Government – Page 79 – artdiamondblog.com

Government Quotas Raise U.S. Sugar Price from 17 Cents a Pound to 31 Cents a Pound

Every semester in my principles of microeconomics course, I show the students a wonderful old 60 Minutes segment on the U.S. government’s sugar quotas program. I tell them, alas, that the policy is still the same. Below is recent evidence:

(p. C1) . . . , U.S. sugar farmers have successfully blocked efforts to significantly increase imports, assuring them of little price competition.

Restrictions on imports have caused American users to pay much more than the rest of the world for sugar. That gap recently blew out to its widest in a decade.
Mr. Vilsack’s comments raised the prospect of increased demand for global sugar and drove prices up 2.7%, or 0.44 cent, to 16.98 cents a pound on ICE Futures U.S. Prices for U.S. domestic sugar dropped 2.1%, to 30.8 cents a pound. That narrowed the gap between the two to 13.82 cents a pound.

For the full story, see:
CAROLYN CUI and BILL TOMSON , ILAN BRAT. “USDA Says It May Relax Sugar Quotas For This Year.” The Wall Street Journal (Weds., APRIL 14, 2010): C1 & C2.
(Note: ellipsis added.)
(Note: the title of the online version of the article is “USDA Says It May Relax Sugar Quotas.”)

Much of the Value of “Chinese” Imports is Added Outside of China

(p. A17) In a 2006 paper, Stanford University economist Lawrence Lau found that Chinese value-added accounted for about 37% of the total value of U.S. imports from China. In 2008, using a different methodology, U.S. International Trade Commission economist Robert Koopman, along with economists Zhi Wang and Shang-jin Wei, found the figure to be closer to 50%. In other words, despite all the hand-wringing about the value of imports from China, one-half to nearly two thirds of that value is not even Chinese. Instead, it reflects the efforts of workers and capital in other countries, including the U.S. In overstating Chinese value by 100% to 200%, the official U.S. import statistics are a poor proxy for job loss.

Seldom noted in the union-controlled discussion of trade on Capitol Hill is that the jobs of large numbers of American workers depend on imports from China. The proliferation of transnational production and supply chains has joined higher-value-added U.S. manufacturing, design, and R&D activities with lower-value manufacturing and assembly operations in China.
According to a widely cited 2007 study by Greg Linden, Kenneth L. Kraemer and Jason Dedrick of the University of California, Irvine, each Apple iPod costs $150 to produce. But only about $4 of that cost is Chinese value-added. Most of the value comes from components made in other countries, including the U.S. Yet when those iPods are imported from China, where they are snapped together, the full $150 is counted as an import from China, adding to the trade deficit and inflating EPI’s job-loss figures.
In reality, those imported iPods support thousands of U.S. jobs up the value chain–in engineering, design, finance, manufacturing, marketing, distribution, retail and elsewhere. A 25% tariff on imports from China would penalize the non-Chinese companies and workers who create most of the iPod’s value.

For the full commentary, see:
DANIEL IKENSON. “China Trade and American Jobs; Studies suggest that one-half to two-thirds of the value of ‘Chinese’ imports is added in other countries, including the U.S.” The Wall Street Journal (Fri., APRIL 2, 2010): A17.

April 22nd Was Tenth Anniversary of Democrats’ Infamous Betrayal of Elian Gonzalez

“In this April 22, 2000 file photo, Elian Gonzalez is held in a closet by Donato Dalrymple, one of the two men who rescued the boy from the ocean, right, as government officials search the home of Lazaro Gonzalez, early Saturday morning, April 22, 2000, in Miami. Armed federal agents seized Elian Gonzalez from the home of his Miami relatives before dawn Saturday, firing tear gas into an angry crowd as they left the scene with the weeping 6-year-old boy.” Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

Yesterday (April 22, 2010) was the tenth anniversary of one of the darkest days in American history—when the Clinton Administration seized a six year old child in order to force him back into the slavery that his mother had died trying to escape.

(p. 7A) MIAMI (AP) – When federal agents stormed a home in the Little Havana community, snatched Elian Gonzalez from his father’s relatives and put him on a path back to his father in Cuba, thousands of Cuban-Americans took to Miami’s streets. Their anger helped give George W. Bush the White House months later and simmered long after that.

. . .
Elian was just shy of his sixth birthday when a fisherman found him floating in an inner tube in the waters off Fort Lauderdale on Thanksgiving 1999. His mother and others drowned trying to reach the U.S.
Elian’s father, who was separated from his mother, remained in Cuba, where he and Fidel Castro’s communist government demanded the boy’s return.
Elian was placed in the home of his great-uncle, Lazaro Gonzalez, while the Miami relatives and other Cuban exiles went to court to fight an order by U.S. immigration officials to return him to Cuba. Janet Reno, President Bill Clinton’s attorney general and a Miami native, insisted the boy belonged with his father.
When talks broke down, she ordered the raid carried out April 22, 2000, the day before Easter. Her then-deputy, current U.S. Attorney General Eric Holder, has said she wept after giving the order.
Associated Press photographer Alan Diaz captured Donato Dalrymple, the fisherman who had found the boy, backing into a bedroom closet with a terrified Elian in his arms as an immigration agent in tactical gear inches away aimed his gun toward them. The image won the Pulitzer Prize and brought criticism of the Justice Department to a frenzy.
. . .
The Cuban government, which tightly controls media access to Elian and his father, said neither is willing to give an interview. A government representative agreed to forward written questions from the AP to Elian, but there has been no response.
Pepe Hernandez, president of the Cuban American National Foundation, said his group predicted in 2000 that Elian would become a prop for the Castro government if he were returned. It was one reason, he said, the group fought for him to be kept in the U.S. and would do it again today, although behind the scenes to avoid negative publicity for the Cuban-American community.
“We knew what this kid was going to be subjected to,” Hernandez said. “And time has proven us right.”

For the full story, see:
JENNIFER KAY and MATT SEDENSKY. “10 years later, few stirred by Elian Gonzalez saga.” Omaha World-Herald (Thurs., April 22, 2010): 7A.
(Note: ellipses added.)
(Note: the online version of the article is dated April 21, 2010 and has the title “10 years after Elian, US players mum or moving on.”)

Taxpayers Taking a Haircut as States “Scramble” to Find Something New to Tax

“A LITTLE OFF THE TOP; Michigan residents may have to pay a 5.5 percent tax for haircuts. States across the nation are considering similar taxes on services to solve their budget problems.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) In the scramble to find something, anything, to generate more revenue, states are considering new taxes on virtually everything: garbage pickup, dating services, bowling night, haircuts, even clowns.

“It’s hard enough doing what we do,” grumbled John Luke, a plumber in the Philadelphia suburbs. His services would, for the first time, come with an added tax if the governor has his way.
Opponents of imposing taxes on services like funerals, legal advice, helicopter rides and dry cleaning argue that this push comes as businesses are barely clinging to life and can ill afford to see customers further put off by new taxes. This is especially true, they say, in states like Michigan and Pennsylvania, where some of the most sweeping proposals are being considered this spring.
But this is also a period of economic gloom for states. Pension funds are in the red, federal stimulus help will soon vanish, and revenues from traditional sources like income and property taxes are slumping ever lower, with few elected officials willing to risk voter wrath by raising them.
. . .
(p. 20) But from coast to coast, desperate governments are looking to tap into new revenue streams.
In Nebraska, a lawmaker has introduced a bill to tax armored car services, farm equipment repairs, shoe shines, taxidermy, reflexology and scooter repairs. In Kentucky, Jim Wayne, a state representative, and some fellow Democrats are proposing taxing high-end services: golf greens fees, limousine and hot-air-balloon rides, and private landscaping.
In June, voters in Maine will decide whether to accept a state overhaul of its tax system that would newly tax services like tailor alterations, blimp rides, and entertainment provided by clowns, comedians and jugglers.

For the full story, see:
MONICA DAVEY. “States Seeking Cash Hope to Expand Taxes to Services.” The New York Times, First Section (Sun., ed: March 28, 2010): 1 & 20.
(Note: ellipsis added.)
(Note: the online version of the article is dated March 27, 2010, and has the title “States Seeking Cash Hope to Expand Taxes to Services.”)

Source of graph: online version of the NYT article quoted and cited above.

If We Want More Jobs, We Need More (Steve) Jobs

(p. A19) Mr. Obama and his advisers need to grasp this essential fact: Entrepreneurs are not just a cute little subsector of the American economy. They are the whole game. They will give us tomorrow’s Apples and the multiplier effect of small businesses and exciting new jobs that go with them. Entrepreneurs are necessary to keep our large multinationals on their toes. It’s no coincidence that the entrepreneurial flowering of the 1970s forced a managerial revolution in large companies during the 1980s and 1990s. Without Steve Jobs, there would have been no Lou Gerstner to reinvent IBM in the ’90s. Entrepreneurs like Steve Jobs make everyone better.

For the full story, see:
RICH KARLGAARD. “Apple to the Rescue?” The Wall Street Journal (Thurs., JANUARY 28, 2010): A19.

New York Forces Entrepreneur to Subsidize His Competitor

(p. A24) Last year, the State Legislature levied a new tariff on most of the businesses in the New York City region. The metropolitan commuter transportation mobility tax requires employers to set aside 34 cents for every $100 in payroll costs, and hand the money over to a battered, barely breathing patient on the state’s fiscal operating table: the Metropolitan Transportation Authority.

The tax has not worked out so well. So far, its projected revenues are coming in about $400 million below the state’s estimates — which, in part, will mean reduced subway and bus service for New Yorkers starting this summer. It has also prompted a furious backlash from suburban officials who resent bankrolling an agency that, they say, benefits the city at the expense of its surrounding counties.
And then there is William Schoolman, 69, amateur activist, self-described ”prototypical entrepreneur,” and proprietor of the Hampton Luxury Liner bus fleet. In December, he filed a lawsuit in State Supreme Court claiming the tax is unconstitutional and demanding its repeal. The reason?
”Competition,” Mr. Schoolman said in a recent telephone interview, anger rising in his voice. ”This is the first time that I ever had to pay a subsidy directly to my competitor. That’s the thing that really bothers me.”

For the full story, see:
MICHAEL M. GRYNBAUM. “Suing Over a Transit Tax, in the Name of Competition.” The New York Times (Tues., February 16, 2010): A24.

Market Entrepreneurs Versus Political Entrepreneurs

“James J. Hill (center) built a great railroad on his own dime.” Source of caption and photo: online version of the WSJ commentary quoted and cited below.

(p. A17) Let’s bring back the robber barons.

“Robber baron” became a term of derision to generations of American students after many earnest teachers made them read Matthew Josephson’s long tome of the same name about the men whose enterprise drove the American industrial age from 1861 to 1901.
Josephson’s cast of pillaging villains was comprehensive: Rockefeller, Carnegie, Vanderbilt, Morgan, Astor, Jay Gould, James J. Hill. His table of contents alone shaped impressions of those times: “Carnegie as ‘business pirate’.” “Henry Frick, baron of coke.” “Terrorism in Oil.” “The sack of California.”
I say, bring ’em back, and the sooner the better. What we need, a lot more than a $1,000 tax credit, are industries no one has thought of before. We need vision, vitality and commercial moxie. This government is draining it away.
The antidote to Josephson’s book is a small classic by Hillsdale College historian Burton W. Folsom called “The Myth of the Robber Barons: A New Look at the Rise of Big Business in America” (Young America’s Foundation). Prof. Folsom’s core insight is to divide the men of that age into market entrepreneurs and political entrepreneurs.
Market entrepreneurs like Rockefeller, Vanderbilt and Hill built businesses on product and price. Hill was the railroad magnate who finished his transcontinental line without a public land grant. Rockefeller took on and beat the world’s dominant oil power at the time, Russia. Rockefeller innovated his way to energy primacy for the U.S.
Political entrepreneurs, by contrast, made money back then by gaming the political system. Steamship builder Robert Fulton acquired a 30-year monopoly on Hudson River steamship traffic from, no surprise, the New York legislature. Cornelius Vanderbilt, with the slogan “New Jersey must be free,” broke Fulton’s government-granted monopoly.

For the full commentary, see:
DANIEL HENNINGER. “Bring Back the Robber Barons.” The Wall Street Journal (Mon., MARCH 4, 2010): A17.
(Note: the online version of the article is dated MARCH 3, 2010.)

The full reference for Folsom’s book is:
Folsom, Burton W. The Myth of the Robber Barons. 4th ed: Young America’s Foundation, 2003.

An “Entrepreneur’s Visa” to Let the Future Sergey Brin In

(p. A19) . . . , there is one way to create a lot more jobs without spending federal money. Let’s import them. More precisely, let’s import the people who create them: entrepreneurs.

A bipartisan bill that would begin to do just that was introduced on Feb. 24 by Sens. John Kerry (D., Mass.) and Richard Lugar (R., Ind.). Their “Startup Visa Act” would create a new, two-year visa for immigrant entrepreneurs whose firms attract at least $250,000 in financing from American angel investors or venture capital firms.
. . .
Here’s a way to improve on the Kerry-Lugar plan. Create a true “job creator’s visa,” one tied directly and only to job creation by new immigrant entrepreneurs. The visa could be a temporary one for immigrants already here on another visa who establish a business. It could then be extended if the firm hires at least one American non-family resident. The visa should become permanent once the enterprise crosses a certain job threshold (such as five or 10 workers). But it would not be tied to financing.
. . .
Google was founded by Sergey Brin, a Russian immigrant, and American Larry Page by borrowing funds from their own credit cards. Why on earth would we want to create an entrepreneurs’ visa that couldn’t let in the future Sergey Brin?

For the full commentary, see:
ROBERT E. LITAN. “Visas for the Next Sergey Brin; To create more jobs, let’s import more employers.” The Wall Street Journal (Mon., MARCH 8, 2010): A19.
(Note: ellipses added.)
(Note: the online version of the article is dated MARCH 7, 2010.)

United States Exports “High-Value-Added Services that Support Well-Paying Jobs”

Source of graph: online version of the WSJ article quoted and cited below.

(p. A23) Exports of American services have jumped by 84 percent since 2000, while the growth rate among goods was 66 percent. America trails both China and Germany in sales of goods abroad, but ranks No. 1 in global services by a wide margin. And while trade deficits in goods have been enormous — $840 billion in 2008 — the country runs a large and growing surplus in services: we exported $144 billion more in services than we imported, dwarfing the surpluses of $75 billion in 2000 and $58 billion in 1992.

Equally important, Commerce Department data show that the United States is a top-notch competitor in many of the high-value-added services that support well-paying jobs.
. . .
. . . , will Washington offer tax breaks or other export incentives? While businesses may clamor for them, these would be a setback for freer trade — after all, for years it has been America that has been hectoring other countries to end their subsidies to exporters. Will Washington try to pick winners in the global marketplace, like green energy? More often than not, this kind of industrial policy wastes money, fosters inefficiency and creates few permanent jobs.

For the full story, see:
W. MICHAEL COX. “An Order of Prosperity, to Go.” The New York Times (Weds., February 17, 2010): A23.
(Note: ellipses added.)

Small Nuclear Reactor Will Run on Spent Fuel From Big Reactors

“An artist’s modeling of the proposed EM2 reactor, which would be small enough to be transported by truck.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Nuclear and defense supplier General Atomics announced Sunday it will launch a 12-year program to develop a new kind of small, commercial nuclear reactor in the U.S. that could run on spent fuel from big reactors.

In starting its campaign to build the helium-cooled reactor, General Atomics is joining a growing list of companies willing to place a long-shot bet on reactors so small they could be built in factories and hauled on trucks or trains.
The General Atomics program, if successful, could provide a partial solution to one of the biggest problems associated with nuclear energy: figuring out what to do with highly radioactive waste. With no agreement on where to locate a federal storage site, that waste is now stored in pools or casks on utilities’ property.
The General Atomics reactor, which is dubbed EM2 for Energy Multiplier Module, would be about one-quarter the size of a conventional reactor and have unusual features, including the ability to burn used fuel, which still contains more than 90% of its original energy. Such reuse would reduce the volume and toxicity of the waste that remained. General Atomics calculates there is so much U.S. nuclear waste that it could fuel 3,000 of the proposed reactors, far more than it anticipates building.
The decision to proceed with its 12-year program indicates that General Atomics believes the time is right to both make a nuclear push and to try to gain approval for an unconventional design proposal despite the likely difficulty of getting it certified by the Nuclear Regulatory Commission.
The EM2 would operate at temperatures as high as 850 degrees Centigrade, which is about twice as hot as a conventional (p. B2) water-cooled reactor. The very high temperatures would make the reactor especially well suited to industrial uses that go beyond electricity production, such as extracting oil from tar sands, desalinating water and refining petroleum to make fuel and chemicals.

For the full story, see:
REBECCA SMITH. “General Atomics Proposes a Plant That Runs on Nuclear Waste.” The Wall Street Journal (Mon., February 22, 2010): B1 & B2.