Friday, August 23, 2013

Parsha Ki Tavo: Modern-Day, Spiritual Fruitfulness

This week's Torah portion, Ki Tavo (Deuteronomy 26:1-29:8) commences with the practice of tithing one's first fruits (Deuteronomy 26:1-15). Based on Rashi's commentary, we know that the tithing was limited to the Seven Species (26:2), as well as the fact that they were confined to the Temple in Jerusalem during the season of rejoicing, i.e., between Shavuot and Sukkot (26:11). The first fruits from a tree that is less than three years old were sacrificed to G-d (26:2), whereas the first fruits from trees from fruit three years or older were donated to "the Levite, stranger, orphan, and widow" (26:12).  What we are observing is a form of sacrifice that has not been practiced since the fall of the Second Temple. Much like with the other forms of sacrifice, that's nearly 2,000 years of what seems to be total irrelevance to Jewish practice. Do we gloss over or dismiss the passage regarding fruit tithing because there currently is no Temple and sacrifices have since then ceased, or should we analyze the text to pull out more eternal and essential messages given within the passage? This would be a pretty short blog entry if I went for the former, so let's go with the latter here, shall we?

The first thing we should ask ourselves is why this practice existed in the first place. Fruit has a special place in Judaism. Aside from the separate blessing for [many] fruits (borei pri ha'etz; and borei pri hagafen for grapes), fruits are commonplace throughout Jewish holidays (e.g., apples on Rosh Hashanah, etrog for Sukkot, the Tu BeShevat seder, charoset at the Passover seder), so I'd say that fruit has plenty of symbolism in Judaism. Furthermore, when Judaism began, Jewish society was predominantly agrarian in nature. Since many Jews were farmers, fruit was a representation of a Jew's livelihood.

When we acquire the fruit of our labors, whether that is in the form of a paycheck or in actual agricultural produce, it becomes so easy to say "I worked for it. Everything I have earned is mine. Why should I have to part with anything that I have done through drudgery and labor?" Yes, we should make sure that we have are needs provided for, because "If I'm not for myself, who will be (Pirke Avot 1:14)?" However, when life is based on greed, we create instability and volatility in our interpersonal relations and institutions. What we need here is a spiritual view of economics that is well-balanced. When we think solely about ourselves, we lull ourselves into being greedy. The problem is that we don't live in isolation from others. We have G-d, family, friends, community, and society to worry about. To go back to that wonderful Jewish saying (ibid), "if I'm only for myself, then what am I?" One of the friendly reminders that G-d gives us in this tithing practice is that everything is not ours. We are not put on Earth simply to accrue material wealth. We are meant to use that material wealth as a positive force in society, to bring about a sense of responsibility to others, not to mention righteousness in this world. That is why the first fruits [that come from trees that a three-plus years old] are to be given to those who are less fortunate (Deuteronomy 26:12-13), which also is a reminder that we are to treat individuals with dignity because they are "created in His Image." The fruits of one's labor has purpose that transcends ourselves.

Aside from teaching the importance of generosity, G-d is reminding us that what we need in life is a well-grounded sense of gratitude. The fruit tithing is a tithing of thanksgiving. The passage that is recited during the tithing (Deuteronomy 26:5-10), and one that also happens to be in the Passover Haggadah,  reminds us of the tough times and how events in life can and do get better. While the Jews were reduced to a state of destitution (Abraham ben Izra, commentary on Deuteronomy 26:7) while being slaves in Egypt, they could not even acquire their own possessions (Sforno, commentary on Deuteronomy 26:6). Once out of slavery, they were free and thus able to acquire the fruits of their own labor.

What is interesting is that other sacrifices were offered in silence, but in this case, the passage in Deuteronomy 26:5-10 had to be verbalized (ibid, 26:5). Gratitude is so important that it required the externality of verbalization of the gratitude. The Talmudic rabbis bring up that happiness is being satisfied with one's lot (Pirke Avot 4:1). With that, R. Mordechai Gifter, zt"l, went as far as saying that being joyful for having one's lot is a commandment (Deuteronomy 26:11). The Israelities in the Torah, even after being slaves in Egypt and wandering in the desert for forty years, were still meant to feel gratitude and joy. We are meant to reflect on what it is to have ups and downs in life, but nevertheless ultimately be joyful for what we have (ibid), which is to say that Judaism likes to end on a positive note.

Although we no longer have a sacrificial system, we are taught a great deal from fruit tithing about how to live our lives. Give what you can and be thankful for what you have. When we act generously and show gratitude, those actions bear fruit in our lives in ways we could not imagine possible.

Tuesday, August 20, 2013

Why Legalizing Prostitution Wouldn't Be Horrifying

Commonly referred to as "the world's oldest profession," prostitution, which is the voluntary trade of sexual services in exchange for financial compensation, has such stigma attached to it that it has become illegal in many countries. Why is there such stigma in the first place? Does the prostitute do something so outrageous that there should be no legal market? While assessing the arguments for and against prostitution, I would like to state what I am trying not to do here. This is not me expressing my personal opinions on prostitution, this is not me trying to present a discussion on prostitution from the lens of Jewish law, and this is not a blog post about the wrongs of human trafficking because trading human beings and forcing them into sexual slavery is a different topic than the one presented here. What I am attempting to do is determine whether a voluntary economic transaction involving sexual favors should be legalized.

To understand why prostitution is illegal in many places, one has to understand the arguments behind its illegality because its current legal status expresses moral outrage towards prostitution. What I find interesting is that amongst the naysayers, you neither find the prostitute nor the client as clamoring to prohibit prostitution. The naysayers are not even involved within the transaction, and are those who don't have a stake or standing in the result of said transaction. In spite of all that, prostitution is illegal in many parts of the world. So what are the arguments used to prohibit prostitution?

Sex should not be commoditized: I agree that there is a qualitative difference between mechanical, emotionless sex and making love with someone whom you know and care about. In the latter, there are emotional bonds, commitment, and loyalty that elevate the value of having a sexual rapport with a spouse or partner. However, this does not mean that there is zero value in paying for sex. Otherwise, why would history teach us that there has always been a high demand for such services? Also, sex has multiple functions, including stress relief, sensual pleasure, or dealing with boredom or loneliness. Considering the declining marriage rate and the number of single people, sex for pay can become an acceptable substitute for those who cannot or do not want to have a [long-term] relationship.

One can claim that a good has infinite value and that it shouldn't be commoditized, whether that is art and music or selling human organs. Even so, the truth is we commoditize goods and services all the time. Even if listening to music at a concert can be considered "priceless," there are still ticket prices one has to pay in order to see a concert. The teacher or the fireman does altruistic work, but they are nevertheless provided a salary to compensate for the work done. More to the point, one pays for sex in some way or another, whether it's taking someone to dinner and a movie, listening to the other partner's woes, or dealing with the ups and downs of marriage. Every voluntary transaction has tradeoffs, and guess what? Sex is no different.

"Sex for money" is degrading: A voluntary action between two consenting adults should not be prohibited simply because it violates somebody else's sense of morality or personal preferences. Aside from using something as  subjective as "it's degrading" for the basis of determining policy, I find it amusing that if you film two individuals having sex, pay them for their services, and call it pornography, it's covered under the First Amendment, but if two consenting adults have sex for pay and it's not filmed, it's somehow so much worse that it is rendered illegal. Furthermore, a prostitute works few hours for good pay. Especially given the higher relative wages, how is it any less degrading than something mundane like being a housekeeper or flipping burgers at McDonald's?

Addressing other negative factors: One can argue that I am glorifying sex for pay and that I am ignoring other negative features associated with prostitution, whether that is harassment by policemen, exploitation by the pimp, or degrading work conditions. Harassment by policemen exists because prostitution is illegal. With an estimated average of approximately 79,000 arrests per annum from 2001-2009, you'd think that law enforcement would be able to better utilize their time and resources on something else, such as fighting human trafficking or sex abuse, rather than pursuing legal action for adults having consensual sex. The pimp is not inherently an unscrupulous career choice. Functionally speaking, the pimp is a broker between the prostitute and the client.  A broker brings two parties to a transaction in a way that would be cheaper than without the broker's services. In this case, the prostitute saves time and money looking for clients, and the clients have better assurances regarding the quality of the prostitute. Every career field has perfidious and corrupt individuals. If you judged a career choice based on a few bad apples, then you would have to legally prohibit most professions. The reason why the pimp is disproportionately able to get away with worker abuse is because the market has been driven to the underground market. If a pimp abuses a prostitute, the prostitute does not go to the police and have the crime reported not only because the prostitute would be arrested for prostitution, but also because of the societal stigma attached to prostitution. If the markets were made legal, prostitutes would have legal recourse and pimps would have greater incentive to not abuse prostitutes because they would be subject to implementing workers' rights. As for the appalling working conditions, they are made more appalling due to the fact that prostitutes are being forced into the underground market, which is categorically unsavory. Legalizing prostitution would mean overall better working conditions and a safer working environment.

Health factors: An important aspect of the working conditions is with regards to health issues. The argument used by those who are against prostitution is that legalizing prostitution will lead to more prostitution. I agree with that much. Regardless of whether legalized prostitution causes an increased demand or supply [or both], there will be an increased quantity in the services consumed. This is a problem for those who are anti-prostitution because it means the further spread of sexually transmitted diseases (STDs). When the market is underground, prostitutes are much more likely to be threatened to perform their services without any safeguards to their personal health (e.g., lack of condom usage; Nevada study with Albert and Warner, 1998). When the markets are made legal, the prostitute can demand health care benefits. There are regulations that can be enacted to require prostitutes to undergo STD testing on a regular basis, as can be observed with the state of Nevada. Additionally, with the power of societal pressures and market forces, customers are going to have higher standards for the transaction, e.g., nicer facilities, prostitutes without STDs, all of which is to say that the transmission of STDs is less likely to occur when prostitution is legalized. As an additional point, much like any other health care decision, sexually active individuals need to be informed about the decisions that they make regarding their health. That is why sexual education, condom and birth control usage, and regular STD testing are all important.

Economic factors: If people are going to engage in commercial sex, there might as well be some economic benefit. Legalizing prostitution would mean a larger GDP, and it would translate into more government revenue from licensing fees and taxes, as is illustrated with the Netherlands and Germany. Since the prohibition would be lifted, it also would translate into more jobs.

Conclusion: In this country, we are supposed to have the right to life, liberty, and the pursuit of happiness, and when put into practice, that means, amongst other things, the right to pay for sex. Even with an underground market, 15-20% of American men have engaged in commercial sex at least once in their lives (NCJRS, p. 10). Why prohibit such a voluntary transaction between two consenting adults? When prostitution is prohibited by the law, not only does the government compound the issues already involved with prostitution, but prohibition couples the headache by throwing on the unintended consequences involved. Instead of punishing consenting adults for a victimless crime, we should follow the examples of ItalyCanada, Nevada, and the Netherlands and create a regulatory system for prostitution. The World Health Organization recently released a publication illustrating the benefits of decriminalization to sex workers. If we are to "think of the children," the government can create red light districts to confine the business to a certain area that families can avoid. The government can also enact licensing fees and sin taxes (much to my dismay), force brothels to undergo inspections, or require prostitutes to undergo regular STD testing. While legalized prostitution has its risks, if it's between better working conditions for prostitutes, economic stimulus, and more freedom versus the status quo, I'll take the former any day.

8-13-2015 Addendum: The Institute of Economic Affairs released its report on the benefits of decriminalizing the sex industry. I was particularly intrigued by the argument that the economic independence of women and the subsequent withdrawal from the sex market will only increase demand for the sex industry.

8-21-2015 Addendum: Vox just put out a good article examining the merits of the studies of banning prostitution, and it looks like heading towards liberalization of the sex workers market is the way to go.

Thursday, August 1, 2013

The Detriment of Keeping Interest Rates Artificially Low on Federal Student Loans

Yesterday, the House of Representatives passed the Bipartisan Student Loan Certainty Act of 2013 (H.R. 1911), which is supposed to keep interest rates for federal student loans at a more affordable rate. What the bill enacts is tying the interest rate for student loans to the yield on ten-year Treasury notes (See §2(a).3, which approximately works out to be 3.86% for undergraduate students and 5.42% for graduate students). The bill had overwhelming support from Congress, not to mention most Americans, which makes it seem like a good idea. Aside from the fact that these rates don't apply to my own college loans, what could possibly be wrong with maintaining artificially low interest rates for student loans?

Before answering that question, it would be prudent to answer some more important questions: What is the function of an interest rate? Why do lenders need to charge interest rates in the first place? Why not just have Congress mandate that the interest rate be 0% on all loans? Essentially, an interest rate is the cost of borrowing money. The interest rate not only compensates the lender for risk of potential loss on the principle, but it also compensates the lender for having foregone other investments that could have made with those assets. Like any other price, the interest rate relays information to the creditor, which is why the interest rate also takes into account such factors as inflation, length of time of the loan, the consumer's past credit history, as well as the price of the consumer wanting to hasten consumption [as opposed to deferring it]. This is how it is supposed to work, at least when the government doesn't intervene and crowd out the private sector.

The problem is that the government does interfere and does keep the interest rates artificially low, which means that any information that the interest rates were transmitting have been garbled, if not simply lost. With specific regards to the bill, proponents laud the fact that the interest rates on federal student loans are tied to yields on Treasury notes. It might sound nice to have interest rates tied to Treasury notes because "they're attached to 'stable' market forces." In reality, it's no less distortionary to have it tied to Treasury notes than have the government pick some arbitrary interest because guess who's distorting the interest rates on Treasury notes? The Federal Reserve. Using this interest rate as a metric of credit risk is no more informative than what a thirty-day weather forecast would tell me about the weather thirty days from now.

Since the interest is the way a financial institution makes profit, lending at a rate below what an undistorted market would have allowed translates into profit loss. The differential in interest rates means that somebody has to pay for the loss. Our government doesn't have any money of its own and has no concept of making profit, which is why it's in debt (Take a look at a dollar bill. On it, you'll see it says "This note is legal tender for all debts, private and public"). From where does the government accrue its money? The private sector. To pay for the price differential, the federal government either needs to increase tax rates to cover the costs, or it will kick the can down the road by acquiring more debt, thereby increasing the debt-to-GDP ratio. According to the Congressional Budget Office (CBO), the overall student loan program is going to cost the government $90B over the next ten years (Table 2, p. 5).

The average student debt for an individual with an undergraduate education is about $26,000. If you lower the interest from 6.8% to 3.4%, that translates into monthly difference of $44.32 for the individual. While I believe that $44.32 saved is $44.32 earned, this policy distracts people from the more worrisome aspect of financing college education, i.e., college is too expensive to begin with.

When the government sets interest rates below those of the private sector, the government artificially increases demand for a college education because students are now more willing to borrow more money than they would have otherwise. The end result is like any other government subsidy towards education. When demand increases, price also increases. Since colleges now have more consumers [of education], the colleges raise their tuition prices, which cause an upward price spiral in which college costs have increased beyond overall inflation. This only causes more and more student debt, which is exacerbated for those who don't even complete their Bachelor's degree. Even for those who complete their Bachelor's degree, it's hardly a rosy picture. Both the Center for College Affordability (also see here) and the Federal Reserve Bank of New York show that nearly half of college graduates have taken on jobs that do not require a Bachelor's degree (i.e., underemployment). And all of this without getting into credential inflation, which is the idea of the declining value of a Bachelor's degree caused by a decrease in the advantage that a degree holder has [in this case, because of artificially high demand for a college education].

The first step is for the government to stop subsidizing college education because there is evidently an overconsumption of college education. Young adults need to know there are alternatives to the traditional four-year education, whether that is through online/distance learning, technical college, two-year college, apprenticeships, acquiring certifications, starting a business, or directly entering the workforce. Once the postsecondary education marketplace is compelled to compete with alternatives, then we can begin to see a decrease in four-year college tuition prices.

7-7-2015 Addendum: I found another reason for the government to stop subsidizing student loans. For every dollar spent on student loans, the student experiences an average hike of 65 cents on tuition, according to the latest study from the New York Federal Reserve Bank.