Community College: Investment or Signal?

I haven’t yet made up my mind about Obama’s proposal for free community college.  Well, I have made up my mind on one (arguably small) aspect: ain’t gonna happen.  His proposal is nothing more than that: a proposal for a bill that would have to be passed through Congress.  The GOP-led Congress has no interest in Obama’s proposals as a general matter of principle, and even less in proposals for expanding public education.  There are many more contentious issues, most raised well by Andrew Sullivan and readers: what are the costs, what are the benefits, and will this truly benefit the worst-off or the generally well-off?

I do think this hinges largely on whether you believe higher education is a human capital investment or signaling.  If it’s investment, then this is unequivocally a good thing even if it might not be the wisest investment compared to primary education.  If education is just a signal of hard work and intellectual ability, there’s no social benefit to increasing the education level of the marginal.  It will just push up the competition for jobs open to current associate degree-holders, and encourage them to get four-year degrees, and so on up the credentials chain.  Tim Worstall makes this point well.

One thing I think can be neglected is that it’s implausible to believe that education is just signaling or just human capital investment.  It’s surely some of one and some of the other, and different for different degrees and people.  A BA from Yale in English may be almost pure signaling, while an Associate’s from a community college in electrical engineering is probably mostly investment.  Correspondingly, the value of the Yale degree resides less in the education one receives than just how competitive it is to get one.  I suspect that most community college degrees lie further towards the investment end than might be obvious to social elites, who are highly attuned to signaling and positional goods.  That doesn’t necessarily mean it’s the best investment of money – again, probably there is much lower-hanging fruit in earlier education.  But I think that increasing the number of community college graduates by one will likely yield far higher social benefits than increasing the number of Ivy League graduates by one.

Climate Accords and the Credible Commitment Issue

Attention-grabbing headlines this morning said that Obama was seeking to circumvent Congress in order to pass a far-reaching “accord” on climate with the international community.  Treaties have to be ratified by the Senate, but the President has a fair amount of leeway to negotiate anything short of a legally binding treaty.  As soon as I dug even a little deeper into the details, I couldn’t help smiling because this is a ridiculous idea.

It also proves that the Administration needs more political scientists thinking through political strategy.  I’m available, by the way; the NSA has my number.  Even a basic familiarity with the tenets of game theory would explain why this is an extremely unpromising idea.

Why would countries agree to treaties, which restrict their freedom to dictate policy?  Usually as a way to resolve collective action problems, wherein all the participants bind themselves to pursuing a policy that is better for everyone.  The Geneva Convention is a good example; people generally honor it because a world where POWs and civilians are treated better is better for everyone.  Why do they not sign on to treaties even when the result would be better for everyone? In that case it’s usually a concern about defection – Country X worries they will honor it but nobody else will, and leave them alone bearing the cost.  So when proposing a treaty, it’s very important to convince your counterparts that you will honor the deal.

In game theory terms, this is called a credible commitment.  Countries need to go to great lengths to demonstrate credibility, and there are many mechanisms to do so.  Senate ratification is actually a way to do this – our counterparties can be confident that when a treaty gets the required two-thirds vote in the Senate, there is a genuine political consensus behind this.  And therein lies the rub – when a treaty commands almost no support in Congress, our counterparties are justified in doubting how likely the US will be to honor it.

Our counterparties – China, Germany, and the rest of the world, aren’t stupid.  They can read the New York Times and understand that a solid majority of the Senate would vote to overturn such an accord passed without their consent.  There might even be sufficient Congressional support to override a veto of such a vote.  Furthermore, as soon as a Republican takes the Presidency the accord will be broken by executive fiat.  An international agreement implemented against the explicit wishes of Congress, at the tail end of a Presidency, is almost the least credible commitment the US Presidency can make.  

This is a ludicrous idea that I sincerely hoped is discarded as swiftly as possible.

Government Shutdowns and Models of Rationality

As a positive (not normative) account of the government shutdown beginning today, I think it’s hard to do better than Tyler Cowen in telling the “strategic irrationality” story:

The House GOP has voted to repeal Obamacare 41 times, as of last count, but that link is from Sept.12 and maybe by now the number is higher yet.  One can thus conclude that the GOP sees advantage in staking out a public position against Obamacare, whether this be with voters, donors, primary opponents, whatever.

By threatening a government shutdown over Obamacare defunding, the GOP is again staking out a public position against the law.  Such a statement is more focal, and generates more publicity, than a 42nd vote for repeal.  Everyone is talking about it, even me (sorry people).  If you’ve voted 41 times for repeal, you will like the fact that everyone is concerned with this new dispute.

If the GOP lets the government actually shut down, people will talk about their Obamacare stance even more.  But the party, and its representatives, will bear costs from being associated with the shutdown, which is inconvenient, hurts the economy, and lowers our international status.  We don’t know whether they will cross this threshold, but either way it is a purely political calculation and not especially mysterious or “irrational.”

I would note that Mancur Olson would disagree with the “strategic irrationality” viewpoint, seeing this as a collective action problem.  Namely, political entrepreneurs like Ted Cruz see great advantage from forcing a shutdown in terms of publicity, donations, position within the party, and so on.  This is causing the entrepreneurs to act in their own best interest, to the detriment of the party as a whole.  In this story, the devolution of funding power from party organizations to third-party funding like SuperPACs has destroyed the coercive element necessary for the party to act in its own best interest.  In a neat little irony, the GOP’s relentless attacks on campaign finance ultimately hampered their ability to do pretty much anything.  Let’s call this “group irrationality“.  Perhaps the Democrats should be glad that their superPAC infrastructure is so much less developed.

However, neither of these explanations suggest the GOP achieving their goal of ending Obamacare.  In Cowen’s, the strategic payoff is in electoral returns in 2014…they keep the shutdown going until the perceived costs outweigh the perceived goals, and then they fold as efficiently as possible.  In Olson’s, the payoff starts off negative…the shutdown continues until enough actors defect and they ally with the House Democrats to end the standoff.  In either case, the incentive for the Democrats is to hold fast – basically no individual Democrat gains from defecting.  Either explanation suggests an eventual fold by the GOP with no policy gains.

Also worth noting is the consequences for default, which unlike government funding has a drop-dead date.  If the GOP is strategically irrational, the debt ceiling is nothing to worry about.  If the GOP is group-irrational, then panic might be appropriate.

Perpetual Crisis and the Sixth Party System

A post on Talking Points Memo is a brief reminder that the period of relative calm in Washington we’ve enjoyed these past few months is coming to an end.   It follows this up with a half-assed explanation that Obama wants to give speeches to “set the tone”, but the key point is that there is yet another crisis point coming with the upcoming expiration of the debt limit.  Since the last crisis, Congress has actually been working on real legislation concerning immigration, but I think that the debt limit battle will push immigration right off the table.  Why?  Because there’s a hard deadline, because the Republican House continues to demand concessions, and because most of the easier compromises were signed at the last crisis points.

Little has changed since the last time I wrote about government by crisis, a year and a half ago (ugh).  Government-by-perpetual-crisis is a terrible way to do things, because sooner or later someone will miscalculate and send the country hurtling off the cliff.  Nevertheless, it seems to be a real passion for the GOP House for reasons that aren’t entirely clear to me.  While it could use regular appropriations bills as opportunities for standoffs without the chance for global financial crisis, the House seems fixated on seizing the opportunity with the highest stakes possible.

I think the real question is: why did this only start in 2010, and will Democrats act similarly in the minority? Here’s my hypothesis – it’s time to put the Fifth Party System to bed and acknowledge the emergence of the Sixth Party System over the late 1990s and early 2000s.  The politics of the Fifth Party System are generally oriented around Roosevelt’s “New Deal Coalition”, whereas they have been replaced by a new party system organized primarily around culture.  The Democrats represent the North and the cities; the Republicans the South and the country.  This matters a lot because it gives massive cultural import to previously mundane issues like spending levels.

Under the Sixth Party System, with the unification of party and culture, all politics takes on symbolic value to voters.  Previously, it was hard to get regular voters to care about policy because it’s a dry and boring topic.  But when every policy conflict becomes invested with cultural significance, it’s a lot easier.  Hence why you have every Republican politician and Fox News anchor talking about “taking our country back”; repealing Obamacare isn’t just a policy issue, it’s rolling back the Northern domination of America.

The system reached its full fruition only with the election of Barack Obama for a few reasons.  Not only is Barack Obama the first black President; he’s also the first Northern Democratic President since Kennedy and I don’t think this is irrelevant.  He personifies the value system of the North – multiracial, professional, coastal, urban, educated (and not a veteran).  The Southerners who now comprise the vast majority of the GOP look at him and see their values under siege.  Racism likely plays a role – but I think it’s foolish to see rabid hatred of Obama as motivated solely by racism.

Ultimately, I think this explains both why the House GOP has adopted a posture of total war and why Democrats are unlikely to do the same.  Each has come to represent a culture and the North is winning.  America is becoming more diverse, less white, less Christian, more tolerant and more urban.  It’s natural that in such a scenario the party of the cultural losers will perceive perpetual crisis and will act accordingly – it’s also just as natural that the party of the cultural winners will act with less urgency.  I posit that the dynamics of this Sixth Party System does predict perpetual warfare and crisis from the GOP, and less so from the Democrats when they are in opposition.  It also suggests a Democratic advantage in electoral politics, though one which translates poorly to Democratic policy goals.  But we shall see!

“The Obama Spending Surge”

The “Obama spending surge” isn’t actually real.  Keep in mind that the budget for 2009 was laid out in 2008, and it basically entirely disappears.  From 2010 onwards (budgeted for in 2009, Obama’s first year), aggregate federal government spending is basically flat.  I hadn’t quite realized how clear the picture was, but it is a reminder that in addition to having no concrete policy proposals, the main Republican complaint about Obama is basically not real.

Slouching Towards Default (But Not Really)

The Politico article from this morning, about how the Congressional GOP is seriously considering national default, is predictably horrifying.  But after having thought about it for a little while, it is somewhat less concerning than it seems initially.  The “default caucus” is rather small, and unlikely to grow.  The GOP can’t survive without Wall Street, and the massive financial shitstorm that the GOP is playing with is pretty unpalatable for Wall Street, to put it mildly.  If the GOP did cause a national default, it’s fairly obvious that their big-money donor support would evaporate pretty quickly.  John Boehner gets that, as do most GOP House members, I reckon.

Furthermore, as I’ve said before, their actual goals are unclear.  While the Politico article has a lot of tough talk about the torrent of spending and putting brakes on Obama, Congress does hold the power of the purse.  If they wanted spending cuts, they could pursue them without creating crisis points like the debt ceiling through the budget process.  And even with these crisis points, the excellent leverage crisis provides is good for nothing if the GOP doesn’t have the will to power to pursue their goals.  If we see the GOP going balls-to-the-wall to secure huge cuts in Medicare, then I might be a little less sanguine about the likelihood of crisis being averted.

One must wonder what an actual default would look like, politically.  According to Ezra Klein, the ability of the Treasury to successfully prioritize payments seems rather limited.  Debt payments run on a separate system, but even so it’s not clear whether payment can be withheld in such a way that the United States will write zero bounced checks.  And I do fully believe that a bounced check from Treasury, even if it’s not on an interest payment, will unleash a complete financial shitstorm.  For Wall Street to continue supporting the GOP after that will be completely untenable.  Frankly, if I were Jamie Dimon I’d already have some tough questions for the Chamber of Commerce after they backed the losing horse in 2012.  If that losing horse blows up the banking system, that’s unacceptable.

The situation really does resemble a hostage negotiation with a single hostage.  If the House GOP shoots the hostage, that has the potential to completely shatter the party.  It will devastate their institutional support, alienate the vast majority of Americans, and of course be completely indefensible on the merits.  I think they’re bluffing, and attempting to dangle the crazy caucus in front of Politico in order to scare the Democrats.  The main danger isn’t John Boehner purposely deciding to shoot the hostage, it’s him miscalculating and taking too long to fold.

Truth in Opinion

Jonathan Bernstein drops some knowledge on debt ceiling polling.  Basically, pre-debt-ceiling-battle, respondents will agree with abstract statements about matching debt-ceiling hikes dollar-for-dollar with spending cuts.  This is not necessarily a good predictor of how people will react should Republicans force a debt default because Democrats refuse to cut Social Security.

This is a factor of a few things.  One is specificity – while “cutting spending” is popular, specific spending cuts are generally not.  The Republicans will not be able to hold together on the debt ceiling unless they go balls-to-the-walls on this –  hitting the Sunday shows, grandstanding in Congress, endless CNN appearances, all threatening national default unless Democrats consent to their demands on cutting Social Security.  And they won’t be able to play the game of demanding Obama specify the cuts, because he has declined to do so and would be dumb to cede that ground.  In order to get their base appropriately riled up, they need to make demands and fight for them.  Perhaps Republicans think the terms of that fight favor them, but I doubt that.

More fundamentally, people are really bad at judging their future behavior.  I’m not an authority, but I did write my undergrad thesis on public opinion dynamics and I now do market research for my job. If there’s anything I’ve learned, it’s that people are really crappy at predicting their future opinions and behavior.  Asking people today, with relatively leading wording, how they would react should the Republicans cause a debt default is a terrible predictor of how people would react should the Republicans cause a debt default.

Hopefully John Boehner is dropping surveys like that to fire up the troops and intimidate the Democrats, rather than as an expression of his actual beliefs.  Given his aversion from maximalism in confrontations before now, I’m guessing the former and I hope that I’m right.  Making overconfident predictions about a basically unthinkable action is the sort of thing that gets one into trouble.