- Israel is the only democratic country in the Middle East. According to Freedom House, "Israel is a multiparty democracy with strong and independent institutions that guarantee political and civil rights for most of the population."
- Israel is the most accepting of LGBT individuals in Middle East, and indeed, the entirety of Asia. Israel is also home to one of the most gay-friendly cities in the world: Tel Aviv.
- Israel is consistently ranked as one of the happiest countries in the world. In the 2018 World Happiness report, Israel ranked as the 11th happiest country.
- Israel contains holy sites of the three major Abrahamic religions: Christianity, Islam, and Judaism.
- Israel has had 12 Nobel Prize winners, which ranks Israel 15th on the list for number of Nobel Laureates. When adjusted for per capita, that ranking increases to 12th.
- With more than 200 museums, Israel boasts of having the most museums per capita in the world.
- Israel's intelligence apparatus has helped thwart terrorist attacks in multiple countries (see here, here, here, and here).
- Israel leads the world in recycling wastewater at 90 percent. This is at least four times more than any other country.
- Israel has 3.5 physicians per 1,000 people, which is well above the world average of 0.3 physicians, and exceeds many developed countries (World Health Organization).
- From a linguistic standpoint, Israel was able to do something no other group of people has done, which is take a dead language (at least in the vernacular sense), revive it, and have it spoken by an entire nation of people.
- Israel has two official languages: Hebrew and Arabic. Throughout the land of Israel, you can see signs in Hebrew, Arabic, and English, thereby showing another example of inclusiveness.
- For the first time in centuries, there is an actual Jewish state. With the rise in anti-Semitism, if Jews want to leave their currently brutal living situation, they have somewhere safe to go. The same could not be said for Jews during the Holocaust, which is another reason I am glad that Israel exists.
- Israel ranked 10th on the 2018 Bloomberg Innovation Index. In terms of sub-categories, Israel ranked first on researcher concentration and R&D intensity.
- Intel's presence in Israel has been significant in technological research and development, and has brought such advancements as the P55C chip, Core i7, and the Skylake microprocessor.
- The technology for Voice Over Internet Protocol (VOIP), you know, the technology that brought you such services as Skype, was created in Israel.
- Four Israelis at Mirabilis developed ICQ, which is the technology that allowed for instant messaging.
- Polish-Israeli engineer Simcha Blass was responsible for developing the modern-day drip irrigation system, which helps save water and nutrients in the agricultural process.
- In 2017, Israel led venture capital on a per capita basis with $447.17.
- Israel's success with Iron Dome has been great enough that Europeans have caused a boom in Israel's defense exports.
- Israel is a prominent player in the solar power market, and is looking to acquire 17 percent of its energy from solar power by 2030.
- The Israeli economy is one that is developed enough (see latest IMF report here) where it is part of the OECD, not to mention the number of trade agreements. Per Heritage Foundation's Index of Economic Freedom, Israel has improved enough over the past decade where it went from being categorized from "Partly Free" to "Mostly Free."
- The Israeli Defense Force provided the self-defense and fighting system known as Krav Maga.
- Being surrounded by four bodies of water (Mediterranean Sea, Dead Sea, Red Sea, Sea of Galilee), there are plenty of beaches to go to in Israel.
- Shawarma and hummus. Need I say more?
- As a hat-tip to current events, Israel represented at Eurovision 2018 and won this past weekend.
Monday, May 14, 2018
Israel at 70: 25 Reasons to Love Israel
Seventy years ago on the Gregorian calendar, the Israeli Declaration of Independence was proclaimed. The Declaration established a Jewish state in the land of Israel, which came into effect right after the termination of the British Mandate on May 14, 1948. The state of Israel already celebrated Israeli Independence Day (יום העצמואת) last month since it was commemorating the Declaration on the Jewish calendar, and not the Gregorian one. It is on this anniversary that I would like to provide a list of reasons to love Israel, and I will preface by saying that the list is not a complete one.
Friday, May 11, 2018
Foie Gras Ban in the United States: Oui ou Non?
You know you are a public policy nerd when you read an amicus curiae brief for fun. That is what I caught myself doing recently. A few weeks ago, libertarian organizations Cato Institute and the Reason Foundation filed an amicus curiae brief regarding a foie gras ban. Foie gras is a luxury food made from the fattened liver of a duck or a goose. To have these livers fattened, these birds are force-fed a mixture of fat and grain in a process known as gavage. The basis for the ban is that the force-feeding is inherently cruel (see PETA website for opponents' arguments).
Much like fish do not have the same neurological capacity to feel pain as humans do (e.g., Rose et al., 2012), I have to wonder if geese feel the pain of a tube down its throat. Vis-à-vis an argument of analogy, we anthropomorphize the pain because we think to ourselves, "Pushing a tube and shoving food down my throat sounds tortuous, so it must be the case for a goose or duck." But let's take the duck's anatomy for a second. Birds have gizzards, which give them the ability to digest stones and other hard materials. Ducks have been known to swallow whole fishes. Ducks also lack a gag reflex, thereby diminishing the argument that ducks are uncomfortable during gavage. The gavage takes places at the end of the fowl's life, and usually last 2-3 weeks (which is relatively short in comparison to the lifespan). Couple that with the fact that at least in the United States, the animals for foie gras production are treated better relative to other animals in agricultural production.
Setting aside biological facts for a moment, what does research say on the topic? The most thorough report on the topic comes from a 1998 meta-study completed by the European Scientific Commission (ESC). On the one hand, the report found that the gut capacity is adequate to handle gavage. The report also found that the effects were reversible in four weeks, thereby implying a lack of long-term damage. The overall evidence of injury was "small." Conversely, the same ESC report found a higher mortality rate, and that such fowl were impaired as a result of the gavage. The report also concluded that the "resulting fat liver is of no commercial value." In short, the ESC report had vindicating and damning parts. There is some other evidence suggesting a lack of pain (e.g., Guémené et al., 2006) and some suggesting more pain (Ma, 2013), more research is required to make a more determinable conclusion (Skippon, 2013).
There is the philosophical argument on animals' rights: Should we treat animals as equals to humans, as mere property of human beings, or have a legal quasi-qualification that affords animals some protections under the law? Animal rights activists argue one way, foie gras producers another. In the United States, France, and other countries where they produce foie gras, animals are afforded less rights than humans. There is a balance between animal rights and the individual human being's consumption choices, and it is difficult for society to figure out where to draw the line.
The problem with such a normative argument is that it comes down to "I personally don't like that." The logic used by foie gras opponents could be used to ban all factory farming or even all meat production, as the aforementioned amicus curiae argues. Yes, this is technically a slippery slope argument, but at the same time, animal rights activists would most probably not stop if they were able to enact a nationwide ban on foie gras. Fortunately, there is no notable legislative push to further ban production of animal products because freedom to eat whatever animals they want is preserved.
Aside from the food freedom argument and the argument that the ducks do not feel the amount of pain that animal activists purport, foie gras is a delicacy. More to the point, foie gras is not consumed at the same rate in the United States as it is a country such as France. In 2012, U.S. per capita consumption was 0.003 pounds. To put this number into perspective, the average American eats on average about 100 times the amount of buffalo meat. I'm not a fan of government bans because they are blunt instruments that often have unintended consequences. The prohibition of alcohol was so terrible that Congress had to appeal the 18th Amendment with the 21st Amendment, which is no easy feat given the constitutional amendment procedure. Prohibition of marijuana has also come with a heavy price. The thing here is that I don't expect a foie gras ban to have the same effect because foie gras does not have the same pervasiveness as alcohol. With only three foie gras production farms in this country, it is the lack of foie gras in this country that makes me wonder why we're bothering in the first place. It is probably because of that lack of demand that animal rights activists are grabbing at that low-hanging fruit. I don't mind a call for more humane practices in the foie gras industry, but when you look at biology, a lack of evidence, and market demand, I don't see why we need to take a further step to quash food freedom to placate animal rights activists.
Much like fish do not have the same neurological capacity to feel pain as humans do (e.g., Rose et al., 2012), I have to wonder if geese feel the pain of a tube down its throat. Vis-à-vis an argument of analogy, we anthropomorphize the pain because we think to ourselves, "Pushing a tube and shoving food down my throat sounds tortuous, so it must be the case for a goose or duck." But let's take the duck's anatomy for a second. Birds have gizzards, which give them the ability to digest stones and other hard materials. Ducks have been known to swallow whole fishes. Ducks also lack a gag reflex, thereby diminishing the argument that ducks are uncomfortable during gavage. The gavage takes places at the end of the fowl's life, and usually last 2-3 weeks (which is relatively short in comparison to the lifespan). Couple that with the fact that at least in the United States, the animals for foie gras production are treated better relative to other animals in agricultural production.
Setting aside biological facts for a moment, what does research say on the topic? The most thorough report on the topic comes from a 1998 meta-study completed by the European Scientific Commission (ESC). On the one hand, the report found that the gut capacity is adequate to handle gavage. The report also found that the effects were reversible in four weeks, thereby implying a lack of long-term damage. The overall evidence of injury was "small." Conversely, the same ESC report found a higher mortality rate, and that such fowl were impaired as a result of the gavage. The report also concluded that the "resulting fat liver is of no commercial value." In short, the ESC report had vindicating and damning parts. There is some other evidence suggesting a lack of pain (e.g., Guémené et al., 2006) and some suggesting more pain (Ma, 2013), more research is required to make a more determinable conclusion (Skippon, 2013).
There is the philosophical argument on animals' rights: Should we treat animals as equals to humans, as mere property of human beings, or have a legal quasi-qualification that affords animals some protections under the law? Animal rights activists argue one way, foie gras producers another. In the United States, France, and other countries where they produce foie gras, animals are afforded less rights than humans. There is a balance between animal rights and the individual human being's consumption choices, and it is difficult for society to figure out where to draw the line.
The problem with such a normative argument is that it comes down to "I personally don't like that." The logic used by foie gras opponents could be used to ban all factory farming or even all meat production, as the aforementioned amicus curiae argues. Yes, this is technically a slippery slope argument, but at the same time, animal rights activists would most probably not stop if they were able to enact a nationwide ban on foie gras. Fortunately, there is no notable legislative push to further ban production of animal products because freedom to eat whatever animals they want is preserved.
Aside from the food freedom argument and the argument that the ducks do not feel the amount of pain that animal activists purport, foie gras is a delicacy. More to the point, foie gras is not consumed at the same rate in the United States as it is a country such as France. In 2012, U.S. per capita consumption was 0.003 pounds. To put this number into perspective, the average American eats on average about 100 times the amount of buffalo meat. I'm not a fan of government bans because they are blunt instruments that often have unintended consequences. The prohibition of alcohol was so terrible that Congress had to appeal the 18th Amendment with the 21st Amendment, which is no easy feat given the constitutional amendment procedure. Prohibition of marijuana has also come with a heavy price. The thing here is that I don't expect a foie gras ban to have the same effect because foie gras does not have the same pervasiveness as alcohol. With only three foie gras production farms in this country, it is the lack of foie gras in this country that makes me wonder why we're bothering in the first place. It is probably because of that lack of demand that animal rights activists are grabbing at that low-hanging fruit. I don't mind a call for more humane practices in the foie gras industry, but when you look at biology, a lack of evidence, and market demand, I don't see why we need to take a further step to quash food freedom to placate animal rights activists.
Monday, May 7, 2018
Renewable Fuel Standard: Enough With Supporting Big Ethanol Already!
It's amazing how everything can be politicized, including food that can be turned into fuel. Last week, midwest biofuels associations were requesting that the Environmental Protection Agency (EPA) stop handing out exemptions for the Renewable Fuel Standard, such as the waiver for major oil refinery Andeavor last month. This request took place shortly before the President reportedly is to meet with Senators on biofuel policy sometime this week. The purpose of this meeting, according to Reuters, is to help "refiners cope with the Renewable Fuel Standard."
Let's get into the basics of the Renewable Fuel Standard (RFS) before we analyze it further. As part of the Energy Policy Act of 2005, the RFS was created to mandate that transportation fuel sold in the United States contained a minimum volume of renewable fuels. The EPA is the entity responsible for administering the RFS program to ensure that volume requirements are met through a system of tradable credits known as renewable identification numbers (RINs). The RFS was meant to be a major boost for ethanol producers. When formally enacted in 2007, the RFS required ethanol producers to blend 13.8 billion gallons of ethanol into gasoline by 2013, and up to 32 billion gallons by 2022. When President Bush passed the law, he stated that the idea behind this mandated renewable fuel subsidy was to limit our dependence on foreign oil while reducing carbon emissions. How well has the RFS fared so far?
Higher Costs for Drivers: The RFS was intended for ethanol gasoline to be a substitute for standard petroleum-based gasoline. According to the American Action Forum (Rosetti, 2018), Americans spent $76 billion more on transportation fuel in the past decade as a result of this mandate. In 2016, the Heritage Foundation found that repeal would save the American people $54 million over a decade's time.
The U.S. Department of Energy found that ethanol has two-thirds the energy of regular gasoline, which would further explain the higher prices. The lack of ethanol's energy content relative to petroleum-based gasoline helps explain why ethanol is costing the American people at the gas pump. Even when using E85, ethanol fuel usage is more expensive that standard fuel usage (Loris, 2016).
Higher Food Costs: In addition to higher fuel costs, there is the matter of higher food prices. The Resources for the Future estimated in 2016 that by 2022, global food prices will have increased an extra 17 percent more than they would have without the mandates (Chakravorty, 2016, p. 13). These findings should be no surprise considering how much crops are diverted from the food market (40 percent of corn production), thereby constricting supply and subsequently increasing prices. The amount of corn used to produce ethanol fuel exceeds corn production in Africa and any single country, with the exception of China (Carter et al., 2014). Think of all of the people that could have been fed if it had not been diverted by RFS! The concerns of increased food prices as a result of biofuel mandates have been expressed by the United Nations' Food and Agricultural Organization, the World Resources Institute, and the OECD.
Environmental Impact: In its 2016 report on RFS, the Government Accountability Office (GAO) concluded that it would be unlikely that the EPA could meet the RFS' greenhouse gas reductions by 2022. When it released the report, the GAO found that less 5 percent of the emissions reductions were met. The GAO found a few reasons for this lack of success. One is that most of the biofuel blended as a result of RFS has been corn-starch ethanol, which has smaller greenhouse gas emission reductions than other biofuels. The second issue is that many vehicles are not compatible with biofuels with higher concentration than E10 (i.e., gas with 10 percent ethanol). The third reason is that in spite of the mandate, demand has not been sufficiently high enough. This lack of demand undoubtedly has to do with hydraulic fracturing and more fuel-efficient cars that reduce overall demand for transportation fuel. Finally, production costs remain high, even in spite of the subsidies and the research and development work (GAO, p. 10).
More ironic is a study from the University of Minnesota that found that because of the "fuel market rebound effect," the RFS has actually increased greenhouse gas emissions (Hill et al., 2016; DeCicco, 2016). How so? The RFS mandate increases supply of fuel, which lowers prices and subsequently increases quantity produced. And this doesn't account for costs of land-use (Holland et al., 2013).
Oil Consumption and Lack of Energy Independence: Forget for a moment that energy independence is a myth. Ethanol oil has played a minuscule role in energy use for transportation, not to mention that the United States is a net importer of biofuels. Even with the de facto ethanol mandate in place, biofuels only accounted for 4 percent of transportation fuel in 2016.
Impeding Technological Progress: As the American Enterprise Institute illustrates in its report on RFS, there have been multiple developments in recent years that have shaped the transportation market, whether it is electric cars or hydraulic fracturing. Alternatively, there might not be enough progress to get petroleum-powered vehicles out the market. The problem is that over a decade ago, the government made a choice as to which type of fuel the American people should be nudged towards: ethanol fuel. Going back to the GAO report, the GAO admits that it would take a lot of technological investment, an amount that is not feasible, to get ethanol fuel anywhere that is cost-effective enough to meet RFS standards.
Postscript: I expressed my discontent with RFS about five years ago about how RFS should have never become law in the first place, and can you blame me? The program has neither allowed for energy independence nor has it lowered emissions. The fact that the EPA had to reduce the RFS' cellulosic fuel target from 1 billion gallons to 6 million gallons back in 2013 shows just how little the government understands the market enough to plan production. I have made the same point when analyzing wind power: the government has no business selecting winners and losers. Such market-distorting decisions harm both the consumer and the environment while benefitting a few well-connected ethanol producers. It has failed to deliver on the promises it made. Especially when ethanol has been heavily subsidized over the years and still cannot be cost-effective or environmentally friendly signals that the best reform for biofuels policy is to repeal the RFS.
Let's get into the basics of the Renewable Fuel Standard (RFS) before we analyze it further. As part of the Energy Policy Act of 2005, the RFS was created to mandate that transportation fuel sold in the United States contained a minimum volume of renewable fuels. The EPA is the entity responsible for administering the RFS program to ensure that volume requirements are met through a system of tradable credits known as renewable identification numbers (RINs). The RFS was meant to be a major boost for ethanol producers. When formally enacted in 2007, the RFS required ethanol producers to blend 13.8 billion gallons of ethanol into gasoline by 2013, and up to 32 billion gallons by 2022. When President Bush passed the law, he stated that the idea behind this mandated renewable fuel subsidy was to limit our dependence on foreign oil while reducing carbon emissions. How well has the RFS fared so far?
Higher Costs for Drivers: The RFS was intended for ethanol gasoline to be a substitute for standard petroleum-based gasoline. According to the American Action Forum (Rosetti, 2018), Americans spent $76 billion more on transportation fuel in the past decade as a result of this mandate. In 2016, the Heritage Foundation found that repeal would save the American people $54 million over a decade's time.
The U.S. Department of Energy found that ethanol has two-thirds the energy of regular gasoline, which would further explain the higher prices. The lack of ethanol's energy content relative to petroleum-based gasoline helps explain why ethanol is costing the American people at the gas pump. Even when using E85, ethanol fuel usage is more expensive that standard fuel usage (Loris, 2016).
Higher Food Costs: In addition to higher fuel costs, there is the matter of higher food prices. The Resources for the Future estimated in 2016 that by 2022, global food prices will have increased an extra 17 percent more than they would have without the mandates (Chakravorty, 2016, p. 13). These findings should be no surprise considering how much crops are diverted from the food market (40 percent of corn production), thereby constricting supply and subsequently increasing prices. The amount of corn used to produce ethanol fuel exceeds corn production in Africa and any single country, with the exception of China (Carter et al., 2014). Think of all of the people that could have been fed if it had not been diverted by RFS! The concerns of increased food prices as a result of biofuel mandates have been expressed by the United Nations' Food and Agricultural Organization, the World Resources Institute, and the OECD.
Environmental Impact: In its 2016 report on RFS, the Government Accountability Office (GAO) concluded that it would be unlikely that the EPA could meet the RFS' greenhouse gas reductions by 2022. When it released the report, the GAO found that less 5 percent of the emissions reductions were met. The GAO found a few reasons for this lack of success. One is that most of the biofuel blended as a result of RFS has been corn-starch ethanol, which has smaller greenhouse gas emission reductions than other biofuels. The second issue is that many vehicles are not compatible with biofuels with higher concentration than E10 (i.e., gas with 10 percent ethanol). The third reason is that in spite of the mandate, demand has not been sufficiently high enough. This lack of demand undoubtedly has to do with hydraulic fracturing and more fuel-efficient cars that reduce overall demand for transportation fuel. Finally, production costs remain high, even in spite of the subsidies and the research and development work (GAO, p. 10).
More ironic is a study from the University of Minnesota that found that because of the "fuel market rebound effect," the RFS has actually increased greenhouse gas emissions (Hill et al., 2016; DeCicco, 2016). How so? The RFS mandate increases supply of fuel, which lowers prices and subsequently increases quantity produced. And this doesn't account for costs of land-use (Holland et al., 2013).
Oil Consumption and Lack of Energy Independence: Forget for a moment that energy independence is a myth. Ethanol oil has played a minuscule role in energy use for transportation, not to mention that the United States is a net importer of biofuels. Even with the de facto ethanol mandate in place, biofuels only accounted for 4 percent of transportation fuel in 2016.
- Despite the ethanol mandate and the increasing oil prices since last decade, petroleum accounts for 88 percent of the transportation fuel market.
- Ethanol's minuscule role in the market implies that it is not responsible for reducing dependence on oil, either domestic or foreign.
- Now that the United States is a net exporter of petroleum, it is more likely that ethanol would displace domestic production than foreign production.
- 40 percent of our corn production is used to produce ethanol fuel and it only accounts for 4 percent of transportation fuel. Can we realistically expect that ethanol fuel be a viable replacement for petroleum if it cannot meet consumption demand?
Impeding Technological Progress: As the American Enterprise Institute illustrates in its report on RFS, there have been multiple developments in recent years that have shaped the transportation market, whether it is electric cars or hydraulic fracturing. Alternatively, there might not be enough progress to get petroleum-powered vehicles out the market. The problem is that over a decade ago, the government made a choice as to which type of fuel the American people should be nudged towards: ethanol fuel. Going back to the GAO report, the GAO admits that it would take a lot of technological investment, an amount that is not feasible, to get ethanol fuel anywhere that is cost-effective enough to meet RFS standards.
Postscript: I expressed my discontent with RFS about five years ago about how RFS should have never become law in the first place, and can you blame me? The program has neither allowed for energy independence nor has it lowered emissions. The fact that the EPA had to reduce the RFS' cellulosic fuel target from 1 billion gallons to 6 million gallons back in 2013 shows just how little the government understands the market enough to plan production. I have made the same point when analyzing wind power: the government has no business selecting winners and losers. Such market-distorting decisions harm both the consumer and the environment while benefitting a few well-connected ethanol producers. It has failed to deliver on the promises it made. Especially when ethanol has been heavily subsidized over the years and still cannot be cost-effective or environmentally friendly signals that the best reform for biofuels policy is to repeal the RFS.
Tuesday, May 1, 2018
Cities Easing Up on Food Truck Regulations Shouldn't Be Off the Table
Eating food is not simply an act that is done for survival's sake. What we have seen even in the past few years is an increase of demand in gastronomy. This greater demand in gastronomy is pronounced in the food truck market. Food trucks are large vehicles with the capability of cooking and selling food. Food trucks have a few bits of allure. The trucks can move to the place where customers are located. They tend to offer more exotic food and do so at a cheaper cost than a restaurant since they do not have the same upkeep costs. Food trucks have also been found to be a safer option than restaurants because the trucks' kitchens are easier to manage due to their smaller size (Erickson, 2014). Being the mobile version of a restaurant, food trucks provide considerable competition in the foodservice market. From 2011 to 2016, food truck demand increased at a comprehensive annual growth rate (CAGR) of over 7 percent. While the food truck market is outpacing the rest of the foodservice market, food truck demand growth will be restricted by regulatory hurdles.
This trend is not only mentioned in a market report from global business intelligence leader IBISWorld, but also from a Chamber of Commerce report released in late March. The report also touches upon three main types of regulations that food truck owners face: permits and licensing to operate the truck, the day-to-day compliance, and annual compliance rules.
Unfortunately, occupational licensing is not unique to the food truck regulations. As I have pointed out in the past, occupational licensing creates a barrier to market entry, restricts employment, increases prices, creates social immobility, and is disproportionately burdensome for lower-income individuals. As for the compliance costs, the Chamber of Commerce found that food truck owners have to deal with 45 separate regulatory procedures over the span of 37 days, all of which costs an average of $28,276 a year. A Forbes article suggests that these regulations are limiting market entry as a result.
The regulations against food trucks are nothing more than a form of protectionism because well-connected restaurant owners don't want to deal with the competition of food truck owners, many of whom are small business owners. Much like Uber, food trucks are a disruptive innovation that offer lower startup costs and provide greater flexibility by going where the demand is highest. Food trucks are hardly the only business that are affected by zoning or occupational licensing or onerous regulations. Even so, they provide a great service to the American people at a lower cost. It's a win for those who want to start their own business or enter the food business, as well as a win for those who want comparable food at a lower cost than a brick and mortar restaurant. Since food trucks are regulated on the local level, each jurisdiction is going to have its unique challenges. This is not to say that there should be zero regulations because that would be impractical (see National League Studies here to see how to approach food truck regulations). At the same time, the Chamber of Commerce shows how that regardless of the city, food trucks could use less regulations so society as a whole can improve.
This trend is not only mentioned in a market report from global business intelligence leader IBISWorld, but also from a Chamber of Commerce report released in late March. The report also touches upon three main types of regulations that food truck owners face: permits and licensing to operate the truck, the day-to-day compliance, and annual compliance rules.
Unfortunately, occupational licensing is not unique to the food truck regulations. As I have pointed out in the past, occupational licensing creates a barrier to market entry, restricts employment, increases prices, creates social immobility, and is disproportionately burdensome for lower-income individuals. As for the compliance costs, the Chamber of Commerce found that food truck owners have to deal with 45 separate regulatory procedures over the span of 37 days, all of which costs an average of $28,276 a year. A Forbes article suggests that these regulations are limiting market entry as a result.
The regulations against food trucks are nothing more than a form of protectionism because well-connected restaurant owners don't want to deal with the competition of food truck owners, many of whom are small business owners. Much like Uber, food trucks are a disruptive innovation that offer lower startup costs and provide greater flexibility by going where the demand is highest. Food trucks are hardly the only business that are affected by zoning or occupational licensing or onerous regulations. Even so, they provide a great service to the American people at a lower cost. It's a win for those who want to start their own business or enter the food business, as well as a win for those who want comparable food at a lower cost than a brick and mortar restaurant. Since food trucks are regulated on the local level, each jurisdiction is going to have its unique challenges. This is not to say that there should be zero regulations because that would be impractical (see National League Studies here to see how to approach food truck regulations). At the same time, the Chamber of Commerce shows how that regardless of the city, food trucks could use less regulations so society as a whole can improve.
Monday, April 23, 2018
Note to Starbucks: Diversity Training Hardly Ever Works and Often Backfires
Last week, there was a lot of buzz on my Facebook feed about how two African-American men who were arrested in a Philadelphia Starbucks. The men who were arrested were waiting for a business associate to arrive. They had not ordered anything yet, and had asked the Starbucks staff if they could use the facilities. The staff reportedly told the individuals that they could not use the restroom because Starbucks policy is to "not allow nonpaying people from the public to come in and use the restroom." Police officers were on the scene, and the two men were detained after they refused to leave. Needless to say, the video went viral and gained social media outcry because those who were outraged by it saw it as another example of racism at work. Not only has Starbucks issued numerous apologies, but it has even gone as far as closing all of its Starbucks locations on May 29 and requiring anti-bias training for all its employees. Will Starbucks' anti-bias training be feel-good policy or will it actually do some good?
The purpose of diversity training or anti-bias training is to reduce bias or prejudice that is unwanted. Having diversity and reducing prejudice in the workplace also makes for a better workforce. Individuals that are not prejudiced are in a better state of mind to be more productive than those who do, not to mention that they are less likely to want to look for a new job. Having a diverse workplace means having individuals who view the same project from multiple angles. This maximizes creativity within the workforce and subsequently maximizes profitability (Hunt et al., 2018; Ellison and Mullins, 2014; Saxena, 2014). I believe in the importance of having a diverse workforce that has as few prejudices as humanly possible. At the same time, I am not a fan of diversity training.
If the ample evidence out there is an indication of anything, I don't feel optimistic about Starbucks' endeavor. The idea of putting people through a one- or two-hour training and expecting systemic issues to disappear seemed fanciful. Harvard Business Review wrote a scathing article in 2016 on why diversity programs fail. The article points out a meta-analysis of 1,000 studies about prejudice-reduction programs (Paluck and Green, 2009). The meta-study found that the positive effects of diversity training rarely last beyond a day or two, as did another meta-analysis (Bezrukova et al., 2016). And in case two meta-analyses were not enough, here is another: A meta-analysis of 400 studies shows that getting people to acknowledge implicit bias does not change individuals' behavior (Forscher et al., 2017). A number of the studies in both meta-analyses show a backlash towards diversity training.
How could diversity training backfire? After all, you are getting people to reexamine their views and illustrate the importance of working with those who are different. The problem with such examination is that it gets people to think about stereotypes more. The irony here is that it brings bias to the forefront and makes it more likely to activate stereotypes (Duguid and Thomas-Hunt, 2015). The other irony is that eliminating the individuals' ability to assess diversity and prejudice on their own terms can create even more prejudice (Legault et al., 2011; Anand and Winters, 2008). The more compulsory the training, the more animosity from workers and the less diversity there is (Paluck and Green, 2009; Anand and Winters, 2008; Kulik et al., 2007).
What we have here is a mountain of evidence that diversity and anti-bias training is loaded with good intentions but has poor results. Although diversity training is not coming from Congress or another legislative body, diversity training nevertheless comes off as a way to "legislate" a certain way of thinking. Here is the difficult truth: you cannot legislate or compel tolerance, let alone acceptance.
It is not just diversity training that fails to produce a more tolerant workforce. Performance ratings, grievance procedures, or hiring tests don't help with prejudices, either. So what does work? Don't focus on control or compulsion. The programs that work best, according to Harvard, address the following: engaging managers, exposing employees to different types of people, and creating a culture that allows for social accountability. We should find ways to reduce racism and other forms of prejudice, but we should also throw out the methods that have proven to be failures. If Starbucks is truly committed to fighting bias or prejudice, it should change its strategy.
The purpose of diversity training or anti-bias training is to reduce bias or prejudice that is unwanted. Having diversity and reducing prejudice in the workplace also makes for a better workforce. Individuals that are not prejudiced are in a better state of mind to be more productive than those who do, not to mention that they are less likely to want to look for a new job. Having a diverse workplace means having individuals who view the same project from multiple angles. This maximizes creativity within the workforce and subsequently maximizes profitability (Hunt et al., 2018; Ellison and Mullins, 2014; Saxena, 2014). I believe in the importance of having a diverse workforce that has as few prejudices as humanly possible. At the same time, I am not a fan of diversity training.
If the ample evidence out there is an indication of anything, I don't feel optimistic about Starbucks' endeavor. The idea of putting people through a one- or two-hour training and expecting systemic issues to disappear seemed fanciful. Harvard Business Review wrote a scathing article in 2016 on why diversity programs fail. The article points out a meta-analysis of 1,000 studies about prejudice-reduction programs (Paluck and Green, 2009). The meta-study found that the positive effects of diversity training rarely last beyond a day or two, as did another meta-analysis (Bezrukova et al., 2016). And in case two meta-analyses were not enough, here is another: A meta-analysis of 400 studies shows that getting people to acknowledge implicit bias does not change individuals' behavior (Forscher et al., 2017). A number of the studies in both meta-analyses show a backlash towards diversity training.
How could diversity training backfire? After all, you are getting people to reexamine their views and illustrate the importance of working with those who are different. The problem with such examination is that it gets people to think about stereotypes more. The irony here is that it brings bias to the forefront and makes it more likely to activate stereotypes (Duguid and Thomas-Hunt, 2015). The other irony is that eliminating the individuals' ability to assess diversity and prejudice on their own terms can create even more prejudice (Legault et al., 2011; Anand and Winters, 2008). The more compulsory the training, the more animosity from workers and the less diversity there is (Paluck and Green, 2009; Anand and Winters, 2008; Kulik et al., 2007).
What we have here is a mountain of evidence that diversity and anti-bias training is loaded with good intentions but has poor results. Although diversity training is not coming from Congress or another legislative body, diversity training nevertheless comes off as a way to "legislate" a certain way of thinking. Here is the difficult truth: you cannot legislate or compel tolerance, let alone acceptance.
It is not just diversity training that fails to produce a more tolerant workforce. Performance ratings, grievance procedures, or hiring tests don't help with prejudices, either. So what does work? Don't focus on control or compulsion. The programs that work best, according to Harvard, address the following: engaging managers, exposing employees to different types of people, and creating a culture that allows for social accountability. We should find ways to reduce racism and other forms of prejudice, but we should also throw out the methods that have proven to be failures. If Starbucks is truly committed to fighting bias or prejudice, it should change its strategy.
Thursday, April 19, 2018
Reaping the Maximum Benefit of Reducing Mandatory Minimum Sentences
In an increasingly polarized country, finding bipartisan solutions to problems seems as unmanageable as it is elusive. However, it still exists. About a month ago, the Brennan Center for Justice released a report entitled Criminal Justice: An Election Agenda for Candidates, Activists, and Legislators. Reading through the report, one of the policy alternatives that caught my eye is to pass the Sentencing Reform and Corrections Act in response to mandatory minimum sentences (see Federal government 2017 overview here). What exactly are mandatory minimum sentences?
For much of the 19th and 20th centuries, federal trial judges essentially had unlimited discretion in their ability to sentence. Mandatory minimum sentences first started in the United States with the Bogg Act of 1951, but really did not take off until the Sentencing Reform Act of 1984 combined with the Anti-Drug Abuse Act of 1986. There are few purposes of mandatory minimum sentences. One is to expedite the judicial process. Another is to make sure that there were less irregularities than with judicial discretion. Finally, it is to send a message that certain crimes will not be tolerated. Even if mandatory minimum sentences were a response to the good intention of reducing the high crime rates that permeated throughout the United States in the 1970s and 1980s, we have to come to terms with the fact that it had some unintended consequences on our justice system (e.g., Tonry, 2009).
As the Brennan Center points out in its report, the federal prison population increased by an astounding 750 percent in the past 30 years, from 22,000 prisoners to 200,000 prisoners. About half of the federal prison population is non-violent low-level drug offenders (Taxy and Kotonias, 2015). When accounting for the state level, the United States went from imprisoning 100 people per 100,000 residents to 760 people per 100,000 residents. That is a 660 percent increase! Don't think that the increase in the prisoner population didn't come with a huge price tag because it did. In its 2014 report on incarceration, the Brookings Institute calculated that prison costs quadrupled in inflation-adjusted dollars from 1980 to 2010!
Here are a few other fun facts on the topic:
To summarize, mandatory minimum sentencing has increased taxpayer spending, does next to nothing to reduce crime, wastes scarce criminal justice resources, and ruins peoples' lives. It's no wonder that 87 percent of Americans disapprove of mandatory minimum sentences, as did the bipartisan Colson Task Force that Congress created to examine federal corrections reform. I understand that there has to be a balance. If judges have complete discretion, there will be major disparities in the justice system. If there are mandatory minimum sentences, judges do not have the discretion to determine if extenuating circumstances render the sentence to be too harsh. That being said, prison should be for those who commit the most serious of crimes, not for non-violent drug offenders. By reducing mandatory minimum sentences, we can take the first steps to keeping our streets safer, taxpayer costs down, and better ensure that justice is served.
For much of the 19th and 20th centuries, federal trial judges essentially had unlimited discretion in their ability to sentence. Mandatory minimum sentences first started in the United States with the Bogg Act of 1951, but really did not take off until the Sentencing Reform Act of 1984 combined with the Anti-Drug Abuse Act of 1986. There are few purposes of mandatory minimum sentences. One is to expedite the judicial process. Another is to make sure that there were less irregularities than with judicial discretion. Finally, it is to send a message that certain crimes will not be tolerated. Even if mandatory minimum sentences were a response to the good intention of reducing the high crime rates that permeated throughout the United States in the 1970s and 1980s, we have to come to terms with the fact that it had some unintended consequences on our justice system (e.g., Tonry, 2009).
As the Brennan Center points out in its report, the federal prison population increased by an astounding 750 percent in the past 30 years, from 22,000 prisoners to 200,000 prisoners. About half of the federal prison population is non-violent low-level drug offenders (Taxy and Kotonias, 2015). When accounting for the state level, the United States went from imprisoning 100 people per 100,000 residents to 760 people per 100,000 residents. That is a 660 percent increase! Don't think that the increase in the prisoner population didn't come with a huge price tag because it did. In its 2014 report on incarceration, the Brookings Institute calculated that prison costs quadrupled in inflation-adjusted dollars from 1980 to 2010!
Here are a few other fun facts on the topic:
- A report from the Brennan Center of Justice (Roeder et al., 2015) examined what caused the drop in crime since the 1990s, and concluded that anywhere from 0 to 7 percent of the drop was due to mass incarceration. More to the point, a 2014 report from Pew Research suggests that lowering incarceration rates has led to lower crime rates. This should provide adequate evidence that there is a lack of correlation between incarceration rates and crime rates. Additionally, research suggests that it is the certainty of apprehension, and not necessarily the long sentence, that deters would-be offenders.
- Mass incarceration has done little to improve public safety (e.g., McCrary and Sanga, 2012).
- According to a Government Accountability Office (GAO) 2012 report, it also jeopardizes the safety of corrections officers.
- In 2013, the Urban Institute projected that reducing mandatory minimum sentences by half would reduce prison overcrowding by over half within the next decade (Samuels et al., 2013, p. 24).
- A 2014 report commissioned by the Department of Justice shows how lowering minimum sentences in such states as Texas, Georgia, and Pennsylvania has cut costs and held offenders accountable.
- Reducing mandatory sentences reduced recidivism, diversion, and racial disparities in New York City (Parsons et al., 2015).
- The Rand Corporation showed over twenty years ago how investing in treatment is more cost-effective than imprisoning those with drug addiction (Caulkins, 1997).
- A report from Pew Research that came out last month concluded that there is no correlation between prison terms and drug misuse (also see Pollack and Reuter, 2014; Gelb, 2015).
- As the Right-leaning Heritage Foundation argues, mandatory minimum sentences shift discretion from judges to prosecutors. Not only are prosecutors not trained in such matters, they are actually incentivized to not exercise discretion.
- Last month, I covered the topic of "ban the box" laws. After ex-offenders leave prison, they have a difficult time integrating back into society, which increases likelihood of reoffending. The mandatory minimum sentences contribute to a revolving door that makes life difficult for many Americans while costing the taxpayer.
To summarize, mandatory minimum sentencing has increased taxpayer spending, does next to nothing to reduce crime, wastes scarce criminal justice resources, and ruins peoples' lives. It's no wonder that 87 percent of Americans disapprove of mandatory minimum sentences, as did the bipartisan Colson Task Force that Congress created to examine federal corrections reform. I understand that there has to be a balance. If judges have complete discretion, there will be major disparities in the justice system. If there are mandatory minimum sentences, judges do not have the discretion to determine if extenuating circumstances render the sentence to be too harsh. That being said, prison should be for those who commit the most serious of crimes, not for non-violent drug offenders. By reducing mandatory minimum sentences, we can take the first steps to keeping our streets safer, taxpayer costs down, and better ensure that justice is served.
Monday, April 16, 2018
Balanced Budget Amendment: Why I'm Glad to See It Didn't Pass in Congress
The Republican Party has cultivated the image of being the party of fiscal responsibility. Newt Gingrich certainly did so when he released his Contract for America back in 1994. The House Republicans were continuing to cultivate that image when it failed to pass a balanced budget amendment (BBA) last week. You might think to yourself that I would be disappointed that such an amendment failed to pass because I consider myself "a deficit hawk." However, you would be wrong on that assumption. Why wouldn't I be disappointed? After all, the Congressional Budget Office (CBO) released its Budget and Economic Outlook: 2018 to 2028 earlier this week. Look below at the deficits that we're going to rack up in the next decade. It's enough to make my blood boil. Yes, of course we need to worry about high debt-to-GDP ratios. When government takes on massive amount of debt, the high interest payments made to pay of that debt slows down economic growth (e.g., Chudik et al., 2018; Afonso and Aves, 2015; CBO, 2014, p. 3-4; Cecchetti et al., 2013; Reinhart and Rogoff, 2010). Knowing that, I still think a balanced budget amendment is a bad one. Why?
Let's start with the procedural aspect of amending the Constitution before jumping into actual opposition. I looked at the possibility at repealing or modifying the Second Amendment a couple weeks ago. This comes with similar procedural hurdles. Per Article V of the Constitution, an amendment either needs two-thirds of votes both in the House and the Senate or a Constitutional Convention, the latter of which is convened by 38 state legislatures. Although the Republicans have control over both branches of the federal legislature, they are nowhere near getting the required votes to pass an amendment, as is illustrated by yesterday's vote. Aside from political feasibility, what issues does the BBA face?
Federal Version Stricter Than State Versions of BBA: As of 2015, 46 states and the District of Columbia had balanced budget requirements. The fact that BBAs are done on the state level can be used to advocate for a BBA on the federal level. However, it might not be so analogous. As the Center on Budget and Policy Priorities points out, BBA only applies to the operations budget. For state-level capital budget, borrowing is allowed. States also are allowed to save for a "rainy day" fund. This would not be doable on the federal level since a BBA "prohibits spending from exceeding revenue in that year (ibid)." Granted, there could be a "rainy fund" addendum. At the same time, these sorts of details act as another reminder as to why something this complex and subject to frequent change should not be a constitutional amendment.
Deficits Are Good From Time to Time: Proponents of the BBA argue that if families can tighten their budgets, so can the government. The government can and should tighten their spending, especially with current spending and debt trends. Conversely, families are allowed to borrow money to help finance their life. Debt is not inherently bad. I know I couldn't get through graduate school without taking some debt. The ability to successfully finance debt is what has helped so many individuals and businesses succeed. The problem is not debt so much as it is debt servicing and making sure that future generations are not burdened with debt.
Inflexibility: Sometimes, the government has to take on debt, whether in time of war, natural disaster, or a recession. Even if I have criticism about unemployment insurance and food stamps, the truth is that they exist and they have countercyclical demand during recessions (although that contention is contested). The libertarian Cato Institute concludes that procedural rules that are too inflexible to adapt to chaining circumstances prove less durable. I have to agree. I can still condone a more flexible fiscal policy while still call for greater fiscal responsibility.
Enforcement Issues: According to the Constitution, Congress is responsible for the budget. If Congress cannot balance the budget, could the President cut programs or raise taxes unilaterally? Would the courts? Would non-compliance go to the Supreme Court, thereby delaying the budgetary process further? Would the other branches of government be trained to adjudicate?
Questionable Economic Benefit: Proponents advocate for the BBA because the fiscal responsibility will cause better economic growth. I question that notion in the next point below. What I can say is that the restraint caused by a BBA can be problematic for the economy. In a recession, a BBA would either force spending cuts or an increase in taxes when the economy is weak. Economic forecasting firm Microanalytics wrote in 2011 if Congress had ratified a BBA in 2008 and it would have taken effect in 2012, the effects would have been catastrophic.
Dubious Fiscal Responsibility: This final concern is one that Congressman Paul Ryan (R-WI) brought up in 2011. It is mathematically possible to raise spending, raise taxes, and still have a balanced budget. If the goals are to minimize debt and to keep government small, this is not a guaranteed way to go about achieving those goals. Since there are not agreements on spending targets or what the size of government should be, the BBA does not fulfill its primary goal. And to think none of this gets into creating an incentive for politicians to use dubious accounting or budget gimmicks to meet budgetary requirements.
Even if the Republicans had the votes, why would there need to be a constitutional amendment? If the Republicans were the party of fiscal responsibility and maintained control, there is no need for such an amendment. If anything, the Republicans passing a budget in which the spending allows for trillion-dollar-plus deficits for the next decade is anything but fiscally responsible. It is hardly a stretch to argue that the balanced budget amendment was a gimmick by the Republicans to continue to cultivate an erroneous image of fiscal responsibility. This brings me to an even more important question: if we're interested in decreasing the debt-to-GDP ratio, why simply balance the budget? If the Republicans are genuinely interested in fiscal responsibility, there needs to be lowering taxes combined with lower spending in order to lower the debt-to-GDP ratio. As this Cato Institute paper on budgetary rules illustrates, there needs to be a framework and action for budget restraints. Or better yet, how about some entitlement reform to restrain spending? A BBA is not a substitute for working to reduce deficit spending. If the Republicans cannot focus on actual budgetary restraint, a BBA is nothing more than political pandering.
Let's start with the procedural aspect of amending the Constitution before jumping into actual opposition. I looked at the possibility at repealing or modifying the Second Amendment a couple weeks ago. This comes with similar procedural hurdles. Per Article V of the Constitution, an amendment either needs two-thirds of votes both in the House and the Senate or a Constitutional Convention, the latter of which is convened by 38 state legislatures. Although the Republicans have control over both branches of the federal legislature, they are nowhere near getting the required votes to pass an amendment, as is illustrated by yesterday's vote. Aside from political feasibility, what issues does the BBA face?
Federal Version Stricter Than State Versions of BBA: As of 2015, 46 states and the District of Columbia had balanced budget requirements. The fact that BBAs are done on the state level can be used to advocate for a BBA on the federal level. However, it might not be so analogous. As the Center on Budget and Policy Priorities points out, BBA only applies to the operations budget. For state-level capital budget, borrowing is allowed. States also are allowed to save for a "rainy day" fund. This would not be doable on the federal level since a BBA "prohibits spending from exceeding revenue in that year (ibid)." Granted, there could be a "rainy fund" addendum. At the same time, these sorts of details act as another reminder as to why something this complex and subject to frequent change should not be a constitutional amendment.
Deficits Are Good From Time to Time: Proponents of the BBA argue that if families can tighten their budgets, so can the government. The government can and should tighten their spending, especially with current spending and debt trends. Conversely, families are allowed to borrow money to help finance their life. Debt is not inherently bad. I know I couldn't get through graduate school without taking some debt. The ability to successfully finance debt is what has helped so many individuals and businesses succeed. The problem is not debt so much as it is debt servicing and making sure that future generations are not burdened with debt.
Inflexibility: Sometimes, the government has to take on debt, whether in time of war, natural disaster, or a recession. Even if I have criticism about unemployment insurance and food stamps, the truth is that they exist and they have countercyclical demand during recessions (although that contention is contested). The libertarian Cato Institute concludes that procedural rules that are too inflexible to adapt to chaining circumstances prove less durable. I have to agree. I can still condone a more flexible fiscal policy while still call for greater fiscal responsibility.
Enforcement Issues: According to the Constitution, Congress is responsible for the budget. If Congress cannot balance the budget, could the President cut programs or raise taxes unilaterally? Would the courts? Would non-compliance go to the Supreme Court, thereby delaying the budgetary process further? Would the other branches of government be trained to adjudicate?
Questionable Economic Benefit: Proponents advocate for the BBA because the fiscal responsibility will cause better economic growth. I question that notion in the next point below. What I can say is that the restraint caused by a BBA can be problematic for the economy. In a recession, a BBA would either force spending cuts or an increase in taxes when the economy is weak. Economic forecasting firm Microanalytics wrote in 2011 if Congress had ratified a BBA in 2008 and it would have taken effect in 2012, the effects would have been catastrophic.
Dubious Fiscal Responsibility: This final concern is one that Congressman Paul Ryan (R-WI) brought up in 2011. It is mathematically possible to raise spending, raise taxes, and still have a balanced budget. If the goals are to minimize debt and to keep government small, this is not a guaranteed way to go about achieving those goals. Since there are not agreements on spending targets or what the size of government should be, the BBA does not fulfill its primary goal. And to think none of this gets into creating an incentive for politicians to use dubious accounting or budget gimmicks to meet budgetary requirements.
Even if the Republicans had the votes, why would there need to be a constitutional amendment? If the Republicans were the party of fiscal responsibility and maintained control, there is no need for such an amendment. If anything, the Republicans passing a budget in which the spending allows for trillion-dollar-plus deficits for the next decade is anything but fiscally responsible. It is hardly a stretch to argue that the balanced budget amendment was a gimmick by the Republicans to continue to cultivate an erroneous image of fiscal responsibility. This brings me to an even more important question: if we're interested in decreasing the debt-to-GDP ratio, why simply balance the budget? If the Republicans are genuinely interested in fiscal responsibility, there needs to be lowering taxes combined with lower spending in order to lower the debt-to-GDP ratio. As this Cato Institute paper on budgetary rules illustrates, there needs to be a framework and action for budget restraints. Or better yet, how about some entitlement reform to restrain spending? A BBA is not a substitute for working to reduce deficit spending. If the Republicans cannot focus on actual budgetary restraint, a BBA is nothing more than political pandering.
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