Richard J Grant

Published in The Tennessean , Sunday, December 18, 2011 by Richard J. Grant Economists call it the “shortsightedness effect.” Government decisions tend to be biased against actions with easily recognized current costs and less-obvious future benefits. Politicians prefer it to be the other way around. They prefer the benefits to show up before the next election — the costs later. It also applies to tax policy and the timing of tax revenue. Such is the dilemma faced by the governor of Tennessee. Gov. Bill Haslam is worried about a legislative proposal to eliminate Tennessee’s estate tax and its Hall Income Tax on dividends and interest. The governor knows that both of these taxes hurt the state’s economic development. As he put it, they “chase capital away from the state.” Enough capital is chased away by these taxes to have reduced Tennesseans’ income growth measurably. Recent research by economists Arthur Laf-fer and Wayne Winegarden compared Tennessee to other states with similar pol...

A shortened version was published in The Tennessean , Sunday, December 11, 2011 by Richard J. Grant “What does not kill him makes him stronger,” wrote Friedrich Nietzsche. This oft-quoted phrase, usually out of context, is misunderstood almost as often – for it is not necessarily true. That which does not kill him leaves him stronger than he would be if he were dead. Thus history is presented to us as a string of non sequiturs dressed up as a necessary unfolding of events. We look back fondly at our leaders of the past assuming that, if we survived the crisis of that time, whatever our leaders did must have been wise. We know better, but are sometimes susceptible to rhetoric that reaches into the haze of history to retrieve moral authority from precedent. So it was that President Barack Obama arrived in Kansas last week in search of reflected glory, invoking the memory of a speech by Theodore Roosevelt a century ago. That President Roosevelt served as a Republican is useful as a rhetor...

Published in The Tennessean , Sunday, December 4, 2011 by Richard J. Grant Some taxes are just not worth the trouble. There are many ways in which a tax can end up costing us more than the revenue it generates. This is especially true when the tax rates are high and the tax base is narrow enough that people can shift to other activities that are less heavily taxed. Resources shift into second-best uses. Taxes reduce the ability of individuals to accumulate capital. Although some government spending is devoted to long-term capital projects, such as roads and bridges, most of it is shifted into consumption. As social programs become a larger proportion of governmental spending, governments increasingly inhibit our ability to maintain and create capital. With less capital, our future incomes will unfortunately be lower than they would have been. While this implies a lower future standard of living for individuals, it also implies a lower capacity for the future provision of government ser...