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Sam Harris has a Newsweek article up about Sarah Palin, and America’s apparent penchant for mediocrity in politicians. When McCain was nominated, I had decided that this was an election I could live with either way. There are some things to like about McCain. His choice of Palin changed that real fast. John McCain is 72 years old, can’t dress himself without help, and Sarah Palin as POTUS is a very scary prospect. Please, please, please, please America, do not elect her vice president. Any policy differences between McCain and Obama are completely mute points next to the possibility of Sarah Palin as president.

What is so unnerving about the candidacy of Sarah Palin is the degree to which she represents—and her supporters celebrate—the joyful marriage of confidence and ignorance. Watching her deny to Gibson that she had ever harbored the slightest doubt about her readiness to take command of the world’s only superpower, one got the feeling that Palin would gladly assume any responsibility on earth:

“Governor Palin, are you ready at this moment to perform surgery on this child’s brain?”

“Of course, Charlie. I have several boys of my own, and I’m an avid hunter.”

“But governor, this is neurosurgery, and you have no training as a surgeon of any kind.”

“That’s just the point, Charlie. The American people want change in how we make medical decisions in this country. And when faced with a challenge, you cannot blink.”

If the US presidential election was being held worldwide, it looks like Obama would be on course for an easy victory. At least according to a Pew Research Survey, in June. Perhaps republicans have good reason to resist immigration. Courtesty of Alex at The Daily Transcript, who discussed it as part of his “Let’s talk about facts this election” series.

I would like to voice my support for retiring the US penny. It is a waste of time and metal. I have a jar containing virtually every penny that has passed through my hands for the last year, and it is not worth enough for me to drive to the grocery store and deal with the change counting machine. I’m certainly never going to count them myself, nor am I going to carry them around and spend them. I only save them in the jar because I can’t bring myself to throw away money. If your purchases are rounded to the nickel, would you ever even notice? For that matter, I could get behind retiring both the penny and the nickel at the same time. The dime is small enough to cover any cash transaction, and it is a nice even metric 1/10th of a dollar.

But the penny is a no brainer. It has outlived its usefulness. Sorry Abe.

As in Pigovian Taxes, of course. I’d like to throw the term around like I know what I’m talking about, but the truth is I just learned it and had to go to wikipedia to figure it out. It comes from Greg Mankiw’s post, The Pigou Club Manifesto. It’s almost two years old, but it’s new to me, so I thought I’d echo it again.  An argument for taxing gas consumption. He also has a more recent post about why the much more popular “windfall profits” tax on oil companies is NOT just as good.

I’d like to add road tolls as a much better way to pay for highway systems. They are paid for by taxes anyway, but the up front lump sum has no effect on people’s driving decisions; paying per trip would. It wouldn’t have to change revenue, but it could encourage more efficient use of roads, lower congestion, and those who used it more would pay more. With today’s high-speed toll lanes, it doesn’t even require a lot of toll booth lanes and extra delays to pay. Just drive through at 70, and the transponder on your windshield beeps to let you know you’ve just paid.  Plus, rates can be adjusted for areas of high congestion, or during peak times to spread the load.

Zimbabwe introduces $100 billion banknotes 

According to CNN that’s worth about $1 USD. According to the Reserve Bank of Zimbabwe it is more like $4. But, that was yesterday. Expect it to be significantly less tomorrow. You can buy the slightly older $50 billion notes on ebay for like $60! I kind of want one, but not for more than $20. I may wait for the $1 trillion version (although, they might not have any paper left to print those).

It came up in a recent conversation that Sweden was an example of socialism working. At the time, I really didn’t know a thing about Swedish politics or economics, so I left it alone. I’ve done a bit of research, and I don’t think Sweden is a socialist state at all. At least not as I interpret the word.

Webster’s defines Socialism as:

“Any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.”

And this seems to be not at all what sweden is. Industry in Sweden is primarily privately owned. Even energy production is largely privatized (with very little fossil fuel usage, BTW). It ranks #1 on The Economist’s Index of Democracy. The new face of Swedish socialism on Forbes.com contrasts the “socialist facade” with a booming economy with low inflation and a lot of entrepreneurial growth. The Sweden Wikipedia article and related articles also give a good overview.

I think few will disagree that Socialism as defined above has not worked out well historically. Alan Greenspan captures why this is very effectively in his book, “The Age of Turbulence“. It is because a centrally planned economy relies on the central planners to set prices, allocate production resources, etc. They simply can’t do this effectively. Markets can. When lots of people are acting individually, using price signals to determine the best way to deploy the capitol under their control, they can arrive at a more optimum distribution of resources. Additionally,private property rights must be guarantee, or there really isn’t any reason for anybody to invest themselves or their resources (which they don’t really have in the first place) in anything.

There is little doubt that markets are an excellent tool for optimizing resource allocation and determining prices, and private ownership is required to maximize motivation to succeed. However, what people so often call socialism in sweden, includes both of these things. Okay, some services, such as health care and education, are “socialized”. It is certainly a welfare state by anyone’s definition, with guaranteed health and education services for everything, extensive unemployment support, and a tax burden higher than any other industrialized country (as percent GDP). But these taxes are used to provide services that Swedes apparantly think are worth paying for. They’ve decided that it is worthwhile to pay for health care for everyone. And socializing a service doesn’t mean the government is going to screw it up. Since 1992, Sweden has implemented a school voucher system, where the state will pay full tuition costs to the for-profit private school of the parent’s choice. Schools must compete for students providing the motivation for excellence, yet equal access is still guaranteed for all citizens.

I’m not suggesting that Sweden is a perfect model of government that the U.S. or any other country should strive for. I just want to make two points:

1) I wish people would stop throwing around the word Socialism or Socialist every time someone suggests the government provide health services for the WHOLE public. They are just trying to associate an old stigma, that really doesn’t apply at all. We are not talking about abolishing private property, compromising democracy, or throwing away free markets.

2) Tax-payer funded health care and education (among other things) can work, and has in several countries, Sweden included. As far as I can see, it is the only way to guarantee equal access. The real question people should be asking themselves is if they are willing to pay a bit extra in taxes in order to provide it. The same goes double for education. We ALL benefit from a well educated public.

He’s basically reading from chapter 6 of his book, but a very reasonable speech none-the-less.

[youtube]http://www.youtube.com/watch?v=LXcvbnzNIjg[/youtube]

This video is both funny and dead on (as long as you aren’t being too literal minded). A summer gas tax holiday is a really dumb idea, and it is just pandering to (large numbers of) stupid people. If you want to lower consumption, the last thing you should do is lower the cost to the consumer. About the only winners there are people selling the gas. I propose a summer gas tax hike! If more American voter’s could pull themselves away from American Idol Smarter than a 5th Grader Oprah whatever mind numbing thing they are watching on TV long enough to think straight and look a bit into the future that just might even be politically feasible.

I filed my taxes today, and it was a distinctly different experience than any other year I’ve filed. Due to the fact that the vast majority of my previous income was “self-employed”, no taxes were withheld throughout the year, and I had to pay the extra 7.5% self-employment (social security) tax in addition to the usual. This meant that every year around tax time I owed a lot of money. This year however, I’m getting a rather large refund! Tack on my $600 stimulus check, and it almost feels like I’m getting a gift from Uncle Sam. Of course, that’s not really the case. I was really giving out an interest free loan…but that doesn’t change the way I FEEL about it!

It got me thinking, so I decided to do a bit of research and came across the “History of the US Tax System”, published by the US Treasury. Tax withholding at the source (the employer) was first enacted during the Civil War, along with a two-tiered income tax and standard deductions, and various other taxes to support the growing war costs. It was soon repealed though, in 1872.

Tax withholding returned during World War II, along with huge increases in taxation levels: federal receipts increased from $8.7B (7.6% of GDP) in 1941 to $45.2B (20.4% of GDP) in 1945. From the US Treasury’s summary:

Another important feature of the income tax that changed was the return to income tax withholding as had been done during the Civil War. This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer’s awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future.

That seems to hit it right on. Collecting is easy, and I’m feeling right now like I got a tax time bonus! It is worth noting that tax levels (as a percent of GDP) never returned to Pre World War II levels. They dipped briefly to 14.4%, but soon were back up to the postwar (1945 to present) average of 17.9%. This graph from heritage.org shows 1945 to present tax rates.

It is just another example of how the right presentation can effect people’s perceptions. We really don’t always consider things rationally. But, whatever.  When do I get my check???