You Would Pay Harris’s Wealth Tax

The selloff caused by a levy on unrealized capital gains would devastate ordinary investors and 401(k)s.

By Hal Scott and John Gulliver. Mr. Scott is an emeritus professor at Harvard Law School and director of the Committee on Capital Markets Regulation. Mr. Gulliver is the committee’s research director. Excerpts:

"Billionaires alone own more than $5 trillion in stock, or 7% of the entire stock market. Public stock represents 66% of their wealth, so they would need to sell hundreds of billions of dollars worth of stock to fund their wealth-tax payments. These sales would drive down stock prices and, therefore, returns for all investors. The largest, most innovative and fastest-growing U.S. tech companies would be hit the hardest. Unrealized capital gains are concentrated in these companies."

"Stock sales would need to continue each year to pay the annual wealth tax. This would be a long-term drag on the returns of all investors, while also reducing the skin in the game of the innovative founders who built these companies. The wealthiest Americans would be entitled to tax refunds in future years if the value of their remaining stock holdings goes down, but that wouldn’t diminish the effect of the tax on capital markets.

U.S. taxpayers with assets of more than $100 million hold approximately $4 trillion in unrealized capital gains in the shares of private companies. Selling these investments to cover a tax bill is even more difficult than selling stock in public companies. Private companies generally don’t have active trading markets, so finding a buyer can be difficult and the cost of selling high. These sales can also disrupt the growth of private companies, which are often managed by their owners.

The Biden-Harris tax therefore includes an exemption from the proposed wealth tax for ultrarich investors who have 80% of their wealth in nontradable illiquid assets, such as investments in private companies. This would create a major incentive for the wealthiest Americans either to delist the public companies that they control or to keep their private companies from going public in the first place. If the ultrarich respond this way, it would reduce projected tax revenue and hurt all investors by shrinking the size of public markets."

How Not to Make Housing Affordable

Kamala Harris could learn from New York City’s failed example

WSJ editorial. 

"Kamala Harris is promising to make housing more affordable, and her answers so far are more subsidies, rent control and national intervention in local zoning. She’d be wiser to look at how New York City’s interventions have made housing more costly.

A year ago this month, New York began enforcing new rules designed to make it harder for people to rent out their homes on a short-term basis. The claim was that these short-term landlords were taking space from city residents and making housing less affordable. That was an excuse. The real goal was to drive out Airbnb, an online platform that enables home owners to pick up extra cash by renting homes or apartments to visitors—while offering travelers cheaper rooms than the city’s hotels.

But whenever some new technology offers competition for customers, established enterprises see a threat. In this case those interests include the hotel industry and the Hotel Trades Council, a union. They are among the most powerful forces in New York politics and backed Mayor Eric Adams and predecessor Bill de Blasio for election.

The law they lobbied to pass requires people who want to list their homes on Airbnb to register with the city and prove they’re in compliance with the city’s regulatory machinery. For a stay of fewer than 30 days, the law also requires that the host must be present in the home.

What was the result? Airbnb declines to share its own figures about the effect on its business. But AirDNA, a short-term-rental data company, reports an 83% drop in New York City listings for stays under 30 days.

The damage to short-term rental firms is obvious. But in a statement last week Airbnb notes that travelers looking for affordable shelter are the big losers. Visitors to the Big Apple now pay on average about 7.4% more for a hotel room than they did a year ago. That’s more than three times the national average increase of 2.1%.

New York’s already high rents also continue to increase. StreetEasy says rents rose 3.4% in the first 11 months since the anti-rental law was implemented—outstripping the increases in Chicago, Boston and Washington, as well as nationwide. The vacancy rate in New York remains unchanged at 3.4%.

In any sane universe, the response to these results would be to repeal the law. But this is New York, whose political class has no understanding of how a private economy works. The last thing they’ll do is remove barriers to expanding the supply of housing. If Ms. Harris continues down this road, she will make housing less affordable."

Lights Out in La La Land

Blackouts hit Los Angeles as climate policies wilt in the heat

WSJ editorial. 

"Meet modern life in Los Angeles. On Sunday night the Hollywood Bowl had to cancel a concert because of a city power outage. On Saturday a brief blackout disrupted a University of Southern California football game. Why aren’t La La Land’s progressive leaders upset? Maybe because they’re partly responsible.

Heat waves with triple-digit temperatures are unpleasant, though not unusual during the summer in the South and West. Yet Los Angeles’s electric power system suffered widespread failures this weekend as temperatures surged, causing more than 70,000 utility customers in the city and surrounding neighborhoods to lose power, including the Los Angeles Coliseum and Hollywood Bowl.

Tens of thousands of Californians in other parts of the state also lost power, but L.A.’s grid meltdown was the worst. Its municipal utility, the Los Angeles Department of Water and Power (LADWP), faulted overloaded cables and overheated equipment. Customers were told they might not get power back for more than 24 hours. Better crash at a friend’s place—and hope it doesn’t lose power.

L.A. Mayor Karen Bass blamed the outages on “extreme heat.” But the electric systems in Arizona, Texas and Nevada withstand sizzling temperatures without buckling. Why can’t L.A.? Perhaps because the municipal utility has prioritized the city’s climate goals over hardening its system and replacing aging equipment.

Former Los Angeles Mayor Eric Garcetti in 2021 announced plans to put the city “on the fast track to a 100% renewable energy future.” He was joined by LADWP leaders and Energy Secretary Jennifer Granholm, who declared the city’s “study” would be “proof that the clean energy transformation is not only possible, but preferable.” Sure, if you don’t mind blackouts.

LADWP has been spending heavily on building out green energy and subsidizing electric vehicle chargers. But something has to give, and that has been electric reliability. The utility has skimped on grid repairs to prevent rates from surging even more than they have. Since January 2021, electric prices in the Los Angeles metro area have climbed 36%.

Los Angeles is a portent of the not-so-bright green future that awaits America if today’s climate policies continue."

All the President’s Legal Defeats

Biden’s agencies keep violating the law and losing in court: the list

WSJ editorial. 

"President Biden considers himself a law-abiding fellow. But when it comes to living within the law as established by Congress, his Administration is the most lawless in long memory. His regulators keep rewriting laws as they see fit, and the result is that they keep losing in court in humiliating fashion. 

As a public service, and to illustrate the breadth of the law-breaking, we’re providing a summary of the legal defeats across five of the most lawless agencies. Clip and save in case Donald Trump or Kamala Harris retain anyone running these agencies.

***

Federal Communications Commission

• Net neutrality rule. The FCC tried to classify broadband providers as common carriers under Title II of the Communications Act of 1934. The Sixth Circuit Court of Appealsblocked it in August, citing the Supreme Court’s major questions doctrine, which holds that regulators need express direction from Congress on consequential rules.

• National Association of Broadcasters v. FCC. In 2022 the D.C. Circuitvacated part of a 2021 FCC rule requiring broadcasters to verify the sponsors of programs by checking two federal sources

Department of Education

• Student loans. The Supreme Court ruled 6-3 in 2023 (Biden v. Nebraska) that Mr. Biden’s plan to forgive $400 billion in student loans usurped Congress’s power of the purse. Mr. Biden then boasted that the Court couldn’t stop him and came up with the SAVE plan, which caps payments at 5% of discretionary income and forgives balances after 10-20 years. The Eighth Circuit recently put that plan on hold with a nationwide injunction.

• Title IX. Six federal judges this year have blocked a new Title IX nondiscrimination rule from going into effect in 26 states. “The new rule contravenes the plain text of Title IX by redefining ‘sex’ to include gender identity, violates government employees’ First Amendment rights, and is the result of arbitrary and capricious rulemaking,” wrote Judge Danny Reeves.

***

Environmental Protection Agency

• Clean Power Plan. In 2022 the Supreme Court vacated an Obama-era rule regulating greenhouse gas emissions. “EPA ‘claim[ed] to discover in a long-extant statute an unheralded power’ representing a ‘transformative expansion in [its] regulatory authority’” in violation of the major questions doctrine, wrote Chief Justice John Roberts for a 6-3 majority in West Virginia v. EPA. The Biden Administration has issued a new rule that also uses indirect means to shut down coal plants and is being challenged in court.

• Waters of the U.S. In 2023 the Supreme Court ruled 5-4 in Sackett v. EPA that dry land on the Sacketts’ property doesn’t constitute “waters of the United States” under the Clean Water Act merely because it has a tangential connection to a navigable body of water.

• Good Neighbor Plan. In June the Supreme Court issued a stay on the EPA’s “good neighbor” rule that would have restricted ozone emissions in certain states because of their alleged downwind effect on other states. The EPA’s plan “likely runs afoul” of “long-settled standards,” Justice Neil Gorsuch wrote for a 5-4 majority.

***

Federal Trade Commission

• Noncompete ban. In August a federal judge struck down FTC Chair Lina Khan’s 2024 rule banning employee noncompete agreements. Judge Ada Brown concluded the FTC lacked legal authority under the FTC Act and that the rule was “unreasonably overbroad without a reasonable explanation.”

• Welsh Carson antitrust case. In May federal Judge Kenneth Hoyt dismissed an FTC lawsuit against Welsh Carson. The private equity firm had a minority stake in an anesthesiology company, and the judge ruled that even if the anesthesiology firm violated antitrust law, holding a minority stake couldn’t make Welsh Carson liable.

• Administrative law judges. In 2023 the Supreme Court ruled 9-0 in Axon Enterprise v. FTC and SEC v. Cochran that companies can take constitutional challenges to federal court rather than having to first go through administrative agency tribunals that invariably rule for the agencies.

• Meta acquisition. In January 2023, federal Judge Edward Davila ruled that the FTC did not meet standards of proof in its antitrust case against Meta’s acquisition of virtual reality app Within Unlimited.

• Microsoft purchase of Activision Blizzard. In 2023 federal Judge Jacqueline Scott Corley dismissed the FTC’s attempt to block a Microsoft-Activision merger. “The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets,” the judge wrote.

***

Securities and Exchange Commission

• Proxy advisory rule. In June the Fifth Circuit ruled that the SEC’s rescission of a 2020 proxy advisory rule was arbitrary and capricious. SEC Chairman Gary Gensler had sought to preserve the duopoly of Glass Lewis and Institutional Shareholder Services.

• Private fund disclosure rule. In June the Fifth Circuit blocked the SEC’s rule that would have micromanaged contracts between private funds and their investors, saying the agency lacked statutory authority.

• Debt Box. In March a federal judge in Utah imposed sanctions on the SEC “for bad faith conduct” in its crypto case against Debt Box. In May the SEC was ordered to pay $1.8 million in fees and the case was dismissed.

• Stock buyback rule. In December 2023, the Fifth Circuit vacated the SEC’s rule that required extensive public disclosures when a company decides to buy back its own shares: “The SEC acted arbitrarily and capriciously, in violation of the APA, when it failed to respond to petitioners’ comments and failed to conduct a proper cost-benefit analysis.”

• Grayscale. In 2023 the D.C. Circuit ruled against the SEC’s denial of Grayscale’s bitcoin fund. “The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products,” Judge Neomi Rao wrote for the court.

• Ripple. In 2023 federal judge Analisa Torres rejected a significant part of the SEC’s case against Ripple’s sale of a digital token. Judge Torres ruled that about half of Ripple’s token sales did not constitute an illegal securities sale.

***

This is an extraordinary record of lawlessness, and note the variety of judges who have ruled in these cases. They illustrate the degree to which the progressive administrative state simply disregards the law as its avatars seek to impose their will on Americans without the consent of the governed.

It’s also worth noting that both FTC Chair Khan and SEC Chair Gensler were Sen. Elizabeth Warren’s hand-picked choices whom President Biden accepted when he subcontracted his Presidency to the left. They bull-rush their policies via regulation and dare the judiciary to stop them. Americans are fortunate the Founders created an independent judiciary to block this will to undemocratic power."

The High-Tax State Brain Drain

A new study shows which states are losing their young and wealthy

WSJ editorial. 

"More bad news for California, Illinois and New York. A recent analysis finds that their most upwardly mobile millennials are fleeing for lower-tax states. Call it a high-tax state brain drain. The flight of the young and newly affluent promises to compound the states’ budget and economic problems.

Using IRS data, the fintech company SmartAsset ranked states based on net migration of young households (ages 26 to 35) in 2022 that earned at least $200,000 a year. The biggest losers: California (-3,226), Illinois (-1,323), Massachusetts (-1,102), New York (-345) and Pennsylvania (-320).

Michigan, Louisiana, Delaware, Minnesota and Missouri round the top 10 losers. Delaware (6.4%) and Illinois (4%) lost the largest share of their young, higher-earning households.

The biggest gainers were Florida (1,786) and Texas (1,660), which have no income tax. They attracted more than twice as many such households as any other state. “Half of states attracting the most young and rich households don’t charge state income tax,” the study notes. The other big gainers without an income tax are Tennessee (347) and Nevada (162).

Washington state (383) also ranked in the top 10 gainers of young affluent households, along with Colorado, North and South Carolina, Arizona, and of all places New Jersey. The Garden State had significant movement of young households into and out of the state, and perhaps it benefited on net from young families moving out of New York City.

Although Washington state doesn’t tax wage income, Democrats imposed a 7% tax on capital gains above $262,000 in 2022. An initiative to repeal the tax is on the ballot this November. Do Washington voters want their software engineers and entrepreneurs following those migrating from Silicon Valley to Austin?

Damage to high-tax state economies will compound as more young, upwardly mobile people leave. Local businesses and their workers will lose customers. On the other hand, lower-tax states will benefit from the influx of high-earning young professionals who will grow wealthier as they get older. Newcomers may also start families and businesses.

And don’t ignore the fiscal impact. According to the study, the average adjusted gross income for California households in the “young and rich” demographic is $480,776. These folks pay a top marginal tax rate of at least 9.3%, and those making more than $1 million pay 13.3%. Their flight will result in billions of dollars in less tax revenue for the state as their incomes climb.

This means the middle class in these states will inevitably have to pay higher taxes to support the state’s political promises to public unions. The Blue State governance model keeps giving taxpayers the blues, which is why more of the young and mobile want out."

Rent Control Is a Great Destroyer

The Democrats’ proposal would wreak havoc. For proof, look at Argentina

By Amber Gunn. She is a senior policy analyst for the Mountain States Policy Center. Excerpts:

Argentina had "a rent-control law the National Congress had passed in 2020."

"the statute locked landlords into tenant-controlled leases for a minimum of three years and capped rent. The consequences were swift and brutal: 45% of landlords reportedly elected to sell their properties. Many others either converted their units into Airbnb-type short-term rentals or increased rates prior to the law going into effect. As the Cato Institute relates, the average rent for a two-bedroom apartment in Buenos Aires rose from nearly 18,000 pesos a month at the end of 2019 to 334,000 pesos four years later, well beyond the 210,000 pesos a month if the rate had tracked inflation. Since the law’s repeal, supply has reportedly rebounded and prices have fallen by double digits."

"Nearly a century of case studies by economists such as Friedrich Hayek, Milton Friedman and George Stigler have exposed rent control as destructive. Center-left economists have agreed. Jason Furman, who led President Obama’s Council of Economic Advisers, has said it “has been about as disgraced as any economic policy in the tool kit.”"

"Secured tenants in rent-controlled environments may not give up their units for decades, even after their needs have changed. Meanwhile, units fall into disrepair as landlords neglect basic maintenance or upgrades, because they can’t recoup investments through rent increases. Price-controlled units that can’t be converted into owner-occupied units are eventually abandoned, leading to blighted and dilapidated neighborhoods."

" As Friedman and Stigler observed, “Everything that is not as abundant as air or sunlight must, in a sense, be rationed.” If rationing isn’t done by price, it will be done by force in the form of central planning."

"the effect of pandemic-era eviction moratoria, under which many landlords went months or years without being able to evict nonpaying tenants. Once those restrictions were lifted, landlords raised prices to recoup costs, hedge against inflation and deter squatters."

"As Swedish economist Assar Lindbeck observed, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”"

Welfare Is What’s Eating the Budget

Means-tested programs, not Medicare and Social Security, are behind today’s massive debt

By Phil Gramm and Jodey Arrington. Excerpts:

"Since its inception, Social Security has produced cash surpluses 60% of the time. In 2023 Social Security payroll taxes funded 88.9% of benefits. The cost of Social Security’s Old-Age, Survivors and Disability Insurance program, net of payroll tax collections, was only $88.1 billion. Medicare payroll taxes and premiums funded 49.7% of Medicare expenditures, producing a net cost of $509 billion. 

Means-tested social-welfare spending totaled $1.6 trillion in 2023. Welfare spending now absorbs an astonishing 72.6% of unobligated general revenue (total revenue net of Social Security and Medicare payroll taxes and premiums and mandatory interest on the public debt) and is larger than the claims against unobligated general revenue by Social Security (4.1%), Medicare (23.5%) and defense (37.2%) combined.

Since funding for the War on Poverty ramped up in 1967, welfare payments received by the average work-age household in the bottom quintile of income recipients has risen from $7,352 in inflation-adjusted 2022 dollars to $64,700 in 2022, the last year with available household income data. This 780% increase was 9.2 times the rise in income earned by the average American household.

Since 1967 defense spending has fallen from 68% of unobligated general revenue to 37.2% in 2023"

"the U.S. today redistributes a larger share of its gross domestic product, 29.4%, through transfers and taxes than any developed country in the world except France with 30.1%."

"After counting all transfer payments as income to the recipients and taxes as income lost by taxpayers, and adjusting for household size, the average households in the bottom, second and middle quintiles all have roughly the same incomes—despite dramatic differences in work effort. With the explosion of means-tested transfer payments, the portion of prime work-age persons in the bottom quintile who actually work has fallen to 36% from 68%. In the second quintile, households with a work-age adult who actually works have declined to 85% from 90%. While work effort fell in the bottom two quintiles, the percentage of middle-income households with a prime work-age person who works has risen to 92% from 86%"

"For about the same income, 2.4 times as many work-age persons in the second quintile actually work and on average work 85% more hours than those in the bottom quintile. And 2.5 times as many work-age middle-income persons actually work and work on average 108% more hours."

"The bipartisan effort to reform Aid to Families with Dependent Children during the Clinton administration was a success."

"the 1996 Clinton welfare reforms reduced the rate of dependency of families on what is now called Temporary Assistance for Needy Families by 80%. Six years after the adoption of the reforms, the number of program beneficiaries had fallen dramatically, the labor-force participation rate of never-married mothers had increased, and child poverty had declined. State-imposed work requirements for food-stamp eligibility in Arkansas, Mississippi, Missouri and Florida have thus far also been successful."

"In reporting household income, the Census Bureau doesn’t count 88% of transfer payments made to households that are defined as being poor. The census doesn’t count refundable tax credits (for which the beneficiary receives a check from the Treasury), food-stamp debit cards, free medical care through Medicaid, or benefits from about 100 other federal transfer payments as income to welfare recipients. When those benefits are counted as income, 80% of those who are today counted as being poor are no longer poor, and almost half have incomes equivalent to American middle-income earners."

Minorities Reap the Benefit When Affirmative Action Ends

Colleges across America see the first signs of a repeat of what happened in California after 1996

By Jason L. Riley. Excerpts:

"Nevertheless, because admissions offices can no longer use double standards to select black applicants, a decline in black enrollment at the nation’s highest-ranked colleges was to be expected. That’s what happened in California and other states that prohibited colleges from choosing applicants based on race before last year’s Fair Admissions ruling. In the Golden State, where Proposition 209 banned affirmative action in 1996, the initial reduction in black and Hispanic students was more pronounced on the most selective campuses, UC Berkeley and UCLA. But as the New York Times later reported, “eventually the numbers rebounded” and “a similar pattern of decline and recovery followed at other state universities that eliminated race as a factor in admissions.”

More important, however, black graduation rates rose sharply after racial preferences ended and more students were funneled into schools throughout the University of California system that better matched their academic qualifications. The obsession with the racial composition of first-year students at elite schools is misplaced. The more consequential metric is what percentage of black students in the Class of 2028 make it to senior year and graduate with a degree in their intended major.

Before California’s prohibition on racial preferences, black enrollment at UC Berkeley had been growing, yet only about a quarter of black students were graduating within five years, compared with two-thirds of white students. The end of racial preferences prompted a redistribution of students. System-wide, the number of black and Hispanic freshmen who graduated in four years increased by more than 50%, as did the number who earned STEM degrees and graduated with grade-point averages of 3.5 or higher.

Blacks and Hispanics admitted to the UC system’s most selective schools likewise benefited. “Prop 209 changed the minority experience at UCLA from one of frequent failure to much more consistent success,” wrote Richard Sander and Stuart Taylor Jr., in their empirical analysis of affirmative action policies. “The school granted as many bachelor’s degrees to minority students as it did before Prop 209 while admitting many fewer minority students and thus dramatically reducing failure and drop-out rates.”"

New evidence upends contentious Easter Island theory, scientists say

By Katie Hunt of CNN.

"Rapa Nui, also known as Easter Island, never experienced a ruinous population collapse, according to an analysis of ancient DNA from 15 former inhabitants of the remote island in the Pacific Ocean.

The analysis also suggested that inhabitants of the island, which lies about 3,700 kilometers (2,300 miles) from the South American mainland, reached the Americas in the 1300s — long before Christopher Columbus’ 1492 landing in the New World. 

Settled by Polynesian seafarers 800 years ago, Rapa Nui, today part of Chile, has hundreds of monumental stone heads that echo of the past. The island has long been a place of intrigue.  

Some experts, such as geographer Jared Diamond in his 2005 book, “Collapse,” used Easter Island as a cautionary tale of how the exploitation of limited resources can result in catastrophic population decline, ecological devastation and the destruction of a society through infighting.

But that theory remains contentious, and other archaeological evidence suggests that Rapa Nui was home to a small but sustainable society.

The new analysis marks the first time scientists have used ancient DNA to address the question of whether Easter Island saw a self-inflicted societal collapse, helping to shed light on its mysterious past.

Easter Island genomes

To investigate Rapa Nui’s history further, researchers sequenced the genomes of 15 former residents who lived on the island during the past 400 years. The remains are stored at the Musée de l’Homme, or Museum of Mankind, in Paris, which is part of the French National Museum of Natural History.

The researchers found no evidence of a genetic bottleneck corresponding to a steep drop in population, according to the study that published Wednesday in the scientific journal Nature. 

Instead, the island was home to a small population that steadily increased in size until the 1860s, the analysis suggested. At this point, the study noted, slave raiders from Peru forcibly removed one-third of the island’s population.

“There is definitely not a strong population collapse, like it has been argued, a population collapse where 80% of the population or 90% of the population died,” said study coauthor J. Víctor Moreno-Mayar, an assistant professor of geogenetics at the University of Copenhagen’s Globe Institute in Denmark.

The genomes also revealed that the Easter Islanders had exchanged genes with a Native American population, suggesting that the inhabitants crossed the ocean to South America somewhere between 1250 and 1430, ahead of Columbus’ arrival in the Americas — and well before Europeans reached Rapa Nui in 1722.

Around 6% to 11% of the individuals’ genomes can be traced to coastal South American ancestors, the study found, and the team’s analysis provided information about when these two groups met and had offspring. The authors estimated it took place 15 to 17 generations before that of the individuals studied.

Polynesian seafarers

The finding is not totally surprising. Oral histories and analysis of the DNA of present-day islanders suggested such ancestry, and remains of sweet potato, an import from South America, have been found on the island predating European contact, Moreno-Mayar said.

Some experts, and the wider public, have been reluctant to let go of cataclysmic stories about Easter Island, said Lisa Matisoo-Smith, a professor of biological anthropology at New Zealand’s University of Otago.

But the ancient genomes add to a growing body of evidence that the idea of a self-inflicted population collapse on Easter Island is a false narrative, said Matisoo-Smith, who wasn’t involved in the study.

“We know that the original Polynesian voyagers who discovered and settled Rapa Nui at least 800 years ago were among the greatest navigators and voyagers in the world,” she said in a statement shared by New Zealand’s Science Media Centre.

“Their ancestors had spent at least 3000 years living in an Oceanic environment. They sailed eastwards across thousands of kilometres of open ocean and found almost all habitable islands across the vast Pacific. It would be more surprising if they had not reached the coast of South America. These results do provide some intriguing evidence of the timing of that contact.” 

Matisoo-Smith noted that scholars based in Pacific regions had questioned the narrative of ecocide and society collapse based on a range of archaeological evidence.

“But now, we finally have ancient DNA evidence that directly addresses these two questions and perhaps will allow us to focus on a more realistic narrative of the history of this intriguing, yet actually rather typical, Polynesian island,” she said.

A study published in June, based on satellite imagery of land once used to grow food, reached a similar conclusion."

Related posts:

The Mysterious 'Ecocide' Collapse of Easter Island Never Really Happened 

The truth about Easter Island: a sustainable society has been falsely blamed for its own demise 

Was Easter Island (Rapa Nui) The Victim Of Ecocide? Maybe Not 

Resilience, not collapse: What the Easter Island myth gets wrong

B.C. government should improve health-care access at home rather than ship patients to U.S.

By Mackenzie Moir & Alicia Kardos of The Fraser Institute.

"Since 2023, the British Columbia government has spent $16 million to send cancer patients to Washington State for radiation therapy due to delays in the province. And while BC Cancer, which is part of the province’s health services authority, says more patients are being treated within the four-week benchmark (compared to last December), the number of British Columbians being treated in a timely manner remains below the national average.

And it’s not just patients being treated for cancer that face long waits in B.C. According to the Canadian Institute for Health information, the province failed to meet all wait times benchmarks in 2023. For example, for knee replacements only 57 per cent of patients. and for hip replacements only 65 per cent of patients, were treated within wait-time guidelines.

More broadly, in 2023 B.C. patients faced a median wait of 27.7 weeks from GP referral to a specialist to treatment, the longest in the province since 1993 (when national estimates were first published). And this measure doesn’t include the wait time to see their GP in the first place, assuming they have one. In 2022, according to polling data, 36 per cent of B.C. residents said they had difficulty getting a doctor’s appointment, with nearly one million B.C. residents not having one at all.

For B.C. patients seeking radiation therapy, a critical part of cancer treatment, the total wait in 2023 was 9.1 weeks, double the national average.

All things considered, B.C. Health Minister Adrian Dix should be commended for recognizing the reality of wait times in B.C. and sending patients seeking cancer treatment over the border to Washington.

However, a better approach would be to learn from other countries with universal health care that deliver more timely care. Take Australia, for example, where less of the economy is spent on universal health care yet the country has more health-care workers and diagnostic technology than Canada. And more Australian patients report timelier access to doctor appointments (at 54 per cent) and non-emergency surgical care (72 per cent) compared to Canada (38 and 62 per cent, respectively).

The problem isn’t that we don’t spend enough money; in fact we are already one of the top spenders on universal health care in the developed world. The problem lies in how we approach universal care. Australia has long understood the valuable role of the private sector in enhancing universal health-care delivery. In fact, Australia has used private hospitals to deliver publicly-funded care since the early 1990s, with 41 per cent of hospital services occurring in private facilities in 2021/22 (the latest year of available data).

But we don’t need to imagine what a similar system could look like in Canada; we have proof from recent history By utilizing, among other things, private clinics to deliver publicly-funded procedures, Saskatchewan reduced that province’s total wait for surgery from 26.5 weeks (the longest wait outside Atlantic Canada) in 2010 to 14.2 weeks (the shortest next to Ontario) by 2014.

Quebec has had similar success. The province increasingly relies on private surgical clinics as part of universal health care in the province. The percentage of publicly-funded day surgeries performed in private clinics in Quebec increased from 6.1 per cent in 2011/12 to 17.1 per cent in 2022/23.

The result? More timely access to care for patients in Quebec and Saskatchewan.

For policymakers in every province and territory, examples abroad and experiments at home offer a better way forward for our health-care system."

Tariff Myths, Debunked

By Scott Lincicome. Excerpts:

"It’s similarly misguided to claim, as some misguided souls recently have, that protective tariffs don’t increase U.S. prices. The basic logic and economics here are again straightforward: If tariffs didn’t increase import prices, then they wouldn’t protect U.S. companies from that foreign competition; and if those U.S. companies were already selling at or below the import price, then they wouldn’t need a tariff to change American importers’ and consumers’ behavior. (Nobody—not even me—is “buying foreign” just for the fun of it.) By forcing importing firms to either pay a tariff or switch to more expensive U.S.-made goods, protective tariffs will push the domestic market prices of those goods higher than they’d otherwise be. If they didn’t, then they wouldn’t protect anything.

Furthermore, high or unpredictable tariffs can reduce potential supply and give domestic producers more market power over U.S. consumers who, thanks to the tariff, have fewer alternatives, and this can and often does increase the prices of the American-made goods even higher than they were before the tariff. These kinds of price-boosting effects are precisely why U.S. manufacturers—like this guy—lobby for tariff protection. And we see them all the time in the economic data.

For example, Obama-era tariffs on washing machines, a recent paper showed, didn’t raise U.S. prices because they weren’t protective. (Korean companies simply moved to other countries to avoid the tariffs.) Trump-era tariffs on those same goods, by contrast, were global and did significantly raise U.S. prices of both washers and dryers by about $90 each.

…..

The empirical literature from dozens of countries over many decades again confirms the theory: In case after case after case—and regardless of the model used—economists have found that tariffs reduce national economic output and make a nation worse off on net, while tariff liberalization generally does the opposite. (One of the more popular trade models, if anything, understates the output gains from trade liberalization.)"

Why We’re Not Getting All the Medical Care We Need

By John C. Goodman.

"Even though the United States has the most expensive health care system in the world, we actually have fewer doctors than we need. The average wait to see a new doctor in this country is 3½ weeks. At the worst-performing hospitals, one in ten visitors to the emergency room leave without ever receiving medical attention—apparently because they get tired of waiting.

The situation is especially dire in rural areas. More than a third of rural hospitals are at risk of closing. Of those that are open, more than half have stopped offering labor and delivery services to pregnant women. Rural residents are more likely to die earlier than their urban counterparts from such illnesses as heart disease, cancer and stroke.

We have fewer doctors per capita than most other developed countries, and they are seeing patients less often. Between 2007 and 2017 the number of doctor visits per capita in the U.S. declined by 20 percent. Yet this was a period in which the population was aging (and presumably experiencing more medical needs) and in which Obamacare was insuring more people.

Nurse Practitioners

One solution to this problem is to let nurses practice to the full scope of their training. A majority of states now do that. But 14 put restrictions on independent practice and 11 do not allow it at all. There is no good reason to deny nurses the right to do what they have been trained to do.

The American Association of Nurse Practitioners publishes a list of studies that support the quality of nurse practitioner-led care. In a study for the Cato Institute, Dr. Jeffrey A. Singer and Spencer Pratt have identified some more recent ones. Even the American Medical Association admits that nurses can provide services within their level of training comparable to the care that physicians provide.

Lack of independence is costly and creates bureaucratic obstacles to meeting patient needs. Texas is one of the states that require a doctor supervisor for virtually everything that nurses do—despite having a large and under-doctored rural population. This means that a nurse practitioner in quasi-independent practice must find a doctor to engage in monthly supervision of her work. That can mean having to pay the doctor as much as $50,000 a year.

Not only is this very expensive, but if the doctor decides to quit supervising the nurse must find a new doctor willing to take over. In the meantime, the nurse’s patients are without medical care.

The need for a doctor supervisor almost guarantees that nurse practitioners must locate where doctors are located—and that tends to be in large cities. At a minimum we should allow nurses who relocate to under-doctored areas to pocket the $50,000 they were giving to their supervisors.

Another reason to free the nurses is to provide care for low-income patients. In the most thorough study ever done of the effects of Medicaid on patient care, researchers discovered that new enrollees increased their use of the emergency room by 40 percent. This is a wasteful way to deliver care that in most cases does not require a hospital setting.

If nurses were not required to pay high fees to a supervising doctor, they could afford to charge lower fees to low-income patients and maybe establish a practice that caters to Medicaid enrollees.

Care delivered by nurses is cheaper for everyone. In general, care provided by nurses staffing retail clinics costs 30 percent less than the same care provided in a doctor’s office.

Foreign-Trained Doctors

Another solution is to expand opportunities for doctors trained in other countries. Doctors licensed abroad who have years of training and experience cannot practice in the United States without repeating a multi-year post-med school residency training program. As a result, many foreign-trained doctors living in the United States are doing things other than practicing medicine.

As long as international licensing meets or exceeds U.S. standards, why not allow those doctors to practice without having to repeat a residency program?

Last year, Tennessee became the first state to make it easier for competent and experienced doctors in other countries who migrate to the United States to provide care to its residents. Beginning in 2025, Tennessee will grant provisional licenses to international medical graduates who have full licenses in good standing in other countries and who pass the same standardized medical exams that U.S. medical graduates must pass. After two years of supervision by a Tennessee-licensed physician, they can receive unrestricted licenses.

Similar legislation is being enacted this year in Florida, Virginia, Wisconsin and Idaho.

Medical School Graduates without Residencies

A third needed reform is to make use of medical school graduates who fail to obtain a residency (about 7% of MDs and 10% of osteopaths). Cato institute scholars Dr. Jeffrey Singer and Spencer Pratt write:

The graduates are stuck in limbo, unable to apply the knowledge and clinical skills acquired with their doctorate degrees to care for patients while also being unable to further hone and develop those clinical skills with postgraduate training.

One option that some states are adopting is to allow medical school graduates who have yet to complete a residency program to become assistant physicians (APs) and provide primary care services. However, there are many government-imposed restrictions and barriers that impede these graduates from becoming APs.

In 2014, Missouri enacted a law that permits APs to practice primary care in rural and underserved areas of the state with limited supervision by a licensed physician, with whom they must have signed a collaborative practice agreement. Six other states have subsequently passed similar laws: Arkansas, Kansas, Utah, Arizona, Louisiana, and most recently, Idaho.

Allowing competent professionals to deliver needed health care services they are trained to provide is just common sense."

The Misguided Antitrust Investigations in AI

By Jennifer Huddleston of Cato.

"In early September, news of possible Department of Justice (DoJ) subpoenas indicated that the agency is escalating its investigation into antitrust claims against chipmaker Nvidia. Some critics, both left and right, have expressed concerns that there is already a “big tech” monopoly on artificial intelligence (AI). But as I’ve previously written, the criticism does not reflect the reality of the tech market or, more narrowly, the AI market in general.

Given these latest actions, an analysis of why these claims disregard the consumer welfare focus of antitrust law and the dynamics of an emerging market, such as AI, is needed.

Antitrust Turns its Investigations Towards AI

The DoJ alleged in its probe that Nvidia makes it harder to switch to other suppliers and penalizes buyers that don’t exclusively use its artificial intelligence chips. The investigation also focuses on the company’s acquisition of AI workload management firm RunAI for $700 million in April.

In response, Nvidia said in an emailed statement that the company “wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” Also, a spokesperson encouraged regulators to approach with questions about their business practices. This comes after the Federal Trade Commission (FTC) announced in January the launch of an inquiry requiring six AI companies to provide information regarding “investments and partnerships involving generative AI companies and major cloud service providers.”

These investigations follow the antitrust cases brought against leading tech companies, including Google, Meta, Apple, and Amazon, indicating a heightened degree of scrutiny and enforcement in the technology sector. Additionally, US competition regulators like the FTC have been increasingly aggressive in merger and acquisition enforcement, both in the tech sector and more generally.

Despite a mounting record of losses, many of these cases shy away from the objective, economic-focused consumer welfare standard in favor of theories that are far more attenuated about potential harms and focus on competitors — not consumers.

Competition in AI Is Global

American companies were leaders during the internet era, in part due to our country’s light-touch approach to regulation. By allowing entrepreneurs and consumers to determine the best applications for this technology, both success and failure were determined by the market — not government bureaucrats. America’s leading tech companies became global household names.

More regulatory approaches, like that of the EU, made it difficult for innovative entrepreneurs to develop and launch products in those countries. However, one other side effect of the internet era is the global connectedness of people and markets. As my Cato colleague Scott Lincicome often points out, increased globalization has practical and moral benefits for societies.

Much like the internet and other communications technologies, AI is accelerating our ability to access information. Global competition for various elements of the AI stack is still developing. AI competition is diverse as many elements go into creating an AI model; however, competition exists throughout the various elements of AI development as well as the final AI products.

For example, while the US currently leads in much of the research and development of AI (or has the potential to do so), these companies face global competition. This includes UAE’s Falcon 2 open source model that has emerged as a significant competitor. While Europe has taken a more regulatory approach with the AI Act, there is still an unusual amount of activity around AI start-ups — particularly in France and the UK — that could prove competitive to US companies.

To look at the AI market only in terms of the United States misses much of the global nature of the current stage of development and competition where it is still unclear what the winning models, chips, and applications will be.

Competition Continues to Develop

Even if one were to look more narrowly at AI chips as one smaller element of a complicated market, there are competitors both internationally and domestically for Nvidia.

In many ways, the AI market is still in its early stages. Neither regulators nor the public should presume that the first mover or early successful companies will forever remain dominant. While Nvidia may currently be the leader in providing certain elements in the AI infrastructure, a growing number of competitors in the US are either offering products or looking to develop alternatives. In June 2024, CNBC reported on the rising competition in the AI chip market. This included AMD and Intel creating alternatives as well as companies like Amazon looking at if they could develop their own processors for their cloud and AI products.

If Nvidia wants to maintain its success in the market, it will have to do so by continuing to offer a superior product and adapting to demand. A first mover of a popular and successful product will face challenges from other innovators who see opportunities in the booming market, even if it momentarily appears to have few competitors. However, if it maintains that success through superior products, the response to consumer needs should be applauded and not presumed suspect.

The competition in the AI space is global and regulation or unnecessary enforcement might hamper America’s leading companies in the global market. Nvidia identified Chinese company Huawei as a competitor in 2024 filings. This raises the question of what alternatives allies might turn to if they seek to continue their AI development when an American company is bogged down in negotiations with regulators. Given the concerns expressed by many policymakers about Chinese technology, deterring an American company from further development and innovation by presuming its success is anticompetitive could create greater opportunities for its Chinese competitors.

Conclusion

The escalating investigations into some of America’s leading AI companies miss the competition at all levels of the AI ecosystem, as well as the global market these companies compete in. The eagerness of antitrust enforcement in such an emerging market is just the latest example of the “big is bad” mentality that drives much of the US’ current approach to competition policy. If antitrust loses its objective standard, it is consumers who will lose out on the most innovative products and the best service options in the market."

The UK’s Orwellian sounding Equality Act 2010 is strikingly Marxist

See Equality Act 2010 by Alex Tabarrok.

"The UK’s Orwellian sounding Equality Act 2010 is strikingly Marxist. It demands equal pay for work of equal value where these are defined as follows:

A’s work is equal to that of B if it is like B’s work, rated as equivalent to B’s work, or of equal value to B’s work.

A’s work is like B’s work if A’s work and B’s work are the same or broadly similar, and such differences as there are between their work are not of practical importance in relation to the terms of their work.

…A’s work is rated as equivalent to B’s work if a job evaluation study— gives an equal value to A’s job and B’s job in terms of the demands made on a worker

…A’s work is of equal value to B’s work if it is neither like B’s work nor rated as equivalent to B’s work, but nevertheless equal to B’s work in terms of the demands made on A by reference to factors such as effort, skill and decision-making.

In short, supply and demand have been replaced by judges and labor boards with the authority to deem which jobs are “equal” and therefore should be paid equally. And the labor boards do so based on vague and subjective considerations that do not change with changing circumstances. Imagine replacing “jobs” with “condiments” and having judges decide whether ketchup and mustard should be priced equally because they are similar, broadly comparable, or rated equivalent in terms of the effort, skill, and decision-making that went into their production.

You think I am joking. I am not. Here’s an example of a case just decided in the UK.

More than 3,500 current and former workers at Next have won the final stage of a six-year legal battle for equal pay.

An employment tribunal said store staff, who are predominantly women, should not have been paid at lower rates than employees in warehouses, where just over half the staff are male.

The tribunal ruled that retail workers and warehouse workers were “equal” and thus had to be paid equally. Next replied that they paid everyone market wages. Verboten!

Next argued that pay rates for warehouse workers were higher than for retail workers in the wider labour market, justifying the different rates at the company.

But the employment tribunal rejected that argument as a justification for the pay difference.

According to the tribunal’s ruling, between 2012 and 2023, 77.5% of Next’s retail consultants were female, while 52.75% of warehouse operators were male.

The tribunal accepted that the difference in pay rates between the jobs was not down to “direct discrimination”, including the “conscious or subconscious influence of gender” on pay decisions, but was caused by efforts to “reduce cost and enhance profit”.

It ruled that the “business need was not sufficiently great as to overcome the discriminatory effect of lower basic pay”.

No one is alleging that male and female warehouse workers were paid unequally or that male and female retail workers were paid unequally or that there was any direct or indirect discrimination. The only claim is that warehouse workers, who are less likely to be female than retail workers, earn more than retail workers. And since these jobs have been judged “equal,” the company has violated Equality Act 2010.

Who could have predicted that jobs as disparate as warehouse and retail jobs might one day be deemed “equal.” Yet because Next failed to foresee such lunacy they are now required to pay millions in back wages to their retail employees. Software engineers, particularly in AI, are currently in high demand. A British firm looking to hire them may hesitate to raise wages, fearing that a future ruling could classify software engineers as “equal” to a larger, lower-paid group like HR administrators. Such a decision could easily push the firm into bankruptcy.

The warehouse workers were almost 50% female (47.25%). So females were not barred from the higher paying jobs. The fact that 77.5% of the retail workers were female suggests that retail work has special appeal to females relative to males and thus that there are compensating differentials. Any of the three female plaintiffs could have taken jobs in the warehouse. If the jobs are equal and the warehouse jobs pay more this is, on the plaintiffs’ theory, “puzzling”. [Or, as Ayn Rand would say, blank out.]

In fact, the court case reveals that Next was struggling to fill the warehouse positions and offered any retail employee—including the plaintiffs—the opportunity to switch to warehouse work. On cross-examination, one of the plaintiffs admitted that, given the unpleasant conditions in the warehouse—described by the court as “the drone of machinery,…vibration, alarm sirens and the screeching of machinery, wheels and rollers, continuously present in all areas”—the warehouse job “did not seem particularly attractive” compared to the greater autonomy and more appealing environment of the retail job. The plaintiff added that she would only have considered the warehouse job if it paid “a lot more money.”

Thank goodness for the men and women who were willing to take such jobs for only a little more money! It should not shock that different people have different preferences over jobs, just as they have different preferences over ice cream. In particular, it will perhaps surprise only the judges to learn that men tend to be more wage-focused and “women are relatively more attracted to employers with low pay but high values of nonpay characteristics (NBER 32408).” The court, however, recoiled from this idea, noting that if they were to take demonstrated preferences seriously this would be tantamount to applying “an unfettered free market model of supply and demand.” The horror.

Now consider how the jobs were deemed “equal”. On the left is the job evaluation report for claimant Amanda Cox. The specific categories and numbers are not important; what is important is that the jobs are rated across 11 categories, and the point-scores are then added to get a total score at the bottom.

Amusingly, the evaluators emphasize that they use equal weighting across the categories. Of course, they did—because “equal” is synonymous with fair, right? An unequal weighting would surely be discriminatory!

I am not making this up:

Any scheme which has as its starting point – “This qualification is paramount” or that “This skill is vital” is nearly always going to be biased or at least open to charges of bias or discrimination.

Thus, if you think that a skill is vital for a job, that’s discrimination!

(Notice also that equal weighting is just another form of weighting. Given the subjective nature of both the categories and the points assigned, equal weighting holds no inherent superiority or objectivity.)

But no matter—we have yet to get to the best part. The evaluators selected three warehouse workers and assessed them using the same metric. For example, Amanda Cox was compared to warehouse worker Calvin Hazelhurst, resulting in the table on the right.

Can you spot something surprising in this table? I’ll give you a moment.

The obvious conclusion any reasonable person would draw from this table is that the jobs are clearly not equal. Amanda’s total score is 440, while Calvin’s is 340. 440 ≠ 340. Not even close! In nearly every category—except (no surprise!) physical demands and working conditions—the retail job requires more points, aka “skill and responsibility”.

At this point, most people would stop and ask some critical questions. If the jobs differ so much across multiple dimensions, isn’t it clear that they are not equal? And why do jobs that seemingly require less “skill” pay more? Could it be that our point-score rating system is oversimplified? Maybe the market is telling us something that this crude scoring system isn’t capturing? Is it time to check our premises?

But not the evaluators! Oh, no. The evaluators are thrilled–because the fact that the jobs are unequal proves that they are equal!

War is peace, freedom is slavery, ignorance is strength. UNEQUAL IS EQUAL.

Adam Smith had a much better understanding of wages in 1776 than UK judges have today.

Adam Smith had a much better understanding of wages in 1776 than UK judges have today.

The wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness, of the employment. Thus in most places, take the year round, a journeyman tailor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier. A journeyman blacksmith, though an artificer, seldom earns so much in twelve hours, as a collier, who is only a labourer, does in eight. His work is not quite so dirty, is less dangerous, and is carried on in day-light, and above ground. Honour makes a great part of the reward of all honourable professions. In point of pecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavour to shew by and by. Disgrace has the contrary effect. The trade of a butcher is a brutal and an odious business; but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever.

Today, the UK would convene a labor board to rule that the tailor and the weaver must be paid equally because they DO WORK OF EQUAL VALUE. Case closed.

Labor boards will inevitably lead to the misallocation of labor, diminishing both wealth and fairness. Severe misallocation may lead to further intervention, in the worst scenario, even to the allocation of labor by fiat. Politicization breeds division, rent-seeking, and a stagnant, unpleasant society.

More generally, it pains me that there is no recognition that the market is a discovery procedure, including the discovery of the value of different skills and people’s preferences over different jobs. No recognition that the market harnesses tacit knowledge and knowledge of particular circumstances of time and place–knowledge that is difficult to quantify, communicate, or communicate in a timely manner–and that “society’s economic problems are primarily related to adapting quickly to changes in these circumstances.” No recognition that a price is a signal wrapped up in an incentive.

I despair when I consider that these fundamental ideas are the foundation of our liberal, global, and prosperous civilization. On economics, as on free speech, the UK has entered the great forgetting.

Addendum: A special hat tip to Bruce Greig who brought this to my attention and had the receipts."