Favorite sports teams

  • My favorite sports teams
  • (1) Braves
  • (2) Yankees
  • (3) Hawks
  • (4) Falcons
  • (5) Panthers
  • (6) UNC (basketball)
  • (7) UGA (Football)
  • (8) Alabama (Football)

Friday, July 18, 2014

Israel vs Hamas 2014 edition

Recently, Israel and Hamas have engaged in conflict yet again. I haven already discussed the history of this conflict in a prior post, so I shall start with the beginning of the most recent one.

 On June 2nd, a unity government between Fatah and Hamas formed, hurting peace efforts and relations with Israel.  On June 12, 3 Israeli teenagers were kidnapped in the West Bank, presumably by a Palestinian. For the next several weeks, Israel searched throughout the West Bank for the teens, arresting several people and increasing tensions in the process. On June 30th, the three were found dead. Netanyahu blamed Hamas, and Fatah stated they were not responsible for the teenagers deaths. A few days later on July 2nd, an apparent revenge killing of a Palestinian teen occurred. Several suspects were arrested as  rioting occurred in Arab villages. At the same time, Hamas began to fire rockets into Israel. By July 7th, over 200 rockets had been fired into Israel. That same day Israel launched Operation Protective Edge, escalating the conflict.

     Israel's anti-missle defense system, in part funded by the U.S., has been about 90% effective. Sirens warn Israelis to take cover, also limiting causualties. In the next several days, Hamas fired rockets into Tel Aviv,  Haifa, and Be'er Sheva, major Israeli cities, as well less populated areas and places near Gaza. On July 8th, Israel called up 40,000 reserve troops in response. Israel also launched airstrikes and navel strikes onto many targets. Many missile and weapon sites have been hit as well as militants. Unfortunately, up to 70% of casualties have been civilian, however this does not appear to be intentional. Efforts have been made to avoid civilian casualties, such as warning shots and warning leaflets. The high civilian casualty rates have hurt Israel's international reputation. On July 9, with 43 Palestinian deaths and over 370 wounded, Palestinian President Abbas declared that Israel was committing genocide. Meanwhile, neither side appeared to be letting down.

         As the death toll continued to climb, and tensions continued to rise, Egypt proposed a ceasefire. On July 15, Israel accepted it, but Hamas rejected it and continued to fire rockets, leading to more airstrikes, more reserve troops being called up, and more deaths. On July 17 there was another temporary ceasefire, but it was again broken by rocket fire from Hamas. That day, with over 1200 rockets launched from Gaza, Israel launched a ground invasion into Gaza. An invasion was  sure to add to the over 230 Palestinian deaths and 1 Israeli death, although Israel with its heavy artillery and armored vehicles, including tanks, is likely to face far fearer deaths. To this day, over 20 Palestinians and one Israeli solider have died in the ground invasion.

      Whatever the result of the ground invasion, the real question lies with how to resolve this conflict for more than a few years. With the peace-process all but dead, the U.S. has little leverage to resolve it. Thus, it must be resolved among the engaged parties. Hamas will still remain belligerent towards Israel and does not appear to have the will to resolve it. Thus Israel is left with three options, none of them good. The first option is to withdrawal from Gaza after damaging Hamas's military, and have a ceasefire. This is what has happened in the past. However, every time Israel does this, Hamas  breaks the ceasefire within a few years, starting the process all over again. This is appears likely to occur again if Israel goes with the option.

      The second option is to forcibly remove Hamas as the government and replace it with the PLO. This has advantages in that the PLO is less hostile to Israel and has not launched attacks on it in several years. However, this is harder then it seems. Keeping Hamas out of power permanently and propping up the PLO would require some military supervision and could need some action against Hamas. Additionally, it runs the risk of the PLO being seen as a proxy government for Israel, which could lead to it being delegitimized or even overthrown and being replaced by another hostile government. Even if this could be accomplished, the PLO is not an ideal government. It is on bad terms with Israel, and may not be able to maintain power. Despite these risks, this is the option I prefer, in part because it reduces the risks of future attacks while minimizing the negative impacts.

     The last option is a full military occupation. This nearly eliminates the risks of future attacks by a government, all but removes the possibly of sophisticated rocket attacks, and could maintain relative order in the area. However, there are several problems with this option. First of all, a full occupation would be expensive, requiring near constant military supervision, and the potential use of force to maintain order. Secondly, a re-occupation would not be good for Israel's international standing, although based on history relations with the U.S.  would not be damaged severely. Thirdly, relations with the PLO would surely be damaged, making keeping order in the West Bank harder. This leads to the last problem, the potential rise of a third intifada. Re-occupation would anger not only the PLO, but the Palestinian people as well. Uprisings in Gaza and the West Bank could occur, causing many casualties for both the Palestinians and for Israel. This could turn much of the international community against Israel. The effects on its economy and moral would be severe.

      Israel and Hamas seem to be engaged in a never ending conflict. Unless either side changes their strategy, expect to be reading about the same thing in a few years.












Tuesday, May 20, 2014

Secular stagnation part 2

         Another reason for the current secular stagnation is bad trade policies. During the late 1990s, NAFTA had been recently signed. Since then, trade between the the participating countries has surged, although in part this is due to growth in these economies.  A huge increase in trade with China also caused economic growth. In 1995 trade between the U.S. and China amounted to about 57 billion dollars. In 2000, it was about 116 billion dollars. Total U.S. trade grew from 1.3 trillion dollars in 1995 to about 2 trillion in 2000, and average of about 26% a year. It remained stagnant during the recession of 2001 to 2003. In 2004 it amounted to about 2.3 trillion dollars, and grew to about 3.1 trillion in 2007, a slightly larger increase per year. However, since the end of the last recession trade has slowed, in part due to slower growth,  but also due to more trade restrictions, most importantly among the G-20.

             NAFTA, which was signed in 1994, is outdated and needs to be updated.  The greatest gains occurred earlier in NAFTA's lifetime, the late 1990s, and the positive effects have wained over time.  One way to improve NAFTA would be to strengthen infrastructure along the U.S.-Mexico border. According to a U.S. Chamber of Commerce report on U.S.-Mexico trade failing to update current infustructure and build new infrastructure would put efficiency and economic growth at risk.

         Allowing the U.S. to export natural gas would also be helpful, since it would bring in greater profits for natural gas companies, since in Europe natural gas prices are higher than in the U.S. Additionally, it would help wean  Europe off Russian gas, thus allowing greater sanctions by the U.S. and Europe over the crisis in Ukraine against Russia.

     The deals currently being discussed with the Transatlantic Trade and Investment Partnership(TTIP) and the Transpacific partnership(TTP) by many estimates would add $200 billion to the United States annual output. The TTP, which is currently being negotiated would encompass 800 million people and 40% of the world's trade. It would be composed of nearly every Pacific Country except China, Indonesia, and Russia. The TTIP would be between the United States, and E.U. The two economies in 2012 accounted for about 33 trillion dollars in GDP, or about 46% of the world's 72.5 trillion dollars. These two trade pacts cover over 63% of the world's GDP.

       The president has been supportive of both initiatives, but congress has blocked them, especially Harry Reid. Democrats in congress, as well as some Republicans, fear job losses in the U.S. as well as political retaliation among their constituents. Rather than face up to big issues, both parties have tried to rally their base. Here are some examples of issues that parties have focused on to rally their base.  The democrats have used the 77 cents catch phrase on how much women make compared to men on average. However, women work less hours, are in higher paid professions, and do more dangerous jobs. Minimum wage has also been a hot topic for the left, despite uncertainty on how positively a minimum wage raise to $10.10 would help the economy, if at all. Republicans have  focused solely on The Affordable Care act in many instances, which although is problem, and potentially a large one, is not as urgent as some other issues, such as unemployment and low workforce participation(although the law encourages the later). Benghazi has also been raised up yet again recently, despite the fact that it occurred nearly two years ago. Although the president may not have been completely honest about the situation, it is insignificant compared to other problems facing the country, and politicians have lied about much worse things. 

   Rather than focus on partisan politics, the United State's federal lawmakers should focus on issues that can stimulate the economy and bring long term job growth. Alas, it appears that neither party is going to do this anytime in the near future. 













Monday, March 17, 2014

The new normal: why low workforce participation rates and bad trade policies mean that the U.S. will be stuck in low growth and high real unemployment for the foreseeable future

     The United States right now is facing a weak economy, high unemployment, and low growth. There have been periods of recovery throughout the recession, but all have been followed by disappointing results. It has been over 4 years since the official end of the recession. Even before the recession, growth was much lower then in the mid 90s. From 1994-2000, the United States averaged an annual growth rate of about 4.05%. From 2003-2006, at the height of the U.S. economy on the last decade, the growth average was almost a full point lower, at about 3.18%. From 1994-2000, unemployment consistently fell or stayed put. In January 1994 it was 6.6%, falling to 5.1% in August of 1996 to 4.5%  in May 1998 and to under 4% in 2000. Although some of the growth toward the end of the period was driven by the technology bubble, the fact that the recession afterward was only made much worse after the terrorist attack of Sept 11, 2001 shows that despite the bubble, underlying economic conditions were still good. The period from 2003-2006 also saw a drop in the unemployment rate, although not to as low as a level as seen in 2000, and the low unemployment lasted for a shorter period of time. This period was driven not by one but two bubbles, a banking one and a lending one, which would prove to be much larger than the technology bubble. Yet despite this, the period from 2003-2006 was worse in regards to both growth and unemployment than from 1994-2000. The fact that conditions were dissapointing even before the recession reveal a worrying reality: that structural, not cyclical factors are hampering the U.S. economy. This is also known as secular stagnation. From 2001 onward, the economy was unable to create many jobs or produce good growth without a bubble, and even with the bubble conditions were not great. Former treasury secretary  Larry Summers admitted this in an interview with the Washington post. The United States is in danger of following a path similar to Japan, and France: consistently poor GDP growth, low workforce participation, and excessive regulation combined with relatively high unemployment and low inflation to create a economy that is permanently bad.

      Even worse news is that when one takes into account lower workforce participation, one can see that the unemployment rate is underestimating the number of people out of work. The workforce participation rate is now at a very low 63.0%. It has been in decline for a while. In 1998 around its peak it was at 67.1%. At that time it was expected to decline to about 63.0%, but in 2025 not 2014. In November 2007, the month prior to the recession it was at 66.0%. As the unemployment rate peaked at 10.0% in October 2009, workforce participation was at 65.0%. Despite the fall in unemployment by over 3.0%, the workforce participation rate has decline by 2.0%. This means not only that much of the decline was artificial, but also that the U.S. will have relatively fewer jobs because relatively fewer people are working. In short, unless this major problem is solved, it is highly unlikely growth can be sustainably what it was in the mid-2000s, let alone the mid to late 1990s.

      One thing that contributes to the low workforce participation rate is the excessive social safety net.  The retirement age had remained 65 ever since 1938. It was not until 1983 until a very small raise in the retirement age was introduced for people born after 1938, gradually rising to 67 for people born 1959 or later. In 1938 the life expectancy in the U.S. was 63.5 years. In 1983, even when in had risen to 74.6 years, the retirement age barley budged. In 2011, the life expectancy was 78.7 years. Despite the over 15 year increase in life expectancy, the official retirement age has barely moved since 1938. This contributes to the low workforce participation rate. The fact that there is an over 15% drop in workforce participation from ages 62-64 to ages 65-69 confirms this.  In addition to an early retirement age, disability claims are also being abused. Disability claims rose by during the recession. From 2008-2009, applications for the program rose by 21%, and from 2007-2011 the number of people collecting disability claims rose by 2.8 million, or about 20%. This is a significant increase that needs to be addressed. The Affordable Care Act makes the problem of less people working even worse. According to the CBO,  from 2014-2024 2.5 million less people will work full time because of disincentives to work by the Affordable Care Act.

      A low workforce participation rate is bad for the economy and country for many reasons. One reason is that with less people working, less income is made, causing both tax revenues to fall and  average household income to fall. It also means that less work and production is done, causing growth rates to fall. Lastly, with less people working, the people who are working will have a bigger average burden to support the people who are not.

I my next segment, I will discus the United State's poor trade policies and how it hampers growth.

      The Economist Feb 22-28 2014



    Monday, February 10, 2014

    The focus on inequality in America

         Today, there is a lot of focus on inequality, particularly from more liberal news sources such as the Huffington Post, Time Magazine, and MSBC. The President in the State of the Union Address as well as during other occasions, proposed solutions such as raising the minimum wage and increasing taxes on the wealthy.  Although income equality sounds like a wonderful goal for society, it can be a poor measurement of the prosperity of the society.  A society in which all citizens are poor is very equal but less prosperous than one that has a wide range of incomes from rich to poor.  Focusing on income equality alone leads to economic conditions that help the poor at the expense of mean income and wealth for the entire society. Some of these misguided measures taken to enhance economic equality are artificially raising wages higher than market value, and placing an excessively high tax burden on the wealthy.  The United States should not trade in the prosperity of the entire nation to achieve income equality.

       Even though inequality is rising, social mobility is not declining. According to a large Harvard economic study, social mobility has stayed constant over the past half century. The president has stated that social mobility is getting worse, when in fact it is not. This reveals a fundamental flaw in his world view of inequality, which in turn should make one take any solution he proposes with a grain of salt.

          Income equality is not necessary a good way of measuring prosperity. Using the Gini coefficient as a way of measuring inequality, with 100 being complete unequal and 0 being completely equal, the U.S. is in the highest third with a rating of 45.0. Canada, Australia, Sweden and Norway are often seen as models of wealth and/or income inequality. Canada comes is in the bottom half with a rating of 32.1, Australia in the bottom forth with a rating of 30.0 Norway 5th lowest with a rating of 25.0, and Sweden being the most equal with a rating of 23.0. Despite its high income inequality, the United States ranked first in the OECD, with a mean Household adjusted disposable income of $38,001. Norway comes in with $31,459, Australia with $28,884, Canada with 28,194, and Sweden with $26,242. The point is greater income inequality does not always translate into greater average income. In mean Household financial wealth, the U.S. outperforms its peers even more. The U.S. has $115,918, Canada with $63,852, Sweden with $44,889, Australia with $32,178, and Norway with a mere $6,905. Once again, greater wealth equality does not mean greater wealth. Yes, the U.S. has significantly higher poverty rates then these countries, but for the most part people in the U.S. make more and have more money than in every other OECD country. The stats show income equality is not a good way of showing how well people in a country are doing.

         What about the President's specific solutions for enhancing economic equality such as raising the minimum wage and increasing taxes on the wealthy? Are these good ideas? Raising the minimum wage to $10.50 an hour, as the president has proposed, would not be much relief. It would only be a annual income of $21,480 assuming the employee works full time. This is still below the poverty line for a family of four. Raising the minimum wage much higher would likely cause companies to not hire as many young workers, leading to high youth unemployment rates as seen across southern Europe.  In addition, one would expect companies that are forced to pay higher wages to pass off the increased expense to the consumer.

           Raising taxes on the wealthy is not a good idea either.  In March of 2013, the top 10% of American earners made 45% of the nation's income, but paid 70% of the income taxes. Proponents of higher taxes on high earners often focus on the wealthy paying their fair share. However, they are actually paying over one and a half times their fair share.  While income tax accounts for about 47% of the total, this is the only type of individual tax that is progressive, and thus is the only one that can be changed for only a certain group of earners. However, in 2012, the bottom 50% of earners paid only 2% of income taxes. Raising taxes on only the top income bracket is also inefficient. Were it to be raised 1% point on only them, from 2014-2018 tax revenue would rise about $38 billion, while if it were to be raised 1% point on all income tax brackets, tax revenue would rise $287 billion from 2014-2018.

         In summary, economic equality is a lofty ideal that does not work well in the real world.  European countries have more income equality but lower incomes and wealth than the United States. Moreover, the specific measures that the President is proposing to enhance equality are unhelpful and perhaps harmful to the economy.  Raising the minimum wage might help a small number of workers by a small amount, but corporations would be forced to compensate for the increased expense by hiring fewer workers and increasing prices that consumers pay for goods.  Increasing taxes on the wealthy is not nearly as efficient in raising tax revenue as raising taxes on all citizens.  In addition, the wealthy already pay more than their fair share of taxes.  The President should not focus on the deceptive goal of greater economic equality.  Rather he should focus on strengthening the economy as a whole.







    Thursday, January 9, 2014

    Why the affordable care act should be repealed

    The Affordable Care Act, more commonly known as Obama-care, was signed into law on March 23, 2010 after much Republican resistance. The law attempts to attain two main goals, to make health care more affordable and to cover many of the 48 million people without insurance (Pear). Supporters of the law claim it achieves both, but in reality it only achieves only the latter. In addition, many citizens are losing their current health insurance because their plan does not qualify.  Finally, even those who wish to sign up for the new exchanges created by this law are unable to because the website for signups seldom works. 
    The Affordable Health Care Act,  law makes healthcare less affordable.  A major problem is that the bill fails to significantly address health care costs. Drug prices were not negotiated; there was little action to curb rising insurance premiums.  This law promises insurance for millions of people, but has no plausible way to pay for their medical care. There is no doubt that insuring people who cannot afford medical care will be very expensive.  Since many sick people with preexisting conditions can now be covered, prices would go up. The law has a fine to encourage young people to sign up for health insurance to make up for this increase in cost.  However, the fine is insufficient.  In 2014, an adult would have to pay only $95 for not having health insurance (Luhnby). Meanwhile, the average monthly cost for a middle tier plan is $328 (Persaud), around 370% more in a single month than the fine is for an entire year. Even though the fine will rise, it will still cost over five and a half times as much to buy healthcare than to pay the fine.  Additionally, 80% of the uninsured will be exempt from the mandate (Luhnby). The lack of economic incentive for purchasing insurance and the difficulty navigating the website will result in fewer people purchasing insurance.  Costs will go up dramatically, further discouraging young people to sign up, which will further raise costs. The law will enter a death spiral of ever-higher insurance rates until the system collapses or major reforms are required.
    Furthermore, 12 million hard working Americans have lost their insurance (Killough). Part of the problem lies in the complicated regulations.   These people have relatively cheap plans, and the new law says these plans do not meet the new requirements. The President said, “If you like your insurance, you can keep it”, but this was clearly a lie. Ironically, the law tried to make it easier to obtain affordable healthcare, but affordable healthcare is obtained more difficultly. Some will get health insurance, but the rise in prices and the loss of insurance will make people who currently have it suffer.
    Another major problem is that the backend of the website has been dysfunctional. Even though individuals can now sign up, “…insurers have long said that they are receiving botched enrolment forms, or 834s, if they receive them at all” (The Economist). So, while many will think that they have health insurance, in reality they will not. This could become a major problem when people arrive in hospitals only to realize that they do not have insurance. The fact that health care officials “…would not confirm what share of 834s were being bungled” (The Economist) shows that it is a major problem. The worst of the website problems are probably over. However, not being able to deliver on a website for the president’s signature law calls into question the administration’s competency in performing a major overhaul of the U.S. healthcare system.
               A major problem lies with the fact that the law was designed in an unsustainable way. If there major changes are not added to the bill, it will lead to much higher insurance rates and eventually a collapse in the system. Once the system collapses, there will be millions of people who got their healthcare insurance through Obamacare and want to keep it. Unfortunately, for many of these people, a free market system will be unable to cover their insurance in a way that they can afford it. Ultimately, these people will want to keep the insurance and will become very influential in the healthcare debate. The only way that these people could be covered is a single payer system. The problem with that lies with the fact that this system would be expensive for the government and require tax hikes, something that neither party wants to do. Considering that Medicare already cost around 500 billion dollars per year (Sahadi), and that there were 3.3 workers per beneficiary in 2011 (Sahadi), even when factoring in that old people need more healthcare than others, and potential savings in costs of Medicare and Medicaid, this system could still add around $1 trillion dollars per year. Considering that the current GDP was 16.9129 trillion dollars after the 3rd quarter of 2013 (Bureau of Economic Analysis), this would equal about a 6% increase of debt as a percentage of current GDP every year. The situation could put us in a Spain like scenario were people do not want to cut services even if it is necessary, and the fiscal burden leads to prolonged high unemployment and recession.
    The U.S. should repeal the Affordable Care Act. It fails to allow people who like their insurance to keep it. It fails to make healthcare more affordable. It is likely that without repeals or considerable reforms, the law will cause the system to collapse on itself.
    That being said, Republicans should not solely focus on the law, or even make it their primary issue. Despite the law’s low approval rating of 35% (Alter) most Americans are still primarily focused on the economy. Despite the recent jump in GDP growth shown in the 4th quarter of 2013, unemployment remains high, and yearly GDP growth remains disappointing, especially compared to before 2008. The resurgence of Al-Qaida and affiliated groups in Syria and Iraq also make the president vulnerable after repeatedly stating that Al-Qaida is on the path to defeat. While the Affordable Health Care Act is a major issue, it should not be focused on too much by opponents of it in order to prevent ignoring other issues. Instead, opponents of the law should combine opposition to it with mentioning other issues in order to get elected, and focus on repeal after 2014.