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Tuesday, May 11, 2004

Badly named laws...

There was a time when Congress passed laws called the Sherman Act or the Clayton Act, named for their authors, I assume because the authors were proud of the legislation. These days we get cute names for laws that are (potentially) misleading such as the USA PATRIOT Act: Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism, CAN-SPAM Act of 2003: Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, and now the JOBS Act: Jumpstart Our Business Strength.

The JOBS Act deals with tax breaks and tax breaks and tax breaks but ostensibly is concerned with the offshore outsourcing of jobs that supposedly happens because of tax considerations. While this may be the case in some situations, the offshore outsourcing of jobs has to do with comparative advantage considerations - some countries have a comparative advantage over the United States in, say, low skill labor intensive products, whereas the U.S. has a comparative advantage in high skill capital intensive products.

The JOBS Act is not likely to have a dramatic impact on the offshore outsourcing of jobs because such outsourcing follows the laws of comparative advantage not tax loopholes.

Thomas provides an interesting lesson in log-rolling (or pork barrel stuffing). The introduced legislation had 16 sections. The final legislation has around 170 sections.

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