Archive for the ‘Finance’ Category

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Check back in 12 years

December 10, 2016

This is interesting news, particularly since it’s being privately funded and the benefits are non-directed.

A Privately Funded Experiment in a Universal Basic Income
Dozens of villages in Kenya will soon be receiving payments.

A U.S.-based group is preparing a pilot program in Kenya that will test the effects of a universal basic income—the increasingly popular concept of giving virtually everyone in a community unconditional payments on a regular basis. Unlike past large-scale experiments of this sort, this one is being run and funded privately.

The organization behind the effort is GiveDirectly, a charity whose work in Africa is based on the idea of giving people cash without restrictions on how the money can be spent. (The underlying anti-paternalist principle is that the needy know their needs better than outsiders do.) That outlook led naturally to an interest in the basic income, and so the organizers conceived a randomized control trial:

• In one set of villages, every adult will receive monthly payments equivalent to 75 cents a day for two years.

• In another set of villages, every adult will receive such payments for 12 years.

• In yet another set of villages, the adults will receive a single lump-sum payment equivalent to what the two-year group will be receiving.

• The last set of villages is the control group, so they don’t get any money at all.

The aim here, GiveDirectly’s Ian Bassin explains, is “to isolate the effects of what most people consider a ‘basic income’—that is, a permanent payment over time—from something resembling more traditional temporary supports. For example, when someone knows they have a long-term, guaranteed floor below which they cannot fall, do they take more risks like starting a business or going back to school? And does that security produce greater overall returns?” […]

The good news is that this isn’t a USAID program. The problems with government-to-government aid in Africa have been pretty well documented.

Even private aid to Africa has its pitfalls. When the price of clothing or shoes goes to $0, that puts the local textile and shoe makers right out of business.

I have to wonder what happens when these GivingDirectly programs end. Or, if they’re continued indefinitely, at what point their participants become ineligible because of income or assets.

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TANSTAAFL (still)

July 28, 2015

Here’s a David Brooks column in The New York Times.

The Minimum-Wage Muddle

Once upon a time there was a near consensus among economists that raising the minimum wage was a bad idea. The market is really good at setting prices on things, whether it is apples or labor. If you raise the price on a worker, employers will hire fewer and you’ll end up hurting the people you meant to help.

Then in 1993 the economists David Card and Alan Krueger looked at fast-food restaurants in New Jersey and Pennsylvania and found that raising the minimum wage gave people more income without hurting employment. A series of studies in Britain buttressed these findings. […]

Some of my Democratic friends are arguing that forcing businesses to raise their minimum wage will not only help low-wage workers; it will actually boost profits, because companies will better retain workers. Some economists have reported that there is no longer any evidence that raising wages will cost jobs.

Unfortunately, that last claim is inaccurate. There are in fact many studies on each side of the issue. David Neumark of the University of California, Irvine and William Wascher of the Federal Reserve have done their own studies and point to dozens of others showing significant job losses.

Recently, Michael Wither and Jeffrey Clemens of the University of California, San Diego looked at data from the 2007 federal minimum-wage hike and found that it reduced the national employment-to-population ratio by 0.7 percentage points (which is actually a lot), and led to a six percentage point decrease in the likelihood that a low-wage worker would have a job.

Because low-wage workers get less work experience under a higher minimum-wage regime, they are less likely to transition to higher-wage jobs down the road. Wither and Clemens found that two years later, workers’ chances of making $1,500 a month was reduced by five percentage points.

I wonder if Governor Cuomo reads the Times — or Forbes.

Via Coyoteblog

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Let’s hope he’s wrong

July 18, 2015

This is not the first time I’ve heard Mr. Schiff talk about this topic, so his prediction of inflation isn’t news. But it always leaves me wondering how the U.S. debt will be handled. (I’m not talking about the deficit, but rather the total debt of roughly $18 trillion.)

This is a particular concern to those of us who are retired or close to retirement. In the last several years it’s been very difficult to find an investment with low risk and a decent return — where ‘decent’ means a couple of percentage points above the inflation rate.

I suppose we could all buy junk bonds, keep our fingers crossed, and hope for the best.

If the inflation rate jumps up into the 10-15% range, as it did in the 1980s*, there’re going to be a lot of unhappy oldsters. And maybe a lot of unhappy youngsters, too, as the older folks figure out they need to keep working or return to work.

*When I bought my first house in 1984, the mortgage rate was 13.5%. And that was an adjustable rate note with a 17.5% cap; it was the best deal we could find at the time.

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What he said (4)

August 24, 2014

Jeff sends a link to this post by Kevin Williamson at NR’s The Corner. (It’s the whole post, since it’s not easily excerpted.)

In the Wrong Business, Part 247

The school board of Centinela Valley Union High School District in Los Angeles County is firing its superintendent, Jose Fernandez.

He was paid $750,000 a year. 

That’s three-quarters of a million dollars a year — not to manage some sprawling big-city school system (which would be questionable enough) but to oversee five schools and an independent-study program in the suburbs. 

But not to worry: He was previously paid only about a half-million a year. As the Los Angeles Times reports, “Fernandez’s unusually high compensation was in part the result of a one-time payout of $230,000 he used to increase his pension credits, which would give him a higher annual pension upon his retirement.”

So they were paying him an outrageous sum of money today in order to pay him an even more outrageous sum in the future.

These thieves are why we’re broke.

Amen, brother.

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What happens when your tax rate is too high?

August 8, 2014

For one thing, you get nonsense-on-stilts like this:

The United States Needs Corporate ‘Loyalty Oaths’

Big corporations are fleeing for lower tax rates abroad. With reform legislation going nowhere, it’s time to think creatively and institute newfangled ‘non-desertion agreements.’

Do none of these people ever think…

– about the incentives companies are reacting to?

– that corporations are just groups of people; like school boards or the local Lions Club (except with better financial savvy)?

– that the idea of taxing corporations is sort of nonsense to begin with?

Corporate taxes are paid by customers (people), or by reduced earnings to shareholders (people), or by reduced salaries and benefits to employees (people), or by reduced reinvestment — causing job and opportunity losses (to people).

economic-patriotism

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