Russia Examining Corporate Tax Rate Reduction

Lower tax rates are not a solution to all Russia’s problems, but tax policy is moving in the right direction. Tax-news.com reports that the government wants to reduce the corporate tax rate to 20 percent. Even more impressive, policy makers seemingly understand that lower corporate tax rates will have a larger supply-side effect than a reduction in the value-added tax, demonstrating a better grasp of economics than nine-tenths of the US Congress. The story also notes that Russia has taken other positive steps, though it does not mention the 13 percent flat tax implemented in 2001: 

Russia may cut its corporate profit tax rate to 20% from 24% as part of a three-year tax policy plan, Deputy Finance Minister Sergei Shatalov stated last week. The government had previously been considering a further reduction in value added tax, currently 18%, to as low as 13%, but Shatalov said that a cut in corporate profit tax would be more likely to stimulate economic growth and boost levels of investment. …Putin has stated many times that while the government remains committed both to simplifying tax legislation and reducing the tax burden, tax reform must be balanced against needs of business, which requires certainty in the tax code. Since 2002, the Putin administration has reduced or abolished a number of taxes, including turnover tax, payroll taxes, sales tax, and value added tax. According to Putin, in 2005 Russia’s tax burden eased to 27.4% of GDP, from 28.7% in 2004.

“Amen Brother” and Other Funky Breaks

Against Monopoly points to a YouTube video that tracks some of the history of the “Amen Brother” beat and sampling generally.  That’s the practice of taking pieces of an existing song and weaving it into a new one.

The video reminded me again of the upwelling of creativity that occurred in the late 80’s before sampling came on the the radar screen of copyright holders.  Though sampling remains possible, it is done less often because of the legal minefield one encounters when doing so.

“Amen Brother” is important, of course, but there are many other beats that contend for top honors. I went looking for James Brown’s “Funky Drummer” and came across this list of beats, calling itself “The 30 Greatest Hip Hop Drum Breaks & Samples of All Time.” Well, I’m not so sure, if it doesn’t have Funky Drummer, but listening to the beats connotes the dozens of songs that succeeded them. It’s an exciting window into our culture.

Finally, after much searching, I came across the Funky Drummer beat on this list. Enjoy the two-and-a-half seconds of bliss.

The point? Creative works are not just outputs of creative people - they’re also inputs to new creative works, a point made well by Greg Lastowka and Dan Hunter in their Cato Policy Analysis Amateur-to-Amateur: The Rise of a New Creative Culture.

The Gray Lady Deflates “Peak Oil” Fears

An excellent article by reporter Jad Mouawad in today’s New York Times knocks the stuffing out of those warning for the nth time that we’re about to run out of oil. What the doomsayers overlook is that existing fields typically deliver about 35% of their oil to the market. Until recently, the rest had been deemed unrecoverable for economic reasons.

But as technology improves and oil prices go up, what was once deemed unrecoverable becomes, well, recoverable. And that has a big impact on supply. Oil analyst Leonardo Maugeri has estimated that if recovery rates (which hovered around only 10% a few decades ago) were to move from 35% to 40%, that would be akin to adding a new Saudi Arabia to the global crude oil market. Maugeri’s recent essay in Newsweek covers a lot of the same ground.

Mouawad’s piece well demonstrates this dynamic at work in the Kern River oil field in Bakersfield, California. First discovered in 1899, the field has been producing for about a century and is still going strong despite numerous predictions over the years that the field was on its last legs.

I’ve said it before and I’ll say it again: the New York Times does a better job reporting business news, industrial trends, and microeconomic developments than any other newspaper — and perhaps magazine — in the world. Today’s piece is an excellent example of why serious people need to read that newspaper.

Paternalism Runs Out of Gas

I was filling up the minivan on Saturday when a woman at a nearby pump approached me and said, “Can you do me a favor? I don’t know how to pump my own gas.”

My first reaction was puzzlement. She was probably in her 30s, driving an SUV with what looked to be one or two kids inside. How could she be driving a car all these years and still not have figured out how to pump her own gas? Then she said something that instantly made it all clear.

“I’m from New Jersey.”

New Jersey, of course, is just about the only state left that requires that all gas stations within the state be full-service. Defenders of the ban on self-service pumps claim it is safer and more convenient for motorists and that it does not cause higher prices. None of those arguments hold water against the decades of successful experience with self-service pumps across the country. If a gas station attendant could pump your gas more safely and conveniently and at the same price, why do so few stations offer full-service anymore?

On top of its economic inefficiencies, the New Jersey ban on self-service is an insult to the good people of New Jersey. Their own state government is telling the world that its citizens are not smart enough or responsible enough to be trusted to handle a gasoline pump. When it comes to the routine task of filling up our vehicles, the paternalistic government of New Jersey treats its citizens as though they are children.

As I witnessed first-hand over the weekend, that paternalism can leave its citizens overly reliant on the kindness of strangers whenever they venture away from home.

Deamonte Didn’t Have to Die

The other day, I was at CNN’s Washington studio to comment on proposals to improve dental care for the poor following the tragic case of Deamonte Driver, 12, who died in Maryland this week for lack of routine dental care

My case was twofold.  First, having the government throw more money at the problem would just leave even more people with lously access to dental care.  That is true of government programs targeted solely at the poor (read: Medicaid), as well as universal programs such as the U.K.’s National Health Service, described by the New York Times as a “state-financed dental service, which, stretched beyond its limit, no longer serves everyone and no longer even pretends to try.”  Unfortunately, throwing money at the problem is exactly the solution proposed by U.S. Senators Ben Cardin (D-Md.) and Jeff Bingaman (D-N.M.), as well as Maryland Del. Nathaniel T. Oaks (D-Baltimore) and Sen. Thomas Middleton (D-Calvert County). 

Second, Deamonte might have gotten the care he needed if not for regulations that restrict access to basic dental care for poor families.  As the American Dental Hygienists’ Association notes:

In the greater Washington D.C. area, patients currently do not have direct access to dental hygienists because of restrictive public health policies. In many other states patients are allowed direct access to dental hygienists for preventive procedures, which has been an effective model in increasing access to care.

Those “public health” policies are regulations that define the scope of practice for dental hygienists and require them to work under the supervision of a dentist.  Requiring licensed hygienists to work out of a dentist’s office makes it impossible for them to strike out on their own, providing basic and preventive dental care that is affordable to low-income families. 

Were it not for those “public health” policies, intervention by a dental hygienist could have caught Deamonte’s problem well before it threatened his life.  Even if the hygienist could not have extracted the abscessed tooth, at a minimum she could have bought Deamonte’s family more time to fix the problem.

Something unrelated also happened while I was at CNN, about which I blogged elsewhere.

The Federal Communications Commission Versus the First Amendment

Newspapers and movie studios have reasonably good protections from government intervention and censorship. But as Steve Chapman explains, the Federal Communications Commission successfully has limited the First Amendment rights of television networks:

The First Amendment’s guarantee of freedom of speech has complex implications, but it clearly means two things: The government cannot tell you what to say, and it cannot tell you what not to say. That is your own business, and if you conduct it in a way the government dislikes, the government can take a flying leap. Unless by “government” you mean the Federal Communications Commission. It operates on the assumption that in its special realm, the First Amendment is a nonbinding resolution.

In addition to the constitutional argument, he makes two excellent points. First, improving television quality (as defined by politicians) is not the business of government. Second, parents should decide what their kids see, not bureaucrats:

…parents who want to shield their kids from bad language on TV already have ample means to do so – via channel blocking and V-chips that can be used to filter out programs with content they regard as inappropriate. The FCC says these methods are ineffective because parents don’t use them. More likely, parents don’t bother because they don’t think the problem is serious enough to justify the effort to shield kids from words they’ve already heard on YouTube. To insert the federal government is not a way to strengthen the authority of parents but to circumvent it. …The idea that we need the FCC to assure educational opportunities for children is nonsense on stilts. In the first place, there are plenty of channels, from PBS to the Discovery Channel, that offer nothing but educational programming. …In the second place, any parents truly interested in exposing their children to intellectual stimulation are more likely to shut the TV off than turn it on. Even if more educational programming would be a good thing, what business is that of the government? More G-rated films would be a good thing, too, but we don’t force movie studios to produce them. …Today, most viewers no longer distinguish between cable and broadcast programs. So having different rules for each makes about as much sense as having different regulations for odd- and even-numbered channels.

Further Evidence of Federal Silliness

As an irony junkie, I enjoy watching federal officials argue that they should be able to run the country’s educational system at the same time they flunk the basics.  For example, the Clinton Administration once posted this map on the White House website:

 

There are a number of interesting things about this map.

  • Apparently, Owensboro, Kentucky, isn’t in Kentucky anymore.  In fact, it looks like Kentucky isn’t in Kentucky anymore.  It has moved to Tennessee. 
  • Illinois has annexed the entire western portion of Kentucky, completely cutting off everything south and west of Union county, and with it Kentucky’s access to the Mississippi River.
  • It seems that Kentuckians were so infuriated by the loss of western Kentucky — and their state’s very name — that they invaded their neighbors to the east, capturing the city of Roanoke, Virginia.
  • Both Minnesota and Iowa have led incursions into South Dakota, conquering and dividing up that state’s southeastern corner.  South Dakota’s largest city, Sioux Falls, has fallen into the hands of wild-eyed Minnesotans.  Everything south of Sioux Falls is living under brutal Iowan occupation. 

So the other day, while in a lobby shared by CNN and the U.S. Department of Education (ED), a poster on the ED side bearing the following logo caught my eye:

U.S. Department of Education and Federal Student Aid logo (Start here. Go further.)

The proper usage of further and farther is the subject of some dispute.  Authorities have traditionally instructed that farther is used when discussing distance (Maine is farther from DC than New York) while further expresses a difference of degree (he further refined his craft).  Some argue that the distinction has been effectively erased by usage.  But I figured that since the ED’s new slogan was based on the common expression “you’ll go far,” there was a good chance that I had struck gold.

Yet the fun had really just begun.  When I pulled out my mobile phone to snap a photo, a very large man jumped up from behind the security desk and interposed himself between me and my prize.  He told me to put the camera away.  Irony or no irony.  Why?  Federal building.  Therefore, no taking pictures.   Of a poster.  In the lobby.  Of a building that doesn’t house, and isn’t near, anything even mildly important.  (Okay, that’s not fair.  If anything happened to those offices, who would all those former college attendees blow off?)

By the time I was done at CNN, an even larger man (the first man’s supervisor) wanted to have a word with me.  I wonder if their demeanors would have been different had the CNN reporter and cameraman not happened to follow me downstairs.