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Mercatus scholars apply economic analysis to the issues of the day

PAs Key to Better Healthcare in Kentucky

by Edward J. Timmons on April 28, 2016

The commonwealth of Kentucky is famous for many great things: fried chicken, a major horse race and baseball equipment, to name a few. Unfortunately for the citizens of the Bluegrass State, it is also the only state that does not allow physician assistants to prescribe controlled substances.

According to the U.S. Census, Kentucky has a larger share of its population in rural areas than most other states. More than 40 percent of its population resides in a rural area – and just seven states have larger rural populations. According to data collected by Syracuse University, Kentucky has two counties (Carlisle and Owsley) with zero physicians. Residents of these counties may have to travel significant distances to find health care. In addition, research conducted by the University...

Michael Farren: This Is How You Regulate Uber

by Michael Farren on April 27, 2016

This month, Detroit’s operating agreements with Uber and Lyft will end, placing ride-sharing in the Motor City in legal limbo. Over the last two years, 32 states have passed ride-sharing laws and another 15 are currently considering legislation, including Michigan.

Ride-sharing legislation offers a great opportunity to show how working people can benefit from a few simple policy principles: generality of application, low barriers to entry and permissionless innovation. On the other hand, taxi regulations provide a frustrating counter-example of how ignoring these principles can harm an industry and the customers it serves.

Laws and regulations should not discriminate between different people or companies. Everyone and every business should face the same set of legal requirements. To do otherwise provides a government-granted privilege to whomever a policy favors, or to...

FCC Meddles in Cable-Box Market. Is Streaming TV Next?

by Andrea Castillo on April 26, 2016

This February, the Federal Communications Commission (FCC) announced a plan to intervene in the cable set-top box (STB) market with its "Unlock The Box" proposal. The telecommunications regulatory body sings a libertarian tune in press releases about the program, extolling the virtues of "creating choice and innovation" and bringing "competitive solutions" to that dusty old cable box in your living room. But this is rather misleading. We are already witnessing a renaissance of competition and innovation in media distribution...

Gigs, Jobs, and Smart Machines

by Robert Graboyes on April 26, 2016

The Gig Economy enrages certain political quarters. Ironically, anti-giggers demonize companies like Uber, Lyft, and Airbnb by romanticizing and reinforcing the most hated aspects of post-1800 employment—subordination of and control over employees by employers. This blinkered nostalgia threatens employability in a world of smart machines.

I’ve Been Working on the Railroad

The Industrial Revolution transformed generalists who made their own food, clothes, shelter, and medicine into specialists with long-term, full-time jobs in hierarchical organizations. As Don Boudreaux notes, “Having a job only makes sense in a modern world, where each individual typically does only one type of work.”

Today, you likely have a boss who also has a boss. Hierarchy reduces transaction costs. (The SVP for Marketing doesn...

How to Respond to 'Unfair' Trade

by Donald J. Boudreaux on April 26, 2016

Protectionists today rarely admit to being protectionists. Most of them proclaim their allegiance to free trade but quickly follow up with a “but” — as in “but it must be fair trade.”

“Fair trade” is code for “unfree trade.”

Of course, no one endorses trade that is genuinely unfair. The crucial questions, however, are just what is unfair trade and what is the best way to deal with it. Protectionists in America want you to think that any imports whose producers receive any assistance at all from foreign governments are unfair. They want you also to uncritically accept their assumption that the best way to deal with unfair trade is for Uncle Sam to raise tariffs — that is, taxes — on American consumers.

Never mind the hypocrisy at work when Uncle Sam — itself a major subsidizer of many U.S. exporters, such as Boeing and Dow Chemical...

New ACA Study Considers What Happens When Generous Government Subsidies End

by Brian Blase on April 25, 2016

A large subsidy program that has helped insurers offering Affordable Care Act (ACA) compliant coverage in the individual market expires this year. In 2017, for the first time, insurance premiums alone must cover expenses in the individual market. A new working paper released today by the Mercatus Center at George Mason University measures the importance of this subsidy program, sheds new light on insurers’ generally poor results in 2014, and discusses what likely lies ahead for the law. 

The study, authored by myself, Doug Badger of the Galen Institute and Ed Haislmaier of...

Minimum Wage Laws Are Barriers to Employment

by Charles Blahous on April 25, 2016

Minimum wage laws are much in the news these days. New York, California and various US cities have recently enacted legislation to raise minimum wage requirements to $15 an hour. In this context it is especially worthwhile to revisit the purpose and effect of minimum wage laws.

Two policy questions are closely connected to the minimum wage debate:

  1. Whether government should ensure that workers receive no less than a certain amount of compensation for their labor; and
  2. Whether government should establish a price barrier to employment, and if so how high it should be.

The minimum wage debate is often reported as though it is about the first of...

The Land of the Free, but Not until April 24

by Veronique de Rugy on April 21, 2016

Americans just finished filing and paying for their federal income taxes. It was painful and expensive. Collectively, we still have several more days to go before we are done paying for our entire tax bill.

In 2016, Tax Freedom Day is April 24. As the Tax Foundation explains in its annual report on the issue, "Tax Freedom Day is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year." The tax bill in question includes all federal income taxes, payroll taxes and state and local taxes. In 2016, that's $4.99 trillion, including $3.3 trillion in federal taxes. That's 31 percent of national income.

If it sounds like a lot of money, it's because it is. As the report states, "Americans will collectively spend significantly more on taxes in 2016 than they will on food, clothing, and housing combined." Unfortunately, the system is...

Privatizing Public Transit Lowers Costs and Saves Cities Money

by Adam Millsap on April 20, 2016

The financial plight of many U.S. cities has caught the attention of the Democratic presidential candidates, as both Hilary Clinton and Bernie Sanders discussed urban issues during their recent debate in Brooklyn. Both candidates supported the idea of investing in city housing and infrastructure using federal tax dollars. But before any additional U.S. taxpayer money is redistributed to cities, city officials should be required to take steps to shore up their city’s finances. A good place to start is the privatization of public transit.

A new NBER working paper compares the efficiency...

The Persistence of Regionalism in Federal Regulations

by Patrick McLaughlin on April 19, 2016

Regional protectionism in regulatory policy was a term used several decades ago to describe the regional effects built into regulatory acts of Congress. At the time, Brookings Institution economist Robert Crandall and University of Chicago economist Peter Pashigian looked at the regional distribution of congressional support for specific elements of the Clean Air Act that would discourage the development of production facilities in the South and the West. Their studies showed that support came largely from high-income, low-growth states in the North and from urban and industrialized congressional districts in the North and Northeast.

Two salutary lessons that their scholarship exposed remain true today: First, regulations affect different regions differently, which alters the distribution of economic growth across regions. Second, the different impacts on different regions can be a deliberate design feature....

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