Thursday, April 28, 2011

Oxfam International

If you're interested in policy research, Africa, and the environment, you could do a lot worse than this:

The Rain Doesn't Come On Time Anymore: Poverty, vulnerability, and climate variability in Ethiopia

Oxfam International has a great presence on Scribd. This is something that I can also recommend.

Tuesday, April 26, 2011

Yes, and Why Are They Starving?

There is more than one way to be impoverished. You can be poor and have the means of sustaining your life. In America, even the poorest citizens have access to the means by which they can feed and clothe themselves. It's not like that in the rest of the world, of course, and Foreign Policy has two takes as to why this is true:

Jeffrey Sachs, an advisor to the United Nations and director of Columbia University's Earth Institute, is one such expert. In books and countless speeches and television appearances, he has argued that poor countries are poor because they are hot, infertile, malaria-infested, and often landlocked; these factors, however, make it hard for them to be productive without an initial large investment to help them deal with such endemic problems. But they cannot pay for the investments precisely because they are poor -- they are in what economists call a "poverty trap." Until something is done about these problems, neither free markets nor democracy will do very much for them.
But then there are others, equally vocal, who believe that all of Sachs's answers are wrong. William Easterly, who battles Sachs from New York University at the other end of Manhattan, has become one of the most influential aid critics in his books, The Elusive Quest for Growth and The White Man's Burden. Dambisa Moyo, an economist who worked at Goldman Sachs and the World Bank, has joined her voice to Easterly's with her recent book, Dead Aid. Both argue that aid does more bad than good. It prevents people from searching for their own solutions, while corrupting and undermining local institutions and creating a self-perpetuating lobby of aid agencies. The best bet for poor countries, they argue, is to rely on one simple idea: When markets are free and the incentives are right, people can find ways to solve their problems. They do not need handouts from foreigners or their own governments. In this sense, the aid pessimists are actually quite optimistic about the way the world works. According to Easterly, there is no such thing as a poverty trap.
When I hear the words "Goldman Sachs," why do my eyes glaze over? Allow me to turn on the sarcasm for a moment.
Of course "aid" is the problem. Everyone knows that if you try to feed, clothe and house people who are desperate, you'll end up with a disaster.
Except when we talk about things like the Marshall Plan, of course. Sarcasm, off.
Doesn't the United States have a moral obligation to try to do something? I thought that was one of the easiest things to explain to people. 
Here's Theodore Roosevelt, writing in 1894:

Preachy, yes. But, relevant? Absolutely.

Monday, April 25, 2011

The Answer is a Resounding Yes

The headline reads, "Should Wal-Mart Pay Workers $12 An Hour" and what strikes me about that is the nearly-universal simplicity of the question. Yes, Wal-Mart should pay their workers more:
Walmart is plowing through its global responsibility goals, cutting down on plastic waste, improving energy efficiency in factories, and reshaping the crop diversity of entire U.S. regions. But it's doing a less-than-stellar job when it comes to doing right by its workers. According to a new report(.pdf file) from the University of California, Berkeley, Walmart could significantly raise the wages of its employees without affecting its low prices. Chronically underpaid people around the country could benefit.
I have a personal belief that this would greatly improve the economy. And I base that on common sense. If Wal-Mart were to pay its workers just a little more, that money would go back into the economy. It would, I believe, then be spent at Wal-Mart, increasing sales and profits. It wouldn't automatically replace the money paid out, but Wal-Mart would see a benefit in increased sales, happier employees (not all, but some, for sure) and that would, in turn, lift some people out of poverty (or get them closer to being lifted out).

When you work for hourly wages, you don't have many other options besides sticking it out in a place. You work through your initial probationary period and then you work to get better schedules, better hours, and better pay by making it to the various milestones along the way. These milestones are designed to give employees incentives. If you stay for a year, you'll make x amount more than what you're making more. Many times, you know that, after three or five years in a position, you can run into a cap; meaning, once you've made it to the top of the pay scale, that's it. No more raises.

If Wal-Mart is serious about being a good corporate citizen, making the wages that it pays more progressive and a little bit better would go a long ways towards improving the lives of the people who work there.

Advocates of business "freedom" sometimes applaud when workers take a pay cut to help save a company (these pay cuts hurt our economy because those workers have less discretionary income for things like going to Wal-Mart and all that). Wal-Mart doesn't need saving right now. But, if it took this step towards raising wages, it would build up goodwill for a later date.
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Sunday, April 24, 2011

Hey, That's No Way to Analyze the Problem

See if you can spot the same triggers in this part of William Bennett's editorial:

This entire debate begins with the assumption that the Bush tax cuts from 2001 and 2003 led to a ballooning of the deficit problem. But as Brian Riedl at the Heritage Foundation has shown, those cuts, at every level, are responsible for only 14% of our current deficit problem, with the tax cuts at the upper margins being responsible for only 4%.
Indeed, the bulk of our deficit problem is because of "above-average spending, not below-average revenues." And there is a serious question as to whether raising rates on the wealthy raises more revenue at all based on behavior, flexibility and numbers.
Recently, The Wall Street Journal editorial page analyzed what marginal tax rates would yield at the upper brackets even if 100% of income were taxed and assets were not moved around (a mighty assumption). The answer: There simply is not enough money to be taxed among the wealthy to solve our deficit and debt problems.
If you want to argue that the Bush tax cuts didn't add to our deficits and didn't hurt our long-term financial outlook, then why would you turn to the Heritage Foundation? Who is the Heritage Foundation? Well, it's hardly a non-partisan operation. It clearly advertises itself as a conservative organization and it opposes tax increases of any kind. Why would someone cite their research and not expect for the point to be dismissed as being biased?

Then, Mr. Bennett cites The
Wall Street Journal's editorial page. And this is run by whom? It's well in the hands of conservatives, and the Wall Street Journal is owned by Rupert Murdoch.

What a poor example of making a case. This op-ed should have come with a warning attached to it: nothing in it "is intended to be a factual statement."

The problem is, organizations like CNN will run this material, and it will have virtually no effect on advancing the debate or informing the public. It won't influence anyone to change their mind unless that person is completely uninformed and easily manipulated. Anyone fully versed in the details of the debate will see the triggers in this article and realize that Mr. Bennett has turned in a lazy piece.

Yes, the big question here is: "why did CNN even bother to run it?"
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Saturday, April 23, 2011

The Fallacy Laid Bare

See if you can read this and not see that there is an underhanded premise being shaped here:
When politicians argue that, for the sake of fairness, we must raise taxes on the entrepreneurial class — and make those “millionaires and billionaires” bring us a few state-subsidized beers on the beach — they are unwittingly undermining the possibility of achieving the opportunity society they regret not having.
We are not a perfect opportunity society in the United States. But if we want to approach that ideal, we must define fairness as meritocracy, embrace a system that rewards merit, and work tirelessly for true equal opportunity. The system that makes this possible, of course, is free enterprise. When I work harder or longer hours in the free-enterprise system, I am generally paid more than if I work less in the same job. Investments in my education translate into market rewards. Clever ideas usually garner more rewards than bad ones, as judged not by a politburo, but by citizens in the marketplace.
To throw the word "politburo" into the discussion is a buzzword that is supposed to associate "higher taxes on the rich" with "communism." Did you fall for it? Of course not. Whenever a member of America's elite, either academically, financially, or socially speaks to the American people about taxes, fairness, meritocracy, or the American dream, the use of the word "politburo" is supposed to conjure up terrifying images of a Soviet Union on the march.

Of course, there is no Soviet politburo anymore, and there hasn't been one for about twenty years. But Mr. Arthur Brooks knows that if he can link the idea of forcing the rich to pay for the benefits of living in a free society with a communist plot to bring socialism to America, he can convince people to vote against--or advocate against--their economic self-interest.

The advocacy is inherently suspect whenever the discussion of whether the wealthy should pay more in taxes. As shown here, there's no use denying it, wealthy people do have to pay taxes. But what this article doesn't really acknowledge is this:

The tax burden in America has dropped for wealthy Americans over the last fifty years. It plunged during the Reagan era and dropped precipitously during the Bush Administration (2001-2009). Raising taxes on the rich is one thing--actually getting them to pay their taxes is the other half the battle:
The dean of tax reporters, David Cay Johnston, has a fantastic cover story in the Willamette Week (of all places and 40 other alt-weeklies), shining a bright light on just how unfair and unequal the US tax system is. The whole 3,000-word article is well worth reading in full, but here are some highlights:
  • In Alabama, the tax burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more.
  • Between 2000 and 2009, the US population increased by 25,584,644. Meanwhile, the number of people with jobs increased by just 2,803,967.
  • John Paulson has paid no taxes at all on the $9 billion of income that he made in 2008 and 2009.
  • Frank and Jamie McCourt, the owners of the Los Angeles Dodgers, have not paid any income taxes since at least 2004.
  • Between 2000 and 2008, corporate profits rose by 12% while corporate income taxes fell by 8%. Without any change in the corporate income-tax rate.
  • George W Bush did sign one — just one — tax increase. It was on children under the age of 17.

I suspect that if you "raised" taxes on the wealthy, stories about how wealthy people were "leaving" America would surface. If we are already not collecting much in taxes from the wealthy, why are there so many advocates for keeping tax rates on the wealthy low?

One theory is that the only wealthy people who actually pay taxes are the ones who want to work in the public sector. These are the wealthy individuals who have to file ethics reports and who expect to have their tax returns examined closely if they choose to work for the government. I don't think that a wealthy person who has nothing but disdain for the tax system worries about whether or not they are going to face similar scrutiny.

Tax rates remain low for the individuals who actually pay their taxes because many of them work in the public sector. Tax rates are irrelevant for those individuals who have taken their money offshore, decided to pursue a tax strategy of openly cheating, or who have created a business situation where they are able to game the system.

Any change in the tax code would have to be accompanied by strict enforcement and auditing of tax laws and tax returns by an IRS that would have to be directed to pursue wealthy individuals who commit fraud, the ability to pursue those individuals who move their money offshore, and the political will to challenge a system that benefits only a handful of powerful Americans.

If the system were even remotely honest, wealthy Americans would pay their share of the costs of civilization. These costs are rising every day and the burden on people who are not sophisticated enough to lie, cheat, or steal becomes greater on an annual basis. Do we have a discussion about fairness, or about fear? Unwarranted fears are always used to distract people from the real issues at hand. Namely, the gap between rich and poor is growing and no one seems to know how to stop the process and reverse the trends which are shrinking the middle class, creating endemic poverty in groups that saw economic growth during the last half of the Twentieth Century, and leaving us with an economic system that is not sustainable.

If it is argued that we cannot sustain a large Federal deficit then why isn't anyone arguing that concentrating wealth in the hands of a few elite individuals is an even quicker road to economic ruin?

Until we begin to have an honest discussion about these issues, we will be treated to more of this "politburo" talk.
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