You are browsing the archive for Economics.

Avatar of admin

by admin

3 Big Questions for the Two North Korea Summits

April 23, 2018 in Economics

By Eric Gomez

Eric Gomez

The diplomatic events of the decade are rapidly approaching.
Later this week, President Moon Jae-in of South Korea will meet
with Kim Jong-un at Panmunjom for the first inter-Korean summit
since 2007. Shortly thereafter Kim will have a
summit with President Donald Trump—the first such meeting
between the sitting leaders of North Korea and the United
States.

A steady stream of news and speculation has preceded the
summits. Over the course of three days last week, Trump revealed
that CIA director Mike Pompeo made a secret
visit
to North Korea around Easter to speak with Kim about the
upcoming U.S. summit, South Korea announced that it is working to
negotiate a peace treaty to officially end the Korean
War, and Moon suggested that Kim would not demand the removal of U.S. troops from South Korea in
return for denuclearization. For analysts and lay observers alike
these developments raise some big questions that need to be
answered in the two upcoming summits.

What Is Kim Jong-un Prepared to Give Up?

The most important issue up for discussion at the two summits is
the denuclearization of North Korea. Kim indicated a general
willingness to discuss denuclearization in talks with South Korean officials after the
Pyeongchang Winter Olympics, but he has not provided many details
about what denuclearization means for the North in
the context of the upcoming summits. Getting more details from Kim
about what he is willing to give up should be Moon and
Trump’s first priority.

Hopefully both summits
will be successful and the parties can begin the long and difficult
work of resolving this crisis and achieving lasting peace in
Northeast Asia, but success is not a foregone
conclusion.

Nuclear weapons are Pyongyang’s ultimate insurance against
regime change, and it is difficult to imagine Kim agreeing to
dismantle his nuclear program without significant concessions and assurances from Washington and
Seoul. Despite recent reports suggesting North Korea could accept a
U.S. troop presence on the peninsula, effective reassurance will
likely require some reduction in American military posture in South
Korea.

A recent report in the South Korean press said that Pyongyang
asked for a withdrawal of U.S. “nuclear and strategic
assets” from the peninsula. Keeping nuclear weapons out of
South Korea is an easy demand to satisfy since the United States
withdrew the last of its forward-deployed
nuclear weapons from South Korea in 1991. However, the withdrawal
of “strategic assets” is a thornier issue because the
North has not publicly provided any details about what capabilities
fall under this category. The United States …read more

Source: OP-EDS

Avatar of admin

by admin

Adapting to American Decline

April 21, 2018 in Economics

By Christopher A. Preble

Christopher A. Preble

The news that Mike Pompeo, the C.I.A. director, met in secret
with North Korea’s leader, Kim Jong-un, over the Easter weekend has
renewed hope that one of the world’s most dangerous standoffs might
be resolved without war. On Saturday, in fact, Mr. Kim announced
that he would halt nuclear tests. Mr. Pompeo’s trip was surprising
for many reasons: he went personally, it was kept a secret and it
was revealed at a time when others were questioning his fitness to
become secretary of state.

But it says something about America’s place in world affairs
that at least one aspect of the trip was no surprise at all: that
Americans are deeply, centrally involved in a dispute involving two
sovereign countries thousands of miles away from Washington.

Of course, there’s a good historical reason. Under American
tutelage, South Korea eventually evolved from a desperately poor
autocracy to one of the wealthiest democracies on the planet.
American taxpayers continue to spend billions of dollars a year to
help maintain regional security. A similar process played out in
other parts of Asia and in Europe, where the American security
umbrella, including tens of thousands of military personnel,
provided room for those countries’ leaders to build strong
democracies and economies.

American leaders argued that such policies served the cause of
global peace and security. They also reasoned that the substantial
costs would be tolerable. And, so long as American productivity and
workers’ wages were rising, it seemed that Uncle Sam could ensure a
decent standard of living at home and security around the
world.

Admitting that the United
States is incapable of effectively adjudicating every territorial
dispute or of thwarting every security threat in every part of the
world is hardly tantamount to surrender. It is, rather, a wise
admission of the limits of American power.

It is becoming harder, though, for America to maintain this
global posture. Eventually, it may become impossible, in part
because we helped create the conditions that allowed other
countries to prosper and grow. There may come a time, not too far
in the future, when Americans would be surprised to hear that they
are responsible for keeping peace on the Korean Peninsula.

Americans should be debating how to manage that transition in a
way that avoids destabilizing the rest of the world. Unfortunately,
if the current administration’s maneuvers between the two
Koreas are any indication, this is the last thing on the minds of
policymakers.

There is no question that America’s share of global wealth
is shrinking. By some estimates, the United States accounted for
roughly 50 percent of global output at the end of World War …read more

Source: OP-EDS

Avatar of admin

by admin

Is University Funding by Taxpayers a Waste of Money?

April 20, 2018 in Economics

By Ryan Bourne

Ryan Bourne

It slipped under the radar, but the UK has almost hit Tony
Blair’s 1999 university pledge. The higher education
participation rate (an estimate of those who would have gone to
university by age 30) was 49pc in 2016, a whisker from
Blair’s 50pc aim. In 1993, just 13pc of those in their late
20s had degrees.

Conventional educational wisdom heralds this trend as a boon for
Britain. An army of skilled graduates will surely be utilised in
highly productive jobs, propelling economic growth for the future.
Emboldened, education expert Nick Hillman last year proposed
targeting a 70pc participation rate by 2035.

For George Mason University economics professor Bryan Caplan,
this trend wouldn’t elicit celebration. In a provocative new
book, The Case Against Education, he suggests that
university, while individually profitable, is largely a waste of
time and resources from a societal perspective.

In a provocative new
book, Bryan Caplan suggests that university, while individually
profitable, is largely a waste of time and resources from a
societal perspective.

His story is straightforward. There is a significant graduate
earnings premium. Across the OECD, adults with a tertiary degree
earn on average 56pc more than those who merely finish secondary
education. In the US, on which his book is focused, it’s
73pc. A 2016 Institute for Fiscal Studies report on the UK found
graduates in their late 30s earned 60pc more per hour than those
who left school at 16.

Why? Blair believed the traditional story that education builds
human capital, developing skills crucial to our job performance.
This might be job-specific learning for doctors or engineers, but
may include transferable skills like research or teamwork. Seen
this way, higher education is an investment in workforce upskilling.

Undoubtedly there’s some truth in all this. Education
delivers some marketable qualities. For certain subjects, such as maths, engineering and
medicine,
skills are acquired, practised and honed. But what if
a major or even the lion’s share of the graduate premium
arises because degrees are merely a “signal” to
employers of our inherent talents, skills and attributes?

Think about it. When someone with undergraduate and masters
degrees in history from Cambridge University applies for a job at a
management consultancy, does their in-depth knowledge of the Roman
empire really matter? Or does their educational history signal to
the employer that they are intelligent, diligent, and conform to
social norms and conventions?

Caplan concludes overwhelmingly the latter. If university was
really about human capital, students attending before dropping out
would still earn a significant premium. They earn a bit more than
high schoolers, but nowhere near what this theory would predict.
“University as credentialism” also explains …read more

Source: OP-EDS

Avatar of admin

by admin

The Trump Administration Failed to Study Immigration Vetting. so I Did.

April 19, 2018 in Economics

By David Bier

David Bier

President Trump’s “travel ban,” which the
Supreme Court will review next week, seeks to limit immigration
from certain countries because, as the president contends, our
vetting of immigrants has not been “extreme” enough to
keep radicalized offenders out of the United States. Despite this
assumption, Trump required a report to determine whether his
claim was actually true. In the nearly 15 months since then, his
administration has failed to complete its report, stating this past January that it lacks the
relevant information.

In light of this failure, I independently completed the study that Trump
asked for. Its conclusions undermine his claims.

Vetting failures are extremely rare and becoming rarer.
Moreover, after vetting improvements were implemented following the
terrorist attacks of Sept. 11, 2001, only one vetting failure
resulted in a deadly attack, causing just 9 percent of terrorism
deaths since the attacks. U.S.-born Americans killed 82 percent of
the terrorism victims since 9/11.

The precipitous decline
in vetting failures after 9/11 proves the government can keep
Americans safe without banning certain nationalities or categories
of immigrants.

I defined “vetting failure” as broadly as possible
to include any foreigner who harbors terrorist associations or
sympathies before receiving permission to enter the United States,
who goes on to commit a terrorism crime. I excluded offenders born
in the United States, those who entered illegally, those extradited
to the United States, children who entered at age 15 or younger,
and those who otherwise radicalized after entry.

My definition includes people as vetting failures even if the
government made no mistakes in its procedures. And
“terrorism” includes any action in which an immigrant
sent support to terrorist groups abroad, as well as terrorism
crimes committed abroad by foreigners who lived for a time in the
United States. Moreover, without information to the contrary, I
assumed that anyone who committed an offense within 10 years of
entry radicalized before coming to the United States.

By this broad definition, I identified 65 foreign-born
terrorism offenders as vetting failures — 80 percent of them,
(52 offenders, including the 19 9/11 hijackers), occurred in the 15
years leading up to Sept. 11, 2001. From 2002 through 2016, there
was just one vetting failure per 29 million vetting approvals
— a decline of 84 percent in the rate compared with the
earlier 15-year period. The 13 post-9/11 cases make up just 2
percent of all terrorism offenders since 9/11.

Not only have vetting failures become less frequent, they have
become much less deadly. During the pre-9/11 years, 27 vetting
failures resulted in deaths in the United States — 1 in …read more

Source: OP-EDS

Avatar of admin

by admin

Why Do the Insured Pay More for Prescriptions?

April 19, 2018 in Economics

By David A. Hyman, Charles Silver

David A. Hyman and Charles Silver

If you’re like us, your health insurance coverage includes a
prescription drug benefit. The benefit isn’t free, but you’re
willing to pay for it because it saves you money every time you
have a prescription filled. You are responsible for your co-pay,
and your insurer pays the rest.

At least, that’s how it is supposed to work. But the truth is
that your insurer often pays nothing. Your co-pay is all the
pharmacy receives. Not only that, but your co-pay often exceeds the
amount that someone without insurance would have paid for the drug.
That’s right: People who don’t have insurance are paying
less than you are for the same drug.

In 2017, Texas passed legislation banning this practice for
health insurance contracts issued or renewed after January 1,
2018
. Presumably, the legislature acted because lots of Texans
were overpaying for drugs. How many? Until recently, no one really
knew.

The scam works by taking
advantage of consumers’ naive belief that their insurers are
watching out for them.

But researchers at USC’s Schaeffer Center for Health
Policy & Economics
just filled in these blanks, and the
numbers are big. They found that overpayments occurred on 23
percent of all prescription drug sales. The overpayment rate for
generic drugs (28 percent) was substantially higher. And for the
twenty most popular prescription drugs in the study, nine had
overpayments more than 40 percent of the time. For the sleep-aid
Ambien, the overpayment rate was 60.5 percent. For Norvasc (for
patients with high blood pressure) the overpayment rate was 59.8
percent.

The scam works by taking advantage of consumers’ naive
belief that their insurers are watching out for them. Suppose you
have high blood pressure and your doctor prescribes amlodipine, a
medication used by millions. If you have insurance, you probably
think your insurer negotiated a great deal because a month’s
supply at the pharmacy costs you only $10. But if you paid cash for
the same drug at Costco, you’d have to pay only $1.85. Over a
full year, you’d save $90 by not using your insurance.

The extra dollars that insured customers shell out usually
don’t stay with pharmacies. They wind up in the hands of the
pharmacy benefit managers (PBMs) that insurers hire to handle their
subscribers’ prescription drug claims. These
“rebates” are known as “clawbacks” in the
trade.

In our example involving amlodipine, the clawback would have
been about $8. That’s just below the average overpayment per
drug prescription of $7.69 in the USC study. That may not seem like
a lot — you might pay that much or more for dinner …read more

Source: OP-EDS

Avatar of admin

by admin

For a State That Bucks the Feds, Texas Sure Has a Lot of Immigration Check Points

April 19, 2018 in Economics

By Patrick G. Eddington

Patrick G. Eddington

The Lone Star state has a rich history and cultural heritage,
with many firsts to its credit. But there’s one not-so-glorious
distinction bestowed upon this state by the federal government:
Texas has more internal Customs and Border Protection checkpoints
than any other state in the Union.

A new Cato Institute project, Checkpoint: America, provides the maps and
related information to prove it. What it also provides are accounts
of the naked brutality and disregard for constitutional rights that
are also a feature of these checkpoints.

The case of Greg Rosenberg is a prime example. Rosenberg
immigrated to the United States from Armenia during the first
decade of the 21st century. Rosenberg grew up in what was then
Soviet-occupied Armenia. Internal checkpoints were a key means of
repression and control, just one of the many things Greg thought
he’d left behind when he came to America and started his life here
as a long-haul truck driver.

As chronicled by ReasonTV, Greg found out the hard way that
Customs and Border Protection agents could be just as abusive as
their former Soviet counterparts.

In late September 2014, Rosenberg found himself on Interstate 35
near Laredo. Like every other motorist, he was forced to pull over
at the local Customs and Border Protection checkpoint. Rosenberg’s
complexion, and his accented English immediately drew the attention
of agents. When Rosenberg asserted his rights not to answer the
agents’ questions, they dragged him from his vehicle and locked him
up without charge for 19 days. No Customs and Border Protection
official was ever disciplined for the incident.

Rosenberg’s experience, as well as the back story on how these
checkpoints came into existence, should enrage every American who
believes in the right to travel freely without federal
interference.

In 1953, a group of Justice Department bureaucrats got the
bright idea that a key to immigration enforcement was allowing the
federal government to set up internal checkpoints to try to catch
illegal border crossers. A federal regulation was promulgated
setting up a 25-mile interior zone in which such checkpoints could
be established, all without public comment or debate. Years later,
again without public input, the zone was increased to 100 miles into the United States.

Keep in mind that all throughout this period, no actual studies
or real-world tests were conducted to see whether creating these
interior checkpoints would be constitutional or effective. In 1976,
the Supreme Court answered the first question in the affirmative,
but in a split decision that remains controversial to this day.

We have enough data now
to demonstrate clearly that these checkpoints …read more

Source: OP-EDS

Avatar of admin

by admin

Ridesharing Is Overtaking Urban Mass Transit and We Should Rejoice, Not Mourn for the Past

April 19, 2018 in Economics

By Randal O’Toole

Randal O’Toole

Thanks to new services such as Uber and Lyft, the nation’s
transit industry is fading away, leading some
people to declare an “emergency.” In fact, we should
rejoice that transit, one of the least productive industries and
most expensive forms of transportation in America, is
disappearing.

Data recently published by the Federal Transit Administration
show that ridership in February was 2% lower than the
previous February. This continues three years of declining
ridership caused by increasing auto ownership and growing
competition from other transportation providers.

Ridership declines have prompted transit consultant Jarrett
Walker to argue that “city governments have an urgent
imperative to do what’s necessary to make it attractive for
people to use” transit. Walker apparently believes that
cities exist for the benefit of transit systems, rather than the
other way around.

In fact, urban transit was developed for a kind of city that no
longer exists, one in which most jobs were downtown and most
residents lived near downtown. The Golden Age of urban transit lasted from about
1890 to 1920, when skyscrapers housed factories with tens of
thousands of jobs on a city block and people got to work on
streetcars and rapid transit trains.

The beginning of the end came in 1913, when Henry Ford installed
the first moving assembly line. Moving assembly lines not
only made cars affordable to most Americans, they also moved jobs
from downtowns to the suburbs because they required lots of space.
Today, fewer than 8% of American jobs are located in big-city
downtowns.

Transit’s importance to American cities peaked in 1917, when the
average urban resident rode transit 287 times. By 1964, it had
declined to a mere 62 trips per urban resident.

In that year, Congress passed the Urban Mass
Transportation Act
, promising federal funds to cities and
states that took over private transit systems. The massive infusion
of subsidies that followed failed to reverse the industry’s decline
and instead caused a massive drop in economic productivity.
Operating costs grew far faster than ridership or fares, and trips
carried per operating employee fell by more than 50%.

Since 1970, American taxpayers have spent more than a trillion
dollars (adjusted for inflation) subsidizing urban transit. This is
how well it has worked: In 2017, transit ridership was down to 37
trips per urban resident, the lowest in recorded history.

Inevitably, some of the subsidies to transit went to lobbyists
who’ve come up with ever more creative ways to justify further
subsidies. Transit, they say, helps the poor, saves energy, reduces
greenhouse gas emissions, and relieves congestion.

None of these is true. All but about 4% of …read more

Source: OP-EDS

Avatar of admin

by admin

Lucia v. SEC: Reining in the Fourth Branch

April 18, 2018 in Economics

By Ilya Shapiro

Ilya Shapiro

We begin with first principles: the Constitution created three
branches of government. The legislative and executive branches are
periodically checked by the electorate. To make that electoral
check work for the executive branch, however, the one official
actually accountable to voters, the president, is supposed to be
able to supervise it. As James Madison noted during the
Constitutional Convention, “if any power whatsoever is in its
nature executive, it is the power of appointing, overseeing, and
controlling those who execute the laws.” 1 Annals of Cong.
481 (Madison, June 16, 1789).

The president also has a duty to see that the laws be faithfully
executed. To do this he must be able to remove officers who fail in
their duties. And yet the president lacks the ability to remove SEC
administrative law judges (ALJs) who abuse their powers or fail to
use their discretion to act intelligently or wisely. These ALJs are
thus insulated from electoral control and accountability.

The D.C. Circuit panel in Lucia ruled that ALJs need not be
subject to presidential removal because they’re not executive
officers. When the case was reheard en banc, the court deadlocked
5-5, leaving in place the panel’s earlier characterization of
ALJs as something less than the category of officers subject to the
removal power. But ALJs’ duties are similar to Special Trial
Judges (STJs) and court clerks, positions the Supreme Court has
previously determined to be officers. If anything, ALJs have more
power and exercise their duties with greater discretion and
independence than STJs or court clerks.

Precedent going back to
the Founding supports the notion that SEC ALJs must be subject to
executive oversight.

The similarities between ALJs and court clerks or STJs are alone
enough to show that ALJs are officers. Even more, ALJs fit the
definitions of an “executive officer” established by
legal and historical precedent. Chief Justice John Marshall
articulated a test for distinguishing an officer from an employee
in United States v. Maurice (1823). He explained that if a position
didn’t require a contract because the government had
prescribed duties of the position independent of a specific
position-holder—and that successive holders’ duties
would not change—then that position is an office, and thereby
its holder an officer.

The Supreme Court would later expand on Marshall’s
criterion by setting parameters for the tenure, duration,
compensation, and duties of an officer that are different from
those of an employee. Evaluating the ALJ role against these
parameters demonstrates that ALJs are officers, not employees. Most
importantly, ALJs have significant discretion and perform more than
ministerial duties, which, based on the Court’s definitions,
makes them officers.

Both Congress and the SEC have recognized that …read more

Source: OP-EDS

Avatar of admin

by admin

Taxes Don’t Cover America’s Expenses

April 18, 2018 in Economics

By Michael D. Tanner

Michael D. Tanner

Yesterday, as most Americans are painfully aware, was “Tax
Day,” the last day for filing individual income taxes this
year. When the smoke clears, Americans will have paid $1.6 trillion
in individual income taxes. And contrary to the populist rhetoric
of both the Left and the Right, the vast majority of those taxes
will have been paid by the rich. The wealthiest 1 percent of
Americans, who earn 16 percent of U.S. income, will pay roughly 43
percent of federal income taxes this year.

Of course, income taxes are only one component of federal taxes,
and for most Americans, it’s not even the biggest part of
their taxes. All in, Americans will pay $3.3 trillion in federal
taxes this year. On top of that, they will pay $1.8 trillion in
local and state taxes, for a total burden (local, state, and
federal) of $5.2 trillion, roughly 30 percent of GDP. Americans
will pay more in taxes this year than they will for food, clothing,
and shelter combined.

Entitlement reform is the
only long-term solution to our ballooning debt.

Despite record tax revenue, the federal government will still
run an $800 billion budget deficit this year. That’s because
it will spend roughly $4.1 trillion this year, while taking in the
aforementioned $3.3 trillion. This is not rocket science: If you
spend more than you take in, you have a problem. Progressives will
blame low taxes generally, and the recent GOP tax reform in
particular. But the Congressional Budget Office says that tax
revenues as a percent of GDP will decline by just 0.7 percent this
year. Spending, on the other hand, will increase by 3 percent of
GDP, more than four times as much.

Over the long term, the tax cuts will probably mean larger
deficits. CBO estimates that forgone tax revenue will add about
$1.85 trillion to the debt over a decade. Not good. On the other
hand, increased spending will add around $12 trillion to the debt
over ten years. Spending is expected to grow by 70 percent, meaning
that even without the tax cuts, we would be drowning in red ink.
Houston, we have a spending problem.

Where does that spending go? Despite complaints from
conservatives, domestic discretionary spending (everything from the
FBI to the FDA, the Department of Commerce to the Department of
Education) accounts for just 16 percent of federal spending.
Traditional subjects of conservative ire, such as foreign aid,
amount to less than 1 percent of spending. At the same time,
despite criticism from liberals, and even after the increases that
Congress just approved, defense spending will be just 15 percent …read more

Source: OP-EDS

Avatar of admin

by admin

Repeal, Don’t Replace, Trump’s War Powers

April 17, 2018 in Economics

By Gene Healy, John Glaser

Gene Healy and John Glaser

On Monday, two days after President Trump declared
Mission Accomplished” on the latest round
of missile strikes against Syria, a bipartisan group of senators
unveiled legislation intended to reassert
Congress’s relevance to the wars we fight. But the new
Authorization for the Use of Military Force, introduced by Bob
Corker, the chairman of the Senate Foreign Relations Committee
Chairman, and the Democrat Tim Kaine, may end up doing the
opposite.

Senator Kaine is right that, as he said in a speech about the
bill, “for too long Congress has given presidents a blank
check to wage war.” The 2001 authorization, passed three days
after the Sept. 11 attacks and aimed at the perpetrators of those
attacks, has done just that. Three presidents in a row have warped
its limited authority into an enabling act for globe-spanning
presidential war.

The Corker-Kaine resolution won’t bring an end to the
Forever War; it will institutionalize it. Instead of ratifying war
powers that three presidents in a row have seized illegally,
Congress should repeal — and not replace — the 2001
legislation.

In authorizing the use of force against a list of terrorist
organizations and their affiliates, the bill states that it
“establishes rigorous congressional oversight,”
“improves transparency” and ensures “regular
congressional review and debate.” Such transparency
requirements are an improvement over the status quo. But the bill
also turns the constitutional warmaking process upside down.

Our Constitution was designed to make war difficult, requiring
the assent of both houses and the president. The bill essentially
changes that by merely requiring “regular congressional
review” of presidential warmaking and requires
reauthorization every four years; meanwhile, choosing new enemies,
in new countries, is the president’s call, unless Congress
can assemble a veto-proof majority to check him.

The legislation concurs with the argument asserted by Presidents
George W. Bush, Barack Obama and now Donald Trump that the war on
terror has “evolved”; as the draft authorization
announces in its preamble: “Numerous nonstate actors”
now “pose a grave threat to the United States.” For
both the White House and Senators Corker and Kaine, this justifies
giving the president new warmaking powers, with Congress taking a
back seat.

And yet if the past 17 years have taught us anything, it’s
that far from being an existential menace, in most cases terrorism
is a manageable threat: Since Sept. 11, an American’s chance
of being killed in the United States by a terrorist is about one in
40 million. And the groups that Corker-Kaine authorizes war with
— the Taliban, Al Qaeda and the Islamic State — do not
pose a grave threat to our country now, if they ever …read more

Source: OP-EDS