A Nobel Laureate’s Disappointing Policy Advice

We reported previously on the research by Nobel laureate Angus Deaton and his wife Anne Case showing that the death rate has been increasing for the white working class, the only socioeconomic group for which that is true. This finding, which some have dubbed The White Death, has become perhaps the most talked-about recent finding in all of social science.

Deaton and Case are to be commended for their statistical analysis, which appears to be solid. The White Death seems to be real. The question therefore becomes: What can be done about it?

The Washington Post’s Wonkblog wanted to know, so they published a very good interview with Deaton and Case. Their most fundamental argument is that the labor market for unskilled labor has deteriorated badly, and this development has had an adverse impact on the lives of millions of people. I agree with Deaton and Case on this basic point. But Deaton’s specific policy recommendations left me very disappointed.

First, Deaton apparently believes that we need to get more people into college.

Anne and I, I think, differ a little bit on how much education is a solution for this. But it’s certainly clear there are lots of people who are not getting BAs who are capable of it. So we need to do a much better jobs [sic] of getting these into school.

Well, as someone who has spent more than 20 years in the university classroom, I can state with confidence that the problem in higher education is more nearly the exact opposite–too many, not too few, people pursuing BAs. America must have, at Deaton says, at least a few people “not getting BAs who are capable of it.” But there are vastly more people in the opposite situation; pursuing BAs who are not really capable. Higher education is already massively subsidized and over-expanded. Rather than expanding further, higher education needs to contract. More people should consider learning a trade or going to coding school.

On education, Deaton’s wife is more sensible:

Case: But it’s also the case here that there are people who don’t want a four-year BA. We’ve been around this block many times: We do need to think about how we want to train people to enter the 21st century labor force.

Deaton also wants to expand the welfare state.

Deaton: We haven’t really talked about how none of this is happening in Europe…The obvious difference is that the safety net is enormously more generous in Europe. And lot of people in their 50s who lose their jobs can go on retirement. You get a doctor’s certificate and you get paid pretty much your salary until you die.

Wait, if you’re in your 50s and you lose your job for economic reasons, then you can just talk a doctor into saying you’re disabled and collect your check for life, and Deaton thinks that’s a good thing? Am I misreading this, or did Deaton endorse disability fraud?

Deaton and Case also seem to believe that Americans are too reluctant to accept welfare.

Case: The other thing that makes it harder in America rather than Western Europe is that there really is a difference for a large swath of the population in how they feel about receiving government transfers. We’ve all been trained up on the idea that we are individuals and we take care of our families and our neighbors take care of theirs, and that’s the way we like it. It’s very hard to give somebody something when they see it as handout that they don’t want.

What Case says was true about America in the 1950s and 1960s. In those days, there was a strong conscientious aversion, as well as considerable social stigma, to accepting welfare. But I don’t think that’s true today. Half of American households receive some kind of government check, and 30 percent receive a “means tested” benefit, i.e., welfare. When I was a kid, that latter figure was only 7 percent.

Moreover, unlike Deaton and Case, I don’t believe the primary reason why working-class people are dying in America but not Europe is Europe’s somewhat more generous welfare state. Another obvious and possibly more relevant difference is that Europeans do not drink sugary Cokes in 30-ounce servings, nor do they consume Little Debbie Snack Cakes by the box. Maybe before we put millions more on the disability rolls, we should first try to get them to cut back on carbs.

There’s one other policy recommendation that I’ve been pushing. We’re spending about three trillion dollars a year on health care. And our life expectancy is going down. Whereas all these other countries are spending way less, and their life expectancy is going up. For me the implication is if we implemented single payer, we’d get rid of a lot of these costs. Not without screaming and yelling, of course, and not without goring a lot of oxen.

But the crucial thing is recognizing the extent to which these rising health care costs are responsible, at least in part, for the stagnant wages for people without a college degrees. If they’ve got an employer and they’ve got health care, their wages are getting pushed down by the employer paying for that health care. People don’t even realize this. They think it’s for free.

No doubt, the cost of health care is a huge problem, and we need reform. But single-payer is not the way to do it. Those single-payer countries that report lower costs are leaving out a lot of hidden costs. In particular, they don’t count the costs to individuals of suffering due to rationing of health care. They also don’t count the negative impact on the economy of taxes needed to fund the system.

I’m not a left-wing nut pushing for single-payer! It’s not because I like socialized medicine. It’s just because I think this is eating capitalism alive, and if we want a healthy capitalist society in America, we’ve got to get rid of this monster.

Shorter Deaton: “I’m for single-payer, but just don’t call me a left-wing nut!”

So to summarize, Deaton wants to expand higher education, make welfare more generous, and pay for nearly everybody’s health care. This amounts to a massive expansion of government. Deaton intends to help the ‘little guy,’ but as Dennis Prager likes to say, the bigger the government, the smaller the individual.

And Deaton wants all this additional spending when the federal government is already exposed to a $200 trillion fiscal gap. Where will the money come from?

As I said, Deaton’s policy advice is very disappointing.

The Latest Government Entitlement: Sex

Last summer I speculated that the welfare state had expanded beyond the point of diminishing returns.

[I]s there no responsibility too small for liberals to leave to the citizenry? One suspects that liberals would willingly relieve their dependent political clients of the very last of life’s responsibilities, thus reducing them to the equivalent of kept zoo animals.

Well, turns out that liberals did manage to find another personal responsibility they could relieve people of. Getting laid.

The Greens’ plans consists [sic] of patients obtaining a medical certificate confirming that ‘they are unable to achieve sexual satisfaction in other ways, as well as to prove they are not able to pay sex workers on their own’.

Modern government sure does love to empower medical doctors as the gatekeepers for the welfare state’s panoply of free shit, as if the docs are all omniscient sages. But after all, what do docs know about whether or not somebody can ‘achieve sexual satisfaction’? Last time I checked, they don’t teach pickup artistry in med school.

In any event, it is worth considering the different socialist models the government might use to deliver its sex entitlement, and their various implications.

Veterans Administration Model. In this scheme, the government owns the brothels, and the prostitutes are unionized government employees, almost impossible to fire. The sex workers get fat and lazy and offer poor service. Clients endure long wait times for service. The government brothels are forever plagued by scandal, with abused clients, and funds unaccounted for. Poor sanitation makes the brothels incubators for disease.

U.S. Public School Model. The market includes both privately owned and government-owned public brothels. Clients by law can visit only the public brothel assigned to their district. Public brothels vary enormously in quality and safety. In affluent areas, public brothels approach private brothels in quality, but in poor areas, public brothels are unspeakably squalid. People willingly pay a housing premium to live near a relatively good public brothel, and brothel quality gets incorporated into housing prices.

Canadian Single-Payer Model. The brothels are privately owned, but clients pay nothing out of pocket. Instead, sex bills get sent to the government for payment. The government, however, cannot afford a completely open-ended brothel liability, so brothel services and prices have to be tightly regulated. A panel of government ‘sexperts’ sets annual brothel quotas for each of the various sexual services: oral sex, BDSM, etc. The government imposes price ceilings on brothel services, resulting in shortages of services. Clients go on waiting lists, sometimes waiting months for sex. When people can’t get the sex they need, they sometimes resort to paying out of pocket for foreign sex holidays. Everybody complains, but government propaganda convinces the rubes that the system nonetheless works far better than would a free market in sex.

Food Stamp Model. Here the government gives individuals each period a swipe card topped off each month with a fixed amount of money. The swipe card can only be used to pay for sex. This restriction is to make sure that people don’t waste the money on stuff like meat, books, or gym memberships. Inevitably, a black market develops in which people sell their sex vouchers for 50 cents on the dollar, then use the cash to buy soda pop, cheetos, and heroin.

So which system do the German Greens propose to use?

‘Municipalities could discuss appropriate offers on site and grants they would need.’

Sounds like single-payer except administered locally and funded with block grants.

The Most Pathetic Entitlement Ever

The notion that women can’t or shouldn’t have to pay for their own birth control must be the most pathetic argument for a government entitlement, ever.

This idea has been around for several years now, and comes up whenever Democrats need to motivate female voters. The notion first received a lot of national attention in 2012, not coincidentally an election year, when Sandra Fluke testified before Congress that, as a student attending an elite law school, she was somehow too underprivileged and disadvantaged to provide for her own birth control.

Now, prescription birth control can be had for something like $13 a month. Condoms are available for about 50 cents each. How anyone can with a straight face whine about not being able to bear such a trivial expense is beyond me.

And yet the issue persists. Jake Tapper, one of the resident presstitutes at the Clinton News Network, brought it up again just last week.

Tapper pressed Speaker of the House Paul Ryan about possible future adjustments to the Patient Protection and Affordable Care Act (ACA)- otherwise known as Obamacare – that might remove taxpayer subsidies for condoms and other birth control options.

With President-elect Donald Trump regularly having promised to “repeal and replace” the ACA during his campaign, Tapper and other like-minded news media personalities are pushing for details on what they describe as removal of benefits from the act’s purported beneficiaries.

“Obamacare also provides birth control for women at no cost. Is that going to end or will that remain?” asked Tapper, essentially parroting a left-wing and Democrat talking point.

Rather than rejecting Tapper’s implied premise that birth control options are provided “at no cost,” (they are paid for with American taxpayer dollars), Ryan opted not to speculate about possible changes to the ACA under a Trump administration, described such details as “nitty gritty.”

I like that this report at dailywire.com pointed out that the birth control is not really free because it is paid for “with American taxpayer dollars.”

But if I were Paul Ryan, I would have laughed in Tapper’s face. We have people rioting in the streets, the Middle East is on fire, the federal government is facing $200 trillion in unfunded liabilities, and Tapper’s worried about birth control?

Furthermore, if the birth control entitlement is the best argument that Tapper can muster in defense of Obamacare, then the program is obviously not worth saving. First, birth control in most cases is not even health care. Second, did I mention that it costs about $13 per month?

Look, there was a time when women in the labor force really were discriminated against. Around 1920, some cities enacted minimum wage laws that applied only to women, not to men, for the purpose of pricing women out of the labor market. Before about 1960, it was a matter of policy in many school districts to fire any female teacher who got married. The prevailing notion was that a woman could not simultaneously devote herself to both her teaching job and her family.

But those days are long gone. Women in their 20s today earn more than men do at the same age. Women far outnumber men in college, and women comprise the majority in law school as well. For a supposedly modern, liberated woman to beg for someone else to pay for her birth control is just sad.

If the frontier of modern feminism is now defined by clamoring for an entitlement that is priced equivalently to one pizza per month, then it’s time for feminism to just declare victory and disband the troops.

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Universal Income: Gaining Traction?

The idea of a universal basic income–provided by the government to every adult citizen–received considerable attention during the 1960s and 1970s as a potential anti-poverty measure. The idea was never enacted, and then laid dormant for several decades. As we reported previously, however, the idea has resurfaced recently in Silicon Valley, for the purpose of relieving distress caused by the loss of jobs to automation.

Now it appears that the universal basic income (UBI) is being given serious consideration in countries all over the world, including Canada, Japan, the Netherlands, Switzerland, and Finland. Switzerland will vote on UBI in a national referendum in June, although the proposal is not expected to pass, and the government officially opposes the policy. In Finland, the government is moving forward on starting a pilot project next year involving about 10,000 individuals. Under the Finnish model, every adult citizen would receive a tax-free stipend of about $900 per month. The UBI would effectively replace most of Finland’s current welfare programs.

The UBI offers several advantages over conventional welfare programs. First, it eliminates the incentive for fraud. Second, it saves resources by rolling back most of the massive welfare bureaucracy that administers means-tested programs. Finally, and perhaps most importantly, the UBI does not create the same disincentives for work as do conventional welfare programs. Right now, means-tested programs like Medicaid, Obamacare, and food stamps create huge disincentives to work because once someone starts making money, they lose their benefits. The UBI, in contrast, is always provided regardless of income.

As an anti-poverty device, the UBI is in most respects preferable to the current welfare state, which explains why Milton Friedman championed the idea in the 1960s and 1970s. As we wrote previously, however, we do worry that freedom could be placed in peril if a critical mass of the population becomes dependent upon government and otherwise unemployable due to robots and automation.

Parenthetically, we note that Finland’s welfare state must be extraordinarily generous if it spends the equivalent of $900 per month for every adult citizen. By comparison, the United States spends on means-tested programs roughly $1 trillion per year. That’s a big welfare state, but dividing that figure by some 250 million adults yields less than $400 per month.

Pols Promising Us Stuff We Already Have

Most people probably believe that, prior to the creation of America’s modern welfare state in the 1960s, the poor were totally neglected. The truth, however, is that the poor and unfortunate were taken care of by a huge network of charitable organizations and mutual-aid societies established by the private sector. For instance, even before the creation of Medicaid in 1965, the poor had access to quality medical care at Catholic charity hospitals. The prevailing view at the time was that it was the middle class, not the poor, that struggled to obtain health care, since they couldn’t access the charity hospitals.

The point is that our bloated $1 trillion welfare state has mostly just displaced services for the poor that the private sector was already providing. The politicians took credit for supplying something that already existed.

During this election season, we’ve noticed a couple of other examples of politicians curiously promising to deliver what already exists. Take for exmaple, the promise of “free college tuition.” We already have that, at least for the students who are most deserving. Although nominal tuition rates are indeed very high, that does not stop students that are both bright and poor from accessing a college education. Students that are bright enough and poor enough will qualify for scholarships that will pay for most or all the cost of tuition.

A poor but very good student can even go to Harvard for free. That has always been the case. President Richard Nixon grew up so poor in California that as a kid he walked to school barefoot. But he was an excellent student and so he was awarded a full tuition scholarship at Harvard. He still did not attend Harvard because his family could not afford the train ticket from California to Massachusetts.

We agree that college is more expensive than it should be, but “free” tuition paid for by the taxpayer is not giving the poor a leg up; instead, it’s just another shameful entitlement for the middle class. And who do you think will eventually pay most of the taxes to cover that tuition? The middle class, which means it’s not really free.

Next, this campaign season has seen politicians repeatedly promise “equal pay for women.” And how do they propose to bring that about? Do they intend to pass a federal law banning wage discrimination? Oh…wait.

Of course, politicians only promise us things we already have because the ignorance of the voters lets them get away with it.

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The Big Issue Nobody Wants to Talk About

It’s fatherlessness. Tony and I were talking just the other day about the deplorable fact that approximately half of American teenagers do not have their biological father living at home. This is a potentially crucial issue because it lies at the root of numerous other social ills. And yet, nobody wants to talk about it. In over a dozen presidential debates, the issue of fatherlessness has never once been raised.

Writing at pjmedia.com, Leslie Loftis noticed the same thing Tony and I did.

Fatherlessness is on the rise. It is causally linked to an array of social risk factors. While there are success stories in single-parent households, children raised without a father in the home are more at risk for dropping out of school, using drugs, having emotional problems, and becoming involved in crime, just to name a few.

Each of these individual risk trends can impact health care expenses, education, the budget and economy as well as public safety. Taken together they look like the root problem for many of our societal ills. The body of research confirming fathers’ importance grows. We even have studies looking at the stunning public cost of fatherlessness. Yet our politicians do not discuss fatherlessness as a policy matter.

Of course, for government and the political class, fatherlessness is a feature not a bug. As fatherlessness spreads, it is the government that steps in as a kind of surrogate father, providing some of the resources that the father otherwise would have supplied. From the point of view of government, fatherlessness is good for business.

Just another of the many ways in which government can’t be expected to solve problems because the interest of the political class diverges from the interest of society, or more precisely, the interest of those of us who prefer to live in a decent society.

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Breaking: Earth Not Yet a ‘Total Frying Pan’

THEN

“An Inconvenient Truth” had its world premiere at the Sundance Film Festival on Tuesday night before an enthusiastic audience that gave the former vice president and his movie a big standing O.

Among the film’s lessons: Earth’s glaciers are melting, the polar bears are screwed, each year sets new heat records. Al Gore sometimes flies coach. He also schleps his own bags.

The morning after his debut as leading man, Gore pronounces this whole Sundance thing “a most excellent time.”… He’s palling around with Larry David of “Curb Your Enthusiasm,” who says, “Al is a funny guy.” But he is also a very serious guy who believes humans may have only 10 years left to save the planet from turning into a total frying pan.

The Washington Post, January 26, 2006.

 

NOW

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Larry David was right!

Oh, and if Al Gore flies coach, then I am Marie of Rumania.

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The injustice of welfare (bumped)

This report at Politico about how people are gaming the Obamacare program made us recall our old post, reproduced below, explaining how the welfare state corrupts the character of the people. Socialism creates a nation of crooks and cheats.

The Daily Mail is a British tabloid newspaper that is filled largely with appalling celebrity gossip. But besides the gossip, the paper also regularly offers truly sensational exposés on the horrors of government medicine and on the outrages of the British welfare system. The stories, in fact, are so sensational that we do wonder if they aren’t at least significantly embellished. But since the stories do not seem to generally end up being refuted or contradicted, we suspect that they are, in the main, true.

The latest Daily Mail outrage concerns a “Miss” Heather Frost, a 37-year-old mother of eleven, and grandmother of two, who is having a six-bedroom house built for her, at taxpayer expense.

She is due to move into the property – valued at £400,000 – in July after ‘struggling’ to survive in two adjacent houses in Churchdown, Gloucestershire, which have been joined together by the [city] council.
Her new home will slash water and energy bills with its modern design using natural, locally-sourced materials. Extra large windows will fill it with natural light.

“Miss” Frost does not work. Neither does her live-in boyfriend, Jake. And despite the boyfriend and the honorific “Miss,” the article notes in passing that our heroine says she is married. About the husband, the article says nothing. “Miss Frost first became pregnant at the age of 14, to a man of 23 who ended up in jail.” We can’t determine if that’s the husband, or yet another man.

In any event, the sense of entitlement is strong in this one.

‘It’s being built especially for me,’ she said. ‘If I go there and I say to them I don’t like it or it’s too small, then they will just have to build me a bigger one, won’t they?’

So neither “Miss” Frost, nor Jake, nor the husband, nor any other possible fathers of these eleven children, is working to support the household. Resources, however, are scarce, and there’s no such thing as a free lunch. It follows that to provide the new six-bedroom house, as well as everything else the household consumes, somebody has to work. Who might that be?

Well, those would be the people who were responsible enough not to get knocked up at 14. Those would be the people who were responsible enough to finish school. Those would be the parents who roll out of bed in the morning and work hard to support themselves and their children. Those would be the men who take responsibility to raise the children they sire. In short, those would be the good citizens who keep their noses clean and their legs crossed and who keep society functioning and make civilization possible. Marxists and ‘occupiers’ think they see ‘exploitation’ in the free enterprise system, but here is some real exploitation: the irresponsible living off the labor of the responsible.

“Sometimes,” said Orwell, “the first duty of intelligent men is the restatement of the obvious.” So for those of you from Rio Linda, or who may be professors of liberal arts, or who, for whatever reason, might be a bit slow on the uptake, let’s be clear about the problem here.

To not support the children you produce is bad behavior. To have more children than you are capable of supporting is bad behavior. If you can’t feed ’em, don’t breed ’em.

To be able-bodied and yet live off the labor of others is unjust and immoral.

To force a man, who is working hard to support his own children, to devote part of his labor to support children who are not his own is something that most men feel viscerally to be unjust, and for good reason, because it violates nature’s reproductive imperative.

To punish the responsible in order to reward the irresponsible is unjust. Moreover, doing so will only encourage bad behavior and discourage good behavior. This is how socialism and big government ruin the society–by taxing good behavior and subsidizing bad behavior. If you subsidize anything, you’ll get more of it. The modern welfare and entitlement state is not an instrument of social justice.

Welfare, or what the British call ‘benefits,’ makes people worse. It literally makes them worse people; worse parents who do not provide a good example for their children, worse citizens who develop an entitlement mentality and make themselves a burden on their fellow citizens. It robs them of the motivation to improve themselves, and ultimately of their human dignity.

A few years ago, at UD’s annual Human Rights Week, we heard a professor of liberal arts declare that “welfare should be a Constitutional right.” Well, Orwell had something to say also about “ideas so absurd that only an intellectual could believe them.”

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Francis the Clueless

Kyle Smith, writing in the New York Post:

[T]he pope hinted that capitalism is a force that shackles and immiserates, when the exact opposite is true: Even partial market reforms have, in China and India, lifted hundreds of millions out of abject poverty and into relative comfort. This is not a miracle, but it is a blessing, and one that the pope seemingly opposes when he talks about “the millions of people living under a system which has overlooked them.”

In an earlier speech, in Bolivia last July, the pope said, “an unfettered pursuit of money rules” and called it “the dung of the devil,” adding that “once capital becomes an idol and guides people’s decisions, once greed for money presides over the entire socioeconomic system, it ruins society.”

No one is arguing that capital should become an idol, but free markets produce wealth that puts food in people’s mouths and clothes on their backs. The Church has a historic commitment to battling poverty, and yet its earthly leader is profoundly ignorant of how history tells us to accomplish this. He shouldn’t flaunt his lack of understanding.

We almost wonder if the Church doesn’t want people to remain poor and oppressed so they will turn to religion for relief, like Poland under communism. After all, the Church is growing rapidly in the poorest parts of the world like Africa, while in the richest parts like Western Europe, the churches are empty. Does the Catholic Church view prosperity as bad for its business model? We recognize the question is a profoundly cynical one. As the old saying goes, we try to become more cynical every day, but lately we just can’t keep up.

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Congress Bankrupts Puerto Rico

The media’s focus in recent days on the bankruptcy of Greece has overshadowed the unfolding bankruptcy of another polity–Puerto Rico. We thought that, much like Greece, Puerto Rico’s bankruptcy was due to socialism causing the state to eventually run out of other peoples’ money. That phenomenon does account for a big part of the story, but not the whole story. A recent report put out by top-notch economists–Anne Krueger, Ranjit Teja and Andrew Wolfe–highlights the role of two acts of Congress in crippling Puerto Rico’s economy.

Puerto Rico is an island. As on any island, stuff is just more expensive there. Yet because of an obscure law known as the Jones Act, which bans foreign vessels from shipping goods between U.S. ports, businesses in Puerto Rico have to use the U.S. merchant marine to import anything. They can’t just hire whatever boats and crew are available, which makes shipping even more expensive. The cost of transportation in Puerto Rico is twice that in the neighboring Caribbean nations.

The second law is a much more famous one, in fact one that many people feel they have to support in order to be considered a Good Person.

Another problem is that just 40 percent of the population has a job—or is even looking for one. That figure has plummeted in recent years. In the United States as a whole, it is 62.9 percent.

Why are so few people working or looking for work?

The report cites one surprising problem: the federal minimum wage, which is at the same level in Puerto Rico as in the rest of the country, even though the economy there is so much weaker. There are probably some people who would like to work, but because of the sickly economy, businesses can’t afford to pay them the minimum wage.

Someone working full time for the minimum wage earns $15,080 a year, which isn’t that much less than the median income in Puerto Rico of $19,624.

Maybe it’s just a coincidence, but Puerto Rico’s economy started declining in 2007, right after the Democrats won control of Congress and jacked up the minimum wage.

The minimum wage–what can’t it do? Oh yeah, increase employment.

When we lived in DC, we met numerous bureaucrats who had convinced themselves that the federal government was the only thing standing between America and total chaos. They really believed that, if not for those noble bureaucrats setting off for their offices every morning, America would devolve into a four-season Somalia.

In truth, the federal government more closely resembles Milton’s Chaos Umpire, creating the crisis, then making sure not to let it go to waste.

Chaos Umpire sits,
And by decision more imbroiles the fray
By which he Reigns

The federal government creates the crisis, then tells the people suffering through it, “See, you need us.”

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