Thursday, April 19, 2018

Alex Muresianu Appearances, 2018

I do not keep this blog up and running most of the time, so I've decided to pin a list of my writing elsewhere so followers of the blog can see what I'm up to. I will probably still post here occasionally. Also, follow me on Twitter if you aren't already.

1/9: The Case for Corporate Tax Cuts, Lone Conservative
1/18: The Left Still Doesn't Understand Never Trump, Lone Conservative
1/25: Book Review: Beyond the Messy Truth, Lone Conservative
2/8: 3 Problems Only Conservatives Can Solve That Millennials Will Love, Glenn Beck
2/12: These Three Issues Will Win the Hearts of Millennials, Young Voices Podcast
2/20: Conservative Millennial Appeal, The Glenn Beck Program
3/23: Don't Decrease Legal Immigration, Lone Conservative
4/6: Free Market Cures for Wage Stagnation, Townhall
4/18: The Problem With Asking What Has Conservatism Conserved, Glenn Beck
4/24: Opening the Locked Door of Infrastructure with This Hidden Key, The Daily Caller


Wednesday, December 20, 2017

Tax Reform: Angry At Everyone

So the Republicans just passed tax reform, and I have to say, I can't think of another time where I've felt so much political frustration directed at both Democrats and Republicans simultaneously for different reasons.

The Democrats have infuriated me for their usual, and unusual, rhetoric regarding tax cuts. First, their claim that lowering tax rates for corporations and top-bracket earners is equal to "giving money away." This claim rankles me on a philosophical level: a tax cut means that the government is taking less money away; it's not the government's money to "give." Some Democratic senators have even gone as far as to say the bill is robbing "our" wealth. The ideological implication behind this claim is that property is collectively owned. That is abhorrent collectivist totalitarianism and hence fundamentally opposite to the individual rights to life, liberty, and property that the United States was founded on. 

My second beef with the Democrats lies with their beyond-the-pale claims about the bill. I'll get to my complaints with the bill and the Republicans later (and I have plenty, believe me) but the Democrats have absolutely lost their minds by the way they are discussing this piece of legislation. 

From Nancy Pelosi claiming that the bill is "theft" (the idea of anybody paying less taxes as equivalent to a "heist" is beyond laughable) to Vox pushing the narrative that the only reason that the Republicans support the bill is that they want to enrich themselves or their donors, the Democrats have been verging on hysterics in their reliance on bad faith arguments. Newsflash: the Republican Party has always supported tax cuts, and (I'll get to this later) it's honestly the only thing holding them together. The hysteria the Democrats have worked themselves into over a largely normal (if poorly crafted) Republican tax policy proposal is ridiculous. 

Lastly, before I hammer the Republicans, I'll hit the media. The difference between public perception of what the bill does and what the bill actually does is gaping, and the blame should fall directly on the media's shoulders. According to a poll from Politico, thirty-three percent of Americans expect their taxes to go up, while only 20% of Americans expect their taxes to go down. Meanwhile, the Tax Policy Center, a left-leaning think tank, published an analysis that stated that next year, 80% of Americans will see a tax cut while only 5% will see a tax increase (and before you say anything about sunsetting middle class tax cuts, yes, I will address them). 

The bottom line is that the publicly held view that this bill does not cut taxes on the middle class is inaccurate, and the reason that incorrect view is widely held is the mainstream media's bias. This skewing of facts is unsurprising given that liberals vastly outnumber conservatives in the press, and it is an example of how having predominantly progressive-run newsrooms lead to a default assumption that the Democrat narrative is the correct one. 


Now, on to the Republicans. 


The Tax Cut and Jobs Act represents a giant failure in conservative policymaking. It is a thrown-away opportunity for once-in-a-generation economic reform, and a wasted chance to have and win a policy fight independent of President Trump's antics. 

First and foremost: this bill completely blows up the deficit. Now, I'll issue a mea culpa on this point if the Republicans somehow manage to pass an entitlement reform bill next year that reduces spending by a trillion dollars over the next 10 years, but that's a very unlikely scenario. While estimates vary based on economic growth assumptions, among well-respected sources, the consensus is that the deficit will go up. The Tax Foundation, with relatively optimistic economic modeling, projects half a trillion dollars in deficit expansion over the next ten years; the more pessimistic Wharton model projects 1.9 trillion dollars in deficit expansion.

That's not even the worst of the deficit problem. Remember those middle-class tax cuts that will expire in 2021? It's very unlikely that they will expire. Most "temporary" tax cuts, especially politically juicy middle class tax cuts, get made permanent: take, for example, the temporary Bush 2001/2003 tax cuts. During the fiscal cliff fight in 2012, every Bush rate cut, except the one for the top tax bracket, got made permanent. The same will hold true for the temporary cuts in this bill.

Great, you say! The Democrats' statements about how this bill raises taxes on the middle class are nonsense, and they probably won't come true! Yes. But this sword cuts both ways. If the tax cuts don't end up expiring, that means that the added revenue that would come from the rates expiring won't come in either, and hence is not counted in the deficit estimate. 

There are two more reasons why blowing up the deficit with this tax bill is a bad idea. 

One, the debt is out of control. The Republicans were (rightly!) furious as the debt grew under President Obama. Under his tenure, the national debt grew by roughly 9 trillion dollars, almost as much as all of his predecessors added combined. As health care costs continue to skyrocket, and as the population ages, these concerns about a runaway deficit due to spending will only worsen. While I agree with the conservative principle that we should cut spending, not raise taxes, to bring the deficit under control, it is irresponsible to cut taxes without cutting spending drastically in the current fiscal situation. Furthermore, given the difficulty the GOP had marshaling their own caucus around repealing Obamacare, I have extreme doubts that they will be able to follow these tax cuts with revolutionary entitlement reforms.

Two, the economy doesn't need a deficit-financed tax cut. In the past two quarters, economic growth has been  over 3 percent, and that's partially brought down thanks to natural disasters. There's a solid chance the economy will have grown over 3% in a year for the first time since 2005. That's partially due to the continued recovery from the Obama administration, although President Trump also deserves partial credit for the economy beating expectations thanks to deregulation and an increase in consumer and business confidence. So the economy is doing well without a deficit-financed tax cut. That's not to say that now isn't a good opportunity to come up with a bill that makes the tax code more efficient and simple by getting rid of deductions, lowering individual tax rates, and lowering the corporate tax rate, but one does not need to increase the deficit to do that. If anything, when the unemployment rate is at 4 percent, it makes sense to do spending cuts, not tax cuts.

Lastly, the Congressional Republicans have seemingly embraced the pejorative label "zombie Reaganism." Many commentators, from The Federalist's Ben Domenech to The Weekly Standard's Bill Kristol, have used this moniker to refer to the non-Trumpian half of the GOP. People like the congressional Republican leadership have not exactly embraced Trumpism, but they are not presenting another message either. I can understand the absolute bungling of health care: generally speaking, Republicans do not have a passion for health policy, and with a caucus running from Susan Collins to Ted Cruz with a 2-seat majority, it's hard to craft something that appeals to everyone. 

On taxes, however, this is a failure of the Republican Congress to present a different message and a policy vision to differentiate themselves from Trump and actually demonstrate that conservatism is neither empty platitudes nor fighting about athletes kneeling for the National Anthem. Taxes are Republicans' forte, and if they were serious about doing "once in a generation reform," they could have. This bill should have been constructed two years ago, and they should have fought tooth and nail against special interest lobbyists to rid the tax code of the trillion dollars' worth of deductions, expenditures, exclusions, and credits that litter the tax code. The end result could have been a revenue-neutral, pro-growth bill that lowered taxes for every tax bracket, made tax filings much simpler, and eliminated special treatment for particular interest groups. That would be truly an achievement. 

This bill, however, is lazy. While a couple big deductions (the mortgage interest and state and local tax ones) get downsized, and doubling the standard deduction will turn some people away from itemizing, the tax code hasn't been made that much simpler. The bill requires budget gimmicking to hide the entire negative impact it will have on the deficit. If the Republicans had given even another month's thought and work into this bill, they could have worked to go after more corporate tax expenditures or individual deductions instead of relying on tricks that not only provide the Democrats ammunition, but also contradict a decade of Republican concern about the deficit. 

I'll break down the specifics parts of the bill in another, but the bill doesn't seem to know what it wants to be. Given the relatively good economic conditions right now mentioned earlier, this bill should look much more like the '86 tax reform law rather than the '81-'82 tax cuts that took place at the bottom of a recession. Instead, the whole thing was rushed through and in the end lacks vision, almost like the Republicans were writing it on autopilot. It's an unfortunate waste, and one could conclude that the process and outcome is another symptom of anti-intellectualism and disdain for expertise in the GOP. 

TL;DR everything and everyone in Washington is terrible.
I'm going to have another post at some point detailing policy specifics. 

Saturday, August 19, 2017

Solutions for Equality of Opportunity

According to most of the progressive Left, income inequality is, as President Obama put it, the “defining challenge of our time.” Senator Bernie Sanders built a presidential campaign on the idea that government should take coercive action to facilitate a more equitable distribution of income. However, the issue of income inequality is at best a red herring, and at worst a potential gateway to authoritarianism.

            The fundamental premise of “equality of outcome,” which is the goal that people like Bernie Sanders and Elizabeth Warren implicitly advocate, is diametrically opposed to the founding principles of the rights to life, liberty, and property. The idea that person A has a right to take property from person B just because person A has a lot less property relative to person B has nothing to do with charity and everything to do with envy. Taking government action to redistribute money for no reason than to equalize its distribution is antithetical to the principles that have built America. The government has neither the power nor the responsibility to directly and coercively alter the income distribution.

            That is not to say that there are issues related to income inequality that the government should take an interest in, or that income inequality does not create societal problems that government redistributionism would not solve. The issues related to income inequality that the government should work to address are poverty and inequality of opportunity, as opposed to equality of outcome. Furthermore, income inequality spawns social and cultural polarization, issues that economic redistribution would not solve. Those social and cultural issues are enumerated in Charles Murray's book, Coming Apart, which I wholeheartedly recommend. In essence, Murray sees the country splitting into the new upper-middle class and the new lower class, and that neither really understands the other. Merely redistributing money from the upper-middle to the lower, according to Murray, would not cure the cultural or social differences at all, and those issues, rather than economic ones, are what matter in terms of America's social fabric. Nevertheless, there are some policy changes that could improve equality of opportunity, especially for the people in Murray's "new lower class."

            On the inequality of opportunity front, according to the Brookings Institution, the three ways to nearly guarantee eventually moving out of poverty are to not have children before the age of 21, to graduate high school, and to hold an entry-level job. Adults who followed these rules have a poverty rate of only two percent. Government policies should be crafted with those criteria in mind in order to incentivize the best behavior regarding those three categories, and the government should avoid policies that encourage negative behaviors.

            With regards to avoiding single parenthood, one policy that should be replaced is the Child Tax Credit. The Child Tax Credit reduces the tax burden of low- and middle-income parents by $1,000 per child. While this tax credit is very popular, and not enough of an economic draw to incentivize single parenthood on its own, it does create incentives for parents to file separately rather than as a single household, and therefore leads to more single parenting instead of traditional two-parent households. To compensate for the removal of this targeted tax relief for the middle class, I would propose, as I did in my tax reform piece, doubling the standard deduction, which would raise the incomes of lower and middle class people across the board, instead of specifically targeting single parents.

            A second way to lower single parenthood is to spend on pregnancy prevention. According to the Brookings Institution, spending on pregnancy prevention programs, from mass-media campaigns to wider access to Medicaid family planning, provide savings, in terms of lower outlays for welfare programs and Medicaid, at a ratio of between 4 and 5 dollars for every dollar spent on prevention. Providing wider or even universal access to Long-Acting Reversible Contraceptives could both reduce the teen pregnancy rates even lower than they are currently, at one of the lowest points in the past few decades, as well as net saving the federal government money and reducing the need for the abortion debate.

            The entry-level job issue is a purely economic one, so I'd direct the reader to my paper on government spending and the economy to get some ideas on how to get people into the work force. 

            Moreover, we can move to the next subject: Education. Education, as a public policy issue, encompasses pre-kindergarten schooling, K-12 education, and higher education. The problems with all three of those facets of education revolve around rising costs, lack of equal access, and varying levels of quality.

            In terms of pre-k education, there is a debate as to whether or not the implementation of a universal pre-kindergarten education system would help lower the achievement gap between children from lower-income households and children from higher-income households, as well as the achievement gap between black and Hispanic children when compared to their white counterparts. There is also a strong correlation between pre-k attendance and future performance, although that may have to do more with the confounding variable that the sort of parents to send their kids to preschool may be more likely to pay extra care to their children’s schooling later in life, or that preschool attendance is an indicator of class, and that upper-middle or upper-class kids who attended pre-k have more resources later in life. Nonetheless, according to the Center for American Progress, a “high-quality” universal pre-k program would practically eliminate the gap between black/Hispanic children and white children with regards to reading scores, and halve the gap with regards to math scores. Similarly, the gap between high- and low-income children would shrink 27% for math scores and 41% for reading scores. However, the term “high quality” is the key to the question. What exactly constitutes a “high-quality” pre-k program?

            The American Enterprise Institute examined, in a policy paper titled “Does Pre-K Work?,” a series of early childhood programs not limited to just what comes to mind when one says the phrase “pre-k,” namely conventional preschool. The conclusion of AEI’s researchers, Katharine Stevens and Elizabeth English, was that not all pre-k programs are equal – that pre-k programs vary greatly in terms of time commitment (some are 15 hours a week for 1 year, others are 50 hours a week from infancy to kindergarten), and also vary in terms of cost/benefit, which matters for policy implications (the return on investment per dollar for the relatively cheap 15 hours a week, 1 year long program may be greater than the ROI on the 50 hours a week, 4 year long one). However, the AEI study did conclude that “intensive, carefully designed, and well-implemented programs that target very young children” did have biggest impact. Additionally, AEI suggested advancing “high-quality child care and voluntary home visiting.”

            The phrase “high-quality” seems to be the key. Both American Progress and AEI reference “high quality programs.” According to American Progress, “high-quality programs,” such as the Boston public pre-k system, feature “small class sizes, low teacher-to-student ratios, and well-qualified teachers.” Those features, of course, make these programs very expensive. Furthermore, if implemented nationally, a Boston-style high-quality pre-k program may generate shortages of high-skilled pre-k teachers. In the Boston pre-k system, 78% of program teachers had master’s degrees, and 75% had at least five years of teaching experience. Creating a national, universal, and high-quality pre-k education program would shift demand for pre-k teachers outward, hence leading to increases in price. Eventually, that should mean that, in the long run, more talented people would choose to enter the field of pre-k education, but in the short run, it could mean shortages of qualified teachers. Assuming these two effects cancel each other out in the long run, though, universal high-quality pre-k would be a very effective way to reduce the achievement gaps between high-income and low-income groups and between minority and white groups. According to the Brookings Institution, the costs of “universal” pre-kindergarten education would be fairly low, because the federal government would only be entering the picture in areas in which state-funded pre-k systems were not already in place. The Brookings Institution pegs the annual cost at between $2B and $4B annually, and even assuming that those numbers underestimate how the stimulation of demand for pre-k educators may lead to a ballooning in cost, and that the true annual cost would sit around $6B, that isn’t a massive fiscal impact when compared to most social programs, and if it could halve the achievement gap by 50%, and, according to Brookings, these programs should have roughly a 4:1 benefit-cost ratio.
           
            When it comes to K-12 education, the funding structure of relying on state and local funding for education, rather than federal funding, hinders social mobility, because children with lower-income parents most likely live in school districts with smaller tax bases, and hence poorly funded schools. However, the framework of state and local, rather than federal, funding for public education, is well entrenched and politically popular. People who live in good school districts do not want their good schools to be brought down to the national average, which is what, in theory, a fully federal education system would bring.

            Furthermore, the federal government has, for the past roughly forty years, greatly increased its spending on public education. In 1970, the federal government spent $2.9B on education. In 2010, the federal government spent $73.3B on education. When adjusted for inflation, that constitutes an increase of 375% in federal spending. Even when adjusting for the larger population of students in 2010 than in 1970, and after subtracting some Obama-era stimulus money allocated during the Great Recession to the Department of Education, spending per student has still more than doubled. Meanwhile, scores on standard reading and math assessments have been almost completely flat. Clearly, increasing federal funding for public education has been ineffective in improving test scores for students. Altering the federal government’s approach to spending on education would be prudent, given the ineffectiveness of the increases over the past forty years.

            A prominent alternative to using federal money for public education is to finance a federal school choice, or voucher, program. Due to cost concerns, as well as concerns over equality of access, a federal voucher program would be targeted, rather than universal. If the federal voucher program was universal, then it would provide each student with a very small amount of money, rendering the program ineffective. Using the voucher program in a targeted fashion, by offering substantial vouchers to students in the worst performing school districts, would provide two significant effects. One the one hand, vouchers for charter, religious, or private schools would provide poor children opportunities to escape failing school districts for whom funding increases have not had an effect on performance. Children from affluent families, like my own, already have “school choice.” This voucher program would give poor children closer to the amount of opportunities that I have had. Additionally, according to the Manhattan Institute, struggling public schools that faced competition from school choice programs improved at a faster rate than public schools not facing competition. Therefore, whether or not a student goes to a non-public or public school, school choice should benefit them. A federal school choice program would focus on poor inner-city areas where a lack of access to quality education is a serious problem. Then, assuming there’s added funding available from future budget surpluses I projected in my 10-year budget proposal, the program would be expanded to neighborhoods in less dire need. Ultimately, a targeted school choice program at the federal level would be beneficial to all low-income students, regardless of whether or not they individually take advantage of the vouchers.

            Lastly, the issue of higher education. Ballooning college tuition costs are a problem with many different causes. The most obvious reason for the rise in college tuition costs is the increase in demand for college-educated workers in the work force. The revolution in technology in the 1980s with the introduction of computers as devices for personal use not only drove inequality, but also drove an increase in productivity for high-skilled workers, especially college-educated ones. In response to the higher demand for high-skilled workers, the government created programs to encourage and assist more people in attending college. The contradiction at the heart of the college issue is that additional programs to help more people be able to attend college, namely grant and loan programs, also shift the demand for a college education outward. Inevitably, an outward shift in demand means a rise in price. Ironically, the programs meant to counter the explosion in cost of college tuition in some ways exacerbate the problem. On the other hand, these programs provide low-income students with means to pay for college that they would otherwise not have. There’s a serious conflict here, so instead of take a position on student loan subsidies or Pell Grants, on whether or not funding for them should go up or down, I’m going to consider some other causes of the college cost crisis and some fiscally responsible ways to fix them.


  • Costs also increased due to higher spending on administrative positions rather than faculty. According to the failing New York Times, between 1993 and 2009, the number of tenured faculty at universities across the US rose by 6 percent, while the number of total administrative positions rose by 60 percent. On a more micro scale, at Yale University over the past decade, the total number of faculty members declined by 4%, while the total number of administrators grew 25%.  This rapid growth in payroll for administrators constitutes a rise in input costs and hence a rise in price. 
  • College rankings are partially driven from how much a college spends per student, creating incentives for colleges to increase their spending per student and increasing expenses necessitates an increase in price. This incentive system gives colleges incentives to spend more money on luxurious facilities while at the same time jacking up tuition.
  • Colleges should be faced with more competition from online options. The revolution in information technology in the past few decades has made access to world-class scholarship easier than ever before. This wider access, which could be depicted as an outward shift of the supply curve in the market for higher education, should lead to lower costs. However, established institutions have an interest in protecting themselves from a potentially dynamic new set of competitors. Adding legitimacy to online courses for both academic purposes and for skill development would force colleges to lower their own prices to compete with these new innovators.

Lastly, with regards to education as a broad issue, here are a few general reform proposals.

  • An end to both race-based affirmative action and legacy preferences, and replace them with some form of preferential treatment for people from lower income brackets. There are several criticisms of affirmative action, from that it leads to higher dropout rates for groups that theoretically benefit from it, that it primarily benefits members of preferred groups that are already upwardly mobile, and that its “reverse discriminatory” effect, which really primarily effects Asian-Americans rather than whites, worsens race relations. However, affirmative action makes more sense when considering the benefits primarily white, upper-class people have in terms of preferential treatment for legacies. Many of these legacies may stretch back well before schools were even integrated. The eradication of both of these treatments, with a replacement that focuses on lower-income applicants or first-generation college student applicants, would be ideal; however, both affirmative action and legacy admissions are so well entrenched at this point that it’s probably a pointless argument.  
  • A national television show called “Teacher of the Year.” The show would be a competitive game show where top teachers from around the country would teach their best lessons and a panel of judges would choose the best teacher. While this show might seem insignificant overall, its goal would be to engage more highly motivated people in the teaching profession as a permanent career path. Teach for America has not had those sorts of effects, so a TV show on PBS would be a relatively low-cost way to try to advance the same goals in a different way. 
  • Better financial literacy and civics education. In a functioning democracy, citizens need to be able to think clearly about the issues by understanding both sides’ positions and the principles, facts, and solutions each side presents. The polarization present in America today reflects a lack of understanding of the other side’s perspective – if asked, I’d bet most conservatives would provide a gross caricature of what liberals want and vice versa. A non-partisan civic education program would make future voters more informed and less inflammatory. On a related manner, in a free market economy, the more informed the consumer, the less need for government. Individuals are not rational maximizers of utility, although education in financial literacy could help teach young Americans to, for example, save more and borrow less than current citizens do, would help them just as much in the real world as civic training would.

Friday, June 30, 2017