The culture that is Swedish: a story of optimal tax enforcement
Via Geekpress.com:
Sweden's tax authorities are cracking down on unreported webcam stripper income.
They estimate that hundreds of Swedish women are dodging the law,
resulting in a tax loss of about 40m Swedish kronor (£3.3m) annually.
The
search involves tax officials examining stripper websites, hours upon
hours, for completely legitimate purposes. A slightly disheveled
project leader said 200 Swedish strippers had been investigated so far,
adding the total could be as much as 500. "They are young girls, we can
see from the photos. We think that perhaps they are not well informed
about the rules," he said.
Here is the cited link. Here is one story.
One hypothesis why CEOs do not have a backward-bending labor supply curve
BECAUSE THE CEOs THINK KIDS ARE BORING.
That's Penelope Trunk, here is much more.
Are European nations free-riders when it comes to fiscal policy?
I don't think so. I think the truth — hard for some people to digest — is simply that these smart Social Democrats, rightly or wrongly, don't much believe in massive fiscal stimulus. They're used to the idea that their economies have big structural problems that government spending cannot eliminate.
If fiscal policy can work for a large country such as the United States, it should work for the Netherlands (or Portugal) as well, even if it would work with less potency.
The benefits from the first round of spending would be captured almost completely within the Netherlands. If unemployed resources can be well targeted, and without messing up incentives too badly, (big "ifs" in my view), that provides an almost automatic case for extra Dutch government spending.
It is a good question whether the Dutch already have too much government spending. I will say yes but I don't much hear this from fiscal policy advocates. Maybe they think the current Dutch balance is "just right" but again that means at the margin fiscal policy, targeted at unemployed resources, won't wreck the overall balance.
What about the second round of expenditures from the fiscal policy? Well, if a big chunk of those newly employed workers increase their spending on food, shelter, and local transportation, lots of the second round is captured in the Netherlands as well. Even buying a T-shirt from China will likely benefit a Dutch retailer to some extent.
You will hear the common tale that "everyone not crazy thinks fiscal policy is a good idea, but some countries are too selfish, or too cowardly, to do it."
That story is an easy out, but the truth is that not everyone is so enamored of massive fiscal policy stimulus. If they were, they would be doing it. But they're not.
Hong Kong, by the way, is preparing a relatively aggressive stimulus package.
Here is a relevant blog post on Germany.
Questions that are rarely asked
Is euchre making a comeback?
I played frequently as a child, as I was taught by my partly Irish grandmother. No one else in my grammar school knew the game. Then I heard nothing about it for more than thirty years. Now, twice in the last month, I've heard the game mentioned in public, "on the street" as it were. What is up?
The alternative is that the question is rarely asked because, in fact, euchre is not making a comeback.
Assorted links
1. Tweenbots
2. Literary conventions and the human body.
3. Shirt to assist you in your time traveling.
4. Mark Thoma vs. Houman Shadab, on financial regulation.
Are Good Times, Bad Times?
a mutual fund which invests in the so-called "sin" industries like
distillers, casino operators and cigarette companies, has lost 42% over
the past twelve months. That's actually four percentage points worse
than the Standard & Poor's 500 index overall.
Meanwhile the Ave Maria suite of mutual funds, which invest only in
companies that comply with certain Roman Catholic values, have done
better. The Ave Maria Growth Fund is only down 33%. It's beaten Vice by
nine points and the S&P by five.
It's hardly a miracle — but maybe enough to raise eyebrows on Wall
Street, a secular place where the usual invocation is "let us prey."
More here. Hat tip to John Chilton.
Trade and the signaling benefits of hosting the Olympics
Andrew Rose and Mark Spiegel report:
Economists are skeptical about the economic benefits of hosting
“mega-events” such as the Olympic Games or the World Cup, since such
activities have considerable cost and seem to yield few tangible
benefits. These doubts are rarely shared by policy-makers and the
population, who are typically quite enthusiastic about such spectacles.
In this paper, we reconcile these positions by examining the economic
impact of hosting mega-events like the Olympics; we focus on trade.
Using a variety of trade models, we show that hosting a mega-event like
the Olympics has a positive impact on national exports. This effect is
statistically robust, permanent, and large; trade is around 30% higher
for countries that have hosted the Olympics. Interestingly however, we
also find that unsuccessful bids to host the Olympics have a similar
positive impact on exports. We conclude that the Olympic effect on
trade is attributable to the signal a country sends when bidding to
host the games, rather than the act of actually holding a mega-event.
We develop a political economy model that formalizes this idea, and
derives the conditions under which a signal like this is used by
countries wishing to liberalize.
An ungated copy of the paper is to be found here (which, I should note, I have not read).
Could it be unobserved heterogeneity, namely that up-and-coming nations (and there is no perfect way to control for that) are the ones who apply to host the Olympics? It costs a lot of money to put together a bid and Albania is simply not going to try. It is hard for me to believe that unsuccessfully submitting a bid to host the Olympics should boost exports by 30%. The simpler model is that winner's curse holds, overbidding for the games results, bidding is also driven by rent-seeking and special interests, but since the bidders are up-and-coming cities in the final analysis the complaints don't sound so convincing.
Illegal immigration and crime
This is from only one county, but I found these numbers (check out the table) instructive:
About 2 percent of the people charged with major violent crimes in
Prince William County last year were illegal immigrants, but they were
arrested for a larger portion of secondary offenses, according to newly
released statistics and a Washington Post analysis that offer the first
comprehensive look at criminal activity since the county implemented
its controversial anti-illegal immigration measures.
The crime of prostitution has the highest percentage of illegal immigrants as arrestees, namely 21.4 percent. If you are wondering, the new county procedure is to check the immigration status of everyone taken into custody. A few points:
1. Immigration has worked much better in northern Virginia than in many other parts of the country, most of all southern California. The number will not be this low in many other locales.
2. I don't have a number for the percentage of illegal immigrants in Prince William County, but I believe there are many, albeit a falling number.
3. I am not convinced by the argument that illegal immigrants will try "especially hard" not to get caught, because they are illegal immigrants and do not wish to be deported. This argument has been used to suggest that two percent is an underestimate.
4. When all is said and done, two percent is a fairly low number.
Saint Augustine on Pirates
The quote is from Noam Chomsky's Pirates and Emperors and is cited by Ralph Raico at the Liberty and Power Blog. Hat tip to Sheldon Richman.
Economic history trivia question
What and when was the deepest economic collapse in any non-communist, non-wartime, fully industrialized country since the 1930s?
First offer your guess in the comments. Then check the answer.
Paragraphs of excellence
Masonomics looks at the human brain as an organ that is highly evolved
to engage in deception, including self-deception. It can reason without
necessarily being rational. The way I see it, Masonomics does not
necessarily agree that humans tend to choose the best ways to achieve
their objectives. Instead, we are limited by our capacity for
self-deception, among other shortcomings.
That is from Arnold Kling.
Assorted links
3. Why Scott Sumner doesn't like IS-LM.
Lobbying Pays
In a remarkable illustration of the power of lobbying in Washington, a study released last week found that a single tax break in 2004 earned companies $220 for every dollar they spent on the issue — a 22,000 percent rate of return on their investment.
The study by researchers at the University of Kansas underscores the central reason that lobbying has become a $3 billion-a-year industry in Washington: It pays. The $787 billion stimulus act and major spending proposals have ratcheted up the lobbying frenzy further this year, even as President Obama and public-interest groups press for sharper restrictions on the practice.
From the Washington Post. We will never get the money out of politics until we get the politics out of money.
Communists
Here's a piece from the WSJ on the latest intervention into the market for executive compensation:
…[The] government disclosed that it had set limits on executive pay for 2008 at state-owned financial companies, the latest effort to address public concern over pay at companies controlled by the country's nominally socialist government.
Total compensation for last year was capped at 90% of the amount executives received in 2007, the Ministry of Finance said in a brief statement. For companies whose revenue fell last year, the limit was set at 80%, it said. The statement, issued late Thursday, said the new rule had been issued "recently," but didn't elaborate. A ministry spokesman declined to comment Friday.
Need I tell you that the story is about the communist party and China? Sadly, I think I do need.
Hat tip to Helen Yang.
Business arrangements I would bet against
One sugar daddy whose screen name is Sam has tried long-term
girlfriends, mistresses, prostitutes and a brief marriage. Now single,
the 39-year-old entrepreneur has found the arrangement that suits him
best: a monogamous business-associate-with-benefits deal in which he
pursues an entrepreneurial project with a young, beautiful, intelligent
woman. He provides financial backing, mentoring and networking; she
provides sex, fun and, inevitably, a bit of worshiping, all of which
make him feel virile and influential. In between vacations using his
private jet, both work hard on the project. They don’t tend to see each
other much, as he travels frequently for his work.
I don't recall seeing that arrangement anywhere in Oliver Williamson's typology of the business firm. Should I have entitled this post "What people will spend on theatre"? Does this make it sound better?
Sam runs these relationships with an explicit business plan, a set
budget, measurable goals and quarterly reviews. From the outset, the
contract has an end date. It’s a brilliant, if contrived, way to
protect his pride. The contract specifies that the romance and sex are
to end by the preset date, so there’s no break up, no rejection, no
bruised ego. She’s not dumping him; the gig’s just over.
Here is the much longer story. Here is more:
He has an almost mathematical approach to assessing relationships, and
once even computed the costs for a girlfriend, mistress, prostitute and
wife – mistresses turn out to be most expensive by the hour; wives, by
the year; girlfriends are cheapest all around. But he’s not as
calculating as he seems. In fact, he concluded there’s little
correlation between cost and quality. Still, he is relentlessly
searching for an algorithm that will predict relationships’ success.