Gentle Respect

The ultimate payers of the corporate tax are those individuals who have some stake in the company on which the tax is levied. If you own corporate equities, if you work for a corporation or if you buy goods and services from a corporation, you pay part of the corporate income tax. The corporate tax leads to lower returns on capital, lower wages or higher prices — and, most likely, a combination of all three.

A cut in the corporate tax as Mr. McCain proposes would initially give a boost to after-tax profits and stock prices, but the results would not end there. A stronger stock market would lead to more capital investment. More investment would lead to greater productivity. Greater productivity would lead to higher wages for workers and lower prices for customers.

The full article is available here

The state of Texas is now in official opposition to the federal ethanol mandate. Governor Rick Perry has petitioned the Environmental Protection Agency for a one-year reprieve, and the reason is simple and increasingly familiar: Washington’s ethanol obsession is hurting the state.

We all know that corn farmers everywhere love ethanol. Don’t tell that to Texas cattle ranchers. Because of the mandate to add this biofuel to gasoline, ranchers are being forced into bidding wars with ethanol plants for the grains they feed their cattle. They don’t appreciate being hammered on price because of a subsidy to corn growers.

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Interesting article in The Economist about black poverty and lagging achievement.

[Roland Fryer's] most striking contribution to the debate so far has been to show that black students who study hard are accused of “acting white” and are ostracised by their peers. Teachers have known this for years, at least anecdotally. Mr Fryer found a way to measure it. He looked at a large sample of public-school children who were asked to name their friends. To correct for kids exaggerating their own popularity, he counted a friendship as real only if both parties named each other. He found that for white pupils, the higher their grades, the more popular they were. But blacks with good grades had fewer black friends than their mediocre peers. In other words, studiousness is stigmatised among black schoolchildren. It would be hard to imagine a more crippling cultural norm.

A study by Richard Sander of the University of California, Los Angeles, found that when the bar is lowered for black applicants to law school, they are admitted to institutions where they cannot cope. Many who drop out of top-tier colleges might have thrived at slightly less competitive ones. Mr Sander calculated that the net effect of pro-black preferences was actually to reduce the number of blacks who passed the bar exam. That is, racial preferences for black law students result in fewer black lawyers. John McWhorter, the author of “Winning the Race: Beyond the Crisis in Black America”, argues that lowering the bar for blacks also reduces their incentive to excel at school. “As long as black students have to do only so well, they will do only so well,” he says.

This does not mean that discrimination does not exist:

That said, blacks certainly face barriers in the job market. Two economists, Marianne Bertrand and Sendhil Mullainathan, sent out 5,000 replies to job advertisements in Boston and Chicago. Each fictitious applicant was randomly assigned either a black-sounding name, such as Jamal or Lakisha, or a white one, such as Emily or Greg. For every ten jobs the “whites” applied for, they were offered one interview. The “blacks” had to post 15 letters to elicit the same response. Clearly, some managers are racist. But many are not. And many firms are desperate to hire and promote blacks, if only to avoid lawsuits.

The Guatemalan government, under heavy pressure from the United Nations Children’s Fund (UNICEF), is trying to halt international adoptions by putting into place the “Protocol of Good Practices.” The claim is that Guatemala’s partially privatized system creates incentives to steal babies, pay birth mothers to give up their children, or to induce them to have children that they would otherwise not have.

Other countries that have halted international adoptions because of UNICEF’s pressure, such as Romania and Honduras, have seen orphanages swell with large numbers of abandoned children. These institutionalized children have little hope for a better life, or even of developing basic social and cognitive skills. No one is expecting it to be any different for Guatemala, which is why UNICEF is promising to provide millions of dollars to build new orphanages for abandoned children.
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A five year study of children in Romania’s abandoned children shows that children do better with family-based foster care than they do in orphanages. You would not think that a study would be needed (recall the outcry when Newt Gingrich suggested that we save money by putting foster children in orphanages back in the mid 1990’s), but when it comes to international politics, everything gets turned upside down. Orphanages are preferable in the political realm because the money running orphanages goes to the government, whereas foster care is usually privately provided by adoption agences. This leads to the favorite tactic of foster care opponents: arguing that the money is what drives abandonment. But that has clearly not been the case in Romania - abandonment of children continues at the same rate as before, but now the babies are put in orphanages.

Romania — even with 30,000 orphans in state facilities and infants abandoned at a rate of 20 a day — has nonetheless slapped a moratorium on adoptions by all foreigners, a move that seems at least partly intended to stop the flow of infants to American families.

In 2001, when she was entrusted to foster mother Illeana Udeanu as part of the Bucharest study, Mimi was chronically ill, pathetically undersized — unable to feed herself, unable to totter, and unable to talk.

And yet, some 8,000 infants a year are abandoned in Romania, according to international health experts. That’s a shocking figure in a nation of just 22 million people.

“It’s a hangover from communist times, when people were taught by the system that it’s OK to give up your child to the state,” said Elena Petcu, a psychologist who oversees a program that seeks to dissuade young mothers from giving up their newborns.

The Bucharest study has been slammed by anti-US firebrands in the European Union — which Romania expects to join next year — as sneaky science meant to justify international adoptions.

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The basic argument of What’s the Matter With Kansas is this: working class people in Kansas are voting against their own economic self-interest by voting for Republicans because of abortion. I disagree with about every premise. The evidence shows that (1) it is the middle class, not the working class, that are voting Republican, (2) even if they were, it is not against their economic self-interest, and (3) people do not have misplaced priorities if they put morality aissues ahead of economics.
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