What Is Social Justice?

Column 2017-16 (5/8/17)

There is nothing new about using deceptive slogans and buzz words to sell ideas. This tactic is often focused on selling bad ideas. Thus, the term “social justice” has been revived and inflicted upon us.

Social justice isn’t a new idea. It is merely a rebranding of an old idea. Who could possibly oppose something as high sounding as “social justice?” To oppose social justice must be support for social injustice. Who would dare do that?

The first line of Wikipedia’s entry on social justice states.: “Social justice is the fair and just relation between the individual and society.“ Any definition that relies on two totally ambiguous words isn’t a good start. “Fair” and “just,” like beauty exist only in the eye, or mind, of the beholder. That which is fair and just to one may be oppression and tyranny to others.

Today’s social justice crusaders lean heavily on the claim that social justice decrees that individuals are entitled to certain things, such as medical services, education, and housing. There is no limit on what can be added to the list.

Calling such entitlements social justice is supposed to ward off nasty questions. No one is supposed to ask why the entitlement exists, or who will pay for it. Social justice might be best described as armor for bad ideas. The armor doesn’t do a thing to improve the idea.

We only have two things for our use, unprocessed natural resources and human effort. Everything else is produced by combining these two resources. Most natural resources aren’t very useful before they are processed with human effort.

Everything we have is a product of human effort. Even the air you breathe isn’t of much use unless you expend your energy inhaling it.

Calling something an entitlement doesn't bring it into existence. People must produce it. If the person using the entitlement doesn’t produce it, or produce something to trade for it, someone else must.

Unless someone volunteers to produce or pay for the entitlement, someone must be forced to produce it or pay for it. Forcing someone to serve another is involuntary servitude, also called slavery.

Those who advocate entitlements are calling for slavery. Calling entitlements social justice is at the most a thin mask for slavery.

Anyone who wants to advocate slavery is free to do so. They shouldn’t expect sympathy when they crawl off to a safe space to avoid the criticism they earned. Neither should they expect the taxpayers, or anyone else, to pay for the safe space. In other words, safe space isn’t an entitlement.

A true human right must be equally available to everyone. Anything that forces one to serve another can’t be a universal right. It is only a special privilege that forces some to serve others.

The only right that can be shared by all is liberty. Everyone can be free to live as they choose and interact with those who are willing. Freedom doesn’t include the right to commit aggression against anyone. Aggression destroys the freedom of the victims.

Individuals charitably using their own wealth do far more good than politicians and bureaucrats doling out wealth seized from others. Some wealthy people claim they aren’t paying enough tax. If they really believed that, they would shut up and start writing checks.

Life will never be completely fair and just by anyone’s definition. Voluntary cooperation will produce more fairness and justice than will ever come from “do it my way or I will hurt you” government. Totalitarian politicians will disagree with this conclusion.

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What Will Balance the Federal Budget?

Column 2017-15 (5/1/17)

Balancing the government’s budget has long been a hot topic of discussion. Still the deficit continues on the same trajectory, one step down and two steeps up.

 Most of the discussion focuses on two possibilities, raise tax rates or cut spending. Unfortunately politicians usually prefer to cut tax rates and increase spending. So far this plan has only produced oceans of red ink. The last eight years have more than doubled the ink supply.

The accumulated debt is around $20 trillion. That doesn’t include the unfunded promises for future spending such as Social Security and Medicare. The cost of the “entitlements” is estimated to be $100 trillion or more beyond estimated tax revenue.

If we continue on the present course there is a financial train wreck coming. Unfortunately warnings of the coming crash have echoed for so long that many people no longer take them seriously. This head in the sand approach won’t make the financial wreck any less of a disaster when it happens.

On rare occasions someone raises his voice to offer another way to eliminate the deficit. So far those voices have barley made a ripple in the D.C. swamp.

That other way is easy to describe. Also in theory it could work. The big question is, Will it work in D.C?

The first step in the plan is to concede that cutting spending is politically impossible. Thus. forget about cutting spending. Also forget about raising tax rates. We are past the point where higher tax rates begin to decrease revenue rather than increase it.

There is only one option left. Increase the wealth available to tax. In other words we must increase productivity. Government is good at decreasing productivity, but mostly useless at increasing productivity. This may seem depressing. In this case it is the only reason that plan could work.

Economists who study productivity have concluded that without the burden of excessive regulations productivity and incomes would be at least twice what they are. This sounds believable. If over the last 70 years productivity had increased 1 percent a year more than it did, incomes would be double what they are.

This would have doubled tax revenue. That is enough to eliminate the federal deficit and provide a tidy surplus. Of course that would have happened only if spending didn’t exceed current levels. That is the fly in the ointment.

Unspent money drives politicians mad. If there had been more money available, Who wants to bet that spending wouldn’t have increased as much as tax revenue did?

Why did I bring the plan up at this time? President Trump has promised to drain the swamp of regulations. If he actually does we will have a real life test of the plan. I doubt that much drainage will happen. Perhaps there is a chance that it will.

If the regulations are dumped and increased revenue rolls in, what government does will be up to the voters. If voters continue to demand more spending on more “free” goodies, that is what the politicians will deliver. The spending orgy will continue until the well runs dry. I don’t know how many decades it be until the end. However long it takes it will happen.

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Copyright 2017

Albert D. McCallum

Preventing Diploma Abuse

Column 2017-14 (4/24/17)

Abuse prevention is much in the news. Certainly there is plenty of abuse to be eliminated. Still, I was surprised to read of an abuse that had never crossed my mind. How could I have missed it? How did so many others miss it?

 

Chicago mayor, Rahm Emanuel, is leading the charge to prevent diploma abuse. We can now add diploma control to gun control as a hot school issue. Chicago’s plan doesn’t yet require a permit to carry a diploma. I’m sure there will be time for that later.

I’m not sure how Chicago discovered graduates were abusing their diplomas. Give credit where credit is due. Results, not methods, are what matters most.

After years of urging everyone to earn a high school diploma, Chicago has discovered that graduates need government guidance on how to use that diploma. Believe it or not some graduates might actually use a diploma to get a job. If graduates can get away with using a diploma to get a job, What next? Will they find a way use a diploma to get drugs?

To get a diploma the student must provide proof of acceptance by: 1) A four-year college; 2) A community college; 3) A branch of the armed services; or 4) A trade school or program. That is it. There are no other options.

No where does it say the student must participate in his chosen option. Community colleges accept just about anyone. The student can gain acceptance, collect his diploma, and then skip college. Why should the student have to jump through the hoop? Why should colleges be bothered to process applications from students who have no intention of enrolling?

It is the height of arrogance for government to pretend to know best how a graduate should use a diploma. With 18 million or so recent college graduates unable to find jobs in their field of study, it is ridiculous to be pushing more into college.

For many jobs on the job training is the best way to learn a skill. Yet government pushes individuals into formal education and debt. At the same time minimum wage laws prevent trainees from accepting low wages while learning. Any wage is better than no wage plus debt.

While on the subject of schools this seems to be an appropriate time to revisit the silliness of zero tolerance. In case you missed it, zero tolerance is still thriving. Its implementers apparently are immune to embarrassment.

A five years old girl was suspended from school for pretending a stick was a gun. A four years old boy got the boot for having an empty .22 caliber shell casing. Perhaps the zero tolerance enforcers felt the need to demonstrate that they are gender neutral.

When I was in school it didn’t bother anyone when I bought ammunition during lunch time, brought it back to school, and took it home on the bus. Maybe it was a bit over the top when we used real hand guns on stage in our senior play. No one complained though, including the teacher directing the play.

If anyone did this today the school would be locked down and attacked by a SWAT squad. Life was simpler in the age of dinosaurs.

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Copyright 2017

Albert D. McCallum

Can Government Be Successful?

Column 2017-13 (4/17/17)

It is easy to find government's failures. Its successes are a bit harder to smoke out of their holes. I recently found one of the successes in the most unlikely of places, an op-ed from the “New York Times.”

The success story comes from Pagedale, Missouri, a community of about 3,300 near St. Louis. You know that the success has to be spectacular to get noticed far away in New York city.

Pagedale has its own court which costs about $90,000 a year. Fines and cost collected by the court exceed a quarter million dollars per year. That is nearly a 300 percent return on investment. If that isn't success, What is? If a business hauled in that kind of profit, someone would be screaming for a Congressional investigation.

The dastardly deeds that can get the city into a pagedalions pocket include not walking on the right side of crosswalks; barbecuing in the front yard, except on national holidays; and failing to have a screen on every door. It is also a violation if the enforcer does not like the look of a home owner’s drapes or if the window blinds are not neatly hung.

The Pagedale court handled 5,781 cases in 2013. That is about 1.75 cases per resident. The money collected adds up to about $75 per resident.

Policing for profit wasn't invented by Pagedale. Speed traps have been around almost as long as automobiles. Michigan still has a law enacted to cut down on speed traps. The law banned speed limits of less than 25 miles per hour. It has been amended to create a few exceptions. Still, most speeding violations are much about revenue and little about safety.

Code violations and speed traps are small potatoes in government's quest for other people's money. The big leaguers play at the asset forfeiture table. Why bother with hundreds of dollars when tens of thousands, or even millions, are there for the taking?

In civil asset forfeiture the enforcers skip over people and go straight for the loot. They file a claim that certain assets may have been involved in a crime. The next steep is seizure of the assets. The owner can attempt to get his presumed guilty assets back if he can jump through all of the right hoops.

The first hoop usually is posting bond for the privilege of trying to reclaim his own property. To its credit Michigan did eliminate this hoop. Posting bond can be a challenge when all of the owner's money and other assets have been taken from him.

The national government has developed a nasty habit of seizing bank accounts for the dastardly deed of the account owner making too many deposits of less than $10 thousand. A sheriff in Florida took cash from anyone caught in his county carrying more than a hundred dollars. He claimed that anyone carrying $100 or more must be dealing in drugs.

In most cases of civil asset forfeiture no person is even charged with a crime, leave alone convicted. Civil asset forfeiture should be abolished. A criminal conviction should be prerequisite to forfeiture. Unfortunately abolition isn't going to happen soon.

Squeezing the the profit from fines and forfeitures would greatly discourage enforcers from pursuing money instead of criminals. No one involved in collecting fines and forfeitures should be allowed to benefit from the collection.

All fines and forfeitures should be put in a separate fund where they couldn't be spent by or for government. The money could be used to reduce taxes, compensate crime victims, or some other worthy purpose. With the profit removed from fines and forfeitures, don't expect the fund to ever grow large.

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Copyright 2017

Albert D. McCallum

Is Capitalism Good?

Column 2017-12 (4/10/17)

     Advocates for capitalism passionately defend the word. Seldom do they bother to offer a coherent definition of what they are defending. To them the definition is obvious. The definition of capitalism is also obvious to its opponents. Few stop to ask, Do the definitions in the minds of the two sides have anything in common?

     What is capitalism? Even more basic, What is capital? We work and produce to provide the things we want to use. The tools, equipment, materials, etc. used to produce consumer goods are called capital. Without capital we wouldn't be able to produce much of anything. All we would have to work with would be our bodies.

      Try to imagine people living without any capital. About as close as we can get would be naked hunter-gatherers foraging with their bare hands. Life without capital wouldn't be good. Even the most primitive tribes have at least a few tools. How can capital be a bad thing? If capital isn't bad, Why is capitalism bad? 

     Communists, socialists, fascists and just about everyone else seeks to accumulate capital. If we call them all capitalists, the word "capitalists" won't mean much of anything. What does capitalism mean?

     The advocates for capitalism probably have in mind a highly efficient, smoothly running economy based on freedom and voluntary cooperation. Unfortunately they assume that the word capitalism creates this image in everyone's mind. It doesn't.

      The advocates for capitalism commonly imply that our existing economy is capitalism. Opponents of capitalism can be forgiven if they look at our existing economy and conclude that it is what capitalism is. It is also understandable if they don't like the the crony capitalism they see.

     Those who insist on using the emotionally charged and nearly meaningless word “capitalism” are largely responsible for the confusion. Or, perhaps they really want to defend crony capitalism, If so they are battling on behalf of the indefensible.

      What kind of economy is worth defending? Adam Smith answered that question more than 240 years ago in "An Inquiry Into The Nature and Causes of the Wealth of Nations." After considering numerous economies from various eras Smith concluded that the wealthiest nations were those where government interfered the least with the economy. In other words, freedom is essential for prosperity.

      Experience since Smith wrote further confirms that Adam Smith was right. We ignore his wisdom at our peril. Instead of quibbling over the meaning of vague words, such as "capitalism," advocates for a strong, productive economy should focus on increasing understanding of freedom in the marketplace and how that freedom works for everyone.

      Some will complain that this is too materialistic, we don't need to be more productive. This is short sighted. Those who don't want to consume more don't have to. If we increase our productivity we can produce what we now have with less effort.

       If the poet can sustain himself with 20 hours of work instead of 40 he has 20 more hours to write poems. Those who aren't into poetry can give more to the less fortunate or just relax. Much of the increase in productivity we now enjoy goes into increased leisure time. Most people no longer work 80 or more hours a week.

      Freedom in the marketplace only requires that we be free to produce, buy, and sell as we choose. Individuals wouldn't need government approval to work and produce. Government wouldn't write the specification for the vehicles, appliances, etc. that we make and use. I recently read that there are nearly 100 US government regulations on how to make furnaces and air conditioners.

      It is absurd to even suggest that we live in economic freedom. Unless we want to watch the US waste away we must bring more freedom back to the marketplace.

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Copyright 2017

Albert D. McCallum

What Can Cyber Learning Be?

Column 2017-11 (4/3/17)

No one can provide a detailed picture of the future of cyber learning, or anything else. The future will be made through a series of changes each made in response to the changes that preceded it.

Cyber learning will evolve through time as do all new technologies. We can look through the foggy window between us and the future and see some of the features cyber learning can offer. To enjoy the full picture, we must let cyber learning happen.

The old school system is based on rigidity and conformity. Cyber learning will usher in flexibility and individuality. Each student will have a curriculum planner and personal tutor on call around the clock all year long. Say goodbye to school years, school days, and school hours, and all the conflict and controversy they generate.

The learning shop will always be open, Every student can have a personal schedule without disrupting anyone else. Plan a two week vacation in February, no problem. Take the summer or winter off, still no problem. Take a day off just because you need it, still no problem. Also, forget about snow days.

Computer programs will test and evaluate each student. The student can then proceed at a pace he is comfortable with. Goodbye busy work. As soon as the student masters a segment the computer will direct him to the next lesson. The computer will retest from time to time to see when a skill needs refreshing.

Location will be as flexible as the schedule. The full spectrum of cyber learning will be as available in a wilderness cabin as in a major city. If a student so chooses he can take his “school” on vacation with him. The potential for interaction with other students won't end at the boundaries of the classroom and the neighborhood. Interaction can reach the entire world.

Person to person assistance will be available on line. The student can have access to a vast array of instructors for assistance. If the style of one doesn't mesh, try another.

Students will need some assistance from learning coaches close at hand. This can be provided in many ways. In some cases parents or older siblings will provide the assistance as is now done by home educators. Incidentally, many of those home educators are already benefiting from using Cyber Learning 1.0.

In many respects home education has been and is leading education to its future. Traditional schools fight off the future at the peril of being cast aside.

Huge schools and school buses are unneeded and obsolete. There is no longer any good reason to congregate large numbers of students in one place. Likewise there is no reason to rigidly segregate students by age or level of achievement. They will all be learning independently. One learning coach could monitor and guide a diverse group of students.

A few things can't be learned on line, at least not yet. Learning hands on skills requires the student to have the equipment to put his hands on. If the equipment is large and expensive it won't be available everywhere. For example, shop classes will require the student to get together with a shop. On the other hand, knitting could be learned any place.

Learning rooms with learning coaches can be opened any place students can be found. Apartment buildings, mobile home parks, and subdivisions can all have their own leaning centers. Groups of parents can establish learning centers for their children.

Entrepreneurs will step in offering to provide learning centers for a fee. A variety of cyber learning programs will be available on line. Don't be surprised if some are available without charge. Only time will tell the ways creative minds find to offer learning services. The only thing certain is the future of learning won't look much like the past and present.

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Albert D. McCallum

The Future of Learning

Column 2017-10 (3/27/17)

      New ideas don't instantly catch on. Many people reject new ideas without even considering their merit. New equals bad is an old formula. Some of the most vocal opponent's of the new are individuals who have a vested interest in the old.

       The opponents of twenty-first century learning do have vested interests in our antiquated school system. Many of them are living well off the old system. They fear that a real step forward for learning would leave them behind. They are willing to sacrifice the children to sustain the obsolete district schools.

      This was on full display in Detroit last year as the Luddites of our times fought to force escaped students back into the failed district schools. More than half of the students living in Detroit have left the district schools.

     Schools should serve the students, not consume them to sustain the failed schools a bit longer. I doubt that "sacrifice the children to save the district schools" will ever be a popular rallying cry.

       Defenders of district schools whine that charter schools aren't accountable. This is a garbage claim. The accountability of charter schools could be improved. Still, they are far more accountable than district schools.

      The real complaint on behalf of district schools is that charter schools provide another choice. That choice makes district schools more accountable to those whom they serve.

      All service providers should be accountable to those they serve. Then they must serve their customers well, or close up shop. Being ruled by unaccountable bureaucrats, who often don't know or care what consumers want, is fake accountability.

      It takes extra effort for parents to have their children in charter schools. If the charter school doesn't deliver, it will lose its customers. That is real accountability. No bureaucrats needed. Of course bureaucrats hate it.

     Our present school system has its roots in the nineteenth century. It was embellished a bit during the twentieth century. Now Common Core seeks to preserve the fossil forever. The system is based on dividing students in to herds by age. Those herds are then driven through the system for 13 years. It is all about the herd, not the individual.

     Inevitably the system aims for mediocrity, and usually falls short. One size fits all doesn't fit anybody. The faster students are held back and bored. Commonly the lack of any challenge leads to bad study habits.

      The slower students are trampled by the herd and left behind. Not everyone has the same ability in all subjects. They may be bored in some classes while being left behind in others. Not all students need the same body of knowledge as others. The system doesn't care. In fifth grade, learn fifth grade stuff because you are in fifth grade.

      It is long past time to lay grade numbers to rest and build curriculum to fit students. Forget about forcing students to march through a curriculum that probably doesn't fit anyone. Cyber learning can liberate students from slavery to the rigidity of grade numbers and one size fits all lesson plans. All we need do is let it happen.

      Computers can continuously measure where the student is at and lead him to the next step. When the student masters a segment he can move on to the next one, instead of marking time with busy work. It won't matter that others are progressing at different paces. What matters is that all will be progressing. What the student learns is far more important than how fast he learns it.

        Not all students will be suited to full scale cyber learning. Most will benefit greatly from it. Next time I will endeavor to provide a thumbnail sketch of of some of the advantages of cyber learning.

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Copyright 2017

Albert D. McCallum

Why Bureaucracy?

Column 2017-9 (3/20/17)

     Most people are familiar with the word ”bureaucracy.”  
What is a bureaucracy?  Why do we have bureaucracies?  What are
bureaucracies intended to accomplish?  What do bureaucracies actually
accomplish?
 
    People free to choose work together to form many enterprises. 
These enterprises produce many things.  The consumers choose which
things they want and decide how much they are willing to pay.  To
succeed, an enterprise must be able to sell its products for more than it
costs to make them.

     To do this the enterprise must please customers.  The enterprises
that well serve their customers prosper.  Those that fail to please
customers perish.  Nothing more is needed to achieve accountability.

     Some enterprises don't sell their products to customers who are
free to buy or reject the products.  Such enterprises aren't accountable to
those they are supposed to serve.  Most such enterprises get their
income from appropriations.  The value of the product is never tested in
the marketplace.

     Most government products never face the marketplace test of
value.  Many departments in businesses share the same lack of
accountability to those they are supposed to serve.  How can
management know if the payroll or purchasing department is operating
effectively and efficiently?  Such departments don't compete for
customers.

     Businesses and some government enterprises commonly out
source services such as cleaning and payroll.  The providers of those
services then have customers to please.  This increases accountability.

     In free markets a business's final product is always subject to the
marketplace test when offered for sale.  In government the opposite is
true.  Some of government's suppliers compete in the marketplace.  The
final product is usually given away or sold to customers who have little
or no freedom to choose, such as those coerced to buy city water.

     Bureaucracy is an attempt to bring some accountability to
enterprises that escape real accountability to customers in the
marketplace.  Those who are accountable directly to their customers
don't need books full of rules about do and don't.  If they don't discover
and heed the right dos and don'ts their enterprise perishes.  That is real
and inescapable accountability..

     This accountability comes from the bottom up.  Bureaucratic
accountability is based on rules  from the top.  Bureaucrats, who at best
have some foggy idea what consumers want, make and attempt, or at
least pretend, to enforce the rules.

     Often the bureaucrats care little about what consumers want. 
Bureaucrats try to enforce the rules with slaps on the wrist and giving
more money to the worst performers.  Rules that started out as means to
an end become ends in themselves.

     Enforce the rule because it's the rule.  Never mind that the rule
frustrates the purpose for which the rule was made.  Soon the
bureaucrats and their minions lose sight of any purpose other than
survival and growth of the bureaucracy.  This process can continue for
so long as money can be squeezed from the taxpayers to pay for it.

     Attempts to reform bureaucracy will fail because human nature
and the bureaucratic environment dictate what any bureaucracy will do. 
With all its faults bureaucracy is still the best way to run an enterprise
that isn't accountable to consumers in the marketplace.  The only real
solution to the problems of bureaucracies is to replace them with
enterprises that are directly accountable to consumers in the
marketplace.

     Those who still complain that charter schools are less
accountable than district schools should read this column again.  
Charter schools may, or may not, have less pseudo accountability to the
bureaucracy.   They have far more real accountability to the consumers
they serve.  Charter schools must please those they serve.

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 Copyright 2017
Albert D. McCallum

What Is Important About Sovereign States?

Column 2017-8 (3/13/17)

       When the Revolutionary War ended, the colonies didn't
automatically become one nation.  Each colony became an independent,
sovereign nation.  The leaders of the new nations realized that alone in
the world each would have a difficult time.

     The new nations banded together under The Articles of
Confederation.  Each nation retained its sovereignty, except for a few
matters delegated to the government of the federation.  The present US
Constitution was born when the convention called to propose
amendments to the Articles of Confederation instead drafted the
Constitution.

     The Constitution didn't end the sovereignty of the member
nations.  The Bill of Rights was added to make it clear that the states
and their citizens weren't to be ruled by the federal government but to
be served by it.  Over time, particularly at the time of the Civil War,
the federal government has morphed into a national government seeking
to rule rather than serve the states.

     In large part the states have surrendered their sovereignty in
exchange for return of some of the wealth taxed away from them by the
federal government.  There is nothing like being bought into servitude
with your own money.  That is worse than making Mexico pay for
Trump's wall.

     Many today want the states to be little more than administrative
districts of a national government.  Should all laws be uniform across
the entire country?

     If someone devises perfect laws that are best for  everyone, it
might make sense to apply them to everyone.  So far I'm waiting to see
the first such law.  Someone may say, What about a law against
murder?  My response is, when someone comes up with a definition of
murder that is agreeable to everyone, let me know.

     Not everyone wants the same lifestyle.  What gives one the right
to impose his lifestyle on another?  With different laws in different
states, we can vote with our feet for the ones we prefer. Individuals
have been voting in this election for all of history.  The colonists who
settled in the new world voted against the old world.

     Some people want to stop the voting with our feet by imposing
the same destructive laws on everyone.  Interestingly, when their
favorite laws don't win, they don't smile and accept someone else's
favorite laws.  We need no further proof of this than to observe how the
so-called progressives are melting down over Trump's election.
 
      I'm not all that pleased with some of Trump's ideas.  So far I have
avoided having a temper tantrum and beating my head on the floor.

     Success is the product of experimentation.  Many experiments,
probably most, don't yield good results.  Those failures are the price we
pay for progress.  The fewer people harmed by failed experiments, the
better.   That experiment called Obamacare should not have been
inflicted on the entire nation.  For one thing, it denied us the
opportunity of seeing 49 alternatives, one or two of which might
actually have worked.

     The attempt to impose one size fits all education on the all 50
states is another on going disaster.  Let 50 flowers bloom and then pull
up the ones that turn out to be weeds.

     Let state sovereignty and diversity flourish.  Then pick the
winners after they actually win.  Quit relying on politicians and
bureaucrats to pick winners from untried rookies at the beginning of
spring training.

     I'm not suggesting that more government at the state level is a
good thing.  We can at least hope that one state will give freedom a
chance.  Faced with success from freedom the other states will be
forced to get on board the freedom train, or be left behind.

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Copyright 2017
Albert D. McCallum

How Dumb Is It?

Column 2017-7 (3/6/17)

   The year is still young.  It's not too young though for making
my first nomination for "dumb idea of the year."  I hope the idea wins
the award.  I shudder to imagine someone coming up with a dumber
idea.

     This idea makes Mr. Trump at his worst seem good.  And, that
is no small accomplishment.  At least Trump appears to have a few
good ideas to balance his ledger.

     Interestingly, the supper dumb idea is attributed to the man
alleged to be the world's richest human.  Bill Gates supposedly wants to
tax robots that take jobs from humans.  Maybe this will turn out to be
fake news, or an early April Fool's Day prank.  I certainly hope so.

     The sophomoric logic behind the proposal is that humans are
taxed on the income they produce; therefore, robots should be taxed
too.  Would the robot hire another robot to file the tax forms?  Of
course, business owners are already taxed on income produced by their
robots.

     Robots increase productivity of workers so that each produces
more.  Thus, fewer workers are needed to make the same amount of
products.  Of course, the increased productivity will lower the price of
the product creating demand for more of the product.  Will the robot get
a tax credit for the new jobs it created?

     The function of invention and innovation is to increase the
productivity of workers.  Increased productivity is the only way to
increase our standard of living.  Gates is proposing to tax away part of
the increase in our standard of living.

     Every innovation that increases productivity takes away jobs. 
Why single out robots for special treatment?  How many scribes have
lost their jobs to printing presses?  How many telephone operators have
been replaced by computers?  How many diggers lost their jobs because
of the invention of shovels?

     One of the greatest job destroyers of all times is the farm tractor. 
It has wiped out millions of jobs driving and caring for horses and
mules.  What would be a fair tax to impose on tractor owners for this
dirty deed?

     A robot is just a fancy piece of equipment.  Equipment doesn't
pay taxes.  Equipment owners will have to come up with the money
to pay the robot tax.  Businesses don't pay taxes either.

     Businesses merely collect taxes for government.  The tax money
must come from customers or employees, or else the business goes
bankrupt.  Instead of cutting prices or increasing wages, the business
will send the robot tax money to government.

     There is a third option.  Government could use the robot tax to
subsidize the businesses harmed by the robot tax.  I hope this option
doesn't make sense to anyone.

     Without the robot tax, consumers will pay lower prices for the
goods produced by robots.   This will leave consumers with money to
spend on things they couldn't buy before.  Someone will have to make
those things.  That means new jobs.

     If government levies the robot tax, then government gets to
spend the increased productivity.  Of course, if government taxes away
all the benefits from using robots, there won't be any robots to tax, or
any increased productivity to spend.

     It appears that Gates believes government will spend wealth
more wisely than will those who produce it.  That is unless the producer
is Bill Gates.  If Gates really believed in the wisdom of government, he
would donate his billions to the cause.

     The robot tax is just one more lame scheme to increase taxes on
everyone.  Government thrives on fooling people into believing
someone else is paying the taxes.

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Copyright 2017
Albert D. McCallum

Why Fear a Trade Deficit?

Column 2017-6  (2/27/17)

 With foreign trade now a front burner political issue we are
likely to hear more about that thing called a trade deficit.  Many people
claim a trade deficit is a bad thing.  How could anything named
"deficit" be good?

     Shakespeare asked, What's in a name?  Let's consider, What is
in the name "trade deficit?"  If a nation imports more than it exports it
is said to have a trade deficit  If your bank account imports more
money than it exports, Would you call the results a deficit?

     Things we import are useful to us.  Things we make and export
are a waste.  Someone else gets to use them.  If we could import all the
stuff we now make we could live the same way we do now.  If we
could get the imports without making anything to export, we would gain
a whole bunch of leisure time.

     If we imported nothing and exported everything we made,
everyone would soon starve.  It seems foolish to brand imports as bad
while praising exports.  It is like calling work good and the things work
produces bad.  Exports can have value to us only in one way.  We can
use the exports to pay others for stuff they make for us.  Without
payment the making is likely to stop.

     How can we import more than we export?  Does it mean we
aren't paying for all of our imports?  One economist pointed out that we
don't have a trade deficit, instead we have a transportation deficit.  A
simple example will explain why.

     Imagine Toyota shipping $100 million worth of vehicles to the
US and selling them.   Then Toyota buys $100 million worth of
assembly line equipment in the US.   Now consider two options.

     In the first option Toyota ships the equipment to Japan and
builds an assembly plant.  When the purchase is transported across the
magic line it cancels the $100 million trade deficit.  Without the
transportation the trade deficit would live on.

     In option two Toyota builds the assembly plant in the US.  As a
result the US increases its trade deficit by $100 million.  Which benefits
the US more, an assembly plant in the US or one in Japan?

     Such foreign investments in the US are the main cause of the US
trade deficit.  Foreign investors create the trade deficit because they find
the US a better place to invest than their own, or any other, country.

     Some Canadians seem proud that Canada usually has a trade
surplus with the US.  Why are they proud that their fellow Canadians
find investing in Canada inferior to investing in the US?

     The saving and investment rate for people in the US is very low. 
Without investment prosperity is impossible.  The US economy would
be in far worse shape than it is if foreigners hadn't made the
investments that created the US trade deficit.  We should say thank you
rather than complain about the trade deficit.

     There is another small contributor to the trade deficit.  Some
money we spend on imports never comes back to buy anything in the
US.  The local currency in some countries is so bad that people prefer
to use US dollars.

     We shouldn't feel badly about the loss of that money.  Taking
money out of circulation in the US increases the value of the money we
still have.  Without having to increase our spending, we get to buy the
things those foreigners didn't buy.  Again, we should just say thank you.

     The trade deficit isn't a debt.  It never has to be paid off.  If
foreign investors want to take their investments home, they are free to
do it.  No one has any obligation to pay them for their investments.

     President Trump wants increased foreign investment in the US. 
He also wants to reduce the trade deficit.  The one thing certain is he
has to fail to achieve one of those goals.

aldmccallum@gmail.com
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Copyright 2017
Albert D. McCallum

To Trade or Not to Trade

Column 2017-5 (2/20/17)                                   

     Since long before my time a battle has raged over whether to
trade or not to trade with people who live in other nations.  A quarter
century ago Ross Perot proclaimed that the sucking sound was our jobs
going to Mexico.  Others were of the mind that the sucking sound was
Ross Perot sucking all of the intelligence out of the room.

     Donald Trump now waves the banner passed down by Perot. 
Now the main villain is China.  Mexico still has a supporting role. 
What is the truth about foreign trade?  Does anyone care?

     Trade is a two-way street.  That is what "trade" means.  Each
party gets something from the other.  When the wealth moves only in
one direction it isn't trade.  It is either a gift, robbery or extortion.   
Believe it or not the Chinese and Mexicans are so selfish neither will
send us an endless stream of gifts.  Even if they would, Why should we
complain?

     We aren't losing jobs to China or Mexico.  When we trade
goods we also trade jobs.  When shirt makers lose their jobs because we
import shirts from China, other jobs are created in the US making
something to pay the Chinese for the shirts.  Those new jobs usually
aren't as obvious as the ones lost.  Sometimes those new jobs do show
up on our radar.  Boeing recently announced that a sale of airplanes to
China would create 50,000 jobs in the US.

     Trade does mean some workers have to find new jobs.  There is
nothing unusual about that.  In Michigan every year 700,000 or so jobs
are lost and replaced with new jobs.  The only way we can increase our
standard of living is to replace low productivity jobs with more
productive jobs.

     Trump claims he will bring our manufacturing jobs back from
China.  That would be a neat trick considering that those jobs didn't go
to China.  So where did the manufacturing jobs go?  They went the
same place the farm jobs went.

     In colonial times about 90 percent of workers were farming. 
Now only about 1 percent are farmers.  We didn't lose those jobs by
importing our food from China.  Farmers now produce more than ever
before.  Mechanization makes it possible for one farmer to grow as
much as many used to.

     Manufacturing jobs are now going the way of farm jobs.  And,
we will be better off because of it.  Imagine what life would like today
if 90 percent of workers were still farming.  Those displaced farmers
make most of the stuff we have today.

     In colonial times no one could have imagined all the non farm
jobs we have today.  Likewise, no one today can imagine all the non
manufacturing jobs that will fill the future.  As long as people have
unsatisfied wants, there will be work to be done.  All we need to do is
give entrepreneurs the freedom to dream and create.  They will find
ways to employ available labor to produce the goods and services
people want.

     Some may ask, What about the money China lends to the US
government instead of spending?  Be assured, the government spends
that money.  The jobs the spending creates may not be very productive. 
They will be as productive as they would be if government borrowed
the money from people in the US.  And, the borrowing from China
won't drain investment capital from the US economy.  Please don't
interpret this as suggesting government borrowing is a good thing.

     The reason people trade is that they find it easier to make
something to trade for what they want than to make what they want. 
Trade benefits both parties, even when they live on opposite sides of the
world.

     Blocking trade may benefit some politically connected special
interests.   The price we pay is that we all have to work harder for what
we want.  Blocking free trade always increases the price of something
people buy.

aldmccallum@gmail.com
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Copyright 2017
Albert D. McCallum

More About Obamacare?

Column 2017-4 (2/13/17)                              

     In a recent column I considered the nature of insurance
along with what insurance can and cannot do.  Insurance doesn't
reduce losses.  It only provides a means of sharing the losses so
none of the insured individuals have to take a big hit.

     If everyone in the insurance pool doesn't face about the
same risk, those who face greater risks must pay higher
premiums.   Otherwise the low risk individuals will bailout
unless coerced to stay.  It won't work to charge 25 years old
individuals and 85 years old individuals the same premiums for
life insurance.

     Obamacare was designed to defy the basic principles of
insurance.  That is why many people believed Obamacare was
designed to fail.  It was believed to be nothing more than a
stalking horse for the complete government takeover of medical
services.

     The foundation of Obamacare was to force some people
to pay the medical expenses of others.  The prime target was
healthy young people who were to be forced into a herd with
high risk individuals.

     Everyone was to be forced to help pay for preexisting
conditions.  Preexisting conditions can't be covered by real
insurance.  There is no unknown risk to share,  Try buying
tornado insurance after your house is blown away.  See how
many insurers are eager to cover your house's existing condition.

     Preexisting conditions are problems.  Those problems
can't be solved with insurance.  There are only two solutions,
rely on voluntary help or resort to extortion.  Obamacare chose
extortion by requiring everyone to pay or else go without
insurance.

     Many people seem to be pleased when insurance
companies are forced to provide additional coverage.  Politicians
spin it as something they are doing to the "evil" insurance
companies.  In reality those "evil" insurance companies must
raise premiums to pay the added cost.  Mandated coverage is
extortion as far as those who don't need or want the mandated
coverage are concerned.

     Together the federal and state governments mandate 100
or so coverages, all of which make insurance cost more.   All
mandates of coverage should be abolished.   Let individuals
choose the coverage they pay for.

     Employer paid medical coverage is a substantial cause of
high costs.  One size fits all coverage prevents individuals from
having the coverage that fits them best.  Also, not even seeing
the bill for their coverage encourages waste.  Some go to the
emergency room for hangnails and colds.  Services that seem to
be free encourage unnecessary tests and all sorts of waste.

     Instead of trying to get rid of employer provided
coverage, Obamacare tried to force its expansion.  To get rid of
the wasteful employer provided coverage we must level the
playing field tax wise.

     Employer provided coverage is exempt from income and
Social Security taxes.  Pay the same money to the employees so
they can buy insurance and it is subject to both taxes.  To
correct this problem all medical expenses, including insurance,
should be exempt from both taxes.  What employer wouldn't
gladly give his employees raises equal to the cost for medical
coverage, in exchange for being relieved from providing the
coverage?

     I haven't come close to even touching everything that
needs to be done to unravel what government has done to make
medical insurance and services far more costly than need be. 
Until we have individuals price shopping for medical services
and insurance, the problems will live on.

     The cost for most medical services have been rising
toward the stratosphere.  Meanwhile, the cost for plastic surgery,
which usually isn't covered by insurance, has been going down. 
With proper incentives all medical costs can be reduced.  More
freedom and choice, not more government intervention, is the
solution.

aldmccallum@gmail.com
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Copyright 2017
Albert D. McCallum

What Is Insurance?

2017-3 (2/6/17) 

 With the battle over repeal of Obamacare descending
upon us medical insurance promises to be in the news for what
is likely to seem like forever.  It is a safe bet that the discussion
will generate more heat than light.  A good start would be
having everyone, especially those in Washington, D.C., know
what insurance is.  A bit of knowledge about what insurance can
and can't do would also be good.

     I am reminded of an age old riddle.  If you call a tail a
leg, how many legs does a dog have?  The answer, of course, is
four.  Calling a tail a leg doesn't make it a leg.  Neither does
calling a harebrained scheme insurance make it insurance.

     Insurance isn't magic.  It doesn't mystically prevent
expenses and loses.  Neither does insurance magically create
wealth to reimburse those expenses and loses.  In fact insurance
adds to those expenses and losses.  Someone has to pay the cost
of providing the insurance.

     Insurance is only an arrangement where many individuals
agree to pay small amounts to compensate a few who suffer
large losses.  There are four requirements for an expense or loss
to be insurable.  First, there must a number of people who face
the same risk of expense or loss.  Second, there must be a very
low probability that more than a few of those people will
experience the loss.  Third, the members of the group must have
little ability to avoid or cause the loss.  Fourth, it must be
impossible to know in advance who will experience the losses.

     A simple example will illustrate the basic principles of
insurance.  Assume that 10,000 people own houses.  History
indicates that on average only three houses will be hit by
tornadoes each year.  The loses can be shared through insurance.

     If some of the houses are in Oklahoma and some in
Minnesota, not everyone faces the same risk.  To make insurance
work, at a minimum those in Oklahoma would have to pay
higher premiums.  Otherwise those in Minnesota would reject
the insurance and buy less expensive insurance that only covered
houses in Minnesota.

     A recent poll found that 80 percent of people want
Obamacare repealed.  Apparently its failures haven't gone
unnoticed.  Sadly those failures were obvious from the beginning
to anyone who looked for them and was willing to see them.

     Obamacare combines insurance with extortion.  A minor
but controversial feature of Obamacare illustrates this point.  The
law mandates the coverage of contraceptives.  Contraceptive
insurance is impossible.  It is no more workable than "insurance"
to fill your cars fuel tank when it's empty.

     If contraceptive coverage were offered as an option, only
those who wanted to use contraceptives would buy it.  Almost,
everyone who bought it would use it.  The "insurance" would
cost more than the direct purchase of contraceptives.  No
sensible person would buy the coverage.

     Government "solved" the problem with extortion.  If you
buy medical insurance you are forced to pay for someone else's
contraceptives.  Refuse to pay the extortion and you not allowed
to purchase medical insurance.

     This is only the tip of the extortion iceberg floating in
Obamacare.   There is more than enough left for another column.

     I accidentally discovered a replacement for Obamacare. 
My spell checker wants to replace it with "macabre."  I did not
make that up.

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Copyright 2017
Albert D. McCallum

What About Jobs?

Column 2017-2 (1/30/17)                                 

     During the 2016 campaign candidates talked much about
jobs.  After a politician speaks the first question to ask is, What
is the truth?  This is at least doubly true when politicians talks
about jobs.  There is something about jobs that causes
politicians, and others, to slip into a fantasy world that defies
reality.

     Donald Trump proclaimed that he would be the greatest
jobs president ever.  Was he talking about snow jobs?  The jury
is still out on that.  He didn't set the bar very high.  I don't
recall the last president who was great at creating real jobs. 
Anyone with access to money, his own or someone else's, can
easily and quickly create make work jobs.

     Before continuing we need to consider a simple question,
What is a real job?  Businesses don't hire employees for the
pleasure of writing pay checks.  Hiring is worth while only when
the employee produces more value than what he costs.  That cost
includes taxes, insurance, fringe benefits and all other expenses
resulting from the hiring.

     It is often impossible to determine exactly how much
value each employee contributes to production.  The total value
all employees contribute can be calculated.  For a business to be
profitable and survive total employee cost must be less than the
total value created by the employees.

     If the business pays some employees more than they
produce, it must pay others less.  Employees who are paid
substantially less than what they produce are likely to find
greener pastures elsewhere.  For any business, losing its most
productive employees is a serious problem.  Thus, businesses
have plenty of incentive to pay employees in accordance with
their value to the business.

      When minimum wage laws would force an employer to
pay more than the worker is worth to the business, the business
can't afford to hire the worker.  Thus, the least productive
workers have no jobs and no income.  For them the minimum
and maximum wage is zero.

     An honest calculation of the impact of minimum wage
laws requires including in the calculation those with no wages
because of the laws.  Of course, we can never be certain exactly
how many jobs are lost to minimum wage laws.  This leaves
plenty of room for advocates of minimum wage laws to lie.

     By trampling on freedom in the marketplace businesses
can find other options when the employees don't produce enough
to pay their costs.  Businesses ask government to protect them
from competition.

     The sugar industry is a prime example.  Thanks to
government protection of the sugar industry you pay twice as
much for sugar compared to sugar prices in most other countries. 
Among other things, government protection of the sugar industry
has pushed hard candy makers out of the US.

     If protection isn't enough, businesses plead for outright
subsidies to cover their losses.  Either way the inefficient,
wasteful production goes on.  The taxpayers and customers are
forced to pay for the losses.  Under our crony capitalism,
government interference with competition causes vast amounts of
waste that drag down our standard of living.  Various studies
find that without the government caused waste, our incomes
would be twice or more what they are.

     Should it come as a surprise that the younger generation
considers capitalism to be a dirty word?   Crony capitalism is
the only capitalism they have ever seen.  Free choice in the
marketplace is what matters.  Provide that and willing investors
will provide all the capital we need to have a vigorous,
prosperous economy.

     Presidents don't create productive jobs.  They protect
wasteful inefficient jobs.  The heart of Trump's job plan appears
to be the protection of inefficient jobs.  The most good a
president can do is to get government out of the way.  Then free
people working together will create productive jobs that
efficiently make the things people want to buy.

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Albert D. McCallum

What Is Wrong With Businesses?

Column 2017-1

     During the recent election campaign politicians and others
devoted many words to the subjects of businesses and jobs.  If
you found it all confusing, don't feel alone.  It was bad enough
that the speakers disagreed with each other.  Far worse, some of
them couldn't utter two sentences without contradicting
themselves.

     The primary purpose of work is to produce things people
want to use.  Businesses and jobs aren't ends in themselves. 
Both are only means of producing consumer goods, including
services.  If an enterprise, whether a business or some other
entity, doesn't produce something of value to consumers it has
failed.  This failure wasted resources that could have been better
used to produce value.

     The ultimate mission of a business is to earn profits. 
When we have freedom in the marketplace there is only one way
for any business to earn profits.  The business must create value.

     The business buys resources, including human resources.
The business sells its products.  If the business sells its products
for more than its resources cost, it has created value and earned
a profit.  If the opposite happens the business has destroyed
value and suffers a loss.  In free markets the business must soon
find a way to create value or else end up on the rocks of
bankruptcy.

     Consumers have the final say on how valuable the
products are.  Businesses must please their customers or perish. 
Businesses may disappoint their customers.  Those disappointed
customers aren't a good source of future sales.  There is a reason
why con artists don't work the same neighborhood twice.

     Consumers acting in free markets weed out wealth
destroying enterprises while rewarding and encouraging
expansion of wealth creating businesses.  This process is far
more efficient and effective than anything politicians and
bureaucrats can devise.

     For so long as consumers are free to choose in the
marketplace, businesses can't make a career of ripping off
consumers.  Only when consumers lose the freedom to choose
can businesses endlessly rip off those customers.

     Only "do it my way or I will hurt you" government can
empower businesses to exploit customers.  Many businesses
today are ripping customers off.  The ripoffs are possible only
because licensing laws and a swamp full of regulations protect
politically connected businesses from real competition.

      The "occupy Wall Street" crowd made a valid point
when they claimed many big businesses were thriving on ill
gotten gain from exploitation.  They went completely off the
track with their proposed solution.  More laws, regulations and
bigger government weren't the answer to a problem caused by
too many laws and too much government.

     The only reason businesses grow "too big to fail" is that
government protects them from competition and bails them out
when they grow too big to succeed on their own.  The real
problem is crony capitalism where government and big
businesses conspire to take care of each other at the expense of
everyone else.

     Inefficiency, waste and exploitation are always on
defense and fighting losing battles when businesses are free to
produce as they see fit and fully depend on satisfied customers
free to reject any and all products.  The same formula works
equally well with non business enterprises.  Yes, government
schools, I'm looking at you.

aldmccallum@gmail.com
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Albert D. McCallum