For Prop. 8, the “Fiscal Impact” that was included in the official CA voters guide said:

Over the next few years, potential revenue loss, mainly sales taxes, totaling in the several tens of millions of dollars, to state and local governments. In the long run, likely little fiscal impact to state and local governments.

Tens of millions of dollars in FREE tax revenue!  No one claiming to be a fiscal conservative can come up with a good argument against it.  Supporting the Constitution (equal protection) and making money?  Seems like a no-brainer.  And it would show how libertarian they really are.

It’s another example of people letting their ideology get in the way of rational behavior.  In this case, voters put their morals ahead of their financial best interest. (In response to budget deficits, sales tax has gone up since Prop 8 passed.  Not saying it wouldn’t have happened otherwise, but something to consider.)  To me, opposition to gay marriage is a curious position, especially among those calling themselves “taxed enough already.”

For a group ostensibly concerned with taxes, why not start with some low-hanging fruit?

Disclaimer:  The Tea Party itself is not explicitly opposed to gay marriage, although I suspect a majority of its members are.  The Tea Party’s official stance on gay marriage (and other social issues) is to not have one, and defer to state’s rights.

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Obesity is a primary cause of costly and potentially deadly medical issues including heart disease, stroke, high cholesterol, high blood pressure, diabetes, cancer, and more.

A lack of health insurance can cause people to postpone treatment and routine examinations, leading to further problems, and possibly premature death.

It stands to reason that obese people without health insurance would support health care reform.  Yet the states with the highest obesity rates and the highest rates of un-insurance are among the least likely to support health care reform, particularly in the rural South.

This is even more impressive considering these are lower income states, where people would certainly receive more benefits from health care reform than they would pay out for them.  Mississippi is the perfect example.

Stand up for what you believe in, I’m all for it.  But pick your battles.  It might save your life.

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In light of the massive BP oil spill in the Gulf of Mexico, there will be a lot of political pressure in the coming months to take  a hard look at the future of offshore drilling.  Is it viable, efficient, and safe for the long-run?

Well, clearly it’s not as safe as we thought.  But we’ve decided as a society, through our consumption, that the occasional catastrophic ecological disaster is worth the risk.

And we’ll make the same decision again tomorrow.  Here’s why.

Prohibiting, limiting, or creating more red tape for offshore drilling decreases supply in the near term.  With demand remaining constant and less supply, prices go up sharply.  In the long-run, this would be good because it would probably make our planet cleaner and spur innovation in new technologies and alternative fuels.  But in the short-term, the price increase would be painful for customers to swallow, especially as we struggle through this recession.

And for policy-makers, there’s no such thing as the long-run.  There’s only the next election.  If a politician sponsors some proposal that ultimately sends gas to $5 a gallon, it’s a one-way ticket out of office.

So despite the terrible disaster, I don’t expect to see any major changes to offshore drilling in the near future.  Hopefully we can learn from it though to prevent a similar spill from happening again.  After all, oil isn’t worth anything in the ground (as far as I know… geologists, a little help?), but it’s pretty valuable above ground, so you can be fairly sure some company will find a way to get it up.  And I think that’s a good thing.  Until the pipe breaks.

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Fast forward 500 years.

Cap and Trade is one idea to limit carbon emissions and slow climate change.  The proposal makes carbon pollution an environment “sin,” and mandates good clean behavior.  Sound familiar?  But instead of the threat of eternity in hell, we have fines, and instead of indulgences, we have proposed “pollution permits,” that wealthy companies can buy to make their pollution OK.

I find this uber-liberal narrator uber-annoying, but she gives a good overview of the problems with Cap and Trade.  And if both the climate-change-deniers and the hippies think it’s a bad idea, maybe it’s not that great an idea.

The moral of both the indulgence and cap and trade story is: if you have money, you can do pretty much whatever you want.

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Toyota denies any wrongdoing, but has agreed to pay the fine.

What I’m curious about is how impartial a regulator Uncle Sam can truly be, given their majority shareholder position in General Motors, one of Toyota’s top competitors.

It’s like Pepsi being allowed to dictate the regulatory environment for Coke, which clearly would put Coke at a disadvantage.

Interesting to see how it plays out.

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I thought this was an interesting tidbit: according to the Tax Policy Center in Washington DC, roughly 47% of U.S. households will have no federal income tax liability for 2009.

That is a huge percentage of the population with little or no “skin in the game.”  Imagine sitting at a poker table in Vegas, where half the players can bet wildly and recklessly because they’re not playing with their own money.  Worse: they’re playing with yours.

Federal income taxes pay help pay for national defense, education, and infrastructure — services that benefit everyone.  In theory, 100% of the people get a vote on how those dollars are spent, yet only 53% pay into the system.  For a country ostensibly committed to equal representation, I think this could be a dangerous policy in the long run.

Nearly half of the voters have no incentive to abandon inefficient, ineffective, and wasteful programs.  After all, they’re not paying for it.  And knowing they won’t foot the bill, they can approve shiny new expensive projects too.  Surf and turf?  Yes, please.  It’s dine-and-dash.

I believe a certain degree of “buy-in” is valuable in a democracy like ours.  It doesn’t have to be a lot, but at least something.  I think it would help reduce apathy and encourage smarter policy decisions.

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In Economics-land, people behave rationally and work to maximize their utility.  Whatever that means.

For self-employed people who buy their own insurance, let’s say the average health insurance policy costs $1000 a year.  Healthy people, who expect their medical expenses to be far less than $1000 a year don’t buy the policy, or buy some cheaper high-deductible coverage to have in case of catastrophe.  Only the people who expect their medical expenses to be around $1000 or greater buy the policy.

Since the insurance company is only insuring the more expensive, unhealthy people, they find their costs increasing substantially, so the following year they raise the premium to $1500.  Now the moderately healthy people who expect their medical expenses to be less than $1500 opt out, and only the really unhealthy people continue to by the policy.

The following year, the insurance company realizes their expenses have again increased, paying out claims for the percentage of the population that has self-selected themselves as needing the most coverage.  So again the insurance company raises the premium, this time to $2000.

And so the cycle continues.  Insurance costs skyrocket while the size of the risk pool decreases and adds volatility.  And so far all parties have done nothing but act rationally.

A national health care system could potentially stop the cycle.  None of this “everyone must buy insurance” mandate garbage.  It’s a tax so why not just call it a tax and be done with it.  Everyone’s taxes pay into the system and everyone is covered.  By dramatically expanding the risk pool, the average cost of coverage goes way down, and by bringing 300 million people into one system you can substantially reduce overhead due to economies of scale.

The downside would be the young healthy people paying more than their “fair share”… for a while.  They lose out on some perceived freedom and disposable income.  But it’s no different from Social Security and Medicare, right?  The young and the strong subsidize the old and the weak?

Another positive would be for the companies currently providing health insurance for their employees.  This is a HUGE non-essential, non-business-related expense.  Relieving companies of their role as health insurance providers would free up a ton of capital and spark a new wave of economic growth as they invest in new products, markets, and workers.

The other thing I was curious about was whether removing the personal “cost” from the health care equation encourages irresponsible and unhealthy behavior.  In other words, am I avoiding the terrain park on the ski hill because I have crappy insurance and one wrong move could cost me a broken leg and thousands of dollars?  Or, under a nationalized system, am I going to chow nothing but dollar menu double cheeseburgers because I know my coronary bypass is covered?

Based on what I could find about countries with such a system already in place, the answer is no.  There is no evidence to suggest that a universal health care system increases X-games-type activity per capita or leads to increased McDonald’s consumption.  Even though the economic “cost” of these risky and unhealthy activities may be diminished, the “pain/health” costs remain.  In the end, the incentive to remain healthy for the sake of being healthy seems to be incentive enough.

There seems to be a great fear about “not getting your money’s worth” out of a national health care system.  This seems kind of perverse, since only the sickest among us will be getting their money’s worth, and I’m just guessing they would gladly trade places with you.

Still, this post contains a lot of “perfect world” assumptions and given the government’s track record for running things efficiently, a double dose of skepticism is required.  But, like a lot of things, “in theory,” it could work.

Disclosure: I count myself among the young and healthy, so this policy would almost certainly make me worse off in the near term.  I buy my own  insurance.  It’s $57/month and I’m thankful I don’t “get my money’s worth.”

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A while ago I did a post on the best health care bumper stickers, so I won’t include too many of those.  Most of these are conservative or republican bumper stickers, but liberal bumper stickers are guilty too in some cases.

Seriously?  Someone who wants to spend less money on gas and spew less emissions into the air pisses you off so much you’d like to run them over?

Well, yes, that’s one possible outcome.  Did you know red states have higher divorce rates?

Real mature.

If this in reference to Obama it’s the most racist thing I’ve ever seen.

Really?

This is one of the more common ones.  Initially I thought it was funny but I think it makes one big incorrect assumption: that people on welfare are not hardworking and that they want to be on welfare.  I’m sure there are exceptions, and maybe I’m naive, but I honestly believe most people want to be financially independent and work for an honest living.  In other words, I’d like to think that no one is on welfare by choice.

This driver is apparently unfamiliar with this data, that suggests a correlation between education and liberalism.

Again, real mature.

This is just frightening.

So God’s pro-life stance must not apply to kittens.  Did you know that God, through natural miscarriages, performs more abortions than every clinic in the country combined?

Surely you could think of a greater threat.  Nuclear war, theocracy, alien invasion?

Now contrast those with the liberal bumper stickers.  I’ve found liberals are far more likely to use facts, logic, and reason on their bumper stickers.  But I suppose that could be the liberal media bias that has brainwashed me…  Sure, only facts that support their side of the argument but facts nonetheless.  And to be fair, I’ve left out some of the more idiotic ones.

Conservative response: it will easily be 10 times that number once the government takes over.

Washington said that?  Don’t tell Glenn Beck.

Longer?  Yes, look it up.  Better?  That’s always subjective.

But I’ll love my wife so much less knowing a gay couple has the same legal rights as us!

Easy: selective reasoning.  Try it sometime.

I disagree with this.  Labor creates some wealth, but certainly not all.  Smart entrepreneurs and managers directing that labor deserve some credit too.

That stings.

What, and sit idly by when my 2000 year old book says they’re all going to burn in hell?  They must be saved!!!

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“About one week from now, you will receive a 2010 Census form in the mail.”

Are you kidding?  I mean, thanks for the heads up, but why not just send the form?

Assuming every one of America’s 114 million households received this letter, and the Commerce Department has a special 50% discounted rate with their friends at the Post Office, they just wasted $25 million of OUR money!  What’s worse, the figure is probably closer to $30 million given the Postal Service’s recent inability to operate profitably.

Unbelievable.  And I’m not even counting the Census TV commercials, one of which aired during the Super Bowl.  Will any of these tactics really improve response rate?

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Taxes are basically the price we pay in exchange for government services, right?  If I go to the store and buy a $100 widget, perhaps it makes sense for me to pay a tax since I drove on a public road to get there, and didn’t get shot, presumably thanks to the public police department.  That $100 widget cost $110.  Fair enough.

But what if I bought the same $100 widget from a store in Nevada?  Now I’m not using any California public resources, and neither is the store.  FedEx is the one driving on the roads now, and they got paid from the Nevada store, and sent the required sales tax into the government.  That widget cost $100.  Shipping cost $10, but was included in the price.  FedEx sends $1 to the government.  Fair enough.

In the Nevada store example, the California government gets $1 instead of $10.  (If the customer is Ned Flanders, they might actually get $11, assuming he reports his out-of-state purchases.)  But the fact is that less government resources were consumed, so California should get less.  A single FedEx truck making 50 stops along a route is far more efficient than 50 cars each making one trip to their local store to buy a widget.

I’m not sold that out-of-state stores should be responsible for California taxes.  They don’t have employees driving on our roads or children in our schools.  They can’t vote in California elections, they have no say in how their tax money is spent.  Making them pay would essentially be free money for the state, they get the income from the business activity, but none of the expense.  Taxation without representation indeed.

What about the local widget store that was undercut by their Nevada online competitor?  Economists have a semi-heartless term for this, “creative destruction,” which is a typical ingredient for progress and it’s all well and good until you’re the one getting destroyed.   But in business, price is only one selling point.  Maybe this local widget store has been in business 100 years, has unsurpassed widget expertise, amazing marketing, unbeatable service, and a great atmosphere.  Those are sales points they can compete on, and probably better than any website.

So what’s the solution?  I think something will have to be done on a national level.  There are something like 65,000 different sales tax jurisdictions across the country, and it would be a compliance nightmare unless something was standardized nationally.  However I imagine the congressman that proposes a national sales tax would be voted out of town pretty quick, so that might not happen anytime soon.

In the meantime, state and local governments could consider lowering their sales tax rates.  I think a lot of people would like to “buy local” and talk to a real person, especially for high dollar items, but sales tax rates like Alameda county’s 9.75% are driving people online instead.  They’re already taxing our income and our property; how much is “fair?”

Alternatively, states could spend some money on enforcing the current “self-reporting honor system.”  It probably wouldn’t take much to start a word-of-mouth / social media campaign that they’re auditing people’s online orders and tax payments.  A scared taxpayer is a compliant taxpayer.

Or we could all just move to Oregon.

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