Archive for the ‘Government intervention’ Category

The communist economic system was a total disaster, but it wasn’t because of excessive taxation. Communist countries generally didn’t even have tax systems.

The real problem was that communism was based on central planning, which is the notion that supposedly wise bureaucrats and politicians could scientifically determine the allocation of resources.

But it turns out that even well-meaning commissars did a terrible job. There was massive inefficiency and widespread shortages. Simply stated, notwithstanding the delusions of some left-wing economists (see postscript of this column), the system was an economic catastrophe.

Why? Because there were no market-based prices.

And, as explained in this video from Learn Liberty, market-based prices are like an economy’s central nervous system, sending signals that enable the efficient and productive allocation of resources in ways that benefit consumers and maximize prosperity.

And just in case it’s not obvious from the video, a price system can’t be centrally planned. Or, to be more precise, you won’t get good results if central planners are in charge.

Now let’s look at a bunch of economic policy questions that seem unrelated.

What’s the underlying reason why minimum wages are bad? We know they lead to bad effects such as higher unemployment, particularly for vulnerable populations, but how do these bad effects occur?

Why is it bad to have export subsidies such as the Export-Import Bank? It’s easy to understand the negative effects, such as corrupt cronyism, but what’s the underlying economic concern?

Or what’s the real reason why third-party payer is misguided? And why should people be concerned about high marginal tax rates or double taxation? Or Obamacare subsidies? Or unemployment insurance?

These questions involve lots of different issues, so at first glance there’s no common theme.

But that’s not true. In every single case, bad effects occur because politicians are distorting the workings of the price system with preferences and penalties.

And that’s today’s message. We generally don’t have politicians urging the kind of comprehensive central planning found is genuinely socialist regimes. Not even Bernie Sanders. But we do have politicians who advocate policies that undermine the price system on an ad-hoc basis.

Every tax, every regulation, every subsidy, and every handout is going to distort incentives for some people. And the cumulative effect of all these interventions is like a cancer that eats away at prosperity.

The good news is that we don’t have nearly as many of these bad policies as places such as France and Mexico.

But the bad news is that we have more of these policies than Hong Kong and Singapore.

The bottom line is that America could be much richer with less intervention. But that would require less ad-hoc interventionism.

P.S. There’s a bit of economic wisdom in these jokes that use two cows to explain economic systems.

P.P.S. Here are two other videos on the price system, both of which help explain why only a decentralized market system can allocate resources in ways that benefit consumers.

P.P.P.S. A real-world example of the price system helped bring about the collapse of communism.

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Back in 2010, I joked that the Libertarian Party should give Barack Obama a Man-of-the-Year Award because his failed policies rejuvenated interest in limits of federal power.

Though, in retrospect, perhaps the GOP should have given Obama the Award since Republicans reaped the short-term benefits.

In any event, let’s not get distracted by electoral politics. That’s because we have another tongue-in-cheek award. It’s time for the Libertarian Party to give its Woman-of-the-Year Award to Michelle Obama.

Why? Because the First Lady has single-handedly managed to discredit the federal government’s program to subsidize school lunches.

In short, there are now all sorts of federal regulations and mandates that have simultaneously made the program most costly for schools and resulted in food that is less appealing to students.

In other words, she’s helping to teach the next generation that big government makes your life less pleasant. That’s usually a lesson young people don’t learn until they get their first paycheck.

Let’s look at the results of Ms. Obama’s handiwork.

Citing a report from the Government Accountability Office, the Wall Street Journal opines on how Washington has made the school lunch program become far less appealing.

America’s youth are voting with their forks: …participation has plunged for the second year in a row by 1.4 million children, or 4.5%, as they flee inedible government-designed cuisine. …In the name of better eating habits, the USDA has published 141 memos with mandates reaching down to quotas across “vegetable subgroups” and bans on salt and sandwiches. …this cookbook…runs to some 4,700 pages and counting… GAO auditors toured 14 schools in eight states for an on-site look at how kids and cafeterias are responding, and they report that the regulatory deluge is “overwhelming.”

Though I’m glad to see that some local governments and students are engaging in civil disobedience.

“…two had nevertheless been serving pasta that was not in compliance with the whole grain-rich requirement.” …The auditors found students in two schools who carried contraband salt shakers.

Gasp! Non-compliant pasta and contraband salt?!?

Surely it’s time to sic the IRS on these scofflaws.

Or maybe we should learn a different lesson, which the WSJ succinctly identifies.

This exercise has been an epic waste of food and taxpayer money.

Some statist readers doubtlessly are saying that the higher cost is worthwhile because students (even if they don’t like it) are being forced to eat healthier.

Um…not exactly.

Amazingly, the federal government managed to decrease consumption of fruits and vegetables (FV) even though that’s one of the main goals of the new rules. Here’s an excerpt from a scholarly study.

Since 2012, the USDA’s requirement that children select FVs at lunch as part of the reimbursable school meal has been met with concern and evidence of food waste. We compared elementary schoolchildren’s FV selection, consumption, and waste before (10 school visits, 498 tray observations) and after (11 school visits, 944 tray observations) implementation of this requirement using validated dietary assessment measures. More children selected FVs in higher amounts when FVs were required compared with when they were optional (0.69 cups vs. 0.89 cups, p,0.001); however, consumption decreased slightly (0.51 cups vs. 0.45 cups, p50.01) and waste increased (0.25 cups vs. 0.39 cups, p,0.001) when FVs were required compared with when they were optional.

As reported by the Washington Examiner, even the School Nutrition Association is not exactly happy with the federal government’s nanny-state approach to school lunches.

Schools nationwide are being forced to raid their education budgets to cover the costs of federally-mandated school lunches, rejected by students because they taste bad, according to a group the represents school nutrition professionals. Once a profit center for schools, cafeterias have become a financial black hole… And the deficits are being made up by cafeteria worker firings and budget shifting, according to the School Nutrition Association.

The Washington Examiner story represents an interesting development since it’s a sign of a schism between two interest groups – government workers and nanny staters – that normally are part of the same coalition.

So further kudos to Ms. Obama for causing discord on the left.

Though when push comes to shove, the nanny staters lose.

Here’s a real-world example of how the federal government has botched the program. A Montana school board has decided it makes more sense to reject handouts from Uncle Sam.

Bozeman school board members voted 5-3 to pull the high school out of the National School Lunch Program because federal regulations on calories, fat, sugar, sodium, whole grains and other nutritional elements championed by the first lady were driving students off campus for lunch… School officials realized it was financially advantageous to forgo $117,000 in federal food subsidies tied to the National School Lunch Program to draw students back into the cafeteria, and it seems they were correct. …Across the district, the food service program is $1,441 in the black so far for the 2015-16 school year. The food service budget ended last school year $16,000 in the red… And school food service workers told board members students are now getting high quality food from local sources, rather than pre-packaged meals promoted by the government.

Let’s now shift gears and look at other ways the federal government screws up when it gets involved with what goes in our stomachs.

For years, bureaucrats in Washington have tried to tell all of us, not just students, what we should eat and drink.

Well, it turns out that they were giving us bum advice. Here are a few excerpts from some analysis in the Washington Post.

U.S. dietary guidelines have long recommended that people steer clear of whole milk… Whole milk sales shrunk. It was banned from school lunch programs. Purchases of low-fat dairy climbed. “Replace whole milk and full-fat milk products with fat-free or low-fat choices,” says the Dietary Guidelines for Americans, the federal government’s influential advice book, citing the role of dairy fat in heart disease.

Was this advice helpful?

Not so much. At least if the goal is better health.

…research published in recent years indicates that the opposite might be true: millions might have been better off had they stuck with whole milk. Scientists who tallied diet and health records for several thousand patients over ten years found, for example, that contrary to the government advice, people who consumed more milk fat had lower incidence of heart disease.

By the way, it’s not just whole milk. One of my Cato colleagues, Walter Olson, points out that the government has a long track record of botching recommendations.

Previous advice from Washington about the supposed hazards of eggs and other cholesterol-laden foods, the advantages of replacing butter and other animal fats with trans fats, and the gains to be made from switching from regular to diet soda, have all had to be re-evaluated and sometimes reversed in later years.

So what lessons should we learn?

Let’s turn to David Boaz, another colleague from the Cato Institute. He succinctly explains that government shouldn’t be involved in our diets.

It’s understandable that some scientific studies turn out to be wrong. Science is a process of trial and error, hypothesis and testing. Some studies are bad, some turn out to have missed complicating factors, some just point in the wrong direction. I have no criticism of scientists’ efforts to find evidence about good nutrition and to report what they (think they) have learned. My concern is that we not use government coercion to tip the scales either in research or in actual bans and mandates and Official Science. Let scientists conduct research, let other scientists examine it, let journalists report it, let doctors give us advice. But let’s keep nutrition – and much else – in the realm of persuasion, not force. First, because it’s wrong to use force against peaceful people, and second, because we might be wrong. This last point reflects the humility that is an essential part of the libertarian worldview.

Very well said.

Let’s close with one final example to demonstrate the bad things that happen when the federal government gets involved with food.

Writing for the Foundation for Economic Education, my old buddy Jim Bovard explains how biased bureaucrats are deliberately exaggerating hunger in America.

The Agriculture Department announced this morning that 48 million Americans live in “food insecure” households. Soon you’ll hear we’re suffering an epidemic of hunger. While the federal government is already feeding more than 100 million Americans, we’ll be told that it just isn’t enough. But it isn’t true. “Food insecurity” is a statistic designed to mislead. USDA defines food insecurity as being “uncertain of having, or unable to acquire, enough food to meet the needs of all their members because they had insufficient money or other resources for food.”

But this doesn’t mean anyone is going without food, as Jim notes.

The definition of “food insecure” includes anyone who frets about not being able to purchase food at any point. If someone states that they feared running out of food for a single day (but didn’t run out), that is an indicator of being “food insecure” for the entire year — regardless of whether they ever missed a single meal. If someone wants organic kale but can afford only conventional kale, that is another “food insecure” indicator.

Needless to say, statists predictably use the federal government’s biased stats to push for…you guessed it…more government!

After the 2009 USDA food security report was released, President Obama announced that “hunger rose significantly last year. … My administration is committed to reversing the trend of rising hunger.” …USDA food security reports, by creating the illusion of a national hunger epidemic, have helped propel a vast increase in federal food aid in recent years. …The insecurity = hunger switcheroo is also fueling campaigns to compel schools to give free breakfasts to all kids after school starts each day. …USDA has never attempted to create an accurate gauge to measure actual hunger. Instead, citizens are supposed to be satisfied with federal reports that are little more than a subsidy for political grandstanding.

I know what lesson I hope people learn from the deceit, waste, and foolishness discussed today.

We should end any role for the federal government in food. That means ending all the misguided programs discussed above.

It also means abolishing the food stamp program and letting states decide whether such subsidies are desirable.

And it means shutting down the entire Department of Agriculture.

Like all sensible libertarians, I don’t like the idea of having the federal government in my wallet or my bedroom. Perhaps we also need to say we don’t want Washington in our stomachs either.

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I’m happy that many of the presidential candidates are proposing big tax cuts.

Bobby Jindal and Donald Trump have large tax cuts, and Jeb Bush, Rand Paul, and Marco Rubio are proposing smaller – but still significant – reductions in the federal tax burden.

All of these plans, to be credible, should be accompanied by proposals for a sustained reduction in the burden of government spending (with real enforcement mechanisms).

But there’s something else that needs to be part of the discussion. Yes, we need tax cuts and smaller government, but we also need radical tax simplification.

Consider this depressing chart showing the number of pages in the instruction manual for the IRS’s 1040 tax form.

Or the number of sections in the tax law, which has skyrocketed in the past four decades.

I think it’s fair to say that complexity is a proxy for corruption (and even the World Bank agrees with me). Our tax code is a Byzantine mess because interest groups and lobbyists conspire with politicians to swap loopholes for campaign cash.

Some say that this problem could be solved by restricting the First Amendment and limiting people’s ability to participate in the political process. But that’s naive. So long as we have a convoluted tax code, insiders will figure out how to curry favor with the political elite and manipulate the system to their advantage.

Rather than trashing the Constitution, we should be trashing the internal revenue code.

I have lots of economic arguments for fundamental tax reform and I can wax poetic about the harm of high tax rates and double taxation of saving and investment.

But this new chart from the Tax Foundation, showing the ever-growing number of words in the tax code, is probably the single most compelling argument for a simple and fair flat tax.

Wow. It doesn’t seem to matter which party is in power. It doesn’t seem to matter who controls the White House or who controls Congress. Just as the number of pages in the tax code keeps expanding, so does the number of words.

And I think all of us know that this relentless growth in complexity is not good for ordinary taxpayers.

The only winners are the cronyists, politicians, and other insiders who get rich by using the coercive power of government.

And don’t forget that a complicated tax code means a very powerful IRS, and we’ve seen how that leads to venal corruption.

Now let’s circle back to where we started. I mentioned that many presidential candidates have proposed big tax plans that reduce the amount of money flowing to Washington. Many of those plans also include partial reforms of the tax code.

All of these components are desirable in that they both reduce the tax burden and simplify the tax system. And I could list other attractive partial reforms that are in the various tax plans.

But I can’t help but wonder why no candidate has explicitly embraced the gold standard of tax reform.

By the way, I’m ecumenical on a replacement system. There are other plans that satisfy the goals of real reform.

My only caveat, for those who advocate a national sales tax or value-added tax, is that we first need to repeal the 16th Amendment and replace it with something so ironclad that politicians could never do a bait and switch and saddle the American people with both an income tax and a consumption tax.

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Remember the scene in Monty Python and the Search for the Holy Grail, when the Knights of the Round Table have to answer three questions before they can cross the Bridge of Death?

Sir Galahad is cast into the Gorge of Eternal Peril because he changes his mind when asked his favorite color.

I can sympathize because I would hate to be asked for a one-word description of government.

My first instinct would be say “stupid,” but that might not be the most mature response. So I’d probably say “wasteful.” But then I’d change my mind and say “corrupt.” As the bridge keeper was about to cast me to my death, I’d say “thuggish.” And my final choice as I fell into the gorge might be “incompetent.”

And I’d have lots of examples in mind for that final version, such as the time the Italian government appointed the wrong person to a job that shouldn’t even exist.

Or how about the British government being so incompetent that it created a new handout that was so poorly designed that nobody signed up.

I guess Japan’s government was inspired by the British counterparts, because Bloomberg reports that the Japanese government also is too incompetent to give away money.

Not a single Japanese company has applied for a government subsidy to encourage firms to promote women in the 17 months since the plan started. Under a labor ministry plan unveiled in April 2014, small and medium-sized companies that promote women are eligible to apply for a 300,000 yen ($2,500) payment per company, while larger firms can get 150,000 yen each. The ministry had budgeted 120 million yen to be distributed to about 400 companies.

So why didn’t companies want these handouts?

Probably because the government wanted them to waste a lot of time and energy and it simply wasn’t worthwhile.

The program requires companies to set their own numerical targets and achieve the goals within six months. Firms also need to offer at least 30 hours of training to educate their workforce about equal opportunity rights, according to the health ministry’s Megumi Kondo.

Needless to say, the right lesson to learn is that the government shouldn’t be trying to steer the market.

The profit motive and human preferences should determine how many women fill various positions in companies, not the arbitrary diktats of the political class.

Moreover, you would think Japan’s policy community would have more important things to worry about, such as the fact that  the IMF, BIS, and OECD all show the country on track for Greek-style fiscal chaos.

Or the fact that higher taxes are keeping Japan’s economy stagnant.

But I guess it doesn’t make sense to assume smart decisions by Japanese politicians. After all, they’re probably just as venal and short sighted as their American counterparts.

P.S. If I had to pick the most inane regulation on the planet, I’d probably select the Greek rule on stool samples. But, depending on my mood, the Japanese reg on coffee enemas might win the prize.

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Like many Americans, I’m suffering from Obamacare fatigue.

Health Freedom Meter before ObamacareBefore the law was implemented, I repeatedly explained that more spending and more intervention  in the health sector would worsen a system that already was suffering from too much government.

And since the law went into effect, I’ve pointed out – over and over again – the predictably negative effects of Health Freedom Meter after Obamacaregiving the government even more control.

So I’m tempted to wash my hands of the issue.

But that would be wrong, particularly since advocates of statism disingenuously might claim that silence somehow means acceptance or approval.

Moreover, we need to continuously remind ourselves that big government doesn’t work just in case there’s a chance to enact good reforms after Obama leaves office.

With that in mind, let’s look at recent developments that underscore the case against government-run healthcare.

How about the fact that Obamacare is extremely vulnerable to fraud?

…the GAO report showed that federal auditors 11 out of 12 times were able to gain subsidized coverage with fictitious applications, three of the successful applications never provided citizenship or immigration documentation. The investigators in each case were able to obtain $2,500 or around $30,000 annually in advance premium tax credits.

And what about the fact that the Obamacare co-ops have been a big flop?

Nonprofit co-ops, the health care law’s public-spirited alternative to mega-insurers, are awash in red ink and many have fallen short of sign-up goals, a government audit has found. Under President Barack Obama’s overhaul, taxpayers provided $2.4 billion in loans to get the co-ops going, but only one out of 23 — the one in Maine — made money last year, said the report out Thursday. Another one…was shut down by regulators over financial concerns. The audit by the Health and Human Services inspector general’s office also found that 13 of the 23 lagged far behind their 2014 enrollment projections.

Or what about the fact that deductibles have increased under Obamacare?

A survey released earlier this week by the Kaiser Family Foundation found that..deductibles have risen almost three times as fast since 2010 for employer-sponsored plans.

And should we care that Obamacare has meant rising health care costs?

…the actuaries estimated that health spending that year jumped by 5.5 percent, a bigger rise than the country had experienced in five years. …The actuaries cited three main reasons they think health spending is set to tick up. One is the aging of the population… Another is the improving economy… But the third, and a big one, was Obamacare’s coverage expansion.

All of the aforementioned things are contrary to what Obamacare supporters promised.

Though since I focus on policy rather than politics, I’ll take this opportunity to point out that higher deductibles in some ways are a good thing. Which is why I’ve defended Obamacare’s Cadillac tax.

But now let’s look at two additional Obamacare developments. And both represent very bad news.

First, new scholarly research shows that Obamacare will be bad news for all income levels, and even will be of questionable value to those getting big subsidies (h/t: Marginal Revolution).

…the average financial burden will increase for all income levels once insured. Subsidy-eligible persons with incomes below 250 percent of the poverty threshold likely experience welfare improvements that offset the higher financial burden, depending on assumptions about risk aversion and the value of additional consumption of medical care. However, even under the most optimistic assumptions, close to half of the formerly uninsured (especially those with higher incomes) experience both higher financial burden and lower estimated welfare.

In other words, people generally were making sensible choices when they had some degree of freedom.

But now that they’re being coerced into Obamacare, many of them are worse off. Even in many cases if they’re the ones getting subsidized!

Second, we now know that President Obama’s promise to lower health insurance premiums by $2,500 was laughably misleading.

But it’s not simply that the President exaggerated. As Investor’s Business Daily explains, the numbers actually have gone in the other direction

Since 2008, average family premiums have climbed a total of $4,865. The White House cheered the news, saying it was a sign of continued slow growth in premium costs. …Slightly less higher premiums aren’t what President Obama promised Americans when he ran for office touting his medical overhaul. He specifically said his plan would cut premiums. “We will start,” Obama said back in 2008, “by reducing premiums by as much as $2,500 per family.”

And keep in mind that Obama’s claim of big savings was not a one-time, off-the-cuff comment.

As you can see in this video, it was a pervasive part of his campaign for further government control of the health care system.

But the real story isn’t prevarication by a politician. That comes with the territory.

The real issue is that our healthcare system is more screwed up because government now is playing a bigger role.

And keep in mind that fixing the problem means a lot more than simply repealing Obamacare. We also need to deal with spending programs such as Medicare and Medicaid and address tax preferences and regulations that encourage over-insurance.

After all, never forget that our real healthcare crisis is a giant government-caused third-party payer problem.

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The libertarian message of limited government generally is not warmly received in Washington because politicians, bureaucrats, cronyists, lobbyists, contractors, and other insiders profit from the status quo.

The D.C. area is now the richest region of the country, filled with folks who gladly support higher taxes because they realize that “They may send an additional 5 percent of their income to the IRS, but their income will be 20 percent higher because of all the money sloshing around Washington.”

But what about folks in the real world? Do the folks from “outside the beltway” believe in smaller government?

As a general rule, I think ordinary people are sympathetic to limited government, particularly if you have a chance to dispassionately explain how nations with good policy routinely out-perform countries with bad policy.

But there are issues that present challenges because a non-trivial share of the population thinks the free-market approach is too radical or unrealistic. To cite a few examples that I’ve written about in the past:

Today, I want to add to that list. When discussing the merits of government intervention, there are people who generally believe in markets, but nonetheless argue that we need antitrust laws to protect consumers from avaricious companies.

I agree that businesses are looking to maximize profits, but I disagree with the notion that this puts consumers in peril. In a free-market economy, businesses can get money only by providing goods and services that are valued by consumers.

Indeed, consumers are only in danger when government puts its thumb on the scale with handouts, subsidies, restrictions, bailouts, regulations, licensing, mandates, and other forms of intervention. Because when government rigs the market and hinders competition, that’s when consumers can get exploited.

Moreover, to the extent we have monopolies in America, it’s because of government. Just think of the Postal Service. Or Social Security. Or the air traffic control system. Those are all things that should be handled by the private sector, but they exist because of government coercion.

Now that we’ve reviewed the theoretical argument, let’s look at how antitrust laws are grossly inconsistent in practice. Professor Mark Perry of the American Enterprise Institute pointed out that it’s possible for companies to get in trouble with antitrust bureaucrats regardless of the prices they charge.

If your company’s prices are too close to the same as your competitors’ prices, government bureaucrats will come after you and charge you with price-fixing and collusion as 35 auto parts manufacturers found out recently… If your company’s prices are too high, government bureaucrats will come after you and charge you with price-gouging, as five airlines found out recently… And finally, if your company’s prices are too low, government bureaucrats will come after you and charge you with predatory pricing or selling products below cost, as the grocery chain Meijer found out recently after opening stores in Wisconsin.

Now put yourself in the position of a pricing manager at a company. What are you supposed to do if bureaucrats can come after you no matter what price you charge?!? This makes no sense.

And it sparked my memory. Back when I was a college student in the 1970s and first learning about free markets, I remember coming across a short film, The Incredible Bread Machine, that argued in favor of economic liberty.

It was accompanied by a poem that told the story of an entrepreneur named Tom Smith who invented a technology to produce cheap bread for the masses. That was good news, but then the price of bread rose after an increase in business taxation and that led to accusations that the entrepreneur was exploiting his “market power.”

And that’s when the antitrust bureaucrats got involved. Here’s the relevant section of the poem, and you’ll notice that 1970s satire is eerily similar to today’s antitrust reality.

So, antitrust now took a hand.
Of course, it was appalled
At what it found was going on.
The “bread trust,” it was called.

Now this was getting serious.
So Smith felt that he must
Have a friendly interview
With the men in antitrust.
So, hat in hand, he went to them.
They’d surely been misled;
No rule of law had he defied.
But then their lawyer said:

The rule of law, in complex times,
Has proved itself deficient.
We much prefer the rule of men!
It’s vastly more efficient.
Now, let me state the present rules.

The lawyer then went on,
These very simpIe guidelines
You can rely upon:
You’re gouging on your prices if
You charge more than the rest.
But it’s unfair competition
If you think you can charge less.

A second point that we would make
To help avoid confusion:
Don’t try to charge the same amount:
That would be collusion!
You must compete. But not too much,
For if you do, you see,
Then the market would be yours
And that’s monopoly!”

Price too high? Or price too low?
Now, which charge did they make?
Well, they weren’t loath to charging both
With Public Good at stake!

In fact, they went one better
They charged “monopoly!”
No muss, no fuss, oh woe is us,
Egad, they charged all three!

Here’s the 1975 film version of the Incredible Bread Machine. The poem begins shortly after 30:00, though I suggest watching the whole video for its historical value, as well as the commentary at the end by Milton Friedman.

P.S. On another topic, I can’t resist sharing this man-bites-dog passage from a recent editorial in the New York Times.

…the next government will have to do more to make the country more productive, and that includes…cutting pensions, streamlining regulations, privatizing state-owned businesses.

No, this isn’t a joke. The NYT actually endorsed pro-market reforms to shrink the size and scope of government.

That’s the good news.

The bad news is that the editorial was about Greece rather than United States.

But at least there’s hope that the editors are becoming more rational, particularly when you also consider that the New York Times recently published columns showing the superiority of funded pension systems over tax-and-transfer programs like Social Security and revealing that feminist-supported government intervention in labor markets hurts intended beneficiaries.

To be sure, a few good pieces hardly offset the NYT‘s long track record of economic illiteracy, but a journey of a thousand miles begins with a first step.

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Bernie Sanders, Vermont’s pseudo-socialist senator, thinks that America can learn from Europe.

He’s right.

But he’s also wrong. That’s because he thinks that Europe is a role model to emulate rather than a warning signal of mistakes to avoid. Needless to say, that’s borderline crazy.

Heck, even President Obama has pointed out that the United States out-performs our European counterparts.

In his Washington Post column, Robert Samuelson warns that it would be a mistake to follow the European model of more taxes and additional regulation. He starts with (what should be) an obvious point about businesses responding to incentives.

We can learn from Europe about job creation, but many Americans may reject the underlying lesson. It is: If you price labor too high — pay workers more than they produce — businesses will slow or stop hiring.

He then points out that bad incentives in Europe are leading to bad results.

Europe’s economy is in the doldrums. Growth in the eurozone (the 19 countries using the euro) is weak… Eurozone unemployment is 11.1 percent, barely down from the peak of about 12 percent. This contrasts with the United States, where the jobless rate has dropped from 10 percent in October 2009 to 5.3 percent now.

And what exactly are the bad incentives in Europe?

Simply stated, governments are imposing too many burdens on the economy’s productive sector.

In a fascinating article in the latest “Journal of Economic Perspectives,” economist Christian Thimann — a former top adviser at the European Central Bank and now at the French investment bank AXA — argues that Europe’s debt crisis and the weak recovery both stem from high wage and compensation costs. “Jobs fail to be created in a number of [eurozone] countries not because of a ‘lack of demand’ as often claimed,” Thimann writes,” but mainly because wage costs are high relative to productivity, social insurance and tax burdens are heavy, and the business environment is excessively burdensome.”

Which brings us back to the point Samuelson made earlier.

If the costs of new workers exceed the likely benefits in higher sales and profits, companies will hire less or not at all.

And just in case the implications aren’t obvious, he spells it out.

…we should not ignore the implications for the United States. …it’s tempting to load the costs of social policies onto business. …The Affordable Care Act (aka Obamacare) requires firms to provide health insurance for workers; a $15 minimum wage would raise labor costs sharply for many firms; and there are proposals mandating paid maternity and sick leave. All these seem worthy causes, but we need to be alert to unintended consequences. If we make hiring too expensive, there will be less hiring.

Amen. As I’ve already noted, businesses aren’t charities. They won’t hire new workers if that means lower profits!

But Europe has a lot of these policies, so unemployment is higher. And we have politicians in America who want to copy Europe’s mistakes.

The problem is not just that politicians are making it more expensive to hire workers. Bad government policy also is making it more expensive to do almost anything.

The U.K.-based Telegraph has a story looking at how some European governments are making other business activities needlessly costly and difficult.

…doing business in Portugal, Ireland, Italy, Greece and Spain is more difficult, expensive and slower than in stronger, neighbouring countries. …Looking at the average time it takes to get construction permits, electricity connected, contracts enforced and goods exported shows the disparity.

This chart shows that the problem is especially acute in Southern Europe.

Let’s close by making a very important point about differences within Europe. While it’s sometimes useful and interesting to look at big-picture comparisons (such as average unemployment in the EU vs US or average income in the EU vs US), it’s also important to realize that European nations (notwithstanding pressures for harmonization, centralization, and bureaucratization from the European Commission) still have considerable leeway to determine their own economic policies.

And if you peruse Economic Freedom of the World, you’ll see that Northern European nations such as Finland (#10), Denmark (#19), Germany (#28), and the Netherlands (#34) are all considered market-friendly, while Southern European countries such as Spain (#51), France (#58), Italy (#79), and Greece (#84) are much lower in the rankings.

The Nordic nations are especially interesting. They have large welfare states, but they have very pro-market policies in other areas. So to elaborate on what Senator Sanders asserted, we actually could learn some good lessons from Scandinavian nations in areas other than fiscal policy.

P.S. Since we picked on Bernie Sanders already, let’s create some balance by also mocking Hillary Clinton.

Here’s a clever satirical video about her email scandal.

And if that doesn’t satisfy your craving, click here for more Hillary humor.

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