Topic: Regulatory Studies

Play Ball! But Not With Taxpayer Money

As we enjoy the opening week of the new baseball season, we should reflect on the dastardly organization that spends too much money and raises the price of baseball for everyone.

No, it’s not the New York Yankees: it’s the United States government.

You see, as discussed in this recent New York Times op-ed, the price of baseball has increased all across the Major Leagues because of the tax write-off (read: subsidy) that businesses get to treat clients and employees to ball games:

There are many reasons for the price explosion, but a critical factor has been the ability of businesses to write off tickets as entertainment expenses — essentially a huge, and wholly unnecessary, government subsidy.

These deductions have led to higher ticket prices in two ways. On the demand side, they have fueled competition for scarce seats, with business taxpayers bidding in part with dollars they save through the deductions.

While baseball parks built in the 1960s and before held as many as 56,000 seats, the modern trend is toward smaller-capacity parks, with a higher percentage of total space dedicated to skyboxes. The new Yankee Stadium, the only major-league park built since 2000 with more than 44,000 seats, has 3,000 fewer seats than its 1923 predecessor but almost three times as many skybox suites.

Of course, libertarians support low general taxes for a variety of reasons, but targeted tax breaks for luxury items pad the pockets of billionaire sports team owners, give a discount to companies showing off their “generosity” to clients, and generally distort the economy, all at a cost to taxpayers (including those who aren’t even baseball fans).

Boo! America’s national pastime of baseball should not be corrupted by national and state governments’ parochial pastime of corporate welfare.

For more in-depth analysis on the business of sports, read anything by Andrew Zimbalist or Home Team by my former professor Michael Danielson.  (Danielson taught a great class on the political economy of sports; my classmates who thought it would be a gut were in for a rude awakening.)

H/T: Above the Law

When Regulators Attack

No, that’s not the name of a new TV series. We should be so lucky.

It’s actually a good description of the government’s approach to tobacco.

Instead of letting adults make up their own minds about costs and benefits of risky choices (which includes most things in life, such as crossing a street and eating a cheeseburger), nanny-state officials have decided to investigate menthol-flavored cigarettes. And since the Food and Drug Administration has been given authority over the tobacco industry and since the FDA’s supposed purpose is to ensure drugs are “safe and effective,” that almost certainly means this latest campaign will lead to either further restrictions on free speech or outright bans.

Here’s a blurb from the Wall Street Journal:

Congress last year added the tobacco industry to the FDA’s regulatory mix and today a panel of health experts making up the agency’s new Tobacco Products Scientific Advisory Committee is kicking off a two-day meeting. First on the agenda: how menthol flavoring in cigarettes affects smokers’ habits. Small wonder that menthol is getting early attention, says the New York Times, which notes menthol butts account for almost a third of the $70 billion U.S. cigarette market.

After more meetings, the advisory panel will send recommendations to the FDA, which could eventually decide to ban menthol products or take steps to curtail their marketing.

One can only wonder how far down the slope we will slide. There already are attacks against fatty foods and sugary soft drinks. Both provide pleasure to many people, but that no longer means much in Washington. Will regulators, either at the FDA or elsewhere, eventually decide that anything linked to obesity must be regulated and/or taxed?

And now that government is going to pick up the tab for an even larger share of health costs, how long before the politicians use obesity-related costs as a major justification for further efforts to control our private lives? Maybe some day we will have a Federal Health Police to enforce daily exercise mandates? I better stop now before I give them any ideas.

Pot, Protectionism, and Unions

Lobbying reporter Tim Carney notes that some California marijuana growers are worried that a proposed legalization initiative could drive down the price of the product and adversely affect their incomes. They’re holding meetings to deal with the threat.  Some growers are just talking about creating an official Humboldt seal of approval. Maybe they could even get legal restrictions on who can use the Humboldt name, like Champagne and Roquefort. But some local stores sport bumper stickers reading “Save Humboldt County — keep pot illegal.”

The story reminds Carney of this Reason.tv video featuring a spokeswoman for the purported American Marijuana Growers Association, who urge smokers to buy only American-grown bud:

And that video reminds me of this classic Saturday Night Live video, from those heady days in the ’70s when television shows could joke about marijuana, featuring the American Dope Growers Union reminding viewers that when you buy pot from Mexico or Colombia, “you’re putting an American out of work.” (The SNL sketch was based on a much-broadcast commercial by the International Ladies Garment Workers Union singing “Look for the Union Label,” to discourage Americans from buying foreign-made products.)

Union rules, protectionist laws, and sometimes even outright bans are all ways of avoiding the rigors of competition, seeking to prevent consumers from buying products and services where they’re cheapest. Sometimes there are laws banning or taxing the purchase of goods from another country. Sometimes there are appeals to compassion and patriotism, like “Buy American” or “Buy Local” campaigns. Sometimes an outright ban on the sale of a product actually products the market for established illegal sellers, as the Humboldt County marijuana growers are thinking, and as economist Bruce Yandle theorized in his work on “bootleggers and Baptists.”

O’Reilly: No Freedom, No How

Bill O’Reilly teases an interview with John Stossel this way:

Should Americans be able to use their body for any purpose? John Stossel says yes and joins us to explain!

And Bill O’Reilly says no! No to legal prostitution, no to polygamy, no even to legal markets for vitally needed organs. Check it out:

More Stossel videos on personal freedom here. Cato research on organ markets here. And don’t forget to watch John Stossel every Thursday night at 8 on the Fox Business Network.

Tuesday Links

  • Price controls have failed in the past and there is no reason to think they will work now. So why is the president proposing price controls on health care? Michael Tanner: “Attempts to control prices by government fiat ignore basic economic laws – and the result could be disastrous for the American health-care system.”

Government-Mandated Spying on Bank Customers Undermines both Privacy and Law Enforcement

I recently publicized an interesting map showing that so-called tax havens are not hotbeds of dirty money. A more fundamental question is whether anti-money laundering laws are an effective way of fighting crime – particularly since they substantially undermine privacy.

In this new six-minute video, I ask whether it’s time to radically rethink a system that costs billions of dollars each year, forces banks to snoop on their customers, and misallocates law enforcement resources.

Obama’s ‘Best’ Idea? Rationing Care via Clinton-esque Price Controls

Hoping to revive his increasingly unpopular health care overhaul, President Obama has invited Republicans to a bipartisan summit this Thursday and plans to introduce a new reform blueprint in advance of the summit.  On Sunday, the White House announced that a key feature of that blueprint will be premium caps, a form of government price control that helped kill the Clinton health plan when even New Democrats rejected it.

The New York Times reports on President Obama’s blueprint:

The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators.

It bears repeating what Obama’s top economic advisor Larry Summers thinks about price controls:

Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time.

For example, as I have written elsewhere, artificially limiting premium growth allows the government to curtail spending while leaving the dirty work of withholding medical care to private insurers: “Premium caps, which Massachusetts governor Deval Patrick is currently threatening to impose, force private insurers to manage care more tightly — i.e., to deny coverage for more services.”  No doubt the Obama administration would lay the blame for coverage denials on private insurers and claim that such denials demonstrate the need for a so-called “public option.”

As the Progressive Policy Institute’s David Kendall explained in a 1994 paper, the Clinton health plan contained similar price controls.  Kendall explains why they would be a disaster:

In spite of the late hour in the health care debate, Congress has not yet decided how to restrain runaway health care costs. The essential choices are a top- down strategy of government limits on health care spending enforced by price controls or a bottom-up strategy of consumer choice and market competition. History clarifies that choice: Previous government efforts to regulate prices in peacetime have invariably failed. Moreover, government attempts to control prices in the health care sector would undermine concurrent efforts to restructure the marketplace…

The idea of controlling costs by government fiat is seductively simple. But it rests on a conceit as persistent as it is damaging: that government bureaucracies can allocate resources more wisely and efficiently than millions of consumers and providers pursuing their interests in the marketplace. The alternative – one rooted in America’s progressive tradition of individual responsibility and free enterprise – is to improve the market’s ground rules in order to decentralize decision-making, spur innovation, reward efficiency, and respect personal choice.

As centrally planned economies crumble around the world, many in the United States seem bent on erecting a command and control economy in health care. This policy briefing examines the reasons why government price regulation would fail to constrain health care costs and create many adverse side effects…

Ultimately, government price regulation will always fail because it does not change the underlying economic forces driving up prices. If we are serious about slowing the growth of health care costs, we have to change the ways we consume and provide medical care. Price controls evade the hard but essential work of structural reform in health care markets: They are a quintessentially political response to an economic problem. The alternative is to allow well-functioning markets to set prices and allocate resources, while ensuring that all Americans have access to affordable health care coverage. The market-oriented approach leaves decisions to cost-conscious consumers and health care providers rather than bureaucrats.

Any of that sound familiar?  It’s worth reading the whole thing.

This is not hope.  This is not change.  (Much less a game-changer.)  It is, to pinch a phrase, a return to “the failed theories that helped lead us into this crisis.”