Manufacturing Shared Prosperity

Cato's Daniel Ikenson follows up on his own thesis about the allegedly-surprisingly-vital state of American industry with a mention of Peter Goodman's recent article, which provided a case study in the same phenomenon.

As Goodman describes it:

The United States makes more manufactured goods today than at any time in history, as measured by the dollar value of production adjusted for inflation — three times as much as in the mid-1950s, the supposed heyday of American industry. Between 1977 and 2005, the value of American manufacturing swelled from $1.3 trillion to an all-time record $4.5 trillion, according to the Bureau of Economic Analysis.

With less than 5 percent of the world’s population, the United States is responsible for almost one-fourth of global manufacturing, a share that has changed little in decades. The United States is the largest manufacturing economy by far.

Ikenson offers his own thoughts on the implications of this "metamorphosis" in American manufacturing:

During the most recent decade, U.S. manufacturing has become increasingly oriented toward the middle and upper ends of the value-added spectrum. Opportunities abound for workers with skills or the willingness and wherewithal to acquire them. In fact, the title of the National Association of Manufacturers tenth annual Labor Day Report on the state of U.S. manufacturing is “Rising Incomes Cushion Economy,” and its subtitle is “Finding Highly Skilled Workers Remains a Challenge for Manufacturers.” It seems to me that rising wages should make more workers willing to get the skills, and the need to find highly-skilled workers should induce manufacturers to assist on the wherewithal front.

The story about the current economy continues to be the disconnect between the optimists and the pessimists: the former seem completely unable to understand the latter, even though pessimism about the economy is the lived experience of most Americans.

Wage growth in fact remains relatively slow. But if we take Ikenson's analysis on faith and concede -- happily -- that there is increasing demand for highly-skilled manufacturing workers, then we should also take seriously the question of "wherewithal." Specific investment in advanced skills is a risky thing, as Jacob Hacker has pointed out. And it becomes an increasingly difficult question of "wherewithal" when seen in the context of the many other risks facing American workers: lack of portable, affordable health care, unreliable defined-contribution pension schemes, low savings and high levels of debt, and an increasingly volatile housing market.

Certainly it would be a good thing for high-value-added manufacturers to invest in helping train workers to fill the jobs they need filled. But addressing those other sources of insecurity would go a long way toward encouraging workers to make their own investments in obtaining advanced skills -- or even in starting up their own ventures.

Good social insurance can be capitalism's best friend. And in the long run, experience has shown us that economic growth most benefits society when government helps ensure that the newfound prosperity is shared by all.

If we're having a "second industrial revolution," as Ikenson calls, it, let's not forget the lessons of the first.

Labels: Cato Institute, economy

  ¶ Posted by Paul Curtis 11:07 AM 1 comments

  Marriage Counseling

A number of my recent posts have related to the strained marriage between Republicans and libertarians. I haven't yet commented on discussions about a liberal-libertarian alliance. I'm skeptical about such discussions, I have to admit, in part because I'm not sure that negotiating with self-identified libertarian intellectuals of the Cato Institute variety is the same thing as negotiating with so-called "libertarian" voters. The latter, I think, are a rather more complicated group, to the extent that they are a group at all.

The way I see it, libertarian thought is quite mainstream on matters of civil liberties, but, when followed to its logical conclusions, not very mainstream at all regarding its views on government. But then, I guess that's what makes me a liberal.

Anyway, here's a dose of skepticism from the other side, by a libertarian who just doesn't think a fling with the left would be a very good idea:

Why not, instead, follow Brink Lindsey's suggestion and try to forge a common bond between libertarians and liberals?

Briefly, my answer boils down to two points.

1) The Republican base is more naturally favorable toward limited government than is the Democratic base.

2) I find it a challenge trying to persuade religious conservatives to loosen the relationship between their religious beliefs and their political agenda. However, I find it even more of a challenge to deal with the Left, where their political agenda is their religion.

[...]

The typical libertarian shorthand is that we are with the Democrats on social issues and with the Republicans on economic issues. In recent years, the Republicans betrayed us on economic issues. However, my sense is that many in the conservative movement are anxious to repent. On foreign policy, I think that we can gradually persuade more of them to come to their senses on the challenges of the Natural State.

Meanwhile, the Democrats seem to be completely dug in to hard-left positions on economics. They lack any vision for foreign policy. I think we should stick with our marriage to conservatives, and try to make it work.

Again, I'm not sure that whatever the intellectuals decide to do will necessarily have a tremendous impact on the "libertarian vote." But maybe I don't give political theorists enough credit.

Labels: Cato Institute, libertarians, TCS Daily

  ¶ Posted by Paul Curtis 3:14 PM 0 comments

  Right-Wing Think Tank Review - 2/6/07

Cato Institute (Sourcewatch profile here)

"Libertarian Voters in 2004 and 2006" (Cato Policy Report: Jan/Feb 2007)

Article by David Boaz, executive vice president of the Cato Institute, and David Kirby, executive director of America's Future Foundation.

Boaz and Kirby use poll data to show that the 2004 and 2006 elections have found "libertarian-leaning voters" moving increasingly into the Democratic column. While it's generally understood that Republicans lost heavily among independents in 2006, the authors seek to show that libertarians "may be the largest bloc of such independent-minded swing voters." If this is the case, if "libertarians are a bigger share of the electorate than the much-discussed 'soccer moms' or 'NASCAR dads,'" and if their votes are up for grabs, then parties should seek to address specifically libertarian concerns in order to win elections.

However, the article, in my analysis, is not entirely convincing on two important - and related - levels:

1. Defining "libertarian voters," and


2. Determining what motivated these voters in '04 and '06.

The authors report that they have selected questions from a number of polls about American political attitudes, arriving at results that suggest that about 14% of American voters can be "classified as libertarians." However, they do not disclose specifically what those questions are. They also rely on data from a poll they themselves commissioned from Zogby International, which identifies 15% of voters as "libertarian," but they don't provide or link to the full results of this poll (For more on questions regarding Zogby's special-interest polls, and specifically those commissioned by Cato, see this Chris Mooney article from the American Prospect).

Boaz and Kirby report that, in 2004, "the libertarian vote for Bush dropped from 72 to 59 percent, while the libertarian vote for the Democratic nominee almost doubled." They continue:

It’s not hard to imagine why. Bush’s record on federal spending, centralization of education, expansion of entitlements, the war in Iraq, executive authority, the federal marriage amendment, and civil liberties was certainly sufficient to dissuade many libertarian voters.

This, however, fails to distinguish among these potential motives, providing no indication of whether "libertarian" voters were more displeased by the war in Iraq or by "centralization of education."

The trend continued in 2006:

After two more years of war, wiretapping, and welfare-state social spending, we found similar patterns in 2006. In the Zogby survey, 59 percent of libertarians voted for Republican candidates for Congress, and 36 percent voted for Democrats. Comparing those results to the last off-year election in 2002, we find a 24 percentage point swing to the Democrats.

An interesting note: as measured by Boaz and Kirby, "The libertarian vote is about the same size as the religious right vote measured in exit polls, and it is subject to swings more than three times as large."

The authors' Zogby poll apparently does provide a breakdown of these voters' motivations in 2006:

Libertarians who said the war in Iraq was the most important issue voted 64-31 for Democratic congressional candidates. Libertarians who stuck with Republican candidates were most likely to describe terrorism or security as the most important issue. Libertarians for whom federal spending was the most important issue were most likely to vote for third-party candidates: 39 percent Democratic, 38 percent Republican, 22 percent other.

Once again, however, the authors do not provide the raw numbers. How many of those libertarians said the war in Iraq was the most important issue? How many cited federal spending? Of course, those numbers, representing the opinions of 15% of respondents to a poll of 1,012 voters, would be subject to a margin of error of roughly 10%. Based on the information Boaz and Kirby provide, it's difficult to extrapolate that there is a significant swing vote motivated directly by opposition to "welfare-state social spending." To be fair, the authors mostly avoid making any claims that would privilege economic motives over others. But we should be cautious about rushing to assume that, if libertarian voters are swinging elections, politicians should therefore make it a priority to focus their attacks on entitlements. Indeed, for instance, one of the surveys cited by the authors, the 2004 Pew Values poll, indicated a sharp drop in anti-government sentiment since 1994, and a corresponding rise in public support for the idea of a social safety net.

And who are those libertarian voters, anyway? Again, the authors are appropriately cautious:

Certainly we are not claiming that 15 percent of American voters have the deep and well-informed commitment to liberty and limited constitutional government of Cato Sponsors or Reason magazine readers. Rather, we include both individuals who would self-identify as libertarian and individuals who hold generally libertarian views but may be unfamiliar with the word.

The authors recognize the limits of ideological self-identification polls, which are in my view the least useful measure of public political attitudes. Of course, it behooves them to recognize this, as "only 9 percent of voters with libertarian views identify themselves that way."

Thus, they ask an additional question:

We asked half the sample, “Would you describe yourself as fiscally conservative and socially liberal?” We asked the other half of the respondents, “Would you describe yourself as fiscally conservative and socially liberal, also known as libertarian?”

The problem is that this question also relies on self-identification, only at another level. It's still left to the respondent to interpret the meaning of "liberal" and "conservative." And this allows for a tremendously broad interpretation: no wonder that 59% of respondents answered "yes" to the first question. "Fiscally conservative and socially liberal" is a phrase that has frequently been used to describe Howard Dean - and many of the "Deaniacs" who were lampooned as wacky leftists; it could also apply to many, if not most, of the posters at Daily Kos - including Markos himself.

The authors themselves admit that this number is "overinclusive," though they find it "encouraging." I am still unclear as to how they then arrived at the 15% figure - I couldn't find where they had reported any further screening questions. Boaz and Kirby provide some interesting indications that the libertarian constituency, such as it is, may increasingly operate as a swing vote. But the who, why, and how much of this story remains far from clear.


Heritage Foundation (Sourcewatch profile here)

"Bush Budget Reins in Entitlement Costs" (WebMemo no. 1341, 2/5/07)

Article by Brian M. Riedl, "Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Insitute for Economic Policy Studes at the Heritage Foundation."

Riedl praises the president's budget for its "focus on entitlements."

The impending retirement of 77 million baby boomers will trigger a $39 trillion tsunami of unfunded entitlement costs over the next 75 years.[1] The good news for the younger Americans who will pick up this tab for retiring baby boomers is that President Bush's budget begins to seriously address this challenge by proposing real reforms that could slice $8 trillion from Medicare's total unfunded liability.

Specifically, Riedl is pleased with the proposal to require wealthy retirees to pay higher premiums, as well as to modify the "market basket" of Medicare payment plans, so as to pay less money to doctors and hospitals over time. However, he indicates that Medicare is still fundamentally flawed from a conservative perspective, arguing, as many conservatives do, in favor of a "defined contribution" scheme that would de-collectivize it.

Riedl also defends Bush's request to extend his notorious tax cuts:

By increasing incentives to work, save, and invest, reduced tax rates played a key role in the expanding business investment, job growth, and the stock market gains that have powered recent years' economic growth.

(By contrast, this article suggests that the tax cuts have not resulted in increased business investment or in higher wages for American workers.)

The article also further indicates how the right will frame the battle over extension of the tax cuts: as a fight over a tax increase:

Letting the tax cuts expire--or worse, repealing them--would be a major tax increase for millions of Americans. [...]

The federal budget's problems do not stem from Americans being undertaxed, but rather from Washington spending too much. In order to prevent one of the largest tax increases in American history, Congress should follow the President's lead by extending the current tax policies.

Of course, when they were proposed, the cuts were only supposed to be temporary - so one could argue that it was Bush himself who "planned" this massive tax "increase."

As for who this "increase" will primarily affect, see this study.

Labels: Brian Riedl, Budget, Cato Institute, David Boaz, David Kirby, electoral politics, Heritage Foundation, libertarians, Right Wing Think Tank Review

  ¶ Posted by Paul Curtis 11:03 AM 2 comments