Czech Government Officially Proposes Flat Tax

Although its prognosis is unclear because of the ruling government’s lack of a firm majority in parliament, the Czech government has unveiled its flat tax. Combined with reductions in social welfare spending, the tax reform could dramatically boost Czech competitiveness and put more pressure on Western Europe’s welfare states. Tax-news.com reports:

The Czech government has announced a raft of major tax reform plans, which include a flat tax on personal income, a significant reduction in tax on corporate income, and changes to the value-added tax regime. Under the proposals announced by Finance Minister Miroslav Kalousek, if approved Czech taxpayers will pay a 15% flat tax on their personal income, while companies will see their income tax rate drop to 19% from the current 24% by 2010. At present personal income tax rates vary according to wages, and range from 12% to 32%. The lower rate of value-added tax will increase under these reforms to 9% from 5%, but the headline rate will remain unchanged at 19%. …with the tax cuts accompanied by some major cuts in welfare spending, such as unemployment benefits and healthcare, the government is sure to encounter opposition from the left.

Dueling Book Titles on Health Care

Shannon Brownlee writes in the New York Times,

Sure, aggressive treatment is reducing mortality and improving the quality of life for some patients. Sometimes it even cures. But for many others, the cancer machine offers only marginal benefits at best, and providers push screening and aggressive treatment in part because they have nothing else to give, but also because it’s profitable. How much of the money we spend on unnecessary or futile cancer treatment might be put to better use searching for real advances?

Her forthcoming book is titled, Overtreated: Why Too Much Medicine Is Making Americans Sicker and Poorer.  Meanwhile, Jonathan Cohn writes

Every day, millions of hard-working people struggle to find affordable medical treatment for themselves and their families - unable to pay for prescription drugs and regular check-ups, let alone for hospital visits. Some of these people end up losing money. Others end up losing something more valuable: Their health or even their lives.

His book title is Sick:  The Untold Story of America’s Health Care Crisis–and the People Who Pay the Price.

Europeans probably will love Cohn’s book, which apparently will reinforce their impression that Americans fall down dead in the streets every day because we don’t have enough socialized medicine.  Brownlee’s book also apparently will take an anti-capitalist slant, blaming evil doctors and hospitals for overtreating patients.

The moral of the story is that whether you are being overtreated or undertreated, it’s the fault of the evil capitalist system.  Still, if Cohn and/or Brownlee want to campaign on a platform of “Your health care stinks.  It’s time to replace your health insurance and your doctor with a government programm,” I think they may run into opposition.

But We Can Trust the Government, Right?

A common criticism of Social Security choice (and defense of the Social Security status quo) is that there are dishonest actors in private markets who would put people’s private account assets at risk of (in the words of the AFL-CIO) “corruption, waste and Enron-ization.” These critics argue that society is much better off keeping Social Security in the honest, benevolent hands of Uncle Sam.

What must these critics be thinking about today’s NYT above-the-fold article on teacher pension fund shenanigans in New Jersey? The lede says it all:

In 2005, New Jersey put either $551 million, $56 million or nothing into its pension fund for teachers. All three figures appeared in various state documents — though the state now says that the actual amount was zero.

Like many state and local government pension systems, New Jersey’s is woefully underfunded compared to the benefits it will have to pay in the future. (This situation will make headlines in the coming years, as state and local governments begin to disclose their pension fund and retirement benefit system shortfalls in accordance with a recent GASB requirement.) In New Jersey’s case, the shortfall is more than has been publicly acknowledged, however: “an analysis of its records by The New York Times shows that in many cases, New Jersey has overstated even what it has claimed to be contributing, sometimes by hundreds of millions of dollars.”

Talk about the Enronization of retirement benefits…

What should be especially troubling to SS choice opponents is that New Jersey has a number of “good government” provisions on its books, including one requiring any new state spending be paid for using a specified revenue source. When the state sweetened its pension benefits a few years ago, lawmakers supposedly complied with the law. Moreover, New Jersey officials told the NYT that there is no impropriety in the pension fund’s accounting — everything (including the apparent misstatements) is on the level.

So, despite “the right” legal safeguards, despite accounting mandates, despite the existence of a special interest (aka the state’s teachers’ union) with strong incentive to make sure the teachers’ pension fund is healthy, and despite the fund’s handling by supposedly honest, benevolent government, New Jersey’s teachers’ pension fund is “in dire shape, with a serious deficit.”

Choice opponents do have a reasonable concern that bad actors in investment markets could harm private accounts. But they fail to acknowledge that bad actors (and even non-bad actors) can — and do — harm public pensions. Wouldn’t it be sensible to allow people to put their public pension nest eggs in many different private investment baskets (some of which may be susceptible to bad actors) instead of keeping those eggs all in one Social Security basket (also susceptible to bad actors)?

At the very least, wouldn’t it be sensible to give people a choice of which bad actor risk they’d rather run?

Does Gitmo Hurt More than It Helps?

This morning, NPR did a story on media coverage of the British sailor crisis in the Arab world. Ramez Maluf, a journalism professor at American University in Beirut, pointed to this commentary by an Arab blogger on the subject:

Iranians should consider those 15 pirates as enemy combatants, and treat them in the same way as they treat our “detainees” in Gitmo. They should be put in orange jumpsuits, and their eyes, hands, and feet should be binded [sic]. After that, they should be kept rotting in cages there for five years without any legal process. That would be just like the U.S. style of democracy. It would be very fair.

Thank God, it appears that the Brits are about to be released. Apparently, what the British are supposed to do is state that they “regret” the incident, and will endeavor to make sure it doesn’t happen again, without admitting that the British entered Iranian territorial waters. I imagine that both of those statements are true, though I suspect that “making sure it doesn’t happen again” may mean different things to the English than it does to the Iranians. There are different ways to ensure that such an incident doesn’t happen again.