I have thus far avoided social issues because the focus of this blog has been on institutional fiscal topics. However, some of these issues have the potential to or already have become big fiscal problems so I thought it relevant to discuss them as a preemptive move.
Poverty
Poverty is the direct result of the combination of liberty and free will. It is encouraged by our liberal political policy of subsidizing poor people. It is reinforced by the political power of the substantial population of poor people; they vote for politicians who promise the most free stuff.
The lower graph below shows how, since the civil rights movement and LBJ's Great Society program in the 60's, we have a near-permanent 13% poverty rate in the US; currently trending upward near 15%.
This is the classic case of good intentions gone wrong. With 9% of GDP ($1.36 trillion/year) going to 46 million people, we're talking about more than $29,500 per person! This is way beyond crazy; no wonder the population of poor people never seems to decrease.
When we combine government welfare with the $516 billion from individuals and private charities, the amounts increase to $40,600 per person! So a welfare mom with 5 kids is subsidized with $243,600?
I don't think it an overreaction to say this is nuts.
Eliminate the government subsidies and the poor population will decrease by at least 50% and overall taxes can drop by more than 20%.
Uninsured People and Obamacare
This one is really frustrating.
According to the AMA, uninsured and uncompensated health care cost about $54 billion in 2008 (the year in which Obamacare began). There are about 50 million uninsured so the cost is only a bit over $1,080 each. To fix this, the CBO estimates that Obamacare will spend $150 billion/year starting in 2017; $5,000 each.
If the current trend of half of the uninsured remaining so persists, does that put the cost at $10,000 each?
Such a deal!
Even better, it will increase by $30 billion/year in just a few years; see graph below.
Those liberals are economic masterminds! I can't wait until Billary tries to invest more in 2016!
The liberals love to lambaste the (conservative) House of Representatives for trying and failing to repeal it 37 times (so far). However, given these facts and the facts that half of the states have rejected it and that the roll-out of the pre-existing condition trial is already running out of money lend credence to the House's efforts.
They also love to say it's a republican idea: modeled after Romneycare in Massachusetts. In 2012, the Blue Cross Foundation of Massachusetts funded and released in April research that showed that the 2006 law and its subsequent amendments – simply in terms of measuring the state-budget effect on the uncompensated care pool and funding subsidized insurance had cost approximately $2 billion in fiscal year 2011 versus approximately $1 billion in fiscal year 2006. Some of this doubling in cost was funded by temporary grants and waivers from the United States federal government (us again). The result doesn't include the $295 per employee cost to employers.
The net result is that 4% more of the state population is insured. With a population of 6.6 million, this is 264,000 people. The cost per person is $3,787 + $295 = $4,082. Still way more than the original $1,080. The beneficiaries are the health care providers, not the uninsured people or the taxpayers.
I'll not argue that republicans are incapable of dumb ideas too, but that's no reason to duplicate them on a large scale.
This may be stating the obvious but wouldn't we be better off to repeal and offer the hospitals insurance against uninsured people rather than doing stupid stuff like this?
Immigration
As I've said in a previous post, the issue here boils down to cost.
- Cost of amnesty.
- Cost of labor.
- Cost of keeping illegals out.
- Cost of deportation.
In a similar vein, the cost of housekeeping, landscaping, masonry, farm and fast-food wages are driven down by cheap illegal labor. Business says Americans won't do this work but the reality is that we won't do it for the crap wages businesses pay to illegals.
We have about 15,000 miles of unguarded borders, it's quite feasible to protect the whole thing. Imagine 15,000 guard towers manned 24/7. This would cost about $100 million for the towers and we could train 45,000 unemployed folks to man them for about $2.25 billion/year. Compare this to the taxpayer cost of the illegal immigrants above.
I've seen an estimate of $285 billion to apprehend, detain, process and transport them all. Although I think the apprehension cost is vastly overstated (as a scare tactic), it is still roughly equal to what the illegals cost us every year. This is well worth it.
Kick the illegals out, make them arrive legally and pay Americans decent wages for a good day's work.
Of course, the $14,148/year cost increases to $19,292 for citizens and this figure should raise some eyebrows too; the cost of citizenship is too high!
Besides being puzzled by the concept of gayness and concerned about the political strength of this small group (3.8% of population), why should I care? I don't believe that gays cost me any more than straight people do.
Gays in the Military
This seems as though it should be a trivial issue since we already have both men and women in the military.
However, sexual assault in the military occurs at a rate of 1 in 16 versus 2 in 1,000 overall. Throwing openly gay people into this volatile environment seems like a recipe for disaster; a big distraction and huge litigation costs.
That said, the notion of armed gays parading around the Middle East is an entertaining prospect.
Abortion Rights
Women comprise roughly half of the population and abortions wouldn't be needed without the help of the other half. The only issue here is; who pays?
This is only an issue because the government camel has stuck its nose into the health care tent and some religiously-minded taxpayers object to their money being spent to commit what they view as murder.
Liberals will say that they object to tanks and bombs and don't want to pay for them with their tax dollars.
Here's the difference; the US Constitution (Article 1, Section 8) empowers congress to collect taxes to raise and support armies and a navy. Abortions (and health care) are not mentioned.
The solution so far is simple and that's why this one frustrates; get the government out of health care.
However, some states like Michigan are proposing laws to allow tax deductions for unborn children. I'm concerned that this incentive will lead to some bizarre tax evasion behavior that will cost me.
Domestic Terrorism
This, like poverty, is the direct result of the combination of liberty and free will, fueled by sub-standard education with a small dose of insanity thrown in. It's a sad statement on the state of affairs when people do this stuff but it's nothing new.
We've had Shay's Rebellion, the Whiskey Rebellion, John Brown and the Abolitionists, the Civil War, the KKK, Haymarket Square, the Wall Street bombing of 1920, the Weather Underground, Oklahoma City, Aurora, Sandy Hook, Boston, etc.. In other words, since the country was founded.
Some of this is political, some religious but most is just plain crazy. It sucks but so does a lot of other stuff like having a bridge collapse beneath you. The good news is that the cops are getting smarter. The bad news is that some of us are willing to give up some liberty in the interests of safety (with the Patriot Act, for example); something Ben Franklin warned against.
Aside from the tragic loss of life, it's really expensive with no solutions in sight.
My main concerns are things like the Patriot Act, an emboldened government intruding into the press as well as profiling conservative groups.
Second Amendment
Any discussion of domestic terrorism always leads to a knee-jerk discussion of gun control and the 2nd Amendment. The issue of gun ownership outside a militia was resolved in DC v. Heller in 2008 but the liberals, like a dog with a bone, just won't let it go.
Background checks are fine but here's the rub; how do they help when the gunner goes nuts after the purchase? There's also the issue of doctor-patient privilege. There's also the roughly 270,000,000 guns currently in circulation in the US.
To me, this is what the 2nd Amendment is all about; a well-armed citizenry as a bulwark against government tyranny. Bring on the Howitzers!
Failing Schools
I've written on this subject extensively from a fiscal perspective.
Personally, I don't think schools fail. Parents fail their children by not stressing the importance of education and/or a sense of discipline. This apparently happens most often in places where poverty is high; is anyone surprised by this?
Let's try one of Einstein's thought experiments;
- Imagine the best and worst schools in the country.
- Imagine transplanting the students of both schools, one to the other.
- What happens?
It is not because money = education. The graph below illustrates this quite clearly.
Bring back corporal punishment, end advancement without achievement and end mainstreaming.
Failing Infrastructure
I remember hearing about the collapse of the Mianus River Bridge the day after I drove over it. I am convinced that it wouldn't have happened if the politicians had been budgeting to maintain the roads and bridges instead of doing the social engineering that gets them elected.
The failing power grid is the fault of the power company executives who favor profits over maintenance then go hat-in-hand to the politicians for maintenance costs and rate increases after every storm. The politicians happily provide it in exchange for campaign contributions.
The southwest is consuming water faster than nature can provide it; irrigating the desert in southern California was a colossally bad idea. The only solution on the horizon is if/when southern California falls into the Pacific in a massive earthquake. The same thing is happening in the Midwest but with no earthquake relief in sight.
This stuff costs us all dearly. The bridge that recently fell into a river in Washington (because a truck bumped into it) will be replaced with 90% paid for by the federal government (us). Isn't this rewarding bad fiscal behavior in Washington and encouraging it in other states?
Earthquakes, Hurricanes, Tornadoes and Floods
These Acts of God are generally foreseeable. If a calamity can be foreseen, it can be protected against either with insurance or by living somewhere else.
Reading about the aftermath of these tragedies is heart rending, especially when lives are lost. However, I can't help wondering why people choose to live below sea level yet close to the ocean, on a known fault line or in a place called Tornado Alley.
Not to be too cold about it, having had my share of tragedy (two house fires), but is this Darwinism?
A special note on flood insurance: I wrote an op-ed letter to express my outrage over the federal government's need to borrow the money to pay flood insurance claims. Most folks don't know that it's the government that provides flood insurance. We charge about $3.4 billion a year in premiums, but just Katrina and Sandy cost over $140 billion in eight years.
Worse, if the predictions made by the global warming crowd are right, it will only get worse. I think they're right, regardless of the causes.
Having grown up by the water, I can appreciate the desire to live by the water despite the risks. But insurance premiums need to go up by a factor of 10 or more to cover the damage. Taxpayers should not subsidize questionable decision making by homeowners, businesses and utilities.
Banks and car companies should not be bailed out from disasters and neither should people or businesses who choose to live in risky places without insurance.
Banks and car companies should not be bailed out from disasters and neither should people or businesses who choose to live in risky places without insurance.
Global Warming
I mentioned this one in relation to flood insurance since, in general, the stormy weather conditions seem to have been getting more extreme lately and global warming is the odds on favorite for the cause.
It's hard to judge what's really happening since we've only witnessed a tiny portion of Earth's history.
Ice cores show that temperatures rise before carbon dioxide.
We pump 5 ppm of Earth's atmosphere full of carbon dioxide every year but the actual concentration only increases by 2 ppm/year.
Water vapor is a more potent greenhouse gas than carbon dioxide and there's a lot more of it.
Carbon dioxide does not appear to be the main culprit to anybody but the liberals; they even tried to reinterpret the ice core data to fit their theory. After all, pollution is a bad thing so why not blame the temperature rise on it too?
On the other hand, the storms seem stronger and more frequent. Who cares what the causes might be?
Solar and wind are the answer so what do we do? Impose punitive tariffs on cheap solar panels from China.
You can't make this stuff up.
Islamic Extremists
This is a totally crazy situation. These folks are blowing themselves and others up in increasing numbers. The number of suicide attacks has grown significantly, from an average of less than five a year in the 80's to 81 suicide attacks in 2001 to 460 in 2005.
The attack on the World Trade Center in 2001 was beyond belief; more than 3,000 killed. For what? Because we like sex, drugs and rock and roll?
Many of us wanted to strike back; but where? At whom?
We should have hunted the instigators down with a vengeance never before seen. Instead, we got two wars with 6,700 more dead Americans. We also got $1.4 trillion in wasted treasure. Twelve years later, it still goes on with no solution in sight.
Now, we're trying to restart the 'Peace Process' with Israel and the Palestinians again. This is the process by which we subsidize air traffic to the Middle East.
Seriously though, there are good intentions but come on, 40 years?
The whole Middle East are has become a quagmire that makes Vietnam in the 60's look like a picnic. Our efforts are not making it any better; Arab Spring, Islamic Fundamentalists in charge of Egypt, Libya (Benghazi), the Syrian Civil War, Iraq, Iran's centrifuges, the Taliban in Pakistan, Afghanistan and Lebanon again. This doesn't even cover the fact that al Qaeda sprang from Saudi Arabia, our supposed ally and long time trading partner?
I feel sorry for the Israelis, stuck with these crazies.
I think we should invoke something like the Prime Directive from Star Trek except that instead of avoiding contact with "pre-warp" civilizations, we avoid contact with pre-modern civilizations. I'll be the first to admit that we're not perfect but take a look at this and you'll see part of the problem.
No trade, no travel, no diplomacy, no immigrants, no occupation, no bases and absolutely no weapons until they figure it out for themselves. It's time for the Middle Eastern countries to step into the 21st century and clean up this mess themselves. Call us when they're done.
Meanwhile, hunt, try and kill all those who attack us.
Corporate Tax Evasion
I think that even though it exists, what gets reported is really the irritatingly legal maneuverings of companies like Apple. This is the direct result of an intentionally complicated tax code and the less than transparent actions of elected officials seeking reelection.
This has been going on for a very long time and it needs to end. Government gives free taxpayer money to corporations and individuals who did not contribute tax dollars to directly fund the handout. I call these things tax trickery to separate them categorically from traditional entitlements although I think that they even more abhorrent than traditional entitlements since they represent government selection of winners and losers.
I think the mortgage interest deduction is the biggest one (dollar-wise) but I think that all it really does is non-linearly inflate the cost of housing - thereby increasing the interest so only the banks really benefit.
This is the same old story; Medicare/Medicaid inflates the cost of health care; government funding inflates the cost of education; welfare makes poverty attractive, etc..
I have offered a solution:
- Cut all government back to Justice, State, Treasury and Defense.
- Finance Social Security, Medicare, Medicaid and Welfare for those 45 and older.
- Cut everyone else (but not employer's payroll tax) for 20 years while paying off debt.
- Start cutting tax trickery and reducing all taxes by a net 2%/year for the next 20 years.
- End with a surplus, no debt and an effective flat tax of 9.3%; everyone pays, no exceptions.
- Exquisitely fair and balanced.
- All inclusive, not divisive.
Another total policy failure. We spend $15 billion/year to stop a $400 billion/year business. This is like bringing a knife to a gunfight.
This doesn't include the $14 billion cost of imprisonment of the 325,000 people convicted of drug crimes.
Legalize it, control the quality and tax it to pay for the quality control so that non-drug-users don't pay a cent. Also free all of the drug crime inmates except those guilty of worse crimes.
This strategy won't stop people from killing themselves by overdose but it should reduce the rate with the higher quality control. It will also reduce the incarceration rate and the killings associated with law enforcement. It will also save a ton of money on prisons. It will also give a boost to the economy of Afghanistan if they ever decide to join the 21st century.
More splendid clear thinking in the face of the storm.
ReplyDeleteI would question the primary premise of this blog - that social issue have a financial consideration.
I think that a better formed social conscience would better impact financial decisions. None other than Pope John Paul II taught against state run social programs as expensive, ineffective and immoral.
Less well formed values result in the failed programs you enumerate.