Crashing Gore’s Global Warming Party

An amusing video from Americans for Prosperity:

Via Reason.tv.

If only all politicians were so honest

U.S. House Democrat Maxine Waters during a hearing concerning gas prices.

I suggest she read the Constitution she swore to uphold, think a bit about property rights, and watch this video by John Stossel. My favorite part is the graph showing that tax revenue from the tax on gasoline exceeds oil company profits.

Teen minimum wage costs them jobs

Daily Herald, Chicago, April 28, 2008

“Suburban teenagers might have trouble finding summer employment, but some businesses say they fear they’ll have even fewer work opportunities next year.

If an Illinois proposal to make the teenage minimum wage equal to adults’ pay becomes law, teen-friendly businesses may slice hours or give their 15- to-17-year-old workers the boot.” …

York Theatre in Elmhurst also would be forced to downsize its 40-person staff of mostly high-schoolers if the higher wages became law.

“Being a family-run company, there’s not a whole lot in the budget for payroll,” said Trevor Murakami, general manager of York Theatre.

See also this editorial in the Investors Business Daily:

As a basic point of economics, it’s a given that anytime you raise the cost of anything, you will use less of it. As such, the minimum wage hike that took effect in Massachusetts this year has been a job-killer for thousands of untrained youths, many of them minorities.

We’re not the only ones to see this, by the way.

Investing in students

Thomas Sowell on the subject:

Why does college cost so much?

There are two basic reasons. The first is that people will pay what the colleges charge. The second is that there is little incentive for colleges to reduce the tuition they charge. …

[An alternative to funding college education for the poor] would be to allow students to sign enforceable contracts by which lenders would pay their college or university expenses in exchange for a given percentage of their future earnings.

That way, students would be issuing stocks to raise capital, the way corporations do, instead of being limited to borrowing money to be paid back in fixed amounts — the latter being equivalent to issuing corporate bonds.

Last week I read Thomas Sowell’s three-part essay on this. I found the above ideas intriguing. Here are some other parts that summarize his ideas:

What warrants explaining: equality or inequality?

Follow up to: Thomas Sowell on income inequality

Today Yahoo News reported the this Live Science article:

Conservatives Happier Than Liberals

Individuals with conservative ideologies are happier than liberal-leaners, and new research pinpoints the reason: Conservatives rationalize social and economic inequalities.

Regardless of marital status, income or church attendance, right-wing individuals reported greater life satisfaction and well-being than left-wingers, the new study found. Conservatives also scored highest on measures of rationalization, which gauge a person’s tendency to justify, or explain away, inequalities.

The rationalization measure included statements such as: “It is not really that big a problem if some people have more of a chance in life than others,” and “This country would be better off if we worried less about how equal people are.”

Upon reading this I smelled something fishy. My question, which reveals that I’ve learned something from Thomas Sowell, was: Why did the study assume that inequality was something to be explained? Why not ask people who expect equality (however defined) to be the “normal” state of affairs to explain why they think it’s normal?

In his essay, Race, Culture, and Equality, Thomas Sowell starts off listing several historical instances of inequality. He then asks

Why are there such disparities? In some cases, we can trace the reasons, but in other cases we cannot. A more fundamental question, however, is: Why should anyone have ever expected equality in the first place? …

Given similar educational disparities among other groups in other countries– disparities in both the quantity and quality of education, as well as in fields of specialization– why should anyone expect equal outcomes in incomes or occupations? …

Groups also differ demographically. It is not uncommon to find some groups with median ages a decade younger than the median ages of other groups, and differences of two decades are not unknown. …

It makes sense to blame human beings for biased rules and standards. But who is to be blamed for circumstances that are the results of a confluence of all sorts of conditions of the past and present, interacting in ways that are hard to specify and virtually impossible to disentangle?

The whole essay is worth reading.

Thomas Sowell on income inequality

Arnold Kling (Swarthmore ’75) has recommended a podcast by George Mason University Economics Professor Russ Roberts about basic economics. Kling writes that

If you had just one hour to learn essential, basic economics, listening to this talk would be the way to do it. The core topic is the reasons for income variation across people and over time. It is organized around refuting the claim that rich people need to keep poor people down. Along the way, he takes on (although not by name) the four main biases that Bryan [Caplan] has found among non-economists: anti-foreign bias, make-work bias, anti-market bias, and pessimistic bias.”

On that note, it’s time I quote one of my favorite passages from Thomas Sowell’s The Vision of the Anointed (pp.211-213).

Tax musings

I originally had this at the end of my previous post, but it’s worth its own post.

On a related issue, I continue to be amazed at how seldom, if at all, I hear people write or talk about taxes in terms of “what am I getting for this”? I start thinking about this when pondering the “progressive” income tax. There must be a non-biased name for this. I’d prefer to call it the punitive income tax. Often defenders of it say that people earning higher income should pay more. But under a flat tax, that is, where everyone pays they same percentage of their income, those who earn more do pay more. So I don’t know how one goes about figuring out the “correct” form of tax brackets.

The price of most products people buy do not depend on one’s income or wealth. One exemption is property insurance, such as home-owners or car insurance. But the customer can determine his preferred level of coverage.

My guess is that underneath the desire for a “progressive” tax system is the idea that one person’s need is a moral claim on another person’s wealth. Not to get into a dissertation on ethics here, but I don’t see what facts support such a claim. And even if it were true, is an action ethical if one is forced to do it?

Back to taxes, I found some IRS data quite interesting. For example Table 1 here shows that as fo 2005 the top 10% of income earners pay more than 70% of all income taxes. Table 7 at this IRS site (an Excel file), shows how much the top X percent of income earners pay in income tax as a percentage of total income tax collected. For the top 10% of income earners, their share has risen from 54% in 1986 to 70% in 2005. Of course, people move in and out of this top 10% group every year.

The Detroit News published results of Congressional Budget Office report showing that since the tax rate cuts of 2000 (not simply “tax cuts” as cutting the tax rate can increase total tax revenue), people in the top 20% of incomes paid more taxes than before the rate increase.

“For the general good of society”…whatever

The Rocky Mountain News posted my letter in response to this news article about how or if government should force one group of people to buy broadband internet access for another group of people.

Jeff Smith writes that CU law professor Phil Weiser “would like to see public rather than industry funds used to stimulate broadband deployment, arguing that such services are for the general good of society” (March 10). This is journalistic smoke and mirrors.Extending broadband access to rural and remote areas is not a choice between”public” and “industry” funding. Since “the public” both pays taxes and funds industry when buying products, it pays either way. The choice is between voluntary trade and coercion.

Aesop’s fable of the City Mouse and Country Mouse is about trade-offs. If government should force City Mouse to buy broadband internet for Country Mouse, must Country Mouse buy City Mouse therapeutic getaways to the countryside?

If broadband access is for “the general good of society” what isn’t? Since a smelly, dirty, and immobile populace is surely “bad for society,” how about tax subsidies for soap, deodorant, and shoes?

Incidentally, both Phil Weiser and I graduated from Swarthmore College.

One could argue that certain goods are “public goods,” but fast communication and access to information is not one of them. The Wikipedia entry on public goods includes articles skeptical of the concept.

The tax threat to prosperity

Writing in the Wall Street Journal, economist Arthur Laffer makes an important point:

A cut in the highest tax rates will increase lots of other tax receipts. It will lower government spending as a consequence of a stronger economy with less unemployment and less welfare. It will have a material, positive impact on state and local governments. And these effects will only grow with time.

Mark my words: If the Democrats succeed in implementing their plan to tax the rich and cut taxes on the middle and lower income earners, this country will experience a fiscal crisis of serious proportions that will last for years and years until a new Harding, Kennedy or Reagan comes along.

Trained economists know all of this is true, but they try to rebut the facts nonetheless because they believe it will curry favor with their political benefactors.

For an instructive video on how lowering the marginal tax rates at high income brackets can increase tax revenue and promote prosperity, see the videos at the Center for Freedom & Prosperity here.

Free-market “barons” must please customers

Yesterday the Daily Camera printed a letter to the editor of mine in response their Editorial Page Editor’s attacking individual freedom: