Archives: 10/2012

Immigrants Are Important for Disaster Reconstruction

Hurricane Sandy walloped the East Coast yesterday. The strongest part of the storm focused its wrath on coastal cities, ravaging New York, Atlantic City, Ocean City, and others in the storm’s path. In the coming days, focus will turn from rescuing people to rebuilding the devastated areas.

Immigrant workers, especially in the building trades, are an essential component of any reconstruction. People living in places hit by Sandy are going to demand an influx of laborers to rebuild and replace their destroyed property.

During and after Hurricane Katrina in 2005, hundreds of thousands of people from Louisiana, Mississippi, and Alabama left their homes behind. For many from New Orleans, Houston became their new home. In contrast, around 100,000 immigrant workers quickly moved into the Gulf Coast area to take advantage of the labor market opportunities offered by the reconstruction in the aftermath of Katrina.

Many Americans also moved into the Gulf Coast region to rebuild with the immigrants. But in the year prior to Hurricane Katrina, Hispanic immigrant workers accounted for about 40 percent of the total growth in the construction sector-–the majority of whom were unauthorized immigrants. A year after the rebuilding began in New Orleans, an estimated quarter of all construction workers were unauthorized immigrants.

A tornado in Tuscaloosa, Alabama in April 2011 left 43 dead and tore a path almost a mile wide through the city. Immigrant Hispanic workers in Alabama responded with alacrity. “Hispanics, documented and undocumented, dominate anything to do with masonry, concrete, framing, roofing, and landscaping,” said Bob McNelly, a contractor with Nash-McCraw Properties. Three months after the tornado, Tuscaloosa issued 1069 business licenses with 81 percent of them related to businesses repairing storm damaged.

There is no economic silver lining to a disaster, despite what The New York Times thinks, but fortunately there is a mobile workforce capable of responding to natural disasters to aid in reconstruction. After dealing with the Tuscaloosa reconstruction, McNelly said that he prefers Hispanic immigrants workers. “It’s not the pay rate. It’s the fact that they work harder than anyone. It’s the work ethic,” he said.

Immigrant workers are the economic early responders to natural disasters. They are typically younger so they do not own houses and mortgages tying them down to certain areas. As a result, they move quickly based on labor market demands allowing reconstruction to start quicker and complete faster. Immigrant workers, mostly Hispanics in the building trades, will flock along with others to the areas devastated by Hurricane Sandy. As in previous natural disasters, they will be an important component of any rebuilding.

Would You Let a Quack Treat Your Child?

Cases in which parents deny their children modern medical treatment are increasingly rare. In medicine, the days of snake-oil selling quacks are mostly behind us. Sadly, the same isn’t true in education policy.

Medical researchers precisely define and test their proposed treatments. Compare that to a recent bit of education policy “analysis” in which the writer purports to assess Milton Friedman’s market-inspired proposal (minimally regulated school vouchers) by reviewing the outcomes of charter schooling. This is like testing insulin by administering Flintstones Chewables. Charter schools are opened and closed at the discretion of government authorities, lack market-determined prices, and cannot be operated for-profit or offer religious instruction. In many states, they cannot hire teachers who lack government credentials. Friedman’s voucher proposal shared none of these characteristics, and so to treat the two interchangeably is a sign of ignorance or intentional equivocation.

Even when relevant evidence is presented, the presentation is frequently inaccurate and unsystematic. To see just how serious this problem is, it helps to look at an example in detail. Consider a recent discussion of voucherizing U.S. federal education spending that drew lessons from Chile’s voucher program. Many of its facts are wrong, others are misrepresented, and key pieces of information are omitted.

The author claims that Chilean education spending as a share of GDP shrank between 1980 and today. But, according to the United Nations, it rose from 4.4 percent to 4.5 percent. And, due to the sustained growth of Chile’s economy since the mid-1980s, inflation-adjusted per pupil spending has more than doubled.

The author acknowledges that Chilean students are now the highest-performing in Latin America, but claims that his fabricated “budget cuts have led to overall decline in quality.” In fact, Chile is one of the fastest-improving nations in the entire world on international tests of academic achievement. He goes on to claim, without support, that vouchers have led to growing inequality, benefiting only upper-middle-income families, yet a Yale University study reports that the voucher program has reduced inequality in educational attainment and raised earnings equally for both the poor and the non-poor.

Finally, the author notes that lower-income students are more likely to attend public rather than private schools in Chile, but neglects to mention that public schools serving the poor receive a varying amount of additional funding that is not given to private schools serving similar students. Chilean economists Sapelli and Vial report that public schools receiving vastly higher funding per pupil outperform private schools (which explains their appeal), but in the rare cases in which the public sector’s funding advantage is 25 percent or less, it is private schools that perform better.

This is not an exhaustive list of the commentary’s errors, omissions, and misrepresentations, but it should suffice to show the level of quackery being doled out to the public by purportedly serious publications (it was published in the Washington Post’s education blog). We’re not exactly talking House or Doc Martin here.

Few parents would administer the medical equivalent of this claptrap to their children–they are generally protected from such errors by the health-care field’s comparatively careful, systematic research practices. But in education, they still suffer under the ministrations of charlatans. The result can be seen in the virtually unique productivity collapse that has beset American education for generations.

So what can we do about it? A first step would be for well-intentioned education policy analysts to make more systematic use of the high quality research that is available, and to add to that literature. But it is harder to conduct experiments on the impact of state or national policies than on the impact of drugs. Fortunately, there is a solution to this problem–one that we also owe, incidentally, to the medical field. I’ll be writing about that soon, and will update this post with a link when it’s available.

Update: My article in the Washington Post’s Answer Sheet blog.

This is No Way to Organize a Society

Congratulating them in only the narrowest sense, Ezra Klein credits Senate Majority Leader Mitch McConnell (R-KY) and House Speaker John Boehner (R-OH) for their success in obstructing President Obama the last four years. This has garnered endorsements for Mitt Romney from newspapers that see him as more capable of eliciting cooperation from these congressional leaders.

Nevermind how much this was an articulate strategy distinct from insisting on their own priorities. How outrageous that these men should be rewarded for obstruction, the Obama supporter fumes! And if you’re a Republican, you smugly chuckle.

And none of these politicized characters need consider U.S. government policies regarding military spending, entitlement spending, transportation spending, education spending, warrantless wiretapping, drone war, monetary policy, privacy, regulation, tax rates, tax incidence, waste, fraud, abuse, agriculture subsidies, endangered species, energy policy, or the drug war (What did I forget?–plenty). The differences between the two parties are minimal.

All the world’s a stage, and all the men and women merely players. But while you’re hanging on this strange contest to control a big chunk of your life the next four years, the valets are stripping your car.

The current state of affairs–this political American Idol–is not God-given. Restoring the federal government to its proper role, and limiting states to theirs, we might once again take control and decide for ourselves how our wealth is apportioned and how our lives are run.

People on both sides think that this election is do-or-die, hopping on stage to take part in the play. But politics is no way to organize a society. Exeunt.

Global Science Report and The Current Wisdom Now on Cato@Liberty

Fans of Cato@Liberty may have noticed two new features from the Center for the Study of Science.  These are a weekly Global Science Report and a monthly Current Wisdom

While the Wisdom has been a monthly feature that can be found under my publications, World Science Report is new and is modelled after my original blog, Global Climate Report, which is the Web’s longest running climate change blog.  Our first release was September 11, 1995. The enormous archive at http://www.worldclimatereport.com is cross-referenced by subject and date, and can provide valuable information on virtually any climate question.  We also reserved the right to write in a humorous fashion.

As the Center adds new affiliates, you will see much more in the new World Science Report than mere climate.

Dissecting Obama’s Record on Tax Policy

The folks at the Center for Freedom and Prosperity have been on a roll in the past few months, putting out an excellent series of videos on Obama’s economic policies.

Now we have a new addition to the list. Here’s Mattie Duppler of Americans for Tax Reform, narrating a video that eviscerates the President’s tax agenda.

I like the entire video, as you can imagine, but certain insights and observations are particularly appealing.

1. The rich already pay a disproportionate share of the total tax burden - The video explains that the top-20 percent of income earners pay more than 67 percent of all federal taxes even though they earn only about 50 percent of total income. And, as I’ve explained, it would be very difficult to squeeze that much more money from them.

2. There aren’t enough rich people to fund big government - The video explains that stealing every penny from every millionaire would run the federal government for only three months. And it also makes the very wise observation that this would be a one-time bit of pillaging since rich people would quickly learn not to earn and report so much income. We learned in the 1980s that the best way to soak the rich is by putting a stop to confiscatory tax rates.

3. The high cost of the death tax - I don’t like double taxation, but the death tax is usually triple taxation and that makes a bad tax even worse. Especially since the tax causes the liquidation of private capital, thus putting downward pressure on wages. And even though the tax doesn’t collect much revenue, it probably does result in some upward pressure on government spending, thus augmenting the damage.

4. High taxes on the rich are a precursor to higher taxes on everyone else - This is a point I have made on several occasions, including just yesterday. I’m particularly concerned that the politicians in Washington will boost income tax rates for everybody, then decide that even more money is needed and impose a value-added tax.

The video also makes good points about double taxation, class warfare, and the Laffer Curve.

Please share widely.

Higher Taxes on the Rich Are a Precursor to Higher Taxes on the Rest of Us

President Obama repeatedly assures us that he only wants higher taxes on the rich as part of his class-warfare agenda.

But I don’t trust him. In part because he’s a politician, but also because there aren’t enough rich people to finance big government (not to mention that the rich easily can alter their financial affairs to avoid higher tax rates).

Honest leftists are beginning to admit that their real target is the middle class. Here are a few examples.

In other words, politicians often say they want to tax the rich, but the real target is the middle class. Indeed, this is the history of tax policy. In a post earlier this year, warning the folks in the Cayman Islands not to impose an income tax, I noted how the U.S. income tax began small and then swallowed up more and more people.

[T]he U.S. income tax began in 1913 with a top rate of only 7 percent and it affected less than 1 percent of the population. But that supposedly benign tax has since become a monstrous internal revenue code that plagues the nation today.

The same thing is true elsewhere in the world.

Allister Heath explains for London’s City A.M. newspaper.

The introduction of income taxes around the world have tended to follow a very similar pattern over the past couple of centuries. First, we get generally low income tax rates, with most people exempt and with the highest rate only affecting a few people relatively lightly. Eventually, tax rates shoot up for everybody – including to crippling levels for top earners – and millions more are caught by income tax. The next stage is that the ultra-high tax rates for top earners are reduced to manageable levels – but ever more people are brought into the tax system, with the higher brackets also catching vastly more folk.

By the way, you can see that Allister makes a reference to tax rates being reduced for top earners. That’s largely because many politicians learned an important lesson about the Laffer Curve. Sometimes, the best way to “soak the rich” is by lowering their tax rates. Unfortunately, President Obama still needs some remedial education on this topic.

Allister then looks at some specific United Kingdom data revealing how more and more middle class people are now subject to higher tax rates.

The biggest change in the UK has been the number of people paying what is now the 40p tax rate: up six-fold in thirty years, from 674,000 in 1979-80, 2.5m in 1999-2000 to 4.048m in 2011-12. This number will jump again to around 5m in 2014, according to the Institute for Fiscal Studies. When Margaret Thatcher came to power, just 2.6 per cent of taxpayers paid the top rate; by the time of the next election, 16.7 per cent will.

If Obama and other statists get their way, we’ll see similar statistic in the United States. Higher income tax rates for the rich will mean higher income tax rates for the rest of us. Though I’m even more worried about a value-added tax, which would be a huge burden on ordinary people and a revenue machine for greedy politicians.

It’s worth noting, by the way, that the American tax code actually is more “progressive” than the tax codes of Europe’s welfare states. This is largely because we don’t pillage poor and middle-class taxpayers with a VAT.

P.S.: Since I mentioned the Laffer Curve above, I should emphasize that the goal of good tax policy should be to maximize growth, not to maximize tax revenue.

P.P.S.: And don’t forget that poor and middle-income taxpayers also will be hurt because slower growth is an inevitable consequence when tax rates climb and the burden of government spending increases.

Social Issues in the 2012 Election

Remember when Republicans thought that social issues, especially gay marriage bans, would help them win the 2004 election? There’s good evidence that it wasn’t true even then. But take a look at 2012. Even though President Obama and the Democratic platform have endorsed marriage equality, Mitt Romney and the Republicans are staying well away from the issue.

And well they should. The Washington Post reported earlier this month:

In February, a poll by the [Des Moines Register] newspaper found that 56 percent of Iowans were opposed to legislative efforts to pass a constitutional amendment to ban same-sex marriage. That is consistent with other swing states: Voters back gay marriage by 21 points in Florida, 15 points in Ohio and nine in Virginia, new Washington Post polls found.

A September Post poll in the crucial state of Ohio found that by 61 to 30 percent, registered voters said they trusted Obama “to do a better job dealing with social issues such as abortion and gay marriage.”

A poll published Sunday found that in swing-state Virginia

Obama also enjoys a wide lead among likely voters (56 percent to 35 percent) on the question of social issues, such as abortion and same-sex marriage.

Post polls also found that nationally 63 percent of the tiny number of genuine swing voters support gay marriage.

That sound you don’t hear, the sound of Republican speeches and ads denouncing Obama for his support of gay marriage? That’s the sound of social change.

Much more on these topics in our new ebook, The Libertarian Vote: Swing Voters, Tea Parties, and the Fiscally Conservative, Socially Liberal Center.