You are browsing the archive for 2014 July 09.

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Get Bosses Out of Health Insurance Altogether

July 9, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

The Supreme Court’s decision last week in Burwell v. Hobby Lobby has pushed all the buttons that could be expected when sex and religion intersect. Many on the right are celebrating because they value religious expression and feel rather less excited about sex, especially of the non-procreative variety. And much of the Left is outraged because religion is generally considered of far less import while sexual freedom has a high priority. But both sides are missing the point.

It is true that your boss shouldn’t be deciding whether or not your insurance plan includes contraceptives. It is also true that your boss shouldn’t have to pay for your contraceptives if it violates his or her religious beliefs. But why is this debate limited to employers with certain clearly defined religious beliefs, or for that matter to contraception?

The bigger question should be: Why is some woman arguing with her boss about what benefits are included in her insurance plan in the first place?

There’s no good answer. The entire concept that our boss should provide our insurance is an anomaly that grew out of unique historical circumstances during World War II. At the time of a significant labor shortage, President Roosevelt imposed wage (and price) controls, preventing employers from competing for available workers by raising salaries. In an effort to circumvent the regulations and attract workers, employers began to offer non-wage benefits, among them health insurance.

In 1953, the IRS compounded the problem by holding that employer-provided health insurance was not part of wage compensation for tax purposes. This means that if a worker is paid $40,000 and their employer also provides an insurance policy worth $16,000, the worker pays taxes on just the $40,000 in wages. If, however, instead of providing insurance, the employer gave the worker a $16,000 raise — allowing the worker to purchase his or her own insurance — the worker would have to pay taxes on $66,000 in income, a tax hike of as much as $2,400. This puts workers who buy their own insurance at a significant disadvantage compared to those who receive insurance through work.

In a less politically polarized world, that would be a reform that both left and right could embrace.”

As a result, Americans were driven to get health insurance through their job: In 1960, just a third of non-elderly Americans received health insurance at work, roughly. Today, 58.4 percent do. …read more

Source: OP-EDS

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Brazilians Learn About the Law of Opportunity Cost

July 9, 2014 in Economics

By Thomas DiLorenzo

Some 40,000 of them cursed their president in a most vulgar way because she spent $11 billion on soccer stadia when it could have been spent on things that actually benefited at least a few citizens instead, they explained.

…read more

Source: MISES INSTITUTE

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Design Matters: The Future of School Choice

July 9, 2014 in Economics

By Jason Bedrick

Jason Bedrick

Though voucher programs tend to receive more attention, more than six in ten students attending private school through an educational choice program are using tax-credit scholarships. Nearly 200,000 students use tax-credit scholarships in 11 states, and three other states have recently enacted but not yet implemented scholarship tax credit (STC) laws. States looking to expand educational choice are more likely to adopt a scholarship tax credit because STC laws face fewer constitutional obstacles than government-funded vouchers and elicit higher levels of public support.

Policymakers should learn from the other states’ experience when designing their own STC laws. One useful new resource for such policymakers is the Center for Education Reform’s first-ever scorecard for scholarship tax credit laws. The CER report grades every state’s STC law (or laws) on an A-F scale based on their performance in four categories: Eligibility and Availability; Design of Credit and Scholarship; Autonomy; and Budget. The report also rates each state based on the number of participating students and the total amount of scholarship funds expended, but did not count these scores toward the main grade as participation and funding rates depend considerably on the age of the program.

Policymakers should learn from the other states’ experience when designing their own laws.”

The scorecard highlights the importance of good design. The best STC laws allow the widest participation without negatively affecting private school autonomy. Wide participation entails avoiding overly restrictive eligibility requirements for scholarship recipients and allowing the scholarship organizations to award scholarships that are large enough for low-income families to afford tuition. The CER report penalizes states that restrict new scholarships to students who are currently in a public school, who have special needs, or who come from very low-income families. States also receive lower scores for restrictions on the scholarship sizes below the lower of either $10,000 or parity with public school spending per pupil. Only Arizona receives full credit for its eligibility criteria while eight states receive full credit for their maximum scholarship sizes.

Ensuring sufficient funding requires a wide enough donor base, encouraging donations through credits that are as close to dollar-for-dollar as possible, and allowing substantial donations. CER scores each state for the types of taxpayers eligible to contribute (i.e. — corporations and individuals) and deducts points for credit values below 100 percent and for maximum donation sizes below $100,000 for corporations or $2,000 for individuals. Of the states …read more

Source: OP-EDS

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Block on CNBC: Privatize the Roads

July 9, 2014 in Economics

By Ryan McMaken

Walter Block explains road privatization on CNBC:

Web site link: http://video.cnbc.com/gallery/?video=3000290399

…read more

Source: MISES INSTITUTE

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Why Washington Needs a New North Korea Strategy

July 9, 2014 in Economics

By Doug Bandow

Doug Bandow

North Korea has imprisoned one American since 2012 and announced its intention to try two other U.S. citizens recently arrested for “perpetrating hostile acts.” Having no diplomatic relations with the Democratic People’s Republic of Korea, the Obama administration cannot even inquire as to the prisoners’ welfare, but instead must rely on Sweden, which acts in Washington’s stead. The United States should create official ties with the DPRK.

Countries have long used diplomatic relations as a weapon, even though recognition confirms geopolitical reality, rather than validates government policy. A state cannot be wished away even if it is controlled by unpleasant, distasteful or antagonistic forces. When issues between nations arise, it is usually best if the governments talk to each other. And that is easiest done if they both have diplomats in each other’s countries.

Nevertheless, politics has long dominated diplomacy surrounding the Korean peninsula. Washington and Pyongyang have never recognized each other. South Korea and Japan also do not have relations with the North. Throughout the Cold War, the Soviet Union and People’s Republic of China did not recognize the Republic of Korea. (For most of that time, the PRC and United States also did not officially talk.) One longstanding proposal to break the diplomatic deadlock was “cross-recognition,” by which everyone would recognize everyone. The United States, Japan and the ROK would establish ties with North Korea, and the USSR, PRC and North Korea would open diplomatic relations with the South.

Washington should engage diplomatically with the Pyongyang.”

The end of the Cold War delivered the last half of that deal. Russia went first, followed by China, Pyongyang’s most important ally. Two decades later, the allied powers still have not formally acknowledged North Korea’s existence.

America, the ROK and Japan see the DPRK as an enemy state. No treaty has replaced the armistice that ended the fighting. The North is building nuclear weapons, developing long-range missiles, conducting a confrontational foreign policy and violating human rights. For the allies, the bill of particulars is long.

But it is also one that largely applied to the Soviet Union, with which Washington maintained official ties throughout the Cold War, and the PRC, with which the Nixon administration opened relations while downgrading its close relationship with Taiwan. Both of these communist giants were at military odds with America, engaged Washington in real or proxy wars, battled the United States diplomatically and ran gulag …read more

Source: OP-EDS

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Can Higher Ed Really Be This Clueless?

July 9, 2014 in Economics

By Christopher Westley

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Readers of the Mises Economics Blog will be glad to know of a job opening: Detroit’s Wayne State University is seeking “a nationally prominent academic leader for the Coleman A. Young Endowed Chair in Urban Affairs.”  Coleman Young was, of course, the corrupt mayor of Detroit from 1974 to 1994 and is seen today as one of the most destructive and divisive mayors in all of U.S. history.

Although hardly the sole player causing a troubled city to become the textbook case for municipal catastrophe that it is today, Young and his policies helped set the stage for it by overseeing and extending Detroit’s welfare-ization in order to pacify and/or buy off otherwise angry segments of Detroit’s population in the decades following the 1967 riots.  What were once low-income neighborhoods became low-income and dangerous neighborhoods that scared away productive labor and capital already overburdened by Great Society overreach, and wealth-creating Detroiters escaped to safer and more bourgeois suburbs and states.

Under Young, Detroit became known as both the arson and murder capital of America, an accomplishment that’s somehow not found on his gravestone.  Its metro population fell by a third from 1970 to 1990 (and by more than a half from 1970 to 2010).  Although the mayors who succeeded him wrought more fiscal harm, some say Young’s severe racial rhetoric was cynically calculated to create a majority black city that would provide a more electorally secure environment for himself.

One concedes that if the University of Missouri still has its endowed economics chair named for former Enron CEO Ken Lay, then Wayne State should possibly be granted some slack in maintaining a Coleman Young Chair in Urban Affairs.  The contrast is interesting.  The Enron saga reminds us that when firms fail in the market, they at least are shut down before incurring any more damage, while their capital is transferred to others who might use it more efficiently (and, in Enron’s case, more ethically too).  Young’s legacy should remind us that when entities operating outside of market forces fail, their destruction is demonstrably more deep and persistent and can continue in that vein for decades—at least until they become relatively less aggressive against the natural rights of person and property.  

It is no accident that Detroit’s remarkable implosion since 2008 has been followed by several exciting entrepreneurial developments in that city.  Bankruptcy has its upsides, …read more

Source: MISES INSTITUTE

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Grudging Nod to ABCT from The Economist

July 9, 2014 in Economics

By Jeff Deist

The_Economist_Logo

The Economist is often wrong about economics and world affairs.  Worse still, it is almost uniformly tedious and overbearing in tone: its writers generally sound like exasperated parents having to explain for the hundredth time what everybody knows.

But here an Economist blogger gets one thing right, in a piece otherwise riddled with errors (everybody knows that Austrians are wrong about QE and hyperinflation, everybody knows that Austrians favor a dystopian, selfish world, etc).

The insight of Austrian economics that seemed pertinent to me is that credit cycles can be hugely destructive, as the credit often does not find its way into productive uses; just drive around Ireland and see the abandoned houses built a decade ago if you want an illustration. Before 2007, most economists seemed to think that credit didn’t matter, except when it caused inflation; that is clearly wrong.

Clearly the central bank apologists are getting nervous, and they should be.  Even the high priestess of the US Fed is warning that “Monetary policy faces significant limitations as a tool to promote financial stability.”

SIR: Perhaps she can push harder on the string.

…read more

Source: MISES INSTITUTE

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The Magic of Mises University

July 9, 2014 in Economics

By Mises Updates

We hope you’ll consider sponsoring a student today:https://mises.org/MisesU2014. Your generosity will help make the next generation of Austrian economists possible.

The Mises University is the world’s leading instructional program in the Austrian School of economics. Since 1986, it has been the essential training ground for economics students who are looking beyond the mainstream.

The program offers courses, seminars, and reading groups on the whole range of the discipline. A core curriculum presents economic foundations, and more than fifty elective classes explore the entire range of economics, in all levels of advancement.

This program is entirely supported by private donors, and thanks to Mises Institute Supporters, there is no registration fee at Mises University for students who are accepted. The selection process is highly competitive.

…read more

Source: MISES INSTITUTE

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Sen. Paul Requests Foreign Relations Committee Action on Stand with Israel Act

July 9, 2014 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today issued a letter to the Senate Foreign Relations Committee Chairman, Sen. Robert Menendez (D-N.J.), and Ranking Member, Sen. Bob Corker (R-Tenn.), requesting committee action on the Stand with Israel Act.

Earlier this week, Sen. Paul took to the Senate floor to ask for unanimous consent to pass the Stand with Israel Act, however Sen. Corker objected, citing the need to review the legislation in the Foreign Relations Committee.

The purpose of this bill is to cut off the flow of U.S. taxpayer dollars to the Palestinian Authority if it is allied with Hamas-the same Hamas that murdered two Israeli teenagers and one dual U.S.- Israeli teenager last week. Below is a copy of Sen. Paul’s letter and video of his floor speech.

CLICK HERE TO WATCH SEN. PAUL’S FLOOR SPEECH

LETTER:

July 9, 2014

Senator Robert Menendez

Chairman

Committee on Foreign Relations

United States Senate

Washington, DC 20510

Senator Bob Corker

Ranking Member

Committee on Foreign Relations

United States Senate

Washington, DC 20510

Dear Chairman Menendez and Ranking Member Corker,

As you are aware, the terrorist organization Hamas, finding itself under extreme financial hardship and in need of a bailout, reached an agreement with the Palestinian Authority to create a unity government, with that government recently swearing in new ministers.

Hamas’ charter declares that ‘there is no solution to the Palestinian question except by Jihad,’ its spokesperson in Gaza recently called for an intifada against Israel, and their political head has reaffirmed Hamas’ commitment to Israel’s destruction. Hamas is also responsible for the recent kidnapping and murder of three Israeli teenagers from the West Bank-one of whom held U.S. citizenship. Hamas’ record of anti-Israel propaganda, terrorism and violence, as well as its call for the outright destruction of the state of Israel, compels us to take immediate action to prevent U.S. taxpayer money from falling into the hands of terrorists who would further destabilize the region and do harm to our friend and ally.

Under existing laws, foreign assistance cannot be provided to the Palestinian Authority if it is ‘effectively controlled’ by Hamas, or if Hamas has ‘undue influence.’ Because we face a unique power sharing agreement, the Obama administration will not interpret the Palestinian Authority unity government as meeting …read more

Source: RAND PAUL

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Political Reform in China: Elections, Public Goods, and Income Distribution

July 9, 2014 in Economics

The control of large bureaucracies is a difficult task. In autocratic countries, controlling local officials is further complicated by the weakness of established channels to receive feedback from citizens. To address this problem, several autocratic governments have introduced local elections in recent years. New research from Monica Martinez-Bravo, Gerard Padró i Miquel, Nancy Qian, and Yang Yao provides a rigorous empirical analysis of how village-level elections in China that were instituted in the 1980s and 1990s changed the incentives for local officials.

…read more

Source: CATO HEADLINES