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The "Buy American" Fallacy

July 22nd 2009 16:26
Watch this short video over at Reason.tv to learn why "Buy American" is not such a great idea.



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Michael Jackson's funeral ended up costing the city approximately $1.4 million. To help fund the city's expenses, the acting mayor, while the real mayor was on vacation, set up a website for people to donate money to cover the expenses of the funeral for the city. After raising $35,000 donated voluntarily in a short amount of time, the mayor Antonio Villaraigosa, returning home from vacation, was not very happy about someone else besides the city paying for the expenses:


"This is a world-class city, and we provide fire and police protection, period. The idea that we would charge the family for a funeral is nonsensical," he said during his first public appearance today, calling the website set up by his office to solicit donations "ridiculous."

So, basically, the mayor is opposed to a family paying for its own funeral, even a wealthy family with a whole host of wealthy friends, and he is opposed to people voluntarily paying money to cover the expenses. These things are both "nonsensical" and "ridiculous." Instead, he is going to do the altruistic thing and pay out of his own pocket, right? No, he is going to pass the cost on to taxpayers, many of whom don't like Michael Jackson, don't know Michael Jackson, don't listen to Michael Jackson's music, and won't have anyone paying for their own family's funeral.

On the contrary Mayor Villaraigosa, not having the people who care most about the passing of Michael Jackson pay for his funeral is both "ridiculous" and "nonsensical."
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Keeping Obama Honest

July 18th 2009 18:40
Great post by Greg Mankiw at his blog:

President Obama will hold a press conference this coming Wednesday. Here are two questions I would like to see the press ask him:

1. During your campaign, you said that under your tax plan, "no one will pay higher tax rates than they paid in the 1990s." The House healthcare reform bill, however, raises tax rates for top earners well above the 1990s levels. In many states, the top marginal tax rate would exceed 50 percent. Do you still stand by that campaign pledge, and would you veto any bill that violates it?

2. During your campaign, you said, "The danger in a cap-and-trade system is that the permits to emit greenhouse gases are given away for free as opposed to priced at auction. One of the mistakes the Europeans made in setting up a cap-and-trade system was to give too many of those permits away." The climate change bill now being considered in Congress does the same thing. Are you now willing to have the United States make the same mistake the Europeans made, or would you veto the bill?

It would be quite interesting to see how Obama would handle tough questions like these.
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The media is reporting the House Democrats plan to place a 5.4% surtax on income over $350,000. However, this is a misrepresentation of the true increase of the tax. Currently, there is a 35% marginal rate, which will be raised by 5.4 percentage points (not percent) to 40.4%. This would be an increase of 15.4% (= 5.4%/35%). To be truly accurate, the media should be reporting that the House Democrats are proposing a 15.4% surtax.
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Harvard's Jeffrey Miron says "Nothing," which by this he means "nothing new:"

The fundamental problem underlying the financial crisis was government policy. Instead of undertaking enormous new policies, we should try to fix or eliminate bad policies and focus on efficiency rather than redistribution. Doing nothing new and simply working with pre-existing procedures would have been much better than anything we've done so far.

[ Click here to read more ]
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According to the Wall Street Journal,

The Obama administration announced a crackdown Wednesday on hundreds of companies suspected of employing illegal immigrants, signaling a shift in strategy: going after employers instead of workers.

[ Click here to read more ]
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Prosperity Essential to Survival

June 27th 2009 01:41
It seems that people do not fully appreciate the importance of having a high Gross Domestic Product. A country that produces $20,000 per person is not better off just because they are able to use their fancy IPods or have larger homes. Instead, the greater importance lies in the fact that people can expect to live longer and not have to watch their children die. I offer a crude illustration of this point:

The Importance of GDP

[ Click here to read more ]
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The Future of Health Care

June 15th 2009 14:53
Economist David Rose has written a great article on how to fix health care. He asserts that the problem with the health insurance market is a lack of competition:

The key to returning true competition to health care is to make it possible for individuals to fire their insurance company, which requires eliminating the tax break on employer-provided health insurance by extending it to privately purchased policies.

[ Click here to read more ]
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Over at Econlog, Bryan Caplan has a great defense of free immigration and a great criticism of advocates of Social Democracy:

Reading Brad DeLong's "non-Socratic dialogue on social welfare functions" has inspired me to return to one of my favorite literacy forms. In DeLong's original dialogue, Prof. Agathon helps Prof. Glaukon reach a shocking conclusion:

[ Click here to read more ]
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