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www.freedomandprosperity.org |
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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Heritage Foundation, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Sunday, October 31, 2004 ~ 11:40 a.m., Dan Mitchell Wrote: Canada should launch new efforts to reduce effective taxation on businesses as a means of encouraging greater investment in physical capital, the Organization for Economic
Cooperation and Development said Oct. 28. Elimination of provincial sales taxes on capital goods and the abolition of capital taxes would lead to greater business investment and benefits across the economy,
according to the OECD's annual survey of Canadian economic performance. ...Other tax-related recommendations in the report suggest that Canada adjust policies that discourage people from working... Specifically,
the OECD suggested that Canada address the "welfare traps" created by high effective marginal tax rates faced by modest-income families. ...Tax disincentives to work in the Canada Pension Plan should
be removed, and new efforts should be taken to make the scheme actuarially fair for early and late retirement, the OECD said.
Sunday, October 31, 2004 ~ 10:15 a.m., Dan Mitchell Wrote: The controversial issue of sales tax was once again visited by the Japanese government yesterday after Finance Minister Sadakazu
Tanigaki indicated that an increase in the levy was likely as part of the country's package of long term fiscal reform. "I think it's important (for
the government) to have a debate asking for consumption tax (increases) from 2007," Tanigaki told a parliamentary fiscal affairs committee, adding that the government is hoping that tax revenues will match
expenditure by the early 2010s. The consumption tax is currently levied at a rate of 5%, although some, including the head of the governmental
tax reform panel, have controversially suggested hiking the tax up to between 15% and 20% to help pay for Japan's future social security costs.
Saturday, October 30, 2004 ~ 12:10 p.m., Dan Mitchell Wrote: Poll after poll has consistently shown that the American people like gridlock. They don't trust either party to run the entire government and
like having one in a position to check the other. The most recent poll in December 2002 by NBC News and The Wall Street Journal found 62 percent of Americans in favor of Congress and the White House being
controlled by different parties. Only 29 percent were not in favor. ...if most voters were as certain of Republican control of Congress today as
they were of Democratic control in the 1960s and 1970s, it might be enough to push the Democratic presidential candidate over the top. But it will probably take many more electoral cycles and years of Republican
control of Congress before that happens. For now, at least a few conservatives and libertarians who normally vote Republican are voting for John Kerry precisely in order to bring back gridlock. One is
well-known web blogger Andrew Sullivan, who thinks gridlock will keep government spending under control. "Divided government," he says, "is
perhaps the only real mechanism we have ... to restrain the politicians in D.C. from spending even more of our money." According to economist
Bill Niskanen of the Cato Institute, Sullivan has a point. His research shows that the rate of growth of federal spending is significantly lower when the White House and Congress are under control of different
parties than when they are unified.
Saturday, October 30, 2004 ~ 11:30 a.m., Andrew Quinlan Wrote: There was always something a little grandiloquent, a touch improbable, about the pledge made by the leaders of the European Union in Lisbon in
March 2000 to transform the EU into the "world's most competitive knowledge-based economy" by 2010. ...it is dangerous that the debate on
how to boost economic growth has become polarized, with opponents viewing structural economic reform as a threat to social progress, rather
than as a necessary catalyst for further progress. The truth is that the wider goals we all share -- from the eradication of poverty to the
creation of ever-more resource-efficient and environmentally sustainable economies -- are not attainable without the dynamism of economic
growth. It is crucial that the volatile public reaction to economic reform in Germany, France, the Netherlands and elsewhere evolves into a
broader consensus that inaction is simply not an option. The scar of high levels of long-term unemployment in many parts of the EU should not be tolerable to public opinion.
Friday, October 29, 2004 ~ 11:15 a.m., Dan Mitchell Wrote: The United Nations appears to have cast its vote in the U.S. Presidential election this week, and it wasn't exactly a secret ballot. It used 377 tons
of high-grade Iraqi explosives to announce its opposition to re-electing George W. Bush. At least we think that's a fair suspicion from the oh-so-convenient timing of the story of the explosives missing from the
Qaqaa munitions depot outside Baghdad. ...On October 10, a letter from the Iraqi Ministry of Science & Technology arrived at the International
Atomic Energy Agency's Vienna headquarters. The letter included a list of "high explosive materials" that "were lost" after April 9, 2003,
through "the theft and looting of the governmental installations due to lack of security." This is the ministry that worked with the IAEA before
the war and it's headed by a man who used to work for Saddam Hussein. The Iraqi ministry was responding, in what appears to be record time, to a U.N. request. IAEA Director-General Mohamed ElBaradei attaches the
Iraqi letter to his own October 25 letter to the U.N. Security Council, saying he had received it "consequent to [a] reminder" the IAEA had
sent on October 1. Somehow, information that was known for many months suddenly required urgent communication to New York.
Friday, October 29, 2004 ~ 10:54 a.m., Andrew Quinlan Wrote: Failure to regulate operators of "shell companies" that allow criminals to hide ill-gotten assets is making London a haven for money-launderers,
an influential report will warn on Friday. Many offshore jurisdictions have already clamped down on anonymous corporate entities and trusts that can be used as vehicles for fraud and money laundering. They have
introduced legislation to regulate the service providers that set them up. But Britain has left the sector unsupervised, opening the door to unscrupulous operators of shell or front companies, according to the
report from Transparency International, the anti- corruption campaign group. Official estimates suggest £25bn is laundered through the UK
every year. The report says: "It seems to us unconscionable that the UK crown dependencies and overseas territories have been pushed to
introduce legislation, yet the UK itself still lacks definitive plans to do so."
Friday, October 29, 2004 ~ 9:34 a.m., Dan Mitchell Wrote: A proposal put forward by some House Republicans for a national sales tax to replace the current system of federal income tax is being attacked
in a television commercial sponsored by the Democratic Congressional Campaign Committee. ...Democrats contend that the proposal will create a regressive tax system, shifting the burden onto low and middle
income taxpayers, who spend proportionally more of their income on goods likely to be subject to the tax. Emphasising this argument, the ad, which is running in South Carolina and parts of North Carolina, Texas,
Georgia, Indiana and Kansas, warns that the sales tax system will, for the average taxpayer, mean "a new big tax on every clothes purchase, our food, our cars and trucks, even our homes."
Friday, October 29, 2004 ~ 8:04 a.m., Dan Mitchell Wrote: No Republican president was elected in the 20th century without capturing the Buckeye state. Right now, it's neck-and-neck in the polls. If
Bush loses here, it will be due to the economy. ...Ohio, however, is one state for which Bush should probably take very little of the blame. The
real culprit is the Ohio GOP establishment headed up by Republican (In Name Only) Governor Bob Taft. Known among anti-tax activists as "Governor Tax," he has, with the aid of the Republican-controlled
legislature, boosted taxes over $900 million in the last three years. ...It is not just Taft's fault. The GOP has been in control of Ohio since 1994,
and previous governor and now senator George Voinovich raised taxes in 1997. As a result, Ohio has jumped in the rankings for state and local tax burden from 24th in 1994 to 3rd today, according to the Tax
Foundation. ...Not only is the tax burden affecting Ohio's job picture, it appears to be chasing away the future. From 2000 to 2003, the Census Bureau shows that the number of people ages 25 to 34 in Ohio has
declined by more than 54,000. ...Economics Professor Richard Vedder of the University of Ohio complains, "We have one-party rule that is tired
and corrupt. The special interests have inordinate control, and the legislature does its best to cater to them." ... From 1990-2001, per-capita general-fund spending in Ohio rose faster than in all other
states save Montana. With such explosive growth in expenditures, it is little wonder that the GOP establishment has felt the pressure to raise
taxes. ...if Bush doesn't win the Buckeye state, there is little question as to who is to blame. "If Bush loses Ohio," warns Vedder, "Ohio Republicans are largely responsible." |
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Thursday, October 28, 2004 ~ 4:40 p.m., Dan Mitchell Wrote: We've all heard about the Alternative Minimum Tax, or at least most of us will sooner or later. That convoluted scheme to ensure we can't use
deductions to avoid paying our "fair" share is predicted to ensnare a record 12.3 million taxpayers next year, and between one-quarter and
one-third of all filers by 2010. But the disclosure that Teresa Heinz Kerry paid a federal tax rate of only 12.4% on her income in 2003 has given us
a different idea. How about a Kerry Maximum Tax? That is, no taxpayer should have to pay a larger share of his income in taxes than John Kerry and his mega-millionaire spouse, who are after all bidding to become
role models as America's First Couple. Polls have long shown that when Americans are asked how much income people ought to pay in taxes, they typically say no more than 20%. This comports with Americans'
general sense of fairness that success shouldn't be punished with confiscatory tax rates. Millions of Americans pay far more than that, of course, and the Alternative Minimum Tax rates are 26% and 28%,
capturing those with enough deductions who imagine they can escape the 39.6% top marginal rate proposed by Senator Kerry.
Thursday, October 28, 2004 ~ 9:45 a.m., Dan Mitchell Wrote: Kerry's strongest and most consistent campaign message is the lament that the top income-earners benefitted from President Bush's
across-the-board tax cut, and that their money instead should have been spent on government programs. ...This is a true class warfare-style strategy: punishing the rich and rewarding the non-rich. It would be
terrible for our economy and hurt the rich, poor, and middle class alike. The reason America's standard of living is high - and why our poor
would be considered middle class in the majority of other countries - is because we produce so many goods and services per person. Monetary rewards, and/or a desire to break out of one's current economic class,
are largely what motivate us to produce those goods and services. ...The ill effects of slower economic growth particularly play out over the long
term. Europe, with its high marginal tax rates, serves as a good example. In 1973, per-capita income for the United States was about 26 percent
higher than that of Germany. After three decades of slower growth in Germany, the gap had widened to 37 percent. The numbers for France are similar. Per-capita income of Germany and France is about the same
as that of our least-wealthy state, Mississippi. A recent study by Edward Prescott of the Federal Reserve Bank of Minneapolis - and this year's co-winner of the Nobel Prize in Economics - concludes that Europe's
higher taxes account for almost all the difference in labor force participation rates between Europe and the United States. As taxes have risen over the past three decades, European workers have responded by
working less.
Thursday, October 28, 2004 ~ 8:25 a.m., Andrew Quinlan Wrote: Last week, the Columbus (Ohio) Dispatch reported that illegal alien Nuradin Abdi -- the suspected shopping mall bomb plotter from Somalia
-- was registered to vote in the battleground state of Ohio by the Association of Community Organizations for Reform Now (ACORN), a left-wing activist group. Also on the Ohio voting rolls: convicted al
Qaeda agent Iyman Faris, who planned to sabotage the Brooklyn Bridge and had entered the country fraudulently from Pakistan on a student visa. In the battleground state of Florida, indicted terror suspect Sami
Al-Arian illegally cast his ballot in a Tampa referendum in 1994 while his citizenship application was pending. He claimed the unlawful vote was
the result of a "misunderstanding." State officials declined to prosecute. ...at least eight of the 19 Sept. 11 hijackers were eligible to vote in
Virginia or Florida while they plotted to kill Americans. What's to stop the next foreign terrorist plotter from casting a tainted ballot in the
nation he has sworn to destroy? Not much. According to the Franklin County Board of Elections, the Dispatch reports, the office simply "takes
a person's word, that they're (sic) a U.S. citizen." ...Ethnic and racial grievance groups, with backing from the likes of Hillary Clinton and Ted
Kennedy, have forcefully opposed basic ID requirements at the polls. And they have armies of lawyers standing by to assist them. Responsible election officials who ask for proof of citizenship will be accused of
"harassment" and "intimidation." They will be accused of causing a "chilling effect" -- never mind the corrosive effect of unchecked illegal
alien voter fraud on law, order and the integrity of our electoral system.
Wednesday, October 27, 2004 ~ 5:17 p.m., Dan Mitchell Wrote: The economic efficiency scores don't paint a pretty picture about our elected representatives. The highest score held by a Democratic House
member (48) was jointly held by Barney Frank of Massachusetts, Earl Blumenauer of Oregon, Ron Kind of Wisconsin, and Ralph Hall and Charlie Stenholm of Texas, who all voted for efficiency-enhancing
legislation 48 percent of the time. The highest score for a Republican House member (87) was jointly held by John Shadegg of Arizona, John Sununu of New Hampshire, and Tom Petri and James Sensenbrenner,
both of Wisconsin. In the Senate, the highest score (64) held by a Democrat was held by Blanche Lincoln of Arkansas, and for a Republican, it was Richard Lugar of Indiana (91). The average Econ-E
Score was 20 for Democratic House members and was 54 for Republicans. The average for Senate Democrats was 40, and for Senate Republicans, it was 69. Congressional Econ-E Scores tend to confirm
what I suggested earlier that doing what's best for America is nowhere near as important to congressmen as doing what's best for special
interests within their constituencies. Doing what's best for the nation is a losing proposition and can cost them an election. But I don't blame
politicians for their efficiency-diminishing votes. After all, isn't it unreasonable to ask a politician to commit political suicide by upholding his oath of office and doing what's best for all Americans?
Wednesday, October 27, 2004 ~ 4:30 p.m., Dan Mitchell Wrote: ...the Democrats' most influential constituencies have interests and agendas with major negative impacts on blacks. No special interest
group within the Democratic party has as much influence -- domination might be a better word -- as the teachers' unions. The top priority of the National Education Association and the American Federation of
Teachers is their members' jobs. Even black Democrats in Congress seldom dare to cross these unions by supporting anything that would threaten unionized teachers' jobs, such as vouchers or any other form of
choice that would allow black parents to take their children out of failing and dangerous schools. Parents may think that public schools exist to
educate their children but, to the teachers' unions, these schools exist to provide their members with jobs, with iron-class tenure, and with pay
increases based on seniority, not performance. If maintaining that status quo means sacrificing the education of a whole generation of young blacks, the teachers' unions will do it.
Wednesday, October 27, 2004 ~ 2:45 p.m., Andrew Quinlan Wrote: ICT Ireland, the trade body representing the country's burgeoning information technology sector, has urged the Irish government not to
bow to pressure from tax harmonisation advocates within the EU and raise its corporate tax rate. "Any change in stated government policy to
retain a 12.5% corporate tax rate would be detrimental to our chances to retain and attract foreign direct investment to Ireland," said Peter
McManamon, chairman of ICT Ireland's taxation committee. He added that Ireland's low tax reputation has been "frequently cited by foreign-owned companies as the primary reason for which Ireland was
chosen as a location."
Wednesday, October 27, 2004 ~ 11:24 a.m., Andrew Quinlan Wrote: According to an analysis by the Argus Group, a well respected tax law and economics firm, the Kerrys' average tax rate would only increase by
1.8 percentage points to 15.2 percent under the senator's plan, while many small business people would see their average rate rise by 4.0 percentage points, resulting in effective rates as high as 35 to 40
percent... As Mr. Kerry's own tax situation shows, he is not proposing increased taxes on those who are already rich - through inheritance, hard work, luck or marrying a rich woman - but is proposing increasing
taxes on those who are trying to become rich. His plan proposes to make it more difficult for people to join his club of the very wealthy. If you are
already rich, you can tax shelter much of your income, but if you have little in the way of assets, it is almost impossible to shelter your earnings
from taxes. Mr. Kerry's running mate, Sen. John Edwards, also shares this tax hypocrisy. Last year, Mr. and Mrs. Edwards paid an average tax rate of only 5.1 percent on their reported $434,000 of income, or less
than one-third of what the average taxpayer pays.
Wednesday, October 27, 2004 ~ 10:45 a.m., Dan Mitchell Wrote: Just as U.S. states once did -- and still do -- national governments are increasingly forced to adopt policies that recognize the need to compete
with other governments. This competition among governing entities to make their jurisdictions good hosts to business is fostering global economic development in much the same way that it once fostered the
growth of the now-robust U.S. economy. As with other organizations, governments need competition to force greater efficiency. It also helps control the natural tendency -- dating back to the larcenous kings of
centuries ago -- to pry open the cash boxes of the private sector. That's why globalization is hated by socialists and other worshipers of state
ascendancy the world over. They don't like these constraints but know that the penalty for resisting them is severe.
Wednesday, October 27, 2004 ~ 9:30 a.m., Dan Mitchell Wrote: Reports indicated last week that the investment tax amnesty scheme currently underway in Belgium has failed to entice large numbers of
foreign account holders to repatriate their undeclared assets, and revenues are running way below government expectations. According to the reports, the Belgian authorities have collected just EUR47 million
under the amnesty scheme, which commenced in January and concludes at the end of the year, representing a paltry 5.5% of the targeted total.
...Under the scheme, individuals declaring hidden accounts are obliged to complete a form known as the declaration liberatoire unique (DLU), allowing immunity from prosecution and a reduced tax charge provided
the funds are repatriated to Belgium.
Wednesday, October 27, 2004 ~ 8:43 a.m., Dan Mitchell Wrote: No Republican president has devoted so much attention to this "right nation" within America. And no president has delivered so much red
meat to the various factions within the conservative coalition. Yet Mr. Bush has done more than just pay court to the right. He has actively
changed it. ...The most surprising change has been the rise of "big government conservatism." Ever since the Goldwater campaign of 1963-64, conservatism has defined itself as an antigovernment creed.
Barry Goldwater proclaimed that he had little interest in reforming government, "for I mean to reduce its size." Ronald Reagan proclaimed
that "government is the problem, not the solution." The Republican Class of '94 believed that "government is dumb while markets are
smart" (to borrow a phrase from Dick Armey)--and set about balancing the budget and cutting popular government programs. But Mr. Bush has
been different: an avowed conservative who is nevertheless willing to embrace big government. The massive growth in the state during this presidency (faster than under Bill Clinton, even if you exclude the
spending on the war on terror) owes a fair amount to opportunism... If the GOP's political machine puts Mr. Bush back into the White House on
Nov. 2, he could be on his way to creating a new kind of big-government Republicanism...
Wednesday, October 27, 2004 ~ 7:58 a.m., Dan Mitchell Wrote: The study says that the main success of Latin American pension reform has been to improve governments' finances. Expensive pay-as-you-go
pension schemes-paying for pensions out of current taxes-have been scaled back. Future generations will no longer be saddled with oppressive pension commitments. In several countries, the Bank finds,
reform has galvanised the development of capital markets and helped to modernise the financial system, both by improving the quality of regulation and by generating services such as risk-rating. Real returns in
the new pension funds have generally been impressive. In Chile, pension privatisation seems to have imparted a modest boost to economic growth by improving both capital and labour markets.
Wednesday, October 27, 2004 ~ 7:13 a.m., Dan Mitchell Wrote: Europe must focus on boosting sustainable growth if its social model is to survive, German Chancellor Gerhard Schröder has warned, as he today set out a seven-point plan for improving the EU's internal market. ...In a bid to reverse this trend, the German Chancellor's plan - entitled "seven chances for the single European market" - calls for complete liberalisation of Europe's energy markets by 2007, increased co-operation in defence industries and common standards for credit card operations and bank transfers. Mr Schröder also calls for a harmonisation in the way corporate tax is calculated, which may raise eyebrows in London, as the UK sees this as
the "first step" towards tax harmonisation, to which they are implacably opposed.
Tuesday, October 26, 2004 ~ 5:21 p.m., Andrew Quinlan Wrote: It would have been better to have had all the rate cuts in 2001, rather than phased in slowly. Better still to have combined the tax cuts with
effective control of future spending as the economy returned to full employment. But it's no coincidence that a moribund economy mired in an uneven, uncertain recovery took off exactly when the 2003 tax cuts
were passed. John Kerry wants to repeal the reduction in the top two tax rates, and the dividend and capital gains relief. He says it would have been better temporarily to provide larger rebates for lower- and
middle-income people. First, the evidence is that temporary tax rebates have very little stimulative effect. Second, the lower rates and dividend
and capital gains relief moved us closer to an economically desirable tax base by significantly reducing the double taxation of saving and investment. Indeed, if the concern is the potential long-run harm of
deficits crowding out private capital formation, it's strange to propose raising taxes on private capital formation.
Tuesday, October 26, 2004 ~ 4:15 p.m., Dan Mitchell Wrote: William J. Fox, director of the Treasury Department's Financial Crimes Enforcement Network, Oct. 25 highlighted "defensive filing" of
Suspicious Activity Reports (SARs) as a concern that has emerged following a recent series of high-profile actions against banks that have violated key provisions of the Bank Secrecy Act. We all know this
phenomenon is occurring--we have both empirical and anecdotal evidence we can cite," Fox said in addressing an American Bankers Association anti-money laundering conference. "We have seen financial
institutions file [SARs] in ever increasing numbers--often upon the recommendation of their lawyers or risk management teams" even when
circumstances do not justify such filings. ...SARs were intended simply to get information into the hands of law enforcement officials ...The process
of filing SARs involves subjective judgments on the part of bank officials and therefore "we're not that interested in focusing on isolated SAR
failures. What we are interested in is situations where the whole system doesn't work or where the bank doesn't have a program in place to
comply with the BSA." ...Following the panel presentations, John Byrne, director of the ABA's Center for Regulatory Compliance, drew applause
from the audience made up largely of compliance officers when he said he agreed with Joseph that the prosecutions were not the primary cause
of defensive SARs filings. "I don't think that's why it's happening," Byrne said. "Why it's happening is in part the examiners' overreacting to the
enforcement action and criticizing the banks. And that combination has led us to where we are today."
Tuesday, October 26, 2004 ~ 1:59 p.m., Dan Mitchell Wrote: I'm among those who believes George W. Bush doesn't merit re-election, though I supported and in fact actively advised his campaign the first
time around. ...the last thing I wanted was an administration combining aggressive social conservatism with uncontrolled spending and big new government programs. Some Bush strategists have seemed confident that
secular-minded supporters of small government and individual liberty -- a rather important constituency, historically, within the Republican Party
-- would have nowhere to go this fall, since it's not as if the record of Sen. John Kerry inspires confidence. But there are places to go, if not
especially attractive ones. Prof. Richard Epstein of the University of Chicago School of Law, whose scholarship has inspired so many of us, says he plans to vote for the Libertarian nominee... My favorite
syndicated columnist, Steve Chapman of the Chicago Tribune, is actually planning to cast a Democratic presidential ballot for apparently the first
time in his life. Chapman quotes Cato's Dave Boaz making perhaps the strongest argument that can be made for the Democrat on domestic policy: "Republicans wouldn't give Kerry every bad thing he wants, and
they do give Bush every bad thing he wants."
Tuesday, October 26, 2004 ~ 10:42 a.m., Dan Mitchell Wrote: ...Earlier this year, Mr. Kerry said, "I believe that the Constitution, our laws and our customs protect law-abiding American citizens' right to
own firearms." In September his campaign went as far as saying: "John Kerry's opponents are worried because he's the first Democratic candidate to support Second Amendment gun rights and to be an avid
hunter... But according to those on both sides of the gun debate--the Brady Campaign and the NRA--Mr. Kerry has voted for every gun-control bill before the Senate over the last 18 years. He has
consistently voted for restrictions, from banning semi-automatic guns to mandating storage rules. He refused to rein in the lawsuits against gun-makers. ...Polling may have convinced Mr. Kerry to change his
rhetoric, but his voting record and his refusal to "oppose an outright ban on handguns" show his constant endorsements of the Second Amendment mean little.
Tuesday, October 26, 2004 ~ 9:13 a.m., Andrew Quinlan Wrote: Romano Prodi, the outgoing European Commission president, has labelled Europe's efforts to overtake the US as the world's most
competitive economy "a big failure". ...His comments came as Wim Kok, the former Dutch prime minister, prepared to deliver a scathing
report on Europe's economic reforms... Mr Prodi said the widespread use of the national veto had allowed member states to block progress, in spite of Commission prompting. "You can't have unanimity in all
economic areas, or if you do, you must accept the failure of Lisbon," he told the FT. "Lisbon is a big failure."
Tuesday, October 26, 2004 ~ 8:30 a.m., Dan Mitchell Wrote: Europe would be plunged into "absolute crisis" in the event of a French "no" to the Constitution, Luxembourg's Prime Minister Jean-Claude
Juncker has warned. Mr Juncker told French television yesterday (24 October), "A French 'non' would lead Europe into an absolute crisis where there would be no more European dream, no more European ideal
to nurture: it would be total paralysis". And Mr Junker cast doubt on whether a country that said no to the Constitution could continue as a member of the European Union.
Monday, October 25, 2004 ~ 3:30 p.m., Dan Mitchell Wrote: The Sacramento Bee reported that the University of California system gave more to the Kerry campaign than any other single employee group,
and that Harvard was second, with only 15,000 employees to UC's 160,000. Campus bloggers computed the percentages of Kerry contributions over Bush: Cornell 93%, Dartmouth 97%, Yale 93%,
Brown 89%. ...Recently, I had two encounters with sobering implications for the academy. A junior professor told me that when she began teaching at Harvard she resigned from several organizations that would
have betrayed her conservative leanings. She hadn't wanted to give colleagues an easy excuse for voting her down when she came up for tenure; but now that the prospect of tenure was before her, she didn't
know whether she wanted to stay on in such a repressive community. My second conversation was with a rare pro-Israel Muslim whose contract
as lecturer hadn't been renewed, very probably because he was critical of the way his subject was being taught.
Monday, October 25, 2004 ~ 2:15 p.m., Dan Mitchell Wrote: The issues that exercised voters and politicians over the last several years have largely been resolved. In the 1992 and 1996 campaigns, the
major questions were: Should taxpayer money be used to fund cutting-edge art likely to offend a large segment of the community? And, should the National Endowment for the Arts continue to exist? ...look at
the NEA today. Not only is it still with us but in January President Bush boosted its budget by $18 million, to $139.4 million, the largest increase
in 20 years. ...Perhaps because it came from a Republican president, this particular gift horse has had its teeth picked over rather closely. The very people who would normally have lauded such an increase have
instead denounced it. For example, the theater critic for Minnesota's St. Paul Pioneer Press attacked it as a "cynical political maneuver." Maybe
it was. The point is, the NEA got more money and President Bush got the funding issue off the table, demonstrating once again the power of an incumbent to control a political agenda.
Monday, October 25, 2004 ~ 8:30 a.m., Andrew Quinlan Wrote: Sen. John Kerry hit a new low lately with campaign claims that President Bush is somehow responsible for contamination of flu vaccine at a plant
in England ...Unusually costly new U.S. regulations introduced in 1999 also compelled former vaccine producers to call it quits. The fact that
Medicare and other government agencies use their buying power to hold down the price of flu vaccine - a policy Mr. Kerry advocates for all drugs
- means there is plenty of downside risk when demand is weak, but no offsetting upside potential at times like this. De facto price controls for
flu vaccine artificially boost demand and discourage supply, resulting in shortages. If prices were allowed to move up during a shortage (which
economic illiterates call "gouging"), the market would quickly attract additional vaccine from abroad, the product would be moved from areas
with relative abundance to places of acute scarcity, and healthy adults would have an incentive to stay out of the waiting lines.
Monday, October 25, 2004 ~ 7:45 a.m., Dan Mitchell Wrote: ...since 1995, Philadelphia's population has declined 13 percent but registered voters have increased 24 percent. Are we sure we should we
be pleased? The unexamined belief that an ever-higher rate of voter registration is a Good Thing has met its limit in the center of the state
that this year is the center of the political universe -- Ohio. The U.S. Census Bureau's 2003 estimate is that in Franklin County -- Columbus --
there are approximately 815,000 people 18 or over. But 845,720 are now registered. ...What liberalized registration and voting procedures do
increase are opportunities for fraud, including the sort that Milwaukee television station WTMJ found in 2002. Fund says it ``filmed Democratic campaign workers handing out food and small sums of money to
residents of a home for the mentally ill in Kenosha, after which the patients were shepherded into a separate room and given absentee ballots.'' In 2000, in heavily Democratic St. Louis, at 6:30 p.m., a judge,
responding to a Democratic complaint filed in the name of a man the judge did not actually hear from (the man was dead), ordered polls to remain open until 10 p.m., three hours longer than the law allows, and
ordered one voting place downtown to be open until midnight. Before 7 p.m., all over the city, persons were receiving automated, prerecorded phone messages from Jesse Jackson saying, ``Tonight the polls in St.
Louis are staying open late until 10 p.m. in your neighborhood and until midnight downtown.'' Between 7 and 7:30 p.m., Al Gore was calling radio stations to announce the later voting hours. Apparently the entire
episode was orchestrated by the Democrats well in advance.
Sunday, October 24, 2004 ~ 11:45 a.m., Dan Mitchell Wrote: ...the vast majority of Canadian private schools are small, inexpensive, and are often subsidized by religious organizations. Children First grant
recipients attend a wide variety of schools, including Montessori, Waldorf, Christian, Islamic, Jewish, and small community schools. The average tuition of the 150 schools the families will attend in the 2004-05
school year is just under $5,000. This is far less than the $7,800 spent on average to educate a child in the Ontario public system. ...public schools
are often segregated due to the high costs of housing surrounding the "good" schools.
Saturday, October 23, 2004 ~ 1:30 p.m., Dan Mitchell Wrote: Germany's contribution to the EU's coffers is set to rise by billions of euro by 2013. According to a study by the French International Relations
Institute (IFRI), quoted by Die Welt, Berlin's net contribution to the EU could rise to 16bn euro a year by 2013. ...Meanwhile, the Financial
Times notes that Germany, Italy, Portugal and Greece are all at risk of breaching European Union ceilings on budget deficits in 2005.
Friday, October 22, 2004 ~ 2:22 p.m., Andrew Quinlan Wrote: The recent release of some of Teresa Heinz Kerry's tax records reveals as much about the confusion over this issue as it does about her financial
situation. The Kerrys are clearly rich, with several homes, a private jet, and millions of dollars in annual income. Yet they paid just 13 percent of
their income in taxes. That's less than most American pay -- and it is not due to "tax cuts for the rich." It is due to putting much of their wealth
into tax-free municipal bonds or other tax-exempt securities. So whether income tax rates are high or low, on rich or poor, makes little difference
to them. One of the major purposes of tax cuts is to get people to take their money out of tax-free securities and invest that money in something
that will increase economic activity and create jobs. Since our income tax system is steeply graduated, any across-the-board tax cut will immediately benefit most those who pay most of the taxes -- which is to
say, people with higher incomes. After Ronald Reagan's tax rate cuts in the 1980s first brought out anguished cries of "tax cuts for the rich," it
turned out that the federal government collected more tax revenue than ever and that people in upper income brackets not only paid a larger amount of taxes than before, but even paid a higher share of all taxes
than before. ...Much sloppy thinking about economic issues is based on reasoning as if there is a fixed amount of income, so that someone has to
lose whenever someone else gains. The real test of an economic policy is whether it can produce a rising tide that lifts all boats.
Friday, October 22, 2004 ~ 1:12 p.m., Dan Mitchell Wrote: Turkey should reform its complicated corporate tax system to help level the playing field between tax-compliant private sector firms and their
rivals in the informal sector, most of whom currently evade taxation, according to a report published Oct. 21 by the Organization for Economic Cooperation and Development. Turkey should also consider
cutting payroll taxes that finance the state-run welfare system as a means of boosting legitimate employment and reducing competitive advantages held by firms in the informal sector, which are estimated to
employ half of all Turkish workers, the OECD said. ...The OECD said it recognizes that Turkey has taken important steps over the past year toward simplifying and streamlining the corporate taxation system,
including moves to reduce the corporate income tax rate, from 33 percent to 30 percent...
Friday, October 22, 2004 ~ 8:35 a.m., Dan Mitchell Wrote: ICTU's economic advisor has said Ireland's low rate of corporate tax is unsustainable and is fuelling what he called a 'race to the bottom'. ...He
said the enlargement of the EU meant that Ireland was being pursued by new members in the tax competition race, citing Estonia, which has a
rate of zero for many firms. 'This is a race Ireland cannot win,' he said. ...He said the cuts in corporation tax were a huge subsidy to businesses in
the financial and non-trading sectors, with no quid pro quo requested in return.
Friday, October 22, 2004 ~ 8:00 a.m., Dan Mitchell Wrote: Japan's Finance Minister Sadakazu Tanigaki has warned that tax cuts legislated under a previous administration may soon be phased out now
that the country appears to be emerging from its long economic malaise. ...Tanigaki's comments came hot on the heels of a reference by Prime
Minister Junichiro Koizumi to the phasing out of 'proportional' tax cuts, possibly from 2005, as the country seeks to raise revenues to meet growing levels of debt and government spending. The tax cuts in
question, introduced under Prime Minister Keizo Obuchi, allow a 20% deduction of income tax, or up to Y250,000 per year ($2,300) and a 15% deduction in residential tax, or up to Y40,000 per year.
Friday, October 22, 2004 ~ 7:17 a.m., Andrew Quinlan Wrote: New Zealand's Finance Minister Michael Cullen has announced that the government is working towards delivering "significant tax reductions"
to help the business sector. Addressing the parliamentary finance and expenditure select committee, Dr Cullen indicated that a key tax reduction move would likely involve higher depreciation rates on
'short-lived assets'. ...According to Cullen, tax cuts would lead to a significant reduction in business tax revenues, although somewhat disappointingly for the business sector, he remarked that a reduction in
New Zealand's 33% general company tax rate is "not my priority."
Thursday, October 21, 2004 ~ 1:00 p.m., Andrew Quinlan Wrote: Here's a startling fact: Based on labor market statistics from the Organization for Economic Cooperation and Development, Americans
aged 15-64, on a per-person basis, work 50% more than the French. Comparisons between Americans and Germans or Italians are similar. What's going on here? What can possibly account for these large
differences in labor supply? It turns out that the answer is not related to cultural differences or institutional factors like unemployment benefits,
but that marginal tax rates explain virtually all of this difference. ...Let's take another look at the data. According to the OECD, from 1970-74
France's labor supply exceeded that of the U.S. Also, a review of other industrialized countries shows that their labor supplies either exceeded or
were comparable to the U.S. during this period. Jump ahead two decades and you will find that France's labor supply dropped significantly (as did
others), and that some countries improved and stayed in line with the U.S. Controlling for other factors, what stands out in these cross-country comparisons is that when European countries and U.S. tax rates are
comparable, labor supplies are comparable. ...I would add another data set for certain countries, especially Italy, and that is nontaxable market
time or the underground economy. Many Italians, for example, aren't necessarily working any less than Americans -- they are simply not being
taxed for some of their labor. Indeed, the Italian government increases its measured output by nearly 25% to capture the output of the underground sector. Change the tax laws and you will notice a change in
behavior: These people won't start working more, they will simply engage in more taxable market labor, and will produce more per hour worked. ...we should stop focusing our attention on the recent tax cuts
and, instead, start thinking about tax rates. And that means that we should roll back the 1993 tax rate increases and re-establish those from
the 1986 Tax Reform Act. Just as they did in the late 1980s, and just as they would in Europe, these lower rates would increase the labor supply,
output would grow and tax revenues would increase. ...The important thing to remember is that the labor supply is not fixed. People, be they European or American, respond to taxes on their income. Just one more
example: In 1998, Spain flattened its tax rates in similar fashion to the U.S. rate cuts of 1986, and the Spanish labor supply increased by 12%. In addition, Spanish tax revenues also increased by a few percent.
Thursday, October 21, 2004 ~ 12:21 p.m., Dan Mitchell Wrote: Predictably, so-called "consumer" groups with 20/20 hindsight have taken out their trusty retrospectroscopes -- the only medical instrument
guaranteed 100% accurate -- and condemned the FDA for not banning Vioxx three years ago, when a preliminary study indicated a possible increase in cardiovascular risk among patients taking the drug. But these
critics neglected to take into account the fact that Vioxx, as with the other COX-2 drugs (Pfizer's Celebrex and Bextra), was prescribed specifically to alleviate arthritis pain while posing less danger to the
stomach and GI tract. The older anti-arthritis drugs, known as NSAIDs, are notorious for irritating the gut, sometimes causing bleeding severe
enough to require hospitalization. Among all classes of drugs, these were among the most common causes of serious adverse drug reactions. Some
estimates attribute over 10,000 deaths annually to NSAID complications. How many such complications have been prevented by the use of Vioxx instead of one of the older NSAIDs? No one can be sure, but the number
is substantial. I practiced Rheumatology for twenty years, and had to care for many patients suffering the ill effects of NSAIDs -- there was no
COX-2 option at that time. Another valuable lesson gleaned from the Vioxx episode is the benefit to consumers of "me-too" drugs, whose
production and marketing has been condemned in recent attacks on the pharmaceutical industry. No matter how similar drugs may be in chemical structure, some patients will respond to one and not another,
while some will exhibit intolerance to one and not another. Indeed, Merck itself hopes to launch another COX-2 inhibitor within the next few months. Some editorials went so far as to call for restrictions on the
other COX-2 drugs, based on data from the Merck-Vioxx study alone. Yet, there is no solid evidence incriminating the others in cardiovascular risk, only suspicion. While those patients now on Celebrex and Bextra
are concerned about the potential risks to them as well, more studies should be done evaluating these risks before restrictions are added. No
other anti-arthritis drug, including aspirin and the older NSAIDs, have been studied over the length of time that Vioxx has been. Even aspirin would not be approved for human use if it had to pass FDA evaluation
today, due to its propensity for inducing GI bleeding, allergic reactions, and blood thinning. Indeed, while critics accuse the FDA of being lax, the
opposite is true: getting an innovative, life-saving pharmaceutical to market in the US is an incredibly daunting, time-consuming and expensive endeavor.
Thursday, October 21, 2004 ~ 11:15 a.m., Dan Mitchell Wrote: EU membership has so far been a disappointment to Eastern Europeans, with high upfront costs and slow-to-materialize benefits. Nor can the
citizens of Warsaw and Prague console themselves with the knowledge that they are joining, in the EU Commission's words, the world's "most
dynamic trade bloc." Since the early 1990s, European unemployment has averaged 11 percent, compared to 4 percent in the United States. According to the Organization for Economic Cooperation and
Development, EU countries have not created a single, net private sector job since 1970, compared to 50 million jobs added in the United States. The roots of Europe's malaise can be traced to protectionist trade
practices and heavy taxes that fuel government growth and impair private-sector job creation. By comparison, the new members - who spent the past 15 years dismantling socialism - have pioneered
innovative pro-growth policies... Thanks to their willingness to liberalize, the Eastern countries are outperforming the original EU-15 at every turn: The average Eastern European growth rate in 2003 was 3.9
percent of GDP - more than double the 1.6 percent average in Western Europe and significantly higher than the 2.4 percent growth in the United States. The largest Eastern member ( Poland) has enjoyed higher
growth rates than the largest Western member ( Germany) for each of the past nine years, averaging 3.8 percent annually. Hungary 's growth has averaged 5 percent, with unemployment at 3 percent and wages up
17 percent in 2003. And the star performers among the accession countries - the flat-taxers - have enjoyed average GDP growth of 6.1 percent. ...Faced with a choice between economic growth and EU
subsidies, Eastern Europeans have - at least for the moment - chosen the former. If they are able to withstand Western pressure, their success may
provide a model for the rest of the EU and help breathe new life into an ailing continent. Herein lies the ultimate irony: countries where minimalist government and free enterprise have existed for so short a
time may be instrumental in returning those concepts to countries where they originated but have lately fallen out of fashion.
Thursday, October 21, 2004 ~ 10:09 a.m., Dan Mitchell Wrote: Kofi Annan, secretary-general of the United Nations, finds it "inconceivable" that Russia, France or China might have been
influenced in Security Council debates by Saddam Hussein's Oil for Food business and bribes. "These are very serious and important
governments," Mr. Annan told Britain's ITV News Sunday. "You are not dealing with banana republics." This has been Mr. Annan's chief
response so far to the extensive documentation cited in the recent Iraq Survey Group report, from the CIA's Charles Duelfer, that under cover of the U.N.'s Oil for Food relief program Saddam was trying to buy up
pals on the U.N. Security Council. ...To be fair, maybe that's how the world would appear to anyone dulled for decades by U.N. diplo-speak--and Mr. Annan has toiled there for 42 years. But in the
modern world, the notion that Russia and China in no way qualify as banana republics might be news to the state-muffled media of both countries. It might also surprise readers of the Berlin-based
Transparency International Corruption Perceptions Index, which ranks 133 countries by levels of corruption, from best to worst. On that list, China ranks about halfway down, worse than Colombia or Peru and tied
for 66th place with Panama, Sri Lanka and Syria. Russia does worse yet, ranked between Romania and Algeria, and tied for 86th place with Mozambique. France does much better. Though it ranks as more corrupt
than the U.S., Israel or Japan, it ties with Spain for a still respectable 23rd place. That makes France one of the most corrupt countries not in
the entire world, but merely in Western Europe. Alas, such dignity may come as cold comfort to the French, given that Mr. Annan did not actually deny that the Chinese, Russians and French had taken big
payoffs from Saddam. Mr. Annan merely disputed that the Chinese, Russians and French would have delivered anything in return for the bribes. In other words, they may be corrupt, but at least they weren't
honest about it.
Thursday, October 21, 2004 ~ 9:45 a.m., Dan Mitchell Wrote: The Boston Globe ran an article entitled "Kerry Opposes Role in Tribunal/U.S. Concerns Not Yet Met, He Says." It quoted Kerry
spokesman Mark Kitchens: "George W. Bush once again chose to mislead the American people about John Kerry's position [on the ICC]."
So, what precisely is Kerry's position? The Globe conceded it had a hard time prying it out of him. "Kerry's statement on the court, e-mailed to a
Globe reporter Saturday night," the paper said, "came after repeated inquiries over the past six weeks and two days after another request the
morning of the [first] debate." "My number one priority is to protect the servicemen and women who protect America from harm," Kerry told the
Globe. "Therefore, I don't believe the United States should join the International Criminal Court until our concerns are addressed and the
Court develops a solid track record of fair prosecutions of the world's worst criminals." However, the Globe said, Kerry added (with ellipses
inserted by the Globe): "I will not continue the obsessive and self-defeating campaign President Bush has waged against the ICC and
the close American allies that support it. . . . All he's done is to alienate our closest allies and diminish his own authority in the world."
Thursday, October 21, 2004 ~ 8:24 a.m., Dan Mitchell Wrote: France must undertake a radical overhaul of its labor market or face irreversible economic stagnation, Michel Camdessus, former head of the International Monetary Fund, said in a report published Tuesday. The 200-page document, which was commissioned by the French finance minister, Nicolas Sarkozy, in May, touches on everything from the national education system to the need for more technological innovation. But the key to unlocking faster expansion is allowing people to work harder, it says. ...Attacking his country's 35-hour workweek and high minimum wages, the former IMF chief warned that if the government did not act, the effects of an aging population would be enough to trim the economy's growth potential from an annual 2.25 percent to 1.75 percent over the next decade. France, Camdessus said, must cut its "work deficit."...Economic growth in France has lagged that of the United States on average by 1 percentage point every year over the past decade as a combination of the shortened workweek, high unemployment and early retirement curbed the amount of time the French spend at work. And as people live longer, the state-funded health and retirement systems are coming under increasing strain. ..."We've had reports like that for 20 years, and for 20 years they've been put in the drawer," said Marc Touati, | ||||||||||