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The company I work for is taking taxes out of my paycheck but has not asked me to complete any signNowwork or fill out any forms since day one. How are they paying taxes without my SSN?WHOA! You may have a BIG problem. When you started, are you certain you did not fill in a W-4 form? Are you certain that your employer doesn’t have your SS#? If that’s the case, I would be alarmed. Do you have paycheck stubs showing how they calculated your withholding? ( BTW you are entitled to those under the law, and if you are not receiving them, I would demand them….)If your employer is just giving you random checks with no calculation of your wages and withholdings, you have a rogue employer. They probably aren’t payin in what they purport to withhold from you.
Twenty one political parties that are opposing the BJP at the centre plan to sign a letter, saying once election results are out, they will be ready to show the President their letters of support for an alternative government. How does this work?It smells as a blank fire, let them, either they have guessed the mode of people and people won't go to protest to the President for it( 21 parties petitions) nor the President may do it legally with hearing only the oppositions, also newly elected as won party will not be the targeted all the Aligations may be viewed against the conductor ( E.C) only so this is no where in the constitution that THE PRESIDENT OF INDIA MAY DISMISS A WINNING PARTY ONLY ON SUCH REPRESENTATION , BECAUSE AT LEAST THE PARTY SHOULD BE ALLOWED TO RULE FIRST THEN WITH ANY ANTI ACTION OR DECISION TAKEN AGAINST COUNTRY INTEREST BY THE ACCUSED RING PARTY AND HE MAY IMPOSE PRESIDENT RULE IN THE COUNTRY WITH THE HELP OF AN ACTING MINISTERIAL BATCH AND THIS NOT FROM THE OPPOSITIONS BE CAUSE OPPOSITION MAY NOT BRING THAT THEY CLAIM THE WINNING PARTY TO DISMISS AND LET THE OPPOSITION TO RULE AS ACTING RULERS! THE PRESIDENT RULE IS OTHR THAN THE MARTIAL RULE INVOLVEMENT OF THE MILITARY IS NOT POSSIBLE THERE ,SO BLANK FIRE BLUFF TO DIVERT PEOPLE'S MIND FOR GAINING REST VOTES— AS PREJUDICE A NEW ROGUE POLICY, NOTHING ELSE! THEY KNOW THE PEOPLE ILLITERATE AND THEY ARE THE WISE MEN! AND WAITE FOR THEIR OTHER ARROW NEXT AFTER 12/5/2019, AND AFTER 19/5/2019 THOSE FOXES WILL SHUT THEIR MOUTH AND WILL LOUGH AT SELF MADNESS!Behappy!
Do you think the Malaysian economy is heading to the right direction under this new government (PH)?I adopted a bottom-up approach to avoid bias. Individual PH promises and policies are first evaluated on the basis of right policy direction (score from -5 to +5), estimated economic impact, and political difficulty in implementation.The results are shown in the matrix below.Next I looked at key economic data to cross check against previous findings.Analysis from both approaches clearly show that Malaysian economy is heading for the better.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PH Election ManifestoDuring the election campaign PH published 10 key promises to be delivered in first 100 days (!). They are shown on the right-hand side of the image below. For comparison purpose I have included BN (the former government) manifesto on the left-hand side. Let’s only review PH promises (right-hand side) that have major economic implication, i.e. #1, 2, 5, 7 and 10.*** As a side note, while imperfect, PH promises are at least measurable. I wonder how could BN promises be measured. What is the measure for rakyat’s (people’s) economy, education for the future, healthy living, or more “smiles”?Besides, which economy isn't about the people (unless it’s a kleptocratic economy)? What type of education isn’t about the future? ***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Election Manifesto Promise #1: Abolish GST (Goods and Service Tax) and take steps to reduce cost of living~~Right Economic Direction: -2 (from -5 to 5) ~~~~Potential 5-Year Economic Cost: about RM105b~~~~ Political Difficulty: Low ~~GST was zeroized in Jun 2018. It was replaced by SST in Sep 2018. The biggest problem is in fulfilling the promise, PH government has create a big hole in the government finance. The expected annual revenue loss to the government was RM 21 billion, or about 6-7% of 2019 government budget of RM 314.6 billion.5-year Economic Cost = 5*RM21b = RM105bBesides most economists also believe that GST is a more efficient form of taxation. It would have been better if PH government has simply lowered GST to say 3%.However political consideration means there is no room for PH to backtrack from its No 1 promise.But the benefit is a one-off lowering of inflation rate. The Consumer Price Index of last 6 months of 2018 is 0.9%, 0.2%, 0.3%, 0.6%, 0.2%, 0.2%. Annual inflation of 2018 is just 1% versus 3.8% in 2017. Subdued inflation has boosted consumer confidence and spending. It isn’t a surprise that consumer sector stocks have done well after the general election.To lower cost of living in the long run, however, the government needs to encourage more competition (those who clamor for price control is wrong). So far the signs are encouraging. For instance, in the telecommunication and energy markets, the respective ministers are breaking up the broadband monopoly, and on the way to liberalize the energy generation and distribution market.The reduced cost of living is a plus, but at a huge fiscal cost to the nation.Note: I find it interesting that Tan Kin Lian, the former CEO of Singapore NTUC Income, and former presidential election candidate, also advocates for Singapore to abolish GST giving reasons that it is regressive and costly to administer. Refer footnote.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Election Manifesto Promise #2: Stabilize the price of petrol and introduce targeted petrol subsidies~~ Right Economic Direction: 2 (from -5 to 5) ~~~~ Potential 5-Year Economic Cost: about RM12b~~~~ Political Difficulty: Low ~~The government has spent over RM3 billion on fuel subsidy from May-Sep 2018. It intends to finetune the subsidy by targeting bottom 40% (B40) household starting 2019Q2, at an expected annual cost of RM2b.5-year economic cost = RM3b + 4.5 years * RM2b = RM12bMany economists are against fuel subsidy on the ground that it benefits affluent citizens disproportionately (think of fuel guzzling SUV’s). The plan for a targeted subsidy will address this concern. It also helps to reduce fuel smuggling and stop subsidizing foreign car owners.Given the link between fuel price and inflation, fuel subsidy will help to lower cost of living. The economic cost of fuel subsidy should be limited since Malaysia is a net energy exporter.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Election Manifesto Promise #5: Equalize and increase minimum wage nationally~~ Right Economic Direction: 2 (from -5 to 5) ~~~~ Potential 5-Year Economic Cost: about RM20b~~~~ Political Difficulty: Medium ~~PH promises to raise the minimum wage from current RM1,000 to RM1,500 per month nationwide in the first term of the PH Government. So far it has only raised the level to RM1,050.While disappointing to some PH supporters, the cautious approach is right. A drastic increase in minimum wage could damage many small businesses, curtail hiring and cause unemployment. Large wage increase is also inflationary.There are 8.4m Malaysian wage earners. Median monthly income was estimated at RM2,000 by 2016.Let’s assume20% Malaysian wage earners fall under the minimum wage (I don’t have data), andminimum wage trajectory as RM1,050 (2019), RM1,200 (2021), RM1,400 (2023)5-year economic cost = 8.4m * 20% * (RM50*4.5y + RM200*2.5y + RM400*0.5y) * 12month = RM20b (rounded)This has not included the secondary effect of minimum wage hike may also lifts wages for workers earning just above the minimum line. Even if the cost might be partially shouldered by the government, it is still a huge burden to small business.A step by step increase is the right way to go, giving businesses time for adjustment.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Election Manifesto Promise #7: Investigate and reform 1MDB, FELDA, MARA and Tabung Haji~~ Right Economic Direction: 4 (from -5 to 5) ~~~~ Economic Cost Already Incurred: about RM50b~~~~ Political Difficulty: Low ~~To recap:1MDB: Maximum loss about RM 30b. So far Najib, Jho Low and father, a few former 1MDB management and Goldman Sachs bankers have been charged. Tun Razak Exchange project, with RM 3b of development fund siphoned off, has just been resumed after “de-toxification” .FELDA: Together with its listed entity FGV, turned a combined cash pile of over RM 10b to net debt, incurring heavy loss, after some very questionable acquisition. Former chairman has been charged. Civil lawsuit against 14 former directors and senior management.MARA: This is peanut. Companies associated with former chairman were said to have flipped an Aussie property bought $24m (Australian dollar) to MARA at $42m. No charge so far.Tabung Haji (TH): Bogus deals to create profit illusion. With 80 cent asset for every 1 ringgit liability, it’s technically insolvent. A SPV (function like a bad bank) was created to raise cash and buy TH underperforming asset in return for guaranteed payments. The list does not stop here, e.g. Scorpene submarine purchase and Sarawak Solar Power project.I shall just assume a ballpark figure of RM50b of corruption amount involved in all these ongoing investigation and prosecution, and ignore the effect of mega projects created to bailout 1MDB.Some have questioned why wrongdoers are not in jail yet. For example, Najib has just managed to delay his trial. However, proper trials in accordance with rule to law is essential. Any conviction must be fair and seen to be fair by the public. This is necessary to restore the reputation of judiciary system and win investor confidence.The effort in recovering lost money, including prosecution of Goldman Sachs, also deserves high mark. Refer John Chin's answer to Should Goldman Sachs settle with Malaysia for $7.5 Billion over the 1MBD fraud scandal?Although there is much more to be done on the reform side, the current prosecution effort shall leave a mark in future Malaysia politics, supported by the regularity of corruption report lodged against both past and current politicians.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Election Manifesto Promise #10: Review all mega projects awarded to foreign countries~~ Right Economic Direction: 4 (from -5 to 5) ~~~~ Potential Economic Saving: about RM60b~~~~ Political Difficulty: Medium ~~The total cost of all mega projects runs into at least RM 300b (just by adding a selective list of projects below). It is a huge drain on government finance. And some projects have questionable economies.Applying a conservative estimate of 20% saving from rationalization and future open tenders, potential saving is RM300b * 20% = RM60b.PH government has more success in rationalizing mega projects with domestic contractors. Projects too late to stop get the go-ahead after cost reduction, for example:Pan-Borneo Highway – 4% reduction from original price tag of RM16.5b.MRT2 – 22% cost reduction from RM39b to RM30b.LRT3 - 47% cost reduction from RM32b to RM17bProjects yet to start are cancelled or postponed:MRT3 (circle line) – though it makes sense, the burden at RM35-45b is too large for now.High Speed Rail — Costing RM100b by latest estimate, the collaboration with Singapore is still at design stage. It has been postponed for 2 years after reimbursing Singapore for RM45m.Failure to proceed beyond May 2020 will see Malaysia paying full compensation (estimated at less than RM1 b)The challenge is with projects involving China, where status is still unclear due to sensitivity and complexity of negotiation:MPP and TSGP pipelines – At RM9.4b, 88% has been drawn down but only 13% of work has been completed.East Coast Rail Link (ECRL) – Costing at least RM81b, it is an even bigger white elephant. RM20b has been paid with 13% completion. So far the PH government has done well in rationalizing these mega projects. All well except for China related projects, which Malaysia government is not in good control (which is the reason for assigning “medium” political difficulty).~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Third National Car~~ Right Economic Direction: -4 (from -5 to 5) ~~~~ Potential 5-Year Cost to the People: about RM30b~~~~ Political Difficulty: Low ~~The most senseless initiative. I can understand Mahathir’s rationale to use automotive industry to further industrialize Malaysia. Through its deep supply chain, the sector can create many jobs, specialization and niches.But after the 3-decade of disastrous experience of Proton, started by Mahathir, protected through tariff wall and supported by captive Malaysian buyers, I would have expected few are keen to give it another try. But interestingly a survey showed mixed opinion among Malaysians.But I still think Najib was right to sell 49% of Proton to Geely. Proton has costed a fortune, money which could have been spent more productively.What’s more since 80’s global competition has only become more intense. Car making is a volume business (with notable exception like Ferrari, which is really in luxury goods sector). Top companies like Toyota and Volkswagen wield large economy of scale. Each produces more than 10m vehicles annually. In comparison, even a 100% captive Malaysia market can only absorb half a million annually.Some people argue for an ASEAN car. But Proton experience should have taught us that it’s hard to crack the export market. Some other people argue for an electric car. But what is the chance of a Malaysian start-up competing against Tesla and BYD, not to mention traditional car companies and tech firms like Google are entering the market?According to one estimate, Proton costed Malaysian RM360b since 1985. The rate is RM360/30 years = RM12b per year. Let’s say third national car is rolled out in the second half of this government term, costing at similar rate, the cost is 2.5y * RM12b = RM30b, not counting government grant.A third national car is likely to be another rent seeking enterprise – a Malaysia badge that masks the underlying licensed and outdated foreign technology. It is better to entice foreign electric car companies to invest in Malaysia. Learn from Malaysia high tech electronics industry, which by servicing multi-nationals, over the time has produced great companies dominating certain niches, such as Vitrox in automated vision inspection system.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Internet Connectivity~~ Right Economic Direction: 5 (from -5 to 5) ~~~~ Potential 5-Year Economic Saving to the People: about RM10b~~~~ Political Difficulty: Medium ~~Mahathir set up Multimedia Super Corridor (MSC) in 1996. More than two decades later, instead of Internet highway, Malaysia still finds itself on the slow country road controlled by the incumbent ISP, TM, the former telecommunication monopoly. Malaysia lags behind many countries in terms of broadband speed, price and penetration.The new Communications Minister Gobind Singh is now forcing incumbent ISP’s to “double the speed, half the price”. This catchy slogan, ironically, is actually the unfulfilled promise by Najib in 2016.Gobind has introduced competition. He has targeted 98% coverage in inhabited areas by 2023 with minimum 30 Mbps. In the trial in Melaka several ISP’s provide broadband services through the network of TNB, an energy utility.TM has been forced to introduce cheaper and better packages. The impact to TM bottom line is substantial such that TM share price has been more than halved. It even prompted an online petition signed by almost 30,000 asking Mahathir to remove Gobind, citing TM share price as proof of his bias! I view the petition as proof that finally something right is happening.To estimate the saving, note that Malaysia has 2.7m fixed broadband subscribers (2.3m served by TM). Assume each subscriber saves RM60 a month.5-year economic saving = 2.7m * 60 months * RM60 = RM10bThis is actually a conservative estimate as I do not include the spillover effect. Like road, electricity and phone connection, Internet connectivity has now become a necessity for commerce. Robust and low-priced connectivity is essential for Malaysia to develop the digital economy. I give full mark for this PH government initiative.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Electricity Utility~~ Right Economic Direction: 3 (from -5 to 5) ~~~~ 5-Year Economic Saving to the People: several billions~~~~ Political Difficulty: Medium ~~In Malaysia electricity distribution and transmission are monopolized by TNB, but there are many independent power producers (IPP) which TNB is “obliged” to buy power from. Most of these IPP deals are awarded through direct negotiation, making it a lucrative business for rent seekers.Perhaps that explains why there is an excessive (power generation) reserve margin at 32%. Trying to optimize reserve margin, the new Minister Yeo Bee Yin has recently cancelled 4 IPP projects, potentially saving RM1.3b in electricity tariffs.In keeping the imbalance cost pass-through (ICPT) mechanism set up by previous BN government, which is sensible in my view, the new government has also reassured the market of fair treatment. This will help lower future funding cost for TNB and benefit consumers eventually.At the same time Yeo’s ministry is looking into more competition in the electricity distribution. She seems supportive of net metering by commercial-industrial users (usually through rooftop solar). It is also reassuring that the pursuit of 20% renewable energy target by 2025 will not be at the expense of increased cost.In calculating the potential saving, I note that TNB 2017 revenue is RM47b, mostly derived from domestic market. Just a 1% saving is about Rm500m a year.Adding the aforementioned quick win of potential RM1.3b saving by scrapping 4 IPP projects, I expect at least several billions in saving in the government 5-year term.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Palm Oil~~ Right Economic Direction: 2 (from -5 to 5) ~~~~ Potential Economic Impact: several billions~~~~ Political Difficulty: Medium ~~In 2018 palm oil accounted for just 3.9% of Malaysia export (RM39b out of RM998b). GDP contribution is also below 4%.Palm oil export contribution has been in decline, from 5.6% in 2014 to 3.9% in 2018. The main reason is declining commodity price, which is perhaps due to worldwide over-production. Although the export value is small, the industry supports many small plantation farmers including FELDA settlers.The industry has suffered a bad reputation of deforestation (especially in Borneo) and labor abuses. European Union, the second largest export market after India, plans to phase out palm oil from transport fuel by 2021.*** Side Note: The counter argument from palm oil industry is it’s the most efficient oil crop at 3.8 tons per hectare, rapseed (0.8), sunflower (0.7) and soy (0.5). Palm oil uses 7% of land to produce 39% of oilseeds output. ***PH government, through Ministry of Prime Industries, has taken the following measures:To mandate Malaysian Sustainable Palm Oil certification by 2019To stop expansion of oil palm plantation (though it was said that Sarawak, which PH is not in control, is not supportive)To mandate B10 biodiesel program, which is expected to consumer ~0.8 million ton annually (though this is merely 4% of annual output at ~20m ton)Inviting China investors to set up processing plants in MalaysiaCut export tax to zero and reviewing export duty structureThe Minister Teresa Kok cannot be faulted for not trying. However my view is being a commodity, palm oil price is beyond the control of Malaysia government. There is a limit of how much the government could do.My view is for small producers, who in total make up 40% of Malaysia production, the industry is in decline. Indonesia is already the top producers (60% global output versus to 35% from Malaysia). Other low-cost developing countries are expanding production.In the long term, production should be consolidated. The government should manage the decline and help small producers to switch out from the industry.I use two methods to do a ballpark estimate of potential economic impact:1% improvement 2018 export value = 1% * RM39b * 5 years = about RM2b10% improvement in wages of 0.5 million plantation workers, assumed at present minimum wage of RM1,000 a month = 10% * 0.5m * RM1,000 * 60 months = about RM3bAgain, the potential economic impact is about several billionsThere is moderate political difficulty considering the environmental group opposition in EU and potential non-cooperation from Sarawak state government. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~International Trade~~ Right Economic Direction: -1 (from -5 to 5) ~~~~ Potential 5-Year Economic Gain: RM5b ~~~~ Political Difficulty: Medium ~~Like other economies open to external trade, Malaysia needs to mitigate the risk of slowing global trade as a result of US-China trade conflict and rising protectionism. Everyone loses out in a global trade war. However Malaysia may be in a better position. A recent analysis by Nomura finds that Malaysia will benefit the most from any import substitution by US and China companies.In 2018 Malaysia total export is RM998b, import RM878b, total trade RM1,876b, trade surplus RM120b. Export has grown at CAGR of at least 10% a year over the past decade.The positive impact of better and more trade is hard to measure. A rough guesstimate of total economic impact in 5 years= 5yr * RM1,876b in total annual trade * 5% increase in trade * 1% gain from trade= RM5bCurrently Malaysia is negotiating 5 trade agreements. CPTPP, the successor to TPP after US has pulled out, attracts the most attention. 7 out of the 11 remaining countries have already ratified CPTPP. But Malaysia has not. In the interview with SCMP, Minister Darell Leiking vowed not to be pressured into ratification.There is concern that CPTPP might restrict Malaysia government policy of preferential treatment towards Bumiputra , although the former Najib government is said to have won a carve out. Given the experience of anti-ICERD movement, I would not be surprised if this is the main concern for Mahathir. Although Najib government has agreed to current CPTPP deal, any ratification by PH might still provide UMNO-PAS opposition another opportunity to exploit as racial issue, playing to the fear of Malay voters that their privilege is under threat.A detailed study mentioned by Darell is of course necessary. However a timeline should be provided. I also wish PH government could explore imaginative solution such as cross-party support by from Najib and other UMNO MPs. After all they have started and put in place current CPTPP deal.Failing to see that, this area only deserves a passing score of 3 – nothing negative, but nothing positive either.The excessive caution expressed so far indicates PH government is slightly worse than fomer BN government (which I assume is ready to go ahead with CPTPP trade deal it has negotiated)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Government Debt & Liability Management~~ Right Economic Direction: 5 (from -5 to 5) ~~~~ Potential 5-Year Saving: order of RM100b~~~~ Political Difficulty: High ~~After taking over the government, PH highlighted that the national debt & liability exceeded RM1 trillion. Alarming? Scaremongering? Excuses? Let’s find out.As of Jun 2018, Malaysia government debt stood at RM725b. But a better measure favored by economists is debt to GDP, which provides indication of ability to pay down the debt. On that measure Malaysia public debt is at 50.7% GDP.This is somewhat high compared to neighboring developing countries (Thailand 42%, Indonesia 29%, Philippines 42%. However it is about the average among Emerging Asian countries.Malaysia government will not face immediate debt payment crisis too, for97.1% of government debt consists of domestically issued Ringgit debt, thereby shielding the government from currency risk56.3% of debt is only due 10 years or laterRather the risk is hidden and lie in the future. The former government has been using off-budget initiatives to get around its self-imposed public debt limit at 55% GDP (though politicians in other countries play such trick). The full picture is shown below:As of end 2017, the government guarantees and liabilities were close to 30% GDP! The total debt & liabilities is at 80.3%!Since coming to power, through review and rationalization of large infrastructure projects, the PH government has brought the debt and liabilities down to 74.5% by Jun 2018. This risk mitigation exercise has often been overlooked by critics.However, despite the heavy debt burden, 2019 budget is not an austerity budget as originally feared. Government spending has been maintained, at a price of fiscal deficit of 3.7% GDP in 2018 and 3.4% in 2019.To reassure rating agency on Malaysia commitment and in providing greater transparency, Finance Minister Lim Guan Eng has committed to shift to accrual accounting standards by 2021, providing more transparency on government finance.It will take time to lower the debt. Reigning in spending is highly unpopular in politics, given many businesses and ordinary citizens have the habit of expecting largess from the government.However, the potential saving is high. Refer to above figure, government guarantee and liability have reduced by 5.8% GDP (=80.3% - 74.5%) from end 2017 to Jun 2018, or about RM83b! With additional saving in future years from better debt management, the total saving can easily signNow the order of RM100bI shall give a full score for the prudent measures to manage the national finance.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Government Revenue~~ Right Economic Direction: 3 (from -5 to 5) ~~~~ Potential 5-Year Revenue Gain: about RM12b~~~~ Political Difficulty: High ~~First let’s look at tax revenue (except GST & SST which have been covered before). According to 2019 Budget :Personal and corporate tax rate remain virtually unchanged; corporate rate for first RM500k reduced from 18% to 17% –a minor benefit for small businessesThe much speculated capital gain tax for shares and inheritance tax are not introduced, although not ruled out in the future – I believe such taxes will be counterproductive, causing capital to flee to regional financial centers like Hong Kong or Singapore. Estate tax has been abolished in HK (in 2005) and in Singapore (in 2008) in their competition to become wealth management centers for the region.Soda tax introduced – Besides the revenue, it will be good for general public health, and perhaps helping to reduce public health spending in a very small way. Although removing sugar subsidy works even better, I think it is politically infeasible right now.New airport levy for international departure – At RM20 ASEAN, and RM40 outside, I don’t think it will deter foreign tourist arrival. With about 50m international passenger movement a year, the expected revenue is just a few hundred million. But it will pay towards airport capacity expansion.Real property gain tax in sixth year onwards increased from 0% to 5%; higher for non-residents -- It’s probably unfair for long term house owners who is tax for inflation effect. But I can’t see economic harm like hurting housing sales10% casino duty hike to 20% for VIP and 35% for mass segment respectively – The quantum of hike caught market by surprise. While bad for Genting Malaysia shares, it probably contributed extra RM1b to government. (As comparison, casino tax is 5%-15% in Singapore, 38%-39% in Macau)Not much surprise is actually good news, such that business and middle-class consumers confidence is not affected.2019 budget sees the national oil company Petronas coming to rescue again. Petronas will pay a special dividend of RM30b to the government to fill the fiscal hole created by abolishing GST and various past scandals including 1MDB. The good thing is the consensus among financial analyst is Petronas could absorb this one-off dividend.A long-standing concern is petrol revenue is unstable, besides oil industry seems to be in secular decline and Malaysia oil & gas will deplete eventually. Petroleum related revenue contribution has fluctuated greatly between 14.6% (in 2016 when oil price crashed) and 41.3% (during 2009 commodity boom), and now at 30.9%.In the long run, Malaysia government should set up a professionally managed, independently run petroleum revenue stabilization fund like Norway. It could provide countercyclical support to government finance at time of stress. However, this remains a pipedream until the day when Malaysia politics becomes matured. Otherwise even if PH government adheres to the rules, what stop UMNO or PAS from raiding the fund when they come to power?Overall I think PH government deserves good mark in not upsetting businesses with populist tax policy (other than GST), showing some innovation in finding new sources (like soda tax), and pushing for other policies (as covered under other sections) to support the economy.What is the potential extra government revenue from a higher and sustainable economic growth? GDP growth since 2011 fluctuated between 4.2% (2016) and 6.0% (2014), and now at 4.7% (2018). Assuming the right set of economy policies and reform could increase future growth rate by a sustainable 1%:Estimated 5-year gain in government revenue of extra 1% increase= RM236b (2018 revenue) * 1% * 5 years= RM12bOf course, the political challenges in pushing through necessary reforms, as covered under various other headings, will be great.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Government-Linked Companies (GLC) Reform~~ Right Economic Direction: 0 (from -5 to 5) ~~~~ Potential 5-Year Economic Gain: order of RM100b~~~~ Political Difficulty: High ~~Facts:Malaysia ranks fifth in the world among countries with highest State-Owned Enterprises presence among their large firms.GLC employs about 5% of national workforceIt accounts for 36% and 54%, respectively, of the market capitalization of Bursa Malaysia and the benchmark Kuala Lumpur Composite IndexOne estimate put the number of GLC’s at 68,000! At federal level, they are controlled mostly through seven giant Government-Linked Investment Companies (GLIC), namelyMinister of Finance (Incorporated) [MOF (Inc.)]Khazanah Nasional Berhad (Khazanah)Employees Provident Fund (EPF)Lembaga Tabung Haji (LTH)Armed Forces Fund Board (LTAT)Retirement Fund (Incorporated) (KWAP)Permodalan Nasional Berhad (PNB)Many GLC’s were created to facilitate a new class of Bumiputera entrepreneurs – by first promoting GLC, and next divesting to those entrepreneurs. However, the evidence in creating self-reliant and independent Bumiputera entrepreneurs so far has been patchy.Although many GLC’s are professionally run and well managed, their dominance has negative implications to the nation economy:Crowding out private investment – GLC’s enjoy preferential treatment like benefiting from government procurement, state-backed guarantees. Research by Menon and Ng (2017) found evidence that private sectors are reluctant to invest in sectors dominated by GLC.Potential sources for fraud and corruption – One example is Felda Global Ventures (FGV) Holdings which squandered billions in questionable acquisition.Potential political abuses – When meeting Donald Trump in 2017, Najib offered to get Malaysia Airlines, which was supposed to reduce unprofitable routes, to buy Boeing aircrafts to make “America great again”!Cost of government bailout for failed GLC – RM1.5b for Proton in 2016, RM6 for Malaysia Airlines in 2014The potential economic gain from a well-planned, well executed GLC reform, without succumbing to vested interest, will be enormous.The value of listed GLC in Bursa Malaysia is about 36% * RM1,700b (total market capitalization) = about RM600b. It is not inconceivable if non-listed asset held under GLIC is of similar size – which should include investments in private equity, hedge funds, real estate, money market and debt instruments.With a net asset of ~ RM1 trillion (need to net off liability e.g. to EPF holders), a potential gain of say RM100b through disposal and reinvigorating private investment is not unreasonable.What is the current progress of PH government in GLC reform? We know thatFinance Minister Lim Guan Eng has vowed to sell “non-critical, non-strategic” assets to pay down the country debt. He said that government must take a reduced role in the private sector to stop crowding out businesses that would otherwise have strong potential.A notable action was taken in Nov 2019, where Malaysian sovereign wealth fund Khazanah disposed 16% of equity stake in IHH Healthcare to Japan’s Mitsui for RM8.42b (USD2b). Transacted at RM6 per share, the price is viewed as fair by the market.A long list of GLC board and management members appointed by previous government have been replaced. One notable replacement is the much-respected former central bank governor Zeti Akhtar Aziz was appointed as group chairman of PNB, one of the seven giant GLIC. However, the quality of overall replacement has yet to be seen.There is worry that it will be business-as-usual. For example, Prime Minister Mahathir has appointed himself as Chairman of Khazanah to much criticism, for this is a continuation of past practice. Some political appointment to the GLC has also courted controversy.It is not yet clear whether and how the new government is going to push for genuine GLC reform; and how to ensure further divestment of GLC assets in a transparent manner at fair market price instead of enriching cronies as in the past.To dispose the assets in an orderly manner, PH government could consider the experience of HK government, which set up the Tracker Fund to dispose the massive portfolio of shares acquired during market intervention in 1998.However this is also a pipedream as such scheme will come under extreme political opposition it is unclear how it could be compatible with “facilitating a new class of Bumiputera entrepreneurs”. Any attempt, even though it is for a more efficient economy and is for the national good, is just an invitation for UMNO to be back in power.Nonetheless, the GLC management has not turned for the worse under PH, just that there is lack of clarity and determination for reform. Selective, non-strategic asset disposal to pare down national debt is the best that can be hoped for.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~What do economic data, stock market, forecasters, rating agencies tell us?Enough of studying individual policy or initiative. Let’s look from a different angle of economic statisticsFirst a few words on the limitation and uses:Monthly and quarterly data like inflation and GDP growth rate reflect the past but not the future. However, the data does show the effect of PH government policy in the recent months.Longer term data like index on Ease of Doing Business, approved FDI mostly reflect past effort of former BN government. However, policy continuation by the PH government plays a part.Forward looking data based on stock market index, business and consumer survey, rating agency and IMF forecast are by definition uncertain. But they are the consensus judgement by market and economists on Malaysia future economic prospect.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Short term, backward looking data: GDP growth rate, inflation
PH come to power in Q2 2018. Malaysia economy continues to grow steadily in Q3 and Q4 of 2018, despite the headwinds of external environment like the growing US-China trade tension and weak commodity price. As mentioned earlier, there was a one-off decline in inflation during the second half of 2018. As a result, inflation retreated from 3.8% in 2017 to 1.0% in 2018.Although inflation is expected to pick up in 2019, it is expected to remain moderate.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Longer term, backward looking data – Foreign Direct Investment (FDI), Ease of Doing Business, Index of Economic Freedom Latest data from MIDA shows Malaysia recorded RM64b of approved foreign investment in 9-month to 2018, which is more than double of RM54b in full year 2017.Approved manufacturing investment by China also accelerated from RM4b in 2017 to RM16b in 9M2018, refuting theory that China is punishing Malaysia for cancelling Belt & Road Initiative projects like ECRLOf course, FDI is volatile , and credit but be given to past BN government effort in wooing foreign investors. The recovery in FDI does show foreign investors, including China, are comfortable investing in Malaysia under the new PH government. Recently Malaysia advanced nine places to 15th spot among 190 economies worldwide in the World Bank’s Doing Business 2019 Report. The index published by American Heritage Foundation places Malaysia on 22nd among the world 180 economies measured, and 6th among the 43 Asian Pacific countries.I’ve written about it here → John Chin's answer to Is Malaysia a capitalist country?~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Forward looking data – Stock Market, Consumer Confidence Survey, IMF Forecast, Rating Agency Stock market is said to lead the economy by 6-12 months, although it’s also a noisy signal which means it is not always reliable.FTSE Bursa Malaysia KLCI, the index made up of 30 largest companies on Bursa Malaysia, has seen about 10% correction since GE14.Stock price in selective sectors have been depressed due to the new government pro-competition position (telecommunication sector), rationalization of major infrastructure projects (construction sector), and casino tax (gaming sector). But consumer sector has been doing very well.However, comparing against regional stock market indices during the period since GE14, KLCI (purple line below) has outperformed Hong Kong Hang Seng Index (green line) and Singapore STI (pink line), although it has underperformed against Indonesia Jakarta Composite Index (grey line).(Note: Exchange rate effect is not considered, since 2%–4% exchange rate difference on less than 10% stock performance difference translate into a net effect of less than 0.5%. BTW short term Malaysia Ringgit movement is heavily influenced by US interest rate and crude oil price. That’s why I leave exchange rate analysis out)The overall Malaysia stock market correction is actually in line with regional market. They are all responding to the less favorable global conditions.The recent stock market correction does not seem to provide indication of whether PH government is inferior or superior. The survey has shown the change in government has given a strong boost to consumer confidence that has been languishing for the past few years, although the euphoria has since worn out. But confidence is still higher than before GE14. GDP growth – Stable growth between 4% to 5% expected ahead (2018 actual was 4.7%). Expected Malaysia economic growth looks respectable compared with regional peers.Unemployment – Forecast is trending lower to below 3% The latest opinion issued by three major rating agencies:S&P keeps Malaysia's rating at A-, Outlook stable (Jun 2019).Fitch Ratings affirms Malaysia rating at ‘A-’, outlook stable (Aug 2018).Moody’s affirms Malaysia's A3 ratings, maintains stable outlook (Dec 2018).The stable outlook remains unchanged despite forecasted fiscal deficit of 3.7% GDP in 2018 and 3.4% in 2019. The endorsement of rating agency is based on the economic growth potential (debt to GDP ratio will continue to decline as GDP growth outpaces debt growth)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ConclusionNews headlines, social media and one’s political opinion often prevent a person from arriving at sound economic judgement. There are many naysayers, but there have been short of facts and analysis to prove their point.Together with individual policy analysis, the various economic indicators have also painted a picture of resilient economy under the PH government, despite the poor fiscal state inherited from the previous government. Although there are external headwinds, Malaysia economy is expected to perform as well, if not better than neighboring countries.Yes, Malaysia economy is heading to the right direction under this new government (PH).Footnotes Barisan Nasional, Pakatan Harapan, and Parti Sosialis Manifesto Comparison Department of Statistics Malaysia Official Portal Malaysia inflation rate 2010-2022 | Statista #HearMeOut https://www.nst.com.my/news/nati... Half of Malaysians earn below RM2,000 a month Guan Eng: TRX project has been detoxified Turkey Of The Year: Mismanagement at FELDA and FGV The Australian building that made almost $20m for corrupt Malaysians Tabung Haji paid dividends using depositors' savings — report Tabung Haji completes transfer of unperforming equities to SPV Scorpene scandal: Graft investigators reopen case involving Najib and Razak Baginda - Nation | The Star Online MACC: Rosmah, Rizal to face charges related to Sarawak solar power project tomorrow | Malay Mail 4% cut for Pan Borneo Highway Sarawak cost, RM660mil saved - Business News | The Star Online https://www.nst.com.my/news/nati... Final price of LRT3 reduced by 47% to RM16.63b, says Guan Eng - Business News | The Star Online The MRT3 Rail Project Has Been Cancelled Malaysia, Singapore ink agreement to defer high-speed rail project for 2 years; KL to pay S$15m for suspending work MoF reveals RM9.4bil gas pipeline scandal - Business News | The Star Online Jomo: No need for ECRL, just take a flight - Nation | The Star Online RM100b ECRL should be scrapped Third national car? Malaysians unsure about it, survey shows | Malay Mail PROTON, Khazanah, Malaysia Incorporated and Harapan Prime Minister Proton, Khazanah, Malaysia Inc and Mahathir https://www.nst.com.my/news/nati... Budget 2017 Promises Double The Internet Speed For Half The Price https://themalaysianreserve.com/... Petition calls for "unbiased" communications minister | SoyaCincau.com https://www.change.org/p/prime-m... Malaysia - Fixed broadband Internet subscribers Termination of four IPP projects could save RM1.26bil in electricity tariffs, says Minister - Nation | The Star Online Tenaga gets green light to continue with ICPT till year end Cover Story: ‘I am looking at empowering the consumer’ Top 10 Major Export Products, 2018 Palm Oil | 2019 | Data | Chart | Calendar | Forecast | News EU heading for ‘zero palm oil’ in transport by 2021 European Palm Oil Alliance Sustainable palm oil certification mandated in Malaysia Teresa Kok: Govt to stop oil palm expansion, maintain forest cover | Malay Mail https://www.nst.com.my/business/... Malaysia and China ink deal to produce palm oil-based products Malaysia reviewing palm oil export duties NGO calls for halt on logging near Mulu national park Sarawak government needs to resolve issue of oil palm plantation development near Mulu Park — Kok US-Sino trade friction: not all a lose-lose outcome for Asia MITI FTA Malaysia won’t be pressured into CPTPP: trade minister ‘Devastating consequences’ if Malaysia ratifies CPTPP, says group against trade pact http://www.treasury.gov.my/pdf/b... http://www.treasury.gov.my/pdf/b... Malaysia committed to implementing accrual accounting standard Budget 2019: Budget 2019 highlights https://www.nst.com.my/business/... http://www.treasury.gov.my/pdf/b... The fund http://www.ideas.org.my/wp-conte... State-owned enterprises in the global economy: Reason for concern? Taming Malaysia’s GLC ‘monsters’ Political preference crowding out enterprise in Malaysia http://www.bursamalaysia.com/mis... Government not meant to be in business, says Guan Eng | Malay Mail Japan's Mitsui Makes $2 Billion Bet on Asian Hospital Growth Zeti apppointed PNB group chairman, takes over from Wahid - Business News | The Star Online Dr M defends his appointment as new Khazanah chair History of the Fund Monthly Highlights and Statistics in December 2018 Facts and Figures Malaysia Foreign Direct Investment | 2019 | Data | Chart | Calendar http://www.doingbusiness.org/con... 2019 Index of Economic Freedom Malaysian Institute of Economic Research Download entire World Economic Outlook database S&P keeps Malaysia's rating at A-, Outlook stable Fitch affirms Malaysia rating at ‘A-’, outlook stable - Business News | The Star Online Moody's affirms Malaysia's A3 ratings, maintains stable outlook
Without naming his opponent, what are 5 reasons to vote for Donald Trump?Although I’d never vote for Trump, I consider it a high American calling to answer this question to the best of my ability. We’re a democracy of 350 million people, and voters have a responsibility to respect the perspective of their opponents.I can see voting for Trump because he’s the best candidate to shift the country away from a direction I think is bad for me, my family, and my community. His bias on the military part of international affairs - avoid fighting but fight hard and dirty when you absolutely have to - is reasonable. Wars are always dirty; pretending otherwise just makes them more acceptable to the media back home. Also, the government spends too much on NATO; our allies have become complacent under our protection and don’t take responsibility for their own defense.On trade, we've aided and accelerated China’s integration into the world economy, even though it’s had the effect of adding 80 million new manufacturing workers to compete with Americans, at a time when technology was already squeezing manufacturing jobs. The result of that, and to a lesser extent the impact of NAFTA, has been that a few million jobs - jobs with good salaries and benefits, jobs that gave people without a great education a middle class life and pride in their work, have been replaced by service jobs with fewer benefits, lower salaries, and less respect. So yes, from a classical economic perspective, I know that higher trade barriers lower overall gains. But you can’t just use dollars and cents to compare what people lose when they lose respectable jobs against what they gain when they get cheaper goods.I can see overlooking Trump’s sexist, racist comments. They’re deplorable, but he’s a candidate for president, not for becoming my friend - I don’t have to like him. And I don’t see any evidence that he’s actually been sexist or racist in treating his employees; he has a good record, for example, of promoting women. The exception is the Miss Universe pageant, but that’s a reasonable exception: the product in that business is female beauty, so it makes sense that the company owner talks about that. I don’t like it; but before Trump I wasn’t exactly on the rampage against beauty pageants, and it would be hypocritical of me to start attacking them now.I don’t like that he isn’t knowledgeable about policy issues, but he’s a CEO, used to hiring experts to provide their expertise and identifying the crucial decision points, and that’s what he’ll probably do here. I do like that he’s energetic and risk-taking. According to the NYT yesterday he’s started about 60 businesses, that break down into about a third fail, a third go sideways, and a third succeed. That’s not a bad record for an entrepreneur. The wall is a stupid idea, but it’s an effective rhetorical device. Obama thought that aggressive ICE policies would give him right-flank cover to work out a compromise immigration policy. That failed; maybe building a wall will give Trump cover more successfully.I can see voting for him on the Supreme Court appointment thing if I were a social conservative. Even for a moderate, the court’s been 5/4 conservative with some switchovers on key issues, like Roberts on Obamacare. If it goes back to that mix, it’ll be tolerable.Ok, that’s the best I’ve got. Convinced?
How can we earn huge money online?1. Take Online SurveysTaking online surveys is one of the easiest ways to earn extra money. And plenty of companies are looking for consumer feedback to improve their products or develop new ones.Brands hire survey sites to conduct online questionnaires on their behalf, gaining access to precious customer feedback. The sites in turn pay you for participating in their surveys. If you really want to rake in the cash, join several survey sites to maximize access to opportunities. Survey's, Global Test Market and American Consumer Opinion are just a few of the sites that will pay you to share your thoughts.2. Test WebsitesMany businesses pay people to visit their sites and test functionality and user friendliness. Fortunately, getting into website testing is relatively easy. Simply sign up for free on sites like Startup Lift, TryMyUI or UserTesting, which pays a $10 flat rate for each completed test.3. Participate in Mock TrialsYou don’t need to know insider lawyer secrets or have a law degree to make money in the legal sector. Websites such as eJury and OnlineVerdict pay users to participate in mock trials for their clients, who are mainly lawyers.Online juries give lawyers the chance to “pre-try” their cases before presenting them in court. The lawyers gain experience, and you earn a little something for your effort: eJury pays $5 to $10 depending on the length of the case.4. Get Paid to SearchServices such as Microsoft Rewards offer incentives to users who search and browse the web with Microsoft. You can then redeem the points for rewards like movies, games, gift cards and apps.Another site where you can earn points while you search, shop and watch is Swagbucks, which has paid out over $280 million to its members to date.5. Install SoftwareYou need your own website to take advantage of this nontraditional job opportunity. However, installing software is one of the easier ways to use technology to make money.Sites such as PerInstallCash offer money to users in exchange for hosting software on their pages. You get paid when visitors download and install the software from you.6. Become a BetaIn the digital world, feedback is a valuable asset. Before computer products are commercially released, beta testers offer a final round of evaluation, trying out a range of unfinished products before paying customers do.To get in on the beta action, explore sites and services such as Erli Bird, uTest and VMC’s Global Beta Test Network. You can sign up to become a beta tester for free and start making some green.7. Participate in Clinical TrialsMost people have spent money on healthcare, but few of us have had the experience of earning cash off the industry. However, medical clinics, hospitals and universities are regularly in search of people to participate in their studies in exchange for payment.Test subjects must sign release forms accepting the consequences of their trials, so do your homework to find out what you’re getting into. Sites like Home - ClinicalTrials.gov and CenterWatch allow you to search and connect with thousands of clinical studies across the U.S.8. Enter ContestsPerhaps the easiest way to make money fast is to win it. To get started, check out websites like Contestgirl to find out what contests and sweepstakes are available.You can treat entering contests like a job by getting organized and spending hours each day submitting forms; however, it’s important to know that you’re unlikely to be chosen as the winner of a contest that will set you up for life. Additionally, you will have to pay taxes on your winnings, so be sure to take that into account before spending all your “free money.”9. Enter CompetitionsIf you have time and a special skill, consider entering a competition with a cash prize. At worst, you participate, fail and wind up with a good story to tell. If you win, the prizes can be substantial.10. Get Paid to Watch Movie PreviewsYou don’t have to be a film critic to get paid for watching videos. Sites such as Swagbucks ask you to watch specific videos and “like” them. In the process, you earn Swagbucks, which you can redeem for gift cards.11. Install Mobile Apps That Collect Your DataMarket research involves collecting feedback on shopping trends and patterns. Check out apps such as ShopTracker, SavvyConnect and MobileXpression, and score rewards for sharing data on your purchase history and mobile data usage.12. Get Paid to Improve Search ResultsSites like Appen and Lionbridge pay users to help improve search results for their clients by making them more qualitative, relevant and useful. As an online content evaluator, you can earn money just by testing sites and answering questions.13. Rent Out Your BelongingsYou might as well make the possessions you’re not using work for you. Sites such as Loanables enable users to rent almost anything to anyone — and for a good profit.14. Rent Out an Extra RoomIf you have a furnished bedroom in your home that you rarely use, you can make money by renting it out to travelers. Finding people to fill your spare room is easy when you sign up to host on Airbnb or VRBO.If you don’t have extra space in your home, you can still make money by working as a neighborhood co-host with Airbnb. Co-hosts perform concierge-like services for people in their neighborhoods who have homes they want to share but lack the time or confidence to host. For example, co-hosts can screen and approve potential guests and organize other aspects of stays.15. Rent Out Your Studio SpaceCreative spaces can be tough to come by. If you have a guitar lying around and a place to jam, you could be sitting on a gold mine. Check out sites such as Sparkplug, where you can make money by renting out instruments, amps, mics and even rehearsal spaces.16. Rent Out Your Parking SpotParking spaces are prime real estate in big cities like New York or Chicago, and you can earn a good income if you have one to rent. Use Craigslist to list your spot for hundreds of dollars a month.Have a driveway that sits empty? You can rent that out, too.17. Rent Out Your AutomobileIf you hardly use your car or are heading out of town for a period of time, renting out your vehicle is an easy way to make some extra cash. Apps like Turo and Get around connect car owners to renters in their cities. Peer-to-peer car sharing is priced per vehicle on a per-day or per-hour basis.18. Deliver Meals on Two WheelsEven if you don’t have a car, it doesn’t mean you can’t break into food delivery. You can work for apps like Post mates where you’ll pick up and deliver meals, groceries or just about anything you can carry while riding on two wheels. Some companies can even help you rent an electric bike or scooter, which you can also adopt for personal use.19. Rent Out Your BoatDon’t stop at renting out your car or bike. If you have a boat that is sitting idle, there’s an easy way to rent it out and help cover the costs of boat ownership. With the website Sailo, you can conveniently list your boat for rent; as a bonus, the site provides captains.20. Rent Out Your ClothesIf you have a closet full of clothes, put them to work for you. Websites such as RentNotBuy and Loanables allow people to rent clothing by the day or week.21. Sell Your ArtThat hobby you’ve had since childhood might just help improve your financial circumstances. Websites such as ArtFire and ShopHandmade allow you to sell art of all kinds with ease.22. Sell Lesson PlansIf you’re a current or former teacher, you can pay it forward while getting paid yourself. Teachers, especially new ones, are often in the market for lesson plans. You can make their jobs easier by selling yours for a profit.Selling lesson plans online has become a lucrative industry, according to the Associated Press. Websites such as Teachers Pay Teachers provide a market for educators to sell and share their valuable resources.23. Sell Your ClothesOne of the easiest ways to make money while decluttering is by selling your unwanted clothes. Consignment sites such as thredUP enable you to get rid of old clothes and earn cash in the process. The site even provides kits to assist you in cutting down your wardrobe.24. Sell Old BooksIf you’re a devoted bibliophile, selling books can be a solid stream of extra income. You could even hit up your local thrift shop, buy used books for pennies and sell them for a profit.However, these days, you don’t have to leave the house to profit off book selling. Apps like BookScouter and Sell Textbooks For Cash - Sell Used Books make earning money online easy. Simply install the app, scan the book’s ISBN and discover the highest price you can sell it for online.25. Sell Your CDs, DVDs and Video GamesThey might be outdated, but you can still turn a profit selling CDs, DVDs, Blu-rays and old video games. Using an app like Decluttr, you can get a valuation for old media teams, box and ship them to the site for free and get paid by check, PayPal or direct deposit.26. Sell Your FurnitureThere’s nothing revolutionary about selling furniture for money. But with the internet, doing so is easier than ever. Along with selling directly to customers via Craigslist, you can sell furniture through online consignment stores, such as Chairish for vintage furniture or Viyet for pre-owned designer pieces.27. Sell Handmade CraftsWant to profit from your creativity? It’s easier than ever, thanks to sites like Craigslist and Etsy. One of the top sites for handmade crafts, Etsy lets you create a store for fee and stock it for 20 cents per product. Just beware that the site takes a 5 percent cut of anything you sell as a transaction fee in addition to payment processing fees.28. Sell Stock PhotosIf you’ve ever tried to buy stock photos online, then you know they don’t come cheap. Because demand for stock photos, videos and vector graphics remains high, skilled photographers can easily earn a profit. Sign up on stock photo sites like iStock, Shutterstock and Dreamstime to start cashing in.29. Sell Photos From Your PhoneIf friends and relatives praise your skill with an iPhone, you might be able to sell shots right from your photo library. Foap is a free app that enables you to upload photos you take on your smartphone and sell them. You earn 50 percent of the revenue for each photo you sell.30. Sell Virtual PropertyMassively multiplayer online role-playing games like World of Warcraft and Second Life can really eat up a lot of your time. But you can make this time more productive — and even profitable — by getting into virtual real estate.Skilled gamers make money selling virtual property and high-level characters, because these things have real-life value. One of the most notable pioneers in the field, Anshe Chung became a millionaire playing video games by selling property on Second Life.31. Sell Junk MailYou can earn rewards by recycling things in the virtual world, such as your junk mail. The Small Business Knowledge Center is a market research company that evaluates your direct mail and email, rewarding you with prepaid Visa cards once you earn enough points.32. Design and Sell ShirtsDesign By Humans and Teespring all allow users to design T-shirts for free and sell them. The sales processes vary by site.For example, on Teespring you set a sales goal and price for each item. This aspect is crucial because it affects how much the company will pay you per shirt sold. If you signNow your sales goal, the shirts will be printed and distributed, and you will be paid for your work.33. Work as a Virtual AssistantWorking as a virtual assistant is a lot like working as a secretary from your home, and with today’s technology, being a virtual assistant is easier than ever. From novelists to online business owners, a wide range of people are in need of professional assistance.To excel in this side hustle, sharpen your administrative skills, like email response and organization of information. Check out sites such as Zirtual if you want to make some quick cash this year.34. Work as a Virtual BookkeeperBookkeeping can be a potentially lucrative work-from-home business, and it doesn’t require an accounting degree. For a comprehensive guide to starting a career in this field, check out Bookkeeper Business Launch and learn from the site’s founder, CPA Ben Robinson.lechatnoir / Getty Images35. Start Affiliate MarketingAffiliate marketing involves advertising something in exchange for a commission on the sales. To cash in on affiliate marketing, you’ll need your own blog or website on which to promote an advertiser’s product. To promote, you could write a product review and provide a link to the product.Visitors to your site follow the product link to the advertiser’s site, where they can complete the sale. Investigate sites such as ClickBank for opportunities to earn money with affiliate marketing.36. Earn Money Posting on ForumsA key ingredient for creating a successful website is strong engagement with the online community. Online forums provide a conducive space for doing just that. Companies will pay people to post quality content on forums in order to promote increased interaction and web traffic.If you want to get your side job up and running, check out sites like Paid Forum Posting and myLot for paid forum writing opportunities. Posting doesn’t pay a lot, but combining this side income with other revenue streams makes it a viable option. Plus, if you develop your writing skills, perhaps you can turn this side hustle into a career.37. TelecommuteTelecommuters perform typical office jobs but from the comfort of their own homes. And these days, many jobs can be done over the internet.Use sites like FlexJobs to get connected with telecommuting jobs based on your skills and areas of interest.38. TutorIf you have a strong academic background and feel an unfulfilled urge to teach, tutoring could be an excellent pursuit.One of the easiest ways to get into tutoring is to use a website like TutorVista. You must be a postgraduate in your subject to qualify as a tutor. TutorVista offers both part-time and full-time opportunities, and tutors need only commit to four hours of work per day to get started.39. Earn Money WritingFreelance writing is an ideal job for many, as it can be done from nearly anywhere. All you need is a laptop and internet access.Sites like WritersDomain provide freelancers with article topics, word counts and other requirements, as well as the prices being offered. All you have to do is submit writing samples and pass a grammar test to start accepting jobs.40. Start Micro FreelancingThe boom in America’s gig economy has resulted in a similar increase in micro freelancing. Like the name suggests, micro freelancing involves performing tasks with comparably low pay; for example, the micro freelance site Damongo offers jobs that pay between $5 and $50. But when combined with other side jobs and alternate forms of income, micro freelancing can be lucrative.There are multiple micro freelance sites to choose from, including Microworkers.41. Work as a TranslatorIn our increasingly globalized world, translation and interpretation are some of the fastest-growing industries you can invest in. If you are bilingual, you stand to profit from this development.The demand for translating documents, as well as audio, video and other media, is greater than ever. Fortunately, many websites have sprung up to meet this demand. You can use sites like TRADUguide to find freelance translating jobs and even register with an agency.BONNINSTUDIO / Getty Images42. Become a TranscriptionistTranscribing audio and video content can be tedious work requiring a detail-oriented mind. However, if you possess strong grammar skills and spelling, you can earn a solid income with this side gig.KatarzynaBialasiewicz / Getty Images43. Get Paid for Giving AdviceIf you love giving your two cents, consider putting your hobby to good use and getting paid to provide advice. Sites like JustAnswer pay expert users to answer questions online after askers approve the responses. In fact, JustAnswer claims that its top experts earn thousands of dollars each month.Frederick M. Brown / Getty Images45. Apply to Be on a Game ShowOnly certain types of people apply to be on a game show. And the chances of getting selected are higher than you might think. If you’re good at trivia, apply to be on “Jeopardy!” Those who excel at educated guessing might do better on “The Price Is Right” or “Family Feud.”46. Coach Other ContestantsOnce you’ve made money as a contestant on a game show, take the next step and coach others to follow in your footsteps. Mark Richards, who has appeared on at least six different game shows including “To Tell the Truth,” “Wheel of Fortune” and “The Dating Game,” trained students on how to get on game shows in exchange for 20 percent of their winnings.48. Mow LawnsMany people are fond of keeping their outdoor foliage trimmed and orderly. And while knocking on doors with your lawnmower in tow might feel juvenile, the money makes any initial embarrassment well worth it.To get started, research the amount local landscaping companies charge to ensure you’re offering a fair rate. While you’ll never be able to manicure a lawn as quickly as a team of workers, you can do it for less, which many customers will appreciate.If you don’t want to find your own clients, consider signing up as a vendor with GreenPal, a service that connects homeowners with local landscapers.49. Be a Mystery ShopperCustomer reviews are often the deciding factor for consumers in choosing whether to make a purchase. In fact, according to a 2017 BrightLocal survey, 85 percent of consumers said they trusted online reviews as much as personal recommendations.It’s no surprise then that . Companies hire these shoppers to visit their stores and test services and products. Mystery shoppers interact with staff, ask about predetermined products and make purchases, for which the company reimburses them.Shoppers then fill out reports recounting their experiences. According to Indeed, the average salary for a mystery shopper is $15.54 per hour as of July 2018.50. Earn Cash by CookingPersonal chefs travel to their customers’ homes and cook meals for people in their own kitchens. If you have a talent for food prep, you can turn that into a lucrative business, provided that you know how to network.You’ll need to invest in marketing materials, like business cards, a website and advertisements. Word-of-mouth recommendations will be extremely valuable to you as well. Private chef salaries vary depending on your clients and how often you work, but the average private chef salary hovers around $63,000 per year, according to PayScale.51. Become a Ride-Share DriverRide-share services like Uber and Lyft are revolutionizing the way people get around. Even better, they make it easy for good drivers to score a little extra cash.You must meet several requirements before you can become a driver for a ride-share service. For example, to become a Lyft driver, you must have an in-state driver’s license and be at least 21 years old. Once you and your car are approved, making money is as easy as turning on the app and taking jobs.52. Deliver on Your CommuteMake your side job even more profitable by incorporating it into your regular work. Using Roadie, you can get paid to deliver items during your regular commute. You can earn up to $60 for local Roadie Gigs, while long-distance Gigs can net you up to $650.53. Wash CarsWashing cars is a good side hustle that requires little skill. There are some best practices, however. According to Consumer Reports, you should avoid household cleaners like dishwashing detergent and hand soap, refrain from scrubbing your sponge in circles and concentrate on washing the car section by section.54. Flip Flea Market FindsIf you believe “one man’s trash is another man’s treasure,” then you might be interested in becoming a flea market flipper. Flea market flippers find old furniture at garage sales, on Craigslist or — you guessed it — at flea markets, and then rework the old pieces into something new.To make money as a flipper, you must be able to sell your finished products for more than your original purchase prices, plus the cost of any supplies used for revamping. You can take photographs of your finished products and list them for sale online. Or, you could return to the flea market with your items in hopes of out-haggling bargain-hungry shoppers.55. Do Odd TasksTime is money for a lot of people, and you can make some extra cash by doing their tasks. Apps like TaskRabbit and Zaarly let people post their chores for a price. From building a bookcase to standing in line, get paid to do what other people don’t want to.56. BabysitBabysitting is an age-old way to make money. And while wide-eyed teens who lack child care experience can only expect to earn meager wages for watching their neighbors’ tots, experienced sitters can set their rates quite high.Word of mouth is a powerful method for finding good babysitting work, but you can also get in touch with potential clients by registering with Find Child Care, Senior Care, Pet Care and Housekeeping or Sittercity. Keep in mind that some parents might require you to have CPR certification and some early childhood education.57. Become an Election OfficerDon’t just vote on Election Day — make some money, too. Many localities need election officers, especially those who are bilingual. Hours can be long, but the pay isn’t bad for a day’s work. Rates vary, but election judges generally earn over $100 on Election Day.58. Start Your Own Subscription BoxTechnology is refashioning delivery services, and one of many ways to capitalize is by selling monthly subscription boxes like Birchbox. You can get in on the action with Cratejoy, a platform that enables you to build, run and scale your own subscription box business.59. Work for AmazonThe pay is small, but you can earn extra money performing micro tasks from Amazon Mechanical Turk. These are services that require human intelligence, such as selecting the correct spelling for search terms and determining if two products are the same.60. RecycleYou can earn money gathering recyclable materials and delivering them to local recycling facilities.Recycling facilities pay you for the items you bring in by weight, so you’re looking to get as much of one type of item as possible. You can also make money recycling through sites such as Gazelle, BoxCycle and uSell.61. Return Printer CartridgesThis side job is an oldie but a goodie. Round up your empty printer cartridges — and those belonging to friends — and take them to office supply stores like Office Depot and Staples to score rewards.62. Find Your Unclaimed Property Held by the StateState governments hold on to un-cashed dividend checks, returned utility deposits, unclaimed state tax refunds, uncollected insurance benefits and much more. You just have to know where to look for them.Using sites like MissingMoney.com Unclaimed Property FREE SEARCH, you can search for unclaimed property held by the state, file a claim and potentially collect money you didn’t know existed.63. Find Unclaimed Property Held by the FedsSimilarly, the federal government holds on to tax refunds that are returned to the IRS due to problems with mailing addresses or never claimed by taxpayers because they didn’t file returns. The government also holds forgotten savings bonds, government-guaranteed mortgage-insurance refunds and government pensions that were never claimed. The main drawback is that you need to check with individual federal agencies about missing funds.64. Get Cash From Class-Action SuitsMillions of dollars in class-action settlements never get claimed, because people aren’t aware they’re eligible to file. For example, people who bought Red Bull products between 2002 and 2014 were entitled to $10 to $15 through a class-action lawsuit brought on the company because of its slogan, “Red Bull Gives You Wings.”There are several tools you can use to find products you purchased, file a claim for class-action settlement money and receive money in the mail. Some of the top class-action claim sites include ClassActionRebates.65. Get Money Back for Things You Already BoughtUsing a service such as Paribus, you can sign up to get money back on items that dropped in price after you purchased them. Paribus saves you time by connecting to your email account and checking your receipts for you. If the retailer dropped a price, Paribus will automatically file a price adjustment claim on your behalf.66. Cash in Your Unused Gift CardsAll too often, gift cards are bought as presents but not utilized. Don’t let your unused gift cards go to waste. Convert them to cash by selling them online at sites such as Gift Card Granny, Cardpool and Raise. You won’t receive the full value of the card, but it still feels like getting free money.67. Make ReferralsA time-honored way to make easy money is to refer friends to products or services you currently use. Various businesses, from ride-sharing companies like Uber to credit card companies, pay out rewards to the referrer and referred. Research different referral programs to target the ones with the best ROI.68. Buy Groceries and Score RebatesA good way to cut down on cost-of-living expenses is to save on groceries. These days, you can actually earn cash by grocery shopping. Rebate apps like Ibotta offer cash rebates for grocery store purchases. Simply verify purchases by taking pictures of your grocery receipts with your phone.69. Lose Weight to Earn MoneyFinally, there’s a monetary reward for all your hard work at the gym. Sign up for HealthyWage and you can make money shedding pounds. Start by defining your goal weight and the amount of time needed to achieve it, and then place a bet on yourself.Depending on how much weight you lost, the time frame and the amount of money you wagered, you could win up to $10,000.70. Open a Checking AccountThere’s no shortage of banking promotions these days, and you can make a quick hundred or two when you open one of these checking accounts with sign-up bonuses.You can score up to $300 through accounts such as Chase Premier Plus Checking, among others.71. Open a Savings AccountSeveral savings accounts offer bonuses and promotions. Earn money for account anniversaries, signNowing savings goals and even just signing up.72. Donate Blood PlasmaTuck an extra $50 into your pocket each time you donate your plasma. The amount you are paid depends on the volume of permitted plasma, which is determined by your weight. Basically, the more you weigh, the more you’ll get paid. Check out sites like BloodBanker or CSL Plasma for more information.73. Get Paid to Watch TVIf you love watching TV, you can get paid to do so by downloading the Viggle app. The app knows what you’re watching by screening the audio coming out of your TV, and you play games and look at ads on your phone while you’re watching the big screen. You’ll get points through Viggle, which you can then redeem for rewards.74. Invest in a Turnaround CompanySure, investing in penny stocks can be risky. But there are also great opportunities to be found among the rubble. Do your research and identify failing companies with good bones. Investing in penny stocks and bankrupt companies isn’t something to do with your retirement nest egg, but if you have some play money and can stomach the risk, you can score a great return.75. Write an E-BookThere’s an old saying that everyone has a novel tucked away somewhere. If you want to make bank, finish yours, polish it up and publish it. You can release e-books through Amazon Kindle Direct Publishing or Nook Press. At Amazon, you’ll earn up to 70 percent royalties on sales.76. Invest in Mutual FundsIf you’re not a stock market wiz, don’t try to time the market. Instead, look for consistent returns rather than big ones. When it comes to investing in the best mutual funds, look for those run by managers who don’t change their stocks too often and view their investments as partnerships.77. Run a Virtual StorefrontIf you’re crafty, consider opening up a virtual storefront on a site like CafePress. The best thing about these sites is that you’ll only have to make the number of products that people order, so there’s no need to spend a lot in startup costs. CafePress and Zazzle take care of the actual production; all you have to do is supply the designs.78. Start a BlogIf you’re a natural storyteller and feel comfortable sharing your tales on a public platform, you can make money blogging online.Choose a blogging topic that you have a strong understanding, passion and expertise for, because you’ll want to write about it regularly. Once you have a consistent audience, you can start to make money off your blog through an ad network like Google AdSense or with affiliate marketing.Get started with a free blogging platform like WordPress, Blogger or Tumblr. If you decide that you love writing but running a blog isn’t for you, you’ll still end up with a portfolio of writing that you can use to land another gig.79. Become an Online Travel AgentIf you have a case of wanderlust, put your time perusing Expedia to good use by earning money as an online travel agent. You can find both part-time and full-time remote gigs on websites like Upwork and Indeed.Don’t jump on the first job post you see, however, as there are many scams out there. Make sure to vet the agency before signing up, and don’t take a job that requires you to use your own money or recruit other agents.80. Hold a Garage SaleIf you have an abundance of items you no longer want or need, make money fast by holding a garage sale.While you can price gently used or high-quality items at 30 percent to 35 percent of their original cost, you should only expect to recoup about 15 percent of the original cost for most items. You should also be prepared for potential buyers to haggle for even lower prices. If you have some items that you’re trying to sell for higher prices, consider listing them online instead.81. Recycle Scrap Metal and TiresMetals like copper, aluminum, brass and steel are widely desired at most recycling plants or scrap yards. It depends on the location, but you can earn around 9 cents per pound for magnetic metals, 45 cents to 55 cents for aluminum and up to $2.30 for bare bright copper wire.82. Sign Up for Free Gift CardsEbates will reward you with a $10 gift card when you sign up on the site and make a minimum purchase of $25 within 90 days.Signing up for Ebates is a great way to put money back in your pocket. Free to use, the site lets you find online retailers you want to shop with and get cash back for purchases.Additionally, you can sign up for MyPoints to shop online, take surveys and complete other tasks that earn points you can redeem for gift cards, travel miles or cash via PayPal.83. Score Free Gift Cards on Social MediaMonitor social media channels for your favorite brands. People selling products via social media often host Twitter and Facebook parties, for example, that can include giveaways. For best results, watch for hashtags related to gift cards and giveaways.84. Make Money Off PharmaciesWatch for promotional offers from pharmacies that want you to switch your prescription accounts to their companies. When you sign up for CVS ExtraCare Pharmacy and Health Rewards, for example, you can earn up to $50 in ExtraBucks Rewards, which is similar to a gift card.85. Shovel SnowIf you live where it snows, you already know that someone has to be responsible for clearing it from sidewalks, driveways and lawns. Most people don’t want to wake up early to clear snow away, and that’s where you come in.Depending on how quickly you can work, charging $10 to $20 a yard can be a great boon to you. A larger yard will justify a higher rate. If your business grows quickly, consider investing in a snow blower to increase your speed.86. Rake LeavesJust like snow, those fallen leaves need to be cleared away every autumn. If you’re raking leaves, you can also bring a ladder and offer an extra gutter-cleaning service. Consider purchasing your own workers’ compensation policy in advance to protect yourself and your loved ones in case of accidental injuries or falls on the job.87. Become a Ghost ShopperThere’s a fair chance you’ve never heard of ghost shopping. Like personal shopping, ghost shopping is a service that people seek out when they’re low on time but have cash to spare. If you have good taste and love hitting the mall, consider performing this task as a side gig.88. Go Dumpster Diving and Curb ShoppingWhether you’re fully committed to “freeganism” or simply want free stuff, dumpster diving is a potentially lucrative hobby. You can go curb shopping on your own or turn to sites that facilitate bartering, trading, sharing and other ways to get what you need for free.Check out neighborhoods that allow residents to leave items like furniture on the curb for bulk pickup and visit during garage sales, when sellers might leave items out for free after the sale is over. Sites that support bartering include Craigslist and BarterOnly.89. Clean HousesThere are probably plenty of professional maid services in your town, but that doesn’t mean you can’t get in on the cleaning game. There are a number of reasons that potential clients might want to hire you rather than a service.For one thing, individuals are less expensive. Maid services often provide more than one cleaner, which drives up costs. Additionally, services have to charge higher prices to cover other costs of operating their business. Finally, individual cleaners can often find work with family, friends and friends of friends, who would rather hire a trusted acquaintance than a stranger.90. Do Data EntryIf you’re a whiz on the keyboard and pay attention to detail, data entry could be the gig for you.Websites like Craigslist or Upwork post data entry and administrative jobs, most of which can be done from the comfort of your own home. Hourly wages start around $12.55 an hour, according to PayScale.91. Participate in an Online Focus GroupYour opinion could be worth money — if you share it with the right people. Participate as part of an online focus group like ProOpinion, and you’ll get paid for sharing your thoughts. Payments typically come in the form of gift cards or PayPal deposits. Joining the ProOpinion survey panel is free, and you can choose to log in to the site to take a survey immediately or receive emails that connect you to new surveys.92. Rate PizzasHave your dinner and get paid, too, when you sign up to visit and review local pizzerias.All you have to do to be considered for this job is fill out an application with The Source, an independent field agent database provider — no fees required. Once you’re approved, you can search out pizza shops in your area to rate. You’ll get paid twice per month via direct deposit or signNow check for all your work.93. Model for ArtistsArtists are always in need of models to help them hone their drawing skills. This is especially true in areas with plenty of young artists, such as college towns.If you’re comfortable posing nude and are capable of holding poses for as long as 30 minutes, consider life modeling. Modeling sessions can last as long as three hours, and pay is typically around $20 per hour, according to ZipRecruiter. If you’re interested in becoming a life model, contact local colleges, art organizations and community centers.94. Coach a Youth Sports TeamIf you were a star athlete in high school or college and miss the thrill of the game, consider coaching a youth sports team.According to PayScale, a youth coach makes an hourly wage of $18.18 as of July 2018. You can find youth coaching jobs on career sites like Indeed and Glassdoor. However, make sure you fulfill the job requirements.95. Create Video Games OnlineIf you’re into gaming, consider making money by creating your own. You don’t need a degree for this career, but you do need creativity and a knack for building alternate worlds. With platforms like Roblox, you can create your very own family-friendly video games and charge users to play them.96. Watch Video AdsIf you enjoy watching videos online, you might as well earn money while doing so. For example, visit the InboxDollars website and you’ll find opportunities to earn money watching TV or video ads.97. Become an AirmuleFor those who prefer to bring as few items as possible when traveling, Airmule could be the ideal program to make a little money. Airmule is a free app that lets travelers sell their unused checked luggage space to shipping partners. You’ll earn up to $500 per round-trip flight, according to the Airmule website.98. Sell Gold and Silver for ScrapIf you have some old gold or silver jewelry lying around that you never wear, sell it for scrap.For gold, first determine the “melt value” by calculating the weight and purity. Be sure to shop around at different jewelers and metal dealers to get the best prices.For silver, check in with metal dealers online and in person for quotes.99. Maintain Fan PagesWho says socializing on Facebook and Twitter is a waste of time? On Fiverr, you can make money off your networking and social media skills by maintaining social fan pages for businesses, gaining likes and follows and more.100. Start a Resume Writing ServiceIf you love helping people find their dream jobs, consider launching a resume writing service. First, find out how much time it takes you to provide the service and what its value is in your area to gauge how much you should charge. Then, standardize portions of your service to make them more efficient and cost-effective. For example, you can create a questionnaire for people to fill out to help you tailor their resumes to get the jobs they’re after.Make sure you keep up with current resume writing and formatting trends, as well as what recruiters are looking for, so that you’re offering sound advice. When your clients benefit from your services, ask them if they’ll recommend you on your online profile, social media or other platforms so you can build your business.101. Start a Walking or Biking TourUse your knowledge of your community or city to earn cash from tourists looking for expert guides. Whether you start your own walking tour or join an organization that facilitates these tours, you can turn your home-turf advantage into a mutually beneficial, calorie-burning cultural exchange.If you’re starting your own walking tour business, make sure you understand your city’s business and safety laws. Whether you’re visiting famous spots or local hideaways, you need to know which areas are publicly accessible so that you don’t accidentally trespass.You could also get a job with a local business that offers guided tours. Depending on the organization, you might be able to share your knowledge with school kids on class trips or other groups on private tour events, in addition to tourists.Click to see ways to make more money this year.More on Making Money Through Side GigsLearn How to Make Money on YouTubeUp vote this answer and follow us on Quora to be the first having 1 Million followers 9999994 to go.Regards,Tech Expert
Would USA function as a parliamentary republic and would the American population be in favour of such changes?From the term-limitation movement to the rise of Ross Perot, the signs of discontent with the political status quo are everywhere. Our author outlines a plan to channel that discontent in an innovative direction, one that would make the House of Representatives more democratic and more responsive to the variety of opinion to be found in the country and that would break the monopoly on power enjoyed by the two parties. "Because of our peculiar electoral law," he writes, "the American government is divided between two parties. The American people are not"This is the first in an occasional series comparing the U.S. system of politics and elections with other democracies around the world.Democracy.In America.How’s it going?In the period 1990-2010, the United States comes in 29th out of 31 democracies in percentage of the voting-age population that actually votes, with an average turnout of 57.28 percent.“If it be admitted that a man possessing absolute power may misuse that power by wronging his adversaries, why should not a majority be liable to the same reproach? Men do not change their characters by uniting with one another; nor does their patience in the presence of obstacles increase with their strength. For my own part, I cannot believe it; the power to do everything which I should refuse to one of my equals, I will never grant to any number of them.”Alexis de Tocqueville, “Tyranny of the Majority,” Chapter XV, Book 1, Democracy in AmericaThe world has, America has changed--but the United States Congress has not. And because Congress hasn't changed, more and more people feel alienated from government, and the silent crisis of legitimacy, which figures as a haunting leitmotif in so many of our other crises, intensifies. The size of the House of Representatives has been the same since 1910. And America's archaic and undemocratic system of electing, by plurality, one member of Congress per district--an eighteenth-century anachronism long since abandoned by most European democracies--has scarcely been questioned in the entire period since 1789.This kind of acquiescence in tradition--pious if you approve of it, mindless if you do not--might be justified if the U.S. Congress were an effective and popular institution. The consensus of its inmates and its constituents, however, is that Congress does not work. Widespread discontent with the political system could have been expected to produce proposals for reform of the legislative branch, and it has. Unfortunately, the most familiar proposals for reforming Congress would do so at the expense of democracy.All this system-bashing could also begin to imply that I have no respect or appreciation for the Framers. That’s not so. Although I don’t seem to have the normal allotment of reverence for the Constitution or its authors, I see them as very smart guys, many of them heroes of the War for Independence, who came to Philadelphia in the summer 1787 hoping to -- and trying hard to -- make things better.And they did make things better, considering that the weak Articles of Confederation -- the framework of national government in effect before the Constitution -- was inadequate to the task of making a nation out of the then-13 states.But the Framers had their blind spots. I won’t mention slavery for the moment, since that’s where everyone goes and since that blot has been amended out of the Constitution (and since many of the Framers, notably Ben Franklin and Alexander Hamilton, were anti-slavery).One of the big blind spots, which seriously interfered with their thinking on many constitutional matters, is that they believed it would be possible to have national politics without political parties. This played a big role in the creation of the Electoral College system. The strange tale of how the electoral system came about puts some of its weird features into context. Once you get this context, it is at least understandable what the Framers thought they were doing.NO EXECUTIVE BRANCHUnder the Articles of Confederation (the U.S. national government system created during the Revolutionary War period that was replaced in 1789 by the Constitution), there was no executive branch and no president and therefore no method of choosing a chief executive officer for the whole nation.The Framers of the Constitution saw the need for such an executive to run the beefed up new national government they were creating. But they couldn’t decide how much power to give to the new office, especially because they couldn’t figure out how the president would be chosen.Over the course of the constitutional convention, the delegates considered having the president chosen by Congress, but they feared the interdependence between the branches that would be engendered. They considered having the governors of the states or the state legislatures choose the president, but they likewise were anxious that the chief executive of the new souped-up federal government not be overly beholden to the state governments.Another obvious way -- at least to us -- would be to let the country vote. This was apparently discussed, but not very seriously. Often, the Framers’ decision to invent the Electoral College is interpreted as part of their mixed feelings about democracy. There is some truth to that.Imperfect Union: The Constitutional roots of the mess we're in The Framers were a fairly aristocratic bunch, many of whom had mixed feelings about “democracy,” which they sometimes regarded as mob rule. Although the preamble begins with “We, the people,” and guarantees a “republican form of government” to all of the states, the word “democracy” is not mentioned in the text of the Constitution.When the Framers used the word themselves it was often a pejorative term. On the convention’s first day, delegate Edmund Randolph of Virginia warned that “none of the [state] constitutions have provided sufficient checks against democracy.” A week later, Massachusetts delegate Elbridge Gerry said “the evils we experience flow from the excess of democracy.” Father of the Constitution James Madison referred to “the inconvenience of democracy,” and Alexander Hamilton to the “imprudence” of it.The Framers did, after all, create four power centers (president, House, Senate and Supreme Court) and only the House was to be directly elected.But, on balance, the Framers’ decision not to let the people directly elect the president is more complicated than their aristocratic mistrust of the mob.THREE BAD IDEASBad idea No. 1 is term limitation. Why should any constituency be prevented from sending the same representative or senator back to Washington again and again? The direct election of U.S. senators, brought about by the Seventeenth Amendment, did not, as advertised, eliminate corporate influence on legislative politics. Only the very naive believe that the same promised result--the sidelining of "special interests" and the filling of the legislature with public-spirited citizen-legislators--will be produced by frequent rotation. In a capital city in which expertise is power, the frequent circulation of amateur legislators would only increase the relative influence of the permanent congressional staff, the federal bureaucracy and the entrenched Washington establishment of lobbyists and insiders.The misguided panacea of the moment, term limitation joins two long-standing proposals for congressional reform, one associated with the left, the other with the right. For much of the twentieth century Progressives, New Dealers, and then left liberals, in the name of "responsible party government," have dreamed of reforming the United States to resemble an idealized Britain--bad idea No. 2. (Ironically, today constitutional reformers in Britain are seeking a new system with many "American" features, such as federalism, judicial review, and a written constitution.) Those who seek to reform Congress along parliamentary lines are not concerned about the separation of powers, an antiquated system they deride. Instead, they favor the "separation of parties." In their view, the American mass electorate should be given a clear choice between two sharply defined ideological parties; a party that wins a bare majority in the House, the Senate, and the presidential election should be given carte blanche to govern with as few impediments to the exercise of power as possible, rolling over not only the opposition party but also dissidents within the majority party itself.If a parliamentary Congress was the dream of midcentury liberals when it appeared that the Democratic Party would control all three branches forever, the recent inability of Republicans to elect congressional majorities has created a constituency on the American right for bad idea No. 3--what can almost be described as presidential rule. Effectively abandoning any hope of ever recapturing Congress, many Republicans have favored strengthening the power of partisan Presidents to alter policy directly, through executive orders, rather than the old-fashioned way--by pressing for the repeal or the amendment of laws.Since Richard Nixon began the present era of Republican presidential dominance, Republican claims for "inherent" executive prerogative have grown ever more extravagant (recycling the arguments of Democratic presidentialists in the era from Franklin Roosevelt to Lyndon Johnson). President George Bush has claimed vast powers in domestic as well as foreign policy. In addition to asserting that he had the power to wage war in the Persian Gulf without congressional approval, he has declared that he will not enforce provisions that he considers unconstitutional in laws that he has signed. Some conservatives even argue that Bush should exercise a supposed "inherent" line-item veto that has been read into the Constitution (where, somehow, it has eluded discovery since the days of George Washington, who observed, "From the nature of the Constitution, I must approve all the parts of a bill, or reject it, in toto").Further magnification of discretionary White House power--even in the service of legitimate goals--runs the danger of creating a North American form of Latin American plebiscitary presidentialism, in which a demagogic Presidente circumvents a weak legislature and rules by fiat, in the name of a "mandate" from the national electorate.Many of the problems of Congress that term limiters, parliamentary reformers, and presidential-power enthusiasts seek to address are genuine: swollen congressional staffs and perks, arrogance by entrenched committee chairmen, subservience to wealthy and well-organized lobbies, micromanagement of executive agencies by incompetent or venal legislators. These abuses cry out for remedies--but for republican remedies.A GOOD IDEAOther reforms of Congress can extend rather than restrict democracy in America. One is an overdue increase in the size of the House of Representatives.In 1789 the first House of Representatives had sixty-five members, each representing about 30,000 inhabitants (and far fewer qualified voters). Anti-Federalist opponents of the new federal Constitution protested that districts of 30,000 were too large: congressmen would be far too remote from the concerns of their constituents (the constituencies in most state legislatures at the time were much smaller). One of the Federalist signNows (No. 55) is devoted to justifying such enormous districts.Today each of the 435 members of the House represents about twenty times as many voters as the first representatives did. Whereas the United States has, on average, one representative for roughly every 600,000 inhabitants, the ratio in Japan is one to 238,600, in Germany one to 120,000, in France one to 96,300, and in Britain one to 87,500. Obviously, the disparity is due largely to the differences in population between the United States and other Western countries, but the number of representatives also plays a role. The U.S. House of Representatives is small by Western democratic standards. Germany's newly revised Bundestag has 662 members, the British House of Commons 651 members, France's National Assembly 577 members, and Japan's lower house of the Diet 512 members.There is nothing sacred about 435, the number at which the-House of Representatives has been frozen by law since 1929. In the intervening six decades the United States has more than doubled in population. A vote for a representative, therefore, counts less than half as much in 1992 as it did in 1929--and a twentieth as much as it did in 1792. The weight of a vote will continue to decline: fifty years from now the average congressional district may include 750,000 people. Already, Montana has gone to court to challenge the present apportionment system, which would give the huge state only one congressional seat, representing 800,000 people. What is more, at the rate that the U.S. population is growing, in the foreseeable future a fifth of the states may have only one representative--and a third only two or one.Clearly, the membership of the House cannot be increased in direct proportion to the population. If the original 30,000-member constituencies had been retained, by today there would be more than 8,000 representatives. (The House would have to meet in a stadium.) Nevertheless, moderate increases in House size can help limit the dilution of democracy caused by population growth. If the experience of other Western democracies is any guide, a 500-member House would not be unmanageable, nor would a 600-member House. The House is not the Senate; it loses its special function as districts grow too large and representatives find themselves ever more remote from their constituencies. If there is an argument against moderate increases in House membership beyond 435, it must be more compelling than mere tradition. Sixty-three years is not time immemorial.PROPORTIONAL REPRESENTATIONThe comparatively small number of representatives in the popular branch of the U.S. legislature is not, however, the only respect in which the United States is less democratic than the countries of Western Europe.Electoral systems can be divided into two fundamental varieties: the plurality, or "winner-take-all," method and the party-list method, with proportional representation (PR). Under the plurality system a representative is elected by a simple plurality (or in some cases a majority) of voters in a single-member district. In contrast, in PR systems the country is divided into multimember districts (in a small country such as Israel, the entire nation may be a single district). Several parties present lists of candidates within each multimember district; the electorate casts its votes for the parties, rather than the candidates; and then the seats are allocated among the parties, on the basis of the proportion they received of the total vote.The United States has inherited the plurality method from Britain, which maintains it as well (Australia has broken with the British tradition in favor of more-modern methods). The Anglo-American method makes possible distortions of the democratic process which are simply impossible under PR. Imagine a country with a plurality system in which there are two major parties, X and Y. Those who vote for party X, even if they make up no more than 51 percent of the voters in each single-member district, may elect 100 percent of the representatives; those voting for party Y, although they constitute 49 percent of the population, MAY END UP WITH NO REPRESENTATIVES AT ALL. Now suppose that X and Y are joined by a third party, Z. If in every district X receives 40 percent of the vote, Y 38 percent, and Z 22 percent, X will control every seat in the legislature, even though 60 percent of the population voted for other parties.These examples may seem extreme, but there are cases in which plurality systems have elected one party even though another received a greater number of votes. For example, in 1974 the British Conservative Party lost its majority of seats in the House of Commons, even though it received 300,000 more votes than the Labour Parry. In the latest British election John Major's Conservative Party retained a majority in the House of Commons, even though a majority of British voters cast votes for parties other than the Conservatives.Similar distortions exist in the United States. In 1990 the Republican Party won 45 percent of the popular vote but was reduced to 38 percent of the seats in the House. The Democrats, with 53 percent of the popular vote, received 61 percent of the seats. As in Britain, a strong third-party challenge could permit a minority of American voters to elect a majority of members of Congress. Nothing remotely comparable to these distortions is possible under proportional representation.Another advantage of PR is the way it makes gerrymandering difficult or impossible. In multimember districts every party or voting bloc will be represented more or less in proportion to its strength in the entire electorate, regardless of how the district lines are drawn. It is only in plurality systems, in which an area of several blocks may make the difference between losing everything and winning everything by a few percentage points, that there is a strong incentive to gerrymander.Along with partisan gerrymandering, today's government-mandated racial gerrymandering could be eliminated by PR without curtailing the voting power of ethnic minorities. Federal courts have gone from striking down a "strangely irregular twenty-eight-sided" district drawn to prevent black voters from pooling their strength to requiring the creation of equally strange districts to encourage the election of black candidates. Under PR, blacks and Hispanics would find it much easier to elect candidates of their own ethnic group--if they chose. But they would not be maneuvered into such a choice by being electorally ghettoized in safe "minority" districts. Other ethnic minorities, who do not receive preferential gerrymandering, would benefit as well. For example, the federal courts have recognized the right of blacks to have districts redesigned to their benefit--but not the right of Hasidim. PR would eliminate the need for heavy-handed efforts that force some electoral minorities to waste their votes while artificially magnifying the weight of other minority votes. At the same time, PR would increase the power of all minorities--ethnic, religious, ideological, economic, blacks and Hasidim--to elect representatives to Congress, on whatever grounds they chose.Proportional representation has an additional advantage, insofar as it permits the election of talented or distinguished persons who can get a minority of the vote in a district but who disdain to indulge in the vulgar exaggeration and false promises necessary to win a majority. Noting that "the highly cultivated members of the community" find it difficult to be elected under a winner-take-all system, John Stuart Mill wrote,"Had a plan like Mr. Hare's [for proportional representation] by good fortune suggested itself to the enlightened and patriotic founders of the American Republic, the Federal and State Assemblies would have contained many of these distinguished men, and democracy would have been spared its greatest reproach and one of its most formidable evils."PRACTICALITIESWhat would it take to install proportional representation for members of the House of Representatives? Nothing more than an act of Congress. No constitutional amendment is necessary. Article I, Section 4 of the Constitution states, "The Times, Places and Manner of holding Elections for Senators and Representatives shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators." This gives Congress the power to preempt all state electoral laws and to mandate a system of multimember districts with proportional representation for electing members of the House of Representatives.Because the idea of PR is to give electoral representation not only to parties or candidates that win by slight pluralities or majorities but also to second-, third-, and fourth-place winners, it requires multimember districts. The best way to adapt PR to American conditions would be to consolidate present contiguous congressional districts into multimember districts with some manageable number of members--seven, say, or nine. The larger the number elected from a multimember district, the smaller the number of voters needed to elect at least one representative to the House.By promoting a close correspondence between groups of voters and groups represented in Congress, PR minimizes the waste of votes that occurs under our present system. For example, the same hypothetical voting population that, divided into nine single-member districts, now returns nine Democrats, each with a slight plurality in his district, might, if organized into a nine-member district with PR, send four Democrats, three Republicans, one Libertarian, and one Conservative to Congress--WITH THE SAME VOTES CAST. By the same token, Democrats who today waste their votes in largely Republican areas might be able to elect a minority of a consolidated multimember district's congressional delegation. Many voters who today are resigned to never electing a congressman of their party or their philosophy, simply because they happen to belong to permanent electoral minorities in their local communities, would suddenly be able to help elect one or more representatives, without changing either their residence or their views.Multimember districts are nothing new in the United States. Combined with both plurality elections and PR, they have long been used at the state and municipal levels. For example, from 1870 to 1980 the cumulative vote within three-member districts (similar to PR) was used to elect legislators to the Illinois Assembly. As early as 1867 Senator Charles Buckalew proposed that cumulative voting for House elections be imposed by Congress on reconstructed southern states seeking readmission to the Union; following this experiment, either cumulative voting or proportional representation (which he thought too complex for the Americans of his day to comprehend!) could be adopted nationwide. That his proposed reform got nowhere was a tragedy not only for the black, white Republican, and Populist electoral minorities in the South, who were soon effectively disenfranchised by the dominant Democrats, but for the country as a whole, which might have adopted PR by the turn of the century, as many European democracies had.What about the states that are so sparsely populated that they have only one congressman apiece? PR works only when districts elect multiple members--at least two or three, and preferably more than four or five. At present six states have such small populations that they have only one representative apiece (Alaska, Delaware, North Dakota, South Dakota, Vermont, and Wyoming). Perhaps single-member states would elect their representatives under a plurality system. Still, it seems unfair not to allow their citizens the benefits of PR. The fairest approach would be to increase the number of representatives to give these states more representatives.These proposals may seem radical. They are. Established institutions need be accorded respect only to the degree that they have earned it. In this case it is difficult to argue with the political scientist Theodore Lowi that "nothing about the present American party system warrants the respect it receives."Discontent is manifested not only by third-party challenges but also by split-ticket voting, a practice that expresses the inability of many Americans to identify completely with either national party. In 1988, for example, a quarter of the Ohio voters who voted for George Bush also voted for the liberal Democratic senator Howard Metzenbaum. Split-ticket voting like this has produced today's deadlocked government. The blame lies with a party system that does not allow the preferences of substantial numbers of Americans to be expressed.Because of our peculiar electoral law, the U.S. government is divided between two parties. The American people are not.THE CUMULATIVE VOTE AND CONGRESSIONAL LEADERSHIPThe principal behind PR--the representation of electoral minorities as minorities in the government--would be thwarted if it were not carried through to the selection of the leaders of the legislature. The instrument to carry it through is the cumulative vote.The technique of cumulative voting was devised by corporate lawyers to ensure minority-shareholder representation on the board of directors of a corporation. The technique gives a voting bloc a choice, whether to distribute its votes among all the candidates who are to be elected to the board at the same time, or to pool its votes, in order to be sure of electing one or several candidates. The theory is that it is better to be represented by a minority on the board than not to be represented at all.Cumulative voting could easily be applied to the selection of both the House and the Senate leadership. Under the present system for selecting the speaker of the House and the Senate majority leader, whatever party or faction controls a bare majority of each body can control the leadership and elect all the committee chairmen. Suppose, however, that each house of Congress were run by a leadership committee. Suppose further that each representative or senator did not have to cast one vote for each committee position but could cast all his or her votes for one candidate. Minorities within each house could then elect members to the leadership committees.Why should a party that controls 51 percent of the seats in a legislature control 100 percent of the chairmanships of legislative committees? Why should 49 percent of the population go unrepresented in the congressional leadership, merely because they are 49 rather than 51 percent? Why should there be a revolution in committee leadership in a closely divided House if, say, half a dozen districts return representatives belonging to the former minority party?Life is full of crude approximations, and the ancient convention that treats a 51 percent majority as a surrogate for the whole might be tolerable if there were not an alternative. But there is: the cumulative vote.EXTREMISM--OR CONSENSUS?Compared with proportional representation, the Anglo-American plurality method is so manifestly unfair that it must be justified in terms of other values. Most of the criticism of PR is directed at multiparty systems, which PR is thought--correctly--to promote. Plurality systems tend to encourage two parties to dominate, while PR systems generally reward the formation of small parties.Some claim that the multiparty democracy encouraged by PR is "undemocratic," because coalition-building is undertaken in the legislature by minority parties, rather than within broad, would-be-majority parties before winner-take-all elections. Insofar as smaller parties must make more compromises than large parties in order to get their programs passed, PR is said to deny voters the right to choose between two clearly defined party platforms, one of which has the chance of becoming the platform of a stable legislative majority. This assumes, however, that there is no logrolling in two-party systems. It also assumes that most voters identify wholly with one or the other party. In reality, Americans, to the extent that they vote for parties rather than individual candidates, choose one party over the other because it is the lesser of two evils, not because they fully endorse the national party's positions on all issues. The addition of new parties would increase the chances that voters could find representatives who shared most or all of their values and concerns.The charge that a multiparty system leads to governmental instability is untrue for a country like the United States, whose government is based on the separation of powers. In multiparty parliamentary regimes, because the Prime Minister and executive officers belong to the parties in the dominant coalition, the entire government may fall if a small party defects. In such a system a small extremist party may be able to exact major concessions on policy, as the price of its joining a coalition. Reportedly, in the spring of 1990, for example, a single Brooklyn rabbi, by virtue of his influence over a tiny religious party, prevented the formation of a legislative coalition in Israel's Knesset. This kind of instability would remain impossible in the United States, where the President would continue to be elected by the plurality system, and would serve for a fixed term no matter what multiparty coalitions formed in the House of Representatives. Israel, now on the way to adopting direct elections for the Prime Minister, is moving away from parliamentary instability toward a system like the one I advocate, combining the separation of powers with PR for elections to a popular legislative chamber.NATIONAL ELECTIONThe Framers could not picture how a national election would work. Never in the history of the world had a comparable election been conducted in a territory as large as the United States – even the 1787 version of the United States that covered just 13 eastern seaboard states from Maine to Georgia. (Maine, by the way, was then part of Massachusetts and didn’t become a separate state until 1820.)The differences and distances between the 13 states were much bigger deals than they are today, despite the enormous growth of the United States. There was no national media by which the people of New England would come to know about the political leaders of the Deep South, or vice versa. There was no tradition of campaigning for office; in fact powerful norms banned overt office-seeking. (This business of presidential candidates running around the country begging for votes dates back roughly to the 1890s.)Because the potential electorate was so much more state-oriented in political thinking, if everyone could just vote for a person whom they thought would make a good president, they would mostly vote for a favorite son of their own state. The favorite sons of the most populous states – Virginia, Massachusetts and Pennsylvania -- would tend to get the most votes, which made small-state delegates nervous. (There’s an irony here: Despite the Framers efforts to work around this problem, the first 10 presidential elections were all won by candidates from Virginia or Massachusetts.)If the Framers had assumed that national political parties would present the nation with a reasonable set of choices for president, they might have come up with a less complicated, more directly democratic plan. At least the eminent constitutional law scholar Bruce Ackerman suggested as much in his book “The Failure of the Founding Fathers.”But, as I mentioned in a previous installment of this series, the Framers had a blind spot about political parties. They disliked them, which is understandable. But they believed you could have national politics without political parties, which was just naïve and wrong.The Framers envisioned a nation led by a certain kind of natural aristocrat who was above partisanship, like George Washington, whose noble qualities would inspire and justify trust. Everyone knew Washington would be the first president no matter what kind of selection system was used (and he remains the only president named unanimously in the Electoral College). But the Framers weren’t sure that, after Washington, any subsequent Great Man would have a comparable national reputation.Washington owed his national reputation to his role as hero-general of the War for Independence and the Framers couldn’t assume a similar event to create a similar hero in the future. So a “Committee of Eleven” Framers worked on the side on ideas for how to choose a president while the rest of the constitutional convention pursued other matters.NEW PARTIESIt is anyone's guess what the parties in a House elected by PR would be. (The Senate would continue to be elected the way it is now, and such effect as there would be on it would be indirect.) Although voters might continue to identify with the two major parties for a time, dissidents would soon learn that third-party votes were not wasted.The largest party in the House might well be the Republicans. As it is, their party, with its homogeneous and stable group of core voters and centralized, disciplined organization, is far more like a European party than the Democratic Party is. If PR were adopted, the Republicans might lose their right wing to a new conservative party or parties, but the number of right-wing Republican voters is fairly small (as the Patrick Buchanan campaign unintentionally demonstrated, by adding only single-digit figures to large protest votes). The Republicans might compensate for their loss by becoming a more consistently classical-liberal party--pro-business, pro-choice--and attracting fiscally conservative social liberals who now identify with a Democrat like Paul Tsongas. Such a neoliberal Republican Party might hold steady at 35 to 40 percent of the House.The Democratic Party, an incoherent coalition of smaller proto-parties, lobbies, interest groups, and machines, which are brought together only by the winner-take-all logic of our electoral system, would, however, probably disintegrate. The breakup of the Democratic Party as the result of PR would not mean that the power of today's Democratic voters would decline. On the contrary, the kind of moderate Democrats represented by the Democratic Leadership Council, freed from the electoral necessity of appeasing ethnic and liberal lobbies, might well prosper. Together with "Reagan Democrats" wooed back from the Republican presidential coalition, moderate Democrats in Congress might form a Populist Party equivalent to Christian Democratic parties in Europe. Slightly right of center on social issues and foreign policy, slightly left of center on middle-class benefits, such a party could be expected to draw substantial support from Northeastern ethnics, middle-and lower-middle-class whites and Hispanics in the South and West, and perhaps socially conservative blacks. It would be heavily Catholic. A Populist Party might be the nearest rival to the Republicans for the status of largest party in the House.The United States, unlike Europe, probably would not have a strong Social Democratic Party, given the low level of unionization and the lack of a mainstream socialist intellectual tradition here. There might nevertheless be something that called itself the Social Democratic Party, representing unions, farmers, public-sector employees. Heavily black and Hispanic, such a party would favor protectionism and government subsidies to industry.A small American Green Party would almost certainly arise from the decomposition of the Democrats. Appealing to New Age environmentalists, pacifists, feminists, and gay-rights activists, such a party might have trouble winning five percent of the vote in successive elections. So might other fringe parties that are easy to imagine: the Conservatives, a far right-fundamentalist alliance; the Multicultural Coalition, a coalition of ethnic-separatist parties; and anti-tax Libertarians.Carrying this speculative exercise one step further, we might assign percentages of House membership to these hypothetical parties. Based on European experience and American political subcultures, the pattern might be as follows: Republicans (40 percent), Populists (30 percent), Social Democrats (15 percent), Greens (5 percent), Conservatives (5 percent), Multiculturalists and Libertarians (5 percent between them).One question that immediately comes to mind is, Would a multiparty system exaggerate the power of small, extremist parties in the House? The danger that such parties might hold the key to House leadership would be eliminated by the leadership reforms proposed above. If the position of speaker of the House rotated among the members of a leadership committee elected by cumulative vote, moderate parties would be assured of exercising power in their turn and having substantial weight on the leadership committees, without having to make any compromises with extremists.The chances that tiny fringe parties would win signNow representation would be limited by the division of the country into multimember districts. The danger of extremism could also be guarded against by setting a threshold for participation in the legislature. Germany's requirement that parties get five percent of the nationwide vote, for example, has been enough to exclude both the neo-Nazi Republicans and the radical-left Greens. Anyone who argues for a higher threshold should explain just which 10 or 20 percent of his fellow citizens are so dangerous that they should be effectively disenfranchised.It is extremely doubtful that PR could bring black-nationalist or white-supremacist parties to power in the House. Since blacks constitute only 12 percent of the population, and an even smaller proportion of the electorate, most black voters would have to support an extremist party for it to clear a five-percent threshold. It seems unlikely that they would, because more-moderate multiracial parties would more accurately reflect the economic concerns and values of most black voters. Even if a black-nationalist party passed the five-percent hurdle, it could be kept out of the House leadership. To elect one member to a five-member leadership committee, at least 17 percent of the House membership would be necessary. Black radicals would have to form coalitions with non-blacks.What about white Klansmen and neo-Nazis? Right-wing nationalist parties have made gains in recent European elections, but these are protest votes by moderate voters who seek to change particular policies of centrist parties, not to replace those parties permanently with extremists. In the United States the support for Buchanan's extreme conservatism, even in the Republican Party, appears to have been in the single digits, and support for David Duke-style racism vanishingly small. This suggests that the only viable far-right parties in a multiparty House would be Pat Robertson-style Christian conservatives, not Aryan Nation skinheads.Those who claim that PR was responsible for the electoral successes of the National Socialist party in Weimar Germany are mistaken, according to no less an authority than Hermann Goering. Enid Lakeman, a British advocate of PR, writes of Weimar Germany that "if the British electoral system had been in use [the Nazi party] might have been grossly over-represented....Goering said at his trial that under the British system that  election would have given the Nazis every seat in the country, and he cannot have been far wrong." Hitler would have loved the Anglo-American electoral system.For some, of course, a system that gives any influence to "extremists" like conservative Christians and social democrats is bad. Even if this intolerant position could be reconciled with a commitment to democracy in America, would PR be worse than the plurality system in this respect? Under our present system small but intensely motivated ideological minorities have the power to force moderate Republicans and moderate Democrats to placate them in order to get the small margin of voters sometimes necessary for election in winner-take-all races. In a multiparty system such intense minorities might gain direct representation in Congress but would lose their ability to dictate centrist-party platforms. To be sure, on particular measures large, centrist parties might need small-party help, but they would not need to ally themselves with small parties in order to win election in the first place. In the shifting coalitions formed to pass different bills, the larger, moderate parties would have the upper hand.In addition to ideological extremism, today's two-party American system promotes "extremism of the center." This results from the need for the two national parties to exaggerate their differences in order to appeal to the crucial minority of white middle-class swing voters. These voters--Wallace-ites and Reagan Democrats--do not identify completely with either national party. Since 1968 they have elected primarily Republican Presidents who share their conservative cultural and foreign-policy values, and Democratic congressmen who protect their middle-class transfers (Social Security, Medicaid, student loans). The penchant of these "populists" for ticket-splitting not only exaggerates the indirect power of this group but also encourages Democrats and Republicans alike to pander to their worst instincts. The Democrats try to appeal to the populist swing vote with giveaways; the Republicans play on racial resentment and call for military strength. If populists had their own party in Congress, their leaders would presumably have to be more responsible and measured in their views than are swing voters whose prejudices and appetites are stoked and exploited by both of today's national parties. As long as there is ticket-splitting, extremism of this kind will be built into our present system--and will corrupt it. A case can be made, then, that PR is just as likely to reduce the political power of extremist minorities as to enhance it.CITIZEN PARTICIPATIONHow do you measure the health of a democracy? One obvious and absolutely valid first thought is to measure the level of citizen participation, and the basic form of such participation is voting.Of all the developed democracies in the world, the United States ranks near the bottom in the portion of its voting-age citizen population that votes. And, I’m afraid to tell you, the situation is even worse than that general statement makes it look.“A Different Democracy: American Government in a 31-Country Perspective,” a soon-to-be published text on comparative democracy, examines U.S. democracy in the context of (you guessed it) 31 developed democracies across the six populated continents of the world (although the biggest chunk of the 31 are in Europe). The lead author, political scientist Steven Taylor of Troy University in Alabama, kindly shared with me an advance copy of the chapter that deals with voter turnout.It includes a chart depicting the percentage of the voting-age population that actually voted in all 31 democracies in the period 1990-2010. The highest turnout is Italy, with an average participation rate of 86.12 percent. The top 10 countries by this measure — all with average turnouts above 78 percent — are Italy, Belgium, Greece, Australia, Denmark, Sweden, Brazil, Finland, Korea and New Zealand.The United States comes in 29th of the 31 nations, with an average turnout of 57.28 percent.That is a bad number. Very bad. You can argue, I suppose, that as long as people have a right to vote, it is up to them whether they choose to exercise that right. I’m not interested in making excuses for lazy or tuned-out voters, but Professor Bingham Powell of the University of Rochester, a veteran comparer of different systems of democracy, urges me (and you) to bear in mind that “lots of things affect voter turnout other than interest and competence of the voters.”Even bearing that mind, in judging the health of a democracy, I don’t know how a low rate of voting participation can be taken as anything other than a serious sign of democratic ill health.'FATHER' OF ELECTORAL COLLEGEJames Wilson of Pennsylvania is credited by many sources as the “father” of the Electoral College. Wilson was actually one of the most democratically minded of the Framers, but once it became clear that direct popular election for president was not going to be adopted, Wilson and the others came up with a plan that had no real precedent and very few subsequent imitators, but which makes some sense once you have in mind the various questions and problems the Framers faced.The president would be chosen indirectly, in a process that could take several steps. First the Constitution created the position of presidential “elector,” chosen by the state legislatures.As the Committee of Eleven conceived the office of presidential elector, these were not to be people who ran for the office or announced to the public whom they would favor for president. And they certainly didn’t have in mind the modern situation where the role of the elector is pro-forma and is given to party regulars who are pledged or legally bound to support the party’s nominee. On the contrary, the Framers’ plan assigned no role to partisanship. (In fact, nowhere does the Constitution mention political parties.)The electors were intended to be men of good reputation whose judgment would be trusted to know something -- and something more than the average voter -- about the great men of the nation who might be worthy of consideration for president. If there was a new Washington out there somewhere, the electors were supposed to be the kind of gentlemen of sufficient learning and wisdom and connections to the national scene to know about him.The plan left it entirely up to each state legislature to decide how to choose electors (except that no member of Congress or other federal official could be an elector). This appealed to the states-righters in the convention and in the country. Any state that wanted to could allow its voters to choose the presidential electors (which appealed to those hoping for a more democratic process), or the electors could be appointed directly by the legislature. Both measures were used in the early going.In fact, it’s worth noting that the Framers had no thought that the president would have a “mandate” from “the people.” They were looking for excellence, not popularity. Ackerman’s “Failure” book (cited above) argues that not until the fourth presidential election -- the one in 1800 in which Thomas Jefferson defeated the incumbent president John Adams but inadvertently tied with his own running mate -- did the idea develop that a president derived some of his authority from a popular mandate.However they might be chosen, each elector was instructed to vote for two men for president -- not one for president and one for vice president, two men -- either of whom the elector thought would make a good president. But at least one of the two had to be from a state different than the elector himself. (This is the provision that caused the Cheney problem two-plus centuries later, which I mentioned in the previous installment.)Why? The Framers knew the loyalty that these early Americans felt to their home state grandees and they assumed that most electors would support someone from their own state and that the big-state candidates would have a signNow advantage. But if there was a new Washington around, they hoped the electors from other states would push that person into the top tier of finishers.The original plan said that if anyone was named on a majority of ballots, that person would be president. But assuming there would be no parties and no nominees, it seemed quite likely that after Washington no single candidate would be named by a majority of the electors. So the Framers decided that the top five electoral-vote recipients would all have their names forwarded to Congress and the winner would be chosen by the House of Representatives, voting on a one-state one-vote basis and with a requirement that the balloting continue until one candidate received support from an absolute majority of states.If two candidates were each named on a majority of ballots, the one with the most votes would be president and the runner-up would be vice president. But if two men had a majority and an equal number of electoral votes, those two candidates would be offered to House for the same one-state, one-vote runoff. You might think that scenario is far-fetched, but, of course, it happened.If the plan worked the way it was envisioned by the Framers, it would look pretty ugly to modern eyes. Because of the crazy one-state one-vote rule, a fifth-place finisher who for some reason appealed to representatives of small states could end up as president. And although the Framers worried about a system that would make the president into a creature of the Congress, their back-up mechanism would undermine that goal. The only benefit of the electoral vote would be to force the House to choose from among five candidates chosen by others (and note that the Constitution bars any member of Congress from being an elector).But the plan never played out, not even once, after Washington retired. Bear that in mind when people defend the Electoral College system as representing the divine wisdom of the Framers. The Electoral College, as practiced today, has almost nothing in common with the system the Framers intended or envisioned. The emergence of national political parties and presidential tickets, the decision by most states to adopt a winner-take-all system for the awarding of its electoral votes and other changes of modern politics have led to a number of pretty strange results. In the next installment, I’ll go over some of those weirdnesses.IT GETS WORSESome of those “other” factors will be the subject of the next installment, but first allow me to argue that the U.S. turnout is actually quite a bit worse than that 57 percent participation rate makes it look.Curtis Gans of the Center for the Study of the American Electorate, who specializes in studying turnout, says that presidential election turnouts in recent history have been generally in the upper 50s, occasionally breaking into the low 60s, and midterm turnouts have fairly consistently hovered just above and below the 40 percent mark. Here are Gans’ calculations of the turnouts over the last five midterm elections:1994: 40.9 percent1998: 37.9 percent2002: 39.6 percent2006: 40.6 percent2010: 41.5 percentAs you can see, there’s been a slight uptick over the last few cycles, but Gans believes this trend is ending. After studying turnout in the primaries so far this cycle (it hit a record low in 15 of the first 25 states to hold primaries this year), Gans is projecting a drop in the turnout on Election Day this year from the level of recent midterms.When constructing the table that ranked the United States 29th out of 31 democracies in turnout, the authors of the textbook cited above rated each country according to the highest-turnout election in its normal cycle. But nobody else on the list has a system that alternates regularly between a high-turnout election and a low-turnout election. In a typical election elsewhere in the democratic world, everything is on table.So let’s just look this square in the face. It’s true that the presidency is not on the ballot this year. And that makes the midterm a somewhat less important election. But all 435 seats in the U.S. House of Representatives and 35 Senate seats, including the one in Minnesota (there’s a couple of extras because of vacancies), will be on the ballot.Theoretically, this is an opportunity for the electorate to deeply change the power structure in Washington, and to send, in the most meaningful and democratic way, a signal about what they want their national government to do over the next two years. It’s somewhat unlikely that this election will result in such a clear signal. But even if it does, the message will be sent by just 40 percent of the voting-age population.TRANSFORMING AMERICAN POLITICSOf course, a little instability might help end the trench warfare in American politics. By multiplying the possibilities for coalitions, a PR-produced multiparty system could introduce movement and change where there is now only partisan maneuvering on the margins of deadlock. To use the parties in my example, a legislative coalition of Republicans, Libertarians, and Conservatives might be able to cap runaway spending and put through a bill enabling parents to choose the schools that their children will attend. Populists might be able to attract Social Democrats and Conservatives whose lower-middle-class constituents were dependent on federal transfer payments into an alliance on the issue of comprehensive health-care reform. Small-town Christian Conservatives and rural Greens might find themselves allied against environmentally disruptive development projects.The formation of multiple parties could transform American politics in other ways. Although only members of the House of Representatives would be elected by PR, parties in the House would soon begin to run candidates for the Senate as well, so that the Senate, too, might be divided among several parties offering a choice, not an echo.The effects on presidential elections could be even more interesting, because of the constitutional provision that if no presidential candidate wins a majority of the electoral-college vote, the choice will be left to the House of Representatives. "The presence of a third important party capable of obtaining seats in the House of Representatives and a few electoral votes would hardly throw every presidential election into the House of Representatives," Theodore Lowi has written. "Its presence WOULD, however, force each of the candidates for the nominations of the two major parties to look to the House of Representatives as the place where the real election MIGHT TAKE PLACE. This would transform the presidency because Congress would become the president's direct constituency." The possibility that a splitting of the presidential vote among several candidates would give the House the opportunity to choose might deter Presidents from demagogically "running against Congress," as have Jimmy Carter, Ronald Reagan, and George Bush.A much more likely scenario than elections thrown into the House is the formation of multiparty alliances to elect presidential candidates. Not only might populists have the dominant party in the House, but also they might be the dominant partner in winning presidential alliances. No longer would populists be tempted to split their votes between Republican Presidents and Democratic Congresses. Divided government could come to an end.Such a system might create incentives for interbranch cooperation, rather than confrontation. Since Presidents would tend to be elected by the same multiparty coalition that dominated voting in the House, they would be inclined to view major congressmen as allies, not enemies. At the same time, the multiplication of parties might increase presidential influence in Congress, because it would be difficult for centrist majorities in the House to entice Greens, radical Christians, and other small parties into the supermajorities needed to override presidential vetoes. Presidents who found it easier to organize legislative coalitions, in turn, would be less tempted to circumvent Congress and undermine constitutional democracy by bureaucratic policy changes in the name of "inherent executive power."There might even be a parallel to the "era of good feelings" that, in hindsight, can be seen to have existed from 1936 to 1968. Contrast the accomplishments of that era--the winning of the Second World War, the Marshall Plan, NATO, GATT, the GI Bill, interstate highways, public education, the Civil Rights Act--with the dissension, deadlock, and deficits of the period from 1968 to the present. Contributing to the nonpartisan achievements of that earlier period might have been the fact that the United States had a de facto three-party system. From their rebellion against FDR's court-packing scheme until their downfall as the result of the civil-rights movement, conservative southern Democrats in Congress functioned in effect as a third party, voting almost as often with the Republicans as with liberal Democrats. Their power had evil roots, to be sure, in black disenfranchisement; recognizing this, one can also recognize that they played a moderating role in American politics, checking the excesses of left-wing New Dealers and isolationist Republicans alike. If something like the post-1968 two-party system had existed from the Depression until the 1960s, with a deep division between left-wing New Dealers and far-right Republicans combined with nearly constant control of the presidency and Congress by opposing parties, then America might have been far less stable and successful both abroad and at home.The Founding Fathers did not think that the long development of democratic political forms in America and the world had come to an end with their work. Neither should we. America was once the laboratory of democracy. If the alliance of tradition and cynicism against democratic reform of Congress prevails, America may become democracy's museum instead.DIFFERENTIATIONNo other democracy in the world has a system quite like this, a system in which the legislative branch is regularly up for grabs in an election in which the executive branch is not. A system in which we have alternating turnouts from bad (60 percent) to worse (40 percent) then back to bad then back to worse.You can say this was in a sense part of the Framers’ design. They built the staggered terms into the U.S. Constitution. There is general agreement that they wanted to cushion the national government from short-term swings in public opinion, and to make a bit harder to change the whole government with one sudden gust of public opinion that might be short-lived.But the Framers did not mean to set up this weird alternation between bad and worse turnouts. It was not anyone’s intention and it’s hard to imagine why anyone would ever intend such a pattern. It has just evolved. And it’s pretty crazy. And no other democracy in the world has anything like that going on.Reference:Parliamentary republic - WikipediaA Radical Plan to Change American PoliticsWhy the Constitution’s Framers didn’t want us to directly elect the presidentWhy do so few citizens participate in our democracy?James Madison and Executive PowerMajority Rule/Minority Rights: Essential PrinciplesThe Constitution and the FoundingAmerican RevolutionThe Formation of a National Government