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Bad Economy Good For A Lower Trade Deficit
Tweet Share on Facebook July 10, 2009 Comment (1)We've heard speculation that the U.S. trade deficit is a big problem that maybe even led to the recession. But if you really want to reduce the trade deficit, the last year has shown that recessions are a very effective way to balance things out. As unemployment is rising and retail spending is falling, the trade deficit has hit its lowest level in nine years:
The Commerce Department said Friday the deficit narrowed to $26 billion, a drop of 9.8 percent from April and the lowest level since November 1999. Economists expected the deficit to widen to $30.2 billion in May.
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Do California Ads Promote Marijuana Use?
Tweet Share on Facebook July 9, 2009 Comment (26)The pro-marijuana-decriminalization group the Marijuana Policy Project is making big waves in California's debate over whether to legalize, tax, and regulate pot in order to raise revenue. Many national media sources are reporting on an ad the MPP is airing on California TV that argues the state is ignoring millions of willing taxpayers--marijuana smokers.
Well, the ads are intended to be aired on TV--the LA Times reports that several major local stations are refusing to air them. They were also rejected by an NBC affiliate in the San Francisco area, and ABC affiliates in LA and San Francisco.
Why? According to the San Francisco Chronicle politics blog, the stations fear that the ads appear to "promote drug use."
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Are The States With The Worst Budget Problems The Product Of Taxes?
Tweet Share on Facebook July 9, 2009 Comment (5)ABC got a big hit on Digg with its list of the Top 10 States With The Worst Budget Problems (but it's actually eleven states). Sifting through the 200 plus comments to the article, I see the usual partisan wrangling: "They're all blue states," says one. "No, this is the result of Reagonomics," says another.
So who's right? Did an obsession with small-government bankrupt these states? Or do they prove that you can't tax yourself into good fiscal standing?
Luckily, we do have at least one good index that measures how "low-tax" states are. The Small Business & Entrepreneurship Council puts out an annual index on the "best to worst" tax systems for entrepreneurship (I've written about it before). What they mean by "best for entrepreneurship" seems to mean how low the whole range of taxes are: personal income, corporate income, capital gains, excise taxes, gas and diesel taxes, whether or not the state taxes Internet access, etc. So the states that do "well" on this index have put these taxes low, or eliminated them altogether. I'm not using this index to make a value judgment on whether or not these policies are good. I'm just using it as a measurement of low taxes.
How does this ranking compare to ABC's?
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Is The Unemployment Rate As Bad As It Looks?
Tweet Share on Facebook July 8, 2009 Comment (3)In his monthly newsletter, Jim Paulsen of Wells Capital Management has a point about the rising unemployment rate that doesn't get made very often:
even though the unemployment rate rose by 1 percent to 9.5 percent in the second quarter, about 55 percent of this rise was due, not to job losses, but rather from new entrants to the labor force. Of the 1.568 million rise in the unemployed roles during the second quarter, 878 thousand came from new searchers which is often a good sign the labor market is returning to health.
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Scam Artists Hit Twitter
Tweet Share on Facebook July 7, 2009 Comment (3)We already have heard about how much many members of Congress love to tweet. Don't be surprised if within the next year, Congress starts talking about Twitter in a quite different way--holding hearings about what laws should be passed to protect the rights of vulnerable tweeters!
The Better Business Bureau reports about new scams that capitalize on Twitter:
The e-mail links to EasyTweetProfits.com, a company out of Surrey, England. EasyTweetProfits.com claims you can make $250-$873 a day working at home with Twitter. The Web site offers a seven-day free trial of their instructional CD-ROM for $1.95 to cover shipping. Buried in the lengthy terms and conditions are the details that the trial begins on the day the CD is ordered—not when it is received—and if the consumer doesn’t cancel within seven days of signing up, they’ll be charged $47 every month.
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Unaffordable San Francisco, And Other Urban Misconceptions
Tweet Share on Facebook July 7, 2009 CommentA couple weeks ago I wrote a story about how a Michigan economist found San Francisco to have the highest amenity value of any city in the country. That's part of the reason why it's also the most expensive city in which to live. But what my story didn't cover is the bang-to-buck ratio. Luckily, Forbes just published a story looking at the issue of affordability: In which cities do basic necessities eat up the incomes of families the worst? Which cities get you more bang for your buck?
Again, San Francisco does quite well--coming up fifth on their list. An average budget for a family only consumers 68 percent of income, because the median income is so high.
One implication for urban policy: Taxes really make a difference. New York and San Francisco both have similarly high incomes and high housing costs. But while San Francisco is one of the better cities for affordability, New York is the most unaffordable--the average budget consumes 93 percent of income. Residents of San Francisco have much more disposable income.
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Nuclear Power May Be Climate Change Bargaining Chip
Tweet Share on Facebook July 7, 2009 Comment (4)In the middle of this Post story on the political wrangling over Waxman-Markey in the Senate, there's an interesting tidbit. The Democrats may need to offer new permits for nuclear power plants to lure a few Republican votes and avoid a filibuster:
Maine's moderate Republicans, Sens. Susan Collins and Olympia Snowe, are the only likely GOP backers of the legislation at this point, and if Obama needs more Republicans, he may have to authorize Reid to give in for more funding for the construction of the nation's first new nuclear power plants in a generation. The environmental lobby has rigorously opposed any new nuclear plants, but several GOP senators, including Lamar Alexander (Tenn.) and John McCain (Ariz.), have made their case that nuclear power is the best for cleaning the skies of carbon emissions.
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Caplan On How The Market Can Supply Health Care For All
Tweet Share on Facebook July 2, 2009 Comment (8)Bryan Caplan has a thought-provoking response to my queries. Excerpt:
...almost everyone familiar with the data admits that at least in First World countries, the difference in health between rich and poor has little or nothing to do with access to medical care.* It's easy to find anecdotes of poor people who suffered or died because of inadequate medical care, but when you look at the big picture, you realize that these anecdotes must be quite rare. So despite response #1, more redistribution wouldn't actually help the poor's health very much.
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Health Insurance's Ideological Divide
Tweet Share on Facebook July 2, 2009 Comment (3)Health insurance companies (or the big ones, at least) want whatever Frankenstein-esque monster bill that emerges from Congress's health reform debate to require everyone to buy health insurance. Bryan Caplan has a must-read post on what he sees as the main intellectual justification for mandatory health insurance.
Shorter version of Caplan: The standard criticism of markets in health insurance harps on a phenomenon called adverse selection: relatively healthy (low-risk) people will find health insurance too unaffordable for them, because the premiums are inflated by all the relatively unhealthy (high-risk) people buying insurance. These healthy people will drop out of the market, and thus premiums will inflate further still for high-risk people left in the pool.
Caplan responds that the solution of mandatory insurance does not actually do anything about this problem, because insurance companies really can tell who the low-risk people are, and charge them lower premiums accordingly.
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A Hidden Business Tax Increase
Tweet Share on Facebook July 1, 2009 Comment (3)Geoff Colvin, writing about the major tax increases of the Obama administration, lays out one that might have you scratching your head:
That's Obama's first proposed business tax increase. Another would require companies to account for their inventories on a first-in-first-out (FIFO) basis rather than a last-in-first-out (LIFO) one -- an eye-glazing change that's highly significant. In an era of rising costs, to assume that you're selling your oldest inventory rather than your newest increases reported profits and thus taxes, even though nothing real has changed. If inflation turns worse, as many analysts predict, FIFO would force companies to pay real taxes on phantom profits as the value of goods gets inflated while they sit in inventory.
I wrote a piece on the LIFO issue a while back. It's a pretty dry issue, but it's becoming more important. The basic deal is that the majority of businesses use a first-in-first-out accounting method for tax purposes. So when you, a business owner, record the cost of a good you sold from your inventory, it is assumed that the first good added to your inventory was the one sold. That's great for you if you're selling goods that depreciate in value over time. In that case, what's going on your books for that tax year are your highest cost goods. That means that, for tax purposes, your profit margins look lower on the books, and your taxes are lower as a result.
