healthcare

EXPLAINED: Government Healthcare is not Christian

The latest salvo against Christians who are politically conservative is to charge in the most morally superior of tones that failure to continually expand welfare programs is in direct defiance of biblical teachings.

This is true, of course, as long as you don’t actually read the Bible.

But the lack of truth rarely slows a political assailment, particularly against Christians who are politically conservative.

So this quickly became an attack line against the healthcare reform program Republicans proposed in Congress last week. It wasn’t the substance of the need to stem the bleeding of Obamacare; it wasn’t the skyrocketing insurance costs the program incurred; it wasn’t the all-important personal freedoms at stake that we spelled out previously.

It was this, best represented in a couple of tweets from CNN political analyst and USA Today columnist Kirsten Powers retweeting one of her followers. Her follower tweeted: “We do not require religious writings to know that it is right for gov to have compassion for the poor.” To which Powers added: “This is true. And it’s sad that so many people demanding scripture citations have such antipathy toward the poor.”

They are probably demanding those citations in relationship to the role of government. And in that, there are none to be found.

Personal experience with this

This is not a new line of attack.

Many years ago, I was at a luncheon function sitting at a large table with others from the newspaper where I worked. As the speaker was walking up to the podium, the editorial page editor — an older, liberal atheist man who knew I was both Christian and politically conservative — turned and said, “Based on Jesus’ teaching on the Sermon on the Mount, I don’t understand why all Christians aren’t liberals.” He then turned away toward the speaker as the program began, allowing no time for a response.

That was purposely timed. I wrote him an extensive explanation. But he never responded, nor could I get him to engage when I saw him, because he did not want a discussion or a better understanding. He wanted to take a cheap shot, feel smugly self-satisfied and move on.

That is a lot of what we are seeing here today. Many of the people saying that any opposition to government-funded or government-run healthcare insurance is un-Christian are themselves not even Christians. (Powers, to be noted, is a Christian.)

It’s a dual purpose political attack line to score points for big-government welfare programs among the uninformed while also taking a whack at RWRN (social media slang for Right Wing Religious Nuts.)

But they have an empty case on multiple levels, and they should be and can be knocked down vigorously.

Christianity and government healthcare

Let’s take the Sermon on the Mount, as this is a favorite for those who skim the Bible, or hear it paraphrased from others who have skimmed it.

The problem with the editorial page editor’s cheap shot is that it suffered from a fatal fallacy. Jesus teaches for three full chapters in Matthew on the deeper Christian life of joy, suffering and generosity toward others. In one portion of one chapter, Jesus says:

“Be careful not to practice your righteousness in front of others to be seen by them. If you do, you will have no reward from your Father in heaven.

“So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by others. Truly I tell you, they have received their reward in full. But when you give to the needy, do not let your left hand know what your right hand is doing, so that your giving may be in secret. Then your Father, who sees what is done in secret, will reward you.” (Matthew 6:1-4)

Jesus not only is speaking directly to his followers — that is, those who are now called Christians — but he is also telling them to not be generous in ways that call attention to ourselves. Do it quietly, even secretly when possible. In the very passage he is talking about giving to the needy, he exhorts his followers to do it tacitly, humbly.

No place in these three chapters does he mention a role for government in his teachings. This is consistent throughout Scripture. Some argue that just because Jesus did not overtly say this should be done by government does not mean he opposed it.

That is true, but that is not what defenders of big government welfare programs are asserting. They are saying Christians are compelled to support helping the poor through government programs because they are Christians. But Christianity is based on the Bible, and it is clear that is not what the Bible says at all.

Further, Jesus had plenty of opportunities to spell out a Christianized government role when talking to soldiers, centurions, Roman leaders, Pontius Pilate and so on. And he stayed mum.

Given his teachings that were always aimed at the responsibilities of the individual believer and not the government, and his choice to stay mute when given the open opportunity to spell out the role of government, it seems more than likely that he was disinterested in government doing what individual Christians should be doing.

The error of compassionate government

Compassionate government is an impossible combination.

An entity such as a government cannot have compassion. People can have compassion because it is a uniquely human trait. Anthropomorphizing government is a grave error leading to terrible policies — exactly what we’ve seen for decades.

Government as an institution has a critical role, but it has nothing to do with compassion or love or anger or any other human emotions or traits. The American government’s primary role was meant to be the protection of individual human rights. That’s why the very Declaration separating us from a distant tyrant launches with:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed…”

Government is meant to secure the rights of the individual, and protect them from intrusion by other individuals and by the government itself. Hence we have a system of checks and balances within the government so as to keep itself in check because by nature it is not compassionate. It was a machine designed to protect us from itself.

Endowing government with human attributes such as compassion and placing upon it the burden of caring for individuals is a doomed proposition. We see it fail again and again and again.

Opposition to government healthcare is not hatred

Kind of an absurd point to have to make, but alas, here we are. Powers used the word “antipathy.”

An American, whether Christian or not, can believe that X should be done and also think that it is wrong for government to do X. We can believe in helping the poor individually, through churches and synagogues and other charitable organizations and oppose the government doing the same. It is not an either/or proposition.

What we’ve seen is that when government fills this space, it displaces charities that would otherwise be doing the work. And it does it inefficiently while creating an entitlement mentality among those receiving it. Instead of gratefulness to an individual or a church or an organization, recipients see the gifts bestowed from government as a virtual right. And if the gifts are not sufficiently large, they are angered and will protest for more.

That alone is a bad sign for the soul.

So we spend about $1.3 trillion every year on various safety net programs and in return we get deep familial dysfunction, enablement of bad behavior, more debt that eventually we will be unable to pay off and, maybe as much as anything, we lock the poor into generational poverty and ingratitude.

Opposing the system doing this is not hatred. In fact, it may actually be more loving and therefor more Christian. But politicians cannot take credit for that system. Only when ladled by their generous hand can they take the credit and secure future votes — accomplished by forcibly taking money from others. There is no love in any of that.

There is nothing virtuous about giving other people’s money to the poor. In fact, if you want to go to Scripture, Jesus has a few harsh things to say about such grandstanding.

We cannot outsource moral obligations

Shifting responsibility to the government is a pathway for us to feel relieved of any personal duty to help those in need. For many, merely advocating for more money to go to the poor proves our compassion and moral superiority.

Nothing could be further from the truth.

Conservatives tend to want a system where there is minimal welfare, just enough to help people get back on their feet. The institutional variety we have now breeds ever more welfare and robs people of their self-worth, making them comfortable living in poverty on handouts.

That is not loving and it certainly is not Christian.

So any Biblical case for Christians being required to support government healthcare and other welfare programs is DOA — if we actually read the Scriptures.

RELATED ARTICLES:

In 24 States, 50% or More of Babies Born on Medicaid; New Mexico Leads Nation With 72%

EDITORS NOTE: This column originally appeared in The Revolutionary Act.

hawaii rail system

VIDEO: How your tax dollars are being wasted on a railway in Hawaii

From Fox News March 17, 2017

The city low-balled the cost and construction is five years late; William La Jeunesse has the story for ‘Special Report’.

$15M Change Orders: Redesign Rail Columns so they Don’t Collapse Under Weight of Stations

SA: Under earlier plans rail was supposed to have started running from East Kapolei to Aloha Stadium in September 2016, but that interim opening has now been pushed to July 2020….

More than $6 million will go to Kiewit Infrastructure West, as the firm building the system’s first 10 miles continues to make revisions to its columns and elevated guideway so it will support the load of the rail stations…..

The city awarded Kiewit contracts to design and build the guideway in 2009 and 2011 — before the contracts to design the stations went out.

Those station and guideway contracts should have been awarded together, former HART Executive Director Dan Grabauskas said in 2014 when the rail agency approved an earlier $6 million additional payment to Kiewit to address the issue. (Grabauskas joined HART in 2012 and resigned in August.)….

Kiewit’s latest $6 million will also go toward reinforcing underground sections of the West Oahu guideway near a channel that’s more susceptible to erosion than originally thought, HART officials said.

The remaining $8.7 million awarded Thursday will cover delay impacts to Ansaldo Honolulu JV, the firm contracted to design and build the train cars as well as the communications and controls system. Delays in building stations have kept the firm from running the proper tests, and delaying those tests then pushes back rail’s opening, Deputy Director for Core Systems Justin Garrod said in his board presentation Thursday.

The $9 million is a preliminary figure that’s expected to grow, rail officials said.

The project’s contingency fund, with a reported balance of more than $450 million, will cover all of the costs, officials say. HART has already approved more than $284 million in change orders to Kiewit to build the first 10 guideway miles and an operations and maintenance center, according to the agency’s most recent reports. The agency has approved nearly $27 million for Ansaldo in change order increases, the report further stated…..

A former rail consultant who left the project last year amid disagreements with HART has said that Kiewit expects to lose about $100 million on its contracts to build the first 10 miles of guideway….

The consultant, Bart Desai, questioned how those overseeing the project handled the early contracts.

“One could ask a question: Could HART have designed stations without much or no impact to the guideway elements? Or should HART have waited to delay issuance of Notice to Proceed (NTP) of the guideway project and give time to complete 75-90 percent design of station structure elements?” Desai, who dealt with claims on the project through subcontractor PGH Wong Engineering Inc., wrote in his letter. “Such option(s) would have saved the taxpayers multi-million dollars.”….

Hanabusa, then a rail board member, said, “Maybe we didn’t have a clear enough idea what we were doing”….

For the next stretch of rail construction, from Aloha Stadium to Middle Street, the stations and guideway are being designed and built as part of the same $875 million contract. The joint venture Shimmick/Traylor/Granite is expected to start that work later this year….

read … Change orders totaling $15 million approved for rail

inflation

Trillions in Debt and We’re Just Scratching the Surface by Antony Davies and James R. Harrigan

As the federal debt has gone from astounding to unbelievable to incomprehensible, a new problem has emerged: The US government is actually running out of places to borrow.

How Many Zeros Are in a Trillion?

The $20 trillion debt is already twice the annual revenues collected by all the world’s governments combined. Counting unfunded liabilities, which include promised Social Security, Medicare, and government pension payments that Washington will not have the money to pay, the federal government actually owes somewhere between $100 trillion and $200 trillion. The numbers are so ridiculously large that even the uncertainty in the figures exceeds the annual economic output of the entire planet.

Since 2000, the federal debt has grown at an average annual rate of 8.2%, doubling from $10 trillion to $20 trillion in the past eight years alone. Who loaned the government this money? Four groups: foreigners, Americans, the Federal Reserve, and government trust funds. But over the past decade, three of these groups have cut back significantly on their lending.

Foreign investors have slowed the growth in their lending from over 20% per year in the early 2000s to less than 3% per year today. Excluding the Great Recession years, American investors have been cutting back on how much they lend the federal government by an average of 2% each year.

Social Security, though, presents an even bigger problem. The federal government borrowed all the Social Security surpluses of the past 80 years. But starting this year, and continuing either forever or until Congress overhauls the program (which may be the same thing), Social Security will only generate deficits. Not only is the government no longer able to borrow from Social Security, it will have to start paying back what it owes – assuming the government plans on making good on its obligations.

With federal borrowing growing at more than 6% per year, with foreign and American investors becoming more reluctant to lend, and with the Social Security trust fund drying up, the Fed is the only game left in town. Since 2001, the Fed has increased its lending to the federal government by over 11% each year, on average. Expect that trend to continue.

Inflation to Make You Cry

For decades, often in word but always in deed, politicians have told voters that government debt didn’t matter. We, and many economists, disagree. Yet even if the politicians were right, the absence of available creditors would be an insurmountable problem—were it not for the Federal Reserve. But when the Federal Reserve acts as the lender of last resort, unpleasant realities follow. Because, as everyone should be keenly aware, the Fed simply prints the money it loans.

A Fed loan devalues every dollar already in circulation, from those in people’s savings accounts to those in their pockets. The result is inflation, which is, in essence, a tax on frugal savers to fund a spendthrift government.

Since the end of World War II, inflation in the US has averaged less than 4% per year. When the Fed starts printing money in earnest because the government can’t obtain loans elsewhere, inflation will rise dramatically. How far is difficult to say, but we have some recent examples of countries that tried to finance runaway government spending by printing money.

From 1975 to 1990, the Greek people suffered 15% annual inflation as their government printed money to finance stimulus spending. Following the breakup of the Soviet Union in the 1990s, Russia printed money to keep its government running. The result was five years over which inflation averaged 750%. Today, Venezuela’s government prints money to pay its bills, causing 200% inflation which the International Monetary Fund expects to skyrocket to 1,600% this year.

For nearly a century, politicians have treated deficit spending as a magic wand. In a recession? We need jobs, so government must spend more money! In an expansion? There’s more tax revenue, so government can spend more money! Always and everywhere, politicians argued only about how much to increase spending, never whether to increase spending. A century of this has left us with a debt so large that it dwarfs the annual economic output of the planet. And now we are coming to the point at which there will be no one left from whom to borrow. When creditors finally disappear completely, all that will remain is a reckoning.

This article first appeared in InsideSources.

Antony Davies

Antony Davies

Antony Davies is an associate professor of economics at Duquesne University in Pittsburg.

He is a member of the FEE Faculty Network.


James R. Harrigan

James R. Harrigan

James R. Harrigan is the Senior Research Fellow at Strata, in Logan, Utah.

Repeal-and-Replace-Obamacare

GOP Repeal/Replace Bill Cuts Taxes By Nearly a Trillion Dollars

On the White House website one of the key accomplishments of President Trump’s first 50 days in office is:

PUTTING PATIENT HEALTHCARE FIRST: After years of false promises, rising costs, and shrinking accessibility, President Trump is championing reforms to put patients first.

  • President Trump has supported efforts by Republicans in Congress to repeal the worst parts of Obamacare and replace them with the American Health Care Act.
  • President Trump acted on his first day in office to instruct Federal agencies to minimize the burden of Obamacare on Americans.

Katie Pavlich in a Townhall article titled ATR: Obamacare Replacement Cuts Taxes By Nearly a Trillion Dollars reports:

Yesterday the Congressional Budget Office released its official score for the Obamacare repeal and replacement bill, better known as the American Health Care Act.

Reaction to the scoring, which estimates an additional 21 million Americans will become uninsured by 2020, was mixed. House Speaker Paul Ryan said last night he is “encouraged” by the score. However, the Trump administration is hardly pleased.

“We disagree strenuously with the report that was put out. We believe that our plan will cover more individuals at a lower cost and give them the choices that they want for the coverage that they want for themselves and for their families, not that the government forces them to buy,” Health and Human Services Secretary Tom Price said at the White House Monday evening.

But Americans For Tax Reform sees some good news. If passed, the bill will cut taxes by $883 billion. Here’s where the cuts come from:

Medicine Cabinet Tax on HSAs and FSAs
Flexible Spending Account Tax
Chronic Care Tax
HSA Withdrawal Tax Hike
Ten Percent Excise Tax on Indoor Tanning
Health Insurance Tax
Employer Mandate Tax
Surtax on Investment Income
Payroll Tax Hike
Tax on Medical Device Manufacturers
Tax on Prescription Medicine
Elimination of Deduction for Retiree Prescription Drug Coverage
$500,000 Annual Executive Compensation Limit for Health Insurance Executives

You can read more about the details and specific amounts behind this list of tax repeals here.

As we have said, this bill is out in the open. Now is the time for every citizen to read it and then contact their U.S. Senators and member of Congress and tell them what you think about this bill.

We’ve come a long way to get to this point, we’ve got a long way to go to make sure it gets done right.

RELATED ARTICLES: 

After Paul Ryan Admits Obamacare Plan Needs Changes, Conservatives Hope to Strike Deal Uniting Party

House Leadership’s Health Bill Is Not What Republicans Promised. We Can Do Better

Which Parts of the Obamacare Replacement Face Trouble in the Senate

Conservative Lawmakers Join Rally Against GOP Health Care Plan

20170310_ADM_working-for-the-people_blog-header

President Trump’s First 50 Days of Action: Achieving Results for the American People

JUMPSTARTING JOB CREATION: President Donald J. Trump is looking out for the American workers who Washington has left behind.

  • President Trump has worked with the private sector to deliver tens of thousands of new jobs for Americans.
  • President Trump ordered the United States to withdraw from the Trans-Pacific Partnership agreement and negotiations.
  • President Trump signed a Presidential Memorandum to clear roadblocks to construction of the Keystone XL Pipeline.
  • President Trump signed a Presidential Memorandum declaring that the Dakota Access Pipeline serves the national interest and initiating the process to complete its construction.
  • President Trump signed a Presidential Memorandum to help ensure that new pipeline construction and repair work use materials and equipment from the United States.

CUTTING GOVERNMENT RED TAPE: President Trump has quickly taken steps to get the Government out of the way of job creation.

  • President Trump directed each agency to establish a Regulatory Reform Task Force to identify costly and unnecessary regulations in need of modification or repeal.
  • President Trump has required that for every new Federal regulation, two existing regulations be eliminated.
  • President Trump directed the Department of Commerce to streamline Federal permitting processes for domestic manufacturing and to reduce regulatory burdens on domestic manufacturers.
  • President Trump signed legislation, House Joint Resolution 38, to prevent the burdensome “Stream Protection Rule” from causing further harm to the coal industry.
  • President Trump ordered the review of the “Clean Water Rule: Definition of Waters of the United States,” known as the WOTUS rule, to evaluate whether it is stifling economic growth or job creation.

REFORMING WASHINGTON: President Trump has taken actions to reform the old Washington way of doing business and to ensure that his entire Administration are working for the American people.

  • President Trump put in place a hiring freeze for Federal civilian employees to stop the further expansion of an already bloated government.
  • President Trump signed an Executive Order establishing new ethics commitments for all Executive branch appointees, putting in place a five-year lobbying ban and a permanent ban on lobbying for foreign governments, so that appointees serve the American people instead of their own interests.

PUTTING PATIENT HEALTHCARE FIRST: After years of false promises, rising costs, and shrinking accessibility, President Trump is championing reforms to put patients first.

  • President Trump has supported efforts by Republicans in Congress to repeal the worst parts of Obamacare and replace them with the American Health Care Act.
  • President Trump acted on his first day in office to instruct Federal agencies to minimize the burden of Obamacare on Americans.

PRIORITIZING AMERICAN NATIONAL SECURITY: President Trump has taken action to ensure the safety and security of the United States homeland, its borders, and its people.

  • Under President Trump’s leadership, the Department of the Treasury sanctioned 25 entities and individuals involved in Iran’s ballistic missile program.
  • President Trump implemented new protections against foreign terrorists entering our country.
  • President Trump has proposed increasing the military’s budget by $54 billion so that it can begin to rebuild.
  • As a result of a Presidential Memorandum President Trump signed on January 28, he has received a plan to defeat ISIS designed by the Secretary of Defense and other members of his Cabinet.
  • President Trump ordered a review of military readiness and made it the policy of the United States to rebuild the United States’ Armed Forces.
  • President Trump has negotiated to bring down the price of the F-35, saving millions of dollars.

DELIVERING ON IMMIGRATION REFORM: President Trump has made enforcing the Nation’s immigration laws a priority of his Administration.

  • President Trump signed an Executive Order to start work on a southern border wall.
  • President Trump signed an Executive Order to enhance the public safety of Americans through enforcement of immigration laws.
  • President Trump signed an Executive Order to halt funding to jurisdictions in the United States that do not comply with Federal immigration rules.
  • President Trump signed an Executive Order to begin the removal of illegal immigrants who have committed certain crimes.
  • Following through on President Trump’s direction, the Department of Homeland Security will hire 10,000 Immigration and Customs Enforcement officers and agents and 5,000 border patrol agents.

RESTORING PUBLIC SAFETY TO AMERICAN COMMUNITIES: President Trump is following through on his promise to restore public safety for all Americans.

  • President Trump signed an Executive Order directing the Attorney General to develop a strategy to more effectively prosecute people who engage in crimes against law enforcement officers.
  • President Trump signed an Executive Order to establish a task force, led by the Attorney General, to reduce crime and restore public safety in communities across America.
  • President Trump signed an Executive Order re-focusing the Federal Government’s energy and resources on dismantling transnational criminal organizations, such as drug cartels.

HELPING WOMEN AND MINORITIES SUCCEED: President Trump knows the country cannot reach its potential unless every American has a chance to prosper.

  • President Trump signed an Executive Order strengthening and repositioning the Historically Black Colleges and Universities initiatives within the White House to foster better opportunities in higher education.
  • President Trump and Canadian Prime Minister Justin Trudeau launched the United States-Canada Council for Advancement of Women Entrepreneurs and Business Leaders.
  • President Trump signed into law the Promoting Women in Entrepreneurship Act to encourage the National Science Foundation’s entrepreneurial programs to recruit and support women to extend their focus beyond the laboratory and into the commercial world.
  • President Trump signed into law the Inspiring the Next Space Pioneers, Innovators, Researchers, and Explorers (INSPIRE) Women Act to encourage women to study science, technology, engineering, and mathematics (STEM), pursue careers in aerospace, and further advance the nation’s space science and exploration efforts.

KEEPING HIS PROMISE TO DEFEND THE CONSTITUTION: President Trump promised a U.S. Supreme Court justice in the mold of late Justice Antonin Scalia selected from his previously announced list of 20 judges

  • President Trump nominated Judge Neil M. Gorsuch to the U.S. Supreme Court because of his consistent record defending the Constitution.

RELATED ARTICLE: How President Trump Is Performing on His Promises Halfway to First 100 Days

trump stock market

Economic ‘Trumpature’ Survey Results Released

NEW YORK, NY /PRNewswire/ — Convergex, an agency-focused global brokerage and trading related services provider, released the results of its “Take Your Trump-erature” survey, designed to gauge President Trump’s possible impact on the financial markets. The survey, which was conducted from February 21, 2017 through February 24, 2017, garnered a record number of responses with some surprising results.

According to the survey findings, 74% of financial industry participants have a positive outlook on the financial markets, even though only 40% of the respondents approve of the job President Trump is doing thus far. However, only 20% of the respondents expect the market volatility (as measured by the CBOE VIX index) to increase more than 25% over the next 4 years, revealing an ongoing complacency about possible dramatic market fluctuations.

“We were surprised at some of the survey findings regarding Wall Street’s sentiments of the financial markets while under President Trump’s watch,” said Eric W. Noll, Covergex CEO and President. “It is clear from the results that most of the respondents feel President Trump will have a positive impact on the near-term prospects of the financial market, even if they don’t necessarily agree with his overall vision for the country.”

Below is an overview of the key survey findings:

  • While only 40% of survey participants give their approval of “Trump the President,” almost 74% give him high marks (grade A or B) for his effect on the investment climate for stocks. Moreover, over 57% expect stocks to do better over the next 4 years under a Trump Presidency than if Clinton had won the Presidency (21%).
  • Changing tax policy is the most important aspect of Trumponomics to equity markets, according to 54% of respondents. Deregulation came in 2nd (25%) and Infrastructure spending came in 3rd (16%).
  • Survey respondents think the equity markets want to see lower corporate taxes (46% ranked this “most important”) and lower repatriation rates (29% said that was “most important”) far more than lower individual/personal taxes (only 19% said that was “most important” to US equities) or the adoption of border taxes (4%).
  • Q4 2017 was the most common expected timeframe (28% of the responses) as to when new tax legislation would pass. Q3 2017 was second, with 23% of respondents.
  • Favorite Trump Trade sectors: 92% of respondents said Trump policies will help Financials the most, followed by Energy (89%) and Industrials (84%). Least favored: Healthcare (29%) and Consumer Staples (46%).
  • Active over passive: 63% of respondents say the Trump administration will be better for active management rather than passive management (16%).
  • Financial industry biggest worries: Congress not passing legislation (31%) and trade/currency war (32%). Respondents were least concerned about company-specific tweets (4%) and Trump’s Immigration policy (5%).

Full survey results are available here.

Methodology – Convergex’s Trump-erature Survey was performed via an online survey of financial industry participants. The survey was conducted from February 21 to February 24, 2017, and has a margin of error of ± 10%. Respondents included buy-side firms (asset managers, hedge funds), sell-side firms (banks, broker-dealers), trading venues, service providers and other financial industry participants.

convergex logoAbout Convergex
Convergex is an agency-focused global brokerage and trading related services provider that takes on the industry’s toughest challenges, from complicated trades to complex businesses. With clients’ interests as the top priority, Convergex delivers comprehensive solutions that span global high-touch and electronic trading, options technologies, prime brokerage, clearing, commission management and beyond. Headquartered in New York with a presence in several other locations including Atlanta, Boston, Chicago, Orlando, San Francisco and London, the company serves nearly 3,000 clients accessing over 100 global market centers.

Important Information
Convergex is an agency-focused global brokerage and trading related services provider. In the U.S., Convergex offers products and services through Convergex Execution Solutions LLC (member NYSE/FINRA/NFA/SIPC), of which Convergex Prime Services is a division; Westminster Research Associates LLC (member FINRA/SIPC); and Convergex Solutions LLC, of which Jaywalk is a division. In London, Convergex operates through Convergex Limited, which is incorporated in England and Wales (registered with company number 06262150). Convergex Limited is authorized and regulated by the Financial Conduct Authority (FCA) of the United Kingdom. Westminster Research Associates LLC is regulated in the United States by the U.S. Securities and Exchange Commission. Westminster provides services in Australia pursuant to an exemption from the requirement to hold an Australian financial services license under the Corporations Act 2001 (ASIC Class Order [CO 03/1100]).

Convergex provides brokerage services primarily on an agency basis, but may operate in a riskless principal and/or net trading capacity, and in connection with certain ETF or ADR transactions, may act as principal or engage in hedging strategies. Convergex does not engage in market making or investment banking activities.

The material, data and information (collectively “Convergex Information”) that is available from Convergex is intended for institutional investor use only; is for informational purposes only; is subject to change at any time; is not intended to provide tax, legal or investment advice; and does not constitute a solicitation or offer to purchase or sell securities. Convergex Information is believed to be reliable, but Convergex does not warrant its completeness or accuracy and Convergex assumes no duty to update such information. Clients should read their account agreement(s) and documentation with Convergex carefully as those documents contain important information and disclosures about the products or services covered thereby. Convergex is not responsible for third-party information or services, including market data from the exchanges. (Rev. 02/24/17)

© 2017 Convergex Group, LLC. All rights reserved.

live-longer2

Longer Life, Healthier Life?

The average human being is living longer than ever before. Nearly every country on the planet has seen an increase in life expectancy since the beginning of the 21st century.

But though we are living longer, not all of us are living healthier.

Health Adjusted Life Expectancy (HALE), or healthy life expectancy, is a metric used by the World Health Organization to measure the number of years a person can expect to live in good health, taking social and economic factors into account alongside disease and disability rates.

When we deduct healthy life expectancy from actual life expectancy, we see the average amount of years someone can expect to live in bad health – or ‘Bad Health Years‘.

This infographic takes a country-by-country look at the change in bad health years since 2000 to see where people are living a longer, healthier life.

Longer Life, Healthier Life?

Europe

Despite having some of the highest life expectancy in the world, the people of Europe live the most years in bad health. The majority of European nations have become even more unhealthy since 2000.
Longer Life, Healthier Life

Africa

It is in Africa where the biggest reductions in bad health years have occurred, with great progress in health and development since the turn of the century.

Longer Life, Healthier Life?

Middle East and Asia

While bad health years in most nations in the Middle East have increased since 2000, outcomes across the rest of Asia are slightly better.

South East Asia and Oceania

Indonesia and the South-East Asian nations are getting healthier, but in Australia and New Zealand bad health years are on the rise.

North and Central America

Mixed outcomes in North and Central America reflect the diverse range of economic and social conditions across the region, with the United States seeing one of the biggest increases in bad health years in the world. ”

South America

Similarly, South America displays a varied set of outcomes. Nations like Bolivia and Ecuador, traditionally considered to be among the continent’s least developed, have achieved the biggest reduction in bad health years.

Life Expectancy changes since 2000

Besides Bad Health Years, we also made some interesting findings regarding life expectancy.

The Price of Conflict

Only two nations did not register an improvement in life expectancy: Iraq and Syria.

Life expectancy in Iraq stagnated, while in Syria it has decreased by 3 years.

Healthier, longer lives

A number of countries have witnessed a startling increase in life expectancy since the year 2000. The top 10 can all be found in Africa.

How has life expectancy changed in Africa since 2000

map of world water color

Which Country Punishes Productive People the Most? by Daniel J. Mitchell

Back in 2014, I shared some data from the Tax Foundation that measured the degree to which various developed nations punished high-income earners.

This measure of relative “progressivity” focused on personal income taxes. And that’s important because that levy often is the most onerous for highly productive residents of a nation.

But there are other taxes that also create a gap between what such taxpayers earn and produce and what they ultimately are able to consume and enjoy. What about the effects of payroll taxes? Of consumption taxes and other levies?

Looking at the Evidence

To answer that question, we have a very useful study from the European Policy Information Center on this topic. Authored by Alexander Fritz Englund and Jacob Lundberg, it looks at the total marginal tax rate on each nation’s most productive taxpayers.

They start with some sensible observations about why marginal tax rates matter, basically echoing what I wrote after last year’s Super Bowl.

Here’s what Englund and Lundberg wrote.

The marginal tax rate is the proportion of tax paid on the last euro earned. It is the relevant tax rate when deciding whether to work a few extra hours or accept a promotion, for example. As most income tax systems are progressive, the marginal tax rate on top incomes is usually also the highest marginal tax rate. It is an indicator of how progressive and distortionary the income tax is.”

They then explain why they include payroll taxes in their calculations.

The income tax alone does not provide a complete picture of how the tax system affects incentives to work and earn income. Many countries require employers and/or employees to pay social contributions. It is not uncommon for the associated benefits to be capped while the contribution itself is uncapped, meaning it is a de facto tax for high-income earners. Even those social contributions that are legally paid by the employer will in the end be paid by the employee as the employer should be expected to shift the burden of the tax through lower gross wages.”

Englund and Lundberg are correct. A payroll tax (sometimes called a “social insurance” levy) will be just as destructive as a regular income tax if workers aren’t “earning” some sort of additional benefit. And they’re also right when they point out that payroll taxes “paid” by employers actually are borne by workers.

They then explain why they include a measure of consumption taxation.

One must also take value-added taxes and other consumption taxes into account. Consumption taxes reduce the purchasing power of wage-earners and thus affect the return to working. In principle, it does not matter whether taxation takes place when income is earned or when it is consumed, as the ultimate purpose of work is consumption.”

Once again, the authors are spot on. Taxes undermine incentives to be productive by driving a wedge between pre-tax income and post-tax consumption, so you have to look at levies that grab your income as it is earned as well as levies that grab your income as it is spent.

All Things Considered

And when you begin to add everything together, you get the most accurate measure of government greed.

Taking all these taxes into account, one can compute the effective marginal tax rate. This shows how many cents the government receives for every euro of additional employee compensation paid by the firm. …If the top effective tax rate is 75 percent, as in Sweden, a person who contributes 100 additional euros to the economy will only be allowed to keep 25 euros while 75 euros are appropriated by the government. The tax system thus drives a wedge between the social and private return to work. …High marginal tax rates disconnect the private and social returns to economic activity and thereby the invisible hand ceases to function. For this reason, taxation causes distortions and is costly to society. High marginal tax rates make it less worthwhile to supply labour on the formal labour market and more worthwhile to spend time on household work, black market activities and tax avoidance.”

Here’s their data for various developed nations.

Keep in mind that these are the taxes that impact each nation’s most productive taxpayers. So that includes top income tax rates, both for the central governments and sub-national governments, as well as surtaxes. It includes various social insurance levies, to the extent such taxes apply to all income. And it includes a measure of estimated consumption taxation.

And here’s the ranking of all the nations. Shed a tear for entrepreneurs in Sweden, Belgium, and Portugal.

Slovakia wins the prize for the least-punitive tax regime, though it’s worth noting that Hong Kong easily would have the best system if it was included in the ranking.

U.S. Ranking

For what it’s worth, the United States does fairly well compared to other nations. This is not because our personal income tax is reasonable (see dark blue bars), but rather because Barack Obama and Hillary Clinton were unsuccessful in their efforts to bust the “wage base cap” and apply the Social Security payroll tax on all income. We also thankfully don’t have a value-added tax. These factors explain why our medium-blue and light-blue bars are the smallest.

By the way, this doesn’t mean we have a friendly system for upper-income taxpayers in America. They lose almost half of every dollar they generate for the economy. And whether one is looking at Tax Foundation numbers, Congressional Budget Office calculations, information from the New York Times, or data from the IRS, rich people in the United States are paying a hugely disproportionate share of the tax burden.

Though none of this satisfies the statists. They actually would like us to think that letting well-to-do taxpayers keep any of their money is akin to a handout.

Now would be an appropriate time to remind everyone that imposing high tax rates doesn’t necessarily mean collecting high tax revenues.

In the 1980s, for instance, upper-income taxpayers paid far more revenue to the government when Reagan lowered the top income tax rate from 70 percent to 28 percent.

Also, keep in mind that these calculations don’t measure the tax bias against saving and investment, so the tax burden on some upper-income taxpayers may be higher or lower depending on the degree to which countries penalize capital formation.

P.S. If one includes the perverse incentive effects of various redistribution programs, the very highest marginal tax rates (at least when measuring implicit rates) sometimes apply to a nation’s poor people.

P.P.S. Our statist friends sometimes justify punitive taxes as a way of using coercion to produce more equality, but the net effect of such policies is weaker growth and that means it is more difficult for lower-income and middle-income people to climb the economic ladder. In other words, unfettered markets are the best way to get social mobility.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

EDITORS NOTE: Marcus Tullius Cicero in 55 BC said,

 “The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest Rome become bankrupt. People must again learn to work instead of living on public assistance.”
export import bank logo

The Ex-Im Bank Is the Heart of the Swamp by Daniel J. Mitchell

I’ve written many times that Washington is both a corrupt city and a corrupting city. My point is that decent people go into government and all too often wind up losing their ethical values as they learn to “play the game.”

I often joke that these are people who start out thinking Washington is a cesspool but eventually decide it’s a hot tub.

During the presidential campaign, Trump said he wanted to “drain the swamp,” which is similar to my cesspool example. My concern is that El Presidente may not understand (or perhaps not even care) that shrinking the size and scope of government is the only effective way to reduce Washington corruption.

In any event, we’re soon going to get a very strong sign about whether Trump was serious. With Republicans on Capitol Hill divided on how to deal with this cronyist institution, Trump basically has the tie-breaking vote on the issue.

In other words, he has the power to shut down this geyser of corporate welfare. But will he?

According the Susan Ferrechio of the Washington Examiner, Trump may choose to wallow in the swamp rather than drain it.

President Trump now may be in favor of the Export-Import Bank, according to Republican lawmakers who met with him privately Thursday, even though Trump once condemned the bank as corporate welfare.

Veronique de Rugy of the Mercatus Center is one on the Ex-Im Bank’s most tenacious opponents, and she’s very worried.

…if the reports are true that Trump has decided to support the restoration of the crony Export-Import Bank’s full lending authority, it would be akin to the president deciding to instead happily bathe in the swamp and gargle the muck. …If true, the news is only “great” for Boeing, GE, and the other major recipients of Ex-Im’s corporate welfare. It is also at odds with his campaign promises since much of the way the program works is that it gives cheap loans — backed by Americans all over the country — to foreign companies in China, Russia, Saudi Arabia, and the UAE. Restoring Ex-Im’s full lending-authority powers is renewing the policy to give cheap loans backed by workers in the Rust Belt to companies like Ryanair ($4 billion in guarantee loans over ten years) and Emirates Airlines ($3.9 billion over ten years) so they can have a large competitive advantage over U.S. domestic airlines like Delta and United. It continued to subsidize the large and prosperous state-owned Mexican oil company PEMEX ($9.7 billion over ten years). Seriously? That’s president Trump’s vision of draining the swamp?

Ugh. It will be very disappointing if Trump chooses corporate welfare over taxpayers.

What presumably matters most, though, is whether a bad decision on the Ex-Im Bank is a deviation or a harbinger of four years of cronyism.

In other words, when the dust settles, will the net effect of Trump’s policies be a bigger swamp or smaller swamp?

The New York Times opined that Trump is basically replacing one set of insiders with another set of insiders, which implies a bigger swamp.

Mr. Trump may be out to challenge one establishment — the liberal elite — but he is installing one of his own, filled with tycoons, Wall Street heavyweights, cronies and a new rank of shadowy wealthy “advisers” unaccountable to anyone but him. …Take first the Goldman Sachs crowd. The Trump campaign lambasted global financiers, led by Goldman, as having “robbed our working class,” but here come two of the alleged miscreants: Gary Cohn, Goldman’s president, named to lead the National Economic Council, and Steven Mnuchin, named as Treasury secretary. …Standing in the rain during Mr. Trump’s inaugural speech, farmers and factory workers, truckers, nurses and housekeepers greeted his anti-establishment words by cheering “Drain the Swamp!” even as the new president was standing knee-deep in a swamp of his own.

I’m skeptical of Trump, and I’m waiting to see whether Gary Cohn and Steven Mnuchin will be friends for taxpayers, so I’m far from a cheerleader for the current administration.

But I also think the New York Times is jumping the gun.

Maybe Trump will be a swamp-wallowing cronyist, but we don’t yet have enough evidence (though a bad decision on Ex-Im certainly would be a very bad omen).

Here’s another potential indicator of what may happen to the swamp under Trump’s reign.

Bloomberg reports that two former Trump campaign officials, Corey Lewandowski and Barry Bennett have cashed in by setting up a lobbying firm to take advantage of their connections.

The arrival of a new president typically means a gold rush for Washington lobbyists as companies, foreign governments, and interest groups scramble for access and influence in the administration. Trump’s arrival promises to be different—at least according to Trump. Throughout the campaign, he lambasted the capital as a den of insider corruption and repeatedly vowed to “drain the swamp,” a phrase second only in the Trump lexicon to “make America great again.” …Trump’s well-advertised disdain for lobbying might seem to augur poorly for a firm seeking to peddle influence. …“Business,” Lewandowski says, “has been very, very good.”

This rubs me the wrong way. I don’t want lobbyists to get rich.

But, to be fair, not all lobbying is bad. Many industries hire “representation” because they want to protect themselves from taxes and regulation. And they have a constitutional right to “petition” the government and contribute money, so I definitely don’t want to criminalize lobbying.

But as I’ve said over and over again, I’d like a much smaller government so that interest groups don’t have an incentive to do either the right kind of lobbying (self-protection) or the wrong kind of lobbying (seeking to obtain unearned wealth via the coercive power of government).

Here’s one final story about the oleaginous nature of Washington.

Wells Fargo is giving a big payout to Elaine Chao, the new Secretary of Transportation.

Chao, who joined Wells Fargo as a board member in 2011, has collected deferred stock options —  a compensation perk generally designed as a long-term retention strategy — that she would not be able to cash out if she left the firm to work for a competitor. Her financial disclosure notes that she will receive a “cash payout for my deferred stock compensation” upon confirmation as Secretary of Transportation. The document discloses that the payments will continue throughout her time in government, if she is confirmed. The payouts will begin in July 2017 and continue yearly through 2021. But Wells Fargo, like several banks and defense contractors, provides a special clause in its standard executive employment contract that offers flexibility for awarding compensation if executives leave the bank to enter “government service.” Such clauses, critics say, are structured to incentivize the so-called “reverse revolving door” of private sector officials burrowing into government. …Golden parachutes for executives leaving firms to enter government dogged several Obama administration officials. Jack Lew, upon leaving Citigroup to join the Obama administration in 2009, was given a cash payout as part of his incentive and retention awards that wouldn’t have been paid if he had left the firm to join a competitor or under ordinary circumstances. But Lew’s Citigroup contract stipulated that there was an exception for leaving to work in a “full time high level position with the U.S. government or regulatory body.” Goldman Sachs, Morgan Stanley, and Northrop Grumman are among the other firms that have offered special financial rewards to executives who leave to enter government.

This rubs me the wrong way, just as it rubbed me the wrong way when one of Obama’s cabinet appointees got a similar payout.

But the more I think about it, the real question isn’t whether government officials get to keep stock options and other forms of deferred compensation when they jump to government.

What bothers me much more is why companies feel that it’s in their interest to hire people closely connected to government. What value did Jacob Lew bring to Citigroup? What value did Chao bring to Wells Fargo?

I suspect that the answer has a lot to do with financial institutions wanting people who can can pick up the phone and extract favors and information from senior officials in government.

For what it’s worth, I’m not a fan of Lew because he pushed for statism while at Treasury. By contrast, I am a fan of Chao because she was one of the few bright spots during the generally statist Bush years.

But I don’t want a system where private companies feel like they should hire either one of them simply because they have connections in Washington.

I hope that Trump will change this perverse set of incentives by “draining the swamp.” But unless he reduces the size and scope of government, the problem will get worse rather than better.

Republished from International Liberty.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

china currency manipulation

Dear China: Thank You for Manipulating Your Currency by Mark J. Perry

fRom a Wall Street Journal article earlier this week “U.S. Eyes New Tactic to Press China“:

The White House is exploring a new tactic to discourage China from undervaluing its currency to boost exports, part of an evolving Trump administration strategy to challenge the practices of the U.S.’s largest trading partner while stepping back from direct confrontation.

Under the plan, the commerce secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country, instead of singling out China, said people briefed on or involved in formulating the policy. U.S. companies would then be in a position to bring antisubsidy actions themselves to the U.S. Commerce Department against China or other countries.

Don Boudreaux responds on Cafe HayekThe Bizarro World of Mercantilism” (my emphasis):

To the extent that currency manipulation is real and works as advertised, it makes the exports of countries that practice it artificially inexpensive for foreigners to buy. That is, currency manipulation transfers wealth from the citizens of countries that practice it to the citizens of countries fortunate enough to buy the manipulators’ subsidized exports.

And yet it is the governments whose citizens are on the receiving end of these transfers who fussily try to prevent these transfers, while the governments whose citizens are taxed to fund the transfers stubbornly carry on with them. So with the Trump administration threatening to stop Beijing’s alleged currency manipulation, and Beijing resisting, it’s as if the Trump administration believes itself to be charged with the responsibility of protecting the welfare of the Chinese people at the expense of American citizens, while the government in Beijing plays the role of benefactor of the American people at the expense of Chinese citizens.

Mercantilist myths about trade truly do incite governments to do the darndest things!

To that, Don adds:

Nearly every tenet of mercantilism is backwards. Those who fall for this sham mistake benefits for costs and costs for benefits; they interpret wealth destruction as wealth creation and wealth creation as wealth destruction. If they were a school of mathematics, mercantilists would insist that 2 + 2 = -4, 100 x 20 = 5, and 2 < 1.

MP: I would add that those who fall for the mercantilist sham also mistakenly interpret the destruction of jobs as job creation. This is a very important point that Don makes — Trump’s mercantilism and protectionism aren’t just misguided and maybe slightly off-base and erroneous, they are actually completely wrong, upside-down and backwards.

And to Don’s assessment of currency manipulation, I’ll add some updated comments below based on my 2011 article in The AmericanWhy We Should Thank the Chinese Currency Manipulators“:

The “manipulation” of China’s currency is actually to the distinct economic advantage of millions of American consumers and thousands of U.S. businesses buying products made in China, and benefits the U.S. economy overall. Let me explain:

In the best of all possible worlds for the United States, China would use its labor, capital and resources to manufacture consumer goods like clothing, footwear, furniture, electronics, toys and appliances and send $250 billion worth of those products to U.S. consumers for free every year as a gift or as a form of foreign aid to the American people. In addition, the Chinese would produce and send to America another $250 billion worth of capital goods, raw materials, parts, industrial supplies and materials, automotive parts, machinery, and natural resources at no charge, as a gift to American manufacturers and other businesses every year. (Note: That’s roughly the dollar amount of goods the U.S. purchased from China last year.)Can there really be any argument that such an arrangement, where America would receive $500 billion worth of free goods every year from China, would be to the indisputable economic advantage of the United States? Unfortunately, that extreme form of Chinese generosity is not realistic, so here’s a possible second-best outcome:

Instead of sending us $500 billion worth of goods annually for free, China offers an attractive alternative. It agrees to send us $625 billion worth of consumer and industrial goods every year, but agrees to sell us those manufactured goods at a substantial 20% discount for only $500 billion. In that case, the amount of foreign aid will be less than the $500 billion in the first example, but will still be significant—a $125 billion gift every year from the Chinese people to the American people.

How will China generate this $125 billion in annual foreign aid to the United States? One way is to keep its currency undervalued to bring about the 20% discount on its products coming to America. Which then raises the question: If China is willing to undervalue its currency, and in the process provide approximately $125 billion of foreign aid annually to American consumers and businesses, what’s the problem? Why should we complain?

And that is my main point: that the “manipulation” of China’s currency is actually to the distinct advantage of millions of American consumers (especially low-income Americans) and U.S. businesses buying products and inputs made in China. Those two groups certainly aren’t complaining about low-priced Chinese products, and in fact would be made worse off if China were forced to revalue its currency and in the process make its products more expensive for Americans.

So when you hear China’s alleged currency manipulation discussed in the media and by Donald Trump, keep the following in mind:

  1. China’s currency manipulation is a form of foreign aid, and to the direct advantage of millions of U.S. consumers, especially low-income groups, and to the direct advantage of thousands of American companies buying inputs from China.
  2. Forcing China to revalue its currency would benefit some American manufacturers competing with China, but would significantly harm those American consumers and businesses currently buying undervalued imports. On net, there would be more harm to American consumers than benefits to American manufacturers, which would reduce our overall standard of living.
  3. Like other forms of mercantilism and protectionism, forcing or pressuring China to appreciate its currency would favor certain domestic producers over millions of consumers and import-buying companies, but would make the U.S. worse off, not better off.
  4. Finally, instead of complaining, we should be thankful for China’s foreign aid to Americans through an undervalued yuan and overvalued dollar, and for the undervalued goods that collectively save American consumers and companies billions of dollars every year.

Bottom Line: If you wouldn’t object to China sending products to the United States for free, then on what basis would you object to currency “manipulation” that allows you and millions of fellow Americans to purchase undervalued Chinese imports at a huge discount? To complain about China’s low prices from currency manipulation would be like complaining that Walmart’s “Everyday Low Prices” are a form of “price manipulation,” even though those “manipulated” prices save Americans billions of dollars annually. Pressuring China to stop its alleged currency manipulation would be to force it to raise prices on everything we buy from them, and somehow thinking that those higher prices make us better off. That would be like forcing Walmart to stop “Everyday Low Prices” and instead charge “Everyday High Prices” and then thinking that American consumers are somehow better off.

In the upside-down “bizarro world of mercantilism” here’s how Trump’s new trade policy will apparently work: China and some other countries allegedly keep their currencies undervalued to the distinct advantage of Americans, who are enriched and made better off by low prices, and to the distinct disadvantage of the Chinese people and other foreigners, who are impoverished and made worse off. To retaliate against that “unfair” outcome, Donald Trump proposes to enact protectionist, mercantilist trade policies to correct that “unfairness.” But those mercantilist policies are actually guaranteed to impoverish America and make Americans worse off. So the faulty “logic” of trade retaliation is: If China and other countries impoverish their people with currency manipulation, we’ll retaliate by impoverishing our people with protectionism. “Fairness” might be achieved by this mercantilist-driven trade policy, but only in the sense that the people of all affected countries are made equally worse off.

Mercantilism isn’t only bizarre, it’s a guaranteed formula for economic ruin. And that’s why it was discredited by the mid-18th century when it was “eclipsed by the theory of comparative advantage and the associated benefits of free trade developed by David Ricardo,” according to the Princeton Encyclopedia of the World Economy. And that’s why “Britain abandoned mercantilism and its associated trade restrictions in the 1840s” and was no longer taken seriously by economists. Unfortunately, in the world of modern U.S. politics, the sham of mercantilism is still being taken seriously by politicians almost 200 years after it was discredited.

Republished from AEI.

Mark J. Perry

Mark J. Perry

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

universal basic income

VIDEO: Universal Basic Income is Even Worse than Welfare by Bryan Caplan

Libertarians have a standard set of fundamental criticisms of the welfare state.

  1. Forced charity is unjust. Individuals have a moral right to decide if and when they want to help others.
  2. Forced charity is unnecessary. In a free market, voluntary donations are enough to provide for the truly poor.
  3. Forced charity gives recipients bad incentives. If the government takes care of you, you’re less likely to take care of yourself by work and saving.
  4. The cost of forced charity is high and growing rapidly, leading to a future of exorbitant taxes or financial crisis.

Taken together, I think these criticisms justify the radical libertarian view that the welfare state should be abolished. But this is an extremely unpopular view, so it’s natural for libertarians to consider more moderate reforms like the Universal Basic Income. And when you’re considering moderate reforms, the right question to ask isn’t: “Is it ideal?” but “Is it better than the status quo?”

My claim: The Universal Basic Income is indeed worse than the status quo. In fact, all the fundamental criticisms of the welfare state apply with even greater force.

  1. Some forced charity is more unjust than other forced charity. Forcing people to help others who can’t help themselves – like kids from poor families or the severely disabled – is at least defensible. Forcing people to help everyone is not. And for all its faults, at least the status quo makes some effort to target people who can’t help themselves. The whole idea of the Universal Basic Income, in contrast, is of course, to give money to everyone whether they need it or not. Of course, the UBI formula normally reduces the net payment as income rises; but if a perfectly able-bodied person chooses never to work, the UBI gravy train never stops.
  2. The UBI is an extremely wasteful form of forced charity. Helping the small minority of people who can’t help themselves doesn’t cost much. Giving an unconditional grant to every citizen wastes an enormous amount of money. If you were running a private charity, it would never even occur to you to “help everyone,” because it’s such a frivolous use of scarce charitable resources. Instead, you’d target spending to do the most good. And unlike the UBI, the status quo makes some effort to so target its resources.
  3. Overall, the UBI probably gives even worse incentives than the status quo. Defenders of the UBI correctly point out that it might improve incentives for people who are already on welfare. Under the status quo, earning another $1 of legal income can easily reduce your welfare by a $1, implying a marginal tax rate of 100%. But under the status quo, vast populations are ineligible for most programs. Such as? You guys! If you’re an able-bodied adult, aged 18-64, who doesn’t have custody of any minor children, the current system doesn’t give you much. Switching to a UBI would expand the familiar perverse effects of the welfare state to the entire population – including you. And if taxes rise to pay for the UBI, the population-wide disincentives are even worse.
  4. A politically acceptable UBI would be insanely expensive. Libertarian economist and UBI advocate Ed Dolan has a detailed, fiscally viable plan to provide a UBI of $4452 per person per year. But every non-libertarian I’ve queried thinks it should be at least $10,000 per person per year. Even with a one-third flat tax, that implies that a family of four would have to make $120,000 a year before it paid $1 of taxes. This is pie in the sky.

But doesn’t the UBI give people their freedom? In some socialist sense, sure. But libertarianism isn’t about the freedom to be coercively supported by strangers. It’s about the freedom to be left alone by strangers.

If abolition of the welfare state is extremely unlikely and the UBI is worse than the status quo, does this mean libertarians should accept the welfare state as it is? Not at all. There’s a straightforward moderate path to a freer world: AUSTERITY. Cut benefits. Restrict eligibility. Remind the world of the great Forgotten Man: the taxpayer. We probably can’t convince the majority to end the welfare state. But “Welfare should be limited to genuinely poor people who can’t help themselves” has broad appeal – and unlike the UBI, it’s a clear step in the libertarian direction.

Reprinted from Library of Economics and Liberty.

Complete video of ISFLC’s UBI debate:

Bryan Caplan

Bryan Caplan

Bryan Caplan is a professor of economics at George Mason University, research fellow at the Mercatus Center, adjunct scholar at the Cato Institute, and blogger for EconLog. He is a member of the FEE Faculty Network.

facebook thumbs down

Mark Zuckerberg’s World Vision to ‘Bring Us Together in a Global Community’ by Cheryl Chumley

To say it’s a Utopian vision would be an understatement.

Mark Zuckerberg, Facebook founder, offered up a global vision of utopia via a 5,500-word post.

It’s titled simply, “Building Global Community.”

Some excerpts:

“On our journey to connect the world, we often discuss products we’re building and updates on our business. Today I want to focus on the most important question of all: are we building the world we all want? …

“Today we are close to taking our next step. Our greatest opportunities are now global — like spreading prosperity and freedom, promoting peace and understanding, lifting people out of poverty, and accelerating science. Our greatest challenges also need global responses — like ending terrorism, fighting climate change, and preventing pandemics. Progress now requires humanity coming together not just as cities or nations, but also as a global community. …

“This is a time when many of us around the world are reflecting on how we can have the most positive impact. I am reminded of my favorite saying about technology: ‘We always overestimate what we can do in two years, and we underestimate what we can do in ten years.’ We may not have the power to create the world we want immediately, but we can all start working on the long term today. In times like these, the most important thing we at Facebook can do is develop the social infrastructure to give people the power to build a global community that works for all of us.”

Zuckerberg then offers five different categories to address to shape the world in his view, touching on supportive communities, safe communities, informed communities, civically-engaged communities and inclusive communities.

More excerpts:

“My hope is that more of us will commit our energy to building the long term social infrastructure to bring humanity together. …

“Building a global community that works for everyone starts with the millions of smaller communities and intimate social structures we turn to for our personal, emotional and spiritual needs. …

“Going forward, we will measure Facebook’s progress with groups based on meaningful groups, not groups overall. This will require not only helping people connect with existing meaningful groups, but also enabling community leaders to create more meaningful groups for people to connect with.

“The most successful physical communities have engaged leaders, and we’ve seen the same with online groups as well. In Berlin, a man named Monis Bukhari runs a group where he personally helps refugees find homes and jobs. Today, Facebook’s tools for group admins are relatively simple. We plan to build more tools to empower community leaders like Monis to run and grow their groups the way they’d like, similar to what we’ve done with Pages. …

“Today’s threats are increasingly global, but the infrastructure to protect us is not. Problems like terrorism, natural disasters, disease, refugee crises, and climate change need coordinated responses from a worldwide vantage point. No nation can solve them alone. …

“The two most discussed concerns this past year were about diversity of viewpoints we see (filter bubbles) and accuracy of information (fake news). I worry about these and we have studied them extensively, but I also worry there are even more powerful effects we must mitigate around sensationalism and polarization leading to a loss of common understanding. …

“The first encourages engagement in existing political processes: voting, engaging with issues and representatives, speaking out, and sometimes organizing. Only through dramatically greater engagement can we ensure these political processes reflect our values.

“The second is establishing a new process for citizens worldwide to participate in collective decision-making. Our world is more connected than ever, and we face global problems that span national boundaries. As the largest global community, Facebook can explore examples of how community governance might work at scale. …

“Building an inclusive global community requires establishing a new process for citizens worldwide to participate in community governance. I hope that we can explore examples of how collective decision-making might work at scale. …

“This is an important time in the development of our global community, and it’s a time when many of us around the world are reflecting on how we can have the most positive impact. …

“There are many of us who stand for bringing people together and connecting the world. I hope we have the focus to take the long view and build the new social infrastructure to create the world we want for generations to come.”

EDITORS NOTE: This column originally appeared on The Geller Report.

trump-refugees

Breitbart: Refugees cost taxpayers BILLIONS each year

While bringing refugees to the US from certain parts of the world poses a security risk for America, often forgotten is the huge cost to US taxpayers (federal, state and local) of placing them in communities already loaded with poor people, a practice the mayor of Springfield, Mass. recently pointed out.

domenic-sarno

Democrat Domemic Sarno, Mayor Springfield, Massachusetts.

And, before the refugee industry starts shouting about the fact that some refugees ultimately pay taxes, in reality very few even reach the income threshhold to pay taxes and many who make small amounts of income can actually file to get money back from the government through earned income tax credits while not ever having paid in anything.

The Democrat mayor of Springfield, Mass recently said that the U.S. Refugee Admissions Program concentrates “poverty on top of poverty!

Here is Michael Patrick Leahy at Breitbart in an article entitled: ‘Refugees Will Cost Taxpayers an Estimated $4.1 Billion in FY 2017’ says:

American taxpayers will spend more than $4.1 billion in the 2017 budget to support the 519,018 refugees who have been resettled by the federal government in the United States since October 2009, according to a cost estimate by Breitbart News.

To put that very large number in context, $4.1 billion can buy 10,677 new homes for $384,000 each, which is the average price of a new home sold in the United States in December 2016. Or it could buy 170,124 new autos for $24,100 each, which is the manufacturer’s suggested retail price for a 2017 Chevrolet Malibu.

Even if the Trump administration were to entirely shut down the flow of refugees into the United States in FY 2018 and beyond, the refugees who have already arrived in the country will cost at least another $3.5 billion in 2018, and about $2 billion to $3 billion annually thereafter until FY 2022 and beyond.

Here is one of several useful charts prepared by Leahy. This summarizes the COST PER REFUGEE:

screenshot-323

For more fun with numbers, continue reading here.

Where is Congress?

Donald Trump can cut the numbers arriving in the US while he is in office and can tinker with the regulations, but unless Congress grows a spine and reforms this out-of-control federal program, in 4 or 8 years we will go back to a wide open spigot! There is a limit to what can be done with a phone and a pen as Obama learned the hard way.

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Problem Solved: Asylum seekers streaming into Quebec to escape Trump order

The Canadian Border Security Agency says Quebec is now the flashpoint for “asylum seekers” or double refugees who first entered the U.S. as refugees and are now fleeing there and trying to sneak into Canada over fears that President Donald Trump will have them deported.

The asylum seekers are graciously accepting the warm welcome from Canadian Prime Minister Justin Trudeau, who responded to Trump’s ban by saying they were welcome to Canada.

Trudeau has not paid attention to the fateful, historic mistake Angela Merkel made in her once-enthusiastic welcome of refugees into Germany, which turned out to be disastrous for Germany and for her politically.

“Illegal Refugees Now Streaming Across Quebec-New York Border”, by David Krayden, Daily Caller, February 14, 2017:

Despite all the media reports of refugees illegally entering Canada from the U.S. at remote Manitoba crossings, more are actually getting through along the Quebec-New York border — and it can be just as cold as the temperatures reported along the prairies that have sometimes induced frostbite.

The Canadian Border Security Agency says Quebec is now the flashpoint for “asylum seekers” or double refugees who first entered the U.S. as refugees and are now fleeing there and trying to sneak into Canada over fears that President Donald Trump will have them deported.

The numbers speak for themselves, with 42 asylum claimants showing up at the Quebec border last weekend alone and 452 for January — a 230 percent increase from the year before.

RCMP spokesman Cpl Camille Habel told CBC News that he attributes the popularity of the Quebec border to its relative closeness to major U.S. cities like New York and Washington, D.C. and the fact that international airports are nearby.

“Bigger cities on each side can mean more people trying to cross here.”

The “refugees” are deliberately crossing illegally so they can bypass the Safe Third Country Agreement, which is supposed to prevent people seeking asylum from choosing more than one “safe” destination when the flee their country of origin. The U.S. and Canada are both considered safe under this international legislation. But, paradoxically, the act only applies at legal border crossings; so double refugees are crossing illegally in order avoid their official refugee status from being questioned.

But the agreement only holds at official border crossings, so people crossing illegally into Canada are able to apply for asylum here, even if they arrived in the U.S. first.

Julie Lessard, who specializes in business immigration law, told the CBC that the current illegal flow of refugee claimants that is spreading across the longest undefended border in the world is fast becoming the status quo….

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Illegal Immigration Drives Income Inequality

Applying some common sense to the immigration debate offers an immense amount of clarity. And it reveals errors at both ends of the argument: Immigration is a powerful engine for economic growth, but wrong immigration can be a recipe for low wages and the bottom end of the scale, high governmental costs and high wages at the top end of the scale.

And there is wrong immigration. We’ve been practicing it for decades and are reaping the results.

The unstated policy of the past 30 years or so has been to have a de facto open border with Mexico that allows somewhere between 11 million and 20 million illegal immigrants — one of many problems is that we just don’t know — to be here and work, live and enjoy the benefits of this country.

But they are allowed to come illegally with a wink and a nod because politicians have opposed enforcing U.S. immigration laws. Yes, we have some fencing and a Border Patrol and we do stop some and send them back — about 250,000 annually. But they come right back again and eventually get through. And apparently we miss most the first time. The proof that the de facto policy is open borders is the 11-20 million people that are here illegally.

In the rest of the picture, we have legal immigration that takes many years and is an arduous and expensive journey. But because we are controlling it, we are getting immigrants that as a batch are capable of not only improving their own lives, but those of other Americans.

In 2014, 29 percent of the 36.7 million immigrants ages 25 and older had a bachelor’s degree or higher, compared to 30 percent of native-born adults. While that lines up nicely with the existing American population, the bottom end still does not: 30 percent of immigrants lacked a high school diploma or GED certificate compared to 10 percent of native-born Americans.

What this overall picture shows is that we allow — legally and illegally — millions of low-end workers into the country, and that has enormous consequences for low-income Americans.

Compassion for whom?

Often the defense of keeping quasi open borders is that we are a “compassionate” nation. Well yes, that is indisputable by practically every definition of charity at home and around the world.

But in the case of immigration, compassionate for whom? While letting millions of poor, unskilled, illiterate immigrants in our country may be showing compassion toward them, it is demonstrably not showing compassion toward tens of millions of poor Americans.

Consider: Millions of uneducated, unskilled and illiterate immigrants from south of the border come to America seeking a better life — or for many, just income to send money back “home.” The economics is undeniable: Their very presence depresses the low end of wages. They not only take millions of entry-level jobs, but also keep all those wages low or even lower them.

So the jobs “Americans won’t do” theoretically, are actually only jobs Americans won’t do at the prevailing wages. Without all those immigrants — legal or illegal, but most are illegal — low end wages would rise. Perhaps a lot. They would have to for supply to meet demand. It’s basic economics and the effect trickles up to middle class incomes.

How much? It’s hard to say, but George Borjas, Professor of Economics and Social Policy at the Harvard Kennedy School of Government, writes in Politico:

“Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent.”

This explains the flattening or declining of wages in real terms of lower skilled American workers with the huge influx of unskilled workers, and it is a minor tragedy that so few understand the reality.

But this also explains a big social bogeyman in American politics: income inequality.

A surprising source of income inequality

In a recent fascinating EconTalk podcast, Russ Roberts interviewed Borjas, himself an immigrant and leading expert in the economics of immigration, and Borjas laid out a fascinating case.

First off, immigration has historically increased capital, even with those who bring nothing to the country. They work for companies who provide goods, a percentage of them start and build successful companies, and overall the economy grows and capital is produced. This dynamic, along with a fairly free market capitalism and rule of law, explains the dramatic economic engine that the United States developed into after the Civil War.

If immigration demographics of skill level roughly mirror the makeup of the United States, then the net impact on the country is economic growth and capital growth, without much relative change in distribution between low, middle and upper incomes. Roughly, it’s a win-win-win.

However, if the immigration demographics do not mirror the country, there will be income distribution impacts. In the United States in recent decades we have seen immigration heavily weighted toward the low income end, depressing wages as explained above.

But it also has a converse impact.

Because capital has been expanded with the immigration, the value of people’s skills at the high end of the scale has gone up. This is because there are relatively fewer of these people to provide their services in an environment of both increased demand for them and increased capital due to immigration that is not mirroring the country’s current demographics.

There may be other policies that drive income inequality in a trade-off for another benefit, but there can be little doubt that the millions of illegal immigrants at the low end not only depress low-end wages but drive up high-end wages and create income inequality.

No public policies can alter the laws of economics. They are immutable. But public policies can alter the laws of immigration, which can positively impact the economics and the people in the economy.

That’s a debate worth having.

EDITORS NOTE: This column originally appeared in The Revolutionary Act.