Monthly Archives: April 2020

This is a time to reconsider the UBI

Goldwater Reagan Buckley RINOWe were told four years ago that 17 million people went to bed hungry each night. Well that was probably true. They were all on a diet. But now we’re told that 9.3 million families in this country are poverty-stricken on the basis of earning less than 3,000 dollars a year. Welfare spending [is] 10 times greater than in the dark depths of the Depression. We’re spending 45 billion dollars on welfare. Now do a little arithmetic, and you’ll find that if we divided the 45 billion dollars up equally among those 9 million poor families, we’d be able to give each family 4,600 dollars a year. And this added to their present income should eliminate poverty. Direct aid to the poor, however, is only running only about 600 dollars per family. It would seem that someplace there must be some overhead.–Ronald Reagan, A Time For Choosing

 

In the midst of $1,200 checks and huge unemployment and the utter pointlessness of these attempts at saving an economy that–let’s be honest–was already being destroyed and rotted away by a policy of isolationism, bigotry, and hatred of the free market.  

But on the plus side, this might be a way to bring back an intelligent discussion of the Universal Basic Income. 

Obviously if we instituted it now it would help spare of the worst of the problems caused by COVID-19.  That’s a no-brainer. But this gives us a chance to look at why it could be a long term solution.

 

 

Freidman Hayek
Whenever these two agreed you should probably listen.

In the works of Milton Friedman, F.A. Hayek, and Ronald Reagan you will find an idea called a negative income tax. The negative income tax says that the easiest way to solve the problem of poverty is not to give people housing, and food stamps, and SNAP, and Medicaid…no the easiest way to solve the problem of people not having money is to give them money. It’s so simple only a government could be too stupid to not get it. At the time the negative income tax was the idea they pushed…but I believe if they had considered it, they would have approved of the UBI. 

Mostly because the UBI has an advantage over the negative income tax in that it requires a far smaller and less intrusive bureaucracy.  

 The basic concept of the UBI is that instead of the welfare/entitlement state (food stamps, public housing, Medicaid and Medicare, Social Security, the whole swath of all entitlements) being replaced with a $10,000-15,000 payment to every citizen in the US over the age of 21. At least the intelligent version is that–people like Andrew Yang want to put the UBI on top of all the existing programs and that’s just stupid–misses the whole point of the UBI. Properly done, it reduces huge amounts overhead, it actually removes many of the current system’s disincentives to work or get married. It would actually be cheaper and since we believe in the power of the market we have to believe that in most cases individuals will be much better at spending their money than the government telling them how to spend their money. This idea has merit, I deeply respect many of the people who are advocating this, especially Charles Murray of the American Enterprise Institute (also herehere, here, and here) but also respect some of those who are against it (here and here though I feel these arguments are a bit knee jerk and don’t look at the bigger picture). And it works even better if you match with a completely flat tax. 

If coupled with a $3,500 voucher for private health insurance (and a law requiring all private insurers to have a $3,500 plan that covers all emergency and genetic conditions) you pretty much catch all of people’s financial needs to survive…not thrive, but survive. Which should be the goal. We want people to know that there is always a safety net to keep them on a footing that they can once again pull themselves up the economic ladder. The UBI would guarantee that they have all the basic needs–food, shelter, emergency medical care–but not go beyond that. It costs less than all of the current dole programs and helps more people with a smaller government. But some just aren’t convinced.

The most prominent argument against them the UBI boils down to: “if you give everyone a minimum income they won’t because they’ll have all their basic needs covered.” This is a really stupid argument for two reasons. The first being that most people through the myriad of welfare systems out there can earn $25,000-$50,000 a year if you know how to bilk all the systems for assistance out there. Removing all those programs and offering everyone only $12,000 a year is hardly offering people more of an incentive to be lazy, quite the opposite in fact. It’s providing them the bare minimum needed to survive and giving them the agency to spend it in the way they see best rather than the way a government bureaucracy sees best. Further, getting those full benefits takes time, so we’ve now freed up people’s time to search for a job, and removed all the disincentives to work that current welfare programs have. So while everyone will have a basic income guaranteed to make sure they can meet the bare-bones necessities of life, they’re not going to be provided with any comfort. In fact, this will likely, just in the replacement of Medicaid, Medicare, Welfare, Unemployment Insurance, SNAP, TANF, and Social Security save $600,000,000 to 1 Trillion dollars off the federal budget right off the top.

But there are other advantages to the UBI that many people haven’t considered.

As the UBI will replace Social Security as the fixed income of senior citizens, the Social Security fund will have to be just rolled back into the general government fund. With that comes all the assets the Social Security System has invested in. Specifically, about $3 Trillion in US government debt currently held by the Social Security fund (a little over that when you count Medicare and other retirement funds which would be made useless by this)…so that $3 Trillion in US government debt will go back to the US government. For those of you not picking up on what this means, this means the debt will be erased, as we will just owe it to ourselves. That’s a little over a tenth of all US debt, gone. Completely gone. Now there is other money in Social Security but I assume much of that will be eaten away in the inevitable transfer from one system to the other (you can’t just switch people who are only on Social Security now to a different program without giving them time to adjust).

So no one is in poverty, we’re spending a trillion less a year, and a good chunk of our debt is gone.

Oh, and our interest payments on debt have also been cut. If we were really smart we would use those savings in interest payments to buy back even more debt and further dig our way out of this hole but, we can only hope for so much.

Oh but there’s more. As everyone is now guaranteed a basic level of income, do you know what you don’t need? You don’t need a minimum wage. Minimum wage laws started as a racist way to keep minorities from competing for a job and continuing because of the dumb comment about needing to provide a living wage certainly doesn’t hold water anymore. Now while not every state will get rid of their minimum wage laws, a good many will. That means that employment will go up in those areas and more people will be willing to take lower wages because, hey, they’re starting off with $1,000 a month. That means people will get experience faster as more people will be employed, which has from there a compounding nature to economic growth from increased employment will be astounding.

And, since farmers are now also getting the rewards of basic income, they will no longer need subsidy programs (they don’t need them now, but this will undercut their last excuse). Not only will this mean we can get rid of one of the most useless expenditures of the federal budget, but it also means we don’t need to subsidize corn anymore, which also means we can end the nightmare that is ethanol. This, in turn, will actually drop food prices the world over, and thus that $1,000 a month will actually go even further than you initially thought. And we get to just end the Department of Agriculture and the Farm Credit Administration.

And now that everyone has income coming in that means job security means a lot less. They can leave a job and still be moderately secure at least for a while even if their income was well above the UBI level. Do you know what this means? It means that while employers can pay less because there is less of a risk of employing someone, it also means employees have greater freedom to leave at any time. That means employers will have to work harder to keep employees they want to keep. That means one of the primary goals of most unions, protecting employees from abuse, is no longer needed. Yes, unions will still need to be legal, but as they will no longer be a core part of employment in America you certainly won’t need idiotic things like the Department of Labor and the Federal Labor Relations Authority. Plus all those rules from idiots like OSHA can go out the window as employers will be too concerned with keeping employees. Granted there will be some need for the state versions of these institutions, but as the need for them will be so few and far between the federal government need will no longer be there.

And since the UBI comes with a voucher for health insurance (which is the reason why we won’t need Medicaid or Medicare), it also means you won’t need the Department of Health and Human Services…and if you just want to double the voucher for veterans you won’t need the Department of Veterans Affairs either. The fact that there won’t be massive fraud in Medicaid, Medicare, and the VA, not to mention the lack of government pricing, the price of all medical care will drop while quality will go up.

And as you’re giving money people for housing you don’t need to government to run housing, which means you can either sell all that public housing or give it all to the states…it also means you don’t need rent control laws. This, in turn, will actually drop the price of housing for everyone. And the Department of Housing and Urban Development can go to. So your bills just went down and that $1,000 goes even further.

So, let’s be clear here, we save on yearly costs of entitlement programs, employment goes up, regulation on business goes down, the debt is cut in half and we get rid of the Departments of HUD, HSS, Agriculture, VA, and Labor (plus a lot of other smaller offices)…and all the opposition has is that people will be lazy if you pay them money (even though they can get more right now under the current system it just comes with incentives to not work that the UBI will not have).

Again, some states will not have the brains to implement the needed free-market reforms that the UBI allows them to do. But the thing is that now people aren’t tied to a particular state’s welfare checks and can use their newfound monthly check to move to a state that is booming because of the free market expansion. Yes I know that under the current system of welfare it is possible to move to a different state, but it’s not easy to do….under the UBI it’s very easy, which means people will go where the jobs are and thus bringing more economic growth in the long run.

Granted, there are millions of ways the UBI could be screwed up as the devil is always in the details. This is a system that can only be set up by amending the Constitution, and while most have not gotten as far as those details here are some things it will need to include: the federal government will not be allowed to give any form of entitlement other than the UBI, the UBI should only be adjusted for inflation every 15-20 years, any increase in the base amount needs to be accompanied by a tax increase (which is why this works best with a universal flat tax so people can see the immediate effects of a 1% increase in the UBI resulting in a 1% decrease in their take-home from their job thus ensuring that few will ever want to use the UBI to enrich themselves beyond the basics).

*I realize that when eliminating these departments there is always one or two offices that will need to remain. Like getting rid of HHS won’t get rid of the CDC because that is still a fairly important thing, but it can be an executive office as so many things are. When I say get rid of the department in reality that will only translate to getting rid of 80%-90% of each department (except Agriculture, you can fire all of those useless idiots without negative effects).

 

 

The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need hayekfall even when he is unable to provide for himself, appears not only to be wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born. F.A. Hayek, Law, Legislation and Liberty.

 

 

 

 

Some Further Reading:

In our Hands: A Plan to Replace the Welfare State by Charles Murray (free pdf of the book on AEI.org)

 

 

Flat Tax Revolution: Using a Postcard to Abolish the IRS by Steve Forbes

“The Case for the Negative Income Tax” in The Essence of Friedman by Milton Friedman

Capitalism and Freedom by Milton Friedman

Law, Legislation and Liberty, Volume 3: The Political Order of a Free People by F. A. Hayek

 

Three Reasons for Universal Basic Income

A Budget – Neutral Universal Basic Income

 

Experts Think UBI Is the Solution to Automation. This Year, We’ll Find Out.

The case for a universal basic income

Universal Basic Income: Pilot Programs

What happens if you replace every social program with a universal basic income

 

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No one is thinking

So I found this image the other day. I shared it. A lot of people liked and shared it, but I have come to realize that very few actually believe it.

The problem seems to be that as with most things people have divided into three camps.

Most, but not all, liberals are worried only about the number of deaths from COVID 19

Most, but not all, conservatives are only worried about the economy.

And libertarians are at least consistent in only being worried about everything is going lead to a government takeover of everything.

Granted these terms are always hard to define, especially as conservative nowadays doesn’t remotely mean most of us thought it meant 20 years ago.

Now the COVID death group has, for the most part, never cared about expanding government power (which has always been a problem), but a lot, but again not all, of the remaining NeverTrumpers are falling into this group, and while vocalizing some concern over Trump’s expanding power the=yore not make it a driving force. Further, this group seems to be absolutely idiotic in not realizing that a good economy keeps people alive. Neoliberal economists (and I mean that covering everyone from Friedman and Hayek to the modern Neoliberals which seems to the be the new term for the New Left from the early 1990’s and early 2000’s*) care so much GDP is because there is a beyond heavy correlation between GDP and longer lives, better medical care, higher quality of life, more innovation, more choice, more happiness. It’s not a perfect indicator, but no one has come up with a better one. Economists don’t care about money because they’re Scrooge, they care about it because it buys better lives. And if the economy tanks PEOPLE WILL DIE. More stress causing heart attacks and strokes, more malnutrition, more suicide, more accidents at home, more domestic abuse, more alcoholism, and drug abuse. The longer this goes on the more people will start dying from other things that are not this virus. And to act as if the virus is the only thing to worry about if just preposterous.

But you know what the care only about the economy crowd is equally dumb. Be it the buffoons who are trying to make this out to be nothing—-this is a big thing.

There were 2.8 million deaths in the US in 2019.  We will have more. A lot more this year. Now, I’ll grant that we were always going to have more because it was projected that the Baby Boomers and Gen X were going to be dying in such large numbers that the number of deaths per year wasn’t expected to ever stop increasing until the mid-2050s—but this is going to push those number up more.  But right now you have people arguing that the death rate isn’t that much higher right now…yeah because COVID is mainly confined to New York. It won’t be forever. Flattening the curve may slow the spread of disease but it is unlikely to halt it. NYC deaths are over double what they usually are for this time of year.  When it hits all those communities where we’ve heard about for the last 10 years that are suffering from high opioid use, high unemployment, high-diabetes and in general shitty life…well, let’s just say that if the South had to choose, they would likely be better off picking a second Sherman’s March to the Sea than what is coming for them. Very ignorant people are thinking that because it hasn’t hit their hospital or their community that this is just not going to ever come to them. History tells me that communities during every plague and pandemic throughout history from the plague that caused Athens to the lose the Peloponnesian War, to the Black Death, to the Spanish Flu have had communities that thought they wouldn’t be affect…and then those communities were all but destroyed. Let me make this very clear: UNTIL THERE IS A VACCINE THERE IS NO WAY OF STOPPING THE PROGRESS OF THIS THING. And at best that probably 12 months away. Yeah, sure, maybe if the whole world wanted to shut down for three weeks and we all sheltered in place and had an obscenely limited list of essential employees we could stop the spread of this thing…but only a damn fool could think we could get that done. A lot of people are going to die, and more importantly, a lot of people are going to get sick and that will also have influence on the economy. Further, just putting this out there, worst case is that like HIV we may not develop a vaccine…or just short of that keep in mind we didn’t have a chickenpox vaccine until the late 80s.

And then, of course, there is the consistency of the libertarians in hating government expansions of power and loving the fact that there are many regulations being rolled back to expedite care for people. All well and good. And I don’t mean to let them off easy, I know there are quarters of the libertarians sphere out there that are as always calling for full-on anarchy at this point and ignoring that public health has at least since the Roman Empire been a power of government…but as it’s hard enough to find libertarian voices out there I don’t think many of us are running into that insanity so insulting it wouldn’t do much good. But I will say that fringe does once again miss one of the points of government that some of the other two groups are ignoring: the government is there to help keep people calm and ensure stability in society. Yeah socialism might work on an Israeli Kibbutz, and the world Trumpkins works well in the backwoods of Pennsylvania were those vile inventions of the modern civilization are not embraced, and absolute libertarianism works in an Ayn Rand novel…but the thing is these extreme only work when you have a small group that all agrees to abide by the same rules—here in society you have people too stupid for any extreme, or frankly any sense of moderation. They panic a lot. And idiots cause problems. And you need to keep them in line so they don’t ruin it for the rest of who do have some purpose in life, true on in every nation, on every continent, in every period of time. People are stupid. They ran for toilet paper as if they thought they were going to die on the Oregon Trail. But, at the moment, Trump is making the best case against the expansion of government power that one could ever possibly hope for, so only the most hopelessly mentally damaged (i.e. his supporters…and Bernie’s) are unaware of how terrible government is right now.

Now if you want to talk about what should we be doing that we’re not, that would be great. Because personally, I think we should be plotting for that scenario where vaccines are far off. How? How about starting with the military and medical forces that are not in areas being hit hard right now we start putting people in their 20s into quarantine and then infecting them. Like a good old fashioned chickenpox party that anyone older than a Millenial who got a chick pox vaccine remembers. Give the people the least likely to be harmed the virus, give them immunity to it, hell try some of the safer drugs on them in scientific trials. A very few will die. But what this will do is ensure that these people are now no longer vectors for the disease. Then go through people in their 30s and 40s who have no other conditions that might make them vulnerable. Then move through the ranks of the rest of the government, and maybe then start finding a way for companies that can pay their people to be out for three weeks to do so they aren’t a problem any longer (I’m not a fan of tax breaks in most cases but this could be one of those exceptions). That’s what would protect the elderly and those who have conditions that make them vulnerable—herd immunity. The fast we establish herd immunity the better. Because that is what is going to cut the problems of death and economic at the same time.

Of course, someone might have a better plan, but I haven’t heard of one yet.

Death, the economy, and government overreach are problems. But just yelling that your concern is the big one is not helping anyone.

In the meantime, we need to start dealing with this in a clear risk versus reward way of thinking. Are homemade masks going to stop the spread? Nope. Will they only have be 5% effective? Probably. And 5% is not nothing. And what’s the cost for that 5%, fairly low. If you’ve ever bought a lottery ticket you’ve said you believe in long shots far worse than that 5%. Further, again to the libertarians, we’re trying to prevent panic.

Meanwhile, the panic you could cause by proposing a particular medicine as a cure, which will probably prove to be nothing but a statistical blip could be devastating. Why? Because drugs seldom work on viruses beyond slowing their progress. It’s why we have vaccines because anti-viral drugs are little more than Hail-Mary passes. And really disturbing, we can’t always find a vaccine for viruses…if it were easy then we wouldn’t have been dealing with 40 years of AIDS.

*Side rant here. I know that political terminology is always a shifting set of meanings throughout history, but does it seem that everything has been thrown out and nobody has any consistent set of words we can use that can give us any damn sense of whom we’re talking about. I believe in absolute free markets, personal choice in social concerns, and a strong interventionist foreign policy…Reagan and I would have agreed on 70%+ of things, but I hardly meet any criteria for “conservative” in 2020…WTF?

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A Long-Term Case for Optimism

“The past can teach us, through experience, how to accomplish things in the future, comfort us with cherished memories, and provide the foundation of what has already been accomplished. But only the future holds life. To live in the past is to embrace what is dead. To live life to its fullest, each day must be created anew. As rational, thinking beings, we must use our intellect, not a blind devotion to what has come before, to make rational choices.”—Wizard’s Seventh Rule, The Pillars of Creation, Terry Goodkind

So, in a bizarre way to treat optimism let’s first look at how bad this is going to get. That may seem very counterintuitive but go with me on this for a minute. “Of all mindfulness meditation, that on death is supreme,” says the Buddha as he calls for an awareness of death (maranasati)…and some research shows that there are emotional and intellectual benefits to contemplating our death. When you have faced the worst end, analyzed it, accept it, and moved on, you are no longer bounded by the fears of the the worst-case scenario.

The same is true of any terrible situation.
So, let’s deal with the worst that this could possibly be. COVID 19 at worst has a fatality rate of 4%, and we will probably have a second round of it next cold and flu season. That is upwards of 8% dead. In the US that is 26.4 million people. Worldwide that is 624 million people.
That is beyond tragic. That is over four times more than communism killed in its entire existence. That is somewhere between 56-100 times the deaths of the Holocaust. It is nearly everyone you know over 65, parents, friends, certainly grandparents, and depending on who is reading this, possibly you. A new word might need to be invented to deal with death at these levels.
I want everyone reading this to take a few minutes, maybe even days to consider this, and let it sink in. It will be horrible.
It’s okay, it’s worth crying over, worth being horrified by, and worth being revolted that more could not be done.
Let it sink in.
Okay? If not, maybe this is a time to stop reading and think about why you’re still not okay with this. Do you need to make amends with people who might be gone or who might lose you? Then why are you still reading and not doing that? Didn’t accomplish all you wanted in life? Again, if that’s what is really bothering you, you might want to deal with that while you have time. Didn’t’ go on that trip or buy that car or retire to that beach…you know these are the kind of moments that are supposed to make it clear that life isn’t things, and you may need to think about what is bothering you.
Okay, have we come to terms with this worst-case scenario?
Now let’s move on.
This is unspeakably terrible, but there is one thing it is not. It is not the end of the world.
The Black Death killed 50 million people in Europe. That sounds like a lot less but it was closer to 35-65% of the population of Europe. (Data on what it did in Asia is a little harder to get, but over the course of centuries it probably did a bang-up job there too). And you know what happened? Europe survived. Possibly two-thirds of the population gone. Two out of every three people dead. And Europe survived. This is a disease that strikes hardest at the elderly, which was a disease that was indiscriminate to age. And they survived. We will survive 8% of the population dying.
Now, I’m not saying that we shouldn’t’t care about the people who die, not do every reasonable and even a few unreasonable efforts to save them. But understand this will be tragic deaths of people we love—it will not be the end of the world. If a bunch of illiterate peasants who are civilized only by the barest of definitions can survive two-thirds of their civilization, we will survive. *
This is not the end of the world.
Let that sink in.
Really, let that sink in because to get to the optimism for the future this might come off as a little callous if you haven’t accepted the previous points.

The plagues that struck Athens which led to their conquest by the Spartans led to Socrates, Plato, and Aristotle. The Black Death was followed by the Renaissance. The Napoleonic Wars led to the Industrial Revolution on the European Continent, and the Civil War was followed by the Industrial Revolution in America. WWI and the Spanish Flu were followed by the Roaring ’20s. And the post-WWII economics was nothing short of miraculous. The universe has a way of balancing great tragedy with a spectacular moment of growth economically, intellectually, and spiritually. I’m not saying that everything about these periods was great, but the good certainly outweighed the bad. And granted, not every great tragedy is followed by prosperity. But assuming we get better at what we’re doing (either by toughing it out until January, or maybe blessedly COVID will walk down Pennsylvania Avenue) and learn that the free market with light direction is often a better innovator to our problems, and then hopefully set the groundwork for prosperity when this passes—and this too shall—then we will rise from this better than before.
That might not seem logical, but consider that we’re already coping remarkably well. Restaurants are still serving people via delivery and so while they won’t be in a great situation come to the end of this, they will still be there and ready to grow again. Companies will find that most people can be more effective from home, and will probably find out that 30 hours from home (so long as they have support from the corporate office) will be more effective than 40 in the office for a lot of jobs, which will not only help bring about a new jump in productivity but hopefully give vast new hours for people to spend on pet projects, artistic endeavors, and side business possibilities. This is giving us the opportunity to put in a lot of automated systems that unions and regulation had previously stood in the way of, which will raise the quality of life for numerous people and drop the costs of products worldwide. I’m sure we will see a massive increase in the money for self-driving cars and drone delivery to help reduce human to human transmission of the COVID, which will have an unspeakably massive drop in transaction costs of almost every economic transaction. We have been on the verge of a change as great as the change from an agrarian culture to an industrial one—and it promises to be a world where there is far less poverty and institutional injustice, and it’s sad this is the price we may have to pay for that change, but it is a better world on the other side of this.

And if you’re still not convinced, let me be exceptionally coldly rational here. The average person over the age of 65 in the US has an average net value of over a million dollars. In the worst-case situation, you’re looking at 20 million senior citizens dead. I hate to be callous but, that’s $20 Trillion being pumped into the economy. Granted a good deal of that is in housing, which that kind of glut on the market will radically drop housing prices (but that is affordable housing that isn’t bad) …but that’s still about $10 Trillion being pumped into the economy in the next year and a half. This is terrible, but it relieves a huge strain on our safety nets which can give us the opportunity to fix them properly without having to cut the benefits of those who depend on them while we fix them to be sustainable.
If we think long term here and amidst trying to save as many as possible, but we also need to work to set the groundwork for the world that comes after. And that world is better with less government (which I think we can easily see how stupid and short-sighted government is), with more guardrails in government to prevent the idiotic and unethical from achieving power over anyone, with more efforts put into the technologies and innovations that can make our lives better, and by using the time to reflect on how much we do need human connection in our lives and how we need to re-establish a greater sense of community with others in our lives after this.

What I am not saying is that we should help those who are vulnerable to this disease, who are suffering from it, or who are afraid. We most certainly should be there for them in any way that we find we are able to without going further than we feel comfortable doing.
That we need to understand that it was globalization that gave us exposure to so many diseases before this that we had better immunities and that this will only be, at worst, 8% and not 20% or 70%.
We should take time to ask if this is the best plan to save the most people unlike right now which only cares about deaths from COVID ignoring that the economic harm we’re causing will also cause death from more suicide, accident, stress, domestic violence…and the fact is that I can’t find anyone seriously asking which will have more death, it would likely be COVID is the greater danger, I would just love to know somebody looked toward the long term…you know in a way the government never does.
That science and free markets are working hard to find solutions while governments dither and sputter in incompetence.
And that life is a mixture of good and bad, and we shouldn’t give up on the good just because of terrible, but undeniably momentary, bad.
The world on the other side of this is easily a better one than behind us. Take comfort in that.

*A caveat. I know there are some older parents out there who are worried that they might not be there for their children. I wish I could transfer my faith that the universe is an ordered place, and that they will not be challenged with anything more than they can take, and any loss they endure will be a loss they knew about coming into this life and that it will give them the opportunity for growth. But I can’t transfer that faith. I can only advise that you seek some reconciliation with your own beliefs. But I understand that logically there is probably nothing I can do to ally your fears.

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