Quote of the Day

“Often the masses are plundered and do not know it.”

~ Frederic Bastiat

An Interview with Imad-ad-Dean Ahmad

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The Case Against the Millionaire Surtax

Alan D. Viard of the American Enterprise Institute has published The Case Against the Millionaire Surtax. Below is the abstract:

By increasing marginal tax rates at high income levels, the millionaire surtax in the House health care reform bill would promote tax avoidance and impede savings and investment, reducing wages throughout the economy. Taxing a mere 0.3% of the population is not a sustainable way to pay for health care reform.

HT: TaxProf Blog

Judge People By Their Favorite Author

Lauren Leto explains how knowing people’s favorite author is a great way to stereotype them. Below are some examples:

Jack Kerouac: Umphrey’s McGee fans.

Ayn Rand: Workaholics seeking validation.

Ralph Waldo Emerson: People who can start a fire.

Mark Twain: Liars.

Dan Brown: People who used to get lost in supermarkets when they were kids.

George Orwell: Conspiracy theorists (too easy).

F. Scott Fitzgerald: People who get adjustable-rate mortgages.

C.S. Lewis: Youth group leaders who picked their nose in the 4th grade.

Alexis de Tocqueville: Political theory and constitutional democracy majors.

Kurt Vonnegut: People who played Creep by Radiohead while having sex or smoking pot.

Quote of the Day

“The best way to get a bad law repealed is to enforce it strictly.”

~ Abraham Lincoln

WSJ: ‘Michigan Forces Business Owners Into Public Sector Unions’

The Wall Street Journal reports on a new method for labor unions to increase annual revenues: force.

A year ago in December, Ms. Berry and more than 40,000 other home-based day care providers statewide were suddenly informed they were members of Child Care Providers Together Michigan—a union created in 2006 by the United Auto Workers and the American Federation of State, County and Municipal Employees. The union had won a certification election conducted by mail under the auspices of the Michigan Employment Relations Commission. In that election only 6,000 day-care providers voted. The pro-labor vote turned out.

Today the Department of Human Services siphons about $3.7 million in annual dues to the union—from the child-care subsidies. The money should be going to home-based day-care providers—themselves not on the high end of the income scale. Ms. Berry now sees money once paid to her go to a union that does little for her. She says she is “self employed and wants nothing to do with the union.”

Chinese economy overtakes Japan

China has overtaken Japan to become the world’s second-largest economy.

World Map of Remoteness vs. Connectedness

HT: William Easterly

Why Health Care Reform Will Cost Taxpayers Dearly

In the most recent edition of the Journal of the American Enterprise Institute, Veronique de Rugy investigates how health care reform will “cost taxpayers more, much more.”

According to Congress, de Rugby explains, the different health care bills will cost approximately $900 billion over the next decade, yet somehow will simultaneously save taxpayers’ money in the long run.  Why does this sound familiar? Because the government has made similar arguments before.

Take Medicare, for instance. In 1967, long-run forecasts estimated that Medicare would cost about $12 billion by 1990. In reality, it cost $110 billion that year. Today, it costs $500 billion.

Moreover, based on Congressional Budget Office data, this chart below illustrates how long-term projections of Medicare spending have steadily increased, even in recent years and over short periods of time. In 2005 for example, CBO projected that Medicare would cost $1.5 trillion in 2050. Two years later, in 2007, the same CBO projected that this cost would reach $2.8 trillion. And in 2009, it projected that the cost would be $3 trillion instead. In other words, this projected cost doubled in four years.

This upward revision of projected costs comes despite CBO’s allowances for “excess cost growth,” meaning that CBO is aware that it tends to underestimate the long-term cost of programs, so it allows for some excess spending in its projections.

Furthermore, the actual expenditures exceed projections—in 2008, federal outlays for Medicare exceeded most recent projections by $63 billion; in 2009, federal outlays for Medicare exceeded projections by more than $148 billion.

Are Political Scientists Better Than Economists?

In his latest commentary for Marketplace, Dan Drezner sticks it to economists:

For decades, there was a clear but unspoken pecking order in the social sciences. Economists were royalty, and every other discipline was part of the peasantry. Economists were treated as real scholars, with their very own Nobel Prize and everything.

Political scientists, on the other hand, were mocked for having the word “science” in the title. The old joke goes that an economist who switches to studying political science raises the average intelligence of both disciplines. It’s not true, but the perception is powerful. Powerful enough for Sen. Tom Coburn to have tried scrapping National Science Foundation funding for “poli sci” earlier this year.

Coburn’s effort failed, however, and for good reason — 2009 was a banner year for political scientists, and a not-so-banner year for economists.