catallaxy

At the risk of offending people with large families, I think this fellow has a point as well as the research to back it up (any statistical generalisation is bound to have exceptions but that doesn’t mean the generalisation is invalid):

The U.S. government encourages families to have children, as many of them as possible. Child tax credits, child-care tax deductions, and family leave policies all reward parents with big broods …

Problem is, these two goals—more kids and better-prepared kids—are at odds. If we really care about kids’ welfare and accomplishment, the United States should scrap policies that encourage parents to have lots of children. As my recent research shows, having more than two children is tantamount to handicapping their chances for academic, and thus economic, success. In this information economy, what we ought to be doing through the tax code is making it easier for parents to ensure the quality of their first one or two children, not stimulating quantity. Pro-fertility tax policy is an outdated notion from an industrial era when we needed bodies to fill manufacturing plants …

The reasons that additional siblings hamper the intellectual growth of children (and particularly middle-borns) are fairly obvious—parental resources are a fixed pie, and children do better when they get more attention (and money). The conclusions to be drawn are more controversial …

We have to confront the possibility that a more powerful educational (and antipoverty) policy is a tax structure that acts as a disincentive to have more children. Research has long shown that family background is a lot more important than school conditions in predicting academic success or failure. Just about the most controllable aspect of family background is how many kids are in that family. So it stands to reason that a more effective education policy may be to provide economic disincentives to large families.

Link via Gene Expression.

Veteran academic Francis Castles is reported in The Australian this morning as saying that

“We share with the United States the dubious distinction of having no public maternity leave schemes and almost no public provision of childcare places for the under-3s”

and that unless governments intervene to provide maternity leave and affordable childcare our birthrate will continue to decline. But Australia also shares with the United States above average fertility. Indeed, the US has the highest fertility rate (excel file) of any advanced country.
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In 1968, the economist Harold Demsetz wrote a famous article [1] called ‘Why regulate utilities?’ that made a dent in the the traditional case for public regulation of natural monopolies. However the extent of the dent is a matter of debate [2]. Essentially Demsetz argued that a system of ‘franchise bidding’ could be an alternative to public regulation of prices charged by natural monopolists. Under his proposal, a central authority would auction the rights to the natural monopoly. Potential suppliers would bid by quoting prices at which they were prepared to supply the market. The supplier quoting the lowest price would be offered the franchise. Competing bidders would then drive the price down to a competitive levels. This argument is not inherently implausible and naturally it has been seized on by libertarian economists and other thinkers who are sceptical of antitrust policy and public regulation (see for instance this paper by Deepak Lal). There are also clearly examples of this alternative approach working under particular circumstances.
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Since I’m busy and have got nicer blog digs I thought this would be a good excuse for reposting some posts from the old blog which IMO deserve a wider audience. So for history of libertarian ideas buffs, here’s an old post on Edmund Burke.

The statesman Edmund Burke was a fairly interesting character. He is chiefly known as a romantic, almost reactionary type of conservative who condemned the French Revolution in quite strong terms in his ‘Reflections on the Revolution in France’ and is usually placed as a foil to the character more favourably regarded by liberals (and libertarians), namely Thomas Paine. However it must also be remembered that he was a Whig and supportive of the American Revolution and even something of a liberal with regard to injustices in India perpetrated by the East India Company. Nonetheless overall I had followed majority academic opinion on this and pegged him as a reactionary conservative.

What’s not so well known is that in 1756 Burke wrote an intriguing essay called ‘A Vindication of Natural Society’ wherein Burke sounds like a flaming libertarian anarchist.

If you don’t take my word for it, read it yourself or alternatively read this fascinating essay by Murray Rothbard on ‘A Vindication’.
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The Sydney Morning Herald has a habit of giving prominent coverage to minor interest higher education stories, such as this story yesterday about the Nelson reforms generating too many prices to fit in the University Admissions Centre guidebook. What, students will just have to spend a few more minutes on each uni’s website to work out the cost?

For the followers of bureaucracy-gone-mad, though, there is a story in how prices are affected by government regulation. The best-known rule is the 25% capped increased on existing HECS levels. At least there is a clear rationale for that one, even if it is a bad rationale. But the same cannot be said for other price rules applied by the Commonwealth.

For example, universities are not allowed to set lower prices for students from disadvantaged backrounds. They can give, subject to government guidelines, such students a so-called ‘fee-exempt’ place (not to be confused with the no-no fee-waiver place, but there is not space to explain this bureaucratic madness). So it is all or nothing. Nobody can explain why.

Nor - and this is relevant to the SMH story - can they set a course price for HECS students. They have to set their prices at the unit-of-study level, and since most students can or must do subjects from faculties other than the one they are principally enrolled in, their total course costs could add up to varying amounts. However they can set common prices for all units done by students in fee-paying courses. Why the difference? I have no idea.
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I follow sport in the same way most people follow politics. I hear about it on the news, but I don’t watch dedicated TV programs or go to events. I know who the most famous sportsmen and women are, but few of the minor players. I can tell you who won the most recent big games and races, but I can’t give you any of the details. So like those who vaguely follow politics, I base my assessments more on personal character than detailed understanding.

Hearing Ian Thorpe on radio this morning and reading about him in the papers reminded me how good he seems as a person, compared to say Lleyton Hewitt or some footballers, with their attitude to women. He bungled badly in falling into the water last Saturday, but has accepted it without public tantrums or demands that the rules be changed to suit him. While disappointed, he seems genuinely glad that his friend Craig Stevens will now get a chance to race.

I’d been impressed with Thorpe before this as much because he was a young person who spoke in sentences as for anything he did in the pool (though swimming being the only sport in which I was not a total failure I did take some interest in his actual swimming achievements). On the basis that character is best displayed in the highs and lows of personal experience, I am more impressed with him now.

Yesterday saw another day of violent protest at my alma mater, Monash University. There has always been a criminal element to the student left, and so these things are to be expected whenever they can find an excuse for a protest. The naive students who get caught up in the heat of the moment are more interesting. Take this lass for example:

Second-year commerce student Denise Lee, of Singapore, was in the house on her first protest. “In my country we don’t do this . . . I saw it on Monday and thought it would be good to take part. I am already paying quite a bit, so I don’t want to pay any more.”

Poor Denise doesn’t seem to realise that it is people like her who have been paying the HECS students’ bills for years, and that Monash reversing the 25% increase in HECS decision will increase the chance that she would pay more, not decrease it. She’s also foolishly told a journalist her name, which will make it a lot easier for Monash to suspend or expel her. Go to the bottom of the class, Denise.

There is another protest at the Victorian College of the Arts, as these apprentice luvvies practise boring us with their political views. I’m not sure what they are worried about. The creative arts are a winner-take-all profession, so those who are successful won’t notice the few extra thousand dollars the full HECS increase would cost them, and those that are not will never make it to the income threshold at which they have to repay their debt.

It seems that the overwhelming majority of thinkers who are influenced by libertarian/classical liberal ideas but who accept the need for taxation prefer a flat rate of tax over the current progressive tax system. There are many reasons for this preference (and here I confine my analysis to reasons that are amenable to consequentialist analysis).

One commonly cited one is that a flat tax can have some sort of ’supply side’ positive incentive effect that leads to increased economic growth and activity. The work done by researchers such as Hall and Rabushka fall into this category.

However, while such positive incentive effects are not irrelevant they by no means constitute a decisive or ‘killer’ argument for preferring a flatter tax structure as the means of achieving such incentive effects since by similar reasoning, such effects could also emerge from reductions in overall tax rates and through other measures. For this line of argument to work, some reason must be supplied for why there is something special about a a flatter tax structure (as opposed to overall cuts in levels of taxation)as a means of achieving such incentive effects.

Which is why flat tax proponents usually add to their list of reasons considerations such as the greater administrative simplicity associated with a flat tax. Again, while administrative costs are a relevant consideration they hardly seem a strongly compelling reason in the minds of supporters of the status quo for moving to a flat tax. While there may be some savings in administrative costs, it is not clear that the savings would be that great given we already have incurred the fixed costs to set up a bureaucracy of a sufficient size to administer the tax code plus a lot more.

In The Constitution of Liberty, Hayek had a go at a more systematic refutation of the need for progressive taxation, going beyond the ‘incentives’ plus ‘administrative simplicity’ arguments. Hayek went into detailed historical reasons for why some degree of progression was originally justified because taxation bases were genuinely regressive in the past, and noting that this is no longer the case. However his decisive argument was essentially a ‘public choice’ one (though the term was not in broad use then).
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The Centre for Independent Studies has just published a study by Alex Robson that dissects the economics of corporate welfare in the Queensland sugar industry. The report cites the current arrangements as a classic example of the kind of ‘concentrated benefits and diffused costs’ that allows inefficient subsidies to be sustained with little political resistance because taxpayers remain blisfully unaware of the burdens they shoulder for very little return.
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Just like the joker in a pack of cards can substitute for any other card, ‘economic rationalism’ seems able to substitute for any other explanation of something that’s gone wrong. In an article I wrote for Quadrant a couple of years ago I chronicled how ‘economic rationalism’ was blamed from everything from the decline of Sydney University’s music department to leaks in Melbourne’s Burnley tunnel.

Now, it seems ‘the ascendancy of economic rationalism pushed Hamer from power’. I admit I am a bit hazy on why the late Dick Hamer left office in 1981, but any kind of economic rationalism was two years away in federal politics, and eleven years away in Victorian politics. The defendant has an alibi, your honour. I’ll put this one in my ever- growing file of academic silliness.

This entry provides some brief biographical information on contributors to the Catallaxy blog.
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As an avid consumer of science journalism and someone who appreciates the importance of providing science education to the general public, the recent blossoming of blogs specialising exclusively in science is an encouraging trend. You’ll see a few on my US and UK blogroll (Chris Mooney and Carl Zimmer). Now this morning I’ve just discovered a new one which seems quite promising as it’s a groupblog comprised of quite a number of contributors called The Panda’s Thumb which I now have to add to the roll.

No fault divorce laws have taken a hammering because of research by conservative think-tankers demonstrating that, not surprisingly, they do lead to marginally more divorces. And in turn that family breakdown allegedly leads to more maladjusted offspring, higher crime rates committed by the offspring and so on. Personally I’ve been sceptical of the public policy significance of such research because it doesn’t disentangle the fact that families who are statistically more likely to get divorced might already suffer pre-existing circumstances that cause maladjustment of their children, in which case divorce might be a lesser evil than the alternative. Now comes research on the benefits of no fault divorce for hitherto neglected parties in the divorce debate which also seems to capture this additional factor of pre-existing problems:

In the past three decades, liberalized divorce laws have reduced suicides among women, sparked a dramatic reduction in domestic violence and led to a decline in women murdered by their partners, according to economists Betsey Stevenson and Justin Wolfers.
Specifically, they claim, these benefits have resulted from the adoption of so-called “no-fault” divorce laws, in which one partner can end the marriage without the consent of the other.

After states adopted no-fault divorce laws, suicides among women dropped by 20 percent, the rate of domestic abuse fell by a third, and the number of women murdered by their partners dropped by about 10 percent, Stevenson and Wolfers found.

(Link courtesy of Marginal Revolution)

The AEI-Brookings Joint Centre for Regulatory Studies has a new paper out which would be of great interest to ’small government’ advocates. In essence it argues that the larger the population, the greater the potential for regulation:

We present a model of efficient regulation along the lines of Demsetz (1967). In this model, setting up and running regulatory institutions takes a fixed cost, and therefore jurisdictions with larger populations affected by a given regulation are more likely to have them. Consistent with the model, we find that higher population U.S. states have more pages of legislation and adopt particular laws earlier in their history. We also find that specific types of regulation, including the regulation of entry, the regulation of labor, and the military draft are more extensive in countries with larger populations. Overall, the data show that population is an empirically important determinant of regulation.

‘At the end of the day’ has, it seems, been been voted the most irritating phrase in the English language, with ‘like’ thrown gratuitously into sentences as a runner-up.

Personally I find unnecessary use of ‘like’, a verbal tic of young women especially, to be far more annoying than ‘at the end of the day’. I really can’t stay in a conversation with anyone who uses it, for fear of what I might say to them. The same people who use ‘like’ where it does not belong often also use ‘goes’ when they mean ’says’, which is just as bad.

Another irritating phrase which surprisingly does not make it onto the list is ‘do you know what I mean?’. If I don’t I’ll say so. This expression is worse than some of the other phrases because it needs a reply, requiring the listener to collaborate in the redundancy. In many cases it really means ‘are you listening?’, and is a sign of conversational insecurity.

Thanks to blog-meister c8to, I am and my fellow bloggers are now ensconced at a more reader-friendly blog environment. This group blog will serve, as always, to provide running commentary on a wide range of issues from a broad church but consistently classical liberal and secularist perspective. Our particular areas of interest and expertise range from general microeconomics to law and regulatory policy (particularly intellectual property and antitrust) and education policy, but that won’t stop us from the odd trespassing into other fields.