Coyote Blog

This is really interesting, and I suppose not surprisingly, quite under-reported.  It appears the blue state model is even worse than we thought for combating poverty.  Not only does it suppress economic growth, but it also tends to raise prices of housing and other necesities

The familiar official [poverty] measure is more than 50 years old, and is showing its age. It has two huge shortcomings: it considers the cost of living to be the same in the 48 contiguous states (a patently ridiculous proposition when considering that the average rent in San Francisco in the first quarter of 2015 was $3,458 vs. $867 in Houston), and it doesn’t account for in-kind benefits, such as Section Eight housing subsidies and Electronic Benefit Transfer cards (food stamps).

Thus, the federal government’s main poverty gauge undercounts material poverty levels in high-cost states such as California, New York, and Hawaii, while over-counting true poverty in much of the low-cost Midwest and South.

Responding to concerns from Congress, advocates for the poor, and academics, some 20 years ago the U.S. Census Bureau began developing an alternative measure of poverty to address weaknesses in the official measure. The Census Bureau’s new, more comprehensive Supplemental Poverty Measure (SPM) is the result....

The authors use this data to compare Texas and California

	Official Poverty Measure Rate, 2011-2013	Supplemental Poverty Measure (SPM) Rate, 2011-2013
California	16.0%	23.4%
Texas	17.2%	15.9%
National Average	14.9%	15.9%

The share of minorities in California and Texas is about 50 percent higher than in the nation as a whole, triple that of Wisconsin or Minnesota, more than quadruple that of Iowa, and about six-and-a-half times that of New Hampshire. Thus, it is an illuminating measure the wellbeing of America’s four largest racial or ethnic groups in the two most-populous states that one-fifth of Americans call home. The table below shows the average SPM for four years, 2010 to 2013, for these four groups.

	White, non-Hispanic SPM Rate, 2010-13	Black, non-Hispanic SPM Rate, 2010-13	Hispanic SPM Rate, 2010-13	Asian SPM Rate,2010-13
California	14.8%	30.1%	33.7%	17.9%
Texas	9.7%	19.9%	22.7%	14.1%
National Average	10.8%	24.7%	27.7%	17.1%

I guess its time for a disparate impact suit against California!

In a related bit of data, here is the real value of $100 in each state (higher is better) which is sort of the inverse of cost of living.  States with higher costs of living will have lower numbers

Leading to this interesting outcome:

I am on the road for a week long trip combining business (visits to some parks the government wants us to manage), college interviews, and baseball camps (the latter two for my son).  I will end up staying in or driving through Virginia, W. Virginia, Maryland, Pennsylvania, New Jersey, New York, Massachusetts, New Hampshire, Maine, Rhode Island, and Connecticut.

I was pretty bummed out that Gary Johnson is not to be included in the debate slate for New Hampshire.   I am not one (most definitely not one) to invest all my hopes and dreams in a political candidate, but I really like Gary Johnson and thought he could bring a new libertarian voice (in addition to Ron Paul's) to Republican discussions dominated by statists like Romney and Huckabee.   I have met him once and listening talk about things like the costs of the war on drugs and immigration is just so refreshing from a politician of any sort, particularly a Republican.    And in contrast to Ron Paul, who comes off as a bit wacky (and wonky), Johnson does it all in a very non-threatening way.   Many people in this country self-identify as fiscally conservative and socially liberal -- this is their guy.  They just haven't heard of him yet.

As an ex-governor well respected by independents, he strikes me as infinitely more worthy of a debate spot than, say, Donald Trump, who did receive an invitation.  I wrote a whole column on the importance of being previously famous, rather than experienced, as a qualifier for office nowadays.

From the Thin Green Line, an environmental blog I often criticize for it incredible credulity in accepting bizarre figures, comes this whopper:

Is Ganja green? TGL has covered the issue before, but a new study undertaken by a Lawrence Livermore scientist gives us some real numbers (H/T New York Times Green)....

In California, indoor cultivation is responsible for a whopping 8 percent of household electricity usage. But, California grows only about a fifth of the nation's bong hits and much of what we grow goes to out-of-state consumers....

The study, written by Evan Mills on his own (non-government-funded) time, makes the case for legalizing and regulating grow operations, suggesting that if marijuana didn't have to be grown in secret and indoors, efficiency could be improved by as much as 75 percent.

Readers of this blog will know that I am all for marijuana legalization.  But how can anyone accept this figure.  Eight percent?  Really?   This would be larger than the total residential electricity use of Vermont and New Hampshire combined, solely for pot growing in California.  I am calling BS.

There are very few problems that can't be traced to information and incentives.  I thought of this when Tyler Cowen discusses an attempt to improve health care costs with better information:

The health care reform bill before the U.S. Senate would require hospitals to publicize their standard charges for services, but New Hampshire and Maine have gone much further in trying to make health care costs more transparent to consumers.

New Hampshire and Maine are the only states with Web sites that let consumers compare costs based on insurance claims paid there.

In New Hampshire, the price variation across providers hasn't lessened since the Web site went live in 2007.

The problem is that this is all useless if individuals have not particular incentive to shop.  If I were on Unemployment, would I bother to check a web site to see which unemployment offices had the lowest operating costs and go there to get my check?  No way, what incentive would I have to do so?  I am going to the closest one, or the one with the fewest lines.  Ditto with most people and health care:

Of course, the new health care bill will only make this worse.   Those of us who actually have an incentive to shop, either with high deductible policies and/or HSA's will see our policies banned.   The new health care bill has done nothing but attempt to drive this line all the way to zero.

Update: IBD publishes on the exact same topic (I beat them by 12 hours).

Patients have little direct connection in paying for their care. Their role has fallen significantly. Meanwhile, the government's involvement has grown, as has that of the insurance industry.Because so many Americans rely on an insurance policy or a government program to pay their health care bills, the internal governors that temper the rest of their purchases are turned off. When a visit to the doctor's office or a diagnostic test costs them a mere $10 or $20 co-payment out of pocket "” or there is no charge at all "” cost has little impact on their decision to see a doctor.

"By not knowing the full costs associated with health care, consumers demand more and 'overuse' it," Kenneth E. Thorpe explained a few years back in Health Affairs.

Americans would be more judicious in seeking health care "” they would self-ration "” if the right incentives were in place. An effective way to cut overuse and bring down costs would be to encourage through public policy the use of health savings accounts. If consumers used HSAs to pay the full amount for medical care at the point of service rather than letting employer-funded insurance or a government program pay the bills, the demand would fall.

The Democrats' health care legislation, however, puts more distance between Americans and the payment process and promotes dependence on government. That will only drive down consumers' out-of-pocket expenses even further and force overall health care spending upward. Under such a regime, the system will be worse off than it is now.

Carlos Miller has an interesting story from New Hampshire, where a man was arrested for bringing a camera into a courtroom, and then has been detained for weeks in prison because he refuses to tell his captors his name.  By the way, filming and picture taking is explicitly allowed in courts by New Hampshire law and past state supreme court rulings.  The judge who presides over the court in question began banning cameras from court, despite having no legal right to do so, last year after he was personally embarrassed by a YouTube video of his courtroom temper tantrum.  The state has yet to point to the precise statute that requires courtroom visitors to provide their names on demand.  One would think the worst that could happen is to be told that revealing one's name is a security requirement and that those refusing to do so are barred entry.  But 22 days in jail?

Also yet to occur is any arrest or prison sentence for a judge who flaunts the very state law he is sworn to uphold.

Via TJIC:

In his commencement speech at Southern New Hampshire University
this morning, Obama - like most commencement speakers - delivered a
call to public service; unlike many, however, he also warned against
the charms of doing what most college graduates set out to do: Make
money.

"In a few minutes, you can take your diploma, walk off this
stage and go chasing after the big house and the large salary and the
nice suits and all the other things that our money culture says you
should buy.

"But I hope you don't. Focusing your life solely on making a
buck shows a poverty of ambition. It asks too little of yourself. And
it will leave you unfulfilled," he told the crowd.

This statement would certainly be true in 18th century European monarchies, in Soviet Russia, in third world Kleptocracies, in Cuba, and in Chavez's Venezuela.  Because making money in these environments is a zero-sum game, and the only way to get rich is to loot it from some poor schmuck who is actually creating the value.

But here in America, we (mostly) have this cool system called capitalism.  In capitalism, all interactions are based on the voluntary self-interest of the parties involved.  This means that one only can "make a buck" by doing something or making something that is of value to another person.  And only by successfully serving the needs of a LOT of people does one get really rich. 

TJIC's conclusion is wonderful:

Far better that they spend their life

• majoring in political "science"
• working for a meaningless non-profit
• trying to register more people to vote so that the negative-sum game of politics can have more credibility
• helping political partisans redrawn electoral district boundaries in the same negative-sum game of politics
• being a senator, pushing for more regulations and tax increases

That, clearly, is a fulfilling life.

Let the suckers create value.

The best and brightest should just steal it, and move it around
(while taking some portion of it for themselves, and destroying another
portion of it).

Beware of people who try to demonstrate how much they "care" using other peoples' money.

Note that this is the newest in my series of "real-world" small business issues.  Other posts in this series include Buying a Small Business and Working with the Department of Labor

One of the things I did not mention in my series on buying a small business was the notion of complexity.  Our business manages over 175 sites with 500 seasonal employees in 10 states.  I have friends who own businesses that have the same sales, and more profit, from working alone from their home.  As I often tell people, I love what I do, working in recreation and spending most of my time in National and State Parks, but it is overly complex for the money we make.

The one advantage of this is that, despite being a small business, I get to observe business practices in many parts of the country.  And one business-related practice that varies tremendously from state to state is sales taxes.  (By the way, before I bought this business, I was a strong Federalist.  Putting most regulatory power in the states slows government encroachment.  It also limits anti-business regulation, because states know that such unilateral regulation will just chase employment across state lines, as California has found out.  However, having to deal with 10 different tax and regulatory regimes every day is causing me to revisit Federalism a bit).

Anyway, based on this experience, I will dedicate the rest of this post to my observations of the good and bad of state sales tax systems.

Continue reading ‘The Good, the Bad, and the Ugly of State Sales Tax Systems’ »