Taxes on Unhealthy Food Are Ineffective and Hurt the Poor: They come at the expense of the most vulnerable segments of society

The authors make good points below but they could have gone further by questioning the whole notion of healthy food.  Official advice on what is healthy frequently undergoes large changes, even U-turns, so if there is such a thing as healthy or unhealthy food there is no certainty about what that is.  Fat was demonized for decades but it suddenly became good for you recently.  Eat what you like and ignore the food nannies!

Over the past decade or so, paternalistic objections to fat, sugar, and salt have gained traction among policymakers, mostly at the state and local levels of government. Predictably, new taxes have been proposed and imposed on foods and beverages containing those ingredients. For elected officials, the prospect of addressing health concerns while raising new tax revenue is nearly irresistible.

It’s certainly intuitive that taxing sugary soda and bad-cholesterol-ridden potato chips will prompt consumers to buy fewer of those items—and that people will substitute healthier alternatives. But it turns out that consumers’ buying habits do not change markedly in response to the higher prices, and that the burden of those taxes falls most heavily on the low-income, who allocate larger shares of their budgets to food than wealthier people do. Together with our coauthors Adam Hoffer and Regeana Gvillo, we describe these effects in more detail in a new paper published in the Journal of Entrepreneurship and Public Policy.

In assessing these kinds of taxes, it’s critical to understand the consumption choices people have available. Many programs have tried to address unhealthy eating, but individuals eat junk food not just because they enjoy it, but also because of a complex web of eating habits, accessibility of stores, cooking abilities, and time pressures. Even when consumers in lower-income neighborhoods want to buy healthier foods, their options are limited.

High-sugar and high-fat foods are shelf-stable, making them more convenient than food that spoils quickly and giving them a much lower price per calorie consumed. The absence of healthy options in so-called urban food deserts means that taxing junk food will disproportionately harm the people living there. Also, as everyone who has bought food from a vending machine knows, the combination of accessibility and hunger can trigger the purchase of unhealthy food.

Moreover, diet is only one component of a healthy lifestyle. The other components, such as regular exercise and adequate sleep, are not directly related to tax policy.

But the most important, though less obvious, point is worth repeating: expenditures on the items we studied don’t vary much with income, meaning that the poor spend a higher share of their income on these products—making taxes on them regressive.

People do tend to buy more expensive, higher-quality versions of alcohol, tobacco, and some foods as their incomes rise. The largest effect reported in our paper was for alcohol: a household that makes 1 percent more income spends, on average, 0.31 percent more on alcohol. (For the average household, this means that if income goes up by $428 per year, alcohol spending goes up $1.) But the quality of things like soda and potato chips does not scale up, and so expenditures remain basically constant regardless of income.

It is widely accepted that eating better enhances health, lowers health-care expenditures, and improves the quality of life. The problem is that the link between taxes on unhealthy food and the consumption of such food is weak, and that those taxes come at the expense of the most vulnerable segments of society.

SOURCE

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The genius of Trumpism

Julius Krein sits in a cafe on the ground floor of his office building in downtown Boston, wearing a green corduroy blazer and a neat part in his hair.

He’s just launched a tweedy magazine called American Affairs, and the press has dubbed it “the intellectual journal of Trumpism.”

It’s a useful label, in some respects. “Frankly,” Krein says, poking at an apricot tart, “it gets me a lot of clicks.” But it’s also made the magazine a target for criticism.

Trump, as one skeptical columnist put it, is a “deeply flawed tribune” for an intellectual movement — an anti-intellectual, a former reality television star who changes positions at the speed of Twitter.

Can there really be a Trumpism, the skeptics ask, in the face of Trump’s flip-flops? How do you reconcile the president’s many, glaring contradictions?

Krein’s answer: You don’t. Instead, you cut right to the bracing argument at the heart of Trump’s campaign — that it’s time to pull back from the globalism that’s served coastal elites and turn to a vigorous, new nationalism that puts ordinary Americans first.

It’s “ism” as game-changer, as once-in-a-generation challenge to political orthodoxy. And while it’s not clear that Trump himself will stay faithful to Trumpism — he’s already broken from it in some big, public ways — Krein is betting that the idea will survive nonetheless, that the energy the president unleashed will re-order public life in important ways.

Trump’s wild swings are a blow to Trumpism. They may be fatal in the end. But the bet here is that “isms” are built more on the salience of the big idea than the intellectual purity of its namesake; that a malleable “ism” isn’t doomed to irrelevance, but equipped to endure; that you start with a big personality and a big moment, and you go from there.

History suggests that’s a pretty good bet.

SOURCE

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Financial security versus independence

The changing face of the United States should be viewed as an opportunity

James E. Smith and Alex Hatch

In 2015, the Bureau of Labor (BLS) Statistics released the results of a study dubbed the “National Longitudinal Survey of Youth 1979.”  This survey observed the employment habits of nearly ten thousand men and women of various groups over a 30-year period. Of all the data presented by the study, two numbers most characterize the evolution of the American job market: 11.7 and 93.7.

The former represents the average number of jobs a person will work between the ages of 18 and 48; the latter the percent of people age 30 to 34 who will spend less than 15 years with any single employer.

These numbers reflect the downward trend, if not the death, of the one-time American ideal of being a “company man.”  The average American no longer aspires to grind through a nine-to-five job in his or her perfect first employment scenario. If they did initially, the volatility of the current job market seems to force a more thorough review of reality.

At the very least, they certainly don’t expect to be rewarded with a mantle clock or gold watch after thirty-plus years of faithful service. Even in their early to mid-thirties, an age when most people begin to settle down and raise a family, the average American is still willing to change careers and locations repeatedly to further their long-term economic viability.

In most cases a planned career change provides an improvement in living and working conditions, as well as a boost in income. For most, these improvements are reflected in the standard of living enjoyed, and also with measureable improvements in future financial security, improved net value, greater liquidity, and larger retirement benefits.

For some, the correct choices may also provide the ability to cross the threshold where financial security becomes financial independence: defined as the ability to continue the same, or better, lifestyle without a job; the much-heralded early retirement.

The frequency for this likelihood increases for the case where workers take greater personal and financial risks early in their career by investing in additional retirement plans, stocks and bonds or, more significantly, by contributing their time and future income to innovative technologies and start-ups.

Accordingly, spurred on by the age of the internet, numerous opportunities have sprung up in the last 30 years, resulting in a more than eight-fold increase in millionaires. That demographic can be used here to illustrate the number of people who have become financially independent.

More specifically, in 1988 there were only about 1.5 million millionaires in the United States. By 2017, this number had increased to 10.8 million, showing that, as investment savvy workers and the innovations they support have grown, so too have the number of financially independent Americans.

By and large though, employer mobility, as enjoyed by American workers, has often come at the cost of their financial security.  According to the BLS study, during the 30-year period the bureau analyzed, the subjects spent a total of 22% of their time from age 18 to 48 either unemployed or out of the workforce.  This means that they were out of the working world for nearly seven years during what should be the most productive portion of their lives.

While a good portion of this time was likely related to the pursuit of higher education and training, the result is still the same: the average American now spends more than half a decade out of the workforce during their working careers. This results in years of lost wages and promotions for the individual, lowering their future earnings potential and seniority in a position, in many cases affecting their job security.

In a broader sense, this also means that there are fewer citizens who can make positive contributions to the local economy, as well as to the government in the form of taxes. Today’s employee knows that stability in a career is not a given, and there is very little chance that the government will provide any kind of substantial fallback for them should their employment situation change. Thus, their historically strong employer loyalty has given way to increased financial depth.

The days when Social Security and even company pension plans would provide for future living conditions and survival security are long gone.  Even with all the optional retirement vehicles, the reality is that the American workers must again secure their own future financial security, independent of government-mandated programs that may work initially but can never keep pace with changing economic, demographic, longevity and life-style realities.

Workers must invest in their own future, first through education and training and then by investing in public and private markets, as well as in innovation and entrepreneurial opportunities, not to mention second jobs or the equivalent from their spouses and other family members.

According to the 2016-17 Global Entrepreneurship Monitor report, there has been a significant uptick in entrepreneurial activity in the last decade. Most notably, in 2016, 13.6% of all American adults ages 18 to 64 were involved in either the creation or the operation of businesses that are less than 42 months old.  Thus, millions of Americans have decided to dedicate at least part of their time and financial security to the pursuit of innovation and wealth creation, instead of working exclusively in the corporate world.

While entrepreneurship entices Americans with the promise of great wealth, it is important to note than 90% of all startups fail. For the sake of financial stability, Americans must understand that the social safety nets currently in place simply cannot support entrepreneurs who fail in their endeavors. They must have their own savings and safety nets to help them survive any failures they may encounter.

We are ultimately responsible for our current situation, and more so for the future, since we have time to make the plans necessary for that future lifestyle we have set as our goal. It also means we can bet the house on one throw of the dice. Proper planning is essential and even risk taking must have a safety net.

For these and numerous other reasons, it is important for the stability of our citizens and the social welfare system we enjoy that we take charge of our own financial security and not expect to find the solution to our lack of personal planning during the eleventh hour of our working careers. Programs are in place to provide the fundamental mechanisms for wealth accumulation. We just need the discipline to take advantage of them.

More importantly, with that same discipline and a proper outlook to the future, there appears to be a plethora of ideas that will allow the transition from hand to mouth to financial security and possibly to financial independence. The data show that the United States is primed to make innovation another way to create security and independence. It is our responsibility to make it happen.

Via email

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