Friday, February 26, 2016

How Does the Australian Economy Look for 2016?

Sometimes, it's nice to blog on the more obscure things in life. Last week, the Australian Governor of the Federal Reserve of Australia, Glenn Stevens, addressed the Australian House of Representatives Committee on Economics. In his address, he summarized Australian economic development in 2015, and looked forward a bit. Although he did provide some insight on the global economy in general, I was hoping for something a little bit more substantive in his address. After all, Australia does have the world's 12th highest ranking GDP at $1.44T, according to the International Monetary Fund (IMF). How is the Australian economy expected to perform for the year 2016?

Australia is a country with superior credit ratings from Fitch, Moody's, and Standard and Poor's.
What is interesting is that whether you look at the economic freedom indices for either the Fraser Institute or Heritage Foundation, Australia has more economic freedom than the United States. As of date, Australia ranks 11th on the World Bank's Doing Ease of Business Index. With such good rankings, I would expect to find more good than bad on Australian economic outlook. Ultimately, the Australian economy is facing some challenges, but on the whole, is still doing well for itself. I highlight both the negative and positive aspects of the Australian economy below.

Negative Indicators
  • Mining Investment: Mining investment has taken a precipitous decline since 2013. In 2013, mining investment as a percent of GDP was 6.1 percent. Now, it's down to 1.7 percent.
  • Wage Price Index Growth and Balance of Trade: The Australian economy has experienced the largest shift in terms of trade in the past 150 years. The increase of supply of resource commodities has been accompanied by an even sharper decrease in prices. As such, wages have experienced weakened growth since 2010, and continue with that trend.
  • Housing: Housing prices have experienced quite the growth within the past few years.  They are so high that the International Monetary Fund wrote a report last year illustrating that point. While housing prices are expected to plateau, they are still very high.
  • Low credit growth: Overall credit only grew at a moderate 5.9 percent last June. Most of the increased credit-to-GDP ratio was due to weak nominal growth, instead of rapid credit growth. 
  • Goldman Sachs' Take: "We continue to be well below consensus for economic growth in 2016 and anticipate low interest rates for longer as the familiar threats of the commodity price income shock, rapidly falling business investment, and the challenge of addressing Australia's deteriorating fiscal position weight on economic growth." 

Positive Indicators
  • GDP Growth: Over the past 25 years, Australia's GDP has grown double than its peers, and technically, has not experienced a recession in that time period. GDP growth in Australia for 2015 was below historic averages, which is why it's nice to see Australia is expecting between a rate of 2.7 GDP growth and 3.0 percent growth for 2016. Goldman Sachs, on the other hand, has a bearish prediction of 2.0 percent since it will take some time for the non-mining sectors to adjust. 
  • Fiscal Position: Australia has a net debt of 15 percent, which is much lower than the G20 average of 79 percent.
  • Employment Growth and Unemployment Rate: Australia has experienced employment growth since 2013. The unemployment rate was about 5.75 in late 2015. Employment-to-population ratio has also taken an upward trend since late 2014
  • Depreciation of currency: Depreciation has led to competitiveness of Australian goods in the global market. 
  • Consumer Confidence: According to Roy Morgan Research, consumer confidence will be on an upward tick due to less volatility in the global markets. 
  • Merrill Lynch's Take: "It is our expectation that global volatility should pass and commodity prices stabilize. Should this occur, the case for further cuts [in interest rates] will be eroded significantly." 

For more reading, check out the following sources:
Reserve Bank of Australia, Statement on Monetary Policy (February 2016)

Monday, February 22, 2016

Apple, the FBI, and the Cost of Bypassing Encryption

The fight over liberty versus security makes the news again. The Federal Bureau of Investigation (FBI) asked the company Apple to comply with an order to bypass security features on an iPhone 5c from Syed Farook, one of the attackers in the San Bernardino shooting back in December. Tim Cook, the president of Apple, released a poignant letter saying that Apple refuses to comply. In response, the Department of Justice filed a motion to force Apple to assist the FBI. It seems like a simple request: help the FBI unlock the phone of a terrorist who possibly had ties to ISIS. Why is Apple taking such a forceful stand?

At first glance, this seems like an open-and-shut case of the Fourth Amendment. This is especially true since Farook is dead, and the information could potentially help bring down certain terrorist organizations. While there is a general expectation of privacy in American jurisprudence, it can be overwritten if the government has acquired a warrant, which is permissible under the Fourth Amendment. What is being used to attempt Apple's compliance with such an order is an unprecedentedly broad reading of the All Writs Act of 1789, which involves compelling individuals or companies not involved in a given case to comply. While it's true that the Fourth Amendment allows for warrants, the warrant still needs to be executed in a reasonable manner. The Supreme Court ruled in the case of United States v. New York Telephone Company that the government cannot compel a company to comply if doing so would place "unreasonable burdens" on it. There is also a federal magistrate judge in New York that implied in preliminary comments on another case involving an Apple phone that the All Writs Act doesn't apply, which could help Apple's case during litigation. I'm sure that the ensuing legal battle will make for more interesting commentary, but I wonder just how much of an unreasonable burden such a compliance would cause.

Much like other versions of the iPhone, the iPhone 5c is an encrypted phone, which is to say only one who has a key (e.g., a four-digit password) can access the phone. It's a good thing that smartphones are encrypted because as I brought up about a couple years ago, smartphones can store information on banking, health, and location, as well as private text conversations. Encryption is also great if your phone is stolen by criminals or if you're visiting a totalitarian country, and the police decide to seize your phone. The fact that the FBI cannot bypass the encryption shows just how secure encryption can be.

Apple has already provided the FBI with data Farook stored on a Cloud device a month before an attack. Apple also provided the FBI with data that is directly under Apple's possession, so it's not as if Apple is deciding to be stubborn or recalcitrant as a form of baseless defiance. This case is not your standard Fourth Amendment issue in which the government has a warrant to access a house. It is more analogous to asking a lock manufacturer that manufactured locks for a certain house, and telling the manufacturer they have to come on-site to unlock the house so the police can gain entry. It would explain why the All Writs Act is being used in hopes to compel Apple.  While the circumstances of this case are unusual (e.g., the owner of the property is dead), this does set precedent that the government can coerce someone to gain access to someone else's property.

Aside from an enforced delay between password guesses, the security measure that is causing so much trouble has to do with passwords. Ten failed attempts at entering the phone could lock the phone and erase the data on the phone, which is why "brute force" wouldn't work in this case. The flaw in the iPhone 5c, which is an older version of the iPhone, is that the software controlling the phone is not encrypted. As such, the FBI is asking Apple to create a new version of iOS, Apple's operating system. By installing this new version of iOS on Farook's phone, which can be done without the consent of the owner, the FBI would be able to access the information required. Aside from the fact that such technology doesn't exist, what's the issue with this request? The FBI makes it sound as if the reply were a one-time request that would remain an isolated incident. However, the issue is that according to industry officials, the hacked software being requested would be general, and would work on any phone of the same model. Cook's issue is that creating a new version of iOS that bypasses security measures in such a manner would create a backdoor. The idea of a backdoor sounds alarming, not to mention an argument could be made that such an order could violate the First and Fifth Amendments (believe it or not, Bernstein v. United States and Junger v. Daly ruled that software source code is protected by the First Amendment). What are the possible outcomes of legal action? I see four possible outcomes.

  1. Apple wins the case, and the government is kept at bay. This is a scenario in which the status quo is preserved, and sets precedent that the United States government cannot conscript companies to produce hacking or surveillance tools that are meant to compromise the devices. Privacy is not just an essential for living in a free society; it is vital for self-development. It's not only privacy, but the increased cost of having to create sophisticated technology along with products and workhours used to compromise said security. Imagine an entire department at Apple dedicated to building spyware for government. Imagine the barrier to entry that would create for start-up companies in the telecommunications industry. Also, imagine how lowered security on such devices would open up so many people to cybercrime, thereby increasing social cost. PriceWaterhouseCoopers found that in 2014, there were 42.8 million cyber attacks globally. McAfee also found that in 2014, cyber crimes cost $400 billion. Ironically enough, a secret document from the U.S. National Intelligence Council admits that encryption is the best tool again cyber attacks. It would be interesting to see what a cost-benefit analysis on the issue would end up looking like (the issue is too recent for such information to be readily available), but at first glance, having Apple lose doesn't look good. As someone who loves civil liberties and does not like government-induced price hikes, the preservation of privacy would be a desirable outcome. 
  2. The FBI wins the case, and civil liberties aren't eroded because the government's scope is actually limited to this particular case. Some argue that Cook's claim about creating a backdoor is a tenuous argument, and that it is technically feasible to create an iOS software update for a specific phone without it being applicable to other iPhones. If it is possible to create the iOS software without giving the FBI the key to its encryption that could be used on other devices, then this could end up preserving both civil liberties and national security. 
  3. The FBI wins this case, and it's the beginning of the end of civil liberties. Requiring backdoors could very well provide a Pandora's box for cybercriminals, industrial spies, and intelligence agencies to conduct all sorts of surveillance and steal secrets. Even if the technology were only applicable to Farook's cell phone, why do you think it would stop there? This is a precedent that could affect the future of smartphones, computers, and other digital devices. Such devices would come with an implicit warning label of "Sorry, we might be forced to hack you." The Senate Intelligence Committee Chair is already drafting legislation to compel technology companies to weaken encryption in order to make it easier for governments to access devices. And this only considers what would happen on a national level. This could create precedent for other countries. The would be even worse if such software were to be used by authoritarian regimes that have little to no respect for civil liberties. There are countries where speaking out against the government could lead to imprisonment or even death. Encryption protects correspondence of dissidents, and having Apple create a key could mean that through legal channels or illicit ones, authoritarian governments could get its hands on this technology to make the lives of millions even worse. 
  4. It doesn't matter what the outcome of the case is because it's already the beginning of the end. We could very well find ourselves in a scenario in which the government is already on the path to use such devices as Internet-connected sensors, cameras, and other devices for surveillance purposes, as this 2015 Harvard University report shows. Technological development could very well inevitably render privacy a relic of the past, regardless of what the Supreme Court has to say. At the very least, the government can use technology to partake in a level of fact-finding and investigation that was not available in years past. 
So which is it? Can the government actually find a balance between national security and privacy? Will this case lead to a slippery slope in government surveillance? Does it ultimately not matter because it is only a matter of time that the government will have the technological capability to spy on us all, or will companies like Apple be able to harness the power of technology to protect the privacy of the people? I don't have the clairvoyance to tell you with 100 percent certainty what the future holds. I can make the educated guess that based on the government's past history of use and abuse of surveillance, the government's general trend towards becoming ever larger, and the demand from government to have such technology (e.g., the District Attorney of Manhattan said this past summer that there was a six-month period in which 74 iPhones were inaccessible), the government would not stop at Farook's phone. If the government knows that it can coerce one of the largest companies to create software that undermines the security of their products, then it would become more reliant on such a method in the future. It would also create a conflict of interest for telecommunications companies because it has to work so hard on creating devices and creating a separate division to undermine the security.

Ultimately, I think this will most probably end up being one of the biggest cases in American legal history involving civil liberties. Either we live in a society in which companies can provide us secure products to consumers, or we live in a society in which the government has the ability to force companies to violate the security of those products, thereby allowing that eerie, Orwellian capability for the government to use technology to spy on its people "for the greater good." This could very easily be used to undermine the trust in many devices on a global outcome, which is all the more important with increased reliability on digitized data. Whatever the outcome of the case ends up being, I hope that civil liberties prevail and that trust in digital devices can be preserved.

Thursday, February 18, 2016

Is John Oliver Right About Voter ID Laws Being Problematic?

While many are focused on the death of the late Supreme Court Justice Antonin Scalia and what his death means for the Supreme Court, I thought that I would look at something different. Earlier this week, John Oliver started his new season of Last Week Tonight. I don't agree with John Oliver on everything he says, but he's generally more spot-on with political and social commentary than Stephen Colbert or John Stewart have been. With which topic did John Oliver start his season? Voter identification laws. The argument for voter identification laws is that it's a common-sense law not simply because voter identification is used to preserve the integrity of the electoral system, but also because identification is used for a number of other transactions, including renting a car, acquiring a gun, applying for food stamps, getting married, buying alcohol or cigarettes, or getting a mortgage. It is common-sense enough where 36 states in the United States have some form of voter ID laws. Oliver argues that a) voter fraud is incredibly rare, and b) it is more difficult to acquire a valid form of voter identification than one would think. Is John Oliver right? Are voter identification laws worse than intuition would suggest?

Let's touch upon "dead people voting," which is a type of voter fraud where a dead person remains registered, and a living person fraudulently uses that person's name to vote. Proving the prevalence of this form of fraud is difficult not only because it's expensive or inconvenient, but also because the number of studies are few and between. The Pew Center found that as of 2012, 1.8 million dead individuals were still registered as voters. With a 2012 voter-age population of about 235 million, that has the potential to sway a national election by a maximum of 0.8 percent. With that being said, there are instances in which "dead people vote." According to Rutgers University professor Lorraine Minnite, voter-impersonation fraud is quite rare and not on the rise. I can point to the South Carolina case study in which there were 953 "dead voters" at first glance, but after a closer look, there were only five actual cases of fraud. I can point to a 2006 New York case study where there were 2,600 cases of fraudulent voting. Even with the anecdotal evidence that exists, we cannot definitely state the extent to which voter fraud is a problem, although this 2014 Washington Post article points out some good academic literature showing that concerns for voter fraud are largely overblown. Also, there is some intuition as to why it wouldn't be so prevalent. As Oliver put it, it's pretty stupid to "stand in line, risk five years and a $10,000 fine, all to cast one inconsequential vote."

Even if we cannot definitively say that voter fraud is so prevalent, we can still assess different issues with voter ID laws. One is Oliver's claim that it is more difficult to acquire a form of identification to satisfy legal requirements. The Brennan Center found back in 2011 that 11 percent of Americans did not have a valid voter ID. Some like to challenge the issues with acquiring a voter ID, such as those at the Heritage Foundation or Right-leaning National Review, but the Brennan figure seems to be a pretty well-accepted figure. That's the bad news behind voter identification laws. Oliver made a point about racial disparities in voter identification, which if true, would violate the Fourteenth Amendment. A 2014 report from the Government Accountability Office (GAO) found that while there was some decrease in voter turnout due to voter identification laws, there was not a sizable disparity between races. The same GAO report also pointed out that there were no apparent cases of voter-impersonation fraud, either. A report from Political Research Quarterly (Rocha and Matsubayashi, 2013) also confirms that there is no discernible difference in terms of voter turnout by race.

Ultimately, this creates some mixed feelings on my end. One the one hand, a valid form of identification is necessary for other interactions in life, and we should encourage individuals to better integrate into society. On the other hand, voter identification laws make it more difficult to vote. In this respect, it is like so many other government regulations in that it makes it more difficult for people to exercise their freedoms. If we are to consider the United States a representative republic, we should encourage each state to find the way to balance electoral integrity and voter freedom that works best for that state, although addressing the fraud at its source, i.e., during the voter registration process, would help more. However, that's how I feel in theory, and that's what the ideal should be. If proponents of voter identification laws are to justify such legislation, they need to prove, at the very least, that a) there is a significant prevalence of voter identification fraud, and b) voter identification laws are a significant deterrent to the problem. Prevalence rates can vary from state to state, which is why it should be handled on a state level, but proponents have a ways to go before proving a real need for the voter identification laws currently enacted. In the meantime, I'm going to maintain my skepticism about voter identification laws.

Monday, February 15, 2016

Is Marco Rubio's Idea of Repealing the Capital Gains Tax a Capital Idea?

While there are many hot-button topics on the table for the presidential election, I wasn't exactly expecting taxes to be one of those topics. Bernie Sanders, for instance, wants to substantially increase taxes. Just with his health care plan alone, the American people would be given a bill that would amount in the trillions, thereby adding to the already high-deficit. One of the taxes that he intends to increase is the capital gains tax. The capital gains tax is levied when an investor sells capital, e.g., stocks, bonds, property, for a price that is higher than the initial purchase price. The capital itself does not trigger the tax, but rather the sale of said asset. Sanders wants to tax capital gains the same as income from work, which would de facto tax capital gains at a 65 percent rate. Republican presidential nominee Marco Rubio, on the other hand, wants to do away with the capital gains tax all together. This repeal would be a departure from past establishment Republican candidates. Last week, the Tax Policy Center published a research paper on Rubio's tax plan, finding that the plan would cost the government $6.8T over the next decade, create a deficit of $8T over the same time period, and would disproportionately provide the rich with more after-tax income in percentages. The Tax Foundation came to a similar conclusion regarding Rubio's tax plan. However, repealing the capital gains tax is only part of Rubio's tax plan. His plan also includes such policies as increasing the child tax credit, repealing any taxes related to Obamacare, and converting the income tax into a consumption-based tax. Since the analyses of his tax plan do not isolate the effects of repealing the capital gains tax, it begs the question: what sort of effect would a repeal have on the economy?

A higher capital gains tax rate has many disadvantages, as this Cato Institute policy bulletin illustrates. In addition to collecting revenue, the primary effect of taxation is disincentivizing behavior. In this case, the capital gains tax discourages savings and investment because the effective tax rates on saving for future consumption are higher than for current consumption. Given that the marginal propensity to consume is at an astonishingly high 90-98 percent (although the Congressional Research Service found that the savings rate went from 12.1 percent in 1951 to -1.9 percent in 2009 [p. 3]), the United States could actually use more of an incentive to save. Capital formation is a such an essential component of economic progress that even someone as anti-capitalist as Karl Marx recognized its potential for economic growth. In order to invest properly, the savings rate that the tax code allows affects how much we save, as the head of the National Bureau of Economic Research has found (Poterba, 2004).

Since capital gains taxes are accrued on a realization basis, the capital gains tax leads to what is referred to as the lock-in effect (Bauer, 1990). The St. Louis Federal Reserve Bank brought this up back in its 1995 analysis of the capital gains tax, and pointed out that being less likely to sell securities [and pay the capital gains tax] is problematic for small, start-up companies since it incentivizes them to hold onto previous investments instead of selling them in order to build up their business. Generally speaking, this effect makes it more difficult to reallocate capital in low-performing investments to more profitable ventures. There is also a double taxation effect of the capital gains tax, at least in the United States, since the profits of corporations are first taxed at the corporate level, and then at the stockholder level (CBO, 2014, p. 17). When looking at tax rates, we would need to look both at corporate income tax and the capital gains tax. This is more troublesome given inflation. Under the current tax code, it is entirely possible to be taxed solely or mostly based on the "gains" caused by inflation. This could be solved by either indexing the tax for inflation or compensating with a lower tax rate, but those alternatives have yet to be implemented in an American context to address inflation.

There are also government revenues to consider. Historically speaking, the capital gains tax revenue has amounted to about 2-4 percent of GDP during most years, which is to say that it's a small, but not insignificant amount considering that general tax revenue as a percent of GDP is usually somewhere between 15 and 18 percent. In 2012, the Congressional Budget Office (CBO) found that long-term responses to capital gains realizations is quite significant, which is to say that revenue would not be anywhere near as high as anticipated due to the elasticities. As such, there is a general positive correlation between pre-tax rates of return and lower tax rates (Sikes and Verrecchia, 2012). When looking at historical data on capital gains tax rates and revenue as percent of GDP, this phenomenon would help explain why capital gains tax revenues as a percent of GDP actually increased when President Bush reduced the capital gains tax rate. A professor at Ohio State University found that the optimal percentage in terms of revenue collection is just under 10 percent.

One of the downsides, at least during an election cycle that's emphasizing income inequality, is that a capital gains tax cut or repeal would be regressive in the sense that it would disproportionately affect the rich. As the Tax Policy Center shows from analyzing capital gains tax preferential rates from 2012, the policy would disproportionately affect those in the upper socioeconomic quintile. This makes sense, considering that richer people are more likely to own capital [in larger quantities] (CRS, 2010, p. 8). The question is whether reducing or repealing the capital gains tax would help or harm economic growth.

In 2008, the Right-leaning Heritage Foundation released a paper postulating how an increased capital gains tax would reduce capital stock, employment, personal incomes, and the GDP. As the Tax Foundation also points out, realized gains as a percentage of GDP increase when the top capital gains tax rate falls. The American Council for Capital Formation, which is an organization representing a wide range of businesses, published an economic analysis in 2010 finding the negative effects that higher capital gains tax rates have on economic growth (also see Congressional testimony here). The Right-leaning American Enterprise Institute also published a 2013 report on the adverse effects of the capital gains tax, and why a consumption-based tax would be preferable. The positive outcomes can also be observed in Canada when Canada decided to lower its capital gains tax (Clemens et al., 2014).

Conversely, the Left-leaning Center for Budget and Policy Priorities (CBPP) finds opposite results from those of the Heritage Foundation, and that lowering the capital gains tax would be inequitable, costly, and would not help with economic growth. Another argument against lowering the capital gains tax is that the fluctuation of capital gains tax rates along with lowered income tax rates makes it more difficult to determine the efficacy of lower capital gains tax rates (CRS, p. 4). This does not automatically negate the argument that higher capital gains tax rates are problematic, but rather that income taxes have larger effects on economic growth since they are taxed at a higher rate. This still does mean, however, that lower tax rates (in this case, capital gains) would be helpful both from a standpoint of revenue collection and economic growth. The Congressional Research Service also published its 2010 report on the economic effects of the capital gains tax, and finds that enough of the claims for a lower capital gains tax rate are tenuous.

Ultimately, the United States government can repeal the capital gains tax, lower the tax rate, or implement some policy reforms so that the adverse effects of the capital gains tax are not so bad (see here and here). There are countries, such as Switzerland, South Korea, the Netherlands (has some exceptions, but generally exempt), New Zealand, and Turkey, that do not have capital gains taxes, so it's not as if it can be done or as if tax revenues could not be collected on income to supplement tax revenues. An argument can be made for a zero-percent capital gains tax rate, and an argument an be made for a significantly lower capital gains tax rate. One thing that can easily be argued is that that the capital gains tax rate is currently too high, and it would be nice to see that this discussion results in a lower capital gains tax.

Friday, February 5, 2016

Flint, Michigan: An Example of Why Public Ownership of Water Is Dead in the Water

Back in 2014, the city of Flint, Michigan changed the source of its water from the treated Detroit Water and Sewage Department to the Flint River. Complications in switching water sources led to lead contamination and quite possibly the cause of an outbreak of Legionnaire's disease. On January 5, 2016, the Governor of Michigan declared a state of emergency, which eventually resulted in the involvement of FEMA and the Department of Homeland Security.

There is plenty of blame that could go around because the debacle is so convoluted. The City of Detroit was charging Flint with exorbitant water prices, which encouraged Flint to look for alternative sources of water. The City of Flint could be blamed for running their finances into the ground by spending too much its budget on pensions. Even as a cash-strapped city, it would have cost as little as $50,000 to add phosphorus into the water in order to avoid the lead contamination. Also, Flint government officials were informed ten months before everyone else found out, and they had clean water shipped to them during that all that time. In April 2015, even the EPA knew that there was more than a distinct possibility that switching over to the Flint River could cause pipe corrosion, thereby increasing exposure to lead. Yes, the better part of an entire year....the amount of time that government sat on the problem and did nothing while people were being exposed to contaminants! As Keith Creigh, who was the acting Director of the Michigan Department of Environmental Quality, put it, "In retrospect, all levels of government should have done more."

Regardless of where you would like to shift the blame, this was a government failure, plain and simple. This was a utility owned and operated by the government. Local government actors caused the events in motion, and the regulators neglected it until it was too late to stop it. A similar thing happened when the EPA polluted the Animas River this past summer by spilling 3 million tons of mine water waste into the river. Was the EPA held accountable for its actions? Was it even fined? Nope! This is one of the issues of providing government with the power over something as vital as water: when the government screws up, it is nigh impossible to hold the government for its actions.

If this were a private company that distributed thousands of bottles of tainted water, a litigious people would have sued the company into bankruptcy. The fact that the government gets a free pass when it blatantly endangers the environment and health of people within range is unacceptable. Especially with sovereign immunity, there is a lack of tort liability, which creates moral hazard. When you turn water into a "right" and de facto price the good at little to no cost, much like with public water utilities, it leads to overconsumption. I have discussed this with California's water situation and how government policy led to water shortage issues. Not only does turing water into a public good deplete such an important resource, but it also has adverse effects on ecosystems.

At the very least, such a fiasco should make us consider policy alternatives as to dealing with government ownership of water. One option could be to have some tort reform so that the government could actually be held accountable. Another option is to raise the state cap on private activity bonds, which would mitigate a lot of the equity issues. I am a fan of privatizing the water system in some form, either through strict privatization or through some sort of public-private partnership (PPP). Even realizing that privatization of water has its pros and cons, I personally don't have a prima facie issue with privatization, yet I know some do. I love the irony of privatization opponents such as Public Citizen trying to scare people by saying that privatization will undermine water quality, that there would be no accountability, or corruption would be rampant, yet these were the exact things that have plagued the Flint water crisis. Going back to financial issues, let's keep in mind that municipalities consider PPPs precisely because of the private sector's ability to better finance such projects.

I have generally found that when privatization is compared with government ownership, the former wins the day, much like my blog has attested over the years. I don't see why the fact that water is a necessity for survival should impede privatization. For one, food is also a necessary provision to ensure one's survival, yet you don't see people clamoring to turn food into a public good. Another fun fact is that 75 million Americans, or about a quarter of the nation's population, currently receive its water from a private source. Plus, private companies would be beholden to local and federal regulations for water treatment.

Since water privatization tends to result in public-private partnerships, I'm not shocked that there are mixed results. With something as important as water, I was surprised to find a lack of studies on the topic, but again, we deal with mixed results because of both the implementation and the type of public-private combination used for implementation. Some municipalities revert back to public ownership because it didn't work for them. On the other hand, it worked out in such countries as the United Kingdom, Colombia, and Senegal.

While water falls freely from the sky, it still needs to be collected, managed, process, and supplied through an expansive and expensive infrastructure of reservoirs and pipes, all of which cost considerable money. That is why water prices are going to increase relative to the current artificially low prices. Thinking that we can continue to provide water at little to no cost is going to rapidly deplete the most important resource we have. As of 2011, only 980 million people, or about 14 percent of the world population, had water provided privately. About 86 percent of water provided by the public sector, and yet 1.1 billion people still lack consistent access to fresh water. Considering the water shortages around the world, privatization has to be part of the discussion if we want any chance of conserving water in the long-run.

Monday, February 1, 2016

Why Women Can and Should Recite the Mourner's Kaddish

Not quite two weeks ago, British Chief Rabbi Ephraim Mirvis made a semi-shocking announcement: women should be allowed to say the Mourner's Kaddish (קדיש יתום). While I will be going into further detail momentarily, the Mourner's Kaddish is an Aramaic prayer recited at all prayer services (usually at the end) for those mourning the loss of a loved one. Traditionally speaking, one is generally obligated to say the Mourner's Kaddish for one's parents, spouse, children, and siblings. Another tradition surrounding the Mourner's Kaddish is that it is only recited by men. In popular culture, this is illustrated by the film Yentl, in which Barbara Streisand plays the protagonist of Yentl. When the character's father unexpectedly dies and everyone is at the funeral, they are trying to figure out who should recite the Mourner's Kaddish because Streisand's character was the only surviving close relative of the father. In great defiance to the establishment and to the horror of those around her, she grabs the prayer book and starts reciting the Mourner's Kaddish. While this movie does portray the role of the woman in European, Jewish life at the turn of the twentieth century, whether women can recite the Mourner's Kaddish is still problematic for many Orthodox communities. Even with such organizations such as the Jewish Orthodox Feminist Alliance (JOFA) that support women saying the Mourner's Kaddish, there are only a select number of Orthodox synagogues that allow for it.

The first question I would like to answer is whether a woman can be allowed to say the Mourner's Kaddish under the Jewish legal system (halacha). The first mentioning of the Kaddish in connection with mourning is an eighth-century text called the Masechet Sofrim (19:9). The oldest version of the Kaddish text is found in the siddur (prayer book) of R. Amram Gaon, circa 900 C.E. Interestingly enough, early medieval writers, including the illustrious Rambam (Maimonides), never mention the practice of reciting Kaddish. The fact that Rambam never mentioned it implies that the practice of reciting Kaddish is not a Biblically mandated (d'oraita) practice. The practice seems to have formally taken hold as a custom in thirteenth-century Germany. The fact that the practice of Kaddish takes on the status of minhag (custom) already gives us more leeway to permit a woman reciting the Kaddish.

The first responsum that deals with the topic of women reciting the Mourner's Kaddish, and the one that has most prominence, is that of R. Yair Chaim Bachrach in his work Chavot Ya'ir. In this work (#222), he brings up two primary reasons why a woman could be allowed to say the Mourner's Kaddish: 1) It would be a sanctification of G-d's name (Kiddush Hashem); 2) there is a bona fide quorum of ten present (minyan), so there is no fear of counting women in the minyan. R. Bachrach's ultimate reason for opposition is not halachic in nature, but was because that it would weaken Jewish customs as a whole, and that it would allow for people to subjectively create their own customs, which unto itself is a subjective reason that has different applicability for each community.

There are secondary reasons brought up for its prohibition. R. Shimon Frankfurter believed that "a woman's voice is lewdness." I already covered the topic of a woman's voice (קול אישה), and I can tell you that given the context of the Mourner's Kaddish, any concerns surrounding lewdness or licentiousness are totally unfounded because if one is sexually aroused or triggered by a woman's grieving, I can safely assert that the female mourner is not the one with the issue. R. Frankfurter also believe that it would violate the idea of kavod tzibur (congregational/public dignity), but even that concept is limited to reading from the Torah. Even with some of these concerns, we have to keep in mind that great rabbinic minds such as R. Moshe Feinstein, R. Yosef Eliyahu Henkin, R. Yosef Soltoveitchik, R. Yosef Dov Soltoveitchik all permitted such a practice.

I want to come back to this topic of halachic permissibility more in a bit, but I want to touch upon some other questions: Why does one say the Mourner's Kaddish? What is it the function of the Mourner's Kaddish? Part of the recitation of the Mourner's Kaddish is supposed to be for the departed. In normative, traditional Jewish eschatology, the departed soul spends 11 months purifying itself in the netherworld (גהנום) before formally entering the afterlife (העולם הבא), which is why the tradition is that a child (or other closest relative) is supposed say the Mourner's Kaddish for the full 11 months: to help ensure that the purification process goes smoothly. It doesn't take place for the full 12 months because under this eschatology, it would imply that the individual were a particularly wicked human being.

Jewish views on the afterlife, however, are not so universal, and not everyone might necessarily hold that belief of what the soul goes through within the first year of departing from this world. Regardless of your views of what happens in the afterlife, there is another party that decidedly benefits from reciting the Mourner's Kaddish, and that is the mourner. How does it help the mourner?

A bit about the Kaddish itself. Aside from the text being in Aramaic, which was at one point a lingua franca of the Jewish people, the text also does not make a single mentioning of death, bereavement, the departed, or the mourner. The text is about G-d's name and sanctifying G-d. This is important when mourning because it could all too easily result in anger, resentment, or frustration with G-d. Rather than losing faith in G-d, the Kaddish is there to reaffirm our faith in G-d and committing oneself to Torah and mitzvahs, thereby sanctifying His name. Sanctifying G-d's name, which is known as קדוש השם, is actually a mitzvah. Not only is it a mitzvah, but it is a mitzvah that is incumbent upon both men and women at all times, which also supersedes the idea of mitzvot aseh shehazman grama (women being exempt from time-bound mitzvot) because sanctifying G-d's name is not a time-bound mitzvah. Since the Mourner's Kaddish is a manifestation of sanctifying G-d's name, there is no valid reason that women should be prevented from performing this mitzvah. If anything, preventing a woman from saying Kaddish would be a violation of the commandment of לפני עבר, which is the Levitical commandment of not putting a stumbling block before the blind (Lev. 19:17), but also understood as a prohibition of against others from committing violations of the Torah. Essentially, not allowing women to say Kaddish is a violation of the Torah.

In addition to sanctifying G-d's name, the mourner is also honoring the memory of the departed individual. When looking at it from the eschatological point of גהנום, it is a declaration that you believe that the departed one's sins will be forgiven. It also shows that you respect the individual enough that you are willing to honor the individual's memory, even postmortem. For this reason, I would argue that while not obligatory, one would still be able to recite Kaddish for a grandparent, close friendsHolocaust victims, or even non-Jews. Being able to honor the departed is a way to help grieve. A way to help grieve in a traditionally Jewish context to help one realize what really matters is something both men and women should be allowed to do. Women should not be deprived of that ritual because of baseless slippery slope arguments.  Instead of providing a disdain or disintegration of Jewish customs, allowing women to partake in the recitation of the Kaddish is a reaffirmation of the importance of Jewish traditions. The Kaddish exists to show respect for loved ones. Instead of preventing women from performing a mitzvah that honors the departed and helps with the grieving process, I hope for a day where Orthodox communities everywhere allow for women to partake in this important sanctification of G-d's name.