Preempting Democracy

It's been almost two weeks since the final version of Pennsylvania House Bill 1950 was passed and sent to the governor. Meanwhile, I've been wrestling with writer's block.  Stating all the reasons I oppose this bill would require several pages. A less satisfying but more realistic option is to break the task up into smaller parts.

I'm opposed to drilling for natural gas in the Marcellus shale in Pennsylvania using hydraulic fracturing (fracking) for two main reasons. Briefly:

• Fracking poses long-term dangers to the public health and safety by releasing carcinogens and other toxins into the air and water on which we all depend. It may also threaten the geological stability of the land.
• Further drilling for natural gas will further delay the transition to renewable energy—primarily, wind and solar power—that is essential to avoid dangerous climate change that threatens to end human life on earth in just a few decades.

I'll discuss both of those issues in more detail on another day. This post is just about HB1950. I'll assume there will be more drilling and ask whether we are taxing and regulating it effectively. To say that the bill is industry-friendly is an understatement. But that should be no surprise, since the government of Pennsylvania is a wholly-owned subsidiary of the natural gas industry.

Flaring at a natural gas well in Potter County.  © Joshua B. Pribanic

Impact Fee

First of all, there is the optional impact fee. Each county must decide whether to impose it, which means that gas industry lobbyists will be flocking to the major drilling counties, checkbooks in hand, hoping to play off one county against another. (“If you impose the impact fee and the adjacent county doesn't, we'll leave your natural gas in the ground. And if you believe that . . .”)

The amount of the impact fee is difficult to pin down because it varies with the price of natural gas, but at current natural gas prices, it amounts to an effective tax rate of 2.6%—as opposed to, say, the marginal income tax rate of 28% that most upper middle class Americans pay. This amounts to about $240,000 per well, as compared to $993,700 per well in West Virginia, $878,500 in Texas, and $555,700 in Arkansas.

Sixty percent of the impact fee goes back to the counties to cover local costs, such as police and fire protection, damage to roadways, etc. The remaining 40% is split among state agencies, including some environmental and recreation funds, such as the Growing Greener fund. However, these gains are offset by cuts to environmental and recreation spending in the governor's 2012-2013 budget.

These fees will not even begin to cover the legacy costs of drilling in Pennsylvania. Ultimately, the gas companies will treat Pennsylvania the same way they treat the Third World. They will extract our resources and leave us with a hollowed out shell of environmental destruction. The cleanup costs will be borne by the taxpayers. As the song goes, “find 'em, fool 'em, and forget 'em.” (I think that's how it goes; there may be another “F-word” in there somewhere.)

Health and Safety Standards

The media have dutifully reported the health and safety protections in the bill, such as increased bonding requirements, greater penalties for violations, and setback requirements from homes and waterways. However, the bonds and fines are still inadequate, and the setbacks are a sham, since the bill requires the state to grant a variance from these standards should they deprive a company of its gas rights or if they promise to take protective measures. (For a more thorough critique of the bill's details, see this document from Penn Future.)

There have been over 3000 legal violations by natural gas companies in the last four years. The Environmental Protection Agency's recent decisions to investigate the effects of natural gas drilling in Susquehanna and Washington counties was widely interpreted as a lack of confidence in Pennsylvania's Department of Environmental Protection (DEP) to enforce the law, which seems reasonable if DEP is a wholly-owned subsidiary of the natural gas industry.

Preemption

Another provision of HB1950 preempts any local ordinances that regulate natural gas drilling that are stricter than the state standards—which is most of them. It states: “(A)ll local ordinances purporting to regulate oil and gas operations regulated by Chapter 32 are hereby superceded.” Local governments have 120 days to repeal those laws or they lose any impact fees that might be coming to them, plus they will have to pay legal penalties if they are sued by drilling companies.

Preemption is a legal strategy by which corporations and government take away the right to home rule from a community. It can occur with any law, but it often involves environmental issues such as corporate resource extraction or waste dumping. State preemption goes something like this: A bill is passed by the state imposing lax, corporate-friendly standards on the activity in question. Included in the bill is a section making it illegal for county or local governments to impose more stringent standards than those contained in the state law. The bill is often given an Orwellian title claiming to “protect” the very right that is being taken away.

Remember when the legislature passed its partial ban on smoking in restaurants and bars? Establishments that claim to make 20% or less of their revenue from the sale of food were exempt from the ban. Suppose Allegheny County wanted to ban smoking in all businesses that serve food? Sorry. That's preempted. Another example of preemption in Pennsylvania is the 2005 ACRE act, in which the state overruled local ordinances governing farming practices in Pennsylvania.

Of course, should a state impose environmental standards that corporations find to be a nuisance, such as California's gas mileage standards, they will press for federal preemption of state laws. Congress can preempt state and local laws under the supremacy clause of Article VI of the Constitution. Between 2000 and 2005, the feds enacted 27 preemptive laws overturning 92 state statutes.  The trend appears to be growing.

The ultimate in preemption is the World Trade Organization, where a three-person international committee of corporate lawyers have the power to overrule the laws of any country that they deem to be in “restraint of trade.” These dispute resolution tribunals have consistently ruled health, safety and environmental standards to be illegal under the General Agreement on Tariffs and Trade.

Preemption shifts the decision-making power away from members of the local community who are directly affected by the outcome and gives it to people who don't have to live with the results. The legislators who decide that local communities can't regulate factory hog farms don't have to smell the pig shit. In most cases, it shifts the decision to a level of government where corporations have greater influence, or where they can exert their influence more economically—that is, where fewer people have to be “persuaded” through a combination of lobbying and campaign contributions.

Brian O'Neill of the Post-Gazette said, “We need to elect better poker players to represent is in Harrisburg.” This is typical media talk. It assumes that when our legislators fail to act in the public interest, it is due to incompetence. A more likely explanation is that the public interest is not even a serious issue for our politicians. Their only important constituency is the people who pay for their campaigns. According to Penn Future, Governor Tom Corbett received $1.3 million in contributions from the natural gas industry.

The responsibility for this debacle belongs to the Elephant Party. The Jackasses were excluded from the secret deliberations between the governor, the majority leadership and natural gas industry which produced this bill. But there is no reason to think the result would have been different had there been divided government, or had the Jackasses been in power. (Recall the Rendell administration's similar record on natural gas.) The public interest can be safely ignored because there is no political party in Pennsylvania that represents the public. Democracy has been preempted.

Junk Health Insurance

I'm one of those lucky Americans who never had to shop for health insurance. I've always gotten it through my employer or Medicare. So it was a real eye-opener for me when I read about what passes for “health insurance” in the latest issue of Consumer Reports.

Junk health insurance comes in three varieties. Only the first of these qualifies as actual insurance; the other two are not insurance, but are marketed as if they were.

• Mini-med plans. This is real insurance, offered by recognizable health insurance brands, e.g., Aetna, Cigna, but at a lower price than their other insurance plans. Their distinguishing feature is extremely low yearly coverage limits, often only a couple of thousand dollars per year, which is useless if you have a serious illness.
  
  
• Fixed benefit indemnity plans. These plans reimburse you a fixed and generally low amount for medical care, i.e., $100 for each of five doctor visits per year.
  
  
• Medical discount cards. These plans offer a percentage discount on medical services in exchange for a monthly fee, if you can find a provider who will honor the card.

The latter two types of plans are sold by fly-by-night companies with generic names and are marketed directly to consumers over the phone and the internet. Premiums are generally high, and if consumers read the fine print they will realize that the potential reimbursement is not much greater than the yearly fee. Needless to say, the advertising and sales pitches are intended to obscure this fact.

Mini-meds are usually sold to low-wage employees of businesses such as retail or junk food who want to claim they offer some health insurance to their employees. The employer may or may not contribute to the premium. The Affordable Care Act (ACA) prohibits the sale of health insurance that has yearly or lifetime caps on benefits, so these plans were supposed to go out of existence at the end of 2010. However, employers such as McDonald's threatened to completely drop insurance coverage for their employees if the law was implemented. The Obama administration, consistent with its typical pattern of behavior, caved in to the pressure and granted waivers to 1231 mini-med plans covering almost 4 million people until 2014. It's not clear what will happen then.

The fixed benefit plans and discount cards also face a 2014 deadline, since citizens are required to have health insurance by that time and these plans are not health insurance. Of course, this presumes that the ACA still exists in 2014. These plans could be saved by either an Elephant landslide in the 2012 election or a ruling by the Supremes that the ACA is unconstitutional.

The article is filled with horror stories of people with life-threatening illnesses whose coverage fell far short of their expectations. The continued existence of these plans is one of many symptoms of a business culture that tries to cheat people out of their money whenever it can, and a government regulatory structure that does almost nothing to protect consumers from this type of exploitation.

Freedom Of . . . /Freedom From . . .

Photo by emilygk09

I have yet to see a clear analysis of the First Amendment implications of the controversy over health insurance coverage of contraceptives, so here is my attempt.

Many of us were required to memorize the five freedoms protected under the First Amendment: religion, speech, the press, assembly, and the right to petition for redress of grievances. But to say the First Amendment protects “freedom of religion” is an oversimplification. It reads, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” The second part, called the free exercise clause, is that which says that government can't prevent you from engaging in any legal behavior motivated by religion. It is the basis for the claim that the Constitution guarantees freedom of religion. But the first part, the establishment clause, says that the government can't force you to engage in any religious behavior, or compel you to support a religious institution, such as spending your tax dollars to subsidize religious schools. This is your freedom from religion.

The Catholic bishops, supported by members of the Elephant Party, object to a portion of the Affordable Care Act which requires employers to include contraceptive coverage in the health insurance plans they offer their employees. The Catholic church employs people not only in churches, but also in secular institutions, such as hospitals and universities, that it owns. The bishops argue that their religion not only compels them not to use contraceptives themselves, but also to actively prevent others from sinning by using contraceptives. Forcing them to provide women with contraceptives prevents them from exercising their religious beliefs, and is presumably the basis of the Elephant claim that the Obama administration is waging a “war on religion.”

Note that Obama's compromise plan requiring the health insurance companies to provide “free” contraceptive coverage does not overcome this objection. The bishops know that health insurance companies never do anything free of charge, and that the employer will pay indirectly for any contraceptives that are used.

The employees whose contraceptive coverage is threatened see the bishops' position as a violation of the establishment clause. If the government allows the Catholic church to withhold contraceptive coverage, then the government is requiring them either to abide by religious beliefs that they do not share, or spend a substantial sum of their own money to avoid this form of coercion.

It doesn't matter whether the employees are Catholics or not. There is no reason to assume that young Catholic women share the beliefs of the elderly men who dictate church policy; in fact, surveys show there is every reason to believe they don't. Part of women's objection to the bishops' position is the suspicion that they are trying to use the government to enforce a policy that they've been unable to convince their members to accept through persuasion.

So there is a conflict between the two parts of the First Amendment statement about religion. If the bishops are allowed to freely exercise their religious beliefs, they interfere with their employees' freedom from religion.

Does this remind anyone of John Stuart Mill's essay On Liberty (1959)? Mill argues that people should be free to do whatever they want, provided they don't interfere with the rights of others. As the cliché states, your right to swing your fist ends at the tip of my nose. How would Mill balance the religious liberty of those who wish to practice their religion with the rights of those with whom that practice interferes?

In this case, the bishops' free exercise claim interferes with an important right of their employees, the right to control their family size. This right has been affirmed by Supreme Court in Griswold v. Connecticut (1965), where they ruled that a state law prohibiting the sale of contraceptives violates the “right to marital privacy.” It should also be noted that contraceptives are prescribed for some women for other health reasons in addition to or instead of birth control.

In view of the importance of people's right to contraception and health care, it's my opinion that the establishment clause trumps the free exercise clause in this case. Obama's “accommodation,” while it may be politically expedient, failed to educate the public about the constitutional principles involved in the controversy.

Of course, we should be careful when applying Mill's analysis not to exaggerate the rights of those wanting to protect their freedom from religion. To interfere with people's religious liberty, they must threaten others with concrete and substantial harm. A non-believer can't insist that religious advertisements be removed merely because he finds them “objectionable,” any more than a believer can insist that pornography be banned for the same reason.

As Lawrence O'Donnell has pointed out, this controversy would not exist if we had single payer health care in this country. Why should any employer be allowed to control the health care coverage of its employees? The Elephants have inadvertantly emphasized this point when Senator Roy Blunt (R-MO) introduced a truly outrageous bill by that would give any employer or insurance company the right to withhold any type of medical coverage merely because that “corporate person” decided that the coverage violates his or her “religious beliefs or moral convictions.” John Stuart Mill would be spinning in his grave.

Deadbeats for Self-Reliance

Binyamin Appelbaum and Robert Gebeloff had an article in Sunday's New York Times suggesting that some of the people who are most in favor of severe cuts in government domestic spending are also highly dependent on the federal safety net. This chart—actually a scatterplot—by Aaron Carroll supplements that article. It shows that the residents of conservative states get more help from the government than liberal state residents. The chart requires some explaining.

The vertical axis measures government help. “Transfer receipts” refer to all the payments made by the federal government to individuals, such as social security, Medicare and unemployment benefits. It is divided by total personal income to yield a percentage, so .20 on the chart means that the people of that state derive 20% of their income from government programs. As you might expect, those states that are higher on the vertical axis are those states whose per capita income is lower.

The horizontal dimension refers to how liberal or conservative the state was in a 2010 Gallup poll. “Conservative advantage” refers to the percentage of self-identified conservatives minus the percentage of self-identified liberals. From left to right, the “conservative advantage” increases. The size of the circles represents the population of the states.

The trend is obvious. The more conservative the state, the more government “handouts” its citizens receive. Including all 50 states yields the same result. Of the 25 most liberal states, 16 of them pay more in taxes than they get back. But 23 of the 25 most conservative states are on the receiving end of wealth redistribution. This also translates into voting behavior. Seven of the ten most dependent states voted for McCain in 2008, while only two of the ten least dependent states did.

There are two tempting ways to interpret this chart. One assumes that red state citizens are aware of the inequity from which they benefit and are hypocrites. The Times article reports that when the conflict between their attitudes and their behavior is pointed out to some of them, they rationalized that they “deserve” their government benefits while most other recipients do not.

Another possible interpretation is the false consciousness argument from Thomas Frank's What's the Matter with Kansas? It suggests that poor state residents are confused and, without realizing it, are voting against their economic self-interest. In effect, they have been duped by the Elephant Party, which appeals to them with ads about abortion and gun control, but once in office, uses their electoral advantage to enact economic policies which primarily benefit the wealthy.

(Of course, you could also argue that anyone who voted for the Jackass Party in the last 20 years has been duped, since once in office, the Jackasses have rather consistently done the opposite of what they promised to do during the campaign.  See "The Mourning After.")

A new analysis of wealth and voting patterns by Andrew Gelman adds some interesting data to the mix. He finds that, in all 50 states, the higher your income, the more likely you are to vote for the Elephants, as would be predicted by self-interest. However, the higher the per capita income of a state, the higher the share of its vote that goes to the Jackasses. That is, there is something about the culture of the poorer states, perhaps relating to social rather than economic issues, that persuades their people to vote for the Elephants.

Furthermore, the relationship between income and party preference is stronger in the poorer states than in the richer ones. As a result, a high percentage of low income people in all states—rich and poor—vote Jackass. But in the poorer states, the middle class and especially the rich, vote strongly Elephant, while in the richer states, there is a higher percentage of Jackass voters among middle and higher income people.

In other words, most of the poor people in all the states are not confused. They vote in their self-interest. But in the higher income states, people who are not themselves poor vote in a way that appears to benefit the poor. (If anyone votes contrary to their self-interest, it's rich people from Connecticut.) In the low income states, upper middle class and rich people vote in a way that is more consistent with their economic self-interest and that is harmful to the interests of the poor. Here's a presentation by Gelman:

Of course, all of these data are correlational, and correlation does not mean causation. A wealthy Mississippian may not necessarily have voted for McCain because he wanted poor people to starve. He may have been motivated more by an opposition to gay marriage, and the effect of his vote on the plight of the poor may have been incidental. Voting is complicated.

Accountable to Whom?

An article by Ezekiel Emanuel and Jeffrey Liebman promises “the end of health insurance companies.” According to these former Obama administration advisors, they will be made obsolete by accountable care organizations (ACOs).

The Affordable Care Act provides for the establishment of ACOs to serve Medicare and Medicaid patients. Essentially, a group of health care providers (doctors and/or hospitals) form an ACO and sign a contract with the government to provide care for a large group of patients. They receive a bundled payment based only partially on services provided. Some part of the payment is based on the quality of the health care they provide and their ability to control costs.

In theory, cost control can be done by better coordination of patient care, for example, with the help of computerized records. Since so much of medical care is unnecessary or harmful, a lot of money could be saved, provided the incentives were greater than the profit to be made through overtreatment. It should at least be possible to measure whether money is being saved in comparison to the current fee-for-service system.

Measuring quality of care is more difficult. But it is crucial, since without it, the incentive structure of ACOs might encourage them to withhold necessary care from their patients. But what are the criteria of good health, and how could they be measured without incurring additional expense? Health care research focuses on hospital admissions and readmissions as an indicator that the patient is not healthy, but this is an imprecise measure of health which only becomes apparent after the patient's situation has deteriorated. Like other health indicators, it can be manipulated by denying treatment.

It is possible to imagine ACOs working well under Medicare with proper oversight from government. Nevertheless, there are problems. If an ACO is to be responsible for prevention as well as treatment, subscribers must remain in the system long enough for the ACO to reap the savings that come with prevention. This is possible in a single payer system, but not in this country where there is a lot of client turnover. Also, to be accountable for all their clients' health care needs, an ACO must include specialists in all health problems, which means it must be quite large. But large organizations have greater market share, which discourages competition and leads to higher prices—just the opposite of what ACOs are supposed to do.

However, Emanuel and Liebman are suggesting that ACOs will dominate the private health care market as well. In fact, hospitals are already buying out competitors and hiring more doctors, and insurance companies are merging with hospitals in anticipation of forming ACOs. This trend is evident in the Pittsburgh area. The University of Pittsburgh Medical Center (UPMC), the largest hospital chain, has bought out competitors and has gone into the health insurance business as well. Meanwhile Highmark, the region's largest health insurer, has purchased West Penn Allegheny, the only major hospital chain not owned by UPMC. Not surprisingly, this morning's paper reports that Pittsburgh has the highest hospital care costs of any city in the U. S.

Apparently we can look forward to a brave new world in which, when we purchase health insurance, either alone or through our employer, we affiliate with an ACO which promises to keep us in good health. But Austin Frakt, a health care policy expert who is sympathetic to ACOs, suggests that they “are fine and good for Medicare, but somebody needs to think through the consequences for the private side of the market.”

The dominant characteristic of today's corporations is that they are not accountable to anyone except perhaps their stockholders. A combined health insurance-medical care corporation will have strong financial incentives to charge as much as possible for health insurance while providing as little health care as possible in return. At least under the current system, the patient is caught between two corporations pushing in different directions. If their insurance company is trying to deny them care, there is a good chance that their doctor will come to their defense and insist that they receive medically necessary treatment. If the insurance company and the doctors are all part of the same corporation, who will defend the patient's interests? Without third party oversight, what is to keep the patients from being harmed when their very lives may be at stake?

It is possible that a conscientious employer might provide oversight of an ACO with which it affiliates, since companies may want to keep their employees healthy. However, this is certainly problematic, and, in any case, individual health care subscribers are on their own under this system. I don't see how the entire country can shift to ACOs without substantial government oversight. This, of course, will be strongly resisted by hospitals and insurance companies, in part because it would start to take on the characteristics of a single payer system.

Many countries—Germany, Japan and Switzerland are examples—have systems in which both health care providers and insurers are private entities. But these countries have tight government regulation of medical services and fees. These private entities are required to cover everyone and they are permitted to make only modest profits, if any. And why should they make large profits? Under a single payer system, insurance companies are completely unnecessary, while doctors and hospitals can be limited to a “reasonable” fee for their services. If they want to increase their income, maybe they should be allowed to compete for higher wages by demonstrating that they can keep their patients healthy and, as a consequence, control costs.

Although I have serious doubts as to whether ACOs will work in our private health care system, they may be a good idea when embedded within a single payer system.

Kiss Kiss Bang Bang

Does anyone remember those Looney Tunes in which Bugs Bunny is fleeing from a speeding bullet, and every time he zig-zags, the bullet changes direction along with him? Well, Sandia National Laboratories, a division of Lockheed Martin, has announced the successful development of a rifle for use by the military that fires self-guided bullets. In theory, these weapons could hit a laser-designated target from very long distances. Just point and shoot. The bullet does all the work. Sandia's motto on their website is “securing a peaceful and free world through technology."

Photo by www.defenceimages.mod.uk

The bullet works on the same principle as a smart bomb. An optical sensor in the nose of the bullet detects a laser beam on the target and sends feedback to a control system, also built into the bullet. The bullet flies straighter than usual because it lacks the spin caused by the uneven surface which keeps a normal bullet from hitting its target. It has a smooth surface and fins to prevent it from spinning. According to Sandia, a typical bullet misses a target one-half mile away by 9.8 yards, while this bullet only misses by 8 inches.

The key to near perfect accuracy is “painting” the target with a laser beam. I presume the laser is built into the scope of the rifle. The shooter will only have to keep the laser on the target until the bullet arrives. However, this limits the range of the weapon. An alternative would be a two-person operation, with one person spotlighting the target with a laser while the other fires the weapon. In theory, this would allow the shooter to hit the target from an even greater distance and may not require a direct line of sight to the target.

Doesn't this begin to sound like a political assassin's wet dream?

Stanley Milgram and other social psychologists who have found that anything that decreases salience of a helpless victim increases willingness to harm that victim. The physical distance between an aggressor and his target is one factor determining salience. It's much easier to kill someone from a distance of half a mile than from three feet, where you have to see, hear and smell his death.

Here's a cheerful video from a fellow who doesn't see any downside to this weapon:

Sandia's press release says, “Potential customers for the bullet include the military, law enforcement and recreational shooters.” (That's funny. The reporter on the video said that too. I guess plagiarizing from a corporate press release is much easier than writing your own copy. And they don't seem to mind at all!) The only impediment would seem to be the cost. Of course, cost is no problem for the U. S. military, but every police force in the country will want to have them as well. Not to worry. I'm sure most communities will be willing to lay off a public school teacher or two in order to accomodate them. As these weapons become more common, how long will it be before they start to disappear from the supply room?

Certainly, many hunters will want to have one in order to add a few extra inches to their manhood. But it seems to me that self-guided bullets are the hunter's equivalent of “fishing” by throwing a stick of dynamite into a pond and picking up the dead fish as they float to the surface. They're just not very sporting.

What's to keep every moron in the country from owning one of these toys? The National Rifle Association will surely insist that anyone who can legally buy a gun can has a right to have one that fires self-guided bullets. After all, they are needed in order to protect ourselves from our neighbors, who we suspect are also planning to purchase one of these weapons.

Price may turn out not be a problem. Sandia says these weapons “can be developed inexpensively and rapidly.” You and I have already paid for the R&D. There are big bucks to be made by pricing them to sell. Public subsidies followed by private profits. This is the corporate welfare state as it's intended to function. 

If one of these rifles and six bullets winds up costing less than a laptop computer, I'm going to be worried.

Damned If They Do . . .

A month ago, when I commented on Pittsburgh's property reassessment controversy, there was some evidence from a small sample of three streets that the new values still favored the wealthy and discriminated against the poor. Rich Lord of the Pittsburgh Post-Gazette has done a more complete analysis of the reassessments, and the results are as I suspected.

For non-Pittsburghers, let me back up a step. Allegheny County property had not been reassessed since 2002. Failure to do regular reassessments discriminates against low income residents, whose property values are usually stable or declining, while giving a tax break to higher income residents living in areas where property values are on the rise. A coalition of low income homeowners filed suit to force a reasseesment and won. Judge Stanton Wettick ordered that 2012 taxes to be based on the new values. These new values were sent to Pittsburgh homeowners in December, causing much wailing and gnashing of teeth. When Allegheny County Executive Rich Fitzgerald argued that there was not enough time for the appeal process to run its course, Wettick backed down and gave county residents another year of the old values.

The problem is that the new values are also regressive. A regressive tax is one in which the tax rate goes down as the real value of the property subject to taxation increases. Therefore, the burden of taxation falls more heavily on the poor than the rich. Lord found that the reassessment systematically overestimated the value of low-priced land and buildings, while underestimating the value of higher-priced properties.

Lord analyzed 2099 “arms-length” sales that took place in 2011. An arms-length sale is one in which the buyer and seller have no prior relationship to one another. If a prior relationship exists, as when a home is sold to a relative, the sale price may not reflect the true market value of the property. The reassessed values were divided by the sale prices of these same properties to yield a percentage. So, for example, a score of +50% means that the reassessed value of the property is 50% higher than the sale price, as when a home that sold for $50,000 is assessed at $75,000. Here are the percent differences, aggregated by to the sale prices of the properties.

Sale price	% difference between assessment and sale price
$5,000 to $19,999	+295%
$20,000 to $39,999	+134%
$40,000 to $74,999	+56%
$75,000 to $99,999	+17%
$100,000 to $149,999	-3%
$150,000 to $249,999	-17%
$250,000 to $999, 999	-31%

As Lord points out, the houses that sold for between $100,000 and $150,000 are pretty accurately assessed, but the more valuable properties are underassessed. The greatest unfairness, however, occurs among the low-value properties, which are assessed at much more than they are worth. However, an undervalue of 30% on a $500,000 property is worth a lot more money to the owner and a lot more tax revenue to the county than an overvalue of 30% on a $50,000 property.

Click here for a more complete table, showing how these percentages differ by wards within the city. In the interest of full disclosure, I should note that I live in Highland Park (Ward 11), and as would be predicted from the table, our home is assessed at less than we paid for it in 2009.

The reaction to the P-G study of Wesley Graham, the county's acting chief assessment officer, is instructive. He complained that they had not verified that all 2099 sales were between independent parties. Presumably, there could have been some undetected sweetheart deals among the properties with lower sale prices. I must confess, I'm also concerned about including extremely low-end properties in the analysis. Some sellers may have been trying to unload run-down properties by selling them at below market value. However, even if we disregard the top two rows of the table, the figures are still quite persuasive.

Mr. Graham also said that the reassessment values meet industry standards for fairness and consistency. It's not clear from the article what percentage of deviation from the sale prices the industry considers acceptable. Regressive property taxes may be more common than is generally acknowledged. Many years ago, I had a sociology professor who told our class that tax assessment was one of the most important but overlooked ways in which poor people get screwed in this country. He argued that tax assessments are almost always regressive, or as he put it, the assessment curve is always flatter than the curve describing the real value of the properties. (I remember this well because I had a summer job working for a tax assessor at the time.) The people who profit from this are not only people with expensive homes, but also the owners of commercial property, which is almost always undervalued. Does anyone know of any good national studies of this problem?

Why are property values almost always regressive? Dominic Gambino, former manager of the Office of Property Assessments, said, “It's very hard to catch those quickly appreciating properties.” He didn't explain why the P-G could catch them while the county couldn't. One of Mr. Graham's comments may have been closer to the truth. He said assessors are “a little gun-shy about putting on the value that they're seeing” on high-end properties. Could it be that they know that affluent people are more likely to appeal their assessments than poorer people?

The Post-Gazette also reported some anecdotal evidence that suburban assessments, which have not yet been posted on the web, are also regressive. For example, property values in low income communities like Braddock and Duquesne appear to have increased more than those in wealthier suburbs like Monroeville and Plum.

Chris Briem has pointed out that, in spite of their bias, the new values are more accurate than the 2002 figures. Whether the county uses the old assessments or the new ones, however, it looks like the poor will always be shortchanged.

Suspicions Confirmed

If you're a conservative, you're not going to like this post. If you're a liberal, you probably knew all along that those pointy hats that Ku Klux Klan members wear were actually dunce caps.

photo by greenyourdecor

A new study by Gordon Hodson and Michael Busseri found that intelligence is negatively related to both conservatism and prejudice. That is, the higher people's I. Q., the lower their conservatism and their prejudice. These relationships were obtained in three separate samples. In two nationally representative British samples (almost 16,000 people), intelligence was measured when the participants were 10 or 11, while conservatism and prejudice toward racial minorities was measured in their early thirties. The potentially contaminating effects of both social class and education were statistically removed prior to analyzing the data. In a smaller American college sample (254 people), all three measures were taken at the same time, and prejudice measure was their dislike of gay people.

The relationships they obtained were the same in all three samples and are strong enough to take seriously. Of course, that doesn't mean that all racists are stupid or that all stupid people are racists. I did some back-of-the-envelope calculations based on the average correlations they report for the two British samples. (I will use the word “correlation” to describe the relationships that were found, although the data analysis actually used standardized regression coefficients, a slightly better estimate of the relationships.) If a British child was below the median in I. Q. at age 10 or 11, there was a 57% chance he or she would be above the median in ethnic prejudice at age 30-33. Alternatively, if a child was above the median in I. Q., the chance of being above average in prejudice drops to 43%.

The relationship of I. Q. to conservatism is actually stronger. A child below the median in I. Q. has a 63% chance of being above the median in conservatism. Finally, the strongest relationship is that between conservatism and prejudice. A person who is above the median in conservatism has a 74% chance of being above the median in prejudice. This is nothing new. The strong relationship between conservatism and prejudice has been well-known to social scientists since the 1950s. For example, recent surveys of "tea party" members suggest that they are more prejudiced than the average American. The mass media usually politely refrain from mentioning this relationship.

The authors claim that the relationship between intelligence and prejudice is mediated by conservatism. The term implies causality. In plain language, here's what it means. Intelligence comes first. (In this case, this is literally true, since intelligence was measured about 20 years before conservatism and prejudice.) Intelligence first has the effect of increasing conservatism. Then, as a result of their conservatism, these less intelligent people go on to become more prejudiced. Had they not first become conservatives, they would not have become as prejudiced as they did. The implicit assumption is that “intelligence causes conservatism, which in turn causes prejudice.”

The generally accepted way of testing a mediational hypothesis is this. First, compute the correlation between intelligence and prejudice. Then recompute the correlation between intelligence, partialling out, or eliminating, the effect of their common relationship to conservatism. This correlation should be significantly lower than the initial correlation between intelligence and prejudice. This is the case in all three samples, supporting the mediational hypothesis.

The catch here is that these data, strong as they are, do not conclusively support the everyday meaning of the term “mediates.” These are correlational data, and correlation does not mean causation. (The rising of the sun does not cause us to get out of bed, even though the two are highly correlated.  See the video below.) There are alternative interpretations. Since conservatism and prejudice were measured at the same time, it is possible that prejudice mediates the relationship between intelligence and conservatism. Given the pattern of correlations observed here, if the authors were to calculate the relationship between intelligence and conservatism removing the effect of prejudice, they would get the same result.

The idea that prejudice comes before conservatism is not implausible. It is possible that children have experiences, either in real life or through the mass media, that lead them to form negative attitudes toward minorities long before they decide that women should not work or that prisoners should receive longer sentences (two items from their conservatism scale). One way of looking at conservatism is that it is an ideology that provides a socially acceptable justification for a person's existing prejudices.

It is also possible that there are one or more unknown variables that are responsible for the relationship between intelligence, on the one hand, and both conservatism and prejudice, on the other. Here's my favorite “fourth variable” explanation. Maybe less intelligent people don't really enjoy thinking (because they're not very good at it). A psychologist might say that they are low in need for cognition, or that they are cognitive misers.

Conservatism is a much simpler ideology than liberalism. Its explanations of behavior usually focus on a single variable, usually a personal characteristic of the individual in question, i.e., “She is poor because she is lazy.” A liberal's explanation of poverty involves several variables, most of them external to the person, that are related to one another in complex ways over a long period of time. Conservative theories are more readily communicated on television not because they are more correct but because they are easier for a slightly inattentive audience to understand. Maybe it is the fact that people low in intelligence would rather not be bothered to think that causes them to accept both the simplistic ideology of conservatism and overbroad negative generalizations about minorities.

That's my theory, anyway. To the best of my knowledge, it remains to be tested.