Justice Scalia again on golf and the majesty of the Supreme Court

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Tax revenue as % of Portuguese, Italian, Greek and Spanish GDP

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Data extracted on 23 Feb 2016 07:08 UTC (GMT) from OECD.Stat.

Beating the VAT Horse Until It’s Dead

International Liberty

This is a very strange political season. Some of the Senators running for the Republican presidential nomination are among the most principled advocates of smaller government in Washington.

Yet all of them have proposed tax plans that, while theoretically far better than the current system, have features that I find troublesome. Marco Rubio, for instance, leaves the top tax rate at 35 percent, seven-percentage points higher than when Ronald Reagan left town.

Meanwhile, both Ted Cruz and Rand Paul (now out of the race) put forth plans that would subject America to value-added tax.

This has caused a kerfuffle in Washington, particularly among folks who normally are allies. To find common ground, the Heritage Foundation set up a panel to discuss this VAT controversy.

You can watch the entire hour-long program here, or you can just watch my portion below and learn why I want Senator Cruz to…

View original post 538 more words

British full-time gender wage gap by age band

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Source: What is the Gender Pay Gap? | Visual.ONS.

The dangers of sovereign debt default

Notes from the Bartender

Greece is featuring regularly in the news at present, chiefly because of the possibility that it will not be able to fulfil its sovereign financial obligations and, therefore, may have to default on its debt repayments.  Greek workers are currently striking in protest at the austerity measures that their government is proposing/implementing. These workers are understandably angry that they are paying the price for many years of political mismanagement and corruption.

Greeks need to realise is that the consequences of default may make life even harsher for them than what their government is now proposing. Default is a situation a country should avoid at all costs (no pun intended).  Just because a country defaults does not mean that its debts are forgiven.  In fact, default can place onerous burdens on a country and its peoples for years.  For a start, borrowing money on global markets becomes that much more difficult…

View original post 1,179 more words

Supporting the Folks at Home

Cartographia

Many immigrants, especially those with family in their old homelands, make it a habit to send money to their loved ones to help pay the bills.  This trend isn’t true just for the US–immigrants to most of the world’s richer nations tend to send money home when they can.  As The Economist points out, this money can have a major impact on foreign GDPs.

The map above shows the biggest recipients of these international remittances in 2007.  India is at the top, with $27 billion in foreign currency sent home.  China and Mexico aren’t far behind.  Rich Western European countries also receive a large value of money from overseas, perhaps because their expatriates are more likely to be highly educated than those from poorer countries.  Click here or on the picture above to see the article from The Economist, and a larger map.

Romania is a standout in the top…

View original post 93 more words

Think Again: The Green Economy @janlogie @GarethMP

Source: Matthew Kahn (2009) Think Again: The Green Economy | Foreign Policy

Irish election 2016

Fruits and Votes

Ireland’s 2016 general election will be held 26 February. The current coalition of Fine Gael and Labour is not doing well in the polls. However, neither is the main opposition party, Fianna Fail. The RTE seat projection currently has Fine Gael on 55 seats (based on just 28% of the vote), Labour on 13. Fianna Fail is barely holding off Sinn Fein for second place, 33 to 29 in the projection (20% and 18% in voters, according to the poll of polls).

The assembly size has been reduced. It was 165 in the last election (2011), but will be 157 in this one (not counting the seat of the Speaker). Fine Gael’s 2011 result was 46% of seats; they may not make it over 35% this time.

So worried is Fine Gael that it is “devising a risky battle-plan aimed at salvaging as many seats as possible,” according to…

View original post 330 more words

Edward Prescott and @BernieSanders compared

As a contrast against the Bernie Sanders tax-and-spend high-growth plan, the Edward Prescott plan is:

  1. mandatory savings for retirement;
  2. Eliminate capital income taxes;
  3. Broaden tax base and lower the marginal tax rate;
  4. Phased-in reforms so all birth-year cohorts are made better off;
  5. Left welfare programs and local public good shares the same; and
  6. Savings not part of taxable income, saving withdrawals part of taxable income – with these changes U.S. income tax would be a consumption tax.

Source: Edward C. Prescott – Importance of Good Governance for Economic Prosperity.

The difference between the Prescott and Sanders plans is Prescott delivers high growth through massive supply-side reforms that include the abolition of taxes on income from capital, mandatory savings for retirement along with much lower marginal tax rates.

The Sanders plan argues that if you tax people a lot more, there is more growth, more investment, more innovation and entrepreneurship and greater labour supply. There is no historical precedent for that as an outcome from higher taxes.

In the case of Prescott, the disagreement is over how large are his growth dividends. In the case of the Sanders band, only one economist agrees that his plan will increase growth. Despite that, he is still voting for Hillary Clinton.

@NZGreens @nzlabour @uklabour @berniesanders bite a gift horse in the mouth when complaining about the ignorance of the average voter

Left-wingers do whinge about voters not understanding; about how if only the voters understood better their arguments than they do now. The Left thinks voters just keep getting it wrong.

They do not know how lucky they are. Rational ignorance and rational irrationality are a rich harvest for the policies of Labour and the Greens.

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Most of the policies of Labour and the Greens are premised on cultivating the rational irrationalities of voters. These lead to Bryan Caplan’s pessimism bias, an anti-market bias, an anti-foreign bias and make-work bias:

The evidence—most notably, the results of the 1996 Survey of Americans and Economists on the Economy—shows that the general public’s views on economics not only are different from those of professional economists but are less accurate, and in predictable ways.

The public really does generally hold, for starters, that prices are not governed by supply and demand, that protectionism helps the economy, that saving labour is a bad idea, and that living standards are falling.

Politicians mindful of re-election must pander to these four biases.

Fortunately, for the New Zealand Labour Party and the Green Party of Aotearoa New Zealand, voters have no rational reason to correct these four biases. Voters are rationally irrational. As each individual counts so little, why spend any time correcting biased political beliefs?

Anti-market bias: The tendency to underestimate the benefits of the market mechanism. The typical voter equates market phenomena such as profitability and interest as examples of unbridled monetary confiscations by ‘greedy’ businesses. This  biased against the market, despite all its successes, is a rich field to till for both Labour and the Greens

Anti-foreign bias: The tendency to underestimate the economic benefits of interaction with foreigners. This antagonism towards such trends as outsourcing employment overseas, or selling raw materials to faraway traders, is reminiscent of the mercantilism Adam Smith so brilliantly demolished but it still lives on today in the hearts of the voting citizenry. Labour and the Greens play to that bias shamelessly.

Make-work bias: The tendency to underestimate the economic benefits from conserving labour. Those who look to the visible face of job losses overlook the job gains (often by those who lost their jobs) to be made tomorrow in emerging industries. The Greens and Labour are sure-fire enemies of creative destruction.

Pessimistic bias: The tendency to overestimate the severity of economic problems, and to underestimate the recent past, present and future performance of the economy. In The Progress Paradox (2003), Gregg Easterbrook ridicules abundance denial:

Our forebears, who worked and sacrificed tirelessly in the hopes their descendants would someday be free, comfortable, healthy, and educated, might be dismayed to observe how acidly we deny we now are these things.

Many average voters seem to feel that Malthus was correct in diagnosing the allegedly poor prospects for the market economy.

Where would the voting base of the Greens be without a pessimism bias? They are professional pessimists and doomsday prophets from their earliest days. Labour assumes working class Tories are dupes of what is left of fading media barons such as Rupert Murdoch.

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