In a speech to party cadres containing some of the boldest pro-market rhetoric they have heard in more than a decade, the country’s new prime minister, Li Keqiang, said this month that the central government would reduce the state’s role in economic matters in the hope of unleashing the creative energies of a nation with the world’s second-largest economy after that of the United States.
The broad proposals include expanding a tax on natural resources, taking gradual steps to allow market forces to determine bank interest rates and developing policies to “promote the effective entry of private capital into finance, energy, railways, telecommunications and other spheres,” according to a directive issued on the government’s Web site. “All of society is ardently awaiting new breakthroughs in reform,” the directive said.
Bolded for emphasis. I remember making comparisons between the Federal Reserve Board of Governors and how they’re the American economy’s Politburo. I guess that comparison is no longer relevant considering that the Chinese government is making shifts toward more market friendly policies like market set interest rates.
Maybe I should have taken Mandarin in college instead of Spanish…
Forget about price controls**. The Venezuelan government finally figured it out. The country is facing an acute shortage of toilet paper because people are eating too much. The head of the National Institute of Statistics released a survey yesterday that shows that Venezuelans âare eating three times a day or even more.”
As Dan Gross explains, the Venezuelan T.P. shortage is a fairly textbook case of well-intentioned safety-net planning run amok. Venezuela wanted to make sure toilet paper and other basic staples were available to the nation’s poor during a period of high inflation. Rather than simply subsidize purchases with an American-style food stamp program, it implemented strict price controls, putting a ceiling on how much manufacturers could charge consumers for basic goods.
Those price controls lowered producers’ profits and took away much of their incentive to produce. And combined with fairly strict currency controls that have made it harder for Venezuelan companies to receive foreign supplies and equipment, the result has been “shortages of staples like milk, meat and toilet paper,” as the Times put it last year.
“For example, one big reason that our rates are skyrocketing is that it is becoming illegal for CareFirst and all other health insurance companies to deny someone with a preexisting condition. What insurance provider in their right mind would cover someone new who say, just contracted flesh eating bacteria, for example? It’s the equivalent of a home insurance provider accepting a new customer whose house was already burning down. People can now pay a small fine/tax, and not get insurance until they get a major health problem and then the insurance provider has to accept them at the same rate that everyone else is paying. This is just plain stupid; it violates the entire point of insurance and will result in people gaming the system.”
“Aides and lawmakers in both parties fear that staffers — especially low-paid junior aides — could be hit with thousands of dollars in new health care costs, prompting them to seek jobs elsewhere. Older, more senior staffers could also retire or jump to the private sector rather than face a big financial penalty.”
IF TRUTH-IN-LABELING rules applied to Congress, the proposed law giving states the power to collect sales tax from out-of-state online retailers would be named the Marketplace Unfairness Act… .
For mammoth retailers like Amazon or Walmart, the prospect of juggling “a few thousand local tax rates” may not be an intolerable burden. For countless smaller online businesses, however, it could be the kiss of death. And what happens when the technology turns out not to be quite as cheap and easy as advertised? Writing in the Wall Street Journal last summer, Overstock.com’s chairman/CEO, Patrick Byrne, and president, Jonathan Johnson, warned against complacency:
“It took our team of 20-30 experienced IT professionals 9,412 hours over five months to install, test and integrate the software that let us properly calculate use tax in one additional state. The annual software license fees for the first year, the internal and external development and installation costs, and the cost of collateral hardware and software came to $1.3 million. And that’s just for one state.”
Whatever inequities exist in the current system, the proposed legislation would be much worse. There’s a crucial reason why merchants can only be required to collect taxes for states in which they are physically present: Anything else would be taxation without representation. States must not be allowed to reach beyond their borders, imposing tax obligations on retailers who had no vote or voice in creating those obligations, no political recourse, no opportunity to be heard. Against such unfairness, Americans once fought a revolution. A craving for revenue is no reason to forget that.
“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”