Noah Smith, Bernard Sanders and Poverty in Japan

Noah Smith writes a pertinent article but seems to miss a big point:

Japan's Growing Poverty Defies Glib Explanations

The fact of growing poverty in Japan shows that poverty is not causing the things Democrats say are caused by it, but that a third factor is probably causing both relatively low income in the USA and the problems associated with the same.

Once again I will link to a story about he poorest country in the USA and point out that you see none of typical problems there.

And to this about a guy who lives in San Fransisco on $7,000/year  he evidently needs no living wage.

The Amish and Mennonites have low income too, without the problems associated.

These show that it is not about money or schooling, considering the groups above like to drop out of school early, though it might be about education (most of which occurs out of school).

I know some guys who so much more desired to sit home and drink or get high to working that more income would have negative social effects. I would like it if the country worked a little better for them but the solutions Democrats propose do not fit with that purpose.

I also know some people who manage to get along well on very little and so who do not get along very well on much more.

I have known folks on assistance who really needed it and benefited from it, so I am not all one way but let's not be naive.

The whole subject is fascinating to me.

BTW Bernie Sanders talks at lot about taking money from the rich and spending it on the middle-class and much less about spending it on the relatively poor, is that because he recognizes the above points? Maybe it is not just that they do not vote.

Robert Frank on Luck and Dilligence

Robert Frank on Luck and Diligence

I like Robert Frank and I want to agree with him and I like a progressive consumption tax but I think he is badly off on Education and infrastructure.

I just read that USA infrastructure is good, better than it has ever been.

AND middle of the pack for the industrialized countries. That matches with my experience also. How much does the U.S. spend on infrastructure compared to the rest of the world?

It's in the middle of the pack. Between 2001 and 2011, annual public investment averaged 3.3 percent of gross domestic product, according to the Organization for Economic Cooperation and Development. The average OECD nation spent 3 percent of GDP over the same period.

AND anyway transportation is only 3% of the federal budget doubling spending on it would not be that big a deal.

AND further more, roads should be paid for with the gasoline taxes and airport with usage fees to the airlines.
  Frank and I really disagree on education. I think school spending should be cut in half. Spending above 1965 levels seems to not have much effect.


Related excerpt:   

The achievement decline cannot be blamed on inadequate spending. Between 1960 and 1995, annual per pupil spending in the United States rose from $2,122 to $6,434 in inflation-adjusted 1995 dollars.3 By 1999, the United States was spending an average of $7,397 per K–12 student. Spending in other industrialized countries averaged $4,850. Only Switzerland, at $8,194 per pupil, spent more than the United States.4 In industrialized countries, student scores on the Third International Mathematics and Science Studies tests are uncorrelated with spending. Though per capita U.S. spending is high and the academic achievement of its fourth-graders is above average, its eighth-graders score in the middle of the pack, and twelfth-grade achievement is consistently among the lowest of the countries studied.
Even Franks example:
and if they do that and I don't do that, then my kid goes to the school with a metal detector out front.

That is bad students not bad schools. I went to schools with metal detectors and they were good schools with some bad students. You cannot get away from bad students! In the "bad school" that I went to teachers would bend over backwards to help any student who showed a little interest I think because so few students did.

Here is a related blog post by me.
 
Also I think we could get to a progressive consumption tax by removing the cap on the IRA and removing the penalties for early withdrawal and taxing people on any earnings not put in the IRA plus any withdrawals from the IRA.

Finally we USAers are a great and wild and diverse lot. We are not all northern Europeans and the northern European model does not even work so well in Italy, Spain, Portugal and Greece. My mothers family is from Sicily and they brought with them a little of Sicilian attitudes and paranoia. Those attitudes seems to hang on through the generations. Those types of attitudes make the northern European model not work. As it seems to not even work so well for Arabs in Belgium and France.

I say considering the mix of people we have the USA does incredibly well. Much better than the Northern European model would work here. Continued immigration may eventually make it fail even in Northern Europe.

The Trouble with the Minimum Wage

It looks like companies that are effected by a rise in the minimum wage, mostly being in competitive industries, raise their prices enough to cover almost the entire difference on labor costs. That means that the disemployment effects are due to people a little buying less from those businesses. therefore the disemployment effects are very small.

Never the less I am against minimum wage because I believe that even a very small increase in unemployment is very bad easily outweighing the benefit to those whose wages increase. I believe that the nonmonetary benefits of having a steady job are large. Also many people already work for less that minimum wage so...

If you, Like Trump, Are Concerned About Trade with China and Mexico there is Something You Can Do

If you, like Donald Trump are concerned about trade with China and Mexico and the trade deficit there is something you can do. You can buy VIGI. VIGI is an exchange traded stock fund with very low fees that invests in foreign Dividend Achiever stocks. The expense ratio is only one quarter of one percent so Wall Street is not getting much of a cut.

(To qualify as a Dividend Achiever, a company must have increased its dividend payout each year for the last 10 or more consecutive years and meet certain liquidity requirements.)

Why will this work?

When Foreigners buy more assets in the USA than USA citizens buy assets in foreign countries they are buying less goods and services and that is what produces a trade deficit. Essentially they sell goods and services to us and use some of the many that they make to buy assets.



So the deficit is a result of foreigners buying more US assets (stocks, bonds, T-bills, etc.) than US citizens buy foreign assets. The balance of payments is always nearly equal so if we buy more assets they will have to buy more goods and services. (There is some cash held outside the USA but it is a small amount and most of it is needed long term and it is not significant and is eroded by inflation.)

Interestingly, though foreigners own more assets in the USA (stocks, bonds, T-bills etc.) than US citizens own in foreign countries, US citizens receive more returns (dividends and interest) than foreigner receive on US assets. This shows that foreigners have been bidding up the price of US assets.

If you think that you cannot afford to buy even a little bit of stock ready this.

Bernie Sanders and the AMA

It is mind boggling to me that the likes of Bernie Sanders trot around the country talking about the high cost on healthcare and education (2 state issues BTW) but he never talks about the what is driving the costs up.

He would rather focus on talking about getting the very rich to pay for them rather than reducing the costs but the very rich do not consume enough for you to move sufficient consumption from them to everyone else to make a huge difference. He is a con artists like almost all politicians, he is probably cosy with the AMA.

BTW The more the Federal government pays for healthcare and education the more the states are motivated to regulate on behalf of the in state providers, pushing up costs.

One of the Problems with Federal Government Provision of Health Insurance and Schooling in the USA

Here in the USA health and education are state Government issues not federal issues.

The state governments regulate the healthcare industry and run the schools including at the University level, so if he federal Government pays for most of the healthcare and education there is an incentive for the states to do what they can to push up costs because most of the money comes from other states.  And what do know, surprise, surprise, that is what we see. USA spending is much more than other countries on healthcare and schooling.

To address the problem of high costs of schooling and healthcare at the federal level the President and congress need to take over the regulating of healthcare and take over the running of the schools. Alternatively they could mandate that the states provide healthcare and college free and provide any funding proportionally to the population.

This would require that the Constitution be amended.

A Reply to Dean Baker on Social Security

Dean Baker objects to means testing Social Security here. 

 

But, why not do the sensible thing and give all citizens above some age the same benefit? If I understand their Government speak correctly, that is what the Government part of the pension system in Australia does.

Social Security is already progressive see here, so why try to keep the voters deluded, thinking it is not welfare?

You could set the payment at $200/week/person, that would give the neediest a raise. I think this would reduce the total cost by about 30% which would mean that you could lower the tax allowing the citizens to spend that money when they choose to rather than in their older years. My Grandmother told my father spend the money when you are young and can still enjoy it.

Social Security is welfare program that was disguised as a Ponzi scheme to make it past the voters. Time to admit to them that it is and has always been a welfare program.