Perverse Incentives

The Bennett Hypothesis: Why College Tuitions Are Out of Control

"Some researchers argue that government subsidies have had the perverse effect of encouraging colleges to increase tuition so as to capture more federal dollars, an effect known in the literature as the 'Bennett hypothesis'. To see how this could work, imagine a school that charged $0 in tuition and fees. Suppose that the federal government then offered $5,000 vouchers to pay for college tuition, but only at schools that charge tuition. Obviously, our hypothetical free school is going to increase tuition to $5,000 a year to take advantage of that money. That’s just money on the table." Continue reading →

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The enduring mystery of U.S. offshore cash

"The U.S. Internal Revenue Service lumps in the foreign dividend with corporate income. While the U.S. offers a credit for foreign taxes paid, U.S. multinationals typically face an extra tax bill when the foreign earnings come home for a number of reasons, including the higher U.S. corporate income tax rates. So when Apple says it intends to give $100-billion back to shareholders by the end of 2015, it's all well and good. It's got just $45-billion in the U.S., however, and that's what leads to a cash-rich company borrowing more cash, just to give it away." Continue reading →

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Obamacare Putting Millions Of Part-Time Workers At Risk Of Seeing Cut Hours

"Ken Jacobs, chair of the labor center at UC Berkeley, told the Huffington Post that employers are not likely to force all full-time employees into part-time work due to factors that include additional administrative costs and productivity decreases. Instead, those at highest risk are workers in predominately low-wage industries that are right on the cusp of what is considered full-time work under the law. The industries with the highest concentration of Jacobs’ at-risk workers are restaurants, accommodation and building services. The 3.6 million workers who report that their 'work hours vary' could have their hours jeopardized as well, according to the study." Continue reading →

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New York City bike-share program bans riders who weigh more than 260 pounds

"It is 'prohibited' for any rider who weighs more than 260 pounds to sign up for the soon-to-launch initiative — prompting backlash from riders who say the fat-shaming rule is enough to make them fly off the handle. Everyone who signs up for the program has to agree to a contract, which states users 'must not exceed maximum weight limit (260 pounds)' because the bikes can’t hold that much heft. Would-be riders called the rule unfair, saying the 40-pound cruisers are plenty sturdy. Others claimed the rule makes no sense — especially at the height of the city’s obesity problem. Several bike-shop owners agreed that the weight limit was bogus." Continue reading →

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The hidden dangers of legal highs

"In comparison with regular drugs, there is hardly any data on the harm these new drugs do. Manufacturers in the UK, China and eastern Europe take any of these chemicals or dozens more, blending them with inert substances into uncontrolled, unstated doses, and selling them online. These products, with names such as Barry White and Dutchy, are the most concerning: customers are very often young people, some of whom find it hard to buy drugs anywhere else, or prefer to stay on the right side of the law. Manufacturers do not list their contents, or give any dosage instructions, since to do so would render them liable for prosecution." Continue reading →

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Boston Bombers’ Family Received $100,000 in Government Welfare

"We know that this sort of thing goes on. We know that the welfare state is now basic to American life. But bombers or not, this family has been openly ungrateful. They have had nothing good to say about America. But America is an equal opportunity welfare state. Those who hate the country are given the same handouts as those who love the country. What did the handouts buy the voters? Resentment. The younger brother was a stoner. He spent the taxpayers’ hard-earned money on marijuana. His older brother used the money to fly to Russia and then, somehow, get to Chechnya. How the Russian authorities missed that excursion remains an unanswered question." Continue reading →

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Why It’s So Hard For Scientists To Study Medical Marijuana

"Both the American Medical Association and the American College of Physicians have called for more research into the therapeutic uses of marijuana and for the U.S. government to reconsider its classification as a Schedule I substance. The University of Mississippi grows and harvests cannabis for studies funded by the National Institute on Drug Abuse, yet because NIDA's congressionally mandated mission is to research the harmful effects of controlled substances and stop drug abuse, the institute isn't interested in helping establish marijuana as a medicine." Continue reading →

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The Role Disability Insurance is Playing in Discouraging Young Adults from Working

"Of the nearly nine million former workers receiving federal disability payments, more than 2.5 million are in their 20s, 30s and 40s. 'It is difficult to overstate the role that the SSDI program plays in discouraging' employment among these young people, Messrs. Autor and Duggan said in one of their research papers, urging reform." Continue reading →

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Terrible Costs of a ‘Modern Economy’

"When large democracies create state mandates they will inevitably be exploited. Now it appears that nearly a million in Britain were taking advantage of sickness-related benefits that they were not eligible for. This figure is arrived at via reports that 878,300 'decided not to have an official assessment of whether they were fit for work.' The Telegraph informs us this was more than a third of the total number of people claiming sickness-related benefits. 'As well as the 878,300 who chose to drop their claims, another 837,000 who did take the a medical test were found to be fit to work immediately, while a further 367,300 were judged able to some level of work.'" Continue reading →

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Fed Could End Up Paying Banks $77 Billion Annually on Excess Reserves

"The Federal Reserve could pay more than $77 billion a year in interest on the excess cash reserves it holds for commercial banks if rates follow the highest path forecast by Fed policy makers. The central bank already has paid more than $13 billion since 2008 when Congress authorized interest on reserve balances as part of financial-rescue legislation. The Fed earns interest income on its bond holdings and, after covering its operating expenses, returns the profit to the U.S. Treasury. Last year, the Fed remitted $88.4 billion. As the interest payments on reserves rise, this profit could shrink or disappear." Continue reading →

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