You would think that the topic of the Israeli security wall on its borders is passé, but the people at Procon.org decided it was important enough to resurrect the debate, so I might as well give a brief overview.
Why build a fence in the first place? A fence either keeps people in, such as a prison fence, or it is meant to keep people out. In this instance, Israel built a wall because of the latter, because they wanted to bring an end to the huge amount of terrorist attacks that were occurring back in the early 2000s under the Arafat regime. The result? A huge reduction in terrorist attacks. The construction had absolutely nothing to do with oppression and everything to do with a legitimate security concern. But that never stopped the United Nations from giving Israel a hard time, not that I actually care what the United Nations think....might have something to do with their anti-Israel bias.
Let's get back to the fundamental question: does a security fence bring peace? No. It brings about security. That is its function, and it has done quite a nice job at succeeding. Do you think that there is going to be peace between the Israelis and Palestinians if they took down that fence today? Of course not! Because much like the land disputes, it's not the root issue. As Golda Meir put it, it's because the Palestinians hate the Jews more than they love their own children. Not even the "moderate" Fatah recognizes Israel's existence. If you can't even recognize Israel's existence, how can you even begin a peace process? You don't make peace with your enemies; you make peace with your former enemies. When hatred for Israel stops being a Palestinian norm, then there will be hope for peace. But until such an event takes place, Israel might as well protect its citizens while this stalemate is perpetuated.
Tuesday, February 28, 2012
Thursday, February 23, 2012
Does Obama's Corporate Tax Reform Impress Me?
I love how this is the question that is going to keep me up tonight, well, at least until I answer the question. Obama's plan is to reduce the top corporate tax rate from 35% to 28%, and the effective rate for manufacturing will be lowered to 25%. Given that I'm libertarian, my ears perk up when I hear the words "tax cut," especially since America has one of the highest corporate tax rates amongst the OECD nations. Historically, the United States has had a varied corporate tax rate (see IRS data). The proposal does not put it as low as the 1% it was during the early 20th-century, but at least it's not as high as the 52.8% as it was in the late 1960s.
However, I do have to put this in context. First is that Democrats haven't exactly been the most ardent supporters of tax cuts. The second is that a tax cut is not in line with Obama's ideological stance. The third is that it's a re-election year, and anything that the incumbent does around re-election is thus suspect. Do I have good reason to be suspect of this tax reform?
I see this tax deduction is nothing more than misdirection from the fact that Obama is also raising the dividend tax, not to mention the imposition of a "minimum foreign tax." Also, as Cato Institute tax reform expert Dan Mitchell points out, the government already forces the government to overstate its income, which is not addressed in Obama's tax reform. Although Obama is addressing the need to close loopholes, he fails to address the complexity of the tax code, which is in dire need of simplification. Interestingly enough, an OECD study stated that not only is tax complexity harmful, but the corporate tax is especially harmful to a given economy (re-affirmed by the Tax Foundation, although I do have to wonder if this particular study proves causation if the R-squared is only around 0.24).
It would have been nice to see revenue-neutral tax reform or a further tax reduction. One has to keep in mind that this rate does not even include state-level corporate taxes. In Europe, the total corporate tax rate is only 23%. If those in Europe who are all for the social welfare state have at least enough common sense to keep the corporate tax rate low, you would think that America would. How else do you expect America to maintain its competitive edge when its corporate tax rate is still above average?
Obama attempted to address the root cause, which is the corporate tax rate needs to be lowered. However, Obama's plan did not do enough to solve the problem, and as such, I'm anything but impressed.
However, I do have to put this in context. First is that Democrats haven't exactly been the most ardent supporters of tax cuts. The second is that a tax cut is not in line with Obama's ideological stance. The third is that it's a re-election year, and anything that the incumbent does around re-election is thus suspect. Do I have good reason to be suspect of this tax reform?
I see this tax deduction is nothing more than misdirection from the fact that Obama is also raising the dividend tax, not to mention the imposition of a "minimum foreign tax." Also, as Cato Institute tax reform expert Dan Mitchell points out, the government already forces the government to overstate its income, which is not addressed in Obama's tax reform. Although Obama is addressing the need to close loopholes, he fails to address the complexity of the tax code, which is in dire need of simplification. Interestingly enough, an OECD study stated that not only is tax complexity harmful, but the corporate tax is especially harmful to a given economy (re-affirmed by the Tax Foundation, although I do have to wonder if this particular study proves causation if the R-squared is only around 0.24).
It would have been nice to see revenue-neutral tax reform or a further tax reduction. One has to keep in mind that this rate does not even include state-level corporate taxes. In Europe, the total corporate tax rate is only 23%. If those in Europe who are all for the social welfare state have at least enough common sense to keep the corporate tax rate low, you would think that America would. How else do you expect America to maintain its competitive edge when its corporate tax rate is still above average?
Obama attempted to address the root cause, which is the corporate tax rate needs to be lowered. However, Obama's plan did not do enough to solve the problem, and as such, I'm anything but impressed.
Wednesday, February 15, 2012
How Dependent Are Americans on Government?
When the New York Times publishes an article on the extent of government dependence, that's when you know that you have to begin wondering just how dependent the average American has become on government. What does it mean to "be dependent" on government? How do we measure dependency on government?
The Heritage Foundation recently put out the data in their 2012 Index of Dependence on Government. It is tempting to scream "right-winged bias." I'm not a happy that Heritage Foundation only included federal income taxes in its assessment with tax burden or that it does not put the growth of expenditures in terms of 2012 dollars. But just remember that with the aforementioned NYT article, there was an interactive map that came to the same conclusion: Americans have become increasingly dependent on government.
As Heritage Foundation points out, the programs that create dependency account for seventy percent of our budget! The two largest programs are Social Security and Medicare. Considering the rise of retiring Baby Boomers, it should be no surprise that these expenditures will only increase with time, not only as a dollar amount, but also in percentage of the federal government's budget.
What makes these programs even worse is these two entitlement programs are not predicated upon economic status, but age. This is a point that the Center of Budget and Policy Priorities, a Left-leaning think tank, illustrates, which is that the "middle class" is benefiting way more than perceived. That makes sense given that Social Security and Medicare are the large percentage of these "entitlement expenditures." I know what the CBPP is trying to do. They want to demystify the Republican adage of redistribution of wealth. However, this does not help the Left's cause because they go on and on about how we need these programs to help the poor. If that is not what is really going on, all that the CBPP study does is give libertarians such as myself the reaffirmation as to why such programs are not needed.
Look at Social Security. The original purpose of Social Security was a temporary safety net created during the Great Depression to make sure that elderly citizens weren't dropping dead en masse. Now, the government is treating the program as "guaranteeing" a retirement account to American citizens, much of the funding that helps the "middle class." Considering the rising costs, scaling back on Social Security and encouraging private retirement accounts (PRAs) would be the way to go.
Although Social Security and Medicare are two programs that create a huge degree of dependency at a great fiscal cost, I'm not solely worried about that. What about housing? Or higher-education subsidies? Federal employees notwithstanding, approximately one in five citizens are dependent on the government.
I know of people who would play the emotional card on me here and say that I don't care about others, that I want the elderly to die, or I don't want young adults to receive a good education because I either want virtually every government department either scaled back or eliminated. But let's look at a department such as the U.S. Department of Housing and Urban Development, also known as HUD. The department was created back in 1965, which was also the same year that the legislation that created Medicare passed.
It makes me wonder. Was there no healthcare prior to the creation of Medicare? Prior to 1965, was there no interim housing for those who were temporarily down on their luck? Of course not! For my friends who are enamored with Big Government, it must be difficult to imagine a world in which there is not a bureaucratic entity that attempted to regulate and provide everything. However, prior to the creation of these programs, mutual-aid, religious, and educational organizations provided poor people with such needs as temporary housing, welfare, and healthcare.
But now? We live in society with such a self-entitlement mentality that many expect the government to not only solve problems, but provide citizens with everything, i.e., a "welfare state." It's not simply a matter of the welfare state being a costly endeavor. Dependency stymies progress and growth, both for the individual and the society as a whole. The trend of this country is clearly heading in a direction towards increased dependency. If we are to reverse this negative trend, it begins with changing the minds and hearts of the American people.
The Heritage Foundation recently put out the data in their 2012 Index of Dependence on Government. It is tempting to scream "right-winged bias." I'm not a happy that Heritage Foundation only included federal income taxes in its assessment with tax burden or that it does not put the growth of expenditures in terms of 2012 dollars. But just remember that with the aforementioned NYT article, there was an interactive map that came to the same conclusion: Americans have become increasingly dependent on government.
As Heritage Foundation points out, the programs that create dependency account for seventy percent of our budget! The two largest programs are Social Security and Medicare. Considering the rise of retiring Baby Boomers, it should be no surprise that these expenditures will only increase with time, not only as a dollar amount, but also in percentage of the federal government's budget.
What makes these programs even worse is these two entitlement programs are not predicated upon economic status, but age. This is a point that the Center of Budget and Policy Priorities, a Left-leaning think tank, illustrates, which is that the "middle class" is benefiting way more than perceived. That makes sense given that Social Security and Medicare are the large percentage of these "entitlement expenditures." I know what the CBPP is trying to do. They want to demystify the Republican adage of redistribution of wealth. However, this does not help the Left's cause because they go on and on about how we need these programs to help the poor. If that is not what is really going on, all that the CBPP study does is give libertarians such as myself the reaffirmation as to why such programs are not needed.
Look at Social Security. The original purpose of Social Security was a temporary safety net created during the Great Depression to make sure that elderly citizens weren't dropping dead en masse. Now, the government is treating the program as "guaranteeing" a retirement account to American citizens, much of the funding that helps the "middle class." Considering the rising costs, scaling back on Social Security and encouraging private retirement accounts (PRAs) would be the way to go.
Although Social Security and Medicare are two programs that create a huge degree of dependency at a great fiscal cost, I'm not solely worried about that. What about housing? Or higher-education subsidies? Federal employees notwithstanding, approximately one in five citizens are dependent on the government.
I know of people who would play the emotional card on me here and say that I don't care about others, that I want the elderly to die, or I don't want young adults to receive a good education because I either want virtually every government department either scaled back or eliminated. But let's look at a department such as the U.S. Department of Housing and Urban Development, also known as HUD. The department was created back in 1965, which was also the same year that the legislation that created Medicare passed.
It makes me wonder. Was there no healthcare prior to the creation of Medicare? Prior to 1965, was there no interim housing for those who were temporarily down on their luck? Of course not! For my friends who are enamored with Big Government, it must be difficult to imagine a world in which there is not a bureaucratic entity that attempted to regulate and provide everything. However, prior to the creation of these programs, mutual-aid, religious, and educational organizations provided poor people with such needs as temporary housing, welfare, and healthcare.
But now? We live in society with such a self-entitlement mentality that many expect the government to not only solve problems, but provide citizens with everything, i.e., a "welfare state." It's not simply a matter of the welfare state being a costly endeavor. Dependency stymies progress and growth, both for the individual and the society as a whole. The trend of this country is clearly heading in a direction towards increased dependency. If we are to reverse this negative trend, it begins with changing the minds and hearts of the American people.
Thursday, February 2, 2012
Was the Right-to-Work Bill a Victory for Indiana?
As of yesterday, Indiana became the first state in the "Rust Belt" to enact right-to-work (RTW) laws, as well as the 23rd state in the Union to do so. It's the first time in about a decade that such a bill has been passed. One thing is for certain: Big Union is throwing a hissy fit.
Although the bill has become law in Indiana, it begs the question of whether Indiana did the right thing.
Unions complain that it will cause a "free rider" issue. If such an issue exists, then union members would be disincentivized to pay union dues, thereby causing erosion of unions. However, it does not seem out of the realm of possibility, especially in a policy-making sense, to create some sort of mechanism in which non-union members would not derive benefit from any union negotiations. Plus, the Supreme Court prohibits free riding under Consolidated Edison Co. v. NLRB (1938).
I have this bigger issue with forcing people to be part of a union. It's a violation of freedom of association, as well as dictating whether someone should have their hard-earned cash go towards union dues. If there is a reason that an individual does not want to be a part of a given union, they would either have to "grin and bear it," leave their profession, or leave their state to find a job in a right-to-work state. There might be a reason why nearly three in four Americans have a problem with it.
There are also questions to consider that go beyond fairness, mainly that of efficacy and whether this causes more [economic] harm than good.
The unions complain that workers make less than non-union workers, thus making a "right-to-work" bill a "right-to-work-for-less" bill. The Economic Policy Institute, a Left-leaning think tank, argues that it also has detrimental effects, particularly in private-sector pension funds. Do keep in mind that only 6.9% of private sector workers are in unions, not to mention the average American's propensity towards dissavings, so it's hard to see how that has much bearing. Interestingly enough, their 2011 study shows that states with RTW laws have lower levels of unemployment than states without such laws (8.6% and 9.6% respectively), as well as lower costs of living.
The libertarian think-tank Cascade Policy recently just put out a study as to how implementing RTW laws would be good for Oregon, although much of the data would be relevant for any other non-RTW state. The study looks at various macroeconomic effects of RTW laws, including impact on employment and income growth.
Looking at the data, I think that Indiana will be better off for enacting RTW laws. But it'll depend on what your take on the data is or how you perceive unions. Either way, it'll be interesting to see if Indiana's economy improves.
There are also questions to consider that go beyond fairness, mainly that of efficacy and whether this causes more [economic] harm than good.
The unions complain that workers make less than non-union workers, thus making a "right-to-work" bill a "right-to-work-for-less" bill. The Economic Policy Institute, a Left-leaning think tank, argues that it also has detrimental effects, particularly in private-sector pension funds. Do keep in mind that only 6.9% of private sector workers are in unions, not to mention the average American's propensity towards dissavings, so it's hard to see how that has much bearing. Interestingly enough, their 2011 study shows that states with RTW laws have lower levels of unemployment than states without such laws (8.6% and 9.6% respectively), as well as lower costs of living.
The libertarian think-tank Cascade Policy recently just put out a study as to how implementing RTW laws would be good for Oregon, although much of the data would be relevant for any other non-RTW state. The study looks at various macroeconomic effects of RTW laws, including impact on employment and income growth.
Looking at the data, I think that Indiana will be better off for enacting RTW laws. But it'll depend on what your take on the data is or how you perceive unions. Either way, it'll be interesting to see if Indiana's economy improves.
Wednesday, February 1, 2012
Mediocrity in the Job Market Won't Cut It Anymore
I hardly consider myself a fan of the New York Times. However, Thomas Friedman recently penned a piece entitled "Average Is Over," and I have to say that I enjoyed it. The premise of the article is that being average, whether in education or job skills, used to get an individual a cozy lifestyle. Due to such phenomena as globalization, technological progress, and economic liberalization, being average no longer suffices.
The value of a high school education is not what it used to be. Median wages for those with just a high school education has been dropping over the years. This would have something to do with the fact that the American economy has put more emphasis on the service sector and less on the manufacturing sector. The service sector requires more skills than manufacturing, which is why the college degree has an increased premium.
If America is to compete in the global job market, education reform is going to have to be a top priority for America. Although getting into actual education policy is a topic too grandiose for this single blog entry, I still would like to briefly highlight an important policy goal: improving the quality of K-12 education.
Why do I under-emphasize college education reform? I'm not saying that a college education is unimportant. Quite the contrary! The college education premium has only increased in recent years.
Rather, there is no reason to focus on college education if K-12 education is not addressed first. If children are not developing necessary skills and common sense in the primary and secondary school systems, there are going to flounder all the more if/when they reach college.
There was a time in which a high school education had career-based value. If we want American to avoid a fate of becoming a mediocre nation, it would be nice if we could re-establish the worth of a high school degree that was enjoyed in previous years.
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