Monday, October 23, 2017

The Jones Act: How This Protectionism Harms Puerto Rico and the Rest of the U.S.

It has been about a month since Hurricane Maria hit Puerto Rico, and the Puerto Rican community remains devastated by the damage caused. Only a small portion of people have water and electricity again. It will probably take months for the island to recover from this tragedy. One of the responses from President Trump is to temporarily waive the Merchant Marine Act of 1920, which is better known as the Jones Act. You are probably wondering what a shipping act that is nearly a century old has to do with Puerto Rico in 2017.

The Jones Act is a law that regulates maritime commerce between U.S. ports in U.S. waters. The Act states that all goods carried between U.S. ports must be done so on U.S. flag-ships constructed in the U.S., owned by U.S. citizens, and manned by U.S. citizens or permanent residents. The law was created shortly after the end of WWI as a national defense measure against the potential of [German] U-boats attacking, specifically to have a solid supply of marine vessels. Essentially, if the United States found itself in a national state of emergency or under attack, it could better secure its shipments and navy, thereby better securing U.S. commerce.

I want to get less into whether the Jones Act should have been law in the first place, and focus more on whether Congress should repeal the Jones Act. Based on the blog entry I wrote earlier this year about Trump's "Buy American," you can already take an educated guess as to how I feel about the Jones Act. We can bypass the irony that Trump is very pro-"Buy American" and yet temporarily rescinded an Act that is about as "Buy American" as it can get, but let's take a look at the Jones Act specifically in further detail.

Economic Costs
One of the major criticisms of the Jones Act is that it makes shipping goods from U.S. port to U.S. port more expensive. This should be no surprise since this is a predictable economic outcome. Why? When foreign-owned or foreign-operated shipping vessels cannot transport between ports in the United States, the competition in this market is subject to less competition. Here is some research to back up the economic theory that the Jones Act causes economic harm:
  • The Congressional Research Service (CRS) released a 2014 reporting finding how the Jones Act made it about three times more expensive to ship petroleum between U.S. ports (CRS, p. 9). 
    • In 2012, the New York Federal Reserve Bank found that shipping a 24-foot container from the mainland to Puerto Rico cost $3,063. It cost $1,503 to ship that same container to the Dominican Republic, which is further away from the mainland than Puerto Rico. The major culprit as to why it costs twice as much to ship goods to Puerto Rico? The Jones Act.
    • In her paper on Puerto Rico, World Bank Chief Economist Anne Kruger points out how the Jones Act creates a particularly negative effect for Puerto Rico and that by repealing it, the Jones Act could help the Puerto Rican economy be on the mend. 
  • In 2012, two professors from University of Puerto Rico estimated that the Jones Act cost the Puerto Rican economy $17 billion from 1990 to 2010 (Valentin-Mari and Alameda-Lozada, 2012; [see infographic below]).
  • The World Economic Forum calculated that the Jones Act costs the United States economy $200 million a year in shipping costs. 
  • The Right-leaning Manhattan Institute estimated in 2015 that the Jones Act increased gas prices in the U.S. by 15¢. Fifteen cents might not seem a lot, but think of how often gasoline is used, both by individuals driving vehicles and business transporting goods. That fifteen cents a gallon adds up very quickly. 
    • As another example of cost, that same Manhattan Institute report estimated that because foreign ships cannot ship liquefied natural gas, Puerto Ricans pay an extra 30 percent for electricity. 
  • One recent study from the Grassroot Institute (Kashian et al., 2017) estimated that the Jones Act creates $163 million of domestic activity for shipping jobs while costing $3 billion in economic costs. Since places like Hawaii, Alaska, and Puerto Rico are disproportionately dependent on shipping, they would benefit from the repeal of the Jones Act. 
  • Drewry, an independent maritime consulting firm, found that Jones-compliant ships cost about four times as much to construct as foreign ships (also see CRS report here). It should be no surprise that the U.S. went from being 16.9 percent of the world's fleet in 1960 to 0.4 percent in 2014 (Grennes, 2017).

National Security Argument
I can hear proponents of the Jones Act arguing that the economic costs could be worth the national security benefits. Let's examine that for a bit. Even if we accept the assertion that the "national security" argument was valid back in 1920, it has much less validity now. Why? Air transport for shipping purposes didn't exist back then. We have made advancements in railroads, trucks, and pipelines. As an additional side note, the Cato Institute argues how the Jones Act endangers seamen, which would be another facet as to how the Jones Act actually diminishes national security.

You know the Jones Act has to be bad when the neoconservative Heritage Foundation, a think-tank that often is in favor of national security arguments, does not even accept the Jones Act's national security premise (Loris et al., 2014). As the Heritage Foundation brings up, 1,072 ships were Jones-eligible. By 2014, that number decreased to 90 ships. There are very few Jones-Eligible ships that are used for military operations. As a matter of fact, the Department of Defense for Military Sealift Command (MSC) vessels is typically to use lease foreign vessels with military capacity (CRS, 2010, p. 3). In its 2017 report on the Jones Act (Grennes, 2017), the Mercatus Center scrutinizes the national security argument, as well as illustrates economic costs.

As an aside point, the fact that Presidents often waive the Jones Act, much like we see with Hurricane Maria, illustrates how the Jones Act threatens national security in disaster response. In short, the national security argument is nothing more than a smokescreen.

I don't think Trump temporarily rescinding the Jones Act will do much because a) it is to only last for 10 days, and b) Puerto Rico gets most of its oil from outside the U.S. due to the adverse effects of the Jones Act. But I will say this: the research on the Jones Act over the past 25 years consistently tells us that the Jones Act incurs considerable economic costs and contributes to increasing energy costs. What's more is that the national security justification has outlived its usefulness. The Jones Act is another example of why protectionism is harmful: because it protects and benefits a small group of well-connected producers while harming everyone else. The reason customers don't complain about something like the Jones Act is because like with other forms of protectionism, it is difficult for the consumer to see the costs. When I point out how shipping costs are increased because of the Jones Act, this is not just about numbers. Especially when looking at a place as greatly affected as Puerto Rico, we are talking about the ability of people to afford cost of living. The Jones Act makes it that much harder for people to have a livelihood, which affects people in more ways than one.

The Jones Act should not just be waived, but repealed. Aside from the aforementioned reasons, repealing the Jones Act would lower the costs of coastal shipping by 67 percent (Lewis, 2013). Do I think that repealing the Jones Act will solve all of Puerto Rico's woes? No. As I have mentioned before (see here and here), Puerto Rico contends with multiple issues, ranging from economic barriers to harmful tax code exemptions to debt issues. I hope that this blog entry can help shatter the illusion that the Jones Act is of benefit to the American people.

Thursday, October 19, 2017

Parsha Noach: Was Noah Really All That Righteous?

It's all relative. The intuition behind that idiom is that something may or may not be what it seems depending on what that something is being compared to. I think that goes for people, as well. Someone like Thomas Jefferson was considered enlightened for his time. However, we would not consider his views on slavery enlightened for a 21st-century, democratic society. We actually see this notion play out in this week's Torah portion with Noah:

נח איש צדיק תמים היה, בדרתיו. את האלהים התהלך נח.
Noah was a righteous and whole-hearted man in his generation; Noah walked with G-d. - Genesis 6:9

This passage in Genesis calls Noah a righteous man (צדיק). The word צדיק is not thrown around lightly in Judaism. Think of it as analogous to the "one percenters" of Jewish spirituality. Noach was righteous enough where he and his family were the only ones on the planet spared from the Flood.  Noah is also referred to as תמים (whole-hearted). The word תמים can also mean unblemished or simple, which brings up some ambiguity. The word תמים, however, is generally viewed in a positive light in this verse (also see Psalms 15 and 101:6). You would think that Noah's status is unblemished and beyond reproach. However, there is a clarifier that casts doubt on Noah's righteousness: "in his generation" (בדרתיו). This caveat is so important that it caused a debate amongst the rabbis.

The phrase בדרתיו can be used to argue either in favor of or against Noah. One can argue that because Noah prevailed in such a corrupt society, Noah would have been, a fortiori, even greater had he lived in another generation (Rashi; Resh Lakish in Talmud, Sanhedrin 108a). On the other hand, one could argue that only by comparison to the rest of his generation was Noah righteous. Another way to say this: If Noah had lived in another generation, he would not have been considered righteous (Ramban). Which one is it? Was Noah adequately righteous or was his righteousness merely relative to his contemporaries?

One can argue that being average in absolute terms during such a time of such depravity is precisely why Noah is referred to as righteous. This is why R. Eliyahu Kitov argued that the righteous of each generation ought to be judged in the terms of their own time (Sefer HaParshiyos). Even so, this solidified why I am inclined to believe that Noah's righteousness was relative for three reasons. One is that Noah walked with G-d. As Rashi points out, walking with G-d meant that Noah needed G-d's support to spiritually advance. Conversely, Abraham walked in front of G-d (Genesis 17:1), meaning that Abraham's righteousness was good unto itself. The second reason for thinking his righteousness was relative was how Noah reacted after the Flood. My take on Noah post-Flood is that he was dealing with a combination of PTSD and coming off a spiritual high. Noah built the ark and survived the Flood. His mission was complete. He ended up building a vineyard (Genesis 9:20), getting drunk (Genesis 9:21), and according to the Talmud (Sanhedrin 70a), was either castrated or sodomized by his son. Noah fell low enough where his sons were ashamed to look at him (Genesis 9:23). Needless to say, Noah did not handle his emotions well post-Flood. If Noah were that righteous, he would not have faltered the way he did.

The third reason is even more intriguing: Noah did not protest G-d's verdict nor did he attempt to save his contemporaries, which is contrasting to Abraham's response to Sodom and Gomorra. This reason is implied in the Talmud (Shabbat 55a) and explicitly stated in the Zohar (Zohar Mashatot, Bereshit 254b). According to the Zohar, Noah did not attempt to save a single person or beg G-d to change His verdict. The Hebrew for Noah (נח) has the same root for the word "comfortable" (נוח). While it is true that Noah did not harm others and he was able to withstand corruptive influences of his generation, he did not do good towards others. This is why in the Zohar, G-d calls Noah a "foolish shepherd." He receded into his comfort zone. In terms of individual responsibility, Noah was fine. As for collective responsibility, Noah did nothing to contribute to the betterment of mankind. The Golden Rule is important and vital. It creates a basic respect for humankind. However, that is not all we are here to do. Certainly from a Jewish point of view, a spiritual vocation does not mean isolation or a monastic lifestyle. It means contributing to the world so that it is better than when you found it. This lack of responsibility towards others is why Noah's righteousness comes with a big caveat. If we want to avoid the downfall of Noah, the righteousness we express through our thoughts, words, and deeds cannot be in isolation and cannot be done strictly for our own benefit. We need to help others, and by doing so, can we truly live a life towards righteousness.

Monday, October 16, 2017

10-16-17 Policy Digest: Iran, Clean Power Plan, and Obamacare

There was so much that happened last week in the world of public policy that I am taking a slightly different format. Rather than go in-depth on one issue, I will briefly cover three issues: the Iran Deal, the Clean Power Plan, and Obamacare. Aside from the time crunch on my end, the reason for covering it in an abridged digest format is because I have already covered these topics in further detail. With that, let's begin.

The Iran Deal
Last Friday, President Trump announced that he is going to decertify the Joint Comprehensive Plan of Action, more colloquially known as the Iran Deal. This decertification will give Congress 60 days to determine if they want to re-impose sanctions on Iran. This position is a compromise on Trump's end since he despises the Iran deal while his aides like it. The basis of the Iran Deal is to make sure that Iran does not become a North Korea-like nuclear power threatening the world. Trump's assertion is that it is not working. I took a look at the Iran Deal both when it first came out and one year after in 2016. My conclusion? The Iran Deal is doing what it is supposed to be doing. If Congress reimposes sanctions, there is legitimate concern that the United States' trust in the international sphere will be eroded as a result. Not only that, but Iran could shift blame towards the United States since Iran has been complying with the Iran Deal. Since the Iran Deal is succeeding at keeping Iran's nuclear capabilities contained, there is no logical reason for Trump to rattle the cage.  

Clean Power Plan
On Tuesday, October 10, the Environmental Protection Agency (EPA) announced that they would repeal the Clean Power Plan. EPA Administrator Scott Pruitt claimed that CPP repeal will save $30 billion over the next ten years. Personally, I'm glad that the EPA repealed the CPP. I analyzed the CPP three years ago, and I surmised that the CPP would only reduce global temperatures by 0.2º, which is a far cry from what we would need to avert the cataclysmic effects predicted by climate scientists. For more recent analyses on why the CPP is inadequate, you can read from the Cato Institute, Heritage Foundation (also see here), Manhattan Institute, and the U.S. Chamber of Commerce.

If that were not enough, President Trump signed an executive order on the Affordable Care Act, better known as Obamacare. There are those criticizing it as Trump's attempt to unilaterally dismantle Obamacare, which critics argue would  (see here, here). See analyses from the Cato Institute, Forbes, and Heritage Foundation as to why Trump's executive order is not so bad. In either case, something needs to be done to stop Obamacare. For more on the issues with Obamacare, see my list of 15 reasons as to why Obamacare is poor policy.

Wednesday, October 11, 2017

Should Partisan Gerrymandering Be Allowed?

Last week, the Supreme Court began its new session and brought in the new session with a doozy of a case: Gill v. Whitford. This case is set to determine whether partisan gerrymandering is constitution or not. Partisan gerrymandering is the practice of drawing [congressional] district lines in order to give one party an advantage over the other. The term comes from when Massachusetts governor Elbridge Gerry signed a redistricting bill in 1812 in a way where the district was shaped like a salamander, hence the portmanteau "gerrymander." Two main methods of gerrymandering are concentrating the opponent's voters into one district ("packing") or by spreading out the opponent's votes throughout multiple districts ("cracking"). In the case of Gill v. Whitford, the contention is that the Republicans in Wisconsin drew the district lines in such a way to provide the Republicans more seats in the state assembly than the Democrats.

The plaintiffs are arguing using a method calculating what is referred to as the "efficiency gap" (see more here for further details). The efficiency gap is calculated by taking the difference between "wasted votes" (i.e., votes beyond what are necessary to win an election) for each party and dividing that difference by the total number of votes. Anything beyond 7 percent would show that one party is getting a wasted-vote advantage, and would [based on their argument] be gaining undue advantage. The defendants are arguing that the efficiency gap not only fails to take in such traditional criteria as contiguity and compactness, but also that the redistricting ought to be challenged on a district-by-district basis. This Supreme Court case will be important because it will determine how congressional districts will be drawn in the future. The question is whether we have a case of politicians drawing district lines in such a way where politicians choose their constituents instead of constituents choosing their politicians.

As the Washington Post points out, 83 percent of the decline in swing districts between 1997 and 2017 was due to the political evolution of the American voter (i.e., it had nothing to do with redistricting). What this means is that the Republican's rise to power in 2010 did not have to do with gerrymandering. However, the solidification of the Republican hold in Congress is being maintained by gerrymandering. This, of course, is to insulate themselves from competition and insure their incumbency. This makes sense if the lines are drawn in their favor: it would become more expensive for a challenger to campaign in that district. Conversely, even in districts that are dominated by one party, there is still evidence of there being competitiveness within the primary election (Hirano and Snyder, 2014Abramowitz et al., 2006). Furthermore, the effects of gerrymandering are exacerbated by the fact that voting is not based on issues or candidates like it used to be; it is based on parties.

There is also a question of how much it has polarized legislators. One can argue that gerrymandering has a negligible effect on Congressional polarization (McCarty et al., 2009), which would mean that the polarization is because of how Democrats and Republicans represent moderate districts. Even if the districts are drawn to be more heterogeneous and competitive, the impact on polarization would be minimal. Some, however, disagree about the polarization, and argue that gerrymandering causes more polarized politicians to be elected (Caughey et al., 2017). In terms of polarization, gerrymandering deviates the results away from broader statewide attitudes (Mattingly and Vaughn, 2014). And to think none of this gets into how gerrymandering makes creating third parties all the more difficult.

Additionally, I have to wonder how much of an advantage the parties have had as a result of gerrymandering. Historically speaking, fair districts have been the norm, not the exception. More to the point, there has been a roughly even balance of wasted votes from both parties (Stephanopolous and McGhee, 2014), which would mean that gerrymandering is not as bad as perceived. Other good news: gerrymandering does not increase the rate of incumbency (Friedman and Holden, 2009).

While gerrymandering is not the cause of all political woes, there are still enough problems where it needs to be reformed, regardless of the party that is doing the gerrymandering. Gerrymandering invites more overt corruption, especially when our governance should be representative of the people. The question is how does one reform the redistricting process. One facet that will make this Supreme Court case messier is that there are other measures of a gerrymander, which implies that there is no obvious system that gives people the optimal representation. The Supreme Court is going to have to sift through a question that is not just about politics, but also mathematics and cartography. The two main questions are who draws the lines and how they should be drawn. There ought to be such traditional criteria as being contiguous, compact, and congruent. There is the question of whether or not an independent commission is a good idea because of the mixed results (Henderson et al., 2017).

Ultimately, the Gill case has major ramifications. If the Supreme Court defines the "efficiency gap" as a principled and objective manner of drawing district lines, then Gill v. Whitford will change electoral politics for the foreseeable future.

Monday, October 9, 2017

LIHEAP: Maybe the Government Has a Role in Subsidizing Least In the Short-Term

Now that it's Fall, I am reminded that wintertime is not that far off. I live in a place where winters are nowhere near as bad when I was living in Wisconsin. I remember that one winter in Wisconsin, it reached -30ºF, and that was without wind chill. Without having an adequate enough of a heating system, my guess is that I would not have made it through that winter or any other winter. I would hardly consider myself rich, but at the same time, I have always had access to heating, ventilation, and air conditioning (HVAC) when I needed it. There are some who do not have such access or have a harder time paying for energy during the winter or summer. This is where LIHEAP comes in.

In 1981 under the Reagan Administration, the United States Congress created LIHEAP, the Low-Income Energy Assistance Program. The purpose of LIHEAP is to provide assistance to households that pay a disproportionately high amount in meeting their immediate home energy needs. LIHEAP is currently managed by the Health and Human Services' (HHS) Administration for Children and Families (ACF). In its most recent LIHEAP report to Congress, the ACF pointed out that in 2014, LIHEAP helped 5.7 million families with heating and 673,000 with cooling. There is also the case to be made that LIHEAP helps the most vulnerable. 90 percent of LIHEAP households either have children, disabled individuals, or senior citizens. This suggests not only this directly helps many low-income households, but that it helps those who are disadvantaged.

The economic theory that would support having LIHEAP in the first place is the market failure of a negative externality. The idea here is that on its own, the market fails to provide an adequate output level of affordable energy for people to make it through arduous seasons. The LIHEAP subsidy is supposed to push private demand up to social demand, thereby creating greater social benefit. Given where I lie on the political spectrum, I used to take the opinion of "there isn't a subsidy out there I like." The reason is that the government's attempt to subsidize comes with unintended consequences, and usually makes things worse. In 2014, I came across the first subsidy I did like: the birth control subsidy. At that moment, I realized that it is more prudent to look at subsidies on the individual level instead of assuming a generalization (even if it is true) because an exception might come along. The question here is whether the LIHEAP subsidy falls under the exception of being a helpful subsidy or not.

I started to ask myself this question when I read this policy brief from the Urban Institute entitled "Eliminating LIHEAP would leave poor families in the cold." What makes it difficult to ascertain the impacts is that the ACF has not conducted an evaluation of any kind since 2005. And even that 2005 evaluation was a case study, and not a nation-level evaluation. We do, however, have a study showing that cutting LIHEAP would decrease energy security amongst low-income households by 17 percent (Murray and Mills, 2014), which would indicate that LIHEAP actually helps out those in need. Plus, the Center of Poverty and Social Policy at Columbia University estimates that 200,000 would transition into poverty as a result of eliminating LIHEAP.

There is a concern over fraud rates. A 2010 Government Accountability Office (GAO) report found that the fraud rate for LIHEAP was 9 percent. With a program that cost nearly $3.4 billion for FY2017 (see LIHEAP funding history), that comes out to about $305 million. Urban Institute questions whether the fraud rate is still that high because it asserts that improvements on verification and monitoring have been made in the past seven years (e.g., improved program monitoring data in May 2017). Assuming that these initiatives have decreased fraud, that means fraud is less prevalent of an issue.

So here we have a program that is relatively well-targeted and actually provides the service it promises to provide. Sure it could use some tweaks, but generally, LIHEAP is doing pretty well for itself. Since successfully providing a service is a rarity in the world of public policy, I would consider that enough for government to play a role in subsidizing heating. However, my main issue with LIHEAP is that it does not address why energy costs are growing at a faster rate than wage growth (also see here). The subsidy simply provides a cash transfer to help low-income households with their utility bills. My contention is that such a subsidy could be contributing to higher energy costs. The reason for this concern is looking at how the U.S. government subsidizes college tuition. Federal subsidies are the primary culprit for rising college tuition costs because it's a demand-side subsidy, and that contributes to rising costs. Granted, LIHEAP is nowhere near as large or prevalent as federally subsidized student loans, but it should make one pause.

Even so, we need to ask why energy costs growing this quickly in the first place. This certainly is a discussion for another time and another blog entry, but we need a better focus on bringing energy efficiency to low-income housing so their energy bills can go down. If we cannot address this issue, LIHEAP is at best a temporary bandage over an increasingly large problem. By finding ways to provide energy at a lower cost can we solve the main issue LIHEAP is trying to mitigate.

Wednesday, October 4, 2017

Las Vegas Shooting: Why Mental Illness Is a Poor Target for Gun Violence

Las Vegas experienced the worst mass shooting in recent history this week. Stephen Paddock fired an automatic weapon into a crowd of people at a country music festival. It nearly 60 dead and over 500 injured. Many people have been speculating as to why Paddock would do something so horrible. We are still unclear on motive as of date, but one of the running theories is that Paddock might have been mentally ill. Although Paddock did not show any signs of mental illness before, his father, Benjamin Hoskins Paddock, was a psychopathic robber. There is an argument to be made that psychopathy and other mental disorders have a genetic component to it. Even if it is not the sole factor, it would not be a surprise if mental illness played a role in it. In response to the Las Vegas shooting, Speaker of the House Paul Ryan advocated for mental health reform. The National Rifle Association (NRA) has also taken this approach in the past of addressing mental health over gun control. Most Americans think that mental illness is a major cause of mass shootings (Gallup). Since there plausibly will be a conversation about mental illness and gun ownership in the weeks to come, I might as well ask the question: how much would addressing mental illness affect rates of violence?

The argument for addressing mental health reform in response to mass shootings goes something like this. A normal, mentally stable individual would not commit such an act. In mass shootings, the percent of shooters with mental illness range from 11 percent to 22 percent. By addressing mental illness and better providing access to mental health facilities, we can better prevent gun violence in the United States. Here are a few issues I take with the argument:
  1. We like to focus on mass shootings as representative of gun violence in America, but the truth is that mass shootings account for a small fraction of gun violence in the United States. Historically, mass shootings have accounted for 1.2 percent of gun homicides. Let's not forget that gun homicides only account for about a third of gun deaths, which means that mass shootings only account for about 0.4 percent of gun deaths
  2. Between 2001 and 2010, only 5 percent of gun homicides were committed by those with a mental illness (Metzl et al., 2015). Most gun violence is caused by something other than mental illness (Swanson et al., 2015). Since most people who are violent do not have a mental illness, it has to make one wonder about efficacy of targeting mental illness.
  3. According to one epidiomelogical study, eliminating the adverse effects of mental illness would only reduce violence by 4 percent (Swanson et al., 2015). Much like most people who are violent don't have a mental illness, most people with a mental illness are not violent. Only about 4 percent of people who have mental illness are violent (Swanson et al., 2014; Stuart, 2004).
  4. This assumes that we can target the dangerous individuals through better mental health access. There is research that shows that risk prediction works better for low-risk individuals than high-risk individuals (Fazel et al., 2012).
The criminal use of firearms is a violation of the nonaggression axiom. Protecting citizens against rights-violating actions can easily be construed as a legitimate role of the government, even for those who advocate for limited government. The libertarian Cato Institute believes that using mental health reform could help individuals, provided that the mental health assistance applies to those who could legitimately cause harm and also make sure that civil rights are protected in the process. The APA agrees that the intervention should be specifically targeted for those who possess behaviors for increased likelihood of violence, as opposed to generally targeting those who need mental health treatment. Plus, voluntary mental health treatment is more cost-efficient in the long-run.

My issue with trying to target mental illness to lower gun violence is that it lacks a coherent risk-identification strategy. Additionally, most violent people don't have a mental illness and most people with mental illness don't commit violence. The connection between mental health and violence is tenuous at best (Metzl and MacLeish, 2015). I am worried about further stigmatization of mental illness when mental health access is just as important, and in some cases more important, than physical health. I am also worried that such a targeting would discourage individuals from getting treatment for mental health issues, which would cause all sorts of social costs. Pouring all those resources into a major mental health reform effort to lower violence would be low-yield and ineffective. Mental health reform should take place, but given the lack of correlation between mental illness and gun violence, mental health reform and gun reform should be analyzed and enacted separately.

Monday, October 2, 2017

Another "Medicare for All" Bill From Bernie Sanders, Another Attempt at Single-Payer Failure

Insanity is doing the same thing over and over and expecting different results. That quote is commonly attributed to Albert Einstein, but today, I would like to apply the content of the quote to Bernie Sanders. Sanders loves clinging to the failed idea of socialism. He wants to provide free college. He thinks that breaking up big banks will help (it won't). He even mistakenly believes that Denmark is socialist when in fact it is even more of a free-market nation than the United States. But there is one idea of his that doesn't want to die: single-payer healthcare. Last week, Sanders introduced the Medicare for All Act of 2017. Unlike his failed attempt to introduce a single-payer healthcare bill back in 2013, this Act received the backing of 15 Democratic Senators. Single-payer healthcare is gaining traction in this country, and seeing how the fight over Obamacare has gone, it is not difficult to see why. Plus, there are those on the Left who think that if we centralize the buying power into the federal government, we can bring healthcare costs down and improve the quality of healthcare.

This should be a shorter blog entry because this is not the first time I covered the topic of single-payer healthcare. In 2013, I looked at single-payer through an economic theory lens and it wasn't flattering. In November 2016, I examined Colorado's referendum for a statewide single-payer healthcare system, and it was as unflattering as it was costly. Most relevantly, I wrote a piece back in January 2016 that not only analyzed the three most prominent cases of single-payer healthcare (and even these countries feature some role for private insurance), but also scrutinized the "Medicare for All" plan that Sanders proposed while on the presidential campaign trail. Although I was staunchly opposed to his "Medicare for All" bill in 2016, there is still a theoretical possibility that Sanders worked out the kinks. Let's take a brief look.

While single payer comes off as alluring, the biggest concern is that of cost. Sanders doesn't have a clear idea of how this will exactly be funded, which should be a red flag right there. However, he has a list of options of how to finance "Medicare for All," which primarily consists of a list of taxes on the rich that we can increase. Since he is unsure as to how exactly he is going to fund it, I am going to avoid (at least for the time being) comparing his financing options currently versus who he proposed back in 2016. What I can say is that if Sanders, by some miracle, were able to pass all the proposed policy alternatives, it would generate $16.2 trillion in tax revenue. All of this assumes, of course, we take Sanders' estimates at face value, which is not something I would do given how he was so off base back in 2016. Since we don't know how Sanders would finance "Medicaid for All" yet, it is premature to officially say whether his bill is fiscal insolvency. However, if estimates from his 2016 proposal are any indication, this bill is not insolvent. According to the Left-leaning Urban Institute, Sanders' 2016 proposal would have cost $32 trillion, which would potentially be a shortfall of over $15 trillion!

Let's think of the cost in another way. Medicare's cost curve is already unacceptable (Steurele, 2015). The Centers for Medicare and Medicaid Services (CMS) project that the trust fund for Medicare is to be depleted by 2029. Looking at other countries, implementing single-payer did not keep costs down, but rather expanded the cost curve. Colorado and California had similar issues when trying to implement single-payer healthcare. Sanders' home state of Vermont could not pass a single-payer bill because, "surprise, surprise," single-payer healthcare does not contain costs in theory or in practice. Increasing the aggregate demand for healthcare without working on increasing the supply would actually increase prices: who would have thought? The Bernie Sanders of 1987 surely understood that concept (see below). What happened to him in the past 30 years with regards to healthcare reform is beyond me.

This is more an exercise of one Jew kvetching about another Jew's incapability of understanding the basics of economics than it is anything else. However, I do worry, not because I think this bill will pass. Given the Republican majority in both chambers of Congress, I'm not worried about that. Plus, the recent Obamacare debates show that the American people are leery of drastic changes to the healthcare system. Sanders' bill could be positioning the Democratic Party for whenever it gets itself back into power. What is scariest about this bill, though, is how far to the Left the Democratic Party is moving. My liberal friends often complain about how far to the Right the Republicans have moved, but they should also take a look at the party they are most likely to be sympathetic towards. This is scary because the government has botched up Obamacare so badly, not to mention single-payer systems such as the Veterans Affairs (VA) or Indian Health Affairs (IHA). Why should I trust the government with more power over healthcare when it has proven its incapacity to run healthcare exchanges or adequately provide health under the VA or the IHA?

If it does gain enough traction one day, that is what is scary. According to the Peterson Institute for International Economics, the United States is the only major economy facing a sizable increase in public debt burden. The bipartisan Committee for a Responsible Federal Budget illustrates how Sanders' plan would increase the debt-to-GDP ratio nearly 60 points over the next decade (see below). As previously mentioned, we already have issues with affording Medicare, and turning it into a single-payer system would merely exacerbate our debt issues. It is not just an issue of cost. Since Medicare pays doctors far less than private insurers (and therefore are less likely to see Medicare patients), there is also legitimate concern that doctors would refuse to participate in "Medicare for All." As observed with Obamacare, the technical and administrative transitions would be horrendous. However, that is not going to stop the Democrats on pushing something like this.

The truth of the matter is that the Democrats are much more unified on healthcare than the Republicans are. For those of us who want less government involved in the healthcare marketplace, this needs to be a wake-up call. It might be tempting to dismiss single-payer outright since the Democrats don't have a workable plan. That is why alternatives to reform the system are vital. As but one example, the centrist Brookings Institution suggests, in response to Sanders, universal catastrophic coverage. Brookings asserts that it would combine the Left's dream of universal access and the Right's dream of using market forces to best efficient and cost-effective. In any case, if proponents of limited government or a freer healthcare market don't come up with something, we could wake up in an America that not only has healthcare completely controlled by government, but ends up being more bloated and inefficient than it ever has been before.

Thursday, September 28, 2017

Why the Extra Ne'ilah Service on Yom Kippur?

Yom Kippur is not only a day of fasting, atonement, and introspection. It is a day for a whole lot of religious services. On normal days, there are Shacharit, Mincha, Ma'ariv. On Shabbat and the holidays, there is the extra Mussaf service. But with Yom Kippur, there is an extra service on top of Shabbat: Ne'ilah (נעילה). Literally meaning "locking," Ne'ilah comes at the end of Yom Kippur. Why do we need an extra service at the end? I know that there is not much to do on Yom Kippur aside from praying, but I would like think there is more to the Ne'ilah service than having us kill time at the end of services because "there's nothing better to do." So what is the significance of Ne'ilah?

For many traditional Jews, the Ne'ilah service is about having one last chance to repent for what one has done in the previous year. Through G-d's mercy do we get an extra opportunity to do teshuvah. A verse that makes its way into the Ne'ilah service is Isaiah 43:25, "I, just I, am He who wipes your transgressions. For my own sake, I will not remember." This notion is in alignment of the traditional understanding of the Hebrew word נעילה, which has referred to one of two things (Jerusalem Talmud, Berakhot 4:1).

One is that it refers to the locking or closing of the Heavenly Gates. That argument falls short since the Gate of Tears is never closed. The second closing could correspond to the closing of the Temple, but as R. Arthur Green brings up in Yom Kippur Readings, that correspondence is not impressive. It would be more accurate to say that what is closing is our hearts. The High Holy Day season takes a lot out of us emotionally. According to R. Green, Ne'ilah is that time where we realize that we move from supplication to making peace.

What we can glean from R. Green's interpretation is that Ne'ilah is not just about what we have done, but also about the potential we can achieve in the upcoming year. I think the forward-looking focus is another way of looking at this service for three reasons:
  1. Going back to the Isaiah 43:25, the following verse (43:26) gives us some context. G-d is asking that we "reason together" (נשפטה יחד) in order that we may be justified (למען תצדק). According to this interpretation, G-d does not just want us to be penitent for our wrongs, but also ask how to make things right. Per these passages from Isaiah in the context of the Ne'ilah service, it is a reminder that G-d wants to forgive us. If G-d is capable of forgiving us, shouldn't we also be able to forgive ourselves? When we reach that stage, we can better move forward. 
  2. R. Yisrael Salanter pointed out that most people do teshuvah on the High Holy Days, while the more pious do so on the month of Elul. R. Salanter went as far as saying that we should do teshuvah right after Ne'ilah services are over. R. Salanter's main point was that teshuvah is a year-round endeavor. To take R. Salanter's words a step further, Ne'ilah is supposed to be that extra push that gets us going in moving forward for the upcoming year. 
  3. In each of the Yom Kippur services is a Viduy (וידוי), a confession. In the Ne'ilah service, we read through the Ashamnu. However, unlike the other services, the Ne'ilah Viduy does not have an "Al Chet," the longer confession within the Viduy that mentions specific sins. The "Al Chet" is replaced with two new paragraphs: "Atah noten (אתה נותן)" and "Atah hidalvta (אתה הבדלת)." Within these two paragraphs, the only specific sin mentioned is theft. My rabbi, R. Shmuel Herzfeld, mentions this in his book Food for the Spirit. Why, according to my rabbi, is theft the only specific sin mentioned? As R. Joseph Soloveitchik explained, every sin we commit is really a sort of theft against G-d. When we err, we violate our purpose on earth. R. Herzfeld expounds upon this by saying that when we steal from G-d, we have lost our focus and forgot why we are here. We read this passage to remind us about our responsibility in this world and what we are meant to do (Herzfeld, p. 92). Reciting this towards the end of Ne'ilah is meant to bring our focus on what is to come. 
The Ne'ilah service is important because it is that segue between the High Holidays period and the New Year. It is what connects our past to our future. Yes, we are meant to look back and make up for our shortcomings. However, looking back only does so much good if we do not take it in the context of looking forward. Amend for past mistakes to be sure, but also learn from those mistakes to propel yourself forward. As R. Jonathan Sacks brings up in his Yom Kippur machzor, Ne'ilah is not about asking "Are you perfect?" but "Can you grow?" That is what Ne'ilah is about: take that lesson and be the best version of you that you can be!

Monday, September 25, 2017

Should There Be a Catalonian Nation Independent of Spain?: The Ramifications of Secession

Barcelona is a beautiful city known for its art and architecture. It is a city I would like to visit some day because it truly is a gem of Spain. Being located in the Spanish province of Catalonia (Cataluña), it is also in the middle of a political controversy. On October 1, the Catalonian people are to vote on whether or not Catalonia is to secede from Spain. The complication is that the Spanish government has declared the referendum for independence to be illegal. Catalonian independence dates back to the early 20th century when the Spanish government revived the Generalitat of Catalonia in 1932. This increased autonomy was quashed with the rise of dictator Francisco Franco. After Franco's death in 1975, the Catalonians focused on increased autonomy instead of an independent state. This changed in 2007 as a result of a fallout from the Great Recession. The main gripe: Catalonia has been paying more in taxes than it had been receiving in benefits. In a time where Brexit is taking place, it makes me wonder if Catalonia should secede. I do not want to get into whether or not Catalonia should hold a referendum. That is separate from the question I would like to answer: "Is it a good idea for Catalonia to separate from Spain and become its own country?" I asked a similar question three years ago when Scotland was looking to secede from the United Kingdom, and I will apply that general research methodology here to the Catalonian case study.

Economic Costs
Economics will play an important enough in the outcome of this election. The economic argument being used in support of Catalonian independence, which is being contested by some, is that it pays more in taxes than it does in expenditures, thereby creating a deficit. Catalonia receives 10 percent of federal funds while accounting for 16 percent of the Spanish population. Based on this cash-flow method, Catalonia is losing the equivalent of 8.5 percent of its GDP per annum, which is notable when its current debt-to-GDP ratio is 35.4 percent. Even if this money were to stay in Catalonia, there are multiple costs to the Catalonian economy, the first being that the services that the national government provide would have to be provided by the autonomous Catalonian government. This could very well reduce the benefits from 8.5 percent of the GDP to 4.2 percent, although the Generalitat of Catalunya estimates a rosier 5.8 percent (also see less rosier projections from the Societat Civil Catalana here).

Having an extra 4.2 or 5.8 percent of the GDP sounds like a nice win. However, this assumes that economic commerce resumes as normal after the secession. The big reason for that is because secession automatically means that Catalonia is ejected from the European Union. 65 percent of Catalonian exports are bought by the European Union. This is important because the European Union is a trade bloc. Being removed from that means paying tariffs, which diminishes the benefit of secession.

Much of that EU trade is with Spain: Catalonia conducts about half of its trade with Spain. Yes, France is Catalonia's largest exporter, but after that, Catalonia's biggest exporters are Andalucía, Aragón, and Valencia. Also, let us keep in mind that while Catalonia technically has a trade surplus, much of that surplus is with Spain. With the rest of the world, it runs a trade deficit of about 4 percent.

Considering that the Spanish government is already attempting to quash the referendum vote, it is unlikely that Spain is going play nice with Catalonia in the event of a secession. Spain's Economic Minister, Luis de Guindos, warns that Catalonia's GDP could drop by 30 percent. Why? There is great uncertainty as to how this will play out. The uncertainty would cause Catalonian households to consume less, which would damper the economy. When the costs and benefits are added up, a study from the University of Edinburgh actually found that disposable income would diminish by 3 percent (Comerford et al., 2014). There will most certainly be disinvestment and increased unemployment, both of which would diminish Catalonia's return. The reason for disinvestment is because many of the Catalonian businesses would prefer to stay in the Euro Zone, and would probably relocate to Spain.

Membership with the EU is not just about trade policy, but also monetary policy. Once Catalonia leaves, it would no longer be part of the Euro Zone. Sure, it could de facto use the euro, but it would be a country without a currency and have zero control over monetary policy. Its inability to receive financing from the European Central Bank (or Spain) would lead it to creating its own central bank and currency. Without an institutional history, its currency would probably be weak and its interest rates would be high.

Other Considerations
  • According to a survey from Deloitte surveying business owners throughout Spain, 74 percent of Spanish business owners think independence will hurt the Spanish economy. 43 percent of Catalonian business owners feel the same way.
  • Pluralism is one of those highly esteemed values, especially in a more democratic society. We get along with those around us in spite of our differences. Yes, the Catalonians have a distinct language with their own history and culture, but Catalonia somehow managed to maintain their heritage for over 400 years under the Spanish crown, as well as Franco's attempts to suppress Catalonian heritage. 
    • While it is admittedly easier to maintain more homogenous countries, many developed countries have maintained multilingual nations, including Canada, Israel, India, and Switzerland, not to mention other countries that can harmoniously deal with a multicultural society. 
  • The end-result of a secession greatly depends on the reaction of the country from which the separation is taking place. Catalonian separatists do not have the capacity or desperation to take on the Spanish army. Let's remember that in the not-so-distant past, the Spanish government was run by a far-Right Francoist military junta. Considering how important Catalonia is to Spain, the Spanish government using military might to quash the secession should not be dismissed outright. 
  • Catalonian independence has other militaristic ramifications. If Catalonia leaves Spain, it loses protection under NATO, and there would be no guarantee that Catalonia would be offered protection under NATO. 
  • According to Spanish think-tank Fundación Alternativas, this does not just affect its status with NATO. Independence also adversely affects its status with the United Nations, European Union, the International Monetary Fund (IMF), and the World Bank. Specifically with regards to the European Union, Catalonia could not get into the European Union without Spain's help because entry into the EU requires a unanimous vote.
  • Per a 2012 European Commission report on regional governance, Spain ranked 13 out of 27 EU countries. More to the point, Catalonia ranked 130 out of 199 regions, and was the lowest-ranking Spanish region. The fact that corruption is more pervasive in Catalonia than it is throughout the rest of Spain indicates that the government would have a harder time performing and that the economy would not grow as well as anticipated. 
Conclusion: While Catalonia has a large and diverse enough of an economy to theoretically support its own statehood, the current dynamics would render a hypothetical secession a disaster both for Catalonia and Spain. Reforming the Spanish federal fiscal regime would be a much more prudent move than Catalonia leaving Spain. The people should be allowed to decide their own fate, but I nevertheless contend that the people of Catalonia should remain as a part of Spain.

Saturday, September 23, 2017

Want to Stop Corporations From Fleeing Vis-à-Vis Corporate Inversions?: Lower Taxes

Those in society tend to look down upon those who avoid responsibility as weak, incapable, or lacking the courage to act on basic decency. It is through this moralistic lens that some look at corporations who are "fleeing the country" through what is known as a corporate inversion. A corporate inversion is when a corporation completes a merger with a company in another country that is often smaller. The merger allows for the U.S. company to be treated as a foreign country in the U.S. tax system, even in spite of the fact that U.S. shareholders own more than 50 percent of the company stock post-inversion. Operations often stay in the United States, but it the legal headquarters is changed to a lower-tax jurisdiction. In 2014, Obama accused companies pursuing corporate inversions as being deserters, followed by a call for "economic patriotism." For Obama, paying taxes is a form of being patriotic since it helps support the government. By using the tax code to pay less taxes, the loophole is seen by inversion critics as avoiding one's patriotic duty. I want to challenge this notion of "economic patriotism" and see what the deal is with inversions, least of all because standard microeconomic theory states that a business primary goal is to make a profit (i.e., profit motive).

This line of thought comes in light of a report released by the Congressional Budget Office (CBO) on corporate inversions. The report had two main findings. The first main finding is that within the next decade, corporate inversions will cost the government $12 billion (CBO, p. 2). The second main finding is that on average, a corporation saved itself $45 million after the first financial year of completing the inversion (CBO, p. 1). The second finding of the CBO bolsters why corporations feel the need to go through an inversion in the first place: to pay less in taxes (also see Col et al., 2016).

If you have looked at corporate taxes, it is not difficult to see why corporations in the United States want to flee. It's because the corporate tax rates are high. The CBO released a report in April with corporate tax rates in G20 countries. The United States has the ranks highest in top statutory rate of 39 percent. Statutory is the rate that is "on the books," which is different than what is actually paid (i.e., effective rate). The United States still has the fourth highest rate of 18.6 percent. While the corporate tax revenue as a percent of GDP has declined over the years, overall tax revenue from corporate taxes has generally increased since the 1930s because U.S. GDP has grown considerably over the years. Also, these studies do not account for state corporate tax rates or the fact that 30 percent of companies pay as an S-corporation, a tax status in which the corporation pays individual income tax instead of corporate income tax.

It is true that the corporate tax rate in theory (statutory) is double what it is in practice (effective). At the same time, it is high enough where over 60 companies since 1993 went through the headache and paperwork to legally move. It is bad enough where U.S. corporations are at a competitive disadvantageI scrutinized the corporate tax three years ago when Walgreens was looking to make its inversion. I found a few things, one being that the tax incidence falls on the workers in the form of lower wages. I also found that it reduces labor productivity, slows down economic growth, and creates a double-taxation effects. The OECD opined that it was bad enough where it deemed the corporate tax the least efficient and most harmful tax (OECD, 2008, p. 2).

When looking at corporate tax rates in the United States, we have to remember that our tax code is not in isolation. U.S. corporations are competing with corporations in other countries with lower tax rates. Having a disadvantage in paying more taxes could result in a lower market share, as well as affect the workers at the corporation, many of whom are not bigwig executives. Combine this with the negative effects of the corporate tax, and it should be no wonder that corporate inversions are trending. The libertarian Cato Institute pointed out something interesting with regards to corporate inversions: it tends to be the CEO and other corporate executive that benefits from the inversion, not long-term investors. Executives' incentives are misaligned with those of shareholders, and that creates additional issues.

Inversions are a symptom of and a reaction to a malfunctioning tax code, which means that cutting corporate taxes to disincentivize inversions is better than some retroactive regulation or converting to a territorial system, the latter of which would create greater incentives to shift U.S. profits overseas to avoid taxation. Ireland and Canada are two examples of countries that have benefited from lowering their corporate tax rates. Canada was able to collect more tax revenue when it reformed its corporate tax rate in the early 2000s, which suggests that a cut in the corporate tax rate could lead to more tax revenue. Plus, corporate tax reform has something else uncommon in our day in age: bipartisan support, which means it would be politically feasible to pass.

The United States has a tax code that is over 10 million words long, which makes it all the more difficult to navigate. Again, it should be no surprise why certain corporations find it easier to complete an inversion than deal with the U.S. tax code. Simplifying the tax code by lowering or eliminating the corporate tax would be a step in the right direction for all involved.

Monday, September 18, 2017

How to Celebrate Rosh Hashanah When Your Judaism Is Shaken to the Core

Normally, at this time of year, I would take a passage from the Torah, Talmud, or some other Jewish text that relates to Rosh Hashanah. I would take that passage, analyze it, and come up with some sort of insight that can carry us through the Jewish year of 5778. This year, I don't have that luxury in my life because I am dealing with the loss of someone who was dear to me. Baruch Hashem, thank G-d that individual did not pass away. Although I shared many intimate moments and developed a strong bond with said person, what this person ended up doing to me recently was injurious enough where making up for the damage caused is impossible. One thing that this is done is change my view on humanity a bit. A redeeming feature of Judaism is that it reminds us that we are imperfect beings, but that G-d has given us a framework that provides us with second chances and the ability to do better through what Judaism refers to as teshuvah. Much like we learned with the Pharaoh in Egypt, an individual can fall into a pattern of behavior that can obscure our humanity to the point where they are irredeemable. A default assumption in Judaism is to believe that in spite of our flaws, we have the capacity to improve upon ourselves and be better than we were before. However, my past relationship with the aforementioned individual reminds me that either some people don't want to work on themselves or that some individuals are incapable of working on themselves. I still believe most people can improve upon themselves, but some people are truly beyond redemption.

Unfortunately for me, my recent loss did not just impact my relationship with this person, but also with my religiosity and how I feel about Judaism. Although I believe in an impersonal G-d, I have found myself in a position I have not found myself in years: angry at G-d. Rather than remember the benefits of living a Jewish life or how I have grown throughout my Jewish life, all I can feel is the pain I have endured as a result of Judaism and the costs of living an observant Jewish life. I feel adrift about my Jewish identity and Jewish practice in a way that I never have before. Fortunately, I have an exceptionally supportive Jewish community, family, and overall social network that is helping me stay afloat, but that still doesn't help me with how I proceed with Rosh Hashanah. How do I continue maintaining introspection while looking forward to how I can be a better person and Jew this upcoming year when I wonder whether I still even want to practice Judaism or be Jewish?

I am sure I am not the first person who has undergone an arduous trial in life during this time of year. Based on recent conversations I have had with my Orthodox friends, I know that I am not the first Orthodox Jew to go through, for lack of a better term, a "crisis of faith." Even in the Orthodox world, there are people who struggle with their Yiddishkeit and what it means to be Jewish. It is just that much like other topics in the Orthodox world, they are considered taboo. Instead of addressing these issues and helping people grow spiritually, the Orthodox world has a propensity to sweep these issues under the rug. With that being said, here are a few things I am going to keep in mind for the High Holidays (Yamim Noraim), as well as some advice for those of us whose hearts or minds are not necessarily or fully into the "holiday spirit" this year:
  1. A Jew is supposed to struggle and question. It is nice to think that being religious means unwavering support and never doubting or questioning. This is simply not true. This is not simply a matter of "three Jews, five opinions" or how the Talmud, and indeed Judaism as a whole, has been a discussion and debate that spans over the ages. Being able to struggle is literally a namesake of the Jewish people. The Jewish people are referred to as Israel (ישראל). In Hebrew, the word means "one who struggles with G-d." This name was given to Jacob after he fought and struggled with the angel in the biblical text. If we do not struggle with, doubt, or question Judaism, we are not doing it right. 
  2. Yom Kippur is not a hard deadline in finishing processing, grieving, or moving forward. This might seem counterintuitive given traditional Judaism's take on this time of year. At this time of year, Jewish tradition teaches that there is a Book of Life and a Book of Death. At Rosh Hashanah, G-d inscribes names in the Book of Life, and at Yom Kippur, G-d seals the Book of Life, thereby sealing our names in the given Book. While interesting imagery, this is not meant to be taken literally. As we see upon analyzing the prayer of Unetaneh Tokef, this is meant to be a metaphor. This time of year is not an opportunity to manipulate G-d in helping us cheat death for another year, but rather to make us think about the ephemeral nature of life. It is meant to bring us closer to G-d. It also reminds us of the fragility of life. This time of year is meant to inspire. At the same time, the Yamim Noraim do not magically solve all of our problems or remove our pain. The nice thing about Judaism is that it focuses on the journey, not the destination. Rosh Hashanah is meant to rejuvenate and inspire, which means that this time of year is meant to be a starting point, not an endpoint.  
  3. Take it one day at a time and do what you can. On the one hand, a Jew is supposed to step it up a notch at this time of year. In the High Holiday prayer books (machzorim), we see the phrase of "teshuvah, tefillah, tzedakah help us avert the Divine decree." We are supposed to do more repenting, praying, and giving money to causes per Jewish law than we do during the rest of the year. On the other hand, I had a good friend tell me in this context that "If you don't bend, you will break." To quote Ben Hei Hei in Pirkei Avot (5:26), "the reward is in proportion to the exertion (לפום צערא אגרא)." Rashi comments on this passage in Pirkei Avot that the reward is in proportion to the effort and difficulty needed for its performance. This passage means that G-d understands what you're going through, and that G-d is well aware of the mitigating or exigent circumstances. In the context of Rosh Hashanah observance, what this means is this. Ideally, it would be great if you go full-out and do mitzvahs galore. But if you don't, G-d understands. The main mitzvah on Rosh Hashanah is to hear the shofar blowing. Even if you are in a tough spot and only go to one service to hear the shofar, G-d will give you even greater kudos since He knows what you're going through. G-d wants Jews to do mitzvahs, but G-d also understands that for the vast majority of people, Jewish practice and dedication to Judaism has its ups and downs
    • As I wrote a couple of years ago, the Nazarite provides an example of how taking even a few small steps can help us grow immensely, especially during the Yamim Noraim. It doesn't matter if you're making small steps. As long as you're moving forward in your life, that's what ultimately matters.
  4. Forgive yourself and cut yourself some slack. I don't say this point because it's easy because I can tell you I struggle with this, especially given recent days. This time of year is about forgiving others, asking G-d for forgiveness, and asking others for forgiveness. There is a lot of forgiveness, but there is one aspect of forgiveness that is often overlooked: forgiving ourselves. I looked at this idea within the context of the Ashamnu prayer, which I know isn't recited until Yom Kippur, but it is still apropos. Why is forgiving ourselves important? Especially when we feel down, it is all too easy to look at the High Holiday liturgy and feel even worse about ourselves than we do. Yes, reflect on the right and wrong you did this past year. At the same time, if you want to do better this upcoming year, if you want to move forward from your struggle, and if you want to be the best version of yourself, then you have to forgive yourself. We are human, and as such, we will err and fall. We will do so many times. What defines us is not how we fall, but how we get back up. Part of getting back up is forgiving yourself so you can do better. If you can remember that, Rosh Hashanah will be more pleasant.  
Our lives are a process. How we feel about Jewish practice or G-d or Torah can and does fluctuate. It is part of the human condition. Will I return to a non-Orthodox denomination? Will I forsake religion altogether? Will I return to Orthodox Judaism after processing my loss and figuring out what I want in my spiritual and religious life? Quite frankly, I don't know. I want to do what makes me happiest and provides me with the most meaning in my life. While my relationship with Judaism and G-d is currently hurting, I am in the process of seeing where this healing process takes me. Much like I hope for myself, I hope for those of you struggling with their Judaism at this time of year, I hope you find solace and peace in your relationship with G-d. 

Monday, September 11, 2017

DACA's Net Benefits and Why Congress Needs to Save DACA

When it comes to the United States' history on immigration, it is fraught with tension. On the one hand, the United States has been a land of opportunity where an immigrant could become a citizen and make something of their life. On the other hand, there have been times in the United States' history where we see more restrictive immigrations policies, such as immediately after World War One or in the mid-1960s. This tension between lax and restrictive immigration policy plays out with the debate on the Deferred Action for Childhood Arrivals (DACA). President Obama signed an executive order in 2012 allowing minors who illegally entered the country to receive a two-year period of deferred action on their deportation combined with the ability to be eligible for a work permit. As of this year, 790,000 individuals, more colloquially referred to as Dreamers, are covered under DACA. While DACA provides Dreamers with temporary legal reprieve, it does not provide legal status or amnesty. In either case, last week, Attorney General Jeff Sessions made the announcement that President Trump rescinded Obama's executive order. Trump has allowed for a six-month delay for Congress to work on a legislative version to get passed so the Dreamers can stay in the United States. Was Trump's move a wise decision or not?

Much of Jeff Sessions' remarks last Tuesday on announcing the desistance of DACA had to do with constitutionality, which is highly contested. Article I, Section 8, Clause 4 provides Congress with the power to naturalize citizens. Keep in mind that naturalization is not the same as immigration. But even if this constitutional clause gives Congress the right to control immigration, it is hypocritical that Trump was fine using an executive order to instate his dubious travel ban, but he suddenly has an issue when it comes to DACA. Also, the executive branch has granted "deferrals of removal" or "deferred action" for at least a half century, so it is not as if Obama's actions are unprecedented. If anything would be unprecedented in American history, it would taking a group of people that were raised and rooted in the United States and stripping them of their legal recognition and shoving them into a state of unauthorized immigrant life.

After mentioning constitutionality, Sessions then says how eliminating DACA is important because "enforcing the law saves lives, protects communities and taxpayers, and prevents human suffering. Failure to enforce laws in the past has put our nation at risk of crime, violence, and even terrorism." He then proceeds to talk about how it will further economically the lives of millions who are struggling." Let's examine these claims and continue with looking at ramifications of rescinding DACA.

Higher Risk of Crime - Sessions implies that by removing DACA, we will have a lower rate of crime. On the macro level, we have seen a bit of an increase in violent crimes in 2015 and 2016 (FBI Statistics). Nevertheless, there has been a general decline in violent crime since the 1990s. Aside from that, we should ask whether the Dreamers' demographic, young adults who are undocumented workers, are increasing the crime rates. The "crime reduction" argument is the same one used for justifying Trump's border wall, and as I pointed out earlier this year, it does not have merit. As a matter of fact, the Cato Institute found that undocumented workers/illegal immigrants (whichever term you prefer to use) are 1.8 times less likely to commit crimes. Plus, Dreamers have to go through a background check prior to participating in DACA. Only 2,139 Dreamers (or 0.25 percent of the Dreamer population) lost DACA protection because of criminal behavior, which means that Dreamers are even less likely to be convicted of a crime or go to prison (Landgrave and Nowrasteh, 2017).

Prevent Human Suffering - Sessions' comments make even less sense when accounting for the crime rate of the Dreamers' demographic. DACA does come with a human cost, but it comes at a cost for the Dreamers, not native-born citizens. To be eligible under DACA, Dreamers had to register with the Department of Homeland Security (DHS). If Congress cannot come up with a bill to replace the executive order, the DHS can take that list, target the Dreamers, deport them, and split up families in the process. These Dreamers have been here, on average, since they were six years old, so deporting them to a country they to a Third World country that they do not really know is a form of human suffering. The only "crime" that the Dreamers committed was accompanying their parents, who entered the country illegally.

Protecting Taxpayers - By claiming that eliminating DACA would protect taxpayers, Sessions implies that immigrants do not pay taxes. The problem with that implication is that it is false. Immigrants, regardless of their legal status, pay taxes. As for being a "drain on society," that is also false: immigrants not only have a fiscal impact that is near net-zero, but also positively contribute to the economy. The Dreamers covered under DACA are no exception. 90 percent of Dreamers are employed, which is a higher labor force participation rate than native-born workers. Also, Dreamers are responsible for $2 billion in tax revenue. Dreamers are more likely to make a net fiscal contribution because they do not qualify for federal means-tested welfare. Plus, Dreamers are better educated than the overall immigration population, which means that they can better contribute to the economy and tax base. How deporting hard-working, tax-paying individuals protects taxpayers is beyond me.

Improve the Economy - Sessions also postulates that ending DACA would improve the economy. When discussing the issue of deportation a couple of years ago, I concluded that deportation would be costly with little to no economic benefit. Limiting the deportation to Dreamers would still be costly.
  • Budgetary Cost of Deporting Dreamers: According to the Brookings Institution, the average cost of deporting an individual from arrest to removal is $12,500. That would mean that it would cost $9.9 billion to deport the Dreamers. The Right-leaning American Action Forum estimates that the costs deporting the undocumented workers covered under DACA could be as high as $21 billion. The libertarian Cato Institute calculates that it would cost $280 billion in reduced growth and $60 billion for the government (also see here). To put this cost into perspective, the Immigration and Customs Enforcement (ICE) budget for FY2017 was only $5.8 billion, and it's not difficult to realize that this is something the United States government can ill-afford.
  • Economic Cost to Employers: Ending DACA would be the equivalent of 31 regulations, and would end up costing employers $6.3 billion to fire, replace, and train. 
  • Economic Benefit of Immigrants and Dreamers:  The Trump administration is under the impression that less immigrants is better for the country. This was something I explored only last month when asking whether Trump's support for a bill that would cut legal immigration in half would help the nation. Cutting immigration does not increase native-born workers' wages, it does not boost the GDP, and immigrants are less likely to be on welfare. Immigrants in general provide a modest, but net positive gain to the economy. Specific to DACA, ending DACA would lead to an estimated loss of $460 billion in GDP over the next decade, according the Left-leaning think tank Center for American Progress.  The American Action Forum estimates that between now and 2020, it would be a loss of $72 billion and 740,000 workers. 

The economic and moral case to create legislation to keep the Dreamers here in the United States is as overwhelming as it is damning. It is already clear that reducing immigration doesn't do the American people any favors, and given the demographic features of the Dreamers, it becomes all the more perplexing as to why Trump feels the need to go after the Dreamers. At the same time, I understand that DACA was never meant to be a permanent solution since the President can only defer deportation and does not provide a path to citizenship. Even if you want to argue that DACA is "good policy but bad law," the solution has been and continues to be Congress. At this point, it is up to Congress to create legislation to help the Dreamers and preserve the American dream.