Wednesday, February 27, 2013

Sequestration: The Hype That Shouldn't Be

Last December, the world was supposed to end because the Mayan calendar predicted the apocalypse. Looking at political commentary, I'm expecting a similar breakdown of society due to the sequestration "cuts" that are planned to take into effect on March 1, 2013. The sequestration consists of $1.2T of spending "cuts" over the next ten years. $88B of which are supposed to take place this year, and that doesn't consider the fact that the government will do away with $44B of those "cuts" (CBO, p. 11). The Pentagon is threatening hiring freezes and furloughs, particularly since about half of sequestration "cuts" affect the military. Heritage Foundation is complaining about how the sequestration will undermine national security. The White House and the Democrats cannot help but scare the American people. Liberals complain because Meals on Wheels will be put on hold, quality of education will worsen, and sequestration will increase the likelihood of health risks. Sequestration is something that makes both sides of the aisle nervous. What comes to my mind is the following: are we going to experience societal dysfunction if sequestration goes through or is this an example of Big Government incapable of taking a small dosage of the medicine it needs? Unsurprisingly, my answer is "the latter." Rather than give into emotionalism, I think it's prudent to put the spending "cuts" into perspective:

Government spending is not decreasing. You might be wondering why I have been putting the word "cuts" in quotation marks. That is because when we look at the big picture, these aren't actual cuts. If the government were to experience actual cuts, there would be a net decrease in government spending from the previous year. What is going to take place is decreases in initial projected baseline increases, not spending cuts. The Congressional Budget Office (CBO) shows that our federal budget will nearly be $3.6T (Table 1-1) this year, which translates into about spending cuts about 1%. Looking at Summary Table 1 of the CBO report, net government expenditures [in real dollars] still increase.  



Defense spending can take a "hit." Defense spending is 4.7% of the overall GDP and about 18% of the federal budget. The United States has more military spending than all the other major militaries combined. If the full sequester goes into effect, the defense budget will drop 31% from the 2010 peak to the 2017 trough. We've already pulled out of Iraq and we're looking to pull out of the pointless war in Afghanistan by 2014. Since both of those military expeditions will be eliminated shortly, there is no need to increase spending. Let's also consider that in the next ten years, the federal government is planning on spending over $7T [in nominal dollars] (See Table S-4) on defense spending and defense spending actually increases over time (ibid). With the sequestration, the CBO still calculates that the defense budget will still be over $6.4T [in real dollars] (See Table 1-5), not to mention that the Pentagon will still have about $500B per annum and overall military spending in real dollars will exceed current levels by the year 2019 (ibid).  In the grand scheme of things, cutting $500B from $7T is not a huge cut.

Bottom Line: Hysteria like this frustrates me. Anything that resembles a "cut" is, in aggregate terms, negligible to the fact that the government is still increasing its overall spending. Much like with the case in Britain, the "anti-austerity" crowd wants to bemoan the implementation of faux spending cuts and how spending cuts don't work, even when these "cuts" are only 0.03% of our GDP. This sort of scare tactic is used by those who think that we can spend our way out of an economic crisis and that we should perpetuate the "tax and spend" mentality because of the misconceived notion that government creates economic growth.

Even the perceived threat of spending cuts gets people all riled up. Considering that the net debt-to-GDP ratio is about 87% right now and projected to rise, I'd be worried since it affects our country's credit risk, which affects our economy's overall well-being. I would have preferred that the sequestration targeted Social Security and other forms of entitlement spending in addition to defense spending. I wish that we had real spending cuts that would help with deficit reduction and get our fiscal house back in order. Even if the sequestration "cuts" only modestly cut back initial baseline increases in spending, at least it's a modest beginning in the right direction that might even get the government thinking about how it spends its money.

Thursday, February 21, 2013

When Does the Violation of One's Religious Beliefs Actually Matter?

Yesterday, I listened to this two-person panel sponsored by the local Federalist Society. The speakers were Professors Richard Duncan and Ann Althouse, and they spoke on "The Constitutionalization of the Sexual Revolution and What It Means for Religious Liberty, Federalism, and Self Government." It was a lively discussion on the line we draw between religious freedom and civil liberties, specifically those in the sexual realm. I had a bit of frustration with Professor Duncan because he kept going back to the example of how Catholic adoption agencies in Massachusetts cannot turn away gay couples looking to adopt because if they do, the agencies would be violating anti-discrimination laws, which made him sound very one-sided.

At the end of the panel, I started asking myself a lot of questions. Should religion have as much influence in the political sphere that it does? Should the government have influence over one's religious beliefs? Should the religious beliefs of a vocal minority, plurality, or even a bare majority have any bearing on policy? In short, what constitutes as a legitimate violation of religious freedom and what constitutes as an encroachment on freedom that is merely disguised as religious freedom? When should I care that your religious beliefs have been violated, and when should I tell someone to "just deal with it?"

Constitutionally speaking, there's this little thing called the First Amendment. There are two relevant aspects of it: an Establishment clause, which states that the government cannot establish religion, and the Free Exercise Clause, which gives individuals a pretty wide range to practice one's religion in peace.

As a libertarian, my take on religion is that as long as you are not harming anyone (i.e., the nonaggression axiom), you can practice your religion as freely as you like. This rule applies to all, which means that an individual cannot impose their religious beliefs on other individuals and cry "that was a violation of my religious beliefs" when that individual doesn't get their way. I'll use myself as a hypothetical example. I have the right to keep kosher in accordance with Jewish dietary laws because that's part of my freedom of religion. I do not, however, have the "right" to either force others to keep kosher or even force all restaurants to adhere to Jewish dietary law. At the very least, you'd have a lot of people become angry because eating bacon cheeseburgers or shrimp would become illegal. Policy should not be enacted simply because it violates an individual's sense of religious right or wrong. Otherwise, it would become an argumentum ad absurdum very quickly.

So how do all these factors get applied to modern-day politics and policy?

1: Gay marriage. As I have argued before (see here, here, and here), same-sex marriage is not only a civil right dealing with equality, but it is a matter of contract rights. If you're on the Religious Right and you think that same-sex marriage is "an affront to G-d," then my advice to you is don't get married to someone of the same sex. You have the right to believe same-sex marriage is wrong (and I also have the right to disagree with that assertion), but you don't have the right to impose your religion on other people. A ban on same-sex marriage based on religion is as tenuous as my argument of making everyone in America adhere to Jewish dietary laws: it has no place in a free society.

2: Gay adoption. If we go back to Professor Duncan's main grievance, he brings up there being an issue with anti-discrimination laws, and I agree. Do I personally like the anti-gay discrimination of the Catholic adoption agencies? Absolutely not! In spite of that, I do have to respect the Catholic Church to run their private institutions in whichever way they would like. Fortunately, the Catholic Church's views do not stop a gay couple from exercising their right to adopt, especially considering that there are other adoption agencies out there that are more than willing to allow same-sex couples adopt. And as a side note: if we are to respect the Catholic Church as a private institution, then they shouldn't be receiving government funding. Otherwise, deal with the strings that are attached!

3: Anti-discrimination laws. Being a libertarian Jew, I have very mixed feelings about anti-discrimination laws. On the one hand, I know discriminating against employees based on something like religion, race, gender, or sexual orientation is wrong. Employers should select employees based on their skills. On the other hand, the notion of property rights allows proprietors to run their businesses however they want, regardless of how idiotic or immoral their discrimination is. This sort of idiocy does end up being punished. There is a reason why more and more businesses are being pro-LGBT: it's good business. Once the momentum for a civil rights movement begins, the trajectory is in favor of progress and equality. Businesses realize that as time goes on, more people will be pro-gay rights, which means that over time, being anti-gay is poor business strategy.

4: Obamacare and Birth Control. Another unintended consequence of Obamacare is agitating the Catholics with a birth control mandate that even extends to non-profit organizations. The Catholic Church doesn't want to be forced to provide something that they find morally objectionable. I believe women should have access to birth control. Conversely, birth control is not a right; it is an economic good. Birth control should be freely accessible in the marketplace, not at the bequest of a government mandate. Do the rights of the Catholic Church matter here? Yes and no. I agree with the Catholic Church, but for different reasons. They complain that their religious views are being violated, but that's not the issue per se. The real issue is that their economic rights are being violated. They should not be forced to pay for something they don't want, all the more so if they find it morally problematic.

Conclusion: The search for religious freedom is what led the Puritans and other persecuted religious minorities from the Old World to America. Religious freedom is considered sacrosanct in this country. Respecting the individual's freedom of religion means not infringing or imposing upon another individual's freedoms. Atheists can be offended or annoyed by religion, but that doesn't give the atheist the right to destroy or close down houses of worship. People were offended by Dan Cathy's anti-gay remarks, myself included, but that doesn't mean we go about banning Chick-fil-a restaurants. Boycotting is the best response to Dan Cathy and his ilk. If an evangelical Christian parent is offended that the public school teaches evolution or doesn't allow prayer in the classroom, that parent can either send their child to private school or have their child home-schooled.

To summarize my sentiment, if the government is forbidding a certain religious belief or practice when it is not infringing on other people and their rights, then the religious individual has the right to cry foul. Otherwise, we speak up and put an end to the chicanery because your freedom of conscience ends where another individual's freedoms begin. Without being aware of the difference between actual religious rights and faux claims masquerading as rights, we can lose our religious rights to either extreme, which is why we should always pay attention to our rights with due diligence and alacrity.

Tuesday, February 19, 2013

To Drink or Not to Drink? On Purim, That Is the Question

Purim is a Jewish holiday commemorating the redemption of the Jewish people from the Persians after Haman's attempt to exterminate the Jewish people: another example of "They tried to kill us, we survived, let's eat." One of the more peculiar practices on Purim is that of a festive amount of drinking. In the Talmud (Megillah 7b), Rava opines that it is a mitzvah for a Jew to drink until "he can longer distinguish between 'blessing Mordechai' and 'cursing Haman.'" Certainly at first sight, the Talmud tells us it's a mitzvah to get drunk on Purim. On the other hand, Noah's drunkenness had bad results, not to mention that Proverbs 23:30-35 doesn't present drunkenness positively. If Judaism views drunkenness in a negative light, how can we resolve the mitzvah of drunkenness on Purim with Judaism's condemnation of drunkenness? Can we resolve them?

After researching rabbinic commentary and factoring in Jewish values, these were the following possibilities I derived:
  1. This mitzvah is an exception to the norm. Although drunkenness is normally considered lewd behavior with negative repercussions, this is a day where we throw that notion out the window. The pivotal events of Purim, whether that would be the downfall of Queen Vashti (Esther 1), Haman's execution (ibid 7:1-10), or Esther's ascent to power (ibid 2:17-18), were all associated with wine, hence the mitzvah (Babylonian Talmud, Megillah 7b; Shulchan Aruch, Orach Chayim 695:2). What could be the personal significance of drinking on Purim? For some, the mitzvah is a supra-rational moment in which one is in touch with their G-dly self. Others view it as a chance to appreciate the unity of the Jewish people, and thus be able to that express joy and love in that given state. I like the idea that it can crumble our sense of security, and to some degree, self-control. Realizing that we are not in control of nearly as much as we'd like to think helps generate a similar feeling the Jews felt during the Purim story. Anyone can become drunk. To take a mundane act like drunkenness and elevating it to a holy status is a challenge and a joy.
  2. Getting drunk on Purim is in fact not a mitzvah. Drunkenness can lead to terrible things happening. If we finish reading the passage in the Talmud (Megillah 7b), we see that being the case. After the Rava states his opinion, there is a parable of Rabba and Rav Zeira. They both get drunk on Purim. In a drunken stupor, Rabba stabs Rav Zeira with a knife. Rav Zeira is revived back to life due to a miracle. The following year, Rabba invites Rav Zeira to drink with him on Purim, and he refuses. This story would explain why R. Ephraim ibn Avi Alragan (12 c. rabbi) ruled against drinking on Purim; R. Ephraim felt that this parable negated Rava's opinion. Furthermore, in the Mishnah Torah (Hilchot De'ot 5:8), Maimonides states that a drunkard is a despicable sinner because he loses his self-control, his wisdom, and is thus prone to committing acts like that of Rabba. 
  3. Have a bit more than usual. R. Ephraim ibn Avi Alragan read the story literally. Rabbis such as the Maharsha and R' Avraham (son of Maimonides) read the story figuratively and treated the parable as a caveat. This would make sense since it wasn't uncommon for the Talmudic rabbis to use hyperbolic parables to illustrate a point, which in this case would be "don't take your drinking too far or this is what happens." According to Maimonides (Hilchot Megillah 2:15) and R. Moshe Isserles (Orach Chayim 695:2), one is meant to eat the festive meal and drink enough where the alcohol-induced drowsiness makes one fall asleep. R. Moshe Isserles, or the Rema, points out that the point of falling asleep is when one cannot distinguish between Mordechai and Haman. Hey, I guess passing out beats stabbing someone with a sword! 
  4. You're only meant to get tipsy. Here, I define tipsy that point between being buzzed and being drunk. This is why I like that R. Nathaniel Weil interpreted the word "until" (עד) as "up to [and not including]" drunkenness. The word used for drunkenness in the Talmudic passage, לבסומי, comes from the same root as בשמים (the fragrances used on Havdalah). If one has to have enough to drink to have the "fragrance" of alcohol, this could arguably be under Point #3, but I would contend that it fits better under "being tipsy" because it is the typical minimum under which one would need to drink and have the "fragrance" on them. I think this is a good compromise scenario because if one only reaches tipsy and doesn't go into the territory of being drunk or completely wasted, one can find spiritual joy (per Point #1) while still avoiding the problems in Point #2.
Conclusion: Although there were concerns about being wasted and committing sins while under the influence, the rabbis never got rid of the practice. They limited its indulgence to the point of not reaching excess, which is something we should keep in mind to make sure we don't go overboard. Each individual is different. Some people are alcoholics, in which case, they shouldn't drink on Purim (Chofetz Chaim, Biur Halacha, Orach Chayim 695, Note 1); the same goes for those who know they'd be a danger while drunk. Others have complete control over their drinking and can handle self-control without a problem. Most people fall somewhere in between those two extremes. The wide variety of chemical reactions to alcohol is probably why the rabbis never quantified the amount one had to drink in order to fulfill the mitzvah. That is why I clarify that this blog entry's function is to elucidate upon rabbinic commentary and present possible interpretations to the tradition of drinking on Purim. If you have questions or [personal] concerns regarding this tradition, you should bring them up with your rabbi. Ultimately, the Rema gives a good perspective on this practice. He says that whether we drink more or less than normal, the important thing is that our drinking on Purim is for the sake of Heaven. Regardless of how much you decide to drink, I hope that you find joy on Purim!

Friday, February 15, 2013

Parsha Terumah: Voluntary Giving > Obligatory Giving


It’s that “most ‘wonderful’ time of year” where we get geared up for April 15th to file our taxes. Because who doesn’t love a burdensome regulatory system that has thousands of pages of tax code that’s next to impossible to follow, causes a lot of man-hours being used, or funding the oh-so-wonderful IRS that costs the taxpayers nearly $13 billion every year?  You know you’re a public policy nerd when you take this time of the year to have fun debating things such as lack of oversight in the value-added tax, whether the carbon tax is a good way to cut back on carbon emissions, or what I would consider an “ideal tax rate.” I also take this as a moment to reflect on the idea of spending money and what one does with assets. Money might be the fruit of our labors, but the spending of our money is also a reflection of how we view the physical and spiritual world because money is not an ends unto itself, but rather a means to an end. How we go about income, consumption, investment, etc., brings me to this week’s Torah portion, Parsha Terumah. 

At the beginning of the portion, in ch. 25, verse 2, it states:

דבר אל-בני ישראל, ויקחו-לי תרומה:  מאת כל-איש אשר ידבנו לבו, תקחו את-תרומתי.

Speak to the children of Israel, and have them take for Me an offering; from every person whose heart inspires him to generosity, you shall take my offering. 

Looking at Rashi’s commentary of the verse, the word terumah, or offering, can refer to three offerings. The first two refer to a half-shekel donation that was a regressive tax that everyone had to pay. The third refers to the donations that each individual Israelite made. What differentiates these two types of offerings? The first was an obligatory tax that covered the sockets of the Tabernacle. The second, also obligatory, was a similar regressive tax to cover the communal offerings. The third terumah was set of gifts were voluntary. People gave because they wanted to, and they gave so much to construct the Mishkan, the Tabernacle, that they actually had an excess of goods to use. So why the distinction between obligatory and voluntary? Why the need for these types of offerings? 

I would like to extrapolate the idea of obligatory versus voluntary action to the great realm of Jewish practice. On a base level, we need a sense of obligation. It brings structure, it brings guidance, and the idea is there because let’s be honest, not every day do we feel like doing certain things. Obligation acts both as a foundation and as a safety net. In spite of that need, the Torah portion goes into this huge detail about the voluntary donations, making me conclude that the emphasis here is not on the obligatory giving, but on the voluntary giving. 

Taking a quick look at Pirke Avot, Ch. 1, Verse 3, it states that we should not be slaves and serve our Master, i.e., G-d, for the sake of reward, but rather be like one who serves without that condition [of receiving a reward]. And let the fear of Heaven be upon you.” We notice that fundamental idea of obligation, or being an eved Hashem. The Maharal’s commentary on this verse points out that the highest form of service is one that is motivated by ahavat Hashem, the love of G-d. That is precisely what the Israelites are doing in this week’s portion. A bulk of their offerings are voluntary. They are giving because they want to. They want a place where G-d can dwell, and a place where they can feel a sense of divinity and spirituality. 

Translate that alacrity into 21st century terms. We shouldn’t ultimately do things because we feel we have to or “our parents did it, and our parents’ parents did it.” Ultimately, we should say to ourselves “I do it because I find meaning in what I do, it brings me closer to G-d, and because we want to.” With this mentality, not only do we strive to, as Nachmanides puts it, to go beyond the letter of the law, but because this approach is healthier, both spiritually and emotionally, and as the Israelites show us in the parsha, it gets better results.

Wednesday, February 13, 2013

At a Minimum, Obama Wants to Raise the Minimum Wage

State of the Union addresses are nothing more than political pontification in which the President attempts to assuage people's fears, to illustrate the progress made by the executive branch, and to outline future proposals. One of the proposals in Obama's State of the Union Address was to raise the minimum wage from $7.25 to $9. Since I have previously expressed my views on minimum wage, this should be a reasonably short blog entry.

It shouldn't be all too surprising that I don't like the minimum wage. If the minimum wage were such a wonderful policy without tradeoffs, we should just legislate the minimum wage at $15, $20, $100, or even at $1,000 and be done with it. Alas, that's not the case. Minimum wage is another feel-good policy that is supposed to help the poor, which is an odd claim because minimum wage affects less than 2 million laborers in this country, so I don't understand how Obama thinks this will be such a big boost to the economy, or the incomes for millions of families when it in fact affects so few individuals. In fact, minimum wage causes higher levels of unemployment for unskilled laborers while making it more difficult for individuals, primarily young adults from 16-24 (a demographic experiencing record-high unemployment right now), to enter the job market and "work their way up the ladder." See this recent study by Neumark et al. (2013).

If you think that producers aren't going to adjust the way they do business because of a minimum wage increase, think again! Supply and demand undoubtedly plays a role in here, whether that is in terms of creating a surplus in unskilled labor, i.e., unemployment, or causing the producer to increase the price at which goods and services are sold. Unlike other taxes or wealth transfers, the minimum wage puts the entirety of the burden on employers, most of whom are small or medium-sized business owners. There are ways to bring about labor and economic reform (e.g., the earned income tax credit for the poor), but minimum wage is, at minimum, a fiscally irresponsible idea.

At this point, I'm posting a few videos. The first is by Professor Antony Davies to explain minimum wage............



......and this second video of the John Stossel show with Dr. Walter E. Williams explaining how minimum wage specifically hurts African-Americans.......


....and Milton Friedman, whose wisdom and knowledge is regrettably as relevant now as it was back then:





Here is another video about minimum wage:


Tuesday, February 5, 2013

Obamacare Projections Reveal More Unwanted Surprises

Obamacare, also known as the Patient Protection and Affordable Care Act (ACA), is hundreds of pages long. To quote Nancy Pelosi, "we have to pass the bill so that you can find out what is in it." I don't know about you, but I find it unsettling when a politician can't give you a straight answer. My enmity towards Obamacare subsided, but then the CBO came out with a series of reports today, and that enmity resurfaced where I decided to write this short blog entry.

One such report is the 2013 estimates regarding the ACA. In the last published projections, Obamacare was only estimated to have 3-5 million people lose their employer-based insurance. Now, that number is up to 7 million. Someone might notice that the net amount of uninsured people remains the same, and construe that as a good thing. But how is it a good thing that an extra 2-4 million people have become dependent on government for something as essential as health care?

Another surprise is the revised cost of Obamacare. Remember that Obama promised that this would only cost us about $900B. The last projection was that this would cost us $1.252T. We are now looking at it costing $1.329T. The increase is even more bothersome because with more states confirming that they will not participate in Obamacare, you'd think those numbers would have decreased, but alas, they have not.  I can imagine an Obamacare proponent saying, "Well, what's an extra $77B to you?" And you wonder how America inherited its fiscal issues. Oy gevalt!

Friday, February 1, 2013

Another "Right to Choose": A Look at School Choice & School Vouchers

This week concludes the third annual National School Choice Week. I am personally torn on the idea of school choice. On the one hand, it would be nice to see a great privatization of education that is not done with taxpayer dollars. On the other hand, I find that for being a developed nation, there is something wrong with the education system in this country, specifically in K-12 education, and something thusly should be changed.

I think this quote is a good transition into determining whether school vouchers are good policy:

"It constantly amazes me that defenders of the free market are expected to offer certainty and perfection while government has only to make promises and express good intentions. Many times, for instance, I've heard people say 'A free market is a bad idea because some child somewhere might fall through the cracks,' even though in today's government school[s], millions of children are falling through the cracks every day." -Lawrence Reed

One of my biggest kvetches about the status quo is that for many students, they are limited to public school in which they are districted. Some students can afford private schools (only 11.3% of students are in private schools [2007]), and a small percentage of parents are able to facilitate homeschooling (2.9%, as of 2007). However, most students, especially those from families in a lower socio-economic stratum, do not have those options. Even for those who do opt to get out of public schools, many are double-whammied: once with paying property taxes that go to a public school that their children are not even using, and once to cover the tuition for a private school. For those who are not financially well off, this can be very financially burdensome.

Although the government technically doesn't have a monopoly on education, it still acts as a monopoly because the government really does not face direct competition, which does not incentivize them to improve upon their product. What the school voucher program would do is give parents the option of applying the voucher to a public, private, or parochial school. Creating a competitive market, both in economic theory and in practice (also see here and here), engender overall better quality for a lower price. And in the event that you are worried about there not being specific case studies, how about Washington DC, the city of Milwaukee, the state of Florida, Alberta, or Sweden

How does school choice engender this sort of change? Because when parents "vote with their feet," they incentivize schools to perform better and hold schools more accountable to maintain expectations. We can see schools be more innovative, such as offer alternative subject matter (e.g., vocational skills in the high school level) or alternative school hours. This sort of competition has already succeeded in the collegiate level where public and private universities compete for GI Bills and Pell Grants.

Since time is not on my side right now, I have to conclude rather than delve into more facets of school vouchers. If we are to implement school vouchers in more places, I worry about the regulatory oversight being burdensome where change and innovation would be stifled. I know it's not a completely liberalized education market. It would be great if it could be, but pragmatism has to step in. Given how slow change happens in American politics, I know gradualism is not only more pragmatic because it wouldn't deliver a shock to the political system, but also because people can handle change in more gradual doses. This is why in spite of imperfections one can find with a school voucher system, I believe it is a step in the right direction. Providing a more competitive market, albeit with government oversight, is better than the status quo, which is why I hope the efforts of National School Choice Week translate into legislation towards a more liberalized education market.