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Shipping Out Jobs | Daniel Griswold | Cato Institute: Commentary: "In 2008, US companies sold more than $6 trillion worth of goods and services through overseas affiliates — three times what US companies exported from America. And, no, those affiliates aren't mainly 'export platforms,' set up to ship goods back to the United States: Almost 90 percent of what they produce abroad is sold abroad.
It's not about access to 'cheap labor,' either: More than three-quarters of outward US manufacturing investment goes to other rich, developed economies like Canada and the European Union. That's where they find the wealthy customers, skilled workers, open markets, efficient infrastructure and political stability to operate profitably.
Indeed, US manufacturing companies invest a modest $2 billion a year in China, compared to $30 billion a year in Europe.
Nor do jobs created by those investments come at the expense of American workers. In fact, the more workers US multinationals hire abroad, the more they tend to hire at their parent operations in America."
Wednesday, November 10, 2010
Obama's Imaginary Tax Cuts | Richard W. Rahn | Cato Institute: Commentary
Obama's Imaginary Tax Cuts | Richard W. Rahn | Cato Institute: Commentary: "The tax increase of $725.7 billion dwarfs the tax cuts of $373 billion, leaving a net tax increase of $352 billion. But it gets worse. Just $107.6 billion of the tax cuts are permanent — the rest are temporary — but all of the $725.7 billion increases are permanent."
"The vast majority of these tax increases fall on middle- and lower-income people."
"'If Democrats are being truthful, why did they not enact the tax cuts before adjourning to campaign for re-election, when such an act would have been to their political advantage?' The answer is that they did not have a majority of Democrats who could agree on any specific tax-cut measure.
Remember, the lame-duck Congress will contain the same members who have been serving, even though, perhaps, 50 or 60 of them will have lost the election. What incentive do they have at that point to agree suddenly to tax cuts they previously opposed? Yes, the people might have spoken in favor of the cuts through the electoral process, but many of these defeated members will be more interested in returning home well before Christmas rather than spending time in Washington, debating tax-cut legislation. They also would be beholden to the president for appointments to new jobs."
"The vast majority of these tax increases fall on middle- and lower-income people."
"'If Democrats are being truthful, why did they not enact the tax cuts before adjourning to campaign for re-election, when such an act would have been to their political advantage?' The answer is that they did not have a majority of Democrats who could agree on any specific tax-cut measure.
Remember, the lame-duck Congress will contain the same members who have been serving, even though, perhaps, 50 or 60 of them will have lost the election. What incentive do they have at that point to agree suddenly to tax cuts they previously opposed? Yes, the people might have spoken in favor of the cuts through the electoral process, but many of these defeated members will be more interested in returning home well before Christmas rather than spending time in Washington, debating tax-cut legislation. They also would be beholden to the president for appointments to new jobs."
Monday, November 08, 2010
Mindless Partisanship Gets in the Way of Fighting Big Government | Gene Healy | Cato Institute: Commentary
Mindless Partisanship Gets in the Way of Fighting Big Government | Gene Healy | Cato Institute: Commentary: "In a 1988 survey, over half of self-identified 'strong Democrats' believed inflation had increased under President Reagan, when it had actually come down nearly 10 points. Half of the Republicans in a 1996 poll believed Bill Clinton had increased the deficit, though it dropped steadily during his tenure. Political scientist Adam J. Berinsky puts it starkly: 'In the battle between facts and partisanship, partisanship always wins.'
In 2004, psychologist Drew Westen took a look at the partisan mind through an MRI scanner. He presented 15 'strong Democrats' and 15 'strong Republicans' with negative statements about their favored candidates and watched which parts of their brains lit up.
'None of the circuits involved in conscious reasoning were particularly engaged,' Dr. Westen reported — it appeared 'as if partisans twirl the cognitive kaleidoscope until they get the conclusions they want.'"
In 2004, psychologist Drew Westen took a look at the partisan mind through an MRI scanner. He presented 15 'strong Democrats' and 15 'strong Republicans' with negative statements about their favored candidates and watched which parts of their brains lit up.
'None of the circuits involved in conscious reasoning were particularly engaged,' Dr. Westen reported — it appeared 'as if partisans twirl the cognitive kaleidoscope until they get the conclusions they want.'"
The Tempting Path of Protectionism | Jim Powell | Cato Institute: Commentary
The Tempting Path of Protectionism | Jim Powell | Cato Institute: Commentary: "By inflaming nationalist sentiment against the United States, Smoot-Hawley encouraged many governments to retaliate by enacting exchange controls that further throttled trade. By 1935, there were exchange controls in Afghanistan, Argentina, Austria, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Czechoslovakia, Danzig, Ecuador, El Salvador, Finland, Germany, Greece, Hong Kong, Hungary, Iceland, Japan, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Nicaragua, Paraguay, Poland, Romania, Uruguay, Venezuela and Yugoslavia.
American farmers, who had lobbied hard for Smoot-Hawley, were among the biggest losers from all this. They saw their exports plunge from $1.8 billion in 1929 before Smoot Hawley to $590 million just four years later."
American farmers, who had lobbied hard for Smoot-Hawley, were among the biggest losers from all this. They saw their exports plunge from $1.8 billion in 1929 before Smoot Hawley to $590 million just four years later."
Rethinking Intellectual Property: History, Theory, and Economics - Stephan Kinsella - Mises Daily
Rethinking Intellectual Property: History, Theory, and Economics - Stephan Kinsella - Mises Daily: "Patent law finds its origins in mercantilist monopoly grants, and even legalized plunder — letters patent were used to legalize piracy in the 16th century — making it ironic for IP to be used against modern-day 'pirates' who are not real pirates at all."
A Better Way Than the VA? | Michael D. Tanner | Cato Institute: Commentary
A Better Way Than the VA? | Michael D. Tanner | Cato Institute: Commentary: "Democrats seem more concerned about preserving 'the system' than about results. The idea of giving people a private choice rather than keeping them confined to a government system is regarded as 'radical' and 'extreme.' You see it on issues ranging from education to Social Security. Apparently, the VA system has now become another such sacred cow."
The Fallacy of "Child-Labor-Free" - Rod Rojas - Mises Daily
The Fallacy of "Child-Labor-Free" - Rod Rojas - Mises Daily: "economic development is the precursor of all things good and humane. This sometimes even includes tangible expressions of parental love — a parent who puts a child behind a loom for ten hours a day does so, not out of callous greed, but because this is what brings food to the table.
Any ban or boycott on oriental rugs, or any other product of child labor, is utterly counterproductive and potentially life-threatening to the very people we are trying to protect. Only economic development can improve the lives of these children, and nothing short of unrestricted free trade will do."
Any ban or boycott on oriental rugs, or any other product of child labor, is utterly counterproductive and potentially life-threatening to the very people we are trying to protect. Only economic development can improve the lives of these children, and nothing short of unrestricted free trade will do."
The Real Reason for FDR's Popularity - Mark Thornton - Mises Daily
The Real Reason for FDR's Popularity - Mark Thornton - Mises Daily: "December 5, 1933, was the day of final liberation [from Prohibition], following nine months of frenzy and excitement. FDR successfully claimed credit for this, achieving a reputation as a great liberator. His popularity reached astounding heights. The glow never left."
Things Are Better Than You Imagine | Jason Kuznicki | Cato Institute: Commentary
Things Are Better Than You Imagine | Jason Kuznicki | Cato Institute: Commentary: "When asked what how much an average U.S. corporation's profits were as a percentage of sales, the students gave wild overestimates — the median student guessed corporate profits were 30% of sales; the upper quartile said more than 60%. The reality? More like 4%.
Goffe's students also thought inflation for the previous year (2008) had been about 11%. The Consumer Price Index, our best measure of inflation, rose by a mere .09% during that time, a small enough change that we could plausibly dismiss it as a measuring error.
Ordinary Americans make more money, too – the median student said that 35% of all workers earned the minimum wage. The real number is more like 1.7%.
And things are improving more than they imagine. When asked how much inflation-adjusted income had risen since 1950, the median student said 25%. Really, it's more like 248%.
Finally, our economy is freer than most of them imagine – when asked, the median student believed that the government sets 40% of market prices. Numbers for this one are harder to come by, but I asked some economist friends of mine, and it's certainly nowhere near that high. Governments do set prices on state-school tuitions, on Medicaid and Medicare-financed health spending, on cigarettes, and on a few others — but in all, prices are pretty free nowadays. Formerly, the federal and local governments had regulated airfare, trucking prices, and the prices of major consumer products like gasoline and apartment rents (there are still a few rent-controlled apartments, but good luck finding them!)."
Goffe's students also thought inflation for the previous year (2008) had been about 11%. The Consumer Price Index, our best measure of inflation, rose by a mere .09% during that time, a small enough change that we could plausibly dismiss it as a measuring error.
Ordinary Americans make more money, too – the median student said that 35% of all workers earned the minimum wage. The real number is more like 1.7%.
And things are improving more than they imagine. When asked how much inflation-adjusted income had risen since 1950, the median student said 25%. Really, it's more like 248%.
Finally, our economy is freer than most of them imagine – when asked, the median student believed that the government sets 40% of market prices. Numbers for this one are harder to come by, but I asked some economist friends of mine, and it's certainly nowhere near that high. Governments do set prices on state-school tuitions, on Medicaid and Medicare-financed health spending, on cigarettes, and on a few others — but in all, prices are pretty free nowadays. Formerly, the federal and local governments had regulated airfare, trucking prices, and the prices of major consumer products like gasoline and apartment rents (there are still a few rent-controlled apartments, but good luck finding them!)."
Hiding the Cost of Government Leads to Bigger Government | Christopher J. Conover | Cato Institute: Commentary
Hiding the Cost of Government Leads to Bigger Government | Christopher J. Conover | Cato Institute: Commentary: "When the federal government takes an additional dollar from taxpayers, the actual cost to society is generally $1.44. That extra 44 cents represents the deadweight loss of taxation. Every time Congress shifts another dollar from Peter to Paul, it leaves society 44 cents poorer.
The deadweight loss of taxation can be much higher, though. For example, if Congress allows income-tax rates to rise in January, as current law provides, it will cost society $1.50 for every dollar of new tax revenue. Feldstein estimates that each dollar of new income-tax revenue could cost society $2.65!"
"University of Chicago economist Harald Uhlig estimates that federal borrowing carries a much higher deadweight loss, such that every $1 of deficit spending ultimately costs society $4.40."
"The Office of Management and Budget already directs federal agencies to include the deadweight costs of federal taxes when doing cost-benefit analyses of federal spending. Congress should do the same."
The deadweight loss of taxation can be much higher, though. For example, if Congress allows income-tax rates to rise in January, as current law provides, it will cost society $1.50 for every dollar of new tax revenue. Feldstein estimates that each dollar of new income-tax revenue could cost society $2.65!"
"University of Chicago economist Harald Uhlig estimates that federal borrowing carries a much higher deadweight loss, such that every $1 of deficit spending ultimately costs society $4.40."
"The Office of Management and Budget already directs federal agencies to include the deadweight costs of federal taxes when doing cost-benefit analyses of federal spending. Congress should do the same."
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