Tuesday, March 28, 2017

Would America be better off if we became Norway?

Sorry for the long delay in posting anything.  I have been busy living in denial since last November and have not felt inspired to write much.  Here is my latest Op-Ed from The Orlando Sentinel.

Should America aspire to become Norway?

 According to economists who now study factors that determine human happiness, Norway is now the happiest place in the world.   The 2017 World Happiness Report says so.  It also says that America has fallen to 14th place.

For the past several years, economists have moved into a new realm of economic studies that focus on factors beyond income, wealth, consumer spending and the gross domestic product.    Now, my discipline has shifted to questions surrounding perceptions of mutual trust, shared purpose, generosity and the degree to which nations have good governance.

Somewhere Bernie Sanders is saying, “See, I told you so”. 

But before we all start packing our bags for this perceived Scandinavian utopia, it might be instructive to look a little deeper at what is happening in Norway and whether we could pull off the same model in the United States.

First, it is important for people to also look at Norway’s overall level of economic freedom.

The Heritage Foundation annually ranks countries, based on several criteria, to come up with a list of nations that are free, mostly free, moderately free, mostly unfree and repressed.

For 2017 Norway ranks 25th in the world.  The United States sits at 17th – the lowest ranking in the history of this list.

However, when we look deeper at Norway we find that in the area of protection of private property rights Norway scores far higher than the United States.  Norway also outranks the U.S. in business freedom (the ease of starting a business the amount of regulations faced), government integrity and trade freedom.  

It is somewhat paradoxical that most American see Norway as a quasi-Socialistic state.  Yet, citizens of Norway have more economic freedom than Americans in many key areas that play into the happiness index as well.

When it comes to tax burdens and government spending the United States has more economic freedom than Norway.    The effective tax rate paid by the average American is 26 percent.  In Norway it is 39.1 percent.

Moreover, government spending on the social welfare network is much larger in Norway – and in other Scandinavian nations – than in the United States.

Herein lies the question for Americans:

If Norway is a relatively free nation with few restrictions on trade, low levels of government corruption, fewer eminent domain takings of property and greater business freedom, would it make sense for America to follow Norway’s lead in those areas, while at the same time, raise taxes on the wealthy and provide a larger social welfare network?  Wouldn’t we be happier then?

After all, as I tell my students every semester, Norwegians voted for their tax rates and level of welfare.  This system of high taxes and generous benefits was not imposed on them and they can always leave for Hong Kong, Australia or other freer nations if they feel they are being taxed too much.

Meanwhile, in America we have witnessed more and more crony capitalism, skyrocketing levels of government regulations, takings of property by corporations and sports team owners in direct violation of the “public use” standard for eminent domain and choking occupational licensing procedures that keep poor people from competing with entrenched corporations.   

Yet, there is one rarely mentioned dilemma that we would face if we tried to imitate the Norwegian model.

That is the fact that Norway is a nation of 5 million relatively homogenous people.    It is much easier to have a common view of shared sacrifice, community spirit, mutual purpose and generosity when there is so little cultural asymmetry.     Anthropologically speaking, it would be impossible to pull off what Norway has achieved in a country as politically and culturally diverse as America.   We can barely get two people to agree on a subset of shared values much less 320 million.

Finally, and no less significantly, is the fact that America has a higher crime rate, greater obesity levels and much lower educational achievement than Norway.    Therefore, expanding the social welfare network to model Norway would be far more expensive, and our tax rates much higher.

So, while we have much to admire about our friends across the Atlantic, it might be best to hope that America returns to our higher levels of economic freedom than to ever expect to be as friendly and socially responsible as they are.



Monday, November 14, 2016

Dear Millennials, It is time to stop crying over Trump

The following is my November 11, 2016 Op-Ed in the Orlando Sentinel

It was with a mixture of amusement and nausea that I observed young Americans throwing a post-election fit in the wake of Donald Trump’s stunning victory in the 2016 election.  It was even more bewildering when I read about college professors all over America postponing exams and cancelling classes to help alleviate the stress and trauma their students were going through.

Give me a break.

I should begin by saying that I voted for the Libertarian – and geographically-challenged –candidate, Gary Johnson.   I also feel compelled, lest Sentinel readers judge me too harshly, that I spent large portions of this fall semester explaining to my students why Donald Trump’s policies on trade, immigration and entitlements made no economic sense whatsoever. 

That said, I want to offer some words to the millions of Millennial voters (and non-voters) who are now crying, stamping their feet and smashing their participation trophies in fits of rage over this outcome.

First, get over yourself.  In case you learned nothing in your public K-12 schools, there is a system in place that Hillary participated in and lost fair and square.  Spare me the complaints about the Electoral College.  Most of you do not even know what it is.  Those of you who do would have been totally fine if Mr. Trump won the popular vote and lost the election.  

Protesting the outcome of a legitimate election  - one where your age group failed to turn out in the same numbers that helped Mr. Obama get elected – is totally fruitless.  Walking out of class, chanting simple slogans about our offensive new president and screaming for a different outcome is like the proverbial locking the barn door after your organic cows have run away.   You lost.  Deal with it and regroup for 2020.

To your professors and teachers who cancelled tests and classes – what bunch of enabling, pathetic examples of adulthood you are.

I would be willing to bet that the day after Adolf Hitler became Chancellor of Germany, students in Germany had to take exams.    The day after Pearl Harbor and September 11th people had to get up and go to work.  In the future, your precious students you are trying to protect will have to function the day after other upsetting or horrific events have taken place.  Letting them go home or cancelling their obligations simply trains them to fall apart and abdicate their roles as students and future workers, spouses or leaders of this nation.

Now to some good advice for the nearly 80 million Americans who are part of the 18-35 year-old demographic.    It is time for you to revolt.    I do not mean burning tires or smashing the windows of the coffee shops you hang out in.  I mean revolution in your thinking and actions about Washington, D.C.

In 2008 young people rose up in staggering numbers to support the Libertarian-leaning Ron Paul.  Eight years later you jumped on the Socialist bandwagon of Bernie Sanders. 

My recommendation is that you combine these two movements into a new Millennial Party that represents intelligent change to American politics and policies.

You have shown us older folks that you are very individualistic when it comes to social issues.  You do not want 50-something year old people like me and others to tell you whom to marry, what to put in your body or what faith (or lack thereof) you should have.  Good for you.  It is none of my business – or anyone’s business what you do to yourself or with another consenting adult.  Keep telling us to mind our business and get out of your lives.

You also shown (at least in 2008) that you are aware of the fact that our economic system of crony capitalism, entitlements and debt will ruin your futures.    Many of you have shown that you are capable of running businesses that practice compassionate capitalism, sustainability, a deference to small and local suppliers, etc. in an attempt to be more socially responsible.  This is beautiful.  Keep it up – because the lobbyists and giant corporations out there are going to keep trying to rig the economy to suppress competition and plunder us for subsidies, bailouts and other anti-free market goals.

You need to organize your economic thoughts around the notion that the same government you do not want in your bedroom should not be in your wallet.   If you fight for your right to your property and your money with the same zeal you fight for gay-marriage and recreational marijuana you will be able to get people elected who will leave you alone.   This will mean social and economic prosperity – and an end to the duopoly of Republican and Democratic tyranny.

So, stop crying and get to work.


Monday, September 26, 2016

Trump and Clinton would fail my Economics class

The following is my September 24, 2016 Op-Ed in The Orlando Sentinel.  Enjoy tonight's debate...
As the United States inches closer to one of the most anticipated — and dreaded — elections in our nation's history, we should all be looking at which candidate can promote the most economic growth.
America's last recession ended in June 2009. Since then, the United States has endured the slowest economic recovery since World War II. While median incomes are finally rising, we are still below the earnings achieved before the last recession began. Unemployment is 4.9 percent, but we have the lowest labor-force participation rate in 30 years as millions of Americans have dropped out.
In the 1960 election, John F. Kennedy promised to create 5 percent economic growth. This was an astounding goal, given the three recessions that had occurred during the 1950s. 1n 1962, Kennedy called for a massive cut in corporate and personal income-tax rates. His tax plan passed in early 1964 and the 1960s saw his promise of 5 percent growth come true — all while federal tax revenues doubled.
Ronald Reagan pulled off the same results following the stagflation of the 1970s. His two tax cuts pushed the top income-tax rate from 70 percent to 28 percent and, along with his successful continuation of Jimmy Carter's effort to deregulate the economy, led to record economic growth and a near doubling of income-tax revenue.
While Trump should be commended for his recent proposal to lower income-tax rates and fight the growth of costly, and job-killing government regulations, his other ideas are so bad that any gains in economic growth from lower taxes and regulations will be more than offset by the economic costs created by his trade, immigration and social-welfare plans.
On trade, he wants to pull out of NAFTA, reject the Trans-Pacific Partnership and impose tariffs of 45 percent and 35 percent on China and Mexico, respectively. As reported recently in The Wall Street Journal, the Peterson Institute ran several models of his trade policies and found that this plan would lead to a recession within three years and as many as 5 million jobs lost.
Trump's vision of a border wall and deportation of nearly all unauthorized immigrants would, according to the American Action Forum economists, lead to an increase in the national debt by $400 billion while reducing the gross domestic product by $1 trillion as 11 million consumers and workers were sent packing. This 6.4 percent reduction in the labor force would also fuel inflation in housing and food as labor shortages lead to higher production costs.
Throw in his plan to expand Social Security benefits, and you have a recipe for exploding debt, economic contraction and higher unemployment rates.
Hillary — who apparently was not paying attention to her husband's highly productive economic policies from 1994-2000 — also deserves an F in economics.
After giving dozens of speeches supporting free trade, she now rejects open markets. Her trade policies are also projected by economists to be recessionary, but not as much as Trump's. She also proposes a massive increase in capital-gains taxes (her husband lowered the tax on investments to 20 percent, down from Reagan's 28 percent); higher marginal income-tax rates; an exit-tax on companies leaving America and more government spending on infrastructure.
Higher capital-gains taxes will reduce investments in new businesses or business expansion. Moreover, raising income taxes will not only not yield the revenue she thinks she will get, but it will slow the American economy. She claims the rich do not pay their "fair share" of income taxes, but according to IRS data, the top 5 percent of taxpayers already pay more than 50 percent of the tax burden.
America's 35 percent corporate income-tax rate is the highest in the industrialized world. Instead of raising this even more for companies planning to exit, Clinton should follow Ireland's lead and lower this rate so more companies will want to enter the United States.
Finally, from Franklin Roosevelt's New Deal through President Obama's 2009 stimulus package of more than $800 billion, we have seen promise after promise that government spending will create a multiplier effect and thus a booming economy. This concept has never produced the results predicted. Every $1 spent by government on a new bridge, for example, is $1 taken from a business or an individual that could have been spent on something else. We can see the new bridge and the jobs created building it. We cannot see the jobs lost from taking this money to begin with.
I sincerely hope that whoever wins this November will wise up and change his or her current plans. If the new president doesn't, the next four years will make us long for the slow-growth days of Barack Obama.

Tuesday, August 30, 2016

What my student's are (not) thinking Hillary Clinton's ideas

This week in my classes I handed out a sheet of paper to all 105 of my fall students as they walked into class on day one.   They were asked to indicate whom they would vote for in the 2016 presidential election.  They were given five choices - Hillary, Donald, Gary Johnson, Jill Stein and a write in candidate.  Then, they were asked to identify one specific policy proposal from the candidate of their choice and fully explain why they believed this policy would benefit the United States.
First, the result of the poll:
Hillary Clinton - 52 votes (49.5%)
Donald Trump - 19 votes (18%)
Gary Johnson - 19 votes (18%)
Jill Stein - 1 vote
I was a bit surprised by the number of students who even knew about the Libertarian candidate - and hopefully followers of this blog will find some hope in this result - but what I was really interested in was why they supported the person they picked.
Of course, for Donald Trump, all 19 students mentioned kicking illegal immigrants out, or building a wall near Mexico.
It was the Hillary crowd that gave these answers.  As always, everything within quotation marks is a real student response, unedited for grammar or spelling. 
Here, America, is what young people like about Hillary Clinton...
" I believe in gender and race equality so, I believe that Hillary Clinton has been enforcing them."
"Taxing the upper class more, because they can afford it and the wealthy can get around taxes."
"I don't know any of the policies that Hillary Clinton has proposed, but I do know that she is a Democrat and for me that is a big enough reason to vote for her, if I could."
"The reason why I choose her is more about sympathy.  I can't vote here, so I don't pay much attention on either ones."
"She is married to Bill Clinton, so if she needs any help, he can help her."
"A fair tax system would benefit the United States because it would mean equality among the classes. The wealthy, middle class and the poor would pay according to what they are able to. There would be no disagreements among the people."
"One policy I agree with is attempting to equals all social classes"
"health care policy if you cannot afford it, it provides you with health care, there are a lot of places where people could not afford to be taken care of. Yes this is not so good for the other people that could pay for it, not fair, because they end up paying for it, but that's just how it is."
"To be perfectly honest, I'd vote for Gary Johnson, but since that would be a wasted vote since not many people would even pay attention to him, I'd vote for Hillary Clinton instead."
"Exit taxes for national companies that have factories out of the U.S. Since there are so many American companies that move to China, for example, or other countries that have cheaper labor, the exit taxes would be a way to charge these companies."
"The one policy I mostly agree with that Hillary Clinton proposed is probably - if I'm not wrong - fixing the educational system and make tuitons more affordable and decrease the college debt that many students face right after graduating. It was a not so bad idea making the in state tuiton free for the state residents."
"Besides a free energy movement promoting solar, wind and other renewables energy sources, a general assumption that Bill would have direct contact to the source, could improve all policy's set but "free" energy could relieve dependence on foreign energy.
I have a lot of work to do....

Tuesday, August 23, 2016

Hillary Clinton's "Free" Tuition plan = Horrible economic policy

The following is my August 15, 2016 column in The Dallas Morning News
This month I turned in grades for my summer classes. The moment that task was completed I had officially wrapped up 25 years in America's system of higher education.
During that quarter-century, I have observed countless proposals from Washington, D.C., to the hallways of my institution to make college education more "accessible" for millions of struggling American families. The latest idea —straight out of the Bernie Sanders-created Democratic platform — has Hillary Clinton proposing "free" college tuition for a large swath of America's middle- and lower-income families.
This idea is loaded with several unintended consequences that will make the recipients of this federal gift regret the moment it passed.
1. Her plan would create an artificial increase in the demand for college classes at community colleges and public universities. Community colleges, which are open-enrollment institutions, would be inundated with students seeking seats. This would lead to massive shortages, unless states approve huge budget (and tax) increases to fully fund the expansion of buildings and hiring of new faculty that would have to take place.
Universities, facing a similar demand push, would simply raise the price of admission, meaning higher grade-point averages, SAT and ACT scores would be used to weed out students who have responded to the allure of free tuition. This greater selectivity would put even more pressure on public universities, which already are facing challenges in having a racially and culturally diverse student population.
2. Potentially millions of young people who have no business attending college would waste their time -- and taxpayer dollars -- seeking degrees they will not obtain. It is a simple fact that not everyone is capable of surviving the demands of multitudinous college majors. Free tuition would dupe young people into a sense of belonging, only to find that their work ethic, intelligence and aptitude are not up to the rigors of advanced education.
This brings us to another economic fact: Ill-prepared students who rush off to college could have allocated their time and resources to second-best choices such as internships, vocational training or other certification programs to become skilled workers in fields that are already in critically short supply -- and often pay more than college graduates earn. Clinton's plan only exacerbates those shortages in blue-collar trades by decreasing the available supply of candidates for those programs.
3. Her program also would lead to downward compression on salaries for students who do obtain college degrees. Simply put, if you have an artificial increase in college and university enrollment, you will have an artificial increase in the number of people who eventually receive degrees. Ask yourself what will happen if, say, the supply of humanities or English majors increases? Of course, salaries will have to fall as surpluses emerge in those professions.
Furthermore, possessing a college degree would now be less illustrious in the eyes of many employers (as it already is), and the four-year degree would be less valuable. This would force more students to turn to graduate school -- and more debt since Clinton is not giving that away for free (yet).
4. Then there is the problem facing college educators who would now teach millions of educational welfare recipients. We already see a growing trend toward millennial entitlement thinking. If President Clinton gives these folks free tuition, many of them are going to treat college like they do public high school. Does anyone really want America's colleges and universities to be regarded the same way we regard our high schools?
Free K-12 education is of the same quality as many other free goods -- poor, at best. Paying for college makes people value their education more.
5. Finally, there is the small matter of the United States Constitution. In 1794, James Madison said, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress, of extending on objects of benevolence the money of their constituents."
Since Clinton would have to swear to defend the Constitution, I would like to send her my pocket copy, which provides no measure for taking away taxpayer dollars to pay for the education of college kids. Simply put, our Founders recognized that in order to make tuition free for one person, an act of plunder had to be committed on a taxpayer.
Which leaves me with my recommendation to parents of college-age kids:
Pay for your own creation.

Thursday, June 23, 2016

A July 4th Challenge and cartoon for your kids...

Today in my classes I reminded my students that they have an exam on July 5th.  Mindful of the fact that many of them would rather not have to study supply and demand analysis on July 4th, I made an attempt to make them feel better. I explained how July 4th should be a day of mourning rather than celebration.  Mourning for what America could be - and should be - if we would only follow the principles of individual liberty and limited government spelled out in the words of our Declaration of Independence.
I went on to explain that if you look at the trend in property rights, civil liberties, taxes, the social welfare state and government regulations (all issues we have covered in class), America is far from what our Founders meant for it to be and that in reality, we are closer than ever to becoming a land of socialism where fewer and fewer people have anything more than contempt for our founding principles.
To prove the point that July 4th should be called "National Hypocrite's Day" I offered the following challenge:
"As your family and friends prepare to enjoy fireworks on July 4th, stop and ask them if they would mind if you read the Declaration of Independence to them and have a family discussion of that Thomas Jefferson was saying and how his words apply to us today."
I told my students that there is a good chance that their request will be met with protest and if allowed to read it they would look out and see glazed, indifferent expressions, followed by silence as if to say, "Can we just pop the firecrackers now??"
For those of you who do not think a reading of the Declaration of Independence would go over well in your household, let me offer this 15 minute cartoon/ Bernie Sanders monologue instead.  Surely you have 15 minutes to share this with your kids. 
Enjoy the fireworks.

Thursday, May 12, 2016

Why Libertarianism should be GOP's future

What follows is my May 10, 2016 Op-Ed in The Orlando Sentinel  
Now that the Republican Party has officially committed suicide by selecting Donald Trump as the new standard bearer of the GOP, it is time for all good Libertarians to come to the aid of our neighbor.

Make no mistake about it: If you are a traditional Goldwater/Reagan conservative, your party is now the one that is associated with xenophobia, racism, religious and ethnic bigotry and blatant sexism. On top of those unflattering but true categorizations, you also belong to a party that is now as economically ignorant as that of left-wing democratic socialism.
Yet, it is because of this reality that you, Republicans, are now in a prime position to make a historic comeback in 2020 and beyond. If you want proof, go back to the future and watch a 44-second YouTube clip from 1975.

Forty-one years ago, Mike Wallace of "60 Minutes" interviewed Republican presidential hopeful Ronald Reagan. In this segment, Reagan told Wallace that the heart of his philosophy was Libertarianism.

Reagan went on to explain that Libertarianism is essentially a belief that human beings are better positioned to make their own decisions without the control or regulation of government.
This means that, on social issues, Libertarians do not believe the state should have any say in who consenting adults marry; should not regulate what adults put into their bodies; and should not interfere with our rights to privacy, speech and other civil matters.

Democrats understand this all too well, and are to be congratulated for pushing for laws that do not restrict the right to marry whom we choose while getting laws passed that decriminalize marijuana use. Moreover, it has been the Democrats who have been most outspoken in fighting the government's surveillance practices against innocent Americans. Meanwhile, Republicans, in their best ostrich-head-in-the-sand impersonation, continue to push for laws that impose their "family values" on all the rest of us.

On economic issues, Libertarians want government out of our wallets as much as we want them out of our bodies and bedrooms.

This is where Republicans traditionally received high marks. After all, it was Reagan who drove the top marginal income tax rate from 70 percent to 28 percent in only five years. It was Reagan who championed welfare reform and fewer job-destroying regulations that helped to fuel the rapid growth of the 1980s. And spare me (in case you are a Democrat reading this) the line that "Reagan caused massive deficits." Government tax collections rose from $599 billion in 1981 to $990 billion by 1989 because of his tax cuts and growth-creating policies.

Reagan also championed amnesty for millions of illegal immigrants and never once announced a policy of not allowing any Soviet or Eastern-bloc residents to enter American until "we can figure this thing out."

Today's Republican Party also fails — miserably — the test of economic literacy.
Donald Trump wants to return the United States to the trade policies of the 1930s while pushing for greater social-welfare spending and immigration laws that would create labor shortages and inflationary pressures in innumerable areas of our economy.

But Trump's bad economics simply follow the policies of both Bush presidencies in which increased regulations, higher income taxes (the first Bush), horrible trade policies (second Bush) and rampant crony capitalism did not give voters much reason to believe that Republicans were good for their economic livelihood.

Those of us who are Libertarians offer today's disaffected Republicans a saner option going forward.
We would say to those who cannot stomach voting for Trump — or Hillary Clinton — that the time has come to realize that, on social issues, the country largely wants no part of 1950s Republican values. Millennials — who now outnumber baby boomers — do not want to hear about morality and certainly do not want the government to define it.

On the economic side of the coin, younger voters are torn between the Libertarian ideology of Ron Paul and the Socialist dogma of Bernie Sanders. In each of the past two election cycles, young people flocked to these candidates.

Now is the time for a smart Republican (no laughing, please) to embrace the Democratic Party on social issues and the traditional Reagan Libertarianism on economic issues in order to turn 2016 into a bad memory.

Or, Republicans can just keep losing elections.