The Private Value of Public Investment

One thing I find disappointing about web-based journalism is the comments that often follow the article. Mostly, I no longer read them but there was one that followed the article on Bridger Bowl that appeared in the Billings Gazette this morning (read it here). The commenter asks, in an inflated tone of indignation, why his tax dollars should subsidize the operations of a local ski area. It’s a good question and goes to the heart of our current debate over the economy, taxes, and public investment.

In his book, The Affluent Society (1958), economist John Kenneth Galbraith points to the irrationality of the distinctions we make between private and public goods: “We view the production of the most frivolous goods with pride. We regard the production of some of the most significant and civilizing services with regret.“ Of course, he is talking about the perceived virtues of most any private good over the necessary evil of public production. Galbraith makes the argument that public goods production is really an investment for the production of private goods. After all, the small marginal tax we pay for a public police force protects a very large amount of private wealth.

A public subsidy for Bridger Bowl in the form of lower taxes (because they are a 5013c nonprofit) and low cost use of leasing public land does seem like a strange form of public good. After all, skiing and outdoor recreation is by and large an activity for the financially well off and most could certainly afford marginally higher lift tickets.

Let’s look at what we get for that subsidy and others like it. In direct terms, we enjoy high quality recreation opportunity near the community, a certain amount of ecosystem services are preserved we might otherwise lose to timber harvest, habitat is preserved; some local employment is created. Less directly, Bozeman receives a great deal of free press when BB is mentioned in national ski publications. People are attracted to the region for our outstanding scenery and quality of life. That creates jobs, new business, and expanded opportunities for our citizens. For BB, that amounts to about $12 million in economic impact. I would argue that because largely intact public lands surround Bozeman, our community is a better place in which to live and do business. I think that’s a pretty good return on investment.

Disconnections in US Agricultural and Trade Policy

Why do US negotiators for agricultural trade liberalization in the World Trade Organization sometimes spend scarce negotiating capital in “tit for tat” concessions from our trading partners that are later made irrelevant, or nearly so, by the US Congress? And why do our trade negotiators appear at odds with the inclinations of the US Congress about making the changes needed to our domestic farm policy to support our international trade negotiations? I investigated this question with co-author, Kathleen C. Hansen, former student at MSU, now Rhodes scholar enroute to Oxford, and our paper on this question will be published early next year in the Estey Centre Journal of International Law and Trade Policy.

The GATT, now known as the World Trade Organization, made progress in the liberalization of agricultural trade for the first time with the Uruguay Round Agreement. Implementation of the URA began in 1995, and in the year 2000, WTO members began negotiating again to further liberalize agricultural trade. Progress in this round of negotiations has been excruciatingly slow and a final agreement is still elusive. Progress is problematic as one key component of the negotiations is restrictions on the nature and level of domestic subsidies for agriculture that distort agricultural trade. Some, but not all, subsidies are considered to result in an increase in exports and thus a move away from the “level playing field.”

The problem in a nutshell is that the US Congress has the authority to enact domestic farm bills that contain a wide variety of subsidies for US farmers, some trade distorting, others not. Congress wants to keep this power as the Farm Bill has been an important mechanism in securing the support of constituents. However, since the 1930s Congress has been delegating authority for negotiating trade agreements to the agency now known as the Office of United States Trade Representative. In sum, Congress found it politically expedient to keep authority over the Farm Bill but to delegate authority to negotiate trade agreements.

This was not a problem for fifty years, until the mid 1980s, when agriculture was substantively included for the first time for comprehensive negotiations in the GATT/WTO. In order to achieve trade liberalization for agriculture, WTO members have to agree to restrict the nature and extent of domestic subsidization. And sometimes there is a divergence between Congress and US trade negotiators about how to negotiate for agricultural trade liberalization that may require us to reform our domestic policies. This is painfully known by the rest of the world, and at times, diminishes US credibility and power in the negotiations. For details, check back to our blog for a link to the paper when its published, or contact Linda Young for a draft copy.

Democrats face big challenges in 2012 here in Montana

A quick piece from Campaigns and Elections Magazine on the challenges Montana Democrats face here in 2012. Read it here.

One quick note: the piece says that Governor Schweitzer is up for reelection in 2012. That's not the case; Governor Schweitzer is term-limited, so the race is wide-open.

Senator Baucus: Not popular in the beltway

Courtesy of Dr. Johnson, a pretty scathing view of Montana's senior Senator in today's Washington Post. Read it here.

Senator Baucus' role in the healthcare debate did not make him particularly popular in Montana. Nor did the negative press he received about recommending his girlfriend for a position as U.S. Attorney bode well. And now, a recent poll shows his job approval ratings in Montana at around 38% (the poll was done by Public Policy Polling).

Granted, Senator Baucus won reelection overwhelmingly in 2008 (against the "formidable" Bob Kelleher). And he is the Chairman of the Senate Finance Committee, one of the most important and powerful chairmanships in Washington. One wonders, however, what shape the Senator will be in should he chose to run for reelection in 2014. A lot can happen between now and then, but all of this suggests he may face a substantial challenge in the general election--perhaps from Congressman Rehberg. Rehberg, of course, took on Baucus in 1996 and lost in a tough race. He might be game to try again.

Senator Baucus can repair his reputation and win reelection if:

A) He comes back to Montana frequently and visits with constituents.
B) Parlays his position on Finance to bring tangible benefits for the state to which he can point during the next few years.
C) Emphasizes his, to use Fenno's language, "one of us-ness" with Montanans (although I think Tester and Rehberg are more creditable in this regard).
D) Keeps raising a lot of campaign cash to scare off potential challengers.

But don't forget that the most popular politician in Montana at the moment--Governor Schweitzer--will be out of job come January, 2013. He, too, may be looking for something to do. And the Senate might be a place where he can do it.

Requiem for a semester...

Today another semester draws to an end (roughly my 56^th semester as either a student or teacher, if I’m counting right). My Classical Political Thought class wrapped up by talking about the philosopher Paul Woodruff’s book Reverence: Renewing a Forgotten Virtue. Specifically, we discussed two chapters on reverence in ancient Greek thought and in ancient Chinese thought. (For an interesting New York Times piece yesterday, comparing Chinese and Western virtue ethics, see “Kung Fu for Philosophers.”) The message of reverence in both these traditions, according to Woodruff, is “Remember that you are human. …Between now and death you will have many opportunities to crash down from whatever height you have reached, and you will fall harder if you forget that the human path is strewn with stumbling blocks.”

Within a certain political narrative (i.e. the modern liberal enlightenment narrative, wherein self-mastery and sovereignty are the preeminent virtues and goals), Woodruff’s reminder can only be the source of despair. But journeying every fall through Socrates, Plato, Aristotle and Confucius (not to mention grappling with Creon who, in Antigone, learns the lesson of hubris the hard way), gives me a chance to engage with an alternative account of what it means to be human. Within this classical narrative there is certainly some despair (to wit, Creon: “Oh weep, weep for the pain of human pain!”). But there is also a measure of awe and wonder, even joy, that comes from the way humans are, for better or for worse, in it together.

And so Confucius, the Master, says: “Virtue is never solitary; it always has neighbors.”

I count myself lucky to be surrounded by curious and smart and supportive colleagues, who embody the virtues of the life of the mind balanced with the active life. Good neighbors, indeed. And I count myself lucky to get to spend my days surrounded by critically engaged students who indulge my passion for pondering the big questions of life: Why be moral? What is power? Can leaders be virtuous? Does studying ethics teach us to be ethical? Is self-preservation always justified? Is efficiency ever a preeminent value? Does the state have a duty to produce certain types of citizens? Do teachers have a duty to cultivate certain types of students? Can you have true reverence without God? Can you have true justice without laws (can you have true justice with laws?)? And so on.

It’s not a bad way to spend one’s days. Grading the stack of papers that will start flowing in tomorrow, on the other hand…. Well, that’s the price of doing (intellectual) business, I guess. So be it.

That's Your Opinion

Steve Eagle at George Mason law school posted an interesting column yesterday. You can read it here.

Why Social Science is so cool

I found this column in today's NY Times by David Brooks to be fascinating:

http://www.nytimes.com/2010/12/07/opinion/07brooks.html?ref=opinion

Some people think political science is all about the professor's personal political opinions and their desire to make students mimic those opinions. Nothing could be further from the truth. Political science is about understanding political behavior, the consequences of institutional arrangements, and the how choices between competing values have policy consequences. The political animal is a fascinating beast, and with the use of the tools of social inquiry, we can gain a much better understanding of how that beast operates in a political environment. It's about teaching students to evaluate evidence, and how to use evidence to make good arguments--arguments which are falsifiable. That's political science, and that's what most political scientists do.

To quote the esteemed Dr. Peter Venkman of the Ghostbusters: "Back off, man. I'm a scientist."

Running Scared

British political scientist Anthony King wrote an interesting book called Running Scared. In it, he discusses how elected public officials are unwilling to deal with toxic political issues, like entitlement reform, deficit reduction, or the closing of military bases. The problem, of course, is politicians are risk-averse--especially when they are faced with paying the political costs of making an unpopular decision. Military bases that are no longer needed or antiquated may need to be closed, but individual members will fight to protect those bases because the cost of closure is directly borne by them AND their constituents. And, given that any member might have a military base closed on them, members of Congress collectively will fight to keep any base from closing--thereby perpetuating an inefficient use of military funds and resources.

King, as well as others (Canon and Mayer 1999; Epstein and O'Halloran 1999), note that in these situations Congress will seek to delegate the responsibility to address such nettlesome political issues to a commission. These commissions will have the power to make the tough decisions, and Congress develops processes to protect those decisions as they work their way through legislative process. Case in point is BRAC: the Base Realignment and Closure Commission. This commission was tasked with the responsibility to close America's excess military base capacity using a set of economic, strategic, and mission-centered variables that removed politics from the equation. The Commission would then make its recommendations to the President who would forward the entire list to Congress who had to vote the entire list up or down. The process worked quite well: military bases that were no longer needed were closed, and members of Congress could fight the "good fight" on the House/Senate floor against the recommendations, but in the end, any one individual member could not easily hold the process hostage. The process was so successful that it was used repeatedly: in 1991, 1993, 1995, and in 2005 (a slightly different process was employed in 1988).

Unfortunately, President Obama's Debt Commission's recommendations are dead on arrival because Congress never bought into the process and created a commission that was insulated from political pressures like BRAC. The National Commission on Fiscal Responsibility and Reform was established by executive order after legislation to create it was defeated. Any recommendation established by the Commission, if it is forwarded to Congress at all, will not be protected from amendment by members who face electoral pressures. Republicans will be loathe to go on the record and support tax increases (can you say Tea Party primary opponent?). Democrats will be similarly reluctant to support changes in Social Security for fear of upsetting their liberal base. In short, the electoral forces to which members respond will undermine any genuine, bipartisan effort to deal with the debt crisis. If Congress and the President are truly serious about dealing with the national debt, they will develop a Commission based on the BRAC model that will have the authority and protection necessary to develop a comprehensive solution that will include the tough tax hikes and entitlement cuts necessary to create the basis for long-term fiscal sanity. Anything less is merely posturing that will be subject to the fundamental problem of the collective action dilemma.

The Difference Between 1994 and 2010? Democrats Saw the Wave

An interesting piece on the 2010 midterms from MSNBC today on the debt Democrats took on to prevent even larger losses in the House. Some key points to consider:

In 1994, The Democrats were caught unawares when the GOP tidal wave hit. Now, because of the proliferation of polling, the Democrats not only knew they were in trouble, they had a good idea where and could shift resources appropriately. The same thing happened in 2006 when the Republicans lost their majority. In both cases, it seems the losses could have been much worse. Because of the ability to use polls to target with sophistication and partisan-motivated redistricting, large wave elections like '94 and '10 are much rarer today.

Second, the large debt combined with the loss of the House majority weakens considerable the Democrats going into the 2012 congressional election cycle. It's much hard to raise money when you aren't in the majority. Add to this the monumental drubbing the Democrats took in state gubernatorial and legislative races--which give the GOP a big leg up in redistricting, and forget about the Democrats winning back the House. Indeed, we'll probably see Republican gains in 2012.

Political Theory Consortium Rocks the House

The Political Theory Consortium (PTC) gathered last week for our second to last meeting of the semester. This group of theory-lovin’ students is awesome! So far this semester we’ve read selections from John Dewey’s The Quest for Certainty, Gandhi’s Non-violent Resistance, Jose Miranda’s Marx Against the Marxists, and Rousseau’s “Discourse on the Origin and Foundations of Inequality” paired with a contemporary work-in-progress by two friends of mine (David Gutterman and Keally McBride), using Rousseau to analyze the Tea Party movement as a manifestation of deep status anxiety.

The meeting last week was the one on Rousseau and the Tea Party, and it was HEATED! I could hear people up and down the halls of Wilson closing their office doors, as Jordan and David (a.k.a. Karl Marx Jr. and Milton Friedman Jr.) went head to head on the question of what economic system was more likely to improve humankind’s lot. I’m not going to lie to you, the term “Keynesian monetarism” was used more than once. And there was radical disagreement over whether Rousseau’s insights about what he saw as the foundational “swindle” capture our contemporary predicament.

Rousseau writes,

“Lacking reasons valid enough to justify himself and strength sufficient enough to defend himself, easily able to overwhelm an individual but overwhelmed himself by bandits, alone against all, and, on account of mutual jealousies, unable to join forces with his equals against enemies united by the common hope of plunder, the rich man, pressed on by necessity, finally conceived the most carefully thought out plan that ever entered the human mind; this was to use in his favor the very forces of those who were attacking him, to make his adversaries into his defenders, to inspire them with other maxims and to give them other institutions, which were as favorable to him as natural law was opposed.”

And if you’ve ever read the text, you know what happened next! The “easily seduced,”

“ran headlong into their chains, hoping to ensure their liberty, for, along with enough reason to be conscious of the advantages of political institutions, they did not have enough experience to foresee their dangers; those most capable of anticipating the abuses were precisely those who counted on profiting from them….”

According to Rousseau, this was the very origin of society. Ouch! And so here we are, centuries later, trying to figure out whether there is some masterful, Rovian (as in Karl) deception that has duped the not-rich into voting against their economic self-interest in order to protect their self-conception. Gutterman and McBride call this a “therapeutic” mode of politics – acting out our psychic worries, or angst, or fear of degeneration, if not our rationally considered interests. Fascinating stuff! Was the foundation of modern society the enlightenment insight that “all men are created equal” or was it actually the recognition of inequality (and the desire by some to preserve their comparative advantage) that inaugurated civil society in the first place? Discuss.

The 2012 Montana Senate Election: It's ON.

Attended Steve Daines' announcement for the U.S. Senate today to help the local television with commentary. Daines is a native Montanan, and co-founder of RightNow technologies--one of Bozeman's major employers. In reviewing Daines' materials, it's the standard "I'm an outsider, government is too big, and I've created jobs" that one might expect, especially after the success of this type of message in the 2010 midterm elections. In many ways, I suspect the campaign will be similar to Ron Johnson's successful campaign in Wisconsin. Johnson ran against, and defeated, three-term incumbent Russ Feingold.

I was asked if Daines has a chance. Well, of course he does--the question is whether that chance is substantial. In political science, we term challengers as quality or not. Quality is generally defined as having experience in elected office. These candidates generally have the best chance of beating an incumbent--which is a tall order indeed. However, some candidates without elected office experience are classified as "ambitious amateurs" (see Canon 1990). These candidates may not have elected office experience, but they behave strategically like experienced candidates. They generally have decent name recognition and financial resources, and they make the decision to run strategically.

The incumbent senator, Jon Tester, is running in his first reelection campaign. The best chance of beating an incumbent is when they run in their first reelection campaign. So, if Tester is to beaten, this is the time to do it. Daines is acting strategically by choosing to take Tester on now. And, he's acting early enough to get his name out there and to clear the field of other prospective challengers.

Daines narrative is might compelling in an environment with high unemployment and discontent with incumbents. He's certainly taps into the Tea Party skepticism of larger and bigger government. Tester, of course, can be tagged with some unpopular votes.

Tester, however, has other advantages that should not be dismissed. He is the incumbent. He is a native Montanan. He is a rancher and a farmer. He is pro-gun and a conservative Democrat. It will be hard, methinks, to paint him as an Obama/Pelosi Democrat. And the election is two years away. The economy might improve--and the electorate voting in 2012 will be very different from the one turning out in 2010. All of things bode well for Tester in defending his seat.

Nevertheless, if Daines is the nominee, we can expect a lot of money to be spent by both sides in 2012. Lots of television ads, lots of voter outreach--a rich information environment to help reduce the costs of voting and get more people involved/interested. I can't wait to watch this unfold.

Montana Politics: Divided Government Matters

Montana Politics: Divided Government Matters

Divided Government Matters

From Politico:

Darrell Issa plans hundreds of hearings - Jake Sherman and Richard E. Cohen - POLITICO.com:

"California Rep. Darrell Issa is already eyeing a massive expansion of oversight for next year, including hundreds of hearings; creating new subcommittees; and launching fresh investigations into the bank bailout, the stimulus and, potentially, health care reform.
Issa told POLITICO in an interview that he wants each of his seven subcommittees to hold “one or two hearings each week.”"

David Mayhew wrote a book called Divided We Govern in 1991. In that book, he argues that Divided Government does not lead to more high profile investigations of the executive branch. My co-author Matt Dull and I took on this assertation in an article ("Divided We Quarrel") published last year in Legislative Studies Quarterly, where we find that divided government is significantly associated with an increase in the number and intensity of investigations of executive branch malfeasance conducted by the House of Representatives. Although our analysis ends in 2004, data we have collected for the 110th Congress show a spike in investigations with the return of divided government.

Here is Figure 2 from that article:

An analysis of investigations with the committee as the unit of analysis shows a similar trend: divided government is associate with more and longer investigations of the executive branch.

Is this a good thing? Not necessarily. As Matt and I conclude in a related article in progress:

"Our findings, however, do not suggest that a 'mended' Congress performing vigorous oversight is necessarily a positive development. Cartel committees in divided government pursue investigations aggressively and intensely, yes, but such activity may only serve to increase partisan rancor in Washington given such investigations are potentially driven by partisan purposes. More investigation need not imply better government. Indeed, given all the consternation expressed by some politicians and the public at large about pork barrel spending, our findings on investigation should give pause. Yes, Congress may be more willing to investigate the executive branch under divided government; however, it will not disturb the logrolling arrangements so important to the re-election prospects of individual members."

Which is why, of course, oversight was so lax when it concerned MMS.

The punch line: Divided government matters. It makes it harder to pass legislation, and increases the propensity of Congress to oversee the executive branch.

Why it is increasingly difficult to succeed as President

From Ross Douthat in today's New York Times:

At the same time, their legislative maneuverings — the buy-offs and back-room deals, the inevitable coziness with lobbyists — exposed the weakness of modern liberal governance: it tends to be stymied and corrupted by the very welfare state that it’s seeking to expand. Many of Barack Obama’s supporters expected him to be another Franklin Roosevelt, energetically experimenting with one program after another. But Roosevelt didn’t have to cope with the web of interest groups that’s gradually woven itself around the government his New Deal helped build. And while Obama twisted in these webs, the public gradually decided that it liked bigger government more in theory than in practice.

http://www.nytimes.com/2010/11/01/opinion/01douthat.html?ref=todayspaper

This illustrates nicely the concept of historical time. In his book, The Politics Presidents Make, discusses how the progression of historical time makes it difficult for succeeding presidents, regardless of their place in political time, to accomplish their agenda. Douthat's point, essentially, is that institutional thickening--the rise of interest groups with their own agendas--make it nearly impossible to nimbly reshape government.

The larger point is that political time itself may becoming increasingly irrelevant. As Skowronek notes, increasing institutional thickening will make it increasingly difficult for all presidents--regardless of their place in the regime or their warrants for action--to succeed. The only way for them to do so is to constantly seek third way solutions--to triangulate. The good news is presidents can still be successful. The bad news is it becomes increasingly difficult to establish an enduring legacy and institute a new, longstanding regime.

For Obama to succeed in gridlocked government, he's going to have to learn the lessons of preemption from Bill Clinton and Richard Nixon. He should play the left and the right off of each other, and strive to find middle-of-the road solutions in the next two years.