Wednesday, October 27, 2010

The Tancredo Surge

Get ready for heads to explode if this actually happens. Tom Tancredo is within the margin of error in the latest polling for the Colorado governor's race. As Glenn Beck said on his show today, if he wins, "what a message that would send".

Tancredo's number one issue of course is illegal immigration. Personally, I have mixed feelings on the whole illegal immigration issue. I see immigration as a free trade issue, and the fact that we have illegal immigrants is in large part due to the massive trade barrier that is our immigration policy. But I have always had a soft spot for Tom Tancredo. To him, illegal immigration issue is not a wedge issue designed to siphon off votes, it's a matter of principal.
Plus, he is a down the line conservative on all other issues, including economic issues, the role of government and Federalism.

Speaking of Federalism, on the Glenn Beck show today he discussed the idea of kicking off a 10th Amendment revolution. He describes it as an effort to "draw a line in the sand" when it comes to Washington's encroachment on the states.

The only thing that worried me was that he said the first person he is going to call to launch this effort is NJ Governor Chris Christie. Uh...I'm not so sure about that. A great way for Chris Christie's numbers to plummet would be for him to stop talking about teachers unions and the NJ fiscal crisis and start hanging out with Tom Tancredo.

Tancredo needs to give Christie some space to do what he doing up in NJ, and just maybe he will have the opportunity to move on and do it for the entire nation. So Tom, please don't call, and Gov Christie, if he does call, consider not answering.

Tuesday, October 26, 2010

Tea Party Extremist!

Remember when the GOP establishment told us that we needed to nominate Charlie Crist?

Behold, this performance, by Marco Rubio in front of the Miami Herald editorial board.

Monday, October 25, 2010

Government should neither discourage or encourage risk taking

Peter Robinson has an excellent post on supply side economics over at Ricochet. But he does include this statement which I take some issue with:
The government ought to encourage individuals to form enterprises, take risks, and invest.
One one hand, I understand what he is saying. The government is too often in the business of discouraging investment, work and risk taking. On the other hand, the idea that the government should be encouraging risk taking is problematic.

After all, the politician's favorite way to encourage risk taking is by putting taxpayers on the hook for losses. Whether these policies are explicit, (i.e. loan guarantee programs, deposit insurance, or other subsidies), or implicit (i.e. government sponsored enterprises such as Fannie and Freddie, the Federal Reserve's habit of flooding the banking system with liquidity every time Wall Street gets into trouble, or the broader notion of "too big to fail"), these policies distort the process by which the market prices risk. This leads to mal-investment, speculative bubbles, and ultimately, taxpayer bailouts. Exhibit A is the housing and financial crisis, as explained by Russ Roberts in his white paper entitled "Gambling with Other People's Money".

The amount of risk that should be financed in our economy is ultimately something that should get settled in the capital markets through millions upon millions of negotiated transactions between those who need capital (business enterprises) and those who provide capital (investors). The idea that politicians and bureaucrats are capable of shaping, molding and fine tuning the capital markets without doing harm is the kind of thinking that will lead to the next financial crisis.

Is Peter Robinson arguing for subsidies and loan guarantees and too big to fail? Not at all. My point is that if we are ever going to win the historical argument over what caused the financial crisis, I think we should get the language right.

Thursday, October 21, 2010

UK Economy headed for depression

Well, that is what has to happen now that they've announced that they are:
cutting 500,000 government jobs, slashing spending by 25 percent, including a 19 percent cut in welfare spending, and changing the state pension age for men and women to 66 by the year 2020.
I guess this should be called de-stimulus. Think of all that money that's going to be "taken out of the economy". And what's going to happen to economic growth when the "multiplier" is applied to a negative number? Are they crazy? Haven't the Brits read Paul Krugman?

[Update]
Predictably, Krugman is now saying that the UK is likely headed toward a severe recession.
What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it.
Jeremy Warner has this response in the UK Telegraph:
The big point missed by those who think elevated public debt doesn’t matter is that these periods of excessive debt utterly crippled the UK economy. Indeed, Britain’s decline through the twentieth century as an economic superpower directly correlates with increased indebtedness.

Thursday, October 14, 2010

Michelle Obama violates election laws, ho-hum

Drudge is reporting that after early-voting in Chicago, the First Lady stuck around the polling place to ask voters to support her hubby's fellow Dems. Said one voter, "She was telling me how important it was to vote to keep her husband's agenda going."

Drudge notes that this activity would seem to run afoul of Illinois Statutes Section 17-29(a), which (he writes) provides: "No judge of election, pollwatcher, or other person shall, at any primary or election, do any electioneering or soliciting of votes or engage in any political discussion within any polling place [or] within 100 feet of any polling place."

These sorts of statutes are common. Florida's version prohibits any person from attempting to "solicit voters" inside a polling place or within 100 feet of the entrance to a polling place. The election clerk assigned to each polling place is supposed to mark off the 100-foot no-solicitation zone before the polls open. "Solicitation" is defined broadly to include "seeking or attempting to seek any vote, fact, opinion, or contribution; distributing or attempting to distribute any political or campaign material, leaflet, or handout; conducting a poll [except exit polls]; seeking or attempting to seek a signature on any petition; and selling or attempting to sell any item."

The idea is to protect voters from being physically bullied, verbally browbeaten, or otherwise leaned on as they head into the polls. You know, like if a world-famous figure, say the spouse of the most powerful man in the free world, hung around telling voters whom they should vote for.

In all seriousness, it doesn't bother me too much that Michelle Obama talked up a few voters. It also does not surprise me when Democrats disregard election laws. In 2008, I served as a poll-watcher for the McCain-Palin campaign in a very heavily Democratic precinct in South Florida. A few weeks before election day, the campaign hosted a training for lawyers like me who were to serve as poll-watchers. They explained that, as poll-watchers we weren't there to promote our candidate (that was forbidden by the law prohibiting "solicitation"). Nor were we to offer any kind of advice to voters (that was a job for the election clerks and their deputies) or even speak to them. Rather, by law, our only role at the polling place was to observe, make sure election laws were being followed, and report any problems to the election clerk. Apparently the Obama campaign didn't tell this to its own poll watchers.

On election day, my counterpart from the Obama campaign sat next to the entrance to the polling both (within 5 feet of the entrance, much less 100), with a large, professional looking sign with something like VOTING RIGHTS HOTLINE in block letters, inviting them to call 1-800 number if they encountered problems trying to vote. I called the 1-800 number -- it was the Obama campaign's national headquarters, which answered with an automated greeting from the candidate. He also wore a cap emblazoned with "Florida Election Lawyer." When I asked him about this, he admitted that he lived in New York, not Florida, he was not admitted to practice law in Florida, and he did not practice election law. I also saw him speak with several voters well within the 100-foot limit.

I mentioned all of these things to the election clerk, who seemed markedly unfamiliar with the regulations it was her job to enforce. But after much cajoling, she asked the Obama poll-watcher to move, and after she asked him several times, he did so, at least for a little while, before returning to his (illegal) post. One saving grace was that he was incredibly lazy, and spent most of the day just sitting slumped under his sign. He was a cheater but not a very good one.

After consulting with the McCain election-law headquarters, I figured it was not something worth going to the mattresses over. The precinct was something like 99.5% Democrat, and the campaign's legal team had more important things to worry about, and so did the Florida Bar. And the fact is, the guy wasn't influencing anyone's vote with his sign or his stupid hat. But for me it was a little lesson in at least some Democrats willingness to ignore the rules on election day.

Wednesday, October 13, 2010

If you are in the tea party, you are not allowed to collect Medicare

A common critique from some on the left about the tea party movement is that many in the movement are hypocrites for saying we need limited government, while at the same time benefiting from various government programs. This article in Rolling Stone magazine promotes this theme by talking about how Senate candidate Joe Miller received benefits from something called the Denali KidCare program back in the 90's, but has since publicly criticized the program. Miller defended himself by saying that he is opposed to Federal funding of the program, not to the program in general.

The author then launches into a wider critique of the tea party movement.
I can’t even tell you how many people I interviewed at Tea Party events who came up with one version or another of the Joe Miller defense. Yes, I’m on Medicare, but… I needed it! It’s those other people who don’t need it who are the problem!

Or: Yes, it’s true, I retired from the police/military/DPW at 54 and am on a fat government pension that you and your kids are going to be paying for for the next forty years, while I sit in my plywood-paneled living room in Florida watching Fox News, gobbling Medicare-funded prescription medications, and railing against welfare queens. But I worked hard for those bennies! Not like those other people!

This whole concept of “good welfare” and “bad welfare” is at the heart of the Tea Party ideology, and it’s something that is believed implicitly across the line. It’s why so many of their political champions, like Miller, and sniveling Kentucky rich kid Rand Paul (a doctor whose patient base is 50% state insured), and Nevada “crazy juice” Senate candidate Sharron Angle (who’s covered by husband Ted’s Federal Employee Health Plan insurance), are so completely unapologetic about taking state aid with one hand and jacking off angry pseudo-libertarian mobs with the other.
(He really zinged Rand Paul on that one...ha, ha..."sniveling rich kid". And Sharon "crazy juice" Angle...stop, please stop. I am falling out of my chair.)

Anyway, on the surface, this argument seems clever, but if you use your brain for a second, you realize it makes no sense. First of all, it would be like me saying that anyone who was against the Bush tax cuts should refuse to accept them and send the money back to the US Treasury immediately; or that anyone who is demanding that we end our "addiction" to oil should not only refuse to drive a car, but should also refuse to buy any product that was ever placed on a truck or a plane; or that someone who believes in socialized medicine should refuse any treatment or medicine that was ever developed in the pursuit of profit.

But more importantly, does this guy realize that when the government takes over a function that was otherwise provided by business and/or charity, that it then puts those businesses and charities out of business? With Medicare, for example, the government essentially destroyed the private market for health insurance for the elderly. There are no private options. So what else are people supposed to do? Plus, people are forced to participate. They have to pay in, there is no opt out. So, is it really hypocritical for someone to oppose the existence of Medicare, but then also kindly ask their representatives in Congress to make sure that the government has the resources necessary to ultimately pay for the Medicare benefits that were promised to them - benefits that they were forced to pay for over the course of their entire career? I don't think so.

And on that Sharon Angle thing, getting health insurance through your state government, when you are employed by the state government and it's part of your entire employee compensation package, is not the same thing as receiving a government benefit. It's not even close.

Monday, October 11, 2010

This should make Paul Krugman happy

Greg Mankiw has a wonderful, must read essay today in the NY Times.
I am regularly offered opportunities to earn extra money. It could be by talking to a business group, consulting on a legal case, giving a guest lecture, teaching summer school or writing an article. I turn down most but accept a few.

And I acknowledge that my motives in taking on extra work are partly mercenary. I don’t want to move to a bigger house or buy that Ferrari, but I hope to put some money aside for my three children. They will never lead lives of leisure, but I hope they won’t have to struggle to find down payments to buy their own homes or to send their kids to college.

Suppose that some editor offered me $1,000 to write an article. If there were no taxes of any kind, this $1,000 of income would translate into $1,000 in extra saving. If I invested it in the stock of a company that earned, say, 8 percent a year on its capital, then 30 years from now, when I pass on, my children would inherit about $10,000. That is simply the miracle of compounding.

Now let’s put taxes into the calculus. First, assuming that the Bush tax cuts expire, I would pay 39.6 percent in federal income taxes on that extra income. Beyond that, the phaseout of deductions adds 1.2 percentage points to my effective marginal tax rate. I also pay Medicare tax, which the recent health care bill is raising to 3.8 percent, starting in 2013. And in Massachusetts, I pay 5.3 percent in state income taxes, part of which I get back as a federal deduction. Putting all those taxes together, that $1,000 of pretax income becomes only $523 of saving.

And that saving no longer earns 8 percent. First, the corporation in which I have invested pays a 35 percent corporate tax on its earnings. So I get only 5.2 percent in dividends and capital gains. Then, on that income, I pay taxes at the federal and state level. As a result, I earn about 4 percent after taxes, and the $523 in saving grows to $1,700 after 30 years.

Then, when my children inherit the money, the estate tax will kick in. The marginal estate tax rate is scheduled to go as high as 55 percent next year, but Congress may reduce it a bit. Most likely, when that $1,700 enters my estate, my kids will get, at most, $1,000 of it.

HERE’S the bottom line: Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family’s marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?

By contrast, without the tax increases advocated by the Obama administration, the numbers would look quite different. I would face a lower income tax rate, a lower Medicare tax rate, and no deduction phaseout or estate tax. Taking that writing assignment would yield my kids about $2,000. I would have twice the incentive to keep working. "
90%! I think about this stuff all of the time and never quite thought about it this way. Brilliant.

Thursday, October 7, 2010

Can't we use this somehow?

This still amazes me.

My final thought on the fire department story

Dave Henderson at Econlog references a private fire service company in Arizona called Rural/Metro Fire Department. Their website is worth taking a quick look at. Henderson points out that this company will respond to calls from non-subscribers, but charges a multiple of their annual fee to provide the one time service.

Furthermore, I imagine this privately owned fire service, with a reputation to protect, would go out of its way to avoid the bad publicity that would come with sitting idly by as someone's house burns down.

On the other hand, the government run fire department in Tennessee, with its monopoly status, and its government employees blindly following dumb bureaucratic rules, and its lack of foresight on how to handle calls from non-subscribers, allowed the house to burn down.

And libertarians are supposed to be on the defensive on this one?

Wednesday, October 6, 2010

Fire story does not work as an attack on libertarianism

John Stossel made this point on O'Reilly last night, and Dave Henderson makes a similar point over at Econlog. In terms of this episode demonstrating the problem with libertarianism, there is one major problem: the fire-department was a government-run fire department. If there had been a private sector alternative, most likely, a for-profit fire service would have been happy to put out the fire for say a five or ten thousand fee. Instead, the fire fighters were adhering to overly rigid, bureaucratic rules.

Dave Henderson writes:
It's bizarre for a statist to attack libertarians when his own statist alternative works out badly...What's next... blaming libertarians because government schools are so lousy?

Tuesday, October 5, 2010

Firemen watch as man's house burns down

There has been a lot of discussion about this story. Over at Volokh, Orin Kerr asks readers if paying for the fire-fighting service that the man neglected to pay for should be made mandatory, and over at The Corner, Dan Foster says that this episode is "bad for libertarians", and argues that the fire department should have tried to stop the fire since the homeowner was willing to pay full price for the service.

I agree that it's not exactly the best PR moment for the cause of libertarianism. I guess I wish that the fire department had stopped the fire and then sent a bill for every last dime worth of expenses and trouble they had incurred. And then if the homeowner failed to pay, they perhaps should have been to able to go to the man's insurance company to seek reimbursement (although that is a legal issue that I am not all that familiar with).

Which brings me to my main point. The other important player in this whole equation is the insurance company that was insuring the man’s home. Apparently, the insurance company is on the hook for the loss.

My guess is that insurance companies are now going to want to change their contracts to include a requirement that policy holders pay for a fire-fighting service if it's not otherwise provided. It would work the same way that a mortgage contract works, where the lender requires the borrower to maintain a homeowners insurance policy. The insurance company could even set up an escrow account on behalf of the homeowner to make sure the fee is paid.

So no, a government mandate is not necessary. The marketplace will work this out in about a second, assuming the state insurance board approves such a change and the mayor and the town hold firm on this policy.

[Update]

Arnold Kling, in arguing in favor of private, for-profit fire service , says:
I think that the solution to the problem of how to get people to pay the membership fee would come from fire insurance. I would assume that if you want to get fire insurance, the fire insurance company will be much more receptive to writing a policy if you maintain your membership fees. Mortgage lenders, in turn, will require fire insurance. As long as the vast majority of people who own their homes free and clear also obtain fire insurance, not many people would go without fire protection in this scenario.

Monday, October 4, 2010

Taxing the "rich"

I think we need to change the language. It's not an increase in taxes on "the rich", it's an increase in taxes on:

1) people who hire people
2) people that we buy stuff from
3) people who buy stuff from us, and/or
4) people who lend money or provide capital to people who do any or all of the above.

Saturday, October 2, 2010

Socialism's war on the real world, part 402 -- Insurance

Adam Freedman at Richochet reports:

The Advocate General of the European Union's highest court has declared that insurance companies shouldn't be able to charge men and women different rates for products.

The suit was brought by plaintiffs complaining about men having to pay more for insurance. Advocate General Juliane Kokott didn't deny that insurers charge different rates based on actuarial facts -- women live longer, drive more safely, etc. -- but nonetheless insists that such differential pricing violates the EU's anti discrimination codes. The Advocate General's opinion isn't binding on the court, but it's likely the court will follow her.

Here's a link to the Wall Street Journal article cited by Freedman (subscription required).

This is just another chapter in the Left's long war on real life. The Left's insistence that any unequal outcome (such as higher insurance rates for men than for woman) is evidence of discrimination leads to nonsense such as Kokott's report. Kokott admits that the insurers charge different rates due to actuarial facts, not discrimination. And yet, she finds that the insurers are in fact committing illegal discrimination. The maddening thing is that, as a matter of statutory interpretation, she may be correct -- the EU anti-discrimination codes may be so over broad as to outlaw decisions that are rational, well-intended, and probably essential to a well-functioning, non-discriminatory insurance regime.

What do the EUrocrats think is the alternative to insurers' setting rates according to actuarial statistics derived from real life differences in the way men and woman live? Do they imagine that banning the actuarial tables will result in lower rates for men? It seems to me that tailoring insurance rates according to how people actually live is a protection against racial or gender bias, in that they provide a way for insurers to base their rates on real life rather than assumptions.
It's not a perfect system (some men are very safe drivers, some women are very risky ones), but it allows for a degree of tailoring a system that ignores gender differences would not.

One hopes that the supergeniuses devising the Obamacare regs do not draw inspiration from Ms. Kokott.

Friday, October 1, 2010

Rush on the "Family Guy"

Here's a preview of Sunday night's forthcoming Family Guy episode, starring Rush Limbaugh.


Rush groupie: "Love the Hummer Rush, how do you like it?"

Rush: "It is the best. I'm not saying that you have to be gay to drive something else, but if you drive something else, it probably means you are a guy that likes to pleasure other men sexually."
As Rush says in the promotional interview, "If you can't laugh at yourself, there's no reason to be alive."