Category: Technology and Regulation

Blog author: dpahman
posted by on Friday, January 4, 2013

800px-Programming_language_textbooksIn addition to my post in late November about the textbook bubble (spurred by this post from AEI’s Mark Perry), the Atlantic‘s Jordan Weissmann joins the discussion, asking, “Why Are College Textbooks So Absurdly Expensive?” (also the title of his article). It is a good question, and one that highlights the danger of disconnecting the determination of prices from the subjective valuing of consumer demand. There is no competition, no free market, where students are required to buy only certain books for their classes at artificially inflated prices. Weissmann provides a helpful summary of Kevin Carey’s related Slate article as follows:

Academic Publishers will tell you that creating modern textbooks is an expensive, labor-intensive process that demands charging high prices. But as Kevin Carey noted in a recent Slate piece, the industry also shares some of the dysfunctions that help drive up the cost of healthcare spending. Just as doctors prescribe prescription drugs they’ll never have to pay for, college professors often assign titles with little consideration of cost. Students, like patients worried about their health, don’t have much choice to pay up, lest they risk their grades. Meanwhile, Carey illustrates how publishers have done just about everything within their power to prop up their profits, from bundling textbooks with software that forces students to buy new editions instead of cheaper used copies, to suing a low-cost textbook start-ups [sic] over flimsy copyright claims. (more…)

The Goldwater Institute has released a new study showing that states with a larger share of entrepreneurs do a better job at reducing poverty than states with fewer entrepreneurs.

There is a strong connection between a state’s rate of entrepreneurship and declines in poverty. Statistical analysis of all 50 states indicates that states with a larger share of entrepreneurs had bigger declines in poverty. In fact, comparing states during the last economic boom—from 2001 to 2007—data show that for every 1 percentage point increase in the rate of entrepreneurship in a state, there is a 2 percent decline in the poverty rate.

To help reduce poverty, policymakers should focus on increasing the number of entrepreneurs in their state. Research shows that one of the most effective ways to increase entrepreneurship is by lowering tax burdens. In particular, this study shows that high tax burdens, measured as a percentage of personal income, drags down the growth rate of entrepreneurship in a state: for every 1 percentage point increase in the tax burden, there’s a corresponding 1 percentage point drop in the entrepreneurship rate. States without income taxes also have higher average rates of entrepreneurship than those with income taxes. The average number of sole proprietors as a percentage of employment in states without an income tax is 21.7. The rate for states with an income tax is 19.6.

You can access a PDF of the report here.

Blog author: dpahman
posted by on Friday, September 14, 2012

In an odd story from Maryland, Ari Ashe of WTOP reports,

Many people find speed cameras frustrating, and some in the region are taking their rage out on the cameras themselves.

But now there’s a new solution: cameras to watch the cameras.

Yes, you read that correctly. Prince George’s County, Maryland, has a problem with people vandalizing their speed cameras and their solution is to install additional cameras to watch them. In response, Michael Rosenwald says what many others surely are thinking: “This is 100 percent ‘One Flew Over the Cuckoo’s Nest’ crazy.” (more…)

After relating how city regulations in Chattanooga, Tenn., helped kill a small business, economist Mark J. Perry offers a sympathetic sentiment for failed entrepreneurs:

To paraphrase President Obama:

Look, if you’ve been unsuccessful, you didn’t get there on your own. If you were unsuccessful at opening or operating a small business, some government official along the line probably contributed to your failure. There was an overzealous civil servant somewhere who might have stood in your way with unreasonable regulations that are part of our American system of anti-business red tape that allowed you to not thrive. Taxpayers invested in roads and bridges, but you might have faced city council members who wouldn’t allow you to use them. If you’ve been forced to close a business – it’s often the case that you didn’t do that on your own. Somebody else made that business closing happen or prevented it from opening in the first place. You can thank the bureaucratic tyrants of the nanny state.

(Via: Cafe Hayek)

Blog author: jcarter
posted by on Wednesday, August 22, 2012

What was the greatest invention of the industrial revolution? Hans Rosling makes the case for the washing machine. Rosling explains how the productivity gains of the washing machine (and similar labor-saving devices) lead to increases in education and economic growth in the developing world.

(Via: David Henderson)

Earlier this month, India experienced the worst blackout in global history. Over 600 million people—more than double the number of people in the U.S. and nearly one in 10 people in the world—were left without power.

The crisis highlights the fact that corrupt governance and lawless institutions can keep even an entrepreneurial people in the dark:

Along with a lack of investment in infrastructure, the crisis also had roots in many of India’s familiar failings: the populist tone of much of its politics, rampant corruption and poor management in its government and public sector, weak law enforcement, and a maze of regulations that restrict many industries.

Officials said they did not know what caused the blackout Tuesday, although a similar failure Monday was blamed on individual states drawing too much power from the grid, in defiance of regulations.

“It is open lawbreaking that goes on all the time in India,” said a Power Ministry official, who spoke on the condition of anonymity because of the sensitive nature of the subject. “This time, it went beyond limits.”

Read more . . .

Getting the government’s permission to work—occupational licensing—hurts both consumers and entrepreneurs. That’s the conclusion of two new reports, one a study conducted by the Institute for Justice and the other a survey by the Kauffman Foundation and Thumbtack.com. As the reports note, in the 1950s, only one in 20 U.S. workers needed government permission to pursue their chosen occupation. Today, it is closer to one in three. Yet research to date provides little evidence that licensing protects public health and safety or improves products and services:
(more…)

The recent oral arguments presented before the Supreme Court about ObamaCare’s individual mandate have exposed a profound difference in how American’s conceive of liberty. In the the New York Times, Adam Liptak provides a revealing example:
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“Unless incentives suddenly stopped mattering during this recession, says Casey B. Mulligan, an economics professor at the University of Chicago, “it appears that the expanding social safety net explains some of the excess nonemployment among unmarried women who are heads of households.”
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In a political climate dominated by debates about individual mandates and restrictions on religious freedoms, an issue like road privatization isn’t likely to be on the top of anyone’s list of major concerns. But the excellent post on “The Mirage of Free-Market Roads” by Timothy B. Lee, a writer with Ars Technica and the Cato Institute, is worth reading even if you don’t care about toll roads. Lee provides an intriguing example of why we need to think clearly about how we apply principles to policy:
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