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Saturday, February 06, 2016

high taxation and cartels

A Primer on Tax Havens (Dan Mitchell)
What we’re seeing throughout the world today are international bureaucracies and politicians from high-tax nations launching a very coordinated attack against these jurisdictions. In effect, what’s happening is that the high-tax nations of the world want to set up something equivalent to OPEC. But instead of a cartel to keep energy prices high on behalf of oil producing countries, it’s an effort by politicians in high-tax nations to create a cartel that will keep taxes high.

Most economists recognize that cartels are a bad idea. And if it’s a bad idea for there to be cartels in the private sector, it’s a horrible idea to have cartels among governments; and yet that’s what the Organization for Economic Cooperation and Development (OECD), the European Commission, and various politicians from high-tax nations are trying to do.

The problem is, politicians for the most part don’t like low-tax policies. How do politicians win elections, how do they reward contributors, how do they steer money to their supporters? They do it by imposing high tax rates and then using the money to divvy up among those that are on their side. So why are they trying to attack tax havens? Because tax havens are the most powerful instrument of tax competition. (...)

Today, labor and capital are a lot more mobile, which means that taxpayers around the world have options to move either themselves or their money across borders if governments are trying to impose high tax rates. (...)

The number-one thing on the OECD’s list is no or nominal taxes. So if you are a free-market, laissez-faire jurisdiction with a low tax burden, the OECD wants to punish you. There is no blacklist from the OECD of high-tax countries—the countries that are actually punishing growth and impoverishing people with bad policy. No, there’s only a blacklist of jurisdictions that are doing the right thing. But it’s not just the OECD. The European Commission has all sorts of various anti-tax competition, pro-tax harmonization schemes.

By the way, I can’t resist pointing out the irony of something. If you work for the OECD, you get a very generous salary, and you work in an elaborate chateau over in Paris. And guess what? By international treaty, you pay no tax. So we have these well-fed bureaucrats working at the OECD in the nice chateau—with its own private wine cellar—and they fly around the world in business class telling jurisdictions with low taxes that they’re doing something wrong and should be blacklisted, and yet these bureaucrats pay zero tax. (...)

When you listen to the politicians, what do they always say? “We’re trying to stamp out tax evasion.” Well, all the academic evidence out there says one thing: tax evasion is linked to one variable—tax rates. You can shut down all the low-tax jurisdictions, but it’s not going to affect tax compliance so long as tax rates are high.

Security paper tigers (2)

Time to close the TSA
When the Transportation Security Administration dispatched undercover investigators last spring to test the effectiveness of airport checkpoints, the results were deplorable. Agents posing as passengers were able to smuggle weapons and mock explosives through 67 out of 70 TSA checkpoints — a failure rate of 95 percent. Following that debacle, the TSA’s acting administrator was given the boot, and the Department of Homeland Security announced that it had “immediately directed TSA to implement a series of actions, several of which are now in place, to address the issues raised in the report.”

That was in June. In July, a new TSA chief pledged to lawmakers that within 60 days “we will have trained the failure out of the front line” of airport screening personnel. So how do things stand four months later? The House Oversight and Government Reform Committee held a hearing on that question last week, with Homeland Security Inspector General John Roth as the key witness. Roth reported the final results of the the undercover testing at US airports, and he didn’t beat about the bush. “The test results were disappointing and troubling,” he said. “The results were consistent across every airport. . . . The failures included failures in the technology, failures in TSA procedures, and human error. We found layers of security simply missing.’’ (...)

Fourteen years after the creation of the TSA, there is still no indication that the agency has ever caught a terrorist, or foiled a 9/11-type plot in the offing. Conversely, there are reams of reports documenting the inability of TSA screeners to spot hidden guns, knives, bomb components, and other dangerous contraband as they pass through airport checkpoints. It’s doubtful that anyone is still capable of being surprised by a fresh confirmation of the TSA’s incompetence — even if members of Congress do sometimes feign alarm for the sake of the folks back home.

Sunday, August 09, 2015

Why the euro's not so bad

Personally I'd prefer a currency that no government or government-mandated institution could control but failing that, the euro is in fact a much better solution for countries with historically weak currencies than allowing their respective governments to devalue the local currency. John Cochrane expands on that point:
Conversely, and perhaps more centrally, I'm less trusting of the stabilizing influence of central banks. Dispassionate omniscient central banks can, in theory, wisely spot demand shocks and cleverly devalue currencies to offset them, while not responding to supply shocks, political demands, and so forth. The same technocrats could quietly redefine the meter as needed to let tailors respond to shocks without changing prices.

But the history of small-country central banks is not so reassuring. Greece and Italy's repeated devaluations and inflations did not bring great prosperity.

Joining a common currency is a pre-commitment against bad monetary policy as well as foreswearing of hypothetical good monetary policy. Political forces seldom think there's enough stimulus. When Greece and Italy they joined the euro, they basically said, defaulting and inflating now will be extremely costly. They were rewarded for the precommitment with very low interest rates. They blew the money, and are now facing the high costs they signed up for. But that just shows how real the precommitment was.

Saturday, June 06, 2015

Security paper tigers

The latest news on US airport security theatre, as reported by ABC (via Zero Hedge):
An internal investigation of the Transportation Security Administration revealed security failures at dozens of the nation’s busiest airports, where undercover investigators were able to smuggle mock explosives or banned weapons through checkpoints in 95 percent of trials, ABC News has learned. The series of tests were conducted by Homeland Security Red Teams who pose as passengers, setting out to beat the system. According to officials briefed on the results of a recent Homeland Security Inspector General’s report, TSA agents failed 67 out of 70 tests, with Red Team members repeatedly able to get potential weapons through checkpoints. In one test an undercover agent was stopped after setting off an alarm at a magnetometer, but TSA screeners failed to detect a fake explosive device that was taped to his back during a follow-on pat down.
No reason to worry however, I'm sure they have everything under control:
“Upon learning the initial findings of the Office of Inspector General's report, Secretary Johnson immediately directed TSA to implement a series of actions, several of which are now in place, to address the issues raised in the report,” the DHS said in a written statement to ABC News. Homeland security officials insist that security at the nation’s airports is strong – that there are layers of security including bomb sniffing dogs and other technologies seen and unseen. But the officials that ABC News spoke to admit these were disappointing results.
Even though the outcome of this investigation was clearly not a one-off:
This is not the first time the TSA has had trouble spotting Red Team agents. A similar episode played out in 2013, when an undercover investigator with a fake bomb hidden on his body passed through a metal detector, went through a pat-down at New Jersey's Newark Liberty Airport, and was never caught. More recently, the DHS inspector general’s office concluded a series of undercover tests targeting checked baggage screening at airports across the country. That review found “vulnerabilities” throughout the system, attributing them to human error and technological failures, according to a three-paragraph summary of the review released in September.
But they probably just need to spend some more resources on it, right? It's extremely difficult to fight terrorism when you're not adequately funded:
In addition, the review determined that despite spending $540 million for checked baggage screening equipment and another $11 million for training since a previous review in 2009, the TSA failed to make any noticeable improvements in that time.

Saturday, May 30, 2015

BBC's neutral maths

From the Beeb:
Huge Republic of Ireland vote for gay marriage
The Republic of Ireland has voted overwhelmingly to legalise same-sex marriage in a historic referendum.
Huge? Overwhelming? How much is that exactly?
More than 62% voted in favour of amending the country's constitution to allow gay and lesbian couples to marry. 
6 out of 10 is huge and overwhelming. Had it been 5 out of 10 and there would be no clear outcome. 62% is not even enough for a qualified majority in several places around the world. If the BBC can't be trusted to report on other countries' political processes from an objective and neutral point of view, how could they ever do so on issues pertaining to the UK?

Sunday, April 12, 2015

Já comprei o bilhete de regresso


O camarada Jerónimo teme que Passos Coelho transforme Portugal numa Singapura da Europa aplicando uma política de salários baixos. Eu não sei bem o que é que os assessores políticos do camarada consideram um salário baixo mas o salário médio singapurense é mais do dobro do português e a taxa de desemprego por aquelas bandas é inferior a 2% enquanto em Portugal se situa actualmente nos 13%. Claramente um resultado indesejável para algumas pessoas que rejeitam os confortos da sociedade materialista e crêem que viver a pão e água em nome do bem comum é um ideal ao qual aspirar.

Monday, April 06, 2015

Campaign for Real Beauty

Love and learn to accept your body the way it is. Unless you're very thin of course, in which case you should be ashamed and we'll make it illegal for you to find work:
Using a model who has a BMI under 18 could result in jail time

France has become the latest country to ban excessively skinny models from working in the ultra-chic country’s fashion industry, joining Israel, Spain and Italy.

According to Reuters, the French legislature voted for a bill Friday the declares: “The activity of model is banned for any person whose Body Mass Index (BMI) is lower than levels proposed by health authorities and decreed by the ministers of health and labor.”

Tuesday, March 24, 2015

News from the ant colony

An example of EastEnders'​ popularity is that after episodes, electricity use in the United Kingdom rises significantly as viewers who have waited for the show to end begin boiling water for tea, a phenomenon known as TV pickup. Over five minutes, power demand rises by three GW, the equivalent of 1.5 to 1.75 million teakettles. National Grid personnel watch the show to know when closing credits begin so they can prepare for the surge, asking for additional power from France if necessary. [link]

Sunday, March 08, 2015

Decline and Fall

The Dying Russians
Sometime in 1993, after several trips to Russia, I noticed something bizarre and disturbing: people kept dying. I was used to losing friends to AIDS in the United States, but this was different. People in Russia were dying suddenly and violently, and their own friends and colleagues did not find these deaths shocking. Upon arriving in Moscow I called a friend with whom I had become close over the course of a year. “Vadim is no more,” said his father, who picked up the phone. “He drowned.” I showed up for a meeting with a newspaper reporter to have the receptionist say, “But he is dead, don’t you know?” I didn’t. I’d seen the man a week earlier; he was thirty and apparently healthy. The receptionist seemed to think I was being dense. “A helicopter accident,” she finally said, in a tone that seemed to indicate I had no business being surprised.

The deaths kept piling up. People—men and women—were falling, or perhaps jumping, off trains and out of windows; asphyxiating in country houses with faulty wood stoves or in apartments with jammed front-door locks; getting hit by cars that sped through quiet courtyards or plowed down groups of people on a sidewalk; drowning as a result of diving drunk into a lake or ignoring sea-storm warnings or for no apparent reason; poisoning themselves with too much alcohol, counterfeit alcohol, alcohol substitutes, or drugs; and, finally, dropping dead at absurdly early ages from heart attacks and strokes.

Back in the United States after a trip to Russia, I cried on a friend’s shoulder. I was finding all this death not simply painful but impossible to process. “It’s not like there is a war on,” I said. “But there is,” said my friend, a somewhat older and much wiser reporter than I. “This is what civil war actually looks like. “It’s not when everybody starts running around with guns. It’s when everybody starts dying.”

Saturday, February 07, 2015

Menos mal que nos queda Portugal

Quando uma pessoa pensa que é difícil encontrar um país europeu mais burocrático e com uma adminstração pública menos eficiente...
Anton sai da assembleia de voto. Não saí apenas com um boletim, tem uma resma de papel nas mãos. Sim, na Grécia, não há um boletim de voto. Há 20, um por cada um dos 19 partidos concorrentes, mais um para os que queiram votar em branco. O eleitor escolhe o papel do partido preferido que contém uma lista de nomes com os candidatos a deputados. Desse conjunto faz uma cruz em quatro. O processo continua com a colocação do papel escolhido num envelope que se insere na urna. Quanto aos restantes 19 têm um final comum, vão para o lixo.

Sunday, May 25, 2014

Picking on Piketty

A classic example of confirmation bias:
While Americans swooned over Thomas Piketty and his thesis about ever-rising inequality it has taken a Brit, the FT’s Chris Giles, to expose the corruptions in his data. What he has found – on the cover of today’s FT and in detail on a blog here – is shocking because the errors are so basic. And yet on this, Piketty has built a manifesto for all kinds of tax rises. It makes you wonder how his publisher, Harvard University Press, allowed such flaws to enter print. (...) 
The points Chris Giles so powerfully makes ought to have been picked up by any serious peer review process. (...) Perhaps the idea of one’s instincts being proving empirically correct is rather intoxicating, which partly explains the success of his book. Perhaps Piketty gave the left intelligentsia a story which (as tabloid hacks say) was “too good to check”. 
But what about Harvard University Press? Piketty’s publisher there, Ian Malcolm, is interviewed here. From the sounds of it, he just reprinted the French version without applying the checks and balances that you’d hope would be applied to a Harvard economics book. He says how much money Piketty has made his company, and concluded by saying: “As long as there is bullshit and inequality, we won’t go out of business.” Quite.
It's worth reading the full article in The Spectator.

Also recommended: What Piketty Misses

Sunday, September 01, 2013

Don't mention the war

The last Jew in Vinnitsa [1941]
One of the worst consequences of living in a post-war era is that all the talking heads will then be trying to fix whatever they believe were the set pre-conditions leading up to the war they have just been through. Sometimes they get it right and implement worthy policies such as having an independent central bank, a policy first implemented by the Bundesbank in order to avoid a similar situation to the Weimar Republic's hyperinflation in the 1920s, which is usually seen as one of the determining factors of Hitler's rise to power.

Sometimes, however, they get it all wrong. One of the most common arguments put forward by proponents of military conscription in Germany has been that it is necessary to keep very strong ties between the military and society so that nothing like the Schutzstaffel will ever again be conceivable. While it is true they were a paramilitary organisation, just like many others which came to life throughout the Weimar Republic, this obviously ignores the fact Hitler was democratically elected and used the full force of the existing military apparatus for his own purposes. And what could possibly be better for the state than having a very submissive population - by the very nature of the mandatory conscription - who has been trained to kill people and obey their military superiors without question? Well, having a submissive population who has also been ideologically indoctrinated.

Homeschooling is currently illegal in Germany. Not very surprisingly, the ban dates back to the third Reich:
One of Hitler and his buddies' first acts on taking office was to establish the Reich Ministry of Education and give it control of all schools, including private schools. Nobody was to have the right to teach children from a different point of view than the State (with a capital "S"). There would be no right to teach from a distinctively religious point of view, especially. As Hitler said on May 1, 1937, "The Youth of today is ever the people of tomorrow. For this reason we have set before ourselves the task of innoculating our youth with the spirit of this community of the people at a very early age, at an age when human beings are still unperverted and therefore unspoiled. This Reich stands, and it is building itself up for the future, upon its youth. And this new Reich will give its youth to no one, but will itself take youth and give to youth its own education and its own upbringing."
This also seems to be the actual position of the German state in the present day:
German homeschoolers have told us on numerous occasions that your calls are working despite the response many of you have received from the [German] Embassy [in the United States]. In part, the Embassy stated that homeschooling should not be legal because "The public has a legitimate interest in countering the rise of parallel societies that are based on religion or motivated by different world views and in integrating minorities into the population as a whole."
Yes, I'm afraid you've read that right. The best way to get a healthy society is to make sure everyone gets their education approved by the government, all the while erasing every sign of individuality and killing any seeds of political dissident before they are even allowed to coalesce by making everyone conform to the same standard. I wonder what could possibly go wrong. If you thought Milgram and Asch's experiments had taught us anything, you are now probably wondering how long we'll have to wait for the 'burning of books and burying of scholars'.

Alas, we reach the point of this diatribe of mine - a couple of days ago something curious happened in Darmstadt. I recommend reading the whole article:
At 8:00 a.m. on Thursday, August 29, 2013, in what has been called a “brutal and vicious act,” a team of 20 social workers, police officers, and special agents stormed a homeschooling family’s residence near Darmstadt, Germany, forcibly removing all four of the family’s children (ages 7-14). The sole grounds for removal were that the parents, Dirk and Petra Wunderlich, continued to homeschool their children in defiance of a German ban on home education.

The children were taken to unknown locations. Officials ominously promised the parents that they would not be seeing their children “anytime soon.” (...) Moreover, Germany has not even alleged educational neglect for failing to provide an adequate education. The law ignores the educational progress of the child; attendance—and not learning—is the object of the German law.

Judge Koenig, a Darmstadt family court judge, signed the order on August 28 authorizing the immediate seizure of Dirk and Petra Wunderlich’s children. Citing the parents’ failure to cooperate “with the authorities to send the children to school,” the judge also authorized the use of force “against the children” if necessary, reasoning that such force might be required because the children had “adopted the parents’ opinions” regarding homeschooling and that “no cooperation could be expected” from either the parents or the children. 
So, how do you prevent a society from turning into a totalitarian state? It appears the answer is to act pre-emptively and make it turn into a totalitarian state as quickly as possible.

Tuesday, June 25, 2013

What is the definition of irony?

From the administration that has been spying on everything from here to Pluto and subsequently charged Edward Snowden with espionage, we now get this one:
(...) on Friday, White House officials today publicly pressured Hong Kong authorities to give him up. “If Hong Kong doesn’t act soon, it will complicate our bilateral relations and raise questions about Hong Kong’s commitment to the rule of law,” a senior Obama administration official told Reuters Saturday afternoon.
I swear that sometimes I can't tell whether government officials are serious or simply laughing in everyone's face.

Friday, April 19, 2013

Poor choice



Remember to wear a Che Guevara shirt next time, kiddo. Those never seem to get anyone in trouble.