Wednesday's interesting reads - 6/4/08

It's been a couple days since I posted.

"Windfall Profits for Big Food: Where's The Outrage?" by Mark Perry for Seeking Alpha:

"Question: Why don't the "obscene, windfall profits" of Big Food get the same attention as the profits of "Big Oil?" Where are the Congressional hearings and proposals for windfall profits taxes on Big Food? After all, the increase in profits for major food companies from 2005 to 2007 are ridiculously and obscenely higher than the paltry 12% increase in profits for Exxon Mobil (XOM) (see chart above)."

The answer is constituencies.

"Whose Side Are You On?" by David Boaz with Cato:

"In an article about the wave of conservative reform under Louisiana governor Bobby Jindal, the New York Times writes:

'Meanwhile the House is considering an income tax cut that would cost the state $300 million.'

Another way to say that would be:

'Meanwhile the House is considering an income tax cut that would save the taxpayers $300 million.'

It all depends on whether you identify with the taxpayers or the tax consumers."

And I would imagine you would likely answer the question based on who you think will spend the money best.

"In Defense of 'Sweatshops' " by Benjamin Powell for The Library of Economics and Liberty:

"Economists across the political spectrum have pointed out that for many sweatshop workers the alternatives are much, much worse. In one famous 1993 case U.S. senator Tom Harkin proposed banning imports from countries that employed children in sweatshops. In response a factory in Bangladesh laid off 50,000 children. What was their next best alternative? According to the British charity Oxfam a large number of them became prostitutes...

Because sweatshops are better than the available alternatives, any reforms aimed at improving the lives of workers in sweatshops must not jeopardize the jobs that they already have."

I had a debate with a friend at work a couple months ago about this. His point was that when a company opens a "sweatshop" in a country, it drives down the non-sweatshop wages in that country. This is a similar argument, I think, to why some people want to keep low-skilled illegals out of the country - they drive down the wages of the low-skilled workers who are already here. I think my friends claim is dubious (combined with, frankly, my inability to fully understand how that would happened), but I agree to give it to him for the sake of argument. He further asserts that even with sweatshop wages, these people will die from malnutrition -- in other words, the sweatshop wages only defer postpone because they aren't making enough money to sustain themselves long term. His thesis, therefore, is that because these people will die anyway, they shouldn't be allowed to drive down the non-sweatshop wages. My contention to that is that his philosophy would essentially require those who would receive the sweatshop wages to sacrifice their lives and die earlier so others can have higher wages. I asked him if he would be willing to take away from the extreme poor the right to earn money and sustain life, even if only for another three or four months, condemning them to an earlier-than-otherwise death, so others can earn more money for food, clothes, etc, and he said yes. I was shocked. I wish I could go into more details of our arguments, but space constrains. To me, taking away the right of someone to earn money in an attempt to sustain life, even briefly, is more heartless than the profit motivations of any "soulless capitalist" out there.

"Irreversible Climate Change Policy" by Arnold Kling:

"In practice, cap-and-trade creates an irresistible opportunity for politicians to use carbon permits as political favors to be handed out to special interests. This in turn means that there will be special interests with a large stake in keeping cap-and-trade policies in place, regardless of what transpires in terms of global temperature.

What is the probability that the United Nations derivation of climate model consensus overstates the problem of man-made global warming? Unless that probability is zero, it seems to me that we should prefer a climate change policy that is reversible to one that it irreversible.

Because I think that the probability that the UN is misleading us is significantly greater than zero, I think that the issue of irreversibility is quite important. Therefore, I think that a carbon tax is far preferable to cap-and-trade. Ten years from now the global warming scare might be completely debunked, and yet we will still be unable to unwind cap-and-trade. As with farm subsidies and many other policies, the problem will be long gone but the solution will be with us in perpetuity."

"Parsing Senator McCain" by Arnold Kling:

After quoting McCain's speech:

"I'll reach out my hand to anyone, Republican or Democrat, who will help me change what needs to be changed; fix what needs to be fixed; and give this country a government as capable and good as the people it is supposed to serve. There is a time to campaign, and a time to govern. If I'm elected President, the era of the permanent campaign of the last sixteen years will end. The era of reform and problem solving will begin. From my first day in office, I'll work with anyone..."
Arnold adds this:

"I prefer gridlock to bipartisanship and compromise. To me, bipartisanship means enacting cap-and-trade legislation. I worry that compromise means allowing the Democrats to block any attempt to reduce the size of government.

Senator McCain notes that his critics fear that a vote for him is a vote for a third term of the Bush Administration. Not all of that fear comes from the left. Some of it comes from those of us who remember the spirit of bipartisanship and compromise that gave us No Child Left Behind, the unfunded prescription drug benefit for Medicare, ethanol mandates, and zilch on reforming Social Security."

Count me in this group. In some respects, I'd welcome four more years of Bush. In others, that's the last thing I want.

"Norman Borlaug on the Food Crisis" by Alex Taborrok:

"I now say that the world has the technology - either available or well-advanced in the research pipeline - to feed a population of 10 billion people. The more pertinent question today is whether farmers and ranchers will be permitted to use this new technology. Extremists in the environmental movement from the rich nations seem to be doing everything they can to stop scientific progress in its tracks. Small, but vociferous and highly effective and well-funded, anti-science and technology groups are slowing the application of new technology, whether it be developed from biotechnology or more conventional methods of agricultural science. I am particularly alarmed by those who seek to deny small-scale farmers of the Third World -and especially those in sub-Saharan Africa - access to the improved seeds, fertilizers, and crop protection chemicals that have allowed the affluent nations the luxury of plentiful and inexpensive foodstuffs which, in turn, has accelerated their economic development."

"The Coming Oil Investment Boom" WSJ opinion by Holman Jenkins:

"Growing up would begin with recognizing that science doesn't prove the case against CO2. Our political system has been looking at the problem of climate change for a generation, and lack of action is not due to the machinations of big oil – but to the inability of policy to bridge a giant chasm between proposed costs and benefits. Even if carbon's guilt is assumed, the economics are far from certain that it wouldn't be cheaper just to endure a changing climate." [emphasis added.]

This, to me, is the biggest point of consideration. Is the cost worth the benefit, even if the science were taken as correct. Adopting some kind of global approach of carbon restrictions (either through a cap-and-trade or through a tax) would prevent the poor from ever gaining on the rich, especially in other countries.

Which is very similar to...

"Manslaughter by politicians" op-ed for The Washington Times by Richard Rahn (HT: Club for Growth):

"When politicians enact anti-economic growth regulations and taxes, even in the name of "global warming," "environmentalism," and "fairness," they are, in fact, shortening the lives of many of their fellow citizens and those in other countries.

I do not pretend to know with much certainty whether the Earth will be much warmer at the end of this century and whether any increase in temperature that does occur will reduce or increase human life expectancies. But I do know the following with high confidence: The global warming alarmists told us 15 years ago that the Earth would be getting steadily warmer - yet, in fact, it has been getting cooler for the last 10 years, and some of their new models say this cooling trend might continue for another 10 or 15 years. The restrictions on drilling for new oil have driven up the price of oil products to the extent they are causing unnecessary real hardship to billions of people on the planet and, as a result, people are spending less money on their medical care and medical research...

Environmental laws that require reasonably clean air and water can clearly be a net gain for human health and economic development. But, like anything taken to excess, the costs of many of the new and proposed measures to curb CO2 greatly exceed the benefits, thus costing both lives and treasure. Most serious economists who have looked at the issue believe environmental adaptation (as humans and other plants and animals have done for millions of years) would be far less costly than speculative actions to try to change the climate.

The fundamental problem is that many politicians do not understand or, perhaps, do not wish to understand tradeoffs. That is, every time they increase a regulation or a tax, or require a government expenditure that reduces economic freedom and does not meet a reasonable cost benefit test, they are not engaged in just some annoyance, but they are costing real human life years."

"In bed with bankers" AJC editorial by Maureen Downey:

"However, Georgia will never enact more substantive consumer-mortgage protections until the Legislature stops blaming the crisis solely on unsophisticated borrowers, ignoring the role played by unscrupulous lenders and a government that failed to protect its citizens.

The subprime market flourished because of three decades of deregulation. Loans were made without concern over whether the borrower had a job, income or any ability to make payments. Volume-hungry mortgage brokers enticed borrowers with tempting teaser rates that ballooned down the road, when the loan had been sold many times over to unwary investors."

I sent the following letter:

"After reading Maureen Downey's "In bed with bankers" editorial (June 4), I remain unconvinced that the "do-nothing" General Assembly needs to take action. She'd like our legislature to "protect its citizens", but only if they are the citizens who borrowed money to buy a home instead of the citizens who loaned money to buy a home (banks, after all, are ultimately owned by citizens). Does Ms. Downey need to be reminded that every successful economy is based on well-defined property rights and enforceable contracts? When a money-borrowing citizen enters into a contract with a money-lending citizen to buy a house, the borrowing citizen agrees to pay the borrowed money back to the lending citizen. If that money is not paid back according to the contract, does the lending citizen have the right to enforce the contract? If the General Assembly picks a favored citizen and legislates (or bullies) the lending citizen into altering the terms of that contract, which citizen needs protecting?"

If they didn't ask for a 150-word max I would have added more about some of her fallacies I quoted.