Tag: New York Times

Robert H. Frank’s Non-argument for Higher Tax Rates

In The New York Times, Robert H. Frank of Cornell University repeated his perpetual argument that high tax rates on the rich do no harm to demand (not supply) because the rich can just draw down savings, year after year,  to pay more taxes yet maintain a showy lifestyle.   Then he resorts to the old trick of asserting there is no “credible” evidence that tax disincentives and distortions have any ill effects on the economy.

Frank asks, rhetorically, if an increase in top tax rates might reduce economic growth.  And he replies, “There’s no credible evidence that it would.”   This is a timeworn trick among people too intellectually lazy to look for a single academic study or statistical fact.  

As I have shown before, Mr. Frank has a history of abusing bogus statistics culled from dubious sources. 

To simply assert “there’s no credible evidence,” however, is much worse than distorting the facts. 

It amounts to claiming that he has the ability and the right to suppress facts not to his liking. 

Over the past year I have repeatedly cited several major studies showing that pushing the highest marginal tax rates even higher is extremely dangerous to economic growth; Stanford economist Michael Boskin lists half a dozen of them in his latest Wall Street Journal op-ed.   

For Mr. Frank to assert that such studies are not “credible” simply reveals his own inability to find credible evidence to support his own untenable position.

The CPSC’s Defective New Complaints Database

We are told constantly that government can play a beneficial role in the marketplace by taking steps to make sure consumers are more fully informed about the risks of the goods and services they use. But what happens when the government itself helps spread health and safety information that is false or misleading? That question came up recently in the controversy over New York City’s misleading nutrition-scare ad campaign, and it now comes up again in a controversy over a new database of complaints about consumer products sponsored by the federal Consumer Product Safety Commission (CPSC).

As part of the Consumer Product Safety Improvement Act of 2008 (CPSIA), Congress mandated that the CPSC create a “publicly available consumer product safety information database” compiling consumer complaints about the safety of products. Last week, by a 3-2 majority, the commission voted to adopt regulations that have dismayed many in the business community by ensuring that the database will needlessly include a wide range of secondhand, false, unfounded or tactical reports. The Washington Times editorializes:

…[Under the regulations as adopted last week] anybody who wants to trash a product, for whatever reason, can do so. The commission can leave a complaint on the database indefinitely without investigating its merits “even if a manufacturer has already provided evidence the claim is inaccurate,” as noted by Carter Wood of the National Association of Manufacturers’ “Shopfloor” blog….

Trial lawyers pushing class-action suits could gin up hundreds of anonymous complaints, then point the jurors to those complaints at the “official” CPSC website as [support for] their theories that a product in question caused vast harm. “The agency does not appear to be concerned about fairness and does not care that unfounded complaints could damage the reputation of a company,” said [Commissioner Nancy] Nord.

Commissioners Nord and Anne Northup introduced an alternative proposal (PDF) aimed at making the contents of the database more reliable and accurate but were outvoted by the Democratic commission majority led by Chairman Inez Tenenbaum. Nord: “under the majority’s approach, the database will not differentiate between complaints entered by lawyers, competitors, labor unions and advocacy groups who may have their own reasons to ‘salt’ the database, from those of actual consumers with firsthand experience with a product.” Commissioner Northup has published posts criticizing the regulations for their definitions of who can submit a report, who counts as a consumer, and who counts as a public safety entity.

For those interested in reading further, Rick Woldenberg, a leading private critic of the law who blogs at AmendTheCPSIA.com, has critically commented on the politics of the proposal here, here, here, here, and here. More coverage: ShopFloor with followups here and here, New York Times, Sean Wajert/Mass Tort Defense. I’ve been blogging for the past two years at my website Overlawyered about the wider problems with the CPSIA law, including its effects on books published before 1985, thrift stores, natural wooden toys, ballpoint pens, bicycles, plush animals, Irish dance costumes, rocks used in science class and many more. Most of these problems remain unresolved thanks to the inflexible wording of the law as well as, sometimes, the unsympathetic attitude of the commission majority. I’ve heard that bringing overdue investigative oversight to the ongoing CPSIA disaster is shaping up as a priority for many incoming lawmakers on the (newly Republican-led) House Energy and Commerce Committee, whose outgoing chair, California Democrat Henry Waxman, is closely identified with the law and its consumer-group backers.

Conservatives, Liberals, and the TSA

Libertarians often debate whether conservatives or liberals are more friendly to liberty. We often fall back on the idea that conservatives tend to support economic liberties but not civil liberties, while liberals support civil liberties but not economic liberties – though this old bromide hardly accounts for the economic policies of President Bush or the war-on-drugs-and-terror-and-Iraq policies of President Obama.

Score one for the conservatives in the surging outrage over the Transportation Security Administration’s new policy of body scanners and intimate pat-downs. You gotta figure you’ve gone too far in the violation of civil liberties when you’ve lost Rick Santorum, George Will, Kathleen Parker, and Charles Krauthammer. (Gene Healy points out that conservatives are reaping what they sowed.)

Meanwhile, where are the liberals outraged at this government intrusiveness? Where is Paul Krugman? Where is Arianna? Where is Frank Rich? Where is the New Republic? Oh sure, civil libertarians like Glenn Greenwald have criticized TSA excesses. But mainstream liberals have rallied around the Department of Homeland Security and its naked pictures: Dana Milbank channels John (“phantoms of lost liberty”) Ashcroft: “Republicans are providing the comfort [to our enemies]. They are objecting loudly to new airport security measures.” Ruth Marcus: “Don’t touch my junk? Grow up, America.” Eugene Robinson: “Be patient with the TSA.” Amitai Etzioni in the New Republic: “In defense of the ‘virtual strip-search.’” And finally, the editors of the New York Times: ”attacks are purely partisan and ideological.”

Could this just be a matter of viewing everything through a partisan lens? Liberals rally around the DHS of President Obama and Secretary Napolitano, while conservatives criticize it? Maybe. And although Slate refers to the opponents of body-scanning as “paranoid zealots,” that term would certainly seem to apply to apply to Mark Ames and Yasha Levine of the Nation, who stomp their feet, get red in the face, and declare every privacy advocate from John Tyner (“don’t touch my junk”) on to be “astroturf” tools of “Washington Lobbyists and Koch-Funded Libertarians.” (Glenn Greenwald took the article apart line by line.)

Most Americans want to be protected from terrorism and also to avoid unnecessary intrusions on liberty, privacy, and commerce. Security issues can be complex. A case can be made for the TSA’s new procedures. But it’s striking to see how many conservatives think the TSA has gone too far, and how dismissive – even contemptuous – liberals are of rising concerns about liberty and privacy.

The Campaign Finance Crusade of The New York Times

In a barely coherent editorial this morning, The New York Times continues its decades-long crusade against free speech – except its own, of course – with yet another blast at the Supreme Court over its campaign finance decision last January in the Citizens United case. And again, the Times misstates the decision: it did not overturn “a century of precedent.” Perhaps its editorialists can be forgiven for that, even after nearly a year to get it right: after all, the president himself continues to misstate the decision, and that’s good enough for them.

Entitled “Our Constitutional Court,” the editorial’s main point seems to be that the Court is “redefining itself as a constitutional court.” That’s a curious charge. Many countries have “constitutional courts” that give, among other things, advisory opinions about the constitutionality of pending legislation. Our courts, by contrast, decide only “cases or controversies” that are ripe for decision, based on facts that bring the controversy into fairly sharp relief; but they’re still often “constitutional” decisions. The charge here, apparently, is that the Court acted where it needn’t have or, perhaps, had no authority to act. Yet the facts belie that.

Citizens United is a complex decision, but the facts giving rise to it are fairly simple. It arose over the question whether Citizens United, a non-profit corporation, could advertise a film critical of Hillary Clinton in broadcast ads during the 2008 primary season, in apparent violation of the 2002 McCain-Feingold Act. Thus, there was a real controversy here. But in upholding the right of corporations and unions to make independent campaign expenditures supporting or opposing candidates, the Court sustained a “facial challenge” to the statute that the parties had agreed to dismiss, and in so doing reached out to overturn an anomalous and mistaken 1990 decision that was directly on point, even though that case was not before the Court in the initial ’go-round of Citizens United. And that, apparently, is the “judicial activism” that so exercises the Times’ editorialists.

In truth, however, the Court was following a fairly well established practice. In First Amendment speech cases, as here, the Court entertains “facial” rather than “as-applied” challenges for a very simple reason. Were the Court to have found simply that Citizens United’s rights were violated in this instance, based on these particular facts, the statutory provisions restricting those rights would be left standing, unlike with a facial challenge, and the future speech not only of Citizens United but of all others would be chilled. The First Amendment will not stand that, and the Court so ruled.

Of all people, the Times editorialists surely understand that. But in their minds, campaign finance is not speech, and so they use this decision, in light of the “tumultuous change in the recent elections,” with which the editorial begins, to make a much broader point: that the Court decided “a sweeping issue of constitutional law” by “moving past the limited controversy that was actually in the case.” Thus the Court “inserted itself where [it] has said it should be most restrained, deferring to other branches with more competence to decide questions about the workings of politics, including about the role of money.”

That’s rich – the Times championing judicial restraint. One wonders what the response would have been had the Court held that the Great Gray Lady’s corporate wealth could not be put behind campaign editorials, almost all supporting the candidates of a single party. Fortunately, the Court seems to be moving in the opposite direction. The Times editorialists are perfectly free to put their corporate wealth behind candidates, and so, now, are the rest of us – thanks to the Court’s grasping the nettle.

Government Cheese

Self-anointed elites have been relentless in prodding government planners to apply their enlightened solutions for the purported benefit of the ignorant masses. As a result, the federal government has become a Super Nanny monitoring and guiding the intimate activities of the nation’s 300 million inhabitants. However, the government is not altruistic and does not have the solutions for how people should live their lives.

The amalgamation of programs and regulations that constitute the federal government is basically a reflection of the myriad special interests that have won a seat at Uncle Sam’s table. Government consists of fallible men and women who are naturally susceptible to pursuing policies that have less to do with the “general welfare” and more to do with rewarding the privileged birds incessantly chirping in their ears.

One result is that government programs often work at cross purposes. A perfect illustration is the confused U.S. Department of Agriculture, which spends taxpayer money subsidizing fatty foods while at the same time setting nutritional guidelines with the purported aim of getting Americans to eat healthier.

The New York Times explains:

Domino’s Pizza was hurting early last year. Domestic sales had fallen, and a survey of big pizza chain customers left the company tied for the worst tasting pies.

Then help arrived from an organization called Dairy Management. It teamed up with Domino’s to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign.

Consumers devoured the cheesier pizza, and sales soared by double digits. “This partnership is clearly working,” Brandon Solano, the Domino’s vice president for brand innovation, said in a statement to The New York Times.

But as healthy as this pizza has been for Domino’s, one slice contains as much as two-thirds of a day’s maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories.

And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture — the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting.

Urged on by government warnings about saturated fat, Americans have been moving toward low-fat milk for decades, leaving a surplus of whole milk and milk fat. Yet the government, through Dairy Management, is engaged in an effort to find ways to get dairy back into Americans’ diets, primarily through cheese.

Your tax dollars are being used by the USDA to help Domino’s Pizza (and Taco Bell, Pizza Hut, Wendy’s, and Burger King according to the article) sell its product. Of course, the government isn’t trying to help these fast food giants so much as it’s trying to help a particularly favored special interest: farmers.

While calls to get rid of subsidies for Dairy Management would obviously be on target, the better move would be to get rid of the entire USDA, which the New York Times comically refers to as “America’s nutrition police.” The USDA has been around for almost 150 years, and yet Americans have never been fatter. If there’s a solution to America’s obesity “problem,” it won’t be found in Washington. In a free society, the only solution is to make individuals responsible for the consequences of their own decision-making.

See these essays for more on downsizing the U.S. Department of Agriculture.

Bootleggers & Baptists, Sugary Soda Edition

Here’s a poor, unsuccessful letter that impressed the relevant New York Times reporters, but not their editorial overlords:

It may seem counter-intuitive that bleeding-heart anti-hunger groups and “Big Food and Big Beverage” would ally to oppose Mayor Bloomberg’s request to prevent New Yorkers from using food stamps to purchase sugary sodas [“Unlikely Allies in Food Stamp Debate,” October 16].  Yet the “bootleggers and Baptists” theory of regulation explains that this “strange bedfellows” phenomenon is actually the norm, rather than the exception.

Most laws have two types of supporters: the true believers and those who benefit financially.  Baptists don’t want you drinking on the Lord ’s Day, for example, while bootleggers profit from the above-market prices that Blue Laws enable them to charge on Sundays.  Consequently, both groups support politicians who support Blue Laws.

Baptists-and-bootleggers coalitions underlie almost all government activities. Defense spending: (neo)conservatives and defense contractors.  President Obama’s new health care law: the political left and the health care and insurance industries. Ethanol subsidies: environmentalists and agribusiness. Education: egalitarians and teachers’ unions. The list goes on.

It’s easier to illustrate the theory (and sexier) when the bootleggers are non-believers who cynically manipulate government solely for their own gain.  Yet one can be both a Baptist and a bootlegger. The Coca-Cola Company may sincerely believe that society benefits when the government subsidizes sugary sodas for poor people.  Even so, a bootlegger-cum-Baptist can still rip off taxpayers.

This morning, NPR reported on another bootleggers-and-Baptists coalition: anti-immigration zealots and the prison industry.

KFF/HRET Survey, Part III: Employers Can’t Shift to Workers a Cost that Workers Already Bear

In a previous post, I promised to address the negative spin that the Kaiser Family Foundation put on its annual Employer Health Benefits Survey, released this month.  I do so in an op-ed that ran today at the Daily Caller.  An excerpt:

The Kaiser Family Foundation recently issued its annual survey of employer-sponsored health benefitsdeclaring: “Family Health Premiums Rise 3 Percent to $13,770 in 2010, But Workers’ Share Jumps 14 Percent as Firms Shift Cost Burden.” That’s half-right — but the other half perpetuates a myth about employee health benefits that stands in the way of real health care reform….

[Y]ou pay the full cost of your health benefits: partly through an explicit $4,000 premium and partly because your wages are $9,770 lower than they otherwise would be.

Kaiser therefore claims the impossible when it says that firms are shifting costs to workers.  Employers cannot shift to workers a cost that workers already bear. Yet this year, as in past years, the Associated PressBloombergCNNKaiser Health NewsThe Los Angeles TimesThe New York TimesNPRThe Wall Street Journal, and The Washington Post uncritically repeated the cost-shifting myth.

The bolded sentence is Cannon’s Second Rule of Economic Literacy.  (Click here for the first rule.)

I have also collected a series of excerpts from past Kaiser Family Foundation surveys showing this is a persistent issue.  Here are a few:

1998: “Workers in small firms bear a much larger share of the financial burden for health benefits than employees of larger firms.”

2005: “The average worker paid $2,713 toward premiums for family coverage in 2005 or 26% of the total health premium.”

2007: “Annual Premiums for Family Coverage Now Average $12,106, With Workers Paying $3,281”

The folks at the Kaiser Family Foundation were exceedingly gracious when I approached them to discuss this issue.