Stumbling Into the Hamilton Safe Space

21 Monday Nov 2016

Posted by in Constitution, Progressivism

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An incident at the curtain call of Friday night’s performance of Hamilton, The Musical in New York has attracted more attention than it deserves, or perhaps it’s attracted attention for the wrong reasons. Vice President-Elect Mike Pence attended the show, and the word spread to the cast. One of the actors, Brandon Dixon, read a message to Pence from the stage which had been written by the show’s producers. By that time, Pence’s Secret Service detail was ushering him out of The Richard Rogers Theater, apparently the usual protocol, but one of the producers said Pence stopped to listen. Here is the message that Dixon read, according to this Twitter link:

“You know, we have a guest in the audience this evening — Vice President-elect Pence, I see you walking out but I hope you hear just a few more moments. There’s nothing to boo, ladies and gentlemen, There’s nothing to boo. We’re all here sharing a story of love. We have a message for you, sir, we hope that you will hear us out. And I encourage everyone to pull out you phones and tweet and post because this message needs to be spread far and wide.

Vice President-elect Pence, we welcome you and we truly thank you for joining us here at ‘Hamilton: An American Musical.’ We really do. We, sir, we are the diverse America who are alarmed and anxious that your new administration will not protect us, our planet, our children, our parents or defend us and uphold our inalienable rights, sir. But we truly hope this show has inspired you to uphold our American values and work on behalf of all of us. All of us.

Thank you truly for seeing this show. this wonderful American story told by a diverse group of men, women of different colors, creeds and orientations.“

Donald Trump overreacted to the situation, tweeting that Dixon and the cast should apologize to Pence. This is typical Trump, making a bigger story of something that could have passed with less controversy. Pence, left to his own devices,  would have let it pass. He said later that he was not offended. And I’m sure the cast of Hamilton was under no illusion that Pence would accept their advice on anything.

Dixon’s message itself was respectful, more or less, though it was not “a conversation”, as he later claimed. It was a lecture. It seemed designed to show Pence up, but Pence listened politely. Less “respectful” were audience members who greeted Pence with boos as he entered the theater (there were cheers as well), and when Dixon mentioned his name at the curtain call. At least Dixon admonished them. However, there are reports, which I’ve been unable to confirm, that some of the show’s actors directed their lines at Pence. If true, such a confrontational delivery broke the “fourth wall” for purposes that do not elevate the show. On something of a light note, someone suggested that the incident might prompt Trump to build a “fourth wall”. Heh! No, Dixon’s lecture did not break the fourth wall — he read the statement after the show had ended.

Some artists thought the Hamilton cast went too far. Here is Steven Van Zant, guitarist for The E-Street Band and an avowed progressive who, for what it’s worth, happens to agree with Trump that the cast should apologize to Pence:

“When artists perform the venue becomes your home. The audience are your guests. It is nothing short of the same bullying tactic we rightly have criticized Trump for in the past. It’s taking unfair advantage of someone who thought they were a protected guest in your home. You don’t single out an audience member and embarrass him from the stage. [This was] a terrible precedent to set.“

I have a number of friends and acquaintances in my city’s theatre community. Their opinion is divided, but a clear majority are defending the cast of Hamilton. They stress that theatre has always been a vehicle for social commentary and social change. There is certainly an extent to which that’s true, and Hamilton is nothing if not a social statement. Of course, the lecture was not part of the show, but for what it’s worth, my view is that such commentary is more successful as art, and more likely to provoke sincere thought, when it is weaved into the art or story in subtle ways. I also believe that approach is truer to the history of theatrical social commentary. Personally, I don’t like tendentious art, and I’ve always felt that artists who make their political views too explicit cheapen their work. But that’s just me. One theatre friend thought that Dixon (and the producers) had crossed a line, using the curtain call to get on a soapbox to instruct a single member of the audience as to the proper interpretation of the art he had just witnessed.

Another theatre friend commented that theater should educate, entertain and edify, a view that probably gives the average playwright credit for more knowledge than they deserve. As it happens, there are several historical distortions in the book of Hamilton, which I covered in this post on Sacred Cow Chips about five months ago. While the show is a smashing success as entertainment, it contains some unadulterated propaganda about Alexander Hamilton, Thomas Jefferson, the meaning of the Constitution, and certain events that took place around the time of our nation’s founding. It is a failure at educating.

Incidentally, Brandon Dixon is not quite the virtuous SJW that many would have us believe. His Twitter history shows a rather aggressive attitude toward women, and white women in particular:

“St. Patty’s day weekend is like Christmas for black dudes who like white chicks. Happy holidays boys.
@reesewaters
#seasonsgreetings“

Evidentally, Brandon fancies himself quite the stallion, a sure sign of his deep respect for women.

The incident at The Richard Rogers is most interesting to me because it reveals an irony: the extent to which the writer, producers and actors of Hamilton lack an understanding of our system of government and individual rights. The president (and especially the vice president) do not hold the power to strip individuals of their rights. Granted, the GOP will have a slight majority in Congress and on the Supreme Court, but that does not mean that Trump will be unrestrained. The divisions of power and the constitutional checks and balances promulgated by the likes of Jefferson and Hamilton will serve to protect the rights of diverse Americans. And in two years, control of either the Senate or the House of Representatives might swing back to Democrats.

The Hamilton cast has an insufficient grasp of another fact: one person’s constitutional rights can come into conflict with the rights of others. If they so infringe, it is not enough to assert that you must have the freedom to exercise your rights. You can try, but these are matters for the courts to decide, and those decisions usually hinge on possible accommodations and whether the government has a “compelling interest” in protecting one right at the expense of another.

One other note to the Hamilton cast: while illegal immigrants share in many of the individual rights protected under the Constitution, they do not share fully in all of those rights. In particular, Trump might not need congressional support or help from the courts to enforce existing immigration law. If it’s any reassurance, he seems to have moderated his position on illegals, focusing his rhetoric on “sanctuary cities” and illegals having criminal records.

Perhaps the “elite” Broadway theatre kids of Hamilton can be forgiven if they have the wrong impression about executive power after watching Barack Obama over the last eight years. Hamilton would not have approved. Thankfully, what can be done with “a pen and a phone” can probably be undone with “a pen and a phone”. Now get back out there and have fun, kids!

Futile Hope for Faithless Electors

16 Wednesday Nov 2016

Posted by in Federalism

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Just who are these electors, anyway? Might they elect Hillary Clinton after all? Or switch en masse to someone else? The answer: slim to no chance. After my post on the Electoral College, it occurred to me that I should have addressed those questions. After all, every leftist clinging to hope of political redemption seems to think it could happen. But here’s the thing: if a Republican wins a state’s popular vote, then a slate of Republican electors is appointed. Electors at the state level are not appointed randomly or in proportion to the vote, as some apparently imagine. Only the Maine and Nebraska electoral slates bear any semblance of proportionality, since congressional districts in those states get one elector each, while two others go with the state vote. Here is a U.S. government web page on the Electoral College describing the selection process for electors.

It appears likely that Donald Trump will win Michigan’s 16 electoral votes, though the results probably won’t be certified until the end of the month. That would give him 36 more electors than the 270 required to win the presidency. The likelihood that 36 Republican electors will refuse to back Trump, or even 20 electors if he loses Michigan, is infinitesimal. Such “faithless electors” can be penalized in 29 states, but those laws have never been enforced due to the rarity of faithless electors. In some states, the vote of a faithless elector is voided, so it would reduce Trump’s total but not add to Clinton’s. And Clinton might have two faithless electors of her own in Washington state, who have said they will vote for Bernie Sanders and pay a $1,000 fine.

Broken-hearted leftists will almost certainly have to satisfy themselves with marching, or rioting, and simply demonizing Trump, his appointees, and his supporters.

Post-Election Thoughts: The Electoral College

15 Tuesday Nov 2016

Posted by in Constitution, Populism

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Among the targets of disillusioned Hillary Clinton voters is the much-maligned electoral college. The EC is misunderstood by most voters, from what can be judged on social media. Few seem to have any idea why it exists. Donald Trump condemned the EC during the recent campaign, echoing a typically populist attitude, yet it actually worked in his favor. And most are happy to accept the EC’s results when it works in their favor, but otherwise the EC strikes them as nonsensical.

Here’s how it works: a state’s electoral votes are equal to the total number of seats it has in Congress: two senators plus the number of congressional districts in the state. Therefore, a state’s relative influence in the college is larger with fewer congressional districts (which are a function of population and land area). For example, suppose that each congressional district has a population of 1,000,000 (The actual average is closer to 750,000). A state with one congressional district gets three electors for its one million inhabitants. A state with two congressional districts gets four electors, or two votes per million inhabitants. A state with a ten congressional districts gets 12 electors, or 1.2 per million inhabitants. Therefore, voters in small states have more leverage on the outcome of presidential elections than voters in large states. Does that make sense as a mechanism for selecting the nation’s chief executive?

The Constitutional Convention

The purpose of the Federal Constitutional Convention of 1787 was to forge an agreement between the individual states regarding a system of governance. This 1986 article by Shlomo Slomin in The Journal of American History provides an excellent account of the lengthy discussions that took place at the convention over how to select the chief executive. It was perhaps the lengthiest debate at the convention, as documented by Slomin. In the effort to create a durable union, a major concern was that a majority of voters were concentrated in states with interests, both economic and social, that differed from the interests of small states. One fear was that the executive would always be selected from one of the large states.

The first proposals involved selection of the president by legislative bodies (a position which endured until late in the summer):

“Whereas the Virginia Plan provided for a popularly elected legislature with the representation of each state proportional to the size of its population, the New Jersey Plan proposed that the legislature remain …the representative body of the states, with each state entitled to one vote…. In effect, therefore, at the very outset of the convention, the large and small states were at loggerheads over the method of selecting an executive no less than they were over the composition of the legislature.“

Obviously, the New Jersey Plan was much more extreme in its departure from proportional representation than the final, agreed-upon EC. (Note that New Jersey was relatively small at the time.) The problem was finally referred to a committee late in the summer, which presented its plan a few days later. Each state legislature would choose electors, who would in turn elect the president. States would have the option of turning over the choice of electors to their voters. To paraphrase Slomin slightly, it removed the decision from Congress for selection of a president in favor of an independent, ad hoc body. The EC had a single purpose, would not meet at one central location, and would immediately disband, so there was little chance of corruption or “cabal” influences. In terms of votes, it was an exact replica of Congress. Originally, each elector was to vote for two individuals, but could vote for only one from their own state.

“The delegates, it appears, were pleased with the Electoral College scheme, which so successfully blended all the necessary elements to ensure a safe and equitable process for electing a president and which reserved considerable influence for the states.“

The Constitution embodies other provisions that ensured a balance of power, all of which helped to bring disparate interests together into one federalist union. This includes the fact that we have two senators in Congress from each state. Alexander Hamilton wrote favorably of the EC in the Federalist Papers. The method of electing a president was subject to the same balancing of interests.

The founders had other reasons to think the EC was advisable. One was that it was impossible for many citizens, especially those in less populous regions, to truly “know” the presidential candidates. State electors, it was hoped, would relieve the citizenry of an impossible duty to perform a final vetting process. That rationale, however,  might not be very compelling in the era of modern communication and social media.

Another concern that arose was the appeasement of the southern, slave states. The issue of slavery was a lightning rod, but the northern states offered another “sweetener” to the south: the so called “three-fifths rule”, whereby three-fifths of the slave population would be counted in the total for allocating legislative representation. Even with that rather ugly adjustment, the southern states were generally less “populous”, but not as a rule. After all, Virginia was by far the largest state at the time of the convention. Certainly, the EC was an extra inducement to those states to approve the Constitution, but slavery had less to do with it than some have asserted, as the popular vote was never a serious contender for passage at the convention.

Fragile Democracy

It’s long been known that unrestrained democracy and majority rule can have negative consequences, including severe instability, without safeguards. The EC represents one such safeguard, functioning as a protection against a tyranny of the majority. If you’ve ever dealt with so much as a neighborhood association, you know that it’s a real phenomenon. Slomin found little evidence that the tarnished history of absolute majoritarianism was of any influence at the convention, but the founders were aware of it. The fact that legislative solutions to the electoral problem were widely accepted from the start of the convention probably reflected their awareness. Here is John Adams on the subject:

“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.“

In any case, the possibility of a union in which large states were dominant was obviously an issue for small states, and delegates from large states recognized the potential imbalance and the threat it presented to the success of the convention.

Today’s Imbalance

Today, only nine states account for over half of the U.S. population. (Fifteen states account for over two-thirds.) Ten states accounted for more than half of the presidential vote count in 2012, which suggests that voter turnout in 2012 was slightly lower, on average, in the most heavily-populated states. Suppose we were to do it all over: if, for example, densely-populated states have interests that do not align with rural states, and if the latter are considered economically or culturally important, then the EC can be viewed as a worthwhile concession to offer in exchange for participation.

The Interstate Compact

The National Popular Vote Interstate Compact is a group of states that will pledge their electors to the winner of the national vote, but only when enough states join to total 270 electors. The compact now has ten member states plus DC, for a total of 165 electoral votes. These states are solidly “blue”, having voted for the Democrat in elections over many cycles. There are two states, with 36 electoral votes, in which legislation to join the compact is pending: Pennsylvania, which was carried by Donald Trump in last week’s election, and Michigan, which appears to have been carried by Trump. Something tells me the compact legislation will be risky for most legislators in those two states, but we’ll see. The voters of any state, under some circumstances, can have more leverage over the outcome of a presidential election when its electors are pledged to the winner of the in-state vote, rather than following the national popular vote. This can occur any time a majority of a state’s voters happen to disagree with a thin national majority.

If states with 270 or more electors vote as a block, it diminishes the importance of each state’s voters, who might well disagree with the national popular vote in the future, if not already. The members of the compact, including California, would have had to vote for George W. Bush in 2004, despite the desires expressed by their citizens at the polls. Hamilton would not have approved of the compact; he wrote that a state’s electors should not be influenced by parties outside the state. Unfortunately, that rule was not clearly set forth in the Constitution.

Accidental Genius

Sean Rosenthal just articulated a powerful defense of the EC appearing at FEE.org. He notes that the founding founders expected a fractured political landscape, with many parties vying for public office. They were wrong in that regard, he believes, because they agreed to two-year terms in the House of Representatives. Rosenthal cites Duvergers’s Law, combined with “first-past-the-post” voting for representatives, for the devolution to a two-party system in the U.S.: voters tend to avoid candidates who might help elect their least-favorite candidate.

Given the existence of a system dominated by two-parties, the EC ensures stability by working against a concentration of power. Rosenthal reminds us that the EC transforms one federal election into 51 local elections. That reduces the chance of tampering by the party in power at the federal level. It also reduces the incentive for electoral fraud at the local level, since a greater margin of victory cannot gain the votes of additional electors. Rosenthal believes that these benefits would be powerful even if the number of each state’s electors was reduced by two, which would then cause the EC to approximate the results of the popular vote. As I noted earlier, the founders seemed to think that the EC would promote stability, and that belief was not conditional on the number of major presidential contenders.

Other Notes On the EC

Another approach to the pledging of electors is used by Maine and Nebraska. They allow congressional districts to use their single vote independently, based upon the popular vote in the district. Certainly this is the most empowering approach for an individual district’s voters. I’m sure many voters in down-state Illinois would love it!

There are plausible criticisms of the EC, such as discouraging voter turnout in non-“swing” states, and of course the disadvantaging of third-party candidates. On the other hand, some have argued that the EC can help the interests of minority voters by encouraging candidates to focus on winning their votes. And relatively small states like Mississippi have a proportionately large minority population, so the EC should help to advance their interests.

Conclusion

The Electoral Collage is enshrined in the U.S. Constitution and was a crucial device in achieving an acceptance of the document by all the states. The delegates to the convention might have been able to overcome objections to proportional representation without the EC, but other, less desirable, concessions probably would have been necessary. Our country might look very different today without it. The EC certainly inures to the benefit of voters in smaller states who differ in their views from majority opinions. If we had to hold the convention all over again, some form of the EC would probably be necessary to achieve consensus, and obviously that has nothing to do with slavery. The EC is consistent with the federalist approach to governance, which is instrumental to maintaining the stability of the Republic. And voters can change their minds: even voters in large states might one day find themselves in a national minority. The Electoral College is undoubtedly a better way to protect the interests of those voters in the long-run than the Interstate Compact. It will probably survive the latest challenge, as it has survived many others in the past.

Post-Election Thoughts: The “Idiocracy”

11 Friday Nov 2016

Posted by in Free Speech, Liberty, Tyranny

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I keep reading about “idiots” in my news feed, directed by angry supporters of Hillary Clinton at anyone who voted for Donald Trump. These crestfallen partisans do not appreciate an irony: their very arrogance and desire to proscribe the freedom of others to speak and act freely actually helped to coalesce Trump’s support. So smug are they in their beliefs and attitudes that they are able to render high-handed judgements as to whether certain beliefs are socially acceptable. That there are many dimensions to social problems is lost on this crowd: it’s all or nothing. You are an idiot, a racist, a misogynist, or a homophobe if you support free speech (because it might offend), private property (you are greedy), free markets (capitalist pig), law enforcement (racist), gun rights (violent), or if you hold attitudes that are “traditional” or religious. In fact, you are probably suspect if you are white, asian, or in any way successful: you are too privileged to understand the negative consequences of your privilege.

Here’s my disclaimer: I don’t particularly like Donald Trump and some of his antics. I strongly disagree with a few of his most prominent policy proposals. Nevertheless, I voted for him because Hillary Clinton is so obviously a devotee of centralized power and she is irredeemably crooked. I was repelled by the identity politics she celebrated, and I found a certain aspect of Donald Trump’s disregard for political correctness to be refreshing.

The fact is that many voters are sick and tired of the name-calling by the left, and of the proscriptive behavior it enables. I’m one of them. Robby Soave at Reason just wrote an excellent article on this point:

“The leftist drive to enforce a progressive social vision was relentless, and it happened too fast. I don’t say this because I’m opposed to that vision—like most members of the under-30 crowd, I have no problem with gender neutral pronouns—I say this because it inspired a backlash that gave us Trump….

There is a cost to depriving people of the freedom (in both the legal and social senses) to speak their mind. The presidency just went to the guy whose main qualification, according to his supporters, is that he isn’t afraid to speak his.“

In the wake of an election that didn’t go their way, the identity politickers are proving themselves to be petulant and vulgar creeps. They decry the Trump election as racist by placing entire demographics and regions into an “idiot” trick bag. They cry racism on counties in which the majority voted for Barack Obama in 2012, but flipped to Donald Trump in 2016.

But no one is shamed. I’d have loved it if Carly Fiorina had been nominated. I’d vote for Walter Williams if he ran for president. I have great respect for Peter Thiel but I don’t know whether I’d vote for him. I might. In the end, it’s usually about policies, and if your policy portfolio has an excessive basis in identity politics and political correctness, and if you are strident about it, don’t be surprised if you stir some resentment. The idiots just might be the ones shooting themselves in the foot.

Note: Yes, I’ve used that cartoon before. I like it!

Clinton Corruption Remedy: Keep Her Out

07 Monday Nov 2016

Posted by in Corruption, statism

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Would I ever vote for Donald Trump? I’ve been critical of Trump’s positions on foreign trade, immigration policy and eminent domain. I think he’s an extremely risky candidate for any supporter of small government. But I’ve been much more critical of Hillary Clinton: she is a statist through and through, and she so often finds herself in close proximity to corruption and some other highly suspicious circumstances. I consider myself a libertarian, and I like Gary Johnson. Unfortunately, Johnson has disappointed me with his selection of Bill Weld as a running mate, his goofs on foreign policy and his often poor presentation of libertarian principles.

FBI Director James Comey has again concluded that there was no intent on Clinton’s part to violate national security with her private email server, but he also concluded that she was reckless in conducting sensitive government business, including the transmission of classified information, on that server. Unfortunately, Comey limited his investigation to the period during which she was Secretary of State. The server, however, was put in place before she was confirmed by Congress. The question of intent makes that time period relevant, but Comey ignored it. She broke the law concerning the handling of classified documents, there is no question about that. No less than five of Clinton’s aides took the Fifth Amendment to avoid prosecution. Evidently, Mr. Comey has been under pressure from a highly-politicized Justice Department. There are other investigations underway at the FBI and by Congress involving the Clintons, however.

The deluge of information via Wikileaks over the past month reflects horribly on the Clintons. I don’t care whether the leaks came from government sources, the Russians, or from other foreign actors. No one has challenged the authenticity of these leaks. Again, Hillary Clinton compromised national security by conducting her duties as Secretary of State on a private computer server. That’s what got her into the email mess. Now, we’ve learned that she gave her housekeeper access to her computer to print documents! At least five foreign intelligence services hacked into that server. Clinton also obstructed justice on the matter by destroying evidence and perjuring herself before Congress.

Wikileaks has shed additional light on the Clinton Foundation as well. The foundation functions as a money laundering scheme intended to disguise influence-buying as charitable giving, with the Clinton’s and their cronies as the real beneficiaries. Foreign governments, including several middle eastern powers, funneled money to the foundation while Hillary served as Secretary of State. Here’s Deroy Murdock on the Foundation:

“… its 2014 IRS filings show that it spent a whopping 5.76 percent of its funds on actual charitable activities — far below the 65 percent that the Better Business Bureau calls kosher. That paltry figure also mocks Hillary’s Las Vegas lie, uttered at the final presidential debate on October 19: ‘We at the Clinton Foundation spend 90 percent — 90 percent of all the money that is donated on behalf of programs of people around the world and in our own country.’ The Clinton Slush Fund . . . uh . . . Foundation seems to be mainly a travel and full-employment program for Hillary’s government in waiting. It’s also a bribe pump that sucks in money and spews out favors.“

The Clintons also have had strong ties to individuals with criminal histories, such as the notorious child predator Jeffrey Epstein. And Hillary Clinton’s reputation for contemptuous behavior toward others was so strong that State Department security personnel requested reassignment. It’s been reported that members of her Secret Service detail called her plane “Broomstick One“.

A Hillary Clinton victory in the president election will not end the investigations. Congressional leaders such as Jason Chaffetz and Trey Gowdy have vowed to press on aggressively, given that Clinton lied before their committees and to the American people about the existence of classified emails on her server. Impeachment by the House might occur, though Clinton’s offenses have occurred prior to her term in office, and the Senate would never attain the two-thirds majority necessary to convict.

It is possible that the FBI investigation into the Clinton Foundation will be damaging, but it is unlikely to bring an indictment. The DOJ under Clinton would be headed by Loretta Lynch or some other Hillary/Obama sycophant. There will be no DOJ indictment or special prosecutor as long as the Attorney General reports to the criminal herself. (The FBI cannot indict; it can only recommend indictment.) There would hardly be a real opportunity to render justice to Hillary at the federal level.

A local jurisdiction could bring an indictment for criminal activity. The Anthony Weiner laptop investigation by the NYPD could be troublesome for Clinton, depending on the extent to which any Clinton dealings with Jeffrey Epstein were recorded there.

There remains only one sure constitutional remedy for Hillary Clinton’s corruption: Tuesday’s election. Preventing her from taking office must be priority one. Hillary Clinton’s days of insider dealing would then be over, as would the politicized government created by Barack Obama, who was just recorded encouraging illegal aliens to vote! But Gary Johnson obviously won’t beat Clinton… the only real option is Donald Trump.

Yes, Trump is risky, and I’ll have plenty to criticize on my blog if he takes office. He is plainspoken but sometimes crude and offensive. Naturally, that “style” is especially offensive to the tender snowflakes who cling to identity politics, but I do not believe Trump is a racist. It’s true, I don’t know exactly what we’d get with Trump. I suspect he has some statist tendencies of his own, but I prefer that risk to the corruption and certain statism of Hillary Clinton.

So I must vote for Donald Trump. Putting Hillary Clinton in the White House would compromise our system of government. She is an accomplished grafter and cronyist, expert at leveraging her position of power for personal enrichment, and she is prone to taking retribution against enemies. The IRS, the DOJ and other agencies have already become partisan organizations under Obama. And as I mentioned earlier, Clinton is a statist who desires centralized power. That is always dangerous.

Read this excellent essay: “The Case Against Hillary Clinton“, by Lisa Schiffren of the Independent Women’s Forum.

Here is a page with a number of past posts about Hillary Clinton on Sacred Cow Chips.

Give Workers Choice to Rule Unions

02 Wednesday Nov 2016

Posted by in Labor Markets

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Collective bargaining via union representation is a right that deserves protection, but the value of that right is often undermined by union officials because the law empowers them to do so. In a case decided in September, however, a court confirmed that a union cannot force itself on an employer without worker support (and workers must file a request with the National Labor Relations Board (NLRB)).

Almost ten years ago, the Service Employees International Union (SEIU) insinuated itself as representing the employees of Professional Janitorial Service (PJS). The business insisted on a vote of its employees by secret ballot. Fair enough, right? That much is consistent with law and the administrative rules of the NLRB (see the link above). Had I worked for the business, its demand for a secret-ballot vote would have earned my respect. At that point, however, SEIU turned to questionable tactics:

“Unions win such elections more often than not, but the SEIU did not want to leave it to chance. So it retaliated against the company by libeling it with false accusations about illegal labor practices and overtime violations.

The SEIU claimed that Professional fired staff for trying to unionize, and had forced others to work off the books. Both allegations were dismissed as unfounded — lies, in other words — by the Labor Department.

The union’s libel was part of a broader campaign to drive Professional out of business unless it surrendered to union demands. Behind the scenes, the SEIU used its political connections to steer contracts away from the company. Emails showed SEIU officials electronically high-fiving each other every time Professional lost a contract.“

It took almost a decade, but PJS recently emerged victorious in its legal battle with SEIU. A jury in Houston ruled that SEIU defamed PJS, awarding the business a judgement of $5.3 million for damages. This article reports that SEIU kept a “campaign manual” that it relied upon in it’s effort to “kill PJS”, as they so delicately put it. PJS isn’t done yet:

“In a statement, PJS added that they ‘will now ask local prosecutors to investigate apparent perjury by union officials and an attorney who testified in the trial, and will increase its efforts with state legislators to remove the SEIU from eligibility in state-provided union dues collection programs.’“

SEIU has a long history of corruption, so it’s great to see the union’s tactics exposed before a jury. Apparently, too many employers have settled out of court, allowing SEIU to force its way into their businesses without a fair process, and those businesses have taken undeserved hits to their reputations along the way.

What incentives motivate such aggressive tactics? They undoubtedly reflect the value a union organization can capture through exclusive representation of workers and mandatory payment of dues. That is the general theme of “Unelected Unions: Why Workers Should Be Allowed to Choose Their Representatives“, by James Sherk. Once a workplace is successfully unionized, the union not only holds a monopoly on the supply of labor to the business; the government also grants to the union a monopoly over the services it provides to workers via exclusive representation. The workers are a captive market, short of a difficult and risky (for individual workers) decertification process.

That latter form of monopoly power, enforced by legal rules and court precedent, creates a severe principal-agent problem in union representation of workers. Union officials (the agents) have the incentives and power to capture excessive value from the workers they represent (the principles). This value, and historically questionable union financial reporting, has often made union activity a magnet for organized crime elements. This NPR story demonstrates the widespread nature of union corruption. An article about labor corruption by James B. Jacobs describes several common forms of labor racketeering:

“Organized crime bosses exploit unions and union members through alliances with corrupted or intimidated union officials…. In return, union officials provide mobsters access to the union treasury, pension and welfare funds, no-show jobs with the union, and support in establishing and enforcing employer cartels…. Some organized crime members have held formal union office…. In addition, of course, corrupt union officials, whether or not connected to organized crime figures, engage in ‘ordinary’ organizational corruption, such as misappropriation of funds. The most distinctive form of corruption by union officials is taking employers’ bribes to ignore violations of the collective bargaining contract, or even to allow employer to operate nonunion shops….“

Sterk and Jacobs both emphasize the potential that worker choice over their representation has for cleaning up union corruption. Here is an excerpt from Sterk’s conclusion:

“Congress and state legislatures should require unions to run for re-election, or allow workers to designate their own bargaining representative. Workers should not be forced to accept a union’s services.“

The right of workers to control their representation was at the heart of PJS’s original insistence on a worker vote, by secret ballot, over whether they desired representation by SEIU. And SEIU’s underhanded tactics illustrate the importance of giving workers strong control over their unions from the start. While mechanisms creating greater worker choice and control might not be foolproof, it is more likely to minimize union corruption and to maximize the incentives of union officials to truly promote the interests of their workers.

Hillaryeconomics: Swelling the State

30 Sunday Oct 2016

Posted by in statism

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Who cares about Hillary Clinton’s economic plan while her campaign quivers in the shadow of Weiner’s hard drive? Despite all the hubbub over Mrs. Clinton’s sloppy security practices, and her lies and destruction of evidence regarding those practices, it’s a good idea to remind ourselves of some of the frontrunner’s policy proposals and the general philosophy that informs them. Daniel J. Mitchell must have been feeling jovial when he took a crack at deciphering Hillary Clinton’s economic plan. He offered translations of each of 42 Hillary catch-phrases, but the translations were identical:

“Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.“

Mitchell highlights two general themes at the start: one is the left’s constant misuse of the term “investment’ to describe spending on almost any government initiative; the other is the still fashionable Keynesian theory that a low-productivity government can make the economy grow by a multiple of any claim on resources it deigns to make.

I’ll try to do Mitchell one better. Here’s a run-down of the catch-phrases he cites along with my own interpretations:

  • “…support advanced manufacturing” — because the government is adept at picking winners with taxpayer money, like Solyndra. Does “advanced manufacturing” involve politically-favored outputs, as opposed to market-favored outputs? Does it involve robots, or workers? Is it somehow preferable to “advanced services”?
  • “a lot of urgent and important work to do” — there oughtta’ be more laws;
  • “go out and make that happen” — we must impose the heavy hand of the state;
  • “enormous capacity for clean energy production” — …if only we can provide our cronies with enough subsidies on your dime;
  • “if we do it together” — …kumbaya; we’ll wreck the private economy together;
  • “things that your government could do” — like, wreck everything;
  • “I will have your back every single day” — …with a sharp knife, in case it’s in my interest to betray you;
  • “make our economy work for everyone” — we’ll redistribute your wealth;
  • “restore fairness to our economy” — be prepared to share your success;
  • “go to bat for working families” — …by punishing your employer; but look, we have freebies!
  • “pass the biggest investment” — mandatory campaign promise;
  • “modernizing our roads, our bridges” — shovel-ready” projects;
  • “help cities like Detroit and Flint” — redistribute resources to poorly-governed communities and impose federal oversight;
  • “repair schools and failing water systems” — because local needs and the federal government are a perfect match;
  • “we should be ambitious” — about government domination;
  • “connect every household in America to broadband” — even if they don’t want it, and even if they’ve chosen to live in the badlands; at your cost, of course;
  • “build a cleaner, more resilient power grid” — reduce carbon emissions by inflating your utility bill; dismantle markets and direct energy resources centrally;
  • “creating an infrastructure bank” — we need another big federal agency, extending control and conjuring opportunities for cronyism and graft;
  • “we’re going to invest $10 billion” — Whew! I thought you were going to say $100 billion. But… can you define “investment”?
  • “bring business, government, and communities together” — …we’ll be as one at the federal level;
  • “fight to make college tuition-free” — so that even the least qualified have a strong incentive to enroll, on your dime;
  • “liberate millions of people who already have student debt” — because meeting the terms of a contract is a form of enslavement;
  • “support high-quality union training programs” — with federal subsidies on your dime; non-union training programs would be so …exploitative;
  • “We will do more” — …cause we’re from the government, and we’re here to help!
  • “Investments at home” — Invest? Can you define that? Do you mean “spend”?
  • “we need to make it fairer” — … by redistributing your income to others;
  • “we will fight for a more progressive…tax code” — reduce those ugly private work incentives and quash the bourgeois tendency to save and invest in physical capital;
  • “pay a new exit tax” — don’t get the idea it’s YOUR company; you didn’t build that;
  • “Wall Street, corporations, and the super-rich, should finally pay their fair share” –because the highest corporate tax rate in the industrialized world is not high enough, and besides, we can pass the booty back to elites in myriad ways, as long as they give to the Clinton Foundation;
  • “I support the so-called ‘Buffett Rule'” — …to quench the thirst of class warriors;
  • “add a new tax on multi-millionaires” — we must tax wealth because a high income tax rate just isn’t enough to encourage capital flight;
  • “close the carried interest loophole” — cause we think that loophole actually exists, and hey, it sounds good to class warriors;
  • “I want to invest” — Invest? Can you define that? Do you mean “spend”?
  • “affordable childcare available to all Americans” — …so that no parent need pay any attention to price; but your tax credit will diminish if you earn extra income, so don’t earn too much, for God’s sake!
  • “Paid family leave” — …because it isn’t expensive enough to hire you already;
  • “Raising the federal minimum wage” — … so the least skilled will be jobless and dependent on the state;
  • “expanding Social Security” — …so what if it’s already insolvent? Oh, you must mean “expanding” payroll taxes!!
  • “strengthening unions” — …because we mean to kill the sharing economy, and it isn’t expensive enough to hire you already;
  • “improve the Affordable Care Act” — if it’s broke, break it more thoroughly;
  • “a public option health insurance plan” — …shhh… don’t say single payer!
  • “build a new future with clean energy” — in our judgement, your inflated utility bills will help all mankind; besides, we want to take control, and wreck something.
  • Bonus: “wage equality once and for all” — because it should be illegal for employers to pay based on occupational risk, demands for paid leave and flexible hours, skill differentials and available supplies.

Lest you think my interpretation of that bonus quotation is unfair, remember: the so-called gender wage gap is almost entirely explained by the factors I’ve listed.

Hillary Clinton’s economic view is straight out of the statist theater of the absurd. Joseph Stiglitz, one of Hillary’s economic advisors, in 2007 endorsed Venezuelan socialism under Hugo Chavez, which proved to be disastrous. Was she forced to the left by Bernie Sanders? To some extent, perhaps. But Peter Suderman notes that Clinton’s current policy agenda constitutes a thorough rejection of Bill Clinton’s economic policies. The irony!

Hillary’s “Fix”: Obamacare Squared

26 Wednesday Oct 2016

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One of Hillary Clinton’s “public positions” is that Obamacare needs a few “fixes”, a considerable understatement. Meanwhile, Wikileaks has revealed that she has “privately” rooted for the failure of Obamacare. For that reason, Bill Clinton’s recent slip-up, in which he portrayed Obamacare as a “crazy” system, had a certain Freudian quality. Indeed, Obamacare looks crazier every year, especially in the middle of premium-hike season.

One of Hillary’s so-called “fixes” is the creation of a “public option”, or health insurance offered by the government to compete on exchanges with private insurance. Private health insurers, with the expiration of the so-called “risk corridors”, do not have continuing access to the public purse to cover their losses; going forward, they must price coverage at rates covering the cost of their respective risk pools. The government, on the other hand, is likely to have pricing flexibility. If exercised, there will be little hope for private insurers to “compete” without bailout money. Health insurance coverage, then, is likely to devolve into a single-payer monopoly, and control over health care delivery will be increasingly monopolized as well.

Sally Pipes says the “public option” is a politically attractive way to make a single-payer system inevitable:

“But progressives face the same problem pushing single-payer they always have — the public won’t stand for it. So they’re dusting off an old idea that will get them to single-payer without using those words.“

So the path from Obamacare to a single-payer system is likely to involve a public option in one form or another. John C. Goodman points out that expanding Medicaid is one way to create a broad public option. Medicaid reimbursement rates are low, however, which is why many doctors refuse to accept patients with Medicaid coverage. Such might be the quality of future coverage under an “affordable” public option. And if Medicaid is enhanced so as to appeal to middle class families, it will be correspondingly more expensive. But for whom? More than likely, the tab will be paid by a combination of insureds and taxpayers. And more than likely, the number of competing Medicaid plans (most of which are now privately offered and managed (e.g., Centene Corporation)) will dwindle.

Christopher Jacobs says that when Obamacare became law, health insurers had every expectation that they’d be bailed out by the government indefinitely. Continuing reimbursement for losses was never guaranteed, however. The pressure to backstop the insurers’ profitability will be stronger as the debate over “fixing” Obamacare advances. But as Jacobs warns, ongoing bailouts mean that these insurers are essentially controlled by the government. The private insurers would essentially become heavily-regulated entities managing the operational details of a de facto single-payer system.

So, there are three distinct possibilities under a Hillary Clinton presidency, assuming she can get any of them though Congress: 1) a public option with no private bailouts; 2) a public option with ongoing bailouts; and 3) no public option with ongoing bailouts. Ultimately, all of these scenarios are likely to devolve toward a de facto single-payer system. So we will have monopoly, central control of health care, and/or bailouts. Who was it that said government is the way we wreck things together?

Hillary has some other “fixes” in mind. Some of these involve more regulation of coverage and pricing, such as mandatory provision of three free “sick” visits with a provider each year and in-network pricing for emergency procedures. These steps will add to the cost burden on private insurers.

Regulating drug companies more heavily is another favorite Hillary Clinton theme, but regulation is perhaps the primary reason why the drug development process is so lengthy and costly. The theory that government will be more effective at negotiating drug prices than insurers is suspect. Outright price regulation is likely to mean reduced availability of various medicines. Patent reform and an expedited drug approval process would be a more effective approach to reducing drug prices.

Clinton has also proposed a tax credit for out-of-pocket health care costs exceeding 5% of income. We’ll need higher tax rates, lower deductions and credits elsewhere, or higher deficits to pay for this one.

Finally, Hillary wants to expand eligibility for Medicare to anyone 55 and older, but as Goodman explains, the kind of Medicare Advantage plans that would be made available to “near seniors” under this proposal are similar to those already offered by private insurers, and at lower cost, and premia for these plans are often payable with pre-tax dollars, or the buyers may be eligible for tax subsidies. This proposal might sound appealing, but it is unlikely to accomplish anything except to create more administrative overhead, regulation and diminish existing offerings.

Obamacare has injected a high degree of central planning into the health care system with disastrous results. It has fallen far short of its own objectives for reducing the number of uninsured, “bending the cost curve” downward, and avoiding disruptions to existing coverage and patient-doctor relationships. Choices have narrowed in terms of coverage options and within networks. Obamacare has imposed unnecessary costs on providers and encouraged a monopolization of health care delivery, hardly a prescription for affordability. And Obamacare has proven to be a budget buster, contrary to the advance hype from its proponents.

I remember standing in a pharmacy shortly after Obamacare was enacted, and I heard a sharp-voiced leftist telling a clerk that Obamacare was just a bridge to single-payer health care. I tried to mind my own business, thinking it unproductive to engage such an individual in public. This fellow was quite pleased with the clever deception that was Obamacare. It was never a secret that the progressive left hoped single-payer would be the ultimate outcome, but it’s interesting to witness their discomfort with the way things are unfolding. Surely they must have known that if “fixes” were necessary, something would have to be broken. Perhaps they thought the politics would get simpler, but the shortcomings of the health care law have inflicted too much pain and shame.

I’m tempted to say that the health care system can be improved only by doing precisely the opposite of everything Clinton has proposed. There’s some truth in that, but it’s not quite that simple. The path to better and more affordable health care is to end the dominant role of third-party payers, placing responsibility on price-sensitive consumers, allowing a variety of choices in coverage, ending tax preferences, reducing regulation and encouraging real competition in the markets for coverage and medical care. Reform of the patent system could introduce more competition to markets for pharmaceuticals. The Medicaid system will have to be relied upon to cover those who otherwise can’t be insured at affordable rates. Proposals for federal funding of Medicaid through block grants to the states is an avenue for achieving greater efficiency and better health care outcomes.

Hillary Clinton’s “fixes” are all likely to exacerbate the worst failings of Obamacare for consumer-patients and taxpayers. More federal spending commitments will not solve the structural problems embedded in the health care law. It will magnify them. The hope among the progressive left remains that single-payer health care will evolve out of the Obamacare system once it is “fixed”. And what will we get? More complete monopolies in coverage and care, higher prices, central regulation, narrowed choice, waiting lists, denial of care, and some combination of higher taxes and deficits. In other words, a more radical version of Obamacare.

A Land Under The Rule of Hillary

20 Thursday Oct 2016

Posted by in Corruption

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I just had to laugh when I saw a progressive cite “the rule of law” as a compelling reason to vote for Hillary Clinton. First, while she might not be a policy clone of Barack Obama, you can bet that she’ll take a similarly dismissive view of Constitutional principles, subjugating our governing framework to her own brand of executive authority whenever and wherever possible. The rule of law hasn’t stopped the Clintons from proving their cronyist bona fides, using positions of power to reward friends, foundation contributors, and to accumulate personal wealth. The Clinton’s are inveterate liars, having misled the American public on numerous occasions, as well as Congress. In 1996, New York Times writer William Safire called Hillary Clinton a “congenital liar“. The Clinton’s are also vindictive: they have done their level best to destroy the reputations of various enemies over the years, and there is widespread suspicion that much dirtier deeds have been perpetrated in order to protect their interests.

Foundation of Graft

I quote here the opening paragraph of a July post on Sacred Cow Chips entitled “Clinton Foundation Domain of Darkness“:

“Hillary Clinton provides a fascinating case study in the art of graft, and the Clinton Foundation provides her with brilliant cover. The foundation masquerades as a legitimate charity, avoids taxes, and it provides a vehicle for what’s known as ‘pay-to-play’ influence-buying. It appears that Bill Clinton made a lucrative career of this while his wife was serving in public office. It was a sensitive issue when Hillary Clinton was Secretary of State, given the potential for compromising national objectives. It is still sensitive in view of the many gifts to the Clinton Foundation provided by foreign entities, not to mention the handsome speaking fees paid by foreign entities to the Clintons.“

Now we know, thanks to Wikileaks, that certain Clinton Foundation (CF) contributors and “Friends of Bill” (FOBs) were given priority access to Hillary Clinton and other senior State Department officials.

The next few paragraphs contain information described more fully at the first link above. The first point is the Clinton’s cozy relationship with Russian interests. CF accepted contributions from individuals hoping to arrange a large deal giving Uranium One, a Russian company, control of one-fifth of all uranium production capacity in the U.S., a deal that Hillary Clinton’s State Department had to approve. Sounds like pay-for-play to me!

Also noteworthy is the relationship between CF and Laureate International Universities and Walden University Online, which have been accused of scamming earnest students. CF received substantial donations from Laureate‘s chairman, and Bill Clinton received millions as honorary chancellor of Laureate. In turn, Laureate received millions in State Department grants.

The devastating earthquake that struck Haiti in 2010 provided another avenue through which the Clinton’s were able to enrich their cronies. The complicated web of relationships included CF ties to organizations that received State Department funding. Here is Dinesh D’Souza:

“… a number of companies that received contracts in Haiti happened to be entities that made large donations to the Clinton Foundation. The Haitian contracts appeared less tailored to the needs of Haiti than to the needs of the companies that were performing the services. In sum, Haitian deals appeared to be a quid pro quo for filling the coffers of the Clintons.“

Gifts from foreign governments to CF are clearly red flags of potential influence buying. Many of the donors were Middle Eastern governments eager to acquire weapons from the U.S.  Hillary Clinton’s State Department, once again, was in a position to help them. Via Wikileaks, we know that Clinton’s campaign has been accepting contributions from lobbyists representing these governments. The Huffington Post‘s Senior Politics Editor, Sam Stein, says that Qatar’s $1 million birthday gift to Bill Clinton “confirms sort of the worst portraits of the Clintons and how they operated out of office.” What other favors could a Clinton presidency make possible?

As a charity, CF performs poorly, with less than 6% of its 2014 spending going to actual charitable causes, contrary to Hillary Clinton’s claims that 90% went to charity. The last link provides the following quote from The Federalist regarding historical totals from CF:

“The Clinton Foundation’s three largest charitable ‘program service accomplishments,’ according to its tax reports, are the Clinton Global Initiative ($23.2 million), the Clinton Presidential Library ($12.3 million), and the Clinton Climate Initiative ($8.3 million).”

The article also quotes Ira Magaziner, once among the top executives at CF:

“This is not charity. The whole thing is bankable. It’s a commercial proposition.”

The Vengeful Touch

The Clinton’s have a reputation for being vindictive and for being fairly ruthless in dealing with those who cross them. Here is a story on a Clinton request to discredit Congressman Trey Gowdy, who was looking into her deleted emails:

“Jennifer Palmieri, director of communications for the 2016 Hillary Clinton campaign, wrote an e-mail to staff where she says, ‘HRC asked me what offense we could do today to set up Gowdy for Face The Nation tomorrow.’“

This story about a detailed list of Hillary Clinton’s enemies is instructive. Apparently, Claire McCaskill and John Kerry were at the top of the list after the 2008 presidential campaign.

Hillary is also known to be extremely ill-tempered. Check out this account of Hillary Clinton’s post-townhall tirade against moderator Matt Lauer, according to a female NBC producer and a cameraman. Hillary was enraged because Lauer had asked a pointed question about her private email server and her handling of classified documents, a question that did not appear on the pre-approved list provided to her in advance of the townhall. She threw a profanity-laced tantrum upon leaving the stage, according to these accounts. She promised to have Lauer fired threw a glass of water into the face of an assistant, and finally delivered an arguably racist insult to DNC Chair Donna Brazile’s face.

There are many accounts of Hillary Clinton’s abusive behavior toward staff, both at the White House during her tenure as First Lady and later at the State Department. Here is the latest, from an FBI summary of an interview with one of its own security officials:

“CLINTON’s treatment of the DS [diplomatic security] agents assigned to protect her was so contemptuous that many of them sought reassignment or employment elsewhere. …by the end of CLINTON’s tenure, [her protective detail] was staffed largely with new agents because it was difficult to find senior agents willing to work for her.”

The FBI’s summary of the interview also describes Clinton’s routine violation of standard security protocols.

It’s long been rumored that the Clinton’s have dealt quite harshly with enemies who pose legal threats. The number of mysterious deaths of individuals who were apparently dangerous to the Clintons could be a series of strange coincidences. However, the laws of probability don’t provide strong support for that theory. Perhaps many of the deceased individuals were involved in other dangerous activities, but that would not reflect well on the Clintons, either. There are web sites that keep track of the Clinton “body count”. Left-leaning sites such as Snopes.com routinely label that scorekeeping as pure speculation and false, but often do so even before investigations are complete. Three recent deaths, discussed here, involved individuals believed to have information damaging to the DNC and/or the Clintons.

Security and the Email Imbroglio

Hillary Clinton’s careless and criminal email practices should convince any American that she is unfit for the job of President. Her efforts to obstruct the investigation into those practices are nothing short of spectacular, and are themselves worthy of prosecution. It’s even more appalling and corrupt that she has Obama’s Justice Department and FBI Director James Comey in the tank, so prosecution is unlikely to proceed without extraordinary developments. Fortunately, Wikileaks and FOIA requests have uncovered some of the deleted emails. It’s also clear that the FBI is in a state of internal revolt over the questionable handling of the email investigation and Comey’s ultimate refusal to recommend prosecution. The revolt could lead to additional revelations having major consequences for Clinton, Comey and others inside the government.

Austin Bay condenses Clinton’s email scandal into a “Three-Headed Crime” and highlights the bastardized way in which Comey managed to compromise his agency:

  • The Server Head: the “rogue email server … that she controlled. … designed to evade laws regulating the retention of government documents and thus evade scrutiny and accountability.“
  • The Loose Lips Head: “Hillary used her off-the-books and non-secure server system to transmit and analyze classified national security information ….“
  • The Nixon Head: “Hillary and her aides tried to hide evidence the rogue server existed and evidence they routinely mishandled of classified information.“

The email scandal came to light as a result of the Administration’s response to the terrorist attack on an American diplomatic compound in Benghazi, Libya. Here is Bay:

“The House of Representatives began investigating the Benghazi attack and questioning the Obama Administration’s Great Benghazi Lie. Testimony wasn’t the only issue. The House had subpoena power. Providing inquisitive representatives and senators with Hillary’s Benghazi-related communications would expose the rogue email operation. Better start destroying evidence.“

Bay notes that even Jonathan Turley, who had originally defended Comey’s decision not to refer the email case for prosecution, changed his mind as more details came to light. Apparently, the revelation that the Justice Department gave “immunity to the parties on both ends of those communications” struck Turley as a tactic wholly unsuitable for a serious investigation. He doesn’t quite say that Comey or the DOJ were acting on Hillary’s behalf, but the case certainly gives that appearance.

The Press In Her Pocket

My attempt to get a fix on the suspicious history and current state of the Clinton’s and their gang of operatives relies, to some extent, on nontraditional news sources. The mainstream media is willing to ignore Hillary Clinton’s many transgressions, with almost no mention of the latest Wikileaks dumps, FBI document releases, and other documented Clinton indiscretions. Kimberley Strassel is correct in saying that this is in no small part Donald Trump’s fault, as he manages to create a circus of distractions on an almost daily basis. Here is her conclusion:

“Mrs. Clinton has been exposed to have no core, to be someone who constantly changes her position to maximize political gain. Leaked speeches prove that she has two positions (public and private) on banks; two positions on the wealthy; two positions on borders; two positions on energy. Her team had endless discussions about what positions she should adopt to appease ‘the Red Army’—i.e. ‘the base of the Democratic Party.’

Voters might not know any of this, because while both presidential candidates have plenty to answer for, the press has focused solely on taking out Mr. Trump. And the press is doing a diligent job of it.“

It’s ironic that the press takes so little interest in the Clinton misadventures. Or rather, the truth is that many in the press intentionally omit reporting of these issues. That helps to maintain a solid base of low-information voters in Hillary’s thrall, under the misapprehension that she has any respect for the rule of law.

Saving Social Security

14 Friday Oct 2016

Posted by in Privatization, Social Security

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Social Security benefit levels are anything but sure for current workers, given the likelihood of benefit cuts to preserve the long-term solvency of the system. In fact, even without those cuts, Social Security provides very poor yields for retirees on their lifetime contributions. Instead of a tradeoff between risk and return, the system offers bad outcomes along both dimensions: lousy benefit levels that are not at all “safe”.

To get a clear sense of just how bad the returns on Social Security contributions (i.e., FICA tax deductions) truly are, take a look at this Sacred Cow Chips post from late 2015: “Stock Crash At Retirement? Still Better Than Social Security“. According to the Social Security Administration’s own calculations, without any future changes in the program, a retiree can expect to get back 1 to 4 times their lifetime contributions (obviously, this is not discounted). If you think that’s acceptable, consider a real alternative:

“Suppose you are given an option to invest your FICA taxes (and your employer’s [FICA] contributions) over your working life in a stock market index fund. After 40 years or so, based on historical returns, you’ll have stashed away about 12 – 18 times your total contributions (that range is conservative — 40 years through 2014 would have yielded 19x contributions). A horrible preretirement crash might leave you with half that much.“

Allowing workers to self-direct their contributions over a lengthy working life, whether they invest in equities, government bonds, or other assets, holds much more promise  as a way to provide for their retirement needs.

As for risk, projected benefit levels are worse when possible program changes are considered. It’s widely accepted that changes must be made to the way contributions by current workers are handled and how future benefits are determined, or else the system’s value to them will be a greatly diminished. The Social Security Trust Fund, which once funded government deficits via FICA surpluses over benefit disbursements (while the demographics of the labor force allowed), has dwindled, and it has never been invested to earn the returns necessary for long-term solvency. Shall today’s workers face later eligibility? Reduced benefit levels? Or both? Or can we face up to the reality that workers will do better by choosing the way their funds are invested?

The contributions of today’s workers are paid out directly to current retirees. This practice must be modified, but the nation still faces a large and immediate liability to current retirees. How will it be paid if the system is overhauled to allow self-directed investment alternatives? Current workers must pay for some portion of that liability, but that portion could be phased out over several decades. The transition, however, would initially require additional taxes, borrowing, or voluntary conversion by some retirees to a discounted cash-balance equivalent, much as most private sector defined-benefit pensions have been converted to cash-balance equivalents.

Ultimately, workers should benefit from their own individual contributions. One objection is that self-directied investments and “privatization” of one’s own contributions would cause the system to lose its function as social insurance. Recall, however, that eligibility for benefits requires contributions, so it is not a general program of assistance. Nevertheless, there are several ways in which Social Security fulfills an insurance function. In a strong sense, it provides insurance against the risk of failure to save for retirement. More fundamentally, disabled workers can qualify for benefits, and the dependents of a deceased contributor are also eligible (survivors’ benefits). In addition, the current system provides greater returns to individuals with relatively low contributions. Under self-direction, these features could be retained via minor redistributional elements applied to investment returns, particularly given the superior returns available to equities over periods of sufficient length.

When U.S. politicians discuss the future of Social Security, they usually say they’ll fight against the dark intent of those who wish to take away hard-earned benefits from seniors. This despite the fact that few (if any) observers have suggested cutting benefits for current retirees, or even for those now approaching eligibility. The self-righteous proclamations about protecting retirees are a dodge that avoids the need to take a position on dealing with the system’s insolvency. But an easy answer is available: reform the system by allowing workers to self-direct their contributions into more promising investment vehicles.