Until I read a fascinating story, I had not heard of something called the EB-5 Visa Program for foreign investors. The idea is simple enough. If a foreign investor pumps $500,000 to a $1,000,000 into a project targeting a rural or poor urban area, their children are given legal rights to live in the United States. What could go wrong? Exactly what you would expect.

Basically, the meaning of jobs being created and poor regions as defined by the EB-5 was stretched so that most of the money went to fund luxury projects in wealthy cities. Districts were drawn to include poor regions but the vast majority of the construction took place in wealthy areas. That along with the fact that some of the developers simply absconded with large sums of money.

Most of the investors appear to come from China and individuals of enormous wealth found a way to invest their money not only with a financial return but also a pathway to United States citizenship for their children.

Personally, I’m not convinced the EB-5 program was created with the best of intentions at all. The politicians back in 1990, when it was implemented, most likely well-understand where the money would go and created a system by which it could flow to wealthy regions while following the loose guidelines of the program.

I’m not even upset the money went to fund luxury projects like Hudson Yards. I’m also not opposed to foreign nationals purchasing U.S. citizenship, which is exactly what is going on despite any arguments to the contrary. What makes me angry is pretending to be doing a good and wonderful thing by helping out the poor in rural regions and urban cities when there was never any such intention.

Some of the money did, in fact, go to projects of the nature for which they were intended but I strongly suspect that would have been the case even if the base purpose of the program was to simply attract foreign investments. When money comes into the United States for various projects it is a good thing. It would be nice if more money was spent to help poor rural areas and poverty ridden urban regions but reality is a tough mistress.

People largely don’t want luxury apartments in rural regions or the poor areas of the inner city. However, when a region undergoes development the area around it often improves as well. This reality is the best we can hope to accomplish.

Creating a program like EB-5 with unrealistic expectations of development in rural and poor regions is an exercise in deceit. I’m here to help, said the politician while stuffing their stomach at the trough. My Libertarian sensibilities say, go ahead and stuff your face, but be honest about it.

If the EB-5 program was created honestly, I’m certain organizations like Asian Americans for Equality would have found a way to use that money to help the poor in both rural and urban regions. I’m sure many investors believed they were doing a good thing because the project was under the mantle of the EB-5.

Tell investors the truth. This project is in a wealthy region and this other one is in a disadvantaged region. You decide which one in which to invest. I’d guess you’d have had more money going to the sorts of projects the entire program was designed to fund in the first place.

Tom Liberman

The Federal Reserve and the President of the United States seem to be at odds over the idea of raising interest rates. I’m of the opinion that most people, including many of my fellow Libertarians, don’t really understand the base purpose of the Federal Reserve and the point of increasing interest rates. I’m not an economist by trade but the issue is relatively straight-forward and I thought I’d take a few moments to go over it.

As I said, it’s relatively simple. Pretty much since the beginning of human history there has been something called the business cycle, or in common parlance, the boom-bust cycle. Basically, when times are good and people have plenty of money, they tend to spend it on speculative interests in the hope of gaining much more money. In contrast, when times are not good and money is in short supply, people have a tendency to hoard what they have. These two things exacerbate the business cycle.

Essentially, because people are spending more money on potentially enriching schemes during boom times the bubble goes to extremely high levels before it bursts and creates devastating economic destruction. Once the bust takes hold it is difficult to stop the downward spiral because people are reluctant to borrow money.

The solution created by Alexander Hamilton and the founders was the First Bank of the United States. Its primary idea was to raise interest rates during boom times thus curtailing people’s willingness to borrow money and fuel the boom and to lower interest rates during times of bust to encourage people to take out loans and pull the economy from its collapse.

It did not stop the business cycle altogether and thus its opponents, who felt there was artificial manipulation of the economy at the expense of growth abolished it. The booms and bust then grew much worse and so the Second Bank of the United States was formed with essentially the same goals as the first. Once again, the business cycle continued although with tempered effects because of the policies of the bank. As can be expected, people grew unhappy with the bank because they felt it was impacting the booming economy negatively and so it was abolished.

Immediately thereafter there again began a more virulent series of business cycles until Congress established the Federal Reserve which still exists to this day. As expected, the business cycles continue to be a problem as we have seen recently. One of the things that has happened since President Reagan is that the Federal Reserve has acted more to promote economic growth but not to slow it. This means, naturally that the boom cycle is not properly tempered.

That is the point of the Federal Reserve in their recent raising of interest rates. They desire to slow economic growth to temper the boom section of the business cycle. These actions anger the President of the United States in the midst of that cycle. Politicians desire to brag about the good they have done and lay blame for the bad, but the business cycle is beyond their control. The Federal Reserve cannot stop the cycle, the people who make policy can only hope to temper the catastrophic effects of the inevitable bust.

That is why it is generally considered a bad idea for politicians to dictate policy to the Federal Reserve. Their actions are often, and for good reason, opposite of those wished by the politicians.

Tom Liberman

People generally assume regulations are a burden on all businesses in general but the reality is that large and enterprise companies are far less affected because of their greater resources. Thus, small and medium sized businesses are the only ones hurt. As if the small competitor didn’t have enough trouble already. It’s my opinion a great number of regulations are working exactly as planned, to benefit political allies.

You have to remember who pays the bills. Enterprise businesses bribe, I mean to say contribute, to politicians on a much larger scale than is possible for smaller businesses. When new regulations come down the pipeline they force all companies to perform a great deal of documentation to prove they are doing things correctly. Bigger companies can handle these costs much more readily and thus small producers are forced to sell their business. It’s an accelerating trend that has created carnage in the once influential small business world. I won’t get too deeply into statistics but since the 1980s small businesses have contributed less and less to the total economy of the United States.

An article I recently read about the 5,000 plus regulations that apply to apple farmers is case in point. There are regulations on scanning the entire orchard for mouse dropping before the start of the work day. Shoe to ladder to hand. While the Trump administration has reduced some regulations, they’ve also vastly increased regulations in regards to foreign workers so help does not appear to be on the horizon.

The reality of regulations is they drive out small players and aid enterprise business. Even if you support many of the regulations it is impossible to deny the evidence of their affect.

Another quite interesting factor in all of this is the standards applied by wholesalers often outstrip those applied by the government. If you want to have Whole Foods sell your produce, they require a lot of assurances about quality and safety. This means a double burden in which not only must government regulations be followed and thoroughly documented, but a second set of rules must be adhered to in order to make it to market. This, again, is to the advantage of larger operations.

I question the necessity of many government regulations at all. Let’s take the mouse droppings rule as an example. It’s certainly possible mouse droppings might make their way from the ground to a ladder to the hand of a worker and hence to an apple. The regulation requires workers walk the entire orchard each day before harvest looking for mouse droppings. This is obviously unreasonable, even for large operations. This regulation is doing nothing to prevent mouse droppings from migrating to your apple simply because it is an impossible rule to follow.

I’m not entirely against various regulations, I think there needs to be far fewer of them and they need be better written. The bottom line in the case of apples is to ensure those going to market aren’t going to make people sick. The simplest way to do this is test a random apple or two from various batches for salmonella or whatever else might cause disease. I admit this is not a perfect solution as the stray disease-causing apple will slip through the net, but that is no different than with current regulations. Citizens of the United States are sickened by food on a fairly regular basis.

Nor am I arguing against the executives of enterprise business, they have every right to conduct their companies as they choose. The problem is the majority of regulations, well-intentioned or not, basically work against smaller operations.

We want a business to succeed because they do something well, not because they are aided by the government against competition. Fewer, smarter, and better regulations is a winning recipe for the smart business owner and the consumer.

Tom Liberman

There is a lot of news about Net Neutrality these days and the people who are proponents are incredibly passionate while those who are against are quite determined. The current administration and the Federal Communication Commission seem bent on eliminating Net Neutrality and tout all the benefits of doing so. Those who oppose fill my Social Media with diatribes and examples about how the internet will be destroyed. Frankly, it’s a lot of hype on both sides.

I’m not going to make this a long dissertation on exactly what Net Neutrality is and is not. Instead I’d like to focus on the idea it just won’t make that much of a difference either way. In doing so I understand I’m going to make enemies on both sides of this passionate debate, so be it.

There is a single factor causing the majority of the problems we have with our internet providers, the lack of competition. This dates back to the monopolies granted to cable providers. Basically, territories of the United States were broken up and given to single companies to provide cable access. These monopolies largely continue to exist across the country.

There is a distinct lack of competition in the industry and this means consumers have few, if any choices, about whom provides them with internet access. This means the power largely resides with the companies rather than the customers. They can apply any sort of rules they want and their customers have nowhere else to go. Thus, if an internet provider decides to throttle customers or block particular content there is nowhere else for the consumer to go, they must simply accept the status-quo.

It’s extraordinarily important to note prior to 2015 Net Neutrality was merely a concept that many internet providers followed simply because it made good business sense not to anger their customers. There are some choices in the industry and providers voluntarily gave open content and access to their customers in an effort to provide good service.

There were some exceptions but when they came to light, consumer pressure generally forced the provider to change the policy, it was not government enforced Net Neutrality that did anything, at least before June 12, 2015 when the provisions were accepted by the FCC.

If we had strong competition in the field then Net Neutrality would most certainly be a negative concept. If we had many choices and a company was not providing us with a good service we would simply go elsewhere. Once you get a bad meal at a particular restaurant, do you go back? Of course not, there are far too many good choices. It is the lack of competition that makes it appear we need Net Neutrality. The problem was created by the government, mainly municipal and state, in creating monopolies in the first place. The answer isn’t to enforce Net Neutrality but to open the market to competition.

The reality is enforcing or repealing Net Neutrality in our current situation isn’t going to do any harm or any good. We didn’t have Net Neutrality prior to 2015 and things were fairly much exactly the way they are now. Removing Net Neutrality is not going to bring the benefits claimed by those who oppose the concept. Keeping it is not going to fix the current problems we all have because of the lack of competition.

The proof seems obvious to me. Prior to 2015 we did not have Net Neutrality. Can you tell the difference? I can’t.

In other words, it’s much ado about nothing.

Tom Liberman