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Archive for the ‘Redistribution’ Category

Every so often, I share an image that is unambiguously depressing. Usually because it suggest that freedom is slowly eroding.

I now have another addition to that depressing list.

Just as the Minneapolis Federal Reserve has an interactive website that allows users to compare recoveries and recessions, which is very useful for comparing Reaganomics and Obamanomics, the St. Louis Federal Reserve has an interactive website that allows users to compare national and regional economic data.

And that’s the source of today’s depressing chart. It shows median inflation-adjusted household income for the entire nation and for the District of Columbia. As you can see, the nation’s capital used to be somewhat similar to the rest of the nation. But over the past 10 years, DC residents have become an economic elite, with a representative household “earning” almost $14,000 more than the national average.

By the way, I put quotation marks around “earning” in the previous sentence for a very specific reason.

There is nothing wrong with some people accumulating lots of wealth and income if their prosperity is the result of voluntary exchange.

In the case of Washington, DC, however, much of the capital’s prosperity is the result of coercive redistribution. The lavish compensation of federal bureaucrats is a direct transfer from taxpayers to a gilded class, while the various lobbyists, contractors, cronyists, politicians, and other insiders are fat and happy because of a combination of direct and indirect redistribution.

I should also point out that the entire region is prospering at the expense of the rest of the nation.

By the way, some people will be tempted to argue that rising income levels in DC are simply a result of gentrification as higher-income whites displace lower-income blacks. Yes, that is happening, but that begs the question of where the new residents are getting all their income and why the nation’s capital is an increasingly attractive place for those people to live.

The answer, in large part, is that government is a growth industry. Except it’s not an industry. It’s increasingly just a racket for insiders to get rich at the expense of everyone else.

P.S. To close on a semi-humorous note, some cartoons are funny even if the underlying message is depressing.

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What federal program is most sacrosanct, even though it delivers poor results?

Those are all good answers, and you could also add housing subsidies, the drug war, and lot of other example to the list of programs that enjoy lots of political support even though they produce bad results.

But I’m guessing that the activity that has the greatest level of undeserved support is government intervention for “pre-K” kids, with Head Start being the most prominent example.

I haven’t written about the failure of that particular program since 2013, which is unfortunate because two of the most compelling visuals about Head Start were released in 2014.

First, this AEI research reveals that the supposed academic consensus for the program evaporates under close examination.

Second, this table from an article in National Affairs shows that the program doesn’t produce long-run benefits.

Yet these empirical results don’t seem to influence the debate. Every year, programs such as Head Start get funded because politicians only seem to care about intentions.

And positive headlines for themselves, of course. After all, we’re supposed to believe that they care about kids because they spend other people’s money on programs with nice goals.

With this as background, now let’s zoom in on a specific example of how supposedly good intentions in this field translate into occupational restrictions that have very bad results for the less fortunate people in society.

The Washington Post reports that the city’s local government has decided that additional regulation is needed to boost the quality of programs for pre-K kids.

More than a decade after Washington, D.C., set out to create the most comprehensive public preschool system in the country, the city is directing its attention to overhauling the patchwork of programs that serve infants and toddlers.  The new regulations put the District at the forefront of a national effort to improve the quality of care and education for the youngest learners. City officials want to address an academic achievement gap between children from poor and middle-class families that research shows is already evident by the age of 18 months.

And what exactly did the city government propose to achieve these nice-sounding goals?

They’ve imposed “new licensing regulations…for child-care centers” that will mandate college degrees.

The District set the minimum credential for lead teachers as an associate degree… The deadline to earn the degree is December 2020. New regulations also call for child-care center directors to earn a bachelor’s degree and for home care providers and assistant teachers to earn a CDA.

Gee, this sounds nice. Don’t we all want the best-trained staff so that we can get the best outcomes for kids?

Yes, but let’s consider costs and benefits. Especially, as noted in the article, costs that are imposed on people without a lot of money who are working at childcare centers.

…for many child-care workers, often hired with little more than a high school diploma, returning to school is a difficult, expensive proposition with questionable reward. …prospects are slim that a degree will bring a significantly higher income — a bachelor’s degree in early-childhood education yields the lowest lifetime earnings of any major.

And poor people without a lot of money who are clients of childcare centers.

Many parents in the District are maxed out, paying among the highest annual tuitions nationally, at $1,800 a month.

And taxpayers who pick up part of the cost.

…government subsidies that help fund care…and generous funding for preschool.

In other words, imposing this kind of mandate will be rather expensive, especially for lower-income Washingtonians who either work at these centers of send their children to them.

That’s the cost side of the equation. Now let’s look at the benefits.

Except there’s no real-world evidence included in the article. Instead, all we get it some theorizing.

…a 2015 report by the National Academies that says the child-care workforce has not kept pace with the science of child development and early learning. From the first days of life, learning is complex and cumulative, the report says. Infants are capable of abstract thought, forming theories about what is happening in the physical world and whom to trust. Scientists concluded that teachers need the skills and insight to offer the kinds of learning experiences that challenge them and make them feel safe. They need tools to diagnose and intervene when they see learning or emotional problems. And they need literacy skills to introduce young learners to an expansive vocabulary, exposure many children do not have at home and are not getting in day care.

Scott Shackford of Reason is appropriately skeptical about this regulatory scheme.

Scientists say that higher education for pre-school child-care workers is a good idea. So of course D.C. is going to make it mandatory that child-care workers get associate’s degrees and completely screw over an entire class of lower-skilled workers. …The news story doesn’t engage in the question of why parents can’t decide for themselves how important it is for their child-care workers to have advanced degrees. Perhaps that’s because early education advocates might not like the answers, once the realities of the likely cost increases get factored in. …such a subsidy plan would not do much for lower-income families. And so not only would poorer families be even less able to afford child care, they’re also going to be locked out of jobs within the industry itself.

Though he does identify one group that would benefit.

To be sure, this D.C. law is a jobs program—it’s a jobs program for people who work in the field of post-secondary education itself. Nothing like using a regulatory mandate to create a demand for your educational services that might not exist otherwise. The story makes it abundantly clear that advocates for increased education of child-care workers—who, wouldn’t you know it, work in the field of education—want to spread this program well beyond D.C.’s borders.

And there’s another group of beneficiaries. The new DC regulations will be good news for childcare workers who already have college degrees. That’s because the city government is using a form of licensing to force competing workers out of the market (as Scott pointed out, the new rules “screw over…lower-skilled workers”). And that means that the college-educated workers will have more ability to extract higher salaries.

Just as unions urge higher minimum-wage mandates in order to undermine competition from other workers.

In other words, this is a classic “public choice” case study of a couple of interest groups using government coercion to unfairly line their pockets.

P.S. Speaking of public choice, here’s the real-world explanation of how a bill becomes law (h/t: Imgur).

Very accurate. I especially like the variation of Mitchell’s Law at the end.

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Certain redistribution programs are called “entitlements” because anybody who meets various criteria is “entitled” to automatically get money or other benefits.

Economists worry that such programs (particularly the “means-tested” entitlements) create perverse incentives since some people will choose to work less and earn less in order to maximize the amount of handouts they receive. Such behavior is immoral, but understandable. People learn that if they make sacrifices and work more, the reward is taxation, whereas if they work less (or not at all), the reward is freebies from the government.

And the problem presumably is worse in places where there is a greater amount of redistribution (if you’re curious, here’s the data on which states and countries have the most profligate package of benefits).

But the problem goes beyond simply luring people into idleness with bad incentives. When politicians create programs that give away money, they also create opportunities for outright fraud. Which is a pervasive problem, as illustrated by these examples.

Let’s travel to Minnesota to get a sense of the magnitude of the problem.

Minnesota’s Pioneer Press reports on a government audit that found one-third of welfare recipients improperly received handouts.

A review by Minnesota’s legislative auditor has found that some of Minnesota’s welfare programs do a poor job of ensuring benefits don’t go to ineligible people… It found significant error rates in the Temporary Assistance For Needy Families program, which provides cash and other benefits to low-income families with children. …the audit found eight of 24 families it reviewed weren’t eligible for benefits they received.

That’s not a large sample size, so we don’t know if the actual overall error rate is higher or lower than 33 percent, but the audit certainly suggests that there is a major problem.

It’s also not clear how much of the problem is caused by accident and how much is caused by fraud. Presumably the latter, but it’s quite possible that some people aren’t knowingly bilking the system.

But in some cases, there’s no ambiguity. The Sun has a horror story about a stunning case of welfare fraud.

Fozia Dualeh, 39, was charged with felony theft in Anoka County District Court, as prosecutors say she received $118,000 in government aid over roughly an 18 month period. According to the complaint, Dualeh exploited three public benefit programs from January 2015 to August 2015 which included $24,176 in food support, $85,582 in child care assistance and $8,996 in medical assistance overpayments.

Wow, almost $120K over 1-1/2 years. That’s an impressive haul, though perhaps not too surprising given the dozens of handout programs that – when combined – make idleness relatively lucrative.

In any event, Ms. Dualeh claimed she was eligible for that huge package of handouts because her husband was no longer part of the family.

But that wasn’t true.

A search of the home by authorities in late October 2015 led to the discovery of Dualeh’s husband, who is also the children’s father, Abdikhadar Ismail, hiding under a blanket in the master bedroom, charges said. Several articles of mens clothing were found in a chest, as well as numerous documents and mail throughout the home belonging to Ismail. Ismail also listed the family’s address on two vehicles and with his employer, a residential health care business.

Given the large sums of money involved, the Center of the American Experiment probably deserves an award for most-understated headline on this issue.

Though at the risk of being a pedantic libertarian, I would prefer if the headline said “Lucrative” instead of “Profitable.” After all, as Walter Williams has explained that profit is a meritorious reward for serving others.

But we can all probably agree that Ms. Dualeh deserves membership in the Moocher Hall of Fame.

P.S. I wouldn’t be surprised if Ms. Dualeh was introduced to the welfare system thanks to America’s poorly designed refugee program.

P.P.S. On the broader issue of redistribution and economics, this Wizard-of-Id parody contains a lot of insight about labor supply and incentives. As does this Chuck Asay cartoon and this Robert Gorrell cartoon.

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It’s time to make a very serious point, albeit with a bit of humor and sarcasm.

A couple of years ago, I shared an image of Libertarian Jesus to make the point that it’s absurd to equate compassion and virtue with government-coerced redistribution.

We all can agree – at least I hope – that it is admirable to help the less fortunate with our own time and/or money. Indeed, I’m proud that Americans are much more likely to be genuinely generous than people from other countries (and it’s also worth noting that people from conservative states are more generous than people from leftist states).

But some of our statist friends go awry when they think it’s also noble and selfless to support higher tax rates and bigger government. How is it compassionate, I ask them, to forcibly give away someone else’s money? Especially when those policies actually undermine progress in the fight against poverty!

With this in mind, here’s another great example of Libertarian Jesus (h/t: Reddit).

Amen (pun intended), I’m going to add this to my collection of libertarian humor.

But don’t overlook the serious part of the message. As Cal Thomas succinctly explained, it’s hardly a display of religious devotion when you use coercion to spend other people’s money.

This is why I’ve been critical of Pope Francis. His heart may be in the right place, but he’s misguided about the policies that actually help the less fortunate.

For what it’s worth, it would be helpful if he was guided by the moral wisdom of Walter Williams rather than the destructive statism of Juan Peron.

P.S. I’m rather amused that socialists, when looking for Christmas-themed heroes, could only identify people who practice non-coercive generosity.

P.P.S. On a separate topic, Al Gore blames climate change for Brexit.

Brexit was caused in part by climate change, former US Vice-President Al Gore has said, warning that extreme weather is creating political instability “the world will find extremely difficult to deal with”.

I’m beginning to lose track and get confused. Our statist friends have told us that climate change causes AIDS and terrorism, which are bad things. But now they’re telling us climate change caused Brexit, which is a good thing.

Maybe the real lesson is that Al Gore and his friends are crackpots.

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President Trump has released his budget blueprint. From a big picture perspective, the size of government won’t change. He’s kicking the can down the road on entitlements, which is obviously disappointing for people who can add and subtract. He does cut some domestic programs, but taxpayers won’t reap the benefits since those savings will be spent elsewhere, mostly for a bigger Pentagon budget.

But I’m going to be optimistic today (the glass isn’t 9/10ths empty, it’s 1/10th full). Let’s look at the good parts of his budget.

First, some background. Redistribution is bad public policy since it simultaneously encourages inactivity and dependency among recipients and discourages activity and initiative by taxpayers.

That’s the standard argument against conventional handouts such as welfare, food stamps, Medicaid, EITC, and housing subsidies. The plethora of such programs in Washington is bad news for both taxpayers and poor people.

But there’s another type of redistribution that’s far worse, and that’s when politicians use the coercive power of government to take money from lower-income people in order to provide goodies for upper-income people.

This is why I am so unrelentingly hostile to programs like the Export-Import Bank, agriculture subsidies, so-called disaster relief, green-energy scams like Solyndra, and Fannie Mae/Freddie Mac subsidies.

Indeed, I even developed a “Bleeding Heart Rule” back in 2012 to describe how such giveaways are morally reprehensible.

Now let’s add another program to the list.

The National Endowment of the Arts is a federal program that subsidizes art, with upper-income people reaping the vast majority of the benefits.

That’s the bad news. The good news is that President Trump is proposing to defund this elitist bureaucracy.

Before explaining why the program should be abolished, let’s look at the case for federal involvement. This is how the NEA describes its mission.

The National Endowment for the Arts is an independent federal agency that funds, promotes, and strengthens the creative capacity of our communities by providing all Americans with diverse opportunities for arts participation.

That sounds noble. But are we really supposed to believe that our communities won’t have any creative capacity without some handouts from the federal government to museums and other politically connected organizations that primarily serve rich people?

And for those of us who have this old-fashioned notion that the federal government should be constrained by the Constitution, it’s also worth noting that art subsidies are not one of the enumerated powers in Article 1, Section 8.

Here is the pro-NEA argument from a column in the New York Times.

Sadly, it has become clear that the N.E.A. is, once again, under threat of being abolished… The N.E.A.’s budget is comparatively minuscule — $148 million last year, or 0.004 percent of the total federal budget — while the arts sector it supports employs millions of Americans and generates billions each year in revenue and tax dollars. …the N.E.A., founded in 1965, serves three critical functions: It promotes the arts; it distributes and stimulates funding; and it administers a program that minimizes the costs of insuring arts exhibitions through indemnity agreements backed by the government. …The grants, of course, receive the most attention, if not as much as they deserve. Thousands are distributed in all 50 states, reaching every congressional district, urban and rural, rich and poor. …They support live theater for schools; music, dance and jazz festivals; poetry and literary events; arts programs for war veterans; and, of course, museum exhibitions.

This actually makes my point. The NEA spends $148 million per year, which is just a tiny fraction of what is spent by the private sector.

In other words, we had museums, plays, music festivals, and art programs before the NEA was created and all of those activities will exist if the NEA is abolished.

All that will change is that politicians and bureaucrats won’t be doling out special grants to select institutions and insiders that have figured out how the manipulate the system.

The column also has some absurd hyperbole.

I fear that this current call to abolish the N.E.A. is the beginning of a new assault on artistic activity. Arts and cultural programming challenges, provokes and entertains; it enhances our lives. Eliminating the N.E.A. would in essence eliminate investment by the American government in the curiosity and intelligence of its citizens.

The author actually wants readers to conclude that a failure to subsidize is somehow akin to an assault on artistic creativity. Oh, and don’t forget that our curiosity and intelligence somehow will suffer.

Here’s a story about an interest group that wants to keep the gravy train on the tracks.

The heads of five Boston arts museums are pushing back against feared Trump administration cuts to the National Endowment for the Arts and the National Endowment for the Humanities. The museums’ directors say in an open letter that the agencies…help foster knowledge of the arts, create cultural exchanges, generate jobs and tourism, and educate young people. They say NEA and NEH funding has been instrumental at each of the Boston museums.

My immediate reaction is that there are lots of rich people and well-heeled companies in Boston. Surely NEA handouts can be replaced if these museum directors are remotely competent.

I’ll also take a wild guess that the directors of these five museums earn an average of more than $500,000 per year. Perhaps it’s not right for them to be using tax dollars to be part of the top 1 percent. Heck, trimming their own salaries might be an easy place for them to get some cost savings.

But enough from me. Let’s look at what some others have written about the NEA.  Let’s start with George Will’s assessment.

…attempting to abolish the NEA is a fight worth having, never mind the certain futility of the fight. …Government breeds advocacy groups that lobby it to do what it wants to do anyway — expand what it is doing. The myriad entities with financial interests in preserving the NEA cloyingly call themselves the “arts community,” a clever branding that other grasping factions should emulate… The “arts community” has its pitter-patter down pat. The rhetorical cotton candy — sugary, jargon-clotted arts gush — asserts that the arts nurture “civically valuable dispositions” and a sense of “community and connectedness.” And, of course, “diversity” and “self-esteem.” Americans supposedly suffer from a scarcity of both. …the NEA’s effects are regressive, funding programs that are…“generally enjoyed by people of higher income levels, making them a wealth transfer from poorer to wealthier.” …Americans’ voluntary contributions to arts organizations (“arts/culture/humanities” institutions reaped $17 billion in 2015) dwarf the NEA’s subventions, which would be replaced if those who actually use the organizations — many of them supported by state- and local-government arts councils — are as enthusiastic about them as they claim to be. The idea that the arts will wither away if the NEA goes away is risible.

Now let’s hear from members of the “arts community” who understand that art doesn’t require handouts.

We’ll start with Patrick Courrielche, who wrote in the Wall Street Journal about the need to free the arts from federal dependence.

The NEA, created in 1965, has become politically tainted and ill-equipped to handle today’s challenges. Mr. Trump and Congress should ax it as soon as possible. …For the American arts to flourish—and for art to reach all Americans—artists must be able to make a living from their efforts.

And a theater director from Brooklyn explains in the Federalist why the art world will be better off without the NEA.

…as Trump prepares to spike the ball and end the game by axing the NEA, there is reason to be optimistic that this decision will be very good for the arts in America. …Arts institutions, which receive the bulwark of NEA funding, are failing badly at reaching new audiences, and losing ground. This is a direct result of the perverse market incentives our nonprofit arts system creates… As the artistic director of an unsubsidized theater company in New York City for more than a decade, I had to compete in a closed marketplace, where wealthy gatekeepers and the government rather than ticket sales pay the bills. …The industry receives more free money than it did a decade ago, and has fewer attendees. That is a broken system by any estimation. …Taking away free government money for the arts won’t make art disappear. After all, art is older than government. It will force artists and arts organizations to finally come to terms with their market realities. Audiences are better than experts at deciding what art is good or important. If a piece of art is so good that nobody to wants to pay for it, maybe it isn’t all that good. …In the American tradition, vaudeville, jazz, standup comedy, and many other art forms were created and grew within the free market, free from government assistance. Under this system there was a tremendous appetite for high art among Americans… President Trump is wise to get the government out of the art game, and all of us will be better off for his decision.

Here’s another artist, writing for PJ Media, about the benefits of ending federal handouts.

For over a decade as a theatre artist, my salary was made possible by taxpayers funding the arts. …In hindsight, and after much reflection and a better understanding of economics, I am truly sorry, and ask the taxpayer to forgive my thievery. However, spilled milk can’t be put back into the bottle. That doesn’t mean that we have to keep spilling the milk, though. It’s way past time to defund and shutter the National Endowment for the Arts. … The NEA and their supporters will trot out research about how many dollars are added to local economies due to things like theatres, symphonies, and museums. Of course, as almost every person with at least half a semester of Economics under their belt is screaming, the NEA’s argument embraces the broken window fallacy. The economic stimulus felt and supposedly generated by the arts community comes at the expense of other markets. …The National Endowment for the Arts model artificially props up mostly unwanted markets by using tax dollars that get funneled through inefficient and wasteful bureaucracies. …What it does to the arts is create a marketplace that supports bad art. …Don’t misunderstand, I love art. Like, a lot. And I’m willing to pay for it, as are many other patrons of the arts. If the National Endowment for the Arts were to be defunded and shuttered, it would help clear the deck of bad art that people aren’t willing to pay the real cost for. …art does enhance life, but having your life enhanced at the expense of others is not a right. People don’t have a right to other people’s money just so they can watch a play or visit a museum. …It’s time for the National Endowment for the Art to be defunded and shuttered.

Amen.

Since I started today’s column with optimism, I’ll be balanced and end with pessimism. I very much doubt that Congress will defund the NEA bureaucracy.

In part, this is a classic example of “public choice.” The recipients of the handouts have strong incentives to mobilize and lobby to keep their goodies. Taxpayers, by contrast, mostly will be disengaged because their share of the cost is trivial.

But it gets worse. The NEA also is very clever. A Senator once told me that it was difficult to vote against the bureaucracy because the “arts community” cleverly placed the wives of major donors on local arts councils. That made it difficult to vote against the NEA, though this Senator did say that making this tough vote would be worthwhile. Yes, there would be some short-term grousing by interest groups (and donor wives) if the agency actually was shut down, but that would quickly dissipate as people saw the arts were able to survive and thrive without sucking at the federal teat.

For the sake of the nation, let’s hope most lawmakers think this way.

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The tax-and-transfer welfare state is in deep trouble. I explained last year that the United States faces a very serious long-run challenge.

Many of our entitlement programs were created based on the assumption that we would always have an expanding population, as represented by a population pyramid. …however, we’ve seen major changes in demographic trends, including longer lifespans and falling birthrates. The combination of these two factors means that our population pyramid is slowly, but surely, turning into a population cylinder. …this looming shift in America’s population profile means massive amounts of red ink as the baby boom generation moves into full retirement.

In other words, in the absence of genuine entitlement reform, America will have a Greek-style fiscal mess at some point in the future. Or, as I wrote yesterday, maybe we should call it a Japan-style mess.

Demographic 2030Simply stated, we’re going to have too many people collecting benefits and too few people generating income.

The outlook is even worse in Europe. Indeed, the fiscal crisis has already started in many nations in Southern Europe. And the crisis will spread to many countries in Northern Europe. And it will hit Eastern Europe as well, notwithstanding some good economic reforms in that region.

Unfortunately, most politicians are reluctant to undertake the entitlement reforms that would avert this crisis.

So what’s their alternative solution? In many cases, they don’t have one. In other cases, they act as if higher tax burdens can solve the problem, even though that probably means even more people will be discouraged from productive lives and instead decide to ride in the wagon of government dependency (higher taxes also would enable even more spending, but that’s a separate story).

Another potential answer is sex. To be more specific, governments around the world are urging people to procreate more so that there will be additional future taxpayers to finance the welfare state.

I’m not kidding.

Let’s start with the new effort in Spain.

Europeans across the continent are having so many fewer babies that national populations from Scandinavia to the Mediterranean are skewing towards the older end of the spectrum, with not enough young, productive people to keep economies thriving and to look after the rest of the aging population. Spanish women have 1.3 children on average. In 2015, Spain’s death rate outstripped the birth rate… Edelmira Barreira Diz was appointed as “commissioner for the demographic challenge” last month.

I think “sex commissioner” would have been a better title. Heck, that probably would have enticed a certain former American president to apply for the position.

Here’s a chart from the story showing declining fertility rates.

There’s a similar effort for government-encouraged babies in Italy.

Italy is facing a dramatic demographic change, with increasingly fewer children being born. So the Health Ministry recently launched an ad campaign to remind people of Sept. 22 being “fertility day.” …another ad claiming that fertility was “a common good” — a comparison that reminded some of fascist propaganda from the 1920s which urged women to have more babies to support the nation. …As a social welfare state, Italy’s pensions system and economy relies on a certain number of younger people joining the workforce every year.

The Danish government also wants women to think they have an obligation to produce future taxpayers.

In Denmark, for instance, schoolchildren are now taught in class that they should have more babies. “…we just thought, maybe we should actually also tell them about how to get pregnant,” Marianne Lomholt, national director of Sex and Society, told the New York Times. …Denmark’s Education Ministry now has teachers talk not only about the dangers of sex and pregnancies, but also about their benefits.

Also in Denmark, private companies are jumping on this bandwagon (sexwagon?) of more sex as a solution to demographic-entitlement crisis.

Denmark has a sex problem. …not exactly a sex problem, per se. It’s more like a baby problem. …Denmark’s perennially low birth rate…has left people worried… “We are concerned. The fewer Danes means fewer people to support the aging population…” …can vacation sex save the Kingdom of Denmark? Spies thinks it can, so the company has sweetened the deal. According to its promotion, the company will give prizes to couples who get pregnant while on vacations purchased through them.

Given the grim demographic outlook in Japan, nobody should be surprised that the government there is agitating for more future taxpayers.

A comprehensive plan to reverse Japan’s crashing population numbers was unveiled on Thursday by a government task force… Shigeru Ishiba, minister in charge of overcoming population decline and reviving local economies, was more blunt. “Japan will die off” without proper countermeasures, he warned. …The strategy outlined in the government plan is to encourage young people to relocate to areas outside the major metropolitan regions by fostering jobs and economic growth in small local communities that are now in danger of simply disappearing for lack of inhabitants.

Huh?!? Japan’s repeated forays into Keynesian economics haven’t generated good results nationally, so I’m not holding my breath that this new campaign will be “fostering jobs and economic growth” in targeted communities.

For a final example, let’s shift to China, where a government that formerly forced women to have abortions is suddenly looking at ways to subsidize an extra child.

China is considering introducing birth rewards and subsidies to encourage people to have a second child… the country issued new guidelines in late 2015 allowing all parents to have two children amid growing concerns over the costs of supporting an aging population. …China began implementing its controversial “one-child policy” in the 1970s in order to limit population growth, but authorities are now concerned that the country’s dwindling workforce will not be able to support an increasingly aging population.

Since coerced redistribution isn’t nearly as odious as coerced abortion, I guess this is another sign of progress in China.

But I’m not sure that will be enough to produce enough future taxpayers for China. Or any other nation.

The only sustainable welfare state, given modern demographics, is no welfare state.

Or, to be more accurate, the right approach is to start with the default assumption that people are responsible for saving and investing to support themselves in retirement. There are lots of nations that now have systems of personal retirement accounts, and this puts them in much stronger position than nations that rely solely on tax-and-transfer entitlement schemes. Hong Kong is a good example, as are Chile and Australia.

By the way, countries with private social security systems have safety-net programs for destitute seniors, but that’s far more affordable than automatic payments to everyone in retirement.

P.S. On a related note, there’s a big debate in academic circles about whether the welfare state (specifically young-to-old redistribution) actually sows the seed of its own destruction by inducing lower fertility rates. Ramesh Ponnuru of National Review summarized some of the evidence for this hypothesis back in 2012.

A 2005 paper for the National Bureau of Economic Research by economists Michele Boldrin, Mariacristina De Nardi, and Larry E. Jones points out that “the size and timing of the growth in government pension systems” matches up nicely with fertility trends in the U.S. and Europe. They expanded on both sides of the Atlantic Ocean, and fertility fell on both sides, after World War II; and they expanded more in Europe, where fertility fell further. In their model, entitlements account for roughly half of the decline in fertility, and 60 percent of the difference between European and American fertility. When a pension system expands by 10 percent of GDP, the average number of children per woman drops by 0.7 to 1.6. “These findings are highly statistically significant and fairly robust to the inclusion of other possible explanatory variables.” A 2007 paper by Isaac Ehrlich and Jinyoung Kim, also for the NBER, reached similar conclusions, finding that pension programs explained a little under half of the decline in fertility rates, and a little more than half of the decline in marriage rates, in developed countries between 1965 and 1989. One implication of this finding is that pension programs have contributed to their own financial woes by suppressing fertility.

Some researchers have concluded that other types of redistribution spending can boost fertility, though other scholars are more skeptical.

I haven’t studied this literature on subsidized babies enough to have a strong opinion.

For what it’s worth, I suspect the government can provide enough handouts to induce motherhood (heck, one of the motives for the welfare reform that was adopted during Bill Clinton’s presidency was a concern that the old system was encouraging women to have children out of wedlock).

But I’m very doubtful that such policies would fix the demographic/entitlement crisis that threatens most nations. In part, because I’m skeptical about the ability of governments to cause large shifts in fertility, but also because recreating a population pyramid only works if the additional children wind up being productive workers in the private sector.

In other words, the goal isn’t really a population pyramid as much as it’s a shift in the ratio of producers versus dependents in a nation.

As such, if many of the babies induced by handouts come from mothers that rely on welfare, and if those children are less likely to grow up to be net payers of tax rather than net consumers of tax, then baby subsidies are not going to solve the problem.

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As I peruse the news, I periodically see headlines that are misleading in some fashion.

And if the headline is sufficiently off-key or bizarre, I feel compelled to grouse.

Now I have a new example, though I’m not sure whether to call it dishonest or clueless.

The EU Observer has a brief report that poverty has reached record levels in Germany.

Despite a booming economy, 12.9 million people in Germany were living below the poverty line in 2015, the Equal Welfare Association reported on Thursday. Based on figures from the Federal Statistical Office the alliance found a record high poverty rate of 15.7 percent in 2015.

By the way, I can’t resist pointing out that there is no “booming economy” in Germany. Growth in 2016 was only 1.9 percent.

Yes, that’s decent by European standards of stagnation and decline, but it’s far from impressive in any other context.

But I’m digressing. Let’s get back to the main point of today’s column.

As you can see from the story’s headline, the implication is that lots of people are left behind and mired in deprivation even though the economy is moving forward.

But there’s a problem with both the story and the headline.

If you read carefully, it turns out that both the story (and the study that triggered the story) have nothing to do with poverty.

No link at all. None. Zero. Nada. Zilch.

I’m not joking. There’s no estimate of the number of people below some measure of a German poverty line. There’s no calculation of any sort about living standards. Instead, this story (and the underlying report) are about the distribution of income.

…people [are] defined as poor when living on an income less than 60 percent of that of the median German household.

One might be tempted at this point to dismiss this as a bit of journalistic sloppiness. Indeed, one might even conclude that this is a story about nothing.

After all, noting that some people are below 60 percent of the median income level is about as newsworthy as a report saying that half of people are above average and half are below average.

But there actually is a story here. Though it’s not about poverty. Instead, it’s about an ongoing statist campaign to redefine poverty to mean unequal distribution of income.

I’m not joking. For instance, the bureaucrats at the Paris-based Organization for Economic Cooperation and Development actually put out a study claiming that there was more poverty in the United States than in nations such as Greece, Portugal, and Turkey.

How could they make such a preposterous claim? Easy, the OECD bureaucrats didn’t measure poverty. Instead, they concocted a measure of the degree to which various countries are close to the left-wing dream of equal incomes.

And the Obama Administration also tried to manipulate poverty statistics in the United States in hopes of pushing this statist agenda of coerced equality.

Robert Rector of the Heritage Foundation wrote about what Obama tried to do.

…the Obama administration…measure, which has little or nothing to do with actual poverty, will serve as the propaganda tool in Obama’s endless quest to “spread the wealth.” …The current poverty measure counts absolute purchasing power — how much steak and potatoes you can buy. The new measure will count comparative purchasing power — how much steak and potatoes you can buy relative to other people. …In other words, Obama will employ a statistical trick to ensure that “the poor will always be with you,” no matter how much better off they get in absolute terms. …The weird new poverty measure will produce very odd results. For example, if the real income of every single American were to magically triple over night, the new poverty measure would show there had been no drop in “poverty,” because the poverty income threshold would also triple. …Another paradox of the new poverty measure is that countries such as Bangladesh and Albania will have lower poverty rates than the United States, even though the actual living conditions in those countries are extremely bad.

Even moderates such as Robert Samuelson recognized that Obama’s agenda was absurd. Here is some of what he wrote.

…the new definition has strange consequences. Suppose that all Americans doubled their incomes tomorrow, and suppose that their spending on food, clothing, housing and utilities also doubled. That would seem to signify less poverty — but not by the new poverty measure. It wouldn’t decline, because the poverty threshold would go up as spending went up. Many Americans would find this weird: People get richer but “poverty” stays stuck.

To put this all in context, the left isn’t merely motivated by a desire to exaggerate and misstate poverty. That simply the means to an end.

What they want is more redistribution and higher tax rates. The OECD openly admitted that was the goal in another report. Much as all the fixation about inequality in America is simply a tool to advocate bigger government.

P.S. Germany is an example of a rational welfare state. While the public sector is far too large, the country has enjoyed occasional periods of genuine spending restraint and German politicians wisely avoided a Keynesian spending binge during the last recession.

P.P.S. Though Germany also has its share of crazy government activity, including a big green-energy boondoggle. And lots of goofy actions, such as ticketing a one-armed man for have a bicycle with only one handlebar brake, taxing homeowners today for a street that was built beginning in the 1930s, making streetwalkers pay a tax by using parking meters, and spending 30 times as much to enforce a tax as is collected.

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