By slemrod on 7/21/2008 3:59 PM

A GAO report released today details government waste and fraud at the Indian Health Services (IHS). The report tells the all-too-familiar tale of lax oversight of government property, including theft and mismanagement, costing taxpayers $15.8 million from 2004 to 2007. The best excerpt:

"For example, IHS disposed over $700,000 worth of equipment because it was “infested with bat dung."

HT: Leslie at Swine Line.

By slemrod on 7/10/2008 12:55 PM

 

 

You can't make this stuff up. The European Union currently has 34 regulations on "marketing standards" for vegetables. From the Washington Post,

"Consider the Class I cucumber, which must be 'practically straight (maximum height of the arc: 10 mm per 10 cm of the length of cucumber).' Translation: A six-inch cucumber cannot bend more than six-tenths of an inch. Following 16 pages of regulations on apples (Class I must be at least 60mm, or 2 1/3 inches, in diameter) come 19 pages of amendments outlining the approved colors for more than 250 kinds."

And my favorite quote, from Gerald Ioli, the owner of an "upscale produce stand":

"It's a choice for the customer," Ioli said. "He has enough information on the label to make a decision about what he wants to buy. It's real competition."

Right.

By slemrod on 7/7/2008 11:46 AM

Surprise! A proposed commuter rail line from Ann Arbor to Howell will cost taxpayers millions more than the initial $32.4 million estimate, according to a recently released feasibility study. The Detroit News reports,

"The two-month study conducted by R.L. Banks and Associates of Cheboygan was requested after estimates of from $5 million to $24 million surfaced.

The $32.4 million covers the cost of track, station, signals and bus infrastructure. Another $6.3 million is needed for operating expenses since transit fares will bring in only about 30 percent of the revenue."

The $5 million estimate, submitted by a coalition for the Washtenaw-to-Livingston rail line, called WALLY, bolsters Edwards' budget rule, (coined by Chris Edwards at the Cato Institute), which states:

Government officials "should assume that the item will cost at least twice as much as initial estimates indicate. There should be a 2-to-1 hurdle when the price tag of a project is being considered."

In the case of WALLY's estimate, Edwards' rule applies almost fourfold. The bottom line: cost overrun for government projects is rampant. Clearly, Michigan is no exception.

 

 

 

 

By slemrod on 6/19/2008 1:01 PM

This video speaks for itself.

HT: FreedomWorks

 

 

 

By slemrod on 6/17/2008 9:07 AM

As gas prices hover around $4 a gallon, Americans undoubtedly turn towards their elected representatives to "do something." Anytime such a sentiment is expressed, advocates of limited government should be very, very skeptical. Over the next few days, I'll be taking a look at a few of the solutions to high gas prices that Congress is proposing during an election year, and some steps that could be taken to actually help reduce prices.

First up: a windfall profits tax.Touted by Democrats and some Republicans as a way to "punish" oil companies for their profits, a windfall tax would apply an arbitrarily determined tax rate to any profits above an arbitrarily determined profit margin. The concept hit Capitol Hill last week through Consumer-First Energy Act of 2008, introduced by Senate Majority Leader Harry Reid. His website touts a 25% windfall tax as one of the "roots of high gas prices."

It continues, "The proceeds of the tax will be invested in consumer price protection, renewable energy development and energy efficiency technologies through a designated Energy Independence and Security Trust Fund." (Read: slush fund)

There is no doubt that gas prices hit the bank hard, but it is not logical to follow that greedy oil companies have a magic button that they  push to raise prices. Oil prices are determined through extremely complex market interactions, not by the CEO of ExxonMobil, as uninteresting as that may sound.

In 1980, Jimmy Carter pushed a windfall profits tax through Congress under the guise of punishing Big Oil. Revenues, expected at $320 billion trickled in at around...$40 billion. Domestic production decreased. No solution there. Thankfully, Ronald Reagan ended the tax in 1988.

Further taxing the profits of Big Oil is a great election year ploy, but few will honestly tell you that it will do anything about gas prices. Just another day in Washington.

More&am ... Read More »

By slemrod on 5/31/2008 3:44 PM

By slemrod on 3/27/2008 3:09 PM

 Eli Lehrer from the Competitive Enterprise Institute notes five truly absurd product bans that exist in the United States. I could opine on the ridiculousness of the bans here, but I will leave that up to you. The conclusion? The nanny state persists.

Sangria (Virginia) . The Commonwealth of Virginia bans most preparations of the popular fortified wine drink (typically red wine with brandy and fruit) even though the state not only allows drinking of substances with the same alcoholic composition as Sangria and actually operates stores that sell all of the alcoholic ingredients needed to make Sangria.

Playing Online Poker in a Legal Casino (U. S.). Although 48 states have legal gambling in some form (and several run casinos), the federal government has made it illegal to place bets online—even in jurisdictions that allow almost all other types of gambling.

The Cardio-Pump (U. S.). No one has ever contended that anybody could do harm using this American-designed device intended to help resuscitate heart attack victims, which may actually help save lives. Although it has found wide use in other countries, the Food and Drug Administration bans its use in the United States.

Wildflower Bouquets (Louisiana). Louisi ... Read More »

By slemrod on 3/19/2008 7:07 PM

Students packed Forum Hall on U-M's campus today  for "20/20" host (and unabashed libertarian) John Stossel , drawing over 200 people to hear him speak on the dangers of government intervention in the free market, specifically in health care. The event was put on by Young America's Foundation, Students for a Free Economy, College  Libertarians, and Young Americans for Freedom.

“This is why I say socialized medicine stinks -- because everything socialized stinks," Stossel remarked.

A huge thanks to the following for helping put on the event: Eric Plourde, Sarah Ledford, Zack DiVozzo, Mike Zola, all of the wonderful staff at Palmer Commons, and of course, anyone that attended. Stay tuned for more SFE events in the near future.

The Michigan Review blogs on the event.

The Michigan Independent's take.

The Michigan Daily's coverage.

 

 

By slemrod on 3/3/2008 5:59 AM

SFE is incredibly excited to be hosting 20/20 anchor and libertarian John Stossel not once, but twice in the same day at the University of Michigan and Central Michigan University on March 19, 2008.  The events are titled, "Socialized Medicine Stinks!" and Stossel will be discussing his findings on what health care is really like in countries where it is "free".  Stossel has used his mainstream media credentials to advocate often unspoken free-market based solutions to economic, health, education and environmental problems, among others. Here are the details of the events.

U of M
Wednesday, March 19, 12:30 PM

Palmer Commons, Forum Hall

CMU
Wednesday, March 19, 7:00 PM

Platcha Auditorium

 

 

By slemrod on 2/7/2008 7:45 PM

Dan Mitchell from the Center for Freedom and Prosperity and the Cato Institute gives a concise explanation of the laffer curve, which relates tax rates to government revenue. Politicians, such as Rudy Giuliani who claim that tax cuts "pay for themselves" are wrong. However, some tax cuts can bring in more revenue if tax rates are on the left side of the laffer curve. This video should be required viewing for all politicians. See for yourself:

 

 

By slemrod on 2/7/2008 3:07 AM

I couldn't make this one up...

 

By slemrod on 2/7/2008 2:58 AM

As Congress debates the Bush Administration's jaw-dropping $3.1 trillion budget that was delivered to Congress on Monday, earmarks are a main focus of the debate. Earmarks are funds that lawmakers insert into spending bills during Committee reports, and they are often free from any discussion over their merit. The Bridge to Nowhere, a $240+ million bridge to an Alaskan town of about fifty residents, sparked the debate a few years ago. Some politicians think that the handful of Congressman who stand up to wasteful spending are wasting their own time, because "earmarks don't make up a large portion of federal spending." Don Boudreaux, Chariman of the George Mason Department of Economics and author of the wonderful blog Cafe Hayek, brilliantly points out the flaw in this line of argument.

"    Rick Perlstein suggests that it's petty and unjustified to criticize Sen. Hillary Clinton for earmarking $1M of taxpayers' funds to pay for a museum at Woodstock ("Getting Past the '60s? It's Not Going to Happen," February 3).  His argument is that the amount of money involved is so relatively small - only "one-millionth of the federal budget."

    The ethical standards to which we hold politicians are truly meager.  Mr. Perlstein apparently cares neither about the constitutionality of such earmarks nor about whether or not they serve the public interest.  Earmarks such as this one are okay, in his view, simply because the size of each one is so paltry in comparison with Uncle Sam's budget.  I wonder if Mr. Perlstein or Sen. Clinton would excuse me if I refused to pay my taxes this year on grounds that my taxes are an infinitesimal portion of federal revenue.

    Sincerely,
    Donald J. Boudreaux "

By slemrod on 1/9/2008 9:35 AM

America has always been known for its competitive global economy which attracts capital and labor at rates far superior to many other countries. However, the tides are changing. The United States' corporate tax remains at a staggering 35%, which jurisdictions across the world are slashing their rates to retain capital and labor. The Wall Street Journal explains this phenomenon:

"It's getting lonelier all the time at the top for America, which with a corporate tax rate of 35% is one of the few developed nations left with a rate of more than 30%. Economist Dan Mitchell tracks these trends for the Cato Institute, and he finds that 26 developed nations have cut either personal or corporate income tax rates since 2005. Since 1980, OECD nations have sliced their average personal income tax rate by 24 percentage points, to 40% from 64%. Corporate tax rates have fallen by more than 20 percentage points. Foreign leaders have learned that, in a world of easy global capital flows, high tax rates chase away investment and entrepreneurs."

Here is a video from the Center for Freedom and Prosperity explaining tax competition and America's uncompetitive corporate tax rate.

By slemrod on 11/13/2007 1:21 AM

America's agricultural policy is a great lesson in the concept of diffused costs, concentrated benefits. Every year, hundreds of thousands of taxpayer dollars are handed over to huge agricultural businesses which lobby hard to make things the way they are. The Washington Post reports on how the sugar industry buys votes:

"So far this year, nine sugar farm or refinery groups have made more than 900 separate contributions totaling nearly $1.5 million to candidates, parties and political funds, according to federal election records and CQ MoneyLine. American Crystal Sugar Co., a Minnesota-based sugar-beet cooperative with 3,000 members, has made 317 contributions totaling $819,000. In July alone, its political fund contributed more than $70,000 to 26 House members, 24 of whom sided with it on the July 27 sugar vote."

Check out the whole article here.

By slemrod on 10/3/2007 6:19 AM

According to The Tax Foundation, Michigan already has the 14th highest tax burden in the country. Monday morning, Michigan lawmakers voted to make it worse.

Avoiding a government shutdown, the House passed an increase in the state income tax from 3.9% to 4.35% early Monday morning. A 6% sales tax was also extended to 23 additional services.

This is a disaster in the making. It is now crystal clear that some Michigan politicians think that the solution to the highest unemployment rate in the country and a myriad of other economic woes is to increase how much money bureaucrats get from us and spend.

Governor Granholm's administration has proved that regardless of the situation, it is incapable of living within its means. There is an enormous moral hazard involved; that is, with each tax increase, politicans get the message in their heads that whenever the times get tough, more taxation is an acceptable solution.

I have a feeling I'm not the only SFE member that begs to differ.

 

By slemrod on 9/21/2007 10:42 PM

 

Although the free market gets closer and closer to finding alternative energy sources everyday, government wants to get in the way  at the expense of *gasp* the taxpayer. The Founding Fathers are rolling over in their graves: pork barrel spending and corporate welfare in the name of "alternative energy" just isn't what our government exists for. Mark J. Perry, professor of economics at the University of Michigan-Flint, tells us why ethanol is politically popular, but bad policy, both scientiically and economically:

"Ethanol cannot be justified on a scientific or economic basis, and the only reason the industry has survived and profited is that the government gives corn farmers and ethanol producers very generous subsidies. As The Wall Street Journal pointed out, ethanol is produced by mixing corn with our tax dollars, currently $5.5 billion annually in more than 200 ethanol tax breaks and subsidies.

If extended through 2022, as the Senate energy bill provides, the ethanol subsidies will cost taxpayers an estimated $131 billion, according to the Tax Foundation. Subsidies under the Lugar-Harkin measure would cost as much as $205 billion over the next 15 years."

Check out the whole op-ed here.

 

By slemrod on 9/8/2007 7:11 PM

 

The growing political trend of hiking taxes on cigarettes has unintended consequences, notes a Wall Street Journal editorial today:

"In New York City, where the combined city and state tax is $3 a pack, smugglers sell bootlegged cigarettes on street corners much like drug dealers. Three weeks ago a sting operation in Queens busted a black market tobacco ring of "unbelievable proportions," in the words of one official. The sting found a half-million untaxed cartons of cigarettes that were being sold out of car trunks to avoid the tax hit. The Tax Foundation estimates that half the cigarettes smoked in the Big Apple come from such illicit operations."

 

It's no secret that heavy-handed regulation in the form of high taxation fuels the black market, where crime, interstate smuggling and theft are rampant. Additionally, revenue-hungry politicians that think increased  taxes will bring in more cash are probably wrong:

"State cigarette tax collections may fall by an estimated $1 billion more if Congress goes ahead with its plan to raise the federal cigarette tax to $1 a pack from 39 cents in the name of funding an expansion in health-care spending of $132.6 billion."

Will bureaucrats ever learn?

 

By slemrod on 8/11/2007 2:11 PM

The Club for Growth's 2007 RePork Card rates House members on how they voted on 50 anti-pork amendments. The amendments sought to strip funding for earmarks which included things such as

"$50,000 for the National Mule and Packers Museum in California, requested by Rep. Buck McKeon (R-CA)"

 and;

 "$1 million to the Center for Instrumented Critical Infrastructure in Johnstown, Pennsylvania, requested by Rep. John Murtha (D-PA). No congressional member could confirm the existence of the alleged Center."

Michigan's Representatives scored very poorly for the most part.. A score of 100% means that the Rep voted against wasteful earmarks. Prepare to be dissapointed.

Republicans:

Walberg-86%

Rogers -54%

Ehlers-45%

Camp-44%

Upton-42%

Hoesktra-20%

Miller-10%

McCotter-2%

Knollenberg-0%

Democrats:

Dingell-2%

Kilpatrick-2%

Stupak-2%

Conyers-0%

Kildee-0%

S.Levin-0%

To view the entire RePork card, check out the Club for Growth's website.

By slemrod on 8/2/2007 2:53 PM

 

The Smoot-Hawley Tariff Act was signed into law in 1930 by President Herbert Hoover. Amidst the Great Depression, Hoover bowed to the demands of special interest groups (specifically farmers) that wanted higher prices, and raised tariffs to record levels.

A dramatic decrease in international trade ensued. According to the Department of State, "U.S. imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932." Many economists today believe Smoot-Hawley played a major part in prolonging the Depression.

Although it is now an accepted fact that tariffs are detrimental to free trade, populist sentiments persist. This week, China is the foreigner-to-blame in Washington. The Senate Finance Committee voted 20-1 to impose tougher restrictions against China, who they believe is manipulating the value of their currency to gain an advantage in trade. Last year, Senators Lindsay Graham (R-S.C.) and Chuck Schumer (D-NY) introudced a bill to impose a 27.5% tariff on Chinese imports.

As the old saying goes, "those who forget the mistakes of the past are bound to repeat them." Indeed, America learned its lesson in 1930 when protectionist measures were enacted. Our economy suffered at the hands of illinformed policy.

Over 1,000 economists have signed on to a petition circulated by The Club For Growth stating opposition to protectionist measures against China, our second biggest trading partner.

Politicians, like economists, know that free trade is beneficial to all. It's unfortunate that they bow to special interests that can't compete in a global economy instead of the interests of all.

 ----- ... Read More »

By slemrod on 8/1/2007 4:09 PM

Today, July 31st, would have been the 95th birthday of economist, Nobel Laureate, and humanitarian, Milton Friedman. Born in Brooklyn in 1912, Friedman dedicated his life to fighting for the very things which have lead our world to unparalleled prosperity: free markets, individual liberty, and a system of limited government which exists solely to protect one from harming another.

Friedman's academic work, which he pursued mainly at The University of Chicago, redefined economics as we know it. His thesis on monetary policy earned him at Nobel Prize in 1976.

But beyond the complex economics equations is a lesson anyone interested in the advancement of liberty should heed. Indeed, while Friedman was undoubtedly a genius in  academia, his greatest skill may have been his packaging of concepts that were alien to many into easily digestable mediums.

From 1966 to 1983, Friedman had a column in Newsweek, where he stressed the importance of everything from the merits of school choice, to the evils of the War on Drugs. Friedman's most famous books, Capitalism and Freedom and Free to Choose, have sold millions of copies worldwide.

Milton Friedman's ideas are especially important at a time when protectionism is becoming increasingly political popular. Thus, in the words of the man himself, we should never forget that "history suggests that capitalism is a necessary condition for political freedom."

 

Milton Friedman, 1912-2006

Picture: www.ef-magazin.de