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.