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A Response to Samuelson's "Importing Poverty" article
Submitted by Tim Fowler on Thu, 2007-09-06 12:26.Robert Samuelson wrote an article in the Washington Post titled "Importing Poverty"
Here is my take on it.
I agree that the poverty rate is higher because of immigration. I think Samuelson shows that very well. But while it increases the poverty rate, it doesn't increase poverty. Your not making people poorer your increasing average wealth in the world, and maybe even the average wealth for non immigrants in the US, but your bringing in new poor people to be counted, that wouldn't have been considered before because they where not in the US.
The rate of poverty (esp. if measured in an absolute rather than a relative sense) among non immigrants has declined. Also the rate of poverty among immigrants has declined (a larger percentage of them where poor before they immigrated). So how do we get a slightly large poverty rate? By immigrants, and there direct next generation descendants being a larger percentage of the population. If the group with a larger poverty rate increases as a percentage of the population that poverty rates can go up even if the rate is declining for every group, and if the majority of individuals are doing better. Immigration isn't on the net making people poor, or keeping them in poverty (in fact it helps raise many of the immigrants from poverty, or at least to raise them to a higher level that we might still consider poor), but its brining in new poor people. Its not totally unreasonable to assert that there is something negative about brining in new poor people, OTOH its likely not to be a random selection of the poor but rather be shifted towards people with higher than average initiative (if your lazier than average you probably won't emigrate, unless perhaps you'll starve if you don't or someone sets up some cushy setup for you after you immigrate, but that doesn't apply to most immigrants. The main counter argument to that point is that people could immigrate for government benefits. That's why I'm much more partial to arguments about not making illegal immigrants eligible for welfare than I am to thoughts about trying to stop illegal immigration (which I don't think can be done) or mass deportation.
Another possible negative is that emigration from Mexico reduces the incentive for government reform, and reduction in the level of socialism in Mexico (both by removing the discontented people, and by the remittances which go back to Mexico and might make some people who stay more content), and also might represent a drain of more intelligent or motivated individuals from Mexico, and thus will help keep Mexico poor.
Losing industry?
Submitted by Tim Fowler on Wed, 2007-08-15 16:54.One semi-common comment is that the US, or "the western world", is de-industrializing, or losing industry, or that industry is in decline.
Twofish in a comment to a post at Brad Delong's blog argues that the whole world is de-industrializing.
Actually the reason that industrialization didn't spread in China-19th century is easy to explain. In the early 21st century, we are witnessing a massive worldwide de-industrialization, as capital-intensive industries are being replaced by labor-intensive ones in China.
Look at your shirt. Chances are that it wasn't made in a factory in the Midlands and New England, but rather by hand in China. The reason for this is that China has a lot of people, and this population boom started in the late-1600's.
This idea ignores a couple of important facts.
1 - The value of industrial production in "industrialized western countries" continues to increase.
http://www.geocities.com/timwfowler/industrialproduction.gif
That data is for the US, but the same idea applies to most industrialized countries.
2 - China (and other developing countries) are industrializing. In China's case at a fairly rapid rate.
Yes China's production methods typically are more labor intensive than those in say the US, but its not like China's export industry consists mostly of purely hand crafted items. Factories are going up or expanding all over China. Yes production in more labor intensive developing countries such as China, is growing faster than production in more developed countries. But since the value of industrial production is increasing in both it doesn't make a lot of sense to say the world is losing industrial production.
In the developing countries not just the value but the bulk and weight of industrial products is increasing. (That might also be true for developed countries but I'm not sure where to find the stats, and in any case I consider value to be much more important than weight, why should we feel bad if we switch to lighter and/or smaller products if they are equally or more useful than the old items?)
In one sense developed countries are "de-industrializing", in that less people are required to produce manufactured goods. But that just means productivity has grown, not that we are "losing industry to China", let alone that the world as a whole (including China) is losing industry. This is similar (if so far much smaller than) the decline in agricultural labor in the US. We used to employ a large majority of Americans in agriculture, now less than 2% of Americans are farmers, but they produce much more (not just in terms of real value, but even in terms of tonnage).
Cuban growth under Castro
Submitted by Tim Fowler on Mon, 2007-08-13 19:33.Movie Critics Aghast at Andy Garcia's The Lost City
by Humberto Fontova
http://www.lewrockwell.com/fontova/fontova56.html
I found the link to that article here
http://volokh.com/posts/1147055252.shtml#88474
Its a comment to a blog post
http://volokh.com/posts/1147055252.shtml
that also might be looking at.
The comment quotes Fontova's article, most tellingly with
"In 1958 Cuba had a higher per-capita income than Austria and Japan. Cuban industrial workers had the 8th highest wages in the world."
---
Another commenter argues against this, mostly with ad-hominem, but he does provide a link
http://www.columbia.edu/~lnp3/mydocs/state_and_revolution/cuba.htm
If you follow the chart at that link you see how things in Cuba have supposedly gotten better from 1958 to 1978.
Some responses come to mind.
1 - What about since 1978. Cuba was subsidized by the Soviet Union during the cold war.
2 - Only 5 categories of good and services are considered. Also the harder the category is to measure and put down to one simple number, the larger the difference. Education suppossedly went from 100 to 448. What does that even mean? Health care went from 100 to 202. Again what this means is very unclear. And do you really trust Cuban statistics?
3 - The other three categories, show minimal improvement over a generation. "Food and beverage" goes from 100 to 125, clothing from 100 to 100, housing from 100 to 104. This over a twenty year period where much of the world showed much larger improvements (And that's assuming that these numbers can be said to even measure anything).
The link tries to explain some of the slower areas of growth, or show how the larger areas where performed despite severe handicaps. I'll answer a few of the points.
1. Decline in clothing figures can be explained by the fact that a lot of raw material for the textile industry was imported from the US and needed to be replaced by local inputs, a structural transformation that was long and difficult.
Raw materials for textiles are wildly available on the world market. Lose one supplier and you can buy elsehwere.
2. Lack of growth in housing is because priority for the construction industry was given to building infrastructure, schools and industrial plants.
And the fact that government sets the priorities away from what might be directly useful to many people is somehow a good thing?
3. Gains in health took place despite the fact that 1 out of 3 doctors left Cuba in the first 3 years of the revolution. The infant mortality rate in Cuba, up until the recent economic crisis, was one of the lowest in the developing world.
And I'm sure the Cuban government has NO responsibility for the actions and policies which caused one third of its doctors to leave in just three years...
4. The illiteracy rate in Cuba went from 23.6 percent to 3.9 percent in less than one year."
Normally I try to answer clearly incorrect claims with argument and/or data, but this one's so extreme that perhaps the best answer is simple, BS.
"This was corroborated by UNESCO"
If that's true it reflects rather poorly on UNESCO.
Do targeted tax breaks give you more choice?
Submitted by Tim Fowler on Tue, 2007-07-31 18:19.Constant and I have been having a debate in the comments entry to a prior post.
His most recent reply argued that targeted tax cuts give you more choices, because you have an option to do what the government wants and so pay the government less.
In a certain narrow sense this is true. If you don't have the tax break you don't have the possibility of taking advantage of the tax break. But tax breaks don't exist in such splendid isolation. They are part of a larger tax code, and the break itself has effects beyond just the effects on the person who can take advantage of it.
You can say that a targeted tax break is giving you the option to do X and get some benefit from the government. But its just as reasonable to look at the whole picture and say that such targeted tax break is not a break but rather a penalty for not doing what the government wants.
True you don't have a simple one for one situation where imposing tax break X will cause rates to increase, or getting rid of tax break Y will cause rates to decrease, but there is a connection between the two. If you have a high number of targeted tax breaks you are likely to have higher tax rates (then you would otherwise have had).
Instead of looking at the choice to eliminate one specific highly targeted tax break or keep it in place, imagine instead the hypothetical where there is a proposal for an extra hundred thousand targeted tax breaks? Is it really wrong or "anti-libertarian" to oppose the plan? I don't think so. Such a plan is a mess, and will cause more harm then good. Its likely to result in higher base rates for taxes (absent a reduction in spending), and the higher base rates are not the only source of harm from the proposal.
Looking at such a huge plan its obvious that you have an attempt on the part of politicians to control society. Giving politicians that additional control is a harmful. Its harmful because it distorts incentives and gives less efficient results, but its harm extends beyond that. I submit its intrinsically harmful. Even if the politicians could and did make choices for people that where better then the choices they would make for themselves (and in general terms that will never be the case), greater power in the hands of politicians is harmful to freedom. That's still true even when the power can be expressed as giving people more choices.
What's true for the huge proposal is also true, on a smaller scale for individual targeted tax breaks. They allow greater government/political control.
When you combine the harm to freedom from that greater control, with the practical harm caused by compliance costs and the fact that these political decisions often provide perverse incentives and lower efficiency; its obvious that a complex tax code full of such targeted breaks is hardly something libertarians should be supporting.