It would be funny... if it wasn't so terrifying!
"There is no art which government sooner learns of another than that of draining money from the pockets of the people" - Adam Smith, The Wealth of Nations
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Monday, June 21, 2010
Tuesday, June 8, 2010
Hilary Clinton Says High Tax-to-GDP Ratio is Healthy? Since When is Cuba Healthy?!
Hilary Clinton today amazingly argued that countries with the highest tax-to-GDP ratio are healthy. Responding to a question, she remarked,
Let’s talk economics. It is unclear how Clinton could infer anything from tax-to-GDP ratio because the amount of revenue a government has is entirely contingent on a particular countries resources, ideology, historical forces, social forces, and so on. For this reason, different governments have vastly different constituent revenue components and therefore to make a generalization about the relationship between tax and GDP is simply not possible. For example, if one country counts sales of oil as tax revenue and another does not, then no clear comparison can be made between the two with regard to a tax-to-GDP ratio.
There are other reasons why Secretary Clinton cannot make the judgment she is making but they all boil down to the same thing: economics says nothing about tax-to-GDP ratio. However, economics does say something about taxes in general. When a government taxes heavily, it stifles economic growth because why would entrepreneurs risk their livelihoods if their fruits are going to be appropriated by a central bureaucrat? This is one well-established economic relationship, Secretary Clinton. Try opening an economics 101 textbook sometime.
What is really implicit in Clinton’s remark is her ideological fixation on the idea of redistribution by the government. Economic science has repeatedly affirmed that meddling by the government simply introduces distortions into the market and leads to a less efficient distribution of resources.
By the way, Secretary Clinton, Brazil doesn’t have the highest tax-to-GDP ratio in the western hemisphere. Guess who does? Cuba.
Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what — it's growing like crazy. And the rich are getting richer, but they're pulling people out of poverty. There is a certain formula there that used to work for us until we abandoned it, to our regret in my opinion.With all due respect, Secretary Clinton, your opinion is just plain wrong.
Let’s talk economics. It is unclear how Clinton could infer anything from tax-to-GDP ratio because the amount of revenue a government has is entirely contingent on a particular countries resources, ideology, historical forces, social forces, and so on. For this reason, different governments have vastly different constituent revenue components and therefore to make a generalization about the relationship between tax and GDP is simply not possible. For example, if one country counts sales of oil as tax revenue and another does not, then no clear comparison can be made between the two with regard to a tax-to-GDP ratio.
There are other reasons why Secretary Clinton cannot make the judgment she is making but they all boil down to the same thing: economics says nothing about tax-to-GDP ratio. However, economics does say something about taxes in general. When a government taxes heavily, it stifles economic growth because why would entrepreneurs risk their livelihoods if their fruits are going to be appropriated by a central bureaucrat? This is one well-established economic relationship, Secretary Clinton. Try opening an economics 101 textbook sometime.
What is really implicit in Clinton’s remark is her ideological fixation on the idea of redistribution by the government. Economic science has repeatedly affirmed that meddling by the government simply introduces distortions into the market and leads to a less efficient distribution of resources.
By the way, Secretary Clinton, Brazil doesn’t have the highest tax-to-GDP ratio in the western hemisphere. Guess who does? Cuba.
Saturday, June 5, 2010
The Correct Response to the BP Oil Spill
Many on the left have criticized those who were pro-drilling and pro-business because of the recent catastrophic oil disaster in the Gulf of Mexico. They use this tragedy as evidence that America shouldn’t be exploiting its offshore resources and instead should be looking toward other energy sources to provide for our needs in the future.
This kind of argument is nonsense. It’s like saying that we shouldn’t drive cars because they crash. This kind of oil spill – of course disastrous – does not happen frequently enough for the market to say it is inefficient for oil to be extracted for commercial use. The left wants to use an extreme disaster to provide evidence for a point that simply cannot be supported by such a tragedy. A more nuanced and long term view shows us that companies that find it economically viable – within the means of the law – to drill offshore should be allowed to do so.
The problem with the Gulf of Mexico’s oil spill is that BP simply did not take the necessary precautions or have a decent contingency plan to deal with such a disaster. The problem is not that oil companies are drilling off the shore of the United States and therefore it is not viable to use this unfortunate incident as an example of why we shouldn’t drill offshore.
The fact – even President Obama has acknowledged this – is that offshore drilling is relatively safe when done properly. The market will punish BP for its lack of readiness with regard to the disaster; they will be charged for the cleanup operation and their reputation has taken a big hit around the world. Furthermore, other companies will learn from BP’s mistake and ensure that their oil rigs are not as vulnerable to the kind of disaster that happened in the Gulf.
We shouldn’t let the left use this tragedy for political gain. Offshore drilling is economically viable and relatively safe: we refuse to be held hostage to the leftist green agenda because of a tragedy and a mishandling of the tragedy.
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