FDR Cared About the Politics, But Not the Economics, of Social Security

(p. 116) Roosevelt’s social security plan created an array of problems. First, it retarded recovery from the Great Depression by contributing to unemployment. From 1937 to 1940. employers and employees were docked for social security, and that money was out of private hands and lying fallow in the treasury. Lloyd Peck of the Laundryowners National Association concluded, “The burden of this proposal for employers to carry, through a payroll tax, will act as a definite curb on business expansion, and will likely eliminate many businesses now on the verge of bankruptcy.”
. . .
(p. 117) When an accountant quizzed Roosevelt about the economic problems with social security, especially its tendency to create unemployment, he responded, “I guess you’re right on the economics, but those taxes were never a problem of economics. They are politics all the way through.” Roosevelt explained that “with those taxes in there, no damn politician can ever scrap my social security program. That’s why, as Roosevelt admitted, it’s “politics all the way through.” Most politicians, following Roosevelt’s lead, have taken delight in raising social security payouts and using that gift to plead for votes from the elderly at election time.

Source:
Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.
(Note: ellipsis added.)

Ben “Kickback” Nelson Seeks More Earmarks

NelsonBenEarmarksGraph2010-05-18.jpg Source of graph and photo: online version of the Omaha World-Herald article quoted and cited below.

(p. 1A) WASHINGTON — In the battle to secure federal earmarks for Nebraska, Sen. Ben Nelson is feeling lonely this year.

The Nebraska Democrat is seeking 51 earmarks worth $183.1 million. The four other members of the Nebraska con­gressional delegation, all Republicans, have submitted no requests this year, three of them agreeing to a House GOP moratorium.
That’s a big change from 2009, when Rep. Lee Terry re­quested 11 earmarks totaling more than $85 million, Rep. Jeff Fortenberry sought 28 earmarks totaling more than $75 million and Rep. Adrian Smith sought two earmarks to­taling $1.2 million.
Sen. Mike Johanns has abstained from seeking earmarks since joining the Senate in 2009.
. . .
(p. 2A) Johanns has criticized ear­marking as a method of direct­ing taxpayer money based on lawmaker clout rather than a project’s merits. He said last week that the process would be better if lawmakers had to jus­tify their individual earmarks at hearings.

For the full story, see:
JOSEPH MORTON . “Nelson stands alone on earmark requests; He is seeking $183 million for Nebraska projects while the state’s GOP lawmakers sit out this round.” Omaha World-Herald (Tues., May 18, 2010): 1A & 2A.
(Note: ellipsis added.)

After Health Care Plan, Are There Any Limits to What the Government Can Mandate?

(p. A10) As they constructed the requirement that Americans have health insurance, Democrats in Congress took pains to make their bill as constitutionally impregnable as possible.

But despite the health care law’s elaborate scaffolding, attorneys general and governors from 20 states, all but one of them Republicans, have now joined as confident litigants in a bid to topple its central pillar. In the process, they hope to present the Supreme Court with a landmark opportunity to define the limits of federal authority, perhaps for generations.
In the seven weeks since the legislation passed, at least a dozen lawsuits have been filed in federal courts to challenge it, according to the Justice Department. But the case that could carry the most weight, and may be on the fastest track in the most advantageous venue, is the one filed in Pensacola, Fla., by state officials, just minutes after President Obama signed the bill.
Some legal scholars, including some who normally lean to the left, believe the states have identified the law’s weak spot and devised a credible theory for eviscerating it.
The power of their argument lies in questioning whether Congress can regulate inactivity — in this case by levying a tax penalty on those who do not obtain health insurance. If so, they ask, what would theoretically prevent the government from mandating all manner of acts in the national interest, say regular exercise or buying an American car?
. . .
Jonathan Turley, who teaches at George Washington University Law School, said that if forced to bet, he would predict that the courts would uphold the health care law. But Mr. Turley said that the federal government’s case was far from open-and-shut, and that he found the arguments against the mandate compelling.
“There are few cases in the history of the court system that have a more significant assertion of authority by the government,” said Mr. Turley, a civil libertarian who acknowledged being strange bedfellows with the conservative theorists behind the lawsuit. “This case, more than any other, may give the court sticker shock in terms of its impact on federalism.”

For the full story, see:

KEVIN SACK. “Florida Suit Rated Best As Challenge to Care Law.” The New York Times (Tues., May 11, 2010): A10 & A11.

(Note: the online version of the article is dated May 10, 2010 and has the slightly different title “Florida Suit Poses a Challenge to Health Care Law.”)
(Note: ellipses added.)

“The Evolutionary Concomitant of Incessant Climate Change Was Human Resilience”

CreativeObjectsEarlyMan2010-05-14.jpg“Early Homo sapiens created these symbolic objects between 60,000 and 30,000 years ago. Using natural materials and creativity, they combined animal and human features into fantastical creatures and fashioned instruments for making music. “Source of caption and photo: online version of the WSJ article quoted and cited below.

The sort of artifacts displayed above have been used to argue that homo sapiens had essentially reached their modern capabilities at least by 40,000 years ago.
The handaxes below are fascinating, in that they clearly display progress, and they clearly display how slow that progress was.

(p. D13) The mysterious Ice Age extinction of the Neanderthals, losers in the competition against modern humans, still fires the popular imagination. So it’s startling to learn that as recently as 70,000 years ago, at least four human species coexisted, including tenacious, long-lived Homo erectus and diminutive, hobbit-like Homo floresiensis, found in Indonesia in 2003.

The sensational 1974 discovery in Ethiopia of “Lucy,” resembling an ape but walking upright, located human origins 3.2 million years in the past. Those same fossil deposits have recently yielded even more-ancient ancestors, who stood on their own two feet as far back as six million years ago.
Paleoanthropology is thriving, and human fossil finds–more than 6,000 and counting–regularly force revisions of old timelines and theories. Our species, Homo sapiens, turns out to have had an abundance of long-lost cousins, though scientists are still arguing about the closeness of those relationships. The new David H. Koch Hall of Human Origins at the Smithsonian National Museum of Natural History, whose opening marked the museum’s centennial, provides a formidable overview of this still-developing story.
. . .
It’s long been accepted that different human species were adapted to thrive in specific climatic niches. Neanderthals had short, compact bodies to conserve heat and large nasal passages to warm frigid air, while some of our African forebears had long, skinny frames suited to hotter climes. But this exhibition contends that the evolutionary concomitant of incessant climate change was human resilience–the flexibility to make it almost anywhere, thanks to large, sophisticated brains and social networks.
Versatility apparently characterized even our oldest relatives. The ability to walk upright through the drier, more open grasslands did not immediately divest them of their penchant for climbing trees in the shrinking woodlands. A diorama of Lucy (Australopithecus afarensis) depicts her with one foot on the ground and another on a tree limb, symbolizing her straddling of two environments.

For the full review, see:
JULIA M. KLEIN. “Natural History; Our Species Rediscovers Its Cousins.” The Wall Street Journal (Tues., May 11, 2010): D13.
(Note: ellipsis added.)

HandaxesSlowlyEvolved2010-05-13.jpg“Handaxes — multipurpose tools used to chop wood, butcher animals, and make other tools — dominated early human technology for more than a million years. Left to right: Africa (1.6 million years old), Asia (1.1 million years old), and Europe (250,000 years old).” Source of caption and photo: online version of the WSJ article quoted and cited above.

“I Cannot Consent to Buy Votes with the People’s Money”

(p. 91) . . . Thomas Gore, . . . was first elected to the Senate in 1907, the year Oklahoma became a state. Gore had a populist streak in him, but he always recognized the protections to individual liberty that came from limited government. In the 1930s, therefore, he strongly opposed the federal government going into the relief business. Interestingly, Gore was made totally blind by two childhood accidents. He still managed to become a lawyer, and as a senator, he had to have family members or staff assistants read bills, books, and newspapers to him. Yet he claimed to see clearly through the political chicanery that would occur if the federal government entered the relief business. No depression, Gore argued, “can be ended by gifts, gratuities, doles, and alms handed out by the Federal Treasury and extorted from taxpayers that are bleeding at every pore.” On the issue of relief, especially, Gore argued that state and city officials “have immediate contact” with hardship cases and can best “superintend the dispensation of charity.” Soon after the ERA brought federal relief into existence, Gore said, “The day on which we began to make these loans by the Federal Government to States, counties, and cities was a more evil day in the history of the Republic than the day on which the Confederacy fired upon Fort Sumter.”

In 1935, Gore helped lead the charge in Congress against funding the WPA with $4.8 billion. After he spoke against the bill, thousands of people in southeast Oklahoma held a mass meeting to denounce Gore. They sent him a telegram demanding that he cast his vote for the WPA and, by implication, start bringing more fed-(p. 92)eral dollars into Oklahoma. Gore responded with a telegram of his own. Your action, he wrote, “shows how the dole spoils the soul. Your telegram intimates that your votes are for sale. Much as I value votes I am not in the market. I cannot consent to buy votes with the people’s money. I owe a debt to the taxpayer as well as to the unemployed.” Shortly after dictating these words, the blind Senator was led to the Senate floor to cast a lonely vote against the WPA.

Source:
Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.
(Note: ellipses added.)

Russell Crowe as a Libertarian Robin Hood Fighting High Taxes

RobinHoodRussellCrowe2010-05-14.jpg “Mr. Crowe as Robin Hood.” Source of caption and photo: online version of the NYT review quoted and cited below.

Ridley Scott has directed some entertaining movies (Blade Runner and Alien to name two) and he also directed one of the most famous tech ads of all time: upstart Apple smashing the uptight corporate conformity of IBM.
And now he brings us what we could use about now: a libertarian Robin Hood who defends property rights and fights high taxes.
When all is said and done, liberal NYT reviewer A.O. Scott doesn’t much like the movie in the full review that is briefly quoted below. (But I want to see the movie anyway.)

(p. C1) You may have heard that Robin Hood stole from the rich and gave to the poor, but that was just liberal media propaganda. This Robin is no socialist bandit practicing freelance wealth redistribution, but rather a manly libertarian rebel striking out against high taxes and a big government scheme to trample the ancient liberties of property owners and provincial nobles. Don’t tread on him!

For the full review, see:

A. O. SCOTT. “Rob the Rich? Give to the Poor? Oh, Puh-leeze.” The New York Times (Fri., May 14, 2010): C1 & C14.

(Note: the italics in the title of Scott’s NYT review, appeared in the print, but not the online, version of the review.)

Housing Crumbles Under Portugal’s Rent Control Laws

Stigler and Friedman’s only co-authored paper showed the flaws in rent controls. Although excellent, the paper apparently is seldom read in Portugal (or New York City).

(p. B3) LISBON — José Gago da Graça owns a Portuguese real estate company and has two identical apartments in the same building in the heart of Lisbon. One rents for €2,750 a month, the other for almost 40 times less, €75.

The discrepancy is a result of 100-year-old tenancy rules, which have frozen the rent of hundreds of thousands of tenants and protected them against eviction in Portugal. Mr. Gago da Graça has been in a lawsuit for a decade over the €75-a-month apartment, since his tenant died in 2000 and her son took over and refused to alter his mother’s contract, which dates to the 1960s.
“We’re the only country in Europe that doesn’t have a free housing market and that’s just amazing,” Mr. Gago da Graça said.
Rules like these, which economists also blame for contributing to Portugal’s private debt load, help explain why this nation of 11 million has followed Greece and Spain into investors’ line of fire.
. . .
The . . . rules helped protect tenants, but also led to a chronic shortage of rental housing. This, in turn, persuaded a new generation of Portuguese to tap recently into low interest rates and buy instead — often in new suburbs — thereby exacerbating the country’s mortgage debt and leaving Portugal with one of Europe’s lowest savings rates, of 7.5 percent.
“This system of controlled rents is a major problem for the Portuguese economy, but we will probably be waiting for a generational change to have room for institutional reform,” said Cristina Casalinho, chief economist of Banco BPI, a Portuguese bank. Beyond fueling housing credit, she added, the system “basically stops flexibility and mobility in the labor market because you can perhaps find a new job in another city but it will then be very difficult to rent a house there.”
. . .
“Nobody has had the political courage to change something like these rental laws and I don’t see the situation changing in the short term, even if I don’t think the Portuguese tend to react as dramatically as the Greeks,” said Salvador Posser, who runs a family-owned company renting out construction equipment.
Besides distorting pricing in the housing market, the tenancy rules have left physical scars. Portugal’s historic city centers are dotted with abandoned and crumbling houses that are either subject to a court dispute or have rental income that cannot cover repair and maintenance costs.
“This economic crisis is clearly keeping our very slow courts even more occupied because of the amount of conflict that it is creating between landlords and tenants,” said Menezes Leitão, a law professor and president of PLA, a property owners association.
Mr. Posser cited a recent estimate that 8 percent of the buildings in central Lisbon were deserted, in large part because of rent-related obstacles. In Porto, the second-largest city, less than 10 percent of inner-city housing is available for rent, which has helped shrink the population by a third over three decades.
“We’re still losing about 30 inhabitants a day,” said Rui Moreira, president of the Porto Commercial Association.

For the full story, see:
RAPHAEL MINDER. “Like Spain, Portugal Hopes to Make Cuts, but It Is Mired in Structural Weakness.” The New York Times (Fri., May 14, 2010): B3.
(Note: the online version of the article is dated May 13, 2010 and has the title “Portugal Follows Spain on Austerity Cuts.”)
(Note: ellipses added.)

The original source of the Friedman and Stigler article (in pamphlet form) was:
Friedman, Milton, and George J. Stigler. Roofs or Ceilings? The Current Housing Problem. Irvington-on-Hudson, New York: Foundation for Economic Education, 1946.