Tag: benefits

Ban on Short Sales Benefits Banks and Hurts Investors

Today, in what seems like an endless string of 3-2 votes, the SEC moved to restrict the ability of investors to short stocks, claiming that such restrictions would restore stability and protect our financial system.  The truth couldn’t be more different.  Short sellers have long been the first, and often only, voice raising questions about corporate fraud and mismanagement.  For instance, shorts exposed the fraud at Enron, WorldCom and other companies while the SEC largely slept.

Bush’s SEC, lead by former Congressman Chris Cox banned the shorting of various financial industry stocks during the crisis.  The SEC then, as now, would have us believe that Bear, Lehman, AIG, Fannie, Freddie and others were not the victims of their own mismanagement, but rather victims of bear raids by short sellers.  In another instance of Obama and his appointees reading from the Bush playbook, SEC Chair Mary Shapiro finds ever creative ways to expand Cox’s misguided policies.

Short sellers only profit if they end up being correct.  Sadly Washington instead believes in punishing market mechanisms that work and throwing increasingly more money at failed agencies, like the SEC.  Rather than attacking short sellers we should applaud them for doing the SEC’s job.  But then if we had more short selling, providing greater incentives for investors to root out fraud, we might start to question why we even have the SEC.

‘A Career Where X-Ray Vision And Federal Benefits Come Standard’

That’s the slogan the Transportation Security Administration is apparently using to entice people to apply for jobs as airport screeners. Now that they’re preparing to expand the use of whole body imaging scanners, which can produce moderately detailed nude images of travelers, maybe they should consider a tagline that doesn’t sound like it’s designed to recruit voyeurs.

California Illustrates Need to Revive Federalism

The state of California recently received $60 million in U.S. Department of Labor stimulus funds to upgrade its 23 year-old unemployment benefits system. But according to the Associated Press, California is yet to spend $66 million it received from Labor in 2002 to upgrade its system. The price tag isn’t whopping by federal standards, but it is another reminder of the need to return to fiscal federalism.

Apparently, the Department of Labor couldn’t care less:

The federal government has no plans to sanction or fine California for not completing the original technology upgrade. The Labor Department said it was more concerned that new stimulus funding is used in a way that will allow more workers to qualify for unemployment assistance.

At the same time, California’s unemployment insurance fund is $7.4 billion in the red, which has forced it to “borrow” $4.7 billion from the federal government. According to an editorial in the Oakland Tribune, California increased the generosity of its unemployment benefits when the economy was healthy, but now that the economy is stagnant spendthrift policies are creating a fiscal crisis.

Alan Reynolds reminds that the federal stimulus package “bribed states to extend benefits — which have now been stretched to an unprecedented 79 weeks in 28 states and to 46 to 72 weeks in the rest.” When you subsidize something you get more of it—federal subsidies prompt more state subsidies to the unemployed, which generates more unemployment. Alan concludes that “the February stimulus bill has added at least two percentage points to the unemployment rate.”

California’s unemployment rate of 12.5 percent is the state’s highest since the end of the Great Depression. Once again we see that when the line of responsibility between federal and state government is blurred, the result is more of both and poor policies compounded.

Federal Wages Fly High

Yahoo News is highlighting the story “10 Jobs With High Pay and Minimal Schooling.” Topping the list: air traffic controllers, who work for the federal government.

These workers make sure airplanes land and take off safely, and they typically top lists of this nature. The median 50% earned between $86,860-142,210, with good benefits. Air traffic controllers are eligible to retire at age 50 with 20 years of service, or after 25 years at any age.

Huge salaries and retirement after 20 years – sweet deal!

Air traffic controllers seem to provide a good illustration of my general claim that federal workers are overpaid.

I don’t know what the proper pay level for controllers is, but I do know that we should privatize the system, as Canada has, and let the market figure it out.

Your Tax Dollars at Work

The National Park Service announced Friday that it has removed its superintendent at Gettysburg National Military Park and reassigned him to work in a cultural resources office as an assistant to the associate director. His job duties have not yet been determined.

John A. Latschar said Thursday that his demotion was in response to the public disclosure of Internet activity in which he viewed more than 3,400 “sexually-explicit” images over a two-year period on his government computer – a violation of department policy. The misconduct, which Latschar acknowledged in a sworn statement, was found during a year-long investigation by the Interior Department’s inspector general and was documented in an internal Aug. 7 report obtained by The Washington Post.

The reassignment came after a Post report Monday about the results of the investigator’s forensic analysis of Latschar’s computer hard drive, which showed “significant inappropriate user activity” and numbered the “most sexually-explicit” images at 3,456….

David Barna, spokesman for the National Park Service, said Latschar’s annual salary of $145,000 and his pension will not be affected. The cultural resources office is based in Washington, but Latschar will commute from his home in Gettysburg to a Park Service office about 30 miles away in Frederick, Barna said.

Hey, can I get that deal? If I download 3,500 pornographic images on my office computer, can I get reassigned to a telecommuting job with no defined duties at my current salary and pension? As superintendent of a very visible national park, Latschar had a job with a lot of pressure, lots of criticism, management challenges, etc. Now he’s going to be some sort of undefined “assistant to an associate director in a cultural resources office,” but he won’t have to actually go to the cultural resources office, and he’ll still get the same pay and benefits he was getting for doing a real, stressful job. Does anyone in the federal government ever get fired?

In Canada You Need Wait-List Insurance!

Governments love to promise benefits.  But politicians prefer not to have to raise the funds necessary to provide the promised services.  The result for nationalized medical systems is political rationing … and long waiting lists.  The Mackinac Institute, located in Michigan, has produced a series of videos on Canadians speaking about how their system works.  The British Columbia Automobile Association even developed medical access, or wait list, insurance, before abandoning the program under pressure.

The Land Is There, the Cubans Are There, but the Incentives Are Not

The Washington Post has an interesting story today on the program of the Cuban government to transfer idle state-owned land to private farmers so they can resurrect the dilapidated agricultural sector on the communist island. As Ian Vásquez and I wrote in the chapter on U.S. policy toward Cuba in Cato Handbook for Policymakers, before this reform, the agricultural productivity of Cuba’s tiny non-state sector (comprising cooperatives and small private farmers) was already 25 percent higher than that of the state sector.

At stake is an issue of incentives. Collective land doesn’t give farmers an incentive to work hard and be productive, since the benefits of their labor go to the government who distributes them (in theory) evenly among everyone, regardless of who worked hard or not. While with private property, “The harder you work, the better you do,” as a Cuban farmer said in the Post story.

The country’s ruler, Raúl Castro, recently declared that “The land is there, and here are the Cubans! Let’s see if we can get to work or not, if we produce or not… The land is there waiting for our sweat.” However, it’s not a matter of just having land and lots of people. It’s also a matter of incentives to produce. Failing to see this, as in the case of Cuba’s failed communist model, is a recipe for failure.