More on Open Border policies around the world, Part Two

The Trump administration is currently building a border fence in Whatcom County, Washington where I lived for most of the last decade.

In order to put this in perspective, first let’s look at a few indicators. I am using a few of my favorites, the Democracy Index from the Economist Intelligence Unit, Press Freedom Index by Reporters Without Borders, and the Corruption Perceptions Index by Transparency International.

Press Freedom Index
Corruption Perceptions Index

This makes it pretty clear that there are several areas which do very well in terms of average freedom, and these also tend to correlate with each other.

Here is a current map of countries in the world which have open border treaties:

Current open borders
Open borders

If we were to filter out only the freest countries in the world, so those that are in the top thirtieth percentile for press freedom and corruption which have a closed border we find only one  border which isn’t open, and that is the border between the United States and Canada. Out of 23 such borders in the world which qualify.

I created a viability index, which multiplies corruption, ease of doing business, press freedom, and homicide rates together in order to get a rough metric to understand the country pairs which are the most likely to have an open border. The United States/Canada border scored as the 4th most likely in the world out of closed borders to adopt an open border.  Our score was hurt most by the homicide rate in the United States. The three pairs ahead of us are Croatia and Slovenia, Ghana and Burkina Faso, and Bulgaria and Greece. Two of these pairs are  going to be open through the Schengen Area in the near future. Ghana and Burkina Faso have significantly worse corruption than the other pairs in the list.

Using a Support Vector Machine using cross validation, I can predict whether a border is open or closed with 77.5% accuracy.

One question with extremely important consequences for everyone in both the United States and Canada is which direction this goes. It is pretty obvious that most of the countries which have opened their borders with their neighbors were already very developed before they opened them, which means the correlation almost always points from higher political development in neighboring countries leads to open borders.

In order to test this, we can look at the cases of open border areas in the order of age:

  • The oldest open border in the world is the Common Travel Area between the United Kingdom and the Republic of Ireland. It was formed as part of a compromise because of the tensions caused by the division of Ireland.
  • Treaty of Friendship between India and Bhutan in 1949.
  • Treaty of Peace and Friendship between India and Nepal in 1950.
  • Nordic Passport Union was signed in 1952.
  • The Gulf Cooperation Council in 1981 between Saudi Arabia, Oman, the United Arab Emirates, Kuwait, and Bahrain. Qatar used to be a member.
  • Schengen Agreement in Europe in 1995.
  • Union State between Russia and Belarus in 1996.
  • East African Community in 2000
  • Central America in 2006
  • Andean Community in 2007
  • CARICOM in 2009

Of these oldest open border schemes, we have most which preserved pre-existing open borders between these countries which shared a colonial and cultural past, and the Schengen Area which is in the region of the world with the most highly developed countries which border each other as a cluster. There are no other open land borders in the world.

So, what is really important to understand about this, is that on a global scale, the United States/Canada border is an outlier. The following graphs should make this very clear (blue means open border, red means controlled border):

GDP per capita vs. Corruption Perceptions Index
GDP per capita vs Democracy Score (Economist Intelligence Unit)
Better vs. worse Press Freedom Index between two bordering countries
Press Freedom Index vs GDP per capita
Lower Press Freedom score vs Lower GDP per capita among bordering countries
Lower Corruption vs Lower GDP per capita among bordering countries
Higher homicide rate vs Lower GDP per capita among bordering countries

What is so striking about these graphs is I don’t need to point out which pair is the United States and Canada.

In the graphs which look at the relationship between press freedom, corruption, and democratization between neighboring countries, there is always one red dot which stands out. That is the United States and Canada. By any metric, the United States and Canada are unique in the world in how we do not have an open border given the political economic realities of our countries.

This heavily implies that building a fence between our fences makes absolutely no sense since there is no other border in the world like ours which is not a free flowing border.

How Social Security Works

Social Security Old Age and Survivors Insurance is a program which every American who makes wages pays into every year of their life. Social Security takes 12.4% out of every paycheck in the country, for the pinky promise that you will receive some benefits when you retire.

There are a lot of myths on how Social Security, works, so let’s break down the biggest myths one by one.

Your employer does not pay half

Many financial advisors will tell you your employer pays half. This is not true because math. When studying tax policy, one of the first things you will learn is how a tax wedge works.

Supply and Demand

This graph shows what happens with any tax, not just Social Security.

  • P stands for Price
    • PS is the price the Supplier will pay
    • PC is the price the Consumer will pay
    • PE is the price there would have been if no tax had been levied.
  • Q stands for Quantity
    • QE is the quantity which would have been traded if no tax had been levied.
    • QT is the quantity which was sold because of the tax
  • T stands for Tax
    • TS is the tax paid by the supplier
    • TC is the tax paid by the consumer
  • DWL stands for deadweight loss, which is the lost economic welfare due to the tax.

From this we can learn several important lessons:

  1. The tax paid by the supplier and the tax paid by the consumer will never be the same.
  2. Every tax will reduce the quantity demanded of the good or service being taxed.
  3. Both supplier and consumer is in effect paying the tax, no matter who writes the check to the government.

In the case of labor, the worker is the supplier and the employer is the consumer. An easy way to remember this is that in any transaction the supplier will be paid, and the consumer will pay.

Calculus teaches us that when we have a function with a limit which approaches a value it will never actually hit that value, just like that mythical supply and demand graph where their slopes are the inverse of each other.

This is why the claim that employers pay half of Social Security taxes is a complete lie and because of Calculus it literally never happens.

My taxes do not go to my benefits

Your taxes do not go directly to your benefits. The system is somewhat byzantine, and the easiest way to explain it is to explain how an IRA works as a baseline, because it is a much simpler system.

In an IRA, you invest money into an investment plan. This will most likely be a mixture of stocks and bonds, which will likely grow because of interest until you retire. That money is legally yours, and when you retire you will withdraw an amount which will ideally not touch the principal, leaving inheritance for your children. IRAs are generally tax deferred, which means you can earn interest on money which otherwise would have been taxed, but the tradeoff is that when you withdraw the entire amount is taxed with special rules. But, the most important thing to understand is that every dollar you put into your IRA counts. Any money left over will be distributed according to your will, or if you don’t have a will by your State’s inheritance laws, which is generally your spouse and then your children.

Social Security is a much more complicated system. It is fully explained in this government document.

  1. Calculate the number of computation years.
    1. Generally 35. Can be changed by Congress.
  2. Wage Indexing of Earnings
    1. Basically calculates the inflation of the average annual wage from the year that person worked versus the index year which is two years before today’s date.
    2. Multiply that number by that person’s wages of each year, unless if they made more than the maximum creditable, in which case you multiply by that number which changes annually.
  3. Computing the Average Indexed Monthly Earnings
    1. The highest 35 years of indexed earnings are used to calculate your benefit. This is divided by 420 months.
  4. Computing the Primary Insurance Amount
    1. for the first $700 of AIME (in 2019) multiply by 0.9
    2. Multiply all money made between $700 and $1500 AIME by 0.32
    3. Multiply all money made between $1500 and $6000 by 0.15
    4. These bend points only apply to people born in 1957. For everyone else, their bend points are different.
  5. Computation of Monthly Benefit
    1. Add up the three values calculated in step 4.
  6. Early or Delayed Retirement Benefit changes
    1. Multiply the number calculated by Step 5 by the number required for early or delayed retirement.

Congratulations, you now know how to calculate your OASI Benefit! (assuming you don’t have spousal benefits as well)

By this calculation, here are some examples, for people who retired on their 62nd birthday in 2019:

  • $25000 per year:
    • $727 per month
    • 34% of salary
  • $50,000 per year
    • $1051 per month
    • 25% of salary
  • $100,000 per year
    • $1699 per month
    • 20% of salary

Source: Benefit Calculator
It can be very confusing for those who are new to it. All of these seemingly arbitrary numbers can also be changed by Congress at any time, in any direction, for any reason.

My taxes go to my grandparents

Your taxes do not go into some fund to save for your retirement. That’s how an IRA works. Your taxes go to pay for this year’s retirement and any money left over then is borrowed by the Federal government to pay for other programs. Nothing is actually saved for you. That’s how it works in Singapore and Australia.

The purpose of publishing this now is so people will understand how Social Security works since Donald Trump is talking about it in the news a lot right now.

 

Also, you still have to pay your Social Security taxes in April.

2021 Vice President

Joe Biden has said he has already picked a Vice President and that she is a woman. We don’t know who she is yet, but if we look at the history of Democratic Vice Presidents, we should be able to see a pattern of who successful Vice Presidential picks have been. I’m starting the clock in 1932, as the beginning of the Modern Democratic Party. This page from Wikipedia includes all the information we need.

Franklin Delano Roosevelt

Franklin Delano Roosevelt was the sitting governor of New York. He had 3 vice presidents during his time in office. His first one was John Nance Garner from Texas, who helped him carry the South. His second was Henry A. Wallace who was from Iowa, and his third was Harry S Truman from Missouri. All three offset his New York background with more conservative less rural backgrounds then he had.

Harry S Truman

President Harry Truman

Harry S Truman was from Missouri, first a local judge, then a US Senator, and then the Vice President. He selected Alben W. Barkley as his vice president who was from neighboring Kentucky.

Adlai Stevenson

Adlai Stevenson was from Illinois, and  both of his Vice Presidential picks were from the South. Eisenhower was a very powerful candidate given his strong middle of the road track record and military service.

John F. Kennedy

Kennedy followed the same strategy as FDR, being a liberal New England Democrat from Boston, Massachusetts, he selected Lyndon B. Johnson who was a powerful liberal Southern Senator from Texas. Even though he was from Texas, Johnson was quite liberal and he was of course very successful.

Lyndon Baines Johnson

Johnson followed the same strategy again, selecting Hubert Humphrey of Minnesota as his vice Presidential candidate in 1964. Humphrey complimented Johnson’s liberal views, and got a good geographic spread to his ticket.

Hubert Humphrey

Humphrey selected Edmund Muskie of Maine. This was the first all northern ticket of the modern Democratic Party. They were absolutely creamed in the election.

George McGovern

George McGovern of South Dakota ran with Sargent Shriver of Maryland in 1972. They received a total of 17 votes in the Electoral College.

Jimmy Carter

After two tickets with essentially all northern tickets, Governor Jimmy Carter of Georgia ran with Walter Mondale of Minnesota twice. He won the first election, but lost the second time against Reagan who had a ticket with George HW Bush of Texas.

Walter Mondale

https://upload.wikimedia.org/wikipedia/commons/6/6c/Vice_President_Mondale_1977_closeup.jpg

Former Vice President Walter Mondale of Minnesota ran another all northern ticket, with Geraldine Ferraro from New York. They got a total of 13 electoral college votes.

Michael Dukakis

https://upload.wikimedia.org/wikipedia/commons/b/bb/Governor_Dukakis_speaks_at_the_1976_Democratic_National_Convention_%28cropped%29.jpg
Michael Dukakis of Massachusetts ran with Lloyd Bentsen of Texas. They received 111 votes, but Bush won with a majority of the popular vote.

Bill Clinton

https://upload.wikimedia.org/wikipedia/commons/d/d3/Bill_Clinton.jpg

Bill Clinton is the only modern Democratic President to win with an all southern ticket, and he did it with a minority plurality (fewer than 50% of the votes but still more than any other single candidate) of the vote both times. Although they won the Presidency, the Clinton Presidency is not notable for any major achievements which fall in line with the Democratic platform before or after his Presidency, but he still was able to win. I have already written a thought piece about the importance of his Presidency.

Al Gore

https://upload.wikimedia.org/wikipedia/commons/thumb/c/c5/Al_Gore%2C_Vice_President_of_the_United_States%2C_official_portrait_1994.jpg/819px-Al_Gore%2C_Vice_President_of_the_United_States%2C_official_portrait_1994.jpg

Al Gore is a very unique Presidential ticket. Al Gore was a relative liberal from Tennessee running with a conservative Democrat from Connecticut, Joe Lieberman. They won the popular vote, but lost the electoral college because of the final vote count in Florida… but that is still disputed to this day.

John Kerry

File:John Kerry official portrait.jpgJohn Kerry is a fairly unique combination because he ran as a relative moderate form Massachusetts with John Edwards from North Carolina.

Barack Obama

Barack Obama returned to the tried and true model of running as a relative progressive from the North (this time from Illinois) with a relative moderate from a former Slave State, Joe Biden of Delaware. They won in a landslide majority twice with this combination.

Hillary Clinton

Hillary Clinton is a unique candidate, she was born in Illinois, but spent most of her career in Arkansas, where she was obviously first lady, but was the Senator from New York. So is modern America, where fewer people stay in one state their whole lives which Hillary Clinton represents. Her running mate Tim Kaine is from Virginia, and one of the least qualified candidates she could have possibly picked (he was the Chair of the DNC during the 2010 blow out). Tim Kaine was born in Minnesota, so they were very similar in the way how they were both born in Northern States but lived most of their lives in Southern States.

So, in summary, the successful tickets have the following pairs:

won? President VP Count
no South South 1
popular, no electoral South South 1
popular, no electoral North North 1
yes North North 1
no North North 2
yes South North 2
yes South South 3
no North South 5
yes North South 6

There is no significant correlation between the location of the President and Vice President and whether they win or not.

So what our analysis shows us is that the  region the Vice President comes from doesn’t seem to matter in whether the President wins or not.

The final potential variable we can look at is the existing job of the Presidential and Vice Presidential candidates. Since 1933, 13 of the Vice Presidential candidates have been Senators. The last time the Democratic Vice Presidential candidate was not either a Senator or a sitting Vice President was Geraldine Ferraro in 1984. The last successful candidate for Vice President who was neither a sitting Vice President or Senator was Henry A. Wallace in 1940. Joe Biden is almost guaranteed to pick a Senator as his Vice Presidential candidate.

He has said he will pick a woman for our next Vice Presidential candidate. I assume the candidate will be younger than 80. The potential candidates then are as follows:

  1. Kyrsten Sinema
  2. Kamala Harris
  3. Mazie Hirono
  4. Tammy Duckworth
  5. Elizabeth Warren
  6. Debbie Stabenow
  7. Amy Klobuchar
  8. Tina Smith
  9. Catherine Cortez Masto
  10. Jacky Rosen
  11. Jeanne Shaheen
  12. Maggie Hassan
  13. Kirsten Gillibrand
  14. Patty Murray
  15. Maria Cantweell
  16. Tammy Baldwin

If  Biden wants to do the best pick he can, he is going to want to have a candidate who is relatively progressive compared to him. Elizabeth Warren, Kamala Harris, Mazie Hirono, and Kristen Gillibrand are the three most progressive  senators according to Govtrack. However, in terms of public opinion as well as actual ideology, Kamala Harris has a strong cop narrative floating around which she has done a bad job responding to, and Hirono and Gillibrand are less widely known. For this reason, if Biden wants a progressive Vice Presidential pick, who will offset his moderate image with a progressive image which is reflected in actual policy, I believe Elizabeth Warren is his obvious choice to be the next Vice President of the United States.

Is the United States a failed state?

The United States is obviously in turmoil today. We have protests around the country, federal troops attacking American citizens on the street who were protesting indiscriminately, thugs who are coming into Black Lives Matter protests because they see an opportunity to cause mayhem, and more. This is all you can see on the news today. We have a President who is in denial of the epidemic which is ravaging our country as over 160,000 Americans have died from disease. In response to 2977 victims dying on September 11, 2001 we saw massive powers expanded to the Federal government which neither targeted the terrorists who actually attacked Americans, in fact they targeted everyone else (there will be another blog post about that Fascist legislation later). The issue with the pandemic is that there is no group of people which we can easily target to try to assuage fears, and there is no quick and easy solution which we can do which will calm the totalitarian tendencies of the right wing in the face of this tragedy. The only thing we can do is buckle down, fund the hell out of our scientific research to find a cure, and try to limit its spread through social distancing until it has either run out of fuel or we have a vaccine. It is very obvious at this point that we can only wait for a vaccine since the virus has been able to spread.

Does this make the United States a failed state? That becomes a very complex question, and since most Americans have never been to a developing or undeveloped country where they have mingled with the locals even once in their lives, it will be very hard for most Americans to have a clear perspective of what this means. Going to a resort in Mexico doesn’t count.

Fortunately, there are multiple indexes which measure this concept. I am look at three of  them to understand where we stand among all nations. I am going to use the Failed States Index, Corruption Perceptions Index by Transparency International, and Democracy Index by the Economist Intelligence Unit to try to get a wider perspective.

Failed States Index

When we look at the details on America’s failed states index we do fairly well on almost all indicators. In fact, we have improved on almost every metric except 3. Those three are factionalized elites, group grievance, and security apparatus. This has to do with several factors. The first is how people are finally waking up to the decades where police brutality has targeted people of color, and no one has done anything about this. The answer to  this is to end police brutality and increase the opportunity which impoverished communities have to have a place in the prosperity of the United States today. Another major factor is the absolute lack of accurate information which a large percentage of America is getting from Fox News and other far right sources. I have no easy answers on how to wean people off of this garbage media, and help people start to watch a wide variety of sources, and learn how to ask questions to determine the validity of one source over another.

A professionalization and defunding of American police forces will help with security apparatus and factionalized elites, as so many minority led non-profits are fighting for right now. The easiest thing to do is to eliminate all advanced weaponry in the hands of police forces.

In regards to the Corruption Perceptions Index the United States currently ranks 23 in the world (for the 2019 report, 2020 isn’t out yet) right next to France.

According to the Economist Intelligence Unit the United States does worst on functioning of government in 2019. Factors for this have included the following:

  • The unwillingness of the Republican Party to negotiate with President Obama during the last 6 years of his Presidency.
  • Having only two major parties as a consequence of First Past the Post breeds dysfunction.
  • Increasing political partisanship.
  • Donald Trump has been unwilling to negotiate in any way, and has called the independence of America’s judicial system into question.

It is obvious to me that removing Donald Trump from office needs to happen, and if we don’t he will continue to undermine our democracy, but we need to do more than that, particularly in regards to police brutality. These two issues are the biggest threats to our democracy today.

Implementing ranked voting will allow a more diverse political spectrum which will bring in more issues to our discussion. It will allow parties which have real grievances (such as with our police) to have a voice in government and be more likely to pass the reforms which are needed to have a more just, democratic society, and to save lives.

Democracy Index 2019

Looking at the United States today, no, we are not a failed state. But that being said we have several major issues which stand out on a global scale which need to be addressed as soon as we can. I believe we can do that. Here are the basic things you can do:

  1. Make sure you are registered to vote
  2. Get connected to your local Black Lives Matter chapter
  3. Get involved with FairVote
  4. Diversify your news sources.
  5. Make sure you understand basic statistics and Calculus so you can interpret the news.

Together we can make a more perfect union and address systemic issues which plague our country.

Hope

Hope enriches my life by allowing me to see the way out of times of trouble. It allows me to make and keep strategies for my own success which over time will allow me to spread my success to others. I do this by finding job opportunities for friends of mine, working on building up new companies which will be ethical and prosperous. I believe strongly that by increasing my own success it allows me to give more back to groups, particularly Carbon Washington, FairVote, and UU which I believe are doing good work and making the world a better place.

The word hope reminds me of both Star Wars and President Obama. Star Wars because of that line by Jyn Erso in Rogue One, and President Obama because that is what he campaigned on in 2008. I get hope by remembering that there have been times where things have been so terrible, but with enough hard work and advocacy we are able to make the world better. No one action has ever fixed every problem from the beginning. World War II is a great example of this. While it ended the Nazi regime, East Germany wouldn’t see true freedom until 1990, with a government which was undemocratic and controlled by a foreign power. The decolonization of Africa has had a wide variety of results. Botswana and Sudan decolonized around the same time, from the same colonial power, Sudan in 1956, and Botswana in 1966. Botswana is ranked as a full democracy by the Economist Intelligence Unit, while Sudan is ranked as an authoritarian regime. An even better example is that of Belarus and Lithuania. Both neighbors received independence from the Soviet Union in the same year. Lithuania is a member of the European Union and Belarus has a democracy score around that of China, Iran, or Venezuela, lower than that of Russia, Iraq, or Egypt.

The main message of this is how democratization matters, and is possible to do in even the most dire of circumstances. The question is how do we have systems which empower people to be the best which they can be, both through encouragement and simply allowing people to prosper? When we have systems which empower people to be the best which they can be, the entire outlook on the world changes, from a personal point of view people are able to see how they can make their lives better, and by improving themselves or their situations they are able to make the world a better place. I have hope and have seen the trend that as time goes on, the world does indeed get better. This was originally said by Unitarian minister Theodore Parker. But if you understand the story of Theodore Parker, he clearly understood there was no inevitability to making the world better. People who know his work or knew him then understand that he put his own life in danger by being an abolitionist, putting himself and his family in personal danger from both the law of the day and the Klu Klux Klan. In this way, the idea that the world will inevitably become better is a belief that despite the danger to self, you have an absolute conviction that what you are doing is not just the right thing to do, but that over time you will win. I personally find this to be even more inspiring than an idea that there is some inevitability to it, but in reality, it is the belief that building off this inherent belief that people are inherently good that in time they will see the error in their ways. There is a Universalism to this point of view, the idea that all souls are valuable, which makes Parker’s quote even more inspiring with that context. It is through this hard work that we build on what we have, and as we move the Overton Window towards justice, the moral arc of the universe self bends. It is a quote of both extreme hope and also extreme empowerment. It is the knowledge that what we are building a world which works for all (to quote a dear friend of mine), and that we will succeed in the long run. A world can only work for all which listens to all. A system where everyone has the ability to have the power to improve their well-being in life, be protected from harm, and spread their good fortune to others.

All of this is impossible to summarize in a short quote which can be put on a t-shirt or a bumper sticker, takes five to ten minutes to read about, and takes years to fully internalize. Hope is not just a feeling you have. Hope is a verb which you do when you see the possibility of a better world. As we live our lives, being the best people we can be in face of such significant cultural forces which are constantly trying to push us off course, is not an easy task, but it is worthwhile. As we continue this journey of hope towards a better world and making ourselves into better people, we are fulfilling the promise of so many prophets which stretch from ancient time to the present day which continues to make the world a better place for all.

Sudan Infant Mortality Rate, 1970-2020

Infant mortality around the world has continued to plummet in almost every country in the world. This is one of the greatest successes in the history of humanity. We still have issues, but we have solutions for almost all of them, and working together as a species we will be able to overcome challenges which we face. Given what we have done in the past, we will solve global warming. The question is how much damage has to be done first until we we realize that we are in danger and need to act now to fight climate change. I know that we will get a vaccine for coronavirus in the very near future, and I hope the deployment of the vaccine will be fast and efficient so we can save as many lives as possible.

Carbon dioxide to biochar

Problems with the video

The above video from Cheddar examines how scientists have developed a brilliant way to fight global warming in a community by using your air conditioner. Our homes contribute about 10% of our global warming emissions, which of course is a very serious problem and we have about 30 years to solve global warming. The video goes more in depth.

I had one issue with the video however, which is that it doesn’t go far enough. Capturing CO2 only to put it back in the atmosphere is counter productive. We are going to be spending precious resources on renewable energy to only put carbon dioxide back in the air. While this is carbon neutral, we need to do better.

First of all, I absolutely love the idea of using air conditioners to cool our houses and pull carbon dioxide from the air, but ultimately the numbers are very clear. We cannot use sequestration to remove all of the pollution we put into the atmosphere in even one year alone at a reasonable cost. It is akin to trying to fix an arm which has been chopped off with a band-aid, the solution does not match the problem. There is absolutely no alternative to focusing on policies which will significantly reduce the amount of carbon dioxide we emit into the air year after year.

Source: Columbia University

So how do we fight global warming?

Transporation is the biggest source of emissions in the United States

In the United States, more CO2 emissions come from transportation than any other source. Coal has been dying for a decade, and its decline will continue. We need to hurry up the end of the era of coal, first because it devastates the climate, and secondly because it leaves behind serious health problems in the communities it operates in.

We cannot settle for simply continuing to pollute as much as we had. We will never have the technology at an affordable cost to take out more than we are putting in the atmosphere, and it is highly inefficient. Why should we spend money to make electricity from renewable energy when we do nothing to fight the penultimate problem ,which is that we are burning far too many fossil fuels, emitting greenhouse gases at a rate which far exceeds the ability for the Earth to successfully digest?

Biochar needs to be part of the solution to global warming. We need to accelerate the carbon cycle’s pulling CO2 out of the atmosphere, and if we can grow food with it at the same time, revitalizing our soils and reducing the need for harmful pesticides which poison our water, than that is something we should absolutely do. We should pass policies which increase the amount of carbon sequestration and celebrate our victories. But we absolutely cannot let this be enough. We need to go for policies which reduce the amount of carbon dioxide we emit into the atmosphere, for the lowest cost both in terms of dollars spent and in terms of the opportunity cost. We need to be efficient about such methods, because the clock is ticking, and the urgency is increasing.

I believe that in order to do this right we have no choice but to implement carbon taxes as fast as possible, with as few exemptions as possible, to get to the rate which matches the destruction to our planet the burning of fossil fuels creates as quickly as we can. The minute someone looks at their checkbook and they see an electric car is less expensive than an internal combustion engine, and it provides the same benefits to them, a lot of people will choose the electric car over the internal combustion engine, which will change their calculations on which to buy and reduce the amount of carbon dioxide being emitted into our atmosphere.

We cannot afford to simply pay an optional sin tax for our fossil fuel burning by paying to build a wind farm every time we fly. We simply do not have the financial ability to absorb the carbon dioxide we emit every year through carbon sequestration without some very serious trade offs.

We need a carbon tax which treats a tailpipe and a coal power stack the same per ton of carbon emitted. We need a carbon tax which increases every single year at a set rate to get to the point where the cost of burning a gallon of gasoline includes the entire social cost of burning that gasoline. To not do that creates moral hazard of the highest order, The externalities of fossil fuels are far greater than the benefits they provide to society. If we all had to pay full price at the pump, we would all change our behavior.

I feel like a broken record, but that is because nothing has fundamentally changed. I look around at options to fight global warming and we have honestly very few options.

  1. Reduce emissions
    1. Carbon Tax
    2. Cap and Trade
    3. Subsidies
  2. Take Greenhouse gases out of the air
    1. Biochar
    2. Technology
    3. Plant trees

There really are no other options that I can think of.

Each of our sequestration options have serious drawbacks. When it comes to taking greenhouse gases out of the air it is very simple, they are too expensive and we simply cannot pull out enough carbon to match the amount we emit.

So we are left with reducing emissions. Short of everyone reducing their quality of life (good luck on that) we are stuck with three options.

Cap and trade sounds like a great policy to fight global warming until you actually study it. The European Union has the world’s largest carbon trading market in the world. It has had significantly low prices for most of the previous decade. It still target=”_blank”reduced emissions, but for me it is impossible to not see the massive opportunity cost with the additional emissions which have occurred if the price had been higher. It makes it painfully clear how hard it is to make a cap and trade system which will not be self-defeating if it is not meticulously designed.

Subsidies to fight global warming are great, but they have a wide range of effectiveness in terms of how they are spent, which alternatives you fund, and how well you do it. If we end up reducing energy prices because of new electricity available on the grid, then the incentive for people to switch from existing fossil fuels will be reduced. The Carbon Tax Center makes the full explanation of how subsidies can be counter productive if not done precisely right.

Carbon taxes however do not come with any of the problems mentioned with the other proposed global warming solutions. They will not make it cheaper to pollute like a poorly designed subsidy, and if they are effective they will not drop like a poorly designed cap and trade system. You can absolutely use the money from a carbon tax to fund any programs you want, whether it is more renewable energy, reduce taxes on low income households, or fund a plan for low income households like the Earned Income Tax Credit. It is simply money and you can do whatever you want with it. Designing a carbon tax is also very simple. You just set the price, and every purchase of a fuel which will emit carbon dioxide is taxed at that rate for the amount of pollution that fuel will produce. It is the only policy on this list which does not seriously require a PhD in economics in order to be confident you have designed properly, and as we have seen with cap and trade and subsidy approaches in the past, carbon taxes fight global warming far more efficiently because they do not stop working if they are more effective than initially planned.

Conclusion

I did not plan on this post about global warming to be about carbon taxes, I was really intending to write about carbon sequestration, but it did not take much reading to make the sheer cost of the amount of sequestration which would be necessary to make a reasonable dent in global warming explicitly clear to me. I care about this issue, but I also care about education, health care, and many other important issues. That means that I consider myself progressive, and I also care deeply about efficiency. As an economist I understand the idea of opportunity cost, and I apply this to everything in my life. This is why my conclusion is very simple.

  1. We should absolutely do as much carbon sequestration as we can while balancing other important issues.
  2. We should not transform that back into fuels to emit back in the atmosphere. To do so is pointless.
  3. We need to reduce the amount of carbon dioxide we emit as a species as fast and efficiently as possible.

Disclaimer: I am a member of the policy committee of Carbon Washington. All views in this article are the opinions of the author alone and should not be construed as an official policy position of any organization.

Coronavirus Aid

It took me some time to unravel why we are losing Coronavirus aid today. This article from Marketwatch explained it very clearly in a single sentence:

On Monday, Senate Republicans unveiled a new stimulus package, dubbed the Health, Economic Assistance, Liability Protection and Schools Act, or HEALS Act, that calls for implementing supplemental weekly unemployment benefits equal to 70% of a workers’ prior wages with a $500 cap.

What does this mean?

What switching the $600 unemployment benefit from the Federal government to States will do is strain state budgets which are already struggling due to a drop in tax revenue due to the largest recession since the great depression. With state budgets under even more stress, with higher requirements for unemployment benefits and less assistance from the Federal government, and no where to turn for tax revenue state governments will have to cut services. State budgets are generally mostly going to programs like health care and education, more unfunded mandates from the Federal government. The States will either have to limit access to Medicaid further during an economic recession and epidemic as a result of this policy, which will only make the epidemic worse, or they will have to cut funding for education which will hurt students of all ages, through fewer resources, fewer school lunches which often are the only meals students get in poor districts, or even cut access to food stamps which are seeing record levels of applicants.

Further straining state budgets who cannot simply borrow from the Federal Reserve like the Federal government can is the entire point of this latest Republican experiment in cruelty and economic suicide.

An economy cannot survive without a  well educated populace.

Which is where charter schools come in, where only the rich have access to education.

The goal of switching the burden of stimulus from this economy from the Federal government is so that Republican governments in most States will

If this wasn’t bad enough already, the Ayn Rand institute who originate a lot of these plans received Federal aid money. this is almost as bad as sending  tax payer dollars to fund your political campaigns on top of private donations. It is corruption to the highest level.

The same goes for all of those military contracts in the original stimulus package who will turn right around and use that same money to go fund the campaigns of people like Mr. McConnell.

The Republicans are using coronavirus aid to limit the ability for States to provide essential services to their citizens. They are taking a crisis which none of us have seen in our lifetimes and turning it upside down in an honestly quite clever way in order to further their highly partisan agenda of eliminating every part of Federal Government which benefits people of color.

Mitch McConnell has blood on his hands.

Coronavirus Aid should not be tied to Objectivist goals

Current Coronavirus cases
Coronavirus is in Large Metropolitan areas and Republican states. Not much else to say

Obama supports ending the filibuster

Today was John Lewis’ funeral. John Lewis was obviously a truly great member of congress, renowned for being part of the March on Selma, and remembered just as strongly for being a stalwart in the United States House of Representatives, the conscience of the nation, a life long civil rights activist who ascended to the highest levels of government, using his conscience to serve his country which he loved so very much.

Three presidents spoke at Representative Lewis’ funeral today at Ebenezer Baptist Church in Atlanta, Georgia. The first to speak was President George W. Bush. He gave a short speech, and I personally found it rather boring. The second to speak was President Bill Clinton who talked in detail about working with John Lewis when he was the President, and how great a man we know John Lewis was.

Nancy Pelosi spoke as well, and she had worked with him longer than anyone else there today.

Obama however stood above every other major political speaker. He talked about how in order to truly honor John Lewis we need to continue to support the same policies which he does. Most importantly, Obama supports abolishing the filibuster if it gets in the way of passing civil rights reform, decrying it as a relic of the Jim Crow era.

Soon after, #MyPresident was trending on Twitter, and when you saw what people were talking about, you would find they were talking about President Obama.

#MyPresident
The hashtag is still going this evening, hours after the funeral

I don’t remember President Clinton stealing the show when Bush was president. I remember he was there during the Reagan funeral of course, but people weren’t looking at it and remarking at how his eulogy was the best of them all. As soon as Bush left office he almost disappeared from public life. When I was a young child, George H. W. Bush was almost never talked about.

President Obama is different. Not only is he the first African American president in history, but he also continues to be a leader for our nation long after he finished his two terms. As I went for a walk today I thought, “He was right when he said he would probably win reelection in 2016”. This is the problem with term limits, if you look at 2016, the probable candidates to run for President were HIllary Clinton and Joe Biden, both of whom has serious foot in mouth disease, Elizabeth Warren who chose not to run, and that is about it. This NBC article didn’t even mention Elizabeth Warren. Very few candidates had the national name recognition, and since Obama was ineligible, there weren’t any other household name recognition candidates left in the country.

On top of this, President Obama has the grace, tact, and style which made him one of the most effective and consequential Presidents in the United States. He is highly unusual that even after being President he continues to be a public figure, with high approval ratings which give him the power to move the national needle of public opinion.

Senators across the country are going to have to respond to President Obama now, and it is going to be a campaign issue this November for Senate races. This is a good thing, and an obviously calculated move for President Obama. Forcing Democrats to announce they support a major reform which will make a significantly more functioning government is going to make a massive change in the next Congress which starts on January 3rd. Senators could potentially end the filibuster by January 20th which would allow President Biden to pass major reform, or deliver major progressive legislation to President Biden’s desk which he will have to sign.

To President Obama, thank you for your service to our country. Our country is a better place because of you.

To the late Representative John Lewis, may you rest in peace. Our nation owes a debt to you which will probably never be repaid. You made our country a better place, and you will never be forgotten.

All politics is local politics

Our local elected officials make significant decisions which directly impact our lives every year. One example is how there are resolutions in every city council across this country right now which are restricting police violence or giving them more leeway. When it comes to the management of local police forces your city council has far more direct power than the federal government, especially during this time of federal dysfunction. Even in the best of times if the Federal government were to make rules about police brutality it would take a long time to make sure those rules are followed in each of the tens of thousands of municipalities across America. However, if we focus on what our local officials are doing than they can make practically immediate changes regarding their agencies. Part of this also has to do how with in many parts of the United States Republicans completely dominate local and state governments because the DNC was headed by two DINOs, Tim Kaine and Debbie Wasserman Schultz who had no interest in sending money to local parties, and here we are. This leads to a deficit of experienced candidates in most of the country which makes it hard to get the best qualified candidates to run for congress, which allows people like Trump to violate the Constitution, Geneva Protocols, and general human decency.

Local politics effects so much of our daily lives, our water, our roads, our electricity. They regulate local utilities and ensure health and safety hazards to protect workers. Perhaps more than anything else, the local politics determines the zoning of your area, which determines how dense your neighborhoods are. Your transit agency is local politics, which is one of the biggest determinants on whether people are able to climb out of poverty.

Whether you are looking for people to ascend to higher office or to find someone to improve your local community, it is important to vote for every race on your ballot in every election.

President Harry Truman
Jackson County Judge and President of the United States

President Harry S Truman is a really good example of a local politician who started his career in local politics as a Jackson County Judge and then moved up the ranks as United States Senator and then as Vice President, becoming President upon the death of President Roosevelt. If he hadn’t been voted in as the Presideing Judge of Jackson County he never would have been able to implement his Fair Deal which included the prohibition of child labor, Fulbright Program, the National Science Foundation, expansion of the Tennessee Valley Authority, and major programs to help Americans buy homes. This all started because he was active in local politics which led him to eventually become the President of the United States.

New Castle County Board Member and Vice President Joe Biden

Vice President Joe Biden had a similar career to President Truman. He was elected as a Member of the New Castle County Council in 1970 at  the age of 28 and became the Senator from Delaware at the age of 23. He became the Vice President of the United States in 2009 and is currently favored in both betting pools and polls to become they next President of the United States.

The Democratic Party likewise needs to ensure it competes with Republicans in every county across these United States because those local politicians can help rural America develop at the same time as they are prepared to run for Federal office, and perhaps someday to become President of the United States. Getting the best people possible elected into local politics makes a major difference in our day to day lives, and gives the National Party a strong pipeline of candidates so we can get the best candidates for Congress and the Presidency.

Remember to vote in your local elections. They really matter.

The Derivative of a Constant is 0

We are going to start today’s lesson with some mathematics, at the end we are going to fully understand the roots of why a basic income will not impact the amount people work.

What is change?

In order to understand the impact of basic income on unemployment we need to start with some fairly basic mathematics.

Change in math is answering the question of how much will one thing change if another changes? If I turn this knob on my bathtub, how much water will come out of the spigot? If I tilt my milk carton, what will be the velocity of the milk? If I shoot a gun in the middle of a field, what is the velocity (change of location over time) of an unladen swallow? It is important for people to understand these very real life scenarios so you don’t flood your bathroom, spill your milk, or be catapulted into a bottomless valley. This is the idea of change. In mathematics we call it the slope of a line.

How do we calculate slope? Well, you do it all the time. If you drive onto the freeway it will say that the speed is something like 100 km/hr. This sign is telling you that if you were to drive on this freeway at the speed limit for one hour you will travel 100 km. This is boring, but it is very important. Slope can then be written as a change in distance over a change in time.

Infitesimal and derivative

The roots of marginal analysis

The next idea of slope is the idea of an infitesimal. We can find the average rate of change of any two slopes with that fairly simple equation in the previous section, but in order to proceed we need to be able to find the slope of any line at any point.

 

This is the basic idea of a derivative. This is useful in almost any scientific field you can imagine. You can plug a general equation into that definition with the limit at the bottom and find the correct equation for any equation in the universe if it has a derivative.

For example:

 

This is the essence of calculus.

Why do people do what we do? The essence of economics which is Marginal Analysis

So let’s say you went to the store this week like many people do. Why did you buy what you did? You reached the dairy aisle and you were confronted with several choices, you have cows milk, almond milk, soy milk, and other options. Within each of those categories you have whole, half and half, 2%, and fat free cows milk, and many flavors for all of your vegan milks and milk from other animals. Why will you buy your whole cows milk over vanilla soy milk? The most likely answer is because you prefer it, or more importantly, you think you will enjoy drinking whole cows milk more than vanilla soy milk based on the information you have.

These are three very important ideas we use in economics to describe and understand behavior.

  • Perceptions
  • Information
  • Preferences

First of all, a perception is based on the information someone has on an item and how it will impact  them and the world around them. The amount of information people have is constantly changing, and it will impact how people choose what they buy and do not buy.

Preferences is very simply someone saying they want one item over another and they will choose it over another.

What are they weighing against? Well, they are trying to improve their total happiness. We call this utility in economics, because the idea was founded by the Utilitarians of the early 19th century.

In short, people are always trying to maximize their utility in everything they do day after day.

The second important concept is not just how much utility doing this will give me but also the cost of doing one activity over another. There are two types of costs people will consider. They will consider their absolute costs, such as I would love to travel to the Great Barrier Reef, but it will cost me about $2000 round trip from where I live for just the airfare. That $2000 could have been spent in other ways, and if I default on my rent I will be homeless, meaning my overall pleasure is reduced. The cost relative to what else we could have done with that money definitely impacts the decisions people make from day to day.

The next question is while we have the understanding that people want to maximize their pleasure, minimize pain, and reduce costs (mainly because of the trade offs), our final question is how those relate to each other. This forms our demand curve, which represents the relationship between the cost of one good and the amount we will buy. Also, if the price of a ticket goes down, people will be more likely to buy more of it, and vice versa. If you see an item you like is on sale, you will likely buy more because that maximized your utility. Essentially, as the price goes up, the amount people are able and willing to buy declines without sacrificing other goods which will reduce their overall wellbeing, and vice versa.

 

Supply works the same way, so in the labor market the amount of hours people are willing to work for a certain rate is proportional. It is not going to be directly proportional however, because as people get more money they will need to be paid to put in another hour of work is going to be larger because the marginal benefit of every additional dollar is relatively smaller. If I already have a million dollars saved up, a nice house, a fancy electric car, and I can travel whenever I want, why would I go do a tedious job for a measly $20 per hour? I would absolutely be willing to spend an entire week in Yosemite hiking with some wonderful friends and sacrifice that $800 since my million dollars in the stock market is going to likely grow more in that time than the offered wage. For that reason, the pleasure gained form the added income for doing a job will always have to be greater than if that individual had been doing recreation. Ever wondered why CEOs and stock traders get paid such lavish salaries? This is why. As long as the value of that works is worth that much money, the stock holders will be more than willing to pay it. This means the supply of labor offered for each wage will look like so:

This graph is with the total number of hours worked on the bottom, and the wage is going up to something like a million dollars per hour. After we add up all of these curves for every individual in the market, and for the analysis of how it will effect 99% of people it essentially looks something like this:

Basic Income

This is where the derivative, basic income, and demand come together into one very powerful lesson.

If a socialist state were to say they were going to give their people a set amount of money every month, will this impact the amount people are willing to work? Well, this is where calculus comes in to solve the problem.

Let’s say a company were to give every employee a $500 bonus. Will this inevitably lead to people taking more time off? Probably not a significant amount. People think on the margin, and the overall benefit  of a reasonable amount of money gained through a basic income program is almost certainly not going to be at the level which will cause people to start taking time off of work in droves. This is essentially a basic income for your employees of that company. As long as the marginal benefit of seeking extra work with the company is greater than the marginal benefit of going on that additional vacation, the person will continue to work.

The same will happen at a state or national level as well. If people see an extra $1000 in cash, this does not impact the calculus of the slope of determining whether people will offer significantly more or less work compared to now. The equation for how many hours people will supply their labor is for all practical purposes a linear equation, where the amount of hours they spend is reflected by the wage paid. Basically, the equation looks like so:

Total wage = hourly rate * hours worked + bonus

If you take the derivative of the total wage with respect to hours worked ( in short, what will determine the amount of hours worked by an employee), you find that the bonus is a constant, so the derivative becomes:

δ wage/δ hours worked = hourly rate

The bonus does not impact the number of hours worked in the short run.

Basic income has no impact on either the wage paid per work hour so it does not impact the overall amount of hours which will be spent working in society. As long as it is not large enough for the relative pleasure of an additional vacation to be worth more than working an extra week, it will not effect employment. No country has ever gotten to that level.

Practically that means if a bonus was theoretically an amount large enough to provide enough income from investing the bonus in a short amount of time you would see it effect the amount of hours worked. No serious proposal for basic income, or actual implementation of one has ever been that large.

If basic income did make an impact on how much people worked, than companies would not give out bonuses to workers. Most of corporate America has some sort of bonus structure, and many co-ops will give dividends out to all of their members regardless of the amount of work they put in based on the profit of the firm on a regular basis. If that were to impact the amount of work employees put in they wouldn’t have such policies.

This is the full reason why basic income has no impact on employment.

This is why the $600 unemployment bonusus did not lead to people working less.