So called “school reform” New Mexico style is not going to work because the incentives are all wrong. Look here for one assessment of the results so far. Last again.
Does ignorance of basic economics ever do any good? Maybe so.
When New Mexico repealed its gross receipts tax on groceries, it raised the tax on nearly every other good and service. It attempted to calculate this rate increase to exactly offset the revenue loss from grocery tax relief.
However, the state’s “economists” failed to allow for consumers’ negative responses to higher taxes. Supply side economics in reverse, as it were. With a nearly one percent increase in the cost of most goods, people bought less, or increasingly shopped out of state. The result was that net revenue losses were ten pecent more than expected.
Of course, any tax cut—even if by accident—is a good idea. Sadly, this was merely a reduction in a tax hike, but it was better than nothing. Truly, an “error of enchantment.”
Too bad we don’t have more doubting Thomases on the Supreme Court. Here is a portion of Justice Clarence Thomas’s dissent:
“Respondents Diane Monson and Angel Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything and the Federal Government is no longer one of limited and enumerated powers.”
The Commerce Clause has enabled activist judges to make up the rules as we go along. So much for the Constitution.
See more thoughtful discussion here.
Ethanol’s advocates have long argued that increasing the amount used in
gasoline would be a boon to the economy, reduce our dependence on
foreign oil and improve air quality.
Yet, more than two decades and tens of billions of dollars in subsidies,
tax credits and fuel mandates have done little other than enrich the
agribusinesses that produce ethanol, says H. Sterling Burnett, a senior
fellow with the National Center for Policy Analysis.
Indeed, the economic impact of ethanol subsidies is negative. One report
by the U.S. Agriculture department determined that every $1 spent
subsidizing ethanol costs consumers more than $4.
There are several reasons for this, says Burnett:
o Every bushel of corn devoted to ethanol production leaves less
for human consumption and animal feed — thus people pay more for
corn, beef, poultry and pork than they would absent the
o And prices for other goods are also higher since farmers, in
pursuit of lucrative subsidies, devote more acreage to corn
rather than other, unsubsidized, produce.
o Additionally, the costs of growing, distilling and blending
ethanol into gasoline makes it cost 51 cents more per gallon to
produce than regular gasoline.
The clamor for increased use of ethanol also raises the specter of the
current problems surrounding the use of MTBE, the fuel additive that oil
producers began blending with gasoline in the mid-1990s to meet stricter
clean-air standards. Although not carcinogenic in humans, MTBE has
caused huge problems recently because it leaks from storage tanks and
contaminates local water supplies.
Absent federal subsidies and mandates, ethanol would likely disappear
from the marketplace. Like so much of the pork Congress bestows upon
special interests, ethanol is bad for the economy, consumers and the
environment, says Burnett.
Source: H. Sterling Burnett, “Ethanol benefits makers, legislators who
support their cause,” Billings Gazette, June 5, 2005.
Chuck Muth expresses my sentiments better than I ever could:
“For all its purported virtues, the Bush/Kennedy ‘No Child Left Behind’ law is perhaps the biggest threat to state sovereignty this side of the Rio Bravo today. The federal NCLB law tells states how they MUST run their re-education camps…er, public schools…or else.
Up ’til now that “or else” has been a threatened cut-off of federal funds to states who refuse to ‘get with the program.’ But now that Utah has gone on record as telling Uncle Sam to take his money and shove it, the feds are getting significantly more cranky. In fact, Nina Rees from the Education Department announced at a Cato Institute forum on Tuesday that, ‘We’re going to take a hard line against states that blatantly violate the law.’
So when the carrot doesn’t work, the feds are more than happy to whip out the ol’ stick to compel state compliance with the diktats of the omnipotent federal government. 10th Amendment supporters should be outraged. More states should follow Utah’s lead. Congress should repeal NCLB. And the federal Department of Education ought to be eliminated, just as Republicans proposed back in 1994…BEFORE they actually became the party of power.”
Walter Williams explains why you should not worry about the trade deficit.
I wish politicians were as economically literate as Professor Williams. But they are not:
“Some politicians gripe about all the U.S. debt held by foreigners. Only a politician can have that kind of audacity. Guess who’s creating the debt instruments that foreigners hold? If you said it’s our profligate Congress, go to the head of the class. If foreigners didn’t purchase so much of our debt, we’d be worse off in terms of higher inflation and interest rates.”