You are browsing the archive for 2013 April 11.

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Schumer-Toomey Gun Bill Deserves a Committee Hearing

April 11, 2013 in Economics

By David B. Kopel

David B. Kopel

When it comes to passing federal gun control legislation, no one can match the record of New York’s Senator Charles Schumer. Schumer was the House sponsor of the 1994-2004 ban on magazines and “assault weapons,” and also the House sponsor of the Brady Act. Now, Schumer is back with a 14-part blockbuster, this time as part of a deal worked out with Pennsylvania Republican Senator Pat Toomey.

Based on Toomey’s record, gun owners would have as much reason to trust Toomey as they would to worry about Schumer. But maybe gun owners should be worried about Toomey, too. Earlier this week, his staffers told concerned telephone callers that the notion of Toomey working on a gun control bill was a mere “media rumor.” Except this rumor, first reported in the Washington Post, was true; Toomey was already working on the gun control bill while his staff claimed otherwise.

(West Virginia Senator Joe Manchin — who has told constituents that he only believes in guns for sporting purposes — is touting the bill as his joint product with Toomey. Informed journalists have reported that Toomey’s negotiations were really with Schumer.)

The Schumer-Toomey language is on a rocket track to a floor vote, even though few in the Senate and no one in the general public have even seen it. According to Toomey’s website, the bill covers 14 different federal gun law topics.

The Schumer-Toomey language is on a rocket track to a floor vote, even though few in the Senate and no one in the general public have even seen it.”

Almost surely, the actual bill language will tilt far more anti-gun than does the sketchy list of talking points on Toomey’s website. During the drafting process, Toomey would have been bereft of assistance from experienced pro-Second Amendment attorneys, since he shut them out of the process. Meanwhile, Schumer had every opportunity to use lawyers such as those affiliated with stridently anti-gun New York Mayor Michael Bloomberg.

Indeed, those lawyers have demonstrated that they are capable of making an actual Schumer bill considerably more anti-gun than Schumer intends. Consider, for example, Schumer’s “Fix Background Checks Act,” introduced a few weeks ago. Schumer explained that his bill would not affect “your ability to borrow your Uncle Willie’s hunting rifle.”

Well, that’s true if Uncle Willie hands you the rifle while the two of you are out in the field hunting deer. …read more
Source: OP-EDS

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Extensions of ABCT: The Fed’s Impact on Latin America

April 11, 2013 in Economics

By John P. Cochran

Nicolás Cachanosky, who recently completed his PhD at Suffolk University under Ben Powell (now at Texas Tech running the new Free Market Institute), has been hired by Metro State. Nicolás fills the position I vacated when I completed retirement from Metro following the Spring 2012 semester. Nicolás has just posted a new and potentially very important working paper “U. S. Monetary Policy’s Impact on Latin America’s Structure of Production (1960-2010)” which extends ABCT and capital-based macroeconomics in the international arena, especially as it applies to the ‘periphery’.

The abstract:

I study the effects of U.S. monetary policy on Latin America’s structure of production prior to two recent economic crises. I find that changes in the Federal Funds rate produced uneven effects across economic sectors. Those industries that are more capital intensive and relative long-term projects are more sensitive to changes in the Federal Funds rate than projects that are less capital intensive and relative short-term in duration. Therefore, periods of loose monetary policy resulted in a misallocation of resources that has been costly to correct during the bust. This result finds a particular pattern of economic distortion during an unsustainable boom.

The work provides evidence which supports concerns about the effect of Fed policy on Latin America expressed by Mary Anastasia O’Grady earlier this year in the Wall Street Journal (See part II of Thoughts on Capital-Based Macroeconomics).

Cachanosky’s paper complements earlier work by Andreas Hoffman, “Zero Interest Rate Policy and the Unintended Consequences on Emerging Markets.

Currency wars and a race to the bottom by major central banks have major demonstrated negative unintended consequences around the world.

I look forward to all the great things Nicolás can achieve in Colorado especially as he has an opportunity to work with Alex Padilla who has already developed a very successful Exploring Economic Freedom.

…read more

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On North Korea, Keep Calm and Carry On

April 11, 2013 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

North Korea has caused more nervousness than usual in the international community in recent weeks. American pundits and political figures have a serious case of the jitters. There is talk by some hawks that the United States needs to consider a show of force.

But cooler heads need to prevail. We should recognize North Korea for what it is: a beggar state with no capability to launch a nuclear attack against the American homeland.

When Pyongyang followed its December 2012 ballistic missile launch with a nuclear test in February, the United States predictably led the charge to impose tighter sanctions in response, and an increasingly annoyed China did not block that effort. Kim Jong Un’s regime has since aimed a barrage of shrill threats at the U.S. and South Korea.

The most far-fetched one was that North Korea would attack U.S. cities with “cutting edge” nuclear weapons. More troubling was Pyongyang’s renunciation of the 1953 armistice that ended the fighting in the Korean War, though North Korean leaders have issued similar empty declarations before, and the severing of a hotline with South Korea.

We should recognize North Korea for what it is: a beggar state with no capability to launch a nuclear attack against the American homeland.”

This is cause for some concern, but we shouldn’t blow the situation out of proportion. The same news media outlets that solemnly intoned that sequestration would strangle the federal government, and who earlier suggested that going over the so-called fiscal cliff would wreak havoc on the entire U.S. economy, are now warning about a dire North Korean threat to American security. The usual hawks in Congress are also demanding action. Senator James Inhofe, R-Okla., declared that the United States needed to have in place “right now” a plan for a preemptive strike on North Korea if the crisis deepened.

But there is little evidence that North Korea poses a threat to the United States. It is unclear whether Pyongyang’s embryonic nuclear program has produced even one deployable weapon. It certainly has not produced sophisticated, compact “cutting edge” warheads that can be married to ICBMs.

Nor is the country’s missile program likely to be mistaken for those of first-rate military powers. The successful December launch followed several spectacular failures over nearly a decade, and a single successful test is a long way from creating a fleet of reliable missiles.

North Korea’s ability to conduct attacks against targets in South …read more
Source: OP-EDS

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Tax Havens Allow Economic Vitality

April 11, 2013 in Economics

By Daniel J. Mitchell

Daniel J. Mitchell

From an economic perspective, tax havens are very valuable because they discourage anti-growth tax policy. Simply stated, it is very difficult for governments to impose and enforce confiscatory tax rates when investors and entrepreneurs can shift their economic activity to jurisdictions with better tax policy. Particularly if those nations have strong policies on financial privacy, thus making it difficult for uncompetitive high-tax nations to track and tax flight capital.

Thanks to this process of tax competition, with havens playing a key role, top personal income tax rates have dropped from an average of more than 67 percent in 1980 to about 42 percent today. Corporate tax rates also have plummeted, falling from an average of 48 percent to 24 percent. Notwithstanding their normal inclinations to impose class-warfare policies, politicians recognized that it was better to have modest tax rates and collect more revenue than to have confiscatory tax rates and collect less revenue.

With more and more nations careening toward fiscal collapse, it is more important than ever that there are places where people can protect themselves from bad government.”

Lawmakers also were pressured to lower or eliminate death taxes and wealth taxes, as well as to reduce the double taxation of interest, dividends and capital gains. Once again, tax havens deserve much of the credit because politicians presumably would not have implemented these pro-growth reforms if they didn’t have to worry that the geese with the golden eggs might fly away to a confidential account in a well-run nation like Luxembourg or Singapore.

And this global shift to lower tax rates and better tax policy helps explain why the world economy in recent decades has been much more vibrant than it was in the 1960s and 1970s.

Tax havens also play a very valuable moral role by providing high-quality rule of law in an uncertain world, offering a financial refuge for people who live in nations where governments are incompetent and corrupt. Folks in Argentina will keep assets in the Cayman Islands to guard against economic mismanagement. People in Venezuela will invest money in Panama to protect against expropriation. Families in Mexico will hold funds in Miami to reduce the threat of kidnapping.

There are also billions of people living in nations with venal and oppressive governments. To cite just a few examples, tax havens offer secure financial servicesto political dissidents in Russia, ethnic …read more
Source: OP-EDS

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Medicaid Expansion: Tennessee Would be Wise to Reject It

April 11, 2013 in Economics

By Michael D. Tanner

Michael D. Tanner

If a deal sounds too good to be true it usually is. That’s a maxim that Gov. Bill Haslam and Tennessee legislators should keep in mind as they wrestle with whether or not to expand Medicaid under the Patient Protection and Affordable Care Act, aka Obamacare.

Gov. Haslam took a step in the right direction when he rejected an expansion of the traditional Medicaid program. However, legislators must remain wary of ongoing negotiations with HHS that would use the same federal funds to subsidize private insurance.

The federal government is dangling “free” money in front of state lawmakers as an incentive for them to go along. For the first three years, the federal government promises to pay 100 percent of the cost of expansion. While the 100 percent will gradually decline to 90 percent by 2020, it still might sound like too good of a deal to pass up, compared to the 65.29 percent that the federal government currently reimburses Tennessee for Medicaid.

But even with the federal government picking up 90 percent of the cost, Tennessee taxpayers would not be off the hook. In fact, over the next 10 years, it is estimated the Medicaid expansion would cost Tennessee taxpayers more than $1.7 billion. Worse, those estimates significantly underestimate the cost to Tennessee if it had gone forward with the expansion. It ignores a second category of recipients likely to be added to the Medicaid rolls if this expansion moves forward, what the Robert Wood Johnson Foundation has dubbed “the woodwork effect.”

The federal government is dangling “free” money in front of state lawmakers as an incentive for them to go along.”

If any Medicaid expansion moves forward, thousands of Tennessee residents will discover that they are eligible for Medicaid. Some of these people will be uninsured, but others will either be paying for insurance themselves or receiving it from their employer. In fact, it has been estimated that 76,000 people, roughly 17 percent of the 438,000 new Medicaid recipients enrolled under the expansion, would in fact be “coming out of the woodwork.” This group is not eligible for the 90/10 match, but is covered under the old formula, with Tennessee responsible for nearly 35 percent of the cost.

The Tennessee Health Care Finance and Administration has projected that these “woodwork” recipients could increase the total cost to Tennessee taxpayers by as much as $900 million through 2019, with annual increased costs of $200 …read more
Source: OP-EDS