Smashing Protectionist "Theory" (Again) - Murray N. Rothbard - Mises Daily

Smashing Protectionist "Theory" (Again) - Murray N. Rothbard - Mises Daily: 'The best way to look at tariffs or import quotas or other protectionist restraints is to forget about political boundaries. Political boundaries of nations may be important for other reasons, but they have no economic meaning whatever. Suppose, for example, that each of the United States were a separate nation. Then we would hear a lot of protectionist bellyaching that we are now fortunately spared. Think of the howls by high-priced New York or Rhode Island textile manufacturers who would then be complaining about the "unfair," "cheap labor" competition from various low-type "foreigners" from Tennessee or North Carolina, or vice versa.

Fortunately, the absurdity of worrying about the balance of payments is made evident by focusing on interstate trade. For nobody worries about the balance of payments between New York and New Jersey, or, for that matter, between Manhattan and Brooklyn, because there are no customs officials recording such trade and such balances.

If we think about it, it is clear that a call by New York firms for a tariff against North Carolina is a pure rip-off of New York (as well as North Carolina) consumers, a naked grab for coerced special privilege by less-efficient business firms. If the 50 states were separate nations, the protectionists would then be able to use the trappings of patriotism, and distrust of foreigners, to camouflage and get away with their looting the consumers of their own region.'

'American labor is more costly than Taiwanese because it is far more productive. What makes it productive? To some extent, the comparative qualities of labor, skill, and education. But most of the difference is not due to the personal qualities of the laborers themselves, but to the fact that the American laborer, on the whole, is equipped with more and better capital equipment than his Taiwanese counterparts. The more and better the capital investment per worker, the greater the worker's productivity, and therefore the higher the wage rate.

In short, if the American wage rate is twice that of the Taiwanese, it is because the American laborer is more heavily capitalized, is equipped with more and better tools, and is therefore, on the average, twice as productive. In a sense, I suppose, it is not "fair" for the American worker to make more than the Taiwanese, not because of his personal qualities, but because savers and investors have supplied him with more tools. But a wage rate is determined not just by personal quality but also by relative scarcity, and in the United States the worker is far scarcer compared to capital than he is in Taiwan.'

'the fact that American wage rates are on the average twice that of the Taiwanese, does not make the cost of labor in the United States twice that of Taiwan. Because US labor is twice as productive, this means that the double wage rate in the United States is offset by the double productivity, so that the cost of labor per unit product in the United States and Taiwan tends, on the average, to be the same. One of the major protectionist fallacies is to confuse the price of labor (wage rates) with its cost, which also depends on its relative productivity.'

'The problem faced by less efficient US textile or auto firms is not so much cheap labor in Taiwan or Japan but the fact that other US industries are efficient enough to afford it, because they bid wages that high in the first place.

So, by imposing protective tariffs and quotas to save, bail out, and keep in place less efficient US textile or auto or microchip firms, the protectionists are not only injuring the American consumer. They are also harming efficient US firms and industries, which are prevented from employing resources now locked into incompetent firms, and who could otherwise be able to expand and sell their efficient products at home and abroad.'

'The alleged "deficit" was paid for by foreigners investing the equivalent amount of money in American dollars: in real estate, capital goods, US securities, and bank accounts.

In effect, in the last couple of years, foreigners have been investing enough of their own funds in dollars to keep the dollar high, enabling us to purchase cheap imports. Instead of worrying and complaining about this development, we should rejoice that foreign investors are willing to finance our cheap imports. The only problem is that this bonanza is already coming to an end, with the dollar becoming cheaper and exports more expensive.'

Tariff Lesson for Obama – and Us | Daniel J. Ikenson | Cato Institute: Commentary

Tariff Lesson for Obama – and Us | Daniel J. Ikenson | Cato Institute: Commentary: 'Trade barriers and subsidies, while burdensome to foreign companies, are foremost matters of domestic economic policy. Australia's experience affirms that the most compelling case for dismantling trade restrictions is not that they are "concessions" to exchange for foreign market access, but domestic reforms that benefit the domestic economy, regardless of what other countries do with their own trade barriers.'

Mustangs Mistreated But Not Inhumanely | Fox News

Mustangs Mistreated But Not Inhumanely | Fox News: 'The U.S. Bureau of Land Management's internal review of a wild horse roundup in Nevada found some mustangs were whipped in the face, kicked in the head, dragged by a rope around the neck, and repeatedly shocked with electrical prods, but the agency concluded none of the mistreatment rose to the level of being inhumane.'

Better Education Through Lower Taxes | Andrew J. Coulson | Cato Institute: Commentary

Better Education Through Lower Taxes | Andrew J. Coulson | Cato Institute: Commentary: 'for every dollar the education tax credit reduces state revenues, it saves the state $1.49 — according to an official study by the legislature's accountability agency. That is because educating children in the private sector is quite a bit less expensive than doing so in the public sector. So the program not only improves educational outcomes for all concerned, it generates a 50 percent annual return on investment — a remarkable boon in difficult economic times.'

Opinion: The answer is: Spend less. Period. - Grover G. Norquist and Mike Needham and Phil Kerpen and Al Cardenas and Duane Parde and Daniel J. Mitchell - POLITICO.com

Opinion: The answer is: Spend less. Period. - Grover G. Norquist and Mike Needham and Phil Kerpen and Al Cardenas and Duane Parde and Daniel J. Mitchell - POLITICO.com: 'Let’s be balanced, they insist, and promise to cut some spending and raise some taxes. Having pushed spending way up, they now want to pretend this spending is normal or, at least, inevitable. It isn’t.'

'In 1990, the same trick was played out — this time at the expense of President George H.W. Bush and the American people. A two-to-one promise brought higher taxes and higher spending. When tax hikes are on the table, the talk about spending cuts evaporates. Oddly enough, the tax hikes remain.'

Referendum Initiatives Prevent Eminent Domain Abuse | Ilya Somin | Cato Institute: Commentary

Referendum Initiatives Prevent Eminent Domain Abuse | Ilya Somin | Cato Institute: Commentary: 'In reality, economic development condemnations often destroy local economies by wiping out neighborhoods, small businesses and schools. Moreover, the new owners are usually not required to actually produce the development they promised. In the Poletown case, the new factory produced only about half as many new jobs as were promised. In Kelo, nothing has been built on the condemned property six years after the Supreme Court upheld the takings.

Private developers who have a genuinely valuable project should be able to acquire the land they need through voluntary purchase. One of the strongest indications that their proposed project really is more valuable than current uses of the same land is their willingness to pay the current owners a price high enough to persuade them to sell. Economic development takings also undermine growth by reducing the security of property rights. If landowners fear that their land might be condemned, they are less likely to invest in it.'

The Real "1 Percent" | Michael D. Tanner | Cato Institute: Commentary

The Real "1 Percent" | Michael D. Tanner | Cato Institute: Commentary: 'Roughly 80 percent of millionaires in America are the first generation of their family to be rich. They didn't inherit their wealth; they earned it. How? According to a recent survey of the top 1 percent of American earners, slightly less than 14 percent were involved in banking or finance.'

'since 2007, there has been a 39 percent decline in the number of American millionaires.

Among the "super-rich," the decline has been even sharper: The number of Americans earning more than $10 million a year has fallen by 55 percent. In fact, while in 2008 the top 1 percent earned 20 percent of all income here, that figure has declined to just 16 percent. Inequality in America is declining.'

A Lesson on the Laffer Curve for Barack Obama | Daniel J. Mitchell | Cato Institute: Commentary

A Lesson on the Laffer Curve for Barack Obama | Daniel J. Mitchell | Cato Institute: Commentary: 'The key takeaway is that the IRS collected fives times as much income tax from the rich when the tax rate was far lower. This isn't just an example of the Laffer Curve. It's the Laffer Curve on steroids and it's one of those rare examples of a tax cut paying for itself.

Folks on the right, however, should be careful about over-interpreting this data. There were lots of factors that presumably helped generate these results, including inflation, population growth, and some of Reagan's other policies. So we don't know whether the lower tax rates on the rich caused revenues to double, triple, or quadruple. Ask five economists and you'll get nine answers.

But we do know that the rich paid much more when the tax rate was much lower.'

Executive Privilege Claim Ahead on Solyndra | Gene Healy | Cato Institute: Commentary

Executive Privilege Claim Ahead on Solyndra | Gene Healy | Cato Institute: Commentary: 'as is so often the case in politics, the real scandal is what's gone on in broad daylight. Solyndra is a perfect illustration of the dangers of government/business "partnership."

"We're all in this together," has been Obama's continual refrain this fall while pushing his $449 billion jobs bill. Sure, it's a collectivist notion that's hard to reconcile with a country dedicated to the individual pursuit of happiness. But he doesn't really mean it.

In this half-socialized, corporatist sector of privatized profit and socialized loss, we're only "all in it together" if a federally favored company goes belly up — as Solyndra did, sticking the taxpayer with tab. "One has to take risks in order to promote innovative manufacturing," as Energy Secretary Steven Chu put it last week.'

'Today, with unprecedented levels of money and power flowing to Washington, more and more Americans fear that the game is rigged. Can you blame them?'

Keynes Was No Liberal - Allen McDaniels - Mises Daily

Keynes Was No Liberal - Allen McDaniels - Mises Daily: 'Keynes called his theory "general" because he claimed it would work not only in a laissez-faire setting but also, and more easily, in a totalitarian one.'