Many critics of immigration claim that immigrants will grow the size of government. As their argument goes, allowing for more lawful immigration to the United States will produce a larger government through immigrant voting behavior or their children’s voting behavior. However, if another factor like institutional changes can explain the growth of government, we would expect government to grow independently of the size of the immigrant stock.
There are many measures of the size of government, many of which are included in the Economic Freedom of the World: 2014 Annual Report. As excellent as that report is, the data does not go back far enough to show whether government growth a century ago tracks well with growth in the immigrant population. Older data is essential because there have been radical changes in immigration policy over the last century and larger changes in the growth of government. By looking at the more distant past, a clearer picture can be formed over how immigration has impacted growth in government – if at all. My charts below focus on the federal government only.
Below I use two measures of the growth of the federal government from 1901-2010: Real outlays (2010 dollars) per capita and government outlays as a percent of GDP. I use figures for every decade as yearly data is more difficult to attain.
Source: Table 1.1, http://www.whitehouse.gov/omb/budget/historicals & U.S. Census
Real government outlays per capita go up no matter what happens to the stock of immigrants. Two forty-year periods had very different immigration policies: 1930 to 1970 and 1970 to 2010.
Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”
It is the current rage in the mainstream media and the government to tie almost everything into human‐caused global warming — from a sluggish economy to Ebola, and everything in between (and then some).
In fact, virtually none of these claims are supported by a consensus of evidentiary science. Here is (yet) another example, debunking the popular notion floods are being worsened by dreaded climate change caused by pernicious economic activity.
Clinically speaking, a “flood” is actually an extreme excursion in streamflow. So, if changes in streamflow are related to long‐term changes in climate, and we accept that the majority of those latter changes are caused by said economic activity (we don’t), then our activities should increase streamflow and therefore the frequency of floods (or their opposite, droughts).
Two scientists from the U.S. Geological Survey (USGS), Gregory McCabe and David Wolock, recently examined historical (1951−2009) streamflow records from 516 rivers and streams that they considered to be only minimally impacted by human development. They first sorted the data into regional patterns, and then compared the temporal behavior of these patterns to common historical climate indices — such as well‐known patterns of atmospheric circulation, sea surface temperatures, or even large‐scale warming.
It turns out that there weren’t any relationships between streamflow and the larger atmospheric phenomena. Or at least, so very few that they are hardly worth mentioning.
Here is how McCabe and Wolock describe what they (didn’t) find:
Comparing time series of climate indices…with the time series of mean [stream] flow for the 14 clusters [patterns] indicates weak correlations that are statistically significant for only a few clusters. These results indicate that most of the temporal variability in streamflow in the conterminous U.S. is unpredictable in terms of relations to well‐known climate indices. [emphasis added]
In other words, trends and/or variability in larger‐scale features of the climate (including rising temperature from global warming) are not very strongly (if at all) related to regional and temporal characteristics of streamflows across the U.S.
And before anyone starts to argue that we have left out the direct (i.e., local) effect of global warming — that warmer air holds more moisture and thus it can rain more frequently and harder — McCabe and Wolock report very few long‐term trends that would be indicative of steadily rising moisture levels. Instead, the find the historical records dominated by periods of multidecadal variability. In their own words:
Analyses of the annual mean streamflow time series for the 14 streamflow clusters indicated periods of extended wet and dry periods, but did not indicate any strong monotonic trends. Thus, the mean cluster streamflow time series indicate nearly random variability with some periods of persistence.
The bottom line is that McCabe and Wolock do not identify any behavior in historical U.S. streamflow records that is suggestive of an influence from human‐caused global warming.
So next time you hear that there are increasing droughts or floods in the U.S. and that they are, through some convoluted explanation, “consistent with” global warming, remember two things: 1) “consistent with” is not the same as “caused by” and, 2) the consensus science linking global warming to changing streamflow characteristics across the U.S. is lacking.
McCabe, G. J., and D. M. Wolock, 2014. Spatial and Temporal Patterns in Conterminous United States Streamflow Characteristics. Geophysical Research Letters, doi:10.1002/2014GL061980
Compensation for federal civilian employees is more generous than private‐sector workers. Federal workers receive better benefits than their non‐governmental counterparts in particular, and generous paid leave benefits are one of the federal advantages. A new report from the Government Accountability Office (GAO) suggests that federal agencies are abusing this benefit.
The Washington Post summarizes the GAO findings regarding the number of workers who are being paid for staying home:
53,000 civilian employees were kept home for one to three months during the three fiscal years that ended in September 2013. About 4,000 were idled for three months to a year and several hundred for one to three years. This is the first time the government has calculated the scope and cost of administrative leave.
The Office of Personnel Management permits paid leave for many reasons including jury duty and snow days. But those types of absence do not require one to three months of time out of the office. Instead, it appears that agencies are shifting employees to paid leave for months at a time while dealing with performance issues:
Auditors found that supervisors used wide discretion in putting employees on leave, including for alleged violations of government rules and laws, whistleblowing, doubts about trustworthiness, and disputes with colleagues or bosses. Some employees remain on paid leave while they challenge demotions and other punishments.
This practice varies from the private sector where paid leave is used infrequently. The Washington Post notes that in the private sector “an employee accused of wrongdoing either stays at the office and is reassigned or is suspended without pay,” generally within days to minimize costs.
All told, GAO estimates that federal employees collected $775 million in salary while on leave. Employees continue to receive other benefits as well. Time on leave counts towards pension and pay increase calculations, and employees continue to accrue vacation and sick days.
GAO acknowledges that this cost estimate understates the problem because it only includes three‐fifths of the federal civilian workforce. Leave is not tracked for the remaining employees.
Abusive practices are not a new phenomenon. As early as 1958, the comptroller general found excessive use of leave and ruled that it should not be used for more than 24 hours for employees under investigation.
Senators Chuck Grassley of Iowa and Jon Tester of Montana are working on legislation to overhaul this practice. If passed, the legislation “would narrowly define the circumstances in which employees can be kept home” and “pay would be limited to a few days,” to match private‐sector practices. Limiting this abusive practice would save millions in unnecessary expense.
A tax reform is spurring a savings revolution in Canada. Amity Shlaes and I wrote about Canada’s Tax-Free Savings Accounts (TFSAs) in the Wall Street Journal in August. We think that such accounts would be a fantastic policy reform for America. They would simplify the taxation of savings, encourage families to save more, and spur stronger economic growth.
Toronto firm, Investor Economics, has released new data confirming the popularity of TFSAs. In just the past year, TFSA account assets increased 34 percent, and the number of accounts increased 16 percent. In June 2014, 13 million Canadians held $132 billion in TFSA assets. Given that the U.S. population is about 10 times that of Canada, it would be like 130 million Americans pouring $1.3 trillion into a new personal savings vehicle.
The chart shows the rapid growth of TFSAs since they were introduced in 2009:
There are 27.7 million Canadian adults, so about 47 percent of them own a TFSA, according to the data from Investor Economics. A 2013 survey by a bank found a similar figure of 48 percent. In just five years, TFSAs have become the most popular savings vehicle in Canada, outstripping the Canadian version of 401(k)s. TFSA growth is expected to continue, and the accounts may soon play a central role in virtually every family’s financial planning.
The American vehicle most similar to the TFSA is the Roth Individual Retirement Account (IRA). But Roths are far inferior, and thus just 16 percent of U.S. households own them. Indeed, just 38 percent of U.S. households hold any type of IRA, even though these accounts have been around a lot longer than TFSAs.
TFSAs are like supercharged Roth IRAs. Here are some of the key features:
- Individuals can deposit up to $5,500 after-tax each year. Annual contribution limits accumulate if you do not use them. So if you contribute $2,000 this year, you will be able to put away $9,000 next year ($3,500+$5,500).
- All account earnings and withdrawals are tax-free.
- Withdrawals can be made at any time for any reason with no penalties or taxes. That greatly simplifies the accounts and increases liquidity, both of which encourage added savings.
- There are no income limits and no withdrawal requirements. All Canadian adults can contribute and withdraw at any time during their lives.
- TFSAs can be opened at any bank branch or online. They can hold bank deposits, stocks, bonds, mutual funds, and other types of assets.
- TFSAs are great for all types of saving, including saving to buy a home, a car, or to start a business, and saving for health expenses, unemployment, or retirement.
Why are we letting Canadians have all the fun? Everyone agrees that Americans don’t save enough, so why don’t we kick-start a home-grown savings revolution with a U.S. version of TFSAs? Former Treasury official Ernest Christian has long championed similar accounts, which he and I call Universal Savings Accounts (USAs). Canada has now run the real-world experiment on such accounts, and it has succeeded brilliantly.
TFSAs, or USAs, are a better way to handle savings in the tax code. Currently, many people are scared off by the complexity of U.S. savings vehicles and by the lack of liquidity in retirement accounts. TFSAs solve these problems. Members of Congress and presidential aspirants for 2016 who are interested in a popular, pro-growth, and pro-family reform to champion—this is what you are looking for.
Jonathan House reported [$] in the Wall Street Journal:
The U.S. government’s budget deficit narrowed in its 2014 fiscal year to its lowest level in six years, as an improving economy boosted tax revenues.
The annual deficit for fiscal year 2014 fell 29% to $483.35 billion, the Treasury Department said Wednesday… the lowest deficit since 2008. …
The 2014 deficit fell to 2.8% of the country’s gross domestic product, the broadest measure of economic output. This measure, preferred by economists because it offers greater context, was at its lowest level since the fiscal year ending Sept. 30, 2007.
“This is not only a reduction of the deficit, it’s also a return to fiscal normalcy,” said White House budget director Shaun Donovan.
The Obama administration’s definition of “fiscal normalcy” is a deficit just under half a trillion dollars, larger than in any year before 2009.
The national debt, which was about $5.7 trillion when George W. Bush entered office and $11 trillion when he turned the White House over to Barack Obama, is now at just a shade under $18 trillion. And the director of the Office of Management and Budget declares that a “return to fiscal normalcy.” Where is Warren Harding now that we need him?
But hold on, there’s more: Donovan also noted that the federal government has abandoned its “harmful excessive budget austerity.” So we can expect more spending, and more deficits, and more debt, in the years to come.
The regulations that govern taxis in the Las Vegas area impose especially heavy restrictions on consumer choice and driver availability. Such an environment is ideal for rideshare companies, which provide consumers with more choice and drivers with more flexibility. Yet perhaps unsurprisingly, regulators and market incumbents in Sin City may prove to be among ridesharing companies’ most defensive and rigid opponents.
Taxi drivers in Las Vegas are not only restricted in regards to where they can pick up passengers, they are also restricted in how they pick up passengers. For instance, individuals are unable to hail Las Vegas cabs from the street. Cabs must be called and requested or found at designated areas.
The Nevada Taxicab Authority has a web page dedicated to describing the sixteen different taxi medallions available in the state.
The “North Las Vegas” medallion allows operators to drive 24 hours a day, seven days a week. Holders of this medallion “are permitted to stage on any taxicab stand North of Owens Avenue. They can then provide an on‐call service within a five‐mile radius of North Las Vegas. The southern border of North Las Vegas is Flamingo Road. Taxis with the “North Las Vegas” medallion may pick up passengers when directed to do so by a dispatcher; however the ride must originate north of Flamingo Road and cannot originate on Las Vegas Boulevard or Paradise Road (in the map below Owens Avenue is blue, Flamingo Road is green, and Las Vegas Boulevard and Paradise Road are highlighted in brown).
“Providing that adequate service is maintained” in North Las Vegas, taxis with this medallion are permitted to provide service from ten specified locations, most of which are hotels.
One of my first professional jobs 25 years ago was with the economic forecasting firm DRI/McGraw‐Hill. It was fun work, but I noticed that the firm’s gross domestic product forecasts with models hundreds of equations long were no better than simple forecasts based on the interest rate yield curve.
I’m sure that macroeconomic models have grown more sophisticated today, but they still can’t predict very well. Former chair of the Council of Economic Advisers, Edward Lazear, has a terrific piece today describing the inaccuracy of government forecasting models:
My analysis of 1999 – 2013 reveals that the [Congressional Budget Office]’s real GDP growth forecasts for the next year were off, on average, by 1.7 percentage points, either too high or low. Administration forecasts were similarly off by a slightly larger 1.8 percentage points on average, also too high or too low. Given that the average growth rate during this period was only 2.1%, errors of this magnitude are substantial.
Perhaps most damning: History is a better predictor of annual growth than government forecasts. Simply assuming that GDP growth will be 3.1% in each year — the average annual rate for the 30 years that precede the study period — results in an average forecast error of 1.5 percentage points.
Lazear’s article should be posted above the desk of every reporter and pundit writing about the macroeconomy. And it should be kept in mind by politicians, who often claim that such‐and‐such policy will create such‐and‐such number of jobs based on such models.
The lesson for federal budget policy should be one of prudence. We don’t know where the economy is headed, so policymakers should cut spending, zero out deficits, and start paying down debt now while we’re enjoying a run of sustained growth.