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Archive for January 12th, 2010

For a change of pace, I get to debate a leftist other than Christian Weller. As always, feedback would be appreciated. What parts of the interview went well? What opportunities did I miss?

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Paul Light of New York University has a column in the Washington Post that acknowledges an ongoing pattern of incompetence by the federal government. He admits that the bureaucracy is too big. He notes that bureaucratic success is unrelated to merit and that it is well nigh impossible to fire incompetent staff. And he also mentions that huge army of consultants and contractors, which further makes accountability impossible. Unfortunately, he fails to draw the obvious conclusion that the federal government needs to be radically downsized:

The systemic failures that led to the attempted bombing of Northwest Flight 253 are, sadly, all too familiar. Substitute the words “Christmas Day plot” for tainted meat, poisoned peppers, aircraft groundings, the Columbia shuttle accident, Hurricane Katrina, counterfeit Heparin, toxic toys, the banking collapse, Bernie Madoff or even Sept. 11, and the failure to put Umar Farouk Abdulmutallab on the “no-fly” list becomes yet another indication that the federal government can no longer guarantee the faithful execution of our laws. …Fifteen years later, a second national commission…looked at the widening federal agenda after the Sept. 11 attacks as well as underlying causes of poor performance and frequent breakdowns. The final report minced no words: “There are too many decision-makers, too much central clearance, too many bases to touch, and too many overseers with conflicting agendas . . . accountability is hard to discern and harder still to enforce.” …four bureaucratic problems that plague the federal government. First, the federal government currently has the most confusing hierarchy in its history. Barack Obama entered office overseeing at least 64 discrete titles just at the top of the government. Even one vacancy in the reporting chain can wreak havoc on performance. With more layers of management and more managers per layer, information must travel a great distance before reaching the president, if it ever does. …Third, front-line government employees have expressed serious concerns about their jobs. Interviewed in mid-2008 by the U.S. Office of Personnel Management, less than half of a random sample of federal employees said their agencies were able to recruit employees with the right skills, just over a third said promotions were based on merit, and even fewer said their agencies took steps to deal with poor performers. …Fourth, the federal government is increasingly dependent on a huge workforce of employees who operate in the shadows. According to estimates from Eagle Eye Publishers, prepared on my behalf, the number of federal contractors grew from an estimated 4.4 million in 1999 to more than 7.5 million by the end of the 2005 fiscal year. Given the continued rise in federal procurement spending, the number of contractors is almost certainly higher today. As the number of large contracts has increased and competition has declined, it has become nearly impossible to hold anyone accountable for what goes right or wrong.

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Since I said something semi-nice about the French a couple of days ago, let me now revert to form and bash French politicians for their reflexive desire to tax and tax and tax again. The first example is from Tax-news.com, which reports that the French government wants to tax Google and other online companies in order to subsidize politically-approved news outlets: 

A report presented recently to the French Culture Ministry has proposed a series of measures designed to improve the legitimate supply of cultural services provided over the Internet and their financing, including most notably the introduction of a new tax to be levied on the online advertising revenue derived by Internet giants such as Google. …In order to finance the proposals, estimated at around EUR50m in 2010, and between EUR35m and EUR40m a year in 2011 and 2012, the report advocates the introduction of a levy imposed on online advertising revenue. Dubbed the “Google tax” by one of the main authors of the report, Jacques Toubon, himself a former French Culture Minister, the levy is designed to support creative industries and online press sites. A threshold level for the tax would ensure that the levy only affects large companies such as Google, Microsoft, AOL, Yahoo, and Facebook.

If the French politicians limited to themselves to raping French citizens, that would be reprehensible, but not exactly a reason for the rest of the world to be upset. Unfortunately, the French government has a misery-loves-company attitude and is always trying to export bad policy to other nations. France, for instance, is a leading supporter of the OECD’s anti-tax competition crusade (not surprisingly, the OECD is based in Paris even though the US pays one-fourth of the bureaucracy’s bloated budget). Another example is France’s campaign to impose an EU-wide carbon tax, which combines the worst aspects of big government, protectionism, and enviro-radicalism. The EU Observer reports:

France intends to push for a tax on carbon emissions across the European Union, President Nicolas Sarkozy said on Wednesday (6 December), a week after his country’s top court struck down an attempt to introduce just such a tax domestically. Mr Sarkozy also wants to see carbon “tariffs” slapped on products entering the EU from countries with weaker environmental legislation. …Any carbon tariff move is likely to meet with stiff resistance from other EU member states, particularly the more free-trade oriented nations, who would view such a levy as a form of protectionism. When an EU carbon tax imposed at the borders of the bloc was first mooted at a meeting of European environment ministers last July, the idea was given a frosty reception, particularly by Germany. …In response, the French government is to present a re-edited version of the bill on 20 January, taking into consideration the court’s objections. On Tuesday, French finance minister Christine Lagarde said that the new law would would involve a progressive tax, with different brackets similar to income taxation.

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Kudos to Nicki Kurokawa, a former Cato employee, for this short but substantive video explaining “moral hazard.” She notes that government-subsidized risk played a pernicious role in the housing bubble and financial crisis, and warns that “too big to fail” may create similar problems in the future.

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