I was very late in making The New York Times my primary news source, and for a poor reason- elitism. There are still sections that ooze smug privilege, like the quarterly fashion magazine. The features that illustrated the strains of the recession through depressed private jet markets and frugal Hampton summers were particularly distasteful.
I’m not sure which of the following then occurred: The Washington Post took a nosedive in quality after the hire of publisher Katherine Weymouth or that it’s always been a petty, poorly written newspaper and I just got wise to it. Either way, The Post’s content increasingly paled in comparison to that of The Times.
As happy as I am now reading The Times first and then The Post, I occasionally come across the sort of piece that kept me cool to The Times for so long. One such piece came in the form of a farewell post to Matt Gross’ Frugal Traveler blog:
But more than anything, I regret the huge swathes of the planet that I never visited. Yes, I went all over Europe, a large part of Asia, almost all of North America and the Caribbean, but that’s about it. In South America, I made it only to Argentina and Uruguay. Apart from the former Soviet republics of Kyrgyzstan and Georgia, I didn’t touch the Russian sphere of influence.
For this Frugal Traveler, the Middle East was confined to Dubai (unless you count Turkey). With the exception of a single day I spent in Fez, Morocco, I skipped the entire African continent. And I never got anywhere near Australia and New Zealand.
Matt Gross is a wonderful writer, and I enjoyed his piece this past Sunday on following Patrick Leigh Fermor’s trip on foot across Central Europe. And yet, I’m skeptical of the way he sets this up. As if South America, Africa, and Eastern Europe were on his to-do list and he simply ran out of time. They just happened to be at the bottom of that list!
For six years, Matt Gross was a travel columnist for The Times and only once touched Africa, never venturing south of the Sahara. He only went to the two most developed countries in South America.
It may be impossible to avoid, but I do not want to come across as self-righteous. I haven’t been to any of these places either. The problem is not that he hasn’t traveled to the poorer parts of the Earth. It’s that in regretting his omission, he ignores the obvious dividing line between the countries he’s traveled to and those he hasn’t. His off-handedness belies that the omission was one by design, rather than by accident.
Still, I’ll miss his blog.
Ezra Klein has an interesting take on Ultimatum Bargaining Games and Wall Street:
During the 1980s and 1990s, economists in a variety of countries conducted a series of experiments that shocked their profession. The experiments were called “ultimatum bargaining games,” and they were very simple: One person was given a pot of money to dole out. The other person got to accept or reject the deal. But here was the catch: If the second person rejected the deal, neither party got any money at all.
Market man — and his bible, textbook economics — would’ve thought this easy. The second person should take any deal that’s offered. After all, even a bit of money is better than no money. But that’s not how it worked out. When the second person was offered less than 30 percent, they generally rejected the deal. This was true across countries, age groups and even dollar amounts. “Apparently, responders do not behave in a self-interest-maximizing manner,” commented Ernst Fehr and Simon Gächter in a review of these experiments. Apparently not.
This brings us to a word that’s very important to most people but not very important to Wall Street: fairness. As the ultimatum experiments show, fairness is very important to the way most people make their economic decisions. But that particular quality is not very important to how Wall Street makes its decisions. Banks mislead customers, make money from betting against housing bubbles they help fuel, get bailed out with taxpayer dollars, and then pay out massive bonuses to their executives while the rest of the country is mired in a recession they caused. This might not be illegal, and the bailout might have been necessary to save our economy, but all of it is deeply unfair.
I think this is also relevant to the Euro-zone debacle. Wall Street creates the conditions for a global recession, and then when the public sector takes it upon itself to clean up the attendant mess (through fiscal and monetary stimulus), bond vigilantes initiate a run on the sovereign’s currency, running up borrowing costs. Paul Krugman has labeled this a “death spiral”- as the government goes deeper into debt to shore up the economy, investors raise its borrowing costs for fear of default. This means that a country, say Greece, has to spend more to service its debt in addition to its initial stimulus. This increases Greece’s debt, startling investors even more (who express their feelings the only way they know how: by raising borrowing costs). And so on and so forth.
In this case, Greece sort of made its own bed. There was a good article in The New York Times on Sunday about massive tax evasion in Greece:
In the wealthy, northern suburbs of this city, where summer temperatures often hit the high 90s, just 324 residents checked the box on their tax returns admitting that they owned pools.
So tax investigators studied satellite photos of the area — a sprawling collection of expensive villas tucked behind tall gates — and came back with a decidedly different number: 16,974 pools…
Various studies, including one by the Federation of Greek Industries last year, have estimated that the government may be losing as much as $30 billion a year to tax evasion — a figure that would have gone a long way to solving its debt problems.
But Portugal and Spain especially have been more responsible. The fact that they’re teetering reflects less upon their own vulnerabilities than on the capriciousness of financial markets. I’ve always thought of these sort of runs as being similar to a stack of newspaper sections sitting outside on a windy day. The underlying papers are safe, at least until the top one blows off.
“Sometimes I talk about love, some songs I talk about life, some songs I talk about me being the shit on every level.”
-T.I.
A few more photos from the Tea Party protests yesterday.
Below are pictures I took of the Tea Party’s rally outside of my office in Freedom Plaza. For a self-styled populist movement, they’re rather wealthy and educated, but OK.
B.O.B. - 4.12.2010
“The formula for making a hit record is like making a hit conversation”
- The-Dream
“This is about a lancing shame, about that gaping wound in the soul that comes when confronted with the appalling deeds of our forebears. Lost Causers worship their ancestors, in the manner of the abandoned child who brags that his dead-beat father is actually an astronaut, away on a mission of cosmic importance.”
- Ta-Nehisi Coates on Southern reverence of the Confederacy.
[video]
The Fourth Branch provides us with this interested map, which categorizes states according to the return on their taxes from the federal government. The states coded red receive more than a dollar in revenue for every dollar in taxes that is sent to the federal government, while those shaded blue receive less than a dollar. As both The Fourth Branch and Ezra Klein have pointed out, there’s alarming correlation between those states that voted Republican in the last election (and that house the majority of the most zealous anti-tax activists) and those that receive a positive return on their taxes. The political dimension to this paradigm is immediately apparent. It seems that those who are the most indignant about taxes are getting the best deal out of them.
Hypocrisy aside though, I think that geography is the dominant force here. Taxes are redistributive. We most often think of this redistribution in terms of individuals’ income- a progressive income disproportionately taxes the wealthy, whose income the government uses as a social safety net for the lower and middle classes. This redistributive mechanism holds as true for geography as it does for income levels. The states that receive more than one hundred cents on the dollar are the beneficiaries of the redistribution of wealth from other states. Part of this is a function of the income distribution described above. States that receive less than a full return on their taxes like New York and California are relatively wealthy. It makes sense then that when wealth is redistributed from the rich (who are likely to live on either coast) it will end up in poorer parts of the country like the Midwest.
I think this only explains part of the above map though. Government services vary by quality and scope across states but there exists some minimum level of service no matter where you live. You have the option to go to a public school. Roads are paved and maintained. Every municipality has a policy force. Et cetera. Economies of scale tells us that in less populated areas, the per capita cost of that minimum level of government service is higher than in more populated areas. A town of 5,000 needs an elementary school just as much as a town of 50,000, but the cost of building that school is spread across 5,000 people rather than 50,000, making it more expensive per person. Of course, those living in smaller towns don’t generally pay more in taxes than those in larger towns. The resulting gap between revenue and the cost of services is absorbed by the federal government, or more specifically, by tax payers in wealthier, denser parts of the country.
Population density compounds the problem. Not only is the population of Montana 11% that of New York City, but it is spread out over an area 484 times larger than New York. A population that spread out needs more hospitals, schools, and especially roads per capita as a result.
The debate over health care reform underscored the divide between rural and urban. Midwestern senators opposed the public option in part because the federal government’s reimbursement rate would not sufficiently cover rural hospitals’ costs. That’s because while rural hospitals serve a fraction of the people that Washington Hospital Center does, their MRI machines are just as expensive.
Rural areas have long been maligned for being relatively damaging environmentally. I think that as urban areas become increasingly livable rural areas may also earn a reputation for being economically inefficient.