TSA link collection

Just a reminder as you travel this holiday season: the TSA is a total waste of money.

The following lists are nowhere close to comprehensive. They are just the links I happened to save over time. The first two groups (Fools, Criminals) are only anecdotes and are a small sample over the course of many years. However, the third group (Incompetent) involves larger sample sets and speaks to the central question: Does the TSA keep us safe?

Fools:
TSA fires screener caught sleeping in Seattle – CNN, January 6, 2003
Florida teen detained because her purse had an image of a gun – Yahoo News, December 2, 2011
TSA subjects wheelchair-bound three-year-old to humiliating search – The Daily Mail, March 19, 2012
TSA Apologizes To Family After Clip of 3-Year-Old Girl in Wheelchair Goes Viral – Huffington Post, February 21, 2013 (Note this is a separate instance than the previous story.)
TSA Humiliated Double Amputee Marine – KTLA, March 22, 2013
TSA Agents Detained Nine-Year Old Boy Because He Had A Pacemaker – Reason, August 23, 2016
A panty liner triggers a TSA pat-down – Washington Post, March 30, 2017

Criminals:
3 ex-TSA workers plead guilty to theft – Seattle Pi, September 23, 2005
TSA Screener Arrested [after taking money from a passenger’s wallet] – TMJ4, October 14, 2006
Ex-TSA agent sentenced for role in pot smuggling scheme at LAX – Daily Breeze, March 25, 2013
6 Shockingly Childish Abuses of Power by Airport Employees – Cracked, April 22, 2014
Suit: Man held 20 hours after asking to file TSA complaint – San Diego Tribune, February 4, 2015
Video Shows Airport Security Tackling Cancer Patient With Disability – Huffington Post, August 12, 2016
A TSA agent who may have lied about a bomb threat can’t be sued – Los Angeles Times op-ed, August 26, 2017 (Passenger threatens to file a complaint against TSA agent, so TSA agent falsely tells police passenger made a bomb threat.)

Incompetent
Airport screeners fail to see most test bombs – Seattle Times, October 28, 2006
The Things He Carried – The Atlantic, November 2008 (Atlantic correspondent carries prohibited items on to multiple flights while investigating what the TSA can actually detect.)
TSA’s Program to Spot Terrorists a $200M Sham? – CBS, May 19, 2010 “The program is failing to catch terrorists. It’s never even caught one.”
Does the TSA Ever Catch Terrorists? – Slate, November 18, 2010
TSA Source: Armed Agent Slips Past DFW Body Scanner – NBC, February 21, 2011
The case for abolishing the TSA – Vox, May 26, 2014
Acting TSA director reassigned after screeners failed tests to detect explosives, weapons – CNN, June 2, 2015 (Note in both 2006 and 2015 the TSA failed to detect the relevant items over 90% of the time.)
Please, TSA Workers, Don’t Come Back – Reason, January 9, 2019

And just for fun:

See also the related DR post: TSA: A Cost-Benefit Analysis

Gillette, Culture, and Class

I didn’t really want to write about the infamous Gilette #MeToo advertisement, because I didn’t really care about it. I still don’t, personally. But then a Glenn Reynolds piece at USA Today showed me the controversy in a new light.

In his article, Reynolds made the observation that:

… in America class warfare is usually disguised as cultural warfare. But underneath the surface, talk is a battle between the New Class and what used to be the middle class.

This is definitely something that I’ve noticed. It was one of the things I learned when I did the research for the most frequently-read post here at Difficult Run: When Social Justice Isn’t about Justice. And it totally fits with the fallout I’ve seen on my Facebook feed. Pretty much every single person I’ve seen angry or opposed to the ad comes from a blue collar and/or rural background. Why are they mad? Not because they object with the message of the ad per se (who objects to “hey, stop bullying”?) but because they know they are being talked down to, patronized, and scolded. And they’re right.

And all the folks I’ve seen making fun of them and mocking anyone who has a problem with the ad? College educated, often with a graduate degree, and frequently working as a professional intellectuals. They see it as a culture war issue instead of class war issue because that’s one of the most important functions of social justice activism: to cloak class interest in progressive ideals.

Also, the silliness of anti-capitalists celebrating ad campaigns, no matter how superficially idealistic, is pretty amusing.

But, while we’re admiring the nimble messaging of capitalism, here’s a message that might actually contribute to men being good men.

Have the Minimum Wage Hikes in South Korea Helped the Economy?

From The New York Times:

Under President Moon Jae-in, South Korea has raised taxes and the minimum wage in the name of economic growth. So far, it hasn’t worked out as planned.

Growth has slowed, unemployment has risen and small-business owners like Moon Seung are complaining. Mr. Moon, founder of an auto parts maker called Dasung in Incheon, an industrial town near Seoul, says his labor costs were up an extra 3 percent last year after the minimum wage rose to 7,530 Korean won, or about $6.70, an hour. That may not sound like much, but it ate into his razor-thin profit margin and prompted him to stop hiring.

“We can’t take it,” Mr. Moon said. “This is a problem not just for the employers, but for the employees.”

The NYT is quick to recover:

The discouraging early results don’t mean that Mr. Moon is wrong and Mr. Trump is right. Wage growth in the United States, though stronger in recent months, has generally remained stubbornly low despite the tightest labor market in a generation, and the American economy is widely expected to slow in 2019 as the economic sugar rush of Mr. Trump’s tax cuts wears off. Pro-business policies in Europe, where labor laws are being loosened, have been met with large-scale protests.

That’s true, but large-scale protests don’t mean that strict labor laws are right either. The article continues:

Mr. Moon aims to improve the incomes of average Korean families so they will consume more, thus reducing the economy’s reliance on exports and, with them, the ups and downs of the global economy. (Exports accounted for 43 percent of South Korea’s gross domestic product in 2017, compared with 20 percent for China.)

But joblessness hit an eight-year high in August of 4.2 percent after the new minimum wage took effect, though it has since improved. Growth was at 2 percent in the third quarter compared with the same period a year earlier, down from 2.8 percent in the second quarter.

The biggest problem is the strain on small businesses, which are often unable to pass on higher costs to their customers. In a 2017 survey of its members by a small-business organization known as Kbiz, 42 percent said they would be forced to shed employees because of the minimum wage increase.

Unsurprisingly, “Some union leaders argue that the minimum wage is not rising quickly enough, and they objected to a proposal that would give businesses more flexibility in meeting limits on working hours. On Nov. 21, an estimated 160,000 workers went on a general strike.” Some experts remain optimistic:

“It is difficult to catch two birds — economic growth and even distribution — with one stone,” said Jung Yoo-shin, dean of the Graduate School of Management of Technology at Sogang University in Seoul. “He needs more time.”

Frederic Neumann, co-head of Asian economics research at HSBC in Hong Kong, said South Korea’s export-led economy had been hurt more by the slowdown in global growth than the higher minimum wage. Though he is forecasting lower growth for South Korea in 2019, Mr. Neumann said lifting wages among lower-income people was good for the economy.

Maybe. Or maybe we should look at the economic evidence for minimum wage hikes.

Image result for i'm shocked gif

Currently Working without Pay: Border Patrol, FBI, etc.

© Tomas Castelazo, www.tomascastelazo.com / Wikimedia Commons / CC BY-SA 4.0

USA Today is reporting that many of the federal workers who specifically work to protect our country, and our borders, are working without pay due to the government shutdown. That’s right, Border Patrol, the FBI, and the Coast Guard are working without pay. (Also included: the TSA, but I think the security they add to our nation may be more up for debate).

The author, a Republican, has a lot to offer in terms of why Trump is doing this and how the GOP can let this fight go down in flames while still letting Trump say he did everything he could.

There is not a single person who actually thinks that forcing Border Patrol agents work without pay, or driving them to find new jobs, will somehow increase border security. So why has Trump painted himself into this corner?


I’m afraid that the answer is Trump actually does not care about border security at all. It has been obvious for quite some time that the main thing Donald Trump likes about being president is holding rallies. What he cares about is his “base” — specifically, the people who are willing to show up and cheer for him.

Chris Truax

Finally, if Congressional Republicans “betray” Trump, the stalemate could end, agents could be paid, and the fight for the wall could be taken up another day (if anyone currently in a position to fight for the wall actually wants it).

The kindest thing Republicans can do is to let Trump go down fighting. They should back the Democrats’ efforts to reopen the government and, if necessary, vote to override Trump’s veto. This will straighten out the shutdown mess while allowing Trump to claim he did everything he possibly could to keep faith with his fans but was stabbed in the back by “traitorous” Republicans.


This is a small price to pay for getting cash flowing once again into agencies such as the FBI and the Border Patrol that really do protect America. And being a “traitor” to Donald Trump is far preferable to being a traitor to common sense and the public good. 

Chris Truax

The Effects of Legalizing Immigrants

Image result for spain immigration

Over at SMU’s Texas-Mexico Center blog, I wrote,

Despite the recent political rhetoric and anti-immigrant sentiments, the economic benefits of immigration are well-established in the empirical literature. A 2011 meta-analysis by economist Michael Clemens found that dropping all current immigration restrictions would result in a doubling of world GDP.

A more recent analysis corroborated these findings, concluding that lifting all migration restrictions would increase world output by 126%. In 2015, migrants made up 3.4% of the world population yet contributed about $6.7 trillion to global output—9.4% of world GDP. The McKinsey Global Institute estimates that this is $3 trillion more than these migrants would have produced had they stayed in their origin countries. Even undocumented workers in the United States contribute about 3.6% of private-sector GDP annually—around $6 trillion dollars over a 10-year period. Granting these migrants legal status would increase their contribution to 4.8%. 

On this last point, a recent study explores the effects of immigrant legalization in Spain. The authors explain the background for the natural experiment:

In the early 2000s, Spain experienced an incredible boom in immigration. The share of immigrants in the working-age population increased from less than 2% in 1995 to around 10% in 2004. Many of these newly arrived immigrants lacked work permits. By 2004, there were close to 1 million undocumented immigrants in a country of around 43 million inhabitants.

Despite this large number of undocumented immigrants, the government at the time, led by Jose Maria Aznar (Popular Party) and with Mariano Rajoy in its cabinet, was unlikely to legalise the work status of immigrants. Traditionally, the Popular Party had been proposing tougher policies against immigration. Its main stance was to avoid implementing policies that could attract new waves of immigrants. In this context, in the early 2000s, immigrants were granted work permits mostly on the basis of family reunification.

On 14 March 2004, voters in the Spanish general election had to determine whether the Popular Party would continue in power or be replaced by the Socialist Party. In the week before the election, the outcome seemed clear: the polls were forecasting that Zapatero of the Socialist Party was trailing Rajoy by seven percentage points. 

Yet, something completely unexpected happened just three days before the election which, as shown by Garcia-Montalvo (2011), changed the final outcome: Madrid suffered the largest terrorist attack in Spanish history, a tragedy that was poorly managed by the Popular Party. As a result, the Socialist Party came to power, and one of the first policies it implemented was the legalisation of nearly 600,000 immigrants already living (and working illegally) in Spain.

Using administrative payroll tax revenues, the authors find

that the legalisation of immigrants’ work status increased revenues locally — i.e. at the province level — by around €4,189 per newly legalised immigrant. This amount is only 55% of what we would have expected if newly legalised immigrants had shared the same characteristics as previous contributors to the social security system and had enjoyed similar labour market experiences. Two factors may explain this. First, newly legalised immigrants were perhaps disproportionately low-skilled and had worse labour market experiences than natives. Second, the legalisation may also have affected previous workers.

…Using very detailed administrative and survey data on wages and employment, we show that the policy change disproportionately affected the labour market outcomes of workers in high-immigrant locations relative to low-immigrant locations. In particular, it worsened employment opportunities for both low-skilled natives and immigrants, while it improved them for high-skilled workers. Among low-skilled natives, those who lost their jobs were negatively selected — the policy change negatively affected employment prospects of native low-skilled workers at the bottom of the wage distribution. Putting together all the labour market changes and comparing them to payroll tax revenue changes, we show that this negative selection is crucial to fully understand the effects of the reform.

We also show that, following the reform, many immigrants moved from high- to low-immigrant locations. This is important since these immigrants also contributed to payroll tax revenues, but in traditionally low-immigrant locations. This, in turn, means that comparing local payroll tax revenues in high- relative to low-immigrant locations to evaluate the effect of the policy may underestimate the true impact of immigrant legalisation on payroll tax revenues. Once we take into account internal migration and selection, we argue that the true contribution was almost €5,000 per newly legalised immigrant, i.e. substantially higher than what we would have been able to estimate on the basis of local tax revenue data alone.

Incoherent Know-Nothings

Cards Against Humanity’s Pulse of the Nation poll from 2017 to 2018 has some pretty interesting, disturbing, and rather unsurprising findings about the American public:

Conflicting Views

39.1% of Democrats think that it’s wrong to negatively stereotype people based on their place of birth, but also think Southerners are more racist.

65.2% of Republicans think that people are too easily offended, yet find Black Lives Matter offensive.

64.6% of Democrats think that a woman has the right to do what she wants with her body, except when it comes to selling her kidney. Nearly half also believe a woman has the right to do whatever she wants with her body, except sell it for sex.

57.9% of Republicans think that people should be free to express their political opinions in the workplace, but athletes shouldn’t be allowed to make political protests at games.

Over half of Democrats think that men and women “are equal in their talents and abilities,” except when it comes to multitasking and empathy.

About 1/3 of Republicans think we should be more suspicious of foreigners, yet believe Putin when he says he didn’t interfere in the 2016 election. (You’re twice as likely to do this if you support Trump.)

Over half of Republicans believe nobody deserves a handout and that the government should do more to help small, working-class towns in America’s heartland.

About 1/3 of Democrats say that they trust the scientific consensus, just not when it comes to GMOs.

Political Ignorance

39% of Americans either think low GDP is better than high GDP or have no clue altogether.

The majority of Americans can’t name the three branches of government.

Only 12.7% of Americans can name a living, breathing economist. 55.9% can’t name a living economist, but think their opinions about economic policy are well-informed.

The richest 1% of Americans own 39% of the country’s wealth. Everyone overestimates the amount. If you’re a Democrat, you think it is 75 percent. If you’re a Republican, you think it’s 50 percent. Perhaps surprisingly, the more educated you are, the more likely you are to overestimate the amount.

Nearly half of Americans do not believe the U.S. has interfered with foreign democratic elections. You’re less likely to believe it if you’re Republican.

Other Stuff

Those who think “sex without love” is okay are far more likely to be pro-choice.

If you rely on “common sense” instead of empirical evidence, you’re likely older, less educated, and lack a Twitter account. You also are more likely support military action against Russia for their 2016 election interference. 

29% of Trump supporters would still stick with him in 2020 even if he murdered journalist for spreading lies.

What Kind of Immigration Fuels Nationalism?

From a recent NBER Digest:

In Skill of Immigrants and Vote of the Natives: Immigration and Nationalism in European Elections 2007-16 (NBER Working Paper No. 25077), Simone Moriconi, Giovanni Peri, and Riccardo Turati explore the relationship between immigration and European elections. They develop an index of “nationalistic” attitudes of political parties to measure the shift in preferences among voters when confronted with influxes of skilled and unskilled immigrants. They find that larger inflows of highly educated immigrants dampen nationalistic sentiments, while larger inflows of less-educated immigrants heighten them. Their results imply that a more balanced inflow of high-skilled and low-skilled immigrants could attenuate voters’ nationalistic attitudes.

...The new study tracks voter attitudes and behavior for all political parties and elections in 12 European countries for a decade. It relies on demographic and political data from the European Social Survey and a number of other sources. In addition, the researchers collected and classified the political manifestos of 126 parties for 28 elections, focusing in particular on how frequently these materials mentioned nationalistic subjects, the European Union, and other indicators of where parties stood on the political spectrum.

The researchers found “that highly educated native voters are less nationalistic in their attitudes towards immigrants than less-educated natives. The data also show strong nationalistic sentiments in regional pockets in the United Kingdom, Ireland, France, Germany, Demark, Sweden, Norway and, especially, Italy.”

The results suggest that a 1 percent increase in the share of a country’s population who are immigrants in highly educated, highly skilled groups was associated with a 0.1 standard deviation voting change away from nationalism. An increase of comparable size in the number of less-educated and lower-skilled immigrants led to a 0.12 standard deviation voting change towards nationalism. The same patterns emerged when the researchers analyzed voter sentiment expressed in surveys. In this case, a 1 percent increase in high-skilled immigrants led to a 0.07 standard deviation decrease away from nationalism, while a 1 percent increase in lower-skilled immigrants lead to a 0.07 standard deviation increase in nationalism. The results were broadly similar regardless of whether the analysis focused on all immigrants or only on immigrants from non-EU nations.

Immigration is not only about ethnicity, but class as well.

What’s Behind Cuba’s Health Outcomes?

The above comes from Michael Moore’s Sicko. Cuba’s healthcare system is a common talking point among those of Moore’s persuasion. However, a recent study should give us pause regarding some of the overly positive claims about Cuba’s system. First, what people like Moore get right:

How is Cuba healthy while poor? Most attribute the fact to Cuba’s zero monetary cost health care system. There is some truth to that attribution. With 11.1% of GDP dedicated to health care and 0.8% of the population working as physicians, a substantial amount of resources is directed towards reducing infant mortality and increasing longevity. An economy with centralized economic planning by government like that of Cuba can force more resources into an industry than its population might desire in order to achieve improved outcomes in that industry at the expense of other goods and services the population might more highly desire (pg. 755).

However,

Centralized planning has disadvantages. Physicians are given health outcome targets to meet or face penalties. This provides incentives to manipulate data. Take Cuba’s much praised infant mortality rate for example. In most countries, the ratio of the numbers of neonatal deaths and late fetal deaths stay within a certain range of each other as they have many common causes and determinants. One study found that that while the ratio of late fetal deaths to early neonatal deaths in countries with available data stood between 1.04 and 3.03 (Gonzalez, 2015)—a ratio which is representative of Latin American countries as well (Gonzalez and Gilleskie, 2017). Cuba, with a ratio of 6, was a clear outlier. This skewed ratio is evidence that physicians likely reclassified early neonatal deaths as late fetal deaths, thus deflating the infant mortality statistics and propping up life expectancy. Cuban doctors were re-categorizing neonatal deaths as late fetal deaths in order for doctors to meet government targets for infant mortality.

Using the ratios found for other countries, corrections were proposed to the statistics published by the Cuban government: instead of 5.79 per 1000 births, the rate stands between 7.45 and 11.16 per 1000 births. Recalculating life expectancy at birth to account for these corrections (using WHO life tables and assuming that they are accurate depictions of reality), the life expectancy at birth of men by between 0.22 and 0.55 years (Gonzalez, 2015) (pg. 755).

But that’s not the only thing driving low infant mortality rates:

Coercing or pressuring patients into having abortions artificially improve infant mortality by preventing marginally riskier births from occurring help doctors meet their centrally fixed targets. At 72.8 abortions per 100 births, Cuba has one of the highest abortion rates in the world. If only 5% of the abortions are actually pressured abortions meant to keep health statistics up, life expectancy at birth must be lowered by a sizeable amount. If we combine the misreporting of late fetal deaths and pressured abortions, life expectancy would drop by between 1.46 and 1.79 years for men. In Figure 1 below, we show that that with this adjustment alone, instead of being first in the ranking of life expectancy at birth for men in Latin America and the Caribbean, Cuba falls either to the third or fourth place depending on the range (pg. 755-756).

The researchers explain, “Other repressive policies, unrelated to health care, contribute to Cuba’s health outcomes” (pg. 756) These include:

  • Restrictions in car ownership leading to low automobile fatalities.
  • Rationing combined with physically demanding transportation (e.g., cycling) contributing to reductions in obesity and deaths caused by diabetes, coronary heart diseases and strokes.

The researchers conclude,

Cuban mortality and longevity statistics appear impressive. They are a result of some combination of the government’s choice to allocate more resources into the health care industry (at the expense of other industries that could produce needed goods) and from coercive measures through both health delivery and economic planning that improve health statistics at the expense of other spheres of life.

Although the USA and other countries re-examine how to design health care delivery they should not uncritically accept the myth that the Cuban health care system has been the sole, or even the most important, cause of Cuba’s abnormally high longevity statistics. The role of Cuban economic and political oppression in coercing ‘good’ health outcomes merits further study (pg. 756).

The Effects of Corporate Taxes on Innovation

Image result for innovation

I’ve looked at some of the negative effects of corporate taxes in previous posts. These largely had to do with wages and employment. But a new study based on Chinese data finds that they can have negative effects on innovation:

Theoretically, taxes can have either positive or negative impacts on firm innovation. On the one hand, lower taxes can increase the after-tax profit of firms, so that they have better capacity to invest in new technologies or products. Moreover, lower taxes may reduce the resources that firms spend on tax evasion, such as the costs of bribing tax officers, which can be instead used on innovation activities. On the other hand, lower taxes may also have a negative impact on innovation because they decrease government revenue, and in turn may reduce government spending on public goods such as research, education, and infrastructure. As a result, whether providing tax incentives can improve firm innovation is ambiguous. 

In a new study, we investigate the impact of taxes on firm innovation using a natural experiment in China (Cai et al. 2018). In November 2001, China implemented a tax collection reform on all manufacturing firms established on or after January 2002, which switched the collection of corporate income taxes from the local tax bureau to the state tax bureau. After the reform, similar firms established before or after 2002 could pay very different effective tax rates because of the differences in the management and incentives of those two types of tax bureaus…[T]he reform changed the enforcement of tax collection, resulting in a reduction of effective corporate income tax rates by almost 10% among newly established firms.

…To test the impact of taxes on innovation, we combine a comprehensive dataset of all medium and large enterprises in China between 1998 and 2007 with patent data from the State Intellectual Property Office (SIPO), including all patents applied in China by the year 2014. We use the data to measure three dimensions of innovation activities – input (R&D expenditure and skilled labour ratio), output (number of patent application), and quality (type and characteristics of patent application). 

Our analysis yields several interesting results. First, we show a strong and robust causal relationship between tax rate and firm innovation. Decreasing the effective tax rate by one standard deviation (0.01) increases the average number of patent application by a significant 5.7% (see Figure 2 for the graphical evidence). The reform also stimulated R&D expenditures and increased the skilled-labour ratio by 14%. Second, a lower tax rate also improves the quality of patents. The impact of tax reform on patent applications mainly comes from its effect on invention and utility patents – decreasing the effective tax rate by one standard deviation improves the probability of having an invention patent application by 4.4% and increases the number of utility patent applications by 4.7%. This suggests that the improvement in innovation outcomes is not merely driven by the low-quality design patents. We also use the detailed information on patent applications as proxies for the patent quality, including number of claims, number of independent claims, and the amount of effort that was spent on the patent application (length of the application document, number of figures, and length of abstract). In our patent data, only invention and utility patents have the above information, and results suggest that a reduction in the tax rate significantly improved patent quality, and the effect is significant for both invention and utility patents. 

Another study drawing on datasets from the 20th century had similar results:

We use new data from the 20th century to show a negative effect of high taxes on innovation. We use three newly constructed datasets consisting of: (1) the universe of corporate and non-corporate inventors who patented since 1920, as well as the citations to their patents; (2) the patents, research employment, and location of laboratory facilities of firms active in R&D; and (3) an historical state-level database of corporate income taxes linked to personal income tax rates from Bakija (2017).

…At the macro level, we find that the effects of taxes are strongly negative and quantitatively important. For example, a one percentage point increase in either the median or top marginal tax rate is associated with an approximately 4% decline in patents, citations, and inventors, and a close to 5% decline in the number of superstar inventors in the state. A one percentage point higher top corporate tax rate leads to around 6-6.3% fewer patents, 5.5-6% fewer citations, 4.6-5% fewer inventors, and 8.5-9.3% fewer superstar inventors.

Furthermore, we find that the share of patentsassigned to corporations appears to be extremely sensitive to the corporate tax rate. A one percentage point increase in the top corporate tax rate is associated with close to 1.2 percentage points fewer patents assigned to companies.      

Individual case studies of tax regime changes underscore how important the effect of taxation could be. As one example, Figure 4 shows the depressing impact on innovation of Michigan’s 1967 and 1968 tax reform bills. In 1967, Michigan introduced its personal income tax, at a rate of 2.6%. In 1968, it then introduced its corporate income tax, at a rate of 5.6%. In the subsequent years, the state experienced a substantial decline in innovative output relative to its peer states.

…At the micro level, we similarly find that taxation negatively affects innovation. To estimate the effect, we assign inventors to their tax brackets based on their productivity, which we observe in the patent data. A one percentage point higher tax rate at the individual level decreases the likelihood of having a patent in the next three years by 0.63 percentage points, even controlling for inventor quality and all other state-level policy changes. The likelihood of having high-qualitypatents with more than ten citations decreases by 0.6 percentage points for every percentage point increase in the personal tax rate. We also show that corporate inventors — inventors who appear on at least one patent assigned to a company — are much more responsive to personal and corporate income taxes than non-corporate inventors, consistent with the profit-sharing narrative posited above, as well as with different motives for innovation. 

Inventors prefer to locate in places where other inventors are active in their particular technology area. This suggests there are particular characteristics which may matter to inventors, and which can ultimately dampen their responses to taxation. Silicon Valley, for example, still attracts an abundance of tech inventors due to its rich network of capital and labour resources for innovation, despite California being a high tax state.          

At the firm level, we find consistently negative effects of taxation on patents and citations. We also find that the top corporate tax rate has a significantly negative effect on the decision of a firm to locate its R&D laboratory in a given state.

Innovation is critical to improvements in human well-being. Something for policymakers to consider.

The Benefits of Walmart

Image result for walmart

Walmart catches a lot of grief. For example, as reported by CNN, Bernie Sanders recently “introduced a bill, titled the Stop Walmart Act, that would prevent large companies from buying back stock unless they pay all employees at least $15 an hour, allow workers to earn up to seven days of paid sick leave and limit CEO compensation to no more than 150 times the median pay of all staffers.” Yet, many don’t consider the massive benefits produced by Walmart: 

A 2005 Global Insight study commissioned by Wal-Mart and overseen by an independent panel suggested that a new Wal-Mart would create, on net, 137 jobs in the short term and 97 jobs in the long term (Global Insight 2005: 2). Studying Pennsylvania counties, Hicks (2005, discussed by Vedder and Cox 2006: 110) found that the company led to a net increase of fifty new jobs with a 40% reduction in job turnover. Hicks (2007: 93-94) uses data from Indiana to estimate that Wal-Mart increases rural retail employment from 3.4% to 4.8% after correcting for endogeneity. After correcting for endogeneity of urban Wal-Mart entry, Hicks argues that Wal-Mart leads to a 1.2% increase in employment but points out that this estimate is statistically insignificant.

…Wal-Mart’s most obvious effect on the retail sector comes through its policy of Every Day Low Prices. Basker (2005b) and Basker and Noel (2009) estimate that WalMart has a substantial price advantage over competitors with the effect being that prices among incumbent competitors fall after Wal-Mart entry. Hausman and Leibtag (2007: 1147) argue that the compensating variation from Big Box retailers’ effect on prices leads to welfare increases of some 25% of total food expenditure for people who enjoy the direct and indirect effects of Big Box stores. Further, they argue (Hausman and Leibtag 2009) that the Consumer Price Index is over-estimated because it fails to account properly for price effects of supercenters, mass merchandisers, and club stores. Evaluating estimates of the price effects of Big Box retailers and adjusting for foreign sales, Vedder and Cox (2006: 18-19) argue that “the annual American-derived welfare gains are probably still in excess of $65 billion, or about $225 for every American, or $900 for a typical family of four.”

…Jason Furman (2005) called Wal-Mart a “progressive success story” because of its impact on prices. He notes that if the 2005 Global Insight estimate of annual average household savings of $2,329 is accurate, the annual Wal-Mart related consumer savings of $263 billion dwarfs Wal-Mart-generated reductions in retail wages of $4.7 billion estimated by Dube et al. (2005). Hicks (2007: 82) notes that reductions in nominal retail wages are likely offset by larger price reductions, which translates into higher real wages. Courtemanche and Carden’s (2011a) estimate of $177 per household in savings attributable to the effects of Wal-Mart Supercenters in 2002 multiplied by the 105,401,101 households in the 2000 census yields household savings of $18.7 billion, which is still substantially higher than Dube et al.’s estimate of lost wages. 

Hausman and Leibtag (2007: 25) argue that the compensating variation—i.e., welfare increase—attributable to supercenters, mass merchandisers, and club stores is some 25% of food expenditures. Since poorer households spend more of their income on food, the effect (as a percentage of income) is higher toward the bottom of the income distribution (Furman 2005: 2-3). Hausman and Leibtag (2007: 1172, 1174) further argue that compensating variation from access to non-traditional retailers is higher at lower income levels, which would make the effect even more progressive (pgs. 8-9).

A brand new study demonstrates even more benefits provided by Walmart:

We estimate the effects that Walmart Supercenters have on food security using data from the 2001–2012 waves of the December Current Population Study Food Security Supplement (CPS-FSS). Narrow geographic identifiers available in the restricted version of these data enable us to compute the distance from each household’s census tract to the nearest Walmart Supercenter. Our outcomes are counts of the number of affirmative responses on the household and child-specific portions of the food insecurity questionnaire, along with binary variables for household food insecurity, household very low food security, child food insecurity, and child very low food security. We estimate instrumental variables (IV) models that leverage the predictable geographic expansion patterns of Walmart Supercenters outward from corporate headquarters. Specifically, we instrument for Walmart Supercenters with the interaction of distance from Bentonville, Arkansas (Walmart’s headquarters), with time. For both households in general and children specifically, the results show that a closer proximity to the nearest Walmart Supercenter leads to sizeable and statistically significant improvements in all food security measures except the indicator for very low food security. Subsample analyses reveal that the effects are especially large for low-income households and children, though they are also sizeable for middle-income children.

As journalist John Tierney asked, “How could any progressive with a conscience oppose an organization that confers such benefits?”

What Drives Political Violence?

Image result for political violence

This is disturbing, if not really all that surprising. From the Greater Good Science Center:

Earlier this year, political scientists Lilliana Mason and Nathan Kalmoe presented a paper at the American Political Science Association’s annual meeting, titled “Lethal Mass Partisanship.” With data from two different national surveys, they found that 24 percent of Republicans and 17 percent of Democrats believe that it is occasionally acceptable to send threatening messages to public officials. Fifteen percent of Republicans and 20 percent of Democrats agree that the country would be better if large numbers of opposing partisans in the public today “just died,” which the authors call a “shockingly brutal sentiment.” Nine percent of both Democrats and Republicans agree that violence would be acceptable if their opponents won the 2020 presidential election.

So drives political violence? First and foremost, aggression:

By far the biggest predictor of lethal partisanship across the board was having aggressiveness as a personality trait. This isn’t surprising, of course—aggression and violence go hand in hand. But a deeper look at aggression reveals how it fits together with other traits and shapes human behavior. Aggression all by itself is not good or bad; any of us can become aggressive when we face a direct threat. But aggression can go too far when inner and outer restraints are absent.

In neurological studies, more aggressive people tend to show less activation of the default mode brain network, which is associated with empathy and emotion regulation, which in turn helps suppress aggressive impulses. As psychologist Scott Barry Kaufman notes in Scientific American, aggressive people are more likely to retaliate when treated unfairly by others, which is not necessarily a bad thing (“although they tend to care much less about whether others are treated unfairly”).

However, aggression also shapes political outcomes. “Politicians who are more antagonistic get more media attention and are more often elected than more agreeable politicians,” he writes. “In the general population, antagonistic people are more likely to distrust politics in general, to believe in conspiracy theories, and to support secessionist movements.” In a series of experiments published in 2014, Kalmoe found “that exposure to mildly violent political metaphors such as ‘fighting for our future’ increased general support for political violence among people with aggressive personalities.”

Next, party identity:

After aggressiveness, Mason and Kalmoe found that “partisan identity strength”—how much being Democrat or Republican is part of who they are—is the most important factor in endorsing violence.

There are many studies—mostly from political science and sociology—showing that more Americans are using their political party affiliation as a source of meaning and social identity, with these identities linked to differences in “leisure activities, consumption, aesthetic taste, and personal morality,” as Daniel DellaPosta and colleagues write in their 2015 paper, “Why Do Liberals Drinks Lattes?

Worse, the Republican Party has become whiter in recent decades, while the Democratic Party has become more racially diverse—which could be intensifying party antagonism. A recent study of survey data by political scientist Diana Mutz found that nothing predicted support for Donald Trump more than a feeling of threatened status among white Christians—an insight ratified by several studies from Robb Willer at Stanford Universityand the Public Religion Research Institute.

…“All of the research to date was pointing in this direction,” adds Mason in an interview. “But we have a long tradition of treating partisanship like a largely benevolent force. It makes sense that as an identity grows stronger, and conflict intensifies, people will begin to approve of violence.”

Third, emotions like anger, contempt, and disgust:

While Mason and Kalmoe’s study gives us some sense of how common the tendency to accept political violence is—and some of the personality traits and belief structures that may be associated with it—a 2015 study points us in the direction of the emotions involved. In “The Role of Intergroup Emotions in Political Violence,” San Francisco State University researchers David Matsumoto and Hyisung C. Hwang and the University at Buffalo’s Mark G. Frank tried to figure out which emotions can drive violence by a group against an outgroup.

They examined the emotional tone of major political speeches that occurred prior to political events throughout history, looking at the emotions expressed in words, the judgments underlying the emotions, and the nonverbal expression of the emotions that could be seen in video form.

They also examined speeches made by “ideologically driven” leaders who despised opponent outgroups that resulted in violence, such as Hitler’s; and they studied those that did not, like Gandhi’s Salt March and pro-Tibet protests at the Beijing Olympics in 2008.

They found that speeches which preceded violent events tended to express more anger, contempt, and disgust (ANCODI)—but not fear, happiness, sadness, or surprise. These negative emotions tended to target specific “outgroups”—Jews, in the case of Hitler’s speeches.

Fourth, moralizing language:

Earlier this year, a team of five researchers searched the popular social media platform Twitter for tweets about the Baltimore protests. They wanted to investigate “moralizing” tweets—that is, tweets that viewed the protests as a moral issue rather than as a political disagreement. A moralizing tweet might, for example, refer to people as “disgusting” or “evil” or “traitorous.”

In fact, they did find a positive association between the number of moral tweets and the occurrence of violent protests (gauged with arrest data). “The days in which there were violent protests, we saw that there was a lot more moral language being used,” says study co-author and University of Southern California Ph.D. student Joe Hoover. “Which was consistent with the idea that morality and violence in these contexts might be linked.”

The team also ran an experiment using another prominent protest marred by violence: the far-right rally in Charlottesville, Virginia, in 2017. Respondents were asked to what extent they thought protesting against the far-right demonstrators was a moral issue; they were then asked how acceptable it was to use violence against these far-right activists. What they found is that people were more likely to embrace violence the more they saw it as a moral issue.

In an additional experiment, the participants were given the same prompts, but they were told either that the majority of Americans agreed with their view of the protest, or that few Americans agreed with their view. They found that “moralization predicted violence only when participants perceived that they shared their moralized attitudes with others.”

In other words, when it comes to violence, there’s validation and safety in numbers. The researchers dubbed this phenomenon “moral convergence,” when many people come together around a strong idea of what’s right and what’s wrong. The “risk of violent protest, in other words, may not be simply a function of moralization, but also the perception that others agree with one’s moral position, which can strongly be influenced by social media dynamics,” they write. 


Finally, group leadership:

There are many, many studies—starting with Stanley Milgram’s classic electric-shock experiments—which show that people are much more likely to inflict pain on others when an authority figure tells them to. When leaders engage in violent rhetoric, so do their followers; when they urge calm, people do calm down. Research has documented that words do have an impact on both beliefs and behaviors.

For example, a 2017 Polish study found “frequent and repetitive exposure to hate speech leads to desensitization to this form of verbal violence and subsequently to lower evaluations of the victims and greater distancing, thus increasing outgroup prejudice.” As part of the study, researchers surveyed participants on how frequently they encountered hate speech against refugees; they found that those who were more exposed to hateful words were more prejudiced against the group and more accepting of restrictive immigration policy.

Taken together, these studies suggest that our political leadership—everyone from pundits on cable news to the President of the United States—would do well to avoid promoting the political tribalism that leads people to strongly identify with one group and demonize the other.

In short, watch your aggression, avoid identity politics, keep your emotions in check, lay off the moral grandstanding, and quit putting so much stock into political leaders and pundits.