Young and Unemployed

I encourage you to read this piece at Brookings on the more than 2 million young people in the United States who are not attending school and are unemployed. In the piece they profile five different subgroups. They are 17% of the total youth population. They are disproportionately black or Hispanic. Many are poor.

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Why Aren’t Wages Rising at the Bottom?

One way in which I could critique the editors of the Washington Post’s most recent editorial in favor of unlimited immigration of unskilled workers from Mexico and Central America would be to point out the logical fallacies it contains, all aligned in the same direction. Tertium non datur, non sequitur, and appeal to unnamed authority all come to mind.

However, rather than that, consider this passage:

That stopgap is symptomatic of what has become a broader worker shortage across the U.S. economy, which faces a shrinking native-born labor force as baby boomers retire at a rate of 10,000 daily , unemployment reaches historically low levels, and immigration continues to dwindle from Mexico, a traditional source of cheap documented and undocumented employees. In March, the Labor Department reported there were 7.6 million unfilled jobs and just 6.5 million unemployed people, marking 12 straight months during which job openings have exceeded job seekers.

The labor shortage is sapping growth as well as state and municipal revenue. Small businesses and major corporations have sounded the alarm as the delivery of goods is delayed by a drastic shortage of truckers, and housing prices in some markets are driven up by an inadequate supply of construction workers. Mr. Trump’s admission Friday that he will consider transporting new migrants to so-called sanctuary cities as a means of punishing those cities is probably an empty threat given the scheme’s blatant illegality. But if he were to fulfill the threat, he might do some of the cities an unintentional favor by providing them with badly needed workers.

The deficit is particularly acute in lower-wage jobs, as more and more Americans attend college and are reluctant to take positions in skilled trades and other jobs requiring manual labor.

Why aren’t wages rising for these workers? I think that’s the question that the editors need to address.

The wages of those without college degrees have been declining for decades. There’s plenty of evidence that not merely a continuing supply but the expectation of a continuing supply of unskilled workers reduces the wages of other unskilled workers. What do the editors plan to do about the situation of unskilled workers already here? Increasing the minimum wage will help some at the expense of others.

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The Rich Are Different From You and Me

James Freeman makes an observation about Bernie Sanders’s version of “Medicare for All” in his Wall Street Journal column. After quoting the relevant passages he observes:

The legislation does have a provision for private contracting for medical services, and assuming doctors, patients and nurses obey the various rules for such contracts, there would be a path for some small amount of non-government health care. But remember insurance products and corporate plans are not allowed to compete against the broad coverage promised by the government plan. And the Sanders bill prohibits private contracts “entered into at a time when the beneficiary is facing an emergency health care situation.”

So there would generally be no escape for patients who realize too late that they will die before they get to the front of the line for necessary care. But for someone who does not require insurance and is willing and able to pay cash for any needed services—and who contracts ahead of time to cover possible needs in a way that complies with the Bernieaucracy—there appears to be a narrow path to high-quality service. But how many Americans are financially capable of paying cash for any needed medical care?

We already have several different classes of health care in this country. That’s a decision that was made a half century ago. The classes include those on Medicaid, those on Medicare, those whose employers pay for their health care insurance, those whom the federal government subsidizes, and those who pay for concierge medicine. I’m sure that some will protest that the standard of care ensures that everyone gets the same level of care but the reality is different.

Under Sen. Sanders’s plan (as well as under the “Medicare for All” Act already pending in the House), those classes would be greatly narrowed. Under the present system most in the middle class have a pretty good level of care available to them. Under M4A there would be two classes: those who can pay cash and everybody else. What level of care “everybody else” would actually receive is presently unknown. You can assume the best or you can assume the worst.

I should also point out that, based on the snippets quoted by Mr. Freeman (particularly this: “the automatic enrollment of individuals at the time of birth in the United States or upon the establishment of residency in the United States”), the plan raises the prospect of people in the country illegally being covered by it which would seem to me to be a non-starter. That could be fixed by amending it to read “legal residency” but that could well be a non-starter for other reasons.

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Assange

I look forward to the upcoming trials of Julian Assange on charges of hacking and probably ultimately to include rape. Joe Gandelman has a small link round-up.

The only other observation I have to make is that Mr. Assange appears to be an obnoxious son-of-a-gun.

The editors of the Washington Post argue that Assange is no journalist:

Mr. Assange is not a free-press hero. Yes, WikiLeaks acquired and published secret government documents, many of them newsworthy, as shown by their subsequent use in newspaper articles (including in The Post). Contrary to the norms of journalism, however, Mr. Assange sometimes obtained such records unethically — including, according to a separate federal indictment unsealed Thursday, by trying to help now-former U.S. Army soldier Chelsea Manning hack into a classified U.S. computer system.

Also unlike real journalists, WikiLeaks dumped material into the public domain without any effort independently to verify its factuality or give named individuals an opportunity to comment. Nor, needless to say, would a real journalist have cooperated with a plot by an authoritarian regime’s intelligence service to harm one U.S. presidential candidate and benefit another.

That’s very much what a trial will determine and why I support that. However, their remarks are not without irony: the WaPo is presently being sued for a failure to verify the factuality of reports they made.

In his Washington Post column David Ignatius remarks:

Because Assange hasn’t shown “calibrated judgment” about what information to share with readers, he isn’t acting as a journalist, Kendall told me. As for the prosecutors’ allegation that Assange facilitated Manning’s hacking of classified information, Kendall added: “People in the press typically are not burglars.”

Lincoln Caplan, a Yale Law scholar who has written widely about journalism, said in an interview that there’s an important distinction between “curating” information, as reporters do, and “dumping” it, as has often been WikiLeaks’ practice.

An intriguing footnote to the Assange case is that as part of a failed plea-bargain negotiation with the Justice Department in 2017, he offered to help vet some highly classified CIA files that WikiLeaks was publishing in a document dump known as “Vault 7.” As I wrote last September, this “risk mitigation” discussion collapsed after WikiLeaks revealed some especially sensitive CIA hacking techniques.

Perhaps Mr. Assange’s trial will shed some light on who is and who is not a journalist.

Update

The editors of the Wall Street Journal point out:

The single-count federal indictment charges that he conspired with then-Army intelligence analyst Bradley (now Chelsea) Manning to commit computer intrusion. The indictment says he offered to help Ms. Manning crack a password stored on Defense Department computers connected to a “U.S. government network used for classified documents and communications.”

It’s notable, and welcome, that Mr. Assange isn’t being charged under the Espionage Act of 1917. Journalists including those at the Wall Street Journal sometimes feel the duty to disclose information in the public interest that governments would rather keep secret. Indicting Mr. Assange merely for releasing classified information could have set a precedent that prosecutors might have used in the future against journalists.

They conclude:

It’s not clear when Mr. Assange will answer to an American court. On Thursday after his arrest, a British court found him guilty of jumping bail, which could land him in jail for a year. There also remains a rape allegation in Sweden. The woman who accused him is now asking Swedish prosecutors to reopen an investigation they dropped in 2017 on grounds that there was nothing Sweden could do given that Mr. Assange was holed up in Ecuador’s London embassy.

Despite his many apologists, Mr. Assange has never been a hero of transparency or democratic accountability. His targets always seem to be democratic institutions or governments, not authoritarians. If he really is such a defender of transparency, he should have no fear of a trial to defend his methods.

I don’t know that the various journalists commenting on this case recognize what thin ice they are skating on. Conspiracy covers a lot of territory.

I also find it rather bizarre that we’re talking about trying someone when the sentence of the individual found guilty of the overt act has already been commuted.

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Progressive Tax Passes Committee

The progressive income tax for the state of Illinois that Gov. Pritzker ran on has cleared its first hurdle. The Chicago Tribune reports that it has passed Executive Committee in the Illinois Senate on a straight party line vote:

Gov. J.B. Pritzker’s effort to shift Illinois from a constitutionally mandated flat-rate income tax to a structure where higher incomes are taxed at higher rates cleared its first legislative hurdle Wednesday.

The state Senate’s Executive Committee voted 12-5 along party lines to approve a proposed amendment to the Illinois Constitution that would allow for a federal-style graduated-rate income tax. It’s the first of many steps necessary before voters can have their say on the issue, which can’t happen until the November 2020 election at the earliest.

How likely is the amendment to make it that far? Not very says the Illinois News Network:

SPRINGFIELD (Illinois News Network) — Gov. J.B. Pritzker has staked his future budgets on convincing lawmakers and voters to change the state’s constitution to allow for a progressive income tax with higher rates for those who earn more, but not enough members of his own party in House are prepared to put the question to voters.

Fewer than 60 lawmakers in the House are in favor of asking voters to change the state’s flat income tax to a graduated one, according to a report from Politico. That means Pritzker could have to look to other sources to come up with the more than $3 billion he said the state needs to stabilize its finances.

Pritzker ran on changing the flat income tax to a progressive one. For that, there would need to be a constitutional amendment approved by voters. The House would need 71 votes to pass it to voters. Multiple roll call votes on the progressive tax proposal registered support “in the 50s,” Politico reported. To pass just the rates, if there were ever a constitutional change from the flat tax to the progressive tax, it would require a simple majority of 60 votes in the House.

which is why I’ve been asking for a whip count for the last six months. Without Republican defections that would mean that 71 of 74 Democrats would need to vote “Aye” and I don’t think the governor has the votes.

Recently, the governor challenged people for an alternative plan. Here’s mine:

  1. Raise the personal income tax rate to 5%. I mean, what kind of rate is 4.95%, anyway? If that actually increases revenue by no less than 1%, it could be increased more later.
  2. Subject all public pensions in excess of twice the state median household income to state income tax. The state median household income is around $60,000 so that means that public pensions greater than $120,000 per year would be subject to the tax. That should pass constitutional muster.
  3. Ban the paying of public pensions greater than three times the state median household income, i.e. $180,000. That would require amending the state constitution.
  4. Require school districts to contribute at least 50% per year to the state fund to pay the pensions of teachers retired from their districts. That would discourage the practice of goosing pay in the last several years of active service to increase the amount for which the state is on the hook and over time lower the exposure. They should be paying 100%.
  5. Make a transition to a defined contributions plan for all present Illinois public employees. That would require a constitutional amendment, too (same one).

That would at least be a downpayment.

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Theory vs. Practice

As Yogi Berra put it in theory there is no difference between theory and practice; in practice there is. While I agree wholeheartedly with George P. Schultz’s, William J. Perry’s, and Sam Nunn’s op-ed in the Wall Street Journal warning us about the urgent need for action by the United States to reduce the likelihood of a nuclear confrontation, I’m concerned that the practice will prove elusive. Here’s their prescription:

The U.S. must first address its own dysfunctional Russia policy, and Congress must lead the way. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell should convene a new bipartisan liaison group of legislative leaders and committee chairmen to work with senior administration officials on strengthening the North Atlantic Treaty Organization and renewing dialogue with Russia. This model was used in the arms-control observer group led by Sens. Robert Byrd and Bob Dole in the 1980s. The group was able to build bipartisan consensus for a defense modernization program that strengthened America’s defenses and bolstered NATO’s deterrence, as well as a Russia policy that led to negotiations eliminating missiles in Europe. These policies helped end the Cold War.

Second, Presidents Trump and Vladimir Putin should announce a joint declaration reaffirming that a nuclear war cannot be won and must never be fought. This would renew the 1985 Reagan-Gorbachev statement that Americans and Russians received positively as the beginning of an effort to reduce risk and improve mutual security. A joint statement today would clearly communicate that despite current tensions, leaders of the two countries possessing more than 90% of the world’s nuclear weapons recognize their responsibility to work together to prevent catastrophe. This could also lead other nuclear states to take further steps to reduce nuclear risk. The timing of such a statement would also signal Washington and Moscow’s commitment to build on past progress toward disarmament, as next year will mark the 50th anniversary of the Nuclear Nonproliferation Treaty.

Third, the U.S. and Russia must discuss a broad framework for strategic stability—including increasing decision time for leaders—in a period of global destabilization and emerging military technologies. In a positive step, Presidents Trump and Putin apparently agreed in Helsinki last summer to open a dialogue on strategic stability, focused on nuclear dangers that threaten both nations. Yet their inability to follow up by empowering their military and civilian professionals to follow through underlines how dangerously dysfunctional relations have become.

And this is the most vital part of their op-ed:

This effort must begin now. America’s leaders cannot call a “time out” to wait for the aftermath of the Robert Mueller investigation or other issues to play out in Congress or the courts. Nor is there time to await a new U.S. administration, a new leader in the Kremlin, or the gradual resolution of current international disputes. The risks are simply too grave to put America’s vital interests on hold.

As the late Mayor Daley used to say, let’s look at the record. Since the collapse of the Soviet Union the United States has invaded and/or attacked a dozen countries without United Nations Security Council Authorization. Those include Iraq, Syria, Yemen, Somalia, and Libya and not one of which threatened U. S. security. Arguably, Russia has invaded and/or attacked two: Georgia and Ukraine. Both of those were actual parts of Russia for hundreds of years. We have no real analogy. It would be as though we had invaded North Dakota after it declared independence.

Since the collapse of the Soviet Union NATO has been expanded to include 13 more countries, all of them former Soviet republics or Soviet allies. U. S. security has not been enhanced by even one of those additions. Russia sees every single addition as an actual or implied threat.

From reading the U. S. media you would get the impression that the greatest challenge to the U. S.-Russian bilateral relationship is Russian meddling in U. S. domestic politics. Any but the naive realizes that is what countries do. We meddle in Russian politics; Russia meddles in ours. China, Israel, and even the United Kingdom all meddle in our politics.

From the Russians’ viewpoint the greate challenge to the U. S.-Russian bilateral relationship is an aggressive and expansionary United States and NATO. That can’t be healed by revitalizing a NATO that has expanded to Russia’s borders.

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A Cogent Plan

As should be needless to say I agree nearly completely with the plan for reforming our system of immigration proposed by the editors of the Washington Post:

A cogent plan to cope with the tsunami of asylum-seeking migrants, mainly Central American families and unaccompanied minors, would start with hundreds more immigration judges to supplement the existing 400 or so whose backlog of roughly 800,000 cases means that hearings are now scheduled for 2021 and beyond. It would mean expanding and constructing detention centers near the border, suitable for families, that could accommodate many multiples of their current capacity while migrants await the adjudication of their cases. And it would probably entail congressional action that would permit authorities to hold families for more than the three weeks that court decrees have set as a limit on detentions that involve children.

Here is where I disagree with them:

Crucially, the existence of a functional system would in short order begin to deter migrants without plausible asylum claims from embarking on the risky and expensive journey.

Their “cogent plan” would help us deal with the present flood but I think it would just result in churn—the same migrants, augmented by additional immigrants, would be making the same claims in a neverending and increasing spiral. Variation among rulings by different judges would be enough to produce that outcome and, as long as the incentives remain in place, the behaviors are likely to persist.

In the past I’ve suggested the missing pieces: workplace enforcement and an information operation in the migrants’ home countries. More effective aid to their countries would help, too, but that may well be beyond our control.

It does raise the question of why the Congress hasn’t acted along those lines already? The Congress doesn’t require presidential leadership; it doesn’t even respond to it very much. I can only speculate that the Congress, Democrats and Republicans alike, like the system just as it is.

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The Difference Between Depopulation and Demographic Decline

I do not believe I have read a more willfully ignorant post recently than Noah Smith’s post at Bloomberg View, “Demographic Decline Is the Real Threat to the U.S.”. The U. S. has no demographic decline to threaten it. Japan has demographic decline. China has demographic decline. Germany has demographic decline. The U. S. does not.

I have attached links to population pyramids for the countries in question above and you will note that those for Japan, China, and Germany all have something in common: they get skinnier at the bottom. That’s demographic decline.

The United States does have a problem which is the hollowing out of the countryside, completely unrelated to demographic decline. That problem will not be solved by moving immigrants there. The map at the top of the page tells the whole story. Immigrants are moving to where the jobs are not where the land is. I’d be willing to bet that if you moved an immigrant family to Elbing, Kansas (pop. 226) within a 100 hours they would have left for somewhere else. There’s nothing for them to do there.

Now if your concern is about the depopulation of the countryside, something that has been noted for decades, I’d be happy to talk about it. One thing you’ll note about where the population is moving from and to is that state capitols and the counties that surround them along with Washington, DC and its environs are all growing while most other counties are shrinking. Immigration won’t solve that. Solving that will require changes in how tax dollars are spent.

Now if he were to have said that there isn’t enough housing in Seattle, Santa Clara, San Francisco, New York, and Alexandria to accommodate all of the people who would like to move there, then he’d be talking. That wasn’t caused by demographic decline. It was caused by NIMBYism. Policy decisions.

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Who’s Qualified for the Federal Reserve BoG?

I am gratified to see that at The Bridge Scott Sumner has taken a stab at defining what it means to be qualified for the Federal Reserve Board of Governors, something that has puzzled me for some time. Here’s his list of qualifications:

1. Does the candidate agree with one’s own views on monetary policy?

2. Does the candidate have educational or work experience and credentials indicating an adequate background in monetary economics?

3. Does the candidate exhibit knowledge of monetary economics in their public comments and writings on the subject?

4. In retrospect, do previous policy recommendations by the candidate seem to have been correct?

5. Would the candidate avoid partisan bias when making decisions?

of which he thinks that the first two are the least important.

While Dr. Sumner’s explanation does clarify things a bit, I’m not as convinced as he is about some of them. For example, I seem to recall that it was Dr. Sumner himself who complained from time to time that the Fed and the Congress were working at cross-purposes. Should there be more coordination between the Fed and the Congress or less and, if more, how would that work out with the sort of semi-independent Fed that we have now? I’m uncomfortable with a a fourth branch of government which the Federal Reserve seems to have become.

I’m also less predisposed to pooh-pooh experience than Dr. Sumner seems to be. In theory the Federal Reserve is supposed to be responsible for regulating banks. In practice it has been completely derelict in that area and that has been true for as long as I can recall. I’d prefer a less independent Fed that did the job it was supposed to do over an independent Fed that let the banks run riot as certainly seems to have been the case. If we can’t expect the Fed to regulate banks, let’s officially strip them of that power and give it to one or another of the executive branch agencies which already have authority in that area.

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Next Stop: Feudalism

I want to recommend Joel Kotkin’s post at Quillette on the decline of aspiration all over the developed world. Here’s a snippet:

In the United States, about 90 percent of children born in 1940 grew up to experience higher incomes than their parents, according to researchers at the Equality of Opportunity Project. That figure dropped to only 50 percent of those born in the 1980s. The US Census bureau estimates that, even when working full-time, people in their late twenties and early thirties earn $2000 less in real dollars than the same age cohort in 1980. More than 20 percent of people aged 18 to 34 live in poverty, up from 14 percent in 1980. Three-quarters of American adults today predict their child will not grow up to be better-off than they are, according to Pew.

These sentiments are even more pronounced in France, Britain, Spain, Italy, and Germany. In Japan, a remarkable three-quarters of those polled said they believe things will be worse for the next generation. Even in China, many young people face a troubling future; in 2017, eight million graduates entered the job market, but most ended up with salaries that could have been attained by going to work in a factory straight out of high school.

I cannot tell you what factors underpin the attitudes of young Australians or young French men and women. The preponderance of the evidence here in the United States suggests that young people are not forming families, not buying homes and all of the things associated with homeownership, not because they prefer it that way but because they can’t afford to and the main reasons for that are educational debt and slow growth in the number of jobs they thought that more education would provide them.

Among my siblings and me half of us have incomes greater than our parents’ ever were. The other half earned less than our family did when we were growing up. Of their children only one is likely to have a family income that equals that of his parents. Most are tenuously holding on to middle class status. About half have post-graduate degrees.

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