Bureaucrat to Honor

STEPHEN J. DUBNER and STEVEN D. LEVITT in today's NYTimes Magazine describe a bureaucrat to honor in Filling in the Tax Gap:

"an I.R.S. research officer in Washington named John Szilagyi had seen enough random audits to know that some taxpayers were incorrectly claiming dependents for the sake of an exemption. Sometimes it was a genuine mistake (a divorced wife and husband making duplicate claims on their children), and sometimes the claims were comically fraudulent (Szilagyi recalls at least one dependent's name listed as Fluffy, who was quite obviously a pet rather than a child).

Szilagyi decided that the most efficient way to clean up this mess was to simply require taxpayers to list their children's Social Security numbers. 'Initially, there was a lot of resistance to the idea,' says Szilagyi, now 66 and retired to Florida. 'The answer I got was that it was too much like '1984.'' The idea never made its way out of the agency.

A few years later, however, with Congress clamoring for more tax revenue, Szilagyi's idea was dug up, rushed forward and put into law for tax year 1986. When the returns started coming in the following April, Szilagyi recalls, he and his bosses were shocked: seven million dependents had suddenly vanished from the tax rolls, some incalculable combination of real pets and phantom children. Szilagyi's clever twist generated nearly $3 billion in revenues in a single year."

Obeying Rules--A Bureaucrat's View

Glenn Reynolds takes the position that providing "amnesty" for illegal immigrants is destructive to legal immigrants:

Reynolds:� Laws are for suckers? - Glenn Reynolds - MSNBC.com: "My question is, if the fact that lots of people break a law is a reason to get rid of it, why don't we get rid of the Drug War next? That would be OK with me. But it doesn't seem to be the way they think in Washington.

The problem with the current system -- and with the amnesty proposal -- is that it makes people who obey the law feel like suckers. That's a very destructive thing, socially. "

As a bureaucrat, I have to sympathize. I certainly feel mad as hell when I read of the rich evading taxes.

When Did Immigration Turn Bad?

Opponents of immigration reform seem to take the position that immigration is bad. That raises the question, when did it go bad? Was it 1970? Or 1912? Or 1848? Or 1630? Or maybe 11,000BC?

OrinKerr.com and Class Discrimination

Orin Kerr has set up shop separately from Volokh Conspiracy and posts here

"It’s always hard to second-guess a state sentencing decision based only on press reports. You don’t know the details of the sentencing scheme, or the details of the factual findings. But I wonder what sentence this defendant would have received if she had been an African-American male who had dropped out of high school?

UPDATE: Brooks Holland weighs in with a very helpful comment here."

The comments suggest that the defendant (a college grad white millionaire's daughter) profited from having a good lawyer and access to therapeutic programs but not from a racial bias in the system.

A thought on blogs and Orin's move: Bloggers want an audience. One way to get one is as a cooperative enterprise. But there's always the free rider problem--some in the cooperative are going to be more productive and more attractive than others, so there's often an incentive for people to split off and go on their own. Eugene Volokh has seen that happen with Tyler Cowan and now Orin (others I think, but I don't remember their names).

"Low-Skilled/Unskilled Immigrants"

The debate over immigration is heating up. People, mostly on the restrictive side, often refer to "low-skilled or unskilled immigrants". We need to be careful of context--there's two societies involved: the U.S. and the country of origin; so comparisons and social ladders in one society don't match up with those in another.

My impression is that the vast majority of immigrants of working age have to come up with a fair amount of money in their native country in order to get into the U.S. Indeed, illegal immigrants probably have to pay more than legal immigrants. (A "coyote" on the Mexican border costs more than an airline ticket from whereever.) That assumed fact leads me to believe that the future immigrants, while in their country of origin, had skills. They weren't the "lowest of the low" there. They may be doing jobs "Americans won't do" here, but that reflects the differences in the two societies and is not a basis for looking down on them. [ed.--do I heard a comment that of course we don't look down on people? Remember the Bible's beam and mote in the eye.]

Why the Estate Tax Helps Our Competitiveness

Mr. Mallaby in today's Post didn't intend to endorse the estate tax in his column lauding American superiority over Europe in productivity, but I think he did in this excerpt:

Why U.S. Business Is Winning:

"The next explanation for American superiority is a healthy indifference to first sons. Bloom and Van Reenen report that the practice of handing a family firm down from father to oldest son is five times more common in France and Britain than in the United States. Not surprisingly, this anti-meritocratic practice does not always produce good managers. So even though the best European companies are managed roughly as well as the best American ones, there's a fat tail of second-rate firms in Europe that's absent in the United States."

As for the overall column, I'd apply a large grain of salt. Over the last 55 years I remember the many enthusiasms the chattering class had for the superiority of this system or that. As far as I can tell no one system maintained an edge for the whole time. That suggests to me that the factors that seem to make for greater productivity ebb and flow. It's like saying the CAA is better than the Big East in basketball based on this year's NCAA tournament.

Those Ivied Walls Are Falling Down; Meritocracy and Institutional Imperatives

An interesting op-ed in today's Times: To All the Girls I've Rejected,
by Jennifer Delahunty Britz, director of admissions at Kenyon College:

"The elephant that looms large in the middle of the room is the importance of gender balance. Should it trump the qualifications of talented young female applicants? At those colleges that have reached what the experts call a 'tipping point,' where 60 percent or more of their enrolled students are female, you'll hear a hint of desperation in the voices of admissions officers.

Beyond the availability of dance partners for the winter formal, gender balance matters in ways both large and small on a residential college campus. Once you become decidedly female in enrollment, fewer males and, as it turns out, fewer females find your campus attractive."

Link this to the thesis of The Chosen, by Jerome Karabel, a good book, recently published, which reviews the history of admission policy at Harvard, Yale and Princeton from 1920 to now. He traces the different criteria for admission used and not used: academic promise, SAT scores, personality, extra curricular, legacy (descendant of alumni), athletic ability, race, religion, geographic diversity, international diversity, etc. Sometimes "diversity" was used to keep Jews out, sometimes to get African-Americans in; "legacy" has always been important because it ties directly to alumni support (giving).

Karabel barely touches on the new controversy--whether affirmative action should apply to males over females. Twill be interesting--will Bill Buckley be happy if Yale is 80 percent female? Will the stalwart proponents of merit-based admissions change their positions when the issue is not black versus white but male versus female?

FEMA and Multiple Layers of Contractors

The Washington Post had an article, Multiple Layers Of Contractors Drive Up Cost of Katrina Cleanup on the 19th:

"Four large companies won Army Corps contracts to cover damaged roofs with blue plastic tarp, under a program known as 'Operation Blue Roof.' The rate paid to the prime contractors ranged from $1.50 to $1.75 per square foot of tarp installed, documents show.

The prime contractors' rate is nearly as much as local roofers charge to install a roof of asphalt shingles, according to two roofing executives who requested anonymity because they feared losing their contracts. Meanwhile, at the bottom of the contractor heap, four to five rungs lower, some crews are being paid less than 10 cents per square foot, the officials said."

A bunch of bloggers were attracted to comment on this obvious example of governmental inefficiency. I want to be contrarian.

First, government bureaucracy in the U.S is weak. In a typical bureaucracy (think Catholic Church, Army, GM, Starbucks) you have a pyramidal organization--the "operators" at the local level (churches, platoons, dealerships/factories, coffee shops), then a management hierarchy, often geographically organized. This is the way you combine local knowledge and ability to act with centralized management. FEMA and other governmental organizations don't have this complete hierarchy. What tends to happen is FEMA, or Department of Education, or whatever provides the centralized management, but the lower layers are State and local governments or nonexistent.

In the specific case described by the Post, there was no expertise on temporary covering of roofs (though it doesn't seem to require much expertise). So FEMA, through the layers of contractors as is right and proper in a nation so firmly convinced of the merits of private enterprise, created a temporary bureaucracy with the ability to cover roofs. Contrast this approach to disaster to that of USDA. USDA has a network of county offices throughout the country. When a disaster occurs or Congress authorizes a new disaster relief program for farmers, this existing bureaucracy springs into action and delivers the checks.

The USDA model works much more efficiently than the FEMA model but it also works much more often. It's like the old Maytag repairman ads--do you want to pay FEMA to have people sit around and do nothing for years? Or can you find enough other duties for a permanent FEMA bureaucracy to do (as USDA offices have ongoing farm programs to justify their existence)?

BCC Follies--How Not To Manage

John Tierney in today's Times (subscription required) has a column discussing the buck-passing that preceded the Iraq invasion. Summary: no planning because no one saw it as his responsibility.

The blame is that of Bush/Cheney/Card--the managers in charge. One thing any bureaucrat learns when you're dealing with an effort that spans multiple units is that your major effort must be to ensure that things don't fall through the gaps. You can trust people (almost all the time) to try to do their jobs. What you can't trust people to do is to define the boundaries of their jobs.

Astro-physicists talk of "black matter"--stuff they can't see or sense but which must exist because of the way the visible universe behaves. Similarly, there's dark matter in the social universe, a dark matter called fear of failure. An easy way to fail is to try something new, something chaotic, something undefined. So let people define their jobs and they'll define away any responsibility for things they don't know or they haven't done (successfully) before. Conversely, they'll devote their effort to the things they've done before, what they've trained to do.

So managers, like BCC, must constantly ask questions to see that their bureaucrats cover the gaps between units, use imagination to think ahead and around. Alternatively they may follow the FDR precedent--assign multiple bureaucracies to overlapping tasks, resulting in conflicts that must be resolved in the White House. But one way or the other Bush did it wrong.

When an Op-Ed Makes No Sense--Harvard for Free

Yesterday the LATimes published an oped, How Harvard could share the wealth,
proposing that Harvard use the income from its endowment to make itself free to all students. (The figures seem to work.) The writer's key point was the contrast between Harvard's wealth and the $41K it charges for tuition, suggesting that it needed to be accessible to the poor. But then the writer says:

"Two years ago, Summers took action to make Harvard more accessible. He declared that parents of undergraduates with family incomes less than $40,000 a year would no longer have to pay anything for their children's Harvard education. The expected payment from families with incomes under $60,000 would be cut greatly as well.

Summers said his initiative sent 'a powerful message that Harvard is open to talented students from all economic backgrounds.' The university reported that the enrollment of students in those income brackets rose 18%. But the 18% growth, when you do the math, means only an additional 45 students.

Harvard's message needs to be more powerful — at least as powerful as one ought to expect from an elite, 370-year-old, $26-billion institution. Dropping tuition, room and board charges for all students would be a gesture worthy of the institution."

So the bottom line is that Harvard is already free to students from families under $40K. So what's the effect of the writer's proposal? To make Harvard free for rich kids!!

Not something I want to support.