Monday's interesting reads

"The Coming Recession: Seven observers debate the (sorry) state of the economy." Reason Online (HT: Don Boudreaux):

Don Boudreaux:

"New York Times columnist Gail Collins was underwhelmed by the president’s folksy course-things-ain’t-great-now-but-we-Americans-with-our-rebate-checks-and-incessant-complaining-about-congressional-earmarks-are-gonna-be-just-fine address to the Economic Club of New York on March 14. She complained that “in times of crisis you would like to at least believe your leader has the capacity to pretend he’s in control.”

This is the attitude that scares me. I worry not a whit that the subprime crisis or falling share prices will cause long-term economic woe. As unnerving as the current downturn might be today, people in competitive markets always find ways of regaining their economic footing tomorrow. Investors recalibrate their expectations and entrepreneurs redirect their energies to take better advantage of the changing economic landscape. Workers’ pay and consumers’ standard of living, after blipping briefly downward, resume their upward trend."

"Farm Subsidies and Farm Taxes-Becker" by Gary Becker on the Becker-Posner blog:

"So by putting restrictions on the exports of farm goods, developing countries are not only making their economies less efficient, but also they are adding to the overall incidence of poverty among their populations...

I believe that the explanation for the very opposite treatment of farmers in developing and developed countries is interest group competition (see my "A Theory of Competition Among Pressure Groups for Political Influence", The Quarterly Journal of Economics (Aug., 1983), pp. 371-400. This analysis shows that small groups, like farmers in rich countries, often have much greater political clout than large groups, like farmers in poorer countries. The reason is that even large per capita subsidies to small groups, such as farmers in the US, impose rather little cost (i.e., taxes) on each member of the large groups, like urban and suburban residents of the US. As a result, these large groups do not fight very hard politically against the small per capita taxes used to subsidize farmers.

By contrast, a large subsidy to farmers in developing countries would require imposing high per capita taxes on their relatively small urban populations since farmers are a rather large proportion of the total population in these countries. Instead, the same political pressures as in developed countries lead poorer countries, regardless of the nature of their political systems, to subsidize the smaller urban populations at the expense of the larger farm populations. "

"Obama's Health Care Record" WSJ op-ed by Scott Gottlieb:

"Not all mandates are equally expensive. Drug rehab, for example, increases a plan's premiums by 9% on average, according to America's Health Insurance Plans (AHIP). Coverage for psychologists adds 12% to premiums. But in total, in some states mandates increase the cost of insurance from 10% to 20%, according to AHIP...

The burden of paying for state mandates is usually borne by individuals who buy their own insurance, small employers and others not covered by ERISA. In total, about half of the people who have insurance bear the brunt of the cost of state mandates. And, as it turns out, individuals who do not work for large corporations are much more likely to be uninsured. AHIP calculates that between 20%-25% of uninsured Americans can't afford coverage because of the increased cost of providing mandated care.

It doesn't have to be that way. If insurers were allowed to offer "bare-bones" plans – which would be cheaper because they would cover just essential care – many consumers who are priced out of health insurance now would likely buy these plans instead of living without insurance...

Why, then, do we have mandates?

For the simple reason that each mandate has a powerful constituency – be it chiropractors, dentists or other groups – who benefit when their services are included on the list of mandated care. These groups pressure lawmakers to expand the list of mandates and, over time, the list grows to be very long and expensive. Often the care that is being mandated is for minor medical problems because small, routine ailments are suffered by more people and therefore have broader political constituencies."

"XM-Sirius Rent-Seeking" by Timothy Lee at Cato:

"Once we have a real market for spectrum, Congress may choose to enact general regulations governing the use of that spectrum. But the current system, in which the FCC has the arbitrary power to single out individual companies for arbitrary restrictions on virtually any subject the FCC’s commissioners happen to be concerned with, is deeply flawed. It’s not fair to companies that have the misfortune of attracting the FCC’s scrutiny, and it’s not good for consumers, who are deprived of the benefits of a robust and competitive market for spectrum."

"Farm bill upends normal political order" by Carolyn Lochhead for SFGate (HT: Club for Growth):

"Lawmakers are betting that Bush will not dare kill a $10.3 billion increase in nutrition spending such as food stamps, which make up the bulk of the bill, or anger farm-state Republicans in an election year. If he does, they plan to override him.

Congress has its bases covered. Each interest group represented in the sprawling legislation - from tiny Santa Cruz organic vegetable growers to Georgia cotton magnates, from conservationists to prairie-plowers - gets enough money that it would prefer this bill rather than start over with a new president.

Farm bills come around just once every five years and usually fly under the radar of most lawmakers and the public, making it easy for Congress to tout the bills as aid to family farmers. The commodity supports - born as temporary economic aids in the 1930s - are mind-numbingly complicated and get little notice outside the farm press, despite their enormous impact on U.S. food policy. Urban lawmakers are normally happy to vote for crop subsidies in exchange for food-stamp votes from rural lawmakers. It is textbook political logrolling."