Aging America needs immigrants or faces higher taxes, more imports

The country is becoming a nation of the elderly. 

In Maine, the future is us.  The state now has the highest median age of all states.

The U.S. birth rate continues to decline.  By 2035, Americans over 65 will outnumber all children.  A reduction in family size is typical of societies as they become more affluent. 

Not all families enjoy the same wealth.  More affluent families that have enjoyed economic opportunity have smaller families.  The reality is that mostly white families are causing the decline in the population.  

The country would have grown older more quickly, except for youthful immigrants and a higher birth rate among non-whites.  In fact, the number of non-Hispanic whites will begin the fall in just six years.  They will be less than half the population by 2045.

The booming senior population creates major economic problems.  There are fewer workers relative to the entire population.  One reason for Maine’s low unemployment rate is the shrinking number of young people in the state seeking work.

The reduced working population nationally will slow economic growth. It will simply be impossible for the smaller workforce to keep up production much less make it grow.  Increasing automation will help, but will not fully offset the decline in labor.

Current trade policy is based on replacing U.S. imports with domestic production in sectors from steel to autos.  But the U.S. economy will not be able to meet this challenge when employers won’t find enough workers.

The economy must shift toward meeting the needs of the enlarged older population.  Money that might have been intended to boost the economy either through tax cuts or public spending will go to support programs like Social Security and Medicare. 

Older citizens vote more heavily than the general population and cannot be denied.  They present major demands.  Estimates show that more than 40 percent of the aging population does not have enough money to maintain their standard of living in retirement. 

Social Security was meant to supplement other retirement plans.  But the percentage of the elderly with access to employer-funded retirement plans has plummeted.  And the 401(k) retirement plan has produced far less money for old age.

The traditional plan yielded a guaranteed retirement income and its assets were invested by professional managers.  But businesses found that, by using 401(k) plans, they could reduce their costs.  The payout would depend on investment decisions made by employees, the ultimate beneficiaries.

Reduced pension funding, recession and poor investment decisions drastically undercut the new system.  Added to these factors was the ability of beneficiaries to withdraw funds to meet family needs, thus stripping their own pensions.  This was not possible under the traditional system.

The inevitable result of inadequate pensions is greater reliance on the government, well beyond the effect of the population shift toward the elderly.  Social Security and Medicare, funded by contributions from current workers, are asked to do more while receiving less.

To deal with the crisis of a smaller workforce and a larger senior population relying more heavily on government, only two solutions appear to have any chance of working – more imports and higher taxes. 

Income support programs will have to be financed by higher payroll taxes. Domestic production will have to be replaced by foreign goods.   Both could undermine economic growth.  

The U.S. now wants to cut imports from countries with cheaper labor and lower environmental standards.  Conditions abroad may improve, but, whatever happens, the U.S. will remain dependent on foreign goods produced by foreign labor.

Raising taxes and increasing imports run counter to current Trump administration policy.  Yet these actions will not be a matter of choice.  They are the inevitable result of a falling birth rate and an aging population. 

An alternative, already shown to work throughout American history, is obvious.  If a nation of immigrants returned to its traditional immigration policies, it could quickly increase the number of American workers and customers. 

New Americans would supply the payroll taxes to support Social Security and Medicare, and they would stimulate economic growth by boosting both production and demand.

Current opposition to immigration stems from concerns that new, young arrivals change the ethnic make-up of the country.  But that change is taking place naturally, even without immigration.

In recent years, Congress has come close to agreeing on a new immigration policy, going beyond merely closing the door on illegal immigrants.  Economic reality dictates the need for congressional action that does more than build a wall.

The best solution for an aging American population is to make it younger. 

   

American “socialism” – a threat or a promise?

Could America become socialist?

That’s where some conservatives believe the country would be headed under the Democrats. Sen. Bernie Sanders has been leading a progressive movement that has gained widespread support.

Conservatives, like columnist George F. Will, warn of government displacing free market corporate decision-makers in setting industrial policy.

Will’s concern does not match what Sanders would want. Nobody proposes historic socialism with government ownership or control of all production.

Americans believe in the free enterprise system. Most would worry if the government made decisions that should be freely made by individuals. So, what might socialism mean in the U.S. with its long and firm tradition of individual liberty?

Inevitably, it would involve a larger role for government, paid for by taxes. But, instead of government taking over businesses in line with historic socialism, the American version would more likely enhance the public role in meeting the basic needs of Americans. Here are some examples.

Social Security is becoming a national retirement program, though that was not the original intention. People do not save enough for their retirement, and many have no access to an employer retirement plan. Many retirees must find ways to live on Social Security and not much else.

If Social Security were converted into a real national retirement plan, seniors would be helped and private retirement plans could become an employer option, not a necessity. Of course, tax support would have to increase, but employers would save by not having to offer their own plans.

The private sector could be involved. Today’s retirement plan operators might provide, through competitive bid, investment services to the government.

Much the same would be the case for health care. Right now, health insurance is costly, does not cover tens of millions and the level of care is questionable as many people are rushed through doctors’ appointments to keep up cash flow.

Government now pays many medical bills though Medicare, Medicaid or the Veterans Administration. Because the health care system largely involves the government paying somebody else’s bills, there’s room for cheating.

To get around the weaknesses of the current system, some advocate a single payer system where government pays all the bills and is able to control costs and availability through its market power. Doctors would not need to be government employees, and people could still choose their doctors.

The Affordable Care Act was meant to be a step toward government coverage for an increased number of people. Though it has produced some benefits, socialists would say it is half-hearted and thus bound to disappoint.

Recently, proposals have appeared for a “universal basic income.” The government would ensure that everybody received a modest income, providing protection as technology eliminates jobs. Recipients would be expected to carry out public service tasks and seek work, if physically able.

Similarly, Sanders and others advocate a free college education for all to help workers keep up with technological change.

Government would have a major economic role in promoting growth during a recession by increasing its purchases from private suppliers. Spending on public works can be boosted, just as the Obama Administration did.

Stimulating the economy costs money and that may mean an increase in the public debt. But that could be more effective than boosting the debt by cutting taxes, in the hope that tax savings will be converted into private sector investment and not just more profits.

Everybody is affected by the environment. Claiming it smacks of socialism, private sector leaders, like the famous Koch brothers, fight any regulation, because it reduces profits. Almost certainly, it does. But limiting industrial activity, like burning coal and off-shore oil drilling, can produce longer-term benefit.

Conservatives argue that bureaucrats have too much power and can impose their own environmental views. But that’s not their fault. Congress passes general mandates and leaves too many details to the administrators. Congress needs to legislate more clearly about its intent, leaving less discretion to regulators.

All these aspects of a possible American version of socialism clearly do involve an enlarged role for government. Opponents argue that people ought to hold onto their money and make their own decisions rather than funding government to play a greater role in their lives.

Individual liberty is at the essence of the American system. But that does not prevent people from agreeing voluntarily to deal through government with common challenges.

Even watered down “socialism” probably won’t prevail any time soon, but proposals for a greater government role are now on the table. That should make for interesting elections.

If everybody took citizenship test, it could educate, unite Americans

This week we celebrated Independence Day, renewing our pride in being Americans.

At the same time, the hotly debated immigration issue leads us to consider what it takes to achieve the much prized status of citizen.

If you are born here, the Constitution says you’re a citizen. Some people think that’s too easy, because it allows the children of illegal entrants to be citizens.  

Immigrants must spend time in the country and then pass a test.  It has two parts: knowledge of written and spoken English and a basic understanding of civics.

Is it possible that the citizenship test, required of new Americans but not of native-born, makes them better able to evaluate the heated debate and political half-truths that shape televised media reports?

For the English test, an examiner determines if the applicant can understand instructions, read one out of three sentences and write one of three dictated sentences.  For people born in the U.S, the English test should be easy.

The civics test is aimed at teaching an immigrant some basics about the U.S.  The applicant is given 100 questions and answers to study.  They are in three groups: government, history and civics, which includes geography, symbols and holidays.  Each immigrant is asked ten of those questions.  It takes six correct answers to pass.

The key part of this test is not taking it, but studying for it.  Having no idea of which questions will be asked, applicants must study all 100 of them.  Aspiring citizens are usually well motivated to study and are expected to learn from the process of test preparation.

Could all native born Americans could pass the civics test? While it may be widely assumed that people know basic, background facts, it’s possible that immigrants know more than some citizens.

Native-born Americans may worry about immigrants who don’t share their national experience, even though some may know less about how their own country works than immigrants do.

If Americans fail to understand how their government works, they risk being easily misled by politicians and a politicized media. 

Here’s an idea for a level playing field for all Americans.  States should make passing the civics test given to immigrants a condition for everybody before leaving high school, with or without graduating.  All citizens, born here or not, would be assured of the same basic knowledge.

Can you pass the test?  Here are ten of the questions that are asked.  Of course, you have not studied, but if you’re a native, you are assumed to know the answers. The authorized answers follow, but please try to take the test without looking at the answers.

1. What is the supreme law of the land?

2. What is one right or freedom from the First Amendment?

3. What stops one branch of government from becoming too powerful?

4. What are the two parts of Congress?

5. Name one of your state’s Senators.

6. Name your U.S. Representative.

7. What is one right only for U.S. citizens?

8. Who was the president during World War I?

9. Name one state that borders Mexico.

10. Why does the flag have 13 stripes?

The official answers (with added notes):

1. The Constitution.

2. Speech, religion, assembly, press, petition the government.

3. Either “checks and balances” or “separation of powers.”

4. Senate and House of Representatives.

5. In Maine, Collins or King.

6. Pingree (1^st district residents), Poliquin (2^nd district)

7. Vote in federal elections.  Run for federal office. (All other rights are guaranteed to all persons, not only citizens.)

8. Woodrow Wilson.

9. Arizona, California, New Mexico, Texas

10. Because the stripes represent the original colonies

Did you get six correct answers?  Readers of this column likely did, but it’s possible you did not answer all ten correctly.  Clearly, some questions are meant to be easy, but test takers may find some challenging, if they haven’t studied. 

If all young people were required to pass the test, it would ensure that they shared a common, unifying educational experience about their country no matter how their school covers American government and history.

Perhaps just as important, in today’s fast-moving and hotly contested political debate, studying for the test could help ensure that people, including members of the media, share a basic and neutral picture of some of the fundamentals of their country. 

Leaders talk about the special character of the U.S., and test preparation might provide at least some basis for the claim.  And, through this common experience, it might help bind together a country that is growing more diverse.

Ranked choice voting reveals weaknesses without promised benefits

Maine was fleetingly in the national political spotlight this year, because it held the first statewide election using ranked choice voting (RCV), the system allowing people to vote for several candidates in rank order.

After using the process in party primaries, Maine provided other states with a model to study.  An accompanying referendum suggested that RCV is here to stay.  The lessons from the process are worth examining, because Mainers will vote again on RCV and others may be tempted to try it.

The gubernatorial primary in both parties turned out to pit the favorite against the field.  Could using back-up votes change the outcome resulting from the traditional system in which the person with the most votes wins?

The RCV process changed nothing.  The two candidates, who would have been selected under the usual plurality voting, won under RCV.  The field could not gang up on the frontrunner. 

The GOP race avoided RCV and simply gave Shawn Moody, the frontrunner, an outright majority. 

On the Democratic side, Janet Mills, the ultimate nominee, led Adam Cote in the first round of vote counting by 54 percent to 46 percent, if only their votes are counted.  She obtained exactly the same result over him in the final round of ballot counting after all other candidates were eliminated.   

In short, RCV offered no improvement on the traditional system.  If the state had used the California open primary system in which the top two candidates win and then face one another in November, the result would also have been the same.

RCV also showed that, as in almost all major elections, money matters, probably more than the process.  The candidates who invested in the greatest TV presence also got the most votes. 

The other big spending campaign was waged in support of RCV itself, though it faced no organized campaign opposition.  The pro-RCV campaign was heavily funded by out-of-state millionaires who used Maine to test their political game.

The new process did not bring out more voters.  The last time there was an open governor’s seat was 2010, and there were five Republican primary candidates. They received 120,612 votes.  This time, using RCV, the four candidate GOP race drew 88,344 first round votes.  It’s questionable if RCV affects turnout.

The length of time it took to collect and count the ballots reveals some real and potential weaknesses in the RCV system.  It took days for the ballots to get to Augusta, but Moody, the Republican, could start campaigning immediately.  Alan Caron, an independent candidate, promptly launched his television ad campaign. 

Though Mills has a platform as Attorney-General, she could not begin competing with them for eight days while ballots were being processed. That’s more than five percent of the total campaign period, a handicap imposed by RCV.

The collection and counting process ran into technical problems.  It looks like the Secretary of State’s office handled RCV well and without any bias.  But much of what happened between casting ballots and coming up with a final result was complicated and unseen by the public. A laptop computer ran the final count.

That process increases the chances of something going wrong or, even worse, of somebody tampering with it in a future election.  With RCV, we trust the most important political choices to a complex process in which there is more room for cheating or computer error.

At a time when we demand more transparency, RCV gives us much less.  Also, processing the ballots costs more.

The Republican primary kept alive the rule of one person, one vote.  The Democratic primary did not.  Some voters’ first choices kept changing as the field narrowed from the original seven candidates.  Meanwhile, other voters, who backed lower ranked candidates, were eliminated as the counting continued.

The Maine primaries were not the last word on RCV.  The state constitution allows it in federal races, but not in state general elections.  After its use in party primaries for governor, the traditional plurality vote will be used in the November election of the new chief executive.

To use RCV for general state elections would require passage of a constitutional amendment.  In effect, Mainers will have to vote for a third time on the new process.  More out-of-state money will pour in, attempting to influence how Maine governs itself.

If RCV survives, a voter for a losing candidate could go to court – state or federal – challenging the lack of one person, one vote.

The rest of the country will again get to watch Maine’s electoral drama.