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.”

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

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.

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).

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.

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

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???