Coyote Blog

From the National Industrial Recovery Act of 1933, eventually struck down by the Supreme Court:

Whenever the President shall find that destructive wage or price cutting or other activities contrary to the policy of this title are being practiced in any trade or industry or any subdivision thereof, and, after such public notice and hearing as he shall specify, shall find it essential to license business enterprises in order to make effective a code of fair competition or an agreement under this title or otherwise to effectuate the policy of this title, and shall publicly so announce, no person shall, after a date fixed in such announcement, engage in or carry on any business, in or affecting interstate or foreign commerce, specified in such announcement, unless he shall have first obtained a license issued pursuant to such regulations as the President shall prescribe. The President may suspend or revoke any such license, after due notice and opportunity for hear ing, for violations of the terms or conditions thereof. Any order of the President suspending or revoking any such license shall be final if in accordance with law.

With this law, all commerce was to be conducted only at the President's pleasure. The law also instituted code authorities, modeled on Mussolini's economic system, that would set prices, wages, production quotas and nearly every other business practice in an industry. To some extent, I would argue that the recent health care bill is the first modern American code authority.

A while back in my Forbes column on the incentives faces by government workers, I wrote

People sometimes say that problems involving difficult trade-offs are hard for government bureaucracies to handle. This isn't true--most of these trade-offs are in fact easy for them to handle, because the outcome is as predetermined as a river's path through a well-worn valley. The problem is having these trade-offs made well.

Most of the tough decisions in the Gulf involve violating a rule or standard practice for which an agency and its staff have specific accountability for compliance. This is balanced against the opportunity to gain some benefit that is outside of the agency's responsibility and for which it will not be rewarded or punished. An example would be the administration's ban, at EPA insistence, of what BP ( BP - news - people ) claims is the most effective oil dispersant because it is potentially toxic. Does this dispersant's toxicity create more or less harm than the lost opportunity of preventing a lot of oil from entering coastal wetlands? The answer doesn't matter, because there was only one way the EPA was ever going to rule on this--their employees are easily able to duck blame for any damage from the spill, but they would be right on the firing line if even a single living creature was provably harmed by their allowing the dispersant to be utilized. Fear of blame for consequences of an action outweigh the opportunity costs of inaction every single time.

We see this again in this video, where school teachers and nurses in California argue that it is better to allow kids to die from their inaction than to take an action (e.g. dispense a life-saving medication)  that might have harmful consequences.

My column for Forbes is up this week, and yet again I address issues related to the stimulus.  This time, rather than questioning the Keynesian multiplier, I observe that Congress has passed several pieces of legislation which act as "anti-stimulus" whose magnitudes dwarf that of any fiscal stimulus programs, even at multipliers greater than one.

Larger corporations are going to face different economics, but they too seem to be anticipating higher future costs from this legislation. For example, while they may not face the penalty for having no health care plan, they will face higher Medicare taxes, taxes on overly rich plans, and increases in health care premiums. If the average business is anticipating a 5% increase in payroll-related expenses, and given that total private payrolls in the U.S. are around $6 trillion, this implies that businesses may be planning for $3 trillion of health care anti-stimulus over the next 10 years.

Similar scale numbers can be found for the overall effects of cap-and-trade. Perhaps the best estimate we have is the CBO scoring of the Kerry-Lieberman bill, which estimated that payments for carbon allowances over the first ten years would total $751 billion. Assuming that the costs of most of these allowances are passed on to consumers, then this bill represents another three quarters of a trillion in anti-stimulus. In addition, expiration of the Bush tax cuts, card check, and a number of new regulatory initiatives all will drive this anti-stimulus expectation higher. Is it any wonder, then, that the private sector yawns when the Congress rushes back from vacation to pass a $26 billion jobs bill?

Did you ever notice that when government programs are labeled "popular," it is always by their beneficiaries, e.g.

For the second time in two years, the state universities are weighing whether to limit or even get rid of the popular AIMS scholarship, which waives tuition and fees for thousands of college students.

Since most similar government programs consist of giving people something of value for free or at least for a below-market price, aren't they always going to be popular with their recipients?  Wheat subsidies are popular with wheat farmers, light rail subsidies are popular with those who ride it, cash-for-clunkers was popular with folks who got 2-3x blue book value for their trade-ins, and education subsidies are popular with the students and parents who get them.  In this usage, then, I would argue that the word "popular" in the paragraph above is entirely tautological and should therefore be eliminated from standard usage.  The only meaningful definition of "popular" vis a vis a public program should be "popular with those who fund it."

On this blog, over the last couple of months, I have presented a pretty clear set of facts showing that, with the possible exception of some rural border regions beset by drug gangs, the vast majority of Arizona has experienced rapidly falling crime rates, in fact crime rates falling much faster than in the rest of the country.  The crime rates of even our key border towns has remained flat.

What to make, then, of these statements by our governor.

Gov. Jan Brewer on Friday reiterated her assertion that the majority of illegal immigrants are coming to the United States for reasons other than work, saying most are committing crimes and being used as drug mules by the cartels.

Brewer's remarks are an expansion of comments she made last week during a televised debate between the four Republican gubernatorial candidates....

In the debate, Jette [a candidate running against Brewer] said that most people who cross illegally into Arizona are "just trying to feed their families." Brewer disputed that, saying, "They're coming here, and they're bringing drugs.

And they're doing drop houses, and they're extorting people and they're terrorizing the families." The governor, who has become a national media figure since signing Senate Bill 1070 into law on April 23, went further on Friday, saying that the "majority of the illegal trespassers that are coming (into) the state of Arizona are under the direction and control of organized drug cartels."

When pressed, Brewer said that even those who do come to the United States looking for work are often ensnared by the cartels.

"They are accosted, and they become subjects of the drug cartels."

Estimates are that there are 8-12 million illegal immigrants in the US (Brewer's hispano-phobic allies would put the number much higher).  They are mostly all drug dealers and criminals?  Really?

I try really hard not to try to guess at what motivates folks I disagree with by assuming they are driven by something dark and evil, but how else in this case can one describe opinions like this so contrary to facts as anything other than prejudice against a particular ethnic group?

Just look at the actions of our governor and folks like Joe Arpaio.  If it really were the case that illegal immigrants are all criminals uninterested in legal work, then why is so much recent legislation aimed at business owners that hire illegal immigrants?  Or at day labor centers?  Why are all of Sheriff Joe's immigration sweeps raiding lawful businesses rather than, say, crack houses?  After all, if illegal immigrants are all just drug dealers not looking for real work, why spend so much time looking for them, uh, doing real work?

Postscript: If Brewer is in fact correct, then there is a dead easy solution for the illegal immigration problem -- legalize drugs.  She and I both agree that the worst criminal elements of illegal immigrants would be much less of a problem without the illegal drug trade.  The only difference is that I think that segment makes up less than 1% of the population of illegal immigrants, and she thinks its everyone.

Further, to the extent that some illegal immigrants just trying to support their families are "ensnared" by drug cartels (whatever that means) it is because of their immigration status.  Make them legal residents of the country, and no one has any particular leverage over them.

Note to Commenters: Many, many of you have disagreed with me vociferously on immigration.  Please, I would love to see reasoned comments defending Brewer, particularly with data.  In particular, please use the laws of supply and demand to explain how the majority of 8-12 million people are able to earn a living in the illegal drug trade in the southwest.  To help you out, there are about 6.6 million people in Arizona.  Based on national rates of 8% of over age 12 being users, about 500,000 of those are illegal drug users.  One estimate is that there are 500,000 illegal immigrants in Arizona.

Update: Are she and I living in the same state?

Arizona GOP Gov. Jan Brewer claimed recently that law enforcement has been finding beheaded bodies in the desert "” but local agencies say they've never encountered such a case.

"Our law enforcement agencies have found bodies in the desert either buried or just lying out there that have been beheaded," Brewer said Sunday, suggesting that the beheadings were part of increased violence along the border.

But medical examiners from six of Arizona's counties "” four of which border Mexico "” tell the Arizona Guardian that they've never encountered an immigration-related crime in which the victim's head was cut off.

I was thinking today, what must the families of the 11 people killed on the Deepwater Horizon be thinking?  Their losses are never mentioned in any news reports I see.  Its all about getting oil on the ducks.

Sure, I am pissed off about the enormous damage to the Gulf Coast as well.  But I got to thinking, were I the engineer that made the wrong risk/safety decisions here, what would I feel most guilty about?  I was put in that position for years in a refinery, constantly asked, "is this safe" or "can we keep running" or "do we need to shut down" or "is that vibration a problem?"  These are difficult, because in the real-world of engineering, things are not ever perfectly safe.  But never-the-less, if I had made the wrong call here, I think I would be feeling a lot worse about the 11 dead people than a number of dead fish and birds.  Perhaps my priorities are out of whack with the times.

By the way, TJIC has a great post on risk and cost in the real world of engineering.  I agree with his thoughts 100% from my experience as a troubleshooter / engineer in the field making just these decisions.

Look, we all trade off safety in order to save time and expense.

Do you put on your seat belt when moving your car from one point in the driveway to another?

Do you buy the car that costs twice as much, because it's got a 1% increase in crash survivability?

Did you pay $40k to get industrial fire sprinklers installed in your house?

Do you have a home defibrillation machine?

There is nothing wrong, in the abstract, with trading off safety in order to save time and expense.

The question is whether BP did this to a level that constitutes "gross negligence".

Opponents of free trade will often say publicly that they are all for free trade but it must be "fair," which they generally would define as balanced between imports and exports.  This is a dodge, because they know many of our trading partners are not going to open up trade to be entirely free so they can use that inevitability as an excuse not to remove American protectionist barriers.

But trade does not need to be balanced to create wealth, and in fact it is not just exports that provide a boost to real incomes.  Daniel Ikenson at Cato has these two charts comparing the CPI for items that face competition from imports and those that don't:

See his article for more discussion.

This is also related to something I read about a while back, that we may be underestimating income gains among the lower income quartiles in this country because we adjust to real wages based on an average inflation rate.  The argument was that the inflation rate for the poor has been lower  (the Wal-Mart effect) than the inflation rate for the rich (prices at the Four Seasons keep going up).  One estimate put the difference in inflation rates as high as 6 percentage points, in part because the poor proportionally consume a lot of goods that are imported while the rich consume proportionally a lot of services that are produced domestically with high cost labor.

Via Reason, from the man Obama personally appointed to lead the Deficit Commision

"America needs a 21st century economic plan because we now know the market-worshipping, privatizing, de-regulating, dehumanizing American financial plan has failed and should never be revived, worshipping the market again," Stern said in remarks at the annual conference of the liberal activist group Campaign for America's Future in Washington on Monday."It has failed America and everyone that works here," Stern said.

Stern said the changes that Obama and Democrats in Congress have made are nothing short of a "revolution" that will move the American economy from national to international.

"This not our father's or our grandfather's economy," Stern said. "We're as far today from the New Deal as the New Deal was from the Civil War. And we cannot drive into the future looking in the rear view mirror."

He said the progressive movement must build on the past and look to the future as the economy is transformed "from a manufacturing base, to a service, finance, knowledge, green, Internet, and bio-science economy."

"This revolution's going to only take 30 years," Stern said. "No single generation of people have ever witnessed this much change in a single lifetime. [...] And as we've witnessed now in the absence of a simple and realistic way forward, people "“ even us "“ sometimes resist the future or try to turn back the clock to days that are now long gone."

I am not sure I have ever heard anyone sound more like a scabby beauracrat in Atlas Shrugged.  Can you believe this dweeb along with Barrack and the gang who can't shoot straight taking credit for the transformatoin of the economy?  As if these guys have anything to do with the rise of new industries and technologies, except to make their birth and growth more difficult through strangling regulation and taxes.

The last paragraph about progressives and change is an interesting one in the context of this old post of mine, where I discuss how progressives most hate free markets for their constant change and unpredictability. Here is an excerpt:

Beyond just the concept of individual decision-making, progressives are hugely uncomfortable with capitalism.  Ironically, though progressives want to posture as being "dynamic", the fact is that capitalism is in fact too dynamic for them.  Industries rise and fall, jobs are won and lost, recessions give way to booms.  Progressives want comfort and certainty.  They want to lock things down the way they are. They want to know that such and such job will be there tomorrow and next decade, and will always pay at least X amount. ...

Progressive elements in this country have always tried to freeze commerce, to lock this country's economy down in its then-current patterns.  Progressives in the late 19th century were terrified the American economy was shifting from agriculture to industry.  They wanted to stop this, to cement in place patterns where 80-90% of Americans worked on farms.  I, for one, am glad they failed, since for all of the soft glow we have in this country around our description of the family farmer, farming was and can still be a brutal, dawn to dusk endeavor that never really rewards the work people put into it.

This story of progressives trying to stop history has continued to repeat itself through the generations.  In the seventies and eighties, progressives tried to maintain the traditional dominance of heavy industry like steel and automotive, and to prevent the shift of these industries overseas in favor of more service-oriented industries.  Just like the passing of agriculture to industry a century ago inflamed progressives, so too does the current passing of heavy industry to services.

In fact, here is a sure fire test for a progressive.  If given a choice between two worlds:

1. A capitalist society where the overall levels of wealth and technology continue to increase, though in a pattern that is dynamic, chaotic, generally unpredictable, and whose rewards are unevenly distributed, or"¦
2. A "progressive" society where everyone is poorer, but income is generally more evenly distributed.  In this society, jobs and pay and industries change only very slowly, and people have good assurances that they will continue to have what they have today, with little downside but also with very little upside.

Progressives will choose #2.  Even if it means everyone is poorer.  Even if it cuts off any future improvements we might gain in technology or wealth or lifespan or whatever.  They want to take what we have today, divide it up more equally, and then live to eternity with just that.   Progressives want #2 today, and they wanted it just as much in 1900 (just think about if they had been successful "” as just one example, if you are over 44, you would have a 50/50 chance of being dead now).

Update: What does the line about shifting form a national to international economy mean?  It must be some kind of progressive code phrase that does not mean what it sounds like, since most progressives and this administration tend to be opposed to free trade and have a strong tendency towards protectionism.  After all, these are the same guys that sympathize with the anti-globalization rioters at various G8 conferences.

A reader sent me this interesting story about immigration within Cuba:

"I was caught because I was an illegal," explained a bicycle taxi driver as he gripped the rusted blue handle-bars of his vehicle in Havana's Central Park. "And because I'd been here several times before, I was deported back."

But the driver working his trade in the capital city did not arrive in Cuba from another country. Instead he is among the thousands who have come from rural provinces in search of work and a place to live - but who have been deported back because of "Decree 217."

The 1997 law restricts rural migration to Havana, making this taxi driver an illegal resident in his own capital city.

"If you're illegal you can't be here in Havana," said the driver, originally from Cuba's eastern Holguin province. "You don't have an address here in Havana."...

Economic conditions were generally worse at the eastern end of the island, according to Cuba analyst Edward Gonzalez, a professor emeritus at the University of California Los Angeles.

"[The eastern region] has always been the less affluent, impoverished part of the island," he said, "heavily dependent upon agriculture, less on tourism, and also happens to be more black and mulatto."

The effort to keep migrants out and prevent overcrowding in Havana may have resulted in police discrimination against darker-skinned Cubans presumed more likely to be illegal, Gonzalez said.

I get tired of the perception that labor law is universally beneficial to people selling their labor, and that these laws are solely intended to reduce the ability of rapacious employers to exploit powerless workers.  It confuses people to no end when I say that minimum wage laws prevent workers from selling their labor for less than the minimum wage, and is therefore a restriction on every worker's freedom.  Supporters of the law say, that's can't be right, it simply must be helping all workers.

But I think anyone who has gone through the experience lately of trying to help their teen get a summer job knows this is not the case.  My son would gladly work for free or below minimum wage at any number of jobs to get experience.  Unfortunately, he must be paid the same minimum wage as someone with years of experience, and many large corporate chains have simply banned hiring of kids under 18 to avoid liability and labor law hassles associated with hiring teens.  The result is an astronomical unemployment rate for teens.

So here is another example, with the Feds cracking down on unpaid internships.  This is simply crazy.  The government has got to realize that there are useful and valuable things one can trade his labor for (e.g. experience, training) that can't be measured in money.

Of course, you know who is the greatest violator of these internship rules?  The organization that requires the longest hours for the least pay (well under minimum wage) for a huge portion of its staff?  Why, its the US Congress, but of course they exempt themselves from these laws.

Update:  From a commenter on Stossel's blog:

Maggie Hanson:

I have an unemployed friend trying to land work in a new field where she has no experience. She's up against experienced applicants. I suggested she offer her services for free as an intern for 3 months in exchange for learning on the job and a letter of recommendation. She told me she didn't think that was legal. I'm appalled to learn she is right! Yet how else is she going to get experience? She can't afford school. Internships are a free education.

My health insurance policy, which is an actual "insurance" policy that insures me against catastrophic medical costs but leaves me with responsibility for day to day expenses, just became illegal.   Over the last couple of years, I have documented my learning curve as, for the first time, I actually had an incentive to shop around for medical care, or to push back on doctors when I thought they are calling for too many tests and procedures.  I have learned a lot about saving money, but all of this education is now for naught, as I will now be required to buy a pre-paid medical policy that leaves very little of the decision-making to my family and provides zero incentives for me to be cost conscious.  Apparently, the operators of the US Postal Service and US military procurement felt they were better qualified to manage these cost/value trade-offs than I am.

Here, by the way, is my favorite quote from today, from Nancy Pelosi (who else):

House Speaker Nancy Pelosi praised the health care legislation for its ability to "unleash tremendous entrepreneurial power into our economy."

Only if one considers rent-seeking to be entrepreneurship.  There will certainly be a mad rush of special interests to Congress to get their pet procedure or drug included in national must-cover rules.  I discussed this rent-seeking process, which used to have to proceed inefficiently state by state but now can be achieved single-source, here.   Naturopath coverage, anyone? (already required under coverage rules in 4 states).   Already a lot of so-called medical research is really just thinly disguised pleas to have a certain procedure in must-cover rules.  For example, I wrote about one study:

In other words, the study surveyed a bunch of cosmetic surgeons.  They were asked "should an expensive procedure you provide be covered by insurance."  They all answered "Hell YES!"  Anyone want to bet whether the funding for the study came from the company that makes the laser equipment?

I love it when Mark Perry rewrites trade stories

"U.S. Steel Unions Score American Consumers Dealt Yet Another Huge Victory Loss As China They Are Slammed With New Steel Tariffs Taxes"

One has to envy pity the insignificant amount of pull U.S. steel workers consumers and steel-using companies have. The majority of U.S.-China trade agitation is caused by imposes signifcant costs on this one relatively tiny huge part of the U.S. economy.

This was the trick behind cap-and-trade: Politicians know that the only real way to reduce energy usage is to raise its price much higher.  They also know that doing so would lose them their jobs, so instead of passing a simple carbon tax, they created a cap-and-trade system that would force private companies to be the bad guys.  They then try to hide this basic fact with a lot of distracting arm-waving about green jobs and wind power.

The new Obama health proposal, which looks a heck of a lot like the old Obama health proposal (same basic features, same lack of detail) plays a similar game.  Do you remember all that Obama talk about mysterious brilliant ways to reduce health care costs?  Where did they all go?  It turns out that the only real idea they had for reducing health care costs was to deny people care.  They just try to hide this with a lot of distracting arm-waving about gold-plated insurance and electronic medical records.

This denial of service is unpopular.  In fact, it is a great (and sad) irony that Obama is trying to harness anger at insurance companies that is caused mainly by denial of coverage for certain procedures with a system that will deny coverage for even more procedures.  Just like carbon taxes, Obama has fixed on a scheme where once again he sets up private enterprises to be the bad guys to give himself some sort of quasi-plausible deniability.  Obama is proposing artificial price caps on insurance premiums.  The inevitable result:

For example, as I have written elsewhere, artificially limiting premium growth allows the government to curtail spending while leaving the dirty work of withholding medical care to private insurers: "Premium caps, which Massachusetts governor Deval Patrick is currently threatening to impose, force private insurers to manage care more tightly "” i.e., to deny coverage for more services."  No doubt the Obama administration would lay the blame for coverage denials on private insurers and claim that such denials demonstrate the need for a so-called "public option."

Alan Reynolds has more.  And Peter Suderman.   And Phillip Klein points to an interesting anti-progressive angle:

Like the Senate bill, Obama's proposal doesn't include a strict employer mandate, but it does penalize businesses who do not offer insurance to workers who then get their insurance through the exchange. The Obama proposal provides more subsidies to small businesses, and helps mid-sized businesses by exempting the first 30 workers when calculating the tax, but large employers who do not offer coverage would face higher penalties under the Obama proposal. In the end, the tax will make it more expensive for large employers to hire lower income workers (who qualify for government subsidies), and thus exacerbate unemployment.

My read is that this all takes a hodge-podge mess and, uh, makes it even  hodgier-podgier.

By the way, my take is that there is only one health care cost reduction proposal worth talking about, and that is making individuals more responsible for their own health care costs, not less, thus creating incentives to do the thing we do for every other purchase we make:  shop around.

I find it pretty hilarious that folks on the left suddenly feel the US is ungovernable, largely because they have not been able to pass a couple of complicated and risky legislative initiatives.  Was the US ungovernable when Bush couldn't pass Social Security reform?   It seems that showing leadership on a national scale with diverse interests is a tad harder than running a grad school policy round-table.  Oddly, the left seems befuddled by actual diversity of opinion, rather than the faux diversity with lock-stepped beliefs they built in academia and among themselves.

I don't read Real Clear Politics much but I thought Jay Cost makes a good point:

Let's acknowledge that governing the United States of America is an extremely difficult task. Intentionally so. When designing our system, the Founders were faced with a dilemma. How to empower a vigorous government without endangering liberty or true republicanism? On the one hand, George III's government was effective at satisfying the will of the sovereign, but that will had become tyrannical. On the other hand, the Articles of Confederation acknowledged the rights of the states, but so much so that the federal government was incapable of solving basic problems.

The solution the country ultimately settled on had five important features: checks and balances so that the branches would police one another; a large republic so that majority sentiment was fleeting and not intensely felt; a Senate where the states would be equal; enumerated congressional powers to limit the scope of governmental authority; and the Bill of Rights to offer extra protection against the government.

The end result was a government that is powerful, but not infinitely so. Additionally, it is schizophrenic. It can do great things when it is of a single mind - but quite often it is not of one mind. So, to govern, our leaders need to build a broad consensus. When there is no such consensus, the most likely outcome is that the government will do nothing.

The President's two major initiatives - cap-and-trade and health care - have failed because there was not a broad consensus to enact them. Our system is heavily biased against such proposals. That's a good thing.

One of the roles of the President is to bring some adult supervision to his party in Congress.  Bush failed on this, allowing Republicans to run rampant in earmarking excess, and Obama has if anything been even worse on this dimension.  He routinely remains aloof from the legislative details (some would say he just got rolled by Nancy Pelosi) and then proceeds to speak as if the actual bill matches his grand words and promises when it is obvious to all that it does not.

Via the WSJ, on the Mortgage Banker's Association (MBA) being underwater on their real estate loan:

On Friday, CoStar Group Inc., a provider of commercial real estate data, announced that it had agreed to buy the MBA's 10-story headquarters building in Washington, D.C., for $41.3 million. The price is well below the $79 million the trade group says it paid for the glass-walled building in 2007, while it was still under construction. The price also falls short of  the $75 million of financing that the MBA received from a group of banks led by PNC Financial Services Group Inc. for the purchase.

John Courson, chief executive officer of the trade group, declined in an interview Saturday to say whether the MBA would pay off the full loan amount. "We're not going to discuss the financing," he said. A spokeswoman for the MBA added that the MBA has reached "an agreement with all relevant parties" regarding the outstanding amount on that loan but declined to provide any details.

...In an interview late last year, Mr. Courson said he believed mortgage borrowers should keep paying their loans even if that no longer seemed to be in their economic interest.  He said paying off a mortgage isn't only a matter of personal interest.  Defaults hurt neighborhoods by lowering property values, Mr. Courson said. "What about the message they will send to their family and their kids and their friends?" he asked.

If Obama really wanted to get small businesses to start investing again, he could announce that both cap-and-trade and the health care bill are dead-dead and will not be disinterred this year.   These two bills affect nearly 2/3 of our company's cost structure.  Since we have single digit margins, small changes in the wage and fuel cost lines can completely wipe out our profits.  Not knowing what 2/3 of our costs were going to look like into the future, we have been sitting on our hands.

Unfortunately, this may not be enough.  The third leg of the uncertainty stool is income taxes, and its seems likely that some huge increase almost has to be forthcoming given Congress's predilection for taxes and marked unwillingness to cut spending in any meaningful way.

Here is a very specific example.  We have an opportunity to invest about a half million dollars in a new operation in Texas.  Financing is available.  But in my evaluation spreadsheet, small changes in income tax rates combine with a potential 8% health care tax on wages and an unknown fuel tax increase to move the net present value by enormous amounts.  I am not going to risk a half million dollars on a 20-year investment when the government is considering so much legislation that will arbitrarily move the value of this investment.

This is why Obama's offer of small business financing is meaningless.   In the last decade, government sponsored cheap money lured people into housing "investments" that eventually went upside down.   Are they now luring small businesses into a new trap, encouraging them to take on debt, only to slam the door on them with future increases to their operating costs and taxes?

Via the Dallas Morning News:

A last-minute change in the federal health care bill ditched a proposed 5 percent tax on cosmetic medical procedures and replaced it with a 10 percent tax on indoor tanning services.

Goodbye Botox tax. Hello tan tax.

This seems really random.  Why should either of these businesses foot a special, disproportionate share of my health care bill?  Well, things that seem random to most of us make perfect sense in Congress.

The tan tax popped up in the health care bill last weekend after powerful medical lobbies "“ including the American Academy of Dermatology Association, American Medical Association, American Society of Plastic Surgeons and Botox-maker Allergan "“ persuaded Congress to remove a tax on cosmetic medical procedures and replace it with a 10 percent surcharge on indoor tanning services.

Lobbyists are very good at punching political hot-buttons.  Since they couldn't argue that botox is "for the children," and since it is generally used by rich white people they could not place the race or class card, they played the only card they had:

"Since 90 percent of cosmetic surgery patients are women, this would have been a very discriminatory tax," said White, who opposed the cosmetic surgery tax.

Technocrats want to believe, and perhaps honestly believe themselves, that care guidelines in the new Federal health care system will be science-based.  What possible basis do they have for thinking that?  We have 50 state laboratories, where states specify must-carry rules on procedures, and not a single one of these lists are science based -- they are loaded with special interest handouts.   I even show in this post how special interests give money to academia to produce studies whose entire conclusion is that certain procedures (performed by the special interest group funding the study) need to be in the minimum coverage laws.   The very first time out, when confronted with a science-based care recommendation (that women not receive breast cancer screening until after 50), the Congress specifically overrode it in the bill under a firestorm of public outcry.

But maybe the dermatologist guys are really looking after us?  After all:

The American Academy of Dermatology warns of significant health risks caused by indoor tanning.

But, as it turns out, it only sees health risks in the use of ultra-violet light by practitioners who are not members of their trade group.  I have bolded the key passage that gives away the game.

Indoor tanning industry groups note that dermatologists use tanning equipment in their offices for cosmetic skin conditions, such as eczema and psoriasis, in phototherapy treatments that cost up to $100 per visit billed to health insurance companies. In contrast, indoor tanning salons cost as little as $6 to $20 per session.

The tan tax would exempt phototherapy services performed by a licensed medical professional.

"This is like Coke being allowed to lobby the government to tax Pepsi, but that Coke be allowed to sell the same product and not be taxed for it," International Smart Tan Network Vice President Joseph Levy said in a statement. "It's unbelievable."

Is there any difference between Hugo Chavez and Barack Obama in terms of how they approach the auto industry?  "Make the kind of cars I thing you should, or the government will take you over."

Mr. Chavez said his socialist government is going to apply strict quotas regarding the number and types of vehicles auto makers can produce. The president also ordered his trade minister, Eduardo Saman, to inspect the Toyota plant, saying it may not be making enough "rustic vehicles," a style of all-terrain vehicle that is much-needed in Venezuela's countryside, where they are often converted into minibuses.

"They'll have to fulfill [the quotas], and if not, they can get out," Mr. Chavez said during a televised address. "We'll bring in another company."

He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it. "We'll take it, we'll expropriate it, we'll pay them what it's worth and immediately call on the Chinese," Mr. Chavez said. Chinese companies, he said, are willing to make vehicles made for the countryside.

It seems like Venezuelan workers want the same deal Obama gave the UAW:

Venezuela's auto sector is in tatters amid recurring labor problems that have led to a lack of productivity. Analysts say many auto workers hope their company is nationalized so they can become de facto government workers and enjoy the extra job security that comes with that status.

By the way, this seems like a suckers play -- please put more valuable stuff in your store window so when we break in there is more to steal:

Mr. Chavez said late Wednesday the Japanese auto maker needs to transfer more new technologies and manufacturing methods from headquarters to its local unit in Venezuela.

While Mr. Chavez directed most of his criticism at Toyota, he said other auto assemblers, including Fiat SpA and General Motors, are also guilty of not sharing technology from abroad with their Venezuelan units.

The left often seems to imply that the US government is too eager to shed blood to protect American industry overseas, but in point of fact American industry has had to live with the reality for decades that foreign governments often steal billions of dollars in American-owned assets with barely a peep being heard from the US government.  For example, there is really no such thing as a Saudi or Libyan or Venezuelan or even Mexican oil industry - those are just assets paid for and built by private Western concerns and then stolen by local governments.

James Hansen wrote an editorial supporting a revenue-neutral carbon tax, and while I don't really agree with all of his justifications or economics, I do agree with his ultimate conclusion --that such a tax would be fairer, more efficient, less growth-killing, and ultimately more effective than the Frankenstein mess of parts that makes up the current cap-and-trade bill.

To be fair, I have been on this point for a while, having advocated a carbon tax offset by a payroll tax reduction to make it revenue neutral for some time, including in my most recent film.  I don't think I have to tell my readers that I am not big on taxes nor am I of the belief that any strong action on CO2 emissions is necessary.

However, I am largely indifferent between a sales tax on fuel and an equal sized sales tax on labor (which is effectively what payroll taxes are).  There is no doubt that a reduction in payroll taxes would be a helpful step in this recession, and if folks would sleep better at night with less carbon emissions, I can tolerate trading one for another.

Jonathon Adler has more, including Paul Krugman's negative reaction to the plan  (did this guy really once win the Nobel Price in economics?)

I just couldn't bear to post this at my climate site, which I really try to keep science-based.  Since this doesn't have even a sniff of science to it, I will post it here for your entertainment:  According to the UN, Global Warming Causes Prostitution

The effects of climate change have driven women in communities in coastal areas in poor countries like the Philippines into dangerous work, and sometimes even the flesh trade, a United Nations official said.

Suneeta Mukherjee, country representative of the United Nations Food Population Fund (UNFPA), said women in the Philippines are the most vulnerable to the effects of climate change in the country.

"Climate change could reduce income from farming and fishing, possibly driving some women into sex work and thereby increase HIV infection," Mukherjee said during the Wednesday launch of the UNFPA annual State of World Population Report in Pasay City.

Megan McArdle has two posts here and here on consumer credit and payday loans.  My chief takeaway is that the majority generally benefits from the availability of diverse (though sometimes expensive) forms of consumer credit, while a minority are tragically and very visibly worse off.  The question seems to boil down to whether regulation should be crafted that relatively invisibly makes the majority worse off but visibly helps a minority.  This same question exists with programs from trade protectionism (where job losses due to foreign trade are more visible than the broader well-being of consumers and customer industries) to health care (where it looks like a lot of people will have worse health care to help a few people with visibly tragic stories). In all these cases are elites who are more than willing to opine that smart people like themselves should be allowed to force their "superior" decision-making on others.

The other thing I found intersting was her discussion of the Dave Ramsey anti-debt formula.  She imagines a Ramsey-ite world with a high savings rate.  But its a weird world with with lots of capital formation but little actual capital use.  My gut feel is that it is almost certainly a poorer world, given how much technology and new wealth is created by entrepeneurship.  While I am sure some do it, few great entrepeneurs created success without debt.

One thing neither post discusses is the role of loansharking and illegal forms of credit.  The need for credit strikes me to be at least as strong as the need to gamble or get illegal drugs.  If getting credit becomes illegal, then people will go underground for their credit, with almost certainly more dire consequences than over-paying a payday loan company.

I am sick and tired of so many people treating the economic growth of India and China like it is bad news.  The astounding numbers of people emerging from almost unimaginable poverty is fabulous news, and perhaps one of the ten greatest events in all of world history.  Too many people -- from neo-Malthusians to global warming alarmists to cold warriors looking for the next enemy to trade protectionists -- treat these countries' emerging wealth like it is some sort of disaster.

This was sent to me by a reader, something called the "Environmental Justice Small Grants Program."  Over the last 20 years, socialists who realized their message wasn't selling anymore remarketed themselves under the green "global warming" banner.  Coincidentally, all the exact same things socialists wanted 20 years ago are what we need to do to fight global warming.

It appears that ACORN may be getting a second life using this same strategy.  I can't bear to read all this leftish public policy psychobabble in the document, but did note this early on:

The primary purposes of proposed projects should be to develop an understanding of environmental and public health issues and to identify ways to address these issues at the local level, and educate and empower the community. The long-term goals of the EJSG Program are to help build the capacity of the communities with environmental justice concerns and create self-sustaining, community-based partnerships that will continue to improve local environments in the future.

There is a well-established scientific consensus that climate change will cause disproportionate impacts upon vulnerable populations. [1] Thus, the program is adding emphasis this year on addressing the disproportionate impacts of climate change in communities with environmental justice concerns. The goal is to recognize the critical role of grassroots efforts in helping shape climate change strategies to avoid, lessen, or delay the risks and impacts associated with climate change. An overarching goal of including this emphasis is to help increase the number of underrepresented communities and ensure equitable green economic development in ways that build healthy sustainable communities.

This translates to "we have found a way to hand out government money to leftish groups like ACORN to do things that are impossible to measure and thus bear little accountability by calling it all "Green."

By the way, the little footnote to prove the statement above is this:

[1]  As stated in the Technical Support Document for the Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act (April 2009), "Within settlements experiencing climate change, certain parts of the population may be especially vulnerable; these include the poor, the elderly, those already in poor health, the disabled, those living alone, those with limited rights and power (such as recent immigrants with limited English skills), and/or indigenous populations dependent on one or a few resources. Thus, the potential impacts of climate change raise environmental justice issues."

Given that cap-and-trade is almost certainly going to impose a very large regressive tax disproportionately on the poor, I wonder why no one ever discusses environmental-solution justice issues?  Maybe it really has nothing to do with the poor, but just with power.

We sometimes forget the good news.  Growth is not the enemy.  Growth, technology, trade, markets, capitalism -- these have improved the lives of more people more quickly than any number of Irish rock stars putting on benefit concerts.  Via Carpe Diem

Tyler Cowen links to a good article that gets at the fallacy that suddenly obsoleting our energy infrastructure and having to rebuild it will be of net economic benefit.

Optimistically treating European Commission partially funded data, we find that for every renewable energy job that the State manages to finance, Spain's experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created

Includes 1 million euros in government subsidies per wind job created.

In my mind, the green jobs mantra is a result of the CO2 abatement case becoming fatally weak, with supporters of legislation casting about for other justificaitons.  From the very beginning, many of the most passionate folks are on the AGW bandwagon not because they really understand the science, but because the theory provided justification for a range of government actions (reduced growth, limited technology, reduced energy use, reduction in global trade -- even vegetarianism) that they supported long before AGW made the news.

Update: A quick note on a theme I harp on a lot - nameplate capacity for wind and solar is really, really misleading.  In Spain in the study cited, wind operates at 19% of nameplate over the course of a year and solar operates at 8% (figure 3).  The actual CO2 reduction is even worse, because, particularly for wind, fossil-fuel fired turbines have to be spinning on hot backup for when wind suddenly dies.  Germany, the largest wind user in the word, found only 1,000MW of reduced fossil fuel plant needs from every 24,000 MW of wind capacity.