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www.freedomandprosperity.org |
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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Heritage Foundation, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Thursday, June 30, 2005 ~ 12:39 p.m., Dan Mitchell Wrote: ...the country that for hundreds of years was best known for emigration, tragic poets, famines, civil wars and leprechauns today has a per capita G.D.P. higher than that of
Germany, France and Britain. How Ireland went from the sick man of Europe to the rich man in less than a generation is an amazing story. It tells you a lot about Europe today: all the innovation is happening on
the periphery by those countries embracing globalization in their own ways - Ireland, Britain, Scandinavia and Eastern Europe - while those following the French-German social model are suffering high
unemployment and low growth. ...The country was going broke, and most college grads were emigrating. "We went on a borrowing, spending and taxing spree, and that nearly drove us under," said Deputy
Prime Minister Mary Harney. "It was because we nearly went under that we got the courage to change." And change Ireland did. In a quite unusual development, the government, the main trade unions,
farmers and industrialists came together and agreed on a program of fiscal austerity, slashing corporate taxes to 12.5 percent, far below the rest of Europe, moderating wages and prices, and aggressively
courting foreign investment. ...In 1990, Ireland's total work force was 1.1 million. This year it will hit two million, with no unemployment and 200,000 foreign workers (including 50,000 Chinese). Link to this Blog Entry
Wednesday, June 29, 2005 ~ 12:10 p.m., Dan Mitchell Wrote: The White House is putting heavy pressure on Congress to support this agreement, which it should. But one cannot help feeling that its own
missteps on trade are what have gotten this administration to the point where it must pull out all the stops to gain passage of a very modest trade agreement that probably won't have much impact one way or
another. ...the Bush administration has played politics with trade since day one, which has done serious damage to the fragile alliance that still
supports free trade. It imposed utterly unjustified tariffs on steel, torpedoed the Doha Round of multilateral trade talks by supporting a huge increase in agriculture subsidies, and has never missed an
opportunity to demagogue China for all our trade woes. Having destroyed the prospects for a multilateral trade agreement, which was supposed to be primarily about eliminating agriculture subsidies, the
Bush administration has tried to salvage some semblance of a free trade agenda by pursuing bilateral trade agreements. ...Still, much more could have been accomplished with CAFTA if the White House had made more
of an effort. For example, it could have used this as an opportunity to start dismantling the absurd U.S. sugar policy, which keeps domestic prices far above world levels just to enrich a few producers. Although
CAFTA opens the sugar market a little, much more could have been done without making the sugar lobby any more opposed to the agreement than it is anyway. Free traders have no choice but to support
CAFTA. Its failure would be seen as a victory for protectionism and would crush the hopes of economic reformers throughout Latin America.
...The effort shouldn't have been this difficult. If President Bush had been more consistent in his support for free trade over the last five years, he would now be in a stronger position to get CAFTA approved.
Thursday, June 30, 2005 ~ 11:32 a.m., Andrew Quinlan Wrote: Europe is the citadel of hypocrisy. Considering Europeans' contempt for the United States and George Bush for not embracing the Kyoto
Protocol, you'd expect that they would have made major reductions in greenhouse gas emissions -- the purpose of Kyoto. Well, not exactly. From 1990 (Kyoto's base year for measuring changes) to 2002, global
emissions of carbon dioxide (CO2), the main greenhouse gas, increased 16.4 percent, reports the International Energy Agency. The U.S. increase
was 16.7 percent, and most of Europe hasn't done much better. Here are some IEA estimates of the increases: France, 6.9 percent; Italy, 8.3 percent; Greece, 28.2 percent; Ireland, 40.3 percent; the Netherlands,
13.2 percent; Portugal, 59 percent; Spain, 46.9 percent. ...Even if rich countries actually curbed their emissions, it wouldn't matter much. Poor
countries would offset the reductions. "We expect CO2 emissions growth in China between now and 2030 will equal the growth of the United
States, Canada, all of Europe, Japan, Australia, New Zealand and Korea combined," says Fatih Birol, the IEA's chief economist. In India, he says,
about 500 million people lack electricity; worldwide, the figure is 1.6 billion. Naturally, poor countries haven't signed Kyoto; they won't
sacrifice economic gains -- poverty reduction, bigger middle classes -- to combat global warming. ...we should acknowledge that global warming
is an iffy proposition. Yes, it's happening; but, no, we don't know the consequences -- how much warming will occur, what the effects (good or bad) will be or where. If we can't predict the stock market and next
year's weather, why does anyone think we can predict the global climate in 75 years? Global warming is not an automatic doomsday. In some regions, warmer weather may be a boon.
Thursday, June 30, 2005 ~ 10:19 a.m., Dan Mitchell Wrote: The threat of the U.S. withholding cash from the United Nations has sent Kofi Annan into overdrive recently, with the secretary-general putting
his name to yet another round of articles proclaiming such stuff as a fresh start and much progress and grand plans for reforming the U.N.--which he is particularly practiced at, having done it twice already,
in 1997 and 2002. ...Let's even assume that this time, his record of failures notwithstanding, Mr. Annan is serious about U.N. reform. Who knows? At this stage, the secretary-general may be able to glean some
pointers from the eight or nine or 10 investigations (even France has finally found it unavoidable to launch one) still trying to mop up after his own mismanagement of the U.N. Oil for Food Iraq program--the
signature relief deal of Mr. Annan's U.N. leadership to date. Oil for Food fortified Saddam, helped corrupt the U.N. Security Council, and has since provided such diversions as the evolving tale of how the U.N.
Office of the Iraq Program happened to hire a company that for more than five years paid the secretary-general's own son for not working in
West Africa. ...if there is one item in all Mr. Annan's talk of reform that should provoke distinct horror, cold sweats, and mighty fears over the
trajectory of the U.N., it is a small cipher embedded in Mr. Annan's tastefully printed and expensively bound proposal for U.N. reform, "In
Larger Freedom," Annex item No. 5(d). That would be the proposal that developed countries contribute 0.7% of their gross domestic income to
the cause of "official development assistance." For the U.S. alone, where gross national income now totals about $11 trillion, that would
add up to more than $82 billion per year--by itself more than 10 times what the U.N. has already failed miserably to manage well. And though Mr. Annan does not spell out exactly how such official aid would
"officially" reach its intended beneficiaries, the clear implication is that it would go through the "official" U.N.--generating a great gush of cash,
with no more need for the U.N. to worry about reform, or Mr. Annan and his successors even to strain themselves sending staffers to lobby Washington, or signing self-laudatory Op-eds. ...Investigators are still
trying to follow the money from that last U.N. grand scam. To think seriously for even a second about Mr. Annan's plan to levy a percentage tax, of any size whatsoever, on the GDP of the developed world, is a
route not to help for the hungry, but to Orwell's "Animal Farm."
Thursday, June 30, 2005 ~ 9:32 a.m., Dan Mitchell Wrote: The framers of our Constitution gave us the Fifth Amendment in order to protect us from government property confiscation. The Amendment
reads in part: "[N]or shall private property be taken for public use, without just compensation." Which one of those 12 words is difficult to
understand? The framers recognized there might be a need for government to acquire private property to build a road, bridge, dam or fort. That is a clear public use that requires just compensation, but is
taking one person's private property to make it available for another's private use a public purpose? ...The Court's decision helps explain the
vicious attacks on any judicial nominees who might use framer-intent to interpret the U.S. Constitution. America's socialists want more control
over our lives, property and our pocketbooks. They cannot always get their way in the legislature, and the courts represent their only chance. There is nothing complex about those 12 words the framers wrote to
protect us from governmental property confiscation. You need a magician to reach the conclusion reached by the Court's majority. I think the socialist attack on judicial nominees who'd use framer-intent in their
interpretation of the Constitution might also explain their attack on our Second Amendment "right of the people to keep and bear Arms." Why?
Because when they come to take our property, they don't want to risk buckshot in their butts.
Thursday, June 30, 2005 ~ 8:45 a.m., Dan Mitchell Wrote: The recent practice of using foreign laws as bases for judicial decisions about American laws likewise turns law into the caprices that John
Stuart Mill feared more than he feared bad laws. There is no such thing as generic foreign law. There are the specific laws of France and the very different specific laws of Saudi Arabia and of hundreds of other
countries around the world. It is a matter of individual prejudice or caprice which of these laws any given judge chooses to cite. Justice Anthony Kennedy, for example, referred to foreign laws as a reason for
declaring an American state's law unconstitutional because it permitted the execution of murderers who were not yet 18 years old, which some
foreign governments do not. In other words, laws enacted by the elected representatives of an American state can be wiped out if people in Spain
or New Zealand think otherwise. Not only does this prevent the millions of people who want to be law-abiding citizens from knowing which laws
to abide by, it deprives American voters of the right of self-government through elected representatives that is at the heart of American society.
If our votes decide only which candidates get which offices, but not what laws and policies those elected representatives can enact for us to live
under, our elections will become more and more like placebos, with the real power being exercised from the judicial bench by people we never voted for.
Thursday, June 30, 2005 ~ 7:18 a.m., Dan Mitchell Wrote: ...the most important thing Congress can do is not to use $60 oil as an excuse to repeat the energy policy mistakes of that decade. Ronald
Reagan's first Executive Order upon taking office in 1981 was the immediate repeal of all Nixon-Ford-Carter era price controls on oil and natural gas. The windfall profits tax was eliminated on domestic
producers. Subsidies for alternative fuel boondoggles, including the infamous Synthetic Fuels Corporation, were ended. This revival of free-market energy policy resulted in exactly what we need today: a
boom in production and exploration that led to a 20-year decline in prices to less than half their peak levels. On this score, the energy bill
now moving through Congress is mostly beside the point, or worse. (The Alaska oil-drilling expansion is being addressed in a separate budget
bill.) This monstrosity repeats most of the subsidy mistakes of the Carter years--for wind, solar, "biomass," you name it. The only one of these
that will affect the price at the pump is a new eight-billion-gallon ethanol mandate that will actually increase gas prices by as much as a dime a
gallon on the East and West coasts. ...In some of our 50 states, the price of gasoline now exceeds $3 a gallon, or $40 to $50 for a fill up. Sticker
shock indeed. Washington shouldn't add insult to injury by making consumers pay twice for higher gas prices by also saddling them with billions of dollars of extra costs for an energy bill laden with corporate
welfare.
Wednesday, June 29, 2005 ~ 6:30 p.m., Dan Mitchell Wrote: Proposals by Germany's ruling Social Democrat Party (SPD) to introduce a new wealth tax have been interpreted by observers as a ploy
to appeal to its core left wing vote ahead of the general election, which is expected in September. Speaking after the party's top brass met in Berlin
to discuss the election manifesto, SPD leader Franz Müntefering told reporters that the party plans to impose a 3% surtax on the 42% top rate of income tax for individuals earning more than EUR250,000 ($300,000)
per year and couples earning more than EUR500,000 per year. The surtax is only likely to generate a relatively small amount of additional revenue, and the party has made no secret of the fact that the measure is
as much a psychological move as a serious attempt to fill the government's coffers.
Wednesday, June 29, 2005 ~ 4:12 p.m., Dan Mitchell Wrote: ...small businesses are concerned the law will cause financial and time-consuming burdens, because protection from sunlight is included in
the proposed rules. "The current proposal places completely unrealistic and onerous obligations on firms with employees working outdoors and
is a perfect example of the type of unnecessary regulation that reinforces the negative public perception of the EU," said Oliver Loebel, from
UEAPME, the small and medium-sized enetrprises' lobby. The pending directive is at its second reading and is part of broader health and safety
legislation, designed to protect workers from risks caused by exposure to physical agents. ...SMEs are concerned about the parliament's suggestion
that the commission should prepare "a practical guideline" with concrete measures that could actually lead to further burdens on companies - both for the daily evaluation of meteorological conditions,
and for the protection to be provided, like sunglasses or suncream. "We think the protection from sunlight should be excluded from the directive
and left up for member states to regulate. It is clear sunlight has varied intensity in different parts of Europe, and different people are also
affected by it in a different way. So the EU measures in this field would be inconsistent with the subsidiarity principle", said the UEAPME spokesman.
Wednesday, June 29, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: The DeMint-Ryan plan, if passed into law, would mark a giant first step toward personal ownership of Social Security benefits. Moreover, it
addresses the Democrats' main objections to personal accounts. We will now see, in other words, whether congressional Democrats have been debating the issue in good faith, or whether they have ulterior motives.
Announced last week by Sen. Jim DeMint, along with several influential House Republicans, the plan is based on the radical idea that our Social
Security surplus should actually be set aside for Social Security. As it is, Social Security funds drawn from payroll taxes run a surplus of billions
of dollars a year. This coming year it will exceed $80 billion, and before the great demographic shift of 2017 -- when baby boomers begin turning
65 -- the cumulative surplus will approach $2.2 trillion. In theory, that money is held in trust for future retirees. In practice, of course, the
surplus is spent by Congress on programs great and small, turning what ought to be an asset into massive future debt. Under the DeMint-Ryan plan, instead of just gobbling up the Social Security surplus, the
government would, in effect, rebate each worker's share of the surplus in the form of voluntary personal accounts invested in U.S. Treasury bonds.
Workers would be sure that their retirement money is safe because it would be stored away in an account that they would own -- a true
"lockbox" of solid construction, containing assets beyond the reach of politicians. ...It is true that the personal lockbox proposal does not
address Social Security's long-term solvency problem. Nor, at first, would it give young workers a very wide range of options -- a diversified
equities portfolio that could make for a much larger retirement savings. But partial reform is better than none at all.
Wednesday, June 29, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: There's an old tale which says that if you take a frog and throw him in a pot of hot, boiling water the frog will jump out. But if you take the frog
and put him in a pot of cold water, and gradually turn up the heat, little by little over a long period of time, the frog's body will adjust to the
incremental increases of heat and eventually boil to death. The U.S. economy is like a frog in a pot of boiling water and he can't jump out to
save himself. One of his legs is the oversized tax code, and the other leg is the dysfunctional Social Security system. ...The politics of obstruction
are slowly killing our economic future, while countries like China and India are closing the economic gap. Even though some of our nation's best economic and intellectual minds have repeatedly endorsed the
optional personal retirement accounts concept, the Democrats in Congress are content to do nothing. ...the Democrats will use the same "do-nothing" attack against changing the obese tax code when the
President's Tax Panel issues its report. No matter what the Tax Panel recommends, the Democrats will make their usual cries of, "it's a tax cut
for the rich." That's Democratic code again for "let's keep the economic frog in hot water and turn up the heat for the good of the Party and the
next election." The Democrats in Congress try to create the perception that they are the political party that best represents the poor. There is
some truth to that claim. They want everybody to be poor when they retire in the future by doing nothing today.
Wednesday, June 29, 2005 ~ 8:57 a.m., Dan Mitchell Wrote: ...more than nine months have passed and the first crime numbers are in. Last week, the FBI announced that the number of murders nationwide
fell by 3.6% last year, the first drop since 1999. The trend was consistent; murders kept on declining after the assault weapons ban ended. Even more interesting, the seven states that have their own
assault weapons bans saw a smaller drop in murders than the 43 states without such laws, suggesting that doing away with the ban actually reduced crime. (States with bans averaged a 2.4% decline in murders; in
three states with bans, the number of murders rose. States without bans saw murders fall by more than 4%.) And the drop was not just limited to
murder. Overall, violent crime also declined last year, according to the FBI, and the complete statistics carry another surprise for gun control
advocates. Guns are used in murder and robbery more frequently then in rapes and aggravated assaults, but after the assault weapons ban ended,
the number of murders and robberies fell more than the number of rapes and aggravated assaults. ...For gun control advocates, even a meaningless ban counts. These are the same folks who have never been
bashful about scare tactics, predicting doom and gloom when they don't get what they want. They hysterically claimed that blood would flow in
the streets after states passed right-to-carry laws letting citizens carry concealed handguns, but that never occurred. Thirty-seven states now have right-to-carry laws - and no one is seriously talking about
rescinding them or citing statistics about the laws causing crime.
Wednesday, June 29, 2005 ~ 7:45 a.m., Dan Mitchell Wrote: As a Canadian transplanted to the United States, I urge my American neighbors to listen to the Canadian patients, not the American
advocates. The Canadian health care system provides a poor model for the United States. Rather it serves as a cautionary tale of what happens when a single payer, the government, is put in charge of a large and
critical system. Incentives drive any system, and the incentives of a government-financed health care system are contrary to the best interests of patients. In a multipayer system, patients produce revenues
for the institutions that treat them. As a result, they are courted and welcomed. In a system of bureaucratically set global budgets, patients
are cost centers, drains on resources and thus must be rationed. ...Last year, more than 800,000 Canadians, 2.5 percent of the population, were
waiting for health procedures. The average wait to see a specialist, according to the Vancouver-based Fraser Institute, is nearly 10 weeks.
The institute pegs the estimated cost to these patients at $2.2 billion, or roughly $2,700 a person. The problems plaguing Canada's health care
system -- long lines, lack of access to technology and dwindling doctor supply -- are unavoidable in a single payer system. Consider the lack of
technology. Since procedures are "free," investing in technology merely costs the government money. Government officials have a strong
incentive to underinvest in advanced technology, and they do. Canada ranks 20th of 25 industrialized countries in the number of MRI machines. It ranks 16th of 25 for CT scans... The Canadian health care system
provides yet another vindication of the insight that in socialistic systems, everything is free yet nothing is available.
Tuesday, June 28, 2005 ~ 8:00 a.m., Dan Mitchell Wrote: Last week's regrettable 5-4 decision in Kelo v. City of New London marks a new low point in the Supreme Court's takings jurisprudence.
...In the mid-1950s, the Supreme Court held that takings were for public use when they were intended to relieve various forms of urban "blight"
-- a slippery term with no clear constitutional pedigree. Thirty years later, the Court went a step further by allowing Hawaii to force landlords to sell their interests to sitting tenants, as a means to
counteracting ostensible "oligopolistic" market conditions. Now any "conceivable" indirect social benefit would do, without regard to the
attendant costs. Given this past legacy, Justice Stevens found it easy to take New London at its word. Any comprehensive public project will produce some benefit for someone, so that -- as Justices O'Connor and
Thomas stressed in dissent -- his test always allows the legislature to gin up some rationale for taking public property for just compensation
(which alas falls far short of making the individual landowner whole: legal, appraisal and moving costs, for example, are systematically ignored). But the slightest bit of reflection should have shown just how
the new public use cases have migrated from the old mining cases, or even under the Hawaii statute, which did not displace sitting tenants.
...The Court could only arrive at its shameful Kelo ruling by refusing to look closely at past precedent and constitutional logic. Courts that refuse
to see no evil and hear no evil are blind to the endemic risk of factional politics at all levels of government. And being blind, this bare Supreme
Court majority has sustained a scandalous and cruel act for no public purpose at all. In effect, the majority in Kelo v. New London held that the words "public use" in the Fifth Amendment -- "nor shall private property be
taken for public use without just compensation" -- can mean wholly private use, so long as the government expects it to yield some incidental
public benefit -- more tax revenue, new jobs, "maybe even aesthetic pleasure," as Justice Sandra Day O'Connor wrote in a dissent joined by
Chief Justice William Rehnquist and justices Antonin Scalia and Clarence Thomas. Would your town's tax base grow if your home were bulldozed and replaced with a parking garage? If so, it may not be your
home for long. As a result of this evisceration of the Public Use Clause, "the specter of condemnation hangs over all property," the dissenters
warn. "Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a
factory." ...In a separate dissent, Thomas made the same point: "These losses will fall disproportionately on poor communities . . . the least
politically powerful." Fifty years of eminent domain statistics drive home the fact that families uprooted by eminent domain tend to be nonwhite
and/or nonwealthy. No wonder urban renewal came to known bitterly as "Negro removal." ...It isn't the high and mighty on whom avaricious
governments and developers prey. Justices John Paul Stevens, Steven Breyer, David Souter, Ruth Bader Ginsburg, and Anthony Kennedy are responsible for this execrable decision, which shreds what little was left
of the principle that a man's home is his castle. But they'll never have to live with its consequences. The Fifth Amendment to the U.S. Constitution contains what has come to be known as the Takings Clause: "nor shall private property be taken
for public use without just compensation." As Justice Thomas argued, "The Takings Clause is a prohibition, not a grant of power." Eminent
domain, an awesome and dangerous power even for truly public uses, was restricted by the Bill of Rights to only truly public purposes. But
instead, the Court majority expanded the meaning of "public use" to encompass "politician use." Certainly, the only meaningful public benefit
is more tax dollars collected and spent by politicians. The public gets whatever trickle down benefits come of this government spending. Lucky
us. The term "public use" ceases to have any real meaning under this tortured logic. "When the government takes property and gives it to a
private individual, and the public has no right to use the property," Thomas writes, "it strains language to say that the public is 'employing'
the property, regardless of the incidental benefits that might accrue to the public from the private use."
Tuesday, June 28, 2005 ~ 7:23 a.m., Dan Mitchell Wrote: A quarter-century ago, Daniel Patrick Moynihan noted how it was the Republicans who had become a party of ideas, while the Democrats'
philosophical foundation was ``deeply eroded.'' But even Moynihan would be surprised by the bankruptcy in the Democrats' current intellectual account. Take trade and Central America. The status quo
there is widespread poverty. The Bush administration has proposed doing something about it: a free trade agreement encompassing five Central American countries plus the Dominican Republic. It's a
no-brainer. If we have learned anything from the last 25 years in China, India, Chile and other centers of amazing economic growth, it is that open markets and free trade are the keys to pulling millions, indeed
hundreds of millions of people, out of poverty. The Central American Free Trade Agreement (CAFTA) is a chance to do the same for desperately poor near-neighbors. You would think this treaty would be a
natural for the Democrats, who have always portrayed themselves as the party with real sympathy for the poor... Not so. CAFTA is in great jeopardy because Democrats have turned against it. Whereas a decade
ago under President Clinton, 102 House Democrats supported NAFTA (the North American Free Trade Agreement), that number for CAFTA is down to 10 or less. ...Eighty percent of goods from these countries are
already entering the United States duty-free, so CAFTA would have a minimal impact on the United States. It would, however, have a dramatic impact on these six neighbor countries -- countries that
Democrats used to care about. Or so they said.
Tuesday, June 28, 2005 ~ 6:45 a.m., Dan Mitchell Wrote: For the Founders, dependence on government in private and public life was to be avoided at all costs -- such dependence, as they rightly saw it,
being the root of bondage. "Dependence," said Thomas Jefferson, no doubt reminiscent of the abuses of the British Crown, "begets
subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition." Independence, then, was the key to
private liberty and public virtue. ...The process described here is what's known as "welfare democracy," and its ever-growing presence has
become the pattern characterizing -- to one degree or another -- every industrialized democracy in the world today. In fact, the growth of such
welfare democracies has become so predictable that we can identify its basic pattern: A country becomes a stable democracy (of some variety); democracy promotes the country's growth in wealth; the now-wealthy
country perceives its "duty" to use this wealth for social care and betterment (welfare); the ever-growing entitlements sap the state's
original economic vitality; and the citizenry becomes dependent on the state from cradle to grave. Today, France, Sweden, Germany, Great Britain and Canada are only a few of the worst offenders. ...Perhaps
Benjamin Franklin was the first to see the dangers of the emerging welfare state in England; he remarked that such a system removed "the
greatest of all inducements to industry, frugality, and sobriety, by giving [the poor] a dependence on somewhat else than a careful accumulation
[of wealth] during youth and health." Rather, said Franklin, "the best way of doing good to the poor, is not making them easy in poverty, but
leading or driving them out of it." To that end, Franklin and many of the other Founders practiced what they preached and were active in organizing and promoting private associations to provide public
assistance -- precisely the relationship they envisioned between a democratic society and its neediest members. ...In every case, well-intentioned government economic assistance becomes the harbinger
of unintended and detrimental social consequences.
Monday, June 27, 2005 ~ 1:00 p.m., Dan Mitchell Wrote: The key to assimilation, of course, is language. The real threat to the United States is not immigration per se but bilingualism and, ultimately,
biculturalism. Having grown up in Canada, where a language divide is a recurring source of friction and fracture, I can only wonder at those who
want to duplicate that plague in the United States. The good news, and the reason I am less panicked about illegal immigration than most, is
that the vogue for bilingual education is waning. It has been abolished by referendum in California, Arizona and even Massachusetts. As the
results in California have shown, it was a disaster for Hispanic children. It delays assimilation by perhaps a full generation. Those in "English
immersion" have more than twice the rate of English proficiency than those in the old bilingual system (being taught other subjects in Spanish
while being gradually taught English). By all means we should try to control immigration. Nonetheless, given our geography, our tolerant culture and the magnetic attraction of our economy, illegals will always
be with us. Our first task, therefore, should be abolishing bilingual education everywhere and requiring that our citizenship tests have strict standards for English language and American civics. The cure for
excessive immigration is successful assimilation. The way to prevent European-like immigration catastrophes is to turn every immigrant -- and most surely his children -- into an American.
Monday, June 27, 2005 ~ 12:41 p.m., Dan Mitchell Wrote: Unemployment Insurance (UI) also does not redistribute to the poor. In Massachusetts, a state considered to have a very generous UI program,
the UI benefits were financed in 2003 by a payroll tax on only the first $10,800 of earnings (with a zero marginal tax rate above that level)
while basic benefits were 50 percent of previous wages up to more than $50,000 of wages per year. An individual who earns $50,000 a year pays the same tax as someone who earns $11,000 a year but would receive
benefits that are nearly five times as high. Taken by itself this would mean a substantial redistribution from low wage earners to higher wage
earners. Moreover, since benefits are paid only to individuals who have earned some minimum amount during the past year, those with long spells of unemployment may not be eligible for any benefits at all.
...Noneconomists who write about social insurance programs often implicitly assume that social insurance programs do not affect the behavior of beneficiaries or the overall performance of the economy.
Evidence shows that the opposite is true. Social insurance programs have important and sometimes harmful effects on the economy that are not fully recognized by the public, the Congress, or the politically
responsible officials. A substantial volume of work during the past quarter century has shown the various ways in which social insurance programs do affect individual behavior and the overall economy. These
effects include reducing national saving, inducing early retirement, raising the unemployment rate, pushing up the cost of health care, and crowding out private health insurance. ...social insurance programs not
only distorts economic behavior directly, thereby creating deadweight losses, but also creates further deadweight losses because of the taxes
that are levied to finance those programs. I believe that the deadweight losses of those taxes are much larger than is generally recognized. ...A
high level of unemployment insurance benefits helps the unemployed to maintain consumption but also encourages longer spells of unemployment and the choice of jobs that have a greater likelihood of
leading to a layoff. ...Today economists recognize that high marginal rates of income tax and the marginal tax rates implicit in various benefit
rules reduce taxable income and create substantial deadweight losses. ...Unemployment insurance benefits raise the unemployment rate in a variety of ways that economists have now analyzed and measured. But
back in the 1960s and 1970s, the higher unemployment rates that were actually induced by unemployment insurance were instead incorrectly perceived as due to inadequate demand. When the government tried to
reduce this high structural unemployment with expansionary monetary and fiscal policies, the result was rising inflation. ...accumulating evidence showed that UI benefits were inducing excessively long periods
of search in which the gain from the marginal search was less than the value of the foregone output. For example, Larry Katz and Bruce Meyer (1990) showed that the probability that an unemployed person takes a
job rises dramatically in the few weeks just before their benefits would expire. Jim Poterba and I (1984) found that the median value of the
reported reservation wage of new UI recipients was actually higher than the wage on their previous job, that it was an increasing function of the
UI replacement rate, and that it came down only very slowly during their spell of unemployment.
Monday, June 27, 2005 ~ 11:17 a.m., Dan Mitchell Wrote: The only foolproof way for colleges and universities to avoid lawsuits was to make their athletic rosters "proportional" to overall enrollment.
Since women account for about 56 percent of undergraduates on the average campus, women must make up more than half of all athletes if school administrators are to sleep soundly at night. There are two ways
to make the math work. First, schools can try to lure more women into sports by creating new teams for them. ...when Brown University was sued under Title IX, there were 85 unfilled spots on women's varsity
teams. The second way of meeting the quota is more certain: eliminate men's teams. Scrapping men's sports works every time and costs nothing,
and so many universities across the country have taken this route. ...In total, universities have eliminated more than 200 male track teams, 120
wrestling teams, and nearly 90 male gymnastics teams, leaving just 20 schools with gymnastic programs for men. The only winners from cutting men's teams are radical gender ideologues fixated on mathematical
parity between men and women. ...The Bush administration's regulatory clarification means that schools now have the option of surveying their
students to assess interest in athletic participation. Different responses between genders can now serve as a basis for explaining different levels
of participation in athletics. ...Hostility toward reform is likely based on fear of what an honest assessment may find: that more men are drawn to sports than women. And indeed, evidence that men have a greater
interest in athletics abounds. Men's participation in intramural leagues on college campuses dwarfs women's; men spend more time watching sports; men spend more money on sports; and male athletes are more
willing to sit on benches as second stringers than female athletes, who often quit when not regularly played. The feminists and left-wing
politicians who sing the praises of Title IX don't want to face these facts. They envision a world in which men and women act the same and are
equally represented in all walks of life. But that's not how actual men and women behave. These social engineers want government to force that outcome anyway.
Sunday, June 26, 2005 ~ 3:00 p.m., Dan Mitchell Wrote: The Internal Revenue Service is investigating whether unauthorized people gained access to sensitive taxpayer and bank account
information... The U.S. tax agency -- whose databases include suspicious activity reports from banks about possible terrorist or criminal transactions -- launched the probe after the Government Accountability
Office said in April that the IRS "routinely permitted excessive access" to the computer files. The GAO team was able to tap into the data without
authorization, and gleaned information such as bank account holders' names, social security numbers, transaction values, and any suspected terrorist activity. It said the data was at serious risk of disclosure,
modification or destruction. ...IRS officials were not immediately available for comment.
Sunday, June 26, 2005 ~ 2:31 p.m., Dan Mitchell Wrote: Most conservatives hoped that, in the most important case the court was to decide this term, judicial activism would put a leash on popularly
elected local governments and would pull courts more deeply into American governance to protect the rights of individuals. Yesterday conservatives were disappointed. ...The question answered yesterday
was: Can government profit by seizing the property of people of modest means and giving it to wealthy people who can pay more taxes than can be extracted from the original owners? The court answered yes. The
Fifth Amendment says, among other things, "nor shall private property be taken for public use , without just compensation" (emphasis added).
All state constitutions echo the Constitution's Framers by stipulating that takings must be for "public use." The Framers, who weighed their
words, clearly intended the adjective "public" to circumscribe government's power: Government should take private property only to
create things -- roads, bridges, parks, public buildings -- directly owned or primarily used by the general public. Fighting eviction from homes
one of them had lived in all her life, the New London owners appealed to Connecticut's Supreme Court, which ruled 4 to 3 against them. Yesterday
they lost again. The U.S. Supreme Court issued a 5 to 4 ruling that drains the phrase "public use" of its clearly intended function of denying
to government an untrammeled power to dispossess individuals of their most precious property: their homes and businesses. ...Those on the receiving end of the life-shattering power that the court has validated
will almost always be individuals of modest means. So this liberal decision -- it augments government power to aggrandize itself by bulldozing individuals' interests -- favors muscular economic battalions
at the expense of society's little platoons, such as homeowners and the neighborhoods they comprise. ...Liberalism triumphed yesterday. Government became radically unlimited in seizing the very kinds of
private property that should guarantee individuals a sphere of autonomy against government. Conservatives should be reminded to be careful
what they wish for. Their often-reflexive rhetoric praises "judicial restraint" and deference to -- it sometimes seems -- almost unleashable
powers of the elected branches of governments. However, in the debate about the proper role of the judiciary in American democracy, conservatives who dogmatically preach a populist creed of deference to
majoritarianism will thereby abandon, or at least radically restrict, the judiciary's indispensable role in limiting government.
Sunday, June 26, 2005 ~ 1:54 p.m., Dan Mitchell Wrote: Brown is a remarkable woman. She is the daughter of an Alabama sharecropper, as the Republicans repeated ad nauseam. She rose from a
segregated childhood to become a prominent jurist with a sizzling pen and fierce convictions. Her worldview is that of an uncompromising libertarian, particularly as concerns property (or economic) rights.
Property and contract are, for her, the lifeblood of liberty; and when, in the late 1930s, the country and the Supreme Court began treating property rights cavalierly, they set loose an inexorably advancing
leviathan state. To Brown, moreover, it makes no sense to treat speech and privacy rights as sacrosanct but property rights as trivial, when the
Founders viewed all those rights as of a piece. ..In a 2000 speech to the Federalist Society in Chicago, she said, "We no longer find slavery
abhorrent. We embrace it. We demand more. Big government is not just the opiate of the masses. It is the opiate: the drug of choice for multinational corporations and single moms; for regulated industries and
rugged Midwestern farmers and militant senior citizens." She spoke of the Supreme Court's belated acquiescence to the New Deal as "the
Revolution of 1937," resulting today in "a debased, debauched culture." There is much more in this vein, and not just in her speeches. In a 2002
dissent involving a San Francisco housing regulation, she declared that private property "is now entirely extinct in San Francisco," replaced by "a neo-feudal regime."
Sunday, June 26, 2005 ~ 12:13 p.m., Dan Mitchell Wrote: Republican reformers are introducing a new plan to invest Social Security surplus funds into personal accounts that has the potential to
shake up the debate. Wisconsin Congressman Paul Ryan and South Carolina Senator Jim DeMint are calling for legislation to bring an immediate halt to the ongoing political raid on the surplus payroll taxes
collected by Social Security. Congress now spends that cash on current programs--from cotton subsidies, to defense, to the Dr. Seuss Museum.
Every day that Congress fails to act, another $200 million is spent rather than being saved for future retirement. Daniel Patrick Moynihan once
called this "thievery," and if corporate America were engaged in this type of accounting fraud Eliot Spitzer would be hauling CEOs to jail.
Instead of spending this retirement money, the reformers would allow individual workers to divert every surplus Social Security dollar--from now until the extra cash runs out in 2016--into personal retirement
accounts. ...DeMint-Ryan would allow workers to create individual personal retirement accounts and place marketable government bonds worth their portion of the Social Security surplus into these accounts.
Think of this as creating 140 million "lock box" accounts, one for every American worker. After three years, workers could trade these Treasury
bonds and invest instead in higher-return mutual funds containing a combination of corporate stocks and bonds. ...The virtues of this proposal are both economic and political. By investing the surplus,
rather than letting Congress spend it, the money would be put to better economic use and add to net national saving. The latter ought to please
the deficit scolds in particular. Another benefit is that Congress wouldn't be able to keep using the Social Security surplus to disguise its other
spending habits. This means more-honest federal budgeting, and we hope more pressure for spending discipline.
Saturday, June 25, 2005 ~ 3:30 p.m., Dan Mitchell Wrote: Throughout the mid-1990s, the Republican Congress did a good job controlling spending. Combined with pro-growth policies like welfare
reform and a capital gains tax cut, an environment of rapid revenue growth and limited spending growth emerged. The net result was a budget surplus. But this was not the fiscal Promised Land. Like hungry
children who happen upon a bag of candy, Congress just couldn't control itself once there was extra money on the table, and the Clinton White
House certainly was not interested in exercising adult oversight. ...Any hope that the Bush administration would steer the "Republican
Revolution" back on course was dashed almost immediately. First there was the enactment of the President's education bill, No Child Left Behind. Since when do Republicans stand for federal spending on
Education? Yet, in four years, President Bush increased spending at the Department of Education by 98.6 percent. However, instead of being ashamed, Republicans see the increase as an accomplishment. Then,
there was the farm bill. This bill is best characterized as a bipartisan orgy of special interest politics. It makes a mockery of the Freedom to
Farm Act signed in 1996 by President Clinton. Today, old subsidies have been increased, new subsidies created and the budget of the Department
of Agriculture is up 40 percent. Finally, the Republicans are responsible for the biggest expansion in Medicare since 1965. ...To be sure, President
Bush never pretended to be a Goldwater or a Reagan Republican. His campaign promised a new "compassionate conservatism" and a desire to "change the tone in Washington." Today, we know that
compassionate conservatism is really just big government and changing the tone means his veto pen is buried under the ground.
Saturday, June 25, 2005 ~ 2:24 p.m., Dan Mitchell Wrote: According to deputy finance minister Barbara Hendricks, the SPD wants to eliminate the different tax rates paid by private and incorporated
companies which sees 90% of Germany's 3.4 million firms pay corporate tax at a top rate of 42%, whilst public companies pay a flat rate of 25%
with surcharges. "Signs are that the party will adopt the proposal, the only realistic way to simplify the tax system," Hendricks told reporters in
Berlin on Tuesday. Under proposals announced in March by Chancellor Gerhard Schroeder, the 25% flat rate will be reduced to 19%. However, the ruling SPD and the principal opposition Christian Democratic Union
have been unable to agree on how the tax cut will be financed in the light of falling revenues and a stagnating economy. ...With Germany's fiscal finances in a mess at both federal and state level, even the
right-of-centre CDU, which had previously trumpeted cuts in the bottom and top rates of income tax, accepts that simplification is a higher priority now. In particular, the CDU is keen to bring smaller German
firms, which have a different legal form to larger companies, into the tax net. Fewer than 20% of Germany's small firms pay corporation tax.
Saturday, June 25, 2005 ~ 12:29 p.m., Dan Mitchell Wrote: The Court's four liberals (Justices Stevens, Breyer, Souter and Ginsburg) combined with the protean Anthony Kennedy to rule that local
governments have more or less unlimited authority to seize homes and businesses. No one disputes that this power of "eminent domain" makes
sense in limited circumstances; the Constitution's Fifth Amendment explicitly provides for it. But the plain reading of that Amendment's
"takings clause" also appears to require that eminent domain be invoked only when land is required for genuine "public use" such as roads. It
further requires that the government pay owners "just compensation" in such cases. The founding fathers added this clause to the Fifth
Amendment--which also guarantees "due process" and protects against double jeopardy and self-incrimination--because they understood that
there could be no meaningful liberty in a country where the fruits of one's labor are subject to arbitrary government seizure. That protection
was immensely diminished by yesterday's 5-4 decision, which effectively erased the requirement that eminent domain be invoked for "public use."
...In his clarifying dissent, Justice Clarence Thomas exposes this logic for the government land grab that it is. He accuses the majority of replacing
the Fifth Amendment's "Public Use Clause" with a very different "public purpose" test: "This deferential shift in phraseology enables the Court to
hold, against all common sense, that a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer
Corporation, is for a 'public use.'" And in a separate dissent, Justice Sandra Day O'Connor suggested that the use of this power in a reverse
Robin Hood fashion--take from the poor, give to the rich--would become the norm, not the exception: "Any property may now be taken for the
benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with
disproportionate influence and power in the political process, including large corporations and development firms." ...in just two weeks, the Supreme Court has rendered two major decisions on the limits of
government. In Raich v. Gonzales the Court said there are effectively no limits on what the federal government can do using the Commerce
Clause as a justification. In Kelo, it's now ruled that there are effectively no limits on the predations of local governments against private
property. These kinds of judicial encroachments on liberty are precisely why Supreme Court nominations have become such high-stakes battles.
If President Bush is truly the "strict constructionist" he professes to be, he will take note of the need to check this disturbing trend should he be presented with a High Court vacancy.
Saturday, June 25, 2005 ~ 10:14 a.m., Dan Mitchell Wrote: The plaintiffs' bar has discovered another golden goose to fleece. Merchants throughout the world recognize the benefits of credit and
debit cards, but have turned to lawsuits and governments to reduce the costs. A class-action suit filed in Connecticut this week seeks billions
from Visa, MasterCard, and their member banks for alleged "collusion" in setting prices. Australia and other countries have even imposed
controls on the price that card issuers can charge merchants. ...credit cards can be a superior form of credit for some consumers. Too often,
those who scoff at this use of plastic do not need credit or are wealthier individuals with better credit options than many Americans. Compared
to home-equity loans, for example, credit cards do not require that one own a home or that one further mortgage the home that he owns. Credit cards are clearly superior to traditional forms of credit such as
pawnshops, payday lenders, and borrowing money from family and friends. Furthermore, personal-finance company loans can be more expensive and have much higher initiation fees than do payment cards.
Given the enormous benefits of payment cards, government efforts to interfere with this market are taken at great risk. Consider the Australian price controls, which this week's class action may seek to
emulate. Like such controls throughout history, these restrictions have adversely affected the product under control and interfered with consumers' ability to transact as they please. Today in Australia,
cardholders are forced to pay more while getting less. Australians have seen higher card fees, fewer payment choices, and a reduction in loyalty and reward programs.
Saturday, June 25, 2005 ~ 10:12 a.m., Dan Mitchell Wrote: Republican reformers are introducing a new plan to invest Social Security surplus funds into personal accounts that has the potential to
shake up the debate. Wisconsin Congressman Paul Ryan and South Carolina Senator Jim DeMint are calling for legislation to bring an immediate halt to the ongoing political raid on the surplus payroll taxes
collected by Social Security. Congress now spends that cash on current programs--from cotton subsidies, to defense, to the Dr. Seuss Museum.
Every day that Congress fails to act, another $200 million is spent rather than being saved for future retirement. Daniel Patrick Moynihan once
called this "thievery," and if corporate America were engaged in this type of accounting fraud Eliot Spitzer would be hauling CEOs to jail.
Instead of spending this retirement money, the reformers would allow individual workers to divert every surplus Social Security dollar--from now until the extra cash runs out in 2016--into personal retirement
accounts. ...DeMint-Ryan would allow workers to create individual personal retirement accounts and place marketable government bonds worth their portion of the Social Security surplus into these accounts.
Think of this as creating 140 million "lock box" accounts, one for every American worker. After three years, workers could trade these Treasury
bonds and invest instead in higher-return mutual funds containing a combination of corporate stocks and bonds. ...The virtues of this proposal are both economic and political. By investing the surplus,
rather than letting Congress spend it, the money would be put to better economic use and add to net national saving. The latter ought to please
the deficit scolds in particular. Another benefit is that Congress wouldn't be able to keep using the Social Security surplus to disguise its other
spending habits. This means more-honest federal budgeting, and we hope more pressure for spending discipline.
Friday, June 24, 2005 ~ 1:32 p.m., Dan Mitchell Wrote: A top level Canadian Senate committee has called upon the government to cut taxes for businesses and individuals as a matter of urgency in
order to close the growing productivity gap between Canada and the United States. The Senate banking, trade and commerce committee has urged the federal government to put in place a tax reform strategy by
2006 to stem the decline in the nation's productivity. The committee has suggested the the reforms should cut federal capital tax, corporate tax
and individual tax for middle and upper-income workers. It also wants to see businesses allowed to write off capital investments more aggressively. "That's not just that Canadian workers aren't working
hard, the real issue is that there is not enough capital investment per worker in our economy compared to the United States. That all goes to the question of tax incentives," observed Liberal Senator Jerry
Grafstein, the committee chairman. The committee's report noted that a decade ago, Canada was almost equal to the United States in productivity, but now trails 15% behind the US in terms of productivity
per worker. ..."Here, we tend to punish success," commented Conservative Senator David Angus. "You make a big score on a new
productive business with a new invention and something really exciting - boom - that money is all gone in tax and there's not enough money to attract the people to stay here in Canada," he added.
Friday, June 24, 2005 ~ 12:17 p.m., Dan Mitchell Wrote: What is the true nature of Europe's crisis? It is not institutional, despite the many flaws of Brussels' technocrats and their nontransparent
dealings. It is not the failure to agree on a budget, as such a deal can wait another year and even longer. And it is certainly not the rejections
of those hundreds of pages of legalese which so many commentators now assume to be the starting point of Europe's disarray. Even the staunchest
defenders of Valéry Giscard d'Estaing's oeuvre have yet to explain why Europe couldn't continue to function without it. Rather, the rejection of
the constitution, certainly in France, is a symptom of the country's and Europe's real crisis -- its economic decline. And economic policy is still
primarily national policy and not formulated at EU level. The European crisis, in other words, is above all a crisis of leadership in the various
capitals of the Continent, primarily in those of its three biggest economies, Berlin, Paris and Rome. It is hard to imagine that the French would have rejected the constitution if France didn't have double-digit
unemployment and little economic growth. ...Capitalism and the mythical Polish plumber seem to have become the greatest threats to West European civilization since the days of Attila and his Huns. Western
civilization in this context of course means the so-called French social model, which, as Mr. Chirac's rival Nicholas Sarkozy has pointed out, is
neither social nor a model because nobody is emulating it and with more than 10% unemployed, you can't really call it social. ...For Europeans
accustomed to the conventional concepts of social justice, the ideas that strict labor laws might not protect but destroy jobs or that lower tax rates might lead to higher, not lower, government revenues are
counterintuitive and hard to accept. That's why they are quick to believe that caricature of the heartless, neoliberal Anglo-Saxon economy and
that all those favorable economic data must come at a terrible price for the "underprivileged." ...In the end, the budget is not really the key to
economic progress in Europe. The EUR40 billion farm budget is only a fraction of 1% of the combined EU GDP, and shifting some of it from subsidizing farmers to subsidizing researchers is economically speaking
only a marginal improvement. Scientists are definitely more important for the 21st-century economy than farmers, but financing their work through subsidies would still be very 19th century.
Friday, June 24, 2005 ~ 10:43 a.m., Dan Mitchell Wrote: Feminists keep demanding new laws to protect women from the so-called wage gap. Many studies have found that women make about
75 cents for every dollar a man earns. Activists say the pay difference is all about sexism. ...But how could this be possible? Suppose you're an
employer doing the hiring. If a woman does equal work for 25 percent less money, businesses would get rich just by hiring women. Why would any employer ever hire a man? ...Suppose two people have equal
potential, but one takes on more demanding, consuming, lucrative jobs while the other places a higher priority on family. The one who makes work the focus will be more productive for an employer than the one
who puts his or her home life first. The latter will get more of the pleasures of family. So he (and it tends to be "he") will make more money, even though she would be equally productive and equally
rewarded if she made the same choices. ...The market is just. It rewards you for the work you do, not for the work you choose not to do. If men
want the family time many women have, we must accept lower financial rewards -- and if women want the money, they have to work like money-grubbing men.
Friday, June 24, 2005 ~ 9:53 a.m., Dan Mitchell Wrote: America's socialists advocate that we adopt a universal healthcare system like our northern neighbor Canada. Before we buy into complete
socialization of our healthcare system, we might check out the Canadian Supreme Court's June 9th ruling in Chaoulli v. Quebec (Attorney General). It turns out that in order to prop up government-delivered
medical care, Quebec and other Canadian provinces have outlawed private health insurance. By a 4 to 3 decision, Canada's high court struck down Quebec's law that prohibits private medical insurance. With
all of the leftist hype extolling the "virtues" of Canada's universal healthcare system, you might wonder why any sane Canadian would want to purchase private insurance. Plaintiffs Jacques Chaoulli, a
physician, and his patient, George Zeliotis, launched their legal challenge to the government's monopolized healthcare system after having had to
wait a year for hip-replacement surgery. In finding for the plaintiffs, Canada's high court said, "The evidence in this case shows that delays in
the public healthcare system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public healthcare. The
evidence also demonstrates that the prohibition against private health insurance and its consequence of denying people vital healthcare result
in physical and psychological suffering that meets a threshold test of seriousness." ...I wonder just how many Americans would like to import
Canada's healthcare system, which prohibits the purchase of private insurance and private healthcare services. In British Columbia, for example, Bill 82 provides that a physician can be fined up to $20,000 for
accepting fees for surgery. In my book, it's medical Naziism for government to prohibit a person who wishes to purchase medical services from doing so. But let's not look down our noses at our northern
neighbors, for we too are well along the road toward medical Naziism.
Thursday, June 23, 2005 ~ 1:01 p.m., Dan Mitchell Wrote: ...as recently as 1997 the Senate voted 95-0 for the Byrd-Hagel Resolution assailing Kyoto's provisions. Bill Clinton never even brought
the Protocol up for a vote. ...Since that Byrd-Hagel vote eight years ago, the case for linking fossil fuels to global warming has, if anything,
become even more doubtful. The Earth currently does seem to be in a warming period, though how warm and for how long no one knows. In particular, no one knows whether this is unusual or merely something
that happens periodically for natural reasons. Most global warming alarms are based on computer simulations that are largely speculative and depend on a multitude of debatable assumptions. ...the computer
models that predict it suggest the upper atmosphere should have warmed substantially in recent decades. But data from weather balloons and satellites don't match the projections. There's also the matter of the
alleged melting of the Antarctic ice cover, threatening a catastrophic sea level rise. In fact, recent data suggest the ice is thickening and temperatures are dropping in most of the continent. Finally, an
increasing number of scientists are concluding that variations in solar radiation associated with sun spots -- that's right, the heat of the sun --
play a major role in Earth's climate. To add it all up, the Earth is slightly warmer than it used to be a century ago, but no one knows why. Even if
fossil fuels were the cause, Kyoto would make little difference, especially with China and India understandably bent on oil-fueled growth to lift
their citizens out of poverty. And a warmer Earth may not be any worse than a colder one, certainly not for the longer growing seasons it would
allow in the world's temperate zones. None of this justifies passing, for the first time, limits on greenhouse gases that would impose hundreds of
billions of dollars in compliance costs on American energy production. Although the planet almost certainly is warming, how much of that is due to humanity - which contributes only about .3 percent of total
greenhouse gas emissions - remains in dispute. ...assuming that global warming is a problem to be solved, the so-called Kyoto treaty, signed in
December 1997, is not a good answer. By its own terms it would merely mean that the temperature predicted to occur in 2100 (any estimate a century off is essentially meaningless) would actually arrive in 2106.
Kyoto's original objective, to hold energy consumption at 1990 levels, is well nigh unattainable, at least at acceptable cost. Even a dozen European nations that once championed Kyoto now concede that they
will fall short. ...Eugene Trisko of the United Mineworkers of America warned that "most credible estimates of the costs of reducing carbon
emissions in the U.S. show cumulative GDP losses of up to $1 trillion to $3 trillion over a 15- or 20-year period." Employment loss, too, would be
high. For instance, an early study by Wilbur Steger and Frederick Rueter for CONSAD Research Corp. predicted that between 240,000 and 360,000 jobs would be lost in the first three to five years after Kyoto's
implementation. Within a few more years, lost employment could rise above 1.6 million jobs, with several more million jobs at risk in
"vulnerable industries." ...If it costs nothing to reduce use of fossil fuels, we could let sentimentalism rule and ignore serious doubts about the
dangers posed by global warming. But wrecking the economy would be a high price to pay to deal with a phenomenon of uncertain magnitude that might end up being transitory and even positive. The only way to limit emissions in today's world is to cut back on energy use. To do that, governments either have to tax energy heavily or simply
command reductions. Either way, the economy will suffer enormously--in the United States alone, the slowdown would slice two to three percentage points off growth, according to the Clinton Administration's
research. That's a recession, or close to it, every year. Implementing Kyoto would plunge the world into stagnation, mainly hurting the developing nations of Asia, Africa and Latin America ...The U.S. Senate
is now considering two disastrous mini-Kyoto bills--one proposed by Sens. John McCain, R-Ariz., and Joe Lieberman, D-Conn., which would demand emissions be cut to 2000 levels by 2010, and another by Sen.
Jeff Bingaman, D-N.M., which would impose $60 billion in new taxes and would devastate the American coal industry.
Thursday, June 23, 2005 ~ 12:43 p.m., Dan Mitchell Wrote: As any junior high civics student knows, under the Constitution's separation of powers doctrine, the legislative branch makes the laws and
the judicial branch interprets them. Not so in Kansas these days. There the state Supreme Court has commanded that the legislature must increase spending on the schools, as well as the taxes to pay for it, by
precisely $853 million over the next two years. ...Thankfully, some of the Republicans in the state legislature are not inclined to be bullied by the
court. One of them is Senator Tim Huelskamp who describes the court decision as a "judicial shakedown of the citizens of Kansas for higher
taxes." The court counters that it is simply enforcing a provision of the Kansas Constitution that requires that the state provide "suitable
provisions" for financing the schools. But just what is a "suitable" amount? Kansas already spends a shade under $10,000 per student in
the public schools -- the most in the region and above the national average even though Kansas is a low cost-of-living state. Also ignored by the courts were the volumes of scientific evidence that the link
between school spending and educational achievement is close to nonexistent. ...they promulgate the fundamental logical fallacy that has long undermined the U.S. public education system: that we should
measure performance by inputs, not outputs. Every other industry in America is obliged to cut costs and get more for less; in education, parents and kids keep getting less for more. ...The Kansas media are
describing the hullabaloo in Topeka this week as a state constitutional crisis. And they are right. The legislature is sworn to abide by the Kansas
Constitution, but that doesn't mean abandoning its own powers of the purse to an unelected judiciary. This is a showdown between the branches of government, and the legislature has every right to protect its
own constitutional prerogatives from judicial intrusion. In this case that means protecting Kansans from a judicially ordered, and thus unconstitutional, tax increase.
Thursday, June 23, 2005 ~ 11:12 a.m., Dan Mitchell Wrote: President Chirac asked the newly appointed Prime Minister Dominique de Villepin to boost employment and at the same time preserve the
French social model. This is an oxymoron, and the very reason why employment policies have so far failed. It's useful to see the post-1975
French labor market as a "worker-insider" model, to borrow from Gilles Saint-Paul of the Social Science University in Toulouse. More than five
million employees have secure lifetime jobs because they work for the state. For them, compensation isn't particularly generous, but they don't
have to work too hard and their jobs are safe. Within the remainder of the work force (16 million), at least 80% benefit from high employment
protection as a result of restrictive labor laws and high firing costs. Understandably worker-insiders want to prevent outsiders -- low qualified workers, first-job seekers, long-term unemployed or immigrants
-- from gaining access. Their protected status gives them more bargaining power when negotiating wages because they are sheltered from competition from job seekers who might take jobs at lower wages.
...Do mainstream French politicians understand the origin of the economic disease and, if they do, why are they so shy when they have an opportunity to act? I cannot imagine that the ideas I have mentioned are
unknown to leading politicians. For example, the Camdessus report gathered views from a broad range of experts from all political sides and was widely publicized. However, the debate about employment is, in my
view, polluted by the outdated ideological debate about "liberalism" vs. the "social model." The power of words in the land of Voltaire is such
that today very few politicians dare question the relevance of the French model. Even fewer admit that the model has long ago become the
province of vested interests... Unless France isolated itself from the rest of Europe, it is exposed to democratic competition between social models within the European Union. That the British economy delivers
both jobs and wages hasn't gone unnoticed in France and other European countries, thanks to rising immigration flows within the EU. Support for the status quo is steadily declining.
Thursday, June 23, 2005 ~ 9:30 a.m., Dan Mitchell Wrote: While some Americans argue that our health care system should be copying Canada's single-payer national (read: government-controlled)
health care system, a recent ruling by Canada's Supreme Court ought to cause some serious reconsideration. Deadly serious reconsideration.
Canada is the only industrialized country that actually prohibits citizens from privately contracting for medical care. In other words, no matter how much money Canadians can afford to pay, they're stuck in the
public's health care system waiting and waiting and waiting for care. ...In a case brought by Jacques Chaoulli, a Montreal family doctor, and
George Zeliotis, a patient forced to wait a year to have his hip replaced, Canada's Supreme Court found that the evidence "shows that delays in
the public health care system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public health care." The
court thus concluded that Canada's invasive, idiotic and totalitarian prohibition of private health insurance and medical care - of almost anything outside the government-run system - is unconstitutional. The
long waiting periods in the government system violated the "life and personal security, inviolability and freedom" of patients under Quebec's
charter of human rights and freedoms. So ruled the court. ...Enter Prime Minister Paul Martin. He sees the ruling, as well as the necessary
response, quite differently. ...The prime minister adds, "What we want to do is strengthen the public health care system." But what about the sick?
We can be sure that Mr. Martin doesn't want sick people to suffer or die. He is all for saving lives. It's just that his commitment to the national
health care system comes first. ...In emphatic arrogance, Martin asserted, "We are not going to have a two-tier health care system in this
country. Nobody wants that." Well, nobody except the people dying for lack of care . . . or almost any Canadian with a lick of sense. |
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Wednesday, June 22, 2005 ~ 1:33 p.m., Dan Mitchell Wrote: ...the so-called European Social Model...is often regarded as sacred and the desire to keep it is strong. But it strengthens protectionism; the system creates its own support.
Companies are seen as milk-cows for the state. They must pay their taxes, obey and accept criticism from politicians. When they decide to relocate, the reaction is even more criticism and threats of more
regulations. A big state can't create anything. It can only redistribute what others create. The larger the state, the more resources in society that go to non-creative activities. We get used to demanding money
from others instead of working. Of course every society can have a growing economy, more jobs and companies and thus an increasing living standard. But the European Social Model prevents that through the
imposition of high taxes and regulations that hinder creative forces. ...About 150 years ago, 80 percent of the Swedish people worked in agriculture. Today, it is less than 3 percent and they actually produce
more. But the other 77 percent did not become unemployed. They actually got better jobs than before, in the expanding industry. Today, the average Swede is more than ten times wealthier than at that time. Would
anyone have wanted to stop development then? They didn't know then either what was going to replace agriculture and there was fear -- and protectionism. ...We have every reason to welcome the new. That means the
old must disappear. If we lock up productive resources in the old, the new will not expand. ...We already live with one horrific example of where we end up if we try to keep the old: Europe's Common Agricultural
Policy. Enormous sums of the taxpayer money go to farmers -- close to half the EU budget. Consumer prices are higher, poor countries are kept from exporting and resources are locked up.
Wednesday, June 22, 2005 ~ 12:19 p.m., Dan Mitchell Wrote: ...the Fund badly wants to regain control of global debt restructuring. This explains why the IMF is now trying to reinsert itself in the haggling
between holdout debtors and the Argentine government. In its loan workout, Argentina offered its creditors new bonds worth around 34 cents on the dollar. Some 76% of bondholders decided that the risk of
holding out was higher than the cost of eating the loss. The other 24% gambled that enough creditors would hold out that Argentina would have to sweeten the deal. They turned out to be wrong, and the workout
proceeded after some wrangling in federal court in New York. The IMF says that it is not insisting that Argentina settle with the holdouts by
offering them the same price that they already turned down. But it has also said that it is studying Argentina in light of its "lending into arrears"
rule. In other words, it is signaling Argentina that if the country doesn't satisfy the holdouts, the Fund's future lending to Buenos Aires could be in
jeopardy. Of course if the Fund gets its way and the holdouts are let in without a penalty, a bad precedent will be set for the next debt workout.
Bondholders will realize they run no risk by holding out for better terms, because the IMF is likely to force the country to let them in later under
the same terms as early settlers. This will destroy the incentives that make market-based restructurings possible. And you know where this
leads. In the event of such a "market failure," the IMF can get back in the workout picture with its bankruptcy court idea, along with a revival
of at least partial IMF bailouts. The Bush administration could help here by telling the IMF to back off. Putting an end to the Clinton era of IMF
bailouts has helped to restore some sanity to emerging-market investing and reduce the "moral hazard" that encouraged investors to take bad
risks. Now is not the time to let the Fund rebuild its global bankruptcy empire.
Wednesday, June 22, 2005 ~ 12:02 p.m., Dan Mitchell Wrote: European Commissioner for Taxation, Laszlo Kovacs is working on proposals that will introduce a uniform car registration tax throughout
the European Union. ...While some member states do not levy a car registration tax, rates across the EU can vary widely, and are as high as EUR16,000 ($20,000) in Denmark. Under Kovacs' plans, registration
taxes will be merged into member states' existing annual road tax charges or fuel tax levies. He expects the new system to be introduced within ten years after receiving approval from national legislatures and
the European Parliament.
Wednesday, June 22, 2005 ~ 10:54 a.m., Dan Mitchell Wrote: Within hours of taking office he undid Mr. Davis's tripling of the car tax, cutting taxes by about $2 billion. He slashed spending by about $6 billion
in a first step to eliminate the state's $22 billion deficit. The current budget is balanced at a level $11 billion less than the projected baseline
when he took office. ...A week ago the governor called a special election for Nov. 8 to vote on three policy changes that the Democrat-controlled
legislature has refused to consider... The most economically important is Measure 1131, which would put additional controls on state spending.
Mr. Davis drove spending up by one-third in his five years in office; Mr. Schwarzenegger's proposition would limit spending increases to average
revenue growth over the previous three years and give the governor the power to reduce spending if revenue decreases and the legislature fails to act to correct the deficit.
Wednesday, June 22, 2005 ~ 10:37 a.m., Andrew Quinlan Wrote: Candidates who challenge incumbent members of their own party in primary elections aren't supposed to win. Just ask Pat Toomey. But last
week in Virginia, voters gave 26-year-old Republican Chris Craddock a convincing victory over Delegate Gary Reese. ...Craddock was one of six Republicans who launched upstart bids against members of their own
party for supporting Democratic governor Mark Warner's $1.3 billion tax hike last year. ...Anti-tax candidates also prevailed in the races for
governor, lieutenant governor and attorney general. The anti-tax movement adds these to an earlier success, when James Dillard, a tax-supporting incumbent of 30 years, dropped out of the race when
faced with primary opposition from Michael Golden, an avowed anti-tax candidate who also won his primary last week. "We won two races and ran good races against several others," said Phil Rodokanakis of the
Virginia Club for Growth. ...Rodokanakis says that Craddock's victory sends a clear message to incumbent Republicans who are thinking about supporting tax increases: "Don't do this again or we'll make it very
expensive for you."
Wednesday, June 22, 2005 ~ 9:15 a.m., Dan Mitchell Wrote: ...if the teacher unions, ACLU, People for the American Way and similar organizations have their way, a successful voucher program in Florida
will cease operation. Should Florida's Opportunity Scholarship Program be found unconstitutional, it will be yet another defeat of the poor and
disenfranchised at the hands of a pretentious and self important elite. Opportunity scholarships are an important ticket out of failing public schools for the poor. Yet, these elites, a good portion of whom can
themselves afford options to public schools if they so chose, for their own ideological reasons, want to preclude choice for poor families. ...Performance data show dramatic improvement in test scores and
graduation rates in Florida since the implementation of the Opportunity Scholarship Program. A study conducted in 2003 showed direct correlation between school improvement and the option to take a
voucher and go to another school. ...Teacher's unions like the status quo. Opening up to competition threatens their monopoly. Second is an elitism
that produces an overarching hostility to religion and religious schools. This hostility is so profound that given the option of a better educated
child who is the product of a parochial school, these folks prefer mediocrity or even failure.
Wednesday, June 22, 2005 ~ 7:51 a.m., Dan Mitchell Wrote: Unfortunately, the body politic's grasp of Medicaid lags about 20 years behind its understanding of welfare. The Left launches a fusillade at any
mention of such heresies as applying the lessons of welfare reform to Medicaid. The New Republic's Jonathan Cohn calls such an approach
"heartless" and says that "rolling back Medicaid means the poor and disabled will have to confront medical bills alone. The bankruptcies will
pile up, emergency rooms will get even more crowded, and, yes, some people will die." One wonders whether Cohn and others slept through
the last ten years. During the welfare-reform debate, the Left predicted that scaling back federal cash assistance to the poor would be similarly
disastrous. The most hysterical predictions were that one million children would be thrown into poverty and that the poor would be starving in the
streets. Welfare reform produced exactly the opposite of what the Left expected. Caseloads plummeted and poverty decreased -- often dramatically -- for every racial category and age, including children.
Poverty remains lower today than at any point prior to welfare reform, going back to 1979. Many who opposed the 1996 law have since admitted that it accomplished a large measure of good. ...one might
think Republicans would be eager to mount an all-out assault on Medicaid's vicious cycle of inflating health-care costs and promoting dependency. Not so. In its proposed budget for fiscal year 2006, the Bush
administration backed away from its earlier reform proposals, which themselves were a watered-down version of what Republicans offered in 1995. Indeed, the budget laments that states have not done enough to
expand Medicaid. It proposes additional state flexibility, but mostly in the service of such expansions. ...Congress should stop encouraging Medicaid expansions by freezing payments to states at the 2005 amount,
just as welfare reform froze payments to states at the 1995 amount. According to Congressional Budget Office figures, freezing federal Medicaid spending at 2005 levels would produce $941 billion in savings
by 2015, or enough to wipe out 96 percent of the cumulative ten-year federal deficit. ...Second, Congress should give states maximum flexibility to use federal funds to meet a few broad goals, as it did with
AFDC's replacement, the Temporary Assistance for Needy Families (TANF) program. ...A necessary first step toward allowing states to focus resources on the truly needy would be eliminating the federal entitlement
to Medicaid benefits, just as Congress eliminated the federal entitlement to cash assistance under TANF. ...Like welfare, Medicaid must be reformed for the sake of its recipients. The likelihood that anyone will
soon offer this type of assistance brings to mind a passage from Charles Murray's 1984 book Losing Ground, which is credited with sparking the
welfare reform movement: "The real contest about the direction of social policy is not between people who want to cut budgets and people who want to help. When reforms finally do occur, they will happen not
because stingy people have won, but because generous people have stopped kidding themselves."
Tuesday, June 21, 2005 ~ 3:41 p.m., Dan Mitchell Wrote: A comprehensive flat tax, which strives to tax income only once, would exclude inheritance from taxation on the ground that inherited money
was taxed at the time of its earning and that taxing bequests amounts to double taxation. In April Russia's President Vladimir Putin called for an
end to inheritance tax. On June 15, 2005, Russia eliminated this source of double taxation. The State Duma, the lower house of the Russian parliament, by an overwhelming vote of 414 to 2 passed the draft law
abolishing inheritance tax in the third reading required for passage. It eliminated current taxation of estates at rates ranging from 5-40%. The
law, which takes effect January 1, 2006, also abolishes gift tax to close relatives, including spouses, parents, children, grandparents, grandchildren, siblings, and step-siblings.
Tuesday, June 21, 2005 ~ 2:14 p.m., Dan Mitchell Wrote: Research by Dawson (1998, forthcoming), Gwartney, Lawson and Holcombe (1999), de Haan and Sturm (2000, 2001), Adkins, Moomaw
and Savvides (2002), Pitlik (2002), and Weede and Kampf (2002) all find that increases in economic freedom are positively correlated with increases in economic growth rates. ...While much has been written on
the relationship of economic freedom to growth rates and standards of living, little has been written on the relationship between aid and economic freedom. Vasquez (1998), Ovaska (2003) and Heckelman and
Knack (2005) are exceptions; they examine both economic freedom and aid. ...Overall, our regression results are mixed but on balance tend to
support Bauer's claim that aid promotes statism. We find that countries receiving aid are less economically free than those that do not. This could be a confirmation of Bauer's claim that aid harms economic
freedom, or it could simply be an indication that countries with less freedom are more likely to get aid. Our strongest regression results find
that countries that receive larger amounts of aid over a five year period, even after controlling for their level of income, have a lower freedom
score at the conclusion of that period. ...Our regressions give some indication that aid decreases economic freedom. Our findings clearly can
cast serious doubt on the proposition that aid increases freedom in poor countries. Given the World Bank's mission of promoting economic growth in poor countries and the strong empirical literature on the
importance of economic freedom for growth, our paper indicates that since aid cannot be shown to have a positive influence on freedom, aid is unlikely to lead to development in poor countries.
Tuesday, June 21, 2005 ~ 10:23 a.m., Dan Mitchell Wrote: Mr. Stracher and many others miss the big picture: how well markets serve us and how much better they make our lives by giving people
strong monetary incentives to introduce time-saving technology. Take Automatic Teller Machine (ATM) fees. Mr. Stracher points out that there was a time -- and it was less than 30 years ago -- when, if you wanted
cash from your bank account, you had to show up at the bank between the hours of 9:00 a.m. and 3:00 p.m. on a weekday. For many of us, that was a huge inconvenience. Then came ATMs. Now, as Mr. Stracher
points out, we can show up day or night and get the money quickly. Hard to find fault with that, right? Wrong. Mr. Stracher finds it. It seems, you
see, that some banks actually try to charge us for this service. Imagine that -- a bank having the nerve to charge us a small fraction of the value
of the time they save us. What's next? Restaurants charging for offering us the convenience of meals away from home? ...When I'm in California, I can almost always find a Wells Fargo ATM nearby. When I'm not in
California, I gladly pay $2 or so for the convenience of getting $40 to $300 up to 3,000 miles away from home. And foreign travel has become
so much better. The first thing I do when I land in a foreign country is go to the ATM and get local currency at an exchange rate better than is offered by most of the foreign exchange booths. ...Or take what
happened when we were relaxing in our hotel room before the wedding. Our daughter, a college student, called my wife's cell phone. What's the
big deal? The fact that we see that as no big deal. My daughter didn't need to know what hotel we were staying at to be able to reach my wife.
Cell phones exist because the government finally allowed them to after keeping them off the market for at least ten years, a regulatory delay
that is estimated to have cost Americans over $80 billion in lost value.
Tuesday, June 21, 2005 ~ 10:00 a.m., Dan Mitchell Wrote: President George W. Bush's bipartisan Advisory Panel on Federal Tax Reform should propose a measure to assist a neglected segment of
society: the avowedly under-taxed. The H.O.T. Tax, or Higher-rate Optional Tax, would give those who think their levies are too low the
ability to pay the steeper tax bills they say they deserve. ...The IRS simply would add a small box to the 1040 tax form beside these words: "If you
believe you should be taxed at a rate above that assigned to your income bracket, please indicate here the higher rate you prefer. Kindly calculate
your tax liability, and send it in." With that easy step, congressional liberals and residents of Malibu and Martha's Vineyard no longer would
have to keep the tax cuts conservatives keep throwing their way. Instead, they could send 50, 75, or even 99 percent of their incomes to Washington... Arkansas, Massachusetts, and Virginia taxpayers already
may pay above and beyond their usual top rates, though few do this. When Massachusetts cut its top tax rate to 5.3 percent in 2001, it let
guilty liberals pay the old 5.85 percent rate if they wished. According to the Massachusetts Department of Revenue, as of June 15, only 930 taxpayers opted to do so on their 2004 returns generating an extra
$246,505. In 2002, 2,215 taxpayers paid the higher rate, yielding $341,829. Among 3,218,572 returns filed in 2003, only 1,488 (or 0.46 percent) paid the voluntary higher rate, adding $209,216 to state coffers.
Tuesday, June 21, 2005 ~ 9:31 a.m., Dan Mitchell Wrote: The leaders of the 25 European Union nations went home after a failed two-day summit meeting in anger and in shame, as domestic politics and
national interests defeated lofty notions of sacrifice and solidarity for the benefit of all. The battle over money and the shelving of the bloc's
historic constitution, after the crushing no votes in France and the Netherlands, stripped away all pretense of an organization with a common vision and reflected the fears of many leaders in the face of
rising popular opposition to the project called Europe. Their attacks on one another after they failed to agree on a future budget - for 2007
through 2013 - seemed destructive and unnecessary, and it is not at all clear that they will be able to repair their relationships. Even if they do,
the damage to the organization is done. ...the failure of the summit meeting laid bare the deep divide with the European Union between grand but competing visions of Europe. Prime Minister Tony Blair of
Britain leads the camp that wants a Europe with fewer trade and employment barriers and a more free-market orientation to better compete against rising giants like India and China. Yet he rejected all
criticism of Britain for vetoing the final agreement on the budget, which would have required Britain to reduce the annual rebate, now $6 billion
a year, that it gets back from its contribution to the European Union budget. By contrast, Mr. Chirac and some of his allies are skeptical of
what they call the "Anglo-Saxon model" and protective of the continental "social model" that offers citizens a protective economic
security shield. He refused to compromise Friday night on Mr. Blair's demand that France reduce the $13 billion in farm subsidies it receives every year from the European Union. ...Lost in the turmoil over the
budget debacle on Friday night was a joint communiqué issued by the leaders that their constitution could one day be carried out. It did not explain how, given the French and Dutch rejections and the requirement
that all 25 countries ratify it. Before the referendums in both countries, there was widespread speculation that there could be a "Plan B," either
to revise the current text or salvage the parts that are not objectionable to voters. In announcing that the constitution would be put on hold so
that it could be better understood, Mr. Juncker insisted that there would be no "Plan B." Instead, he told reporters on Thursday night, "there is a
Plan D - for dialogue and debate." That prompted jokes throughout the corridors of the conference building that the D in "plan D" could stand
for other things as well: denial, defeat and even death.
Tuesday, June 21, 2005 ~ 8:44 a.m., Dan Mitchell Wrote: Recent evidence suggests that capital punishment may have a significant deterrent effect, preventing as many as eighteen or more murders for
each execution. This evidence greatly unsettles moral objections to the death penalty, because it suggests that a refusal to impose that penalty
condemns numerous innocent people to death. Capital punishment thus presents a life-life tradeoff, and a serious commitment to the sanctity of
human life may well compel, rather than forbid, that form of punishment. ... The familiar problems with capital punishment - potential error,
irreversibility, arbitrariness, and racial skew - do not argue in favor of abolition, because the world of homicide suffers from those same problems in even more acute form. The widespread failure to appreciate
the life-life tradeoffs involved in capital punishment may depend on cognitive processes that fail to treat "statistical lives" with the seriousness they deserve.
Tuesday, June 21, 2005 ~ 8:32 a.m., Dan Mitchell Wrote: A 9-0 Supreme Court rebuke ought to be a teaching moment. So it is amazing to behold that -- notwithstanding the unanimous recent reversal
of its 2002 Arthur Andersen conviction -- the Justice Department may well make the same mistake all over again. We're referring to the news that Justice may indict the entire KPMG accounting firm for obstruction
of justice and the marketing of legally questionable tax shelters. As Andersen's fate made clear, an indictment against a corporation is usually a death sentence, whatever the ultimate legal outcome. How
many more innocent people does the Bush administration want to put out of work? The purpose of criminal law, we had thought, is to punish the guilty and deter future wrongdoing. In KPMG's case, the people
responsible for any misdeeds are open to prosecution as individuals and nearly all have already been dismissed by the firm. ...As for the crimes
alleged, it will be up to a jury to decide whether the particular tax shelters sold by KPMG were legal or not. The fact that that is no easy question, given the convoluted IRS tax code with its loopholes and
built-in incentives to cheat, is another reason for not issuing a blunderbuss indictment. (Congressional tax reformers, please also take note.) A corporate indictment might save Justice the time and long effort
of having to prove criminal intent by individuals, but at the price of putting up to 18,200 mostly innocent KPMG employees out of work in the U.S. ...In deciding how to use his power, a wise prosecutor has to
balance the severity of the crime with the costs and benefits of prosecution. If former KPMG partners broke the law, by all means indict them and prove it to a jury. But don't punish innocent employees and the
broader economy for the sake of flexing some prosecutorial muscle.
Monday, June 20, 2005 ~ 1:03 p.m., Dan Mitchell Wrote: Culminating years of frustration with the performance and behavior of the United Nations, the House voted Friday to slash U.S. contributions
to the world body if it does not substantially change the way it operates. The 221-184 vote, which came despite a Bush administration warning
that such a move could actually sabotage reform efforts, was a strong signal from Congress that a policy of persuasion wasn't enough to straighten out the U.N. "We have had enough waivers, enough
resolutions, enough statements," said House International Relations Committee Chairman Henry Hyde, R-Ill., the author of the legislation.
"It's time we had some teeth in reform." ...Hyde was joined by lawmakers with a litany of complaints against what they said was the
U.N.'s lavish spending, its coddling of rogue regimes, its anti-America, anti-Israel bias and recent scandals such as the mismanagement of the
oil-for-food program in Iraq and the sexual misconduct of peacekeepers. ...The bill, with amendments, lists 46 reforms sought. They include cutting the public information budget by 20 percent, establishing an
independent oversight board and an ethics office, and denying countries that violate human rights from serving on human rights commissions. The secretary of state would have to certify that 32 of the 39 reforms
have been met by September 2007, and all 39 by the next year, to avoid a withdrawal of 50 percent of assessed dues. U.S.-assessed dues account for about 22 percent of the U.N.'s $2 billion annual general budget.
Monday, June 20, 2005 ~ 12:34 p.m., Dan Mitchell Wrote: A dozen states have woken up and begun backing down from mandates that specified in detail what treatments and procedures insurance must
cover, driving the cost of available policies out of sight. One of them, Washington State, is home to LifeWise Health Plans, which signed up
12,000 individuals in the first quarter for plans combining health savings accounts with high-deductible insurance, nearly 60% of whom had
previously been without health insurance. Nationally, a million customers have now signed up for similar plans -- a doubling in six months. A
bipartisan duo in the House has introduced a bill to require hospitals to publish their prices, following similar steps in several states. These are
early moves -- very early -- in the right direction, towards a day when spending on health care is moderated by price-sensitive shoppers weighing benefits against costs. Take the case of Whole Foods, which
switched its entire 32,000-strong work force to a new consumer-based health plan last year. John Mackey, boss of the upscale supermarket chain, makes two crucial points: The impact on how the health care
industry organizes, delivers and prices its services won't be felt until thousands of companies with millions of employees are doing the same;
and companies need to offer such plans not in parallel with conventional plans, but as sole option. Amen. Here's one place where policy could be helpful in honestly recognizing that the huge tax subsidy for
employer-provided health insurance is the original engine of excessive spending. The least we could do is adjust the tax incentive so it rewards
only the proper use of insurance to cover major expenses, rather than as a laundromat for all health spending.
Monday, June 20, 2005 ~ 11:43 a.m., Dan Mitchell Wrote: The European Union is becoming increasingly uncompetitive in the world economy. The average tax burden consumes almost 45 percent of
GNP, and regulatory red tape makes it very difficult for the private sector to create jobs. With this track record, it is not surprising that per
capita income in the EU is much lower than it is in the United States. To make matters worse, many European governments face huge unfunded
liabilities for pensions, so it is likely that the burden of government will climb rather than fall. So should the European Union get an economic
face lift? ...Some of the comparative figures are startling. For instance, per capita economic output in the US in 2003 was $37,600, more than 40 percent higher than the $26,600 average for EU-15 nations. Real
economic growth in the U.S. over the last 10 years has been more than 50 percent faster than EU-15 growth in the same period, 3.2 percent average growth compared to 2.1 percent average growth. The
unemployment rate in the U.S. is significantly lower than the EU-15 unemployment rate--5.2 percent in the US versus 8.1 percent in EU15, and 10 percent in France. Also, there is an important gap in the
percentage of unemployed who have been without a job for more than 12 months--11.8 percent in the U.S. versus 41.9 percent in EU-15 nations. And according to a study by the Swedish think-tank Timbro,
France, Italy, and Germany have less per capita GDP than all but five US states. The European economies are so far behind the US that most European countries will need about 15 years of normal growth in per
capita GDP to catch up to where the US is today. Also, Connecticut's GDP per capita is almost twice as much as the GDP per capita in France and the UK. Finally if France were a US state, it would be the
fifth poorest state.
Monday, June 20, 2005 ~ 11:12 a.m., Andrew Quinlan: France ...suffers from low labour force participation and high structural unemployment. This poor labour market performance contributes to a
persistent budget deficit which is exacerbating, rather than alleviating, the fiscal pressures arising from ageing. ...Above all, long-term fiscal
sustainability requires better control of public expenditures, including social expenditures and those of regional and local governments. ...weaker growth is likely in 2005-06, while unemployment remains
stubbornly high, currently around 10%. The origins of poor labour market performance, a central challenge for French policymakers, lie in a combination of measures themselves designed to protect workers,
notably a high minimum cost of labour and strict employment protection legislation, as well high tax wedges on labour... As for public sector
employment, despite some first steps to reduce numbers, the government has not yet taken sufficient measures for a progressive reduction in employment levels in the medium term, and increases in public sector
salaries decided recently limit the ability to control the wage bill. ...marginal effective tax rates on labour are very high in France. ...Employment protection legislation (EPL) makes dismissing workers on
standard employment contracts relatively difficult and expensive in France. For many firms, most of the time, this is probably a minor inconvenience. But it causes significant extra costs for firms in difficulty
or facing fluctuating market conditions and over time it has contributed to an unwillingness to hire, especially in uncertain times.
Monday, June 20, 2005 ~ 9:23 a.m., Dan Mitchell Wrote: ...the EU savings directive, which requires member states to swap information on savings income, is widely expected to leave much of the
money hidden offshore undetected. ...Three main factors could undermine the effectiveness of the directive. First, its geographical reach. Even though its scope extends beyond the EU to some notable
offshore centres, including the Channel Islands, some Caribbean islands, the Isle of Man, Andorra, Liechtenstein, Monaco, San Marino and Switzerland, anyone determined to evade tax could move money out of
Europe into financial centres in Asia or elsewhere. Second, the directive only covers bank interest - and income from some bonds and investment
funds - paid to individuals. Investments could be restructured or put within trusts and companies to ensure they fall outside the scope of the
directive. ...Third, several of Europe's most important financial centres, including Austria, Belgium, Luxembourg, the Isle of Man and the Channel Islands, have decided to maintain customer confidentiality by
levying a withholding tax instead of exchanging information for a transitional period. Most of the money collected is passed on to the country where the account holder is resident.
Monday, June 20, 2005 ~ 9:13 a.m., Dan Mitchell Wrote: What ought to depress partisans of European unity in the aftermath of the rejection of its proposed constitution by France and the Netherlands
is not so much the foundering of this ridiculous document as the response of the leadership to the crisis, especially in France and Germany. Jacques Chirac reacted by appointing as prime minister Dominque de
Villepin, a frivolous playboy who has never been elected to anything and is best known for his view that Napoleon should have won the Battle of Waterloo and continued to rule Europe. Gerhard Schröder of Germany
simply stepped up his anti-American rhetoric. What is notoriously evident among the EU elite is not just a lack of intellectual power but an obstinacy and blindness bordering on imbecility. ...Jean Monnet,
architect of the Coal-Steel Pool, the original blueprint for the EU, always said: "Avoid bureaucracy. Guide, do not dictate. Minimal rules."
He had been brought up in, and learned to loathe, the Europe of totalitarianism, in which communism, fascism and Nazism competed to impose regulations on every aspect of human existence. He recognized
that the totalitarian instinct lies deep in European philosophy and mentality--in Rousseau and Hegel as well as Marx and Nietzsche--and must be fought against with all the strength of liberalism, which he felt
was rooted in Anglo-Saxon individualism. In fact, for an entire generation, the EU has gone in the opposite direction and created a totalitarian monster of its own, spewing out regulations literally by the
million and invading every corner of economic and social life. The results have been dire: An immense bureaucracy in Brussels, each department of
which is cloned in all the member capitals. A huge budget, masking unprecedented corruption, so that it has never yet been passed by auditors, and which is now a source of venom among taxpayers from the
countries which pay more than they receive. Above all, règlementation of national economies on a totalitarian scale.
Monday, June 20, 2005 ~ 7:54 a.m., Dan Mitchell Wrote: ...the French and Dutch "NOs" on the new European Constitution...are certainly not a verdict on Economic and Monetary Union. Nor will they
affect the euro, since the relevant provisions for the common currency are already contained in the Treaty of Maastricht of 1992, which will remain in place regardless of whether the Constitution is adopted.
...Admittedly, over the last several years the performance of the euro area and EU GDP growth lagged behind many parts of the world. But the euro and the single monetary policy are surely not to blame for this.
...Politicians should be truthful with their electorates: Structural reforms are the way to bring about higher growth in Europe. This process is not
without pain, but globalization of all segments of our lives does not leave us any choice, if we want to remain competitive, flexible and efficient.
...We must go forward with privatization, liberalization and deregulation of markets. This is the way towards higher growth and more employment.
Sunday, June 19, 2005 ~ 2:15 p.m., Dan Mitchell Wrote: Whatever the rights and wrongs of the populist rejection of the EU treaty, the manner in which the 'No' campaign is disparaged by
professional politicians betrays a powerful anti-democratic temper. It appears that professional politicians attempt to account for their
isolation from the electorate by pointing their finger at the incompetence of the public. On both sides of the Atlantic, the political class has drawn
the conclusion that the problem with the people is that they do not know what's in their best interest. This sentiment is particularly widespread
among liberal and left-wing activists and thinkers. ...According to this view, since the people cannot be trusted to understand the finer points of
legal documents, important decisions need to be left to the professional politician. Andrew Duff, Liberal Democrat Member of the European Parliament (MEP), agrees that consulting the electorate is a distraction
from getting on with the job. After the referendums in France and Holland, he stated that 'the experience begs the question of whether it was ever appropriate to submit the EU Constitution to a lottery of
uncoordinated national plebiscites'. The people are not only regarded as politically illiterate. They are also depicted as simpletons... In the USA,
this sentiment has been systematically articulated by Democratic Party activists, who cannot understand why many blue-collar workers vote for Republicans. ...The view that the public is too stupid to grasp the
high-minded and sophisticated ideals of American liberals expresses a profound sense of contempt towards people. Furthermore, it uncritically
transfers responsibility for the contemporary malaise of political life on to the simplistic and uneducated electorate. From this standpoint, it is
not the inability of liberal politics to connect with significant sections of the public that accounts for John Kerry's defeat in 2004, but the
narrow-mindedness of the electorate. This attitude is not confined to the USA. It was not so long ago that the ascendancy of the Thatcher era was blamed by British leftists on the influence of working-class
authoritarianism. Left-wing and liberal academics characterised Thatcherism as a form of authoritarian populism that had somehow seduced sections of an easily misled working class.
Sunday, June 19, 2005 ~ 12:02 p.m., Dan Mitchell Wrote: ...business and industry lobbies have called on leaders to keep to its previously stated commitment to boost the EU's competitiveness and put
aside sufficient resources for it. "To cut funds for competitiveness by 40% is like depriving a sick man of medicine he urgently needs. If we
want to secure Europe's economic and political weight in the world we must also provide the relevant budget, said Christopher Leitl, President of the Eurochambers, the Association of European Chambers of
Commerce and Industry.
Sunday, June 19, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: EU leaders meeting in Brussels have agreed a "period of reflection" on the constitution amid fears that a knock-on effect would mean the
document would be rejected in countries still planning to have referendums. ...However, they stressed that the constitution itself will not be renegotiated and that ratification will continue. ...The current
deadline of end of October 2006 "is no longer tenable" said the prime minister who stressed that countries that want to ratify the document via
their parliaments may do so while member states planning to have referendums "will decide autonomously when those referendums are to be organised".
Saturday, June 18, 2005 ~ 7:30 a.m., Dan Mitchell Wrote: ...the UN's procedures create situations that are morally repugnant and politically counterproductive. The annual meeting of the UN Human
Rights Commission in Geneva in 2003 was typical. With the votes of countries such as Saudi Arabia, Zimbabwe, Syria, China, Pakistan, Sudan and others, the UN's Economic and Social Council (ECOSOC)
re-elected Cuba to serve on the UN Human Rights Commission just a few days after the Castro regime summarily executed several people whose only crime was attempted emigration. The meeting was chaired by
Libya. In 2004, Sudan was elected to serve, just as its government faced allegations of genocide in Darfur. Rarely have members of the Commission been criticized for their own human rights behavior, with
the result that the world's tyrannies expend much energy trying to become Commission members. An organization that was set up with the aim of promoting human rights has become a body that protects those
who abuse human rights. Moynihan once said to me, quoting Fred Ikle, that negotiating at the United Nations always betrays you into the "semantic infiltration" of
deep falsification. This is something that Bolton would not do. It is no secret that I believe the United Nations to be a false remedy for the
world's ills. (Darfur just keeps happening, doesn't it?) So, since the expansion of the organization's headquarters in New York is in deep financial and political difficulties, I propose a test. Let the United
Nations move, say, to Lagos, a major city of a paradigmatic member state, undemocratic and verging always on civil strife. Let all of the supposed economic advantages of hosting the United Nations flow to
that poor country. Let us see what happens. What will happen is that no one would come. The supposed need for the organization would vanish,
and with it would go "the theatre of the absurd," as Moynihan once put it. His U.N. memoir and lament, A Dangerous Place, remains all too relevant.
Saturday, June 18, 2005 ~ 6:45 a.m., Dan Mitchell Wrote: The interpreter also told us that Sweden is a country where the government will put a check into your mailbox each month if you don't
work. She explained that there was no reason to get a job. How could a country function if people were paid not to work? ...In the refugee camp nobody did anything. Nobody learned how to speak Swedish. Nobody
was integrated in the Swedish society and nobody was allowed to get a job. The strong work ethic that we had brought from our home countries simpered away and we became used to the idea that social security was
responsible for our lives. ...we became accustomed to the idea that there was no reason for us to work. ...we learned about a new phenomenon
regarding social security; how you could cheat the government. The vast majority of the people who lived in this location were supported by social
security and had been in the Swedish system long enough to understand how it worked. Social security secretaries assumed that the people that
they supported had no sense of responsibility. Also, they were responsible to see that each person had enough money to live a decent life at all times. If you told them that you had spent all your money at the
beginning of the month and didn't have any left, they gave you some more. If you told them that your children cried every day in want of new
toys, they helped you. If you told them that a neighbor had stolen all you clothes, they helped you. ...From time to time you could also get something extra from the system. The best example is when social
security paid my mother around 30,000 Kronors (A Swedish Krona is worth about a tenth of a euro) for stomach reduction surgery, even though she wasn't particularly overweight and only lost 3 kilos thanks to
the surgery. ...there is little incentive to work and educate yourself in the Swedish welfare system. According to the Institute for Labour Policies
the average salary of a person who has studied at a university for three years is only five percent higher of somebody who is uneducated. Most
Swedish families would have higher income if they lived off government and made some money working in the black market. ...The work ethic has dramatically fallen in Sweden. More and more people are finding
ways of living off government as an alternative to working. Between 20 and 25 percent of the working age population does not work. Between 1997 and 2003 the number of people who were on sick leave increased
by more than 200,000, a dramatic number for a small country such as Sweden. ...The European welfare systems have functioned because of
strong work ethics that made people reluctant to exploit them. But these work ethics are the product of a society where you had to work in order
to provide for yourself and your family. As people adjust to the political systems we have today the ideas of individual responsibility diminishes.
Saturday, June 18, 2005 ~ 1:12 a.m., Dan Mitchell Wrote: Under the budget measures, Australia's 17% income tax rate will be reduced to 15% from 1 July 2005. Additionally, the tax threshold for the
42% and 47% rates will also be raised on 1 July 2005 and again on 1 July 2006, meaning that taxpayers will not reach the highest marginal tax rate until they earn around 3 times average weekly earnings.
Saturday, June 18, 2005 ~ 12:54 a.m., Dan Mitchell Wrote: Historically, American courts have played a leading role in ensuring educational equality and opportunity. But the Florida Supreme Court
may reject that tradition by denying the constitutionality of, and thereby ending, the most promising educational progress for minority schoolchildren in the U.S. ...only 750 children are attending private
schools using opportunity scholarships. But their footsteps have reverberated across the state, prompting failing public schools to reform. Steps taken by failing schools have included spending more money in the
classroom and less on administration, hiring tutors for poor performing teachers, and providing year-round instruction to pupils. ...Most remarkable has been minority student progress. While the percentage of
white third-graders reading at or above grade level has increased to 78% from 70% in 2001, the percentage among Hispanic third-graders has climbed from 46% to 61%, and among blacks from 36% to 52%.
Graduation rates for Hispanic students have increased from 52.8% before the program started to 64% today; and for black students from 48.7% to 57.3%. Minority schoolchildren are not making such academic
strides anywhere else. ...Should the Florida court strike down the program, it would spell a death sentence not only for opportunity scholarships, but for more than 10,000 scholarships used by disabled
children to attend private schools, and for a host of other parental choice programs as well. Even more significant, it would doom the dramatic
and unprecedented progress Florida has made in delivering high-quality educational opportunities.
Friday, June 17, 2005 ~ 3:28 p.m., Dan Mitchell Wrote: ...activists in at least 20 states -- from Alaska to South Carolina -- are working to enact Taxpayer Bill of Rights (Tabor) laws to cap runaway
state spending and tax increases. These Tabor initiatives place a fiscal straitjacket on state legislators and governors, requiring them to rebate
surplus taxes back to the citizens rather than spending the funds on new programs whenever states are flush with cash -- as they happen to be
now, with revenues rising at a rate of 11% in 2005. ...The national model here is the Tabor law passed in Colorado 12 years ago, which prohibits
state spending from increasing faster than the growth of state population plus inflation in any given year. In six of the last nine years Coloradans
have received tax refunds in the mail exceeding $3.2 billion, or about $3,000 per family over the period. ...Politicians and their spending
beneficiaries in state capitals are about as fond of these Tabor laws as an alley cat is of a bell around its collar. Government employee unions and
corporate lobbyists are expected to spend some $10 million to neuter Tabor in Colorado and even more to defeat Governor Schwarzenegger's "Live Within Our Means" budget initiative in California.
Friday, June 17, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: The most outrageous example of the government punishing everyone for the frauds of a few bad apples was passage of the Sarbanes-Oxley Act.
Peter Wallison, former U.S. Treasury general counsel and now an American Enterprise Institute resident fellow, has just published a study in which he documents the costliness of the Sarbanes-Oxley Act, with
almost no discernible benefit. As Mr. Wallison correctly notes, the existing statutes against fraud and the securities laws already adequately protect us from those who engage in fraud. Sarbanes-Oxley (SOX) is a
costly and misguided attempt to prevent people intent on committing fraud from doing so by substantially increasing regulation of public companies. But given there are an almost unlimited numbers of ways to
engage in fraud, if one is intent on doing so, efforts to regulate the attempt will almost always fail. SOX is a poster child for a government
act whose cures are worse than the disease. Its provisions are so costly one section of the bill alone has an average company cost of $4.36 million, and the regulated companies will have to pay $6.1 billion this
year alone to comply with SOX. To ensure companies comply with the regulations, the four large accounting firms that do almost all public company audits have raised their fees an average of 78 percent to 134
percent in 2004. Professor Ivy Xiying Zhang of the University of Rochester has calculated SOX has resulted in a cumulative loss of $1.4 trillion for the shareholders of public companies. (This works out to an
average loss of about $460 for every man woman and child in the United States).
Friday, June 17, 2005 ~ 9:55 a.m., Dan Mitchell Wrote: Just about every Democrat on the Hill, and in the newsrooms of our country and the faculty lounges, knows that PBS in general reflects a
liberal worldview. That's why they like it. That's why they want to keep it. The Democratic Party naturally desires to retain or increase public
funding of a television network whose overall and reflexive tendency is to persuade viewers to see the world as liberals see it. They say this is a
First Amendment issue, an anticensorship issue, a Big Bird issue, and some of them mean it. But mostly they're trying to keep a particular building on the liberal plantation up and operating. ...Conservative
argue that in a 500-channel universe the programming of PBS could easily be duplicated or find a home at a free commercial network. The power of the marketplace will ensure that PBS's better offerings find a
place to continue and flourish. This I doubt. Actually I'm fairly certain it is not true. ...PBS should be refunded, because it does not and will not
exist elsewhere if it is not. But it should be funded with rules and conditions, and it should remember its reason for being: to do what the networks cannot do or will not do, and that somebody should do.
Friday, June 17, 2005 ~ 9:25 a.m., Dan Mitchell Wrote: The manufacturing sector, ideally placed in terms of labor and raw material to compete with China, never took off. India's restrictive labor
laws, a remnant of the socialist infrastructure that India's first prime minister, Jawaharlal Nehru, put in place in the 1950s and 1960s, were
politically impossible to reform. It remains excruciatingly difficult for most Indians to start a business or set up shop in India's cities. This is
painstakingly illustrated in "Law, Liberty and Livelihood," a new book edited by Parth Shah and Naveen Mandava of the Center for Civil
Society in New Delhi, which documents the obstacles in the way of any Indian who wishes to start a business in one of India's big cities. Messrs.
Shah and Mandava write: "Entrepreneurs can expect to go through 11 steps to launch a business over 89 days on average, at a cost equal to
49.5% of gross national income per capita." Contrast the figure of 89 days with two days for Australia, eight for Singapore and 24 for
neighboring Pakistan. ...an urban land ceiling act and a rent-control act make it virtually impossible for poor migrants to rent or buy homes, and
they are forced into extralegal housing. The vast shantytowns of Bombay -- one of them, Dharavi, is the biggest slum in Asia -- hold, by some
estimates, more than $2 billion of dead capital. ...The socialist left, a natural proponent of such views, believes that free markets are the problem and not the solution. India's communist parties have blocked
labor reform, opposed foreign investment and prevented privatization of public-sector units. They naturally have a vested interest in the
"license-permit-quota raj," as the web of statist controls is called.
Friday, June 17, 2005 ~ 8:38 a.m., Dan Mitchell Wrote: In Virginia's primary races Tuesday, several Republicans who voted for the biggest tax increase in the commonwealth's history in 2004 faced
single-issue anti-tax challengers. The most vocal of those pro-tax incumbents was so embattled that he withdrew from the race. Another was trounced, two-to-one, by a twentysomething political neophyte. Two
others barely won, and in the statewide contests to select the GOP's Lieutenant Governor and Attorney General nominees, the tax hike defenders were upset by anti-tax challengers.
Friday, June 17, 2005 ~ 7:27 a.m., Dan Mitchell Wrote: If you happen to be reading this while standing in one of those disturbingly slow, zigzag lines at airport security -- looking repeatedly at
your watch, wondering if this time you really will miss the plane -- here's something to make you feel worse: Almost none of the agony you are experiencing is making you safer, at least not to any statistically
significant or economically rational degree. ...outside inspectors have found, over and over again, that federal screeners perform no better
than the private screeners they replaced. ...according to the calculations of economist Veronique de Rugy, 99.992 percent of intercepted items
were nail scissors, cigarette lighters, penknives and the like. Yet this mass ceremonial sacrifice of toenail clippers on the altar of security comes at
an extraordinarily high price. The annual budget of the federal Transportation Security Administration hovers around $5.5 billion -- just
about the same price as the entire FBI -- a figure that doesn't include the cost of wasted time. De Rugy reckons that if 624 million passengers each
spend two hours every year waiting in line, the annual loss to the economy comes to $32 billion. ...In the case of the TSA, that waste includes $350,000 for a gym, $500,000 for artwork and silk plants at the
agency's new operations center, and $461,000 for its first-birthday party. ...this isn't a country that has ever been good at risk analysis. If it were,
we would never have invented the TSA at all. Instead, we would have taken that $5.5 billion, doubled the FBI's budget, and set up a questioning system that identifies potentially suspicious passengers, as
the Israelis do. Even now, it's not too late to abolish the TSA, create a federal training program for airport screeners, and then let private companies worry about how many people to hire, which technology to
buy and how long the tables in front of the X-ray machines should be.
Thursday, June 16, 2005 ~ 12:03 p.m., Dan Mitchell Wrote: Our goal was to cut marginal tax rates because we firmly believed that this would provide the greatest economic boost to the economy. And we
knew that other types of tax cuts would not only have no economic benefit, but could actually be economically harmful. Ideally, we wanted a tax system that was as close to neutral as possible. That is, we wanted
people to make economic decisions based on market forces, not because of some provision in the tax law. In this respect, tax subsidies were as
bad as tax penalties. Both caused economic activity to deviate from what would exist in a free market, thus creating inefficiency and reducing
growth. The biggest problem we had was convincing economists that the tax structure mattered for growth. At that time, most economists followed Keynesian economics, which said that the only way taxes
affected growth was through their impact on disposable income. In the Keynesian model, all that mattered was spending. Incentives were of no importance. Consequently, to Keynesians, a 20 percent tax rate and a
100 percent tax rate with an 80 percent rebate would have exactly the same economic effects. ...Unfortunately, this lesson has been lost among
most conservatives these days. Just like the Keynesians of old, the Right today sees no difference between one tax and another. All tax cuts are
equally good and all tax increases are equally bad, goes the thinking. The result has been that wrong-headed but politically popular tax cuts like
the child credit have been enacted at the expense of more economically beneficial tax-rate cuts. These wrong-headed tax cuts have also made it
extraordinarily difficult to enact fundamental tax reforms like the flat tax.
Thursday, June 16, 2005 ~ 11:27 a.m., Dan Mitchell Wrote: Europe as we know it is slowly going out of business. ...Unless Europe reverses two trends -- low birthrates and meager economic growth -- it
faces a bleak future of rising domestic discontent and falling global power. Actually, that future has already arrived. ...It's hard to be a great
power if your population is shriveling. Europe's birthrates have dropped well below the replacement rate of 2.1 children for each woman of
childbearing age. For Western Europe as a whole, the rate is 1.5. It's 1.4 in Germany and 1.3 in Italy. In a century -- if these rates continue --
there won't be many Germans in Germany or Italians in Italy. ...Europe's economy is already faltering. In the 1970s annual growth for the 12 countries now using the euro averaged almost 3 percent; from 2001 to
2004 the annual average was 1.2 percent. In 1974 those countries had unemployment of 2.4 percent; in 2004 the rate was 8.9 percent. ...One way to revive economic growth would be to reduce social benefits, taxes
and regulations. But that would imperil Europe's "social model," which supposedly blends capitalism's efficiency and socialism's compassion.
Consider some contrasts with the United States, as reported by the Organization for Economic Cooperation and Development. With high unemployment benefits, almost half of Western Europe's jobless have
been out of work a year or more; the U.S. figure is about 12 percent. ...All this is bad for Europe -- and the United States. A weak European economy is one reason that the world economy is shaky and so
dependent on American growth. Preoccupied with divisions at home, Europe is history's has-been.
Thursday, June 16, 2005 ~ 10:32 a.m., Andrew Quinlan Wrote: Henry Hyde, who chairs the House International Relations Committee, is sponsoring legislation that would condition America's U.N.
dues--currently some $500 million a year, or about 22% of the U.N.'s core budget--on reform. A floor vote is expected this week. This has the U.N.'s American lobby in a lather of indignation, claiming Mr. Hyde
plans to stop paying U.N. dues as Jesse Helms did in the 1990s. In fact, only the threat of withholding U.S. funds induced any U.N. improvement
in the 1990s. The Hyde bill would require 18 U.N. agencies to become independently funded, as the U.N.'s Development Program and the World Health Organization already are, with a view toward becoming
transparent and effective. ...Above all, the prospective combination of Mr. Bolton's arrival to the U.N.--and Mr. Annan's departure from it--suggests an organization with the potential to be taken seriously by
the United States.
Thursday, June 16, 2005 ~ 9:30 a.m., Dan Mitchell Wrote: Under a new resolution passed by the European Parliament's legal committee on Wednesday (15 June), member states would pay MEPs a
single rate of EUR7,000 a month, while the EU would provide around EUR1,600 a month for a non-contributory pension scheme. Members would also be reimbursed for real expenses rather than receiving a flat
fee that allows delegates to claim back first class airplane seats while flying economy. ...Some MEPs also voiced discomfort about the non-contributory nature of the pensions provisions. "It's normal to
contribute to your pension, my constituents do this, so it's very difficult for me to explain to them why I don't contribute", Dutch socialist
member Edith Mastenbroek said. ...Meanwhile, non-attached Austrian MEP Hans-Peter Martin pointed out that the real size of the MEPs' package will be over EUR10,000 a month if you count the EUR3,700 a
month allowance for constituency office and travel costs which are not covered by the new measures. ...Mr Martin also noted that, since the EUR7,000 figure is calculated on the basis of 38.5 percent of the wages
of a judge at the European Court of Justice, this is likely to rise to over EUR8,000 a month by 2009 in tandem with judges' pay hikes.
Thursday, June 16, 2005 ~ 8:59 a.m., Dan Mitchell Wrote: Support for a suspension in the EU constitution ratification process is growing as the tide of popular opinion turns against the document in the
countries that still plan to have referendums. ...Some scenarios are being floated on how to deal with the situation, including prolonging the
deadline for ratification - something publicly supported by both Finland and the Czech Republic. Currently, the deadline for ratification is the end of October next year. It was a crucial mistake to send out the entire constitution to every French voter, the architect of the EU's first constitution Valéry Giscard
d'Estaing has said in an interview. ..."It is not possible for anyone to understand the full text". ...The ratification process should continue
across Europe, the former president advises and predicts: "In the end, it will pass", he added. "There is no better solution".
Thursday, June 16, 2005 ~ 8:45 a.m., Dan Mitchell Wrote: Government health insurance now includes trying to improve people's sex lives. I'm all for improving folks' sex lives, but with our tax money?
Government insurance is the first problem. Insurance was designed to protect us from the unexpected: floods, fire, severe illness, catastrophes that cost more than most of us can pay. But today, people expect
insurance to cover everything, even routine things like eyeglasses and dental treatment. This is a terrible idea. Insurance is a lousy way to pay
for anything. Once some faceless stranger is paying for what you do, you don't have an incentive to control costs. On the contrary, you have an
incentive to get as much as you can and leave the other person with the bill. Doctors also have an incentive to run up the bills. Patients rarely
complain, but they might complain if the doctor skips a test. Insurance companies know this, of course; hence the torturous bureaucracy: the paperwork, the phone calls where you beg them to pay, the times they
refuse to pay for what you thought was covered. ...Government insurance is worse than private insurance. A private insurer has an incentive to cut costs; every dollar wasted comes out of profit or must be
recovered by raising prices, which drives customers away. Government just raises taxes or increases debt. So when our bloated government picks up the tab for poor people's health costs, guess what it buys:
Viagra! In 2004, Medicaid spent $38 million on drugs for erectile dysfunction. ...If you had to pay for your own medical care out of your pocket, you might choose to forgo some expensive treatments in order to
have money for a nicer home or for better education for your children. But when the government taxes you to pay for what other people "need,"
you don't get that choice. You are forced to buy Viagra for some man you've never met.
Thursday, June 16, 2005 ~ 7:17 a.m., Dan Mitchell Wrote: Who owns Walter E. Williams? Is it President Bush, the U.S. Congress, the Commonwealth of Pennsylvania, or do I own myself? I'm guessing
that any reasonable person would agree that I own Walter E. Williams. The fact that I own myself means that I have the right to take risks with
my own life but not others'. That's why it's consistent with morality to mandate that my car have working brakes. If my car doesn't have working brakes, then I risk the lives of others, and I have no right to do
so. If I choose not to wear a seatbelt, then I risk my own life, which I have every right to do. ...Some might rejoin by saying, "Williams, if
you're not wearing a seatbelt, and don't do us the favor of dying in an accident and become an incapacitated vegetable, society will have to
bear the expense of taking care of you." That's not a problem of liberty and self-ownership. It's a problem of socialism. ...Each year, obesity
claims the lives of 300,000 Americans and adds over $100 billion to health care costs. Should government enforce a 2,000-calorie intake limit
per day? There's absolutely no dietary reason to add salt to our meals. Salt can lead to hypertension-induced heart attacks that kill thousands.
Should government outlaw salt consumption? Sedentary lifestyles have been shown to lead to shorter and less healthy lives. Should there be government-mandated exercise programs? The justifications used for
"Click It or Ticket" can easily provide the template for government control of our diets and other lifestyle features. Maybe I'm a bit out of touch with today's Americans.
Wednesday, June 15, 2005 ~ 5:22 p.m., Dan Mitchell Wrote: Americans now feel entitled to spend nearly a third of their adult lives in retirement. Their jobs are less physically demanding than their parents'
were, but they're retiring younger and typically start collecting Social Security by age 62. Most could keep working - fewer than 10 percent of
people 65 to 75 are in poor health... The problem isn't that Americans have gotten intrinsically lazier. They're just responding to a wonderfully
intentioned system that in practice promotes greed and sloth. ...The result is a system that burdens the young and creates perverse incentives
for people to retire when they're still middle-aged. Once you've worked 35 years, more work often yields only a tiny increase in your benefits
(sometimes none at all), but you still have to keep paying the onerous Social Security tax, which has more than doubled over the last half
century. If the elderly were willing to work longer, there would be lower taxes on everyone and fewer struggling young families. ...Getting that
kind of system seems politically hopeless at the moment here, but it already exists in Chile. Its pension system has a stronger safety net for the older poor than America's (relative to each country's wages) and
more incentives for people to work, because Chileans' contributions go directly into their own private accounts instead of a common pool like Social Security. Once Chileans accumulate enough money in the account
to finance a pension that pays at least half their salary (which is better than what the typical American gets from Social Security), they can start
collecting the pension and still go on working. In fact, they have an extra incentive to go on working because they keep more of their paychecks:
elderly Chileans, unlike Americans, are freed of the obligation to continue making pension contributions. ...Chileans who control their own private-account pensions don't have to count on politicians or groups
like AARP to decide when they can retire. It's a personal choice, not a public battle, and the Chileans I interviewed had a saner attitude about retirement than the American baby boomers dreaming of retiring to
decades of golf.
Wednesday, June 15, 2005 ~ 2:11 p.m., Dan Mitchell Wrote: The standard view of this is that the common agricultural policy's excessive protection of food is highly damaging, that the single market in
manufacturing is giving us the benefits of intense competition, and that the single market in services will, in time, give us great benefits from
deregulation. Our studies show this view is largely wrong. Yes, the CAP is costly to us. We put this cost at about 0.3% to 0.5% of our national
income. However, it turns out that manufacturing enjoys about as much EU protection as does food. In addition to tariffs, now generally quite small, the EU protects manufacturing through quotas in certain areas
such as textiles, but mainly through anti-dumping measures and various trade "restraint" agreements. Anti-dumping operates both through
explicit duties and the threat of levying them, which often results in importers raising prices instead. The result is to be seen in the high
margins by which EU prices exceed world prices - in cars, for example, 69%, in footwear 60%, and in radios and televisions 63%. As we are net
importers, this protectionism is costly to us in just the same way that the CAP is. It is, if you like, a "common manufacturing policy". Our
estimates put the analogous cost at 2%-3% of GDP - much bigger than food.
Wednesday, June 15, 2005 ~ 11:15 a.m., Dan Mitchell Wrote: The 10th Amendment to the Constitution says that all powers not granted to the federal government belong to the states or to the people.
Those who wrote the Constitution clearly understood that power is dangerous and needs to be limited by being separated -- separated not only into the three branches of the national government but also
separated as between the whole national government, on the one hand, and the states and the people on the other. Too many people today judge
court decisions by whether the court is "for" or "against" this or that policy. It is not the court's job to be for or against any policy but to apply
the law. The question before the Supreme Court was not whether allowing the medicinal use of marijuana was a good policy or a bad policy. The legal question was whether Congress had the authority under
the Constitution to regulate something that happened entirely within the boundaries of a given state. For decades, judges have allowed the federal government to expand its powers by saying that it was authorized
by the Constitution to regulate "interstate commerce." But how can something that happens entirely within the borders of one state be called "interstate commerce"?
Wednesday, June 15, 2005 ~ 10:36 a.m., Dan Mitchell Wrote: For the list of worst Congressional legislation ever, we have a new candidate: last month's debacle in the House Financial Services
Committee on Fannie Mae and Freddie Mac. In the name of reforming these "government-sponsored" mortgage giants, the Members voted to make them even more financially dangerous, while grabbing a chunk of
their profits for political payola to boot. Chairman Mike Oxley and friends voted to create a new "affordable housing fund" to the tune of
$600 million or more a year. Already facing deserved criticism for being under-capitalized, Fannie and Freddie would have to dole out 5% of
their after-tax income each year to an assortment of "non-profit and for-profit housing organizations, government agencies and lenders." This
means passing out $3 billion and potentially much more over five years to anyone in the housing industry who is politically well connected -- say,
anyone with a pal on the Financial Services Committee. ...The Oxley bill is worse than current law in several other ways, too. It raises the dollar
limit on mortgages that Fan and Fred can purchase -- to about $540,000 from $359,650 -- thus elbowing out non-subsidized private companies from even more business. Fannie has a statutory obligation to promote
affordable housing, but how many poor people do you know with $500,000 mortgages?
Wednesday, June 15, 2005 ~ 10:03 a.m., Dan Mitchell Wrote: ...the rebate, negotiated more than 20 years ago by Margaret Thatcher, isn't unfair but simply an (imperfect) attempt to rectify the real injustice
caused by the EU's huge misallocation of resources. It was France that almost 50 years ago insisted on the so-called Common Agricultural Policy (CAP), which today eats up 40% of the EU's EUR100 billion
budget. Even though less than 5% of Europe's population works in the farm sector, producing about 2% of its gross domestic product, the CAP
is the EU's biggest budget item. And thanks to its rural policy, France is still the prime beneficiary of this European "solidarity," receiving more
subsidies than the much poorer new member states with relatively larger agricultural sectors, such as Poland. Britain, which decades ago adjusted
its farm sector to the post-industrial age, receives relatively little in return -- hence the rebate to avoid even larger British net payments. But
the rebate is imperfect because it only eases the British burden without fixing the real problem. The CAP must be scrapped -- or, this being the EU where nothing can be done cleanly, at least downsized beyond
recognition. In itself, that would reduce the need for the British rebate. But instead of tackling the real issue, the poorer EU members and some
richer ones too are ganging up against the U.K. The motivations of the latter aren't hard to divine: They hope that more of the British taxpayers'
money will come their way. ...Europe's citizens pay twice for this budget folly: First as taxpayers who fund the CAP and then consumers who must spend more for expensive EU food. (The CAP farmer
protectionism, you see, leads to higher prices.) What's more, the policy also hurts the developing world whose economies, unlike the rich EU's, rely on farm exports.
Wednesday, June 15, 2005 ~ 8:33 a.m., Dan Mitchell Wrote: ...the Supreme Court of Canada...issued an opinion last Thursday saying, in effect, that Canada's vaunted public health-care system produces
intolerable inequality. ..."Access to a waiting list is not access to health care," wrote Chief Justice Beverly McLachlin for the 4-3 Court last
week. ...The ruling stops short of declaring the national health-care system unconstitutional; only three of the seven judges wanted to go all
the way. But it does say in effect: Deliver better care or permit the development of a private system. "The prohibition on obtaining private health insurance might be constitutional in circumstances where
health-care services are reasonable as to both quality and timeliness," the ruling reads, but it "is not constitutional where the public system fails
to deliver reasonable services." ...The larger lesson here is that health care isn't immune from the laws of economics. Politicians can't wave a
wand and provide equal coverage for all merely by declaring medical care to be a "right," in the word that is currently popular on the
American left. There are only two ways to allocate any good or service: through prices, as is done in a market economy, or lines dictated by government, as in Canada's system. The socialist claim is that a
single-payer system is more equal than one based on prices, but last week's court decision reveals that as an illusion.
Tuesday, June 14, 2005 ~ 11:32 a.m., Dan Mitchell Wrote: The Laffer Curve helped launch the Reaganomics Revolution here at home and a frenzy of tax rate cutting around the globe that continues to
this day. The theory is really one of the simplest concepts in economics. Yet its logic continues to elude the class-warfare lobby whose disbelief is
unburdened by the multiple real-life examples which validate its conclusions. The idea is that lowering the tax rate on production, work,
investment, and risk-taking will spur more of these activities and thereby will often lead to more tax revenue collections for the government rather
than less. ...Now we have overpowering confirming evidence from the Bush tax cuts of May 2003. ...Last week the Congressional Budget Office
released its latest report on tax revenue collections. The numbers are an eye-popping vindication of the Laffer Curve and the Bush tax cut's real
economic value. Federal tax revenues have surged in the first eight months of this fiscal year by $187 billion. This represents a 15.4% rise in federal tax receipts over 2004. Individual and corporate income tax
receipts have exploded like a cap let off a geyser, up 30% in the two years since the tax cut. Once again, tax rate cuts have created a virtuous
chain reaction of higher economic growth, more jobs, higher corporate profits, and finally more tax receipts. ...The severe slump in business
capital spending in 2001 and 2002 has now taken the shape of a U-turn, with spending on capital purchases up an enormous 22% since 2003. Because higher wages and new job creation are highly dependent on
business capital investment, the mislabeled "Bush tax cut for the rich" has in reality enormously benefited middle-income workers.
Tuesday, June 14, 2005 ~ 11:03 a.m., Dan Mitchell Wrote: Cutting tax rates in the right way clears jobs and boosts economic revenues. On the other hand, attempting to revive economic growth by
just "putting money in people's pockets" through tax credits, deductions and rebates not only fails to increase growth but also creates disincentives to work, save and invest, which ends up costing the
government lost revenues. The historical record couldn't be clearer. The Kennedy tax-rate reductions that triggered the prosperity of the 1960s and produced a windfall of government revenues indeed ended up
helping balance the budget in 1964-65. Federal revenues doubled in the 1980s as a result of the Reagan tax-rate cuts. Today the evidence continues to mount that the Bush tax-rate reductions of 2003 also got the
economy moving again and are leading to increased federal revenues. ...Where government revenues are concerned, economic growth really is everything. The economic recovery triggered by the 2003 tax rate
reductions means not only greater prosperity for all Americans but more revenue for government, too. ...If Congress would take the next step and
reform the federal tax code - by reducing tax rates even further and simplifying the code, completing the job it began of defining taxable income properly so as to completely eliminate double, triple and
quadruple taxation of income - the prosperity dividend would increase and solve the problem of financing personal retirement accounts. It's not
rocket science, voodoo or magic. It's incentive-oriented economics. Cut tax rates, generate more economic growth, slow the growth of federal spending, capture higher revenues to make a down payment on personal
retirement accounts.
Tuesday, June 14, 2005 ~ 10:21 a.m., Dan Mitchell Wrote: Sometimes it seems as if liberals have a genius for producing an unending stream of ideas that are counterproductive for the poor, whom
they claim to be helping. Few of these notions are more counterproductive than the idea of "menial work" or "dead-end jobs."
...Many low-level jobs are called "dead-end jobs" by liberal intellectuals because these jobs have no promotions ladder. But it is superficial
beyond words to say that this means that people in such jobs have no prospect of rising economically. Many people at all levels of society, including the richest, have at some point or other worked at jobs that
had no promotions ladder, so-called "dead-end jobs." The founder of the NBC network began work as a teenager hawking newspapers on the
streets. Billionaire Ross Perot began with a paper route. You don't get promoted from such jobs. You use the experience, initiative, and discipline that you develop in such work to move on to something else
that may be wholly different. People who start out flipping hamburgers at McDonald's seldom stay there for a full year, much less for life. Dead-end jobs are the kinds of jobs I have had all my life. But, even
though I started out delivering groceries in Harlem, I don't deliver groceries there any more. I moved on to other jobs -- most of which have
not had any promotions ladders. ...Notions of menial jobs and dead-end jobs may be just shallow misconceptions among the intelligentsia but
they are a deadly counterproductive message to the poor. Refusing to get on the bottom rung of the ladder usually means losing your chance to move up the ladder. Welfare can give you money but it cannot give you
job experience that will move you ahead economically.
Tuesday, June 14, 2005 ~ 9:43 a.m., Dan Mitchell Wrote: The administration should stop forthwith insisting that it believes ever deeper and closer European integration is in America's best interest. This
was true in the Cold War, when Western European fragmentation would have been a real problem in the fight against communism. But in the more complex post-9/11 world, in which threat perceptions and
strategies differ across the Atlantic and within Europe, it is no longer self-evidently in U.S. interests that the E.U. try to eliminate national
policies. It is hysterical nonsense to suggest that without closer E.U. integration the European nations will fall back into internecine strife. In fact most E.U. members are mature democracies capable of making
rational decisions. It is much more likely that top-down efforts to force separate nations into the straitjacket of one sprawling, remote supernation will only heighten national tensions. ...the United States
should gently urge the Europeans now to address the real challenge they face. Washington has a powerful interest in seeing a strong Europe in the
world as a vigorous partner for American foreign policy objectives. But creating an ever more rococo panoply of bureaucracy and superstatehood is not the way to achieve that. What the bulk of the E.U.
desperately needs is economic growth. Instead of creating hundreds more jobs for Eurocrats, Euro-diplomats, and Euro-politicians with global
pretensions, it should be creating millions of real jobs for the growing army of unemployed that truly threatens economic vitality and political
stability. That means real economic reform, including deregulation and more flexible labor markets. There may not be much the United States
can do directly to assist in that process except offer encouragement. But making European economic recovery, rather than European integration, a central plank of U.S. foreign policy would be more likely to help
produce the kind of Europe that would really be in American interests. The EU has always been an elite project with little if any democratic support. To a shameful extent, it has been imposed on national
electorates by stealth and outright lies - for instance, the assertion that membership would involve no major loss of national sovereignty. This
anti-democratic strategy has succeeded only because until 15 years ago voters had been sedated by prosperity and asked to make no sacrifices
for "the European idea." Now that the cumulative effects of Europe's economic centralization are being felt, voters have also woken up to the
political intrusions on their liberty and independence. Hence the rising tide of Euro-skepticism. ...Though the Bush administration generally and Secretary of State Rice personally gave occasional support to the
constitution now in peril, it would have been a serious setback for U.S. interests. These interests are a prosperous free-trade Europe, hospitable
to U.S. trade and investment, and a reliable U.S. ally rather than a "counterweight" in diplomacy and military affairs. These concerns reflect the interests of EU member states such as Britain and the
post-Communist democracies in promoting a more flexible and varied European Union - intergovernmental rather than supranational, reliant on tax and regulatory competition rather than on bureaucratic
harmonization, and determined to keep NATO as the basis of its foreign and defense policies. Such flexibility would include allowing the French and Germans to form a more economically regulated and politically
integrated European "core" in return for accepting the return of many now centralized powers from Brussels to national governments. And that
in itself would be a major step toward restoring European democracy.
Tuesday, June 14, 2005 ~ 8:00 a.m., Dan Mitchell Wrote: ...no sooner had Marxist Newspeak evaporated than Eurospeak - the official language of the European Union - came in place of it. Turn to
that extraordinary document on which the future of Europe now depends - the official constitution of the European Union - and you will again see
language used as it was used by the Communists, not to describe reality, but to subdue reality to a ruling purpose. Take the critical term
"subsidiarity," with which the constitution promises to protect the vestiges of national sovereignty. This term invariably occurs in the
vicinity of a seriously damaging question, namely: What remains of the democratic forms of government achieved by the nation-states when the EU takes charge of their legislation? The answer is that we must apply
the "principle of subsidiarity," according to which decisions are all to be taken at the "lowest level compatible with the project of Union." What is
this lowest level, you may ask, and who decides which decisions are to be taken there? The only possible answer to the second question - namely,
the EU apparatus, including the European Court of Justice - removes all meaning from the first. To say that the nation-states have sovereignty in
all matters that they are competent to decide, but that the EU apparatus decides which matters those are, is to say that the nation-states have no
sovereignty at all, since all their powers are delegated. In other words, "subsidiarity" effectively removes the sovereignty that it purports to
grant, and so wraps the whole idea of sovereignty in an impenetrable cloud of mystery.
Tuesday, June 14, 2005 ~ 7:30 a.m., Dan Mitchell Wrote: Mr. de Villepin comes from an antimarket tradition in France that has long worshipped the centrality of the state. His patron, Mr. Chirac, has
even declared that "neoliberalism is the new communism" because it forces societies into a rigid straitjacket of economic policies that include
lower taxes and less regulation. Mr. de Villepin did acknowledge that France, which has suffered from double-digit unemployment for a
decade, has to "look reality in the face." But then he declared he was "deeply attached to the French social model" and announced policies
that are almost guaranteed to ensure that economic reality will slap France back--and hard. While he announced modest reductions in paperwork and other barriers to small businesses hiring more workers,
the new prime minister decided to cancel planned income tax cuts that had been proposed to jumpstart the economy. The $6 billion or so in suspended tax cuts will instead be channeled into public-works jobs that
will do nothing to help the long-term investment climate. ...while the current government is made up largely of people who call themselves conservative, 80% of ministers have never worked at all in the private
sector.
Monday, June 13, 2005 ~ 4:12 p.m., Dan Mitchell Wrote: For far too long, a majority of Germans have preferred this regime of euphemism and wishful thinking. They have rewarded self-deception.
True, at the backs of their minds, they were aware that they were gambling with their own livelihoods and, even more, their (very few) children's. But the will to act was lacking, the flesh was weak. They voted
Mr. Kohl out in 1998 when he finally decided, reluctantly, to reduce pensions. Now Mr. Schröder is out of favor because he, too, began, after
long and fateful hesitation, to shake up the country's paralytic welfare state. Typical of these two representatives of the ancien régime was their
failure to explain publicly their late and half-hearted reforms. In ur-German, paternalistic tradition, they feared appealing to their fellow
citizens' intelligence by articulating plain truths. A state that spends 48% of its budget on social-welfare entitlements and 14% on interest payments on a growing mountain of debt, and can only invest 11% in
modernizing infrastructure, has long since lost its ability to act. It is bankrupt. ...Germans have an "equality sickness" that makes them
dependent on the welfare state. This describes our society's worst burden, cultivated in the 20th century under various forms of government.
...Civil equality before the law became social equality, and freedom was, in case of doubt, always sacrificed to the idea of social equality.
Monday, June 13, 2005 ~ 2:44 p.m., Dan Mitchell Wrote: Congress should give American motorists a break at the pump in the pending energy bill, but special interests and legislators beholden to them
are once again loading the bill down with pork barrel projects. Ethanol is a prime case in point. Ethanol's advocates have long argued that
increasing the amount of ethanol used in gasoline would be a boon to the economy, reduce our dependence on foreign oil and improve air quality.
Yet, more than two decades and tens of billions of dollars in subsidies, tax credits and fuel mandates have done little other than to further
enrich Archer-Daniels Midland (ADM), the multibillion dollar agri-giant that produces more than 70 percent of the ethanol used in America. In return, ADM has been a major campaign contributor to key farm state
legislators in both political parties. The economic impact of ethanol subsidies is negative. One report by the U.S. Agriculture department determined that every $1 spent subsidizing ethanol costs consumers more
than $4. ...Worse, most studies show that it takes more energy to produce and deliver a gallon of ethanol than the energy it produces - a net loss of
energy. Imported fossil fuels are used to produce, distill and transport ethanol. Thus, requiring that the United States use 5 billion to 8 billion
gallons of ethanol - a mandate that Congress is currently considering - would mean burning more, not less, imported oil and natural gas. ...Ethanol would likely disappear from the marketplace absent federal
subsidies and mandates. Like so much of the pork Congress bestows upon special interests, ethanol is bad for the economy, bad for consumers and bad for the environment.
Monday, June 13, 2005 ~ 10:40 a.m., Dan Mitchell Wrote: Raising taxes may look like an easy way to strengthen the fiscal situation but it is likely to be costly and perhaps even counter productive. In the
short term, it would reduce the pressure to reprioritise spending or to find productivity improvements instead. Further out, it would reduce labour supply. High tax wedges have a negative impact on hours of
work; raising them further is likely to worsen the situation, in which case it may not generate much in the way of receipts anyway. But there is
scope to collect revenue in less costly ways. Making the VAT uniform again and continuing the shift towards green taxes would raise revenue that could then be used to reduce labour income taxes, thereby
improving work incentives. Another way to strengthen public finances is to raise the efficiency of the public sector. Opening up to competition can
be a powerful way of achieving this. Ultimately, all levels of government should think about whether the public sector needs to provide certain
services at all. ...Finally, there is considerable scope for selling state assets, especially in competitive parts of the business sector.
Monday, June 13, 2005 ~ 10:07 a.m., Dan Mitchell Wrote: What EU officials have by and large failed to do, however, is build effective economic policies. French unemployment has hit 11% and
youth unemployment surges even higher. Five million Germans are out of work. Italy has slipped into outright recession. France and Germany
ignore the debt limits they accepted as part of the deal to create the Euro currency. Their feeble efforts to reform their out-of-control welfare
states have failed: This spring, a wave of strikes forced French prime minister Jacques Raffarin to abandon his proposal to end the national paid holiday for Whit Monday, a festival English-speakers may vaguely
remember from the pages of Ivanhoe. It's not hard to describe what Europe must do to keep pace with the United States and remain ahead of China and India. It must invest more, and so it must cut taxes. It must
raise its skill and technology level, and so it must free its universities from state control. It must encourage its citizens to work harder, and so
it must cut back on lavish pension and unemployment systems. ...This agenda is easy to describe, but hard to carry out. The EU constitution
was at best a time-wasting irrelevancy to this work of reform; at worst, it would have functioned as an outright impediment. True, some reform-minded Europeans may have held quiet hopes that the unelected
European Commission might somehow force reforms from which cowardly politicians recoiled. At its best, the commission has been a force for freer trade and more rational economic policies. But the
commission has bad days as well as good days, and it seems as often interested in forcing Estonia and Slovakia to push their taxes up as in persuading France and Germany to bring their taxes down. ...[The] vote
puts an end to the bizarre fantasy of one united Eutopia--and creates an opportunity for a new generation of leaders to do what their nations need to grow and thrive. So again: Don't panic. Europe's leaders have
tried and failed to evade their responsibilities. Now they have no choice but to accept them--and go to work.
Monday, June 13, 2005 ~ 9:39 a.m., Dan Mitchell Wrote: Some 38 nations qualify as "highly indebted poor countries," or HIPCs. Despite $144 billion in bad loans, mostly from official lenders, their
average per-capita income is more than 25% below where it was in 1980. Ending this misery starts with diagnosing the problem. And to that end, the British claim that "many countries have to choose between
servicing their debt and investing in health, education, infrastructure and other areas" isn't helpful -- because it isn't true. Lenders stopped
expecting repayment on this money years ago. In fact, since 1985 the HIPCs have been regular recipients of new funds to cover their debt service, as Carnegie Mellon economist Adam Lerrick shows in a new
paper out from Congress's Joint Economic Committee. This has put the HIPCs further into debt. But the process continues so the World Bank and International Monetary Fund can boast -- preposterously -- that
they've never made a bad loan. ...There is a better way, as the U.S. is signaling. First, force the World Bank and its cousins to write down their
bad loans and acknowledge their failures. Second, move to a model of performance-based grants that will raise accountability. ...Imagine: Poor
country politicians would suddenly be accountable for aid they receive, and the rest of us wouldn't have to repeat this "debt forgiveness" fiasco 20 years from now.
Monday, June 13, 2005 ~ 8:44 a.m., Dan Mitchell Wrote: Universities across the country are making an effort to ensure that products with their name on them are not made in sweatshops. U.S.
unions, such as UNITE, the garment workers' union, lobby to impose working standards for third world countries. Unfortunately these efforts
actually hurt poor workers in third world countries more than help them. ...Economists across the political spectrum, from Paul Krugman on the left to Walter Williams on the right, have defended sweatshops. The
economic reasoning is straightforward. People choose what is in their perceived best interests. If workers voluntarily choose to work in a
sweatshop, without being physically coerced, it must be because it is their best option compared to their other even worse alternatives. Admittedly,
sweatshops have abhorrently low wages and poor working conditions by western standards. However, economists point out that alternatives to working in a sweatshop are often much worse; oftentimes scavenging
through trash, prostitution, crime, or even starvation are the other choices workers face. ...Buying products made in sweatshops would do more to help third world workers than college protests. Wages are
determined by a worker's productivity and next best alternative employment. By purchasing more products made in sweatshops we create more demand for them and increase the number of factories in
these poor economies. That gives the workers more employers to choose from, raises productivity and wages and eventually improves working conditions. This is the same process of economic development the U.S.
went through and it is ultimately how third world workers will raise their standard of living and quality of life.
Monday, June 13, 2005 ~ 7:17 a.m., Dan Mitchell Wrote: The real question is never what judges decide, but how they decide it. The Scalia-Thomas argument was not about concern for cancer patients,
the utility of medical marijuana or the latitude individuals should have regarding what they ingest. It was about what the commerce clause permits, and even more abstractly, who decides what the commerce
clause permits. To simplify only slightly, Scalia says: Supreme Court precedent. Thomas says: the Founders, as best we can interpret their
original intent. The Scalia opinion (concurring with the majority opinion) appeals to dozens of precedents over the last 70 years under which the
commerce clause was vastly expanded to allow the federal government to regulate what had, by the time of the New Deal, become a highly industrialized country with a highly nationalized economy. Thomas'
dissent refuses to bow to such 20th-century innovations. While Scalia's opinion is studded with precedents, Thomas pulls out founding-era dictionaries (plus Madison's notes from the Constitutional Convention,
The Federalist Papers, and the ratification debates) to understand what the word commerce meant then. And it meant only ``trade or exchange'' (as distinct from manufacture) and not, as we use the term today,
economic activity in general. By this understanding, the federal government had no business whatsoever regulating privately and medicinally grown marijuana.
Sunday, June 12, 2005 ~ 1:15 p.m., Dan Mitchell Wrote: Donors have justified aid with various theories and political motivations, but its core justification, the 'gap theory', is fundamentally flawed. This
theory assumes that poor countries are trapped in a vicious cycle of poverty because they are unable to save and hence have insufficient capital to invest in growth-promoting, productivity-enhancing activities.
But there simply is no evidence that this savings/investment 'gap' exists in practice. As a result, aid has failed to 'fill the gap'. Instead, it has, over
the past fifty years, largely been counterproductive: it has crowded out private sector investments, undermined democracy, and enabled despots
to continue with oppressive policies, perpetuating poverty. The reason countries are poor is not that they lack infrastructure - be it roads,
railways, dams, pylons, schools or health clinics. Rather, it is because they lack the institutions of the free society: property rights, the rule of
law, free markets, and limited government. In a majority of poor countries, the average poor person is typically unable to own and transfer property. Courts of law are slow, expensive and corrupt.
Government plays a large role in the economy and government policies undermine incentives to engage in mutually beneficent economic activities. ...Aid as a percentage of Gross National Income (GNI) grew
continuously in Africa between 1970 and 1995, starting at around 5 per cent in 1970 and peaking at around 18 per cent. There appears to be an
inverse relationship between aid and growth, and this is not unique to Africa. Growth is higher in periods when the aid-to-Gross National
Income ratio falls. ...It would be more sensible to scale back levels of aid, provide aid only to governments that are already reforming, and make
aid available for a strictly limited period of time. Other reforms, such as removing trade barriers and eliminating trade-distorting agricultural subsidies, would yield far more benefits than increasing aid.
Sunday, June 12, 2005 ~ 12:53 p.m., Dan Mitchell Wrote: A number of states are considering taxing certain cosmetic surgery procedures, including face-lifts, tummy-tucks and Botox injections. The
idea behind the taxes -- dubbed "vanity taxes" or "Botaxes" by some -- is to boost state coffers and raise revenue for government initiatives such
as health care for poor children. ...Proponents of the efforts say that since the taxes are levied on elective procedures, they are relatively
painless ways to raise money for state programs. ...Lori Rosenzweig has seen Dr. Hetzler for Botox and Restylane injections, but says the new tax
will make her reconsider future cosmetic procedures. "I will either not have a procedure or I will go out of state to New York," says Ms.
Rosenzweig, of Long Branch, N.J. (Both Botox and Restylane are used to minimize wrinkles.) Like many New Jersey plastic surgeons, Dr. Hetzler is also licensed in New York and Pennsylvania. No one knows for sure
how many New Jersey patients are declining surgery or are going out of state for treatment since the law was passed. The tax hasn't generated as
much revenue as New Jersey originally hoped. When the tax was signed into law last June it was expected to generate $24 million this fiscal year.
The state now thinks the tax will only generate $7 million this year.
Sunday, June 12, 2005 ~ 11:52 a.m., Dan Mitchell Wrote: ...the Europeans who have awakened to the fact that the great myths that have sustained their joint enterprise this far will sustain it no
further. ...The first of these -- the founding myth -- is that the root of Europe's historical problem is nationalism. Of course, Adolf Hitler was a
nationalist, and Hitler was the cause of Europe's physical and moral implosion in World War II. But nationalism isn't Hitlerism, and Hitlerism wasn't merely nationalism; fundamentally, it was totalitarianism. By
contrast, the communist countries imposed on Eastern Europe after World War II were explicitly "international" in their outlook. Europe,
however, was not better off because of them. The second myth is that, since nationalism is the problem, Europe must be the solution. "We need
more Europe, not less," said Tony Blair in 2002, in a speech that stressed the need for a European Constitution. In Mr. Blair's view, wherever the
EU has gone, good things have followed. Yet it would be closer to the truth to say that wherever good things have happened, the EU has
followed. ...The third myth is that the "European solution" actually solves anything. Turn again to Mr. Blair: "The way that EU membership
has transformed Ireland, Spain, Portugal and Greece into prosperous economies in 20 years," he said, "should be tremendous encouragement
to Central and Eastern Europeans." The notion that it was EU membership that was primarily responsible for making these countries prosperous is demonstrably false. Switzerland and Norway, two of
Europe's richest countries, are not in the EU. As for Ireland, it joined the EU in 1973, remained a backwater despite massive subsidies from
Brussels, and only took off following radical free-market reforms in the late 1980s. ...Finally, there is the myth that the EU has something larger
to offer the world. In economic affairs, the offering has been corporatism and welfare, a model supposedly more humane than America's system of
"cowboy capitalism." ...As for euronomics, it has delivered 15 consecutive years of laggard performance, culminating in some of the highest unemployment rates the Continent has seen since the 1930s.
Sunday, June 12, 2005 ~ 10:15 a.m., Dan Mitchell Wrote: But while I certainly hoped to see the EU constitution voted down because I did not want to witness the creation of yet another
Leviathan-like political structure, because I did not want to see the political institutions responsible for propagating failed economic policies receive public approbation and because I too believe that the EU
constitution was both wordy and incoherent, I fear that the reasons behind the thumbs-down votes in both France and the Netherlands will come to haunt advocates of economic liberalization who want to see
Europe adopt our ideas and succeed through their adoption. ...It may be well and good that the EU constitution was defeated. But we ought to ensure that it was defeated for the right reasons and that involves
ensuring that anti-free-market forces do not hijack the movement opposing the EU constitution and use it in order to force Europe to turn away from economic liberalization.
Sunday, June 12, 2005 ~ 9:31 a.m., Dan Mitchell Wrote: Since the birth of the euro in 1999, the countries that use the common currency have yielded their monetary policy to the European Central
Bank. Those now mooting a withdrawal from the euro zone would like to restore monetary policy to national control. Some of these critics of the
euro and its central bank, the ECB, claim that rates are too high, but with real (inflation-adjusted) short rates at nearly zero for two years
now, that can only be an alibi for the failure of policies that members still control. There still is that residual instinct among politicians in
economically troubled times to reach for the monetary level and devalue the currency. But that has never solved anything. History shows that
devaluation leads to inflation as night follows day, destroying wealth, upsetting securities markets and eroding the capital stock. The ECB, to
its credit and that of the designers who gave it the single mission of preserving the currency's value, has done an excellent job of keeping
inflation in check. That's entirely to do with its success in keeping the monetary-policy lever out of the hands of opportunistic politicians. Sound money is never a problem in any economy. ...U.S. tax revenues
have soared since the 2001 Bush tax cuts, with revenue growth exceeding both projections and economic growth. As a result, that political bogeyman, the budget deficit, will shrink this year. But sluggish
Europeans don't have to look that far for examples of how to boost growth; they can be found within the euro zone, in places like Ireland and Aznar's Spain of a few years back. Those countries managed just
fine without the monetary lever, and in recent years have offered a pretty good guide for operating the fiscal lever as well.
Saturday, June 11, 2005 ~ 11:45 a.m., Dan Mitchell Wrote: Under the deal struck between the left-leaning NDP and the minority Liberal government in April, it was agreed that corporate tax cuts
proposed in this year's budget will be removed whilst an extra C$4.6bn ($3.7bn) in spending on items such as low-income housing, the environment and foreign aid will be tacked on. Consequently, the initial
pledge to cut corporate tax to 19% from 21% by 2010 and remove the corporate surtax by 2008 now hangs in the balance. Nevertheless, Goodale was able to fend off questions of whether the government will
be able to carry through its tax cut commitments, asserting that there is "ample time" to reach an all-party agreement with the cuts not due to
take effect until 2008. However, the government's political meanderings over the corporate tax cut have angered the business community, which has been vocal in its opposition to the deal with the NDP.
Saturday, June 11, 2005 ~ 11:02 a.m., Dan Mitchell Wrote: China's political system is odious, and its arms buildup is menacing. But its economic performance is neither sinister nor evil: It lifted 400 million
people above the $1-a-day line between 1981 and 2001, a period when the net progress against poverty in the rest of the world was zero. And
China's growth is not unfair. To the contrary, China has become a better global economic citizen than reasonable observers could have predicted.
You think China does not abide by international rules? To meet the terms of its accession to the World Trade Organization, China abolished or
amended 2,600 legal statutes and regulations... Between 2000 and 2004, China's imports from the United States doubled. China imported 60% more American goods than France last year, although the French
economy is bigger. You think China discriminates against foreign investors? In the past 25 years, China has taken in 10 times more foreign investment than Japan did between 1945 and 2000. As a result, more
than half of China's exports are made by foreign subsidiaries. ...Relative to older Asian tigers, notably South Korea and Japan, China has
developed in an open, import-friendly way. It is trying to play by global economic rules, even if its record isn't perfect. But who does have a perfect record, anyway? Not the Europeans, whose inflation-fighting
sado-monetarism holds back global growth. Not the Japanese, who are the kings of farm protectionism. And not, for that matter, the U.S. Congress itself. What's Congress doing about the U.S. budget deficit,
about egregious farm subsidies or about the scandal of U.S. anti-dumping laws that are rigged against foreigners?
Saturday, June 11, 2005 ~ 10:26 a.m., Dan Mitchell Wrote: Unlike their colleagues, Mr. Sarkozy and Ms. Merkel have challenged the long-held consensus views. In Germany as well as in France, the old
guard only wants to tinker with the welfare system. These two have challenged its very nature. The battle usually is over economics. "What is
the best social model in the world? It is the one that ensures everyone has a job," Mr. Sarkozy said on the campaign trail last month with, by
French standards, incendiary language. Ms. Merkel stresses "freedom" and "competition" over "solidarity," that shibboleth of postwar German
politics. ...the emergence of this duo in Europe today has opened a window in a fetid room. To imagine France or Germany led by Nicolas Sarkozy or Angela Merkel is to become excited about European politics
for a change. For years, people have wondered when -- if -- France and Germany could get their Ronald Reagan or Margaret Thatcher. It just could be very soon.
Saturday, June 11, 2005 ~ 9:55 a.m., Dan Mitchell Wrote: What may today seem a fatal blow to further integration and economic reform may actually be Europe's future salvation. Finally, those
countries that have embraced the Lisbon Agenda, Europe's ambitious program for growth and jobs, can move ahead without worrying about France and other members of "core" Europe -- a club of aging
industrialized economies whose prized "social model" is exemplified by high taxes, rigid labor regimes and low economic growth. ...Interestingly,
history has shown that Europe works best not when it tries to harmonize the unharmonizable, but when it creates a club with a high standard for
admission -- such as the euro or the EU itself. ...a two-speed Europe offers the only hope to put Europe back on track. Maybe if Jacques Chirac had to explain to his voters why they are excluded from a
leading-edge, forward-looking group of countries that reward their citizens with greater prosperity, jobs and opportunities, the reality would
prevent him from constantly invoking preservation of l'Europe sociale as an excuse for perennially poor economic performance and blocking urgently needed reforms.
Saturday, June 11, 2005 ~ 7:11 a.m., Andrew Quinlan Wrote: The problems of General Motors are not the problems of the U.S. vehicle industry. The United States remains a uniquely outstanding place to build
cars and trucks, which is why Toyota, Nissan, Honda, Hyundai, BMW and Mercedes-Benz have invested heavily in U.S. factories. ...Because so many Japanese cars, trucks and engines are now produced in the United
States, increased U.S. sales of Japanese brands has not meant increased U.S. imports of Japanese vehicles and parts. U.S. imports of vehicles,
parts and engines from Japan amounted to $48.6 billion in 2004 -- down from $49.3 billion in 2002. ...GM has 2.5 retired workers for each one
now on the payroll, so past decisions about paying extraordinary health and pension benefits at age 55 were a serious mistake. Health insurance costs for current workers are also costly for GM, but overall
compensation costs also have to be competitive for foreign auto plants in the United States. Any pretense that socialized medicine subsidizes costs
for foreign exporters forgets that corporations are every politician's favorite source for payroll and profits taxes to pay for such free lunches.
Friday, June 10, 2005 ~ 8:40 a.m., Dan Mitchell Wrote: The oldest, and perhaps still the most compelling, of these concerns is class. In the vision of the left, we are born, live, and die in a particular
class -- unless, of course, we give power to the left to change all that. The latest statistics seized upon to support this class-ridden view of America
and other Western societies show that most people in a given part of the income distribution are the children of other people born into that same
part of the income distribution. ...does this show that people are trapped in poverty or can coast through life on their parents' wealth? Does it
show that "society" denies "access" to the poor? Could it just possibly show that the kind of values and behavior which lead a family to succeed
or fail are also likely to be passed on to their children and lead them to succeed or fail as well? If so, how much can government policy -- liberal
or conservative -- change that in any fundamental way? ...If this is a class-ridden society denying "access" to upward mobility to those at the
bottom, why is it that immigrants can come here at the bottom and then rise to the top? One obvious reason is that many poor immigrants come here with very different ambitions and values from that of poor
Americans born into our welfare state and imbued with notions growing out of attitudes of dependency and resentments of other people's success.
...In other words, liberalism is not part of the solution, but part of the problem. ...The same counterproductive and self-destructive attitudes
toward education, work and ordinary civility found in many of America's ghettos can also be found in lower-class British communities. ...These chaotic and violence-prone communities in Britain do not have the
excuse of racism or a legacy of slavery. What they do have in common with similar communities in the United States is a similar reliance on the
welfare state and a similar set of intellectuals making excuses for their behavior and denouncing anyone who wants them to change their ways.
Friday, June 10, 2005 ~ 8:00 a.m., Dan Mitchell Wrote: Crooks and deluded optimists sell useless baldness remedies, breast enlargers and diet products while the FDA is supposedly in charge. The
FDA rarely stopped even the obvious crooks. What it mostly stopped, or delayed, were the serious drug companies' attempts at genuine innovations. Without an FDA, how would doctors and patients know
which drugs were safe and effective? The same way we know which computers and restaurants are good -- through newspapers, magazines and word of mouth. In a free, open society, competition gets the
information out, and that protects consumers better than government command and control. ...If I'm dying, shouldn't my government allow me the right to try whatever I want? If FDA scrutiny were voluntary, the
government agency would soon have competition. Private groups like Consumer Reports and Underwriters Laboratories (UL) might step in to compete with the FDA. The UL symbol is already on thousands of
products. No government force was required. Yet even though UL certification is voluntary, its safety standards are so commonly accepted that most stores won't carry products without the UL symbol. ...If all
drugs have to be reviewed -- even if they can be sold while under review -- the cost in money and energy will keep some drugs off the market. But
getting rid of the FDA's power to forbid us to try something would be a big improvement: It would mean Americans would no longer be forced to wait, and die while their government passes judgment on innovations
that could save them.
Friday, June 10, 2005 ~ 7:12 a.m., Dan Mitchell Wrote: The strategy liberal Democrats have chosen, to prevent loss of the black vote, is to keep blacks paranoid and in a constant state of fear. But is it
fear of racists, or being driven back to the plantation, that should be a top priority for blacks? Let's look at it. Only 30 to 40 percent of black males graduate from high school. Many of those who do graduate
emerge with reading and math skills of a white seventh- or eighth-grader. This is true in cities where a black is mayor, a black is superintendent of schools and the majority of principals and teachers are
black. It's also true in cities where the per pupil education expenditures are among the highest in the nation. Across the U.S., black males
represent up to 70 percent of prison populations. Are they in prison for crimes against whites? To the contrary, their victims are primarily other
blacks. Department of Justice statistics for 2001 show that in nearly 80 percent of violent crimes against blacks, both the victim and the
perpetrator were the same race. In other words, it's not Reaganites, Bush supporters, right-wing ideologues or the Klan causing blacks to live in fear of their lives and property and making their neighborhoods
economic wastelands. ...Since black politicians and the civil rights establishment preach victimhood to blacks, I'd prefer that they be more explicit when they appear in public fora. Were they to be so, saying
racists are responsible for black illegitimacy, blacks preying on other blacks and black family breakdown, their victimhood message would be revealed as idiotic.
Thursday, June 9, 2005 ~ 12:02 p.m., Andrew Quinlan Wrote: The late pope's teachings on economic ethics are embodied in two encyclical letters. First and foremost, in "Centesimus Annus," John Paul
outlined with superb clarity an ethical capitalism for our time. He recognized the superiority of market capitalism vis-à-vis competing systems. As we say in Italian, Karol Wojtyla knew what communism was
"on his own skin." It is well-known that communism was not an abstraction to him, but a system he had lived with, and under, for much
of his life. But what it is seldom remembered is the fact that, equally, John Paul II emphasized some positive qualities inherent in a capitalist
economy -- those favorable to the development of individual persons and human societies. In other words, for him, capitalism was not simply the
opposite of communism, but a system that had positive attributes of its own -- among them, the encouragement of liberty and responsibility, putting the individual at the center of the political discourse in the
so-called global era. The pope recognized that man needs freedom in the economic sphere in order to be truly himself, to realize his own potential
and therefore to be able to come to the rescue of his fellow human beings. ...Private individuals and private business produce wealth: It is the entrepreneur who is engaged in wealth-production -- not the state.
Thursday, June 9, 2005 ~ 11:27 a.m., Dan Mitchell Wrote: While EU finance ministers failed to move forward towards a solution on the next EU budget on Tuesday (7 June), MEPs have joined forces with
the Commission in calling for a more generous plan on future spending. ...the compromise bid by the Luxembourg presidency sets the limits at 1.06 percent (EUR871bn) in commitments and 1.00 percent (EUR824bn)
in payments. That figure remains above the 1.0 percent cap called for by the group of six (Germany, France, the UK, the Netherlands, Sweden and Austria) - all net contributors to the EU budget. For its part, the
European Commission has put the cap on the EU spending commitments at 1.24 percent (EUR1,025bn), and at 1.14 percent of GNI (EUR929bn) for actual payments. Member states should do more to trace and recover misspent EU funds, with over EUR1 billion of aid payments going astray each year
according to a European Parliament study. The EU's anti-fraud body, OLAF, also faced flak over the wasted funds in Strasbourg on Tuesday (7 June), when MEPs adopted Austrian socialist Herbert Bosch's
non-binding report on budgetary control. OLAF has so far recovered just 1.87 percent of the estimated EUR5.34 billion that went astray between
1999 and 2003, Mr Bosch noted. ...Agricultural aid is the worst sector for financial leakage, he explained, with many cases involving civilian
contractors who receive EU cash "due to misunderstandings of the rules" and then declare bankruptcy, blocking attempts to recover the funds.
Thursday, June 9, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: ...we can't help but feel uneasy about the Supreme Court's 6-3 decision Monday in Gonzales v. Raich, which held that the federal government
can trump state laws permitting the possession and cultivation of small quantities of cannabis for purely personal use. As Justice Clarence
Thomas wrote in his dissent: "If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything, and the
federal government is no longer one of limited and enumerated powers." By "enumerated powers," Justice Thomas means the idea that the federal government can undertake only such activities as the
Constitution explicitly permits. ...let no one be deluded that the democratic preference of America's largest state isn't being trampled here. We didn't support the California medical marijuana ballot initiative
at issue in Raich. But a clear majority of Californians did. Just because an issue is "important" doesn't mean it should be a matter for federal
law. Almost all homicide is regulated at the state level, and contentious issues like abortion rights are best handled not by judicial fiat but by
democratic compromises in the 50 states. ...Justices Scalia and Anthony Kennedy, who voted to limit federal powers in Lopez and Morrison, appear to have retreated from putting any restraint on Commerce
Clause-based regulation. This was not a good decision for anyone who believes there are Constitutional limits on the federal leviathan.
Thursday, June 9, 2005 ~ 10:50 a.m., Dan Mitchell Wrote: ...the governor established a Special Commission for Fiscal Reform (known as CERF by its Spanish acronym), instructing it to analyze
Puerto Rico's tax system and make recommendations for reform. CERF delivered its report on April 30. It recommended a ...10% flat tax on individuals, a marked reduction from the current top marginal 33% rate,
which can reach 38% in certain conditions. Single taxpayers with annual income up to $15,000 would be exempt, as would married working couples with annual income up to $30,000. ...A 10% flat tax on
corporations. Only about 35,000 of the 140,000 registered corporations file tax returns. Local corporations are subject to a 39% tax rate... 10%
consumption tax, reduced to 9% after five years, which would replace a 6.6% general excise tax. The current excise tax cascades from importer
to wholesaler to retailer, resulting in higher prices for consumers. The 10% consumption tax would be a hybrid VAT that could be implemented in less than a year.
Thursday, June 9, 2005 ~ 10:11 a.m., Dan Mitchell Wrote: ...a pitched battle is brewing over that 1993 law, the Family and Medical Leave Act (FMLA). The Department of Labor is expected to come out
shortly with proposals for revising parts of the law; some labor and family groups, such as the National Partnership for Women & Families,
fear those changes will cause hard-won family leave protections to be lost. Business groups such as the U.S. Chamber of Commerce and the Society for Human Resource Management (SHRM), however, say the
current law is too vague and vulnerable to employee abuse. ...groups wanting the law changed say people with minor health problems, such as
a broken toe or a cold, are claiming they should get time off. The groups, such as the U.S. Chamber of Commerce and the National Association of
Manufacturers, want a more precise description of what would qualify as a serious illness. One suggestion: that the law cover only illnesses serious
enough to require 10 or more days off. ...The law currently allows employees to take time off in small chunks of time - say, a half hour one day to undergo radiation therapy, for example, or a few hours to see a
doctor. The problem? Business leaders say some unscrupulous employees are using the intermittent time off for bogus reasons. For example, they might come to work late every day and say it's because they have
migraines, which are covered by the FMLA. Business groups say tracking intermittent time off in short bursts is a nightmare for employers. ...More than 30% of employers with more than 250 employees reported that
intermittent leave had a negative impact on productivity, according to a Department of Labor survey. ...Complying with the FMLA cost employers $21 billion in 2004, according to an analysis by the
Employment Policy Foundation, a public policy research group based in Washington.
Wednesday, June 8, 2005 ~ 10:00 a.m., Dan Mitchell Wrote: Shed no tears for Bill Donaldson. He was a gigantic disappointment as chairman of the Securities and Exchange Commission. He consistently
sided with the two Democratic commissioners against the two Republicans. It was Harvey Goldschmid, a hardline Democratic law professor from Columbia, along with the permanent bureaucracy of
interventionist lawyers, who really ran the SEC in the Donaldson years. ...As nominee to fill the post, President Bush has made an inspired choice: Rep. Christopher Cox (R-Calif), who, in my experience,
understands the authority of free markets better than all but a handful of members of Congress. Cox should be quickly confirmed. When he is, he
must immediately turn to undoing the mess that Donaldson created. With two superb commissioners, Paul Atkins and Cynthia Glassman (no relation), behind him, he will have little trouble. ...Cox must also change
a culture that views more complex and onerous regulations as the goal. Instead, the SEC should focus on fighting fraud, on encouraging companies to be more transparent and on urging the adoption of other
metrics besides GAAP accrual accounting. Cox should also conduct a thorough review of the Sarbanes-Oxley law, which has put a damper on risk-taking, boosted corporate expenses and produced no significant
benefits for investors. To the contrary.
Wednesday, June 8, 2005 ~ 9:29 a.m., Dan Mitchell Wrote: There isn't a human being alive who knows what's contained in the federal tax code. To put it in perspective: Abraham Lincoln's Gettysburg
Address, which defined the American nation, is 272 words in length. Our Declaration of Independence is some 1,300 words. The Bible, which spans several thousand years of human history, is 773,000 words. But the
federal tax code, with all of its attendant rules and regulations, is 9 million words and rising. Since 1986, when the last serious attempt at tax
simplification was made, the code has been amended 14,000 times. Its length has grown by 3 million words--an avalanche of personal and business deductions, exemptions, preferences, loopholes, credits and
exclusions spread out over six formal tax brackets (and an infinite number of other brackets as deductions are phased out when taxpayers reachcertain income thresholds). And then there's the abomination
known as the alternative minimum tax--an Orwellian name for a levy if ever there was one. A more accurate name would be the compulsory maximum tax. A typical taxpayer filing the regular Form 1040 and
reporting income from work, dividends and capital gains will spend an estimated 26 hours and 48 minutes each year completing his return. Seventeen years ago it took only 17 hours and 7 minutes. That's a 57%
increase in just the past 17 years. Billions of hours of lost productivity--the equivalent of 3.3 million full-time jobs--are squandered on tax compliance. At last count, Americans spent a staggering 6.6
billion hours preparing their tax forms. Not surprisingly, a recent AP poll that found that seven in ten people believe federal taxes are too complicated. ...the monstrosity of the tax code we have today has
created a problem of monstrous proportions. And like every big problem, it requires a big solution. Fiddling around the margins of the tax code
won't do the trick. A simpler, fairer flat tax will. We already know flat taxes work because they've been enacted in Hong Kong, Russia, Lithuania, Latvia, Estonia, Ukraine, Slovakia, Romania, Serbia and
Georgia. Other nations are actively considering their own versions of a flat tax. What are we waiting for--especially now, when the rest of the
world, including India and China, is determined to catch up with us?
Wednesday, June 8, 2005 ~ 7:19 a.m., Dan Mitchell Wrote: Pawlenty made the first major misstep of his career recently in offering an olive branch to Democrats by proposing a 75 cent-per-pack tax hike
on cigarettes that would have hit smokers for $380 million over two years. ...Pawlenty signed a no-new-taxes pledge and has been a proven leader in previous tax battles. His signature achievement as governor
was closing a $4.5 billion budget gap during the 2004-05 cycle, without raising taxes. In a sign of his dedication to taxpayers, he even used his
2004 State of the State speech to call for a constitutional amendment to limit the growth of overall state spending to population growth plus
inflation. Prior to this special session, the governor continued his support of taxpayers by vetoing legislation that would have raised the state's gas
tax by 50 percent, from 20 to 30 cents per gallon. ...Democratic lawmakers allowed Pawlenty's proposal to land with a thud. The Democratic chair of the state senate's Health and Human Services
Budget Division, Linda Berglin, had the temerity to argue that the governor's plan was unacceptable because the $380 million in added spending from the tobacco tax hike should have been piled on top of the
$1 billion demanded by Democrats. Clearly, there is no reasoning with the tax-and-spend crowd. ...[Pawlenty] will hopefully have learned a
valuable lesson: No amount of taxing and spending is enough for the left, so olive branches are useless. It is a myth that Minnesota needs higher
taxes; indeed, the state's overall tax burden is already much heavier than the national average. According to data from the Tax Foundation, Minnesota's state and local combined tax load was 10.7 percent of
average income in 2004. That percentage stands at 10th highest nationally, well above the national average of 10.1 percent. Overall, Minnesotans pay $4,409 per capita in state and local taxes. Despite
recent moderate growth in the state, Minnesota's government has grown rapidly in the last few years. Between fiscal year 2000 and 2005, total spending and transfers have risen by more than 50 percent. Even after
accounting for inflation, Minnesota's government is set to grow by a remarkable 40 percent in just the first six years of this decade.
Tuesday, June 7, 2005 ~ 11:47 a.m., Dan Mitchell Wrote: When Kerry was in a tough 1996 race for his U.S. Senate seat, Jeff Jacoby reported, "During the previous six years, it turned out, Kerry had
given less than $5,000 to charity - a minuscule seven-tenths of 1 percent of his gross income for the period." The Democrats' 2000 standard-bearer, Al Gore, proved no better. His 2000 tax return on an
adjusted gross income of $197,729 listed charitable donations of $353. When eyebrows were raised, Gore's spokesman explained, "Contributing
financially to charitable organizations is certainly noble and should be encouraged and is something that the Gores have done when the resources were there. However, to truly judge a person's commitment to
helping others, you need to consider what they have done with their lives and how they have spent their time - and by that standard the Gores are
extraordinarily committed." In other words, merely holding a public office, for which one is well paid, makes one a highly moral person. Provided you are a Democrat, of course. ...Liberals, progressives,
Democrats (whatever alias they use) think that the taxes you pay amount to their charity. The mere act of voting to steal bread from the mouths of
working Americans to fund any one of a zillion government giveaway programs should, they think, be accounted as their good work. Voting to raise your taxes, with some tiny fraction going to the poor, fills
Democratic politicians with grace. Meanwhile, they dismiss private charity, whereby individuals sacrifice freely to help those in need, as of little consequence. To Kerry and too many of his fellow Democrats,
"good works" are those done only through government . . . making taxation their highest moral value.
Tuesday, June 7, 2005 ~ 9:55 a.m., Dan Mitchell Wrote: ...as the EU's leaders scramble around for a Plan B that they insisted all along (truthfully, as it turned out) they never contemplated, some pretty
bad ideas are starting to surface. Our nomination for one of the worst (so far) goes to Austrian Chancellor Wolfgang Schüssel, who earlier this
week floated a trial balloon on a pan-EU referendum to get the thing approved. Aside from the considerable legal obstacles to the proposal, which Mr. Schüssel acknowledged, the obvious question the proposal
raises is why France or the Netherlands, both of which have decisively voted the treaty down, much less the U.K., which now looks unlikely to hold a vote, would allow themselves to be outvoted in a broader
referendum. The obvious answer is that they would not. Approval by all the member states, and not merely a majority of the EU's citizens, was a requirement of ratification for a reason. The EU is a treaty-based
organization of states. Direct approval by a majority of those citizens who showed up to vote on the day would amount to an abolition of that
structure; it is not too much to say that it would be tantamount to the abolition of the member states as sovereign entities. ...Any insistence on
keeping the process alive will only confirm the fears of the "no" voters in France, Holland and elsewhere -- that the EU is an unaccountable,
out-of-touch organization with little regard for the opinions of Europe's citizens.
Monday, June 6, 2005 ~ 12:03 p.m., Dan Mitchell Wrote: ...he is likely to reinterpret some SEC rules in a much more investor- and business-friendly manner than did his predecessor William Donaldson. At
times, Donaldson appeared to be contributing to an overly hostile regulatory climate for business. Watch Cox reverse this environment in his first 100 days. That said, Cox will insist on honest accounting and
complete accountability from chief executive and chief financial officers. There will be no opening the door to number-fudging under Cox. But just
as surely, a number of costly paper-work burdens will be reduced. ...Cox will be very sympathetic to the argument that the post-Enron Sarbanes-Oxley era is chock-full of regulatory overkill, the kind that has
lowered the animal spirits of entrepreneurship and risk-taking. It is doubtful, for example, that Cox will be tolerant of out-of-pocket fines for
corporate directors who have no knowledge of company misdeeds. He is more likely to focus on the miscreant behavior of individual corporate wrongdoers than bring down entire companies (as was the case with
Arthur Anderson). He is also likely to make it easier for foreign-domiciled businesses to register in the U.S. Outgoing SEC chairman Bill Donaldson generally voted with the commission's two
Democrats and their frequent attempts to hogtie and re-regulate American business. He often followed the overzealous regulatory instincts of the SEC staff bureaucracy while opposing Republicans Paul
Atkins and Cynthia Glassman. The free-market Atkins may provide a window into the thinking of the free-market Cox. Three-to-two votes henceforth are likely to favor the Republicans on the five-member
commission, much to the benefit of economic growth and job creation. ...Chris Cox's keen intellect and free-market viewpoint will provide a breath of fresh air at the Securities Exchange Commission.
Monday, June 6, 2005 ~ 10:25 a.m., Dan Mitchell Wrote: Italy should consider leaving the single currency and reintroducing the lira, Welfare Minister Roberto Maroni said in a newspaper interview on
Friday. Maroni, a member of the euro-skeptical Northern League party, told the Repubblica daily Italy should hold a referendum to decide whether to return to the lira, at least temporarily. He also said European
Central Bank President Jean-Claude Trichet was one of those chiefly responsible for the "disaster of the euro." The euro "has proved inadequate in the face of the economic slowdown, the loss of
competitiveness and the job crisis," Maroni said. ...Maroni cited Britain as a virtuous example of a country whose economy "grows and develops, maintaining control over its currency."
Monday, June 6, 2005 ~ 9:52 a.m., Dan Mitchell Wrote: The European Commission has defied the wishes of some EU member states by refusing an ECOFIN request to propose a voluntary airline tax
in order to fund additional development aid for Africa. Last month, European Union finance ministers agreed to the voluntary levy on airline
tickets to raise funds to assist development in the third world - although only a few member states actually stated their intention to go ahead and
levy the tax. ...However, the proposed levy was less than popular among ministers from member states whose economies rely heavily on tourism, such as Malta and Greece. Italy, Finland, Sweden and Ireland also
expressed opposition to the ticket tax. Speaking to Reuters on Wednesday, an unnamed EC source revealed that the Commission had sounded the death knell for the plan, explaining that: "The
Commissioners decided today they did not want to send the proposal. At least 10 Commissioners disagree with the whole idea of a voluntary airline tax."
Monday, June 6, 2005 ~ 9:17 a.m., Dan Mitchell Wrote: Jan Edling, a little-known labor-union economist, is suddenly in the policy spotlight with his assertion that Sweden's real jobless rate is really
closer to 20% than the official 5.5% rate. ...That Sweden has far more people out of work than detailed in the official 5.5% unemployment rate
isn't totally new. Beyond the official rate, an additional 4.4% of the working-age population are parked in the government's elaborate array of job-creation and training programs, according to a study by
Skandinaviska Enskilda Banken AB with data from Statistics Sweden. But Mr. Edling calculates that another 10% of working-age people can be identified as unemployed, using correlations between unemployment,
long-term sickness and early retirement among Sweden's municipalities and regions. This makes the actual unemployment rate closer to 20% of the work force... Finance Minister Paer Nuder ...acknowledged that
Sweden's jobs issue goes further than the number of registered unemployed.
Sunday, June 5, 2005 ~ 1:56 p.m., Dan Mitchell Wrote: Prime Minister Anders Fogh Rasmussen is reluctant to officially cancel a planned referendum on the EU Constitution, scheduled for 27
September. But his chances of winning such a poll seem to have dropped significantly. According to a fresh opinion poll from Greens Analyseinstitut, published in Danish business daily Bĝrsen on Friday (3
June), 39.5 per cent of Danes would reject the Constitution. This is the first survey conducted after the French no-vote on 29 May and it shows support for the No side has gone up by 50 per cent in Denmark
compared to previous surveys. Only one in three Danes (30.8 per cent) would now approve the Constitution, while 29.7 per cent were undecided. ...There also appears to be a change in attitude in Norway
towards EU membership. According to a new opinion poll conducted on behalf of Norway's largest newspaper Verdens Gang, one third (35.5 per cent) of Norwegians are in favour of joining the EU, while 44.9 per cent
said they were opposed to the idea of membership.
Sunday, June 5, 2005 ~ 11:14 a.m., Dan Mitchell Wrote: Indeed, one of the most remarkable characteristics of the European Union is the ability of its leaders to keep building their institutions and
expanding their power, self-righteously ignoring whatever obstacles European voters throw in their path. In a certain sense, of course, the
democratic deficit was built into the very heart of the European project from the beginning. For Europe is not, in fact, a nation. Nevertheless, the EU every year writes more European law and influences a wider
range of policies, on everything from labor to the environment to arts subsidies. Europe's national parliaments and national debates matter
less. Why argue about things you can't influence? ...A few Europeans, at least, understand that Europe is not a nation, and that attempts to make
it become one without popular consent will fail. British Prime Minister Tony Blair, for example, has called for Europe to stop and "reflect"
before the ratification process is continued. If the rest of the European political class eventually follows his lead, it might still be possible to
rename the thing and renegotiate it, incorporating only those bits designed to make a larger Europe easier to run. But President Chirac's reaction did not suggest that he recognizes the need for retrenchment.
Nor did the words of the German chancellor, Gerhard Schröder, who called the French vote a "setback" for the constitution but not its end. Jack Straw is today preparing to pull the plug on Britain's referendum on the EU constitution. ...According to reports, he will tell MPs the Bill
allowing for a referendum in the UK is to be put on ice indefinitely. ...Europe Minister Douglas Alexander said public opinion could not be
ignored. His words left no doubt that Tony Blair wants the constitution to be abandoned when EU leaders meet to discuss the crisis on 16 June. But
the Prime Minister was fighting behind the scenes against pressure from France and Germany to go through the motions of holding a UK referendum - which ministers think would end in an even bigger
rejection. ...While British party leaders were unanimous in declaring the constitution dead, German chancellor Gerhard Schröder joined forces
with France's Jacques Chirac in refusing to accept the verdict. Germany was reported to be proposing an "inner core" of EU members to recreate the old Franco-German axis.
Sunday, June 5, 2005 ~ 9:43 a.m., Andrew Quinlan Wrote: "Real Men Moisturize." So begins an article on "Sharp Dressed Men" that appeared in a State Department funded magazine aimed at youth in
the Arab world. The magazine, called "Hi" is published in Arabic and English. A State Department website explains that Hi is published "with
the hope of building bridges of greater understanding among our cultures." The article continues: "In fact, some of them, like Michael
Gustman, a 25-year-old public relations account executive from Boca Raton, Fla., even have separate moisturizers for the face and body. Facial pores can clog with too heavy a salve, it seems. Not long ago,
these and other habits would have been considered odd for a male. Gustman exfoliates. He gets manicures. He gets pedicures. He gets facials. He gets his hair done every two weeks. He accessorizes. He puts
effort into getting ready for a date. He loves cooking complex dishes. He's a refined, evolved, sensitive guy. In a word, he's a metrosexual."
The photo accompanying the story pictures the male author seated in a pedicure chair, pants rolled up to his knees, along with half a dozen
women enjoying the same treatment. ...First things first. Is this what the U.S. State Department thinks America is really like? How many men, outside a tiny subset in major cities, are the primping, feminized
"metrosexuals" the article lauds? Not many. You cannot enhance understanding between one people and another by presenting a false
version of one side. But more importantly, is this the way to "build bridges" between the Arab world and ourselves? Does the State Department believe that Arab males -- some of whom do not permit their
wives and daughters to go out in public without a male family member as escort, others of whom think nothing of killing a daughter who dishonors
the family by fraternizing with a boy -- are going to be impressed with a vision of America in which males are feminized "exfoliated," smooth-skinned eunuchs?
Sunday, June 5, 2005 ~ 8:30 a.m., Dan Mitchell Wrote: When the federal assault- weapons ban expired last September, its fans claimed that gun crimes and police killings would surge. Sarah Brady,
one of the nation's leading gun-control advocates, warned, "Our streets are going to be filled with AK-47s and Uzis." Well, over eight months
have gone by and the only casualty has been gun-controllers' credibility. Letting the law expire only showed its uselessness. ...The irrelevance of
the assault-weapons bans to crime rates was to be expected. Not a single published academic study has ever shown that these bans have reduced any type of violent crime. Even research funded by the Justice
Department in the Clinton years found only that these bans' effect on gun violence "has been uncertain." And when those same authors released
their updated report last August, looking at crime data up through 2000 - the first six full years of the federal law - they stated, "We cannot
clearly credit the ban with any of the nation's recent drop in gun violence." ...Why? Simple: There's nothing unique about the guns that
these laws ban. The phrase "assault weapon" conjures up images of the rapid-fire machine guns used by the military, but the weapons in the ban
actually function the same as any semiautomatic hunting rifle. They fire the exact same bullets with the exact same rapidity and produce the exact same damage.
Saturday, June 4, 2005 ~ 12:30 p.m., Dan Mitchell Wrote: Chirac, Socialist Party President François Hollande, UMP President Nicolas Sarkozy, former socialist Prime Minister Lionel Jospin, all swear
that the Constitution would protect Europe from economic liberalism. Former socialist Prime Minister Laurent Fabius, UMP representative Dupont-Aignan, anti-globalization activist José Bové, right-wing
nationalist Philippe de Villiers, all promised that the No vote would protect Europe from economic liberalism. They opposed each other in a hypocritical campaign even though they all deeply believe that economic
liberalism shall not be and must not be a European core value. All agree with Chirac's stunning statement that economic liberalism would be as disastrous as communism. ...The political class - and even its most
economically liberal leaders -- now raves about this social economy for the market, the first step of collectivism. Some really believe it, others
support it for political opportunities, all join in the same rhetoric. Oddly enough, it could be related to the new Star Wars movie, in which Padme
declares after a vote giving executive power to Chancellor Palpatine: "So this is how liberty dies -- to thunderous applause."
Saturday, June 4, 2005 ~ 11:57 a.m., Dan Mitchell Wrote: Germany has sent a clear signal that it is willing to compromise on the EU budget in order to help push through an agreement in two weeks
time. ...In a reference to the political crisis sparked by the double rejection of the EU constitution by France and the Netherlands, the
chancellor said that now is not the time for "national egoism". This is the first time Mr Schröder has signalled flexibility over his demand that the
EU budget should be capped at 1 per cent of the EU's Gross National Income (GNI). ...But a deal is still not going to be easy as there are at
least five governments calling for the budget to be capped at 1% of GNI; there is the British rebate to be dealt with and how to divide regional aid
between old and new member states. ...Collectively, EU leaders are also trying to draw some concrete lessons from the No votes. According to FT
Deutschland, they are set to propose at their meeting on 16-17 June that a social clause in the EU constitution is already used. This article says
that new EU laws must promote high employment, guarantee adequate social protection and promote the fight against social exclusion.
Saturday, June 4, 2005 ~ 9:21 a.m., Dan Mitchell Wrote: ...as the EU's leaders scramble around for a Plan B that they insisted all along (truthfully, as it turned out) they never contemplated, some pretty
bad ideas are starting to surface. Our nomination for one of the worst (so far) goes to Austrian Chancellor Wolfgang Schüssel, who earlier this
week floated a trial balloon on a pan-EU referendum to get the thing approved. Aside from the considerable legal obstacles to the proposal, which Mr. Schüssel acknowledged, the obvious question the proposal
raises is why France or the Netherlands, both of which have decisively voted the treaty down, much less the U.K., which now looks unlikely to hold a vote, would allow themselves to be outvoted in a broader
referendum. The obvious answer is that they would not. Approval by all the member states, and not merely a majority of the EU's citizens, was a requirement of ratification for a reason. The EU is a treaty-based
organization of states. Direct approval by a majority of those citizens who showed up to vote on the day would amount to an abolition of that
structure; it is not too much to say that it would be tantamount to the abolition of the member states as sovereign entities. ...Any insistence on
keeping the process alive will only confirm the fears of the "no" voters in France, Holland and elsewhere -- that the EU is an unaccountable,
out-of-touch organization with little regard for the opinions of Europe's citizens.
Saturday, June 4, 2005 ~ 9:02 a.m., Dan Mitchell Wrote: Britain is set to reject the new Commission's compromise on the working time rules, rallying enough countries to oppose the plans to scrap the
opt-out from the 48-hour weekly limit. ...The UK remains the strongest opponent, and is set to be backed by Germany and some of the EU newcomers, like Slovakia or Lithuania. ...The issue showcases the
contradictory economic views held in London and Paris, with leaders in both capital suggesting they want to push Europe's economy in their direction. French President Jacques Chirac has promised his citizens he
will fight for their interests and for the French social model in Brussels, against "Anglo-Saxon" ideas.
Friday, June 3, 2005 ~ 1:15 p.m., Dan Mitchell Wrote: The French unemployment rate has hovered around 10% for nearly a decade, and almost half of the jobless have been out of work for at least
a year. If the U.S had an unemployment rate as high as France, there would be about six million more non-working Americans--the equivalent of placing every worker in Michigan on the jobless rolls. ...Once upon a
time the intellectual elites in Europe and the U.S. trumpeted the economic accomplishments of European social welfare state policies. Today the conclusion is nearly inescapable that this economic model
simply doesn't work to create jobs, wealth or dynamism. ...the U.S. has substantially outperformed Old Europe in wealth and job creation. The economic growth rate of the European Union nations since 2003 has
limped along at about half that of the U.S. In the 1980s and '90s the U.S. created about 40 million new jobs; Western Europe created some 10
million, well over half of which were in the public sector. ...European nations penalize work and subsidize non-work, and, no surprise, they have gotten a lot of the latter and far too little of the former. By
contrast, the U.S. model--allegedly cruel and "laissez-faire"--has done much better both by economic growth and worker opportunity. ...the
Brussels bureaucracy has to this day purposely ignored the Continent's central ailments: high tax rates, bloated welfare benefits and industrial
policies that pick winners and losers, usually the latter. Those topics are essentially taboo in Brussels, which has pursued an economic
"harmonization" strategy in part to inhibit the benign impact of tax cutting and tax competition among member countries by creating a de
facto multi-state cartel. The nations that have prospered the most in recent years--Ireland in the 1990s, now the nations of Central Europe--are those that have resisted the harmonizing orders. Europe is
now paying a high price for this failed experiment with welfare state socialism.
Friday, June 3, 2005 ~ 12:30 p.m., Dan Mitchell Wrote: The United States lowered its simple average tariff rate from 40 percent in 1946 to 4 percent today, and other industrial nations followed a
similar track. After a steady half-century of liberalization it is fair to ask, what do Americans have to show? As it turns out, quite a lot. Using four
different methods, we estimate that the combination of shrinking distances-thanks to container ships, telecommunications, and other new technologies-coupled with lower political barriers to international trade
and investment generated an increase in US income of roughly $1 trillion annually (measured in 2003 dollars), or about 10 percent of GDP. Put
another way, after a half-century of shrinking distances and commercial liberalization, the average American household enjoys an income gain of
about $10,000 per year. Americans do not receive this money as a check marked "payoff from globalization." Too bad. Instead, the payoff comes
through the same routes as other economic gains: lower prices at the checkout counter, more product choices (compare the telephones available now against the standard black model of 1980), and fatter
paychecks. ...our estimates of future policy liberalization alone (excluding likely benefits from better communications and transportation) indicate that a move from today's commercial
environment to global free trade and investment could produce an additional $500 billion in US income annually, or roughly $5,000 per household each year.
Friday, June 3, 2005 ~ 11:15 a.m., Dan Mitchell Wrote: When it comes to designing a simple tax system that does the least damage to the economy, it would be difficult to find a better role model
than Hong Kong. As The Economist wrote a few years ago, "The territory's tradition of simple and low taxes ... is widely seen as a main
reason for its stunning rise to prosperity." ...There are four marginal tax brackets of 2 percent, 8 percent, 14 percent and 20 percent. ...For those
with high salaries, however, it is cheaper to forego personal exemptions (but not deductions) and pay a 16 percent "standard rate." Only the top
2 percent usually pay that standard rate, yet they account for nearly half of all revenue from the salaries tax. ...Hong Kong has no payroll tax for
Social Security, no general sales or value-added tax, no tariffs on imports and no personal tax on income from financial assets ...a flat tax
of 17.5 percent on corporate profits, 16 percent on property owners and unincorporated enterprises. ...Hong Kong's taxes on salaries and profits amounted to about 7 percent of GDP last year, while combined U.S.
corporate and individual taxes brought in only 8.6 percent of GDP. Since a larger percentage of American employees have higher salaries, a salary
tax such as Hong Kong's would raise more money even without higher tax rates.
Friday, June 3, 2005 ~ 10:45 a.m., Dan Mitchell Wrote: Austrian chancellor Wolfgang Schüssel has revived the idea of an EU-wide referendum on the constitution, following France's rejection of
the document on Sunday and a probable Dutch No today. According to reports in the Austrian press, Mr Schüssel believes EU leaders could decide on a pan-European referendum in just over two weeks time when
they gather for their traditional June summit. ...Mr Schüssel believes that a Europe-wide referendum should take place on one day and the constitution would only be considered adopted if over half of member
states and over half of the EU population voted in favour of it.
Friday, June 3, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: Earlier this year, Indiana Governor Mitch Daniels snorted at our criticism of his proposed income tax surcharge on individuals, couples
and small business owners making more than $100,000 a year. But it turns out that the state Legislature wasn't too fond of the idea either. Once the lawmakers made clear that they wanted to eliminate the state's
$645 million deficit without tax increases -- even "temporary" ones -- everyone set about attacking the real problem, which is spending. And
Mr. Daniels recently signed into law a tight, two-year budget that holds government growth to 1.5% -- well beneath the 6% average increases in
recent years. In short, Hoosiers can thank their Republican-controlled Legislature for helping the Governor appreciate what could be accomplished without a 29% hike in the top marginal income tax rate.
...Democrats and others insist that the move will leave local governments no choice but to raise property taxes. But tax hikes aren't the only
alternative. As Governor Daniels told reporters after he signed the new budget, local governments could opt to be "as careful about their
spending as the Legislature is about its." Gee, that advice sounds familiar. It also sounds like the Mitch Daniels voters were looking for
last November when they elected Indiana's first Republican Governor in 16 years.
Friday, June 3, 2005 ~ 8:14 a.m., Dan Mitchell Wrote: ...years of consumer reporting have taught me that the regulators, by protecting us from bad things, protect us from good things, too. When we
let the government use force to limit our choices, we deprive ourselves of innovation that makes life better. Even genuinely compassionate officials
can literally regulate us to death. ...Some years ago, the FDA held a news conference and proudly announced, "This new heart drug we're
approving will save 14,000 American lives a year!" No one stood up at the press conference to ask, "Doesn't this mean you killed 14,000 people
last year -- and the year before -- by keeping it off the market?" Reporters don't think that way, but the FDA's announcement did mean that. Thousands will die this year while other therapies wait for
approval. You may want to wait. Many of us want to be absolutely sure a drug is safe before we take it. It's natural to want the "experts" to
protect us. But why isn't the choice left to us? Why does the FDA get to force us to wait and, in some cases, die, when there are experimental drugs, however risky, that might save our lives? ...Thousands of
Americans die prematurely because they are too fat. Drug companies have invented fat substitutes -- ingredients that taste as good as fat but
are not absorbed by your body. This would help the obese, but they are not permitted to try them, because the ingredients are still squeezing
through the FDA's 12-to-15-year pipeline. After all, there's a tiny chance that something in these innovative products might hurt us. But what about the thousands of lives that would be saved? Don't those lives
count?
Thursday, June 2, 2005 ~ 3:46 p.m., Dan Mitchell Wrote: President Bush named conservative Rep. Christopher Cox to lead the Securities and Exchange Commission Thursday, a day after William
Donaldson announced he was stepping down after 28 months. With Cox at his side at a White House ceremony, Bush called the Californian "a
champion of the free enterprise system in Congress" and said "he'll be an outstanding leader of the SEC." In a statement yesterday announcing his resignation, Mr. Donaldson noted that his 2 1/2 years at the SEC represented an "extraordinarily
active" period for the agency. Well, that's one way to put it. But active to what end? Rather than focus on punishing individual transgressors, Mr.
Donaldson's SEC seemed more interested in compensating for its own regulatory misses (such as the mutual fund late-trading scandal) by punishing all of business as a class. In doing so, Mr. Donaldson often
found himself siding with the two Democrats on the Commission against his two fellow Republicans. This trio perpetuated the SEC's "trade-through" rule that gives the New York Stock Exchange a
competitive advantage. They required that 75% of all mutual fund board members be "independent," which means that experienced, scandal-free
directors like Edward Johnson, who has run Fidelity Investments for decades, must step down. And they pushed through a new hedge-fund registration rule that isn't likely to prevent wrongdoing and was opposed
by Federal Reserve Chairman Alan Greenspan, the U.S. Treasury, the Chamber of Commerce and a long list of economists and financial experts. Then there is the list of things the Donaldson SEC didn't do,
starting with reining in the excesses of Sarbanes-Oxley. One of the most important jobs for his successor will be to minimize the burdens imposed
on business by that 2002 law passed in haste by a Congress panicked by the WorldCom debacle. The main White House goal in appointing that successor should be consolidating a free-market majority among the five
Commissioners.
Thursday, June 2, 2005 ~ 11:45 a.m., Andrew Quinlan Wrote: The very idea of draining a swamp -- a sacrosanct "wetland" -- would arouse the fury of environmental zealots. Legalistic hassles over
"environmental impact" reports alone might be enough to bankrupt the builders. Environmental impact reports often have little or nothing to do
with the environment and everything to do with stopping development. Nothing is easier than to claim that there will be horrible environmental consequences from building something. Moreover, there is no penalty
whatsoever for making charges that can cost others millions of dollars to research and prove wrong. The whole purpose of the charges may be
precisely to cause builders to lose millions of dollars and perhaps have to give up the whole idea of building anything where the green zealots don't
want anything built. ...Ironically, many of the same people who have made "development" a dirty word that arouses outrage have
nevertheless often looked favorably on "redevelopment." What is the difference? Development means private initiative to build what people are willing to buy. Redevelopment means government tearing down
"blighted" areas, so that whatever bureaucrats and politicians want can be built.
Thursday, June 2, 2005 ~ 10:51 a.m., Dan Mitchell Wrote: With four-fifths of the votes counted, the charter was losing 62 percent to 39 percent, an even worse defeat than the 55 percent "no" vote
delivered in a French referendum Sunday. ...The charter was designed to provide such trappings of statehood as a flag, a president and an anthem on what has largely been an economic bloc while creating a more
integrated political entity of 450 million people with a bigger economy than America's. But the idea has proved increasingly polarizing, with opponents worrying about loss of national control and identity to a
strengthened EU bureaucracy at the heart of a superstate. ...At EU headquarters in Brussels, Belgium, EU Commission President Jose Manuel Barroso urged member governments not to make any hasty
judgments about the ratification process and wait for the bloc's mid-June summit to assess the constitution's situation. ...German Foreign Minister
Joschka Fischer said EU leaders needed to analyze what went wrong, but said they should press on. "This is not the end of the process for the
constitution and not at all the end of European integration," he said.
Thursday, June 2, 2005 ~10:10 a.m., Dan Mitchell Wrote: France's vote against the constitution is an important victory for European unity, because the document posed a serious threat to the
great European experiment in peace and prosperity. What began 53 years ago as an idealistic attempt to use economic cooperation to heal a war-torn continent has deteriorated with the passage of time into a
gigantic imperial machinery that has largely eroded the democratic values and objectives for which it was originally established. ...the organization's vision of a confederation of states collaborating on an
equal footing was increasingly replaced by the reality of an empire in the making--a consensual empire, yes, but an empire all the same, one in
which a metropolitan center run by a new kind of bureaucratic political elite is responsible for more and more European decision-making and increasingly determined to remove control of lawmaking from member
state governments. ...the so-called pro-Europeans hold nationalism to be the scourge of international relations and the primary source of conflict
and war; and they regard a tightly unified pan-European super-state as a panacea. In fact, there is nothing inherently ugly or violent about the
desire of a specific group of people, sharing attributes including a common descent, language, culture, tradition, and history, to live their
lives as they see fit in a territory they consider to be their historical or ancestral homeland. Rather, the real problem is imperialism, which has
constituted the foremost generator of violence throughout world history. The desire to dominate foreign creeds, nations, or communities and to occupy territories well beyond the ancestral homeland contains the
inevitable seeds of violence. ...Beginning with Charles De Gaulle, French leaders, left and right, have viewed the European Union as a central tool
for the restoration of imperial grandeur and influence. "We have to recognize," explained former French Euro Commissioner Pascal Lamy,
in 2003, "that [within the EU] there are some countries which remember that they were once great world powers and which believe that this was
not an accident--that they still have special qualities that deserve recognition." Given these sentiments, it is hardly surprising that the EU's smaller nations have remained wary of anything that smacks of
imperialism--or that they have generally expressed greater affinity for the United States than France. ...Should their resounding non lead to a
more modest EU, French voters will have done their continent a favor. For if history tells us anything it is that imperial overextension is a recipe
for disaster--a destroyer, rather than a guarantor, of peace and unity. The version of the EU constitution voted down on Sunday was an imperial document, not a democratic one. Europe and the European
Union are both better off without it. ...the main message delivered by voters on Sunday was about the economy. And it was certainly not, as many Americans would have liked,
that the French are fed up with excessive regulation, protectionism, and high taxes. Rather, the French no camp seemed to be saying it wanted
more protection and regulation, not less. True, Chirac tried to defend the constitution by claiming that it would protect the French from
"ultra-liberal Anglo-Saxon" economics. But voters did not believe him, and they wanted an EU constitution that made their preferences explicit.
Does anybody really think that free-market reform and the defense of globalization will now become priorities of the French government?
Thursday, June 2, 2005 ~ 9:41 a.m., Dan Mitchell Wrote: French democracy has blundered its way to the right result. Most of the arguments advanced by the "non" side in Sunday's referendum on the
European Union Constitution were exaggerated, misleading, or outright falsehoods. And yet beneath those arguments was a larger truth that will likely also be recognized and acted upon by Dutch voters in their
balloting today. The French, the Dutch, and other Europeans have lost patience with political systems that seem increasingly remote and political elites that seem increasingly disdainful of the interests and
values of the people they claim to represent. If the French voted "non," because they sensed that the EU Constitution would aggravate those
problems, then they voted very shrewdly. Indeed, only a political system as seemingly remote and disdainful as the EU has become could have produced a document like the EU Constitution: interminably long,
confusingly organized, obscure in its effects, and in many crucial spots almost deceptive in its purposes. ...French opponents of the EU
Constitution charge that it is an "Anglo-Saxon" document that would impose a harsh "neo-liberal" free-market regime. In truth, the EU
Constitution owes little or nothing to the constitutional traditions of the English-speaking world. It would establish a legislature that cannot write
laws, a judiciary that can act even when no law has been broken, and an executive that is not elected by and is barely accountable to anyone or
anything. As for accusations of "neo-liberalism," they miss the point. The Constitution vastly expands the powers of the unelected and largely
unaccountable European Commission and the unelected and wholly unaccountable European Court of Justice (ECJ). ...For almost five decades, American administrations of both parties have taken it as
axiomatic that ever-closer European integration is in America's national interest. Even the Bush administration, which has overthrown so many outdated shibboleths, has not yet liberated itself from this one. The
European Constitution explicitly subordinates nearly all the member states' old obligations to NATO to their new obligations to the EU. That alone should be reason enough to disturb any Alliance-minded European
or American. Yet many inside the administration keep pushing the president to support and endorse the European Constitution. ...Americans should fear European weakness -- and this constitution
weakens Europe by diminishing democracy, alienating voters, and discrediting the legitimacy of necessary economic reforms. Europe's elites, nearly unanimous in their desire to "pool" nations' sovereignties in E.U. institutions responsive only to those elites, warned
that a French rejection might plunge Europe into bloody chaos akin to the dissolution of Yugoslavia -- perhaps even another Holocaust. Such synthetic hysteria revealed the elites' contempt for, and fear of, the
European publics that the constitution was designed to further marginalize. ...Supposedly a single nation's rejection prevents the constitution from coming into effect. But some E.U. officials, with
characteristic mendacity, hope to press on, get 24 ratifications, then force the French to keep revoting until they produce the politically correct answer. Fortunately, the Dutch seem about to render an even
more emphatic no today. ...It is fine for people who are not French to admire from afar how "civilized" the French are in cherishing their "way
of life" -- short workweeks, many weeks of vacation, laws "protecting" labor by making it difficult to fire people. But those laws, by making
employers reluctant to hire, help explain France's double-digit unemployment. Cast a cold eye on this way of life -- this amalgam of desires for increasing affluence and leisure and weight in the world --
and "civilized" looks like a euphemism for "childish." Children are unaware of the costs of things, and the incompatibility of many desires.
...British Prime Minister Tony Blair, recently awarded a third term, has made it clear that before the next election he will resign, making way for
Gordon Brown, chancellor of the exchequer. Blair's Labor Party can hardly wait. After three drubbings by Margaret Thatcher, the party, still nursing a curdled nostalgia for socialism, pretended conversion to
common sense. It tolerated Blair, and his acceptance of most Thatcherite reforms, as the price of returning to power. But Labor longs for Brown, a dour Scot who embodies the cheerless egalitarianism of socialism
understood as more and more queuing by more and more people dependent for increasing numbers of things on a decreasingly competent welfare state.
Wednesday, June 1, 2005 ~ 2:30 p.m., Dan Mitchell Wrote: Traditionally, it was not considered anyone else's business, including the government's, as to what trees, flowers and other plants one grew on
one's own property. Slowly, local governments and zoning authorities began regulating these decisions. As the influence of agricultural and environmental interests grew, federal laws and regulations were passed
regarding which crops and trees could be grown or removed from private property. ...When I was a child, no identification was required to open a bank account, and almost every school kid in America had a
passbook savings account. Today, you need extensive documentation to open a bank account because of both the U.S. and internationally mandated "know your customer" regulations. We should be asking why
Americans and citizens of other countries are forced to meet the requirements of unelected bureaucrats in an international organization (the Financial Action Task Force or FATF in this case), which has the
effect of making it very difficult for students and other innocent people to get bank accounts. ...Over the last 80 years, we have seen the endless
drift of government power from local, to state and regional to the federal and now increasingly to multinational institutions that have become
quasi-governments fulfilling some government functions, particularly on trade, financial, environmental regulation and even criminal justice,
given the advent of the International Criminal Court. The drift toward global statism has continued at a relentless but measured pace; so, like
the frog in the pot, we don't realize we are being boiled to death. ...As government gets more distant from the people, it is more likely fundamental individual rights will be trampled, and the individual will
feel he has less power. We should not let ourselves just drift into supernational statism but, instead, have a genuine debate about what powers may and may not be delegated to each level of government,
including those of multinational organizations.
Wednesday, June 1, 2005 ~ 1:10 p.m., Dan Mitchell Wrote: Opponents of education vouchers like to say they prefer "public school choice" known as charters. But even that claim often turns out to be an
illusion under pressure from teachers unions. Consider what's happening in Connecticut, where Republican Governor M. Jodi Rell is resisting charter expansion despite their notable success in the state. Charter
schools -- which are free from many of the union work-rule constraints imposed on regular public schools -- have been allowed in Connecticut since 1997, and there are now 14 of them. A study by Western Michigan
University found that the state's charter students "are gaining more on the state assessment tests than students in surrounding traditional public
schools." ...Connecticut currently spends on average about $9,100 per student in regular public schools, though that figure can run to $13,000
in urban districts such as New Haven and Hartford. Teacher salaries are among the highest in the country. By contrast, under current law the
state allots charters just $7,250 per student, even though most charters operate in urban districts and, unlike regular public schools, must also
cover their own facility costs. ...Ms. Rell's silence has stood in sharp contrast with Democrats in the State Legislature, notably House Speaker
James Amann. They've shown a willingness to challenge the predictable opposition from teachers unions, which seem to believe they've found a new champion in the GOP Governor.
June 1, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: ...the magnitude of the fiscal adjustment needed and the strict spending discipline already assumed make it seem prudent to explore options for
revenue enhancements. Measures that would help avoid having to unwind recent tax rate cuts and their associated supply-side benefits include broadening the income tax base by curbing deductions, such as
the generous treatment of mortgage interest, or introducing a national consumption-based tax.
Wednesday, June 1, 2005 ~ 9:51 a.m., Dan Mitchell Wrote: Has U.S. manufacturing been battered for years? On the contrary, U.S. manufacturing output rose 5.7 percent a year from 1995 to 2000,
according to the Bureau of Labor Statistics (BLS) -- up from 3.7 percent from 1990 to 1995. And the real GDP of U.S. manufacturing increased 5.4 percent per year from 1995 to 2000, according to the Bureau of
Economic Analysis, before the recession of 2001. By 2003-2004, manufacturing GDP was again growing by 4.4 percent yearly. The manufacturing component of the Fed's industrial production index rose
5.1 percent last year. ...In 1992, Bill Clinton and Al Gore claimed U.S. manufacturing jobs were being exported to Japan and Germany. Yet U.S. exports rose 6 percent per year from 1990 to 2001-- twice as fast as
exports from Japan. From 1991 to 2004, Germany lost 25.8 percent of its manufacturing jobs and Japan lost 28½ percent (according to the BLS), which puts our lesser 20 percent loss of manufacturing jobs into
perspective. Even China lost 8.5 million manufacturing jobs from 1995 to 2003. Yet China has replaced Japan and Germany as the trade
warriors' imaginary adversary. ...Like all "economic miracles," China's rapid economic growth began with huge cuts in tax rates and tariffs.
Taxes were cut from 40 percent of GDP in 1978 to 19 percent in 1993. Tariffs on imports were cut from well more than 50 percent in the early 1980s to 9 percent today... The problem for U.S. exporters is not that
China's economy is so strong, but that the economies of Europe and Japan are so weak. The Organization for Economic Cooperation and Development just raised its forecast for U.S. economic growth to 3.6
percent this year, while cutting its forecast to 1½ percent for overtaxed Japan and 1.2 percent for the overtaxed Euro countries. Weak economies do not import much -- strong economies like the United States
and China do. ...People from the legislative or executive branch who offer to protect you from low-priced goods from any specific country must be presumed to secretly represent the interests of other countries,
pawns of special interests or both. Link to this Blog Entry
Wednesday, June 1, 2005 ~ 8:19 a.m., Andrew Quinlan Wrote: What does Beijing have in common with Portland, Oregon? Urban congestion. It's much worse in Beijing, but Portland's traffic congestion
isn't getting any better. Further, both cities' traffic is worsened by bad government. In Beijing, the problem is corruption, with bureaucrats
skimming millions from funds meant for roads. In Portland, the problem is ideology. Nearly every former bicyclist in Beijing knows that one important solution to traffic congestion is more roads. In Portland, on
the other hand, lots of influential people think roads are the wrong way to go. Oregon politicians want, instead, to go back to what Beijing once
was, a centralized city with buses and bikes and pedestrians. They see cars and more roads and decentralized sprawl as the enemy. ...the planners' favorite solution - siphoning off public funds from
road-building to the building of new light rail lines - will do little to solve traffic congestion. It's simply the case that roads can handle a lot more
people than rails can. Roads are more efficient because roads go nearly everywhere. Everywhere roads go, cars can go. Buses are more limited, by the number of established routes. And trains are stuck to
capital-intensive lines. The superiority of cars to other modes of transportation, then, is pretty basic. ...O'Toole, president of The Thoreau
Institute, identifies a network of planners at the root of the anti-car, anti-road agenda: they call themselves the "New Urbanists," and their
policies, "Smart Growth." O'Toole regards the powers they have accumulated as dictatorial, and their agenda as patently idiotic. ...The
New Urbanism's internal contradictions are droll and amusing, as were those of the communists and socialists in days of yore. But they don't seem so funny when you yourself have to pay the price in terms of lost
time, increased taxes and expenses for home and travel, and even (cough) more pollution. Link to this Blog Entry
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