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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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Saturday, March 31, 2007 ~ 11:19 p.m., Dan Mitchell Wrote: Europe's booming hedge funds and private equity groups face renewed pressure to submit to tighter regulatory control, after Socialist MEPs warned that the industry's rapid
growth threatened to undermine the European Union's social achievements. ...In countries such as Germany, politicians have criticised activist investors for allegedly pursuing quick profits at the expense of the
long-term viability of companies and jobs. Several European policymakers and regulators have also warned of the risk posed by hedge funds to the stability of the financial system. Echoing these concerns, the
Socialists said yesterday that managers of hedge funds and private equity funds should submit to tighter transparency and disclosure requirements. They urged tougher rules on taxation and corporate governance.
"There should be various protection rules to prevent the crass over-exploitation of tax saving rules," the report said. Yesterday's paper also called for the introductionof "fiscal
discrimination"to prevent hedge funds from moving offshore.
Saturday, March 31, 2007 ~ 9:32 p.m., Dan Mitchell Wrote: EU environment minister Stavros Dimas wants increased European efforts to help kick-start an international post-Kyoto climate deal aimed
at limiting the world's greenhouse gas emissions. ...Environment ministers from across the world are widely expected to agree on a mandate to start negotiations to replace the UN Kyoto Protocol - the
international plan to fight global warming by limiting CO2 emissions which runs out in 2012 - at a December meeting in Bali, Indonesia, this
year. ...The EU executive is keen to get rapidly growing economies such as Brazil, China and India on the bandwagon for a global deal albeit
with a "differentiated" treatment to the already industrialised countries. He explained that from meetings with China and India, it has become
very clear that if the world's number one CO2 polluter - the US - would not sign up to the agreement, then neither will they. "We have to focus
on the US. We must be both cooperative and critical and give them the arguments in order to press the decision makers," Mr Dimas said.
Saturday, March 31, 2007 ~ 9:21 p.m., Dan Mitchell Wrote: Rudy Giuliani is the real fiscal conservative in the 2008 presidential race. ...He built New York's resurgence not just on fundamental police work, but also on
a foundation of fiscal discipline. He cut taxes and the size of government and turned an inherited deficit into a multibillion dollar surplus. Mr. Giuliani entered
office in 1994 with a $2.3 billion budget deficit handed to him by his predecessor, Mayor David Dinkins. Liberal conventional wisdom held that the
only way to close the gap was to raise taxes while cutting back on basic city services such as sanitation. The new mayor rejected this advice--in fact, he
famously threw the report recommending tax hikes in the trash! ...In his first budget address Mr. Giuliani explained that he would "cut taxes to attract jobs
so our people can work." ...Mr. Giuliani delivered, overcoming the initial resistance of the overwhelmingly Democratic City Council. He ultimately
prevailed 23 times, including cuts in sales, personal income, commercial rent and hotel occupancy taxes. ...Controlling government spending is another
pledge often made by politicians. ...Mr. Giuliani has a record they can have confidence in. His first budget cut spending for the first time in the city since
the fiscal crisis of the 1970s--and over the course of his administration he controlled the city's spending while federal government spending grew by over
40% and average state spending ballooned by over 60%. Mr. Giuliani always made fiscal discipline a priority: instructing city commissioners to cut agency
budgets even when the deficits had turned to surpluses. Mr. Giuliani set out to cut the size of city government, insisting that New York should live within its
means. New Yorkers saw their quality of life improve with more effective delivery of services while the bureaucratic ranks were being thinned by nearly
20,000--a near 20% decrease in city headcount, excluding police officers and teachers. But there are reasons to question Giuliani's pedigree. In a post on the New York Sun's political blog, Ryan Sager quotes Giuliani trashing the flat tax: "It [the flat tax] would really be a disaster and it's totally inconsistent with the movement of the Republican Congress toward giving more
responsibility to state and local government," Mr. Giuliani said on CNN's "Capital Gang," on March 9, 1996. To be sure, even good policy makers sometimes say silly things because of competing political interests. Nonetheless, it is difficult to reconcile Giuliani's recent supply-side rhetoric with his harsh 1996 statement. If he had merely expressed concern, that would be understandable, but claiming that a flat tax would be a "disaster" suggests a genuine hostility to the flagship policy goal of supply-side advocates.
Friday, March 30, 2007 ~ 9:14 p.m., Dan Mitchell Wrote: Assembly Bill 32, the "California Global Warming Solutions Act of 2006," makes California the first state in the nation to broadly limit CO2
emissions. Cosponsored by radical groups like Environmental Defense and the Natural Resources Defense Council, AB 32 establishes an overall cap on the production of CO2 and a mandatory new reporting system to
track emission levels across the state. This law will force California to ramp CO2 production back to 1990 levels by the year 2020. ...Less allowable carbon means less energy. Less available energy, coupled with
higher expected demand, means higher energy prices. Higher energy prices mean a booming market in "carbon offsets" for wealthy movie
stars and their patrons and extremely unaffordable energy for the rest of working, commuting California. ...even if one agrees that global warming is occurring and that human activities are the cause,
California's unilateral restrictions are counterproductive and will simply force businesses to leave the state. ...The first real casualty of all the
hype surrounding global warming seems to be simple economic common sense. Just a few years ago, in 1997, a Senate resolution sharply criticized proposed CO2 limits under the Kyoto Protocol, calling on
then-President Clinton not to sign it or any other international climate change agreement that ". . . would result in serious harm to the economy
of the United States." The Kyoto Protocol would have compelled the U.S. to reduce carbon dioxide emissions to 7% below 1990 levels by the
years 2008 to 2012. Adopting Kyoto-style restrictions would have cost the economy 4.9 million jobs, something Sen. Boxer and 96 of her Senate
colleagues apparently found morally, or at least politically, unacceptable. Unfortunately, with AB 32, California has adopted its own mini Kyoto,
so Sen. Boxer, Rep. Pelosi and Rep. Waxman are "all in" at a high-stakes game of tax, cap and trade. This push from the California delegation
stands American federalism on its head. Competition and innovation among the states are the driving force behind federalism, but Sen. Boxer and Speaker Pelosi hope to take an extravagantly expensive idea from
their state and force it on the rest of us, even as similarly draconian carbon restrictions are failing miserably in Europe.
Friday, March 30, 2007 ~ 8:55 p.m., Dan Mitchell Wrote: Today's EU resembles a sort of undemocratic Habsburg Empire. Its legislation is proposed by a Commission of unelected bureaucrats who
have now apparently lost control of their own staffs and who themselves are usually political outcasts from their national political systems.
Decisions on whether to adopt their often bizarre initiatives are then taken in total secrecy by the Council of Ministers or the European Council, before being rubber-stamped by the federalist parliament and
imposed on the citizens of member states, whose national legislatures can do absolutely nothing to alter their directives or regulations. Indeed, 84
percent of all legislation before national parliaments, according to the German Ministry of Justice, now simply involves implementing Brussels
diktats. All this makes European politics undemocratic at all levels, and opinion polls reflect the public's growing disillusionment. Daniel Schwammentahl of the Wall Street Journal, meanwhile, notes that politicians who favor more European centralization treat voters as obstacles to be overcome in their drive for a more powerful bureaucracy in Brussels: ...as Valéry Giscard d'Estaing, the former French President and main drafter of the constitution, said last year, rejecting his chef d'oeuvre
"was a mistake which will have to be corrected." In other words, Europeans are given a free vote as long as they vote for what the
Brussels mandarins think is best for them. In a newspaper interview last week, Ms. Merkel diagnosed a certain alienation between the EU and its
citizens, the root cause of which she located in the people's alleged impatience with the slow pace of decision making in Brussels. "To change that we need an EU constitutional treaty," she said. Come
again? The chancellor wants to fight the citizens' alienation by ignoring democratic votes that expressed that very alienation?
Friday, March 30, 2007 ~ 8:40 p.m., Dan Mitchell Wrote: Issste's pension arm currently provides retirement benefits to 580,000 individuals and like so many pay-as-you-go systems, the agency is operating in the red. With an average retirement age of 56 and retirees living longer, Issste has obligations that far outstrip its income and every year the deficit grows. In 2000, Issste's pension deficit was 10 billion pesos ($909 million). This year the government has set aside 42 billion pesos to fill the gap. By 2012 the shortfall is forecast to hit 77 billion pesos. According to the Finance Ministry, Issste's actuarial deficit in pensions is equal to over 50% of Mexican gross domestic product. Issste is a ticking time bomb. O'Grady's column then explains the new system, noting that the plan is optional for current government employees but mandatory for new hires: The centerpiece of the reform, which passed the lower house last week and is expected to pass the Senate this week, is the establishment of
worker-owned, individual accounts to replace the communal pool at Issste. There are no changes for those already retired. Current workers will have the choice of staying with the government's defined-benefit
plan and accepting gradual increases in the retirement age, or migrating to the new individual account, defined-contribution system. The new plan
differs from the pension reform for private-sector workers carried out in 1997 in that it gives those who migrate to the new system a bond, which
represents their vested rights and which will be rolled over into their new individual account. This makes the plan closer to the Chilean pension
reform than to the previous Mexican reform. Another similarity to Chile is the fact that new hires will not have the option of joining the old
system; through attrition, all government employees will eventually be owners of their pensions.
Thursday, March 29, 2007 ~ 6:23 p.m., Dan Mitchell Wrote: The bloc's economic record is mixed. This is still a Europe of wasteful farm subsidies, low growth and high unemployment, with rising
protectionism and a regulatory zeal unmatched anywhere in the free world. Yet the bad ideas tend to come from bad leaders. When the Brussels bureaucracy and dreams of creating a super-state are checked
by a vigilant media and national governments, the Europe construct itself can be market friendly. In the past two decades, the EU on balance has done more to open the door to greater competition than provide a
back door, as Margaret Thatcher feared, for welfare policies. Why? Most crucially, the 1957 Treaty of Rome was inspired by free-market principles. The EU is the world's largest zone for the free movement of
goods, capital and people. When individual countries have tried to blunt those freedoms, Brussels has often fought back with vigor. The euro, the
world's most successful currency union, has lowered interest rates, promoted internal trade by removing exchange-rate risks and--especially in the Latin countries--made it impossible for governments to inflate
their way out of trouble. Europe's diversity and growing size are also strengths. For each dysfunctional Italy, there's a booming Britain or Estonia or Denmark showing how market-friendly policies pay dividends.
In a wider Europe, good ideas squeeze out the bad. The Eastern Europeans have popularized low and flat taxes. Boom-town London is home to hundreds of thousands of Poles and Frenchmen, whose
departure is an electoral issue in their native countries, where politicians are realizing they must compete to keep their brightest at home.
Wednesday, March 28, 2007 ~ 4:30 p.m., Dan Mitchell Wrote: Senators Max Baucus (D-Mont.) and Orrin Hatch (R-Utah) have introduced legislation which they say will protect the jobs that US
financial services companies have created in the US, by keeping the industry on an equal tax footing with its international competitors. When
foreign financial services companies earn income abroad, it's not subject to taxation until the money is brought back to the parent company at home. The law giving American companies this tax treatment here at
home is set to expire next year. The Senators' bill would make the 'Subpart F' exception for active financing income permanent, so that US firms and their workers are not disadvantaged by tax burdens their
competitors don't face. "We need to make sure that US tax rules don't make financial services companies less competitive in the world arena,
and less able to keep good-paying jobs here at home," Baucus stated. "Making this active financing provision permanent will let US companies
make business decisions on a long-term basis." "America's tax laws shouldn't handicap companies striving to lead in a very competitive
global marketplace," Hatch added. "Considerable overseas business is at stake. Salt Lake City is home to firms that would benefit from this
legislation, and Utah jobs could be hurt if US-based companies cannot fairly compete in the international marketplace." ..."When we tax US
companies working overseas, we increase their overhead and allow their competitors to undercut them," Hatch noted. "That hurts American
workers, business, our influence abroad, and - ultimately - the tax revenue we're able to collect. Renewing legislation that puts our top-notch financial companies on competitive footing is good for
business and good for our country."
Wednesday, March 28, 2007 ~ 1:33 p.m., Dan Mitchell Wrote: For generations, Europe's wealthy journeyed through mountains and valleys to quietly stash their money with Switzerland's bankers, famed for
taking their secrets to the grave. ...many of the country's detractors complain that Switzerland remains the world's prime tax haven. The European Union (http://topics.nytimes.com/top/reference/timestopics/ Second, the article notes that high-tax countries can get at least some money to return home if they remove and/or reduce the tax penalites: Several countries, including Italy and Belgium, have lured back untaxed assets held abroad by decreeing an amnesty for tax evasion. But that is not the biggest challenge. Third, tax competition is creating other havens for people seeking to avoid not only punitive taxes, but also other forms of oppression: As Swiss bankers penetrate markets abroad they are facing like-minded competitors from elsewhere in the world. Dubai and Singapore have cultivated sophisticated private banking hubs, offering discreet financial services and a tax haven aimed at luring away wealthy clients. And just as the Swiss have moved overseas, foreign banks like Citibank have flocked to Switzerland. Geneva, once a sleepy lakeshore town, now has branches of 100 foreign banks. Lastly, the article notes that Switzerland has a completely different approach from America. Unlike the US - which has a so-called Bank Secrecy Act that strips away financial privacy, Swtizerland still respects the fundamental right to privacy. Citizens are treated like adults - a relationship that is facilitated by a better tax regime: Unlike regulations in the United States, Swiss law forbids bankers from divulging information about clients or their assets, under threat of
penalty. Tax evasion is not considered a crime.
Wednesday, March 28, 2007 ~ 11:26 a.m., Dan Mitchell Wrote: There is a sad law I have noticed in my economics career: the poorer the country, the poorer the economic analysis applied to it. Sub-Saharan
Africa, which this month marks the 50th anniversary of its first nation to gain independence, Ghana, bears this out. ...Economists involved in Africa then and now undervalued free markets, instead coming up with
one of the worst ideas ever: state direction by the states least able to direct. African governments are not the only ones that are bad, but they have ranked low for decades on most international comparisons of
corruption, state failure, red tape, lawlessness and dictatorship. Nor is recognizing such bad government "racist" -- this would be an insult to
the many Africans who risk their lives to protest their own bad governments. Instead, corrupt and mismanaged governments on the continent reflect the unhappy way in which colonizers artificially created
most nations, often combining antagonistic ethnicities. Anyway, the results of statist economics by bad states was a near-zero rise in GDP per capita for Ghana, and the same for the average African nation, over
the last 50 years. ...Why was state intervention considered crucial in 1957? Africa was thought to be in a "poverty trap," since the poor could
not save enough to finance investment necessary to growth. Free markets could not get you out of poverty. The response was state-led, aid-financed investment. Alas, these ideas had already failed the laugh
test then, as the late economist P.T. Bauer pointed out. The U.S. in 1776 was at the same level as Africa today, yet it escaped the poverty trap.
The same was also true for the history of Western Europe, Australia, Japan, New Zealand and Latin America. All of these escapes from
poverty happened without a state-led, aid-financed "Big Push." In the ensuing 50 years, there have been plenty more examples of poor
countries which grew rapidly without much aid -- China and India (who each receive around half a percent of income in foreign aid) being the most famous recent examples. Meanwhile, aid amounted to 14% of total
income year in and year out in the average African country since independence. ...The cowed IMF and the World Bank never mention the words "free market" in thousands of pages devoted to ending poverty.
Even the World Bank's 2005 World Development Report "A Better Investment Climate for Everyone" doesn't mention the forbidden words.World Bank economists are so scared of offending anyone on
Africa that they recite tautologies. The press release describing the findings of the 2006 World Bank report "Challenges of African Growth"
announces: the "single most important reason" for Africa's "lagging position in eradicating poverty," finally "has been identified." It is
"Africa's slow and erratic growth." The next World Bank report may reveal that half a dozen beers has been identified as the single most important reason for a six-pack.
Tuesday, March 27, 2007 ~ 11:04 p.m., Dan Mitchell Wrote: In 1965, the average man spent 42 hours a week working at the office or the factory; throw in coffee breaks, lunch breaks, and commuting time, and you're up to 51 hours. Today, instead of spending 42 and 51 hours, he spends 36 and 40. What's he doing with all that extra time? He spends a little on shopping, a little on housework, and a lot on watching TV, reading the newspaper, going to parties, relaxing, going to bars, playing golf, surfing the Web, visiting friends, and having sex. Overall, depending on exactly what you count, he's got an extra six to eight hours a week of leisure-call it the equivalent of nine extra weeks of vacation per year. For women, time spent on the job is up from 17 hours a week to 24. With breaks and commuting thrown in, it's up from 20 hours to 26. But time spent on household chores is down from 35 hours a week to 22, for a net leisure gain of four to six hours. Call it five extra vacation weeks. And because those with lower incomes have disproportionately gained from this trend, the author mockingly asks whether they should be forced - as part of the campaign to reduce inequality - to donate unpaid labor to the "less fortunate" with more money but less free time: ...a certain class of pundits and politicians are quick to see any increase in income inequality as a problem that needs fixing-usually through some
form of redistributive taxation. Applying the same philosophy to leisure, you could conclude that something must be done to reverse the trends of
the past 40 years-say, by rounding up all those folks with extra time on their hands and putting them to (unpaid) work in the kitchens of their
"less fortunate" neighbors. If you think it's OK to redistribute income but repellent to redistribute leisure, you might want to ask yourself what-if anything-is the fundamental difference.
Monday, March 26, 2007 ~ 9:03 p.m., Dan Mitchell Wrote: Last year states cashed in on the boom times by hiking expenditures by almost 9%, according to the National Association of State Budget Officers, or three times the rate of overall inflation. This year at least a dozen states are contemplating double-digit rates of spending growth. If that happens, aggregate state budgets will be up nearly 20% in just two years. One politician tossing aside the "new Democrat" playbook of fiscal restraint is the just-re-elected Governor of Illinois, Rod Blagojevich. Mr. Blagojevich just recently announced a $60.1 billion budget loaded with $7 billion in new taxes and $16 billion in new debt -- what the Chicago Sun Times calls "the largest tax increase and biggest borrowing spree in state history."...Jennifer Granholm, the Democratic governor of another declining Midwestern industrial state, is also seeking a $1 billion-plus tax business tax increase to fund what she's calling her "invest in Michigan" budget. The state, with more last jobs than any except Hurricane-ravaged Louisiana, hopes to reward businesses that invest more funds and create more jobs in Motor City by socking them with a higher tax bill. ...Montana Gov. Brian Schweitzer wants to hike spending by nearly 15% this year; North Carolina's Mike Easley has proposed a 7.5% spending hike financed by extending "temporary" sales and income tax hikes passed during the 2001 recession; and Ed Rendell of Pennsylvania seeks a $60.3 billion budget, a $4,500 budget increase per family of four since he entered office in 2003. New Mexico is so flush with cash from the oil boom that Gov. Bill Richardson has requested a 10% hike in spending this year, including $100 million for a space launch pad ...This year's fad "investments" -- teachers pay raises, expanded Medicaid, free health care for children, all-day kindergarten, more generous aid to the universities -- are fiscal grenades likely to detonate in the next recession. Fortunately, tax competition still exists, and the states that avoid higher fiscal burdens will continue to lure jobs and capital from the states governed by more irresponsible officials: Fortunately, some states are avoiding this fiscal trap door. Arkansas and West Virginia have already enacted tax cuts with their surpluses to make
sure the money doesn't get spent on unaffordable new wish list programs. Florida, Georgia, South Carolina and Texas are also preparing major
property or income tax cuts designed to lure more people, businesses and capital down South and away from the high-tax northeast and Midwest.
Monday, March 26, 2007 ~ 8:11 p.m., Dan Mitchell Wrote: In New Mexico, anyone can work as an interior designer. But it is a crime, punishable by a fine of up to $1,000 and up to a year in prison, to list yourself on the Internet or in the Yellow Pages as, or to otherwise call yourself, an "interior designer" without being certified as such. Those who favor this censoring of truthful commercial speech are a private group that controls, using an exam administered by a private national organization, access to that title. This is done in the name of "professionalization," but it really amounts to cartelization. Persons in the business limit access by others -- competitors -- to full participation in the business. ...in Las Vegas, where almost nothing is illegal, it is illegal -- unless you are licensed, or employed by someone licensed -- to move, in the role of an interior designer, any piece of furniture, such as an armoire, more than 69 inches tall. A Nevada bureaucrat says that "placement of furniture" is an aspect of "space planning" and therefore is regulated -- restricted to a "registered interior designer." Placing furniture without a license? Heaven forfend. Will notes - quite accurately - that businesses are in favor of regulation when it means they can raise prices on consumers and/or disadvantage competitors. This is why there is a big difference between being pro-market and pro-business: It is not true that businesses, as a matter of principle, want to fend off government regulation. Businesses have a metabolic urge to make
money, which is as it should be. But when a compliant government gives them the opportunity to use government regulations to enhance their moneymaking, businesses' metabolic urge will overpower any principles
about the virtues of free (from government intervention) enterprise.
Monday, March 26, 2007 ~ 5:39 p.m., Dan Mitchell Wrote: Chancellor of the Exchequer Gordon Brown surprised many yesterday by announcing a 2% reduction in the rate of corporation tax and a 2% cut
in the basic rate of income tax, representing the first major cut in these taxes in many years. Brown has been on the receiving end of growing
criticism of his handling of the public finances and his propensity to add complexity to an already unwieldy tax system, but many of the more
cynical observers believe that the Chancellor's generosity has more to do with securing his place as the next Prime Minster than it does with giving
the UK's tax competitiveness a much-needed fillip. Taking centre-stage in what is likely to be Brown's last budget speech was the announcement that corporation tax would be cut by 2% to 28%. According to the
Chancellor, this would bring the UK's corporate tax rate below both the OECD and EU15 average. However, tax experts observe that while the Chancellor has given with one hand, he will claw back much of this lost
revenue with the other through changes in capital allowances. ...Paul Davies, UK Head of Tax at Ernst & Young noted that while the Chancellor appears to have finally woken up to the pleas of the business
community for a tax cut, the overall result of the budget is a "mixed bag of changes that may affect different taxpayers in different ways." "The
cut in the main rate of Corporation Tax is welcome, showing that the UK is once again on a competitive path. This will reassure those companies thinking of moving offshore. However, the gain from the rate
reduction will be more than clawed back by the change in plant and machinery capital allowances. As a result it is clear that the main beneficiaries of the rate cut will be in the service sector rather than the
manufacturing sector," he stated.
Sunday, March 25, 2007 ~ 11:13 p.m., Dan Mitchell Wrote: It might appear that the rich are deluded, because virtually every study of the subject has shown that money by itself does not bring happiness.
Worse yet, many charge that the wealthy accumulate money simply so they have more than others. ...These explanations for the acquisitive tendencies of the world's billionaires (and all the rest of us, for that
matter) are convenient for social critics and tax collectors, but they ignore an explanation that doesn't reflect quite so poorly on the rich: What people hunger for is not money per se, but success at creating
value. Money just tends to come along for the ride. ...Happiness and perceived success are intimately linked: If you feel very successful, you
are twice as likely to be very happy than if you don't feel very successful -- even after accounting for differences in income, as well as education,
age, race, sex, religiosity, and other characteristics. In fact, while people who feel successful earn about a third more than others, on average,
income by itself creates no happiness at all. Above the level needed to get by, money is just an expedient measure of the value we feel we create.
...as long as a fortune is earned (as opposed to stolen, squeezed from governments or otherwise extorted from citizens), pecuniary acquisitiveness is directly related to the comfort of others. ...Better than
convincing today's 946 billionaires (and the rest of us) to stop chasing filthy lucre, or looking for creative ways to confiscate it, we should
understand this wealth as an enabler of everyone's success, and through increasing philanthropy, as the fuel for social good.
Saturday, March 24, 2007 ~ 7:16 p.m., Dan Mitchell Wrote: ...countries in the higher rankings of the IPRI are primarily advanced industrialized economies, particularly Western Europe (Scandinavia) and
North America. Countries that show a weak performance with respect to property rights protection are African and Latin American nations, in
addition to the Central European nations. ...better performing countries (1st Quartile in ranking) enjoy, on average, a GDP per capita income of
more than eight times their counterparts at the lower quartile of the Index. ... citizens of countries in the top quartile in the IPRI ranking
enjoy a per capita income that is more than seven times that of their counterparts in the bottom quartile. ...the correlation between the IPRI rating and GDP per capita amounts to a value of eightynine percent.
Saturday, March 24, 2007 ~ 4:41 p.m., Dan Mitchell Wrote: ...a Washington Post editorial...takes issue with last week's first-ever appeals-court decision holding a gun-control law unconstitutional on the
ground that the Second Amendment protects the rights of individuals, as opposed to the collective rights of state militias. The Post blasts the
ruling by the D.C. Circuit as an "unconscionable campaign . . . to broadly reinterpret the Constitution so as to give individuals Second
Amendment Rights." Not according to the guys who wrote it. ...The Bill of Rights was written to protect the rights of individuals - rights such as
freedom of religion, speech and the press - not to protect the rights of states. It is absurd to suggest that in the middle of this list of individual
rights the Founding Fathers wanted to protect the right of a state to have a militia. George Mason, often called "the father of the Bill of
Rights" said that a militia is the "whole people." In other words, all 300 million people in the United States are the militia. ...James Madison,
drafter of the Bill of Rights, in Federalist No. 46, alluded to "the advantage of being armed, which the Americans possess over the people
of almost every other nation." In Europe, he noted, "the governments are afraid to trust the people with arms." ...Governments have powers. It
is individuals who have rights. The Bill of Rights were an enumeration of those individual rights to be protected from the intrusion of an oppressive government, whether it be freedom of speech, freedom of
religion or the right to bear arms.
Friday, March 23, 2007 ~ 7:55 p.m., Dan Mitchell Wrote: The European Statistics Office (Eurostat) on Tuesday published figures examining taxation in the EU from 1995 to 2005. According to the
Eurostat report, in 2005, tax revenue in the EU27 stood at 40.8% of GDP, compared with 40.4% in 2004. In the euro area, tax revenue was 41.2% of GDP in 2005, compared to 40.9% in 2004. Over a longer
period, tax revenue as a percentage of GDP in both the EU25 and the euro area were in 2005 slightly below the levels recorded in 1995. ...In 2005, Sweden (52.1%) recorded the highest ratio, followed by Denmark
(51.2%), Belgium (47.7%), France (45.8%), Finland (44.0%) and Austria (43.6%). The lowest ratios were observed in Romania (28.8%), Lithuania (29.2%), Slovakia (29.5%), Latvia (29.6%), Estonia (31.0%) and Ireland
(32.2%). ...With regard to taxes on income and wealth, Denmark (31.2%), Sweden (20.1%) and Finland (17.5%) recorded the highest ratios to GDP, compared to an EU27 average of 12.8%, while Romania
(5.3%), Bulgaria and Slovakia (both 6.1%) registered the lowest ratios. For actual social contributions, the highest ratios to GDP were observed in Germany (16.7%), France (16.4%) and the Czech Republic (15.1%),
compared to an EU27 average of 13.0%, whereas Denmark (1.1%), Ireland (4.8%) and Malta (7.2%) recorded the lowest ratios.
Friday, March 23, 2007 ~ 7:40 p.m., Dan Mitchell Wrote: In a bid to help Canadian manufacturing and processing businesses respond to the rising value of the Canadian dollar and global
competition, Flaherty announced that certain firms would be permitted to write off their capital investments in machinery and equipment acquired on or after March 19, 2007, and before 2009 using a special
two-year 50% straight-line rate. In addition, the capital cost allowance rate will increase from 4% to 10% for buildings used in manufacturing and processing, and from 45% to 55% for computers.
Thursday, March 22, 2007 ~ 4:00 a.m., Dan Mitchell Wrote: Mr. Conrad has no intention of extending the Bush tax cuts, which he voted against and whose repeal would slap the economy in 2011 with the
largest tax increase in U.S. history. But Senate Democrats don't want anyone to know this, at least not before the 2008 election. So Mr. Conrad says his budget revenue estimates "assume that Congress will
take steps to counter the effects of the expiration of tax cuts in 2010 in a manner that does not add to the nation's debt burden." How so? Well,
"this additional revenue can be achieved without raising taxes by closing the tax gap, shutting down illegal tax shelters, addressing tax havens,
and simplifying the tax code," he avers. What the Senator should have said is "Abracadabra." The 10-year revenue increase from repealing the
Bush tax cuts is something like $2 trillion, according to Congress's static-revenue models. Mr. Conrad is claiming that Congress will make
up for all of that lost revenue by chasing down such illusions as the "tax gap," which the IRS claims is the difference between the taxes people
owe and what they pay. ...All of this is really sleight-of-hand to disguise that Democrats are intent on repealing the Bush tax cuts. This would
raise the tax on capital gains to 20% from 15%, more than double the tax rate on dividends to 39.6% from 15%, and sharply increase marginal
tax rates at all levels of income. ...The market fell 200 points on the day Mr. Conrad unveiled his magic act last week.
Thursday, March 22, 2007 ~ 3:15 a.m., Dan Mitchell Wrote: If the financial pre-eminence of the U.S. is eroding, as several recent reports contend, what's really to blame? ...when you listen closely to
what foreign and U.S. business and finance people are saying, there's one central cause -- private class-action enforcement of the SEC's Rule
10b-5. ...The possibility that a company will face a class-action lawsuit if its stock price falls makes all the other problems worse. ...Sarbox is only
one feature of the U.S. regulatory system that is exacerbated by class-action risk. Boards and audit committees complain that they spend more time on legal and regulatory compliance than on the business of the
company. Managements complain that they are required to restate their financial reports for trivial reasons, and no longer have collegial relationships with either their boards or their auditors. Auditors
complain that they can no longer advise their audit clients without worrying about the loss of their independence. And managements and boards have grown more risk-averse as they contemplate the
consequences of a losing quarter. At times, it seems, the purpose of companies is to issue accurate financial reports rather than to add value
for shareholders -- and fear of unwarranted and expensive class action litigation is at the bottom of this. As one participant in the Treasury Department's conference last week exclaimed, "We announced [a
transaction] today, and I've been sued three times already!"
Thursday, March 22, 2007 ~ 12:56 a.m., Dan Mitchell Wrote: The government is paying for unemployed single parents to have massages, beauty treatments and shopping sprees to "boost their
confidence" and encourage them to attend job centre appointments. The treats, part of a programme named Big Brother..., include £30 to spend
on a day out, as well as lunch and childcare. ...A brochure describes it as a "free two-week scheme that will boost your self-esteem and
supercharge your confidence". Organisers said it would be "nice" if participants found work, but this was not vital. ...A man from Whitley
Bay, Tyne and Wear, whose teenage daughter works at a salon involved in the scheme, said: "She was baffled when she was told these women were getting treatment for nothing. They had their make-up done, they
had facials, they had their nails filed and some even had their ears pierced. "My daughter doesn't get a penny from the government and will
earn less than these single mothers get in benefits. What message does this send out?" ...Martin Callanan, a Conservative MEP for the North
East, said: "There are lots of other parents, not to mention pensioners, who would like the state to pay for their pampering. It is suspicious that
they are unable to tell us how much this is costing taxpayers."
Wednesday, March 21, 2007 ~ 2:21 p.m., Dan Mitchell Wrote: City dwellers are making huge profits out of an EU loophole that allows people who have never set foot on a farm to claim European farm
subsidies. ...Auctioneers and brokers who used to sell cattle and farm-land are now focusing their attention on selling the rights to receive
European taxpayers' money - known as entitlement trading - in what one described as a "ferocious" market with the rights to subsidies "flying off
the shelf". ...Open auctions are being held - with one in Aberdeen due next Friday - while investors are also buying the rights to subsidies over
the telephone, through brokers, through internet auction sites and inter-active trading. ...Under EU regulations, only someone classified as a farmer can buy the right to receive subsidies, but to be classifed
officially as a farmer, people need only hold a lease on a minimum of 1.7 acres for ten months of the year, and never need to visit it. Scottish
landowners are now leasing out vast tracts of rocky highland for as little as £5 an acre a year, so that investors can claim to be farmers. For each
acre you lease, you can buy annual subsidies averaging £100 an acre, but which can rise to over £1,000 an acre. A newspaper in Scotland, meanwhile, reports that one dairy farmer has figured out how to scam the system for about $2 million per year - most of which is received as a subsidy for milk that does not exist: A Scottish dairy farmer has exploited a glaring loophole in European law to annually earn the right to claim more than £1million in subsidies.
William Hamilton and Sons, of Meldrum Farm, Blairdrummond, Stirling, has taken advantage of a flaw that allows it to get handouts on almost nine times the amount of milk it produces. Under EU law, the business
will continue to qualify for the lottery-size payment annually until 2012 - even if it stops producing milk.
Tuesday, March 20, 2007 ~ 2:59 p.m., Dan Mitchell Wrote: This month, the State Department has set a new record by managing to insult the citizens of 123 different lands at one time in the "International
Narcotics Control Strategy Report: Volume II, Money Laundering and Financial Crimes." The 450-page report discusses what other countries
are doing to reduce money laundering and financial crimes, which is fine. But then the authors go on gratuitously lecturing each of the countries by
name about how they could do things "better." To understand the total hypocrisy of the State Department nags, it is important to remember that
more money laundering goes on in the United States than anywhere else, and that the U.S. is the world's biggest market for illegal drugs. The
Report…is filled with endless demands that other countries do a better job enforcing their laws, pass more laws, sign more international treaties
and engage in some practices that would be illegal and unconstitutional in the U.S. Many of the demands would not meet a reasonable cost-benefit test… Some examples: The Belgians "should strengthen the
adherence to reporting requirements by some nonfinancial entities, such as lawyers and notaries," so says State, while completely ignoring the
importance of lawyer client confidentiality. …To the Germans they say, "Amend legislation to waive the asset-freezing restrictions in the EU
Clearinghouse for financial crime and terrorism financing, so that the freezing process does not require a criminal investigation." Perhaps, the
folks at State Department forgot there are certain historical reasons why the Germans now insist on strong legal protections against a potentially abusive state. The Greeks (and others) are told, "Abolish
company-issued bearer shares, so that all bearer shares are legally prohibited." Maybe the State Department gurus were unaware that bearer shares are perfectly legal in some states in the U.S., such as
Nevada, and can serve a sound economic and personal privacy purpose. The authors say the government of Dominica "should eliminate its program of economic citizenship." But then again, maybe they were
unaware that many, if not most, countries allow permanent residency and/or citizenship (including the U.S.) to noncitizens who invest a certain
amount in their adopted homeland. …Singapore is told that it "should add tax and fiscal offenses to its schedule of serious offenses." Perhaps
again, it did not occur to the folks in State that the highly educated and prosperous citizens of Singapore are quite capable of figuring out for themselves which laws ought to be "serious offenses."
Tuesday, March 20, 2007 ~ 10:10 a.m., Dan Mitchell Wrote: When you pool together all the combined energy it takes to drive and build a Toyota Prius, the flagship car of energy fanatics, it takes almost
50 percent more energy than a Hummer - the Prius's arch nemesis. Through a study by CNW Marketing called "Dust to Dust," the total
combined energy is taken from all the electrical, fuel, transportation, materials (metal, plastic, etc) and hundreds of other factors over the
expected lifetime of a vehicle. The Prius costs an average of $3.25 per mile driven over a lifetime of 100,000 miles - the expected lifespan of the
Hybrid. The Hummer, on the other hand, costs a more fiscal $1.95 per mile to put on the road over an expected lifetime of 300,000 miles. That
means the Hummer will last three times longer than a Prius and use less combined energy doing it.
Monday, March 19, 2007 ~ 3:11 p.m., Dan Mitchell Wrote: The European Commission has tabled a controversial bill to raise the minimum duty on diesel from 2012, aimed at stamping out so-called fuel
tourism ... Mr Kovacs's paper suggests harmonizing the minimum level of excise duties at EUR359 per 1,000 litres of diesel in 2012 and subsequently at EUR380 in 2014, something which would force 21 EU
states to increase their current rates. ...fuel tourism cost Germany - believed to be the strongest advocate of the tabled proposal - EUR1.9 billion in 2004, as excise duties represent roughly between 30 to 60
percent of the pump price and are responsible for six to 18 percent of the running costs of a road haulage business.
Monday, March 19, 2007 ~ 2:46 p.m., Dan Mitchell Wrote: The 2007 Water Quality Financing Act, passed by the House late last week, reauthorizes a loan fund that lapsed in 1994 for state and
municipal waterworks, sewage treatment, water conservation projects, etc. If it emerges from the Senate in its current form, the bill is projected
to cost $14 billion over four years, a 250% increase over current spending levels. The bill not only extends the 1931 Davis-Bacon regulations to all federal water-infrastructure projects, but also to those
funded solely by states. Economists have shown repeatedly that the artificial wage floors of Davis-Bacon freeze low-income laborers -- primarily black or Hispanic -- out of competition with their union
counterparts. Small-business contractors are especially hurt by the compliance costs. Davis-Bacon also dramatically increases the cost of government projects, amounting to a mandate for more spending -- and
all for the sole justification of satisfying the AFL-CIO. According to the Bureau of Labor Statistics, only about 18% of construction workers are unionized.
Monday, March 19, 2007 ~ 11:23 a.m., Dan Mitchell Wrote: Ireland has boomed in recent years, and it now boasts the fourth-highest gross domestic product per capita in the world. In the mid-1980s, Ireland
was a backwater with an average income level 30 percent below that of the European Union. Today, Irish incomes are 40 percent above the EU average. Was this dramatic change the luck of the Irish? Not at all. It
resulted from a series of hard-headed decisions that shifted Ireland from big government stagnation to free market growth. After years of high
inflation, double-digit unemployment rates, and soaring government debt that topped 100 percent of GDP, Irish policymakers began to cut spending in the late 1980s in a desperate bid to recover financial
stability. Irish government spending fell from more than 50 percent of GDP in the 1980s to 34 percent by 2005. For Europe that is a triumph of restraint, given that the average size of government across 25 EU
countries today is 47 percent of GDP. And Ireland has steadily reduced its tax rates. The top individual income tax rate was cut from 65 percent
in 1985 to 42 percent today. The capital-gains tax rate was cut from 40 to 20 percent in 1999. ...Ireland established a flat 12.5 percent tax rate
on all corporations - one of the lowest rates in the world, and just one-third of the U.S. rate. Low business tax rates have helped Ireland
attract huge inflows of foreign investment. ...Inspired by the Celtic Tiger, many Eastern European nations have gone one step further and installed
both low corporate taxes and simple, flat-rate taxes on individuals. ...there are now 13 nations in the "flat-tax club," including Estonia, Russia, and Slovakia.
Monday, March 19, 2007 ~10:45 a.m., Dan Mitchell Wrote: A joint study by the Brookings Institution and American Enterprise Institute found that government regulations that are supposed to save
lives actually end up killing more people. Why? Because safety laws almost always have unintended bad consequences. ...In 1972, the FDA passed a law requiring child safety caps on many medications. It was
supposed to keep kids from being poisoned by drugs like aspirin. But there is an unexpected side effect. Because safety caps are hard to get
off, some people -- particularly older people -- leave them off, and some parents, feeling safer with the cap, leave the aspirin where kids can
reach it. A study of this "lulling effect" concluded that an additional 3,000 children have been poisoned by aspirin because of the regulation.
Sunday, March 18, 2007 ~ 4:00 p.m., Dan Mitchell Wrote: ...what would happen to average worker productivity if Uncle Sam were to impose a minimum wage of $500 per hour. The correct answer is:
"The productivity of the average worker would skyrocket!" This achievement, however, would be no cause for celebration, for this higher
productivity would result chiefly from the firing of all workers incapable of producing at least $500 worth of output per hour. Measured productivity in America would jump impressively even as the US
economy tanked and most workers were cast into lasting unemployment. ...For example, if teenagers, immigrants, and other lower-skilled workers
start entering the labor force in larger numbers, they will lower the average wage rate because lower-skilled workers generally are paid lower wages than those paid to higher-skilled workers. This fall in the
average wage rate, however, does not signal that workers' fortunes are declining. In fact, in this case it is evidence of economic health: The
economy is sufficiently flexible to provide jobs to workers who haven't yet acquired valuable skills. A less-flexible economy, such as France's,
which makes it difficult for lower-skilled workers to find jobs, will not "suffer" any such fall in its average wage rate. But that fact, surely, is
small comfort to the many poor people left unemployed.
Sunday, March 18, 2007 ~ 2:18 p.m., Dan Mitchell Wrote: The German politician highlighted that Berlin "really wants to underscore the social dimension" in this third part of the declaration.
"Europe stands for a social model based on economic competition but reconciling that competition with social and ecological responsibility," he
stated. A strong social paragraph is important to France which in 2005 saw a failed referendum on the EU constitution partly due to fears that
the EU would become too [classically] liberal. But too much social talk in the declaration is disliked by free market-oriented states like the UK and the Czech Republic.
Sunday, March 18, 2007 ~ 12:56 p.m., Dan Mitchell Wrote: Re-elected last year, Ms. Granholm recently rewarded the voters by announcing some $1 billion in new fees and tax increases. ...She would
tax trucking, shopping, smoking, hunting, fishing, drinking beer and liquor, using a cell phone and, yes, even dying. ...the levies are part of what has become a vicious cycle for Michigan: Poor growth causes
lower revenues, so raise taxes, which leads to even poorer growth, so raise taxes again. The state has lost some 362,000 jobs since 2000 and
the jobless rate in December was 7.1%, second highest in the country... The national rate is 4.6%. ...per capita income in the state fell to its
lowest level in 75 years in 2005, relative to the national average. ...her budget would...pay off the teachers unions that support her with a new
$178 per pupil spending increase, most of which would be absorbed by the bureaucracy and never see a classroom. This continues the state's lack of spending restraint; between 1995 and 2007 Michigan spent an
aggregate $14 billion above the rate of inflation and state population growth, according to a Mackinac study. ...according to the Governor's own Financial Advisory Panel, the state has amassed a $35 billion
unfunded liability in its public-school health and retirement benefits. The state spends a whopping $1,200 per student per year on teacher and administrator benefits. Additional Blogs:
Saturday, March 17, 2007 ~ 2:59 p.m., Dan Mitchell Wrote: Homeowners who refuse to make their properties energy efficient will face financial penalties under drastic government plans to transform Britain into the world's first 'green' economy. ...The Government said that every new home should be 'carbon neutral' within ten years - and existing properties subject to a 'home energy audit' to assess how green they are. Critics correctly note this is a massive intrusion into the private lives of homeowners: Blair Gibbs, of the Taxpayers' Alliance, said: "It's bad enough that politicians want to take so much of our money away in tax. For them also to intrude into our homes in order to have the ability to penalise us even further is simply unacceptable." But the government is undaunted, and, in a classic case of the pot calling the kettle black, Tony Blair even has the gall to state that his totalitarian initiative is akin to the fight against fascism: People are to be encouraged to make 'more sustainable' travel choices, including greater use of public transport, walking and cycling. The Government is also to invest in solar, wind and wave power. ...Mr Blair compared the fight against climate change to the battle against fascism. Sadly, the British people cannot count on the Tories to defend individual freedom. Under the feckless leadership of David Cameron, the Conservative Party is even further to the left than Labor. The Party of Margaret Thatcher has become a hollow shell: | ||||||||||