The basic skills section

DO NOT WRITE ANYTHING DOWN FROM THE NEXT 10 SLIDES. JUST LISTEN AND TRY TO FORMULATE ANSWERS TO THE QUESTIONS I POSE.

Five basic skills This is what you need to know how to do: 1.Understand and summarize what’s being said about politics. 2.Distinguish a reasoned political argument from propaganda. 3.Support a political argument with evidence. 4.Understand and use quantitative political data. 5.Find reliable evidence that answer political questions.

The first basic skill Be able to listen to/read a political argument and know what was said identify the likely political point of view of the speaker/writer. Recognize what he/she wants you to think/believe

Can you figure out the assumption/biases of these speakers and locate them on an ideological spectrum?

“In light of the National Labor Relations Board attacks on business this week, this little piece is striking, as it is the epitome of why unemployment remains high. The U.S. Department of Labor… regularly issues a newsletter via e- mail and posts it… This week, among other items touted, was this little gem on union bosses meeting with President Obama to discuss growing the economy and the government-union partnership. It’s funny that the administration still refuses to admit that unions are the antithesis of private-sector job creation. In fact, it seems the only way unions create jobs is to buy politicians who steal other people’s money, then reward the union bosses with taxpayer dollars and government-approved discrimination.”

“Let's imagine the political possibilities of the next two years and beyond. So far, President Obama's response to the drubbing of the mid-term has confirmed the progressive community's worst fears. Astonishingly, he still seems to believe the following: The American people care more about bipartisan compromise and budget cuts than about ending the economic crisis. If he just compromises a little more, the Republicans might still meet him halfway. The recipe for economic recovery has something to do with reducing the short term federal deficit. All three of these premises are disastrously wrong -- as politics and as economics. Gestures like freezing federal pay levels and cutting the government workforce only play into the… mantra that the government is the problem. Politically, they signal weakness.”

A hypothetical political argument “Under a liberal president, federal spending has spun out of control. As a result, the federal budget deficit has never been larger. But just as the average American family has to balance its household budget, the federal government should balance its budget. It’s the smart thing and the patriotic thing to do. Unless we do, taxes will eventually have to rise. We’ll lose jobs. And our competitive position in the world economy will inevitably decline. Your children’s future is at stake.”

POSC 100 – Course Materials The Coursepack – Contains the Syllabus, Study Guides and Reading Material Used Later in the Course – is available at: /~cdennis (Click on “Courses”) /~cdennis

Our hypothetical argument decoded Under a liberal president, federal spending has spun out of control (RHETORIC DESIGNED TO SCARE). As a result, the federal budget deficit has never been larger (POSSIBLE FACT: DEPENDS ON HOW IT IS MEASURED). But just as the average American family has to balance its household budget, the federal government should balance its budget (SYMBOL/ANALOGY). It’s the smart thing and the patriotic thing to do (SYMBOL/EMOTION). Unless we do, taxes will eventually have to rise (LOGIC/EMOTION/SELF- INTEREST). We’ll lose jobs (POSSIBLE FACT/SELF-INTEREST). And our competitive position in the world economy will inevitably decline (POSSIBLE FACT). Your children’s future is at stake (EMOTION).

Which claims are “empirical” in this paragraph? Empirical = there is evidence derived from experience or experiment that can support and confirm it. 1.The federal budget deficit has never been larger. 2.A large federal deficit causes job loss. 3.A large federal deficit weakens America’s competitiveness in the world economy.

How to Think about the Deficit - 1 How would you measure the federal deficit?

How to Think about the Deficit - 2 Should we think about the deficit in “absolute” or “relative” terms? For example, would you rather be $5 in debt and have $10 or be $20 in debt and have $100? Thus, is the “critical factor” the absolute amount of the debt or the debt in relation to your ability to pay it off?

How to Think about the Deficit - 3 The next slide will show you the federal deficit in current dollars (i.e., not adjusting for inflation), constant dollars (i.e., adjusting for inflation) and as a percentage of the economy (i.e., as a percentage of the Gross Domestic Product) over time.

How to Think about the Deficit - 4 Year Current Constant Percentage of GDP % % % % , , % So, how large is the federal deficit? (Dollar amounts are in billions – in 2009 the deficit is trillion dollars)

How to Think about the Deficit - 5 The deficit increases during recessions. Why? Would you actually want the federal government to reduce it’s deficit during a recession? Should the deficit be considered from a “short- term” or “long-term” perspective? Thus, if the cost of reducing the current federal deficit causes higher unemployment and reduces future earnings (e.g., through less education) is short-term deficit reduction advisable?

How to Think about the Federal Debt Federal Debt (i.e., total of the annual deficits) as a percentage of GDP: 1945 – 106.2% % % (no recession but tax cuts) 2000 – 34.7% (Clinton raised taxes) 2006 – 36.5% % Tax Cuts, Wars and Recessions increase the debt

Government Debt as a Percentage of a Nation’s Economy Nation Govt. Debt as a Percent of GDP Canada 84.0% Germany 78.8% Britain 76.5% Netherlands 64.6% U.S. 58.9% Norway 47.7%

Paying Off the National Debt/Reducing the Deficit We could sell off federal land and possessions (e.g., the national parks, military hardware, federal lands/buildings, bridges, roads, etc). Would this make our nation stronger or more prosperous? We could convert the federal deficit into a surplus in several years by: (1) tripling the size and length of the original Obama stimulus package; (2) letting the Bush Tax Cuts expire; and (3) adopting single payer health care.

Are Federal Revenues Increasing? Are Federal Revenues “too high”? Federal Revenues (taxes, fees, social Yearinsurance) as a percentage of GDP Federal revenue as a percentage of GDP are LOWER today than in any year since 1966.

The third basic skill Write an essay in which evidence is brought to bear evaluating a thesis.

An example: How democratic is the U.S.? The steps: Define democracy Identify the measureable elements of the definition Gather evidence that bears on those elements Assess to degree to which current practice conforms to the definition.

Try it What is “democracy”? Which parts of your definition could be measured? Where would find evidence that bears on those measures? Where is the U.S. on your measures?

A (too) simple example Definition: In a democratic system, everyone has the right to vote. A measure: the percentage of the population that is allowed to vote Evidence: the U.S. constitution says that all American citizens 18 and older have the right to vote.  Therefore, on this measure, America is democratic.

The fourth basic skill Look at a simple table or graph and understand what it describes. Use that information to evaluate a thesis.

Understanding Data Do most employees work for small or large companies?

Who do Americans work for? # of employees% of all firms under % % % % 2500 and above 0.04%

What we know from that slide The majority of firms have fewer than 10 employees. Very few firms employ one hundred or more employees.

What we don’t know from that slide How many workers work for firms in each category? What percentage of all employees work for firms in each category?

A hypothetical example (100 firms with 1000 employees) # of each total% of total firmsemploys employmentemployment (3 x 60) 18% (180/1000) (25 x 10) 25% (250/1000) (14 x 25) 35% (250/1000) (1 x 220) 22% (220/1000) %

Who do Americans work for? # of employees% of all firms % of all in firmemployees under %11.0% %25.3% % 14.6% % 11.8% 2500 and above 0.04% 37.2%

Is America on the right “path”? Is this an empirical question? How could you make it more empirical?

An “operational” definition of “right” Increasing economic well-being How would we measure that?

Two ways to measure “increasing economic well being” Is family income rising? Is unemployment falling?

Median household income in the U.S.

2010 – Household Income at Various Percentiles: 10 th Percentile: $11, th Percentile: $49, th Percentile: $138,900

In is important to note that over the period 98% of the income gains went to the richest 10% of earners – roughly households that today earn over $138,900 per year.

What do we now know? 1.Into how many racial groups are Americans divided in this graph? 2.Into which category would you put an hispanic household that considered itself white? 3.Are white households (non-hispanic) better or worse off than the American median household? 4.What’s the ratio of the median white household income to the median black household income? 5.Are all white households better off than all black households? 6.Has the median household gotten richer or poorer over time?

Thinking About Data - 1 Bush: Pollution is lower today than when I became president. Kerry: Pollution would have been lower if President Bush had done nothing instead of what he did. Four Options: 1 – Bush right/Kerry wrong; 2 – Kerry right/Bush wrong; 3 – both right; 4- both wrong

Thinking About Data - 2 Answer #3 is correct (i.e., they’re both right). But how can both statements be true? It is useful to distinguish between a: TREND LEVEL RATE

Thinking About Data - 3 Some argue that income taxes fall much too heavily on the wealthy. For example, in California, the wealthiest 10% of the taxpayers pay approximately 75% of the state income tax. While true, this argument is misleading for what two reasons?

Thinking About Data – It’s the percentage of income paid in a tax and not the percentage of a tax that a particular income group pays that is the important consideration – thus, if California’s state income tax was only to raise $1 and Steven Spielberg paid that $1 he would have borne 100% of the state income tax burden – however, $1 would be virtually 0% of his income; 2 – Excludes all taxes other than the income tax

Thinking About Data - 5 In political campaigns state spending is often an important topic. One often hears candidates for state office talking about “runaway” state spending. If we are going to compare spending by the State of California over time, what adjustments do we need to make?

Thinking About Data – population 2 – inflation Adjusting for population growth and inflation, to maintain the same level of service in 2009 that the state of California provided in 1999 state spending would have had to increase by 53%. Over the period spending by the State of California only increased by 29%.

Thinking Through Relationships - 1 What is suppose to be the relationship between a person’s level of wine consumption and their health?

Thinking Through Relationships - 2 Possible Relationships: 1 – no association – the amount of wine you drink is unrelated to your health 2 – positive – the greater the amount of wine you drink the more healthy you become 3 – negative – the greater the amount of wine you drink the less healthy you become

Thinking Through Relationships - 3 How could we find an association between wine drinking and health if, in fact, none existed?

Putting Skills Together - 4 It might be that wine consumption is related to other factors which affect a person’s health. For example, wine drinkers may eat healthier diets, exercise more and be slimmer than non- wine drinkers. Even if we removed the effect of each of these other factors (i.e., two people had the same diet, weight, etc. but one drank a glass of wine per day and the other did not) there might be “limits.” Thus, a glass of wine might be helpful but not a bottle of wine.

Thinking Through Relationships - 5 Statement: “High taxes discourage people from working and reduce economic growth” Questions: 1 – Growth for whom? The person paying the taxes or for the nation as a whole? 2 – Can you think of a way that the opposite could be true (i.e., higher taxes = higher growth)?

Thinking Through Relationships - 6 Increasing the taxes on the rich may cause them to work less hard. However, if this money is redistributed to poorer people for productive purposes (e.g., education, training, day care, etc.) the reduced income of very high income individuals can be more than offset by the increased earnings of those whom the money/services were redistributed to. Thus, higher taxes can lead to greater growth for the economy as a whole.

Putting Skills Together - 1 Question: How successful a candidate was President Obama in 2008?

Putting Skills Together - 2 Easy Answers: Very successful because: (1) he was elected President; (2) he won the popular vote 52.9% to 45.7%; and (3) he won the electoral vote 365 to 173. What’s missing/wrong with each of the three answers above?

Putting Skills Together - 3 Omitting scandal, what factors should effect a presidential election?

Putting Skills Together - 4 Political science research tells us that presidential election results are mainly influenced by the economy and war. How should we measure economic performance? How should we measure war?

Putting Skills Together - 5 The next slide shows the predictions for the incumbent party presidential candidate in each election based on the change in real disposable income (i.e., personal income after adjusting for inflation and taxes) and fatalities in war. Which party was the incumbent party in 2008?

Putting Skills Together - 6

Putting Skills Together - 7 Now, how successful was Obama?

Putting Skills Together - 8 In terms of the presidency, the Republican Party was the incumbent party in Since McCain received a greater percentage of the popular vote than he should have based on the economy and the wars, Obama wasn’t that successful of a candidate. Thus, while Obama won, he didn’t receive as greater a share of the popular vote as he should have given the economic and military situation.

Putting Skills Together - 9 The Estate Tax: As a result of the 2001 Bush Tax Cuts, by 2009 the value of estates exempt from taxation had risen to $3.5 million for individuals and $7.0 million for couples. The tax rate above this threshold was 45%. Thus, if an individual inherited $4.0 million dollars they would pay $225,000 in taxes (i.e., nothing on the first $3.5 million and 45% of the remaining $500,000).

Putting Skills Together - 10 In 2009, only the richest ¼ of 1% of estates paid any estate tax (i.e., 99.75% of estates were too low to be subject to the tax). Under these rules only 50 small farms or businesses in the entire nation were subject to the estate tax. Virtually all Republican Congressmen and Senators want estates to be entirely tax free. They compromised with President Obama and got the thresholds raised from $3.5 to $5.0 million for individuals and from $7.0 to $10.0 million for couples.

Putting Skills Together - 11 By comparison to the estate tax system in effect prior to the 2001 Bush Tax Cuts, the current estate tax system costs approximately $68 billion dollars per year in lost revenue. Think of what this means in terms of people who will now lose medical care (i.e., Medicaid - some will die as a result), students who will never go to college, workers who will not be retrained, working class people who will lose public transportation services all to pay for this tax cut for the extremely wealthy.

Putting Skills Together - 12 One of the main purposes of the “skills” component of this course is to equip you to think through policies such as the estate tax. Here are some questions worth considering. Does reducing, or eliminating, the estate tax reward merit or luck? Since the estate in question was typically “built” by someone other than the person inheriting the money and the family you are born into is entirely a matter of luck, it would seem like “luck,” not “merit” is being rewarded.

Putting Skills Together - 13 Additionally, don’t the program cutbacks necessitated by the lost revenue from estate relief reduce the ability of people to be “meritorious” (e.g., reduce government spending on education, job training, public transportation to work, etc.)? If you believe in inheritances, what is your policy goal? Is it maximizing the number of people who inherit money or maximizing the amount of money inherited? These are potentially conflicting goals.

Putting Skills Together - 14 Let’s reason this out. During the pre-2001 period (i.e., before the Bush Tax Cuts), only about the richest 2% of estates were subject to the estate tax. Now, this is less than ¼ of 1% of estates. Even if an estate was subject to tax, those inheriting would still inherit a very large sum of money (i.e., the estate tax would reduce, not eliminate their inheritance). However, every year many inheritances are either greatly reduced, or eliminated. If the estate tax isn’t the reason, what is?

Putting Skills Together - 15 ANSWER: The “end of life” medical expenses of the person who you would inherit from. For example, let’s say your father was going to “leave you” a home valued at $400,000. If he was diagnosed with Alzheimer’s disease 7 years before death and had to live in a nursing home, the costs could easily wipe out your entire $400,000 inheritance. Unlike most all wealthy democracies, the U.S. government does NOT provide money for long-term care beyond about 3 months.

Putting Skills Together - 16 The following is almost certainly “true”: a significantly GREATER NUMBER of people would inherit money if we taxed wealthy estates much higher (and had higher tax rates in general) and if the Medicare program provided long-term care coverage, than by having either a small, or no, estate tax but not having governmentally provided long-term care insurance. On the other hand, due to the many millions of dollars inherited by a few individuals the TOTAL AMOUNT OF MONEY inherited could be greater under minimal estate taxes.

Putting Skills Together - 17 For example, the total amount of money inherited would be greater if one person inherited $100 million dollars than if 1,000 people each inherited $50,000. If you believe in inheritances, which is your goal: maximizing the number of inheritances or maximizing the total amount of money inherited?

Putting Skills Together – 18 - Medical Research If you think that you can avoid healthy living because by the time you would get a serious disease there will be a cure, let me explain why this is likely to be a SERIOUS mistake! There are two reasons that advancement in medical treatment for such serious diseases as pancreatic cancer (only 3% survive 5 years) is VERY slow: (1) it’s difficult; (2) economic incentives DON’T sufficiently prioritize finding a cure.

Putting Skills Together – 19 While the scientific difficulties in finding cures for diseases is outside the scope of this course, the policy implications of economic incentives are very central to the goals of this course. In order to understand this process we need what economists refer to as “Expected Value.”

Putting Skills Together – 20 The “Expected Value” is the probability of an event occurring times the benefit from the occurrence of that event. Thus, if you have a 10% chance of winning a $500 prize, the expected value is $50 (.10 x $500 = $50). The probability of finding a “cure” for a disease is typically MUCH LOWER than for finding a minor improvement in treatment. Look at this from the standpoint of a pharmaceutical company.

Putting Skills Together – 21 If a pharmaceutical company can demonstrate that a new drug makes a minor improvement in health outcomes (e.g., not curing but extending the life of colon cancer patients by an average of 3 months), it can get a patent and charge a price similar to what it could charge for a cure. So, if the financial payoff is similar, but the probability of developing a drug which is a minor improvement is much higher than developing a cure, the financial incentive is to develop drugs that offer small gains over potential “cures.” This is also why government funded research is essential: it isn’t driven by a profit motive.