Spending Other People's Money

Now that I'm on my break, I hope to be posting more frequently in the next few weeks than I have recently. I want to start off by quickly sharing my thoughts on the morality of taxes and government spending.

Whenever policymakers create new laws that require funding, they must keep in mind that they are spending other people's money. Since taxation is not voluntary, people aren't paying the government for services, and taxes cannot simply be thought of as the "price" for a government provision of goods. Since government programs can only be funded through coercive measures, it is a moral imperative that governments demonstrate that they are justified in raising such taxes.

I don't think that anything I've said so far is controversial. The debate lies in what counts as "justified", and I will devote many posts in the future to examining that thought.

The Truth about "Sweat-Shops"

I have often suspected that there was something amiss about the argument in favor of imposing minimum wages and standards for working conditions on sweat-shops in poor countries. If people are willing to work in them, shouldn't they be allowed the opportunity? I'd love for everyone to make $100 an hour and work in comfort, but I suspect that the way to get there is through economic development and not through government regulation. Paul Krugman makes this argument more elaborately and intelligently than I can here and here. Let me know what you think.

Random Reflections: 11/15

Here are my thoughts on a few major recent events:

• I'm elated at the release of Aung San Suu Kyi, but as The Economist is wise to note, her release probably has strings attached.

• Obviously, I'm glad that the Republicans took control of the House, but I'm disappointed that it largely came at the expense of fiscally conservative Democrats. The Blue Dogs are probably my favorite main-stream coalition.
• In response to public obsession over the deficit, an obsession I find misplaced, the New York Times has published an interesting tool for examining how best to eliminate the deficit. Check out a blank one here and my version here (note that the only tax increases I support are a carbon tax and a measure that will close loopholes).

• The New York Times finds it unlikely that Don't Ask, Don't Tell will be repealed in light of the elections. I think that it would be a disappointment if we didn't get such an absurd policy removed. My hope is that the Democrats will trade spending cuts for the policy's repeal. I doubt it will happen, but I think it would appease both liberal Democrats and help new Republicans keep Tea Party favor.

• I think that the most important thing for the new Congress to remember is that cutting spending is far better fiscal policy than raising taxes, especially in an economy filled with wasteful and inefficient subsidies and earmarks.
• My prediction: There will be a lot of partisan grandstanding during the lame duck session, and then real compromise will happen.

A Defense of Fiscal Conservatism

Today's post is a response to what I think is a common misconception. I think people sometimes make the assumption that wanting to limit government involvement in the economy is equivalent to selfishly placing the interests of oneself (or business or unions or whatever) over the interests of others. While I am certain that this assumption is true in some cases, I know that it is not true all of the time and suspect that it is true very rarely.

There are certain goods that many people think should be available to everyone. A few commonly cited examples are a clean environment and healthcare. I agree that these are two things that society should provide for its members. However, that is not equivalent to saying that government should provide a clean environment and healthcare. Government is once mechanism for providing goods to society. Another is the free market. The fiscally conservatives view is not that these things should not be provided, but that they should be provided by market forces and not by government.

Arguing in favor of that point is one of the points of this blog, so I won't try to justify that position in one post (instead, I'll attempt to do it in many). I just want to make sure I'm being clear about what I believe, namely that in most circumstances the free market is a far more effective mechanism for increasing social welfare than government.

My Hope for the Future

The midterm elections are fast approaching, and in the time between now and November 2nd I will be doing a series of posts about which individual candidates I support. Most or all of these posts will be about New York elections in which I can vote. I wish to wait until the primaries are finished before I begin that series of posts, however, so today's entry will outline the direction in which I hope the midterms take our nation.

There are four issues which I think will be important after the midterms: the economy, climate control, immigration, and healthcare (if the Republics win one or both houses). While both parties will attempt to solve these problems, they will likely have very different approaches. I expect the Democrats to take fiscally liberal approaches to fixing the economy and climate control, with measures such as increasing unemployment benefits, tax cuts for the middle class, further stimulus measures (although I'm sure they won't call it that), and subsidies for green technology. I think the Democrats will attempt to solve immigration issues by making borders more open and by creating an easy path to citizenship for illegal immigrants already in America. I expect the Republics to take more fiscally conservative measures to fix the economy, such as more extensive tax and spending cuts and attempts to reduce the budget deficit. I expect them to resolve the immigration issue by increasing border security and attempting to root out illegal immigrants. I am uncertain of the path they will likely pursue on climate control.

While my opinions are scattered between the two parties, the majority of them align with the Republican position. I think the fiscally conservative approach to solving the economy is more responsible and will be more effective in the long run. I think spending needs to be cut and that the deficit needs to be reduced, and I simply don't trust Democrats to do that. As I have previously written, however, I support a very open immigration system. I think that with a Democratic president and a Republican congress (which certainly won't have a 2/3 majority), this is still achievable. I am wary of the Republican response to healthcare, however. I in no way support the current Democratic solution, but I feel that a Republican congress frantically removing whatever pieces of the legislation they can could complicate the system further. Fortunately, Obama won't allow that to happen. Instead, I think that a full overhaul of the healthcare system is needed. Unfortunately, Obama won't allow that to happen either.

I think that smart environmental reform comes in the form of correcting market failures, not through expensive subsidies. For example, a gas tax would go a long way towards reducing emissions and would make that market far more efficient. I don't believe that Democrats will follow that approach. However, I fear that Republicans will simply try to protect the interests of big business instead of finding smart market-based solutions (oil companies obviously won't want a gas tax, for instance). My hope is that a Republican congress bent on cutting spending and a Democratic president committed to improving the environment will construct a compromise that consists of market reforms.

Overall, I am hoping for Republicans to take control of both houses of congress, however unlikely that is. I am not universally endorsing the positions of the Republican party, but, lame duck issues aside, I think the combination of a Republican congress and a Democratic president is the most beneficial situation for our nation.

Religious Tolerance Improves Our Nation

I have been slow to blog on this subject because I hoped that it would fall to the background quickly enough so that there would be no need. Unfortunately, it appears that I overestimated the advancement of religious tolerance and the quality of American political discourse. I find it absolutely appalling that anyone could oppose the construction of the Cordoba House Mosque on Park Place in NYC. Opposition to its construction is an insult to all decent Americans. Not only does the opposition movement act with a mean-spirited sense of bigotry, they are opposing a project which is good for America. Here are 5 reasons that the country will be better off with the Cordoba House's Mosque:

1. The Cordoba House Mosque will increase America's national security

Allowing moderate Muslims to build a mosque near Ground Zero shows the world, especially Muslim extremists, that the American public understands who its enemy is. It will erode the extremist argument that America is intolerant of the Islamic faith. Building the Cordoba House Mosque will also allow domestic Muslims to assimilate more completely into American society, reducing the chances that they will be driven to extremism.

2. It will show the dedication of American citizens to the opposition of terrorism

It is crucial that the Islamic world understands that we are at war with terrorists, not Muslims. Al Qaeda and other extremists hate moderate Muslims as much as they hate Americans. It is therefore strategically necessary that we take every opportunity to unite with moderate Muslims to fight extremism. As they say, the enemy of my enemy is my friend. Supporting the Cordoba House Mosque will remind moderate Muslims that we are on the same side.

3. Tolerance of the project shows a respect of religious freedom

This point needs little elaboration. The freedom of religion is a basic constitutional right. I find it ironic that those who oppose the building of the Cordoba House the most fervently are often the most outspoken supporters of the Constitution. To me, the freedom of religion is the freedom to practice your religion without any form of persecution. Opposing the building of a mosque is clearly an act that violates the religious freedom of American Muslims.

4. It also shows a respect for the rights of private property

Respecting the rights of private property is another constitutionally guaranteed right. This is not only the freedom to have personal property protected from the government, but also the right to do what you wish with your own property, free of ridicule. These are two of the most fundamental democratic rights, and those who oppose them are damaging our democracy.

5. The Cordoba Project will help Americans understand the teachings of Islam and the motivations of the Muslim world more completely

This is part of the official mission of the Cordoba Project. It is a noble goal that would improve our nation culturally, as well as improving our relations with the Islamic world. The fact that 60% of Americans oppose the building of the Cordoba House Mosque shows that this message is sorely needed.

I have found some small measure of support among America's citizens who support this project. Featured on the Cordoba Initiative's homepage is a letter from Rabbi Burt Visotzky thanking President Obama for his support of the "Ground Zero Mosque". I find the letter to be an inspiring reminder that interfaith understanding is not gone from this country.

Nearly Open Borders

Immigration is the issue that won't go away, and I'd like to weigh in. I think that the current immigration system is fundamentally flawed, and that smart immigration reform will make life better for Americans as a whole.

Our current immigration system spends vast resources protecting the border against the entry of undocumented workers, detaining illegal immigrants, and auditing businesses so that the government can force them to fire illegals. This policy is bad for the country because, simply put, immigration is a good thing for America. Immigrants increase domestic demand (which is the goal of unemployment benefits and other stimulus spending), and they reduce the prices we pay for goods by increasing the labor supply. This also lowers the wages that are paid to workers in the short run, but in the longer run lower wages cause companies to expand, hire more workers, and bid wages at least partly back up. As with many economic policies, there are individuals who are made worse off by immigration (though not as worse off as it may seem, because even workers who get paid less enjoy the benefit of lower prices). Basic economic theory tells us, however, that in this case the gains to the rest of the country outweigh the costs to those individuals (see here and here for more complete arguments). Under current immigration policy, we are spending vast sums of taxpayer money to make ourselves worse off. Obviously, that's not good.

Good immigration reform therefore makes it as easy as possible for immigrants to enter the country. We should be careful to keep out those that pose a threat to national security, but otherwise immigrants should be allowed to enter unhindered. In addition to the gains outlined above, a more open immigration policy makes the country better off by reducing the amount of resources we spend combating illegal immigration. A policy of (nearly) open borders therefore causes us to spend less money and allows immigrants to improve our country. Instead of spending lots of money making ourselves worse off, we'd be spending less money making our country richer and more secure.

I also think that there should be a way for current illegals to become citizens (or at least legal immigrants). They should have to pay a fee that will cover the costs of naturalization and should have to settle unpaid taxes, but otherwise should be unpunished. They have already been here improving our country, and shouldn't be asked to cover the costs of past, flawed policies.