The coming boom in inherited wealth

As everyone who has been paying attention knows, the news on inequality is nearly all bad. Not only has inequality increased dramatically in the US, but intergenerational economic mobility is declining[1]. And, where the US leads, the rest of the world looks likely to follow. The top 1 per cent lost more than most during the crisis of 2008-09 but, as Stephen Rattner reports here (drawing on work by Piketty and Saez), that was just a blip. A stunning 93 percent of the additional income created in the US in 2010, compared to 2009, went to the top 1 per cent, and there’s no reason to think things were much better in 2011 – average real earnings have fallen yet again, and employment growth, though positive, was still modest. Wealth inequality is also high, though it has not increased as much as income inequality.

The one bright spot mentioned by Rattner is that ” those at the top were more likely to earn than inherit their riches”. Since I’m already noticing that point popping up in the places you might expect to see it (can’t find a link right now), let me point out that Rattner’s explanation, that “the rapid growth of new American industries — from technology to financial services — has increased the need for highly educated and skilled workers” is wrong, and that there is every reason to expect a boom in inherited wealth.

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A real end to an era

Bob Brown has just announced his retirement from politics. It comes as a shock, but such announcements usually do. I can’t do justice to Bob’s thirty or more years of activism in a blog post, but there have been few people in political life who’ve achieved as much while not compromising their integrity to secure political support. The Green Party which Bob effectively founded and has largely embodied for many years, has made a big positive contribution to Australian political life

Given the rubbish in the comments threads recently, I’m going to be ruthless in moderating this one. There will be plenty of time for critical thoughts on Bob Brown’s political career and on the Green Party. If you can’t wait for a more appropriate occasion, take such comments to the sandpit. Anything in this post that crosses my subjective line will be deleted with prejudice.

Fortunate in my enemies

That’s how Robert Vienneau described me after some of my stoushes last year.

It seems as if my luck is holding in that respect at any rate. While I’ve had plenty of supportive responses after being booted from the Fin, I’m sure not everyone is sorry to see me go. Most of those in the latter class, however, haven’t seen any need to gloat.

I would have been disappointed, however, if Andrew Bolt had not lived down to his usual form on this occasion. Sure enough, as his fans have advised me both by email and in comments here, he’s written a gloating column, expressing the hope that Laura Tingle (a far better journalist than Bolt could ever be, even if he was trying) will be next to go.

Bolt can’t even manage an original line of attack, dragging out the tired misrepresentation of a 2007 blog post that the Telegraph ran last week.

The great thing about having Bolt as an enemy is that you get his fans thrown in as part of the package. There’s something comforting in knowing that, if someone dislikes you, there’s a high probability that they are the kind of person who comments on Bolt’s blog.

Of course, it isn’t much of a distinction to be one of Bolt’s enemies. With the exception of the late Paddy McGuinness (who at least had some style to combine with the vitriol) I can’t think of anyone who is less discriminating in his hatreds.

Megalogenis messes up the generation game

George Megalogenis is a smart and insightful writer, so I opened his new book The Australian Moment with anticipation. Alas, the very first sentence is the most tiresome of generation game cliches

Every rich nation reveals its character in its most selfish generation – the baby boomers

Showing that invoking the word “generation” instantly reduces your IQ by about 50 points, Megalogenis goes on to support his claim by a discussion of the results of a poll of voters taken in 1972, the year Gough Whitlam was elected, and the year before his government lowered the voting age from 21 to 18.

The baby boom began in 1946, when returning members of the armed services started having big families. The end is usually placed somewhere between 1960 and 1963.

Whichever end date you choose, even the many boomers who were still in primary school ought to have been capable of doing the subtraction that would inform George that anyone born after 1951 (that is, the vast majority of boomers) was not a voter in 1972.

End of an era (for me, anyway)

A little while ago, I got a message from the Fin to tell me they wouldn’t be running any more columns from me, as they are bringing in some new commentators. Given my run-in with Michael Stutchbury (then at the Oz, now Editor-in-Chief of the Fin) last year, and other changes at the Fin since he came on board, I wasn’t surprised. Still, it’s the end of a long-running association, which started, ironically (at least in the Alanis Morrisette sense of the term) when Michael was opinion editor there. My first column, advocating the exclusion of food from the GST, ran in 1992. I wrote occasional pieces after that, and I was a regular columnist for 15 years, which is a very long stint by Australian standards, at least for someone who isn’t a full-time journalist.

I’ve enjoyed it a lot, and I think I’ve made a useful contribution, but now it’s time to move on. I’ll certainly continue to take part in public debate, through this blog and other media, but this gives me a chance to stop and think more clearly about where I want to go with this part of my life.

Swan and plunging revenue

Treasurer Wayne Swan has switched from a “hard Keynesian” to a structural justification of expenditure cuts. Rather than advocating a rapid return to surplus as consistent with macroeconomic balance and full employment, Swan now says cuts are needed because of structural factors like declining capital gains tax revenue, notably omitted the Howard income tax cuts adopted and implemented almost completely by Labor. claiming, as quoted by the Age and other sources.

Tax revenue, which plunged from the 24.2 per cent of GDP once enjoyed by the Howard government to 20 per cent, is set to recover only slowly to around 22.8 per cent by 2016.

Looking that the 2011-12 Budget papers show nothing of the kind. They are for receipts, not revenue, but they show a decline from 24.9 per cent in 2007-08, the last Howard Budget to a low of 21.9 in 2010-11 (I checked and the final figure was 21.7). The 2012-13 MYEFO has (General Government) receipts recovering to 23.9 per cent of GDP by 2012-13 on current policy. Revenue is higher at 24.5 per cent.

Before I talk about the merits and otherwise of Swan’s strategy, I’d like to get the numbers right. Does anyone have any info?

Update An inquiry to the Treasury produced an amazingly rapid response, pointing me to page 363 of the MYEFO, which is the source of the data. I think it’s fair to say that Swan is engaged in cherry-picking the past and relying on rubbery numbers for the future. The numbers represent tax revenue rather than total receipts. The number for the Howard government is not that of its last budget, but is for 2005-06. That was before some big tax cuts, and also before the establishment of the Future Fund, the earnings from which are not counted as revenue, although the debt interest that could have been saved is an expense. The rubbery projections involve claims that the revenue/GDP ratio will remain almost static from 2012-13 onwards, when bracket creep would typically be expected to produce growth, in the absence of policy change.

I’d suggest a more accurate summary of the data is that, on current policy, receipts are projected to be 23.9 per cent of GDP in 2012-13, down from 25.1 per cent in the last year of the Howard government (Labor has, unwisely, pledged to hold itself below this level). The gap is entirely explicable in terms the unaffordable income tax cuts promised by Howard in 2007 and implemented (with modest changes) by Labor.

It would be easy enough to fill this gap by taking a harder line on tax expenditures and tax avoidance, without cutting the services which, according to Gillard and Swan, we are supposed to trust Labor to deliver.

Republican conservatism (rewritten)

In the light of comments, mostly at Crooked Timber, I’ve rewritten this completely, trying to be as clear as possible about how I read Mooney and what I think myself.

Chris Mooney has a great talent for knowing just when to push the envelope. Back in 2005, when CT held a book event on The Republican War on Science, the idea that Republicans as a group were hostile to science and scientists was somewhere between controversial and unthinkable, as far as mainstream Sensible opinion was concerned. Now, it’s a truth universally recognised – even the professional Repub defense team doesn’t deny it, preferring the (demonstrably false) line that Dems are just as bad.

Now, with The Republican Brain Chris pushes the argument a step further with the question: why are Republicans  the way they are, and what, if anything, can be done about if? 

Before we start, I’ll observe that the set of “conservative Republicans” has changed over time, as have the specific set of policies associated with these terms and the general temperament that goes with this. On the first point, we’ve seen the disappearance of Eisenhower Republicans, the Southern realignment and the rise of the religious right, all of which have increased the concentration of dogmatic authoritarians in the Repub party. On the second, the emergence of environmentalism as a major political line of division is probably the most important development. The fact that Republicans/conservative are increasingly anti-science reflects both of these trends.

It’s also important to observe that Republican/conservative alignment can’t be explained simply in terms of class, geography and education though all these factors play a role. With a few exceptions (notably including blacks and scientists) a substantial portion of nearly every demographic group votes Republican and self-describes as conservative. So, explanations solely based on (for example) class interests, can’t explain voting behavior without a lot of (self?)deception, and that raises the question of why some people are more easily deceived.

Some people may regard themselves as Republican/conservative simply because they have adopted, without thinking too much about it, the political positions that are regarded as normal by their family, social circle and so on. Lots of people simply aren’t interested enough in either politics or science to devote a lot of thought to these issues. Typically, such people will hold a range of views that aren’t particularly consistent either internally or with any standard ideological line.

An obvious inference is that, if people could be given better information they would change their views. But, as Mooney shows, and has become steadily more evident thanks to the Internet, better educated and informed Republicans are more likely to hold crazy views consistently and less likely to change them in response to new information.

That leads to Mooney’s primary conclusion, that Republicans/conservatives don’t simply have different beliefs from liberals/Democrats (or, for that matter, leftists), or even different values. They have (bear in mind that this a statement about population averages) different psychological characteristics, summarised as high authoritarianism and low openness to ideas different from their own.

I find this pretty convincing. It seems to me that there is an authoritarian type of personality which, in the specific circumstances of the US right now, and for non-poor whites, produces a predisposition to Republican voting and “conservative” political attitudes. In particular this type of personality is (more) strongly associated with confirmation bias. That is, not only do they ignore evidence contrary to their initial position, they tend to reinforce their commitment as a result. The creation of an alternate universe in which this bias can be repeatedly amplified (Fox News, rightwing think tanks and so on) both reinforces this kind of thinking and encourages self-selection.

I don’t think there is the symmetry here that some of the commenters are suggesting. Looking at the standard examples of nuclear power and GM foods, it seems to me that, on the whole people on the left have been more open to evidence than in the corresponding cases on the right. In the case of nuclear power, it seemed for a while (say, from the mid-90s until a few years ago) as if the safety problems might be soluble at a reasonable cost in which case an expansion of nuclear power would be preferable to more coal-fired power stations. While the evidence pointed that way, opposition to nuclear power was muted. As it turned out, the problems couldn’t be solved, at least not at a reasonable cost, and Fukushima was the last straw.

In the case of GM foods, the evidence has mostly supported the position that the use of GM technology per se doesn’t create significant health risks, and AFAICT that has been fairly widely accepted on the left (Greenpeace is a notable exception, but I don’t think their position is representative of the left as a whole). That doesn’t rule out opposition to GM on ethical or aesthetic grounds, or opposition to the whole structure of the food industry – the whole point is that you can have preferences and beliefs without assuming that the facts will always be those most convenient to you.

Similar points may be made about “alternative” medicine, particularly opposition to vaccination. It’s primarily, though not exclusively (consider Michelle Bachmann), associated with liberals and leftists in the same way as creationism is primarily, though not exclusively, associated with evangelical conservatives. But, faced with scientific criticism, there hasn’t been anything like the political pushback and doubling down we’ve seen with creationism. The Huffington Post, which was a big outlet for anti-vaxers has started publishing one of their most vigorous critics, Seth Mnookin.

This brings us finally to the question that set off all the fireworks in the original post. To what extent are authoritarian personalities the product of environment, genes or some combination of the two. Again, it’s worth pointing out that, even if there is a genetic role in personality, there’s no such thing as a genetic predisposition to be a conservative/Republican. The content of these terms isn’t fixed, and the implications are very different depending on social circumstances. To take the most obvious case from comments: Republican policies and rhetoric appeal strongly to (US) white tribal/ethnic loyalty. So, US whites who respond well to in-group appeals are likely to vote Republican and call themselves conservatives. US blacks with similar predispositions obviously won’t vote Republican and are unlikely to call themselves conservatives.

To take another example from Mooney’s book, authoritarian attitudes in the US are typically associated with support for free-market/pro-business economic policies and virulent hostility to “socialism”. By contrast, in the former Soviet Bloc, the same attitudes are associated with support for the old order and positive feelings about “socialism” (I’m using the scare quotes to indicate that, in both cases, the term is something of a blank canvas, onto which all sorts of things can be projected). And indeed, in this context, the term “conservative” is commonly applied to hardline members of the surviving Communist parties.

Following up on a comment, this way of looking at things has a lot of similarities with Corey Robin, and The Reactionary Mind. The difference between Robin’s choice of Mind and Mooney’s choice of Brain is significant. As I argued when I looked at his book, I think Robin doesn’t take enough account of personality/temperament. While most soi-disant “conservatives” are authoritarian reactionaries, there is a genuinely conservative temperament which will tend to align with political conservatism in periods when the general tendency of politics is towards the left.

So, does the genetic part of the story matter. As (I think) Andrew Gelman has observed, in this context and many others, it’s just code for things we can’t change. As long as authoritarian personalities are stable over the adult lifetime of those concerned, it doesn’t matter much whether they are determined by genes, by toilet training (as in the caricature version of Freudian psychology I learned in my youth) or by some much more complex process. That said, I think the evidence that heredity (and therefore genes) plays at least some role in the determination of personality is pretty convincing.

The political implication, which has drawn some flak in the comments, but which I think is correct is that there is no point in political engagement with authoritarian conservatives. In a political environment where they are concentrated in one party,politics is going to be a matter the only strategy open to liberals is to outnumber and outvote them by peeling off as many peripheral groups (for example, those who deviate from the approved cultural identity in some way) as possible. Obviously, that’s an unpalatable conclusion in all sorts of ways, but I think it’s a valid one.