Singapore Permanent Residence (PR) Statistics: 2007-2017

Updated December 21, 2018. What are the odds of approval if you apply for Singapore Permanent Residence (PR)? "It depends." This post attempts to characterize the statistical realities of applying for PR.

Singapore's Immigration and Checkpoints Authority (ICA) handles PR applications, consistent with government policy goals. Unfortunately, detailed PR statistics are not publicly available. However, the government publishes some summary statistics in its annual Population in Brief publication, usually released in late September every year.

One important statistical series is the number of new PRs granted each calendar year. Here they are from "Population in Brief":

Year	PRs Granted
2007	63,627
2008	79,167
2009	59,460
2010	29,265
2011	27,521
2012	29,891
2013	29,869
2014	29,854
2015	29,955
2016	31,050
2017	31,849

As you can see, since 2010 (and probably starting in late 2009) the government set an absolute cap on the number of new PRs at 30,000 annually. Then there was a slight uptick from 2016.

Within each year's total PR number there are PRs granted through family ties (for example, to some of the foreign spouses of citizens and PRs), the Professionals/Technical Personnel and Skilled Workers (PTS) Scheme, and the Global Investor Programme (GIP). The government also invites international students to apply for PR, and, from 2008 to 2017, 7,251 applied and 5,932 were approved. Otherwise, we only know the aggregate annual PR numbers, not the numbers of PRs granted under each of these paths. We also don't exactly know how many PR applications ICA receives. However, the government has explained that it's becoming increasingly common for citizens to marry foreigners. Also, some years ago the government ended two other paths to Permanent Residence: the Landed Permanent Residence (LPR) and Financial Investor Schemes (FIS). The Ministry of Manpower also made it more difficult to qualify for the Personalised Employment Pass (PEP) and shortened its term from 5 years to 3 years. At the margins these PEP adjustments probably make it a bit harder to qualify for PR via the PTS Scheme. In short, it's reasonable to conclude that it keeps getting statistically more difficult, at least for those without family ties, to obtain Permanent Residence in Singapore. This trend is likely to continue given the government's overall population goals.

The total PR population is relatively stable in absolute numbers, at about 522,300 (June, 2018). As we've seen above, the PR inflow is about 31,000 per year. The PR outflow consists of PRs who become citizens (at a bit over 22,000 per year), who die, and who terminate or lose Permanent Residence. (A PR automatically loses his/her status if the PR's Re-Entry Permit expires while the PR is physically outside Singapore.)

The government strives to maintain relatively stable percentages of ethnic Chinese, Malay, Indian, and "Other" cohorts. In the government's view, ethnic compositional stability is fair, appropriate, and desirable. (That's not my view, as it happens.) To the extent birth and immigration rates diverge across these ethnic cohorts, so too will PR decisions.

While you cannot change your race, ethnicity, gender, parents, eye color, sexual orientation, or any other immutable human characteristic, you should be able to read and to follow ICA's PR application instructions. I recommend applying some common sense to the process. As a notable example, if you're applying under the PTS Scheme, ICA wants at least 6 monthly payslips and 3 Notices of Assessment (income tax notices from IRAS). You can apply for PR before you have what ICA requests, but in my view (unless you've won a Nobel Prize, as one of only a few exceptions), you're being quite foolish. Be patient, and good luck.

Nokia Phones Resurrected, Badly

I'm glad that HMD Global is resurrecting Nokia branded mobile phones. However, I'm disappointed in the "new" 2017 edition of the Nokia 3310. It's still a traditional GSM (2G/2.5G) phone. That's a problem. Around the world, carriers are progressively shutting down their older GSM networks or already have. Some countries, such as Japan and Korea, never adopted GSM. Singapore will shut down all its GSM networks within a couple months. AT&T has shut down its GSM network in the United States, leaving only T-Mobile with a "skeleton" 1900 MHz GSM network that has significant coverage limitations. Australia's last 2G/2.5G networks will shut down later this year.

In Europe it's possible that mobile carriers will shut down their 3G networks before they shut down their "skeleton" 2G/2.5G networks, but 3G phones can also connect to 2G/2.5G networks.

Nokia had many 3G feature phones, both before and during Microsoft's brief, disastrous stewardship of the brand. In fact, Nokia's 3G phones date all the way back to 2002. Nokia offered a truly global 3G phone as early as 2004.

There is still a market for feature phones, but they really need to function as phones. A 2G/2.5G feature phone in 2017 just isn't even a phone, sorry to say. I'd like to see HMD Global introduce (or reintroduce) a genuinely global 3G feature phone. There are a few directions HMD Global could choose. One approach would be to reintroduce something very much like the Nokia X3-02 but with one major improvement: a capacitive touchscreen. The X3-02 was the smallest 3G feature phone Nokia ever made (and probably the smallest anyone ever made), a miniature marvel. Its resistive touchscreen was troublesome, however. The Nokia 302 of similar vintage had no touchscreen at all, so another possibility is to update the X3-02 to make do without one. Yet another option is to reintroduce the Nokia 311 (or something very much like it) with a long-term supported and security patched Android software base. I think there's a market for a truly tiny, well supported Android-based phone, and the Nokia 311 form factor with modest, battery efficient internals would occupy that niche well.

One problem HMD Global seems to have is that, to date, there haven't been any MediaTek S30+ phones that support 3G. Maybe the S30+ software platform simply cannot support 3G yet, unlike Nokia's prior but more capable S40 platform that supported both 3G and Wi-Fi. And maybe HMD Global doesn't have rights to the S40 platform. Whatever the reasons, HMD Global still has some work to do to recover at least a part of Nokia's past glory. Nostalgia is terrific in certain ways, but the "new" Nokia 3310 is only bad nostalgia.

President Trump: Bad News for Overseas U.S. Citizens?

President Trump and the Republican Congress will try to enact several major policy changes starting in early 2017. Here are a couple policy areas that could seriously disrupt the lives of U.S. citizens presently living overseas:

1. Elimination of the Head of Household filing status. The Republicans' tax plan is not crystal clear yet, but Trump proposes the elimination of the Head of Household filing status. U.S. citizens with U.S. citizen children who are married to non-resident alien spouses (same and opposite sex) are among those who properly choose Head of Household when they file U.S. tax returns. The Head of Household filing status is much more favorable than the alternative Married Filing Separately filing status. U.S. citizens living in comparatively high income tax jurisdictions who presently collect the refundable Additional Child Tax Credit would lose that important income support, too. Trump's other proposed tax provisions are extremely generous to high income filers (much too generous), but other Head of Household filers would get hit with tax increases. That also includes millions of U.S. resident households, especially those with single parents or with several children.

2. Repeal of "Obamacare." Right now U.S. citizens (and their families) returning to the U.S. from overseas can enroll in "Obamacare" medical insurance as soon as they return, with full subsidies available. They have a 60 day special "welcome home" enrollment period, starting from the date they return. Republicans vow to repeal Obamacare. However, repeal without any substitute would cause tens of millions of U.S. residents to lose their medical insurance, and everyone else would face higher medical costs due to cost shifting effects. In Obamacare's place Republicans propose various "weak tea" substitutes, at best. Their proposed replacements generally bar medical insurance companies from charging new policyholders higher premiums if they have preexisting conditions, but that protection only applies if policyholders have no lapse in coverage. Returning U.S. citizens and their families do have "lapses" in coverage: they are typically enrolled in foreign medical systems when they live outside the U.S., and "enrollment" often means simply living in a country with publicly provided universal coverage. It's quite possible, even likely, that Republicans will not protect this cohort, perhaps out of sheer ignorance. (Healthcare policy is complicated.) Returning Americans could be faced with steep premiums since they won't have proof of continuous U.S. medical insurance coverage, and that's assuming they can even obtain any insurance. Also, relatedly, Obamacare is fairly well designed for legal immigrants, including for previously uninsurable, elderly foreign spouses of U.S. citizens who are not Medicare eligible for at least the first five years of their U.S. residence. Any repeal effort is likely to harm them, too.

3. Immigration complications. U.S. citizens married to non-resident alien spouses already face difficulties bringing their foreign spouses into the U.S. The process is expensive and lengthy. Those difficulties could get much worse.

I'll be keeping a close watch on these and other policy developments, with great concern.

Singapore Permanent Residence (PR): Advantages and Disadvantages

If you're considering applying for Permanent Residency (PR) in Singapore, or if you have obtained PR status, here's an excellent list of the advantages and disadvantages (posted to Singapore Expats Forum in mid 2016, plus my revisions as of November 13, 2024).

If you are considering applying for or maintaining Permanent Residence in Singapore, you should be aware of PR's evolving advantages and disadvantages. Every person will weigh the advantages and disadvantages at least somewhat differently. Nobody else can decide which characteristics of PR are more or less important to you.

This list is divided into three sections: Clear Advantages, Clear Disadvantages, and Mixed Advantages/Disadvantages (characteristics that may or may not be a net advantage or disadvantage). Whether any particular advantage or disadvantage is relevant depends on your personal situation.

The government can change (and has changed) PR-related rules and policies. This list only reflects the current situation, when last updated.

Clear Advantages

Immigration stability. Second only to citizens, Permanent Residents have the most stable immigration status in Singapore. They may live and/or work in Singapore as long as they wish. During the COVID-19 pandemic, PRs (and citizens) caught outside Singapore were allowed to return to Singapore, albeit with isolation requirements upon arrival, whereas foreigners had no such right of return. PR status is not absolute, but it is quite robust in practice. As examples, a PR who lied in his/her PR application or who commits a serious criminal offense could be ejected from Singapore (after facing any criminal penalties). Also, note that a dependent or spouse of a Singaporean citizen or PR can still enjoy good immigration stability with an approved Long-Term Visit Pass (either LTVP or LTVP+).

Ability to sponsor certain family members for immigration. Adult PRs can sponsor certain immediate family members for LTVPs and/or PR, to allow them to live in Singapore. However, the Immigration and Checkpoints Authority (ICA) reportedly denies about 15-20% of such LTVP applications and greater than half such PR applications. In other words, approval is not guaranteed, even for citizen sponsors, and will depend on financial and other factors.

Ability to sponsor foreign visitors for short-term visas and stay extensions. Adult PRs can access ICA's SAVE and e-XTEND online services as sponsors ("Local Contacts").

The only realistic path to citizenship for foreigners. After a two year waiting period, PRs can apply for Singaporean citizenship.

Business and employment privileges. PRs can be self-employed, start their own businesses, be directors and officers of most Singapore companies, own businesses, and otherwise lead full economic lives in Singapore. They are also fully employable without requiring work permits or letters of consent, in practically any full-time or part-time employment including most government employment, and can even hold more than one part-time job. One exception: Unlike citizens, PRs cannot drive for ride sharing services unless they work for chauffeured services companies. Although financially unpleasant, bouts of unemployment are allowed.

Unemployment benefits. Some PRs are eligible for SkillsFuture Jobseeker Support cash benefits when involuntarily unemployed.

Ability to retire in Singapore. Singapore doesn't offer a "retirement visa." However, like citizens, PRs can generally stay in Singapore through their retirement years, living off their savings and pensions.

Lower cost public medical services. PRs pay a lower cash rate than foreigners for medical services obtained from public hospitals and public clinics in Singapore. PRs' prescription medicines listed in the Standard Drug Lists and obtained from public hospital/clinic pharmacies are subsidized (though to a lesser degree than medicines for citizens). PRs also enjoy the Health Promotion Board's subsidized rates for Screen for Life tests at Community Health Assist Scheme (CHAS) GP clinics. PRs are also eligible for certain wellness programs, such as the Singapore Cancer Society's free colon cancer screening tests and some Healthier SG benefits (particularly at polyclinics), and some HPB promotions, such as free step trackers, through the Healthy 365 mobile app. PRs only paid S$10 to see a doctor at any Public Health Preparedness Clinic for any suspected COVID-19 case. PR children attending government-supported schools may be eligible for a few free vaccinations, such as HPV vaccination for female PRs in secondary school.

Childcare and Education Advantages

• Lower cost infant care and childcare. PR children pay lower fees than foreigners to attend government-supported infant care and childcare centers, nursery schools, and kindergartens.

• Better, lower cost access to government-run primary and secondary schools. Citizen children come first, but PR children receive placement priority over foreigners when enrolling in government-run/supported primary and secondary schools. PR children also pay substantially lower school fees than foreign children.

• Lower university tuition rates. PRs often pay at least somewhat lower tuition and fees than foreigners to attend public universities in Singapore.

Housing and Real Estate Advantages

• Ability to buy resale HDB leaseholds. After a waiting period, PRs are eligible to buy resale public housing leaseholds for their own occupancy, without whole flat subletting privileges. Build-to-Order (new) HDB units are reserved for households with at least one citizen. PRs who own resale HDB units are eligible to participate in the Selective En bloc Redevelopment Scheme (SERS) if announced for their units. PRs who own HDB flats are occasionally eligible for incentive programs such as 2024's Climate Vouchers.
  

• Lower stamp duty (tax) on real estate purchases. PRs pay a substantially lower Additional Buyer's Stamp Duty (ABSD) than most foreign purchasers pay.

• Greater chance of approval to buy landed property. Non-citizens need government approval to buy so-called landed property in Singapore. PRs reportedly have a better chance of approval than foreigners.

• Ability to buy resale executive condominiums earlier. Singapore has a few executive condominium developments, a form of real estate that starts out as HDB (public) but that, after 10 years, reverts to private housing. Like HDB units they start out with 99 year leaseholds, but unlike traditional HDB developments they usually have more extensive amenities such as swimming pools. PRs are eligible to buy resale executive condos only 5 years after construction (with 94 years or less remaining on the leaseholds) and, unlike foreigners, do not have to wait 10 years. (Only citizens can buy new build executive condos.) 

Privileges at government-run sports facilities. PRs pay the same, lower rates as citizens for admission to government-run sports facilities such as public swimming pools, and they can also participate in the ActiveSG $100 rebate program.

Better, lower cost privileges at public libraries. PRs pay a one-time fee of only $10.69 for a basic National Library Board (NLB) membership, much less than the annual fee foreigners pay for more limited privileges. Alternatively, PRs (and citizens) holding PAssion cards, including DBS/POSB's PAssion debit cards (free even with DBS's zero minimum balance "My Account"), enjoy complementary NLB Partner Membership.

No need to renew driving licenses. Although new PRs must convert their Singapore driving licenses to reflect their new NRIC numbers and pay a fee to do so, unlike foreigners they do not need to renew their licenses periodically, saving time and money. (Older drivers' periodic competency checks still apply.)

Some limited merchant, attraction, and financial privileges. Like citizens, PRs enjoy some limited privileges from merchants, attractions, and financial institutions. As examples, it's somewhat easier to sign longer term contracts for telecommunications services and utilities (with lower deposit requirements), and some credit cards are only available to citizens and PRs. There are also a few discounts specifically for older PRs, for example the Senior Citizen Concession Card that offers discounted public transit fares. All citizens and PRs enjoy free admission to National Heritage Board museums and The Istana (during open house days).

SkillsFuture program benefits. A couple of the government programs to promote career and talent development are open to Permanent Residents, specifically P-Max and the Individual Learning Portfolio portal.

Extraordinary wage subsidies. During the COVID-19 pandemic the government subsidized the wages of employed PRs, including self-employed PRs who received direct subsidies. These subsidies helped reduce unemployment and income losses among citizens and PRs.

Retirement and Re-Employment Act (RRA) protections. Employers must not force PRs to retire before the minimum statutory retirement age and must offer a reasonable re-employment option for at least 5 years thereafter under the RRA.

Eligibility for certain Ministry of Social and Family Development benefits. Permanent Residents are eligible for some social "safety net" programs. Examples include ComCare, the Assistive Technology Fund, the Taxi Subsidy Scheme, and the Enabling Transit Subsidy.

Some greater ability to express political and social views publicly. For example, Permanent Residents (and citizens) can participate in the annual Pink Dot event. PRs can also pick up free National Day "fun packs."

Some privileges when obtaining visas to visit foreign countries. A few foreign countries may offer Singapore PRs greater odds of visa approval, longer term visas, and/or lower cost visas compared to otherwise similarly situated foreigners.

Singapore Armed Forces Volunteer Corps eligibility. Permanent Residents age 18 to 45, including female PRs, may join the SAFVC.

Commemorative Coins. The Monetary Authority of Singapore occasionally issues commemorative coins such as the LKY100 coins recognizing the 100th birth anniversary of Lee Kuan Yew. Only Singaporean citizens and Permanent Residents can purchase these coins at original issue.

Clear Disadvantages

National Service obligations. Young male citizens and PRs (and their sons) are required to perform National Service if physically and mentally able, i.e. to serve in Singapore's armed forces, police, civil defense, or another government-decided role, and to be available for periodic medical checks and training exercises for several years thereafter. In the event Singapore goes to war or has some other serious national emergency, most young male PRs and citizens would be required to serve. Young men with National Service (NS) obligations face certain international travel restrictions. NS obligations are waived for first generation PRs under the Professionals/Technical Personnel and Skilled Workers (PTS) and Investor Schemes and, generally, for men who acquire PR status under the Immediate Family Scheme who are in their late 20s or above.

Not Ordinarily Resident (NOR) tax break curtailed. In certain situations Singapore offered a special income tax break to fairly highly compensated (or higher) individuals based in Singapore who spent a lot of time working outside Singapore. This tax break was called the Not Ordinarily Resident (NOR) Scheme. Citizens and PRs apparently could not qualify for this particular tax break. This tax break is closed to new entrants and will be phased out completely in 2024.

Fee to access Singapore's casinos. Like citizens and unlike foreigners, PRs must pay either a daily or annual entry fee if they want to enter the gambling areas of the Marina Bay Sands or Sentosa casinos.

Limitations on other countries' residence and benefits (exclusivity restrictions). Certain countries may bar Singapore (and other foreign) PRs from obtaining permanent residence and/or from enjoying certain tax breaks (and other benefits) available to residents.

Some of Singapore's laws apply extraterritorially. A few of Singapore's laws apply to PRs even when they travel outside Singapore. For example, Singapore's Misuse of Drugs Act makes it a crime for PRs (and citizens) to consume any form of cannabis (marijuana) even in countries where local laws allow cannabis.

Mixed Advantages/Disadvantages

Lower Supplementary Retirement Scheme (SRS) contribution limits. PRs are more limited than foreigners in how much they can contribute annually to Singapore's tax-advantaged SRS accounts. Also, PRs cannot make qualified (penalty free) withdrawals prior to minimum retirement age. However, PRs typically have a greater opportunity to make qualified withdrawals Singapore tax free (or at least tax reduced) than foreigners do.

Mandatory Central Provident Fund (CPF) contributions. Working PRs and their employers are required to contribute to Singapore's mandatory national savings program, the Central Provident Fund. CPF is a comparatively safe and high yielding savings vehicle. Compulsory contributions and all earnings are Singapore tax free. (Also, Singapore provides income tax breaks for some voluntary CPF contributions and top ups. It's often wise for new PRs to make substantial voluntary CPF contributions/top ups to their MediSave and Special Accounts, at least up to their income tax break limits if possible.) CPF savings can be used for retirement and also for medical care, insurance, and certain real estate purchases in Singapore. Many individuals would voluntarily contribute to CPF if they could. However, there are some possible disadvantages. Take home pay is reduced compared to a similarly situated foreign worker. Also, those PRs with limited non-CPF savings who plan to retire outside Singapore could end up somewhat "over-invested" in CPF assets and thus incur some currency risk. In rare cases CPF assets and payments might cause reductions in a PR's entitled benefits from other countries.

MediShield Life. Singapore requires PRs, no matter where they live, to pay MediShield Life premiums (taxes). MediShield Life provides a basic set of medical insurance benefits at public hospitals (and to a limited extent at public clinics) in Singapore, with benefits designed for citizens staying in B2 or C public hospital wards. (Charges are higher for PRs while MediShield Life payouts are the same, so PRs experience a greater coverage gap with MediShield Life alone.) The premiums are set annually and increase with age, and they are paid from CPF MediSave funds (if there are MediSave funds available; otherwise the premiums must be paid out of pocket). Individuals with preexisting conditions are covered, although a 30% higher premium may apply for up to 10 years. Some PRs (particularly retired PRs) may qualify for MediShield Life premium subsidies of up to 25%. Extra cost Integrated Shield insurance policies are available to supplement MediShield Life, and since PRs already have mandatory MediShield Life (and somewhat subsidized charges in the public medical system) they pay a lower premium for an Integrated Shield plan than foreigners do. PRs and citizens also enjoy a wider choice of Integrated Shield plans than foreigners, although most of the lowest cost plans (designed to cover care in public hospitals in B1 ward) reduce coverage benefits for PRs. Whether a particular PR gets value-for-money from MediShield Life is highly situational.

CareShield Life. Singapore requires PRs born after 1979 to pay CareShield Life premiums starting from age 30 or when PR status is granted, whichever is later. CareShield Life pays a monthly benefit for life when an individual is severely disabled, defined as an inability to perform at least 3 out of 6 "Activities of Daily Living." PRs born before 1980 who are not disabled can voluntarily join the program. Private insurance carriers offer optional supplemental policies to CareShield Life. Disability insurance in some form is quite important, but CareShield Life isn't always the best fit. Please note that CareShield Life coverage ends (and with no refund of premiums) if/when Singaporean citizenship or PR status ends.

Possible loss of "expat" employment compensation elements. If you arrived in Singapore with "expat" compensation provisions then your employer may reduce or terminate some or all of those elements after transitioning to PR status. Such provisions might include housing, children's education, tax preparation, tax equalization, continuation of home country social insurance and/or retirement savings contributions, pension, seniority privileges, employee stock purchase discounts and stock options, per diems, relocation/repatriation/moving, household goods storage, transportation/car, professional society memberships, disability income insurance, life insurance, unemployment insurance and severance, global medical insurance, medical evacuation, and home country travel, as examples. You might also lose an implied or even actual right to return to a home country position. On the other hand, you might be entitled to new employment benefits as a fully localized employee in Singapore. Highly compensated executives from developed economies on "expat packages" tend to suffer a net loss of compensation and benefits when transitioning to PR and local employment, while less highly compensated workers, including those from countries with few employment-related benefits, may find that fully localized employment in Singapore is a net positive.

Opt-out organ donation. PRs and citizens are automatically subject to the Human Organ Transplant Act (HOTA). By default, when a PR dies in Singapore, some of his/her organs (kidneys, liver, heart, and/or corneas) are donated for medical use. Organ donation cannot occur unless and until the patient is clinically deceased. Everyone ought to sign up to be an organ donor, to give the gift of life. (You or your family might someday be in need of a donor organ. The opt-in MTERA form is available to all adults, including foreigners, who want to donate more than the four HOTA organs.) However, there are a few PRs who do not wish to donate any of their organs after they die. They have a slight paperwork burden to bear; HOTA requires them to submit an opt-out form.

Fee changes. There are PR application fees, Re-Entry Permit fees, and NRIC ("blue card") fees. Depending on the circumstances, these fees could be higher or lower than the fees associated with other immigration statuses.

Donald Trump's "Liberal Heresies"?

Kevin Drum at Mother Jones doesn't understand why Donald Trump's "liberal heresies" aren't costing him political support. But I'm surprised he's surprised. I could quibble with Drum's list, but let's assume for sake of argument Drum has accurately reflected Trump's current views. Let's take a look at the list:

1. Affirmative action. That hardly matters if Trump wants to deport about 11 million undocumented immigrants immediately, does it? If you're compiling an Anti-Brown Person Score, Trump gets one zillion points for that and minus three for affirmative action among those who are left in the country, and that's still a great score. Besides, Trump is a beneficiary of affirmative action. He inherited a great deal of wealth from his father (and he made it bigger). That's also affirmative action of the most potent kind. Moreover, most importantly, Trump particularly favors affirmative action for beautiful women. cf. Omarosa. What red blooded Republican male doesn't?

2. Funding Planned Parenthood except for abortion. See above re: beautiful women.

3. The progressive income tax. The Republican Party's billionaire donors support a flat tax, i.e. cutting their taxes, sure. Republican Party rank-and-file members? Not so much. Besides, Trump favors dramatically simplifying tax filing. He says he wants to "put H&R Block out of business." Even the so-called flat tax always has at least two brackets: 0% and something else. So this is a distinction without a difference for voters, rightly so. Top 0.01% donors of course care intensely about the progressive tax rates they already don't pay often enough.

4. Not being able to fire gay employees. Well who needs the workplace competition for those beautiful women (see above)? And who's going to help with their hair and makeup to keep them beautiful? Besides, where is Trump going to find the artistic people to design his "beautiful" wall to keep out the Messicans?

5. No cuts to Social Security and Medicare. Republicans overwhelmingly agree! Even the Republican Party itself officially runs campaigns against cuts to Medicare -- successfully in the last Congressional election -- so Trump can hardly be faulted for being doctrinaire Republican. There's a long history of the Republicans trying to sell to their rubes: publicly defend Medicare (in particular) and Social Security but then try to get the Democrats to do the dirty cutting work they really want on behalf of their big donors. Pete Petersen and his followers have about 6 primary and caucus votes between them.

6. Favors an assault weapons ban. So do most gun owners, and nuttiest gun nut Ted Nugent apparently likes Trump.

7. Invited Bill and Hillary Clinton to his wedding. And they attended, and he brags about it, claiming he bought Hillary. He tested political corruption, it worked, and he tells voters all about it. Voters understandably love him for unmasking the corruption (or at least "corruption"). And who hasn't had a guest at a wedding, later regretted? Who wouldn't want a famous person at her wedding? Who wouldn't want Trump's billions and be able to "force" the Clintons to attend his wedding? It's a raw demonstration Trump's power and prestige, and they love him for it.

8. Doesn't "fully" believe in supply-side economics. OK, he lost Arthur Laffer's vote, but so what? That's a top 0.01% "issue" again, and maybe not even that.

9. Believes that Germany should take the lead in Ukraine. Well sure, and so do most Republicans! Messing around in some furrin' place that Republican voters couldn't even find on a map and that doesn't have oil is, to quote Trump, "stupid." The Trump Wall™ will keep out the Ukrainians, too. Pat Buchanan and Ron Paul tapped into the isolationist streak in the Republican Party, and if anything isolationism is a bigger, majority segment of the Republican Party today after the Iraq debacle. OK, he lost Dick Cheney's vote, but so what? Does he need Lockheed Martin's PAC money? On top of all that, there's a certain segment of the Republican Party that admires the Germans for the wrong reasons, know what I mean? (They do.)

10. Hates the Iran deal but would respect it in office. Yes, because he's a businessman, and businessmen honor their contracts. Except when they don't, frequently -- see Trump, Chapters 7 and 11 -- but never mind that. Republicans love businessmen, particularly loud ones and those who were fired from HP. Haven't you been paying attention?

I'm not at all persuaded that Drum has compiled a compelling list of "conservative" objections to Trump's candidacy.

Apple, iMessage, and Satellites?

Rumors abound that Apple is interested in satellite technologies, and the company has reportedly spent a bit of money on securing satellite-related talent.

The "killer feature" that I'd like to see Apple implement in its iPhones is truly global text messaging: the ability to send and receive both SMS and text-based iMessages anywhere in the world. That would presumably also include "SOS" messages with geographic coordinates, for example. All at a cost of about $5/month -- and free for a basic SOS service.

Text messaging is a limited bandwidth application that even today's satellite technologies (e.g. Iridium) can support at scale. The antenna(s) would have to be part of the existing iPhone form factor, but that too doesn't seem to be a significant engineering problem within even today's state-of-the-art.

Such a killer feature would continue to differentiate iPhones and would also fit well with the brand. It'd be entirely consistent with the "active lifestyle" image that Apple often conveys -- think mountain climbing and Antarctic expeditions, basically. Such a feature would also be a great fit for the iPod touch, iPad, and even (in the future, as the electronics get better) Apple Watch. Many people don't need or want cellular voice and data. Global satellite messaging would also find a ready audience among the Apple-IBM enterprise customers.

On a $5/month plan SMS would probably need a monthly cap due to carrier charges, but it could be something pretty high like 500 messages/month. Apple might also need to set an overall cap of, say, 2000 messages/month, to keep the satellites from getting too burdened. The free tier could be, say, 20 messages/month. All that'd work.

Let's hope Apple brings truly global text messaging to its devices soon. That'd be really exciting.

The United States Could "Buy" Greece (if Greeks Are Interested)

Here's a "crazy" idea, but it's so crazy it makes sense. The United States could "buy" Greece. It'd be the greatest deal in history for Greece and the greatest deal since the Alaska Purchase for the U.S.

Here's a broad outline of how that would work:

1. The President and Greek Prime Minister would hold a joint press conference announcing the offer, and a full "prospectus" would be published in both English and Greek for the people to consider.

2. Greece would hold a referendum to become a U.S. territory (and the U.S. would pass enabling legislation or, if necessary, a constitutional amendment) under the following terms.

3. The U.S. would offer to buy and bury all of Greece's public debt held by external governments and public institutions. The offer would be reasonable in the circumstances but represent a discount. The offer would be open for 60 days, take it or leave it.

4. Greece would convert to the U.S. dollar. The U.S. Federal Deposit Insurance Corporation would take over Greece's banks and insure all deposits up to FDIC limits. Euro-denominated accounts would be frozen as euro, insured within overall FDIC limits, and convertible when/if the depositor wishes, but no new euro could be added to those accounts.

5. As a U.S. territory Greece would enjoy immediate free trade to/from the U.S. European free trade would be up to Europe to decide.

6. Greeks would become U.S. citizens, though there would be a 5 year transition period with temporary policies that discourage people movement, probably via the tax code. European freedom of movement would be up to Europe to decide, though the U.S. would urge Europe to maintain residence rights for Greeks already in Europe and their immediate families.

7. Greece would have nonvoting representation in Congress and a Cabinet-level official in a new U.S. Department of Greek Recovery. Various transition policies would be set with strong protections for Greek language and culture, as examples. Tax policy would quickly converge, though the Greece would keep all U.S. federal tax revenues for at least 20 years.

8. The U.S. would be limited to opening one naval base and one land (joint Air Force and Army) base in Greece. Some current Greek military facilities would convert to territory/state National Guard facilities, and others would be closed.

9. After a period of 25 years but not more than 50 years, Greece would hold a statehood referendum, and the U.S. would be bound to honor the result. The vote would be between two irrevocable choices: statehood or independence. If no referendum is held within 50 years then Greece's U.S. territorial status would be automatically terminated, and Greece would become an independent nation again. In other words, permanent territorial status would not be an option. (Congress would also consider adopting the same 50 year transition clock for all other existing U.S. territories.)

Can Greece Keep the Euro and End Austerity? Perhaps So!

I've been trying to read and to listen carefully to what the Greek government has been writing and saying. This Greek government's public representations have so far matched its actions, so it's particularly important to listen.

Today, Greece's Foreign Minister, Nikos Kotzias, reportedly told China's Ambassador to Greece that Greece is not leaving the euro zone. (The press report used "euro zone" instead of "Eurozone.") Is that possible? It might be.

The key to understanding how a sovereign default could work within the euro, at least in theory, is that there are important, critical differences between the Eurozone (including European Central Bank support and the Eurosystem) and maintaining the euro as legal tender. There are two countries that adopted the euro as their medium of exchange without any monetary agreement or other coordination with the Eurozone: Montenegro and Kosovo. Their entire economies operate on the euro. In principle Greece could do the same. The Bank of Greece could legally maintain its Eurozone membership but, with an uncooperative European Central Bank, de facto operate as Montenegro and Kosovo do.

OK, without commenting on whether that outcome is desirable, is it possible? Probably. Even assuming an ECB that doesn't return the Bank of Greece's phone calls, there's no available mechanism for the ECB to prevent Greeks from using euro. Indeed, efforts to prevent the free exchange of euro would undermine the euro's status as global, convertible currency. Such efforts would also harm Montenegro and Kosovo.

The Bank of Greece has already adopted capital controls including withdrawal limits of 60 euro per day per depositor. A significant fraction of the Greek economy, perhaps a third, is already operating "in the black" and off the books, primarily on a euro cash and barter basis. Austerity-fueled and ECB-supported "bank jogs" have already done great damage to the Greek economy and its financial system. The Bank of Greece could, in principle, maintain capital controls and (probably) nationalize what's left of Greek banks. Moreover, there's no particular reason why Greeks in Greece need to have bank accounts in Greece, and many have already established accounts elsewhere in Europe.

The Greek government is already running a primary surplus, meaning that tax revenues (even with significant compliance problems) are supporting government services and benefits. When (not if) the Greek government defaults on its external debt it'll have more euro to keep. The Greek government won't be able to borrow more, but that's already true.

Could that be the plan, to tell the troika "piss off," run the Greek government on a neutral domestic cashflow basis (better than sending the surplus to the troika), and remain within the euro zone (lowercase) de facto, just as Kosovo and Montenegro do? It could be. Moreover, Greece could be on firm legal footing in doing all that. The troika and the ECB, on the other hand, might have several legal problems (at least) if they try to act maliciously. It's one thing to suspend support but quite another to go to war (metaphorically one hopes) against one of its members. They may be very, very angry, as foolish creditors often are, but I don't see how they legally retaliate against a sovereign in their midst.

Greece: What's Really Happening, What Matters

If you'd like to understand what's happening with Greece and its economic situation, here's a quick guide.

1. Before the 2008 Financial Crisis, Greece borrowed too much and European banks lent too much. This credit overextension problem was the direct result of a poorly designed Eurozone, a monetary union without fiscal union.

2. Government institutions bailed out the overextended banks, assuming the bad Greek (and many other bad) debts. That bailout was not handled particularly well.

3. Just as there was no way the banks could sustain those bad debts (hence the bailouts), equally there is no plausible (or even implausible) way the Greek government can repay all of its debts. Yet the government institutions substantially have not (and continue to refuse) to write off Greece's debts.

4. Greece's governments have tried to service that debt held by public institutions (and all other debt), but in the process the government created great misery and horrific economic depression in Greece. This set of self-defeating policies is called "austerity." Greek unemployment is now about 26% and Greek GDP fell by about the same percentage. Greater poverty and immiseration means it's even more impossible to pay off euro debt.

5. A new Greek government came to power on a promise to end austerity. That government negotiated with its external creditors (government institutions, i.e. the "troika") for months and failed to reach an agreement that included debt relief -- or indeed any material changes to the existing, counter-productive austerity policies. The troika offered more of the same: never-ending economic depression in Greece.

6. The Greek government refused more of the same and now seeks a public referendum backing its refusal. The Greek government will presumably stop servicing its external debt and will default on that debt. (As it should have done years ago in a negotiated but still deliberate way.) That's the only decision the Greek government can make, and it's a good one. Or at least it's the only realistic one. The math doesn't lie. There's just no way the debt is repayable. (Importantly it appears that the Greek government can and will continue servicing internally held debt, particularly the debt held by its domestic banks. It just isn't going to continue playing a mathematically impossible charade with the IMF, in particular.) On June 30 the Greek government owes $1.6 billion to the IMF, and the Greek government does not plan to make this payment. That's "default."

7. The European Central Bank (Mario Draghi, really) now has a decision to make. Will the ECB destroy the euro-based Greek banking system simply because another entity, the Greek government, is defaulting on its external debt? In the language of central bankers, will the ECB decide that Greek banks are facing a solvency problem instead of a liquidity problem because the IMF isn't getting paid? It's the ECB's decision to make, and it's a very strange one indeed, a decision Draghi has desperately wanted to avoid having to make. Central banks aren't usually in the habit of destroying their own banking systems, even partly. There are no precise analogies here, but this would be a bit like the U.S. Federal Reserve deciding to torpedo Alabama's banks if the Alabama state government stopped paying its bonds held by Wisconsin. Yet that's the "logic" of the Eurozone.

8. Of course the Greek government must prepare for the possibility the ECB will act to destroy Greece's banking system. The Bank of Greece (Greece's central bank) will bear most of the responsibility to protect and defend Greece's banking system. If the ECB does terminate Greek banks' access to Emergency Liquidity Assistance (ELA) then the Bank of Greece will likely have to respond in these three basic ways:

(a) Declare a bank holiday (that could last several days), keeping the banks closed;

(b) Introduce capital controls, meaning limits on withdrawals (particularly internationally);

(c) Possibly introduce a new currency, most probably a purely electronic one that operates via debit cards and smartphones.

Cyprus has recent experience with (a) and (b). There may also be another option:

(d) Request and obtain a loan from Russia to help keep Greece's banks capitalized. (The Russians have offered in part for geopolitical reasons.)

The Bank of Greece will probably also have to nationalize the banks, meaning to take equity (probably all of it) in those banks. That's a minor detail in terms of execution, but it's an important one for public governance.

9. If the ECB acts to destroy the Greek banking system, and the Bank of Greece is forced to respond to protect and defend Greece's banking system, there will be disruption and turmoil, and not only in Greece. However, with the key assumption that the Greek government and the Bank of Greece execute well -- the Greek government does have many smart people, fortunately -- the disruption will be relatively short lived. There are several countries that have followed this path, and they've recovered nicely. Iceland is arguably a useful, recent example, though Iceland always had its own currency and never joined the euro.

10. Greece will remain within the European Union and Schengen Area unless other European governments do something particularly stupid and perhaps even illegal. True, European policymakers have often acted stupidly in recent years, but I would not bet heavily on this particular form of stupidity on this occasion. Note that Norway and Iceland do perfectly well outside the European Union as members of the European Economic Area (EEA) with their own currencies, so Greece does not actually require EU membership to restore economic growth and prosperity. The only real advantage to EU v. EEA membership is the ability to influence policy within the EU, but since Greece hasn't been able to do that anyway, it doesn't matter.

11. In the hopefully unlikely event EU governments continue to act stupidly with respect to Greece's membership, EU leaders should bear in mind that Greece is housing many thousands of asylum seekers and refugees. There are costs to continuing policy stupidity.

12. EU policy leaders talk as if they are confident Greece's issues will not "blow back" to cause turmoil in the rest of the Eurozone. I wish I were so confident. The financial markets have shown a strong ability to sense "blood in the water" and attack, shark-like, the weak and the vulnerable. European public institutions will likely discover that this botched exercise is even more expensive than a negotiated, managed write-down and Greek economic recovery plan would have been. One of the ways Greece will be "expensive" is in Spain where that government is more likely to fall at the next election. One of the ways European leaders have been particularly out of touch and particularly stupid is in their tolerance (or obliviousness) to the pain and suffering of the unemployed amidst persistent economic depression. It's a human emergency, and the EU's inability to solve that emergency is its greatest, overarching failing.

In Praise of the Greek Government

I wrote about Greece's economic situation earlier this year. A few points:

1. Greece's government is acting reasonably, logically, sensibly. (See the Greek Finance Minister's latest verbatim statement, for example.) Unfortunately Greece is dealing with European ministers that are not. They're not even acting like good (or even average) bankers would.

2. To reiterate, the European Central Bank could act to destroy what's left of Greece's euro-based banking system or not, but make no mistake that it's the ECB that will be at fault if it does so. Blame where blame is due.

3. To reiterate, if the ECB destroys what's left of the Greek banking system then Greece's new currency (after a bank holiday) will be entirely electronic, primarily based on debit cards and smartphones. Greece will become Europe's first truly cashless society, and (ironically) the euro will become Greece's black market currency (in a hopefully shrinking black market). The Greek government won't even bother to mint new coins and print new bills. The transition will be tumultuous, of course, but after the dust settles it'll work quite well. Tax evasion and undeclared labor will become harder to pull off since all Greek currency transactions will be electronically recorded. The Greek government has some smart people who will make this work.

4. Greece will remain in the Schengen Area and in the European Union unless European governments somehow act in concert (and with unprecedented malice) to expel Greece. Blame where blame is due again. That'd be completely dumb from the point of view of Europe's self interest (and the European public interest), but see #1 above.

Rationalizing U.S. Currency for the 21st Century

U.S. cash currency has a couple problems that should be easy to solve:

1. Inflation has eroded the dollar's value, so the lowest denominations are less useful.

2. There are too many paper notes and not enough coins. Paper notes are more expensive to produce and to maintain, and coins are more useful for vending machines.

3. America's rich diversity is poorly represented.

One online campaign is pushing for Harriet Tubman to replace Andrew Jackson on the $20 bill. That'd be a good switch, though I have an even better idea. Here are the changes I'd make simultaneously:

A. Stop producing pennies. That takes Lincoln out of coin circulation, but he's still safe and secure on the $5 bill.

B. Stop producing $1 bills. That takes Washington out of bill circulation, but he's still safe and secure on the quarter.

C. Ramp up production of Kennedy half dollar and Sacajawea dollar coins.

D. Put Harriet Tubman on the $2 bill and ramp up its production. That takes Jefferson out of bill circulation, but he's still safe and secure (for a while) on the nickel.

E. Switch all paper currency to more colorful, Singapore-style polymer-based notes.

It'd be nice to stop producing the nickel, but either the quarter would have to be demoted to 20 cents or it would have to be yanked as well. And these are the coins with Jefferson and Washington. If any old white men belong on U.S. currency then they do. If you really want to pull the nickel then here's one way:

AA. Stop producing pennies, nickels, quarters, $1, and $2 bills.

BB. Introduce a new $2 Jefferson coin in a substantially different form factor.

CC. Ramp up production of the $1 Washington dollar coin, already produced as part of the presidential series, but with Sacajawea on the obverse. (Or put Washington on a new 20 cent coin, but that's a bit confusing.)

DD. Introduce a new $200 Harriet Tubman bill, probably (unfortunately) with a limited but regular production schedule.

Defending Against the Crazy Pilot Scenarios

There's strong evidence that the co-pilot aboard the Germanwings flight that crashed in the French Alps was, in a word, crazy. It appears he locked the post-9/11 reinforced cockpit door while the captain was using the toilet, and he also blocked the door override code as any cockpit occupant is allowed to do. The captain couldn't reenter the cockpit, and the co-pilot intentionally crashed the plane, killing himself and 149 others.

Exactly the same thing happened in 2013 in a murder-suicide crash in Africa that killed 33 people (including the perpetrator). And the same thing may have happened on at least three other occasions in the past several years.

Once is a fluke, but twice is a pattern. As my previous post described, aviation safety experts knew that the FAA's (and other regulators') orders to reinforce cockpit doors would result in more fatalities associated with crazy pilot scenarios. We're now seeing their unheeded warnings become real. And unfortunately copycat incidents are quite possible.

In the immediate aftermath of the Germanwings crash, airlines around the world are requiring that the cockpit always have two occupants, at all times (except when parked at the gate). Typically this would mean that when a pilot wants to step out to use the toilet a flight attendant would take his/her place. What this means in practice is that an 80 kilo crazy pilot now would have to incapacitate a 50 kilo flight attendant in order to commit murder-suicide.

While I appreciate the airlines' prompt change in operating practices, this change in policy will only help a little bit. The last line of defense will be, typically, a 50 kilo flight attendant with no knowledge of the switches and controls in the cockpit and no ability to pilot the airplane. If the crazy pilot wants to incapacitate that flight attendant, he/she will have the advantage of complete surprise. Maybe the airlines think differently, but I don't think this last line of defense is going to be much of a defense. Moreover, that flight attendant now has the opportunity to be the crazy one, and that's another, new risk.

What I think the regulators now need to do is not allow any occupant in the cockpit to disable the override code to open the door. According to press reports, on an Airbus A320 any knowledgeable cockpit occupant -- and the Germanwings co-pilot certainly was -- can block the override code from opening the door. That block lasts either 5 minutes or indefinitely -- press reports vary.

Why? I assume it's because the regulators were afraid that a crazy crewmember would open the door with the override code, storm the cockpit, incapacitate the pilots, and crash the plane. Well, yes, that's a possibility. But obviously there can be one or more crazy people in front of the door, in the cockpit.

There is an effective solution here, even if the regulators don't want to go back to pre-9/11 bashable (eventually) doors: a plane-wide alarm. That is, whenever the door is left open for a certain number of seconds, or whenever anybody uses the override code to open the door, a plane-wide alarm would sound. It could be a coded alarm that only the crew (and particularly knowledgeable passengers) understand, or it could be a general alarm that everybody understands ("Warning: Cockpit Door Open!"). But it would be an alarm that effectively declares, "We have a problem. Everybody work together now to save the plane." There should not be a 5 minute (or indefinite) block on the override code. That block should be about 10 seconds, during which time the door alarm sounds, plane-wide. It should not be possible to disable this particular alarm, though eventually it could stop sounding if the door is closed.

Let's hope the FAA and other regulators act more thoughtfully this time.

Is 9/11 Overreaction Now Killing Airline Passengers?

With the important caveat that press reports are sketchy and could be in error, there are reports that one of the two pilots of the Germanwings flight that crashed in the French Alps, killing 150 people, was locked out of the cockpit and couldn't get back in. If that's what happened, unfortunately this accident (and others like it, in the future) was predicted. Public officials may be learning a hard lesson: their overreaction could be killing (and will surely kill) people.

After the 9/11 terrorist attacks in the United States, public officials ordered the aviation community to improve security, understandably. Airline passengers around the world are now often taking their shoes off, removing laptops from bags, surrendering their large bottles of cologne and tubes of toothpaste that exceed liquid and gel limits, and so forth. Most of these "improvements" are annoying and costly but relatively harmless.

Public officials also ordered aircraft manufacturers and airlines to reinforce cockpit doors and to keep them locked as often as possible. They also ordered airlines to adopt protocols restricting passengers from lingering near the cockpit door and to block access to the door (using a beverage cart, for example) when a pilot needs to open the door, to visit the toilet for example.

All of these cockpit door measures rely on a critical underlying safety assumption that public officials probably did not fully comprehend or consider: both pilots must be infallible. If one pilot decides to strangle the other pilot, for example -- or simply lock the other pilot out of the cockpit while he's visiting the toilet -- then there's literally nothing anybody can do to save the airplane and the people aboard it. It simply doesn't matter if America's finest military pilot is sitting in seat 28C, ready to save the plane. Reinforced cockpit doors are remarkably effective in separating the passenger cabin from the cockpit, by design. However, the doors have no way of adjudicating whether the cabin occupants or the cockpit occupant are/is crazy or medically distressed.

In other words, after many decades working to eliminate single points of failure in aviation, with tremendous safety benefits in saving lives, the post-9/11 introduction of mandatory reinforced cockpit doors introduced a new single point of failure in the aviation safety system. If either pilot wants to commit murder-suicide, or if the one pilot left on duty simply has an incapacitating medical problem while the other pilot is visiting the toilet, the airplane is lost. These safety risks are thoroughly predictable, and many aviation experts predicted them.

What's also frustrating is that anybody logically analyzing 9/11, taking into account human behavior, would realize that that type of attack is extremely unlikely to happen again. The 9/11 attack taught passengers and flight crew that resisting attack, in the air, promptly and with massive force, is the only viable option. In fact, 9/11 taught that lesson so well, so effectively, so quickly that passengers and crew aboard United Airlines Flight 93, having heard the fate of other hijacked airliners that same morning, resolved to resist their hijackers. They did, and they saved probably hundreds of lives on the ground as UA93 crashed in rural Pennsylvania, far away from populated areas. They had a chance to save not only people on the ground but themselves, and they took it. Their sacrifice should have taught public officials that 9/11 simply will not happen again, certainly not that way.

But instead public officials overreacted in at least one area. They overruled many safety experts, and they ordered the installation of impenetrable cockpit doors. And thus they put the lives of all airline passengers and flight crew in the hands of a single point of failure, on every flight.

Fortunately most pilots don't commit murder-suicide, and fortunately most pilots don't have strokes or other incapacitating medical events while the other pilots are using the toilet. But a few will, and the reinforced cockpit door will effectively block the non-crazy and the healthy from preventing crashes and fatalities. That's exactly what might have happened aboard Germanwings 9525 and even possibly Malaysian Airlines 370. But if it didn't happen aboard those flights, it surely will happen at some point in the future.

Greece's Next Steps

The Greek government is running a primary surplus. That is, tax revenues exceed spending. That surplus is currently approaching a whopping 4.5% of Greek GDP.

Consequently the new Greek government could simply slow down or stop paying interest on their public debt. Nothing terribly bad would happen directly. The Greek government would find it even more difficult to borrow, but that's not actually a problem when you're running a budget surplus, and borrowing is already difficult.

So I think it likely that the new Greek government will take this step, preferably with the grudging acceptance of other European governments but without that acceptance if necessary. Grudging acceptance means the new Greek government slows down interest payments (with partial debt write-off), and non-acceptance means the new Greek government blows off much more (or even all of it). But those are the two choices.

With non-acceptance the ball then lands squarely in the European Central Bank's court. Greek banks depend on the ECB as the "lender of last resort," the institution that provides them with liquidity so that they can issue euro cash to nervous depositors steadily pulling their money out. (Note that the new Greek government is implicitly giving depositors space to pull their euro out, with the ECB's help, and that's what I'd be doing.) The ECB would have the technical ability to stop performing this vital role. Would it?

There's some legal question. Another problem is that, even today, a systemic failure among Greek banks probably would cause bank runs elsewhere in Europe. There's a lot of brave talk that the ECB could allow Greek banks to fail, but does anybody remember the same brave talk about allowing Lehman Brothers to fail? How did that work out?

I don't think the ECB will blow up the entire Greek banking sector, even now. If I'm wrong, though, then the Greek government simply declares a nationwide bank holiday much like Cyprus did, possibly nationalizing the banks in the process. When the government allows the banks to reopen there will either be severe withdrawal limits gradually relaxed or new drachma in those accounts, maybe even a new drachma crypto currency but, unlike the dreadful Bitcoin, with a monetarily sound inflation rate. It turns out that, nowadays, you don't actually have to issue paper bills and metal coins when you want to launch a new currency. Greeks have smartphones and EMV ("chip") ATM/debit cards, and that's all they need for their new drachma if it comes to that. A side benefit to making all physical cash transactions in Greece totally illegal is that tax evasion becomes more difficult.

Congratulations in advance to Greece on taking steps to end this austerity madness.

Bad Economics at the BBC

The BBC doesn't seem to understand basic economic theory. That's a shame.

As further evidence I point to this overwrought article penned (electroned?) by Linda Yueh, identified as the BBC's Chief Business Correspondent. She describes Japan's most recent data on aggregate household savings as constituting "another blow" to Prime Minister Abe. Japan's net aggregate household savings turned very slightly negative according to the data.

Ms. Yueh has gotten the story exactly backwards. First it's important to understand that saving is simply deferred consumption. Saving is neither virtuous nor sinful in and of itself. A young adult could easily be quite foolish to try to save instead of borrowing to invest in a university education, for example.

The Japanese Prime Minister's entire economic program is premised on trying to get businesses and consumers to spend more on present consumption. Consequently he'd be rightly pleased that Japanese households have shifted more of their future potential consumption to the present, because that consumption is needed now to pull the Japanese economy out of its doldrums, not 20 years from now. Yueh correctly reports the disappointment in household consumption data (also down), but the shift away from savings is fantastic news, not "another blow."

Moreover, why should old people save so much? That is, Japan has an aging population (as Yueh also points out), and older people really should spend more, now, on themselves, their children and grandchildren, on charities -- anything they like. That's quite reasonable and proper.

There might be some concern that declining net overall household savings could mean a shortage of capital, but that's not at all Japan's problem. Japan has been stuck at the zero lower bound for a couple decades. Investment capital is plentiful and cheap. Yueh's own reporting bears that out since she notes that Japanese corporate balance sheets are strong, i.e. they're sitting on lots of cash.

Anyway, Prime Minister Abe ought to be delighted that Japanese households are finally reducing their hoarding of cash. That particular part of the Japanese economic story is great news. It's too bad the BBC's Chief Business Correspondent didn't grasp that reality.

Boris Johnson: Another Wealthy, Cheap F**k

Boris Johnson, Mayor of London, was born in the United States and is thus a U.S. citizen. As with every country on the planet, citizens are subject to the laws of their state of citizenship no matter where they live. For example, it is illegal under U.S. law (the Foreign Corrupt Practices Act) for U.S. citizens to commit bribery.

Last month Mayor Johnson announced to the world that he was refusing to obey U.S. tax law, specifically that he was refusing to pay U.S. personal income tax on a portion of the net gains on the sale of his home in London. Reader comments posted to the linked article are brutal, and understandably so. They boil down to this central point: it's outrageous that Boris Johnson thinks he's above the law, that he thinks he can enjoy the rights and privileges of U.S. citizenship without also living up to its obligations. And it is outrageous. Johnson has a net worth of approximately $185 million according to press reports. He's one cheap f**k if he's refusing to pay a rather modest capital gains tax. (What is it with rich people nowadays? What, modest taxes and immense wealth that would have made Julius Caesar blush aren't enough?)

Let me explore the basic facts more fully to give readers a fuller idea of just how cheap and outrageous Johnson is.

First of all, Johnson is under no obligation to keep his U.S. citizenship. He could have terminated his U.S. citizenship as early as age 21 (now age 18). When he was 21 years of age it was free of charge to apply for a U.S. Certificate of Loss of Nationality (CLN). Now it costs as much as $2350, though that's just a bottle of mediocre whiskey to Boris Johnson. It does require two visits to a U.S. consulate or embassy, though conveniently there's one in London, the city where Johnson is mayor. Why two visits? In the first visit the consular officer explains the process and ramifications of terminating one's U.S. citizenship, including the fact it's irrevocable, and assesses whether the applicant is legally competent (not drunk, for example) and renouncing voluntarily. Then the applicant is sent home in order to allow time for careful consideration. In the second visit the consular officer verifies that the applicant won't be stateless after loss of U.S. citizenship, re-verifies competence and the voluntary nature of the act, and then completes the process. Then the deed is done. The U.S. government reported that 2,999 individuals in 2013 completed this very process and terminated their U.S. citizenships.

So why has Boris Johnson kept his U.S. citizenship? He's had about 29 years to terminate it, and it's about the same effort as getting a bunion removed but far less painful. I'll offer some more detailed, informed speculation on this question in a moment. Johnson has claimed it's difficult, but no, it really isn't (as many commenters have correctly pointed out). The bottom line, self-evident answer is this: Johnson maintains his U.S. citizenship because he values the rights and privileges associated with his U.S. citizenship. He just wants to complain about one of its obligations.

Let's take a look at that specific obligation. The United States requires its citizens (and its nationals, and its permanent residents) to pay personal income tax in certain circumstances. Approximately 6% of Americans residing outside the United States owe any U.S. income tax whatsoever. That's roughly 400,000 Americans (out of about 7 million), including (this year) Boris Johnson. Under U.S. tax law the United Kingdom gets paid first. However, the U.K. doesn't tax the gains on primary residences (as defined in the U.K. tax code), even if your primary residence is more lavish than Buckingham Palace. So, Johnson's U.K. tax rate on the sale of his primary residence is zero. Had it been something other than zero, the U.S. tax code would have given him full credit for the foreign tax, dollar for dollar.

But it was zero, so now Johnson is subject to the U.S. income tax on the sale of his home. However, the U.S. exempts the first $250,000 ($500,000 if he files a joint tax return with his spouse) of gains on the sale of his home. And, furthermore, those gains are net of costs. If Johnson spent a small fortune renovating his whiskey cabinet in his home, the cost of that renovation would likely be a cost that could be subtracted from his gains. If all that's not enough, the U.S. will also take into full consideration all his other foreign (presumably mostly U.K.) income taxes paid on all other passive income he received. If the U.K. taxed him above U.S. rates on his gains/dividends/interest from his other investments, the U.S. tax code gives him full credit for that differential. The U.S. tax code even lets him carry forward those excess foreign tax credits up to 10 years in the future (and up to one year in the past), to offset possible future (and past) U.S. income taxes on passive income.

Oh, but wait, there's more! The U.S. tax code also grants him an annual personal exemption, standard deduction, and (if he has dependents), further deductions and credits. If the gains on his home exceeded his limit, and if he couldn't offset them with excess foreign tax credits (even from other tax years), then he can fall back to his annual income exclusions/exemptions/deductions. And, if his spouse isn't a U.S. citizen but owned 50% of the home (as is typical), he has the option to file a separate tax return (without his non-citizen spouse, also typical) and thus only be responsible for 50% of the gains. If his non-citizen children owned shares in the home, that would further dilute his U.S. tax obligations. Indeed, any legitimate ownership interest dilutes his taxable share.

No, wait, there's even more! While he owned the home the U.S. tax code provided a generous mortgage interest deduction. At the very least this deduction most likely helped Johnson accumulate ("bank") foreign tax credits in the U.S., even if (as likely) he didn't owe any U.S. income tax. In other words, the U.S. tax code heavily subsidizes home loans. I don't remember Boris Johnson complaining about that.

For the record, the maximum U.S. capital gains tax rate for 2014 is 23.8%, including the Medicare surtax. Johnson owes something less than this percentage on his net gains. How much less depends on his exact circumstances, but it will be less. Unless he did not pay the tax owed on time, in which case he could owe interest and penalties.

And now we turn to more details on why Johnson maintains his U.S. citizenship: because it's probably a really good financial deal for the most important person in the world, Boris Johnson. In particular, an individual with a net worth of $185 million (or thereabouts) obviously has a lot of financial wealth to manage and to attempt to grow in internationally tax-efficient ways. As a U.S. citizen, Johnson enjoys privileged access to Wall Street and other U.S. financial accounts, some with U.S.-U.K. tax treaty protection. Unlike foreigners, he is not subject to mandatory 30% tax withholding on his U.S. financial accounts, and thus he does not have to (in effect) provide an interest-free loan to the IRS until his exact U.S. tax liability (if any) is determined.

Some commenters have speculated that Johnson would be subject to the U.S. exit tax if he renounces U.S. citizenship. It appears not. Johnson is living in his other country of citizenship, a citizenship he has held from birth, and he has not been a U.S. resident for 10 years or more within the past 15 years, thus (it appears) he would legally qualify for a full exit tax exception. For the record, if it applies the U.S. exit tax simply requires a "settling up" on the date of expatriation: mark-to-market of your worldwide assets, then standard U.S. capital gains tax rates applied to the calculated net gains. (Your cost basis is also reset, and typically you can credit your U.S. exit tax to your foreign tax return.) You must have a net worth of at least $2 million, or have paid about $150,000 or more in U.S. income tax for the past 5 years, in order to be considered for the exit tax. You also get a $680,000 exemption. For example, if your net worth is $3 million but the cost basis on that net worth is $2.5 million, when you renounce U.S. citizenship you won't owe a dime in exit tax because the net gain ($500,000) is less than your exemption ($680,000). All that is moot, though, because Johnson appears to qualify for a full exit tax exception.

As mentioned above, Johnson could terminate his U.S. citizenship for the price of $2350 and two visits to the U.S. embassy in London. His termination would not change anything that happened in the past in terms of his tax obligations, understandably, but if U.S. citizenship were such a terrible burden he has an easy, near-immediate out. The fact he hasn't within the past 29 years speaks volumes. In short, he's a cheap f**k.

What happens if Boris Johnson doesn't pay his U.S. taxes? As basic, routine steps the IRS could place tax leins against any assets he holds in the United States. The IRS could also order financial institutions that do business with him in the United States to begin mandatory tax withholding. Meanwhile, interest and penalties will accumulate. If those steps don't result in Johnson's compliance with his tax obligations then the IRS could escalate, asking the U.S. Department of Justice to issue an arrest warrant for criminal tax evasion. An outstanding arrest warrant would effectively bar Johnson from travel to the United States (including transit) and, no doubt on advice of his attorneys, from travel to any country that could conceivably extradite him to the United States for tax evasion. (That's a shorter list of countries than the number of countries with U.S. extradition treaties, but there is a list.) Johnson's tax compliance problems could also conceivably, negatively affect U.S.-U.K. relations, at least unofficially. The IRS could suddenly become somewhat less responsive in returning HMRC's phone calls regarding particular HMRC international tax fraud investigations, for example. So much of international relations relies on mutual trust and adherence to behavioral norms. Johnson is p*ssing where he shouldn't.

All of these hypothetical compliance escalations are just that, hypothetical. My prediction is that Johnson, if he hasn't already, will quietly pay his U.S. tax bill. I do not predict that he will terminate his U.S. citizenship. He's a cheap f**k, and that's why he won't.

Update: Boris paid his U.S. tax bill.

How to Link LAX to the Metro

Duncan Black succinctly highlights the problems with the Los Angeles MTA's current thinking on how to link LAX (the airport) to the Metro public transit system. He's of course correct: it doesn't make any sense to build two separate train systems, one for LAX and one for the metropolitan region, instead of one, integrated system.

But let's turn to the practicalities of building one, integrated transit system that ties LAX to the Metro. The first problem is that LAX isn't actually one place. As this map of LAX shows, it's at least 9 places: Terminals 1 through 8 plus the Tom Bradley International Terminal. OK, Terminals 5, 6, 7, and 8 are linked, so maybe LAX isn't as many as 9 separate places, but it's much more than one stop.

The second, related problem is that many passengers at LAX don't actually want to leave LAX. They simply want to transfer from one terminal to another, preferably without re-clearing security as they often must today. (Though due to current regulations most passengers arriving in the U.S. on international flights must re-clear security before connecting to another flight, even an international flight.) Terminal-to-terminal transportation is typically the role a local airport shuttle bus or train -- a "monorail," for example -- serves. These connecting passengers require higher frequency service over longer hours than the Metro might want to run over an entire hypothetical line serving LAX.

The third problem is that governments aren't always smart in how they fund public projects. Airport transit tends to get funded from passenger ticket taxes (PFCs for example) and fuel excise taxes (mostly paid by general aviation). The FAA administers those funds. The Metro and other mass transit projects receive their funding through other, separate sources, mostly from another part of the U.S. Department of Transportation. Each bucket of money has different rules associated with it.

Now that I've described the three basic problems that confront the MTA, I'll describe the best solution in two simple words: single track. Here's how it would work.

The MTA would extend the Crenshaw Line to LAX in the form of a single Metro track that runs in a loop around LAX. Passenger platforms would be constructed at each stop along that one track: one airside (inside security), one landside. (The Tom Bradley Terminal might not get an airside platform, but see below.) That loop would converge into the standard dual track Metro system at the first traditional Metro stop outside LAX, and there would also be a single track that closes the loop within LAX. Terminals 5 and 6 would probably share one pair of platforms, and Terminals 7 and 8 would probably share another pair. (It may be possible for other terminals to share stations.)

OK, that's the track, and those are the platforms and stations. Now how do the trains run? First of all, all trains are Metro trains. There is no separate LAX-only equipment. With the exception of some extra luggage racks across the entire line, train equipment, power systems, signaling, automation, maintenance -- everything is the same. That saves a lot of money both in initial acquisition and in ongoing operational costs, and it also provides tremendous flexibility in equipment dispatching across the entire system.

Then there are two types of trains: airside and landside. The airside trains operate on the closed LAX loop on that single track. The airside trains are inspected, especially before coming into service on airside runs, to make sure nobody left a gun aboard (for example). When they stop, only the airside doors open, and passengers get on and off. (At the Tom Bradley Terminal only egress would be permitted from the airside trains. So there probably would be separate doors and a separate platform, but it would only serve exiting passengers. No passengers would be permitted to board an airside train from the Tom Bradley Terminal.)

The landside trains would typically operate in conventional Metro fashion, running the full line. At each stop within LAX (on the same track), only the landside doors would open for the landside platforms. Passengers could both enter and exit, including to/from the landside platform at the Tom Bradley Terminal.

The plan so far only leaves one gap: landside Terminal 1 to landside Terminal 8 (or vice versa, depending on whether the trains run clockwise or counterclockwise over the single track). There are a couple ways to close that gap. My favorite solution would be to modify the plan slightly, taking those airside trains and partitioning them. For example, if they are 6 car trains, partition them between car 3 and car 4. Make the first 3 cars landside and the last 5 cars airside. (I'm assuming the heaviest flow between terminals is airside rather than landside in this example, but any partition point is fine.) Doors on the left open airside, and doors on the right open landside (or vice versa, as applicable). Thus the trains that travel over the closed LAX loop serve both airside and landside passengers within LAX, and the "long distance" Metro trains open only their landside doors and only stop at each LAX station in one direction along the loop. Every train uses the same track (except for the track segment that closes the LAX loop), all train equipment is the same (albeit securely partitioned and with luggage racks) -- the whole system is integrated, cohesive, and just plain (or plane) super.

About that funding. Will that be a problem? In a word, no. There's nothing in the FAA's grant rules that forbids this sort of approach. Indeed, the FAA would likely warmly receive this sort of funding application. Airport-related funds can be directed to the whole LAX portion of the project including the single track that closes the loop and including the required number of trains for operating the LAX loop. The MTA then gets their LAX Metro stations and track basically free and only needs to pay for incremental costs, and there won't be many of those. If a hypothetical LAX-only monorail project is cheaper -- probably not -- then the FAA might want to see those numbers and only fund to that level. Maybe the MTA isn't used to working with its funding sources this way -- and with new funding sources like the FAA -- but I don't see any particular impediment. Nothing in the FAA's rules says you can't have the same train equipment and track at your airport as your Metro has. Fortunately also the U.S. Secretary of Transportation can intervene to help the MTA navigate the funding process across DoT agencies.

What about Metro ticketing? No problem. These are Metro stations, remember. You can have any fare system you want. For the airside loop there'd be no fares. For the landside loop everybody could "pay" a fare, but if you remain within the LAX loop the fare might be free or at least trivial. Pick up a recyclable fare card when you enter and drop it off when you exit.

Even more important than the funding advantages -- yes, advantages, including especially for taxpayers -- is the fact that the passenger experience with one, integrated system will be far better than two separate systems. Passengers won't have to cope with moving luggage any more than they have to. Every passenger would benefit.

Duncan Black is absolutely correct. Please, MTA, make it one integrated system: same track, same trains.

Thoughts on Mobile Phone Service in Singapore (Hint: Prepaid)

Singapore's mobile phone service market is fairly competitive and consists of 3 major carriers (Singtel, StarHub, and M1) plus a couple niche carriers such as Grid Communications. Prepaid mobile service is particularly competitive, and that's something to keep in mind if you want to get service here. Unless you're an extremely heavy user, and maybe not even then, postpaid (contract) mobile phone service is unlikely to ever make financial sense.

Among the prepaid services there have been some recent changes: one for the better, and one not. Let's start with the bad news. If you are a light mobile phone user then prepaid service seems to be getting a bit more expensive. That's because the carriers are finding ways to make it slightly harder to keep your balance active for the traditional 180 day maximum. StarHub, for example, appears to have increased the minimum top up amount to S$18 if you want that top up value to be valid for 180 days, and then only if you buy a physical top up card. If you go online to top up your account then you have to pay S$20 (which adds S$23 in value) to extend the validity of your balance another 180 days.

That's the bad news. The good news is that you can pay as little as S$23 for 50 days (or maybe 49 days due to recharge rounding effects) of basic service. That basic service includes free incoming calls and text messages, 120 minutes of outgoing local calls, 500 outgoing local text messages, and S$12 added to your credit balance for that same period to spend on other services (such as international SMSes). And that's exactly what I do. That comes out to about 47 Singaporean cents per day for reasonable mobile phone service. StarHub offers substantially the same deal for S$2 more.

M1 sells SIM cards for S$5 if you shop around. (They also sell them for S$15. For purposes of the 50 day plan, just buy the S$5 card.) Mini- (standard) and Micro-SIM sizes are readily available, though at this writing the Nano-SIM size is hard to find in a prepaid SIM. That's OK, though, because you can find shops that'll cut the SIM down to proper size for you.

Another tip: if you go with StarHub, and especially if you live in Singapore, do not buy the "Tourist Prepaid" SIM card. That card is a decent offer if you're only going to stay in Singapore less than 90 days. However, the problem is that you can never extend the credit balance on that SIM more than 90 days, unlike StarHub's normal prepaid SIM cards which allow 180 day credit balances. Yes, Singapore's mobile carriers are "clever." Too clever.

In my view Singapore's IDA, the regulatory agency that's supposed to keep an eye on the mobile carriers, is much too passive. Carriers need to be much clearer and simpler in their communications with consumers, and they must provide accurate (and easily understandable) disclosures. They're not doing that, and that's causing consumer confusion. IDA ought to do a better job. While they're at it, IDA should insist on number portability across postpaid and prepaid services, in both directions. IDA's job is not to protect carriers. It's to ensure a well functioning mobile service market that serves consumers' best interests. In these two areas, disclosures and number portability, IDA is not fulfilling its responsibilities in my view.

Plan B: The FDA Must Comply

The U.S. Food and Drug Administration (FDA) is still dragging its heels and, as I write this, has not complied with a court order to make emergency contraception available without prescription and over-the-counter to anybody who wants it without any obstacles except normal payment.

Please excuse my using strong language, but here's the reality. At any age, women and girls seeking emergency contraception have semen already inside them. They have only 24 hours to take emergency contraception to have the best chance of preventing pregnancy. The idea that anyone should impede access to emergency contraception is utterly repugnant. I don't care what age we're talking about. Unless the woman wants to become pregnant, the only choice with sperm already swimming to find her egg is emergency contraception. Nobody sane would want otherwise for her. In fact, a parent aware of the situation who didn't try to help a young daughter avoid pregnancy should be thrown in jail as an unfit parent.

Yet the FDA is still responding to the insane who think somebody should put an obstacle in front of a woman or girl who needs this miracle medicine called Plan B that prevents unintended pregnancy. Plan B is medically proven safer than aspirin. Hundreds of medications are sold over the counter every day without anybody having to show a passport, driver's license, or birth certificate. (Most teenagers don't have those IDs.) Nobody is going to pay the selling price for Plan B to gulp them like Tic Tacs, and even Tic Tacs are more dangerous to human health.

Study after study demonstrates that Plan B doesn't encourage sexual intercourse. Not that that matters, but it doesn't. What Plan B does do is prevent abortions and unwanted babies.

Of course 13 year old girls should never have semen swimming inside them. Frankly if I had a daughter I would be delighted if she wanted to live in a convent until at least age 28. However, any girl of any age should be able to get Plan B with zero obstacles because semen swimming to find her egg is an emergency that requires no court, no consent, no debate, no bullshit. After that there may also be some idiot/criminal male thrown in prison or a gift box of condoms, but regardless of whether that happens no girl should get pregnant because some other idiot unduly influencing the FDA thinks she should show a passport in a CVS or Walgreens.

I'd go further, in fact. Plan B should be available everywhere. If Chuck E. Cheese's wants to sell Plan B, great, let them. Plan B should be available in restroom vending machines everywhere, too, including in schools. First aid kits should include Plan B as a standard item, and wherever condoms are sold Plan B should be sold as well.

GUBI Part 3: Can America Afford It?

Building on Part 2 of my ideas for America's Guaranteed Universal Basic Income, one popular question would undoubtedly be, "How could America possibly afford GUBI, at least as you describe it?"

Quite easily, actually. America is a wealthy country, and GUBI would make America wealthier and happier.

First keep in mind that government at all levels spends an enormous amount of money on programs and tax breaks that would be entirely or mostly eliminated with GUBI. I mentioned several previously, but there are others: Medicare and Medicaid (replaced with universal $10/visit and $10/drug basic healthcare at public and some contracted facilities), student loans ($5000/year public universities and technical colleges would replace those), Pell Grants, farm subsidies and price supports, trade adjustment benefits, Railroad Retirement benefits, and school lunch programs, among others. The government twists itself it knots trying to "target" assistance so much that the end result is an expensive mess that grifters and rentiers exploit. Social Security is America's most popular, most effective, and comparatively simplest program, and it should be enhanced and expanded with GUBI, particularly now in these distressing economic conditions. GUBI would also help many more Americans take entrepreneurial risks, leaving jobs they hate (or that left them), retraining, relocating (even overseas), and so on.

But let's take a look at the basic numbers. The annual GDP for the U.S. is about $16 trillion. Ignoring GUBI's GDP-boosting benefits -- and that's a big omission! -- let's assume 300 million Americans receiving an average of $11,500 in GUBI. (Both numbers are probably too large due to children, noncitizens, idle rich with no W-2s to qualify, and overseas/expatriating Americans, but this is a basic calculation.) That's $3.45 trillion, and that's about 21.6% of GDP. Let's round up to 22%. That's a big hunk of GDP, sure. However, current total government spending at all levels in the U.S. is about 37%, so GUBI would leave about 15% of GDP for public education, healthcare, military, public transportation, and other remaining government functions. That's enough, actually, particularly with the GUBI-associated healthcare changes I've included which would dramatically improve the cost efficiency of healthcare. And much of the military's budget is payroll which would drop quite a lot since servicemen/women would receive GUBI just like everyone else, and therefore the market-clearing price for volunteer soldiers should also fall. ("It depends," but that's a likely result. The military budget is far too large anyway.) The same is true for public education and healthcare which are labor-intensive, although the impacts should be modeled to quantify them. Crime- and prison-related expenses would also likely fall significantly with the elimination of poverty and the expansion of higher educational opportunities, and the victims of remaining crime would get more help.

On the revenue side, it works. The income threshold for the 50% marginal tax rate could be set low enough to fund at least GUBI, but that math works, particularly given the big drops in household medical and higher education outlays. A simple corporate income tax with loopholes eliminated, the estate tax, and a carbon tax would likely take care of the rest. Transition costs would likely be funded with debt (at record low bond interest rates).

In short, GUBI is very doable within generally accepted ideas of government and its role (and size) within the overall economy.