I think it's time to do some looking at the Milton Friedman argument for deficits that conservatives have scrambled to embrace of late. You know, "deficits tend to decrease spending; specifically, they tend to constrain non-defense domestic spending," and so on.

If this is true, you'd expect to see surpluses correlated with spending, and deficits inversely correlated with spending.

I loaded 1962-2001 data on government spending as a proportion of GDP from the tables of section 8 into Excel and ran some correlations. I deleted the bizarro TQ, because I'm too lazy to fix up the results for that correctly, and it doesn't change much anyway. A few items of note:

• The correlation between surpluses and non-mandatory non-defense spending is weakly negative.
  
• There is no correlation between revenue and non-mandatory non-defense spending - the "big government" conservatives complain about.

These both contradict Freidman. Here's one that doesn't:

• The correlation between interest outlays and non-mandatory non-defense spending is weakly negative.

So a fallback hypothesis, that interest payments constrain spending, matches the evidence pretty well.

On closer inspection, interest rates, which have little to do with the matter under discussion, have extremely strong effects on interest payments. Year-to-year changes in the annual deficit don't do much to the size of the total deficit, after all, so annual interest payments are barely affected by short-run changes in the deficit; it's almost entirely interest rates. These rates are mostly the result of inflation and long-run growth expectations; altogether, this means interest payments probably aren't a very good measurement of the delta in congressional spending from revenue changes.

I don't think the evidence is with Friedman here.

Update: Megan McArdle makes some good points about consumption smoothing and forward-looking interest rates, but they don't really change anything.

To see why, let's assume that interest outlays constrain domestic spending. Interest payments are spending, too (they're certainly not free), so I added them to the spreadsheet. Interest payments + domestic spending starts at 3.7% of GDP in 1962, crawls up to 6.6% of GDP in 1980, and then stays there until 1995, after which it slowly falls to 5.2% in 2001. Does that look like cheaper government through deficits to you? The correlation between deficits and interest+domestic is strongly negative, already - what are conservatives trying to do? Make the government spend just as much tax money as before, except on bond payments?

Welfare for rich people!
- posted by Jason @ 5:30 PM

 
Something you won't hear in all the neocon blathering about how "everyone hates Germany": after the 20 point drop of the last year, 71% of those polled have a favorable opinion of them.

Coincidentally, 29% is close to the proportion of strongly identified Republicans out there.
- posted by Jason @ 4:35 PM

 
There's been a bit of discussion over on Delong's website about the weirdness of the chart in this NYT article. Do the various income brackets really all pay about the same tax rate? How do you fund government spending at 32% of GDP when no bracket pays over 19% of their income?

After some discussion, and talking to Steve Henderson at the BLS, it looks like the NYT misinterpreted the data. As Steve explained by email:

Good afternoon,

Thanks for your phone call yesterday. Here's what I found out about the tax data from one of the CE senior economists:

As I understand it, the tax amounts are simply those reported by complete reporters, and nothing more.
That is, if a person says, "I don't know how much I paid in state or local taxes last year, but my federal taxes were $1,000," then total taxes are shown as $1,000. If the person says, "I refuse to tell you how much I paid in taxes in any form last year," the total taxes are shown for tabulation purposes as $0.

The inclusion of zero tax amounts into the mean tax
expenditure for complete income reporters can cause the tax estimate per household by income bracket to be lower.
- - Steve

In other words, the strongest statement you can make about the survey data related to the tax burden is something like "incomplete data results in all brackets reporting about the same proportion of income spent on taxes." That the state, local, and federal government adds up to about 32% of GDP, yet no bracket has a higher rate than 19%, is a big tip-off.
- posted by Jason @ 12:43 PM

 

Hitler's Willing Executioners

This book is.....complicated.....to get through. There are only so many descriptions of guys grabbing kids by the hair and blasting them in the back of the head that you can take, really, before you hurl it into the wall. Be forewarned if you pick it up; it's not a pleasant endeavor.

It's worth it, though. The point, more or less:

Eliminationist anti-semitism was one of the central defining features of German culture in the Weimar period. The apologist statement that "the average Weimar German wasn't an an anti-semite" has a rough time of it; there was plenty of public discussion about "the Jewish problem," long before Hitler's arrival. They were poison to German society, that was common territory; the only point of debate was the best way to get rid of them. Should they be relocated outside of Germany? Would mass murder be easier?

Building on this, he insists that the existing explanations for why individual Germans agreed to kill Jews are wrong. At the core, they all blame the Nazi system of government and culture in some manner for what happened, instead of focusing on the "beliefs and actions of the individual perpetrators." The stories of the Police Battalions, which were tasked with maintaining order in the occupied territories (and spent a lot of time eradicating Jews), are examined in detail to refute the common exculpatory theories.

One of these is the "just obeying orders"/authoritarian/groupthink argument. Many police battalion commanders made it quite clear, however, that anyone who did not feel up to the task was not required to engage in the killing operations; more strangely, only a few members took up these offers. Contrary to the statements of defendants at Nuremburg, no one has been able to find a single case where someone was significantly punished for refusing to kill a Jew. Does this sound like an authoritarian climate of fear, where refusal to shoot Jews results in harsh punishment?

Another is "the killing was done by extremist, out of control fringe elements." The obvious response is scale: the police battalions killed something like a million Jews, at a minimum. How could a fringe element possibly kill so many? More usefully, demographic data shows the battalions weren't composed of "extreme, crackpot, Jew-hating elements," as the conventional wisdom would have us believe; they were a virtual cross-section of the non-military-eligible male population. The German equivalent of guys from the suburbs, most with wives and children, offered no objection to slaughtering entire villages.

Killing actions weren't carried out in "chaos of combat" situations, either. The battalions had regular social events during their scheduled deployments; bowling, music, and other common get-togethers of civil society. Commanders had their significant others visit them. An occasion of genocide wasn't particularly noteworthy from command's standpoint; the only reaction was a bigger alcohol ration. No discussion, no indoctrination, no conflicting orders, no return gunfire. Occasionally a commander would explain the actions to the men as "suppression of partisan activity," so I suppose the case can be made that the killing of Jewish men was somewhat understandable under the circumstances (oh, and it has). Shooting the elderly, though? Blasting away at infants?

The weirdest avenue explored is how Germany didn't put Jews to work for their production value; you'd think they at least would try to get some cheap labor out of them. The popular conception of Jewish forced labor contains a lot of this view; Schindler took his Jews because they were cheap, remember? Goldhagen's conclusion is the direct opposite: that the German approach to Jewish work was entirely punitory. The camps were the logical consequence of the common statement "Jews do not do honest, real work, and they hate it"; the chief goal was Jewish suffering, with economic value but a happenstance. Jews were made to work because it was considered so inimical to their "nature" (greedy, slothful bankers, and so on) that the act of lifting a hand was itself punishment. Their living conditions certainly weren't designed for optimum production, or even barely sufficient to turn a profit; the death rate in some work camps was upwards of 100% per month. Work wasn't "work" for the good of the Volk; it was just one last caper at gunpoint, the final amusement of the captors.

Similarly, the Jewish death marches that occurred towards the end of the war served no material purpose. They were in some cases explicitly ordered not to kill the Jews enroute, but that apparently was only to prolong the suffering. Their destinations were pointless (in the middle of forest, miles from civilization), the Soviet army was right behind them, and they weren't treated in a manner where economic value could be extracted from them at some future date. The marches were simply torture, to inflict the maximum possible suffering on the Jews before exertion and malnourishment took them.

The "average German" of this period was perfectly fine with killing Jews. Nazi eliminationism wasn't a trick of Hitler's spellbinding oratory and economic circumstance. It was the logical outgrowth of the virulent anti-semitism of Weimar Germany. Goldhagen does state that he rejects the notion of collective guilt; standing there and watching (metaphorically or literally) doesn't make you guilty of genocide, even if you think the Jews do need to be killed. For those that engaged in the killing, however, or were directly involved in the killing operations (100,000? 1 million? more?), there aren't any excuses. They quite clearly believed that Jews were a direct threat to Germany, if not the world, and that the good of humanity required their destruction.

From the epilogue:

This study of the Holocaust and its perpetrators assigns to their beliefs paramount importance. It reverse the Marxian dictum, in holding that consciousness determined being. Its conclusion that the eliminationist anti-semitic German political culture, the genesis of which must be and is explicable historically, was the prime mover of both the Nazi leadership and ordinary Germans in the persecution and extermination of the Jews, and therefore was the Holocaust's principal cause, may at once be hard to believe for many and commonsensical to others. The evidence that so many ordinary people did maintain at the center of their worldview palpably absurd beliefs about Jews like those that Hitler articulated in Mein Kampf is overwhelming. And the evidence has been available for years, indeed available to any observer in Germany during the 1930s. But because the beliefs have seemed to use so ridiculous, indeed worthy of the ravings of madmen, the truth that they were the common property of the German people has been and will likely continue to be hard to accept by many who are beholden to our common-sense view of the world, or who find the implications of the truth too disquieting.

Germany during the Nazi Period was inhabited by people animated by beliefs about Jews that made them willing to become consenting mass executioners. The study of the perpetrators, especially of police battalions, who were a representative cross section of German men - and therefore are indicative of what ordinary Germans were like regarding Jews - compels us, precisely because there were representative of Germans, to draw this conclusion about the German people. Being ordinary in the Germany that gave itself to Nazism was to have been a member of an extraordinary, lethal political culture. That German political culture was producing such voluntaristic killers suggests, in turn, that perhaps this was a society that had undergone other important and fundamental changes, perhaps cognitive and moral ones. The study of the Holocaust's perpetrators thus provides a window through which German society can be viewed and examined in a new light. It demands that important features of the society be conceived anew. It suggests further that the Nazis were the most profound revolutionaries of modern times and that the revolution that they wrought during their but brief suzerainty in Germany was the most extreme and thoroughgoing in the annals of western civilization. It was, above all, a cognitive-moral revolution which reversed processes that had been shaping Europe for centuries. This book is ultimately not only about the perpetrators of the Holocaust. Because the perpetrators of the Holocaust were Germany's representative citizens, this book is about Germany during the Nazi period and before, its people and its culture.

- posted by Jason @ 9:44 PM

 
Want to argue about the size of the budget? Taxes? Relative distributions, spending cuts, blah blah blah? This right here has everything you need.

A few things that stand out:

• Taxes haven't changed much since the 1970s.
  
• Spending hasn't changed much either, excepting a drop in defense spending.
  
• None of the stereotypes about Democratic or Republican budgets are true, really.

- posted by Jason @ 2:35 PM