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Six Policies Economists Love (And Politicians Hate) : Planet Money : NPR


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Adam, you were asking about this first one...

These are great.

1. No mortgage deduction. It distorts the housing market.

2. Tax employment health benefits. No reason why they're untaxed.

3. Eliminate corporate income tax. Half of companies don't pay it anyway.

4. Eliminate payroll and income taxes. Move to consumption taxes.

5. Tax carbon emissions.

6. Legalize marijuana.

The Jason Belich tax plan:

* Replace all federal/state/local taxes and excises (except local property tax) with a 17.5% general VAT on all goods, services, incomes, inflation-indexed capital gains, and interest/fee bearing transactions where the _buyer_ is located in the US, as a separate line item, collected by the states on behalf of the seller. Basically if money changes hands, the buyer owes a 17.5 sales tax (if both endpoints are in different states, split it). Natural persons with earned income can choose a $10,000 standard credit in lieu of the standard VAT itemized deduction schedule. Natural persons without earned income will receive social vouchers from his or her state. I call it the OneTax. :-)

* Replace all international tariffs and duties with a 17.5% General Tariff.

* Levy a 33% excise on all transactions with, between, or among the several States, including taking 33% of the VAT collections, assorted Fees, Fines and interdepartmental transactions.

* Replace the Drug War with a mandated Social Cost Insurance on sellers. Let the actuarials do their magic on the real social cost for drugs, alcohol, tobacco, prostitution, gambling, HFCS, GMO foods, fossil fuels and the like.

* Devolve ALL social welfare functions of the Federal Government to the States... why do we have a federal department of education when every state has one too? Doctrinaire libertarians and mind numbed Republicans always talk about less government and smaller government... how about we just get rid of redundant government? and because states are just so damn untrustworthy let's let Congress pull their puds with oversight of state agencies?

Shouldn't there be some kind of national education standard?

Otherwise kids in some states might not get the same opportunities.

Why is it any Californian's business what Mississippi's education standards are? Or rather, do we want one party in power dictating their version of education standards upon the whole country? In the middle of a Cold Civil War?

Also, I did not say standard credit/social vouchers for adults only, I said for natural persons.... including children. BLAMMO: school vouchers for every kid, administered by their own state (or more preferably county, town, or district).

Milton Friedman's advocacy of a negative income tax was predicated upon the idea that giving people cash was cheaper and less damaging of society than the bureaucracies which have built up around social programs. For social vouchers, we already devolve administration of many welfare programs to the states; It would not be a stretch to reorient those administrative systems towards voucher disbursements (or better yet, a certification process to bypass even local bureaucracies).

Additionally, the social credit becomes an individual privilege, what some might refer to as a positive right, that can't be interfered with by any distempered bureaucrat. This would reverse the power equation in favor of the individual and potentially even give government-run social services legitimate competition.

And have national testing standards remain privatized, right?

(SATs are private, right?)

Why is a standard proffered by a bureaucrat or politics considered inherently more trustworthy than what knowledgeable people can create for themselves?

Also bureaucratic standards tend to favor the rote, particularly by requiring all data input be both quantifiable and in a predefined format. All that matters is that the appropriate hoops are jumped thru, rather than a comprehensive assessment taken.

In Startupese, you could say the bureaucracies are the APIs to the legal 'code'. They take inputs and produce outputs. However, bureaucracies collect data both inefficiently and insufficiently, making 'Lean' methodologies and 'Agile' responsiveness impossible, producing fully GIGOed output.

In public education, you end up with teachers forced to teach to the test so administrators can bolster their numbers and game the system, because government bureaucrats can't possibly have enough legitimate data to conduct a meaningful analysis at the aggregate level, let alone an individual level.

At least with non-governmental testing systems, like the SAT, ACT, IB, AP, CLEP, etc. there is enough competition for mindshare that when one system becomes corrupted or a flaw is demonstrated, others can be given greater weight in their stead. In fact, even tho people talk more about their SATs, most colleges don't even accept SATs, preferring ACTs instead. And many won't accept CLEP placement scores, preferring AP. And in casual googling it seems more schools are moving over to IBs over even APs.

With government mandates there is no competition, and the bigger the government, the more complete the suppression of competition.

Well, this certainly speaks to a lot of existing problems.

I just wonder who gets left behind if the federal government gives up on education.

I guess people who fill out forms for a living would be pretty screwed.

But any economic activity, and education as a system is entirely an economic activity, will ALWAYS obey the True Golden Rule: He who has the gold, makes the rules.

As every single instance of State Socialism (and Corporate Socialism) has taught us, your job is to please the bureaucrat so you get funding. In our state education system, the customer is eventually the legislative appropriator whether local, state or federal, not the parents, nor the children, nor the teachers, nor any of the other people that school is supposed to serve. Furthermore, that legislative appropriator is at best going to rely on the bureaucratic powerpoint which aggregates you into oblivion, or at worst trade your needs for votes towards his pet project.

At least with a local school board it's easier to hold that person accountable. The chances of a PTO group from anywhere _other_ than his district knocking off John Kline (Chrmn, House Education & Labor Cmte) in November is entirely zilch.

But if people are paying for their own education, or have an social credit voucher to receive any schooling they (or their parents) choose, then they are going to get the most for that money: the True Golden Rule equation orients where it belongs. As a student, you are no longer the product (ala Facebook), you are the customer!

So who will get left behind, are those who are already being left behind now: children so disadvantaged by (usually parental) ignorance and by brutal circumstance. However, unlike the situation we have now, good people in bad situations aren't so completely trapped like they are now by our current socialist education system, and society can begin to cleave away the good people towards success, and start a positive feedback loop, eventually cleaning up the barrios and ghettos and trailer parks.

And I'm not even getting into the basic failure of our classroom structure, which I believe I ranted about here several weeks ago.

But it all comes down to this basic economic fact: When a teacher or school has to compete for the dollars a student controls (and frankly the other way around too, Teachers should have the right to choose and unchoose their students) instead of competing for dollars a bureaucrat controls, you are going to get a product which is more responsive to the needs of children and parents than you will to the needs of bureaucrats and legislators.

(And you will see that probably fewer people in Kansas are as interested in teaching their own children Creationism than you think!!)

Things have changed so much since we were kids.

It's clear that something's gotta give.

The answer is, and always will be, Gall's Law

So... we have to start over?

No, we have the simple system we need already buried under the mountains of politicians and bureaucrats: the triurnal republican form of government and the trial jury system.

No bureaucrat has the right to write secondary legislation, AKA regulations (i.e. the SEC intentionally mucking up the JOBS act, or the FDA keeping me from useful medications). That responsibility belongs to our elected representatives.

No bureaucrat has the right to demand compliance nor enforce sanction without due process, which means a jury of peers to determine facts and a judge to apply those facts to the law.

Think about the kind of society we would have, if at every single level of government, and within every department and function of government, we carried these two simple structures into the core of their operations. Our already elected representatives doing their actual jobs. Enforcement and execution requiring judicial oversight. Facts determined by a jury of our peers instead of the whims of political appointees.

And most importantly, the presumption of innocence and of compliance with the law; where you're no longer forced to spend resources proving you're compliant with a bureaucrat's whims as a precondition for your pursuit of your happiness.

I challenge you to take some time and explore the permutations of how that would actually work, and when you see flaws, look for creative ways for those two simple systems to organize themselves in such a way that could resolve the flaw. I think you might be astonished to realize how much of our governing apparatus we really don't need.

The problem is how much of society believes we need it all.

The system resists such radical change.

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