Wednesday, September 14, 2016

Clinton 100 days

Hillary Clinton's 100 day jobs plan is mediocre at best. It focuses on building infrastructure, increasing science investments, green collar jobs, reducing regulation, and increasing US manufacturing.

As an economist I obviously agree with the first two planks. Investment is an essential part of GDP, and you cannot have economic growth without it. Both infrastructure and science are necessary for the future of America. Being able to do more with fewer people with an aging population is where our economy is moving in order to maintain our quality of life and increase access to a good lifestyle.

As an environmentalist I agree completely with green collar jobs, which is where we need to go.

She isn't specific about what regulations she wants to reduce, so this plank could be either good or bad. I personally hope she will cut the barriers to starting a business and increase the penalties for fraud which is where I believe we need to go. New college grads in finance should not be paying the regulatory cost of the Great Recession while Jamie Dimon gets yet another million dollar bonus. I have written about financial regulation before, particularly when it comes to advising. Having more places to do business will keep up competition and force them to be honest.

The final plank, increasing US manufacturing I disagree with. Manufacturing jobs pay far less than high skilled science and technology jobs, because they produce less product. We need to move towards increasing access to college and make it so more people get the math skills they need to succeed in college and get good jobs. We need to encourage the employment of new college grads because it is criminal that so much talent is going to waste. We should have programs for job placement for young people so that we can start our careers as soon as we leave college and give tax breaks towards hiring young professionals in real jobs, and outlaw unpaid work. This would do far more in terms of improving the American economy and spurring GDP growth than encouraging the creation of low pay jobs. The average machinist salary  (the jobs Clinton's plan would create) have an average wage of around $40,000 per year, which is not enough to support a family. Economists, scientists, and programmers make an average of $80,000 per year with a wider standard deviation, and many make 6 figure salaries.

The Mankiw-Romer-Wile model of economic growth is functional and makes it clear that if you want to grow your economy you don't just need technology to grow an economy, you also need an educated population. I can give a ten year old a complex data analysis program, but they won't know how to use it. I can have someone who can solve the mysteries of quantum physics but without a place to run experiments they won't be able to get hard data. We need to have both, and running backwards to a secondary economy is going to reduce our GDP and quality of living.

The fact that education is missing from her economic plan shows she is listening to bad advisors and doesn't understand much about economics. I still wish Elizabeth Warren was in her place.

Tuesday, September 13, 2016

Supreme Court reduces voting in Ohio

The supreme Court made a decision today which makes it so that the Golden Week, which allowed Ohioans to register and vote on the same day starting on October 5th. This is a victory for the Republicans since people who used October 5th.

Hank Green explains how to vote in Ohio:

I live in Washington State, and you can register to vote online and when you get your driver's license, change your address with the postal service, or basically any time you do anything with the government. Since every public library has internet access, there is no reason any citizen is not able to register to vote in Washington, and with mail in voting combined with being able to print your ballot off online (at a public library for free if you don't have printer) there is no excuse for not voting in Washington State. If you are not registered, register immediately at vote.wa.gov

In Ohio, this is a very different situation. Like many parts of the country they do not have universal mail in voting, people have to wait in long poll lines, so for people with crazy work schedules and children voting can be a real hassle. This is why early voting in Ohio is so important for people who fit into these disadvantaged situations.

According to ThinkProgress, 80,000 people used Golden Week in 2012 and 60,000 in 2008. For comparison, in 2012 Obama won Ohio by 160,000 votes and in 2008 he won by 263,000 votes. Without Golden Week Obama would have won regardless, even if Golden Week voters wouldn't have voted otherwise even if they all voted for Obama which is impossible. This makes it unlikely to swing the election this year. However, unless if Ohio makes voting easier for people do by mailing in a ballot or voting online, giving people more opportunities to get to the polls is extremely important and vital to democracy. Even though I do not expect that this will swing the election for Trump, it is against the principles of democracy and equality of opportunity which our nation must strive to achieve.

Additional Source:
Huffington Post

Thursday, August 11, 2016

How Social Security Works

Social Security is lauded by liberals across America as a great accomplishment, and a signature accomplishment of the American social safety net. It has become a third rail of American Politics, where any attempt to change it gets the AARP and other senior advocacy groups railing against it as betraying the working class and then their members kick out the politicians who propose changes which keeps conservatives from attacking it and others from criticizing its flaws. Since turnout among young people is routinely low and senior usually vote in large numbers this protects the program from any changes that would benefit younger people or the nation as a whole.

I am a progressive, I want to have a public option at a bare minimum for health care, ideally expand the number of people who can enroll in Medicare and Medicaid, allow Medicare to negotiate for lower drug prices, and increase equality in access across states. I want to see an investment in education for all students and help bridge the rich/poor funding divide in our schools which is reflected in resources. Creationism should NEVER be taught in science classrooms. I use and respect the science method and its findings, and change my views to fit its findings. I want to build a massive increase to inner-city mass transit and inter-city mass transit to reduce our reliance on cars and make our cities more liveable. I believe inner-city mass transit should be free to the rider. We need to have programs to help the homeless become housed and stop incarcerating drug users and the mentally ill.

I also want to kill Social Security Old Age Insurance. Yes, that's right. I want to kill OASI and replace it with a basic minimum income for people of all ages. First of all, here are the reasons why I want to kill OASI.

The biggest reason I want a radical reform to Social Security is because OASI always gives less than 100% back for the contributions people make. For the poorest Americans they receive 90 cents on the dollar for Social Security contributions up to $856 a week ($21.40/hour or $42800 per year) and then it goes down from there. These earnings are so low that putting a worker's social security benefits into bonds would yield more money. SSA and proof

I would like to have a universal basic income replace OASI. For those people who have paid into Social Security we would still get the benefits we have bought into, but for workers younger than me they would never pay into the fund. In 2015 the fund stood at $2.857 trillion dollars. At the same time OASI cost $740 billion for the year. The first issue is the investments of Social Security are not getting a good return on their investment, and we should allow the Social Security Administration to seek out any investment they deem appropriate so that we can get a better return on our investment. We only got a 0.9% return on the Investments the SSA has been able to make. If they bought longer-yield bonds from the Treasury we could get a much better return for our money and it could be enough to make the program self-sufficient at this point. The American people lost 30 billion dollars in Social Security Trust money last year because of this decision. Over a long period of time the difference of how much money the trust fund should have has become very large. With an aging population and hundreds of millions of people betting on Social Security being there for them when they retire this has become a very big issue where the Trust Fund is barely making any more money compared to the 1980s and 1990s which has made it stagnate in comparison to the amount it should be making today. history

So, if I had my druthers, I would have Americans stop paying OASI taxes, allow the trust fund to be invested freely by the Administration so that OASI can be paid out of the interest its massive reserves make every year. People who currently are owed Social Security benefits will be paid out of the interest which will be enough to cover the difference. Disability and SSI will not be changed.

The replacement of Social Security OASI will then be a Universal Basic Income. This will be a direct stimulus to poor economies across the country. People can use this money in any way they want. I would give every American $5000 when they file their taxes as their UBI every year. The payments will be given to the person as cash, and they can do whatever they want with it.

If people stop paying social security taxes and instead invested their UBI into 30 year government bonds averaging 4% annually over the long run will yield a bigger benefit to people than OASI provides. A $5000 basic income will have the benefit of people being able to invest into interest bearing assets which will grow into a far larger sum than Social Security will ever provide in a lifetime. The other benefit to Basic Income is it will help young people get a foothold on life by being able to purchase what they need to get their lives started, versus people who are in their senior years and have had decades to invest for their future. I would rather get people started on a good foot than step in at the last moment. Another advantage is if someone dies soon after retiring than the money that they have paid into Social Security will not be recovered by their families, while having assets helps families accumulate wealth. If more families had access to that then we could see less inequality. It also will not matter as much how much money your family has because young people will have the funds they need to start life on a good foot.

The total cost for my Basic Income would be $1.5 trillion, which would and in part replace less efficient programs. We spent $1.3 trillion on pensions this year, and most pensions do not perform as well as a strong index fund, and many cannot be inherited which is essentially stealing from poor and middle class families. I would rather spend money on getting everyone on a good foot to the point where people can take care of their own retirement which then will be inheritable and not transferred back to the rich. Most people I know who have financial stability have no formal training in economics. These plans are accessible if people are willing to look and have basic math skills.

One final note on my counter proposal is that the $5000 per person Basic Income would go to adults in cash to their bank account (or cash if they are dinosaurs) and it is theirs to use as they want. However, for minors half of their money will go to their legal guardians, and half of it will go into their trust fund. It will receive interest over time like how I want to change the OASI trust fund, and when they turn 18 they will receive the sum in the way they choose. This money would come out to be around $50,000 if it didn't collect interest, but if it collects 2% interest will be around $62,000 and $75,000 at 4% interest. This would make a big difference for young adults with less supportive families and make a big impact for people when starting families, particularly for those who would invest what they don't use. Everyone would have the opportunity to start their own business, take a risk, and our economy would grow significantly by the increased spending in poor areas. This positive shock to demand will create the opportunity for new businesses which will create new jobs and a better economy for everyone.

The funding for the basic income will come by treating capital gains as regular income. I have already written about that here. This will be an overall better safety net for American from which everyone will ultimately benefit.

Thursday, July 21, 2016

Ideology of Trump

Donald Trump is new to American politics, and this has left a lot of people very confused on how to understand him, or unwilling. On my blog I really enjoy writing about political theory/philosophy and using those lenses to help understand the underlying intentions of candidates so that we can make better decisions as citizens.

Now, in political science there are several major schools of thought. Liberalism, Marxism, Mercantilism (economics only), Objectivism, and Fascism. These four schools are very easily defined against each other by breaking down policies into their social, economic, and foreign components.

Social Economic Foreign
Liberalism Socially left-wing. Believe in individual liberties, both positive and negative freedoms. (freedom to do things and freedom from harm) Minority rights. Feminism. Economically free market. In favor of regulations as they benefit society. Greatest Good for the greatest number. Believe that trade brings peace. In favor of global trade as a good for society.
Marxism People are divided by class and the Bourgeois need to be torn down in order to build up a Communist utopia. Economic control by the state. Spread the Marxist ideology throughout the world.
Fascism People are divided by race and we need to purify our country from all people who are not like us. Economic control by the state or state-sponsored corporations. Isolate ourselves from foreign goods. Go to war with other nations.
Mercantilism/Realism N/A Economic control by the state or state-sponsored corporations. Isolate ourselves from foreign goods. The gain of another country is our loss.
Objectivism Do not help other people, another person's gain is your loss. Altruism is bad. Free market completely unfettered by government intervention. Isolate ourselves from foreign goods.

Now that we have our definitions which are universally accepted among political economists, where do we place Trump?

Starting with economic policy, Trump is firmly anti-trade, placing him in either Mercantilism or Fascism. Trump proposes a social policy of deporting foreigners, he is anti-feminist and anti-immigrant. He has spoken out against hispanics and Muslims, making his foreign policy clearly in the fascism camp. He is clearly not liberal, and he is obviously not socialist. He is more extreme than Objectivism with his talk of actually deporting people. The full list of Trump's comments on what he would do which fit into this is listed on Reddit and provides enough examples to place him firmly in the fascist camp.

Being politically correct nowadays means to not call people out for what they actually claim. We are used to living in a free civilized country that when someone comes along who wants to destroy everything that makes America great we don't know what to do about it. For those of us who have close family who lived under Fascism, and those of us who are educated in political thought, the connection is obvious. For myself, I am part of a very small number of Americans who 1. Are trained political scientists, 2. Have family who survived the Drittes Reich, 3. are American. I don't know anyone else who fits this particular demographic, but there might be someone else out there. With this background knowledge I have every right to say that my professional diagnosis as a political economist of the thoughts and plans of Donald Trump put him firmly into the Fascist camp. I also believe that with my education it is the duty of my country to call politicians what they are, and the evidence is overwhelming.

I didn't earn a Political Science degree by misusing terms. I wasn't born onto this world in my family to allow history to be repeated. My background with Quaker and German ancestors (plus being a practicing UU) means I am in a very unique position to help people avoid human rights violations and I feel like it is my duty. We, the People of the United States in order to defend our imperfect union need to ensure Donald Trump never becomes President of the United States.

Wednesday, July 13, 2016

The General Election has begun

So, the Sanders revolution has ended. Clinton has won the nomination, and I am now seeing countless Sanders supporters I know claiming they will "never vote for Clinton" "Vote for Stein" and other rubbish.

For me, I originally wanted a Warren/Feingold dream team ticket. I wrote about this dream way back in 2013. I still wish Warren had run and know that if she had that she would have won the Presidency in a landslide by gathering all of Sanders supporters and a large number of Clinton supporters. However, this did not happen obviously so we have to stick to what is available at the moment.

When it comes to criminal records, Clinton has never been indicted once in her life. Even the Senate committee on Benghazi which is composed of Republicans whose entire purpose is to discredit Clinton and send her to jail to give Republicans the nomination to Donald Trump is unable to get any dirt on Clinton to the point where she can be indicted. When it comes to criminality, no one has ever been able to prove that she has ever committed a crime.

When it comes to policy, Clinton comes out to be about the same as Obama. The political compass for 2008 puts her as slightly more capitalist than Obama and the same level for social issues. In 2016 she has moved more right in both directions than she was in 2008, and Sanders is about the same point when it comes to social policy as she was in 2008. Clinton will probably drift slightly further to the right in the general election because of the median voter theorem, but as president I do not expect any significant social policy changes under her. Economically, she is going to probably whittle away our financial regulation but besides that I do not expect any other major reforms. Trump, on the other hand has talked about significantly eliminating a lot of civil rights laws and incredible discrimination against Muslims and Hispanics. This is what the election comes down to. Economically we are screwed either way, but with Trump there is little doubt we are going to quickly move towards a fascist state, and given the Democrats willingness to vote for the PATRIOT ACT without thinking in 2001 I don't think there will be anyone to stop Trump from truly destroying the United States. This will not happen under a Clinton presidency. She is definitely a hack for corrupt bankers, but she is no fascist. For this reason I prefer Clinton over Trump and will not waste my vote voting for Jill Stein until the minor parties start to run candidates and get elected in local offices.

Clinton is far to the right of President Lyndon Johnson, but she is no Hitler. Trump on the other hand talking about banning Muslims from the US, and policies against Hispanics is racist to the core. I do see Trump as a Fascist in his economic views, social views, and foreign policy and so out of respect to the millions who have died and lived under Fascist governments (including some of my favorite relatives) I will call him what he is. My family lived under Nazi Germany and I have studied the Third Reich as a way to understand my history and understand how to avoid Fascism at all costs. (if you want to understand the Third Reich, read Hannah Arendt) There is no overarching moral issue where I see a divergence between Trump and Hitler (find "Jew", replace "Muslim") so out of respect for those we have lost I call Trump a Fascist. I will write a longer comparative post later.

Also, the majority of African Americans voted for Clinton even after all of the welfare reforms done under the first Clinton Presidency. They know what is best for them ultimately and if they feel that they will be better off under a Clinton Presidency it doesn't matter how long you or I have been involved in organizations fighting racism, it is inappropriate to deny the voices of millions of people.

Please do not waste your vote and vote for Clinton this November. If you want to get real change going, you need to get involved in your local politics, demand ranked voting, and help our country get a better election system.

Tuesday, June 28, 2016

UK Referendum and the weaknesses of democracy

Last Thursday the United Kingdom voted to leave the European Union. This is one of the stupidest decisions ever made by a country and is going to isolate the United Kingdom from the rest of Europe. Membership in the European Union provides many benefits for the British economy, such as cheaper imports from the rest of Europe (which lowers prices) and no tariffs on European goods. Other benefits include allowing British citizens to freely live in Europe (and vice versa) along with being able to sort out continent wide issues in the Parliament of the European Union. There is no real disadvantage with the European Union being a democracy where the Parliament is directly elected by the people, but the advantages of closer trade links given the lack of war over the last 70 years is a major advantage for all Europeans in favor of union except the military industrial complex.

Vote Leave made the European Union out to be a gigantic force which destroys the United Kingdom's sovereignty. the issue however is that the voting patterns in Parliament do not demonstrate a huge division over votes by nationality. While it is true that UK MPs are on the winning side less than any other country (winning 71% of the time) the division between countries is most of the time along partisan lines, not among national lines. Guardian

This is yet another example of the problem with highly technocratic issues being put onto the ballot. Most people can vote for a candidate who represents their viewpoint who then is hired by the people to make decisions, talk to scientists, understand the issues, and then make the best decision following their conscience. While there are some issues that people can understand at a fairly good level, most of the time the reality of the situation is very complicated, and the European Union is no exception. In order for people to fully understand the costs and benefits of an initiative they need to be well informed and the media usually does a very poor job at this. Occasionally you will get a publication like the Economist or The Guardian which include scientific analyses using large sample sizes and graphs to demonstrate the difference between groups without biasing their results, but this is rare. Most other news outlets (even NPR at times) try to show all sides of the story by giving treating all voices as if they have equal validity, but all this does is confuse people and feed the false narrative that scientists can't know anything and don't know anything. I find this narrative in conversations with people when I talk about my field which I have a degree in and they say "you are so certain you are right and don't give any room for being wrong" to which I always respond that 1. I am practicing my trade, 2. (for most issues) the evidence is clear, and 3. Provide me with better evidence than I have seen and I will change my views. They never provide me with better evidence. This is a pathology on our society and we need to recognize that our world is measurable and that there are trends in economics just as much as there are trends in physics, and ignoring this is irresponsible and dangerous. The media practices this without giving a clear insight into the issues which people are required to vote on, meaning people are essentially voting blind creating a major risk for society. We have seen this before with the Alternative Vote referendum which is a better system in every single way from what Britain currently uses to elect parliament, but given the poor analysis in the media of the difference and impact of the two systems for people, and it was explained poorly by the Vote Yes campaign. Excellent blog I cannot find research testing whether people actually If people do not usually understand the Alternative Vote, (of which I am not certain) there is absolutely no way they are going to understand the complexities of international trade and the costs and benefits of the European Union which is far more complicated.

This is the problem with pure democracy. In a perfect world where people were taught how to reason and use science to find answers to questions this wouldn't be an issue. If people were willing to study and learn about issues they could learn about any subject they wanted to. People would be able to tell which news sources are actually describing the issues in a neutral manner or just acting as the mouthpiece for a political party. in that type of world referendum would be acceptable, and a perfect democracy would work for large multinational trade issues which effect everybody. In a world where many people who go to public school don't even learn calculus (which is vital to many scientific fields) this is not going to be possible. We obviously do not live in this perfect world where science education is of high quality and news outlets are fair by not by giving every fascist, communist, and fraudster a free talking stage to spread their message but instead focus on the scientific reality and are willing to call the rich and powerful out on their lies or demonstrate the evidence behind their claims. To be clear, these media outlets are outside of the norm and the majority of people do not listen to Planet Money or read the Economist which are unusual in their unbiased focusing on evidence even if it means they have to take a hard stance on an issue. The difference however is that they are very clear about why the author makes the stance using evidence, science, and reason. The difference is that with science the conclusion easily changes given new and better evidence but is impervious to public opinion, bribes, or anecdotes.

This is why the Brexit is going to happen and why Britain is about to go into a deep depression with many people losing their jobs in the near future. It is heartbreaking and scary, and we are already seeing the damage with the collapse of the Pound. I can't leave this article on an uplifting note because at this point in time there is nothing good that can possibly come from this if Cameron goes through on his decision, only less cooperation and more risk of conflict in Europe.

Tuesday, June 14, 2016

Project timelines and cost overruns

Everywhere you look nowadays you see a common pattern, cities need more infrastructure to keep up with their rapid growth, so local governments plan to build more infrastructure to fit their needs, and then hire private companies for construction. I have nothing against hiring private companies as long as the bidding process is fair, but whether you look at Seattle's mass transit, Berlin's airport, The Dulles-Washington rail link, or so many other cases of needed infrastructure being delayed for years or even decades, the costs start to run into the billions of dollars. The opportunity cost of not getting such programs done also tends to be significantly higher.

Here are a few ideas for how to get projects done on time.

  1. There will be a completely open bidding process where different contractors will bid for building the project and give their design plans, with details on how many people will be able to be served by the project, the cost of designing the project with a complete breakdown, how it fits into the general plan of the city and region, and how long it will take to complete the project. The contractor with the best benefit/cost ratio will get the job.
  2. Contractors are required to finish the project by the deadline and to have all necessary safety features installed. Failing to finish the project by the deadline will give them the choice of finishing with extra charges for not being proper, or handing the job to another company and penalizing the company for not finishing the job. Environmental disasters will of course be acceptable reasons for not finishing a project on time. (eg you are working a project at a city on the Gulf Coast and a hurricane destroys your project)
  3. Contractors will receive a bonus for finishing the job early and completely.

This is a major environmental and economic issue. There are projects that need to get done now, and there are many high speed rail lines which need to be built. It is ridiculous that the US lacks high-speed rail (which is internationally defined as going a minimum of 150 km/hr) and that Canada lacks sufficient mass transit between Montreal and Windsor. We need government and contractors to be responsible.

Further reading:
http://www.dcd.com/oleary/oleary_jf_2002.html is a good summary like what I have posted here.