JustinIdea

How to create the next 40-year economic boom for the United States

One word: Immigration.

Now is not the time for the United States to keep people out of the country.  China and India are picking up a lot of growth and becoming more desirable places for people that want the excitement of a developing country with modern ammenities.  They are creating and re-attracting more scientists and engineers than ever.  

But the United States is also a very desirable place for it's relatively little corruption, ease of doing business, and the ability for people to reinvent themselves and create a new life.  The draw of the US as a place of opportunity is something the United States shouldn't limit to 500,000 people a year, instead we should start opening the floodgates.  For the next 20 years, we should let in 30 million people a year, and for the 20 years after that, we should let in 50 milion per year.  In 2051, the population of the United States would be over 1.1 billion, rivalling that of India, China, and the continent of Africa.  The United States is destined to being a second-rate world power to India and China?  No thanks.

Crazy, you say?  A republican government with democratically elected officials was a crazy idea 225 years ago, so why should we stop now?  

Here are some cold, hard numbers.

In January, it was reported that of the 131 million housing units in this country, only 112.5 million are occupied.  That leaves 18.5 million units of housing that are currently vacant.  If 30 million people immigrated this year, we would no longer have a housing downturn.  The only way for us to fill all the homes is to boost the population.  Hello construction jobs!

In 1997, David Pimentel, professor of ecology in Cornell University's College of Agriculture and Life Sciences, reported that at the United States's then yield from grain output that the US could feed 800 million people.  With additional gains in agriculture yields, we could feed many more.  So for anyone that doubts the US's ability to feed all those people I recommend letting in, you are mistaken.  For example, the EPA shows that 80% of all the corn, 30 million tons of soybeans (~46% of the entire yield based on 65 million tons), and 22% of all wheat produced in the United States goes to feed livestock.  

Not only would the housing vacancy problem be solved and not only could we feed all those people, but by letting in an additional 800 million into this country we would also almost quadruple the demand in the domestic market.  Imagine each year 30 million new consumers being added to the domestic market, that's almost like getting access to another California each year.  Each year those additional people would need housing, food, clothing, transportation, and entertainment.  We could go on the greatest building boom in history.  800 million additional people means greater density in our cities, more jobs to support the population growth, greater access to talent and entrepreneurial immigrants will drive more business innovation, and for the politicians in the audience who need money, more tax revenue.

Crazy? Sure.  But allowing our country to have economic growth of 10% per year and fixing the housing crisis because we open the floodgates for immigration sure beats the current state of the economy.  It would be crazier to think that the Federal Reserve could actually create prosperity, because in the end just like it's taught in Econ 101, economic growth consists of two and only two components: productivity increases and population growth.

Do we want to be the next Japan and have two lost decades?  I don't.

Osama bin Laden is dead, but is the world really a better place?

AP UPDATE -  Osama bin Laden was unarmed when the US commandos shot and killed him.

AP UPDATE 2 - Only one person in the house was armed and shot at the special forces team, while 5 were killed.  [Maybe the reason the government won't release the video is because they know it will look like more of a cold-blooded assassination than an actual battle.]

Two night ago I was down at Hotel 1000 with the fellow my Startup Weekend comrades at Madrona, which I must say was an amazing weekend with the great CityMat.ch team and Arianna did a nice write-up on our team as well.  We went downstairs to the bar when Obama started giving his speech about how Osama bin Laden was killed by US strike team.  Talk about a heavy weekend, everyone was kind of stunned.  We had just finished a 54 hour startup-a-thon, with 15 companies being pitched and launched, and instead of being able to wind-down, we were all caught by a small piece of history.

Yesterday, I saw in the newspapers that people were celebrating by waving American flags in DC and other areas and chanting and cheering and Facebook blew up with people saying how great it was.  I was caught off guard, and I know I wasn't the only one.  Now if you imagine a courtroom where a killer has just been convicted, the grieving family of those who were killed will probably breathe a sigh of relief and have some measure of resolve that justice was served.  They will also probably still be crying, much like what I saw from photos on The New York Times at ground zero with people who had lost loved ones.

For those that lost loved ones on 9/11, I don't hold it against them that they might feel that justice was served, but it was not those who lost loved ones that I saw in pictures or commenting with chants and cheers.  Those that were cheering and partying were excited about the killing of a person who was the mastermind behind a plot that killed over 3000 innocent Americans.  When the Green River Killer or Unibomber were put away, were those times to party?  No, they weren't.  They were times for breathing a sigh of relief.

What is there exactly to party about?

After 10 years, the world's most powerful military was able to finally pinpoint the person that masterminded the attacks and send in a strike team.  One guy with a small group of guardsmen against a United States strike team.  Do you really expect he would have prevailed?  This wasn't the United States and Britain landing at Normandy on D-Day and pushing back one of the most powerful and disgusting military powers of the 20th Century, the Nazis.  This was one guy and guardsmen in a compound with the world's most powerful military sending a strike team in.   This was nothing to party about.

So why the cheers?  Why the chants?  Would we have liked it if people in the Middle East cheered during 9/11?  No, we wouldn't have.  We would have resented it.  But, you say, this time it's totally different.  Yeah, right.  I heard the same thing during the housing bubble.  That "this time is different."  Sadly, it isn't.  By chanting and cheering, we fail to learn from what happened on 9/11.  9/11 wasn't just a terrorist act.  It was a statement.  It was a statement by a small group of people who lived under repressive regimes sponsored by the United States that they had had enough.  I do not condone the attacks on 9/11, nor do I condone the ruthless killing of 3000+ innocent civilians.  But hasn't our government, by proxy and directly, done the same to others?

How about the human rights of our military partners?  We get so excited about how we have womens rights that we conveniently forget about how our government recently signed a $60 billion arms deal with one of the most repressive governments on Earth when it comes to women's rights, our oh so "strategic military partner" - Saudi Arabia.  Women in Saudi Arabia enjoy the same or lower level of rights that blacks did during South Africa's Apartheid and in the American South before the Civil Rights Act.  And men and others?  Try being executed if you are gay or having your arm amputated if you rob someone.  But they're pitching it as a way for us to counterbalance a growing Iran.  Haven't we seen this script before? Wasn't one of the worst allies in our history in a similar situation?  Oh, that's right.  We did a similar thing with Saddam Hussein by providing him weapons to counterbalance Iran all over again, and judging by history, that didn't turn out too well.  And somebody will inevitably try to claim that for some odd reason, "this time it's different."

If our government is so quick to be military partners with people who actively crush both the economic and social freedom of their people, should we really be that surprised if one or a group of those people under the repressive regime, who has nothing to lose, takes out their anger on us?  We really shouldn't be.  What should be more surprising is that we get surprised at all.

So Osama bin Laden is dead, but is the world really a better place?

Obama actually had to publish his birth certificate?

I can't believe it got to the point where Obama actually felt compelled to publish his birth certificate after the State of Hawaii had already said his valid birth certificate was on file.  So a group of bigotted white people got all upset that a black person finally got into office.  

Just to piss them off, it would have been funny if when Obama was inaugurated, he had gone to the lecturn and said, "Damn straight my middle name is Hussein." Put on a turban, and continued:

from theatlanticwire.com

 

Welcome to...The Black House of Allah, Mother F*****s!

from fobbdeep.com

 

Queue music praising Allah

Ron Paul has set up his exploratory committee for the Presidency!

Since he's one of the few truly great politicians in office when it comes to being able to draw from lessons of history and apply them to current day predicaments, I'm excited that Ron Paul has taken the first step today in running for the Presidency again.  Maybe we'll have a Paul/Paul ticket? :)

The Republican Party creates its own noose, but the Democrats don't apply it

Politics are a funny thing.  Highlighted by this article about California, we can see that California hasn't been doing too shabby -

• having above average GDP growth from 1999-2009 compared to the rest of the country
• taking home 50% of all venture capital dollars
• it's budget deficit, while large, is still only 6-7% of its budget, and future pension and health liabilities are only 7% of its economy
• not to mention bailing out the South, Midwest, and some of the West to the tune of $620 billion from 1981-2005.

So let's get this straight, California bails-out the country for a quarter-century and Republicans scream its a failed state?  Yeah, right...  If you want to see the tax data, it's supplied by the Tax Foundation.

Republicans claim they want to slash Federal spending, so why don't the Democrats let them?  Let the Republicans shrink the Federal budget by 80%, abolish the income tax, the corporate income tax, and payroll tax.  And do you know who will be better for it?  Many of the states that reliably vote or are more likely to vote Democratic -  California, New York, Illinois, Massachusettes, Connecticut, New Jersey, Delaware, Minnesota, Washington, Oregon.  

If the Democrats end up raising taxes to lower the budget deficit, then who will be worst off? Their own constituents.

No wonder politics often defies logic.

Wikileaks and the Obama Administration

A couple days ago, I posted the following status to Facebook, which linked to a New York Times article about the Europeans criticizing the United States's response:

Obama tells China, Russia, and the Middle East to embrace democracy and transparency, but his administration is hypocritical when the same comes right back at him. -1 for Obama, +1 for Putin and the PRC

A well-intentioned friend questioned my response, and the following is what I wrote back:

Hi [_____]!

Thanks for the thoughtful reply!

As far as the cables' contents, I agree with the French position as well. I was greatly impressed with the thoughtfulness of the US diplomatic corp and how professional they are in their assessments.

Although whether the Europeans themselves are transparent or not was besides the point. If Obama wanted to take a stand for freedom of the press and government transparency in the world, he would come out and blatantly say, "My administration has so far found nothing illegal with what Wikileaks is doing acting as a press organization. They have the right freely publish leaked materials, no matter how embarrassing, as long as they do not aid in the capture of them. If we find they went beyond their right as a press organization, you will hear from the Justice Department." That is the moral high ground he should take, and it would reinforce the idea of the United States as the beacon of freedom for the world. It would also be in stark contrast to how Bush's administration conducted itself.

Like the Europeans, the +1 to Putin and the PRC is not meant to say they are morally better. It is because they have been pointing out how hypocritical American policy has become. If we are going to preach to be the beacon of freedom to move others towards, then we should hold ourselves to the same standard. We preach protection from invasive policing of the populace, and TSA authorizes virtual strip searches and invasive pat-downs. Instead of being innocent until proven guilty, they assume all air travels are guilty until proven innocent. We preach to China to let the market determine foreign exchange rates, and the Fed manipulates the currency to a scale that is only beaten by a country such as China. We preach that other countries shouldn't condone corrupt business practices, yet no high-profile bankers from the recent crash in the markets have been taken to court, even though mortgage fraud has been reported in the papers and any settlements have been a slap on the wrist.

I would love to see the United States take the moral high ground, which is why I was cautiously optimistic when Obama, became President [0]. I thought he would reverse the hypocrisy of the Bush years, but as of late, I don't see that happening.

In addition, Ron Paul made a great defense of Wikileaks, and why organizations like Wikileaks are necessary for freedom to exist.

[0] As shown in this blog post from when Obama had just been elected.

Minorities Holding-Back Minorities

The fact that an African-American firefighter would punch a Latino firefighter, because the Latino firefighter stood up for equality under the law, is ridiculous.  It's sad that some minorities want their employers to promote them based-on the color of their skin instead of the content of their character, and these are the ones who have been holding back minorities for the last 45 years.  Did they not listen to Martin Luther King, Jr - a man that is held up as a martyr among men and in the same esteem as George Washington and Abraham Lincoln?

 

"I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character."

 

The content of one's character is judged based-on merit and how they deal with others.  Holding minorities to a lesser standard than whites is reverse discrimination and does not hold true to the words that King spoke on August 28th, 1963.  If minorities aren't up to par competing based-on merit, they need to shape-up and start working harder and smarter, instead of complaining about discrimination.  Focusing on championing educational achievement in minority communities by the minorities themselves, like Booker T. Washington had done, would be a great start.

 

But too many minorities feel entitled today because of injustices that occurred in the past.  But do you know what?  This is America.  We aren't limited by a caste society where you must stay in the same social bracket that your parents were born in and perform the same job as them.  We have the freedom to be our own people.  If your workplace is discriminating against you, then quit and start your own company whose policies of non-discrimination will make you out-compete the competition and put them out-of-business.  

 

Yes, there is still racism in America, but it isn't nearly as bad as it was 50 or 150 years ago.  Today's racism is peanuts compared to then.  So stop complaining and start working, doing otherwise is a disservice to those that were enslaved and faced heavy discrimination in the past.  And if American-born minorities don't start working, then the immigrating minorities will leave them in the dust (and hopefully change the culture of laziness among some of the American-born ones at the same time).  Just look at President Obama.  He's the son of a Kenyan immigrant (no American slave roots).  It's the work ethic that counts.  

Translating the 10 Principles of Economics for Non-Economists

In case you were wondering what is guiding all of those economists out their making decisions right now that will decide the future state of our economy (or if we'll have one), Yoram Bauman does a brilliant job of translating the 10 principles, so that non-economists can understand what is going on in the minds of economists.

From his blog: Random Observations for Students of Economics

Controlling Rising Health Care Costs - Give the Power to the People

Right now, Democrats and Republicans in Washington, D.C. are fighting over what type of system the United States should use to control skyrocketing health care costs.  I thought I would do some digging to see which plan will actually reduce costs.

The Plans:
    Democrats - Government-insured (especially a push for single-payer) health care
    Republicans - Private insurance and government out of the picture

I went digging and using data from the Center for Medicare and Medicaid Services, I found that the plans put forward by both the Democrats and Republicans will fail at controlling costs.  Costs have been rising even though Medicare, Medicaid, and private health insurance have been insuring a larger proportion of American's medical care since 1960, when the Great Society programs and employer- based health insurance really started to take-off.  If the given plans would save money, then the domination by government and private insurance should have already started yielding cost savings.  Instead, costs have been skyrocketing.
 
So I kept digging to see if there was any granule of data that would show me anything about why health care costs have been rising.  The devil was in the details. 

What are both plans missing?  The power of the consumer.  Insurance, whether government or privately-run, fails to contain costs.  Food is more important than health care, yet we don't need to buy food insurance to ensure every American is fed.  Since World War II, Americans have been relying more heavily on insurance than ever before to pay for health care.  

Digging through the data, I found that as Out-of-Pocket payments for health care have decreased as people shifted to insurance (both private and public), while health care costs soared and the types of health care paid for have stayed relatively stable.
  
The system that we have that is based-on insurance is the problem.  In order to lower health care costs, we need to get insurance (except for catastrophic) out of the picture and have consumers pay for their own health care.  Then everyone will be able to afford their own health care, on their own.

In order to create the system, the Federal Government will need to:

1. Tax employer-sponsored health insurance (to stop distorting the market)
2. limit federally-financed health care to Medicare for the elderly (they deserve to be paid-back for the money they put-in).
3. give Medicare beneficiaries accounts with pre-determined amounts of money to spend on health care that they can then use to shop around for non-catastrophic health care use (and this is what they're limited to).  Then give them catastrohpic coverage to cover the balance.
4. Make sure direct primary care providers are not defined as insurance companies for Medicare patients
5. Make illegal the practice of insurance companies limiting their payments to doctors within their "network", which is anti-competitive and hurts consumers.

State Governments that are serious about controlling health care costs will also make sure direct primary care providers, such as Qliance, are not defined as insurance companies.

Instituting these programs will take the incentive away for people to get insurance and will give the power of their health care decisions back to the American people.

For more info, check out:
"How to Cure Health Care" by Milton Friedman

Related Articles:
If Food Doesn't Require Insurance, Health Care Doesn't Require Insurance

The Best Sub-Prime Fixing Stimulus Idea I've Seen

From the NYTimes by Thomas Friedman - "The Open-Door Bailout"

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

Cost to the United States - Maybe $1-3 billion to go through all the paperwork, which sure beats wasting $800 billion on a stimulus package and $2.5 trillion to shore-up our financial system.  

Friedman continues by elaborating on how we became the wealthiest country in the world, which I think many Americans sometimes forget:

“Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.”