Category: Government

Joe Ricketts Stands Tall Against Earmarks

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Entrepreneur Joe Ricketts. Source of photo: online version of the Omaha World-Herald article quoted and cited below.

I used to teach an Economics of Technology course in the UNO EMBA program (until a curriculum committee axed the course). As a long-shot I once invited Joe Ricketts to speak to the class. I was surprised that he accepted, and maybe also surprised that he clearly invested some time and thought in his presentation. The class was riveted not only by the story of his own entrepreneurial challenges, but also of his views of the policy issues of the day. I remember his good-natured persistence in arguing with one student who challenged him on his view of the importance of tort-reform.
From his manner, and some of the stories he told, he seemed to be the sort of entrepreneur who exemplified George Gilder’s view that great entrepreneurs have a kind of humility that leaves them open to learning, at least in key areas related to their business goals. By all accounts, Sam Walton was another example. And I heard Charles Koch speak this summer and saw him interact with some of his executives; he also gave the impression of being down-to-earth, and open to learning.
(Of course, then there’s Steve Jobs and Larry Ellison—generalizations on entrepreneurship are hard to come by!)
Ricketts and Koch also share another trait—this one too rare among successful entrepreneurs. They are both willing to invest a considerable part of their hard-earned wealth in order to preserve and protect the institutions of limited government that will make it possible for future entrepreneurs to succeed. In Ricketts’ case, for example:

(p. 7A) WASHINGTON — Joe Ricketts wants to bring down at least one Capitol Hill lawmaker who seeks earmarks so he can get the rest of Congress’ attention.

The founder and former CEO of what is now TD Ameritrade has started a new organization called Taxpayers Against Earmarks, which will seek to highlight what he describes as the evils of legislators setting aside money for pet projects back home.
. . .
Ricketts said that while some earmarks support worthy projects, he is against them all because the process is flawed. He compared those who support earmarks to addicts and criminals.
“I’m sure that all over the country there are people that like earmarks and people come to defend earmarks, and those are the people that are on the dope,” he said.
Ricketts said those who seek earmarks are asking legislators to spend other people’s money for their purposes.
“That’s theft,” he said. “As Tom Coburn says, that’s intergenerational theft. So those people that like earmarks, you can consider thieves.”
. . .
Ricketts said . . . the process encourages lawmakers to throw their support behind other spending bills to gain other lawmakers’ support for their earmarks.
“A lot of elected officials like the earmarks, but they’ve never had anybody like me or anybody else push back. … So now the scales are going to balance a little bit,” he said. “I’m going to spend as many years and as many dollars as it takes to be successful.”

For the full story, see:
Joseph Morton. “Joe Ricketts Will Put Up Big Bucks to Fight Earmarks.” Omaha World-Herald (Friday, October 1, 2010): 7A.
(Note: all ellipses added, except for the last one which was in the original.)
(Note: the online version of the article has the title “Joe Ricketts will help fight earmarks.”)

“I Just Love Economics”

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Paul Ryan. Source of photo: online version of the NYT article quoted and cited below.

(p. 16) Your once-quiet life as a congressman from Wisconsin was forever altered at the House Republican retreat in Baltimore last month, when President Obama singled you out as a “pretty sincere guy” and gave a shout-out to your “Road Map for America’s Future 2.0,” your plan to balance the federal budget.
He brought up my plan and I thought for a moment, Wow, this could be a sincere olive branch.

As the ranking Republican member of the House Budget Committee, you are seen within your party as a policy wonk.
I’ve been working on the federal budget most of my adult life, which is kind of a pretty sad thing to admit to. I just love economics.
Your “Road Map,” we should explain, is a somewhat alarming document that proposes, in 600-plus pages, erasing the federal deficit by radically restricting the government’s role in social programs like Social Security and Medicare. The president described it as “a serious proposal.”
Right. And then the next day his budget director starts ripping me and then the day after that the entire Democratic National Committee political machine starts launching demagogic attacks on me and my plan. So when you hear the word “bipartisanship” come from the president and then you see his political machine get in full-force attack mode, it comes across as very insincere.

For the full interview, see:
DEBORAH SOLOMON. “Questions for Paul Ryan; The Big Cheese.” The New York Times, Magazine Section (Sun., February 21, 2010): 16.
(Note: bold in original versions, to indicate questions by Deborah Solomon.)
(Note: the online version of the article is dated February 19, 2010.)

The Dirt on Government Detergent Laws

JonesEliseDirtyDishes2010-09-19.jpg “Elise Jones has noticed “a white dusty film” on her dishes and attributes it to reduced phosphates in dishwasher detergent.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Some longtime users were furious.

“My dishes were dirtier than before they were washed,” one wrote last week in the review section of the Web site for the Cascade line of dishwasher detergents. “It was horrible, and I won’t buy it again.”
“This is the worst product ever made for use as a dishwashing detergent!” another consumer wrote.
Like every other major detergent for automatic dishwashers, Procter & Gamble’s Cascade line recently underwent a makeover. Responding to laws that went into effect in 17 states in July, the nation’s detergent makers reformulated their products to reduce what had been the crucial ingredient, phosphates, to just a trace.
. . .
(p. 4) Phosphorus in the form of phosphates suspends particles so they do not stick to dishes and softens water to allow suds to form.
Now that the content in dishwasher detergent has plummeted to 0.5 percent from as high as 8.7 percent, many consumers are just noticing the change in the wash cycle as they run out of the old product.
“Low-phosphate dish detergents are a waste of my money,” said Thena Reynolds, a 55-year-old homemaker from Van Zandt County, Tex., who said she ran her dishwasher twice a day for a family of five. Now she has to do a quick wash of the dishes before she puts them in the dishwasher to make sure they come out clean, she said. “If I’m using more water and detergent, is that saving anything?” Ms. Reynolds said. “There has to be a happy medium somewhere.”
. . .
. . . Jessica Fischburg, a commerce manager in Norwich, Conn., for CleaningProductsWorld.com, which sells janitorial supplies in bulk, said she was not surprised that many of her clients rejected products marketed as environmentally friendly.
“The reality of any green product is that they generally don’t work as well,” she said. “Our customers really don’t like them.”
. . .
. . . in its September issue, Consumer Reports reported that of 24 low- or phosphate-free dishwasher detergents it tested, including those from environmentally friendly product lines that have been on the market for years, none matched the performance of products with phosphates.

For the full story, see:
MIREYA NAVARRO. “Cleaner for the Environment, But the Dishes? Not So Shiny.” The New York Times, First Section (Sun., September 19, 2010): 1 & 4.
(Note: ellipses added.)
(Note: the online version of the article was dated September 18, 2010, and had the title “Cleaner for the Environment, Not for the Dishes.”)

Obamacare Is Increasing Health Costs

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Source of graph: online version of the WSJ article quoted and cited below.

(p. A7) The health-care overhaul enacted last spring won’t significantly change national health spending over the next decade compared with projections before the law was passed, according to government figures released Thursday.

The report by federal number-crunchers casts fresh doubt on Democrats’ argument that the health-care law would curb the sharp increase in costs over the long term, the second setback this week for one of the party’s biggest legislative achievements.
The Wall Street Journal reported Wednesday that insurance companies have proposed rate increases ranging from 1% to 9% nationwide that they attribute specifically to new health-law coverage mandates.

For the full story, see:
JANET ADAMY. “Health Outlays Still Seen Rising .” The Wall Street Journal (Thurs., SEPTEMBER 9, 2010): A7.
(Note: the online version of the graph has the date SEPTEMBER 8, 2010.)

Budgetless California Legislature Votes to Create “Motorcycle Awareness Month”

(p. A1) SACRAMENTO, Calif.–On the brink of insolvency, California may have to pay its bills with IOUs soon. A budget was due three months ago, and the legislature hasn’t passed one.

The lawmakers can, however, point to a list of other achievements this year. Awaiting Gov. Arnold Schwarzenegger’s signature, for example, is a bill that would bar the state from filming cows in New Zealand. It’s the fruit of five committee votes and eight legislative analyses.
California lawmakers also voted to form a lobster commission. They created “Motorcycle Awareness Month,” not to mention a “Cuss Free Week.”

For the full story, see:
STU WOO. “There’s No Budget, but California Is All Over the Foreign-Cow Issue; As Deficit Looms, Lawmakers Promulgate ‘Cuss Free Week,’ Defend the State Rock.” The Wall Street Journal (Tues., SEPTEMBER 28, 2010): A1 & A18.

French Utopian Planned Community Goes Up in Flames

VilleneuveGrenobleFranceUtopia2010-09-01.jpg“The planned neighborhood Villeneuve, in Grenoble, has slowly degraded into a poor district before it finally burst into flames three weeks ago, with a mob setting nearly 100 cars on fire.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A7) GRENOBLE, France — A utopian dream of a new urban community, built here in the 1970s, had slowly degraded into a poor neighborhood plagued by aimless youths before it finally burst into flames three weeks ago.

After Karim Boudouda, a 27-year-old of North African descent, and some of his friends had robbed a casino, he was killed in an exchange of automatic gunfire with the police. The next night, Villeneuve, a carefully planned neighborhood of Grenoble in eastern France, exploded. A mob set nearly 100 cars on fire, wrecked a tram car and burned an annex of city hall.
. . .
Villeneuve, or “new city,” emerged directly out of the social unrest of the May 1968 student uprising.
People committed to social change, from here as well as from Paris and other cities, came to create a largely self-contained neighborhood of apartment buildings, parks, schools, and health and local services in this city of 160,000 people, at the spectacular juncture of two rivers and three mountain ranges at the foot of the French Alps.

For the full story, see:

STEVEN ERLANGER. “Grenoble Journal; Utopian Dream Becomes Battleground in France.” The New York Times (Mon., August 9, 2010): A7.
(Note: ellipsis added.)
(Note: the online version of the review is dated August 8, 2010.)

Government Import Quotas Increase Price of Sugar in U.S.

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Source of graph: online version of the WSJ article quoted and cited below.

(p. A1) The gap between what Americans and the rest of the world pay for sugar has reached its widest level in at least a decade, breathing new life into the battle over import quotas that prop up the price of the sweet stuff in the U.S.

For years, U.S. prices have been artificially inflated by import restrictions designed to protect American farmers. That has kept the price well above the global market.
But in recent days, the difference between the two has ballooned, giving new impetus to U.S. sugar processors and confectioners to step up their long campaign to pressure the government to increase import limits.
Attention to sugar prices, and the dwindling supply of sugar left in U.S. warehouses, has intensified in the lead up to April 1, after which the U.S. Department of Agriculture can review and change the import quotas, which now stand at 1.3 million metric tons.
Sugar users have long been vocal critics of the quotas but have failed to convince the government to change the limits. The quota has remained unchanged since it was first imposed in 1990, except for two temporary increases after Hurricane Katrina in 2005 and a major refinery explosion in 2008.

For the full story, see:
CAROLYN CUI. “Price Gap Puts Spice in Sugar-Quota Fight.” The Wall Street Journal (Mon., MARCH 15, 2010): A1 & A20.

Charles II Took a Gamble on Toleration

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A19) Early in “A Gambling Man,” a detailed and thoroughly engrossing examination of the Restoration’s first decade, Jenny Uglow notes that Charles Stuart, upon his ascension, “wanted passionately to be seen as the healer of his people’s woes and the glory of his nation.” Cromwell’s regime had featured constant war and constant taxes. The population was bitterly divided among Anglicans, Catholics and dissenting Protestants–Presbyterians, Puritans, Quakers, Baptists. A huge standing army had burdened the people financially and frightened them; such an army, it was not unreasonably thought, could be used to impose a tyranny.
. . .
As a result of such divisions, Charles became a “gambler,” as Ms. Uglow puts it–not at cards or gaming tables but at affairs of state. His biggest gamble was on something he fervently wanted to achieve: religious toleration for all sects and the freedom for Englishmen to follow their own “tender consciences” in individual worship. He forwarded this policy in Parliament only to receive his first major defeat with the passage of the Corporation Act, a law that took the power of corporations (governing towns and businesses) away from Nonconformists and handed it back to the Church of England. Charles had gambled on “the force of reasonable argument,” Ms. Uglow says, but was ultimately defeated “by the entrenched interests of the [Anglican] Church” and “the deep-held suspicions” of Parliament, which believed that England’s dissenting sects posed a persistent threat. That Charles was willing to go head-to-head with Parliament for such a cause, even in failure, was especially audacious, considering his father’s fate.
. . .
In his desire to be a monarch of the people, Charles was determined to make himself accessible–in the early days of his reign he threw open the palace of Whitehall to all comers. He gambled, with some success, that (in Ms. Uglow’s words) “easy access would make people of all views feel they might reach him, preventing conspiracies.” During the 1666 Great Fire of London he and his brother, James, duke of York, went out into the streets and put themselves alongside soldiers and workmen. They could be seen “filthy, smoke-blackened and tired,” frantically creating a firebreak as the blaze consumed London like a monstrous beast.

For the full review, see:
NED CRABB. “BOOKSHELF; Risky Business; A bitterly divided nation, a monarchy splendiferously restored..” The Wall Street Journal (Fri., NOVEMBER 27, 2009): A19.
(Note: ellipses added; bracketed word in original.)
(Note: the online version of the review is dated NOVEMBER 26, 2009.)

Book being reviewed:
Uglow, Jenny. A Gambling Man: Charles II’s Restoration Game. New York: Farrar, Straus and Giroux, 2009.

Tax Hike Would Hurt Entrepreneurs

(p. A17) When Congress returns from its summer recess, members will face a pivotal decision about the expiring Bush tax cuts. President Barack Obama has called for their permanent extension for singles with incomes below $200,000 and married couples with incomes below $250,000, but has proposed that most of the tax cuts for households with higher incomes be allowed to expire.
. . .
The fact that there are millions of people in the lower tax brackets with small amounts of business income may be interesting for some purposes, but it is irrelevant for the assessment of the economic impact of the tax hikes.
The numbers are clear. According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007.
. . .
Economic research supports a large impact. A pair of papers by economists Robert Carroll, Douglas Holtz-Eakin, Harvey Rosen and Mark Rider that were published in 1998 and 2000 by the National Bureau of Economic Research analyzed tax return data and uncovered high responsiveness of sole proprietors’ business activity to tax rates. Their estimates imply that increasing the top rate to 40.8% from 35% (an official rate of 39.6% plus another 1.2 percentage points from the restoration of a stealth provision that phases out deductions), as in Mr. Obama’s plan, would reduce gross receipts by more than 7% for sole proprietors subject to the higher rate.
These results imply a similar effect on proprietors’ investment expenditures. A paper published by R. Glenn Hubbard of Columbia University and William M. Gentry of Williams College in the American Economic Review in 2000 also found that increasing progressivity of the tax code discourages entrepreneurs from starting new businesses.

For the full commentary, see:
KEVIN A. HASSETT and ALAN D. VIARD. “The Small Business Tax Hike and the 97% Fallacy; The president’s plan to raise top marginal rates is holding back the very people who should be leading the economic recovery.” The Wall Street Journal (Fri., SEPTEMBER 3, 2010): A17.
(Note: ellipses added.)

One of the papers by Carroll et al, is:
Carroll, Robert, Douglas Holtz-Eakin, Mark Rider, and Harvey S. Rosen. “Income Taxes and Entrepreneurs’ Use of Labor.” Journal of Labor Economics 18, no. 2 (April 2000): 324-51.

The Hubbard paper is:
Gentry, William M., and R. Glenn Hubbard. “Tax Policy and Entrepreneurial Entry.” The American Economic Review 90, no. 2 (May 2000): 283-87.

Brit Papers Survived Due to “the Gratifying Defeat of the Luddite Unions by Rupert Murdoch”

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“Evans says: “Ultimately, Mrs Thatcher was the reason I was fired, because I attacked her so much.” Source of caption and photo: online version of The Independent on Sunday article quoted and cited below.

(p. 12) As a condition of acquiring both The Times and The Sunday Times in early 1981, Murdoch promised that the independence of each would be protected by a board of directors, and made other solemn guarantees.

“On this basis,” Evans wrote in Good Times, Bad Times, “I accepted Rupert Murdoch’s invitation to edit The Times on February 17 1981. My ambition,” he admitted, “got the better of my judgement.” Every assurance regarding editorial independence, he added, was blithely disregarded.
On 9 March 1982, the day after he’d come back from burying his father at Bluebell Wood cemetery in Prestatyn, Harold Evans was sacked.
“Ultimately,” he says, “Mrs Thatcher was the reason I was fired. Because I was attacking her so much. When she started to dismantle the British economy, the most cogent critic of that policy which led, OK, to… a lot of things… was The Sunday Times. I wrote 70 per cent of that criticism myself. When I became editor of The Times, I continued to criticise monetarism. But I could still see some of the good things about her.”
“Just remind us?”
“I’m thinking – and you probably won’t agree with this because I sense that you’re a firm supporter of the NUJ [National Union of Journalists] – mainly of her dealings with the unions.”
“How do you feel about her now?”
“I think she is a very brave woman.”
“Hitler was brave.”
“Yes, but… she was right about terrorism. She was right about the IRA.”
“Do you think Britain would be a better place if she’d never existed?”
“No. I think Britain benefited from her having been there. Britain was becoming so arthritic with labour restrictions.”
“Good Times, Bad Times is an unforgiving portrait of Rupert Murdoch.”
. . .
(p. 13) [Evans] has called Rupert Murdoch elitist, anti-democratic, and asserted that the Australian cares nothing about the opinion of others, so long as his business expands. This is the same man who refers to “the gratifying defeat of the Luddite unions by Rupert Murdoch”.
. . .
“So how do you feel about the Murdoch empire now?”
Evans pauses. “I’m not that familiar with the British… OK. Let’s take an alternative scenario. Murdoch never arrives. I manage to take control of The Sunday Times with the management buyout. Then I get defeated by the unions. The Independent wouldn’t be here. Rival papers survived because they got the technology. Thanks to Murdoch.”

For the full interview, see:
Robert Chalmers, Interviewer. “Harold Evans: ‘All I tried to do was shed a little light’.” The Independent on Sunday (Sun., June 13, 2010): 8 & 10-13.
(Note: free-standing ellipsis, between paragraphs, added; internal ellipses in original; italics in original; bracketed name added in place of “he.”)

Post-War Freedom, Not FDR’s New Deal or War, Ended Great Depression

(p. A17) Roosevelt died before the war ended and before he could implement his New Deal revival. His successor, Harry Truman, in a 16,000 word message on Sept. 6, 1945, urged Congress to enact FDR’s ideas as the best way to achieve full employment after the war.

Congress–both chambers with Democratic majorities–responded by just saying “no.” No to the whole New Deal revival: no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.
Instead, Congress reduced taxes. Income tax rates were cut across the board. FDR’s top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.
. . .
Congress substituted the tonic of freedom for FDR’s New Deal revival and the American economy recovered well. Unemployment, which had been in double digits throughout the 1930s, was only 3.9% in 1946 and, except for a couple of short recessions, remained in that range for the next decade.
The Great Depression was over, no thanks to FDR. Yet the myth of his New Deal lives on. With the current effort by President Obama to emulate some of FDR’s programs to get us out of the recent deep recession, this myth should be laid to rest.

For the full commentary, see:
BURTON FOLSOM JR. AND ANITA FOLSOM. “Did FDR End the Depression?
The economy took off after the postwar Congress cut taxes.” The Wall Street Journal (Mon., APRIL 12, 2010): A17.
(Note: ellipsis added.)