What Do Inequality Data Mean?

Steven Horwitz has an interesting post on inequality data. Here is the way he understands what the data means:

Carroll uses a nice analogy from Schumpeter that I'd never heard before: the distribution of income is like a hotel with some really fancy rooms on the top floors and some very basic ones on the bottom. All the rooms are always full, but who occupies which rooms changes from year to year.

If one wants to stretch the analogy a bit more, it's also the case that each year brings a new upgrade to every room. What constitutes a "basic" room gets slightly more luxurious each year as standards of living rise, and the same is true on other floors. It might be the case that the upgrades to the top floor rooms are proportionally greater than those to the basic and middle floor rooms, but given that the occupants of the rooms switch around from year to year, those greater improvements at the top are still consistent with improvements in the absolute standard of living for many.

And to take the analogy even further: if we account for immigration and other new entrants to the labor force, it's as if the hotel keeps adding rooms/floors on each year at the lower/basic level, enabling everyone else to potentially keep moving up (assuming that some occupants die or leave the country!).

I've often noted in my courses that aggregate data hide a large amount of important information. In the case of the static aggregate income distribution data, we cannot see what happens over time and within each income quintile.

It seems that many people assume a person who is in the lowest income quintile in any year will also be in the lowest income quintile 5 years and 10 years later. It also seems many assume that a person in the top income quintile in one year will still be in that top income quintile 5 years and 10 years later. If you check out Mr. Horwitz's post you can learn that such conclusions are not well-founded. For example:

Of those taxpayer households in the lowest quintile of income in 1999, 57.5% had moved up at least one quintile by 2007 and over 30% jumped two quintiles or more.

Of those in the top 1% in 1999, only 44.6% were still there in 2007.

Oil Spills & Executive Powers

I recently commented on the following taken from a speech by President Obama:

"Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent third party.

I asked if such actions as these promised by the President fall within existing statutes and also the responsibilities of the courts? The point of the earlier comment was different than this. So, I want to explain my concerns about what the President said in his speech.

In order to determine who has a legitimate claim for damages against BP, and in order to determine the amount of such damages, I think it is the case that the President, or an independent third party picked by the President, will have to make decisions and take actions that are supposed to, constitutionally, be within the Judicial power of government.

Shouldn't it be a significant concern to ask, and answer, whether or not the President has exceeded his constitutionally granted Executive power to inform the CEO of BP that he must set aside $20 billion? If a President can decide what a legitimate claim is against BP, and if a President can decide how much compensation must be paid by BP, then what is the difference between the Judicial branch and the Executive branch of government?

Oil Spills, Oil Producers & Governments, Part 2

We might find another illustration of how earlier, and not easily seen, federal government actions could be involved in the BP Gulf Oil spill by wondering about something the President said in his recent OVAL OFFICE SPEECH:

Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent third party.

I don't understand this idea that the President will tell BP it has a liability for this accident, and further that the President is going to require BP to create an escrow account to be administered by an "independent third party." Don't such actions fall within existing statutes and responsibilities of the courts?

My first thought is to wonder about why the President would think actions such as these are appropriate and necessary. I have assumed all along that BP is liable for the damages caused by the oil spilled because of an accident involved with it's production of oil. I certainly expect that if I caused oil to be spilled on my neighbor's property, that I would be fully liable for the damages my actions caused to my neighbor. So, I assume BP understands already that it is liable for the damages.

This also leads me to wonder about why the President has been spending so much time and effort in his public speeches insisting that BP is going to be made to pay for the environmental harm it has caused. Once again, I assume that in the same way that I know I would be made to pay for harm I cause to others, BP knows it will have to pay for the harm it's actions have caused others.

But, now I think that perhaps I should start to by a bit more of my normal, cynical and dismal economist self. Do I smell a rat?

Perhaps I do. THE OIL POLLUTION ACT OF 1990 "imposes liability for removal costs and damages resulting from an incident in which oil is discharged into navigable waters or adjoining shorelines or the exclusive economic zone." Yep, just what I assumed to be true. But, the Act also limits liability:

Liability is limited by specific dollar amounts, which vary depending on the type of vessel or facility involved. These limits do not apply in the case of gross negligence or willful misconduct or the violation of an applicable federal safety, construction, or operating regulation or for failure to cooperate in certain specified ways.

Oh my, perhaps BP believed it would not be fully liable for the damages caused by an accident that resulted a spill such as is occurring in the Gulf. Can you imagine, Congress created a statute in 1990 (and some President must have signed it) that both made it clear that BP was liable for damage caused by this accident, and at the same time the statute told BP (and all other oil producers in the Gulf) that it's liability was limited, that it would not be fully liable.

Well, you can see the incentives partial liability creates for BP and every other oil producer in the Gulf. At the margin, this limited liability statute should result in BP being at least a little less cautious in it's operations than it would otherwise be. Same incentive and response by all the Gulf oil producers as well. In other words, by limiting liability with this statute Congress and the President did two things: (1) Incentives to produce oil in the Gulf were increased, and (2) the probability of an accident occurring in the Gulf was increased.

Now we come to the second sentence in the limited liability quotation above. I suspect members of Congress also understood the incentives they would create by limiting liability. So, of course, Congress also writes laws that allow for the Executive Branch to regulate how BP, and the other oil producers in the Gulf, go about the business of producing oil from Gulf waters. Do you remember hearing reports after the accident, and before the Oval Office speech, that BP had requested that the government agency overseeing its operations modify several permits in the last day or two before the accident? I'm guessing this indicates that the government regulatory agency was at least supposed to be closely involved in making sure BP's actions met with all the things government thought BP was supposed to be doing.

I think this is another illustration of government's involvement in the actions of people and businesses in the economy that we cannot easily see. It is my view that government should not limit liability, and that especially in the case of deep water oil production government's role should be to strictly enforce full liability.

And, because government regulatory actions are involved in oil production in the Gulf, my default position has to be that government has some part to share in this accident, unless it can be shown that BP violated permits and regulations that if followed would have prevented this specific accident from happening.

Finally, returning to the President's statement quoted above, I think there are some additional serious issues to bring up. I will do that with another post in the future.

Enough Money?

TOM SOWELL on politicians and enough money:

"One of the many shallow statements that sound good-- if you don't stop and think about it-- is that 'at some point, you have made enough money.'

The key word in this statement, made by President Barack Obama recently, is "you." There is nothing wrong with my deciding how much money is enough for me or your deciding how much money is enough for you, but when politicians think that they should be deciding how much money is enough for other people, that is starting down a very slippery slope.

Politicians with the power to determine each citizen's income are no longer public servants. They are public masters."

You should read the whole piece.

Oil Spills, Oil Producers & Governments

The accident in the gulf is a pretty ugly sight. I'm sure there is no person alive who actually likes the accident and the aftermath, which of course continues.

Today you can read news reports of our political leaders holding hearings to point fingers and hold the culprit's feet to the fire. And, of course, you may have read or heard the President castigating the oil producers and promising to kick the appropriate butts.

You can also read reports that assert British Petroleum made numerous bad decisions that led to the accident, and which were made in an effort to save some costs and improve profits. Even if there is some truth to such allegations, there may be more involved in terms of the incentives and the tradeoffs than meets the eye.

I make this last assertion myself because I'm come to believe government policy is almost always involved, and it is almost always well hidden from us, unless we are able to spend much time reading statutes, regulations, and executive orders.

STEVEN HORWITZ has written about just one example related to this accident:

"The Jones Act is actually section 27 of the MMA and requires 'that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents.' This, of course, includes the Gulf of Mexico. Thus any attempt to move equipment from one U.S. port to another for the purpose of either stopping or cleaning up the Deepwater Horizon leak must involve U.S. ships, fully constructed in the U.S., etc..

Of course in a world of globalized trade few such ships exist. In fact, a number of foreign-constructed or crewed ships are in U.S ports at the moment and could easily transport oil sucking equipment or more booms to the Gulf, but the Jones Act prevents them from doing so. Like the school buses that sat in a parking lot while folks were stranded during Hurricane Katrina, those non-U.S. ships and their equipment are sitting idle while an environmental disaster unfolds."

Professor Horwitz mentions the buses and Katrina because he wants to point out that the Jones Act was apparently waived two days after the hurricane. I haven't read the Jones Act, so I am not aware of whether the Act itself includes conditions by which it might be waived. Perhaps it does. Or, perhaps Congress must act to repeal the Act, something suggested by Professor Horwitz, and something I agree would be a good idea. In any case, Professor Horwitz does point out that apparently the President does not agree that Act should be waived or repealed since he writes: "Meanwhile, President Obama and others continue to insist that such a blanket waiver is 'not needed at this time.'"

So, who might benefit from not waiving or repealing the Jones Act? My guess would be some union or unions, and that is the view of Professor Horwitz as well. If this seems plausible, then it should also seem plausible to you that the President is making political calculations when he decides to trade off this against that. Not too surprising to me, and not really unlike the tradeoffs some assert BP made and should not have made.

It seems to me there are other aspects of this accident and the aftermath that involve government policies, regulations, and actions that are hidden from our easy view. I'm always suspicious this might be the case when our elected leaders in Washington rush to microphones and hearings to point fingers. I will try to add at least one or two additional illustrations in the next day or two.

Taxing Incomes & Estates

Ludwig von Mises:

If the present American methods of taxing incomes and estates had been adopted fifty years ago, most of those new things which no American would like to do without today would not have been developed at all or, if they had, would have been inaccessible to the greater part of the nation. (Theory and History, p. 238)

Economics: The Primary Civic Duty

In Human Action Ludwig von Mises writes:

". . . As conditions are today, nothing can be more important to every intelligent man than economics. His own fate and that of his progeny is at stake.

Very few are capable of contributing any consequential idea to the body of economic thought. But all reasonable men are called upon to familiarize themselves with the teachings of economics. This is, in our age, the primary civic duty.

Whether we like it or not, it is a fact that economics cannot remain an esoteric branch of knowledge accessible only to small groups of scholars and specialists. Economics deals with society's fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen." (p. 875)

Of course, this is a pretty easy thing for an economist to believe. I wonder how many others, economists and non-economists, agree with Mises?

Big Brother Is Green?

Washington Examiner:

"Alexandria residents soon will have to pay for larger home recycling bins featuring built-in monitoring devices.

The City Council added a mandatory $9 charge to its residents' annual waste collection fee.

That cash -- roughly $180,000 collected from 19,000 residents-- will pay for new larger recycling carts equipped with computer microchips, which will allow the city to keep tabs on its bins and track resident participation in the city's recycling program.

'If you know who's participating in the programs, you can focus your education and outreach to those who are not participating,' said Stacy Herring, Alexandria's recycling coordinator."

I suppose this is just like our parents when we were kids -- our paternal governors are just making sure we take out the trash, eh?

Constitution & The Supreme Court

Senator Hatch offers some thoughts about how the Constitution is supposed to constrain all 3 branches of government, even the Supreme Court.

Federal Spending 2020

The Congressional Budget Office makes this projection. The CBO is projecting then, that in 2020 the federal government will be spending 47 cents of every dollar it spends on social security, medicare, and medicaid combined.

From a constitutional perspective, isn't this rather remarkable? After all, Congress is supposed to have only those powers explicitly enumerated in Article 1 Section 8 of the Constitution, and not one of these three programs is thus enumerated.

With respect to social security, the projection is that in 2020 22 cents of every dollar the national government spends will involve the redistribution of income from those who are working in 2020 to people who are among the retired.

I think we can consider social security, medicare, and medicaid as redistribution programs. If so, then this projection is that about 1/2 of every government dollar spent in 2020 will involve redistribution. Again, constitutionally remarkable since the Constitution seems to me to have created a limited government, mostly a "protective state" government, not a "redistributive state" government.

My son is not yet old enough to vote, but he will be in 2020. He may or may not be paying income taxes to the federal government then, both because he may be in college instead of the workforce and because a large percentage of people pay no taxes to the federal government today (I expect the same in the future). But, if he is paying income taxes then, note that 14 cents of every dollar spent by the national government will amount to him being required to make payments for loans taken out by others now and in the past. Assuming he is working, then 22 cents on the dollar will represent taking money from his paycheck to give to people who are retired and no longer a member of the workforce. Perhaps we can toss medicare and medicaid in with respect to these sorts of considerations as well. In any case, his income and productive abilities in the year 2020 as well as the years beyond have already been encumbered by federal government policies and programs, and he cannot yet vote.

As Hayek wrote, it seems to me the case that "the basic principles on which this civilization was built have been falling into increasing disregard and oblivion." The government I know today, and the government projected in the CBO's picture, seems impossibly different from the government I read about in the words of the Constitution.

Profit & Loss

Ludwig von Mises:

“Profit is the difference between the higher value of the good obtained and the lower value of the good sacrificed for its obtainment. If the action, due to bungling, error, and unanticipated change in conditions, or to other circumstances, results in obtaining something to which the actor attaches a lower value than to the price paid, the action generates a loss. Since action invariably aims to substitute a state of affairs which the actor considers as more satisfactory for a state which he considers less satisfactory, action always aims at profit and never at loss. This is valid not only for the actions of individuals in a market economy but no less for the actions of the economic director of a socialist society.” (Theory and History, p. 210)

Here is President Obama commenting on profits for Wall Street businesses.



It seems to me that the best way to think about "profit" is the way Mises explains, and of course this view of profit does not support the President's view. It is always a time to profit, or to make profit, and never a welcome time when loss is made instead.

The President seems to believe that in a time of recession businesses should not be earning profits. The implication of this is that instead, in a time of recession, businesses should earning losses, because profit and loss are terms that characterize the opposite results of human actions. But this is a perverse view isn't it? After all, businesses can only earn profits if their efforts to produce and sell goods and services sufficiently predict consumer desires in the future.

Mises's view of profit and loss is also informative about the President's actions in encouraging us to believe that now is not the time for Wall Street businesses to earn profits. The President's actions in politics can either serve to gain a state of affairs he regards as more satisfactory (profit) or a state of affairs he regards as less satisfactory (loss). Thus the President is acting as though he believes he will personally profit by castigating the efforts made by others to profit themselves by supplying consumers with goods and services they want. Oh, and incidentally, when consumers are able to buy goods and services they want, the consumers gain profit for themselves as well.

In the freedom of voluntary market exchange, the actions of businesses and consumers to profit themselves is positive sum. It is indeed possible for buyers and sellers to choose well their personal courses of action in face of an uncertain future, and both buyers and sellers can profit from exchange.

The President seems to see the situation as zero sum. He seems to be suggesting that profits for Wall Street businesses necessarily mean losses for consumers. But, while a business or a consumer need not choose well and thus profit from their choices, on the whole the realm of free and voluntary exchange is positive sum. It is in the President's world, the world of politics in which the struggle between competitors is over which will win the opportunity to determine the way that force will be used in the lives of others, that we should be prepared to expect to find a zero sum (even a negative sum) world. So, it seems, the President is apparently thinking that he will personally profit by encouraging his listeners to believe that they will also profit if there is greater reliance of the zero sum realm of politics instead of the positive sum realm of market exchange.

I'm pretty sure the view the President encourages will not profit me, but I also fear that because of the nature of politics it may well profit him.

Knowledge & The Human Condition

THOMAS SOWELL:

The risks of making decisions with incomplete knowledge (there being no other kind) are part of the tragedy of the human condition. However, that has not stopped intellectuals from criticizing the inherent risks that turn out badly in everything from pharmaceutical drugs to military operations -- nor does it stop them from helping create a general atmosphere of unfulfillable expectations in which 'the thousand natural shocks that flesh is heir to' become a thousand bases for lawsuits. Without some sense of the tragedy of the human condition, it is all too easy to consider anything that goes wrong as being somebody's fault.

Jefferson -- On Democracy

Thomas Jefferson:

"A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine."

Do you suppose this is why the Constitution guarantees a "republican" form of government instead of a "democratic" form of government? At least this is a view of democracy that might help us understand why the conceptual foundation of the Constitution is supposed to be a national government, and specifically a legislature, that has only the powers granted to it by We The People and specifically enumerated in the Constitution itself. Unfortunately, the knowledge and wisdom expressed so simply and directly by Jefferson, and I think widely understood by many others of his day, seems to have been lost to many of us, even lost to the constitutional scholars of our day.

Perhaps you would want to pull out your handy dandy copy of the Constitution and see if you can find the enumerated power that was granted to Congress to create a statute popularly called "health care reform."

Good People

GOING JOHN GALT:

"I don't want good people to flee bad law, but bad law to flee good people."

I think this is worth reflecting on.

Countries & Taxes per Person

Greg Mankiw:

"The bottom line: The United States is indeed a low-tax country as judged by taxes as a percentage of GDP, but as judged by taxes per person, the United States is in the middle of the pack."

Check out his numbers.

Borrowing For Unemployment Benefits

TheHill.com reports:

"A bipartisan Senate deal to briefly extend a package of expiring provisions fell apart Thursday night, endangering unemployment aid set to expire April 5.

Senate leaders from both parties had neared a deal to allow swift passage of a package providing benefits for another week that would be fully paid for, according to Senate sources from both parties. The compromise was needed because Sen. Tom Coburn (R-Okla.) blocked Senate Democrats from quickly passing a month-long extension. Coburn objected because its cost -- $9.2 billion -- wasn't offset and would increase the $12.7 trillion national debt."

I know, this is going to be reported as such a terrible bit of partisan politics by Senator Coburn. The Senator must be heartless and mean. So, too, I suppose I will seem heartless and mean. And, I have no idea whether the reporting in this article is accurate or not.

But I just have to ask if this is really something we want our government to be either (1) borrowing money for or (2) creating money and thus causing inflation for.

I suspect few of us want to see this $9.2 billion paid for by inflation. After all, does it really make any sense to pay unemployment benefits to people today by causing all of us to have to pay higher and higher prices for the things we need and want tomorrow and the next day. So, let's move on to the only other way this $9.2 billion contribution to the government's budget deficit can be paid for.

Government can borrow this $9.2 billion. Who will be paying this money back when the loans come due? It depends on when the loans have to be repaid. It might be 5 years, or 10 years, or even 30 years in the future. The money to pay off the loans will have to come from tax revenue (unless it is paid by inflation or additional borrowing at that time). It will have to be paid by those paying taxes at that time. Some of these people paying taxes will be you and I. So, here is a question I think we should all ask. Do you want to borrow $9.2 billion today against our own income in the future so that unemployment benefits can be paid to some who are unemployed at this time?

Let me suggest a way to think about this question. Suppose you become unemployed. Would you take a personal loan, assuming someone would make this loan to you, in order to have money to live on while you look for another job? If you do this, you are actually borrowing money from your own future income when you return to working. You would be reducing your future income by the amount of your loan plus interest. More money for consumption today, but less money for consumption at some time in your future.

I don't know that there is a correct answer. But, notice something by contrasting this personal question with the government policy question. If you personally borrow money to cover a period of unemployment, you will personally have to pay the money back. If government borrows the money and gives it to you, then you won't have to pay it back. And, if you are unemployed now and don't have to pay back money you get from government, isn't that like taking money from others?

Let's go back now to that policy question I asked earlier: Do you want our government to borrow $9.2 billion today against our own income in the future so that unemployment benefits can be paid to some who are unemployed at this time? Perhaps you would like that tradeoff: more income for some who are unemployed today but less income for all of us to consume from in our futures.

But, let me add something to your deliberations of these issues. Why has this recession happened? My answer is that it is the result of bad government policies by many people in several Congresses and in the Presidency. It seems Alan Greenspan, along with many others, sees it this way as well. Therefore, the apparent "need" for additional unemployment benefits today is the result of past government actions. So, today there seem to have been many in the Senate who were angered by Senator Coburn who obstructed their efforts to borrow money from our future incomes, mine and yours, because they had chosen bad government policies in the past. I don't know about you, but it seems less than obvious to me that we want to borrow money today to pay additional unemployment benefits.

Still, I have one more thing to ask you to consider. There are children who are not now paying taxes, and who are not now able to vote, such as my 4th grade son, who will be working when the time comes to pay off this $9.2 billion loan to pay today's unemployment benefits. Some of the people who will have to repay these loans haven't even been born yet. Remember the Boston Tea Party? Talk about taxation without representation. These kids can't even vote NO yet and our government is acting on our behalf to promise some of their future incomes to pay off loans for unemployment benefits today. This seems unjust don't you think? Thomas Jefferson thought so to.

Recently I told my son I had a similar deal for him. I said I'd found someone who would loan me money to get another house. He thought: "nothing unusual about that." But, then I told him the punchline. The guy loaning me the money agreed that I didn't have to pay the money back. Instead, when my son began his first job after college this guy would start sending him a monthly bill of $2000 to pay off my loan. My son's response? You guessed it: UNFAIR.

So, please think again about what Senator Coburn did today, and think about about whether it makes any sense at all to borrow money to pay additional unemployment benefits. Perhaps Senator Coburn was merely thinking about taxation of those who aren't yet able to vote?

Obesity Bake Sales

Chidem Kurdas comments on New York city's BAN ON HOME BAKED GOODS at school bake sales:

Last week, New York City’s Panel for Educational Policy approved a new rule for school bake sales. Home-made treats are no-no, but pre-approved packaged products, the ones that are also in school vending machines, are fine.

The bake sale ban is supposed to reduce childhood obesity. An education bureaucrat explained that homemade goods can’t be allowed because it’s impossible to know their portion size and content. You may add raisins to your banana bread and slice it thin, while I add walnuts and cut it thick.

Hence banana bread, cupcakes and anything else baked at home have been banished; but kids are free to gorge on Kellogg’s Frosted Brown Sugar Cinnamon Pop-Tarts, which come in portion-controlled packages and have known ingredients—in fact a long list of ingredients from high fructose corn syrup to yellow dye #6.

This is a vivid little example of how regulation in general functions and the impact it has in many areas of social life.

One, regulators are almost always influenced by the industry involved and work to its advantage— the NYC schools’ chosen vending operator plans to sell “fund-raising kits” of packaged products.

I probably shouldn't be shocked, but I am shocked at just how far the nanny state has progressed in our country. If you've taken my second course in public sector economics you should also recognize this as yet another illustration of BOOTLEGGERS & BAPTISTS at work to help the local vending operators be successful rent seekers.

The President & Prosperity

Yesterday PRESIDENT OBAMA SPOKE before the Business Roundtable and said this:

Whatever differences we have in this country, all of us have a stake in meeting the same goal, which is an America in which a growing prosperity is shared widely by its people.

Of course, the President goes on to talk about how this growing shared prosperity can be achieved through his favorite government policies. I agree with the goal of a growing shared prosperity. I wonder how this goal should be pursued?

I think we can discover the answer to this question by reading LUDWIG VON MISES:

“. . .there is only one way a nation can achieve prosperity: if you increase capital, you increase the marginal productivity of labor, and the effect will be that real wages will rise. (p. 88)”

If you read all of the President's speech, and/or if you follow the President's policy proposals, I think you will be forced to the conclusion that the President seems to know very little about how the country's prosperity was achieved, and very little about how the country's prosperity can be sustained.

Oh, and if you have some time, you will learn many more valuable lessons by reading the entire set of lecture by Mises, than you will from following all the speeches and policies of the President. I would go so far as to suggest that if you study these seven lecture by Mises the result will be that you will be one of the most economically literate voters in the country.

The Green Police

This GREEN POLICE video is one of the best commercials I've ever seen. I'm afraid that although this is very funny today, it is likely to be not so funny by the time my son graduates college. I'm not sure, but hasn't there already been a bill introduced to Congress to ban the incandescent bulb? Maybe this ban is already law, and that could be me they're loading into the squad car, eh?

Health Insurance Tax Credit

CHIDEM KURDAS:

But there is another way to make exchanges viable, one that should be prominently on the table at Blair House: offer a tax break. Some Republicans like Tom Coburn of Oklahoma and Paul Ryan of Wisconsin propose a refundable tax credit for buying insurance. This can be linked to exchanges.

Since employer-provided health insurance has a huge tax advantage, the only way a market is going to develop outside employer-mediated insurance is to level the tax field with a proper tax incentive. It also happens to be fair, since a growing number of people work for themselves and hence are discriminated against in being forced to pay higher taxes compared to those who benefit from the employer health insurance tax break.

With a significant – say $3,000 a person – and permanent tax cut, exchanges have a chance of attracting enough customers. Justice and economic logic both demand this tax break.

I think this is a good idea. I think the whole idea would be even better if the tax exchange idea was dropped, plus the Congress said both that there would no longer be mandates for what must be in a policy at either the national or state levels and that there could no longer be restrictions on buying insurance from companies across state lines.

Please don't any body point out that this tax credit idea sounds a lot like a "voucher" for health insurance. If Democrats notice this they just might be afraid that if vouchers worked for health insurance they would probably work for education as well.