23 Oct 2009

Tom Woods and Doug Casey on PBS (!) Debate: Chocolate Anarchy or Vanilla Anarchy?

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Wow, I finally got around to watching the below video that Tom posted a few days ago. You know how normally, if you watch a political discussion on TV the spectrum of the debate is, “Should we steal 50% of taxpayers’ money, or just 48%?”

Well a similar thing happened on this program, except the spectrum was more like, “Should I be an anarchist because of bold assertions about the nature of government, or should I be an anarchist because of the study of history?”

I can’t believe this was on PBS.

BTW Tom, I noticed that he called you an economist and you just nodded. I won’t tell anyone, don’t worry.

22 Oct 2009

Reduce, Reuse, Recycle (Citizens’ Money)

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More fun tax facts: Massachusetts also has a tax on marijuana, but it has yet to collect any revenue from it. On the other hand, in Fiscal Year 2008, the state made almost $39 million from unredeemed deposits on bottles. See pages 26-27 of this pdf.

22 Oct 2009

States Already Taxing Marijuana

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During my research for a PRI paper on state tax policies, I came across this interesting nugget (see page 13 of this pdf):

A tax is levied on marijuana and controlled substances which creates an economic burden on drug dealers. Payment of the tax is indicated by the affixing of stamps to the marijuana or controlled substance. The tax is due and payable immediately upon acquisition or possession of the drug in Connecticut by a dealer.

FY 2005-06 $90,329
2006-07 40,851
2007-08 61,262

Basis and Rate
$3.50 per gram of marijuana;
$200 per gram of controlled substance; and
$2,000 per 50-dosage unit of controlled substance not sold by weight.

The part I put in bold just cracks me up. Note that for the other sections, they don’t say things like, “The Business Entity Tax places a burden on those selling goods in Connecticut.”

22 Oct 2009

Don’t Tell Matt Yglesias, But I Don’t Understand the Pending Health Care Legislation

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Matt Yglesias is astounded at the ignorance of Mary Landrieu, Democratic senator from Louisiana, because she said, “I’m not for a government-run, national, taxpayer-subsidized plan, and never will be.” Yglesias sets her straight:

The larger issue here, I think, is that unlike these programs the “public option” wouldn’t be a taxpayer-subsidized program. It would be a government-run health insurance plan that people could buy.

Interestingly, my colleague Zaid Jilani observed the other day that Landrieu has been attributing the popularity of the program to the fact that people like the idea of “free health care”…

When I first read these remarks, I thought Landrieu was saying that the public was misunderstanding the proposal. She thought people thought the public option meant bigger subsidies for them and didn’t understand what the proposal really is. Now that I’ve read her latest remarks, however, I think maybe she doesn’t understand what’s being proposed and thinks that liberals are proposing to create an additional spending commitment. In reality, adding a public option would make the Finance bill cheaper and not involve any additional taxpayer subsidies.

OK don’t tell MY (yes his initials are almost as unfortunate as mine: BM), but I don’t think I understand the legislation then either. (This is not surprising, inasmuch as an illustrious blogger recently told me I don’t know how to read.)

I realize the government lies all the time, that proponents of legislation make all kinds of wishful assumptions, etc. etc. Let’s put all those things aside. Are you telling me that official “progressive” proposal is that the government is going to offer a health insurance plan with no use of taxpayer funds whatsoever? Surely Yglesias must be misunderstanding, right?

If that is the claim, then why all the politics and debate? There’s nothing to stop Harry Reid and Nancy Pelosi from incorporating a business, taking in premium payments, and paying claims when people file them, according to the contractual specifications.

Seriously, what the heck is going on here? I want to know: (a) Does Yglesias really think a bunch of DC politicians can run a business more profitably than people in the private sector, if they can’t draw on tax dollars, and (b) Is that what the official claim is, that half the blogosphere is supporting?

I’m hoping I’m misunderstanding, and Yglesias is saying something like, “With all of the savings that reform will generate, even the injection of tax dollars into the public option will still yield a deficit-neutral outcome.” If he’s just saying that, OK, I think he’s naive and wrong, but I get how he could be thinking that. Yet his critique of Landrieu, at face value, suggests the bolder claim, that the “public option” really won’t rely on taxpayer dollars at all.

22 Oct 2009

Does Austrian Economics Just Need a Name Change?

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For a while I’ve thought Austrian economics just needs a new name. Arnold Kling got way more thoughtful reaction to his “recalculation argument” against stimulus spending, even though (as he himself acknowledged when he first unveiled it) his story and Austrian business cycle theory are almost identical once the bust ensues. So it seemed that the very name “Austrian business cycle theory” was an albatross around the neck of the particular set of ideas. (That, and the fact that some of the Austrians pushing it are fairly annoying.)

And then Stephan Kinsella relays this anecdote about Tom Woods’ debate with ING Chairman Tom McInerney (HT2 Bob Roddis):

McInerney had mentioned that Bernanke was a diligent and knowledgeable student of the Great Depression. So, when it came time for the Q&A, one audience member asked Woods to briefly explain the Austrian view of Great Depression and how it might differ from Bernanke’s view. After Woods did this, McIerney took the stage, and as if he were about to unload a devastating blow against Woods, said to him, “this might seem like a bit of an attack. Don’t take it too personally.” And then…. he began to rant about … the relatively small size of the country of Austria. I kid you not.

Some audience members began to laugh; others cringed, as McInerney dug his hole deeper while under the illusion that he was unleashing a deadly zinger. Woods kept trying to stage whisper that Austria had nothing to do with the school of Austrian economics, but McInerney, undeterred, plowed on. Thus, when Woods took the stage he said, “this might seem like an attack, but don’t take it too personally…” And then Woods commented that we may as well say we shouldn’t listen to Milton Friedman, since the GDP of Chicago is pretty low.

It’s even worse than the above suggests. Someone in the comments of Stephan’s post said:

I was there as well and unfortunately there was no video camera that i am aware of, so no video. But the above story is 100% true; one could feel the collective cringe when McInerney was spouting off about Austria. And it wasnt short. He spent a good 5-7minutes in his diatribe, trying to get audience participation by asking “Does anyone know the GDP of france…How about Italy….and austria….” It was very sad because people were snickering and he had no idea it was at him.

So that settles it, we need a new name. I suggest “reality-based economics.” Who could possibly oppose that?*

* Yes I am kidding.

21 Oct 2009

Federal Government Overrides Executive Compensation Packages

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CNBC reprints a NYT article:

Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in the government’s financial rescue, the Obama administration will order the companies that received the most aid to deeply slash the compensation to their highest paid executives, an official involved in the decision said on Wednesday.

Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the annual salaries of their 25 best-paid executives by an average of about 90 percent from last year. Their total compensation — including bonuses and retirement contributions — will drop, on average, by about 50 percent. The companies are Citigroup…, Bank of America…, American International Group…, General Motors, Chrysler and the financing arms of the two automakers.

I don’t have the time to look into this more carefully, but I’m really hoping that the “pay czar” is only overriding compensation packages at companies that still have tax money (as opposed to ones that paid it back).

Regardless of the legal niceties, this is a very bad development. Now the unruly masses get a taste of seeing the noble DC crusaders pushing back against the corporate fat cats. Hip hip hooray! People not profits!

Oh one question: Where does the clawed back money go? I’m assuming it goes to the corporate shareholders, and not (say) a fund for baby formula for the homeless.

21 Oct 2009

Those Dirty Rotten Taxes

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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

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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.