Category: Government

USAID

“When Marco Rubio testified during his confirmation to become Secretary of State, he said that one of the things that frustrated him the most about the U.S. Agency for International Development was that it didn’t ‘brag’ enough to show other countries ‘what the United States is doing to help their societies.’

“The comment followed years of praise from Rubio for the billions of dollars in lifesaving aid that USAID distributed overseas to boost America’s image and counter the influence of rivals such as China.”  “Washington Post: Marco Rubio on USAID”

From my own experience, I agree with Rubio. After retiring from the International Monetary Fund in 2003, I had a contract from USAID from May 2004  – Sept 2005 to help the Central Bank of Iraq establish financial markets important for monetary policy as well as its capacity to formulate and implement monetary policy. Under this contract I reported to and was supervised by the US Treasury. I have also worked closely with USAID banking supervision contractors (BearingPoint and Deloitte) in Afghanistan, Bosnia, Kosovo, and South Sudan, all post conflict countries. They did an outstanding job, and I am sure that I was well worth the money I earned as well.

Quite aside from the insanity of suspending payments and projects in midair, wasting millions of dollars (and lives) in the process, the proper question of our government is whether these projects (or which of these projects) serve American interests and do so more effectively than would alternative uses of the same money. “As Secretary of State Marco Rubio has said, ‘Every dollar we spend, every program we fund, and every policy we pursue must be justified with the answer to three simple questions: Does it make America safer? Does it make America stronger? Does it make America more prosperous?’” “State Department: Implementing the president’s executive order on reevaluating and realigning United States foreign aid”

A proper answer to those three objectives should take a long run perspective. America is safer and more prosperous when the rest of the world (our trading partners) is also more prosperous. We are stronger when we have earned the rest of the world’s respect and cooperation. USAID, by providing humanitarian and development assistance to other countries, gains their respect and gratitude, which promotes their cooperation. When President John F Kennedy established the USAID in 1961 he made this case calling it American soft power. Following Congress’s adoption of the Foreign Assistance Act in September1961, Kennedy consolidated several foreign aid agencies into the USAID in order to improve coordination and efficiency.  It is fair to ask whether this is the most efficient way of packaging these activities and coordinating them with other departments. https://www.youtube.com/watch?v=QLzwsc3XGNA

USAID has missions in over 100 countries. Congress authorizes USAID’s programs in the Foreign Assistance Act, which Congress supplements through directions in annual funding appropriation acts and other legislation. As an official component of U.S. foreign policy, USAID operates subject to the guidance of the president, Secretary of State, and the National Security Council.

Of USAID’s total budget of almost $8 billion in 2001 and $34 billion in fiscal 2024 (less than 1% of total federal budget), one third goes to public health and the rest to disaster relief, and economic and government capacity building. Its programs to treat HIV and malaria have saved millions of lives, largely in Africa, over the last two decades. It played a major role in implementing George W Bush’s “President’s Emergency Plan for AIDS Relief (PEPFAR) which saved over 25M lives globally. “State Department: About US PETFAR” It played an important role in ending smallpox and increasing global literacy.

When I asked several USAID staff what they considered the agency’s greatest successes they sighted South Korea which is now a major US trading partner, and Columbia which has risen from a failed state to a secure middle-income country and a major US trading partner. But we can no longer access the details of these programs as USAID’s website was taken down February 1.   

Those lives saved, plus the technical assistance in governance, infrastructure, and building stronger economies has raised incomes in these countries and their sales to and purchases from the US and other countries abroad (trade). As the U.S. benefits economically from these stronger economics, American citizens are also kept safer.  With stronger economies comes stability for citizens to live peaceful, prosperous lives, turning away from the perils of extremism and increasing security on the ground. Thus, American aid has not only gained respect, good will, and cooperation from the aid recipients but increased trade, income, and security in the US as a result. In a statement made by then U.S. Senator Marco Rubio, he highlighted that six of the United States’ ten largest trading partners had graduated from assistance provided by the U.S. Agency for International Development (USAID). In a 2015 Senate Foreign Relations Committee hearing, for instance, Rubio said USAID “not only is doing what is right, but we are also furthering our national interests.” “Washington Post: Marco Rubio USAID”

The mean average managed foreign assistance disbursed in the fiscal years 2001 to 2024 by USAID was $22.9 billion in inflation adjusted to 2023 dollars; 2023 was an exceptional year because of an extra $16 billion of funds for Ukraine. America’s military budget over this period was almost $850 billion dollars per year. Since 9/11, the United States has spent an estimated $8 trillion on wars and counterterrorism efforts globally. This figure includes direct military operations in Afghanistan, Iraq, Syria, and other countries, as well as related costs like veteran care and interest on borrowed funds to finance the wars. Over 7,000 American servicemen died in these wars and deaths many multiples of that were suffered by our allies and our enemies over that period. Total Defense Department expenditures over this period were $14 trillion compare with USAID’s expenditures of 0.6 trillion with many lives saved and almost none lost. The State Department’s annual budget ranged from $50 to $60 billion over the same period. Soft power is clearly a bargain for the American taxpayers seeking a safer, stronger, more prosperous America. Why does President Trump want to shut it down?

Not all projects have been successful in achieving their objectives. But many claims of waste and corruption are not supported by facts:

“In 2025, the Trump administration accused USAID of ‘wasting massive sums of taxpayer money’ over several decades, including during Trump’s first presidency from 2017 to 2021. The administration highlighted a list of twelve projects, totaling approximately $400 million—less than 1% of USAID’s annual budget—dating back to 2005. Among the examples cited were $1.5 million for LGBT workplace inclusion in Serbia, $2.5 million to build electric vehicle chargers in Vietnam, $6 million for tourism promotion in Egypt, and ‘hundreds of millions of dollars’ (the largest item) purportedly allocated to discourage Afghanistan farmers from growing poppies for opium, which allegedly ended up supporting poppy cultivation and benefiting the Taliban. Fact checkers found that these claims were largely false, ‘highly misleading,’ or wrong.” “Wikipedia: United States Agency for International Development” 

For another example, claims that USAID funded major media organizations like Politico or BBC News were false. Payments were for subscriptions or grants to independent media projects, not direct funding of news operations. 

But neither USAID nor any other government agency is perfect. Some functions should be eliminated and others automated or streamlined and oversight strengthened. But in order to properly review its programs and operations most operations should continue until a broad consensus is achieved on what reforms are desirable how they can must efficiently be executed. For functions that survive: “’The end goal is replacing much of the human workforce with machines,’ said a U.S. official closely watching DOGE activity. ‘Everything that can be machine-automated will be. And the technocrats will replace the bureaucrats.’”  “Washington Post: DOGE Musk goals” These are worthy goals.

This “convinced Democratic lawmakers and financial columnists, who have long promoted the analogy between citizens and consumers, that DOGE could be a good idea. ‘Streamlining government processes and reducing ineffective government spending should not be a partisan issue,’ announced Congressman Jared Moskovitz (D-FL) when he joined the DOGE caucus in December. ‘If Doge can actually unleash digital reform in the US government, and in a non-corrupt manner, that would be an unambiguously good thing,’ Gillian Tett wrote last month in the Financial Times.”   “Speed-up-the-breakdown”

But suddenly suspending programs and payment while undertaking a review is the wrong approach. To take but one example, Trump’s foreign aid freeze is having unintended effects in Latin America, including halting programs aimed at stopping the flow of fentanyl. Trump has vowed to impose tariffs unless Mexico stops the trafficking of fentanyl, a major killer of young adults in the US, but the aid freeze has halted funding that Mexican authorities rely on to destroy clandestine labs, Reuters reported. Countries across Latin America are scrambling to respond to the cuts, which have dealt a blow to humanitarian programs designed to slow migration to the US — which Trump has also promised to crack down on — as well as conservation efforts in Brazil and coca eradication in Peru.

USAID’s budget and the projects it finances generally arise from the recommendations of USAID Missions in the countries it operates in accordance with the development objectives captured by the respective Country Development Cooperation Strategy (CDCS) created in concert with the host government and civil society. Almost two-thirds of its employees are locally employed staff, many from the upper echelons of the political and social classes of that country, which means stronger ties and partnerships for USAID and the host country government political figures. Some of these local staff go on to join the host country government as Members of Parliament, establishing connections between the USG and the host country government that are unmatched in terms of influence. USAID operates with an understanding of the local institutions and culture that is deep and strongly influences the projects it recommends. These recommendations are reviewed and vetted by multiple entities, including USAID regional bureaus, the State Department Office of Foreign Assistance, the Office of Management and Budget, and by the House and Senate Foreign Affairs and Operations Committees.  These oversight tools include USAID answering inquiries sent directly to regional USAID Bureaus by individual members of Congress  and through the Congressional Notification process, where every USAID project and dollar is reviewed through Hill briefings and questioning of USAID officials by Congress for its approval, which has full oversight of their execution, and gives Congress the ability to place “holds” on funding preventing obligations of funds to take place before answering their inquiries.

As with other government agencies USAID’s operations are reviewed by an independent Inspector General. USAID Inspector General Paul Martin was officially fired on February 11, one day after his office issued a critical report warning that nearly $500 million in food was about to go bad due to President Donald Trump’s freeze on the agency. Rather than the announcement coming from Secretary of State Marco Rubio, the current acting director of the USAID, it was announced by the White House Office of Presidential Personnel. Martin’s office published a six-page report the day before that argued that the recent pause on foreign assistance programs and the slashing of USAID staff has prompted ‘risks and challenges’ to the safeguarding and distribution of the $8.2 billion in humanitarian assistance. Among other things confidence in America health aid in many cases was shattered by its sudden suspension thus undermining its benefit to the US.

“One U.S. official credited Rubio with pushing for the 10,000-person agency to keep on the job roughly 600 staffers as essential workers instead of the 290 suggested by some Trump officials.” .”  “Washington Post: Marco Rubio on USAID”  Whether that is the right number or not (i.e. the staff needed to perform the functions that best serve American interests) the sledgehammer being swung by DOGE is not the right, and certainly not the cheapest, approach to determining it.

Conclusion

The government does more than is best for the country and many programs should be ended or reformed. Freezing them in order to undertake a review is the wrong approach. Lasting positive reforms must be a careful consultative process. The debate over a big bang vs a more gradual approach following the collapse of the Soviet Union is illuminating. Anyone who thinks they can work with a “blank slate” is a fool. Such an approach has never been successful.

The USAID has generally been very successful and should not be “shut down.” To date the DOGE approach has done harm to American standing, safety and prosperity and reduced taxpayer safeguards of who their money is spent rather than strengthened them. The USAID website has been removed thus eliminating the transparency of its operation to public scrutiny. The USAID’s Inspector General has been fired thus eliminating independent oversight, though the Supreme Court may overturn this executive action. The overall approach of DOGE to reform with worries about conflicts of interest is doing more harm than good.

Checks and Balances

Americans have flourished under the freedoms and rules of community life provided by a government with limited enumerated powers that are divided between legislative, executive, and judicial branches to provide checks and balances against abuse of power and a civic culture of mutual respect. As a result, America itself has flourished. In 1900 median American income, valued in 2024 dollars was approximately $18,000 and 40% of the population lived in poverty. In 2024 median American income was $80,020 and 11.1% lived in poverty.  

The share of government spending (Federal, state and local) in the US was approximately 5.5% in 1900 and 37.5% in 2024. Following WWII GDP growth rate declined as government spending rose as a share of GDP. During the 34 years from 1950 – 1984 GDP growth averaged 3.5% per annum while over the next 34 years from 1984-2019 average annual growth rate fell to 2.5%. But the lower growth rate also reflects the burden of increased regulation.

The incoming Trump administration is claiming, with good justification, that the slowing of economic growth reflects excessive government spending and regulation. It has assigned Elan Musk and his new Department of Government Efficiency (DOGE) to reduce Federal government spending and counterproductive regulations.

Some government programs violate or at least stretch its powers as enumerated in the Constitution.  Some regulations fail to pass the cost/benefit test and thus reduce incomes. To identify waste and fraud, DOGE employees have been given access to confidential employee and or beneficiary data bases. “Late Friday, a federal judge in Washington declined to block DOGE access to Labor Department data but expressed concern about young DOGE staffers who ‘never had any training with respect to the handling of confidential information’ accessing ‘the medical and financial records of millions of Americans.’ And on Saturday, a federal judge in New York temporarily blocked DOGE staff from accessing sensitive payment systems at the Treasury Department, citing the risk of ‘irreparable harm.’

“After the New York ruling, Musk defended DOGE methods, tweeting that his team had sought to add routine information to outgoing Treasury payments to help spot fraud — “super obvious and necessary changes” that “are being implemented by existing longtime career government employees, not anyone from @DOGE.”   “Washington Post – DOGE and Musk goals”

 I support modernizing administrative systems to improve government employee’s productivity (i.e. reduce the number of employees needed for a task) and I support eliminating functions that exceed government’s enumerated powers or do not serve a clear need that can only be met by government, and I support eliminating regulations that fail cost/benefit criteria. Examining these functions and systems and associated databases are surely part of such a careful determination.  But what if Musk and Trump have other objectives such as driving out or punishing their enemies?

“The Trump administration is giving hints it may ignore a federal judge’s ruling restricting Elon Musk and his associates in DOGE, the Department of Government Efficiency, from accessing the Treasury Department’s critical payment systems. In his decision, U.S. District Judge Paul Engelmayer warned about the ‘disclosure of sensitive and confidential information and the heightened risk that the systems in question will be more vulnerable than before to hacking.’ Vice President JD Vance responded to the ruling by writing on social media that ‘judges aren’t allowed to control the executive’s legitimate power.’ Elon Musk also called for the judge to be impeached.”   “Democracy Now – constitutional crisis Trump admin hints it will ignore judge’s ruling to block Musk from Treasury records”

Trump has been issuing executive orders that ignore Congress’s authority (such as the adoption of tariffs, and impounding congressionally authorized expenditure). A federal judge in Rhode Island, John J. McConnell Jr., has ordered the Trump administration to immediately restore federal funds that were frozen under a controversial directive. This followed evidence that the administration failed to comply with a prior temporary restraining order (TRO) issued in January, which prohibited freezing federal grants and assistance programs. The funding freeze, initiated by a memo from the Office of Management and Budget (OMB), affected programs tied to the Inflation Reduction Act and bipartisan infrastructure law, as well as initiatives like Head Start and health research grants.

While the legality of Trump’s executive actions in these areas is doubtful, its wisdom is totally lacking. Collective (i.e. government) action requires broad consensus which is obtained by public discussion in which all views are aired. Cutting off programs and expenditure in the middle of existing contracts bound to be harmful to those involved and to generate public outrage quite unnecessarily. It’s probably illegal as well as just bad policy.

Each administration has the right to put managers in place who support its programs. But the pure execution of administrative functions is not, or should not be, a partisan matter. In the earlier years of our republic working for the government was often a way of rewording family or party members. The resulting quality of the services performed was often poor.

The Pendleton Civil Service Reform Act, signed into law by President Chester A. Arthur on January 16, 1883, marked a turning point in U.S. federal employment practices. It was enacted to dismantle the corrupt “spoils system,” which awarded government jobs based on political loyalty rather than merit.

  • The act required certain federal positions to be filled through competitive examinations, ensuring that candidates were selected based on their qualifications rather than political connections.
  • It prohibited the firing or demotion of employees for political reasons and banned mandatory political contributions (known as “assessments”) from federal workers.
  • The act established the Civil Service Commission to oversee the implementation of merit-based hiring and enforce its provisions.

Initially, only about 10% of federal jobs were covered, but presidents were allowed to expand its reach. By 1980, over 90% of federal positions fell under its protections. President Trump intends to roll back such protection to make more political appointment. Is this to insure that he can appoint managers committed to the faithful execution of his policies? Why then have many of his cabinet appointments been so unqualified to care out their responsibilities? An even bigger question is why the Republican controlled Congress has silently approved their appointments and why have they remained silent in the face of Trump’s many violation of law?

Kash Patel, Trump’s nominee to head the FBI, has publicly outlined plans to go after individuals he perceives as part of the “deep state,” including journalists, Democrats, and former Trump allies. Trump has asked for the names of all FBI agents who work on the investigation of his violations of the law and he threatens to fire them. This sound more like an administrative coup than putting a strong team in place to “make America Great again.”

To take one example of executive actions that undermine rather than serve America interests, consider his strong support of Israel’s war against Palestinians, which even goes beyond Biden’s “blank check” support for Israel. After his threats to Mexico, Canada, Greenland, and Panama, he now plans to take control of Gaza, displace its two million Palestinian residents, and transform the area into a U.S. owned resort-like destination. In interviews, Trump described Gaza as having the potential to become “the Riviera of the Middle East” and suggested relocating Palestinians to neighboring countries like Jordan and Egypt, citing safety and redevelopment needs. He emphasized that Palestinians would not have a right to return under this plan, claiming they would be resettled in “better housing” elsewhere. Thus, Trump would join Israel’s ethnic cleansing of Palestinians directly.

On February 11, when meeting with Trump at the White House, Jordanian King Abdullah II was told that Jordan risked billions of dollars in U.S. foreign aid that Amman receives every year if he did not back Trump’s Gaza displacement plan and admit millions of displaced Palestinians. Later Trump softened but did not withdraw his threat.

Trump has taken a number of other measures that signal his supporters will be exempt from the law. He pardoned approximately 1,500 people connected with the Jan 6 attack on the capital. “Rod Blagojevich and Eric Adams got off because they played the Trump card. Is that how justice now works in America?  “Trump-Rod Blagojevich-Eric Adams lawfare corruption pardon”

“In a further jaw-dropping move…, Trump issued an Executive Order that suspends the Foreign Corrupt Practices Act (FCPA) for 180 days, giving a greenlight to megabanks on Wall Street and other U.S. corporations to bribe officials in foreign countries to get business deals approved.”  “Trump gives the greenlight to Goldman Sachs and JPMorgan Chase to return to bribing foreign officials”

To express his anger at what he considered disloyalty by former Trump administration officials such as Mike Pompeo, Brian Hook, John Bolton, and Mark Esper, Trump terminated their security protection.

All of these reflect Trump’s willingness to punish those who cross him. This provides a possible explanation for why Republicans have remained silent in the face of Trump’s violations of Congress’s laws and quietly approved unqualified cabinet appointments. They are afraid of his retribution.

So what do we do about DOGE’s freezing projects and payments and accessing confidential data bases. Is it for good or evil?

Checks and balances should be supplemented by independent inspectors and auditors. But Trump recently fired 17 Inspectors General from various federal agencies. All members of DOGE given access to confidential data should receive security clearances. Edward Coristine, a 19-year-old member of Elon Musk’s Department of Government Efficiency (DOGE), launched an image-sharing website called tesla.sexy in 2021. The site featured custom “shitposting” web addresses that redirected to content hosted on his platform. Some of these URLs referenced inappropriate and illegal content, including child sexual abuse material and racist themes.  He was recently appointed as a senior adviser to the State Department’s Bureau of Diplomatic Technology without a security clearance!!!

I am perplexed. I would like DOGE to identify waste and fraud and help reduce the scope of government and make what remains more efficient and effective. Understaffing air traffic control under Biden didn’t work out so well for the 67 people who died when a helicopter crashed into a passenger plane at Reagan National. Proper government functions should be properly performed.  But I do not want it to become a weapon of a thin-skinned bully punishing those who oppose him. Among other things the president should not be able to remove oversight inspectors or otherwise weaken independent scrutiny.

Facebook

Our wise founding fathers established a government to protect the rights and property of a free people, who made their own decisions about how to live. They wisely did not create a government to tell us how to live—nor what to believe.

A society whose members don’t know what to believe, with people who spread lies for whatever nefarious reasons, has a serious problem. Living in communities as we all do requires a degree of trust in a common understanding of the facts. But who is to determine what is true and on what basis? In a free society the responsibility of evaluating what to believe rests with each of us individually.

“The American Founders told everyone who would listen (and some who wouldn’t) that the republic could not endure without a virtuous citizenry. They warned that the Constitution was necessary but not sufficient.”[1]  The quality of our lives and of the functioning of our communities depends on the choices and behavior of each of us. Our freedom to behave as we choose will only produce a successful community if its members behave virtuously. The maximization of each individual’s utility (happiness) as we economists might put it, depends, in part, on how well our individual preferences fit into the community’s norms and expectations. No man is an Island.

Our specific values might come from our religious and/or philosophical beliefs. These can differ but must include respect for the rights of our neighbors to live by their own lights. But decisions based on incorrect information will be suboptimal or worse. The government might require that firms transparently disclose relevant information about their products (such as content) but should not impose its own judgment about the truth—governments themselves lie too often to be the final orbiters of truth.

Meta CEO Mark “Zuckerberg announced earlier this week that his platforms would part ways with the third-party fact-checking organizations he had employed to police speech on Facebook and Instagram.

“‘The fact-checkers have just been too politically biased and have destroyed more trust than they’ve created, especially in the U.S.,’ he said.”  “An urgent meeting of the fact check legion-of-doom—Reason”  FaceBook posts will continue to allow comments by its users challenging alleged facts.  Zuckerberg, who met with President-elect Donald Trump at Mar-a-Lago on Friday, said his company is “going to get back to our roots and focus on reducing mistakes, simplifying our policies, and restoring free expression on our platforms.”

It is up to us to evaluate what to believe and what to pass on. This is not a trivial responsibility, but the market works hard to help. Just as we learn how to successfully do anything else (Reading, Writing, and Arithmetic), we need to learn how to evaluate information we are given and to carefully choose sources that we trust. There are private fact checking organizations we are free to consult or ignore. We are free to choose news sources that we believe adhere to the standards of objective journalism. But if we do not exorcise our judgement wisely, our society will be less “successful” than otherwise.[2] But it would violate the wisdom of our founders and the best interests of a free society to give that responsibility to the government.

[1] Jonathan Rauch, “Cross Purposes, Christianity’s Broken Bargain with Democracy” January 2025

[2] Jonathan Rauch. The Constitution of Knowledge: A Defense of Truth. Washington, D.C.: Brookings Institution Press, 2021. 280 pp.

“Data” – Flawed but see it anyway

Ito and I saw the play “Data” at Arena Stage last Tuesday. The Washington Post review was titled “This play is a flawed look at AI. You should see it anyway.”  “Data-Arena Stage review”  We agree. The production and acting were outstanding. But the story fell short in a number of ways.

Skipping all the personal mysteries that were inadequately explained, the play suggests that turning the screening of immigration applications (not asylum applications) over to a computer (AI) program would be bad. Whatever biases (criteria) are wanted for US immigration policy can be built into the screening program, of course, but if they are not the criteria America wants to apply, AI is a safer way of avoiding them than the judgement of individual immigration officers.

In requesting bids from programmers to develop the AI screening program, the play states that the government’s objective to sort out those applicants for residency (and ultimately citizenship) is to approve those who would be “positive and productive.”  If the criteria for finding such people can be identified for immigration officers (no easy task), they can be built into an AI program, which can be relied on to more faithfully and consistently apply them than any human officers. The boss in the play correctly noted that such a program could produce an answer in seconds that  took the US immigration service three years to achieve in his case coming from China.

Of course, AI is not perfect and can make mistakes just as humans can. But their accuracy is improving with training and use at a rapid rate. Tesla’s Full Self Driving cars have been linked to 956 accidents with 29 deaths. But this is already dramatically safer than the much higher death rates per million miles driven of car accidents by humans.

Training AI programs will draw on a much wider set of information than is now used for immigration applications. Anything on the Internet related to the applicant might be collected and evaluated by an AI program. How should such information be used? This opens new concerns that will need to be evaluated, but the promise of faster and better application processing from the use of AI promises much more benefits than risks compared to our current reliance on human immigration officers.

“Data” does a poor job of exploring these important issues, but it is worth watching anyway.

The latest on Social Security Benefits

If no changes are made to the Social Security law: “Starting in 2034… Social Security will only have enough money to pay 79% of its promised benefits.” “Day of reckoning for Social Security draws closer”  The system promises a given pension upon retirement (a defined benefit) that is financed by a given payroll tax. It is not a pool of saving that is drown down at retirement. It is pay as you go. “Saving Social Security”.

This financial problem results from the fact that Americans are living longer and thus receive their SS pension for more years if there is no change in the retirement age. Moreover, the growth in the population has slowed so that the ratio of workers (i.e. those paying the tax financing the pensions of the retired) to retirees has fallen from approximately 3.3 in 1970 to 2.9 in 2020. It is projected to fall further to 2.0 by 2030.

The system must and will change, the only question is how. Legal immigration could be increased to increase the number of workers. The wage tax could be increased. Retirement age could be increased (20% voluntarily work after retirement already). As people live longer many choose to work longer for more than just the extra income. Pension benefits could be indexed to inflation rather than to wage growth (which has been greater than inflation). But more recently I have proposed replacing Social Security and other safety net programs with a Universal Basic Income for every man, woman and child without exception. Such a remake of our social safety net would have several very good features. “Replacing Social Security with a Universal Basic Income”

The Right to Choose

I have always supported a woman’s right to choose whether to complete a pregnancy up to the point at which another person (her fetus) acquires existence and thus the protection of the law. In my view a fetus becomes a person when viable, i.e. when they are able to live outside the womb. In my opinion, laws that permit abortions that comply with that standard, should not force those who disagree to pay for such abortions. Thus I do not support allowing the Armed services to pay for its member’s wanting an abortion for the travel and related expenses of the abortion. Tax payers should not be forced to pay for such individual choices.

A similar argument has been made about taxpayer funding of elementary education. A Jewish taxpayer should not have to pay for a catholic child’s education in a catholic school or visa versa. But I also favor school choice. How do I defend this use of taxpayer’s money? An abortion up to the allowed age of the fetus is an individual choice. But elementary education is required for all children in the public interest. Thus, it is appropriate that the government (taxpayers) pay for it. But, providing public (i.e. taxpayer’s) money for each child’s education can and should leave the choice of school to each parent. It is appropriate that schools eligible to receive public funds meet minimum standards of curriculum to be covered. School choice not only maximizes the freedom of choice among parents with different religious beliefs and views on the most effect approach to education, but the competition among schools improves the over quality of education. https://wcoats.blog/2021/05/09/the-great-divide-who-decides/

What to do about Social Security

Sixteen years ago I wrote about problems with the U.S. Social Security System. The system promises a given pension upon retirement (a defined benefit) that is financed by a given payroll tax. It is not a pool of saving that is drown down at retirement. It is pay as you go. https://wcoats.blog/2008/08/28/saving-social-security/

When Franklin Roosevelt established it, average life time after retirement was only about two years. Today life expectancy in the US is 79 years, or 14 years of retirement pension payments for those retiring at age 65. This fact, plus the declining population growth rate, means that the workers being taxed to pay for the currently retired are shrinking relative to those already retired and receiving benefits. The worker to beneficiary ratio of 3.3 in 2005 is projected to fall to 2.1 in 2040. At that point wage taxes will not be enough to cover the current benefits promised at that time.

Various proposals have been made to address this problem. The wage tax could be increased. Retirement age could be increased (20% voluntarily work after retirement already). As people live longer many choose to work longer for more than just the extra income. Pension benefits could be indexed to inflation rather than to wage growth (which has been greater than inflation). But more recently I have proposed replacing Social Security and other safety net programs with a Universal Basic Income for every man, woman and child without exception. Such a remake of our social safety net would have a number of very good features. https://wcoats.blog/2020/08/20/replacing-social-security-with-a-universal-basic-income/

Abortion

Views on abortion have always been difficult to reconcile. Under our constitution, anyone born here is a citizen and has all of the rights of all other citizens. But when does a human fetus or embryo become a person with such rights? The question can be most challenging when the rights of two people—the mother and the fetus—conflict. My own view is that a fetus obtains the status of person with the right to protection, when it is viable, i.e., capable of living when removed from the womb.

The recent ruling by the Alabama Supreme Court that an embryo is a person that must enjoy the protections of the law, moves the goal post to a whole new level. Dr. Ito Briones (MD, Ph.D) argues that, if that is true and applied into practical terms, then women will be subject to a whole new level of restrictions on their behavior in the interest of the unborn person. His interesting observations follow:

The recent ruling by the Alabama supreme court to equate the embryo as a person started when embryos frozen in tubes were accidentally destroyed in a fertility clinic. The parents sued the clinic based on Alabama’s  law of “wrongful death of a minor’s act”. The lower courts said that this law does not apply but the Alabama Supreme Court overturned that decision. And so here we are.

As a practical consequence of this ruling, IVF clinics in Alabama have expectedly suspended treatments. There are already numerous outlets online and in the news that discuss this topic and so I will not discuss this here anymore. Unfortunately, there are also other unintended consequences from this decision that might turn the mundane day to day life of a woman into a dystopian mess.

Here are other issues that may need to be considered because of this ruling. 

  1. Is a restaurant owner liable for serving alcohol to a pregnant woman even if she didn’t know she was pregnant and does not inform the establishment? Presently, restaurants and stores can be held legally liable if they serve or sell alcohol to minors. The liability is valid even if they were not aware of the age status of the patron. To solve this issue, restaurants ask for an ID to confirm age. Does this mean women should also be required to show a negative pregnancy test before being served any alcohol? 
  • Coffee has been scientifically proven to be harmful to the embryo. Do women also have to show a negative pregnancy test before being served coffee? Caffeine is the main culprit in harming embryos and caffeine is also present in tea, chocolate, soft drinks and other foodstuff. Should the government limit the sale of these items to women?
  • How about pregnant women who have breast cancer or any cancer? Can they get treatment even if it will most probably harm if not kill the embryo? 

Before this ruling, a medical case of a pregnant woman with cancer will involve an intimate discussion with the woman, her husband and family, and the doctor. Because of this ruling, the government and law enforcement will have to join the already hypersensitive and impossible dilemma that she will face.

Additionally, any medical treatment on a pregnant woman will have to be reviewed by lawyers to make sure that the embryo’s rights are taken into consideration.

Medical studies have shown that stress on pregnant women may harm the embryo. Stress can induce sleepless nights, hypertension, loss of appetite or a tendency to overeat, headaches, etc. 

Can pregnant women (at any trimester including the first) work as nurses (exposing the embryo/child to harm) or police officers? Should women in these jobs show a monthly negative pregnancy test while at work?

Driving can be very stressful for the woman. Can pregnant women drive? 

Do women have to show a negative pregnancy test while enrolled in college?

By the way, is every miscarriage going to be handled as a possible homicide?

If I have any recommendation about this ruling it is that one should invest in pregnancy test kits soon. The stock value of these tests in the market will surely skyrocket. 

Should the State mandate or advise?

It depends of course. But in America, which was established to empower each individual to make their own decisions, the state should only regulate those individual activities that might harm others such as violating property rights. This attitude presumes that each of us cares more about our wellbeing than does anyone else and know better how to achieve it taking account of our differences in tastes, interests, and risk preferences. It has resulted in a society of more prosperous and happier members.

This can be contrasted with the view that the average person is not intelligent enough or self-motivated enough to maximize their potential and needs to be guided by smarter, wiser people.

A society in which each individual enjoys the maximum freedom of choice hardly means that the government has little or no role in our wellbeing. In addition to providing public safety, shared institutional and physical infrastructure development, and the adjudication and enforcement of contracts (the rule of law), government can contribute to the provision of the knowledge to help inform the individual choices we each make. I want to review two very different areas of government involvement that have reflected the above conflicting attitudes of the government’s best role—monetary policy and public health policy.

Section 8 of the US Constitution gives the federal government the power “To coin Money, regulate the Value thereof,…” Our twelve Federal Reserve Banks and the Board of Governors of the Federal Reserve System carry out that mandate via a system of market determined prices of goods and services and an inflation target of 2%. While I would prefer a monetary policy in which currency was issued or redeemed at a fix price for a hard anchor (traditionally gold) in response to market demand (currency board rules), the Fed has behaved very well within its inflation targeting regime over the past two years (after keeping its policy interest rate too low until two years ago).

A successful inflation targeting policy requires keeping inflation expectations anchored to the target (2% in the US) so that economic wage and price decisions are made in light of that expectation. But todays’ policy actions are only fully felt over the next year or two (what Milton Friedman called “long and variable lags” in the effects of policy). Federal Reserve policy is implemented largely by setting the rate at which it supplies the money it creates to the market. If it sets that rate below the so called neutral rate, it must supply money to keep the rate low. If it sets the Fed Funds (and related) rate above the neutral rate, it must absorb money from the market to keep the rate high. Setting its policy interest rate is the lever by which it controls the rate at which the money supply grows. Each Federal Reserve President and Governor must evaluate all available information about economic activity most likely over the next one to two years and determine in like of that what monetary growth is most likely to result in 2 percent inflation over that period. If market participants believe that the Fed’s choice is most likely to result in achieving the stated target in the future, their wage and price decisions will anticipate that inflation and thus bring it about.

It should be obvious that if Fed officials are honest it attempting to achieve their target and explain as fully as they themselves understand the prospects to the public and the public has confidence in the Fed’s commitment, this is the best that can be done. In fact, the Fed deserves high marks for such transparency in our uncertain and evolving world. Each person and firm make their own forward looking decisions in light of their best guesses of future conditions. The Fed’s guidance is the best and most the Fed can do to bring or keep inflation on target.  

When governments don’t trust “the people” to make their own decisions (they are not smart enough or are two lazy or whatever), they must mandate the “proper” behavior. Consider our approach to the public’s health during the Covid pandemic. Whether government should offer advice and provide information on what is known about a disease such as Covid-19 is complicated by the fact that we should not be free to expose others to communicable diseases. In the case of Covid the government’s understanding of its nature and best protection grew and evolved over time. But the US public heath agencies lost credibility from the beginning by telling well intentioned lies.

“In early March 2020, Dr. Fauci said ‘there’s no reason to be walking around with a mask.’ In the same interview he said people could wear masks if they liked, but they wouldn’t get perfect protection, and it would further pinch what at the time was a short supply of masks for doctors and nurses.” PolitiFact | Marco Rubio says Anthony Fauci lied about masks. Fauci didn’t.

But more to my point, CDC officials thought that their shut down and isolation mandates would be more effective than allowing individuals to determine how best to protect themselves and others. The subsequent evidence suggested that they were wrong. Any benefits were outweighed by very substantial costs. Read the following articles and studies for examples.

Scott Atlas on Lies

“I explore the association between the severity of lockdown policies in the first half of 2020 and mortality rates. Using two indices from the Blavatnik Centre’s COVID-19 policy measures and comparing weekly mortality rates from 24 European countries in the first halves of 2017–2020, addressing policy endogeneity in two different ways, and taking timing into account, I find no clear association between lockdown policies and mortality development.” https://academic.oup.com/cesifo/article/67/3/318/6199605?login=false  

“The most restrictive nonpharmaceutical interventions (NPIs) for controlling the spread of COVID-19 are mandatory stay-at-home and business closures. The most restrictive nonpharmaceutical interventions (NPIs) for controlling the spread of COVID-19 are mandatory stay-at-home and business closures. Given the consequences of these policies, it is important to assess their effects. We evaluate the effects on epidemic case growth of more restrictive NPIs (mrNPIs), above and beyond those of less-restrictive NPIs (lrNPIs)….

“After subtracting the epidemic and lrNPI effects, we find no clear, significant beneficial effect of mrNPIs on case growth in any country…. While small benefits cannot be excluded, we do not find significant benefits on case growth of more restrictive NPIs. Similar reductions in case growth may be achievable with less-restrictive interventions.”  January 2021 study

Worrying About Mandates and Lockdowns as Delta Variant Hits Unvaccinated Californians

Trump’s second go

JPMorgan CEO Jamie Dimon recently stated that:  “I don’t think people are voting for Trump because of his family values. If you just take a step back and are honest, he’s kind of right about NATO, kind of right on immigration, he grew the economy quite well, tax reform worked. He was right about some of China….  I don’t like how Trump said things, but he wasn’t wrong about those critical issues. That’s why they’re voting for him. People should be more respectful of our fellow citizens. When you guys have people up here [on a CNBC panel] you always ask them why — not like it’s a binary thing that you’re supporting Trump or you’re not supporting him– but why are you supporting him.” “Jamie Dimon on Trump”

In addition, during Trump’s administration many excessive regulations were revoked or reduced. Secretary of Education Betsy DeVos promoted school choice and restore due process to college rape cases. Andrew Wheeler, Trump’s administrator of the United States Environmental Protection Agency (EPA) reduced greenhouse gas emissions, improved water quality, and cleaned up contaminated sites while strengthening cost benefit assessments of environmental regulations. And much more.

His administration did many bad things as well.  His advisors Stephen Miller and Peter Navarro implemented protectionist, buy American trade policies that hurt our economy. His crazy withdrawal from the Trans Pacific Partnership was an ill advised gift to China. He Imposed a travel ban on citizens from seven Muslim-majority countries, rescinded the Deferred Action for Childhood Arrivals (DACA) Program, separated families at the US-Mexico border and withdrew from the Paris Climate Agreement and the Iran Deal (Joint Comprehensive Plan of Action), which was designed to prevent Iran from developing nuclear weapons.

Trump’s promise to leave Afghanistan was not kept (and was later very badly executed by President Biden). His initial love affairs with North Korea’s President Kim Jong Un and China’s Xi Jinping exploded into hostility. If reelected Trump promises revenge against his enemies. He promises to strip tens of thousands of career employees of their civil service protections in order to dismantle the “deep state.” He promises to impose tariffs on all imported good and to revoke the visas of students studying in the U.S. who are critical of the U.S. None of these is keeping with the traditions and policies that have helped make America great.

On the other hand, I hope that he would keep his promise not to send American soldiers to Taiwan should China attack it militarily, which would be insane. Whether we would get the better or worse policies under another Trump administration would also depend on the team that he would bring with him.

Trump’s small-minded pettiness, dishonesty, vindictiveness, and egotism are on daily display. He is not someone I would invite into my home. But we are right to look at the policies he pledges and is likely to pursue if elected President again in 2024. As with his previous administration, his next one, if reelected, will depend on those who join and run his administration.

My expectation is that Trump will be more careful next time to choose loyalists rather than the most capable. It is also likely that the most capable people would refuse to be part of another Trump administration. I expect the worst.