This blog post on the Fox News website discusses some of the numbers being thrown around with regard to how much a potential immigration reform bill would cost taxpayers. Seeing as it is from Fox, there is likely some serious conservative bias, but I found it interesting nonetheless. According to the blog, the latest attempt at immigration reform is shaping up to be similar to a failed 2007 bill that was projected to cost $30 billion over 5 years, but the Heritage Foundation, a conservative organization, estimates it would cost upward of $90 billion a year. The biggest issue, as pointed out in the blog, is that the majority of illegal immigrants only make between $15,000 and $30,000 dollars a year, which qualifies them for food stamps and medicaid without having to pay federal income taxes, essentially reaping benefits without paying costs. So what is the most efficient thing to do? If the federal government were to adopt a strict immigration policy similar to the one recently enacted in Arizona, would enforcement costs turn out to be just as much, if not more than allowing illegal immigrants to stay? I’m curious to know if there is any data out there that can provide a definitive answer.
The Incentives of Poisoning Elephants in Indonesia
A local battle has been waged recently in Indonesia. The stakes are high and neither side wants to back down. In the left corner, endangered Sumatran elephants; the right corner, Indonesian farmers. This case dates back decades, as farmers in Indonesia’s rural communities have vied to make a living off the land. Yet, they’ve faced an old wise foe who sees the farmers crops as an easy source for food or they don’t see them at all and the 15,000 lb animals trample the crops, destroying them. unlike other Asian countries, elephants are not revered in Indonesia and farmers have threatened to poison the animals if the government doesn’t do something about it. This whole issue began in the late 1950’s as Indonesia’s population began to boom. The government relocated farmers from the island of Java to Sumatra to farm. This has transformed the island as people have encroached onto the elephants habitat. In order to maintain a balance between people and animals the government will obviously have to step in, otherwise the Sumatran elephants will be killed. This is a rational choice for many farmers, thus, I think that there needs to be local laws implemented that utilize local knowledge and create an incentive for the farmers to protect the elephants. It’s possible that a whole new tourism industry within Indonesia could be created with the elephants as a central figure. A successful law would incentivize the farmers to protect the elephants and would allow them to benefit from the elephants in some way.
Art-Taxation
I came across this post on the marginal revolution blog,
http://www.marginalrevolution.com/marginalrevolution/2010/04/the-art-of-taxation.html#comments
Mexico will allow painters to pay their taxes with their talent, or their paintings. Basically, an “art-for-amnesty” deal. My first question is why didn’t the originators of this just sell their art and then pay the taxes? The transaction costs are obvious, market value, time-line, and etc. But, the government went ahead and said yes, and the precedent was set. Furthermore, the payment was judged on quantity, not quality. Put myself in their shoes. I am a painter. If I sell five paintings, I must pay my taxes with the submission of one of my works. It doesn’t take a financial analyst, but I will obviously sell the most valuable painting and submit my taxes with the least valuable painting. In order to somewhat dodge this type of problem, the government set up a 10-member jury to determine if the submitted paintings are actually works of art, and they have to pass the test before they can be considered payment of taxes.
Although, something like this does not exist in the US, imagine if it did. I think that I would actually work on becoming a painter. I could theoretically have approximately a 5% tax bracket if I was successful. That would be nice.
Simply a great article I thought Simmons would enjoy
http://www.campaignforliberty.com/article.php?view=799
Poor Poor Wal-mart
Today a decision in the 9th circuit court of appeals allowed 6 former female Wal-Mart employees to file a class action suit concerning discrimination. The women say that Wal-Mart discriminated against them because the company paid men more for doing the same job as women. The controversy surrounding the decision is that the 9th circuit said it was ok for six women to represent basically every female employee, or former employee, at every Wal-Mart in the country in a class action. If these women win the case Wal-Mart can face unbelievable damages in the billions of dollars. Link
Looking at the case in light of the McDonalds coffee case (where we saw not just McDonalds but every other fast food chain immediately lower the temperature of their coffee after McDonalds lost) what effect will this giant suit have on every company in country if Wal-Mart loses, or even if they win? My guess is that this case might do more, and do it quickly, to equalize the pay between genders throughout most companies than anything we’ve seen in a long time. What do you think the consequences will be?
Tort reform was simply government greed
Ron Paul points out in a 1999 article, no less true today, that the so called “Tort Reform” was like many other ideas, paraded around as something good for every American, but in reality simply an unConstitutional power grab for the federal government. “While one might initially think this sounds like a good idea, it does not take long to understand why it is not. First, this is federal meddling in an area of law not given it under our Constitution or legal tradition.
“Second, as experience has shown, federal “solutions” tend to dumb down a process, rather than encourage excellence. One need look only at that state of our schools to see the most practical example of that premise. In the arena of law, one can examine the results of the 1973 Roe v Wade decision, which took abortion law out of the purview of the states and gave it to the federal courts.”
Ron Paul argues for personal interest, definitely an economist assumption, and says that the government involvement will actually do less for you if serious problems occur.
You can’t argue with his logic and evidence, especially as he supports states’ authority over tort - much more Coasian than the Federal government having so much say in the tort system.
http://www.ronpaullibrary.org/document.php?id=97
Democracy Inaction
In a recent N.Y. Times article, it talked (or wrote) about how the GOP is trying to cease long held Democratic seats in the House. While I agree that, as the article discussed, competitive elections are a good thing, I can’t help but wonder how this will effect the decisions lawmakers will make in the future. This push by the GOP is being done because of the recently passed health care bill. Both parties have admitted that a reform was needed. And, while now the Republicans say that they way it was done was wrong, the bill is very much what the Republicans wanted in the early and mid 90’s. This means that the Republicans are ousting the Democrats for simple political reasons. In the future, if the Democrats are terribly hurt by this push, there may be a huge worry that future law makers have of ever doing anything that is good for the country, despite what good could come from it. If this happens, then the system we have based on incremental decision making (a system perpetuated on immediate short term goals, never focusing on the big picture or doing the best thing) will be perpetuated and worsened. While the Republicans feel confidant right now, I can’t help but wonder how they will feel when they need to make some major changes that may be opposed, or neutral, to a good deal of people. Now, anything that is considered even slightly controversial, may be ignored in order to avoid loosing seats and keeping political power (which ironically enough, can’t even be exercised for fear of upsetting the public).
NCAA Monopoly: Perverse incentives. Who is paid more, the football coach or the president of a university?
Is this a question that should even be asked? You would think its obvious that the president of a university would make more than the football or basketball coach, after all the president is an indirect boss of the coaches. But the reality of the issue is a disturbing one. In the USA Today article it gives some eye opening statistics. The University of Iowa pays its football coach a guaranteed $4.6 million each year, while the president of the University makes only $390,250 a year. The University of Louisville is very similar. The University pays its full-time staff an average of 95,024, and the head football coach is guaranteed $1.6 plus the possibility of incentives according to the article. So why is it that the Universities do this to themselves? Why is it that the football coach makes 3-6 times the money the president of the university does? The monopoly of the NCAA is at the core.
The NCAA has such a monolpoly that there is no competition in college athletics off the field as far as endorsements and tournaments are concerned. Because of this the NCAA is able to offer the best performing teams with great monitary rewards. This creates a “crap rolling down the hill effect” let me explain. The NCAA gets all the revenue from tv contracts, sponsorships, etc. They then reward the top performing teams with monitary bonuses for being successful. Schools want to then be successful in athletics to get their hands on this money. So the schools will pay ridiculously high salaries for top notch coaches to improve their athletic team. Well the money to pay these coaches doesn’t just appear out of nowhere. Just recently here at USU student fees increased by $65 dollars a semester to support the athletics program. So who is the one who takes the punishment and pays the price for the monopoly of the NCAA? The student, and the tax payer. It just so happens that I fall under both categories. It seems the feeling of the article is that the NCAA and its monopoly are sending a “conflicting message.” Which is more important the academic institution that the athletic team represents, or the athletic team itself? In the current system the perverse incentive is to sacrifice the academics for the athletics to get a share of the NCAA wealth. But without the academic institution there would be no athletic team, or NCAA. Yet the NCAA monopoly trumps the academic world, and whether students like it or not they are the ones who pay the price. Thanks NCAA!
http://www.usatoday.com/sports/college/football/2006-11-16-coaches-salaries-cover_x.htm
Plea Market: Our Rights for Sale?
I’ve been reading a lot lately on the topic of plea bargaining and it’s pros and cons for our criminal justice system. Some condemn the practice as a violation of essential rights to trial and due process. While others glorify it as the savior of our criminal courts, saying, without it, courts would be so back-logged that a right to a speedy trial would be violated out of sheer logistics. Dirk Olin of New York times Magazine provides a nice overview of the issue, which includes analysis from Freidman’s “Law’s Order” (so it must be correct, right?). In this article he discusses the efficiency of plea bargaining and controversy surrounding it. We have talked a lot about incentives and trade-offs in the course and I don’t think there is a greater example of both than the practice of plea bargaining. As I mentioned above, the practice of plea bargaining leaves us with a choice (much like the accused): to diminish a person’s right to have their case heard by an impartial court by holding a diminished sentence over their heads, or to deal with the consequences of having an increasingly over-burdened criminal court system. The second question we must ask, as we have throughout the semester, is what type of incentive structure does this create for prospective criminals? One would think the possibility for a diminished sentence would manipulate a criminal’s cost benefit calculus. But could it be the other way around? Might a ban on plea bargaining actually lead to decrease in crime? Might losing in court, instead of pleading guilty prior to trial, actually lead to a stricter sentence, and therefore, a greater deterrent affect? This increase in the severity of punishment is exactly what the state of Alaska has experienced after banning the practice in 1975. Assuming rationality (of course), wouldn’t criminals be less likely to commit crimes if they knew the option of bargaining to a reduced sentence wasn’t a possibility? What do you think? Does plea bargaining undermine our 5th and 6th amendment rights? Is it too soft on criminals? Or is it a necessary evil?
Monopoly the sport, not the board game
As I mentioned in class, I believe the NCAA to be the closest the U.S. has to a monopoly. I found an interesting article from the New York Times on the topic. It discusses the fact “that the N.C.A.A. tournament did not acquire, and does not maintain, its monopoly fairly. It does so through a set of anticompetitive rules that force all invited schools, under pain of severe penalty, to participate only in the N.C.A.A. tournament and to boycott any competing events.” It talks about the 1970 decision that Marquette–one of the best schools in the country at the time–made to participate in the NIT instead of the NCAA tournament. This made fans happy due to the lower ticket prices and greater excitement. The NCAA obviously did not approve of profit loss and boycotted, starting in the 1980s, all its invited schools from participating in the NIT or any other tournament. The consumers (basketball fans) are now the ones paying for this decision. I agree with the author when he says:
Like a 7-foot center playing in a fixed game in which no one else is allowed to be taller than 6 feet, the N.C.A.A. tournament uses its anticompetitive rules to roll over the competition and collect its payday from all of the fans. It’s time for the N.C.A.A. to end its anticompetitive rules and let its tournament stand on its own feet in competing with the N.I.T. or any other postseason tournament. March would be just as mad, and far more beneficial to students and fans.
And that’s just basketball….