Enemies of Ethanol Round-Up

The Wall Street Journal has a nice round-up of all of the shots that are being fired across the bow of the Ethanol gravy boat. Worth the read, if you're interested in the issue.

First Amendment vs. First Amendment

Reason has an interesting post posing the question: Does the Freedom of Assembly Limit Freedom of Speech?

Economic Quiz

Greg Mankiw has posted this great video on his blog. I think it bears repeating:

This One's For You, Entrapping Innocent People in What Isn't Actually a Crime Police Guy

More darn fine police work, Lou:

"At first, an epidemic of absent-mindedness seemed to have broken out.

"One purse was found just sitting on a display shelf in the shoe department at Macy’s. Another one turned up downstairs, in Macy’s Cellar. Yet another rested on a chair in a Midtown McDonald’s, left by a woman who had stepped into the restroom.

"In fact, all three items had been planted by police officers in plainclothes during the previous six weeks. And the three people who picked them up were arrested, and now face indictment on charges that could land them in state prison.

"Nine months ago, a similar police decoy program called Operation Lucky Bag was effectively shut down by prosecutors and judges who were concerned that it was sweeping up the civic-minded alongside those bent on larceny. Shopping bags, backpacks and purses were left around the subway system, then stealthily watched by undercover officers. They arrested anyone who took the items and walked past a police officer in uniform without reporting the discovery.

"Now, a new version of the operation has started to catch people in public places outside the subways, and at much higher stakes, Criminal Court records show.

"Unlike the initial program, in which the props were worth at most a few hundred dollars, the bags are now salted with real American Express cards, issued under pseudonyms to the Police Department.

"Because the theft of a credit card is grand larceny, a Class E felony, those convicted could face sentences of up to four years. The charges in the first round of Operation Lucky Bag were nearly all petty larceny, a misdemeanor, with a maximum penalty of one year in jail.

...

"In dismissing one case, a Brooklyn judge noted that the law gives people 10 days to turn in property they find, and suggested the city had enough real crime for the police to fight without any need to provide fresh temptations. The penal law also does not require that found items be turned over to a police officer. The Manhattan District Attorney’s Office began to dismiss Lucky Bag charges."

Emphasis Added.

So, just to recap:

1. The NYPD comes up with a way to entrap people for petty crimes.
2. Program gets shut down both prosectuers and judges.
3. NYPD waits 6 months, then reinstates the program under a different name but with the extra added bonus that they're obtaining real credit cards using psuedonyms so that they can charge people with felonies.

Can someone remind me why I should vacation in New York again?

HT: Fark Headline

Business Models

TechDirt, which routinely has excellent articles about various business-related subjects (mostly dealing with the software, technology infrastructure, and music industries), has another gem regarding CEOs and business models. A summary would not do it justice, so it is reproduced here in entirety:

Of all the major record labels out there, it's been Universal Music, the largest record label out there, that has been the most vocal about its contempt for changes in the market place. In the past, we've mentioned that Universal Music CEO Doug Morris appears to be focused on squeezing every immediate dime out of anyone he can, even if it means destroying the company's long-term prospects. From an outsider's perspective, it really appeared as though he believed that giving up a dollar today was bad business, even if it meant the ability to get $100 in the future. However, it turns out that's not just the outsider's perspective. That's Doug Morris' own perspective as well.

In a stunning interview that should have any stockholders of Universal Music demanding a CEO change, Doug Morris happily reveals his ignorance of all things having to do with business, business models, strategy, economics and technology. It's hard to know where to start. When asked about giving up money now to be able to make more later, Morris tells the interviewer that if you do that, then "someone, somewhere, is taking advantage of you." This is the guy in charge of charting Universal Music's future? To further underscore his inability to think long term, Morris gets angry when discussing the fact that his job isn't easy any more, discussing how great it was when he could just sit back, not do anything strategic and just let he money pour in from high-margin CDs. Sure, that must have been nice, but your job as a CEO is to be able to see those changes ahead of time and set a course for the company to navigate them.

Not so, according to Morris. When asked why the recording industry was unable to see the change, Morris says that there was nothing he or anyone could have done (!!!):

"There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person -- anyone with a good bullshit story would have gotten past me." Morris' almost willful cluelessness is telling. "He wasn't prepared for a business that was going to be so totally disrupted by technology," says a longtime industry insider who has worked with Morris. "He just doesn't have that kind of mind."

So why is it that Universal's shareholders would allow a CEO who gleefully admits he doesn't like to think strategically about the long-term, doesn't understand the forces that are changing the fundamental business he's in and doesn't even know enough to hire people who can help tell him what's going on?

To make matters even worse, Morris is so clueless that he chooses the worst possible analogy to explain his position. Lots of entertainment industry execs have thrown up their hands and ignorantly stated that "you can't make money from free." That's wrong, of course, but Morris takes it one step further up the ridiculous scale, with the following example: "If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go. That's what happened to the record business." Hmm... and what is coming out of your faucet in your kitchen? That's right... water. And how much are people willing to pay for water? That's right, billions. In fact, it's a larger market than (oops) recorded music. Can someone please explain how Morris keeps his job?

Envinronmentalists

Heehee:

Uniquely Unqualified

As coercive monopolies that spend other people's money taken by force, governments are uniquely unqualified to solve problems. They are riddled by ignorance, perverse incentives, incompetence and self-serving.

From John Stossel's latest column, this time on global warming. Regardless of what you think about global warming, it is important to remember that if the government gets involved things will become significantly worse that they otherwise would be. This is an important distinction to make when talking to those who are commonly classified as "left wing": just because you oppose government intervention to solve a problem does not mean you don't think it is a problem.

For instance, when I suggest that the Public School System should be dismantled with the same enthusiasm shown by Canadians for clubbing baby seals, I am often met with some variation of the sentiment "But don't you care about children's education?" This is a false dichotomy. I believe that Public Schools help our nation's children far less than they harm. The fact that I do hate children is irrelevant. Far too often, libertarian objections to grandiose government schemes are dismissed with the retort that we don't care about children/whales/rainforests/working-class mothers/starving corn farmers, while the central-planner has his priorities straight and should, therefore, be trusted.

Some people view government as some kind of benevolent force that can counteract the self-serving interests of corporations and the free market. They think that because government is not accountable to market forces, it is above self interest. This is among the most dangerous ideas still widely accepted (the idea that burning children alive will ensure a rich harvest is currently out of favor). A government is made up of people, just like any organization. Those people work for their own betterment and interests just like anyone else. The fact that governments do not produce anything of their own and survive by taking from others is not a virtue, and it certainly does not ensure virtue in those who are employed by government.

When a corporation puts its resources behind a project it stands to lose those resources, and will do what it takes to protect them from being misused. A government, since it just spends other peoples money, will always through good money after bad, claiming that with a little more budget everything will work.

Ethanol - A Cute Picture

I saw this linked to by Fark a little while ago. I kinda like it:

"Economic Sclerosis"

Cato has an excellent post entitled "Treating Successful Taxpayers Like Pinatas" in which the author quotes another piece dealing with the inherent problem of a society wherein a large portion of the electorate does not pay taxes. I highly recommend reading it and even following up by reading the several pieces to which it refers.

Runaway Cows

I just don't know which way to go with this one. Should I make the "Cows With Guns" reference or the "Eat More Chiken" reference. Decisions, decisions . . . . .

Wilmington is Jealous of LA

Remember that post about the First Amendment in LA? Yeah, read this one about Wilmington. It's "better" :-)

HT: Fark

Those Poor, Poor Students Who Need Uncle Sam to Buy Their Condoms

I don't think commentary is really necessary on this one. It's pretty obvious what we here think of this kind of thing.

HT: Fark

Cotton Subsidies

The BBC has an article about US cotton subsidies in which the stupidity of government intervention in economic matters shines through pretty clearly:

"John Negroponte was defending ongonig subsidies on US cotton growers during a visit to Burkina Faso, in west Africa.

"The country is Africa's leading cotton grower, although it produces just 6% of the amount of cotton the US does.

"The region's small farmers complain that they must compete against highly mechanised, well-subsidised US rivals."

Now, just as an aside, I would like to point out that the complaint that the farmers of Burkina Faso not being able to compete against mechanized US firms is, well, stupid. Granted, they have a legitimate complain when it comes to subsidies, but with regard to mechanization (unless this wouldn't have happened without subsidies) is just dumb.

Anyway! The article continues:

"He said the US had worked to promote cotton farming in Burkina Faso by providing aid funds to finance increased production and marketing."

So, unless I'm missing something, first the government uses tax money to subsidize an industry (offense #1) then takes more tax money and sends it to the competitors of the people it subsidized with the first batch of tax money so that they can be more competitive. Brilliant! Simply Brilliant!

The Unadulterated Socialism of Warren Buffet

Read about it here.

S-CHIP: It's for the Children!

Next time you hear an annoying piece of rhetoric about how anyone opposed to S-CHIP doesn't want kids to have health care, remember these interesting tidbits that Cato was kind enough to dig up:

"Currently, 12 states currently use S-CHIP funds to provide taxpayer-funded insurance for adults. According to data released by the Department of Health and Human Services in July, Wisconsin covers almost twice as many adults as children — and spends 75 percent of its S-CHIP funds on them. Minnesota spends 63 percent of its S-CHIP funds on adults. In New Jersey, it’s 43 percent."

Income Inequality

TCS Daily has a nice little article about income inequality. While I recommend reading the whole thing (it isn't very long), here is a summary of the points made:

• Those who advocate leaving things up to markets are not necessarily believing in market forces with blind faith. Rather, while we recognize that markets fail and that government intervention is another option, we believe that government fails much more frequently than markets do.
• Income inequality is a poor measure of prosperity. That is, who cares what one's position is relative to someone else's? What really matters is how well off one is in more absolute terms.

When X Is Outlawed, Only Outlaws Will Have X

Apparently when something that lots of people want is banned by authorities, an "underground" or "black" market is created. Shocking, I know. This is the harrowing story of two parents confronted with evidence that their son was dealing in contraband at his school:

Billy and his parents had been at odds. The junior at Boulder’s Fairview High School, whose identity has been changed for this story, had been letting his hair grow and was routinely getting it styled. He was buying things without any visible means of income. A few weeks into the 2007 fall semester, he had a brand new iPod. He had new boots, new clothes and was talking about a new car.

“He had no friggin’ job,” his mother, Sue Anne, told Boulder Weekly. “His dad and I won’t let him have a job. We want him focused on school. We want him at Stanford after he graduates, so we don’t need him distracted by a job and all that comes with it. We don’t want him buying videogames and iPods.”

As money became less of an obstacle for Billy, the boy’s parents became more concerned. It had become common to see him with a one- to two-inch-thick wad of cash. They became certain he was dealing drugs. They confronted him.

Indeed, the boy was a dealer, selling "treats" to his fellow students. And by treats, I mean candy. Sweets. Sugar.

“Hey, suddenly it all made sense,” William said. “At this point, we believed that drugs were not a part of it. It was just a bunch of candy. Instead of fearing visits to drug rehab, we had to worry about a dental visit. We went home and laughed about it. We were just so relieved. We were actually kind of proud of him for finding a niche, filling it and making a profit.”

Because schools are trying to enforce the latest health fad/scare by banning anything that might contain flavor, the market for candy has taken on aspects of the drug trade. This kid was marking up candy he had bought at Costco by 900% and making a killing. At least his parents were cool about it. Some might have reported him (to, um, someone) for being an enabler.

Read the whole thing here, for and this picture →

and more great lines like "a candy ban in public schools turned Austin High School into an underground candy market that resembles 'Willy-Wonka-meets-Casablanca',”

HT Reason

Largest Private Companies

Forbes has an interesting list of the largest private US companies.

HT: Club for Growth

Vanity Plates in Virginia

Virginia accounts for 10% of all vanity plates in the country, with 16% of registered plates being personalized. That surprises me not in the least.

The Internet

I love Fark headlines sometimes:

"Other countries want the US to give up control of the Internet Tubes it created. It's always funny when the mice vote to bell the cat"

The Right to Free Speech is Apparently Restricted by Political Correctness

In LA, anyway.

Alcohol Round-Up

Two interesting developments on the battle to eliminate alcohol from society.

First, the Marines (celebrating 232 years of kicking ass) are trying to allow members of the Corps to drink on base. Obviously, MADD is, well, mad. Good luck fighting the marines, Mom.

Second, a follow-up to this post about a mom arrested for serving alcohol to her son at his birthday party. The prosecutor who charged her has failed in his re-election bid.

Now here's where I'm supposed to kowtow to the moral bullies and signal my agreement that underage drinking is some kind of horrible offense. Well, forget it. I'm not recommending excessive drinking (though I confess to doing it, shall we just say, on more than one occasion) for anybody. However, the United States is the only country that imposes alcohol prohibition on people until age 21. Germany, France, Italy and the Netherlands, among others, put that limit at age 16 and they don't seem to be falling apart as societies. I think it's high time to lower the U.S. drinking age.

In any case, Camblos' attempt at moral grandstanding turned out to be bad politics. Good riddance to him.

What, Me Worry?

Mark J. Perry of Carpe Diem on why we are not about to enter a recession. Some very nice comparisons to the S&L meltdown of the 80's bring a new angle to an old debate.

The Good Lie

Reason has a post about claims by anti-smoking activists that spending 30 minutes in a room with a smoker raises your risk of death to the same levels as someone who smokes. This claim is what we in political blogging call a "lie." But that's ok, since we need to "simplify the facts" for those who are too stupid to draw the conclusions we want them too.

I recomend you read the whole Reason post, but the original article in New Scientist is behind a paywall. There is a link to the author's blog, however, which contains a nice summary, as well as a lot of interesting stuff from the War on Tobacco. I highly recomend giving it a read, especially if you are interested in smoking policy.

Tax Competition: Once More With Feeling!

Two recent articles highlight the new consensus about tax competition growing among economists on tax competition.

In the first, Kenneth Rogoff, former chief economist for the IMF, has an article in the Daily Star (via Cato-at-liberty) where he muses on the nature of the very wealthy. This is the money quote:

Many super-earners are also super-creative and bring enormous value. Places like the United Kingdom actively court wealthy foreign nationals through extraordinary preferential treatment of their investment income. The ultra-rich are an ultra-mobile group, too. If you are earning $540,000 an hour, it does not take too long to save up to buy an apartment, even in London.

The second, also from Cato, is about British race car driver Lewis Hamilton, who has moved to Switzerland. He claims that he wants solitude, but the Mirror notes that he will save about $8 million per year in taxes. As the rich flee high tax jurisdictions, those jurisdictions will continue to complain about the "unfair taxation" that is stealing their God-given tax base.

Markets Pessimistic on Iraq

The New York Times has an article showing that the international bond market is not considering the war to be going well. The market has not responded positively to the surge, or anything else. Apparently, bond markets are one of the best predictors of a failing government.

$39 Billion Tax Writeoff for GM

General Motors has just announces that it will take a huge tax break this year, totaling $39,000,000,000. So that's a good thing for them, right? Wrong. Accountants are now talking bankruptcy. For the best examination of this rather complicated story, read this post from Mises.org's blog.

Prohibition Returns!

Reason Magazine's cover story this month is about the new prohibitionary movement gaining momentum across the US. They lead off with a story about a woman who was pulled over in DC after having a single glass of wine. Her BAC was .03, or less than half of the level of intoxication. She was arrested and ordered to attend a 12 week alcohol counseling course. When she refused, her license was suspended. Then the tale of a man in Pennsylvania who had his license taken after he told his doctor that he drank a six pack of beer a day. "State law requires doctors to report any of a patient's physical or mental impairments if the doctors think it could compromise his ability to drive safely" He had no convictions, his work attendance record was good, he had exhibited no history of anti-social behavior except drinking. From the article:

Neoprohibitionists aim to muddle the distinction between drunk diving and driving after drinking any amount of alcohol. Sen. Barbara Boxer (D-Calif.) endorsed the idea at a Senate Environment and Public Committee hearing way back in 1997, contending that we "may wind up in this country going to zero tolerance, period." Former MADD President Katherine Prescott concurred, in a letter to the Chicago Tribune, where she stated "there is no safe blood alcohol, and for that reason responsible drinking means no drinking and driving."

I highly recommend reading the whole thing, especially the part about police in Fairfax county VA asking a woman in a restaurant who had just finished dinner and was enjoying her first drink to come outside and take a sobriety test.

I can only stress that as our government takes over our decision making process and becomes responsible for more of our lives, they will only continue to become more meddlesome. Already people justify these kinds of actions by saying that "we" pay for the hospital bills of people injured in accidents, so "we" have a responsibility help prevent drunk driving. As the state assumes new duties, it will use them to justify new powers.

EU vs US Revisited

In the past we have pointed to studies that rank EU nations against individual States in terms of Gross Domestic Product (GDP) adjusted for Purchasing Power Parity (PPP). Normally the EU nations come off poorly by comparison, ranking on average near Alabama or West Virginia.

Now Political Calculations has published an interactive, sortable, table of this data.

Fun Fact: Italy has about half the GDP per capita as Wyoming.

HT Carpe Diem

Is The Ban on Internet Taxes a Subsidy?

Economist Dean Baker has written an article claiming that Amazon owes its success to government subsidies.

Amazon reported higher than expected third quarter profits and a 41 percent increase in revenue, a good enough showing to push its stock price back to tech bubble peaks. One item missing from the accounts of Amazon's good news is the continuing subsidy that it gets from taxpayers.

While most stores must charge customers state sales tax, Amazon and other Internet retailers enjoy a special subsidy. They need not charge sales tax except in the states where they have a physical presence. (I believe that list is Washington and Utah.) That's great news for Amazon, if we assume that state sales taxes would average 4 percent on annual sales of $15 billion a year, then taxpayers are subsidizing Amazon to the tune of $600 million a year, more than its annual profits.

Rather than try to come up with something intelligible to say to this nonsense, I will merely quote TechDirt, which has published a nice response.

Some states don't have sales taxes at all, but no one would consider that a taxpayer subsidy. My local Wal-Mart benefits from a variety of state and local government services here in the St. Louis area, such as police and fire protection, and roads and other infrastructure. At least in part, sales taxes go to cover the costs of providing those services. Amazon uses few if any services from state or local governments in Missouri, so it's hard to see anything unfair about the fact that it doesn't have to collect sales taxes here.

On the other side of the ledger, sales tax collection would be far more burdensome to Internet-based businesses than to their brick-and-mortar competitors. A mom-and-pop retail store only has to learn about the tax rules in one jurisdiction. Most likely, there's just one tax rate, one set of rules about which goods are taxable at that rate, and one set of reporting requirements. In contrast, a small e-commerce site would have to familiarize itself with the rules in thousands of different jurisdictions. The state of Missouri, for example, allows municipal governments to tack a variety of local taxes onto the state sales tax. As a result, the tax rate varies from city to city. Even worse, different states have different rules about which goods and services are taxable. Missouri, for example, exempts custom software (but not boxed software), farm equipment, and medical grade oxygen, among other things. Colorado has exemptions for bingo equipment, cigarettes, food, fuel and oil, machinery and machine tools, newsprint, precious metal bullion and coins, and more. Each of the other 40-some states with sales taxes have their own lists of what's taxable. Many states exempt food and clothing from taxes, but the precise definitions of "food" and "clothing" varies from state to state. For example, in Wyoming, bagels are considered tax-exempt food unless they're sold with cream cheese and a knife, in which case they become taxable "prepared foods."

Inefficient Public Schools

We all know that the Public School System is a well practiced money waster. Cape Diem, however, has run some numbers on just how much money they waste and produced a series of posts on the subject.

Here he points out that spending per student in constant dollars has grown by 10x since 1929. But this post shows where that money is being spent. Quoting Cato's Saving Money and Improving Education, he notes:

Student enrollment in public schools grew by 13% between 1979 and 2000. During the same period the total number of school employees grew by 61%, and the number of teachers grew by 35%. Nationally, public schools now have about 1 employee for every 8.1 students, and teachers make up only 40% of total school employees

As a side note, my favorite part of the post is the comparisons he makes at the end.

1. The Chicago Board of Education, which has 3,300 employees, is larger than the entire Japanese Ministry of Education.
2. The New York City public schools system has 250 times as many administrators as the New York Catholic school system (6,000 administrators in public school system versus 24 in Catholic school system), even though New York public schools have only four times as many students as the Catholic schools.

In this final post, he shows that because Public Schools have so many more administrators than teachers, they cost much more per pupil than their private counterparts. In contrast to the common perception that private schools are elite organizations awash with old money to trow at their privileged students, they operate with budgets of, on average, 1/3 to 1/2 the size per student.

Average private school tuition ($6,600) was about 1/3 less than the spending per pupil in public schools ($9,620) in 2003-2004 (the most recent year available), and average Catholic school tuition ($4,254) was less than half of public school spending per student.

Not only was the average private school tuition between 1/3 and 1/2 less than the cost per public school student, the private schools had on average 18% more teachers per 1000 students (72.25 in private schools vs. 61 in public schools) in 2003-2004.

Yet our money continues to be funneled into the Public Schools, reinforcing their failure with increased spending. If parents were free to spend that money on the school of their choice they could procure a better education for their children while saving the taxpayer a whole lot of money.

Shock of the Week: Low Tax Nations Have More Money

The Business has a great article pointing out that of the top 20 richest nations, most of them are enclaves of low taxes.

What are the three richest countries in the world? You might be tempted to answer America, maybe Switzerland, or perhaps even Ireland. The right answer, however, is Luxembourg, Bermuda and Jersey in that order.

The Top 20 also includes: Equatorial Guinea, Guernsey, Ireland, the Cayman Islands, Andorra, Hong Kong, the British Virgin Islands, the Isle of Man, San Marino and Switzerland.

The wealth of some of those territories is striking. Luxembourg and Bermuda have a GDP per capita of $71,400 (£35,072, E50,250) and $69,000 respectively. By contrast, America, the wealthiest of the mainstream industrial economies, has a GDP per capita of $44,000. Even the worst-off low-tax nation, Switzerland, has a GDP per capita of $33,000. And Britain, despite the endless boasting from Gordon Brown about the brilliance of its economic record, ranks only 28th in the world, at $31,800.

Seems like there could be a lesson here.
HT Cato-at-liberty

And The New Largest Corporation In The World Is:

Cape Diem has created this chart to show just how big the Chinese national oil company is. Summary: huge.

Usury?

Reason on why loans with 80% interest are a great thing. Thank you School of Salamanca!

Yet Another Country Which Is Not The USA Cuts Corporate Taxes

From Canadian Financial Post:

The Conservative government delivered a mini-budget yesterday that lowered the Goods and Services Tax for a second time and reduced corporate taxes by one-third over the next five years as part of a $60-billion multi-year package of tax cuts.

The plan was contained in Finance Minister Jim Flaherty's fall update, which was a budget in all but name given the myriad tax relief measures introduced. The minority government's political opponents issued fierce denunciations of the plan, but Liberal leader Stéphane Dion said his party would not oppose the measures, ensuring they receive Parliamentary approval as early as today.

When Liberal Canadians are not opposing corporate tax cuts, it makes you wonder what kind of world we live in, and why our rates are still so high.

HT Cato

I Don't Care Who He Is, My Mind Is Made Up!

From the WSJ, via Luskin:

Pollster Scott Rasmussen notes that when he surveys head-to-head matchups between Hillary Clinton and any of the eight potential GOP candidates, Mrs. Clinton scores between 46% and 49% against all of them.

"When we polled her against Rep. Ron Paul, a non-mainstream libertarian, she got 48% of the vote. When we polled on Ron Paul among people who knew who Ron Paul is, she got 48% of the vote. When we polled among people who didn't know who Ron Paul is, she got 48% of the vote," he says.

It apparently doesn't matter who runs against Hillary, the outcome will be the same.