Keep Your Laws Off My Meds! August 25, 2006Posted by federalist in Government Regulation, Healthcare.
Plan B consists of two pills taken 12 hours apart within three to five days of sexual intercourse. The dosage of contraceptive drug in these pills is 12 to 15 times that of a regular contraceptive pill. Remember: Plan B is now cleared to be sold OTC, yet the lower-dose conventional Pill still requires a prescription. Odd. Never before has a higher dose of a particular drug been made available OTC while a lower-dose preparation still requires a prescription.
The contrast is, as Homer Simpson might say, “Ovuliscious.”
Why not just get government out of our medicine cabinet, and let adults buy whatever pharmaceuticals they want?
Account for Global Public Goods August 24, 2006Posted by federalist in Finance, Government Spending, Taxation.
This is a problem worth drawing attention to: Old Europe’s bloviations are writing checks their defense budgets can’t cash.
In fact a majority of the world’s countries are not paying their fair share for the security they enjoy. It seems easy to argue that, at least in a free country, GDP is a fair measure for assessing security taxes. After all the more production the more a country depends on the world markets and the more utility it enjoys from increased world security.
According to the World Factbook we can see that most free countries are not spending as much as the United States on defense, as a fraction of GDP. Americans are devoting 4% of our production to defense. And as we have seen time and time again, our peerless military is the only force capable of successfully overthrowing genocidal and terrorist regimes, securing world commerce, and acting as a first-responder to both global catastrophes like the 2004 tsunami and regional conflagrations like the invasion of Kuwait.
When an American pays $4 in taxes to secure Middle-Eastern oil, stop genocide in Serbia, and hem in that North Korean maniac menacing the Pacific Rim, a German pays just $1.50, and our self-righteous neighbors to the North are spending just $1.10. But everyone benefits from the global peace and security we are providing.
It’s time for the United States to start billing for its services. Granted, we have no authority to tax other countries. But we could start accounting for the defense debts of other nations. For example, Spain spending just 1.2% of GDP on defense is short its fair share by $27BB for last year alone. For 2005 Italy owes $32BB and Japan is down over $110BB.
The next time these countries start whining about the U.S. not paying its dues to the United Nations or not donating enough cash to earthquake victims let’s just add up their security debts to the United States — already trillions of dollars, and growing!
And if for some reason the United States agreed to an economically burdensome treaty like, for example, the Kyoto Protocol, we should first deduct our defense credits from our share. It would be a long time before we had to cut any of our carbon emissions.
Who Pays Estate Taxes? August 20, 2006Posted by federalist in Taxation.
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Hendrik Van den Berg offers a good perspective on death taxes (a.k.a. “estate” or “inheritance” taxes) in a letter in today’s WSJ:
The relevant question is whether the inheritance tax is more or less harmful than the other taxes that have to to be levied to pay for what our government spends. Are inheritance taxes worse than higher income taxes that discourage work and innovation? Are they worse than higher property taxes that discourage the accumulation of wealth? Are they worse than higher corporate profits taxes that discourage issuing equity and shift business offshore? Clearly not.
Given the government’s budget deficits, its immense need for revenue and the high economic costs of obtaining that revenue through other types of taxes, it makes little sense to cut a tax that is relatively less harmful to the economy and falls entirely on people who are, because of their wealth, relatively well-positioned to efficiently deal with the costs.
That’s the end of his letter. The obvious question to follow this fine reasoning is: Given that the estate tax is 100% avoidable, and given that the wealthy are “well-positioned to efficiently deal with” the tax, who actually pays it? Is this a real source of revenue for the government, or just a “hose-the-rich” measure that never hits anyone in practice?
For as little as a few thousand dollars a wealthy individual can create trusts, family offices, or insurance arrangements that legally and completely avoid the death tax.
Presumably, then, the only people who actually pay this tax are:
- People who want to leave half of their estate to the government instead of to their designated beneficiaries.
- People who didn’t know their assets were so large as to be subject to confiscation upon their death.
- People who didn’t want to pay the tax and knew they were subject to it, but who died before they implemented the avoidance measures available to them.
In other words, this is effectively a tax on rich people who are stupid, disorganized, or unfortunate.
Transportation Stupidity Administration August 15, 2006Posted by federalist in Government Regulation, Transportation.
Granted, the airport security charade has been amply criticized before. But here we go again: overreacting to yesterday’s threat. Terrorists dusted off an old plot to use liquid explosives and now we have passengers getting double-searched to ensure they aren’t carrying any toothpaste or lip balm onto a plane.
This is stupid. If terrorists want to smuggle liquid explosives on board as passengers they can still do it. They can flatten sealed chemical bags and either sew them into carry-ons or strap them tight to their body. Is that woman really in her third trimester, or does she have 30 pounds of hermetically sealed plastic explosive molded around her breasts and stomach? Only a stripsearch could tell for sure.
The billions spent harrassing commerical airline passengers only creates bigger targets on the ground. The one thing that is actually keeping us safe is intelligence programs to find terrorists and disrupt their organizations and plans before they can strike.
Arlen Specter noted for Platitudinous Political Pomp August 8, 2006Posted by federalist in Energy, Government Regulation.
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Arlen Specter is a paragon of the pandering politician, which is why he is the new winner of my award for Platitudinous Political Pomp.
In a recent letter to me he noted,
“I have been the lead Republican sponsor of an amendment to the energy bills of the 106th and 107th Congresses that would require the federal government to enact policies to reduce United States consumption of oil by one million barrels per day….”
This perennial amendment of his has never been passed into law, but what exactly was he proposing? A staffer in his DC office explained that it’s exactly what it sounds like: He is proposing to require the executive branch — by law — to figure out how to reduce oil consumption. That’s right: No consideration of the means or costs of this proposal was to be had from Arlen Specter. He saw a problem, and proposed an arbitrary law to fix it. Because that’s what great legislators do these days.
Which leaves one wondering: Why stop a one million barrels per day? In fact, why not pass a law saying that the government must enact policies to cause Americans to travel primarily on unicorns powered by fairy dust whose only emissions are rainbows?
Next time you hear a politician trumpeting his legislative efforts to fix problems, pay close attention: Does he offer any real solutions, or is he just blustering his way to another term with daydreams and platitudes?
The Overdue Death of Pensions August 6, 2006Posted by federalist in Economic Policy, Finance, Government Regulation, Government Spending, Pensions, Retirement.
The Wall Street Journal expounds on the latest legislation to overhaul private pensions, noting, “the idea of a single company guaranteeing retirement payments for decades is no longer practical, if it ever was.” Frankly, that is an understatement.
Defined-benefit pensions are annuities. Annuities are an insurance product. Unless you happen to work for an insurer, your employer has never been regulated as an insurer or rated for the health of its reserves. What business does an airline or car manufacturer have writing insurance for its employees? Yet that is what all these private companies were doing with their defined-benefit pensions.
It would have been fine if they had literally been funding a deferred annuity written by a proper insurer. But as we know they neither fully funded their pensions nor did they offer the sort of portability that would come with a true annuity contract.
Fortunately, that scam seems to be coming to an end. But there is still the matter of government defined-benefit pensions: Many federal, state, and local government agencies offer these to their employees. I suppose that since they are being backed by governments they do not suffer the same credit risks associated with private companies. Many agencies also collude to provide some degree of pension portability, so an employee can switch jobs without losing his benefits.
But government pensions still suffer from the underfunding hazard — with the cost and risk being dumped on taxpayers. I suspect pensions will persist in government if for no other reason than that they are a convenient way to hide the cost to taxpayers of benefits provided to one of the classically strong special interests: government employees. For this reason, taxpayers should demand that governments fully price and fund their pensions. Or better yet: abolish them and let people buy their own annuities if they want.
After American Capital Market Hegemony? August 3, 2006Posted by federalist in Finance, Government Regulation.
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I never thought I’d see the day that the United States would lose its hegemony in the world capital markets. Alan Murray, in his essay yesterday, “Fees May Be Costing Wall Street Its Edge In Global IPO Market,” notes that Wall Street investment banks are roughly twice as expensive as their foreign competitors. “Does anyone really believe they deserve 7% of the capital raised by a newly listed company?” Of course, it may not be long before America produces a crop of discount IBanks.
But later Murray points to more systemic faults in our capital markets, and these realy could cost us our capital superiority:
New Treasury Secretary Henry “Hank” Paulson Jr. — former chief executive of Goldman Sachs — … said there’s no simple answer to America’s IPO problem. “Markets overseas are much stronger, more competitive than they were a few years ago,” he said, “so that’s one of the reasons.”
He also cited the U.S. “legal environment” (read: trial lawyers), the “enforcement environment” (read: New York Attorney General Eliot Spitzer) and the “regulatory environment” (read: Sarbanes-Oxley) as contributing to a reluctance to raise new capital in the U.S.
Welfare Incentives August 2, 2006Posted by federalist in Economic Policy.
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The New York Times had a story about skilled, middle-aged men who choose not to work. Dividends of the feminist revolution? After all, if women can break into the workforce and assume any traditionally male role, doesn’t it follow that husbands can choose the role of a middle-aged housewife? Apparently not:
Nearly 60 percent are divorced, separated, widowed or never married, up from 50 percent a decade earlier, the Census Bureau reports. Sometimes women who are working throw out men who are not, says Kathryn Edin, a sociologist at the University of Pennsylvania. In any case, without a household to support, there is less pressure to work, and for men who fall behind on support payments, an incentive exists to work off the books — hiding employment — so that wages cannot be garnisheed.
Other than deadbeat dads, it looks like the most likely cause of voluntarily unemployed men is our perverse government welfare incentives:
The Inefficient Market for Corporate Leadership August 1, 2006Posted by federalist in Finance, Human Markets.
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I rarely disagree with the Wall Street Journal’s editorial board, but today’s essay on CEO compensation is incongruous.
There’s been a lot of griping about executive pay recently, and Hank McKinnell’s severance package, estimated to be worth $83 million, will do little to damp the indignation.
But Mr. McKinnell’s surprise ouster as CEO by Pfizer’s board last week illustrates the flip side of the executive-pay coin: Top executives in the U.S. are paid for performance, and today’s corporate directors are not shy about pushing out those whose performance doesn’t measure up for shareholders.
It’s great to see that boards are firing underperformers, but the thing that really shocks the conscience is the compensation levels. And the fact that even when they fail these CEOs win. Walking away with an $83MM severance is not what anyone would consider punishment or failure.