Tuesday, November 24, 2015

Why It Doesn't Make Sense to Block Syrian Refugess from the U.S.

Humanitarian crises perpetrated by scourges of the earth are an unfortunate, bleak reality. The lack of freedom and liberties uproot people from their homes and make it all the more difficult to pursue life, liberty, and happiness. The latest humanitarian crisis that has been receiving considerable attention from the media is the Syrian crisis. Since March 2011, Syria has experienced a sectarian civil war. While the inhumanity behind the death tool is regrettably not anything new, Syrians citizens fleeing the Syrian nation in droves is a more recent development. The European Commission is calling the Syrian civil war the worst humanitarian crisis since WWII. As of date, the crisis has created about 4.3 million refugees. Europe has dealt with its fair share of headache of trying to admit Syrian refugees, and now it looks like it's America's turn. In light of the recent ISIS attack in France, the United States has become much more hesitant in admitting Syrian refugees. A majority of governors said they would refuse to admit Syrian refugees. Forgetting that such immigration issues are under the purview of the federal government for a moment, it makes me question whether we should let in Syrian refugees or institute a moratorium in the hopes we can prevent an attack like the one in France.

As has been implied, the major concern about letting in Syrian refugees is a national security concern. For critics of admitting refugees, particularly many of the Republican presidential candidates, they are worried that ISIS soldiers will pose as refugees and work their way into the country to launch a terrorist attack. 13 percent of Syrian refugees are sympathetic towards ISIS, which can be perceived as reasonable cause for this concern. Much like with hyperbolic claims made about mass shootings in this country, we have to make sure that we properly assess the data to make sure we understand the risk.

I have to ask what logical sense it would be for a terrorist from ISIS [or any other agency] to sneak in as a refugee. It takes one to two years for refugees to get processed before they ever step foot on American soil. And none of that counts the two-year vetting process from the UN High Commissioner from Refugees prior to being referred to the United States. The security check for a refugee is the most stringent type for anyone entering the United States, which is in contrast to Europe's more lax refugee process. It would be much easier for a potential ISIS terrorist to enter this country with a student visa, a business visa, a travel visa, or even by crossing the U.S.-Mexican border.

The U.S. only accepted 2,148 Syrian refugees, or 0.05 percent of all Syrian refugees (the vast majority of whom are women and children), since the crisis began. Obama is looking to admit 10,000 Syrian refugees this upcoming year. Since 9-11, there have been 785,000 refugees admitted to the United States. Out of that number, only 12 refugees have been removed or arrested due to terrorism charges. Based on post 9-11 refugee data, the probability that a refugee would be involved with a terrorist organization is .001%. More to the point, none of the refugees have made a terrorist attack on American soil. The probability of even just one ISIS member attacking through the manipulation of the refugee system is so small that it is hardly worth halting the refugee program. A defense policy specialist from the Rand Corporation pointed out that in most cases, "a would-be terrorist's refugee status had little or nothing to do with their radicalization and shift to terrorism." Shutting out thousands of refugees who legitimately need help in the minutest of chances that you might stop one terrorist is nonsensical.

As limited research shows (e.g., Findley et al., 2013Choi and Saleyhan, 2013; Ekey, 2008), having refugees stay in refugee camps instead of finding them countries where they can live only exacerbates the issue. Europe will have to deal with this issue differently since the conditions across the Atlantic have encouraged greater Islamic radicalization, but at least for the United States, there isn't a good reason to discontinue admitting Syrian refugees. Other countries, such as Jordan, Turkey (also see here), and Lebanon, are much smaller countries that have admitted way more refugees than the United States, and in spite of some short-term shock, their economies have been adjusting (although keep in mind that given the high refugee-to-general population ratio in Lebanon, it has put certain unique strains on Lebanon that would not be experienced in the United States).

There is no reason to believe that refugees would not be of economic benefit in the United States. The "we don't have enough jobs for the refugees" is another variation of the argument that anti-immigration pundits use that is based on the fallacy that the economy is a fixed pie. Immigrants are not a fiscal drain. If anything, immigration has been a net gain for the United States economy, and the same thing should happen when the U.S. government admits more Syrian refugees. Even with short-term adjustments to the labor market, the long-term economic benefits outweigh the upfront costs.

Ever since its debacle with not taking in Jewish refugees back in 1939, the United States has taken it as more of a moral imperative to act as a exemplar and actually take in refugees instead of give into isolationist tendencies. 3.75 million refugees admitted since 1975 (not to mention all the other ones from earlier), and the American economy hasn't imploded because it took in too many refugees. Barring a legitimate national security, crime, or health concern, there is no reason we shouldn't help by admitting some more Syrian refugees.

Tuesday, November 17, 2015

Consumer Financial Protection Bureau: An Agency for the American Consumer?

The Great Recession, which has been the worst financial crisis since the Great Depression, sparked major financial regulation in the form of Dodd-Frank. Part of this 2,300-page legislation included Title X, which established the Consumer Financial Protection Bureau. The CFPB is an entity within the Board of Governors of the Federal Reserve System that is supposed to regulate the "offering and provision of consumer financial products and services under federal consumer financial laws." Republican presidential candidate Carly Fiorina took a jab at the CFPB saying that the CFPB has "no congressional oversight." Politifact rated this claim half-true since the CFPB technically has some congressional oversight, even if it is significantly lower than other agencies. Congressional oversight notwithstanding, what I would like to know is if the CFPB has succeeded in its mission statement of "empowering consumers to take more control over their economic lives." These subsequent points summarize the research I was able to find:

  • The Mercatus Center released a working paper in September about unintended consequences from the CFPB, stating that "although stricter regulation of permissible debt collection practices can benefit consumers who are in default and increase demand for credit by consumers, overly restrictive regulation will result in higher interest rates and less access to credit for consumers...it may also have the unintended consequence of providing incentives for creditors to more rapidly escalate their efforts to more aggressive collection practices, including litigation."
  • The Cato Institute published a research brief in February showing how the regulations with Dodd-Frank, and more specifically the CFPB, have disproportionately burdened smaller banks with compliance costs.
  • The Mercatus Center also released a study back in August showing [with CFPB data] that consumer arbitration settlements are preferable to heavy-handed regulation from the CFPB. 
  • To be fair and bring in other points of view, the Left-leaning Center for American Progress makes the argument in its issue brief that it has protected consumers in the mortgage market.
  • The Right-leaning Heritage Foundation put out an issue brief earlier this month showing how payday lenders provide a vital service to the financial sector, as well as how regulating these lenders compounds issues burdens in the financial sector.
  • The CFPB has created a "Qualified Mortgage" category that has imposed strict home financing standards for lenders and borrowers alike. 
  • Checking accounts have become more expensive for lower-income family households, which is why these households have gravitated towards prepaid cards. As the American Action Forum illustrates, recently proposed CFPB regulations would most probably eliminate prepaid cards as an option, thereby leaving more unbanked Americans.

As the Federalist Society points out, we should not "impose 19th century regulatory approaches to a 21st century credit consumer economy." Having an agency with a director who has de facto power to deem any consumer product or practice "unfair" or "abusive" is perturbing indeed. Back in its 2013 report on the CFPB, the Heritage Foundation made some suggestions for reform, including striking the undefined term of "abusive" from the CFPB's purview, prohibiting public release of unconfirmed complaint data, abolishing the deference in judicial review granted to the CFPB, and downright abolishment of the CFPB. At the end of the day, we should make it easier for the American people to have access to credit, not more difficult. While the passage of time will better tell us whether the CFPB helps the American consumer, it seems that there is enough out there to make us doubt whether CFPB regulations have done more good than harm.

If you want more information on the CFPB, you can go to the CFPB's website, read this Congressional Research Service brief, or this financial audit from the Government Accountability Office that was released earlier this week.

Tuesday, November 10, 2015

More Government Regulation Is Not a Solution for Lowering Prescription Drug Prices

Daraprim is a drug that not only helps with curing toxoplasmosis, but is also part of a pharmaceutical regimen to help deal with AIDS. This past August, the rights to sell Daraprim were sold to Turing Pharmaceuticals. Upon purchasing the rights, Martin Shkreli, who is the CEO of Turing, decided to jack up the prices 5,000 percent from $13.50/pill to $750/pill.

What allowed him to get away with "price gouging" is not the free market, but the Food and Drug Administration's (FDA) drug importation laws. India has a cheap alternative, but FDA laws prohibit it from being imported to the United States. Combine that with the FDA's expensive and time-consuming process of acquiring approval to produce Daraprim in the United States, and you have another example of government regulation gone awry. Fortunately, Imprimis Pharmaceuticals was able to bypass the regulations and create and alternative pill that only cost about $1.

The story behind Daraprim leads us to asking the bigger question of how to make sure that prescription drug prices aren't so exorbitant that it runs Americans into financial ruin. While generic drugs have saved more than a trillion dollars from 1999 to 2010, we have seen an uptick in brand prescription drug pricing. What is interesting is that when you look at the cost of generic prescription prices according to the Express Scripts Prescription Prices Index, generics have dropped by nearly two-third since 2008 (see below).

One of the most popular policy recommendations, according to a Kaiser Family Foundation survey, is to have Medicare negotiate with drug companies for lower prices. In response to Shkreli's actions, Hillary Clinton vowed to fight to "price gouging", in which the biotech sector of the stock market responded with a 6 percent decrease in value. What should be done to mitigate the cost of prescription drugs?

In September, the Left-leaning Center for American Progress (CAP) released a report on prescription drug-related reforms. The free-market-oriented National Center for Policy Analysis (NCPA) also released a two-part report around the same time as CAP (see here and here). Both reports can be viewed for further details, but I would like to briefly go through some preliminary reactions of mine, mainly those of "price gouging" and backlogs.

Clinton has already proposed putting a price cap on patients' drug costs. Aside from the fact that there isn't "price gouging," price controls have adverse, unintended consequences (see here, here, here, and here). According to a study from the centrist Rand Corporation, such stringent price controls [from the FDA] cause a slight decrease in life expectancy. Research from Stanford University and the National Bureau of Economic Research also shows that FDA regulation dampens innovation in the pharmaceutical sector.

As already has been alluded to, the FDA approval process has played a role in keeping innovation from taking place. The Healthcare Supply Chain Association (HSCA) wrote the FDA a letter back in June saying that it should deal with its backlog of 3,000 applications and fast-track potential generic drugs. Clinical drug trials are lengthy, which is why conditional approval pending Phase II testing wouldn't be a bad policy reform. Removing patent monopolies would be another great policy since monopolies cause price increases.

We can get into such industry trends as market consolidation, group purchasing organizations, raw material shortages (e.g., 27% of drug shortages are caused by raw material shortages), but what we see is another example of government regulation and rent-seeking creating a monopoly for something that would have cost pennies in a competitive market. While many of the issues facing the pharmaceutical industry are regulatory and legal in nature, there are still other issues with supply shortages and price increases. While the conversation can be extended, much like it is in the aforementioned reports from the CAP and NCPA, the general solution in this case is market liberalization on the supply-side.

Wednesday, November 4, 2015

Do We Need a Constitutional Right to Hunt and Fish?

Election Day is fun for me, not because of the candidates per se, but because of the ballots and referenda that are up for vote. Aside from Ohio voting to legalize marijuana, there was another interesting ballot out there yesterday: the Texas Right to Hunt, Fish, and Harvest Amendment, also known as Proposition 6. As the name of the proposition states, this would provide Texans with a constitutional right to hunt and fish. Section B of the Amendment states that its purpose is to manage and control wildlife. This amendment overwhelmingly passed, and Texas has become the nineteenth state with a constitutional right to hunt and fish. With that being said, I would like to try to answer three questions here today:

1) Should this be a constitutional right?
2) Is it necessary to have this be a constitutional right?
3) Would such an amendment help guarantee wildlife conservation?

Constitutional Arguments Regarding Fishing and Hunting

One who argues that we "have the right to do something," it is coming from a stance of natural rights. From a natural rights viewpoint, one's rights definitionally cannot infringe upon another's right. In the debate for a constitutional right to hunt and fish, the biggest opponents are the animal rights activists. Animal rights activists are opposed to this types of amendment, and hunting more generally, because it is an infringement upon animal rights. The question here is whether we can treat animals under the law with the same consideration or equality as humans. As I concluded about a couple of years ago (read here for my take on animal rights and welfare in political philosophy and public policy), the answer is in the negative. In this specific context, if we were to hypothetically get to the point of banning hunting or fishing, then we would need to ban consumption of animals, which has multiple feasibility and philosophical issues. Keep in mind that the probability of a downright ban of hunting or fishing is minuscule, but rather that such amendments are preemptive moves to ensure that it doesn't take place.

Let's frame the argument of putting animals on the spectrum of being equals to humans and being considered mere property. I'm certainly not going to argue that animals are equal to human beings. Given how current jurisprudence treats animals, let's put the status of animals closer to being man's property. If we go on the complete end of the spectrum and treat animals like any other piece of property, then the constitutional right to hunt and fish is implicit in laws governing property rights. Given the amount of Texans who fish and hunt, it very well comes off as more superfluous than anything else. On a personal level, I wouldn't hunt because it's not kosher under Jewish law. It is my right not to hunt, just as it is the right of others to go hunting. In a similar vein, I do have to wonder what the effects of hunting are on the individual hunters that hunt for sport versus those that are hunting for conservationist purposes. Does hunting incline one towards more violent tendencies? It would be interesting to see conclusive data on that. On the one hand, hunting has its violence. It might not be as bad as what we see on television, but there is still a violent component. On the other hand, much like with video games, I can see hunting having a substitution effect in which hunting satisfies the urges so that people are less likely to act on those violent tendencies. It would be nice to see which theory holds, but until there are adequate studies, this facet needs to be tabled. As a side note, from a moralistic standpoint, it becomes easier to justify hunting if it is done to "secure the aggregate welfare of the target species, the integrity of its ecosystem, or both" than it is to justify hunting for sport, but as long at it conserves the species and hunting can act as a substitute for violence towards human beings, I have less of a moral qualm with hunting.

Hunting, Fishing, and Wildlife Conservation

However, even if we are to view fish or game as property, there is the matter of conservation. This is important because if we deplete the number of animals to hunt or fish, then the ability to hunt or fish in the long-run becomes in danger. In order to guarantee that future generations can hunt and fish, we need to conserve our resources. I think part of the solution can be found in what is causing overpopulation in certain species, whether that is increased urbanization or if hunting the overpopulated species' natural predator (i.e., hunting caused the problem). It is difficult to say that outlawing hunting works because like with other prohibitions, it assumes that the action ceases to take place. Instead, hunting goes underground to the poaching market, and often with worse results. From that standpoint, hunting with data-based regulations would have a more sound argument than a downright ban on hunting. I have proposed increased privatization of national parks, and I would be interested if that would help with keeping animal populations in check. Barring land privatization, I do have to wonder if hunting is the best alternative to deal with managing animal populations.

The Humane Society provides an alternative to hunting: immunocontraceptives. Essentially, this would be a non-violent way of producing a similar outcome. However, the issue with immunocontraceptives are only effective in small, fenced-in areas. For something like deer, which is an animal in the United States that commonly overpopulates, studies show that hunting remains the most effective method of controlling the deer population. If immunocontraceptives can be implemented more effectively or we come up with a better system of controlling animal populations, I would be all ears. Until such policy alternatives come along, I have to side with hunting, albeit with some regulations to make sure that the pendulum doesn't swing to the side of making the species endangered or extinct.

Sunday, November 1, 2015

Time to End Government Regulation of Daylight Saving Time

This morning, I set my non-automated clocks this morning on account that Daylight Saving Time ended. It was nice to get the extra hour of sleep. However, it is annoying to have to deal with losing an hour during springtime (not to mention that as an observant Jew, Shabbat starts a whole lot earlier, thereby making that part of my life more hectic than normal). As I set my clocks an hour back, I had to ask myself why we have this practice of Daylight Savings Time (DST). Wouldn't it just be easier if we didn't have to switch the times twice every year?

Contrary to popular belief, Benjamin Franklin did not propose DST. In 1784, Franklin wrote a satirical piece suggesting that Parisians save money on candles by waking up earlier to use more sunlight. This piece included such glib remarks as rationing candles, ringing church bells, and firing cannons to help people wake up early. In no way was this meant to be taken seriously. The modern-day concept of daylight saving time came from George Hudson. Hudson was an entomologist who suggested in 1895 a two-hour daylight saving time shift in order that he could collect more bugs for his entomology collection. DST was first implemented during WWI by Germany and Austria-Hungary to conserve on coal consumption. The Allied nations followed suit. The United States repealed it after the Great War. DST was reinstated during WWII. After WWII, some states kept DST with interstate inconsistencies. It was with the Uniform Time Act in 1966 when the United States federal government made DST the law of the land for the first time under peacetime conditions. Ever since, DST has become a mainstay of the United States calendric system.

Back in 2010, an economist from Utah State University, William Shughart II, ran a back-of-the-envelope calculation, and found that it was costing us $1.7 billion per annum. Although inflation and population have increased, I can argue that technological advancements have decreased the amount of time and energy at which one uses to go about and changing the time on clocks. There is not only the hassle (read: opportunity cost) of the act of changing clocks to consider, but also the effects as a result. When changing back to DST in the springtime, there is an increase of heart attacks, traffic accidents, and work-related injuries, not to mention the decreased workplace productivity. Given that DST is messing with circadian rhythms twice a year, these findings are not at all surprising. The main intent of implementing DST was to conserve energy. However, it turns out that DST might not accomplish its prime directive. A research paper from the National Bureau of Economic Research showed a negative tradeoff between reduced demand for lighting and increased demand for heating and cooling (Kotchen and Grant, 2008).

Whether we decide to keep daylight savings time year-round (also see here) or adopt Universal Time (UTC), one thing is for certain: we would be better off it the government was no longer in the business of establishing time standards.