18 Oct 2009

Those Dirty Rotten Taxes

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Oh man. When last we left our protagonists the children of Israel, King Solomon had asked for wisdom, and the Lord granted not only that (wise) request, but showered Solomon (David’s son) with peace and legendary riches.

But then things fell apart. I’m not sure if we are supposed to infer that the wealth corrupted Solomon, but I note with interest that 1 Kings 10:14 says, “The weight of gold that came to Solomon yearly was six hundred and sixty-six talents of gold…” (Cue Twilight Zone music.)

But upon Solomon’s death, there is a power struggle and Solomon’s majestic empire is split. Here’s what happened when Rehoboam, Solomon’s son, took the throne:

 1 And Rehoboam went to Shechem, for all Israel had gone to Shechem to make him king. 2 So it happened, when Jeroboam the son of Nebat heard it (he was still in Egypt, for he had fled from the presence of King Solomon and had been dwelling in Egypt), 3 that they sent and called him. Then Jeroboam and the whole assembly of Israel came and spoke to Rehoboam, saying, 4 “Your father made our yoke heavy; now therefore, lighten the burdensome service of your father, and his heavy yoke which he put on us, and we will serve you.”
5 So he said to them, “Depart for three days, then come back to me.” And the people departed.
6 Then King Rehoboam consulted the elders who stood before his father Solomon while he still lived, and he said, “How do you advise me to answer these people?”
7 And they spoke to him, saying, “If you will be a servant to these people today, and serve them, and answer them, and speak good words to them, then they will be your servants forever.”
8 But he rejected the advice which the elders had given him, and consulted the young men who had grown up with him, who stood before him. 9 And he said to them, “What advice do you give? How should we answer this people who have spoken to me, saying, ‘Lighten the yoke which your father put on us’?”
10 Then the young men who had grown up with him spoke to him, saying, “Thus you should speak to this people who have spoken to you, saying, ‘Your father made our yoke heavy, but you make it lighter on us’—thus you shall say to them: ‘My little finger shall be thicker than my father’s waist! 11 And now, whereas my father put a heavy yoke on you, I will add to your yoke; my father chastised you with whips, but I will chastise you with scourges!’”
12 So Jeroboam and all the people came to Rehoboam the third day, as the king had directed, saying, “Come back to me the third day.” 13 Then the king answered the people roughly, and rejected the advice which the elders had given him; 14 and he spoke to them according to the advice of the young men, saying, “My father made your yoke heavy, but I will add to your yoke; my father chastised you with whips, but I will chastise you with scourges!” 15 So the king did not listen to the people; for the turn of events was from the LORD, that He might fulfill His word, which the LORD had spoken by Ahijah the Shilonite to Jeroboam the son of Nebat.
16 Now when all Israel saw that the king did not listen to them, the people answered the king, saying:

      “What share have we in David?
      We have no inheritance in the son of Jesse.
      To your tents, O Israel!
      Now, see to your own house, O David!”

So Israel departed to their tents. 17 But Rehoboam reigned over the children of Israel who dwelt in the cities of Judah.
18 Then King Rehoboam sent Adoram, who was in charge of the revenue; but all Israel stoned him with stones, and he died. Therefore King Rehoboam mounted his chariot in haste to flee to Jerusalem. 19 So Israel has been in rebellion against the house of David to this day.
20 Now it came to pass when all Israel heard that Jeroboam had come back, they sent for him and called him to the congregation, and made him king over all Israel. There was none who followed the house of David, but the tribe of Judah only.
(1 Kings 12:1-20, New King James Version)

17 Oct 2009


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* Brian Domitrovic was one of the speakers at the recent ISI conference I attended. He is a history professor but (like Tom Woods) he has the gumption to cross disciplinary lines and do very good economic analysis. Domitrovic is an avowed supply-sider, but if you think “oh so he thinks you cut taxes, receipts go up, end of story” then I encourage you to read more about it. I haven’t spent too much time at his blog yet, but I think this post is a good summary of what Domitrovic (following Robert Mundell) calls “the policy mix”–namely “tight money and tax cuts.” Domitrovic’s ISI speech walked through the 1920s, ’30s, ’70s, and ’80s, and showed the lessons that a supply-sider would draw.

* Man I can’t believe all those whiny leftists who actually think the US government is capable of “torture”! (Yes, they actually use the t-word.) You keep a detainee from falling asleep, or you pour some water over his face, and the ACLU’s all on your case. Next thing you know, you got the British high court mad because you use a scalpel to slice open the genitals of a guy who’s NOT EVEN A BRITISH CITIZEN, for crying out loud. Oh my gosh, what a bunch of sissies, and then everyone’s all huffy about the CIA threatening to not tell British intelligence about impending terror attacks on the UK, if they publicized details of the genital slicing. Are there no real men left in the West? No wonder Al Qaeda is winning.

* Steve Levitt defends himself from the Romm/Krugman tag team. I don’t even care about the rest of his post; Levitt ended with “Nothing could be further from the truth.” Seriously, is the truth really far away? I ask because there are hundreds of new things every week that are each apparently tied for being the furthest possible thing from it.

* Cage Match: Gene Callahan & Bob Murphy vs. Roger Koppl & St. Paul. No matter who wins, we lose.

17 Oct 2009

Why Are Progressive Economists So Afraid of Negative Comments?

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Believe it or not, I actually agree with Paul Krugman’s harsh assessment of Superfreakonomics. (Before you chalk this up to my evenhandedness, keep in mind that I am still jealous of the success of Freakonomics.) But what the heck? In both posts (here and here), Krugman shuts off the comments from the get-go. His explanation: “Administrative note: I’m going to block comments here, because I know it will be overwhelmed.”

So what if it’s overwhelmed? I realize that’s tough on the guy who has to moderate the comments, but then again you can always turn off the moderation.

Failing that–we wouldn’t want people to get “bad ideas” in their heads–Krugman could allow only the first 100 comments. If a cap will save the planet, why not a blog?

(BTW for those who don’t understand the title of my post, Brad DeLong is notorious for editing/deleting comments on his blog. And we’re not merely talking about jettisoning use of racial slurs. Mario Rizzo got gonged once, for crying out loud.)

Seriously, what is the deal with this? I would have expected tobacco executives and Glenn Beck to eliminate dissent on their websites, not believers in open dialog and democracy. Talking with Iran is the path to peace, but we can’t have a conversation with global warming deniers?

17 Oct 2009

I Don’t Get No Respect, I Tell Ya

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For those who are curious, check out Silas Barta’s attempt to use Jedi mind tricks to embarrass me in my challenge to evolutionary psychology. But if Silas read EPJ, he would know that I am similar in many ways to Jabba the Hut.

17 Oct 2009

"Which is what happens when you call the Feds!"

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One of my favorite scenes in Firefly–a show that was taken from us much too soon–is from the episode “Ariel” when Jayne tries to collect the reward on the fugitives traveling with them, and the official with whom he had the deal ends up arresting Jayne and trying to collect the bounty himself.

Now I am not 100% sure this is what went down, but I think this is the chronology:

(1) Obama cut a deal with the insurance industry in the spring, where he agreed the government wouldn’t try to limit prescription payments etc., and would have a high fine of non-insured in order to funnel a bunch of new “customers” onto the insurance rolls, in exchange for the insurers running a favorable ad campaign. (Recall that hardcore progressive activists called Obama a “charming liar” after he cut the deal.)

(2) When Wolf Blitzer was amazing (for a CNN reporter) and kept pressing David Axelrod on why the federal government doesn’t break down barriers to interstate competition–if all the government wants is more choices and lower prices for consumers–Axelrod shucks and jives but ultimately offers the reason that the feds don’t want to interfere with state legislation.

(3) For some reason, the deal broke down. This lefty writer blames the insurers for overreaching, though they weren’t crafting the legislative details so that seems a bit weird to me. (I.e. if they were happy at one point with what they thought the deal was going to be, and then as the legislation emerged they were unhappy, I’m thinking it’s because the politicians reneged on the deal.)

(4) The insurers switched gears and instead of funding pro-”reform” commercials, they fund a study saying government involvement will drive up costs. (I haven’t read the study, but I think it could have been one sentence: “Government involvement will drive up costs.” And then there would be a footnote to that one sentence which reads, “See: U.S. history.”)

(5) In response to the scurrilous study based on lies and scare tactics, members of Congress and now Obama himself are threatening to remove the insurance industry’s anti-trust exemption–which means overriding state regulations of insurers. (BTW Tyler Cowen has been doing a great job highlighting the sheer outrageousness of this–changing federal law to punish people who publicly disagree with proposed legislation. Read the comments at Tyler’s initial post and see how many “progressives” don’t even get what Tyler is complaining about. Seriously, how can someone not even see the potential problem when the government decides to revisit a regulation after the businesses it holds life and death over, decide to oppose the government? It doesn’t matter if this particular bunch of progressives is sincere or not; they are clueless when it comes to assessing the dangers posed by various sections of our culture, i.e. corporations versus the government.)

Conclusion: As Stewie from Family Guy would say to the insurers: What did you learn?

17 Oct 2009

Assuming a Can Opener?

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Something is screwy in the health care debate. Advocates of “reform” keep repeating a point that doesn’t make sense to me. I’ll quote Krugman, but others are saying it too:

As I said, the individual mandate probably should be stronger than it is in the Finance Committee’s bill. But there’s a reason the mandate was weakened: fear that too many people would balk at the cost of insurance, even with the subsidies provided to lower-income individuals and families. So why not address that cost?

Aside from making the subsidies larger, which they should be, there are at least two changes to the legislation that would help limit costs…

OK Krugman didn’t say the point as clearly as I’ve heard others doing it on radio. The argument goes like this: We need to get more people paying into health insurance, to make it viable. Otherwise the system is going to go broke. But, a lot of the people who aren’t currently insured, can’t afford the premiums that we’d need to charge them in order to make the system viable. So, we’ll have to subsidize them.

Am I missing something? That doesn’t make any sense to me. How do you make a system viable by bringing in people that you have to subsidize?

I suppose it’s a form of price discrimination, where really the government is still extracting a net payment from the currently uninsured. I.e. we’re going to fine you $1000 unless you pay your $2500 premium for the public option, but oh if you’re too poor then we’ll spot you $500.

So really, it’s just a fancy way of saying, “If you’re poor you can pay $2000 for the public option, or get fined $1000.”

Yet that’s not the way it’s being framed, at least on public radio. There they are talking as if giving subsidies is a magic way to reduce costs.

17 Oct 2009

Wow I Must Annoy Bryan Caplan

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When it comes to his observations on children, I simply refuse to believe his two counterintuitive claims:

(1) Parents don’t matter.

(2) Children were never a good investment, even for families in traditional agricultural societies.

As I say, Bryan must be incredibly frustrated with someone like me who basically says, “I don’t care what data you point to, Bryan, how can you possibly believe that?”

But really, Bryan, how can you possibly believe those statements? #2 I suppose is not patently absurd, just highly unlikely. But #1?!

Don’t get me wrong, I’m not saying Bryan should abandon this topic as pointless. Rather, I’m suggesting that he says, “Hmm, you would think parents would matter in this way, but the evidence says they don’t. So let’s refine our intuitions to make them more accurate.”

16 Oct 2009

The Pot Calling the Kettle a Pot

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Paul Krugman, Oct. 16, 2009:

For a long time, there’s been an accepted way for commentators on politics and to some extent economics to distinguish themselves: by shocking the bourgeoisie, in ways that of course aren’t really dangerous…

Clever snark like this can get you a long way in career terms — but the trick is knowing when to stop. It’s one thing to do this on relatively inconsequential media or cultural issues. But if you’re going to get into issues that are both important and the subject of serious study…you’d better be very careful not to stray over the line between being counterintuitive and being just plain, unforgivably wrong.

Paul Krugman, Dec. 15, 2008:

Right now the world economy is in a nosedive, and understanding what I call “depression economics” — the weird world you get into when even a zero interest rate isn’t low enough, and a messed-up financial system is dragging down the real economy — is essential if we’re going to avoid the worst.

The key thing, when you’re in a situation like this, is realizing that normal rules don’t apply. Ordinarily we’d welcome an increase in private saving; right now we’re living in a world subject to the “paradox of thrift,” in which private virtue is public vice. Normally we want to be careful that public funds are spent wisely; right now the crucial thing is that they be spent fast. (John Maynard Keynes once suggested burying bottles of cash in coal mines and letting the private sector dig them up — not as a real proposal, but as a way of emphasizing the priority of supporting demand.)

The big test for the next few months will be whether policymakers here and abroad can wrap their minds around this Alice-in-Wonderland world. If they can’t, nobody knows how deep the rabbit hole goes.