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Nordic Governments Own 33% of the Region’s Wealth

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On Friday, I wrote a piece noting that Giancarlo Sopo’s article in the Federalist about the Nordic countries was full of errors. Sopo tells me he has asked the Federalist to issue corrections on the errors I identified in my piece, but so far the Federalist has not done that.

If they do get into the mood to do corrections, then there are a lot more to make than the ones I identified in my initial piece. Before listing all of those errors, let’s start with some facts.

In the below graph, I have calculated how much of the national wealth each Nordic government owned in 2014. That is the last year in which all four have data. I have also produced a figure for the Nordic region as a whole (i.e. if you combine the figures of all four countries).

These figures come initially from the World Inequality Database, but were subsequently double-checked with each country’s national account or with the economist responsible for them. What they say is that in 2014, the Norwegian state owned 54.6 percent of its nation’s wealth; Finland owned 31.7 percent; Sweden owned 24.1 percent; and Denmark owned 11.2 percent. For the Nordic region as a whole, the figure is 32.6 percent. In 2014, the US government owned -3.2 percent of its nation’s wealth.

Sopo gets these facts wrong in his piece due to the same calculation error that led him to make mistakes about Mexico’s state ownership and South Korea’s state ownership, mistakes I pointed out in my first piece. So, in a sense, he made one math error — using the wrong calculation method — that then led him to publish dozens of errors.

Given the facts contained in the graph above, Sopo’s piece contains the following errors that also need to be corrected:

  1. The headline says “Debunking Socialist Myths: 90 Percent Of Scandinavia’s Wealth Is Privately Owned.” This is false. The real number is 67 percent.
  2. The sub-headline says “The Bruenig standard indicates Scandinavia is less socialist than the average non-Scandinavian country, including the United States under the most conservative presidency of our lifetime.” This is false. Sopo believes it is true because he believes Nordic governments only own 10 percent of the region’s wealth, which is less than the 12 percent of national wealth the US government owned under Reagan. But in fact, the Nordic governments own 33 percent of the region’s wealth, which is more than 12 percent.
  3. The table in his piece gets the wealth of Denmark, Finland, and the Nordic region as a whole wrong.
  4. Sopo writes “Lastly, more than 90 percent of Scandinavia’s combined wealth is privately owned.” This is false. The real number is 67 percent.
  5. Sopo writes “9.6 percent of Scandinavia’s wealth [is] under government ownership, meaning that a little over 90 percent is in private hands.” This is false. The real number is 33 percent and 67 percent.
  6. Sopo writes “Scandinavia has less state ownership of its national wealth today than the United States had under President Reagan.” This is false. See (2) above.
  7. Sopo writes “a greater share of Scandinavia’s wealth is in private hands (90.4 percent) than in the 17 other countries examined in the WIR study (86.8 percent).” This is false because only 67 percent of Nordic wealth is in private hands, which is less than 86.8 percent.
  8. Sopo writes “As such, not only does the Bruenig standard fail to prove Scandinavian socialism, it points to Scandinavia being less socialist than the average non-Scandinavian country, including the United States under what was arguably the most conservative presidency of our lifetime. Boom.” The claim about the Nordics being “less socialist than the average non-Scandinavia country” is false. It’s a repeat of the mistake in (7). The claim that they are less socialist than “the most conservative presidency of our lifetime” is false. It’s a repeat of the mistake in (2) and (6). Boom.

Also, unrelated to his statistical mess up, Sopo keeps saying that Finland is a Scandinavian country. It’s a Nordic country, but not a Scandinavian one.

I look forward to the Federalist’s corrections on these points. If they are made, the article will be basically entirely gone.

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jsled
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WaPo Keeps Publishing False Claims About Medicare-for-All

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An activist organization asked me to speak on their conference call last night about the Mercatus Medicare-for-All study. After I finished my opening remarks, one of the callers, a retired physician, told me that she had read Sanders’s plan would cut payments to doctors by 40 percent in the Washington Post. I told her that the Post had already corrected that mistake, but now I realize the Post continues to disseminate this falsehood in new pieces across its website despite already issuing a correction on it.

The False Claim

The originator of this false claim in the Washington Post universe was, ironically enough, fact-checker Glenn Kessler. Kessler wrote on August 7 that:

In doing his research, Blahous decided to follow the text of the Sanders plan and assume that providers — doctors, hospitals, drug companies and the like — would face an immediate cut of 40 percent in their payments.

On that same day, I immediately pointed out that this was a false statement. The Mercatus study does not say that Sanders’s plan cuts provider payments by 40 percent because it doesn’t.

What the Mercatus study says is that Medicare provider rates are 40 percent below private insurance rates. This was cleverly worded to deceive readers into thinking Medicare-for-All would cut provider payments by 40 percent and Kessler was clearly so deceived. But the specific details of the report make it clear that the actual cut would be much less than 40 percent.

This is because only 56 percent of Americans have private insurance. So while private insurance patients would see their payments reduced by 40 percent, Medicare patients would not see their payments reduced at all, and Medicaid and uninsured patients would actually see their payments increase.

Kessler corrected his piece on August 7, which now reads:

In doing his research, Blahous decided to follow the text of the Sanders plan and assume that providers — doctors, hospitals, and the like — would face an immediate cut of roughly 40 percent for the treatment of patients now covered by private insurance.

He also put an editor’s note at the top of the piece stating “This fact check has been updated.”

Falsehood Continues

Despite acknowledging that this claim was false and issuing a correction about it, the Washington Post continues to publish it.

Astonishingly, Glenn Kessler himself published another piece on August 10 with this exact same falsehood in it.

In his “debunking” of Alexandria Ocasio-Cortez’s (completely accurate) claim that the Mercatus study showed that Medicare-for-All would be cheaper than our current system, Kessler wrote:

Some Democrats have seized on a reference in a study released by the Mercatus Center at George Mason University, which receives some funding from the Koch Foundation, that a Medicare-for-all plan advanced by Sen. Bernie Sanders (I-Vt.) would reduce the country’s overall level of health expenditures by $2 trillion from 2022 to 2031. That’s because the Sanders plan would slash payments to providers by 40 percent.

So, to repeat: Kessler acknowledged this claim was false on August 7 and corrected his piece about it on August 7. Then he republished the exact same falsehood on August 10. This August 10 piece has not been corrected as of the publication of this post.

Falsehood Continues Again

On August 12, the editorial board of the Washington Post published a piece generally bashing Bernie Sanders’s (completely accurate) descriptions of the Mercatus study. The text of the editorial does not say that Sanders’s plan would cut provider payments by 40 percent, though it does point out that Medicare payment rates “run at about 60 percent of private insurance rates” without also mentioning that Medicare payment rates are higher than Medicaid payment rates and higher than the often nonexistent payments for uninsured patients.

Although the text of the editorial does not contain an explicit factual error, right smack dab in the middle of the editorial is a video that does. Here is a screenshot of the video in the editorial:

At 0:18 in the video, the voiceover says:

In order to generate the savings, Senator Bernie Sanders’s plan generously assumes that providers would be paid roughly 40 percent less than they are now.

The video also provides this helpful illustration:

This is a completely false claim. Glenn Kessler acknowledged that this was a false claim on August 7 and corrected the piece he wrote making it. Yet here it is once again being published by the Washington Post.

In some ways, the undead nature of this falsehood is a perfect microcosm of the problems our society faces in dealing with fake news. Once a false report is out there, it is devilishly difficult to undo the damage it has caused because, even if it is corrected, few people ever recognize the correction and so many people wind up repeating the false report. What’s remarkable is that this same dynamic can somehow be present within a major news organization and indeed within the same human being who actually made and then corrected the initial false report.

Needless to say, the Washington Post needs to correct Glenn Kessler’s August 10 piece and needs to correct its August 12 editorial. The video also needs to either be remade with a different voiceover and graphic or wiped off the website entirely.

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jsled
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The Apotheosis of Dinesh D’Souza

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In “Dinesh D’Souza and the Decline of American Conservatism,” my colleague David Frum notes a mainstay of his subject’s work: portraying racism in the United States as if it is overwhelmingly a sin of the Democratic Party, even as D’Souza, a partisan Republican, stokes the racial prejudices of his readers by playing on pernicious group stereotypes.

D’Souza’s basic formula for distortion is easy to grasp.

Abraham Lincoln and the members of Congress who fought to reconstruct the South in a manner that would guarantee the rights of freed slaves were Republicans. And the Democratic Party’s history is rife with horrific racism. D’Souza’s schtick is to selectively cite those historical truths while eliding other truths, like huge changes in the political parties across the decades, Democrats who’ve fought for civil rights, and a Republican Party history that is also rife with horrific racism, helping to explain why so few African Americans cast ballots for the GOP today.

D’Souza’s approach is especially attractive to the subset of grassroots Republicans who resent being lectured about racism on the ideological right. How psychologically comforting to be told that Democrats are the real racists, rather than grapple with the bigotry that is present in their own coalition. My colleague cited apt examples of the intellectual dishonesty and factual distortions D’Souza deploys while profiting off of his pandering. But Frum’s article happened to be written just before the absurdity of D’Souza’s project reached what may be its apotheosis.

I direct your attention to American Greatness, a populist intellectual journal that began as a dissident group blog back when the Claremont Institute was unwilling to associate itself with Michael Anton’s then-pseudonymous case for Donald Trump. Last weekend, it published D’Souza’s article, “Richard Spencer, Wilsonian Progressive,” the latest of his pandering contributions to the Democrats are the real racists genre.

“I’ve never interviewed a white supremacist before, so I didn’t know what to expect when Richard Spencer showed up to talk to me,” D’Souza began, but he quickly noted his purpose in seeking the interview: “My real interest was to find out what Spencer really believed, with a view to figuring out where he really belongs on the political spectrum.”

Of course, there is no doubt about Spencer’s allegiances in current electoral politics: The white-nationalist bigot is an open, explicit supporter of President Donald Trump. He voted for the Republican candidate in the 2016 presidential election. He said, “Hail Trump, hail our people, hail victory!” as cheering supporters rendered Nazi salutes. And the rally of white supremacists that he participated in last year in Charlottesville was named “Unite the Right,” not “Unite the Left.”

But D’Souza’s project is predicated on always reaching the conclusion that Democrats are the real racists, and in his telling even Spencer fits the theory.

First, D’Souza highlights this excerpt from their conversation:

Finally I asked Spencer about the movie, “Birth of a Nation.”

Me: Have you seen it?

Spencer: Yes, I have.

Me: What did you think of it?

Spencer: It’s an amazing film, one of the most important films ever made.

Me: Leaving aside its technical merits, the notion that the sex-crazed blacks are taking over the country and the Ku Klux Klan was a redemptive movement of white identity to clean the place up—you agree with that?

Spencer: It was a romanticization of the first Klan in response to Republican Reconstruction. It’s an idealized vision that paints in really broad strokes.

Me: But it’s your music.

Spencer: Sure. It appealed to many, Americans including presidents.

It is, indeed, a historical fact that Woodrow Wilson watched Birth of a Nation at the White House—and that he did tremendous harm to African Americans by resegregating the federal government (among other transgressions that make him one of the worst presidents).

D’Souza continues:

As I interviewed Spencer, I kept saying to myself, obviously this guy is not a conservative, but what is he? He’s not a progressive in the contemporary sense, either. And yet his ideas are so familiar. Only toward the end of the interview did it hit me. Spencer’s views are virtually identical to those of the progressive racists of the Woodrow Wilson era. In a purely logical sense, Spencer “should be a progressive Democrat … even today the Democratic Party is the party of ethnic identity politics.

Actually, in “a purely logical sense,” it’s incoherent to choose one’s political party by focusing on the figures and labels of 100 years ago. But in D’Souza’s telling, “Spencer’s problem … is that the Democrats mobilize black, Latino and Asian identity politics against that of whites. Since whites are now the all-round bad guy, Spencer’s brand of progressivism is no longer welcome at the multicultural picnic.” Notice that to make his argument work, D’Souza must unashamedly conflate the “identity politics” of Wilson, who valorized the Ku Klux Klan, lamented black suffrage, and resegregated the federal government, with the “identity politics” of Hillary Clinton and Nancy Pelosi.

It is shameful for the journal of a political movement to allow a writer to conflate such things as if they’re substantively or morally alike.

D’Souza then attempts to distance Spencer from the Republican president who both men support:

Now, there is very little on which Spencer and Trump actually agree. Trump is a flag-waving patriot who cherishes the American Founders; Spencer isn’t and doesn’t. Trump believes our rights come from God; Spencer is an atheist. Trump wants to keep illegals out so legal immigrants and other American citizens—whether white, black or brown—can thrive. Spencer wants more white immigrants, fewer if any black and brown ones. In sum, Trump is generally “conservative” in his ideology and Spencer is clearly not.

That is a dubious assessment of Trump, who has praised murderous foreign dictators more lavishly than America’s founders, shows no sign of earnest religious faith, and has attacked even people who came to the U.S. legally as if they are foreign others who have a lesser claim to this country. D’Souza continues:

Why, then, did Spencer vote for Trump?

Why does he consider himself on the right? The simple answer is that Spencer has no place else to go, so he is trying to carve out a niche for himself in the only party where he can find some measure of agreement, however small. Trump isn’t embracing Spencer’s agenda; rather, Spencer is embracing Trump’s agenda because his own is politically irrelevant.

How’s that for a douple-standard? For D’Souza, progressives like Barack Obama are tarnished by their affiliation with racists who lived more than a century ago because they, too, were “progressive Democrats,” despite the ways in which their party has subsequently changed. But he also says it is totally baseless to connect the Trump wing of the Republican Party to white supremacists like Richard Spencer and David Duke, men who presently declare themselves Trump supporters and argue that Trump is taking Republicans in a direction that they see as desirable.

D’Souza may yet outdo himself in the future. But for now, the apotheosis of his discreditable project’s absurdity is trotting out Spencer, who loudly proclaimed “Hail Trump!”, as proof that Democrats are the real racists.

That American Greatness and Fox News are assisting him in this enterprise is both an indictment of those outlets and a reminder of how badly the American right wants to shield itself from the truth: that Spencer, Duke, and others like them support Trump and Trump-adjacent populists like Steve Bannon and Stephen Miller because racists derive benefits from Trump’s approach to politics and his agenda.

White supremacists benefit when Trump stokes racial anxieties and resentments. White supremacists benefit from the Republican Party’s turn toward white-identity politics and away from aspirational color-blindness.

White supremacists thrilled in elevating a man who once took out a newspaper ad calling for the execution of black and Hispanic youths, asserted that Obama was a foreign-born usurper, campaigned for the presidency by calling Mexicans rapists, suggested that a U.S. born judge of Mexican ancestry was unfit to hear his trial, pardoned one of the most vicious violators of Hispanic civil rights in the country, and implemented a ban encompassing many Muslims with legal resident visas.

As David French writes at National Review:

[Trump] retweeted alt-right accounts and alt-right memes and claimed (after an alt-right terror attack) that there were “very fine people” marching with the alt-right at Charlottesville. The Virginia GOP nominated Corey Stewart for the United States Senate, and Stewart has a history of disturbing ties to alt-right figures—including calling the vile alt-right anti-Semite Paul Nehlen one of his “personal heroes.”

In some ways the influence of the alt-right has been more subtle. It has created room for more race-baiting on the right, including even in personal conversations and personal relationships. Since 2015, I’ve read and heard more racist comments (including directed at my youngest daughter) than I’d read or heard in my entire life. I’ve heard with my own ears a substantial uptick in casual racism in personal conversations, including when talking to people who know my family is multiracial. Our public and private conversations have been measurably degraded.

That record doesn’t make all Trump supporters racists any more than Wilson’s behavior made all of the people who voted for him racist. But 100 years from now, if a polemicist is trying to tar his political opponent as a bigot by reaching back into the previous century, it isn’t Bill Clinton or George W. Bush or Barack Obama that he’ll invoke. “You’re acting like a Trump-style Republican” will do just fine.

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jsled
2 days ago
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Provider Payments Only Fall by 10.6% in Mercatus Study

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I have probably written too many pieces about the Mercatus Medicare-for-All study (1, 2, 3, 4, 5, 6), but I am nonetheless not done yet. One of the claims that keeps popping up in the coverage of the study is that the Sanders plan would cut provider payments by 40 percent. This is absolutely untrue and the study does not say this. Although the report’s author, Charles Blahous, conveniently omitted the actual provider payment cut, a reverse-engineering of his tables indicate that the it is only 10.6 percent, not 40 percent.

A Completely Absurd Figure

Before getting into how I arrive at the 10.6 percent estimate, it is useful to emphasize that the claim that Sanders’s plan cuts provider payments by 40 percent is so totally absurd that you would have to be innumerate to think it was true.

Blahous’s score of Sanders’s plan (Table 2 of the report) says that the provider cuts amount to $5.3 trillion between 2022 and 2031. If $5.3 trillion represents 40 percent off the baseline no-cut provider payment rate, then that would mean Sanders’s plan only pays providers $7.96 trillion over this period ($5.307 * 0.6 / 0.4). Yet the total health expenditures in this score are $57.6 trillion. Needless to say, there is absolutely no way Sanders’s plan only pays $7.96 trillion out of $57.6 trillion (13.8 percent) to health providers. That is totally absurd and so the 40 percent figure is also totally absurd.

There are still other ways to see how totally nuts this claim is. For instance, Blahous provides two scores in his paper. In one of them, he does not reduce provider payment rates at all. That score puts the total price tag at $62.9 trillion. In the other score, where some people are saying provider payment rates are cut by 40 percent, the total price tag is $57.6 trillion. So, the difference between cutting provider payment rates by 0 percent and 40 percent is the difference between $62.9 trillion and $57.6 trillion, a difference of 8.4 percent? Again, completely absurd.

The Real Figure

In order to figure out what the real number is (more or less), what I did was go into Table 2 and start with the line that says “currently projected personal healthcare spending.” This line represents total national health expenditures minus expenditures for research, structures, equipment, and insurance administrative costs. Put differently, this line roughly represents payments to providers and payments to drug companies.

The report says “prescription drugs account for only 10 percent of total national health expenditures.” So I take 10 percent of the line in Table 2 that says “currently projected national health expenditures” in order to get a dollar value for drug expenditures.

I then take that value for drug expenditures and subtract it from the “currently projected personal healthcare spending.” The resulting figure should be equal to currently projected provider payments. I add on to that the estimated increase in utilization provided in Table 2 to get the provider payment level that would obtain under Medicare-for-All without any provider payment cuts.

From there, I go to the line in Table 2 that says “Applying Medicare payment rates,” which tells you how much lower provider payments will be under Sanders’s plan. I then take that value and divide it by the provider payment level arrived at in the prior paragraph. The result: under Sanders’s plan, provider payments go down by 10.6 percent between 2022-2031.

One way to double check if this figure makes sense is to see if it more or less lines up with Medicare reimbursement rates. Since Medicare-for-All sets all reimbursement rates at the current Medicare rates, then the provider cuts should basically be equal to however much below cost Medicare reimbursements are set. Thankfully, Blahous provides this figure on page 11: “For example, in 2014, hospitals were reimbursed just 89 percent of their costs of treating Medicare patients.” If Medicare reimbursements are set at 89 percent of costs, then that suggests Medicare-for-All will cut provider payment rates by 11 percent, which is virtually identical to my 10.6 percent figure.

A 10.6 Percent Cut in Provider Payments Is Pretty Doable

If provider payments go down by 10.6 percent, then that means doctors and hospitals will have 10.6 percent less money to work with on a per-patient basis. That could cause a strain (or at minimum cuts in salaries) if they cannot find a way to cut operational costs. But they absolutely should be able to cut operational costs.

As Austin Frakt pointed out last month in the New York Times, American hospitals spend 25 percent of their revenue on provider-side administrative expenses. By contrast, Canada and Scotland, both single-payer systems, only spend 12 percent. A single-payer system like Medicare-for-All would make it much easier for hospitals to do their administration because they would only have to bill the national health insurer rather than deal with all sorts of different insurers and uninsured people. If they can get their administrative costs down to Canadian levels, that would represent a cut in their operating costs of 13 percent, which is more than the 10.6 percent cut in provider payments.

What this means then is that the Mercatus score of Sanders’s plan, which finds that it saves $2 trillion over the first 10 years, is absolutely plausible, contrary to the public messaging campaign Mercatus has been waging over the last two weeks against their own study. More than that: it seems conservative. An aggressive single-payer plan would not just cut provider payments in an amount equal to provider-side administrative efficiencies, but would go even further and cut them up to the point of pushing down exorbitant doctor salaries. And in that more aggressive scenario, the savings would be way more than the $2 trillion projected by the Mercatus report.

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jsled
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"American hospitals spend 25 percent of their revenue on provider-side administrative expenses. By contrast, Canada and Scotland, both single-payer systems, only spend 12 percent. A single-payer system like Medicare-for-All would make it much easier for hospitals to do their administration because they would only have to bill the national health insurer rather than deal with all sorts of different insurers and uninsured people. If they can get their administrative costs down to Canadian levels, that would represent a cut in their operating costs of 13 percent, which is more than the 10.6 percent cut in provider payments."
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Kevin Williamson’s unhinged attack on Elizabeth Warren’s corporate accountability bill, explained

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I’m not sure he actually read it.

As someone who tries to follow progressive policy development trends pretty closely, I was struck to see Thursday morning that Kevin Williamson had an article in National Review describing “Elizabeth Warren’s Batty Plan to Nationalize . . . Everything.”

Williamson turns out to be referring to Warren’s proposed Accountable Capitalism Act, which I wrote about on Wednesday and which does not involve nationalizing anything at all.

Her proposal would, in fact, be a large change in how the American economy works. And the impact of the change would almost certainly be negative for the 10 percent of the population that owns 80 percent of the value of the American stock market. So it’s natural that the plan will provoke intense opposition, and very much worth considering the possibility that it’s a bad idea.

But Williamson, who every conservative I know regards as one of the movement’s top minds, reaches his conclusion based almost entirely on mischaracterizing Warren’s program.

What Williamson says Warren wants

According to Williamson, Warren’s plan would make corporations “accountable to politicians, who desire to put the assets and productivity of private businesses under political discipline for their own selfish ends” in pursuit of “the wholesale expropriation of private enterprise in the United States, and nothing less.”

He means this quite literally.

His view is that Warren’s proposal is to essentially nationalize industry — putting business enterprises under the direct supervision of the federal government — to the extent that he views Donald Trump being in office as a knock-down argument that should convince everyone on the left that Warren’s proposal is bad.

To those on the left who look at Senator Warren’s proposal and think that giving the government a stronger whip hand over American businesses is just the ticket, I would like to present four questions: Who is the president of these United States? Who is the majority leader in the Senate? Who is the speaker of the House? How would you evaluate the composition of the Supreme Court, either as it stands or after President Donald Trump has the opportunity to nominate another justice or two? The power you give the federal government will be there during Republican administrations, too. Any future populist demagogue who finds his way into the White House will have access to the same power. No one should be trusted with that kind of power.

I think this is a reasonable argument against the wholesale nationalization of industry in the United States. It’s true that Norway has had a great deal of success with an economic system in which the state controls an incredibly large share of national wealth, but it seems unwise to me to leave so much up to the vicissitudes of the electoral process.

But conveniently, Warren’s plan does not in any way resemble Williamson’s description.

What the Accountable Capitalism Act actually says

Under the existing legal status quo, it is already the case that if you want to start a corporation you need to get permission from the government in the form a corporate charter. Currently, charters are issued by state governments, which has tended to lead to a race to the bottom. Delaware ends up being the paper home of a huge share of businesses thanks to its shareholder-friendly laws.

Warren’s proposal is that the federal government should halt that race to the bottom by requiring large businesses with more than $1 billion in revenue to obtain a federal charter. These businesses represent a large chunk of overall economic activity in the United States. But contrary to Williamson’s rhetoric, the vast majority of American businesses are small and would be totally unaffected by anything in her legislation.

The federal charter for large businesses would have the following stipulations:

  • Company directors would be explicitly instructed to consider the interests of all relevant stakeholders — shareholders, but also customers, employees, and the communities in which the company operates — when making decisions.
  • 40 percent of the directors would be elected by the company’s workforce, with the other 60 percent elected by shareholders.
  • Corporate executives would be required to hold onto shares of stock granted to them for at least five years after they were received and at least three years after a share buyback.
  • Corporate political activity would require the specific authorization of both 75 percent of shareholders and 75 percent of board members.

In other words, under this plan no businesses would be nationalized. And neither Donald Trump nor any executive branch official would gain any new discretionary authority over any business. Congress would, of course, be able to change the law in the future, but Congress can already change laws — which is why we are talking about a senator’s proposal to change the law — so there’s no change there either.

Williamson alleges that under this bill “the federal government would then dictate to these businesses the composition of their boards, the details of internal corporate governance, compensation practices, personnel policies, and much more.”

That’s simply not the case. Williamson employs the rhetorical trick of insisting that because Warren is not stupid she must be dishonest to have put forward such a transparently bad idea.

I don’t personally know whether or not Williamson is stupid, so I won’t speculate on why exactly he has misdescribed the proposal so badly, but he has done an extremely poor job of describing the proposal. Then having misdescribed it, he raises a number of practical concerns without any regard for the relevant evidence.

Williamson doesn’t seem to know codetermination is common

Warren is proposing, essentially, that large American companies adopt an economic system known as “codetermination” in which management of the enterprise is the joint responsibility of workers and shareholders. This is not the historical practice in the United States or in other English speaking countries, but it’s common in continental Europe and often takes forms that are quite a bit stronger than what Warren proposes.

In Denmark, for example, any company with 35 employees needs worker representation on the board. In Germany, any company with more than 2,000 employees needs a board that is half elected by workers.

Reasonable people can disagree about the strength of the Danish or German economy, obviously, but when assessing the likely impact of adopting a codetermination system in the United States, one should start with some awareness of the functioning of comparable systems abroad.

Williamson, who does not seem to realize this, warns that if America adopts codetermination all its companies will leave:

Businesses historically have chosen to locate in the United States for a number of reasons: It was long the world’s largest market, and businesses had faith in American law and the American dollar. It’s still a big market, and the dollar is still the world’s favorite currency. But if American law or American lawmakers are going to treat profit-seeking enterprises as an Enemy of the People — Zurich is pretty nice. Lots of places are. There are a lot of big American businesses with targets painted on their backs, and those that do not already have a Plan B are doing their shareholders a disservice.

The idea that making the US legal system less friendly to shareholders will to an extent deter investment in the United States is not crazy. But it’s also obviously not the case that the entire German corporate sector has departed for Zurich despite it being a German-speaking city that is physically close to Germany and that is part of the same European Common Market as Germany.

One reason this doesn’t happen, as Williamson could probably have figured out for himself, is that since German workers control half the board seats on big German companies, it would be nearly impossible for a German company to gain board approval to abandon Germany.

One underlying issue here is that American conservatives seem hopelessly confused as to what it is that’s happening in Northern Europe and what, if anything, they want to say about it.

Conservatives aren’t sure if something’s rotten in Denmark

For several years now, Bernie Sanders has been prominently describing himself as a “socialist” and more specifically praising the social model of Denmark. Denmark’s prime minister (who leads a conservative political party) stridently disagrees that this social model amounts to “socialism.” And for the specific purposes of dunking on Sanders, most American conservatives are inclined to agree with the prime minister.

Two years ago, for example, Williamson himself praised Denmark, noting that “our friends at the Heritage Foundation rank its economy the eleventh most free in the world, one place ahead of the United States, reflecting Denmark’s strong property rights, relative freedom from corruption, low public debt, freedom of trade and investment, etc.” Sanders and his ilk, according to Williamson, “do not understand Denmark, or America, or much of anything.”

The libertarian Cato Institute agrees with Williamson that Denmark should be understood as a free market success story that happens to have a generous welfare state attached to it.

But guess what?

Denmark has some of the strongest codetermination laws in the world with employee representation on corporate boards kicking it at a much lower threshold than Warren proposed.

Yet even though Cato regards Denmark as an example of a successful free market economic system, Scott Shackford at the libertarian magazine Reason writes that Warren’s proposal to adopt a version of Danish-style codetermination would “destroy capitalism.”

Williamson, who a few years ago was scornful of Sanders’s lack of appreciation of the high degree of economic freedom in Denmark, now writes scornfully that Warren’s proposal to adopt a version of Danish-style codetermination would destroy the American economy.

There’s a weird quirk in conservative ideology in America: Since it’s knowable from first principles that policy action to create a more egalitarian economic system is undesirable, editors and writers can assign negative takes on something like Warren’s proposal without anyone taking the time to actually assess whether or not it’s a good idea.

But since it’s clear that the people working on this subject so far don’t actually know anything about it, it might be helpful to everyone concerned for Warren critics to slow down and do a little research first.

Warren is proposing a large change, and it might be a bad idea. But it’s simply not the case that codetermination systems lead naturally to tyranny or imminent economic collapse. And it’s simply not the case that she is proposing the nationalization of all American business. (Or of any American business.)

Indeed, a critical part of the appeal of the idea is precisely that it directly empowers middle- and working-class employees without asking them to trust the wisdom or competence of a large new government entity.

Reforming corporate governance is an idea that polls extremely well so it’s probably true that conservatives’ best tactic for defeating it is to wildly mischaracterize it. The audience for conservative media deserves better than this.

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jsled
2 days ago
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South Burlington, Vermont
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Surprise: the Federalist Publishes Obvious Lies

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Conservatives generally engage the public debate in intentionally dishonest ways, whether that’s Charles Blahous deceiving people about provider payment cuts in Medicare for All or Kevin Williamson saying that giving workers 40 percent of the seats on corporate boards is nationalization. If you watch the public debate a lot, you get used to this, but it still remains somewhat annoying.

This new piece by Giancarlo Sopo at the Federalist is a classic in the conservative genre of takes that are both intentionally deceptive and totally incoherent. The argument of Sopo’s piece goes like this (seriously):

  1. Matt Bruenig says Norway is the most socialist country in the world because its state owns more of the national wealth than any others.
  2. But (1) is false because the Mexican state owned more of its national wealth in 2009 than the Norwegian state did in 2009.
  3. Yet Mexico is not socialist because its president in 2009 was a conservative.
  4. If the Mexican state is not socialist (3) despite owning more of its national wealth than the Norwegian state (2), then it follows the Norwegian state is not socialist.

If you think there is no way that this is an accurate account of his argument, read the piece for yourself.

The fun thing about this argument is that literally every piece of it is false.

1. Norway as Socialist

For starters, I did not say Norway is the most socialist country in the world. Rather, I said it was “the most socialist country in the developed world.” This immediately nullifies the rest of his argument because Mexico is generally not considered a developed country.

2. Mexico’s state-owned wealth

Sopo claims that the Mexican state owned 60 percent of the country’s wealth in 2009. He says his source for this is the World Inequality Report. But the WIR does not contain any data about Mexico in it.

When I asked for clarification on this, Sopo said that he had gotten it from the World Inequality Database (WID) that is also on that site. The WID has a lot of different data in it from different countries at varying stages of completeness and reliability. The Mexican data is compiled by researchers Wouter Leenders and Luis Bauluz and is described on the site as a “work in progress.”

I emailed Leenders about this seemingly odd figure and he explained:

For Mexico, the private wealth and public series are “my” series that relied on very limited data. The “market-value national wealth” series are those updated by Luis and these are therefore not comparable with my old series. If you want to get an indication of the share of public wealth in total wealth: you can see from the old series in the graph, net public wealth is considerably lower than net private wealth.

To understand what he is saying here, you can look at the following graph.

The blue (net private wealth) and green (net public wealth) lines were constructed by Leenders using “very limited data.” If you stick to those two series, what you conclude is that the Mexican state owns 37.4 percent of the national wealth in 2009, which is obviously less than the 50.5 percent of the national wealth owned by the Norwegian state in that same year.

What Sopo did instead was take Leenders green (net public wealth) line and divide it by Bauluz’s red (market-value national wealth) line. But these are not compatible series that permit that kind of calculation. Of course, Sopo must know this because, dividing the green by the red line says that the Mexican state increased its share of the national wealth from 21.5 percent in 2004 to 60 percent in 2009, an obviously insane finding.

I guess if you wanted to be really charitable to Sopo here, you could say that he was trying to demonstrate the unreliability of all these data. But they aren’t all unreliable. In particular, the data published in the WIR (not the WID) are very reliable and are from countries with very detailed national accounts. The Norwegian figures, which show that the government owned around 60 percent of the national wealth in 2016, come straight from the the country’s national accountants who I contacted directly by email before I started publishing the claim.

The weird thing is that Sopo seems to know that his Mexican figures are unreliable because in his piece he also says that, using his calculation method, South Korea owns 21,205 percent of the country’s national wealth, which obviously cannot be true. But instead of questioning whether his calculation method is wrong or getting the authors to clarify, he just publishes these figures. Like I said: intentional dishonesty is the calling card of conservative punditry.

In a separate email, the WIR’s Gabriel Zucman said “The national wealth data for Korea and Mexico are wrong and we don’t use them in the WIR. They should not be in our database—our mistake, we’ll fix the database asap.”

3. Conservative Heads of State

By the time we get to step 3 in the argument, it’s already failed two times. But Sopo is not satisfied with two points of failure and decides to go for the hat trick by arguing that Mexico cannot be socialist because its head of state was conservative in 2009. This is more of a judgment call than it is an outright factual mistake (like the other two), but it is clearly nonsensical.

I know the precise contours of socialism are disputed, but even within those disputes people generally acknowledge that a country is socialist or not based on its economic institutions, not based on the self-professed ideology of its leaders. If you have a full-blown socialist economy (whatever that might be) and then the head of state changes hands to someone who is not a socialist, that country does not flip to being capitalist on inauguration day. Likewise, when you have a capitalist country whose head of state flips to a self-professed socialist, the country does not toggle into socialism.

Since socialism refers to economic institutions, what matters is whether the institutions are in fact socialist. So if the Mexican state did own as much wealth as Sopo falsely claimed they did, they certainly would be a quite socialistic state regardless of what their head of state’s personal ideology was.

This third failure point has another weird aspect to it. Sopo’s basic argument is to say that since Mexico is more socialist than Norway by my measure (it isn’t really), and Mexico is not socialist because it had a conservative head of state in 2009, then that means a fortiori that Norway is not socialist either. But if all it takes to not be socialist is to have a conservative head of state, then Sopo could have dispensed with this bizarre argument altogether and just pointed out that Norway currently has a conservative head of state.

So the argument is both wrong on every level and unnecessarily elaborate. Sopo is apparently angling for that Kevin Williamson market.

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jsled
3 days ago
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South Burlington, Vermont
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