Rationed by income

Maryland Congressman Chris Van Hollen on the Paul Ryan budget plan:

This Republican Plan simply rations health care and choice of doctor by income.

What bizarre rhetoric for a US politician in one of the country's major political parties to use. Everything we buy that is not subject to government price controls, directly or indirectly, is "rationed" by income. In the vernacular, this simply means the thing in question has a price to be paid by the person who wants to consume it, as everything must in a free market. The car, the house, the soap, and the sandwich you buy are all rationed by income, or more precisely, by money. It's basic supply and demand, the most rudimentary concept in economics.

I don't follow mainstream political punditry very closely, though I've not heard it being seized on by the popular right. Maybe the Rasmussen poll from a couple of years ago finding only a very slight majority of the public saying capitalism is a better economic system than socialism means it's rhetorically trickier than I'd imagine it to be, and maybe public sentiment is in favor of shielding health care costs entirely from the individual and collectivizing them in their entirety, but Van Hollen's statement reveals a socialistic mindset if ever one did--the idea that if an individual must pay the market rate for something, that thing is being "rationed", with all the negative connotations that go along with such a word choice in contemporary America.

Blacks like socialism and other sundries from Pew's word association survey

About a month ago, Pew Research released the results of a word association survey it conducted in late April. Word association is by some distance removed from anything actionable, but the survey is nonetheless useful in calibrating common perception with the actual feelings of various groups of people. A few instances of this follow.

- Awhile back, I had some fun creating hypothetical electoral maps portraying what the outcome of the 2008 Presidential election would've been if only select demographic groups were allowed to vote. As has been the case for Democrats for decades, Obama performs better if suffrage is extended to women and denied to men.

I was not making a novel observation in pointing out that the female voting behavior is steadily pushing the country in a leftward direction. I first encountered it in John Lott's book Freedonomics. The Pew survey reinforces that argument. "Socialism" is favorably perceived by 33% of women to 25% of men. It is viewed unfavorably by a slim majority of women (54%) compared to two-thirds of men (65%). "Capitalism", in contrast, is viewed favorably by 59% of men but only 47% of women. It invokes negative feelings in 34% of men and 40% of women.

- While the socialist indoctrination that putatively takes place at colleges throughout the country may be a rallying cry for cultural conservatives, it is among those who've never set foot on a university campus that socialism's base of support is the widest. Among those with a high school education or less, 35% view the word "socialism" favorably, compared to only 23% of college graduates.

- Blacks, who stand to benefit from socialist economic policies at the expense of white Americans, are understandably much more favorably inclined toward socialism than whites are. While 53% of blacks view the term "socialism" favorably, just 24% of whites do.

- Despite the attempts by some leftwing activists to portray "states' rights" as code words for racial resegregation, the reinstatement of Jim Crow laws, and even a desire to resurrect the institution of slavery in the US, the vast majority of the population (77% positive, 15% negative) feels an affinity for the phrase. The sentiments are overwhelming across the political spectrum. Among Democrats, 71% view it positively to 21% negatively.

- Militancy is a guy's game. Nearly all the wars in human history have been started by men, etc, and despite the recent strides forward women have made in Afghanistan, terrorism is a masculine line of work. Predictably, men are twice as likely as women (28% to 14%) to have a positive view of the word "militia".

- Surprisingly, Democrats warm to the word "libertarian" more than Republicans do (31% to 39%). TGGP half-heartedly suggested it might be due to some political conservatives being unfamiliar with the term but reacting negatively to it anyway because it sounds similar to the word "liberal". That seems plausible enough to me. Independents like "libertarian" more than anyone else does (44%), of course--it's not liberal or conservative, and neither are they!

Culling marginal workers during recession leads to greater per capita productivity?

In a recent Econ Talk podcast, host Russ Roberts and guest Garett Jones discussed the relationship between an economy's health and worker productivity, pointing to the real business cycle theory introduced in the early eighties by Edward Prescott and Finn Kydland. RBC theory predicts that during economic slowdowns, productivity will drop because innovation is sparse (it is this real lack of innovation and of attractive investment opportunities that is said to be the cause of the recession, rather than monetary policy). In the last three major recessions, though, productivity has increased during recessions and dropped during booms. The latter pattern seems commonsensical to me, and I was unaware that in previous recessions the reverse had been observed. Jones goes about describing the putatively conventional explanation for why productivity (at least over the last couple of decades) goes up during downturns:

During a recession is when the boss comes and tells all the workers, "Hey, I'm going to make you work harder." ... There's certainly some of that going on, on some level--bosses do love to squeeze the last bit of blood out of a stone. ... There's this point that even Marx made about the army of the unemployed: The boss can point to all the people out on the street and say, "Hey, those people want your job, so you better work harder for less money."

He and Roberts also point to substantial reductions in R&D and marketing spending by companies during slow periods, while budgets for physical production tend to be reduced more modestly, as another reason for increased productivity. Since productivity is measured by dividing worker hours by actual production, the relative reduction of indirect support functions bolsters productivity numbers.

What the two George Mason economists didn't discuss, and I also did not hear mentioned last week when labor productivity figures were released, were any effects resulting from the culling of marginal employees. If the number of consulting slots stagnate and then begin to decline, either per capita workloads are reduced, or the number of employees is reduced. To the extent that anti-merit obstacles like tenure or demographic considerations can be circumvented, the latter provides an opportunity to increase productivity (either out of genuine necessity, or by providing cover for what needed to occur anyway).

I am not aware of any hard numbers on the various elements of productivity changes during the current recession--it may loom large in my eyes because I've experienced it on multiple occasions in the last two years (on the delivering end--my plate is still full, although it is a wrenching process to go through even when you are giving the boot), and because I'm not in the manufacturing sector, where an individual employee's performance is less determinative of his fate. Or it could be the strong strain of HBDism in my blood that is skeptical of the emphasis placed on the value of motivating and driving people to be better performers at the expense of focusing on finding the most capable people in the first place (that is, who you are is the most relevant question an employer should be seeking the answer to, not what ways to squeeze the most blood out of the stones they've already collected).