Monthly Archive for April, 2008

The Argument Against Regulations

Bacon-wrapped hot dogs are common in downtown Los Angeles and especially in Mexican border cities. Tijuana, for example, has a vendor at almost every corner. Well now, apparently, Los Angeles is trying to ban the cart sale of these very delicious bacon-wrapped hot dogs.

As a huge fan of bacon-wrapped hot dogs (I’ve eaten more than ten in one TJ night before), I couldn’t pass up the opportunity to use this recent regulation as an argument against regulations in general (though not all regulations). It is a perfect illustration of the standard argument against regulations: reduces consumers choices, benefits the well-off and established sellers, and harms competition. All, of course, in the name of saving the consumer from himself…government paternalism at its finest.

However, those of us that eat bacon-wrapped hot dogs in much less regulated settings (Mexico, for example) know who these regulations really benefit (not the consumer!).

Quote Of The Day

“Free trade with Colombia can’t have anything to do with loss of US jobs: Colombia’s exports already enter the US duty-free. Rather, the Free Trade Agreement would reduce remaining Colombian barriers to imports from the US….It is hard to escape the conclusion that the only reason Congressmen are opposing the Colombian free trade agreement is to pander to ill-informed American public opinon. ” —Jeff Frankel, professor of economics at Harvard University

Why The Age Divide Between Hillary And Obama Supporters?

David Friedman, son of Milton Friedman, gives us his opinion:

I have a different theory, one that also helps explain the mirror image problem—the reason so many people dislike Hilary. To me, at least, she comes across as bossy, cautious, conservative, someone who knows what is good for other people and will firmly make them do it, whether or not they want to. The feel, the gestalt, fits my description above of the old. So it isn’t surprising if she appeals to many older people.

Obama appeals to young people. Part of the reason may be the impression that he is willing to take risks, to bet on luck and human goodness—the sort of political risks that might heal some of the rifts in modern American society and, in the process, establish a long term Democratic majority. The sort of risks that, if something goes seriously wrong, might snatch electoral defeat from the jaws of victory in what should be a Democratic year.

The full post can be found here.

Quote Of The Day

“What they are saying is that in zip codes where lots of folks were turned down in 1996, you see lenders approving many more loans, and at lower risk spreads in 2001 through 2005, fueling the home price bubble. The lower risk spreads tells me that this was not predatory lending, but the opposite…It sounds like what they are talking [about] is that lenders charged exorbitant interest rates to hapless borrowers. In fact, lenders were guilty of charging borrowers too little for loans, as well as approving too many unqualified borrowers. If you think that alert regulators would have cracked down on lenders for providing too many home ownership opportunities to Americans, especially minorities, then you believe in a different political environment than what I remember.” — Arnold Kling, explaining a recent study by two University Of Chicago economists on the housing bubble

Quote Of The Day

“John McCain is now aggressively exploiting loopholes in . . . wait for it . . . McCain-Feingold. Presumably this is all right because as we know, McCain is not like those other nasty politicians who take money as part of a corrupt quid-pro-quo. McCain is taking money in order to fight the good fight, which makes it okay to raise the funds By Any Means Necessary. I was against McCain-Feingold, so I normally don’t get particularly interested in violations thereof. But as far as I’m concerned, politicians who voted for McCain-Feingold are the only people who should be bound by its silly and counterproductive rules. And Messrs. McCain and Feingold should be straightjacketed with them.” —Megan McArdle

Quote Of The Day

“I’ve been asking myself that about student loans for quite some time. It’s still not clear to me how much, if at all, they benefit the students they are supposed to help. It seems at least equally plausible that they’re simply feeding the tuition inflation which makes it impossible for a normal kid to work his way through college–that is, that all the benefits of the student loans are not being appropriated by the students, but by the faculty and administration, and the non-borrowing students, who get to enjoy the shiny new facilities that tuition inflation helps pay for.” — Megan McArdle

Quote Of The Day

“After adjusting for multiple sources of bias and differences in sample construction, we establish that (1) the U.S. high school graduation rate peaked at around 80 percent in the late 1960s and then declined by 4-5 percentage points; (2) the actual high school graduation rate is substantially lower than the 88 percent estimate of the status completion rate issued by the NCIS [National Center for Educational Statistics]; (3) about 65 percent of blacks and Hispanics leave school with a high school diploma, and minority graduation rates are still substantially below the rates for non-Hispanic whites. In fact, we find no evidence of convergence in minority-majority graduation rates over the past 35 years….A significant portion of the convergence reported in the official statistics is due to black males obtaining GED credentials in prison.” — James J. Heckman and Paul A. LaFontaine, via Greg Mankiw

Quote Of The Day

“I have never quite encountered an intrinsically less fair institution than the university, at least in liberal terms of egalitarianism and respect for the underclass. A full professor may damn Wal-Mart, but Wal-Mart would never get away with the two-tier system that the university in built upon: the PhD part-timer has no job security, sometimes no benefits, no privileges, and earns usually about 25% of the compensation that is paid to the full professor to teach the identical class. When one factors in the use of graduate assistants not merely to TA courses, but to teach them in their entirety, then you can appreciate the level of exploitation that the university is built on. And add to the notion that tuition has climbed higher than the annual rate of inflation, and the picture is complete of an institution that is entirely immune from public scrutiny.” —Victor Davis Hanson

What Is A Libertarian?

Do you want to know what a Libertarian really believes in? Listen to the father of modern day Libertarianism, Milton Friedman define it without all the distortions and misrepresentations from those who claim to know what libertarianism is.

[youtube:http://www.youtube.com/watch?v=0PaN9M4WwHw]

Milton Friedman On Race, Poverty And Government

[youtube:http://www.youtube.com/watch?v=7HMEFsmpKMc]

From an old speech but just as relevant today as it was then.

Quote Of The Day

“For the first time in decades, and probably ever, workers retiring from the US labour force will be better-educated on average (according to one measure anyway) than their much younger counterparts. Some 12 per cent of 60-64 year olds have a master’s degree or better; less than 10 per cent of 30-34 year olds do. More generally, the decades-long rise in the educational quality of the labour force is coming to an end. This is important, because that rise has been one of the principal forces driving American economic growth.” —Clive Crook, blogging in the Financial Times

Quote Of The Day

“Europe continues, slowly and reluctantly, to deregulate its economies. In this it is following the US example. The American economy has some problems at the moment, but the EU’s governments are ever mindful of, and oppressed by, the long-term success of the American model. What is interesting is that the United States has been moving the other way. If the Democrats control both the White House and Congress next year, which seems very likely, America’s hitherto-gentle drift in Europe’s general direction will accelerate. One day, might the lines actually cross?” —Clive Crook, blogging in The Atlantic

The Effect Of The Iraq War On The Economy

A new CBS/New York Times poll asked:

“From what you know, how much do you think the cost of the war in Iraq has contributed to the U.S. economic problems: a lot, some, not much or not at all?”

Harvard economist Greg Mankiw responds:

I have never taken a public position on the Iraq war: The issue is a hard one, and foreign policy and military matters are well beyond my area of expertise. But I am confident that it would be a mistake to view the war primarily through the lens of economics. My guess is that if this poll question were asked of professional economists, most would answer “Not Much.”

Paul Krugman agrees, he writes: “I’d say that the sources of the economy’s expansion from 2003 to 2007 were, in order, the housing bubble, the war, and — very much in third place — tax cuts.”

One can make a strong argument that the costs of the Iraq war harm the economy in the long term – the deficit, and the opportunity cost, for example. But its very difficult to make the case that the Iraq war has harmed todays economy.

Thomas Sowell On Income ‘Stagnation’

[youtube:http://www.youtube.com/watch?v=WrtoSx-NbLQ]

Many of you have already heard the talking heads who claim income has been stagnant for many years but likely few of you have heard the response. Thomas Sowell gives it here.

Quote Of The Day

“Michelle Obama has two Ivy League degrees, private school for her children, a third-of-a-million-dollar salary, a large home, and a U.S. Senator as husband and would-be President—and says she has hitherto not been proud of the United States. Rev. Jeremiah Wright has created a huge following in his Trinity Church, merchandises his lectures, enjoys nationwide recognition, and by all accounts is both well paid and popular—and chants “God Damn America.”…Is there a connection between success and furor at the United States?” — Victor Davis Hanson, who has more on this connection here and here.

Quote Of The Day

What the American people really should feel awkward and defensive about is the level of inequality and excess of political power. Instead of asking ourselves what we can do about Warren Buffett or Bill Gates, we should be asking ourselves about what we can do about the Clintons and the Spitzers. Those who want more and more power should be our biggest concern.” —Arnold Kling, on the rising inequality of political power