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Archive for August 6th, 2009

This may not be as important as an IRS agent killing a small business with an audit. And we can certainly imagine dismal scenes of bureaucrats denying health care to sick people in America’s future, and those also would be more important. But when a city official shuts down a lemonade stand because an eight-year old girl did not have a license to operate a busines, that surely is a symbol of government that is both stupid and overbearing:

Eight-year-old Daniela Earnest has made lemonade out of lemons in more ways than one this week. Hoping to raise money for a family trip to Disneyland, the Tulare girl opened a lemonade stand Monday. But because Daniela didn’t have a business license, the city of Tulare shut it down the same day. …The story began Monday morning when Daniela and her stepmother, Marisa Earnest, set up shop at Cartmill Avenue and Hillman Street in north Tulare. The lemonade was freshly squeezed and priced at $2 for a 32-ounce plastic cup. Richard Garcia, a Tulare code enforcement officer, happened to be at the same intersection… Garcia told Daniela and her stepmother that their lemonade stand — on the northwest corner of the busy intersection — was not safe, and also that they needed a business license to sell lemonade.

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When a government increases the burden of taxes, spending, and/or regulation, this makes it more likely that productive resources – on the margin – will gravitate to jurisdictions with better economic policy. Crafty politicians understand that the freedom to cross borders is a threat to statist policies, which is why international bureaucracies dominated by high-tax nations, such as the Organization for Economic Cooperation and Development, are trying to undermine tax competition between nations by imposing fiscal protectionism. The same is true for regulation. The Chairman of a key House committee wants to impose regulatory protectionism to restrict the ability of Americans to patronize banks and other financial services companies based in jurisdictions with more laissez-faire policies. The Financial Times has the unsavory details:

Barney Frank, chairman of the House financial services committee, said he was concerned the new US push to regulate banks and brokers more rigorously could put it at a competitive disadvantage if other countries did not follow suit. As a result, he would like to ban US banks from doing business with countries not subject to similarly tough standards on everything from leverage limits and capital requirements to rules on transparency and clearing of derivatives. “Once we have rules  . . . we will say to anybody who wants to be an outlier, ‘you forfeit your right to participate in the American system’,” Mr Frank told the Financial Times. “We will instruct the [Securities and Exchange Commission] and Treasury and the Fed to deny access to the American financial system to any country that holds itself out as a haven to escape our financial regulation.” …While Mr Frank is a powerful committee chairman, he would have to win over the rest of Congress and the administration to get his idea made into law. He is also certain to face strong opposition both inside and outside the US. “It is absolutely the wrong approach,” said a top industry lawyer, who did not want to be identified criticising Mr Frank. “The assumption is that everybody has to do business in the US and we can set global standards. That is absolute nonsense. There are alternatives, including Hong Kong,” the lawyer added. …Tim Ryan, president of the Securities Industry and Financial Markets Association, said that US regulations should not be imposed on other countries. …The European Commission has an exclusion provision in its proposed directive on alternative investment managers. Outside managers and funds would be excluded if their home states did not offer comparable levels of regulation and tax co-operation. That proposal is seen as a protectionist effort to box out US groups and may be revised. Mr Frank’s interest in banning groups from non-co-operating countries stems in part from the US experience after it adopted the Sarbanes-Oxley corporate accountability law. Many overseas companies opted to list outside the US rather than comply with Sarbox requirements.

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I have no objection to extravagent consumption so long as people are spending their own money. But when elitists in Washington want to enjoy “lifestyles of the rich and famous” by using our money, that is an outrage. Politicians already get to vote themselves hefty salaries and gold-plated benefit packages. They already pass laws and exempt themselves. Is it too much to ask that they fly commercial aircraft when going on their junkets? Heck, maybe if they had to deal with the mindless bureaucrats at the TSA, we might get some common-sense reforms so that going to the airport was not like a visit to the motor vehicles department. Rollcall.com has the story:

Last year, lawmakers excoriated the CEOs of the Big Three automakers for traveling to Washington, D.C., by private jet to attend a hearing about a possible bailout of their companies. But apparently Congress is not philosophically averse to private air travel: At the end of July, the House approved nearly $200 million for the Air Force to buy three elite Gulfstream jets for ferrying top government officials and Members of Congress. …The Gulfstream G550 is a luxury business jet, which the company advertises as featuring long-range flight capacity that “easily links Washington, D.C., with Dubai, London with Singapore and Tokyo with Paris.” The company’s promotional materials say, “The cabin aboard the G550 combines productivity with exceptional comfort. It features up to four distinct living areas, three temperature zones, a choice of 12 floor plan configurations with seating for up to 18 passengers.”

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