Income inequality has become a cause célèbre for many on the Left these days. Oxfam has even jumped on the income inequality bandwagon and declared war on income inequality. In the United States, we're coming up on the midterm election season, which seems like an opportune time to pursue the issue of income inequality. The income inequality narrative goes like this: There is a huge relationship between income inequality and income mobility. Because of that, we should do something about income inequality to prevent further income immobility.
Forgetting that "correlation doesn't equal causation" for a moment, a friend of mine was kind enough to send me a couple of recently published Harvard studies on the matter. These studies are an improvement in discerning the issue of income inequality because instead of using small surveys, these studies use larger sets of data consisting of millions of tax records. The first one was a longitudinal study entitled Is the United States still a land of opportunity? Recent trends in intergenerational mobility (Chetty et al, 2014a). I find its conclusion to be remarkable, which was that "rank-based measures of social mobility have remained remarkably stable over the second half of the twentieth century in the United States (p. 10)." Over the past forty years, income inequality increased while income mobility stayed the same. As a matter of fact, it may even be improving (p. 7). In spite of what the Great Gatsby Curve has to say, income inequality does not cause income immobility, which makes sense because much like income immobility, income inequality is an outcome of given policies and [market and societal] forces, not the cause of societal woes. Not only that, the results of this study show that it is not any more difficult to climb the income ladder than it has been in the past four decades. The days in which we use "income inequality" and "income immobility" interchangeably with a serious face are over.
But wait, it gets better. If income inequality doesn't cause income immobility, then we have to ask ourselves what does. This where the Harvard University longitudinal study of Where is the Land of Opportunity? The geography of intergenerational mobility in the United States (Chetty et al, 2014b) comes into play. This study looked at five main factors associated with income mobility: residential segregation, income inequality, primary schools, social capital, and family stability (p. 4). Given the heavy rhetoric about income inequality, I was expecting income inequality to be the culprit of income immobility. However, in spite of some geographical variants (Figure VI), income inequality is a comparatively weak factor. Although the authors were careful to state (p. 5) that these factors should not be interpreted as causal detriments (no surprise there….that can be said about any study. Can we say "endogeneity problem?") and there is possibly a correlation between the various factors (p. 45), they nevertheless concluded (Table IX) that "the strongest and most robust predictor is the fraction of children with single parents (p. 46)" and that "children of married parents also have higher rates of upward mobility if they live in communities with fewer single parents (p. 4)."
At the very least, these studies quash the Left's assertion of "income inequality leads to income immobility." At the most, it affirms that conservatives were correct in saying that we should legitimately be worried about family structure and making sure that couples get married before having children. There is validity to advocating for married couples, particularly if children are involved. If one is to raise children, two parents are more able to bring in income than one parent. Plus, a two-parent household is better equipped to devote time and effort to childrearing. This is not to say that there aren't single parents who can raise children better than a married couple. There are obviously children who were successfully raised by single-parent households. It is to say, however, that a child will statistically fare better with a home that has two parents than a home with a single parent. Even non-conservative policy analysts believe in the importance of a two-parent home.
Whether family structure is the primary or sole factor in income immobility, it is safe to say that a fixation on income inequality is not going to solve our problems. We should find policies that make life better for as many people as possible, so how about a "war on economic immobility" instead? At least that way, we can better focus on causes of income immobility and root problems related to poverty.
Friday, January 31, 2014
Thursday, January 30, 2014
Parsha Terumah: Why External Piety and Holiness Aren't Enough
The Tabernacle (משכן) was the portable apparatus in which G-d dwelled from the time when the Jewish people began the Exodus to the point when they settled the land of Israel. When building המשכן, G-d wanted the Israelites to give towards the construction of המשכן as their hearts moved them (Exodus 25:2), that is to say to give voluntarily. המשכן was not simply a place where "G-d could dwell therein." It was also meant to be a physical representation of human spirituality in which one expresses genuine and authentic love for G-d and the life He has provided us. That being said, I am intrigued by the construction of the ark itself:
וצפית אתו זהב טהור מבית ומחוץ
Overlay it [the ark] with pure gold, overlay it inside and out. -Exodus 25:11
If no one was going to see the inside of the ark, why have the inside filled with gold as well? Why not just have the outside be filled with gold and fill the inside with a different metal or nothing at all? And while we're at it, why isn't the entire ark made of gold? Why is it made of acacia wood (Exodus 25:10)?
According to the Talmud (Yoma 72b), much like with the gold coverings on the outside and the inside of the ark, the Torah scholar must be genuine to the point where his interior matches his exterior. This consistency goes beyond the Torah scholar. Rabbi Gamilel also points out (Berachot 28a) that one could not even enter a study hall until one was the same person on the outside as he was on the inside. For R. Joseph Hertz, this gold overlaying meant that one needed to be pure in mind and heart as he was in outward manner.
What this commentary is meant to say is that "going through the motions" only does so much, especially if you do not allow for it to transform your mind or heart. The reason for that is that the externalities and the rituals become the ends of spiritual practice, not the means in which you transform yourself. As a result, the primary message is lost and individuals succumb to a downward spiral of hypocritical, "holier than thou" behavior in which they justify their depravity or immorality by invoking G-d's name. We all know those people who act nice to your face but are all the while stabbing you in the back, and this is exactly the kind of behavior we are to avoid.
This is not to say that we don't need to have a sense of obligation when we're having a bad day or "we truly do not feel like it." However, we are supposed to strive for something more than halachic minima. We are to strive for spiritual refinement and do so in a genuine manner that reflects our love of G-d. Take a look at Maimonides' Eight Levels of Tzedakah. Giving unwillingly, regardless of the amount is at the bottom of the hierarchy. Yes, it counts as doing a mitzvah, but we aspire for higher levels of holiness and character refinement that is illustrated by one's spiritual authenticity.
Gold is shiny, malleable, valuable, and is considered to be a pure metal. Humans do not have that level of purity, and neither does המשכן, which is why the entire ark is not made of gold. According to R. Yaacov Haber, the acacia wood is to represent our humanness. Our core is not golden, i.e., we're not angels. Our core is something much more natural and organic. עץ חיים is the Tree of Life. Trees are able to grow, and so are humans. We cannot obtain that sincerity, purity, and humility overnight. There are points in life where we might have it one day and lose it the next. To err is to be human. At the end of the day, G-d wants us to be authentic in our spirituality and go for the gold.
Tuesday, January 28, 2014
Is Obamacare Doomed or Is It Merely Contending With Some Major Hurdles?
It's no secret that I dislike Obamacare. There already have been enough promises broken with regards to Obamacare, not to mention that I just think it's poor policy. The implementation of Obamacare has been severely mishandled, and this goes beyond the website glitches. Whether I think the law should be repealed for a superior one is not the question I would like to ask today. Now that the law has been implemented, I have to wonder about its staying power. I didn't think that the Senate and House would be able to merge their versions of the bill into a single bill. With the election of Scott Brown, I didn't think that the bill would get past the Senate. I didn't think that Justice Roberts would be the one to screw over the American health care system by justifying his vote with the Taxation Clause of the Constitution. Yet all of these events occurred and Obamacare remains as the law of the land. As such, I hesitate to make a clad-iron predictions as to what will happen. Nevertheless, I would like to take a look at some indicators and make an educated guess as to whether Obamacare's main components will be "indefinitely delayed" or if Obamacare will simply be a clunky framework for providing health insurance in this country.
Last week, Obamacare officially hit the "milestone" of three million enrollees. As I have already pointed out, five million Americans have already lost their individual health care plans through Obamacare with more on the way. There is also the concern that not enough young adults enrolling into the Obamacare-induced health insurance markets. For Obamacare to work, there needs to be enough young, healthy individuals to subsidize those who are more elderly and more ailing. If more people are not enrolled, insurance companies will suffer losses and be forced to increase premiums, which would very likely result in what is known as an "adverse selection death spiral." Sarah Kliff over at the Washington Post holds more optimism than I do that young adults will enroll before the March 31st deadline of open enrollment. Why I am less optimistic? Projections of enrollees were higher than what has actually taken place. The Obama administration is currently below the projected seven million that were to sign up during open enrollment. This makes sense because if the government is going to provide insurance, it needs to legally define what is and is not insurance. Looking at §1501 of the ACA, it should be no surprise that so many plans have already been cancelled. I am also curious to see the effects that Obamacare will have on employer-based insurance, particularly in terms of whether enough employers will drop employees from their current plans to the point where it will cause a net decrease of insured individuals. However, the employer mandate had been delayed until 2015, which is convenient for those Democrats running for reelection. This does not even factor the ability to keep one's doctor due to the limited options of health care providers that qualify under Obamacare, which the Cato Institute does a good job of outlining in its recent policy analysis (Obamacare: What We Know Now, p. 14-15).
I also have to wonder the effect that Obamacare will have on insurance prices. The Manhattan Institute provides an interactive map of how rates have increased for individual insurance plans. Even so, looking at averages is statistically problematic. I would rather do things like find out the median and distribution of the percent changes, not to mention that much like with income inequality and income mobility, I would rather track individuals than groups. Although there are bound to be winners and losers in health insurance, much like there are in any other policy, if Obamacare is focused on providing more access to more comprehensive health care, I would intuitively expect prices to increase. Not only that, there is the matter of higher deductibles, which is going to make health care less affordable because what good would lower premiums do anybody if the deductibles are higher? In order to compensate, the government will enact price controls, which makes me rightfully skeptical. If the government imposes price controls, that means both the patient and doctor would lose their say in terms of what the optimal treatment would be because the government is trying to force the lowest-cost treatment.
There is also the matter of the impacts on the labor market. Aside from what Obamacare will do to current employer-based insurance plans, there is also the provision that mandates that employers with over fifty full-time employees to cover the insurance for each employee or pay a penalty. Will this either result in less hiring or more part-time workers? According to Mulligan and Gallen (2013) and the Chamber of Commerce, it will. Others are more skeptical of this claim, but even so, let's not forget that much like with the minimum wage debate, there are costs to labor and there will be a certain point in which hiring another worker will not be worthwhile for the employer. I also would be curious to see what impacts the other ACA taxes have on job creation.
The more information that is provided on Obamacare, the more reason I find to dislike it. It is evident that Obamacare is a law that will rob the consumer of health care options while causing prices to spiral, whether that it is in terms of the costs to the federal government, the individual, or the employer. Although there are some outcomes that are evident, there are many questions that remain to be unanswered. Will Obamacare receive have an adequate number of enrollees? Will Obamacare enroll enough young individuals to avoid an adverse selection death spiral? Will the "temporary fixes" used to delay the unpopular parts of Obamacare simply become permanent? Will Obamacare cause a doctor shortage because "more comprehensive care means longer waiting lines," doctors will be fed up with practicing because of the new law, or some other reasoning? Will Obamacare constrain consumer choice so badly that keeping your plan or doctor will only be possible if you can afford to do so? Will the Supreme Court hear a case that will partially or entirely overturn Obamacare? A lot remains unanswered to the point where I have to give the response of "time will tell." At this juncture, I would like to wait about another year to see the extent of the damage that Obamacare has caused to the American health care system.
Last week, Obamacare officially hit the "milestone" of three million enrollees. As I have already pointed out, five million Americans have already lost their individual health care plans through Obamacare with more on the way. There is also the concern that not enough young adults enrolling into the Obamacare-induced health insurance markets. For Obamacare to work, there needs to be enough young, healthy individuals to subsidize those who are more elderly and more ailing. If more people are not enrolled, insurance companies will suffer losses and be forced to increase premiums, which would very likely result in what is known as an "adverse selection death spiral." Sarah Kliff over at the Washington Post holds more optimism than I do that young adults will enroll before the March 31st deadline of open enrollment. Why I am less optimistic? Projections of enrollees were higher than what has actually taken place. The Obama administration is currently below the projected seven million that were to sign up during open enrollment. This makes sense because if the government is going to provide insurance, it needs to legally define what is and is not insurance. Looking at §1501 of the ACA, it should be no surprise that so many plans have already been cancelled. I am also curious to see the effects that Obamacare will have on employer-based insurance, particularly in terms of whether enough employers will drop employees from their current plans to the point where it will cause a net decrease of insured individuals. However, the employer mandate had been delayed until 2015, which is convenient for those Democrats running for reelection. This does not even factor the ability to keep one's doctor due to the limited options of health care providers that qualify under Obamacare, which the Cato Institute does a good job of outlining in its recent policy analysis (Obamacare: What We Know Now, p. 14-15).
I also have to wonder the effect that Obamacare will have on insurance prices. The Manhattan Institute provides an interactive map of how rates have increased for individual insurance plans. Even so, looking at averages is statistically problematic. I would rather do things like find out the median and distribution of the percent changes, not to mention that much like with income inequality and income mobility, I would rather track individuals than groups. Although there are bound to be winners and losers in health insurance, much like there are in any other policy, if Obamacare is focused on providing more access to more comprehensive health care, I would intuitively expect prices to increase. Not only that, there is the matter of higher deductibles, which is going to make health care less affordable because what good would lower premiums do anybody if the deductibles are higher? In order to compensate, the government will enact price controls, which makes me rightfully skeptical. If the government imposes price controls, that means both the patient and doctor would lose their say in terms of what the optimal treatment would be because the government is trying to force the lowest-cost treatment.
There is also the matter of the impacts on the labor market. Aside from what Obamacare will do to current employer-based insurance plans, there is also the provision that mandates that employers with over fifty full-time employees to cover the insurance for each employee or pay a penalty. Will this either result in less hiring or more part-time workers? According to Mulligan and Gallen (2013) and the Chamber of Commerce, it will. Others are more skeptical of this claim, but even so, let's not forget that much like with the minimum wage debate, there are costs to labor and there will be a certain point in which hiring another worker will not be worthwhile for the employer. I also would be curious to see what impacts the other ACA taxes have on job creation.
The more information that is provided on Obamacare, the more reason I find to dislike it. It is evident that Obamacare is a law that will rob the consumer of health care options while causing prices to spiral, whether that it is in terms of the costs to the federal government, the individual, or the employer. Although there are some outcomes that are evident, there are many questions that remain to be unanswered. Will Obamacare receive have an adequate number of enrollees? Will Obamacare enroll enough young individuals to avoid an adverse selection death spiral? Will the "temporary fixes" used to delay the unpopular parts of Obamacare simply become permanent? Will Obamacare cause a doctor shortage because "more comprehensive care means longer waiting lines," doctors will be fed up with practicing because of the new law, or some other reasoning? Will Obamacare constrain consumer choice so badly that keeping your plan or doctor will only be possible if you can afford to do so? Will the Supreme Court hear a case that will partially or entirely overturn Obamacare? A lot remains unanswered to the point where I have to give the response of "time will tell." At this juncture, I would like to wait about another year to see the extent of the damage that Obamacare has caused to the American health care system.
Thursday, January 23, 2014
Parsha Mishpatim: How Can the Torah Permit Slavery? But Wait, Does It Really?
The Jewish people have been freed from slavery. They received the Ten Commandments at Mount Sinai. Shortly afterwards, at the beginning of this week's Torah portion, G-d begins by laying out a series of enactments. The first set of enactments have to do with owning slaves (Exodus 21:2-11). Hold on a second! Didn't G-d just free us from the awful institution of slavery? All that showboating and G-d still allows slavery to take place? What gives?
If we take a closer look at the passage, the institution put into place is much closer to indentured servitude than it is slavery. The period of servitude is only six years, and during the seventh year, he shall go free (Exodus 21:2). Even when dealing with additional parties, such as a wife and child (ibid, 21:3-4, 11), there are still ways for all to be emancipated.
But let's forget the semantics between "slavery" and "indentured servitude" for a second. Why allow for any period of time in which an individual works for another without just compensation? It seems so counterintuitive for G-d to punish the Egyptians for inflicting slavery on the Jewish people, only to allow for fellow Jews to become slaves in some form or the other.
Allow for me to provide an interpretation that will not completely offend our modern-day notion of morality. It is human nature for people to want to maintain within their comfort zone. Change is scary. Even when people do decide to change, the vast majority of human beings need to do so in a gradual manner. Maimonides pointed this out with regards to leading the Jewish people out of Egypt (Guide for the Perplexed, III, xxiv). According to Maimonides, G-d led the Jewish people away from the direct path (Exodus 13:17) because He did not want the Jewish people to become discouraged and want to return to the comfort zone of slavery. G-d helped in such a way without taking away that which makes us human.
Humans need time to adapt to change, and G-d was well aware of that when enacting these laws. If you need another example of G-d's understanding in this matter, look at the Jewish mourning process (שבעה). The typical human cannot cope with the loss of a loved one instantaneously. G-d gives us time to mourn. Even so, G-d puts a limit on the time it takes to adapt, which is why the maximum time for mourning is eleven months (which is the longest mourning time [reserved for one's parents]).
Much like with שבעה, G-d gave the Jewish people a certain period of time to adapt to being freemen: six years. If, after the seventh year, the slave decides to remain a slave, the master takes the bondman to the doorpost and pierces his ear with an awl (Exodus 21:6). Why? Because at that point, the bondman has declared himself to be property. The reason why the series of laws begins with those regarding indentured servitude is because freedom is a prerequisite for following laws. Without free will, laws, morals, and ethics are pointless. By removing ourselves from our own modern-day slaveries, we can truly appreciate what it means to be human.
If we take a closer look at the passage, the institution put into place is much closer to indentured servitude than it is slavery. The period of servitude is only six years, and during the seventh year, he shall go free (Exodus 21:2). Even when dealing with additional parties, such as a wife and child (ibid, 21:3-4, 11), there are still ways for all to be emancipated.
But let's forget the semantics between "slavery" and "indentured servitude" for a second. Why allow for any period of time in which an individual works for another without just compensation? It seems so counterintuitive for G-d to punish the Egyptians for inflicting slavery on the Jewish people, only to allow for fellow Jews to become slaves in some form or the other.
Allow for me to provide an interpretation that will not completely offend our modern-day notion of morality. It is human nature for people to want to maintain within their comfort zone. Change is scary. Even when people do decide to change, the vast majority of human beings need to do so in a gradual manner. Maimonides pointed this out with regards to leading the Jewish people out of Egypt (Guide for the Perplexed, III, xxiv). According to Maimonides, G-d led the Jewish people away from the direct path (Exodus 13:17) because He did not want the Jewish people to become discouraged and want to return to the comfort zone of slavery. G-d helped in such a way without taking away that which makes us human.
Humans need time to adapt to change, and G-d was well aware of that when enacting these laws. If you need another example of G-d's understanding in this matter, look at the Jewish mourning process (שבעה). The typical human cannot cope with the loss of a loved one instantaneously. G-d gives us time to mourn. Even so, G-d puts a limit on the time it takes to adapt, which is why the maximum time for mourning is eleven months (which is the longest mourning time [reserved for one's parents]).
Much like with שבעה, G-d gave the Jewish people a certain period of time to adapt to being freemen: six years. If, after the seventh year, the slave decides to remain a slave, the master takes the bondman to the doorpost and pierces his ear with an awl (Exodus 21:6). Why? Because at that point, the bondman has declared himself to be property. The reason why the series of laws begins with those regarding indentured servitude is because freedom is a prerequisite for following laws. Without free will, laws, morals, and ethics are pointless. By removing ourselves from our own modern-day slaveries, we can truly appreciate what it means to be human.
Wednesday, January 22, 2014
Oxfam's Poor Study on Global Economic Inequality
A recent study published by Oxfam, an international organization dedicated to fighting global poverty, has gone viral. The main finding that has grabbed people's attention is that "the bottom half of the world's population owns the same amount of wealth as the richest 85 people in the world (p. 2)." When hearing that statistic, I'm sure many of us are thinking, "How unfair! How unjust! How can we live in a world where the wealthy thrive, and the poor are suffering?" Oxfam's issue is not with economic inequality per se, but rather when it's so concentrated that the rich dictate policy, such as financial deregulation, skewed tax systems and rules facilitating evasion, and austerity economics (p. 3). To counter this 'disturbing trend,' Oxfam's recommendation is to create "the right mix of government policies that focus on poor people by increasing social public expenditures (p. 24)," or as I like to call it, creating redistributionist welfare states. Oxfam's facile, anti-capitalist narrative notwithstanding, I had quite a few issues with how they portrayed global economic inequality in the past thirty years.
First is the problem with economic inequality itself. When looking at the rising inequality in five middle-income countries (Figure 2), the poor have a smaller percentage of wealth than they did about thirty years ago. Looking at the disparity between the rich and the poor in this manner makes the flaw of looking at wealth in relative terms, not absolute terms. Everyone would like a bigger piece of the pie. That's part of human nature. Now, if the pie stayed the same size over this time period, I would find this trend to be disturbing. However, when having this discussion, what people tend to forget is that the pie has grown substantially over the past thirty years. Just take a look at real GDP growth over time. Like most people, I would rather have more pie [in absolute terms], even if that means having a smaller percentage of the overall pie.
This is why I wish Oxfam would have finished the sentence of "the rich get richer." While the rich get richer, what the people over at Oxfam neglect is that the poor also get richer. Looking at the United States, this is certainly the case, even when looking at the growth rates in real dollars. And that does not even consider the increased purchasing power that comes about when looking at the improved quality of what can be consumed compared to thirty years ago! On a global level, let's look at the fact that extreme poverty, which is measured as those earning less than one dollar per diem, has dropped eighty percent over the past thirty years (Pinkovisky and Sala-i-Martin, 2009), but you'll never here this statistic as part of the narrative. And let's not forget that income inequality between nations has decreased substantially in the past forty years (Liberati, 2012).
Also, I wish Oxfam had some historical perspective when looking at the issue. For one, in pre-capitalist times, if you were not one of the very few who was lucky enough to have been born into wealth, you were destined to an impoverished life in squalor. If you want to talk about concentrated wealth, pick up a history book! Capitalism has been the single greatest impetus for helping people get out of poverty. Second, I don't think Oxfam really bothered to ask why the trend occurred in the first place. By reading Oxfam's report, one would be under the disillusion that the wealthy having a disproportionate pull in politics, not to mention the general corruption in politics, were unique phenomena that have only existed in the past thirty years. Simply not so. The biggest drivers of the enlarged disparities over the past thirty years are globalization, technology, and the expansion of various sectors that amass and utilize large amounts of capital and wealth, most notably the financial and technology sectors.
A bit of nitpicking before I conclude. Oxfam blames Europe's woes on austerity (p. 13), which I found perplexing because with the possible exception of Greece, Europe has not partook in austerity. Furthermore, why is Oxfam not looking at individuals while measuring economic inequality? By tracking individuals, instead of quintiles or other groupings, you get a better sense of economic mobility. Moreover, if you're going to kvetch about tax avoidance (p. 16), maybe you shouldn't make tax regulation so burdensome where the rich feel incentivized to stash their money in the Cayman Islands or a Swiss bank account. Oxfam also uses Latin America as its success story when it comes to advocating for increased social spending (p. 24). I don't think Oxfam has enough of an understanding of Latin American political history because simplifying it to "the government needs to collect more tax revenues for social spending" is specious. Taking Chile out of the equation because it actually embraced economic freedom, I would, at best, consider Latin America's economic growth to be modest. Argentina is a good example of how interventionist policies impede economic growth.
Although Oxfam's report is slightly more nuanced, its conclusion (p. 24-25) is that with a wave of the magic redistributionist wand, poverty will go away. Even if we were to concede that economic inequality is an issue, which I necessarily don't (at least in a prima facie sense), I fail to see how wealth redistribution would remedy the situation because it does not address wealth creation. Even though the solutions will have to be tailored for each country, the general solution is twofold. First, make sure that countries have strong enough institutions because without institutions, how would property rights, civil rights, and other necessary freedoms be enforced? This is especially important for developing countries who have a weak sense of institutionalization and are thus more prone to corruption, misallocation of resources, and human rights abuses. Second, while getting those institutions solidified, and even afterwards, the general direction has to be towards more freedom, not less. If Oxfam were to heed this advice about the importance of freedom, perhaps I would take their report more seriously. But as it stands, Oxfam is nothing more than a socialist organization that does not have any regard or appreciation for economic freedom.
First is the problem with economic inequality itself. When looking at the rising inequality in five middle-income countries (Figure 2), the poor have a smaller percentage of wealth than they did about thirty years ago. Looking at the disparity between the rich and the poor in this manner makes the flaw of looking at wealth in relative terms, not absolute terms. Everyone would like a bigger piece of the pie. That's part of human nature. Now, if the pie stayed the same size over this time period, I would find this trend to be disturbing. However, when having this discussion, what people tend to forget is that the pie has grown substantially over the past thirty years. Just take a look at real GDP growth over time. Like most people, I would rather have more pie [in absolute terms], even if that means having a smaller percentage of the overall pie.
This is why I wish Oxfam would have finished the sentence of "the rich get richer." While the rich get richer, what the people over at Oxfam neglect is that the poor also get richer. Looking at the United States, this is certainly the case, even when looking at the growth rates in real dollars. And that does not even consider the increased purchasing power that comes about when looking at the improved quality of what can be consumed compared to thirty years ago! On a global level, let's look at the fact that extreme poverty, which is measured as those earning less than one dollar per diem, has dropped eighty percent over the past thirty years (Pinkovisky and Sala-i-Martin, 2009), but you'll never here this statistic as part of the narrative. And let's not forget that income inequality between nations has decreased substantially in the past forty years (Liberati, 2012).
Also, I wish Oxfam had some historical perspective when looking at the issue. For one, in pre-capitalist times, if you were not one of the very few who was lucky enough to have been born into wealth, you were destined to an impoverished life in squalor. If you want to talk about concentrated wealth, pick up a history book! Capitalism has been the single greatest impetus for helping people get out of poverty. Second, I don't think Oxfam really bothered to ask why the trend occurred in the first place. By reading Oxfam's report, one would be under the disillusion that the wealthy having a disproportionate pull in politics, not to mention the general corruption in politics, were unique phenomena that have only existed in the past thirty years. Simply not so. The biggest drivers of the enlarged disparities over the past thirty years are globalization, technology, and the expansion of various sectors that amass and utilize large amounts of capital and wealth, most notably the financial and technology sectors.
A bit of nitpicking before I conclude. Oxfam blames Europe's woes on austerity (p. 13), which I found perplexing because with the possible exception of Greece, Europe has not partook in austerity. Furthermore, why is Oxfam not looking at individuals while measuring economic inequality? By tracking individuals, instead of quintiles or other groupings, you get a better sense of economic mobility. Moreover, if you're going to kvetch about tax avoidance (p. 16), maybe you shouldn't make tax regulation so burdensome where the rich feel incentivized to stash their money in the Cayman Islands or a Swiss bank account. Oxfam also uses Latin America as its success story when it comes to advocating for increased social spending (p. 24). I don't think Oxfam has enough of an understanding of Latin American political history because simplifying it to "the government needs to collect more tax revenues for social spending" is specious. Taking Chile out of the equation because it actually embraced economic freedom, I would, at best, consider Latin America's economic growth to be modest. Argentina is a good example of how interventionist policies impede economic growth.
Although Oxfam's report is slightly more nuanced, its conclusion (p. 24-25) is that with a wave of the magic redistributionist wand, poverty will go away. Even if we were to concede that economic inequality is an issue, which I necessarily don't (at least in a prima facie sense), I fail to see how wealth redistribution would remedy the situation because it does not address wealth creation. Even though the solutions will have to be tailored for each country, the general solution is twofold. First, make sure that countries have strong enough institutions because without institutions, how would property rights, civil rights, and other necessary freedoms be enforced? This is especially important for developing countries who have a weak sense of institutionalization and are thus more prone to corruption, misallocation of resources, and human rights abuses. Second, while getting those institutions solidified, and even afterwards, the general direction has to be towards more freedom, not less. If Oxfam were to heed this advice about the importance of freedom, perhaps I would take their report more seriously. But as it stands, Oxfam is nothing more than a socialist organization that does not have any regard or appreciation for economic freedom.
Tuesday, January 21, 2014
The Need for Mandatory Bicycle Helmet Laws Goes Over My Head
About twenty years ago, New Zealand passed legislation mandating (§11.8) that cyclists wear a helmet while cycling. The premise behind this law is pretty self-evident: protecting one's cranium in the event of a cycling accident. What I would like to do is a) figure out whether mandatory bicycle helmets have major impacts on the rates of cycling injuries, and b) whether the government mandate is necessary.
Looking at the studies on the efficacy of bicycle helmet mandates, the effects are not clear. The British Medical Journal (BMJ) published a study on the effects of cycling-related head injuries in six Canadian provinces (2013) and found that the "overall rates of head injuries were not appreciably altered by helmet legislation." When looking at Australian road deaths, which is relevant because Australia was the first country with a mandatory bicycle helmet law, there would have been a greater decrease relative to other road deaths, but there was no such decrease. According to a BMJ cost-benefit analysis (2002), there were some cost-savings for those under 19 years old, but considerable costs for adults in New Zealand. Even in the United States, cycling fatalities and injuries have decreased without mandatory helmet laws (Department of Transportation).
The reason why the mandatory bicycle helmet laws do not produce the "desirable results" is because other more primary factors can be attributed to the decrease in injuries, including speed limit laws, improved traffic laws, better lighting of streets, increased education, and decreased bicycle ridership as a result of the new law (see study here; also see here and here).The thing with helmets is that they do not prevent collisions, but provide a last line of defense in the event of a crash.
Cycling is a relatively safe activity. The benefits of cycling outweigh any risks or costs that might take place (see meta-study by Teschke et al, 2012; de Jong, 2010), and to enact a policy such as mandatory helmet laws that decreases cycling rates because of a relatively small probability of collision is senseless. Furthermore, motorists and pedestrians are more likely to get into an accident, so why don't we mandate that everyone wear helmets whenever traveling from Point A to Point B?
I'm not here to say that bicycle helmets do not provide some sort of protection, because they do (NIH, 2001). If an individual infringes upon another individual, then yes, a case can be made for government intervention. I have a problem when the government gets into its paternalistic mode by thinking it's justified in protecting individuals from themselves. John Stuart Mill created the "Harm Principle," which states that one should not interfere with competent adults who take risks with their own health. Whether it's smoking cigarettes, donating one's organs, eating trans fats, health care choices, and that includes wearing a bicycle helmet, the choice should be up to the individual, not the Nanny State.
Looking at the studies on the efficacy of bicycle helmet mandates, the effects are not clear. The British Medical Journal (BMJ) published a study on the effects of cycling-related head injuries in six Canadian provinces (2013) and found that the "overall rates of head injuries were not appreciably altered by helmet legislation." When looking at Australian road deaths, which is relevant because Australia was the first country with a mandatory bicycle helmet law, there would have been a greater decrease relative to other road deaths, but there was no such decrease. According to a BMJ cost-benefit analysis (2002), there were some cost-savings for those under 19 years old, but considerable costs for adults in New Zealand. Even in the United States, cycling fatalities and injuries have decreased without mandatory helmet laws (Department of Transportation).
The reason why the mandatory bicycle helmet laws do not produce the "desirable results" is because other more primary factors can be attributed to the decrease in injuries, including speed limit laws, improved traffic laws, better lighting of streets, increased education, and decreased bicycle ridership as a result of the new law (see study here; also see here and here).The thing with helmets is that they do not prevent collisions, but provide a last line of defense in the event of a crash.
Cycling is a relatively safe activity. The benefits of cycling outweigh any risks or costs that might take place (see meta-study by Teschke et al, 2012; de Jong, 2010), and to enact a policy such as mandatory helmet laws that decreases cycling rates because of a relatively small probability of collision is senseless. Furthermore, motorists and pedestrians are more likely to get into an accident, so why don't we mandate that everyone wear helmets whenever traveling from Point A to Point B?
I'm not here to say that bicycle helmets do not provide some sort of protection, because they do (NIH, 2001). If an individual infringes upon another individual, then yes, a case can be made for government intervention. I have a problem when the government gets into its paternalistic mode by thinking it's justified in protecting individuals from themselves. John Stuart Mill created the "Harm Principle," which states that one should not interfere with competent adults who take risks with their own health. Whether it's smoking cigarettes, donating one's organs, eating trans fats, health care choices, and that includes wearing a bicycle helmet, the choice should be up to the individual, not the Nanny State.
Sunday, January 19, 2014
Is An Opt-Out Organ Donation System A Solution To Organ Shortages?
I am personally repulsed by how the government creates a shortage in organ donations simply because it does not want people donating organs for cash. I honestly believe that allowing consenting adults to voluntarily donate their organs for monetary compensation is good policy because if nothing else, money talks. The American Enterprise Institute reminded me of this by citing a Wall Street Journal article, in which one of the authors was Nobel Prize-winning economist Gary Becker. In spite of the argument that Becker made, a colleague of mine astutely brought an intriguing alternative policy to my attention: opt-out organ donation.
The opt-out system, also known as presumed consent, is the idea that anyone who has not explicitly refused to be an organ donor is automatically enrolled as an organ donor. This is in contrast with America's status quo of the opt-in system, in which one has to explicitly give consent in order to be considered a donor. The reason why opt-out is supposed to be so successful is because the donors drastically increase the supply of human organs. For instance, take a look at Germany and Austria. The former has an opt-in system, and the latter an opt-out system. In spite of having similar cultures, Austria's donation rate is eight times higher than that of Germany! While a higher donation does not automatically translate into eliminating the organ shortfall, those in the Eurotransplant system seem to have success with the opt-out system.
From the start, I have an issue with how much this infringes on individual liberty. First, there is arguably no consent in the process. The government takes away one's organs unless one can navigate the government's system for objecting. Opting out might sound like a simple procedure, but there is the issue of clerical errors, improperly filling out a form, losing paperwork, or not being fully aware of the implications or able to fill out the paperwork (e.g., those with a low IQ, the mentally or physically disabled, children). Conversely, based on successful implementation in other countries, these concerns are minimal. Furthermore, if the government can seize your body parts upon death for the "greater good," couldn't the government also seize your assets to collect government revenue for the "greater good," as well? Don't get me wrong. I'm all for saving people's lives, which is why I'm all for the market providing monetary incentives to get individuals to donate. I get annoyed by the presumption that the default effect dictates that the government knows best about what to do with one's body. One's body belongs to the individual, not society.
I don't want to dismiss the deontological argument because it certainly has merit. However, strictly for argument's sake, let's assume we shouldn't care at all about our freedom and the right to do what we want with our bodies, even postmortem. Does the opt-out system provide a viable solution?
According to the British Medical Journal (BMJ), presumed consent can close the gap by 20-30 percent (also see the Hastings Center; Neto et al, 2007). However, since the American donation rate is already higher than other countries, such as the one in the BMJ, the odds are that this gap would be closed by a smaller amount than 20-30 percent.
According to a Mayo Clinic poll, most people would donate their organs, even to a stranger. Assuming that most people do not have a problem donating postmortem because "what am I going to do with the organs when I am dead?," then defaulting to a "yes" response would streamline the process. I can also worry about factors such as government funding, the government's ability to harvest organs in a timely fashion since organs need to be harvested and transplanted quickly, and a scenario in which the shortfall gets bad enough where doctors hasten the patient's death in order to keep up with the supply (if policy alternatives mitigate the shortfall, I can see how this concern would be minimal, at best). In spite of these problems, proponents make a good argument in which our inaction causes the deaths of a sizable amount of citizens (there still is the question I have about the percent of organs harvested from cadavers are actually healthy and viable enough for donor recipients). In a situation that does not inherently remove one's choice, as would be the case in mandatory organ donation, I have to acquiesce that at least from a consequentialist standpoint, this is a good policy, under the conditions that a) the government makes a concerted effort to inform the people about organ donation so they have an informed choice [in the event that they choose to opt out], and b) create a weak presumed consent process in which one's partner or next of kin has veto power (although I can see issues with posthumously denying the donor autonomy).
According to a Mayo Clinic poll, most people would donate their organs, even to a stranger. Assuming that most people do not have a problem donating postmortem because "what am I going to do with the organs when I am dead?," then defaulting to a "yes" response would streamline the process. I can also worry about factors such as government funding, the government's ability to harvest organs in a timely fashion since organs need to be harvested and transplanted quickly, and a scenario in which the shortfall gets bad enough where doctors hasten the patient's death in order to keep up with the supply (if policy alternatives mitigate the shortfall, I can see how this concern would be minimal, at best). In spite of these problems, proponents make a good argument in which our inaction causes the deaths of a sizable amount of citizens (there still is the question I have about the percent of organs harvested from cadavers are actually healthy and viable enough for donor recipients). In a situation that does not inherently remove one's choice, as would be the case in mandatory organ donation, I have to acquiesce that at least from a consequentialist standpoint, this is a good policy, under the conditions that a) the government makes a concerted effort to inform the people about organ donation so they have an informed choice [in the event that they choose to opt out], and b) create a weak presumed consent process in which one's partner or next of kin has veto power (although I can see issues with posthumously denying the donor autonomy).
Even if you want to justify proposed consent based on a decrease in the organ shortage, there is a matter of political feasibility. Countries like Brazil had to withdraw their opt-out system because the citizens had trust issues with the government's health care system. With all of the contention behind Obamacare and the decrease of freedom of health care choices in this country, how do you think Americans would react if they were stripped of yet another freedom? Although I have reservations about the infringements of freedom, I don't think the opt-out system is necessarily a bad idea, and I think it is better than the status quo. In light of other policies, the opt-out system should be weighed against its alternatives, which is why I still prefer permitting monetary compensation for organ donations.
Thursday, January 16, 2014
Freedom of Speech v. Right to an Abortion…..I Mean, "McCullen v. Coakley"
Yesterday, the Supreme Court heard the arguments for the case of McCullen v. Coakley. In Massachusetts state law, it is illegal for anyone who is not a clinic patient, staff member, government agent, or an individual using the sidewalk to pass by to enter a thirty-five foot buffer zone around a "reproductive health care facility," i.e., an abortion clinic. The premise behind this law is to prevent the practice of pro-life activists known as "sidewalk counseling." The plaintiff is asserting that buffer zones are an impediment of free speech, whereas the defendant contends that the buffer zones are a reasonable, constitutional regulation to prevent intimidation, violence, and harassment (see ACLU amicus brief).
I don't want to get into a debate about whether abortion should be considered a right, because courtesy of Roe v. Wade, it is a de jure right. What I want to delve into is whether it is the sidewalk counseling or the buffer zone that is the infringement on freedom. Under the nonaggression axiom, the general idea is that "your freedom ends where mine begins." In this country, freedom of speech is considered sacrosanct. It takes a pretty exigent circumstance, such as "shouting 'Fire!' in a crowded theatre" (see Schenck v. United States), for there to be limitations on free speech, and even then, they're minimal.
This is not the first time buffer zones have been enacted. Funerals, polling places, and political conventions all have buffer zones. Even the Supreme Court has a buffer zone for protesters! With specific regards to abortion, the Supreme Court case of Hill v. Colorado (2000) allows for bubble zones, which creates a 100-foot zone around a healthcare facility in which an individual cannot approach a person that is eight feet away without the individual's consent. In my view, the bubble zone creates two issues: 1) the person within the bubble zone might not even be heading to the clinic, and 2) more importantly, you don't know whether the person is a willing listener until you ask.
The buffer zone could even be in compliance with time/place/manner restrictions, although that would not be the case because employees advocating for abortion services could speak within the buffer zone and anti-abortion individuals could not. Even if there is a legal precedence for making a free speech zone, and even if one argues that the government should regulate a public area [like a sidewalk], should Massachusetts' buffer zone be upheld?
As the Cato Institute points out, the buffer zone does nothing to distinguish between peaceful anti-abortion activists and the violent ones. The law does nothing to target specifically problematic behavior, e.g., anti-abortion violence, conduct that blocks physical access to clinics. Floyd Abrams, who is a pro-abortion constitutional law expert, realizes that this buffer zone does not serve a narrow purpose and does not pass strict scrutiny. Unless the Massachusetts state government can create a law that differentiates between nonviolent and potentially violent individuals, Massachusetts' law is nothing more than an infringement on the First Amendment.
I don't want to get into a debate about whether abortion should be considered a right, because courtesy of Roe v. Wade, it is a de jure right. What I want to delve into is whether it is the sidewalk counseling or the buffer zone that is the infringement on freedom. Under the nonaggression axiom, the general idea is that "your freedom ends where mine begins." In this country, freedom of speech is considered sacrosanct. It takes a pretty exigent circumstance, such as "shouting 'Fire!' in a crowded theatre" (see Schenck v. United States), for there to be limitations on free speech, and even then, they're minimal.
This is not the first time buffer zones have been enacted. Funerals, polling places, and political conventions all have buffer zones. Even the Supreme Court has a buffer zone for protesters! With specific regards to abortion, the Supreme Court case of Hill v. Colorado (2000) allows for bubble zones, which creates a 100-foot zone around a healthcare facility in which an individual cannot approach a person that is eight feet away without the individual's consent. In my view, the bubble zone creates two issues: 1) the person within the bubble zone might not even be heading to the clinic, and 2) more importantly, you don't know whether the person is a willing listener until you ask.
The buffer zone could even be in compliance with time/place/manner restrictions, although that would not be the case because employees advocating for abortion services could speak within the buffer zone and anti-abortion individuals could not. Even if there is a legal precedence for making a free speech zone, and even if one argues that the government should regulate a public area [like a sidewalk], should Massachusetts' buffer zone be upheld?
As the Cato Institute points out, the buffer zone does nothing to distinguish between peaceful anti-abortion activists and the violent ones. The law does nothing to target specifically problematic behavior, e.g., anti-abortion violence, conduct that blocks physical access to clinics. Floyd Abrams, who is a pro-abortion constitutional law expert, realizes that this buffer zone does not serve a narrow purpose and does not pass strict scrutiny. Unless the Massachusetts state government can create a law that differentiates between nonviolent and potentially violent individuals, Massachusetts' law is nothing more than an infringement on the First Amendment.
Wednesday, January 15, 2014
Parsha Yitro: What Does the Commandment of "Do Not Covet" Mean, and Why Bother Having It?
Reading the Ten Commandments is interesting because they have greatly influenced ethical living, particularly in the Western world. Additionally, I am intrigued by the structure of the text (Exodus 20). The First Commandment of "know there is one G-d" (Exodus 20:2) can trip someone up because it's not in the imperative form. That might be because the Hebrew for what is commonly called "the Ten Commandments" is עשרת הדברים, or the "Ten Sayings" or the "Ten Matters," i.e., the ten dicta act as headers. Once you get past the First Commandment, the rest are relatively easy to comprehend (although the Third Commandment of "don't take G-d's name in vain" bewildered me a bit last year), that is until the Tenth Commandment (Exodus 20:13), which tells us not to covet (לא תחמד).
At least in English, the word "covet" means to earnestly want or desire something. I question whether the translation of the word חמד is an accurate one. Based on the "common understanding" of the word, "covet" seems to be an accurate translation. If this is correct, then G-d is commanding us not to feel a certain emotion. If this is the case, then I have to start wondering. Much like with love or joy, how can one command or legislate an emotion or a lack thereof? Actions are much easier to self-regulate than emotions, and from my understanding of Jewish law, G-d judges us on our actions, not our emotions. People can have ridiculous, far-fetched, or morally problematic thoughts. Just because a thought or emotion pops us does not automatically mean that we act on it. That being the case, how do we resolve the text with the reality of human nature?
Yechiel Michael of Zolochev, who was a student of the Baal Shem Tov, said that if you live by the first nine commandments, you will not have a reason to be envious of what others have. Most of the עשרת הדברים consists of negative imperative statements. Yechiel Michael's words might be a nice, little sound byte or 15-second d'var Torah, but it does not actively deal with the issue of envy.
When one covets, it is not about a general proclivity towards material consumption, although that is problematic. The commandment of לא תחמד deals with a fixation on a specific object or person. I have to ask myself whether חמד is an active or passive verb. In Exodus 34:24, the verb is arguably active. In Deuteronomy 7:25, Joshua 7:21, and Micah 2:2, it is a bit more passive. In these passages, the coveting takes place before the morally reprehensible actions do.
Coveting is the process of developing and inculcating envy. Coveting exceeds mere desire because the intensified envy leads to the scheming of acquiring the desired object (Mechilta). By developing this envy, one attempts to justify the wrong they are about to commit, whether that is theft, adultery, murder, or some other heinous act (Maimonides, Hilchot Gzaila v'avaida 1:9, 10). Coveting is arguably the root cause of evil acts.
Similar to the commandment of Shabbat and the need for rest, the commandment of not coveting is more relevant than ever. We live in a world in which the pursuit of material wealth has superseded most, if not all, other values and goals. This is not to say that material consumption is bad (because it's not). What is troublesome is treating it as an end goal, and not a means to an end, e.g., living a more spiritual life.
Coveting is a stepping stone to committing wrong. Since it is an active process, we can take measures to prevent coveting from being actualized. R. Abraham Ibn Ezra realized that we need to discipline and condition the mind so that our actions do not get out of hand. To not covet means to actively work on changing one's perspective so that coveting does not occur. What's the single greatest antidote to coveting and jealousy? Gratitude. If we emphasize and appreciate the good we have in our lives, it detracts from being jealous of others. There is also the notion that the world does not revolve around oneself. There are other people in this world, and they are created in His Image. Realizing that makes it much easier to respect other people, their property, and their relationships with others. Once we take actions to stop giving attention to the evil eye, we can develop lives that respect the dignity of others while respecting ourselves and our own self-worth.
At least in English, the word "covet" means to earnestly want or desire something. I question whether the translation of the word חמד is an accurate one. Based on the "common understanding" of the word, "covet" seems to be an accurate translation. If this is correct, then G-d is commanding us not to feel a certain emotion. If this is the case, then I have to start wondering. Much like with love or joy, how can one command or legislate an emotion or a lack thereof? Actions are much easier to self-regulate than emotions, and from my understanding of Jewish law, G-d judges us on our actions, not our emotions. People can have ridiculous, far-fetched, or morally problematic thoughts. Just because a thought or emotion pops us does not automatically mean that we act on it. That being the case, how do we resolve the text with the reality of human nature?
Yechiel Michael of Zolochev, who was a student of the Baal Shem Tov, said that if you live by the first nine commandments, you will not have a reason to be envious of what others have. Most of the עשרת הדברים consists of negative imperative statements. Yechiel Michael's words might be a nice, little sound byte or 15-second d'var Torah, but it does not actively deal with the issue of envy.
When one covets, it is not about a general proclivity towards material consumption, although that is problematic. The commandment of לא תחמד deals with a fixation on a specific object or person. I have to ask myself whether חמד is an active or passive verb. In Exodus 34:24, the verb is arguably active. In Deuteronomy 7:25, Joshua 7:21, and Micah 2:2, it is a bit more passive. In these passages, the coveting takes place before the morally reprehensible actions do.
Coveting is the process of developing and inculcating envy. Coveting exceeds mere desire because the intensified envy leads to the scheming of acquiring the desired object (Mechilta). By developing this envy, one attempts to justify the wrong they are about to commit, whether that is theft, adultery, murder, or some other heinous act (Maimonides, Hilchot Gzaila v'avaida 1:9, 10). Coveting is arguably the root cause of evil acts.
Similar to the commandment of Shabbat and the need for rest, the commandment of not coveting is more relevant than ever. We live in a world in which the pursuit of material wealth has superseded most, if not all, other values and goals. This is not to say that material consumption is bad (because it's not). What is troublesome is treating it as an end goal, and not a means to an end, e.g., living a more spiritual life.
Coveting is a stepping stone to committing wrong. Since it is an active process, we can take measures to prevent coveting from being actualized. R. Abraham Ibn Ezra realized that we need to discipline and condition the mind so that our actions do not get out of hand. To not covet means to actively work on changing one's perspective so that coveting does not occur. What's the single greatest antidote to coveting and jealousy? Gratitude. If we emphasize and appreciate the good we have in our lives, it detracts from being jealous of others. There is also the notion that the world does not revolve around oneself. There are other people in this world, and they are created in His Image. Realizing that makes it much easier to respect other people, their property, and their relationships with others. Once we take actions to stop giving attention to the evil eye, we can develop lives that respect the dignity of others while respecting ourselves and our own self-worth.
Monday, January 13, 2014
What Is Causing the Growing Problem of Obesity?
Obesity is a massive problem. On a worldwide level, it is estimated that about one in three people are obese. Nearly seven in ten people in America are overweight. Being overweight adds additional economic burdens, as I pointed out a few years back. Before creating solutions to the problem, you need to know what the root causes of the problem are. That might be a self-evident assertion, but that point can be easily forgotten when good politics get in the way of good policy. My friend made me aware of an article from the think-tank Rand Corporation entitled Five Myths About Obesity. Diane Cohen, who authored the piece, concluded that "what is really needed is regulation, for example, limits on marketing that caters to our addiction to sugar and fat," which is what particularly piqued my interest. Is obesity really a disease, and we thus lack the self-control to make our own decisions regarding our health? Does the government need to step in and decide what forms of food are acceptable so we can win the War on Obesity? To figure out how to deal with obesity, let's go through the list of some of the possible causes of obesity.
- Genetics. Genetics play some role in obesity, but people are too quick to blame everything on genes these days. Between 1980 and 2000, obesity rates doubled. If genetics were the primary or sole cause of this increase, it would have taken longer for obesity rates to have doubled. This increase took place too quickly for genetic factors to be responsible, which is to say that the role that genetics plays in obesity is small.
- Sedentary lifestyle. Americans live a less physically demanding life. Physical inactivity is at a point that it is the fourth leading cause of death (World Health Organization). Many Americans are not getting the exercise they need (CDC, 2012, Table 67). Technological development has allowed for less physically demanding activities, both at work and at home. We also watch more television, which is another sedentary activity that increases probability of obesity (Harvard School of Public Health).
- Advertising, lack of healthy food, and a"toxic food environment." The idea here is that one's environment corrodes one's ability to make food choices, whether it's at work, home, or at school. Food marketing is blamed for obesity, but there is no discernible link between advertising exposure and body weight (Andreyeva et al, 2011). Additionally, some claim that obesity is an issue because there is a lack of access to healthy food, or what some would call a "food desert." According to the USDA (2012, p. 1), approximately 3.6% of Americans deal with both food deserts and income issues. If there is anything problematic with the "toxic food environment," it's an issue of convenience, not access.
- Smoking. When people quit smoking, food tastes and smells better, which makes it all the more tempting to eat. Also, nicotine allows for a slightly greater metabolism. Although there is some weight gain while quitting smoking, it cannot be considered a major contributor to obesity (Chiolero et al, 2008).
- Sleep deprivation. There is an increasing amount of research showing a correlation between a lack of sleep and obesity. As the Harvard School of Public Health outlines, less sleep means more opportunities to eat, as well as a decrease in physical activity. A good amount of sleep also provides a proper hormonal balance that does not make you too hungry or too full.
Wednesday, January 8, 2014
The War on Poverty at 50: Guess Who's Winning? (Hint: It's Not the Government)
It can be quite fastidious when the government "declares war" on something. After 9/11, the government declared a War on Terror, and yet terror still exists. The government goes on the rampage with the War on Drugs, and drugs are still a major problem, courtesy of the underground market the government created. When the government declares war on something as relatively abstract as poverty, like Lyndon B. Johnson did fifty years ago today, it makes me wonder what chance the government has to give poverty a good licking.
Proponents would like to look at the declining poverty rate as a form of success. Taking a look at Census data on poverty (Table 2), the poverty rate was already declining prior to the beginning of the War on Poverty. Plus, it takes some time for the government programs to fully take into effect, not to mention that they have grown over the course of time. Keep in mind that none of this considers that using consumption as a basis to measure poverty is superior to solely measuring income, much like the Census Bureau does. Not only would I apply "correlation doesn't equal causation" here, but to point out that these supposedly wonderful government programs have not reversed the increase of poverty since the Great Recession.
We have spent about $16T (yes, trillion with a "t") on the War on Poverty, which is more than the War on Terror. What have we gotten as a result? At the very least, a poverty rate that has fluctuated between eleven and fifteen percent. This country has also dealt with an expansion of the government, including the creation of Head Start, Medicare and Medicaid, as well as expansions of such programs as unemployment insurance, Social Security and food stamps.
Due to the largesse of the government, Americans have become more dependent on government. Dependence on government is not just some "right-winged talking point"; it actually exists. And I cannot emphasize this point enough. The National Park Services does not want us feeding animals because such behavior would make them more dependent, which a fortiori applies to humans. Such dependence has adverse effects on behavior.
1964 was solidified as the moment in which "government is the solution" became increasingly prevalent. Truth be told, the War on Poverty has not addressed structural issues. It was as if the government ignored the Chinese proverb of 授人以鱼不如授人以鱼 ("Give a man a fish, feed him for a day; teach a man to fish, feed him for life"). Programs like TANF notwithstanding [that actually address root problems and make the safety net a temporary one], the government only perpetuates poverty with its "anti-poverty" programs.
"The road to hell is paved with good intentions," which is why I find that the War on Poverty goes well beyond bureaucratic ineptitude. The entire approach of using wealth transfers as a way to pull people out of poverty is flawed. For a majority of those receiving wealth transfers, the government is providing enough to make people comfortable, but it does nothing to help people escape poverty. Throwing money at the problem isn't going to solve it.
If you want people to escape from poverty, you have to go well beyond handing out money, goods, or services. You have to provide poor people with the tools and the incentive to escape poverty. Rather than throwing more money at schools, which doesn't work, students need to learn skills that will make them marketable for a future employer. Unemployment insurance is another example: it only exacerbates unemployment. As the American Enterprise Institute (AEI) illustrates, there are alternative policies (e.g., lowering minimum wage) that do not impede economic growth, entrepreneurship or job creation. After all, having a job [in addition to having an education] is one's best bet for escaping poverty (Tanner and Hughes, 2013). Family arrangements also make a difference. Removing the government regulations and taxation that throw up additional obstacles need to be removed, but even more importantly, we need to have a paradigm shift about poverty reduction if we don't want to create a permanent class of poor people sucking the teat of Big Government while losing their ability to stand on their own feet.
Proponents would like to look at the declining poverty rate as a form of success. Taking a look at Census data on poverty (Table 2), the poverty rate was already declining prior to the beginning of the War on Poverty. Plus, it takes some time for the government programs to fully take into effect, not to mention that they have grown over the course of time. Keep in mind that none of this considers that using consumption as a basis to measure poverty is superior to solely measuring income, much like the Census Bureau does. Not only would I apply "correlation doesn't equal causation" here, but to point out that these supposedly wonderful government programs have not reversed the increase of poverty since the Great Recession.
We have spent about $16T (yes, trillion with a "t") on the War on Poverty, which is more than the War on Terror. What have we gotten as a result? At the very least, a poverty rate that has fluctuated between eleven and fifteen percent. This country has also dealt with an expansion of the government, including the creation of Head Start, Medicare and Medicaid, as well as expansions of such programs as unemployment insurance, Social Security and food stamps.
Due to the largesse of the government, Americans have become more dependent on government. Dependence on government is not just some "right-winged talking point"; it actually exists. And I cannot emphasize this point enough. The National Park Services does not want us feeding animals because such behavior would make them more dependent, which a fortiori applies to humans. Such dependence has adverse effects on behavior.
1964 was solidified as the moment in which "government is the solution" became increasingly prevalent. Truth be told, the War on Poverty has not addressed structural issues. It was as if the government ignored the Chinese proverb of 授人以鱼不如授人以鱼 ("Give a man a fish, feed him for a day; teach a man to fish, feed him for life"). Programs like TANF notwithstanding [that actually address root problems and make the safety net a temporary one], the government only perpetuates poverty with its "anti-poverty" programs.
"The road to hell is paved with good intentions," which is why I find that the War on Poverty goes well beyond bureaucratic ineptitude. The entire approach of using wealth transfers as a way to pull people out of poverty is flawed. For a majority of those receiving wealth transfers, the government is providing enough to make people comfortable, but it does nothing to help people escape poverty. Throwing money at the problem isn't going to solve it.
If you want people to escape from poverty, you have to go well beyond handing out money, goods, or services. You have to provide poor people with the tools and the incentive to escape poverty. Rather than throwing more money at schools, which doesn't work, students need to learn skills that will make them marketable for a future employer. Unemployment insurance is another example: it only exacerbates unemployment. As the American Enterprise Institute (AEI) illustrates, there are alternative policies (e.g., lowering minimum wage) that do not impede economic growth, entrepreneurship or job creation. After all, having a job [in addition to having an education] is one's best bet for escaping poverty (Tanner and Hughes, 2013). Family arrangements also make a difference. Removing the government regulations and taxation that throw up additional obstacles need to be removed, but even more importantly, we need to have a paradigm shift about poverty reduction if we don't want to create a permanent class of poor people sucking the teat of Big Government while losing their ability to stand on their own feet.
Monday, January 6, 2014
The Not-So-Bright Idea of Banning Incandescent Lightbulbs
A few days ago, it was lights out for incandescent lightbulbs in this country. Per §321 of the Energy Independence and Security Act of 2007, incandescent lightbulbs have been phased out in favor of compact fluorescent lightbulbs (CFLs) through EPA standards, thereby making incandescent lightbulbs de facto illegal. Eliminating incandescent lightbulbs in the name of consumer savings, energy efficiency and decreased carbon emissions, however, is going to come with unintended consequences.
One of the selling points of the ban is the cost of the lightbulb. Interestingly enough, in comparison to incandescent lightbulbs, CFLs come with a higher purchasing cost. (There is also the option of LED lighting, but given their relatively high cost, my analysis will only compare incandescents to CFLs). The counterargument to this is that the operating costs over time, the CFLs pay off because they last longer and use less energy. The typical incandescent lightbulb lasts 1,000 hours, whereas manufactures claim that the CFL's lifespan can be up to 15,000 hours. In spite of these efficiency claims, there are those who believe that CFLs do not provide the energy efficiency that is promised. Since it can take time for the CFL to reach full brightness, the CFL loses efficiency with lightbulbs used briefly (e.g., motion detectors, bathroom and closet light fixtures), which is to say that if the lightbulb is only on briefly or turned on and off throughout the day, the efficiency is diminished (Mackinac Center for Public Policy). For areas that do not use lightbulbs all that frequently (e.g., closets, attics), the cost savings of CFLs do not apply or make sense. Furthermore, since CFLs emit less heat, it is more efficient to use CFLs in the summer and incandescents in the winter (ibid). On a side note, CFLs contain rare earth metals, and since rare earth metals will be more scarce over time, so too will the price of CFLs [and LEDs] increase over time.
Let me shed some light on certain transition costs, one of them being that CFLs often do not fix current light fixtures or dimming circuits. CFLs have problems operating in colder weather, which makes the much less operable for outdoor lighting. This is problematic for those who have motion detectors as a part of home-security lighting. Additionally, CFLs contain mercury. Mercury poisoning is a legitimate concern with CFLs, which is why in the event that a CFL breaks, there is a complicated clean-up process (see EPA instructions here). And what about shattered CFLs in landfills? There still is not a standardized mechanism for disposing of CFLs. Mercury seeping into groundwater or soil is hardly beneficial.
There are some environmental issues with CFLs, which is why I also have to be skeptical about the carbon emissions reductions claim. Only 13% of electricity in the typical home is used for lighting (EIA), and that assumes that lightbulbs are a big carbon emitter in the first place. Let's not forget that we've been experiencing a decrease in carbon emissions that is unrelated to CFLs. Unless CFLs can produce a much more substantial reduction in energy production or carbon emissions, the switch over to CFLs wouldn't do much on the fight against global warming. Now that I think about it, how does banning incandescent light bulbs help score victory points for the environment? CFLs are a substitute good. There is still going to be a demand for lightbulbs. CFLs are not going to make any significant strides in slowing energy consumption, and even so, we should consider the energy intensity decline. If decreasing energy consumption were the policy goal (which I'm not recommending by any means), a Pigovian tax would be more effective.
Let me shed some light on certain transition costs, one of them being that CFLs often do not fix current light fixtures or dimming circuits. CFLs have problems operating in colder weather, which makes the much less operable for outdoor lighting. This is problematic for those who have motion detectors as a part of home-security lighting. Additionally, CFLs contain mercury. Mercury poisoning is a legitimate concern with CFLs, which is why in the event that a CFL breaks, there is a complicated clean-up process (see EPA instructions here). And what about shattered CFLs in landfills? There still is not a standardized mechanism for disposing of CFLs. Mercury seeping into groundwater or soil is hardly beneficial.
There are some environmental issues with CFLs, which is why I also have to be skeptical about the carbon emissions reductions claim. Only 13% of electricity in the typical home is used for lighting (EIA), and that assumes that lightbulbs are a big carbon emitter in the first place. Let's not forget that we've been experiencing a decrease in carbon emissions that is unrelated to CFLs. Unless CFLs can produce a much more substantial reduction in energy production or carbon emissions, the switch over to CFLs wouldn't do much on the fight against global warming. Now that I think about it, how does banning incandescent light bulbs help score victory points for the environment? CFLs are a substitute good. There is still going to be a demand for lightbulbs. CFLs are not going to make any significant strides in slowing energy consumption, and even so, we should consider the energy intensity decline. If decreasing energy consumption were the policy goal (which I'm not recommending by any means), a Pigovian tax would be more effective.
CFLs are not the end result of winning in a competitive market. The "victory" of CFLs is the result of what happens when Big Business gets into bed with Big Government for the purpose of regulatory capture. As economist Don Boudreaux points out, "any legislation forcing Americans to switch from using one type of bulb to another is inevitably the product of a horrid mix of interest-group politics with reckless symbolism designed to placate an electorate that increasingly believes that the sky is falling." If CFLs were really that great of a product, they would not need for the government to intervene with a ban.
Considering the government's call for regulating energy efficiency, this is another example of the government micromanaging while curtailing consumer freedom in the process. Let's forget for a moment that the cost savings or benefits to the environment are questionable. The government is impeding the marketplace from competing and innovating to figure out which type of light bulb works best. Since there are certain situations in which it's better to have incandescents and other situations to have CFLs or LEDs, the government also impedes the customer from making the choice of which bulb works best for them. If people want to buy more efficient lightbulbs, let them. If not, let them. Consumers are capable of making the decision. It's their choice, and the government does not need to step into our lighting choices. All the government is doing is distorting market forces yet again. It would brighten up my day to see the government repeal this ban and allow Americans to choose whichever lightbulbs they desire.
Friday, January 3, 2014
Parsha Bo: Did the Hardening of Pharaoh's Heart Negate Pharaoh's Free Will?
Free will is axiomatic to Judaism. Being able to make the choice between right and wrong is one of the features that makes us human. Without free will, life would either be futile or even senseless. That is why I find it so disheartening to read multiple times in the Exodus narrative of the hardening of Pharaoh's heart (Exodus 4:21, 7:3, 7:13, 9:12, 10:1, 10:20, 10:27, 11:10, 14:4, 14:8, 14:17). If G-d hardens one's heart, He interferes in one's emotions and motivations in a way that one would not feel otherwise. Looking at the text, this interference didn't help Pharaoh "see the light." Reading "[and] I will harden the Pharaoh's heart" (ואני אקשה את לב פרעה) literally means that Pharaoh's free will has either been distorted or nullified.
As Dr. David Shatz at Yeshiva University points out, there are three huge problems with the "literal view." One, how can anybody hold the Pharaoh responsible if G-d removed his free will? Two, if Pharaoh has no free will, how can Pharaoh perform teshuva? If one were to use this as a justification for the Pharaoh, then we could all theoretically use that to abscond personal responsibility (Midrash Rabbah, Exodus 13:3). Three, if Pharaoh was not responsible, would that mean that G-d effectively caused evil? As an additional question, why was this even necessary? Couldn't G-d have taken care of the problem "with the snap of His fingers?" To think of G-d as an enabler or perpetrator of evil, חס ושלום, is perturbing. So how do we resolve the hardening of Pharaoh's heart with the notion of free will?
Maimonides thought that the negation was justifiable [as a punishment] because Pharaoh previously used his free will to cause such evil (Hilchot Teshuvah 6:3) that one cannot arguably repent for it. Even if the Pharaoh were that irredeemable, taking away his free will would be, at best, superfluous. Shimon ben Lakish realized a shift in language between the first five plagues and the second set. In the first five plagues, Pharaoh was the one hardening his own heart. In the second set, G-d did the hardening, which is to say that G-d was acting "measure for measure." In spite of Pharaoh's evil, it still does not answer how G-d would completely negate one's free will, and it makes the whole "giving Pharaoh a choice" a farce. Also, R. Moshe David Cassuto noted that since all actions are attributed to G-d, there is no difference between the first and second sets.
G-d's hardening of the heart did not negate the Pharaoh's free will, but rather it provided Pharaoh with free will. What would have happened if G-d decided not to harden Pharaoh's heart? Pharaoh most likely would have been so overwhelmed by G-d's awesomeness that Pharaoh's instinctive reaction would have been to let the Jewish people go. This interpretation means that the hardening of Pharaoh's heart was the way to ensure that the Pharaoh could withstand the plagues (Sadiah Gaon) in order to be able to choose between good and evil (Sforno; Josef Caro). Sforno quoted Ezekiel 18:23 in the process, thereby reminding us that no one is beyond repenting.
I like the idea that G-d's intervention meant preserving Pharaoh's free will. It certainly beats the option of free will deprivation as a punishment. However, my issue here is that I believe in an impersonal G-d, which is why I like R. Abraham ben Izra's interpretation. According to ben Izra, one does not interpret the phrase literally. G-d allowed Pharaoh to exercise his free will and follow his hardened heart. Rabbi Samuel David Luzzatto also went with a non-literal interpretation by saying that "the hardened heart" is a hyperbolic literary device alluding to Pharaoh's stubbornness. To go off of these two non-literaral interpretations, I would conjecture that "the Pharaoh's hardening of the heart" meant that Pharaoh was suffering from cognitive dissonance. There are moments in life where we see only what we want to see and ignore everything else. The Pharaoh was no exception to the common, human phenomenon.
In conclusion, G-d did not remove the Pharaoh's free will. How could He? Judaism has such respect for free will that, as the rabbinic commentary illustrates, G-d could not possibly have done so. The lesson I would take from the hardening of the Pharaoh's heart learning from the Pharaoh's mistake. We cannot let life knock us down and harden us to the point where we are incapable of doing the right thing. To pursue a life of goodness and looking on the bright side provide the antidote for us to avoid the Pharaoh's fate.
As Dr. David Shatz at Yeshiva University points out, there are three huge problems with the "literal view." One, how can anybody hold the Pharaoh responsible if G-d removed his free will? Two, if Pharaoh has no free will, how can Pharaoh perform teshuva? If one were to use this as a justification for the Pharaoh, then we could all theoretically use that to abscond personal responsibility (Midrash Rabbah, Exodus 13:3). Three, if Pharaoh was not responsible, would that mean that G-d effectively caused evil? As an additional question, why was this even necessary? Couldn't G-d have taken care of the problem "with the snap of His fingers?" To think of G-d as an enabler or perpetrator of evil, חס ושלום, is perturbing. So how do we resolve the hardening of Pharaoh's heart with the notion of free will?
Maimonides thought that the negation was justifiable [as a punishment] because Pharaoh previously used his free will to cause such evil (Hilchot Teshuvah 6:3) that one cannot arguably repent for it. Even if the Pharaoh were that irredeemable, taking away his free will would be, at best, superfluous. Shimon ben Lakish realized a shift in language between the first five plagues and the second set. In the first five plagues, Pharaoh was the one hardening his own heart. In the second set, G-d did the hardening, which is to say that G-d was acting "measure for measure." In spite of Pharaoh's evil, it still does not answer how G-d would completely negate one's free will, and it makes the whole "giving Pharaoh a choice" a farce. Also, R. Moshe David Cassuto noted that since all actions are attributed to G-d, there is no difference between the first and second sets.
G-d's hardening of the heart did not negate the Pharaoh's free will, but rather it provided Pharaoh with free will. What would have happened if G-d decided not to harden Pharaoh's heart? Pharaoh most likely would have been so overwhelmed by G-d's awesomeness that Pharaoh's instinctive reaction would have been to let the Jewish people go. This interpretation means that the hardening of Pharaoh's heart was the way to ensure that the Pharaoh could withstand the plagues (Sadiah Gaon) in order to be able to choose between good and evil (Sforno; Josef Caro). Sforno quoted Ezekiel 18:23 in the process, thereby reminding us that no one is beyond repenting.
I like the idea that G-d's intervention meant preserving Pharaoh's free will. It certainly beats the option of free will deprivation as a punishment. However, my issue here is that I believe in an impersonal G-d, which is why I like R. Abraham ben Izra's interpretation. According to ben Izra, one does not interpret the phrase literally. G-d allowed Pharaoh to exercise his free will and follow his hardened heart. Rabbi Samuel David Luzzatto also went with a non-literal interpretation by saying that "the hardened heart" is a hyperbolic literary device alluding to Pharaoh's stubbornness. To go off of these two non-literaral interpretations, I would conjecture that "the Pharaoh's hardening of the heart" meant that Pharaoh was suffering from cognitive dissonance. There are moments in life where we see only what we want to see and ignore everything else. The Pharaoh was no exception to the common, human phenomenon.
In conclusion, G-d did not remove the Pharaoh's free will. How could He? Judaism has such respect for free will that, as the rabbinic commentary illustrates, G-d could not possibly have done so. The lesson I would take from the hardening of the Pharaoh's heart learning from the Pharaoh's mistake. We cannot let life knock us down and harden us to the point where we are incapable of doing the right thing. To pursue a life of goodness and looking on the bright side provide the antidote for us to avoid the Pharaoh's fate.
Wednesday, January 1, 2014
NAFTA at 20: A Step in the Right Direction Towards Liberalized Trade
Today is the twentieth anniversary of the North American Free Trade Agreement (NAFTA) coming into force. Ever since its enactment, NAFTA has become of a lighting rod of controversy in trade policy. Was NAFTA a pioneering step in economic development or has NAFTA truly created a giant sucking sound?
Before jumping into the question, a little background information. NAFTA was a trilateral trade agreement between the United States, Canada, and Mexico to create a trade bloc amongst the three nations. As I pointed out a few months ago when discussing "free trade agreements," it would be more accurate to call NAFTA a preferential trade agreement. The primary goal of NAFTA was to eliminate tariffs between the participating nations, although the agreement includes a plethora of provisions.
One of the arguments used against NAFTA is that it has caused a loss of American jobs. The Left-leaning Economic Policy Institute (EPI) found that NAFTA has caused larger trade deficits and a net loss of 682,900 jobs. If there is to be a true loss in jobs that is so overwhelming that overall job creation cannot outpace it, it would show up in the employment statistics. Taking a look at Bureau of Labor Statistics data, that is not the case. According to the Office of the U.S. Trading Representative, employment rose 24 percent from 1994 to 2007, and the average unemployment rate during that time was 5.1 percent (See the USTR's fact sheet dispelling other NAFTA myths). The Cato Institute is able to astutely refute EPI's analysis by pointing out that a) trade creates jobs through exports [see above], and b) 682,900 jobs over a 20-year period (i.e., about 40,000 per annum) is infinitesimally small compared to the 15 million jobs that are created and destroyed every year.
Opponents tend to complain that NAFTA caused the downfall of the manufacturing sector (e.g., depressed wages, lowered employment). In reality, the manufacturing sector has become more productive and less labor-intensive over time (Economic Report of the President, 2013, Table 51-B), i.e., there is a structural shift in the American economy. There was also concern about the Mexican farmers that were allegedly dislocated by NAFTA. However, the farm subsidies, combined with the removal of tariffs, translated into Mexican farmers being displaced because they couldn't compete with the subsidized exports. The displacement of Mexican farmers was more of an issue of Big Government subsidizing Big Agriculture than anything else. As a side note, any decrease in real wages in Mexico was due to the peso crisis of 1994, not NAFTA.
In spite of whatever flaws I can find with preferential trade agreements, trade between the three countries has increased. As the Congressional Budget Office pointed out back in 2003, NAFTA was not going to have a huge impact on the American economy because trade with Canada and Mexico is a small component of America's GDP. Opponents like to bring up increased trade deficits, but those are more due to China's ascension into the World Trade Organization. As the Congressional Research Service (CRS) illustrated in its report on the 20th anniversary of NAFTA, Canada already had a preferential trade agreement with the United States prior to NAFTA, which is to say (p. 18-20) that it had moderately positive impacts. Ultimately, the one who had the largest relative gains was Mexico's economy (CRS, p. 15; IMF, 2012).
Canada and Mexico are not America's competition; they are valuable trading partners. NAFTA has engendered increased trade, increased price-level synchronization, and more integrated markets (e.g., the U.S. Department of Agriculture shows greater integration of the agricultural market between the three countries with NAFTA), as the International Monetary Fund (p. 97) illustrates, as well as the U.S. Chamber of Commerce in its report on NAFTA. In spite of whatever flaws NAFTA might have (e.g., increased trade deficits that help perpetuate America's long-term debt issues, continued trade regulations not related to tariffs, environmental and labor regulations unrelated to trade), the American government should pursue more liberalized trade, not less.
May 12, 2014 addendum: Here is a policy report by the Peterson Institute of International Economics outlining the overall benefits of "NAFTA at 20."
Before jumping into the question, a little background information. NAFTA was a trilateral trade agreement between the United States, Canada, and Mexico to create a trade bloc amongst the three nations. As I pointed out a few months ago when discussing "free trade agreements," it would be more accurate to call NAFTA a preferential trade agreement. The primary goal of NAFTA was to eliminate tariffs between the participating nations, although the agreement includes a plethora of provisions.
One of the arguments used against NAFTA is that it has caused a loss of American jobs. The Left-leaning Economic Policy Institute (EPI) found that NAFTA has caused larger trade deficits and a net loss of 682,900 jobs. If there is to be a true loss in jobs that is so overwhelming that overall job creation cannot outpace it, it would show up in the employment statistics. Taking a look at Bureau of Labor Statistics data, that is not the case. According to the Office of the U.S. Trading Representative, employment rose 24 percent from 1994 to 2007, and the average unemployment rate during that time was 5.1 percent (See the USTR's fact sheet dispelling other NAFTA myths). The Cato Institute is able to astutely refute EPI's analysis by pointing out that a) trade creates jobs through exports [see above], and b) 682,900 jobs over a 20-year period (i.e., about 40,000 per annum) is infinitesimally small compared to the 15 million jobs that are created and destroyed every year.
Opponents tend to complain that NAFTA caused the downfall of the manufacturing sector (e.g., depressed wages, lowered employment). In reality, the manufacturing sector has become more productive and less labor-intensive over time (Economic Report of the President, 2013, Table 51-B), i.e., there is a structural shift in the American economy. There was also concern about the Mexican farmers that were allegedly dislocated by NAFTA. However, the farm subsidies, combined with the removal of tariffs, translated into Mexican farmers being displaced because they couldn't compete with the subsidized exports. The displacement of Mexican farmers was more of an issue of Big Government subsidizing Big Agriculture than anything else. As a side note, any decrease in real wages in Mexico was due to the peso crisis of 1994, not NAFTA.
In spite of whatever flaws I can find with preferential trade agreements, trade between the three countries has increased. As the Congressional Budget Office pointed out back in 2003, NAFTA was not going to have a huge impact on the American economy because trade with Canada and Mexico is a small component of America's GDP. Opponents like to bring up increased trade deficits, but those are more due to China's ascension into the World Trade Organization. As the Congressional Research Service (CRS) illustrated in its report on the 20th anniversary of NAFTA, Canada already had a preferential trade agreement with the United States prior to NAFTA, which is to say (p. 18-20) that it had moderately positive impacts. Ultimately, the one who had the largest relative gains was Mexico's economy (CRS, p. 15; IMF, 2012).
Canada and Mexico are not America's competition; they are valuable trading partners. NAFTA has engendered increased trade, increased price-level synchronization, and more integrated markets (e.g., the U.S. Department of Agriculture shows greater integration of the agricultural market between the three countries with NAFTA), as the International Monetary Fund (p. 97) illustrates, as well as the U.S. Chamber of Commerce in its report on NAFTA. In spite of whatever flaws NAFTA might have (e.g., increased trade deficits that help perpetuate America's long-term debt issues, continued trade regulations not related to tariffs, environmental and labor regulations unrelated to trade), the American government should pursue more liberalized trade, not less.
May 12, 2014 addendum: Here is a policy report by the Peterson Institute of International Economics outlining the overall benefits of "NAFTA at 20."
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