Wednesday, May 26, 2010

Social Welfare without Liberal Immigration Policy: an unsustainable proposal

Why 100% coverage healthcare or education is not sustainable: it incentivizes limiting population growth, which long term hamstrings the economic growth that is supposed to fund such coverage in the first place.

I don't think its a coincidence that 1st world countries are precisely the ones that have the lowest birth rates, despite the fact that from a resources perspective it makes very little sense - how are America and Europe so well fed but having so few babies? Such a situation would have been absurd at any other point in human history, or natural history for that matter. Why are some of the healthiest, wealthiest groups of people in the world behaving reproductively like they're experiencing famine?

Through very liberal social welfare, countries make each citizen an expensive liability as each must be provided the same high level of health and social services, without inequality or discrimination for any reason. The net effect is not an increase in Democracy, equality, or the human condition as the liberals who envisioned such policies might have hoped when they passed their "forward thinking" and "progressive" reforms. Instead, the net effect is to motivate those countries to make becoming a new citizen extremely difficult. After all, if each new citizen costs the state an average of say $20k a year, members of the country will be a lost less willing to accept new immigrants than if the cost per citizen were $5k a year - this is simple economics.

And in fact, as a proof of simple economics, increasingly difficult barriers to immigration into wealthy countries is precisely what we have seen happen - the richer and richer the first world becomes, the stricter and stricter immigration laws they pass. This is not just in the United States, either - witness the extreme xenophobia and bias against immigrants that pervades Europe. Most people who live in China are apparently not even real Chinese citizens, which is apparently a right only conferred on those lucky enough to be born Han Chinese. It is doubtful that this is due to direct racism so much as it is straightforward economic reality: as an increasingly wealth socialist state, the cost of guaranteeing "bare minimums" for its citizens is increasing right in step, making the Glorious Revolution far more stingy when it comes to handing out membership cards.

New citizens are fundamentally a risky economic investment for a state - they require large upfront investments of capital in the form of social programs and guarantees promised, but in turn pay relatively little in taxes during their initial period within a country due to lower earnings when compared to existing citizens (being that the new citizens are either young, new immigrants, or both). Given all the various ways that a new citizen can fail, its not entirely clear that the state will always receive a payout on each new citizen. Like any other economic agent considering an investment, a country will weigh the perceived risks and rewards when determining the price to set for each new citizen.

Fundamentally, the maximum potential output of a country is directly proportional to the amount of labor available within the country. No more work can be done than there are men and women to do it. Although a country's actual productivity may vary with time (as most biological and natural systems are apt to do) and perhaps even grow with increases to efficiency through technology or process improvement, long term productivity cannot be sustained without a corresponding increase in population. Can you begin to see the contradiction?

By continuously increasing the costs of investing in each and every new citizen, a country will slow population growth both via birth and immigration. This in turn fundamentally caps the total possible production of a country, which in turn caps the total amount of taxes said country can possibly derive. However, when the generous social welfare programs were implemented, the accounting assumed economic growth rates to continue indefinitely. But without the increasing population necessary to support such economic growth, such programs become unsustainable. Considering that the expensive programs themselves are the precisely the things causing the slower population growth, I must conclude that no existing social welfare policy today is long term sustainable.

So what's the fix? Simple - make immigration super easy through the proper channels (think like how getting a driver's license is "super easy" at the DMV). This will allow the state to tax immigrants properly. Meanwhile, explicitly do not allow new immigrants access to certain rights that other citizens may receive - essentially, lower the cost of benefits provided to new citizens during some initial period of their citizenship. Certain human guarantees of course would be provided - we cannot skirt the fact that new citizens do require some initial capital investment from the state - but fundamentally, benefits would be provided somewhat in proportion to net investment into the system, thus making immigration a much more economically justifiable "pay-as-you-go" system. Note that many immigrants already accept such deals when they immigrate illegally - if people are willing to come, work in America, pay taxes, and otherwise build their lives in America without expecting any protection from the government, why shouldn't we allow them to do so? By reducing the economic burden of new immigrants, we can ensure that investment in new citizens remains high

However, whenever anyone mentions loosening immigration laws, the first thing that people bitch about is that they'll lose their jobs ("Dey terk er jerbs!"). We don't want dirty foreigners coming and stealing our precious fast food, janitorial, lawn care, meat processing, or migrant harvesting jobs from good, hard working Americans, right? I vomit a bit whenever I hear supposed "Americans" saying that bullshit. Aren't Americans supposed to be scrappy, resourceful fighters who can overcome a challenge better than anyone else in the world? Our country didn't get where it did today by backing down from difficulties and hardships. As scary as it might sound, the government does not guarantee you a job - that's the whole reason it has things like unemployment benefits. To me, the image of a true American is one who gets a pinkslip and turns it into an opportunity. To me, the real American is the one who proudly collects their unemployment check, righteous in the knowledge that they didnot selfishly beg the Government to prop up whatever whatever outdated and economically nonviable corporation that had been forced by reality to cut costs to more sustainable levels. A real American would look the terrifying specter of unemployment directly in the face and realize that the only thing we have to fear is fear itself. Otherwise goddammit, if we can't do that then what right do we have to call ourselves Americans?

We cannot let short term fear and protectionism guide economic policy in a way that is clear to fail. We must ensure that the American population continues to grow, and the best way to do that is to allow immigration to occur as freely and sustainably as possible. Whatever the short term repercussions this might have, America's glorious history of free immigration and strong economic growth is a testament to not only the long term viability of such a policy, but its necessity if we are to remain the number one world economic power.

Wednesday, May 19, 2010

Political Chatter

ZOMG, Black Mamba had been out of commission for a long time!! Like seriously.  Consumed by finals, followed by a 10 day in-city vacation, ending with a few days of decompressing.  SIGH.  Luckily, Cobra was able to handle the stresses of the snake pit.

Now for some fun, let's recap the latest news since I've been gone (ie: posts I COULD have written).

1) Arizona is a Snake Pit too.

Sometime in April, Arizona decided to commit an act of mega-douchiness by passing the anti-illegal immigration law - or the racial profiling law? it's so douchy we can't tell.  The Snake Pit CATEGORICALLY REJECTS the Arizona law and encourages the boycotting of the whole state.  That's not too difficult though because... ummm, what's in Arizona? Plus New Mexico is prettier, more movies are shot there, we encourage you to go there instead.  Seriously, what does Arizona have aside from a bunch angry white people? the Shins are from New Mexico, The Killers are from Las Vegas.  I mean, not even Arizona Tea is actually from Arizona.  Maybe the state felt bad for not being that important.  Although a quick search on wikipedia informed me that Sandra Day O'connor is from Arizona (ok, score one for AZ) and Cesar Chavez (wow, score two).  Although... wikipedia also tells us that Cesar Chavez was kindda anti-immigration too.  Damn... maybe there's something in the Arizona air.

But you know what was more amusing than the Arizona law? the REACTION to the law - who chose to support it and who didn't.  Here's where political integrity GOES TO DIE.  In a dramatic twist of douchiness, John McCain decided that it was more important to get elected again than to actually believe in something.  Now, I don't presume to say that politicians don't flip flop and it's useless to complain about it.  But the ultimate act of douchiness occurs when YOU CHAMPION A CAUSE, as John McCain did by CO-SPONSORING a pro-immigration bill and then you support this law in your own state.  Like seriously... McCain lost all my respect right there.  Another case of douchiness comes from Florida senate candidate Marco Rubio who flipped flopped on immigration to put up a stronger fight against Charlie Crist.  You know... there's something REALLY douchy about Cubans who oppose illegal-immigration.  Let's briefly explore the hypocrisy.  So a Cuban person can just get up and go, pay a coyote, hopefully survive the treacherous and dangerous trip and land in Miami.  As soon as his/her feet have touched American land, this person WILL BECOME A CITIZEN, FULL FLEDGED.  If a Mexican person (or anyone else for that matter) does THE SAME THING, they become an illegal immigrant.  Damnn... so the same act can be legal or illegal depending on the origin.  The truth of the matter is, IT'S THE SAME THING... and I don't have a problem with Cubans getting such fabulous rights (just because they have communism), but I DO have a problem with them pretending that their act is NOT the same as that of a Mexican immigrant and then condemning those people.  Like, I'm sorry, what??  Yeah, no, Marco Rubio... I'm voting against you this november, oops.  Sigh... so much douchiness, like any of these people are gonna be cleaning toilets for a living at lower than minimum wage.  Let's not get it twisted... this law is not about AZ trying to enforce the law or help fix immigration.  This law is about a bunch of people freaking out about a rapidly changing america that culturally will look radically different in years to come.  Evidence of this, is sadly shown as a sheriff, anti-immigration supporter, had the NERVE to ask on CNN that "what about the cop who was murdered by illegal aliens, what about the family whose daughters have been raped by illegal aliens, or the people that have been robbed?".  Oh, yes.. this sheriff has to defend the white daughters that are gonna be raped.  I think I've heard this language before.


2) BP... yous an idiot.

In a dramatic turn of events, the oil drilling law that had been the subject of a post in this blog has been cancelled!! HAHA, this made me laugh a little, but the reasons are so tragic that the laughter can only last for so long.  Oil spills are common every 20 years, sure, but what is happening right now is OFF THE CHAIN.  This is not an oil spill... this is a an oil leak!!!!!!  To think... that everyday that passes, that we go about our business, there is oil gushing out into the ocean from this pipe is SCARY.  Obviously, I'm pro-environment and anti-oil, so I'm gonna keep my bias down.  It's interesting to see the reaction here in Washington.  Obama was angry at big business, congress was angry at the executive AND big business, Louisiana was angry at everyone (maybe even God?), and BP just kept its mouth shut.  BP has been so inadequate at fixing the problem though, it's baffling.  And I think it IS single handedly destroying, with every barrel of oil that leaks into the gulf, the prospect of off shore drilling that had been so difficult for the companies to get.  Sigh... so sad.  But I guess it will be interested to see what happens politically, what the cost of this will be, and who will pay for it (if anyone!).  For the moment though, BP!!! PUT A LID ON IT!


3) The Specter Spectacle

Oh god... if there's one thing I really hate, it's DINOSAURS.  In Venezuelan politics we (except the opposition) have learned that Dinosaurs can really ruin electoral chances.  I was baffled when I heard that the Obama administration decided to support 80 year old chameleon dinosaur Arlen Specter.  Like... seriously, Obama Team, did you REALLY think he was going to win??  No, I know, you had to pay him back for voting pro-health care, I get it.  But... really?? Was it worth the embarrassment?  To be honest, I was kind of rooting for the other guy... especially after the way that they threw him under the bus.  Like, I'm sorry, he actually has the right to say that his victory is a victory against the establishment... because nothing is MORE establishment than the advancement of dinosaur causes.  A CNN man said "I guess Specter will have to find another day job"... ummm, WHAT? HE'S 80! HE should be looking for a retirement vacation home in Florida! GOD.

Now in other primaries... I want to point out Rand Paul (not to be confused with his father Ron Paul... lame) won a decisive victory on behalf of the tea party.  He made sure to mention this several times in his speech.  I think this proves Cobra's projection that republican incumbents will be the victims of Tea Party rage.  Whether this will mean anything for November?? I honestly can't wait to see who would actually win a seat in a contested election of Tea Party candidate versus a Democrat.  PERSONALLY... I will go ahead and say that it is bad for the republican party to have Tea Party candidates in their elections, given the fact that in major public opinion polls, only 11% of Americans identify with Tea Party views.  Seriously, these are far right candidates that can only really win a non-primary election in far right states that were already going to be republican ANYWAY.

I agree with Cobra... contrary to the media's perception, the Tea Party movement STILL does not pose a threat to Democrats in November.  They pose a threat to Republican unity... THAT'S for sure.

Sunday, May 9, 2010

A vacation from European debt drama


So, Greek debt drama, Spain and Portugal, blah blah blah. I'm sick of it. Lots of people talk about how it will spell doom and gloom everywhere - both abroad and back here in the states. I can't help but think - man, if the Euro is so cheap against the dollar, right now would be a great time to go to Europe if you were an American. After all, the US job market is finally starting to pick up, and companies are hiring again.

My prediction? America keeps recovering economically, and over the coming tourist season more people will visit Europe because its so much cheaper now. Back during the Iceland debt drama (remember that, anyone?), one of my graduate student buddies and his friends took at trip to Iceland for a price that even a graduate student could afford. Tourism revenue will increase, and Europe will get back on its feet again like it always has for the past four millenia.

Oh, and another thing I want to point out: what's happening in Greece does not imply that the debt structure of bigger nations is unsustainable. Countries like Britain, Germany, and the US are not going to come close to defaulting the way Greece has. At the very least, it certainly won't be in the same way: the Greek drama was caused by their use of financial instruments to take more risk than borrowing regulations would have ever allowed otherwise. After re-reading Traders, Guns & Money, I noticed that such uses of derivatives to avoid borrowing limits is an often employed financial strategy by doomed banks and governments alike. Now, I'm not saying that the bigger nations won't ever shoot themselves in the foot by evading regulations - instead, I'm simply pointing out that such big nations create the regulations themselves. They have little incentive to try to cheat those regulations in order to chase higher profits, and even if they were to do so, they're powerful enough to simply refuse to make good on whatever debts they end up with - they could easily claim that they were mislead by the banks that sold the assets; the bank would take the fall, not the government. Quite frankly, the big nation's debt structures are sustainable because they say they are. Who can really challenge that? Who wants to?

The Yankees continue to pastraminate the Red Sox this weekend - my prediction (as Black Mamba can attest to) was a full sweep of the Botox Bosox this weekend, which would warm the hearts of New Yorkers everywhere. Considering that New Yorkers and Wall Street traders include a surprising amount of overlap, my prediction then is that this will lead to a market rally on Monday. Let's see if my crazy predictions can come true? At the very least, I did just hear an ad on Pandora for no hassle vacations to Europe through Contiki, a travel service that caters to 18-30 year olds who want to see the world without having to plan shit themselves. Sounds appealing. Even better, I just want to point out the display ad that Pandora has up for me right now. Notice the portion highlighted in red - at least one of my predictions appears to already be coming true. I hope that bodes well for the others ;)