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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Copyright 2017

Albert D. McCallum