BuckeyeBlog

Over at Reason Online there is a great article debunking the latest fad in advancing the nanny state — mandatory nutritional labeling in restaurants:

Americans may say they would also like to see dietary information on menus. But providing it costs money, in a fiercely competitive industry. If patrons really wanted such disclosures, no law would be needed. Restaurants, eager to attract customers, would already be providing the numbers—just as they strive to offer other things that bring in business. …

The belief that more facts will generate wiser decisions is appealing but, at least in the realm of food, yet to be proved. No one seems to have noticed that as nutritional labeling has expanded, so have American waistlines. The federal government first required packaged foods to carry such information in the mid-1970s, and today, we are collectively fatter than we were then.

What does that suggest? Either people don’t notice what’s in the food they buy, or they don’t let the knowledge affect what goes in their mouths. …

There is little research to suggest that calorie alerts will make any difference in obesity rates. In 2004, the American Journal of Preventive Medicine reported that when women of normal weight were given this kind of information, it had no effect on what they ate, and that facts furnished in restaurants were also irrelevant in dining decisions.

A study in the Journal of the American Dietetic Association found that people who dine out frequently are less likely to pay attention to nutritional data than people who eat mostly at home. It suggested that “those who have a less nutritious diet are less likely to use food labels and have less interest in doing so.”

In an editorial today, the Cleveland Plain Dealer once again decided that getting its facts straight is optional when it comes to smearing payday lenders. It makes the completely unsupported claim that these lenders make “grotesque profits … leeched from consumers.” As was the case with the legislators who supported the payday lending ban, it is clear that the Plain Dealer editors have never actually looked at the scholarly evidence on payday lending. Instead, they rely on the false impressions levied by self-appointed “consumer” advocates.

To pick one study from many, this article published in the Fordham Journal of Corporate and Financial Law states:

this study finds that payday lender profit margins are less than half that of their mainstream lending counterparts…. For pure payday lenders, the average profit margin was 3.57%. When including pawn operators, this figure more than doubles to 7.63%.

These figures indicate that payday lenders are not overly profitable organizations. Contrary to conventional wisdom, these firms fall far short of profits for mainstream commercial lenders. In addition, profit margins of payday lenders are far below those of Starbucks. The profit margins of Starbucks for the measured time period were just over 9%. This is almost 2% more than all payday lenders, and more than double the pure-payday lenders. These figures indicate that arguments against payday lending, couched in terms of preventing excessive profits, are unfounded. If companies should be limited to a certain profitability measure, citizens would be better off fighting Starbucks than their local payday lender.

Anyone who looks at the scholarly data on payday lending can easily see that the common attacks on this industry bear no relation to reality. Unfortunately, the General Assembly and Governor Strickland (as well as the editorial boards that were prominent in pushing for a payday lending ban) decided that anecdotes, name-calling, and agenda-driven “studies” would carry the day.

Economist Tyler Cowen had an excellent article in Sunday’s New York Times about why globalization fears are unfounded:

Trade advocates focus on the benefits of goods arriving from abroad, like luxury shoes from Italy or computer chips from Taiwan. But new ideas are the real prize. By 2010, China will have more Ph.D. scientists and engineers than the United States. These professionals are not fundamentally a threat. To the contrary, they are creators, whose ideas are likely to improve the lives of ordinary Americans, not just the business elites. The more access the Chinese have to American and other markets, the more they can afford higher education and the greater their incentive to innovate.

Conservative and liberal economists agree that new ideas are the fundamental source of higher living standards. We urgently need new biotechnologies, a cure for AIDS and a cleaner energy infrastructure, to name just a few. Trade is part of the path toward achieving those ends. A wealthier China and India also mean higher potential rewards for Americans and others who invest in innovation. A product or idea that might have been marketed just to the United States and to Europe 20 years ago could be sold to billions more in the future.

Those benefits will take time to arrive, but trade with China has already eased hardships for poorer Americans. A new research paper by Christian Broda and John Romalis, both professors at the Graduate School of Business at the University of Chicago, has shown that cheap imports from China have benefited the American poor disproportionately. In fact, for the poor, discounting in stores such as Wal-Mart has offset much of the rise in measured income inequality from 1994 to 2005.

(more…)

Over at NaugBlog, Matt takes apart Governor Strickland’s claim that President Bush is to blame for the GM plant closings in Ohio. To build on his analysis, it’s interesting to read an editorial in Investor’s Business Daily that points out how unions in Ohio (and elsewhere) are a large reason why car manufacturing jobs are shrinking in the upper Midwest:

It’s tempting to blame automakers for [moving jobs to Mexico]. Indeed, they do deserve a big chunk of the blame for poor management decisions. And by far, their worst decisions yet came when they agreed to company-destroying labor pacts with the United Auto Workers union that practically guaranteed Big Auto’s demise.

We don’t fault workers for trying to get more in labor negotiations. But the fact is, past UAW deals have saddled U.S. companies with such high costs that they can no longer make cars here and compete on a global market. So they make cars elsewhere.

Like a coyote caught in a trap, U.S. automakers have been desperately gnawing off a leg to escape certain death. They’re closing plants and slashing jobs in Michigan, Ohio and other U.S. union havens, in favor of non-union, foreign places. Like Mexico and China.

Meanwhile, foreign companies have no problem making cars here. They do it in the non-union South, where the UAW is weak.

Though little noted, last year was a watershed for U.S. carmakers. For the first time, foreign producers in the U.S. made more cars — 54% of the total — than the former Big Three. As recently as the 1980s, Ford, Chrysler and GM made 73% of all cars here.

Why is this? U.S. carmakers pay their workers an average of about $73 an hour in wages and benefits — way more than others.

According to the Center for Automotive Research, there’s a $16.15 per hour gap between what Detroit’s Big 3 pay workers and what Toyota pays workers in the U.S. Add to that a $5 billion a year difference in health care and other retirement costs, totaling thousands of dollars in extra costs on every car sold, and U.S. automakers operate at about a $12 billion a year disadvantage.

It doesn’t take an MBA to understand this is an industry in peril.

(more…)

While it is trendy for liberals to talk about the evils of corporations, an economist in the New York Times points out that one of the best ways to help workers is to lower the corporate income tax:

…a corporate rate cut would help a lot of voters, though they might not know it. The most basic lesson about corporate taxes is this: A corporation is not really a taxpayer at all. It is more like a tax collector.

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

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

Populist critics deride this train of logic as “trickle-down economics.” But it is more accurate to call it textbook economics. Students in introductory economics courses learn that the burden of a tax does not necessarily stay where the Congress chooses to put it. That lesson is especially relevant when thinking about the corporate tax.

(more…)

Currently the state Senate is debating the Governor’s “economic stimulus” package. In reality, this bipartisan spend and borrow mess will do nothing to help the state’s economy, as discussed in Sam Staley’s Viewpoint. Unfortunately, some cities in Ohio are passing resolutions urging the General Assembly to engage in pork barrel spending, reward politically-connected industries, and burden future Ohio taxpayers with debt (of course, they put it somewhat differently). The Gahanna city council, however, is bucking the trend. They voted down a resolution that was promoting the stimulus package and are now considering the resolution below, which advocates steps that would do much more for the state’s economy than anything being discussed in the General Assembly today:

(more…)

If you watch any of the cable news shows you may have seen Naomi Klein on them recently, discussing her book The Shock Doctrine. In it she makes the claim that Milton Friedman was essentially an enabler of dictators around the world and that he and his followers fomented crises in order to deregulate markets and thereby plunder the wealth of these nations. Anyone who has read Friedman knows this is ridiculous, but Klein has become a celebrity on the statist circuit for telling those audiences what they want to hear.

(more…)

The Coalition on Housing and Homelessness in Ohio (COHHIO) has been a big supporter of the push to ban short-term loans, aka payday lending. There’s nothing wrong with individuals banding together as an organization to lobby government. That’s the essence of the First Amendment. But is it proper for taxpayer-supported organizations to do so? Or, to put it another way, should organizations to which you, as a taxpayer, are forced to hand over your money be pursuing a political agenda?

COHHIO receives a significant portion of its funding from government grants. Now, according to its tax forms (available if you are a member of Guidestar), it spent almost $500,000 in 2006 on lobbying. That’s more than it spent on “training and technical assistance” to help the homeless. Now, I’m sure there are requirements that the money it gets from the government is kept separate from its lobbying money and that COHHIO has the proper firewalls between funding sources. I’m not accusing them of breaking any laws. I’m concerned about the wider issues here. The government funds, at the very minimum, support the overhead and salary of COHHIO officials. Without these funds, COHHIO would have a difficult time doing its work, whether that is lobbying or providing “training and technical assistance” on homelessness issues.

You have no choice but to support COHHIO’s work. Even if you disagree with them, they get your money. Is that right? Is it right that a group gets taxpayer dollars and that this group may be working against your interests before the General Assembly?