True Free Markets (2)
There is one commodity that looks like it's properly priced: petroleum!
Which points out the laughably disingenuous way that politics is conducted here, and probably everywhere.
Our national candidates are both smart enough to know that higher petroleum prices are much more like a solution than a problem. But neither of them believes the American electorate has enough intelligence to understand the point. And so neither will come out and admit it.
They could be right. An interesting guy who was a senator from Connecticut, Lowell Weicker, famously took a position in favor of higher gas prices. And later lost to... Joe Lieberman. An interesting guy who was President of the United States, Jimmy Carter, famously took positions in favor of conservation and nuclear power. And later lost to... Ronald Reagan.
Depressing.
I like to think, however, that there could be someone out there with the persuasive power to tell the truth to the electorate and get away with it.
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Thursday, August 07, 2008
Tuesday, August 05, 2008
True Free Markets
If I had to boil the proper function of government down to two propositions, they would be:
1. Protect the people.
2. Free the markets.
No sane person argues with the first, but the second seems to be kept way in the background.
There are so many corollaries, but this post deals with one: price the externalities.
The bureaucracy in my perfect government would consist largely of economists who would look to see where the pricing functions of the markets are failing. For example, in cases where producers are causing damage without paying for it.
There is plenty of policy judgement inherent in this: what's the damage, what does it cost, how wide is the net. An example: is the true cost of petroleum being captured? What about the cost of the military operations that are deemed necessary to maintain supply sources?
Or, what about the multi-source pollutants that go into the Mississippi River, are carried downriver, and create dead areas in the Gulf? Agricultural producers, I would imagine. Is this cost priced into their products?
Cap and trade is a good stop on this road. First we have to reach an enforceable consensus on the cost of carbon dioxide emissions, but if we do and we get it right, then use the government to capture the cost so it is priced into products.
This is not the sole answer to all social ills. There are special problem areas, like capitalism's evident failure to match economic value of individual labor with our moral sense of what people should have. Better pricing and efficient markets do not solve this. But leave that for other posts.
In the meantime: Price the externalities. Let the markets respond and allocate resources properly.
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If I had to boil the proper function of government down to two propositions, they would be:
1. Protect the people.
2. Free the markets.
No sane person argues with the first, but the second seems to be kept way in the background.
There are so many corollaries, but this post deals with one: price the externalities.
The bureaucracy in my perfect government would consist largely of economists who would look to see where the pricing functions of the markets are failing. For example, in cases where producers are causing damage without paying for it.
There is plenty of policy judgement inherent in this: what's the damage, what does it cost, how wide is the net. An example: is the true cost of petroleum being captured? What about the cost of the military operations that are deemed necessary to maintain supply sources?
Or, what about the multi-source pollutants that go into the Mississippi River, are carried downriver, and create dead areas in the Gulf? Agricultural producers, I would imagine. Is this cost priced into their products?
Cap and trade is a good stop on this road. First we have to reach an enforceable consensus on the cost of carbon dioxide emissions, but if we do and we get it right, then use the government to capture the cost so it is priced into products.
This is not the sole answer to all social ills. There are special problem areas, like capitalism's evident failure to match economic value of individual labor with our moral sense of what people should have. Better pricing and efficient markets do not solve this. But leave that for other posts.
In the meantime: Price the externalities. Let the markets respond and allocate resources properly.
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Tuesday, July 29, 2008
Alienated
There are so many falsehoods thrown around in the immigration debate. My biggest beef is with the statement that the illegals "do the jobs Americans don't want to."
No. The illegals take jobs at wages and benefits that American citizens will not accept.
Every job should pay what it takes to hire an American citizen to do it. If that causes dislocation in the markets - if there are fewer restaurants, if walnuts get more expensive - so be it. That's what a free labor market is about.
How do we get there? It is not that complicated. The illegals are not a bunch of drug dealers and terrorists. They are people looking for work.
When there is no work, they will move on.
Require all employers to comply with the law on I-9's and W-2's and 1099's - that is, get the employees' social security numbers and report the wages, payments, etc. to the government. Then, when the Social Security Administration says, "who is this person?" - tell the person that he or she does not return to work without a letter from the SSA.
National ID cards don't bother me, but I don't think they are necessary. I think the real answer is Social Security. If we are going to gather savings for Americans, and later pay it back to them, fine. Let's just make sure we know who they are.
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There are so many falsehoods thrown around in the immigration debate. My biggest beef is with the statement that the illegals "do the jobs Americans don't want to."
No. The illegals take jobs at wages and benefits that American citizens will not accept.
Every job should pay what it takes to hire an American citizen to do it. If that causes dislocation in the markets - if there are fewer restaurants, if walnuts get more expensive - so be it. That's what a free labor market is about.
How do we get there? It is not that complicated. The illegals are not a bunch of drug dealers and terrorists. They are people looking for work.
When there is no work, they will move on.
Require all employers to comply with the law on I-9's and W-2's and 1099's - that is, get the employees' social security numbers and report the wages, payments, etc. to the government. Then, when the Social Security Administration says, "who is this person?" - tell the person that he or she does not return to work without a letter from the SSA.
National ID cards don't bother me, but I don't think they are necessary. I think the real answer is Social Security. If we are going to gather savings for Americans, and later pay it back to them, fine. Let's just make sure we know who they are.
*********************************************************************************
Sunday, July 27, 2008
Poppies
One of the biggest foreign policy failures we face is the narcotics trade. This has been true for decades. But with Afghanistan once again in play, the failure is going to have real consequences.
There are solutions, but no political will to propose them.
The obvious, immediately-available solution is to buy up the crop. Offer 95 percent of market. The sellers will be happy to sell to a legal buyer rather than an illegal one. Then do whatever you want with it for now - compost it.
The longer-term solution is one that we will simply not hear from the major political parties. Legalize and regulate the traffic.
As my friends in the Libertarian Party say, there are two words that answer drug policy:
Al Capone.
One of the biggest foreign policy failures we face is the narcotics trade. This has been true for decades. But with Afghanistan once again in play, the failure is going to have real consequences.
There are solutions, but no political will to propose them.
The obvious, immediately-available solution is to buy up the crop. Offer 95 percent of market. The sellers will be happy to sell to a legal buyer rather than an illegal one. Then do whatever you want with it for now - compost it.
The longer-term solution is one that we will simply not hear from the major political parties. Legalize and regulate the traffic.
As my friends in the Libertarian Party say, there are two words that answer drug policy:
Al Capone.
Friday, November 05, 2004
Personal service deductions
This idea came from a family legend, that my grandparents, rich folks who went broke in the Depression, nonetheless kept some servants until the war because they were family and had nowhere to go.
It also comes from the notion that once upon a time there was dignity in personal service.
Why not a tax deduction for payments to a person who works for you at home? The only requirement would be compliance with withholding tax and Social Security requirements - using a simplified form that could be completed once, when one's personal tax return is prepared. Maybe a cap on the amount paid and the number of people per household.
The idea is to put people to work, sure, but also to take them out of the cash economy, put them onto tax rolls, give them Social Security accounts, bring them into the system.
The deduction would, in theory, have a negative overall tax revenue effect since it would push the income to someone with a lower bracket. But it would encourage people to hire gardeners, housekeepers, caregivers, babysitters, tutors, you name it.
I suppose there are some who would think encouraging a new generation of servants is going backward. But my grandmother had a houseman named Lindsay. He was a distinguished man who greatly enriched my grandmother's life, and mine, and eventually retired from service to a home back in England. What is wrong with that picture?
It's way not politically correct. (As I hope many of these will be.) So I suppose it would take a courageous minority politician to promote it. Barak Obama? [Sic. This was originally written long before he ran for President - hence the bad spelling.]
It also comes from the notion that once upon a time there was dignity in personal service.
Why not a tax deduction for payments to a person who works for you at home? The only requirement would be compliance with withholding tax and Social Security requirements - using a simplified form that could be completed once, when one's personal tax return is prepared. Maybe a cap on the amount paid and the number of people per household.
The idea is to put people to work, sure, but also to take them out of the cash economy, put them onto tax rolls, give them Social Security accounts, bring them into the system.
The deduction would, in theory, have a negative overall tax revenue effect since it would push the income to someone with a lower bracket. But it would encourage people to hire gardeners, housekeepers, caregivers, babysitters, tutors, you name it.
I suppose there are some who would think encouraging a new generation of servants is going backward. But my grandmother had a houseman named Lindsay. He was a distinguished man who greatly enriched my grandmother's life, and mine, and eventually retired from service to a home back in England. What is wrong with that picture?
It's way not politically correct. (As I hope many of these will be.) So I suppose it would take a courageous minority politician to promote it. Barak Obama? [Sic. This was originally written long before he ran for President - hence the bad spelling.]
Opening shot
This blog is a place where I can publish the public policy/legislative ideas that I can't shake. Some are hopelessly impractical. Some would take political courage (I know: where?). Some may be wacky. I hope many are simple but few are obvious.
It seems like a more interesting way to get them off my chest than writing my congressman or a letter to the editor. And this way, no condescending reply.
It seems like a more interesting way to get them off my chest than writing my congressman or a letter to the editor. And this way, no condescending reply.
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