Moving

Given the bland nature of the site and the limited traffic, I have decided to move the blog and give it a new name. The look of the blog was pretty bland and the original purpose of the blog (keeping tabs on Lou Dobbs) has changed and thus I thought a makeover was in order. I hope that any and all of you who consistently read it will continue to visit the new site. The new blog will be entitled "The Everyday Economist" and the link is here.

The new address: everydayecon.com

Medicaid Reform

The Wall Street Journal has a great editorial about Medicaid reform in Florida:

The hallmarks of the Florida reform are consumer choice and competition. Each participant will be assigned a premium with which to purchase coverage for basic and catastrophic care from a menu of state-approved options. If this sounds familiar, it is. Many private companies offer similar options to their employees, as does the federal government, which allows workers to select from a list of competing private plans.

For critics who argue that competition won't work for the sick and disabled, Florida has an innovative answer: risk-adjusted premiums. Under the new legislation, someone with a serious illness or disability will receive a higher premium than a generally healthy person. The aim is to encourage private insurers, HMOs and local networks of physicians and hospitals to compete for their business.

A free market system is always the best approach. Look for other states to imitate this program in the future.

Trade update

The world would largely benefit from free and fair trade. However, the protectionists and France, and increasingly, in South Korea appear to care little about the developing world. The Wall Street Journal reports:

That may end up an impossible challenge, as the negotiations illustrated. France says it is resistant to more pledges to open its agriculture market with tariff cuts. And many developing countries are reluctant to sign on to the new trade round, even though it is intended to help them. The loudest protesters in Hong Kong were Asian farmers, led by South Koreans, worried about the effect of cutting protections offered by their governments.

If all those conflicting interests can't be reconciled by the end of 2006, then the progress in Hong Kong will be for naught. No pledges made here, including the offer to end agriculture-export subsidies by 2013, will be implemented unless a pact is reached next year.

More:

Beyond the gains and losses at stake for specific sectors, another question is the mission of the 149-member WTO in the 21st century. Will it continue to be a force for lowering trade barriers and fostering cross-border investment? Or will it end up as a referee enforcing rules hammered out during a half-century of liberalization after World War II?

"Most of the members seem to have lost sight of the overall goal, which is trade liberalization," says Dan Griswold, director of trade policy for the Cato Institute, a Washington think tank that favors free trade.

It is a shame that more countries do not recognize that free trade is in all of our best interests.

Related posts:

Trade lesson

Mark Cuban vs. New York Times

Mark Cuban asks: "NYTimes Sunday Business or Bloggers. Who has higher standards?" Ouch. Here's a taste:

Given the admitted rush job by Randall Stross for the Sunday NY Times Business column that I discussed in my last blog entry, along with my previous experiences with that paper, i dont think it is preposterous any longer.

Who has higher editorial and reporting standards. Your typical fulltime blogger, or the NY Times?

Who puts more effort into researching their articles?

Who conveys more depth?

Via Don Luskin

Blog makeover

The blog will be getting a makeover soon. Hopefully this will eliminate the bland appearance of the blog and create more traffic.

Any suggestions?

"Investigative" journalism

The Blade has an "investigation" that reveals:

"America's business leaders supplied more than $75 million to return Mr. Bush to the White House last year - and he has paid dividends."

Really? Corporations benefiting from political giving? Huh.

In a related story, I put my pants on one leg at a time.

Wal-Mart

Bloomberg's Kevin Hassett discusses Wal-Mart:

If you're like me, you find it surprising that Wal-Mart Stores Inc. is under such vicious attack. You can hardly flip open a newspaper without finding vituperative anti-Wal-Mart statements. While the bile has been steady over the years, things seem to have stepped up enormously in recent weeks.

It's surprising because Wal-Mart is one of the great economic success stories of our time. Thanks largely to its legendary efficiency, which has enabled it to provide much lower prices than the competition, the once-regional company from Bentonville, Arkansas, has become the world's largest retailer, as well as the biggest private employer in the U.S.

Wal-Mart Chief Executive Officer Lee Scott said in a recent speech that if Wal-Mart were a country it would be the 20th largest economy on earth.

The gains to Americans from Wal-Mart's lower prices are extraordinary. One recent estimate suggests Wal-Mart directly and indirectly (by forcing rivals to keep their prices down) saved the average U.S. household $2,329 in 2004. These gains help low-income individuals the most.

Must read.

Media bias is real

The results of a UCLA political scientist's study shows that bias in the media exists:

While the editorial page of The Wall Street Journal is conservative, the newspaper's news pages are liberal, even more liberal than The New York Times. The Drudge Report may have a right-wing reputation, but it leans left. Coverage by public television and radio is conservative compared to the rest of the mainstream media. Meanwhile, almost all major media outlets tilt to the left.

I will have to read the actual paper to see how bias is quantified. However, for now, the article is definitely worth a read.

A debate on smoking

Our friend Perry Eidelbus disagrees with my opinion on hiring smokers. Make sure you read his opinion and my comments in response.

Great News

There is great news on free trade:

WTO OKs Deal to End Farm Trade Subsidies (AP)

World Trade Organization negotiators approved an agreement Sunday requiring wealthy nations to end farm export subsidies by 2013, a support system that poor nations say puts them at a competitive disadvantage.

Another "Business story"

A "business story" from the New York Times states:

The new universal insurance could be provided by government. One simple way would be to extend Medicaid coverage up to the desired income level and to require people above that point to buy into the system according to a price scale that rose proportionately to income.

Nevermind the fact that government-provided health insurance is inefficient and expensive to the taxpayers. For those that support universal health care, I explain its inefficiencies here.

Here we go...

The Washington Times reports:

Anti-smoking activists who are driving cigarettes from public places across the country are now targeting private homes.

Sheesh. And you thought that smokers were crazy when they said that someday they would not be able to smoke in their own home.

Budget Deficits and Taxes

How would you pay off your debt?

You get your mail out of your mailbox and you find your bank statement and your credit card bill. Upon analyzing each one you realize that your credit card balance exceeds that of your bank account. You decide that you cannot live with this debt and decide that you have two options to eliminate it; ask for a raise or reduce your monthly spending. You know that your boss would be unwilling to give you a raise to pay off your debt, so you decide to cut your spending. So why doesn't the government do the same?

When the budget deficit begins to get high, the calls for tax increases and the elimination of certain tax incentives are always the first options the government tends to use. In 1990, President George H.W. Bush raised taxes in order to reign in the deficit. Later, in 1993 President Bill Clinton signed the largest tax increase in U.S. history in another attempt to balance the budget. However, raising taxes to meet the needs of government spending is an example of backward-thinking. The government should not take more tax dollars out of its citizens pockets because of its fiscal irresponsibility.

The people's money

It was the great Adam Smith who famously wrote in The Wealth of Nations that each individual acting in their own self-interest "was led by an invisible hand to promote an end which was no part of his intention. . .By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." This is why capitalism works. Each individual acts in their own self-interest and it betters society as a whole. However, when a country taxes its citizens it is depriving them of acting in their own self-interest (at least partially). Instead, individuals are forced to give up some of their income as well as consumption and savings due to taxes.

So why not give the money back to the individuals?

Rather than debate the fact that taxpayers spend their money better than the government, liberals typically claim that tax cuts only go to the wealthiest Americans. It is true that those with higher incomes do get a larger nominal dollar amount, but the percentage change in the rates is the same. Additionally, this assumes that there is no reason to allow the wealthy to keep more of their money. This philosophy assumes that the wealthy do not "need" the money and that the money could be put to better use. I disagree. Our friend Perry Eidelbus gives a great example:

Donald Trump's wedding reception was in a ballroom that he had remodeled for $42 million. Who built that ballroom, especially the thousands of square feet of marble? Who sews fur coats, crafts jewelry, or builds luxury cars and boats? Not the rich. When they go out to dinner, who waits their tables? Who mows their lawns? All that labor is done by people of far lower incomes, whose jobs are made possible because the "rich" spend their wealth.

Those with high incomes will not just stuff the money they receive from tax cuts in a mattress. Even if they do not spend it, they will invest it, thus giving higher commissions to stock brokers, financial consultants, accountants, and hedge fund managers who in turn spend the money on goods and services. This is a much more efficient way for money to be spent.

Spending cuts

The responsible thing for the government to do when running a deficit is to cut spending. As with cuts in taxes, liberals always complain that these spending cuts come from entitlement programs that largely benefit students, the poor, and farmers. However, there are a few important facts to know about spending cuts.

First, the spending that "helps" the farmers is actually an example of protectionism, which I discussed here. These policies may "help" the American farmer, but they are in no way beneficial to the American consumer.

Secondly, spending never gets cut, the rate at which it is scheduled to increase gets cut. This is very important because people often argue against spending cuts because it is going to take money out of the hands of college students and the poor. In actuality these groups are actually going to end up with more funds than they had previously received.

And finally, arguing against spending cuts for the poor and for students implies that the government is the best distributor of such funds. This begs the question, is a young black person more likely to benefit from a student loan from the government or a scholarship from the United Negro College Fund? Is a poor, single mother better off living in public housing or in a home built by Habitat for Humanity? Wealthy Americans tend to give large donations to such groups. So would you rather have them give the money to the government?

Conclusion

The government should only supply services that are not better provided for by the private sector (there are not many). In addition, the government should not take a larger percentage of taxpayers' income to finance their senseless, irresponsible spending. Everybody loves to spend somebody else's money. I just wish the government would not spend it on bridges to nowhere and excess supplies of corn. It is extremely doubtful that they will ever stop and thus spending cuts must be the only option for balancing the budget.

WSJ on Iraq

An editorial in the Wall Street Journal said it best:

President Bush has done better at explaining his Iraq policy of late, but the most eloquent rebuttal to American defeatists came from the millions of Iraqis who voted yesterday for a new parliament. They are now practicing the democracy that the U.S. promised when it deposed Saddam Hussein. This is a great achievement.

More:

We're increasingly confident that victory in Iraq is not only possible but likely. The biggest threat to winning now is in Washington, D.C. Let's hope that with their tremendous vote yesterday Iraqis delivered faint-hearted U.S. politicians the necessary dose of fortitude.

Read the whole thing.

Freedom is on the march: UPDATED

The L.A. Times reports:

Iraqis across ethnic, sectarian and religious divides voted in droves today in a high-stakes election that could determine the course of the nation, and the success or failure of the U.S. effort to bring Western-style democracy to the Arab Middle East.

More:

"It is a national wedding day," said President Jalal Talabani, a leader of the Kurdish coalition of parties, said after casting his ballot in the northern city of Sulaymaniyah. "We are all happy because we will choose a parliament that will last for four years. I hope we can choose the right people to achieve our dreams."

Freedom is a wonderful thing. I will not take this time to debate the war in Iraq, rather I will let the voters and the news images do the talking. Watching the Iraqis come out into the streets after voting and seeing the bright smiles across their faces as they hold up their ink-stained fingers makes me truly appreciate living in freedom my entire life. May God bless Iraq.

UPDATE:

The BBC reports: 'This is stability at last'

W. Thomas Smith Jr. over at NRO: It's Electric: U.S. troops describe festive atmosphere throughout Iraq:

As Iraqis queue up at polling stations, some of the scenes look more like a series of regional block parties than what most Westerners would associate with an election day. Children can be seen waving flags or playing soccer. Adults are cheering, clapping hands, beating drums, singing, dancing, and waving at passing U.S. and Iraqi military vehicles. There simply seems to have been more energy in the run-up to this election than in previous ones. And why not?

Newsminer.com:

Think about everything you’ve heard about the conditions in Iraq, the role of U.S. forces, the multi-layered complexities of the war.

Then think again.

I’m a journalist. I read the news everyday, from several sources. I have the luxury of reading stuff newspapers don’t always have room to print. I read every tidbit I could on Iraq and the war before coming.

Everything I thought I knew was wrong.

Maybe not wrong, but certainly different than the picture in my head.

Freedom is on the march!

WSJ vs. GM

An editorial in today's Wall Street Journal takes on GM:

Mr. Wagoner, meanwhile, is joining Ford Motor CEO William Ford in mounting a campaign to ask Washington for taxpayer help, starting with a passionate op-ed on these pages last week. But since Mr. Wagoner is asking for help, it's only fair that taxpayers get to ask some questions in return about the GM business practices that so concern the bond raters.

A good place to start is with its "jobs bank," which is the company's euphemism for a post-employment limbo in which GM pays laid off members of the United Auto Workers not to work. If you want to know why GM's costs are too high for the number of cars it sells, here's one explanation.

GM doesn't like to talk about the "jobs bank," to the point that it won't disclose how many idled workers are in the bank or even how much it costs the company. However, the Detroit Free Press has dug around and reported that the "bank" holds some 5,000-6,000 employees, at an annual cost of as much as $800 million a year.

More:

This pincer movement has turned the jobs bank itself -- and worse, the commitment it represents -- into a millstone around GM's neck. The jobs bank sends a message that downsizing is temporary, and that GM can accommodate those workers somewhere. The reality is that many of them are simply waiting out retirement.

In one recent Reuters story, a worker in the jobs bank by the name of Dean Braid was quoted as saying that he hoped the bank wasn't eliminated when the United Auto Workers' contract with GM runs out in 2007 because by then he'll be two years from retirement with full benefits. If Mr. Braid is still in the jobs bank when retirement rolls around in 2009, he will have spent a decade, or one-third of his career with GM, "in the bank."

Ouch.