Archive for 2007
Britain, Canada, Germany, Italy, Spain, and Now Kuwait
To close out a year of remarkable corporate tax cutting around the world, Kuwait has passed a bill to sharply cut its uniquely high rate. Here is the one-sentence story in the Washington Post today (page D8):
Kuwait’s parliament passed a bill to cut taxes on profit of foreign companies to 15 percent, abolishing a progressive scale established in 1955 with a maximum rate of 55 percent, in a bid to attract investments and diversify the economy.
Progressive is the past; flat is the future.
Filed under: General; International Economics and Development; Tax and Budget Policy
What’s So Funny about P. J. O’Rourke?
I decided to give a young colleague a post-graduate course in political science and economics — P. J. O’Rourke’s books Parliament of Whores and Eat the Rich. So I went to my local Barnes & Noble to search for them. Not in Current Affairs. Not in Economics. No separate section called Politics. I decided to try Borders. But first — to avoid yet more driving around — I went online to see if my local Borders stores had them in stock. (An excellent innovation that Barnes & Noble should copy, for customers who like to look at the actual book before buying it, or who don’t do their Christmas shopping far enough in advance to shop online.) Sure enough, they did, in a couple of stores just blocks from the Cato Institute. Checking to see where in the store I would find them, I discovered that they would both be shelved under “Humor–Humorous Writing.” Oh, right, I thought, they’re not books on economics or current affairs, they’re humor.
Yes, P.J. is one of the funniest writers around. But what people often miss when they talk about his humor is what a good reporter and what an insightful analyst he is. Parliament of Whores is a very funny book, but it’s also a very perceptive analysis of politics in a late 20th century democracy. And if you read Eat the Rich, you’ll learn more about how countries get rich—and why they don’t – than in a whole year of econ at most colleges. In fact, I’ve decided that the best answer to the question “What’s the best book to start learning economics?” is Eat the Rich.
On page 1, P. J. starts with the right question: “Why do some places prosper and thrive while others just suck?” Supply-and-demand curves are all well and good, but what we really want to know is how not to be mired in poverty. He writes that he tried returning to his college economics texts but quickly remembered why he hated them at the time–though he does attempt, for instance, to explain comparative advantage in terms of John Grisham and Courtney Love. Instead he decided to visit economically successful and unsuccessful societies and try to figure out what make them work or not work. So he headed off to Sweden, Hong Kong, Albania, Cuba, Tanzania, Russia, China, and Wall Street.
In Tanzania he gapes at the magnificent natural beauty and the appalling human poverty. Why is Tanzania so poor? he asks people, and he gets a variety of answers. One answer, he notes, is that Tanzania is actually not poor by the standards of human history; it has a life expectancy about that of the United States in 1920, which is a lot better than humans in 1720, or 1220, or 20. But, he finally concludes, the real answer is the collective “ujamaa” policies pursued by the sainted post-colonial leader Julius Nyerere. The answer is “ujaama—they planned it. They planned it, and we paid for it. Rich countries underwrote Tanzanian economic idiocy.”
From Tanzania P. J. moves on to Hong Kong, where he finds “the best contemporary example of laissez-faire….The British colonial government turned Hong Kong into an economic miracle by doing nothing.”
You could do worse than to take a semester-long course on political economy where the texts are Eat the Rich and Parliament of Whores. So, bookstore owners, leave them in the Humorous Writing section for sure, but also put copies in the Economics, Politics, and Current Affairs sections.
Filed under: General; Government and Politics; Political Philosophy; Tax and Budget Policy
Tag-Team Battle: Rats and Bureaucrats vs. Cats and Entrepreneurs
Tens of millions of Americans have cats in their homes, notwithstanding the possibility that some cat hair may get in their food. Bureaucrats in New York City, however, want to save consumers from this horrifying possiblity, so they fine store owners who keep cats on their premises. But the Grinches at the Health Department fail to realize that the cats are the most effective way of controlling rodents. This creates a no-win situation for entrepreneurs. They can keep a cat in the store and risk getting fined, or they can go without a cat and get fined for rodent infestation. The New York Times reports:
Amid the goods found in the stores, there is one thing that many owners and employees say they cannot do without: their cats. And it goes beyond cuddly companionship. These cats are workers, tireless and enthusiastic hunters of unwanted vermin, and they typically do a far better job than exterminators and poisons. When a bodega cat is on the prowl, workers say, rats and mice vanish. … But as efficient as the cats may be, their presence in stores can lead to legal trouble. The city’s health code and state law forbid animals in places where food or beverages are sold for human consumption. Fines range from $300 for a first offense to $2,000 or higher for subsequent offenses. … Still, many store owners keep cats despite the law, mainly because other options have failed and the fine for rodent feces is also $300. “It’s hard for bodega owners because they’re not supposed to have a cat, but they’re also not supposed to have rats,” said José Fernández, the president of the Bodega Association of the United States.
To understand what this really means, the article tells the story of Mr. Martinez, who is trying to earn a living while dealing with the mindless bureaucracy:
…last winter, a friend brought Mr. Martinez a marmalade kitten in need of a home. Mr. Martinez, who was skeptical of how one slinky kitten could fend off an army of hungry rats, set up a litter box in the back of the store, put down an old fleece jacket and named the kitten Junior. Within two weeks, Mr. Martinez said, “a miracle.” “Before you’d see giant rats running in off the streets into the store, but since Junior, no more,” he said. Junior sometimes brings Mr. Martinez mouse carcasses as gifts, which he said bothers him less than the smell that permeates his store when the exterminator’s victims die and rot under a freezer. In October, a health inspector fined Mr. Martinez $300 and warned him that if Junior was still there by the time of the next inspection he would be fined $2,000. “He wants me to get rid of the cat, but the rats will take over if I do,” Mr. Martinez said. “I need the cat, and the cat needs a home.” Because stores do not get advance notification of an inspection, Mr. Martinez is trying to keep Junior in his office as much as possible. Many bodega owners reason that a cat is less of a health threat than an army of nibbling rats. “If cats live in homes and apartments where people have food, a cat shouldn’t be a threat in a store if it’s well maintained,” Mr. Fernández said.
I don’t have much opportunity to patronize New York City bodegas, but I prefer cats over rats. Too bad the city’s bureaucracy doesn’t let the market decide which animal should take precedence.
Australian National ID Card Abandoned
This somewhat cryptic blog post at Wired reflects the delight of Roger Clarke that the Australian national ID card has been dropped by the incoming government. Clarke wrote an article in 1994 that is probably fairly regarded as the foundation of identification theory. I expanded on his thinking in my book, Identity Crisis.
In related news, Montana Senators Max Baucus and Jon Tester put language prohibiting the expenditure of federal funds for development of a national ID card in the omnibus spending bill Congress passed last week. Because the Department of Homeland Security denies that REAL ID is a national ID, this language is probably hortatory during the current administration.
Filed under: Cato Publications; Foreign Policy and National Security; Law and Civil Liberties; Telecom, Internet & Information Policy
Will the IRS Drive More Business Offshore?
In a baffling move, the Internal Revenue Service is poised to unilaterally change the rules for “captive” insurance companies, a policy that will drive business out of the
United States.
It is unclear whether the tax agency actually has the regulatory authority to make this change, and the IRS in the past has tried to use regulations to overturn existing law, so anything is possible. In any event, a report from the Cayman Islands shows that low-tax jurisdictions are looking forward to taking advantage of the IRS’s initiative:
A recent Internal Revenue Service proposal to remove tax deductions for certain U.S. captives may drive more companies to go offshore, with Cayman and Bermuda the prime beneficiaries of the change. If approved, this proposal would eliminate the ability of U.S. captives to claim tax deductions for money set aside in reserves to pay for future claims and losses. Instead, these deductions would only be allowed at the time the actual claims are paid out, potentially leading to millions of dollars in taxes being collected up front.
…Vermont has been the only real onshore competitor for Bermuda and Cayman as large numbers of U.S. companies have turned to captives, transforming this once exotic product into a mainstream choice on the global market place. …To date, Bermuda leads the captive market with about 870 companies, followed by Cayman (756) and Vermont (562).
Filed under: International Economics and Development; Tax and Budget Policy
Cringe-Inducing Confusion at TNR
Over at The New Republic, Josh Patashnik responds to my post on Gov. Arnold Schwarzenegger’s (R-CA) universal coverage plan. Over at Washington Monthly, Kevin Drum gave Patashnik Tuesday’s quote of the day.
It would be an understatement to say Patashnik and I don’t see eye to eye. I don’t even think we speak the same language. For example…
Market-friendly reforms? Patashnik describes the Schwarzenegger plan as a collection of “market-friendly” health care reforms. Really.
The plan would banish market prices for health insurance. It would override market allocations of wages and benefits. It would let the state, rather than the market, decide what share of health insurance premiums will be spent on administrative costs vs. claims. It would expand government coverage at the expense of private markets. Every plank of Schwarzenegger’s plan would reduce the number of decisions made by the market and increase the number of decisions made by government.
Certainly some insurance companies and employers would benefit, because the plan would cripple their competitors. But that makes the plan anti-competitive, special-interest legislation — not market-friendly.
Patashnik claims the plan contains a “variety” of market-friendly reforms. If he can find even one, I’ll buy him lunch.
Libertarians = conservatives? Patashnik writes:
I can’t say I’m surprised Cato doesn’t like [Schwarzenegger's plan], though. The conservative health care strategy works like this…
Patashnik perhaps believes that conservatives and libertarians are the same thing, or that the latter are a subset of the former. This is a source of irritation for libertarians (and probably conservatives too), for the same reasons it would irritate TNR staff to be called communists: not only is it dismissive, it’s just plain inaccurate.
…endorse subsidies in theory, since it would seem unacceptably heartless to simply say that people who can’t afford medical care shouldn’t get it….
Libertarians endorse voluntary subsidies, in the abstract and the concrete, for those who cannot afford medical care. This is not because “it would seem unacceptably heartless to simply say that people who can’t afford medical care shouldn’t get it,” but because that is unacceptably heartless.
Libertarians oppose coerced subsidies, such as the Medicaid program that Schwarzenegger proposes to defraud, because it is immoral to put someone in jail if he doesn’t want to contribute to Medicaid. Coerced subsidies are also counter-productive. (Need evidence? Look around.)
Mind you, we don’t think these things because we’re libertarians; we’re libertarians because we think these things.
Patashnik continues:
…Then, whenever anybody proposes a plan to actually implement subsidies, vehemently oppose it without offering any alternative plan to expand coverage.
Three things: First, a libertarian who opposes coerced subsidies is being entirely consistent. Second, libertarians have no obligation to offer an alternative plan to expand coverage, because libertarians reject that as a legitimate role for government. Third, were Patashnik to peruse the offerings of Cato health policy scholars, he would notice that most of our proposals nevertheless would expand coverage — simply because more people would have health insurance if government got out of the way.
State experimentation Patashnik concludes:
…In other words, let states experiment — except when they actually do.
Yeah — if libertarians (or conservatives?) prefer state-level economic regulation to federal regulation, why do they complain about it when they see it? Two responses:
First, one might believe that gay marriage is an issue for the states rather than Congress, but still oppose a particular state’s proposal to suppress that freedom. My guess is that Patashnik sees hypocrisy only because he does not value the freedom to choose his health insurance or how to provide charitable care as much as he values the freedom to marry someone of the same sex.
Second, Schwarzenegger is experimenting with the money of non-Californians. By law, half of California’s Medicaid budget comes from the feds. So the non-Californians funding his grand designs have every right to object. Moreover, Schwarzenegger proposes — in broad daylight — to further pick the pockets of non-Californians by defrauding Medicaid.
I wonder, does that bother Patashnik? I’m interested to know the answer.
Filed under: General; Health, Welfare & Entitlements; Political Philosophy
Government ID Card Program Off the Rails
“The Internal Revenue Service paid a contractor $188,000 to provide one person to do clerical work over 11 months.”
That’s the opening line from an AP report on waste in the implementation of a Bush Administration federal worker identity card.
Here’s a little more:
The IRS was responsible for developing and implementing the program to provide identification cards to about 150,000 employees at the Treasury Department. The projected cost of the program was $421 million over 14 years.
Check my math: Is that $2,800 per card?
Filed under: Government and Politics; Telecom, Internet & Information Policy
Update on the Internet Gambling Dispute
Good news and not-so-good news on the long-running saga over internet gambling (background here): Antigua has been awarded $21 million annual “damages” as a result of the United States’ restrictions on offshore provision of internet gambling and betting services.
That is far less than the $3.4 billion Antigua had asserted it is owed, but more than the United States had suggested was warranted ($500,000). On the other hand, the arbitrator gave Antigua permission to collect the damages by suspending their obligations to protect U.S. intellectual property. The $21 million worth of pirated software, movies, and music would go on annually unless and until the United States changes its laws, so we can expect some lobbying from Hollywood to have the restrictions on internet gambling lifted.
The report just came out, so I have yet to absorb it fully myself, but here it is.
Filed under: International Economics and Development; Law and Civil Liberties; Trade and Immigration
Expect to Pay More for Chocolate Coins this Christmas
An article today in the Wall Street Journal reports on Department of Justice investigations into alleged price-fixing by U.S. chocolate companies, following similar investigations by Canadian regulators into the Canadian divisions of the same companies.
The companies insist that higher commodity prices are behind any recent price increases in their products, with Cadbury’s CEO expecting ingredients to cost between 5 and 6 percent more next year as a result of tight supplies (primarily because of drought in Australia, pushing up dairy prices) and increased demand, as the middle class — and consequently appetite for dairy, sugar and meat — grows in Asia and Latin America. The U.S. government’s misguided promotion of biofuels, which diverts corn to ethanol production and puts upward pressure on all commodities prices as farmers divert land to growing corn, definitely doesn’t help.
While prices for most commodities are at historic global highs, confectionary companies in the United States have often had to pay significantly higher prices because of government intervention in agricultural markets. Cato’s Center for Trade Policy Studies has looked into dairy and sugar policies before, and finds that the costs to consumers and taxpayers of supporting sugar and dairy farmers through isolating the U.S. market is truly outrageous.
Of course, Congress has so far chosen to ignore the problems with dairy and sugar, proposing instead to maintain these programs (even increasing the support in the case of dairy) rather than bring relief to consumers (including candy manufacturers). You know something is wrong with U.S. agricultural policy when the European Union looks reformed in comparison: the EU announced that it is suspending its tariffs on some cereals crops [$].
Filed under: International Economics and Development; Trade and Immigration
Hillary Claus
Hillary Clinton’s Christmas-weekend TV ad shows her sitting at her famous couch wrapping presents. They’ve all got tags — reading “Alternative Energy,” “Middle Class Tax Breaks,” “Universal Health Care,” and “Universal Pre-K.” (Also “Bring Troops Home,” but she’s already made clear that that box is empty.) I’d embed the video here, but you’d think it was a Club for Growth parody, so instead I’ll link directly to her campaign website.
Hillary actually sees herself as Santa Claus, handing out presents to the voters. Except, as my colleague Justin Logan notes, instead of putting together the toys at the North Pole with her elves, she’ll just take our toys, wrap them up, and then give them back to us after taking her cut and then pretend that it’s a great act of beneficence.
I complained once about teenagers interviewed by Parade magazine who “seemed to regard the new president as a combination of Superman, Santa Claus, and Mother Teresa.” But they were teenagers, not 60-year-old presidential candidates. Only one of the teens interviewed had an adult understanding of where government benefits come from. “I worked every day last summer,” he told Parade, “repairing and setting up cattle fences, from 8 a.m. to 5 p.m. in very hot weather. I got a good tan, but other than that it wasn’t worth it — just to have the government take a third of my money and have it go to someone I don’t even know who didn’t earn it in the first place. Do something about taxes.” He’s old enough to vote now. If only he were old enough to run for president.
Filed under: Government and Politics; Tax and Budget Policy
Follow Huckabee’s Money
I read in Robert Novak’s column this morning that Mike Huckabee held a fundraiser earlier this week at the Houston home of Dr. Steven Hotze. As Novak notes, Hotze is “a leader in the highly conservative Christian Reconstruction movement.”
Christian Reconstructionists, for those unfamiliar with the term, are Religious Right radicals who believe that America, and the rest of the world besides, should be governed in accordance with strict Biblical law. And yes, that includes stoning adulterers. Here’s a snippet from “A Manifesto for the Christian Church,” a 1986 document from an outfit called the Coalition on Revival that was signed by, among others, Steven Hotze:
We affirm that the Bible is not only God’s statements to us regarding religion, salvation, eternity, and righteousness, but also the final measurement and depository of certain fundamental facts of reality and basic principles that God wants all mankind to know in the sphere of law, government, economics, business, education, arts and communication, medicine, psychology, and science. All theories and practices of these spheres of life are only true, right, and realistic to the degree that they agree with the Bible.
For more, check out this audio clip of Hotze from back in 1990. Over the years, Hotze has achieved some prominence for his anti-abortion and anti-gay activism. Also, the good doctor appears to be a total quack.
Meanwhile, Novak reports that among the members of the fundraiser’s host committee was Baptist minister Rick Scarborough. The founder of Vision America and a self-described “Christocrat,” Scarborough made news earlier this year when he argued that the HPV vaccine improperly interferes with God’s punishment of sexual license.
Just when you thought the Huckabee campaign couldn’t get any creepier….
[cross-posted from www.brinklindsey.com]
Korean Tax-Cutter Wins
The corporate tax-cutting revolution may take another step forward with the election of Lee Myung-bak to the South Korean presidency.
Lee has promised to cut the country’s federal corporate tax rate from 25 to 20 percent.
Lee seems to have a very pro-market perspective on fiscal economics: “The ratio of taxation against national income was 17.9 percent under former President Kim Young-sam’s administration, but it increased to 20 percent under the incumbent administration, which almost stops the economy from growing.”
America’s tax ratio is closing in on 19 percent of GDP and our federal corporate tax rate at 35 percent will be 75 percent higher than Korea’s.
The Man with the Plan
The Russian government’s monthly propaganda insert in the Washington Post includes this headline today:
The Man with the Plan/President Putin Has Got the Nation’s Future Mapped Out
It reminded me of an article I wrote a few years ago with the same title, “The Man with the Plan.” (In Liberty, July 1996, or you can read it in my forthcoming book The Politics of Freedom.) I was writing about Clinton adviser Ira Magaziner, whose various planning schemes, while scary, are certainly not as bad as the ones that have been tried in Russia over the past century. Though this idea, expressed by presidential candidate Bill Clinton on the campaign trail in 1992, might come close:
We ought to begin by doing something simple. We ought to say right now, we ought to have a national inventory of the capacity of . . . every manufacturing plant in the United States: every airplane plant, every small business subcontractor, everybody working in defense.
We ought to know what the inventory is, what the skills of the work force are and match it against the kind of things we have to produce in the next twenty years and then we have to decide how to get from there to there. From what we have to what we need to do.
Five-year plans not having planned out so well, Clinton and Magaziner decided the problem was their short-term focus. Whether Bill or Hillary, Putin or Magaziner, when I hear the phrase “the man (or woman) with the plan,” I think of Adam Smith:
The man of system, on the contrary, is apt to be very wise in his own conceit, and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests or the strong prejudices which may oppose it: he seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board; he does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.
Filed under: Government and Politics; International Economics and Development; Political Philosophy; Tax and Budget Policy
A Moment of Idiocy, of Real Idiocy
The above title is the correct assessment of the new energy bill that President Bush just signed into law less than 24 hrs after the House approved it by a 314–100 margin. House Speaker Nancy Pelosi, speaking just prior to yesterday’s vote, gave the politicians’ assessment: “You are present at a moment of change, of real change.”
Of course, it’s not that much of a change for politicians to substitute their collective judgment for the private decisions of consumers who have strong incentives (stronger than politicians!) to make the most efficient choices. Still, the new energy bill — assuming Congress sticks to it — will make some changes:
- The incandescent light will be phased out of existence beginning in 2012.
- Average fuel economy for new vehicles will move from the current 25.0 MPG to 35.0 by 2020 — a standard that only the Toyota Prius and Honda Civic hybrids currently meet.
- New government mandates and subsidies will push the domestic ethanol industry to some 36 billion gallons in sales by 2020. (This will actually lessen fuel efficiency because ethanol gets considerably worse mileage than gasoline.)
- The move to more biofuels will continue to increase food prices as farmland is reallocated to the production of energy stocks.
All this leads to one question: Why are these mandates necessary? If the changes are as sensible as Congress and the White House claim, consumers would make them privately. Indeed, the data indicate that consumer preference for fuel-efficient cars is stronger than what the economics would justify.
So then, what is this energy bill really all about?
ADDENDUM: Beth Douglas Kelly, a mechanical engineer who specializes in energy R&D, emailed me about a bit of sloppiness in my parenthetical that ethanol gets worse gas mileage than gasoline. My statement is correct but, she points out, it’s not that important — it simply means that a certain volume of gasoline gets you farther than the same volume of ethanol. That fact bypasses the important questions of gasoline’s and ethanol’s costs (understood in a broad sense).
Here are the important comparisons:
- What is the cost per mile for gasoline vs. ethanol? (Currently, gasoline still beats ethanol when you take into account the loss of gas mileage.)
- What are the environmental externalities of gasoline and ethanol? (Here, ethanol seems to be better but there’s still some argument.)
- What are the other externalities of gasoline use vs. ethanol use?
- Will consumers ever be made to bear (and thus judge between) those costs, or will politicians continue to hide them?
Filed under: Energy and Environment; Tax and Budget Policy
Unfunded State Health Costs: Still $1.4 Trillion
The New York Times and Washington Post report today on a new study by the Pew Center on the States regarding unfunded state and local pension and health costs for retirees.
Let’s just look at the health costs. Pew finds that state governments have promised their workers $370 billion of retiree health care that they have not put money aside for. Unless those benefits are cut, that figure represents the looming hit on future taxpayers.
But Pew only looks at state governments, which employ 4.3 million people, according to Census data. Local governments employ 11.8 million people. If the local health care problem is as big as the state problem, the total state/local unfunded amount would be $1.4 trillion.
Interestingly, that is precisely the figure that Jagadeesh Gokhale and I came up with when we looked at this problem last year. We estimated that state and local governments have racked up about $1.4 trillion in unfunded retiree health costs.
Our study and the Pew study highlight two fundamental problems. First, governments have been irresponsible in making huge promises to workers regarding future benefits, but then not funding them as private benefit plans would.
Second, “public sector employees are far more likely to receive retirement benefits [than private sector employees] and the gulf between private and public sectors continues to grow,” according to Pew. For example, 82 percent of government workers receive retiree health benefits, compared to just 33 percent of private sector workers.
The solution is to cut back sharply on the gold-plated benefits received by government workers, while privatizing as many state and local activities as possible.
Prior posts: here, here, and here.
Filed under: General; Health, Welfare & Entitlements; Tax and Budget Policy
The Democrats’ Distorted Take on trade and the 1990s
The debate among the Democratic presidential candidates has become stuck in the past. When they are not debating the alleged shortcomings of the 15-year-old North American Free Trade Agreement, they have been sparring over the economic record of the 1990s.
Not surprisingly, front-runner Hillary Clinton touts the economic success of the previous decade, when her husband Bill Clinton was president and she was exercising influence down the hall in the West Wing.
“Sometimes an opponent of mine [read Barack Obama] says we talk about the 1990s too much,” Clinton said recently on the campaign trail, according to this morning’s Financial Times. “That is because in the 1990s we had the greatest economic performance in decades. I like to talk about what works because I want to get back to doing what works.”
Yet candidate Clinton and her fellow Democratic candidates also routinely trash NAFTA, which the former President Clinton shepherded through a Democratic Congress in 1993. They blame the trade agreement with Canada and Mexico for costing the U.S. economy million of manufacturing jobs.
So what was the real record of the 1990s? Was it a time of unprecedented growth and prosperity presided over by a generally pro-trade, Democratic president? Or was it a time of stagnation and job losses caused by a trade agreement that now, according to Hillary Clinton, must be reopened and revised?
The right answer is that the 1990s were a good time for the U.S. economy, and expanding trade and globalization—including NAFTA— were among of the reasons.
As I noted in a recent study for Cato, titled “Trading Up,” the economic record of the U.S. economy during the past decade, including the late 1990s, offers yet another reason to support further trade liberalization:
Rising real wages and compensation during the past decade pose a serious challenge to the “trade is making us worse off” thesis. If we are to believe that expanding trade and competition with low-wage countries have eliminated high-laying manufacturing jobs and depressed the earnings of U.S. workers, how do the critics of trade explain the remarkable labor-market gains of the past decade? Since 1997, during a period of rapidly increased trade and globalization, the number of workers employed in the U.S. economy jumped by more than 16 million, while the unemployment rate is now slightly below what it was a decade ago at a similar stage in the business cycle. And those employed workers, as we’ve seen, are earning significantly higher real hourly compensation than workers a decade ago when the U.S. economy was less globalized. That record is not an indictment of more liberal trade but a vindication.
What works is a more open, efficient and competitive U.S. market.
Filed under: General; International Economics and Development; Trade and Immigration
DHS: And We Even Obey the Law!
The Department of Homeland Security’s Officer for Civil Rights & Civil Liberties, Daniel W. Sutherland, explains here the great pains DHS is taking . . . well, not to embarrass itself as American Muslims return from the Hajj. Well and good.
But he goes a little far in touting the department’s efforts: “For the first time in the federal government, a Cabinet-level Secretary has placed two civil libertarians in senior leadership positions — Hugo Teufel, our Chief Privacy Officer, and me.”
The Officer for Civil Rights and Civil Liberties and the Privacy Officer are statutory positions. I’m not sure self-congratulation is in order for following the law.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
Defeat Terrorism
Terrorism is a strategy used by the weak to goad the strong into self-injurious overreaction.
DownsizeDC has a campaign underway that I think is critical to defeating terrorism. It’s described on their site this way: “We’re looking for a few brave Americans to start a real war on terror — by not being afraid!”
The “I am Not Afraid” campaign is not about passing or killing any legislation. It is just to get Washington, D.C.’s consistent overreaction to the threat of terrorism under control. The sense of proportion this campaign seeks to create really makes it worth a visit, but here’s a taste:
Nearly 800,000 people have died in car accidents in the last twenty years. During that time there have been exactly two Islamic terrorist attacks on U.S. soil, with less than 3,000 total fatalities. That’s more than 200 TIMES as many Americans dying in their cars as at the hands of Islamic terrorism. And yet . . .We’ve turned the whole world upside down in response to the two terrorist attacks. We’ve launched invasions, created vast new bureaucracies, shredded the Bill of Rights, compounded regulations, spent hundreds of billions of dollars, and disrupted travel and commerce. But no one is suggesting that we do 200 times as much to address the driving risk, which is 200 times greater.
Terror warriors, keep your straw men in the barn. This is not a pacifist, terrorism-denial campaign. It seeks proportional responses to threats, and acceptance of harms that cannot reasonably be prevented. The message to legislators:
“I am not afraid of terrorism, and I want you to stop being afraid on my behalf. Please start scaling back the official government war on terror. Please replace it with a smaller, more focused anti-terrorist police effort in keeping with the rule of law. Please stop overreacting. I understand that it will not be possible to stop all terrorist acts. I accept that. I am not afraid.”
This is good, important work to defeat terrorism.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
Evangelicals and Libertarians
A front-page story in the Wall Street Journal features this chart:
It shows, as the Washington Post bannered after the 2006 election, that evangelicals moved a bit away from the Republicans in 2006. Indeed, there was a 7-point decline in the Republican margin among evangelicals.
But if you want to see a real shift, the Post and the Journal could run this chart:
In other words, among libertarians, the margin for Republican House candidates dropped from 47 to 8 points, a 39-point swing. The libertarian vote is about the same size as the religious right vote measured in exit polls, and it is subject to swings more than three times as large. Strategists in both parties should take note.
Virginia’s National ID Tax
The Washington Post had a story yesterday on whether Virginia would implement the REAL ID Act, the national ID law that has been rejected by other states across the country. They object to its formidable costs, bureaucratic burdens, insoluble privacy problems, and ineffectiveness as a security tool. Why might Virginia go along?
“The vast majority of 9/11 terrorists used Virginia licenses,” Gov. Timothy M. Kaine (D) said. “I think that’s why you haven’t seen as much of a push back.”
It’s the hairshirt theory of policymaking – never mind whether making the driver’s license into a national ID will add to our protections.
Noting the governor’s proposal for a $10 increase in the fee to renew a Virginia driver’s license, the Roanoke Times editorializes today with a little more clarity:
Americans should not have to wait weeks for a driver’s license. They should not have to worry about a massive database tracking their every move. They should not have some wannabe national ID card sloughed onto states.
If you think a national ID tax and all this nonsense somehow adds to the country’s protections, then, yes, Virginia, there is a Santa Claus.
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