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Why Did America Stop Working? The Pursuit to Fill Jobs

October 31, 2016

The United States is at an awkward crossroads. At a time when the 2016 presidential election is creating a bitter divide, arguments between neighbors and friends are seemingly at odds with the reality of the U.S. economy. The question is not whether the economy can produce jobs, the question is why did America stop working?

Social services and nonprofit leaders have expressed frustration. Jobs are available. Employers are creating openings. But it is becoming harder and harder to find workers to fill them. To this point, too few Americans are stepping up to take these positions.

As a recent Wall Street Journal article reported:

Retailers are scrambling to hire holiday-season workers despite an unusually early start on recruiting this year, creating a collision among employers for temporary help in a tight labor market.

Data from job-search site Indeed.com shows retailers, and the warehouse and logistics firms they compete with for seasonal labor, started searching for temporary workers in August, a month earlier than in recent years. This suggests retailers and other firms “anticipate stronger consumer demand and expect that it will be harder to find the people they want to hire,” said Indeed economist Jed Kolko.

Last year, more than one in four retail workers hired in the fourth quarter of 2015 started their jobs in October, the highest share on records back to the 1930s.

Companies and analysts say a number of trends are converging. The holiday-shopping season is starting before Halloween for many consumers, rather than the traditional day after Thanksgiving. There are fewer workers available, due to unemployment holding around 5% for the past year. And retailers are facing tougher holiday-hiring competition from logistics firms and distribution centers, which have grown along with e-commerce. …

The pace of overall hiring has slowed a bit this year compared with 2015, but has remained strong enough to absorb new entrants into the labor force, and keep the unemployment rate in check. As a result, wages have started to inch up. That is particularly true for the lowest-paid workers. Weekly wages for workers at the 25th percentile—someone who makes roughly $14 an hour for a full-time job—have increased 4% in the third quarter from a year earlier, compared with a narrower 3% increase for the median worker, according to the Labor Department.

Keeping the economy on track and producing opportunities will be a major task for the next administration, but so will addressing the reasons why so many potential workers are staying on the sidelines. Should we be most concerned about work disincentives in safety net programs, health challenges, or the lack of affordable child care? We have to find the answers to help more Americans go to work.

But these are only a few of the challenges the labor market faces today. In a new volume edited by AEI Director of Economic Policy Studies Michael Strain, 21 of the country’s most prominent economists answer some of our most pressing questions: Is productivity the most important determinant of compensation? How can we build workers’ skills? What should we do about workers who are especially difficult to employ?

Strain gets to the core of these policy issues by speaking to the overall reason why they matter. The chief driver is not the need for a smooth economic engine, but the personal worth that working creates. As Strain eloquently explains:

If I asked you to tell me about yourself, there’s a good chance you’d begin with your job. ‘I’m a teacher.’ ‘I’m a nurse.’ There is something noble behind the impulse to lead with your occupation: we want to contribute to society,and for many of us employment is a key avenue for social contribution. Especially in a market economy— where comparative advantage is rewarded and incentives exist to discover yours, nurture it, and apply it—who we are is, to a large degree, how we choose to contribute.

Work allows us to provide and care for our children. (That the national income statistics don’t reflect much of this work says nothing about its immense value.) Work fosters community—there is something unique and edifying in enjoying the company of your coworkers after that long, hard project is finally completed or the work week has come to a close. The best antidote for boredom and vice is often a good job. Among other features, the expressiveness inherent in work—its creative element—is, or at least can be, deeply spiritual.

Indeed, work is central to the flourishing life. And public policy, in its effort to promote the common good, is properly interested in helping to create a vibrant labor market in which individuals can earn their own success, realize their potential, and enjoy the dignity that hard work provides.

Importantly, all nine of the topics covered in the volume — which range from immigration and corporate taxes to income inequality and worker mobility — are addressed twice from different perspectives — reflecting that the competition of ideas is the best way to solve the nation’s toughest problems.

As this unpleasant election season comes to a close, these important challenges will need to be addressed by the next administration and Congress. Hopefully, come January, both parties will find common ground on a handful of important policy reforms that will be good for the country.

— Robert Doar contributed to this discussion.

Filed Under: Front-Page Feature, Happiness, News

Millennials and Democracy: They Do Want It, Don’t They?

October 23, 2016

A recent survey of Millennials and democracy suggests they prefer authoritarianism to freedom and liberty, but a very enlightening look at the concerning phenomenon by a Russian citizen leaves hope that American democracy could actually benefit from the younger generation’s seeming rejection of it.

As America’s youngest adults search for the best future for themselves, the position of government as the go-to answer for life’s everyday problems could lose its dominance. That may not have been the intention of author Leonid Bershidsky, but it does create the sense of relief from the head-shaking conclusion that Millennials are creeping toward totalitarianism.

First, the scary part: A look at the data that has triggered the widespread talk of Millennial rejection of democracy. Bershidsky reports on the findings in a July paper by Roberto Stefan Foa, a principal investigator of the World Values Survey, and Harvard political scientist Yascha Mouk.

More than two thirds of American Millennials do not consider it essential to live in a country that is governed democratically. About a quarter of them consider a democratic political system a ‘bad’ or ‘very bad’ way to run the country. At the same time, support for authoritarian alternatives is rising. In 1996, only 1 in 16 Americans said it would be good if the military ruled the country. By 2014, it was 1 in 6. Only 19 percent of Millennials say it wouldn’t be legitimate for the military to take over if the government proved incompetent or unable to do its job. A growing share of young people is in favor of a ‘strong leader who doesn’t have to bother with parliament and elections’ and a government of ‘experts’ rather than politicians.

Yeah, definitely scary, but the conclusions may have been misinterpreted, to everyone’s relief.

As I covered the U.S. presidential campaign, I saw much that appears to contradict Foa and Mouk’s dire warnings. Bernie Sanders’ movement, still alive despite his primary loss, has persuaded many young people that traditional politics can be used to further their goals. These Millennials and younger Generation Z-ers follow a strong leader, and much of the grassroots campaigning they do is outside the political system as we know it — but they don’t seem drawn to authoritarianism or a government of ‘experts.’

For those who think Sanders’ democratic socialist approach to governing is nothing to feel relief about, here’s where Bershidsky’s observations become more encouraging.

Democracy isn’t meritocratic enough for the Facebook generation, which deifies tech capitalists and social media stars. None of their heroes are elected. Democracy throws up people like (Donald) Trump and (Hillary) Clinton, not Mark Zuckerberg or Elon Musk. The proponents of raw democracy these days are anti-technocratic, like Michael Gove, Brexiter extraordinaire, who says Britons have ‘had enough of experts.’

Young people assume there are other ways for a talented leader to get to the top than by rising through political ranks — and the tech billionaires support that intuition by trying to bypass government as they fight disease (Zuckerberg) or prepare to colonize Mars (Musk). A world run by these well-meaning people wouldn’t be democratic, though their support comes from below. …

So, the conclusion is that young people don’t reject democracy per se, they reject the brutal game of politics and an electoral system that foists up candidates more interested in “gotcha” moments than on governing. It’s the very bureaucratic nature accompanying the growth of government that is anathema. Young people want to choose their leaders, but want those leaders to make the economy grow, increase innovation, and reduce the technocratic nature of goverment.

If millennials feel they are represented by smart people who understand their agenda and have the necessary expertise to implement it, they may like politics better than they do now. And so may the older generations: They, too, are not immune from the irritation caused by crude election battles such as this year’s.

That doesn’t suggest Millennials want authoritarian government. It suggests that they want the choice for creative problem-solvers in government. And who can argue with that?

Filed Under: Front-Page Feature, Happiness Tagged With: 2016 presidential election, democracy, Leonid Bershidsky, Millennials, World Values Survey

Does Character Matter in Election 2016?

October 23, 2016 by Arthur C. Brooks

Does character matter when it comes to the 2016 presidential election? Many campaign operatives and pundits say that elections are no longer about persuasion to any meaningful extent. Instead, they argue, campaigns are purely a turnout game and campaigns should focus exclusively on turning out their base.

But recent research shows this argument might not be valid. Political scientist Danny Hayes, a friend dating back to my days in academia, studies political traits — the qualities and characteristics people assume you possess because you are a conservative or a liberal.

He finds that if you are a liberal, people overwhelmingly assume you are empathetic and compassionate. For conservatives, the traits people assume are good morals and strong leadership.

Hayes’ research also suggests a moral double standard among the public. In other words, people are especially hard on politicians who betray the traits they’ve already ascribed to them. For instance, people would probably be more outraged if a liberal politician were a jerk to his interns than if a conservative politician did the same thing. And they get madder at conservatives than liberals when they are sexually immoral.

At the same time, voters seem to go out of their way to reward candidates who attempt trait-trespassing. Hayes found that candidates win roughly 60 percent of the vote when they take on traits not usually associated with their party. So for Democrats, the prototypical untapped trait is strength; for Republicans, it’s empathy — a reverse of the standard assumptions about the parties.

Knowing about this huge windfall in voter rewards would have been good for both candidates if they could project authentic character traits not typically ascribed to them. Instead, they missed a golden opportunity. Trump could have started to close the gap by embracing empathy and compassion for the vulnerable. Clinton could have tried to shut the door on Trump by focusing on projecting strength, upright moral leadership, and a modicum of traditional values.

If you’re interested in a more detailed account of this research – including the specifics about what candidates stand to gain from being unconventional, take a look at this column on breaking out of the party box.

Filed Under: Front-Page Feature, Insight Tagged With: 2016 presidential election, character, Donald Trump, Hillary Clinton, marriage, morality, sexual misconduct

The Gender Pay Gap Vs. College Degree Choices

October 21, 2016

Think there’s no gender pay gap? Hate to break it to you: there is. But how much of the gap is eliminated when an apples-to-apples comparison is made of all the variables that go into what men and women make? A lot!

A recent enlightening chart shows one of the variables that is often overlooked in reporting about where some of the gap begins.

The chart, constructed by economist Mark Perry, borrows from a Washington Post article about the 50 majors that offer the highest paying jobs out of college. The original article pulls from a report by job search engine Glassdoor.

Lo and behold, many of the highest-paying jobs are in fields where women are underrepresented in college graduation rates.

Shocker, right? Women are studying in majors whose fields offer lower-paying wages.

Perry’s comparison is rich in details. For instance, he notes that women earned 57 percent of the bachelor’s degrees in 2014 compared to 43 percent of men who graduated that year, yet men were “significantly over-represented for the highest-paying college majors,” specifically taking at least 80 percent of the degrees in eight of the top 10 highest-paying college majors. The one exception where women were overrepresented in a high-paying career — nursing.

He notes that for the top 20 college majors, men earn an average of nearly two-thirds of those degrees; and 60.5 percent of the degrees for the top 30 highest-paying fields.

Perry, a professor at University of Michigan-Flint, acknowledges that the comparison is complicated by the fact that the Department of Education, from where he pulled the gender data, does not separate out degree fields as carefully as Glassdoor, and doesn’t even list certain degrees that offer high-paying jobs.

For example, the Department of Education only reports the number of bachelor’s degrees by gender for the broad academic field of “engineering,” without any details on engineering degrees in the six sub-fields of engineering reported by Glassdoor (electrical, mechanical, chemical, etc.). Likewise, all of the business-related degrees in finance, accounting, marketing, human resources, advertising, etc. are only reported as bachelor’s degrees in “business” by the government. Economics degrees are included in the category Social Sciences, along with degrees in fields like sociology, anthropology, political science, etc. For some Glassdoor college majors like Fashion Design, Biotechnology, Graphic Design, Film Studies, Sports Management, it wasn’t clear what bachelor’s degrees reported by the Department of Education matched those majors, so I omitted 10 of the 50 college majors, leaving 40 majors in the table above.

The lack of detail by the Department of Education is interesting in itself, and certainly makes it more difficult for the federal government to claim to know the source of gender wage disparity, but Perry argues that the wage gap could be reduced if women chose career fields in the sciences and technical fields, as boring as they may seem to some.

Prisoner Education: A Smart Investment of Federal Dollars?

October 19, 2016

Baltimore gets a bad rap for a lot that goes wrong in the city, but redemption is one of its favorite recurring themes. So it’s no surprise that the University of Baltimore is working at Jessup Correctional Institution, a maximum security prison near Baltimore, on improving prisoner education.

Specifically, the university is participating in a Department of Education pilot program intended to help prisoners pursue a higher education with federal grant money.

From Gerard Robinson and Elizabeth English.

In June 2016, the university was chosen among 67 colleges and universities nationwide to participate in the Obama administration’s $30 million Second Chance Pell Grant Experimental Sites Initiative. Under the program, approximately 12,000 of America’s 2.2 million incarcerated will receive federal aid to pursue a higher education. Upon release, they will retain the Pell funding to finish their program.

Since the university’s Second Chance College Program began at Jessup this fall, its students have been working toward a bachelor’s degree in community studies and civic engagement with a minor in entrepreneurship. To be eligible, prisoners had to have been enrolled in Jessup’s preexisting Scholars Program, which offers noncredit liberal arts courses; had a high school diploma or GED; and submitted two letters of recommendation and one personal essay. Preference was given to those with a parole eligibility date within five years of the program’s start. Program directors sent letters to 150 men at Jessup with information on how to apply. Over 100 of those men submitted an application, and 29 are enrolled in the program today.

Federal aid for higher education of prisoners is not a new idea, but it’s most certainly controversial.

Under Title IV of the Higher Education Act of 1965, those in prison were eligible to receive Pell Grant funding for college coursework. That changed with a provision in the Violent Crime Control and Law Enforcement Act of 1994, which prohibited the incarcerated from receiving the funding. At the time, lawmakers argued that it was unjust to provide federal aid to those behind bars while many law-abiding citizens could not afford higher education.

Twenty years later, the administration’s program has resurrected similar debates. Many lawmakers are again concerned about providing Pell dollars for those in prison, as evidenced by the 2015 Kids Before Cons Act, a bill sponsored by Rep. Chris Collins, R-N.Y., Rep. Doug LaMalfa, R-Calif., and Rep. Tom Reed, R-Calif., which would ban the Department of Education from providing Pell Grants to prisoners. The bill was written, in part, in response to the Restoring Education and Learning Act of 2015 sponsored by Rep. Donna Edwards, D-Md. which would lift the Pell Grant Ban from 1994.

If the numbers add up, however, investing in prisoner education could be a wise use of dollars.

One meta-analysis found that prisoners who participated in correctional education were 43 percent less likely to recidivate and 13 percent more likely to be employed upon release. It also found that every dollar invested in correctional education generates $5 in cost savings.

For those who do get an education while in prison, the results can be life-saving. The U.S. Department of Justice reports that about 68 percent of prisoners in state prisons do not have a high school education. Over half of those in prison can be characterized as functionally illiterate. This makes it all the harder to stay out of prison once convicts are released because not only do ex-felons have the stigma of conviction, making it harder to find housing and work, but they are unable to operate as most others do in society. On top of that, many of the released return back to communities that are overwhelmed by financial and education needs.

Jessup already conducts a GED program, though the graduation rate is small. With higher demand for continuing education after high school, this new program is a testament to whether the prison system can actually rehabilitate, not just punish criminals. With the U.S. having the highest incarceration rate in the world — nearly 600,000 men and women are released each year back into society — making them functioning members of society can be a positive step toward lowering that prison rate and helping communities where these ex-prisoners live.

Filed Under: Front-Page Feature, Liberty Tagged With: education, Gerard Robinson, Jessup Correctional Institution, Pell grants, prison population, University of Baltimore

The Never-Ending Battle Between Public Good and Private Property

October 11, 2016

In today’s American society, the battle between the public good vs. private rights manifests itself weekly, with reports of court cases and government regulations involving eminent domain, property rights, appropriate levels of taxation, and other disputes between individual freedom and society’s demands.

It’s no wonder. The argument over the exact balance between public and private has been going on for centuries.

In the second in a series of essays in the new volume, Economic Freedom and Human Flourishing: Perspectives from Political Philosophy, Peter B. Josephson explains how philosophers, John Locke and Thomas Hobbes, two kingpins of modern political thought, were in conflict over the tradeoffs between public good vs. private rights, though in the end they ended up coming to conclusions that were more alike than different.

As for the similarities, the two great philosophers spoke about the state of nature, and the notion of natural equality and liberty, wholly separate from the machinations of man, which created government and institutions. This natural world is where man is given his existence, his independence, which cannot be denied. Life is valued equally, and not to be decreed by one person or institution over another.

But is this state of nature good, or does it need to be contained? Josephson of Saint Anselm College explains how the two disagreed.

Hobbes famously explains that in the state of nature there is no ‘mine and thine,’ and ‘no place for industry, because the fruit thereof is uncertain, and consequently, no culture of the earth . . . no commodious building . . . no knowledge of the face of the earth.’ In Hobbes’ account, the condition of perfect liberty and equality—our natural, ungoverned condition—is a state of war: a war of all against all that produces a condition that is ‘solitary, poor, nasty, brutish, and short.’ On the other hand, Locke describes a state of nature that includes natural rights to property and therefore an account of natural justice. Locke carefully distinguishes the state of nature from the state of war and describes the state of nature initially as a state of ‘perfect freedom’ and ‘equality,’ governed by a ‘law of nature’ that teaches anyone ‘who will but consult it’ that ‘no one ought to harm another.‘ In describing the ‘plain difference’ between the state of nature and a state of war, Locke writes that they are ‘as far distant, as a State of Peace, Good Will, Mutual Assistance, and Preservation, and a State of Enmity, Malice, Violence, and Mutual Destruction are from one another.’

As a result, Hobbes believes an absolute sovereign is needed to save us from ourselves while at the same time, our need for self-preservation means we must establish for ourselves a system to protect us from the haphazard or overbearing nature of a sovereign who would kill us to keep us from killing each other.

On the other side, for Locke, individuals agree to be guided by a common set of rules and leaders, but we submit to them out of convenience because we seek to work in harmony. No sovereign can remove our good from within us by telling us how or what to be. Political power is established according to a set of laws by which we consent to be governed.

Unlike our liberty, the philosophers disagree on man’s natural rights to property, though they eventually lead to the same place. On the one hand,

Hobbes insists that property is not natural, that it is rather a creation of the sovereign, subject to consent and political authority, and so readers should expect extensive exercise of government authority over the private property it has created. …

In contrast, Locke insists that property rights are natural, and that each individual naturally holds a property right that is not at all dependent on the consent of others. In other words, we need no one’s permission to build our own property, not even the permission of the government.

So how is it possible that these two men, opposite sides of the coin, collectively have created the ground game on which so much of modern-day political society operates? They are in a constant battle between what is of the public concern, and what is private. It is that battle that we contest over and over again in the partisan realms of American governance.

For Hobbes, “political authority is necessary for the very creation and security of property; order precedes prosperity.” The sovereign basically hands out the property, and the rights to it, while at the same time the sovereign does not have total ownership in the first place, and the means of production cannot be centralized because if something goes wrong, everyone suffers. He suggests taxation as a means to make sure no one runs away with too much of a good thing.

For Locke, personal industry results in public good by its very nature. At the same time, while labor is the manifestation of our natural right, not all labor will be equal, and the overabundance of one man’s accumulation can result in scarcity for another. Since it is the natural right of everyone to exist, as a result, man needs to smooth over the unevenness, but Locke asserts that can only occur with the consent of the property, or labor, owner to contribute to the public good.

So how do we get to flourish as humans if we’re constantly being clipped and groomed and subject to the rule of law? Are we decent enough to contribute on our own, without a push from a central authority? Are we too unruly to be left alone? Can we have both personal success and achieve the summum bonum, the highest good?

Josephson explains:

As a response to that natural state of war, so-called liberal government is asked to respect and secure private natural rights, and to moderate or regulate the assertion of those rights. That is, we demand liberty, and also a defense against the dominion of others. Property, broadly understood, grounds the rights of individuals to govern themselves, and those rights also help establish a limit on the claims of others or the authority of the government. …

Liberalism thus seems an instrumental political arrangement, one that makes possible the private pursuit of diverse good lives without imposing a particular telos on its citizens. An essential instrument of this liberty—and therefore of the opportunity for human flourishing—is protection of the rights of private property. Rights of private property can ensure a level of sustenance and even independence that is instrumentally necessary for any good life.

Though life in the liberal regime thus promises neutrality with respect to conceptions of the good, in practice the new liberal regime cannot help imposing its own conception of the good or the tolerable on its subjects. Liberalism is “not mere proceduralism, nor is it neutral with respect to ways of life or virtues.”⁹⁵ While the regime permits private pursuits of diverse goods, it also largely consigns those pursuits to the private sphere. The public realm still insists on particular characteristic actions. The free individual who can make his own way or chart her own course in the world must have certain capacities. Such a person must be independent and hardworking. Because of the liberal foundation in natural equality and natural liberty, such a person must respect the independence and hard work of others. And so liberalism insists on certain modern virtues, including industriousness and self-reliance, and toleration and civility. It rewards innovation and pragmatism more than tradition and philosophic speculation. Goods of the soul may be pursued freely in private. Lives devoted to faith or philosophy, to heroic virtue, or to pleasure must be moderated in the service of peace, preservation, and prosperity.

No regime is truly neutral with respect to the good life. The instruments of liberal life become the ends in themselves, and these new good lives may lack the lofty allure or ambition of the old. Modern liberalism secures a realm of privacy that makes some human flourishing possible, but that may not incline us toward teleological conceptions of the good. In its elevation of the instruments of the good life, liberalism may even close our minds to conceptions of ultimate goods. Without a teleological account of human flourishing the idea of the greatest good becomes, for the philosophers of modern liberty, nothing more than a matter of taste, and taste is so much a matter of private judgment that we find it increasingly difficult to consider ultimate goods—and the common good—seriously. Thus egalitarian liberalism has a tendency toward relativism. And yet liberalism properly understood is not neutral; it asserts its own particular claim to the good. Taking liberalism’s particular claim seriously would be the first step toward a serious reappraisal of the alternatives—and especially of the claims of faith, philosophy, and heroic virtue.

Read Peter B. Josephson’s entire essay on Hobbes, Locke, and the Problems of Political Economy.

Filed Under: Front-Page Feature, Life Tagged With: Economics, human flourishing, John Locke, liberal democracy, private property, Thomas Hobbes

NILFs, They Are Not What You Think: Men Without Work

October 6, 2016

The number of men age 25-54 not in the labor force (NILFs, get it?) has reached a shockingly high figure — about 7 million, or about the same percentage as at the end of the Depression in 1940. This number doesn’t even include men who are in prison, students, or stay-at-home dads.

Demographer Nick Eberstadt, who authored the new book, Men Without Work, says that one in six working-age men in America are jobless, and if the trend continues, that number will go to one in five jobless men in America in a generation.

“These detached men live and walk among us, though without productive economic purpose — as they endure an overlooked, modern-day Depression,” Eberstadt says.

This increase in male NILFs is a reality across the developed world, but the increase is especially high in the United States. Trying to come up with an explanation why has become something of a parlor game for economists and social scientists. Among some of the explanations — trade sending jobs away, technology automating jobs, federal benefits that make work less desirable or necessary, even video games, which have driven a rise in couch potatoes.

Eberstadt argues that the problem stems not from the number of men in prison, but from the number of men who have previously been in prison. About 12 percent of the adult male civilian population currently not in jail has been convicted of a felony.

A single variable — having a criminal record — is a key missing piece in explaining why work rates and LFPRs [labor-force participation rates] have collapsed much more dramatically in America than other affluent Western societies over the past two generations. This single variable also helps explain why the collapse has been so much greater for American men than women and why it has been so much more dramatic for African American men and men with low educational attainment than for other prime-age men in the United States.

Eberstadt notes that African-American men are twice as likely to constitute this American “un-worker” than whites or Latinos, which is not surprising since African-Americans make up about 40 percent of the prison population even though they are only 13 percent of the overall U.S. population. That compares to whites who are 64 percent of the U.S. population, but 39 percent of the prison population, and Latinos who are 16 percent of the U.S. population, but 19 percent of the prison population.

Eberstadt offers some solutions to the problem. He notes that former prisoners have paid their debt to society so need to be welcomed back into society. He calls it a “shameful reflection of our ignorance” that we have marginalized ex-prisoners, much less failed to stop the triggers that lead people to commit the offenses that land them in prison in the first place.

He notes that welfare reform worked in the 1990s to get single mothers into the workforce, and that disability insurance programs should be predicated on a “work first” incentive rather than the current system, which spends hundreds of billions of dollars a year to encourage men to sit on the sidelines.

Revitalizing American business, and avoiding a trade war, will also keep employment rates from further declining, he says, not to mention public policies that make marriage a more attractive option since married men with kids are much more likely to be in the workforce than unmarried, childless men.

Order the book, Men Without Work.

Filed Under: Front-Page Feature, Liberty Tagged With: incarceration, labor force participation, Men Without Work, Nicholas Eberstadt, prison population, work

Can Modern Economics Help Us Achieve Happiness?

October 5, 2016

Harvey C. Mansfield of Harvard University and Hoover Institution fame has contributed a most useful essay to the new edited volume, Economics and Human Flourishing: Perspectives from Political Philosophy, explaining how Aristotle applied economics to happiness, and how the study of economics has been twisted by today’s economists and political “scientists” to limit people in their ability to be virtuous.

Aristotle wrote comprehensively on both economics and the flourishing life. Modern economics makes its way without study of the ‘flourishing life,’ which is one translation of what Aristotle meant by happiness. For him, as for common sense, happiness is the goal of ethics and politics, and ultimately of economics. At present, however, economics contents itself with the ‘pursuit of happiness’ (to borrow from the Declaration of Independence), a catchall category that specifies at great length how to pursue but hardly at all what to pursue. …

Originally — and this is in Aristotle as well as in the founders of modern economics — economics supposed that it could define needs or necessities as opposed to surplus or superfluities. But necessities have a way of expanding from survival to comfort and from comfort to perfect assurance, so that it seems safer, and scientifically more exact, to consider them infinite and thus decline to define them.

Economics becomes the science of getting more without ever saying how much more. It is because of its exactness that science requires this vagueness. Economics must either be exact or fall silent; it disdains and rejects the possibility of an inexact statement that is merely probable and better than nothing. It may attempt to evade the difficulty by defining ‘probability’ exactly. The result would be either a vague definition of exact or an exact definition of vague— which leaves the common sense ‘probable’ in charge. So the science of more, of ‘growth,’ drops the utilitarian posture that requires a definition of utility—possibly contestable — and turns to ‘preferences’ that are admittedly quite subjective. Thus does the objectivity of economics require that it surrender totally to human subjectivity. And as the measuring of preferences becomes increasingly sophisticated, which means increasingly mathematical, economics becomes increasingly vague as to its end and continually further from defining the ‘flourishing life.’ …

Turning to Aristotle, we see him considering ways of life with a view to which is best rather than calculation of what brings in more. More what, he wants to know, and how much more? For him the ‘pursuit’ of happiness implies an end to the pursuit, since endless pursuit is futile and irrational. All human beings pursue happiness; everything else is instrumental to happiness and pursued because it brings happiness. Even virtue, though an end in itself and often involving sacrifice, is also pursued as the means to happiness. Virtue won’t, or at least shouldn’t, make you miserable, Aristotle says, somewhat optimistically. To be happy is to be at rest, as we say, ‘sitting pretty.’ Those who scramble without end don’t know how to stop, don’t know how to enjoy. ‘Enjoy!’ we say today in moments of respite; Aristotle would say that enjoyment (not relaxation) is the whole purpose of scrambling to get ahead. Relaxation is to gain respite from scrambling so that one can resume it refreshed, but enjoyment is satisfaction in an end attained. …

Reading from Aristotle’s Ethics as well as his Politics, we see he maintains that virtue is the core of happiness. He means this in both a normative and a descriptive sense. Descriptively, every society has a virtue or cluster of virtues that it promotes as characterizing its way of life and defining its notion of happiness, often in his day the virtue of courage or martial spirit. But as every society claims that its prized virtue is best, Aristotle feels bound to judge normatively whether this claim is correct. For him there is no unbridgeable distinction between fact and value. …

Now it is obvious that virtue cannot assure happiness. This is true not so much because we often witness the sad fact of virtue unrewarded—for virtue is its own reward (not always sufficient!)— but because we observe virtue thwarted for lack of means. Virtue stands in need of “equipment,” Aristotle says nicely. It needs good fortune or the gods’ blessing (implied in the Greek word for happiness, eudaimonia, well-blessed), and it needs wealth. One cannot be generous without wealth to give away. Here enters the need for economics as akin to a science of wealth-getting but distinct from it because economics needs to be limited. Aristotle does not hold to the purity of virtue understood as bringing no personal advantage (called “altruism”), but he does agree that wealth-getting is morally dangerous. It is essentially instrumental to virtue but can often become an end in itself regardless of virtue, Aristotle here in accord with Karl Marx. Money monetizes everything, as with the touch of King Midas, and thereby seems to dissolve all value except itself.

Virtue as the core of happiness is a habit, not a calculation. If you have to calculate the advantage from virtue, you are no longer being virtuous for the sake of virtue, which is no longer virtuous. You are merely behaving virtuously while others are watching, which is not enough. Virtue is in the intent as well as in the action. …

(W)hat makes virtue noble is doing it for its own sake rather than for your private advantage. Yet Aristotle, still eschewing moral purity, says that virtue is for your advantage as well. Virtue makes you a better person, and perhaps a still better person if you realize that your virtue makes you better. For virtue is enhanced when aware of itself as the best kind of enjoyment. Similarly, the virtuous person does not seek pleasure, but he gets pleasure as a by-product of his virtue, taking a moderate pleasure in doing good and avoiding too much self-congratulation or superiority. …

We need a return to reason, to Aristotelian reason. The reason of economics is not empirical as it claims. It is based on the dubious presumption that human beings suffer in a condition of scarcity or necessity that will oblige them with their ‘preferences’ (really, their necessities) to choose in ways that economists can predict and then control. This sort of reason begins in a dubious presumption that denies human freedom, and it dissolves, we have seen, in vagueness that fails to specify a reasonable goal of human life. Aristotle’s reason, by contrast, admits human necessities, for he was one of the founders of economics. But, because it is more empirical than economics by itself on the basis of human experience, it also seeks, through the soul, to come to terms with human nobility and freedom. Aristotle’s reason does its best to define the flourishing life, at its peak as well as in average, and measure the ordinary and the common by what is best and rare.

Mind-blowing, right? That’s just part of the essay. The notion of virtue, necessity, and decision-making has been impacted by the operation of modern politics. Mansfield describes some of the implications of this evolution on American society.

You can read the whole essay here.

Filed Under: Front-Page Feature, Happiness Tagged With: Aristotle, Economics, Harvey Mansfield, human flourishing, political science

International Smoking Deterrence Programs Cause Spike in Illicit Cigarette Trade

October 3, 2016

In the realm of unintended consequences comes this beauty: International efforts by the World Health Organization to try to develop a global smoking deterrence program has resulted in a rise in the illicit trade of a legal though infamous product: cigarettes.

The World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC) became policy in 2005 with the intention to reduce smoking, believed to be the largest cause of preventable premature deaths globally.

FCTC has adopted a policy of encouraging developing nations to follow the demand reduction strategy of mature markets in raising taxes and introducing and then expanding regulation on tobacco products. In many cases such policies result in the rise of illicit tobacco (either counterfeits or legally produced smuggled cigarettes), especially where policy changes are implemented rapidly and enforcement capacity is limited.

According to a report by global auditing firm KPMG, illicit tobacco is now about 10 percent of the global cigarette market, and rising.

So why the massive increase in “illicit whites” — smuggled products that are legally produced? One, they’re cheaper. Two, they’re easy to get.

But HOW is the real question? How did this happen? According to international health expert Roger Bate, too much bureaucracy trying to alter human behavior and global markets.

Reacting to the spread of illicit tobacco, WHO established the Protocol to Eliminate Illicit Trade in Tobacco Products (ITP) under the FCTC in 2012. While sound in principle, the ITP faces numerous challenges in implementation. The ITP’s primary objective is to control the supply chain of tobacco products, which necessitates a very high level of international and commercial cooperation. The spillover effects of production and trade in tobacco require most if not all jurisdictions to share aims and ambitions; without that, coordination is likely to fail. Yet WHO has no expertise in trade policy or overcoming economic objections to health priorities. WHO also has zero experience in combatting organized crime, whose representatives will undermine coordination. ITP has some excellent guidelines, but it is incumbent on individual governments to control demand and police free trade zones (FTZs), where illicit activity of all kinds proliferates.

Voluntary support for the protocol is patchy. For example, the UK, Russia, India, and China are parties to the Framework Convention, but have not ratified the protocol; the US is not even party to the convention (United Nations 2003). …

Studies of illicit activity demonstrate that illegal operations are highly dynamic and respond swiftly to deterrent measures. It is likely that only with the cooperation of the entire supply chain (including the major cigarette companies and governments that currently allow smuggling) will illicit tobacco be controlled.

As if this report wasn’t enough of a headshaker, here comes the kicker: WHO doesn’t want the cigarette industry involved in implementing the protocol, in other words, taking more control of its product distribution, nor is it collaborating with the World Customs Organization or the United Nations Office on Drugs and Crime, which both have extensive experience with some of the challenges WHO is facing. Essentially, the agency won’t accept help combating a problem that it created.

Meanwhile, the illicit tobacco market is flourishing. The trade in illegal cigarettes, particularly through free trade zones and sometimes with the collusion of governments, is huge, lucrative, and sophisticated. Without assistance from international security experts and producers, and without funds to offer signatories in technical assistance, the WHO’s Illicit Trade Protocol has only a slim chance of being implemented in emerging markets, even if nations ratify it.

Read the report on the illicit cigarette trade.

Filed Under: Front-Page Feature, Liberty, Life Tagged With: cigarettes, illicit trade, illicit whites, international trade, Interpol, Phillip Morris, tobacco products, World Health Organization

Do Presidential Debates Matter? Probably Sooner Than Later

September 25, 2016 by Arthur C. Brooks

By most accounts, Monday’s first presidential debate brings Americans a strange mixture of joy and despair. On one hand, this interminable campaign is finally entering its homestretch. On the other hand, an evening of hand-to-hand mudslinging will dominate our televisions and our discussions even more than usual.

Each season, the first head-to-head debate seems to mark the unofficial beginning of the campaign’s end. And while the buildup is always dramatic, the country seems especially on edge this time around. Not only have the polls been tightening of late, but there has also been unusually high variance in the results, adding extra uncertainty. Throw in two candidates who most Americans don’t like, and it’s no surprise that analysts are predicting Monday evening’s debate could be the most watched in history.

This got me wondering how much of a difference these election debates actually make. Do presidential debates matter really? Is all the commotion remotely justified? What do the hard data say?

I dug into the research.

As it turns out, the answer academics have come up with is a go-to favorite among ivory-tower types. Do the debates make a difference? It depends.

First of all, general election debates seem to matter less than everyone thinks. Surveying the literature, Professor John Sides at George Washington University concludes that presidential debates usually have little to no effect on general election outcomes. One study he cites, by political scientists Robert Erikson and Christopher Wlezien, examined a big set of elections from 1952 to 2008. Their finding? “The best prediction from the debates is the initial verdict before the debates.”

So the general election debates hardly ever yield earth-shattering inflection points. But the data can still help us guess what might happen Monday night. In 2012, Nate Silver looked back at the historical record and found that the first debate usually helps the candidate whose party is out of power. Interestingly, he published his piece just a few days before Mitt Romney turned in an enormously successful performance in his first debate with President Obama. Romney’s big night won him a real bump in the polls (as per Silver’s analysis), but it soon faded away, and the underlying fundamentals of the race returned to the fore (as per Erikson’s and Wlezien’s hypothesis).

But this contrasts sharply with the research on primary debates, which seem to matter a lot. One 2013 study found that after primary debates, a whopping 35 percent of viewers said they changed their candidate preference. After the general election debates, only 3.5 percent of viewers said the same. People’s minds are seemingly only 1/10th as open during the general debates as during the primary debates. Why? I’ll make a few guesses.

For one thing, the primaries usually feature candidates with similar views. If voters can hardly distinguish between their options on policy substance, it makes sense that stylistic differences would exert a larger impact. What’s more, we hear a lot from primary voters that they are actually value debating skills pretty highly as an important trait that they’re looking for. (“I want someone who can really take the case to the other guy on national TV in October!”)

In sum, we are left with a bit of a paradox. While many primary voters seem to care a lot about rhetorical skills when they’re choosing who will represent their “team” in the general election, very few general election voters seem to be swayed permanently by those prime-time performances. As a result, debates matter a lot in the primaries but only a little in October.

Try dropping that factoid into the conversation at your debate watch party. It might be the most substantive talking point people hear all night.

Filed Under: Front-Page Feature, Insight, Liberty Tagged With: 2016 presidential election, Donald Trump, Hillary Clinton, presidential debates

Florida: Study Shows Impact of Marriage on Children’s Graduation Rates

September 23, 2016

Brad Wilcox at the Institute for Family Studies does some great research, and part of its greatness is that his results force policy makers to confront wisdom that is sometimes hard to hear, but ultimately super helpful in developing action plans.

The latest is a study he did on Florida schools, called Strong Families, Successful Schools, which builds on conclusions reached in a recent MIT study of 1 million Florida school children and found that poor boys are much more negatively impacted than poor girls, even within the same family, when families break up, and more so, that high-school graduation rates see a smaller gender gap when parents are married.

Wilcox and psychologist Nicholas Zill took the MIT study a step further and looked at the relationship between these variables on a macro-level — the county rates of high school graduation versus the number of married households with children in the county, across a five-year period.

Here’s what the researchers started out questioning:

We hypothesize that counties with more married families enjoy higher levels of parental engagement, better parental discipline, and more parental involvement in PTO groups, all factors that would likely redound to the social and educational benefit of children in these counties.”

This is what he found:

Specifically, Strong Families, Successful Schools finds that the share of married parent families in a county is one of the strongest predictors of high school graduation rates in the 67 counties across Florida, as well as recent growth in high school graduation rates in the Sunshine State.

The share of married families also is the strongest predictor of county school suspension rates in Florida in our models. Moreover, the share of families headed by married couples is a more powerful predictor of high school graduation and school suspension rates than are income, race, and ethnicity in Florida—factors that tend to get more attention in media and policy circles.

The report also finds that parental education is the best predictor of county high school graduation rates in Florida, according to our models (emphasis added). In sum, Florida counties that enjoy strong and stable families also tend to enjoy more successful and safer schools. Accordingly, policymakers, educators, and civic leaders should work to strengthen families—as well as schools—across the Sunshine State.

The study looks at several factors that play bear on high school graduation and suspension levels across the counties, including marriage rates, adult education levels, income, race, and the size of the child population in the county.

The researchers acknowledge that the report does not look at the quality, character, and spending of county schools as they relate to graduation and suspension rates, and note that school quality obviously is a factor in performance. At the same time, however, the role of the family, specifically the relationship of parents, is a major variable in outcomes.

Click here to read the entire report.

Filed Under: Education, Front-Page Feature, Life Tagged With: Brad Wilcox, Florida, graduation rates, Institute for Family Studies, K-12 education, marriage

Why Don’t Families With Housing Vouchers Move to Better School Districts?

September 19, 2016

If you have a housing voucher that you’re allowed to use anywhere, why wouldn’t you situate yourself near a good school for your kids? That’s the question that a new study dives into after learning that “voucher holders do not, on average, use their vouchers to reach better schools.”

Housing choice voucher programs, which have been around for more than 40 years, cost the taxpayers $19 billion a year. They provide assistance to approximately 2.2 million households, which include over 2.5 million children. The program has been in existence for 40-plus years. Studies suggest that kids in housing voucher programs who go to better schools end up better off in the long run.

Obviously, not every voucher holder cares about the school district where they live.

They may instead use their subsidy to move out of overcrowded living situations (Wood, Turnham, & Mills, 2008), write down rent burdens, find larger, higher quality homes (Mills et al., 2006; Rosenblatt & DeLuca, 2012), relocate to neighborhoods with lower crime (Lens, Ellen, & O’Regan, 2011), or satisfy other household demands. Certainly voucher holders without school-age children have little motivation to consider school quality in location decisions. And the long waiting lists for vouchers may, in practice, mean that many voucher holders receive their vouchers after their children have already started school. These voucher holders with children who are already enrolled in school at the time of voucher receipt have to weigh the potential benefits of a new neighborhood against the potential negative effect of school mobility (Chetty, Hendren, & Katz, 2015; DeLuca & Rosenblatt, 2010). Thus, only a subset of households are likely to be motivated by a voucher to move toward better schools: those with young children starting school soon.

So for those families with school-age children, what’s the explanation why their parents don’t move to better schools, especially considering that the vouchers are usually substantial enough to enable them to live in nicer neighborhoods?

Evidently, timing is everything.

We find that families with vouchers are more likely to move toward a better school in the year before their oldest child meets the eligibility cutoff for kindergarten, suggesting salience matters. Further, the magnitude of the effect is larger in metropolitan areas with a relatively high share of affordable rental units located near high-performing schools and in neighborhoods in close proximity to higher-performing schools. To be sure, the effects we find are not large, but they suggest that voucher holders do, indeed, move toward better schools when schools are salient and accessible.

In other words, if the kids are ready for school, then the parents pay more attention to the quality of schools near available rental properties.

Even so, voucher holders with school-ready kids may still neglect the search because better schools are farther away and the area is unfamiliar. For many parents, uprooting kids from their communities may be unpalatable, even for those with kids in lower-performing schools. Another potential barrier is the competition in those housing markets — nicer neighborhoods are in higher demand, and finding an affordable rental is difficult at the price permitted by HUD.

And while the voucher program may intend to help families with children move to higher-performing school systems, targeting those families is tough because the waiting list for vouchers, particularly in metro areas, are so long that kids are no longer at eligibility age by time the family receives a voucher.

The study noted that voucher holders who are not facing the time pressure of locating a place, a crunch that occurs usually for first-time voucher recipients, eventually end up in lower poverty neighborhoods with better schools during subsequent moves.

The research looked at 1.4 million housing choice voucher holders in 15 states, and compared it against data from 5,841 different districts to compare the quality of schools.

Read the housing choice voucher report here.

Filed Under: Front-Page Feature, Life Tagged With: affordable housing, housing vouchers, HUD, K-12 education, Section 8

Official Poverty Rate Declines in 2015. Can Washington Do More?

September 16, 2016

Over the last two weeks, important new reports were released with good news for poverty fighters across the country: the official poverty rate dropped from 14.8 percent to 13.5 percent in 2015, and both food insecurity and very low food security significantly declined as well.

The fact that we are just now seeing progress, as caseloads for major assistance programs decrease, illustrates that a strengthening economy that gets more Americans working is the most essential ingredient for fighting poverty.

Still, a larger share of Americans remain poor than before the recession started in 2007, even when factoring in all non-cash and tax-based government transfers. This means turning to strategies than can further push down the poverty level.

That’s where Angela Rachidi comes in. Rachidi studies the effects of public policy and existing support programs on low-income families, and makes a convincing case that our focus throughout policy should be on getting more Americans working.

A small fraction of prime-working age people in poverty work full-time, full-year, which means that for most, the lack of a full-time job, not low wages, seems to be the primary driver of poverty.

In a study Rachidi conducted over the summer, she found that:

The vast majority of working-age adults in poverty, whether measured by the official rate or the supplemental rate, lack full-time work, and more than 60 percent in official poverty did not work for pay at all in 2014. In addition, the majority of children in official poverty were in a family without a full-time worker, and 31.3 percent were in a family with no working adult at all. …

As Rachidi explains, most working-age adults in poverty are not working for reasons unrelated to searching for work. They have to do with health issues and home and family responsibilities. In other words, Americans in poverty are frequently not able to look for work or take a job when one is offered. They are not actually resistant to doing work. Addressing those barriers could do more to pull those sitting on the sidelines back into the labor market. But government solutions to reducing poverty are addressing the wrong problem.

Antipoverty policies—such as minimum wage increases, wage subsidies, increasing job availability (including subsidized jobs), and workforce development efforts like education and training—often focus on the working poor or on those actively searching for work. Efforts like these are not well-suited to those who are not even looking for work.

From disability programs to child care assistance to apprenticeship programs, a host of changes could be made to increase employment among low-income Americans, Rachidi argues. Many of these can occur on the state level, where much of federal aid is doled out to be distributed as statewide officials see fit. This is useful in the sense that regional problems don’t need a top-down diktat from Washington.

Check out Angela Rachidi’s suggestions on how to make work more attractive to Americans.

At the same time Rachidi focuses on solutions to address the reasons people are in poverty, Edward Conard argues in his new book, “The Upside of Inequality: How Good Intentions Undermine the Middle Class,” that Americans should be wary of relying on increased income redistribution to help the lower and middle classes move up.

He dismantles major myths about income inequality’s impact on the middle and working classes, including the following:

The myth that the rich get richer by making the poor poorer. No other high-wage economy has done more to help the world’s poor than the US economy. Regardless, advocates of redistribution press on. Rising income inequality is actually the byproduct of an economy that has deployed its talent and wealth more effectively than that of other economies — and not of the rich stealing from the middle and working classes.

The myth that incentives don’t matter. In an innovation-driven economy, there are large and compounding costs to dulling incentives for entrepreneurial risk-taking. As payoffs for success have risen, entrepreneurial risk-taking has accelerated US growth relative to other high-wage economies with more equally distributed incomes. Because of this growth, today, median US household incomes are 15 to 30 percent higher than those in Germany, France, and Japan.

The myth that mobility has declined. If the success of America’s 1 percent comes at the expense of the middle and working classes, we should see mobility declining. Yet, even with significant immigration, there is little evidence that mobility has declined or that mobility in Scandinavia, the supposed paradise of redistribution, is better than in the United States.

The myth that the success of the 1 percent hurts the middle class. Since the financial crisis, accusations that crony capitalism and the success of the 1 percent slow middle- and working-class income growth have only grown louder. The incomes of the very top of the 1 percent have soared, and the growth of middle-class and working-class incomes has remained slow. Many insist that this gap has increased because the wealthy are rigging a zero-sum game to take what rightly belongs to others. Conard addresses these accusations and explains how income redistribution is what hurts the middle and working classes.

Conard says income inequality is not a bad thing in and of itself. It drives competition and entrepreneurial risk-taking. Likewise, a heavy reliance on redistributing the income of those entrepreneurs undercuts those who are willing to invest in training and hiring lesser-skilled workers.

At the same time, Conard argues, reducing regulatory rules that create instability in the banking sector would encourage risk-averse institutions to reengage, compounding and growing the economy at a faster rate.

Filed Under: Front-Page Feature, Happiness Tagged With: Angela Rachidi, Edward Conard, income inequality, poverty, work

Harvard Business School Study Blames Gridlock for Lower Economic Growth

September 15, 2016

In a world where over-reliance on government to steer, monitor, and correct private behavior has sucked the courtesy out of human discourse, it should come as no surprise that one of America’s largest educational institutions is reporting that political gridlock is hampering economic growth.

Harvard University’s Business School blames political stalemate in Washington for limited economic growth.

“The federal government has made no meaningful progress on the critical policy steps to restore U.S. competitiveness in the last decade or more.”

Reporting on the study says:

U.S. gross domestic product grew at a rate of about 2 percent since 2000, well below the 3 to 4 percent average in the prior half-century. … The study contends that factors including a growing wealth gap, declines in productivity growth, and a rise in the number of working-age people neither employed nor seeking jobs show that the U.S. economy is becoming less competitive.

At the same time, Harvard reports that the companies most likely to benefit from Washington’s corporate cronyism — larger companies and million-dollar-funded Silicon Valley startups — are keeping the wheels turning, while small businesses are no longer the lifeblood of America’s economic engine.

More damaging still, the authors were quoted saying that the distortion is growing in a political election season filled with mis- and disinformation.

To us, the confused national discussion about our economy and future prosperity in this election year is our worst nightmare,” they say. “There is almost a complete disconnect between the national discourse and the reality of what is causing our problems and what to do about them.

This misunderstanding of facts and reality is dangerous, and the resulting divisions make an already challenging agenda for America even more daunting.”

The lingering premise of the study, which has the subheadline: “Political Dysfunction is the Greatest Barrier to Strengthening U.S. Competitiveness,” suggests that Americans can’t drive economic growth without central government.

Could dismantling some of the regulatory hurdles that businesses face make it easier for Americans to contribute to growth? Of course, but that can’t be done without Washington’s cooperation in reducing government. So if America’s politicians can’t cooperate, how are the rest of us expected to get along?

One major irony of the report, which was cited in more than a dozen news stories on Wednesday and Thursday, is that its conclusions came from an overwhelming consensus of … Harvard alumni. That’d be Harvard alumni across party lines. Bet you didn’t know that was a thing. More amusing still, Harvard Business School’s tag line is: “We educate leaders who make a difference in the world.” What is less amusing is the likelihood that Harvard alumni populate a great number of the institutions faulted for the gridlock.

While a concurrent study showed that only a portion of the blame for lower economic growth goes to government among the general public across party lines, the Harvard study did make some suggestions that many may find at least somewhat appealing. They include changing the corporate tax code, allowing more highly skilled immigrants into the U.S., streamlining federal regulations, improving infrastructure, reforming the K-12 education system, and addressing unfair global trade practices.

Many of the news reports were cited on Harvard Business School’s news page, but the report itself was not clickable. It linked to an empty comments page. There’s gotta be irony in there somewhere.

Filed Under: Front-Page Feature, Liberty Tagged With: economic growth, Harvard Business School, political gridlock

How to Reinvigorate the Marketplace of Ideas

September 12, 2016 by Arthur C. Brooks

A fierce competition of ideas is vital not only for the future of the free enterprise movement, but also for the future of American society. Intense debate and rigorous argument are the proving ground for good ideas and good public policy.

But the marketplace of ideas needs to have principled competitors, and few politicians in Washington seem to understand and articulate the core principles of free enterprise, much less apply them to policy.

Still, one simple point that is often neglected in heated campaign seasons like this one is this: No matter which side you’re on, the vast majority of your political opponents are actually not stupid, nor are they evil.

Let’s not mistake this for some milquetoast assertion that disagreement is in itself wrong, that everything should be settled easily by simple consensus. You hear that around Washington sometimes. I don’t buy it, and you shouldn’t either.

But there’s also a middle ground between consensus and the way Washington too frequently operates. The “polarization industrial complex” fans the flames of bad-faith accusations in order to drive up audience numbers and profits, and it’s no surprise that so many of us start to feel a bitter cynicism about the other side of the aisle. Political disputes give way to personal animus and we hardly even realize it’s happening.

Giving in to these feelings and allowing ourselves to caricature our opponents can seem to offer some short-term catharsis. But something in our core militates against it. Deep down, we know that most progressives, most conservatives, and most independents seek to improve the country and lift up the vulnerable.

In addition to being simply inaccurate, caricaturing our opponents also carries a practical cost. It erodes away the civil disagreements that are so vital for building up the competition of ideas. Innovative thinking is attenuated and political gridlock becomes more entrenched.

Declare Independence From Contempt

So what’s the solution? How can we start a revolt against the politics of contempt?

I offer an old tactic to try out. Actively make a personal effort to substitute kindness for contempt. When you feel especially frustrated or angry in a conversation, deliberately try to marshal up a sense of brotherhood to take those feelings’ place. You’d be surprised how quickly answering hostility with love can turn an entire interaction upside down.

Case in point: Shortly after I published my first book for mass consumption, Who Really Cares, I received an email from a reader. My first reaction: Hey, someone actually read my book! But when I opened the message, I was greeted by a point-by-point attempt to rebut my whole thesis. The criticisms were scathing and — I thought — unreasonable.

At first, I was infuriated. I started drafting a thorough reply. But then I realized that an aggravated response was going to accomplish nothing. Instead, I responded with a note thanking the reader for picking up my book. I expressed gratitude that he had engaged with it so thoroughly.

His reply came quickly. It was about as shocking as the initial email: He immediately softened. He responded with kindness himself, sanding down the rough edges on a few of his critiques. He even proposed we get dinner together the next time I was in his hometown.

Maybe I shouldn’t have been so surprised. My friend the Dalai Lama teaches often about the value of answering anger with love. And growing up, it’s what I learned in Sunday school. Matthew 5:44 tells to pray for our enemies and those who would seek to persecute us.

Here’s the hard truth: The forces of division and polarization won’t be vanquished by one politician riding in on a white horse. The marketplace of ideas can only become less toxic from the bottom up. Fixing our politics begins with each of us treating our political adversaries with greater dignity and more respect.

Again, you might think this sounds a bit “out there.” This nation has been through a lot these past years, and the frustrations are understandable. But consider this: be open to the idea and appreciate the sentiment. Then try to act on it, and see if the outcome is better than the other route.

Filed Under: Front-Page Feature, Happiness, Life Tagged With: competition, free enterprise, marketplace of ideas, political contempt, political parties

15 Years After 9/11. It’s Like Remembering Yesterday

September 9, 2016

Do you remember where you were on Sept. 11, 2001, when you heard that the first airplane hit the World Trade Center? You wouldn’t be alone. A Pew Research Center released a poll recently saying 91 percent of Americans recall exactly what they were doing at that moment.

But what about since then? After the attacks, President George W. Bush gave an impassioned speech, with his arm wrapped around a New York fireman, declaring that the terrorists will hear America’s mighty response. The government mobilized. The military was quickly sent to Afghanistan, the base of the Al Qaeda operatives. The Department of Homeland Security was formed in a matter of months. A senior intelligence chief was appointed on top of the central intelligence director.

The actions had the effect that it intended. In late 2001, 88 percent of people said the government was doing well in addressing terrorism. Unfortunately, that number dropped to a low of 52 percent in December 2015 following the attacks in Paris and San Bernardino.

A lot has passed since those early post-attack days. A lot of politics has gotten in the way of solutions, and a lot of highs and lows have occurred in all of our lives. Americans, like others around the world, learned to cope with the day-to-day of living with threats. We love, laugh, work, argue, struggle, and sleep, among other things.

But our resilience is not merely time. In fact, research shows that we remember 9/11 — and other shocking or traumatic events — because of a neurological process in which emotionally arousing events trigger activity in the amygdala, which is involved in emotional learning and memory.

The interaction then triggers production of a protein called Arc in neurons in the hippocampus, a brain region involved in processing long-term memory.

The scientists think the Arc protein helps store certain memories by strengthening synapses, the connections between neurons in the brain.

Emotionally neutral events generally are not stored as long-term memories,” said Christa McIntyre, a postdoctoral researcher at the University of California, Irvine. “On the other hand, emotionally arousing events, such as those of Sept. 11, tend to be well-remembered after a single experience because they activate the amygdala.”

On the flip side, while many of us may remember it like it was yesterday, some, like those who were particularly close to the terror, may not remember the details. That’s because that same part of our brain is also designed to store feelings, but not necessarily facts.

(I)t has been shown that when we have a traumatic event in our lives, the body produces major amounts of glucocorticoids. This helps to calm us down so we can cope. It also gives us that ‘numb’ feeling that many people describe during stress. But glucocorticoids have a transverse effect. They destroy neurons in the hippocampus. This means that the more stress we are under, the less we will be able to store the traumatic event in long-term memory. This partially explains how some people who endured years of trauma through abuse have very little memory of the entire season of events.

However, there is one other effect of Glucocorticoids. They enhance the limbic system in the brain. The limbic system helps us store our emotional reactions in events. Our brains can actually store our emotional output during a traumatic event much more completely than we can store the facts of the event.

Of course, being bombarded with images of that horrific day helps to keep the memories alive, if not distorted, as they are adapted to suit imaginary narratives produced in art, film, and history-making. But even when we can’t remember exactly the details, our instincts remind us that we must never forget.

Filed Under: Front-Page Feature, Life Tagged With: 9/11, neuroscience, PTSD, Sept. 11, terrorism

How Should the On-Demand Economy Protect Workers?

September 9, 2016

Are you a worker in the on-demand economy? Do you pick the hours you want to work, change who you occasionally work for from time to time, and get most of your work through the matching of your services through technological apps and other forms of digital on-demand requests? Basically, are you an Uber driver or something like that?

These are the new workers. They’re not quite independent contractors who can set their own prices and choose their clients nor are they traditional employees who work “9 to 5” or at the employer’s will. So do they need the traditional protections that workers in the “old” economy created through the years in public policy?

One study last year proposed coming up with a new set of rules for these “independent workers” to give them some of the protections and benefits that traditional workers get on minimum wages, overtime pay, non-discrimination, family and medical leave, workers’ compensation, unemployment insurance, health insurance, and pension benefits.

Among the suggestions: The new “independent worker” classification would allow employees to unionize, and task employers with providing health and disability insurance through contributions to the Affordable Care Act exchanges, paying the employer share of FICA tax payments, and withholding income tax payments.

But a new report on “The On-Demand Economy and Worker Benefits and Protections” suggests that these demands may be over-correcting in a new economic era that is still developing. In other words, the study is a little bit of overkill.

An important reason for exercising some caution in public policy regarding worker protections is the very real prospect of unintended consequences from steps intended to help workers. In particular, the proposal to create a new third category of worker – the “independent worker” – could inadvertently result in a loss of income and social protection for the people the policy is intended to help.

Today, employers must choose to either hire workers as employees or engage with independent contractors to get the services they need to run their businesses. If employers are given a third choice that entails less expense, less long-term commitment, and fewer risks, it would seem possible that the main effect would be to encourage more employers to redefine their workforce to fit within the new model. This could mean a larger migration of people out of employed status and into independent worker status than from independent contractor to independent worker.

After all, there are far more people who are currently employees of firms than who are working as independent contractors, and thus far more potential for migration out of employment than out of independent contracting. In addition, the combination of proposed benefits for independent workers would raise costs on employers well above what they are today. Harris and Krueger’s proposed requirement to pay a 5 percent fee for health insurance on all compensation earned by independent workers would be the equivalent of a new tax on this sector of the economy. Employers will be unlikely to pay much of this tax, as they will adjust the compensation levels of their workers and also raise their prices. The net effect, however, will be to squeeze the ability of the new firms to run their businesses as they can today, which means these firms will contract or grow less rapidly than they would without the new costs and restrictions associated with independent workers. This will mean reduced incomes for those people who would have been willing to engage with these firms without the added protections of independent worker status.

The report acknowledges that workers do need protections, but suggests that many potential solutions are already in place. Author James Capretta notes that independent workers are already required to pay Social Security and Medicare taxes. Additionally, retirement accounts and health insurance are available to workers who may not have it provided by employers. Increasing the “portability” of job-based benefits, as has already been proposed for the overall workforce, would free up workers to move from position to position as it suits them, thereby enhancing the on-demand economy.

As for workers compensation and unemployment insurance, these are two areas where changes could help both firms and workers.

The best alternative approach to improving the financial security of workers in the on-demand economy is to allow them to set aside resources that they could later tap during a period of lower earned income. Firms could be asked to facilitate independent contractor contributions to a 401(k) plan that could also serve as a cushion during periods of lower earned income. Conditions could be established for withdrawing funds without penalty to allow individuals with a history (above some minimum) of independent contractor income to supplement their incomes during periods of lower incomes. Those who access funds in this manner could be required to repay the amounts when their incomes, as shown in tax filings, exceed a certain threshold.

The Aspen Institute’s Future of Work Initiative, which funded the report, says it is built on the idea that “the economic landscape is changing far faster than our system of workplace protections and benefits has been able to keep pace – requiring fresh ideas for how to revitalize our social contract and restore the promise of work.”

Do you think independent workers are being taken advantage of in the on-demand economy, or is this a refreshing new opportunity to keep capitalism on the front burner of the U.S. economy?

Read the full report on the “On-Demand Economy and Worker Benefits and Protections.”

Filed Under: Front-Page Feature, Liberty Tagged With: Aspen Institute, capitalism, free enterprise, James Capretta, on-demand economy, supply and demand, Uber

The Poverty Debate: Why We Don’t Agree on The Same Set of Facts

September 5, 2016

The political realm is a great place to toil if you aspire to be an armchair pugilist. Without much personally at stake in the outcome of the poverty debate, it is easy to pick a side and argue statistics and facts. But in the midst of all the fighting are real people being impacted by decisions outside of their control.

Such is the case when it comes to arguments between the political scientists of the left and right over welfare reform, and whether those at the bottom rungs are any better off despite numbers showing that millions of people were clearly lifted out of poverty as a result of the 1996 welfare reform law.

To this day, commentators on the left employ bogeyman language for the anti-poverty law — demonizing Newt Gingrich and House Republicans for coming up with legislation that Bill Clinton signed — while at the same time acknowledging that the percentage of people in poverty is demonstrably less than reflected in the antiquated methodology used to determine current poverty levels.

Take the words of Will Marshall, president of the Progressive Policy Institute:

The official poverty rate is just above 15 percent, about a point larger than it was in 1996. But that measure is misleading, because it doesn’t take into account non-cash benefits and tax subsidies. According to Harvard University’s Christopher Jencks, the absolute poverty rate falls to under 5 percent when adjusted for food and housing, the earned income and children’s tax credit, and a more accurate measure of inflation.

Nonetheless, Jencks and other social policy researchers are concerned about the rise of “deep poverty” — an increase in the percentage of families whose income is less than 50 percent of the official poverty line.

Some liberal analysts blame welfare reform for gouging a huge hole in the social safety net. Even as unemployment soared during the Great Recession, they note, TANF caseloads stayed down. That meant fewer needy families were getting cash assistance when they needed it most.

That’s true, but it’s not the whole story. As cash assistance has shrunk, other forms of social support have grown and become more generous. These include unemployment insurance, food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP) and disability programs. In fact, some conservatives complain that welfare reform hasn’t made poor single-parent families less dependent on government; it just transferred their dependence to other programs that lack TANF’s strong work requirements.

Marshall notes that welfare reform, courtesy of President Clinton or otherwise, helped reduce the number of people in poverty. The big problem now is the number of women with children who live in “deep poverty,” which is defined as people living on less than half the official poverty rate. Professors Kathryn J. Edin and H. Luke Shaefer recently wrote a book in which they demonstrate that “deep poverty” rose by 2.6 percentage points between 1996 and 2011, from 1.7 to 4.3 percent.

At the same time, however, the Manhattan Institute has released a study contradicting the numbers, while saying something similar to Marshall from a completely opposite perspective.

Practically no children of single mothers were living on $2 a day in either 1996 or 2012 (the latest year for which we have reliable statistics), once the receipt of all government benefits are factored in. In 2012, fewer than one in 1,500 children of single mothers were living in what is called “extreme poverty.” This finding is consistent with other research.

Herein lies the challenge. If both sides agree that “official poverty statistics can create a misleading impression that hardship has increased,” then both sides must get out from beyond their political lens to evaluate not whether welfare reform has been a net positive — it has — but what’s the next step.

Progress is being made. More needs to be done. But the debate must start from the perspective of not what should be done, but whether we can eradicate poverty or whether it will always exist to some extent.

Then it’s a matter of determining how much help is enough to ensure that the least among of us has the means to live in safety and with dignity. This is where agreement is elusive and where next measures stall. Determining what those in deep poverty need, want, and are capable of contributing could go a long way to getting past arguments over whether six in one is equal to a half dozen in the other.

Filed Under: Front-Page Feature, Life Tagged With: poverty, SNAP, TANF, welfare reform

Labor Day Survey: Americans’ Opinions on the Work Environment

September 2, 2016

People like their jobs, and it’s not just because they have one.

As we celebrate Labor Day, polls on the American workforce show a great deal of satisfaction among workers for the jobs they have. This is no surprise. People have been giving them same answer for decades.

There has been little change in the responses since survey organizations started measuring them regularly in the 1970s. Eighty-six percent of employed people said they were completely or somewhat satisfied with their jobs, according to Gallup’s latest. (A decade ago, the response was identical.) Nearly half in the survey, 44 percent, reported that they were “completely satisfied.” Only 13 percent said they were somewhat or completely dissatisfied with their jobs. Across all income breaks, at least 70 percent say they are somewhat or completely satisfied with their jobs. Results from the National Opinion Research Center on satisfaction with work have also been positive and stable over time.

And it’s not just that people are satisfied with the work they have. They are also increasingly optimistic about the work they could possibly get.

In 1998, when the University of Connecticut/Rutgers first asked if it was a good time or a bad time to find a quality job, 69 percent said it was a good time, a reflection of the country’s strong economy. Following the 2008 crash, this response fell to an all-time low of 8 percent in November 2009 and again in November 2011. Since then, confidence in finding a quality job has continued to improve. In Gallup’s August 2016 survey, 39 percent gave that response.

Why is satisfaction so persistently strong? There are probably many reasons, but jumping out is the notion of “earned success.” In other words, having a sense of purpose gives people meaning in their lives. And put yet another way:

Earned success means defining your future as you see fit and achieving that success on the basis of merit and hard work. It allows you to measure your life’s “profit” however you want, be it in money, making beautiful music, or helping people learn English. Earned success is at the root of American exceptionalism.

Filed Under: Front-Page Feature, Happiness Tagged With: Labor Day, polls, public opinion, work

Uninformed America: Global Poverty Down Nearly 60% in 30 Years

September 2, 2016

The percentage of the world living in poverty has declined by nearly 60 percent in the last 30 years, from 52 to 21 percent. That is an astounding number, especially as the world population has risen from 4.933 billion to 7.215 billion in 2015, a 31.6 percent increase, during that same period.

Even extreme global poverty — defined as lack of access to clean water, enough food, sufficient clothing and shelter, or basic medicine like antibiotics,which impacts 1.4 billion people today — has declined from 21 percent in 2011 to 16 percent in 2013.

Despite these facts, 67 percent of Americans said they thought that global poverty had gotten worse over that time period, according to a Barna Group in conjunction with Compassion International, a child advocacy ministry.

Why so pessimistic? Hearing the news each night regularly puts people in a foul mood, but really, it’s a lack of awareness of efforts that have been made. Fortunately, knowledge is power.

Compassion International’s take is that Christians have a responsibility to be involved in helping relieve poverty, and happily reports that many Christians agree. It notes that more Christians donated to anti-poverty causes than the U.S. population as a whole, and donated more cash than non-Christians overall. This is true for Christians over and under 40 years of age.

The survey also found:

Fewer people are likely to have volunteered for a poverty-related cause in the past year. Practicing Christians, however, are still more likely than the general population to have spent time working to end global poverty. Among all adults, 14 percent volunteered for a church and 11 percent volunteered for a non-profit to help the global poor. Among practicing Christians, one-third of those over 40 volunteered at a church to help the global poor and about one-quarter (24 percent) did so at a non-profit. Among those under age 40, 36 percent volunteered at a church to help the global poor and one-fifth (21 percent) did so at a non-profit.

Still, two-thirds of Americans don’t believe that poverty can be eradicated in the next 25 years, despite it dropping so much in such a short time. They fault corruption, the enormity of the problem, government corruption, and an uncoordinated global response among causes of poverty’s persistence.

As research shows, poverty can be eradicated by creating greater opportunity. The freeing of markets across the globe is the most credited reason for poverty’s reduction. In other words, the ability of people to pursue opportunities to build their own livelihood is the single-greatest facilitator in the reduction in poverty.

Read the global poverty perceptions survey here.

Filed Under: Front-Page Feature, Life Tagged With: income inequality, poverty, public opinion, world population

Pittsburgh Most Affordable Metro Area for Home Buyers: Where Does Your City Rank?

August 30, 2016

You can buy a median-priced home in Pittsburgh living on a household salary of $32,390 if you put 20 percent down. You’d need five times that to afford a median-priced home in San Francisco, according to HSH.com, a housing market research firm.

The extremes are not too surprising, The least affordable metro regions for home buyers are all in California — San Diego and Los Angeles are the next most expensive towns after San Francisco.

But buying a home is becoming more difficult in most metro areas. That’s because home values are on the rise, which is a good sign for the economy, but a drag if you’re looking for a bargain. At the same time, while prices went higher in the second quarter of 2016 over the first quarter, mortgage rates dropped across the country, making it easier to afford more home.

HSH did a comparison to determine how much salary you need to buy a home in 27 metro areas. Pittsburgh came in lowest, with a median-priced home at $140,500 — though prices went up from first quarter to second quarter this year. That’s true also in Pittsburgh rival city, Cleveland, which is the second most affordable city despite increases in prices of 24 percent. For Cleveland, buyers need $34,434 annually to buy a home priced at $138,100 with 20 percent down. Cincinnati ranked third with a 17 percent hike in home prices and an average home price of $160,600. A household salary would need to be $37,179 to get a home in Cincinnatti with 20 percent down.

If you’re looking to move to a city that just became more affordable — in other words, home prices dropped — check Florida. Orlando, Tampa, and Miami are the only three cities where prices went down.

The national average salary needed to buy a home is $52,699.17, which is about what it costs to afford a median-priced home in Houston. If you want to buy a home in San Francisco, you need a $161,947.60 salary in order to afford a median-priced home of $885,600.

Of course, putting 20 percent down makes buying a home easier, but the International Center on Housing Risk notes that few first-time home buyers do. In June, 72 percent of first-time home buyers put a down payment of 5 percent or less, and 22 percent of first-time buyers had subprime credit (a score below 660), which means they’re not getting the best mortgage rate out there. It’s clear that avoiding a housing crisis means not stretching the dollar too far.

Trying to find a bargain? Here’s a list of the metro areas HSH reviewed. HSH also produced a great interactive display so buyers can look through cities to see quarterly changes and decide where they might like to move.

Filed Under: Front-Page Feature, Happiness Tagged With: affordable housing, median home prices, mortgage rates, salaries

Startup Nation: A Ranking of Cities and States With New Entrepreneurs

August 29, 2016

Americans are very bad at giving up. Fortunately.

America has rebounded to become a startup nation: posting its fifth most entrepreneurial year in two decades.

The Kauffman Foundation, which recently released the 2016 Kauffman Index of Startup Activity, found that 30 states have higher levels of new business activity over 2015, and 23 out of 40 metro areas experienced an increase in startup activity. That’s after a two-decade low in 2014.

Reviewing the number of start-ups in high- and low-density states, the index found that Texas led the way among the 25 largest states, followed by Florida, California, New York and Colorado. The highest startup activity in the smallest 25 states were in Montana, Nevada, Wyoming, Oklahoma and Alaska.

Across large cities, Austin, Miami, Los Angeles, San Francisco, and Las Vegas saw the highest number of startups while the largest positive shifts among cities were in Orlando, Kansas City, Cincinnati, Nashville, Detroit, and San Francisco.

New Jersey, Michigan, Minnesota, Texas, New York, and Georgia saw the largest rank increase in new startups in large states, while Oregon, Oklahoma, North Dakota, Wyoming, Mississippi, Nebraska, Arkansas and Rhode Island made the greatest ranking increase among low-population states.

The rankings were determined by evaluating the percent of adults becoming entrepreneurs in a given month; the number who were driven by an opportunity, rather than necessity; and the growth of startups that employed at least one person besides the owner in the past year. The data are pulled from the U.S. Census Bureau and the Bureau of Labor Statistics.

Though new startup activity is still below its peak of a generation ago, the growth of opportunity-driven startups is a good sign, in part because entrepreneurship affects “the well-being of every human on this tiny planet.”

“(E)ntrepreneurship should not be a privilege of the few. Indeed, one of the most powerful things about entrepreneurship is its universality. All communities, cities, and states can become “ecosystems” of entrepreneurial innovation to generate new businesses and jobs,” wrote Victor W. Hwang, Vice President of Entrepreneurship at the Kauffman Foundation, who led the study.

Larger states that saw negative shifts in their ranking for new startups were Illinois, Louisiana, South Carolina, Colorado, and Massachusetts while smaller states a drop in their ranking were Utah, Vermont, Maine, Kentucky, Alaska, Idaho, Delaware, and Connecticut.

Metros that experienced the biggest negative shift in rank were Virginia Beach, Chicago, Sacramento, Seattle, Indianapolis, and San Antonio.

Read the entire 2016 Kauffman Index of Startup Activity.

Filed Under: Front-Page Feature, Happiness Tagged With: entrepreneurs, jobs, new business starts, startups

Freedom House Records Loss of Freedom, Notably in the United States

August 27, 2016

Liberal democracies on the whole are on the decline in the world, which may not alarm Americans in their cushy first-world homes but for the fact that the United States is listed among those who are experiencing a downward trend away from democracy and toward a loss of freedom.

Freedom House, which publishes an annual report on the ability of individuals to live freely in their nations, reported in its 2016 study that for the 10th year in row, the number of free countries is on the decline. According to Freedom House, 40 percent of nations are free, 24 percent are partly free, and 36 percent are not free.

It reports:

The number of countries showing a decline in freedom for the year—72—was the largest since the 10-year slide began. Just 43 countries made gains.

Over the past 10 years, 105 countries have seen a net decline, and only 61 have experienced a net improvement.

Ratings for the Middle East and North Africa region were the worst in the world in 2015, followed closely by Eurasia.

Over the last decade, the most significant global reversals have been in freedom of expression and the rule of law.

The United States still ranks as a free nation in the Freedom House report, with a score of 90 on a scale of 100, but Freedom House says that the U.S. should be watched because freedom is receding. Specifically, Freedom House reports:

The United States received a downward trend arrow because of the cumulative impact of flaws in the electoral system, a disturbing increase in the role of private money in election campaigns and the legislative process, legislative gridlock, the failure of the Obama administration to fulfill promises of enhanced government openness, and fresh evidence of racial discrimination and other dysfunctions in the criminal justice system.

Freedom House has been conducting the study for 45 years, and while its results have been questioned before, mostly over whether it views freedom from an American-style left-right political lens, which doesn’t take into account cultural barometers, the results should be a concern to Americans, particularly since the decline appears to be acceptable to many on America’s college campuses.

Writer Rebecca Burgess draws from another study which shows that decreasing support for liberal democracies is evident on college campuses, whether university students and faculty want to admit it or not.

(F)ew scholars or commentators are keen to be the next generational crank and say forthrightly that democracy is in decline. This time, however, Foa and Mounk enlist “the language of survey research” to demonstrate that the young of this era no longer support democracy per se as prior generations of young citizens have.

Not only do fewer than 30 percent of US millennials believe it’s essential to live in a country that’s governed democratically, compared to 72 percent of those born before WWII, in 2011, 24 percent of those born in the 1980s and after considered democracy to be a ‘bad’ or ‘very bad’ way of running the country. Among the same cohort of Europeans in 2011, only 13 percent said the similar — itself an increase from the 1990s, when it was 8 percent.

Arguably, these are tenuous because still vague markers. But consider this: the minimal liberal understanding of representative democracy is centered on elections being free and fair. Twenty-six percent of US millennials say that it is ‘unimportant’ for a people in a democracy ‘to choose their leaders in free elections.’

This anchors the more concerning fact that the share of US citizens who believe that having a ‘strong leader’ who doesn’t have to ‘bother with parliaments and elections’ is a better way to proceed has risen to 32 percent from 24 percent in 1995; that 49 percent now approve of ‘having experts, not government, make decisions according to what they think is best for the country’; and that today, one in six of the survey respondents agree that it would be a good or very good thing for the army to rule. (Notably, the proportion in favor of military rule has risen in most mature democracies, including Germany, Sweden, and the United Kingdom.)

To quote “Team America: World Police,” freedom isn’t free. And its loss, disappearing alongside liberal democracies around the world could be much sooner than a generation away if its defenders are not vigilant.

Filed Under: Front-Page Feature, Liberty Tagged With: democracy, freedom house, freedom index, liberal democracy, Rebecca Burgess, World Values Survey

Online Educational Games Change Principles of Learning

August 26, 2016

If you’re lamenting that kids are not getting a practical education any more, take heed, technology is leading young people in entirely new directions, with online games that teach kids everything from how to save money in virtual piggy banks to how to run multinational airline scheduling and pricing operations.

TPOH will leave it to readers to try out some of these games to determine their value, but the simple fact is that young people are no longer beholden to classroom models for learning. Simulations, interactive play, and augmented reality offer new ways of problem-solving and development exercises.

The University of Akron, for instance, provides links to all kinds of study materials in the form of games that test not only kids’ motor skills, but math, technology, economics, U.S. history and government, and many other topics.

Most of the games can be played online though some are meant to be app downloads. Many of the games the university lists are for grades K-6, but some of the games on personal finance and entrepreneurship target grades 7-12, which is important if schools are not going to make finance classes mandatory.

Thousands of resources are available online for teaching financial education to young people. Economics-Games.com provides gaming-based lessons on microeconomics, industrial theory, and of course, game theory. These are higher-level concepts, and the demonstrations would make any college-age student sit up and pay attention.

Even the U.S. Mint has interactive games, including one that teaches youth about the branches of government. It’s a study tool that forces students to consult the Constitution when they get lost. What could be better than that?

Many of the online economics games offer business simulation strategies, and many are targeted at building collaborative efforts with thousands of players at a time. Some sites are agenda-driven, like trying to teach the value of alternative energy or cooperative farming. A lot of them, surprisingly, are free.

In all, it’s a brave new world out there. Students are learning in ways that many parents and older generations may never understand. So put on your virtual reality headset and hang on for the ride.

Filed Under: Front-Page Feature, Happiness Tagged With: augmented reality, economics games, entrepreneurship, financial education, K-12 education, online learning, virtual reality

Music As Memory: The 19th Amendment, Schoolhouse Rock Song for Suffrage

August 26, 2016

Music has long been used as a learning tool, whether as hymnals or nursery rhymes, but one of the most entertaining and engaging methods of employing music for memory is through the work of Schoolhouse Rock, which taught an entire generation about American history.

And what better way to celebrate suffrage and the women’s vote than to rock this jam?

On this day in history, 1920, the 19th Amendment, guaranteeing women the right to vote, was adopted into the U.S. Constitution by proclamation of Secretary of State Bainbridge Colby. The battle for women’s rights has a long history, led by such memorable women like Elizabeth Cady Stanton and Lucretia Mott, Susan B. Anthony, and Sojourner Truth, among others, as well as many men without whom the amendment would never have happened.

It took more than 70 years and a world war for the Suffragette movement to result in the 19th Amendment, but here’s the short version, courtesy of Essra Mohawk and the Schoolhouse Rock gang.

Maybe the tune will stick in your head, like an ear worm, and you’ll remember a couple of these memorable history makers.
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Lyrics for the Schoolhouse Rock song, for those who learn better through reading comprehension.

Now you have heard of Women’s Rights,
And how we’ve tried to reach new heights.
If we’re “all created equal”…
That’s us too!

(Yeah!)

But you will proba … bly not recall
That it’s not been too … too long at all,
Since we even had the right to
Cast a vote.

(Well!)

Well, sure, some men bowed down and called us “Mrs.” (Yeah!)
Let us hang the wash out and wash the dishes, (Huh!)
But when the time rolled around to elect a president…

What did they say, Sister, (What did they say?)

They said, uh, “See ya later, alligator,
And don’t forget my … my mashed potatoes,
‘Cause I’m going downtown to cast my vote for president.”

Oh, we were suffering until suffrage,
Not a woman here could vote, no matter what age,
Then the 19th Amendment struck down that restrictive rule. (Oh yeah!)

And now we pull down on the lever,
Cast our ballots and we endeavor
To improve our country, state, county, town, and school.

(Tell ’em ’bout it!)

Those pilgrim women who …
Who braved the boat
Could cook the turkey, but they …
They could not vote.
Even Betsy Ross who sewed the flag was left behind that first election day.

(What a shame, Sisters!)

Then Susan B. Anthony (Yeah!) and Julia Howe,
(Lucretia!) Lucretia Mott, (and others!) they showed us how;
They carried signs and marched in lines
Until at long last the law was passed.

Oh, we were suffering until suffrage,
Not a woman here could vote, no matter what age,
Then the 19th Amendment struck down that restrictive rule. (Oh yeah!)

And now we pull down on the lever,
Cast our ballots and we endeavor
To improve our country, state, county, town, and school. (Right On! Right On!)

Yes the 19th Amendment
Struck down that restrictive rule. (Right On! Right On!)

Yes the 19th Amendment
Struck down that restrictive rule.
(Yeah, yeah!
Yeah, yeah!
Right on!
We got it now!)

Since 1920…
Sisters, unite!
Vote on!

Filed Under: Front-Page Feature, Liberty Tagged With: 19th Amendment, Schoolhouse Rock, Suffrage, This Day in History, women's rights

Why the EpiPEN Outrage Could Mark ‘The System’s’ Undoing

August 25, 2016

Updated Aug. 29, 2016:

The makers of the EpiPEN, under intense scrutiny for the increased price of its life-saving epinephrine auto-injector, announced Monday that it would release a generic version of the EpiPEN, which will cost about half of the branded version, now priced at $608 per two injectors.

It’s an unusual move considering that the company’s generic version will in effect be competing against its brand version, but observers say that it’s a smart business decision, not least because it helps drug maker Mylan quell the downward slide in stocks, but also because it potentially ends up paying less to middle men who have a stake in the list price of the branded version, putting Mylan in a better financial position.

The move sheds light on how and why drugmakers end up charging outrageous prices for drugs. Former FDA Commissioner Dr. Scott Gottlieb described how a long line of intermediaries between the drug maker and the patient claim a stake in the listed price of a drug.

The reason why (the system) exists is because of a court ruling that said that if the drug makers provide a discount to any one entity in the channel — so if they provided a big discount to a PBM (Pharmacy Benefit Manager) or a health insurance company, and this is a 1990 court ruling, then they had to provide the same discount to the pharmacies, to everyone in the channel. So, therefore, they moved away from providing discounts and went to this rebate system, which is based on some measure of the total sales of drugs. They had to go to this convoluted system or else they would’ve been forced to provide the same discounts to everyone in the channel, because you would think, if you’re thinking in terms of economics, money today is worth more than money tomorrow, so if you’re an insurance company or a PBM, you’d rather get a discount than a rebate, and that’s probably the case but for the fact that then the drug company would have to provide it to everyone and then the rebates would be much lower.”

Gottlieb said, “The scheme will end when drug makers realize that the current selling model is no longer in their economic interest, and when all of the system’s players realize that they’re losing their compact with patients.”

But, he warned, efforts by policymakers to come up with a regulatory or legislative solution is unlikely to lead to a better outcome.

“The system will game around whatever regulatory rituals Congress divines.”

Original article, Aug. 25, 2016:

The EpiPEN outrage has really taken the public consciousness by storm, with the massive increase — more than 600 percent — in the price of the epinephrine auto-injector. But the question of how its manufacturer, Mylan drug company, came to be public enemy #1 in the space of days is reverberating with little reflection on what circumstances triggered the soaring price hike.

The EpiPEN was considered affordable for the non-insured mainstream when it was first introduced in 2007 at $57 for a two-pack . It has gone up in price to more than $600 per two-pack in the last few months. At the same time, Mylan CEO Heather Bresch has seen her annual salary rise $16 million in the last nine years.

This caused presidential candidate Hillary Clinton to exclaim that the company should be investigated for price gouging.

The product is off-patent, meaning that a generic can make its way to the market, though one hasn’t. TPOH has already brought to light why such failures occur in the generic market, and former Assistant FDA Commissioner Peter Pitts repeated that in a recent discussion on Bloomberg regarding the failure to produce a generic alternative to the EpiPEN.

“When you bring high-quality generics into the marketplace, the prices plummet. So I think it’s opportunity for the FDA to start prioritizing these first-to-market generics.”

While Pitts says “the FDA ban bring competition into the marketplace,” in actuality, Washington has been skewering the free market for years, and this is just one of the unwelcome outcomes, though blame is widely placed at the door of Mylan.

In truth, Mylan spent millions lobbying Congress, which resulted in the 2013 School Access to Emergency Epinephrine Act, which made it law for public schools to stock the drug, which works as a fast-acting allergy inhibitor. EpiPEN, which can be life-saving in some circumstances, has little competition.

Mylan lobbied for its product to be put in all public schools. Congress passed the bill. Mylan raised its price — a typical supply-demand reaction after a typical Washington swat at open competition.

The schools bill was co-sponsored by Senator Amy Klobuchar, a Minnesota Democrat, who now wants to investigate Mylan.

Bresch argues Mylan spent hundreds of millions of dollars researching the drug and putting Mylan on the market — costs associated with the research itself, compliance with Food and Drug Administration rules, and the propping up of the insurance industry as required by Congress’ Affordable Care Act. Reportedly, for every $608 spent on the EpiPen, Mylan gets $270 while the insurer gets $334. Who’s to blame for the price spike now?

As Kevin Williamson notes in a scathing National Review piece to ask who’s really at fault for this shake-up in simple supply-demand economics:

You know how many treatments for anaphylaxis have been produced by politicians over the course of human history? Zero. Congress’s sole contribution to the existence of a handy device that keeps your children from dying from bee stings is the fact that Mylan CEO Heather Bresch is the daughter of a Democratic senator, Joe Manchin of West Virginia.

Yes, Mylan raised the price of an EpiPen. You know who else raised the price on EpiPens? Bernie Sanders and Hillary Clinton, that’s who, and Joe Manchin, too. You thought Obamacare meant free goodies for you paid for by wicked rich people and evil corporations, right, Sunshine? Remember that medical-device tax? An EpiPen is a medical device. You think the politicians don’t have any self-interest there?

Thought experiment: Your child is dying. Who do you go to for help? Sanders? Clinton? Or one of the research scientists who made the EpiPen possible?

Bresch agrees that health care laws have put an additional burden on the consumer.

“The patient is paying twice,” Bresch told CNBC. “They’re paying full retail price at the counter, and they’re paying higher premiums on their insurance. It was never intended that a consumer, that the patients would be paying list price, never. The system wasn’t built for that.”

Ironically, Bresch says she wants to sit down with Congress and sort out the bad mojo over the price increase as well as determine how close Congress’ relationship to biotech should be. Her solution may just be another version of the problem.

“It’s a complicated system and to get in and understand it takes time, and you know, many people don’t have the time to take the time. Our Congress, our leaders in this country need to get around the table to fix this. … I think we need leadership in this country to make the tough changes.”

Filed Under: Front-Page Feature, Liberty Tagged With: epipen, Food and Drug Administration, government regulation, Mylan, pharmaceutical companies

Why Drugs Cost So Much, And How to Bring Down the Price

August 23, 2016

Is the process of trying to ensure overall safety worth the increased cost of manufacturing if the net result is an unknown improvement in safety?

It’s a question facing factories that are being threatened with new emissions control regulations for the sake of global warming. The extra requirements, without an evidence-based benefit, drives up prices, and could force companies out of business.

The same goes for the generic drug market. Everyone wants to know that the drugs they put into their bodies are safe and clean and doing the job they’re supposed to do. But generic-drug makers are being held to regulatory standards despite doubts about a proven need for the extra layers of rules. And these extra rules are making it too costly to create lower-priced alternatives to more expensive, brand name drugs.

From a former Food and Drug Administration official:

(I)n a push to reduce the risk of contamination, the (FDA) in 2009 forced generic-drug makers to retool their sterile manufacturing plants and make production lines less intricate. The abruptness of the change caused many facilities to be shut down, creating drug shortages and driving up prices.

The complexity and cost of completing a generic-drug application has also grown enormously. In 2003, when I began working at the FDA, we estimated that it cost less than $1 million for a firm to file a generic-drug application. A drug would have to fetch about $10 million in annual revenue before it would be subject to generic competition. Today, filing a generic application requires an average of about $5 million and can cost as much as $15 million. This means that a drug may not face brisk generic competition until it exceeds $25 million in annual revenue. Thanks to these changes, infrequently used generics — such as clomipramine for major depression — may now have only one competitor and cost as much as branded drugs.

Author Scott Gottlieb, a physician and clinical assistant professor at New York University School of Medicine, says that the biggest drug-price increases are the result of a small number of old medicines that could be cheaper if more than one generic competitor entered into the market. But with new regulations, including a new draft rule about defensive labeling that exposes generics to costly litigation, generic drug-makers are being driven from the market.

In another example, Gottlieb writes:

Generic-drug makers usually manufacture dozens of different drugs on each production line and hundreds of drugs in a single plant. The FDA is now trying to require production lines to be dedicated to one or two drugs, citing potential safety hazards. But generic-drug makers say this can triple manufacturing costs. While brand companies typically run only one or two products on each manufacturing line, generics run 30 to 50 products. The FDA’s safety concerns could be addressed through better quality controls and improving its inspection capabilities.

Gottlieb notes that if the rules were less burdensome — and that doesn’t mean generic drug makers becoming more irresponsible — generic drug costs in some cases could be driven down by nearly 80 percent. Seems like an area where reducing federal interference could create a robust marketplace that improves Americans’ lives literally.

Read the entire Wall Street Journal article on generic drug regulations here.

Filed Under: Front-Page Feature, Liberty Tagged With: drug prices, Food and Drug Administration, generic drugs, manufacturing, regulations

Are Poor People More Optimistic Than Others About Their Futures?

August 18, 2016

Poor people are more likely than non-poor people to think that they will be able to pull themselves out of poverty. Forty-eight percent of the poor say most poor people will remain poor for a long time while 41 percent say poverty is a temporary condition. That compares to 60 percent of people who said that the poor will remain poor for some time.

Meanwhile, 61 percent of Americans, including 64 percent of Americans living in poverty, say that most poor people who receive welfare benefits would rather earn their own living instead of staying on welfare.

Those are some of the findings from a new Los Angeles Times poll, conducted in partnership with The American Enterprise Institute, a top Washington think tank. The poll provides other stark findings about how Americans think about people in poverty.

America’s political parties may want to take note of those findings, particularly because 37 percent of people living in poverty defined themselves as somewhat or very conservative while only 31 percent defined themselves as liberals. Another 24 percent declared themselves moderate.

Only 27 percent of Americans said they believe that conditions for poor people have improved in the last 10 or 15 years while 42 percent say it has gotten worse for poor Americans. Only 13 percent said they believe that the poverty rate has declined in 30 years.

In reality, 14.8 percent of people were living beneath the official poverty line in 2014, according to the U.S. Census Bureau, 3 points below the rate that lived in poverty in 1965, the year that President Johnson’s War on Poverty programs began, and 3.3 percentage points higher than in 1985, when the AEI-LA Times study was first conducted.

The 2016 survey mimicked the 1985 survey and demonstrates how (little) opinion has changed over 30 years. The seemingly small differences over that time frame may be due to the fact that little has changed when it comes to public policy — or more exactly, how much change has kept things the same. The pivotal Temporary Assistance for Needy Families (TANF), which is coming up on its 20th anniversary since enactment, shifted responsibility for welfare from the federal government to states, but poverty is more persistent than the “T” in TANF intended.

The Center for Budget and Policy Priorities notes that only about half of the federal and state grant money for TANF actually went to “core welfare reform activities” in 2013, in part because “states can use TANF funds much more broadly than the core welfare reform areas of providing a safety net and connecting families to work; some states use a substantial share of funding for … other services and programs.”

So what else do people think of the poor, and how do the poor perceive themselves? Other poll findings that stand out:

Fifty-four percent of people as a whole, and 47 percent of people living in poverty, said they believe that the potential loss of welfare benefits “almost always” or “often” impacts the decision of unmarried people on whether to get married. This is an interesting finding given that much work has been done demonstrating that marriage helps families get out of poverty. It’s notable also that 47 percent of all the people who took the survey reported they are married, but only 23 percent of the people in poverty who answered the poll said they are married.

About 87 percent of Americans — including 81 percent of individuals living below the poverty line — believe that requiring poor people to seek work or participate in a training program in return for benefits is a better approach than providing benefits without asking for anything in return.

Fifty-four percent of people think welfare encourages dependency, down from 59 percent in 1985. On the flip side, more people feel negatively about the way things are going, 67 percent of people, and 66 percent of people who are poor, said they are dissatisfied with the country’s direction. That pairs with the increase in the number of people who say that it’s harder for poor people to find work, up to 57 percent today from 43 percent in 1985.

Seventy-six percent of people, including 71 percent of people in poverty and 80 percent of people not in poverty, said they thought that welfare programs are badly designed or under-funded, and that’s why they have failed to pull people out of poverty.

Thirty-five percent of people said government has the greatest responsibility for helping the poor — that’s twice as high a percentage over those who responded that either churches, charities, families, or the poor themselves have the greatest responsibility.

The entire poll, conducted between June 20 and July 7, 2016, can be viewed here. The survey was conducted among 1,202 adults, including 235 adults living in poverty. The survey oversampled individuals living below the poverty line to get reliable estimates of the views of poor Americans themselves.

Filed Under: Front-Page Feature, Insight, Life Tagged With: Los Angeles Times, poverty, survey, TANF, welfare benefits

Freedom in America: A Comparison of Liberty in the 50 States

August 16, 2016

Even freedom can be fun!

Because America is built on competition, and nothing spurs competition more than interstate rivalries, especially comparisons of individual freedom, the CATO Institute has released its new report Freedom in the 50 States. It’s chock full of data to rev up that statewide pride.

The top five states for freedom in order: New Hampshire, Alaska, Oklahoma, Indiana, and South Dakota (notably, in a recent TPOH post, South Dakota also earned a distinction for being affordable, so keep your eye on the Mount Rushmore State, whose very nickname embodies a sense of America’s best).

New York, California, Hawaii, New Jersey, and Maryland were ranked worst in overall freedom.

So what’s freedom?

(Click on the map to try the interactive features.)

According to CATO, it’s a lot of things. More than 230 different variables were measured to come up with an index. The variables are narrowed down to three broad categories: fiscal policy, regulatory policy, and personal choice. They can be further broken down into categories on litigation, insurance, education, marriage, asset forfeiture, incarceration, and labor, among other topics.

In an effort to be as transparent as possible, CATO is offering all the data it used to readers for them to make their own calculations, turning on and off variables that they may not value as CATO does. Nothing says freedom more than that.
How does your state rank?

Filed Under: Front-Page Feature, Liberty Tagged With: competition, fiscal policy, freedom, personal freedom, regulatory policy, the United States

How to Achieve the American Dream: Start By Being Frugal

August 16, 2016

Are you an extreme coupon clipper? How’s that working out? Maybe pretty good, you’re saving money. Or maybe you’re spending to save. Or maybe it takes way too much time and you abandoned this strategy for living with fewer expenses.

Well, forget about it. If you want to know how to achieve the American dream, follow the lessons of the Fatzinger family. Learn from the “Einstein of economical.”

“These days, frugality is not about clipping coupons. It’s about rethinking your finances, and maybe your life. …

‘Spend money on what makes you truly happy and on what you enjoy.'”

That’s the message from Rob Fatzinger, the patriarch of a family with 13 kids that lives outside of Washington, D.C. What’s remarkable about them isn’t so much that the family focuses on its happiness rather than on its possessions, but that it is living debt-free in one of the most expensive suburbs in the country.

TPOH doesn’t know what spur recently jabbed The Washington Post to begin covering positive new stories, like the recent one about a Republican mayor helping the poor, or the Fatzingers, a model in the pursuit of happiness. But in a world of media errors, it doesn’t matter why. It just matters that the news is good and … useful.

In the case of the Fatizingers, the story is of a devout Catholic family, led by husband and wife, Rob and Sam, who took frugality to a whole new level. The lessons are ones we can all take home to our smaller households.

Back in 2000, they bought a five-bedroom house out of foreclosure and later added three bedrooms. Nine children, including the youngest, who is 4, live there now.

The good news: The home cost $150,000. The Fatzingers paid down $50,000, saving interest on the 15-year mortgage.

The bad news: Sam said their priest, visiting to bless the new home, ‘walked in and said: “Should I do an exorcism on this house?”‘ The place was in serious disrepair.

‘Relatives gutted it and made it livable,’ Sam said. ‘Youth groups were over here, ripping up carpet, taking down walls.’ Someone gave them a wood stove. A relative gifted them a used couch. Later, another couch was left on a curb for anyone to take. Score. …

The family shops at sales or secondhand stores and checks out the Freecycle Network, a site for giving away belongings.

Friends and strangers also chip in. ‘We always have someone dropping off a bike,’ Sam said. ‘We would get things and not even know where they came from.’ …

These days, even the childless can be terrified of college costs, so just imagine having 13 kids. But the Fatzingers have a strategy, and it’s working. The plan: Start in community college, don’t expect a handout from Mom and Dad, and graduate debt-free.

So far, Alexandria, the oldest at 26, graduated at 21 with a master’s degree in social work. Joshua, 25, graduated from the University of Maryland with a degree in kinesiology and became a missionary.

Caleb, 23, is in the last year of a doctoral program in physical therapy at the University of Maryland at Baltimore. And Lizzie, 21, graduated in May from the University of Maryland with a math major, while also cleaning houses and tutoring. All four graduated from college debt-free.”

Now, this family has made sacrifices. It had a failed business. Caleb is now living off a loan to finish his doctorate. The kids work multiple jobs and really long hours. They skip over the latest must-have Nike sneakers.

But so what? As economist Mark Perry points out, being super frugal doesn’t feel like deprivation, and it isn’t so hard in today’s America.

According to data from the Department of Agriculture, aggregate spending on food in the US has been below 10% of disposable personal income in every year since 2000, compared to an average food share of nearly 19% of personal income in the 1950s and 15% in the 1960s. …

In the first half of 2016, Americans collectively spent only $1 out of every $3 of disposable (after-tax) personal income on ‘life’s basics’ – the lowest share in history. Up until the early 1960s, American spent more than half of disposable income on ‘food, shelter and clothing;’ and that share didn’t fall below 40% until 1991. The increased affordability of manufactured durable goods like home appliances, furniture, electronic goods, and cars, along with increasingly competitive prices for food, clothing and energy have brought the share of spending on life’s basics to the lowest level ever in recent years. …

Spending on ‘energy goods and services’ as a share of total consumer spending fell below 4% of total consumer expenditures during the six months of 2016 for the first time since the BEA started collecting data back in 1929. That means that energy affordability (‘energy frugality’) has been greater in the first half of this year, when measured by energy spending as a share of total consumer spending, than at any time in US history.

Perry includes a chart to make visualizing frugality in America a little easier.

So, if you’re willing to “live small,” in other words, use second-hand merchandise, buy at discount stores, save money, and avoid debt, you can live the American dream, even in 2016 in a house of 15 people and a strong commitment to succeed by everyone in the family.

Read The Washington Post article on the Fatzingers.

Filed Under: Front-Page Feature, Happiness Tagged With: American dream, college loans, debt-free living, disposable income, frugality