A New Can Of Worms
31 October 2003
Reimportation Wars

David Hogberg of the Public Interest Institute of Iowa fires another salvo for the good guys in The American Spectator Online:

“Price controls on prescription drugs will have the same disastrous consequences that they have had everywhere, such as shortages and less investment in the product that is controlled. And it will mean higher costs in the long term. In one study, economist Frank Lichtenberg found that an expenditure of $11,000 on general medical care extends life by an average of one year, while an expenditure of only $1,345 on prescription drug research yielded the same result. Limiting research on prescription drugs will only shift health-care to other more costly treatments. Pay less now, pay more later.”

It’s a good piece – and not just because I’m quoted – you should check it out…

30 October 2003
So Much For Ending Business As Usual

More good stuff from the Trib:

"Gov. Rod Blagojevich, who picked up large-scale financial support from unions on his way to the Executive Mansion, on Wednesday loaded the panel that oversees labor disputes between government employees and their bosses with members that have strong union ties.

After reducing the size of the Labor Relations Board from six to five, the governor named the new members, four of whom are either employed by unions or labor retirees. The appointees still must be confirmed by the Democratic-controlled Senate.

The governor also appointed five members to the state's Pollution Control Board, including state Rep. Philip Novak, a Democrat from Bradley, who plans to become the board's $102,000-a-year chairman and retire from the legislature next month. Blagojevich also named to that board Andrea Moore, a former state representative from Libertyville with close ties to former Gov. George Ryan."

Chicago Teachers set Dec. 4 Strike Date

From the Tribune:

"Chicago Teachers Union delegates voted Wednesday to authorize the city's first teacher strike in 16 years on Dec. 4 if contract talks continue to lag.

The 543-98 vote by the union's House of Delegates also established Nov. 18 as the day of a strike vote among the union's 33,000 members, who also must approve a walkout before it can happen."

"Mediation has gone nowhere," said Chicago Teachers Union President Deborah Lynch. "We need stronger ammunition. Once our members vote, unless we have a settlement, Dec. 4 would be the first day of the strike."

It seems health care is now the big issue. Yet according to the Trib:

"In California, many teachers are taking freezes or pay cuts while many other big cities are offering raises of 1 to 2 percent. The Chicago proposal would have raised beginning teachers' salaries from $34,538 to $42,020 by the fifth year and from $63,276 to $76,985 for teachers with the most experience and education. In addition, teachers get additional pay increases as they gain education and as they gain experience for the first 13 years they stay in the district.

Chicago school officials said the 4 percent raises combined with the raises for experience and education would give some teachers increases of more than 40 percent over five years. For example, a typical Chicago teacher, someone with a master's degree and five years of experience, would see a 45 percent salary increase, to $64,395 from $44,256, by 2007-08."

Again, when coming into off Deborah Lynch said it was time to reform or be reformed. This is more evidence that her union has chosen the latter.
The Guy Sometimes Does Good

Hot-Rod is doing some good according to AP:

"Gov. Blagojevich's administration is lobbying Congress to block a measure that would keep Illinois and other states from potentially adopting tougher air-pollution standards for small engines such as lawn mowers."

I think a pattern is emerging. Just as the guy begins to bottom out, he does something redeeming.
I Can See It Now...

"George W. Bush has given us the fastest growing economy in 19 years.

According to AP:

"The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence.

The increase in gross domestic product, the broadest measure of the economy's performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department reported Thursday."

10:38 am -- Update: This just In:
American Shareholders Association
Jobs and Growth Tax Relief Reconciliation Act Scorecard
GDP Up, Unemployment Down, Stock Market Rising

October 30, 2003
The Bush Boom Has Arrived

* 3Q Gross Domestic Product (GDP) Is Way Up
Economic growth in the third quarter increased by an astonishing 7.15
percent. This increase was the largest since 1984. Broad based growth
with business purchasing up and equipment and software leading the
way. These items are closely correlated with increased depreciation
allowances as stipulated by the recently signed tax cut law.
Non-residential investment increased by more than 10 percent. On top
of this, nearly every sector of the economy reported good news and
eal disposable income increased at a rate of 7.2 percent for the
* Initial Unemployment Claims Decline Again
Since the tax cut, initial claims for unemployment insurance has
declined by more than 10 percent. The four-week moving average has
stayed below 400,000 claims for four straight weeks indicating a
stabilizing labor market. With today's GDP report showing business
investment substantially increasing and inventories slim, production
will continue to increase over the next few quarters. This is going to
require hiring more workers and ASA expects to see employment growth
take off in the beginning of 2004. Employment growth will be the final
piece to placing the full recovery together.

* Shareholder Wealth Continues To Increase
As of yesterday's stock market close, shareholder wealth is up $2.9
trillion since the mother of all lows, 10/9/02. Shareholder wealth has
increased 22 percent since last October. 50 percent of the increase in
stock market wealth has occurred since the tax cut agreement was
reached May 20th. Since October of 2002, shareholder wealth has been
increasing at an average of $10.73 billion per session. However, since
the tax cut agreement was reached shareholder wealth has been
increasing at an average of $12.58 billion per session, or roughly
$3.2 trillion annually.

29 October 2003
I Missed Yesterday's Tribune Poll

Chicago Tribune | Voters increasingly doubt governor on budget crisis:

"Gov. Rod Blagojevich still rates favorably in the minds of many Illinois voters, but a new Tribune/WGN-TV poll shows they have doubts about his ability to handle the state's budget problems without a tax hike and are sharply divided on whether he's kept his promise to reform state government.

Surveyed on a wide-ranging set of issues, a majority of voters also indicated interest in a proposal to increase state income taxes and broaden sales taxes in exchange for relief from property taxes. The poll, conducted Oct. 15-20 among 700 registered voters, showed that 49 percent of them have a favorable opinion of Blagojevich as he nears the completion of his first year in office, while 22 percent disapprove."

There are a lot of interesting results in this. We seem to be doing a better job downstate at pointing out the flaws in the budget and upstate. Houlihan's tax swap proposal has some support, but it is an issue that has traditionally lost support as the details emerge.

The poll does fuel the fire that Governor has some big poltical vulnerabilities to exploit if you are the opposition. Whether or not they are recognized, is another question.
Why Israel Should Be a Vacation Hotspot

It at least if you are a single guy and like guns. I found this via Atlanticblog.
Q&A with Karl Marx

This is a fun read from the U.K's Prospect Magazine.
A Modest Proposal for Iraq?

James Woolsey and Bernard Lewis suggest that Paul Bremer and the U.S. Government take a look at Iraq's 1925 Constitution as a transitional guide:

"There may be a path through this thickening fog, made thicker by the rocket and suicide-bombing attacks of the last three days. It is important to help Ambassador Paul Bremer and the coalition forces to establish security. But it is also important to take an early step toward Iraqi sovereignty and to move toward representative government. The key is that Iraq already has a constitution. It was legally adopted in 1925 and Iraq was governed under it until the series of military, then Baathist, coups began in 1958 and brought over four decades of steadily worsening dictatorship. Iraqis never chose to abandon their 1925 constitution--it was taken from them. The document is not ideal, and it is doubtless not the constitution under which a modern democratic Iraq will ultimately be governed. But a quick review indicates that it has some very useful features that would permit it to be used on an interim basis while a new constitution is drafted. Indeed, the latter could be approved as an omnibus amendment to the 1925 document."

The authors go on to discuss the pro's and shortcomings of the document and how one might go about identifying the personnel to run the country. Occam's razor suggestst that this might be the easiest solution to letting Iraqis govern Iraqis once again. The problem is that the Iraqis may not want to use the th e '25 Constitution.

If it becomes the case that Iraqis wish to start from scratch, then there is really nothing the U.S. will want to do about it. Still, it is a great idea.
Early Retirement

Early outs hike state costs according to the Sj-R:

"Last year's early retirement program will cost state government an extra $380 million a year for the next nine years, trustees of the State Employees Retirement System were told Tuesday.

The cost of the early retirement program more than doubled the amount of state funding needed for the system to meet its obligations.
'The early retirement incentive cut state employment, but there's a big ticket at the other end,' said Robert Knox, executive secretary of the State Retirement Systems. The SRS oversees pension plans for state workers, judges and lawmakers."

Buried in this story though is that the state is saving $588 million per year in salaries. I would also add that these are 11,000 bureaucrats that can no longer interfere with our lives.

Governor Jeb Bush instituted a plan that shaved 5% of the stake work force for 5 years. Early retirement can be a good way to shave some size off state government. He has also moved forward on pensions reforms which would allow the state to save money and the state employees the opportunity to earn more toward retirement.
28 October 2003
They Could Call It the Chicago Depopulation Act

From the Sun-Times:

"The sales tax in Chicago would jump to 9 percent under a proposal being considered by Cook County officials to plug a projected $100 million deficit.

The quarter-percentage-point boost in the Cook County sales tax rate would put Chicago on a par with New Orleans as one of the top two major cities with a 9 percent sales tax rate. Parts of Alabama have sales tax rates of 11 percent,
but no other cities of Chicago's stature have a 9 percent rate."
27 October 2003
Living Single

The Christian Science Monitor discusses a story that is beginning to make the journalistic rounds on living single.

"In 1940, less than 8 percent of Americans lived alone. Today that proportion has more than tripled, reaching nearly 26 percent. Singles number 86 million, according to the Census Bureau, and virtually half of all households are now headed by unmarried adults.
Signs of this demographic revolution, this kingdom of singledom, appear everywhere, including Capitol Hill.

Last month the Census Bureau reported that 132 members of the
House of Representatives have districts in which the majority of households are headed by unmarried adults."

I can quickly come with nine close friends -- 8 of whom are in their mid to late 30's -- who have never been married. I have a few others who are entering the ranks of the unmarried after 10 year marriages. Most of my friends are probably unaware that this is a larger trend, a few could probably take comfort in the fact that they are not alone.
The Roots of Public Choice Theory

I found this James Buchanan article on the always useful Arts & Literature Daily. Public Choice came about as a response to the predominant welfare economics of most of the 20th Century. It brought a realistic perspective on the fantasy that government is the answer:

"Public choice came along and offered a foundation for such an understanding. Armed with nothing more than the rudimentary insights from public choice, persons could understand why, once established, bureaucracies tend to grow apparently without limit and without connection to initially promised functions. They could understand why pork-barrel politics dominated the attention of legislators; why there seems to be a direct relationship between the overall size of government and the investment in efforts to secure special concessions from government (rent seeking); why the tax system is described by the increasing number of special credits, exemptions, and loopholes; why balanced budgets are so hard to secure; and why strategically placed industries secure tariff protection.

A version of the old fable about the king's nakedness may be helpful here. Public choice is like the small boy who said that the king really has no clothes. Once he said this, everyone recognised that the king's nakedness had been recognised, but that no-one had really called attention to this fact.

Let us be careful not to claim too much, however. Public choice did not emerge from some profoundly new insight, some new discovery, some social science miracle. Public choice, in its basic insights into the workings of politics, incorporates an understanding of human nature that differs little, if at all, from that of James Madison and his colleagues at the time of the American Founding. The essential wisdom of the 18th century, of Adam Smith and classical political economy and of the American Founders, was lost through two centuries of intellectual folly. Public choice does little more than incorporate a rediscovery of this wisdom and its implications into economic analyses of modern politics."

It's worthy of your attention.

I Know I'm Suprised

Hot Rod's reimportation report will come out today and the Chicago Tribune reports:

"The study was completed in six weeks, notably ahead of schedule from the time the governor first ordered two members of his staff to examine the issue and report back to him in three months.

Just a few days after that announcement, the governor said he did not want to wait and pushed forward with his agenda, saying he felt the report would basically 'reaffirm what I kind of think is the case.' He petitioned the federal Food and Drug Administration to waive its rules barring drug imports, called on fellow governors to join him and enlisted citizens by setting up a nationwide petition drive, all of which has spurred national media attention and allowed Blagojevich to be viewed as a leader on the topic.

As Blagojevich predicted, the report's summary does reaffirm many of his beliefs on the topic. Not only does it say that it could have saved the state $56.5 million of the $340 million it spent on prescription drugs last fiscal year as well as employees and retirees an additional $34.2 million collectively, it also addresses the FDA's main concern regarding the safety of those drugs.

One of Blagojevich's two special advocates on prescription drugs, Ram Kamath, said Sunday that in examining Canada's prescription drug system he and the others who worked on the report found regulations there mirror those in Illinois.

'We have no reason to believe that Canadian pharmacies are selling substandard drugs,' said Kamath, who added that the report was finished ahead of schedule because several other state employees aided him and the other special advocate, Scott McKibbin, in their report. 'The basic question is this: Are the drugs safe? We found that yes they are safe.'"

Of course no one argues that Canadian drugs are unsafe. The arugement are a) will you actually be getting Canadian drugs and b) is there a way to protect the chain of custody? In the long term, questions regard the availability of new drugs in Canada and whether or not Canadians will begin charging more for drugs shipped to the U.S.

My guess is yes, you will see higher prices for drugs shipped into the U.S. as Canadian pharmacies begin to take advantage the opportunity to garner higher profit margins from their unregulated brothers to the South. It will be the same as with generics -- low wholesale prices and higher retail prices that come in just below U.S. retail prices for name brands. The pharmacies will have a new profit center. The savings won't emerge....

...And also, do you really expect that the $90 million saved will be given back to us. They'll just spend it somewhere else.
The Judicial Wars

According to Robert Novak Senate Republicans are going to re-engage on the judicial nominee front.

Last Spring while at the White House Karl Rove told about one hundred of us that this was a battle of political will. Then, Senate Republicans promptly showed us that they had none.

This matter won't be resolved until either a) Republicans gain seats in the US Senate or b) that the Democrats tire of the fight and become willing to negotiate.

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