“The Party of Trump”

The party of Trump – http://www.aei.org/publication/the-party-of-trump/

I particularly enjoyed this quote:

Trump’s policy positions are substantively an inch deep and bombastically a mile wide. In times past, his flippant comments, vulgar attacks on opponents, and appeals to the public’s anger and fears would have been characterized as demagogic.

None of this should surprise. Trump has bounced around with his party identification. Sometimes he has registered as a Republican, other times as a Democrat, and still other times as nonaligned or aligned with the Independence party. Trump himself admits he’s been more than willing to give support and money to whomever might help him and his various enterprises.

Should we subsidize higher education?

 

It is remarkable that most of the debates we have in today’s society are but constant echoes of our past. We have become the proverbial hamster running in a wheel. The same issue of whether to subsidize higher education was alive and well in this 1985 video that I viewed today courtesy of the American Enterprise Institute in which Milton Friedman has a conversation with students and continues to pose the simple questions to them of, “How do we justify the education welfare state? Why should I be forced to pay for your college education?” I appreciate how Friedman turns this pointedly into an issue of whether we should have welfare for students, dispensing with euphemisms such as “society should support higher education” and turning this into a debate about whether we think it is appropriate to have such a regressive form of wealth redistribution from low income to middle class and wealthy individuals. He pointedly asks the question of if this logic applies to education, why does it not apply to welfare transfers to those that start businesses irrespective of their income level? What is it about education that it requires income transfers from largely lower classes to the current or future upper echelons of society? Friedman makes this point in the video when he states that, “there is no other governmental program that so clearly takes from the low income groups and transfers it to high income groups as education.” When challenged by one of the students that society desires broad education as a goal, Friedman’s retort is a masterfully succinct, “societies don’t have goals, people have goals.” The implicit and unanswered question is why should we be forced to subsidize the individual student’s goals and future income?

Fast forward to the current day, I think Friedman could have accurately predicted today’s higher education malaise – tuition rising much faster than income or inflation growth, bloated administrations, colleges that constantly clamor for more funds while simultaneously  binge-building, unaccountable and tenured faculty that focuses more on research and publication than teaching, misaligned and misallocated resources that fail to connect to economic outcomes of the degree and so on. This is the predictable outcome of heavy government subsidization and regulatory involvement as seen in other rapid increase cost decoupled from quality outcomes industries such as healthcare that also have their fair share of government intrusion. Thus, the primary challenge of the rush by the Bernie Sanders crowd to fund college education as “free” for everyone is the simple fact that this doubles down and exacerbates the challenges – colleges would in turn have no incentive to focus on innovation, the needs of consumers, the creation of programs that align to the economy at large, and perhaps most perniciously, devaluing higher education entirely. To borrow a line from the villain Syndrome in The Incredibles, “when everyone’s super, no one will be.” In other words, mass production and a sharp increase in the supply of college graduates due to obfuscation of the pricing mechanism of higher education will only serve to muddle and devalue a college education at large, and the result will be those that still want to send a signal to the market of their higher worth relative to everyone else will still be willing to shell out more money for masters degrees, doctorates, and other forms of specialized training. We will have created a system full of more challenges that is further away from the moderating influence of market signals and fueled more cost increases while doing nothing truly in the name of equal access – which is a utopian and unfulfillable fantasy.

As an aside, one neat component of this clip is a young David Brooks, now a fairly moderate voice of reason at the New York Times. I hope you enjoy the video, if for nothing else, Friedman’s manner of speaking and his mannerisms always give me a chuckle.

The Importance of Ending Farm Welfare – A Middle Class Redistribution Scheme

Corn Farm

It is admittedly with some degree of trepidation that I wade into the arena of agricultural subsidies. My pedigree is one marked with connections to the industry, including part of my early childhood being spent on a corn and cotton farm in the Texas South Plains and then a brief year in Missouri spent on a turkey farm raising contract turkeys for ConAgra. The Texas South Plains in which I was largely raised (and which I recently returned to) is an area that is the largest contiguous cotton growing area in the world. My undergraduate degree is in fact Agribusiness from one of the leading agricultural schools in the country, Texas A&M. Furthermore, although I am not currently employed in agriculture, I have long dreamed of one day returning to the land and occupation into which I was born. That being said, I may be just as guilty personally of falling prey to the overly idealistic aesthetics of living on a farm, which I can’t help but feel are part of our collective problem that leads to resigning ourselves to support of welfare for the farm in order to keep alive what we believe to be an ancient and idyllic profession. The State of Vermont heavily subsidizing dairy farms in an effort to keep the iconic Holstein dairy cow in pastures for tourists to see while driving by and the the recent pickup advertisement during the Super Bowl featuring Paul Harvey voicing a litany of reasons that, “God Made A Farmer” are examples of the tradition of holding agricultural producers in near-mythical status. I will quickly disabuse the notion that living in such occupations is as glamorous as an urban dweller might imagine, as anyone that has ever had to kick baby turkey chicks off of each other to keep them from suffocating the bottom layer  in -10 degree temperatures can attest. Although it still does possess just enough nostalgia for me to one day return, I will admit to desiring to return to a much more free-market system and I will get to my reasons why shortly.

Before I get into specifics, I should state that I firmly believe that getting the intrusive hand of government off of the plow in agriculture would actually benefit the “small” farmer and would stop the lion’s share of government wealth redistribution going to the relatively wealthy, which is what in fact occurs with ag subsidies. Thus, I firmly believe my stance is one that would promote greater fairness and equality and greater distribution of returns to the small and nimble innovative and flexible farmers (rather than the wealthy landowners) within the industry. And much like all of the rest of the industries in America not so coddled, the free market would create viable solutions for insurance and price supports that would be more efficient and useful compared to the cronyist and corrupting influence that is the U.S. Farm Bill.

The largest 10 percent of recipients have received 73 percent of all subsidy payments in recent years.

The U.S. Farm Bill is a monstrosity that has built up thick barnacles over decades, beginning in earnest in FDR’s New Deal Era. Thus, it won’t do to cover all of the tentacles of U.S. Ag Policy in this blog as I am already always at risk of being far too verbose, but I do enjoy and agree with the tenets of this succinct policy document from Cato Institute and appreciate its free market philosophy as much as I enjoy its brevity and important facts. While this document has been superseded by the 2014 Farm Bill, I would argue that very little has changed. The 2014 Farm Bill did finally retire Direct Transfer payments, which those tuned in to Ag policy may recall the infamous reports of wealthy celebrities receiving payments from the government simply for owning land (growing anything was not always a requirement.) While ending these egregious examples of cronyist policy is an important baby step, the rest of the decades long entitlement support for agriculture remains in place, as indicated by this USDA document. American taxpayers will still foot the bill for arcane programs with Orwellian nomenclature such as Price-Loss-Coverage, Agricultural Risk Coverages, and Dairy Margin Protection. A layman’s translation is that taxpayers provide welfare to farmers to subsidize prices, research, marketing, exports, and the purchase of insurance.

As it relates to the Cato document and for convenience of the reader, I have pulled out some quick bulleted highlights:

  • The U.S. Department of Agriculture distributes between $10 billion
    and $30 billion in subsidies to farmers and owners of farmland each year. The particular amount depends on the prices of crops, the level of disaster payments, and other factors
  • More than 90 percent of agricultural subsidies go to farmers of five crops—wheat, corn, soybeans, rice, and cotton
  • More than a million farmers and landowners receive subsidies, but the payments are heavily tilted toward the largest producers
  • Subsidies induce overproduction and inflate land prices in rural America. [My thoughts – The mis-allocated economic rent flows somewhere, and in this case it simply inflates the price of land, to the further benefit of larger landholders and to the detriment of small farmers/landholders.]
  • Farm subsidies transfer the earnings of taxpayers to a small group of fairly well-off farm businesses and landowners. USDA figures show that the average income of farm households has been consistently higher than the average of all U.S. households. The average income of farm households in 2006 was $77,654, or 17 percent higher than the $66,570 average for all households
  • Although policymakers often discuss the plight of the small farmer, the bulk of federal farm subsidies goes to the largest farms. For example, the largest 10 percent of recipients have received 73 percent of all subsidy payments in recent years. Numerous large corporations and even some wealthy celebrities receive farm subsidies because they are the owners of farmland. It is landowners, not tenant farmers or farm workers, who benefit from subsidies

I want to call out especially Cato’s prediction that Agriculture would thrive without subsidies. Sure, there would be winners and there would be losers in such a monumental transition, but the net benefit to producers and even more importantly, to consumers would be positive.

“Interestingly, producers of most U.S. agricultural commodities do not
receive regular subsidies from the federal government. In fact, commodities that are eligible for federal subsidies account for about 36 percent of U.S. farm production, whereas commodities that generally survive without subsidies, such as meats and poultry, account for about 64 percent of production. And, of course, most other U.S. industries prosper without the extensive government coddling that many farm businesses receive. An interesting example of farmers’ prospering without subsidies is New Zealand. In 1984, New Zealand ended its farm subsidies, which was a bold stroke because the country is four times more dependent on farming than is the United States. The changes were initially met with fierce resistance, but New Zealand farm productivity, profitability, and output have soared since the reforms. New Zealand farmers have cut costs, diversified land use, sought nonfarm income, and developed niche markets, such as kiwifruit. The Federated Farmers of New Zealand argues that that nation’s experience ‘‘thoroughly debunked the myth that the farming sector cannot prosper without government subsidies.’’ That myth needs to be debunked in the United States as well.”

Ending such support will be a political challenge, as those that espouse free-market views in our legislature are often the first to make policy exceptions for agriculture, usually under various guises that agriculture is somehow a different industry that can’t face the variations of the market or that food needs protection for national defense reasons. To these I am reminded of a quote I saved from F. A. Hayek’s The Constitution of Liberty that, “Most countries in the process of taking agriculture out of the market mechanism and subjecting it to increasing government direction began before the same was done in industry and that it was usually carried out with the support, or even the initiative, of the conservatives, who have shown themselves little averse to socialistic measures if they serve ends of which they approve.”

My point is this – if we as conservatives and libertarians are serious about limiting the scope and size of government and we want to be consistent, then sometimes we have to take a look and consider reducing the size and direction of government even when it favors us or our region.

Foodborne Illness Scorecard: Chipotle- 200+ illnesses; GMOs – 0

Chipotle

A closed Chipotle restaurant in Boston, MA on December 7. PHOTO: STEVEN SENNE/ASSOCIATED PRESS

For anyone that may obtain access to my bank records over the past five years, they would see about as much occurrence of Chipotle popping up on my ledger about as Target popping up under my wife’s ledger. I went for one reason – it tasted good and it defined a relatively novel concept in the rapidly produced and customizable burrito. I always held my nose, and my breath, when being subjected to their trite and cynical marketing ploys to convince the world that they were somehow better and more morally righteous than their competitor down the street because they used more local ingredients (although not entirely local, which begs the question of: how much local is enough to make one virtuous?) and because they eschewed genetically modified foods.

Now arrives the comeuppance and the limits of that approach, as Chipotle finds out the hard way the challenges of managing quality and risk management of leveraging local suppliers in a large chain and mass production world. As much as Chipotle leadership has pilloried more industrial and centralized forms of food production, they now find themselves going back and applying some of its most profound economic lessons and virtues as they hurriedly scale back on their usage of local suppliers. Namely, these lessons are the benefits of productivity and innovation, which leads to lower cost foods, produced in a more safe and trackable manner and often times a more environmentally friendly manner than their small-scale counterparts.

Thus, I find it important to keep up with the scorecard since Chipotle used GMOs as a whipping boy for all that is wrong with food in America and to fear monger us all about “frankenfoods” in order to boost its own prices. I present the updated scorecard that helps us keep up with the ill effects of GMOs and how Chipotle is saving us from its malevolent forces:

Chipotle – 200+ illnesses due to E. Coli

Deaths due to Malnourishment in Children Under the age of 5 during 2013 – 3 Million

Deaths or illnesses due to GMOs – 0

 

 

 

The cynicism and contortions of Ted Cruz

Gun Legislation
UNITED STATES – APRIL 17: Sen. Ted Cruz, R-Texas, speaks during the news conference on alternative gun legislation on Wednesday, April 17, 2013. (Photo By Bill Clark/CQ Roll Call)

One of the more memorable exchanges of the recent Republican debate occurred between Rubio and Cruz over paths to legalization for the 11 million illegal immigrants currently thought to be residing in the U.S. The setup of the debate was this: Rubio and Cruz were sparring over intelligence and the use of telephone metadata in the fight against terrorism. Cruz pivoted the debate to one of border security and immigration where he believes he is on firmer ground and can attack Rubio. During the scuffle, Rubio pointed out that Cruz did in fact support a path to legislation. Ever the lawyer that is extremely careful with words and terms, Cruz at one point indicated that, “I have never supported legalization, and I do not intend to support legalization.” The emphasis on “intend” was mine, and I find there to be a carefully constructed amount of future wiggle room for a lawyer in that statement.

Where this gets interesting is that while Cruz is now cynically pouncing on the “Gang of 8” bill that seems to hang like an albatross around Rubio’s neck with the nativist wing of the party, it is clear that Cruz did in fact propose an amendment in 2013 that called for an increase to the H1B visa for skilled workers by 500%, a doubling of legal immigration (including for the low-skilled he now claims are taking everyone else’s jobs), and creating a path to legalization status (but not full citizenship) for the 11 million illegal immigrants already in the country.

“I have never supported legalization, and I do not intend to support legalization.” – Senator Ted Cruz, Las Vegas Republican Primary Debates

Senator Cruz’s full remarks on the amendment he filed is out for all of the world to see and judge. Note his vociferous support of high-skilled immigration in the first video I have linked, and his support for legalized status for the existing 11 million illegal immigrants in the second video. Some of the key language Cruz employs makes him sound more like a reasonable and compassionate defender of immigration as a centerpiece of the American experience – using terms such as “coming out of the shadows” and “I want immigration reform to pass.” Cruz’s lawyerly threading of the needle in the amendment is to not support citizenship but supporting legalization and work status. While this amendment stance may not be near generous enough for a pro-immigration, free-market oriented person like myself, it is hardly the militant stance Cruz now employs and it also proves his debate statements the other night to be blatantly false and cynical. Since Cruz is so fond of leveling the charge of amnesty at his opponents these days, perhaps we could all benefit if the debate champion could define precisely what amnesty actually means to him.

In response to the fact-checking that many news outlets are doing and no doubt the increasing spike of people watching these videos, the Cruz campaign has indicated that his amendment was actually a poison pill plot to kill off the entire immigration reform bill that the Gang of 8 brought forward in order to get what Cruz wanted all along – zero immigration reform. That leaves Cruz supporters with two equally problematic conundrums from tough-talking “anti-establishment” Ted Cruz: either he did in fact fully support a rapid increase in high-skilled immigration and a path to legalization for the 11 million resident illegal immigrants and he is therefore not the principled ideologue waging war consistently on the border that he passes himself off to be, or he is a schemer and plotter that plays games in Washington. On the latter challenge, to echo the Wall Street Editorial Board in a recent podcast, this is hardly the stuff of anti-establishment dreams.

 

 

What I am listening to this week – Christmas Carols and a celebrity singer/songwriter

Bing Crosby

With Advent season coming to its end with the culmination of Christmas this week, my music rotation is heavily influenced by my favorite Christmas Carols. My favorite song that lends itself to a full ethereal chamber choir is, “O Come, O Come, Emmanuel” and one of my favorite renditions is Robert Shaw’s SATB (Soprano, Alto, Tenor, Bass) chorale.

The song fully encapsulates what to Christians the season is all about. The prophet Isaiah, foretelling the miracle of Christ’s birth discusses the significance of the immaculate conception when he states, “Therefore the Lord himself will give you a sign. Behold, the virgin shall conceive and bear a son, and shall call his name Immanuel.” (Isaiah 7:14) Immanuel, one of the many names given to Jesus, means, “God with us” and this is a central tenet of the Christian faith. The fleshly body of Christ and his birth on earth is the beginning of the bridge between imperfect man and a perfect God. Indeed, the song’s lyrics point to this day of ransom payment for Israel with Christ’s birth.  The body of Christ that dwelt amongst us is the critical element of the community of Christ. As Bonhoeffer states in The Cost of Discipleship, “A prophet and a teacher would not need followers, but only students and listeners. But the incarnate Son of God who took on human flesh does need a community of followers who not only participate in his teaching but also in his body. It is thus in the body of Christ that the disciples have community. They live and suffer in bodily community with Jesus. By being in community with the body of Jesus they are placed under the burden of the cross. For in that body they are all borne and accepted.”

Also heavy in my Christmas rotation is Bing Crosby’s medley “What Child is This/The Holly and the Ivy“. Crosby is the indisputable king of the Christmas Carol, and I don’t believe it is a point even up for debate. If people can add the Magi to the nativity scene, even though most scholars indicate that they would have arrived years after Christ’s birth, then I am tempted to put a singing Bing Crosby with his heavenly baritone and his effortless lilt into my own nativity scene. I am typically not a big fan of medleys, but this is Bing Crosby combining two of my favorites together and I can’t resist hearing it over and over this time of year.

Lastly and in a departure from the Christmas music, I picked up “Thieves” from She & Him while listening to one of my favorite syndicated radio shows Undercurrents this week. This song satisfies my proclivity for melancholy and sad songs about heartbreak. She & Him is comprised of the celebrity Zooey Deschanel and the less famous but adored in the Indie Rock and hipster scenes M. Ward. The opening lines from Deschanel’s unique and powerful vocals that sounds like a voice that I imagine as perfect for a traveling troupe performing ballads across the Old West sets the pace for the heartache that echoes throughout the tune:

“There’s thieves among us
Painting the walls
With all kinds of lies, and lies
I never told it all
What’s in my pocket?
You never knew
You didn’t know me well
So well, as I knew you”

The common refrain throughout the song is a woeful,

“And I know, and you know too
That a love like ours is terrible news
But that wont stop me crying
No, that wont stop me crying over you”

M. Ward provides great harmony is this song as well. The video is artistic and worth the watch as well.

Quote of the Week – Dealing with Populism

Populism

Taken from this week’s edition of The Economist – Playing with fear. 

“Part of the answer is to draw on the power of liberal ideals. New technology, prosperity and commerce will do more than xenophobia to banish people’s insecurities. The way to overcome resentment is economic growth—not to put up walls. The way to defeat Islamist terrorism is to enlist the help of Muslims—not to treat them as hostile. The main parties need to make that case loudly and convincingly.”

How Automatable is Your Job? How Much Will the Minimum Wage Accelerate Automation?

Cashier

Courtesy of the great blog Cafe Hayek , I came across this fascinating interactive graph built upon no doubt painstaking McKinsey analysis of the range of U.S. occupations and where they sit on axes of how automatable the occupations are and their average hourly wage range.

The common canard from left-leaning advocates for an increase in the minimum wage is that it will improve conditions more than it will harm them – an assumption that more people will benefit from improved wages than will be harmed by being laid off. This graph shows that there are millions of individuals that would be greatly at risk of being automated out of a job – if not now, than in the near future as incentives for innovation in automation would increase.

For advocates of the minimum wage being increased, keep in mind the unintended consequences of what you advocate for. Aside from the fact that one unintended consequence is that those that are most in need of a job are automated out of it, one of the less often talked about realities of a government forced wage floor is that even if it has relatively benign impacts on labor (which in fact it most surely will be more than harmless) is the reality that at best, market and political forces will fuel inflation such that equilibrium and the market clearing price is met once again. This is something that Hayek documents in his writings. Thus, even in its most harmless hypothesized state, a forced raising of the minimum wage is ineffective at best in the intermediate term. In the worst (and most likely) case, it is human labor crushing at the end of the skill scale where people are most in need of a job.

Institutions and Experience (plus some Carbon Tax thoughts)

Magna Carta

I always enjoy John Cochrane’s writings, and the notes from his speech recently at the Hoover Institute are remarkable for bringing to light the importance of venerating our institutions that uphold individual liberties, ideals, and the rule of law. It is well worth the read and includes a lot of concepts that are not talked about or defended enough, especially by our presidential candidates.

As Cochrane is an economist that is considered quite libertarian, I appreciated his discourse on implementing a carbon tax:

I see hope on climate. There is a small but increasing alliance between environmentalists and free-marketers. The environmentalists think carbon is such a big problem, that they want policies that will actually do something about it. Free marketers are aghast at the waste and cronyism of energy policy. They are coming together on a deal: A simple straightforward carbon tax in place of wasting money and economic capacity on tax dodges, crony subsidies and ineffective regulations. Sure, there will be a big discussion on the rate, but any conceivable rate will be a big improvement for both environment and economy.

This may be anathema to many libertarians and conservatives, but I hope to see the discussion on the carbon tax grow. I wonder if that day will ever come. I think there are many climate change skeptics that will balk at the carbon tax simply on principle. I consider myself not so much as a climate change skeptic as much as I consider myself a skeptic that the throngs of self-appointed science doyens that have seemingly descended into a colossal mob mentality group-think aligned with cynical politicians happy to use the fear-mongering to shower subsidies on their pet projects will have any discernable impact while wasting trillions of dollars along the way. Far better that if we agree that there is some risk of manmade climate change, no matter how far into to “black swan” tail end of the probability curve it is, it would be far better to implement the carbon tax and offset other forms of taxation to make it politically palatable. Then the market will adjust to the activities in innovative and efficient ways. The cronyist ways in which we allow the government to pick and choose winners and to create arbitrary and unaccountable legislation through the EPA is the current alternative – and this undermines liberty and the rule of law far more than a simple and understandable and navigable carbon tax.