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When I write about Social Security, I normally focus on two serious deficiencies.

1. The program was never properly designed to deal with demographic change, which means there’s a gargantuan long-run budgetary shortfall of $44 trillion.
2. The program is a very bad deal for workers (especially minorities), offering a paltry retirement benefit compared to what could be obtained with private savings.

I’ve neglected to explain, though, that there’s also an economic cost. All government spending is a burden since resources get diverted from the productive sector of the economy. Moreover, the associated payroll taxes have an adverse impact on incentives for employment.

Those taxes also have a negative effect on entrepreneurship, according to new research from three economists. Here are some excerpts from their study, which has been published by the National Bureau of Economic Research. We’ll start with a look at the methodology.

Entrepreneurship plays a central role in modern economies. In the US, for example, new businesses account for 20% of total gross job creation. While entrepreneurs can be very successful…, entrepreneurship remains one of the most economically risky lines of activity and can result in large wealth losses. …the marginal value of resources for entrepreneurs can be substantial, given how cash-constrained they often are. Therefore, mandating social insurance, while reducing risks,could significantly affect entrepreneurial activity. …In this paper, we…exploit quasi-experimental variation in the amount of social insurance contributions and…administrative data on the full population of Finnish entrepreneurs to address this question. …We use a standard differences-in-differences strategy and exploit a reform in 2011 that changed the ownership share rule from 50% to 30% to assess how relaxing the social insurance mandate affects entrepreneurial activity. …Overall, we find that social insurance contributions are reduced by an aver-age of 19% for the treatment group, which has more discretion over insurance contributions after the reform. This reduction represents a large cash windfall, equivalent to, on average, a 5 percentage-point reduction in corporate taxes.

Here are the key results, which show that payroll taxes have a decidedly negative effect on new firms.

…we observe a larger than average decrease in social insurance contributions by the owners of younger firms. The cash saved from the lower contributions is channeled into their firms, as we observe an increase in both employee compensations and other input costs, and an increase in turnover after the reform. …entrepreneurs in younger firms are more liquidity-constrained and have access to better growth opportunities than more mature firms. …Figure 2 shows the effect of the 2011 reform on business activity for young firms that are equal to or younger than five years old. …we estimate a 9.9% increase in turnover and a 6% increase in employee wage costs. Overall, these results imply that firms use the saved cash to pay for additional intermediate inputs and labor in order to increase turnover, and suggests that these firms might be facing liquidity constraints.

Here’s the aforementioned Figure 2, showing the both sales and wages are higher when social insurance taxes are lower.

The bottom line is clear.

…our findings imply that the social insurance mandate…crowds out business activity for young firms… the social insurance mandate for entrepreneurs has heterogeneous efficiency costs. Efficiency gains could be achieved by…lower social insurance contributions.

What is meant by efficiency gains?

That’s simply economic jargon for faster growth and higher living standards. And those results occur because entrepreneurs play a key role in driving innovation.

P.S. This issue is timely and important since politicians such as Bernie Sanders and Alexandria Ocasio-Cortez are pushing “Medicare for All” and other schemes that would require huge increases in payroll taxes.

P.P.S. Other Democrats, such as Barack Obama and Hillary Clinton, have urged higher payroll taxes that would deliberately target entrepreneurs, investors and business owners.

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Image credit: geralt | Pixabay License.

Child Endangerment as defined by the Texas Penal Code 22.041. (c) A person commits an offense if he intentionally, knowingly, recklessly, or with criminal negligence, by act or omission, engages in conduct that places a child younger than 15 years in imminent danger of death, bodily injury, or physical or mental impairment.

On January 26, 2019 my friend James (Doc) Greene was arrested for trespassing at the Montrose Public Library in Houston, Texas at the behest of the librarian therein. Doc was there as a member of the press, complete with a White House Press badge to report on Drag Queen StoryTime, an event embraced by the American Library Association, The LBGTQ, and the Mayor as a suitable method of teaching three year olds “diversity!”

Unfortunately, while the po po was pitching Doc into the rear seat of a waiting squad car, where he had a quite proper heart event I might add, at least one Queen Dragging around inside the library was a convicted child molester picking out his next date. . The librarian had not even conducted a simple internet search on her guests to see if maybe, just maybe, some of them might be a degenerate. Oh, they did do a check on Doc by the way. And although a Houston newspaper referred to him as a gun waving “monster” he is duly licensed by the State of Texas to wave a machine gun should he so choose!

Doc is a Christian man. He doesn’t believe in revenge, hate, or a little “even up.” Unfortunately for the librarian those are my calling cards. That’s why I’m called “Bill the Butcher.” Cause I ain’t got no sense! So, I have a list of demands.

Since the librarian who tossed that trespass warning at Doc’s feet was the instigator of his arrest, one can only assume that she (if she IS a she, because down at Montrose who knows) is the one who arranged for “StoryTime” and placed the children within arm’s reach of a convicted child rapist, and should be arrested pursuant to section 22.041 of the Texas Penal Code cited above.

The entire staff of the Montrose Library be fired, and the library be closed until such time as it can be made safe for children.

That the Texas Rangers conduct an investigation of any and all persons involved in this event with particular attention to their possible knowledge of the criminal history of the perpetrator involved bringing them, too, under the purification of section 22.041.

And finally, that the Child Protective Services be called in to conduct an investigation of any parent stupid enough to subject their child to this travesty of child safety!

THERE Montrose! Now you’ve tasted my mutton. How do you like it, huh?

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From the Mind of a Dumb ole Biker from Alvin, Texas:
So Chip Darby has made it his mission to tell me I pander to an audience and I’m Wrong about the President and his National Emergency.

He says, Ok Chappy Gypsy how about you stop challenging my intellect, Otherwise your verbose responses are only to play to your cheerleaders.

My response to him:

Well Chip Darby, I wasn’t trying to challenge your intellect, I was however trying to get you to see the bigger picture. Let’s look at the facts.

The President has inherent executive powers from Article II, as well as delegated authority from Congress under existing law, to stop taking in immigrants at the border or through visas for as much time as he deems necessary. While Congress controls immigration once immigrants are legally admitted to our country and can also exclude anyone from admission, the president shares concurrent jurisdiction on exclusions. He can’t deport anyone he wants to without an authorizing statue, but he can exclude anyone up front. As the Supreme Court said in a landmark 1950 case, “The exclusion of aliens is a fundamental act of sovereignty. The right to do so stems not alone from legislative power but is inherent in the executive power to control the foreign affairs of the nation.” This is why for the first 100 years of our country, immigration was entirely controlled by diplomatic correspondence through the State Department. Delegated authority from Congress
INA 212(f) allows the president, whenever he finds that “the entry of any aliens or of any class of aliens into the United States would be detrimental to the interests of the United States,” to “suspend” all forms of immigration “for such period as he shall deem necessary.”

INA 215(a)(1) grants the president an almost equal level of authority to subject entry of all aliens entering or departing to “such reasonable rules, regulations, and orders, and subject to such limitations and exceptions as the President may prescribe.” If demanding that all immigrants enter legally or apply for asylum in a safe and controlled environment at a consulate rather than at a border controlled by some of the most dangerous people in the world is not a “reasonable rule,” I’m not sure what is.

In addition, given that this is not an ordinary case of immigration or a trickle of asylum seekers, but rather a mass influx, the attorney general can use 8 U.S.C. § 1103(a)(10) to deputize local law enforcement bodies at the border that wish to participate to engage in the police powers of federal immigration officers. This section of the law states that when there’s an “imminent mass influx of aliens arriving off the coast of the United States, or near a land border,” the attorney general may “authorize any State or local law enforcement officer” to perform such duties. This will help with the manpower and the national security component of the issue. As I said Chip Darby, your’re smarter than that. Everything the President is doing, he is doing under current law, the same law that Congress voted on and gave their permissions to allow Presidents past authority. Just because it’s Trump doesn’t negate the fact that he has Presidential Authority under current law. If Congress doesn’t like the very laws most of them created in the past, then they need to work on changing the laws of this nation.

I back my writings up with facts, using the Laws that Congress enacted, you say I’m pandering to my cheerleaders. Not true sir, however I can say you in-fact do pander to your audience. Never ever tell me I’m pandering to my cheerleaders. Everything I write is for informational purposes and I don’t pander to any audience. I write the truth and don’t really give a rats ass about who does or doesn’t agree with me, when I write. I write in hopes people will wake up and understand what’s happening to our Nation. Something you use to do as well. Understand something, I don’t write to influence and win friends. Never have. But I do back my writings up with facts. Chip Darby, you have yet to show me where I’m wrong, but to tell me I pandering to my cheerleaders? Wow, you don’t know me at all. We all have our part to play, and I will do what I can. Whether it’s in Austin, or I’m at the Border, running for Precinct Chair, or District Chair, or I’m sitting in my living room writing about the things I’ve learned from talking to the people over the short 58 years I’ve been on this planet. You see, I;m out there when most of the other people are not! I stand behind my convictions.

But what do I know? I’m just a Dumb ole Biker from Alvin Texas.

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