Category: public policy

Hey Joe, Hey Joe … Reverse the Trump Tariffs

tomkapostasy1 Comment

There are few policy choices that have 90-95% positive results compared with 5-10% negative results. Cutting international trade tariffs is one of those “rare birds”.

President Trump “delivered” on his 2016 campaign promises regarding trade deals. He unilaterally increased tariffs on imported aluminum, steel and manufactured goods from China and the rest of the world, including our trade and military allies. As with most “trade killers” (which used to be a minority Democratic party position), he claimed that this would save or restore American jobs. As usual, it had no measurable positive effect. He also claimed that this would lead to a renaissance in American manufacturing. Didn’t happen. He claimed that these actions would make America more self-sufficient in critical military and economic areas. Didn’t happen. Note pandemic issues. Finally, he claimed that these actions would form the basis for “new and improved” trade deals to replace the “awful” deals negotiated by Democrats and Republicans alike for 70 years in the post- WWII era. NAFTA 2 was concluded with minor changes. Small China commitments were obtained to buy things China wanted to buy. But, mostly the response was “HUGE” retaliatory tariffs from China and our allies.

https://en.wikipedia.org/wiki/Trump_tariffs

https://www.npr.org/2021/11/27/1054293073/whiskey-distilleries-europe-tariffs-lift

The “root cause” of the failed results in this situation, and in most other trade fights, is a logical / intellectual error. Proponents of trade restrictions believe that bilateral trade negotiations are a simple “win/lose” game. A real estate deal is a simple “win/lose” game. Bilateral trade deals are more complex. There are many winners and losers in both countries, some direct and some indirect. Higher tariffs or trade restrictions benefit the importing country’s manufacturers and their employees. However, these tariffs typically result in much higher prices for the importing country’s consumers, so the net effect for the importing country is negative. Unfortunately, bilateral trade deals or actions often don’t even help the importing country’s producers. Whatever country is “next most” competitive takes the place of the target country which has been made less competitive by the new tariffs. In the case where a country holds a large share of the global market, neither the “next best” country, nor the domestic producers benefit. The “target” country has such a strong competitive, cost, price advantage that even with added tariffs they are the preferred supplier. This is a very disappointing result for those who wish to take direct action to “save jobs”, but global markets truly matter.

Did Trump’s tariffs benefit American workers and national security?

Columnists, journalists and politicians say that Joe can’t reverse the tariffs for political reasons. The American voting public is too unsophisticated to understand complex trade logic. Given Trump’s framing of his actions, this will look like a capitulation to China. The progressive left doesn’t believe in “free” international trade, which undercuts worker’s pay and the environment. American “labor” is a required part of the Democratic Party coalition and opposes “free” trade. Consumers do not link tariffs to goods inflation. American business and agriculture are fully committed to the Republican Party, so will not repay beneficial actions.

https://www.cnbc.com/2021/11/30/removing-us-china-trade-tariffs-would-ease-inflation-jacob-lew.html

https://www.cnn.com/2021/10/03/politics/global-supply-chain-collapse-biden-tariffs/index.html

The American people elect leaders (of either party) to lead. Step up. The benefits of “free trade” are well known, well documented and supported by 90% of professional economists of both parties. Assign Kamala Harris, Pette Buttigieg and Jared Kushner (just kidding) to develop the communications plan for this policy decision.

The American People Benefit Directly: Taxes, Inflation and Jobs

Tariffs are simply taxes with a longer name. Exporters pay a small share, less than one-third of the total. Importing firms pay a slightly larger share, again less than one-third of the total. Consumers typically pay more than one-half of the tariffs in the form of higher prices. This is a tax, plain and simple. Estimates of the taxes paid by Americans for the Trump Tariffs range from $50-80B.

Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions

https://www.americanactionforum.org/research/the-total-cost-of-tariffs/

Tariffs provide importers with an excuse, reason, justification to increase prices. This is contributing to the current round of inflation at a level last seen in the 1980s. American consumers are paying $700 annually for these taxes.

https://www.cnn.com/2021/03/24/politics/china-tariffs-biden-policy/index.html

Tariffs are imposed to “save jobs”, but the “indirect” impact is usually larger than the “direct” impact. Domestic manufacturers who use imported products find their costs to be higher and some become uncompetitive. Domestic retailers who now sell more expensive products find their sales lower and reduce their work force accordingly. Target countries impose retaliatory tariffs on domestic export products. This is the main source of job losses. The Trump Tariffs are estimated to have cost Americans 250,000 jobs.

Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions

https://carnegieendowment.org/chinafinancialmarkets/83746

https://www.cnn.com/2021/03/24/politics/china-tariffs-biden-policy/index.html

Make American Businesses More Competitive Globally

American businesses pay one-fifth to one-third of the $80B of annual tariffs imposed. This drops straight to the bottom-line. Reduced profits result in reduced capital investments, R&D, product innovation and new markets.

Tariff administration has an overhead cost and it distracts supply chain, logistics and international trade staff from higher value added work.

Tariffs require profit-maximizing firms to accelerate their consideration of import sourcing and domestic production options. Some of this has a minor impact. Some of this activity displaces other higher value-added sourcing projects.

One estimate indicated that 8% of stock market value was destroyed by the Trump Tariffs.

https://www.forbes.com/sites/stuartanderson/2021/05/20/trumps-tariffs-were-much-more-damaging-than-thought/?sh=527605ba65bd

Sharply higher tariffs disrupt existing supply chain relationships and remove some sources as economically feasible sources. In a time of supply chain challenges, tariff make a bad situation even worse.

Farmers were most negatively impacted by the Trump Tariffs. Trump provided temporary subsidies to offset some of the pain, but farmers complained that they were seeing decades old trade lanes being permanently disrupted. Reduced tariffs and reduced retaliatory tariffs might restore these natural trade lanes.

https://www.npr.org/2021/11/27/1054293073/whiskey-distilleries-europe-tariffs-lift

Resume American Trade Leadership that Benefits America

Revert to the 70 year bipartisan American “free trade” strategy that delivered tremendous value for the US and the world. US exports tripled from 4% of GDP in 1955 to 12% in 2007 forward.

https://fred.stlouisfed.org/series/B020RE1Q156NBEA

Restore positive relationships with our historic trading partners.

Re-engage in leadership at the World Trade Organization (WTO) and regional agreements like the Asian Pacific Trade Agreement to establish beneficial trade rules for services and intellectual property.

Conclusion

Reversing the Trump Tariffs can create 250,000 jobs, reverse an $80B consumer tax increase, help American manufacturers and farmers to compete globally, improve supply chain performance, and help the U.S. to craft international trade deals that greatly benefit a country that mostly provides “world class” services.

Are You Better Off? Yes, Today, November, 2021.

tomkapostasy1 Comment

Ronald Reagan skewered Jimmy Carter with this taunt in the 1980 presidential debate. Joe Biden’s approval rating is falling quickly in recent months. US voters need to assess the true state of the US economy under Biden’s leadership after 2 years of a global pandemic, last seen in 1918.

Real Disposable Personal Income Per Capita

Real, inflation adjusted income per person continues to rise. In 2000, average income was just $33,000 per year. It rises quite significantly to $38,000 in booming 2007-10. It remains at this level through 2013. This is a 15% increase over 13 years, a little better than 1% per year. The economy adds another $6,000 in the next 7 years before the pandemic. That’s growth twice as fast, 2% per year during this boom time. Real income has grown another $2,000 to $47,000 in the last 2 years, 2% annually, after the pandemic. Very good news.

Employed Persons

US employment was typically 130M from 2000-2012. Great growth occurred from 2012 to 2020, reaching an unprecedented 152M. The pandemic dropped employment to 130M, an incredible 22M lower. Employment quickly rebounded about half-way to 142M during 2020. It has grown by another 6M in the last year. The employment growth from 2010-20 averaged 2M per year. The 2021 record is a very strong performance, reflecting a healthy economy that has robustly adapted to the challenges of a pandemic environment.

Unemployment Rate

Unemployment averaged about 5% during the first decade of the century, a generally good result compared with 20th century history. It doubled to 10% during the “Great Recession” and then slowly declined to 5% by 2015 and then even further, exceeding economists’ expectations, to 3% in 2018-2020. The pandemic rocketed it up to 15%, but it quickly recovered to 7%. It has since declined to less than 5%, which has historically been the typical definition of “full employment”.

Job Quits

From 2000-2008, about 2% of employees voluntarily left their positions in any given month. The quit rate dropped to 1.5% in the aftermath of the “Great Recession” (2010-13). It very slowly recovered to 2.2% during 2016-18. It increased a little bit to 2.3% in 2019-2020. It rebounded to 2.3% in 2020, and has since increased to an unprecedented 3%. This reflects a labor market where 50% more employees are making a voluntary choice to leave their current employer, apparently confident that they can find an equal or better position.

Job Openings

Job openings averaged 4M from 2000-2014. Openings fell to 3M in 2010-12 after the “Great Recession”. Job openings then grew to 6M in 2017-18 and further to 7M in 2019-20. Job openings quickly returned to 7M early in the pandemic and then began their climb to the current 11M level. Again, these are unprecedented levels, twice as many open jobs as in any time from 2000-15.

Unemployed Persons Per Job Opening

The 2006-7 baseline was 1.5 unemployed persons per open position. The “Great Recession” peak was 6 to 1, an incredibly different labor market, where many older people “retired”; new college graduates went to graduate school, accepted lower positions or remained unemployed; and mid-career professionals accepted positions at 20% lower salary levels. It took 5 years to return to the typical 1.5/1 ratio. This ratio declined a little bit further to 1/1 during 2017-2020 in a tight labor market. The ratio very quickly returned to the historical 1.5 baseline during 2020. It is now at an unprecedented 0.8/1 level. Fewer unemployed people than jobs, not 1.5 to 1, but 0.75/1, half as many potential applicants. This is the first “employees” labor market since the 1960’s.

Home Values

The US Home Price Index was set to 100 in 2000. It increased to 180 during 2005-7. It dropped back to 140 in 2010-13, indicating that part of the rise before “the Great Recession” was a bubble. Prices climbed steadily from 140 to 210 (50% increase) from 2013 to 2020. Despite the pandemic, house prices have continued their climb, exceeding 260, another 25% increase in the last 2 years.

Mortgage Interest Rates

Mortgage interest rates averaged 8% during the 1990’s. They averaged 7% in the 2000’s. They declined even further to 4% during the 2010’s. They fell even further to 3% in 2020-21. The interest cost to finance a house is at an all-time low.

Stock Market

The US stock market averaged 16,000 points from 2014-16. It increased by 50% to 24,000 in 2018, and then climbed to 26,000 and 28,000 before the 2020 pandemic crash. Despite the real financial costs of the pandemic, the market quickly rebounded to 25,000 in the middle of 2020. It has since continued its climb to 36,000, 20% above the pre-pandemic level.

In 1992 James Carville claimed that “it’s the economy, stupid”.

https://en.wikipedia.org/wiki/It%27s_the_economy,_stupid

If so, voters should provide some support to president Biden’s results. Real income is up 2% annually, a record level. Reduction in number of unemployed is 6M in 1 year, another record. Unemployment rate is at 4.6%, below historical “full employment” level. Voluntary quit rate is 50% higher than history, indicating tremendous worker confidence. Nearly twice as many job openings as the historical level, providing great options for job seekers to find their “best” opportunities. Mortgage interest rates remain at historical lows, supporting home purchases. House values have grown by another 25%. The stock market is 20% higher.

This is all at a time when the pandemic unfortunately continues to claim lives and greatly disrupt life and the economy. Overall, the recovery is proceeding at a rate far faster what anyone thought was possible during 2020.

Welfare Benefits: Order of Magnitude

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“Typical welfare family”, a single parent and 2 children (cue the video), receives $35,000 of welfare benefits annually claims the Wisconsin congressman in 2014. That number has stuck in our minds, just like the “welfare queen” and escaped prisoner “Willie Horton”.

https://www.washingtonpost.com/news/fact-checker/wp/2014/12/05/grothman-single-parents-welfare/

Fact checkers debunked this claim, but it’s important to work through the details to get back to a reasonable “order of magnitude” estimate of “welfare benefits”.

If a family has ZERO income, they may receive maximum benefits. The Clinton “welfare reforms” limited the primary benefits to a total of 60 months. Families cannot receive benefits “forever”. Most household heads do work and have some income during the year. The maximum benefit number is an inappropriate “anchor”.

Temporary Assistance for Needy Families (TANF) (welfare) participation rates have fallen from 80% of those eligible to less than 25% since “reform” was implemented. The reform has had it’s intended effect. Two-thirds of those previously participating no longer do so. Some have become more productive and income earning members of society. Others “make do”.

Click to access what_was_the_tanf_participation_rate_in_2016_0.pdf

The percentage of families “in poverty” receiving welfare benefits has fallen from 68% to 23%.

https://www.cbpp.org/research/family-income-support/temporary-assistance-for-needy-families-tanf-at-25

Current average TANF benefits in my home state of Indiana are $346/month or $4,152. That’s a long way from $35,000 of cash benefits, which is the “anchor” that needs to be removed. $4,000 per year of cash is the typical Indiana welfare benefit. The maximum is $700/month or $8,400/year, twice as high. More kids, no income, still eligible. This is possible, but it’s not a useful reference point. The normal received benefit is just one-half of the maximum.

https://www.needhelppayingbills.com/html/indiana_cash_assistance.html

Supplemental Nutritional Assistance Program (SNAP of food stamps) is the next welfare program. For an Indiana family of 3, current benefit value is $6,240 per year. A family of 3 can earn up to $25,000 annually before benefits start to decline. The national ratio of SNAP to TANF recipients is 82%. In Indiana, just 75% of those eligible receive ANY SNAP benefits.

https://www.fns.usda.gov/usamap/2018#

https://www.in.gov/fssa/dfr/snap-food-assistance/about-snap/income/

Housing assistance is listed at $9,000. There are various federal and state programs. This is like “winning the lottery” for low income families. In Indiana, 1 in 8 eligible families (12%) receive housing subsidies. These average $736/month or $8,832 per year. On an “expected value” basis, this is only $1,060 per year. From a public policy point of view, this is the relevant number.

See pages 23-24.

Click to access the_work_versus_welfare_trade-off_2013_wp.pdf

Support has not increased materially since 2013.

https://www.pgpf.org/blog/2020/07/how-does-the-federal-government-support-housing-for-low-income-households

In the Wisconsin representative’s model, there is $7,000 of higher education benefits. This is clearly irrelevant to public policy. Individuals do not make ongoing annual work choices based on education benefits.

The Cato Institute started this “conversation” about “welfare versus work” in 1995 and updated their analysis in 2013.

Click to access the_work_versus_welfare_trade-off_2013_wp.pdf

Like the congressman, they note that the “welfare benefits” received are in “after-tax” dollars, so they “should” be translated back into pre-tax dollars to be “fair”. Since the marginal tax rate for low-income wage earners is often just 10%, this is immaterial. More importantly, the emotional, political currency is cash. “how much do THEY receive?” is THE question. This is an after-tax amount. No “grossing up” is required.

The Cato folks also include the full value of Medicaid benefits received by those below the eligible income transition. The value paid per child ($2,145) and per adult ($4,211) yields an $8,501 annual “benefit” currently. Is this a “welfare” benefit or a “citizen” benefit? The US health care system is primarily funded through tax-deductible employer plans. Medical plan subsidies are now available up to 400% of the federal poverty level. From a federal budget perspective, lowest income families receive more value. From an “incentive” perspective, low income families are generally indifferent between federal and employer sponsored plans. This $9,000 does not belong in “the cost of welfare”.

Medicaid Spending per Enrollee (Full or Partial Benefit)

The Cato analysis includes the cost of the “earned income tax credit” (EITC) as a welfare benefit. The EITC was created and enhanced as an incentive for unemployed persons to work and earn some income, thereby providing themselves with short-term and long-term benefits and reducing the cash level welfare benefits. It grows quickly with earned income up to about $18,000 and then falls back down nearly as quickly as income grows to $40,000 per year. This is not what most people think of as a “welfare benefit”.

https://en.wikipedia.org/wiki/Earned_income_tax_credit

The Cato analysis also focuses on welfare benefits versus the minimum wage, emphasizing that overly generous welfare benefits provide a disincentive for recipients to seek paid employment (ignoring the 60 month TANF benefits limit). As the effective minimum wage in 2021 approaches $15/hour and $31,200/year, we won’t be hearing this comparison again.

As a professional “cost accountant” since 1978, I was often asked to provide the “exact cost” of various products or services. College courses, residence hall rooms, food service meals, buildings for rent, account managers, computer hardware, installed cables, telephone services, computer maintenance, software development, dresses, tops, retail stores, extension cords, surge protectors, imported goods, cell phones, returned cell phones, etc. The answer is always “it depends”. This is never a popular answer. It depends on what decision you are making. Short-term, medium-term or long-term timeframe. Do we include opportunity costs? Which externalities should we consider, if any? Do we include strategic, brand or cultural consistency as factors?

For the “welfare benefits” question, I think that the relevant public policy/budget and personal incentive numbers are largely the same. Welfare/TANF and food stamps/SNAP matter. EITC, medicaid, education benefits, housing assistance, and income taxes don’t matter.

Welfare/TANF for an Indiana family of 3 is worth $4,152 annually. The complementary food stamp/SNAP benefits are worth $6,240. The total quasi-cash welfare payment is $10,392 per year of eligibility. Maximum of 5 years. This is the right “anchoring” number: $10,000 per year for a family of 3. They will be going to the local food pantry every week. They will be seeking family and private charity. They will be leaning on friends, relatives and neighbors for “subsidized” child care. They will be working and seeking to advance themselves.

There are disincentive challenges remaining in our current systems.

https://www.washingtonpost.com/news/fact-checker/wp/2014/12/05/grothman-single-parents-welfare/

But, these technical, marginal, incremental, opportunity rates are not the heart of the matter. Lower income families are not “optimizing” their benefits. I volunteered to provide low income/elderly federal income tax services for several years. The benefit and tax rules are complex beyond comprehension.

The core public policy question is “Is $10,000 of annual benefits a reasonable amount for our state to pay to a family of 3 with no income?”. I would argue that it is too low, half what it ought to be.

Support for a universal basic income (UBI) has grown in recent years, as the economy, productivity and equity returns have grown by 3% annually but wages have remained flat for 40-50 years in the US.

https://www.investopedia.com/news/history-of-universal-basic-income/

Typical welfare benefits at $10,000 are now irrelevant compared with $30,000 effective minimum wage.

The U.S. Senate: Unrepresentative

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The United States was founded as an aspirational representative democracy. No taxation without representation. One man, one vote. Yet, the Senate was created at the 1787 Constitutional Convention to equally represent the states in the federation, not to equally represent the citizens. This was a compromise between the small states and the large states.

How the Great Compromise and the Electoral College Affects Politics Today – HISTORY

The Unconstitutional Implications of the Two-Senator-Per-State Rule — Northwestern Undergraduate Law Journal (thenulj.org)

Distortions

Recent critics focus on the extent of the distortions favoring the citizens of small versus large population states.

California’s 39M residents have the same representation as Wyoming, Vermont, Alaska and North Dakota who each have three-quarters of one million residents. This is a larger than 50 to 1 advantage for these four states. The California-Wyoming ratio is 68X, meaning that California citizens have just 1.5% as much power as Wyoming citizens.

A majority of states comprised of the 26 with the lowest populations represent 18% of the population. In theory, they could combine to outvote the other 24 states with 82% of the population. States with 57M people have more power than states with 269M citizens. The “lucky duckies” in the small population states, on average, get more than 5 times as much power as those in the large population states.

Distorted democracy: Change the Constitution or the states to fix it (usatoday.com)

The 9 most populous states contain more than one-half of the US population, but get only 18% of the Senators. The other 41 states with less than half of the people get 82% of the Senators. The filibuster rules that allow 40% of Senators to block Senate action give 41 Senators representing 11% of the country a potential veto. The two-thirds requirement for constitutional amendments and treaties gives this power to 34 Senators representing 5% of the population.

Abolish the Senate (bestdemocracy.org)

The 50/50 Democratic/Republican split in the Senate shows Democrats representing 185M residents versus 143M for Republicans. Democrats represent 40M more people with the same number of Senators. They represent 29% more citizens each. If California (D) and Texas (R) are removed from the calculation, Democrats have 30M extra voters to represent for the same number of Senators.

Demographers estimate that the disproportionate influence of small states will increase further in the next 20 years. In 2040, the 15 largest states will have 30% of the Senators (power) and 70% of the population, while the 35 states with 30% of the population will have 70% of the power.

‘The Senate is broken’: system empowers white conservatives, threatening US democracy | US Senate | The Guardian

Who Benefits from the Small State Advantage?

Republicans tend to be more popular in small states. In the 30 least populous states, Republicans have 35 Senators versus 25 for the Democrats, a 10 seat advantage. In the 20 most populous states, Republicans have 16 Senators versus 24 for the Democrats, an 8 seat disadvantage (2018).

Small states are getting a much bigger say in who gets on the court | CNN Politics

Most statisticians estimate the Republican advantage in the Senate to be the equivalent of 3%.

The Senate is a much bigger problem than the Electoral College – Vox

In 1950-1960, the impact of small states was more evenly split between Republicans and Democrats. The benefit to Republicans grew through time.

‘The Senate is broken’: system empowers white conservatives, threatening US democracy | US Senate | The Guardian

The Senate Has Always Favored Smaller States. It Just Didn’t Help Republicans Until Now. | FiveThirtyEight

Historically, small population states (mostly rural) have taken advantage of their relative power advantage to gain proportionately more federal spending, military bases and employment (earmarks, committee chair advantages). They have looked out for the interests of their citizens with distinctive federal policies for agriculture, natural resources/oil, highways versus mass transit, gun control/gun rights, criminal justice views, etc.

Lower population states have lower levels of immigration, fewer non-English speaking residents, higher per capita health care spending, higher % households with student debt, lower poverty rates and higher % of home owners.

the-senate-is-an-irredeemable-institution.pdf (filesforprogress.org)

Various calculations indicate that minorities lose representation and power versus Whites. Non college grad whites +12% extra representation. Non college grad blacks -20%. Non college grad Hispanics -30%.

the-senate-is-an-irredeemable-institution.pdf (filesforprogress.org)

As Blacks make up 11% of the 26 least populated states, but 15% of the 24 most populated states, they are 25% underrepresented.

Distorted democracy: Change the Constitution or the states to fix it (usatoday.com)

One author estimates that Whites get 0.35 Senators per 1M population, while Blacks get 0.26/1M and Hispanics just 0.19/1M.

‘The Senate is broken’: system empowers white conservatives, threatening US democracy | US Senate | The Guardian

Another author says that rural residents get 37% extra say, Whites get 13% extra compared to the average voter while non-Whites get 22% less for a total 35% minority voter penalty.

The 2021 Senate Will be Unrepresentative | by Michael Ettlinger | Medium

Why is This Such a Hot Issue?

The Republican advantage is material and is likely to continue.

The country’s political parties are more clearly aligned on a single conservative-liberal dimension, making parties and voters more polarized and reducing the opportunity for compromises based on other dimensions.

Starting with Newt Gingrich, the Republican Party discovered the power of 100% party discipline in both the House and Senate, making trade-offs, compromises, deals and log rolling less likely.

While rural/urban differences have always existed in the US (Federalists vs Democratic Republicans, North/South, Farm populists), the alignment of cultural and economic interests with the 2 parties now reinforces these differences.

The electoral college includes a vote for each Senator, so distortions are reflected to a lesser, but material, extent in presidential contests. US Supreme Court nominees require Senate confirmation.

The White/minority power difference.

With a divided population, the legitimacy of government is threatened.

Not a Problem (Opposing Views)

US Congress has stood the test of time with its “checks and balances”, including the purposeful compromise between large and small population states.

In the long-run, the advantages to one political party have faded.

The Pareto Principle (80/20) rule applies to many calculations like these. The forecast 30% of people with 70% of votes is less distorted than 80/20.

The US was formed as a federation of states with equal rights, like the sovereignty rights of nation states.

Voters do get “equal representation” in the House.

Geography and property are valid dimensions of political power, with a right to be represented.

There are many dimensions to political power. Urban areas are over represented in the economy, universities, media and culture. This gives rural areas/citizens an opportunity to be heard.

Constitutional Amendment?

Article 5 states that “no state, without its consent, shall be deprived of its equal suffrage in the Senate”. Hence, some would argue that no amendment can change these voting rules. Perhaps unanimous consent of the original 13 states would be sufficient. If a regular amendment was possible, it would require the support of two-thirds of the Senators and three-fourths of the states. Realistically, any amendment would require the potential support of 40 states, with only 10 left behind. This would require support from a majority of Republican states and all Democratic states. A Constitutional Convention with all options on the table may be required to change the basic 2 Senators per state rule.

The Senate is a much bigger problem than the Electoral College – Vox

Potential Solutions

Replace House and Senate with a unicameral legislature.

Abolish the Senate (bestdemocracy.org)

Allow states with some high ratio of the smallest or average state to divide into 2 or 3 or more states. “Encourage”/incentivize states with less than 1% of national population to merge with another state. Start with California and Texas.

The United States Senate was explicitly designed to be undemocratic. (milforddailynews.com)

Assign a “bonus” Senator to states with a population greater than 3 times the average population.

Redraw the whole state map to reflect natural economic areas with population differences of no more than 5 to 1.

Assign Senators based on 1 per state plus 1 per population with 110 total Senate seats.

The Unconstitutional Implications of the Two-Senator-Per-State Rule — Northwestern Undergraduate Law Journal (thenulj.org)

Change Senate election rules to have both Senators from a state be elected in the same election. Allow 2 candidates per party. If 1st place winner does not win at least 52.5% of votes, choose second Senator from party with second highest vote total.

U.S. Senate has fewest split delegations since direct elections began | Pew Research Center

Add District of Columbia and Puerto Rico as states. Consider Guam, American Samoa, Northern Marianas and US Virgin Islands.

Finally, some “political” solutions.

Provide economic development assistance grants for 10 smallest states to increase their population, especially their urban population.

Target economic policies/incentives to small, rural states to support the Democratic party.

Examining America’s Farm Subsidy Problem | Cato Institute

Provide incentives for 400,000 Democrats to move from California to Wyoming (125K), Montana (61K), Alaska (45K), North Dakota (36K) and South Dakota (132K) to narrowly win elections in 5 small states!!

US Poverty Rate, 1965-2019

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YearRateAdjusted RateAdjustSingle Female HOH Pov RateSingle % of FamiliesSingle % of PoorNon Single Rate
20199.07.41.62518515.4
201511.59.32.23119526.9
201010.68.62.02919526.2
20059.88.11.72818515.8
20009.98.11.83018535.6
199511.69.52.13518536.6
199010.68.91.73417526.1
198511.710.21.63516477.4
19809.58.31.13215495.7
19759.38.70.63313446.0
197010.610.40.23311347.9
196516.016.00.040102613.3

Table 13.

Historical Poverty Tables: People and Families – 1959 to 2019 (census.gov)

I summarized the data in this table into 5 year buckets, just 4 years for the most recent 2016-19 period, to make it easier to review.

The poverty rate is the number of families out of 100 who meet the Census Bureau’s evolving standard of being poor, based on family size and location. For the last 4 years, 9.0% of families were considered poor.

The adjusted rate in the 3rd column calculates what the poverty rate would be in each period, if the nation had a constant 10.2% of families in the female head of household, no spouse present category (single moms), as was the case in 1965.

The adjustment is shown in the fourth column, reducing the average measured poverty rate.

The poverty rate for only single moms is shown in the 5th column.

The share of ALL families headed by single moms is in the 6th column.

The share of all POOR families headed by a single mom is displayed in the 7th column.

The poverty rate for families headed by a male is listed in column 8.

The OVERALL poverty rate dropped sharply (by 42%) from the early 1960’s at 16% to nearly 9% in the early 1970’s. The overall poverty rate was finally a shade lower in the 2016-2019 period, down to 9%. The overall poverty rate was in the 11% range throughout the 1980’s and first half of the 1990’s. It improved to 10% at the turn of the millennium, but rose back to 11% for the next decade. Overall, the rate was roughly flat for 50 years, ranging from 9-11%.

Partisans love to argue about the “war on poverty”. This data indicates that the early war was effective, but the enemy fought the proponents to a draw for the next 50 years.

Table 13 highlights the growing number and share of single female headed households. Single moms were just 10% of all households in 1965. They increased by 80% to 18% of the total by the early 1990’s, and have stayed in the 18-19% range thereafter.

The single mom poverty rate was unusually high in the early 1960’s at 40%. From 1970 through 1995 it averaged one-third. Single mom poverty rates were reduced by 10% to 30% for the next 20 years. The rate has fallen again, to 25% in the latest period. However, the single mom poverty rate has consistently been 4+ times as high as the male head of household group. Single mom headed households doubled their share of all poor households, from 26% to 52% in the last 50 years..

The male head of household group started with a 13% poverty rate. It dropped to 6% by 1970 and generally remained there for 40 years, aside from 7% rates in the 1985 and 2015 periods. Note that this is a greater than 50% reduction in the share of poor families. The “war on poverty” appears more successful from this vantage point. The rate edged down to a record low of 5.4% in the most recent period, as the extended economic recovery reduced unemployment and started to increase wages for lower skilled workers. This is a 60% reduction in poor families since the early 1960’s for this subgroup.

Column 4 shows the negative impact (mix variance) of having nearly twice as many families in the 33% poverty rate group versus the 6-7% poverty rate core group. By 1980, this change increased the poverty rate by 1%. By 1995, the impact was 2% and has remained in this range.

The adjusted poverty rate, standardized at the 1965 10.2% share of single moms may be a better measure of the effectiveness of overall policies and economic results. The adjusted rate starts with the same 16%. The effective poverty rate drops to 10% in 1970 and further to 8.5% in 1975-80. There is a spike back up above 10% in 1985 before falling back to 9% for 1990-95. The revised rate drifts down to 8% for 2000-2005 (50% reduction from 1965). It pops back up to 9% for 2010-15, before falling to 7.4%, a record low, finally less than half of the starting rate.

Adjusting for the mix of single mom households versus others provides a better view of the country’s effectiveness in reducing poverty. The adjusted poverty rate has been reduced by 60%, not just by 44%.

We can review poverty rates by age, race and education another day. The recent COVID-19 funding bills appear to be very effective at further reducing the US poverty rate. A relatively small amount of money seems to be working. The causes of more single mom headed households and focused policy solutions is also a topic for another day.

Good News: US Air Pollution Declines

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Long-term Trends

The EPA provides consistent raw data from 1980 to 2020 showing very rapid improvements from 1980-2000 and continued, but slower improvements in the last 20 years on 7 measures of air quality. For each item, reductions from 1980-2020 and from 2010-2020 are listed.

Carbon monoxide: -81%, -12%

Lead: N/A, -86%

NO2: -64%, -21%

Ozone: -33%, -10%

Particulate Matter 10 (medium): -26% since 1990, +9%

PM 2.5 (fine): -41% since 2000, -18%

Sulphur Dioxide: -94%, -74%.

More details at this website:

National Air Quality: Status and Trends of Key Air Pollutants | US EPA

Decade by decade data.

Air Quality – National Summary | National Air Quality: Status and Trends of Key Air Pollutants | US EPA

The EPA publishes an annual report/web page to summarize results. In addition to the colorful graphs, its shows sources of pollution and describes the effects of individual pollutants. It provides statistics that normalize pollution measures against GDP which has grown greatly across 40 years, highlighting the even greater achievements by that measure. It shows pollution by city. It details EPA program areas and improvements. It notes that measures of more than 100 “toxic” air pollutants are down (but not zero). It shows that annual “unhealthy days” in the nation’s 35 largest cities have fallen by two-thirds, from 2,100 to 700/year between 2000 and 2015. It shows that “visibility” in scenic areas continues to improve. This report provides significant extra detail in an easy to drill down format.

Our Nation’s Air 2021 (epa.gov)

Our Nation’s Air – Air Quality Improves as America Grows (epa.gov)

Comparisons

Based on the fine particulate measure, the US ranks 84th best of 106 countries (top 20%).

World’s Most Polluted Countries in 2020 – PM2.5 Ranking | AirVisual (iqair.com)

US state measures vary quite widely. Indiana ranks 45th, 46th and 48th by 3 measures.

State Pollution Rankings | US News Best States

Air Quality By State 2021 (worldpopulationreview.com)

see national air pollution tab.

Explore Air Pollution in the United States | 2020 Annual Report | AHR (americashealthrankings.org)

Recent Concerns

The particulate matter measures have historically had the slowest reductions of the 7 measures. The medium particle (10 microns or less) rate increased between 2010 and 2020. The fine particles measure stopped falling at the end of the decade.

w26381.pdf (nber.org)

Bad Air Quality Plagues California, Washington, Oregon Cities : NPR

The Trump administration has loosened regulations, reduced funding and attempted to limit the ability of states to set tougher standards than those at the federal level.

What is the Trump administration’s track record on the environment? (brookings.edu)

NACAA2021PresidentialTransitionDocument-01152021.pdf (4cleanair.org)

Opportunities for Improvement

Interest groups, like the American Lung Association, portray the data to show that the glass is half-empty. The ALA focuses on the two weakest measures (fine particles and ozone). They drill down to daily peak events rather than average annual rates. They drill down to the city or county level to highlight the lower performers. They take the national quality standards and construct a “grading system”, so that the worst “F” cities and their scores can be emphasized. They use these results to show how many people are negatively effected by poor air quality. They emphasize that most of these cities are in the west and southwest. They point out that minority groups are disproportionately impacted by pollution. They link extreme heat and wildfires as causes of recent pauses in progress, noting that global warming is the underlying driver.

Key Findings | State of the Air | American Lung Association

Air quality in US dramatically worse, says new ‘State of the Air’ report – CNN

A recent United Nations article evaluates the last 50 years in the US, highlighting the improvements summarized above. The article emphasizes the health costs of poor air quality and the economic benefits of improved air quality. The “tone” and the “title” are negative. The report highlights the recent uptick in particle measures. It points to the lack of a decrease in CO2/greenhouse gases. It notes that the US is one of the top 10 worst air polluters ranked by number of deaths (not per capita). Finally, it says that the US EPA also agrees that there are major problems.

The United States Clean Air Act turns 50: is the air any better half a century later? (unep.org)

Overview of Greenhouse Gases | Greenhouse Gas (GHG) Emissions | US EPA

Pollution and Health Metrics: Pollution by country data and rankings (gahp.net)

The EPA website lists 4 challenges.

  1. Meeting increased science/health based standards.
  2. Climate change
  3. Reducing toxic pollutants
  4. Protecting the ozone layer

Air Pollution: Current and Future Challenges | Overview of the Clean Air Act and Air Pollution | US EPA

Summary

Like many public policy issues, especially environmental issues, there are competing ways to assess the current situation. The big picture data clearly shows ongoing improvements across 40 years. The fine particulate matter measure stands out as one that may be threatened by climate and fire issues. Federal, state and local regulators, together with businesses, governments, not-for-profits and individuals have taken steps to improve air quality and appear likely to continue in this direction.

On the other hand, air pollution above certain levels, in specific locations, especially for toxic substances, even for short periods of time, does have negative health and economic impacts. There are opportunities for improvement. The U.S. measures are just average compared with similar highly developed economies.

The world, including the US, has made great strides in reducing the emission of gases that threaten the ozone layer. However, CO2 levels in the US in 2020 are the same as in 1990. While US GDP has increased significantly since 1990, so we are more environmentally “efficient”, that does not matter when trying to globally reduce “greenhouse gases”.

US Infant Mortality Rate: It’s Complicated

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The good news is that infant mortality rates (deaths/1,000 live births in 1st year) declined by 80% between 1950 and 2000, from 35 to just 7 and have declined an additional 14% to a little less than 6 by 2018.

• United States: infant mortality rate 1935-2020 | Statista

Infant Mortality Rate for the United States (SPDYNIMRTINUSA) | FRED | St. Louis Fed (stlouisfed.org)

The main CDC page highlights the 5 main causes of death, the significant state differences (higher rates in the south central states, Ohio and WV, and differences by race. Black infant mortality rates (IMR) remain more than twice as high as non-Hispanic Whites. Asians have lower rates than Whites. Hispanic White infant mortality rates are “close” to the White rates.

Infant Mortality | Maternal and Infant Health | Reproductive Health | CDC

The Petersen-KFF website provides clear summaries of the main dimensions of this public health area. About 2/3rds of deaths occur in the first month and are termed neonatal. The remainder in the first year of life are termed postnatal. Both neonatal and postnatal death rates have declined in the last 20 years.

Petersen provides more details on state level death rates, showing that the Great Lakes states have high rates similar to the southern states (7), while much of the country has much lower rates (5).

Births for mothers under 20 show death rates almost twice as high as those in their twenties and thirties.

Ten factors account for two-thirds of deaths, lead by congenital defects and early delivery/low birth weight which account for one-third.

The US mortality rate (5.8) is 75% higher than other countries with similar income levels (3.5). The world-class results in Japan and Finland come in at 2. Details in the way the US reports its figures may account for one-third of the difference versus comparable countries. While the US rate has declined from 7 to 5.8 in the last 20 years, the comparable group reduced its rate from 4.6 to 3.3. Various sources propose that socioeconomic inequality, racial differences and health care system differences account for the US’s poor performance.

What do we know about infant mortality in the U.S. and comparable countries? – Peterson-KFF Health System Tracker

Health status – Infant mortality rates – OECD Data

The racial disparities in infant mortality rates are addressed in various ways.

The very different rates by state seem to show that differing health care policies matter greatly.

Regional variation in Black infant mortality: The contribution of contextual factors (plos.org)

Socioeconomic and racial differences at the county level can be clearly seen in Indiana.

Infant mortality in Indiana | County Health Rankings & Roadmaps

The US Health & Human Services website highlights black-white differences in birth weights, SIDS occurrence, early births/low birth rates and causes of death.

Infant Mortality and African Americans – The Office of Minority Health (hhs.gov)

The statistical analyses to disentangle socioeconomic status and race are very complicated. Most show that socioeconomic status accounts for half of differences, but not nearly 100%. This study found that maternal education, maternal marital status and maternal age “explained” much of the racial differences. Of course, the authors then point to poverty and income differences as underlying factors.

Racial and Ethnic Infant Mortality Gaps and the Role of Socio-Economic Status (nih.gov)

Several more recent studies point to systematic racism working through a large number of lifetime events which impact the mother’s health as the primary cause of racial differences in infant mortality rates.

Exploring African Americans’ High Maternal and Infant Death Rates – Center for American Progress

Eliminating Racial Disparities in Maternal and Infant Mortality – Center for American Progress

One study of Florida births indicated that having a black doctor reduced deaths by 40% for black infant births. White infant mortality was not effected by the race of the doctor.

Black newborns 3 times more likely to die when looked after by White doctors – CNN

In summary, great progress has been made since WW II and continues to be made in the US. However, the reduction in death rates has slowed down. The US death rates are much higher than in other higher income nations and death rates in Europe and Japan have declined faster than in the US. US state death rates range widely, from 4 to 8. Black death rates are twice as high as white death rates.

There remains room for significant progress. World class 2 deaths per 1,000 versus 4.7 for American whites, 11 for American blacks, 4.2 for Californians, 4.6 for New Yorkers, 6.1 for Illinoisans and Floridians, 7.2 for Buckeyes, Hoosiers and Georgians, more than 8 for Mississippians and Arkansans.

Good News: U.S. Air Travel Climbs.

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YearAir-Miles10 Year % Change
196033
1970118258%
198021986%
199035964%
200053148%
20105555%
201975436%

• U.S. passenger-miles in air traffic 2007-2020 | Statista

U.S. Passenger-Miles | Bureau of Transportation Statistics (bts.gov)

Revenue Passenger Miles for U.S. Air Carrier Domestic and International, Scheduled Passenger Flights (RPM) | FRED | St. Louis Fed (stlouisfed.org)

BTS | Table 1-37: U.S. Passenger-Miles (umich.edu)

Since 1970, US air travel has grown by 4% annually, year after year after year.

Air travel in 2019 is more than 6 times as large as 1970 and more than 20 times as large as 1960 when the term “jet-setters” was coined.

How Could We Lose? Democrats Lament.

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In the 2020 elections, Democrats once again earned a smaller share of votes than expected. Republican candidates in national, state and local election outperformed. Candidate Trump registered 74M votes, 11M more votes than in 2016. Americans were voting for the “real Trump”, not just the imagined populist candidate Trump. He earned 47.0%, up from 46.4%. Biden registered 81M votes, 15M more than Hillary’s performance. The Democratic share increased from 48.5% to 51.3%. A presidential win, a narrow House win and a very narrow Senate win.

“How can this be?” questioned the Democratic party leaders and supporters. “Where is our landslide victory?”

There was a higher voting percentage, which usually helps Democrats.

There were more registered and voting minorities, which always helps Democrats.

There were more young voters and fewer older voters, which helps Democrats.

The “special” negatives of Hillary as a candidate could not effect the results.

America is becoming less religious and less evangelical, which helps Democratic results.

Voter surveys show 60% plus support for many leading Democratic policies.

Despite the 2010 “Citizens United” Supreme Court case that eliminated restrictions on campaign contributions, Democrats raised money as effectively as Republicans.

Obama was able to win convincingly in 2008 and 2012 as a moderate Democrat, increasing the number of independents who would consider voting for Democrats at all levels.

Democrats deliver results on social, environmental, international, military and economic issues.

Like all political parties, Democrats “know we are right”.

Setting aside the “policy content” of the 2020 election for this article, Republicans had their own advantages in these elections.

The “megatrend” in the US and west continues to lean toward conservative politicians since the Reagan/Thatcher switch. There is great momentum in voting.

The U.S. Senate and electoral college provide an advantage to Republican leading states, adding 2-4% to the pure voting totals.

Republicans captured a greater share of state legislatures in 2010 and took advantage of this position to gerrymander state and national districts in their favor. At the national level, this adds 1-2% to the Republican House team.

The Republican supporting media (Fox) and talking heads continue to be more effective than the Democrats who are still “catching up.” Republicans have effectively undercut the legitimacy of the “mainstream media” for many, causing them to abandon centrist platforms and consume only Republican supporting sources.

The Republican advantage in the public policy “think tank” arena continues. See the article aggregators at RealClearPolitics or RealClearMarkets for samples of “policy pieces”. Left-leaning contributors from the academy, unions, not-for-profits, entertainment industry and Democratic party publish fewer articles and generally restrict their content to research articles.

Republicans continue to have an advantage in painting Democrats as extremists, socialists, communists, radicals, anarchists, irresponsible, anti-American, soft on crime, atheists, secularists, relativists, opportunists, special interest supporters, pinkos, big spenders, etc.

While Democrats always considered themselves “the party of the big tent”, Ronald Reagan was able to erect a tent which welcomed various somewhat incompatible streams of “conservativism”: philosophical, main street, wall street, religious, social, economic, libertarian, traditional, military and American. Republicans have leveraged this advantage, cooperating on “conservative” policies and ignoring those with conflicts.

Republicans since Newt Gingrich have effectively defined a very polarized world view. Democrats are the enemy. Party discipline is paramount. Results matter most. Insufficiently conservative or loyal reps have been chased from the party. This means that all Republicans vote for all Republican candidates in the general election. Any Republican is better than any Democrat.

Far left, new left, progressive Democrats take a different stance. They support progressive policies and candidates. They are not sure that a moderate, center-left Democrat is “better” than a Republican. They may not vote, cast a write-in ballot, or choose the libertarian or the socialist option. This costs mainstream Democratic candidates 1-4% of the general election vote. In Europe, they would have a party to vote for and the coalition building stage of a parliamentary government would give them influence, from time to time.

Republicans continue to win the framing and communications wars, better positioning their policies and candidates. Pro-choice versus pro-life. American versus globalist. Free market versus government control. States rights versus central government. Regulations versus necessary limits. Common man versus elites. Balanced budget versus deficit spending! US versus UN.

In recent years, Republicans have started to shape election laws to favor turnout from their supporters and discourage turnout from their opponents. This did not appear to have a major impact on the 2020 results, but could do so in the future.

“politics ain’t beanbag”.

Republicans have very effectively managed their political resources and campaigns in recent years. The Democratic demographic trends are simply not enough to assure wins in the short-run.

Free Trade

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Historically, for more than 200 years, economists, conservatives, industrialists and western countries have supported free trade, based upon the theories of Smith and Ricardo. Free trade creates more valuable goods and services. Free trade provides opportunities. Free trade forces domestic firms to become more competitive. The losers from free trade can have their losses mitigated through enlightened government policies. Leftists and labor unions have opposed free trade because governments have not always provided those “enlightened” policies to offset the negative effects on workers and because far leftists cannot support any positive results from capitalism.

3 typical pro trade arguments.

Benefits of free trade – Economics Help

Why is free trade good? | The Economist

Why Free Trade? | IFT (ifreetrade.org)

Conservatives in the west have generally supported free trade for these last two centuries. Western firms and their beneficial owners were positioned to benefit (on average) from free trade. Part of this was the justification for imperialism and economic extraction from “less developed countries”, but most advocates saw the local, corporate and global benefits of trade. Republican support of free trade has been consistent in the post WW II era. Most Republican policy wonks agree with their Democratic colleagues that the great depression was deepened and prolonged by anti-trade legislation in the US and elsewhere.

The Benefits of Free Trade: Addressing Key Myths | Mercatus Center

7 Reasons to Support Free Trade – Foundation for Economic Education (fee.org)

The Benefits of International Trade | U.S. Chamber of Commerce (uschamber.com)

Economists of mainstream political views tend to support “free trade” as a government policy which can provide benefits for countries and the global economy.

Is free trade always the answer? | Business | The Guardian

Economists Actually Agree on This: The Wisdom of Free Trade – The New York Times (nytimes.com)

A Super-Majority of Economists Agree: Trade Barriers Should Go | Cato at Liberty Blog

Center for Economic Research and Forecasting | Economists Do Agree on Something! (clucerf.org)

4 Politically Controversial Issues Where All Economists Agree – The Atlantic

The free trade position has been opposed in the last 200 years by many. Leftists and less developed countries see this as gloss to justify exploitation. Marxists oppose capitalism. Labor sees the negative impact on domestic wages. Environmentalists see trade as a way to export pollution. Anti-globalization advocates see trade as a way to provide power to multinational corporations, so oppose it. Supporters of “less developed countries” argue that pure free trade unfairly prevents firms from developing. Incumbent firms argue that competitors have “unfair” advantages, including government support, that must be offset.

Why do economists support Free Trade? | Jobs Back (JobsBack.com)

Free Trade Is Killing American Manufacturing | IndustryWeek

Free trade in economic theories | Exploring Economics (exploring-economics.org)

Economists on the Run – Foreign Policy

The Folly of Free Trade (hbr.org)

While the “science” and “interests” of free trade may be clear, the “politics” is less clear. In a simple, win/lose, Manichean view, evil foreigners attempt to defeat good domestic firms and their employees. Populist politicians of both left and right views are tempted to tap this voting block.

Here’s why everyone is arguing about free trade (cnbc.com)

Failing at Free Trade: Why Economists Haven’t Won the Debate (dtnpf.com)

Finally, 2 articles that consider both sides.

Free Trade Agreement Pros and Cons (thebalance.com)

4 Reasons Free Trade Has Become A Contentious Political And Economic Issue (forbes.com)

As with many modern public policy issues, there is a professionally supported position (pro, with some limits or compensations). However, the gap between the relatively complex analysis (comparative advantage, history, statistics) required to support these conclusions and votes is wide and used by politicians to frame and tell stories in their best interest, not the interest of the nation or its citizens.