Federal Reserve Bank Regulations

The current iteration of the Federal Reserve Bank Board of Governors, with several President Donald Trump appointees, is proposing a rule that would significantly ease the amount of cash big banks must keep on hand to cover bills due within 30 days.  The savings from this are expected to aggregate to $77 billion per year—not a lot compared to the total of liquid assets held by those banks already.

There is a rumbling, though.  An Obama appointee to the BoG, Lael Brainard, is objecting to the regulatory easing.

She added that banks are “providing ample credit and earning ample profits” under current liquidity requirements.

Yep. There it is again.  “I do think at a certain point you’ve made enough money. …you can just keep on making it if you’re providing a good product or providing good service.”

Because the Progressive-Democrat Fed Governor knows better what constitutes sufficient profit and what “good” service is; market participants’ views are unimportant, and she does not hear them.

A Useful Step

It’s even a step toward my goal of privatizing Social Security.  Tom Giovanetti, Institute for Policy Innovation President wrote of an idea for an additional tax cut in Wednesday’s Wall Street Journal.

[I]nstead of an impotent income-tax cut or, say, a payroll-tax cut of 4% of income, why not redirect that same 4% into personal retirement accounts for every worker? … With no decline in disposable income, American workers would suddenly be investing for retirement at market rates in accounts they own and control, instead of relying on Congress to keep Social Security solvent.

Giovanetti estimated, with an heroic assumption and some unspoken assumptions, that such an account for a family of four would accrue a half million dollars by the time they retired.  The assumptions, though, only affect the details, they don’t impact the utility of the principle: the retirement money would be in the hands of the persons doing the saving, for their own future retirement, instead of being redistributed, on the instant, to already retired strangers somewhere else in the country.

But, but—IRAs and 401(k)s already exist.  Sure, and they’re largely inaccessible to the low-income folks who’ll need retirement funds the most.

The painful truth is that low- to middle-income earners find it difficult or impossible to save adequately for a rainy day, much less for retirement.

But these low- to middle-income earners already are contributing to someone else’s current retirement through their payroll tax.  This “tax cut” has the advantage of diverting some of that already committed money to their own future, without reducing their take home pay by a single red cent.  And they’ll certainly do a better job of investing than Uncle Sugar has.  In addition to which, the future availability of that retirement fund of their own won’t be harmed by the declining numbers of working stiffs paying into Social Security—paying into current retirees’ funding—that threatens Social Security today.

Yes, it complexifies things.  But getting this interim step taken is worth the complexification—which isn’t that great, anyway.  Americans—especially those of us who work for a living—aren’t stupid.

Beyond this cut, there’s an additional one that especially favors the poor and lower income folks, and so makes our tax code more progressive, and so is a cut that even Progressive-Democrats can favor.  Cut/divert the payroll tax for Medicare commensurately, with those funds put into a MediSavings Account for the benefit of and owned and operated by the taxpayer involved.

The Debate Over Birthright Citizenship

President Donald Trump is thinking about signing an Executive Order that would end the birthright citizenship that many say is encoded in the 14th Amendment of our Constitution.  Whether Trump has the authority for such an EO is an open debate, but the more important debate is another one such a move has triggered: whether we should have birthright citizenship, in particular for the children of illegal aliens.

Nor is this question as cut and dried as many would like it to be.  Josh Blackman, South Texas College of Law Houston, has argued

More than 150 years after the amendment’s ratification, this “gloss” on the Constitution cannot be trumped by disputed definitions of “jurisdiction…,”

This, though, is a very Brandeis-ian view of justice—that it’s better that the law be settled than that it be settled right. Of course, this is…suboptimal…since all it does is perpetuate the injustice and spread it far and wide.  Blackman further argued that

…with outlier statements (sometimes misconstrued) during the ratification debates.

There are a couple of things about this bit. One is the arrogance of one man deciding what (inconvenient) arguments are irrelevant because they’re “outliers.” The other, larger thing is the general irrelevance of the ratification debates themselves, including putative outliers. The text of what was ratified already includes the thrust of those debates—for, against, and outlier—and so all that matters here is the text of the Constitution, and not those now OBE pre-ratification debates.

Even the Supreme Court’s primary ruling on one birthright citizenship question isn’t dispositive here.  As Matthew Spalding, Hillsdale College Associate Vice President and Educational Programs Dean, pointed out, the Supreme Court in its 1898, but now-often cited, US v Wong Kim Ark ruling conferred automatic citizenship to babies born to legally resident aliens, not to those born to illegal aliens.

[The Court] held only that the children of legal permanent residents were automatically citizens. The high court has never held that the clause confers automatic citizenship on the children of temporary visitors, much less of aliens in the country illegally.

In the end, the nature of birthright citizenship, the legitimacy of citizenship based on the location of a birth, hinges on the nature of jurisdiction in the 14th Amendment’s phrase subject to the jurisdiction thereof.

Americans’ ability to speak in public hinges on the 1st Amendment’s Congress shall make no law…abridging the freedom of speech phrasing and on the nature of abridging.  Americans’ ability to go armed in public hinges on the 2nd Amendment’s right of the people to keep and bear Arms[] shall not be infringed phrasing, the nature of bearing, and the relationship of this clause with a capable militia.

Yet, we carefully regulate both speech and keeping and bearing arms.  So it is that we can—and must—regulate the application of jurisdiction to the geographic and political surroundings of being born.

One additional thought on the nature of jurisdiction, beyond its regulability. Jurisdiction is a two-way street. Our polity can impose its jurisdiction on those physically within our borders. But those who enter our nation illegally are withholding themselves from our jurisdiction–by breaking our entry laws, illegal aliens actively refuse to submit to our polity’s jurisdiction. They do not, therefore, satisfy the 14th Amendment’s subject to the jurisdiction thereof requirement. And so the children of illegal aliens, born here, cannot satisfy the requirement on two grounds: from their illegal presence and by the fact that they cannot submit themselves; they are bound by their parents’ decision.

In the end, whatever the phrasing of Trump’s Executive Order turns out to be, whether it survives the inevitable legal challenges, whatever occurs in Congress, the proposal of an EO intended to address directly and explicitly birthright citizenship has triggered the necessary debate about that and about its applicability to children born of illegal aliens.

The Wages of a Minimum Wage Law

Recall Seattle’s 2015-2016 minimum wage law that mandated a rise in minimum wage from $9.47/hr to $12 for small businesses and $13 for large businesses.  The University of Washington early on published a study that demonstrated a drop in hours worked by low-wage workers of some 9% with a resulting decrease in actual income for those low-wage earners—ones least able to afford the cut—of some $74/mo.

New, updated numbers are in, reflecting in particular tracks folks with jobs at the time the mandated minimum wage went up.

Experienced workers earned $84 a month more, on average, although about a quarter of the gain came from taking additional work outside Seattle to make up for lost hours. Inexperienced workers got no real earnings boost. They simply spent less time on the clock.

Higher income for those who already had work experience, but at the expense of taking additional work—with that lengthy commute to get an available additional job outside Seattle’s jurisdiction.  I guess gasoline is free in Seattle, and those workers’ time has no value at all.

And those without work experience, trying to accrue some so they can get better jobs?  They’re not even allowed to hold their place in the experience line; this wonderful new minimum wage law is pushing them farther back.  This is emphasized by another sad datum:

The authors point to a marked decline, about 5%, in the number of people entering Seattle’s low-wage workforce each quarter.

The young, new, or simply unskilled are having a harder time just getting a first job.

This is how Progressive-Democrats reward their voters.