21 Oct 2009

Those Dirty Rotten Taxes

All Posts No Comments

It’s funny how tax codes explain a lot. I’m doing this state tax policy analysis for PRI. On the Tax Foundation’s list of state corporate income tax rates, they have notes about Miscellaneous stuff. Here’s the extra info on Michigan, besides its 4.95% corporate income tax:

There is an additional modified gross receipts tax (sales minus purchases from other firms) at a rate of 0.8%. The income and gross receipts taxes are subject to a 21.99% surtax on the calculated liability, with the maximum surtax being $6 million. Banks pay a tax on net worth at a rate of 0.235%.

In case you don’t know, Michigan’s economy isn’t so hot right now. (In fairness, Nevada and Florida also have awful unemployment, yet their tax codes are relatively decent, so taxes aren’t the whole story. Still Michigan’s not exactly welcoming businesses in.)

21 Oct 2009

Wall Street Journal Defends the Predator State

All Posts No Comments

I explain here. The intro:

In my last article on these pages, I offered criticism of a New York Times article that had praised the Lincoln administration’s property violations in pursuit of military objectives. Today I want to focus on a regular Wall Street Journal columnist who praises the Obama administration’s plans to violate property rights in pursuit of socializing medical care. The conventional dichotomy between “liberal” and “conservative” newspapers is spurious: all major news organizations support the welfare-warfare state.

21 Oct 2009

I Stand Corrected: Tyler Cowen Does Support the Warfare State

All Posts No Comments

A while back I had a tantrum because there were back-to-back posts in which both contributors to the ostensibly libertarian, free market blog “Marginal Revolution” supported the bank bailout and government health care. (Of course Tyler and Alex’s posts were nuanced; I’m not saying they quoted Chairman Mao. But follow the links if you don’t believe me.)

To illustrate what I thought was horribly wrong with Tyler and Alex’s rhetorical approach, I satirically started my post by saying they supported the use of torture, under certain conditions, and mimicked their arguments on the bailout and health care to “prove” that government torture–done properly, with an economist setting up the proper incentives–was just dandy. Since Tyler especially is a compassionate, open-minded, small-l libertarian, I thought this was a pretty good move.

Yet somebody either in the comments or in email said to me something like, “Bob, I’m not so sure Tyler opposes torture. It seems he has no problem with Big Government in principle.” I told the guy he was wrong, that Tyler seemed to be anti-militaristic and had even written posts saying it would be OK to let Guantanamo prisoners free even if we thought there was an x% chance of them going back to fight. (Don’t repeat that without finding the original Tyler post, which I can’t do right now; I don’t want to put words in his mouth, but he was definitely dismissive when Republicans were warning that the Gitmo detainees would kill more Americans if released. I.e. Tyler wasn’t challenging the premise that they were guilty, he was saying even if they were, blah blah blah.)

Well I stand corrected. In response to a reader who asked Tyler to list some successful government bureaucracies, Tyler writes:

Wars aside, here is a short and very incomplete list: the NIH, the Manhattan Project, U.C. Berkeley, the University of Michigan, Fairfax County, the World Trade Organization, the urban planners of postwar Germany, some of the Victorian public works and public health commissions, most of what goes on in Singapore, anywhere that J.S. Bach worked.

I am astounded. According to the official version of events, the multi-hundred-billion-dollar-per-year US defense apparatus let 19 guys with box cutters take out the Twin Towers and hit the Pentagon. Then our intelligence agencies gave totally wrong information, and moreover were so confident in their false info that the US military conquered another country because of it. It’s now been x years since President Bush declared “Mission Accomplished” in Iraq. The CIA has been caught engaged in a worldwide network of torture and coverup. And in this environment, the voracious reader Tyler Cowen, who is up to speed on Public Choice and libertarian writings, still subscribes to the typical view that, “Say what you will about government inefficiency, but the military gets the job done!”

Here’s what I wrote in two separate comments:

In what sense are war bureaucracies successful? In major wars it is two government bureaucracies fighting each other, so the fact that one side wins doesn’t prove anything. A coalition of the world’s most powerful militaries hasn’t been able to catch one guy (Osama bin Laden). (And for those who want to chastise my naivete and say he’s never existed or been dead for 5 years, OK, but then that just underscores my point that Tyler shouldn’t be citing wars as examples of government efficiency in achieving stated public aims.)

And:

Another thing, how is the Manhattan Project an example? Yes, they ended up creating an atomic weapon. But did they do it for less money than it would have taken a private company to do, if that had been legal and the company could reap the profits from selling A-bombs?

Tyler, have you read Richard Feynman’s autobiographical books? If so you know how absurdly bad the security was on the atomic secrets, right?

To say the Manhattan Project is a government success is like saying Amtrak is a success. After all, I just took it the other day and the train didn’t break down; I got from point A to point B.

OK now I’ve calmed down. Time to go to work. Fortunately the government was kind enough to pave me a road. High five!

20 Oct 2009

Scott Sumner on Climate: So Close, Yet So Far Away

All Posts No Comments

Scott you’re killing me, man. Folks, I was so thrilled that I could unambiguously endorse Scott Sumner’s latest blog post, where he talks about climate change rather than printing money. (In fact I was working on a joke in which the Fed creates trillions of carbon-eating dollar bills in order to simultaneously fix the economy and the climate.)

He starts out great. After all, he’s responding to Matt Yglesias so that earns him a B- alone. Then Scott shows that he’s no punk on the issue, either; Scott drops terms like “radiative forcing” and “albedo” like they’re Cobb-Douglas production functions. (Geek econ joke.) The climate ninjas’ heads pop up and say, “This one has skills. Proceed with caution, Shrill Tiger and Smearing Bear.” (Yes I am surely mixing up cultures.)

Scott then goes on to suggest that, properly computed, the optimal carbon tax might well be near zero! Woo hoo! That’s (sort of) what I’ve been saying [.pdf]!

And just as I’m firing up Blogger to shower hugs and kisses on Scott, he goes and says:

[A]s a good utilitarian I am going to use this blog platform to push two issues over the next few years. One you already know about; a forward-looking monetary policy targeting NGDP. And my second obsession will be a global tax/subsidy scheme based on the impact of various activities on global temperatures.

Waa, waa, waaaaaaaaaaaaa. (That’s music, not me whining.)

20 Oct 2009

Potpourri

All Posts, Potpourri No Comments

* A blog touting capitalism that was (according to an email I got from the author) inspired by my book.

* David Frum is astounded: “People think of gold not as a metal, but as an alternative form of money.” (HT2 Bob Roddis)

* As if in response, EPJ reports with delight: “I never thought I would see the day this happened. A major exchange is for all practical purposes accepting gold as a currency.”

* Mort Zuckerman says, “The free market is not up to the job of creating work.” That’s right, Morty. The free market creates goods and services. What kind of numbskull wants to create work? (Sorry I don’t remember who emailed me this one.)

* Mesa wins the thread: “Re: the recent climate geo-engineering debates, it’s kind of amusing to see so many instant experts on these subjects in the blogosphere (Matt Yglesias!, Ryan Avent!). There’s no subject that can’t be analyzed and put to bed in a 3 paragraph blog posting! It’s kind of the modern day analog of the all night dorm room bull session, without the pizza but with about the same level of expertise.”

20 Oct 2009

Charlie Rose Interviews Charlie Rose

All Posts No Comments

I was hoping for one more trick, but even so the below is pretty funny. (HT2 Gene Callahan.) I just love what these crazy kids can do nowadays with the intertubes.

20 Oct 2009

PPI Down in September

All Posts No Comments

The BLS reports that the seasonally adjusted PPI for Finished Goods declined 0.6% in September. (The non-seasonally adjusted PPI for All Commodities was also down 0.3%, according to FRED. I can’t find the one-month non-seasonally adjusted information in the BLS press releases anymore; I honestly think they removed it.)

Incidentally, if you are curious why the PPI came out later than the CPI this month (which is rare), here’s a CNBC story giving the reason.

For what it’s worth, I’m hanging on to my gold and silver coins. I definitely jumped the gun in worrying about price inflation in 2009. Even though it’s positive (despite all the talk of deflation), nonetheless it’s obviously not spiraling out of control just yet.

The reason I am holding on to my coins is that I still maintain that Bernanke has painted himself into a corner with all the excess reserves. Quite frankly, I am waiting for everyone else to realize that his “exit plans” aren’t going to work.

I’m going to lay low on the inflation issue until I have something useful to contribute. I can’t stand it when other bloggers do a “heads I was right, tails I made a good guess at the time” stance. So I was wrong about inflation in 2009, my apologies.

19 Oct 2009

Goldbuggery?

All Posts No Comments

MercedesRules passes along this article discussing central bank machinations to suppress not only the gold price, but the “gold basis.” I have not delved into this stuff enough to tell if this is legit or crankish, but I do know that the author–Antal Fekete–has many fans. This paragraph is striking (if true):

Reports are circulating that similar audits of certain Asian depositories have already produced “good” delivery bars (400 oz or 12.5 kg gold bricks) that have been gutted and stuffed with tungsten – a metal whose specific weight approximates that of gold, so that the famous test of Archimedes (fl. 287-212 B.C.) based on the Law of Buoyancy, designed to expose fraudulent goldsmiths, would be inapplicable. Isn’t it strange that criminal law punishes the fraudulent stuffing of gold bars, but allows the stuffing of gold assets in the balance sheet with paper gold? After all, the specific value of tungsten is much higher than that of paper!

As I say, I can’t confirm the validity of these fears, but MercedesRules (who is a huge gold bug) tells me the chatter is really up, that this isn’t just the standard “the government is screwing us, gold will zoom up, I just feel it!” talk.

On the other hand, I did find it funny that Fekete basically starts his article off by admitting he didn’t know what he was talking about 12 months ago…