Tuesday's interesting reads

"Clinton Wants to ‘Connect Up’ America" WSJ Washington Wire:

"We need to finish off high-speed Internet connection, broadband connection, cellphone usage, BlackBerry usage, all across West Virginia."

Why does she think it's the federal government's responsibility to make sure everyone in America has cell phone coverage? I don't necessarily want to subsidize, through my taxes, the technological advancement of West Virginia. If West Virginians want it, let them pay for it through their state taxes.

"Too "Complex"?" by Thomas Sowell (HT: Club for Growth):

"With all the commotion in the media and in politics about the high price of gasoline, is there really some terribly complex explanation?

Is there anything complex about the fact that with two countries-- India and China-- having rapid economic growth, and with combined populations 8 times that of the United States, they are creating an increased demand for the world's oil supply?

The problem is not that supply and demand is such a complex explanation. The problem is that supply and demand is not an emotionally satisfying explanation. For that, you need melodrama, heroes and villains...

What about those "obscene" oil company profits we hear so much about?

An economist might ask, "Obscene compared to what?" Compared to the investments made? Compared to the new investments required to find, extract and process additional oil supplies?

Asking questions like these are among the many reasons why economists have never been very popular. They frustrate people's desires for emotionally satisfying explanations.

If corporate "greed" is the explanation for high gasoline prices, why are the government's taxes not an even bigger sign of "greed" on the part of politicians-- since taxes add more to the price of gasoline than oil company profits do?"

Politicians want to blame anyone but the voter/consumer. And they certainly don't want to think that what they are doing may actually hurt the voter.

"Wall Street IS Main Street" by John Tamny for Real Clear Markets:

"Many might say that protecting Wall Street is different from protecting Main Street. And there lies a persistent myth. Indeed, lost in the absurd “Wall Street” versus “Main Street” discussion is the basic truth that Main Street’s interests fully intersect with those of Wall Street. For those who doubt this, they need only consider the microscopic percentage of Americans who actually lack exposure to the stock and capital markets. To the extent that any Americans don’t possess brokerage accounts, 401(k)s or pensions with stock-market investments, they frequently work for companies and/or individuals whose ability to pay them has a Wall Street origin. In the end, Wall Street is Main Street...

Forgotten amidst all the housing hysteria is the certainty that both borrowers and lenders have strong incentives (credit ratings for borrowers, earnings for lenders) to avoid foreclosure. That being the case, our minders in Washington should step aside and let those two interested parties work out a deal; one that by definition will aid Wall Street and Main Street entities that are inextricably linked."

"An Ugly Regulatory Bill" letter from Pat Toomey of the Club for Growth to members of the U.S. House:

"The [Credit Card Fair Fee Act of 2008] bill's innocuous sounding title hides an ugly reality -- establishment of a new all-powerful bureaucracy inside the Antitrust Division of the U.S. Department of Justice. These bureaucrats would set prices for the credit card business, and they would publish their rate determinations in the Federal Register...

We can understand the frustration of retailers who feel that credit card fees are too high. Yet the answer is not to run to Congress and ask that it set up a new government apparatus to set prices. The answer should instead be more competition and to identify and eliminate laws that might inhibit such competition. This bill takes one step in that direction -- allowing retailers to band together without fear of violating antitrust laws. If the bill had stopped there, then we would not oppose it.

Instead the bill moves in a more sinister direction, giving defacto control on innovation and prices to "Electronic Payment System Judges" in the Justice Department. The standard for their price setting would be cost plus a "normal rate of return in such a hypothetical perfectly competitive marketplace." This, of course, is absurd. Businesses do not run on a hypothetical, they are run in the real world."

The idea that some government beauracratic body can determine a fair or normal rate of return is ludicrous. Socialism at its...er...worst. If government really feels there is a monopoly, they should, as Pat alludes, consider why. If the card providers have more pricing power than they should, let's think of ways that equalize some of that power or look to see if something can be done to encourage more card providers to enter the marketplace, though that wouldn't be ideal.

"Huddles Masses Yearning to Assimilate" at Free Exchange at economist.com:

"That the pull factor of economic conditions is key has important implications for the prospects of the immigrant population. A new study from the Manhattan Institute has found that today's immigrants are assimilating—in economic, cultural, and civic terms—much faster than did previous immigrant cohorts. One reason for the increase in assimilation rates may be that the educational and income level at which today's workers enter is lower than in the past, allowing for faster catch-up. But it helps that immigration increases in economic boom periods—when the economy is best able to absorb new labour.

And, the study's leader concludes, efforts to physically block immigration not only do little to stem the flow of migrants, they also retard assimilation by cutting off economic and cultural opportunities. Taller fences may be popular, but they're also antithetical to the broader goals of the restrictionists."

I would also add that additional money, time, at spent on immigration enforcement also takes the resources from more important efforts such as violent crime.

"Haggling" by Will Wilkinson:

"I understand the price discrimination argument for haggling, especially in a country with a lot of poverty and tourism. But probably hundreds of my dollars stayed in my pocket because I didn’t have good information about the quality of products and I knew the retailer is better at bargaining over the surplus than I am, so… there was no transaction and no surplus. Sure, there is a lot of successful gouging going on, but add up millions of instances of “I know you’re going to screw me,” and I suspect that the average retailer is doing worse rather than better under the haggling system. And how about the average native consumer? In competitive posted-price markets, the system basically pre-haggles the price down to the point where the consumer gets most of the surplus. This is why Wal-Mart is a humanitarian triumph, and a shining symbol of civilization. In the world of Wal-Mart, when it comes to divvying up the surplus from exchange, the retailer has very little freedom to try to take you to the cleaners, but profits by assuring you that you will win the argument."