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TOTM In this morning’s New York Times, Professor Paul Krugman laments the state of America, and, as a remedy, proposes . . . surprise! . . . . .
In this morning’s New York Times, Professor Paul Krugman laments the state of America, and, as a remedy, proposes . . . surprise! . . . more government spending. He writes: “When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.” I’m not an economist, but this sentence seems horribly flawed for someone who is. I agree that in a world with zero interest rates and 10 percent unemployment, some government priming of the pump might make sense. Macro-economic conditions need to be changed, and the government is uniquely positioned to do this. After all, it sets the rules, prints the money, sets the level of taxes, and determines through public policy where investment will flow. But the question is how and where to act. Krugman believes taxing us to raise money to pay teachers is part of the answer. I doubt it, for several reasons.
Read the full piece here.
TOTM The Comprehensive Alcohol Regulatory Effectiveness Act — yes, the “CARE Act” — or HR 5034, is a piece of legislation aimed at supporting “State-based alcohol . . .
The Comprehensive Alcohol Regulatory Effectiveness Act — yes, the “CARE Act” — or HR 5034, is a piece of legislation aimed at supporting “State-based alcohol regulation.” Recall the Supreme Court’s decision in Granholm v. Heald, which held that states could either allow in-state and out-of-state retailers to directly ship wine to consumers or could prohibit it for both, but couldn’t ban direct shipment only for out-of-state sellers while allowing in for in-state sellers. Most states thus far have opened up direct shipping laws to the benefit of consumers. While we occasionally criticize the Federal Trade Commission from time to time here at TOTM, its own research demonstrating that state regulation banning direct shipment and e-commerce harmed consumers is an excellent example of the potential for competition research and development impacting regulatory debates. Indeed, Justice Kennedy’s majority opinion in Granholm cites the FTC study (not to mention co-blogger Mike Sykuta’s work here) a number of times. But in addition to direct shipment laws, there are a whole host of state laws regulating the sale and distribution of alcohol. Some of them have obviously pernicious competitive consequences for consumers as well as producers. The beneficiaries are the wholesalers who have successfully lobbied for the protection of the state. Fundamentally, the CARE Act aims to place these laws beyond the reach of any challenge under the Commerce Clause as per Granholm, the Sherman Act, or any other federal legislation. Whether the CARE Act has any ancillary social benefits is an important empirical question — but you can bet that the first-order effect of the law, if it were to go into effect, would be to increase beer, wine and liquor prices. More on the CARE Act and state regulation of alcoholic beverages below the fold.
TOTM The biggest and most important issue for the next few months won’t be immigration, the New Black Panthers, or even the war in Afghanistan. Huge . . .
The biggest and most important issue for the next few months won’t be immigration, the New Black Panthers, or even the war in Afghanistan. Huge tax increases are headed our way, and it raises tough questions. On the one hand, signaling we are serious about deficits is likely a good thing. But, since politicians haven’t been able to reduce spending additional income, assuming more taxes brings more income, cutting spending would be a better course. Having locked ourselves into huge spending, maybe some tax increases are inevitable.
TOTM I’ve been, for some time, a behavioral law and economics skeptic. Sometimes this position is confused with skepticism about behavioral economics, as in — believing . . .
I’ve been, for some time, a behavioral law and economics skeptic. Sometimes this position is confused with skepticism about behavioral economics, as in — believing that behavioral economics itself offers nothing useful to economic science or is illegitimate in some way. That’s not true. Now, I have some qualms about the explanatory power of some of the behavioral models as well — but the primary critique (in my view) has always been the threat that behavioral economics will be used as the intellectual cover for regulation judged by the preferences of the regulators rather than rigorous economic analysis of any sort.
TOTM One of my antitrust students recently pointed me to a television commercial that could inspire a great exam question. Unfortunately, I didn’t see the ad . . .
One of my antitrust students recently pointed me to a television commercial that could inspire a great exam question. Unfortunately, I didn’t see the ad until I’d finished drafting this semester’s antitrust exam (which I’ve been grading…hence the absence from TOTM).
TOTM Two weeks ago I highlighted the promising looking Cato Unbound forum on the new paternalism kicked off by Glen Whitman, with follow up posts and . . .
Two weeks ago I highlighted the promising looking Cato Unbound forum on the new paternalism kicked off by Glen Whitman, with follow up posts and responses from the King (or co-King along with Cass Sunstein) of Nudge, Richard Thaler, along with Jonathan Klick and Shane Frederick. I was really excited about the forum, because I have research interests in this area and consider myself a “skeptic” of the new paternalism generally (hey, the Weekly Standard says “prominent skeptic,” but even I don’t go that far). So — now that the exchange is over — I find myself, well, better off for having read it but disappointed. I’m going to blog about the disappointing part. Don’t get me wrong, it started off really well. Glen came out swinging, Thaler responds (there no slopes, paternalism is inevitable, and by the way, a really odd choice of example for the lack of evidence in favor of slopes: prohibition), Klick and Frederick chime in.
TOTM We live in a time of optimism about government’s ability to improve upon the unregulated state of affairs. From health insurance to financial markets to . . .
We live in a time of optimism about government’s ability to improve upon the unregulated state of affairs. From health insurance to financial markets to the types of fats we eat, cars we drive, and sources of energy we consume, there is a sense among our political, media, and academic elites that our privately ordered affairs are out of whack and can be improved by government rules. These elites rarely stop to ask whether the private ordering whose malfunctions they are seeking to correct is, in fact, private; in reality, it’s often not (see, e.g., the role of Fannie and Freddie in creating the housing bubble at the heart of the financial crisis, the role of the tax deduction for employer-provided health insurance in eviscerating the price competition that would constrain health care costs). Rather than asking how government meddling may have contributed to an undesirable situation, the elites usually look for a market failure — some systematic defect in the system of private ordering — and then invoke that failure as the rationale for a governmental fix.
TOTM Well, it looks like Congress is going to attempt to enact the Senate’s health care bill using the reconciliation process. President Obama certainly suggested as . . .
Well, it looks like Congress is going to attempt to enact the Senate’s health care bill using the reconciliation process. President Obama certainly suggested as much in Thursday’s Health Care Summit, downplaying the significance of such a move and suggesting it may be necessary in order to “move forward.”
TOTM The subject of antitrust exemptions has been an oft-discussed topic here at TOTM (see, e.g. here and here). In the latter of those two links . . .
The subject of antitrust exemptions has been an oft-discussed topic here at TOTM (see, e.g. here and here). In the latter of those two links I was somewhat critical of the DOJ for taking a neutral stance on the insurance industry exemption, which has now become rather wrapped up in the health care reform debate. I wrote…
