So Mitt Romney wants to exempt capital gains from taxation — but only for taxpayers who earn less than $200,000 a year. In Tuesday night’s debate, Newt Gingrich asked him (I’m paraphrasing) “Why the cap?”. Romney’s answer — that he’s looking out for the middle class because “the rich can take care of themselves” — was as incoherent as anything I’ve heard this election year.

Here’s why:

I interpret Romney’s answer to mean that he wants to cut capital gains rates not on efficiency grounds, not on supply side grounds, and not on philosophical grounds, but on redistributionist grounds. Well, okay, I myself don’t think very much of redistribution as a primary driver of tax policy, but Romney and I can disagree on that one. But where the incoherence comes in is this: If your goal is to redistribute from the rich to the middle class, why on earth would you do it by cutting the capital gains tax, as opposed to lowering income tax rates in the middle and raising them at the top?

To put this another way: If you care about efficiency, you’ll want to cut the capital gains rate to zero for everyone. If you care about fairness, and if you believe fairness mitigates against double/triple/quadruple taxation, you’ll still want to cut the capital gains rate to zero for everyone. If you care about redistribution, you’ll want to juggle the tax brackets. But I can’t think of a single thing you could care about that would lead you to laser in on cutting capital gains rates for middle income taxpayers only.

Now it might be that somewhere in Romney’s 59 point economic plan there’s an answer to this. If so, Herman Cain was surely right when he intimated that Romney himself can’t be terribly familiar with the contents of that plan. Because, when asked a simple question about the justification, Romney wasn’t able to come anywhere close to making sense.

I’m guessing that an honest answer would have been something along the lines of “I wanted something that would sound good to Republican primary voters who aren’t paying too much attention to the details, and I knew that the phrase `capital gains cut` was like red meat to a lot of those guys, so I threw it in”.

If the Republicans want a nominee who will pander to the left, right and middle with no coherent philosophy and no coherent policy proposals, why not just drag out Bob Dole? At this rare historical moment when the country just might be willing to take a flyer on some truly radical changes, it saddens me deeply that warmed-over Dole might be the best the Republicans can manage to dish up.

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For example: Suppose a guy with no health insurance and no assets shows up at a hospital emergency room with an urgent life-threatening condition. Should you let him die? Ordinary compassion says no. The heightened compassion of the economist says, at the very least, maybe.

First, a policy of providing emergency health care to everyone is pretty much the same thing as a policy of providing emergency health insurance to everyone. It was specified here that this was a guy who didn’t want health insurance. So let’s recognize for starters that such a policy runs counter to — I am tempted to say runs roughshod over — the guy’s own revealed preference. It’s an odd sort of compassion that forces people to buy things they don’t want.

Now you might object that nobody’s forcing this guy to buy emergency health care; we’re trying to give him emergency health care. Not so fast. Here’s the first place where a little economic training goes to hone one’s sense of compassion: The emergency health insurance we’re foisting on this guy has a cost. We can spend that money on emergency rooms or we can spend it on a myriad of other things the guy might prefer. How is it compassionate to give him one thing when he prefers another?

This is particularly true if the guy happens to be very poor. Poor people have a lot of problems, and emergency health care is only one of them. They need better education, they need better transportation, and they need a little help buying groceries.

There is room for lots of debate and lots of disagreement about how much we as a society should be spending to help poor people. That’s not the issue here. The issue here is: Given that you’ve decided to spend an extra such-and-such many dollars a year helping poor people, why would you spend it in this particular way rather than one of the many other ways they could use it? For God’s sake, why not at least ask them if they’d rather have the cash?

There are many good economic arguments for subsidizing health care (there are also many good counter-arguments). That’s yet another important debate that’s largely off-topic here. I want to focus attention on the narrower question of what compassion demands.

Here’s my answer: If your compassion is constrained, blind or posturing, you’ll say “Of course we should save lives at the emergency room”. If your compassion is broad, perceptive and genuine — if you grasp and care about the underlying trade-offs — and if you believe you’re being baited by a constrained, blind, posturing journalist — you might very well burst forth with a (com)passionate “Let him die”.

There’s yet another facet to this compassion business, which I’ll mention only briefly because Robin Hanson got there first: Of the many commentators who have jumped in to decry the “lack of compassion” among the debate audience, I’ll wager that nearly all are perfectly comfortable with the American government’s current policy of providing American style health care only to Americans, as opposed to, say, Kazakhs. In other words, they too are perfectly fine with a policy of “let him die”, as long as he dies far enough away. At this point, we’re not arguing about principle; we’re arguing about where to draw an arbitrary line. Once you’ve admitted that there are limits to compassion, it’s fair to ask: Why is it okay for Americans to ignore the plight of Kazakhs, but not okay for Texans to ignore the plight of New Yorkers, or for rural Pennsylvanians to ignore the plight of Philadephians? Maybe there are answers to those questions, but if so, those answers are surely not to be found in the mindless cry of “compassion”.

There are deep and troubling issues here that deserve to be addressed, and economics has a lot to contribute to that discussion. That’s why it’s so very disappointing to see Paul Krugman, yet again, using his platform in the New York Times to bray with the yahoos instead of calling attention to deep and difficult trade-offs. None of us have all the answers, but that’s no excuse for pretending there are no hard questions.

There’s another side to compassion, and that’s a willingness to admit that your adversaries might occasionally have legitimate or even lofty motives, and that their positions are sometimes worthy to be engaged, not simply pilloried. In pursuit of a narrow political agenda, Krugman betrays a failure of compassion not just toward those he disagrees with, but, more importantly, to the many Americans (including many of the desperately poor Americans for whom he so often and so self-righteously claims to speak) who stand to benefit from the wiser policies that just might follow from the more informed public discussion to which I know Paul Krugman could contribute brilliantly if he so chose. Instead we have the sad irony of an embittered polemicist wasting his talent by spewing vitriol against everyone who dares to struggle with the difficult policy choices that he has decided are beneath his notice — all in the name of compassion.

Note: You’ll find more on the economics of compassion in Chapter 15 of my book More Sex is Safer Sex.

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Since May 4, when Sirius rearranged all its channel numbers, my radio has been badly confused. If I punch in station 23, it goes to the station that’s currently 23 for a while, then jumps to the station that used to be 23, etc. And certain stations, which according to the Sirius website are part of my standard package, are completely inaccessible.

Given my past experience with XM customer service, I knew this was not going to be an easy fix, so I’ve been putting off making the call. Today I had some spare time. Sure enough, I’ve spent over TWO HOURS on the phone with these people being alternately put on hold, lied to, put on hold, lied to some more, and put on hold again.

They claim the missing channels are missing because they’re “premium” channels not included in my package. Except that their website clearly identifies these channels as standard channels that *are* part of my package. They tell me that they’re instituting a fix at their end which requires me to leave my radio on for fifteen minutes before it takes effect; this gives them a convenient excuse to hang up and not be there fifteen minutes down the line when nothing has changed. When I complain about how long I’ve been on hold (the automated system always says the wait time is “about eight minutes” before stranding you for half an hour), they give me a direct number to call to bypass the queue. I call that number and am told that no, this number is only for radios installed on airlines or boats. I complain that I’ve just waited twenty minutes to get this message. They give me a *different* number to call, promising me that there is currently no wait at that number. Thirty five minutes later, I’m still waiting.

Ah, but what about just using the form on their web site? Well, you see, that form will not allow me to submit a query unless I give it the serial number of my radio — a serial number that it insists is wrong, even though I have *copied and pasted* it from the “My Account” section of their own damned website. Therefore my query cannot be submitted.

No useful contact by phone, no possible contact whatsoever by web. No email address provided. No way to get help, no way to demand a refund. Let me stress that: Unless I am willing to wait another 40 minutes or so on hold, there is no way even to *request* a refund, not that I believe these evil bastards would grant one in any event.

So. What’s *your* worst customer service story?

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Here is Senator John Thune (R-SD), speaking on the floor of the United States Senate:

Ethanol producers have been ripping us off for a long time, and they’ve come to rely on that for a source of income. So it’s only fair to let them rip us off a little longer.

I’m quoting from memory, so I might have the wording slightly off, but that was the gist of it. Oh, wait, here’s the exact quote:

We have a lot of folks who made investments, you have people across the country whose livelihoods depend upon this. I think it makes sense, when we put policy in place and we say it is going to be in place for a certain period of time, that it be honored.

As you can see, my parapharase was accurate.

Senator Thune speaks in the great tradition of his institution. Back in 1848, senators by the score made exactly the same argument for preserving slavery. A lot of folks had invested in slaves, you know. And their livelihoods depended on it.

I wonder where Senator Thune will stand the next time there’s a bill to tighten up border security, or to speed up deportations of so-called “undocumented” workers. He could say something like:

We have a lot of folks who invested in finding jobs here, you have people across the country whose livelihoods depend upon being in this country…..

Of course the analogy is imperfect. Ethanol producers are socially destructive, converting valuable resources into fuel when they’d be more valuable as food. (If that weren’t the case, they wouldn’t need a subsidy.) Undocumented workers, by contrast, are socially constructive, performing tasks that people want to pay them for, without having to be subsidized to do it.

That’s why I’d be sympathetic to this argument in the case of immigration policy but find it laughable in the case of ethanol subsidies. If socially destructive behavior should be allowed to continue whenever someone’s invested in it, then we should just grit our teeth and tolerate everything from urban gangs to toxic waste dumps to corrupt politicians. I’m sure the latter will please Senator Thune.

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The Obama administration said on Monday that it would not seek Congressional approval of free trade agreements with Colombia, Panama and South Korea until Republicans agree to expand assistance for American workers who might lose jobs as a result.

I have said this before and I will say it again: Anybody who loses his job because of a free trade agreement was overpaid to begin with. The $20-an-hour American who loses his job to a $5-an-hour Colombian is an American who has spent the past few years charging his countrymen twenty dollars for something they ought to have been able to buy for five.

So if I were writing this article it would have read something like this:

The Obama administration said on Monday that it would not seek Congressional approval of free trade agreements with Colombia, Panama and South Korea until Republicans agree to extort additional money from American consumer/taxpayers who might stop being overcharged as a result.

I guess that’s why I never got that call from the New York Times.

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The Smithsonian Magazine asks its readers to vote on who had the best Civil War facial hair. Burnside wins, as well he should. But how is Longstreet not even among the candidates?

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Despite that enormous income, janitors pay no taxes whatsoever — or at least no taxes whatsoever over and above the taxes that are paid by you, me and other ordinary Americans. And shockingly, it appears that the U.S. Congress would rather cut spending than institute a new tax on janitorial income.

If the above strikes you as insane, congratulations. You are smarter than the intended audience of Senator Bernie Sanders, who observes in his new book “The Speech” that General Electric’s shareholders collectively earned a staggering $26 billion over the past five years, and paid absolutely no tax on that amount.

Of course $26 billion is only a tenth of what janitors earned over the same time period, but I guess it does look mighty big if you don’t bother dividing by the number of shareholders. Without having all the numbers in front of me, my best guess is that we’re talking maybe a few hundred bucks per shareholder, though of course (as with janitors) some earn more and others earn less.

And as for the shareholders paying absolutely no tax, perhaps they didn’t, as long as you don’t count taxes on dividends, capital gains and wages. To wit:

• GE pays no current dividends, but the expectation of taxes on future dividends suppresses the current value of the stock, amounting to a tax on past and/or present shareholders.
• Every shareholder who cashes out — that is, every shareholder who actually realizes any of these profits — pays a capital gains tax.
• Every shareholder who ever earned a dollar and bought GE stock has already paid income tax on that dollar, which the government (as opposed to the shareholder) has had the opportunity to invest, so that the government (as opposed to the shareholder) is collecting some fraction of the investment revenue, which is to say that the shareholder’s investment income is effectively taxed up front.

So right. No taxes paid whatsoever, except for the taxes, and the double taxes and the triple taxes. Just as janitors have paid no taxes whatsoever, except for the taxes they’ve paid.

Surely Senator Sanders understands most of this, and ought to understand all of it, and therefore can only be laughing up his sleeve, as befits the most cynical of demagogues, at the gulls who take him seriously. But it’s a delicate business. He’s aiming at an audience that’s smart enough to read or hear his words and still dumb enough to swallow his analysis. According to my careful calculations, the relevant IQ range is a rather narrow 81 to 84. Coincidentally, that’s just about the IQ of the average NPR listener, which I suppose is why Senator Sanders got a respectful hearing last week from Diane Rehm.

The problem with democracy is that these people get to vote.

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Well, you could lower your prices. Or you could work on providing better service. Or you could send over a couple of guys who are really good at convincing people it’s not in their interest to compete with you.

Or say you run a personnel company that brings foreign workers into the United States. And say you’re worried about competitors who cross the border without your help. One option is to try doing a better job. Another is to send over about 1500 guys with unmanned aerial vehicles, new forwarding operating bases and $14 million in new communications equipment to tamp down the flow.

President Obama, with support from both sides of the political aisle, will be signing a bill today that allocates $600 million for “border security”. According to CNN, “The bill is funded in part by higher fees on personnel companies that bring foreign workers into the United States”.

I imagine the personnel companies will consider it money well spent. Let’s not lose sight of how ugly this is.

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So why the singular focus on teachers? The answer, of course, is that unlike plumbers or cab drivers or pharmaceutical workers or computer programmers, teachers, through their unions, were major contributors to the Obama campaign.

All victorious politicians engage in the unsavory practice of diverting spoils to their most vigorous supporters at everyone else’s expense. In this, the current administration may be no more blameworthy than any other. But I’m pretty sure that sending out the chair of the Council of Economic Advisors to defend these political payoffs marks a new sort of low. Traditionally, the Council is composed of first-rate academics whose job is to give good counsel and remain above the political fray. Shame on the President for debasing that noble mission, and shame on Christy Romer for going along with it.

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The number of “unauthorized aliens” in Arizona at any given moment is estimated as just under a half million—about the same as the number of Jews in New Jersey. Over half the text of the Arizona law is devoted to penalizing employers who hire these people. Now suppose for a moment that the New Jersey legislature were to pass a bill penalizing anyone who hires a Jew. Would Professor Kobach defend this law, as he does Arizona’s, by pointing out that it doesn’t require anyone to carry a driver’s license?

The anti-immigration hysterics keep warning us that foreigners want to come over here and exploit our welfare system. The insincerity of that stance is exposed whenever, as in Arizona, its proponents set out to prevent those very same foreigners from coming here and working.

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