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The Affordable Care Act’s Rough Path Ahead

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Americans spend more than most other nations on healthcare.  In fact, a remarkable 18% of our GDP goes to healthcare expenditures.  But at the same time, we seem to be paying more and receiving less in return.  Compared to other highly developed nations such as France, Japan, Canada and the UK, America has a shorter life expectancy and a higher rate of infant mortality.  President Obama’s Affordable Care Act, popularly (and oftentimes derisively) nicknamed Obamacare, started out with the goal of expanding access to quality healthcare while lowering the out of pocket costs.  Unfortunately, the goals may have been noble, but the implementation has been deeply flawed.

First, disappointing registration numbers handicap the act’s effectiveness.  The healthcare.gov website where people could register for the new federal healthcare exchanges has been plagued with technical difficulties.  Frustrated and often unable to use the website, many of those who were interested in signing up ultimately failed to do so.  The result: less than 27,000 people signed up in the first month.  The government was expecting millions of people to sign up in the website’s first year of operations, meaning that the actual numbers are a huge letdown.  Worse, all the bad press the website is getting is likely to persuade many of the 50 million uninsured Americans to avoid taking full advantage of the benefits Obamacare can give them.

Even the 27,000 who did sign up may not be in the clear.  Worries have been surfacing lately that the people who do sign up for the exchanges will be the most unhealthy patients, and thus the most expensive to insure.  The underlying problem is a phenomenon known as adverse selection, where people are driven away from insurance because of the high price unless they have drastic enough medical concerns to be willing to pay.  Of course, if only very expensive to insure patients enroll, the price will have to increase even more, and the process will continue.  The whole purpose of insurance is to minimize individual risk by spreading costs among a larger pool of people.  However, the small pool of potentially very expensive people signing up for these new exchanges, in addition to insurers being forced to cover preexisting conditions, toy with the usual calculations of insurance risks and will likely increase prices.

Focusing on these setbacks makes the blame appear to sit entirely in the hands of President Obama and the Democrats, but this is simply not true.  Many governors, mostly Republican, have turned down the Medicaid expansion that the federal government offered to the states.  Funded almost entirely by the federal government, the expansion was designed to help low income Americans who currently are without health insurance obtain medical coverage.  The governors of the 25 states who rejected the expansion cited their opposition to Obamacare in general as well as the added costs to the states when declining the expansion.  However, the minimal costs states would have to pay would be dwarfed by the savings to the overall system, which now has to pay for emergency procedures administered to uninsured and low income individuals who can not pay for their operations.  Worse, denying the Medicaid expansion puts hundreds of thousands of families in the position of not qualifying for Medicaid but not having the money to pay for insurance through the new exchanges, allowing them to fall through the cracks by choosing to not implement a low cost solution.

These problems and more need to be worked out before the Affordable Care Act can be deemed successful.  Political differences and petty ideological concerns need to be swept aside for the health and economic security of Americans as a whole.  There are problems enough without political pandering making things worse.  Ultimately, the Affordable Care Act still has the capacity to do the nation’s health system a world of good, but the programs it creates, public sentiments and actions of politicians must all align to salvage the situation.

Filed under Domestic
Nov 25, 2013

The Affordable Care Act: Unexpected Consequences

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As Kathleen Sebelius sat testifying before Congress on the merits of Healthcare.gov, the new online healthcare marketplace put in place under the Affordable Care Act (ACA), immediately behind her, the screen was flashing an error as the computer could not access Healthcare.gov. The website, and the rollout of new parts of the ACA as a whole (mainly the individual mandate) has been wrought with problems, and as a result, over the course of the past several weeks, Obama’s approval rating has declined over ACA concerns. The ACA was supposed to be the sterling victory of the Obama administration, and more importantly, was supposed to be the legacy Obama leaves behind (which makes sense given the ACA is nicknamed “Obamacare”). Yet the law has clearly taken its toll on the administration, both in the website and the implemenation of policy standards. We will examine the website glitches, policy problems and their affect on the administration as a whole.

First and foremost, the most easily recognizable and laughable problems are the website glitches. While it may seem as if a website not working is certainly not an indication of anything major (ask any high school student in the nation how good their school is at using technology and they will make you realize how awful beauracracy can be at using the internet), it surprisingly taints the image of both Obama and the law. In his 2008 campaign, Obama was able to successfully harness the power of the internet and social media unlike any previous campaign, and the excitement this created among the youth vote was a large factor in his victory. Since his election, Obama has continued to champion social media, open data and even weekly webcasts. As part of his attempt at creating a modern presidency, Obama created the online healthcare marketplace as part of the ACA. Healthcare.gov is by all accounts accessible, however it is very bad at handling high volume traffic, such as that which would be expected with deadlines like those set under the ACA. With these glitches, perception of the White House was instantly transformed from a modern, tweeting, texting, Facebooking, internet-capable administration to a bunch of monkeys hitting keyboards and hoping something turns out right. The website glitches are harming the perception of both the administration as a whole, and the ACA specifically, as a modern, technologically savvy entity.

Beyond just the surface-level website problems, there are unforseen problems with the ACA itself. While constructing the 906 page behemoth, Obama promised the entire time that no one with a preexisting insurance policy would be forced to change their policy. However, recently, an onslaught of insurance companies have been sending out cancellation notifications to their insurees, citing policies which do not meet the standards set forth in the ACA. In essence, the ACA is forcing insurance companies to do the very thing Obama promised would not happen, thus tainting the image of the ACA as even those who like the core ideas of it are uncertain if they will be forced to change policies or not.

As a result of website glitches and unexpected cancellations, the Obama administration is likely going to extend the deadline for when it is neccessary to have an insurance policy, while scrambling to stop cancellations and get the website working once again. While the cancellations will prevent fines for consumers in the short term, in the long term they may drive up premiums as the insurance companies are claiming any delays will cost them millions of dollars. Clearly, this law is having unexpected consequences upon insurance companies, consumers and the Obama administration as they are forced to deal with new problems. In the end, the law may be doing more harm to the perception of the administration than good.

 

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Filed under Domestic
Nov 10, 2013

NSA and the Fat Tail

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Sometimes, the most intriguing examinations of current events stem from an analysis that eschews the political mindset and replaces it with a different style of thinking.  RantAWeek adopted a mathematical tone for last year’s analysis on the connection between Olympic medals and GDP.  Similarly, a use of mathematical concepts can benefit a discussion concerning the NSA’s spying on the communications of world leaders.

The mathematical concept in question is the fat tail.  A fat tail describes a statistical result far from the expected value that nonetheless has a reasonable chance of occurring.  Mathematicians often like to simplify calculations by ignoring outliers, but the whole point of the fat tail is that these outliers really matter, and ignoring them is dangerous.  Take the financial markets as an example.  Classical views of the financial markets held that daily changes in large stock indices like the Dow Jones followed a normal distribution, which is characterized by ‘skinny tails’ that make large changes a statistical improbability.  However, since records began for the Dow Jones in 1896, the index has experienced more than 38 days with a daily price change greater than 7%.  Assuming a normal distribution, large price changes occurring with that frequency is almost statistically impossible.  Financial traders trusting in the assumed impossibility of rapid price swings would have seen their theory, and their market holdings, disintegrate before their eyes on Black Monday in 1987, when the Dow Jones dropped 22.6%.  The fat tail in the financial market had manifested itself in a nasty way, wiping billions of dollars off balance sheets across not only the country but also the world.

So how does this all connect to the NSA scandal?  The NSA’s strategy in spying on the communications of world leaders was to gain an information advantage.  In other words, there was an expected benefit.  The U.S. government was able receive some additional intelligence on the thoughts of world leaders through the implementation of this spying network.  On the other hand, and equally important to note, is that on a macro scale, this benefit was relatively small.  After all, President Obama summed up the power of diplomacy in garnering information by saying,  “…if I want to know what [German] Chancellor [Angela] Merkel is thinking, I’ll call Chancellor Merkel.”  Even without the massive spying program, the U.S. government would have been able to acquire most necessary information through less secretive strategies.

Obama’s remarks seem rather hollow in retrospect, as Angela Merkel has now accused the United States of spying on her internal communications to gain information.  However, the extent of the alleged spying extends well beyond Germany.  France, Argentina and Mexico are all accusing the U.S. of spying on their leaders.  All the news begs the question, why did the NSA pursue such a extreme spying program if some of the benefits were limited to extra information about countries that are already our allies?

The answer- they forgot about the fat tail.  The risk/reward scenario played out well when it was assumed the spying program would be safe from international criticism because it could never be reported by the media.  But in doing so they ignored the possible outliers in the fat tail.  This mistake became clear when Edward Snowden’s leaks began, and the unexpected result of international news coverage greatly changed the situation.  The NSA would never have embarked on the program if they knew the damage Snowden’s leaks would cause.  But that’s what makes the fat tail so difficult to take into account, it is by definition unexpected.

Even though a fat tail event is not expected to occur, the challenge lies in planning for them.  That way, embarrassing situations like the one the NSA currently finds itself in can be avoided.  Luckily for the United States as a whole, most countries are simply accepting the NSA spying as an inevitable consequence of the information age.  While there has been some backlash, it has not been nearly as devastating as it could be.

Still, the NSA got lucky with the response.  Not all fat tail scenarios end as well.  And that’s why when any policymaker makes an important decision, they should always consider the fat tail.

Filed under Domestic, Technology
Oct 27, 2013

The Government Shutdown Deal

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On the evening of October 16th, the Senate passed another proposal to raise the debt ceiling and reopen the government with an 81 to 18 vote, after the House was unable to move forward with a resolution the day before. Later that night, the House approved the Senate’s proposal with a 285 to 144 vote just hours before we would reach the debt ceiling on October 17th. Thus, the Republicans in the House conceded, ending the sixteen-day long government shutdown with a bill that was signed into law at 12:30am by President Obama. The deal allowed an extension of governmental borrowing power until January 15th and raised the debt ceiling until February 7th of next year.

This decision is a prime example of how legislators intentionally put themselves in dire situations by creating major deadlines. Although they seem highly irrational, these actions actually reflect a lot about strategies used in American politics. Congressmen create deadlines as a way of punishing each other for their inability to compromise. They hope that during these times of despair, the opposing political party will give in to their demands. Yet, this is exactly what has not happened and probably what will never happen. Within just a year, our government has been dangerously close to the edge of the fiscal cliff, squeezed by sequester, and shut down and reopened. But instead of coming together to compromise, legislators keep pushing key issues further and further back. By not reaching an agreement, they punish everyone, forcing the US back into the cycle of stalemate.

The October 17th deadline was very crucial to Congress because the Treasury would run out of ways to meet its obligations without borrowing more money. Soon after, the government runs the risk of defaulting on the national debt because of its inability to delay payments. For this reason, negotiations over the debt ceiling are generally interconnected with budget deals.

Concessions from both parties are usually necessary to get both types of bills debated and passed through the Republican-controlled House and Democrat-controlled Senate. When the government was first shut down, a Continuing Resolution could not be passed because House refused to even begin debating a bill passed by the Senate unless a majority of the majority would support it. A majority of the majority in the House meant reaching a consensus with some hardline conservatives in the Tea Party, a practically impossible feat. Luckily, on the 16th, the House passed a bill with only a minority of Republican votes and a majority of Democratic ones after Senate majority leader Harry Reid and minority leader Mitch McConnell were able to construct a deal hours before we hit the debt ceiling.

The shutdown and congressional stalemate caused congressional approval ratings to plummet, especially those of the Republicans, as voter discontent threatens the representatives’ next term. It also cost our government billions of dollars and damaged our credibility. As for the hundreds of thousands of furloughed workers that were sent on an unpaid, forced vacation from their jobs, they were expected to be back to work on Thursday. Many Republican leaders, like Senator Ted Cruz from Texas who led the push for greater Democratic concessions, were disappointed with the deal, while others like House Speaker John Boehner felt that passing the bill was the only viable solution. Republicans had lost the shutdown battle, but at a large cost for everyone.

It is easy to blame Republican partisanship for the government shutdown, but that does not account for the lack of compromise on the administration’s side either. Many people predicted that the Democrats would be more compromising, but Obama refused to be persuaded. For example, Democrats during Ronald Reagan’s term cut military spending and Republicans lessened the scope of Medicaid during Bill Clinton’s term. In this case, Republicans initially demanded that the Democrats defund the Affordable Care Act and change regulation standards on carbon emissions of the Environmental Protection Agency. In the end, the only concession made by the Democrats was an amendment stating that the incomes of people receiving subsidized health insurance must be checked more thoroughly. Therefore, both Republicans and Democrats are partially at fault for the government shutdown.

Fortunately, legislators of the two parties were able to come together on October 16th to avert another major crisis, whose repercussions would be disastrous for our economy and all of the nations that are economically tied to us. In addition to the new budget and debt ceiling, both parties have also set a goal of creating a budget plan for the next ten years by December 13th. Hopefully this will actually get done so, at least for the next ten years, the government will run smoothly.

Filed under Domestic
Oct 20, 2013

Government Shutdown: Causes and Effects

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On October 1st, the United States Congress failed to pass a continuing resolution needed to finance government activities, leading to a government shutdown.  This information has been all over the news media, but often without a clear and concise explanation of what exactly is going on and what it all means.

To clear up the confusion, a little background is necessary.  One of Congress’s constitutional responsibilities is to pass the nation’s budget.  However, in recent years, Congressional stalemate has made complete budget overhauls rare, and Congress has often relied on Continuing Resolutions (CRs) to keep government funded.  CRs are used as a sort of legislative compromise mechanism; they don’t specify specific increases or decreases in funding to each government program, but instead provide across the board funding based on appropriations levels of the year before.

But even though CRs are a compromise designed to be much simpler and therefore easier to pass than a full budget, Congress still failed to pass one.  The underlying reason was, interestingly enough, not a fight over appropriations but a fight over healthcare.  Congressional Republicans, led by Senator Ted Cruz, said they would only pass a CR if it included a dismantling of the Affordable Care Act, popularly referred to as Obamacare.  Democrats refused to accept their terms, and since each party controls one house of Congress, a stalemate was reached.  The morning of October 1st marked the beginning of a new fiscal year, but without a continuing appropriations bill, nonessential government operations were shut down.

The term ‘nonessential’ is key.  A government shutdown does not mean America’s nuclear arsenal is left unattended and airport security disappears.  These government operations are considered essential to the continued safety and security of the United States.  Still, the ‘nonessential’ part of government includes the 800,000 government workers who were sent home on furlough, including the majority of NASA, the Department of Commerce, and the Department of Labor, in addition to half the Department of Defense.  Important programs and government services are now without funds, potentially causing trouble for those who depend on them.

Unfortunately, the negative effects of this government shutdown are almost insignificant compared to the potential negative effects if the debt ceiling is not raised later this month.  While the debt ceiling and the government shutdown are often incorrectly thought of as being the same problem, they are actually two different concerns entirely.  The government shutdown occurred because Congress failed to appropriate money to fund programs.  Raising the debt ceiling allows Congress to borrow money to fund programs.  More simply, government shutdown is to spending as debt ceiling is to borrowing.

That explanation still doesn’t demonstrate why not raising the debt ceiling is so catastrophic.  If the debt ceiling is not raised by October 17th, the government will be spending more money than it is taking in without an ability to borrow more, setting the United States on the path to credit default.  An advanced sovereign nation defaulting on its debt is exceedingly rare, and usually precipitates economic turmoil for the country involved.  And given that the United States is not only the largest economy in the world but also that the United States dollar is the main reserve currency of the world, the international consequences of a default would multiply the economic destruction of already severe domestic effects.

Because of the dire stakes, it is extremely unlikely politicians will actually allow the government to default.  That being said, a ‘grand bargain’ where both sides of the aisle can come to a comprehensive, long-term solution on both borrowing and spending is just as unlikely, especially in the hostile political environment the government shutdown has created.  The most likely solution is a series of stopgap fixes to increase the debt ceiling and restart the government.  Ultimately, we shouldn’t expect a panacea to our nation’s woes – Washington is too divided for that – but we shouldn’t expect Armageddon either.

Filed under Domestic, Economy
Oct 6, 2013

SCOTUS: A Term In Review (Part 2 of 2)

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Last week, the Supreme Court of the United States (or SCOTUS) wrapped up. The 9 men and women that make up the highest court in the land ended their session with several landmark cases. RantAWeek breaks down four of them, these are the last two.
Fisher v. University of Texas at Austin
This case, in a surprising turn of SCOTUS-fate, broke down 7-1 (Kagan recused herself). The majority had both liberals (Sotomayer and Breyer) and conservatives (Kennedy, Alito, Thomas, Roberts and Scalia) leaving Ginsburg as the sole dissenter. The case began when Abigail Fisher, a young Texan woman, sued the University of Texas at Austin (therein referred to as UT) for admitting other students with lesser credentials because of their race allowing them to fit into an affirmative action plan. The lower courts that the case had gone through had sided with UT, meaning Fisher continued appealing until the Supreme Court. The Supreme Court ultimately took a fairly moderate approach (something Congress cannot seem to do well), deciding that Affirmative Action is constitutional and legal, but it must follow a tighter set of standards. The Court established a test, called “strict scrutiny.” Essentially, courts must establish that use of race to develop a diverse student body is absolutely necessary. That is to say that all other methods have or absolutely would fail. In all, the Court determined that affirmative action is almost a last ditch effort to develop diversity in universities.
Shelby County v. Holder
In this case, the Court went back to good-ole party lines. The majority was the conservatives (Scalia, Thomas, Alito and Roberts) and the swing (Kennedy), while the dissenters were the liberals (Ginsburg, Sotomayer, Kagan and Breyer). The case started with Shelby County, Alabama suing the Department of Justice for the Voting Rights Act (VRA), seeking a permanent injunction on the enforcement of that law. The district court sided with the DOJ, and it was appealed, where the appellate court affirmed the district court’s decision. As a bit of background, the VRA requires all state and local government with a history of discriminatory voting practices to get approval from the federal government before instituting any voting changes. The Supreme Court kept Section 5 of the VRA, which sets out the approval process, but struck down Section 4, which establishes which state and local government must follow Section 5. This effectively left that aspect of the VRA dead, but not impossible to resurrect. However, the key move was that the Court handed the job of determining which state and local governments apply over to Congress, which will pretty much kill it given that Congress will be very unlikely to agree on anything. Meaning that, without directly killing it, the Court killed it.
Filed under Domestic
Jul 3, 2013

SCOTUS: A Term In Review (Part 1 of 2)

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This past week, the Supreme Court of the United States (or SCOTUS) wrapped up. The 9 men and women that make up the highest court in the land ended their session with several landmark cases, RantAWeek breaks down four of them, these are the first two, the next two will be coming up in the next few days.

United States v. Windsor

The court broke down in a 5-4 decision on Windsor, with the liberals (Ginsburg, Breyer, Sotomayer and Kagan) and the swing vote of Kennedy. Kennedy wrote the opinion. This case was a case regarding the Defense of Marriage Act (or DOMA). DOMA essentially defines marriage as the union between a man and a woman for the purposes of all federal law. This meant that same-sex couples could be legally married at the state level and get benefits (no inheritance taxes, joint tax filings etc.) on a state level, but not on a federal level. Ultimately, in an opinion written by Kennedy, the court decided that DOMA was unconstitutional. However Kennedy carefully worded this so that the opinion sets precedent for sure, but still dances around whether or not same-sex marriage itself is a constitutional right. Kennedy essentially wrote an opinion on federalism, not marriage. His opinion outlined only that in states that have legalized same-sex marriage, the federal government must recognize all those marriages as legal marriages.

Hollingsworth v. Perry

Instead of issuing a decisive decision on the constitutionality of same-sex marriage in this case, the court again got caught up on the issue of standing. The court again broke down 5-4, but this time, on anything but ideological lines. The majority consisted of two conservatives (Chief Justice Roberts, Scalia), and three liberals (Breyer, Ginsburg and Kagan). Very rarely is it that Scalia and Ginsburg are on the same side on any case, but once the actual reasoning behind the decision is revealed, it makes a little more sense. In no way is the court saying that same-sex marriage is a constitutional right, instead, they are making a decision based solely on the standing to appeal. The tricky thing about this case is that two same-sex couples sued the state for passing Proposition 8, which banned same-sex marriages. The federal district court ruled Proposition 8 unconstitutional. However, the government of California agreed with this decision and decided to not pursue any appeal of the case. So instead, proponents of Proposition 8 decided to appeal it. The Circuit Court of Appeals for the 9th District agreed with the district court on its unconstitutionality. However, the SCOTUS essentially said that the proponents of Proposition 8, because they have no investment in the case, they have no standing to appeal. Thus, the court essentially says that the district court’s ruling was the final ruling unless the government of California decided to support Proposition 8. The results of this case are essentially that Proposition 8 is dead in California, and the government can now issue same-sex marriage licenses.

In the following days, RantAWeek will give brief coverage of Fisher v. University of Texas at Austin and Shelby v. Holder on Affirmative Action and the Voting Rights Act, respectively.

 

Filed under Domestic
Jun 29, 2013

Economics – Confusing As Ever

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Lately, there have been two main viewpoints regarding the American economy, and they are pretty much polar opposites.

The first viewpoint is the optimistic way of looking at things.  Proponents of this glass-half-full belief can cite financial markets, which have rebounded from 2009 lows and have recently hit new all-time record highs.  Moreover, the U.S. economy has consistently added jobs each and every month for the last two years, showing that the days of rapid job losses appear to be over.  The unemployment rate has dropped from a scary 10% to a much more manageable 7.6%.  And even though the current unemployment rate is higher is not as low as it could ideally be, America’s 7.6% unemployment is still much better than the eurozone’s 12.2%.

However, all this good news avoids the less-than-pleasing economic indicators that the pessimists focus on.  Even though the U.S. economy has been gaining jobs, the rather slow rate of job creation means that the unemployment rate is likely to remain stubbornly high.  For example, the U.S. gained 175,000 jobs in May, but that did not stop the unemployment rate from actually increasing by .1%.  Not only are new workers entering the workforce, which is why the number of available jobs must grow just to keep a relatively stable level of unemployment, but the U.S. still faces a huge problem with both discouraged workers and workers who are stuck in low paying or part time jobs.  Worse, government cutbacks from the sequester combined with ineffective legislation from Washington makes our economic future murky at best.

There’s information to support both fields of view, but it seems like many people are quick to align themselves with one side or the other.  The one viewpoint that gets lost in the optimist versus pessimist battle is also the most sensible one – a realistic take of all forces affecting the U.S. economy.  This realist take on the economy celebrates the economic gains of the last few years while also recognizing the corresponding weaknesses of our current economic situation.

Would markets have rallied to record highs if the economy still had an imminent threat of a precipitous drop into a double-dip recession?  Should a healthy economy have 7.6% unemployment even after 4 years of fairly consistent GDP growth?  Both of these questions deserve an emphatic ‘no’ as an answer, showing that things are neither as dire nor as cheery as many are apt to argue.

Politicians and pundits need to take a more moderate stance on American economic progress.  It’s hard to plan the right path forward if you disagree on your current position.  Instead of bickering about what the current economic facts mean for our economy, the U.S. must accept its economic strengths along with its weaknesses, and use this realist viewpoint to help spur the economy into a truly healthy state so no one can disagree.

Filed under Domestic, Economy
Jun 10, 2013

Meritocratic Missteps- Part 3

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Following suit of Tyler Miksanek, in this multi-part article, Matthew Dudak discusses another American ideal: meritocracy and how it ultimately hurts America as well. This is part 3 of 3. 

The final argument made for meritocracy is that it is all we have. The problem with this argument is the contentment with the system that proponents of it seem to possess. As civilized beings, it is our natural tendency to develop institutions, and rightfully so, they hold the potential to much greater power than an individual. However, often, when institutions begin to fail us, we simply keep trudging along, trusting the kinks will eventually be worked out. Chris Hayes defines the issue of meritocracy, not as one of right versus left, though it often comes off that way, but rather as institutionalist versus insurrectionist. Douthat and Brooks both fall into the former category while Hayes self-identifies as the latter. Institutionalists believe that the capacity for greater change lies within the bounds of an institution, while insurrectionists believe that in order for beneficial change to occur, we must revise our institutions in order to create this change (Hayes, 17-23). When examining just how broken our system of meritocracy is, it almost seems inevitable to lean towards insurrectionism. But beyond that, the fact that institutionalists have largely failed at creating any real change to meritocracy and have in fact accelerated its demise lends itself as enough reason to turn to insurrectionism. Look no further than the almost universally agreed upon failure of George W. Bush, certainly an institutionalist, to fix meritocracy: No Child Left Behind. By staying within the bounds of the preexisting institutions, Bush tried to give students more equal chances but created another institution which has grown to be hated by education professionals across the nation. Insurrectionism exists on both sides of the political spectrum, perhaps the best examples are the Tea Party on the right and Occupy Wall Street on the left. Both present images of a broken America which can only be fixed by a sweeping overhaul of our current institutions. Since we are focusing on meritocracy, we shall focus on the kind of insurrectionism that leads itself to change the meritocratic system. The fact of the matter is that meritocracy is clearly broken on all levels, from the smallest businesses up to the United States government, however since it is hard to proscribe changes in the private sector until they have a massive enough screw-up (a la Enron) to merit government intervention. For this reason, we will focus on changes which can apply nationally.

The first, arguably most important, step to fixing our broken institutions starts with the first institution most people encounter: education. The biggest problem is the disparity between the amount of money those at the top spend on their children’s education versus the amount those at the bottom spend. This does not necessarily guarantee higher achievement, it merely guarantees more graceful failure. Should a child who comes from very little not do well enough on their ACT to get a considerable scholarship anywhere, they simply do not go to college and thus fail altogether at higher education. But should a child whose parents are loaded not do well enough for a considerable scholarship, they end up going to college on their parents’ dime, it just is a school that is not Harvard. The second child was not guaranteed a higher ACT, and thus not guaranteed Harvard, or higher achievement, they were simply guaranteed a safety net to prevent them from failure. Charter schools are beginning to take a stab at this problem. But they still rely too heavily on either meritocracy or random chance. While guaranteeing students are given an equal chance in primary or secondary education is near impossible, giving them a more equitable chance at post-secondary education is possible. By focusing admissions testing on intelligence testing and not standardized testing, test preparation becomes a dead art and colleges are able to see the students they really want, not simply the students who can prepare. Additionally, we are living in an era of often ineffective affirmative action. Affirmative action schemes should be decided more on the basis of wealth than gender or race (Social Mobility in America). Education must the starting place. With a little insurrectionist nudge, education can fall into place and present more equality and less entrenchment.

Yet the change cannot stop simply at education, it must also follow into fiscal policy. The words “fiscal policy” are often the last words anyone wants to hear, but in the case of an entrenched elite they may be part of the solution. Fiscal policy should certainly not make millionaires into beggars or beggars into millionaires, but must create something more akin to an equal chance at life. In the September/October 2012 issue of Foreign Affairs, Andrea Louise Campbell discusses fiscal policy and its role in equality in the United States. Marginally, the US has a relatively progressive tax system, on par with many other OECD nations. However this tax system is made quickly regressive when you add on many tax breaks and subsidies that benefit mainly the wealthy, leaving you with a regressive effective tax system. Pair that with the fact that our social safety net is very small and the redistributive state is only very moderately progressive, and you leave those at the bottom at a loss. Campbell suggests a two-tiered approach to this problem. First and foremost, the United States must simplify its tax code, cutting out many tax breaks and making our effective tax system much closer to the marginal tax system. Then, when you are left with a moderately progressive tax system, add in a larger redistributive state which catches all those who need help, not just those with a giant need. Couple these two changes, both of which are not all that insurrectionist, and you are left with a more fair and progressive fiscal policy. This fiscal policy uproots the harsh lines which divide the elite from the others. Throw in some education reform for good measure, and we are able to achieve a system in which equity of opportunities is met with equity of tools.

Within the United States, our meritocratic system has gotten out of hand. What started with good intentions has devolved into well-established class roles and a dismissal of personal ethics in pursuit of meritocratic achievement. While in an ideal world, meritocracy appeals to the fundamental core of our American identity and produces inherent “good” within us, when meritocracy is left to run its course, and we continually push to stick closely to the mirage we call meritocracy, we in fact create more “bad” than “good” as well as entrench those at the top and leave those at the bottom to fend for themselves. Yet through a mixture of admittedly radical education reform and more moderate fiscal reform, the good of meritocracy on a national level once again outweigh the bad. If we can fix the broken national institutions, perhaps the change will trickle down into the smaller institutions. The Occupiers of Wall Street have since died out and the Occupy movement has all but come to a halt, however their core message that America is broken still resonates. America and meritocracy are indeed broken, but they do not have to be.

Brooks, David. “The Merits of Meritocracy.” The Atlantic. N.p., 1 May 2002. Web. 20 Mar. 2013.

Campbell, Andrea L. “America the Undertaxed.” Foreign Affairs, Sept.-Oct. 2012. Web. 28 Apr. 2013.

Douthat, Ross. “Luck, Hard Work and Meritocracy.” The Atlantic. The Atlantic, 9 Dec. 2008. Web. 20 Mar. 2013.

Hayes, Christopher. Twilight of the Elites: America after Meritocracy. New York: Crown, 2012. Print.

“Social Mobility in America: Repairing the Rungs on the Ladder.” The Economist 9 Feb. 2013: n. pag. Web.

Filed under Domestic, Economy
May 5, 2013

Meritocratic Missteps- Part 2

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Following suit of Tyler Miksanek, in this multi-part article, Matthew Dudak discusses another American ideal: meritocracy and how it ultimately hurts America as well. This is part 2 of 3. 

When the idealistic and pragmatic arguments for meritocracy fail, proponents of meritocracy resort to a much more flawed argument, which is essentially “Got anything better? No? Meritocracy it is!” Ross Douthat- a man who shares Brooks’ burden of being a conservative New York Times writer- also in a guest article in The Atlantic, discusses meritocracy and comes to the conclusion that meritocracy, in the end, incites in the people of meritocratic institutions a kind of unrivaled work ethic. But along the way, Douthat admits many flaws of meritocracy (which we will get to later). Douthat’s biggest problem though is accepting the status quo. Douthat epitomizes the final argument for meritocracy which is essentially that it may be broken, but it is the best we have.

First, the flaws with the idyllic view of meritocracy. The fundamental problem with this argument is similar to the debate over communism. Many would agree that communism is a pretty good system (if you are a fan of equity) in theory, but has always failed to come to fruition and ultimately ends up creating despots like Joseph Stalin and Mao Zedong. Ironically, flip to the (almost completely) opposite end of the spectrum, with meritocracy, and you essentially end with the same result. Meritocracy seems like a really good idea- it objectively rewards those who deserve it and leaves those who do not in the dust. But in practice it plays out more like this: one generation into the meritocracy, those who deserve success achieve it, those who do not, do not. Fast forward to the next generation, and those who hail from families of success are able to have access to greater resources which would allow them to be objectively better than those who do not, meaning that success is now dependent partially on objective skill or talent and partially on objective access to resources. Still objective, but other factors besides skill and talent begin to seep in. Fast forward to 2012, and you are left with a society where the top 1% of income receivers hold 20% of the total income and the Gini coefficient has increased by about .1 in the past 30 years, leaving only China, South Africa, and Brazil the only economies in the OECD with a worse coefficient. (The Gini coefficient is a concise way of summarizing income inequality. 0 is perfect equality, 1 is total inequality, .4 is very high.) This future generation of 2012 is the America we currently live in. Income inequality is just one result of a centuries-long experiment in meritocracy. Over the past 300 years, the United States has started as a fairly equal meritocracy and has since diverged. Essentially, those at the top of the meritocratic ladder have cut the rungs from beneath them. In turn, the meritocracy has become increasingly entrenched and what should be a vehicle for social mobility has taken away much social mobility. The problem is not a lack of equal opportunity, it is a lack of equity of tools: tools which are required for those opportunities.Take the massive test-prep industry which has evolved around the meritocratic bastion that is standardized testing. With Kaplan, Princeton Review, private tutors and classes offered through school districts, the SAT and ACT have no longer become matters of intelligence, they have become matters of preparation. The ACT and SAT are simply testing how well you have been fed and have absorbed the standard set of information tested. Everyone has the opportunity to get a 36 or a 2400, but only those with money and a good school have the tools to do so. The problem with the appeal of meritocracy to our ideal opinions of how the world should work is that in focusing too much on how the world should work, we ignore how it does work, ignoring the entrenchment which meritocracy causes.

Then, the problems with meritocracy as a tangible bringer of “good.”  The fundamental flaw in this argument is taking too narrow of an approach; this argument looks only at the good which meritocracy causes. True, meritocracy certainly incites work ethic and drive in the wheels of the meritocratic cog, but this is not all it incites. In Twilight of the Elites: America After Meritocracy, Chris Hayes discusses events which transpired in the early days of Enron, before it became the Enron everyone knows. Enron’s vice president of internal auditing, David Woytek, stumbled upon patterns which suggested less than sound trading practices. The trading division from which these shaky patterns were emanating presented a story about putting money into personal accounts to balance profits over two years. Woytek took this information to the CEO, Ken Lay, who promptly acted upon this information, which was presented in tandem with bank records pointing to clearly shaky practices. His action: a firm scolding. Nothing more. Hayes goes on to make a connection between the reaction to the practices and performance of this trading division. Since the trading division was fairly successful, Lay was willing to simply look the other way. This kind of behavior was rampant throughout Enron. Hayes states that “whatever you did in pursuit of ‘dominance’ was fine so long as you won,” (Hayes, 74). Hayes goes through lists of other examples where similar, less than ethical, action was taken because of an atmosphere of hypercompetitiveness, ranging from professional baseball to the DC public school system to Countrywide Financial. In all of these cases, the drive and competition which David Brooks praises as creating character ultimately led to the demise of character, as ethics were thrown to the wayside. Hayes clearly demonstrates that the hypercompetitive atmosphere created by meritocracy effectively destroys the ethics of many people as they are willing to get ahead and not stop at any cost.

In the next part, we will discuss the final flaws in meritocracy before determining how to solve these problems.

“For Richer, for Poorer.” The Economist. N.p., 13 Oct. 2012. Web. 28 Apr. 2013.

 Hayes, Christopher. Twilight of the Elites: America after Meritocracy. New York: Crown, 2012. Print.

Filed under Domestic, Miscellaneous
May 1, 2013

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