From the conclusion an NBER Working Paper “Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia”:
The 2001 Russian flat rate income tax reform (flat rate of 13%, see chart above) has often been heralded as a success story and has been credited with large increases in tax revenues and an improved business climate. Although it has been difficult to differentiate between myth and reality with the Russian experience, many other transitional countries have followed suit with flat rate income tax reforms, and an increasing number of countries around the world are considering the adoption of a flat rate income tax.
In this paper we focus on the impact of the flat income tax rate on tax evasion, an issue that was, and continues to be, a major problem in Russia as well as in many other transition and developing countries. We argue that the flat tax reform was instrumental in decreasing tax evasion and that, to a certain extent, greater fiscal revenues for Russia in 2001 and several years beyond can be linked to increased voluntary tax compliance and reporting (see chart above).
The most significant reduction in tax evasion was for taxpayers that experienced the largest decrease in tax rates after the flat rate income tax was introduced. We also find that this decline in tax evasion was likely due to changes in voluntary compliance as opposed to greater enforcement effort by the tax administration authorities.
Recession odds have fallen by 12 points on Intrade.com over the last 4 weeks (see chart above, click to enlarge).
Ayn Rand Institute:
Philosophically, Americanism means individualism. Individualism holds that one’s personal identity, moral worth, and inalienable rights belong to one as an individual, not as a member of a particular race, class, nation, or other collective.
But collectivism is the premise of “Buy American.” In purchasing goods, we are expected to view ourselves and the sellers not as individuals, but as units of a nation. We are expected to accept lower quality or more expensive goods in the name of alleged benefits to the national collective.
Most “Buy American” advocates are motivated by misplaced patriotism. But for some the motive is a collectivist hostility towards foreigners. This xenophobic attitude is thoroughly un-American; it is plain bigotry.
Giving preference to American-made products over German or Japanese products is the same injustice as giving preference to products made by whites over those made by blacks. Economic nationalism, like racism, means judging men and their products by the group from which they come, not by merit.
Christian Science Monitor:
In a test of the American Dream, Adam Shepard (pictured above) started life from scratch with the clothes on his back and $25. Ten months later, he had an apartment, a car, and a small savings.
The effort was inspired after reading “Nickel and Dimed,” in which author Barbara Ehrenreich takes on a series of low-paying jobs. Unlike Ms. Ehrenreich, who chronicled the difficulty of advancing beyond the ranks of the working poor, Shepard found he was able to successfully climb out of his self-imposed poverty.
He tells his story in “Scratch Beginnings: Me, $25, and the Search for the American Dream.” The book, he says, is a testament to what ordinary Americans can achieve.
An interesting job market paper from a UC-Berkeley Ph.D. candidate Jenny Aker, “Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger.”
Abstract: Due partly to costly information, price dispersion across markets is common in developed and developing countries. Between 2001 and 2006, cell phone service was phased in throughout Niger, providing an alternative and cheaper search technology to grain traders.
The results provide evidence that cell phones reduce grain price dispersion across markets by a minimum of 6.4% and reduce intra-annual price variation by 10%. The primary mechanism by which cell phones affect market-level outcomes appears to be a reduction in search costs, as grain traders operating in markets with cell phone coverage search over a greater number of markets and sell in more markets. The results suggest that cell phones improved consumer and trader welfare in Niger, perhaps averting an even worse outcome during the 2005 food crisis.
Conclusion: Information technology is often considered to be a low priority when compared to other basic needs, such as food, water, shelter and health care . While basic needs cannot or should not be overlooked, cell phones could be a powerful development tool for farmers, traders and consumers.
Read a summary of the paper here.
Wall Street Journal — For decades, railroads spent little on expansion, even tore up surplus track and shrank routes. But since 2000 they’ve spent $10 billion to expand tracks, build freight yards and buy locomotives, and they have $12 billion more in upgrades planned (see map above of recent upgrades).
Railroad operators are pressing for advantage over their main competitor, long-haul trucking, which has struggled with rising fuel prices, driver shortages and highway congestion. Railroads say a load can be moved by rail using about a third as much fuel as it takes to haul it by truck. And rail transport is becoming more efficient still, they say, as operators speed their lines and logistics companies build huge warehouse areas along routes.
Demand for rail service increased sharply when the U.S. economy and Asian imports surged starting in 2003. Now, increasingly, railroads are moving finished consumer goods, often made in Asia, from ports to major cities. Tight capacity on major routes enabled railroads to raise prices. The growth in freight volume has slowed along with economic growth, but shippers say they’re still planning to increase their use of rail transport because of the cost.
Comment: The way Lou Dobbs and others criticize international trade, you would think that trade with countries like China is a complete drain on the U.S. economy, almost as if American consumers somehow acquired goods made in China without any additional benefits for the U.S. economy. But this story suggests otherwise – many U.S. jobs are created and supported by trade with China, including jobs in the transportation industry. Further, Chinese goods are purchased at U.S. retail outlets like Macy’s, Wal-Mart and Target, creating and supporting U.S. jobs in the retail sector.