Come see the violence inherent in the system!
28 Feb 2015 Leave a comment
in constitutional political economy, Marxist economics, movies, Public Choice Tags: Monty Python
Women’s voting rights was driven by the demand for migrants in the American West
27 Feb 2015 Leave a comment
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Hauser’s Law of marginal tax rates and tax revenue
26 Feb 2015 Leave a comment
in politics - USA, Public Choice, public economics Tags: Director's Law, Marginal tax rates
No matter what the tax rates have been, in post-war America tax revenues have remained at about 19.5% of GDP.
Why does the Left in New Zealand support old age pensions for millionaires?
26 Feb 2015 Leave a comment
in applied welfare economics, income redistribution, politics - New Zealand, Public Choice, rentseeking Tags: Left-wing hypocrisy, New Zealand superannuation, old age pensions
Michael Littlewood from the Retirement Policy and Research Centre has a commentary on redesigning NZ Superannuation. He says (and I agree) that we should not just look at one issue in isolation or just the cost.
He highlights eight key design features that should be agreed on. They are:
- Universal or means-tested (I favour means-tested if the administrative costs of doing so are not prohibitive)
- Age of entitlement (I favour increasing it and tying it to life expectancy)
- Residency test – how long should someone live here to quality. The current threshold is ten years and I think it should be higher. It used to be 25 years.
- The level. Currently is 43% of the net average wage for a single person. Set at 66% of the after-tax national average wage for a couple.
- How to revalue? Is indexed to both CPI and the average wage.
- How to pay for it? Pay as you go and partially pre-funded. Should it be both? What should the mix be?
- Payments to single people? Why does a married couple get less than two singles living together?
- Overseas pensions? The rules for deducting overseas pensions are inconsistent
via Redesigning NZ Super | Kiwiblog.
I was walking back to the office with a mate who I will call the ecological socialist after a meeting with the government department responsible for income support to old age people in New Zealand.
We were both shaky our heads in utter disbelief. We couldn’t understand their idea of defending an old age pension that is free of any means test been paid to millionaires on the grounds of egalitarianism.
By coincidence, we are both Australians where the old age pension is means tested. We couldn’t understand in any way, shape or form the notion of paying old age pensions to rich people when that money could be used to increase the old age pension for those who we lived in ordinary circumstances all their lives and couldn’t save for their retirement.
I prefer to link MPs pay rises to reductions in the trans-Tasman per capita income gap
26 Feb 2015 Leave a comment
in economic growth, macroeconomics, Public Choice, rentseeking Tags: incentive pay, lost decades, MPs pay, Trans-Tasman income gap
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Bureaucracy also landed on the Moon too
25 Feb 2015 1 Comment
in economic history, economics of bureaucracy, economics of regulation, law and economics, technological progress Tags: conspiracy theorists, moon landing, moon landing hoax
Yet another way to beat the share market
24 Feb 2015 Leave a comment
in economics of bureaucracy, financial economics, Public Choice, rentseeking Tags: political connections, share price event studies
Over the ten trading days following the announcement of Timothy Geithner as Treasury Secretary, financial firms with a connection to Geithner experienced a cumulative abnormal return of about 12% relative to other financial sector firms. This reversed when his nomination ran into trouble due to unexpected tax issues.
That is what Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak, and Todd Mitton found recently.
Geithner had important social connections from his time as president of the Federal Reserve Bank of New York. He knew some people in finance very well – including those at large and small firms – but some others he did not know at all. This spike in share prices for connections to Tim Geithner was somewhat special as the authors explain:
when Henry (Hank) Paulson became Treasury Secretary in May 2006 – there is no evidence of a positive impact on the stock price of connected firms.
The argument put forward explaining the value of these connections had nothing to do with any suggestions of impropriety whatsoever. What happened was the value of connections spiked in a crisis such as the global financial crisis in 2008:
it was entirely reasonable for market participants to suppose that immediate action with limited oversight would have to be taken, and that officials would rely on a small network of established confidantes for advice and assistance. In fact, this is exactly what happened while Mr Geithner was at Treasury.
When the going gets tough, the tough only have time to ring friends and associates for advice and new staff.
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