We seem to have returned to the question of technological unemployment, judging by what’s going on in the comments section. As I’ve said before, I believe that technological unemployment is a factor in our present situation but it’s not the most significant factor.

While remaining convinceable, I’m also unconvinced. Why is Singapore’s unemployment so low? Heck, why is Germany’s unemployment rate lower than ours? Don’t they have technology there? If your answer is that they have better policies than we do, something with which I’m in broad agreement, then you’re not complaining that technological unemployment is our main problem but rather bad policies.

I would think that if technological employment were the most significant problem we’d see rising unemployment everywhere and stable unemployment nowhere. We don’t.

As I’ve said any number of times while I think that technological unemployment is a real issue it’s not the most important factor now. I think that our main problems are a combination of predatory mercantilist policies on the part of so many other of the world’s major economies and deadweight loss.

Here’s a good article I stumbled across on technological unemployment. It presents ten different views on technological unemployment.

For those of you who believe that our primary problem is technological unemployment and the way to solve it is a guaranteed minimum income, I have a few observations. First, you need to recognize that technological unemployment is a structural problem rather than a cyclical one and, consequently, if you’re right Keynesian deficit spending will not produce economic growth. Second, there are only two ways to finance such a program: extension of credit and increased taxation.

Again assuming that you’re right financing a guaranteed minimum income via extension of credit (“borrowing”, “printing money”, etc.) will actually reduce economic growth which sounds like a perverse outcome to me.

Running the numbers is a really useful exercise in clarifying the mind on a subject like this. The total number of unemployed is about 10 million. Unemployed plus underemployed something like 20 million. The number of long-term unemployed plus discouraged workers is about 6 million. Let’s use that last figure as a sort of floor.

Paying each of those six million a guaranteed income of $20,000 a year will cost $120 billion a year. Given the assumption extending credit at that level annually forever is a lot of credit.

If you prefer to tax, $120 billion is about 20% of the gross incomes of the top .1% of income earners. How, exactly, will you accomplish that? The present effective tax rate of those ultra-rich is typically about 15%. You want it to be much, much higher than that. Since you’re talking about 20% of gross, you’re talking about an effective tax rate of significantly more than 35%, probably something more like 60 to 70%. We’ve never accomplished an effective tax rate that high in this country.

$120 billion is about 5% of the gross incomes of the top 1% of income earners. That group presently has an an effective tax rate in the low 20s. You want to increase that to around 30%, once again higher than we’ve had to date. How are you going to do it?

In anticipation of the State of the Union address is which it is believed that the topic of income inequality will be front and center, Mark Schmitt, writing at New Republic, suggests reframing the debate. I completely agree with and endorse the conclusion of his piece:

Inequality was constructed by the rules of the system and we can remake those rules.

and I agree that income inequality is important for reasons he mentions:

As Princeton economist Angus Deaton put it in the conclusion of his recent book, The Great Escape, “The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy.”

I’m skeptical that we will accomplish greater income equality by subsidizing insurance companies, physicians, bankers, and political operatives. That has, however, been the policy of the last several years.

I think that the most significant single thing that could be done to promote greater income equality is more jobs. That isn’t an idea that seems to gain any traction.

I’ll throw some questions on the floor. Is income inequality a problem? If so, what should be done about it?

For those of you who on seeing the title of this post thought it was going to be taking a side on Katniss Everdeen vs. Harry Potter, I’m sorry to disappoint you.

There’s an extremely interesting post at RealClearPolicy by Robert VerBruggen considering the to me surprising hypothesis that minimum wage hikes cause recessions:

I’m no economist, and I tend to share the intuition that minimum-wage hikes reduce employment to some degree, but put me in the coincidence camp here. All of the huge drops in teen employment coincide not only with hikes in the minimum wage, but also with recessions. So unless minimum-wage hikes are so harmful as to cause recessions, I don’t think there’s much evidence of a bad effect on employment here.

I agree with him. I think that what may be reflected is reverse causality.

David Harsanyi responds to the op-ed by Steve Rosenthal I posted about last week:

But like many folks on the left, Rosenthal is forced to make a big leap. He contends that a shift on social issues and the electoral success of (a now-unpopular) Barack Obama proves that the entire progressive buffet is destined for widespread approval. Guess what? It doesn’t work that way. Support for gay marriage does not mean support for unions. (Unions, one of backbones of political progressivism, have never been less popular in practice.) Pot legalization does not mean we’re ready for nationalize energy policy. And support for immigration reform doesn’t mean people are prepared to “Make Everything Owned by Everybody.” And while I certainly don’t believe we’re about to privatize Social Security, to believe that the philosophy of the electorate is on a fixed leftward arc — which seems to be conventional wisdom these days — is premature.

I’d actually like to see some empirical evidence on that. I think that positions held are likely to come in clumps and, possibly, increasingly so. However, I’m prepared to believe that they don’t come in the clumps that either progressives or conservatives cling to so that people don’t fit entirely neatly into the respective camps. Note, for example, that “None of the above” is the fastest-growing political party in the U. S.

The 1990 Individuals with Disabilities Education Act mandates, among other things, that each child with disabilities as defined by federal regulation receive an Individualized Educational Program (IEP). The IEP is produced by a panel consisting of the student, the student’s parents or guardians, a special ed teacher/case manager, at least one regular ed teacher, a representative of the school or district, and one or more specialists who are able to interpret the instructional implications of the student’s evaluation results.

The IEP itself includes an evaluation of the student’s present level of academic and functional performance, measurable annual goals of academic and functional performance, a description of how progress towards the goals will be measured and reported, the services which will be required to achieve the goals and a schedule of those service, least restrictive environment data, along with a few other requirements.

While I have little doubt that students who don’t meet the federal definition of having disabilities under the IDEA could benefit from such an individualized program, I think that holding that up as an objective of the educational system is frivolous. It simply won’t happen.

This approach to education is expensive but I don’t begrudge it to kids who are genuinely disabled as the federal government has defined it. Spending on a special needs kid is at least twice as expensive as that on a kid without such needs and may be as much a ten times as much.

We’re already spending on the order of a trillion dollars a year on education in the United States. It should be obvious that spending ten times that much simply isn’t in the cards, however desireable it might be.

There’s been a debate ongoing in comments on our educational system with some maintaining that the problem with our educational system is unions and other maintaining that all that is needed is more money. I think that while there’s a kernel of truth in each of these positions they’re only grabbing a part of the elephant.

Our educational system has reached a situation of bureaucratic displacement. We are spending three times in real terms on education what we did a couple of decades ago even, as in Chicago, as the number of students receiving an education declines. That spending is coming largely in the form of more administrators receiving higher total compensation with little measurable improvement in performance. Our problem is less unionization or insufficient spending than that we’re not getting value for the money that is being spent.

Megan McArdle recounts her formal debate of the viability of the PPACA, she and Scott Gottlieb taking the affirmative (that the PPACA is not viable) and Jonathan Chait and Douglas Kamerow taking the negative. The affirmative prevailed even before what was probably an unsympathetic audience:

What was the winning argument? We argued that the Patient Protection and Affordable Care Act is an unstable program that doesn’t deliver what was expected. For a lot of people, that hardly needs proving, given all the recent technical and legal gyrations. But for others, it does, and because most of them weren’t at the debate, let me elaborate. Scott spoke eloquently about the ways in which narrow networks and the focus on Medicaid are going to deliver an unacceptable quality of care. I talked about why this, among other things, makes the system so unstable.

In a nutshell, Obamacare has so far fallen dramatically short of what was expected — technically, and in almost every other way. Enrollment is below expectations: According to the data we have so far, more than half of the much-touted Medicaid expansion came from people who were already eligible before the health-care law passed, and this weekend, the Wall Street Journal reported that the overwhelming majority of people buying insurance through the exchanges seem to be folks who already had insurance. Coverage is less generous than many people expected, with narrower provider networks and higher deductibles. The promised $2,500 that the average family was told they could save on premiums has predictably failed to materialize. And of course, we now know that if you like your doctor and plan, there is no reason to think you can keep them. Which is one reason the law has not gotten any more popular since it passed.

The merits no longer matter. It no longer matters if it ever did that only a few hundred thousand people previously without healthcare insurance now have it under the PPACA or that could have been accomplished at lower expense and disruption. It no longer matters whether the plan is actuarially sound or financially stable without increasingly large infusions of cash from the general fund. It no longer matters whether the plan is popular in its entirety or in detail.

That’s what I meant the other day when I wondered whether the PPACA had become a “vanity project”. Like a single-celled organism it now exists in order to exist.

The editors of the Chicago Tribune take a side on Harris v. Quinn, presently being heard before the Supreme Court:

Requiring workers to pay dues to a union they reject, the court said pointedly in a 2012 decision, is an “anomaly.” It’s clear that most of the justices have doubts about the constitutionality of forcing people to support an organization with which they disagree.

It’s obviously good for unions to get dues from 100 percent of workers they represent even if only a 51 percent majority voted for the union. It may even be good for the 51 percent. But the question of whether it’s good for the workers who would opt out is an important one. Especially in a situation such as this.

Pamela Harris cares for her son. She doesn’t believe she needs union representation to do that. Obviously she can think for herself. The state should let her.

I have fewer problems with a “closed shop”, the essence of the case, than I do with the union dues of public employees being recycled into political contributions which I think is inevitably corrupt. Either home health workers should be an open “shop” or the unions that represent them without their express consent should be barred from making political contributions. Note that AFSCME and the SEIU are #2 and #10, respectively, on the on the list of all-time largest political contributors.

And I don’t limit that to unions. I find political contributions by organizations representing healthcare providers or insurance companies troubling as well under present circumstances. However, they’re far down on the list (AMA #24, American Hospital Association #42, ADA #47, AFLAC #51, etc.).

The Watcher’s Council has announced its winners for last week.

Council Winners

• *First place with 4 2/3 votes! The Right Planet –I’m Done With The GOP
• Second place with 2 2/3 votes – The Noisy Room – The Lynchpins Have Been Pulled
• Third place  with 2 votes – Joshuapundit–Rohani On New Iran Nuclear Deal: “World Powers Surrendered to Iran”
• Fourth place *t* with 1 vote – The Colossus of Rhodey-Schooling vs. chaos
• Fourth place *t* with 1 vote – Simply Jews – Chomsky the Mastermind: where only the eagles dare
• Fifth place *t* with 2/3 vote –GrEaT sAtAn”S gIrLfRiEnD – Panzer Arik
• Fifth place *t* with 2/3 vote –Bookworm Room – Upworthy and Good Men Project: Progressive sites for people seeking to save their souls through politics
  
• Fifth place *t* with 2/3 vote – Rhymes With Right – Anti-Catholic Rhetoric At USNews.Com
• Sixth place *t* with 1/3 vote – Nice Deb – The IRS Is Poised To Silence Conservatives Again â?? What You Can Do (Video)
• Sixth place *t* with 1/3 vote – The Political Commentator – Barack Obama’s insidious master plan for the United States?

Non-Council Winners

• First place with 3 votes! – Amil Imani – An Open Letter To The God Of Islam submitted by Joshuapundit
• Second place with 2 1/3 votes – Sultan Knish –Why People Fail submitted by The Political Commentator
• Third place with 2 votes – –Mark Steyn –Global warming’s glorious ship of fools submitted by The Noisy Room
• Fourth place with 1 2/3 votes ––Commentary – A Tale Of Two Surges submitted by GrEaT sAtAn”S gIrLfRiEnD
• Fifth place *t* with 1 vote –Nick Nipclose – Counterpunch Defends Neo-Nazism submitted by Simply Jews
• Fifth place *t* with 1 vote – Reason.Com – They Lied submitted by VA Right!
• Fifth place *t* with 1 vote – Michelle Malkin – Beware the left-wing-funded “Main Street” Republicans submitted by Watcher
• Sixth place *t* with 2/3 votes ––Fred Kagan/Weekly Standard – Gates at War submitted by Liberty’s Spirit
• Sixth place *t* with 2/3 votes ––Gates Of Vienna – Passion submitted by The Watcher
• Seventh place *t* with 1/3 vote –Byron York/Washington Examiner – What if Americans rebel against the Obamacare mandate? submitted by Nice Deb
• Seventh place *t* with 1/3 vote – Ed Hubbard/Big Jolly Politics – Judge Denise Pratt, Please Resign; Fellow Republicans, Please Defeat Judge Pratt if She Does Not Resign submitted by Rhymes with Right

The original announcement post at the Watcher’s site is here.

A study from the University of Illinois has found that reforms approved so recently and painfully by the state legislature and signed into law by Gov. Pat Quinn won’t do much to solve Illinois’s public pension problems:

Jan 21 (Reuters) – A reform package passed late last year will make improvements to Illinois’ woefully underfunded public pension system, but the state’s budget gap still will increase to $13 billion by 2025 if current policies remain in place, according to an independent analysis released on Tuesday.

While the pension reforms are expected to save Illinois $160 billion over 30 years, they will reduce the state’s structural budget deficit only by $1 billion to $1.5 billion a year over the next decade, according to the report by the Institute of Government and Public Affairs at the University of Illinois’ Fiscal Futures Project.

That would leave the state with a projected budget gap of $3 billion in 2015, growing over the next 10 years to $13 billion. The projected shortfall is just $1 billion less than the $14 billion deficit the report projects Illinois would face without pension reform.

There is no pain-free solution to Illinois’s problems. If there were the problems would have been solved long ago.

To date most of the pain has been inflicted on Illinois’s public employees. There will be more pain ahead for them but the hard facts are that we can’t solve our problems without making more changes to the basic structures.

We cannot expect relief from the federal government. Illinois’s Congressional delegation is the worst of the fifty state delegations. Illinois’s return in federal spending relative to federal taxes paid is fifty cents on the dollar, the third worst return in the nation and Illinois is by far the largest state with such a poor return. Illinois is no more than a cash cow for the other 49 states and the federal government and that’s basically because our Congressional representatives put up with it.

The real solution to Illinois’s problem is robust economic growth. We won’t get it as long as our neighboring states reasonably see our woes as an opportunity to lure Illinois businesses away and that’s a consequence of past Illinois fiscal mismanagement and the poor assumption that increased rates are synonymous with more revenue.