Mobility, or, the Marijuana Tax Credit

The Economist has a story which mentions, in passing, that America’s high rates of home ownership (inflated by federal subsidies) hurt the unemployment more than taxes or regulations:

A decade ago Andrew Oswald of the University of Warwick in Britain argued that excessive home-ownership kills jobs. He observed that, in Europe, nations with high rates of home-ownership, such as Spain, had much higher unemployment rates than those where more people rented, such as Switzerland. He found this effect was stronger than tax rates or employment law.

If there are few homes to rent, he argued, jobless youngsters living with their parents find it harder to move out and get work. Immobile workers become stuck in jobs for which they are ill-suited, which is inefficient: it raises prices, reduces incomes and makes some jobs uneconomic. Areas with high home-ownership often have a strong “not-in-my-backyard” ethos, with residents objecting to new development. Homeowners commute farther than renters, which causes congestion and makes getting to work more time-consuming and costly for everyone. Mr Oswald urged governments to stop subsidising home-ownership. Few listened.

America subsidises more than most. Owner-occupiers typically pay no tax on capital gains and can deduct mortgage interest from their income-tax bills. Fannie Mae and Freddie Mac, two government-backed mortgage firms, have squandered a fortune promoting home-ownership among the uncreditworthy.

The other threat to mobility is health insurance. A company can buy health insurance for its employees with pre-tax dollars; an individual can buy it only with after-tax dollars. So although soaring premiums are prompting many firms to drop or restrict coverage, most Americans still get their health insurance from their jobs.

This makes it hard for anyone with a sick child to quit and start a new firm. It also makes it harder to switch jobs, despite a law helping employees to stay in company plans for 18 months after they leave. Scott Adams of the University of Wisconsin-Milwaukee found that married men with no alternative source of insurance were 22% less likely to switch jobs than those who, for example, could get covered by their wife’s employer.

President Bush deserves blame for much of this. He though the poor, the working class, and politically correct minorities would acquire middle class values if they own a mortgage. This Conservative Social Engineering backfired, when his efforts resulted in a wave of foreclosures and angry cries (from his beneficiaries) that they should not have been trusted after all.

Bush’s failure to make personal health care spending tax deductible is simply inexplicable.

I have hope for a better future under President Obama. I expect Obama to see the greatest collapse in home ownership in American history, easily wiping out the gains that blacks and the working class (among others) made under President Bush. Likewise, I expect Obama to socialize health care much more than it is now.

Presuming that Obama stops making fun of cancer patients, we may even see a day under the Obama administration when purchase of medical marijuana is tax deductible, like spending on other drugs are already indirectly deductible to employers.

Will Eric Holder prosecute Tim Geithner if he covers up “Stress Test” Results?

After initially being very critical of Eric Holder (Obama’s Attorney General), I praised Mr. Holder for setting aside the ill-gotten verdict against former Senator Ted Stevens.

While I realize that public declarations of this would be premature, I hope Eric Holder would criminally prosecute Treasury Secretary Tim Geithner if Geithner attempts to squash the reporting the results of the Treasury’s “stress tests”

One more point worth making – Results of the stress tests, especially if they show potential capital shortage, surely constitute a reportable material event and therefore must be publicly disclosed to the SEC to protect the shareholders, who are likely to be diluted.

It is not just the matter of public trust and fairness, it is the SEC law.

More from Calculated Risk:

And on transparency:

“I think serious efforts will be made to respect the confidential nature of the test and its results,” [Ludwig] said, but added that “there is a real danger that the results of the stress test are uncovered and this roils the markets.”

The results of the stress test should be made public – at least for any bank taking TARP money. This would build confidence in the process, otherwise serious doubts will remain.

The “stress tests” are part of the Treasury’s efforts to launder money from the US government to bankers and Wall Street speculators. However, as the “stress tests” themselves will be conducted by career civil servants, the raw analysis (if not the Treasury’s final spin) may well be objective.

I expect Treasury Secretary Tim Geithner to attempt to lean on banks to prohibit them from fulfilling their lawful duties of publicly reporting the details of these material events. I hope Attoreny General Eric Holder will make that right.

Update: The Federal Reserve prohibits banks from publishing their stress-test results. Will Eric Holder prosecute Ben Bernanke?

Police acting badly

Recently in South Dakota, one of our officers was shot at by a Denver cop. On considerationg, it certainly appears that many large-city police forces are essentially counter-insurgency operations (COIN) without the screening, manpower, seriousness, or training to do the job. So it’s not surprising that like other underfunded, understaffed, undermanaged COIN agencies (say, the Baghdad Police Department), I wouldn’t trust them with my wallet:

Philly police accused of looting stores after dismantling video cameras
Philadelphia police dismantled several video cameras as they raided a bodega looking for tiny ziplock bags.

Yes, the same plastic baggies you can buy in any Walgreen’s to divide your vitamins into daily doses. Philly police consider the bags drug paraphernalia.

Obviously, things have changed in the City of Brotherly Love since our nation’s forefathers signed the Constitution in Independence Hall in 1787.

During the raid, police cut the chords of several video surveillance cameras in the store.

Then, once the cameras were not functioning, police proceeded to loot almost $10,000 in cash as well as several cartons of cigarettes, bodega owner Jose Duran told the Philadelphia Daily News.

Fortunately, science offers a way out. In the same way that evidence-based medicine makes up for superstitious doctors, widespread and effortless sureveillence will increase the ability of the citizenry to monitor their police forces. This will naturally lead to an adjustment, as many police tactics that have long been acceptable in large cities (such as theft) lead to terminated careers, and laws will have to adjust to accommodate illegal police tactics that actually do work.