The Financial Times‘ lead editorial today, “Democracy’s Slow Cure for the Euro,” illustrates a growing willingness of “experts” to argue that people are too stupid. The opening phrase notes that rapidly changing financial markets often “outpace the capacity of democracies and their international institutions to control them” and then moves quickly to give a qualified endorsement of “managed democracies.” Russia is their example — a nation where “the ruling elite holds ritual elections which it always wins, and derives formal legitimacy from the people even though it governs with little reference to them.”
The FT recognizes that few nation states wish to emulate Russia but then goes on to note that “Still” Russia has been more quick to respond to threats to its banks, rushing credit to Cyprus to defend its over-extended banks. European nations, it suggests, have been crippled by nationalism (“flying the flags of states with high budget deficits at half-mast”) and seeing the roots of this sluggishness in the outmoded “Protestant notion that debts are sinful and demand public humiliation.”
Somewhat inconsistently, it goes on to note that it is correct to keep the pressures on Greece and Italy, neither of which it admits have done much to address their problems but endorses the French/German decision not to ask Greece to depart the Eurozone. Rather, the FT suggests given the impossibility of people conforming to expert opinion, the European Central Bank must step in to save the Euro, to stabilize Europe’s economy and to create prosperity. The debtor nations, it concludes, must also play their part in this non-moral act, making the reforms their constituencies now oppose so fiercely.
That experts allowed this crisis to develop, that traditional concepts of morality would have done more to fend off this disaster than have the “knowledgeable” views of our best and brightest, is a concept not yet envisioned by the FT. Perhaps, a closer reading of history might suggest a more generous treatment of the wisdom of Europe’s populace. After all Brecht was being sarcastic, when he had his characters complain similarly about the citizenry, stating, “If this keeps up, we’ll have to elect a different people!”
Senate Republican Leader Mitch McConnell (R-Ky.) made a gutsy statement on the Senate floor today, saying that he was introducing an amendment to give the president Trade Promotion Authority (TPA). This was said while the Senate was considering a bill to extend trade preferences to less developed countries and about to deal with Trade Adjustment Assistance legislation, which the administration has said is essential before three pending trade agreements are sent to the Senate.
McConnell noted that TPA, also known as “fast track” authority, gives the president the ability to negotiate trade agreements and have them considered by Congress without amendments. He said that TPA, however, expired in 2007, and the administration has made no efforts to revive it. He called out trade unions for obstructing that process:
“TPA has long had bipartisan support, and led to numerous trade agreements with 17 new countries during the Bush administration, including the three we hope to consider shortly. Unfortunately, Democrats and their union allies allowed TPA to expire in 2007. And this President has made no effort to revive it. But without TPA, the U.S. will likely never agree to another deal again. The unions will make sure of it. And we’ve seen what happens then.
After the North American Free Trade Agreement passed in 1993, TPA expired. In the eight years that followed, the U.S. did nothing while other countries moved ahead, integrating themselves in the global economy. We can’t let that happen again. We can’t miss more opportunities to compete in foreign markets with U.S.-made products just because unions don’t want to.”
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Activists at the Breast Cancer Fund are scheduled to release a new scaremongering “study” on the chemical bisphenol A (BPA) tomorrow, suggesting that children are at risk from Campbell’s Soup. As part of their “Cans Not Cancer” campaign, the group measured BPA levels in a handful of canned goods and concluded: “There is a toxic chemical lurking in your child’s Campbell’s Disney Princess soup,” and other food products.
Why is the Breast Cancer Fund issuing a report about risk to children? What does that have to do with the cause of fighting breast cancer? Nothing at all. Instead it is part of an irrational anti-chemical campaign to rid the world of a very valuable chemical.
BPA makes transparent, polycarbonate plastics exceptionally strong and resistant to breakage and to relatively high heat. It is remarkably durable and easily sterilized, making it well suited for reuse and recycling and medical applications. BPA is also used to make resins and coatings that are suitable for application to a wide range of surfaces at a wide range of temperatures. As a result, it helps prevent corrosion and increases product durability. Its application in food packaging — lining aluminum and steel cans for example — not only reduces food waste, it prevents the development of dangerous contamination and pathogens in the food supply, providing a key public safety benefit.
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OPINION
Dahlia Lithwick: “A Killer Issue: Republicans Like Rick Perry Are Skeptical of Everything the Government Does—Except When it Kills People”
“In recent weeks, leading Republicans have made plain they don’t believe in government-run health care (lo, even unto death). They don’t believe in inoculating children again HPV (lo, even unto death). They don’t believe in government-run disaster relief (ditto, re death), the minimum wage, Social Security, or the Federal Reserve. There is nothing, it seems—from protecting civil rights to safeguarding the environment—that big government bureaucracies can’t foul up.But there is one exception: killing people. These same Republicans who are dubious of government’s ability to do anything right have an apparently bottomless faith in the capital-justice system. Everything is broken in America, they claim—except the machinery of death.”
Richard Rahn: “Stealth Wealth Tax”
“The stealth wealth tax may be the single-largest tax ever imposed on the American people, yet virtually no one knows about it. What is particularly unconscionable about this tax is that it has been imposed upon the most responsible citizens and the elderly in a most disproportionate way, and the real tax rate on American savers has soared to record levels.”
Veronique de Rugy: “Who Wants to Tax a Millionaire?”
“The Obama administration needs money — a lot of money — to pay for past and future stimulus, particularly because its so-called stimulus proposals have failed to reduce unemployment and will continue to fail. That’s why it’s not surprising that the president is once again trying to get tax revenue from the people with the most money to spare, hence the new proposal for a tax meant to hit millionaires – in this case the so-called Buffett tax, named after billionaire Warren Buffett— which would prevent millionaires from paying lower tax rates than middle-class Americans.”
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At Truth on the Market, I discuss how to make legal advice and legal services more affordable at this link. I also discuss the extent to which the legal profession should be deregulated to reduce the cost of legal services and increase their accessibility to people of modest means, and what kinds of regulation need to remain in force to protect the public. Economist Eric Rasmusen discusses the serious First Amendment problems raised by bans on free legal advice by non-lawyers under bar rules against “unauthorized practice of law,” which restrict speech such as one inmate correctly pointing out that another inmate has received bad advice from his lawyer. George Leef describes how the Michigan bar used bans on “unauthorized practice of law” to harass an accountant simply for helping his own daughter.
Law Professor Renee Newman Knake, an expert on legal ethics, discusses First Amendment problems with bar rules that seek to prevent corporations and others from providing low-cost legal services based on their associational characteristics. Law Professor Gillian Hadfield, who is also an economist, discusses the anti-competitive, factually-dubious way that courts have enforced and interpreted bans on unauthorized practice of law, here. George Leef, who himself has a law degree (and who studies educational institutions at the Pope Center for Higher Education Policy), notes that attending law school is “neither a necessary nor a sufficient condition for competence in the legal profession.”
Robert Crandall of the Brookings Institution notes that both lawyer pay and law student loan debt have risen rapidly under the shadow of barriers to entry into the legal profession. As he points out, “in most states, no one can sit for the bar examination without a law degree from an ABA-accredited institution,” even though “three years of law school are not necessary for lawyers handling simple divorces, real estate transfers, or traffic violations,” resulting “in rapidly-rising lawyer incomes and in a sharp increase in the cost of a law degree” due to this captive market. As he notes, “There are numerous studies of the deregulation of various sectors of the economy that began in the mid 1970s and spread to airlines, trucking, railroads, telecommunications, cable television, and oil and natural gas. Invariably, they find that freeing up entry and deregulating prices leads to greater efficiency, more rapid innovation, and lower prices without a sacrifice in service quality.” As Walter Olson notes, however, there are characteristics of the legal profession that make complete deregulation a less attractive option than in some other industries, since the cost of lawyers’ unethical behavior is borne not only by their clients but by other members of the public, like the people they sue. Requiring ethical fitness for lawyers thus seems like a necessity.
But the requirement that would-be lawyers attend law school should be discarded, since three years of law school are neither necessary nor sufficient for someone to be a good lawyer, given the uselessness of many law school classes (and since law school exams tend to do a worse job of testing knowledge of the law than bar exams. Law school instruction is typically much less efficient than the summer bar-exam preparation classes provided by private companies like BarBri). Links to other perspectives on deregulating the legal profession can be found here.
This year’s Federal Register is on pace to be 80,190 pages long. That’s an average of 220 pages of fresh proposed rules, final rules, notices, and more every single day.
If this pace keeps up, this year’s Register will make for slightly easier reading than 2010, which set a new record with an 81,405 adjusted page count.
Think about that for a second. 160,000 pages in two years. Even Stephen King couldn’t write that much. Amazing that so many people claim this or that part of the economy is unregulated. With 165,000 pages already in the Code of Federal Regulations and more coming every day, it just ain’t so.
I have argued that “significant tax increases” may be necessary as part of a deficit reduction deal, given the enormity of the deficit and America’s fiscal crisis. But Obama’s incredibly-complicated recent proposal to impose a new tax on some of the wealthy is a very inefficient and costly way to do that. [NOTE: The tax I am talking about here is the so-called "Buffett tax," not the expiration of the Bush tax cuts for upper-income households, which Obama also supports]. As Daniel J. Mitchell notes, the tax increase might yield only $19 billion or less annually for the U.S. Treasury, while resulting in lots of red tape, and wealthy people spending lots of money on structuring their affairs so as to avoid the new tax, to the point where lawyers and accountants who handle people’s taxes will “celebrate” due to all the new tax paperwork. Mitchell says that the new tax will cut the size of the economy, and wipe out jobs, while “accountants and tax lawyers (and don’t forget bankruptcy specialists) will get more business if Obama’s plan is implemented.”
The new tax resembles the Alternative Minimum Tax (AMT) in its wastefulness. The tax code already requires many wealthy and middle-class households to fill out Form 6251 to see if they are subject to the AMT, even though most discover after completing the form (which sometimes takes hours) that they are not in fact required to pay the AMT. The new Obama proposal will create a “turbo-charged” version of this red tape burden for wealthy households, requiring many to fill out a form that will ultimately require only a fraction of them to actually pay substantially increased taxes. It will also increase taxes on income that “already is double taxed” and punish thrift and investment by classifying “dividends and capital gains as ‘preference’ items.”
Obama’s new proposal seems to be motivated by a desire to redistribute wealth even at the cost of harming the economy and destroying jobs. That’s consistent with what Obama said in his 2008 campaign, when he admitted that he would support increases in capital gains tax rates to redistribute wealth even if the increased rates resulted in tax revenue going down due to reduced economic growth.
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OPINION
David Rittgers: “Abolish the Department of Homeland Security.”
“George W. Bush was right before he was wrong. Mr. Bush initially opposed the creation of the Department of Homeland Security, but he bowed to political pressure and formed a new bureaucracy and increased domestic-security funds. Ten years after Sept. 11, it’s time to rethink the very existence of that department because the additional layers of government and wasteful spending do not provide enough security to justify its existence.”
John Tamny: “Immigration: It’s Time to Get Serious About Legalizing All Work.”
“The reason we need to legalize work in the U.S. has to do with the basic truth that even now, in our depressed state authored by policy error, the U.S. remains the best place for ambitious individuals to realize their goals. In that case, we must open our borders to the foreigners eager to work given the tautological reality that they’ll be able to achieve more here.”
Mark Steyn: “Obama’s Magical Thinking on Green Jobs”
“On Thursday night, the president told a Democratic fundraiser in Washington that the Pass My Jobs Bill bill would create 1.9 million new jobs. What kind of jobs are created by this kind of magical thinking? Well, they’re ‘green jobs’ – and, if we know anything about ‘green jobs,’ it’s that they take a lot of green. ”
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So it has been decreed — by Warren Buffett, by President Barack Obama, and by media members going gaga over to so-called Buffett Rule — that the main goal of our nation’s tax policy should no longer be fostering economic growth, should no longer be making the U.S. more globally competitive, should no longer be removing special interest distortions from housing to ethanol credits.
Rather, the singular goal of the tax system should be making sure Warren Buffett pays the same tax rate — under a curious definition of “rate” that overlooks the fact that individual capital gains and dividends are actually double taxation on corporate income – as his secretary.
“Right now, Warren Buffett pays a lower tax rate than his secretary — an outrage he has asked us to fix,” Obama proclaimed in his September 8 address to Congress. He again invoked this “outrage” in announcing proposed tax hikes today.
After hearing that from the president, I’ve drunken this Kool-Aid as well. I agree; this injustice cannot stand! So here is my solution to fix the wealth disparity between Buffett and his secretary without the collateral damage the president’s planned tax hikes would do to the entrepreneurial sector. Force Warren Buffet to give his secretary a raise!
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One of the great controversies of the new space policy announced last year was the intent of NASA to turn over the transportation of cargo and crew to orbit to commercial industry. The first part of that effort, the Commercial Orbital Transportation Services (COTS) contract is expected to bear fruit soon, though problems with the Russians and ISS may delay things a bit for the first test flight by SpaceX, which may slip from late November into early next year. This program is for cargo only, and to date, it has been funded not through the traditional Federal Acquisition Regulations (FAR), but through what are called “Other Transactional Authority,” in this case Space Act Agreements (SAAs) between the agency and the commercial providers, in which fixed prices are paid for completed milestones, with no payment occurring until the milestone is complete (thus reducing risk to the taxpayer, who pays for performance, not time and material regardless of results). The approach has been very successful, allowing NASA to nurture a new capability at a cost a small fraction of what it would have been with a conventional cost-plus contract, based on the agency’s and Air Force’s own cost models.
For several months, NASA has been saying that it cannot use SAAs for the Commercial Crew contracts, and intends instead to procure the services under the FAR. This has caused a great deal of concern among the providers that this would skyrocket their costs of doing business. Over at Space Transport News, Clark Lindsey reports that they have indeed decided to go this route:
Despite protests from industry and several advocacy groups, NASA is going with the contracting method they decided several months ago to use. Instead of the Space Act Agreement approach used in the COTS cargo demonstration program, they will go with standard contracting but supposedly modified to reduce the huge overhead costs and intrusive interference in the running of projects at the companies that comes with it.
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