Quotulatiousness

June 25, 2016

Canada’s massively counter-productive protectionist racket

Filed under: Bureaucracy, Business, Cancon — Tags: , , — Nicholas @ 02:00

At (of all places) the CBC, Neil Macdonald explains why the Canadian government maintains a ridiculously low limit on what Canadians can purchase from other countries without packages being subject to duty, tax, delay, and possible damage:

As any Canadian who’s ever naively bought anything on the American version of eBay (or, for that matter, any U.S. retail website) must by now know, Ottawa is determined to spoil your bargain.

If the purchase is a penny over $20 Cdn, a federal customs agent can intercept it, open it, delay it, add federal and provincial sales taxes, and, depending on the origin of the merchandise, perhaps pile on some duty charges — basically protectionist taxes.

By the time the government is done, the price of the package can easily rise by 50 per cent. And of course customs brokers usually have to wet their beaks, inflating the final cost of the average package by another 20, 30 or 40 per cent.

Basically, Ottawa has ensured that shipping across our border is such an expensive, paperwork-heavy pain that a lot of American merchants and eBay sellers simply don’t bother shipping to Canada.

The system actually seems designed to be burdensome and sclerotic.

Normally, you’d assume it’s all about increasing the federal government’s tax revenues … the CRA must be raking in the bucks, right? Not at all:

… by keeping that purchase threshold at $20 instead of giving Canadian shoppers a break and raising it to $80, Ottawa spends about $166 million to collect $39 million in additional taxes and duties.

Think about that: Ottawa’s customs officials spend a net $127 million of taxpayers’ money annually, basically to keep Canadians trapped inside the Canadian retail corral.

H/T to SDA for the link.

June 22, 2016

In case you get itchy feet after November’s election results…

Filed under: Cancon, Politics, USA — Tags: , , , — Nicholas @ 04:00

Matt Welch has a few warnings for Americans of all political stripes who threaten to come to Canada if the wrong politico gets elected president this year:

* Revenge-minded border cops. Casually crossing our northern border with a family of four, as I attempted recently, is no longer a routine matter. Investigators I know who have worked with Canada’s Border Services Agency say that customs officials are ramping up their screening of Americans in advance of a possible November onslaught. And just maybe, after 15 years of U.S. border enforcers giving Canadians a harder time, followed by 12 months of a xenophobic presidential campaign, we might be getting some payback.

[…]

* You better like Canadian musicians. Americans can be forgiven for losing track of who among their beloved North American entertainers might say “oot and aboot” after a few Mooseheads. But sitting at one of Toronto’s roughly 1,000 sports bars is a grueling reminder that Canada’s Broadcasting Act, which requires that at least one-third of the content at commercial radio stations emanate from musicians with maple leafs in their passports, is a make-royalties program for the Rushes of the world. If you think American classic rock stations are repetitive, get used to side 1 of “Moving Pictures.”

[…]

* You can run from America, but you cannot hide. Think living in Montreal or Vancouver frees you up from the long arm of the Internal Revenue Service? Think again! There are two countries on this whole planet that require federal income tax filing from its nonresident citizens. Eritrea, not particularly known for its good governance, is one of them. Uncle Sam’s the other.

It gets considerably worse from there. Because of a putrid 2010 law called the Foreign Account Tax Compliance Act (FATCA for short, because Washington legislators are nothing if not subtle), U.S. citizens and their spouses who hold more than $10,000 total in non-American financial institutions must file annual disclosures listing the maximum exchange-rate value of each and every such account during the previous year. If you don’t comply, you face steep fines and even jail time.

Ostensibly aimed at fat cats, this law instead has punished the majority nonrich among America’s estimated 8.7 million expatriates. Not only does FATCA impose costly paperwork on individuals, it also requires overseas financial institutions to act as Washington’s international collections muscle, mandating that they seize and transfer to the IRS 30% of deadbeat Americans’ assets. To the surprise of no one who understands basic incentives, foreign banks have been dropping American clients like sacks of flaming garbage.

February 23, 2016

QotD: How Bernie will pay for his campaign trail promises

Filed under: Economics, Government, Politics, Quotations, USA — Tags: , , — Nicholas @ 01:00

Over on his campaign website Bernie Sanders has a page telling us all how his delightful bribes to the voters will get paid for. The usual populist politician’s trick of just shouting that it will be someone else, not you, no absolutely not you the special little voting snowflake, who will pay for all that you, that special little voting snowflake, are being promised. In Bernie’s case it will be “the rich” who pay for everything. And that’s what means that his taxation plans don’t add up. Simply because there’s not all that many rich people and collectively they don’t have all that much money.

Sure, it’s possible to get a bit more money from them. But at some point in the face of ever rising marginal tax rates, peoples’ behavior will change. There really is some tax rate at which point higher rates don’t produce more revenue, they produce less. And sadly Bernie’s sums don’t take account of this fact. Thus under the current taxation plans all these goodies will not be paid for at all. And this brings us to the essential truth that the European states have all worked out. If you want to bring Big Government to the middle classes then you’ve got to tax the middle classes to pay for Big Government. There just is no other way of raising that sort of amount of revenue.

Tim Worstall, “How Bernie Sanders Won’t Pay For His Proposals”, Forbes, 2016-02-12.

February 14, 2016

QotD: President Herbert Hoover’s lasting economic legacy

Until March 1933, these were the years of President Herbert Hoover — the man that anti-capitalists depict as a champion of non-interventionist, laissez-faire economics.

Did Hoover really subscribe to a “hands off the economy,” free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn’t think so. During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions of people on the dole. He accused the president of “reckless and extravagant” spending, of thinking “that we ought to center control of everything in Washington as rapidly as possible,” and of presiding over “the greatest spending administration in peacetime in all of history.” Roosevelt’s running mate, John Nance Garner, charged that Hoover was “leading the country down the path of socialism.” Contrary to the modern myth about Hoover, Roosevelt and Garner were absolutely right.

The crowning folly of the Hoover administration was the Smoot-Hawley Tariff, passed in June 1930. It came on top of the Fordney-McCumber Tariff of 1922, which had already put American agriculture in a tailspin during the preceding decade. The most protectionist legislation in U.S. history, Smoot-Hawley virtually closed the borders to foreign goods and ignited a vicious international trade war.

Officials in the administration and in Congress believed that raising trade barriers would force Americans to buy more goods made at home, which would solve the nagging unemployment problem. They ignored an important principle of international commerce: trade is ultimately a two-way street; if foreigners cannot sell their goods here, then they cannot earn the dollars they need to buy here.

Foreign companies and their workers were flattened by Smoot-Hawley’s steep tariff rates, and foreign governments soon retaliated with trade barriers of their own. With their ability to sell in the American market severely hampered, they curtailed their purchases of American goods. American agriculture was particularly hard hit. With a stroke of the presidential pen, farmers in this country lost nearly a third of their markets. Farm prices plummeted and tens of thousands of farmers went bankrupt. With the collapse of agriculture, rural banks failed in record numbers, dragging down hundreds of thousands of their customers.

Hoover dramatically increased government spending for subsidy and relief schemes. In the space of one year alone, from 1930 to 1931, the federal government’s share of GNP increased by about one-third.

Hoover’s agricultural bureaucracy doled out hundreds of millions of dollars to wheat and cotton farmers even as the new tariffs wiped out their markets. His Reconstruction Finance Corporation ladled out billions more in business subsidies. Commenting decades later on Hoover’s administration, Rexford Guy Tugwell, one of the architects of Franklin Roosevelt’s policies of the 1930s, explained, “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.”

To compound the folly of high tariffs and huge subsidies, Congress then passed and Hoover signed the Revenue Act of 1932. It doubled the income tax for most Americans; the top bracket more than doubled, going from 24 percent to 63 percent. Exemptions were lowered; the earned income credit was abolished; corporate and estate taxes were raised; new gift, gasoline, and auto taxes were imposed; and postal rates were sharply hiked.

Can any serious scholar observe the Hoover administration’s massive economic intervention and, with a straight face, pronounce the inevitably deleterious effects as the fault of free markets?

Lawrence W. Reed, “The Great Depression was a Calamity of Unfettered Capitalism”, The Freeman, 2014-11-28.

February 9, 2016

Cam Newton’s 198.8% tax rate for his Super Bowl “winnings”

Filed under: Football, Government, USA — Tags: , , , — Nicholas @ 02:00

Dan Mitchell explains how Cam Newton is being taxed at nearly 200% on his California income for playing in the Super Bowl:

When I give speeches in favor of tax reform, I argue for policies such as the flat tax on the basis of both ethics and economics.

The ethical argument is about the desire for a fair system that neither punishes people for being productive nor rewards them for being politically powerful. As is etched above the entrance to the Supreme Court, the law should treat everyone equally.

The economic argument is about lowering tax rates, eliminating double taxation, and getting rid of distorting tax preferences.

Today, let’s focus on the importance of low tax rates and Cam Newton of the Carolina Panthers is going to be our poster child. But before we get to his story, let’s look at why it’s important to have a low marginal tax rate, which is the rate that applies when people earn more income.

[…]

Now let’s look at the tax implication for Cam Newton.

    If the Panthers win the Super Bowl, Newton will earn another $102,000 in playoff bonuses, but if they lose he will only net another $51,000. The Panthers will have about 206 total duty days during 2016, including the playoffs, preseason, regular season and organized team activities (OTAs), which Newton must attend or lose $500,000. Seven of those duty days will be in California for the Super Bowl… To determine what Newton will pay California on his Super Bowl winnings alone, …looking at the seven days Newton will spend in California this week for Super Bowl 50, he will pay the state $101,600 on $102,000 of income should the Panthers be victorious or $101,360 on $51,000 should they lose.

So what was Cam’s marginal tax rate for playing yesterday?

    Losing means his effective tax rate will be a whopping 198.8%. Oh yeah, he will also pay the IRS 40.5% on his earnings.

In other words, Cam Newton will pay a Barack Obama-style flat tax. The rules are very simple. The government simply takes all your money.

Or, in this case, more than all your money. So it’s akin to a French-style flat tax.

December 28, 2015

Alberta’s carbon tax scheme

Filed under: Business, Cancon, Economics, Government — Tags: , , — Nicholas @ 02:00

Some thoughts from Dave’s Insight on Alberta’s attempt to signal their new-found carbon virtues:

First, let me set the premise. When giving seminars on Tax and/or Profits, I like to ask the question. What is a word for a Company that does not pass all its expenses, including its taxes on to its customers? The answer of course is bankrupt. Maybe not immediately, but eventually. Something I always ask when dealing with businesses, non-profits and governments when they are talking about spending is: Where is the money going to come from? Well, where is the money going to come from?

The NDP government may claim that it will only be three or four hundred dollars per person, sorry, per family. But let’s cut to the chase. In almost the same breath they claim it will raise 3-4 billion dollars per year revenue for the provincial government. Possibly double that in a few years. So where is this coming from? At the end of the day, one way or another it has to come from our pockets. While at first you might think that we export so we can export the tax. However, our exports have to compete with all the other available sources of supply, so we cannot export the tax. If we could, we would still be charging over $100 per barrel for oil, but we cannot. That leads me back to: Where is this 3 to 4 Billion dollars per year (more later) to come from?

Well, there is really only one answer; it might be somewhat invisible, but we Albertan’s will have to pay it, and that my friend works out to about $1,000 per person per year, or $4,000 per family of four. And if it brings in $8 billion in a few years, that is over $8,000 per family of four per year. We will pay it in the form of higher transportation costs (both public and private); higher heating costs and to a lesser extend in the cost of everything we buy from groceries to toys. Of course some will pay more and some less, but to be clear, this will hurt the poorest the most.

H/T to Small Dead Animals for the link.

December 10, 2015

QotD: Freelance writing

Filed under: Bureaucracy, Media, Quotations, USA — Tags: , , — Nicholas @ 01:00

A few years ago, I was called upon to inform the IRS that a former employee of mine would have liked to be paid more than I had paid him. Given that I have never met a freelance writer who thought he was being paid enough, I thought it a strange request, but I eventually understood the IRS’s line of thinking: The gentleman in question, who was in his 80s at the time, had retired from his former occupation and worked as a freelance writer. His beat involved a great deal of travel, and he deducted the expenses for which he was not compensated — which, the state of the newspaper industry being what it is, was all of them, at least as far as my editorial budget was concerned. The IRS suspected that his writing gig was somehow phony, something he had invented simply for tax deductions. In truth, he was just a freelance writer who didn’t make a lot of money — i.e., a freelance writer indistinguishable from about 88.8 percent of all freelance writers.

Kevin D. Williamson, “Mottos for Miscreants”, National Review, 2014-11-20.

November 13, 2015

QotD: To many the very concept of “tax competition” is anathema

Filed under: Economics, Government, Quotations — Tags: , — Nicholas @ 01:00

I have written a fair bit on this site and elsewhere (I work in the financial/media world) about this subject, and there is no doubt in my mind that the idea that tax competition is harmful is almost always held by politicians and collectivist-minded commentators who want to create a sort of global tax cartel. Cartels are, we learn in our textbooks, harmful although they tend to fracture with time. (The OPEC cartel had a problem in the 80s and 90 sustaining high oil prices, which at one stage went below $10 a barrel). However futile the attempt, however, do not underestimate the harm that is being done in the process of trying to shut down offshore financial centres and the like. The possibility that people can and will take their money elsewhere is one of the few constraints that exist on otherwise rapacious governments. So naturally, governments try to stop this from happening – hence all this talk about shutting down tax “competition”.

When governments claim that tax dodgers are taking food from the mouths of poor babies, treat it with scorn. The money that goes offshore doesn’t disappear down some black hole, never to appear again: that money, if it is to earn a return and outpace inflation, is invested – ie, it is put to work, often far more effectively than would otherwise be the case.

Johnathan Pearce, “The end of tax competition?”, Samizdata, 2014-11-07.

October 21, 2015

The “tipping” point

Filed under: Business, Economics — Tags: , , — Nicholas @ 04:00

Megan McArdle on the odd and oddly resilient habit of tipping:

Restaurateur Danny Meyer is planning to eliminate tips at his restaurant group’s 13 restaurants by the end of next year. Among other things, the New York Times suggests this will lower the disparity in pay between the back of the house, which makes an average of around $12 an hour, and the servers, who pull in considerably more than that.

Meyer is part of a small but interesting movement among restaurants and bars. A bar without tips just opened near my house in Washington; New York has a few places that no longer support tipping. Prices will naturally have to rise to reflect increased labor costs. Meyer says that servers’ incomes will not fall, but I am skeptical on this point. But it will certainly be interesting to see if Meyer manages to slay tipping — and if so, whether other restaurants will follow suit.

To get a sense of whether this is likely to work, it seems worth asking: Why do we tip? Tipping is, after all, a rather strange custom. We tell ourselves that it exists to ensure good service, but in fact, most people are very reluctant to undertip even when the service has been appalling. They follow the norms of tipping even when they are never going to see that waiter again, and therefore don’t need to worry about retaliation. Meanwhile, all sorts of things seem to affect tipping that have nothing to do with the quality of the service, like the race of the server and whether they put a smiley face on your check (though apparently this only works for female servers).

[…]

So if it’s not about rewarding good service, why do we tip? Notice that we do it in some circumstances, but not others. We tip the bellhop, but not the clerk at reception. The waitress, but not the person behind the Target checkout counter. These disparities offer our first clue to the mystery: We tip people who are providing the services that used to be performed by household servants, but not the people who do the jobs of tradesmen or retail clerks. It’s possible that this grew out of the old tradition of tipping servants when you went to stay at someone’s house.

The two types of statists

Filed under: Economics, Politics, USA — Tags: , , — Nicholas @ 03:00

Another post I stashed away, intending to blog and then somehow forgot … Dan Mitchell on the two main varieties of statist supporters:

At the risk of oversimplifying, there are two types of statists.

The first type is generally insincere and simply views bigger government and increased dependency as a strategy to obtain and preserve political power. Most inside-the-beltway leftists in Washington are in this category.

The second type genuinely cares about the less fortunate but makes the mistake of thinking that good intentions somehow lead to good results. You could call these people the Pope Francis leftists.

As you might imagine, there’s very little hope of persuading the first category of statists. You could show them all the data and evidence in the world, for instance, that a flat tax would boost prosperity, and they’ll simply shrug and tell you to jump in a lake because genuine tax reform would reduce the power and influence of Washington’s political elite.

But the second group of statists should be persuadable. That’s why I share so many comparisons of nations with smaller government and freer markets versus countries with bigger government and more intervention. I want open-minded folks on the other side to see how good policy leads to better economic performance, particularly since the poor will be big beneficiaries. That should be compelling, especially when combined with the data on how the welfare state simply traps poor people in government dependency.

October 7, 2015

A Deeper Look at Tradeable Allowances

Filed under: Economics, Environment — Tags: , , , , — Nicholas @ 03:00

Published on 18 Mar 2015

Since the passage of the Clean Air Act, SO2 emissions have decreased by 35%. Part of this is due to tradable allowances, which created a market solution to the external costs of SO2 emissions. In this video, we look at the lessons of tradable allowances for SO2 and see if a similar market-based solution could work to decrease other pollutants, such as CO2.

October 1, 2015

US tax cut proposals fail the laugh test

Filed under: Economics, Government, Politics, USA — Tags: , , , — Nicholas @ 05:00

At Ace of Spades H.Q., Ace responds to a recent Kevin Williamson post:

It is standard conservative theory that tax cuts and spending cuts go hand in hand. But after decades of ever-rising spending, coupled with occasional tax cuts, I’m not so certain of that any longer.

I believe it was after Reagan that Republican theorists began justifying his model of tax-cuts-now-spending-cuts-later as the “starve the beast” theory of limiting government — if we cut taxes, therefore cutting government’s resources, we should, logically, force the government to adapt itself to living with fewer taxpayer dollars. Ergo, spending should be forced down by the practicalities of the situation — either you start cutting spending, or else you start running up dangerous, Greece-level of debts.

The problem is that this country has always elected the “or else” part of this syllogism: We are racking up dangerous, Greece-levels of debts, and we’re barely even talking about that any longer.

The problem has grown so immense that we’ve decided to declare it officially a Non-Problem. (It will decide to re-assert itself as a Really Big Problem in a short period of time.)

So I no longer believe in the “starve the beast” theory, because the “starve the beast” theory relies upon Americans understanding the mid-to-longer term trajectory of their spending choices, which they plainly do not.

Since Americans are not capable of understanding the mid-to-longer term trajectory of their spending choices, it seems to me the only way to impose budget discipline and spending rollback is to offer Americans an immediate, as opposed to future, confrontation with reality: that is, if Americans wish to have so much government, they should be forced to pay for the level of government they are choosing, and not defer that payment (as they apparently will choose, every single time) into the future, to be imposed upon their children.

But, instead, they must be forced to reckon with the level of government they are choosing now by paying the full freight and cost of that government now.

That is to say: I believe that rolling back spending is only possible when Americans are made to feel the costs of the government they’re choosing, and that will only happen when they’re forced to actually pay for it.

The biggest hurdle, after the economic illiteracy of the voting public, is the starkly clear self-interest of the politicians: they can get re-elected only if they pander sufficiently to the voters. The voters, who do not understand how the government works (and refuse to believe it when you tell them) … want ever-more of it to benefit them as soon as possible. Telling the voters that you’ll not only not give them more but that you’ll be giving them significantly less is a great way to lose your next election (assuming you don’t get thrown out of office before that even comes up).

September 25, 2015

Reducing income inequality

Filed under: Bureaucracy, Business, Economics, USA — Tags: , , , , — Nicholas @ 02:00

Tim Worstall in Forbes:

There’s a fascinating and very long essay over in National Affairs about how we might cut income inequality. And, contrary to what any number of Democratic candidates for office will tell you, the answer isn’t to impose ever more regulation upon the economy. Rather, it’s to strip away some of the regulation that allows certain favoured income groups to make excessive incomes. Excessive here defined as greater than the economic value they add to the lives of the rest of us, something they achieve by carving out economic rents for themselves. I would, myself, go rather further than the writer, Steven Teves, and start using Mancur Olson’s analysis, that this is what democratic (note, democratic, not Democratic) politics always devolves down into, a carving up of the public sphere to favour certain interest groups. But even this milder version gives us more than just hints about what we should be doing:

    At the same time, however, we have seen an explosion in regulations that shower benefits on the very top of the income distribution. Economists call these “rents,” which we can define for simplicity’s sake as legal barriers to entry or other market distortions created by the state that create excess profits for market incumbents.

Let us take one very simple example of such rents. The earnings of those who possess taxi medallions in cities where there’s an insufficient number issued. Until very recently one such medallion, allowing one single cab to operate on the streets of NYC 24/7, had a capital value of $1 million. That led to a rent, a pure economic rent, of $40,000 a year to allow one cab river to use that medallion for 12 hours of the day. and, obviously, another $40,000 to allow another to use it for another 12 hours a day.

That is purely a rent: and one created by New York City not issuing enough medallions to cover the demand for cab services. Uber has of course exploded into this market and the success of that company, along with its many competitors, shows how pervasive the creation of such rents by limiting taxi numbers has been in cities around the world. That is an obvious and very clear creation of a rent purely through bureaucratic action.

[…]

Deregulating the economy will remove many of those rents. This will reduce income inequality. So, why aren’t those who rail against income inequality shouting for deregulation? Good question and the only proper answers become increasingly cynical. Unions exist for the purpose of creating rents for their members. So, given the union participation in the Democratic Party we’re not going to see calls for deregulation from that side. And different groups, those car dealers perhaps, the doctors, have their hooks into the Republican Party too.

My own answer is that it needs to be done in the same manner that Reagan treated the tax code. Not that I’m particularly stating that Reagan’s tax changes were quite as wondrous as some now think they were, only that it all had to be approached on a Big Bang basis. Everything had to be on the table at the same time so that while there were indeed those who would defend their little corner the over riding interest of all was that all such little corners got eradicated. With this rent creation, given that so much of it is at State level, that won’t really work. Except for one idea that I’ve floated before.

September 21, 2015

Greek businesses discover the receipt

Filed under: Business, Economics, Europe, Government — Tags: , , , — Nicholas @ 04:00

Megan McArdle is in Athens, where she’s finding that Greek businesses have started handing out receipts for transactions that once would have been undocumented (the better to hide revenue from the taxman):

I was last in Greece in 2006, during the twilight years of the boom that peaked during the Athens Olympics. Back then, Greece was notable to Americans for its lack of receipts. This is convenient for the shoppers, who don’t have to hunt around for somewhere to toss yet another piece of unwanted paper. But it was also convenient for vendors who wanted to underpay the tax authorities.

The inability of the Greek government to collect the taxes it is owed is one of the recurring themes of coverage of the financial crisis. This problem is sometimes exaggerated, but everyone agrees that it’s very real. And since the burden of structural adjustment is falling on fiscal reforms — rather than, say, firing unproductive members of the vast government workforce — that’s a big problem.

Widespread evasion narrows the tax base, forcing the government to set higher rates. If the evasion were spread evenly across all sectors of the economy, then these two things would roughly cancel out. Unfortunately, it’s not. Some sorts of taxes are easier to evade than others. Employment taxes are hard to evade, while self-employed professionals like doctors and lawyers have found it relatively easy to shelter most of their incomes. As a result, the cost of employing a new staff worker is quite high (especially since those workers are incredibly difficult to fire). The value-added tax here is now 23 percent, close to the EU maximum rate. (Thank God for that maximum, joked one journalist I met; otherwise, who knows how high they’d have raised it.) That’s making up for taxes that aren’t collected elsewhere.

The good news is that Greece has at least made progress on collecting sales tax. They’re hardly at the level that our Internal Revenue Service would accept, but most of the places I’ve gone have automatically given me a receipt, printed out by a cash register. The taxi drivers mostly offer printed receipts. One did ask me how much he should make it out for. (Note to boss: I told him to make it out for the amount of the fare.) I’m told that on the islands, collection is less sure. But here in Athens, they are slowly but surely improving their collection apparatus.

Greece is attempting to do in the space of a few years what other economies did over the course of decades. Most people think of a cash register primarily as a way to add up the value of the sale, but in fact, that is the least of its functions. Its most attractive feature to the merchants who adopted them back in the late 19th century was that they made it harder for clerks to steal. (That’s why old registers made a noise every time the cash drawer opened; that prevented employees from stealthily recording sales and then pocketing the money, or alternatively, giving goods to their friends without being paid.) Over time, of course, revenue authorities realized that cash register tickers were also a good way to ensure that employers gave the state its due.

Command and Control Solutions

Filed under: Economics, Government — Tags: , , , , , — Nicholas @ 02:00

Published on 18 Mar 2015

What happened to the cleanliness of your clothes after the U.S. Department of Energy issued new washing machine requirements? The requirements — which require washers to use 21% less energy — mean that washers actually clean clothes less than they used to. Is “command and control” an efficient way to achieve the desired outcome (which is less pollution)? Rather than a standard requirement, such as the Department of Energy issued, a tax on electricity would provide users with greater flexibility in their washing—and would prompt people to purchase machines that use energy more efficiently and keep their clothes clean.

Are there times when a command and control solution to a problem makes the most sense? We look at the eradication of smallpox as one example.

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