Yes, Pope Francis Will Join The Reprehensible Campaign To Keep The Poor Poor

Sources I have seen indicate that the papal encyclical on climate change will issue on Thursday, that is, tomorrow.   Maybe it's not yet a completely done deal, but at this point any chance of heading this off looks more or less hopeless.

On Monday the Italian newspaper L'Espresso published a leaked version of the encyclical.  Translations of at least substantial sections have appeared on several websites; for example, wattsupwiththat has some large chunks of translation.

I have read some substantial parts of this, and I just can't get my head around what the thinking could possibly be.  Pope Francis:  There are at least a billion people in the world today who don't have electricity.  There are more like two to three billion who are living in what can only be called energy poverty, at least by any standard that would be considered tolerable in America -- unreliable or intermittent electricity, no or limited heat or air conditioning, no refrigeration or other way to preserve food, no mechanized transportation, no mechanized farm equipment, and so forth.  Are these people allowed to get out of their poverty like you have and like most everyone in the West has, or are they condemned to getting forcibly excluded by bureaucratic whim from getting access to affordable and readily available energy?  What is your answer?

So here's the closest thing I can find to his answer:

Climate change is a global problem with serious environmental implications, social, economic, and political distribution, area and are one of the main current challenges for humanity. Impacts heavier probably will fall in the coming decades on developing countries. Many poor people living in particularly affected by phenomena related to heating, and their livelihoods depend heavily from nature reserves and by so-called ecosystem services, such as agriculture, fisheries and forestry. They have no other financial resources and other resources that enable them to adapt to climate impacts or deal with catastrophic situations, and have little access to social services and protection.

Now the translation here is clearly terrible -- it's not possible for the Pope or his people to be as incoherent as this sounds.  But really, no amount of allowances for bad translation can make this anywhere near coherent.  Could you really be saying that because "Impacts [of climate change] heavier probably will fall in the coming decades on developing countries" and because "[m]any poor people . . . their livelihoods depend heavily from nature reserves and by so-called ecosystem services . . .," therefore international bureaucrats should be empowered to prevent these poor people from getting access to the cheapest access to electricity, heating, and transportation and thereby escaping their poverty?  I am one hundred percent certain that, of the three billion or so people in question here, not one single one of them, if given the choice, would give up access to real and cheap electricity because of what you claim as some hypothetical and speculative future damage to "so-called ecosystem services," whatever that means.

Here and there in the text, some lip service is paid to the idea of looking out for the poor.  But somehow when the Pope tries to apply that concept to the real world, he weighs actual real poverty reduction -- like access to electricity or to an automobile -- at zero, and puts huge weight on things like avoiding ecosystem damage, or slowing rising seas.  And what, pray tell, is the actual evidence that ecosystems will be healthier, or sea level rise slower, if we are all forced to use energy that is five or ten times more expensive than the cheapest available, with the poorest priced out of energy entirely?  Can't you open your eyes and look around?  In the United States and Europe, we have power plants everywhere, and we pay exquisite attention to having healthy ecosystems and a clean environment.  Compare that to dirt poor Haiti, where they have next-to-no access to energy, the hills have been denuded of forests and the ecosystems are in collapse.  How does it possibly help the poor of Haiti to force them to have ridiculously expensive intermittent electricity from windmills instead of building a few coal plants?  

And then we have the usual play to guilt:

For poor countries, the priority should be the eradication of poverty and social development of their inhabitants; at the same time the scandalous level of consumption of certain privileged sectors of their population must be considered and better counter corruption.

Well, I have been to the Vatican palaces.  If you are accusing me and my peers of a "scandalous level of consumption," I can assure you that we are a few orders of magnitude of consumption below that of the Vatican.  And I'm not accusing you of anything inappropriate.  You and your predecessors have brought magnificent architecture and art to the world, for the enjoyment of multitudes.  Can others do the same?

If you had asked me whether it would be possible for the international Left to enlist the Pope in the campaign to keep the poor poor, I would have said that such a thing would just not be possible.  But then, I just don't understand the socialist delusion.

Manhattan Contrarian Short Notes

In something I haven't done before, here are a few short notes for the day:

• At the top of my home page, there is a link for "Articles."  I haven't posted anything in that section for a while, but I did post an article this past weekend.  It's a longer piece than the usual blog post, and it is not about current events.  The subject is the changing scene in New York Harbor over the past century and a half.  Lots of pictures.  Also, in another Manhattan Contrarian first, it features a musical performance -- in which I am one of the performers!   This is a link to the article.  Please check it out.
• On Thursday this week, June 18, the Federalist Society is holding a conference in Washington, D.C. at the Mayflower Hotel called the annual Executive Branch Review.  I will be there.  If you can be in Washington, it should be a very interesting event.  Here is a link for more information.
• In news of the SEC trying to support the unsupportable, here is the latest, as reported by Law360:  A company called Timbervest LLC and several of its executives are appealing an August 2014 decision of an SEC Administrative Law Judge named Cameron Elliot, who ordered them to disgorge some $1.9 million that the firm had made on sales of land that the judge found were "conflicted."  The appeal, of course, is to the Commission itself, otherwise known as Judge Elliot's bosses.  The Commission then asked Judge Elliot to put in an affidavit attesting to his impartiality.  Really?  Law360 reports that on Friday Judge Elliot declined.  Did it not even occur to these Commissioners that they were putting the guy in an impossible position?  Now, perhaps the good judge thought that his best approach to try to preserve some semblance of impartiality was to refuse to respond, but of course there is now the implication that he thought that claiming under oath to be impartial would put him in a position of perjury.  Good job, SEC!  The Law360 article also refers to the May 6 Wall Street Journal article that reported how one of the SEC ALJs, Lillian McEwen, once "came under fire" from Chief ALJ Brenda Murray, who "questioned [McEwen's] loyalty" when she ruled too often in favor of defendants.  Really, SEC, I have a good definition for you of the word "impartiality" as applied to somebody who purports to be a federal judge.  It means "appointed by the President, confirmed by the Senate, and serving for life with salary protected against diminution."  Everything else is not impartial.  And if that's the constitutional definition of impartiality, which it is, then Judge Elliot was absolutely right that swearing he was impartial would be perjury.  Whatever it is that these Timbervest guys may have done, it is not remotely in the category of heinousness as what you SEC Commissioners and ALJs are doing by purporting to exercise powers over Americans not granted by the Constitution. 

The "Worst Possible Public Policy" Comes To Westchester County

The editors of the New York Times must have read my piece about "affordable housing" on Friday, because as if on cue they come out with a lead editorial on Saturday excoriating Westchester County Executive Rob Astorino for resisting the expansion of subsidized housing in his jurisdiction.  Their editorial is titled "Westchester's Tortured Road."  

As usual with Pravda, you scratch your head wondering if they have been taken in by the fraud of the government bureaucrats, or if they are actually part of the fraud.  In this case, it's hard to believe that they are part of the fraud, because what benefit does the New York Times get from the subsidized housing game, which is to provide lifetime sinecures to bureaucrats while those bureaucrats imprison the poor in a lifetime of poverty?  That leaves as the only alternative that the editors of Pravda have been taken in, which in turn means that they are incapable of getting outside of their cushy offices and walking a few blocks to the vast public housing tracts located on the West Side of Manhattan to observe those islands of permanent poverty, not to mention racial segregation, plunked into the middle of the richest county in the country.  And did I mention that those Manhattan projects are in the process of a maintenance crisis and financial collapse of a classic socialist death spiral?

So let's force Westchester down the same path!  What is the thought process that could lead someone to advocate expanding New York City's disastrous subsidized housing policies beyond the City limits?  The gist of the Pravda editorial is "fairness" and "opportunity" -- things you could only believe about subsidized housing if you just flatly refuse to observe it with your own eyes.  Here is a key quote:

The county [Westchester] entered into a consent decree in 2009 to build at least 750 units of affordable housing and work to remove the barriers to fair housing that in many villages and towns function as invisible “Whites Only” signs. Its obligations are straightforward and — given the bad behavior that gave rise to the court order — eminently fair. 

On the other hand, I must say that the opponents of subsidized housing seem to have their own messaging problem.  As to Astorino, I can't find him speaking out much at all on the subject.  But Pravda characterizes the debate as "fairness" and "opportunity" on one side, and "privilege" on the other.  If those were actually the real issues, I myself would be a supporter of subsidized housing.  And plenty of opponents of subsidized housing fall into the trap of couching their position in terms that sound very much like "privilege."  For example, the article from The Hill that I linked on Friday quoted extensively from a Congressman named Paul Gosar, Republican of Arizona:

Rep. Paul Gosar (R-Ariz.) . . . argued that the administration “shouldn’t be holding hostage grant monies aimed at community improvement based on its unrealistic utopian ideas of what every community should resemble.  American citizens and communities should be free to choose where they would like to live and not be subject to federal neighborhood engineering at the behest of an overreaching federal government,” said Gosar.

Sorry, Paul, but this argument sounds like "we should be able to keep out anyone we don't like."  It's not just that that's not going to persuade anyone.  More important is that it misses the point, which is that subsidized housing is a disastrous public policy on every front.  It's a disaster for every reason that socialism is a disaster.  It does not help the intended beneficiaries but instead imprisons them, and the projects themselves inevitably go into socialist death spiral.  And thus in the subsidized housing in New York we find:

• The cost of subsidized housing is huge on a per beneficiary basis, and therefore it can only be provided to a relatively tiny number of people.
• The huge expense does not count in the income of the beneficiaries.  They remain poor.
• The asset provided to the beneficiaries, despite its immense cost, cannot be used by the beneficiaries to help extricate themselves from poverty, because it is completely illiquid, and cannot be sold, sublet, mortgaged, etc.
• The supposed benefit of a subsidized housing unit comes attached to poisonous incentives, including making it much more difficult to move for a job (or a better job), together with income restrictions that strongly discourage getting ahead.
• Rents inevitably fail to cover operating expenses, making the projects dependent on subsidies that must ever increase.  It's only a question of time until the units fall into disrepair.  The taxpayer expense increases with every passing year.  No money is available for capital improvements -- even if the project is located in a fancy area where market values would immediately support private renovation at no taxpayer expense.
• The only way the residents can take advantage of their "good fortune" is to remain in the subsidized unit for life and not increase their visible income too much.  The projects become permanent concentrations of poverty and racial segregation.

So, Mr. Astorino, stand up for your position!  The poor need the incentives of capitalism to extricate themselves from their position.  Stand up for them against these predatory federal bureaucrats! 

The "Affordable Housing" Juggernaut Goes National

Really, what is it about "affordable housing"?  I have previously called building "affordable housing" in Manhattan "the worst possible public policy."  I have pointed out that "affordable housing" is "the most expensive possible way to help the smallest number of people" and that it just seems to be "one of those issues on which rational thought is impossible."  Is anybody listening?

And now, to prove my points, along comes the Obama administration, via the Department of Housing and Urban Development, to double, triple and quadruple down on subsidized housing as the way to fix the perceived problem of inequality in our society.  The Hill newspaper reports yesterday that HUD is moving forward this month to finalize its proposed rule with the Orwellian name of Affirmatively Furthering Fair Housing.  Here is the Rule as initially proposed back in 2013.

As usual with stuff coming out of the bureaucracy, this Rule is endless and unreadable.  I certainly would not recommend your trying to get through its 35 three-column pages of fine print.  But the basic idea is to use the threat of withholding government grants to force localities to prepare things called "Assessments of Fair Housing," which would then lead to "Consolidated Plans," "PHA Plans," and "Capital Fund Plans" -- and ultimately to building subsidized housing in places that don't currently have enough of it to please the government overlords.  Here are the key sentences of incomprehensible bureaucrat-speak from the Summary:

HUD proposes an improved structure and process whereby HUD would provide these program participants with guidance, data, and an assessment template from which they would complete an assessment of fair housing (the AFH). This assessment would then link to Consolidated Plans, PHA Plans, and Capital Fund Plans, meaningfully informing resulting investments and related policies to affirmatively further fair housing.

What then is the logic for going national with this huge expansion of the "worst possible public policy"?  The Hill quotes an unnamed HUD spokesman giving the usual justification that if only the government can compel communities to be integrated by building subsidized housing, that will break down the barriers to opportunity and presumably help the poor rise from poverty.

“HUD is working with communities across the country to fulfill the promise of equal opportunity for all,” a HUD spokeswoman said. “The proposed policy seeks to break down barriers to access to opportunity in communities supported by HUD funds.”

Others quoted in the article in The Hill take that argument even farther.  For example, here is Margery Turner of the Urban Institute, from the same article:

“In our country, decades of public policies and institutional practices have built deeply segregated and unequal neighborhoods,” Turner said.  Children growing up in poor communities have less of a chance of succeeding in life, because they face greater exposure to violence and crime, and less access to quality education and health facilities, Turner suggested.  “Segregation is clearly a problem that is blocking upward mobility for children growing up today,” she said.

Some of this might seem at least plausible, except for one small problem.  This has been tried over and over and is a total demonstrated failure. Can anybody please come here to Manhattan and open your eyes and look around?  Manhattan is not some obscure out-of-the-way place.  Probably, it's the most easily accessible place in this country.  All roads lead here, not to mention airline flights.  And we have the highest density of subsidized housing in the country.

And when you come here, here's what you will see.  You will see that Manhattan (New York County) is the wealthiest county in the country (measured by per capita income).  You will see a tremendous business community, with millions of high-end jobs crammed into a few square miles.  You will see some of the wealthiest and most expensive residential neighborhoods in the country.  And literally a stone's throw from these high-end jobs and expensive homes, vast tracts of HUD subsidized housing.  In just low-income housing alone, we have over 50,000 units in Manhattan, housing about 120,000 people, about 7% of the population.  Other forms of subsidized housing bring the proportion of the population receiving housing subsidies of one form or another to well over 10%.

And instead of raising the residents out of poverty, the HUD-supported complexes are in fact concentrated islands of poverty right in the midst of the greatest wealth in the country.  The New York City Housing Authority reports the poverty rate in its projects at 51%.  How is that even possible in the wealthiest county in the country?  Because a NYCHA project comes attached to poisonous incentives that virtually force the residents to remain in a lifetime of poverty in order to keep their specially-located apartment and ridiculously low rent.

If the HUD model of subsidized housing does not work in the wealthiest county with the highest concentration of the best jobs in the country, then it is not going to work anywhere.  And in fact it doesn't just "not work."  It actively traps the residents in poverty, even in the midst of plenty.

The fact is that the interest of the bureaucracy does not lie in raising the poor out of poverty.  The interest of the bureaucracy lies in creating a permanent dependent class that can never shrink and can never get out of poverty, so that the functionaries can forever hold out the poor as a reason to expand their fiefdoms.  Am I the only one who finds their efforts to keep the poor poor to be reprehensible?

New York, of course, is already committed to more and yet more of this "world's worst public policy."  Rest of the country, do yourself a favor and don't take the money.  Congress, how about just zeroing out the HUD budget -- now in the range of $50 billion per year? 

What's The Best Way For Obamacare To Die?

Call me crazy, but I think it's just a matter of time until Obamacare dies.  I'm sure there are many who disagree with me.  Why anyone thinks this enormously complicated Rube Goldberg contraption is worth preserving is another question, but it certainly has its fierce defenders.  As with any socialist scheme, it is plagued with rapidly increasing costs and benefits that somehow don't materialize.  The believers believe that this time that cycle can be broken, but it's never happened with prior socialist schemes.  Sooner or later the death spiral ends in death.

But how?  And when?  A potential trigger is the King v. Burwell case, now fully briefed and argued before the Supreme Court with a decision expected within weeks at most.  The petitioners in that case challenge the legality under the Act of subsidies going to those who purchase policies on the federally-established exchange.  Some 34 states did not establish their own exchanges, and therefore a victory for petitioners will mean that federal subsidies go away for the majority of those now receiving them.  That could be a serious blow to Obamacare.  But will it be fatal?

Don't underestimate the creativity of the bureaucrats and their academic facilitators in coming up with ways to continue to spend billions not authorized by Congress.  In the current issue of Engage, Josh Blackman of South Texas Law School considers some schemes that have already been proposed to keep Obamacare going after a defeat in King.  First among these is something called the "administrative fix," an idea attributed by Blackman to Nicholas Bagley and David Jones in a Yale Law Journal forum:

 HHS could revise its regulations and the Blueprint to provide that some states should be understood as having established an exchange, even if they never formally elected to do so. . . .   In other words, HHS would look to past actions as tacit evidence that the state in fact established an exchange, even in states that did not submit the declaration and application. Bagley and Jones query whether "the regular performance of essential and substantial exchange functions, over time, [could] constitute the establishment of an exchange."

The basic idea here is that some of the 34 states without exchanges have co-operated with the feds to some degree in the operation of the federal exchange, and that would then be deemed by regulation to be the equivalent of "establishing" an exchange under the words of the statute. 

Then there's another idea, suggested by law professor William Baude of the University of Chicago in a New York Times op-ed and picked up by the Justice Department in a letter submitted to the D.C. Circuit.  This idea is that every recipient of subsidies under Obamacare has a due process right to a hearing before his/her benefits can be cut off.  And therefore any ruling by the Supreme Court should be limited to only the four plaintiffs in the King case itself:

The week before oral arguments in Halbig v. Burwell ”which raises the same issues as King” the Justice Department submitted a letter to the D.C. Circuit Court of Appeals, taking the position that the government was constitutionally prohibited from denying subsidies to millions of Americans. In short, the government argued that people who were not parties to the suit had a due-process right to be heard before their subsidies were extinguished.

Blackman presents some rather cogent reasons why neither of these gambits would be likely to succeed after the King case has been lost.  Still, they could require another round of litigation, which could take years.  If a lower court ruled against the government, would it grant a stay pending appeals all the way to the top this time around?  Personally I find it hard to believe that the government would try either of these gambits; but I have been repeatedly surprised by the chutzpah of this administration.

Meanwhile, should we check in on how it is going on the overall Obamacare death spiral front?  Data are trickling out with frustrating slowness, which I take as a sure indication that the government doesn't want us to know how bad it is.  A website called Obamacarefacts.com, which claims no affiliation with the government, is nevertheless the site with the official best administration spin on any and all Obamacare data.  They report that as of the end of Q1 2015 the percent "uninsured" in the U.S. was down to 11.9% from 15.7% at the time Obamacare was enacted in 2009.   By the way, they use Gallup data for the 11.9%.  Isn't the government collecting this information?  OK, that's about a 4% "improvement," which is about 12 million people.  But it still leaves close to 40 million in the "uninsured" category.  Somehow, I was remembering that the whole idea here is that everyone was going to get "covered."  Five years ago it was the world's greatest crisis that 48 million or so were uninsured.  Today it's no crisis at all and indeed a great triumph that 38 million or so are still uninsured.  Go figure.

And of the 12 million or so newly "insured," how many are as a result of all the mandates and the exchanges, and how many are just the Medicaid expansion?  The answer from Obamacarefacts is: 10.8 million as of March 31, and estimated at 11.7 million by May 31 are new Medicaid enrollees.  In other words, almost all of the 12 million are from the Medicaid expansion.  So essentially all of the enrollment through the exchanges has been equally offset by the decline in employer-based insurance.  Why again did they bother with this enormously complicated Rube Goldberg thing?

And finally, how is the idea faring that you could greatly increase the demand for medical care while at the same time the cost would go down?  Really, did anyone believe that?  In just the past few days many insurers have announced their premiums for the 2016 year, and the picture is not pretty.  Here's an article from today in Forbes by Robert Laszewski.  Average proposed premium increases are well in the double digits, and Laszewski cites numerous examples in the 30 - 50% and even higher.  Here's his take:

You might recall that I have said we wouldn’t see the real Obamacare rates until the 2017 prices are published in mid-2016. By then health plans will finally have had a couple of years of credible claim data and two of the three “3 Rs” reinsurance provisions subsidizing the insurance companies will have gone away. . . .   Instead of moderate rate increases for one more year, the big rate increases have begun. They are particularly large among the health insurers with the most enrollment—the carriers with the most data.

So they put in a lot of subsidies to hide the obvious problems for a couple of years, but the disaster is making itself apparent already.  There are a lot of ways that Obamacare can die.

The Joke Of Criminalizing Money Laundering

It's hard to keep up with all the "money laundering" criminality going on all around us.  Just days ago former House Speaker Denny Hastert got indicted for the "crime" of repeatedly withdrawing amounts of less than $10,000 at a time from his bank account in order to pay off a blackmailer.  Then it was revealed that Citigroup is expecting to close its Banamex subsidiary because of inability to comply with government demands to control money laundering in the Mexican affiliate.  Then on Friday it emerges that the U.S. Justice Department is accusing international bank HSBC of "serious deficiencies" in its money laundering controls.

The HSBC revelation arises out of a prior settlement between the bank and U.S. authorities back in 2012.  HSBC paid some $1.9 billion to settle the money laundering allegations at the time, and as part of the settlement entered into something called a "deferred prosecution agreement" by which it agreed to have a government-appointed monitor snooping around it all the time and auditing and reporting back to the government on anything deemed to be a weakness.  The monitor has recently produced a report of some 1000 pages or so, and we learn of its existence because the government has made a motion to keep it secret.  According to June 5 article in the Guardian linked above:

HSBC’s procedures to prevent money laundering, sanction-breaking and criminal activity still have deficiencies so serious that to publicly disclose them would risk serious crime, the US Department of Justice has said.  The embarrassing disclosure of continuing issues with HSBC’s processes is contained in a 16-page motion filed to a US court this week by the DoJ, which is seeking to keep confidential a report on the bank that is more than 1,000 pages long.

Of course, notable about all of these government efforts, and all the others that you will read about in the area of money laundering, is that none of them involve prosecution of the actual bad guys.  Hastert's actions in paying blackmail may be unsavory, but nobody says they were illegal.  The blackmailer?  Hey, he's the cooperating witness -- of course he goes free.  Citigroup and HSBC?  They're involuntarily deputized law enforcement agents who supposedly can stop money transfers by the Mexican drug cartels if only they put in place enough "controls," whatever that may mean.  What is the control that is supposed to stop depositing small amounts of cash at ATMs on one end and withdrawing same on the other end?  I guess that deep secret is what the government is trying to hide by keeping this HSBC report confidential.

All of these guys should read the article in today's Wall Street Journal titled "Money Isn't Free, but Moving It Is Now Cheaper," by Christopher Mims.  This is about lots of new money transfer systems, from Venmo to Apple to Square Cash to Google Pay.  Oh, and then there's Bitcoin.  Bitcoin doesn't involve banks, and they're not the only one.  How about MoneyGram:

Alex Holmes, chief financial officer of MoneyGram, points out that 90% of the remittances his company handles are cash to cash, and they are between people who don’t even have bank accounts.

Really, how much loss of privacy and phony prosecutions of non-criminals do we need to go through in this exercise in total futility?