Scale of action

My friend Andree Zalesk linked on FB to a post by Yonatan Zunger, Trial balloon for a coup. It's not uplifting reading, but I think it is very well argued, and I recommend it.

In comments on Andree's page, someone wrote, "Bannon must go. Period." And Andree responded:

Do you have a strategy in mind? I have NO IDEA how we organize against something this complex and interior. Even some of the best activists I know are refusing to take this in.

I weighed in with some thoughts about government as the organ for collective action combined with the legitimate wielding of compulsion, and the possibility - but more the difficulty - of building alternative means of collective action.

Andree observed, "I don't see here where you're suggesting a strategy for resistance." And she was right. As I wrote to her.

In retrospect, I was answering in a limited way, "What can we do?" But I don't know what we do to resist beyond what we're doing: demonstrating, calling members of Congress, connecting with other people. In the end, if the judiciary declines to declare the executive to be in violation of the law, or the executive decides to ignore the judiciary (as it is apparently already doing), and the arms of the executive (like Customs and Border Patrol) obey the boss rather than the courts, and Congress declines to assert itself (or it asserts itself but the executive ignores Congress and the arms of the executive obey), then I don't know what you do.

Last night I remembered the term "people power" from when the Filipinos turned out in such massive numbers that Marcos fled. What scale of nonviolent action would it take to render Bannon's plans ineffective?

Andree gave me a pat on the back: "There you go: That last sentence is the real question."

OK, but if it is the real question, it's actually just the first real question. Because the one after that is, "How do you achieve that scale of action?"

It's an organizational question, and also one of messaging.

The all-purpose alibi

Trump's madness with the entry ban has been pretty widely panned, with John McCain saying it's misguided (my newly elected Representative, John Faso (R), did as well - ignore the typo in that article that has him listed as "D - NY", in an article about Republican reactions to the order).

A lawyer who describes himself as having been in favor of pretty much every previous anti-terrorism measure describes this one as "malevolence tempered by incompetence."

Similar reaction has greeted Trump's restructuring of the National Security Council. It's hardly reached the volume of the response to the entry ban, but it's a couple days newer, and there's only so much people can push back on at once. And even so, it's gotten some heavy, coherent pushback, including from such an experienced voice in national-security affairs as Michael Hayden, a former director of the NSA and the CIA, and a man who has served under both Republican and Democratic presidents.

But to a convinced Trump supporter, how can it possibly make a difference?

They already know that "Washington" is "broken." Trump is acting decisively, getting things done, not like those worthless politicians who never get anything done.

No way to run a republic

So the first overt violation of rights has happened, the first act that touches people directly, stops ordinary residents from going about their accustomed business and puts them in a dangerous legal limbo.

Customs and Border Patrol says it only affects a small number of the millions of travelers entering the U.S., which is an asinine way to defend an unjustified action. "Yes, I did take those two kids' lunch money, but they're only a  small percentage of all the students at the school."

For now there has been partially effective pushback: demonstrations at airports, a judicial stay, detainees released.

The new administration tried to do something patently wrong, there was resistance, and the extent of the wrong has been reduced. I am grateful to patriots who took the initiative to go demonstrate at the airports, and to the ACLU for doing the complementary legal work. Thinking about what "victory" might look like in the age of Trump, this is about the best I would have hoped for.

But it is only a partial win, and look what it took. Thousands of people had to drop whatever else they were doing to go put out a fire.

We can be energized by responding meaningfully to danger, but it's like a stress reaction: the phenomenon is necessary in the short run, but harmful if continued over long periods of time.

"You'll pay for this!"

So Trump found a way to make Mexico pay for The Wall: slap a 20% tariff on imports from Mexico.

"I think the president is using every tool available to him to make sure that, as we put this wall up, he honors his commitment he made to the American people that it's going to be paid for and that Mexico will pay for it," Rep. Tom Reed (R-N.Y.), a close Trump ally and member of the tax-writing Ways and Means Committee, told The Hill at the GOP retreat in Philadelphia.

OK, about that, ...

This is something covered in probably every introductory microeconomics class: Who pays the tax?

Waiting and seeing

Back in November I wrote about a conversation my parents and I had with one of the nurses who was taking care of Dad.

In her view, the media was biased against Trump and took things out of context to make him look bad. She didn't like the appointment of Steve Bannon, but she wanted to keep an open mind and see what Trump was actually going to do.

The conversation devolved into whether Trump was going to take us on a path like Hitler did with Germany. She was insistent that "It's not going to come to that." And of course, she may turn out to be right.

Our question was, "What will you do if it does come to that?"

And her answer was essentially, "But it won't."

Which isn't a great answer, but on reflection, we weren't asking the best question, either.

Because presumably, there's something short of full-on Hitler that's still very, very bad, and somewhere that the U.S. shouldn't be going.

I still see this idea on Facebook threads: You need to keep an open mind. He hasn't done anything yet. Give him a chance.

Good narratives and bad

This is part 2 of my response to the interview with Whole Foods CEO John Mackey in the collection The morality of capitalism; part 1 is here.

 

Earlier I discussed the introductory essay by the book's editor, Tom G. Palmer. Like Palmer, Mackey calls simplified history to his aid, and simply can't get the story he wants to tell to line up sufficiently with reality.

I saw what happened when Ronald Reagan got elected. America was in decline in the 1970s—there’s no doubt about it; look at where our inflation was, where interest rates were, where GDP was heading, the frequency of recessions, we were suffering from “stagflation” that revealed the deep flaws of Keynesian philosophy, and then we had a leader who came in and cut taxes and freed up a lot of industries through deregulation and America experienced a renaissance, a rebirth, and that pretty much carried us for the past twenty-five years or more. We had basically an upward spiral of growth and progress. Unfortunately, more recently we’ve gone backwards again, at least a couple of steps backwards. First, under . . . well, I could blame every one of these presidents and politicians, and Reagan wasn’t perfect by any means either, but most recently Bush really accelerated that retreat and now Obama’s taking it to extraordinary lengths far beyond what any other president has ever done before. (p. 24)

There's a lot here to unpack. Mackey's story is that when Reagan took office in 1981, things were bad, and the policies Reagan implemented made things better, and the whole story shows that Keynesianism is deeply flawed.

Let's look at the numbers.

First, Mackey is right about the frequency of recessions: starting in late 1982, we had a long expansion under Reagan, a very long expansion under Clinton, and a reasonably long expansion under Bush II. Also, the recessions in between those expansions were short and "shallow": they didn't last very long, and GDP didn't fall by very much.



Year-over-year percent change in real GDP.
Shaded bars show recessions.
Click for larger image.

And he's right that inflation came down in the early 1980s.

The hard line

In preparing their 1969 taxes, my parents voiced their objections to the expenditure of money on what they considered an immoral war in Indochina, and on their 1970 taxes they simply didn't pay a small "surtax" that was levied that year, arguing that it was a war tax.

In 1971 and 1972 they seem to have paid in full and without comment, but in tax year 1973 they went in big, claiming a $13,000 deduction for "Illegal gov't action," which had the effect of reducing their tax bill by about 50%.

In the summer of 1974 the IRS got back to them and said, in effect, "No, that's not actually a thing. We've recalculated your taxes with a deduction of $0 instead of $13,000, and here's what you owe." My parents wrote back to the IRS asking for a conference with a conferee, and to Noam Chomsky asking for advice.

The next item in the file is dated Jan 24 1975, a response from the IRS. Where the one from July had been "Form RSC-525 (Rev. 1-73)", this one was "Form L-87 (Rev. 11-69)", but like the other one, it began, "Dear Taxpayer:".

It's very similar to the first one, except that the original one says, "If you do not agree with the adjustments, you may do one of the following," whereas the later letter says, "If you do not accept our findings, you may do one of the following." In other words, the first letter operates under some sort of useful fiction that the taxpayer has simply made an error, and the IRS has fixed it for you. The second letter comes after some question has been considered, and findings have been arrived at.

The other difference is in the options for a response. Both letters offer:

1. Send us more info
2. Request a meeting with a tax auditor
3. Request a conference with a conferee.

But in the second letter options 2 and 3 have been crossed out by hand, but with a straight edge. They also crossed out the line, "The enclosed instructions concerning unagreed cases explain your appeal rights."

And both letters then explain, "If we don't hear from you within 30 days, we will have no alternative but to process your case on the basis of the adjustments shown" etc. etc., but in the second letter the "30" has been crossed out and "15" written above it.

Strength in numbers

When info about the Women's March was first circulating, I was glad it was happening, and I was glad Kate was taking part and helping organize the bus transportation from our neck of the woods.

Yet I was skeptical about what good it could do. It's valuable to show and experience solidarity, and working toward going to the march seemed empowering for Kate, rather than sitting too long with a sense of helplessness. And I got some of that good energy vicariously. But as many people have observed, the march needs to be just the first step - it's the follow-up from all of us that really matters.

Then the images started coming in yesterday, and I changed my mind.

I still agree that the follow-up is where the big payoff will be, but I find myself appreciating the importance of the march itself in a way I hadn't expected. Because the sheer magnitude of the marches - around the country and around the world - was just the visible manifestation of an important reality: the incoming government is not popular.

The new president starts off with historically low approval numbers.

It's widely known that he got about 2.8 million fewer votes than Clinton, but it's deeper than that.

What concerns a "conscious capitalist"

I'm reading The morality of capitalism as part of supervising an internship a couple of students are doing. It's a provocative read. My reaction to the introductory chapter is here.

The second chapter is an interview with John Mackey, the founder and CEO of the grocery chain Whole Foods.

Mackey's an interesting guy, an advocate of food causes associated with liberals and progressives (organic farming, healthy eating) and an opponent of economic positions associated with progressives (government involvement with health insurance to make it available to more people).

His calling card is something he calls "conscious capitalism," the idea that companies should make profits, but that they should also be about something more than making profits. In the interview, Mackey lists seven core values; creating wealth through profits and growth is number three. Other items on the list include being a good citizen in the communities where they do business, and trying to do their business with environmental integrity.

The interviewer asks, Why not pursue those other things without pursuing profit? Mackey makes the interesting and reasonable reply that that would limit the reach and efficacy of the organization:

[I]f you’re only making enough money to cover your costs, then your impact’s going to be very limited. Whole Foods has a much greater impact today than we had thirty, or twenty, or fifteen, or ten years ago. Because we’ve been highly profitable, because we’ve been able to grow and to realize our purposes more and more, we’ve been able to reach and help millions of people instead of just a few thousand people. So I think profit is essential in order to better fulfill your purpose. (p. 20)

He wraps up this line of thought with a slight overstatement that nonetheless makes an important point:

Also, creating profits provides the capital that our world needs to innovate and progress—no profits, then no progress. They are completely interdependent.

The overstatement lies in the fact that there are ways besides profits for assembling the financial capital to fund innovation and investment.

Strictly speaking, what's needed is "social surplus" - production above and beyond what we need/want to get through our day-to-day lives. If it takes everybody's labor just to grow enough food for us to eat, then we have zero social surplus and no ability build more and better tools. If we can feed ourselves using only half of our time, then we can use the other half in various ways. One option is leisure, but we could also choose innovation and investment.

As long as the social surplus exists, it can marshaled toward investment and innovation in various ways. The Soviet Union had lots of investment and some material progress - a very unimpressive ratio of progress to investment, because their planned economy was bad at choosing useful investments and bad at fostering and adopting innovation, but both things did happen.

And even in a market system, profits are not the only source of [financial] capital. If you pay decent wages, people will save some of their earnings, and then banks and other financial institutions can gather those up into large pools of capital that can fund investments, large and small.

But even if you pay workers enough that they can save and in that way fund investments, there's still an important role for profits, because profits are what provide the return on investment that gives people the incentive to save, and relative profits give information about which investments to choose.

There's an important conversation - one which Mackey perhaps doesn't want to have - about whether profits at some level exceed any useful role in the economy, but profits in principle definitely are an important element of functioning capitalism, whether that be the laissez-faire type that Mackey prefers or a social-democratic model.

Another reasonable concern of Mackey's is what he calls "crony capitalism," where you get ahead not by your hard work and the social usefulness of your ideas, but by your coziness with the government and your resulting ability to get special deals from it.

What to call him?

Only once in the last eight years have I actually been directly in conversation with someone who made a point of not calling Barack Obama "the president." A fellow American in a foreign country, referred to "the occupant of the White House-" and I'd interjected, "You mean, the President?" He responded, "Oh, that's how it is."

I thought it was juvenile. Obviously you don't like him, but he is in fact legitimately the president.

I'm now stumped.

At some level, is it any different if I come up with some clever moniker for The Orange One?

The IRS strikes back

In the early 1970's, my parents were war-tax resisters.

As I heard the story about 30 years ago, they along with others who objected to the war in Southeast Asia, reduced their federal income tax payments by an amount to roughly account for the portion of federal spending going to the war. After a couple of years, the IRS essentially said, Pay up, or you're going to jail. Others actually did go to jail, but my parents decided, with four kids at home, that wasn't the responsible path for them. They settled up their unpaid balance (with interest) and moved on.

Last week I was at my Mom's, going through things and papers in the wake of Dad's death last November. I found their tax filings from 1958 (the year they married) through 2013, and the folders starting with 1969 contain the documentation of their actions, as narrated here and here.

The 1973 folder contains a subfolder labeled "Case," and you can follow Mom and Dad's efforts to satisfy their consciences and the IRS at the same time.

It leads off with a form letter stamped with the date Jul 29 1974 (their big underpayment action would have been in April, 1974, for the 1973 tax year). The IRS sent them a report explaining the adjustments to their tax. "If you do not agree with the adjustments, you may do one of the following within 15 days from the date of this letter:"

The three options were:

1. send in additional evidence or info;
2. request a meeting with a tax auditor; or
3. request a conference with a conferee.

The attached report says,

Items changed: WAR OR OTHER PROTESTS
Amount Shown on Return or As Previously Adjusted: 13000.000
Corrected Amount of Income And Deduction: 0.000
Adjustments Increase or (Decrease): 13000.00

There's then an explanatory note:

19-A DEDUCTION, CREDIT, OMISSION OF INCOME, OR OTHER ADJUSTMENT ON A FEDERAL TAX RETURN AS AN EXPRESSION OF WAR OR OTHER PROTEST IS NOT PROVIDED FOR IN THE LAW. WE HAVE CORRECTED YOUR TAX FOR THE ADJUSTMENT YOU MADE. (SECTION 61 OF THE INTERNAL REVENUE CODE).

The following numbers show their corrected tax owed as 10,445.10, while the tax shown on the return they'd filed in April was entered as 5,407.52. The result was a "statutory deficiency" of 5,0937.58.

Their prepayments, through employer tax withholding and estimated tax payments, were 5,686.90, so they owed 4,758.20.

The IRS also included Publication 5 (Rev. 10-73), "Appeal Rights and Preparation of Protests for Unagreed Cases".

Chronologically, the next item in the file is a letter from my parents, to Noam Chomsky, dated July 30, 1974. The letter seems to be a response to the report from the IRS, though the dating is confusing. The IRS report is dated July 29, 1974, a Monday. If it was sent by mail, how would they have had it before, say, Wednesday. Was it hand delivered? Was it sent by overnight mail?

Anyway, their letter from the 30th reads,

Nature's Trump card

I'm in the process of going over page proofs for my book,  Macroeconomics in ecological context, which is finally just about done, due out next month with Springer, after far too long.

In my proofing I came across the passage below and thought it was a timely reminder as the Senate considers Scott Pruitt's nomination to head the Environmental Protection Agency.

Another kind of renewable resource is the biosphere’s capacity to absorb the waste we dump into it. This may not feel like an input, the way wood is an input to a house or petroleum is an input to flying. In fact, it’s related to an output, rather than an input, though that output is unintentional. Even so, the similarity to an input is there.

You can’t make a house without using some sort of material, like wood or stone or adobe. You can’t fly a plane without using petroleum. And you can’t burn coal without using up some of the biosphere’s ability to absorb the soot and CO₂. So we can think of that absorptive capacity as an input. The biggest difference is in how its limits make themselves known to us.

Resistance coming to fruition

In an earlier post I presented a letter from 1970 from my parents to the IRS, explaining their reluctance to pay their taxes given the war in Vietnam they were helping to fund, and a memo from 1971, explaining that they weren't paying the surtax levied for tax year 1970, as it seemed to be a war  tax.

Then no sign of anything out of the ordinary for tax years 1971 and 1972.

The 1973 tax folder was the jackpot year. There's a "Schedule A: Itemized Deductions," most of which is routine stuff, written in pencil (it's their working copy, the one they kept for their own files, back in the days before electronic filing, and even before easy access to Xerox machines).

But under line 33, "Other (Itemize)" is written in pen, "Illegal gov't action ded, (see letter attached)" with 13,000 entered in the space for the amount.

The attached letter is a type-written document, undated (but presumably it's from about April 14, 1974, sent with their 1973 tax filing), that reads:

* Illegal Government Action deduction

Setting the stage

Two students of mine are doing an internship at Atlas Network, where they've been encouraged to read The morality of capitalism: what your professors won't tell you, [link fixed, 1/23/17] a collection of essays by various authors. In order to be able to discuss the book with them, I've been making my way through it, and found myself jotting notes at such a rate that it seemed there was a short essay lurking in the margins of each chapter.

The title has some ambiguity: Will the argument be that capitalism is moral and your professors are unfairly blackening its name? Or that the morality of capitalism is bad, and your professors have been painting too rosy a picture?

Let me not keep you in suspense: the book's contributions are dedicated to showing that capitalism is good, despite what college may have tried to teach you to the contrary.

The introductory chapter by the editor, Tom G. Palmer, sets the stage by laying out pieces of the argument for how capitalism is moral. But based on the five essays I've read so far, it also prepares us for what's to come in other ways. The essay makes some valid points touching on facts that may be overlooked by critics of how markets work, things that are worth keeping in mind in your view of reality. But then it weakens itself with a black-and-white view of "capitalism" vs. anything that deviates from it, overly broad generalizations drawn from excessively simplified historical narratives, logical leaps, and use of words with strong emotive power while avoiding any specification of what is meant by them.

As an example of a point that may be ignored by critics of capitalism, consider the potential openness to people, regardless of their background:

Brace yourself

Back in July I got to see Hamilton. Kate wanted to treat herself (and us) to something special for her 50th, and I thought she'd found an excellent way to do that.

Throughout the show I had a growing sense of the tension between the stage and the world outside.

Onstage, a team of audacious artists had reconceived part of the story of the Founding Fathers, and presented those iconic white men as people of color, rapping.

Out in the wider world, we were at the start of a general election in which the Confederate flag was making a more prominent appearance than I remember in my 40 years of paying attention to politics. Citizens were organizing to protest against the insanely high odds of being shot for the color of their skin, and some portion of the populace looked at the phone videos and managed to find a way to say there was nothing wrong.

Signs of progress, next to unsettling reminders of how far we had still to go. The sickness in the population was evident, but I was confident the election would come out OK.

Resonances

A couple weeks ago, looking for something to read, I picked up from my shelf The Germans by Gordon A. Craig, an eminent historian of Germany.

I keep coming upon passages that, in the current context, seem to ring a bell.

The chapter on "Romanticism" is an insightful overview of the flight from rational thought. I was struck by the relationship to a sense of helplessness:

Sociologically, Romanticism was always - as the sociologist of literature Leo Lowenthal has suggested it was in its first phase - an essentially bourgeois movement, and politically it was an escape from the bourgeois dilemma of powerlessness. Thus, it was significant that the years 1830-1848, when bourgeois self-confidence was at its height, and when the German middle class had every expectation of seizing political power, as the middle class had succeeded in doing in France in 1830 and in England in 1832. But the failure of the revolution of 1848 destroyed these hopes and did serious and permanent damage to middle-class amour propre and self-confidence, and in the subsequent period escapism and regressive behavior became the order of the day. (p. 197)

Craig traces the glorification of the peasantry and the denigration of city people, presenting a passage from the social geographer W.H. Riehl:

Nowhere to go but in

Arwa Mahdawi in the Guardian has an interesting piece on the "self-care" culture, and people's retreat into it from the harsh realities of the current political scene.

Near the end, she cites Jamie Kalven's comparison of self-care to the "internal migration" that characterized the behavior of money people in the Soviet bloc who were dissatisfied with the regimes under which they lived.

To the extent that there are similarities, it’s important to note a deep difference between communist-era internal migration and Western political disengagement.

The classic portrait of internal migration is someone who would like to live in an open society, where they can say what they want, criticize the government, read what they want, listen to what they want, go to movies that haven’t had to squeak past the government censor, etc.

Those things weren’t possible in the Soviet bloc. Calling for them was risky. Earlier in the communist period, the consequence could easily be jail, possibly execution. By the 1970s and 80s, a death sentence for illegal political or cultural activity was pretty much unheard-of, and jail might well be an off-and-on thing, but you could still lose the ability to work in your chosen profession while exposing your friends to risks as well.

A few people chose to speak out anyway. We called them “dissidents” and lionized them. Most people decided that the risks of engagement were too high, so they migrated inward. And while we can appreciate the courage and sacrifice of those who spoke out, if we haven’t ourselves been citizens of a repressive society, where we can endanger our well-being by voicing critical opinions, we should be slow to castigate those who chose internal migration. None of us knows what choice we would have made if we had been in their shoes.

I’d like to say that there are no dire consequences of speaking out in the U.S., but I’m not sure I can make that categorical a statement. We have the no-fly list, where you can land in response to relatively mild remarks that some government entity deems a threat, or through having a similar name to someone whom the government deems a threat. Still, I think it’s fair to say that you can pretty much say, write, blog, read, listen to what you like, without fear of negative consequences from the government. I’m quite confident that that holds up as a relative statement, compared to the experience in the communist bloc.

Random pages from a life

Among the many things in the long closet on the 3rd floor, a box of Grandpa Bass's journals, an incomplete set from 1967 through his last year, 1976.

There's also a binder labeled "Abstract of diaries, Emery Bass, Apr 1963 to  ", listing events culled from his diaries, starting:

1963
Apr 17 Last days at Hires Root Beer
Apr 19 Left for Boston
May 14 Left for Chicago

etc. etc. etc.

1964 includes:

Sep 3 Birth of --------> Lauren

(her name is off to the right, in the column for "Events", rather than "Medical" or "Trips", which were the other options.

1967
Jan 26 Snow started at 6am. By nitefall of Jan 27 - 24" Everything at a standstill
.
.
.
July 21 Call from Boston - Karl born

(and an "x" over in the "E" column for "Events")

In the 1976 journal the entry for Wednesday, September 15th reads:

4 hrs work in morning

Drove to Kenosha in P.M. for my own relaxation + at same time deliver a special order to a religious organization at the request of John. No time - no mileage charge. Enjoyed trip.

Evening spent relaxing and reading periodicals.

1st + last time for Starsky + Hutch.

News + bed.

Fairly restful nite.

November 7th has notes about seeing Noel Coward's "Design for living" and other entertainment:

Brilliant satirical comedy, highly sophisticated but a bright mirror on the manners + foibles of artists, rich, the press.

Sylvia viewed "Gone with the wind" - I packed some more. [Grandma and Grandpa were getting ready to move from their house to an apartment]

Early bed

Over that entry he taped a newspaper clipping, in such a manner that you could flip the clipping up and read his own notes. The clipping is a short piece titled, "Not to have purpose generates despair".

The limits to not being smug

Kate's network of college friends has left her with a social environment that is politically more diverse than mine. People she was simpatico with in college and treasures to this day were more conservative than she at the time, and some have followed that path to being Trump supporters today.

For whatever reason, that isn't my situation.

One of Kate's college friends posted on her Facebook page a story from last summer, written by Emmett Rensin, a liberal, about the smug style in American liberalism, blaming this attitude for a large part of why conservatives won't give credence to liberal arguments.

The article has some good insights.

It should be obvious that telling people they're stupid is probably not a very effective way to get them to vote for the person you think should win.

It should be obvious, and yet it happens. I've seen others do it. I've done it in my own head, and) I've done it out-loud in private among like-minded people. I can't vouch that I've never done it publicly (though I'm very careful not to do it in class).

But I have two big problems with the article.

First, there's a symmetry in the disregard with which our country's two political camps view each other.

Rock and a hard place

For seven years the Republicans have been obsessed with repealing Obamacare. Now they control the House, the Senate, and, as of next Friday, the presidency, so now they're going to get rid of it, right?

Well, it's not so simple. Now five senators are asking for a delay, of a little more than a month. As Josh Marshall writes at that link:

Republicans, through numerous public statements, have already made a huge strategic concession: that no one should lose their coverage or be worse off once Obamacare is repealed. In other words, they now agree - or to put it more crisply, are unwilling to publicly disagree - with the proposition that the more than 20 million people who've gained health care coverage under Obamacare should continue to have affordable access to coverage.

The problem is, none of the proposals Republicans are considering come close to accomplishing that.

And the reason for that is that there's no way to do it.

A taste of resistance

I'm at my parents' for a few days. I guess strictly speaking it's now my mom's, but essentially it's still my parents', even with Dad gone.

I'm here to spend time with Mom and to help her with going through stuff. When you've lived in the same house for 52 years, there's quite a lot of stuff.

Today I cleaned out a file cabinet that mostly had completely unnecessary stuff: check books and bank statements and insurance payments, for decades.

And manila envelopes and hanging file folders with tax filings. Every year since 1958. Pretty expendable at this point.

But when you flip open the file for 1969, there's a type-written letter:

April 14, 1970

Randolph W. Thrower
Commissioner of Internal Revenue

Dear Mr. Thrower:

I pay my tax this year with the greatest reluctance and misgiving. I do not object to the amount; I would be willing to pay twice as much if it were well spent.

But I cannot voluntarily support the war in Vietnam (and elsewhere); it seems to me that both sides in Vietnam are essentially gangsters fighting for turf. If there were any effective way to withdraw my support of this, I would do it.

Sincerely,

Robert T. Seeley
Charlotte B. Seeley

What we stand to lose: the ACA approach to the "uninsurables"

Health insurance is poorly understood, but pretty damn important, so I'm taking a whack at breaking it down into comprehensible terms.

In my first post on the subject, I introduced the key concepts of insurance but looking at other things we insure. (If you don't want to bother with that post, you can skip to the bottom of this one to see those items summarized.)

In the next one, I looked at what happens when you apply those concepts to health insurance. The main takeaway is that if we're thrown into the health-insurance market as individuals, rather than as members of largish groups, many of us will turn out to be effectively uninsurable - nobody will sell us a policy at a price that is remotely affordable for us.

The solution we've relied upon - employer-based health insurance - is better than all of us being out there as individuals, but it still leaves a lot of people uncovered. Hence, the Affordable Care Act.

The core of the act is three interrelated pieces:

1. A ban on discriminating against pre-existing conditions (that is, you have to sell insurance to people with pre-existing conditions, and you have to charge them the same as you charge other people);
2. A mandate for individuals to have insurance, whether through their employer, their spouse's employer, or bought on their own;
3. Subsidies to less-wealthy households who are buying insurance on their own (plus an expansion of Medicaid eligibility to take care of another group of lower-income households).

This is the natural order to walk through these pieces, because the first one addresses the problem directly, and the next two each address a problem created by the one before.

What we stand to lose: health insurance is different

Health insurance is a potentially confusing subject - Congress certainly seems to be unsure what to do about it. But at its core, it's not that complicated.

It is, however, surprising. Some of the things we think we know from other types of insurance, or even other economic situations, end up pushing in surprising directions when we apply them to the question of health care.

The previous post in this series looked at coverage for homes, cars, and lives, in order to introduce the key concepts for thinking about insurance. They're summarized here:

• Risk pooling: the average outcome for a group of people is far more predictable than the specific outcome for any individual. So when we pool a bunch of people, there's a lot less uncertainty about the average cost associated with that group than about the specific cost associated with any individual in the group. Risk isn't merely transferred by pooling; it's actually reduced.
• The lucky pay for the unlucky: if you never "get" to file a claim on your insurance, it's because nothing bad ever happened to you.
• Mandatory insurance: under certain circumstances, the government or some private entity might require you to buy insurance as a condition of something else.
• Moral hazard: when you are spared from the bad possible outcomes of risky behavior, while benefiting from the good outcomes, you'll take more risks than you should.
• Actuarial fairness: when the premium you pay is proportional to the cost you are likely to represent.
• Adverse selection: when an insurer is unable to make use of information about characteristics of its customers, that affect how costly they're likely to be. The insurer charges higher premiums to protect itself, the less costly people drop away even more, and the pool falls apart.

The weirdness with health insurance starts when we take the concept of actuarial fairness, and ask what happens when we apply it to individuals. That is, what if we figure out the health-insurance premium for each individual that is scaled to the health costs he or she is likely to incur?

It pretty quickly becomes clear that we will have a group of people who are essentially uninsurable.

What we stand to lose: Basics of health insurance

On Wednesday I was a guest in the Rural Health class taught by the nursing program at Hartwick College. For many residents of rural areas, social and economic factors are an important aspect of their health situation, along with access to health care. In that context, the professors for the course invited me in to speak about health insurance.

My goal was to make health insurance more comprehensible by setting it in the context of other types of insurance, draw general principles from those, then see what happens when you apply those principles to health coverage.

I expect this to be two posts: one on the insurance background, the other on issues specific to health insurance. We'll see how it goes.

Start with the basic idea of insurance.

You as an individual are risky. Let's say we're talking about whether you'll get hit by a car. And to keep the exercise simple, let's say that getting hit by a car brings with it $20,000 in medical expenses (along with a lot of pain). And let's say there's a 3-in-100,000 chance of you being hit this year.

So there are two possible outcomes. You almost certainly won't be hit, in which case the cost is $0. But there's a 0.003% chance that you will be hit, in which case there's a cost of $20,000.

So, almost certainly $0, but just maybe $20,000. Nothing in between.

Now take a group of 100,000 people, all with that same 0.003% chance of a $20,000 accident. You can't expect there to be exactly 3 accidents. In fact, the chance of that is only 22.4%. But there's a 99.6% chance that the number of accidents will be between 0 and 8. Which means the average cost for the group will almost certainly be between $0 and $1.6.

That's a much easier situation to plan for than your individual situation where the only possible outcomes are $0 and $20,000.

This is the magic of what's known as risk pooling.

When you pay an insurance company, you might think of it as you paying them to bear the financial risk on your behalf: if you get hurt, you won't have to pay - they will. But in some sense, when they put together a pool of people to insure, in some sense they're not bearing risk for you. They're making it go away. That's the magic part.

A missed opportunity

This is my fourth and final post in response to David Dayen's Chain of title. If you have any interest in the foreclosure crisis of the previous decade, I recommend it highly.

My first post provided a primer on the process of mortgage securitization, setting up the aspects of the process which led to the "need" for banks to fabricate documentation in order to foreclose on homes that they didn't necessarily own.

The next post provided a representative catalog of varieties of fraud perpetrated by the financial sector in the course of the foreclosure crisis.

The third installment provided a framework for thinking about the rights and wrongs of the situation.

This post is about the political failure in the face of the crisis. The failure was bipartisan, with some evidence that Republicans were more willing (eager?) to let the banks get away with theft. But I want to highlight the aspect of this being a missed opportunity for Democrats. Both parties failed the public. The Democrats failed themselves, and thereby contributed to the election of Trump.

When you're stealing houses, what's right?

This is my third post in response to David Dayen's Chain of title. If you have any interest in the foreclosure crisis of the previous decade, I recommend it highly.

My first post provided a primer on the process of mortgage securitization, setting up the aspects of the process which led to the "need" for banks to fabricate documentation in order to foreclose on homes that they didn't necessarily own.

The next post provided a representative catalog of varieties of fraud perpetrated by the financial sector in the course of the foreclosure crisis.

This post is about one way of thinking about the rights and wrongs of the situation.

According to the Wall Street Journal, "More than 9.3 million homeowners went through a foreclosure, surrendered their home to a lender or sold their home via a distress sale between 2006 and 2014."

To be clear at the outset, I'm not claiming that all those foreclosures were wrong.

Learning from animals

 On the TED Radio Hour about a year ago, Deborah Gordon talked about the self-organization of ants (and other biological phenomena) and what we can learn from that.

She contrasted the elegant, decentralized solutions found in biology to the clumsy, top-down structures that humans seem to design.

One of her interesting observations was a connection between ants determining how to forage and packets of information deciding how to send themselves out along the internet.

Ants in the desert have to balance the need to find food against the loss of water that comes from being out in the desert, away from their nest. According to Gordon, these ants only leave the nest if they encounter enough foragers returning with food, thus focusing their foraging their efforts on times when the likelihood of finding food makes it worth the loss of water.

On the internet, if you're a data packet, the thing you need isn't food, but bandwidth. And rather than have a central control telling you when to go, the decision is similarly decentralized: a data packet can't go out until it gets an acknowledgment from the router that the previous data packet had the bandwidth to go through.

As Gordon observes, "We invented for the internet a very similar algorithm to one that has evolved in desert ants many, many millions of years, and we just invented the internet yesterday."

"For situations where we don't have the right algorithm yet, we could look to see, how has nature solved that problem, and maybe we could use that solution."

That's an excellent idea, but she takes it too far. Not only are there ideas in nature we can learn from, she seems to cast hierarchies in general as undesirable.

How to steal a house: the pitch

This is the second part of my reflection on David Dayen's Chain of title. The first part is here.

In an earlier post I gave a condensed version of how mortgage securitization worked (or in most cases, didn't fully work), and how it led banks to a situation where they either needed to relinquish claims on millions of houses, or fabricate evidence to show ownership that they had previously neglected to properly document.

Guess which path they chose?

No, don't bother. This post is about the ways that banks fabricated the evidence they needed in order to foreclose on homes that they didn't properly have a right to. It's also about how they maneuvered borrowers into a place where the banks could make a case - sometimes blatantly unjustified - that the borrowers had been delinquent.

Late bloomers

At my dad’s service last month I was talking with an old family friend who in mid-life got a doctorate and has recently started teaching at a university.

“After the election, I noticed that my students were more comfortable with lying. If you catch them, they just say, ‘Oh yeah, right.’ There’s no shame, no compunction about lying. If lying serves their purposes, then it’s a fine thing to do.”

I suggested this was maybe the logical conclusion of our worship of markets.

Pretty early in my Hartwick career I ran into students expressing the idea that, “If the government is doing it, it’s bad.” It struck me that to some extent our culture’s mental horizons are limited by a set of ideological blinders oddly symmetrical with the ones the Soviet government fit for its people.

In the USSR, it was common knowledge that markets are inherently bad, inherently exploitative. And you didn’t find this attitude only in government propaganda that ordinary people shrugged off. The propaganda had worked, so that ordinary people believed it.

In the fall of 1988, while I was studying in Moscow, I had dinner with a family that hated it so much in the Soviet Union that they wanted to emigrate. Yet I had a conversation with the father of the family in which I explained the basic workings of a market, and his response was, “But isn’t that exploitation?”

I think a lot of Soviet citizens internalized at least part of the state ideology, the part that said that the only way to have a fair society was to squeeze markets out of as many situations as possible, so that the state, acting wisely and on behalf of the working class, could make sure that things were done properly.

Outside the USSR, plenty of people were not surprised when this turned out to be a disaster.