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"Get a government job," they said

September 25, 2016

The pension shortfall in Illinois – at $111 billion (highest in the U.S.) – dwarfs Oregon’s problem.

But this news is surprising because recent reports showed Oregon’s pensions funds as ‘fully funded.’

Oregon officials face truth behind state’s soaring public pension costs
‘It’s a little bit like a Ponzi scheme,’ the chair of the Oregon Investment Council says

PORTLAND — Just how bad is Oregon’s public pension funding crisis?

Bad enough that Rukaiyah Adams, the normally polished investment professional who is vice chair of the Oregon Investment Council, broke down in tears last week as she spoke of passing a record $22 billion in unfunded promises to future taxpayers.

“My call to the Legislature and to the governor is for leadership on this, and I mean right now,” Adams said during last Wednesday’s joint meeting of the Oregon Public Employees Retirement System board and the citizen panel that oversees its investments. “This is becoming a moral issue. We can’t just talk about numbers anymore.”

The numbers are bleak. Oregon’s pension system owes billions of dollars more to retirees than it has, and the last major attempt to fix the problem was shot down in courts.

This month, cities, school districts and others will find out how much more they’ll pay to help prop up the system. Higher pension costs could come at the expense of funding for other needs, including social services, infrastructure investments and education programs. […]

“We’re beyond crisis,” Katy Durant, chair of the Oregon Investment Council, said in an interview after last week’s meeting. “We should have been addressing this 20 years ago and it’s just been building. It’s a little bit like a Ponzi scheme. Sooner or later it’s going to catch up with you.”

Pension reform has been a topic at the Reason Foundation for some time now.

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What’s it worth to you?

September 19, 2016

Mark Perry at Carpe Diem has a good post about what I’ll call the Information Economy (for lack of a better term). He starts out writing about the different ways music has been delivered for sale and then moves on to the more general point of how information of all kinds gets delivered now.

I particularly liked the "What’s the internet worth to you?" question.

[t]he limitations of GDP accounting

Thanks to the advances in computer technologies, the Internet and smartphone apps, consumers are getting more and more services like GPS for free (or at a significantly reduced cost compared to the past) today and displacing services that used to get accounted for as market-based production (maps and road atlases). In past decades like the 1950s, maybe economic output measured by GDP was a pretty good measure of both economic performance and Americans’ economic well-being. In 2016, that may no longer be the case.

Finally, the video below captures the point I’m trying to make by asking people:

How much would someone have to pay you to give up the Internet for the rest of your life? Would a million dollars be enough? Twenty million? How about a billion dollars?

“When I ask my students this question, they say you couldn’t pay me enough,” says Professor Michael Cox, director of the O’Neil Center for Global Markets and Freedom at Southern Methodist University’s Cox School of Business. The free market, says Cox, creates a huge gap between what consumers would be willing to pay for Internet access and how much it actually costs.
From the video: Since we’re getting something that we really value that is almost free, and wouldn’t give it up for even $1 million or more, “In some ways, maybe we’re all millionaires and billionaires, if we have something that’s worth that much to us… You might just be richer than you realize…”


Update/Related (HT: Joe Sullivan): From a July 2015 WSJ interview with Hal Varian, Google’s chief economist — “Silicon Valley Doesn’t Believe U.S. Productivity Is Down: Contrarian economists at Google and Stanford say the U.S. doesn’t have a productivity problem, it has a measurement problem”:

“There is a lack of appreciation for what’s happening in Silicon Valley,” says Hal Varian, “because we don’t have a good way to measure it.” One measurement problem is that a lot of what originates here is free or nearly free.

Take, for example, a recent walk Mr. Varian arranged with friends. To find each other in the sprawling park nearby, he and his pals used an app that tracked their location, allowing them to meet up quickly. The same tool can track the movement of workers in a warehouse, office or shopping mall. “Obviously that’s a productivity enhancement,” Mr. Varian says. “But I doubt that gets measured anywhere.”

Consider the efficiency of hailing a taxi with an app on your mobile phone, or finding someone who will meet you at the airport and rent your car while you’re away, a new service in San Francisco. Add in online tools that instantly translate conversations or help locate organ donors—the list goes on and on.

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What song the sirens sang

September 16, 2016

I’d heard about Cato’s forum and was curious about it. So I’m glad Ron Bailey wrote this summary article for Reason’s blog. It’s hard to excerpt so I’ve just included a few snippets from it. RTWT though.

Why Is Socialism So Damned Attractive?
What is the attraction of socialism? The Cato Institute held a policy forum Wednesday to consider that question, featuring talks from the moral psychologist Jonathan Haidt and the evolutionary psychologists Leda Cosmides and John Tooby.

One problem they quickly encountered was how to define socialism in the first place. Is it pervasive, state-directed central planning? A Scandinavian-style safety net? Something else? Sen. Bernie Sanders of Vermont, who pursued the Democratic presidential nomination while describing himself as a socialist, attracted a big following among voters under age 30. But most of those voters actually rejected the idea of the government running businesses or owning the means of production; they tended to be safety-net redistributionists who want to tax the rich to pay for health care and college education. And this was, in fact, the platform Sanders was running on.

Cosmides then turned to a fascinating 2014 study in The Journal of Politics by the Danish political scientists Lene Aarøe and Michael Bang Petersen. Aarøe and Petersen found that certain cues could turn supposedly individualistic Americans into purportedly welfare-state loving Danes, and vice versa. […]

In that experiment, researchers asked 2,000 Danes and Americans to react to three cases involving a person on welfare. In one, they had no background information on the welfare client. In the second, he lost his job due to an injury and was actively looking for new work. In the third, he has never looked for a job at all. The Danes turned out to be slightly more likely than the Americans to assume that the person they knew nothing about was on welfare because of bad luck. But both Americans and Danes were no different in opposing welfare for the lazy guy and strongly favoring it for the unlucky worker. “When we assess people on welfare, we use certain [evolved] psychological mechanisms to spot anyone who might be cheating,” Michael Bang Petersen explained in press release about the study. “We ask ourselves whether they are motivated to give something back to me and society. And these mechanisms are more powerful than cultural differences.”

The next panelist, John Tooby, turned to those counterproductive attitudes. Tooby has long been puzzled that so many of his colleagues are not struck by facts like Hong Kong’s amazing economic success. (Its GDP increased 180-fold between 1961 and 1996 while per capita GDP increased 87-fold and inequality fell.) […]

The chief problem, he suggested, is that many people are beguiled by “romantic socialism”—that is, they imagine what their personal lives would be like if everyone shared and treated one another like family. We evolved in small bands that were an individual’s only protection from starvation, victimization, and inter-group aggression. People feel vulnerable if their band does not exist. Such sentiments are more or less appropriate when people lived in small groups of hunter-gatherers composed mostly of kin, but they fail spectacularly when navigating a world of strangers cooperating in global markets.

The third speaker was Jonathan Haidt, whose research explores the intuitive ethics that undergird the psychological foundations of morality. His goal is to reconcile the universal human behavior identified by evolutionary psychology with the cultural variations highlighted by anthropology. He and his colleagues have identified six moral foundations, but he focused on just three during the session. Those three were care/harm, fairness/cheating, and liberty/oppression.

In contemporary politics, liberals are chiefly concerned about care and harm. They see fairness mostly as equality of outcomes. He illustrated this with photos taken during the Occupy Wall Street episode in Zuccotti Park. (One Occupy sign, for instance, read “Tax the Rich Fair and Square.”) On the other hand, conservatives see fairness has proportionality; if you work hard, you get to keep the rewards. Haidt showed a Tea Party sign that read, “Stop Punishing Success—Stop Rewarding Failure.” […]

Another Occupy Wall Street placard shown in Haidt’s presentation said “Equality Now! Liberty Later.” In response to that sentiment, Haidt quoted Milton Friedman: “A society that aims for equality before liberty will end up with neither equality nor liberty. And a society that aims first for liberty will not end up with equality, but it will end up with a closer approach to equality than any other kind of system that has ever been developed.”

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Republicans and walls

September 13, 2016

One of Reason’s Friday Funnies by Chip Bok.

bok-republicans-walls

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How the cosmos knows itself

September 10, 2016

Amanda Gefter writes an interesting column about how we got here from there… whatever ‘there’ means.

It’s fairly lengthy but interesting if you like efforts to unite philosophy and physics. I enjoyed it, at any event.

The Bridge From Nowhere
How is it possible to get something from nothing?

“The question of being is the darkest in all philosophy.” So concluded William James in thinking about that most basic of riddles: how did something come from nothing? The question infuriates, James realized, because it demands an explanation while denying the very possibility of explanation. “From nothing to being there is no logical bridge,” he wrote.

In science, explanations are built of cause and effect. But if nothing is truly nothing, it lacks the power to cause. It’s not simply that we can’t find the right explanation—it’s that explanation itself fails in the face of nothing. […]

If you recognized the title of this post, you’ll know it reminded me of something Carl Sagan said.

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Balanced Rebellion

September 8, 2016

Here’s a clever ad.

FYI, it looks like BalancedRebellion.com expects you to have a Facebook account.

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Apple, Ireland, and more nonsense on stilts

August 31, 2016

Here’s Dan Mitchell at International Liberty commenting on the European Commission’s decision to assess Apple billions for alleged unpaid taxes. As the WSJ editorial (linked below) points out, this is a good example of the reasons for Brexit.

But more to the point, the E.C.’s action is a pretty good illustration of the idea that taxation is theft. This attempt is pretty brazen.

European Commission Launches Shakedown of Apple, Asserts Low Taxes Are “State Aid”

[…] But I’ll soon have white hair based on having to deal with the new claim from European bureaucrats that countries are guilty of providing subsidies if they have low taxes for companies.

I’m not joking. This is basically what’s behind the big tax fight between Apple, Ireland, and the European Commission.

Here’s what I said about this issue yesterday. (YouTube video)

There are three things about this interview are worth highlighting.

  • First, the European Commission is motivated by a desire for more tax revenue. Disappointing, but hardly surprising.
  • Second, Ireland has benefited immensely from low-tax policies and that’s something that should be emulated rather than punished.
  • Third, I hope Ireland will respond with a big corporate tax cut, just as they did when their low-tax policies were first attacked many years ago.

I also chatted with the folks from the BBC. (YouTube video)

I’ll add a few comments on this interview as well.

Here’s an interview from the morning, which was conducted by phone since I didn’t want to interrupt my much-needed beauty sleep by getting to the studio at the crack of dawn. (YouTube video)

Once again, here are a few follow-up observations.

  • First, I realize I’m being repetitive, but it’s truly bizarre that the European Commission thinks that low taxes are a subsidy. This is the left-wing ideology that the government has first claim on all income.
  • Second, it’s a wonky point, but Europe’s high-tax nations can use transfer pricing rules if they think that Apple (or other companies) are trying to artificially shift income to low-tax countries like Ireland.
  • Third, the U.S. obviously needs to reform its wretched corporate tax system, but that won’t solve this problem since it’s about an effort to impose more tax on Apple’s foreign-source income.

The Wall Street Journal opined wisely on this issue, starting with the European Commission’s galling decision to use anti-trust laws to justify the bizarre assertion that low taxes are akin to a business subsidy.

Even by the usual Brussels standards of economic malpractice, Tuesday’s €13 billion ($14.5 billion) tax assault on Apple is something to behold. Apple paid all the taxes it owed under existing tax laws around the world, which is why it hasn’t been subject to enforcement proceedings by revenue authorities. […]

This is amazing. […]


Update: 9/2/16

Here’s a report from CNN Money about the Irish response to the E.C.’s demand.

Ireland is turning its back on a massive tax windfall from Apple.

The Irish government confirmed Friday it would appeal a European Union order to collect 13 billion euros ($14.5 billion) in back taxes from the tech giant.

The European Commission ruled Wednesday that Ireland had helped Apple artificially lower its tax bill for more than 20 years, assistance that it said constituted illegal state aid for the company.

Apple (AAPL, Tech30) has already said it will appeal. CEO Tim Cook has described the Commission’s claim that Apple paid Irish tax of just 0.005% on much of its international profits in 2014 as “total political crap.”

Irish politicians were divided earlier in the week over whether to pursue an appeal. And it’s easy to see why.

As recently as 2010, the country was bailed out by the EU and International Monetary Fund. The extra tax billions would go a long way at a time when Irish officials are worried about the impact of Brexit on their economy.

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