Actuary Hands Gift to Pension Reformers - The actuary, however, highlighted a key problem with the current pension system: It is impossible for any city to plan and budget accurately if it has a defined-benefit pension plan because the associated pension costs are volatile and impossible to predict. When defined-benefit pension costs explode unexpectedly—as they often do because of political mismanagement of the funds—tax revenue is funneled into the pension plans and diverted away from fire, police, and other basic city services. Inadvertently, Cheiron made the case for pension reform……
Smith on Jones - One defining characteristic of early economists was their antipathy toward protectionism, because they realized that high tariffs and import restrictions harm a nation’s citizens by eliminating mutual benefits that voluntary exchange would have created. Adam Smith, history’s most famous economist, was among their number. However, there was the one case of protectionism he endorsed, a misrepresentation of which is still reflected in U.S. policy. Smith’s “exception” involved England’s 1660 navigation law. All shipping between British ports was restricted to British-built and -owned ships, and at least three-quarters of the crew had to be British. While England’s mercantilist burdens stoked America’s revolution, the U.S. Congress’s inaugural session enacted similar restrictions on coastal shipping, later codified by the Jones Act of 1920, which still governs maritime commerce in U.S. waters……
Editor’s Note: You may wish to read the comment on this article.
The
Gender Wage Gap-A Myth that (Still) Just Won't Die - Earlier this week, the Governor of California signed a bill intended to help
women. Supported by the Chamber of Commerce, the new law looks to eliminate the
“gender wage gap,” or the supposed discrepancy between the pay of men and
women. The bill received immense support in both houses of the California state
legislature and will “ensure that women are paid equally for work that is
substantially similar to the work of their male colleagues.” While California policymakers may be well
intentioned, as an economist, this makes me want to bang my head against a
wall. I’ve discussed this very issue on this blog before. But, alas, here we are
again. So, one more time, with feeling. There is
no meaningful gender wage gap. Such a gap makes zero intuitive or economic
sense……
FDA
Driving Drug Prices into Stratosphere - BloombergBusiness has
another story
of a jaw-dropping price hike for a very old medical. In this case, Colchicine,
a gout remedy so old that the ancient Greeks knew about its effects, used to
cost about 25 cents per pill in the U.S. Then in 2010 its price suddenly jumped
2,000 percent. How did this happen? Colchicine is one of a small number of
drugs that were marketed in the United States before 1938. That year, Congress
passed the Food, Drug, and Cosmetic Act to require new drugs to be approved for
“safety” as well as be “pure” (that is, not adulterated or misbranded, as had
been required since 1906). When the Act was amended in 1962 to require “efficacy,”
drugs approved since 1938 had to be approved again. However, pre-1938 drugs
have never had to be approved. In today’s parlance, they were “grandfathered.” Or,
at least they were grandfathered until 2006, when the Food and Drug
Administration decided to cause the makers of those drugs to apply for approval
under the 1962 standards of both safety and efficacy. This is called the Marketed,
Unapproved Drugs Initiative and Compliance Policy Guide.
Health Jobs Dominate Terrible Jobs Report
- No good words were used to describe last week’s Employment
Situation Summary: “Every aspect of the September jobs report
was disappointing,” wrote Michelle Girard, chief U.S. economist at RBS (quoted in Forbes). This is largely a
repeat of the August jobs report, although those
and previous months’ figures were also revised downwards. One-quarter of
September’s new jobs were in health services: 34,000 of 142,000 added to
nonfarm payrolls. Of those 34,000 health jobs, 37 percent were in ambulatory
facilities, and 45 percent in hospitals. This is a change from the past few
months. Because of a long-term shift in the location of care, there are now
almost seven million people working in ambulatory settings, versus just under
five million working in hospitals.
The
EPA: Armed and Dangerous - The troubled
Environmental Protection Agency has a lot of problems, but according to Adam
Andrzejewski of Open the
Books, a lack of military-style weapons for the agency’s 200 environmental
law enforcement agents isn’t among them. The Washington Times reports on Andrzejewski’s findings of how the agency has
spent millions of dollars over the past decade in arming its special agents: Among the weapons purchased are guns, body
armor, camouflage equipment, unmanned aircraft, amphibious assault ships, radar
and night-vision gear and other military-style weaponry and surveillance
activities, according to a new report by the watchdog group Open the Books. “Protecting
the environment just got real. With millions of dollars spent on military style
weaponry, the EPA is now literally ensconced with all institutional force,”
said Adam Andrzejewski, founder of Open the Books and the author of the report.
“Our report discovered that when the
EPA comes knocking they are armed with a thousand lawyers, arrest/criminal
data, credit, business and property histories, plus a ‘Special Agent’ with the
latest in weaponry and technology,” Mr. Andrzejewski added. Stephen Moore of Investor’s Business Daily provides a list of some of the Environmental Protection
Agency’s more unusual expenditures for armaments, which includes the following:
….
National
Debts vs National Revenues - Not long ago, we featured a creative visualization of data developed by Jeff
Desjardins of Visual Capitalist
showing how all the money owed by all the governments of the world is broken up
between them. Desjardins has surpassed himself with a new world debt infographic, which digs into the ability of the
world’s nations to pay back their debts. It makes for a lot of scrolling, but it’s
genuinely rich in information. What he’s done is to rank the world’s nations
according to three different measures, each of which is linked to the ability
of each nation to pay off its national debt. The first is the Debt-to-GDP
ratio, which shows the size of each nation’s total public debt outstanding, at
the national level, with respect to its national income, or rather, the size of
its economy. The second measure then
digs deeper, adding in the debts owed by each nation’s regional, state or local
governments to the national level debt, and then calculating the ratio that
total government debt with a government’s total tax revenues collected. This
measure perhaps provides the best indication of how capable the governments
within a nation are of paying off all their debts.
Duncan Departs, but Federal Education Waste Lives On - Arne Duncan is stepping down as federal Education Secretary, but the Washington Post news story of almost 3,000 words left out some key details. Duncan, one of the president’s Chicago pals, has been the federal point man against school choice. As we noted, the current president, like Bill Clinton and Jimmy Carter before him, does not send his own children to the dysfunctional and dangerous Washington, DC, public schools. In 2009, the same year Duncan became federal ED boss, the Washington Post said needy DC families also “want only a quality education for their children.” Their few alternatives included charter schools and the DC Opportunity Scholarship Program, which provided vouchers of up to $7,500 for low-income students to attend the independent schools of their choice. Teacher unions and federal educrats oppose all school-choice programs, and Arne Duncan captains their squad…..
Government
Predatory Lending - Politicians and pundits like to decry predatory
lending, the practice of private banks and credit card companies preying on
poor and vulnerable people. Indeed a new federal agency, the Consumer Financial Protection Bureau,
was recently established to ride herd on private lenders. As Brad Branan of the Sacramento Bee shows,
the worst offenders would be hard pressed to top the government of California. During the 1980s, California’s Department of
Housing and Community Development launched the California Home Ownership
Assistance Program, which approved 345 loans at interest rates in the
neighborhood of 12 percent. This deal also deploys an “equity share” demand for
homeowners “to pay as much as half of the amount a house has appreciated since
its purchase.” As Branan explains, “the payments can be quite high.”…
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