Friday, August 02, 2013

Eliminate "Gov-co"

Why doesn't McDonald's charge $40 for a cheeseburger? After all it'd more profitable. Why does Wal-Mart or the Dollar General or 5andDimes or Goodwill even exist if name-brand stores can charge as high as "the wealthy" can pay? Most people seem to inherently understand the cause-and-effect of prices and competition in the retail market. But is that only because we see it everyday in our current lives?

Consider an alternative history where during the Great Depression, advocates for the poor pressured the govt to pass a bill that created "Gov-co" retail stores. Gov-co stores are a nation-wide chain that provide cheap, generic food and goods for the poor at massively discounted prices (subsidized by taxes). Adjusted for inflation, they had prices like $1 for a new pair of tennis shoes or a button up shirt or $10 for new car tires or $20 for a new dishwasher because the rest of the cost of the goods is subsidized with taxes. At such discounted prices, no private company can compete and so not only have Gov-co stores became a national chain in virtually every town, but now the only alternative to those Gov-co stores are high-end, brand name stores selling high-end goods that cost top dollar and are only affordable to the middle class and above. At this point, very few really remember what it was like before Gov-co existed. People only recognize that only "the rich" can afford the brand name goods. But that only reinforces the need for a Gov-co to provide affordable goods for the poor.

Unfortunately, people have recognized that while the prices of Gov-co goods have remained stable (only raising with inflation), the quality of the goods has not. In addition, the quality and price of goods in the south is slightly different than the price and quality in the northeast as well as differences between urban, suburban and rural communities. Meanwhile, brand name goods continue to improve and increase in quality, though prices still cannot compete with Gov-co.

People are decrying the further and further separation between what the poor can afford vs what the rich can afford. In fact, they point out that the rich are able to afford goods that make them more productive and able to make more money compared to the poor. Something must be done. Many advocate to increase tax spending on Gov-co products to help increase the quality while keeping the prices low. Others advocate setting mandated regulations - maybe even establishing a federal agency to oversee and inspect manufacturers to ensure sufficient and consistent quality products. Tweaks to the system are constantly introduced, customer feedback mechanisms, product quality control tests are standardized, but nothing appears to really be improving the situation. (Not to strain the analogy, but imagine if IN ADDITION to everything else, if you did choose to shop at Gov-co instead of the brand name stores, you could only shop at your local Gov-co nearest your home.)

In such a situation, if someone advocated simply and completely eliminating Gov-co and allowing the free market to work in the retail space, I think few would dispute that there would be large numbers of people pointing at those high-end stores that cater to the more well-off and decry "What about the poor?" and lament that the poor would go hungry and naked because they couldn't afford to buy from those high-end stores. They'd claim that those private stores would just continue to charge high prices because people have to have food and clothing and stuff, right? The suggestion to completely eliminate Gov-co would be treated as nonsense - of being harsh, unsympathetic, and cruel. Accusations would abound that advocates are only concerned for the rich or are "in the pocket of big business".

But in reality, we know that without a Gov-co, we actually have a vibrant retail market with an enormous segment dedicated specifically to low-income consumers. Stores like mentioned above: Wal-Mart, Dollar General, 5andDimes, Goodwill, etc. all directly aim to serve low-income consumers. Critics of eliminating Gov-co overlook that the poor are a market in and of themselves and that many companies would move into that market to serve them - providing cheaper goods for lower prices and that competition in that market would help improve quality while keeping prices low.

Now this understanding that free market competition DOES encourage businesses to keep prices low and to increase the quality to attract customers is pretty common. We seem to inherently understand this about retail goods because we see it in action everyday. But many seem to have a problem with the idea that the same effects and incentives apply to education as to retail goods - I would argue, because we're only familiar with the current setup where only "the rich" can afford private schools.

Those who suggest simply eliminating public education are dismissed as naive. They are told, often even by other advocates of limited-govt, that without public education, the poor wouldn't be able to afford to send their children to school, only continuing the generational poverty and further widening the gap between the rich and the poor. Perhaps another look at the nature of competition in a free market, only in a different market, may help them see that we cannot simply assume that the current structure of "only the rich can afford private education" would continue if we eliminated public education. In fact, based on looking at other markets like retail, there is significant evidence to conclude that education providers would likely actively focus and pursue low-income customers.

Eliminating public education and allowing free market competition into the market for education couldn't be a whole lot worse than modern public education in many places, and it has the potential to be much, much better.

Wednesday, June 19, 2013

Conversation with a Conservative: A compromise between a Conservative and a Libertarian on Immigration

I had a conversation about immigration with a ardent die-hard conservative Republican recently. I feel the discussion was valuable. I got a better sense of their concerns on the issue and it's more than just "foreigners are bad" or "they took our jobs" or "terrorists!!" like many seem to caricature them to be and in addition to educating them on the libertarian perspective, got their thoughts on that perspective.

For background, my ideal immigration policy is no policy - open borders, no govt required registration. Nobody is directly being harmed by people simply crossing a political line in the dirt. However, there are challenges to that view right now due to the policies of our current govt. For example, we currently face a threat from terrorism that our foreign policy exacerbates and invites. If you also have a non-interventionist foreign policy, I believe your risk from the threat of terrorism is significantly less and thus the need (or perceived need) to comb over every person that gets in an airplane or visits from another country is drastically reduced.

At the same time, however, I am a strong pragmatist and feel that libertarians are not going to get anywhere close to a free society by just declaring the govt is immoral and demanding that everyone stop using it. So I am often more willing to compromise on issues than I feel many libertarians are.

After a nearly 2 hour discussion with my conservative friend, we were able to reach an agreed-upon compromise for immigration reform:

Application process is a background check
A single, simple form to apply for immigration. This form should only require the basic information to identify the person and will be used to perform a background check. The only purpose of the entire application process is to determine if you are a threat to others - i.e. if you have a violent criminal history, ties to terrorists, etc. If you do not, you're free to enter the country at your earliest convenience. No multi-month/year long process of various approvals for different types of immigration.

This should change the legal immigration process from taking months or even years to a couple weeks. By making the process significantly more simple as well as shorter, I feel it will make legal immigration much more attractive compared to the risk and disadvantages of illegal immigration. In addition, with a drastically smaller number of illegal immigrants I think illegal immigration itself will be easier to deal with and certainly less of a problem.

A one-time fee
Applying for legal immigration will require a flat fee that simply pays for the cost of performing the paperwork and background check - no more, no less.

No fines or back taxes
There's little value beyond retribution in trying to excise fines or figure and collect back taxes on illegal immigrants already here. Besides, it would likely cost more in trying to audit and calculate those taxes on individuals who likely earned little income and have no record of it than the tax itself would amount to.

No English fluency/literacy requirements or tests
This is simply unnecessary. Plus, allowing immigrants to come out of the shadows of illegality would likely lead to them being more likely to assimilate and learn the dominant national language.

No expiration on legal immigration
There's nothing immoral and nobody is directly harmed by someone remaining here after govt has told them that they have stayed here long enough. If they are not a direct physical threat to anyone, there's no reason to put a time limit on their stay here.

Eliminate the dozen+ types of immigration statuses
A single status, either legal or not. Whether you're coming here for a single business meeting, a week long trip, a summer tour, or to live here for years doesn't matter. As long as you are not a threat to anyone, govt shouldn't care.

Secure the border
If you're going to have any immigration policy and any restrictions or controls on those who come in, it makes little sense if people can bypass and disregard the law and the process anyway. Frankly, however, I believe that the rest of the policies in this compromise would drastically reduce the demand for illegal immigration and thus reduce the need to aggressively patrol and defend the border as we do currently. I'm not sure how effective any attempt at securing the border would be or the costs involved, but I'm fine with enacting it as part of a bill.

No Federal Welfare
One of the concerns of many conservatives are those unskilled immigrants that come here and directly latch onto the govt dole. As a compromise between no restrictions whatsoever and no welfare whatsoever, we agreed that legal immigrants should be able to take advantage of as many state and local govt assistance programs as they are eligible for, but they should not be eligible for federal govt welfare programs. This is a basic decentralization/"laboratories of democracy" position (I hold the same pragmatic position on all welfare programs). Get the national govt out of it and let the states and localities decide how and to what extent to provide assistance to people - in this case immigrants.

Eligible for citizenship after a period
An immigrant can apply for naturalized citizenship after 10 years from the point they were approved for legal immigrant status. Time period is debatable, 10 years was just what we came up with, but some period of time from the point they received approval should be required before they can apply for full citizenship.

I just barely touched on these items to convey the basic premise. But it seemed like a good compromise that deals with both the concerns of conservatives while making the system and process more simple and open.

So what do you think? What does this overlook? What problems (besides political) might this create?