When talking to groups about the political economy of trade protection, I always mention concentrated benefits versus diffuse costs. Public choice theory explains many bad policies, of course, but tariffs and subsidies are excellent examples of interventions that benefit the few at the expense of the many.

Congress, or specifically two members of that esteemed body, have recently provided me with a textbook example. The Generalized System of Preferences is a federal program that offers duty-free access to the U.S. market to certain goods from certain developing countries. Or, I should say, was a federal program, because it expired on December 31. My opinion of the program is ambivalent at best, but one cannot deny that the program brings real cost savings to American consumers and businesses — to the tune of $580 million a year — through lower import duties.

But those duty savings are, apparently, worthless in the face of special interest politics. From Inside U.S. Trade on January 6 [$]:

An Alabama sleeping bag manufacturer that benefited from the expiration late last year of the Generalized System of Preferences (GSP) program is now taking further steps in an attempt to ensure that Congress does not renew the program this year in the same form.

Exxel Outdoors CEO Harry Kazazian this week said his company is in the process of expanding its U.S. plant by adding workers and increasing production, and that this expansion is occurring as a direct result of the fact that Congress allowed the GSP program to expire on Dec. 31.

Under GSP, Bangladeshi sleeping bags that competed with the Exxel Outdoors product were able to enter the U.S. duty-free. On behalf of Exxel Outdoors, Sen. Jeff Sessions (R‑AL) last year refused to let any renewal of GSP pass that would not remove at least some sleeping bags from the scope of the GSP program (Inside U.S. Trade, Dec. 23).

With the future of the GSP program still uncertain, Kazazian said he is now expanding his Alabama plant in part to put pressure on Congress to either not renew the GSP program, or renew it in a modified form that would exclude imported sleeping bags from its scope.

Kazazian said that if GSP is renewed in its old form, he would have to reverse his expansion plans. He reasoned that members of Congress may be more willing to accommodate Sessions and remove sleeping bags from GSP if faced with the prospect that renewing the program in its full form would lead to the firing of U.S. workers.

“I can’t see how anyone would make any decisions against us,” he said in an interview this week. “We are going to work as hard as we can to make sure sleeping bags are exempted from the GSP.”

These expansion plans must be really something if they can justify holding up such a broad program, right?

Kazazian said that he plans to hire 20 additional employees to start a fourth production line at the Alabama plant. He said he will commence the first phase of its expansion this month by investing in additional equipment and retooling the plant’s operations.

That’s right, readers. The GSP expired and millions of U.S. consumers and businesses (not to mention developing country exporters) are being penalized to save a hypothetical 20 (that’s two-zero) jobs that don’t even exist yet. The jobs being lost by businesses that depend on the GSP to keep them competive are, apparently, not worth consideration. And as for consumers’ buying power being eroded, well forget it.

Come back, Mancur Olson. Your country needs you.

Advocates of limited government often worry about how to maintain republican government and freedom if a substantial portion of the population don’t pay taxes and are net beneficiaries of government largesse.

Lately, it seems like a lot of the advocates of bigger government and higher taxes don’t pay their own taxes — like Tom Daschle, Timothy Geithner, Eleanor Holmes Norton, Charles Rangel, Al Franken, Governor David Paterson’s top aide, Democratic National Convention staffers, Al Sharpton, and so on.

Now the Washington Post has found another one:

Since joining the D.C. Council two years ago, Michael A. Brown has become the chief advocate for raising taxes on the city’s wealthiest residents, arguing that those who earn at least $250,000 a year are not paying their share.

Yet Brown and his wife have failed to pay the property taxes on a Chevy Chase home assessed at $1.4 million, according to public records. Brown, who earns more than $300,000 a year, owes the District $14,263 for property taxes, the records show.

I guess it’s easy to support higher taxes if you don’t intend to pay them. But I suggest that Brown bite the bullet, recruit Daschle, Franken, Norton, and their colleagues, and form a new organization:

Non-Taxpayers for a Tax Hike

If the Army is educating recruits about “geolocation,” maybe you should know about it too. In fact, the U.S. Army primer entitled “Geotags and Location-Based Social Networking” is a pretty good basic resource. Check it out.

Understand this: Your mobile phone sends out signals to cell towers, creating records of where you go throughout your day. If it is enabled with GPS, it can produce even more precise location information.

Law enforcement and intelligence agencies are rushing to exploit the potential of geolocation data, acquiring details of people’s movements and activities that once required costly, 24/7 surveillance. Uses of these data range from tracking fugitives, to reconstructing suspects’ travels, to analyzing the movements of whole populations in search of “suspicious” behavior patterns.

Senator Ron Wyden (D‑OR) is drafting legislation to set standards for government access to geolocation data under both criminal law and the Foreign Intelligence Surveillance Act. On Wednesday, January 26th, Cato will host him at an event we’ve titled “Location-Tracking Technology and Privacy.”

We’ll ask you to silence your cell phone when the program starts. You might consider turning it off on the way here…

Register now.

In a recent post on earmarks and federal grants, I cited the crazy example of HUD’s Community Development Block Grant program funding facade renovations for a wine bar in Connecticut. Now a Michigan newspaper reports that Bell’s Brewery in Kalamazoo is looking for $220,000 in CDBG money to expand its facilities.

I consider Bell’s to be one of the finest breweries in the United States. Bell’s desire to expand its production facilities reflects its success in getting people to part with their money voluntarily in exchange for their products. Now federal taxpayers, whether they like Bell’s or beer, could effectively be forced to give their money to Bell’s.

There are over 1,500 craft breweries in the United States. Those breweries must pay federal taxes, so if Bell’s were to receive its grant, then the federal government would basically be forcing the other breweries to subsidize a competitor. Should the federal government therefore be in the business of subsidizing all craft breweries in the United States? It’s doubtful that any federal politician would answer in the affirmative. Why then the special treatment for Bell’s?

This is a perfect illustration of why government subsidies for economic development are immoral. Politicians and their benefactors justify the redistribution by pointing to the jobs and development created (often allegedly) by the subsidies. But they completely ignore the fact that the handouts cannot occur without money being taken out of somebody else’s hand first. Therefore, what politicians innocuously label as “economic development” can also accurately be labeled as “theft.”

As a Cato essay on community development programs states, “Community development is a local concern, and only local leaders and businesses using their own funds can make sound cost-benefit decisions on projects.”

I’ve decided the time has come to become an entrepreneur — as a black market operator.

Come next January, 100-watt incandescent light bulbs will be illegal, courtesy of Congress and President George W. Bush. Lower wattages will be banned the following year. As usual, politicians in Washington believe they know best and are determined to inconvenience the public in the name of saving energy.

No matter that incandescent lights offer a softer light and are a better value than fluorescent bulbs if turned on only briefly. And no matter that breaking a fluorescent light will spill mercury, creating what in any other circumstance would be considered to be a biohazard.

There are other consequences of the coming prohibition. Notes Tim Carney of the Washington Examiner:

• Citing this law, GE has closed its incandescent light plant in Virginia. For the coming years, while they’re still legal, Americans will be buying their GE incandescents from Mexico. This probably means less efficient manufacturing and more shipping.
• GE makes its CFLs in China. The factories are likely dirtier and less efficient, and certainly there will be more shipping costs.
• Because of the warm-up time for CFLs and the knowledge that they use less energy, people are more likely to leave them on for longer, I imagine.
• In northern latitudes, incandescents’ inefficiency is not wasted. Think about it: in Alaska, summer nights are very short and winter nights are very long. That means a vast majority of light-bulb time happens in the winter. The incandescents waste energy in the form of heat, but if it’s cold, that added heat slightly reduces your need to use a furnace.

And why stop there? I could become an incandescent bulb pusher once the prohibition takes effect. I don’t think drug prohibition makes any sense, but I have no desire to get into that market. Customers and competitors are an ugly lot and I really don’t want to go to prison. But selling light bulbs — now there’s something I could do!

I’d be even happier, however, if the new Congress dropped the coming prohibition. Fluorescent bulbs often are a wise choice, but not always. A supposedly free society should leave at least a few choices to people — like deciding which light bulbs to use.

Last year I hit about 35 states on various lecture/​debate tours. To round that out — and further reduce the states I’ve never visited (though Alaska, Iowa, Nebraska, and the Dakotas will stubbornly remain untrodden by my feet) — this winter I have a schedule that’s eventful but not insane like my fall was. Here are the rest of my public events in January (all sponsored by the Federalist Society):

• Jan. 18 at noon — Debate on the Constitutionality of Obamacare — University of Colorado-Boulder Law School 
• Jan.19 at noon — Debate on the Constitutionality of Obamacre — University of Wyoming Law School
• Jan.20 at 11am — Debate on the Constitutionality of Obamacare – BYU Law School 
• Jan.24 at 12:15pm — Debate on the Use of Foreign Law in Constitutional Interpretation – University of Utah Law School 
• Jan.26 at 5pm — Debate on the Constitutionality of Obamacare – Widener University Law School (Wilmington, DE campus) 

As always, if you attend any of these events, please do come up and introduce yourself. You can also follow me on Twitter at @ishapiro.

A common rationale for federal policies to expand homeownership is the desire to reduce observed racial differences in homeownership. Receiving the most attention has been the gap in homeownership rates between white households and African-American. The current homeownership rate for whites is 76.5% (2007), while that for African-Americans is 54%, leaving a gap of 22.5%.

Limitations on available data have made observations prior to 1940 difficult (1940 was the first “Census of Housing”). A new working paper adds to our understanding by constructing a time series back to 1870, using previous Census data. The findings are quite surprising.

In 1870 the gap between white and African-American homeownership rates stood at an astonishing 48.8 percent. As mentioned, this gap in 2007 was 22.5%, representing a 26.3 percentage point decline. However, of that 26.3 narrowing, 25.3 occurred before 1910. That is correct, almost all of the decline in the racial homeownership gap occurred before we had any national policies targeting said gap. Given all the massive resources that have been devoted to pushing homeownership, it is somewhat surprising that these policies have made almost no difference in the racial homeownership gap.

Obviously homeownership rates in general, and by race, have steadily increased (until the recent bursting of the housing bubble), but these rates largely increased the same across racial groups. We should also note that the vast majority, if not all, of the racial homeownership gap is explained by factors such as age, income, family status, wealth and local housing costs (see Coulson and Dalton forthcoming). Given what little impact these policies have had, and their significant costs, it should be clear that we, as a society, would be better off abandoning efforts to socially engineer a specific homeownership rate, either for the population in general or by racial group.