Category: Antonio R. Chaves

Why It Is Misleading to Compare Murder Rates in the US and Western Europe


A 2016 article by the American Journal of Medicine claims that homicide rates in the U.S. are 7 times higher than an average of other “high income countries.”  This conclusion is based on a select list of OECD nations compiled in 2010.  The lowest income nation on the list is Hungary, where per capita GDP is $28,000 per year.  Turkey and Mexico did not make the cut because their per capita GDPs are respectively $25,000 and $19,000.  Latvia and Estonia are not on this list, presumably because Latvia joined the OECD in 2016 and Estonia joined in December of 2010.  Turkey, Estonia, and Latvia have murder rates comparable to those in the U.S.  Mexico exceeds the U.S. by about 4 times.  Most would agree that Mexico is not “high income” but the case for excluding these other three nations is not as clear cut.

If the list were to include all of Eastern Europe, Russian and Lithuania would surpass the U.S. in homicides per capita.  Only when the U.S. is compared with affluent Western nations that were never under the iron curtain does its murder rate far exceed all other in the sample.  The AJM attributes this grim statistic to high levels of gun ownership in the U.S., but the authors fail to point out that two of the safest nations in the world (Switzerland and Finland) rank 3rd and 4th in per capita gun ownership.

The U.S. has almost double the gun ownership rate of Finland and (according to a table in the AJM article) 12 times the gun homicide rate.  Does this mean there is a “critical mass” for gun ownership where the murder rate increases exponentially?  If this is true, why do heartland states with the highest levels of gun ownership have some of the lowest murder rates in the U.S.?

Since the link between gun ownership and homicide is unclear, what other factors are at play?  How else does the U.S. stand out from all these Western nations other than in gun ownership and homicides?

According to data from WHO, the adolescent fertility rate in the U.S. far exceeds that of Western Europe, Canada, Australia, and New Zealand.  Teenage mothers in Western nations often raise their children without fathers, and fatherlessness has been liked to violent crime in young men.  When comparing the U.S. to other Western nations with higher levels of teenage pregnancy (Eastern Europe and Latin America), the U.S. murder rate is nowhere near the top (Fig. 1).  This graph excludes 10 countries where the homicide rate exceeds 20 per 100,000.  Beyond this murder rate the effect of adolescent fertility is less evident, possibly because other factors such as drug trafficking and poor governance start to play a larger role.  At the top of the list of nations excluded from the graph is El Salvador, where the murder rate was 108 per 100,000 in 2015.  This is over 20 times the murder rate in the U.S during the same year.

Fig. 1:  The adolescent fertility data is from the World Health Organization.  The homicide data is from the World Bank.  The unlabeled points crowded on the lower left include Australia, New Zealand, Canada, and all the nations in Western Europe.  All information was compiled from 2011 to 2015.  Belrs. = Belarus,  Grn. = Grenada,  Sur. = Suriname,  Antig. = Antigua & Barbuda

Fig. 2:  The single parent households data is from the Kids Count Data Center.  The homicide data is from the Death Penalty Information Center.

 

Unsurprisingly, there is also a relationship between single parent households and homicides per state (Fig. 2).  All races are adversely affected by single parenting, but since the overall illegitimacy rate among blacks now exceeds 70%, it also comes to no surprise that most of the states where the rate is 40% or higher are more than 20% African American.  The murder rates in these states concurs with FBI data showing that African Americans commit half the homicides even though they make up only 12% the overall U.S. population.  The media underreports black-on-black homicides because condemning police officers for their mistakes (both real and imagined) is the path of least resistance.  This gutless journalism cost black lives because it demoralized the police and emboldened the killers.

Mass shootings make up a tiny percentage of U.S. homicides but as in the case other violent criminals, many of these killers (Parkland, Las Vegas, Charleston, and Newtown) also grew up in broken homes.  The Parkland shooting was also a perfect storm of criminal negligence.  First, because armed deputies were ordered to wait outside the building during the worst part of the rampage.  Second, because the FBI failed to act on a tip.  Third, because school officials failed to make police referrals that would have denied the shooter’s right to buy a gun.  The last failure is the most egregious because it goes far beyond mere laziness or incompetence; it was a deliberate plan to minimize the so-called “school to prison” pipeline.

Even gun rights supporters agree that some regulations are needed to prevent guns from getting into the wrong hands, but few adolescents are mature enough to distinguish between lack of legislation and lack of enforcement.  Consequently, encouraging students to march on Washington for an agenda they do not understand is wrong.  In the absence of other perspectives for enhancing school security it is indoctrination.  If David Hogg ever wises up, he will condemn the news organizations that shamelessly disseminated his sophomoric comments.

 

Antonio Chaves teaches biology at a local community college. His interest in economic and social issues stems from his experience teaching environmental science.

A 2016 article by the American Journal of Medicine claims that homicide rates in the U.S. are 7 times higher than an average of other “high income countries.”  This conclusion is based on a select list of OECD nations compiled in 2010.  The lowest income nation on the list is Hungary, where per capita GDP is $28,000 per year.  Turkey and Mexico did not make the cut because their per capita GDPs are respectively $25,000 and $19,000.  Latvia and Estonia are not on this list, presumably because Latvia joined the OECD in 2016 and Estonia joined in December of 2010.  Turkey, Estonia, and Latvia have murder rates comparable to those in the U.S.  Mexico exceeds the U.S. by about 4 times.  Most would agree that Mexico is not “high income” but the case for excluding these other three nations is not as clear cut.

If the list were to include all of Eastern Europe, Russian and Lithuania would surpass the U.S. in homicides per capita.  Only when the U.S. is compared with affluent Western nations that were never under the iron curtain does its murder rate far exceed all other in the sample.  The AJM attributes this grim statistic to high levels of gun ownership in the U.S., but the authors fail to point out that two of the safest nations in the world (Switzerland and Finland) rank 3rd and 4th in per capita gun ownership.

The U.S. has almost double the gun ownership rate of Finland and (according to a table in the AJM article) 12 times the gun homicide rate.  Does this mean there is a “critical mass” for gun ownership where the murder rate increases exponentially?  If this is true, why do heartland states with the highest levels of gun ownership have some of the lowest murder rates in the U.S.?

Since the link between gun ownership and homicide is unclear, what other factors are at play?  How else does the U.S. stand out from all these Western nations other than in gun ownership and homicides?

According to data from WHO, the adolescent fertility rate in the U.S. far exceeds that of Western Europe, Canada, Australia, and New Zealand.  Teenage mothers in Western nations often raise their children without fathers, and fatherlessness has been liked to violent crime in young men.  When comparing the U.S. to other Western nations with higher levels of teenage pregnancy (Eastern Europe and Latin America), the U.S. murder rate is nowhere near the top (Fig. 1).  This graph excludes 10 countries where the homicide rate exceeds 20 per 100,000.  Beyond this murder rate the effect of adolescent fertility is less evident, possibly because other factors such as drug trafficking and poor governance start to play a larger role.  At the top of the list of nations excluded from the graph is El Salvador, where the murder rate was 108 per 100,000 in 2015.  This is over 20 times the murder rate in the U.S during the same year.

Fig. 1:  The adolescent fertility data is from the World Health Organization.  The homicide data is from the World Bank.  The unlabeled points crowded on the lower left include Australia, New Zealand, Canada, and all the nations in Western Europe.  All information was compiled from 2011 to 2015.  Belrs. = Belarus,  Grn. = Grenada,  Sur. = Suriname,  Antig. = Antigua & Barbuda

Fig. 2:  The single parent households data is from the Kids Count Data Center.  The homicide data is from the Death Penalty Information Center.

 

Unsurprisingly, there is also a relationship between single parent households and homicides per state (Fig. 2).  All races are adversely affected by single parenting, but since the overall illegitimacy rate among blacks now exceeds 70%, it also comes to no surprise that most of the states where the rate is 40% or higher are more than 20% African American.  The murder rates in these states concurs with FBI data showing that African Americans commit half the homicides even though they make up only 12% the overall U.S. population.  The media underreports black-on-black homicides because condemning police officers for their mistakes (both real and imagined) is the path of least resistance.  This gutless journalism cost black lives because it demoralized the police and emboldened the killers.

Mass shootings make up a tiny percentage of U.S. homicides but as in the case other violent criminals, many of these killers (Parkland, Las Vegas, Charleston, and Newtown) also grew up in broken homes.  The Parkland shooting was also a perfect storm of criminal negligence.  First, because armed deputies were ordered to wait outside the building during the worst part of the rampage.  Second, because the FBI failed to act on a tip.  Third, because school officials failed to make police referrals that would have denied the shooter’s right to buy a gun.  The last failure is the most egregious because it goes far beyond mere laziness or incompetence; it was a deliberate plan to minimize the so-called “school to prison” pipeline.

Even gun rights supporters agree that some regulations are needed to prevent guns from getting into the wrong hands, but few adolescents are mature enough to distinguish between lack of legislation and lack of enforcement.  Consequently, encouraging students to march on Washington for an agenda they do not understand is wrong.  In the absence of other perspectives for enhancing school security it is indoctrination.  If David Hogg ever wises up, he will condemn the news organizations that shamelessly disseminated his sophomoric comments.

 

Antonio Chaves teaches biology at a local community college. His interest in economic and social issues stems from his experience teaching environmental science.



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The Real Gender Gap: Family Breakdown and Black Males


Over 50 years have passed since then Secretary of Labor Daniel Moynihan was raked over the coals for raising awareness on the alarming rise of illegitimacy in black communities. Now that the percentage of single mothers has almost tripled, even leading members of the NAACP regard the breakdown of the family as the single largest barrier to black achievement. Nevertheless, how much of the general public knows the extent of the black gender gap?

According to the Moynihan Report, black females usually outperformed their male counterparts in school and almost always greatly outnumbered black men in white-collar jobs. Data from Maryland’s 2016 PARCC exam concurs with Moynihan’s observations (Fig. 1). Based on these scores the gender gap in blacks is 69%. This far exceeds the 47% difference between black girls and their white counterparts.

Moynihan characterized this as a “matriarchal society” where men were devalued for their inability to provide for the family. He speculated that since men are poorly suited to this “reversal of roles,” some black males react with “aggression… self-hatred, or crime.” Data from the state of Virginia shows a strong association between single parent households and violent crime (Fig. 2). Since the Appalachian cities of Galax and Bristol are 87-90% white, this correlation applies to both races.

Moynihan blamed the trend on past injustices that had “emasculated” black men and rendered them more vulnerable to downturns in the economy. Many conservatives dispute this, but in all fairness, the illegitimacy rate in blacks was already much higher than that of whites as early as the 1930s (about 15% versus 2%). Nevertheless, by exclusively focusing on past injustices, Moynihan overlooked the unintended consequences of governmental regulations that made it harder for black men to access the first rungs of the economic ladder. Ultimately, Moynihan was a liberal Democrat who did not see government as the problem. True to form, he reported that the federal minimum wage was “well below the poverty line” for people supporting families. There are two problems with this perspective: First, most minimum wage jobs are held by teens and young adults. Second, wage restrictions deprived poor blacks of the main leverage they had for competing against whites.

Ironically, the Moynihan Report started out as an internal memo written as an advisory to President Lyndon Johnson’s “Great Society”; a social program that is now widely credited for hastening the breakdown of the family. According to the Heritage Foundation, black illegitimacy rose exponentially halfway through the 1960s. This is precisely when the perverse incentives of Johnson’s “War on Poverty” were being implemented.

The report still has many detractors: Ibram Kendi, the founding director of the “Antiracist” Research and Policy Center at American University resented Moynihan’s use of the term “tangle of pathology” and believes it contributed to the narrative of “black inferiority.” The activist-professor also condemns the Christian right for wanting to impose their “civilizing theology” to the “wayward behavior” of blacks.

Dr. Kendi asserts that “the heartbeat of racism is denial” and for Black History Month he will be shuttling across the nation to share his expertise with fawning members of the academic community who are eager to display their antiracist credentials. As for those who see through this charade, almost none of them deny that racism exists, but when young black men are murdering one another at almost 15 times the rate of their white counterparts, you need not be black to see why the problem of racial discrimination is not high on everyone’s agenda.

Moynihan offered no solutions, but predicted that unless this trend was reversed “all the effort to end discrimination and poverty and injustice will come to little.” This prophecy came true for large portions of the black community, but who could have predicted how this ongoing achievement gap would so greatly empower a grievance industry that would hijack America’s colleges and universities? With the rejection of patriarchy and biological gender now all the rage, do not look to higher education to find answers.

Antonio Chaves teaches biology at a local community college. His interest in economic and social issues stems from his experience teaching environmental science.

Over 50 years have passed since then Secretary of Labor Daniel Moynihan was raked over the coals for raising awareness on the alarming rise of illegitimacy in black communities. Now that the percentage of single mothers has almost tripled, even leading members of the NAACP regard the breakdown of the family as the single largest barrier to black achievement. Nevertheless, how much of the general public knows the extent of the black gender gap?

According to the Moynihan Report, black females usually outperformed their male counterparts in school and almost always greatly outnumbered black men in white-collar jobs. Data from Maryland’s 2016 PARCC exam concurs with Moynihan’s observations (Fig. 1). Based on these scores the gender gap in blacks is 69%. This far exceeds the 47% difference between black girls and their white counterparts.

Moynihan characterized this as a “matriarchal society” where men were devalued for their inability to provide for the family. He speculated that since men are poorly suited to this “reversal of roles,” some black males react with “aggression… self-hatred, or crime.” Data from the state of Virginia shows a strong association between single parent households and violent crime (Fig. 2). Since the Appalachian cities of Galax and Bristol are 87-90% white, this correlation applies to both races.

Moynihan blamed the trend on past injustices that had “emasculated” black men and rendered them more vulnerable to downturns in the economy. Many conservatives dispute this, but in all fairness, the illegitimacy rate in blacks was already much higher than that of whites as early as the 1930s (about 15% versus 2%). Nevertheless, by exclusively focusing on past injustices, Moynihan overlooked the unintended consequences of governmental regulations that made it harder for black men to access the first rungs of the economic ladder. Ultimately, Moynihan was a liberal Democrat who did not see government as the problem. True to form, he reported that the federal minimum wage was “well below the poverty line” for people supporting families. There are two problems with this perspective: First, most minimum wage jobs are held by teens and young adults. Second, wage restrictions deprived poor blacks of the main leverage they had for competing against whites.

Ironically, the Moynihan Report started out as an internal memo written as an advisory to President Lyndon Johnson’s “Great Society”; a social program that is now widely credited for hastening the breakdown of the family. According to the Heritage Foundation, black illegitimacy rose exponentially halfway through the 1960s. This is precisely when the perverse incentives of Johnson’s “War on Poverty” were being implemented.

The report still has many detractors: Ibram Kendi, the founding director of the “Antiracist” Research and Policy Center at American University resented Moynihan’s use of the term “tangle of pathology” and believes it contributed to the narrative of “black inferiority.” The activist-professor also condemns the Christian right for wanting to impose their “civilizing theology” to the “wayward behavior” of blacks.

Dr. Kendi asserts that “the heartbeat of racism is denial” and for Black History Month he will be shuttling across the nation to share his expertise with fawning members of the academic community who are eager to display their antiracist credentials. As for those who see through this charade, almost none of them deny that racism exists, but when young black men are murdering one another at almost 15 times the rate of their white counterparts, you need not be black to see why the problem of racial discrimination is not high on everyone’s agenda.

Moynihan offered no solutions, but predicted that unless this trend was reversed “all the effort to end discrimination and poverty and injustice will come to little.” This prophecy came true for large portions of the black community, but who could have predicted how this ongoing achievement gap would so greatly empower a grievance industry that would hijack America’s colleges and universities? With the rejection of patriarchy and biological gender now all the rage, do not look to higher education to find answers.

Antonio Chaves teaches biology at a local community college. His interest in economic and social issues stems from his experience teaching environmental science.



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The Davis-Bacon Act of 1931 and the Breakdown of the Black Family


Conservatives tend to regard the growing trend of single-parent families as an issue of personal responsibility, but what if the liberals who blame society are partly right? What if they can point their finger to a bill sponsored by two Republicans and signed into law by a Republican president?

Prior to the 1930s, the labor force participation rate for black Americans was roughly equal to that of whites. Following passage of the first federal minimum wage in 1931, these rates started to diverge, and from the 1950s to the present, national black unemployment has remained at double the rate for whites. This is not surprising: Minimum wage restrictions discourage businesses from hiring workers who are regarded as “less marketable” due to either their lack of experience or societal prejudice.

The impact of minimum wage on worker participation depends on how much it exceeds market-based wages. This in turn varies from state to state. Since information on the size of this gap is not easily available, the state “regulatory environment” as determined by Forbes magazine can serve a more comprehensive means for estimating of overall administrative barriers to job growth (including minimum wage).

To detect the effect of the regulatory environment on black Americans I limited the data to states with significant black populations because these states are more likely to provide a representative sample for this group. Based on this sub-sample the line representing blacks is noticeably steeper than the line representing whites (Fig. 1). This means that the “employment gap” between blacks and whites widens as state regulations become less conducive to business.

Fig. 1: Based on data from Forbes (2016), the  U.S. Census Bureau (2015), and the Bureau of Labor Statistics (2015) as cited by Thomas C. Frohlich in 24/7 Wall Street. 24/7 Wall Street.

Federal expenditures to states obscure the effect of overregulation because federal jobs and grants can make up for the lack of private investment. For example, despite having one of the worst regulatory environments in the U.S. (ranks 48 out of 50), the state of Hawaii has one of the lowest unemployment rates. Does this mean that federal “investments” are a good strategy for narrowing the employment gap? Not really: Large federal expenditures are justified in regions with an extensive military infrastructure (like Hawaii or Guam), but spending for the sole purpose of “economic stimulus” is a zero-sum game that worsens the national debt while adding nothing to the national economy. Hence, to more accurately detect the effect of regulatory environment on states, it is necessary to limit the sample to states with less federal land because these states rely less on federal employment and control more of their own resources.

When the sample is limited to states with minimal federal land, the line representing black unemployment becomes much steeper (Fig. 2). On the right side of the graph the average employment gap between blacks and whites is 8 points. On the left side the gap is only 3.5 percentage points (Fig. 3). For the state of Indiana, the gap is a mere 2.5 points. During this time the governor of Indiana was Mike Pence.

Fig. 2: Based on data from Forbes (2016), from U.S. Congressional Research Service, the U.S. Census Bureau (2015), and the Bureau of Labor Statistics (2015) as cited by Thomas C. Frohlich in 24/7 Wall Street.

Fig. 3: Based on data from Forbes (2016), from U.S. Congressional Research Service, the U.S. Census Bureau (2015), and the Bureau of Labor Statistics (2015) as cited by Thomas C. Frohlich in 24/7 Wall Street.

If equality is so important to progressives, why is the right side of the graph dominated by states that have voted Democratic since 1992?

Rep. John Lewis recently cancelled his scheduled appearance at the opening of a civil rights museum upon learning that Donald Trump would be attending. On his own website, the 1960s civil rights veteran denounced Trump’s policies as “hurtful” and “an insult” to the people portrayed in this civil rights museum. Since Trump has neglected to burn incense on the altar of diversity, how have black Americans faired under the Trump administration?

Based on data from the Bureau of Labor Statistics, black unemployment in September reached its lowest point in 17 years. It may get even better given the unprecedented rate at which this president is undoing the burdensome regulations of the Obama administration. If you are among those who condemn the congressional Republicans who did not let Obama raise the minimum wage to $10 per hour, then you should do your homework on Davis-Bacon.

The Davis-Bacon Act was co-sponsored by Sen. James J. Davis (R-PA) and Rep. Robert L. Bacon (R-NY) and signed into law by president Herbert Hoover in 1931. According to the Foundation for Economic Education this law was originally designed to protect white workers from competition, presumably from the minorities who worked for lower wages. You may dispute the law’s intent, but you cannot wish away data from the Bureau of Labor Statistics.

A chart from Heritage Foundation shows how the percent of black children born out of wedlock started rising steadily after 1940, when it was originally 15%. Today it is over 70%. If this is a “legacy of slavery” why were there less single mothers during the era of Jim Crow? If this was precipitated by a “brain drain” of black professionals during desegregation, why did this trend begin thirteen years prior to Martin Luther King’s march on Washington? Could it be the drug trafficking, or might this be a just symptom of the chronic unemployment in these communities?

The steady trend towards single-parent households started within the decade that followed the Davis-Bacon Act. I doubt this is a coincidence, because few things are more damaging to a man’s self-respect than undermining his means to make an honest living.

But what about those generous social benefits in New England? Is being chronically unemployed in Rhode Island preferable to being “stuck” in a low-wage job in Nebraska? Which option is more “hurtful” and “insulting”? Which is a greater barrier to success and personal fulfillment?

If my children ever regard the first option as remotely preferable I will have failed in my role as a father.

Antonio Chaves teaches biology at a local community college. His interest in economic and social issues stems from his experience teaching environmental science.

Conservatives tend to regard the growing trend of single-parent families as an issue of personal responsibility, but what if the liberals who blame society are partly right? What if they can point their finger to a bill sponsored by two Republicans and signed into law by a Republican president?

Prior to the 1930s, the labor force participation rate for black Americans was roughly equal to that of whites. Following passage of the first federal minimum wage in 1931, these rates started to diverge, and from the 1950s to the present, national black unemployment has remained at double the rate for whites. This is not surprising: Minimum wage restrictions discourage businesses from hiring workers who are regarded as “less marketable” due to either their lack of experience or societal prejudice.

The impact of minimum wage on worker participation depends on how much it exceeds market-based wages. This in turn varies from state to state. Since information on the size of this gap is not easily available, the state “regulatory environment” as determined by Forbes magazine can serve a more comprehensive means for estimating of overall administrative barriers to job growth (including minimum wage).

To detect the effect of the regulatory environment on black Americans I limited the data to states with significant black populations because these states are more likely to provide a representative sample for this group. Based on this sub-sample the line representing blacks is noticeably steeper than the line representing whites (Fig. 1). This means that the “employment gap” between blacks and whites widens as state regulations become less conducive to business.

Fig. 1: Based on data from Forbes (2016), the  U.S. Census Bureau (2015), and the Bureau of Labor Statistics (2015) as cited by Thomas C. Frohlich in 24/7 Wall Street. 24/7 Wall Street.

Federal expenditures to states obscure the effect of overregulation because federal jobs and grants can make up for the lack of private investment. For example, despite having one of the worst regulatory environments in the U.S. (ranks 48 out of 50), the state of Hawaii has one of the lowest unemployment rates. Does this mean that federal “investments” are a good strategy for narrowing the employment gap? Not really: Large federal expenditures are justified in regions with an extensive military infrastructure (like Hawaii or Guam), but spending for the sole purpose of “economic stimulus” is a zero-sum game that worsens the national debt while adding nothing to the national economy. Hence, to more accurately detect the effect of regulatory environment on states, it is necessary to limit the sample to states with less federal land because these states rely less on federal employment and control more of their own resources.

When the sample is limited to states with minimal federal land, the line representing black unemployment becomes much steeper (Fig. 2). On the right side of the graph the average employment gap between blacks and whites is 8 points. On the left side the gap is only 3.5 percentage points (Fig. 3). For the state of Indiana, the gap is a mere 2.5 points. During this time the governor of Indiana was Mike Pence.

Fig. 2: Based on data from Forbes (2016), from U.S. Congressional Research Service, the U.S. Census Bureau (2015), and the Bureau of Labor Statistics (2015) as cited by Thomas C. Frohlich in 24/7 Wall Street.

Fig. 3: Based on data from Forbes (2016), from U.S. Congressional Research Service, the U.S. Census Bureau (2015), and the Bureau of Labor Statistics (2015) as cited by Thomas C. Frohlich in 24/7 Wall Street.

If equality is so important to progressives, why is the right side of the graph dominated by states that have voted Democratic since 1992?

Rep. John Lewis recently cancelled his scheduled appearance at the opening of a civil rights museum upon learning that Donald Trump would be attending. On his own website, the 1960s civil rights veteran denounced Trump’s policies as “hurtful” and “an insult” to the people portrayed in this civil rights museum. Since Trump has neglected to burn incense on the altar of diversity, how have black Americans faired under the Trump administration?

Based on data from the Bureau of Labor Statistics, black unemployment in September reached its lowest point in 17 years. It may get even better given the unprecedented rate at which this president is undoing the burdensome regulations of the Obama administration. If you are among those who condemn the congressional Republicans who did not let Obama raise the minimum wage to $10 per hour, then you should do your homework on Davis-Bacon.

The Davis-Bacon Act was co-sponsored by Sen. James J. Davis (R-PA) and Rep. Robert L. Bacon (R-NY) and signed into law by president Herbert Hoover in 1931. According to the Foundation for Economic Education this law was originally designed to protect white workers from competition, presumably from the minorities who worked for lower wages. You may dispute the law’s intent, but you cannot wish away data from the Bureau of Labor Statistics.

A chart from Heritage Foundation shows how the percent of black children born out of wedlock started rising steadily after 1940, when it was originally 15%. Today it is over 70%. If this is a “legacy of slavery” why were there less single mothers during the era of Jim Crow? If this was precipitated by a “brain drain” of black professionals during desegregation, why did this trend begin thirteen years prior to Martin Luther King’s march on Washington? Could it be the drug trafficking, or might this be a just symptom of the chronic unemployment in these communities?

The steady trend towards single-parent households started within the decade that followed the Davis-Bacon Act. I doubt this is a coincidence, because few things are more damaging to a man’s self-respect than undermining his means to make an honest living.

But what about those generous social benefits in New England? Is being chronically unemployed in Rhode Island preferable to being “stuck” in a low-wage job in Nebraska? Which option is more “hurtful” and “insulting”? Which is a greater barrier to success and personal fulfillment?

If my children ever regard the first option as remotely preferable I will have failed in my role as a father.

Antonio Chaves teaches biology at a local community college. His interest in economic and social issues stems from his experience teaching environmental science.



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Healthcare Reform? Let's Take a Close Look at Some Examples Abroad


Republicans won the presidency and majorities in Congress based in part on promises to replace Obamacare.  Nonetheless, with so many Republicans facing re-election in states that voted for Clinton, the strategy of “repeal and replace” is easier said than done.  Furthermore, in view of the challenges involved in garnering enough votes for the “Obama-Lite” alternative that barely passed the House, Republicans appear to be running out of options.

If the “gradualist” strategy is so problematic, why not move to single payer?  In Japan, healthcare spending makes up only 10% of GDP even though it has the world’s highest percentage of people 65 or older.  In the U.S. it is an appalling 17% (Fig. 1).  Japan also has the world’s lowest infant mortality, while in America this healthcare indicator exceeds that of all other developed nations with a comparable GDP (Fig. 2).  If lack of access to healthcare is responsible for this shocking statistic, why not “get with the program” and shift these costs to taxpayers as they do in nearly all other affluent nations?

Before turning over 17% of GDP to the government, we should not overlook one extraordinary exception to this worldwide trend:  Singapore is second only to Japan in having the world’s lowest infant mortality (Fig. 2) even though it has the least-subsidized healthcare in the developed world (Fig. 1).  Singapore also stands apart from other developed nations in that it spends less than 5% of its GDP on healthcare (Fig. 1).  If privatization works so well in Singapore, why have market forces failed so miserably in America?

While it is common knowledge that increasing the supply or decreasing the demand results in lower costs, many overlook the importance of having a critical mass of savvy customers shopping around for the best deals.  This selective pressure ensures that the product or service gets better and cheaper for all consumers.  In Singapore, patients shop around because co-payments cover a considerable portion of their medical bills and everyone is required to have a health savings account.  In the single-payer systems that predominate in Europe, it is the government that does the shopping and bargaining.  In America, health maintenance organizations stabilized prices in the 1990s by bargaining with providers and rationing services.  However, many patients objected to “managed care” and the ensuing backlash resulted in government mandates that limited what these HMOs could do to cut costs.  In the absence of a conscientious buyer, hyperinflation resumed by the end of the decade.  Even though European governments provide healthcare at a lower cost, Americans who want to replace Obamacare with single payer should be careful what they wish for.  More on this later.

Another reliable strategy for lowering costs is deregulation.  We need not look abroad to see this principle applies to medical services:  The cost of cosmetic surgery in the U.S. has remained remarkably stable despite a huge increase in demand.  This has been attributed largely to a streamlined regulatory process that makes it easier for competitors to enter the market and for cost-cutting innovations to get approved.

Competition between providers intensifies when there is a lower demand. The Canadian government lowers demand for healthcare by rationing, which in turn results in lower prices.  Singapore presumably reduces demand by investing in health education.  Even though this city-state has one of the lowest obesity rates in the developed world, how much this can be attributed to health education is debatable.  At any rate, there is growing evidence that obesity increases the risk of infant mortality in affluent countries (Fig. 3).  Strategies for curbing obesity in the U.S. are beyond the scope of the article, but its presumptive role in neonatal mortality underscores the seriousness of this problem in America.  It also discredits the narrative that “lack of access” to healthcare is largely responsible for infant mortality in America.

As more insurers withdraw from the exchanges it becomes increasingly evident that Obamacare was meant to fail in order to pave the way for single payer.  Many welcome this transition because they fear a return to the “bad old days” when people with costly pre-existing conditions were justifiably reluctant to change jobs.  But since so many Americans rebelled when their healthcare choices were delegated to HMOs in the 1990s, they might have second thoughts after the government becomes the only HMO in town.  Hence, the Singapore model of putting patients more in control may be the most viable option.  After all, an important restraint on the cost of cosmetic surgery in the U.S. is that clients usually pay out of pocket.

In all fairness, Singapore differs from the U.S. in many other ways; including walkability, home ownership rates, and transportation policies for minimizing gridlock.  Even though none of these variables relate directly to healthcare, all of them affect risk factors like obesity and stress.  Anyone who believes that this island nation’s policies will automatically achieve the same level of success in the U.S. is being disingenuous.  Nonetheless, the Singapore model shows that there are alternatives to single payer for making healthcare both cost-effective and accessible.  Furthermore, since policymakers in single-payer nations like Australia are also looking to Singapore for ways to contain healthcare costs, this model may provide valuable lessons for all nations regardless as to how healthcare is financed.

Fig. 1:  Nations where healthcare is less subsidized are towards the left.  Nations where healthcare is more efficient are towards the bottom.  Per capita GDP data are from World Bank as cited by Knoema.  Healthcare spending data is from to the World Health Organization.  All data are from 2014.

Fig. 2:  Healthcare spending data are from 2014, according to the World Health Organization.  Infant mortality data are from 2016 according to the CIA Factbook.  Raw values for spending and infant mortality are converted into base 10 logarithms in order to generate a straight line. 

Fig. 3:  Obesity data are from 2014, according to the World Health Organization.  Infant mortality data are from 2016, according to the CIA Factbook

Republicans won the presidency and majorities in Congress based in part on promises to replace Obamacare.  Nonetheless, with so many Republicans facing re-election in states that voted for Clinton, the strategy of “repeal and replace” is easier said than done.  Furthermore, in view of the challenges involved in garnering enough votes for the “Obama-Lite” alternative that barely passed the House, Republicans appear to be running out of options.

If the “gradualist” strategy is so problematic, why not move to single payer?  In Japan, healthcare spending makes up only 10% of GDP even though it has the world’s highest percentage of people 65 or older.  In the U.S. it is an appalling 17% (Fig. 1).  Japan also has the world’s lowest infant mortality, while in America this healthcare indicator exceeds that of all other developed nations with a comparable GDP (Fig. 2).  If lack of access to healthcare is responsible for this shocking statistic, why not “get with the program” and shift these costs to taxpayers as they do in nearly all other affluent nations?

Before turning over 17% of GDP to the government, we should not overlook one extraordinary exception to this worldwide trend:  Singapore is second only to Japan in having the world’s lowest infant mortality (Fig. 2) even though it has the least-subsidized healthcare in the developed world (Fig. 1).  Singapore also stands apart from other developed nations in that it spends less than 5% of its GDP on healthcare (Fig. 1).  If privatization works so well in Singapore, why have market forces failed so miserably in America?

While it is common knowledge that increasing the supply or decreasing the demand results in lower costs, many overlook the importance of having a critical mass of savvy customers shopping around for the best deals.  This selective pressure ensures that the product or service gets better and cheaper for all consumers.  In Singapore, patients shop around because co-payments cover a considerable portion of their medical bills and everyone is required to have a health savings account.  In the single-payer systems that predominate in Europe, it is the government that does the shopping and bargaining.  In America, health maintenance organizations stabilized prices in the 1990s by bargaining with providers and rationing services.  However, many patients objected to “managed care” and the ensuing backlash resulted in government mandates that limited what these HMOs could do to cut costs.  In the absence of a conscientious buyer, hyperinflation resumed by the end of the decade.  Even though European governments provide healthcare at a lower cost, Americans who want to replace Obamacare with single payer should be careful what they wish for.  More on this later.

Another reliable strategy for lowering costs is deregulation.  We need not look abroad to see this principle applies to medical services:  The cost of cosmetic surgery in the U.S. has remained remarkably stable despite a huge increase in demand.  This has been attributed largely to a streamlined regulatory process that makes it easier for competitors to enter the market and for cost-cutting innovations to get approved.

Competition between providers intensifies when there is a lower demand. The Canadian government lowers demand for healthcare by rationing, which in turn results in lower prices.  Singapore presumably reduces demand by investing in health education.  Even though this city-state has one of the lowest obesity rates in the developed world, how much this can be attributed to health education is debatable.  At any rate, there is growing evidence that obesity increases the risk of infant mortality in affluent countries (Fig. 3).  Strategies for curbing obesity in the U.S. are beyond the scope of the article, but its presumptive role in neonatal mortality underscores the seriousness of this problem in America.  It also discredits the narrative that “lack of access” to healthcare is largely responsible for infant mortality in America.

As more insurers withdraw from the exchanges it becomes increasingly evident that Obamacare was meant to fail in order to pave the way for single payer.  Many welcome this transition because they fear a return to the “bad old days” when people with costly pre-existing conditions were justifiably reluctant to change jobs.  But since so many Americans rebelled when their healthcare choices were delegated to HMOs in the 1990s, they might have second thoughts after the government becomes the only HMO in town.  Hence, the Singapore model of putting patients more in control may be the most viable option.  After all, an important restraint on the cost of cosmetic surgery in the U.S. is that clients usually pay out of pocket.

In all fairness, Singapore differs from the U.S. in many other ways; including walkability, home ownership rates, and transportation policies for minimizing gridlock.  Even though none of these variables relate directly to healthcare, all of them affect risk factors like obesity and stress.  Anyone who believes that this island nation’s policies will automatically achieve the same level of success in the U.S. is being disingenuous.  Nonetheless, the Singapore model shows that there are alternatives to single payer for making healthcare both cost-effective and accessible.  Furthermore, since policymakers in single-payer nations like Australia are also looking to Singapore for ways to contain healthcare costs, this model may provide valuable lessons for all nations regardless as to how healthcare is financed.

Fig. 1:  Nations where healthcare is less subsidized are towards the left.  Nations where healthcare is more efficient are towards the bottom.  Per capita GDP data are from World Bank as cited by Knoema.  Healthcare spending data is from to the World Health Organization.  All data are from 2014.

Fig. 2:  Healthcare spending data are from 2014, according to the World Health Organization.  Infant mortality data are from 2016 according to the CIA Factbook.  Raw values for spending and infant mortality are converted into base 10 logarithms in order to generate a straight line. 

Fig. 3:  Obesity data are from 2014, according to the World Health Organization.  Infant mortality data are from 2016, according to the CIA Factbook



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The Disproportionate Impact of Overregulation on Blue-Collar Jobs


Progressives for the most part acknowledge the need for free enterprise.  Where they disagree with conservatives is on the policies that enable it.  Whereas conservatives believe in deregulation, progressives minimize or dismiss the disadvantages of overregulation.  Some progressives even believe that regulations have a “positive” effect on job growth as entrepreneurs innovate to comply with the changing economic landscape.  Since these strategies are mutually exclusive, both sides cannot be right.  Unfortunately, there is no high profile smoking gun that vindicates either side because societies are complex and standards of living are affected by many variables unrelated to local policies.  Even within the U.S., states vary widely in their demographic make-up, per capita GDP, and consumption of federal expenditures.  Any analysis that does not take any of these variables into account is little better than comparing apples to oranges.

According to Forbes, the “business favorability” ranking of a state relies on six components; business costs, regulatory environment, labor supply, economic climate, growth prospects, and quality of life.  Conservatives who feel perplexed upon seeing the relatively progressive state of Washington among Forbes’s “ten best” for business should keep in mind that most of the aforementioned components are subject to the vicissitudes of geography, climate, demographics, and federal expenditures.  The only component of Forbes’s business favorability that relies entirely on local policy is the “regulatory environment,” which usually favors Republican-dominated states.  In fact, among the top 25 states for regulatory environment only three voted for Clinton in 2016 and two of these (Colorado and Virginia) are swing states that voted for Bush in 2004.  Among the bottom ten only one state (West Virginia) voted for Trump.

The variable that conceals the effect of regulation the most is “labor supply” because it favors states with more college graduates (and these states tend to elect governors that favor regulation).  Per capita GDP was not among the six variables listed by Forbes, but it also complicates the data because it favors geographic regions that are more amenable to commerce and urbanization.  Consequently, the effect of the regulatory environment on overall unemployment becomes more noticeable when a sample is limited to states with a labor pool that is less educated (Fig. 1)

or when the sample is limited to the “flyover” states where per capita GDP is below $40,000 (Fig. 2)

Federal spending can also play a role in obscuring the adverse consequences of overregulation because the government jobs provided by these expenditures can make up for those lost in the private sector.  This is particularly true for military spending, which in some states makes up as much as 10% of state GDP.  Consequently, the effect of the regulatory environment becomes more noticeable when comparing states where military spending is 3% or less (Fig. 3). 

The outlier with unusually low unemployment is South Dakota.  Even though its booming economy has been attributed to “diversification,” it is should be noted that this corn belt state also receives nearly $1,600 per capita in farm subsidies per year (placing it second only to North Dakota).  Since this federal expenditure exceeds 3% of state GDP, South Dakota should probably be excluded from this sample.

When the sample is limited to states with a more educated labor pool, there is no discernable correlation between the regulatory environment and unemployment (Fig. 4).  

This implies that college graduates are least affected by overregulation.  Perhaps this is why so few of them ponder the unintended consequences of feel-good mandates such as “living wages,” which may play a role in the ongoing relocation of adults with only a high school diploma from progressive states New York and Rhode Island to more business-friendly states like Florida, Texas, and Georgia where they are more likely to find jobs. 

In contrast, many college graduates are relocating to progressive states with larger cities more cultural amenities. 

This sorting of Americans by college attainment deepens the cultural divide responsible for the 2016 electoral map and the ongoing acrimony we are seeing in congress, the media, and universities.

“Does it feel good or does it do good?”  This question posed by the radio host Dennis Prager cogently sums up the outcome of well-intentioned regulations that undermine job opportunities for blue-collar workers.  While some regulations are needed to protect employees, consumers, and the environment, all of them involve trade-offs and some have unintended consequences.  The business owners who relocate or close down when the cost of compliance wipes out their profit margins understand this.  The college graduates who wallow in a comfort zone of feel-good talking points and virtue-signaling associates have much to learn.

Progressives for the most part acknowledge the need for free enterprise.  Where they disagree with conservatives is on the policies that enable it.  Whereas conservatives believe in deregulation, progressives minimize or dismiss the disadvantages of overregulation.  Some progressives even believe that regulations have a “positive” effect on job growth as entrepreneurs innovate to comply with the changing economic landscape.  Since these strategies are mutually exclusive, both sides cannot be right.  Unfortunately, there is no high profile smoking gun that vindicates either side because societies are complex and standards of living are affected by many variables unrelated to local policies.  Even within the U.S., states vary widely in their demographic make-up, per capita GDP, and consumption of federal expenditures.  Any analysis that does not take any of these variables into account is little better than comparing apples to oranges.

According to Forbes, the “business favorability” ranking of a state relies on six components; business costs, regulatory environment, labor supply, economic climate, growth prospects, and quality of life.  Conservatives who feel perplexed upon seeing the relatively progressive state of Washington among Forbes’s “ten best” for business should keep in mind that most of the aforementioned components are subject to the vicissitudes of geography, climate, demographics, and federal expenditures.  The only component of Forbes’s business favorability that relies entirely on local policy is the “regulatory environment,” which usually favors Republican-dominated states.  In fact, among the top 25 states for regulatory environment only three voted for Clinton in 2016 and two of these (Colorado and Virginia) are swing states that voted for Bush in 2004.  Among the bottom ten only one state (West Virginia) voted for Trump.

The variable that conceals the effect of regulation the most is “labor supply” because it favors states with more college graduates (and these states tend to elect governors that favor regulation).  Per capita GDP was not among the six variables listed by Forbes, but it also complicates the data because it favors geographic regions that are more amenable to commerce and urbanization.  Consequently, the effect of the regulatory environment on overall unemployment becomes more noticeable when a sample is limited to states with a labor pool that is less educated (Fig. 1)

or when the sample is limited to the “flyover” states where per capita GDP is below $40,000 (Fig. 2)

Federal spending can also play a role in obscuring the adverse consequences of overregulation because the government jobs provided by these expenditures can make up for those lost in the private sector.  This is particularly true for military spending, which in some states makes up as much as 10% of state GDP.  Consequently, the effect of the regulatory environment becomes more noticeable when comparing states where military spending is 3% or less (Fig. 3). 

The outlier with unusually low unemployment is South Dakota.  Even though its booming economy has been attributed to “diversification,” it is should be noted that this corn belt state also receives nearly $1,600 per capita in farm subsidies per year (placing it second only to North Dakota).  Since this federal expenditure exceeds 3% of state GDP, South Dakota should probably be excluded from this sample.

When the sample is limited to states with a more educated labor pool, there is no discernable correlation between the regulatory environment and unemployment (Fig. 4).  

This implies that college graduates are least affected by overregulation.  Perhaps this is why so few of them ponder the unintended consequences of feel-good mandates such as “living wages,” which may play a role in the ongoing relocation of adults with only a high school diploma from progressive states New York and Rhode Island to more business-friendly states like Florida, Texas, and Georgia where they are more likely to find jobs. 

In contrast, many college graduates are relocating to progressive states with larger cities more cultural amenities. 

This sorting of Americans by college attainment deepens the cultural divide responsible for the 2016 electoral map and the ongoing acrimony we are seeing in congress, the media, and universities.

“Does it feel good or does it do good?”  This question posed by the radio host Dennis Prager cogently sums up the outcome of well-intentioned regulations that undermine job opportunities for blue-collar workers.  While some regulations are needed to protect employees, consumers, and the environment, all of them involve trade-offs and some have unintended consequences.  The business owners who relocate or close down when the cost of compliance wipes out their profit margins understand this.  The college graduates who wallow in a comfort zone of feel-good talking points and virtue-signaling associates have much to learn.



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A Closer Look at ‘Federal Dependency’ in Republican-Dominated States


A recent article by Steve Hanley in a website that showcases developments in green technology revisited the narrative that red states are on average more “financially dependent” on the federal government. This issue has been raised in the past to discredit fiscal conservatism and dismiss the role of efficient stewardship in states with lower taxes, presuming that it is their reliance on Washington that makes these policies “more affordable”.

The most straightforward methodology for measuring “federal dependency” of states was presented by Ryan McMaken in the Mises Institute blog. Based on “federal spending per dollar paid”, business-friendly states like Texas and Utah among the net recipients of federal funds. McMaken attributes the federal budgetary shortfall in states like these to differences in urbanization and federal land ownership.

Regression analysis supports McMaken’s assertion that federal land ownership and urbanization play a large role in determining federal spending per dollar paid (Fig. 1 and 2). He rightly points out that urban economies generate more revenue than agriculture and federal monetary policies (such as low interest rates) favor urban investors at the expense of the “main street” households that predominate in rural states. Census data indicates that demographic differences (particularly differences in formal education) may also contribute to this disparity between urban and rural states.

Formal education is correlated to federal spending per dollar paid (Fig. 3 and 4). This is unsurprising because adults lacking a high school diploma or a college degree usually pay less taxes and consume more in federal nonretirement benefits like Medicare, food assistance, and unemployment. What is particularly noteworthy is how disproportionately college graduates are distributed between urban and rural states (Fig. 5). This no doubt contributes to the federal budgetary shortfall observed by McMaken in many of the less urbanized states. It is also worth noting that nine of the ten states with the lowest percent of college graduates all voted for Trump and that all of the ten states with the highest percent of graduates voted for Clinton in 2016.

Relocation demographics shows that people who move in search of jobs and personal fulfillment may intensify economic and cultural disparities between red and blue states. In recent years, many college graduates have left Rustbelt and Heartland states and moved to coastal states with large cities that offer cultural amenities. In contrast, many of their less formally educated counterparts have moved to states that offer manufacturing jobs and lower housing expenses. This not only reinforced federal spending differences between blue and red states but political polarization as well: According to the National Center for Higher Education Management Systems, the top six destinations in 2007 for adults ages 22-39 with only a high school diploma were states that voted for Trump. Four of these states have minimum wages from $5.15 to $7.25. The primary state they fled was New York, where the minimum wage is currently $9.00 and labor union membership is higher than in all of the other 49 states. Right to work laws have been credited for the recent surge in manufacturing jobs in Southern and Rustbelt states. This recovery has bypassed states like New York where union membership is mandatory. In contrast, many college graduates relocated to New York in 2007 and four of their top six destinations were states that voted for Clinton in 2016.

Another group that should not be overlooked are retirees because they consume Social Security and Medicare. Consequently, retirement benefits (as percent of state GDP) are correlated to federal spending per dollar paid (Fig. 6). The following seven states are cross-listed in three out of four sources as the ten best for retirement; Arizona, Colorado, Florida, Idaho, South Dakota, Virginia, and Utah. The following five states are similarly cross-listed in Bankrate, Forbes, Kiplinger, and Wallet Hub as the ten worst: Alaska, Connecticut, Maryland, New York, and Rhode Island. Based on this compilation it is unsurprising that Republican-dominated states make up nine of the ten states with the most retirement benefits as percent of GDP.

In his aforementioned article, Steve Hanley proposes a “new federalism” that empowers states to “set (more of) their own policies” and “keep more of their money”. Hanley believes this would in the long run, compel Republican-dominated “taker states” to adopt more progressive policies, presumably because:

People would simply move to whatever states have a culture that most suits their own world view… If the taker states suddenly find themselves with no one left to do the work that needs to be done, they may have to do the unthinkable — raise wages and benefits in order to convince people to stay! How sweet would that be?

In effect, Hanley believes this “new federalism” would lead to a mass migration of less affluent Americans to progressive states, where they would presumably enjoy the blessings of higher benefits and “living” wages.

It should be noted that Hanley resides in Rhode Island; a state where the minimum wage is currently $9.60 and the regulatory environment ranks 49 out of 50 for business favorability. In 2014 Forbes listed Providence among five “laggards” that lost blue-collar jobs. This has been blamed by other sources on this state’s “soaring” minimum wage. This may also explain why in 2007 Rhode Island lost a net total of nearly 2000 adults who had only a high school diploma. Mr. Hanley’s friends and acquaintances were probably unaffected because in that same year, nearly 400 with graduate or professional degrees moved in. The consequences of this ongoing relocation may play a role in the groupthink that compels progressives like Hanley to write columns expressing contempt for conservatives (particularly white Southerners), while overlooking the effect that progressive policies have had on blue collar jobs in his own state.

In the final analysis, the federal spending disparity between red and blue states is a red herring that fails to discredit conservative policies. If anything it makes a strong case for turning over public federal lands to the states and overhauling the Bureau of Indian Affairs (Indian reservations are federal property and the BIA has an extensive reputation for financial mismanagement). While governors cannot set boundaries for federal land, they can attract private investment, retirees, and help to prevent local military bases from being closed. Unfortunately, only private investment generates a net gain in the federal treasury. Though it is reasonable to criticize policymakers who fight to prevent the closure of military bases that no longer serve the national interest, such critiques do not apply to governors who make their states more attractive to retirees through smart policies that curb crime, state taxes, and the cost of living. After all, this does not increase the net total of retirees nor their consumption of Social Security. Furthermore, governors who bring manufacturing jobs to their states deserve only praise, even when they attract workers who generate less tax revenue and consume more federal benefits. It is to their credit that these states provide opportunities to less affluent Americans relocating for jobs instead of handouts. Nevertheless, the simultaneous relocation of college graduates to blue states only furthers the cultural disconnect between college and non-college educated. This makes it even less likely that professionals like Steve Hanley will ever come around to praising the pro-growth policies that are providing job opportunities for the people who are fleeing his state.

Fig. 1 Based on data from Mises Wire, U.S. Congressional Research Service, and The Pew Charitable Trusts Research & Analysis Issue Brief. Data adjusted for large differences in personal benefits (like Social Security and Medicare).

Fig. 2 Based on data from Mises Wire, U.S. Congressional Research Service, and U.S. Census as cited by Iowa State University. Data adjusted for large differences in federal land ownership.

Fig. 3 Based on data from Mises Wire, U.S. Congressional Research Service, and U.S. Census. Data adjusted for large differences in federal land ownership and percent of adults lacking a high school diploma. 

Fig. 4 Based on data from Mises Wire, U.S. Congressional Research Service, and U.S. Census. Data adjusted for large differences in federal land ownership and percent of adults lacking a high school diploma.

Fig. 5 Based on data from Mises Wire, U.S. Congressional Research Service, U.S. Census, and U.S. Census as cited by Iowa State University. Data adjusted for large differences in federal land ownership and percent of adults lacking a high school diploma.

Fig. 6 Based on data from Mises Wire, U.S. Congressional Research Service, and The Pew Charitable Trusts Research & Analysis Issue Brief. Data adjusted for large differences in federal land ownership. 

A recent article by Steve Hanley in a website that showcases developments in green technology revisited the narrative that red states are on average more “financially dependent” on the federal government. This issue has been raised in the past to discredit fiscal conservatism and dismiss the role of efficient stewardship in states with lower taxes, presuming that it is their reliance on Washington that makes these policies “more affordable”.

The most straightforward methodology for measuring “federal dependency” of states was presented by Ryan McMaken in the Mises Institute blog. Based on “federal spending per dollar paid”, business-friendly states like Texas and Utah among the net recipients of federal funds. McMaken attributes the federal budgetary shortfall in states like these to differences in urbanization and federal land ownership.

Regression analysis supports McMaken’s assertion that federal land ownership and urbanization play a large role in determining federal spending per dollar paid (Fig. 1 and 2). He rightly points out that urban economies generate more revenue than agriculture and federal monetary policies (such as low interest rates) favor urban investors at the expense of the “main street” households that predominate in rural states. Census data indicates that demographic differences (particularly differences in formal education) may also contribute to this disparity between urban and rural states.

Formal education is correlated to federal spending per dollar paid (Fig. 3 and 4). This is unsurprising because adults lacking a high school diploma or a college degree usually pay less taxes and consume more in federal nonretirement benefits like Medicare, food assistance, and unemployment. What is particularly noteworthy is how disproportionately college graduates are distributed between urban and rural states (Fig. 5). This no doubt contributes to the federal budgetary shortfall observed by McMaken in many of the less urbanized states. It is also worth noting that nine of the ten states with the lowest percent of college graduates all voted for Trump and that all of the ten states with the highest percent of graduates voted for Clinton in 2016.

Relocation demographics shows that people who move in search of jobs and personal fulfillment may intensify economic and cultural disparities between red and blue states. In recent years, many college graduates have left Rustbelt and Heartland states and moved to coastal states with large cities that offer cultural amenities. In contrast, many of their less formally educated counterparts have moved to states that offer manufacturing jobs and lower housing expenses. This not only reinforced federal spending differences between blue and red states but political polarization as well: According to the National Center for Higher Education Management Systems, the top six destinations in 2007 for adults ages 22-39 with only a high school diploma were states that voted for Trump. Four of these states have minimum wages from $5.15 to $7.25. The primary state they fled was New York, where the minimum wage is currently $9.00 and labor union membership is higher than in all of the other 49 states. Right to work laws have been credited for the recent surge in manufacturing jobs in Southern and Rustbelt states. This recovery has bypassed states like New York where union membership is mandatory. In contrast, many college graduates relocated to New York in 2007 and four of their top six destinations were states that voted for Clinton in 2016.

Another group that should not be overlooked are retirees because they consume Social Security and Medicare. Consequently, retirement benefits (as percent of state GDP) are correlated to federal spending per dollar paid (Fig. 6). The following seven states are cross-listed in three out of four sources as the ten best for retirement; Arizona, Colorado, Florida, Idaho, South Dakota, Virginia, and Utah. The following five states are similarly cross-listed in Bankrate, Forbes, Kiplinger, and Wallet Hub as the ten worst: Alaska, Connecticut, Maryland, New York, and Rhode Island. Based on this compilation it is unsurprising that Republican-dominated states make up nine of the ten states with the most retirement benefits as percent of GDP.

In his aforementioned article, Steve Hanley proposes a “new federalism” that empowers states to “set (more of) their own policies” and “keep more of their money”. Hanley believes this would in the long run, compel Republican-dominated “taker states” to adopt more progressive policies, presumably because:

People would simply move to whatever states have a culture that most suits their own world view… If the taker states suddenly find themselves with no one left to do the work that needs to be done, they may have to do the unthinkable — raise wages and benefits in order to convince people to stay! How sweet would that be?

In effect, Hanley believes this “new federalism” would lead to a mass migration of less affluent Americans to progressive states, where they would presumably enjoy the blessings of higher benefits and “living” wages.

It should be noted that Hanley resides in Rhode Island; a state where the minimum wage is currently $9.60 and the regulatory environment ranks 49 out of 50 for business favorability. In 2014 Forbes listed Providence among five “laggards” that lost blue-collar jobs. This has been blamed by other sources on this state’s “soaring” minimum wage. This may also explain why in 2007 Rhode Island lost a net total of nearly 2000 adults who had only a high school diploma. Mr. Hanley’s friends and acquaintances were probably unaffected because in that same year, nearly 400 with graduate or professional degrees moved in. The consequences of this ongoing relocation may play a role in the groupthink that compels progressives like Hanley to write columns expressing contempt for conservatives (particularly white Southerners), while overlooking the effect that progressive policies have had on blue collar jobs in his own state.

In the final analysis, the federal spending disparity between red and blue states is a red herring that fails to discredit conservative policies. If anything it makes a strong case for turning over public federal lands to the states and overhauling the Bureau of Indian Affairs (Indian reservations are federal property and the BIA has an extensive reputation for financial mismanagement). While governors cannot set boundaries for federal land, they can attract private investment, retirees, and help to prevent local military bases from being closed. Unfortunately, only private investment generates a net gain in the federal treasury. Though it is reasonable to criticize policymakers who fight to prevent the closure of military bases that no longer serve the national interest, such critiques do not apply to governors who make their states more attractive to retirees through smart policies that curb crime, state taxes, and the cost of living. After all, this does not increase the net total of retirees nor their consumption of Social Security. Furthermore, governors who bring manufacturing jobs to their states deserve only praise, even when they attract workers who generate less tax revenue and consume more federal benefits. It is to their credit that these states provide opportunities to less affluent Americans relocating for jobs instead of handouts. Nevertheless, the simultaneous relocation of college graduates to blue states only furthers the cultural disconnect between college and non-college educated. This makes it even less likely that professionals like Steve Hanley will ever come around to praising the pro-growth policies that are providing job opportunities for the people who are fleeing his state.

Fig. 1 Based on data from Mises Wire, U.S. Congressional Research Service, and The Pew Charitable Trusts Research & Analysis Issue Brief. Data adjusted for large differences in personal benefits (like Social Security and Medicare).

Fig. 2 Based on data from Mises Wire, U.S. Congressional Research Service, and U.S. Census as cited by Iowa State University. Data adjusted for large differences in federal land ownership.

Fig. 3 Based on data from Mises Wire, U.S. Congressional Research Service, and U.S. Census. Data adjusted for large differences in federal land ownership and percent of adults lacking a high school diploma. 

Fig. 4 Based on data from Mises Wire, U.S. Congressional Research Service, and U.S. Census. Data adjusted for large differences in federal land ownership and percent of adults lacking a high school diploma.

Fig. 5 Based on data from Mises Wire, U.S. Congressional Research Service, U.S. Census, and U.S. Census as cited by Iowa State University. Data adjusted for large differences in federal land ownership and percent of adults lacking a high school diploma.

Fig. 6 Based on data from Mises Wire, U.S. Congressional Research Service, and The Pew Charitable Trusts Research & Analysis Issue Brief. Data adjusted for large differences in federal land ownership. 



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