Friday's interesting reads

"Obama Joins Clinton in Backing Anti-China Trade Bill" from the WSJ's Washington Wire:

"Clinton signed up Wednesday as a cosponsor of the Fair Currency Act, a bill intended to crack down on countries that manipulate their currencies in order to gain an edge in international trade. Obama followed suit on Thursday...

Many U.S. manufacturers and unions – as well as their Capitol Hill allies – say that China is the main currency offender, although Beijing has allowed the yuan to appreciate by more than 18% against the dollar since the authorities first allowed it to strengthen in July 2005. Chinese officials say they intend to allow the currency to rise and fall with market forces, but only in a gradual way that won’t disrupt the country’s economy.

The Stabenow-Bunning bill would impose retaliatory duties on goods imported from countries that manipulate their currencies."

That's a great idea. At a time when the whole country is worrying about inflation, let's find a way to force prices us a little higher. It makes one wonder how much damage they want to inflict upon the economy. Recession (or at least a healthy slowdown)? Raise taxes. Inflation? Raise tariffs.

"Real Budget Reform" by Chris Edwards at Cato:

"Representatives John Campbell (R-CA) and Jeb Hensarling (R-TX) have just introduced an idea that McCain could champion: A constitutional cap on the overall federal budget. You can read the proposed amendment here, but essentially these House budget experts propose that annual federal spending growth should not exceed the long-run average growth in the U.S. economy, except with a two-thirds vote or a declared war."

I'd support that. Goodness knows it's grown much faster than that under the Bush administration.

"Make dentistry cheaper" by Tyler Cowen at Marginal Revolution:

Quoting the NY Times:

"The opposition to therapists follows decades of efforts by state dental boards, which are dominated by dentists, to block hygienists from providing care without being supervised by dentists.

The dental associations say they simply want to be sure that patients do not receive substandard care. But some dentists in public health programs contend that dentists in private practice consider therapists low-cost competition. In Alaska, the federally financed program that supplies care to Alaska Natives pays therapists about $60,000 a year, one-half to one-third of what dentists typically earn."

This is in reference to a program in Alaska that trains "dental therapists" to "perform basic dental work like drilling and filling cavities".

"Fight Against Predatory Lending Has Gone On For Over A Decade" IBD op-ed by Stanley Foodman:

"This latest bill may be a case of closing the barn door after the horses have escaped. Something could have been done a decade ago to stop the current mortgage meltdown. But then, those who engaged in predatory lending in the mortgage markets would not have been able to build wealth on the backs of those pursuing the American dream of homeownership."

Seriously, what is the American dream? I actually looked it up and this is what Wikipedia says:

"The American Dream can be described as a belief in the freedom that allows all citizens and residents of the United States of America to achieve their goals in life through hard work."

What does this have to do with home ownership? As Americans, we don't have a right to own our own homes. We do, however, have the right to borrow money from someone else at the best rate we can find. Unfortunately, because of the risk of the person borrowing the money, that rate can be quite high. (After all, lenders have a right to the American dream as well.) Also, due to interal risk management at banks or other lending restrictions, people are forced to look for funds from a second-tier lender. In other words, the people who borrow from lenders who charge a higher rate are only in that situation because they don't have other options. (The same can be said for payday loans.) Restrictions on the rates lenders can charge will only limit the legal supply of funds, driving borrowers to loan sharks.

From an article in the WSJ ("In Defense of Usury"):

"Outrage over usury is based on a fundamental belief that credit at high rates does borrowers more harm than good. This belief now holds sway among policy makers world-wide, who seek to curb consumer lending at "excessive" interest rates. Prescriptions include the interest-rate caps imposed recently by state and federal governments in the U.S., Japan and South Africa. Several U.S. states are considering additional measures, including outright bans on payday lending.

But the result of interest-rate caps is often less access to credit. Advocates for restricting access correctly note that poorer consumers (and for that matter just about everybody else) have decision-making limitations that are exploited in the market...

But even consumers making flawed decisions may be better off when they can borrow from regulated financial institutions at "excessive" rates."

"Exxon Agonistes" WSJ editorial:

"On Tuesday, members of the Rockefeller family won media huzzahs for airing their grievances against Exxon Mobil, the oil and gas giant in which they are the oldest continuous shareholders but which they say isn't doing enough to prepare for a greener world...

One luxury of being a Rockefeller is that you are wealthy enough to live in style even if Exxon's performance starts to slide. The same can't be said of millions of pensioners and small investors for whom Exxon's profits may be the main source of a secure retirement. If John D.'s heirs aren't satisfied with Exxon, they're welcome to invest elsewhere. Our guess is that few will, given how much money they've made over the decades on fossil fuels."

"Seeing past the Chicken Littles" by David Harsanyi with the Denver Post (HT: Don Boudreaux at Cafe Hayek):

"It's true that in Utopia there are no economic downturns. In the real world, we have them all the time. This one, in historical context, is at this point rather mild. There is no denying that the poor suffer when prices rise. Failing to provide perspective on our situation, however, creates false panic and invariably leads to flawed public policy.

The last true recession, according to the National Bureau of Economic Research, began during the Clinton administration in November 2000. Remember those glory years of unheralded economic growth? Before that, Elder Bush had his. Nearly every decade — whether Democrats, Republicans, Whigs or Jedis are in charge — the economy experienced some form of correction.

Many economists — most of them still arguing over why we have recessions at all — believe that with a credit crunch, the housing market falling and high oil prices, the economy growing (as it did slightly last quarter) is a sign of resilience."

"Unreasonable Reasonableness" by Don Boudreaux at Cafe Hayek:

"Adhering to the general practice of saying that free trade has both winners and losers, you introduce two letters on Nafta with the heading "Nafta Has Helped Some, Hurt Some" (Letters, May 2). But this familiar endeavor to appear reasonable misleadingly implies that trade across political boundaries has a unique propensity to help some and hurt others. In fact, any economic change helps some and hurts others.

Would you introduce letters on the polio vaccine with "Vaccine Has Helped Some, Hurt Some"? After all, the vaccine eliminated jobs for workers who made crutches, wheel chairs, and iron-lung machines. Of course, the benefits of the vaccine - especially over the long run - far outweigh the costs. Likewise with consumers' freedom to spend their incomes as they choose. And free trade is nothing more than consistently allowing consumers to spend their incomes as they choose."

"Clinton Caught in Time Warp With Windfall Oil Tax" by Amity Shlaes (HT: Club for Growth):

"Senator Clinton has couched her support in terms of the hunt for revenue: 'I'm the only one with a plan,' she said earlier this week. And lots of other Americans, not just Democrats, are eager for a break at the pump.

What to make of it? Insanity has been defined as doing the same thing over and over again, and each time expecting a different result. By this definition, a new windfall-profits tax would suggest a sort of collective insanity. For, as our country's history with the great Windfall-Profit Tax of 1980 amply demonstrates, there are lots of reasons to oppose it."

I had to find a quote, but there wasn't really a good one to pull out. When I see she wrote something, though, I read it.

"Dangerous Delusions" by Richard Rahn op-ed for the Washington Times (HT: Club for Growth):

"The New York Times editorial page has long been a bastion of this delusional thinking. On April 24, the paper produced one of its classic inane editorials in favor of higher taxes on labor and capital, which contained this gem of a sentence: 'Memo to McCain: 401(k) savers get no benefit from a low capital-gains [tax] rate.'

Everyone who has ever taken basic economics should know a lower tax rate on an investment (i.e., the capital-gains tax) will lead a higher rate of return, and hence the investment will be worth more. Other things being equal, lower capital gains tax rates will lead to higher stock prices, and all who hold stocks will benefit, whether or not they pay a particular tax on that stock. Though this concept is not difficult for most people to understand, it seems beyond the knowledge and reasoning ability of those who write editorials for the New York Times."