The tax code should have an income tax exemption for veterans, so $600 for each year of service up to a maximum of 5 years. Often veterans give up more than they realize. The people that don't serve are often further along in their careers when veterans begin their non-military working career - a head start that may make it almost impossible for the Veteran to ever make up the lifetime income gap. That sacrifice should be recognized in the tax code.
We should raise taxes on the wealthy, in particular stop encouraging rampant speculation and asset bubbles with low capital gains taxes. But we should also bring back income averaging, so those people who first hit the big strike can keep more of the income than those whose high income is a long term phenomanen.
Any organization that is granted limited liability should have to abide by a salary standard - mean, median and Mode - across the range of all employees.
Saturday, December 3, 2011
Wednesday, November 30, 2011
Labor relations shouldn't be adversarial
Labor relations in the US are built on an adversarial basis. Labor against management. This seems counterproductive to me. In virtually every other aspect of business we strive to build teams, not encourage adversarial relationships. It is sort of like a football coach on a road trip pitting his linemen against his ball handling players to negotiate who sleeps in a motel and who sleeps on the bus, and then expecting them to go out and play as a team in the game.
We didn't develop an adversarial system intentionally. Nobody figured out the best way to encourage productivity and competitiveness, then devised a system to make it work. It is an accident of history. Business people were allowed to exploit men, women and children for competitive advantage. When the exploitation got really bad, the workers rebelled and formed unions to protect themselves.
Unions are not a really a good solution for the problem of worker exploitation. Unions have a history of abuse by their management, they have a history of being oblivious to the health of the underlying enterprise, and many people don't like be forced to join a union to work.
We should use tax policy to encourage companies to organize themselves as teams in a way that makes unions irrelevant. Create a qualification mechanism - if the payroll structure spreads the company wealth fairly (mean, median and Mode) and grants employees's a say on working conditions, the company can qualify to pay a lower corporate tax rate.
Qualifying for a lower tax rate will be very attractive to investors, since it makes a bigger pie available for them to take a piece of, and a little side benefit of qualification is it will reduce the ability of CEO's to use their power over the Corporation to extract excessive salaries and golden parachutes.
We didn't develop an adversarial system intentionally. Nobody figured out the best way to encourage productivity and competitiveness, then devised a system to make it work. It is an accident of history. Business people were allowed to exploit men, women and children for competitive advantage. When the exploitation got really bad, the workers rebelled and formed unions to protect themselves.
Unions are not a really a good solution for the problem of worker exploitation. Unions have a history of abuse by their management, they have a history of being oblivious to the health of the underlying enterprise, and many people don't like be forced to join a union to work.
We should use tax policy to encourage companies to organize themselves as teams in a way that makes unions irrelevant. Create a qualification mechanism - if the payroll structure spreads the company wealth fairly (mean, median and Mode) and grants employees's a say on working conditions, the company can qualify to pay a lower corporate tax rate.
Qualifying for a lower tax rate will be very attractive to investors, since it makes a bigger pie available for them to take a piece of, and a little side benefit of qualification is it will reduce the ability of CEO's to use their power over the Corporation to extract excessive salaries and golden parachutes.
Saturday, November 19, 2011
The Middle Way
Surveying the last 200 years of economic history the single most dominant theme is the theoretical battle between capitalism and collectivism.
Largely unfettered Capitalism, following the theoretical underpinnings of Adam Smith that individual self interest was the most efficient economic engine, ruled the 1800's (albeit often with a huge dose of state support). Growth and development often bordered on manic, but it chewed up workers with little regard for their welfare.
The sheer brutality of its treatment of workers provoked the worker backlash that produced the communist revolutions of the early part of the 20th Century that led to the biggest chunk of the worlds population living under despotic communist regimes for much of the 20th Century.
In the United States the worker backlash was channeled into laws to protect workers that moderated the tendency toward exploitation that the markets produce. While much of the world was turning communist we enacted workers compensation laws, minimum wage laws, payroll laws, worker safety laws and laws to give labor unions more bargaining power in the early part of the 20th century. That calmed the worker unrest, but didn't address the tendency of unfettered capitalism to speculate itself into a crisis, so our unfettered free markets let the scramble to get rich obscure good judgment and we led the world into the stock market crash of 1929 and the subsequent depression. After the stock market blew up in 1929 and we sank into the great depression, we enacted a series of laws to put some limits on unfettered capitalism. This mix of capitalism with state regulation (which also occurred in most other western democracy's) proved to be much more conducive to growth than the communist state planning approach. For the rest of the 20th Century we enjoyed a long period of economic stability and growth.
But late in the 20th Century, probably because times were good for so long, people drifted away from labor unions and capitalists chaffing under the government restrictions put in place after the 1929 Stock Market collapse began to sound sensible to voters. When the Soviet Union collapsed in 1989, the true believers in unfettered free markets declared the total victory of Capitalism over collectivist notions and over the next decade and a half dismantled much of what had been enacted after the 1929 crash. The unfettered market did what it always does, lost sight of common sense in the scramble to get richer and richer and in 2007-08 we led the world economy into disaster once again.
So now we are back in what will probably be years of high unemployment and slow growth, and are seeing worker unrest again. The Occupy Wall Street protests in the US, and workers unrest around the world are sort of aimless shouts of pain at this point. Will they coalesce into some pendulum swing toward a collectivist future in some countries?
We need to hash out a middle way. A coherent body of theory that recognizes the ability of capitalism to organize people and generate growth, but also recognizes that the human emotions that drive capitalism sometimes need to be restrained and channeled.
The notion of a middle way is timeless, from Aristotle teaching moderation in all things, to traditional Chinese culture based on yin and yang, the balance of opposites. As individual voters we need to cultivate more recognition of Yin and Yang and try not to allow the excesses of the last two decades toward free markets push us into excesses in collectivism.
Largely unfettered Capitalism, following the theoretical underpinnings of Adam Smith that individual self interest was the most efficient economic engine, ruled the 1800's (albeit often with a huge dose of state support). Growth and development often bordered on manic, but it chewed up workers with little regard for their welfare.
The sheer brutality of its treatment of workers provoked the worker backlash that produced the communist revolutions of the early part of the 20th Century that led to the biggest chunk of the worlds population living under despotic communist regimes for much of the 20th Century.
In the United States the worker backlash was channeled into laws to protect workers that moderated the tendency toward exploitation that the markets produce. While much of the world was turning communist we enacted workers compensation laws, minimum wage laws, payroll laws, worker safety laws and laws to give labor unions more bargaining power in the early part of the 20th century. That calmed the worker unrest, but didn't address the tendency of unfettered capitalism to speculate itself into a crisis, so our unfettered free markets let the scramble to get rich obscure good judgment and we led the world into the stock market crash of 1929 and the subsequent depression. After the stock market blew up in 1929 and we sank into the great depression, we enacted a series of laws to put some limits on unfettered capitalism. This mix of capitalism with state regulation (which also occurred in most other western democracy's) proved to be much more conducive to growth than the communist state planning approach. For the rest of the 20th Century we enjoyed a long period of economic stability and growth.
But late in the 20th Century, probably because times were good for so long, people drifted away from labor unions and capitalists chaffing under the government restrictions put in place after the 1929 Stock Market collapse began to sound sensible to voters. When the Soviet Union collapsed in 1989, the true believers in unfettered free markets declared the total victory of Capitalism over collectivist notions and over the next decade and a half dismantled much of what had been enacted after the 1929 crash. The unfettered market did what it always does, lost sight of common sense in the scramble to get richer and richer and in 2007-08 we led the world economy into disaster once again.
So now we are back in what will probably be years of high unemployment and slow growth, and are seeing worker unrest again. The Occupy Wall Street protests in the US, and workers unrest around the world are sort of aimless shouts of pain at this point. Will they coalesce into some pendulum swing toward a collectivist future in some countries?
We need to hash out a middle way. A coherent body of theory that recognizes the ability of capitalism to organize people and generate growth, but also recognizes that the human emotions that drive capitalism sometimes need to be restrained and channeled.
The notion of a middle way is timeless, from Aristotle teaching moderation in all things, to traditional Chinese culture based on yin and yang, the balance of opposites. As individual voters we need to cultivate more recognition of Yin and Yang and try not to allow the excesses of the last two decades toward free markets push us into excesses in collectivism.
Tuesday, November 15, 2011
History has made Republicans reactive
Historically in my lifetime there have always been more voters registered Democratic than Republican. I don't know how far back in history that situation has existed, but it certainly has been the case in the last 60 years.
Ideologically I have always understood that Republicans champion individual self responsibility and government fiscal responsibility. Those are goals that I certainly think are basic and fundamentally required to formulate good public policy. But as I contemplate political history for the last thirty years I find Republican fingerprints on virtually all the really major policy mistakes we are currently trying to clean up.
I have began to understand, I think, why Republicans have made such major mistakes in public policy matters, from the Reagan tax cuts in the 1980's that first exploded the deficit, to the Republican changes in tax law and financial regulations laws that led to the great recession, to the Bush II tax cuts and changes in Congressional rules that redirected the trajectory of the deficit skyward early in the last decade.
Republicans have become reactive. Because there are more Democrats, Democrats controlled the agenda. Between 1955 and 1980 Democrats controlled both houses of Congress - the period when most the current Republican political leadership, and most current voters, were developing their political ideas. So to the extent there were good policies to be enacted, Democrats got to claim them. Republicans were left trying to distinguish themselves from Democrats by looking for mistakes and hammering on them. They become so focused on being something different than Democrats they picked up ideas that are contrary to Democratic positions without really critically thinking through the consequences.
The first example is the Reagan tax cuts in the early 1980's. Republicans had found a chink in the Democratic electoral armor - everyone likes paying less taxes. They found an economic theory that would allow them to make tax cuts without making sufficient cuts to offset the loss of revenue - supply side economics, the theory that giving more money to rich folks would cause it to "trickle down" to the rest of us. Mr Reagan sold the theory to American voters with slogans like "a rising tide raises all boats". I voted for Ronald Reagan, and his willingness to embrace supply side was one of the things that turned me into Democrat. I respected Mr. Reagan, and still do. I believe he had the best intentions, and I think he was masterful in his handling of the Soviet Union. But even at the time I had a hard time understanding how a "conservative" could build his view of how to build an economy on an Ivory Tower theory that seemed to contradict history, human psychology and common sense. How could cutting government revenues without cutting expenses produce anything other than a deficit?
Immediately after the Reagan Tax cuts the deficit skyrocketed. And now a couple decades later the "rising tide" data is in. To continue the rising tide analogy, the rising tide only lifted the yachts, the rest of the boats are now submarines. Virtually nothing trickled down over the last 25 years.
I think what happened was Republicans rejected the Keynesian economic theories of the time that tolerated small deficits because it was associated with Democrats. Republicans had been out of power so long they were in an emotionally reactive mode where they latched onto something, not because it was sensible, but because it was different, and it allowed them to promise voters tax cuts. Sort of like giving out candy to curry favor with the kids. It is effective but not good for the kids in the long run.
In foreign policy George Bush II came into office in 2001 determined to do foreign policy differently. The Clinton years had been marked by worldwide engagement, largely avoiding muscle flexing in favor of soft power. We were highly admired around the world, Mr Clinton helped broker the (hopefully) final resolution of the problems between Ireland, Northern Ireland and England, and came close to resolving the Palestinian issue. Although this approach seems to me to be carrying forward the policy of the great Republican Teddy Roosevelt (walk softly and carry a big stick) Republicans had predictably taken an anti-Democrat stance, arguing we should be tough guys. Mr Clinton was to nice.
Mr. Bush came into office with the notion we were the biggest kid on the block and everyone else needed to respect that. He made a point of snubbing the Palestinians, basically turned his back and stopped all efforts to solve the problem. The rest of the worlds view of the US began sinking. Then 9/11 happened and the world extended their support and sympathy, but it evaporated as we threw our weight around, and then invaded Iraq. By the time Mr. Bush left office in 2008 Iraq had become widely viewed as a terrible mistake and the rest of the world disliked and distrusted us. Mr. Bush seems to be a likable guy, whom I believe acted from good, if mistaken motives. As I try to understand how he, with all the assets and knowledge afforded a President, could have made this kind of mistake, I find myself back to the notion that people emotionally attached to the Republican party have to be the anti-Democrat. They have to find theories that distinguish them from Democrats, and become so focused on Democratic flaws they don't allow themselves to question the sensibility of the policies they are pushing.
In economic policy the Republicans obsession with being "not democrat" gave us the Bush II tax cuts. The data was already trickling in that trickle down theory did not in fact work and the Reagan tax cuts had blown up the deficit, but Reagan's tax cuts had worked wonderfully politically. So even though we were engaged in two wars, Mr Bush and the Republican Congress went back to supply side theory - big tax cuts, no effort to insure spending would match the loss of Revenue.
Now here we are, three years into the economic doldrums, carrying a huge debt load and Republicans are still obsessed with being the anti-Democrat, espousing proposals that history, economic data and common sense notions about human behavior say are almost certain to make things worse.
Voters need for Republicans to stop obsessing about distinguishing themselves from Democrats and start formulating policies with an eye to history, economic data and common sense about human behavior. The fundamental Republican message is important but has been ill served by their reactive policies of the last three decades.
Ideologically I have always understood that Republicans champion individual self responsibility and government fiscal responsibility. Those are goals that I certainly think are basic and fundamentally required to formulate good public policy. But as I contemplate political history for the last thirty years I find Republican fingerprints on virtually all the really major policy mistakes we are currently trying to clean up.
I have began to understand, I think, why Republicans have made such major mistakes in public policy matters, from the Reagan tax cuts in the 1980's that first exploded the deficit, to the Republican changes in tax law and financial regulations laws that led to the great recession, to the Bush II tax cuts and changes in Congressional rules that redirected the trajectory of the deficit skyward early in the last decade.
Republicans have become reactive. Because there are more Democrats, Democrats controlled the agenda. Between 1955 and 1980 Democrats controlled both houses of Congress - the period when most the current Republican political leadership, and most current voters, were developing their political ideas. So to the extent there were good policies to be enacted, Democrats got to claim them. Republicans were left trying to distinguish themselves from Democrats by looking for mistakes and hammering on them. They become so focused on being something different than Democrats they picked up ideas that are contrary to Democratic positions without really critically thinking through the consequences.
The first example is the Reagan tax cuts in the early 1980's. Republicans had found a chink in the Democratic electoral armor - everyone likes paying less taxes. They found an economic theory that would allow them to make tax cuts without making sufficient cuts to offset the loss of revenue - supply side economics, the theory that giving more money to rich folks would cause it to "trickle down" to the rest of us. Mr Reagan sold the theory to American voters with slogans like "a rising tide raises all boats". I voted for Ronald Reagan, and his willingness to embrace supply side was one of the things that turned me into Democrat. I respected Mr. Reagan, and still do. I believe he had the best intentions, and I think he was masterful in his handling of the Soviet Union. But even at the time I had a hard time understanding how a "conservative" could build his view of how to build an economy on an Ivory Tower theory that seemed to contradict history, human psychology and common sense. How could cutting government revenues without cutting expenses produce anything other than a deficit?
Immediately after the Reagan Tax cuts the deficit skyrocketed. And now a couple decades later the "rising tide" data is in. To continue the rising tide analogy, the rising tide only lifted the yachts, the rest of the boats are now submarines. Virtually nothing trickled down over the last 25 years.
I think what happened was Republicans rejected the Keynesian economic theories of the time that tolerated small deficits because it was associated with Democrats. Republicans had been out of power so long they were in an emotionally reactive mode where they latched onto something, not because it was sensible, but because it was different, and it allowed them to promise voters tax cuts. Sort of like giving out candy to curry favor with the kids. It is effective but not good for the kids in the long run.
In foreign policy George Bush II came into office in 2001 determined to do foreign policy differently. The Clinton years had been marked by worldwide engagement, largely avoiding muscle flexing in favor of soft power. We were highly admired around the world, Mr Clinton helped broker the (hopefully) final resolution of the problems between Ireland, Northern Ireland and England, and came close to resolving the Palestinian issue. Although this approach seems to me to be carrying forward the policy of the great Republican Teddy Roosevelt (walk softly and carry a big stick) Republicans had predictably taken an anti-Democrat stance, arguing we should be tough guys. Mr Clinton was to nice.
Mr. Bush came into office with the notion we were the biggest kid on the block and everyone else needed to respect that. He made a point of snubbing the Palestinians, basically turned his back and stopped all efforts to solve the problem. The rest of the worlds view of the US began sinking. Then 9/11 happened and the world extended their support and sympathy, but it evaporated as we threw our weight around, and then invaded Iraq. By the time Mr. Bush left office in 2008 Iraq had become widely viewed as a terrible mistake and the rest of the world disliked and distrusted us. Mr. Bush seems to be a likable guy, whom I believe acted from good, if mistaken motives. As I try to understand how he, with all the assets and knowledge afforded a President, could have made this kind of mistake, I find myself back to the notion that people emotionally attached to the Republican party have to be the anti-Democrat. They have to find theories that distinguish them from Democrats, and become so focused on Democratic flaws they don't allow themselves to question the sensibility of the policies they are pushing.
In economic policy the Republicans obsession with being "not democrat" gave us the Bush II tax cuts. The data was already trickling in that trickle down theory did not in fact work and the Reagan tax cuts had blown up the deficit, but Reagan's tax cuts had worked wonderfully politically. So even though we were engaged in two wars, Mr Bush and the Republican Congress went back to supply side theory - big tax cuts, no effort to insure spending would match the loss of Revenue.
Now here we are, three years into the economic doldrums, carrying a huge debt load and Republicans are still obsessed with being the anti-Democrat, espousing proposals that history, economic data and common sense notions about human behavior say are almost certain to make things worse.
Voters need for Republicans to stop obsessing about distinguishing themselves from Democrats and start formulating policies with an eye to history, economic data and common sense about human behavior. The fundamental Republican message is important but has been ill served by their reactive policies of the last three decades.
Wednesday, November 9, 2011
Fair taxes - An income disparity hypothetical
The media chatter about the gap between the wealthiest 1% and the rest of us continues unabated, particularly since the CBO confirmed how much the gap has grown in the last 30 years or so. We hear some folks talking about taxing the rich, other folks talking about class warfare, but very little real problem solving. No one I have heard is asking how the gap between the very rich and the rest of us over the last twenty years has affected our economy.
From the little bit of evidence I have seen it appears that in developing economies big income gaps can help generate faster growth, but in developed economy's big income gaps retard growth.
This makes sense to me. In a developing economy people have a lot more needs than they do money. So the consumer market is small but bursting with potential to grow rapidly. Allowing those with an entrepreneurial bent to gather wealth provides capital to pick up the good ideas and run with them. We are seeing this happening across the parts of the world we have traditionally thought of as undeveloped nations.
But in a developed economy we have more money than needs. I heard a statistic the other day to the effect that studies show that most people in the United States, once they have about $70,000 a year in household income, don't really want to work longer hours to try to make more money. I assume $70,000 reflects the point where people have what they need plus some extra, so lets assume $70,000 is the US threshold for a comfortable life. It is the point where you spend nearly all of your income, but there isn't much you need that you can't afford. Unlike a developing economy where they need everything, in the developed economy many of us have all we need.
Since economies are mind bogglingly complex, I find a simple hypothetical can help me grasp fundemental relationships quickly. Here is a little hypothetical about income distribution that popped into my head.
Operating on the assumption the $70,000 figure quoted above is the point where people in the US have their primary wants and needs filled, suppose the net income available to Podunk, a town of 10 people, is $700,000. If all 10 Podunkians get $70,000 of that income (i.e. no disparity in income) the the full $700,000 of income available to the society is circulating around supporting the economy of Podunk as people spend their income.
But suppose Joe finds a way to take home $200,000 of the $700,000 income in Podunk. The other 9 persons take home the remaining $500,000 ($55,555 per person, down about $14,500). Even if Joe has more extravagant wants and needs and spends twice as much, $140,000, as anyone else in Podunk , that still leaves Joe with $60,000 in extra income. So he looks for somewhere to invest it. But Podunk now has $60,000 less money in the economy, and the other 9 Podunkians are now $14,500 poorer, so Joe can't start a new business, because there are no Podunk consumers with the money to buy new products. So what does Joe do? He probably just pays more to buy up local property. He inflates the value of some asset local asset without adding any real value.
This sounds really familiar to me. Stock prices have been inflating and deflating precipitously, but overall for the last 15 years stock prices have spent most of the time at higher valuations than the historical average would suggest were prudent. Gold prices are inflated, house prices are inflated. In short, we have lots of investment capital scrambling around to make some money, and big corporations sitting on huge piles of money, but few people willing to start new businesses, or expand existing businesses in the US because US consumers don't have the money to support new ventures. The consumer market in the United States has been shriveled by the wealthiest people taking a bigger and bigger slice of the pie. We disguised this result for years (and drove the world economy) by consumers taking on a bigger and bigger debt load, but that bubble has also popped.
The chattering political class is all abuzz about job creation, and how can we get people back to work. I suspect the US is going to be in the economic doldrums until more of the income this country generates starts making it into the hands of the regular folk that spend most of what they earn, and less income goes to the people who have everything they could possibly need or want - except more.
From the little bit of evidence I have seen it appears that in developing economies big income gaps can help generate faster growth, but in developed economy's big income gaps retard growth.
This makes sense to me. In a developing economy people have a lot more needs than they do money. So the consumer market is small but bursting with potential to grow rapidly. Allowing those with an entrepreneurial bent to gather wealth provides capital to pick up the good ideas and run with them. We are seeing this happening across the parts of the world we have traditionally thought of as undeveloped nations.
But in a developed economy we have more money than needs. I heard a statistic the other day to the effect that studies show that most people in the United States, once they have about $70,000 a year in household income, don't really want to work longer hours to try to make more money. I assume $70,000 reflects the point where people have what they need plus some extra, so lets assume $70,000 is the US threshold for a comfortable life. It is the point where you spend nearly all of your income, but there isn't much you need that you can't afford. Unlike a developing economy where they need everything, in the developed economy many of us have all we need.
Since economies are mind bogglingly complex, I find a simple hypothetical can help me grasp fundemental relationships quickly. Here is a little hypothetical about income distribution that popped into my head.
Operating on the assumption the $70,000 figure quoted above is the point where people in the US have their primary wants and needs filled, suppose the net income available to Podunk, a town of 10 people, is $700,000. If all 10 Podunkians get $70,000 of that income (i.e. no disparity in income) the the full $700,000 of income available to the society is circulating around supporting the economy of Podunk as people spend their income.
But suppose Joe finds a way to take home $200,000 of the $700,000 income in Podunk. The other 9 persons take home the remaining $500,000 ($55,555 per person, down about $14,500). Even if Joe has more extravagant wants and needs and spends twice as much, $140,000, as anyone else in Podunk , that still leaves Joe with $60,000 in extra income. So he looks for somewhere to invest it. But Podunk now has $60,000 less money in the economy, and the other 9 Podunkians are now $14,500 poorer, so Joe can't start a new business, because there are no Podunk consumers with the money to buy new products. So what does Joe do? He probably just pays more to buy up local property. He inflates the value of some asset local asset without adding any real value.
This sounds really familiar to me. Stock prices have been inflating and deflating precipitously, but overall for the last 15 years stock prices have spent most of the time at higher valuations than the historical average would suggest were prudent. Gold prices are inflated, house prices are inflated. In short, we have lots of investment capital scrambling around to make some money, and big corporations sitting on huge piles of money, but few people willing to start new businesses, or expand existing businesses in the US because US consumers don't have the money to support new ventures. The consumer market in the United States has been shriveled by the wealthiest people taking a bigger and bigger slice of the pie. We disguised this result for years (and drove the world economy) by consumers taking on a bigger and bigger debt load, but that bubble has also popped.
The chattering political class is all abuzz about job creation, and how can we get people back to work. I suspect the US is going to be in the economic doldrums until more of the income this country generates starts making it into the hands of the regular folk that spend most of what they earn, and less income goes to the people who have everything they could possibly need or want - except more.
Saturday, November 5, 2011
The deficit - a pertinent fact
Lots of apocalyptic buzz these days about our national budget deficit. I am one who believes Washington has been pretty irresponsible at times over the years, and we should work toward reducing our budget deficit, but the hyperbole on the political front sometimes begs for a reality check:
Normally we judge how serious our debt situation is comparing how much income our country generates in a year (gdp) against how much debt we have. It is sort of like your personal finances. If you owe $50 and only make $20 a month you have a much bigger problem than if you owe $50 and make $100 a month.
31 countries in this world have more debt than we do as a percentage of gdp. Of course that includes the high profile debtors such as Greece, Italy and Portugal, but it also includes countries we think of as economically solid and responsible, like Germany, Israel and Canada.
Source: San Francisco Chronicle Insight section for Sunday, October 16, 2011
Normally we judge how serious our debt situation is comparing how much income our country generates in a year (gdp) against how much debt we have. It is sort of like your personal finances. If you owe $50 and only make $20 a month you have a much bigger problem than if you owe $50 and make $100 a month.
31 countries in this world have more debt than we do as a percentage of gdp. Of course that includes the high profile debtors such as Greece, Italy and Portugal, but it also includes countries we think of as economically solid and responsible, like Germany, Israel and Canada.
Source: San Francisco Chronicle Insight section for Sunday, October 16, 2011
Thursday, November 3, 2011
Thoughts on Immigration Laws
Immigration laws are an odd sort of law.
Being an illegal Immigrant is not a crime in the same sense as murder, robbery or other acts that are intentionally directed at harming someone else. Immigrants (generally) come here to work, because they can't support their families or feel it is too dangerous in their home country. The are generally motivated by values we respect.
The main purpose of immigration laws are to protect our selfish economic interests. They are basically about the fact we've got a good deal and we don't want the rest of the world muscling in.
Immigration hawks lately argue illegal immigrants are acting illegally so they won't consider amending the law until everyone is obeying it. Their view seems to be "its the law so it must be obeyed, and we can't talk about changing the unfair, impractical of just plain dumb parts of the law until everyone is obeying the law".
Every time I hear an immigration hawk say something like that I hear echos of the Syrian Government shooting its peacefully demonstrating people because they are breaking the law. Or Ghadaffi, or Hosni Mubarek.
I don't think Jesus would find violation of immigration laws a very compelling sin. That's not to say we don't have a right to enforce immigration laws, or that some restrictions on immigration aren't prudent. But much of the overheated rhetoric about immigration is misplaced.
Our economy, whether we like it or not, depends on cheap labor from Mexico and Central America to work for low pages in low end, low paying jobs that Americans won't do. Would you or any of your kids be willing to spend 8 to 10 hours a day bending over in a strawberry field for something close to minimum wage day after day, month after month? Anybody you know be willing to do that?
Immigration hawks in the last couple decades have substituted emotion for analysis. Instead of recognizing immigration laws as laws about economics they have treated them the same as laws against murder, rape and robbery - drumming up emotional outrage (because that is what gets votes) then making it tougher and tougher for people to come to this country. Politicians and media personalities build huge ratings on this emotion based opinion bending. It is very successful politically but does not prepare you to actually govern, because once you play the emotion card in your own head, it is very hard to get past it.
A couple decades ago we had a program that allowed people to come North to work in the fields, then go home. We eliminated that program and at the same time made it tougher and tougher to immigrate legally. People have kept coming (now illegally) because there were jobs here and there were no jobs in their homelands, and they have been helped out by employers who needed them. Perversely tougher laws probably resulted in vastly more immigrants in this country because, as academic studies have shown, most illegal immigrants would prefer to go back home where their roots are (and their earnings make them relatively much wealthier) when their work ends. But crossing our borders has become so difficult and dangerous people who once came to work and then went home to their families between growing seasons, now stay and look for any kind of semiskilled labor job so they don't have to go back and forth across the border. Or they bring their families up here.
It seems to me Immigration hawks have not approached immigration law in a constructive manner because they get a lot more mileage out of it as an emotional issue to get people fired up to vote for them. Unfortunately when they get enough votes to get elected they often do something stupid, like the immigration laws recently passed in Georgia and Alabama that seriously damaged their states agricultural economy, before they realized maybe they made a mistake. Good government figures those things out ahead of time, but good government doesn't come from fired up emotions.
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