maketheworldworkbetter

Statistically informed ideas on how to make the world work better.

Category: Ideas

Idea: How to solve Quebec’s budget problems: stop giving me money!

The logo for the Quebec government program that sends me money I don't need.

The logo for the Quebec government program that sends me money I don’t need.

Like so much of the rest of the developed world, Quebec has been going through a budget crisis recently. The supposedly left-wing government has threatened draconian cuts to health research, unemployment benefits, and a host of other popular programs. There never seems to be enough in the coffers.

Like much of Europe, Quebec has an extensive social welfare state. Free health care. $7/day subsidized public day care. A parental leave program that gives parents 1 year of paid leave (~60% of salary) per child. Incredible benefits to save for a child’s education. Heavily subsidized higher education. Generous unemployment benefits and an employment insurance program. Etc.

So why is a left-wing government cutting such things? That’s a subject for another post, but it’s clear that the cuts are politically unpopular, and that there is therefore some budget reality apparent to those in power that is not apparent to the average citizen. These are not the sort of folks likely to buy into all the austerity hype that was so popular elsewhere until recently.

The cuts proposed are not just unpopular, they are for the most part very bad ideas. For example, the government originally proposed cutting $10 million from medical research, or 30% of a $33 million budget. But research is a long-term investment – cutting so drastically would have stopped many projects in progress and made Quebec a much less attractive place for foreign researchers (like me) to come to. It’s like trying to save fuel by cutting the gas to an airplane engine in mid-flight… (The government eventually pulled back, under pressure.)

More importantly, what can the government do to solve the budget problem? The answer here is surprisingly simple: stop giving me money! Amidst all these budget crises in the news, my wife and I recently received a series of checks for about $800 from the Quebec government as child assistance payments, because we have a new son. The leaflet explained that everyone with a child gets such a payment, and that they are between $651 (for richer people) and $2319 (for poorer people) per year. And it’s tax-free.

I think child assistance payments are a great idea. They can (maybe) encourage people to have more children, which is good in developed countries with low birth rates. They also help defray the costs of raising a child and show a societal solidarity with families. I just don’t think child assistance payments for my family are a good investment of the government’s money.

My wife and I are both professionals with comfortable salaries. Our decision to have a child or not (or to have more children or not) is not affected in the smallest way by receiving $800 from the government. Maybe we’ll use it to get an even fancier stroller. Is this really what Quebec taxpayers should be paying for?

Of course, I’m not just talking about my family. I’m talking about all the families like mine. Anyone with a family income over $80,000 has absolutely zero need of government assistance to raise their kids, and the government gets very little benefit from payments to these families.  As I’ve argued elsewhere, $1 is worth much more to a poor person than to a rich person; following this principle, the $800 we’ve received could do a lot more good helping a poor family, or reinvested elsewhere in the budget.

More generally, my wife and I make too much money and are taxed too little. The Quebec tax brackets are 16% up to ~$40,000, then 20% up to about $80,000, then 24% after that. This is on top of federal taxes of 15-29% depending on income. This all seems high compared to the US, especially with 13.5% sales tax, and it is. But the social benefits here are incredible, and worth it. I don’t have to pay for health insurance, and I don’t have to worry about not having health care, to name just the most prominent.

Our current salaries – modest compared to doctors, lawyers, business people, and many other professsionals – nonetheless give us an excellent quality of life. All we could want in a home. Plenty to save for retirement or a rainy day. Plenty to eat well. Plenty to travel to see family abroad, or to vacation overseas. Whatever stresses we may have in life, money is not one of them. Of course we could always find a way to use more, but our quality of life would be essentially untouched if we gave $10,000 more per year to the government in taxes. Instead, the government is sending us checks.

So, my proposal to fix Quebec’s budgets: stop all child assistance payments to the richest 30% of families, and similarly cut back drastically on other benefits for the rich and upper middle class. Less retirement benefits, less pay during parental leave, less unemployment insurance benefits. All of these things could be capped at the amount that would be received by a family with an $80,000 income, for example. And then raise our taxes.

I don’t argue this because I feel we have to always soak the rich. I argue this because this extra money could be used so much better to strengthen great government programs. It’s not just a question of giving money to the poor (though I’d be all for increasing the child assistance payments to the poorest families); it’s a question of smart investment in society. Medical research is the example I know best, of course. Funding medical research attracts educated, foreign professionals like myself. We then set up shop here, and we hire people to work in our labs using money we obtain from research grants. At any given moment, I am supporting about 5-8 students or employees in my lab, and I’m young and just getting started. These people will then go out and spend their salaries, and there is a multiplier effect. And we generate the results of the research, which is (we hope) of great use to society. Some discoveries by researchers like me become patented and create business opportunities, creating more jobs.

So, Quebec can tax me more and hire more people like me, or it can let me keep my money and put it into a savings account, or (if I were a completely different person) buy an Audi, a pool, and a vacation home in Miami. Most of the things a rich person could do with extra money have relatively modest benefits for the Quebec economy; not so for money invested in society, or given to those with modest incomes.

No, I’m not about to donate my extra salary to the government. But it seems silly to talk of a budget crisis when the simple solution is to cut government support to the better off, and to tax them more heavily. This doesn’t have to be exorbitant – there is probably some truth to the idea that higher taxes can slow growth – but a moderate hike could go a long way.

Idea: Limit government surveillance by granting warrants for algorithms, not people

NSA

All the controversy surrounding the surveillance of phone logs and internet use by the US National Security Agency (NSA) shows that it is very difficult to simultaneously make full use of technology to catch potential terrorist threats and to protect the civil liberties of individual citizens. Most of the debate has been polarized: The US government is or is not justified in doing what it’s done. But there is an innovative compromise position no one is discussing, one that (mostly) gives the best of both worlds.

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Idea: A better way to allocate grants for research

There is a paradox that most granting agencies face when they fund research: Researchers have a strong incentive to ask for as much money as possible even if they don’t really need it. One reason is that researchers are evaluated by both their institutions and their peers based on the number of grant dollars obtained (rather than on the quality of their research or their productivity). Another reason is that it’s always better to have a little too much money in the budget than not enough – we might as well estimate high.

These incentives are at work all the time in subtle ways. They mean that researchers ask for more money than they need. There is thus a slow inflation in the accepted “cost of doing business” and in the amounts viewed as normal. There is no reason at all for researchers to try to get by on a shoestring. Perhaps most insidiously, there is an incentive for young researchers to choose research topics that require more money for the same amount of productivity. Several years ago at the University of Michigan, I heard that one of the deans wanted to hire fewer faculty in ecology and evolution and more in lab-based biology because the latter brought in larger grants.* I often see colleagues in developing countries finding cheap and inventive ways to do the same things we do here, just on a fraction of our budgets.

In addition, most granting agencies demand detailed budgets for submitted projects. These budgets require lots of time to prepare, lots of time for peers to review, and are mostly made up anyway – people say in the budget what they need to say to get funded, knowing they can use the money as they wish later. I have even been told by CIHR representatives that I should fudge my budget because it is the best way to get funded!

One reason these problems persist is that in most cases successful grants are chosen with regard to quality but without regard to value. In other words, if there is $1 million left in the budget and a $1 million grant is ranked just above 10 grants that are $100,000, the $1 million grant will be funded and none of the next 10 will be, even if the total value of the next ten projects is 9.5 times that of the $1 million project.

I’ve just devised a system that I think elegantly solves this problem and substantially reduces paperwork. Here is a summary:

1)      For competitions, the funding agency decides a priori on a number of funding tiers (say 7, ranging from $80,000/year to $1 million per year). Each tier has a number of slots available based on the total budget, with many slots available at the lowest tiers and very few at the highest.

2)      Each researcher does not fill out a budget, but simply selects a tier he or she wishes to be considered for. If the grant is awarded, this is the amount that will be received – no more, no less.

3)      All applications are ranked based on quality, without regard to the budget tier chosen.

4)      Funded applications are chosen starting at the lowest tier and choosing the best candidates who applied for that tier, until the number of slots allotted for that tier are filled.

5)      At each higher tier, any applications not chosen for the lower tiers are retained in the competition, and will still be funded at their requested (lower) tier if they rank sufficiently high among the higher-tier applications. In other words, at each tier the highest-ranked applications are funded, including those at that tier and those not selected at lower tiers.

6)      Any remaining funds (due, for example, to lower-tier candidates winning higher-tier slots) can be given to the remaining candidates in order of their rank, irrespective of tier.

 

This system has a number of clear advantages:

1)      It removes a huge amount of work from both writing and reviewing grants – everything related to budgets, which are usually fudged anyway.

2)      It gives a strong incentive to researchers to conduct their research on the smallest budget possible, since the chances of obtaining a grant are much larger for those with smaller budgets.

3)      It gives a way to fund larger-budget projects or programs when justified, and lets the competition incentivize the researchers to make the determination about necessity.

4)      It gives an incentive to young researchers to choose relatively cost-effective fields of study, improving the cost efficiency of research for decades to come.

5)      It rewards overall candidate quality and frugality simultaneously, in such a way that budget does not become a perverse incentive to do other than the best research.

 

What do you think? Would it work? What are the challenges?

 

*Caveat: I heard this story second-hand years ago, and may have misremembered something in the details. But there was unquestionably a perception that expensive research was prioritized by someone higher up.

Idea: To limit guns, make a well-regulated militia

2nd amendment

There you have it. The bizarrely punctuated second amendment to the US Constitution that has become the basis of the bizarre gun-rights movement in the US, people that make bizarre statements like “I wish to God [the Newtown principal] had an M-4 in her office locked up — so when she heard gunfire, she pulls it out and she didn’t have to lunge heroically with nothing in her hands.”

Living in Canada (or almost anywhere else in the world), one looks on in bewilderment at the awful tragedy in Newtown, Connecticut and at the utterly incomprehensible refusal to have sensible gun regulations in the US. President Obama has promised action, and the NRA has fallen silent, but in two weeks the heat will have died down and the gun enthusiasts will start to speak up again.

So, in the spirit of responding in kind to gun enthusiasts’ absurd interpretations of this muddled text, here is a tongue-in-cheek idea for how to adhere faithfully to the 2nd amendment:

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Idea: How to neuter SuperPACs

Sheldon Adelson, AP photo

See that evil-looking guy up there? That’s Sheldon Adelson, a right-wing casino mogul. He donated $70 million to various Republican campaign efforts in the 2012 season. In a fit of brilliance, he donated $20 million to Newt Gingrich. (How’d that work out for ya…?) The rest went to pro-Romney or anti-Obama SuperPACs. SuperPACs are organizations that, as a result of the 2010 US Supreme Court ruling Citizens United, are allowed to spend unlimited amounts of money on political advocacy without declaring their donors. So, according to current US law, someone like Adelson can donate $20 million to support a candidate, either openly or in secret. Then, when Adelson needs a favor to help his business interests… Well, you do the math.

Of course, after the results of this year’s US elections, it seems the SuperPACs had a bark worse than their bite. Many observers were suggesting that the flood of cash would favor Republicans; nonetheless, Obama was re-elected and the Democrats gained seats in both the Senate and the House. Some people think that this means SuperPACs are not so bad. I disagree; Eric Posner lays out a bunch of reasons why we should still be wary of them. Fundamentally, it is a problem for democracy when (a) rich people have disproportionate power to influence the outcomes of elections and (b) there is no legal way to limit either corruption or the appearance of corruption in politics. (The rationale behind the Citizens United decision is that free speech trumps these arguments, and that there is essentially no way to limit campaign spending without telling people they don’t have a right to spend their money to express their opinions.)

Citizens United thus seems to be an insurmountable barrier to any way to limit corruption and a disproportionate influence for the rich. If all political spending is protected as free speech, it seems nearly impossible to craft a law or regulations that would effectively limit the power of money in elections. So, here is an idea for how to get around this: Impose a progressive tax on political contributions.

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Idea: Oil spills, pipelines and negative externalities: insurance as a solution

I just posted on how we can use mandatory insurance on public works projects to guarantee the quality of the work. I’d like to briefly expand this idea to all major projects that have the potential to cause a large amount of public harm: oil platforms or tankers (think of the BP Deepwater Horizon disaster), oil pipelines (think of the Enbridge spill in Michigan or the planned TransCanada and Enbridge pipelines from Alberta), nuclear power plants (think of Fukushima), and probably a host of others I haven’t considered yet.

The basic idea is to only grant permits for construction and operation when the operating company has purchased insurance from a stable, major, independent firm. In the event of a disaster, the insurance company would be forced to pay out damages for all costs relating to the disaster, with a relatively low threshold of proof. These damages would include contributions to government coffers for hard-to-quantify but nonetheless real harm, such as destruction of coral reefs, indirect economic effects, and so forth.

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Idea: Fix shoddy roads in Quebec with mandatory construction insurance

Currently Quebec is home to some of the worst roads in North America. They are bumpy, full of potholes, poorly maintained, and dangerous. The photo above is from the 2006 collapse of the Concorde overpass. In Montreal, many overpasses have wire mesh on their undersides to prevent chunks of concrete from falling on cars passing below. Just over the border in Ontario or Vermont, things are great.

The reasons for the shoddy roads seem to be threefold (based on my reading of the newspapers and conversations with people here). First, harsh winters and freeze-thaw cycles wreak havoc on the roads. While undoubtedly true, this doesn’t explain why things are better in Vermont and Ontario. Second, there is massive corruption in the construction industry, with mafia involvement, backroom deals, corrupt politicans, and so forth. This results in bad bidding practices on contracts and shoddy work to facilitate more future contracts. I don’t know how the level of corruption compares to other countries, but it is widely perceived as a major problem and there is specific evidence in a number of cases. Third, the construction unions are particularly strong, driving up the price of labor, going on strike when anything threatens the status quo, and allowing incompetent employees to retain their jobs. This is perceived as driving up the cost and down the quality of the work.

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The value of living abroad


I’m going to do something a bit different today – I’m going to include a bit more of my personal life in this post. Reading other blogs like Mindful Stew, Analyfe, and Newsofthetimes has made me realize that for some things, personal narrative can be a more powerful argument than purely academic ones, and that a bit of both might sometimes be useful.

True to form, I’m interested in questions of large societal import, but I’ll tackle this one from experience as much as reason. And today’s subject: why we should require college students to spend a year abroad before graduating.

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Idea: International War Crimes Prevention Force

I just posted on why it is so hard to find ways to prevent war crimes – aside from all the internal politics of places like the UN and the Western powers, it is rarely possible to know with confidence what to do, or even to know that intervention won’t make things worse. I argued that two prerequisites for addressing these problems are (a) a strong disincentive for any rulers contemplating atrocities, and (b) a way to impose or implement a stable long-term government in conflict zones.

To this end, I propose the creation of an international body responsible for prevention and enforcement of mass atrocities. This body would have substantial diplomatic and military power and would be largely independent. It would be mandated to use its power in ways that would put real, meaningful pressure on governments to find peaceful long-term solutions to their internal conflicts.

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Idea: Re-introduce corporal punishment for criminals

Some of my colleagues seemed quite offended by this idea over the lunch table the other day. I hope it will be provocative and stimulate lots of comments! (The picture, by the way, is me undergoing corporal punishment from my mother-in-law on my last trip to Korea 😉 )

My starting point is that the criminal justice systems in most developed countries spend a huge amount of money on trials and incarceration, and appear to get relatively little benefit in terms of deterrence. How do we know that there’s little benefit? Look at how low crime rates are in places like Japan or Austria. I doubt these countries are punishing murderers much more harshly than in the US, where murder rates are 10-fold higher, or than Honduras, where they are more than 100-fold higher. Rather, cross-country comparisons (in my crude, quick view) appear to show that low crime rates are largely due to a combination of social cohesion, community values, and limited poverty.

In addition, the US constitution (and probably some other constitutions – I’m not sure) explicitly prohibits “cruel and unusual punishment.” The problem with this phrase is that once any punishment becomes unusual, it can never be re-introduced (it will always be unusual thereafter), so over time the number of potential punishments in the arsenal of law enforcement becomes limited. Currently, incarceration and fines seem to be the only real punishments available. Fines will get you only so far – many criminals are too poor to pay or too rich to care – and so effectively incarceration is all we can do to deter most major crime. And, as I just mentioned, this appears to be quite expensive and not very effective. Going to jail appears increase the probability of becoming a repeat offender.

So why not institute a system of corporal punishment to complement the system of incarceration?

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