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July 20, 2007 8:30AM

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.

July 20, 2007 8:24AM

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.

July 19, 2007 3:22PM

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.

July 19, 2007 1:39PM

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.

July 19, 2007 12:15PM

Cost Overruns, More Liars

“Liar” is not a very scholarly word, but I don’t know how else to describe some of the comments that come from public officials. It’s not just the farm bill, check out this paragraph from a Washington Post story today on the Virginia highway project:

“Project officials hailed the interchange as ‘on time and under budget.’ But although the mid‐​2007 target date for completion was met, the final cost was nearly three times what was first projected. A more recent cost estimate of $676 million was ultimately met.”

Well, of course, the final estimate was met because it’s the final estimate. Obviously, what’s important for taxpayers is that politicians and government agencies stick to the numbers that they agree to when they first vote to approve projects.


It is my view that in many, but certainly not all, large government projects there is deliberate subterfuge about ultimate project costs. Many projects balloon in cost 50 percent or more.


For more on cost overruns, see this and this.

July 19, 2007 12:11PM

Yochai Benkler and the Libertarian Center

If you haven't been reading Cato Unbound this month, you should be. Brink Lindsey defends his notion of libertarian centrism from left, right, and, um, Julian.

I found Jonah Goldberg's follow-up contribution particularly interesting. He points out that much of what was wrong with the progressive movement of the early 20th century was due to its infatuation with centralizing institutions that were ascendant at the time: the army, heavy industry, and later, large-scale scientific endeavors like the Manhattan Project. Bigness and centralization were in, and intellectuals believed that the entire country should be governed in a similarly hierarchical fashion.

Goldberg thinks liberals will just discard the economic argument for central planning and move on to another one: public health, the environment, whatever. But I wanted to point out that there are also some liberals who are adopting a more appropriately skeptical attitude toward central planning itself.

One reason to think the 21st century is going to be more libertarian than the 20th is that the defining technology of our generation, the Internet, is radically decentralizing. After a century in which our cultural and economic lives were dominated by large, vertically-integrated corporations, we're entering an era in which decentralization and disintermediation are the dominant trends. Instead of producing components in house, they develop networks of independent suppliers, knit together by sophisticated supply chains. And instead of vertically-integrated media companies like the New York Times and NBC, we're increasingly moving toward a world in which writers, musicians, and other creators can reach their audiences directly.

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