Venezuela, Crime and Poverty

I don't know whether to believe the story or not (It is an AP story) but if it is true does it say anything about poverty and crime and causality?

The feared street gangster El Negrito sleeps with a pistol under his pillow and says he’s lost track of his murder count. But despite his hardened demeanor, he’s quick to gripe about how Venezuela’s failing economy is cutting into his profits.
Firing a gun has become a luxury. Bullets are expensive at $1 each. And with less cash circulating on the street, he says robberies just don’t pay like they used to.
For the 24-year-old, that has all given way to a simple fact: Even for Venezuelan criminals it’s become harder to get by.
“If you empty your clip, you’re shooting off $15,” said El Negrito, who spoke to The Associated Press on the condition he be identified only by his street name and photographed wearing a hoodie and face mask to avoid attracting unwelcomed attention. “You lose your pistol or the police take it and you’re throwing away $800.”
In something of an unexpected silver lining to the country’s all-consuming economic crunch, experts say armed assaults and killings are plummeting in one of the world’s most violent nations. At the Venezuelan Observatory of Violence, a Caracas-based nonprofit group, researchers estimate homicides have plunged up to 20% over the last three years based on tallies from media clippings and sources at local morgues.
Officials of President Nicolás Maduro’s socialist administration have drawn criticism for not releasing robust crime statistics, but the government on Tuesday gave the AP figures showing a 39 percent drop in homicides over the same three-year period, with 10,598 killings in 2018. Officials also report a fall in kidnappings.
The decline has a direct link to the economic tailspin that has helped spark a political battle for control of the once-wealthy oil nation.

I once read a UK police official who said crime goes up when the economy is good because people drink more.

Some democrats used to contend that the way to reduce violence directed at the USA from the middle east was to stop buying petroleum, presumably so they would be so poor that they could not buy tickets to fly to the USA. BTW I never believed that idea and still do not.

The News Media's Main Goal to to Attract Eyes for Advertisers

Always keep in mind that the News media's main goal to to attract eyes for advertisers. Better to read the academics who actually study the subject. BTW If you think the academics are all far leftists nuts it is because of the reporting of News media, most of the academics are down to earth in their area.

My guess is that you’ve heard that famous result from a recent Federal Reserve survey of Americans: Four in 10 adults in 2017 would either borrow, sell something, or not be able pay if faced with a $400 emergency expense. That’s the exact wording of the Federal Reserve Board’s report of the results of its survey.

...

Question EF3. Suppose that you have an emergency expense that costs $400. Based on your current financial situation, how would you pay for this expense? If you would use more than one method to cover this expense, please select all that apply.

Check the results as reported in the Appendix or as reported by Reynolds. (He reproduces their table.) 36 percent of people answered “Pay it on my credit card and pay it off in full at the next statement.” That would be my option: I want the air miles. 50 percent of people answered “With the money currently in my checking/savings account or with cash.” We can’t simply add these two numbers to get 86 percent because the survey, as noted, gave people the option of using more than one method.

So here are some headlines reporting on this:

CBS:

Nearly 40% of Americans can't cover a surprise $400 expense

CNN:

40% of Americans can't cover a $400 emergency expense

CNBC:

Millions of Americans are only $400 away from financial hardship.

Fox Business:

Shocking number of Americans can't cover $400 surprise expense

Bloomberg:

Almost 40% of Americans Would Struggle to Cover a $400 Emergency

NY Times:

Many Adults Would Struggle to Find $400, the Fed Finds

 

Better to read the academics who actually study the subject. If you think the academics are all far left nuts it is because of the reporting of News media, most of the academics are down to earth in their area of expertise though outside their area they tend to be a little leftist nuts because they read the media above.

 

We Can Get More Poverty Reduction for Less Taxes.

Areas where we help the poor more and spend less tax money:

1. Replace TANF, SNAP, Social Security, housing subsidies etc. with an NIT
2. Replace Medicare and Medicaid with High deductible health insurance with deductible based on income.
3. Even if we do not do number 1 above, change our largest welfare program, Social Security to stop giving more to high life time earners and give everyone the same like they do in Australia.
4. We should force local Government to allow sufficient building so people can move to were the jobs are. It is an infringement of rights for local voters to limit the rights land of owners to subdivide and build housing. The default should be to allow all residential building. Note there are a very few occasions were it is justified but you need very good reasons.

Which of these are Republicans or Democrats for?

On a Negative Income Tax

I'm updating this because Ed Dolan convinced me that what I describe is really not a Basic Income Guarantee (BIG) but Negative Income Tax (NIT).

People are contending that the Negative Income Tax (NIT) would cost more than the current system but if you design it as outlined below it would save money.

Each  adult US citizen would get $200/week. To lower the cost you would:

• Raise the tax rate on lower income people to consume the BIG more rapidly, low earners currently pay no income taxes. Income up to $26,000/year tax rate would be taxed at a 40% rate. So at $26,000/year of earnings the net effect of the BIG on their income would be zero. The tax rates on income above $26,000/year would then drop to the current rate and rise as the current rate does from there. 
• With the BIG you eliminate SS.There is Absolutely no need for SS with a BIG! Also you would eliminate the minimum wage.
• And you replace Medicaid and Medicare with something like this:

The state would provide insurance to all Americans but the annual deductible would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected.
It is not a perfect plan but it might help. Some deregulation of health-care would also help the poor gain access. The gauntlet that Doctors have to run these days to get to practice seems like an anachronism in today’s world. Let smart people get to practice medicine after on the job training. Let the medical businesses decide who is qualified to practice medicine. 12 years of training to tell if my child has an ear infection is overkill and reduces access to health-care for the poor.
Another benefit of my plan is that it would encourage capable Americans (the rich and middle class) to be a counter weight politically against the providers.

Of course our politicians are too corrupt to set up such a program but any discussion of a NIT is pure theory anyway.

All of our debt and inefficiency problems come from rationally ignorant voters and corrupt politicians. With rationally ignorant voters, politicians almost have to be corrupt of ignorant to get elected.

NOTE: You would still need programs for the very disabled. but they are few enough that the problem is manageable.

NOTE: US Democrats seem to think the Europeans have a better welfare system than we do, and that may be true, but ours and theirs seem unnecessarily inefficient. An NIT might give the USA the world's best welfare system.

My Updated Healthcare Compromise

This is my new compromise between advocates of government provided health insurance and those against. My earlier version may have had a flaw incentive wise so I am changing it. This version moves close to that put out by the Niskanen Center see here.

The state would provide insurance to all Americans but the annual deductible would be equal to 60% of each family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. 

Why 60%, because some research by the Democrats has shown tax revenues are maximized at 70%, meaning most people will not hugely cut back at working at up to a 70% marginal tax and the current top rate in some states is about 50% already. I took the mid point between the two at 60%. 

So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300 * .6 or $3,180. 

A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $33,180. 

Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected. 

 

It is not a perfect plan but it might help. Some deregulation of health-care would also help the poor gain access. The gauntlet that Doctors have to run these days to get to practice seems like an anachronism in today’s world. Let smart people get to practice medicine after on the job training. Let the medical businesses decide who is qualified to practice medicine. 12 years of training to tell if my child has an ear infection is overkill and reduces access to health-care for the poor. It appears that medical care could much cheaper than it is, see here.

Another benefit of my plan is that it would encourage capable Americans (the rich and middle class) to be a counter weight politically against the providers.

Also it seems worthwhile to me to maintain flexibility in the system. Our slightly more freedom oriented medical  systen looks not so great right now because we spend more than the other developed countries but things are still changing and our more flexibility may start to pay off at some point. 

Here are some possible avenues for that flexibility to pay off:

• Direct Primary Care (DPC) also called Concierge Medical Care. I've been reading good things about this recently.
• Medical Tourism groups like the Amish already do some of this already, and maybe surprisingly so do people from countries like the UK with Universal health insurance coverage. 
• Dean Baker's idea of allowing foreign providers to come into the USA market.

One, all or none of these things might workout and others not mentioned but it is worth maintaining some level flexibility and freedom.   

Here is an article that makes a strong case for a system similar to the one that I propose.  His plan suggests a  insurance for catastrophic events that cost more than, $50,000 combined with a large health savings account.

In addition since Government provided health insurance is paternalism it should provide insurance that experts would recommend and that means among other things insurance that only pays for care that shows a significant margin of cost benefit. So it should not cover procedures that the UK's NHS does not cover. There would be huge savings there.

Government Provition of Daycare

Government provision of daycare seems an oddity to me

I once asked a few single mothers I worked with, if they would rather have $x/week or free daycare. I varied x from $10 to $100.  Some said that the would not use the daycare even if it was freely available without receiving any money at all. The average preferred about $20 cash per week to free daycare. There is no way a government could provide daycare for $20/week. I've seen estimated costs as high as $400/week and I don't think I've ever seen numbers below $200/week. On top of that 56% of women with children under 18 say they would prefer to stay home and care for their children.

So why do some countries provide it rather than giving cash? Below are some possible reasons, some of which people might not want to admit:

• They believe low income people are such bad parents that government provided daycare will help the children become better adults.
• They are afraid that if given cash the parents would spend the money on themselves.
• They don't want to give cash because they do not want to be seen to be paying people to have children.
• People don't understand that government paid for things have costs. 

There may be other reasons but these are what come to mind. 

A Rational Argument Could Made that the USA has Best Education in the World and Florida has the Best Education in the USA

Because the selection effect is so powerful in education standard test comparisons don't show it, but a rational argument could made that the USA has best education in the world (The Amazing Truth About PISA Scores: USA Beats Western Europe, Ties with Asia), and Florida has the best education among the USA states (Florida Number One in School Measure).

But I believe that there are not significant differences in overall schooling quality in the developed world.

In fact I think a slight modification of of Arnold Kling's null hypothesis in schooling is accurate.

Playing off Arnold Kling's Clarifying his Null Hypotheses on Schooling

Note, this does not mean that we cannot improve education education over time as techniques improve that can be applied that do improve education, but they spread very fast in the developed world and we see no significant differences.

Of course there are some good techniques that do not spread. One technique that works but has not spread is direct instruction, it has not spread because teachers and students hate it, and for pretty good reason it is hard of teachers. Also a singular focus on the three R's might work but is not tried for the same reason.

It is not bad that those techniques do not spread, childhood should not be all about education.