Nixon and basic income

In 1969-70, Richard Nixon made an attempt to guarantee a basic income to all families in America.

Richard Nixon was not the most likely candidate to pursue the old utopian dream, but then history sometimes has a strange sense of humor. The same man who was forced to resign after the Watergate scandal in 1974 had been on the verge, in 1969, of enacting an unconditional income for all poor families. It would have been a massive step forward in the War on Poverty, guaranteeing a family of four $1,600 a year, equivalent to roughly $10,000 in 2016…

According to Nixon, this generation would do two things deemed impossible by earlier generations. Besides putting a man on the moon (which had happened the month before), they would also, finally, eradicate poverty.

A White House poll found 90% of all newspapers enthusiastically receptive to the plan to pay an unconditional income to all poor families. The Chicago Sun-Times called it “A Giant Leap Forward,” the Los Angeles Times “a bold new blueprint.” The National Council of Churches was in favor, and so were the labor unions and even the corporate sector. At the White House, a telegram arrived declaring, “Two upper middle class Republicans who will pay for the program say bravo.” Pundits were even going around quoting Victor Hugo – “Nothing is stronger than an idea whose time has come.”

It seemed that the time for a basic income had well and truly arrived.

“Welfare Plan Passes House […] a Battle Won in Crusade for Reform,” headlined The New York Times on April 16, 1970. With 243 votes for and 155 against, President Nixon’s Family Assistance Plan (FAP) was approved by an overwhelming majority. Most pundits expected the plan to pass the Senate, too, with a membership even more progressive than that of the House of Representatives. But in the Senate Finance Committee, doubts reared. “This bill represents the most extensive, expensive, and expansive welfare legislation ever handled,” one Republican senator said. Most vehemently opposed, however, were the Democrats. They felt the FAP didn’t go far enough, and pushed for an even higher basic income. After months of being batted back and forth between the Senate and the White House, the bill was finally canned.

In the following year, Nixon presented a slightly tweaked proposal to Congress. Once again, the bill was accepted by the House, now as part of a larger package of reforms. This time, 288 voted in favor, 132 against. In his 1971 State of the Union address, Nixon considered his plan to “place a floor under the income of every family with children in America” the most important item of legislation on his agenda.

But once again, the bill foundered in the Senate.

personal carbon trading

I heard “personal carbon allowances” mentioned recently, and hadn’t heard of it before, so I grabbed this from Wikipedia:

Personal carbon trading is the generic term for a number of proposed emissions trading schemes under which emissions credits would be allocated to adult individuals on a (broadly) equal per capita basis, within national carbon budgets.[1] Individuals then surrender these credits when buying fuel or electricity. Individuals wanting or needing to emit at a level above that permitted by their initial allocation would be able to purchase additional credits from those using less, creating a profit for those individuals who emit at a level below that permitted by their initial allocation.

Sounds good in principle, although I think a carbon-based sales tax would be simpler and more straightforward. This concept assumes that people have time and motivation to sit around, do research, make rational choices, and engage in transactions to maximize financial gain. Busy people balancing careers, families, and the minuscule leisure time left over don’t necessarily have time to do this. For this to work, I think it would have to be pretty automated. Maybe a future of automated, computer-controlled financial transactions and markets could pull this off.

hidden parking costs

Hidden parking costs drive up the cost of rent in U.S. metropolitan areas by an average of 17% according this article. The implication is that people are paying for housing and parking together, and don’t realize it. By separating the two, the cost of housing would be reduced, and people would be free to choose to pay for parking, or use the money saved on other transportation options.

Hidden Costs and Deadweight Losses: Bundled Parking and Residential Rents in the Metropolitan United States

There is a major housing affordability crisis in many American metropolitan areas, particularly for renters. Minimum parking requirements in municipal zoning codes drive up the price of housing, and thus represent an important potential for reform for local policymakers. The relationship between parking and housing prices, however, remains poorly understood. We use national American Housing Survey data and hedonic regression techniques to investigate this relationship. We find that the cost of garage parking to renter households is approximately $1,700 per year, or an additional 17% of a housing unit’s rent. In addition to the magnitude of this transport cost burden being effectively hidden in housing prices, the lack of rental housing without bundled parking imposes a steep cost on carless renters—commonly the lowest income households—who may be paying for parking that they do not need or want. We estimate the direct deadweight loss for carless renters to be $440 million annually. We conclude by suggesting cities reduce or eliminate minimum parking requirements, and allow and encourage landlords to unbundle parking costs from housing costs.

Bokashi composting

Bokashi is a method that uses anaerobic fermentation to compost almost anything.

You can use the bokashi system to pre-process food waste that normally can’t go into your compost bin and worm farm so it can be used there after it is processed.

All types of food waste can be processed, including:

  • meat
  • seafood & fish
  • cooked food waste
  • cheese
  • dairy
  • bread
  • onions
  • citrus
  • garlic

Since fermentation is much faster than composting, the bokashi system can produce fermented material in one week, that breaks down quickly when dug into the soil. When in the ground, the fermented material breaks down into soil in 4-6 weeks. Ideally, from start to finish, you can turn raw kitchen scraps into soil that can be used for plants in 30-45 days.

more on taxi medallions

The value of a Philadelphia taxi medallion has plunged from a peak of $545,000 in July 2014 to $50,000 in March 2015. That’s a pretty shocking collapse in less than a year, and it’s pretty much all due to UberX.

Since coming to Philadelphia without regulatory approval in October 2014, Uber has pulled the safety net out from under taxi drivers and claimed their place in the city. In the Philadelphia metro area, Uber says, it now has more than 12,000 active drivers – who have taken a ride in the last 28 days – and more than half a million active riders who have used the app in the last three months. In July, Uber pledged $2.5 million to expand its service in the suburbs and subsidize surge pricing, those times when prices jump for passengers in high-demand areas. This came after SEPTA announced that a third of its Regional Rail cars would be off the tracks for the summer due to fatigue cracks in a beam and the need for emergency repairs.

For a while, the PPA tried to keep Uber at bay, refusing to legalize UberX, which allows drivers to use their own cars and personal insurance to shuttle passengers.

But in July, with the Democratic National Convention bringing in 50,000 visitors and SEPTA’s Regional Rail line in turmoil, the PPA conceded to Uber. It agreed to legalize UberX as long as the company paid $350,000 – rather than the millions in fines it had initially slapped on the company – when the state legislature comes back in session and passes regulatory legislation.

As a person who chooses to live without a car, Uber X has made my life a lot better. Taxis were an okay way to get around the busiest part of the city, and to get from the busy part of the city to the airport and back. But they were never a good way to get from a less busy part of the city back to the busy part. I got stranded many times in out-of-the-way places and/or in bad weather, when I would call for a taxi and be told by a surly dispatcher that none were available, or even after being dispatched they just never showed up. Add to that the payment hassles where you had to try to keep small change in your wallet because they often wouldn’t change a 20 and were unable or unwilling to take credit cards. Miscommunications and misunderstandings about where you wanted to go. With UberX, all of this is almost 100% solved.

Now, I will say that some taxi drivers are wonderful people. They work long hours under risky conditions. Many lift heavy luggage and are kind to children, the elderly and disabled. The problems I mention above are not the drivers’ fault for the most part. By limiting the supply of medallions, the government has produced an artificial shortage of transportation. There just weren’t enough taxis to go around, so they stayed in the busy areas where they had a better shot at making a profit and the underserved neighborhoods stayed underserved. The dispatching companies made sure it was hard on the drivers – they had to pay to lease a car for their shift, then fill it up with gas, then try to pick up enough fares to break even, and then enough to make a living. When they are honking at me or trying to run me over in a crosswalk, I try to remember that they are the victims of perverse incentives in a broken system.

So I really don’t feel too bad for the dispatching companies. They could have improved their service, or one of them could have invented UberX. But they didn’t, they just assumed nothing would ever change and they were creatively destroyed. I don’t feel too bad for the drivers who used to lease cars from the taxi companies, because they can just switch to Uber (at least until the cars start driving themselves in a couple years, I don’t think driving any vehicle is a good long-term career choice for any human at this point). I do feel sorry though for the independent driver who saved and borrowed to buy their own taxi medallion at a high price, only to find that it is now worthless and they are in debt. Although I dislike almost everything about the industry, there was an understanding that it was an industry regulated by law, and the rule of law is supposed to apply to everyone equally. I can understand some affected people feeling like the law suddenly is not being enforced evenly on all parties, and they are left holding the bag. It seems like they might have some legal recourse against the regulatory agency that chose not to enforce the law.

horizontal history

I like this post called “Horizontal History” on Wait But Why. The author takes a number of famous people from all over the world and plots their life spans side by side. It sounds simple, but it makes a point about things that were going on in parallel at various times that we tend to think of in isolation because that is how we studied them. I always thought it would be an interesting way to teach history to take a particular year or decade and look at who was alive and what was going on not just in one country or part of the world, but everywhere. You could take it one step further by picking places and times at random, and asking who was around and what they were doing, not just famous people but ordinary people. What were their lives like? What sources of information did that have about what was going on nearby and far away, and what did they think of these events? What did they eat and where did their food come from, what technologies did they use in their daily lives and what technologies were they aware of, what diseases did they have, what holidays did they celebrate, what work or other economic transactions did they engage in, what natural ecosystems did they interact with, what was their climate and weather like? You could ask the latter two questions even in the absence of humans. Start piecing this together for enough places and times, and we might start to have a more holistic understanding of history. We might understand how the past was different from the present, and that might in turn help inform our imagination about how the future will be different from the present.

financial technology

Here is an article about new “financial technology” by the author of a book called Money Changes Everything: How Finance Made Civilization Possible.

For example, even as we debate the relevance and usefulness of traditional financial institutions such as banks, another revolution is underway in the world of money. A mere decade after we thought we had mastered the intricacies of asset securitization, shadow banking and credit default swaps, an entirely new financial phenomenon has emerged. It is called FinTech – short for financial technology. FinTech involves the plumbing and wiring of the financial system. It is changing how we borrow, how we save, how we raise money for companies even how we assess our future; its possibilities, risks and relationships.

Some of these innovations you may already know: PayPal, Bitcoin, Financial Engines, Kickstarter, Prosper.com and Venmo. They are apps, payment systems, crowdfunding vehicles and peer to peer lending sites. Their use has spread rapidly along with other technological improvements in how we get things done. However these companies are the tip of a very large iceberg.

Many of the innovations in finance are buried in the complex, business to business infrastructure of the economy. These include new ways of detecting fraud, recording transactions, routing orders, valuing assets and even discovering hidden patterns in big data; massaging the fast, continuous flow of news, trades, tweets, satellite images, and Facebook posts. Financial companies – from the big players like Goldman Sachs and Blackrock down to your local bank and financial advisor believe FinTech will fundamentally alter their businesses — and they are rushing to get out ahead of competitors. This is because FinTech innovation tends to disrupt the existing structure. It disintermediates customers and providers of financial services, replacing them with peer-to-peer lending, instant money transfers, loans without loan officers, and investment without investment banks. These innovations are transformative, empowering and create a new infrastructure for exploring even greater opportunities but they threaten the status quo in ways that the securitization wave of the 2000’s never approached. Securitization mostly involved the same big players that ruled the markets in prior decades. FinTech brings a different cast of characters who are defining new communities of investors, new sources of knowledge and unfortunately new kinds of scams and risks. The top FinTech companies today include a lot of new names. How many of us have been following the likes of Credit Karma, Market Axcess, Square, Stripe and SoFi?

I’m all for cutting out the middlemen trying to rip us off. And I’m still looking for the perfect app for splitting a restaurant bill among a large party.

Robert Gordon

Robert Gordon has an op-ed in the New York Times talking about productivity growth, inequality, and the Presidential candidates’ stated policy positions.

Rapid productivity growth in the dot-com era of the late 1990s originated in computer manufacturing — information and communication technology equipment — but this manufacturing has vanished since almost all such equipment is now imported.

This effect of that new technology was another important source of growth. Out went typewriters and calculating machines, replaced by personal computers, spreadsheet and word-processing software, web browsers and e-commerce. Productivity also boomed in retailing, as Walmart and other “big box” stores revolutionized retail selection, layout and supply chain management.

But by 2004, the digital revolution had achieved most of its transition in business methods. Not much has changed in offices and at retail stores since then.

His basic thesis is that we are past the peak of this particular wave of technological progress, and he doesn’t see another wave on the horizon. So technology is not providing that slow but relentless underlying trend of productivity growth right now, and the shorter-term underlying cyclical factors are also on a downward trend (size of the skilled labor force, income inequality, uncertainty over health care, retirement and education). Tax and infrastructure investment policies suggested by the candidates could help somewhat with these shorter term factors. He generally supports socialist policies like we see in “Canada, Australia, and the Nordic countries”.

My own thoughts: It’s tough for politicians to support policies that advance long-term productivity growth, like great education and a level playing field for businesses of all sizes to innovate and compete. First of all, the costs of these policies come due during their terms in office while the benefits accrue long afterward. This is a basic problem of democracy – elected officials can be punished by voters for taking on those short term costs, and solutions can involve voluntarily transferring more power into the hands of un-elected technocrats, which they have little incentive to do. (Nonetheless, many other democratic countries manage to do better than us.) Second, the interests of a few big businesses (finance, fossil fuels and the military-industrial complex) have outsize, undemocratic influence over our (U.S.) politicians allowing them to write laws unfairly in their favor and at the expense of everyone else, even businesses in other industries. This problem could be solved by a courageous amendment to our constitution, but again politicians have little incentive to cut off their own sources of funding.

Politicians can talk about infrastructure because that creates short-term jobs while also helping the economy in the long-term. We need good planning though if we are going to build the smart infrastructure that can really reduce friction in the economy while minimizing environmental impacts and improving our living environments. We don’t have that currently, just some vague ideas about building lots of roads and bridges and maybe some power lines and we’re not sure about pipelines.

Gordon rails against “defined contribution” pension plans, but I still think there is a place for them. While social security is reasonably well run at the federal level, pension plans at the state, municipal and corporate level are terribly run. So I would say either get rid of all those in favor of an expansion of social security, or go to defined contribution. Plans could be designed to help individuals manage risk more effectively (using life cycle funds and annuitization, for example). In Singapore, the system is nominally defined contribution, but the government “tops up” individuals’ contributions – everybody contributes a similar amount as a percentage of their income, then the government matches contributions from lower-income individuals at a higher rate so they can end up with similar retirement savings as higher-income individuals. This could work in the U.S., but we would have to first prevent the finance industry from hijacking the rules to siphon off money for itself.

Of course, we can also hope that the wave of technological progress is in fact not past, we are just in a momentary lull before it continues to pick up in an exponential (but episodic) fashion as it has throughout history. I am 100% positive that the history of technology is not over. The only question in my mind is whether, if we are in fact in an episodic lull, it is going to last long enough to ruin a generation or two for us puny individual humans who only live 70 years or so.