On ‘Fixing the Moral Deficit’ (part 1)

On ‘Fixing the Moral Deficit’ (part 1) March 8, 2012

The Consumerist brings us the entertaining story of a New Mexico man who picked the wrong restaurant to dine-and-dash:

We certainly don’t condone the act of dining-then-dashing. It’s illegal and, more importantly, just plain rude to the people that prepared and served your meal. It’s especially rude when the servers are law enforcement officers working a fundraising event for the Special Olympics.

And yet, a man in New Mexico stands accused of trying to feed and flee an Applebee’s during the Tip-A-Cop fundraiser featuring police officers as hosts and waitstaff.

The suspect’s two female dining companions left the building first, and then he allegedly tried to slip out without paying the $30 dinner check. Given the police presence in the restaurant, it’s not surprising that the man was snagged and charged with obtaining services less than $100.

“Obtaining services” is another word for theft. This guy, the police say, took the service and ate the food but took off without paying for it. If you don’t pay for what you’re using, then you’re stealing.

New York Times columnist David Brooks doesn’t care about this form of theft.

Unlike the cops in that Applebee’s, he doesn’t care whether or not people are willing to pay for what they take and use from restaurants or stores or the federal government. He’s more concerned with looking over their shoulder as they read the menu, waiting to scold them for ordering too much food or dishes that are too expensive. Over-ordering, Brooks insists, would be immoral.

He’s so preoccupied with such potential prodigality that he completely ignores the outright theft of the dine-and-dash.

That’s an odd notion of “morality.”

In his latest column, Brooks attributes the federal budget gap to some unique moral failure of the current generation of Americans. “Every generation has an incentive to spend on itself, but none ran up huge deficits until the current one,” Brooks writes (inaccurately). “Some sort of moral norms prevented them.”

For Brooks, morality is all about government spending, which he imagines is out of control — a wild, orgiastic spree unprecedented in history.

Ezra Klein points out that Brooks’ argument misrepresents the numbers and the facts of the federal deficit. The federal government is currently spending more than it’s taking in, but that’s not because it’s spending like never before, it’s because it’s taking in less than ever before:

Debt began to rise in the 1980s, and not because we began to spend more on ourselves. Spending went from 21.7 percent of GDP in 1980 to 21.9 percent in 1990. Rather, the major change was on the tax side: Revenues fell from 19 percent of GDP to 18 percent of GDP. … Revenues fell from 20.6 percent in 2000 to 18.5 percent in 2007.

… We do have a spending problem in the coming years. But it’s not driven by greed, or moral failure, or even new spending decisions. Discretionary spending, in fact, is set to fall to its lowest level since the 1950s. Rather, our projected deficits are driven by the population getting older and the health care sector innovating new and more expensive treatments. Those trends pose budgetary problems that we have to deal with, but they don’t say anything in particular about our national character, or the moral fiber of this generation.

So if there’s a moral element to the current budget gap, it’s not what scolds like David Brooks are claiming it is. We’re not ordering more than we can afford from the menu, we’re just dining-and-dashing — refusing to pay the bill for the same food we’ve always ordered and eaten.

Misrepresenting deficits, Mark Thoma says, does involve a failure of morality. The Very Serious Scolds like Brooks are misleading their readers, and that is a “Real Moral Problem“:

Why should we care about the misleading rhetoric? Because it gives ammunition to those who have had social programs in their sights for decades — it gives them the arguments they are looking for to make severe cuts in government programs. And centrist, right-leaning Democrats will go along in the interest of solving this “great problem” that we face. …

There are moral issues out there, but they aren’t the ones that Brooks and company think they are. Many of the people pointing fingers at the moral failings of others need to take a hard look at their own behavior and how it has enabled the morality that allows the rich to mislead the public about the impact of budget-busting, redistributive … policies that were key in producing the debt problems that we now face.

Thoma is frustrated because he’s an economist. This topic is frustrating for economists for the same reason that homeopathy is frustrating for medical doctors. The homeopaths proposed solutions do not work, and they distract people from the valid, tested approaches that do.

That’s why famously frustrated economists Paul Krugman and Brad DeLong have seconded those responses from both Ezra Klein and Mark Thoma. When DeLong talks about deficits, I listen, because unlike David Brooks and the other Very Serious Scolds obsessed with the topic, he knows what he’s talking about. He served in the Clinton administration, where he helped to turn budget deficits into budget surpluses. In actual reality.

DeLong also refers us to Stan Collender, who notes that those currently fretting about government borrowing do not seem to understand interest rates or economics. For quite a while now, the interest rates the U.S. federal government pays to borrow money have been effectively negative. And they may be about to become explicitly negative.

When you can borrow money at negative interest, then it doesn’t cost you anything to borrow more. In fact, when interest is negative, it costs you more not to borrow. Thus, Collender says, “Tea Party/GOP Are Wrong: Federal Government Should Be Borrowing More Right Now“:

Given the continuing very strong demand for U.S. debt, the Treasury is considering issuing securities with negative interest rates — requiring buyers to pay for the privilege of safely parking their money — and is assuming  it will get lots of takers. In fact … some investors in Treasuries are already getting a negative return and, given the alternatives, are happy to have it.

… First, as any business and many individuals would be doing in a similar very low interest rate environment, this is the time the federal government should be borrowing more rather than less, especially if the funds were used to pay for capital projects.

Second, it demonstrates that, to the extent possible, the government should be doing whatever it can to lock in these low/negative interest rates by borrowing as much long- rather than short-term as it can. …

Third … the real question is why government borrowing has been and continues to be such a political issue and why the tea partiers in the Republican Party continue to insist it’s the tool of the devil.

Thoma provided the answer to that third question: “they are looking for to make severe cuts in government programs” and to further lower the already historically low taxes on the wealthiest.

The Very Serious Scolds like to frame their complaints about the deficit in moral terms — as a factor of “intergenerational justice.” But, as Collender hints, intergenerational justice involves far, far more than balancing short-term budgets. It has much more to do with those “capital projects” he mentions.

Future generations won’t likely judge us harshly for having too many federal Treasury bonds in circulation. But they will judge us very harshly indeed for squandering the infrastructure we inherited, took for granted, and selfishly refused to maintain or preserve. We inherited roads, bridges, tunnels, levees, dams, railroads, airports, sewers, aqueducts, pipelines, a power grid and all the rest of that amazing infrastructure that makes possible the lives we take for granted. But we refused to pay to maintain them, let alone to expand and improve them to keep pace with our growing reliance on them. We preferred, instead, to give ourselves tax cuts.

Our neglect of this infrastructure is a massive intergenerational injustice. It’s a dine-and-dash on an epic scale that’s wholly ignored by the Very Serious Scolds.

Future generations are also unlikely to forgive us for our current enthusiasm for converting the Marcellus Shale into cheap energy and flammable aquifers while dumping ever-more carbon into an already over-full atmospheric sink. Climate change is another massive intergenerational injustice. A higher national debt is unlikely to concern future generations anywhere near as much as the fact that we are sticking them with the bill for keeping Manhattan above sea level and for relocating coastal refugees, for droughts, storms and record-shattering extreme weather events.

On a more personal scale, but similar in scope, there’s also the intergenerational injustice of failing to be stewards of the economy as a whole. This is largely a function of the misleading pretense that our ability to do so is constrained by budget deficits. The deficit-obsession of the Very Serious Scolds promotes the notion that we cannot address our jobs crisis, or education, or infrastructure, or poverty, because the government is “broke.”

Persistent unemployment is something we know how to fix, but we’re not fixing it because that would involve spending money, and the scolds will scold when money is spent. That jobs crisis isn’t just harming the unemployed — it’s also keeping wages and income down for everyone else. Recent college graduates are now being paid 11 percent less than they were 10 years ago. That has a lifelong effect on those earners and their future children and grandchildren. (It also means, of course, that tax revenues from recent college graduates are 11 percent less than they were 10 years ago.)

As another frustrated economist, Jared Bernstein, says, “We may well be unwilling to raise the revenue we need to fight poverty, invest in poor kids, fix up our infrastructure, push back on climate change, and ensure secure retirements for our elderly. But it won’t be because we’re broke.”

But the best summary I’ve seen of the “moral” aspects of the federal deficit comes from Charlie Pierce. He’s not worrying about sounding “serious” to the Very Serious Scolds and other “deficit hawks” who insist that we must only dine-and-dash from a sensible, reasonably priced meal.

Pierce is not a pundit preaching a sermon on spending, but a former sportswriter who knows you have to keep one eye on the scoreboard and the other eye on the ball. That’s why he understands our current “moral deficit” far better than David Brooks et. al., and why Pierce’s constant refrain has become this: “[Forget] the Deficit. People Got No Jobs. People Got No Money.”

 

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  • Lori

    I think the fact that should concern us most in all this is that David Brooks still has a job and people apparently still read what he writes. 

  • Anonymous

    I’m not sure who the “we” is Fred is talking about. I had and have absolutely no say in macroeconomic policy. Neither did my parents, politically engaged lifelong liberals both, nor does any voter. The “Democratic” elite sold us out and down the river starting with Saint Carter.

    As for David Brooks, the only opinion of his I’m interested in is whether he prefers gallows or the guillotine.

  • friendly reader

    It also means, of course, that tax revenues from recent college graduates are 11 percent less than they were 10 years ago.

    Actually, given how the tax system works, it may be worse than that, as more might be below the poverty line and not paying income taxes at all. I’m currently paying un-refundable income taxes for the first time in my life… in Japan.

  • fraser

    Unsurprisingly, Brooks ignores that Wilson predicted society in the 21st century would be engulfed by a wave of teenage “super predators,” since that might suggest his insights weren’t as deep as Brooks thinks.
    And as usual, Brooks’ discussion of morality focuses on the poor, not on anyone who say, illegally forecloses on a few houses.

  • Anonymous

    And as usual, Brooks’ discussion of morality focuses on the poor, not on anyone who say, illegally forecloses on a few houses.

    What, you expect rich folk to take a loss on their bad investments? Moral hazard is for poor people.

  • rizzo

    Honestly, I think it’s in a large part down to racism.  The only people I hear bitching about the debt anymore are bitching about “OBAMAS DEBT”…they had no problem with all the money W was shoveling into various holes and setting on fire.   They’re also completely ignorant of economic reality because they think the country runs like a household.  At this point, anyone who thinks the government is borrowing/spending too much money is on the exact wrong side of the argument and probably being disingenuous because they should have been making that argument 6-10 years ago, not now.

  • What can we do about this?

  • Anonymous

    We preferred, instead, to give ourselves tax cuts.

    “Morning in America,” indeed.

    It’s worse that what you’ve stated (IMHO): it’s not just that we’re ignoring the economic situation or our infrastructure. It’s that we’re ignoring the environmental situation and the depletion of natural resources [1] — and we’ve been ignoring them for decades.

    Our entire economy right now is a strip-mining operation, designed to funnel money into a tiny (mostly fairly old) fraction of the population. And, like all strip mining, nobody cares about the end product.

    [1] Oil production, most likely, has peaked — and we’re whining about gas prices rather than doing anything useful; also, if you really want to be upset, look up the ways we’re wasting helium. For that matter, Wikipedia understates the case: Helium is the *ultimate* non-renewable resource (even if fusion got off the ground, we’d still be unable to produce at the level we need for, say, medical purposes and scientific research), and we’re wasting it on children’s party balloons.

  • Guest

    Just for the record: Does “discretionary spending” include the military budget?

  • Tonio

     I agree. During the debate over health care reform, I heard from and read about far too many people who misinterpreted it as another welfare program, often throwing in Southern Strategy terminology. And excellent point about the household analogy.

  • Anonymous

    From Brooks’s column:

    In one 1998 Public Interest essay, [Wilson] promoted ideas to strengthen the family: create publicly supported, privately operated group homes for teenage mothers; increase adoption; investigate ways to increase preschool programs; create a G.I. Bill for young mothers — if you take care of your kid now, the government will pay for training later; create a religious United Way fund to increase the role of religion in American society.

    Whatever we think of each of these ideas, they have one thing in common: increased government spending. Thanks for being consistent as always, Bobo.

  • Hell, as far back as the 1800s the USA and its states were borrowing money for various things. As an example, post-Civil War, a black legislator wrote of the possibility of a bond levy to pay for government expenses, but at the time decided to raise taxes instead; he felt in retrospect it might have been better to borrow the money and spread the tax increase over a longer period.

    So people weren’t like all OMGDEBT until it became a politically convenient club with which to beat the librulls over the head with.

  • Anonymous

    As an example, post-Civil War, a black legislator wrote of the possibility of a bond levy to pay for government expenses, but at the time decided to raise taxes instead; he felt in retrospect it might have been better to borrow the money and spread the tax increase over a longer period.
    So people weren’t like all OMGDEBT until it became a politically convenient club with which to beat the librulls over the head with.
    You see? You see? Not being concerned about debt is an ongoing BLACK conspiracy!

  • fraser

    Remember, Brooks also thinks paying single men a stipend so they find it easier to catch a woman is a good use of government spending. The importance of making people get married is a running theme in his moral lectures (of course, this is coming from a man who thinks having more than one sex partner in a year is “spiritual suicide.”)

  • Anonymous

    It’s present at too small a concentration in air, I assume, to make air distillation feasible yet? That may be eventually the only thing we can do, so the price will go through the roof.

  • fraser

     I read an article last year that argued that one side effect of globalization is that CEOs no longer see any need for anyone in America to thrive but themselves. There’s a huge world and if they end up selling their products to Chinese consumers because Americans can’t afford them any more, no big.

  • Anonymous

    It’s present at too small a concentration in air, I assume, to make air distillation feasible yet? That may be eventually the only thing we can do, so the price will go through the roof.

    Wikipedia says that retooling *all* current air distillation plants would only fill about 1% of the world’s *current* demand for helium (retooling all neon plants would add another 0.1%). The problem is, helium achieves escape velocity — meaning that (I’m guessing) helium distillation is kind of a losing battle. Recapturing helium is better, but it’s currently quite expensive, requires all sorts of reconfigurations of facilities, and it’s not mandatory. Not to mention, I doubt it’s 100% efficient.

    Barring a breakthrough in “high”-temperature superconductor technology (speaking of stuff we should be funding at *much* higher levels, ASAP), MRIs will become increasingly expensive, as will a great deal of chemical analysis and basic [1] biochemical studies. (Even if we did make such a breakthrough tomorrow, the time to get to market — plus the turnover time for new instruments — would still mean that it would take decades for us to wean ourselves off of helium.) I’ve heard that it’s possible to use a liquid hydrogen pump to achieve similar temperatures, but I haven’t validated that.

    One really stupid bit is that the US government decided to sell off its liquid helium reserves a few years back — thus not only artificially lowering the price but also eliminating any backup supply we might have had.

    This is one of those issues that’s widely known in a lot of scientific communities but seems to have not gotten any attention in the general public.

    [1] In the sense of research at the bottom of the pyramid: stuff that doesn’t translate immediately into medical breakthroughs but might eventually.

  • Kevin Alexander

    “they had no problem with all the money W was shoveling into various holes and setting on fire.”

    The first thing we should teach kids about economics is the complete failure of the nearly universal idea that money ever gets thrown in a hole or flushed down a toilet or burned of thrown to the wind or…pick your metaphor.

    Money does not ever disappear, it gets carefully counted and then ends up in someones pocket. Follow the money, find the pocket and you will see through all the smoke and mirrors that our fictional republic is made of. You will see your king.

  • Anonymous

    The problem is, helium achieves escape velocity…

    Aha, I see. Well then.

    I do remember hearing something about peak helium, but I’m not really in that kind of geology anymore so I haven’t been keeping up. So…why did the US sell its helium reserves, anyhow? Any idea?

  • The first thing we should teach kids about economics is the complete failure of the nearly universal idea that money ever gets thrown in a hole or flushed down a toilet or burned or thrown to the wind or… pick your metaphor.

    Unfortunately, people who strongly believe that is happening are also very likely to send their children to private schools which will reinforce their political beliefs if they can afford to, or isolate them in homeschools where they can coach those beliefs, if they cannot.  Any attemtp to force the ciriculum to more resemble reality will be seen as “politicising” education. 

  • Anonymous

    So…why did the US sell its helium reserves, anyhow? Any idea?

    Privatization. (It seemed like a good idea — to everyone who wasn’t a scientist.)  I’ve been told it was Republicans but I couldn’t validate that on the first few Google links.

    Lovely quote from a Nobel-winning scientist: “The Earth is 4.7 billion years old, and it has taken that long to accumulate our helium reserves, which we will dissipate in about 100 years.” It’s been stated that helium’s price should be about twenty times what it currently is.

  • Veylon

    I normally just lurk, but I happen to have a link to a chart bookmarked showing what the tax rate on the wealthy has been throughout our history: link

    So now when Obama gets accused of being a Communist for taking 35% of rich people’s money, you can point out that Reagan was a super-Communist for taking 50% and that Eisenhower was an ultra-Communist for taking 91%. The good old days of the fifties were not tax free.

  • Veylon

    Sorry, double posting for inexplicable immediate link rot (and the inability to edit):
    http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213 

  • He is an interesting case study in ageing yuppie self-serving psuedoseriousness, if nothing else. 

  • As long as there’s uranium and thorium in the soil we can get helium, since it comes from the alpha decay of those long-lived radioactive isotopes.

  • Anonymous

    I’m going to posit that the reason college graduates are paid less is that more jobs are requiring some college degree for hiring, even lower paying jobs that didn’t require it before, and that is what is dragging that stat down.

  • Rikalous

     

    Unsurprisingly, Brooks ignores that Wilson predicted society in the 21st
    century would be engulfed by a wave of teenage “super predators,” since that might suggest his insights weren’t as deep as Brooks thinks.

    The century’s young. There’s still time for some real horrorshow ultraviolence.

  • Anonymous

     Helium is more than just its nucleus. It needs an electron shell too.

  • Yes. Basically, federal spending is in two main chunks. “Discretionary spending” is the smaller chunk. It includes the military budget as well as well as funding for a majority of the government’s operations (FDA, transportation, infrastructure spending, veteran’s benefits, etc). An easy way to remember is that discretionary spending bills tend to correspond to one of the Cabinet departments. Each year, Congress needs to appropriate money for each item in discretionary spending budget and they can change the amount each year more or less based on their whims. Because of the sheer size of the military’s budget (about 50% of the discretionary amount), sometimes people break it down between defense and nondefense spending (as in the recent Budget Control Act of 2011 — the one where Congress set up a supercommittee to make certain cuts, which ended up falling apart).

    Mandatory spending, on the other hand, is made up almost entirely out of welfare programs. Social Security, Medicaid, Medicare, food stamps, etc. These things don’t have to be reauthorized every year — they are essentially always funded even if Congress fails to pass an appropriations bill for the discretionary items. Unlike discretionary items, in order for Congress to change the amount of spending on these items, they have to go back and alter the original enabling legislation that created them. They don’t have the option of just choosing not to pay out food stamps benefits, for example.

    Basically, if Congress fails to pass a budget, the discretionary spending (including the military) falls to 0, but the mandatory spending still has to be funded.

    (Outside of discretionary and mandatory spending is a third item, which is the cost of servicing the federal debt; because this number is relatively small — and has to be paid even if you don’t want to –, it rarely comes up in debate).

  • In other words, the things that the current opposition party’s voting bloc are railing against and demanding that the president cut are things that the government cannot legally affect. 

    No wonder they are resentful.  The expect the impossible not realizing it is impossible.  Like a boss who does not understand their employee’s job well enough to understand what they ask. 

  • fraser

     According to Wilson it should already have happened.

  • from fraser:
    Remember, Brooks also thinks paying single men a stipend so they find it easier to catch a woman is a good use of government spending. The importance of making people get married is a running theme in his moral lectures (of course, this is coming from a man who thinks having more than one sex partner in a year is “spiritual suicide.”)
     

    I … arg.  I think I don’t even have to be poly to think that’s seriously misguided.

  • Anonymous

    Is it just me, or do the ideas and actions of the conservative faction in the US actually qualify as psychopathic or sociopathic, by a technical definition? Or are at least approaching that? If they do, maybe that could be useful to people trying to stop them. (I’m not talking about individual players here so much as organizations. Most of them have corporate persons, right? Could said corporate persons be pronounced mentally ill or a useful equivalent?)

    Also, we up here in Canada want it to stop, both for the sakes of Americans, and for our own: Harper has been playing monkey see monkey do with the US conservatives as his model, and many of us don’t like it!

  • Yeah, but they will grab electrons. Since the parent nucleus loses two protons it’s got an excess of two electrons. Those will end up in some way being snapped up by the alpha particles, ergo, helium gas.

  • Anonymous

    Beat me to saying that :).  I’d just add that US government has been described as an insurance company with an army, since that makes up the bulk of the federal budget.  When someone talks about solving the deficit by cutting non-military discretionary spending remember that this is already a mere ~14% of the total budget.  

  •  

    In other words, the things that the current opposition party’s voting
    bloc are railing against and demanding that the president cut are
    things that the government cannot legally affect.

    It’s not impossible. Again, Congress can change the amount on spending on Social Security, Medicare, food stamps, and Medicaid, but only by actually passing a law that does that. For example, if they wanted to reduce the amount they spend on SNAP (the food stamp program), they could pass a law amending the eligibility requirements so that fewer people qualify or reducing the size of the benefits paid out or something like that. What they can’t do is just ‘forget’ to pass a budget and hope that it goes away. And, of course, they can just repeal the law, but that’s almost impossible to do politically.

    Mandatory spending can be reduced/eliminated, but it’s a lot harder to do so since you have to be proactive — you can’t just get rid of Social Security by forgetting about it.

    When someone talks about solving the deficit by cutting non-military
    discretionary spending remember that this is already a mere ~14% of the
    total budget.

    Ha ha, pretty much!

    And since discretionary spending goes towards things that we need like the infrastructure programs and investments in research and development, it’s more like trying to save money on gas by quitting your job. Technically, your expenses go down a little but you’re damaging future revenue at the same time.

  • I understand the necessity of conserving helium deposits, but seriously, when your argument is “We must take away balloons from children!” I think it may be a hard sell.

  • Well, then I have the obvious bad luck of being unable to ever marry my sweetheart for the little detail that she is already contentedly married to someone else (not that I would want to enter a legal property union.) 

    I guess poly never fit into Brooks’ worldview. 

  • Matri

    I guess poly never fit into Brooks’ worldview.

    A lot of things don’t fit into his worldview: Facts. History. Other people.

  • P J Evans

    Wilson had a much better handle on reality than David Brooks. And better morals.

  • P J Evans

    Social Security’s budget is for its administrative side; its payouts are funded by T-bills bought with payroll deductions.

  • Anonymous

     Oh, I didn’t think about that. Derp.

  • Base Delta Zero

    I understand the necessity of conserving helium deposits, but seriously, when your argument is “We must take away balloons from children!” I think it may be a hard sell.

    You could give the children hydrogen balloons.  What could possibly go wrong?

  • Ima Pseudonym

     In one of my lower-level chemistry courses, one of my favorite professors would demonstrate some of the properties of hydrogen by filling small balloons with it and then popping them with a match.  It always made a lovely, rapidly-rising pint-sized fireball.  Good times, good times. 

  • A less dangerous version is to get some in a test tube and then put a match in. It makes a “pop” rather than a “BANG” :)

  • In recent news, Stephen Harper announces plans to ape Ronald Reagan.