Chanukah and Thanksgiving: Double the Holidays, Double the Gratitude

This year, Chanukah comes so early on the Gregorian calendar that we will experience a rare phenomenon that has been dubbed as Thanksgivukkah, which is the intersection of Thanksgiving and Chanukah. This convergence is literally a once-in-a-lifetime opportunity. Since Thanksgivukkah will not happen again for another 78,000 years, and since many people do not believe in coincidences, it should give us time to pause and reflect on the relationship between Chanukah and Thanksgiving. What commonalities can we find between the two holidays?

Let's briefly take a look at the history behind the two holidays. Chanukah is an eight-day celebration commemorating the Maccabean revolt during the 2nd century BCE against the Hellenistic Greeks occupying Judea. Practicing Judaism was de facto banned under this regime, for which the Maccabees fought for and won their freedom of religion. The Thanksgiving story is traced back to a 1621 harvest commemorated by Puritans who emigrated from England to America in order to avoid religious persecution.

Aside from the motif of religious persecution, these two holidays have something in common: gratitude. For Thanksgiving, the gratitude is self-evident. The word "thanks" is in the holiday name. Although people celebrate Thanksgiving differently (e.g., watching football, eating turkey, praising G-d), the most common practice is expressing gratitude in some shape or form. For Chanukah, the theme of gratitude is not so clear, especially when looking at the secular adaptation. People usually associate Chanukah with lighting the menorah or spinning the dreidel. However, the secularized version, which is based on the erroneous assumption of "Chanukah is the Jewish Christmas", misses a major component of Chanukah. The Talmud (Shabbat 21b) provides great insight to the meaning of Chanukah. After discussing the military victory and discussing how the oil was supposed to last only one day but lasted eight days, the Gemara says something that is simply relevant:

לשנה אחרת קבעום ועשאום ימים טובים בהלל והודאה.

The next year, the Sages instituted those days and made them holidays with recitation of Hallel and of thanksgiving.

On Chanukah, we praise G-d by saying Hallel, which are a series of Psalms (113-118) based on the theme of thanksgiving. The הודאה is in reference to the recitation of Al Hanisim (על הנסים), which is a benediction added both to the Modim blessing of the Amidah, as well as Birkat Hamazon. Both of these additions are added to blessings that express gratitude. There is also the Shecheheyanu, which is yet another blessing of gratitude (this blessing is for new experiences), that is recited on the first evening of candle lighting. To say that Chanukah has nothing to do with gratitude is like saying Yom Kippur has nothing to do with atonement or fasting.

The fact that Al Hanisim or the second blessing over the Chanukah candles emphasize miracles does not take away the motif of gratitude. If anything, it is enhanced. How so? Gratitude is about perception. One of the impediments of feeling a sense of gratitude is having the impression that everything comes by itself, and that it is meant to come to that individual (R. Shlomo Wolbe). This impression creates a self-entitlement mentality. Another impediment is taking things for granted. When we become accustomed to receiving something in our lives, it is all too easy to assume it is a given. Additionally, it is easier to focus on what we do not have, as opposed to what we have. When it comes to gratitude, perspective is key. Not only is gratitude about focusing on what we have or assuming that we should never take things for granted, but it is also about viewing life as a miracle. If we can perceive life as a miracle, rather than a burden or a pain in the toches, our sense of gratitude becomes unprecedentedly amplified.

"But what about when times are rough? How can you be grateful then?" That's a good question. It is not easy to be thankful when you are down on your luck. Even so, my answer is that gratitude is not reserved for when it is convenient. When everything is going great, it is so easy to be grateful. It is during the arduous times when we see just how genuine our sense of gratitude is. No one learned this better than Leah, who the Talmudic Sages (Berachot 7b) said was the first person to express thanks to G-d. Given who preceded her, I find the literal statement of "Leah was the first one to express gratitude to G-d" hard to believe. What the Sages were saying was that Leah was the first one to authentically be thankful because she was able to be thankful amidst the complications and disappointments that her life delivered. The ideal form of gratitude is to be thankful, regardless of what is going on in life. The protagonists of the Thanksgiving and Chanukah stories knew that best. Both the Maccabees and the Pilgrims took on arduous tasks, faced incredible odds, and celebrated their successes, even in spite of the hardships. Much like the Pilgrims or Maccabees, we face challenges in life. But it is during those challenges that we are to be most thankful.

Whether we are currently experiencing calamity in life or not, we should seize the moment of these two holidays and fully express our thanks for the miracles we have in life. Keeping the day doubly focused on gratitude is, without fail, the best way to celebrate this rare convergence.

Sierra Leone Doesn't Have a Credit Rating, So Why Don't I Provide One?

Lately, I have become more interested in the world of credit ratings. Although it might seem like a bunch of financial jargon, how it reflects and impacts macroeconomic stability is quite intriguing. I was reading an International Monetary Fund (IMF) report on Sierra Leone this past weekend. I thought to myself, "What do the credit rating agencies think of Sierra Leone?" Much to my shock, I found that neither Moody's, Standard and Poor's, nor Fitch have credit ratings for Sierra Leone. Maybe it was the years of political instability. Whatever the case may be, I thought that I could take a look at the country's overall macroeconomic trends and devise something myself.

Sierra Leone had been marred by a particularly nasty civil war that lasted from 1991 to 2001. Political stability is an important factor in credit ratings because warfare creates economic inefficiencies. With 2 million people (i.e., about a third of the population) displaced by the war, it takes time to recoup (see World Bank report). Although Sierra Leone is a constitutional republic, as Freedom House points out, there have been periods of political upheaval, which have this subsided. Its improvement in governmental institutions would explain why Freedom House gave it a score of 2.5 (Free). But looking at the score from Transparency Institute, an international organization looking at corruption levels, Sierra Leone ranks 123 out of 176, which is to say it has a while to go.

Political factors are important, but so are economic factors (see World Bank fact sheet). There are two main economic indexes measuring economic freedom. The Fraser Institute (p. 147) shows enough improvement where it is ranked 115 out of 152. The Heritage Foundation, on the other hand, shows a decrease in its scoring, as well as a score that is below the regional average. The World Bank's Doing Business Index shows that it is a tad more difficult to do business in Sierra Leone that it was the previous year (Sierra Leone is ranked as the median in regional ease of doing business). Overall tax revenue as a percent of GDP is small, which is good because it signals that the government does not have to tax the citizenry to death to fund its expenditures. Conversely, top tax rates are around 30 percent, which is not exactly optimal. Recent iron ore production (see IMF report, p. 4) has caused a great boost in GDP. As nice as it is to see the boost in GDP, it is a bit disconcerting to rely on one industry because it signals a weak resource base, and without diversification, the economy of Sierra Leone becomes heavily dependent on iron ore. At least external public debt has decreased dramatically. And although poverty has decreased in Sierra Leone since the civil war, the poverty rate is over 50 percent (see IMF report; World Bank report). Even with the tapering inflation, it is still a concern because it exceeds GDP growth, which means lack of growth in real dollars. Debt distress is only moderate because compared to where it was a decade ago, the debt-to-GDP ratio is much lower. Being able to service debt is a plus in Sierra Leone's favor.

Conclusion: There are a plethora of factors to consider, and the hyperlinked documents cover the factors in much detail. If I were working at Standard and Poor's right now (credit rating system here), I would give Sierra Leone a CCC rating. Sierra Leone has shown remarkable improvement in the past decade, but it has a while to go. As long as the political situation can remain stable, I would consider reevaluating its credit rating within the next year or two. Both the World Bank and the Heritage Foundation show economic instability within their indexes. If there is a continued downward trend in economic progress, then I would consider a downgrade. Relying on one industry is suspect. The iron ore industry would have to prove medium-term growth to be substantive, and not just a short-term blip that would send Sierra Leone to more political upheaval once the resource has been extracted to its maximum potential. However, if inflation decreases, GDP growth increases, and Sierra Leone can maintain political stability, then I very well would consider an upgrade in the near future.

Scanning for the TSA's Ineffectiveness and Why We Need to Privatize Airport Security

Nothing says "fun at the airport" like a good-old fashioned, unsubstantiated pat-down from a TSA employee. Sarcasm about my recent travels set aside, I have to wonder if the Transportation Security Administration (TSA) does a good job in providing airport security, thereby preventing another 9/11, or if its unproductive "grope or scan" policy is a waste of taxpayer dollars and a violation of the Fourth Amendment.

One of the complaints lodged against the TSA is due to their mismanagement and abuse of power. I'm sure we can all find TSA abuse stories, like the 400 TSA employees fired for theft, the pat-down of a six-year old, having a the TSA use pliers to remove the nipple ring of a passenger, or cases of inappropriate groping. As illustrative as anecdotal evidence can be, it suffers from selection bias and does not reflect overall trends. That is why studies are more effective, like the 2013 GAO report showing a 26% increase in misconduct from 2010 to 2012. The graph below shows a breakdown of abuses (p. 11), including the 949 cases of inappropriate comments or conduct:

In addition to TSA abuse, one has to question the effectiveness of the TSA's methods (See recent Cato Institute study).  One of the methods used by the TSA is a program known as SPOT (Screening of Passengers by Observation Technique), which is supposed to prevent terrorist attacks by observing behaviors. This is another example of the government throwing lots of money at a project without researching the effects. Accordingly to a GAO report published this month, the SPOT program has been a waste of $1 billion in taxpayer dollars because the program doesn't work. Then there is the matter of the full-body scanners. For one, there are safety issues with the radiation from the scanners. Also, there is the matter of whether they work (GAO, 2010) and if it's possible to bypass the machines. Pat-downs are security theatre. You would think that with an annual budget of over $7 billion, they could at least foil a terrorist plot, but they have not.

It would be better to focus on intelligence and investigation than taking a "reactive approach to security" (House, p. 3) and trying to prevent a method of attack that has hundreds of tactics and hundreds of potential targets. The House of Representatives recommends making a leaner TSA, but I would get rid of the agency and privatize airport security. Airport screening needs to be separate from regulation of airport security if there is to be any notable success. Relegating security hiring to the airports would allow for market competition in airport security, which is preferable to a government monopoly that is very unresponsive to adapting to change. Through Catapult Consultants, the GAO found that private security performs just as well, if not better than the TSA. We should follow Canada and Europe's example and privatize airport security. It would certainly be an improvement to save taxpayer dollars and increase the quality of airport security.

5-17-2016 Addendum: The Left-leaning Vox put out a piece that shows not only that the TSA is ineffective, but they put lives at risk. 

Pirke Avot 2:16: The Evil Eye and Keeping an Eye on Our Own Jealousy

Rabbi Yehoshua (Pirke Avot 2:16) said that three things removed an individual from this world: an evil eye, an evil inclination, and baseless hatred of others. The latter two are relatively self-explanatory, but what is an evil eye (עין הרע)? Evidently, it's not some gigantic eyeball with supernatural powers that causes the world's problems. Although given the superstition surrounding the evil eye, that is a pretty good metaphorical representation. The notion of an evil eye is one of the most universal superstitions out there, and the Jewish people were not exempt from this superstitious belief. The evil eye was the supposed power that a malevolent stare can bewitch or harm another. To try to ward of the evil eye, certain Jews took on the practice of amulets, whether that was in the form of blue beads, the red string, or the chamsa (חמסה). Aside from my issue of using objects as amulets, the superstition misses the point of עין הרע.

The commentators have various opinions of what עין הרע is. R. Yonah opines that עין הרע refers to jealousy. One who is constantly envious is spiritually destitute because one can hardly appreciate what he has. As Ben Yoma points out (Pirke Avot 4:1), "Who is happy? He who is satisfied with his own lot." Not only is there a lack of appreciation for one's lot, but there is also a propensity to undermine another's wealth and prestige in hopes that they can be nefariously acquired. The insatiable desire to go after another's wealth damages both oneself and those around the individual. It is so powerful that it ended up being the last of the Ten Commandments (Exodus 20:14). Avot de Rabbi Natan viewed this jealousy in more spiritual terms. One with the עין הרע will not want his friends to be successful in Torah study. Maimonides viewed the עין הרע from the standpoint of stinginess. If one is stingy, one is constantly obsessed with material wealth. With this worry, one can never really enjoy life since they are in constant fear of being in poverty. Additionally, Hillel said in Pirke Avot 2:8 that "the more flesh, the more worms," i.e., overindulgence in materialism is detrimental to spirituality.

Although there are some variations of opinion, the general consensus is that עין הרע is an issue of jealousy. The underlying point of עין הרע is that עין הרע is an internal phenomenon, not an external one. It's easier to blame some external force for our shortcomings because it means that we don't have to confront them. The Sages were wise enough to realize that having an עין הרע was a detriment, which is why having a good eye (עין טובה) was praiseworthy (Pirke Avot 2:13). How do we go about developing this good eye?

One response is gratitude. There is a huge correlation, and dare I say causation, between gratitude and happiness. If you do not have a sense of gratitude for what you have, your eye wanders towards what others have. R. Yonah (commentary to Pirke Avot 2:13) said that a good eye was someone with a charitable and benevolent attitude towards others. Benevolence is more than a feeling; it needs to be acted upon in order to matter. Whether it is צדקה ("charity") or גמילות חסדים (acts of loving-kindness), it is a matter of externalizing the sentiment in order for it to come to full fruition, much like with happiness. If I am to be so bold as to add my own commentary, I would opine that a change in perspective would help. What I refer to is the idea that we are not in competition with one another; it's not zero-sum. Certainly when it comes to spirituality, G-d does not derive any pleasure from oneupmanship. There is no point in oneupmanship because we are all created in His Image, and G-d expects us all to act ethically. G-d does not want us to knock others down. G-d wants us to wish other people the best in life, and to be able to help others in whatever capacity possible. Being able to help and give to others, not to mention realizing the good in our lives, is the best antidote to eradicating the evil eye from our midst.

Do We Recycle Too Much? A Look at the Economics of Recycling

Reduce. Reuse. Recycle. This was the common environmental mantra of the last couple of decades of the 20th century. I remember that slogan being hammered in during elementary school. They really put a lot of emphasis on the recycling portion, and it seems to have worked. About nine in ten individuals recycle, and why not? If there are such benefits to recycling, then we feel like we're making a difference in the environment because we are preserving scarce resources. But what do we do if recycling is nothing more than feel-good environmentalism?

Recycling is the process of converting previously used products into new products that would have otherwise been discarded as waste. Even with the economic complexities, the government intervenes in hopes of improving upon the situation. In many areas (e.g., Des Moines; Phoenix; Minneapolis; NYC; Scranton, PA; Australia; United Kingdom), cities enact price floors, which are government-imposed price limits as to how low a good can be valued. If the price floor is set above market price, which it usually is, then the government policy will create a surplus. There are also mandatory collection laws that cause an outward shift of the supply curve, which, all things considered equal, will cause an increase in supply and a decrease in price. The Environmental Protection Agency (EPA) also has enacted procurement policies, as well as the FTC's enactment of mandatory recycling product labeling, to encourage more recycling. These are just some government policies that encourage more recycling.

To justify this level of interventionism, one could argue that the market does not accurately reflect the total benefit of the good because that which would be recycled appears to be trash, not resources. As such, the market underprices recyclable goods based on incomplete information. I'm not making the argument that voluntary recycling is a bad idea. If it is cheaper for an individual to recycle a good because it would save resources, then of course the individual should be allowed to do so! People have voluntarily recycled items for centuries, whether in the form of economic transactions or scavenging. But if it is more mandatory (not the "put a gun to your head" sort of coercion, but even a quasi-enforceable law is still problematic), I still have to wonder whether the government knows best.

One of the arguments used to advance recycling is that we are running out of space to construct more landfills. First, the number of active landfills has decreased from 8,000 in 1988 to 1,908 in 2010. Second, and more importantly, we are not running out of landfill space. In spite of regional disparities, landfill capacity is not an issue (EPA, p. 14) because we have plenty of space. Furthermore, landfills do not have the environmental concerns that existed 20-30 years ago.

There are also environmental costs to consider. Recycling is a manufacturing process, and like all manufacturing processes, it pollutes. The trucks that carry recycled goods still emit exhaust. Contamination is also an issue. If there are toxins in the original good, odds are that it end up in the new product. 

Although the benefits of recycling are lauded to excess, it seems like none of the proponents ever stop and think there could be costs. To name a few: time spent by the consumer to sort trash, water and electricity used to clean household trash, recycling containers, collection costs, transportation costs to and from collection centers, labor costs of sorting at the recycling plant. It is difficult to accurately say whether the costs exceed the benefits because the economic efficiency of recycling is so location-dependent that it's not even funny, although some have tried (e.g., Aadland and Kaplan, 2013).

Ultimately, I do not think the issue is as simple as "should we recycle or not?" Some things are worth recycling. Iron and steel are cheaper to recycle than their virgin forms. Aluminum is considered valuable in the market, so people are more likely to voluntarily recycle aluminum. Cardboard can be recycled into a wide variety of paper products, and they also have low collection costs. Recycling asphalt pavement is also useful. Other materials, not so much. It is difficult to recycle plastic because of the various resins cannot be mixed during reprocessing, which means additional sorting costs, not to mention relatively low costs of producing new plastics. Only 8% of plastics were recyclable in 2011. Recycled newspapers need to be de-inked. Even if the sludge from the de-inking process were not toxic (but it is), the sludge still would still need to be disposed. Also, let's not forget that trees are renewable resources. Converting glass into cullet isn't cheap, either. Glass comes from sand, which is one of the most abundant resources on this planet.

Even with the recycling fervor, we still produce tons of garbage. About 65% of municipal waste is still sent to landfills. Landfills will continue to be a part of waste disposal, and are arguably cheaper than recycling. If you are worried about the amount of waste, ask yourself why there is so much waste produced in the first place and how we can do things like consume less or develop more environmentally friendly processes.

If there is a scarcity in a given resource, that will be reflected in market prices, provided the fact that the government does not intervene and distort those prices. When people recycle voluntarily, they conserve resources and raise overall wealth. When forced to do so, society incurs unforeseen costs. Having the government force people to recycle is a load of rubbish.

Why We Need to Reform the Food Stamps Program and How to Approach Reform

Facebook debates can be nasty and unproductive at times. Yesterday, I was in the middle of one about food stamps that was, on the whole, productive. We talked about countercyclical demand and the merits of the food stamp program. In a more ideal world, there would not be a demand for food stamps because food insecurity would be all but non-existent. I would also like to live in a world where government intervention is not the answer to everything. However, I don't live in such a world. I have to address this problem with the Supplementary Nutritional Assistance Program (SNAP) as the status quo. Even if you want to argue that SNAP has any merit, it is hard to deny that the program does not come without its fair share of downsides. As I pointed out a couple of months ago, the program has a plethora of problems, including fraud, high administrative costs, increased unemployment, lack of transparency, bureaucratic redundancies that cause inefficiencies, increased dependency on government, lack of wealth creation, inability to provide healthier dietary habits, and scant evidence that SNAP actually helps with hunger relief. That is quite a list of deficiencies. There is a part of me that has a knee-jerk reaction to cut the program based on this long list. However, given that eliminating the program is the least politically feasible of existing options, I would need to take a more gradual approach that either results in significant downsizing or being totally stamped out in the medium-to-long term. Here are some reforms that I decided to analyze:

1. Separate SNAP from agricultural subsidies. This is a means-tested welfare program, not an agricultural program. The USDA is ill-equipped to handle the food stamps program. If you're going to keep this program on the federal level, at least have the Department of Health and Human Services (HHS) run the program. And while we're at it, let's legislatively separate SNAP from agricultural subsidies. It's blatant politics when you have to sneak in something as economically inept as agricultural subsidies into the bill with food stamps. They are two separate policies. Let's keep them that way. Plus, farm bills are renewed every five years, which is way too infrequent to reevaluate a program such as SNAP, which is larger than that of agricultural subsidies.  
2. Remove bonus payments for increased registration. Rewarding states for increasing enrollment might sound like a good thing. I don't think that making more individuals dependent on Big Government is a good thing, but let's set that one aside for the moment. The issue is that it perverts incentives for states because it makes their primary priority to acquire more applicants to the point where they expand their programs beyond helping the truly needy. If any sort of reinforcement should be used, it should be the negative reinforcement of penalizing states who have high rates of making erroneous payments, especially since erroneous payments cost $2.5B, which was 3% of outlays, back in the 2010 fiscal year (CBO [2012], The Supplemental Nutrition Assistance Program, p. 11).  
3. Fortify work requirements. You might tell yourself that SNAP has nice work requirements on paper, but they don't do much if they're not being enforced. As the CBO states (p. 6), "for most households, there is no limit on how long they may participate in SNAP and effectively no work requirement." At best, SNAP should be a temporary safety net. It should not discourage people from working, and it should not increase medium-term or long-term dependency on Big Government. Unconditional aid leaves very little incentive to ameliorate one's economic situation. Much like with Temporary Assistance for Needy Families (TANF), there was a strong incentive to find work. Any able-bodied adult receiving benefits should do so under conditionality, e.g., employment training or finding gainful employment. Those who implement SNAP need to make this a higher priority.  
4. Eliminate broad-based categorical eligibility and return to traditional assets and income testing. A sizable amount of the SNAP participation rate increase can be attributed to more lax eligibility requirements. In 2010, one half of SNAP recipients qualified for SNAP through broad-based categorical eligibility, which means that their qualification for TANF automatically triggered eligibility for SNAP. According to the Congressional Research Service (CRS), legislation under the Obama administration allowed applicants to bypass the assets and income test, as well as raised dollar limits for eligibility (p. 4). Although there is the worry of greater administrative costs and more errors under this reform, subjecting those under to broad-based categorical eligibility to traditional assets and income testing would focus on those who truly need assistance, as well as save $10.3B in the next ten years (CBO, 2013, Options for Reducing the Deficit, 2014-2023; p. 30). 
5. Modifying the gross income limit. As of now (CBO, 2012, p. 9), a qualifying household needs to have gross income less than or equal to 130 percent of the federal poverty guideline. The proposal would be to reduce that amount to 100 percent of the federal poverty guideline. Much like #4, this policy would also focus on those who truly need assistance. It would also save $1.7B over the next ten years (CBO, 2013, p. 30). The savings in this policy are not as large because those who would not receive benefits have a higher income, which means they have been receiving less benefits to begin with. One could also argue that the adverse effects of lowering the gross limit harm those who "still need the help."
6. Eliminate the LIHEAP loophole. LIHEAP stands for Low-Income Home Energy Assistance Program, which is designed to assist low-income households with winter energy services. Some states send token utility allowances to SNAP participants, which can be several hundred dollars a month. Removing the link between LIHEAP and SNAP would produce a savings of $10.3B over the next ten years (CBO, 2013, ibid).   
7. Enact caps on future spending. Are food stamps the primary drivers of federal debt? No. Those would be Social Security, Medicare, and Medicaid. Even so, if we're going to avoid as much longer-term pain involved with debt as possible, we need to consider spending cuts in all programming, especially when discussing SNAP expenditures in the larger context of welfare spending and entitlements. Food stamp spending doubled during the Bush administration, and it did so again during the Obama administration. SNAP expenditures are currently projected to not decrease greatly. If the primary driver of the increase in participation rate is due to the recession (let's not forget the USDA's drive to recruit participants or more liberalized eligibility requirements are additional factors that drove up the participation rate), then we need to reduce spending back to pre-recessionary levels within the next couple of years, especially since we are technically not in a recession anymore (stagnant recovery, yes, but it's not a recession). Once spending has returned to pre-recessionary levels, make sure that any spending growth does not exceed inflation and population growth. Only during times of exceptionally high employment should this cap be temporarily removed.  
8. Turn the in-kind transfer into a direct cash transfer. Matthew Yglesias makes the point that giving low-income households cash is more economically efficient, which is true. Although there are worries about "where will they spend the money," given the lax nature of what one can spend with SNAP benefits, I don't know how well that works. Ultimately, the SNAP program has a paternalistic vibe to it, and turning SNAP into a direct cash transfer would be about as politically infeasible as abruptly eliminating the program.  
9. Increase health standards for food eligibility. Looking at what qualifies as eligible food items under SNAP, one could argue that the program does not put enough emphasis on the "Nutrition" aspect of SNAP. The USDA should put further restrictions on what SNAP beneficiaries could purchase in order to encourage healthier eating, especially since obesity is a problem amongst low-income households. Forget the fact that this proposal is way too paternalistic for my taste. How would the USDA determine what is healthy? With a long list of exemptions and what is eligible, how would recipients know what qualifies under SNAP? As much as the obesity problem amongst the poor needs to be addressed, this is not a remedy.   
10. Return power to the states by using block grants to allocate funds. Centralized government has the problem of applying a one-size-fits-all approach. This is particularly true with the federal poverty line (FPL), which assumes that the average income is the same in all regions of the country. Although block grants would not give the states complete authority to administer the program, the states would still have significant autonomy to set its own eligibility criteria and benefit levels that better reflect the local needs. Block grants would also provide states to design their own programs and experiment more, which would mean more opportunities to discover reforms that can be implemented in other states. The amount saved would depend on the formulae used for the block grants, but the CBO (Options for Reducing the Deficit, 2014-2023; p. 33) estimates that the savings would be $281B over the next ten years. Although those are some good savings, this alternative has a few drawbacks. One is that block grants are not as responsive to economic conditions as federal spending is. With block grants, funding is contingent upon whether the federal government increases spending during an economic downturn. If not, states that cannot increase their own revenues will have to cut back on the number of recipients. Basing the outlays on inflation versus countercyclical demand is probably not the intent of SNAP. This problem of limited funding during economic decline is reflective of what happens when the states are too dependent on federal government largesse. Also, as the Cato Institute points out in its recent study on SNAP, this leads the states to interpret block grants as "free money," which leads to further waste and inefficiencies, as opposed to genuine experimentation. Even so, some of those inefficiencies can be mitigated by not having the federal government take money from the states only to give it back, which makes for inefficient allocation of funds. Returning complete control over to the states would be most efficient.    

Postscript: This is what I was able to come up with that was directly related to the program. This blog entry does not even consider other reforms that could increase one's income (which would decrease the demand for food stamps) or delve into the causes of poverty. Although these reforms are not anywhere near what I would consider "a libertarian ideal," at least they lead us in the right direction.

Parsha Vayishlach: With Whom Did Jacob Wrestle, and Does It Really Matter?

This week's Torah portion has the iconic narrative of Jacob (יעקב) wrestling the night before he meets up with his brother, Esau. The plot goes something like this (Genesis 32): Jacob is no longer working for his father-in-law. Jacob has been notified that Esau is accompanied by four hundred men who are pursuing Jacob. Jacob attempts to flee, during which he separates himself from the rest of traveling companions. Jacob is now alone, and is met by an unnamed stranger. They wrestle until the dawn, and Jacob proves himself to be the stronger of the two. Jacob demands a blessing, and the mysterious being changes Jacob's name to Israel (ישראל). The question I still have in mind is "who is this mysterious being?" The text is ambivalent when it comes to the identity of this being. Scholars have been debating this question for centuries, and quite frankly, I would like to find an answer to the question. Here are a few theories:

1. Jacob was struggling with Esau's spirit. According to Midrash (Genesis Rabbah 77:3) and Rashi (commentary on Genesis 32:25), the spirit (read: guardian angel) of Esau was attempting to weaken Jacob before the encounter the following morning (Nechama Leibowitz). This interpretation does not make sense because why would Esau bless Jacob with a new name?  
2. Jacob was struggling with an angel. This is the most common depiction of the account. Although the term איש is used ("man"; Genesis 32:25), a term used for "angel" (אלהים) is used later in the passage (v. 29, 31), much like we see in other passages (Hosea 12:3-4; Judges 13:17-18).    
3. Jacob was struggling with G-d. Although Jacob could have struggled with an angel, I think the theory that the struggle was with G-d works better for a couple reasons, aside from the fact that אלהים is also one of the names of G-d. One, after the wrestling, Jacob named the place (Genesis 32:31) where the incident occurred פניאל, which means "I have seen the face of G-d (פנים אל פנים) and survived." The theme of being "face-to-face with G-d" can also be found in text during the Burning Bush narrative (Exodus 3:6). Two, Jacob's new name, Israel, means "he who struggles with G-d." The downside of this argument is that G-d is incorporeal. In the Guide for the Perplexed (II, xlviii), Rambam points out that because of G-d's Infinite Oneness, anything describing to G-d needs to be figurative, which means that Jacob was not literally wrestling with G-d.
4. Jacob was struggling with himself. In Genesis 32:25, the text does state ויותר יעקב לבדו ("Jacob was left alone"), so the most obvious answer would be that Jacob was alone. It is a possibility that this struggle was in the form of prophecy, as Rambam opined (Guide for the Perplexed, II, xlii), but if Jacob was temporarily in a state of solitude, odds are that Jacob was wrestling with his conscience. This was a paramount fight between his good and evil inclinations.  

In my humble opinion, the most compelling answer is a combination of #3 and #4. Although the identity of the "antagonist" has some bearing, what is even more important is the end result of the occurrence. Jacob was not only dealing with the angst of seeing his brother after so many years, but also how it all ties together within the greater context of G-d. Jacob outgrew the negative connotations of his previous name. No longer did he have to deceive his father, run away from Esau after stealing his birthright, or avoid the confrontation that took place between him and Laban. No more deceit or manipulation. No more running. No more hiding. 

In spite of having his sciatic nerve harmed in the process, Jacob was considered to have been שלם (Genesis 33:18), which can mean "safe," but also means "whole" or "complete." It has the same root as the word שלום (peace), meaning that Jacob was finally at peace with himself. That night, Jacob was his own opponent. What did Jacob accomplish that night? He reconciled his sordid past with the fact that he can change and feel a sense of renewal in his life. In short, he accepted all aspects of his humanity.

Why France Deserved the Credit Rating Downgrade from Standard & Poor's

France took another coup as its credit rating from Standard and Poor's (S&P) was downgraded to AA status. I read S&P's report that outlined its decision to downgrade, and I found it to be good reading, although not everyone might agree with that opinion. Paul Krugman had a fit about this report yesterday because Krugman believes that the idea of France's downgrade being based on the notion of needing to cut back on taxes or deregulation is ludicrous. Krugman is just throwing a hissy fit because France is just another example of how high taxes, high levels of government spending, and onerous regulations translate into an anemic economy, but more on that in a moment.

Remember that Fitch downgraded France's credit rating this past July (see the credit rating report), and Moody's did so last November (see credit rating report here). A few days before Moody's decided on its downgrade last year, I performed my own mini-analysis on France's credit rating, focusing on levels of government spending, taxation, and labor rigidities. Additionally, reports from the European Commission, the OECD (this OECD report goes into how France can reinforce competition with labor reforms), and even the French government do not paint the rosiest picture of France's financial situation. Looking at this issue a year later, especially in light of another credit rating downgrade, is most interesting and makes me ask the question of what has triggered all these credit rating downgrades.

France's government spending is not any more inspiring than it was when I looked at it last year. Much like with the case in Britain, Krugman does not have an understanding of what austerity really is because if there were austerity, there would be some actual evidence that austerity has taken place. As Veronique de Rugy, senior research fellow at the Mercatus Center, points out, government spending as a percent of GDP has remained well into the mid-fifties (Ministère de l'Économie et des Finances, p. 111). Last year, it 55.9%, and this year, it is 56.9%. Looking at the Eurostat statistics for government expenditures are not any better because government spending has not decreased at all. Since 2006, France's debt-to-GDP ratio increased from 63.7% to its current 90.2%. Once a debt-to-GDP ratio reaches three digits, it becomes very difficult to lower that ratio, which makes sense because increased, indiscriminate government spending means that the probability that the government can lower that ratio without resorting to expropriating property, high levels of taxation, or printing more money is very low. For a country whose debt-to-GDP ratio has no promise of decreasing, I'd ask Krugman to actually take a look at France's budget to see what unnecessary expenditures exist, but I don't think the term "budget cuts" exists in Krugman's vocabulary.

To lower the debt-to-GDP ratio, the government uses taxation to accrue more revenue. Even before reaching 100%, government tends to use taxation as a method to lower that ratio. Much to Krugman's dismay, taxing citizens into oblivion does not have the desired effects. Why? When taxation becomes a large percentage of the GDP, like we see with France (Ministère de l'Économie et des Finances, p. 61) having its taxation currently be at 45.0% of its GDP, not only does the dependency on taxation signal weak economic development, but taxation also adversely affects incentives to work, save, and take risks in business. Even the IMF recommends that the French government reduces spending over increasing taxation. A look at the World Bank's Doing Business Index, which measures how business regulations make it more difficult to do business, can give us some insight to this phenomenon. According to the index, France has actually gotten worse since last year. If it is more difficult to acquire a construction permit or hire an employee, it would explain why S&P predicts France's unemployment rate will remain in the double digits until 2016, and why real GDP growth has been at zero for the past couple of years.

Fortunately for France, it is not doing as bad as Italy or Greece. As S&P states in its credit rating report, France absolute high levels of productive and wealth, high diversification, financial sector stability, a well-educated workforce, and political stability. S&P is not predicting further instability in France, but recovering its previous credit rating doesn't look all that hopeful, either. Without decreasing its levels of taxation and government spending, France can never become the economic powerhouse that it once was.

If Only It Were a Fat Chance the FDA Were Going to Ban Trans Fats

I'm simply amazed at just how interventionist the government can be. The government regulates so many aspects of our lives, including our wallets, health care, retirement funds, the energy sector, and the definition of marriage.  The government even mandates the number of gallons per flush for a toilet! One of the government's latest crusades is against trans fats. Last Thursday, the Food and Drug Administration (FDA) announced that it is essentially banning artificial trans fats, which are found in foods containing partially hydrogenated vegetable oils. The World Health Organization points out that trans fats are risky to consume, but it still makes me wonder whether the government should step in and ban trans fats.

One of the primary arguments for banning trans fats is that it promotes a positive externality, i.e., improved public health. Trans fats cause increased incidence of cardiovascular diseases. That being the case, I have to wonder just how much trans fats are a leading cause of cardiovascular disease if only 13,000-27,000 deaths (CDC estimate) out of an estimated 597,689 deaths caused by cardiovascular disease would be prevented. This is not to downplay death, but to point out that in the grand scheme of things, 2.2-4.5% of cardiovascular-related deaths is relatively small, especially given the hype behind trans fats. Even assuming that the 13,000-27,000 deaths per annum merit a trans fat ban, there are still some issues with the ban itself. The first is that the FDA does not know how it will distinguish between artificial and natural trans fats (e.g., beef has 8g per lb.). Attempting to legally differentiate between the two will be a regulatory nightmare. Let's say that the FDA somehow manages to succeed in that endeavor. There is still the issue of the substitution effect, which is to say that food producers will substitute artificial trans fats for another type of fat. Even if one is to use fat substitutes, which is comparable to using tofu products to replace actual meat products, not only are fat substitutes in their infancy, but they are an imperfect substitute. What will most likely take place is that saturated fats will be substituted for trans fats. Supposing that saturated fats are slightly less dangerous, the issue is not trans fats per se, but rather an issue with overconsumption of high-fat foods. If the FDA is going to fight this battle properly, it would need to declare war on all fats, not just trans fats. To go a step further, the government should just regulate anything that is unhealthy (more on that later).    

The second argument for a trans fat ban is an economic one. If we ban trans fats, we reduce the amount of dollars spent on health care to [attempt to] cure cardiovascular diseases caused by trans fats. Determining health care benefits from the ban has a similar flaw to cigarette smoking. Those who have cardiovascular diseases usually die earlier. If one is allowed to live longer because they avoided the risk that comes with trans fats, one acquires more health care bills in their old age, thereby making it more difficult to measure the net economic effects of the ban. And none of this gets into the issue of how the ban sticks it to smaller businesses [because enforcing and complying with bans costs money], how trans fats increase shelf life of food, or how such legislation typically has exemptions that complicate its implementation.

There is a disquietude with with a trans fat ban because I feel a certain anxiety that the government is going to ban more and more food. One can argue that my worries are based on a slippery slope argument, which would only be a logical fallacy if there is no evidence to suggest that a trans fat ban would lead to more and more government intervention with regards to what we eat. Let's start with how the FDA has a well-established track record of regulating food. The FDA is also currently investigating the effects of caffeine. A ban on trans fats could set a precedent on a caffeine ban. As further studies find more health effects of certain foods, there will be more pushes for more bans, as can be observed with the attempted soda ban in New York City. Health advocates will continue to push for more regulations over time because it is a popular form of political advocacy. What I am trying to illustrate in this paragraph is that the basis for a slippery slope argument is substantiated by various trends.

Aside from slippery slope with the trans fat ban, there is an issue of dietary freedom. Much like freedom of religion or freedom of speech, we have the right to eat what we want. The government has no right to restrict what citizens choose to eat. Furthermore, food can important cultural, religious, ethnical, or sociological significance, which enhances the freedom of what one eats. Especially since trans fats don't really have addictive qualities, there is no reason why citizens should not be given the freedom to make whichever dietary decisions they desire.

The average American consumes 1.6 grams of trans fats (0.6% of calories) per day (the FDA puts it at about 1.0g per day), which is below the amount recommended of 2.0g by the American Heart Association. The issue here is not consumption, but overconsumption of trans fats. The same can be said for saturated fats, sodium, and sugar. If the government is so worried about public health, they should regulate sodium, sugar, and other fats. The problem is that there is a push for that extensive level of intervention.

There has already been progress made in way of trans fats: a) the government already requires trans fats to be part of the food label since 2006, b) there has been increased awareness of the dangers of trans fats, and c) companies have voluntarily substituted their foods with alternatives. Given this progress, individuals have the information to make informed decisions about their health. Much like anything else in life, what we eat comes with risks, and each individual should be allowed to assess what the tradeoff between eating tastier food and higher risk of cardiovascular issues in the future. Rather than treat American citizens like ignorant children, the FDA should rescind the ban and allow people the freedom to choose what foods they eat.

Note to Center for American Progress: Social Security Is a Raw Deal for Millennials

I am a millennial, and like most millennials, I am so worried about the future of Social Security that I do not even think it will be there for me when I retire. Proponents of Social Security like to pass it off as this benign program that will not only last into the foreseeable future, but also helps the disadvantaged and provides economic security to its beneficiaries. A good example of that mentality is from the Center of American Progress' (CAP), a Left-leaning think-tank. Look at its latest piece on Social Security entitled "Top 5 Reasons Young People Should Fight to Strengthen--and Not Cut--Social Security." No surprise here: I disagree vehemently. But let's go through their Top 5 list to see why their notion of Social Security being a solution for millennials is a misconceived one:

1. Millennials will need Social Security to retire, maybe even more than their parents.

Response 1a: I had to look back at one of my books from graduate school entitled A Practical Guide for Policy Analysis (p. 7) for this one. The entire CAP article suffers from a major pitfall, but in this particular point, the pitfall mentioned in the book is that you do not define the solution into the problem. To say that there is not enough funding in Social Security is a flawed framing of the problem because one does not implicitly include Social Security into the solution. We need to identify the actual problem.

Response 1b: The problem that Social Security tries to solve is an issue of people not having enough saved for retirement, that is to say, the average propensity to save is too low. CAP opines that millennials need Social Security needs to be strengthened because the private retirement system is failing. That is simply false. As the Cato Institute points out, private investment is still a better deal than Social Security. I looked at the numbers a few months back, and compared to Treasury bonds, corporate bonds, or the stock market, these alternatives have a higher rate of return than Social Security.

Response 1c: There are other policies that can encourage millennials to acquire skills, as well as increasing income to provide millennials more money for savings. Decreasing tax rates comes to mind. Considering how burdensome student debt can be, one can offer some reform in higher education. There is also the option of decreasing onerous regulations that prevent businesses from hiring, just to name a few ideas.

2. Conservatives pose the most serious threat to Social Security.

Response 2a: This goes back to problem framing. CAP defines the solution of Social Security into the problem, which makes those who want to actually decrease the debt-to-GDP ratio become the bad guys. I can re-frame this in a different way to reverse roles. We have a looming debt crisis that we cannot afford to delay. Social Security is about 22 percent of the federal budget, which also means about 5 percent of the GDP. Social Security might not be the primary driver in federal spending growth (that would be healthcare spending), but being five percent of the GDP with an already rising debt-to-GDP ratio is not exactly helping the situation.

Response 2b: Let's ignore the perturbing SSA trust fund ratios, and for argument's sake, let's say that CAP's analysis about removing the cap for high-income workers is correct (it might not be), and that Social Security can be fixed that easily. It still does not negate the fact that Social Security is a threat to economic freedom, not to mention impeding retirees from having the most amount of savings possible (See Response 1b).

3. Social Security benefits workers of all ages, including 3.5 million millennials that receive benefits.

Response 3a: I'm confused as to why children are brought up in CAP's analysis, especially when millennials (Generation Y) are defined as those born between 1982 and 1994. There is a separate consideration for Generation Y and Generation Z. But even if we were to argue that the age range on the term 'millennial' can be debated, the "young people" that CAP refer to need to be old enough (arguably at least 18 years old so they can vote) to fight for Social Security.

Response 3b: Going with the definition set in Response 3a, let's see how many derive benefit from Social Security. 384,393 are disabled worker beneficiaries, 16,863 are young widow beneficiaries, 861 are spouses of retired worker beneficiaries, 622,622 are surviving child beneficiaries, and 271,529 are children of retired workers beneficiaries. The grand total of millennials is less than a million.

Response 3c: More millennials currently benefit from Social Security disability than the retirement system, which is in fiscal trouble. Going back to those SSA trust fund ratios, the disability fund is projected to be depleted in 2016. I guess that millennials won't be receiving disability benefits for much longer.

4. Social Security eases the financial burden of seniors' retirement on their children. 

Response 4a: According to the SSA, Social Security benefits account for 39% of one's income, which comes out to average monthly benefits of $1,296. For 36 percent of retirees, Social Security provides at least 90 percent of one's income. I know that poverty is not anything new, but how did we get to the point where so many people have become dependent on government?

Response 4b: CAP brings up that "millennials who only recently moved out of their parents' houses could find their parents moving in with them."Again, millennials range from age 19 to 32. Although one can receive benefits at age 62, full retirement age is at age 67. Looking at retiree age breakdown and historic median age for first birth, I have to question the probability, or in this case, improbability, of that taking place.

Response 4c: If we're worried about the affordability of millennials taking care of their parents, we should focus on policy to increase one's disposable income. See Response 1c.

5. We can invest in millennials and pay for Social Security. 

Response 5: CAP was correct to say that they are not mutually exclusive options. While this statement is technically true, it still begs the question why we should invest in Social Security. Social Security has a lower rate of return than alternative forms of investment, it increases government dependency, disincentivizes savings, quashes economic freedom, and it exacerbates the debt crisis, which millennials will pay for dearly via a higher rate of taxation over time. We should invest in millennials, but we should also work on privatizing retirement accounts so millennials can have a brighter future.

New York Should Roll the Dice and Legalize Casino Gambling

Today, the citizens of New York will vote on Proposal 1, which would allow for legalized casino gambling. The proponents laud the economic benefits, whereas the opponents argue that the costs associated with the vice of gambling will outweigh the benefits. Who's right? Are casinos a good idea?

There is the libertarian deontological argument of individual rights. An individual proprietor has the right to build and run a casino. Provided that the individual consumer isn't harming anyone in the process, the consumer has a right to spend their money on whatever they want, even if that decision is to go gambling. Although gambling addictions and crime are problems within the gambling world, they are not inherent to gambling. If we assessed a policy solely based on its costs, not only would that be a very incomplete cost-benefit analysis, but it would also mean we prohibit the consumption of other goods and services, such as cigarettes, guns, alcohol, and foods with too much sugar or fat.

There is yet another libertarian argument that can be used, which is that less economic barriers lead to more economic prosperity. Allowing casinos to be built means more economic productivity. Setting aside the tax revenue that the government would collect on casinos, not only are jobs created from the construction and operation of casinos, but there are also jobs created indirectly by adjacent resorts, retail shops, and restaurants.

While this is true, it is tough to measure net economic effects for two reasons. The first is that the economic benefits (e.g., employment, construction of new facilities) are tangible, whereas social costs (e.g., increased gambling addiction and crime; see Philadelphia Federal Reserve study) are intangible, thereby making it tougher to account for all costs. The second is that building and running a gambling facility only transfers wealth in a community; it does not create it. Granted, the same thing can be said for any form of entertainment or sporting venue. Just because attending a movie theater or football game merely "transfer wealth" should not be a reason unto itself to ban it. People acquire utility (which is the economic term for "satisfaction derived from consumption") from gambling or watching a movie. The net benefits for the given community are highest when the transfers are coming from outside the community, i.e., there needs to be some sort of tourism for gaming casinos to work, much like we see with the success of Las Vegas.

Let's pull up some research to figure out what the economic effects are. The findings of the St. Louis Federal Reserve Bank (also see here) were twofold. One, the extent of economic gain is dependent on where the casino patrons come from. Two, casinos in rural areas tend to fare better than those in urban areas. The Philadelphia Federal Reserve Bank assessed the effectiveness of casinos in its district back in 2010. It found positive net economic benefits in the short-run, but remained inconclusive in the long-run since social costs can take a longer period of time to manifest. During the Clinton Administration, Congress enacted legislation to create a committee to analyze the impacts of gambling. Upon writing the National Gambling Impact Study Report (1999), the committee realized the difficulties of measuring social cost. Even so, the committee recognized that economically depressed communities derive economic benefit from building casinos (Recommendations, 7.3). Overall, the committee's recommendations are surrounded around the idea that casinos should be legal, but should be built with due consideration.

Even if we want to opine that "the results are mixed," New York would still need to assess it in contrast with the alternatives. If New Yorkers do not have casinos in their own state, they will travel to a place like Atlantic City to gamble. Even with casinos in neighboring states, there is still the reality of underground markets. Underground markets, such as those in marijuana, prostitution, cigarettes, labor, or human organs, do not eliminate the problems associated with the market. What happens when a good or service is forced to the underground market is that you add the problems of underground markets on top of the problems that already exist, thereby exacerbating the issue. Much like any other activity in life, gambling comes with its risks. However, if I had to make an educated guess, I'd say it's a pretty safe bet that New York's economy will experience a net benefit with Prop 1.

Why Anti-Discrimination Laws Will Not Help the LGBT Community

Tomorrow is the day that the Employment Non-Discrimination Act, or ENDA (S. 815), will come before the Senate. The premise behind the bill is to prohibit discrimination of hiring employees based on sexual orientation or gender identity. Much like with judging an individual based on skin color or religion, an employer who discriminates against a potential or current employee based on their sexual orientation or gender identity is committing a moral wrong. An employer should ultimately judge an employee based on their job performance. So why would I have a problem with a bill that prohibits such discrimination, aside from the fact that even if the Senate does pass it, there would be no way that the Republican-dominated House would allow for its passage?

In the past, I had to wonder about anti-discrimination laws. On the one hand, I believe that a proprietor should be able to run his business however he wants, even if he is going to be ignorant and bigoted in the process, much like he would be when firing a hard-working employee because of their sexual orientation. On the other hand, something needs to be done to help the LGBT community to make sure that they are given fair and equal treatment under the law. However, I have to be skeptical about the efficacy of anti-discrimination laws, especially considering how the government has handled affirmative action and the Americans with Disabilities Act (ADA).

For one, politics follows social change; it does not lead it. Societal changes take place from the ground-up in a gradual manner, and the gradualness was a part of the Civil Rights movement, the Women's Rights Movement, and the Gay Rights Movement. It takes time for LGBT members of society to come out. It takes time for people to become more supportive of LGBT rights and to realize that people who are LGBT are people, too.

Politicians pick up on civil rights only after it has gained traction and popularity, which is why only very recently has the Supreme Court tackled the issue, and why multiple states have recently legalized same-sex marriage. As a side note, it is amazing at the frequency with which government is actually the cause of the problem, such as when it legally defines marriage between a man and a woman.

Going off the thought of politics following social change, I have to wonder whether it is even necessary for Congress to legislate a social change which is already occurring. 87% of Fortune 500 companies already have such policies in place, as do over 50% of the top federal contractors. According to the Left-leaning Center for American Progress (CAP), seven out of ten small businesses already have anti-discrimination policies for sexual orientation in effect, as do six out of ten small businesses for gender identity discrimination. According to the Williams Institute, which is a think-tank focused on LGBT issues, the rate at which one is discriminated for their sexual orientation is 4 out of 10,000. Any discrimination is unfortunate, but a rate that is significantly less than one percent is a sign of true progress.

Freedom of association is vital for having a relatively free labor market. Mandating to an employer who he can and cannot fire creates a labor rigidity because, as Professor David Bernstein puts it, "there is no limit to the scope of anti-discrimination laws, because the definition of discrimination is almost infinitely malleable." The last thing we want is to make it as difficult to fire someone in this country as it is in France, which I can tell you is a bad thing for economic growth. As Nobel Prize-winning economist Gary Becker illustrated, a free market punishes those who decide to discriminate. Being concerned about the bottom line mitigates discrimination because an employer who wants to maximize profits, which in all honesty is a majority of employers, wants the best employee, regardless of race, religion, gender, or sexual orientation. ENDA is merely a reflection of how society already feels about workplace discrimination on the basis of sexual orientation or gender identity. Rather than perpetuate the fallacious idea that government can actually legislate acceptance, we should just let society progress towards even greater acceptance towards LGBT individuals while we allow bigoted entrepreneurs to learn the hard way by shooting themselves in the foot.