Monday, March 1, 2010

Some Conservative/Liberal Links

Lifted from the comments at Marginal Revolution: Dan H. compares parliamentary and presidential systems:

... in a parliamentary system with strong party loyalty, individual politicans are given 'cover' by their parties and are not held personally responsible for the taxes and benefits of their constituents. If the party in power makes a decision to cut benefits which will harm an individual politician's district, that politician isn't necessarily on the hook for it. The voters know that he has to vote the party line even if he disagrees with the legislation. He gets re-elected so long as the public feels his party in general is better than the opposition.
In the U.S. system, where every vote is a free vote, each member of Congress has to answer for his/her votes, and this drives NIMBY-ism and ever-increasing benefits without the tax hikes to pay for them, and it also causes wheeling and dealing which ultimately makes large regulatory packages like health care reform incoherent and bloated with pork.
I think American government works well when it's strictly limited. When Americans try to implement Euro-style social democracy, they fail due to the nature of American government. It is uniquely unsuited to centralized technocratic governance.

2 - Why aren't commentators on the right talking as much about flat taxes? Short answer: If you make it budget neutral, it's a tax hike on the middle class and a tax cut for the rich and is politically unfeasible. If you make sure it's not a tax hike, it worsens the budget. If you make sure it's not a tax cut, it's clearly a tax hike.... The Forbes article also discusses other attempts at a redo of Reagan's 1986 loophole closings that would at least simplify the tax structure.

3 - Left and Right in agreement? Can't be. But it is. Brad DeLong and Alex Tabarrok agreeing that the Obama administration has a really bad idea: force companies that do business with government to raise wages and benefits. Why is that bad, you ask?
I am more worried, however, about the long term consequences of creating a dual labor market in which insiders with government or government-connected jobs are highly paid and secure while outsiders face high unemployment rates, low wages and part-time work without a career path. ...

Moreover, once an economy is in the insider-outsider equilibrium it's very difficult to get out because insiders fear that they will lose their privileges with a deregulated labor market and outsiders focus their political energy not on deregulating the labor market but on becoming insiders... .  Many European economies found themselves stuck in the insider-outsider equilibrium and as a result unemployment levels in places like France and Italy hovered at 9% or more for decades. 

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