Many people write or speak to tell us what we should think. Some want to be believed because they are experts, or think they are. Some want to be believed because they claim to speak for us. Some have had revelations. Others want us to trust them because they communicate through prominent media outlets. Many tell us what we should think. I write to encourage my readers to think for themselves. I write to ask you to inquire. Question me. Have fun.

  
Comment of the Day
Net neutrality exposed

Jan 16, 2014

Internet service is not much different than other utilities, such as electricity, gas or water. Politicians and commentators focus on the nominal speed offered by ISPs. Comparing to water for example, nominal speed offered is analogous to water pressure. We are charged not for the nominal pressure, but for how much water we consume. The pressure offered is a mere technical consequence of the need to satisfy our demand for the volume of water. Similarly, for the internet service providers the cost of service is related to the volume of data transmitted. In order to have this transmission be useful (for example, being able to watch live TV) certain speed needs to be guaranteed.

    If we want the internet to grow and develop freely, we have to expect that its users are charged based on real cost of the service delivery, not on some political fiction imagined by politicians that do not understand neither technology nor business.
      Net neutrality came into existence due this ignorance of politicians and their eagerness of mingling with things beyond their comprehension. As much as this seems to be a norm, it does not release us from exposing it every time when it occurs.

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        Rector’s sermon

        The Heritage Foundation report alarms that it will cost taxpayers $6.3 trillion net dollars if we permit legalization of presently undocumented immigrants. It is a lot of money – almost 42% of the U.S. GDP in 2012 – so it sounds scary. The authors of this report, Robert Rector and Jason Richwine Ph.D., innocently add that the cost will spread over the lifetime of these new immigrants. From their report one can find out that an average age of an illegal immigrant is 34. According to the latest data a 34 years old person will likely live an additional 45.6 years. This means that even if the numbers from the Heritage Foundation are correct (they are not), that $6.3 trillion would be about $140 billion per year, slightly below 1% of the last year GDP. Just by noting that they rely on this intimidating tactic puts a reader on the alert that this report is not about facts but about the ideological standings of its authors.

        Putting aside the numbers, one can accept that we might predict the financial outcome of political decisions for the next few years or so. But, how accurate could our calculations be for ten, twenty or forty-five years into the future? Forty-five years ago, transatlantic flights had barely started. China was in the midst of the Cultural Revolution. Forty years ago, Microsoft and Apple did not yet exist. Almost exactly thirty years ago, Motorola introduced the first portable cell phone, priced at $3,995. Twenty years ago, we did not use the internet or email. How, based on the knowledge available then, could one make reasonable predictions about our costs today? These were none of the concerns of our geniuses from the Heritage Foundation.

        Many numbers in the report are from government statistics and they seem to be accurate. For example, the chart 9 showing the total of welfare spending – both federal and state. In constant 2011 dollars it was only $64 billion in 1965 but a shocking $927 billion in 2011. I divided these numbers by the population in the corresponding years; in 1965 it was $331 per person; in 2011 it was nine times more, $2,975 per person. This is the real problem; too many Americans receive too much just for being, not for working. For the know-it-alls at the Heritage Foundation this problem, screaming to be resolved, is as a snow storm in the winter or a heat wave in the summer; it is as a god given plague, which we cannot and should not even attempt to do something about.

        This brings us to the core of the argument in Rector’s and Richwine’s report. All the money they counted is for the welfare and other government distributed services that legalized immigrants will likely consume, as well as similar costs of poor Americans who might utilize welfare more as immigrants will take some of the jobs they could do. This focus on the redistribution of a portion of the wealth that the government captures, not on the creation of more wealth by businesses – is the major flaw of this report. The wealth that the government can redistribute is limited, the wealth that thriving businesses can create, is unlimited. And not counted in the report.

        Obviously, when we bring immigrants, with many of them working low pay jobs, some of them will use welfare, if legally available. Should our worries about this cost justify restricted immigration? For the wiseacres from the Heritage Foundation the answer is obvious.  We need to screw up our immigration policy in order to accommodate for the welfare system we have screwed up before.  Introducing their report in the Washington Post column, president of the Heritage Foundation, a former U.S. senator, Jim DeMint together with Robert Rector, began with quoting the famous statement by Milton Friedman that the United States cannot have open borders and an extensive welfare state.

        In this video, Prof. Friedman acknowledges that we cannot have free immigration in the state where every resident is promised certain minimum levels of income or subsistence regardless of whether he works or not. He points to government arrangements on welfare and immigration affecting freedom. Referring to restricted immigration he concludes boldly how bad it was to make a socially advantageous act illegal as this leads to undermining morality in general. Only someone elated with an anti-immigration obsession can lose the sense of reality to the extent of listing Prof. Friedman as a supporter of restricted immigration.

        In 2006 I wrote an essay “Migration to the future” outlining an employment based immigration reform concept; explaining how our immigration crisis can be resolved by adopting the free market mechanisms. This text was followed by my comments on the immigration debate then, on the desperation of immigration opponents, and my comments on the famous gumball video. With these texts on my personal website, I wrote an email to Prof. Friedman asking for his opinion. He started his comments with: “we are speaking the same language.” Then, referring to the welfare he expressed concerns that my proposal “would not solve the problem completely.” Then, he made it clear that “we clearly want to move into direction you are talking about, so this is a question of nitpicking, not a serious objection.” Later, I named my immigration reform concept as the Freedom of Migration Act proposal. Hence, if the eagles from the Heritage Foundation want to stand for immigration policy as envisioned by Milton Friedman, they should support the Freedom of Migration Act, as it reflects teachings of Prof. Friedman and it has his explicit endorsement.

        Lastly, let us look at the numbers twisting in the report. The authors list four categories of costs that taxpayers will incur. In the first category they include: Social Security, Medicare, unemployment insurance, and workers’ compensation. It is plainly cheating as in their very concept all of these benefits are earned services. One needs to work and make regular contributions in order to qualify for these benefits. For all practical reasons the contributions deducted from every paycheck could be considered as an investment or insurance to cover disability and retirement. Theoretically, these benefits could be managed by private businesses, and many advocate for privatization of Social Security. It is just the consensus among Americans that the government was entrusted in managing these services. By listing these services as cost to taxpayers the fellows from the Heritage Foundation disclosed that they do not know our political system.

        The cost of educating children of presently illegal immigrants, at $12,300 per pupil per year, also made into their list. For bureaucrats in Washington, education is an expense; for entrepreneurial Americans it is an investment. Comparing to most other industrialized nations, the U.S. has very low density of population. We have infrastructure and technology; we need more people in order to stay competitive. With the population growth slowing down in Mexico the abundance of cheap labor will dry out soon. With competition from other industrialized nations, we are approaching times that it will become harder and more expensive to get guest workers. By granting citizenship and providing education to children of illegal immigrants we are stealing these kids, and have a shot at making them Americans from the start so we will need fewer immigrants later. This is a business approach. This is thinking of people who actually make money. Politicians, who spend others people money can make disaster out of every opportunity, and this is why the xenophobes from the Heritage Foundation printed in red ink the cost of education of children of illegal immigrants.

        It is hard not to laugh when the anti-immigration zealots from the Heritage Foundation add the costs of police, fire, highways, parks, and similar services needed with increased population. Their formal argument is that taxes paid by mostly low-income immigrants would not cover the cost of the expansion of these services. They did not get it that illegal immigrants are here only because their work enriches Americans, who then pay more in taxes to cover population based services. Without those illegal immigrants Americans would pay less in taxes and fewer Americans would have well paid government jobs delivering these services. It takes the Washington insiders to explain the plain economic growth as the loss.

        The only additional costs that legalization of presently undocumented immigrants would bring are in Earned Income Tax Credit, public housing, Supplemental Security Income, and Temporary Assistance for Needy Families. The proposal by the Gang of 8 has provisions to postpone access to these services; hence, only people able to support themselves would stay. The Freedom of Migration Act has similar approach.

        Finally, the advocates of the labor class at the Heritage Foundation claim that “unlawful immigration appears to depress the wages of low-skill U.S.-born and lawful immigrant workers by 10 percent.” “Appears” seems to be the right word. In their reasoning that illegal immigrants suppress wages of natives, the researchers from the Heritage Foundation seem to depend heavily on the work of Prof. George J. Borjas from the Harvard Kennedy School. As it is hard for non-experts to debate the professors, I use as guidance this article by another expert in this field, Prof. Giovanni Peri. After reviewing 12 representative articles on the subject, he concluded that most of them find small and statistically insignificant effects of immigration on employment. According to Prof. Peri, the exemption are papers by Prof. Borjas who finds short term significant negative wage impact of immigrants on the less educated natives. In some groups it could be close to 10% and this is what our ideologues from the Heritage Foundation cling to.

        There is a grain of truth in their claim.  As the Charles Murray book “Coming Apart” documents, the meaningful part of our poor, mostly men, are already demoralized by our welfare system to the point that they are incapable to hold any job at all, regardless of pay. They bounce from job to job, as no employer wants them. As soon as immigrants come to town, all these town losers go on permanent unemployment, as employers are happy that they do not need to deal with them anymore. Nevertheless, generous politicians from the Heritage Foundation wrote the lengthy treatise arguing that we should kick out people who want to work productively and bet our future on these town losers.‎

         

        6 thoughts on “Rector’s sermon

        1. George Williams

          There are two basic ways of improving productivity in this country, by importing cheap labor or through automation. The former has the attendant costs associated with public subsidized health care and transfers of wealth from the haves to the have nots through taxation. Importing cheap labor involves public subsidy, while the latter involves none of this. The availability of cheap labor inhibits the technological inventiveness of this country to solve a labor shortage problem, while keeping the attendant costs that are passed on to the public. Remember the days of slavery? Before Eli Whitney’s cotton gin, slaves were used to pick seeds out of cotton. The costs attendant with slavery are the need to feed, cloth, house slaves and people who oversee their work. This made cotton expensive and less competitive with other fabrics of the day. The invention of the cotton gin made it cheap. Maintaining cheap labor pools are fine for the producer, unless he’s made to pay the costs assumed by the taxpayer. Eliminate these uneducated, public subsidized, high cost legal or illegal aliens from the labor pool and industry will find alternative measures, i.e. automation to fulfill their needs. We do not need to import poverty and ignorance from Mexico to expand our economy.

          1. George Williams

            Frankly, I don’t believe in immigration reform, except then it benefits the citizens of this country. The Democrats say that the immigration system is broken, but that’s like saying that when the violators overwhelm the system we should change the law to eliminate it as a crime. Why should we change our laws to accommodate these people? We don’t do so for people who violate other laws, such as when we have crime waves of bank robberies and murders. Their argument for amnesty is that somehow the citizens are responsible for the unethical behavior of their congressmen who aren’t looking out for their interests. This turns logic on its head. Why should we have to make concessions that will further injure our best interests by forcing us to accept the further damage of the consequences of importing poverty? How can anyone argue that importing the poverty and illiteracy of Mexico will somehow make our nation great. Give me an example of another nation that has as its agenda the importation of poverty and ignorance and maybe I’ll consider your point. If these people are so useful to the world then why is Mexico forcing them to leave?

            It’s an indisputable fact that the Democratic Party’s constituency consists of those who are the recipients of votes from people who show their gratitude for public welfare benefits provided to them by the government. Democrats cannot be trusted on this issue because they will undoubtedly be the beneficiaries of any amnesty granted by the federal government. You’d have to be a fool to believe that this, and not the best interests of the country are the true motivators for these unethical demagogues. The Democrats will gladly give some concessions to the Republicans on the issue of public charges and border security now, as part of so-called immigration reform, only to renege on this if it is within their power to do so in the future. This is why immigration reform must be soundly defeated now. Any idea that Republicans have that pandering to the poor and gaining their loyalty by going along with immigration reform is contrary to rational thought, as it is impossible for them to outbid the Democrats when it comes to promising government benefits. On the other hand, the Republicans need only wait until Obama’s economic policies fail, as they inevitably shall, and illegal aliens will move back to their homeland, making the issue moot. Again, anyone who believes that a nation can benefit from the importation of poverty and illiteracy is delusional. One doesn’t have to have a masters in economics to understand this.

          2. George Williams

            “By granting citizenship and providing education to children of illegal immigrants we are stealing these kids, and have a shot at making them Americans from the start so we will need fewer immigrants later. This is a business approach. This is thinking of people who actually make money. Politicians, who spend others people money can make disaster out of every opportunity, and this is why the xenophobes from the Heritage Foundation printed in red ink the cost of education of children of illegal immigrants.”

            I see no opportunity here, and I see no xenophobes. We already import over a million legal immigrants a year, more than the rest of the world combined. I hear no call for reducing legal immigration, only enforcing the law of the land, and coping with the real fear that we will have to borrow billions, if not trillions of dollars to assimilate poor and illiterate illegal aliens. If we are being xenophobic, then that is a world wide trend that includes Mexico, which not only drives their people across their northern border, but makes a great effort to keep those peoples south of their border out. I despise those who use the term xenophobia, because it is too commonly the term of the communists and socialists who are repelled by national sovereignty, seeking world governance. The commmunist seek to assure their continued exodus and presence of poverty in the U.S., because, as in Venezuela, they seek to promote the class struggles that they are so well known for. This nation can easily pick and choose from all over the world the best educated and skilled workers, yet there are those demagogues that resort to ad hominem attack and demand that we adopt the poorest and unskilled.

        2. George Williams

          “The wealth that the government can redistribute is limited, the wealth that thriving businesses can create, is unlimited. And not counted in the report.’

          True, if we only lived in an economic vacuum. The fact is that we have international competition that tends to moderate the rate of growth in any nation. The entrepreneurs in China and other countries in Asia are not concerned with establishing a living wage, so they can always undercut their competition. The Democratic Party, essentially the rebranded communist party, constantly vilifies the generation of wealth, tending to extract wealth that can be used for economic expansion, preferring to transfer it to the non-productive parts of society. Since investment money always gravitates to those who make the efficient use of it, and this country is making very poor use of available capital capital will move overseas, as this country becomes unattractive to the capitalist.

        3. George Williams

          “Many numbers in the report are from government statistics and they seem to be accurate. For example, the chart 9 showing the total of welfare spending – both federal and state. In constant 2011 dollars it was only $64 billion in 1965 but a shocking $927 billion in 2011. I divided these numbers by the population in the corresponding years; in 1965 it was $331 per person; in 2011 it was nine times more, $2,975 per person. This is the real problem; too many Americans receive too much just for being, not for working. For the know-it-alls at the Heritage Foundation this problem, screaming to be resolved, is as a snow storm in the winter or a heat wave in the summer; it is as a god given plague, which we cannot and should not even attempt to do something about.”

          Because the Heritage Foundation doesn’t address this in their study, one that mainly focusses on illegal immigration, they are to be disparaged with the pejorative, “know-it-alls”? I certainly trust the Heritage Foundation’s wisdom than the allies of the communists of La Raza and MALDEF, who have much to gain by the importation of poverty, in that maintaining open borders and adopting illegal aliens is a means of promoting political hegemony in a rising Hispanic population. These people continually demagogue and attempt to delegitimize the sovereignty of the U.S., and engage the Mexican government as partners in interfering in the internal politics of the U.S. If you believe that my fears are xenophobic and believe in the propriety of this, then you’re not much of a Patriot, and likely a communist at heart, if not by membership in the CPUSA. Maybe there’s a little of the old Soviet Union still in your immigrant’s blood.

        4. George Williams

          “Theoretically, these benefits could be managed by private businesses, and many advocate for privatization of Social Security. It is just the consensus among Americans that the government was entrusted in managing these services. By listing these services as cost to taxpayers the fellows from the Heritage Foundation disclosed that they do not know our political system.”

          I suggest that it is you who are ignorant to our political system, if you believe that Social Security is not a cost to the taxpayers. The well documented and indesputable fact is that low income workers get more on a dollar for dollar basis from Social Security than they put in. The difference is a cost to the general Treasury, an unsustainable one at that. This is well known to every economist in the country, and even Obama has admitted it, though he has no intention of making it fiscally sound, preferring to add the difference to the deficit and the National Debt.

        About me

        I was born in 1951 in Gdansk, Poland.
        Since my high school years, I have interest in politics and love for writing. During my college years, I started writing to student papers and soon became freelance author to major Polish political magazines.

        In 1980 I wrote a book “Czy w Polsce może być lepiej?” (“Could it be better in Poland?” – this book is available only in Polish) analyzing major problems in Poland at the time and outlining possible solutions.

        I was among those Polish political writers who by their writings contributed to the peaceful system transformation that finally took place in 1989. Since 1985, I live in the Chicago area. I went through the hard times typical of many immigrants. Working in service business, I have seen the best and the worst places, I met the poorest and the richest. I have seen and experienced America not known to most of politicians, business people, and other political writers. For eleven years, I ran my own company. Presently, I am an independent consultant.

        My political writing comes out of necessity. I write when I see that the prevailing voices on the political arena are misleading or erroneous. Abstract mathematics and control theory (of complex technological processes) strongly influenced my understanding of social phenomena. In the past, my opponents rebuked my mathematical mind as cold, soulless, and inhuman. On a few occasions I was prized for my engineer’s precision and logic.

        I have a master’s degree in electronic engineering with a specialization in mathematical machines from Politechnika Gdańska (Technical University of Gdansk).

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