Economics

How much lower is your real income because of excessive regulation? And how much higher is unemployment because of too much regulation? Economists have been trying to answer these questions for the last several decades. Great strides have been made, and now Steve Entin, former Treasury official and president of the Institute for Research in the Economics of Taxation (IRET), Read More ›

Which countries do you think have the best business environments? Economists, politicians and business people fiercely debate this question. There is obviously no one correct answer because there are many variables, depending on such things as whether a particular business is capital- or labor-intensive, import- or export-dependent, etc. Forbes magazine has just issued its list of the “2000 biggest, most Read More ›

Are you aware we are increasingly regulated and even taxed by international organizations that are undermining the protections guaranteed by the U.S. Constitution? The “Oil for Food” and other recent U.N. scandals made many aware the U.N. is quite literally out of control. What is not well known is that the U.N. is only one of now dozens of international Read More ›

The U.S. Treasury has just released some new data that will bring cheer to the advocates of lower tax rates and heartburn to those who advocate higher tax rates. By way of background, for the last three decades, there has been a fierce debate about which tax rates maximize tax revenue. Economist Art Laffer drew a curve that merely illustrated Read More ›

Do you feel more or less free today than you did 10 years ago? If you happen to be a property developer, sit on the board of a public corporation, often travel by air, like to spend your own money supporting political candidates and causes you believe in, or are outspoken in your Christian beliefs, you almost certainly answered the Read More ›

Federal government prosecutors are sending doctors to prison for making mistakes in filing Medicare paperwork. At the same time, Medicare customer service representatives are apparently not even reprimanded for a 96 percent error rate in answering questions about how to handle physician billings. These representatives work at call centers operated by insurance carriers handling Medicare claims, and are tasked with Read More ›

PRESIDENT BUSH WENT TO MADISON County, Illinois, last week to kick off his campaign for tort reform. “Junk lawsuits change the way doctors do medicine,” said the president, surrounded by a phalanx of doctors from southern Illinois. “Instead of taking care of patients, they’re worried about lawsuits.” Madison County — named the nation’s worst “judicial hellhole” by the American Tort Read More ›

Knowing what we now know, would you design our tax system, Social Security system, the United Nations and the World Bank as they are designed and now operate? Unless you are brain dead, you would have answered no to all the above. International organizations and government programs were all established to solve a perceived problem at the time of their Read More ›

What is Somaliland? Don’t be embarrassed if you don’t know. Very few people know, and that is the beginning of the problem. Somaliland is not Somalia, but is a part of what used to be Somalia — and it may or may not be an independent country. As you may recall, Somalia was the country in which the famous “Black Read More ›

William Tucker is a Senior Fellow of Discovery Institute

Today President George Bush will fly to Scott Air Force Base, Illinois, then drive 15 miles northwest to address a crowd at the Gateway Center in Collinsville, which is right next door to Edwardsville, the epicenter of America’s tort crisis.

Madison County, Illinois, has earned all this attention by becoming the nation’s number-one “judicial hellhole,” as the American Tort Reform Association has coined the phrase. “It’s a place where the judicial system has broken down,” says Sherman “Tiger” Joyce, executive director of the American Tort Reform Association.

Actually, Dickie Scruggs, the Pascagoula, Mississippi attorney who started the original $275 billion Medicaid/tobacco lawsuit (and collected several billion in the process) put it better. Speaking before an asbestos conference sponsored by Prudential Securities in 2002, Scruggs — who at least has a streak of honesty — described what he called “magic jurisdictions” in this way:

[W]hat I call the “magic jurisdiction,”…[is] where the judiciary is elected with verdict money. The trial lawyers have established relationships with the judges that are elected; they’re State Court judges; they’re popul[ists]. They’ve got large populations of voters who are in on the deal, they’re getting their [piece] in many cases. And so, it’s a political force in their jurisdiction, and it’s almost impossible to get a fair trial if you’re a defendant in some of these places. The plaintiff lawyer walks in there and writes the number on the blackboard, and the first juror meets the last one coming out the door with that amount of money.… The cases are not won in the courtroom. They’re won on the back roads long before the case goes to trial. Any lawyer fresh out of law school can walk in there and win the case, so it doesn’t matter what the evidence or the law is.

Madison County is one of those little rotten boroughs that — with the help of the trial lawyers — has turned lawsuits into a cottage industry. At last count close to 20 percent of the asbestos lawsuits in the nation were being heard before a single Illinois state judge in Madison. Out-of-state corporations as diverse as Prudential, Ford, AIG, Philip Morris, General Motors, and dozens of others have had to troop down to Madison County before judges and juries obviously intent on stripping them of their worldly goods.

In one particularly ironic case, Judge Nicholas Byron decided in 2003, without benefit of jury, that Philip Morris and its parent company, the Altria Group, had tricked the class of Illinois smokers out of $10.1 billion worth of damages by selling them Marlboro Lights, which plaintiff attorneys said fooled smokers into thinking they were less dangerous than Marlboro regulars. Judge Byron demanded that Altria post a $12 billion bond just to appeal the case to the state supreme court. Altria said it would have to declare bankruptcy.

The decision set off fire alarms in the offices of 49 other state attorney generals, who immediately rushed down to Madison to intervene. What’s the problem? Most states have now built their entire budgets around the Master Tobacco Settlement of 1998, which promises the states $275 billion over the next twenty years. Since Philip Morris pays the lion’s share of this settlement, bankrupting the company in Madison County would set off a financial crisis in 49 other states. Judge Byron finally lowered the bond to $6 billion but the case is still under review by the Illinois Supreme Court.

Do you know how long you will live? Do you know how long the average American will live 50 years from now? Do you know what birthrates will be for the next 50 years? Do you know the rate of immigration for the next 50 years? Do you know the rate of economic growth for the next 50 years?

Of course, neither you nor anyone else the answer to any of the above questions. However, those who tell you we do not need to change Social Security or need only make minor adjustments to the existing system can honestly do so if they know the answers to the above questions — which they do not.

Let’s start with what we do know. The present Social Security system is a “pay-as-you-go” system, in which the taxes paid by workers and their employers are used to fund the monthly benefit checks for the existing retirees. We know that in 1950 there were 16.5 workers paying Social Security taxes for every retired person receiving benefits. We know there are now only about 3.3 workers for each person receiving benefits and there probably will only be 2.2 workers for each benefit recipient 25 years from now in 2030, if we continue with the existing system. We also know the so-called Social Security Trust Fund actually contains no money, because Congress has spent all the money (the surplus from the Social Security tax over actual outlays) on other things since the program’s 1937 inception.

To fully understand the problem, let us go back to what we do not know.

Treasury Secretary John Snow “can stay as long as he wants, provided it is not very long,” is destined to go down in history as one of those classic Washington phrases. The phrase appeared in an article in The Washington Post as a quote from “a senior administration official” one week before the president finally announced Mr. Snow would be Read More ›