You are browsing the archive for 2014 July 01.

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Sen. Paul: Fund Infrastructure Needs by Lowering Repatriation Rate

July 1, 2014 in Politics & Elections

Sen. Rand Paul today issued the following statement in response to President Obama’s remarks on infrastructure projects:
‘The interstate highway system is of vital importance to our economy,’ said Sen. Paul. ‘All across the country, bridges and roads are deficient and in need of replacement. We can help fund new construction and repair by lowering the repatriation rate and bringing money held by U.S. companies back home. This would mean no new taxes, but more revenue, and it is a solution that should win support from both political parties.’
U.S. companies are currently holding more than $2 trillion of profits made overseas outside of the United States. Currently, the repatriation rate is 35 percent, leaving little to no incentive to bring these profits back to the U.S.
Sen. Paul has proposed legislation, S. 911, which would establish an Emergency Transportation Safety Fund and reduce the repatriation rate to five percent.

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Source: RAND PAUL

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Ralph Nader Cites Mises, Hayek, and Rothbard

July 1, 2014 in Economics

By Randall Holcombe

Ralph Nader argues in his new book, Unstoppable, that the left and right are coming together in their opposition of corporatism: those government policies that favor the economically powerful over the general public interest.  This convergence of the left and right presents an opportunity for people to drop their political labels and unite to overturn the nation’s corporatist economic policies.

He wants to eliminate corporate welfare and bailouts, but is short on details about how this can be done.  I’m not objecting here.  The first step is recognizing a commonality of interests that could organize to limit government in this area.  But because I don’t see a clear mechanism here that will be sufficient to overturn entrenched and powerful special interests, it is not apparent that this commonality of interests really is unstoppable.

One interesting thing about Nader’s book is his favorable references to prominent Austrian school economists, including Mises, Hayek, and Rothbard.  References like this from a beacon of the political left are a good sign for the visibility and credibility of the Austrian school.

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Source: MISES INSTITUTE

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Tenure Isn't the Problem, Government Is

July 1, 2014 in Economics

By Neal McCluskey

Neal McCluskey

Tenure takes a lot of abuse from a lot of well-intentioned people. Ensconced in a top-down education system in which kids and dollars primarily flow to schools based on home addresses, tenure is a considerable inefficiency. But tenure itself is not the problem; the system is.

Taken on its own, tenure is neither inherently good nor bad, but just one among many possible tools to attract and compensate employees. Everyone understands the value of job security. While I might like a job that pays $100,000 a year, I’d seek out different employment if there were a good chance that job would disappear within a year. I’d prefer something paying $70,000 if it also guaranteed several years of employment. Of course, the desired mix of pay and job security — not to mention retirement benefits, health insurance, workplace food and drink options — will vary from person to person.

The value of tenure would also differ from employer to employer. For instance, a start-up school without much money to offer high salaries or expensive perks might benefit from offering tenure to attract good teachers. A well established, wealthy institution, in contrast, might make almost all the compensation it offers monetary.

For both employers and employees, the reality-based maxim on which compensation should be based is “different strokes for different folks.” Different employers and employees face different problems and incentives, and tenure should be an option that can either be used, or not used, based on peoples’ varying situations and desires.

The problem in the current system is that such bottom-up, fine-grained decision making is impossible to achieve. When government controls schooling, uniform compensation is almost inevitable. One system, one rule-maker, one compensation policy. Either “yes, tenure,” or “no, tenure.”

Moving to much greater school choice for parents, and freedom for educators to start and run schools, would destroy this hidebound, monolithic system, and in so doing, enable all sorts of compensation arrangements to be employed. It would also, crucially, allow parents to choose the schools that work best for their children and to leave those that fail them. This, in turn, would furnish major incentives for schools to try lots of different ways of operating — including different forms of compensation — to better compete for students and the dollars attached to them.

Choice would, in fact, fully align the incentives of employers, employees and customers, with all benefiting when schools perform better. A well-performing school …read more

Source: OP-EDS

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Hobby Lobby: Government Can't Violate Religious Liberties Willy-Nilly

July 1, 2014 in Economics

By Ilya Shapiro

Ilya Shapiro

By now you’ve no doubt heard that the Supreme Court ruled corporations can fire women who use birth control and that religion trumps all other values in constitutional jurisprudence. At least that’s what my Twitter feed tells me.

But what was at stake in Burwell v. Hobby Lobby actually has nothing to do with the power of big business, the freedom to use any kind of legal contraceptive, or how to balance religious liberty against other constitutional considerations. Much like Citizens United (which struck down restrictions on corporate political speech without touching campaign contribution limits) and Shelby  County (which struck down Section 4(b) of the Voting Rights Act because it was based on obsolete voting data that didn’t reflect current realities as constitutionally required), Hobby Lobby is doomed to be misunderstood. The case now enters the “war on women” echo circus—as if half the plaintiffs challenging the Affordable Care Act’s contraceptives mandate weren’t women—or possibly some more bizarre corner of the Obamadämmerung.

Indeed, if you walked by the Supreme Court when its final opinions were coming down, you’d be excused for thinking that the justices were about to rule on some mega-case combining gay rights, abortion, and the death penalty. But no number of rainbow flags or “keep your rosaries off my ovaries” chants could change the fact that Hobby Lobby was actually a rather straightforward question of statutory interpretation regarding whether the government was justified in this particular case in overriding religious liberties.

The Supreme Court evaluated that question and ruled 5-4 that closely held corporations can’t be forced to pay for all of their employees’ contraceptives if doing so would violate their religious beliefs. There was no constitutional decision, no expansion of corporate rights, and no weighing of religion versus the right to use birth control.

It All Began With Government Aggression

Let’s unpack that. This case began when the Department of Health and Human Services included 20 contraceptives as part of the “minimum essential coverage” that all health insurance plans had to satisfy to comply with Obamacare’s employer mandate. A host of employers objected on religious grounds to four of the items on that list because these particular methods of contraception prevent a fertilized egg from implanting in the uterus.

Now, whether you call such devices and pills “abortifacients” or not is a question of semantics. I don’t have a problem with them, but David and Barbara Green, the founders and owners of the arts-and-crafts emporium Hobby Lobby Inc.—who …read more

Source: OP-EDS

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Hobby Lobby, Contraception, and the Primitivism of Politics

July 1, 2014 in Economics

By Trevor Burrus

Trevor Burrus

Hobby Lobby and Conestoga Wood Specialties have won the right to run their businesses free from government-imposed mandates that violate their religious beliefs. As expected, many reactions to the decision have ranged from hyperbolic to irate. For those on the left, the rallying cry has been that a woman’s birth control is “not my boss’s business,” which is true in an ideal world.

But we don’t live in an ideal world. We live in a world where ham-fisted and misguided government regulations and self-interested, crony-capitalist politicians have manufactured a problem out of thin air–namely, the controversy over who gets to control decisions about health care coverage, employees or employers. Having manufactured the problem, the government then helped create two opposing factions supposedly fighting on opposite sides of a “war on women.” Now we’ve called on the Supreme Court to help solve our made-up problem in our made-up war. We’re bailing water from a sinking ship that the government keeps drilling holes in.

So how did we get here?

First mistake: During World War II, the government imposed wage and price controls in order to counteract inflation. Any economist will tell you this is a bad idea. Nevertheless, the government marched bravely into the abyss thinking, as usual, that the immediate, politically salient problem was more important than the long-term consequences.

Those wage controls then incentivized companies to start providing benefits, such as health insurance, as part of compensation packages. This, of course, is the predictable outcome of putting a limit on how high wages can go. Those employees worth more than the price ceiling would inevitably be compensated in other ways.

Second mistake: After the war, as many people were starting to get insurance through their jobs, the government codified a tax preference for employer-supplied insurance. That small thumb on the scale slowly helped push us into the strange system we’re in today. As reported by the CBO, 76% of insurance-eligible employees are enrolled in employer-based programs.

Third mistake: The preference for employer-based insurance was one of many factors that pushed the United States toward an insurance-centered health care system where insurance is seen as synonymous with health care. Insurance is not, of course, synonymous with health care. It is merely a method by which some people pay for some health care.

Real insurance insures against an unpredictable future. Just as car insurance shouldn’t pay for oil changes, health insurance shouldn’t pay for predictable expenses like birth …read more

Source: OP-EDS

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National Review Online Op-Ed: Tragedy in Israel

July 1, 2014 in Politics & Elections

This week, three young boys were buried in Israel. The victims of kidnapping, they had been murdered by terrorists from Hamas.

The boys, Eyal Yifrach, 19; Gilad Shaar, 16; and Naftali Frenkel, a 16-year-old dual U.S.-Israeli citizen, were like any other children – their lives ready to be lived, their dreams ahead of them. They grew up in a nation that was at war but desperately wanted peace.
It is a peace they did not live to see, nor will others their age if action is not taken.

The Obama administration responded with its condolences to the families and to the state of Israel, as well it should have. But it also called, as it always does in situations like this, for restraint on the part of Israel.

How many times must Israel hear this call? Children are murdered – please show restraint. Cafés and buses are bombed – please show restraint. Towns are victimized by hundreds of rockets – please show restraint while you bury your dead once again.

I think it is clear by now: Israel has shown remarkable restraint. It possesses a military with clear superiority over that of its Palestinian neighbors, yet it does not respond to threat after threat, provocation after provocation, with the type of force that would decisively end their conflict.

But sometimes restraint can work against you. Sometimes you just have to say, enough is enough.

Nearly six weeks ago, I proposed a bill called the ‘Stand With Israel Act.’ Its purpose was to cut off the flow of U.S. taxpayer dollars to the Palestinian Authority if it allied with Hamas – the same Hamas that just murdered these three teenagers.

So let’s be clear: U.S. taxpayer money may soon be going to an entity kidnapping and murdering Israeli and U.S. children.

That is unconscionable, and it must end.

There are those who have said my bill is unnecessary, that current law will allow the Obama administration to cut off the aid money.

I don’t believe that, and no supporter of Israel should believe that. Remember, the Obama administration did not respond to these murders by calling for Palestinian/Hamas aid to be cut off. Instead, they called for ‘restraint.’ The Obama administration chose to lecture Israel instead of punish the perpetrators.

I call for all aid to the Palestinian Authority – every penny – to be cut off. Not one more …read more

Source: RAND PAUL

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Mises University Graduates

July 1, 2014 in Economics

By Mark Thornton

IMAG0012

On my recent trip to the Oxford Union debate in the UK I had the good fortune to be able to attend a lecture by Ben Powell at the Adam Smith Institute in London. Ben attended Mises University in 1999 and 2000 and now teaches economics at Texas Tech University where he is also Director of the Free Market Institute. At his lecture I also saw David Skarbek who attended Mises University in 2004 and 2007. David now is a Lecturer in political economy at King’s College London. I also renewed my acquaintance with Sam Bowman. Sam attended the Mises University in 2009 and is now Director of Research at the Adam Smith Institute. Ben gave an outstanding lecture on the economics of sweatshops, but I was also immensely pleased to see all three outstanding graduates of Mises University and to learn of their ongoing accomplishments.

With Sam Bowman

IMAG0010

With Ben Powell

IMAG0014

With David Skarbek

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Source: MISES INSTITUTE

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Sen. Paul Honors 50th Anniversary of Civil Rights Act

July 1, 2014 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today offered the following statement honoring the 50th Anniversary of the Civil Rights Act:

‘Tomorrow, July 2nd, we celebrate the 50th anniversary of the Civil Rights Act of 1964. It is simply unimaginable to think what modern America would be like if not for the brave men and women who stood up for the rights of all Americans. This legislation changed the future of our nation by enforcing the belief that all men and women are created equal. We must continue to build an America that our children-of every race, creed and color-deserve,’ Sen. Paul said.

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Source: RAND PAUL

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Deposit Insurance is a Gamble

July 1, 2014 in Economics

By David Howden

In a letter to the Economist on May 3rd, Mark Neale, Chief Executive of the UK’s Financial Services Compensation Scheme (the country’s deposit insurance provider), chastised the magazine for its view of deposit insurance as a “corrosive trend” in the state’s involvement in finance.

Mr. Neale points out that deposit insurance is not funded by the government, but is financed through levies paid by the banking system. He further claims that “all insurance creates some moral hazard”, implying that deposit insurance is not radically different from other forms of insurance.

In these claims he is only half correct. The issue with deposit insurance is not one of who pays for it. It is a question of whether such insurance can actually exist in the first place.

In a wonderful little section in Human Action, Ludwig von Mises outlines the distinction between class events and case events. Cases are individual and unrelated occurrences, such as playing a football match or fighting a war. We have much knowledge about the protagonists, but of the outcome we know not much In distinction, there exist classes of events where we know very little about the individuals that comprise a class but the whole of them behave in a similar fashion. A roll of dice provides a good example. Whether snake eyes result from any given roll is relative unknown, but over a series of rolls we know that this outcome should occur roughly once out of every 36 times.

This distinction is important as only class events can be insured. Insuring bank deposits is not included in this category.

When one buys life insurance, the product does not make the individual live a more risky life. He doesn’t try to die a little earlier so that his life insurance product will pay off. In fact, if all goes well he would never have to use the product, but it is there just in case. (And if he lived his whole life, there would be not much need for a life insurance policy as the premiums paid in will amount to more-or-less the policy payout.)

Life insurance does not create moral hazard. Deposit insurance definitely does.

When your bank account is insured your criteria in selecting a bank change drastically. No longer are you worried about prudent financial management, but rather your aim is to maximize a sure bet. Since deposit insurance will pay you out whether your bank is liquid …read more

Source: MISES INSTITUTE

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How Government Forces the Poor Into Black Markets

July 1, 2014 in Economics

By Mises Updates

6796

Mises Daily Tuesday by Peter St. Onge:

Industrious low-income people often must turn to doing business in the black market to avoid the burdensome costs of government regulations. The creation of a cashless society would ensure that even these opportunities to make a living will be abolished forever.

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Source: MISES INSTITUTE