Link-Yo-Rama

California Students Complain About 'Tax Hikes'

Now, when professors and politicians cannot distinguish between a reduction in a state subsidy and an increase in taxes, we better understand the dismal shape of university and state finances.

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The governor set up the commission precisely because the boom-and-bust cycle for state tax revenue is making it increasingly difficult for the state to fund government commitments, including higher ed. The gist of the problem was aptly summed up in its report: "Tax rates have been increased on steadily narrowing tax bases."

Tax bases narrow as marginal rates go up and people and businesses struggle to make a go of it. Some fail; others move to Texas. Either way, the result is what California has been seeing: higher unemployment, slower economic growth, and less tax revenue to fund the state's public institutions.

How Milton Friedman Saved Chile

Saturday's earthquake in Chile measured 8.8. That's nearly 500 times more powerful than Haiti's, or about one million Hiroshimas. Yet Chile's reported death toll—711 as of this writing—was a tiny fraction of the 230,000 believed to have perished in Haiti.

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Pinochet appointed a succession of Chicago Boys to senior economic posts. By 1990, the year he ceded power, per capita GDP had risen by 40% (in 2005 dollars) even as Peru and Argentina stagnated. Pinochet's democratic successors — all of them nominally left-of-center — only deepened the liberalization drive. Result: Chileans have become South America's richest people. They have the continent's lowest level of corruption, the lowest infant-mortality rate, and the lowest number of people living below the poverty line.

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For his trouble, Friedman would spend the rest of his life being defamed as an accomplice to evil: at his Nobel Prize ceremony the following year, he was met by protests and hecklers. Friedman himself couldn't decide whether to be amused or annoyed by the obloquies; he later wryly noted that he had given communist dictatorships the same advice he gave Pinochet, without raising leftist hackles.