Category: Government

Occupational Licensing Raises Costs for Consumers and Reduces Jobs

(p. B1) What lesson should we draw from the success of Uber?
Customers have flocked to its service. In the final three months of last year, its so-called driver-partners made $656.8 million, according to an analysis of Uber data released last week by the Princeton economist Alan B. Krueger, who served as President Obama’s chief economic adviser during his first term, and Uber’s Jonathan V. Hall.
Drivers like it, too. By the end of last year, the service had grown to over 160,000 active drivers offering at least four drives a month, from near zero in mid-2012. And the analysis by Mr. Krueger and Mr. Hall suggests they make at least as much as regular taxi drivers and chauffeurs, on flexible hours. Often, they make more.
This kind of exponential growth confirms what every New Yorker and cab riders in many other cities have long suspected: Taxi service is woefully inefficient. It also raises a question of broader relevance: Why stop here?
. . .
(p. B5) . . . like taxi medallions, state licenses required to practice all sorts of jobs often serve merely to cordon off occupations for the benefit of licensed workers and their lobbying groups, protecting them from legitimate competition.
This comes at a substantial social cost. “Lower-income people suffer from licensing,” Professor Krueger told me. “It raises the costs of many services and prevents low-income people from getting into some professions.”
In a study commissioned by the Brookings Institution’s Hamilton Project, Morris Kleiner of the University of Minnesota found that almost three out of 10 workers in the United States need a license from state governments to do their jobs, up from one in 20 in the 1950s. By cordoning off so many occupations, he estimates, professional licensing by state governments ultimately reduces employment by up to 2.8 million jobs.

For the full commentary, see:
Eduardo Porter. “Job Licenses in Spotlight as Uber Rises.” The New York Times (Weds., JAN. 28, 2015): B1 & B5.
(Note: ellipses added.)
(Note: the online version of the commentary has the date JAN. 27, 2015.)

The working paper co-authored by Krueger, is:
Hall, Jonathan V., and Alan B. Krueger. “An Analysis of the Labor Market for Uber’s Driver-Partners in the United States.” Working paper. January 22, 2015.

Kleiner’s working paper at Brookings, is:
Kleiner, Morris M. “Reforming Occupational Licensing Policies.” In The Hamilton Project, Brookings, Discussion Paper 2015-01, January 2015.

Over-Taxed and Over-Regulated Castles for Sale in Italy

(p. A3) While castles and historic mansions in Italy have long been family inheritances, today dozens of them are for sale, even in one of the most conservative real estate markets in Europe.
. . .
On historic buildings, where owners used to pay little as compensation for the elevated costs of maintaining centuries-old structures, the taxes increased by 20 or 30 times, depending on the property’s location.
On some buildings, taxes spiked from 3,000 euros (about $3,400) in 2011 to 75,000 euros (about $84,000) by 2013. That might be a small figure for castle dwellers in the United Kingdom, but it is a burden for Italian pockets, especially in regions where the property’s market value or tourism interest is low.
The trends, to many here, are indicative of Italy’s place as a country caught between its past glory and its modern difficulty in producing an innovative climate capable of ensuring its future.
. . .
. . . buyer beware: Living a nobleman’s life in Italy comes at a cost, even for many tycoons. New owners face the same onerous bureaucracy as Italians to make even minimal changes to many older properties.
Under Italian law, the owner of a historic building is its custodian, bound to maintain it and grant its security and, in some cases, its use to the public. Many buyers give up on properties of great historic value, but in bad condition, for this reason, brokers said.
“This is a problem for possible investors, who want to have modern comforts like a spa, air-conditioning or a lift,” said Mr. Pallavicini, of the Italian Historic Houses Association.
“We no longer live like in 1800,” he added. “But 99 percent of those changes are either impossible or extremely bureaucratic and complicated in an Italian historic building.”

For the full story, see:
GAIA PIANIGIANI. “PONTASSIEVE JOURNAL; Life of Italian Nobility for Sale, Complete With Regulations and Taxes.” The New York Times (Weds., JAN. 28, 2015): A11.
(Note: ellipses are added.)
(Note: the online version of the story has the date JAN. 27, 2015.)

Innovation and Jobs Destroyed by Tax

(p. 7A) I was humbled to receive in November the National Medal of Technology and Innovation at the White House for the development of life-changing medical devices. Traveling to our nation’s capital, I couldn’t help but think: There is no way I could have had the same impact if the tax on medical devices was in place when I got started over 50 years ago.
Simply put, the medical device tax is destroying job creation and innovation, and as a result, patient care is suffering.
. . .
Every day, I see firsthand the difficult choices innovators must make as a result of this ill-conceived tax. Perhaps worst of all, the medical device tax is helping cause a steep drop of investments in promising therapies.
. . .
It’s time to put an end to this disastrous policy so that medical device entrepreneurs can do what America does best — innovate.

For the full commentary, see:
Tom Fogarty. “Opposing View: Tax Destroys Jobs and Innovation.” USA Today (Mon., January 5, 2015): 7A.
(Note: ellipses added.)
(Note: the online version of the commentary has the date January 4, 2015, and has the title “Tax Destroys Jobs and Innovation: Opposing View.”)

A Federal “Building Whose Banality Is Exceeded Only by Its Expense”

(p. A3) WASHINGTON–They span 75 feet, weigh 4,300 pounds and can’t move.
The four, black aluminum clouds comprising the once-mobile component of “Mountains and Clouds”–one of the final works of sculptor Alexander Calder, which dominates the Hart Senate office building’s 90-foot-high atrium–haven’t drifted for more than a decade. They once rotated at a gentle speed, but have been frozen in place for years after a bearing failed.
. . .
, , , , mirroring the mixed feelings toward Mr. Calder’s sculpture, many in Washington didn’t appreciate the contemporary Hart building’s break with traditional architecture. In 1981, Sen. Daniel Patrick Moynihan (D., N.Y.) suggested in a “sense of the Senate” resolution that the plastic covering that had protected the building from wintry elements was preferable to the exterior itself.
“Whereas the plastic cover has now been removed revealing, as feared, a building whose banality is exceeded only by its expense,” said the resolution, which never came to a vote. “Therefore, be it resolved, That it is the sense of the Senate that the plastic cover be put back.”

For the full story, see:
KRISTINA PETERSON. “A Nebulous Debate in Washington.” The Wall Street Journal (Fri., Dec. 26, 2014): A3.
(Note: ellipses are added.)
(Note: the online version of the story has the date Dec. 25, 2014, and has the title “Calder Sculpture Triggers Heavenly Debate in Washington.”)

Depression of 1920-21 Ended Quickly, Without Government Stimulus or Bailouts

(p. C3) Beginning in January 1920, something much worse than a recession blighted the world. The U.S. suffered the steepest plunge in wholesale prices in its history (not even eclipsed by the Great Depression), as well as a 31.6% drop in industrial production and a 46.6% fall in the Dow Jones Industrial Average. Unemployment spiked, and corporate profits plunged.
. . .
In the absence of anything resembling government stimulus, a modern economist may wonder how the depression of 1920-21 ever ended. Oddly enough, deflation turned out to be a tonic. Prices–and, critically, wages too–were allowed to fall, and they fell far enough to entice consumers, employers and investors to part with their money. Europeans, noticing that America was on the bargain counter, shipped their gold across the Atlantic, where it swelled the depression-shrunken U.S. money supply. Shares of profitable and well-financed American companies changed hands at giveaway valuations.
Of course, the year-and-a-half depression must have seemed interminable for all who were jobless or destitute. It was, however, a great deal shorter than the 43 months of the Great Depression of 1929-33. Then too, the 1922 recovery would bring tears of envy to today’s central bankers and policy makers: Passenger-car production shot up by 63%, for instance, and the Dow jumped by 21.5%. “From practically all angles,” this newspaper judged in a New Year’s Day 1923 retrospective, “1922 can be recorded as the renaissance of prosperity.”
In 2008, as Lehman Brothers toppled, the Great Depression monopolized the market on historical analogies. To avoid a recurrence of the 1930s, officials declared, the U.S. had to knock down interest rates, manipulate stock prices to go higher, repave the highways and trade in the clunkers.
The forgotten depression teaches a very different lesson. Sometimes the best stimulus is none at all.

For the full commentary, see:
JAMES GRANT. “The Depression Fixed by Doing Nothing; The agonizing but often forgotten 1920-21 economic crisis suggests that sometimes the best stimulus is none at all.” The Wall Street Journal (Sat., Jan. 3, 2015): C3.
(Note: ellipsis added.)
(Note: the online version of the review has the date Jan. 2, 2015, and has the title “The Depression That Was Fixed by Doing Nothing; The often forgotten 1920-21 economic crisis suggests that sometimes the best stimulus is none at all.”)

Grant’s commentary is elaborated on in his book:
Grant, James. The Forgotten Depression: 1921, the Crash That Cured Itself. New York: Simon & Schuster, 2014.

“It’s My Life, and I Want the Chance to Save It”

(p. 18) LYONS, Colo. — Since May [2014], a string of states have passed laws that give critically ill patients the right to try medications that have not been approved by the Food and Drug Administration.
Deemed “Right to Try” laws, they have passed quickly and often unanimously in Colorado, Michigan, Missouri, Louisiana and Arizona, bringing hope to patients like Larry Kutt, who lives in this small town at the edge of the Rocky Mountains. Mr. Kutt, 65, has an advanced blood cancer and says his state’s law could help him gain access to a therapy that several pharmaceutical companies are testing. “It’s my life,” he said, “and I want the chance to save it.”
The laws do not seem to have helped anyone obtain experimental medicine, as the drug companies are not interested in supplying unapproved medications outside the supervision of the F.D.A. But that seems almost beside the point to the Goldwater Institute, the libertarian group behind legislative efforts to pass Right to Try laws. “The goal is for terminally ill patients to have choice when it comes to end-stage disease,” said Craig Handzlik, state policy coordinator for the Goldwater Institute, based in Arizona. “Right to Try is something that will help terminally ill people all over the country.”

For the full story, see:
JULIE TURKEWITZ. “Patients Seek ‘Right to Try’ New Drugs.” The New York Times, First Section (Sun., JAN. 11, 2015): 18.
(Note: the bracketed year is added.)
(Note: the online version of the story has the date JAN. 10, 2015.)

The Case that Hamilton Was Better than Jefferson

One of my entrenched beliefs has been that Thomas Jefferson was one of the great heroes of human history, and Alexander Hamilton was not. It is rare that I read something that changes my entrenched beliefs. But Ron Chernow’s Alexander Hamilton did that. He makes a strong (and long) case that Alexander Hamilton was mainly a decent, brilliant, courageous, hard-working, self-made man, who not only talked the talk on liberty, but walked the walk (taking fire in the revolution, and strongly opposing slavery). He wasn’t perfect in either his personal life or his beliefs. But he now has my vote as one of the great heroes of human history (and Jefferson does not).
In the next few weeks, I will quote several of the most revealing or thought-provoking passages of Chernow’s book.
PS: I also previously learned a lot from Chernow’s Titan, a big book about a big entrepreneur.

Main book discussed:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

Other book, briefly mentioned:
Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998.

Wall Street Democrats Question Hillary Clinton’s Views on Job Creation

(p. B1) “Hillary said what?”
That was the question whispered among some of Wall Street’s most prominent Democratic supporters over the weekend after Hillary Rodham Clinton spoke on the campaign trail for Martha Coakley, the Democratic candidate for governor of Massachusetts.
“Don’t let anybody tell you that it’s corporations and businesses that create jobs,” Mrs. Clinton said on Friday in Boston.

For the full commentary, see:
ANDREW ROSS SORKIN. “Wall St. Wonders About Hillary Clinton.” The New York Times (Tues., OCTOBER 28, 2014): B1 & B6.
(Note: the online version of the commentary has the date OCTOBER 27, 2014, and has the title “Hillary Clinton’s Comment on Jobs Raises Eyebrows on Wall St.”)

In Defense of the “Degar-Andish”

(p. C9) “The Lonely War” begins by retelling a lesson from Ms. Fathi’s mother, imparted on the first day of third grade. “If anyone asks you whether your parents support the revolution, you must say, ‘Yes, they do.'”
. . .
As the Islamic dress code became obligatory, Ms. Fathi and her sister, Goli, faced the tyranny of a “morality” teacher at school who tried to mold them into ideal Muslim girls.
The author remained steadfastly critical through it all. “To feel human,” she writes, “we needed to retake control of our minds as well as our bodies. We waged the war on both fronts.”
. . .
Defying a ban on covering the protests any further, Ms. Fathi was under surveillance at her home and tailed by government agents; her life was threatened. She, her husband and two children left Iran in June 2009.
. . .
Her portraits of the women’s rights activists Faezeh Hashemi and Shahla Sherkat make for fascinating reading. So do her accounts of other courageous Iranian women like the lawyers Mehrangiz Kar and Shirin Ebadi (the first Muslim woman to be awarded the Nobel Peace Prize, in 2003), who made legal challenges against discriminatory laws against women, and publishers like Shahla Lahiji who dared to print the work of those branded as “degar-andish,” literally, “those who think differently.”

For the full review, see:
NAHID MOZAFFARI. “Books of The Times; Portrait of Iran, Where Revolution Is Ideological and the Costs Are Human.” The New York Times (Thurs., Jan. 1, 2015): C9.
(Note: ellipses added.)
(Note: the online version of the review has the date DEC. 31, 2014.)

The book under review is:
Fathi, Nazila. The Lonely War: One Woman’s Account of the Struggle for Modern Iran. New York: Basic Books, 2014.

Free Market Tour Guide Challenges Savannah’s Attack on Free Speech

(p. A25) SAVANNAH, Ga. — Especially when she sips French onion soup at a restaurant that was featured in the Julia Roberts movie “Something to Talk About,” Michelle Freenor is an irrepressible tour guide.
She rattles off the history of Methodism in this city, as well as tidbits about William T. Sherman’s March to the Sea. She discusses the canopy of Spanish moss that hangs above Savannah’s streets, whether “Jingle Bells” was actually composed here, and just how haunted one of the country’s largest historic landmark districts might be.
But Ms. Freenor has also emerged in recent weeks in a new role: plaintiff in a federal lawsuit that could reshape Savannah’s lucrative and potent tourism industry. Backed by a nonprofit law firm with libertarian leanings, Ms. Freenor and three others, including her husband, are challenging the Savannah ordinance that requires tour guides to hold licenses and pass regular academic and medical examinations.
“It’s the free market that made us successful, not the City of Savannah,” said Ms. Freenor, 43. “You shouldn’t have to pass a test to be able to tell people where the best ice cream in Savannah is.”
. . .
“What tour guides do is talk for a living,” said Robert Johnson, one of Ms. Freenor’s lawyers. “They’re just like stand-up comedians, journalists or novelists. And in this country, you don’t need a license from the government to be able to talk.”

For the full story, see:
ALAN BLINDER. “Lawsuit May Reshape Tourist Industry in History-Rich Savannah.” The New York Times, First Section (Sun., DEC. 21, 2014): A25 & A31.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 20, 2014. The online version says that the New York paper version of the article started on p. 28. It does not say on what page of that edition, the article continued. My page numbers are from the National Edition, which I usually receive.)