Walmart, Health Care and Higher Education

I came across an interesting map recently that shows the largest employer in each state.

As you can see, Walmart is the leading private employer in most states---22 in all.

However, what I found most interesting was the fact that in 23 other states the largest employer was either a hospital/health system or a public state university.

There were only 5 states that any other type of employer was the state leader. Those included Boeing in Washington, MGM Resorts in Nevada, the Denver International Airport in Colorado and a grocery store chain in New Jersey and Maine.

If you want to understand why healthcare and higher education costs have outstripped every other inflation category over the last 20 years you might want to consider the map above.

If you want to understand why health care and college costs are unaffordable, look at the chart below. Both hospital costs and college tuition have vastly outpaced average wages in the last 30 years.

What do higher education and healthcare have in common?

They both receive massive infusions of government money annually.

There is absolutely no way that healthcare and higher education would have been able to push those costs as high as they have without massive government payments and subsidies.

For example, this chart compares college tuition gains with income gains in constant dollars.

Quite simply, without the infusion of billions of federal dollars, there is simply no way colleges could have increased tuition the way they have.

The following charts, although a few years old, give you a sense of the federal money that has fueled cost inflation in the higher education segment.

Tax subsidies---Up 600% in real dollars in the last 20 years.

Federal sponsored student loans---Up 400% in real dollars in the last 20 years.

I shouldn't have to explain anything regarding the federal government's massive increase in spending in the healthcare market over the last 50 years.

In 1965, the federal government was spending next to nothing on healthcare. That is also the last time that health care costs matched closely with average incomes.

Medicare. Medicaid. Obamacare. They all brought massive new amounts of federal dollars into the healthcare market.

Healthcare costs, like higher education costs, lost all relationship to average wages and incomes.

Today the federal government is spending close to 6% of GDP on health care. That represents almost half of all spending on health care in the United States.

Health care costs also could not go up without a seemingly endless supply of money to pay for it. Just as is the case with health care costs, college costs have become heavily dependent on the flow of federal money into the system.

Health care costs generally tracked overall inflation in the economy until government programs were introduced and normal market forces were disrupted  The same has been true with student loan money. Student loans were basically unheard of when I went to college 50 years ago. As more student loan funds became available, the easier it became for colleges to raise tuition costs.

Ironically, a program that was designed to assist students to afford college seems to be making it more unaffordable with each passing year. That is what occurs over and over when a well-intentioned "liberal" idea meets the real world.  A desire to do good by government ends up being the undoing of the very people it was intended to help.

Isn't also ironic that liberal Democrats are also now promising "free" health care and college education for everyone. Nothing is free. The costs will be high for everyone. That "free" stuff will also come with significant government strings attached. It will decide who gets medical care and when it is received. It will decide who goes to college and where. The highest cost will be loss of freedom. You can count on it. There is no other way.

That employer map above speaks volumes.

Isn't it interesting as well that almost everything Walmart sells (food, clothing, toys, tvs) have gotten cheaper relative to wages while those things that the government has gotten deeply involved with have gotten more expensive.

Coincidence?

Red Wins In The End?

I recently wrote a blog post in which I referred to the declining birth rate in China.

This is despite the fact that in 2016 China abandoned the one-child policy it had in place for almost 45 years. In fact, recent data from China's National Bureau of Statistics shows that births in that country dropped to the lowest level since 1961---15.2 million births. That is 2 million less than China had in 2017.

Final data on births in the United States for 2017 has recently been reported and the number of births in the United States hit a 30-year low according to this Wall Street Journal article.

3,853,472 births were reported for 2017. That is down 2% from 2016.

If you read my last post, these declining birth rates are great news for anyone concerned about man-made climate change. Fewer children and fewer people means lower carbon emissions. If we can get it down to zero we know we will be fine!

The total fertility rate for women is now estimated at 1.765. That is the average number of babies that a woman is projected to have over her lifetime. A fertility rate of 2.100 is required in order to maintain a stable replacement rate for the population over time. That is the lowest TFR since 1978.

However, most of our biggest economic and geopolitical competitors are worse off than we are on this score.

Here is a graphic of U.S. births since 1950.

You can see the "Baby Boom" period that followed World War II and reached its peak between the years of 1953 and 1964. In each of these 11 years births exceeded 4 million.

This was followed by what I call the "Baby Dearth" years between 1971 and 1979. 1970 was the only year in the decade of the 1970's that births exceeded 3,600,000.

We had a "Baby Boomlet" that started around 1989 and lasted until 2010 with a slight pause between 1994-1999.

Since a high of 4,300,000 births in 2007 we have seen a decrease of almost 500,000 births per year compared to 10 years ago.

The highest numbers of babies are born to mothers between the ages 25-29 (1,123,024). That works out to 97.9 births for every 1,000 women in that age group.

There were 1,091,395 babies born to mothers aged 30-34. However, due to the fact that there are fewer females in this age group, this age group actually has a higher fertility number than the 25-29 age cohort---100.3 births for every 1,000 women.

Another way to look at it is that for every woman you see in a year between the ages of 25-34 there is about a 10% likelihood she will give birth during the year.

For women age 35-39 the number of births per 1,000 women is cut in half to 52.2 (5 in 100). At age 40-45 it is 11.6 (1 in 100).

Part of this decline is choice. Women at this age have already had children and do not want more. However, the biggest factor is age.

There is a direct correlation between maternal age and fertility and there is a pronounced downward rate of fertility beginning at age 30. It takes a very sharp dive after age 35 as this chart from The Women's Eye website shows.

Although women are generally marrying later due to career choices and other reasons, the biological science regarding fertility has not changed. This is also a factor in the reduced numbers of births. Later first births necessarily limits the subsequent number of births for that woman.

Age is also a factor regarding male fertility but that process begins about 10 years later and is not as severe as this chart from the British Fertility Society shows.

On the other side of the age spectrum, teen births continue to decline. The teen birth rate in 2017 was 18.8 (2 in 100) which is the lowest ever recorded. By comparison, it was three times higher in 1990.

This is particularly good news regarding Medicaid spending.

43% of all the babies born in 2017 were paid by Medicaid. However, 77.5% of births by mothers under the age of 20 are paid by Medicaid.

The other interesting item I found in the data is that women in red (conservative) states are having more babies than in blue (liberal) states.

Here are the states (and D.C) with the lowest total fertility rates--- all less than 1.7 births per woman.

California
Oregon
Colorado
New York
Vermont
New Hampshire
Maine
Massachusetts
Rhode Island
Connecticut
Pennsylvania
District of Columbia

Every one of these states (and D.C.) voted for Hillary Clinton in 2016 with the exception of Pennsylvania..

Here are the states with the highest total fertility rates---all higher than 1.9 per woman.

Alaska
Idaho
Utah
North Dakota
South Dakota
Nebraska
Kansas
Texas
Iowa
Arkansas
Kentucky

Every one of these states voted for Donald Trump in 2016.

I was also surprised that states like Ohio and Indiana had higher total fertility rates than Florida, Georgia, South Carolina and North Carolina.

If these trends continue it is pretty clear where this takes us. After all, demography is destiny.

Red wins in the end if conservative women continue to outproduce liberal women. Of course, that also assumes that the education system along the way does not totally brainwash the kids who have conservative parents.

Now you also know why the Democrats so desperately want to continue allowing so much illegal immigration to occur.

Who would think you could learn so much from birth statistics?

Belief or Blather?

I often am amazed at the statements that come out of the mouth of some liberals.

Do they really believe what they are saying or is it just blather?

Alexandria Ocasio-Cortez seems to be prone to such statements.

It might actually be amusing until you realize that she has 2.6 million followers on Twitter and another 1.9 million on Instagram.

That leads to another question. Do her followers really believe that she believes the stuff she puts out there?

Let's take her statement last week about climate change.

“Millennials and people, you know, Gen Z and all these folks that will come after us are looking up and we’re like: ‘The world is gonna end in 12 years if we don’t address climate change and your biggest issue is how are we gonna pay for it?'" 

"It's our World War II." 

Can she really believe that the world is going to end in 12 years if we don't address climate change?

Can she really believe that addressing it is the equivalent to World War II?

Let me suggest three policy positions that she should be for if she truly believes what she is saying.

First, she should be in favor of a total ban on all immigration (legal and illegal) from third world countries. The carbon footprint of people in these countries is far less than it would be if these same people migrated to the United States. Therefore, she should be in favor of a total ban on immigrants from these countries in order to give everyone the best chance to survive beyond 12 years.

For example, CO2 emissions per capita in the United States are almost ten times higher than they are in India. Migration from a low emissions country to a high emissions country increases overall carbon emissions globally.

AOC should also support a border wall as we need to insure that people in countries with low CO2 emissions per capita do not migrate to higher per capita countries.

A few examples of countries near our Southern Border and their CO2 emissions per capita.

Ecuador       2.8
Guatemala   1.2
Honduras     1.1
Mexico         3.9

Second, she should support a total ban on anyone having any children. If we have only 12 years left we better address this problem head on. We should focus our efforts first on those things that will have the biggest impact.

A recent study indicated that the one action that would have the most impact in reducing carbon emissions on the planet would be to have fewer children. The study suggested everyone having one fewer child. Why stop there? AOC should realize that if we only have 12 years until the world ends it does not make any sense to procreate anyway.

China already tried the one-child policy and it did not solve the problem. It is time to really get serious if our time is this short.

Look at the numbers. You can live car-free, buy green energy, recycle, eat a plant-based diet, and refuse to use air travel and you will have almost no effect compared to having fewer children.

We will eventually reach AOC's goal. No human beings on the planet will insure we solve the climate change threat.

Finally, I am sure that AOC understands the big picture. The reality is that what the United States does with respect to carbon emissions over the next 12 years will mean very little regarding climate change. If we focus on on what the United States does we are going to lose "the war."

If we only have 12 years, China and India are going to have to stop their carbon emission increases.

Take a look at the 2017 numbers on carbon emissions.

The United States reduced carbon emissions by over 40 million tons.

China and India, combined, increased carbon emissions by over 210 million tons.

Everything the United States did was negated 5 times over by China and India alone.

Every projection of the future shows this trend continuing. All of the net increases in carbon emissions over the next 12 years will come from China, India and the remainder of the developing world as this chart from the U.S Energy Information Administration illustrates.

Carbon emissions from the developed world (the OECD countries) will essentially remain flat.

.

If the world is going to end in 12 years if this is not halted, and this is comparable to the stakes of World War II, it would seem Ms. Ocasio Cortez should be advocating for a reinstatement of military conscription in preparation for challenging China and India to force them to halt their continued increases in carbon emissions.

There is no other way to do it unless everyone in the United States is willing to make major changes in their way of life.

The technology is simply not available to replace the fossil fuels that sustain our modern lifestyle today nor is it realistic that it will be within the next decade.

Of course, the problem with that is that there are only 76 million Americans aged 18-34.  About 39 million are males. China has 370 million aged 18-34. 200 million are males. Those numbers do not work in our favor and that does even include 440 million who are aged 18-34 in India.

There might also be a problem in convincing the American people of the need as well. A recent survey found that only 28% of Americans would support a $10 fee per month to be used to combat climate change. 68% were opposed. Support for a $1 month fee was only 58%.

One more problem is that those 810 million Chinese and Indian Millennials also want to have the opportunity to enjoy the same quality of life as the 76 million American Millennials. They want the cars, the air conditioning, the high speed internet connection and all the rest.

Perhaps they also want to follow Alexandria Ocasio-Cortez on Twitter and Instagram.

My only suggestion is that they should not believe her blather.

She cannot possibly believe what she is saying. If she really, really believed what she is saying, her policy solutions would go far beyond a "Green New Deal".

How The News Wants To Use You

There are few men in history that have seen their name in the news as much as Donald J. Trump has during his lifetime.

Trump has been a fairly constant newsmaker for over 40 years. He starting getting the attention of the media when he started to transform the Manhattan skyline. It continued with his ownership of the New Jersey Generals pro football team, his ownership of Trump Air, the development of his Atlantic City casinos and his highly successful Celebrity Apprentice tv show.

Mixed in with all of that was his highly public divorce from his first wife Ivana, his subsequent marriage and divorce with Marla Maples and his third marriage to Melania.

As they say in the newspaper business, Trump has always made good copy.

Here is an example from The New York Times on November 1, 1976 wherein it described the 30 year old real estate developer this way.

"He is tall, lean and blond, with dazzling white teeth, and he looks ever so much like Robert Redford. He rides around town in a chauffeured silver Cadillac with his initials, DJT, on the plates. He dates slinky fashion models, belongs to the most elegant clubs and, at only 30 years of age, estimates that he is worth 'more than $200 million'."

[The New York Times]

By and large, most of the news coverage of Trump for 40 years was positive. He was open and cooperative with the press and they generally treated him positively as well.

That continued through the Republican primaries. After all, Trump was great for their ratings and readership. Mass media gave Trump a billion dollars in free PR and he used it to roll over 16 other GOP primary challengers.

When Trump wrapped up the GOP nomination it all changed in an instant.

Trump was no longer someone they wanted to promote or publicize  He suddenly became a mortal threat to the liberal ideology that underlies most of mass media today. The mainstream media has made sure that it demeaned, diminished and delegitimized Trump every day since.

For example, here is an analysis by the Media Research Center of coverage of President Trump since he took office by the three major networks. That coverage has consistently been 90% negative for two years.

It is even more remarkable that 28% of all network evening news coverage in 2018 was dedicated to some aspect of the Trump presidency! It is almost as if there is no other news for them to cover.

More than one-half of that coverage involved just five topics.

You could argue that the coverage of the "investigations" is going to be inherently negative. However, there is also evidence of a lot of inherent liberal bias in the other three topics.

I am not aware of any President at any point in history who has had to put up with the animus and animosity that President Trump has had to endure from the media.

The major networks are not alone in the extent of coverage of Trump or its negativity.

I found this analysis of New York Times coverage of President Trump to be very interesting. It compares the amount of coverage the Times has given to Trump compared to other recent Presidents.

It is almost as if the New York Times has can find nothing else to report on. Of course, we know that  coverage is also overwhelmingly negative.

Jill Abamson, the former executive editor of the New York Times from 2011-2014 recently blasted the paper  for being "unmistakably anti-Trump."

Of course, it is not just liberal bias at work. It is also dollars and cents. Negative stories about Trump are like red meat to the Times' readers who wake up every morning hoping that Trump will be impeached that day.

The Times, Abramson said, has reason to be critical of Trump, considering they got a “Trump bump” during the first six months of the administration that saw digital subscriptions increase by 600,000 to more than 2 million.

“Given its mostly liberal audience, there was an implicit financial reward for the Times in running lots of Trump stories, almost all of them negative: they drove big traffic numbers and, despite the blip of cancellations after the election, inflated subscription orders to levels no one anticipated,” Abramson writes.

I have written before that it is nothing short of miraculous that Trump's approval rating is as high as it is considering the media onslaught he has had to withstand over the last two years.

At their core, most people detest political drama. They don't like bickering, backbiting and blabbering. Give them something calming rather than chaotic. A steady diet of drama takes a toll on voters. It wears people out. Their natural reaction is to react negatively to it.

Political drama that is amplified by a constant drumbeat by the media makes it even worse. The drumbeat of repetition engages the "illusory truth effect" in humans. Simply stated, the more often we hear something the more likely we are to believe that it is true---even if it is a complete fabrication.

One of the key principles in any successful attempt to influence is lots of repetition by repeating your points over and over again to engage the "illusory truth effect".

Repetition is the first lesson of propaganda.

The second lesson is that it is easier to change groups of people than individuals. Most people look to others for cues to their behavior. Most people are conformists within a crowd. It is hard to go against the flow.

The objective of the mainstream media (and the Democrats) is to play to the psychology of crowds. Make it seem that there is nothing positive about anything Trump does. Make it appear that everyone who is anyone is opposed to him. Make it so that individuals who voted for Trump will feel more and more uncomfortable when faced with what appears to be the obvious fact that everyone else is opposed to him.

You see that play out every day in the coverage of the government shutdown. It is all Trump's fault. He is stubborn and hard-headed. He refuses to compromise.

All of this has taken a toll on Trump's approval rating. His approval rating with Rasmussen is down to 44%. In early December, before the shutdown was being discussed in the media, he was at 50%. More significantly, those who strongly disapprove of Trump has risen from 40% to 48%. Those who strongly approve has fallen from 36% to 32%.

I have to believe that Trump understands his Presidency is at stake in how this government shutdown ends. He simply cannot cave on his demand for the wall. It was his central campaign promise. If he does not deliver on that pledge he will lose most of his base. It is that simple.

Without that core support he will not win re-election. Without that core support he may not be able to serve out his term. Articles of impeachment are hard to fight when your approval rating is below 30%. The stakes are very, very big for Trump.

The Democrats also know this. That is why they are just as adamant to not give an inch to Trump. They also know they can rely on the media to portray Trump as the bad guy.

In that Trump has given about as much as he can in compromise and maintain the support of his base, I only see two options going forward to end the shutdown.

Congress passes a bill to fund the government without the wall and sends it to Trump. He vetoes it and forces Congress to override the veto with 2/3 votes in each House. This would be a very perilous vote for GOP members. If the veto is overridden Trump simply blames Congress and the Washington establishment for ignoring border security. He proves that he will not sell out for politics.

Alternatively, Trump declares an emergency and uses Defense Department funds and the Corps of Engineers to build the wall. He then agrees to end the government shutdown.

No matter what happens, Trump will continue to be in the center of the news.

That you can count on. There is over 42 years of history that proves it.

You can also count on the fact that the "News" will continue to try to use you to drive Trump from office.

Don't be misled. Do any of the charts above suggest a fair and balanced mainstream media?

Stay Where You Are, Young Man

Americans have a long tradition of moving towards opportunity. Does anyone remember, "Go West, young man"? What about the thousands upon thousands of people who left Appalachia to work in the steel mills and manufacturing plants of the Midwest after World War II? What about all of the African Americans who moved from the deep south to seek employment in Chicago, Detroit and other northern cities?

I documented some of this movement in another post a couple of years ago, "Less Cheese, More Moves".

At the peak, more than 30 percent of southern-born blacks moved north, from 1920 through the 1960s. Even when technological limitations made long-distance travel extremely onerous, in the late 19 century, we were willing to travel in search of opportunity. In the second half of the 1800s, more than two-thirds of US men over 30 had moved away from their hometowns, and more than a third of those moves were for more than 100 miles.

Despite the fact that our transportation systems and technological advances make it easier for all of us to be more mobile, mobility within the United States continues to decline.

The percentage of those who change residence within the same locality each year is half what it was in 1950.

The same is true for those moving within the same county or same state.

People moving from one state to another has dropped 51% from the post-war years.

We have also come a long way from the 1930's when 2.5 million people in the central United States left their homes in a desperate migration in search of work and better living conditions. They moved from an area that became known as The Dust Bowl which suffered severe dust conditions during a drought that lasted a decade.

During that period, 440,000 people from Oklahoma migrated elsewhere. 250,000 of that number alone ended up in California inspiring the storyline in John Steinbeck's book, The Grapes of Wrath.

Oklahoma's entire population was only 2.4 million in 1930. That means almost 1 in 5 left the state in the 1930's. 1 in 10 ended up in California.

Can you imagine a similar migration today? Of course not. It is unimaginable.

The drought would be blamed on climate change and a massive government program would be enacted to bail everyone out. Billions and billions and billions of dollars later, no one would see the need to move for other opportunity.

You can probably cite the aging population as the biggest reason that people are not changing residences within the same locality as much as they did in the past.

However, the massive government safety net that has been developed since the 1960's has to be responsible for so many more people not moving from state to state.

The social safety net has become so large and all encompassing that it no longer provides protection--it has reached the point that it has trapped and ensnared millions of people. People don't move because they don't need to move. Their situation may be less than ideal but they have subsidized housing, they have food stamps, they have Medicaid. Millions gets a government check each month. There is no need to move.

People used to move because they needed to put money in their pockets and a roof over their heads. They were willing to take a risk to better a bad situation. There are few situations anymore where Americans feel the pain of a bad situation like people used to. We have taken care of that by removing much of the discomfort. However, we have also destroyed people's incentive to do something about bettering their lives in the process.

Our intentions are good but in the process we are destroying the spark within their human spirit that motivates people to seek opportunity and remove the chains that keep them locked to their current circumstances.

You see this in this map of opioid deaths in the United States. In 2013, there were about 25,000 deaths from opioids in the U.S. By 2016 that number had grown to 60,000. In 2018 it is estimated that deaths from opioid overdoses will have grown to 72,000 when the final numbers are in.

Let's put that number in context. 58,220 died in the Vietnam War in a conflict that lasted over a decade.

There were 39,773 deaths by guns in 2017---two-thirds due to suicide.

I also find it interesting that so many of the opioid deaths are clustered in Appalachia and the area that was once referred to as the Dust Bowl area.

Previous generations in these areas moved for opportunity. The current generation, supported by government programs, stays put with the support of those subsidies. That support even includes Medicaid which is often the payment source for the opioids they use in an attempt to take away the pain that accompanies hopelessness.

"Go West, young man" has been replaced with "Stay where you are, young man."

Rather than the social safety net providing a temporary cushion against economic woes it has ensnared millions upon millions of people in a permanent trap of hopelessness.

The road to hell is surely paved with good intentions.

Chinese College Invasion

I have written recently about how increasingly dependent the global economy has become on China.

I had no idea how that also extends to American colleges and universities until I read this article on the University of Illinois purchasing an insurance policy against a drop in Chinese student enrollment. The policy pays the university should there be more than a 20% drop in revenues from Chinese students in a single year following "triggering events". These events include such "triggers" as visa restrictions, a pandemic, or trade wars. In other words, something out of the control of the university.

Why is the University of Illinois so concerned?

Chinese students have become a huge revenue source for the school. 51% of foreign students and 12% of the total student body now come from China.

The same is true for many American colleges and universities.

The number of international students has been growing and a big part of that growth has been due to the influx of Chinese students to American schools.

According to the Brookings Institute, between 2008-2012, Chinese students paid nearly $7 billion in college tuition. It is undoubtedly much, much higher today. A group of Texas universities, concerned about limitations on students visas, estimated that Chinese college students contributed $12.55 billion to the U.S economy in 2016 alone.



Here is a chart that shows the growth of international students studying at U.S. colleges.

https://www.migrationpolicy.org/article/international-students-united-states

A third of those students are from China alone. Together, China and India now make up half of international students at American colleges.

Credit: https://www.migrationpolicy.org/article/international-students-united-states

As recently as 2006 Chinese students made up only 10% of international students.

You can also see how far the numbers and mix of international students has changed by looking at the same chart for the 1979-80 school year.

Credit: https://www.migrationpolicy.org/article/international-students-united-states

Here are the universities that were most dependent on Chinese students for the 2014-15 school year. This is the most recent data I could find. I think you can see why the University of Illinois took out that insurance policy.

I was curious what was going on at my own undergraduate institution regarding Chinese students. Miami University is about as midwestern as it gets. It is located in the small rural town of Oxford, Ohio. The environment in Oxford is about as far removed from China as you could imagine.

Miami has 17,000 undergraduates and 2,500 graduate students on the Oxford campus.

There are 2,832 international students in those numbers. (14.5%)

2,682 Chinese students (includes some who may be at branch campuses) are enrolled at Miami. That is over 13% of the student body.

The next highest country that is represented among international students? India---98!

You might as well call the International Study Society at Miami the Chinese Student Society.

Why are Chinese students attractive to Miami?

Undoubtedly, they are smart and hard working.

However, consider the economics.

Miami is a state school. In-state tuition for an Ohio resident is $15,378 for the 2018-19 academic year. For non-Ohio residents it is $34,895.

Looking at the numbers of Chinese students and the dollars involved, it might not be a bad idea for Miami to also be looking into that insurance.

I wrote recently that we need to keep our eye on China.

I had no idea that it was particularly true for college administrators.

We Need A Red Card-Six Years Later

A loyal BeeLine reader reached out to me and told me he thought my recent blog post on illegal immigration was incomplete. He did not disagree with what I wrote but pointed out that the reality is that many jobs in the United States would go unfilled if immigrants were not here to take those jobs.

He argued that most Americans were simply unwilling to do the jobs that are now filled by many legal (and illegal) immigrants. Too many native born Americans simply would rather live off of public assistance than get their hands dirty at a job they considered beneath their status.

This is undoubtedly true for too many Americans. However, in my view, this is only the case because the incentives are not aligned properly. The public assistance is too rich and the going wages for work are too low. People do what is in their self-interest. If this is what is occurring we have created a system that gives us this result.

That being said, I have long been on record as favoring comprehensive immigration reform. The system I favor is one in which we provide legal immigration status to those who can, above all else, contribute something to our economy and society.

Those that are permitted to come to the United States should not be principally determined by family ties or a lottery. It should be determined by who can contribute to making America better and stronger.

Most everyone who migrates to the United States (legally and illegally) has done so in search of opportunity---for themselves and their family. We need to insure that they also make us better as well.

The other reality is that we have anywhere from 11 million to 22 million illegal immigrants in the United States today. I have no problem with these people remaining in the country as long as they are law abiding and they are contributing economically to our society.

Most are hard-working people who would leave us weaker economically if they were deported.

We need a system that recognizes this. That should include some provision for a guest worker program that allows for an immigrant to work in the United States permanently but does not allow the worker to be eligible for any of the benefits of a green card, or ultimately, citizenship.

However, no immigration system of the future will work unless illegal immigration is brought under control and we have a secure border. If this is not done, there is nothing that will work. In fact, if we were to do something similar to what I suggest below we would actually make things far worse if the border was not secure and we enforced the law like we do now.

We have already learned that lesson by the total failure of the 1986 effort at immigration reform during the Reagan administration. We simply cannot do that again.

That is why there can be no amnesty and any violations of the law going forward have to be such that most will think of the punishments I suggest are draconian. There is no other way if there is to be a common sense solution to this problem.

This problem is not going to get solved by ignoring it, trying to demonize Donald Trump or allowing the federal shutdown to continue solely because some don't want Trump to get even a token sum for a wall. A wall that almost every Democrat was for, before they were against it.

We need common sense. A commodity that is very rare these days in Washington, D.C.

This is a common sense proposal. This recognizes the way the world works. This recognizes the incentives and disincentives that drive people's behavior.

Here is what I wrote almost six years ago. It is as true today as it was when I first proposed it six years ago. What is sad is the problem is much worse today and yet we seem even further way from a solution.


Do We Need A Red Card And A Green Card?
(originally published June 17, 2013) ( edited for length and clarity)

I have long been in favor of some form of immigration reform.  There is little question that our current immigration laws have not been effective and are in need of reform.  The United States is a nation of immigrants and it needs a rational, practical, balanced and equitable set of immigration laws for the 21st Century.

The most explosive issue in the immigration debate, especially among conservatives, involves amnesty.  Simply stated, are we going to allow people who violated our laws by entering our country illegally the rights and privileges of legalized status?

What about the millions of people who want to come to our country, obeyed the law and have waited patiently in line for their turn?  For example, in 2012 there were almost 15 million people who applied for the green card diversity lottery for just 50,000 openings hoping to come to the United States from underrepresented countries!  How is it fair and equitable to reward those who broke the law and deny others who play by the rules?  More importantly, what precedent does that establish for the future?

After all, we have already been down this road once before in 1986 when 3 million undocumented immigrants were granted amnesty and provided legal status in this country.  How has that worked out?  Not real well. We now have at least 11 million undocumented immigrants.  It is also estimated that those 11 million have another 4.5 million children that were born in this country.

If we were to enforce the law it is clear that those 11 million should be required to pack up and return to their home countries.  However, the practical reality is that is not going to happen. This is particularly true in light of the parents who have minor children that were born in this country and are legal citizens under the law. The Democrats therefore argue that we should legalize all of these undocumented aliens, since they are here and they are not going anywhere, and get them on the path to citizenship with a green card.

The green card is the term used to signify an individual that has been granted permanent residence in the United States.  The general rule is that someone with a green card can apply for citizenship after five years. In my mind there is no way that this existing legal grant of residency should be granted to anyone who entered this country illegally.

However, we also must recognize the practical reality that the undocumented illegal immigrants are not going home and it is to everyone's benefit that they come out of the shadows and have some status under the law.

My solution is to create what I call the "Red Card".  Of course, this assumes that the border is secure and we don't have to worry about doing this all over again. Nothing is going to work if we don't prevent future illegal immigration.  We will be an even worse position in another ten years.

The Red Card would be available to anyone who is in the country currently that does not have proper documentation. Application for the card would have to be made within 90 days of the enactment of the law.  Holders of the Red Card would be granted conditional residency as long as they were gainfully employed and contributing to the economy of the United States.  After all, we should encourage people who want to work and contribute to our society in a positive manner. The Red Card would permit the individual to stay in the United States as long as they remained employed, paid all taxes and committed no crimes.

The Red Card would also be used in the future to grant status for temporary guest workers in situations and job sectors where it was necessary. Red Cards would be issued where job shortages exist and our Immigration Service would institute a system by which available jobs would be matched with qualified immigrants willing to do that work.

If a holder of a Red Card should lose their employment status, they would be given a grace period of 120 days to find other employment. If they could not find employment in that period they would have to leave the country within the next 60 days.

The Red Card will also be allowed to be extended to a spouse (if minor children 12 or under) and dependent children 18 and under). However, if the primary Red Card holder loses job status all family members also lose their status.

Holders of Red Cards would be entitled to no government benefits currently (welfare, Medicaid) or in the future (Social Security and Medicare). They must pay all required income and other taxes in the United States while here. They must carry health care insurance. They must commit no crimes. Any violations will result in immediate deportation and the loss of the right to future entry into the United States for their lifetimes.

All immigrants would be required to have their green or red card in their possession at all times. Beginning 90 days after enactment if someone does not have proper documentation, is here illegally, has overstayed a visa, or violated the terms of the Red Card status, they will be deported and will never be entitled to return to the United States. This may sound harsh but without a strong provision like this you have little hope in insuring compliance with the law and getting everyone to register and comply with it going forward.

Holders of Red Cards could apply for Green Cards by getting in the back of the line for their respective category under the law.

What does this accomplish?  It provides a method by which we can provide a method for allowing hard working people to stay in this country if they are contributing to the economy and are positive forces in the community.  However, it establishes a clear delineation between people who came to this country legally and those who did so illegally.

It also insures that those here illegally will not benefit from our government programs and have no path to citizenship and no amnesty.  They are free to work to make a living for themselves and their family. They will not be allowed to take advantage of the taxpayer or get an unfair advantage over legal immigrants. They are not allowed to vote. Proof that they voted in a U.S election will also be grounds for immediate deportation and a lifetime ban from ever entering the U.S again.

I see this as a common sense compromise to bridge the liberal and conservative divide on the issue. Common sense should also be determining all of the decisions on immigration reform.

Why have an immigration policy at all?  Why do we let anyone in? The only logical reason is to improve your country by importing human talent that will provide a benefit to the nation.  This is the thinking that drove our immigration policy for most of our history.  Immigrants with illness or who could not support themselves and their families were turned away.  Often this was at Ellis Island after they had already faced an arduous journey here by ship. Those who were willing to work and contribute were welcomed. Why should it be any different today?

Something We Should All Agree On

There are three big reasons in my mind that illegal immigration should be taken seriously by any citizen of the United States irrespective of your political allegiance.

Yes, I understand the empathy one should feel for any human being that wants to escape a bad situation and better themselves. However, as I wrote recently, there are literally millions and millions of people in the world who want to migrate to the United States.

The United States already has 4 times as many immigrants living within its borders as any other country in the world. We can't take everyone. Where do we cut it off? 5 times? 6 times? 10 times?
Who decides?

Let's look at three rational reasons to have immigration laws and secure borders. I have to believe that almost everyone would find something they agree on here if they looked at this issue rationally rather than emotionally--Republican, Democrat, Conservative, Liberal, Young or Old.

A Nation of Laws

First, we are a nation of laws. Society does not operate if we do not adhere to the laws that are written and are on the books. There may be those who do not like the laws. If that is the case, there is a constitutional process to change the law.

A society that functions is based on law and order. It does not work if everyone decides what the law should be and takes the law into their own hands. That brings chaos and, ultimately, anarchy.

Our laws should also be applied in such a way as to insure equal justice. Why should we let millions flood over our Southern Border or overstay temporary visas when there are millions waiting in line to come to this country legally? There is absolutely no justice in that.

Many opponents of the Border Wall claim it is racist. However, the fact is that there are 3.8 million people on the current waiting list to gain legal immigration status in this country due to family or employment reasons. Almost all are from what we would consider minority populations. A third of them are actually from Mexico.

However, current law only permits any one country from receiving more than 7% of the annual visa issuances for permanent legal immigrant residency annually. This is the case in order that any one country does not dominate the legal immigration process. Again, the law is about fairness and equal justice.

For 2019, the per country limit is estimated to be 25,620.

Divide the number of applicants by the per country limit and you will see that most of these people have a rather long wait ahead of them to gain admittance to the United States legally.

Are we supposed to just wink and tell those in Mexico, El Salvador or Honduras to not worry about our laws? Come ahead. There is nothing to stop you.

What about those in the Philippines, India, Vietnam, China and Bangladesh? How is this fair to them?

Sustainability

Second, there seems to be no recognition of the enormous sustainability issues regarding illegal immigration. This is especially surprising considering the importance of this issue with Democrat and younger voters in particular.

Too many immigrants puts too much strain on our resources. It puts unnecessary strain on everything in our society---our water, our sewer systems, our roads, our infrastructure and our environment. It contributes to congestion and urban sprawl.

Add to this what it does to increase the financial strain on our schools and our health system, not to mention our law enforcement and justice system.

As this report points out, there are 730,000 illegal immigrants currently imprisoned in the United States for crimes other than illegally entering the country. Illegals make up an estimated 3% of the population of the United States but account for 20% of federal prison inmates. 91% of criminal aliens are from Mexico, Honduras, El Salvador, the Dominican Republic, Colombia or Guatemala.

The financial and human cost is enormous and it is made more difficult when the flow of immigrants is not managed and controlled as it is supposed to be through our legal immigration system.

This says nothing of the challenge it presents to social order as masses of illegal immigrants find it hard to assimilate into a society and culture they are unfamiliar with. This inevitably results in problems as Europe as discovered to their regret.

Economics and Jobs

Third, there is the economic dimension. Has there been a need in the United States for the labor that many illegal immigrants provide? Absolutely. However, it has come at a significant cost to those American workers who are most vulnerable in the U.S. economy today---those with lower education or few skills.

The added supply of illegal immigrant workers has substantially reduced opportunities and wages for those Americans at the bottom of the economic ladder. It has simply been a question of supply and demand. The supply of workers coming here illegally has artificially suppressed incomes of those Americans who are most vulnerable economically.

What concerns me even more today is that we seem to be on the cusp of a technology and innovation revolution that will put even more pressure on low-skills jobs. This will further squeeze American citizens at the bottom of the economic rung. In addition, what are we to do with the millions and millions of illegal immigrants who are already here and yet may end up unemployable due to low education and skills?

I wrote previously about the recent Bain report that predicts that 40 million current jobs could be eliminated by automation in the United States by 2030. That is just over 10 years away.

It is a recipe for disaster that makes our current state of affiars look tame by comparison. And the current state is not that great.

Consider this recent report from several economists with the Federal Reserve Bank of Atlanta entitled "Building A Skilled Workforce For A Strong Southern Economy."

The thesis of the article is that there is already a significant job skills gap in the South (where there are substantial numbers of illegal immigrants)  There are many more low skill workers than there are low skill jobs. The South also has more high skills workers than high skills jobs. However, most jobs today require middle skills (more than a high school education but less than a college degree).

We see the effects of this every day. Too many people with low education and skills that unemployable. In addition, many recent college graduates who are underemployed because they are overqualified for the available middle skills jobs.

Can you see the obvious problem of permitting millions of  low education and low skilled immigrants to flood across the southern border while we already have a skills gap and the gap is likely to get much larger in the year ahead?

Something We Can Agree On Somewhere?

It should not matter what your political persuasion is.

Law and order conservative. See Reason #1.

Far-left liberal environmentalist. See Reason #2.

Pragmatic independent who is most concerned about economic issues. See Reason #3.

Illegal immigration must cease.

Sensible immigration reform needs to be enacted.

There is simply no excuse that this issue has been allowed to fester for decades.

This is something we should all be able to agree on.

Keep Your Eye On China

It used to said that "when the United States sneezes the rest of the world catches a cold."

That may still be true but it may now be true of China as well.

The growth of China's economy and the sheer size of its population means that anything that occurs in China today will invariably have reverberations around the world.

As we begin 2019 it may make sense to keep your eye on China to see where the world economy is heading. You can be sure that what happens in China's economy will also have major effects on the United States.

We saw evidence of this last week when Apple revised its revenue forecasts down for the first quarter principally due to lagging sales in China. Mind you that is the first time in 15 years that Apple lowered quarterly sales estimates. Apple's stock immediately fell 7.6% in the hours after the announcement was made.

The fact is that most U.S. and multi-national companies have come to rely on China for growth.

General Motors now sells one-third more vehicles in China than it does in the United States. Starbucks is in the midst of opening one new store in China every 15 hours. Adidas has seen its growth expanding at 26% per year in China while its home market of Europe is flat.

A lot of this has been driven by a 400 million (and growing) middle class in China. To put that in perspective, the total population of the United States is only 330 million. Most estimates suggest that the middle class is 50-60% of that total.

The problem is that a lot of the growth of the economy (and the middle class) in China the last decade has come about through a great deal of debt-financed spending. That spending provided wages for construction, manufacturing and service workers but interest and principal payments on that debt needs to be paid.

You get an idea of how large the debt load the Chinese have taken on by viewing this chart.

When I was in China recently I saw evidence of this debt fueled spending everywhere I looked.

There are scores of newly built apartment building complexes like this one I photographed in Tianjin, China.

The problem is that millions of the apartment units in these buildings around China are unoccupied.

This New York Times article on the problems in China's housing market cites a statistic that there are currently 65 million unoccupied apartment units in the country.

Let's put that number in context.

According to the National Multifamily Housing Council, there are a total of 20.8 million apartment units in the United States. Those are all the apartment units in the USA---occupied and unoccupied.

Therefore, China has 3 times as many UNOCCUPIED apartment units as the entire number of apartment units in the United States!!!

Do you think this might pose a problem to those holding the debt on those apartment units in China?

Add to this the recent news that births in China for 2018 are estimated to have fallen 2 million from the numbers in 2017. The government's family planning authority had expected births to rise by 3 million compared to last year due to fact that the previous one-child policy has been replaced by a 2-child policy. That works out to 5 million fewer births than predicted in China.

Let's put that in context. The United States had a grand total of 3.8 million births in 2017.

I would not be surprised to see the Chinese soon paying parents to have babies.

In addition to unoccupied apartments there is also a lot of excess production capacity that is not producing any economic return on the debt used to build those manufacturing plants.

Victor Shih, an economist who follows China closely, calculates that interest on all the debt in China now exceeds $3 trillion per year---22% of GDP.  In fact, interest payments on that debt are now higher than China's incremental increase in GDP.

Enda Curran in an article at Bloomberg.com titled "China's Debt Bomb" describes it this way.

It’s been called a mountain, a horror movie, a bomb and a treadmill to hell. To doomsayers, China's $34 trillion pile of public and private debt is an explosive threat to the global economy. Or maybe it's just a manageable byproduct of the boom that created the world’s second-biggest economy. Either way, the buildup has been breathtaking, with borrowing having quadrupled in seven years by one estimate. (China doesn't give a complete tally). President Xi Jinping has taken note, pushing authorities to announce a slew of measures that target risks lurking in the financial system. The challenge is how to wean the country off its debt drip without intensifying an economic slowdown. Since China is a key driver of global growth, it's a matter of concern for everybody.

On top of all of this, President Trump has turned up the heat on China's trade practices that have systematically worked against the United States for decades. Tariffs are now in place on over $250 billion in imports from China. More tariffs are set to be imposed in March if a trade agreement with China is not reached by then.

Trump has also worked to build a relationship with North Korea which surely has the Chinese concerned about losing control on the Korean Peninsula which borders China.

The United States also ordered that the CFO of Chinese tech giant Huawei be arrested and detained by Canada as part of a large criminal investigation in New York.

No one should ever doubt that Donald Trump does not know to use leverage when he has a goal to achieve an objective.

Trump knows that China is in a tough spot. There is a lot of debt to service. There are a lot of mouths to feed. Over 400 million Chinese have begun to taste the good life in that country. The last thing the Communist Party in that country wants is an economic implosion.

Can China avoid a financial crisis? Can it accede to Trump's demands without crashing their own economy? Can it continue to grow without taking on more debt?

All of these answers are keys to China's economic future.

However, due to the interconnected world we live in, what happens in China could very likely spillover to the rest of the world.

Keep your eye on China.

If it sneezes it might signal a cold wave for the rest of us.

70%---A Fair Share

Alexandria Ocasio-Cortez kicked off her first week in Congress with an appearance on 60 Minutes calling for the imposition of a 70% income tax rate on the super rich.

She said that tax rates must become much more progressive in order to pay for her "Green New Deal" ideas to fight climate change.

I particularly liked the look on Anderson Cooper's face as he listened to this. It seemed to me as if he was quickly adding up in his head how much these far-left ideas were going to cost him.

There actually seems to be a bit of fear in Anderson's eyes as he listens to AOC explain how she thinks he should pay more.

After all, it is great to talk about these things in the abstract. However, at the end of the day, someone actually has to open up their wallets and pay.

We already saw this with the Trump tax bill last year. Big, liberal states like California, New York and Illinois are filled with people who vote Democrat. From their votes you have to believe that they think they should be paying more in taxes.

However, as soon as they lost their unlimited deduction for state and local income taxes all they talked about was how "unfair" it was.

Ocasio-Cortez got a fair amount of people expressing shock at the 70% tax suggestion. However, liberals came to her defense and stated, "Don't worry, that rate would just be imposed on incomes over $10 million---the truly super, super rich. She is only talking about a marginal rate of 70% on a small group of the rich."

I'm sorry. Progressive taxation systems don't work like that.

They are, by definition, progressive. Each dollar of additional income is exposed to higher levels of taxation.

These are the current marginal tax rates.

If you were to enact a 70% top rate you would undoubtedly need a number of additional brackets leading up to 70%. A 40%, 45%, 50%, 55%, 60% and 65%.

Enacting a 70% marginal tax rate on income above $10 million but having a 37% tax rate at $9,999,999 would insure that most people would make sure that the did not earn $10 million. You can count on it. There would have to be additional brackets to make the rate progressive to that point. Otherwise, the 70% tax rate is a cliff tax, not a progressive tax.

The current brackets also might have to pushed downward.

Why?

There simply isn't enough tax revenue to be had at the higher levels of income to enable the socialists to spend want they want to.

In the latest IRS data available (2016), there were only 16,000 individuals who reported more than $10 million of income. Even if you doubled the effective tax rate on the income tax collected from these individuals it would only bring in $120 billion in additional revenues. That only represents 2.7% of current annual spending. It is about the same as an annual inflation adjustment on the federal budget.

The Washington Post is more conservative with their numbers than I am. They suggest a 70% marginal rate would raise $72 billion annually if just applied to income over $10 million.  That is about 1.6% of the budget.

As stated above, all of this also assumes that there would still be 16,000 taxpayers with $10 million in income. My prediction is that number would fall drastically with a 70% tax rate.

To get the kind of money Ocasio-Cortez and her fellow Socialist Democrats want you have to tax everybody much higher across the board.

As I saw Ocasio-Cortez make her argument for much higher income taxes I could not help but think back to the post I wrote last year on Tax Day on the zip codes that pay the most in income taxes.

We always hear that the Republicans are the party of "the rich."

I wanted to do some research on how those high earners voted in the last Presidential election to see if it was those "rich people" who put Donald Trump in The White House.

I am also curious to see how those rich people, in those high income zip codes, think about a young, high profile Democrat arguing they need to have their income tax rate doubled.

This is the list of the highest income zip codes in the United States.

This is the vote for Donald Trump in the ten richest zip codes according to the voting analysis interactive tool that The New York Times has online.

Miami Beach, FL (33109)     52%
Atherton, CA (94027)            23%
Palm Beach, FL (33480)       64%
Palo Alto, CA (94301)           10%
Harrison, NY (10577)             4%
Gladwynne, PA (19035)         37%
Los Angeles, CA (90067)      20%
Kenilworth, Il (60043)           38%
Weston, MA (02493)             28%
San Francisco, CA (94111)    12%

If you take a rough average from the 10 highest income zip codes, Trump only got 28% of the vote from those rich Republicans  Democrats.

Looking at these numbers, if I were Trump, I would call Ocasio-Cortez and tell her I was onboard with her idea to implement the 70% top rate. However, he should propose that only half the revenue raised would go to Green New Deal infrastructure spending. The other half would be allocated to the border wall and any excess funds would be used (in equal shares) to shore up the Social Security Trust Fund, the Medicare Trust funds and reduce college loan interest rates.

There would be a lot of excess funds to spread around. Trump is only asking for $5 billion for border wall funding in this budget. It is estimated that the entire wall would cost $25 billion. Using the Post's estimates, the 70% tax would raise three times that in one year!

It is called the "Art of the Deal".

Let's see any Democrat candidates for President put a better proposal than that together for attracting votes for 2020.

Would it fly?

Of course not. However, I enjoy thinking of scenarios where President Trump could drive the Democrats absolutely crazy.

After all, it is only fair.