My weekly reading for April 21, 2024

by Ryan Bourne, Cato at FreedomApril 18, 2024.

Extract:

The recorded 2023 federal deficit was 23 percent higher than 2022 at $1.7 trillion (or 6.3 percent of gross domestic product, or GDP), but even that was artificially pushed down by the Congressional Budget Office (CBO) that recorded the Supreme Court figures. canceling Biden’s student loan forgiveness plan as a one-time cut. The underlying figure was about $2 trillion, or 7.4 percent of GDP. This is by far the largest deficit since the Great Depression of the 1930s, excluding wars and acute emergencies.

Figure 1 shows the CBO’s budget deficit projections for the next ten years. It estimates that annual deficits under current policies will reach $2.6 trillion per year by 2034. This probably underestimates the extent of the red ink. It assumes that large parts of the Tax Cuts and Jobs Act will simply expire, that no other major spending programs will be introduced after the next presidential election, and that there will be no unexpected shocks or recessions in the meantime. The feds are simply lending enormous amounts of money, especially given the current optimistic macroeconomic conditions.

by Andy Kessler, Wall Street JournalApril 14, 2024.

Extract:

Most venture capitalists invest and help startups with new strategies and hiring a team. Mr. Churi describes what he does as “trench warfare,” fighting regulators and incumbents deal by deal. He notes that “we’ve been building houses the same way for a thousand years – with sticks and stones.” A startup, ICON, hoped to create homes for the homeless in Texas using a giant 3D printing machine that applies layers of concrete. It can ‘print’ a 500 square meter house in 24 hours. For $4,000. Game changes.

Then the regulators came. Mr Churi says international fire safety codes for houses say: ‘You should place the wooden beams this way.’ But there are no wooden beams. The whole thing is inherently fireproof: it is concrete.” As for the supervisors, “they say, ‘You have to place the wooden beams like this.’ Look, it’s right here on the page.’ They had to deal with agencies that allowed fire regulations. “A new language was adopted. It took two years.”

There is so much to like about this article. I remember David Friedman, in his first book, The machinery of freedom, quoting H.L. Hunt’s statement: “If this country is worth saving, it is worth saving at a profit.” I don’t literally agree with that statement and I bet David doesn’t either. But I think he quoted it because it gets to a good point: if people can make a profit by increasing freedom, they are more likely to increase freedom than if they can’t.

by the editorial board, Wall Street JournalApril 2, 2024.

Extract:

The latest data shows that the IRS continues to target the middle class. Since last summer, 63% of new audits targeted taxpayers with incomes of less than $200,000. Overall, only a small portion reached the very highest earners, while 80% of audits involved filers earning less than $1 million. Don’t forget to keep the receipts for charities.

My comments:

In 2021, the last year for which the IRS provides relevant data, those with an AGI of $682,577 or more were in the top 1 percent. (See Table 4.1.) So if we spend 20% of audits on the less than 1% of taxpayers with incomes over $1 million, that means we’re focusing on high-income earners.

I am NOT defending the IRS. I defend math skills and the importance of not misleading readers.

by Alex Nowrasteh, Cato at FreedomApril 17, 2024.

Extract:

Cuccinelli’s statement that crime rates don’t matter, that only the number of crimes matters, says nothing substantive about the potential danger immigrants pose to Americans. Let me give an example. According to Cuccinelli’s interpretation, a city with a hundred murders is twenty times more dangerous than a city with five murders. But if the city with 100 murders has a million inhabitants and the city with five murders has only 100 inhabitants, then the city with fewer murders is much more dangerous to its residents. The city of one million inhabitants and 100 murders has a murder rate of 10 per 100,000. The town of 100 residents and five murders has a murder rate of 5,000 per 100,000, which is 500 times higher than the larger city with 20 times as many murders.

This is an extreme example, but one that is necessary to explain why crime rates are more important to understand in relation to crime and danger than the number of crimes. Which city would you like to live in?

My comment: Alex makes a good point. There is one more point. In any large group of people, some will be criminals. If the group is large enough (and assuming we’re not talking about people in prison or on trial for crime), the vast majority are not criminals in the usual sense of the word. (I refer to Harvey Silverglate’s point in his book with the highly exaggerated title Three crimes a day.)

I think Alex could have made the point even more strongly. There are tradeoffs. Whether the population in question is American-born or born elsewhere, there is a risk of crime. Those are costs. There are also advantages. We get their labor and their contribution to our culture. It is not enough to say that the immigrant pool contains criminals. It also contains very productive people, and their number is a multiple of the number of criminals. You can’t do a cost-benefit analysis by looking at costs alone. As my friend and fellow economist Alan Reynolds once said, that’s single-entry accounting.

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