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Archive for February, 2010

Since many of the politicians want America to be more like Europe (including full government-run healthcare), it’s worth contemplating what that would mean for the economy. America today is richer than Western Europe. Indeed, per-capita living standards are about 30 percent higher in the United States – and that’s according to the statists at the Paris-based Organization for Economic Cooperation and Development (see page 6 of this report). And we have been growing faster, which presumably should not be the case according to convergence theory (see Annex Table No. 1 of this OECD database). It also seems that Europe’s economy is more likely to endure a double-dip recession. Bloomberg reports:

Europe’s economy may be coming unstuck from the global recovery as governments to the south of the region struggle to reverse budget deficits and consumers in the north pull back spending. After the 16-nation euro economy almost stagnated in the fourth quarter, data this week showed the weakness reaching into 2010. …“Europe is where we see the biggest risk of a double dip at the global level,” said Julian Callow, chief European economist at Barclays Capital in London. “Europe has been lagging and we’ve continued to see better numbers in Asia and now the U.S.” …“There are tentative signs that the U.S. economy may be pulling ahead from Europe,” Nelson said in a Feb. 23 report… “The sovereign debt crisis in Europe’s periphery reinforces drags on euro-area growth,” said Michael Saunders, an economist at Citigroup in London.

Irwin Stelzer, meanwhile, writes in the Washington Examiner about the same topic:

Europeans are comparing their close-to-zero growth rate in the last quarter of 2009 with our almost-6 percent growth. …We are growing and they are not. …Large numbers of shops in London are shuttered, students see no prospect of work when they graduate, and businessmen are groaning under rising tax burdens.

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I spoke yesterday afternoon to the Constitutional Law Quarterly 37th Annual Symposium at Hastings Law School in San Francisco.  The title of the event was “Waking from the California Dream: The Past, Present, and Future of California’s Fiscal Constitution,” and the discussion revolved around the state’s fiscal crisis.

Unsurprisingly, I was the only pro-taxpayer speaker, with the other 15 or so speakers ranging from center-left to far-left. So it was a fair fight. Not because I had some special talent, but rather because the evidence is so overwhelming that California has taxed and spent itself into a fiscal cul-de-sac. It is the Greece of America (though Illinois is providing some stiff competition for that dubious honor).

But the facts did not have much impact on the other speakers, who said that the state’s fiscal crisis exists because of Proposition 13, the supermajority tax-increase requirement, the initiative process, or some combination of the above.

I simply noted that California has very high tax rates, a bloated and expensive government bureaucracy, and one of the largest public sectors (as measured by government spending as a share of state economic output) in the country. This excellent report from the Pacific Research Institute has plenty of details.

The students who organized the conference took all the speakers to a nice dinner at the Asian Art Museum, where I did my best to rescue the ones at my table from wasted lives of statism. I suppose only time will tell whether I saved any souls.

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There doesn’t seem to be much union in the European Union. Greek politicians are wetting their pants that Germany isn’t bending over fast enough to provide bailout money, so they pulled out the Nazi card. I’m sure the Germans raped Greece during World War II, but that does not explain why German taxpayers are responsible for the fiscal incontinence of Greek politicians 60 years later. The Guardian reports:

Tens of thousands of striking Greek workers took to the streets today, some throwing stones at police, in a defiant show of protest against austerity measures aimed at averting the debt-plagued country’s economic collapse. Riot police responded with teargas when, in sporadic bursts, masked youths charged them in Athens city centre. The violence coincided with a general strike that shut down public services and closed off Greece to the outside world. For trade unions the mass show of force was a warning shot to a government struggling to satisfy its eurozone partners with policies deemed vital for the nation’s fiscal health while appeasing angry workers at home. …The protests came against a backdrop of mounting Greek hostility towards the EU, with particular venom reserved for Germany, which has pressed for harder measures to be forced on Athens. Greece’s political elite has been outraged and hurt by hard-hitting German media coverage of the debt crisis. The cover of a German magazine, Focus, which showed the Venus de Milo making a less than complimentary finger gesture under the headline “Swindlers in the eurozone” has triggered widespread fury. In an extraordinary tirade, the deputy prime minister, Theodore Pangalos, said Germany had no right to judge Greek finances after wreaking havoc on the economy during the four years that the country was under Nazi occupation in the second world war. Worse still, he said, Germany had failed to make adequate compensation. …Berlin hit back with a tart reminder that Greece had received 115m deutschmarks in compensation by 1960. “I must reject these accusations,” said Andreas Peschke, a spokesman at the German foreign ministry. Greece, he said, had also received around €33bn in aid from Germany “both bilaterally and in the context of the EU”.

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I’ve already received some reasonably positive feedback on Wednesday’s show, though I don’t think it was any better than Tuesday’s performance.

I’d be delighted to get feedback. You can watch the segments here, here, here, here, and here.

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I can’t believe I missed this stary from last October. The food Nazis in New York City have banned bake sales. This cripples fundraising for student groups, but that presumably is a small price to pay so that politicians get an opportunity for a few hollow sound bites about childhood obesity. Of course, if the politicians really want to do something about overweight kids, they could arrest the parents and destroy all televisions sets, video games, and computers in private homes. But maybe I shouldn’t give them any ideas. The New York Times has the odious details:

There shall be no cupcakes. No chocolate cake and no carrot cake. According to New York City’s latest regulations, not even zucchini bread makes the cut. …the Education Department has effectively banned most bake sales, the lucrative if not quite healthy fund-raising tool for generations of teams and clubs. The change is part of a new wellness policy that also limits what can be sold in vending machines and student-run stores, which use profits to help finance activities like pep rallies and proms. …Unsurprisingly, the rationale is getting a cool reception among students. At Fiorello H. La Guardia High School on the Upper West Side, students are used to having bake sales several times a month. Now, Yardain Amron, a sophomore basketball player, laments that his team will not be able to raise money for a new scoreboard. Another La Guardia student, Eli Salamon-Abrams, 14, said that when the soccer team held a bake sale in May, his blueberry muffins sold out in 15 minutes. He said of the ban: “I think it’s kind of pointless. I mean, why can’t we have bake sales?” The new policy also requires that vending machines, which generate millions of dollars for school sports, be supplied with snacks such as reduced-fat Baked Doritos and low-sugar granola bars. A new vending machine contract is expected to be approved on Wednesday by the Panel for Educational Policy, the school oversight board. Student stores will be able to sell only approved snacks bought from the new vendor, rather than obtain the food themselves, as they once did. …Department officials are suggesting that teams use walk-a-thons and similar activities as a way of raising money and doing something active.

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Watch it here.

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We need effective, articulate, and principled lawmakers in Washington. I don’t think many Republicans in DC understand the tax competition issue. And if they do, I doubt they could give either of these speeches.

I especially appreciate his defense of tax havens.

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