From the Cato Institute:
Thriving in a Global Economy: The Truth about U.S. Manufacturing and Trade
by Daniel J. Ikenson.
Daniel Ikenson is associate director of the Center for Trade Policy Studies.He is coauthor of Antidumping Exposed: The Devilish Details of Unfair Trade Law (Cato Institute, 2003).
Executive Summary
Reports of the death of U.S. manufacturing have been greatly exaggerated. Since the depth of the manufacturing recession in 2002, the sector as a whole has experienced robust and sustained output, revenue, and profit growth. The year 2006 was a record year for output, revenues, profits, profit rates, and return on investment in the manufacturing sector. And despite all the stories about the erosion of U.S. manufacturing primacy, the United States remains the world’s most prolific manufacturer—producing two and a half times more output than those vaunted Chinese factories in 2006.
Yet, the rhetoric on Capitol Hill and on the presidential campaign trail about a declining manufacturing sector is reaching a fevered pitch. Policymakers point repeatedly to the loss of 3 million manufacturing jobs as evidence of impending doom, even though those acute losses occurred between 2000 and 2003, and job decline in manufacturing has leveled off to historic averages.
In the first six months of the 110th Congress, more than a dozen antagonistic or protectionist trade-related bills have been introduced, which rely on the presumed precariousness of U.S. manufacturing as justification for the legislation. Justification for those bills is predicated on the belief that manufacturing is in decline and that the failure of U.S. trade policy to address unfair competition is to blame. But those premises are wrong. The totality of evidence points to a robust manufacturing sector that has thrived on account of greater international trade.
Full text: http://www.freetrade.org/pubs/pas/tpa-035es.html
Tuesday, August 28, 2007
Monday, August 20, 2007
Self-Interest
One of my favorite quotes from Adam Smith's Wealth of Nations:
"Two greyhounds, in running down the same hare, have sometimes the appearance of acting in some sort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her towards himself. This, however, is not the effect of any contract, but of the accidental concurrence of their passions in the same object at that particular time. Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilised society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely."
"Self-Interest" seems like such a bad thing to people. Often times, when I say people act out of self interest, people think my view of the world is so pessimistic. That couldn't be further from the truth. For example, let's examine the act of volunteering. Even when it comes to such an apparently "self-less" act as, say, volunteering to help build a house for an impoverished family; the rule of self-interest is in force:
1. By volunteering, I may be satisfying a personal belief in what I feel is the right thing to do. Therefore, my self-interest is to volunteer so I may feel whole in a way.
2. Volunteering may just help me feel good about what I did, or it might give meaning to my life, or maybe I do it because I see the smiles on the benefactors' faces. All of the above are surely in my self-interest.
I think maybe the reason "self-interest" has gotten such a bad reputation is that on the surface, self-interest sounds like something that would be SOLELY for my own self-interest and with no regard to my fellow men and women or the world around me. However, there are many cases when one's own self-interest can coincide with the interests of others in an unintended, mutually beneficial manner.
"Two greyhounds, in running down the same hare, have sometimes the appearance of acting in some sort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her towards himself. This, however, is not the effect of any contract, but of the accidental concurrence of their passions in the same object at that particular time. Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilised society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely."
"Self-Interest" seems like such a bad thing to people. Often times, when I say people act out of self interest, people think my view of the world is so pessimistic. That couldn't be further from the truth. For example, let's examine the act of volunteering. Even when it comes to such an apparently "self-less" act as, say, volunteering to help build a house for an impoverished family; the rule of self-interest is in force:
1. By volunteering, I may be satisfying a personal belief in what I feel is the right thing to do. Therefore, my self-interest is to volunteer so I may feel whole in a way.
2. Volunteering may just help me feel good about what I did, or it might give meaning to my life, or maybe I do it because I see the smiles on the benefactors' faces. All of the above are surely in my self-interest.
I think maybe the reason "self-interest" has gotten such a bad reputation is that on the surface, self-interest sounds like something that would be SOLELY for my own self-interest and with no regard to my fellow men and women or the world around me. However, there are many cases when one's own self-interest can coincide with the interests of others in an unintended, mutually beneficial manner.
Sunday, August 19, 2007
The Minnesota Bridge Collapse
In the aftermath of the Minnesota bridge collapse, of course we will find the Government wanting to increase taxes to fund more Government intervention. Article:
http://www.mises.org/story/2670
I think if you'll reference the previous post, you'll find that we re already taxed enough in this country. How about if existing Government expenditures try to become more efficient?
Cato senior fellow Randal O'Toole said: "Now why would I be suspicious that this might not be a good idea, especially when a huge share of federal gas taxes do not go to roads and another large share is 'flexible,' meaning cities can spend it on either roads or rail transit? A federal gas tax increase would just mean more money spent on wasteful rail projects." Mr. O'Toole has it right - the problem with increasing gas taxes is that the funding most often goes to the General Fund, and only a small proportion will be used to fund road repairs.
Also from CATO:
"Many experts believe that gasoline taxes should be increased for a variety of reasons. Their arguments are unpersuasive. Oil is not disappearing, and when it becomes more expensive, market agents will substitute away from gasoline to save money. The link between oil price shocks and recessions, although real in the 1970s, has been much more benign since 1985 because of the termination of price controls. Market actors properly account for energy costs in their purchasing decisions absent government intervention. Pollution taxes, congestion fees, and automobile insurance premiums more closely related to vehicle miles traveled are better remedies for the externalities associated with automobile travel than a simple fuel tax. Gasoline consumption does not necessarily distort American foreign policy, impose military commitments, or empower Islamic terrorist organizations.
State and federal gasoline taxes should be abolished. Local governments should tax gasoline only to the extent necessary to pay for roads when user charges are not feasible. If government feels compelled to more aggressively regulate vehicle tailpipe emissions or access to public roadways, pollution taxes and road user fees are better means of doing so than fuel taxes. Regardless, perfectly internalizing motor vehicle externalities would likely make the economy less efficient—not more—by inducing motorists into even more (economically) inefficient mass transit use.
The arguments advanced against increasing gasoline taxes are applicable to the broader discussion about America's reliance on oil generally. The case for policies designed to discourage oil consumption is nearly as threadbare as the case for increasing the gasoline tax—and for largely the same reasons."
Complete article: http://www.cato.org/pub_display.php?pub_id=8629
http://www.mises.org/story/2670
I think if you'll reference the previous post, you'll find that we re already taxed enough in this country. How about if existing Government expenditures try to become more efficient?
Cato senior fellow Randal O'Toole said: "Now why would I be suspicious that this might not be a good idea, especially when a huge share of federal gas taxes do not go to roads and another large share is 'flexible,' meaning cities can spend it on either roads or rail transit? A federal gas tax increase would just mean more money spent on wasteful rail projects." Mr. O'Toole has it right - the problem with increasing gas taxes is that the funding most often goes to the General Fund, and only a small proportion will be used to fund road repairs.
Also from CATO:
"Many experts believe that gasoline taxes should be increased for a variety of reasons. Their arguments are unpersuasive. Oil is not disappearing, and when it becomes more expensive, market agents will substitute away from gasoline to save money. The link between oil price shocks and recessions, although real in the 1970s, has been much more benign since 1985 because of the termination of price controls. Market actors properly account for energy costs in their purchasing decisions absent government intervention. Pollution taxes, congestion fees, and automobile insurance premiums more closely related to vehicle miles traveled are better remedies for the externalities associated with automobile travel than a simple fuel tax. Gasoline consumption does not necessarily distort American foreign policy, impose military commitments, or empower Islamic terrorist organizations.
State and federal gasoline taxes should be abolished. Local governments should tax gasoline only to the extent necessary to pay for roads when user charges are not feasible. If government feels compelled to more aggressively regulate vehicle tailpipe emissions or access to public roadways, pollution taxes and road user fees are better means of doing so than fuel taxes. Regardless, perfectly internalizing motor vehicle externalities would likely make the economy less efficient—not more—by inducing motorists into even more (economically) inefficient mass transit use.
The arguments advanced against increasing gasoline taxes are applicable to the broader discussion about America's reliance on oil generally. The case for policies designed to discourage oil consumption is nearly as threadbare as the case for increasing the gasoline tax—and for largely the same reasons."
Complete article: http://www.cato.org/pub_display.php?pub_id=8629
The Tax Foundation - America Celebrates Tax Freedom Day®
The Tax Foundation - America Celebrates Tax Freedom Day®: "'Americans will work longer to pay for government (120 days) than they will for food, clothing and housing combined (105 days),' said Hodge. 'Since 1986 taxes have cost more than these basic necessities. In fact, Americans will work longer to afford federal taxes alone (79 days) than they will to afford housing (62 days).' In 2007 Americans will work another 41 days to afford their state and local taxes. That makes taxation a bigger financial burden than housing and household operation (62 days), health and medical care (52 days), food (30 days), transportation (30 days), recreation (22 days), or clothing and accessories (13 days)."
If all of our income were to go directly to the Government until our taxes were paid, Tax Freedom Day is the day which we, as Americans, would have paid those taxes and can begin earning wages for ourselves. The current tax rate is 32.69% if we consider all federal, state, and local taxes. Therefore, in 2007, Tax Freedom Day was April 30th, 2007. In 1930, Tax Freedom Day was Feb 12th (11.61%).
In my opinion, the increase in taxes from 1930 to 2007 is indicative of a government which has become significantly larger over time and has, as a result, found its way increasingly into our daily lives; thereby eroding our personal freedom. To reiterate, I am not an anarchist. Government does have a place in society I just think their role has grown to become quite a burden on the taxpayer. On the whole, I love America and firmly believe it is still the best place in the world to live, despite its faults. If I didn't like this country, I realize I am free to move out and I have no desire to do so. But, I do think we can do better by putting more money into the hands of the people.
If all of our income were to go directly to the Government until our taxes were paid, Tax Freedom Day is the day which we, as Americans, would have paid those taxes and can begin earning wages for ourselves. The current tax rate is 32.69% if we consider all federal, state, and local taxes. Therefore, in 2007, Tax Freedom Day was April 30th, 2007. In 1930, Tax Freedom Day was Feb 12th (11.61%).
In my opinion, the increase in taxes from 1930 to 2007 is indicative of a government which has become significantly larger over time and has, as a result, found its way increasingly into our daily lives; thereby eroding our personal freedom. To reiterate, I am not an anarchist. Government does have a place in society I just think their role has grown to become quite a burden on the taxpayer. On the whole, I love America and firmly believe it is still the best place in the world to live, despite its faults. If I didn't like this country, I realize I am free to move out and I have no desire to do so. But, I do think we can do better by putting more money into the hands of the people.
First posting
"Men and women born to freedom are naturally alert to repel invasion of their liberty by.....rulers. The greater dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding". -Justice Louis Brandeis, 1928.
A few disclaimers right off the bat:
1. This blog will not attempt to present a politically balanced position. I consider myself to be a Libertarian and Minarchist. The opinions expressed on this blog by me, will reflect that worldview. A couple tenets of this:
- An individual human being is sovereign over his/her body, extending to life, liberty and property
- Government has a place in society, but that role is best when it is limited in scope and power.
2. I typically vote Republican, as I feel it is the less harmful option. The party is imperfect, but I agree with more items on their platform than I disagree with.
3. I feel strongly that a great deal of legislation which provides subsidies to certain interest groups originates with the best intentions, yet the outcome often has the opposite effect of the intention.
4. I have no formal training in economics other than Econ 101 and some construction economics training courses. I am an engineer by degree, and an amatuer who enjoys learning about economics.
A few disclaimers right off the bat:
1. This blog will not attempt to present a politically balanced position. I consider myself to be a Libertarian and Minarchist. The opinions expressed on this blog by me, will reflect that worldview. A couple tenets of this:
- An individual human being is sovereign over his/her body, extending to life, liberty and property
- Government has a place in society, but that role is best when it is limited in scope and power.
2. I typically vote Republican, as I feel it is the less harmful option. The party is imperfect, but I agree with more items on their platform than I disagree with.
3. I feel strongly that a great deal of legislation which provides subsidies to certain interest groups originates with the best intentions, yet the outcome often has the opposite effect of the intention.
4. I have no formal training in economics other than Econ 101 and some construction economics training courses. I am an engineer by degree, and an amatuer who enjoys learning about economics.
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