5 Economic Terms Misused Often by Liberals

The Liberal Trifecta Photo Courtesy of liberalwhoppers.com

Danny Zeng | August 13, 2013

(A similar version of this article was first published on PolicyMic on August 12th, 2013)

The President’s recent economic speech in Knox College and the intense subsequent media interest have prompted me to explore the following often-misused economic statistics by Liberals:

1. Unemployment Rate. Whenever the official U.S. monthly unemployment rate ticks down, it becomes world news. I often receive my monthly BLS job report on Twitter: 7.4% for July. While the official rate had gone down slightly from June, and far from the 10% we saw a few years ago, this statistic is overrated and masks weaknesses in the labor market. The official government unemployment rate is an incomplete indicator of joblessness: It does not count those who have stopped looking for work, and it says nothing about net change in jobs as compared to expectation from economists — we came under expectation in July. About 4 million people gave up looking for work in July. Many jobs created were part-time, partly as result of businesses’ wariness regarding Obamacare compliance. In order to boost employment numbers and avoid political backlash, the White House recently suspended enforcement of the employer mandate in Obamacare for one year, a desperate attempt to spur job growth prior to the 2014 election, even if it means shooting themselves in the foot.

U6unemployed

The U6 unemployment rate, which is the broadest reported indicator that accounts for underemployment and those who are only “marginally attached to the workforce,” still stands at 14%. This statistic remained flat for the last 12 months. While the official unemployment rate has gone down marginally, we still have 11.5 million people without work. That should be our top focus as a country and we should not pat ourselves on the back every month when the number fluctuates slightly in either direction.

2. Median Household Income. The president said in the same speech at Knox College, “The average American earns less than what he or she did in 1999.” I scratched my head and thought maybe the president was referring to census numbers that show a reduction in median household income. If so, his statement accounts solely for income and fails to assess wealth gained during the period. The census definition of income excludes taxes and non-cash benefits. This method would peg a rich, retired couple with much wealth in financial securities as poor, as their income will be dramatically less as result of retirement. Using a more extreme example, assume the U.S. government takes all of our income and redistributes it back to us through transfers. Our median household income would be zero, despite the fact that we’ll have government transfers to sustain household consumption. Therefore, the measure does not capture financial well-being and consumption very well. Average (mean or median) American households have actually gained in after-tax income, according to the CBO graph. According to economists Bruce Meyer and James Sullivan, median income and consumption both rose by more than 50% in real terms between 1980 and 2009.

CBO Average Household Income

The President continues: “this growing inequality not just of result, inequality of opportunity — this growing inequality is not just morally wrong, it’s bad economics. Because when middle-class families have less to spend, guess what, businesses have fewer consumers.” Scott Winship of Brookings discussed the effect of inequality, growth, and opportunity back in April, saying there is scant evidence that supports the proposition that inequality hampers growth. The President here also unveils the premise of his economic worldview. He seems to believe that consumption creates demand that then creates supply. According to this logic, the economic remedy would simply constitute putting more dollars into the pockets of middle-class families. Where are these dollars coming from? Businesses themselves? Or Government? The President seems to suggest that more middle-class spending power could come from the rich (mathematically it wouldn’t make sense for it to come from the poor). If only would the rich share their slice of the pie (redistribution), then businesses will thrive. He is not talking about opportunity here; the President is talking about redistribution. How does spending more money solve the “inequality of opportunity” if not for us to have the same “opportunity” to spend more? And “spend more” necessarily implies more dollars, whose origins I’ve discussed above must come from the rich. Thus, this is a loopy argument that mistaken income for consumption, which in turn distorts economic policy. Unless, of course, one buys into the argument that redistribution constitutes wealth-creation…

Continue reading

Common Sense Skepticism: A Wake Up Call on Immigration Reform

Photo Courtesy of Washington Post’s Wonk Blog

Clay Olsen | June 10th, 2013

It is very difficult to keep up with all the news coming out of Washington with scandals appearing left and right. However, the American people must stay vigilant in focusing on legislation that has the power to radically change the country. Even though much of the media is focused on what is happening with the IRS or whatever it may be, we must remember that there is a group of politicians, known as the “Gang of Eight,” that are working to reform immigration. What does this reform mean for America (American citizens)? Surely it cannot be based on political gains, can it? For now, let us forget about the potential political impacts and instead, focus on the issue in a common sense manner.

The bill that the Gang of Eight has whipped up is over 1,000 pages long and is said to be a compromise between Republicans and Democrats. Of course one of the big concerns that Republicans voice with regards to immigration is a secure border. The bill only requires the Department of Homeland Security to submit a plan to secure the border; no action is required. However, we are supposed to trust that the border will become more secure after this bill passes, and we are supposed to give the Left what they want in return.

Let us take a little trip down memory lane and examine past immigration reform bills in our history. The 1965 Hart-Celler Act was defended by Democrats as being a bill that would not increase immigration. However, within the bill were the introductions of chain migration and the elimination of national quotas. Both made it easier for net welfare takers to be accepted by the immigration system. Illegal immigration increased from 2.5 million in the 1950s to 4.5 million in the 1970s to about 10 million in the 1990s. Again, this was a bill that Democrats repeatedly endorsed as a low impact piece of legislation with regards to immigration.

Immigration reform entered the picture again with the 1986 Immigration Reform and Control Act. This bill would grant 3 million illegal immigrants with amnesty. In order to get enough support to pass, it “promised” border security. After the bill was passed one can only guess which aspect of the bill got priority. Amnesty or security? The pardon of illegal actions or the safety of our country? As expected, amnesty was given and border security was not.

With this kind of a track record, I think it is safe to say that we should be very careful to trust the Left. They continually tell us that the border is secure right now. So are we to expect any increased security? It is easy for those in the D.C. bubble to claim that the border is secure when they do not witness and are not affected by the gangs, drug trafficking, and shootings that occur on our southern border. And obviously they do not want to know. They seem to not even care about the danger that is threatening our nation as displayed by President Obama’s Oval Office meeting with illegal immigrants last month while disregarding the opinions of border security officials and immigration officers. The job of these politicians is to represent the American people, not illegal immigrants.

Welfare benefits and government subsidies are also an issue when discussing immigration reform. A large amount of illegal immigrants would qualify for welfare. This large of an amount would have a huge impact on an already bankrupt welfare state that the left refuses to reform. I fear that the legalizing of millions of illegal immigrants would be like taking a flamethrower to an already raging forest fire. The Gang of Eight bill does not relieve American taxpayers from subsidizing illegal immigration. It waives the public charge law. The public charge law prohibits the Department of Homeland Security from accepting an application from an illegal immigrant that would be an economical weight in our society. So there would be no consideration as to how the taxpayer would be affected by accepting an illegal immigrant into the system.

The bill also sets up a slush fund for advocacy groups to assist potential amnesty applicants. Remember that “government funds” is another term for “taxpayer money.” Also, illegal immigrants would be able to litigate against amnesty decisions that they consider unfair. Again, the litigation would be paid for by the American taxpayer. No doubt, a concept that Eric Holder is drooling over.

So now we must decide how we are to go about fixing the current immigration issues. What do you do the morning after a burglar has broken into your home? Do you make sure there is milk and cookies out on the table for the next intruder? Or do you upgrade the lock on your front door to prevent it from ever happening again? Not a perfect analogy, but it will have to suffice. We have an avenue for immigrants to come into our country with no background check, no security scan, and no way of keeping track of them. We must fix the leak and then deal with those that are within our borders.

Now Marco Rubio has been criticized by some as scheming with the Left and praised by others because he is starting the conversation. I like how he is trying to slow the process down so that more people can comprehend the bill and give their opinion on it. I know Marco Rubio is a smart Republican, and I hope he fully understands whom he is dealing with.

How are we to respond to immigration reform? We must make sure that the law actually secures the border. The United States is the wealthiest country on the earth; I think we can successfully secure our borders. We must make sure that legal immigration is encouraged and illegal immigration is discouraged. Two immigration reform bills (discussed above) brought by the Democrats have clearly failed at accomplishing this task. Illegal immigration has skyrocketed while the legal immigration system remains broken. Above all, we must make sure that the law is in the best interest of the American citizen, a notion that seems obvious but is often disregarded.

So before a group of politicians try to ram through another immigration reform bill, let us remember the past and tread carefully when we talk of compromise. With an estimated amount of 11 million illegal immigrants within our borders right now, we must take immigration reform very seriously because it has the potential to have a huge, negative impact on our country’s future.

The IRS: A Bottomless Bowl of Corruption

fsdfsaf

By Clay Olsen | May 20th, 2013

If you have been watching the news lately (depending on the news you are watching/reading), then you probably have seen a few scandals that the federal government has recently been involved in. What are we to make of these instances? Are we to think of them as mere accidents in the government’s noble quest to make life better for its citizens? I would assert that these cases should clearly reveal to us the overreaching monster that our federal government has become.

News has surfaced that the IRS has been focusing its harassment on Conservative groups around the country. The Obama administration wants to assure the American people that, as always, they are “going to get to the bottom of it.” A translation of this statement from D.C. jargon to plain English: We, the bureaucrats, are going to investigate ourselves and replace IRS officials with more bureaucrats. And that is supposed to put the issue to rest.

It turns out that the commissioner of the IRS division in charge of handling tax exempt organizations during the bullying of the Tea Party, Sarah Hall Ingram, is now the director of the IRS division in charge of implementing Obamacare regulations. Are we to expect the same targeting in dealing with the American people’s healthcare? This woman was involved in inappropriate actions for years, and apparently, no one was there to keep her accountable.

Now there is news that a major donor to the Romney campaign was targeted after donating a large sum of money. What country do we live in when a government organization is targeting citizens for their political views and contributions? The donor was never audited before; he was not a man with a questionable record. This man was audited, his business lost customers, and he had to pay $80,000 in lawyer fees. And every week there is news coming out about how this federal government is pushing around and bullying the “little guy” who it so often claims to defend.

President Obama’s initial response when the IRS story broke was that he did not know about it. That seems to be a popular defense for the Obama administration and was used to respond to the Benghazi scandal. If there is no accountability within this government, than perhaps it is too big. The bullying by the IRS has been going on for years and we are expected to accept that no one knew about it. It makes me wonder what other things are being done by the government that we are unaware of.

The growing corruption of the government should not be a huge surprise by those who have studied history. An increase in power without accountability will always lead to more corruption. The Framers understood this and sought to limit the power of the federal government by leaving a significant amount of authority in the hands of the states. The federal government has always tried to increase its power and reach at the expense of local authority. Perhaps it is time to pull back and return power to state and local governments.

Both sides of the political spectrum were for simplifying the tax code in the 2012 campaign. Of course, the proposed path of simplification is different for different parties. This IRS scandal, I think, supports the Conservative’s stance on a flat tax. The proposed tax is simple: a citizen will pay a proportionate amount of the product of thier labor. This would be a great way to roll back the IRS, which would in affect, reduce corruption. This government is long overdue for a significant reduction in power. In order to make sure these outrageous scandals do not happen again, we must decentralize the federal government and empower local authorities.

The Ambivalent Elephant in the Room

Gang of Eight

Senator Marco Rubio speaking at a press conference on Capitol Hill with his Senate colleagues outlining his ideas for an immigration overhaul
Picture Courtesy of Desecret News

Danny Zeng | May 9, 2013

Many on the Right have come out in full force against Sen. Marco Rubio’s courageous effort to reform the current immigration system. Although there are legitimate arguments to be made against “amnesty,” economic and social, some rhetoric are nonetheless blown out of proportion. Smart people on very short attention span seem to forget just how bad the current immigration system is for lawful and unlawful immigrants. As it stands now, we don’t even know who’re in our country! Not to mention an unsecure border that let’s in criminals and narcotics, a legal system that deprives many of economic and social mobility, and a conscious polarization of our society between citizens and the foreign-born. Many immigrants have been active in their communities, working and living in the U.S. for many years, paying taxes, raising a family, and saving up for college. Even the most ardent exclusionists can appreciate the powerful motive of human beings’ innate desire for a better life. Immigration is plagued by systemic problems, so naturally it requires systemic solutions. Sen. Rubio and others have started this conversation. Let’s finish it and act in good faith to make our immigration system work for those who are currently in the country and many more highly skilled workers and entrepreneurs who thirst to benefit from our capitalist enterprise and to achieve their American Dream.

The current Senate bill, first and foremost, focuses on securing the border. It asks the Department for Homeland Security to come up with a border security plan that will be conditioned as a triggering mechanism for providing undocumented a provisional status. The path to citizenship is at least 13 years. Currently, undocumented immigrants will have to pay back fines and taxes. The bill cuts down chain migration by eliminating adult siblings and children from the preference system. It also boosts the number of allowance for skilled immigrants and provides uncapped access to foreign entrepreneurs. This shift from family-centric to skill-based immigration regime is monumental. It will contribute to America’s competitiveness in an increasingly globalized economy. 

On Monday, Heritage released its heavily criticized study that concludes that “If amnesty is enacted, the average adult unlawful immigrant would receive $592,000 more in government benefits over the course of his remaining lifetime than he would pay in taxes.” Unfortunately, by only examining taxes and welfare, Heritage fails to consider positive economic contributions from provisions embedded in the reform bill, such as opening up our system more to high-skilled workers. The Heritage study counts retirement benefits that are decades away without even acknowledging the possibility of entitlement reforms in the near future. The government predicates that Social Security will dry up by 2036, at which time benefits will either be curtailed, people will shore up by paying more taxes, or government defaults on its obligations to its citizens. Entitlements will be reformed sooner or later as a matter of necessity. Thus, projecting the current welfare spending level outward into the future is misleading.

The study has also been criticized by leading free-market experts from the American Enterprise Institute and the Cato Institute for its misleading figures that fail to take into account the dynamism in our economy. Daniel Foster, who writes for National Review Online, argues that the Heritage study, if anything, is a strong case to roll back the welfare state. Cato condbucted a study a few years back that concludes that comprehensive immigration reform will have a net positive $1.5 trillion contribution to our economy, as real wages tend to go up for unlawful immigrants who come out of the shadow, yielding higher consumption and more government revenues.

The immigration bill is also found by the Chief Actuary of the Social Security Administration to have a “substantial positive effect” on the economy by shoring up entitlements. According to the Social Security Administration, the bill would add more than $275 billion in revenue to Social Security and Medicare, increase the gross domestic product by 1.63 percent and add more than 3 million jobs over the next decade” (May 8, 2013 Bloomberg)

Instead of a coordinated campaign of shooting ourselves in the foot, let’s shore up our nation’s broken immigration system by actually leading on the issue. Ignore the fringe noise of exclusionists. GOP leaders should be vocal in support of reform. There are those who advocate for incrementalism in reforming immigration. Democrats and their union stooges will never opt for that route, so realistically incremental reform will get us nowhere, if not worse than status quo. Comprehensive reform is the only politically viable way forward. The defeatists within the Party would suggest that the 11 million undocumented would necessarily vote Democrat in decades to come. That is synonymous to waving white flag and admits defeat without even putting on a fight.  If our party cannot figure out dynamic ways to engage our fellow Americans with an optimistic vision and sound public policies, then our party will be swept into the dustbin of history. The GOP House will have sufficient political sway to ensure whatever safeguards deemed necessary to strengthen border security and enforcement provisions. The Republicans have the upper hand in this negotiation. Let’s not squander the opportunity to lead on an issue that will create a safer and stronger United States of America for the 21st century.

Forget Reason: Self Defense is Simply Human Nature

Image

State Rep. Allen Fletcher speaking in favor of HB 972 in the Texas House
Courtesy of Austin American-Statesman

Danny Zeng | May 6, 2013

Washington Post did a followed-up story titled, “A clear case of self-defense rallies supporters of gun rights,” about an incidence that happened in January, when a Georgian Mother shot a burglar who broke into her house when both of her children were home. That’s the point that defenders of gun rights have been making time after time: it’s about self-defense; it always has been.

In the past few months, this debate was distorted in the public discourse to support a menu of “reasonable” measures. Whenever a piece of legislation is broken down into component parts, people are more likely to support individual parts than the legislation as a whole.  That’s the polling tactic used by gun-control advocates throughout this debate. It’s the same tactic used to push Obamacare through. An overwhelming majority, Republicans and Democrats, supported provisions such as a coverage for those with pre-existing conditions, tax credits for individuals and small businesses, and closing the Medicare “doughnut hole;” even though Obamacare overall remains divisive. The Texas Legislature is presently wrestling with campus carry bills. The argument for us is still the same: it’s about self-defense.

Though an important detail ignored – intentionally or otherwise – in the WaPo story is the burglar’s history of criminality. ABC reported in January, “Last year he [Paul Slater] served 6 months in jail for battery and has at least six other arrests on his record.” The story never even mentions this point. In fact, the lingering impression is almost sympathetic to Zakia Slater’s (wife of the burglar) predicament. Her role as a schoolteacher, a mother of six, and a depicted “victim” in the situation attempt to humanize the other side of the conflict. This distracts from the fact that her husband’s a criminal, an important fact that underlies the whole logic behind gun-rights advocates for self-defense.

Same rationale, rooted in human nature, applies to support for campus carry. Why should we as college students living in one of the most high-density areas in Austin deny possibilities of irrational violence and criminality  and deprive ourselves of effective means to self-defense? Simple faiths in the security of our campus and the professionalism of our police force have failed to prevent campus shootings and violent crimes in recent years. DOE’s Office of Postsecondary Education reports 649 burglaries, 124 motor vehicle theft, 66 aggravated assaults, and 51 forcible sex offense, and 33 robberies on Texas college campuses.  In this sense, to be against campus carry is to be for status quo, a situation that exposes us to dangerous and perhaps irrational minds in our society.

Melinda Herman did what any mother would do for her children. In moments of inexplicable chaos, I can’t imagine any self-preservative motive greater than one’s inherent instinct to protect people we love. I do realize that in the Hermans’ case, the gun is within the confines of her home, but the underlying logic is nonetheless the same: the possession of a firearm is the only effective mean to stop a violent perpetrator, as opposed to a slew of ridiculous guidelines offered by universities across the country:

  • Wichita State University counsels students in the following manner: “If the person(s) is causing death or serious physical injury to others and you are unable to run or hide you may choose to be compliant, play dead, or fight for your life.”
  • The University of Miami guidelines suggest that when all else fails, students should act “as aggressively as possible” against a shooter. The guidelines, taken from a Department of Homeland Security directive, also recommend “throwing items and improvising weapons,” as well as “yelling.”
  • Otterbein University, in Ohio, tells students to “breathe to manage your fear” and informs them, “You may have to take the offensive if the shooter(s) enter your area. Gather weapons (pens, pencils, books, chairs, etc.) and mentally prepare your attack.”
  • West Virginia University advises students that if the situation is dire, they should “act with physical aggression and throw items at the active shooter.” These items could include “student desks, keys, shoes, belts, books, cell phones, iPods, book bags, laptops, pens, pencils, etc.”
  • The University of Colorado at Boulder’s guidelines state, “You and classmates or friends may find yourselves in a situation where the shooter will accost you. If such an event occurs, quickly develop a plan to attack the shooter … Consider a plan to tackle the shooter, take away his weapon, and hold him until police arrive.

The Texas House gave Rep. Fletcher’s campus carry bill, which includes an “opt out” provision allowing institutions to decide its own gun policy, a preliminary OK over the weekend. The eyes will now be on the Senate and the Lieutenant Governor who has the power to reassign Birdwell’s bill to another committee. The fight goes on. We are that much closer to a more sensible campus carry law that would contribute to the safety of our campuses throughout Texas.