Tag Archives: the economy

After AlphaGo There Is No Stopping AI

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Artificial Intelligence, in one form or another, is everywhere. We invite it into our homes and feed it on social media. Businesses that have the resources to automate, will. Every sector of the economy utilizes AI in some form.

It is nearly impossible to find an industry that is not looking to AI for improvements. AI is potentially playing a role in semiconductors, industrial applications, military and defense and everything in-between. Manufacturers hope AI will make developing products and innovation easier. Globalspace, September 6, 2019

Advances in AI

Meanwhile, AI keeps advancing in what it can do. An interesting way to observe AI’s recent trajectory is to recall the times when AI competed against human champions and won.

* IBM’s Deep Blue defeated chess grandmaster Garry Kasparov in 1997.

Chess kept Deep Blue in the realm of what computers are good at, using statistics and probabilities to determine strategy. (Popular Science, 12/26/12)

* IBM’s Watson defeated two Jeopardy! champions, Ken Jennings and Brad Rutter, in 2011.

Jeopardy! … pushed Watson into an unfamiliar world of human language and unstructured data. (Popular Science, 12/26/12)

* DeepMind’s AlphaGo program defeated go world champion Lee Sedol in 2016.

When compared with Deep Blue or with Watson, AlphaGo’s underlying algorithms are potentially more general-purpose… (Wikipedia, AlphaGo vs. Lee Sedol)

Ultimate Goal With Unknown Results

Real artificial intelligence is general-purpose. It is artificial general intelligence. AGI has the potential to perform any task that a human being can perform, not just a specialized task such as playing board games. It can teach itself by manipulating massive amounts of data. It can act based upon its own knowledge.

Here is a description of Google’s machine learning tool AutoML-Zero, published in Google AI Blog July 9, 2020:

In our case, a population is initialized with empty programs. It then evolves in repeating cycles to produce better and better learning algorithms. At each cycle, two (or more) random models compete and the most accurate model gets to be a parent. The parent clones itself to produce a child, which gets mutated. That is, the child’s code is modified in a random way, which could mean, for example, arbitrarily inserting, removing or modifying a line in the code. The mutated algorithm is then evaluated on image classification tasks.

When asked why he wanted to climb Mount Everest, George Leigh Mallory responded, “Because it’s there.” Once a goal is envisioned, there is no stopping those who will pursue its attainment, regardless of unknown collateral results. The envisioned goal in AI technology is to spread AI everywhere in ever-advanced forms.

On December 2, 2014, BBC News made headlines with remarks by theoretical physicist Stephen Hawkins and response by Cleverbot creator Rollo Carpenter.

The development of full artificial intelligence could spell the end of the human race … It would take off on its own, and re-design itself at an ever increasing rate… Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded. Hawkins

I believe we will remain in charge of the technology for a decently long time and the potential of it to solve many of the world problems will be realized.… We cannot quite know what will happen if a machine exceeds our own intelligence, so we can’t know if we’ll be infinitely helped by it, or ignored by it and sidelined, or conceivably destroyed by it. Carpenter

Recommended Segment of PBS FRONTLINE

In the Age of AI aired on FRONTLINE’s Season 2019, Episode 5, November 5. The program serves as a good overview of what AI is, what it is used for today, what effect is has had in economies, what it has done to privacy and liberty, and where it looks like AI is going.

The program’s framework is the U.S. AlphaGo’s victory over China’s go player Ke Jie, which ignited China’s quest for AI supremacy.

Here are some good take-aways offered by In the Age of AI:

There are three important developments that changed the world – the steam engine, electricity and AI — “everything else is too small.”

In the U.S. automation amplified by AI has sadly caused a lot of white and blue collar workers to lose their jobs. However, developments in technology have always done that. Former elevator operators, telephone operators, and secretaries can attest to that.

AI’s most prominent role has been in personal data gathering. Both private and public sectors depend on some form of AI’s ability to collect massive amounts of data and use it to indicate individuals’ preferences, habits, routines, etc.

China’s advances in AI have been astounding. China sees benefit in having become a surveillance state where people’s routines are in a vast database that can be used to quickly process loans or quickly scoop disruptors for purposes of re-education. The regime’s Belt and Road Initiative invests in and builds infrastructure all over the world. Included in the developments, are China’s ubiquitous surveillance cameras.

AI is the ultimate tool of wealth creation. The push for advancing AI results in aid to capital and neglect of labor, causing inequality to grow. It used to be that wages rose with productivity, but with the advent of automation, especially that augmented by AI, productivity and wages decoupled. It won’t be long before there is real clamor for distribution of wealth created by capital.

You and AI

Whether you embrace or fear artificial intelligence, AI is here to stay. In the short run you will benefit from augmented diagnostic techniques or harmed by loss of a job. In the long run your place in the universe – to your advantage or not — might be determined by a machine.

(Featured picture: Ke Jie playing AlphaGo, NPR, Google A.I. Clinches Series Against Humanity’s Last, Best Hope To Win At Go, May 25, 2017)

Pandemics in Pictures

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It is said that a picture is worth a thousand words.  These days we have thousands of words — often contradictory — about The Pandemic.  A few pictures might help. Pictured above is Jimi Hendrix at the Woodstock Music Festival August 1969.  The Hong Kong Flu 1968 – 1969 raged on as life went on.

Unprecedented Pandemic?

The Coronavirus Disease 2019, commonly known as COVID-19, was first noted December 2019.  As of September 2, 2020, estimates indicate 25.7 million inflections and 857,000 deaths worldwide.  The virus responsible for COVID-19 is SARS-CoV-2 (severe acute respiratory syndrome-coronavirus-2), the newest in a large family of coronaviruses. 

COVID-19 is indeed a pandemic. Pandemics, regardless of severity, spread quickly worldwide, as opposed to epidemics which are more local (think Ebola). But is COVID-19 “unprecedented?”

Here is a picture of some of the worst worldwide influenza pandemics. The Asian Flu lasted about one year (February 1957 to around March 1958), and killed 1.5 to 2 million people. The Hong Kong Flu also lasted around one year, and killed 1 million people.

The next picture includes characteristics like how fast a virus spreads and severity of symptoms. COVID-19 spreads easier than other similar viruses, but proportion with mild illness is high.

Or Unprecedented Overreaction With Devastating Results?

Past pandemics did not see the widespread lockdown we are experiencing with COVID-19. Therefore, past pandemics did not see the unprecedented economic meltdown we are experiencing today. Measured by GDP, the 2008 U.S. Great Recession pales in comparison. Here is a picture from Tradingeconomics.com

As of August 2020, numerous U.S. companies filed for bankruptcy protection amid lockdowns, including big brands such as Brooks Brothers, Cirque du Soleil, and Neiman Marcus. How many Mom & Pop stores that tend to hire lower-income folks have closed is hard to say.

Woodstock Anyone?

An event that characterized the 1960s was the Woodstock Music Festival. An audience of about 400,000 gathered on a dairy farm in New York state August 15-18, 1969, to watch music notables of the time like Joan Baez, Janis Joplin, and Jimi Hendrix.

Although “fact checkers” like Reuters went out of their way to explain why it is “misleading” to say Woodstock took place in the middle of the Hong Kong Flu pandemic — the event was between waves of the flu — the fact remains that Woodstock was in 1969, and the Hong Kong Flu pandemic was in 1968-1969.

Life is Making Choices

The 1960s were the days of fighting the establishment. Those were the days when young people demanded withdrawal of troops from Vietnam and troops were withdrawn. They were the days when women burned their bras in public, and rights were won. Individualism — otherwise known as “do your own thing” — reigned. In retrospect, Woodstock belonged in 1969.

Today we tow the line. We wear masks. We make our children wear masks. We are OK with going without medical checkups and teeth cleanings. We are OK with lockdowns that put our employers out of business and our families on public assistance. We do not fight back as the establishment dooms our children to sub-par education.

Life means choices.

Once Again the Fed Wants to Save Us

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Fed Eagle

On March 23, 2020, the U.S. central bank, the Federal Reserve, announced extensive new measures to support the U.S. economy as the coronavirus continues to ravage small businesses and the livelihood of workers.

Fed Chairman Jerome Powell not only revived the tools used in the 2008-2009 financial crisis but implemented new ones.

In 2008-2009 then Federal Reserve Chairman Ben Bernanke was charged with saving the U.S. economy from the sub-prime massacre. He did that in part by resurrecting Section 13(3) of the Federal Reserve Act, which allowed him to implement key non-conventional tools to provide liquidity directly to borrowers and investors in critical credit markets: Commercial Paper Funding Facility (CPFF), Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), Money Market Investor Funding Facility (MMIFF), and the Term Asset-Backed Securities Loan Facility (TALF).

In 2020, Fed Chairman Jerome Powell was charged with a similar task. Here is what Reuters said on the matter back on March 18,

Pressure is growing in Washington for the U.S. Federal Reserve to use its emergency powers to lend directly to businesses hurt by the coronavirus, according to four people with knowledge of the discussions.

The U.S. Treasury, senior bankers, the U.S. Chamber of Commerce, and some senior senators want the central bank to make broader use of its powers under Section 13(3) of the Federal Reserve Act to provide credit directly to businesses under “unusual and exigent” circumstances, the sources said.

Thus, the Fed established two new programs to accomplish its bidding: The Primary Market Corporate Credit Facility (PMCCF) facilitates lending to small and medium-sized business. The Secondary Market Corporate Credit Facility (SMCCF) provides liquidity for outstanding corporate bonds.

Despite enthusiasm from some quarters for an aggressive Federal Reserve response, there is apprehension.

The Cato Institute points to a constitutional issue. The U.S. was built on the principle of “no taxation without representation.” The people’s representatives in the U.S. House hold the nation’s purse strings. When the Federal Reserve (over which theoretically neither taxpayers nor Congress have any authority) provides credit with little or no recourse, taxpayers are the ones to absorb defaults without having had any say so in the matter.

In a March 27 Bloomberg Opinion piece Jim Bianco (President and founder of Bianco Research) expressed his concerns. Although the 2020 response is similar to that of 2008-2009, the 2020 programs are larger in scale. Blurring of fiscal policy (carried out by the Treasury under the direction of Congress) and monetary policy (carried out by the Federal Reserve under the direction of nobody) endangers the important separation of these two entities. Special purpose vehicles (SPVs) underlying the Fed’s 2020 rescue programs could be abused, resulting in serious distortions in capital markets.  Bianco says,

In effect, the Fed is giving the Treasury access to its printing press. This means that, in the extreme, the administration would be free to use its control, not the Fed’s control, of these SPVs to instruct the Fed to print more money so it could buy securities and hand out loans in an effort to ramp financial markets higher going into the election.

Given the fact that once government programs are put in place they remain into eternity, the American people might find itself stuck with subsequent administrations that could abuse SPVs not only to ensure re-election but also to centralize control of the economy, artificially invigorate stocks, and reward favored industries.

Ayn Rand Could Come in Handy Today

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Pictured

Ford Motor Company: In 1914 Henry Ford acquiesced to his workers’ demand for $5 per hour ($128.67 in today’s dollars) as a result of rising competition in the automobile industry.

McDonalds Company: After a 5-year war against any proposal to raise the government-mandated minimum wage to $15, McDonalds and other large corporations gave up fighting. In the absence of real competition, businesses see no reason to raise wages significantly, and wait until forced to do so by government.

The Keynesian Zeitgeist

Anyone harboring expectations that the U.S. can be saved from the ultra-progressive interpretation of Keynesian economics must feel extremely disappointed. Spending, borrowing and regulating in good times and bad at all levels of government seem to be the majority’s solution to every economic challenge.

Why would the U.S. need eventual salvation from such “solutions?” Exuberance over high stock prices, low unemployment, and a decent GDP has masked since the end of the Great Recession vanishing private sector jobs and an unsustainable national debt.

Keynesian solutions discourage businesses and prop up consumer spending with various government-mandated benefits. To sustain such benefits there has to be very high levels of taxation. In the absence of taxation, public debt is the only other alternative.

Ah, but Keynesians say supply-side economics only serves to enrich the already rich. True, supply-side economics cannot benefit workers in a rigged, monopoly-dominated market where cronyism passes for capitalism. It is no wonder that the bulk of the increase in jobs in the last few years has been in low-paying and part-time jobs. No business competition means no good jobs. Even self-described free-market fiscal conservatives end up in the Keynesian camp when real competition vanishes.

Any Hope in Sight?

* How are the Two Great Decisions of the Past Decade Working For You?

Obamacare? Many people unable to obtain health care before Obamacare were pleased, but the many who saw their premiums double were not.

How about the Tax Cut and Jobs Act? The tax cuts were not accompanied by commensurate spending cuts, so the national debt continues to grow. Small businesses, which generate a lot of new jobs, got a tax cut that will expire in 2025 (6 years away). Large corporations got a permanent tax cut, but have not so far produced the jobs or innovation hoped for. The lack of substantial results is not surprising, since no business it its right mind would commit to significant increases in workforce or capital investment based on the Tax Cut and Jobs Act. Congress has been determined since 2016 to impeach President Donald Trump one way or another, and re-elections are never a certainty. Should the President be ousted, the next effort will surely be to repeal the tax cut.

*  2020 Presidential Candidates’ Spend-Borrow-Regulate Meter

Today, there are two major Republican challengers. William Weld is a former two-term Governor of Massachusetts and 2016 presidential candidate on the Libertarian ticket. Joe Walsh is a former one-term member of the U.S. House of Representatives from Illinois and conservative talk show host. Both candidates talk in general terms about market innovation and fiscal responsibility. Weld’s most specific proposal is to substitute the current complicated tax system with a flat tax. Walsh speaks of advocating for a balanced budget amendment, free-markets, and a “sensible safety net.” Neither speaks of any radical measures necessary to bring down a $23 trillion national debt or end the cronyism that today produces substantial corporate bonuses but low worker wages.

The Democratic field is dwindling as expected, but there are 15 candidates still in. Although these candidates furiously argue with each other on the debate stage, their differences are of degree not substance. They all espouse the same core principle: let government provide all wants and desires by controlling and taxing pretty much everything in the economy. The seriousness of an unsustainable national debt does not seem to be a concern to the candidates.

The talking point voters mainly choose to hear is that Democratic candidates have plans to “eat the rich” to provide benefits for workers. Although that is not entirely the case, it is close enough. The working middle class will also be expected to chip in via such things as loss of stepped-up value on inherited homes (you will not keep a heck of a lot after you sell that San Francisco home your Grandma left you). Also, rich corporations are not the only one who will be required to follow new mandates such as a $15 Federal minimum wage. However, the candidates’ plan main thrust is indeed to tax corporations and wealthy individuals, implement more regulation on businesses, and redistribute wealth to workers and non-workers.

Let’s Talk About Ayn Rand

Fiction has a way of being ahead of life. In 1957 Ayn Rand wrote Atlas Shrugged, which showed in detail how Big Government has a habit of generating policies that create problems and then attempting to fix those problems by generating more problematic policies. Take the minimum wage: government increases the minimum wage, the more vulnerable workers are laid off, government increases taxes on businesses to support safety-nets for vulnerable workers, businesses lay off more workers to keep their level of desired after-tax profits.

In 2009, the Wall Street Journal ran an opinion piece the author Stephen Moore called Atlas Shrugged’: From Fiction to Fact in 52 Years. Note that the date of this op-ed falls during the Great Recession.

In a very brief WSJ video commentary, Stephen Moore talks about the article. He equates the economic downward spiral in Atlas Shrugged with the economic mess that was the period 2007-2009. Piles of regulations in Rand’s imaginary world obliterated innovation, strangled production, promoted inept cronyism, and brought down an entire economy. To Moore, those events looked like heaps of failing sub-prime loans encouraged by pools of mortgage backed securities mostly created by Ginnie Mae, Fannie Mae, and Freddie Mac.

As noted above, the economy is strong, but plagued by rising public debt and wealth inequality. Such ills are versions of things falling apart as envisioned by Ayn Rand in Atlas Shrugged.

Shrugging Happens in Real Time

Today, we see outmigration of large businesses from high-tax high-regulation states to low-tax low-regulation states. Large businesses generally only migrate to costly states if taxpayers fork over billions of dollars in tax breaks and other incentives. We have seen what happens when cost of labor increases beyond what businesses want to pay – they outsource to lower-cost countries.

In other words, when forced to carry more burden than they want to, businesses shrug. They leave. The employed are now unemployed. The good or service previously provided is gone.

There is no evidence that the Atlas of Greek mythology ever gave up and shrugged off the Heavenly Sphere he was ordered by Zeus to carry forever, but common sense would say that he probably eventually did.

Bay Area IPO’s Coming to Raise Your Rent

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The San Francisco Bay Area seems to be on a housing treadmill. Just as housing inventory started to grow and prices responded accordingly in some areas, tech companies are planning to go public. Airbnb, Lyft, Pintrest, Slack Technologies, and Uber are expected to issue initial public offerings in 2019. This will mean an infusion of cash into the pockets of the many tech workers who own their company’s stock. The logical thing to expect these workers to do is to use the cash to purchase a home. No more growing housing inventory and possible growing housing prices.

IPOs and Housing Prices

Doubt the correlation between IPOs and housing prices? Market Watch has a good article on the subject.

Zillow examined the link between Facebook’s IPO in 2012 and rising home prices across the Bay Area and found that home values rose more quickly in neighborhoods with higher concentrations of Facebook employees after the social network became a publicly-traded company.

Specifically, every 10 Facebook employees living in a given U.S. Census tract at the time of the IPO were associated with an extra 1.6-percentage-points increase in home values over the following year, the report said.

In dollar figures, the median value home in a neighborhood with a high concentration of Facebook workers rose by an extra $20,800 between May 2012 and May 2013.

Business Clusters 

In the Bay Area, companies highly valued by market standards, as well as startups hoping to join the value crowd at some point, are concentrated in close proximity to one another.  They comprise the world-famous Silicon Valley hub. This concentration affords the most return on investment for the companies, for their host government jurisdiction, and for homeowners in the community.

Clusters and cluster strategies cannot be seen as the answer to every economic challenge faced by a community or region. However, they do represent a valuable tool that economic development stakeholders should have at their disposal. A cluster approach may be most useful in helping officials and practitioners to see a community’s economy in a new way—not as a collection of individual firms, but as a system in which interventions can assist companies, industries, and the entire community.  Cluster-Based Economic Development Strategies, International City/County Management Association, March 29, 2012

Business clusters are the in thing, and the Bay Area has jumped on the bandwagon with two feet. But, when cluster advocates say clusters benefit “the entire community,” are they including those folks in the community’s lower and middle-income brackets who rent their homes? Those community residents might be employed by fast-food restaurant, or might be the people educating your kids in neighborhood schools or caring for your toddlers. Chances are they will never get their hands on IPOs, do not own a home, and never will own a home in the Bay Area.  But as prices increase due to the IPO infusion of cash, their rents will go up.  And forget about rent control, since everybody pays for that by way of taxes or prices.

Is There a Line of Defense?

The Bay Area has chosen to engage in an endless tug of war between developers and slow-growth advocates, high-income workers and lower-income workers, landlords and renters, YIMBYs and NYMBYs.  Meanwhile, housing costs are transforming the Bay Area into a poster child for unaffordability.  Maybe it is time for all sectors to give in a little by balancing housing and business spaces in every community.

How the U.S. Debt Affects You

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$20 Gold Coin
Real Money: 1907 $20 gold coin

Fiat money, that is money without intrinsic value, is a fascinating topic. Only money backed by a commodity that has intrinsic value, such as gold and silver, can be said to be of value. Such money is redeemable in gold or silver, and its quantity in circulation is limited by the amount of gold of silver available.

The money we use today has only government’s say so that it is of “value.” It is not redeemable in anything. Its quantity is at the will of the Federal Reserve, who has control of the money supply via its power to create credit with interest rates and reserve requirements.

How the U.S. Debt Affects You: The U.S. debt hit $21 trillion March 2018 — the largest sovereign debt in the world for a single country. We live in a monetary system where fiat money erodes your wealth and chips away at your liberty. Read More.

Pictured above on the left is a $20 United States Bank Note, which was redeemable in gold until 1971; that can be considered real money.  On the right is a $20 Federal Reserve Note, backed by the “full faith and credit” of the federal government.  Good luck hoping it will maintain any “value.”

An associate of the Just Vote No Blog editor considers the topic of fiat money the most important one of our day, and provided some insights used by JVN in this article.

Money 101

The U.S. Constitution has two authorities on “money” (Article 1, Section 8):

* To coin money and regulate the value thereof.

During Colonial days gold and silver were considered “money”.  Money was a commodity. “Setting the value thereof” is like making sure a pound is a pound so people can buy the same pound of coffee, for example. A dollar is a dollar is a dollar. This is not the case today. As Consumer Price Index fluctuations show, a dollar today may not buy the same amount of goods as a dollar tomorrow.

* To borrow money on the credit of the United States.

This is the arrangement under which we operate today. There is no actual “money” with intrinsic value in circulation. We are operating under a credit/debit system which is a system of accounts. Under this system, money and debt can be created at will to finance government operations, provide for public assistance, maintain the armed forces, and pay for any other function government decides to undertake. Near-zero interest rates allow for servicing the debt.

Outcomes

All actions, including implementation of government policies, have outcomes or consequences – good and bad. The U.S. monetary/financial model characterized by liberal use of borrowing and the existence of a central bank (the Federal Reserve Bank) is no different. Let’s pick some outcomes at random:

* The Federal Reserve System through debt-issued currency, manipulation of interest rates and steady inflation allows our wealth to be eroded without us even realizing. When government increases money in circulation, consumers will likely use it to purchase additional items they would not have normally bought. Often the supply of goods does not keep up with the increased demand, resulting in a rise in prices. So, if you needed $20 to buy your lunch, now you need $25 or $30. If you were confident your bank savings would help you through a financial setback, you might not be now.

* A central bank’s control of interest rates and bank reserve requirements allow for manipulation of people’s behavior. Near-zero interest rates form the habit of living on credit – why worry about saving or having any cash to pay one’s living expenses or obligations? Cash is anonymous, but credit is not. When you buy with credit, businesses inventory and catalog you, not only so they can stay in touch and collect the debt, but also so that they can try to sell you even more stuff.

* The current U.S. debt was about $21 trillion in March 2018 — the largest sovereign debt in the world for a single country. Debt is necessary to run a country when revenues such as taxes and fees are not sufficient to cover expenses. As debt approaches unsustainable limits, it is logical for government to ensure that every citizen pays his/her “fair share” of taxes. That includes encouraging traceable payments systems. So, it is not only businesses that want you to move towards a “cashless society” so you can be watched. 

The Fading Free Society

We cannot preserve our liberty if we cannot maintain our purchasing power and stay solvent as people, as a state and as a nation. We need to focus on the issue of fiat money, and the associated issues of central planning and debt. The Founding Fathers were forced to do so when faced with enormous war debts and worthless currency. Their solution was to include in the U.S. Constitution Article I Section 10, which prevents states from making “any Thing but gold and silver Coin a Tender in Payment of Debts.” But the U.S. Congress was granted power the “to borrow money on credit.” We the People need to be more mindful of that credit card.

Poverty in the Land of Plenty

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The U.S. is a rich country judging by its massive economy as measured by GDP, standard of living and availability of goods and services. Yet, the U.S. has one of the highest poverty rates in the world. Among OECD (Organization for Economic Co-operation and Development) member countries, mostly developed countries, the U.S. ranks third highest in poverty.

Poverty is not evenly distributed among the U.S.’s 50 states, but is concentrated in a few, with California leading the way as having the highest poverty rate in the nation and contributing the most to the U.S.’s lamentable rank among developed countries. Even more disturbing is the fact that California’s GDP in current U.S. dollars ranks No. 1 among all other states.   Read More

Supplemental Poverty Measure

 

 

If You Are Poor, You Are Not Alone.

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The Big Picture

The U.S. is a rich country judging by its massive economy as measured by GDP, standard of living and availability of goods and services. Yet, the U.S. has one of the highest poverty rates in the world. Among OECD (Organization for Economic Co-operation and Development) member countries, mostly developed countries, the U.S. ranks third highest in poverty.

When viewed as percentage of a population, poverty rates usually understate the misery. The OECD’s as well as many other measures of poverty count individuals living below a certain poverty income line. Therefore, individuals need to be countable and receiving some form of income, which leaves out people participating in underground economies and other invisible endeavors.

Income is defined as household disposable income in a particular year. It consists of earnings, self employment and capital income and public cash transfers; income taxes and social security contributions paid by households are deducted. OECD: Household Income and Wealth

The Smaller Picture:  U.S. States

The big picture shows the U.S. as having a significant GDP in relation to other countries, as well as a noteworthy poverty level. What drives such unfortunate poverty numbers? For example, what U.S. states contribute the most to the bleak figures?

Poverty rates

The above figures show the number and percentage of people living in poverty by state, using a 3-year average over 2015, 2016, and 2017. Additionally, these figures, provided by the U.S. Census Bureau on September 2018, are the Supplemental Poverty Measure, which factor in cost of living in each state. One state stands out: California.

The Golden State, Not So Golden

California has 7.5 million people living in poverty, the nation’s highest rate.  The next worse is Florida with 3.7 million — a little less than half of California’s numbers.  And remember these are the people that are counted, not living in invisible settings.

State legislators throw up their hands, blame the “housing crisis” in the state for the lamentable poverty numbers, and return to their business as usual: creating more poverty by insisting on restrictive land use, irresponsible fiscal policies, curbing mobility of residents (think rent control; think high property taxes and Proposition 13), and just plain brain washing folks against the idea of striking out in search of better opportunities. In California everybody is supposed to stay put, stay progressive, stay PC, and stay either very poor or very rich.  The strategy may not be working all that well considering the state’s net out migration, but California has mighty persistent politicians.

Were California less effusive in bragging about its economy – never mentioning its poverty rate as a self-inflicted wound, and seldom mentioning its unsustainable unfunded pension liabilities; and were California more focused on making efficient use of its enormous tax revenues instead of “resisting” change, it would have been mean spirited to pick on California as the lead contributor to the regrettable U.S. poverty rate. But, given the circumstances, it is not wrong to randomly throw the blame on the Golden State.