July 26, 2007 by Tom Armstrong.

Glenn Hubbard on who really bears the burden of uncompetitive corporate tax rates.

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July 25, 2007 by Tom Armstrong.

John Stossel on why the world is getting better.

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July 25, 2007 by Tom Armstrong.

Don Boudreaux, professor of econ at George Mason, has a theory on why the 21st Amendment was passed, overturning the 18th.

His conclusion:

So, if the history of alcohol prohibition is a guide, drug prohibition will not end merely because there are many sound, sensible and humane reasons to end it. Instead, it will end only if and when Congress gets desperate for another revenue source.

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July 25, 2007 by Tom Armstrong.

Special interests before efficiency (subscription required). 

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July 24, 2007 by Tom Armstrong.

Why does the left insist that the right to choose a child’s school only be available to the affluent?

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July 24, 2007 by Tom Armstrong.

Investor’s Business Daily on the virtues of globalization.

Notable:

And “in response to fears of globalization and rising inequality,” wrote Financial Times reporter Chris Giles, “the public in all the rich countries surveyed . . . want their governments to increase taxation on those with the highest incomes.”

That is, people want to tax the rich — an age-old urge — believing it will somehow help feed the poor. Unfortunately for those who believe this, it doesn’t work that way.

“Taxing the rich” might be satisfying on some level, given the general level of envy people have for those who are more successful. But carried out as a matter of national policy, such ideas will have disastrous consequences for the world economy, leading to less growth, less investment, fewer jobs and lower standards of living.

It’s a well-established fact that globalization — simply another word for free trade — has been, overall, a major boon, raising both incomes and standards of living worldwide. And that includes rich countries as well as poor ones.

Raising taxes might make some people feel better — after all, who doesn’t want to take all those newly minted billionaires down a peg or two — but it will do nothing .

Any nation that begins applying punitive tax rates to its rich will soon find that they are taking their money — and the investments and jobs that go with them — elsewhere.

Those who see the world “worse off” because of globalization must explain why, as global trade has surged over the last 30 years or so, the rate of poverty around the world has plunged.

As Surjit Bhalla, an economist affiliated with the Institute for International Economics, recently wrote: “World poverty fell from 44% of the global population in 1980 to 13% in 2000, its fastest decline in history. Global income inequality has dropped over this period and is at its lowest level since 1910.”

But what about workers in rich countries like the U.S. who worry about inequality? Will higher taxes correct their so-called inequities? Not at all. U.S. economic inequality has virtually nothing to do with globalization or free trade, per se. It has everything to do with education and skills.

A recent study for the National Bureau of Economic Research found that those with a bachelor’s degree can expect to earn $51,000 or so a year. Those with just a high school diploma earn $28,000.

So the “income gap” is really an education and skills gap. And it’s quantifiable: $23,000 a year, or nearly $1 million over a career spanning 40 years.

Taking more money from people who did the right thing — went to school or pursued more high-level training — isn’t the way to run an economy. That is, unless you want to run it into the ground.

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July 24, 2007 by Tom Armstrong.

Art Brooks asks what buys happiness in the City Journal. So, what does buy happiness? Is it income equality and security, as the typical leftist would suggest? No, says Art Brooks. People care more about opportunity and income mobility.

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July 24, 2007 by Tom Armstrong.

Wisconsin offers a costly plan, and Allan Hubbard proposes A Tax Cure for Health Care.

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July 23, 2007 by Tom Armstrong.

Mankiw asks two good questions.

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July 23, 2007 by Tom Armstrong.

The left cares little that the absolute standard of living in America is higher for most everyone than it was 10 years ago, 20 years ago, 50 years ago, etc. Greater absolute wealth for everyone means little to this group, because there are some people with more wealth than others, and they won’t be happy until everyone’s equal. Read this WSJ opinion on justice and inequality.

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July 21, 2007 by Tom Armstrong.

If it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it.

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July 21, 2007 by Tom Armstrong.

No problems foreseen with the impending increase in the minimum wage.

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July 20, 2007 by Tom Armstrong.

I found this from my neighbor, Glenn Reynolds (instapundit). It’s a quick read.

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July 20, 2007 by Tom Armstrong.

For a glimpse inside the mind of the typical college professor, read this. Notice that the professor is very careful with his data selection. What I found more interesting was this statement:

Working people value “economic security” over “economic opportunity…

Really? People prefer socialism or the welfare state to economic opportunity? He says 69% of the people prefer security to 26% for opportunity. He, of course, does not give his source. I find it an notable statement because it contradicts most of the evidence I’ve seen. For another view, read this.

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July 20, 2007 by Tom Armstrong.

I like these tax evaders. The government is trying to imprison them for refusing to pay their taxes, but they are unwilling to surrender to officials. I’m sure that if they resist, they will pay with their lives.

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July 19, 2007 by Tom Armstrong.

Those with a subscription should read this opinion in the WSJ. For those with no subscription, here are some highlights:

In one such study, two-thirds of subjects said that they would be happier at a company where they earned $33,000 while their colleagues earned $30,000 than at one where they earned $35,000 while their colleagues earned $38,000. In another experiment, 56% of participants chose a hypothetical job paying $50,000 per year while everyone else earned $25,000, rather than a job paying $100,000 per year while others made $200,000. Thus, the thinking goes, the very fact that some people have less than others leads to unhappiness, even without deprivation.

But the egalitarians misinterpret the experimental evidence. The studies cited above don’t necessarily tell us that people would be happier in a world of total equality. Rather, they indicate that if there is no apparent prospect for getting ahead themselves (as there indeed was not in the experiment), people will focus instead on having more than others — even to the point of neglecting their financial interests.

Perhaps in a world where there is no opportunity for advancement, an important concern is how one’s income measures up to others. In the real world where people believe there is opportunity, however, one’s own income potential matters a great deal more than what others are earning. Some studies even find that the happiness of workers rises as the incomes of others climb relative to their own, because they see the incomes of others as evidence of what they themselves can achieve.

Those who don’t rise will probably not become happier if we redistribute more income. Indeed, the effect may be just the opposite. Redistributionist policies tend to reduce incentives to create wealth, which means less economic growth and fewer jobs, and less charitable giving — all to the detriment of those lower on the income scale. But more important, redistribution can, as the American welfare system has shown, turn beneficiaries into demoralized long-term dependents.

To focus our policies on opportunity, instead of equality, will address Americans’ real concern, and make us happier to boot.

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July 19, 2007 by Tom Armstrong.

Henry Paulson writes about lowering corporate tax rates today in the WSJ (subscription required).

Paulson contends, like many economists, that a more competitive corporate tax rate would spark additional capital investment in the U.S. and generate economic growth. He makes his point well. For example:

With the 2003 Job Growth and Tax Relief Act, President Bush and Congress reduced the double taxation of dividends and gave small businesses incentives to grow and hire. The 2003 act spurred capital creation that combined with a robust global economy and contributed to the creation of eight million new jobs and low unemployment rate. Economic growth has boosted real wages. Over the past year the average production worker has seen his annual wages rise $424 above inflation.

Tax systems have one fundamental purpose — to raise revenue — and the best systems minimize the drag on the economy. Therefore, we should ask: For a given level of revenue, what business tax regime best promotes U.S. economic growth and creates jobs? At a time when markets change rapidly, requiring businesses to be ever more flexible and swift, they are burdened with a business tax code complicated by parochial political interests. Government should not pick economic winners or losers; the marketplace has proven itself more than able for that task.

Business tax policy levers, such as the corporate tax rate, depreciation rates and investor taxes, as well as the taxes levied on small businesses through the individual income tax, should strive towards a similar purpose: to encourage economic growth by reducing the tax burden on additional investments. Yet, the current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness.

Take just a few examples. Taxes on capital income raise the price of future consumption and discourage saving and capital formation. Reduced capital formation gives labor less capital to work with and lowers labor productivity, reducing real wages and income.

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July 19, 2007 by Tom Armstrong.

Jeffrey Zaslow wrote another article in the WSJ today on the entitlement problem in the U.S. He wrote “Blame it on Mr. Rogers” around one month ago, and it was widely popular and generated thousands of responses. Today, Mr. Zaslow asks who’s really to blame for the problem.

As an educator, I am very interested in this subject. I have witnessed this problem in my own classroom. Students are very self-absorbed, but, worse, they feel entitled to whatever they desire, regardless of merit. I have had students demand higher grades. These same students will have their parents call to make the case for them, which, by the way, is parent behavior that reinforces the entitlement complex. I have often offered extra credit for students asking for higher grades. Most become very upset with my offer. Most refuse the extra work and storm out. Why? They think they are entitled to the higher grade, and they actually feel insulted when someone asks them to “earn” it.

Finally, I have found in my personal experience that the most capable young people exhibit the least sense of entitlement, while the least capable display the most. If this is true in general, I’d like to know why. I have my own ideas, but no science to back it up.

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July 18, 2007 by Tom Armstrong.

John Stossel writes today more about his debate with M. Moore.

Notice that Moore lists Social Security as one of our governments greatest achievements. That’s absurd! If the Social Security program was devised and run by private enterprise, Moore would make a movie about it. Imagine an insurance company offering an annuity that paid an average real return of approximately 1%, had an unfunded liability in the trillions of dollars, was insolvent in its present structure, and was subject to change at any time (worst of all, it’s compelled, otherwise far fewer would participate). Moore would criticize any private organization offering a financial investment such as this, but since it’s a government program, he lists it as a great success.

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July 18, 2007 by Tom Armstrong.

Short post at marginal revolution blog on the compassion at the FDA.

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