Remote Area Medical’s Stan Brock, who spoke at the Cato Institute’s 2012 State Health Policy Summit, explains:
The culprit is state medical licensing laws. For more, read Cato adjunct scholar Shirley Svorny.
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Remote Area Medical’s Stan Brock, who spoke at the Cato Institute’s 2012 State Health Policy Summit, explains:
The culprit is state medical licensing laws. For more, read Cato adjunct scholar Shirley Svorny.
The lead article in the new Cato Policy Report is entitled “We Can Cut Government: Canada Did.” The article reviews Canada’s economic reforms since the 1980s, which have included free trade, privatization, spending cuts, sound money, large corporate tax cuts, personal tax reforms, balanced federal budgets, block grants, and decentralizing power by cutting the central government.
Those all sound like things we ought to pursue in America. The political systems of the two countries are different, but Canada’s pro-market reform lessons are universally applicable.
Canada’s reforms, for example, refute the Keynesian notion that cutting government spending harms economic growth. Canadian federal spending was cut from 23.3 percent of GDP in 1993 to 16.5 percent by 2000. Keynesians and their macro models would predict a crushing economic blow from such a spending reduction. They would argue that the “austerity” would slash “aggregate demand” and “take money out of the economy.”
Yet Canada’s spending cuts of the 1990s were coincident with the beginning of a 15-year economic boom that only ended when the United States dragged its neighbor into recession in 2009. As the government shrank in size during the 1990s, the Canadian unemployment rate plunged from more than 11 percent to less than 7 percent.
Canada still has a large welfare state, and its provincial governments are prone to overspending. However, its experience shows that even a modest dose of public sector austerity combined with pro-market reforms can lead to substantial gains in private-sector prosperity. American and European leaders still under the Keynesian spell should take note.
I sometimes wonder whether journalists have the slightest idea of how capitalism works.
In recent weeks, we’ve seen breathless reporting on the $2 billion loss at JP Morgan Chase, and now there’s a big kerfuffle about the falling value of Facebook stock.
In response to these supposed scandals, there are all sorts of articles being written (see here, here, here, and here, for just a few examples) about the need for more regulation to protect the economy.
Underlying these stories seems to be a Lake Wobegon view of financial markets. But instead of Garrison Keillor’s imaginary town where “all children are above average,” we have a fantasy economy where “all investments make money.”
I don’t want to burst anyone’s bubble or shatter any childhood illusions, but losses are an inherent part of the free market movement. As the saying goes, “capitalism without bankruptcy is like religion without hell.”
Moreover, losses (just like gains) play an important role in that they signal to investors and entrepreneurs that resources should be reallocated in ways that are more productive for the economy.
Legend tells us that King Canute commanded the tides not to advance and learned there are limits to the power of a king when his orders had no effect.
Sadly, modern journalists, regulators, and politicians lack the same wisdom and think that government somehow can prevent losses.
But perhaps that’s unfair. They probably understand that losses sometimes happen, but they want to provide bailouts so that nobody ever learns a lesson about what happens when you touch a hot stove.
Government-subsidized risk, though, is just as foolish as government-subsidized success.
The collusion between big business and big government that fleeces the rest of us has struck again — Tim Carney, iMessage your office — this time in the sports world.
Minnesota governor Mark Dayton recently signed the midnight deal that state lawmakers struck with the owners of the state’s football team, the Minnesota Vikings, to build the team a new stadium. This caused plenty of celebration in Minneapolis and elsewhere across the Gopher State. Alas, the hangover is about to come for taxpayers regardless of their gridiron allegiance or level of fandom.
As former Cato legal associate (and Minnesotan) Nick Mosvick and I write in the Huffington Post, these stadium deals hurt most fans:
That’s because they lead to increased taxes and higher prices, squeezing the average fan for the benefit of owners and sponsors. And that’s not even counting the overwhelming majority of taxpayers, regardless of fandom, who never set foot in these gladiatorial arenas.
Let’s look at this particular deal. The stadium costs $975 million on paper, with over half coming from public funds, $348 million from the state and $150 million from Minneapolis—not through parking taxes or other stadium-related user fees, but with a new city sales tax. In return, the public gets an annual $13 million fee and the right to rent out the stadium on non-game-days.
Vikings ownership, NFL commissioner Roger Goodell, and local politicians make a typical pitch for the deal: the stadium will attract investment to the area; local establishments will see a rise in game-day sales of $145 million; jobs will be created, including 1,600 in construction worth $300 million ($187,500 per job?!); tax revenues will increase $26 million; property values will rise; and, of course, the perennially underachieving team’s fortunes will improve.
Such arguments are always trotted out for these sweetheart deals, but the evidence regarding the economic effects of publicly financed stadiums consistently tells a different story. For example, Dennis Coates and Brad Humphreys performed an exhaustive study of sports franchises in 37 cities between 1969 and 1996 and found no measurable impact on per-capita income. The only statistically significant effects were negative ones because revenue gains were overshadowed by opportunity costs that politicians inevitably ignore.
An older study looked at 12 stadium areas between 1958 and 1987 and found that professional sports don’t drive economic growth. A shorter-term study looked at job growth in 46 cities from 1990 to 1994 and found that cities with major league teams grew more slowly. Even worse, taxpayers still service debt on now-demolished stadiums, including the $110 million that New Jersey still owes on the old Meadowlands and the $80 million that Seattle’s King County owes on the Kingdome. And we shouldn’t forget that local governments often employ property-rights-trampling eminent domain to facilitate these money-squandering projects.
Read the whole thing. It’s not a matter of ideology; we even quote Keith Olbermann approvingly!
The point is that these deals benefit team owners and the politicians who get to wrap themselves in team colors to the exclusion of taxpayers or fans (who are priced out of the games their increased taxes support). If luxury stadiums were hugely profitable, why would the savvy businessmen who own the teams let the politicians in on the windfall?
To be fair about it, New York Times columnist Nicholas Kristof has written some pretty good stuff about the Drug War and other topics. But when he’s having a weak day, he’s weaker than watered beer, or so I conclude in a new Reason piece about his latest crusade.
Last week Kristof urged readers to boycott Anheuser-Busch products until the brewer cuts off beer sales near the alcoholism-ravaged Pine Ridge reservation of the Oglala Sioux. Whatever you think of the paternalistic premises at work here, Nebraska’s system of wholesaler-protective beer regulation appears to make it impossible, even unlawful, for the maker of Budweiser to do any such thing. And Kristof’s second proposal, to extend the boundaries of the reservation itself, fails to allow for obvious adaptive responses by both sellers and buyers.
Kristof has more insight than most of his colleagues into why the Drug War has failed. Why does he seem to forget those insights when it comes to the most familiar of legal drugs?
While perhaps more identified with eating than drinking, New Jersey Governor Chris Christie — who headlined Cato’s recent Milton Friedman Prize Dinner — signed a law in January that allowed out-of-state winemakers to sell directly to in-state consumers and retailers. This wasn’t a spontaneous bit of New Year’s bonhomie — the U.S. Court of Appeals for the Third Circuit had ruled in Freeman v. Corzine that the previous rules benefiting in-state wineries was unconstitutional (that pesky Commerce Clause again) — but still it was a positive sign: even Wine Spectator took note.
More importantly, the district judge in charge of the nine-year lawsuit challenging that earlier law recently approved the consent decree whereby New Jersey’s new law remedied the claims brought by the out-of-state wineries. The agreement creates an out-of-state plenary winery license (good luck saying that after having consumed too much of the the vintage) under which “foreign” wine can compete on an equal playing field with good ol’ New Jersey stock. Specifically, the new law grants this license to out-of-state applicants, including those who sell their wares over the internet, who do not produce more than 250,000 gallons of wine per year and are duly licensed in another state.
The upshot is that the new law takes effect as of this month.
This all still seems like a bit too much regulation to me, but at least everyone is now subject to the same rules. I may have to take advantage of this newfound freedom when I travel up to the Garden State for my college reunion in a few weeks.
For my previous writings on booze and the Commerce Clause, read this and listen to this.
Some politicians say that banks need more regulation because JPMorgan Chase lost $2 billion, about 2 percent of its annual revenue.
Meanwhile, the federal government will have a deficit of about $1.3 trillion this year, more than half its annual revenue (and about a third of its annual spending).
Is there some sort of regulation that might remedy that?