Thursday, July 03, 2014

Taking One for the Team: Embarrassing Moments in Ideological Solidarity

-- Posted by Neil H. Buchanan

Last Tuesday, Professor Dorf noted an odd and gratuitous passage in a recent opinion by Justice Scalia, who wrote that the Environmental Protection Agency "recently set standards for emissions of 'greenhouse gases' (substances it believes contribute to 'global climate change') from new motor vehicles."  Professor Dorf then imagined a Scalia opinion about the powers of the federal Zombie Violence Protection Agency: "The ZVPA recently set standards for the containment of 'zombies' (animate corpses that it believes constitute an 'undead menace' to the living)."

The point was that Scalia had, through a few deliberately chosen words and some carefully placed scare quotes, aligned himself with the climate change deniers within his conservative movement.  It was a truly surprising move, because nothing that Scalia has written about environmental law requires him to believe that climate change is a massive hoax, as nutcases like Oklahoma Senator James Inhofe loudly proclaim.  Even so, it is true that climate change denial has gone mainstream in Scalia's political party, as Florida Senator Marco Rubio's recent panderings demonstrate.  Maybe Scalia is just getting with the program.

Scalia, however, is not running for office.  Given that he (and Justice Thomas) are in the strange position of being "the reasonable not-at-all crazy moderates among the people who think the Second Amendment protects an individual right," it never occurred to me that Scalia would actually buy into the anti-science nonsense that has run amok in Republican circles.  He does not always say crazy things, but here he was, mocking the idea of "greenhouse gases" contributing to "global climate change."

This, however, is merely one example of people on the right who adopt untenable and uninformed positions on issues far outside of their area of expertise.  A bit over a year ago, I wrote here on Dorf on Law about Chief Justice Roberts' ignorant comments about federal budgeting, in which he not only adopted the standard deficits-are-always-bad mantra, but then managed to become completely confused about how government spending is determined by law.

The broader issue is, therefore, the notion of "affinity," which essentially means "being a good team player."  Scalia and Roberts hang out with a certain group of people, and they hear the same things being said over and over again.  Notwithstanding Scalia's image of himself as the smartest man on Earth, no one can know everything, so one starts to adopt the positions of the people with whom one spends time.  (Mitt Romney's fateful comments about "the 47%," spoken to a closed room of rich donors, are another example of this.)

In my Verdict column today, I confront another "zombie," i.e., the claim that "tax cuts pay for themselves by encouraging people to work hard and thus pay more taxes."  When it comes to dead ideas, the Laffer Curve is "all dead."  (Fans of "The Princess Bride," unite!)  Yet it simply will not go away, and it is still frequently invoked in current policy debates.  Moreover, as I discuss in the column, Laffer-esque reasoning has fueled state-level tax cut drives that are doing serious damage.

My central point in the column is to offer a relatively innocent explanation for why some people might still buy into the Laffer nonsense, notwithstanding its all-deadness.  I am generally in favor of cynical explanations, and Paul Krugman's view on this gets it right: Republicans are committed to tax cuts, and big money is keeping the zombie moving forward, eating brains.  Even though that explains a lot, I wanted to try to understand what a non-cynical person could be thinking when he or she endorses the idea that tax cuts increase tax revenues.

That innocent explanation boils down to two elements: (1) Wishful thinking (because, after all, wouldn't it be great if it were true?!), and (2) Intellectual preening (because the Laffer curve, by virtue of offering a counter-intuitive take on tax cuts, allows a person to pretend to be uniquely "in the know").  I admit that the innocent explanations are not exactly flattering, but if a person does not want to be embarrassed, then one should not take embarrassing positions on subjects that one knows nothing about.

As my discussion at the beginning of this post suggests, I think that the extra element here is something that we might call "affinity bone-headedness."  Imagine that you know a lot about, say, corporate finance.  The people who surround you tell you that "the science on evolution turns out to be wrong."  That sounds weird and unlikely, but how would you know, given that you last took a science class as an undergraduate?  Your friends and associates who claim to know something tell you that the world is flat, or that the moon landing was a hoax, or that Barack Obama sent coded signals to his minions to have the IRS go after Tea Party groups.  Who are you to claim to know better?

One might object that what we "know" about economic issues is far less settled than what we know about climate science or evolutionary biology.  And we certainly know more about the shape of the earth or the reality of space travel than we do about the effects of tax cuts.  In addition, much of my writing (e.g., here) is based on debunking and ridiculing the silly claims that economics is a science.  But that does not mean that we know nothing at all, or that some things have not been very well established.  As I note in my column, the debunking of Laffer-esque claims has even been bipartisan, which, as I note below, means that it has overcome a great deal of pressure for Republican economists to take one for the team.

Although I cannot find the link, I am sure that I have previously noted on this blog that, when I began to write my law review article on "capital budgeting," I had no plans to include any discussion of the use of deficits as a short-term response to economic downturns.  That was such a settled matter that it seemed to be a waste of time even to mention it in the article.  Yet, as 2009 unfolded, I found myself astonished to be witnessing the affinity bone-headedness of people who suddenly decided that, because Obama was in favor of stimulus in the face of the worst economic downturn in over seventy years, they were against it.  Much to my amazement, it became necessary to include in the article a section on short-term effects of fiscal policy.

Were it not for the factors that Krugman notes, believing in the magical powers of tax cut snake oil would not be a required blood oath to show one's affinity to the group.  After all, Republicans conveniently forget about deficits when they feel like it.  (Remember Dick Cheney's immortal line: "Reagan proved that deficits don't matter"?)

In other words, although the scientific consensus on climate change and evolution is more lopsided than the "economic science" consensus on the Laffer curve (and, for that matter, deficit spending), that has a lot less to do with the relative hardness of the science than one might imagine.  There are a lot of economists who are simply willing to say embarrassing things on behalf of Team R.  There is a sub-group that is willing to continue to push Laffer's nonsense, grabbing onto misleading examples in the same way that Fox News anchors excitedly announce that a cold weather snap proves global warming is wrong.

And the people who do not really know anything, but who like the team for other reasons, say that they believe, too.  Why not?  It sounds good, it makes one seem clever and contrarian on an obscure issue like taxes, and it makes one's friends happy.  When reality is optional, anything goes.


John Q. Barrett said...

Last Fall, Justice Scalia has this exchange with New York Magazine interviewer Jennifer Senior:

"Q. What’s your media diet? Where do you get your news?
A. Well, we get newspapers in the morning.
Q. “We” meaning the justices?
A. No! Maureen and I.
Q. Oh, you and your wife …
A. I usually skim them. We just get The Wall Street Journal and the Washington Times. We used to get the Washington Post, but it just … went too far for me. I couldn’t handle it anymore.
Q. What tipped you over the edge?
A. It was the treatment of almost any conservative issue. It was slanted and often nasty. And, you know, why should I get upset every morning? I don’t think I’m the only one. I think they lost subscriptions partly because they became so shrilly, shrilly liberal.
Q. So no New York Times, either?
A. No New York Times, no Post.
Q. And do you look at anything online?
A. I get most of my news, probably, driving back and forth to work, on the radio.
Q. Not NPR?
A. Sometimes NPR. But not usually.
Q. Talk guys?
A. Talk guys, usually.
Q. Do you have a favorite?
A. You know who my favorite is? My good friend Bill Bennett. He’s off the air by the time I’m driving in, but I listen to him sometimes when I’m shaving. He has a wonderful talk show. It’s very thoughtful. He has good callers. I think they keep off stupid people."

As a sometimes listener to “talk guys” (Mark Levin, Sean Hannity, Rush Limbaugh; not Bennett, who seems not to be on in NYC, or at least not when I’m clicking around), I can attest that they fill the air with much climate change denial. Justice Scalia probably is hearing some of that.

Ben Alpers said...

Slightly OT, but the Laffer Curve's refusal to die has recently driven me away from both a podcast and a book. I'd been listening to The Gist, the still relatively new daily podcast from Slate's Mike Pesca (who I've always liked well enough talking about sports on the Hang Up and Listen podcast). He had on as his guest Jordan Ellenberg, author of How Not To Be Wrong: the Power of Mathematical Thinking. Ellenberg's book had been receiving pretty good reviews and I was vaguely considering looking at it. But Pesca and Ellenberg's discussion ended up centering, somehow, on the Laffer Curve, which Ellenberg presented as a wonderful example of how significant economic thinking can be presented in a way that's clear to non-economists...and he wanted to do the same thing for mathematical thought. Pesca completely lapped this up. After they both also praised Freakonomics, I was pretty much done with Pesca, Ellenberg, How Not to Be Wrong, and the Gist. The kicker is that, as far as I can tell, neither Ellenberg nor Pesca are rightwing ideologues. But if they aren't they either both have a problem knowing when they're talking about things that they don't understand or perhaps they're both just not that bright. At any rate, I have better things to do than listen to a mathematician and a journalist praise the Laffer Curve (after all, I can always turn to my state legislators for that).

David Ricardo said...

Mr. Buchanan writes “The point was that Scalia had, through a few deliberately chosen words and some carefully placed scare quotes, aligned himself with the climate change deniers within his conservative movement. It was a truly surprising move, because nothing that Scalia has written about environmental law requires him to believe that climate change is a massive hoax, as nutcases like Oklahoma Senator James Inhofe loudly proclaim.”

But what is truly surprising is that Mr. Buchanan is surprised at all. Is it not totally and completely obvious that Justice Scalia is not a serious, independent minded conservative who reaches his conclusions after careful and logical thought and is instead a driven ideologue who sees his position on the Court as one of power to implement his politically driven ideological agenda? Scalia is smart enough not to invite the ridicule that would result from his exposure as a climate change denier; and he cloaks that position in his decisions which produce constraints on public policy consistent with those who are openly climate change deniers.

Scalia equals hypocrisy. Note Justice Scalia’s position that the Constitution means what it meant when it was written. But by this logic the right to bear arms would be the right to bear the guns that existed in 1790, that the Constitution protects everyone’s right to have a musket and leaves open the right of government to regulate firearms that did not exist in 1790. But such a logical consistency would go against his personal beliefs and as a result his legal positions on this issue are tailored only to meet his prejudices.

In his mind in this area the Constitution must be broadly interpreted to protect the right of everyone to own a .38 Magnum or assault rifle. And there is no greater expansionary/imaginary thinking that the Bill of Rights somehow applies to inanimate corporations, opinions of the Court which have effectively amended the Constitution without going through the designated process. Speech is money? In whose dictionary does that exist? Which article or amendment in the Constitution gives free speech and freedom of religion protections to corporations?

But the Constitution must be narrowly interpreted when such a position is consistent with what Justice Scalia believes is proper public policy, such as the area of cruel and unusual punishment. Scalia is not a conservative, he is a radical. His radical positions should surprise no one.

And Justice Scalia’s cryptic comment in the Wheaton order displays his judicial cowardice. It seems obvious from his public record that he believes that not only does the government not have the right to mandate contraception coverage, it should not even provide or facilitate that coverage. If given the opportunity Justice Scalia would likely overturn Griswold and affirm the right of governments to ban contraception and would likely agree with that ban is proper policy. He obviously feels the time is just not ripe to say these things and wants to hide his feelings. But if a Scalia like conservative is appointed to replace Justice Ginsburg this is almost certainly what will transpire.

Mr. Buchanan and Mr. Dorf ascribe their own high level of intellectual honesty and integrity to individuals like Justice Scalia and his ilk on the Court. And no, that is not a compliment.

Lawrence said...

I am curious as to why you think the Laffer curve does not exist. You never explain your assumptions or reasoning.

David Ricardo said...

@ Lawrence

While I cannot speak for Mr. Buchanan, as a professional economist here is a short explanation why I and most of the economics profession believes that the Laffer Curve is not valid.

The core logic of the Laffer Curve is that cutting tax rates will stimulate consumption because of increased disposable income and cutting tax rates will stimulate investment because business after tax profitability will increase which produces both higher returns to investment and increasing the funding available for investment. The resultant economic growth will then increase revenues as a percentage of GDP above existing levels and that percentage will be higher than it would have been absent the tax cuts.

The analysis fails because the multiplier from higher consumption resulting from decreased tax rates is lower than those who support the Laffer Curve believe, and it is particularly lower when the tax cuts are directed towards high income individuals. Business investment is driven by demand for the additional goods and services produced, and not by tax rates which are a secondary and not primary factor, at least at current levels of taxation. No business ever increased capacity when demand for the additional capacity was absent just because tax rates were lowered. The effect of lowering taxes on business is positive, just not as strong as supporters of the Laffer Curve would like to believe.

The empirical evidence from recent times is uncontested. Revenues as a percent of GDP fell as a result (partly, not entirely) of the Reagan and George W. Bush tax cuts, and rose (again partly, not entirely) as a result of the Clinton tax increases. Case closed. The Laffer Curve is like Bigfoot, if it existed we would have seen it by now.

Neil H. Buchanan said...

Interesting comments all around. Not in order, here are some responses/thoughts:

To Ben Alpers: Your example is not at all off-topic, but instead provides a perfect example of the "Gee, what a smart boy am I!" appeal of Laffer-like thinking. The comparison to Freakonomics is apt, too. After I initially wrote a positive review of the first Freakonomics book for FindLaw (Verdict's predecessor), I later wrote a re-review on DoL, saying that there must have been exactly one book's worth of topics on which Levitt's cutesy approach works. It's all crap after that.

To Lawrence: I address you question in my Verdict column, to which this post is a complementary follow-on. (That's the normal approach on Dorf on Law, for Professors Dorf and Colb as well as for me. When we write a Verdict column, we concurrently post further thoughts here.) I also completely agree with David Ricardo's response on this comment board. It really is like Bigfoot (a nice turn of phrase!).

To be clear, it is not quite accurate to say that I think that "the Laffer curve does not exist." As anyone who has thought about the matter knows (as we knew long before Laffer came along), cutting tax rates from 100% would surely generate increased revenues. The important question is whether we can reliably predict that a tax cut in the real world (from something much less than 100%) will be revenue-increasing or -decreasing. As David Ricardo's comment makes clear, and as I said in my Verdict column, empirical research (including, as I said in my column, from George W. Bush's Treasury economists) shows that real world tax cuts are revenue losers, not gainers. Just ask Kansas.

It is not a question of what I "think," but what the evidence shows. And the evidence is abundantly clear that Laffer effects do not play out in real life.

A more clever way to say this, I suppose, is that we know that a Laffer curve exists, as a logical matter, but we also know that it is not shaped the way Laffer and his acolytes think it's shaped.

Finally, to John Q. Barrett and David Ricardo: Thanks to JQB for the transcript, which helps explain why I was surprised by Scalia's climate change denialism. David Ricardo is right that Scalia's intellectual dishonesty has been clear forever, and that he is a dangerous ideologue. What I found surprising was that he joined the climate deniers, which is not at all required to hold his well-known positions on contraception, etc. My picture of Scalia was of someone who is fundamentally motivated by his extreme version of Roman Catholicism, and who is willing to twist words and logic to achieve those ends, but who had no reason to deny scientific reality on other issues. In short, there is nothing inconsistent with seeing Scalia as a right-wing hack with a retrogressive agenda, yet still being surprised that he buys into the stuff that simply embraces ignorance. JQB's transcript shows why.

Even so, although David Ricardo didn't need to add that "that is not a compliment" at the end of his first comment (his disdain having been made quite clear), I see nothing wrong with being surprised when someone like Scalia turns out to be even crazier than I thought. It's somehow comforting to know that I still have some touching naivete left in me.

David Ricardo said...

Mr. Buchanan is absolutely correct in his follow up comments, he describes Justice Scalia eloquently and accurately. I had not considered that Justice Scalia's positions arose from his interpretation of his religion, but now that Mr. Buchanan has made that point it seems right.

And those of us who read and comment on this Forum should also review the essays on Verdict, which I will do in the future. I for one was not aware of the relationship between Verdict and DonL, I had thought the commentary on DonL was stand alone and independent.

I should add that conveying “disdain” way not my intention, apologies to all and Mr. Buchanan if it sounded that way. (This is not the first time on this Forum I have mis-communicated trying to make a comment more cleverly than was needed). And Mr. Buchanan is correct, there is nothing in Justice Scalia’s position on environmental regulations that requires his being a climate change denier. But given Scalia's radical conservatism his being a climate change denier seems surely more likely than not.

My point was that while it is laudatory to ascribe honest intellectual motives to people like Scalia, in the case with most 21st century conservatives that action is misplaced. A position based on pure blind faith can never be overcome by logic, rational arguments, data or facts. This is similar to the situation involving Bill Nye debating Creationism, it gives an aura of intellectual respectability to a doctrine that does not deserve it. If disdain is appropriate here, it is to be directed at Justice Scalia, not Mr. Buchanan.

Mr. Buchanan has in the past expressed his opposition to methodology used by individuals such as Paul Krugman, where Mr. Krugman heaps vicious, sarcastic contempt on those whose positions are so illogical, so unsupported by facts, logic and data that they deserve contempt. It may be that Krugman often goes too far, but if so it may also be that Mr. Buchanan often does not go far enough, that his second set of comments on Justice Scalia are far more appropriate than his first.

David Ricardo said...

A final comment on Mr. Scalia. See this book review in the NYT.

Maybe the curtain is finally being pulled away from the image of Justice Scalia as a towering legal giant and revealing him to be a petty vindictive ideologue and as I interpret Mr. Buchanan characterization, an individual obsessed with using the Supreme Court to convert the United States into a sectarian nation identical to that of 15th century Spain. Re-read his dissent in Lawrence and see if this conclusion is incontrovertible.

Neil H. Buchanan said...

I often hesitate to engage in exchanges on the comment board, but I have to say that this one has been extraordinarily enlightening (and enjoyable). David Ricardo's clarifications and further comments are most welcome, and I appreciate his forthrightness.

As it happens, I have long rebelled against the claim -- heard often amongst legal types -- that Scalia is "really, really smart, even if you disagree with him." I never saw that, and I still don't. The only good thing about Scalia, as others have noted, is that he is such a repellant bully personally that he has done damage to his own goals, driving away his potential allies (first O'Connor, then Souter, and to a lesser degree Kennedy). So, I agree with David Ricardo completely about Scalia.

As to the stylistic matter, it is interesting to note that this is a matter of professional training. Law school (which I attended more recently than economics grad school) pounds into our heads the idea that one must give full credit to the other side's arguments before tearing them down. For example, the standard on "summary judgement" motions requires that the evidence be taken in "the light most favorable to the non-moving party," which means that, to win, you have to say, "Even if they could prove all of their factual claims, they still lose." This translates into an argumentative style that, as I've actually warned about many times (but still fall victim to myself), gives far too much credit to the other side, and ends up conceding ground.

Notwithstanding the image of lawyers as being pathologically argumentative, therefore, we end up giving people too much slack, in many cases.

That said, I do have my moments. I did, for example, label the Romney/Ryan ticket and the entire Republican leadership "sociopaths": And I have repeated that claim many times. Certainly, the label fits Scalia perfectly.

Unknown said...

This article outlines succinctly how, as Mr. Ricardo eloquently puts it, "Justice Scalia's positions arose from his interpretation of his religion," as distinguished from his actual religion. He has long made it clear that he is a Judge, in the Old Testament sense. That is someone gifted and called by God to interpret both human and divine law by means of his superior wisdom and understanding. Although we might actually find this an apt description of many justices, when they drink their own cool aid, and at that level, it becomes quite problematic.

TuppstigenTom said...

@David Ricardo

I think saying "the core logic of the Laffer Curve is that cutting tax rates will stimulate consumption because of..." is misguided and here is why.

The assumptions of the Laffer Curve are:
1. there exists a relationship between tax levels and tax revenues.
2. This relationship can be drawn as a curve.
3. The end-points of this curve (at tax rate = 0% and 100%) occur where tax-revenues are equal to zero.

That's pretty much it and it seems to me that these are non-controversial claims.
The main take-away is that the curve must be non-linear and definitely non-monotonic.
This alone is important because arguments made about tax policy sometimes implicitly assume that this is not true, as in the case Ellenberg notes in his book. So it is a good filter for certain types of arguments.

As for the curve itself:

The Laffer Curve is usually shown as an "inverted" parabola. This is the simplest way of showing that there must exist at least one maximal point, and that when the tax-rate is sufficiently close to this point a change in tax-rate can result in a positive or negative change in tax revenue depending on which side of the point you are on. But there are an infinite number of curves possible and it is likely that it is not so simple as a symmetrical curve with a single maximum, although it may be possible to approximate it by one. Finding a suitable approximation to the actual curve may be so hard as to render the concept useless.

The curve is two-dimensional which means that ALL other variables that affect the curve are taken as constants. It may well be the case that changes in those variables may change the curve significantly, and in such a way as to make a two-dimensional analysis far too simple-minded to be of any practical use.

So there is no such "core logic" in the Laffer Curve. The Laffer Curve (actually a class of curves) is useful in constraining certain arguments about tax policy but obtaining any knowledge detailed enough to make decisions from is may be beyond what anybody can do.