October 31, 2007 by Tom Armstrong.

Buffett claims he is not taxed enough, but his math is a little fuzzy.

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October 31, 2007 by Tom Armstrong.

Walter Williams says a rising tide lifts all boats.

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October 31, 2007 by Tom Armstrong.

Stossel advocates educational choice.

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October 30, 2007 by Tom Armstrong.

Author of Dilbert, Scott Adams, says pay CEOs more.

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October 30, 2007 by Tom Armstrong.

A fan of the Laffer Curve, this author says tax rate cuts can prompt economic growth–through a variety of means–and result in additional tax revenues. I have no problem with this argument. Afterall, growth in revenues can result from rate cuts because of the following:

• Encouraging supply of labor (some labor is elastic)
• Less tax avoidance
• More revenue recognition (willingness to recognize capital gains, prompting capital gains taxes)
• More incentive for entrepreneural risking taking

Having said this, I would not agree that all tax rate cuts pay for themselves entirely. However, I realize a well-targeted tax rate cut might pay for itself, maybe more. My only problem with this is that although I’m happy to see additional economic growth, I’m not sure I’m glad to see additional state revenues.  

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October 30, 2007 by Tom Armstrong.

Thomas Sowell explains how government breaks us down with its policies, unknown to us at the time, and then rushes in during the “crisis” (it created) with “solutions”, and claims to be savior to all.

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October 30, 2007 by Tom Armstrong.

Becker’s comments on recent increases in food prices are worth reading.

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October 29, 2007 by Tom Armstrong.

Don Boudreaux of Cafe Hayek is right on target as usual. He sent this letter today:

You allege that Intel is guilty of “abuse of market power to protect [its] monopoly” (”F.T.C. Goes AWOL,” October 29).  Sounds terrible - until we read that Intel’s offense is to offer “big discounts and rebates to computer makers who minimize the use of processors made by rival Advanced Micro Devices.” In other words, to keep customers, Intel keeps its prices low.

Monopolists raise prices; firms facing competition do not.  Intel keeps its prices low, meaning that it behaves competitively.  Yes, Intel’s pricing practices make life more difficult for AMD and other rivals, but that’s what competition is supposed to do.

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October 29, 2007 by Tom Armstrong.

I originally wrote an anti-draft opinion in response to a pro-draft letter to the editor and sent it to a local paper several weeks ago. I saw a response to my letter last Friday; I’d love to post a link, but the paper  does not yet have a link to it (it’s a small paper and small town). I wrote this response below this morning in perhaps 10-15 minutes. Perhaps it is weak–I’m too busy right now to devote much time to the effort. If you have read my original opinion on the draft and this opinion, and you think the argument could be make stronger, I’d love to have your thoughts and ideas.

I originally wrote my anti-draft opinion focusing on economic theory, but with Claude Walters’ response on October 26, 2007 in The Daily Times, I will direct my argument in terms of personal autonomy.  

Upon reading Mr. Walters’ opinion, I promptly taught of Milton Friedman’s quote: Underlying most arguments against the free market is a lack of belief in freedom itself. Mr. Walters, like many others, lacks a belief in freedom, prompting him to favor state directed uses for labor over personal preferences in supplying labor; that is, he believes our “common goal[s]”, such as fighting wars, trumps any preference of the individual.  

 So, suppose we have a shortage of labor anywhere in the economy, such as, say, in nursing, does that “common goal” authorize the government to compel inspiring teachers, artists, professors, factory workers and others to become nurses? I would hope not. Some people are more driven and more talented to be nurses than others, just as some people make better soldiers than others. Government assigning vocations is a tactic from Nazi fascism and Russian communism, not a policy of free nations. 

 Why should I be compelled to fight in a war when my talent might be fighting disease as a physician? My contribution to society would be much greater if I’m allowed to do what I do best. Mr. Walters does not consider these opportunity costs in his policy suggestions.  

Mr. Walters sprinkles terms and phrases such as “common service,” “sense of sharing,” and “cohesion among all” in his written opinion, but not everyone shares his vision for our society. His policy desires are based on his personal vision, which he wishes to force on everyone else. And if war is a “common goal,” why are so few willing to fight in some wars? I would suggest one of the reasons, again, is that not everyone has the same vision as Mr. Walters. If few people are willing to fight in a particular war, such as Vietnam or the Iraqi War, among others, I would suggest listening to the people and ending the war effort rather than forcing thousands of people, perhaps more, to fight and possibly die in a war they do not support. If indeed a particular war is a “common goal,” the nation will not be lacking volunteers. After all, we won our independence from the mightiest nation on Earth with an inspired, all-volunteer army.  

Might I end in suggesting Mr. Walters emigrates to a society that shares his vision of force and assignment of labor: Cuba. Be careful though. I hear it can be easier to visit than to exit—leaving might not contribute to its “common goal.”

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October 27, 2007 by Tom Armstrong.

John Tamny, the author of this short article, is a believer in the Laffer curve. He begins:

Commenting on the 1920s income-tax cuts spearheaded by Treasury Secretary Andrew Mellon, a New York Times editorial suggested that Mellon “wants in reality to get more money out of [the rich] than they are now paying. But he proposes to do it by making their rate of taxation lower.”

The Times’ editorial stance of over 80 years ago is notable considering the views held by its present editorial board. In a recent editorial (”A Dearth of Taxes“), the Times decried tax cuts given the board’s static view that a reduction in the rate of taxation paid by individuals is tantamount to revenue reduction. Modern history says otherwise.

In truth, tax collections in the U.S. tend to follow our nation’s GDP pretty closely irrespective of the tax rate. As Discovery Institute senior fellow Bret Swanson recently wrote, there is a “remarkable tendency for Federal revenues to hover around 18% of GDP (and for personal income tax revenue to gather between 7.5 and 9% of GDP), no matter if tax rates are high or low.”

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October 26, 2007 by Tom Armstrong.

Here’s a Milton Friedman argument on free trade, adapted from his book, Free to Choose.

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October 26, 2007 by Tom Armstrong.

The American ends its income inequality article as follows:

Even when using only cash-income measures, over the past 25 years, more families have moved to upper-income brackets. In 1980, fewer than 40 percent of American families made over $50,000 per year in 2005 dollars. A quarter century later, 46 percent of families did. On average, households in all income brackets had more spending power in 2005 than they did in 1985. Households in the lowest quintile spent 8 percent more in real terms per person, while households at the top spent 10 percent more and households in the middle spent 6 percent more. This was especially visible in one highly discretionary category: entertainment. Households in the lowest quintile spent 22 percent more on entertainment in 2005 than they did in 1985. Those in the highest quintile spent 12 percent more on entertainment over the same period.

Today, countries with the fastest economic growth—notably the United States, Canada, and the Great Britain—have wider wage distributions, and hence more measured inequality, than countries with slower growth, such as Italy, Germany, and France. Some suggest that the United States could achieve more aggregate equality with higher taxes and more transfer payments. But this approach would slow economic growth and diminish job opportunities across the board—which would eventually reduce total income. As the 2008 presidential campaign heats up, and as the calls for addressing income inequality grow louder, Americans should keep that tradeoff in mind.

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October 26, 2007 by Tom Armstrong.

The Federal Reserve Bank of Minneapolis takes a closer look at hourly wages.

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October 26, 2007 by Tom Armstrong.

Precisely the wrong guy to be president. It’s this type of person–one that promotes less economic and social freedoms–that frightens me. Anyone that seeks to force his morals on me, will not receive my vote. Let me decide what’s best for me, not the state.

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October 25, 2007 by Tom Armstrong.

From today’s WSJ:

John Christy of the U.N.’s Intergovernmental Panel on Climate Change (co-recipient of this year’s Nobel Peace Prize) responds to questions by CNN anchor Miles O’Brien:

O’BRIEN: I assume you’re not happy about sharing this award with Al Gore. You going to renounce it in some way?

CHRISTY: Well, as a scientist at the University of Alabama in Huntsville, I always thought that — I may sound like the Grinch who stole Christmas here — that prizes were given for performance, and not for promotional activities.

And, when I look at the world, I see that the carbon dioxide rate is increasing, and energy demand, of course, is increasing. And that’s because, without energy, life is brutal and short. So, I don’t see very much effect in trying to scare people into not using energy, when it is the very basis of how we can live in our society.

O’BRIEN: So, what about the movie [”An Inconvenient Truth”]; do you take issue with, then, Dr. Christy?

CHRISTY: Well, there’s any number of things.

I suppose, fundamentally, it’s the fact that someone is speaking about a science that I have been very heavily involved with and have labored so hard in, and been humiliated by, in the sense that the climate is so difficult to understand, Mother Nature is so complex, and so the uncertainties are great, and then to hear someone speak with such certainty and such confidence about what the climate is going to do is — well, I suppose I could be kind and say, it’s annoying to me.

O’BRIEN: But you just got through saying that the carbon dioxide levels are up. Temperatures are going up. There is a certain degree of certainty that goes along with that, right?

CHRISTY: Well, the carbon dioxide is going up. And remember that carbon dioxide is plant food in the fundamental sense. All of life depends on the fact carbon dioxide is in the atmosphere. So, we’re fortunate it’s not a toxic gas. But, on the other hand, what is the climate doing. And when we build — and I’m one of the few people in the world that actually builds these climate data sets — we don’t see the catastrophic changes that are being promoted all over the place.

For example, I suppose CNN did not announce two weeks ago when the Antarctic sea ice extent reached its all-time maximum, even though, in the Arctic in the North Pole, it reached its all-time minimum.

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October 25, 2007 by Tom Armstrong.

I ran across New Deal Policies and the Persistence of the Great Depression the other day in my reading, published, I believe, in the Journal of Political Economy in 2004. For those that are interested in the subject, but not in technical papers, Jim Powell’s FDR’s Folly might be more apt.

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October 24, 2007 by Tom Armstrong.

Robert Samuelson’s latest article begins as follows:

WASHINGTON — It’s our versatile villain. Globalization has served as a whipping boy for politicians of both parties and legions of pundits. We blame it for all manner of grievances: lost jobs, greater inequality, shoddy goods. But take this quiz as a reality check. What explains the resilience of the U.S. economy in the face of the deepening housing collapse? (a) Ben Bernanke’s deft management of the Federal Reserve; (b) the tireless spending of consumers; (c) low inflation; or (d) foreign trade.

The best answer is (d).

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October 24, 2007 by Tom Armstrong.

Don B’s latest here in the Pittsburgh Tribune.

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October 24, 2007 by Tom Armstrong.

The New York Fed released this report concerning productivity rates around the world. Intro to the report:

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October 23, 2007 by Tom Armstrong.

I always enjoy reading what Becker has to say.

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October 23, 2007 by Tom Armstrong.

Good opinion in today’s WSJ on Chuck and Barney’s brilliant plan to restore order to the subprime mortgage market. It begins:

So determined are Barney Frank and Chuck Schumer to “do something” about subprime mortgages that they have come up with a proposal that is unnecessary, will do little to help distressed borrowers, and would increase the risk to taxpayers from Fannie Mae and Freddie Mac. Other than that, it’s a fabulous idea.

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October 22, 2007 by Tom Armstrong.

I enjoyed this article on the nanny state. Remember, the more decision-making responsibility we relinquish to the state, the more childlike we become.

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October 22, 2007 by Tom Armstrong.

Article on recent Nobel Prize winners in economics from The Economist.

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October 22, 2007 by Tom Armstrong.

Art Brooks writes an opinion today in the WSJ on happiness and (income) inequality. It begins:

Nothing in the Democrats’ current domestic platform is more prominent than redressing income inequality. All of the major Democratic candidates believe that conservatives have purposively rolled back income equality — which liberals equate to social equality — since 1980. Liberal columnists routinely express this conspiratorial point of view, suggesting that conservatives want to dismantle all of the institutions of the New Deal and Great Society.

Assuming a Democrat wins the White House in 2008, we can expect steeper tax rates to take more from higher income earners, and more government spending to redistribute resources to low-income earners and the middle class.

The Democrats are correct that income inequality in America has increased over the decades. The U.S. Census Bureau, for example, measures this by using a “Gini coefficient,” in which zero indicates no inequality (all incomes are the same) and one is perfect inequality (one person has all the income). Over the past 40 years, the Gini coefficient in this country has increased by a quarter, to .47 today from .39 in 1970. In European countries, Gini coefficients generally sit below .30, indicating substantially less income inequality.

Yet income is just one item of importance in the lives of Americans. There are many others — from love to faith to happiness — that we care about, some of them far more. Egalitarians never ask if we suffer from inequality in these areas. If they did, they might be pleasantly surprised.

Many national and international surveys ask people questions such as, “would you say that you are very happy, pretty happy or not too happy?” They assign quantitative values to the responses (for example, “very happy” gets three points, “pretty happy” gets two points, etc.), and thus we can use the same tools (Gini coefficients) to gauge “happiness inequality” as we do to measure income inequality. It turns out that in terms of happiness — unlike income — Americans are really quite equal.

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October 22, 2007 by Tom Armstrong.

Democrats have finally found some government to cut. Here’s a short opinion today in the WSJ:

Here’s a politician-bites-dog story: Democrats have finally discovered a part of government they want to cut. The catch is that it is the corner of the Labor Department that monitors union corruption and how union leaders spend their members’ mandatory dues.

Last Thursday, the Senate voted 47-46 to cut $2 million from the budget of the Office of Labor Management Standards, which among other things collects so-called LM-2 forms. Revised in 2003 to require greater detail on union finances, these forms require unions to account for how they spend the tens of millions of dollars they collect each year. Under the Supreme Court’s Beck decision, for example, union members can’t be compelled to contribute to political causes they don’t support. So the LM-2s are a way to shine the light of accountability on union leaders.

The forms have disclosed, among other things, that last year the Food and Commercial Workers Local Union 1 spent $26,000 of members’ dues on rounds of golf for the bosses. Another spent $3 million on bills for hotels. The forms have also revealed that union leaders are not exactly members of the proletariat: Jimmy Warren, Treasurer of the Steelworkers and AFL-CIO makes $825,262 a year, while Don Hunsucker, President of the United Food and Commercial Workers Union Local 1288, earns $679,949 a year. These are fellows who think CEOs are overpaid.

The Labor Management Standards office also monitors union corruption, which is a serious and underreported problem. This month, the Labor Department announced 13 indictments and seven convictions in September alone, bringing criminal enforcement action to 97 indictments and 115 convictions for the year to date, mostly for embezzlement. Since 2001, Labor referrals to U.S. Attorneys have resulted in more than 800 convictions and some $102 million in restitution paid to union members.

The Senate vote was almost entirely along party lines, with 45 Democrats voting to cut the money. Only two Republicans went along: Arlen Specter of Pennsylvania and Ted Stevens of Alaska. They apparently believe that accountability is fine for business, but not for their pals in Big Labor.

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October 21, 2007 by Tom Armstrong.

The folks at Cafe Hayek posted a link to Milton Friedman’s take on Leonard Read’s I, Pencil; this clip is from his Free to Choose video set, which I own and bought here. For more on Friedman’s logic in this clip, read Leonard Read’s I, Pencil (a short essay).

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October 21, 2007 by Tom Armstrong.

Mark Steyn writes a good opinion today in the OC Register. Notable:

A couple of weeks ago, the Democrats put up a 12-year-old SCHIP beneficiary from Baltimore, Graeme Frost, to deliver their official response to the President’s Saturday-morning radio address. And immediately afterwards Rush Limbaugh, Michelle Malkin and I jumped the sick kid in a dark alley and beat him to a pulp. Or so you’d have thought from the press coverage: The Washington Post called us “meanies.” Well, no doubt it’s true we hard-hearted conservatives can’t muster the civilized level of discourse of Pete Stark. But we were trying to make a point – not about the kid, but about the family, and their relevance as a poster child for expanded government health care. Mr. and Mrs. Frost say their income’s about $45,000 a year – she works “part-time” as a medical receptionist, and he works “intermittently” as a self-employed woodworker. They have a 3,000-square-foot home plus a second commercial property with a combined value of over $400,000, and three vehicles – a new Chevy Suburban, a Volvo SUV, and a Ford F-250 pickup.

How they make that arithmetic add up is between them and their accountant. But here’s the point: The Frosts are not emblematic of the health care needs of America so much as they are of the delusion of the broader Western world. They expect to be able to work “part-time” and “intermittently” but own two properties and three premium vehicles and have the state pick up health care costs. Who do you stick with the bill? Four-car owners? Much of France already lives that way: A healthy, wealthy, well-educated populace works a mandatory maximum 35-hour week with six weeks of paid vacation and retirement at 55 and with the government funding all the core responsibilities of adult life.

…

As Gerald Ford likes to say when trying to ingratiate himself with conservative audiences, “A government big enough to give you everything you want is big enough to take away everything you have.” But there’s an intermediate stage: A government big enough to give you everything you want isn’t big enough to get you to give any of it back. As I point out in my book, nothing makes a citizen more selfish than socially equitable communitarianism: Once a fellow’s enjoying the fruits of Euro-style entitlements, he couldn’t give a hoot about the general societal interest; he’s got his, and who cares if it’s going to bankrupt the state a generation hence?

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October 19, 2007 by Tom Armstrong.

With much generalization, this author sums up libertarians and populists.

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October 19, 2007 by Tom Armstrong.

From a post I enjoyed at Cafe Hayek, describing the economics taught at George Mason University.

At MIT and other bastions of mainstream economics, most economists are to the left of center but to the right of the academic community as a whole. These economists are known for saying, in effect, “Markets fail. Use government.”

Masonomics says, “Markets fail. Use markets.”

Somewhere along the way, mainstream economics became hung up on the concept of a perfect market and an optimal allocation of resources. The conditions necessary for a perfect market are absurdly demanding. Everything in the economy must be transparent. Managers must have perfect information about worker productivity and consumers must have perfect information about product quality. There can be nothing that gives an advantage to a firm with a large market share. There cannot be any benefits or costs of any market activity that spill over beyond that market.

The argument between Chicago and MIT seems to be over whether perfect markets are a “good approximation” or a “bad approximation” to reality. Masonomics goes along with the MIT view that perfect markets are a bad approximation to reality. But we do not look to government as a “solution” to imperfect markets.

Masonomics sees market failure as a motivation for entrepreneurship. As an example of market failure, let us use a classic case described by a Nobel Laureate, which is that the seller of a used car knows more about the condition of the car than the buyer. Masonomics predicts that entrepreneurs will try to address this problem. In fact, there are a number of entrepreneurial solutions. Buyers can obtain vehicle history reports. Sellers can offer warranties. Firms such as Carmax undertake professional inspections and stake their reputation on the quality of the cars that they sell.

Masonomics worries much more about government failure than market failure. Governments do not face competitive pressure. They are immune from the “creative destruction” of entrepreneurial innovation. In the market, ineffective firms go out of business. In government, ineffective programs develop powerful constituent groups with a stake in their perpetuation.

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October 19, 2007 by Tom Armstrong.

Here’s a link to my recent letter to the editor that I believe I posted here first.

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