Economics & Taxes Archives

My Two Krugmans

That was then…

"The big step by extremists will be an attempt to eliminate the filibuster."–former Enron adviser Paul Krugman, New York Times, March 29, 2005

…and this is now.

"We need to take on the way the Senate works. The filibuster, and the need for 60 votes to end debate, aren’t in the Constitution. . . . So it’s time to revise the rules."–former Enron adviser Krugman, New York Times, Dec. 18, 2009

Which James Taranto labels "his first-ever accurate prediction."  I’d call it evidence of how heavy a role politics plays into Krugman’s thoughts on economics.  He’s more political pundit than economist.

The Real Impetus Behind Copenhagen

Do you want to know the real reason behind all the meeting and agreements and doomsaying being done at the Copenhagen climate change confab?  Listen to the applause.

First, the warm-up act, so to speak, with hints of what was to come.

But before [Australian climate change minister Penny Wong] rose to speak the conference proceedings were interrupted by people with whistles and sirens chanting “stop green capitalism” – a sign of the anger in the developing world that the Danish host government is trying to wrest the process from the professional negotiators, who have failed to make any progress, and hand it to politicians, who might have some chance of achieving something before we all leave on Saturday.

And then the headlining act hit the stage.

Then President Chavez brought the house down.

When he said the process in Copenhagen was “not democratic, it is not inclusive, but isn’t that the reality of our world, the world is really and imperial dictatorship…down with imperial dictatorships” he got a rousing round of applause.

When he said there was a “silent and terrible ghost in the room” and that ghost was called capitalism, the applause was deafening.

But then he wound up to his grand conclusion – 20 minutes after his 5 minute speaking time was supposed to have ended and after quoting everyone from Karl Marx to Jesus Christ – “our revolution seeks to help all people…socialism, the other ghost that is probably wandering around this room, that’s the way to save the planet, capitalism is the road to hell….let’s fight against capitalism and make it obey us.”  He won a standing ovation.

Ladies and gentlemen, that is the primary purpose of the Copenhagen conference and those like it.  It’s the elites getting together to bring capitalism down and raise socialism up so that they can exert more power.  It’s a power grab, plain and simple and unashamed. 

You may have your reasons for wanting to see less carbon in the air, but those in politics and government clearly have their own agenda.  Is it yours?

Eeevil Charities

Only in the NY Times will you find an article about how charities are attracting money that could, instead, be funneled through the inefficiency of a government bureaucracy

The $300 billion donated to charities last year cost the federal government more than $50 billion in lost tax revenue.

"Lost" tax revenue?  It’s not lost if it wasn’t yours in the first place.  But apparently, the Times, and reporter Stephanie Strom, thinks that’s the ‘default’ position; your money belongs to the government, except that which it loses to charities.

And as Don Surber sarcastically notes:

Why by collecting $300 billion a year from donors to provide social services, those charities are cheating the federal government out of $50 billion — money that could be used for, well, social services.

Hey, let’s try something.  If you get a mail appeal letter from the Salvation Army, reply to it and let’s steal more money from the government.  And it’ll hack off the NY Times, to boot!

15% of Your Pay for Health Care Is Apparently Not Enough

That’s what the German’s pay, and yet their system has long ago run out of money.

Germany’s system relies on a handful of state-supported health insurers. This week they informed the government that the system was on the brink of a financial shortfall equal to nearly $11 billion.

Pointedly, the insurers made clear that cutbacks alone won’t solve the problem. They said the government would have to consider raising premiums on the insured or, you guessed it, raise taxes. Currently, German workers pay a fixed-rate premium into the insurance scheme; that rate is now set at 14.9% of gross pay.

Chancellor Merkel, something of a political acrobat, was previously allied in coalition with leftist Social Democrats. She’s now resisting calls from the Free Democrats to get off the state-pulled health-care train. The FDP’s spokesman on health, Daniel Bahr, wants a "shift in direction away from state-run medicine." Why? Because "the current financial figures have showed us that the health-care fund doesn’t work."

"Doesn’t work."  Please someone inform the Senate Democrats of this.

The True Cost of Health Insurance "Reform"

I’ve heard some folks say that they’d happily pay their part to get health insurance for everyone.  The only problem is, they think that it’s just a matter of money; a few (or a whole bunch of) extra bucks out of their paychecks.  But there’s more to it than that.  Republicans have come out with some numbers that show this is a bit more costly than that.  A sampling:

5.5 million — Number of jobs that could be lost as a result of taxes on businesses that cannot afford to provide health insurance coverage, according to a model developed by Council of Economic Advisors Chair Christina Romer

$1.055 trillion — New federal spending on expanded health insurance coverage over the next ten years, according to a Congressional Budget Office preliminary score of the bill

0.7% — Percentage of all that new spending occurring in the bill’s first three years-representing a debt and tax “time bomb” in the program’s later years set to explode on future generations

$88,200 — Definition of “low-income” family of four for purposes of health insurance subsidies

114 million — Number of individuals who could lose their current coverage under the bill’s government-run health plan, according to non-partisan actuaries at the Lewin Group

And what about paying for all of this with Medicare fraud reduction?

$60 billion — Loss sustained by taxpayers every year due to Medicare fraud, according to a recent 60 Minutes expose; the government-run health plan does not reform the ineffective anti-fraud statutes and procedures that have kept Medicare on the Government Accountability Office’s list of high-risk programs for two decades

Zero — Prohibitions on government programs like Medicare and Medicaid from using cost-effectiveness research to impose delays to or denials for access to life-saving treatments.

That silly talk about "death panels"?

$634 Billion — Amount that could be saved by denying individuals access to treatments that are not “cost-effective,” according to a report by the liberal Commonwealth Fund; Section 1160 of the bill gives bureaucrats in the Obama Administration virtual free rein to develop a new “high-value” reimbursement system for Medicare by May 2012

Your money would be buying more government intrusion, less freedom, subsidies for those "poor" making $80,000 a year, expansion of unemployment, and a price tag that, while it may feel good at the beginning, will hit up-and-coming wage earners the hardest. 

Happily pay for this?  Really?

When the Left Hand Doesn’t Even Know There *Is* a Right Hand

We’re spending trillions on both a stimulus that isn’t stimulating and a (so far, potential) co-opting of the health insurance industry.  And President Obama has the gall to say this:

President Barack Obama gave his sternest warning yet about the need to contain rising U.S. deficits, saying on Wednesday that if government debt were to pile up too much, it could lead to a double-dip recession.

To whom was he giving this "sternest warning"?  His own party, with his own approval, has been doing this! 

"It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession," he said.

"If I don’t stop doing this, I’m grounded!  I’m serious!"

So spending hasn’t fixed anything, and it looks like maybe, just maybe, the fella’ may yet have some sense in him.

His administration was considering ways to accelerate economic growth, with tax measures among the options to give companies incentives to hire, Obama said in the interview with Fox conducted in Beijing during his nine-day trip to Asia.

Tax cuts spurring employment?  Who would have thought?  Well, conservatives have always thought that, but besides them?

Links & Comment

Remember "Paul Harvey News and Comment" on the radio?  (Or am I showing my age?)  At least that guy had the guts to let you know that he had commentary in his show, unlike some journalists these days that sneak it in.  Well, no hiding it here.  This is "Doug Payton Links and Comment".

Becky Garrison, writing at the liberal "God’s Politics Blog", on the 20th anniversary of the fall of the Berlin wall, says that "more walls need to fall".  Fair enough, and I’d tend to agree with that.  But sometimes walls are necessary, and are the least intrusive method of dealing with an actual problem.  They can protect more so than divide.  One of the walls that Ms. Garrison says needs to come down is the Israeli wall on the West Bank.  Meryl Yourish, however, compares these two types of walls — Berlin vs. Israeli — and notes major differences in the motivation and the result of each.  The Christian Left perhaps needs to understand a little nuance here.

Dale Franks, writing at Q&O, notes that the supposed upside of the government takeover of Chrysler, and subsequent sale of a large portion to Fiat, hasn’t, and looks like it won’t, materialize.  Your government, and your money, at work flushed away.

An insufficiently colorful color guard.  Scott Johnson at Power Line point out political correctness in the smallest aspect of our lives.  (And he needs to because the media doesn’t seem to want to notice it.  Or it looks on with admiration and doesn’t consider it news.)

For all the accusations of hate directed at the Right, and the religious Right in particular, Jeff Jacoby points out that they don’t hold a candle to the irreligious Left.

President Obama doesn’t think that the prospect of jail time over choosing not buying government-mandated health insurance (and likely choosing not paying the fine) is not the "biggest question" Congress is facing now.  Yeah, no big deal.  (Riiight.)  And in an Irony Alert, candidate Obama criticized Hillary Clinton for proposing a health care system with a mandatory purchase requirement. 

The New York Times has no problem calling Jim DeMint a "conservative Republican", but decides that Bernie Sanders, a self-described "socialist", is only a "left-leaning independent".  Courage and truth from that liberal media.

The Links

No, not as in golfing.  I’m going to be quite busy this week, so blog posts this week will consist mostly of a collection of links that I happen across.

John Mark Reynolds, writing at the Evangel blog, wonders about that prediction that Christians would become a fringe political force if they stuck with their position on same-sex marriage.  This after Maine, of all places, upheld traditional marriage.  Not mentioned is that the House of Representatives barely squeaked out a health care bill (passing it with only 2 votes to spare) only after a provision was added that prevented abortion from being covered by it.  Wasn’t that supposed to be a losing issue, too?

October, 2009 was the 3rd coldest October recorded in the US.  Can we officially chuck those computer climate models and just admit we don’t really know what’s going on with climate, and thus should refrain from making pronouncements on what is or isn’t changing it?

Racist graffiti, and Al Sharpton isn’t all over CNN denouncing it?  Oh, wait, it’s anti-white graffiti.  Well then, nothing to see here.

Attorney General Eric Holder is endorsing extending provisions of the Patriot Act including roving wiretaps.  It’s one thing to talk it down when you’re not in the hot seat.  It’s another thing entirely when it’s your responsibility, eh?

The European Union, as a whole, could sink underneath the waves of debt very soon, having total debt equaling 100% of its annual gross domestic product.  A special commission "discovered" that a major reason is the socialist pensions and healthcare that the government guarantees.  And we want to follow them into this whirlpool?

And finally, the legacy of Major Nidal Malik Hasan, and a musing about whether or not political correctness will allow a candid and honest public discussion, or if more people will die at the PC altar.

Paging Michael Moore

Ah, the benefits of socialism.

Residents of the Venezuelan capital face cuts in water service for as much as 48 hours per week, after the government imposed rationing to stem a 25 percent shortfall in the city’s supply, officials said Monday.

Officials said cuts in water service were to be staggered throughout Caracas through the duration of the current dry season, which is not expected to end until May 2010.

Heap this on top of all the other shortages that Venezuela is suffering under (including electricity, also noted in the article).  But "socialism" means never having to say, "My fault."

Weather forecasters blame the "El Nino" weather phenomenon, saying the periodic weather system has markedly reduced rainfall and created drought conditions.

Others blame the shortage on poor government management of the country’s water resources, while President Hugo Chavez faulted the excesses of capitalism.

"What will the rich fill their swimming pools with?" the country’s leftist leader asked recently.

"With the water that is denied inhabitants in the poor neighborhoods," he said, blaming the lack of sufficient water on "capitalism — a lack of feeling, a lack of humanity."

Don’t blame the weather for a resource shortage if blaming capitalism and demonizing rich people will do just as well, especially if you’re the one managing the resource.

Say what you will about the profit motive and market forces; they do a better job of distribution than any central authority.

Moving in the Opposite Direction

As the US government takes steps like government controls of major industries and attempting to hijack 1/5th of the economy via health care reform, another country is moving in quite the opposite direction during this global recession.

Cuba’s workplace cafeterias are closing, President Raúl Castro keeps saying the well-off shouldn’t get the same subsidies as the poor, and now there are rumblings that one of the stalwart vestiges of the revolution — the ration booklet — has outlived its usefulness.

As the Cuban government struggles through a deep recession, its leaders have begun picking away at socialism in order to save it. But experts say the latest buzz by the Cuban government is simply another desperate fix to stem the slide of a failed economy that buckled long ago.

[…]

Since he took office early last year, Raúl Castro has been saying that the country’s severely battered economy needs fixing. In a widely quoted August speech, Castro said Cuba was spending more than it made.

“Nobody, no individual nor country, can indefinitely spend more than she or he earns. Two plus two always adds up to four, never five,” he said. “Within the conditions of our imperfect socialism, due to our own shortcomings, two plus two often adds up to three.”

In the 18 months since he took office, Castro restructured the nation’s agricultural system to give idle land to farmers, hoping they would revive a deeply troubled state-run agricultural industry plagued by inefficiency. He also allowed taxi drivers to have private licenses; many were working illegally anyway.

How do you get farmers to do more farming?  Create an incentive to do so, like a profit motive, long reviled by liberals and one of the reasons they believe health insurance needs reform.  Socialism costs more than the benefits to society.

Hugo Chavez was, no doubt, convinced that the oil profits he absconded with would pay for his socialist paradise, but that very socialism chases away the people he soaks off of.  Combined with the global recession, food shortages continue in Venezuela’s “paradise”.

The profit motive gives people an incentive to put their own time & money at risk to provide a service to those who need it.  If not enough folks need it, it’s not subsidized by the government (or shouldn’t be); it folds.  If it is useful to enough people, it prospers, and, rightfully, so does the owner who bore the risk.  Wealth is created in this system, not simply “spread around”, as Obama infamously said to Joe the Plumber.

Wealth was spread around in Venezuela, Cuba, and even Sweden, and now the piper must be paid.  In the latter two, changes are being made in a more capitalist direction.  Let’s hope Venezuelans learn that lesson.

Heck, let’s hope American Democrats learn it.

Hasty Pudding Thoughts

Well, I had an long day (12 hours is long for me) and am fighting off a bug hanging in the wings. So, for tonight … a few hasty thoughts and we’ll see where that gets us:

Perhaps if we accept the ontological aspect of human dignity as a starting point in a discussion on abortion that might help make the argument more useful. For discussion based on human dignity can serve as on both sides. The dignity of the mother and father as well as the child. One side can point to the necessity of insuring that the parents dignity, specifically the recognition of their personal ethical choices need to be respected. The other to the fact that human life, any human life, needs to be treated exceptionally. Forming policies and arguments that respect both sides of this matter is the essential element. One which the radicals on both sides fail to accomplish.

A few Econ Nobel prizes ago (Stigler I think) taught me one lesson on investing by which I live … and which lead to my portfolio being dominated by index funds. Whether or not it really does beat playing the market or some other complicated (or simple) strategy (which Mr Stigler argues it indeed also does) … there is one thing it does really well, which might be more important. It take the time wasted on the whole investment aspect of life out of the equation. This years prize will be grist for plenty of later blog posts (after I get some reading on the matter behind me). But commenter JA, might need to re-orient his thinking some ultimately … as he has used the tragedy of the commons numerous times in discussions to amplify on why government intervention is necessary … but alas, when you study the matter … perhaps that assumption is wrong.

And getting wrong reminds me that a quote from Paul Collier’s book on Democracy keeps springing back. In which he notes that spreading democracy in the third world as a good thing to do … is an assumption both Mr Bush and Mr Soros agree. To bad it’s wrong.

"De"regulation

Eric Scheie at "Classical Values" points out that the word "deregulation" doesn’t mean what some users of it think it means.  After noting that some consider it an unmitigated evil, it seems that they are making it the scapegoat for many of our economic ills when in fact quite the opposite is true.

I’m no economist, but the problem is that deregulation is being seen in a vacuum, without reference to the bigger picture, and I think the bigger picture was influenced — possibly even dominated — by something worse than regulation.

I refer to the complete absence of any standards. Not long ago, Glenn Reynolds made a nostalgic reference to the stuffy uptightness of old-fashioned bankers:

You know, we may just find that all those "stuffy" and "uptight" traits that old-fashioned bankers used to be mocked for were actually a good thing. . . .

Truer words have never been spoken and I’ve blogged about this before. It used to be that you had to actually qualify for a loan. You had to demonstrate income, creditworthiness, equity in the home, that the downpayment wasn’t borrowed, etc. before the stuffy uptight pinstriped guys would even think about giving you a loan. It was good that they were uptight. The "system" (for lack of a better word) worked.

So, what made these stuffy uptight guys decide they could get away with ditching the old uptight unfair standards that said (among other things) that some people are more worthy of getting loans than others?

The answer, as most of us know, is the government. It wasn’t as if these guys just stripped off their pinstripes and dove into the economic orgy room; they did something that’s really perfectly in character for stuffy uptight guys — they did as they were told. And they were told not to ever under any circumstances do anything that might in any way be interpreted by anyone at ACORN to have so much as a smidgen of an appearance of anything resembling discrimination. (A word denoting pure, unmitigated evil.)

Bad as the loss of banking standards might be, it’s not what I think is the overarching problem.

In my view, the biggest the loss of standards came in the form of the all-encompassing government guarantee. It was a gigantic blank check, and it operated to cover all sins. That no bank could ever be allowed to fail, and every mortgage would be backed by big daddy at FANNIE and FREDDIE meant that there really was no downside to anything, whether deliberate irresponsibility or government-mandated irresponsibility. The taxpayers would be responsible.

This may be many things, and it may of course be profoundly immoral, but to call it "deregulation" or "an excess of the free market" is absurd.

This is the same thing as when Barney Frank blamed the housing crisis on a failure of the free market.  At the time, Republicans wanted to regulate more heavily Fannie Mae and Freddie Mac; two entities that are themselves a demonstration of how non-free-market the mortgage industry is.  Democrats are blaming all the usual suspects and hoping their base isn’t paying attention.

Sweden Discovers Reagan

Sweden, long an example that the Left has pointed to as a socialist enlightened economic haven, has been running away from socialist progressive ideals.  The latest domino to fall is the realization that tax cuts spur on the economy.

Sweden’s centre-right government on Saturday announced income tax cuts of 10 billion kronor to stimulate the job market, its primary objective.

Prime Minister Fredrik Reinfeldt and three other ministers in the four-party coalition said the reduction would mean most wage earners would have 200 to 250 kronor (20 to 25 euros, 29 to 36 dollars) more in take-home pay every month.

The proposal, to be presented to parliament on Monday as part of the 2010 budget bill, is the fourth leg of a tax cut programme introduced in January 2007 to stimulate employment.

The fourth leg would enter into force on January 1, 2010.

With that step, 99 percent of full-time employees will have had their taxes reduced by a total of 1,000 kronor per month, while 75 percent will have had reductions of 1,500 kronor, the government said.

"The coalition government has agreed on reforms for jobs and entrepreneurialism that will increase employment in the long-term. It has to be more profitable to work and more companies should be able to hire employees," the government said.

Imagine that; looking at the long-term rather than a quick "stimulus" "fix" for the here-and-now.  Not only that, but letting the people keep their money rather than spending their childrens’ is predicted to increase employment in the long-term, in hopes of reducing this:

Since coming to power in late 2006, the government has launched a series of measures aimed at inciting Swedes to return to the job market instead of living off of state subsidies.

The success of public assistance shouldn’t be how many people are on it, but how many no longer need it.  That line is not original with me, but it is an idea that the Swedes are coming to grips with.

Thanks, Ronnie.

Political Cartoon: Good Examples

But good examples of what, exactly?

From Mike Ramirez (click for a larger version):

 

Mike Ramirez

So What Is a "Basic Human Right"?

Is health care a basic human right?  Bob Lupton, writing at the Sojourners presumptively-named blog "God’s Politics", thinks so.  I created an account so I could post a comment that includes a question I’ll now formally pose here:

Is food a basic human right?

Food you need constantly in order to live.  Health care you only need occasionally.  (For some, very occasionally.)  So which is more important for life?

Clearly, food is more important for life, and thus shouldn’t we have universal food care before we have universal health care? 

(Before you point to food stamps or the WIC program, understand that they are nowhere near as invasive to the rights of all as ObamaCare would be.  Those programs for the poor do not place any restrictions on my food purchases; on what I buy or where I buy it or what sorts of foods are sold.  ObamaCare would force me to get a certain type of policy as soon as I cross a state line or change jobs.  And there are many other restrictions on people and employers all in the name of covering those not currently covered.  None of these kinds of restrictions come from food programs for the poor.)

So the questions before you are: If you support the health care reform that the Democrats are trying to pass:

1 – Is health care a basic human right?

2 – If your answer to #1 is "Yes", then is food also a basic human right?

3 – If your answer to #2 is "Yes", then why not universal food coverage?  And what, exactly, do you consider a "basic human right" in general?

4 – If your answer to #2 is "No", why isn’t food a right if it’s more important to life?

5 – And finally, if your answer to #1 was "No", then why do you support a program that restricts everyone in order to deal with a few?  Why not a program that just covers the poor, like food stamps do in the area of food?

Your comments appreciated.  And I’ll report back if Mr. Lupton answers my question.

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