Rubin gets it right (crosspost from Crooked Timber)

Crises upend all kinds of assumptions, and the crisis in the Republican Party is no exception. Who would have thought, for example, that the National Review crowd might end up voting for the Libertarian candidate while lots of self-described libertarians are backing Trump.

At least as surprising to me is that, among all the attempts from establishment Repubs to understand the disaster that has befallen them, the most insightful and accurate (that is, the closest to my own analysis) has come from Jennifer Rubin at the Washington Post, someone I’ve never before taken seriously. Unlike nearly all the NeverTrumpers she accepts the obvious implication of the fact that around half the Republican electorate has gone for Trump’s tribalism

The GOP discovered (in part, through Sen. Ted Cruz’s collapse despite perfect mechanical execution) that there is no majority supporting the Reagan agenda. Certainly, Cruz was a politician of limited talent and imagination, but if he could not sell the “three-legged stool” to the masses, perhaps there are no masses receptive to that sort of stuff. Even in a GOP primary, there is no majority looking to roll back gay rights or give huge tax breaks to upper-income Americans.

Second, she nails the role of climate change denialism in the intellectual collapse of the political right

Along with all of this, conservatives have to end their intellectual isolation and self-delusions. They need to stop pretending that climate change is not occurring (the extent and the proposed solutions can be rationally discussed) or imagining that there is a market for pre-New-Deal-size government. Conservatives must end their infatuation with phony news, crank conspiracy theories, demonization of well-meaning leaders and mean rhetoric

Contrast that with, say, Will and Krauthammer, who denounce Trump in extreme terms, but peddle lunatic conspiracy theories themselves.

In this context, I was struck by this piece headlined The outlandish conspiracy theories many of Donald Trump’s supporters believe. Despite the headline and the spin in the text, the data reported in the article shows that Trump supporters are only marginally more likely than Cruz and Kasich voters to accept the standard set of Republican conspiracy theories. To give a fairly typical example,

Fifty-two percent of his supporters said [the claim that vaccines cause autism] was possibly or definitely true, compared to 49 percent of those who supported Cruz and 45 percent of those who supported Kasich

These differences are barely outside the likely margin of error in a poll of this kind. The differences between groups of Repub voters on any given issue are far smaller than the differences arising from more or less extreme conspiracy theories (for example, only about 20 per cent of each group think that the Sandy Hook shootings were faked).

If there is one prediction that can safely be made it is that the Republican party of 2017 will be very different from that of 2015, before the Trump eruption. Whether it moves in the direction of sanity remains to be seen.

Polls vs punters: an explanation?

Nearly a month ago, I noticed that betting markets were giving long odds (3.5 to 1) against a Labor win in the (presumably) forthcoming election. That would be a good bet if you thought Labor had a better than 22 per cent (1/(1+3.5)) chance of winning. Given that the polls were pretty much tied, I thought those were good odds.

Since then, the polls have moved steadily in Labor’s favor to the point where their lead is just about statistically significant in a meta-analysis (add lots of independent samples and the margin of error declines). At the same time, the government has barely had a good news day. Their one big hit, the kerfuffle about 10-year projections of tobacco tax revenue (a bipartisan policy) blew up in their faces a few days later when Turnbull and Morrison couldn’t/wouldn’t state the cost of their company tax plan. It seems that they had the $50 billion number ready, but had hit on the clever plan of having the Treasury announce it today, just before Parliament is dissolved so that Labor couldn’t … I’m not sure what (cue underpants gnomes). As a result of all this, the pundits, who dismissed the idea of a Labor win as implausible until very recently, are now coming around to the idea

Yet despite all this, the odds are barely unchanged at 3.3 to 1. That’s good for anyone who gives Labor a 23 per cent chance. There are a few possible explanations of this

(a) The idea that betting markets are highly rational aggregators of information is wrong
(b) Those betting in these markets have inside information or else insights unavailable to the rest of us.
(c) The markets don’t really exist in any substantial form and are just a publicity stunt for the bookmakers. That’s the argument of this 2013 article by Michael West, whom I’ve usually found to be sensible and reliable.

Pirates ! (Militarism Whack-a-Mole #173)

Making the case against militarism is very reminiscent of climate denial whack-a-mole. Demolish one spurious argument, and you’re immediately presented with another. For example, my post showing that the economic benefits of “keeping sea lanes open” could not justify more than a trivial proportion of current naval expenditure, got hardly any substantive responses (apart from tiger-repelling rocks), but a great many saying “what about the pirates?”.

I’ve done the numbers on this one, and they look pretty clear-cut. There are a bunch of estimates on the web of the annual cost of piracy ranging from $1 billion to $16 billion a year.

This seems implausibly high. The amount actually stolen by pirates or paid as ransoms is far smaller, less than a billion a year at its peak, AFAICT. Looking in detail, there’s a fair bit of double counting here (both actual losses and the insurance premiums which offset them are counted, for example), and the high-end numbers typically include some estimate of the cost of naval deployments on anti-piracy patrols. In particular. Still, in the spirit of fair play, I’ll go with $15 billion a year as an upper bound.

Turning to the US Navy* budget, it’s currently just shy of $400 billion a year. That supports a fleet of 272 “deployable battle force” ships, implying an annual cost of $1.5 billion per ship. So, the annual cost of piracy is the same as the cost of about 10 ships. To put it another way, reducing the fleet by one ship, and scaling down anti-piracy operations accordingly would have to increase global piracy by 10 per cent to yield a loss to the global shipping industry greater than the savings to the US (I leave aside the question of why the global shipping industry is such an important recipient of US foreign aid).

Having played military whack-a-mole many times before I can anticipate the responses in my sleep. So, I’ll open the comments threads, resist the temptation to take part, and whack the inevitable moles in a later post.

* The US spends more than other developed countries, but I don’t think the others get any more ship for their shilling, capability-adjusted.

Budget bubble

The stream of leaks about Tuesday’s budget suggest that the process was still in turmoil until the last minute. If the last round of leaks are broadly accurate, it looks like a budget that will fit fairly neatly into a class war frame. On the tax side, the government has long been floating a cut in company tax rates and the removal of the budget emergency levy on incomes above $180k. At the last minute, they have apparently decided on an increase in the threshold (currently $80 000) for the 37 per cent marginal tax rate.

Presumably, Morrison and Turnbull think that this will be a vote-winner for people concerned about being pushed into higher tax brackets, or already in the higher brackets. How may such people are there, and who are they? Let’s suppose that the budget measures compensate for the bracket creep since Labor left office. The income tax statistics for 2012-13 showed that, at that time, 18.6 per cent of tax returns reported income of $80 000 per year.

Assuming a 10 per cent increase in nominal incomes since then, I estimate that around 5 per cent of taxpayers would have entered the 37 per cent bracket since then. Of course, most of these would be paying 37 per cent on only a tiny fraction of their income, but people don’t always judge these things sensibly. Still, a budget measure targeted at 5 per cent of taxpayers (a good deal less than 5 per cent of the electorate, even taking account of the fact that many are in couple families) doesn’t seem like an election winner.

The real punch of the measure is that everyone on incomes currently over $80 000 will benefit. Assuming a 10 per cent increase, the full benefit of $360 per year (the 4.5 cent difference in marginal rates, applied to $8000) would go to everyone with a taxable income above $88000. That’s about 25 per cent of the 12 million who file income tax returns or 3 million people.

Those above $180 000 will also benefit from the removal of the 2 per cent emergency levy, which is a much bigger deal for the beneficiaries. Anyone earning over $200k will gain at least $400 from this measure, more than from the tax cut

The threshold change I’ve calculated would cost around $1 billion a year to benefit a relatively small group of voters, most of whom are already Liberals and the rest of whom (including me, for example) are unlikely to be all that responsive to tax cuts.

As a political strategy, this doesn’t make obvious sense. I suspect, however, that most politicians and political commentators (particularly, though not only, on the conservative side) make their political estimates on the basis of people they know, many of whom are exercised about bracket creep, and very few of whom make less than $80 000 a year. I recall studies where members of the political class were asked to estimate the median Australian income, and got the number drastically wrong. The social bubble is reinforced by the intellectual bubble created by an increasingly fact-free rightwing world view.

Bubble thinking isn’t exclusively a problem of the political right. But it’s more prevalent there than at any time in the recent past. It may well prove the Turnbull government’s undoing.

* Peter Martin makes the same point about median incomes. After seeing a lower number in his article, I’ve corrected my original estimate of the budget cost, which was too high.