2005 Q1 GDP revised up 3.5%

Real GDP revised up from 3.1% to 3.5% in Q1 2005.

Major revisions were imports revised down from a 14.7% increase to a 9.1% increase, and inventory increases revised from $80.2 billion to $68.4 billion.

Cell Phone Taxes

The Tax Foundation's blog has a table of federal and state cell phone tax rates. The federal government levies a 6.05 percent tax on wireless telecommunications.

The federal government controls spectrum, and collects lots of money from spectrum auctions. Indeed, the government must charge market price for spectrum in order to maximize efficiency. Yet communications has a positive network effect on the economy, so the government should want them to be as inexpensive as possible. So the government should not be charging any additional taxes on cellular users. That 6% tax should be eliminated.

Star Wars Episode 2.5

A parallel universe begins in the middle of Episode II, when Count Dooku has Obi-Wan captured and asks Obi-Wan to join him, Obi-Wan says yes!

Obi-Wan joins only to learn more about the other side, but learns of the corruption of the Senate and the full extent of the Sith conspiracy. Obi-Wan informs the Jedi that with the dark side having widespread influence in the Senate but only control of the leaders of the CIS, they should switch sides. The Jedi remove the leaders and take control of the CIS, and with the balance of power on their side, win the peaceful surrender of the Old Republic. The reformed CIS forms a new Republic under the principles of capitalism, economic freedom, and free commerce, and everyone lives happily ever after. (Episodes 3-6 never happen)

George Lucas may be making a political statement about democracy turning into dictatorship and good people becoming bad, but the Republican Party has the most in common with the separatists who look to be on the losing side of Episode III. The Darth Vader transformation more accurately describes fears about Vladimir Putin and the history of other Leftist movements.

Ground Zero

Many people want to dump the Freedom Tower design and build something else. My plan is the "Hydra" plan. Chop off one head and two heads grow back. They knocked down two towers, we build four back in their place. The four towers would be of ascending height. The middle towers of the sequence should be built and occupied first. Then, depending on supply and demand, the remaining towers would be built, in sequence, taller or shorter than the first towers.

Death Spiral

Economist's View takes note of a conference around a paper (free) by Michele Boldrin showing that Social Security leads to a reduction in fertility.

Social Security transfers responsibility for retirement security from children to the government. Yet the government needs children to pay into the system to support current retirement benefits, but the government doesn't have children (except "Brave New World"), people do. The paper shows a definite negative correlation between the size of Social Security benefits and fertility. The higher payroll taxes paid by prospective parents also makes it more difficult to afford children. Lower birthrates lead to lower worker to retiree ratios requiring even higher tax rates leading to what David Frum referred to as a "death spiral" on Tucker Carlson's show (4/29).

One way to try to undo the reduced fertility rates without eliminating Social Security would be to have reduced or even negative effective payroll tax rates for parents. Private debit accounts could be created in Social Security to pay for children's health and other expenses (blow up the lock box). Retirement benefits could also be linked to the number of children a retiree has added to the payroll tax system. The government could also explicitly pay much more for children.

Of course, Europe really needs to be experimenting with this now since they are most affected by declining fertility and an aging population.

Children are our future. The greatest investment in our children is having them.

Kaus gets mugged.

"A conservative as a liberal who has been mugged by reality." Mickey Kaus has changed his position on social security.

Democrats charge that Bush's proposed benefit cuts are vicious, and that they don't fix Social Security's solvency problem. But if even vicious cuts don't fix the problem, doesn't that mean the problem is a bit bigger than the Dems have been letting on? I believed Social Security wasn't in much trouble at all--just needed a few "tweaks"--until I looked at the tweaks the Two Peters were proposing. In addition to the benefit cuts outline above, Diamond and Orszag have the current 12.4 percent Social Security payroll tax rising to 15.4 percent in 2078 and continuing to rise "slowly over time thereafter."

He thinks we should be more like Australia and reduce spending on future retirement benefits. I agree. We should worry about saving money, not about saving government programs.

Unions in Iraq

Kevin Drum thinks we should support unions in Iraq because unions were effective in fighting socialism in the 80's and Iraqi unions were anti-Saddam. Not quite.

Unions are most effective when employment is a monopoly. Unions were successful fighting socialism because under socialism, Government is the monopoly employer. Unions were anti-Saddam because his government was a socialistic monopoly employer for most jobs.

That is why the most effective unions here are public and athletes. The Government and Sports Leagues are the only monopoly employers around. Private sector unions are diminishing because we have free market competitive employment. Now that Saddam is gone, creating a free labor market in Iraq is preferable to supporting unions in Iraq.

Blow up the Lock Box!

Social Security provides zero security till death, disability, or retirement age. Social Security locks the money away from you, but not from the government.

The purpose of a forced savings program should be to save for expenses you need to pay for. The solution is not locking your payroll contributions into the stock market, but letting you spend them when you most need to. Private accounts should fund what young people need to save money for: home ownership and children. People should be able to take raid their lock box for a down payment on their home. The equity will only increase future savings. We should also have childhood health and education debit accounts to pay the expenses of having our children. Children are needed to earn and pay taxes to support both ourselves and the government in the future. Government can't have children, people do. There could be a means tested repayment for debit accounts. But even if retirement benefits are reduced for those who raid their lock box, they will have equity and children who can help pay for their retirement.

Lock Boxes are the problem, we should blow them up!

A Zero Newspaper Town

Los Angeles is definitely a zero newspaper town. Patterico catches the Los Angeles Times deliberately removing facts supporting the U.S. on their reprint of a Reuters story about the Italian shooting incident. Proof that the U.S. is telling the truth and the Italians are lying is definitely news not fit to print in the L.A. Times.

This is worse than their s/pro-life/anti-abortion/g incident, and all of their other blunders.