Month: January 2016

It is common in our media and on Facebook to see analogies drawn between migrants from Syria, Afghanistan, and other war-torn regions and Jewish refugees from Germany in the 1930s. Initially the analogy seems apt. After the National Socialists were elected to power, Germany became a dangerous place for Jews, though the full scope of the danger wasn’t clear until the 1940s. For at least the 500,000 Jews who lived in Germany prior to the electoral victories of Hitler (or the roughly 250,000 who were still there just prior to World War II), in retrospect it seems to at least some Americans that we should have accepted them as refugees. People who live in Syria today are also in danger. Therefore we should accept them as refugees because we might regret it 70 years later if we do not.

If we are going to look back to the World War II era in Europe, are Jews the correct group to serve as an analogy and talking point? Jews constituted just one percent of the German population and were a minority group elsewhere in Europe. They were being targeted for discrimination, random violence, and ultimately institutional death camps due to their ethnicity/religion. Most of the migrants seeking admission to Europe and the U.S., however, don’t fit this description. Perhaps Christians who have remained in Muslim countries would be analogous to the Jews of Europe circa 1935 or 1940 (depending on whether there is an active shooting war near their home), but a Muslim citizen of a Muslim country that has become a war zone? Wouldn’t the more appropriate analogy be to a Christian living in a war-torn part of France, Germany, Poland, Ukraine, or Russia? Or to a Christian living in London during the German bombing campaigns? Or even to a soldier in any of the armies fighting during World War II? The average soldier certainly did not choose to go to war and would have preferred to be resettled in Minnesota.

This doesn’t necessarily affect the question of whether or not it makes sense to offer U.S. or EU citizenship to anyone currently living in a war zone. Perhaps it would have made sense to bring 50, 75, or even 100 percent of the European and Russian population in the 1940s in order to protect them from World War II (i.e., potentially hundreds of millions of people). If there are only a handful of places on Planet Earth where people can live without killing each other, why not have everyone live in those places? However, people keep saying “Jews” and “Holocaust” in the context of “Should we accept a refugee who is of the same religion and ethnicity as most other people in a country having a civil war?” If the analogy is inapt then presumably the conclusions that people are drawing are wrong.

[Separately, if Americans are in fact enthusiastic about Jewish refugees, we could take in the entire population of Israel under the proposed new standards for migrants/refugees. The states of the Arab League declared war on Israel in 1948 and only Jordan and Egypt have subsequently agreed to peace treaties. Thus Israel is an official war zone and everyone there is theoretically subject to the risk of violent conflict at any time the Arab countries (plus Iran as a new belligerent) feel strong enough to initiate new battles. (Arab citizens of Israel and Arabs living in the adjacent territories are equally at risk from any conflict, so they would qualify as refugees entitled to U.S. residency as well.)]

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“Islamic State’s Authentic-Looking Fake Passports Pose Threat” (WSJ, December 23, 2015):

Islamic State has likely obtained equipment and blank passport books needed to make Syrian passports when the group took control of the Syrian cities of Raqqa and Deir Ezzour, those officials said. It has also gained control of materials to make Iraqi passports when it occupied the Iraqi city of Mosul, a Belgian counterterrorism official disclosed for the first time.

Frontex, the European Union’s border agency, has recently sent document experts to Leros and other Greek islands to pick out fake passports. But there are now only 10 experts, and identifying a fake that has been printed on real Syrian passport books with real equipment is very difficult, a Frontex spokeswoman said.

 

It seems strange that in our electronic age paper passports are still in use. The U.S. passport is an electronic device with a paper cover (source), but other countries are apparently still relying primarily on paper (which means that we who accept travelers or immigrants from those countries are also relying on paper). Biometric passports are apparently in the far distant future for most countries.

Given the amount of time and energy that goes into fretting about people who move from one country to another, why isn’t there more discussion of biometric passports?

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Who has predictions for 2016 to share? I’ll go first…

Software: the iPhone will continue moving in the direction of Android and Windows. More capability, but also more crashes and unpredictable behavior such as slow response time.

Hardware: the beginning of the end of Intel’s dominance? As the desktop continues to die and the newest chips aren’t that much faster than the old chips (just more cores), why should anyone know or care what the CPU is inside a tablet or notebook computer?

Televisions: the premature death of OLED? Could it be that LCDs with higher dynamic range and/or ridiculously low prices will strangle OLED in its crib?

Politics: Hillary Clinton wins the presidential election by the same margin that Barack Obama had in 2012. Does it matter who is unfortunate enough to win the booby prize of the Republican nomination (previous posting on the unwinnability of this one for Republicans)? I don’t think so, but I will guess that it will be Ted Cruz based on the fact that he is a professional politician, unlike Donald Trump. With government spending now at roughly 50 percent of GDP, the election is important. As the government has grown (chart) people are more passionate about getting on the right side of this rich entity. The vote should basically come down to people who benefit from a big government (either they collect welfare, free housing, etc., work for the government, or have a close family member who works for the government, or work for a government contractor or crony (e.g., health care)) versus people who are economically disadvantaged by the government growing larger (e.g., people who pay taxes but don’t have an obvious way to collect a lot of benefits in return).

Economics: As predicted by Mancur Olson, the U.S. economy continues its stagnation, with per-capita GDP growing only slightly (of course the total GDP can still grow robustly if the U.S. population grows larger, e.g., through immigration). If we model the half of the U.S. economy that is now centrally planned by government as being like the former Soviet Union, we would expect half the economy to grow at an annual rate of between 0 and 0.75 percent. If we model the other half as being like a modern high-income free-market economy, such as Singapore or Hong Kong, that half could grow at a 3-4 percent rate (maybe at the higher end of this range due to the dead cat bounce that we’re probably still in following the Collapse of 2008). That leads to a maximum potential long-term average per capita GDP growth of about 2.4 percent, but let’s assume that the tangle of regulations imposed by the planned portion of the economy drags this down to 1-1.5 percent. If you live in one of the handful of desirable cities in the U.S. the result of this “growth” will be a reduction in your spending power due to (a) higher taxes, and (b) inflation in the cost of housing and services.

Work: The growth of the American welfare state will continue with higher minimum wages and other regulations discouraging companies from hiring the least-able Americans (see also “Can Puerto Rico be a laboratory for the future of the rest of the U.S.?” and “unemployed = 21st century draft horse?”). Higher tax rates and more lucrative child support guidelines in some states (e.g., Kansas), plus the message from politicians and meida to women that they can’t get fairly compensated in the workforce, will contribute to a continuation of the 15-year slide in the labor force participation rate of women. An increasing percentage of young women will be primarily stay-at-home wives (The inquisitive gender studies student and Sheryl Sandberg) or profit from their fertility without being married (chart showing a peak shortly after the Federal mandate for states to develop guidelines that made it easy to calculate the profits from a casual sexual encounter or short-term marriage (History); see also divorce litigators’ analysis of Ellen Pao’s career options)).

Leisure: With fewer people working and higher costs for employers making hotel rates grow faster than official inflation there will be a lot of demand for fun stuff that Americans can do from home, e.g., streaming video, video games, etc. I predict that the first virtual reality headsets will arrive in 2016 as planned but that consumers will be slow to adopt these innovations.

Health care: With no changes in financial incentives, I expect no changes in this sector (nearly 20 percent) of the U.S. economy. Due to the fact that viruses are smarter than humans, I expect no major breakthroughs in treatments.

Government: More outsourcing to cronies. From a bureaucrat’s point of view, a contract with a crony provides a great way to say “no” to the public. Instead of “We don’t want to give you that service,” a bureaucrat can say “We contracted out that function for five years to Vendor X and the contract doesn’t require them to give you that service. It is a great idea, though, and I’m sorry that they aren’t doing it.”

Businesses: Big companies will manage to work around new regulations and taxes. The keys to continued profits will include a combination of purchasing political influence, turning U.S. operations into a subsidiary of a foreign corporation headquartered in a country with lower tax rates (e.g., via an inversion), and expanding in growing markets overseas. Operating a small company in the U.S. will be increasingly untenable, unless it is a startup that can expect to be acquired fairly quickly. “Go big or go home” will continue be the message, e.g., communicated with double the effective tax rates on small corporations compared to large ones with their crews of full-time tax attorneys, offshore subsidiaries holding patents, etc.

Stocks: Due to the above, the S&P 500 should continue to grow in after-tax value at the same rate as world GDP (about 3 percent), even if the U.S. economy stagnates. (i.e., I am predicting that the S&P 500 will be approximately 60 points higher a year from now.)

Education: Mediocrity will continue to be accepted by Americans at all levels of the educational system. The U.S. will continue to spend more on this sector than all but a handful of countries (OECD chart), but most people in the education industry won’t have any incentive to achieve high performance. Incumbent nonprofit colleges will keep fighting back against for-profit colleges and increase their share of government handouts.

Cars: Innovations in self-driving and electric-powered cars will be significant and heavily publicized, but hard to deliver. Thus by the end of 2016 consumers will try to avoid buying a new car and/or enter into short-term leases in hopes that by 2017 or 2018 there will be mass-market cars with dramatic innovations.

Internet: Continued slide in readership and participation for anything that isn’t Facebook.

Income Inequality: Will continue to widen. Politicians who get a boost from complaining about income/wealth inequality will open the doors to a lot of immigrants with zero income and zero wealth, thus immediately worsening the statistics. Population growth from this immigration combined with the obstacles to building in the U.S. will favor existing owners of real property (i.e., Americans who are richer than the median). Increased complexity from regulations, taxes, and tax differentials from place to place and from company to company (e.g., depending on political connections) will favor the cleverest and best-educated (i.e., Americans who are probably richer than the median).

ISIS prediction: We won’t hear too much about ISIS in Syria by the end of 2016. Backed by the Russian military (will they trademark the phrase “What a real ally looks like”?), the Syrian government should be able to get its territory back under control. So ISIS will contract to almost nothing in Syria and grow in Iraq.

Migration into Europe: Every current migrant will tell 10 friends or family members about how well it is working out. Roughly one third of the friends/family will act on the advice. Thus there will be approximately three times as many migrants coming into the EU at the end of 2016 compared to now.

Readers: Your turn now!

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