Suchergebnisse

This blog is based on an article in the Journal of International and Comparative Social Policy by Ilari Ilmakunnas. Click here to access the article. Despite the shared understanding that it is useful to analyse poverty by means of different measures, one measure is more commonly used than others. In the EU, the at-risk-of-poverty threshold… Continue reading Enhancing Clarity in Poverty Analysis →

This blog is based on an article in the Journal of Social Policy bt Kitty Stewart, Ruth Patrick and Aaron Reeves. Click here to access the article. A child's risk of poverty changes considerably depending on how many siblings they have. Until very recently this fact was largely neglected in UK poverty analysis, though there… Continue reading Almost All the Variation in Child Poverty Since 1997 is Concentrated in Larger Families →

If you have ever used a smartwatch or other wearable tech to track your steps, heart rate, or sleep, you are part of the "quantified self" movement. You are voluntarily submitting millions of intimate data points for collection and analysis. The Economist highlighted the benefits of good quality personal health and wellness data—increased physical activity,…

Contributor(s): Dr Kitty Stewart | A campaign by the Manchester United footballer, Marcus Rashford, has prompted the UK government to provide extra support for children from low-income families during the pandemic. Even before coronavirus, child poverty had been rising for several years. This latest bite-sized episode of LSE iQ explores the question, 'How can we end child poverty in the UK?'
Joanna Bale talks to Kitty Stewart of LSE's Social Policy Department and Centre for Analysis of Social Exclusion. Dr Stewart is currently part of a major research programme examining what progress has been made in addressing social inequalities through social policies.
Research links:
K Cooper and K Stewart (2020): Does Household Income Affect children's Outcomes? A Systematic Review of the Evidence

K Stewart and M Reader (2020 forthcoming): The Conservatives' record on early childhood: policy, spending and outcomes 2015-20.

Polly Vizard, John Hills et al (2020 forthcoming): The Conservatives' Record on Social Policy: Policies, spending and outcomes 2015 to pre-Covid 2020.

Desmond's analysis never goes deeper than his facile assertion that "poverty persists because some wish and will it to."

The IMF says we need to cut - harshly - the levels of benefits:Britain and other rich nations have been urged by the International Monetary Fund (IMF) to cut benefits and taxes to tackle the worklessness crisis.Mel Stride vowed to "do whatever it takes to get Britain working" as the IMF said men in particular would be encouraged to find jobs if countries lowered taxes and benefits. More training and childcare support would help more women into work, the organisation said.The IMF research, which was based on analysis of 38 OECD industrialised economies, including the UK, US and Germany, recommended that higher pension ages would also keep people in work for longer.The comments are likely to fuel the debate among Conservative MPs over the benefits reforms needed to boost work.Which leads to the musing. The current definition of poverty is less than 60% of median household income, adjusted for household size, usually measured after housing costs. It's also said that "low wages" are those that are less than 60% of median wages. The minimum wage has been pushed up over that 60% level.Well, OK. It would be harsh to insist that those unable to work should be in poverty, that those working also be in poverty. And yet we have this problem identified by the IMF - a large portion, too large they say - not working because work's not worth it. Therefore cut the taxes upon work - at least at the low end - and also cut the benefits from not working. So as to open up the gap between the incomes gained by not working and those gained by working. But there's a very strong implication here. Which is that 60% is too high a portion of median income to gain by not working. For, if that can be gained by not working then some to many will make that choice. That is, at the very least, implicit in the IMF's advice. The musing at the end of this being, well, perhaps it's just not possible to have the welfare system raising all up to 60% of median household income and also maintaining the incentives to go to work. Perhaps all that free time to do other than work actually is worth 40% of median income? Perhaps we need to adopt a lower poverty measure in order to make the system as a whole balance? It is a musing but one, we think, that does have to be mused through.

So, that answers this Telegraph piece: Can we really trust Britain's economic data?So, what time's the footie then? Ah, you'd like a little more would you? Yes, the things said are true, an economy is a big complicated thing, difficult to measure, best possible is being done and so on. But we find an extra 2% of GDP down the back of the sofa - from which we can conclude that detailed Keynesian demand management is a very silly idea. But there's a much, much, larger problem here. We have endless whingeing about child poverty levels - which are something we don't even measure. For poverty is now defined as less than 60% of median household income. So we're measuring inequality of household income, not poverty at all. Beyond that even in these days of late blooming fertility those with children are going to be younger than those who have had them - and household income does tend to rise with age. You know, career progression, all that stuff. Our measure of wealth deliberately excludes everything the government does about wealth. Currently everyone else pays £6k a year in taxes so your kids can fail their GCSEs. That's wealth you've got which isn't included in any analysis either of total wealth or wealth distribution. Similarly the NHS. OK, it's health care that's indifferent at best and yet purely by being alive in this place at this time you've a lifetime supply of it. Something not included in our wealth statistics. They don't even include the state pension in the pensions wealth statistics. Let alone the wider benefits system which can indeed be modelled like an insurance policy and so have a capital value.And that's before we get to consumer wealth. Everyone's a supercomputer in their pocket, WhatsApp makes international phone calls free to everyone - the Duke of Westminster and the most recent asylum seeker together. The economic data we've got simply is not fit - as with that Keynesian demand management idea - for the purposes people try to use it for. We certainly can't trust it because it's measuring the wrong things for any useful purpose.Measuring the wrongs things and badly - no, that's not the evidence base upon which to run a polity.

Adam N. Michel and Vanessa Brown Calder


First introduced by Republicans as part of the Contract with America, the child tax credit (CTC) has won wide bipartisan support as an income‐​transfer program to fight poverty, a subsidy to middle‐​class families, and a tool to boost declining fertility, yet it is poorly suited to meet each of these goals.
Republicans doubled the CTC in their 2017 tax reform, and Democrats temporarily expanded it again in their 2021 COVID package, increasing the dollar value and removing the de facto work requirements. Republicans and Democrats agree that the CTC should be larger, the only disagreement is on how much the credit should be enhanced. There are bipartisan efforts in the House and the Senate to expand the CTC, while some states have moved forward with their own child tax credit programs.
The CTC is a costly transfer program for taxpayers with kids who do not need government handouts and who do not meaningfully change their fertility decisions in response to larger payments. As an anti‐​poverty program, the CTC is poorly targeted, and without income requirements, regular no‐​strings‐​attached payments from Washington are counterproductive for the most vulnerable families.
There are better ways to support families by reducing the regulations and other barriers that increase the costs of core child‐​related goods and services. Without substantial deregulation, increasing direct government payments to families will simply lead to higher prices rather than expanded supply.
By making payments through the tax code, the CTC allows Republicans to support spending they would otherwise oppose since tax credits operate outside the annual Congressional appropriations process. Democrats support the CTC because they recognize it for what it is, a subsidy program administered through the tax code. Congress should repeal the CTC and use the savings to lower tax rates for Americans broadly. It certainly should not be expanded.
History of the CTC
The child tax credit was first introduced in 1997 as part of the Taxpayer Relief Act. It quickly increased from $400 to $1,000 while lowering the earned income requirement from $10,000 to $3,000. The credit was further expanded in 2017 as part of the Tax Cuts and Jobs Act, which increased the credit to $2,000 per child, lowered the earned income threshold, and raised the beginning of the income phaseout from $110,000 to $400,000 for married taxpayers ($75,000 to $200,000, single). The 2017 reform also eliminated the child and dependent exemption, which was more than offset by the $1,000 increase in the CTC for a taxpayer at or below the 25 percent income tax bracket (about $150,000). Along with a majority of the other changes enacted in 2017, the CTC and additional exemptions return to their previous values in 2026.
In 2021, the American Rescue Plan Act temporarily increased the CTC for just one year to $3,600 for children under 6 years old and $3,000 for children under 18 years old. The full credit was also made temporarily fully refundable by removing the earned income requirements, and half of the credit was delivered as advance payments directly into taxpayers' bank accounts each month. Figure 1 shows the maximum CTC amount from its introduction through 2026 for 0–5‑year-olds, including the scheduled reduction under current law.











Is the Child Tax Credit an effective subsidy?
The CTC provides a large subsidy to families with children. Unlike the earned income tax credit (EITC), cash aid (TANF), food aid (WIC, SNAP), and public health care (Medicaid and the Children's Health Insurance Program), the CTC is primarily a subsidy for middle‐ and upper‐​income Americans. As currently designed, the CTC is not primarily an anti‐​poverty program. Only 19 percent of child tax credit expenditures are claimed by the lowest quintile of income earners. Jacob Goldin and Katherine Michelmore find that 87 percent of filers in the bottom income decile of AGI are completely ineligible for the CTC, and "the majority of filers in the bottom thirty percent of the distribution are only eligible for a partial credit."
Arguments for expanding the CTC usually assume that the cost of raising a child has increased and affordability has broadly declined. Relatedly, some proponents worry that U.S. fertility is below the replacement rate and believe that expanding government subsidies will meaningfully increase women's lifetime fertility. Still, others focus on how larger income transfers could reduce poverty. The CTC is poorly targeted to meet each of these goals.
Poverty
Because the CTC phases in for filers with income over $2,500 at a 15 percent rate, the credit creates an incentive to work by adding a 15‐​cent subsidy to each additional dollar earned, until the full credit is reached. As is the case with the EITC, the work incentives are often partly or fully offset by the "income effect," under which the subsidy allows a worker to meet his material needs with fewer hours worked.[1] Expanding the dollar value of the credit will have income effects that at least partially offset the work incentive.
To better target the lowest income families, others propose permanently increasing the credit and eliminating the earned income requirement, as was temporarily done in 2021 during the pandemic. Proponents claim that such a permanent change would reduce child poverty by more than 40 percent. Such estimates fail to account for how newly eligible families will change their behavior.
Taking behavioral effects into account, Kevin Corinth, Bruce Meyer, Matthew Stadnicki, and Derek Wu estimate that the larger CTC without income requirements would lead 1.5 million workers to stop working (83 percent of whom would be the sole earner in the household). The net effect of expanding the CTC would reduce overall child poverty by 22 percent and would not reduce deep poverty (50 percent of the poverty line). Results from the Joint Committee on Taxation found that the expanded CTC would result in similar reductions in labor supply.
Corinth and Meyer estimate that any reductions in poverty from a larger CTC that is targeted at families without market income would come at a fiscal cost that is almost double that of other programs, such as food stamps. The CTC is neither an efficient nor an effective policy tool to reduce child poverty.
Cost of raising a child
Although Americans frequently cite affordability concerns as an obstacle to fertility, analysis indicates that family costs have not outpaced incomes and that the cost of raising a child has fallen, not grown, over time.
For example, Angela Rachidi compares family incomes to family‐​related costs and finds that family incomes have grown steadily since the 1980s and costs have generally not outpaced them. Instead, Rachidi suggests that family's increasing expectations around—and consumption of—various goods and services (home size, vehicle ownership, clothing) drive perceptions of affordability decline. Moreover, various measures of social support and community support have declined in ways that may make it more difficult to raise a family.
Economist Jeremy Horpedahl similarly finds that the annual cost of raising a child in the United States has fallen from 21.8 percent of median family income in 1960 to 12.6 percent of median family income in 2020 for two‐​earner families, with the 2020 figure constituting the lowest cost yet (Figure 2). For single‐​earner families, the annual cost of raising a child in the United States fell from 27 percent of median family income in 1960 to 23.7 percent of median family income in 2020.[2]











Some proponents of the CTC argue that the presence of children reduces a family's ability to pay and thus deserves an offsetting subsidy, regardless of whether the cost of raising a child is increasing or decreasing. While children do come with additional costs, so do many other decisions individuals and families make, such as living in a high‐​cost area for economic or educational reasons.
Lastly, subsidies could be counterproductive as they will tend to be captured as higher prices of child‐​related services without supply‐​side reforms to expand access. Although evidence indicates that family affordability is not broadly in decline, the price of core child‐​related goods and services could certainly be lower with regulatory reforms.
Fertility
U.S. fertility is below‐​replacement level and converging with the low fertility rates of other countries. Subsidies for families with children, including the CTC, have been proposed as one way to mitigate this decline. Such financial transfers or cash benefits are especially ineffective at reducing fertility decline.
A review of studies with experimental or quasi‐​experimental designs finds that financial transfers result in a short‐​term increase in births while leaving the long‐​term total unaffected. A United Nations working paper finds that financial transfers' "impact on completed fertility is rather small… Furthermore, the effects of financial transfers usually have the biggest influence on fertility of the low educated, low‐​income, or jobless for whom public transfers are of higher value."
As stated elsewhere, these low‐​income households rarely qualify for the CTC's middle‐ and upper‐​income benefit. The CTC is thus doubly ineffective at increasing fertility: not only do financial transfers have a small or insignificant effect to begin with—altering fertility timing rather than total births—but the CTC does not target the demographic that would be most influenced to increase their fertility behaviors in the presence of financial benefits. Targeting low‐​income households comes with other costs to labor force participation and more fundamental questions about the prudence of governments' involvement in fertility decisions.
A better way?
Although the CTC fails at many objectives, there are numerous options for state, local, and federal policymakers interested in supporting families and making family life easier. To increase affordability, reforms to housing, food, formula, and childcare policy should be enacted. To reduce stress, increase opportunity, and reduce the cost associated with buying a home in the "right" neighborhood, further reforms to educational choice must be adopted.
Parents typically have limited financial resources, but just as importantly, limited time. Enacting reasonable independence laws and reforming home supervision laws would reduce the time cost of parenting while providing growth opportunities for school‐​age kids. Overly burdensome car seat requirements, with little associated safety benefit, should also be reconsidered.
Adopting these reforms would do much more for parents and children than expanding the CTC. On the other hand, expanding CTC spending without deregulating the goods and services that parents demand would be counterproductive and regressive. Ultimately, Congress should repeal the CTC entirely.


[1] Incentives depend on whether a person is not working or working to begin with, and whether the worker's earnings place them on the phase‐​in, plateau, or phase‐​out region of the benefit schedule. See here.


[2] Where single‐​earner families includes both single parent families and married couples where one parent is in the labor force.

Lorenzo is an intern at the Adam Smith Institute.Some argue that the current UK welfare state discourages people to work, rather than specifically targeting low-income individuals.An example of such policies are the Jobseeker's Allowance (JSA) and the Income Support (IS) (Niemietz, 2010). As a matter of fact, these welfare-enhancing policies impose elevated implicit marginal tax rates on the most vulnerable segments of the labour market (Blundell et al., 1998; Meghir and Phillips, 2008), essentially functioning as an additional income tax for individuals receiving transfers who strive to go back to the labour market. Consequently, they give rise to detrimental effects on labour dynamics, as clearly highlighted in Table 1. Adam et al. (2006) find indeed that, as the ratio of benefit income without work to disposable income in a low-paid occupation increases, the share of working adults strongly decreases. Despite recognising that there might not be a causal link between the two, the authors conclude that UK benefits might discourage job-seeking and return to work.












































































These policies extend economic support to a significant portion of the population including those who do not necessarily require it, rather than providing incentives for individuals with the lowest incomes to work and escape poverty. As Table 2 shows, government transfers have evolved into a regular source of income across various income levels, as opposed to being limited to those with the lowest earnings (Office for National Statistics, 2020). In 2019-2020, the 5th, 6th and 7th income decile groups, namely the middle and upper-middle class, received a higher percentage of benefits than the lowest decile group. This is mainly because the coverage of a spending programme, as opposed to its net distributional impact, is a much better predictor of its popularity (Niemietz, 2010).












































































The advantages of a Negative Income TaxA negative income tax (NIT) supplements the incomes of the poor by achieving systematic structure of marginal rates, without poverty trap problems or cliff-edges. According to Friedman (1962)'s proposed scheme, at a "break-even" level of income, households pay no income tax (Figure 1). Above this level, households pay tax at constant rate on each additional pound while, below this level, they receive a payment of such rate for each pound by which income falls short of the breakeven level tax. This net benefit can therefore be considered a "negative" income tax as it makes the income tax symmetrical. Under such a proposal, some households would now pay no taxes, others would pay less taxes than before while other households with relatively high incomes would be unaffected (Tobin et al., 1967). NIT's main advantages are therefore claimed to be reducing poverty, supplementing the incomes of low-income earners, reducing expenditure on social security, welfare and administrative costs as well as contributing to the development of social capital (Humphreys, 2001).












































































Empirical EvidenceFrom 1968 to 1980, the U.S. Government conducted four experiments on the NIT, while the Canadian government conducted one, aiming to evaluate the policy's effectiveness and economic viability. Some scholars argued in favour of the policy's success as the experiments did not find any evidence suggesting that a NIT would cause a portion of the population to withdraw from the labour force (Robins, 1985; Burtless, 1986; Keeley, 1981). On the other hand, some scholars declared the failure of the policy based on two main arguments. First, there was a statistically significant work disincentive effect for some subgroups such as primary earners in two-parent families, allowing scholars to conclude that a NIT discourages certain people to work. Second, the work disincentive would increase the cost of the program of about 10 to 200% over what it would have been if work hours were unaffected by the NIT (Rees and Watts, 1975; Ashenfelter, 1978; Burtless, 1986; Betson et al., 1980; Betson and Greenberg, 1983). Despite its theoretical economic advantages - reducing poverty by supplementing the incomes of low-income earners until they reach better paid work as well as lowering expenditure on benefits payments, welfare and administrative costs - further field research is required to assess NIT overall efficiency and economic feasibility.BibliographyAdam, S., Brewer, M. and Shephard, A. (2006) 'Financial work incentives in Britain: Comparisons over time and between family types', Working Paper 06/2006, Institute for Fiscal Studies.Ashenfelter, O., 1978. The labor supply response of wage earners. In: Palmer, J.L., Pechman, J.A. (Eds.), Welfare in Rural Areas. Brookings Institution, Washington, DC.Betson, D., Greenberg, D., (1983). Uses of microsimulation in applied poverty research. In: Goldstein, R., Sacks, S.M. (Eds.), Applied Policy Research. Rowman and Allanheld, Totowa, NJ.Betson, D., Greenburg, D., Kasten, R., (1980). A microsimulation model for analyzing alternative welfare reform proposals: an application to the program for better jobs and income. In: Haveman, R., Hollenbeck, K. (Eds.), Microeonomic Simulation Models for Public Policy Analysis, vol. 1. Academic Press, New York.Blundell, R.; Duncan A., Meghir, A., (1998) 'Estimating labor supply responses using tax reforms', Econometrica, 66, 4, 827-861.Burtless, G., (1986). The work response to a guaranteed income. A survey of experimental evidence. In: Munnell, A.H. (Ed.), Lessons from the Income Maintenance Experiments. Federal Reserve Bank of Boston, BostonFriedman, M. (1962). Capitalism and Freedom. Chicago: University of Chicago Press.Humphreys, J. (2001). Reforming wages and welfare policy: six advantages of a negative income tax. Policy: A Journal of Public Policy and Ideas, 17(1), 19-22.Keeley, M.C., (1981). Labor Supply and Public Policy: A Critical Review. Academic Press, New York.Meghir, C. and Phillips, D. (2008), 'Labour supply and taxes', Working Paper 08/04, London: Institute for Fiscal Studies.Niemietz, K. (2010). Transforming welfare: incentives, localisation and non-discrimination. Institute of Economic Affairs.Office for National Statistics (2020) "Working and workless households in the UK: April to June 2020"Rees, A.,Watts,H.W., (1975). An overview of the labor supply results. In: Pechman, J.A.,Timpane, P.M. (Eds.),Work Incentives and Income Guarantees: The New Jersey Negative Income Tax Experiment. Brookings institution, Washington, DC.Robins, P.K., (1985). A comparison of the labor supply findings from the four negative income tax experiments. Journal of Human Resources 20 (4), 567–582.Robins, P.K., Brandon, N., Yeager, K.E., (1980). Effects of SIME/DIME on changes in employment status. The Journal of Human Resources 15 (4), 545–573.Widerquist, K. (2005). A failure to communicate: What (if anything) can we learn from the negative income tax experiments? The journal of socioeconomics, 34(1), 49-81.

Contributor(s): Dr Rebecca Elliott, Professor Ian Gough, Dr Rodolfo Leyva | Welcome to LSE IQ, the monthly podcast from the London School of Economics and Political Science. This is the podcast where we ask some of the leading social scientists - and other experts - to answer intelligent questions about economics, politics or society. For this LSE IQ we have something slightly different for you – an 'live' episode recorded in front of an audience at LSE at the beginning of November 2018. Economic growth has helped millions out of poverty. The jobs it creates mean rising incomes and consumers who buy more. This drives further growth and higher living standards, including better health and education. Yet WWF, the World Wildlife Fund, has recently warned that exploding human consumption is the driving force behind unprecedented planetary change, through increased demand for energy, land and water. Plastics and microplastics are filling our oceans and rivers and entering the food chain. The production of goods and services for household use is the most important cause of greenhouse gas emissions. The textile industry is responsible for depleting and polluting water resources and committing human rights abuses against its workers. It is also a major source of greenhouse gases, and three fifths of all clothing produced ends up in incinerators or landfills within a year of being made. For this episode of LSE IQ Jo Bale and Sue Windebank ask, 'Can we afford our consumer society?'. This episode features: Dr Rebecca Elliott, Assistant Professor, LSE's Department of Sociology; Professor Ian Gough, Visiting Professor at LSE's Centre for the Analysis of Social Exclusion and an Associate at the Grantham Research Institute on Climate Change and the Environment; and Dr Rodolfo Leyva, LSE Fellow in LSE's Department of Media Communications. For further information about the podcast visit lse.ac.uk/iq and please tell us what you think using the hashtag #LSEIQ.

Apparently we've all got to be poorer. Well, yes, again, but this time it's because: The global extraction of raw materials is expected to increase by 60% by 2060, with calamitous consequences for the climate and the environment, according an unpublished UN analysis seen by the Guardian.Natural resource extraction has soared by almost 400% since 1970 due to industrialisation, urbanisation and population growth, according to a presentation of the five-yearly UN Global Resource Outlook made to EU ministers last week.To get a handle on the sort of size of number they're talking about: Each year, the world consumes more than 92b tonnes of materials – biomass (mostly food), metals, fossil fuels and minerals – and this figure is growing at the rate of 3.2% per year.Of course we don't, in fact, "consume", we borrow for a bit. That old phrase of dust to dust, ashes to ashes, is true at the planetary system level. Say, the use of metals - we might dig them up out of one hole, use them then stick them back in another, mine to landfill, but we've not consumed them.But OK, so 92 billion tonnes, call it 100bn. Up by 60%, let's give them an inch and call it 200 billion tonnes. Big number.Except: The lithosphere consists of sediments and crystalline rocks with a total mass of 23,000–24,000 × 10x15 metric tons.24,000,000,000 billion tonnes.200 billion is 0.0000008%In a million years we'll use under 1% of it (assuming we've got the right number of zeroes there all the way through).This is such a problem that: ""Higher figures mean higher impacts," he said. "In essence, there are no more safe spaces on Earth. We are already out of our safe operating space and if these trends continue, things will get worse. " which we think might be a bit of an exaggeration. "The report prioritises equity and human wellbeing measurements over GDP growth alone and proposes action to reduce overall demand rather than simply increasing "green" production." Ah, yes, we must be more equal and poorer as a solution. How did we guess that is what would be suggested? "Decarbonisation without decoupling economic growth and wellbeing from resource use and environmental impacts is not a convincing answer and the currently prevailing focus on cleaning the supply side needs to be complemented with demand-side measures," Potočnik said." That, again, means make everyone poorer.Yes, sure, 200 billion is a big number even when speaking about government budgets and deficits. But the size of the Earth is a really, really, big number. Against which 200 billion is a grain of a smidgeon of a smear. It's simply not an important nor relevant number nor percentage. It's a great excuse to impose perpetual poverty upon the population, of course it is. But it's not a good reason. Because a big number of a very big number is a small number.

Swaminathan S. Anklesaria Aiyar


Indian Prime Minister Narendra Modi is in the United States for a state visit that is expected to highlight India's importance as a rising economic and military power, and the only country in Asia that can be a counter to China in the 21st century. Modi's Bhartiya Janata Party (BJP) has long promoted its Hindu nationalist agenda by claiming that India was the world's richest region under glorious Hindu rule for thousands of years before being conquered by Muslim invaders in the 11th century and British invaders in the 18th century. The BJP says foreign invaders transformed a sone ki chidiya—a golden bird—into an impoverished chattel. Modi has promised to make India a great world power again, and his U.S. visit aims to be a step in that direction.
The BJP often cites historian Angus Maddison, who estimated that India accounted for 32 percent of world GDP in 1 CE (during the Hindu period), a share that sank to just 4 percent by the time British rule ended in 1947. However, the BJP is cherry picking data from Maddison's work to create a false historical narrative of a once‐​rich country impoverished by foreign invaders. For a full picture, read my new Cato Policy Analysis, "Indian Nationalism and the Historical Fantasy of a Golden Hindu Period."
A close look at Maddison's magnum opus, Contours of the World Economy 1–2030 AD: Essays in Macro‐​Economic History, tells a less flattering story. India's high share of world GDP in 1 CE was due mainly to its high share (33.2 percent) in world population. Since this yielded a GDP share of 32 percent, India per capita income was slightly below the world average at just $450 per year. This did not rise at all in a thousand subsequent years of Hindu rule. So, this supposedly golden period was one of stark poverty and economic stagnancy. Conditions were almost as bad in the rest of the world. High mortality, arising from disease, drought, and war kept India's population stagnant at 75 million for a thousand years till 1000 CE. Simply staying alive was a challenge.
Under Muslim and British rule, India's GDP edged up. Falling mortality rates meant a significant rise in the population too. This rising population partly offset the rise in GDP, so per capita income grew slowly. Maddison estimates it at $550 in 1700, towards the end of the Muslim period. This edged up to $619 by the time British rule ended. Progress was very slow in the thousand years of Muslim and British rule yet was better than the stagnancy in the preceding thousand years of Hindu rule.
Colonial‐​era history books spoke of the great blessings that British imperialism had brought to India. Maddison's figures show those claims to be absurd. But they also disprove the claim that colonial rule impoverished India.
After becoming independent, India's GDP rose much faster and mortality rate fell more dramatically than ever before. By 2003, says Maddison, India's per capita income was up to $2,160. Both in terms of income and life expectancy, India's golden period—if you can call it that—is today, not in the ancient Hindu past.
India is still a lower middle‐​income country, but in PPP (purchasing power parity) terms is already the third largest economy in the world. The World Bank and the International Monetary Fund estimate that it was the fastest‐​growing major economy in the world in 2022 and will continue to be so this year. It runs a fiercely independent foreign policy and has refrained from condemning Russia for invading Ukraine. India is a major buyer of Russian oil. Even so the United States sees India as an important strategic partner, though not an ally. That is why Modi's visit is expected to include the signing of military deals for U.S. supply and coproduction of high‐​tech aircraft engines and drones. Despite foreign policy disagreements and worries about the suppression of dissent and liberal values in India, the United States wants to help Modi build an India that will become a major Asian power that can check China's dominance.

Marc Joffe


Recent years have brought significant changes to Idaho public finances. In addition to rapid increases in population and tax revenue, the state experienced a sharp increase in its Medicaid costs. Legislators, worried that a continued escalation could jeopardize the state's robust fiscal health, created a task force to investigate whether the state could better control Medicaid spending growth by implementing managed care. While switching beneficiaries from traditional fee‐​for‐​service coverage to managed care is intuitively attractive, it may not be the right choice for Idaho policymakers in 2023.
The accompanying figure shows the state's actual costs for the ten fiscal years ending FY 2022, a near final estimate of FY 2023 expenditures based on a review of remittances from the State Controller's Transparent Idaho platform, and budgeted amounts for FY 2024. The most rapid cost escalation occurred since FY 2020.











According to the Centers for Medicare and Medicaid Services, Idaho Medicaid enrollment soared from 242,000 in December 2019 to 419,000 in March 2023, the last month for which data are available. Although some of this growth may be linked to migration into the state, two other factors were more critical. First, Idaho implemented Medicaid expansion at the beginning of 2020, allowing all adults with incomes up to 138% of the federal poverty level to join the program. Second, the federal government prohibited states from removing beneficiaries who no longer qualified for the program from the Medicaid rolls during the COVID public health emergency. This prohibition ended in April and Idaho should be able to reduce its beneficiary count in the coming months by conducting systematic eligibility redeterminations.
So, it is reasonable to conclude that Idaho's Medicaid cost growth is more the result of an expanded enrollment base than of rising costs per enrollee, which is the problem managed care is supposed to address. Managed care promises to lower costs by restricting and coordinating a plan member's use of medical services. Instead of seeing any provider that accepts coverage, the enrollee receives care from within the Managed Care Organization's (MCO) provider network. The MCO receives a fixed "capitation" payment from the state for each covered beneficiary each month.
While Medicaid MCOs can save money by restricting the range of available providers, they cannot use a second lever that MCOs usually rely upon in the private insurance market to control costs: patient responsibility payments. Federal policy generally does not allow Medicaid MCOs to impose copayments or deductibles. As a result, Medicaid patients have no financial disincentive to seek medical care.
Two other factors militate against the ability of Medicaid managed care to yield significant savings. First, the MCO must cover its costs and earn a profit for its owners (and even a not‐​for‐​profit MCO can be expected to pursue revenues greater than expenses to build internal reserves). The largest for‐​profit Medicaid MCO, Centene Corporation, reported a $2 billion pretax profit on $145 billion in revenue for 2022. This is a modest profit margin, but the company also had $12 billion in selling, general and administrative expenses. (These amounts are company‐​wide totals including Centene's Medicare and private plan management activities, as well as its Medicaid Managed Care services.)
A second consideration is that MCOs are compensated for inactive Medicaid enrollees. If someone on Medicaid gets other coverage, he or she may start using that alternative coverage without advising the state Medicaid office. The individual thus remains on the rolls even though he or she is not using services. Under a fee‐​for‐​service model, this is not an issue from a state budgeting standpoint because the individual does not generate any provider claims. But if that same individual is in managed care, the MCO will continue receiving per member per month (PMPM) payments until the state determines that he or she is no longer eligible.
There is some evidence that this latter effect can be large. In response to a public records request, a Los Angeles‐​based publicly owned Medicaid MCO told this author that 327,000 or 29% of its 1.125 million members did not receive any services during the 2021–22 fiscal year. The proportion of inactive beneficiaries may have been especially high that year due to the federal prohibition on redetermining eligibility discussed earlier.
Empirical research on cost savings from Medicaid Managed Care has yielded mixed results. A 2012 meta‐​analysis found a "paucity of evidence on cost savings from Medicaid managed care." A more recent meta‐​analysis cited by Idaho's consulting firm, Sellers Dorsey, found some evidence of cost savings from Medicaid managed care in Florida, Kentucky, and Pennsylvania. However, the consultant characterized these findings as anecdotal and state specific. Sellers Dorsey concluded: "While managed care typically does not (at least, not initially) reduce costs to the State, it can bring budget stability and predictability through the rate setting process and the transition of financial risk to the managed care entities.".
It is commendable that Idaho legislators stood up a task force to investigate a commonsense way to save state and federal taxpayers money on the state's growing Medicaid program. But the case for Medicaid Managed Care is decidedly mixed, and so it is important that the task force consider not only how to extend managed care in Idaho but whether to do so. Although the task force report is due on January 31, 2024, we may not have enough data to know by then whether the return of Medicaid redeterminations has sharply bent the program's cost curve. It may thus be wise to defer any decision on managed care for several additional months.

The death of three Americans in Jordan due to an attack by the "Islamic Resistance in Iraq" was an avoidable tragedy. It should prompt the United States to speed up its exit from Syria and Iraq, something policy makers have been contemplating for some time. Washington must minimize its risks. To dig in and escalate would be a mistake that is likely to lead to more Americans killed. The mission that brought U.S. troops to Iraq and Syria – to destroy ISIS – has been accomplished. Residual policing of ISIS remnants can be undertaken from bases in Qatar, Kuwait and Turkey.Hawks in Washington insist that by striking Iran directly and hard, the U.S. can bring security to its troops, the danger will subside because Iran understands force. But this analysis misunderstands the region and minimizes the dangers arrayed against U.S. troops. Iran has been committed to pushing U.S. troops out of Iraq and Syria, something its leaders articulated clearly following an earlier use of U.S. force, the assassination of Islamic Revolutionary Guard Corps Gen. Suleimani in 2020. Iran will not back down if the U.S. assassinates more of its leaders or strikes infrastructure in Iran for the simple reason that it has the upper hand in the region.But Iran is far from being the only government that wants U.S. troops out. Turkey, Iraq and Syria are equally determined to drive the U.S. from its bases. Every single government in the region is demanding that U.S. troops leave. Turkey has escalated its war against America, not by sending missiles and drones against U.S. bases, but by sending them against America's allies in northeast Syria and the Kurdish region of Iraq. Turkey has assassinated dozens of YPG leaders and destroyed important infrastructure. It has mobilized Syrian opposition groups under its control to attack the Syrian Democratic Forces that Washington relies on. These attacks are designed to weaken the U.S. position in the region and eventually drive it from northeast Syria.The Syrian government is also determined to drive Americans from its soil. It accuses Washington of illegally occupying 30% of its territory and stealing its oil to subsidize the quasi-independent territory the U.S. has established in northeast Syria. As a consequence, the majority of Syrians languish in poverty and must survive with only a few hours of electricity per day, while the economy remains paralyzed by U.S. sanctions. They want the U.S. out.The Iraqi government is also demanding that U.S. troops leave. It was provoked into doing so by Washington's January 4 assassination of Mushtaq al-Jawari, a leader of Harakat al-Nujaba, one of the Shi'a militias that belongs to the popular mobilization forces. Washington targeted him in retribution for an earlier attack on a U.S. base. Did this show of force cow the Harakat al-Nujaba or the popular mobilization forces? No. On the contrary, it led to an escalating drumbeat of missile and drone attacks on American bases.But the militias were not the only forces to go on the offensive, the Iraqi government did as well. Because the popular mobilization forces are officially under Baghdad's control, the U.S. found itself effectively at war with the central government. Prime Minister Sudani cannot ignore them. To save his government, Sudani had to ask U.S. forces to leave. Both he and Iraq's president, as well as almost every Iraqi politician, insist that Iraq not be turned into a proxy battleground.Striking Iran will not solve America's problems in the region. Biden's support for Israel's war against the Palestinians has inflamed anti-American and anti-Western feelings across the entire Arab world. It has breathed new life into the resistance front. Only yesterday, most Arabs scoffed at it for being impotent and doing nothing to deter Israel's mistreatment of the Palestinians. Because of Gaza, Arabs are once again rooting for resistance.Lastly, the forces allied with Iran that stretch from Lebanon to Iraq are not foreign to the region. They cannot be rolled back by U.S. power and retaliatory strikes. There are more Shiite Arabs in Lebanon, Syria and Iraq combined than there are Sunni Arabs. The power of the Shiite militias today may seem like an aberration or some Iranian feat of levitation, but it is not. Centuries of discrimination against Shiites meant that they were the dispossessed and a political minority in a region where they were in fact the demographic majority. It is for good reason that the area stretching from Beirut to Busra is today called the Shiite Crescent.The notion that several thousand American soldiers can be kept safe while hunkered down in desert bases sprinkled across the great expanse of this region is a mirage. No one wants them there, not the governments and not the people. All are sharpening their knives and devising new ways to weaken them and force them to leave. It is pointless for Washington to keep them there for a mission that has long since passed its expiration date or to escalate a war it cannot win.

David J. Bier


My latest policy analysis published today explains why it is impossible for nearly all immigrants seeking to come permanently to the United States to do so legally. The report is a uniquely comprehensive and jargon-free (to the extent possible) explanation of U.S. legal immigration. Contrary to public perception, immigrants cannot simply wait and get a green card (permanent residence) after a few years. Legal immigration is less like waiting in line and more like winning the lottery: it happens, but it is so rare that it is irrational to expect it in any individual case.
The figure below shows the U.S. legal immigration system for people who are abroad who presently intend to immigrate permanently to the United States. Below I briefly describe the main problems and choke points in this labyrinth.







Guilty Until Proven Innocent
Until the Immigration Act of 1924, everyone in the world was eligible to immigrate to the United States unless the government proved they fell into an ineligible category. In other words, innocent until proven guilty. Since then, the foundational principle of U.S. immigration law is that everyone in the world is ineligible to immigrate unless they prove to the government they fit into an eligible category. The result is that over 99 percent of all those wanting to immigrate to the United States cannot do so legally.







The Narrow Categories
Today, people must show they fit into one of five exceptions to the worldwide ban on immigration: 1) the refugee program, 2) the diversity lottery, 3) family sponsorship, 4) employment-based self-sponsorship, and 5) employer sponsorship. These categories are extraordinarily narrow. Few people can qualify, and thanks to low immigration caps, those who do qualify are often subject to decades-long waiting periods before they can enter legally.
1. The Refugee Program: the Lucky Few
The refugee program is supposed to provide a legal way to immigrate for people who fear return to their home countries. But the rules limit admission to those who fear return based on persecution by a government (or someone the government refuses to control), and only if the persecutor is motivated by someone's race, religion, political opinion, nationality, or social group. More importantly, the program will only process refugees if they flee from their homes to a group of about 30 countries, and it will only accept applicants from about 30 countries.
Applicants usually need a referral from the United Nations, and they have a less than one percent chance of receiving such a referral. Moreover, the program has a cap, and the government has adopted processing procedures that make filling that cap extremely difficult. Barely one in 5,000 displaced persons will be admitted to the United States under the refugee program. The figure below shows the increasing number of displaced persons and the decreasing number of admissions under the refugee program.











2. The Diversity Lottery: the Golden Tickets
The diversity lottery has four basic rules: 1) applicants must show that they can support themselves at or above the poverty line, 2) applicants must have at least a high school degree or work experience in a job typically requiring a college degree, 3) only people from countries from which fewer than 50,000 people immigrated to the United States in the last five years can apply (excluding a majority of the world's population), and 4) there are only 55,000 slots awarded through an annual lottery. The chances of winning the lottery and getting a green card have plummeted more than 90 percent since the first lottery was held in 1995.











3. Family Sponsorship: Only the Closest Relatives, Endless Waits
The biggest limitation on family sponsorship is having a qualifying sponsor. The family sponsorship is reserved primarily for the closest relatives: spouses and children of U.S. citizens and legal permanent residents as well as siblings and parents of adult U.S. citizens, and minor children and spouses of those relatives can join except in the case of parents, minor children, and spouses of U.S. citizens. The second limitation is the cap. Only spouses, minor children, and parents of adult U.S. citizens are uncapped, but their numbers reduce the cap of 480,000 for other relatives down to just 226,000. The result is a massive backlog of 8 million cases. For most countries and category combinations, sponsors will die before their relatives can immigrate.











4. Employment-Based Self-Sponsorship: Only for the Most Elite
Employment-based self-sponsorship is available only in the rarest set of circumstances. The three categories are for 1) people with "extraordinary ability," 2) workers with advanced degrees or exceptional ability who are conducting activities of national importance, and 3) investors able to invest not less than $800,000 and—in some cases—more than $1.05 million in a business that creates 10 new jobs for U.S. workers within 2 years. These highly unusual cases apply to very few potential immigrants, but even in those cases, the government strictly enforces the criteria to make them as difficult to meet as possible. In 2019, for instance, the "extraordinary ability" category had a denial rate of over 40 percent.
5. Employer Sponsorship: Backlogs Wrapped in Red Tape
Employer sponsorship is the one chance where, in theory, it should be open to anyone with an employer sponsor in the United States. In practice, the procedures are so backlogged, so costly, and so time-consuming that very few employers are willing to attempt it except for the highest-paid workers in America. Aside from a few specific occupations, employers must advertise the job to U.S. workers. The process takes years, and even if no U.S. worker applies, very few employers can afford to keep a job open for such a prolonged period.











This is why nearly all employer-sponsored green cards go to people already in the United States who can start working on a temporary work visa, such as the H-1B visa, much sooner while they go through the lengthy green card process. But the H-1B visa is capped at just 85,000. The odds of winning the lottery and ultimately getting an H-1B visa were just 16 percent in 2022. But the even bigger problem for potential immigrants is that the H-1B visa requires a bachelor's degree, and only 10 percent of the world's population has a bachelor's degree.











Even if you have a bachelor's degree, win the lottery, and convince the employer to pay for the green card processing, the employment-based annual cap is massively oversubscribed. There was a backlog of about 1.4 million in 2020 for a cap of just 140,000. Because every country has the same cap, and immigrants from India account for half of all applicants, the backlog is overwhelmingly Indians who face a lifetime of waiting for a green card.











The U.S. Can Handle Much More Legal Immigration
The U.S. legal immigration system is restrictive in three ways. First, the system is restrictive compared with demand. Nearly 32 million people tried to receive a green card in 2018, while just 1 million were successful, and most could not even try the process. Second, the system is restrictive compared with U.S. history. In the decades prior to the 1920s, the United States routinely permitted a rate of legal immigration three to four times higher than 0.3 percent of the population permitted to receive a green card in recent years.
Finally, the system is restrictive compared with other countries. The United States ranks in the bottom third of wealthy countries for foreign-born share of the population. Even if it accepted 70 million immigrants tomorrow, it would still not surpass the likes of Australia.











Immigration benefits the United States, so there is no reason to place hard caps or strict categorical limits. Moreover, enforcing restrictive laws is costly and results in illegal immigration. The entire legal immigration system is actually designed not to be followed by most people, but to keep most people out. America should return to its system of openness that reflects U.S. traditions and benefits the country.
David J. Bier, "Why Legal Immigration Is Nearly Impossible: U.S. Legal Immigration Rules Explained," Cato Institute Policy Analysis no. 950, June 13, 2023.