Friday, April 29, 2011

OK, So I Lied

One more video (but click the link 2 paragraphs down instead):

About 15 months ago, Russ Roberts of George Mason University* and Cafe Hayek came out with a rap video about the positions of Keynes and Hayek. This is the follow-up. The original was posted here last year.

This is a serious, albeit alternative, contribution to economics education. If you go to this site, you can view the video while reading the lyrics.

I’ve known this was coming out all semester … and always meant to post it … but it just came out this morning.

Since we’re past the end of class, neither video is required. But … I know how much you all love macro ;)>

* George Mason University, in the Virginia suburbs of Washington D.C., is the “economics blogging capital”. Faculty there write Marginal Revolution, Cafe Hayek, EconLog, until recently Overcoming Bias too, and syndicated columnist Walter E. Williams.

Thursday, April 28, 2011

One Last Post About “Low” Tech

A couple of last thoughts about technology. First, a funny video from several years ago showing that technology is a lot broader and more fundamental than most of us think:

Secondly, I didn’t have a chance to talk about the longer video in the “I, Toaster” post, but it is required for the final exam (you don’t need to know the details, so you can just put it on to play while you multitask). The point of this is not that toasters are complex, but that there is a huge amount of humanity behind the stuff you buy at Wal-Mart. That humanity is technology. When we dismiss a product as cheap crap, we’ve not only missed the point, but dissed the contributions of untold numbers of people. If their lives have meaning, then its embodied in the cheap crap, and we shouldn’t insult it.

Here’s a (funny and short) classic on that note about how our expectations are inconsistent with macroeconomic reality:

The only reason for studying macroeconomics is the overriding fact that the quality of your life has more to do with location of your birth than anything you do on your own.

This is embodied in that last result we obtained from the Solow model: that per capita income depends on per capita capital and aggregate technology, and that the (empirically confirmed) exponents make the latter much more important.

But, since high technology flows so easily across borders, it must be “low” technology — like how a book works — that doesn’t cross borders easily that is important.

So, it’s easy for us sitting in Utah to bemoan the priorities of the world’s poor: why do people in Chad have cellphones but not much else (and it’s not just Chad, that was this year’s example, but last year’s class had folks who talked about the same thing in Brazil). What’s important to the future well-being of people in Chad is not the high technology cellphones, but the fact that they use them to engage in a very old, and “low”, technology: talking to each other, and in particular, talking to strangers to expand their network of ideas. Briefly consider the article “Without His Mother’s Milk, a Haitian Boy Is Lost” from the April 25 issue of The New York Times, and ask yourself whether cellphones and/or Facebook make it more or less likely that a problem like this will persist. I assert that its less likely to persist because the great cultural contribution that America can make to the world’s poor is not Facebook, but that communicating with strangers is OK.

In that vain, consider these two posts. First, one about an experience I had finding a lost kitten’s home. The second is about the “Gates controversy” that Obama got himself into 2 years ago. I hope they help convince you that well-being isn’t about government macroeconomic policy, or macroeconomic exploitation by companies, but rather about the “low” technology of how your society functions. Macroeconomics isn’t, and shouldn’t be, about what the legacy media and politicians tell us is macroeconomics.

Thursday, April 21, 2011

Skynet Self-Aware?

This post is not required; but it touches on a subject Jimmy has been bugging me about all semester.

One of the problems with being a macroeconomist is the number of people who are convinced that the future is going to be worse than the present.

You can see this in science fiction. Most science fiction movies do not present a positive future as in Star Trek, but rather a dark and terrible future as in The Terminator series (see the photo below). Fifteen years or so ago, my wife noted that all these movies seem to feature open fires burning in steel barrels … so, using the brilliant imagination of an economist, I came up with the original title of open-fire-in-steel-barrel-movies for this genre. There’s a lot of them: Blade Runner, the Road Warrior franchise, the Alien franchise,Twelve Monkeys, Back to the Future II (the one where they go to the future), Brazil, Total Recall, Soylent Green, Escape from New York, The Running Man. Is that enough to make my point? Even movies where the future has a nice, clean veneer, there’s an underlying dark side: the Star Wars saga, Avatar, Demolition Man, Silent Running, The Matrix franchise, Logan’s Run, Robocop, or Wall-E.

And yet, for the vast majority of humans who have ever lived on this planet, the human race was better off when they were older than when they were younger.

In part, this is true because the vast majority of humans who have ever lived did so within the last century or two.  

But, it’s also true that for the vast majority of years of civilized human history people’s lives were just about the same when they were older as when they were younger.

For my part, I’m a person, not a year, so that last point is inconsequential. Many people don’t seem to feel that way though.

Anyway …

According to the mythos laid out in the The Terminator series almost 30 years ago, SkyNet became self-aware last Tuesday evening.

In 1984, this was the vision of the years after 2011:

FTNItK: The Terminator features thinking machines from the future. Skynet is the first machine in the future that becomes self-aware: it knows what it is, and it knows what it wants. Specifically, that it is not a human, and that humans are a violent threat. The problem is that Skynet is a Defense Department computer system, so it uses those capabilities to attack humans in the future, and for convoluted reasons, to find a way to attack humans in the past as well.

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Wednesday, April 20, 2011

David Leonhardt Wins a Pulitzer Prize

I keep telling you to read David Leonhardt’s stuff in The New York Times, even if your politics finds it painful, because he’s bright and insightful. Well, now he has a Pulitzer Prize to prove it.

The National Debt “Downgrade”

Standard and Poor’s signaled that they might downgrade their rating of US debt.

S&P is the largest rater of government bonds in the world. They have rated the US, and about 20 other advanced economies as AAA — their highest rating.

But, about 20 years ago, they started also announcing a signal of where the rating may be going. This is what changed on Monday — the US was downgraded from “AAA Stable” to “AAA Negative”. That’s why I put "downgrade” in quotes, because we’re still AAA (sort of). Here’s a chart for comparison:

These ratings are used by buyers of government bonds (typically other countries, central banks, insurance and reinsurance companies and pension funds) to decide how much interest they need to justify the purchase. So this “downgrade” will result in our government having to pay higher rates.

This “downgrade” is purely in response to political moves; most likely Obama’s unprofessional speech last week that pilloried Republicans in Congress for supporting Representative Paul Ryan’s plan to reduce the national debt. The “downgrade” can be taken as a sign that S&P has interpreted Obama’s speech as indicating that he is unwilling to make a deal with House Republicans.

It would not be correct to interpret the “downgrade” as a response to economic fundamentals. These are not good, but they simply don’t change that rapidly. Here’s the story we already know:

This didn’t change last week. Politics did. The top chart also shows that we’re not out of the range of other countries — like Canada. The difference is that our political situation is not currently favorable to improving the numbers.

This all came from a piece in Tuesday’s issue of The Wall Street Journal called “U.S. Warned on Debt Load”.

Tuesday, April 19, 2011

Nouriel Roubini On China

Nouriel Roubini is famous for constantly saying everything (economically) is bad, and getting worse. Sometimes he’s right.

I don’t tend to find his pronouncements interesting — I think he’s selling something … mostly himself.

But, he’s a bright guy, who’s famous for a reason. This past week he’s been ranting about China, and since I’ve used China as an example of the perils of unbalanced growth, I thought I’d link to his recent piece from Project Syndicate.

China has grown for the last few decades on the back of export-led industrialization and a weak currency, which have resulted in high corporate and household savings rates and reliance on net exports and fixed investment (infrastructure, real estate, and industrial capacity for import-competing and export sectors). When net exports collapsed in 2008-2009 from 11% of GDP to 5%, China’s leader reacted by further increasing the fixed-investment share of GDP from 42% to 47%.

The problem, of course, is that no country can be productive enough to reinvest 50% of GDP in new capital stock without eventually facing immense overcapacity and a staggering non-performing loan problem. China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.

…All historical episodes of excessive investment – including East Asia in the 1990’s – have ended with a financial crisis and/or a long period of slow growth. To avoid this fate, China needs to save less, reduce fixed investment, cut net exports as a share of GDP, and boost the share of consumption.

The trouble is that the reasons the Chinese save so much and consume so little are structural. It will take two decades of reforms to change the incentive to overinvest.

Traditional explanations for the high savings rate (lack of a social safety net, limited public services, aging of the population, underdevelopment of consumer finance, etc.) are only part of the puzzle. Chinese consumers do not have a greater propensity to save than Chinese in Hong Kong, Singapore, and Taiwan; they all save about 30% of disposable income. The big difference is that the share of China’s GDP going to the household sector is below 50%, leaving little for consumption.

Several Chinese policies have led to a massive transfer of income from politically weak households to politically powerful companies. A weak currency reduces household purchasing power by making imports expensive, thereby protecting import-competing SOEs and boosting exporters’ profits.

Low interest rates on deposits and low lending rates for firms and developers mean that the household sector’s massive savings receive negative rates of return, while the real cost of borrowing for SOEs is also negative. This creates a powerful incentive to overinvest and implies enormous redistribution from households to SOEs, most of which would be losing money if they had to borrow at market-equilibrium interest rates.

The article refers to SOE’s: State Owned Enterprises. We’ve talked about this a bit in class, but not in several weeks. The form of capitalism practiced in China is similar to fascism: politically connected people get access to equity stakes in “private” enterprises in return for political support. This is a system that can perform well for years (if trade is discouraged, as in Latin America for most of the 20th century) or decades (if trade is encouraged, as in Japan in the postwar period). But it doesn’t end well.

Monday, April 18, 2011

Where the Money Is

Allegedly, when Willie Sutton was asked why he robbed banks, he replied “That’s where the money is.”

This is pertinent to tax policy, and public opinion. Many people believe the rich should be taxed more. Fair enough. But, some people also think this will “solve” our government’s chronic shortage of cash. This is not the case.

The problem is that the distribution of income – while positively skewed, does not have a thick tail on the positive side. Rich people are indeed very rich, and might be able to pay more, but there aren’t that many of them to make a big dent in our federal budget.

The chart below appeared in the piece entitled “Where the Tax Money Isn’t” in the April 16th issue of The Wall Street Journal.

For comparison purposes, our Federal budget is in the neighborhood of 4 trillion dollars. Looking at the chart, if we completely confiscated all income earned by people making more than $200,000 per year, it would total up to … about … half of that Federal budget. Going further, and taking the next group – the one that includes my two full-time faculty household still wouldn’t cover the Federal budget.

Now, to be fair, this is taxable personal income – so it doesn’t add up to the entire GDP of the U.S. Perhaps half of GDP is not included in this chart, so my argument isn’t as sound as one might think at first glance.

Even so, there isn’t any sense in which the Federal government gets a large share of its revenue from sources outside of personal income. Yes, businesses get taxed, but on their taxable income, and not on their value added. And that value added is the major component of the GDP that is not shown above.

Doubting Macroeconomic Statistics from Authoritarian Regimes

I’ve touched a number of times on how you shouldn’t take at face value the statistical announcements of countries without a free press or viable opposition. Currently, this means China.

Thirty years ago, this meant the Soviet Union.

The guy who started pointing this out to people passed away this month.

Birman, who died on April 6 at age 82, was a Russian economist who emigrated to the U.S. in 1974 and predicted the collapse of the Soviet economy. Perhaps because he had served as a director of planning in Soviet factories, Birman had a profound distrust of Soviet statistics and believed its economy was smaller and could support far less nonmilitary consumption than nearly all Sovietologists in the West believed at the time.

… Birman was especially critical of the CIA and most Western experts for trusting too much in Moscow's official claims. For this apostasy, these Western elites ostracized and criticized Birman, saying that his views were by definition biased because he was an emigre.

That dismissal was unfair to Birman's scholarship, but it also had profound implications for U.S. policy during the last decades of the Cold War. The flawed CIA judgment that the Soviet economy was nearly as large and as wealthy as America's supported the view that the Soviet empire could never be defeated and so some kind of detente with Communism was inevitable.

Birman's insight that the Soviet Union was far weaker than it seemed from its military prowess was implicitly adopted by Ronald Reagan when he famously predicted in 1982 that "freedom and democracy will leave Marxism and Leninism on the ash heap of history." For that, Reagan was also reviled as a Cold War simpleton.

Birman stuck to his views and drew further scorn later that decade by predicting that Mikhail Gorbachev would lack the will to make the far-reaching economic reforms that were the only way to save the Soviet political system. As the world soon learned, Gorbachev's economic reforms were too little and the Soviet Union collapsed.

In a 2003 essay, "The Failure of the American Sovietological Economics Profession," John Howard Wilhelm recounted the debate between Birman and the CIA, concluding that "Given what has happened and what we now know, Birman clearly did get it right."

That the deaths of both Birman and Rusher have been so little remarked is a reminder that the liberal establishment will forgive intellectual dissenters for being wrong, but it will never forgive them for being right.

Friday, April 15, 2011

BRIC Summit Nonsense

This week’s BRIC* summit has been in the news. Breathlessly. Because … you know … America sucks.

I’ll be the first to tell you that China is going to be the # 1 economy in your lifetime.

I’ll also be the first to tell you that it will be back to # 2 in your lifetime.

I’m about the only one that will tell you that India will be # 1 by the time you retire.

But … let’s not get premature about this: growing is not the same as big.

And Russia shouldn’t even be included in any prestigious international groups. It’s reason for being there is missiles.

Brazil is a somewhat different case … it may end up as big as the U.S., but it’s going to take centuries — they have to grow both their economy and their population to catch up.

Here’s a chloropleth of the sizes of these newcomers:


This is using World Bank data, evaluated at current exchange rates. World Bank is probably a bit biased towards the U.S. Because this uses exchange rates, it is probably an underestimate of the size of each economy.

Here’s another:


This paints a different picture. This uses IMF data (which tends to be biased against the U.S.). It also uses purchasing power parity, which tends to overstate the GDP of poorer countries. And … this isn’t even complete: each countries GDP is understated by 10-25% here (maybes I should have added some Canadian provinces or Mexican states).

The truth is probably somewhere in between these two.

* BRIC stands for Brazil, Russia, India, and China.

I, Toaster

It’s easy to get across to students that the theory of Romer’s endogenous growth suggests that people and their interconnections are important to growth.

It’s more difficult to get across the practical implication of this: that huge amounts of technological advancement are made conditional on the existence of ideas that are brought together in a completely decentralized way.

The classic example of this is the essay “I, Pencil” by Leonard Reed. The updated version of this, dubbed “I, Toaster” by some, is Thomas Thwaites undergraduate project to build a the equivalent of a $7 toaster … from scratch. He really doesn’t even come close to doing it from scratch, and the final product looks appalling.

I, Toaster

But, that’s the point really: the world is full of objects like the $7 toaster that are put together efficiently by decentralized, voluntary, exchange.

Wednesday, April 13, 2011

Doublespeak In a The New York Times Headline

Here’s the headline from the print edition:

High, Low and In Between: Clocking

the Nation’s Gas Prices

In Arizona, Taxes Help Hold Down Costs


You’d almost think by reading this, that somehow the government is using taxes to help reduce costs at the pump.

But, of course, that’s exactly what is not happening.

Not surprisingly, it is the absence of taxes that is holding costs down.

… Prices … at filling stations across the country … pinpointed Tucson as having the nation’s cheapest average price for a gallon of regular, partly because of relatively low state and local gas taxes.

It’s much more important to falsely trumpet that an omnipotent and benevolent government is helping people fill their tanks with its taxation superpower, than to note prominently that people in a flyover state have a different way of doing things.

You can read the whole thing on page A14 of the print edition from April 13, or click here.*

* One bizarre thing about the article: it repeatedly refers and links to different web sites with the text “web site” rather than just the name of the site. What are they afraid of?

BTW: those fearsome sites are GasBuddy, AAA, and TusconGasPrices.

This is not exactly required, but it does fit into an unsaid part of my “Why Is Macroeconomics So Hard?” lecture: outright lies.

Sunday, April 10, 2011

I Don’t Even Know Where to Start with this One

Not required, but strongly encouraged. asked one of the really big public intellectuals, Stephen Pinker, to suggest one question, and then ran it by 150 other public intellectuals. Here’s the question:


That’s a pretty good topic to expose college students to (in any class). So here goes.

What struck me is how many of the ideas are from economics, or applicable to economics, even though they didn’t actually survey many economists. Here’s what caught my eye (these are in order going through the pages of the site, but I didn’t link to them — you should go browse).

Haecceity: “All objects may be categorized into groups on the basis of some shared property but an object within a category is unique by virtual of its haecceity. It is haecceity that makes your wedding ring authentic and your spouse irreplaceable, even though such things could be copied exactly in a futuristic science fiction world where matter duplication had been solved.” We talked a bit about this in class with regard to economic growth. What is going to happen to growth as humans introduce increasingly non-haecceitic versions of parts of themselves?

TANSTAAFL: “There Ain’t No Such Thing As a Free Lunch”. Heinlein coined this one. Do you thing members of Congress (and some voters) could get a clue about this?

PERMA: “Is global well being possible?”. See week 1 of our class.

Positive Sum Games: exchanges which are voluntary because they make both parties better off. This is the foundation of economics.

Comparative Advantage (suggested by a psychologist!)

Structured Serendipity: see the blog I write and the blog you write for this class.

Gedankenexperiment: German for “thought experiment”. This is what economics has to be all about, because we can’t do controlled experiments like in the hard sciences.

Jensen’s Inequality: useful for any time we need to think about expectations, and decisions based on them.

Externalities: (suggested by another psychologist)

Self-Serving Bias: we all think we’re above average. Obama is certain of this.

Constraint Satisfaction: see ECON 2500.

Pareto Principle: one of Dave Berri’s favorites. The distribution of skill isn’t a bell curve — it’s more like an exponential. The people who are really good at something are a lot better than you think.

Recursive Structure: that’s what’s going on in your Solow model spreadsheets when one row depends on the previous one.

Risk Literacy: Understanding the scale of risks, and acting appropriately about them. I’m not happy about the nuclear crisis in Japan, but I’m way more ticked off at the people who have trouble conceiving that it is a small problem compared to the disaster as a whole. Wayne Roberts loves the guy who suggested this – Gerd Gigerenzer.

Absence and Evidence: “absence of evidence is not evidence of absence” is a basic thought process in economics.

Path Dependence: Why is Word the dominant word processor?

Duality: the post is all about physics, but Samuelson introduced this into economics about 65 years ago, and it comes up all over constrained optimization (like in ECON 2500 or ECON 3010).

Homo Dilatus: humans are the “procrastinating ape”. Option theory in finance suggests that this creates value.

Kakonomics: the preference for low quality payoffs. We really don’t understand why some people accept crap.

Correlation Is Not a Cause: see just about all public policy.

The Mediocrity Principle: you are not special. A very useful realization for understanding public policy.

Superveneince: This is what macroeconomics is.

Confabulation: This helps explain union protesters in Wisconsin last month, and Tea Partiers dissatisfied with budget cuts this month.

Apophenia: perceiving patterns where they don’t exist. This is why everyone except macroeconomists knows what caused the last recession.

Of course, there are many more. The site says there were 146 contributors of 115,000 words. That’s about 3 book pages each.

Political Science Meets the Solow Model

At first glance, the Solow model’s dependence on the depreciation rate seems fine, but when we recognize that depreciation is lowest in temperate regions, and highest in tropical and arctic ones, it starts to get you thinking about whether geography is destiny.

In political science, this is a new idea, Written up in the April 9-10 issue of The Wall Street Journal in a weekly column called “Week In Ideas” was this:

… There were just two democracies, Cyprus and Israel, and 14 "persistent" autocracies among countries with an average annual rainfall of less than 21½ inches. Between 21½ inches and 51 inches, there were 18 stable democracies (out of a total of 26 in the data set) and seven persistent autocracies. Above 51 inches, the balance tipped back to closed societies. That relationship persisted even when colonial history, the presence of oil and ethnic division were controlled for.

We assume that depreciation is a negative cause of growth. That doesn’t imply that this correlation between rainfall and autocracy is causal, but it is suggestive.

Health Spending Trivia

We bemoan the amount that we spend the most on private healthcare in this country. Some people think the solution to that is a greater portion of public spending.

But, as this chart shows, our public spending on healthcare is the second largest.

This points to a common explanation for both high public and private spending, rather than a problem with one or the other.

This was in a weekly piece called “Number of the Week” that appeared in the  April 9-10 issue of The Wall Street Journal.

Friday, April 8, 2011

Some Things Learned Before 40

Excerpts from Bryan Caplan’s post at EconLog about 40 things he learned by the time he turned 40. These excerpts are required in the very broadest sense:

1. Supply-and-demand solves countless mysteries of the world - everything from rent control to road congestion.
2. Almost anyone can understand supply-and-demand if they calmly listen.  Unfortunately, the inverse is also true.
3. Poverty is terrible, and economic growth, not redistribution, is the cure.
4. The proximate causes of unemployment are labor market regulation and workers' misguided beliefs about fairness.  But the fundamental cause of unemployment is excessive wages. 
6. Governments with fiat money have near-absolute power over nominal GDP, but much less over real GDP or employment.
8. Immigration restrictions are a fruitless crime - and do more harm than all other government regulations combined.
9. Communism was a disaster because of bad incentives, not lack of incentives.
10. The last two centuries of rising population and prosperity should fill us with awe - and the best is yet to come.
3. If you can't explain your position clearly in simple language, you probably don't understand it yourself.
9. Violence and theft are presumptively wrong, and calling yourself "the government" does nothing to rebut these presumptions.
1. Voters are irrational.  So is believing otherwise.
2. Government isn't a solution to externalities problems; it's the best example of the problem.
3. The main output of government isn't "public goods," but private goods that people pretend to want much more than they really do.  See Social Security and Medicare.
4. People rarely make the the most internally consistent argument for government action: paternalism.
7. Before you study public opinion, you wonder why policy isn't far better.  After you study public opinion, you wonder why policy isn't far worse.
10. Despite everything, life in First World democracies is amazingly good by world and historic standards and will keep getting better.  So cheer up.


6. People vary more widely than you think.  Tell yourself it's nobody's fault.
10.  Evolutionary psychology is by far the best universal theory of human motivation.  Ignore it at your own peril.

Thursday, April 7, 2011

Government Suppression of Accurate Measurement

The source article is tongue-in-cheek, so this is not required.

But, it touches on something that really frosts me, and is broadly related to one of the items on my list of things that make macroeconomics hard: government isn’t very good at measuring data it doesn’t like.

From Long and Short Capital via Newmark’s Door:

… People are debating whether housing plays too big a role in the CPI; specifically, the “problem” is that the housing portion of the CPI is exerting upward pressure on the overall number.

So what should we do?

“Some suggest alternative inflation measures.”

Oh ok. Well, what are “some” proposing?

“A ‘supercore’ alternative excludes not just food and energy but shelter, too, to gauge underlying trends.

There is great opportunity for the Govt to reduce CPI by excluding more items. In fact, this looks eerily reminiscent of another highly successful endeavor in metrics improvement: LoS’s change from GAAP to SAAP (Seldom Accepted Accounting Principles). By changing our standard, we could change our metrics, and by changing our metrics from EBITDA to EBE (Earnings before Everything aka “supercore earnings”), we greatly improved our profitability.

… The evolved goal of the CPI is to show a slight and consistent level of inflation, we propose that the CPI no longer include any components that are increasing in price …

This new CPI, CPI-F (flat), will provide data on all changes in the prices paid by urban consumers for a representative basket of goods and services whose prices did not vary that month. We expect it to have the most consistent and consistently low inflation readings …

What Obama Thinks

A complete repost from Kids Prefer Cheese:

From KPC uber-friend Pelsmin:

In Obama's statements about the dangers of a shutdown, he ranted about how the economy would be crushed if the Federal Government stopped its work. He then gave a list:
- People couldn't sell their homes to other people.
- Small businesses couldn't secure loans to expand
- Companies couldn't proceed with new plants or expansion plans.

He is basically arguing that individuals can't engage in private transactions with each other unless the Federal Government is there to let it happen.
The scary thing is, he may be right.
- FHA handles 40% of all home purchase mortgages
- SBA and other programs make up a large proportion of small business loans
- EPA has a choke hold on any plant expansion and "environmental impact" hurdle that must be cleared before a factory can be built.

I guess the scary thing isn't that he believes this to be the case, but that he's comfortable with the fact that it IS the case.

It is interesting: for our President, the government actually IS the economy.

If this is true, the man is profoundly ignorant.

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Wednesday, April 6, 2011

Ryan and Medicare

Representative Paul Ryan, the Republican’s lead man on the budget, released the Republican plan the other day.

David Leonhardt’s April 6 column calls it:

The Republican budget released on Tuesday is a daring one in many ways. Above all, it would replace the current Medicare

Yet there is at least one big way in which the plan isn’t daring at all.

He then goes on to trumpet the fact that create such problems for policy in D.C.: people think Medicare is an entitlement (that they’ve paid for) rather than a welfare program (that they haven’t).

I can make this personal. That last row is not far off the position of my wife and I: a professor earning an upper middle class income on his own, married to a lecturer providing a second income that by itself is not far off the median for a household in the U.S. We would probably be regarded as “rich” by most people in Cedar City. And yet that last row indicates that even for us, its unlikely that we pay in more than we’ll take out, making it welfare for us too.