Tuesday, December 3, 2013

Many US Citizens Earn at Poverty Levels but Few Consume at Poverty Levels.

The link below highlights a study that shows that though many US citizens still earn at poverty levels, almost no USA citizens consume at poverty levels.

Thus, they write: "The results in this paper contradict the claim that poverty has shown little  improvement over time and that antipoverty efforts have been ineffective.  We show that moving from traditional income-based measures of poverty to  a consumption-based measure, which is arguably superior on both theoretical and practical grounds—and, crucially, accounting for bias in the cost-of-living adjustment—leads to the conclusion that the poverty rate declined by 26.4 percentage points between 1960 and 2010, with 8.5 percentage points  of that decline occurring since 1980."Just to be clear, the notion that the consumption-based poverty rate nearly reached zero percent does not mean that the war on poverty is won.

That is a very important point made by "The conversable Economist" Tim Taylor.

The above implies that we should continue to work on getting people to earn more but that poverty of consumption is no longer found in the USA except among the Homeless who are often very difficult to help due to mental illness and drug habits (the worst of which is booze.)

There are of course people who drop through the cracks but that is problem of Government ineptitude rather than a lack of money and I am afraid that Government ineptitude will be forever with us.

Friday, November 15, 2013

To PPACA Supporters

To PPACA supporters.

Let us admit that among people who are well informed on the state of healthcare in the USA there is agreement that PPACA is horrible but the supporters think that it is clearly better than nothing and that it is unlikely that better laws are attainable at this time. I can certainly understand and respect that position but I think supporters should do more bashing the bad aspects of the law.  They should also bash the dishonest politicians that made the law, of course always pointing out that the politicians on the other side are just as bad or worse.

The bad aspects of PPACA:

The fact that the PPACA does almost nothing on the supply side is very disappointing.  Lower cost/prices would help everyone.

The employer mandate is a horrible thing.  The push should be in the other direction.  People do not even know what  they are spending on healthcare!

You cannot subsidize the median person so it is an outrage that subsidies go up to $95,000.  The politicians are scamming rationally ignorant voters taxing people $1 to subsidize them with $1!

Capping the deductibles at under $7,000 is also a very bad policy they should be pushing people with above median income in fair health toward much high deductibles.

The tax on Medical equipment manufacturers is a dishonest, underhanded way to tax the people.

Mandating birth control is a Democrat party give away to a voting block important to them.

The 3 to 1 cap on old people's insurance makes no sense but for the fact that old people vote more than young people. Corruption.

There is very little evidence that many of the mandated coverages make medical sense.

The good aspects of PPACA:

People with preexisting conditions can get coverage easier and at a lower cost. 

The exchanges have the potential if structured correctly to lower that marginal tax on those people near the medicaid cut off. 

What people have called "death panels", really the Independent Payment Advisory Board (IPAB),  medicare might stop some care that has not shown net benefit.

Friday, November 8, 2013

Politicians and the Minimum Wage

Hide the costs show the benefit. 

Who pays for the minimum wage increase.  If it were a tax who would it fall on?

It clarifies things to think in terms of consumption so for the minimum wage workers to consume more who consumes less.

In the short run business owner who hire minimum wage workers will consume less.  Why do we want them to consume less rather than using a broad based tax.

In the long run consumers who consume products and services produced by business who hire minimum wage workers will consume less.  Why do we want them to consume less rather than using a broad based tax.

In the all time periods minimum wage laws tend to decrease employment so the low skilled unemployed consume less . Why do we want them to consume less rather than using a broad based tax.

A negative income tax or a basic income guaranty seems far superior  for everyone except for  the politicians. The minimum wage lets the politicians hide the costs show the benefit.

From the comments on moving bad students to "good" schools.

This is a comment by eccdogg on this blog post.

There is a pretty nice natural experiment on this with the comparison of Wake Co (Raleigh) and Mecklenburg Co. (Charlotte) schools in NC.

Raleigh for a long time has tried to balance schools by income so that the percentage of free and reduced lunch students was similar across schools.

Charlotte ended busing quite a while ago and instead uses neighborhood schools combined with increased spending on low income schools.

On the face of it it looks like Raleigh’s approach is better because Raleigh’s schools on average do better on statewide test. But that is mainly a composition error. Raleigh is richer and whiter than Charlotte. When you look at minorities and low income students they do BETTER in Charlotte than in Raleigh. Raleigh has fewer failing schools but more failing children, they just hide them amongst better performing students.

Personally I can see how upper class parent involvement could actually be to the determent of lower achieving kids. Upper achievers and lower achievers have different need and need to be taught at a different pace. An upper income parent will advocate for the school setting its strategy based on what is the best for the upper income child. I see this at my daughter’s school (in Raleigh) that is mainly upper income with lower income kids bused in. The school is great with lots of electives and an accelerated pace. This is great for my daughter, but if a kid is struggling with the 3 Rs as many low income kids are they could easily get left behind and all of us middle/upper income parents would not care in the least.

The Good Samaritan Revisited

When telling the story of the good Samaritan Jesus was speaking to the Jews.  The Jews despised the Samaritans. The good Samaritan was part of the despised group not the other way around. (It is amazing that people get this wrong but they do, I am writing this because I just read some writing about it that was wrong.) The act of love was toward the despising not toward the despised group which is more powerful and perplexing.

It is as if he said in 1950 USA, a white man traveled to a southern town and on the read he was robbed and black man came along and bought him clothes and put him up at a hotel. (That always reminds me that John Brown was saved from drowning by a black man.)

At the end of the story he says go and do likewise. I think that he means even those who despise you are your neighbors and should be treated with love!

Also note that the same Jesus said the poor will always be with and advocated some charity toward them but the Jew who was robbed in the story of the good Samaritan was not poor but a person who fell into a calamity.

The story is far more interesting that many think.
The one who gave the charity was in the despised group. The act of love was toward to despising group which is more powerful and perplexing. It is as if he said in 1950 USA, a white man was robbed and black man came along and bought him clothes and put him up at a hotel. At the end of the story he says go and do likewise. I think that he means even those who despise you are your neighbors!
Also note that same Jew said the poor will always be with and advocated some charity toward them but the Jew who was robbed in the story was not poor but fell into a calamity.
The story is far more interesting that you described it.
- See more at: http://marginalrevolution.com/marginalrevolution/2013/11/a-theory-of-good-intentions.html#comment-157927121
The one who gave the charity was in the despised group. The act of love was toward to despising group which is more powerful and perplexing. It is as if he said in 1950 USA, a white man was robbed and black man came along and bought him clothes and put him up at a hotel. At the end of the story he says go and do likewise. I think that he means even those who despise you are your neighbors!
Also note that same Jew said the poor will always be with and advocated some charity toward them but the Jew who was robbed in the story was not poor but fell into a calamity.
The story is far more interesting that you described it.
- See more at: http://marginalrevolution.com/marginalrevolution/2013/11/a-theory-of-good-intentions.html#comment-157927121
The one who gave the charity was in the despised group. The act of love was toward to despising group which is more powerful and perplexing. It is as if he said in 1950 USA, a white man was robbed and black man came along and bought him clothes and put him up at a hotel. At the end of the story he says go and do likewise. I think that he means even those who despise you are your neighbors!
Also note that same Jew said the poor will always be with and advocated some charity toward them but the Jew who was robbed in the story was not poor but fell into a calamity.
The story is far more interesting that you described it.
- See more at: http://marginalrevolution.com/marginalrevolution/2013/11/a-theory-of-good-intentions.html#comment-157927121
The one who gave the charity was in the despised group. The act of love was toward to despising group which is more powerful and perplexing. It is as if he said in 1950 USA, a white man was robbed and black man came along and bought him clothes and put him up at a hotel. At the end of the story he says go and do likewise. I think that he means even those who despise you are your neighbors!
Also note that same Jew said the poor will always be with and advocated some charity toward them but the Jew who was robbed in the story was not poor but fell into a calamity.
The story is far more interesting that you described it.
- See more at: http://marginalrevolution.com/marginalrevolution/2013/11/a-theory-of-good-intentions.html#comment-157927121
The one who gave the charity was in the despised group. The act of love was toward to despising group which is more powerful and perplexing. It is as if he said in 1950 USA, a white man was robbed and black man came along and bought him clothes and put him up at a hotel. At the end of the story he says go and do likewise. I think that he means even those who despise you are your neighbors!
Also note that same Jew said the poor will always be with and advocated some charity toward them but the Jew who was robbed in the story was not poor but fell into a calamity.
The story is far more interesting that you described it.
- See more at: http://marginalrevolution.com/marginalrevolution/2013/11/a-theory-of-good-intentions.html#comment-157927121

Tuesday, November 5, 2013

A Good Use for all those Psychology Majors?

From E. Fuller Torrey at the national review
Untreated mentally ill individuals are now responsible for at least 10 percent of all homicides and half of the mass killings such as those at Virginia Tech, Tucson, Aurora, Newtown, and the Washington Navy Yard.

We are graduating a huge, huge, huge number of psychology majors who could help treat these people cheaply if we allowed them to prescribe anti-psychotic drugs but we do not! It seems we must treat the insanity of our government.

I am not saying that I am sure that allowing all psychology grads to prescribe anti-psychotic drugs would have a significant positive effect, I do not know that, but I see very little downside to trying it.  It only seems right didn't they learn something in those 4 years? 

Wednesday, August 14, 2013

Copays and Treating People Like Responsible Adults

This article "When a Copay Gets in the Way of Health" from the New York Times rubs me the wring way.  Do we treat people like responsible adults or like children to be controlled.

If I do not change the oil in my car my engine warranty is void. Should we not allow insurers to try to keep their insureds taking high value low cost drugs, like if you did not buy the prescribed drugs each month and you have a heart attack we will not pay the full bill.

AEI Alternative to ACA

The incidental economist has an interesting post about AEI's alternative to ACA

The post talks about the criticism of the AEI's alternative that it is politically impossible and so is just a tool for thise who want to kill ACA.  I strongly disagree with this critique, IMHO the ACA to be politically advantageous to the politicians who passed it it had to be structured to fool the voters and so knowledgeable people even if they support ACA as better than nothing should be shouting how badly structured it is and how the politicians are scamming the voters.  ACA cost much more than it should, solves much less of the problems that it should.  It creates very bad incentives for employers!  It creates bad incentives for patients and it will accomplish very little in improvement in heath.  IMO Democrats are too willing to support bad very high cost legislation to get a tiny theoretical gains in some areas.  Consider CAFE standards, MIT says it costs 6-13 time more per gallon of gas saved (co2 put in the air) than a visible tax yet even knowledgeable Democrats talk it up.  You should always be pointing out how corrupt our politicians (and to a lesser extent voters) are.  Trying to lower the status of politicians. 

Wednesday, July 31, 2013

The Mimimum Wage Debate

Art Carden posts on McDonald's and Minimum Wages

In my opinion the utilitarian debate on the minimum wage should focus more on the following two issues:

  1. Whether it is better to have many people making more money with a little more unemployment or vise versa. One side could list the evils of unemployment and the other side the benefits of higher wages for low earners. This is seldom the focus of minimum wage debates but I think that it should be. (BTW I think unemployment is very bad and that working for low wages is not so bad so I favor ending the minimum wage (idle hands are the workshop of the devil). )
  2. The other issue is that if you look at the difference between the wage an employer would pay without a minimum wage and what they pay with a minimum wage as a tax. Then you should ask who pays that tax. I would say that in the short run it is paid by those who employ low wage workers and in the long run by those who buy goods and services from those who employ low wage workers. So then we should debate why these parties should be taxed and not all of us?

Tuesday, July 23, 2013

An Observation About Politics

A problem with politics is that Democrats compromise too much with Democrat politicians and Republican compromise too much with Republican politicians even while Democrat and Republican people compromise too little with each other.  The result are policies that only serve the politicians.

Monday, July 8, 2013

Could Doctors Greatly Reduce Medical Spending in the USA

My experience with medical care in the USA has lead me to believe that Doctors could and would greatly reduce medical spending if they knew that their patients were spending directly.  I have had Doctors change to much cheaper courses of action when they learned that I would be paying directly.

This is ironic in a way because their patients being part of all patents are untimely paying for everything.  No one cares about carelessly spending government or insurance company money.

Tuesday, July 2, 2013

Are Social Security and Medicare Disastrously Inefficient Programs?

From the Comments on Arnold Kling's Askblog
"Social Security and Medicare are the disastrously inefficient programs they are — with millionaires getting transfers from the young and poor — solely so the actually poor elderly can pretend they are not on welfare. It’s abominable."


Friday, June 14, 2013

Education Lottery

In this TED talk by Sugata Mitra ("The child-driven education"), though it is not the main idea in the talk, he talks about the mismatch between what is taught in school and what is useful in life.

Here is some text about the talk:

Education scientist Sugata Mitra tackles one of the greatest problems of education -- the best teachers and schools don't exist where they're needed most. In a series of real-life experiments from New Delhi to South Africa to Italy, he gave kids self-supervised access to the web and saw results that could revolutionize how we think about teaching. 

I have seen news reports that have lead me to believe that the skills taught in schools in many countries are very badly matched to what people need to know in those countries. In those countries education becomes like a very costly lottery.  If you are at the very top of the class it might enable you to get visa to work in a developed country or to get one the few high level jobs available domestically but if you are not at the top of your class you get very little that is useful in your life.  There was a News report that focused on a girl in India and one of the comments by her family was that her older sister went to school for what they considered a long time and she was still a goat herder.  

I have seen a few reports that  claimed that many in Egypt had college degrees but were working jobs that did not require college. 

Shouldn't education be a way out or a way to live better?

The Big Compromise

As a Christan libertarian would like to see Government greatly reduced in  size and scope but most people want a government that provides for the poor and particularity in the areas of schooling and healthcare.  

Some of the numbers are at this link.

We are clearly spending a huge amount of money for what we get.  

If we must have a mixed system economic freedom but with a robust social safety net, let's at least make the system as efficient as possible. 

So to simplify and minimize the costs of providing for the poorest among us we would replace TANF (was AFDC commonly called welfare), SNAP (food stamps), housing subsidies and  Social Security with a basic income guaranty. This leaves a role for the church and other Charities because some people will drink and drug away their income.  Some people believe that food stamps and housing subsidies are superior because they cannot be spent on drugs and booze but that is a miss conception (interestingly they do not worry about that when it comes to Social Security) because for example people can buy food and sell it.  $200/weak for every adult who was born in the USA should provide enough money to produce the same or higher standard of living that is produced by those programs.  You cannot give anything for children because the incentives would be bad, this also leaves room for charity.

If you look at the statistics it seems medical care beyond the vaccinations, antibiotics and trauma care yield very low benefits per dollar, much less that people assume, but people feel very much compelled to provide them so:

Socialized medical care with deductibles based on a person's last year's income would be uncomplicated and ensure that everyone can get care. The individual would be required to pay for his own care up to his last years income minus the poverty level of income minus his prior years medical expenses.  This would encourage the most capable people to shop for price in medical care.  Also cheap high value items like vaccinations could be provided by Government free of charge as they often are today. 

Again shockingly to most people if you look at the statistics, it seems schooling beyond the 3rd grade also yields very little overall benefit for society but again it is an area were people feel strongly that it must be provided by the state.  

So considering that you cannot subsidize the middle class, the idea would be to have the middle class and rich pay for using Government schools.  Each family's bill would be based on their prior years income.  This would hopefully push down spending on schools. 

Some programs for the handicapped might be kept also.  

How to pay for all this, since we are trying to transfer some consumption from the rich and middle class toe poor we should collect money through a consumption tax.   Since most people feel that the rich should pay at a higher percentage rate than the poor the tax should be a progressive consumption tax.  You can have a progressive consumption tax by allowing individuals to put as much money as the want into an IRA and taxes them on any income that is not put into the IRA plus and money withdraw from the IRA.  This would greatly simplify taxation.

Additionally taxing externalizes like pollution taxes should be maintained and the Gasoline tax which is really a user fee should be maintained.

Biochar Kiln Plan

I have not yet built and tested this biochar kiln but I think it is a good plan and I will try to get it made.  

It is made with just a barrel and stove pipe. 

Saturday, April 20, 2013

Could Wealth Decrease Longevity!

A friend on mine posted a link to this article on facebook.  

Here is an excerpt:

When Cuba's benefactor, the Soviet Union, closed up shop in the early 1990s, it sent the Caribbean nation into an economic tailspin from which it would not recover for over half a decade.
The biggest impact came from the loss of cheap petroleum from Russia. Gasoline quickly became unobtainable by ordinary citizens in Cuba, and mechanized agriculture and food distribution systems all but collapsed. The island's woes were compounded by the Helms-Burton Act of 1996, which intensified the U.S. trade embargo against Cuba, preventing pharmaceuticals, manufactured goods, and food imports from entering the country. During this so-called "special period" (from 1991 to 1995), Cuba teetered on the brink of famine. Cubans survived drinking sugared water, and eating anything they could get their hands on, including domestic pets and the animals in the Havana Zoo.
Cubans became virtual vegans overnight, as meat and dairy products all but vanished from the marketplace.
The economic meltdown should logically have been a public health disaster. But a new study conducted jointly by university researchers in Spain, Cuba, and the U.S. and published in the latest issue of BMJ says that the health of Cubans actually improved dramatically during the years of austerity. These surprising findings are based on nationwide statistics from the Cuban Ministry of Public Health, together with surveys conducted with about 6,000 participants in the city of Cienfuegos, on the southern coast of Cuba, between 1991 and 2011. The data showed that, during the period of the economic crisis, deaths from cardiovascular disease and adult-onset type 2 diabetes fell by a third and a half, respectively. Strokes declined more modestly, and overall mortality rates went down.

I am very skeptical of any statistic out of Cuba but this has very interesting implications. We all know that for some peopel increased wealth can lead to earlier death but if this article is correct it would mean that an increase in wealth above some subsistence level has a negative effect on enough people's longevity that a fall in wealth brought up the overall life expectancy in Cuba.  

BTW: I would bet that most, if not all of the gain, is due to reduced accidents, reduced smoking an drinking. 

Here is another excerpt:

During the special period, expensive habits like smoking and most likely also alcohol consumption were reduced, albeit briefly. 

Even in the USA recessions tend to accompanied by a decline in death rates mostly due to less driving, fewer on the job accidents, less drinking and smoking.  

Also here is a related Article Why early retirement may not be good for your health.  

Dubner: Well look, it may sound terrible but Kai, I'm happy to say, there's a hidden side, a little silver lining here to consider. So the economist Josef Zweimuller, at the University of Zurich, recently did a study that looked at two fairly identical groups of blue-collar workers in Austria. One group that got early retirement up to three and a half years earlier than the other, and what Zweimuller found is that early retirement -- as much as we may crave -- actually has a considerable downside.
Josef Zweimuller: I mean actually what we find in our study is that among blue-collar workers, we see that workers who retire earlier have higher mortality rates. And these effects are pretty large.
Ryssdal: 'Higher mortality rates' -- they die, the people who took the early retirement?
Dubner: Correct. The study showed that for every extra year of early retirement, you lose about two months of life expectancy. And I should say, this is not the first study to show there's a fairly strong relationship between early retirement and earlier death.
Ryssdal: What we do we know about the causes of these deaths? Is it heart attack, what is it?
Dubner: A lot of them cardiovascular, likely due to things like more smoking and drinking, worse diet, not enough exercise. But there's also evidence to show it goes beyond the physical, that working longer is tied to better mental health as well.
Here's Mo Wang, he's a psychologist at the University of Florida who studies retirement.
Mo Wang: Working actually gives you a way to structure life and that's very important. Usually it's interesting you see people travel right after they retire, but then after like one or two years, people just sit at home watching TV.
Here if more...
Josef Zweimuller: I mean actually what we find in our study is that among blue-collar workers, we see that workers who retire earlier have higher mortality rates. And these effects are pretty large.

Combined these should give us some real food for though. 

Of course a longer but less enjoyable life may not be better than a shorter more enjoyable life but there are those in the health movement (Michael Bloomberg for example) for whom the implications should be thought through as to what they imply for our welfare programs like food stamps and social security. 

Friday, March 22, 2013

Catholic Economist Critiques Economists

Pascal-Emmanuel Gobry, here on Forbes.com no less.

 The college wage premium vs the marriage wage premium. In contemporary societies, there is a strong college wage premium. That is to say, people who go to college make more money on average than people who don’t. While a minority of economists (including Cowen) have questioned why this premium should exist, the majority of economists generally take the existence of this college wage premium to mean that college is good and important, that more people should go to college, and that public policy has some role to play in promoting and subsidizing college attendance. I would bet a goodly sum of money that if you picked at random ten tenured economists from top-20 economics departments, and asked them to list what an 18-year-old should do to increase his chances of getting high wages, a majority would say “go to college.”

There also exists a marriage wage premium, which is roughly as significant and as consistent as the college wage premium. To say that the marriage wage premium doesn’t get the same amount of attention is an understatement. Economists recoil at the idea of praising marriage and supporting public policies that increase marriage. They are much more likely to dismiss the marriage wage premium as reflecting selection bias (it’s not that marriage makes people earn more money, it’s that people who would have earned more money anyway tend to get married) or intone that “correlation is not causation”–criticisms that apply equally to analyses of the college wage premium.  I would bet a goodly sum of money that if you picked at random ten tenured economists from top-20 economics departments, and asked them to list what an 18-year-old should do to increase his chances of getting high wages, none of them would say “get married and stay married”–even though the data on the marriage wage premium supports this conclusion to the same extent as it does going to college.


Usually if economists acknowledge the population growth problem, their preferred solution is to increase immigration–which aligns perfectly well with the “cosmopolitan perspective” Cowen praises. Leaving aside the fact that it’s a zero-sum proposition (those immigrants have to come from somewhere, and global population growth is slowing), these discussions often take an interesting turn. Even though I genuinely share economists’ enthusiasm for opening borders, when arguing that opening borders makes sense alongside a natalist policy, I have been accused of being against immigration, and possibly even a xenophobe. On its face, this is absurd. But if what we’re dealing with isn’t a public policy debate, but a clash of ideologies, where one ideology views as taboo the idea of public policy having an influence on the private sphere, then anger and accusation are a perfectly understandable reaction.

The pro-immigration view (which, again, I share) is as much a productivity view as a population view. The normal argument for immigration is that more people will allow for more specialization, which should raise productivity as people focus on the things they’re best at and learn from each other. That this is also an argument for increasing the birth rate seems not to occur.

Anyway–we can have all the arguments about increasing population growth we want: whether it is desirable, whether it is even possible, whether it is consistent with a liberal outlook (my answers: yes, let’s try, of course). My point here is that the subject is just completely ignored by the economics profession, and that this can be explained largely by the existence of bias.

Thursday, March 21, 2013

Some Notes on the Affordable Care Act

I respect point of view of people who want to provide medical care for the poor through government and it makes some logical sense but here are some rules in the affordable care act that make me feel like we are being scammed:
  • The mandate doesn’t apply to firms with fewer than 50 workers 
If it is impotent enough to make it a law that employers provide health insurance for workers why exempt some employers?  Won't this in the long run eliminate employers in those competitive low wage paying industries with between 50 and say 70 or 80 employees?  Outsourcing some services can help such businesses get under the 50 employee limit but it is sometimes less efficient.
  • The mandate doesn’t apply to employees who work fewer than 30 hours
If it is impotent enough to make it a law that employers provide health insurance for workers why exempt some workers? This rule nudges employers to hire more part time workers and fewer full time workers.  This is bad for the guy who ends up working two part time jobs instead of one full time job. 
  • The employee’s share cannot exceed 9.5% of wages for low- and moderate-income workers and an industry rule of thumb that employers must pick up at least 50 percent of the tab.
Considering Tax Incidence why would ACA require that the employee’s share of insurance costs not exceed 9.5% of wages.  Most everyone who studies it closely comes to the conclusion that employees pay for such benefits in reduced wages (that goes for the employers share of FICA also.)

Such rules make me feel like I am being scammed. If the employee will pay in the long run why try to hide that by making the employer no show it in the wage stub? If it is important enough to require employers to pay for health insurance why exempt some employers?

Also why should the costs of providing for healthcare fall in the short run on employers of low wage employees and in the long run consumers who buy products produced by low wage employees rather than on all taxpayers.

Sunday, March 17, 2013

Morgan Warstler's Attemp at Making a Workable Hourly Wage Subsidy

Moragan Warstler has attempted to create an hourly wage subsidy without needing to verify hours.

I realy like the idea of an hourly wage subsidy to replace or at least reduce many of the welfare programs that we currently have.  It seems like it is a far more efficient way to support low earners.   

The problem with implimenting and hourly wage subsidy is that if we had to check and see if a person is working number of hours that they claim it would too difficult to even consider. 

Morgan has come up with a method that might alight incentives in such a way that this problem could be reduced.
An hourly wage subsidy is better than a base income guaranty and an income subsidy like the EITC in that it does less to reduce the  incentive to work than other subsidies. It also is superior to unemployment insurance, food stamps and AFDC and could be much cheaper for the taxpayers.

His basic plan is described at The Money Illusion and below.

The Basic PlanUsing the Paypal and Ebay platforms, the US govt. should establish a Guaranteed Income of $240 per week. Anyone who wants to work registers, receives a Paypal Debit Card, and each Friday at 5PM has their GI deposited.
All GI recipients have their labor weeks auctioned online.
Job offers begin at $40 per week ($1 per hour).  Offers increase by .50 cents per hour ($20 increments).
At $40 per week, there’s no able bodied / able minded person that some rational returns bidder won’t find use for.  The 70 yr old woman in a wheelchair who wants to work to keep busy?  Plenty of teleservice operators have work for her to do from home for $1 per hour.
Note: I solve for the criminally lazy.  Identifying and fixing them is one of my plan’s advantages. I’ll get to it a bit later in the What Abouts plan.So minimum take home cash under GI is $7 per hour or $280.  $240 is the social commitment paid out of taxes and $40 is the winning job offer.
To perfectly align incentives, for each $20 per week offer increase over $40, the govt. gets back $10 of our $240 social commitment, and the auctioned employed keeps $10.
So, on a offer of $100, the govt. is paying $210 and the auctioned receives $310.  A offer of $200, hits the govt. for $160 and auctioned receives $360.
The system ends at $10 per hour.  The maximum offer allowed in the GI Auction is $280 and the govt. is still kicking $120 netting the auctioned $400 per week.
Here is the actual schedule I’m suggesting:
Winning BID        GI paid by govt.              Payday: GI + BID
$40                      $240                               $280
$60                      $230                               $290
$80                      $220                               $300
$100                    $210                               $310
$120                    $200                               $320
$140                    $190                               $330
$160                    $180                               $340
$180                    $170                               $350
$200                    $160                               $360
$220                    $150                               $370
$240                    $140                               $380
$260                    $130                               $390
$280                    $120                               $400
At this point people tend to have lots of questions.  Since I’m writing this to woo progressives let’s starts here.  Companies like WalMart will now  need to pay more than $400 a week, to keep workers from choosing GI.Here are the basic rules:Recipients can choose to take lower paying jobs.
Recipients cannot be made to work outside a radius of 5 miles.  This is a guesstimate.
Bidders must also establish their real identity and deposit money into system before they bid.  No more craigslist roofing scams paying after the fact.
Bidders and auctioned cannot be related or cohabitating.
Bidders must accurately describe the job (check boxes) and cannot add to it after winning bid or require work not checked.
Feedback will be given both ways. If you are familiar with Ebay buyer / seller feedback, you understand what this accomplishes.  It makes it the whole thing work.   If you are not familiar with Ebay, get familiar with it before you state your opinion on this plan.
There are no taxes paid by employer or employee.  There are basic workplace protection requirements. Umbrella insurance is sold on Ebay for folks bringing labor into their home.
Upon meeting some fair criteria, the criminally lazy can be suspended from GI program. Perhaps 6 weeks as first suspension.
Only individuals and incorporated SMBs earning less than $3M per year can bid.   This is not subsidized labor for Fortune 1000.  Under this plan, their labor costs go up.  I am proposing Internet based  Distributism.

After a few days pondering I have begun to doubt weather this plan is better than a basic minimum guarantied income. A person would be able to collude with an employer to get the $240 without working, so why not just write a $200.00 check each week to each citizen and eliminate the minimum wage. 

Often when we talk about people not working they really are working, they are just not working in the taxed economy. They may be working illegally for cash, or they may be working for in-family consumption which is the case for house wives and these people often work quite hard. There is no reason that production for in family consumption should be disadvantaged.  So the advantage over minimum income guarantee may not be big enough to overcome the expense and complication.  

Having now ready the more complete  plan I think the enforcement against employer  employee collusion would be too difficult to enforce and the idea of making the punishment harsher (you propose making hiring people to not work a felony) is not a good approach because of difficulty of enforcement is a bad idea. In fact I think it is might be more effective to make he punish light like maybe a $1,000 fine might make people more likely to turn someone in. We do not want more felons than we already have. 

Another advantage of a guaranteed minimum income is that it could replace Social Security along with AFDC, food stamps, subsidized housing and unemployment insurance.

I like the plan but I am still bouncing it around in my head. All plans to help the poor have downsides, the question in my mind is does the fact that it nudges people to work more overcome the advantages of a income subsidy or the much simpler minimum income guarantee. 

BTW in either case recent immigrants would need to be ineligible for the program.  

I still find the idea is very interesting, perhaps so tweaks can overcome my objection. Anyway thanks for the effort. 

Friday, March 15, 2013

The Incidental Economist on Raising the Eligibility Age for Medicare

This is from The Incidental Economist

Some of us have spent years trying to drive home the point that many Americans haven’t shared in rising life expectancy, making policy recommendations like a rise in the Medicare age a really bad idea;

Medical care is smaller contributor to longevity than life style. So if the goal is to increase longevity, and it seems true that for blue collar workers that the earlier they retire the younger they die (it is though that this id due to the fact that retirement allows for more time to drink, doesn’t this undermine the story a bit? Perhaps postponing Social Security and Medicare eligibility and making harder to get on disability will cause some to work longer and this will increase their longevity.
I think that we can agree that money does not increase longevity in everyone but that some people respond to having more money by engaging in behavior that reduces longevity.
Also although it is surely true that :

Americans haven’t shared in rising life expectancy

Like for example those who are hit by trucks at an earlier age but that is not what he is saying. I think that he is saying that those people of low social economic status are not sharing in the increase is life expectancy and that I doubt. Even if it is true is despite an increase social services and access to healthcare.

 When I was growing up I knew a man who on almost everyday when he did not need to work the next day would drink beer all night and into the next day. If he was off 2 days he would drunk 2 If was off 3 days he would drunk 3 days. days. He would falling over drunk and would sometimes loose the car and his family would have to go look for it. (I for one do not understand how he lived as long as he did). But he would always sober up for work. Now this man managed to give up alcohol altogether and live a long life but that is not true for all  heavy drinkers.  So what would a delay in SS and Medicare do to the life expectancy of such a man?

BTW in Calton a low SES part of Glasgow Scotland the male life expectancy is 54 years.  Clearly these people are drinking themselves to death and access to healthcare is universal in the UK. 

This is from Gene Steuerle's blog "The Government We Deserve"
As it turns out, however, more years of retirement benefits don’t benefit the poor proportionately more than the rich. Yes, the poor have lower life expectancies, but other elements of Social Security offset this factor. A greater share of the poor doesn’t make it to age 62, so a smaller share of them benefit from expansions in years of retirement support. More importantly, those who are poorer are more likely to receive disability payments that aren’t affected one way or the other by the retirement age; hence, again, a significantly smaller share of them benefit from more retirement years. Other regressive elements such as spousal and survivor benefits also come into play for reasons I won’t further explain here. Empirically, these various factors add up in such a way that increases in years of benefits help those who are richer and those who are poorer in ways roughly proportionate to their lifetime incomes.

Wednesday, March 13, 2013

Social Security and the Left's Success

Arnold Kling and Tod Lindberg On the Left’s Success touch on my favorite subject lately that is the strange and illogical structure of Social Security. 

Here is a quite from Tod Lindberg:
The Left shares the suspicion of government power at the heart of classical liberalism, but only up to a point. Individuals need rights to protect them from overweening government intrusion, true, but government power in the proper hands can do good, and indeed the proper hands must wield the power of government in order to do the good of pursuing equality.
Few on the Left are willing to grant that their critics are likewise reasonable — in other words, that the Left has anything to gain from taking its critics seriously. That leaves the Left in search of an explanation for why it hasn’t won over its critics. The Left has three main explanations. The first is ignorance, in the sense that its critics lack sufficient knowledge of how society could be improved and why what the Left seeks would constitute improvement. For this category, there may be hope in the form of remedial education. The second is stupidity; its critics are simply unable to understand superior wisdom when they face it. There is little hope for them, alas. The third is venality — that its critics know better but seek to defend their position of personal privilege anyway. The only way to deal with these critics is to defeat them politically.

And here is Arnold Kling:
 I see this hard-line stance evident in the progressive’s resistance to any suggestion for reducing government spending. You cannot suggest cuts in the short run, because that would mean austerity. You cannot suggest trimming entitlement promises, because Social Security is sacred and control over health care spending is a job for technocrats. 

Speaking of Social Security and the left, I find it interesting that the left believes they must buy off and fool the rationally ignorant voters to keep them from destroying the program.  The belief is that even though it is absurd that SS pay out bigger pensions to the rich they fight to keep the program as it is to by off the voters because they do not trust the voters too keep programs that are targeted at helping the poor.  They also feel the need to fool the voters by hiding half of the tax by making employers right the check so that it does not show up on pay stubs but they like it that half of the tax is visible so they can tell the retirees that you deserve SS because you contributed. (Though to me "contributed" implies volition so to me it is not a contribution buy a tax.)

This makes SS far more expensive that it could be which limits the help that can be done for the poor.  Keep in mind that you can only tax so much before you get to the wrong side of  the Laffer curve.

I think that we can trust Americans more but perhaps I am wrong, seeing that there is more support for Medicare than for Medicaid, though Medicaid makes far more sense than Medicare.

Monday, March 11, 2013

Created Mature

There is an old story around protestant Christian churches that we are such a fractious lot that some church once split over whether Adam had a naval or not. Well a while back I was introduced to an idea that makes whether Adam had a naval or not is a somewhat important issue (though not worth splitting a church over).

The idea is that God created the world in seven days but with a billion years of history in it.  That would mean that every fossil found, every layer of rock in the Grand Canyon is akin to Adam’s navel. Now someone might ask, why would God make the earth that way.  I do not know but it appears from creation that God loves diversity.  Look into the stars, they are all diffident and there are billions of them.  The expanse of the universe goes on for trillions of miles.  The depths of the sea and jungles contain so many creatures diverse and some bizarre.  Look into the smallest things and there seems to be something smaller down to cells and then to molecules and then atoms to then electrons and subatomic particle and who knows for sure that the subatomic particles are not made up of something smaller.  So why not natural history as far back the human mind can conceive and as fare forward as eternity. 

Thursday, March 7, 2013

Mungowitz on the Left Singularity

 Mungowitz links to a  series, by Nick Land on the Left Singularity
A 10-part series, by Nick Land:  On "Dark Enlightenment."  (I've linked to Matt Leslie's presentation of it, which is where I found it, and also because the original links don't work, it seems.)

I do not think that I buy the Left singularity but I has long interested me that the right seems to just forbid people to do things while left Demands that we do certain things.  I.e. it is not good enough for the left that you do no harm to people because of their race but you are to reserve spots for all the races, you are to love all the races not just leave them alone.  Being a Christian I believe that we should love everyone regardless of race but is that something that Governments can and should demand?

Another example the right says do not use recreational drugs or we will punish you (I think that is misguided BTW). The left says that if you do drugs we must treat you. We must treat you and get your children at an earlier and earlier age and socialize them to not use recreational drugs and (to tie it to a recent left policy suggestion) do well in school.

* A singularity, of any kind, is the limit of a process dominated by positive feedback, and thus driven to an extreme. 

* They define the left Singularity as: Increased repression brings increased leftism, increased leftism brings increased repression, in an ever tighter circle that turns ever faster.  This is the left singularity 

Wednesday, February 20, 2013

Looks Like I Am not the Only One Who Finds SS Very Deceptive

So, I am not the only one who finds the social security program very deceptive, here are some excepts of Russ Roberts on the subject:

I am recommending the elimination of the payroll tax. The payroll tax is a regressive tax that falls harshly on the poor. And it is deceptive, an unacceptable characteristic of a tax in a democracy.

Half of the payroll tax appears to be paid by employers. In fact, studies of the payroll tax show that the employer merely lowers worker compensation in response to the tax burden. So workers pay virtually the entire 15%.

Worse, the payroll tax gives the illusion that taxes are "contributions" toward future social security payments. In fact, the payroll tax is used to finance current recipients of Social Security and Medicare along with other government spending such as the war on Iraq and welfare for wealth farmers.

This fools workers into thinking such programs are cheaper than they actually are. This artificially encourages the demand for such programs.

Unlike a temporary rebate of payroll taxes, eliminating the payroll tax will change incentives facing firms and workers. The result will be job creation and increased worker compensation. The permanence of the change raises the effectiveness of that encouragement, again in contrast to a temporary rebate.
But eliminating the payroll tax without reforming the budget and entitlement programs would be irresponsible and would rob the tax cut of much of its kick.The payroll tax currently generates about $700 billion. We will pay for that reduction with three other changes:

 Social Security and Medicare are not viable in their current form given our demographics. For 70 years we have pretended that they are insurance programs. In fact, they are welfare programs that also help the rich in the name of generating support for the system. It is absurd for wealthy Americans to be part of a retirement and health system when they have the wherewithal to take care of themselves without government help.
The system isn't financially bankrupt--yet. But it is intellectually bankrupt. Why should today's workers pay for today's retirees in the expectation that future workers will do the same for them? Why should a poor worker of today send money to a wealthy retiree? There is a name for such schemes and it is not a pretty one. It would be far better to let those who are capable of taking care of themselves do so, while putting aside money for those unable to take care of themselves.

In short, I propose that Social Security and Medicare become means-tested safety nets for the truly needy, rather than a fake pension and insurance program with a hidden welfare component. The commission I appoint will design a gradual transition over time to such a transparent system, allowing today's workers to plan honestly for the future.

One method of transforming Social Security and Medicare will be to make them means-tested and make the welfare components explicit rather than buried and opaque as they are now.

Ultimately, this will allow for lower tax rates. Those expected lower tax rates will help encourage current spending because consumers will not have to worry about future tax increases.
I think that I hate hate Social Security so much because when I think about the system I feel like the politicians think that they are scamming me.  I picture them laughing at us voters.  In a lot of ways SS less bad than many programs because it is mostly a transfer from Peter to Peter but it aggravates me because it makes me think that they think I am stupid.  

Also it is a very expensive scam.  You can only tax people so much or they will hide their income and so you cannot think that SS is because the FICA tax covers it.  It should be reformed. 

Endurance Basketball

Endurance basketball rules:

Same rules as regular basketball except the following:

1.  Limited substitution once a player checks out of the game he is not allowed to return. 
2. The tree point shot is eliminated.  The 3 point shot tends to slow down the game because it favors the setup offense.

3. The count will be made 10 feat longer between the baskets and 5 feet wider.  

4. Fouls not in the act of shooting will result in possession of the ball and in the act of shooting will result in one foul shot and possession of the ball.  Once in bonus all fouls not in the act of shooting will result in one foul shot and possession, shots in the act of shooting will result in 2 shots and position of the ball. 

5. Charging will be eliminated except in the extreme where the offensive player is deliberately running over the defender.  Offensive fouls will still be called for grabbing, hitting and hooking the defenders. 

I hope that this will produce a faster paced, more artful, exciting game than the standard game of basketball. 

Monday, January 28, 2013

Is Life Expectancy Falling for One Group of Americans?

Americans. Harold Meyerson is agog: "Clearly, they missed the recent study in Health Affairs which found that the life expectancy of white working class men fell by three years from 1990 to 2008, and that of white working class women

It looks like disturbing data but there is a simple huge flaw.  It looks from the chart like life expectancy for some group of Americans is falling, but since the group shrunk rapidly over the period of the study it is not showing what the bloggers say it shows.  

It may come as a bit of shock to some that people at the bottom of society by any of the usual measures (education, wealth, income) have lower life expectancy than those at the top but social scientist have known this for a long time (and note that correlation is not causation). So since so many fewer people fail to graduate high school today those who still do not graduate are from a lower group than than in the past.  To clarify what he is actually saying is: Since the bottom 5% today are living less long than the bottom 25% lived 25 years ago life expectancy is not increasing for all groups.

Now I would bat that Kevin Drum knows all this but you can shock people with stuff like this and sells ads and changes people's political positions.  

BTW One reason that someone would not gradate high school today would be very poor health (social science is not easy).

Friday, January 25, 2013

State Universities and Taxpayer Interest

Arnold Kling has a post about cutting administration to make college more affordable. 
Which lead me to post the following thoughts:

In the University world athletics teams are marking, incredibly schools get more applications after a good football season, so that leads to the question why does a state school subsidized by the taxpayers need to market! 

Also a personal issue:

I live in the city where the University of Florida is and son got 3 B’s in high school and all the rest were A’s and he scored 1380 on the Math and English SAT portions he was reject by the University of Florida (UF) but was accepted by the University of Central Florida (UCF). Since he needed to move and get an apartment to go to UCF, were he could have lived at home had he gotten in to UF, it will cost me $50,000 extra to send him to college. He is also further away which weakens family bonds. So I ask how does it benefit the Florida taxpayers to have a difference in who UF and UCF will accept? My thought is that it benefits the administration of UF to become a prestigious school but does not benefit the tax payers.

Wednesday, January 23, 2013

Why the High and Growing Level of Social Securty Spending is a Problem

It has been a mantra on the left that the phrase “Social Security and Medicare” is sophistry that attempts to put a tiny long-range problem, Social Security, next to an enormous one

If you believe that you can only tax people so much (that is without adding a new tax like a VAT and a VAT is problematic under the constitution), the fact that SS absorbs the whole FICA tax is a problem. A sensible reform like paying the same amount (say $800/month) to all retirees could save a lot of money without hurting the needy. SS reform is needed because it is too expensive not because it spends much more that the FICA tax brings in. There is really just one big bucket not separate buckets for separate programs. 

Now we elected a CEO of SS and he set the tax and the payout that would be different but we don't.

Tuesday, January 15, 2013

Whenever They Run Out of Money, Politicians Claim It'll Cause the Most Popular Programs (Teachers, Police, Fire) to not Get Paid

If all the administration does is pay debt interest and make already committed payments and pay salaries without making new purchases/commitments for payment, then they can stay under the debt ceiling indefinitely. All of that committed spending doesn't add up to the tax receipts and other income the federal government has coming in. What's already contracted with individuals and companies is covered. New spending is what would have to go. If the federal government starting selling their accumulated gold, that would give them a $200,000,000,000 cushion to work with. If they started selling federal land that's not currently in use for a park/military base/etc... they could raise another few trillion or so. At the very minimum, the department of the Interior could stop blocking oil and gas leases that bring in revenue and make a "mint" from that. Lots of options out there for additional revenue besides taxes.

Thomas Sewell is a little more partisan strident than I am. I think that almost all politicians act in this way. Considering the incentives that politicians face they act logically.  If they took higher moral ground they would greatly lower their chances of getting elected.

If we could unbundle Government programs it might help but we can't.  

Tuesday, January 8, 2013

The Upside of Government Default

There is a good chance that the U.S. government will be forced to default on its explicit and implicit promises within the next few decades. Fortunately, the state government experience of the 1840s suggests that this may provide the best and most durable long-run solution.
Considering the incentives that politicians are faced with and the ease of demagoging a rational ignorant electorate some kind of federal Government default might be the best option.  It would make it much more difficult for Governments to borrow money forcing balanced budgets.

Monday, January 7, 2013

The Debt Ceiling and Trillion Dollar Coins

I was asked by a friend about the trillion dollar coin scheme is a scheme and here is my answer:

The trillion dollar coin scheme is a scheme to get around the debt ceiling.  The constitution allows the treasury to mint coins, so the idea is to mint a trillion dollar coin which lowers that federal government’s indebtedness by a trillion dollars thus avoid another debt ceiling fight.  

It is my opinion considering the incentives that politicians will borrow and spend money as long as they can do so without major short term negative consequences.  That is why I think an eventual default might be the best thing, because then no one would lend them money and so they would have to run balanced budgets.  As Jeffrey Hummel has said default would be a balanced budget amendment with teeth.  I do not invest based on such things, the way I see it is that companies can do fine even while the Fed Government defaults not only that but we do not know when the real problems will start or will be the best investment at that time.  Also I am holding an appropriate amount of stock in companies outside the USA which seems prudent at al times.

Further IMHO the government does not need all the money that takes in now, I think that they could cut defense spending in half and not endanger the country’s defense, cut SS by 40% and not hurt needy retirees and cut Medicare 30% without hurt the health of the elderly and cut education (mostly not the federal Government but state and local but still) by about 50% with hurting education.   

Friday, January 4, 2013

Taxes USA vs Canada

Alexei Sadeski on Effective AND nominal rates USA vs Canada.
Income: 38
State Income: 10
Cap Gains: 36
Corporate: 46
Estate: 40

Income: 29
Provincial Income: 15
Cap Gains: 22
Corporate: 27
Estate: 22

Because Canada has such low Capital Gain and Corporate rates, high net worth individuals are able to lower their tax liability dramatically by funneling income through corporations. In the US, this is not as useful – the US has one of the highest corporate tax rates in both the world and OECD.

Thursday, January 3, 2013

More Reasons to Tax Consumption Rather that Income.

Income is complicated.  Imagine 2 people earn $100,000 both are taxed the same amount and one guy spends the full net amount, the other invests half of the net.  Over 20 years the invested money doubles but inflation eroded the final value of the money.  Why is the second guy taxed so much more even on the part that is inflation.  It is better to spend your money earlier. there is dis-utility to waiting. It gets very complicated to tax income because of things like inflation capital gains, dividends and interest.  Consumption is easier to define.

Imagine 2 people one who earns $40,000/year right out of college with modest income growth and one (like me BTW) who earns close to minimum wage but then has one big year where he earns 250,000 in one year why should the latter pay more in taxes.  A progressive consumption tax would make this less likely.