Red Clay Citizen

Another Cost of IllegaI Immigration Discussed

While open border advocates continue to push blanket amnesty for illegals aliens in hopes that these newly minted citizens will impact the electorate, more talk is zeroing in on an effect of our unenforced border laws:  the impact on blue collar employment.

Blogger Clayton Cramer really gets at the heart of the native worker issue with this article. 

"However, unskilled illegal immigrants who have flooded across our Southern border the last few years aren’t driving down the wages of well-paid professionals. They are lowering the wages for unskilled U.S. citizens and legal residents. It might not be much, but even a dollar per hour matters for people who earn hardly above minimum wage. For some, it’s the difference between self-sufficiency and needing government assistance."

Rather than taking the jobs that Americans don't want, turning a blind eye to illegal immigration for the sake of good business has resulted in giving illegals jobs that Americans won't want to do for the low pay given to their competitors from south of the border.

This grand coalition that the liberals hope to put together by giving citizenship (and the resulting voting rights that come with citizenship) is really an attempt to force two groups together that have competing economic issues. Low skilled, blue collar workers already have a tough enough time competing for the dwindling good paying manufacturing jobs that their parents and grandparents raised their families on. 

And if you are a felon looking to get hired by a company? Forget about it.  Why hire someone with a criminal record when you can hire an illegal for less pay despite the fact that they have an undeterminable criminal background as well as a questionable identity.  That's right employers, don't ask the questions that you don't want the answers to.

Thank goodness our education establishment has tried to shoehorn every kid in high school into college and an unreasonable career path.  That policy seems to have dovetailed nicely with the arrival of masses of unskilled workers that don't complain much.  American exceptionalism and our sovereignty are at risk, but don't let it get in the way of making a buck.

DC Metro Data Proves Transit a Subsidy for Rich

Advocates in Charlotte and the Triangle for expensive light-rail transit projects like to argue that one reason to build transit is that it helps low-income individuals.  Unfortunately, data released by the DC Metro system shows its more of a subsidy for the upper-middle classes (as we have pointed out many times before.)

According to the Washington Examiner, the median income of DC Metrorail riders is $102,110.  And at least 80 percent have a college degree.

Conversely, Metrobus riders are less affluent (median income $69,000) and are less likely to own a car.

So if these transit planners in Raleigh were serious about helping low-income individuals and families with transportation needs, they'd be expanding bus service, building Bus Rapid Transit and HOT lanes, not building light-rail for the rich and paying for it on the backs of the poor through a 1/2 cent sales tax increase.

Welfare

Do You Want Fries With That EITC?

From today's Finance Committee meeting comes approval of HB2642. The bill slightly increases the size of the state's Earned Income Tax Credit (EITC). The state tax credit will be in addition to the federal credit eligible people already receive. To be eligible, you must be below certain income thresholds, based on filing status and number of dependents.

According to Representative William Wainwright (D - Craven), the increase in the EITC will "help families make ends meet." Really?

According to analysis presented by the bill's sponsors, this new law will increase the average recipient's benefit by $24 - per year. That's right, $2 a month. Those ends better be awfully close together if 2 bucks a month will make them meet. All told, the newly increased EITC will provide the average recipient with less than $7 per month - many of these recipients will be families. Seven bucks a month may get you a super-sized value meal at McDonalds - but making ends meet? Please.

Further, the maximum benefit estimated for a family of four is estimated to be $20 a month. Whoopee! Take the family to Golden Corral - kids eat free on Tuesdays!

So what will this minuscule benefit cost North Carolina taxpayers - about $70 million a year. Not one word in that committee meeting was dedicated to the thousands of jobs that could be created if that $70 million were left in the hands of entrepreneurs around the state. But who can think of creating jobs when you are an omnipotent state legislator who can "do something" to help poor people "make ends meet?" Why bother yourself with such trivial details like cost-benefit analysis when you can pat yourself on the back and convince yourself you are a good person because you "helped" people.

Even more maddening was the discussion that the EITC is needed to offset the high burden that state and local taxes and fees place on poor people. Why not just lower those taxes instead? For example, last year lawmakers extended the 1/4 cent "temporary" sales tax - a tax that will extract $258 million from consumers, and hit the poor the hardest. But allowing people to keep more of their money in the first place erodes the amount of money Raleigh politicians control, and therefore chips away at their power.

Of course, lawmakers will always opt to increase dependency on government programs rather than promoting financial independence in the private marketplace. They've figured out that the more folks that are dependent on you, the more votes you will get.

$22K? How would you spend it?

A beautiful piece in the N&O that will get you thinking about our "social safety net" -- such as it is.
-Max Borders

Government Doesn't Create Jobs

...it creates poverty.

According to (yet another) editorial in the Raleigh News & Observer, government should do what it can to help the poor.

The Good Book famously says that we'll always have the poor, and no sense arguing with so authoritative a source. But a just society that has the financial power should do all it can to reduce the number of people in poverty's grip.

So what can the government do? Get out of the way.

Not a dime in welfare benefits or any other program exists without being parasitic on the free actions of individuals in the marketplace -- which is also the source of economic growth. Therefore, government must not only learn it's place, but not kill the goose that lays the golden eggs.

It must also not create incentives for poor people to remain in subsistence poverty. There will be less upward mobility if being poor is easy (i.e. subsidized). There is also no justice in the persistent notion that the "just society" must mean government action. A society is nothing more than an agglomeration of individual actors. And, by the way, those that read the "Good Book" realize that moral responsibility for charity is a personal. It doesn't not fall on you from Heaven on tax day. So let's get beyond this idea that bureaucrats should take from A to give to B in the name of justice. No one will get to Heaven by moral proxies in Raleigh or Washington.

Remember, every dime the government spends on this program or that is a dime you can't spend on the causes you think are most worthy. THEY say compulsory compassion via government monopoly. I say personal passion for social entreneurship in a dynamic market for doing good. Sadly, who's right comes down to who has the bigger guns.
-Max Borders

Beneath the Surface of "Inequality" Data

In yesterday's Wall Street Journal, American University economics professor Brad Schiller takes a closer look at some recent Census Bureau data regarding income inequality. Perhaps the left's most beloved go-to cliche is about the "rich getting richer while the poor get poorer." At first blush, the recently released Census Bureau seemed to provide fodder to their griping:

"Two observations grabbed the headlines. First, the data indicate that the top-earning 20% of households get half of all the income generated in the country, while the lowest-earning 20% of households get a meager 3.4%. That disparity has widened over time: In 1970, their respective shares were 43.3% and 4.1%. These income-share numbers buttress the popular notion that the 'rich are getting richer while the poor are getting poorer.'"

Of course, most so-called "progressives" are good at merely reading the headlines while being strongly averse to engaging in critical thinking. Schiller provides some sound analysis of the data to tell us that this supposed "growing inequality" is actually not what it appears:

"Demographic changes in the size and composition of U.S. households have distorted the statistics in important ways.

First, we can easily dismiss the notion that the poor are getting poorer. All the Census Bureau tells us is that the share of the pie consumed by the poor has been shrinking (to 3.4% in 2006 from 4.1% in 1970). But the "pie" has grown enormously. This year's real GDP of $14 trillion is three times that of 1970. So the absolute size of the slice received by the bottom 20% has increased to $476 billion from $181 billion. Allowing for population growth shows that the average income of people at the bottom of the income distribution has risen 36%.

The "typical" household, however, keeps changing. Since 1970 there has been a dramatic rise in divorced, never-married and single-person households. Back in 1970, the married Ozzie and Harriet family was the norm: 71% of all U.S. households were two-parent families. Now the ratio is only 51%. In the process of this social revolution, the average household size has shrunk to 2.57 persons from 3.14 -- a drop of 18%. The meaning? Even a "stagnant" average household income implies a higher standard of living for the average household member."

And lastly, what of this nonsense that only the "rich" have enjoyed economic gains in the last several years?

"The increase in nominal GDP since 2000 amounts to over $4 trillion annually. If you assume that all that money went to the wealthiest 10% of U.S. households, that bonanza would come to a whopping $350,000 per household. Yet according to the Census Bureau, the top 10% of households has an average income of $200,000 or so. The implied bonanza is so absurd that the notion that only the rich have gained from the economic growth can be dismissed out of hand. Clearly, there is a lot of economic advancement across a broad swath of population. Dramatic changes in household composition, household size and immigration tend to obscure this reality."

It's easy for politicians and pundits to spout class warfare rhetoric to advance their cause. Closer scrutiny, along with a little critical thinking and common sense, typically expose such rhetoric to be intellectually lazy at best, and intentionally misleading at worst.

NORTH CAROLINA EDUCATION LOTTERY TO HELP FIGHT RECESSION

For Release: IMMEDIATE 

Contact: (877) 9NC-PLAY

         

EDUCATION LOTTERY TO HELP FIGHT RECESSION ANNOUNCES "INSTANT TAX REBATE" SCRATCH-OFF

RALEIGH - The North Carolina Education Lottery (NCEL) is going to help keep the economy from going into a recession. The North Carolina Education Lottery is introducing a new “INSTANT TAX REBATE” scratch-off game in conjunction with the issuing of “Tax Rebate” checks from the federal government.

The federal tax rebates in North Carolina will total billions of dollars and we need to insure that money is not wasted on frivolous spending but goes to supporting education. Since education is the ultimate economic development tool, this will spur the economy in North Carolina and help keep the country out of a recession.

This instant scratch-off ticket will have over $350 million in total cash prizes, which is a spectacular average of over $100 prize payout per household!

If we can convince half of the households in North Carolina to spend half their federal tax rebate on this game we estimate that the NCEL will gross over $1 billion. If the federal government would do the right thing and give a rebate to poor people and lower income families, who don't pay taxes, it would make our job easier as they are our target demographic (we also target mathematical illiterates and people not in full possession of their senses). If this would happen the Sky's the limit for potential sales!

The $300 million “INSTANT TAX REBATE” game is a $10 ticket with top prizes of $10 million. Players who scratch their way to win the $10 million prizes will be paid in installments of $500,000 over 20 years. There are also over 500,000 prizes between $50 and $500 and over 5,000 prizes from $1,000 to $50,000.

These tickets will be available in stores and check cashing centers when government tax rebate checks start arriving in lottery ticket consumers mailboxes!

# # #

                              THIS IS A PARODY!

Subsidized Poverty and "the Children"

Progressive Pulse has another "children" post that, I suppose, is designed to divine more crocodile tears for North Carolinia's poor population. Gregg Flynn concludes - based on the recent poverty stats taken by the Census Bureau (see our statewide map here) - that:

Statistics can be obfuscating but what is clear is that in North Carolina at least 287,894 school age children plus 138,820 children under 5  live in poverty and that the distribution of these children and the resources to meet their needs are uneven across the state.

Hmmm. Statistics aren't the only thing that can be obfuscating, apparently.

And how about the fact that poverty statistics don't really determine the "distribution...[of] resources to meet their needs" at all. In other words, you may live below the poverty line - which means your income is low enough to meet the poverty criterion - but that is not indicative of how much you may or may not be receiving in non-monetary government benefits including food stamps, subsidized housing, Medicare, Medicaid, free or reduced lunch, etc. etc. (all that stuff that helps children "meet their needs"). These data do not include localized cost-of-living adjustments, either. For all we know, total benefits per capita could be higher for these counties than in years past.

Indeed, after the Welfare Reform Act of 1996, the poverty rate went down (again, measured mostly by income) -- because more people had incentives to work rather than stay on government benefits. According to the Manhattan Institute:

Child poverty showed a rapid decline in the late 1990s. The decline was especially dramatic for black and Hispanic children, among whom the poverty rate dropped by close to one-third between 1993 and 2002, and did not increase significantly during the recession years of 2001–2002.

The fact that the decline in child poverty overlapped large national economic gains in the mid- to late 1990s has been used by welfare reform critics to bolster the argument that declines in child poverty after 1996 were due to broader economic factors and not welfare reform. However, this criticism does not explain why child poverty declined in such a sustained and dramatic fashion, since it had been impervious to improvements in the economy for more than the two decades prior to the mid-1990s.

What's worse about this latest "children" post is that Flynn doesn't address the very grave possibility that those government benefits that meet the needs of the poor could be the very perverse incentives dragging down the poverty averages. As entitlements creep upward, people have less incentive to earn more -- i.e. to get more income (which is how poverty is measured) -- because they'll lose those overall benefits. This is called a wage trap. And believe me, benefits for the poor have been creeping back up since 1996 -- particularly in N.C. So we should expect the poverty rate also to go up, too, due to the wage trap. It's a vicious circle.

(I don't suppose that Flynn would like to hear that poverty is also calculated not only by income, but by the number of people per family household -- a factor that would change rapidly due to the continued influx of illegal immigrants, who tend to live many to a family and who tend also to be poor.)

I don't expect the people over at the Pulse to burden themselves with tough, counterintuitive economic concepts like wage traps. I expect them to emote, to demand radical redistributions of wealth, and to put up sad, grainy, black-and-white pics of children from the dustbowl era. But I do expect RCC readers to know better when they run across such fallacies ad misericordiam and uncontextualized numbers.

-Max Borders

Free Markets Save Lives

This article reminds us of why free markets are so important.

"Wealthy populations live longer and are healthier than poor populations because higher incomes open the door to literally thousands of opportunities to improve health and safety that are not available to the poor"

At the extreme end of the spectrum is Sub-Saharan Africa, a region plagued by poverty, famine, disease and very short life spans.

"Most Sub-Saharan Africans do not have access to childhood vaccines, bed nets or clean water.  This lack of resources reduces life expectancy to a level far below that of rich countries.  Princeton University economist Angus Deaton says poverty is the leading cause of mortality in developing countries."

The best remedy for this tragic situation is a healthy dose of economic growth and wealth creation.

"World Bank economist Lant Pritchett and former U.S. Treasury Secretary Lawrence H. Summers studied the relationship between income and health worldwide and found that infant mortality falls as income rises.  According to their research, a developing country would avert one death per 1,000 live births if the average income were raised 1 percent.  In 2005, for example, over 30,000 infant deaths would have been prevented in Sub-Saharan Africa if incomes were raised by about $5 per person per year."

Of course, the best way to spur such life-saving economic growth is not via government intervention and large welfare programs as the left would have you believe, but from greater economic liberty.

"Not one Sub-Saharan African country ranks in the top quartile of economically free countries.  Decades of political corruption, government-controlled monopolies, high inflation, excessive regulation of businesses, and stringent import and export restrictions have led to Africa’s current economic state.  Adopting economically freer policies would increase the rate of economic growth in African countries and thus raise incomes."

Even the redistributionists at the World Bank have begun to recognize this.

"Huge developmental gains would be possible for some of the world’s poorest countries if their governments reform restrictive tax policies that make it impossible for ordinary firms to operate legally, a World Bank report argues today."

Unfortunately, it is hard to be optimistic about a region where the nations tax their businesses at twice the rate of profit.