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"Socking Stocks" by Jim Powell (Cato Institute: Commentary): "Ironically, Obama's increased corporate taxes would probably lead more Americans to seek higher returns by investing in offshore-based companies. The Commerce Department's Bureau of Economic Analysis says US investors hold some $5.1 trillion worth of stock in offshore-based companies. These assets have appreciated as foreign currencies have risen against the dollar, and many Americans have invested in them as a means to diversify and protect themselves from dollar devaluation."
"Corporations don't really pay taxes anyway. Like other costs of doing business, they pass them on to consumers."
Friday, May 15, 2009
"In Defense Of Tax Havens" by Daniel J. Mitchell (Cato Institute: Commentary)
"In Defense Of Tax Havens" by Daniel J. Mitchell (Cato Institute: Commentary): "They argue that if an American firm can earn money in Ireland and only pay 12.5% tax, this gives them an incentive to close down factories in America and ship them overseas.
Since nearly 90% of what American companies produce overseas is sold overseas, according to Commerce Department data, there's not much evidence that this is happening. But there's actually some truth to this argument. If a company can save money by building widgets in Ireland and selling them to the U.S. market, then we shouldn't be surprised that some of them will consider that option.
But this does not mean the president's proposal might save some American jobs. If deferral is eliminated, that may prevent an American company from taking advantage of a profitable opportunity to build a factory in some place like Ireland. But U.S. tax law does not constrain foreign companies operating in foreign countries. So there would be nothing to prevent a Dutch company from taking advantage of that profitable Irish opportunity. And since a foreign-based company can ship goods into the U.S. market under the same rules as a U.S. company's foreign subsidiary, worldwide taxation does not insulate America from overseas competition. It simply means that foreign companies get the business and earn the profits."
Since nearly 90% of what American companies produce overseas is sold overseas, according to Commerce Department data, there's not much evidence that this is happening. But there's actually some truth to this argument. If a company can save money by building widgets in Ireland and selling them to the U.S. market, then we shouldn't be surprised that some of them will consider that option.
But this does not mean the president's proposal might save some American jobs. If deferral is eliminated, that may prevent an American company from taking advantage of a profitable opportunity to build a factory in some place like Ireland. But U.S. tax law does not constrain foreign companies operating in foreign countries. So there would be nothing to prevent a Dutch company from taking advantage of that profitable Irish opportunity. And since a foreign-based company can ship goods into the U.S. market under the same rules as a U.S. company's foreign subsidiary, worldwide taxation does not insulate America from overseas competition. It simply means that foreign companies get the business and earn the profits."
"Politics Plays Role in Bailout Mania" by Will Wilkinson (Cato Institute: Commentary)
"Politics Plays Role in Bailout Mania" by Will Wilkinson (Cato Institute: Commentary): "'I don't want to run the auto companies, and I don't want to run banks,' President Obama said last week during a prime-time press conference on the fate of Detroit. He may not want to, but the Obama administration is effectively running auto companies and banks. And the president does get a bit cranky when he tells the private sector to jump and it doesn't jump.
In a rare flash of anger, Obama lashed out at several Chrysler investors who refused to sign on to the administration's restructuring plan for the automaker. The plan would have required senior investors, who are usually first in line in bankruptcy proceedings, to take big losses while more junior investors, including the UAW, were offered rather more generous terms.
The failure of the plan has left Chrysler no other option than to file for bankruptcy. But why is the president involved at all in deciding who gets what in the breakup of an auto company?"
"When the government gets its finger in every pie, who gets what piece becomes a political decision. We may want to trust our leaders to be dispassionate stewards of the public interest, but politicians — and our over-empowered executive is a politician — will use whatever discretion is at hand to reward their constituencies."
In a rare flash of anger, Obama lashed out at several Chrysler investors who refused to sign on to the administration's restructuring plan for the automaker. The plan would have required senior investors, who are usually first in line in bankruptcy proceedings, to take big losses while more junior investors, including the UAW, were offered rather more generous terms.
The failure of the plan has left Chrysler no other option than to file for bankruptcy. But why is the president involved at all in deciding who gets what in the breakup of an auto company?"
"When the government gets its finger in every pie, who gets what piece becomes a political decision. We may want to trust our leaders to be dispassionate stewards of the public interest, but politicians — and our over-empowered executive is a politician — will use whatever discretion is at hand to reward their constituencies."
Creating Disequilibrium, and Benefiting Society - Isaac M. Morehouse - Mises Institute
Creating Disequilibrium, and Benefiting Society - Isaac M. Morehouse - Mises Institute: "Classical economists often treated economic growth as a mechanistic operation that happened at a stable rate as a result of unchanging levels of investment and production — as if economies simply grew on their own as long as production was steady and inputs were not disrupted. The problem with this view is that, quite simply, the real world doesn't work that way. In 1911, economist Joseph Schumpeter's Theory of Economic Development radically changed this view, and his insights are still relevant today.
Schumpeter stressed the role of the entrepreneur in economic growth and argued that, far from a static maintenance of equilibrium in production, it was the entrepreneurial ability to cause disequilibrium that created wealth. The constant innovation of these economic actors shakes the economy up, breaking down old methods and building up newer and better ones.
It's not just increases in production that create wealth but a radical reforming of the way production itself is done. Think Henry Ford's assembly line. Such entrepreneurial innovations disrupt the unrealistic ideal of a stationary economy. They do destroy the old order — like the classic example of buggy makers losing their jobs when the automobile took hold — but they cause growth because what they create is more valuable than what they replace. Can you imagine halting the progress of the automobile in order to preserve buggy makers?"
"The entrepreneur, by seeing and acting on different combinations of existing knowledge, products, and services, disrupts the economic order and creates growth. There is evidence of this "creative destruction" all around us: every year millions of jobs are created and destroyed, yet the overall long-term trend is continued economic growth.
$25 $20
Finally a shirt to fight back!
The growth could not happen without both creation and destruction; it is the driver of growth, not a problem to be solved. If the economy were static — if jobs were never lost, prices never shifted up or down, investments never enjoyed large profits or major losses — we would not live in a stable utopia but a stagnant subsistence economy.
Don't be afraid to disrupt the economy. Look for ways that things can be done differently — goods, services, and production methods that can be rearranged, new technologies that can be better used. Right now, as the economy reshuffles, there are more opportunities to generate change than ever — the kind of dynamic change that we need to grow out of this slump.
Don't just sit there, create some disequilibrium!"
Schumpeter stressed the role of the entrepreneur in economic growth and argued that, far from a static maintenance of equilibrium in production, it was the entrepreneurial ability to cause disequilibrium that created wealth. The constant innovation of these economic actors shakes the economy up, breaking down old methods and building up newer and better ones.
It's not just increases in production that create wealth but a radical reforming of the way production itself is done. Think Henry Ford's assembly line. Such entrepreneurial innovations disrupt the unrealistic ideal of a stationary economy. They do destroy the old order — like the classic example of buggy makers losing their jobs when the automobile took hold — but they cause growth because what they create is more valuable than what they replace. Can you imagine halting the progress of the automobile in order to preserve buggy makers?"
"The entrepreneur, by seeing and acting on different combinations of existing knowledge, products, and services, disrupts the economic order and creates growth. There is evidence of this "creative destruction" all around us: every year millions of jobs are created and destroyed, yet the overall long-term trend is continued economic growth.
$25 $20
Finally a shirt to fight back!
The growth could not happen without both creation and destruction; it is the driver of growth, not a problem to be solved. If the economy were static — if jobs were never lost, prices never shifted up or down, investments never enjoyed large profits or major losses — we would not live in a stable utopia but a stagnant subsistence economy.
Don't be afraid to disrupt the economy. Look for ways that things can be done differently — goods, services, and production methods that can be rearranged, new technologies that can be better used. Right now, as the economy reshuffles, there are more opportunities to generate change than ever — the kind of dynamic change that we need to grow out of this slump.
Don't just sit there, create some disequilibrium!"
"Rangoon's Renaissance" by Doug Bandow (Cato Institute: Commentary)
"Rangoon's Renaissance" by Doug Bandow (Cato Institute: Commentary): "John Holmes, UN Undersecretary-General for Humanitarian Affairs, opined: 'I'm not sure that invading Burma would be a very sensible option.' And the SPDC gradually opened the delta to Western aid even as it tried to profit from the international community's activities. Three months later Holmes reported that 'a much-feared second wave of deaths from starvation or disease has not happened.' He also said that 'This is now a normal international-relief operation.'
The Burmese military's turnaround led some NGOs to develop a 'strange new respect' for the SPDC. For instance, one unnamed UN program director told the New York Times that after the Burmese recognized they could not handle the disaster, 'they did a lot. A huge national response occurred.' Last October the International Crisis Group reported that developments since the storm
Since then the regime has become even more responsive (though not, of course, more democratic). Twice as many aid workers are now active in the delta as before Cyclone Nargis. A former Oxfam adviser on Burma opines: "The overall response of the government has been remarkable. They are 'getting it' more and more each day that they are involved in the recovery process." Frank Smithuis of Doctors Without Borders told the New York Times: "You can work here very well, and to say that you can't is a lie." Indeed, "the military at times has actually been quite helpful to us." "
The Burmese military's turnaround led some NGOs to develop a 'strange new respect' for the SPDC. For instance, one unnamed UN program director told the New York Times that after the Burmese recognized they could not handle the disaster, 'they did a lot. A huge national response occurred.' Last October the International Crisis Group reported that developments since the storm
show that it is possible to work with the military regime on humanitarian issues. Communication between the government and international agencies has improved. Visas and travel permits today are easier and faster to get than before. Requirements for the launch of new aid projects have been eased. By and large, the authorities are making efforts to facilitate aid, including allowing a substantial role for civil society.
Since then the regime has become even more responsive (though not, of course, more democratic). Twice as many aid workers are now active in the delta as before Cyclone Nargis. A former Oxfam adviser on Burma opines: "The overall response of the government has been remarkable. They are 'getting it' more and more each day that they are involved in the recovery process." Frank Smithuis of Doctors Without Borders told the New York Times: "You can work here very well, and to say that you can't is a lie." Indeed, "the military at times has actually been quite helpful to us." "
What Keeps Us Safe? - Mark Thornton - Mises Institute
What Keeps Us Safe? - Mark Thornton - Mises Institute: "Most people don't realize that dozens of products in their homes — toasters, fire extinguishers, space heaters, televisions, etc. — have been tested by the Underwriters Lab for safety. The Lab also tests items like bulletproof vests, electric blankets, commercial ice-cream machines, and chicken de-beakers, among thousands of other products.
But the Lab isn't an arm of the government. It is privately owned, financed, and operated. No one is compelled by force of law to use its services. It thrives — and makes our lives safer — by the power of its excellent reputation."
"The very existence of the Lab debunks the common civics-text view that, without government intervention, private businesses would seek profit without regard for safety; thus, bureaucrats have to police markets to impose a balance between private interests and the common good. The government, according to this view, is the only thing standing between us and unceasing fatal accidents.
The truth is the opposite. The market is well equipped to regulate itself, and does a fine job of it. It's the government that operates without oversight."
"The Lab was the first to set standards for certifying the safety of pilots and planes before the government intervened. It set the standards for building materials, fire-fighting equipment, air conditioners, and household chemicals. It employs safecrackers and pyrotechnicians to test safes, and a variety of unique machines and devices to test thousands of other products each year. It has been testing multicolored Christmas lights since 1905, and entered the building-code business right after the San Francisco earthquake of 1906."
"Its effectiveness in determining safety standards (even for brand-new products) and maintaining them over time has generated an interesting result. Many government regulations, especially at the state level, merely mimic the building codes and insurance requirements of the Lab."
But the Lab isn't an arm of the government. It is privately owned, financed, and operated. No one is compelled by force of law to use its services. It thrives — and makes our lives safer — by the power of its excellent reputation."
"The very existence of the Lab debunks the common civics-text view that, without government intervention, private businesses would seek profit without regard for safety; thus, bureaucrats have to police markets to impose a balance between private interests and the common good. The government, according to this view, is the only thing standing between us and unceasing fatal accidents.
The truth is the opposite. The market is well equipped to regulate itself, and does a fine job of it. It's the government that operates without oversight."
"The Lab was the first to set standards for certifying the safety of pilots and planes before the government intervened. It set the standards for building materials, fire-fighting equipment, air conditioners, and household chemicals. It employs safecrackers and pyrotechnicians to test safes, and a variety of unique machines and devices to test thousands of other products each year. It has been testing multicolored Christmas lights since 1905, and entered the building-code business right after the San Francisco earthquake of 1906."
"Its effectiveness in determining safety standards (even for brand-new products) and maintaining them over time has generated an interesting result. Many government regulations, especially at the state level, merely mimic the building codes and insurance requirements of the Lab."
"Obama Must Move beyond Pseudo-Events" by Leon T. Hadar (Cato Institute: Commentary)
"Obama Must Move beyond Pseudo-Events" by Leon T. Hadar (Cato Institute: Commentary): "The Bush administration's belligerent style of managing American relations with both friends and foes, so full of empty bravado and a crusading militaristic spirit, has been one of the reasons for the erosion in US global prestige in the last eight years. Obama's emphasis on quiet diplomacy and international engagement that is backed by a genuine sense of confidence and a strong military should prove to be more effective in promoting US interests abroad.
One could imagine, for example, Obama's predecessor responding to the recent pirate attack off the coast of Somalia by labeling the pirates as 'Islamofascists,' adding them to the list of members of Axis of Evil, and threatening tough American military retaliation. By contrast, Obama's measured response followed by a low-key but precise military action is the kind of cool approach one expects from American presidents. That the leader of the most powerful country in the world should be willing to listen to, and treat with respect, foreign critics of American policy is a sign of self-assurance — not timidity — that Americans should welcome."
One could imagine, for example, Obama's predecessor responding to the recent pirate attack off the coast of Somalia by labeling the pirates as 'Islamofascists,' adding them to the list of members of Axis of Evil, and threatening tough American military retaliation. By contrast, Obama's measured response followed by a low-key but precise military action is the kind of cool approach one expects from American presidents. That the leader of the most powerful country in the world should be willing to listen to, and treat with respect, foreign critics of American policy is a sign of self-assurance — not timidity — that Americans should welcome."
"'Thought Crimes' Bill Advances" by Nat Hentoff (Cato Institute: Commentary)
"'Thought Crimes' Bill Advances" by Nat Hentoff (Cato Institute: Commentary): "Then, regarding a Colorado 'hate crime' law, one of 45 such state laws, Corry wrote: 'When a Colorado gang engaged in an initiation ritual of specifically seeking out a 'white woman' to rape, the Boulder prosecutor declined to pursue 'hate crime' charges.' She was not enough of one of its protected classes.
Corey adds that the state 'hate crime' law - like the newly expanded House of Representatives federal bill - 'does not apply equally' (as the 14th Amendment requires), essentially instead 'criminalizing only politically incorrect thoughts directed against politically incorrect victim categories.'
Whether you're a Republican or Democrat, think hard about what Corry adds: "A government powerful enough to pick and choose which thoughts to prosecute is a government too powerful."
But James Madison, who initially introduced the First Amendment to the Constitution, had previously written to Thomas Jefferson on the passage of the Virginia Statute on Religious Freedom: "We have in this country extinguished forever ... making laws for the human mind." No American, he emphasized later, would be punished for his "thoughts." "
Corey adds that the state 'hate crime' law - like the newly expanded House of Representatives federal bill - 'does not apply equally' (as the 14th Amendment requires), essentially instead 'criminalizing only politically incorrect thoughts directed against politically incorrect victim categories.'
Whether you're a Republican or Democrat, think hard about what Corry adds: "A government powerful enough to pick and choose which thoughts to prosecute is a government too powerful."
But James Madison, who initially introduced the First Amendment to the Constitution, had previously written to Thomas Jefferson on the passage of the Virginia Statute on Religious Freedom: "We have in this country extinguished forever ... making laws for the human mind." No American, he emphasized later, would be punished for his "thoughts." "
"Obama's Compromise on D.C.'s School Vouchers Program" by Andrew J. Coulson (Cato Institute: Commentary)
"Obama's Compromise on D.C.'s School Vouchers Program" by Andrew J. Coulson (Cato Institute: Commentary): "During the campaign, Obama said that if vouchers worked he would support them. The Education Department recently revealed that students who joined the voucher program in 2004 are now more than two school years ahead of their public school peers in reading.
In his initial budget, Obama declared that when it comes to education, we cannot waste dollars on programs that are inefficient. Average tuition at the voucher schools is $6,620, while the District is spending $26,555 per pupil this year on K-12 education."
In his initial budget, Obama declared that when it comes to education, we cannot waste dollars on programs that are inefficient. Average tuition at the voucher schools is $6,620, while the District is spending $26,555 per pupil this year on K-12 education."
"Cancer and the Government" by Michael D. Tanner (Cato Institute: Commentary)
"Cancer and the Government" by Michael D. Tanner (Cato Institute: Commentary): "The overall five-year survival rate for all types of cancer for men in America is 66.3 percent, and 62.9 percent for women, the best outcome in the world.
We shouldn't be surprised. The one common characteristic of all national health-care systems is that they ration care."
"With the creation of NICE, the U.K. government has effectively put a dollar amount to how much a citizen's life is worth. To be exact, each year of added life is worth approximately $44,305 (£30,000)."
"The advantages of free-market health care go far beyond an absence of rationing. With no price controls, free-market U.S. medicine provides the incentives that lead to innovative breakthroughs in new drugs and other medical technologies. U.S. companies have developed half of all the major new medicines introduced worldwide over the last 20 years.
In fact, Americans played a key role in 80 percent of the most important medical advances of the last 30 years. Eighteen of the last 25 winners of the Nobel Prize in Medicine either are U.S. citizens or work here.
If the American Cancer Society got the government-run national health-care system it wants, we would eliminate consumer choice and put a stop to the innovations we count on to improve our health. It would condemn thousands of cancer sufferers to waiting lists and denied care. In the end, it would cost lives."
We shouldn't be surprised. The one common characteristic of all national health-care systems is that they ration care."
"With the creation of NICE, the U.K. government has effectively put a dollar amount to how much a citizen's life is worth. To be exact, each year of added life is worth approximately $44,305 (£30,000)."
"The advantages of free-market health care go far beyond an absence of rationing. With no price controls, free-market U.S. medicine provides the incentives that lead to innovative breakthroughs in new drugs and other medical technologies. U.S. companies have developed half of all the major new medicines introduced worldwide over the last 20 years.
In fact, Americans played a key role in 80 percent of the most important medical advances of the last 30 years. Eighteen of the last 25 winners of the Nobel Prize in Medicine either are U.S. citizens or work here.
If the American Cancer Society got the government-run national health-care system it wants, we would eliminate consumer choice and put a stop to the innovations we count on to improve our health. It would condemn thousands of cancer sufferers to waiting lists and denied care. In the end, it would cost lives."
"Bears Shouldn't Do Math" by Alan Reynolds (Cato Institute: Commentary)
"Bears Shouldn't Do Math" by Alan Reynolds (Cato Institute: Commentary): "But stock valuations are not just a matter of opinion, gyrating unpredictably between waves of optimism and pessimism. On the contrary, the graph shows that P/E ratios mainly depend on interest rates. It makes that point by simply turning the P/E ratio upside down, resulting in an earnings-price ratio or 'earnings yield.'"
"Deposit Insurance Undermines Bank Stability" by Mark Calabria (Cato Institute: Commentary)
"Deposit Insurance Undermines Bank Stability" by Mark Calabria (Cato Institute: Commentary): "f the 117 million households in America, only about 10 million have total bank deposits above $100,000, or less than 9 percent of all American households. These same families also have incomes of over twice the median, putting these households in the top 20 percent of earners. Nor are these households without significant wealth, with total median holdings of financial assets alone of almost $600,000. Most households with deposits above $100,000, given their considerable financial wealth, demonstrate sufficient sophistication to provide monitoring of a bank's financial condition. Even if families with bank deposits above $100,000 were to suffer a loss in deposits resulting from a bank failure, the typical family in this group has both considerable income and wealth to buffer such a hit. In contrast, the typical, or median, American household, has only about $6,400 in bank deposits, well below the previous ceiling of $100,000."
"A recent academic study across over 150 countries found that, all else equal, those countries with more generous deposit insurance schemes also suffered more frequent banking crises."
"Few relationships in economics have been found in so many different settings as the link between expanded deposit insurance and bank instability."
"FDR vocally opposed the creation of deposit insurance and threatened to veto the Glass-Steagall banking bill over its inclusion, saying it "would lead to laxity in bank management and carelessness on the part of both banker and depositor." "
"A recent academic study across over 150 countries found that, all else equal, those countries with more generous deposit insurance schemes also suffered more frequent banking crises."
"Few relationships in economics have been found in so many different settings as the link between expanded deposit insurance and bank instability."
"FDR vocally opposed the creation of deposit insurance and threatened to veto the Glass-Steagall banking bill over its inclusion, saying it "would lead to laxity in bank management and carelessness on the part of both banker and depositor." "
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