tv Heritage Foundation Forum Examines Impact of Government Polices on the Poor CSPAN June 5, 2017 12:04pm-2:05pm EDT
for them to go scot free with no regulation or just to me that maybe that is not the right approach. maybe we should look at who is making all the money and why are they able to take so much out of the system. >> former fbi or james comey will testify thursday before the senate intelligence committee investigating thatcher's election. c-span 3 will have live coverage of the open part of the hearing at 10:00 a.m. eastern. you can also watch live online at c-span.org or the semi of using the radio app for apple and android devices. >> up next on c-span two come in discussion the heritage foundation to help the poor. this is an hour and 45 minutes.
>> welcome to the heritage foundation. i'm the director for the center for free markets and regulatory reform. the heritage foundation. i would ask for those of you in the audience to please make that last little check now of your cell phones, to make sure that they won't interrupt proceedings today. and we will get started right now. the event today is really designed to celebrate the special report called a government policies that hurt the poor and how to address them. the united states is a very compassionate country and we have an awful lot of government activities that affect poorer
members of our population in one way or the other. we have welfare programs, welfare spending of one kind or another that adds up to well over a trillion dollars tuesdays. that can be in things like health care, direct income supporters of one kind or another. we are not here to talk about those policies today. we want to talk about another set of government policies. those that are put in place offense for what seems to be on the surface very well-meaning purposes. in fact, they may in some cases be necessary policies of one kind or another for government. but all too often, what they wind up doing if you look at the second or third order effects of the policies is having a negative affect on poor people. the kinds of policies we are taking about here are policies that have two main impacts. the first is an impact on prices.
what that means is that the free market is not going to work very well or work at all if government is changing the relative price is of good, labor, capital. there's lots of programs the government undertakes to have some sort of impact on prices. unfortunately because consumption is a bigger part of the expenditures, poor people, the policies that raise the prices of consumer goods tend to hurt people more than they hurt rich people. the second set of policies are those that interfere with the opportunities of people to work. these would be restrictions like occupational licensing. i suppose you could put minimum wages in this category, too. things that interfere with the ability of poor people especially to get into the
workforce and take care of themselves. that is going to be the focus of our program today. i think you're going to be surprised at how many policies there are. we identifieidentifie d several dozen in the publication and i think we are just scratching the surface. fortunately, we have very eminent people to start us off with today. our keynote speaker for the event is dr. don boudreaux. dawn i would have to say is one of the leading economic educators in the united states of america. i am just going to find his actual resonate in my list of papers here because i want to tell you he is a senior fellow with the friedrich hayek program for advanced study in philosophy
politics and economics at the mercator center at george mason university. he is the mercator center board member, professor of economics, former chair of the economics department at george mason. he holds the martha and nelson gotshal chair for the study of free-market capitalism. that is not a word you hear very often these days you'd react to hear more. free market capitalism. he specializes in globalization and trade, law and economics in antitrust economics. he's also the author of one of the very few blogs online that i go to every day. it is called café hayek and i recommend it strongly for those of you who want to know what is really going on in the economics world. after he speaks, we are going to have commentary and hopefully a conversational and peers steve
marr is a distinguished visiting fellow here at the heritage foundation. he ran until the color project for economic growth. but a broad range of topics senior economic analyst for cnn. enjoying the trump campaign as a senior economic advisor to then candidate donald trump. steve is the author of several books including his most recent, feeling freedom, exposing the mad war on energy. please join me in welcoming don boudreaux. >> good morning. thanks, everyone. i am pleased and on her to be here with steve. when people say that i'm an economic educators, an economist
with research. then use and put a curlicue inside point. i think that is revealed in this state of current public understanding of economics, the contents of the public debate during the most recent national election for any sign of the state of the public's economic understanding. and it's incontestable that the state of that economic understanding is pretty poor. this seems to be the worst in my lifetime, which unfortunately is rather long at this point.
economics at the most basic level is a unique way of thinking about reality. and in a new way of thinking and a willingness to see beyond what's immediately obvious and requires to put those lenses on and use them require some effort once that effort is put forward it is not difficult. you wind up seeing a lot about reality that would otherwise remain on division. it is not and it's not appropriate to school people for not understanding economics who
live in a world and a great deal and to spend time doing your job, being with your family, taking care of personal matters. and then even basic economics. maybe somewhat appropriate than even its golden economist for not learning the details of carpentry. but the difference is, the fact i don't know anything about carpentry. that doesn't affect the state of public carpentry and things seem to be working pretty well with carpentry. the problem with economics is if you don't understand economics, you can still vote and make public commentary and the lack of understanding is displayed
through the voting process the commentary process. the results are bad economic policy. it doesn't inflict bad carpentry on the rest of the world. your vote -- not your come of the people's lack of understanding of economics slips bad economics on the rest of the world. i don't have a solution to the problem. and i point the finger blaming in conveying an understanding of basic economics to ordinary people. there exceptions to this of course, milton friedman being the most notable. a handful of other excellent economist, also very excellent public commanders. we have too few of those.
the basic truths are not out there in the public mind. i try to just till the truths of economics and distilled them down to number 12. the state of the public debate of politics and policy would be better. it would be perfect, but it would be better. these are in no particular order except the first one. there is no such thing as a free lunch. i like that phrase could you all know what it means. it means every benefit has a cost. it doesn't mean the benefit is not worthwhile, but it's not free. most of these costs were often
these costs are unseen. the flipside of that is a lot of cost of benefits. to the sound economically, you can't just focus on the benefits you see in it for the cost. you have to look beyond the first stage, the first act, you should cephalexin and economics play and it doesn't end after the first act. as a general rule, each of us spend their own money more carefully and only then we spend other peoples money. but this is indisputably obvious, but judging from the public policy that comes out of other people. the reigning presumption among other people, mostly people on the political left, but not
always if you take money from person a and give it to person b., they'll spend money better. more productively than other people's money. number three, when the cost of taking some action rise, people are less likely to take this action in a moment you'll see the relevant this morning. this seems obvious as well. more costly for me to do something unless likely to do it or i will do it less. probably the most fundamental proposition of scientific economics is the law of demand, the fancy way of saying from the cost of you taking action go up, you're less likely to take the action. you find some alternative way of pursuing your ends. number four, there is no fixed
number of jobs in a country are globally, the so-called lump of labor fallacy is indeed a fallacy. people on the left, on the right, in the middle, up and down often fall through this lump of labor fallacy. if these jobs are destroyed, what will people do? i think this is a grotesque fallacy to allied history. one of my favorite statistics is looking at the u.s. labor force in u.s. number of jobs. in 1850, so some 67 years ago, u.s. labor force is roughly 60 billion people. today the u.s. labor force is roughly 155 billion people. about 150% larger than it was 67 years ago. the amount of joblessness today is just a little bit higher.
a percentage point or two as it was so the labor force,. so too has a number of jobs. it tracks the number of people in the labor force pretty carefully, does the number of jobs. as women enter the workforce, as a larger population enters the workforce, jobs are created as long as the economy is free to employ those people. number five, just as there is more than one way to skin a cat, there's more than one week to succeed economically. i've heard this phrase. i would like to have to skin a cat. i'm glad to know academically but there's more than one way to do it. i do know not from personal experience i'm sorry to say but from my reading of economics and economic history in business
history that there's obviously more than one way to succeed economically. if one way of pursuing business, the cost of one way is pursuing business rises, competitive bunch for us find other ways to pursue business. not just one way and successful dynamic entrepreneurial business people are on the lookout for ways to conduct their affairs. number six, consumption is the ultimate goal of economic and tv. the ultimate justification is not to create businesses. the ultimate justification is to create goods and services that make people's lives better as they judge them. don't be misled by number six. economic growth is caused by, driven by increased production. it is not cost contrary by increased consumption. it is a happy result of increased production.
number eight, nothing about a political order changes the nature of trade. any problems that arise for nebraskans trade with koreans arise for nebraskans trade with kentuckians. any benefits that arise for nebraskans trade with koreans. number nine, therefore from number eight, when foreigners excel to estimate he do so only because they wish with pfister musser invested our economy. foreigners are no more willing than we are to accumulate lots of pictures, monochrome pictures of dead american statesman, but to listen to the trade debate today among people on the right and and the last come to you is where the goal of most foreigners is to harm us by sending us things makes steel and textiles and consumer electronics in exchange for ever greater numbers of pictures of george washington and abraham lincoln.
as much as i admire george washington and abraham lincoln and jefferson in benjamin franklin and ulysses s. grant, nonetheless engages in economic activity to acquire these pictures. we do so because they want to spend most pieces of money or to invest them in the same is true for chinese, germans, mexicans and all other foreigners. number nine -- excuse me, number 10. trade deficit is neither a symptom for domestic economic performance, noise city sewers of poor economic performance. it is usually quite the opposite. i don't think there is any topic now that is more misunderstood, at least across the political spectrum than the topic of the so-called trade imbalance. a trade deficit as many of you i hope note in this room, but he don't, a trade deficit is a term
of art. a trade deficit is offset exactly by capital account surplus. then they run the trade deficit, america is running capital counter surplus. foreigners are investing more in our country. i fail to see how that could be bad for us and our trade deficit reflects poor economic performance. usually, when i invest, i invest in companies that i think a promise. if someone tells me that company has a very poor future. i rushed to take money out of it. number 11, a trade deficit is not necessarily that. people in the right, people on the left and economists are to blame for this because of the language we use. incessant me describe increase in the trade deficit that
increases in americans that. it is not the same thing. it can become deputy trade deficit is not identical with that. every sense of the trade deficit can be non-debt. an increase is not necessarily mean that americans are going further into debt. it can mean not that it does not necessarily mean that in the description of the trade deficit as a source of increasing american debt is dangerous because the apprehension and misunderstanding about what the major trade deficit is. number 12, they should especially appeal to steve because it is about his great teacher. the most important resource as julian simon todd the human mind in free markets. human creativity is what makes our life and standard of living possible. i like saying we talk about natural resources all the time. there's no such thing as natural
resources. resources are made to lay human creativity figure not how to use them in transferring them into goods and services to make our lives better. these 12 simple points what they were understood to assess away from policies that while they may be meant to help people especially to help the poor, they in fact hurt the poor especially. i will talk quickly about two and one was mentioned briefly by minimum wage. minimum wage legislation is the poster child for such misguided policies. it seems so right, this person is paid less money than we think this person should be paid. let's ordered the employer to pay that person more. the trouble with that is the cost of taking action rises, people are less likely to take that action has to play most skilled workers goes up, fewer
are in troy. because that's not the only effect it has. minimum wage can change the nature of jobs. the employer becomes less willing to allow the workers to tax or use work time and there are a lot of ways to adjust for the employer standpoint. one of those ways unquestionably is to employ fewer low skilled workers. and getting paid zero per hour is worse than getting whenever you would be paid if you had a job in the absence of minimum wage. even worse, not the loss of current income.
that is bad enough, but the loss of the job experience in the job skills you get when you're particularly a young person or an unskilled person. the distribution of the minimum wage is notable. i have a teenage son he was born and raised -- a nice suburb, good schools. he's never had job at the minimum wage. he knew nothing of those he thought he knew a lot. so what the minimum wage does is not only strip some low skilled workers have jobs, the low skilled workers who are disproportionately harmed by this are minorities in the inner-city. they are the teenagers who don't
have their own personal means of transportation. they are more likely to stay home to help babysit their siblings. they are the teenagers who have gone to failing government schools and so the employer for understandable reasons, and players steer more from those workers ended because although more costly to hire even kids like my son, the risk of hiring inner-city teens is even greater than hiring teens from fairfax county are montgomery county. and so it is to teens from the inner-city that are harmed the greatest by the minimum wage. there is a raging debate in economics today. a solid pair of coal to destroy jobs or does it not. the bulk of the evidence still shows that the minimum wage
destroys jobs and that the both of the job losses are among inner-city, especially poor families. there are people who dispute this and the appearance of evidence. it is not conclusive of matter. if you read "the new york times" he was spared it is inclusive because it has mysteriously no effect on the number of jobs. you can find if you want evidence in the literature that low skilled labor among all goods and services in the world is the one good service that is immune to the law of demand, that when the government pushes up the cost of using it, employers go okay, we will not attempt to protect their bottom line by adjusting in the way of economizing on low skilled
workers. the second policy, these are the two policies that access me in my daily lives. first is minimum wage and the second is trade restrictions. it is another example of unseen harm. it is trite to say, but it deserves recognition typically given the kind of debate we had in the last election that you can protect certain jobs with higher tariffs or other import barriers. no question about it. ..
meaning at americans spend less money come to fore on products that do not have a lot of steel input in the. jobs are lost in the other sectors. it's difficult to find evidence of this in the empirical record. if you're looking for specific jobs. because it's difficult, it's easy to, difficult to find evidence, it's easy to demagogue trade as a sort of economic decline. the evidence on the prices that people pay for trade restrictions is pretty clear that trade restrictions raise prices and the bulk of those price increases fault on poor and middle class families. rich people pay them but the high prices are a percentage of a families income, the higher prices caused by trade restrictions fall as a family income rises.
if you raise the price of imports with trade restrictions, the percentage of the income that for families will pay for consumer products and consumer durables will be much higher as a percentage of income than will the percentage of my income or really rich peoples incomes. my time is, i think i will pass my time actually, but just keeping in mind those 12, or you can rejigger the arrangement, you can come up with a few more. you can convince them a bit but just some basic common sense, principles about the way the world works, if people better understood those principles they would better understand that government policies that appear on their face to help the poor, that appear on their face to promise a rejuvenation of
america's middle class. in fact, more likely to do the opposite. so thank you very much. [applause] >> hi, everyone. donald, i love your 12 iron laws of economics. i think they are fantastic and i want to post this on my wall. i think they are words to live by. i thought i would give you five or six examples of policies out there that are meant to help the poor that actually hurt the poor. either way we will save a few minutes for some questions. let me weekly start by saying about two or three weeks ago that president trump came out with his budget with some increases in the budget in some areas like mr. budgett but some big reductions on social spending programs. the last couple weeks i like most of what's in the budget. i think it makes a lot of sense and so i've been defending it.
every time i defend i get called by reporters who say how can you support these policies? don't you have any compassion for the poor? this is going to rip holes and a safety net, intelligibly in meals on wheels and afterschool programs for people and so on? one of the things i just wrote my weekly column on this that government is not compassionate. government cannot have compassion. you and i as individuals can have compassion. i'm not compassionate if i take your money and give it to a por person. that's what a lot of these policies do. it's a false compassion. even with respect in meals on wheels program, it's one of my favorite examples. when i debate liberals on tv or on radio they say you just don't see you any compassion for these people because you want to cut meals on wheels. i so wait a minute, i participated in the meals on wheels program. once every few weeks we make sandwiches and i help deliver meals on wheels to people who
are in form or elderly people who can't get out. it's a great program. love the meals on wheels program but there is a sense of it that if government doesn't do it it's not what yo he did that and thas something that too. there's no reason a meals on wheels program if it is successful as i think that is an entirely successful program can't be done by charitable individuals. i would make the case in a lot of ways these programs would probably work better if government were not involved at all. so let me just mention a few examples of policy better think clearly are hurting poor people, not helping them to uncritical down this list quickly and then we'll opened at the question. first on energy policy because i did, i recycle this book on the energy revolution. liberals are considered against fracking. february go fracking sorbo. we got to shut and fracking. it's going to try the plan and so on. they are trying to hold back this kind of energy revolution. one of the things we've done in
a book was there's a program that liberals love called the low income energy assistance program. i don't think we does the government subsidizing peoples air-conditioning and heating but we hav had this program out thee and it's because the poor can't afford to heat their homes and a condition. it turns out the program is up $1 billion a year program. what we found was because of fracking, which is substantially reduced the price of natural gas, presidential guest you to be ten dollars, now it's about three, this has caused this cute reduction in the price of electricity and utility bills for people. what we found was that the benefit to poor people from fracking and this huge increase in natural gas is worth about $4 billion a year. fracking has done four times as much good for low-income people as the low income energy assistance program. why don't we just get rid of that and have a policy that lowers prices? that's a good example.
the second one of mention is foreign aid. foreign aid is a program that is classic example of good intentions by liberals that will help poor people in africa or who are hungry in the middle east or wherever it is. it turns out all of your fence in economics profession who have devised all these wonderful programs, that there is zero evidence that they that any effect on economic developer. a good example of that is aid to africa, economic development aid to africa over the last 40 years has come we don't exactly the number, summer between 50-$100 billion. that's a lot of money. and yet when you look at the countries that are getting the aid would you find it's the country pick up the most eight actually fell further behind, they didn't advance more. they fell further behind and partly because those foreign aid programs create a dependency that is actually limits economic growth and doesn't help them.
if you'd asked me the single most important policy to help poor people i don't think there's any question about it, that the government runs schools and universities are probably the most devastating thing to low-income people and it's what's really created the cycle of poverty. i agree you mentioned milton friedman. i used to get it within every few months before he died in san francisco. he always said the single most important thing to help poor people is universal school choice. in the city just one quick example, in washington, d.c., where we are right now, the average for resident of the city, mostly blacks and hispanics could get a better education for half the cost than the catholic school system. we spent $20,000 per student in government schools. we can get than $10,000 to go to catholic school and they would get a better education. the next one out midge is social security. that would probably be second,
and that should shock people. social security helps poor people. that's a great program. it make sure people when they go, grow old they don't become destitute. it turns out, we ran some of the numbers with my friend peter navarro. in fact, we randy's with the actuals with the social scape administration. instead of handing the social security taxes taken from the paycheck of workers every week, every paycheck they get, what if we just said 10% of that, 10% of the workers paycheck would go into an ira account? stages own and acute late the interest and so on over the 40 or 45 years that the work. what we found is if you did that compared to social security and assume an average rate of return, that the average poor person would not only get a higher benefit from having this individual account, but they would actually be able to leave $1 million for the kids. so social security, let me cut
to the chase. social security has robbed every low income family $1 million. that said something to him a lot but it happens to be true. make one more point, and that is with respect to progressive taxation. progressive taxation is also something liberals say we need that because it helps the poor people. we take money from the wealthy people and give it to low income people. progressive taxation doesn't help poor people. we sat in the states. the states that have the highest amount of progressive taxation, states like california and new york and connecticut and massachusetts and so on have that less progress for their poor than states where there is no income tax owed taxes. my favorite example is something we will be debating over the course of the next several months and that is the corporate tax. the corporate tax, we're told that's just a tax on very, very rich people who are shareholders in compass and that's a good way
to redistribute income. it turns out this coul gets yout about nobody ever thinks of the second and third effects of these. connecting the dots, when you have a corporate tax, effect of the corporate tax is reduced ree amount of money that businesses invest. in new machinery, equipment, plants, hiring workers and so on. there's some very good almost indisputable evidence by my friend kevin hassett at the american enterprise institute and dissident delegated by many others that, in fact, the front frontline victims of this corporate tax are not the shareholders of companies. they are workers who get lower wages and salaries because when you less capital to work with they can't command the high wages and. and so there are so many areas, guess i will conclude by saying that good intentions is not good enough. most of what the left, look, i'll give them their due. i think in most cases they do have good intentions to it's just the results of the policies
in supporting the people they're supposed to. i want to add a 13 to affected to your list. this is when my favorite ones. this is typical but it goes like this. give a man a fish and eats for a day. teach a man to fish and he works on lifetime. they're so much wisdom in that economics will. i love you to add that one. so they given much. why do we just go right -- were running a little behind. let me just ask your question on trade. there is an argument being made. even among economists who are pro-trade. in fact, those used in something yesterday and this but was made that trade is good. raises -- dot dot dot. the people in, the people on pennsylvania, michigan the lost the tax rate. we are not compensating the losers for trade. and i wonder how you would respond to that point.
>> i only have a few minutes but i could talk for an hour. that one, people talk about the losers. they never talked but the loose from protectionism. you can save some steel jobs, some jobs in use tire industry i putting terrace on tires and you can see those jobs that are saved. but those tariffs will destroy jobs elsewhere. it'smore difficult to see where those jobs are so that you can be sure there are chopsticks or elsewhere. i don't know why we, why we should protect these people in the steel industry from the force of economic competition at the expense of the people in the industry. protectionism has losers. second thing i'd say nothing unique about trade that causes economic disruption. international trade. in the kind of change in consumer spending patterns causes some jobs to decline, to be destroyed. other jobs to be created. when people complain about the
job losses in trade, what they're really complain about is the job losses from economic competition from entrepreneurial innovation and economic dynamism. my single favorite example is the polio vaccine, which is one of the great success stories of humanity. polio is no longer a problem for people who are vaccine against polio but think of all the jobs that are destroyed. people used to work in miniature factories making crutches, making iron lung machines. nothing particularly do with international trade but we don't lament that. we understand that the societies and economies progressed it's the same thing with trade across international borders. it does of course destroy some jobs. it creates other jobs but so does any good economic change, any entrepreneurial innovation destroy some jobs and create other jobs or if you really want to say we don't want any jobs to be destroyed, then you can't
stop with trade restriction safe we want to freeze all economic activity where it is. if we try to do that that is a quick that's what i meant by road to serfdom. >> with time for two quick questions. >> i want to follow up on that point. >> hold on just one second. >> so if you have two options and the one is protectionism and it protects steel jobs and the other is free trade and maybe still jobs are lost but you jobs or else, if it's just a trade-off, what does it matter? i mean, in fact, maybe it's a loss to force workers have been in the stravinsky and have the skills for 20 years to no waste the time to learn new skills or to get new job and new profession, right? why should i prefer free trade overprotection of? >> because what trade does it increases the number of jobs as trade proponents would say, what
trade does a shift jobs over time from industries in which we have a competitive disadvantages which we have a competitive advantage. overtime trade most jobs to place the workers are more productive. when workers are more productive, their wages and standards of living are. if we protected the still jobs from competition, then what we do is see meant jobs in less, in industries that overtime or less productive. then the jobs that we are preventing from being created because those industries are more productive. >> let me just add one thing to this. this is this is a good time to g this debate because we are, with the new age of artificial intelligence and automated vehicles and so on, the structural changes to the economy that are coming in the next decade are going to be incredibly disruptive. i mean that in a positive sense, not a negative sense. the other night a few weeks, i had a speech in philadelphia and i drove back late back to d.c.
not a lot of cars on highway at 11 o'clock at night. as i'm driving there were what i saw, i give since before was a caravan of about seven trucks, big 12 wheelers that were all just like a train, just running one after the other after the other. in the far right lane. when i passed i looked in the cabs of the treatment out of the seven trucks, do you know how many drivers there were? one. it would people in the cabs of the other was whether automated. they're just like, they were moving forward like a train. the one out of 11 american males today is employed driving a vehicle. ten years ago there would be close to zero americans driving a vehicle because everything will be automated. that's going to cause huge disruption. the interesting thing is this is hardly the first time we've seen these kinds of disruptive technologies. probably the most disruptive
technology in history was the farm tractor. basically 120 years ago, one out of every three americans was growing food. today, it's two out of 100 crore more food than we could possibly eat. and so, but i wonder, don, this is a big topic right now in economics, these technologies, robotics will change factories and what did to say about that? is that something we should fear or embrace. >> was something we should embrace. if we want, we always said what the will to be better for our children. leave a better life for our children that's the way to live a better life for your children that workers and other resource moving to more dynamic and productive place. the best way to handle the distractions i think are some of the things you mentioned. lower corporate taxes. that will increase the rate of business creation. get rid of a lot of occupational licensing restrictions. get rid of the minimum wage because that prevents creation of jobs.
a lot of things we can do to make the economy more adaptive, more quick to absorb into new industry, resources, release from one's that are being displaced by trade or by innovation. what we should not dea do is cet thinks in place. >> do you think we'll see the end of work? >> no. as long as human beings have unmet needs, we will have the need for human beings to work. >> one last question and then i think with a wrap this up. why don't you each ask the question because you both agger stands up and will answer them both. how are we doing on time? stop, okay. we'll answer these questions and then stop. >> the poor don't vote or engage in general policy debates. who in the republic looks after the poor? who represents the policies that you just recommended? >> just hand the microphone ba
back. >> so in my opinion one of the main fallacies that we hear today especially from the white house is by american, higher americans. can you speak of a bit about that and about this made american even matter? that kind of thing. >> so very quickly on that last point. we see these labels made in america, they don't mean anything anymore. the only correct label is made on earth. i still that from the cato institute but is correct. what a made in label mates now, find assembly occurred in. that does not mean that the product is made in china or made in america. the typical product even relatively simple things like clothing, they contain inputs and ideas from all over the world. though made an label slapped on happen to be where your code for your cell phone or your
eyeglasses were last assembled. it's meaningless but it appears that meeting that it doesn't have. >> in terms of your question, if i understood, were you asking who in -- [inaudible] >> i visit a guy who probably, the single person comes to mind to me is rand paul. i think he gets this. he's more of a libertarian bent. one of the things, this was apropos to what we've been talking about, it's a perfect sample of government intentions run amok, which is that you industries, i make this point allow myself, that you industries in america with the most rapid increases in prices are healthcare and education. those of you industries where the price is unworkable because yet the government subsidizing them or opportunity. when you ask a liberal why do we have the government involved in healthcare and education? what is their answer? to make it more affordable. they are doing a great job. i think the lesson here, we will
conclude by this note, that government intentions are not enough, good intentions are not good enough to grant a look at the policy results and in which many cases policies that are supposed be compassion in helping the poor actually end up hurting them and actually add, the left is so obsessed now with income inequality, but some of the work we've done at heritage shows liberal policy is increased income inequality, not reversed or so thank you. those fantastic presentation and will move forward with our second panel. [applause] [inaudible conversations]
[inaudible conversations] >> okay. well, as where transition to pass on going to briefly set the stage. if we can put up the slide i'm going to intro what will mainly be focused on. my name is tim doescher. i work at the heritage foundation. and essentially what we're going to be doing is we will be focusing on certain areas, specifically that affect the poor in terms of government with their intentions to help. this chart demonstrates the household spending as a% of after-tax income by income.
you can see it really does hammer home the point that some of these policies are affecting the poor. let's just look at housing. the lowest income households spent nearly 60% of after-tax income on housing. that's compared to 26% for highest income earners. it's because of programs like rent control and various regulations against your use of private property, as well as government taking for economic development. these all programs hurting, another one is energy as we can see. that's on the list as well. these are things that are really, really impacting prices as well. often as it says in a report leading to families having to choose between not eating for a day, and energy bill, or forgoing medical coverage to pay the energy bill. i'm going to let the panel talk about and i'm going to briefly
introduce them. our first speaker is going to be the senior fellow and energy and climate policy at the competitive enterprise institute, marlo lewis. that's your in washington, d.c.. his current research interest, chief including the areas in science, economics, law, and the politics of global warming. he is been published in the "washington times", forbes, national work queue, "investor's business daily," amongst various other publications. he is a bit on various television programs including the oprah winfrey program. where he provided, this is great, counterpoints to al gores an inconvenient truth. >> what a time that was. >> i didn't get to see it but i will youtube it. >> ten years ago. >> well, it's probably fantastic. next, we will have ronald utt, independent economic consultant, all the recently published
books, the war of 1812, and the forging of the american navy. previously he was a harvard and joyce morgan senior research fellow here at the heritage foundation where he wrote on housing, transportation, privatization, urban revitalization, land-use and growth management. in the 75th director of the housing finance division at head, 1987 president reagan appointed him to lead his efforts on privatization of federal activities turkeys editor of several books, 21st century highways, how privatization could help solve america's infrastructure crisis, and a guide to smart growth, shattering myths providing solutions. and finally an all-around good guy, just a wonderful guy here at the heritage foundation, daren bakst. he's a research fellow in agriculture policy and the center for free markets and
predatory reform. before joining heritage he worked as policy counsel for the united states chamber focusing on food and agriculture policy and regular toward reform. for nearly seven years he worked at the john walks foundation we worked extensively on property rights and affirmative policy. he's appeared on cnn, has been coded national work queue, wall street journal, "usa today," "washington times" and he is an attorney. so we will forgive of that, daren. >> thank you. >> we will just bring up marlowe right now. >> thanks very much for the kind introduction and for dredge up some ancient history. of course i supplied that little datum for you, but that was a fun moment. of course, if this is, we just
recently passed the tenth anniversary of our gores an inconvenient truth. so he's back although he has left our -- has less power than he hope to have even a few months ago for very obvious reasons. what i'm going to talk about is how big government climate policies hurt the poor, and i'm pleased to quote from an alum of the heritage foundation who was briefly with the trump administration and who is coming back. and that's david kreuzer. the thing to understand about climate policy is that almost all climate policies are either explicit or implicit taxes on carbon-based energy. and what you can see on your screen there, this was, i just
thought david said so welcomed the hydrocarbon fuels provide 85% of energy in the united states, so a tax on carbon dioxide will drive up energy costs. these higher energy costs work their way through the economy, raising costs production, reducing income and reducing employment. and so david and nick loris and some of the folks at the heritage foundation have been numerous studies of cap-and-trade programs which is an implicit carbon tax. was it actually looked at the effects of carbon taxes set at various levels, for example, one study they did was a carbon tax that at the alleged social cost of carbon as calculated by the obama administration. another study they did was let's translate that clean power plant that if i'm little protection
agency into a carbon tax, or let's look at the energy information administration analysis of the clean power plan, and then plugged it into our own model. heritage has its own model based on the energy information administrations national energy systems model. anstey with the effects are. and the effects are always the same. any kind of carbon price that is being debated today, which is nowhere near as extreme as it could get, will always have the same basic spec, that you reduce cumulus gdp growth something like $2.5 trillion over the next decade and a half. you raise the cost of gasoline by about 30%.
you reduce the cumulative purchasing power of the family of for over a decade by about $28,000. you reduce employment growth, especially in the manufacturing sector by a, cumulative see by about 1 million jobs over decade. so the people who are hurt the most obviously, the people, are the people who are first to lose their job and that's usually people at the lower end of the economic ladder. one of the most obvious points i guess i'm a baby they added as a 14th law, is a energy taxes are regressive. all of these climate policies that increase the cost of energy, and that's because people at the lower end of the economic spectrum spend a higher percentage of their income on necessities like energy and food.
so this was the chart that a foldout of a study that came out a few years ago by roger best deck called the social benefits of carbon. but it shows that if you are a family earning more than $50,000 a year, you spend typically only about 4% of your income on energy related expenses. but if you're on earning up to $25,000 a year, now you're spending over 10% of your income on energy related items. and if you are only making about $10,000, which may be people are just starting out, getting people and so on, then all of a sudden it's nearly a third of your income is energy related, gas, utilities and so on. so one of the obvious points here is that if you really care
about poor people, you should want to ensure that government gets out of the way as much as possible so that energy is as cheap as possible. not that you should subsidize energy because that distorts investment decisions, but that you should not artificially increase the price of energy. you mentioned this fuel poverty problem. this is an enormous problem. it's usually thought to exist only in europe but it exists in the united states today. literally millions of people because energy related expenses consume 10% or more other income have to make these painful trade-offs. as he said, between heating and eating. this is one chart that tries to estimate how many people, how many low income families have to make the source of trade-offs,
that you go without food, skip a meal in order to pay your utility bill or you skip health care that month. you don't go to the doctor even though you feel sick. or you failed to pay the rent. and so on. so these are real painful choices for millions of people, and the folks who pretend that these climate policies are just a great big business opportunity, you know? they are, you know, if you're in the alternate energy industry and the state as just the post and mandate which you a market, but is not a great big business opportunity for people who are on the edge. there was a wonderful datum that i just read about this week, i
think yesterday, it was at peace in the "wall street journal." i'm sure steve has read it. but anyway what whole managing conflict out was that in germany, which is often looked to as the model for what united states climate energy policy should be, the cow say that the system called -- to subsidize solar energy and when energy, even though germany has been building more coal power plants than the united states, and the reason for that is that wind and solar are intermittent energies, right? the wind isn't always blowing and the sun is always shining, and so to backstop wind and solar power, germany has had to build a lot of coal plants which is very hard for them to explain in terms of being good stewards of the climate. but in any event, what the feed
in tariff system is that is increase the price of energy or increase the cost of electricity to about three times the use average rate. and as a consequence of that, 330,000 people in germany last year, they had their electricity shut off because they could not afford to pay the bill. so one of the things we hear about in the climate scare is that heat spells will become more frequent and severe, people are going to drop like flies. to this extent what they say is correct. when the average temperature of the planet increases, heat spells will become more frequent and severe. by how much? who knows. but here's what's interesting from actual empirical data standpoint.
over the last 40 years, even though u.s. urban air temperatures have increased, and a lot of that is simply due to the growth of urban heat islands, actually people in the united states voluntarily expose themselves to much more automatic warming than climate change is producing just moving on the rust belt to the sun belt, something like, well, millions of elderly people and the retire experience probably four times as much global warming or climatic warming when they move to sun belt areas than the united states has experience as a whole in a century. so let's not get too worried about small changes in global temperature. but the point of this craft that
i'm sure he is a he related mortality in the united states has declined decade by decade over the last 40 years. and the progress continues. and why is that? because more and more people have air-conditioning. it's most of the population especially who live in any kind of warm climate. now have air-conditioning. air-conditioning is probably the single greatest protection against global warming of any technology in the world. but if you raise the price of electricity, there are some people who will decide in the hot sweltering summer that they simply can't afford to run the air conditioner. because that's when electricity prices peak and when it's more expensive. so you don't want to have people put in the position would have to choose between air-conditioning their homes and paying the rent.
but that's what could happen if we get european-style electricity prices. now, there is a climate related policy that you might think this can only benefit the poor. there can be no downside and that's fuel economy standards. because after all, the point of fuel economy standards, 1. of it is to make driving less expensive because you are paying, you're stretching your fuel dollars, instead of going ten miles to a gallon, now you're going 24 ultimately they want you to go 54.5. vesicle of. vesicle of the obama administrations fuel economy standards on average everybody should be going 54.5 miles an hour by 2025. so isn't that a great savings? except that fuel, there's no such thing as a free lunch, as don said and that goes for fuel saving technology as will the and raises the cost of vehicles by several thousand dollars.
here's the point. is that low income households, in order to buy a new car, typically need financing. they need to get a car loan. the car loan is based on a formula that has to do with the price of the vehicle and, therefore, how much money you would have to pay for months to repay your loan. and how much income you have per month. so it's roughly that if the car payment exceeds 40% of the monthly income, you don't qualify for the loan. the good folks at the national auto dealers association did a study. it's already a couple of years old but it should be considered by the trump administration as it reassesses the obama administrations last-minute fuel economy decision in november 30, 2016. but with a character he was that
the cost to meet the fuel economy standards in 2025 would have the result of pricing about 7 million americans out of financing for a new car. that means these people would be priced out of the market for a new car. i suppose you could say they can always buy a used car. that's like saying let them eat cake, right? what is it like the rich should have the opportunity to purchase a new car? i think daren will cover this produces ethanol, the mandate. here's a slide i think is very funny. the future is here. this is actually a photo from the 1930s which showed in certain places in the midwest there was already, already dedicated pumps to put ethanol in gasoline. the point is rather obvious but i'm sure daren will cover this. tell me if you're not going to, daren. which is something that the
ethanol mandates so called, the renewable fuel standard is a central planning scheme. i mean look, linen and sullen at least have the intellectual humility -- lenin and stalin -- to stop a five-year plans because of 17 year plan. and so as a result now 40% of u.s. corn crop is an effect preallocated to be burned in gasoline tanks. this artificially raises the demand for corn, and the price for corn. corn is one of the three main food staples in the world. there's corn, rice and soy. all of the staples compete for customers and farmland, and so when you raise the price of corn, you wind up having repercussions throughout the whole global food system. and this was just what i had to
was a slide from a study by the center for regulatory solutions. that's part of karen's small business and entrepreneurship council. they calculate, for example, that just in california over a period of about 20 years, that the increases in food prices, and also because ethanol impairs dual economy, the increases in fuel purchases, all right, another cost, would depress labor income by $18 billion. i don't think i've to go to the rest of it. you can basically the point. here's just a book that it think is wonderful. it also, also read steve's book which argues that same asic basc thesis, although in very different ways, but it's the moral case for fossil fuels.
what they accept is producing, to producing and using also feels didn't take a safe climate and make a dangerous. they took a very dangerous climate and made it dramatically safer. this is one of my favorite charts that alex seitz, but he was put together by a researcher at the interior department. edit basically shows that in the 1920s, 472,000 people in the world perished from famine because famine reduces your access, peoples access to food and water. and since that time, over one-third of all the greenhouse gas emissions ever released into the atmosphere, the world warmed up by almost one degree, and yet famine related deaths declined by 99.8%. if you look at it in terms of mortality rates, deaths per million, 99.9%. this shows how such a base
civilization is highly sustainable. it bore unsustainable as if such claims this chart to be going in the other direction. you don't get a 99.9% reduction in drug-related deaths from it and sustainable energy system. but my point here is, is that committee guess i will, about to run on time so i this up. my point is the main reason for this is that affordable reliable plentiful energy made the whole global food production system way more productive. think of all the machinery that is used in farms today. they all run on fossil fuels. figure that irrigation systems all right on fossil fuels. think about all the electrification and data management. a lot about depends on fossil fuel generated electricity. think about the transport of food from farms to cities, or
from food surplus areas to food deficit areas. just think about wealth in general, wealth creation that allows for humanitarian assistance in the case of natural disasters. all of these capabilities and technologies are supported by fossil fuels, so if you want to keep progress like that continuing, we should want to make sure the energy is as affordable as possible and not artificially raise the cost which is what these policies tend to. i guess maybe one more crack i will show because this is really unbelievable. -- graph. this is a chart put together by our good friends steve at the u.s. chamber of commerce institute for 21st century energy, and it shows what would be required to meet the emission reduction target for 2050 under the paris agreement, okay?
what it means is that in order to meet that target, today's developing countries will have to dramatically decrease their current consumption of fossil fuels, not just their future projections, projected consumption, but right now. if we assume somehow miraculously the developed countries like the united states reduce their emissions to zero by 2050, in order for the world to meet the paris agreements goal in midcentury, developing countries, today's event countries will have to cut their current carbon dioxide emissions by 35%. if more realistically are less unrealistically developed countries on the reduce their emissions by 80% by 2050, developing countries will have to cut their current emissions almost in half. we're talking about an area of
the world where more than 1 billion people don't even have electricity. so the potential for humanitarian disaster here, for harming the poor, if countries are serious about implementing this program is fast. and with that i will turn it over to dr. utt. [applause] >> think you. thank you, marla. and thank you for the introduction and thank you for inviting me. i was here for different times in the past, more times than you, steve. and the finally got it by. they let me stay and actually retire from heritage foundation. anyway what i'm going to talk about is government programs that make housing unaffordable. let me begin, let me see this, okay. am i up trucks there we go. let me begin by a quote -- how
do i get there? there we go. wrong button. anyway let me begin by a quote. this is from a cover letter of a report called not in my backyard that was submitted and created and written with the help of some heritage analysts in 1991. it was called they can't commission and in the cover letter to president bush which was where the report was being submitted, jackie kamp wrote the commissions disturbing conclusion is that exclusionary discriminatory and unnecessary regulation constitute formidable barriers to affordable housing, racing costs by 20-35% in some communities. as a result many low income young families cannot find housing near the places of work and elderly couples cannot afford to live close to the relatives.
this was done 26 years ago called the camp commission, and have things gotten better since then? actually not. despite the fact that who could be opposed to affordable housing, particularly it doesn't involve higher taxes and government programs? in fact, many people are not oppose splc. as i said this is only gotten worse, largely because of additional zoning in the united states that has occurred over that period. there we go. the main reason it is not gotten any better and it's gotten worse is in large part due to the embrace of environmental community of zoning, particularly restrictive zoning in what i call the war against the suburbs or the war against -- 20 years ago there emerged in the united states to the
environment of movement or sort of attached to the environment of movement what i call the rise of smart growth, which wanted to essentially restore the sort of smalsmall-town feel of 1920s america where people live much more closer to each other. then they do small apartments. they walked to work, bicycle to work or they took trolleys. that's what the card to do. americans prefer to live somewhere else. most americans want a single-family house, lupita space, privacy and that's the american dream usually in the suburbs where it's safe, cleaner and the schools are better. this distribute the progressive and the environmental movement because people were behaving in ways they thought were irresponsible. if a confusing of land that we could use for parks -- using up -- agriculture. they were driving long distances to work. there were driving long distances to buy food and at
restaurants and wasting energy and polluting the environment. and so they began to look for ways to restrict people into tighter communities, and by doing this they use zoning essentially to discourage the expansion of suburban housing. in going back to could be opposed to affordable housing and be supportive of this, about 64% of households in america the homeowner. the thing about restricting land is that anytime your stick the supply of something, the price rises. so if you are an existing homeowner, what's happening is a government regulations are in reaching you. your equity in the home rises. recent people begin to realize that these restrictions are worth a lot of money to them. and so anybody who has an existing home is opposed to competition, new homes. what you have is the people who are essentially largely voting,
the property owners, are the ones who are content to keep the system going. that's what it's been so difficult to alter it. because again seeking purposes of american household already homeowners. what do we care about the other people? infect people have not moved into the community at actually, that you're keeping up don't get to vote anyway. you have a real problem. as i said it's getting worse. what i call anti-lan anti-land-e regulations that have become increasingly popular in the last 20-30 years are boundaries. portland, oregon, in 1970s to essentially lines are met and one of those cities in the state and said no growth can take place outside of this boundary. there's plenty of growth that takes place in the photo once be limited to agriculture purposes. all residential and commercial had to be within the growth boundaries. as you can imagine ornament from being a very affordable place to being a very unaffordable place
over that period. the people finally realized that referendums which were popular in the pacific northwest were used to undo and modify the growth boundary so there's now some relief. another way of restricting land is service areas. limits growth around the 95 quarter. because they're not extending the sewage or the water system which our government owned beyond a certain what they call the growth management area. virginia is a strong property tax, property rights state, so the can't really prevent people from building outside and bobette is why right developer. but by right developer has to take place on a minimum light test of lot size, yet have a septic system well. essentially people are allowing the well to buy their way out of
these restrictive regulations. and those who can't are stuck moving into the corridor. another way to do this is -- let me go to the next -- is through simple zoning, large swaths. in western loudoun county, again loudoun county was, again, the existing residents of loudoun county you would already gotten to loudoun county were getting upset that more and more people want to come to loudoun county. they were not really happy with this because they wanted a certain level of privacy and lack of congestion but more people following them because it was a pleasant place to live. the loudoun county with an observed essentially reserved western portion of the county going out towards west virginia with large rezoning. that meant places limited to either live a car lots, ten-acre
lots are 25-acre lots. so essentially they protected the wealthy people in western loudoun county from those who want to move there. interesting thing about this is people talk about and attend consequences, again you can't stop people from getting married and want to have a family and having children are then want their own houses in the future. population growth is inexorable and so is housing. people are still looking for affordable housing so what they've done instead is the leapfrog into west virginia. one of the fastest growing washington suburbs is berkeley county, west virginia. thesthese are the people are mog there are literally moving in virginia or washington, d.c., or that area. they are now driving probably 4o work than ever before. we cut the opposite effect. other ways of again limiting
housing growth and limiting it just to the people who can by the way out is that you also determine what communities must be in the house, yet some communities where all the housing must be brick façade more solid brick, which makes it more expensive, lawns must besotted, not seeds turkey must have sidewalks regardless of whether there's any pedestrian traffic or not at all. and a bit of square footage. >> some communities where your limited to a house they can't be in us more 4000 square feet. and another popular form of limiting housing growth and raising prices and deterring sprawl is impact. stafford county is not allowed to have impact fees so they have proper. >> anytime someone wants to rezone their land for development they say what's the deal? in many cases in stafford county
that instances where the price to get land rezone for quarter acrand grass would be $25,000 wh of course a developer and buildable pass on to every us apart. again making housing more unaffordable. how unaffordable have things to come? we do this by making what we call the median multiple. this is the ratio in any community of the median home price to the median income. my colleague and seamless editing quite been quite a bit but heritage foundation in the past, considers anything over multiple three as unaffordable. that is, affordable housing is if you can buy a house, and meetinghouse, using meeting person can buy the meetinghouse at three country income which is traditionally what it is been in the united states. what has happened is the national average which had been until recently about 3.0, is now
3.9 throughout the country. but it varies dramatically from one community to another -- and if you can see we had some examples of california. california is probably being a very progressive state, has the most severe land-use regulations and the if have been the 1960s and 1970s. to discourage growth. .. in that prosperous communities so we think about all the young people who earned coding at mit or on getting a job that google or
someplace there and they're getting $120,000 and realize they could get a department that was about the size of what they had at a graduate school someplace. you see the same thing in los angeles and san diego. in portland and seattle which have strict regulations but not as bad as california, you see the median multiple is 5 and a half times your income which means again, maybe people of modest incomes are priced out of the market so let me wrap up, we're encouraged to stop but they close the circuit with the court, 26 years later a professor at mit, professor watley who is now at northwestern did a study of this and what he found in conclusion was the literature studying markets with high housing costs, these costs
are driven in large part by artificial scarcity and land use regulation, thank you. [applause] >> thank you, thanks for coming today. this is a really important project for us. i've worked in a lot of these regulatory areas that have been discussed in environment and also food and agriculture policy. and what's made clear each time i was working on these issue areas was that there's so many policies and regulations that drive up the price for consumers. and the reality is anytime a policy drives up the price for consumers, especially when it comes to need items like housing, gasoline and other energy and of course food and agriculture, it's
going to be aggressive. we just assume it's going to be the case and guess what, it's going to have a disproportionate impact on the poor and that's one of the things of this particular panel. i want to focus on food and ag and there are three policies i want to talk about, two of them are classic examples of cronyism and another one is just a classic example of arrogance. so cronyism. first, it's a program that would make the soviet central planner blush. the federal trigger program. central planning 101, everything you can imagine at central planners applies to the federal distributor program. it actually limits how much sugar can be sold. it limits the importance into the country for sugar. the purpose of the program is to reduce the sugar supply and of course then to drive up the price of sugar.
now clarify this is not an unintended consequence of the program, this is actually the goal of the program. which of course therefore is going to again have a aggressive impact on the poor and all of us so why do we have this federal sugar program? why would we want to drive the price of sugar. well, it held a very small numberof sugar growers and harvesters that exist . so a lot of policymakers are helping these cronies at the expense of consumers and consumers pay about plus consumers every year is about 3.5 to $4 billion a year. they call this sugar program cost program, 2.5 to $4 billion is a cost, just because it may not always cost taxpayers money doesn't mean it's a process as consumers money, we are the same people.
they don't care, apparently at the expense of the poor, were going to help these cronies and it has a disproportionate impact on the poor but that's okay. also it comes at the expense of the much larger sugar using industry and certainly that's the can's confectioners but it's also many other manufacturers including staple products like bread. so generally speaking we pay about double the price of sugar compared to the world price. at least the manufacturers do and they pass on to consumers. >> the other thing it also does is his arista jobs as well. so in a department of commerce report that came out in 2007, it's a little old catcher!. in spite of this scene unseen issue discussed before. or every one sugar going and harvesting job you see
through higher sugar prices, you lose reconstruction very manufacturing jobs. >> so that's your federal sugar program and its held a very small interest group. my second cronyism program is one of my favorites, the usda inspection program. you'll never look at catfish the same way again . if in fact you look at catfish. the fda as a general rule affects seafood. but in 2008, from the farm bill there's a special provision, in the farm bill where catfish are going to be affected by the usda so why was this the case? cronyism again. it was to create a trade protection scheme to help the catfish farmers who were getting beat up by competition from foreign competition. there's a pretext to those
for safety reasons, in 2008 as far as i recall there was no catfish prices in 2008. reality is, catfish is centered by the cdc and fda as a low risk food. there's no reason, no evidence on the safety side at all. government accountability office which is not known forever using strong language has repeatedly issued reports criticizing this program. and this may be a pretty direct title, it should have given the conversation what to do, it says the responsibility for inspecting catfish should not be assigned to usda. that's maybe not a good idea. their quote is this program is shifting the inspection to the usda is going to cost, result in duplication, increased costs and guess what, it will improve safety. so why is this a trade protection scheme? the way it works is that you
have these companies providing catfish to the us but what's going to happen is these other countries are going to have to create a regulatory scheme that equipment to the usda's new regulatory schemes and it takes years to do this. some countries may not even bother to create that type of regulatory scheme and if they do is going to take a long time so for that period of time there's going to be a monopoly for the domestic catfish farmers of america. but the senate passed legislation last year, a congressional review act resolution that in fact it passed, the house did not pass the congressional act resolution even though 220 members and leadership to pass the cra resolution. the resolution would have an effect kill the program.
220 by the way would have been more than enough to pass the resolution. leadership, they can explain themselves why they decided to catch the cronies and not allow for a vote and you have that many legislators and by the way, bipartisan wanting a vote on that resolution. president obama in his 2014 budget called for eliminating this program. pretty much everybody hates this program and i know i don't know if catfish even like the program. this program drives up prices as well and it's what's worse is your reducing supply of a protein which is extremely important and again, hurting the poor and get into my third example is the areas example and it's so do taxes. and really to be more precise it's a tax on sugar sweetened beverages. so sodas and really the fault
far left havens like berkeley and san francisco and boulder colorado, they've passed some soda taxes recently. the philadelphia city council , those voters philadelphia city council approved eight sugar sweetened beverages and that serve diet sodas so it is about the whole point of a soda tax is to reduce consumption. >> reduce consumption by driving up prices. it's the whole concept, they'll say that the tax is not on the consumer but it's really a tax on the distributor in the soda taxes. guess what? the distributors are going to pass on the cost to the retailers who will pass on the cost to the customers and as people in the city of philadelphia know very well, this year that's exactly what happened. the incredible sticker shock going on in philadelphia.
one of the things about this is not it's just regressive but what happens is the lower income populations tend to drinks sugar sweetened beverages more and other households. so what you're not going to see is a tax on crcme brc or in boulder colorado, a trail mix tax. >>. >> it's just arrogance. it's not really any business of the government to decide you know, people are pounding coca-cola every day.>> having kegs of soda. the diet is very complex, we make very as individuals somebody to drink a sugar sweetened beverage and have a much healthier diet than somebody who doesn't because in their diet you may offset, you might eat one meal with something healthier than another meal. he may exercise in somebody
else may not. it's arbitraryto pick soda and why not cookies . not to mention who in the world should tell us what is healthy and what's not and quite simply, it's not as if people don't have enough information to make informed decisions on their own through means. it's not like the diet industry is pretty big in this country. >>, i'm going to end this right here but just saying one thing, the big picture is that cronyism, it's a common theme through many of these 22 policies that are identified in support. not all the trouble when the most part but a lot of them but so the government is taking a small winner at the expense of pretty much everybody else and part of that everybody else is the poor. [applause] >> we have a few minutes for
questions if anybody out there as a question, raise your hand and will call on you and bring microphone to you. right down here. >> thank you terry miller. my question earlier is for darren, you talk a lot about cronyism and cronyism is a nice word, actually, i'm not sure a lot of people and even might know what it means but what we really talking about is if i understood your process correctly is taking for example sugar. it is a process where a small group of sugar growers in the united states make political contributions to their representatives then intervene to pass laws or create a program that provides those growers with higher prices and a protected market. i wonder if corruption wouldn't be a better word to use to describe a program like this and if we are not
perhaps sugarcoating it a bit . >> i still want to save corruption. it is part of our process, i believe in contributions and free speech and campaign speech, etc. what happens in a lot of these issues and particularly in agriculture with the sugar program is the idea of concentrated benefits and dispersed cost so the politicians know that these sugar growers really care about this program and they're going to stop policies that favor this particular narrow interests yet the cost are not really seen by everybody else and spread across the whole population so that $3.5 billion to consumers every year doesn't really seem like muchto us , we may not see it when we buy cornflakes that says here's how much your sugar tax was so i think
that's one of the problems especially someone who like me who works in agriculture where the agriculture interests in particular have this benefit of really caring about who their handouts and particularly for taxpayers that cost is spread across the board and it's hard to kind of get the taxpayers to have the power or to have influenced to dissuade legislators to act accordingly. >>. >> any questions? one thing that i wanted to cover just maybe for doctor, if you could maybe even darren, you included in your piece one of the articles of free market is given us over the past few years and what is what we call the gate economy. and particularly in housing, somebody is asked maybe a low or middle income person that utilizes the websites like air b&b or brd, things like that allow them to make
significant money just by renting out your space. darren or, i'm not sure, maybe you could touch on how some of these local municipalities or state or even federal policies are potentially infringing on someone's right to do that. >> particularly air b&b, the hotel industry which is feeling the effects of the air b&b people argue that one advantage is that they're not paying the taxes and we are. the taxes in the hotel early in bases is substantial, anywhere between 10 to 15 percent of room rate is an area and the people are offering the same service without paying the same tax so many communities have now been requiring air b&b people to register with their activity and are tracking them down because alot of this takes place . >> who in your community is
doing so is he find out who needs to be paid, should be paying taxes according to them so this is happening so essentially taxing it whether they're taxing it as a business, i don't know. also, it has worked so well and has been so successful there now thinking about moving from their on sort of long-term rentals little weekend rentals where if you have a spare house you can basically become a rooming house if you want or a spare room or some rooms become a boarding house effectively and this is also, they saw also going to become a regulatory issue because most communities especially in the summer limit the number of unrelated households who can live in a particularhousehold . so you could have all your children in your house and they could all have different cars. you can't have a bunch of adults who are not related to
you in those communities so you could see that could very well be the next regulatory issue or regulatory battle in the housing area. >> i want to say this report does have a reflection on the home sharing issue. >> we have a couple questions here. we only have time for one more unfortunately so you guys can fight it out. [laughter] >> diane case. i apologize if you covered this before i came in but the new administration as a great deal of emphasis on american manufacturing, american products the end sort of the importance of preserving american jobs and it's a decidedly anti-import to some degree policy kind of bent.
i want to address if you could what the potential effect on particularly low income consumers would be of cracking down on imports. >> diane, i wish you had been here for don boudreaux's brilliant destruction of that policy but i hesitate to try to summarize what you said but it's quite obvious that a tariff is a tax and when you tax imports you make them more costly and this will harm consumers but it will use those imports as inputs to the production of other goods and as he also pointed out if it reduces the sales
of goods in the united states it means then that foreigners have less money to spend and invest in the united states and it's just inhibits creation because it means resources are not flowing to the people who can use them most efficiently. and so there will be some very visible winners but a whole bunch of less visible or even invisible losers so that's why the political system perversely prefers such policies even though you can econ 101 or one of 12 iron loss tells us that this is the way to reduce human welfare. >> just add to that with the infrastructure program, soon to be announced at some point or $1 trillion over 10 years
or some amount, that interest for structure programs invariably becomes a big part of by america. there's already a lot of buy american stuff in the highway program and things like that. >> nobodymakes , communities are putting in light rail now so the trolleys are. nobody in america makes trolleys anymore, they're imported from czechoslovakia so there made in czechoslovakia, there to portland oregon, reassembled and it becomes an american trolley car so you're going to see a lot of that. especially with all the pipelines being built, a lot of the piping that is made abroad. >> that was never going to be a heritage penalty yesterday. the premier of saskatchewan ported out that the one fly in the ointment of trump approval of the keystone pipeline is this by america provision or pipelines and as brandon warns, other countries are going to retaliate and so trade wars are really self-destructive.
>> one more question before we take a break. >> darren, i really love your thing having lived in philadelphia and only drinking fresca and diet coke and having to pay the sugar attack on fresca and diet coke. but going back on the sugar subsidy, ron and i are probably the only two were around when the whole thing started. it was during the reagan administration and when it particularly did you don't mention the paper , very good paper by the way but the whole caribbean basin initiative that ronald reagan was advancing was a notion to try to make the islands in the caribbean's self-sufficient. they basically had one agricultural products that was sugar and what we had doing was raising our sugar market which we then have to give them more foreign aid. the whole thing was so goofy. you're attacking all american taxpayers and the poor and in the second-tier way in
addition to directly doing it i increasing the cost of sugar. >> is a great point and we help this central florida area in the everglades, that was my point about the soda tax. it was basically going to create a black market for certain sodas and i'd say a black market for fresca i think we're calling it. thanks a lot fresca. >> around of loss to our cattle and we're headed to a break. >>. >>. [applause] >>. [inaudible conversation] next here on c-span2, the american jewish committee's global forum underway in washington. among the speakers this afternoon, senate minority leader chuck schumer and you will also hear later from the national security council
>> on c-span2 live at the american jewish committee's global forum in washington, senator chuck schumer the democratic leader in the senate speaking shortly, he reacted earlier today to the early news on president trumps infrastructure plan which is being released and focused on this week area senator schumer tweeted that the presidents infrastructure proposal focuses on privatization which really means less construction and fewer jobs, particularly in rural areas. the president's plan means trunk tolls across america, huge profits for financiers. it will be repaid by average drivers and citizens, the president will have several events this week focusing on infrastructure including comments in ohio. meetings today at the white house and more as that plan
>> waiting for the program to reconvene at the american jewish committee's global forum in the nations capital, senator chuck schumer speaking next, the senate battles in this afternoon. at 3:00 eastern, back from the memorial day break and later this afternoon it will consider a resolution that commemorates the 50th anniversary of the reunification of jerusalem. and a adoption of that resolution of a vote on adopting a resolution vote on that is later this afternoon at 5:30 eastern. live coverage of the senate on c-span2.
>> waiting for senator chuck schumer the minority leader this afternoon. the american jewish committee's local forum in washington, we will also hear later from the national security council official from the should ministration, the former undersecretary on the obama administration, later this afternoon. on c-span two, the senate returns from their memorial day break. >> in washing today president from talking about the privatizing and changing the nation's air traffic control system, following the current system painfully in the past, the president called for separating air traffic
control operations from the federal aviation administration, and approach us airlines have long championed as part of the beginning of a focus on infrastructure for the president as the president made those comments earlier at the white house. we will show those later to you on our program schedule. white house preaching is underway at this hour, also the veterans affairs jerry doctor david chopin taking to reporters now followed by the white house spokesman for the afternoon briefing. the va secretary announcing changes to electronic health records at the white house, that's live now on c-span three. >> streaming firstname.lastname@example.org. >> ...