You are browsing the archive for 2014 January 30.

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Sen. Rand Paul Appears on Fox's Your World with Eric Bolling – January 30, 2014

January 30, 2014 in Politics & Elections

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Source: RAND PAUL

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Censorship Through the Tax Code: The Obama Administration Unveils New Rules That Discourage Political Activity

January 30, 2014 in Economics

By Trevor Burrus

Trevor Burrus

The Obama administration has launched the first attack in a carefully planned war on conservative and libertarian political speech. In November, the IRS proposed “clarifying” the rules that govern the political activity of 501(c)(4) “social welfare” groups, many of which have been branded by the left as nefarious “dark money” cabals. By clarifying the rules, the IRS hopes to provide guidance on how much, and what kind, of political activity (c)(4)s can engage in. In reality, the IRS is using the tax code to discourage conservative political speech.

There are of course both liberal and conservative (c)(4)s, but, since 2010, conservative (c)(4)s and other “outside money” groups have greatly outspent liberal ones. Coming from a president who has publicly chided conservative (c)(4)s for not revealing their donors, it is not surprising that he would turn to the ultimate bully in the bully pulpit: the IRS.

Let’s take a step back. In order to have (c)(4) status, an organization must be organized “primarily” around social welfare and community activity. For decades, this language has been interpreted by lawyers to mean that a (c)(4) can’t spend more than 50 percent of its funds on political activity, and the IRS largely went along with that rule of thumb. Of course, the next question is: “what is ‘political activity’?” And it is here these clarifying rules become a thinly disguised political power game.

The IRS is using the tax code to discourage conservative political speech.”

Under the proposed rules, “candidate-related political activity” now includes nearly everything that most (c)(4)s do, including voter registration, voter guides, grassroots lobbying, events where candidates appear, candidate debates, and issue advocacy. This means that many (c)(4)s would have to count nearly all their activities as political spending, even though the rules remain unclear on what percentage of spending can be on “candidate-related political activity.” Not coincidentally, the new rules don’t apply to labor unions, which are not (c)(4)s and therefore can still do all those things without running afoul of the IRS.

Want to create a (c)(4) to organize a grassroots campaign to encourage voters to email their member of Congress to oppose the Farm Bill? That is now a “candidate-related political activity” and must be included as part of your organization’s political spending. Want to hold a voter registration drive that doesn’t mention any candidates? That is also considered “candidate-related political activity” under the proposed rules. …read more

Source: OP-EDS

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Winter 2013 Issue of QJAE Now Online

January 30, 2014 in Economics

By Mises Updates

qjaecover

Featured in this issue of the Quarterly Journal of Austrian Economics (Vol. 16, No. 4):

The Marginal Efficiency of Capital by Edward W. Fuller

How Entrepreneurship Theory Created Economics by Christopher Brown and Mark Thornton

Driving the Market Process: “Alertness” Versus Innovation and “Creative Destruction” by Samuel Bostaph

Legal Monocentrism and the Paradox of Government by Jakub Bozydar Wisniewski

Sunk Costs and Contestable Markets by Mateusz Machaj

…read more

Source: MISES INSTITUTE

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Journal of Prices & Markets

January 30, 2014 in Economics

By David Howden

The first issue of the Journal of Prices & Markets is now available as a paperback. Published by the Ludwig von Mises Institute of CanadaJPM is a journal that seeks to improve the understanding of the role of markets in the economy.

The inaugural issue includes articles and reviews by Walter Block, Pete Boettke, Ben O’Neill, George Bragues, Eduard Braun, as well as many others (including me).

Submissions for the journal are on a continual basis, and interested persons can find more details here.

Of course, you can also read it for free online, but nothing beats the feeling of crisp paper as you leaf through the new directions Austrian economics is going. Why not looking into picking up a copy today?

…read more

Source: MISES INSTITUTE

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Farm Bill Spending Up 49 Percent

January 30, 2014 in Economics

The House on Wednesday passed a $956 billion compromise farm bill, which makes only modest cuts to the bloated food stamp program. The bill now moves on to the Senate. Says Cato scholar Chris Edwards, “Farm bill supporters claim that the new bill includes ‘savings’ and ‘cuts,’ but that is a myth… The reality is that Congress is set to impose a huge, damaging, and unaffordable burden on taxpayers and the economy.”

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Source: CATO HEADLINES

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How President Obama Could be Swept Away with His Executive Orders That Defy Congress and the Courts

January 30, 2014 in Economics

By Jim Powell

Jim Powell

Apparently President Obama has become convinced that he can make magic with that pen he keeps talking about, the one he plans to use for signing executive orders to revive his beleaguered presidency. Executive orders are irresistible, because a president doesn’t have to propose anything, debate the issues, endure hearings or solicit votes. An executive order can be issued in a few minutes — behind closed doors and away from bright lights.

Paul Begala, who was an advisor to President Bill Clinton, reportedly remarked, “Stroke of the pen, law of the land, kinda cool.”

What about the Constitution? It describes presidential power broadly. There isn’t anything in the Constitution that authorizes an executive order or limits what a president can do with it.

Executive orders arise from “implied constitutional and statutory authority,” the Congressional Research Service reported. “If issued under a valid claim of authority and published in the Federal Register, executive orders may have the force and effect of law.”

Many executive orders are in a twilight zone of dubious constitutional legitimacy if not open defiance of the Constitution, especially when they amount to lawmaking without congressional approval.

Presidents have made extravagant claims with their executive orders, as Harry Truman did when he issued executive order 10340 that directed the Secretary of Commerce to stop a steelworkers strike by seizing privately-owned steel mills. Truman insisted that a prolonged strike would impair the government’s ability to fight his undeclared “police action” in Korea. Truman’s Solicitor General Philip B. Perlman declared that Article II, Section 2 of the Constitution “constitutes a grant of all the executive powers of which the Government is capable.”

The case came before the Supreme Court as Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952). Justice Robert Jackson — like Truman, a Democrat — was incredulous at the administration’s position. He said, “The example of such unlimited executive power that must have most impressed the forefathers was the prerogative exercised by King George III. The description of its evils in the Declaration of Independence leads me to doubt that they were creating their new Executive in his image. Continental European examples were no more appealing. And, if we seek instruction from our own times, we can match it only from the executive powers in those governments we disparagingly describe as totalitarian. I cannot accept the view that the clause is a grant in bulk of all conceivable executive power.”

Justice Hugo Black, another …read more

Source: OP-EDS

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Another Way to Reduce Access to Health Care

January 30, 2014 in Economics

By Ryan McMaken

Outlaw emergency rooms that aren’t owned by politically well-connected hospitals.

Politicians in Colorado have introduced a bill 

which would force the closure of already existing freestanding emergency rooms unless they are owned by a hospital. SB 016 provides an exemption for emergency rooms more than 25 miles from a licensed hospital…. the practical effect of the bill would be to give hospitals monopoly control of all emergency facilities.

Freestanding emergency rooms — some owned by hospitals and some not — already serve patients in metro Denver. They locate in areas that are underserved by the emergency rooms attached to hospitals. Different from urgent care centers, they charge more because they can do more. They typically have board-certified physicians on duty 24 hours a day, every day, and are equipped to diagnose and stabilize cardiac arrest, stroke symptoms and trauma.

Like other special interest groups, Colorado’s existing hospitals have developed a loyal group of state legislators who are willing to vote for them without regard for the harm that protecting hospital cashflows inflicts on ordinary citizens in need of health care.

Mark Thornton wrote last fall about some other ways that the state restricsts access to health care:

The mainstream perspective is that experts and technocrats should establish what the best medical practices are and then bureaucrats should enforce those practices on everyone. Practices deemed suboptimal, unproven, or potentially dangerous should be prohibited by politicians and the prohibition enforced by bureaucrats. This is a one-size-fits-all system with the state determining what fits and what does not.

Never shy about intervention, the government has provided monopoly privileges for doctors through licensing, for drug companies through patents and trade restrictions, and for hospitals, who can prevent competitors from entering their market through “certificate of need” requirements. The combination of monopoly suppliers and subsidized consumers is the primary reason for this era of rising medical costs and falling health care outcomes.

…read more

Source: MISES INSTITUTE

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Floods, Snow, and Opportunity Cost

January 30, 2014 in Economics

By Ryan McMaken

800px-Flood102405

While I’m sure the national media is sorely disappointed, the snow disaster in the southeastern United States has not turned into a scene from a post-apocalyptic movie. In fact, people are using social media to help each other out. 

But questions remain as to why the region was not better prepared for a snowstorm, which as every Minnesotan knows, is no big deal. But of course, Georgia isn’t Minnesota, as explained here by Brian Barnett at Gizmodo. Barnett notes that since it rarely snows in places like Atlanta and Birmingham, it doesn’t make sense for those places to keep a lot of snowplows on hand. Thus, when it does snow, there aren’t many supplies at hand for dealing with it the way a place like Des Moines, Iowa might.

Economists will recognize this as a matter of opportunity cost. It costs money and time to purchase, maintain, and store snow plows and piles of road salt. One must have employees trained and ready to plow snow if the need should arise. The problem is that the need almost never arises, so the cost of being ready is very high when compared to all the other things that money and time could be spent on. One could argue that it’s smart to keep chains in one’s trunk to deal with icy roads more readily, but even that is not without cost.

The same was true when Colorado suffered once-in-a-lifetime  flooding during 2013. People asked “Why did these people build houses near these river?” The answer, again, is opportunity cost. Certainly, the people could have built homes further from the rivers, or on stilts, but many elected to build near the rivers because the rivers (we call them “rivers” but easterners would identify them as “creeks” or “small streams”) are considered an amenity of the property. It’s nice to be near a stream, and the owners decided the odds of a massive flood were so low that they did-not build “flood-proof” houses. And they were almost right. Indeed, one could have built a home in the flood-affected areas more than 100 years ago, and never had to worry about flood damage until 2013. The odds were simply that remote. So naturally, it wouldn’t make much sense to drastically change one’s real estate plan to deal with the small chance of being flooded out. It may have been prudent to buy flood insurance, of …read more

Source: MISES INSTITUTE

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The Quack of a Lame Duck — Obama's 2014 "Year of Action"

January 30, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

President Obama’s State of the Union Address Tuesday night was solidly crafted, well delivered, and — with the notable exception of his stirring tribute to Sgt. 1st Class Cory Remsburg — utterly forgettable.

In the days leading up to the speech, we were led to believe that the president would talk about big ideas, that he would make a clarion call for a “year of action” centered on “income inequality.”

The president played small ball, embracing a Clintonesque medley of poll-tested proposals that sounded like action, without actually doing much of anything.”

But instead of swinging for the fences, the president played small ball, embracing a Clintonesque medley of poll-tested proposals that sounded like action, without actually doing much of anything. One hoped nostalgically for a mention of midnight basketball.

Some of his proposals — patent reform, immigration reform, reworking the Earned Income Tax Credit (EITC), and increased trade — do hold potential, though the devil, as always, will be in the details. But for the most part, the speech was simply a tired reiteration of a liberal wish-list.

In his 2013 State of the Union, President Obama called for Congress to take up 42 items. Congress ended up enacting just two. That left a lot left over for this year, and the president dutifully recycled the golden oldies: green energy subsidies, gun control, universal preschool, and so on.

There was a little something for pretty much every potential Democratic voting block. The key word here is “little.”

The president’s call to raise the minimum wage was typical. He had made the exact same promise last year, and there is no reason to believe it more likely to pass this time around.

Even if it did, raising the minimum wage would do little to achieve the president’s professed goal of ensuring that “no one who works full time … [has] to raise a family in poverty.”

Contrary to the president’s implication, less than five percent of those earning the minimum wage are heads of households living below the poverty level.

For every poor person that would benefit from the president’s proposal, four beneficiaries would live in households with incomes above 300 percent of poverty.

The president’s plan would help a lot of college students and second-earners, but low-skilled, low-income workers would be as likely to lose their jobs as to benefit.

Even the president’s vaunted threat to act without Congress turned out to be inconsequential. The big item …read more

Source: OP-EDS

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Why the U.S. Has Lost Manufacturing Jobs

January 30, 2014 in Economics

By Mises Updates

Jawaharlal_Nehru_Trust_Port

by Michael S. Rozeff

The U.S. has lost manufacturing jobs, and it is not due to increases in productivity in manufacturing or because there is a natural maturation into a services economy. The main reason is the freeing up of labor forces in Asia, particularly China, due to their political reforms. Reforms in China, or movement toward greater free markets, began in 1978. Agricultural productivity went up. Peasant (farm) labor pools then started to move to the cities and manufacturing jobs. Imports into America began to increase. However, they were subject to tariffs that were uncertain. Congress renewed the tariffs annually, and they could be raised or lowered. In 2000, that uncertainty ended, and China entered the WTO. Manufacturing companies could then move production to China in greater volume without worrying that their investments might be harmed by sudden tariff increases by the U.S. The labor market in China became more integrated with the labor market in America through the flow of capital and manufacturing to China. Hence, manufacturing in the U.S. felt this shock and so did the labor forces employed in that manufacturing.

The basic story is that half the world had a labor force that was basically being thwarted by communist and similar repressive governments, and when the dam was burst and free market forces unleashed, giant equilibrating economic forces came into play.

One result has been lower prices for products imported made overseas and imported into America. Another result is that American workers have had to compete with Chinese workers. This has put pressure on pay. American workers have had to retrain and seek employment in other occupations. It has been a very difficult and trying period for large numbers of American workers who once had well-paid manufacturing jobs. A third result is that some localities, cities and regions that had built up government spending that depended on the manufacturing tax base had to adjust to reduced tax bases. A fourth result is that some companies that moved manufacturing overseas have lowered their costs and shown higher profits.

The time when this equilibration is complete is unpredictable. It depends on Chinese and American policies, agricultural productivity in China, the movement of peasants, etc. High profits attract more capital and more demand for labor, raising wages in China. This tends to slow the exit of capital and jobs from America. The creation of new industries and jobs in America is another …read more

Source: MISES INSTITUTE