Saturday, April 26, 2008

Another War on Poverty?

"McCain Vows [Another] War on Poverty"

"Government has a role to play in helping people who, through no fault of their own, are having a hard time," McCain, an Arizona senator, said. He defined that role as offering choices on education, health care and job training, rather than providing handouts.

If "offering choices" means "giving people stuff" or "subsidizing stuff", how is this not a handout?

Elsewhere, the article says that McCain doesn't want another Johnsonian "Great Society" program, but all this particular article implies about where McCain departs from it is this:

Government "can't pay lost wages. It can't dig coal from the earth," McCain, 71, said. "It can't buy you a house or send all your kids to college. It can't do your work for you."

Wait a second . . . didn't McCain just say that the government should offer choices in education? Meaning what, if not paying for college?

Let's step back and assume that McCain sees healthcare, education and job training as capital investments, whereas "handouts" refer to current consumption. Let's also stipulate that it is appropriate for the federal government to undertake these expenditures on behalf of individuals. I still have a few questions:

1. Are there any actual studies supporting the notion that such unemployment as we have is structural, ie. the result of a mis-match between existing worker skills and job requirements?

2. Can we reasonably assume that the unemployed have the necessary personal, um, infrastructure to support the education and training on offer? I don't want to be unkind here, but it doesn't do much good to say, "Sorry that your sheet-rock hanging opportunities all dried up, but there's great demand over here for quantum-physicists [let's say]. All you need is some job training!" You get my point.

3. Then there's health care. I would be surprised if McCain's diagnosis of "lack of affordable healthcare" runs any deeper than that the government should help pay for it. In which case, how is the government going to find the money to do this in a sustainable way?

But the fact is, I'm giving McCain way too much credit here. It is obvious from these remarks that McCain has no damn clue what he is talking about. He no doubt thinks that his gestures at the Great Society as something we DON'T want to do sufficiently distinguishes him from the Democrats, but the rest of what he says only concedes rhetorical ground to his opponents.

How much better would it be if he forsook the micro-initiatives and developed a coherent set of policies addressing the macro-conditions that make America a good place to create jobs in the first place. Stuff like: fiscal policy, monetary policy, regulatory policy, trade policy, and, oh yeah, immigration.

Here is an example of the kind of thing I have in mind:

Apartment hunting site cannot shield itself from an housing discrimination lawsuit by claiming it is just an internet forum, because the site requires users to answer questions about their gender, marital status and sexual orientation, the 9th U.S. Circuit Court of Appeals ruled Thursday.

It should be glaringly obvious, even to those of you who think that it is any of the government's business who I rent or sell my house to, that individuals advertising for roommates are not what the Fair Housing Act had in mind by regulating "housing providers". But somehow this obviousness excaped the Ninth Circuit, which exists to take the most expansive view possible of the Civil Rights Laws.

So let's assume that a couple of guys who put up a website can take the time to wade through thousands of pages of federal code, and thousands of pages case law. They can STILL get screwed by a bunch of lawyers who come up with a NEW way to interpret the law!

Multiply this by about one million, and you begin to have some idea of the regulatory environment facing business in America. It's not just that the regulations are onerous, although they are. It's that it is extremely difficult to quantify the risk analysis of a business model. No wonder, then, that nobody wants to create jobs here.

It's pretty obvious to me that these have been badly managed for the last 8 - 20 years. The only thing that can be said on McCain's behalf is that his recommendations probably won't make the macro-conditions appreciably worse. This contrasts favorably with the Democrat plan to actively drive the economy into the ditch.

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