Thursday, March 30, 2017

Note to Italy: Paid Menstrual Leave Will Probably Backfire, Period

Aside from March being International Women's Month, we are not all that far from it being Equal Pay Day, a time in which people [on the Left] misleadingly raise awareness for the gender pay gap (the gap, at least in an American context, is much smaller once adjusted). That is why I find it an interesting time of year for Italy to make headlines. The Italian government is looking to pass a bill that would make Italy the first country in the Western world to mandate menstrual leave.

Menstrual leave is a policy in which a woman is allowed to take either paid or unpaid leave from work to deal with menstruation-related pains. Menstrual cramps (dysmenorreah) are throbbing pains in the abdomen or lower back occurring during the menstrual cycle. Although the pain can be mild, Mayo Clinic points out that the pain can be severe enough where women have legitimate difficulty performing everyday activities because of the pain. The American Family Physician says that up to 20 percent of women deal with severe pain, which would mean that if they are right, 80 percent of periods do not result in severe pain. The Italian piece of legislation attempts to remedy this situation by allowing for women to take three days off per month. If this passes, Italy will join Indonesia, Japan, South Korea, and Taiwan in having such a mandate.

Whether or not menstruation causes greater absenteeism is a bit mixed. A 2009 study in the American Economic Journal found that women are more likely to be absent from work because of the menstrual cycle. A 2010 study in the National Bureau of Economic Research actually found that there is no real effect on absenteeism. While there is mixed evidence, I would like to make the assumption that menstrual leave does indeed address absenteeism caused by the menstrual cycle.

Before continuing, I do want to say this: Admittedly, I am male, and do not have to go through the monthly ordeal of the menstrual cycle. I sympathize with those who go through it because it sounds like anything but fun. Even with that sympathy, I have to wonder just how effective it would be for women to take off up to three workdays a month.

Italian feminist writer Miriam Goi thinks that the bill would reinforce stereotypes about women "being more emotional on their periods." Purdue history professor Sharra Vostral points out that the fact women menstruate was used to keep women out of the workplace. There are feminists that worry that such a bill can be used to reinforce the idea that women are not strong enough to work three days out of the month, which is the last thing women need considering the workplace discrimination against women that still exists. Passing this bill after women have dealt with this bloody issue for centuries would regrettably be perceived as a sign of weakness. This quote from the Irish Times sums it up:

"The notion that women are so frail we need a whole new category of sick leave to deal with what is for most of us a routine, if irritating, monthly occurrence isn't emancipating. It's retrograde and a bit creepy. I can't help feeling it's less about liberation than about our deep-seated cultural anxieties about women and their bodily fluids. Menstrual leave isn't a means of making the workplace more accessible to women--it's yet another way of keeping us out." 

If the more normative argument does not convince you, take a look at the argument against paid menstrual leave from an economic standpoint.

While the bill solves one problem, it creates another: firms would think twice before hiring women, and it is not difficult to see why. Based on the most recently available data, all working Italians are guaranteed 20 vacation days off, as well as 11 paid days for holidays. Italy also mandates 22 weeks of paid maternal leave, which is on the higher end in the European Union (paternal leave is only for one day in Italy). There already is some controversy as to whether paid maternal leave causes women to be at a disadvantage in the workplace.

The Italian bill would add onto the advantage women would get. If the bill passed, women could have an extra 36 days off a year, which would give women a total of up to 67 days off. And if you don't think such labor regulations don't have an effect on living standards, take a look at this November 2016 study from the European Central Bank. This maternity leave would leave men with less than half of vacation time as women. This would not simply be a matter of breeding resentment (both from those who have to carry the extra workload and the men who do not get the extra time off), but an additional 36 days for each woman each year would come at a considerable cost to businesses.

Even though there are not studies out there showing the effects of menstrual leave specifically, we can still take a look on how labor laws for fringe benefits have an adverse effect. To quote a 2013 study from the Social Security Administration, "most labor economists believe that in the long run, much or all of the burden of labor costs for fringe benefits falls on workers." Italian economist Daniella Piazzalunga is worried that a menstrual law would exacerbate the wage gap in Italy. Forbes made a similar argument back in 2014 about the effects of menstrual leave on women's wages. This does not even get into enforcement issues, such as proving that a woman has not reached menopause, is not using an IUD, or proving that the pain is bad enough where a woman needs to take off.

Women in Italy already have an uphill battle. Although it is illegal, one in four pregnant women in Italy are let go as a result of becoming pregnant. Only 61 percent of Italian women work, which is below the 72 percent average for OECD countries. If you want more women in the Italian workforce, this would not be effective. Italy is dealing with anemic GDP growth and an unemployment rate that is above the European Union average.

This legislation would not just deliver a blow to the Italian economy. It would cramp women's opportunity to advance in their careers. Companies should be able to come up with gender-neutral sick policies without having to pry into a woman's personal affairs. Removing the taboo behind menstruation would also be nice, but menstrual leave is not the way to go.

Monday, March 27, 2017

World Happiness Report: A Dubious, Subjective Attempt to Define Happiness

Last Monday was International Happiness Day. Part of that Day was the release of the 2017 World Happiness Report. The report contains multiple measures of collective and social welfare from 155 countries. The report caught some peoples' eyes for a couple reasons. One is that the top five happiest countries are Norway, Denmark, Finland, Switzerland, and Finland. The other is that when the report started five years ago, the United States was ranked tenth. This year, the United States dropped down to being fourteenth. Some took the findings at face value and thought it was sad that the United States is a less happy nation. Rather than accept the findings unquestionably, I have to ask an even more fundamental question: What is happiness?

The World Happiness Report uses survey work to ask 1,000 individuals from each country how happy they feel on a scale from 1 to 10. The report bases its definition of wellbeing on three main factors (p. 10):

The report uses certain variables to explain the rankings in happiness, including GDP per capita in purchasing power parity (PPP) adjusted dollars, life expectancy, social support, generosity in terms of giving to charity, freedom to make life choices, and confidence that the government is not corrupt (p. 17). In Chapter 7 of the report ("Restoring American Happiness"), Left-leaning economist Jeffrey Sachs writes about how we need to focus less on economic growth, and more on growing income inequality and rising distrust and corruption (p. 179).

While I admire an effort to measure happiness, it is difficult to take such findings seriously or at face value because of the subjective nature of happiness. For one, happiness varies person by person. Happiness can mean a good job, lots of money, a steady family, a strong social network, a religious calling, or many other things. The definition does not vary simply by individual, but also by country. Is happiness having a roof over your head? Living a long time? For those living in an authoritarian regime, it could simply mean surviving or being in a well-off enough of a position where the government really doesn't bother you. In the developed world, it could mean having your needs provided for, but it could also have the added goal of pursuing something greater than oneself.

Happiness economics suffers both from empirically defining happiness and inherent limitations in measuring such happiness. Happiness is a multifaceted, complex issue stemming from biological, cultural, historical and sociological underpinnings, which makes happiness less of an empirical pursuit and more realizing that the definition is a changing, moving target that varies from person-to-person and by country. Given the nature of happiness, it will remain an elusive and speculative affair, which is why all is said and done, I would hardly give the World Happiness Report, especially in terms of dictating public policy implications.

Thursday, March 23, 2017

Why are Some Protests and Demonstrations More Successful Than Others?

Living in Washington DC, it is hard not to notice the protesting that has taken place since President Trump has been elected. Trump has only been president for about three months, and there has already been a Women's March, a protest against his refugee ban, and a "Day Without Immigrants" to protest his border wall. While we might see an uptick in protests and demonstrations in the next four years, it is not as if they are a new phenomenon. In an American context, protesting the government goes all the way back to the American Revolution in the eighteenth century. It's also part of the First Amendment of the Constitution. Since the American Revolution, there have been protests against the Vietnam and Iraq Wars, the march for woman's suffrage, the Million Man March, March for Life, Occupy Wall Street, and the Tea Party. Even outside of the United States, there has been the Arab Spring, Tiananmen Square, the French and Russian Revolutions, just to name a few. Protests and demonstrations can certainly be memorable forms of wanting the government to enact change. But how well do they work? What makes a protest more likely to succeed?

One facet is whether the protests are violent or nonviolent. Looking at protests since the start of the 20th century (including those in authoritarian regimes), a nonviolent protest is twice as likely to succeed as a violent protest when the protest is about a country's central leadership (Chenoweth and Stephan, 2012). Even when looking at cases of self-determination, nonviolence works better (Gallagher Cunningham, 2016). Nonviolence campaigns are ten times more likely to usher in democracy than violent ones. This does not mean that violent ones have not or can not work, but that they are more likely to fail, even when the majority of protesting is nonviolent (Chenoweth and Schock, 2013). Take something like the Black Lives Matter (BLM) movement. There is a valid complaint about racial disparity in policing. At the same time, that violence at many of the BLM protests detracts from the message. Plus, violence has this tendency to escalate into a downward spiral and discredit the protesters as more radical and extreme, so doesn't surprise me that nonviolence protesting works better.

The lack of violence is not the only factor to consider. About three years ago, I looked at the effectiveness of boycotts, and my conclusion was that "for a boycott to work, you need to have a targeted, massive enough of a collective to impact [the revenues]." Boycotts are more of an economic protest because a boycotter spends money elsewhere to make a statement, but the idea is similar. One takeaway from this parallel is that size counts. Research shows that if 3.5 percent of the population actively resists the government, the current government cannot withstand that sort of scrutiny. The other takeaway is about targeting, i.e., the message needs to be salient and "under one banner." The more that people can identify with the protesters, the easier it is to sympathize to the point of getting more to protest with you. Much like with boycotts, protests also take time to seep in. For nonviolent protests, it can take three years before progress fully comes into fruition.

The final point is that of turning protest into action. Let's compare two recent protest-based movements: Occupy Wall Street and the Tea Party. The message of Occupy Wall Street was "the wealth is concentrated at the 1 percent while the 99 percent have problems making ends meet." The result of Occupy Wall Street? There is more talk about income inequality than there used to be. However, there is not discernible policy change as a result of Occupy Wall Street, and I wouldn't count on it being addressed by President Trump. We don't even hear about Occupy Wall Street anymore because that is how much it is in the dustbin of history. Yet the protests of the Tea Party were successful (Madestam et al., 2013). Why? One was concise, salient messaging: "government spending and taxes are out of control, and we want our government back." In spite of the decentralized nature of the Tea Party, another feature was the Tea Party was that pivoted from protest to getting officials elected, which is preferable to letting the protest die out or having social media substitute for actual political change (see below). We can argue about whether the Tea Party stayed true to its message or how effective it is in the long-run. But the contrast between the Occupy and Tea Party shows that protest is a starting point, not an endpoint. If protesting is ultimately going to work, it needs to reach and sway key decision-makers (ibid.). Otherwise, the effects of protesting are going to be minimal.

Source: London School of Economics

To summarize, the main criteria to best ensure success of a protest are nonviolence, size and prevalence of demonstration, the extent of protesting, a salient message, how the long protesting lasts, and whether it can mobilize enough to enact change in political agenda and policy. For those who are looking to use protest as a mechanism for political change, these are some things to keep in mind moving forward.

Monday, March 20, 2017

Should Trump Cut Funding for PBS and NPR, and Does It Matter?

This past Thursday, the Trump administration released a preliminary 2018 budget proposal. The budget proposal covers discretionary spending only. To give some context, as of 2015, discretionary spending only accounted for 34 percent of the overall federal budget. This is not to say that discretionary spending is insignificant, but that it's not the whole piece of the pie. Getting back on topic, Trump is looking to cut most departments' spending while increasing defense spending. Part of the budget cuts (see coverage by Washington Post) includes defunding 19 government agencies. Part of that defunding is Trump wanting to cut $445 million of funding for the Corporation of Public Broadcasting (CPB). The CPB's funding most notably covers programming for the Public Broadcasting System (PBS) and National Public Radio (NPR). PBS posted the meme below on its Facebook page recently, undoubtedly in anticipation for Trump's budget.

The first reason that PBS brings up is important, which is that it's not that expensive compared to other aspects of the budget. Looking at past appropriations to CPB, CPB received $445 million for 2016FY. With a $3.854 trillion federal government budget, funding for CPB amounted to 0.01 percent of the overall budget in 2016. One could hardly argue that funding PBS and NPR is driving the federal government's deficits. If cutting funding to CPB is part of a general trend towards government spending and regulation, then I am on board. Since he is merely allocating discretionary spending from non-defense to defense spending, then I have to wonder, especially since Trump's budget does not address entitlement or tax reform.

But if we are going to talk about budget, then it is equally fair to ask what percent of revenue in the PBS and NPR budgets comes from the federal government. The Washington Post estimates, 15 percent of PBS funding comes from the federal government, while that figure is 16 percent for NPR. The Congressional Research Service puts those figures even lower at 15 percent for public television and 10 percent for public radio (although rural areas are more reliant on this funding, although this concern can be mitigated be online streaming and access). Most funding for these programs comes from donations, not taxpayer dollars. If a budget eliminating federal funding for CPB were to pass, would CPB miss the extra cash? I'm sure they would. Would NPR and PBS have to re-adjust their business strategy to account for the lack of subsidies? Definitely. Would it mean the end of public TV and radio broadcasting? Doubtful. After all, it is possible to have public television without having the government step in. National Educational Television (NET), which was a public broadcasting service largely funded by the Ford Foundation, existed from 1952 until its merger with PBS. Prior to PBS, most noncommercial broadcasting was provided without broadcasting (see 2012 policy brief from the Cato Institute on case for defunding public broadcasting).

More to the point, why do we need to use taxpayer dollars to fund public broadcasting? I grew up watching Sesame Street, and I don't see why we would need to have government subsidies. At least when PBS started out in the 1960s, you really only had three main TV stations: ABS, CBS, and NBC. Now, there is so much more in the way of educational media. You have the Discovery Channel, the National Geographic Channel, amongst the other educational TV programming and educational online media out there (YouTube is but one example of innovative, disruptive technology, as well as online streaming that PBS and NPR make available). If public broadcasters cannot function in a multi-media world or find the ability to find a sustainable business model, what does that say about the quality of programming? If the programming continues to be great, then people will continue to make donations to PBS and NPR. If you can't make it without corporate sponsorship, then you might need to have commercials in your PBS programming to continue funding it.

None of this gets into the politics behind it. Much like I brought up about five years ago with government arts funding, I worry when the government has purse strings attached to subsidies. I don't need to invoke totalitarian examples to tell you that when government will have a say in content, and that the politics will follow. Remember when Juan Williams was fired from NPR back in 2010? This led to the ousting of then-CEO Vivian Schiller and executive Ellen Weiss, all for political reasons. This sort of control over limiting content and worrying about political backlash limits the potential of public broadcasting. Government funding doesn't hold PBS and NPR back just because of the politics, but also the inability to fully adapt to the evolving world of media (see video below).

To consolidate the main points, removing federal government funding would not mean the end of PBS and NPR. Even if it is financially more difficult, PBS and NPR should be able to survive just fine if they can maintain high quality in their programming. Furthermore, technology and development in the media industry make it more possible than ever for people to receive quality programming. Government funding comes with strings attached, makes it harder to compete in a constantly growing market, and thus more difficult for PBS and NPR to reach their full potential. In short, removing federal government funding would do everyone a favor, even those over at PBS and NPR.

Thursday, March 16, 2017

Is the GOP's Obamacare Replacement Even Worse Than Obamacare?

Ever since the Affordable Care Act (ACA), or known more colloquially and accurately as Obamacare, has become law, we have seen premiums skyrocket, enrollment numbers stay well below expectation, a sizable number of people unable to keep their preferred doctor, the cost of Obamacare as higher than projected, and less healthcare options are available. Given all the downsides, it should not shock anyone that I am not a fan of Obamacare. Up until last November, it did not look like there was an end to Obamacare in sight. Unless the Republicans were able to control both the executive and legislative branches, repealing and replacing Obamacare would have been impossible. But here we are: a government in which Republicans control both the legislative and executive branches of the federal government. Within the first 100 days, what does Congress do? They propose their plan to reform the healthcare system: the American Health Care Act (AHCA).

This 123-page bill is a partial repeal of Obamacare that uses reconciliation, which is a legislative process to pass budgetary matters through the Senate with a simple majority. Reconciliation is being used because the Democrats can filibuster if there aren't 60 Senators on board, which there are not. This is a procedural gimmick to try to reform as much as politically feasible. What exactly is it that the Republicans are looking to pass? The bipartisan Committee for a Responsible Federal Budget (CRFB) provides a good summary of the provisions here, but here is a summary list:

  • Remove the individual mandate and replace it with a "Continuous Health Insurance Coverage Incentive." The Incentive is that if someone has a two-month gap in their coverage and decides to go back to being covered, they are hit with a 30 percent surcharge. 
  • Repeal the vast majority of taxes in the Affordable Care Act.
  • Remove the regulation prohibiting insurers from charging older enrollees more than three times than younger ones. 
  • The definition of a "qualified health care" expands to the point where catastrophic coverage is legal once again, and that insurers are not mandated to sell Gold and Silver plans. 
  • Continue with Obamacare's Medicaid expansion plan for three more years, and then convert Medicaid funding to add a per-capita cap on states to reform Medicaid. 
  • Convert tax credits from being income-based to means-tested, i.e., mostly based on age but partially on income. 

There are other provisions, but those just mentioned are the main ones. Let's be clear: Obamacare needs to be repealed and replaced. However, the catch is that for "repeal and replace" to work, the replacement needs to be an improvement upon the status quo. Otherwise, what is the point? The question of the day is whether or not the AHCA better than the ACA. The nonpartisan Congressional Budget Office (CBO) came out with their much-awaited report earlier this week on cost estimates for the AHCA, which will be used as the basis for analysis here.

Effects on Federal Budget
As the chart below shows, the AHCA saves $337 billion in deficits over the next decade. Some criticize it as as a huge tax cut for the rich, but given how problematic long-term debt is, it's nice to see the U.S. government actually cut back on spending. The spending does have an effect on Medicare. Repealing the 0.9 percent Hospital Insurance tax is going to accelerate Medicare insolvency by two to three years. Medicaid is also going to be cut substantially. However, given that health care outcomes for those on Medicaid are either no better (or often worse) than no insurance at all, it should give us reason to pause.

Source: CRFB

Effects on Premiums and Overall Cost
On average, premiums will be higher by 15 to 20 percent in 2018 and 2019. However, over the next decade, premiums will be 10 percent lower on average than they would be under Obamacare (CBO, p. 3). Two main findings regarding premiums (see below): 1) If you're younger, the ACHA is a better deal. If you're older, not so much. 2) Poorer people do not fare as well, particularly those who are older. A report from Avalere, a healthcare consulting firm, also shows that low-income and older people will incur higher costs for failing to purchase health insurance because the tax credits shift the benefits more upward on the income scale. [3/26/2017 Addendum: Urban Institute provides a breakdown on the premium by income bracket].

The ACHA accomplishes the effect on the poor in two ways. One is that raises the ceiling on the age-rating rules. Under Obamacare, insurers can only charge older people up to three times what they charge younger people. Although the idea was to not bombard older people with medical bills, there are still unintended consequences that were not desirable. Now, the insurers can charge five times the amount. The idea behind this shift is to make it more affordable for younger people to opt in. The second way is that the ACHA abandons the income-based tax credits for a primarily means-based tax credit for those making less than $75,000. What this means is that because the tax credit is the same for all recipients, the financial effect is more pronounced for those who make less. Flat tax credits that are mean-based are problematic because they disproportionately affect the poor.

Effects on Coverage
The CBO report shows that  in comparison to the trajectory of the current law, there will be 24 million less people who will receive coverage as a result of the AHCA, which is much higher than Standard and Poor's preliminary estimate of 6 to 10 million. We have to ask ourselves why the enrollees are dropping. While the report admits that the subsidies for the Medicaid program play an important role, so does removing the individual mandate:

"Most of the [14 million people losing their insurance by 2018] would stem from repealing the penalties associated with the individual mandate. Some of the people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums." (CBO, p. 2)

This would mean that many of the people are not "having their insurance taken away," but rather people voluntarily making choices about what to spend their money on instead of being forced into it.[3/26/2017 Addendum: The American Action Forum took a look at the breakdown of the 24 million losing coverage (see below). 11 million are "losing" coverage because they are not being forced into buying insurance.]

Postscript: There are some questions unanswered in the CBO report, such as impact on employment, economic growth, or whether the AHCA will provide patients with more and better options or not. Even so, we can already get some answers about how this bill is, even if there is reason to believe the CBO numbers are overstated (see here and here). There are some positive features about the AHCA. Medicaid is not sustainable in its current form, and barely can provide minimal care for patients. Something needed to be done to incentivize states to innovate and focus their resources on the most vulnerable. But that is not all the positive here. We'll see premiums on average drop by 10 percent over the next decade, which will help millions of Americans. By liberalizing the definition of a qualified health plan, the AHCA also provides Americans with more choices, which makes it easier for Americans to find a plan that better suits their needs. Removing the age-rating provisions not only encourages more youth to join the exchanges, but by assessing actuarial risk, health insurance acts more like insurance and less like a subsidy for healthcare.

This does not mean the bill is great. If you are young and/or richer, then you will see benefit through lower cost. If you are poorer, it is not as good, especially if you are old and poor. The Left bemoans the AHCA as an assault on the poor and a stealth attack on Medicaid. Even the libertarian Cato Institute and conservative Heritage Foundation think that this is not a repeal, and instead is a slightly different version of Obamacare. From their point of view, the AHCA tweaks some of the financing aspects while ignoring the insurance regulations (e.g., the community-rating price controls) that drove up premiums in the first place. The AHCA might even exacerbate some unintended consequences, like the death spiral, encouraging even more people to go onto Medicaid before the window closes in 2020, or exhausting Medicaid funds. The CBO already found that a partial repeal would be worse than full repeal, so the Republicans should get their hands fully dirty and go for full repeal (heck, the 2015 reconciliation bill did more to dismantle Obamacare than the AHCA does).

We also have to remember that our choice is between the ACA (Obamacare) and the AHCA. We don't get the luxury of utopia. Even if Obamacare were left alone, it would have still been a disaster waiting to happen. Obamacare was like building a house on a lousy foundation. The replacement bill is like trying to fix this decrepit house by giving it a paint job or replacing one or two appliances. Let there be no mistake: the bill still needs plenty of work, and fortunately, the CRFB provides some ways that Congress can improve the bill. But let's be clear: unless the healthcare system gets a major renovation, the future of the quality of healthcare in the U.S. looks bleaker by the minute.

3-20-2017 Addendum: FreedomWorks came out with a good issue brief describing the good, the bad, and the ugly about the AHCA.

Sunday, March 12, 2017

Parsha Ki Tisa: The Half-Shekel, Purim, and a Lesson on Giving

Purim is a Jewish festival of joy. Jews dress up in costumes, read from the Megillah, and enjoy the festivities. There is a somewhat peculiar custom for the holiday of Purim. On the night of Purim, one is supposed to give three half-shekels (מחצית בשקל). While the practice of giving three half-shekels on Purim dates back to Moses Isserles (the Rama), the practice is derived from the Torah. This Purim custom acts as a commemoration to recall when the Israelites donated three half-shekels to the Temple treasury during the Jewish month of Adar. As a matter of fact, the practice comes from this week's Torah portion:

G-d spoke to Moses, saying: When you take a census of the Israelite people according to their enrollment, each shall pay G-d a ransom for himself on being enrolled, that no plague may come upon them through their being enrolled. This is that everyone who is entered in the records shall pay: a half-shekel as an offering to G-d. Everyone who is entered in the records, from the age of twenty years up, shall give G-d's offering: the rich shall not pay more and the poor shall not pay less than half a shekel when given G-d's offering as an expiation for your persons. You shall take the expiation money from the Israelites and assign it to the service of the Tent of Meeting; it shall serve the Israelites as a reminder before G-d, as expiation for your persons. -Exodus 30:11-16

The fact that the word for offering (תרומת) appears three times in this passage is why we give three half-shekels. But it brings up an interesting question: why pay in half-shekels? Why not a whole shekel? A few explanations:

  • Perhaps it is because we are supposed to "put in half" while G-d "puts in the other half." This is to represent that personal effort (השתדלות) and trust [in G-d] (ביטחון). It means that we cannot simply wait for G-d to solve everything, but that we need to take action. This is very apropos for the Purim considering that G-d is not mentioned at all in the Purim story, and is traditionally considered to be hidden throughout the Book of Esther.
  • In Exodus 30:12, the verse says "when you take a census." Going off the Midrash (Midrash Psalms 91:1), Rashi took that to mean that G-d showed Moses a coin of fire. The message is that both fire and the shekel can be beneficial or destructive, depending on its use (Noam Elimelech). The R. Mendel of Kotzk interprets the Midrash as that if one is to seek atonement by giving funds to charity, that deed should be done with a fire, i.e., a burning passion for serving G-d. 
  • Exodus 30:13 says that each Israelite shall pay G-d a "ransom for himself." The fact that R. Benno Jacob see this offering of the half-shekel as the anticipatory shedding of blood in battle, the offering of the half-shekel is teaching us that life is a gift and that we should be happy to be alive. Tobiah ben Eliezer (the Lekach Tov) said that because we don't have a Temple anymore, we show this gratitude for being alive by giving to the poor.
  • On the one hand, we cannot do it by ourselves. We are not meant to live in isolation (Artscroll), and the fact that the half-shekel represents a lack of wholeness drives that idea home. On the other hand, we have a unique contribution to make. Without our contribution, service to G-d is incomplete. The fact that everyone, regardless of socioeconomic status, shows that we all have a contribution to make, whether it was the Israelites to the Temple or what we have to contribute the world as a whole. 
To tie these interpretations to gather, whether it is our words, thoughts, and deeds, we can serve both G-d and our fellow human beings by giving. We don't sit on the sidelines and let G-d do it. We are meant to contribute, and are reminded that what we all have to contribute to the greater goal is important. Much like the Midrash teaches, we are meant to perform that giving with that fire to help out others. Purim is the season of giving that reminds us that joy is in giving. May our contributions to this world be given with a fiery passion!

Thursday, March 9, 2017

Parsha Tetzaveh: Holy Golden Headband, Batman!

"Clothing makes the man."We certainly see that in this week's Torah portion, Tetzaveh (Exodus 27:20-30:10). For over 40 verses in this week's Torah portion, the Torah obsesses over every last detail of what the priests (Kohanim) wear. At first glance, this seems like trivialities, all the more so now that we do not even have a Temple service in with the Kohen dresses up in the priestly uniform. Even with a lack of the Temple, I would like to think that because the Torah is an eternal text, the description of the priestly clothing can be relevant to us. I think this is especially true when considering what the Kohen  had to wear on his head:

יעשית ציץ זהר טהור. ופיתחת עליו פתוחי חתם קדש להי.
-And you shall make a frontlet (headband) and engrave upon it "Holy to G-d." -Exodus 28:36

What about this headband is so special, and why does the Kohen have to engrave that specific phrase on it?

The Talmud (Arachin 16a) points out the juxtaposition between the priestly garments and the animal sacrifices. This juxtaposition is supposed to represent the atonement brought by the sacrifices and the priest. The Talmud elaborates upon each article of clothing further, and says that the frontlet is supposed to atone for brazenness. 

Since the Kohen was acting as a liaison between G-d and the people of Israel, particularly when it came to atonement, I think the sin of brazenness applies to all the people of Israel, even the Kohen Gadol (High Priest). That might sound sacrilegious when first hearing it. After all, the High Priest has a lofty duty. Surely, he wouldn't screw up. But let's think for a second. It's not as if the Kohanim were unaware of their vocation. The Kohanim knew they were the priestly class that served G-d. Then why require a headband that says "Holy to G-d." Doesn't that seem unnecessary given what they already know? At best, it seems redundant or superfluous. 

Yet it is precisely because of the nature of the Kohen's profession that the headband was necessary. One is supposed to wear tzitzit (fringes) to remind them not to sin (Numbers 15:38). Seeing the tzitzit is supposed to influence our behavior (Talmud, Menachot 44a). Even a King is supposed to carry two Torah scrolls to remind him of the power he wields. Tying the tzitzit and the King's commandment to carry two Torah scrolls together, what we see if that the Kohanim are held to similarly high standards, at least in part because power corrupts and absolute power corrupts absolutely.   

According to R. Raphael S. Hirsch, the gold of the priestly garments represents the purity of heart. Purity means 100 percent--no abnormalities or contamination. To do his job, he needs to be of pure mind and pure heart, which is ironic considering it needs its own brand of brazenness and impudence. The priest, like the rest of us, is all too human. Even with the loftiness, there still needs to be that external reminder of his mission: to be "holy to G-d." Given the power that the priest has and the standards for the priestly vocation, the extra reminder provided by the golden headband is all the more relevant. 

What does that mean for Jews in the twenty-first century? As former British Chief Rabbi Joseph Hertz points out, the golden headband is supposed to crystallize the aim and purpose of the priest's service. Much like the priests in past times, we need to provide ourselves many external reminders: tzitzit, tefillin, mezuzah, the list goes on. The Jewish people are meant to be a priestly nation (Exodus 19:6). This goes back to the idea of the Jews being a chosen people and what that really means. Being chosen doesn't mean being superior, but rather having additional responsibilities. Jews are supposed to do mitzvahs, study Torah, pray, do acts of loving-kindness, all of which bring about many directives and expectations. The goal of the Jewish people is to be a light unto nations (אור לגויים). The golden headband reminds us that even if our purpose seems clear as day to us, we still need all the constant and blatant reminders of our mission on G-d's green earth than we can get. 

Monday, March 6, 2017

HUD Secretary Ben Carson Should Cut Back on Section 8 Housing

Last week, retired neurosurgeon Ben Carson was confirmed as the Secretary for the Department of Housing and Urban Development (HUD). What makes Carson's confirmation interesting is that for someone who is going to head the HUD, we know very little about where he stands on such issues as public housing vouchers. We can postulate and take some guesses based on some past statements. In 2015, Carson wrote an op-ed piece in which he criticized an Obama administration fair housing law and called it social engineering and failed socialism. He analogized Section 8 housing to policy in communist countries. Even so, this is not indicative of how he would actually oversee and manage HUD. Rather than ask how he will approach public housing vouchers (because we still don't know), let us ask what he should do.

Before answering that question, let's get into a bit of history about federal government housing in the United States. The federal government really started to provide for public housing through the National Housing Act of 1937. The federal government's role expanded more gradually into President Lyndon Johnson's creation of HUD in 1965. Ever since, HUD has been responsible for providing public housing. One of the biggest programs for federal housing assistance for low-income households is the Housing Choice Voucher (HCV), also known as Section 8 housing. The reason it is referred to as Section 8 housing is because the initial provision comes from Section 8 of the National Housing Act of 1937.

The rationale behind the HCV was that the poor could not afford housing in the private sector. The tenant pays up to 30 percent in rent and utilities, whereas the voucher covers the rest to make the rental more affordable. The voucher pleased liberals because it provided seemingly adequate funding, and conservatives were happy with the voucher because it seemed like a market-oriented approach to steering the private sector to help with a public policy goal. Section 8 housing has existed since 1937, so the question is how well Section 8 housing has done to fulfill its primary mission. The Left-leaning Center for Budget and Policy Priorities (CBPP) unsurprisingly argues in its report on the topic that the HCV provides more good than harm, but I have some reasons to remain skeptical of claims of success.

Cost of Housing Vouchers
According to a Congressional Budget Office (CBO) report from 2015, HUD spent $18 billion on the HCV program (p. 2). This amount is about a third greater than in was in 2000 [in real dollars] (CBO, p. 3), which signals greater government spending for these vouchers. If HUD eliminates Section 8, it would save the federal budget $118 billion over the next ten years. To  expand the HCV to everyone who qualifies under current rules, that would cost $410 billion over the next ten years (CBO, p. 46).

Waiting Lines and No Time Limit on Vouchers
The average stay in public housing for those on the voucher system is 8.3 years (Sieg, 2016). The average stay is so high because the HCV has open benefits, i.e., there is no official time limit. The lack of time limit not only disincentivizes those on the HCV to look for new housing, but it also creates a waiting line. Speaking of that waiting line, about three-quarters of the 20 million people eligible do not even receive assistance (p. 12). Even more interesting, 7.7 million people HUD defines as "worst-case housing needs" did not receive assistance in 2013, which is 50 percent higher than the previous decade (ibid.).

The Effects of Regulations on Housing Prices
I worry about how much regulation adds to the price of a home. Homes that cost under $200,000 only account for 19 percent of the U.S. housing market, which is about half of what they did just five years ago. Tighter land use regulations have made it more difficult for people to migrate in search for better work. Regulations slow down construction projects and exacerbate housing inflation. The question is to what extent. The consultants and analysts over at McKinsey took a look at that question in October 2014, and figured that up to 48 percent would be mitigated by removing a series of regulations. One of the bigger issues with the McKinsey finding is that it pertains to the global market, not the U.S. market. What that means is that other U.S.-specific regulations, such as the Low-Income Housing Tax Credit, are not included in McKinsey's finding. Even so, it still illustrates how much impact that regulation has on making housing unaffordable.

Affordability of Housing, Poverty, and Crime Rates
The HCV picks up the rest of the bill once the tenant pays a maximum of 30 percent of the rent and utilities. However, what the voucher can cover is based on a formula in which the maximum amount covered varies city by city. What does seem to be constant in cities (e.g., Los Angeles) is that it is difficult to afford housing beyond that in bad neighborhoods. This is because the fair-market cutoff point in the formula often cosigns tenants to poor neighborhoods. The dilapidated and run-down public housing throughout the country reminds us the government's failure in housing, and the fact that vouchers concentrate the poverty more so than without vouchers enforces that (Kucheva, 2011). Even if the voucher can cover decent housing, the other challenge is finding a landlord that will accept the tenant, which is easier in theory than in practice.

All of this has bearing on the crime rate. Voucher receipt increases violent crime arrests (Carr and Koppa, 2016), assumedly because of the concentrated disadvantage that results from the HCV. An alternative explanation is that the voucher system is so poorly set up that it drives voucher recipients to neighborhoods with high crime rates because that is all they can afford (Ellen et al., 2012).

Another facet is that of what the vouchers do to the real estate in surrounding areas. Typically, voucher recipients pay rent at market value, although in some cases, they pay even more. One would think that the price of rentals skyrockets because the vouchers artificially increase demand, but a study from the Federal Reserve of Atlanta shows that is not the case (Erikson and Ross, 2013). What keeps the downward pressure on the prices is that the landlord lacks the incentive for upkeep. The reason for this disincentive is the combination of guaranteed flow income along with the waiting lines that perpetuate the inferior quality of housing.

Postscript: I recognize that Housing Choice Vouchers are but one piece of how government policy attempts to make housing more affordable. There is also rent control, the Low-Income Housing Tax Credit, the FHA loan that greatly contributed to the Great Recession, amongst other pieces of the housing market regulation bubble. What I do know is that looking at Section 8 housing by itself (never mind other pieces of HUD's overreach into the housing market), HUD does not have a record of making housing more affordable.

It would be easy to say that the vouchers should be scrapped. After all, the private sector can help provide affordable housing, much like it has in the past. Even with a president who is potentially looking to abolish certain bureaucratic agencies, I cannot assume that eventual dismantlement of HUD is inevitable, even if I personally think that such a behemoth should not exist in the first place.

There are policy alternatives that can at least lead us into the right direction. We cannot create new land, so controlling for the supply of land is more difficult. However, there are other reforms that can be pursued. Add a time limit for receiving vouchers. Increase the share of rent that tenants have to pay. Create more conditions for qualifying for Section 8. Spend less per person while covering more people. Again, there are multiple variables in play. See reports from Urban InstituteBipartisan PolicyAmerican Enterprise Institute, and the Heritage Foundation for more on housing reform.

One last point to make. Even when looking at housing policy, the government cannot look at housing within isolation, but within greater context of living and economic wellbeing. An Urban Institute study shows that those accepting housing vouchers also accept other forms of welfare (see below). The conversation can be taken at three levels: the housing vouchers, the housing market, and the welfare system as a whole. Whichever level you decide to look at the situation, one thing is clear: we need to remove the red tape so that homebuilders can be encouraged to build more. A greater supply of housing means that prices will decrease, thereby making housing more affordable.

Thursday, March 2, 2017

Trump Needs a Friendlier Stance on High-Skilled Immigrant Visas

A couple of days ago, President Trump gave his first speech to Congress. During his speech, Trump made 22 promises, one of them being a more merit-based immigration system. Given Trump's words and actions, I have to wonder what that means. Trump has already signed two immigration-related executive orders of which I disapprove: building a wall on the U.S.-Mexican border and the refugee/travel ban. I know that Trump would like to get around to deporting illegal immigrants/undocumented workers. Trump is well-known for his stance on illegal immigration, but how he would handle legal immigration is less certain.

I am particularly interested in high-skilled immigrant visas here because they should be less politically controversial for two reasons. One is that that these immigrants bring much-needed labor to help the American economy grow, and the other is that visas are not permanent. The most common type of high-skilled immigrant visa is the H1-B visa, which is a temporary, non-citizen visa that allows high-skilled workers in a specialty occupation (mostly for tech firms) to enter the United States and work here for a limited amount of time.

I would like to think that Trump would not be focused on H1-B visas because they are less of a hot-button issue than dealing with undocumented workers. While Trump has bigger fish to fry at the moment, I would not be at all surprised if he eventually went after the H1-B visas. You do not need to look further than his immigration reform brief from the campaign trail if you want to understand his intent. This brief includes how he would like to increase the prevailing wage for H1-B visas so they can compete with their American counterparts, as well as force American workers to be hired before foreign ones. With regards to intent, any time that Trump has expressed a pro-H1-B view, he has retracted the positive view and harps on how H1-B visas take American jobs. Trump's nomination of Attorney General Jeff Sessions also signals how this administration is going to be unlikely to want to let more immigrants into this country. Plus, Congress has already introduced four bills since January addressing H1-B visas. "Merit-based" can either mean more high-skilled immigrants or only less low-skilled immigrants, but based on the evidence in front of us, I surmise that Trump is aiming for less immigrants in general.

Aside from Trump's speech, part of what initiated this blog entry was the University of Chicago's Initiative on Global Markets. This Initiative entails a panel of economic experts that answer questions on various public policy issues. The topic that the economists were asked about last month was high-skilled immigration visas. They were more specifically asked about what would happen if the United States significantly lowered H1-B visas. None of them said it would materially increase tax revenue or employment for American workers.

It should not only be consensus from economists of the effects of lowering H1-B visas that should worry us. Here are a few more reasons to worry about Trump's stance on H1-B visas:
  • Economists from Rutgers and Princeton found that a one percent point increase in college-level immigrants as a share of the population translates into a 9-18 percent increase in patents (Hunt and Gauthier-Loiselle, 2010). 
  • A Harvard study found that a 10 percent boost of H1-B visas for a given city results in an increase of patents in that city by 1 percent (Doran et al., 2015). This same Harvard study also concluded that because the additional output creates such long-term economic growth, it also helps create more jobs for Americans with similar skill sets.
  • As the London School of Economics and Political Science illustrates, from 1990 to 2010, anywhere from 10 to 25 percent of productivity growth is attributable to H1-B visa workers (Peri et al., 2014).
  • In 2013, the Senate was looking to pass some immigration reform (S. 744). Part of that reform was raising the H1-B cap to up too 180,000 (the cap is currently at 85,000 H1-B visas). What would have been the effect? At the time, the Hoover Institution estimated an extra $107 billion of tax revenue and $424 billion in GDP over a ten-year period. 
  • The Right-leaning American Enterprise institute found that between 2001 and 2010, an influx of 100 H1-B visa workers meant an extra 183 jobs for U.S. natives. This influx meant that a 10 percent increase in H1-B visas translated into an increase of native employment by 0.11 percent. 
  • The Right-winged Heritage Foundation, which is notoriously against illegal immigration, published a policy brief in 2008 showing why H1-B visas are a good idea. 
  • More than half of America's start-up companies valued at $1 billion or more have been started by foreign-born workers. 
  • Consulting firm McKinsey finds that increasing the flow of high-skilled immigrants vis-à-vis H1-B visas would boost U.S. innovation and economic growth. The U.S. Chamber of Commerce came to that consensus in its 2011 report, as well as finding that a) STEM fields have low levels of employment for U.S. workers, and b) foreign-based STEM workers don't make much less than their U.S. counterparts. To be fair, some have argued that there is not a shortage of STEM workers, thereby minimizing the need for H1-B visas. 
  • I actually had a friend make a counterargument that we should not have much in way of high-skilled immigrant visas because it could harm developing countries. Two responses to that:
    • If the United States doesn't snatch them up or if the United States creates an anti-immigrant image with its immigration policies, other countries will offer them visas.
    • These immigrants are leaving in part because developed countries offer opportunities, but because their native country cannot. There are many factors that come into play, including economic policy, monetary policy, corruption, infrastructure, literacy rates, and access to health care and birth control. The biggest changes will not come through stifling migration, but if the native country takes on economic policy reform. Look at the World Bank's Ease of Doing Business Index, the Heritage Foundation/Wall Street Journal Index of Economic Freedom, or the Fraser Institute Economic Freedom Index. Developing countries have lousy economic, fiscal, and monetary policy that hinders their growth and ability to attract better capital and labor. A little economic liberalization goes a long way in improving citizens' well-being. 
A liberalized immigration system for high-skilled workers means greater productivity, innovation, and entrepreneurship. While I would call for raising the H1-B visa cap, there are other options that can be pursued: Imbed randomized experiments in our immigrant selection process to get more empirical results. Restructure the prevailing wage scale would be preferable to reducing the number of H1-B visas in computer science and IT, since the latter would likely trigger a WTO dispute and potentially some trade retaliation. Fast-track the STEM green card system to make immigration easier. Create a merit-based system in place of the current lottery system. If President Trump wants to make America great again, he should reform the H1-B to keep sources of innovation coming to this country instead of cutting off a source of economic growth that has been good to the United States in the past.

1-27-2018 Addendum: Here is a policy brief from the National Bureau of Economic Research showing how a reduction in H1-B visas did not translate into more jobs for native workers.