As I see it the immigration “policy dysfunction” from which the Biden Administration is rather clearly suffering is fully reflected in the Washington Post editorial criticizing the problem:

That’s largely what Mr. Biden has done for others, especially Central American families with children, tens of thousands of whom have been admitted to the United States this year. And he did so even as administration officials urged them not to attempt to cross the border illegally. That glaring disconnect, between official dissuasion and on-the-ground leniency, has been received by Haitian and other migrants as an invitation to take their chances on reaching the U.S. border.

Now the door has slammed shut for many of them in Del Rio, especially the Haitians, whom U.S. officials began loading onto deportation flights over the weekend. It is fair to ask why Haitian migrants, virtually all Black, are being subjected to expulsion on a scale that has not been directed at lighter-skinned Central Americans.

Haiti, reeling from crime, political upheaval, economic calamity and a devastating earthquake this summer, is in no shape to handle the return of thousands of deportees. Yet that is the burden Mr. Biden is imposing, evidently in hopes of deterring further waves of migrants. Under a public health rule invoked by the Trump administration at the pandemic’s outset, asylum seekers are being deported without hearings on daily flights to Haiti.

The policy is inhumane; equally, it is inhumane to incentivize migrants to risk the perilous, expensive journey across Central America and Mexico. Having mismanaged migration in its first eight months in office, which contributed to a two-decade-high surge in illegal border crossings, the administration clearly fears a backlash at the polls in next year’s midterm elections more than it fears the wrath of immigration advocates. Republicans, sensing electoral advantage, are using border “chaos” as a cudgel.

Many of the failings in the U.S. immigration system are reflected in the mess in Del Rio: the absence of any workable channel by which migrants could apply for asylum south of the border; the massive backlog and shortage of judges in migration courts, which means asylum applicants, once admitted, may wait two or three years for their cases to be heard; and the misalignment of high domestic demand for cheap immigrant labor with an inadequate legal supply of it.

I’ll stipulate that employers want to keep wages low. Should keeping wages low be federal policy? I don’t think so. What do the editors think?

Unfortunately for the editors’ worldview, there is no such thing as an immigrant job. There are, however, entry level jobs frequently taken by immigrants but not only by newly-arrived immigrants. Those jobs are also taken by earlier immigrants, by people just entering the workforce, by people who don’t have the skills for jobs that pay higher wages, or people who prefer those entry level jobs for one reason or another. Econ 101 would tell them that high demand would be reflected in rising wages for entry-level workers; the absence of rising wages for entry level workers until very recently, as the supply of such workers declined for a variety of reasons, many of them relating to the pandemic and the policy strategies taken in response to the pandemic.

Consequently, what is humane to newly-arrived Haitians (for example) is inhumane to people already holding those entry level jobs.

I have as much sympathy for the plight of Haitians as the editors but my preferred strategy for remediating their problems is somewhat different from that of the editors. I think conditions need to be improved in Haiti rather than bringing Haitians here. Sadly, Haiti was born dysfunctional and U. S. meddling in Haitian affairs has all too frequently served to make things worse. It won’t be easy but it will be more humane to more people than the strategy advocated by the editors.

If you dig through a considerable amount of word salad you’ll find a significant nugget of information in Ezra Klein’s most recent New York Times column. After spending several hundred words explaining that progressives have scoffed at the “supply side” of the economy through sheer ideological bias he observes:

But this is a lesson progressives are, increasingly, learning. This is clearest on climate. Much of the spending in the Biden agenda is dedicated to increasing the supply of renewable energy and advanced batteries while building the supply of carbon-neutral transportation options. Democrats have realized that markets alone will not solve the climate crisis. And the same is true for much else on the progressive docket.

In a blog post, Jared Bernstein, a member of President Biden’s Council of Economic Advisers, and Ernie Tedeschi, a senior policy economist for the council, framed the Biden agenda as “an antidote for inflationary pressure” because much of it expands the long-term supply of the economy.

“The transportation, rail, public transit, and port investments will reduce efficiency-killing frictions that keep people and goods from getting to markets as quickly as they should,” they wrote. “The child and elder care investments will boost the labor supply of caretakers. The educational investments in pre-K and community college will eventually show up as higher productivity as a result of a better-educated work force.”

A list like this could go on. It’s not clear whether it’ll be in the reconciliation bill, for instance, but Biden has proposed an expansive plan to increase housing supply in part by pushing local governments to end exclusionary zoning laws. And in California, that’s exactly what’s happening, as I wrote a few weeks back. A decade ago, progressives talked often of making housing affordable, but they didn’t talk much about increasing housing supply. Now they do. That’s progress.

I’m not as convinced as he that the Biden Administration has any particular interest in the “supply side” of the economy. Everything he mentions could also be interpreted as constituent service. Additionally, I don’t agree that spending more money on, say, education will ipso facto increase productivity and that is true for two reasons. The first reason is that if you cap the supply of something and make money available to buy more of it in the near term the only measurable effect will be to increase prices. That’s axiomatic, tautological. The second reason is that exactly what the money is used for makes a difference. I challenge Mr. Klein to demonstrate that spending more money on teaching interest studies, psychology, or Hungarian literature has any measurable impact on productivity one way or another. If the objective is increasing productivity they’d get a lot more bang for the buck subsidizing trade schools than community colleges. And the literature on pre-K is pretty mixed. Gains made do not necessarily persist long enough to last the recipients through high school let alone into the workforce.

Nonetheless it’s gratifying to see what I would phrase as increasing aggregate product getting more attention. Subsidizing consumption doesn’t do a lot to improve the state of the economy unless aggregate product increases. At least it doesn’t do much for the U. S. economy.

The Associated Press reports that the Senate parliamentarian has decided that bundling the legalization of millions of immigrants here illegally into the $3.5 trillion infrastructure spending bill is out of order:

WASHINGTON (AP) — Democrats can’t use their $3.5 trillion package bolstering social and climate programs for their plan to give millions of immigrants a chance to become citizens, the Senate’s parliamentarian said late Sunday, a crushing blow to what was the party’s clearest pathway in years to attaining that long-sought goal.

The decision by Elizabeth MacDonough, the Senate’s nonpartisan interpreter of its often enigmatic rules, is a damaging and disheartening setback for President Joe Biden, congressional Democrats and their allies in the pro-immigration and progressive communities. Though they said they’d offer her fresh alternatives, MacDonough’s stance badly wounds their hopes of unilaterally enacting — over Republican opposition — changes letting several categories of immigrants gain permanent residence and possibly citizenship.

which should have surprised no one.

I support giving individuals brought here illegally as children legal status but I support doing it by democratic and legal means. I also support enforcing the law even-handedly once it has been enacted. It should be obvious to everyone that the end run the Democratic majority is attempting is none of those things.

I’m seeing quite a few posts, editorials, and news article (perhaps I should say “news” articles) characterizing people who make wages of $500,000 per year as “very rich”. That must be the framing du jour.

My own view is that the top 1% of income earners are well-to-do; the top .1% of income earners are rich; and the top .01% of income earners are very rich. Interestingly, the tax bill being floated by the House Ways and Means committee is focused on the rich but leaves the very rich alone.

Disclaimer: I am not well-to-do let alone rich or very rich. I know quite a few people who are well-to-do, a few who are rich, and I have met a handful of people who are very rich. I also think that quite a few people see those on the next rung of the income ladder above them as “very rich”.

At Bloombeg Rich Miller warns that if the federal government does not continue to pump trillions into the economy it will just move “sideways”:

The U.S. government spent historic sums to support the economy in the pandemic. Its withdrawal will create an unusually big fiscal cliff.

The U.S. expansion looks set to slow sharply in the second half of 2022 as measures that propped up the economy during the pandemic — from stimulus checks for households to no-cost financing for small companies — fade from view.

That will be the case even if President Joe Biden manages to win Congressional approval for the bulk of his $3.5 trillion Build Back Better agenda. The spending will stretch over years, with limited impact in 2022. It will also be at least partly paid for by tax increases that slow the economy down rather than speed it up.

“We’re in for some very low growth rates” in late 2022 and into 2023, said Wendy Edelberg, director of the Brookings Institution’s Hamilton Project. “It wouldn’t surprise me if there’s a quarter here or there where the economy basically moves sideways.”

but here’s the flip side of the coin:

There is a potential benefit: lower inflation. Prices have surged this year on the back of snarled supply chains and fiscally-fueled consumer demand. “We’ll need to come off the boil,” Edelberg said, because the rapid U.S. rebound will push the labor market and the economy to their limits by the middle of next year.

My takeaway form this is that quantitative easy and excessive fiscal spending targeted at increasing consumer spending without increasing production constitute a tiger that is very difficult to dismount. Particularly in an election year.

And every year is an election year somewhere.

I found this piece at the Wall Street Journal by Christopher Mims on innovation very thought-provoking. Here’s a sample:

Should the U.S. invest in a generation of new intercontinental ballistic missiles? What has really propelled decades of consistently rising computer performance? Is research into new forms of nuclear power a dead end? And should we credit Elon Musk with revolutionizing the automobile industry, or is he just riding the coattails of history?

These are the sorts of questions that researchers who study the history of innovation and what it says about the future say we can now answer—thanks, of course, to innovation.

Much of it is devoted to the findings of this study by Anuraag Singh, Giorgio Triulzi, and Christopher L. Magee, “Technological improvement rate predictions for all technologies: Use of patent data and an extended domain description”, a graph from which is at the top of this post. Here’s Mr. Mims’s explanation of the study:

Using both previously untapped pools of data and new analytical methods, along with the usual tools of modern-day forecasting—namely, the predictive algorithms often described as “artificial intelligence”—they are taking a quantitative approach to examining how quickly technologies improve.

The result isn’t a crystal ball for what’s next. Indeed, one of the conclusions of this group of academics is that attempts to predict the exact nature of the next technological advance are doomed to fail. But their research could help us understand how quickly existing technologies are getting better.

As you might expect I have some reservations. What are they actually measuring? I’m not convinced that the number of patents filed is actually a reasonable surrogate measure for technological progress. I have read hundreds maybe thousands of patent applications. I have written one and received a patent. I think they are more reasonably considered a gauge of what people are interested enough in to invest in than in progress.

I also believe that they are looking at what is effectively a snapshot rather than the movie that represents actual technological progress. Said another way the progress in robotics may be 18.5% this year and 28.5% next year. Or .5%. Furthermore as the graph at the top of the page progress in different areas rather obviously proceeds as a “long tail” phenomenon—a few are developing very quickly indeed while most are barely developing at all. Under the circumstances what does “average rate” mean? I don’t think it has any meaning.

If the findings of this study are true, it’s relevant to the real world in a number of ways, in particular in terms of intellectual property and capital investment. In the past I have expressed my dissatisfaction with our present system of intellectual property and the findings of this study fully support my views. At the very least our system of patents and copyrights needs to be much, much more constrained both in time and in scope. Our present system is actually impeding creativity and progress rather than encouraging them.

But, if the rates of technological improvement in different areas vary based on something other that the degree of capital investment, shouldn’t there be differences in the deductibility of money spent on research and development to provide more encouragement to progress in areas in which we want greater progress but progress is lagging and less to areas in which progress is not lagging?

I would hasten to note that doesn’t even touch on a pet peeve of mine—that too often what is claimed to be R&D is actually marketing. That is especially egregious in the pharmaceutical industry.

I found this account of inflation by Matthew C. Klein at The Overshoot interesting, particularly his conclusion:

As I noted last month, the higher prices are partly a function of higher pay for low-paid line workers. But while we don’t have the wage numbers for domestic workers, the data so far imply that pay gains for restaurant workers have vastly oustripped the price increases imposed on consumers, especially since April.

Average wage gains for nonsupervisory workers since April are running at about 20% annualized, while prices are rising around 8% annualized. Since the start of the pandemic, prices are up 6% at sitdown restaurants and up 10% at fast food restaurants, while average worker pay at both types of establishment has soared by more than 12%.

Prices at restaurants and for rental housing tend to be the best barometers of overall inflation pressure and the state of the economy, so it will be worth watching both categories closely in the months ahead even if other factors temporarily drag the broader index lower.

Imagine a chart with the X axis representing dollars paid and the Y axis representing the number of workers being paid that wage. When I say “payroll” I mean the area under that curve. I wonder what Mr. Klein means?

At The Conversation Gabriel Zucman and Emmanuel Saez react to the Democrats’ tax plan. Here’s the meat of the piece:

In 1950, when looking at all federal, state and local taxes, the top 0.01% of earners paid almost 70% of their income in taxes. In the postwar decades, corporate profits – the main source of income for the rich – were subject to an effective corporate tax rate of 50%. Meanwhile, the rich were subject to high tax rates on wages, dividends, interest and income from partnerships.

The progressivity of the U.S. tax system has dramatically declined over the past seven decades. The upshot is that for most income levels the U.S. tax system now resembles a flat tax that becomes regressive at the very top end, meaning the super-rich pay proportionately less. Today, virtually all income groups pay roughly 28% of their income in taxes – except for the 400 richest Americans, who each own more than $2 billion in wealth today and pay around 25% in taxes.

Working-class and middle-class Americans pay a substantial amount of taxes because of payroll taxes, which are high and barely affect the rich, and state and local sales taxes, which are regressive – they take a bigger chunk out of a smaller wage than out of a large income. Even households that pay no federal income tax because of low earnings hand over a percentage similar to that of wealthier households, because of these other taxes.

The super-rich’s low tax rates of today are in part aided by the collapse of federal corporate taxation. In the 1950s, 5% to 7% of national income came from corporate taxes. By 2018, that figure had fallen to just 1.5%.

The effective tax rate collapses for billionaires further because they can avoid reporting individual income by instructing their companies not to pay dividends and holding on to their shares without realizing their gains.

and here’s their conclusion:

The proposal unveiled by House Democrats would increase taxes on millionaires significantly. But it would largely leave billionaires off the hook, despite the explosion of their wealth during the pandemic. More ambitious proposals in the Senate would tax their unrealized capital gains. In our view, this would be a bold addition that would help the United States reconnect with its tradition of tax justice.

Drs. Zucman and Saez are both French which renders all of their instincts about the United States wrong. There is a simple way to make the U. S. system of taxation more progressive: subject all wage income to payroll taxes.

I do find the term “tax justice” amusing. A flat tax, i.e. subject everyone’s income to a single tax rate without any deductions would be just. Taxing the rich is expedient. As the bank robber Willie Sutton said when asked why he robbed banks, it’s where the money is. By what definition of justice is a 70% effective tax rate just and how does that differ from expedience?

They must surely know corporate taxes are inefficient. They fall on employees in the form of lower wages and customers in the form of higher prices. Besides the U. S. corporate tax rate is just a little below that of Germany or France, practically identical to that of Canada, and higher than that of the UK. The main effect of raising U. S. corporate taxes is neither to raise revenues nor to increase income equality but to offshore corporate headquarters.

Neither of those measures would touch the ultra-rich who have proven very difficult to tax not just in the U. S. but in European countries as well, most of which have abandoned the wealth taxes they once used. Our problem is not the ultra-rich but the Congress. They know which side their bread is buttered on. Higher marginal taxes on the rich are unlikely to raise much revenue or improve income equality but they will increase the opportunities for graft in various forms.

My own preferred strategy for improving income equality is not by increasing the marginal tax rates on either the well-to-do or the rich but by improving the lots of the ultra-poor in the United States and for goodness sake not importing more poor people into the country. A little back-of-the-envelope calculation should illustrate pretty clearly to you how that renders greater income equality impossible.

The United States has political, social, and geopolitical problems that would give the French nightmares. Policies that might be good for France are not the right path for the U. S.

At RealClearPolicy the organization No Labels presents “five facts” on community college. They are:

1. Trade school attendees often earn more than those who graduated from community college.
2. Three out of five students who start community college do not complete a degree program within six years.
3. Twenty states already offer some sort of free community college.
4. Community college applicants are already eligible for the same federal financial available to applicants to four-year programs.
5. One-third of community college students have incomes or access to parental incomes of $50,000 per year or more.

It’s not just that trade school attendees often earn more than those who graduated from community college it’s that on average trade school attendees do better. Add that the great demand for employees is for people with skills rather than degrees and the Biden Administration’s insistence on subsidizing community colleges looks even more puzzling. Under the circumstances it’s hard to justify. I can only see three explanations.

It may just be inertia on their part. For thirty years there has been a political consensus in favor of getting a college degree and that’s been the policy. Maybe the Biden Administration is just coasting on the failed policies of the past.

Maybe it’s just cargo cult thinking. Because people with degrees have higher lifetime incomes having a degree produces higher incomes. That’s not a particularly good reason, either.

Maybe the purpose of advocating “free community college” is not to help the students but to help the colleges, their administrators, and the people with advanced degrees who teach in them. Higher education has become a self-licking lollipop. It produces people with advanced degrees to produce more people with advanced degrees. That should end in favor of a policy that actually helps young people. Maybe advocating trade school attendance is a better strategy for doing that.