Why not raise (or eliminate) the limit on immigration?

One of the key reasons we have illegal immigration in the U.S. is the limit on the number of people let in legally.

I believe that limit is about 700,000 per year, set by the Immigration Act of 1990.

If you restrict the supply of something (in this case, legal immigration) that is in high demand, an underground market will emerge to meet the unserved demand.

This is why it’s difficult to win the war on drugs or to raise minimum wage.

If you make drugs illegal, an underground economy emerges to supply the illegal drugs that are in demand.

If you raise the minimum wage to make it illegal to work for less than a certain amount, an underground economy of off-the-books jobs for people who are willing to work for less.

Sometimes, even legal loopholes emerge, like treating employees as independent contractors. I wrote about how one high minimum wage supporter I knew skirted the minimum wage law in his own business here.

I find it strange that anyone for immigration has not mentioned raising the limit on legal immigration. Why is 700,000 a good number? What can’t it be higher?

Rather, it seems they just want to illegal immigration to continue to happen. Why not make it legal?

I’m fine with immigration and I’m fine with having more than 700,000 per year. I’m not even sure we need to set an arbitrary limit.

Maybe there are good reasons, but I haven’t heard them, yet.

I think the vast majority of immigrants come here for an opportunity at a better life and to contribute, not by taking benefits, but by creating value through the market system and that letting them in makes us all better off.

Raising the limit also reduces the number of folks who come in illegally who may intend to cause harm, making it easier to keep tabs on them since they came through the official process (though I won’t kid myself into believing that official processes are good at that sort of stuff).

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Sports and Politics

Most of the banter between sides in politics is the same as sports. My team vs. your team. Us vs. Them. He said, she said.

In terms of debate, though, there’s no there there.

It never gets to actual discussing of issues and reasoning. It stays at the level of your side is all good and the other guys are all bad.

Most of the banter in sports is to sell beer, t-shirts and hats.

Most of the banter in politics is to keep you from thinking. If your side convinces you that I’m bad, then they minimize the risk of losing you.

I think you should be wary of people who act like this because they’re employing the same tactics as the adults in M. Night Shyamalan’s The Village.

[Spoiler alert] 

They used phony beasts in the woods to keep their kids from exploring beyond the village limits and discovering there was an entire modern world out there.

Economist Thomas Sowell said:

There are no solutions, only trade-offs.

The world looks very different when you grasp this.

You begin to feel like the kids who found their way through the woods. You realize that many of your beliefs were built on fiction because others thought it best for you and for them.

 

Phony concerns about how much tax rate changes will cost

I will be more interested in hearing from folks about how much tax rate changes “will cost us,” when they are just as concerned about how much spending costs us.

Because ‘basic corporate finance’

On the Today show, this morning, I saw Savannah interviewing Rep. Paul Ryan about the tax bill.

She pushed hard on the cut in corporate tax rate in the plan.

His response was valid.

We have the highest corporate tax rate in the industrialized world. It will be good for the economy to be more competitive, so companies stay here and invest more here.

She pushed again…but Michael Bloomberg, CEO of a large company, says he won’t invest more here. He’ll buy back more stock.

Ryan’s response was valid. That’s one anecdote against studies that show otherwise.

But I think he missed a golden opportunity.

Here’s what my response would have been:

It’s great that Bloomberg supports our position.

I envision Guthrie getting confused look at this point and responding with, But he said he would not invest more. How does that support your position?

He said he’d buy back stock. Basic corporate finance tells us that stock buybacks is one way to return money to owners. Paying dividends is the other. Ask any first year B-school student.

What do investors do with money they receive from their investments?

Often, they invest it elsewhere. 

While Bloomberg’s company might not have good projects to invest in (which may be a problem for Bloomberg), other companies might.

With more money in their pockets, the folks who sold shares to Bloomberg will be able to invest more in companies that have better investment prospects, like Google or Facebook or start-ups building better solar panels, curing cancer or the company that might disrupt Bloomberg’s own business model.

So, the economy still gets the benefit of the reduced corporate tax rate, even if companies, like Bloomberg’s, don’t directly invest their extra cash. Others will be more than happy to.

Do your homework

I’m looking forward to reading a new book, The Coddling of the American Mind by Greg Lukianoff and Jonathan Haidt.

Here’s the first part of the description on Amazon:

The generation now coming of age has been taught three Great Untruths: their feelings are always right; they should avoid pain and discomfort; and they should look for faults in others and not themselves.

Unfortunately, it’s not just the generation coming of age now.

This describes well the attitude of the person I wrote about in my previous post and he came of age quite a while back.

I think it started about 30 years ago when schools and MTV encouraged people to To Get Out the Vote and Rock the Vote, instead of encouraging those of us coming of age then to Do Your Homework, Think About, Discuss it with Others, Come to a Reasoned Conclusion, Then Vote.

But, then again, they may not be able to control your vote if you did all that.

Sorry state of discussion

A few times lately, I’ve been reminded of the first part of this post from 2010. Especially this part (some slight edits):

I often find that the other side doesn’t mind being incendiary.  They often drop bombs [like a personal attack], not based on reason or fact, and they want to be able to get away with that without a response.  When I start to respond, usually by simply asking them the reasons or facts behind their statement, they shut down the conversation (with a rude interruption and raising their voice more) with something like,  “Oh, I don’t feel like talking about that,” “I just know,” or “that’s just how I feel and you aren’t going to change that.”

Today, it was “you’re closed-minded. It’s not worth discussing anything with you. You won’t change your mind.”

Any attempt of a response from me was met with hostility to shut my response.

These recent unproductive discussions reminded me of why I started this blog — to try to have productive conversations — and reminded me to review these discussion tips that are always accessible from the top menu on the page for anyone to have to be able to help facilitate that.

In today’s discussion, when I asked someone to provide facts to back up a claim they made, it resulted in three ad hominem (personal attacks) and one red herring (change the subject) fallacies.

While I was being flamed with informal fallacies I searched the Nets to discover that the claim being made was not accurate, at least not as reported by four media sources and all of the media sources were mainstream.

It’s possible that there are other accounts that I didn’t see, but in the sources I checked, the stories lined up with each other and didn’t support his claim.

I don’t think this person was trying to intentionally mislead me.

I know from my own experience that I have a difficult enough time keeping all the information out there straight, which is one reason I like to start with the facts. I’ve been trapped in too many discussions where all of us — including me — were arguing about fiction, because none of us had our facts straight.

Added: But, I simply don’t think it’s productive that when someone challenges your claim to spin-off into fallacy land, either.

But, that pretty much sums up political discussions.

When discussing this event with my 7th grade son, he said it sounds like the sports arguments he has with his friends about whose favorite soccer team is better.

Yep.

Needs more work

This article on QZ.com is disingenuous and not persuasive. It’s headline: The Republican tax bill punishes American families who use public schools.

Why?

Under both the GOP Senate’s nearly 500-page bill (pdf) and the House version, the amount that US households pay in state income taxes (which can be as high as 13% in states like California) and local taxes is no longer deductible on federal income tax forms, with the exception of property taxes up to $10,000.

Making state and local taxes no longer deductible from federal income taxes essentially subjects US households to “double taxation,” by taxing them twice on the income they earn, according to a report (pdf) from the Government Finance Officers Association (GFOA), a non-partisan group of state and local finance professionals from the US and Canada.

Why do I think the article is disingenuous? For a few reasons.

First, they don’t tell us how many people will be affected. Only about 30% even claim this deduction.

Second, they don’t mention that what people lose from this deduction, they will gain some, all or more back in the changes in the standard deduction and tax rates.

Third, they don’t mention how many taxpayers will still get to deduct up to $10,000 in property taxes.

When you take the above into account, I suspect that the impact of the change is minimal.

The authors also claim that the removal of this deduction will pressure citizens to lower their taxes, which could be devastating to school district budgets.

That made me LOL.

First, because I highly doubt that would happen. By the time you take the factors I mentioned above into account, it wouldn’t be worth enough people’s time to do that.

Second, if they did pressure local school districts to lower taxes, good for them. They should hold their school districts accountable. This is how the world should work.

Finally, the authors don’t even mention that one of the 2nd or 3rd order consequences of this deduction is already offset in higher home prices, which is a pretty well-known and accepted fact in the economics world.

So, if you do pay more taxes because of losing this deduction you will likely gain it back in home affordability.

Overall, I suspect the individual impact of this change in the tax code will have a minimal financial impact on most folks.

I could be convinced otherwise. But, this article falls well short of making that case. This article is a good example of the type of paper my high school composition teacher would have handed back with “Needs More Work” written on it. Unfortunately, the standard teachers used to hold students to, don’t seem to apply in journalism these days.