The Bill of Rights was created to protect our individual rights, and the Fourth Amendment was no exception. Our Fourth Amendment states that "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." The Founding Fathers were astute enough to realize that the right of property and expectation of privacy are important for a free society.
This past Tuesday, the Supreme Court did a real number on the Fourth Amendment by ruling on Fernandez v. California. Back in 2006, the Court ruled in Georgia v. Randolph that the police have no constitutional authority to search an individual's premises where one resident disagrees to a warrantless search while another consents. What the 6-3 ruling of Fernandez v. California permits is that in the event that a resident who objects to a police search is removed from the residence through a legal arrest [or merely leaves the premises], a remaining co-resident can provide the police consent to search the premises without demanding a warrant. Until this past Tuesday, the police would have needed to obtain a warrant if a resident refused a warrantless search by the police. That has since changed.
The idea behind the Fourth Amendment is to protect individuals from unreasonable searches and seizures. Much like the Court has put limits on the First Amendment (e.g., Shenck v. United States), the Court has previously ruled on exceptions to the Fourth Amendment, including motor vehicle searches (Carroll v. United States, 1925), evidence in plain view (Horton v. California, 1990), and exigent circumstances (Kentucky v. King, 2011). Even cases of third-party consent searches (United States v. Matlock, 1974) are permissible under United States law. Even if the aforementioned examples can be construed as justifiable, Fernandez v. California is not one of those instances.
In his majority ruling, Justice Alito had stated that "even with modern technological advances, the warrant procedure imposes burdens on the officers who wish to search, the magistrate who must review the warrant application, and the party willing to give consent (III, C)." For Alito, a warrantless search is somehow still in the spirit of the Fourth Amendment, irrespective of the availability (own emphasis added) of a warrant (ibid). Really? If anything, the modern technology makes it simpler than ever to acquire a warrant. Also, a warrant is supposed to burden the police. If a warrant didn't burden the police, they can enter houses on a whim, which is what occurs in police states. If a warrantless search is in the spirit of the Fourth Amendment, then why bother having a Fourth Amendment at all?
Rather than become the norm, Georgia v. Randolph became the narrow exception to the rule of how to handle warrantless searches with regards to a non-consenting resident. In this case, only one consenting co-occupant needs to be present for a warrantless search, irrespective of the physical presence of the [other] non-consenting co-resident. The message that Fernandez v. California sends is that the police can circumvent the law either by arresting the non-consenting resident in order to conduct a warrantless search or wait until the non-compliant individual leaves the premises, after which the police can acquire the permission of a compliant co-resident. Why go through the pain of getting a warrant when you can just play the waiting game or even arrest the suspect? Although the Supreme Court has not provided the police with a carte blanche for warrantless searches, it has nevertheless eroded something that is vital for civil liberties to flourish.
Friday, February 28, 2014
Wednesday, February 26, 2014
Determining the Social Cost of Carbon is Such a Gas
Climate change returns to the Supreme Court. On Monday, the United States Supreme Court heard opening arguments for the case of Utility Air Regulatory Group v. Environmental Protection Agency (EPA) to determine the extent to which the EPA can regulate greenhouse gasses (GHGs). I'll let the lawyers fight out the legal details in the Supreme Court, but it did make me think that if the EPA is going to regulate carbon, how is it going to determine the costs of carbon emissions?
In spite of the efforts by the Office of Management and Budget (2013) or the EPA's collaborative report, it's tricky to discern the social cost of carbon (SCC), which is the projected future marginal cost of emitting an extra metric ton of carbon. Why is that? First, much like any other service the government provides, the government is incapable of adequately providing a value of its output, which is something I blogged about when criticizing the carbon tax about a year ago.
The second reason has to do with the nature of carbon. Carbon dioxide stays in the atmosphere for a century, which is a long time away. It is difficult to determine the effects because modeling the various impacts of climate change is imprecise. How is one supposed to accurately estimate environmental and economic impacts a century from now and tie them directly to current carbon output? Especially from a technological standpoint, but also politically and economically, so much can occur between now and then. Technology, especially technology emitting carbon to improve our lives, is the key to providing us with the ability to adapt to our environment, which is essentially impossible to predict. Also, how do you accurately blame mass migration, civil wars, extreme weather events, or economic cycles, all of which are already difficult to predict, on carbon emissions?!
Much of determining the value of the SCC is based on the computer modeling, also known as integrated assessment models (IAMs) of climate change scenarios, a process that makes me skeptical. Even economist Robert S. Pindyck, who is not a climate change skeptic by any means, points out how useless IAMs are (see here). IAM simulates economic activity in conjunction with our attempt to control carbon, which results in the extent to which we directly cause damage. What's more is that according to the IPCC's 5th Assessment Report (p. 16), its equilibrium climate sensitivity is likely between 1.5° and 4.5°C, which is lower than what the IPCC has predicted in the past. In spite of the lower estimated climate sensitivity (which is important because lower estimations means more time to find solutions to the problem), the SCC estimates just keep increasing. Go figure!
Let's not forget that the OMB is not reporting the global effects separately from the national ones (OMB Guidelines, 6.a.3), which has bearing in the sense that the United States should not go on the futile task of trying to unilaterally stop climate change. They call it "global warming" for a reason. Even with the United States' decrease in carbon emissions, in no small part due to increased natural gas production, there is not much the United States can do if China, the world's largest carbon emitter, does not cooperate.
One also has to contend with the issues behind the discount rate. The discount rate is a reflection of how much one is willing to pay now to avoid future damages. The higher the discount rate, the less significant the future costs. The discount rate captures three important assumptions: "humans prefer to receive benefits in the present rather than the future, that future generations will be richer and a dollar [will be] worth less less to them as a result, and the opportunity cost of capital (that there are a variety of investment options for any given sum)." According to federal guidelines (Section 8), cost-benefit analyses are supposed to include a discount rate of 7 percent, which the OMB forgot to do in the aforementioned 2013 report (the OMB only included 2.5, 3, and 5 percent [Figure 1]). It makes me wonder what the SCC would look like if the 7 percent calculations were included, although I could tell you they would either be negligible or possibly even negative. Given the assumptions made with the discount rate, we should not be so ready to dismiss the 7 percent discount rate as a possibility simply because its consideration has the plausibility of diminishing the SCC.
If the SCC were merely an argument over economic theory, I would consider this a nice, little academic exercise in polemics. However, the Obama administration is using the SCC to determine the extent to which it uses its discretion to regulate carbon emissions. Not only does production become more expensive, but the government is using the SCC to provide itself a carte blanche to regulate virtually any aspect of our lives. If we overprice carbon and it turns out the risk associated with increased carbon output is manageable, then the "War on Carbon" will be for naught.
This is not an argument about the veracity of ACC. It's about the importance of proper risk management and assessment. Especially given the long timeframe and complexity of the variables in the modeling, we need to realize that we cannot prevent every low-probability, high-damage scenario, whether that is downright nuclear war, another terrorist attack, or that ACC will cause such turbulent weather patterns that it will wipe out humanity. Before coming up with solutions and scratching the itch to regulate everything that emits carbon, we should realize the complexities and limitations of IAMs and factor that into policy-making decisions before jumping into climate change policy that could do more harm than good.
In spite of the efforts by the Office of Management and Budget (2013) or the EPA's collaborative report, it's tricky to discern the social cost of carbon (SCC), which is the projected future marginal cost of emitting an extra metric ton of carbon. Why is that? First, much like any other service the government provides, the government is incapable of adequately providing a value of its output, which is something I blogged about when criticizing the carbon tax about a year ago.
The second reason has to do with the nature of carbon. Carbon dioxide stays in the atmosphere for a century, which is a long time away. It is difficult to determine the effects because modeling the various impacts of climate change is imprecise. How is one supposed to accurately estimate environmental and economic impacts a century from now and tie them directly to current carbon output? Especially from a technological standpoint, but also politically and economically, so much can occur between now and then. Technology, especially technology emitting carbon to improve our lives, is the key to providing us with the ability to adapt to our environment, which is essentially impossible to predict. Also, how do you accurately blame mass migration, civil wars, extreme weather events, or economic cycles, all of which are already difficult to predict, on carbon emissions?!
Much of determining the value of the SCC is based on the computer modeling, also known as integrated assessment models (IAMs) of climate change scenarios, a process that makes me skeptical. Even economist Robert S. Pindyck, who is not a climate change skeptic by any means, points out how useless IAMs are (see here). IAM simulates economic activity in conjunction with our attempt to control carbon, which results in the extent to which we directly cause damage. What's more is that according to the IPCC's 5th Assessment Report (p. 16), its equilibrium climate sensitivity is likely between 1.5° and 4.5°C, which is lower than what the IPCC has predicted in the past. In spite of the lower estimated climate sensitivity (which is important because lower estimations means more time to find solutions to the problem), the SCC estimates just keep increasing. Go figure!
Let's not forget that the OMB is not reporting the global effects separately from the national ones (OMB Guidelines, 6.a.3), which has bearing in the sense that the United States should not go on the futile task of trying to unilaterally stop climate change. They call it "global warming" for a reason. Even with the United States' decrease in carbon emissions, in no small part due to increased natural gas production, there is not much the United States can do if China, the world's largest carbon emitter, does not cooperate.
One also has to contend with the issues behind the discount rate. The discount rate is a reflection of how much one is willing to pay now to avoid future damages. The higher the discount rate, the less significant the future costs. The discount rate captures three important assumptions: "humans prefer to receive benefits in the present rather than the future, that future generations will be richer and a dollar [will be] worth less less to them as a result, and the opportunity cost of capital (that there are a variety of investment options for any given sum)." According to federal guidelines (Section 8), cost-benefit analyses are supposed to include a discount rate of 7 percent, which the OMB forgot to do in the aforementioned 2013 report (the OMB only included 2.5, 3, and 5 percent [Figure 1]). It makes me wonder what the SCC would look like if the 7 percent calculations were included, although I could tell you they would either be negligible or possibly even negative. Given the assumptions made with the discount rate, we should not be so ready to dismiss the 7 percent discount rate as a possibility simply because its consideration has the plausibility of diminishing the SCC.
If the SCC were merely an argument over economic theory, I would consider this a nice, little academic exercise in polemics. However, the Obama administration is using the SCC to determine the extent to which it uses its discretion to regulate carbon emissions. Not only does production become more expensive, but the government is using the SCC to provide itself a carte blanche to regulate virtually any aspect of our lives. If we overprice carbon and it turns out the risk associated with increased carbon output is manageable, then the "War on Carbon" will be for naught.
This is not an argument about the veracity of ACC. It's about the importance of proper risk management and assessment. Especially given the long timeframe and complexity of the variables in the modeling, we need to realize that we cannot prevent every low-probability, high-damage scenario, whether that is downright nuclear war, another terrorist attack, or that ACC will cause such turbulent weather patterns that it will wipe out humanity. Before coming up with solutions and scratching the itch to regulate everything that emits carbon, we should realize the complexities and limitations of IAMs and factor that into policy-making decisions before jumping into climate change policy that could do more harm than good.
Monday, February 24, 2014
A Libertarian Argument for Subsidized Birth Control
I can imagine what some of you are thinking right now. "A libertarian argument for subsidized birth control? Really?! Has he been drinking from the statist Kool-Aid?" I know what it seems like at first glance, but hear me out.
A few weeks ago, I found myself in a discussion with a friend and colleague of mine regarding birth control. This discussion began as one about anti-poverty policy alternatives. My colleague suggested an inverse child tax credit, but before we knew it, we were discussing birth control or whether or not it should be subsidized by the government (As a point of reference, this blog entry will not be discussing the infamous Obamacare birth control mandate because mandates and subsidies are conceptually two separate policies). For as long as I can remember, my attitude towards subsidies has been "I've never met a subsidy that I actually liked." Look at unemployment benefits, food stamps, or student loans. These examples of subsidies are all failures that have done nothing to solve the problem, and in certain cases, even have exacerbated the problem. Throughout all my academic studies and research, I have never come across a subsidy that actually works, perhaps until now. What is it about a birth control subsidy that would cause such a reassessment?
Raising a child costs a considerable amount of money. Not to be too tautological, but poor people aren't exactly rolling in the dough. Childcare puts economic strain on poor people due to lack of resources. This is particularly true for those who have unplanned pregnancies. The Census published a report last year showing the connection between out-of-wedlock births and poverty. A Pew Research report (2010) on motherhood demographics shows that nearly half of mothers have a high school degree or less educational attainment, which is disproportionately high when considering educational attainment in this country. Even more recently, a study from Harvard University showed that the single largest factor of economic immobility is single-parent households. Childrearing can be financially strenuous enough for a two-parent household, which makes it a fortiori difficult both for single-parent households, particularly if those mothers have unplanned pregnancies or give birth out of wedlock.
For some, it might be peculiar to think of children as a negative externality, or at the very least, wanting to put a limit on the number of children that are propagated. After all, children are supposed to be a human capital investment in our future. That sounds like a positive externality to me. However, there can be too much of a good thing, and considering the resources that childrearing consumes, children are not an exception to the rule. Even when looking at the economic theory behind positive externalities, it's not as if any positive externality has infinite value. If they did, that would certainly make for some messed up policies! The socially desirable output [of children] has a quantifiable limit, and a lot of that has to do with the fact that we have scarce and limited resources. Women from disadvantaged backgrounds have great difficulty adequately managing their fertility (Salas, 2013), and when that is combined with how we should approach and prioritize positive externalities, that brings the debate on birth control into a different light.
Economic mismanagement notwithstanding, there is a societal aspect to this discussion. In spite of the fact that "sex is everywhere on television," abortion is legal, and pornography is considered free speech by the Supreme Court, a sizable amount of Americans are still puritanical when it comes to sex, whether it comes in the form of condemning prostitution, teenagers having sex, or sex education that isn't abstinence-only. There is a societal stigma against birth control (Sauer et al, 2013), particularly in more religious communities, that causes a decrease in the demand of birth control, as does a lack of sex education. There is also the issue of the high costs of contraception. Whatever is causing the low demand, this a textbook case in which current demand is lower than the marginal social benefit.
Birth control comes with its advantages. According to the Contraceptive Choice Project, an extensive study performed by the Washington University School of Medicine, contraception leads to a drop both in unwanted pregnancies and abortions. There are also the health benefits of birth control beyond pregnancy prevention. In a longer-term sense, there is increased educational attainment, increased family savings, and stronger national economies. It's nice to list the cost and benefits, but it's even nicer to have a cost-benefit analysis, which the Brookings Institution recently performed. If the government were to enact a $235M program through Medicaid, it would produce a benefit-cost ratio of 5.6 (Thomas, 2012, p. 6), which is high rate of return for any government program.
Even if the benefits greatly exceed the costs, that does not seem like a prima facie libertarian justification to allow for this subsidy. It would be nice is there were not a stigma towards contraceptives, but it exists. For anarcho-capitalists, it would be great to live in a world without government intervention, but that pipe dream is strictly reserved for economic textbooks. Rather than have an all-or-nothing approach, we should ask ourselves which scenario would translate into less overall government.
The Brookings Institution report brought up a good point, which Thomas explained while outlining what he couldn't measure in his study: "The prevention of unintended pregnancy would probably also reduce government expenditures on the criminal justice system, on means-tested benefits for older children and adults, and on a a range of other spending programs not incorporated into this analysis. Had sufficient data been available to allow for a more complete accounting of the taxpayer savings that would be generated bt these policies, my estimates of the monetized benefits of these policies would be even larger (ibid)." Considering the cost of public schooling, Thomas should have also added government expenditures on public education into his list. Even so, let me put his thoughts into simpler terms: when looking at the grand scheme of things, a birth control subsidy would mean smaller government, which means that doing nothing would paradoxically mean more Big Government.
There are the issues of whether a birth control subsidy would further moral hazard (e.g., if contraception leads to higher incidence rates of sexual activity, which leads to more STDs) or if it would adversely contribute to fertility being below the replacement rate, although the latter does not seem to be a contributing factor to Europe's declining fertility rate. We should still continue the discussion of how to decrease poverty, address societal stigmas towards sex and birth control, as well as encourage individuals who want to have children to get married before giving birth because these are related policy issues that, if mitigated, would diminish the need for a birth control subsidy.
In summation, even if it means a slight, relatively non-intrusive form of government intervention, I would rather take that over a sizable increase of government spending any day of the week.
A few weeks ago, I found myself in a discussion with a friend and colleague of mine regarding birth control. This discussion began as one about anti-poverty policy alternatives. My colleague suggested an inverse child tax credit, but before we knew it, we were discussing birth control or whether or not it should be subsidized by the government (As a point of reference, this blog entry will not be discussing the infamous Obamacare birth control mandate because mandates and subsidies are conceptually two separate policies). For as long as I can remember, my attitude towards subsidies has been "I've never met a subsidy that I actually liked." Look at unemployment benefits, food stamps, or student loans. These examples of subsidies are all failures that have done nothing to solve the problem, and in certain cases, even have exacerbated the problem. Throughout all my academic studies and research, I have never come across a subsidy that actually works, perhaps until now. What is it about a birth control subsidy that would cause such a reassessment?
Raising a child costs a considerable amount of money. Not to be too tautological, but poor people aren't exactly rolling in the dough. Childcare puts economic strain on poor people due to lack of resources. This is particularly true for those who have unplanned pregnancies. The Census published a report last year showing the connection between out-of-wedlock births and poverty. A Pew Research report (2010) on motherhood demographics shows that nearly half of mothers have a high school degree or less educational attainment, which is disproportionately high when considering educational attainment in this country. Even more recently, a study from Harvard University showed that the single largest factor of economic immobility is single-parent households. Childrearing can be financially strenuous enough for a two-parent household, which makes it a fortiori difficult both for single-parent households, particularly if those mothers have unplanned pregnancies or give birth out of wedlock.
For some, it might be peculiar to think of children as a negative externality, or at the very least, wanting to put a limit on the number of children that are propagated. After all, children are supposed to be a human capital investment in our future. That sounds like a positive externality to me. However, there can be too much of a good thing, and considering the resources that childrearing consumes, children are not an exception to the rule. Even when looking at the economic theory behind positive externalities, it's not as if any positive externality has infinite value. If they did, that would certainly make for some messed up policies! The socially desirable output [of children] has a quantifiable limit, and a lot of that has to do with the fact that we have scarce and limited resources. Women from disadvantaged backgrounds have great difficulty adequately managing their fertility (Salas, 2013), and when that is combined with how we should approach and prioritize positive externalities, that brings the debate on birth control into a different light.
Economic mismanagement notwithstanding, there is a societal aspect to this discussion. In spite of the fact that "sex is everywhere on television," abortion is legal, and pornography is considered free speech by the Supreme Court, a sizable amount of Americans are still puritanical when it comes to sex, whether it comes in the form of condemning prostitution, teenagers having sex, or sex education that isn't abstinence-only. There is a societal stigma against birth control (Sauer et al, 2013), particularly in more religious communities, that causes a decrease in the demand of birth control, as does a lack of sex education. There is also the issue of the high costs of contraception. Whatever is causing the low demand, this a textbook case in which current demand is lower than the marginal social benefit.
Birth control comes with its advantages. According to the Contraceptive Choice Project, an extensive study performed by the Washington University School of Medicine, contraception leads to a drop both in unwanted pregnancies and abortions. There are also the health benefits of birth control beyond pregnancy prevention. In a longer-term sense, there is increased educational attainment, increased family savings, and stronger national economies. It's nice to list the cost and benefits, but it's even nicer to have a cost-benefit analysis, which the Brookings Institution recently performed. If the government were to enact a $235M program through Medicaid, it would produce a benefit-cost ratio of 5.6 (Thomas, 2012, p. 6), which is high rate of return for any government program.
Even if the benefits greatly exceed the costs, that does not seem like a prima facie libertarian justification to allow for this subsidy. It would be nice is there were not a stigma towards contraceptives, but it exists. For anarcho-capitalists, it would be great to live in a world without government intervention, but that pipe dream is strictly reserved for economic textbooks. Rather than have an all-or-nothing approach, we should ask ourselves which scenario would translate into less overall government.
The Brookings Institution report brought up a good point, which Thomas explained while outlining what he couldn't measure in his study: "The prevention of unintended pregnancy would probably also reduce government expenditures on the criminal justice system, on means-tested benefits for older children and adults, and on a a range of other spending programs not incorporated into this analysis. Had sufficient data been available to allow for a more complete accounting of the taxpayer savings that would be generated bt these policies, my estimates of the monetized benefits of these policies would be even larger (ibid)." Considering the cost of public schooling, Thomas should have also added government expenditures on public education into his list. Even so, let me put his thoughts into simpler terms: when looking at the grand scheme of things, a birth control subsidy would mean smaller government, which means that doing nothing would paradoxically mean more Big Government.
There are the issues of whether a birth control subsidy would further moral hazard (e.g., if contraception leads to higher incidence rates of sexual activity, which leads to more STDs) or if it would adversely contribute to fertility being below the replacement rate, although the latter does not seem to be a contributing factor to Europe's declining fertility rate. We should still continue the discussion of how to decrease poverty, address societal stigmas towards sex and birth control, as well as encourage individuals who want to have children to get married before giving birth because these are related policy issues that, if mitigated, would diminish the need for a birth control subsidy.
In summation, even if it means a slight, relatively non-intrusive form of government intervention, I would rather take that over a sizable increase of government spending any day of the week.
Saturday, February 22, 2014
Something Is Rotten With the State of Denmark's Ritual Slaughter Ban
This past Monday, Dan Jørgensen, who is the Danish Minister for Food, Agriculture, and Fisheries, introduced a de facto ban on the ritual slaughter of meat. His reason for the ban is because any slaughtering of meat that does not include stunning, which is tantamount to animal cruelty. This ban affects the Jewish method of animal slaughter (שחיטה; shechita), as well as the Islamic practice of halal (حلال), because neither entails stunning. What I would like to do here is threefold: 1) explain the idea behind shechita, 2) provide a brief primer of animal rights and welfare within the context of public policy and political philosophy, and 3) assess the validity of the Danish ban.
Animal Slaughter in Jewish Law
The practice of שחיטה is derived from the Torah (Numbers 11:22; Deuteronomy 12:21, 14:21). Although a Jew is not obligated to eat meat, one can nevertheless eat meat if it is slaughtered under to provisions under Jewish law. While it is permitted to eat meat in Judaism, Judaism makes it a point to show compassion in its treatment of animals, and this compassion is also illustrated in the practice of שחיטה. For one, the slaughter is performed by a trained professional known as a shochet (שוחט). Two, the knife, known as a סכין, cannot have the slightest nick or scratch on the blade so the שוחט can make as clean of a cut as possible. The cut itself is an uninterrupted cut with precision along the animal's throat to stun, exsanguinate, and kill within a single, relatively painless coup. The issue with stunning animals for slaughter here is that it injures the animal during the slaughtering process, which renders the meat not kosher under Jewish law. Judaism maintains that healthy balance between the idea we should not be needlessly cruel to animals and that animals are not on equal footing with humans. The animus towards שחיטה has more to do with the misperception that "religion is archaic and barbaric" than it does with the merits of the actual practice itself.
Animal Rights and Welfare in Political Philosophy and Public Policy
The moral status of animals is up for debate, much like many other polemic issues. The status of animals in a philosophical context varies from animals being morally equivalent to humans, to being the mere property of humans, and everything in between. It should not be that difficult to dismiss the idea that animals are equal to humans. What is implicit in having rights is having responsibility. Animals are instinctive creatures, and as such, lack free will, mens rea, or even a sense of right and wrong to truly be accountable for their actions. Those are characteristics specific to the human condition. Animals are incapable of entering a social contract, which is why when a dog bites a human being or one animal eats another, animals are not prosecuted in a court of law. If animals were equal under the law, roadkill or hunting would be deemed manslaughter, swatting a fly would be murder in the first degree, putting down one's pet would be euthanasia, exterminating termites or a beehive would be genocide, and owning pets would be a violation of the Thirteenth Amendment.
If we weren't going to go down the route of complete lunacy by treating animals equal to humans, even legalizing some form of animal welfare can be tricky. On the one hand, the idea of treating animals more kindly, contra Michael Vick, has become more of a value in society because animals are also sentient beings. On the other hand, and something I will elucidate upon momentarily, how do we draw the line of "unnecessary animal suffering?" Regardless, the practice of שחיטה does not add a sense of undue suffering to the animal because if that were the case being made, the a fortiori conclusion would be that meat consumption would have to be made illegal, which is only something you see the radical animal rights activists advocating.
What is Jørgensen trying to pull?
When passing the ban, Minister Jørgensen had stated that "animal rights come before religion," which I personally don't find inspiring because he's making the statement that animal rights supersede human rights. Jørgensen was also the president of an animal rights group, so it makes me ask about the extent to which this is legitimately about animal rights and welfare.
Compared to the entirety of an animal's life, the slaughtering is a small percentage of that animal's life. Is the Danish government going to the abandon factory farms that put its livestock in such squalor conditions as close confinement, restriction or prevention of normal exercise, lack of daylight or fresh air, or the related health issues? Since 25,000 piglets die per day through the Danish factory farming system (don't forget the pigs who have their tails docked), which is one of the most intense pig farming systems in the world, maybe Jørgensen shouldn't be sending the message that the slaughter at the end of the animal's life is more important that how it is treated throughout its entire life.
If the Danish government is this worried about animal welfare, why have animal slaughter be legal in the first place? Those who think sending an electrical current through an animal doesn't cause pain should try it either on their pet or a fellow human being. If animals are to be granted that much consideration, then animal slaughter of all meat should be considered, as well as the practices of hunting, zoophilia, or being the world leader in producing mink pelts. The amount of animals abused, harmed, or killed in other practices in Denmark [or anywhere else, for that matter] far exceeds the number of animals killed during שחיטה or حلال. At a minimum, Denmark should mandate vegetarianism if animal welfare were that sacrosanct.
Practically speaking, this ban will not really affect the lives of Jews or Muslims in Denmark. Some of the imams in Denmark already ruled that حلال with stunning is an acceptable leniency, and Danish Jews have been importing their kosher meat for the past decade. There is not a single kosher slaughterhouse in Denmark, so it makes me wonder why Jørgensen would make the symbolic gesture at all.
A part of me wonders whether or not this is an assault on religious practice. The Danish Constitution (Section 67) is not the most reassuring form of religious freedom, especially in comparison to the First Amendment of the U.S. Constitution. Given the overall secular attitudes of Denmark, it would not be surprising if this were a way to stick it to religion, particularly minority religions that the typical Dane would trouble understanding. This ban could also be a populist, anti-immigration response to the uptick in immigration that has taken place since 1995, and the Jewish community could have incidentally been in the crossfire. Alternatively, this could very well be simple politics. Up until earlier this month, Socialistisk Folkeparti (the Socialist People's Party) was part of the coalition government. Although the next Danish general election isn't until September 2015, it's never too early to pander to the green politics of the Socialist People's Party in the hopes that they maintain the coalition in time for the upcoming election, especially after the Copenhagen Zoo euthanized a perfectly healthy giraffe and fed it to the lions. Unless Jørgensen publicly states an alternative reason or leaves a paper trail behind explicitly explaining why he unilaterally proposed this ban, we won't know what is going on inside his head. Whatever the ultimate reasoning may be, one thing is for certain: this ban has nothing to do with animal welfare.
Animal Slaughter in Jewish Law
The practice of שחיטה is derived from the Torah (Numbers 11:22; Deuteronomy 12:21, 14:21). Although a Jew is not obligated to eat meat, one can nevertheless eat meat if it is slaughtered under to provisions under Jewish law. While it is permitted to eat meat in Judaism, Judaism makes it a point to show compassion in its treatment of animals, and this compassion is also illustrated in the practice of שחיטה. For one, the slaughter is performed by a trained professional known as a shochet (שוחט). Two, the knife, known as a סכין, cannot have the slightest nick or scratch on the blade so the שוחט can make as clean of a cut as possible. The cut itself is an uninterrupted cut with precision along the animal's throat to stun, exsanguinate, and kill within a single, relatively painless coup. The issue with stunning animals for slaughter here is that it injures the animal during the slaughtering process, which renders the meat not kosher under Jewish law. Judaism maintains that healthy balance between the idea we should not be needlessly cruel to animals and that animals are not on equal footing with humans. The animus towards שחיטה has more to do with the misperception that "religion is archaic and barbaric" than it does with the merits of the actual practice itself.
Animal Rights and Welfare in Political Philosophy and Public Policy
The moral status of animals is up for debate, much like many other polemic issues. The status of animals in a philosophical context varies from animals being morally equivalent to humans, to being the mere property of humans, and everything in between. It should not be that difficult to dismiss the idea that animals are equal to humans. What is implicit in having rights is having responsibility. Animals are instinctive creatures, and as such, lack free will, mens rea, or even a sense of right and wrong to truly be accountable for their actions. Those are characteristics specific to the human condition. Animals are incapable of entering a social contract, which is why when a dog bites a human being or one animal eats another, animals are not prosecuted in a court of law. If animals were equal under the law, roadkill or hunting would be deemed manslaughter, swatting a fly would be murder in the first degree, putting down one's pet would be euthanasia, exterminating termites or a beehive would be genocide, and owning pets would be a violation of the Thirteenth Amendment.
If we weren't going to go down the route of complete lunacy by treating animals equal to humans, even legalizing some form of animal welfare can be tricky. On the one hand, the idea of treating animals more kindly, contra Michael Vick, has become more of a value in society because animals are also sentient beings. On the other hand, and something I will elucidate upon momentarily, how do we draw the line of "unnecessary animal suffering?" Regardless, the practice of שחיטה does not add a sense of undue suffering to the animal because if that were the case being made, the a fortiori conclusion would be that meat consumption would have to be made illegal, which is only something you see the radical animal rights activists advocating.
What is Jørgensen trying to pull?
When passing the ban, Minister Jørgensen had stated that "animal rights come before religion," which I personally don't find inspiring because he's making the statement that animal rights supersede human rights. Jørgensen was also the president of an animal rights group, so it makes me ask about the extent to which this is legitimately about animal rights and welfare.
Compared to the entirety of an animal's life, the slaughtering is a small percentage of that animal's life. Is the Danish government going to the abandon factory farms that put its livestock in such squalor conditions as close confinement, restriction or prevention of normal exercise, lack of daylight or fresh air, or the related health issues? Since 25,000 piglets die per day through the Danish factory farming system (don't forget the pigs who have their tails docked), which is one of the most intense pig farming systems in the world, maybe Jørgensen shouldn't be sending the message that the slaughter at the end of the animal's life is more important that how it is treated throughout its entire life.
If the Danish government is this worried about animal welfare, why have animal slaughter be legal in the first place? Those who think sending an electrical current through an animal doesn't cause pain should try it either on their pet or a fellow human being. If animals are to be granted that much consideration, then animal slaughter of all meat should be considered, as well as the practices of hunting, zoophilia, or being the world leader in producing mink pelts. The amount of animals abused, harmed, or killed in other practices in Denmark [or anywhere else, for that matter] far exceeds the number of animals killed during שחיטה or حلال. At a minimum, Denmark should mandate vegetarianism if animal welfare were that sacrosanct.
Practically speaking, this ban will not really affect the lives of Jews or Muslims in Denmark. Some of the imams in Denmark already ruled that حلال with stunning is an acceptable leniency, and Danish Jews have been importing their kosher meat for the past decade. There is not a single kosher slaughterhouse in Denmark, so it makes me wonder why Jørgensen would make the symbolic gesture at all.
A part of me wonders whether or not this is an assault on religious practice. The Danish Constitution (Section 67) is not the most reassuring form of religious freedom, especially in comparison to the First Amendment of the U.S. Constitution. Given the overall secular attitudes of Denmark, it would not be surprising if this were a way to stick it to religion, particularly minority religions that the typical Dane would trouble understanding. This ban could also be a populist, anti-immigration response to the uptick in immigration that has taken place since 1995, and the Jewish community could have incidentally been in the crossfire. Alternatively, this could very well be simple politics. Up until earlier this month, Socialistisk Folkeparti (the Socialist People's Party) was part of the coalition government. Although the next Danish general election isn't until September 2015, it's never too early to pander to the green politics of the Socialist People's Party in the hopes that they maintain the coalition in time for the upcoming election, especially after the Copenhagen Zoo euthanized a perfectly healthy giraffe and fed it to the lions. Unless Jørgensen publicly states an alternative reason or leaves a paper trail behind explicitly explaining why he unilaterally proposed this ban, we won't know what is going on inside his head. Whatever the ultimate reasoning may be, one thing is for certain: this ban has nothing to do with animal welfare.
Friday, February 21, 2014
The GDP at 80: Should We Retire It As a Measure of Progress?
When performing economic or public policy analysis, it's always nice to have sound metrics. Since its inception back in 1934, the gross domestic product (GDP) has been considered the "gold standard" of determining a country's standard of living. Given the change of political economy over the past eighty years and the roles that governments have played since 1934, I was wondering if the GDP is still an outstanding metric, whether it should be accompanied by other metrics, or whether it should be scrapped all together.
First, it would help to know what the GDP actually measures. The GDP is the sum of private consumption (C), gross investment (I), government spending (G), and the trade balance (exports minus imports; X-M) within a given time period, or to put it in equation form:
First, it would help to know what the GDP actually measures. The GDP is the sum of private consumption (C), gross investment (I), government spending (G), and the trade balance (exports minus imports; X-M) within a given time period, or to put it in equation form:
GDP = C + I + G + (X-M)
Using economic output as an indicator of success certainly has its advantages. The GDP measures a nation's buying power, which takes market activity and economic growth into account. The GDP is an indicator that is objective, widely used, consistently calculated across borders, and has readily available data, which makes it easy to measure GDP. Also, there is the matter that countries that have a higher GDP is roughly correlated with having a higher standard of living.
However, the GDP has its flaws. Just to name a few:
However, the GDP has its flaws. Just to name a few:
- GDP only measures quantifiable, monetary economic output. The GDP has nothing to say about the quality of said output. A country could be producing short-lived, cheap, low-quality products. Having to replace cheap goods often versus buying a high-quality item once can artificially increase the GDP. It also does not differentiate between good spending (e.g., education) and bad spending (e.g., cigarettes).
- Disasters and externalities inaccurately increase the GDP. War requires soldiers and ammunition, natural disasters require relief, oil spills and pollution require clean-up, and rampant crime requires more government expenditures towards crime reduction. If these externalities did not have to be cleaned up, our scarce resources could have been applied elsewhere in a more efficient manner, which leads to my next point….
- "Government is inherently good, free trade is inherently bad." What makes the public sector different from the private sector is that the public sector cannot accurately value its output. The private sector at least can use a willingness to pay [reflected in supply and demand] to determine such a value. What is the value of domestic intelligence, the worth of government's subpar operating of preschool, or the benefits of carbon reduction? If the government produces something of little or no value whatsoever, the GDP framework would count this squandering of resources as economic growth (The same works if such waste happens in the private sector and gross investment). Under this framework, even financing of debt with the central bank printing money en masse followed by increased amounts of government spending is considered a plus in the GDP formula! A framework that says that government spending is always good is problematic in my book. Furthermore, it makes the erroneous assumption that net imports (read: free trade) are harmful.
- Omission of non-market activities. Transactions that are not counted in the GDP are volunteer work, household services provided by [stay-at-home] parents, production solely for one's consumption, barter, or the underground economy.
- Other measurements matter. There is more to success than economic output, and that includes happiness, the value of leisure time, literacy, quality of health care, social cohesion, child welfare, maternal mortality, quality of labor, and environmental impact.
- Does not account for distribution of wealth. The GDP is a macroeconomic indicator that looks at the economic wealth of a country as a whole. It does not break down the distribution to determine poverty levels or income inequality. Although GDP per capita does a more-than-decent job of capturing the average individual's wealth, in the even that a country has an absurdly high Gini coefficient, the average wealth and well-being measured in per capita terms becomes misrepresented.
Wednesday, February 19, 2014
Even the CBO Recognizes the Unintended Consequences of Minimum Wage
My guess is that this was in reaction to Obama wanting to raise minimum wage, but even if that's not the case, it was fun to read the Congressional Budget Office (CBO) published a report yesterday on the effects on minimum wage. What did the CBO have to say about minimum wage? Here are a few of my favorite points from the report:
While minimum wage helps some people escape poverty, which is to be expected, it is not at all surprising that minimum wage also renders 500,000 citizens unemployed, thereby making it more difficult for others to escape their economic plight. There are arguably better policies to deal with low wages, such as the Earned Income Tax Credit or a wage subsidy. 500,000 unemployed might not sound too bad, but combine that with the Obamacare-induced job loss of nearly 2.5 million full-time equivalent, and you're talking about a whole lot of job loss on Obama's watch. In spite of the CBO's methodology that overstates benefits and understates costs, it's refreshing to confirm what I have been saying about minimum wage all along (see here, here, here, and here), which is that minimum wage creates more joblessness, it's far from being a silver bullet for eradicating poverty, and employers will find ways to pass on the costs to compensate for the wage increases.
- By the end of 2016, "[raising the minimum wage to the] $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent (p. 1)." Aside from the fact that this number was close to the prediction I made last week, I find it interesting that in order to lift 900,000 people out of poverty (p. 3), it would be acceptable for some to "pay" the price of making 500,000 unemployed, which is odd for a policy that is allegedly anti-poverty.
- "The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO's estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion [i.e., $5.89B] would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold (p. 2)." Why is it that a policy that is supposed to fight poverty helping out the middle class more than it is the poor?
- "Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices (p. 2)."
- "The net effect on the federal budget of raising the minimum wage would probably be a small decrease in budget deficits for several years but a small increase in budget deficits thereafter (p. 2)."
- Even with the overall, net real income increases that the CBO estimates, "real income would decrease, on net, by $17 billion for families whose income would other have been six times the poverty threshold or more, lowering their average family income by 0.4 percent (p. 3)."
- "At first, when the minimum wage rises, some firms employ fewer low-wage workers, while other firms do not; the reduced employment is concentrated in businesses and industries where higher prices result in larger reductions in demand. Over a longer time frame, however, more firms replace low-wage workers with inputs that are relatively less expensive, such as more productive higher-wage workers. Thus, the percent reduction in employment of low-wage workers is generally greater in the long term than the short term (p. 7)." Or in layman's terms, "way to stick it to poor people by making it harder to find work!"
- "In the long term, [the] reduction in the workforce lowers the nation's output and income a little (p. 8)."
- "About 16.5 million workers who will earn less than $10.10 per hour under current law would receive higher wages (p. 11)." I bring this up because the White House estimated that 19 million would direct benefit from the minimum wage hike, which just makes the White House look bad for overestimating the benefits to make a point.
- "The Affordable Care Act's requirement that many employers provide health insurance (or pay a penalty if they do not) will impose an additional cost on employers for some low-wage workers who do not currently have employment-based health insurance. CBO expects that the cost will ultimately be broke by workers through lower wages; but before that adjustment has fully taken effect, the cost further boosts the likelihood that employers' savings from reducing the size of their workforces would exceed their adjustment costs (p. 23)."
While minimum wage helps some people escape poverty, which is to be expected, it is not at all surprising that minimum wage also renders 500,000 citizens unemployed, thereby making it more difficult for others to escape their economic plight. There are arguably better policies to deal with low wages, such as the Earned Income Tax Credit or a wage subsidy. 500,000 unemployed might not sound too bad, but combine that with the Obamacare-induced job loss of nearly 2.5 million full-time equivalent, and you're talking about a whole lot of job loss on Obama's watch. In spite of the CBO's methodology that overstates benefits and understates costs, it's refreshing to confirm what I have been saying about minimum wage all along (see here, here, here, and here), which is that minimum wage creates more joblessness, it's far from being a silver bullet for eradicating poverty, and employers will find ways to pass on the costs to compensate for the wage increases.
Monday, February 17, 2014
A Bit of Contemplation on Bitcoin's Viability as an Alternative Currency
A week ago, hackers exploited a flaw in the code to attack Bitcoin exchanges. In spite of the technical difficulties at Mt. Gox, which is a Bitcoin exchange based in Tokyo, it looks like that will not impede the growing trend of Bitcoin. My libertarian friends have really been enthused about the prospectives of Bitcoin, but up until now, I never really took the time to understand it. What exactly is Bitcoin? Why is it so alluring for my libertarian friends? Does it have a future in the currency market?
For those who were wondering Bitcoin is (see primers from Federal Reserve Bank [FRB] of Chicago, Mercatus Center, and Congressional Research Service), Bitcoin is a fiduciary cryptocurrency using a decentralized system known as peer-to-peer (P2P), which means that there is no third-party intermediary. Up until 2013, a bitcoin was a worthless currency. After that, the price for a bitcoin increased substantially (see chart below), and has shown exceptional price volatility ever since, which has brought in some doubts about its long-term stability, especially if it causes a speculative bubble. So why use it in the first place?
For one, it has relatively low transaction costs. The joy of the P2P system is that the lack of an intermediate. Paypal and credit card companies charge larger transaction fees to validate electronic transactions. The lower costs can be offset either by its volatility or by the period of time it takes for the transaction to complete (FRB, p. 3). Those who want more privacy, particularly those looking to avoid identity theft, would derive benefit from the Bitcoin system. Bitcoin currency is also exceptionally portable, divisible, and scarce. The value of Bitcoin market has peaked $20B to date (CRS, p. 3), which exceeds that of some small, developing countries. Bitcoin can also provide better access to financial instruments, which can alleviate poverty in developing countries (Mercatus, p. 14).
Aside from the previously mentioned transaction times and volatility (CRS, p. 7), the latter of which can be mitigated by the possibility that the Bitcoin's fluctuations are merely a stress-test, there are some downsides to Bitcoin. First, the currency's anonymity, or more specifically, pseudonymity, encourages tax evasion and money laundering (Mercatus, p. 23). Maintaining the Bitcoin's advantages while diminishing criminal use will prove to be a challenge. The Bitcoin "mining" process has its environmental costs. Also, it has a long-term deflationary bias (CRS, p. 7), a lot of which has to do with the system being arbitrarily set up a ceiling to only produce 21 million bitcoins (conversely, the idea here is to make sure that [hyper]inflation is avoided, not to mention incentivizing long-term investment), which will theoretically never hit the ceiling due to Bitcoin's divisibility. Additionally, the Bitcoin code and network is opaque and vulnerable, much like we have seen with Mt. Gox, which makes me question its reliable store of value and overall security (CRS, p. 8). Its relative intangibility renders bitcoins prone to loss. Bitcoin is still so new that it is currently not legal tender in any country, nor is it recognized as an official currency by any regulatory authority.
A currency that can compete with the monopoly of central banks has its appeal. It would be nice to see a competitive market in the currency market. The creation of Bitcoin illustrates the demand and desire for people to have the economic freedom to liberally transact. However, Bitcoin is still too new to determine its longevity because it is a disruptive innovation. It will take a few years after the Bitcoin system can work out the kinks, after which it will be much easier to discern whether bitcoins will become a currency in the global finance system or will be relegated to the dustbin of economic history.
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