Tuesday, May 23, 2006
Reform in Africa
No matter which path we follow, endemic corruption foils any plan. The money goes into the pockets and foreign bank accounts of corrupt officials instead of into useful projects. Mr. Holman notes approvingly that "World Bank President Paul Wolfowitz [has] put a crackdown on graft at the top of his development agenda..." Effects are being felt in Asia and South America. Countries in these regions are working to eliminate graft so that they can qualify for World Bank loans. In Africa there has been no effect so far.
Mr. Holman makes another important suggestion: “[Africa] also needs radical reform of the largely communal land-ownership system. It must introduce a competitive business environment, one that does not, for example, require six weeks to register a new company in Kenya, compared to six days in Hong Kong. It needs a bill of business rights, with provisions to allow arbitration of disputes in a neutral venue abroad, circumventing the corrupt legal systems that have scared off investors. In short, Africa must create the business conditions in which African capital will return.”
Contrast this suggestion with dismissive comments on other approaches to helping the Africans: Model development villages and specific tasks. Contrast it also with his comments about Paul Wolfowitz: “.....he has learned that what works elsewhere in the world does not necessarily work in Africa. That lesson is a prerequisite to change in Africa, which is undergoing a continental crisis distinct from the rest of the developing world.”
If Mr. Holman is correct, African society is similar to the society of Native Americans before the arrival of European settlers. The history of the Americas suggests that the change of the social order from one of communal use of resources, particularly land, to one of private ownership and competition did not confer any benefits on the natives. Rather, the new settlers replaced the natives. I wonder whether Mr. Holman’s prescription for Africa has a similar outcome for native Africans.
Friday, May 19, 2006
Senate Considers "English Only" Legislation
What triggered this comment is the news in today’s Los Angeles Times that the Senate is considering amendments to the Immigration Bill that would declare English to be the language of the country.
May 19, 2006: WASHINGTON — English would be declared the "national language" of the United States under a measure the Senate approved Thursday, a largely symbolic move that supporters said would promote unity and encourage assimilation by immigrants.
The measure would not reverse government practices of providing some materials and services — including voting ballots and emergency advisories — in other languages. But it would establish that people have no right or entitlement to ask government officials to provide services or materials in other languages, unless authorized by law.
Minutes after adding the provision to the immigration bill it is debating, the Senate passed a second amendment with less pointed phrasing. Declaring English the country's "common and unifying" language, it specified that the "existing rights" under which the government provides bilingual services and assistance would not be diminished.
Lawmakers said negotiations with the House would determine which of the two measures remains in a final bill overhauling the nation's immigration laws.
The debate over the English language issue dominated Thursday's Senate proceedings and frequently grew heated. Proponents of the tougher amendment argued that it was needed to unite the country, while opponents insisted it would cause greater division.
The dispute echoed similar debates that have occurred for more than a decade not only in Congress but at state and local levels.
This proposal seems to me to be an attempt to fix a problem that doesn’t exist. I know of no organized group that advocates the use of any language other than English in our laws and other government documents. The article from which the excerpt was taken states that forty-two million residents of the United States speak some language other than English in their homes. Are those people a threat to us? I can’t believe it.
One person wrote:
It would be very refreshing to be able to drive through a drive-thru, shop at the grocery store, or ask someone for assistance and have them be able to understand you and even more amazing... understand them! I support English as our national language wholeheartedly!
Perhaps that is the key to my problem. People are resentful of workers who don’t speak English. People who don’t speak English should stay away from the rest of us. Non-English speakers should not be given jobs where they have to wait on or serve English speakers. Non-English speakers should keep to themselves and not wander out into neighborhoods in which only English is spoken.
Am I alone in thinking that resentment against non-English speakers is a despicable form of prejudice?
Tuesday, May 16, 2006
Hardball Politics in California
Today the State is enjoying a windfall. This year tax revenues seem to be enough to support the State's spending and also to put some money away for future dry years. There is no chance that the State legislature will even consider a tax increase this year.
I'm puzzled as to the source of the attack ad. Is it Mr. Angelides' Democratic opponent in the Primary Election, to be held in about three weeks? Or, is it the Republican Governor, Arnold Schwarzenegger, trying to defeat Mr. Angelides in the Primary Election so that he can face a weaker Democratic opponent in the November General Election?
If so, it's not the first time an incumbent Governor with no opposition in his own party has used some of his campaign money to defeat a potential challenger in the Primary Election. Democrat Gray Davis worked to discredit and defeat Richard Riordan in the Republican Primary election in 2002 so that Davis could run against a much weaker Republican opponent. Has Arnold learned a thing or two from Gray?
Correction: This evening I looked more carefully at the attack ad. It is sponsored and paid for by Steve Westly, Angelides's principal Democratic opponent. As a Democrat, I think it is shameful that one Democrat should attack another Democrat in that manner. We should be saving our ammunition (and money) to take down the Republican Schwarzenegger this fall, not wasting it on each other.
Saturday, May 13, 2006
Do Low Taxes Stimulate the Economy?
I’ll leave aside the real or private argument, which I stated in my previous post. I challenge the assertion that simply reducing taxes has any effect on the availability of money to fund purchases or investment in new or improved businesses. Let’s follow the money. Government spends money. The money is used to buy materials, to build and improve infrastructure, and to pay salaries. In estimating the stimulative effect of spending on the economy, we must take into account spending and investment by government as well as by taxpayers. If the effect is the same, then the argument that reducing taxes stimulates the economy is not valid. The only way that such an argument can be validated is to show that government spending and investment stimulates the economy less than the spending and investment by private persons and institutions.
I’ve never seen a study that addresses that problem. I have read somewhere, some time long ago that government spending stimulates the economy about 1.6 times as much as private spending, on a per dollar basis. I can’t verify that ratio. It may have applied to the economy under different conditions than those that we have now.
Continuing to follow the money, we find another flaw in the argument that low taxes stimulate the economy. Certainly at present, our government continues to spend at a rate that bears little relation to the revenue from taxes. The difference is made up by borrowing. That is, instead of increasing taxes to match the outgo, government sells bonds to wealthy individuals and foreign governments. The sale to foreign governments is bound to be temporary, for eventually they will decide that the United States is a poor credit risk. Our government will continue to sell bonds to the wealthy individuals, who otherwise would have to pay taxes at a higher rate. So, a large part of the Bush tax cut goes to wealthy persons who send the money to the government as payments for bonds rather than in the form of taxes. Thus, in reality, the tax cut does not put more money into the hands of consumers. It puts more money into acquiring government bonds.
The Bush argument that tax cuts also benefit middle and lower income taxpayers, and that these taxpayers are the spenders that stimulate the economy, seems rather hollow. Some recent estimates of tax savings indicate that individual having incomes below twenty thousand dollars a year don’t get any reduction in their taxes. Individuals or families in the range of around fifty or sixty thousand may get reductions of less than a hundred dollars. The big advantage goes to the very wealthy who reap a benefit of tens or hundreds of thousands of dollars. But these are people who are not going to run out and buy a lot more stuff. They’re multi-millionaires and they already buy all the stuff they want. They’ll want to sock the money away in a safe investment, such as T-bills.
I’ve said enough. The real reason for the Republican tax policy is to repay the Party’s backers. Any intelligent person can figure for himself or herself that tax rates, at least in the range that exists in this country, can not have much effect on the economy. In order to show that reducing taxes stimulates the economy by putting more money into circulation, you have to show that government does not spend the money it collects in taxes, but rather salts it away in Swiss banks for the rascals to spend after they are voted out of office. I know a few people who actually believe that’s what happens to their tax dollars.
Two Notions that Bother Me
There is both a public and a private argument in favor of the Republican tax cuts. The public argument is that tax cuts leave more money in the hands of the public, so that the public will spend and invest more money and thereby stimulate the economy. This argument completely ignores the effect of government spending as a stimulant. After all, what does government do with the money it collects in taxes? It spends it. It spends all of it. The private argument is that the tax cuts are a reward for the wealthy supporters of the Republican Party. The supporters bankrolled the campaigns of the successful Republican candidates, and the candidates, now elected officials, obliged by cutting taxes.
The notion that the government can in fact absolutely prevent another terrorist attack makes about as much sense as the police chief claiming that, given enough resources, the police department could absolutely guarantee that not another bank would be robbed. The only way to protect all banks from robbers is to change our society from one in which we are relatively free as individuals to express ourselves and do what we want to do into a society of the one imagined by George Orwell in “1984,” in which everyone is watched and spied upon at all times. Only with such spying can potential bank robbers – or terrorists, for that matter – be detected and prevented from carrying out their crimes.
We are not, in fact, in great danger from terrorists any more than we are in great danger from bank robbers. There will always be criminals who will attempt to commit crimes. In our “free” society, we do not arrest persons merely because someone suspects that they may be contemplating a crime. Our police are obliged to wait until a crime is committed before they can arrest anyone. We rely on the efficiency of the police to make sure that any criminal will eventually be caught, tried, convicted, and punished. We rely on other institutions, such as public and private schools, churches, clubs, and the like to teach young people to be good citizens and not turn to crime as a way of life.
One of my most serious criticisms of President Bush is that he seems to take himself too seriously. He acts and talks as though he seriously believes that our government has the means, if not constrained by law or constitution, to detect and prevent terrorist attacks in the future on United States soil. He is helped in this delusion by the report of the “9-11 Commission” that government agencies involved in gathering and analyzing intelligence failed to “connect the dots.” The report implies that the government should have been able to ascertain the plan to drive airplanes into tall buildings and thereby to have thwarted the Al Qaeda plot of 9/11/2001.
Only an ultra-loyal Bush supporter would deny that the administration ignored warnings of possible terrorist attacks, some from the previous administration. Perhaps the air force or the air national guard should have been on the alert for hijacked planes going off course and heading for tall buildings. More should have been done with the information already available at the beginning of September, 2001. Note, however, that the information was available without the Patriot Act and without the warrantless listening in on phone conversations that the present administration has introduced.
There will always be the possibility of terrorist attacks, just as there will always be bank robberies. Our police forces deal with bank robbers. Most of the crooks eventually land in jail. We do not “declare war” on bank robbers or bank robbery. Most of us go about our lives and rejoice that it wasn’t the bank in our neighborhood that was robbed last week. We should deal with terrorists in the same way. They are criminals and there are national and international police organizations to deal with them. Our CIA and the spy organizations of friendly countries should infiltrate the Al Qaeda organization. We should disabuse ourselves of the notion that our “war” is ever going to eliminate terror. Our President should not take himself so seriously.
Saturday, May 06, 2006
Health Care Problem
- Health care costs too much. Many people can’t afford preventive health care and must go to hospital emergency rooms when they are seriously ill.
- If health care were free, many people would overuse it and the system would be even more expensive than the present hodge-podge.
- Health care, just like police protection and fire fighting, should be a public right, available to all at no cost. That is, the cost would be paid out of taxes, just as the police and fire fighters are paid.
- Different people have different health care needs. A single universal system would not be flexible enough to meet the special needs of some individuals. Individuals should have a choice in what system they enroll. Competition between different systems would keep prices low.
- Shopping around for health care is different from shopping around for auto insurance or for autos. If you buy a car and it turns out to be a lemon, you can sell it and buy another. If you have a hip joint replaced and it turns out to be a bad job, you have difficulty trying to have the joint replaced. It’s a lot more expensive than buying another car. Riskier, too.
- It’s silly to believe that health care consumers are going to be able to choose the cheapest and best health care provider. I wouldn’t try to do such a thing myself. My own approach would be like the approach I took to finding a contractor to repair the roof on my house. After interviewing several contractors, getting bids, and finding out just how they proposed to repair the roof, I settled on the contractor that I had the most confidence in and who told me the most believable story. He did an excellent job. His bid was the highest. I am very satisfied with his work and would recommend him to any acquaintance.
If left to itself, the health care problem is going to get worse. Effective action by government is needed to remedy the problem. However, proposals to help solve the problem have become politicized. Republicans have one set of proposals, Democrats another. Neither side likes the other’s ideas. There’s a stand-off. At present, the only plan that has a chance of enactment is one that is acceptable to members of both major parties.
Massachusetts provides an example of a plan that was acceptable to both Democrats and Republicans in State Government. The State has a Republican Governor and a legislature with majority Democrats. The plan includes the following elements:
- Everyone in the State is required to purchase health insurance. This feature pleases Republicans who believe that individuals should take responsibility for their own health care. It also pleases people who believe that individuals should have choices regarding the details of the health insurance they pay for.
- The State provides subsidies to people with low incomes who otherwise can’t afford the premiums on the insurance. This feature pleases Democrats.
- Limits are set on fees that health care providers can charge the insurance companies. This feature pleases the insurance companies.
At present the State is running a surplus. Because of competition, insurance premiums are not excessive. There is money at present to fund the system so that it can get off to a good start. The whole country is watching the Massachusetts experiment.
I wish the experiment well. However, as a “lefty” (according to one of my friends), I foresee some problems. By allowing people choice of which insurance company to patronize, the State allows the insurance companies to “cherry pick” and insure the most healthy individuals at low premiums. Individuals with preexisting health problems will have to pay more for essentially the same insurance. Since the State provides a subsidy to those who can’t afford insurance, the State will be in effect subsidizing the sick. I doubt that this is a politically sustainable position. Insurance companies should be required to insure everyone at the same premium, regardless of any existing condition. The whole idea of insurance is to enlarge the pool and the risk, so that everyone contributes to the pool that covers the health care for those who need it.
At least, that is the classical excuse for insurance. Nowadays, insurance companies are in business strictly to make as much profit as possible. You make profit by selling policies that you are not likely to have to pay out on, that is, policies to the healthiest individuals you can find.
My recommendation is that a plan like the Massachusetts plan be based on a single insurance entity, a non-profit entity established by the government, one that insures everyone. That is, I favor the “single-payer” approach to health insurance. This single insurer would not have to pay for advertising costs and would provide insurance at a lower cost than any private for-profit could.
Anyway, it’s a good first step. I hope it turns out well.
Friday, May 05, 2006
Changing the Subject
I digress from my point, which is that some in the news media seem to be giving the Bush Administration a helping hand by getting the public worked up over illegal immigration so that the public will take its collective mind off the mess the Administration has got us into in Iraq. I don't know whether it will work, but Mr. Dobbs seemed to be doing his best to change the subject.