Sarkozy, France’s Busy CEO

It must be exhausting to be the chairman and CEO of a nation-state-firm that runs everything from retirement plans to universities to energy firms. Steven Pearlstein reports on France’s “hyperactive new president, Nicholas Sarkozy”:

There he is lunching with student leaders at a local bistro to win their support for reform of the nation’s under-funded and under-performing university system.

Here he is on the phone with Russia’s President Vladimir Putin, sealing the deal for the French oil company, Total, for a 25 percent stake in the management of the giant Shtokman gas field.

Now he is in Toulouse, with German Chancellor Angela Merkel, announcing a new governance structure for Airbus that puts a loyal French technocrat in charge.

And there’s Sarko in Brussels, criticizing the European Central Bank for keeping the euro too high and demanding more leeway for France’s ballooning budget deficit.

Rupert Murdoch probably delegates more than this. But Sarko is determined to prove that he can singlehandedly reform the operations of a production-and-distribution entity far larger and more complex than the notorious business conglomerates that eventually displayed significant diseconomies of scale. He’s like a real-life version of the classic Saturday Night Live sketch of a hard-charging President Reagan driving his aides to exhaustion as he masterminds international financial transactions around the clock and around the world.

But as many of the conglomerates found, it might be easier to focus on the French state’s core business — protecting the life, liberty, and property of French citizens — if it sold off some of its peripheral lines, like universities, gas fields, health insurance, airlines, telephones, gambling….

Meet the New Farm Bill

Prepare to pay more for your food. The House Agriculture Committee on Thursday unanimously passed a 2007 farm bill that, in the words of a committee press release, “makes historic investments in conservation, nutrition and renewable energy while maintaining a strong safety net for America’s farmers and ranchers.”

For “investments,” read “spending increases,” and for “a strong safety net,” read “subsidies and trade barriers to keep commodity prices and production artificially high.”

Sadly, the new 2007 farm bill looks a lot like the old 2002 farm bill that is due to expire on September 30. No real changes were made in the Title 1 commodity programs that lavish production subsidies on farmers who grow corn, wheat, cotton, and other program crops. Trade barriers remain against imports of lower-priced sugar, rice, and dairy products.

As we have pointed out in a number of recent Cato studies on farm policy, tens of millions of American families will continue to pay for these programs through taxes and higher prices at the grocery store. Once again, members of the House Agriculture Committee, Democrats and Republicans alike, have demonstrated that they represent a small number of farmers rather than the general interests of the American people.

A Scolding from the EC

The bureaucrats in Brussels may not be able to solve Europe’s demographic problems. They may not be able to promote economic liberalization in Europe’s welfare states. And they may not be able to provide any guidance to nations failing to assimilate large numbers of immigrants. But they can scold European men about not doing the housework.

The EU Observer reports on the latest farce from Brussels:

The European Commission is calling on Europe’s menfolk to help out more at home as a first step to improving women’s career prospects and ending the gender pay gap across the bloc. …EU employment commissioner Vladimír Spidla said, addressing a press conference in Brussels on Wednesday, “It is not possible to reduce the gender pay gap if we do not help out more at home.”

…In the communication, the Commission sets out ways in which the EU can bridge the gender pay gap. It wants the 27 member states to set objectives and deadlines to eradicate the gap, and will also push for equal pay to be made a condition for winning public contracts.

Treasury Secretary Highlights Importance of Competitive Corporate Tax System

Writing for the Wall Street Journal, Secretary of the Treasury Henry Paulson, Jr. warns that America now has an uncompetitive corporate tax system. Mr. Paulson explains that other nations have been slashing their tax rates — and reaping big rewards — while the United States has been sitting on the sidelines. This means less investment in America, which translates into lower wages for American workers:

[T]he U.S. is once again a high corporate tax country. We now have, on average, the second-highest statutory corporate tax rate (including state corporate taxes), 39%, compared with an average rate of 31% for our top competitors… Ireland, for example, has engineered its own economic miracle, in large part due to a reform program that cut corporate tax rates to a level one-third that of the U.S. And the trend continues. Germany will reduce its total rate from 38% to 30% in 2008. France, Japan and the United Kingdom have signaled they may also lower their corporate rates.

…Business tax policy levers, such as the corporate tax rate, depreciation rates and investor taxes, as well as the taxes levied on small businesses through the individual income tax, should strive towards a similar purpose: to encourage economic growth by reducing the tax burden on additional investments. Yet, the current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness. Take just a few examples. Taxes on capital income raise the price of future consumption and discourage saving and capital formation. Reduced capital formation gives labor less capital to work with and lowers labor productivity, reducing real wages and income.

…Over the past two decades, while U.S. tax law has grown more complicated and our statutory corporate income tax rate has increased, other nations have been reducing their rates to replicate our miracle. A study by Treasury economists estimated that a country with a tax rate one percentage point lower than another country’s attracts 3% more capital. It’s not surprising then, that average OECD corporate tax rates have trended steadily downward.

Bush Waxes Philosophical on Health Care

People sick of the big-government conservatism practiced by the Bush administration might be excited at the headline in today’s Washington Post: “Bush: No Deal On Children’s Health Plan/President Says He Objects On Philosophical Grounds.” But President Bush’s philosophical objection to the proposed expansion of the State Children’s Health Insurance Program is in no way a reversal from his stance that big spending is okay as long as Republicans can take credit.

What philosophy does Bush subscribe to?  Apparently, it’s the philosophy that says the federal government should only expand the welfare state by billions of dollars, instead of tens of billions of dollars: “The president said he objects on philosophical grounds to a bipartisan Senate proposal to boost the State Children’s Health Insurance Program by $35 billion over five years. Bush has proposed $5 billion in increased funding and has threatened to veto the Senate compromise and a more costly expansion being contemplated in the House.” 

Later in the article Bush is quoted as saying, “I think it’s going to be very important for our allies on Capitol Hill to hear a strong, clear message from me that expansion of government in lieu of making the necessary changes to encourage a consumer-based system is not acceptable.”

He also said, “I’m worried that there will be a strong incentive for people to switch from the private sector to the government.” 

If only the president had adopted a similar attitude when he approved a $1.2 trillion expansion of Medicare in 2003 in lieu of consumer-based approaches.

Save Wal-Mart, Save Class Action Law?

I’ve got a short Regulation Magazine piece on the notorious (or glorious, depending on your perspective) Dukes v. Wal-Mart case–a gender discrimination class action composed of as many as 2 million women, according to some estimates. You can read more about the case here and download my Regulation piece here.

Many believe the case is headed to the Supreme Court–if not this upcoming term, then the next. If it does, and if the Court takes up Wal-Mart’s constitutional arguments against certification, then, I argue, it might just set the stage for some far-reaching, and overdue, conceptual changes in the way we think about the constitutional rights of class action defendants. My piece uses Dukes as a springboard for sketching some of these defenses–admittedly quite adventurous–which just might become a bit less exotic if Wal-Mart succeeds.