Four Important Points on SOPA and PIPA

January 19, 2012

Four things worth noting:

  • The fight over SOPA and PIPA is not an unfair fight unduly influenced by billions of dollars in dirty money.  While it is true that a billion dollar lobbying industry headed by Capitol Hill insiders helped piece together the bills, the primary opposition to them is also a multibillion dollar industry.  Corporate entities like Google make lots of money off of content, most of which is legal and some of which is illegal.
  • SOPA and PIPA do not legally place an undue burden on businesses in the sense that it simply requires them to do their due diligence to fight the crime facilitated by their service.  This is standard practice.  Bars don’t serve drunks, pawn shops can’t buy stolen goods, photo labs won’t reprint copyrighted pictures, and pharmacies have to verify narcotic prescriptions.  It’s not silly to suggest that YouTube, which makes money off of each video view, should have to reasonably ensure their content is legal.
  • It’s offensive to suggest that SOPA would place the US on par with China, Syria, or Iran in terms of repression and censorship.  Being tracked down and imprisoned, beaten, or executed for your internet activity is not the same as losing blog access.  Ask the protestors in Tahrir Square.
  • There really is a lot of pirated content online.*  Any ideas on how to actually reduce that?  SOPA is bad, but we all have a compelling interest in reducing the theft of other people’s property, so let’s have alternatives from the anti-SOPA crowd.

*Pet Peeve: It rings a bit hollow for some of my friends to be protesting SOPA while they continue to download movies, music, and games illegally from torrents online.

1 Comment | American Dream, Economy, PIPA, SOPA, Technology | Permalink
Posted by Vital Signs Blog

The Blessings of Christmas, Part 3 – Decline in Poverty

December 22, 2011

Since 1990, the absolute poverty rate (now defined as the number of people in the world living on $1.25 or less) has been cut in half.  This astonishing feat has been achieved thanks to major liberalization in places like India and China.

Perhaps more significantly, the global economy now has an exploding group of countries contributing to poverty relief.  Emerging market countries contribute 100 times the funds to global development that they contributed in 2000, meaning that a second channel of funding for development now exists.

Such gains mean real increases in length and quality of life for billions of people around the world, something we can all be thankful for.

Leave a Comment » | Economy, Foreign Investment | Permalink
Posted by Vital Signs Blog

Europe’s Next Lost Generation

December 9, 2011

More than half of all Europeans ages 18-35 still live with their parents, and unemployment among youth (charted below) is at record highs.

Read more.

Leave a Comment » | Depression, Economy, Europe, Unemployment | Permalink
Posted by Vital Signs Blog

If you think our unemployment is bad…

December 9, 2011

If you think the US unemployment rate (8.6%) is bad, move to Europe.

Systemic unemployment is one reason Europe can’t seem to find solutions to its crisis.  With labor markets that make it hard to hire, fire, or change jobs, and economies contracting in the name of  ”austerity” or “fiscal consolidation,” the Europeans (save Germany) have rising employment crises on their hands that will make it hard to jump start recovery from their serious crisis.

3 Comments | Economy, Europe, Unemployment | Permalink
Posted by Vital Signs Blog

Over-regulated, Under-worked

October 4, 2011

This video is a somewhat humorous take on the over-regulation that has swept America.

In the 1950s, one in 20 workers needed a license from the government to earn a living.  Today, that number is one in 3.

Welcome to the world of free enterprise.

Leave a Comment » | American Dream, Economy, Federal Government, Regulation, Ridiculous, Unemployment | Permalink
Posted by Vital Signs Blog

Value of a Human Life

October 4, 2011
The Cost of a Human Life

The US EPA places a dollar value of $7.9 million on human life.

The EPA estimates that a human life is worth 7.9 million dollars.

They use this figure when calculating the cost of implementing a new regulation.  Supposedly, if we’re worth $7.9 million each, the regulation should cost less to implement than the cost of losing the lives at risk absent implementation.

Figures on the cost of business compliance with Federal regulations range from $1.2 trillion annually to $2.2 trillion annually.  Using the Small Business Administration’s non-partisan figure of $1.75 trillion annually for business compliance costs, we can say that we spend $5,700 per year on compliance for every resident of the US.

But that’s not the only compliance figure.  There are many others, but for the sake of simplicity, we’ll look at the 6.6 billion hours spent per year filling out tax forms.  At the median wage of $16.27 per hour for opportunity cost, this means Americans forgo $10.7 trillion in opportunity cost just doing their taxes.

States also have compliance costs.  Using data from the Small Business Administration, it’s reasonable to estimate these costs at $3.7 trillion  per year.

Let’s add this up: $10.7 + $2.2 + $3.7 = $16.7 trillion (rounding causes imprecision).

Note that this figure includes a substantial amount of what economists call “dead weight loss” – the value that should be in the economy, but isn’t because of some complicating factor.  In this case, that factor is regulation.

Now, for the fun math.  The civilian labor force is (generously) 155 million people in the US.  Dividing compliance costs by the labor force gives us $107,742 in lost value per person per year because of compliance costs.

Now, divide the figure the EPA uses by the lifespan of the average American.  The result: $108,000 per year – or approximately equal to the cost of compliance with regulations.

The figures used above are accurate figures, though their real impact on the economy would likely be somewhere well short of 107,000 additional dollars per person per year.  Nevertheless, the math is clear.

If the US government wants to dramatically increase wealth (by as much as 100%) in the US, they should lessen the ridiculous burden of regulation.

Leave a Comment » | American Dream, Economy, Innovation, Regulation, Ridiculous, Taxes, Unemployment | Permalink
Posted by Vital Signs Blog

It’s the economy, stupid?

October 4, 2011

With electoral season well underway, it’s worth noting that, while the economy will undoubtedly be the biggest issue in the election, the earliest arbiters of the election might not care quite as much about the economy as other states.

The unemployment rate in NH and Iowa, the two earliest presidential determiners, is substantially lower (about 40% lower) than the national average, and within a standard deviation of national levels prior to the recession.

Unemployment and Primaries

This is perhaps the reason that creating jobs is third on the list of most important issues for NH voters, behind cutting the size of government and reducing the debt/deficit.

This is not to say the economy isn’t important.  Poverty is on the rise in both states, and median income has fallen substantially.

Leave a Comment » | American Dream, Economy, Election 2012, Unemployment | Permalink
Posted by Vital Signs Blog

Smoking, Fast Food, and Recessions

October 3, 2011

Curiously, Americans seemed to be concerned cognitively about both smoking and fast food, even if it doesn’t impact their behavior.  As recent opinion polls show:

Even smokers understand that smoking is bad for them.  Apparently, addiction is greater than commonsense in this instance.

There’s a certain persistence to sales in these markets, due largely to factors like addiction and convenience.

A few studies indicate that, historically speaking, sales of these items fall during recessions because disposable income falls and these goods are luxuries.  I’ve been tracking American spending on “luxury” items on which Americans have become reliant throughout this recession.  Interestingly, many goods, like tobacco products, have had surprisingly sticky demand or even seen demand accelerate sharply.

Profits earned on tobacco and fast food products have accelerated upwards sharply immediately after the recession started and have dropped quickly as we emerged from the recession for each of the last two recessions.  Perhaps these goods, like our underwear index, can be bell-weather indicators for our next economic downturn.

In theory, our social reliance on these products might accelerate as a coping mechanism for the stress created by an economic downturn.  As families felt the stress of a recession in 2007-8, they smoked more and switched from higher-class restaurants back to McDonalds.  As the recession ended, they loosened the purse strings and cut back on bad habits again.

Maybe.  Somebody should do more research on this.

Leave a Comment » | Depression, Economy, Food, Ridiculous, Social Interaction, Underwear | Permalink
Posted by Vital Signs Blog

Penalizing Savings

October 3, 2011

There has been a 54 percent reduction in the personal rate of savings since the fundamental tax reform of 1986.

Earlier, I commented (quite poorly) on why we might want to broaden the tax base.  There are many good arguments in favor of broadening the tax base.

There are several important arguments about how broadening the tax base might be bad, however.  As Alex Brill and Alan Viard point out:

One way base broadening can impede tax neutrality is by amplifying the income tax’s inherent distortion between current and future consumption…Broadening the income tax base may increase the saving penalty, undermining the pursuit of economic efficiency…The income tax’s penalty on saving causes an inefficient distortion of consumer choice and lowers the accumulation of national wealth and the long-run rise of living standards.

The fundamental tax reform of 1986, which was largely focused on base broadening and lowering marginal rates, may have had a sharp impact on the rate of personal savings.  From 1960-1986, Americans saved 9.1% of their personal income; from 1986-2011, Americans saved 4.9%, a 54% reduction over the previous period.  The decline is illustrated below.

The Rate of Personal Savings, 1986-2011

There are many reasons Americans don’t save as much any more; perhaps the tax code is one of them.

Leave a Comment » | American Dream, Economy, Saving, Taxes | Permalink
Posted by Vital Signs Blog

Serious Tax Reform, part 1 of 3

September 4, 2011
Forty Seven Percent of Americans pay no federal income tax.

47% of Americans pay no federal income tax.

Sorry for the delay in publishing.  Personal issues took precedence over blogging.

On an earlier post, one comment wanted a more thorough explanation of this:

Lower marginal tax rates should be financed by broadening the tax base and closing arbitrary loopholes. This will raise tax revenues by making more people stakeholders in the process.

So, here goes.*

Our tax base needs to be broadened.  Currently, 47 percent of Americans pay no federal income tax.  Additionally, many large corporations pay little-to-nothing in the way of taxes, especially after rebates and subsidies are subtracted from the money they pay in to the tax system. (For studies on this phenomenon, I direct you here and here; many more are available.)

Two damning features emerge as a function of these facts.  The most straightforward economic distortion comes from the shifting of the tax burden.  Taxes are far from neutral; instead, they are used to incentivize certain types of behavior, irrespective of its market efficiency.

The presumption among most is that businesses favor laissez-faire capitalism because it keeps the government from meddling in corporate affairs.  Considerable anecdotal and quantitative evidence says this is not true. Capitalism implies competition, and competition means that some businesses lose.  Businesses are generally eager to support legislation that gives them a comparative advantage over their competitors.

Shifting the tax burden to distort its equity is one of the ways that businesses compete, and by crowding out true competition, we get less equitable outcomes.**

The more harmful feature of our tax system allowing so many free riders is the destruction of a stakeholder conception of democracy.  Democracy works best when citizens have a sense of involvement in the process.  By allowing certain groups to avoid paying into the tax system, we discourage them from taking part in that system.

Serious quantitative research indicates that people are happiest when they exercise some level of control over their environment.  Net tax payers are substantially more likely (by about 30 percent) to say that self-reliance is an important component of citizenship.  Indeed, if our goal with transfer payments is to make those on welfare self-reliant, paying taxes seems to be one way to encourage that virtue.

More to follow.

*Please note that my area of expertise is not tax policy.

**To be clear, I’m not advocating RAISING corporate taxes.  Corporations, in general, pay lots of taxes already.  I’m saying we should make the system more equitably distributed.

2 Comments | American Dream, Economy, Election 2012, Taxes | Permalink
Posted by Vital Signs Blog

« Previous Entries
Follow

Get every new post delivered to your Inbox.