Tuesday, October 25, 2011

Confusing Correlation and Causation

David Brooks has been on a kick lately about where the country mindset is and based on what he "knows" he is very much against the Occupy Wall Street protests, since in his view they are so far out of the mainstream.  But, I believe, he is using the wrong sort of evidence to support his conclusions, as I will try to illustrate below.

If you asked dyed-in-the-wool Democrats whether they trust their government and did so after certain junctures in recent history (I'll list some immediately following this question) how would they respond?
a) During the height of the Vietnam War.
b) After Watergate came to light.
c) When it was learned there were no WMD.
d) After Hurricane Katrina.
e) After the Gulf oil spill.
f)  After the Debt Ceiling debacle.

I don't know the general answer to this.  I know my own answer.  That answer is no, in each instance.  In providing this answer, I'm rendering a verdict on past events.  In each of these instances, government responded poorly.  Some people, I assume most of them are anti-government types, take evidence of this sort and conclude government necessarily acts poorly.  Several of the students I taught last spring were in this category.

But it is quite possible to render quite a different verdict.  Government can be viewed as fundamentally a good thing but is capable of behaving quite poorly, when the President exercises poor judgment and therefore poor leadership (Johnson regarding the escalation of the War in Vietnam), is fundamentally paranoid (Nixon regarding Watergate), or is so anti-government in philosophy that the government agencies acting in his charge don't do their jobs effectively (Reagan and Bush II).  In this case the view is that government needs to be reformed to be effective.  One can not trust government because of past misdeeds and yet be quite hopeful that government can perform admirably in the not too distant future, if there is suitable leadership put in place.

It is, of course, not only the President who exercises leadership.  Congress has a role to play too.   Recently the view has become almost universal that they are obstructionist, which is why their approval rating is so low.  But it doesn't have to be this way.  Read Evan Bayh's Op-Ed about why he is leaving the Senate, written in February 2010. He describes all the problems.  But then he proposes potential solutions that seem sensible to this reader.  If you asked him, do you trust Congress, he'd be forced to say no.  But if you also asked, do you want to trust Congress, you'd get a resounding yes.

This distinction is particularly important when it comes to thinking about regulation, for example, the relationship between the SEC and the financial services industry or perhaps even more evidently, the role of Elizabeth Warren and the Consumer Financial Protection Bureau.  In my view she exemplified what effective government looks like and her leadership of the Bureau was blocked by Senate Republicans specifically for that reason.  So I maintain that effective government is possible but that it didn't emerge in this instance.

There is a further question here that needs to be asked.  If government was effective and most voters did trust government, does that imply government would have an adversarial relationship with business?  And, if so, is that sustainable?  These, I think, rather than the issue of effective government per se, are the questions Democrats need to work through. 

I don't have a fully worked through answer on this, but my partial way of thinking about it is that some business operates with a seeming P.T. Barnum philosophy (there's a sucker born every minute) and for such business an adversarial approach is fitting and proper.  For other businesses, however, they are trying hard to produce a decent product, one that consumers like and want.  Environmental and safety regulation do impose costs on these business, some of which should be borne for the greater good but some of which should be discarded because they are too onerous.  We need an ongoing dialog to find out which is which and where the happy middle is.  We currently don't seem to have a way to get that dialog.  I'm hopeful it will be possible in the future. 

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