Archive for January, 2007
John McCain’s Empty Threat
The NYT has a front-pager this morning on the fact that “In Senate, Allies of Bush Attempt to Halt Iraq Vote.” It describes a resolution offered by John McCain, Joe Lieberman, and Lindsey Graham that seeks to “set benchmarks for the Iraqi government and describe the troop increase as a final chance for the United States to restore security in Baghdad.”
“Final chance?” Sounds serious. But is it? Consider McCain and Lieberman were at AEI earlier this month, warning, in the case of Senator McCain, that if we were to leave, it would be “the beginning of the end, in some respects” of Western civilization.
But say you’re an adviser to Maliki, and you see these two offering a resolution that says this is your last chance, this is it, we’ll pull the plug if you can’t get it together. (Put aside the fact that there’s no chance either of them would ever vote to actually cut off funding for the war, the only practical tool Congress has to stop it.) Then your researchers bring you their AEI presentation in which McCain says it’s the beginning of the end of Western civilization if we leave.
Would you be worried? Would you think “Uh oh, if we don’t meet all of the American objectives, John McCain and Joe Lieberman are going to stop supporting the war. Of course, in their own minds, leaving on those terms would mean the beginning of the end of Western civilization, but they still might do it!” Doubtful.
If John McCain and Joe Lieberman think the stakes are as high as they implied at AEI, then they should just say flat-out: We can’t leave, no matter what, unless we achieve our goals. That’s an honest position, although one I think profoundly misguided.
Of course, the American people wouldn’t be too hot on such a proclamation. They certainly wouldn’t be inclined to, say, elect someone who said that to be president. But consistency’s never been McCain’s strong point.
It’s almost like the guy’s running for president or something.
Filed under: Foreign Policy and National Security; Government and Politics
The Ol’ College Lies
Most college kids have no choice but to subsist on Ramen noodles, and every year skimping on aid keeps tons of fully-qualified students out of higher education, right? Wrong, but you’d certainly believe such things if you listened to the nations’ student interest groups, or most of our politicians.
“We must address the crisis in college affordability that affects every low- and middle-income family and threatens our economic progress,” said Senator Edward M. Kennedy (D-MA) after the House recently passed a bill that would cut in half interest rates on subsidized federal student loans. “I applaud the efforts of my colleagues in the House and look forward to taking up this critical issue in the Senate very soon.”
The problem with continuing to propagate these ideas, as I and others have argued many times, is that if anything, making student aid cheaper and more plentiful actually drives college “sticker prices” higher by pulling up demand and allowing colleges to increase prices with impunity. We’ve also argued that politicians encouraging practically everyone to go to college – and providing them with big subsidies to do so – is hugely wasteful, pushing many kids into higher education who aren’t prepared for it, and squandering huge bundles of student and taxpayer money in the process.
A few articles in today’s newspapers illustrate well the yawning gap between the rhetoric and reality of higher education.
Doha, TPA Extension, and the Farm Bill: the Axis of Frustration
President Bush went to Illinois yesterday, asking for Congressional renewal of his authority (called “Trade Promotion Authority”) to negotiate trade agreements and send them to Congress for an up-or-down vote without amendment. The present TPA expires at the end of June 2007. For those of us who have strong doubts about the ability of members of Congress to take the broad view when considering trade agreements, TPA is a necessary–but not sufficient–condition for the United States to pursue trade liberalization in partnership with other nations, including the ailing Doha round of world trade negotiations and other preferential trade agreements like those underway with South Korea and Malaysia. (This Washington Post article has a good overview of the stakes and politics behind the battle for TPA.)
(Side Note: it was surely no accident that President Bush chose to make his case at the headquarters of a successful exporter [a sterling company Caterpillar may be] rather than, as Grant Aldonas suggests in the Post article, a company that delivers cheap imports to consumers. Mercantalism is alive and well, in case there were any doubts.)
Basically, the bind is this: without TPA, Doha is dead. But many are suggesting that lawmakers will be reluctant to extend TPA if no Doha deal is imminent. Similarly, the new Farm Bill, due for enactment in September, may be an extension of the unsatisfactory 2002 Farm Bill if the Doha round does not exert significant pressure to reform, even though reform of U.S. agricultural policy would go a long way to helping the round succeed.
Don’t look to key members of Congress for their support in unraveling this knot, though. An article at the Delta Farm Press website contains some worrying statements from the new House Agriculture Committee Chair Colin Peterson. The money quote:
There’s pressure on us to change the farm bill because “that’s the only way we can get a trade deal,” said Peterson, a Minnesota Democrat. “Now, I’m sorry, but I’ve had enough of these trade deals. And unless we can get something good out of, I don’t give a darn if we get one.”
Something tells me that Chairman Peterson’s statement was not meant to be a be read as an endorsement of unilateral trade liberalization.
Filed under: General; International Economics and Development; Trade
Amazing Grace, How Sweet the Story
Amazing Grace is a beautiful song, but I’ve never been entirely comfortable with it. I didn’t like that line “saved a wretch like me.” I don’t think I’m a wretch. Nor are most of my friends.
But once I learned the story behind the song (with a little help from my friends at the Mackinac Center), I became more sympathetic: John Newton, who wrote Amazing Grace, really was a wretch. Now a new movie is going to bring that story to millions of people.
John Newton was a slave trader and by his own testimony an infidel. He was converted to Christianity but continued in the slave trade. Eventually, however, he renounced that vile life and became an evangelical minister in the Church of England and an abolitionist. “Was blind but now I see,” indeed.
Among the people who heard his preaching was a young member of parliament, William Wilberforce, who was inspired to lead a long campaign for the abolition of slavery — from his maiden speech in 1789 to the final passage of the Abolition Act a month after his death in 1833.
This is one of the greatest stories in history. And now it is the subject of an impressive new movie. I’ve only seen the trailer, but the production values are obviously good, and I’m told that the movie is great. Michael Apted directed. Ioan Gruffudd (best known as Horatio Hornblower) plays Wilberforce. It also features the fine British actors Albert Finney, Rufus Sewell, Ciaran Hinds, Michael Gambon, and Toby Jones. It opens on February 23.
The story of Newton, Wilberforce, abolition, and Amazing Grace is very popular among evangelical Christians. It’s an unambiguous advance for human freedom and dignity in which evangelicals played central roles. And that’s why the movie is produced by Bristol Bay Productions (owned by Philip Anschutz, a billionaire conservative) which also produced Ray. Anschutz owns another film company which produced The Chronicles of Narnia.
If God’s amazing grace caused John Newton to give up slave trading, then who could object? But you don’t have to be a Christian to appreciate what promises to be a well-made movie about this great triumph of liberty.
And for those of us who struggle in the vineyards year after year, trying to secure the blessings of liberty to ourselves and our posterity, the story reminds us that humanity has made great progress toward freedom, that each battle for freedom can be long and seemingly futile, but that the goal is worth time and money and effort.
I was once challenged by a Chicago School economist, who thinks everything can be measured, to name the most important libertarian accomplishment in history. I said it was the abolition of slavery. OK, name another, he replied. “The bringing of power under the rule of law,” I suggested. He wanted to know how you would measure that. But even without a caliper we can see the importance of that accomplishment. We can also see that neither of these is yet a final victory.
May Amazing Grace inspire us to continue working, as long as it takes, to liberate men and women from the arbitrary rule of others and to constrain power with the chains of law.
Cross-posted from Comment is free.
Filed under: General; Law and Civil Liberties; Political Philosophy
Visa Policies Costing U.S. Billions of Dollars
The United States is losing billions of dollars a year and the goodwill of millions of people by unnecessarily strict visa policies that discourage tourists, students and business travelers from coming to the United States.
The problem has become so critical that a broad coalition of American businesses, universities and other interest groups are planning to launch a campaign today for needed visa reform.
The U.S. government was obviously not doing enough before September 11, 2001, to keep dangerous people out of the country, but changes to U.S. visa policy since then have gone far beyond legitimate security needs. Tighter visa rules are keeping out potentially millions of visitors who pose no security threat to the United States.
As an article in this morning’s Financial Times reported:
The National Foreign Trade Council estimated that US businesses lost more than $30bn in the two years before mid-2004 because of the visa restrictions imposed after the 2001 terrorist attacks. That figure is likely to be much larger now.
“American businesses now routinely hold training seminars, conferences and sometimes even board meetings outside of the US,” said Bill Reinsch, head of the NFTC. “At the same time you see foreign universities attracting more students by advertising the fact that they don’t have a US-style visa regime.”
One step toward a more rational U.S. visa policy would be to extend the visa waiver program to such economically developed allies as Poland, Hungary, the Czech Republic, Greece, and South Korea. The program allows tourists and business travelers to enter the United States for up to 90 days without a visa. Expanding the program to selected countries would boost tourism and goodwill toward the United States without compromising national security.
I write about the need to expand the program in a new Cato Free Trade Bulletin and talk about it in a new Cato podcast.
Filed under: General; Immigration and Labor Markets; Trade
Regulation Author Testifies at a Congressional Hearing
The House Committee on Oversight and Government Reform held a hearing yesterday on the Bush Admininstration’s handling of climate science. Roger Pielke Jr. of the University of Colorado testified. He described in views on the role of science in policy decisions in a recent issue of Regulation.
If You’re in New York and Can Spare a Little Time, You Could Spare a Life
Former Cato Institute interns and New York residents Constantino Diaz-Duran and Chris Kilmer are organizing an effort on behalf of an Egyptian student they’ve never met who faces a terrible penalty for writing his opinions on his personal blog. The event will take place Wednesday, January 31 starting at 3:30 pm at the Egyptian Consulate in New York at 1110 2nd Avenue, between E. 58th and E. 59th.
Kareem is scheduled to be sentenced on Thursday. A respectful message to the Egyptian government — whether in front of the Consulate or by email, fax, or phone — encouraging them to do the right thing and let him go could save a young man’s life.
New Tax Proposal Combines Social Engineering and Class Warfare
Congressional Democrats want to use the tax code to penalize large corporate severance packages. But this should be a matter for stockholders to decide, not headline-seeking politicians. The Wall Street Journal, meanwhile, explains that the middle class often feels the brunt of tax schemes designed to punish the so-called rich:
One of the ways the Senate bill does this is to place a cap on the amount of “deferred compensation” that a company can award its top executives in a given year. The cap is equal to $1 million or the executive’s average salary for the previous five years, whichever is lower. But rather than simply tax any deferred compensation above that threshold as income, it imposes an additional 20% penalty tax on deferred comp above the limit. The Joint Committee on Taxation predicts this provision will bring in $800 million over the next decade. We’ll go out on a limb and predict it brings in an amount closer to $0.
Senate leaders describe this cap on deferred compensation as closing a loophole in the 1993 law that barred companies from deducting from their taxes more than $1 million of salary paid to their CEO and other top execs. Never mind that employee salaries have always been a deductible business expense. This was the last time Democrats ran Congress, and thus the last time they could sock it to the successful.
That 1993 law has itself become a classic example of unintended consequences. The biggest “loophole” in that law was an exemption carved out for performance-based compensation, which was meant to alleviate concerns about Congress setting pay rates in the private sector. Back then, even tub-thumping Senator Carl Levin said “I don’t support the government setting CEO pay in the tax code.” Which he and his mates proceeded to do anyway. And businesses promptly responded by shifting CEO pay away from salary and toward stock options and bonuses to circumvent the cap.
[...]
[T]his time, a much larger pool of people than CEOs could be hit by the new deferred comp cap. People who make a lot less than $1 million have occasion to defer some of their salary, and at many companies even middle managers can do so. If this bill becomes law, those non-millionaires potentially face a 55% tax rate on the income they might otherwise have tried to defer. The tax code is riddled with provisions, such as the Alternative Minimum Tax, the estate tax and any number of phaseouts and caps, that were sold politically as targeting only the “super-rich” but now capture taxpayers of far more modest means.
The Laws of Arithmetic
Last year, then-Gov. Mitt Romney made headlines by signing legislation to cover all the state’s uninsured. . . Romney suggested that annual premiums for a single worker might total $2,400. But when insurance companies recently provided real estimates, the cost was much higher: $4,560.
The problem of paying for health-care coverage, which politicians are declaring they have “solved,” is really just beginning. The only way to make zero-deductible health insurance available at low cost is with a large subsidy; how much will depend on negotiations with insurance companies. Only when the size of the necessary tax increase becomes clear will Massachusetts’s leaders learn the laws of arithmetic.
Everyone is asking whether the Massachusetts plan can work in other states. It seems to me that the only fair assessment is that it isn’t even working in Massachusetts.
Fighting Government-Run Health Care (Some Exceptions May Apply)
I receive the occasional email from Sarah Berk in her official capacity as the executive director of a group called Health Care America. (Disclosure: Sarah and I used to work for the same U.S. Senator.) Typically, these emails riff on the theme:
“Health Care America promotes common-sense policies that limit government control . . . in the U.S. health care system.”
A recent example is an email informing me that “Health Care America has recently released two op-eds that explain why increased government-control over our health care system reduces consumer choice, quality and innovation.”
So I’m always amused to find an example of government control that Health Care America thinks is just hunky-dory. And then another. And another. And yet another.
For example, Health Care America supports:
- Socialized drug coverage for seniors.
- Government barriers to trade that prevent Americans from purchasing prescription drugs from abroad.
- State laws that require people to purchase health coverage and that regulate health insurance in a manner reminiscent of HillaryCare: “The recent success of Massachusetts Gov. Mitt Romney in creating a universal system using the private sector demonstrates that it is possible to reach bipartisan agreement on positive changes.”
- Government control over charity care in general: “Health Care America believes in the social safety net that is funded by government.”
- The nightmarish Medicaid program in particular: “the U.S. rightfully invests significant resources in the program.”
- Expanding the State Children’s Health Insurance Program. According to Health Care America’s ad campaign: ”SCHIP is a notable health care success story…Expanding SCHIP to allow states to cover custodial adults is one easy way to get more children covered by the program.”
How does an organization come to adopt such a sharp yet selective distaste for government control? And with so many types of government control that it supports, why the strident anti-government rhetoric?
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Public Choice in Action
The Washington Post ran a story today that could be a case study in a Public Choice textbook, “Maverick Costco CEO Joins Push to Raise Minimum Wage.”
The chief executive of Costco Wholesale, the nation’s largest wholesale club, yesterday became the most prominent member of a new organization of business owners and executives pressing Congress to approve an increase in the federal minimum wage.
Wow, Costco’s Jim Sinegal must be a really moral and public-spirited CEO. Sinegal “said he signed onto the effort because he thinks a higher minimum wage would be good for the nation’s economy as well as its workers.” The CEO explained: “The more people make, the better lives they’re going to have and the better consumers they’re going to be… It’s going to provide better jobs and better wages.”
Who does Sinegal think he is fooling? His real aim is to use the government to squash any low-end competition.
Costco, of Issaquah, Wash., would suffer no direct impact from a higher minimum wage because its lowest-paid employees now make about $11 an hour, Sinegal said, adding that the average worker in the company’s 504 stores in the United States makes $17 an hour.
Filed under: General; Government and Politics; Tax and Budget Policy
The Global Market for Kannadian Call Centers
“How can I help you, today, eh?”
No, not that Canada. Kannada: the native language of 70 percent of Karnatakans.
Karnataka is the Indian state whose capital city, Bangalore, has been described as “the back office of the world.” Bangalore is awash in call centers, boasts over 200 high tech companies, and is reported to have the highest number of engineering colleges of any city in the world. Bill Gates has made a promotional and recruiting trip to the city.
Bangalore’s economic success rests not simply on its wealth of skilled technicians, but on their ability to work in English. There is no global market for Kannadian call centers. There is a global market for English ones.
And that’s where two visions of India’s educational future collide. On the one hand, we have the School Choice India campaign of the New Delhi-based Centre for Civil Society. This campaign would like to see independent schooling brought within reach of every family in India, and the overwhelming majority of non-government schools in that country teach all their classes (other than, of course, native language classes) in English. They do so because that is what their customers demand.
On the other hand we have the government of Karnataka, and the highly influential linguistic nationalists who wish to promote the use of Kannada and who see English as tainted by its association with India’s colonial past. Back in 1994, the Karnatakan government passed a law — not initially enforced — banning English-medium schools. According to recent reports, it plans to start enforcing that ban in April of this year, under pressure from Kannadian activists, shuttering any schools that refuse to comply.
If the ban goes ahead, it will undoubtedly be short-lived, as Bangalore’s businesses start making plans to relocate to other Indian cities and the full economic ramifications are more widely grasped. The fact that it is even being contemplated is just one more excellent example of why centralized control over the curriculum is a bad idea, eh.
Filed under: Education and Child Policy; General; International Economics and Development
One Reason Why RomneyCare Costs So Much
According to the Boston Globe:
Employees of the new state agency established to provide health insurance to the state’s low-income residents have been hired at an average salary of $111,000 a year, with 12 of the 22 staff members making more than $100,000 and six earning more than Governor Deval Patrick and his Cabinet secretaries…
Eventually the Commonwealth Health Insurance Connector’s administrative costs will be funded by insurance companies through a surcharge . . . of 4 to 5 percent on the premiums they collect as a result of the program. Some have raised concerns that insurers will pass along the cost to consumers in higher premiums.
According to the article, the salaries are so high because the “Connector” is a species of quasi-independent state bureaucracy with the power to set its own salaries. Former Gov. Mitt Romney once “railed against [such agencies] for their overly generous compensation packages” – that is, until he created one.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
The Invaluable Gina Kolata Strikes Again
Read the story of her running injury here.
My interpretation of her story is that the market will often deliver a better diagnosis and more efficient treatment than that specialist who happens to be in your network. But the market has to be able to experiment with new approaches, such as telemedicine. And the patient has to care about the money she’s spending.
For more, read Arnold Kling’s Crisis of Abundance.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Kling on the Latest Massachusetts Outrage
Gov. Romney may have to start choosing neckties that de-emphasize his albatross.
Filed under: General; Health, Welfare & Entitlements
Running for Preacher
In the unlikely event he gets elected president, would former Arkansas governor Mike Huckabee hector the country to death about cutting carbs? Maybe, but he seems to have an even more ambitious goal than slimming us down. As he put it on Meet the Press Sunday:
I think America needs positive, optimistic leadership to kind of turn this country around, to see a revival of our national soul.
Really: is our national soul in such a parlous state that its last, best hope is… Mike Huckabee? I thought it was the Left that was supposed to believe America was in decline.
More to the point, even if there was such a thing as a “national soul,” tending to it is not part of the president’s job. In the taciturn and businesslike language of the Constitution’s Article II, you won’t find anything making the president our national pontiff–any more than you’ll find the language that supposedly makes him Supreme Warlord of the Earth.
This isn’t just a complaint about the Republican party, or the Religious Right, or even about religion in politics. I’m not sure Hillary Clinton was talking about religion in her ”politics of meaning” speech diagnosing America’s “sleeping sickness of the soul,” our deep existential angst stemming from our inability to redefine “who we are as human beings in this postmodern age.” I’m not sure what she was talking about, but whatever it is, it doesn’t sound like something bold executive action can or should fix.
And Barack Obama’s “Audacity of Hope” isn’t a specifically religious concept. Instead, judging by his 2004 Democratic Convention keynote speech, it seems to refer to the continuing promise of redemption through presidential politics. Belief in that ideal would require a leap of faith far beyond anything demanded by the world’s major religions.
Reviving our “national soul,” healing our spiritual malaise, unifying the metatext and subtext of our postmodern age–none of this is the president’s business. He or she is a constitutional officer, charged with faithful execution of the laws.
Former Senator Phil Gramm’s 1996 run for the G.O.P. nomination was a colossal bellyflop, but he had at least one moment of glory. Pushed by Focus on the Family’s James Dobson to talk up values issues on the campaign, Gramm snarled: “I’m not running for preacher. I’m running for president.” How many of today’s candidates can tell the difference?
Tax Reform Is the Right Way to Lower the So-Called Tax Gap
Many politicians in Washington think they could get a lot more money to redistribute if Americans could be compelled into being fully compliant with the internal revenue code. Yet the world’s leading expert on the underground economy estimates that the United States has less evasion than any other nation [.pdf]. Moreover, the Wall Street Journal notes that the vast majority of noncompliance is the result of tax code complexity, which is why the only pro-growth way to generate more revenue is lower tax rates and simplification:
The “tax gap” is the difference between what the Internal Revenue Service thinks taxpayers should be paying and what it collects. The IRS currently estimates this at about $290 billion a year. Ask any Congressional chairman how he intends to close the deficit, expand the Medicare drug benefit, reform the Alternative Minimum Tax or subsidize college education, and the answer is invariably “close the tax gap.” Last year the Senate held some half-dozen hearings in search of this pot of gold. …We suppose politicians are allowed to dream. But it’s worth recalling that Washington has searched for this revenue Atlantis for decades without success. …Nina Olson, the IRS’s taxpayer advocate, told Congress last year that IRS auditors have found that an estimated 94% of noncompliance is the result of honest mistakes by tax filers who simply don’t understand the 17,000-page beast of a tax code. One obvious answer would be to simplify the code (more on that later). But this requires political will, so Congress naturally prefers the easier route of ratcheting up taxpayer regulation and enforcement. …Our personal favorite would require that Americans withhold taxes from any cash payments they make to such individual contractors as babysitters, gardeners or plumbers. They’ll love that one in the suburbs. Implicit in all these new plans is a much bigger IRS staff to monitor and chase tax miscreants. Here’s another bad idea: Many doctors and lawyers who are incorporated under subchapter S will often pay themselves lower wages but higher dividends, in order to reduce self-employment taxes. The law is vague on the limits of this practice, and it is undoubtedly abused. But the Joint Tax Committee’s preferred solution is to make all professional income — even dividend payments — subject to self-employment taxes; this is nothing more than a backdoor tax hike. …There is a better way. The more complicated a tax system, the more likely taxpayers won’t understand, or will try to dodge, the rules. Simple tax regimes, such as a single flat rate, encourage compliance and efficiency, not to mention economic growth. This has been the experience of many Eastern European countries after they imposed a flat tax, and the U.S. had similar jumps in reported tax income from “the rich” following the 1986 tax reform that cut rates and closed loopholes.
Capitol Hill Briefing Re: Standard Health Insurance Deduction
At noon this Friday, the Cato Institute will host a Capitol Hill briefing on President Bush’s proposal to replace the tax exclusion for employer-sponsored coverage with a standard health insurance deduction.
Discussing the proposal will be: Katherine Baicker of the president’s Council of Economic Advisers, Leonard Burman, director of the Urban-Brookings Tax Policy Center, and me.
The room number and video of the event can be found where you preregister, here.
Filed under: General; Health, Welfare & Entitlements; Tax and Budget Policy
Friedman or Plato?
As noted earlier, today is Milton Friedman Day. My modest contribution is this essay.
I call this the Fundamental Problem of Political Economy. How do we limit the power that idiots have over us?
One solution, that might be traced to the expression “philosopher-king” associated with Plato, is to hand the reins of government to the best and the brightest. Since the late 19th-century, the Progressive Movement in American politics has championed this approach…
The other way to avoid having our lives run by idiots is to limit the power that others have over us. This is the approach that was embedded in our Constitution, before it was eviscerated by the Progressives. It is the approach for which Milton Friedman was a passionate advocate.
Filed under: General; Political Philosophy; Tax and Budget Policy
Please Help This Young Man
This case is extremely important. The fates of a young man and of freedom of speech are at stake. Abdelkareem Nabil Soliman will be sentenced on Thursday for alleged crimes in Egypt, including insulting the president. Please read about his case at http://www.freekareem.org/.
Please send a respectful letter by fax or email to the Egyptian Embassy requesting that the Egyptian government correct the error of arresting him and allow him his freedom.
Filed under: General; International Economics and Development; Law and Civil Liberties
Toward a Neo-Khomeinist Foreign Policy*
From the annals of irony, this from Laura Secor’s interesting rundown of the Iranian political scene in the NYT Magazine:
Composed partly of military and paramilitary elements, partly of extremist clerics like [Taqi] Mesbah-Yazdi and partly of inexperienced new conservative politicians, those in Ahmadinejad’s faction are often called “neoconservatives.” But to the extent that they have an ideology, it is less new than old, harking back to the early days of the Islamic republic. Since that time, the same elite has largely run Iranian politics, though it has divided itself into competing factions, and the act of wielding power has mellowed many hard-liners into pragmatists. Ahmadinejad’s faction, on the other hand, came into power speaking the language of the past but with the zeal of the untried.
Ali Ansari refers to “Iran’s neoconservatives” repeatedly in this book, but I thought it was more rhetorical flourish than an actual description that people use in Iran.
* Title reference here.
Criminal Justice in Georgia
Here’s the problem with consensual crimes, plea bargaining, and mandatory minimum sentencing …
This guy shouldn’t be in jail at all, but he’s in a Georgia prison serving a ten year sentence. The case of Genarlow Wilson is also a dramatic illustration of the bizarre mentality of too many prosecutors. Which is not to say that the legislators are very far behind them.
Competition among Cantons Boosting Swiss Competitiveness
Federalism is a marvelous structure, both because it allows preferences for different policies to be satisfied and because it creates competition among units of government. While federalism has been somewhat eroded in the United States, it still exists and presumably is one of the reasons why America is relatively prosperous (thanks to a less oppressive level of government). Switzerland is an even bigger success story. The central government represents less than one-third of total government (as compared to two-thirds in the US), and the concomitant competition between cantons has helped control the size of government. And as a Swiss news report indicates, this has generated big benefits for the Swiss economy:
Zurich is poised for a further influx of foreign firms and workers after the relocation of Kraft Foods’ European headquarters and the expansion of Google this year. The moves earlier this month from the two United States giants offer further evidence that the region offers prime conditions for companies, according to the Greater Zurich Area relocation service. …”The relocation of headquarters and the nice growth of Google that we have seen in the last couple of months shows that we have very good basic conditions in the region,” commented Greater Zurich Area chief executive Willi Meier. …A more controversial lure for foreign companies is the low corporate tax rates offered by many cantons in Switzerland. …The competition among cantons to set the lowest business tax was intensified at the beginning of last year when Obwalden slashed its rates to a Swiss low of just 6.6 per cent. Obwalden attracted 376 new firms in the first 11 months of 2006, three times more than in the previous year. But Meier insists the Zurich region is not afraid of the increased competition. “The tax competition among Swiss cantons makes Switzerland as a whole more competitive on an international basis. Kraft has chosen Zurich despite the fact that we don’t have the lowest tax rate in Switzerland, but on an international scale its still a very competitive rate,” he said.
Filed under: General; Government and Politics; International Economics and Development; Tax and Budget Policy
Milton Friedman Day
Dr. Milton Friedman, who passed away last November at the age of 94, was perhaps the most influential economist of the 20th Century and a champion of liberty. To honor Dr. Friedman, today has been declared Milton Friedman Day – “a celebration of the economist’s positive impact on American life and business, and the spread of the benefits of free markets to nations around the globe.” At 10pm EST tonight, PBS will premiere “The Power of Choice: The Life and Ideas of Milton Friedman,” an exclusive documentary on the remarkable life and free market vision of Milton Friedman. The special, produced for PBS by Free to Choose Media, gives viewers a new understanding of the magnitude of this legendary economist’s influence on the modern world.
Filed under: General; Political Philosophy; Tax and Budget Policy
Lower Tax Rates Yielding More Tax Revenue
The capital gains tax should not be reduced to give more money to the government. Instead, the tax should be abolished since it is a punitive form of double-taxation on income that is invested. Nonetheless, it is worth noting that the government is collecting more money at a lower tax rate. Because there are many factors that influence economic performance, this does not necessarily mean that the lower rate is “paying for itself,” but it certainly indicates that there is a supply-side effect. As the Wall Street Journal explains, the bean-counters at the Joint Committee on Taxation failed to predict this result:
Data released last week from the Congressional Budget Office confirm that the tax cuts of 2003 keep soaking the rich, especially on their capital gains. CBO and Congress’s Joint Tax Committee originally estimated that reducing the capital gains rate to 15% from 20% would cost the Treasury $5.4 billion from 2003-2006. Whoops. Actual revenues exceeded expectations by 68%, creating a $133 billion revenue bonanza for the feds. CBO’s original forecast for 2006 was for $57 billion in capital gains revenues, but actual receipts were $110 billion. This surprise windfall is one reason the budget deficit is also far lower than CBO predicted. The lower capital gains tax has raised stock values by raising the after-tax return on capital investment. It has also given stock owners a greater incentive to sell their shares, and then reinvest the proceeds, because the tax penalty on these transactions is lower. …The 2003 rate cut liberated hundreds of billions of dollars of capital for new investment. By the way, the National Venture Capital Association reports that venture capitalists invested $25.5 billion in 2006, the biggest burst of dealmaking since the stock market bubble burst in 2000. This is seed money for new companies and new jobs that will lift future tax revenues.
Filed under: General; Government and Politics; Tax and Budget Policy
Jeb vs. W
Reading the