The #YangGang can't do math

Andrew Yang talking to Joe Rogan:

• "[The US is spending] $1.5 trillion on 126 welfare programs and Social Security."
• "The real price tag [for UBI] is $1.8 trillion, if you say everyone who is 18 and up. Now for context, the entire US economy is now $20 trillion... and the Federal budget is $4 trillion."
• "When you put money into people's hands, it doesn't disappear. It's going to go right back into the economy."
• "Of the $1.8 trillion, we're going to get back (let's say) $800 billion in new tax receipts."
• "We're going to save $100-200 billion on things like incarceration, homelessness services, and emergency room healthcare."
• "So, if you look at the cost savings, and the value gains, and the economic growth, that actually gains you back about $1 trillion."
• "The way you get back the last $800 billion... we need to put in a new tax that actually gets the American public a slice of every robot-truck mile, Amazon transaction, Facebook ad."

Let's do the math. (FUN!!!)

The civilian population, ages 16 and over and not in jail, is about 258,392,000. Half of which are currently receiving some sort of government assistance. Even if we assume none of them will receive UBI (which, according to Yang, many will get at least a partial payment), then we are paying out $1.5 trillion AT MINIMUM every year. So at least his estimate of $1.8 trillion is somewhat accurate.

But $1.8 trillion is almost half of the Federal budget of $4 trillion (estimated $4.41 trillion for 2019). Of that $4 trillion, $1.45 trillion is Social Security and $0.45 trillion is welfare. The UBI won't change that, as we are only considering the half of Americans who don't already receive government assistance. So we are adding $1.8 trillion of spending on TOP of the $1.9 trillion already being spent in government handouts. Our budget goes from $4.41 trillion to $6.31 trillion overnight.

"But we get that money back in tax receipts." No we don't. Of federal revenue, ad valorum taxes currently account for $1.6 trillion dollars. Our GDP is about $20 trillion, so ad valorum taxes are about 8% of our GDP. Even if we increase our GDP by the full $1.8 trillion, our ad valorum taxes would only raise $1.75 trillion; an increase of only $150 billion, not $800 billion.

Let's say we place an income tax on the UBI (which is stupid to tax government handouts, but it already happens in many instances). We currently get $2.4 trillion in income taxes, which is about 12% of GDP. We add the same $1.8 trillion, in its entirety, to the GDP and tax it at 12%, we get about $200 billion. So far, between ad valorum and income taxes, took back about $350 billion of the $1.8 trillion.

(EDIT) I just learned that Hauser's Law says:

In the United States, federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.

Ad valorum = 8% of GDP. Income tax = 12% of GDP. Total revenue = 20% of GDP. Damn I'm good (even if by accident).

Saying we're going to save money on incarceration by paying people is to deny reality. The people who already get government funding are the most likely to commit crimes. Yang said he's not going to be paying people UBI to those getting government money (or at least not more than his magic $1000/mo). So the people who are committing the most crimes wouldn't see any more money. No more money = no less recidivism. Therefore, $0 dollars gained.

As for saving on healthcare, we are making the logical leap that some of the UBI will be spent on health insurance and preventative healthcare. If it is, then it's not being put toward very much of the GDP, ad valorum taxes, or income taxes. But let's play along, shall we? Federal spending on healthcare, after you remove services like senior care and R&D, which will not change, we're spending about $500 billion federally. Most of this, $400 billion, goes to the states for services which would include those pesky emergency room visits. Even if we reduce this by half (which is overestimating, but let's be generous), we are only saving $200 billion.

So, with $150 billion from ad valorum taxes, $200 billion from income taxes, $0 dollars from reduced incarceration, and $200 billion from reduced healthcare costs, we have a grand total of $550 billion of the needed $1.8 trillion. We need to create new taxes, such as the Value-Added tax (VAT), and raise $1.25 trillion.

Where. Does. That. Money. Come. From?

This is where the logic breaks down between liberals and money. They think the following:

1. Money put into people's hands goes into the economy.
2. Money taken from them through taxes comes from magic fairy dust.

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figures:

Income Taxes = 37% total 
Social Insurance Taxes = 23% total 
Ad valorem Taxes = 24% total 
Fees and Charges = 9% total 
Business and Other Revenue = 7% total

Income Taxes = $2.4 trillion 
Social Insurance Taxes = $1.5 trillion 
Ad valorem Taxes = $1.6 trillion 
Fees and Charges = $0.6 trillion 
Business and Other Revenue = $0.5 trillion 
Total Direct Revenue = $6.5 trillion

Income Taxes: Individual and corporate income taxes.
Social Insurance Taxes: FICA taxes, unemployment, disability taxes.
Ad valorem Taxes: Sales, excise and property taxes, licenses.
Fees and Charges: Fees for government services other than taxes.
Business and Other Revenue: Revenue from government businesses such as liquor stores and utilities.

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source:
Joe Rogan Experience #1245 - Andrew Yang - Streamed live on Feb 12, 2019
Total Government Revenue in the United States - Fiscal Year 2019
Labor Force Statistics from the Current Population Survey - Civilian noninstitutional population - Age: 16 years and over
We've Crossed The Tipping Point; Most Americans Now Receive Government Benefits - Forbes - by Merrill Matthews - Jul 2, 2014
Total US Government Spending
US Gross Output for 2017 Released

Self-test: Am I Literally Hitler?

I know what you've been wondering. "How can I tell if I'm literally Hitler or not?" Well, here's a handy test to see if you are!

Question 1 - Employment is down. Do you:
A. Lower taxes for businesses.
B. Increase government spending on infrastructure (e.g. roads).

Question 2 - More families have both parents in the work force. Do you:
A. Give families subsidies which are transferable to the school or daycare of their choice.
B. Open public education centers, including "Gardens of Children" for the very young.

Question 3 - Healthcare is expensive. Do you:
A. Loosen regulation providing competition between insurance companies across state lines.
B. Provide single-payer healthcare where doctors' salaries are paid by the government.

Question 4 - Crimes are being committed using guns. Do you:
A. Strengthen ties between the communities and law enforcement.
B. Create a national registry of guns and gun owners, thereby denying guns to potential criminals.

Question 5 - Women are getting abortions at higher rates. Do you:
A. Provide education on sex, abstinence, adoption, and family planning at healthcare centers.
B. Provide government funding of abortion.

Question 6 - The economy is not going well. Do you blame:
A. The government which provides businesses with incentives.
B. The rich bankers who control the flow of money.

Question 7 - A portion of the population disagrees with your policies. Do you:
A. Explain to them why your policies are better than the alternatives.
B. Fine or arrest persons who obstruct your policies.


Scoring
Give yourself one point for each answer of "A". Subtract one point for each answer of "B". If you come up with a negative score, CONGRATULATIONS! YOU ARE LITERALLY HITLER!


Explanation
Q1 - Hitler helped revive the country by massive infrastructure projects. By jumping on the popularity of the automobile, as well as the added mobility, Hitler made spectacles out of each road project. To increase the popularity of these infrastructure projects, Hitler also founded the "People's Car Company", or Volkswagen, to provide reasonable cost automobiles to the German people.

Q2 - While "Gardens of Children", or Kindergartens, were already being formed in the 1850's, it was the Nazis who instituted a public education system with the intent of alleviating the burden on households, while simultaneously doubling the available workforce by freeing the mothers to work outside the homes.

Q3 - Hospitals became parts of the state under Hitler. Since healthcare was free, people went to the doctor for anything, causing massive delays in care and bottlenecks in service. Doctors who were paid by the government did not make enough money to endure the massive need, so many left for Austria where they could set their own rates.

Q4 - The Weimar Republic created a gun registry, and the Nazis used it to take guns from the Jews. This left them defenseless when they came to load them on the trains.

Q5 - The Nazis were huge fans of eugenics and the use of abortion to control the population. Poor people, degenerates, gypsies, slavics, and jews were provided abortions in great numbers. The pure Germans, however, had programs to increase their rate of reproduction including one called Lebensborn, or "Wellspring of Life".

Q6 - The Nazis blamed the Jews, particularly jewish bankers, for their economic ruin following World War I. They began with boycotting their businesses, then with outright taking their money.

Q7 - The Jews, being the target of the Nazi's ire, were fined and arrested on any cause the Nazi's could concoct. (Very similar to the persecution of christian bakers of today who did not toe the party-line.)

why i say we're not doing very well

Labor Force Participation Rate
August 2016 - 62.8%
Obama took office 1/2009 - 65.7%
Peak in January 2000 - 67.3%
Last time it was the current rate - March 1978

Labor Force; the number of people, 16 and older who are able to work, with jobs
August 2016 - 159 million
January 2009 - 154 million
January 2000 - 142 million
March 1978 - 104 million

People not in Labor force: the number of people, 16 and older who are able to work, without jobs
August 2016 - 94 million
January 2009 - 80 million
January 2000 - 68 million
March 1978 - 71 million

In last 38 years,
65 million new jobs were filled.
33 million new jobless people.

In last 16 years,
17 million new jobs were filled.
26 million new jobless people.

In last seven years,
5 million new jobs were filled.
14 million new jobless people.

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source:
Labor Force Participation Rate
http://data.bls.gov/timeseries/LNS11300000

Civilian Labor Force Level
http://data.bls.gov/timeseries/LNS11000000

Re-Blog - "The Ugly Truth About A $15 Minimum Wage"

The Service Employees International Union spent 2015 expanding its campaign for a $15 minimum wage to other industries. In recent nationwide protests, the union focused again on its original target: Fast food companies, and McDonald's in particular.

I worked for the company for three decades, and served as its USA President for 13 years. I can assure you that a $15 minimum wage won’t spell the end of the brand. However it will mean wiping out thousands of entry-level opportunities for people without many other options.

The $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business such as McDonald’s. “They’re making millions while millions can’t pay their bills,” argue the union groups, suggesting there’s plenty of profit left over in corporate coffers to fund a massive pay increase at the bottom.

In truth, nearly 90% of McDonald’s locations are independently-owned by franchisees who aren’t making “millions” in profit. Rather, they keep roughly six cents of each sales dollar after paying for food, staff costs, rent and other expenses.

Do the math

Let’s do the math: A typical franchisee sells about $2.6 million worth of burgers, fries, shakes and Happy Meals each year, leaving them with $156,000 in profit. If that franchisee has 15 part-time employees on staff earning minimum wage, a $15 hourly pay requirement eats up three-quarters of their profitability. (In reality, the costs will be much higher, as the company will have to fund raises further up the pay scale.) For some locations, a $15 minimum wage wipes out their entire profit.

Recouping those costs isn’t as simple as raising prices. If it were easy to add big price increases to a meal, it would have already been done without a wage hike to trigger it. In the real world, our industry customers are notoriously sensitive to price increases. (If you’re a McDonald’s regular, there’s a reason you gravitate towards an extra-value meal or the dollar menu.) Instead, franchisees can absorb the cost with a change that customers don’t mind: The substitution of a self-service computer kiosk for a a full-service employee.

In higher-cost European countries, these kiosks are already the norm. In 2011, the company ordered more than 7,000 of them to replace entry-level employees. They’ve been tested successfully in a number of markets in the U.S., and now the company is even testing self-serve McCafe kiosks where a customer can prepare and customize their own coffee beverage.

Hurting young workers

If you’re tempted to shrug your shoulders at this brave new world, don’t. Over four million people in the U.S. are employed at “limited service” restaurants, a descriptor which includes companies like McDonald’s. If even one out of every four jobs was automated, that’s one million fewer job opportunities in a country where the youth unemployment rate is more than three times the overall unemployment rate. (In urban markets such as New York City and Washington, DC, the youth unemployment rate averages 30%.)

These young adults who face long spells of unemployment now are at a long-term disadvantage relative to their employed counterparts. One study released by the Employment Policies Institute found that high-school seniors with part-time work experience earned 20% more per year on average, 6-9 years after graduating, relative to their fellow students who didn’t work. Ironically, today’s minimum wage mandate for higher pay will be condemning young adults to lower-paid and less-successful futures.

I suspect that the labor organizers behind this campaign for a $15 minimum wage are less interested in helping employees, and more interested in helping themselves to dues money from their paycheck. They’re unlikely to succeed in their goal of organizing the employees of McDonald’s franchisees, but they may well succeed in passing $15 into law in other sympathetic locales. You’ll see their legacy every time you visit the Golden Arches, where “would you like fries with that” is a button on a computer screen rather than a phrase spoken by an employee in their first job.

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source:
The Ugly Truth About A $15 Minimum Wage by former president and CEO of McDonald's USA, Ed Rensi - 4/25/2016 Forbes

the only people retiring are the young

Okay, I have done the math for y'all.

between 1984 and 2014, the total population of the US increased by about 83 million... the labor force (16 and older) in that time period increased by only 48 million... of that 48 million, 19 million were 55 years old and older... we LOST 2 million workers between the ages of 16 and 24... (maybe they retired?)

as a rule, the labor force steadily increases... part of this is the increase in population, but also trends in the economy... more women are entering the work force... youth work younger... retirement age getting older.

but from 2008 until now, the labor force has plateaued... it is true that between 2008 and 2014, the Under-55 demographic has not expanded as in the past... and the Over-55 demographic has indeed increased due to the Baby-Boomers... but the plateau is dramatic by the greater scope of the population... between 1984 and 2008, the labor force increased by 41 million; that's about 1.7 million per year... were that to continue from 2008, by 2014 there would have been an extra 10 million in the labor force... but that didn't happen.

so where did they go?... did 10 million retire?... as stated earlier, we've INCREASED the number of retirement age people in the labor force... in fact, an additional 11 million Over-55 were added to the work force between 2004 to 2014, while we only gained 3 million 16-54 year olds.

so, the argument that the Baby-Boomers are retiring, causing the slump in the labor force is false.

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Sources:
Labor force projections to 2014: retiring boomers

Group	Level (thousands)				Change (thousands)
	1984	1994	2004	2014	1984–94	1994–2004	2004–14
Total, 16 years and older	113,544	131,056	147,401	162,100	17,512	16,345	14,699
16 to 24 years	23,989	21,612	22,268	22,158	–2,377	656	–110
25 to 54 years	74,661	93,898	102,122	105,627	19,237	8,224	3,505
55 years and older	14,894	15,546	23,011	34,315	652	7,465	11,304

Population, totals
1984
Population - 235,825,000
2014
Population - 318,857,056

Population 55 Years and Over by Sex and Age: 2012
Under 55 - 229,349,000
Over 55 - 79,477,000
Population 55 Years and Over by Sex and Age: 2008
Under 55 - 229,014,000
Over 55 - 70,091,000

Civilian labor force participation rate (percent of population 16 years old and older)

Jan. 1984 - 63.9%
Jan. 2000 - 67.3% (peak)
Jan. 2008 - 66.2%
Jan. 2014 - 63.0%

Civilian labor force

Jan. 1984 - 112,209,000
Jan. 2000 - 142,267,000 (peak)
Jan. 2008 - 154,063,000
Jan. 2014 - 155,486,000