Feeds:
Posts
Comments

Archive for June, 2010

I’m not a lawyer, so I certainly can’t pretend to have expert views, but everytime I read something like this, my regard for Justice Thomas rises even higher.
In the McDonald case, the justices were asked by the plaintiffs to strike down Chicago’s gun-control ordinance as a violation of the Second Amendment to the Constitution. In order to do so, the justices would have to make two maneuvers. Of course, they’d have to rule that the ordinance runs afoul of the Second Amendment’s prescription that “the right of the people to keep and bear Arms, shall not be infringed.” But they’d also have to rule that the Second Amendment restricts not just Congress’s ability to make laws controlling the use of guns, but that of state governments as well. Remember, the Bill of Rights, as originally constructed, only applies to the federal government. In order to extend the Second Amendment to laws passed by states or cities, the court was faced with a choice of two clauses embedded in the 14th Amendment. It could “incorporate” the Second Amendment to the states through the 14th Amendment’s Due Process Clause. Or, pursuant to the 14th Amendment’s Privileges or Immunities Clause, it could deem “the right to bear arms” one of the “Privileges” or “Immunities” that the states are forbidden from taking away. So you’ve never heard of the Privileges or Immunities Clause? We’re not surprised. The clause was largely neutered in a set of cases decided in 1873. …Those arguing for resuscitation of the Privilege or Immunities Clause pinned their hopes on Justice Antonin Scalia and Justice Clarence Thomas, both known for their “originalist” approach to constitutional interpretation. But Justice Scalia on Monday opted, along with Justices Alito and Kennedy and Chief Justice Roberts, to use the Due Process Clause. As Liptak noted, Justice Scalia, in a concurrence, “acknowledged misgivings about using the due process clause to apply Bill of Rights protections to the states” but went along with it “’since straightforward application of settled doctrine suffices to decide it.’” But in a separate concurrence, Justice Thomas boldly went where no justice has gone before: to the arms of the Privileges or Immunities Clause. He wrote:
[T]he text of the Privileges or Immunities Clause . . . command[s] that “[n]o State shall . . . abridge” the rights of United States citizens . . . the Clause establishes a minimum baseline of federal rights, and the constitutional right to keep and bear arms plainly was among them.
The rationale didn’t carry the day, but many legal commentators were thrilled by Justice Thomas’s concurrence. “He’s sticking with the text of the Constitution,” said Georgetown law professor Randy Barnett, to the Law Blog. “At the same time, nobody voices disagreement with Justice Thomas. And that’s because they can’t.” Writing at Scotusblog, George Mason’s Nelson Lund cheered Thomas’s opinion:
His opinion is scholarly and judicious, and it cements his standing as the only Justice who is more than a half-hearted originalist.
Barnett and others hope that Thomas’s lone dissent has planted the seeds for a constitutional reawakening rooted in the Privileges and Immunities Clause.

Read Full Post »

That’s the title of Richard Rahn’s new column in the Washington Times, which discusses the delusional Keynesian policy being advocated – in America and around the world – by the current administration. As Richard explains, the evidence is overwhelming that government spending does not promote prosperity.
In the face of the unprecedented congressional spending binge, President Obama has been asking Congress to spend even more. Not content with actively promoting the eventual bankruptcy of the United States, Mr. Obama is urging foreign leaders also to increase their government spending – which is truly bizarre. Look at the facts. All of the major European countries have been increasing government spending and deficits at unsustainable rates. The talk for the past couple of months has been about which countries would follow Greece in going over the financial cliff. Responsible economists, financial leaders and, most important, the markets have been telling European leaders they must cut government spending. …The president still seems to believe in the imaginary world of spending multipliers – whereby each dollar of additional spending results in something in the order of $1.40 in additional output. Proponents of such ideas normally refer to themselves as Keynesians (followers of the ideas of John Maynard Keynes, 1883-1946). …The Keynesians and socialists have run hundreds of experiments around the world for the past 70 years, inducing governments to try to spend themselves into prosperity. It doesn’t work. In the 1970s, Keynesian prescriptions led to “stagflation” in the U.S. and many other countries. It was only when Ronald Reagan, Margaret Thatcher and eventually many other leaders (using the ideas of F.A. Hayek and Milton Friedman) reversed course by cutting tax rates and curtailing spending growth that their economies began to grow rapidly without inflation. Mr. Obama seems to have never learned these lessons, and some of his advisers, who once understood what works and what doesn’t, seem to have forgotten. By nature, people like to spend other people’s money, and too many in Congress loved what was billed as Keynesian economic theory because it gave them a rationale to be irresponsible spenders.

Read Full Post »

This new video from Reason.tv is a sobering look at how excessive pensions for state and local government bureaucrats are creating a fiscal nightmare for governments across the nation.

Read Full Post »

In addition to noting that gun control tends to increase crime by reducing the cost of being a criminal (i.e., thugs are less likely to meet armed resistance), Tom Sowell also explains that people who don’t like the Constitution should amend the document rather than appointing ideologically-motivated Justices who ignore what it says.
…there is no obvious reason why issues like gun control should be ideological issues in the first place. It is ultimately an empirical question whether allowing ordinary citizens to have firearms will increase or decrease the amount of violence. Many people who are opposed to gun laws which place severe restrictions on ordinary citizens owning firearms have based themselves on the Second Amendment to the Constitution. But, while the Supreme Court must make the Second Amendment the basis of its rulings on gun control laws, there is no reason why the Second Amendment should be the last word for the voting public. If the end of gun control leads to a bloodbath of runaway shootings, then the Second Amendment can be repealed, just as other Constitutional Amendments have been repealed. Laws exist for people, not people for laws. There is no point arguing, as many people do, that it is difficult to amend the Constitution. The fact that it doesn’t happen very often doesn’t mean that it is difficult. The people may not want it to happen, even if the intelligentsia are itching to change it. …As for the merits or demerits of gun control laws themselves, a vast amount of evidence, both from the United States and from other countries, shows that keeping guns out of the hands of law-abiding citizens does not keep guns out of the hands of criminals. It is not uncommon for a tightening of gun control laws to be followed by an increase– not a decrease– in gun crimes, including murder. Conversely, there have been places and times where an increase in gun ownership has been followed by a reduction in crimes in general and murder in particular. Unfortunately, the media intelligentsia tend to favor gun control laws, so a lot of hard facts about the futility, or the counterproductive consequences of such laws, never reach the public through the media. We hear a lot about countries with stronger gun control laws than the United States that have lower murder rates. But we very seldom hear about countries with stronger gun control laws than the United States that have higher murder rates, such as Russia and Brazil.

Read Full Post »

Europe’s economy is stagnant, the euro currency is in danger of collapse, and many nations are on the verge of bankruptcy. But one thing you can count on in this time of crisis is for prompt, thoughtful, and intelligent action by the super-bureaucrats of the European Commission. Right? Well, maybe not. You can be confident, however, that they will generate idiotic regulations that increase costs and trample national sovereignty. The latest example is some new red tape that will prohibit grocers from selling items based on numerical quantity. I’m not joking. Here’s a blurb from the UK-based Telegraph:
Under the draft legislation, to come into force as early as next year, the sale of groceries using the simple measurement of numbers will be replaced by an EU-wide system based on weight. It would mean an end to packaging descriptions such as eggs by the dozen, four-packs of apples, six bread rolls or boxes of 12 fish fingers. …The changes would cost the food and retail industries millions of pounds as items would have to be individually weighed to ensure the accuracy of the label. Trade magazine, The Grocer, said food industry sources had described the move as “bonkers” and “absolute madness”. Its editor, Adam Leyland, said the EU had “created a multi-headed monster”. Caroline Spelman said: “This goes against common sense. Shopkeeping is a long standing British tradition and we know what customers want. They want to buy eggs by the dozen and they should be allowed to – a point I shall be making clear to our partners in Europe.” …Andrew Opie, food director of the British Retail Consortium, which represents 90 per cent of UK shops, said: “This is a bad proposal – we need to help consumers, not confuse them.”

Read Full Post »

Please share this video with everyone you know. It explains the “Rahn Curve,” which is a spending version of the Laffer Curve. Named after Cato Institute’s Richard Rahn, the Curve shows that modest amounts of government spending – for core “public goods” such as rule of law and protection of property rights – is associated with better economic performance.

But when government rises above that level (as it has in all developed nations), then more government is associated with slower growth.

Read Full Post »

I’m somewhat conflicted by this BBC story from New Zealand. I want prison to be a miserable experience so that there is a strong deterrent effect. Yet anything that keeps prisoners calm is presumably good for prison management. The guy who sent me this story included a comment that a smoking ban will increase the lifespan of prisoners and that will increase the burden on taxpayers (at least for those serving life sentences). I’m enough of a budget geek that this is a compelling argument for me. Give them all unfiltered cigarettes! (except, of course, the ones in jail for victimless crimes, all of whom should be immediately released).
New Zealand is to ban smoking throughout the country’s prisons from 1 July 2011, Corrections Minister Judith Collins has announced. The announcement has prompted concerns that violence in prisons could increase if prisoners are denied tobacco. But Ms Collins dismissed the warnings and said high levels of smoking were a risk to staff and prisoners. About 5,700 prisoners – two-thirds of the current total in New Zealand prisons – are smokers. …Former inmate Shenelle Ngatai told TVNZ that cigarettes were like gold in prisons, where they are used as currency. She also said that jails would become more corrupt if cigarettes were taken off prisoners. …Denying inmates their “fix” would lead to an increase in violence between desperate prisoners, she added. Human Rights lawyer Michael Bott agreed that the ban would cause more problems than it might solve. “They are going to be very frustrated, very dangerous; it’s a toxic dangerous environment, made even worse by such foolishness as this,” he told 3News in New Zealand. However, Ms Collins insists that the smoking ban will have other advantages. It would make it easier to put more than one prisoner in each cell, she said, and reduce the number of prison officers suing the government for being exposed to second-hand smoke.

Read Full Post »

John Lott is one of America’s leading scholars of gun rights and the 2nd Amendment. His Foxnews.com column explains today’s ruling in favor of the Constitution and explains how the 2008 Heller decision led to less murder in Washington, DC.
With another closely decided 5 to 4 decision, the Supreme Court ruled today that state governments are not able to ban most Americans from owning most types of handguns. The court ruled that firearms are “essential for self-defense.” The court found that if the Second Amendment indeed protects an individual right to own a gun, the notion that the government can’t ban all handguns is the minimum protection the Constitution can offer. …When the “Heller” decision was handed down in 2008 striking down Washington, D.C.’s handgun ban and gunlock regulations, Chicago’s Mayor Richard Daley predicted disaster. He said that overturning the gun ban was “a very frightening decision” and predicted more deaths along with Wild West-style shootouts and that people “are going to take a gun and they are going to end their lives in a family dispute.” Washington’s Mayor Adrian Fenty similarly warned: “More handguns in the District of Columbia will only lead to more handgun violence.” Yet, Armageddon never arrived. Washington’s murder rate has plummeted — falling by 25 percent in 2009 alone. This compares with a national drop of only 7 percent last year. And D.C.’s drop has continued this year. Comparing Washington’s crime rates from January 1 to June 17 of this year to the same period in 2008, shows a 34 percent drop in murder. This drop puts D.C.’s murder rate back to where it was before the 1977 handgun ban. Indeed, the murder rate is as low as was before 1967. Other gun crimes have also fallen in Washington. While robberies without guns fell by 7 percent, robberies with gun fell by over 14 percent. Assaults with weapons other than guns fell by 7, but assaults using guns fell by over 20 percent. …Neither the latest justice, Sonia Sotomayor nor the next potential justice, Elena Kagan are sympathetic to an individual’s right to self-defense.

Read Full Post »

In his Washington Post column discussing a crisis of confidence among economists, Robert Samuelson correctly notes that Keynesians don’t seem to have the right answers. But he concludes that other schools of thought are similarly befuddled by current events. What he writes is not terribly objectionable, but it’s almost as if he thinks the fiscal debate in the economics profession is limited to the spend-now-and-forever Keynesians and the all-that-matters-is-the-budget-deficit proponents of “austerity” (which often is just an excuse to raise taxes, as I explain here). I gather Samuelson’s not familiar with the Austrian theory developed by scholars such as Mises and Hayek. Unlike the Keynesians and the crowd at the IMF, the Austrian school is not baffled by world events. The Austrians are not so foolish as to think they can predict the economy’s short-term fluctuations, but they were the ones who correctly warned against the intervention and spending that created the current mess and they can take a certain grim satisfaction about being proven correct. And they have the only intelligent prescription for what should be done now – namely, that politicians should get out of the way. After all, the crowd in Washington created the mess by doing too much and doing more of the same bad policies will – at best – further reduce the economy’s long-term prosperity.
 
Economics has become the shaky science; its intellectual chaos provides context for today’s policy disputes at home and abroad. Consider the matter of budgets. Would bigger deficits stimulate the economy and create jobs, as standard Keynesianism suggests? Or do exploding government debts threaten another financial crisis? The Keynesian logic seems airtight. If consumer and business spending is weak, government raises demand through tax cuts or spending increases. But in practice, governments’ high debts impose financial and psychological limits. …There’s a tug of war between the stimulus of bigger deficits and the fears inspired by bigger deficits. …The disconnect between theory and reality seems ominous. The response to the initial crisis was to throw money at it — to lower interest rates and expand budget deficits. But with interest rates now low and deficits high, what happens if there’s another crisis?

Read Full Post »

If misery loves company, then American and English taxpayers can enjoy a bonding experience after reading this story about excessive pay for bureaucrats in Brussels. According to the Daily Telegraph, at least 1,000 (and probably more than 2,000) of these euro-crats earn more than the U.K. Prime Minster.

More than one thousand EU officials earn more than the Prime Minister, according to research carried out by the The Daily Telegraph. …Included in the overall total are Herman Van Rompuy, the EU president, Baroness Ashton, Europe’s foreign minister, José Manuel Barroso, the European Commission President along with six vice-presidents and 19 commissioners. This group of 28 people, who are all unelected, earn £57,000 to £103,000 more than Mr Cameron and include the three best paid politicians, Mr Van Rompuy, Mr Barroso and Lady Ashton, in the western world. Among the 995 European civil servants, who are on the AD14 to AD16 grades earning £146,267 to £179,703, are at least 90 unelected British EU officials earning more than the Prime Minister. The Commission has admitted that the true numbers cannot be calculated and could be at least twice as high. After tax relief and generous perks are taken into account it is likely that over 2,000 officials are earning more than Mr Cameron. …Research and information requests have also found that there are 19 European Parliament assistants, or researchers to MEPs, who earn £75,752 a year. Another 12 assistants, eligible along with EU officials for low tax rates, pocket £70,217 a year. A British MP in the House of Commons earns just £65,738.

Read Full Post »

I don’t know what will happen when the Senate Judiciary Committee grills Obama’s Supreme Court nominee, but I hope at least one member reads George Will’s column and uses some of his suggested questions. They are all worth reading, but here are my three favorites: 
The government having decided that Chrysler’s survival is an urgent national necessity, could it decide that “Cash for Clunkers” is too indirect a subsidy and instead mandate that people buy Chrysler products? …Can you name a human endeavor that Congress cannot regulate on the pretense that the endeavor affects interstate commerce? …Should proper respect for precedent prevent the court from reversing Kelo? If so, was the court wrong to undo the 1896 ruling in Plessy v. Ferguson that segregating the races with “separate but equal” facilities is constitutional?

Read Full Post »

I’ve always tried to stay away from monetary policy, and I’ve never thought the topic lent itself to humor, but this song parody I saw on Greg Mankiw’s blog is at least somewhat amusing.

Read Full Post »

The G-20 gab-fest is in Canada this weekend, but Canadian taxpayers are definitely not winners. In a display of waste that might even embarrass a French politician, the Canadian government somehow is going to squander $1 billion hosting the event. I can’t even conceive of why such an event should even cost $10 million. Maybe hookers are very expensive up north. One interesting policy issue at the meeting is that the United States is siding with Euro-socialist nations in pushing a bank tax. Fortunately for taxpayers and financial consumers, the former communists in charge of Russia are helping to block this money-grab. This adds to the irony of Russia recently proposing to eliminate capital gains taxation while Obama (and the U.K.’s Cameron) are increasing the tax rate on entrepreneurship and investment. The world is upside down. The EU Observer reports:

With international eyes focusing on the potential ‘stimulus versus austerity’ scrap between different member states, Canadian citizens meanwhile have reacted in uproar at news that the weekend’s bill is set to total over $1 billion. Although 90 percent of that cost comes under the ‘security’ heading, it is a artificial lake intended to impress journalists in the press area that has come in for the heaviest criticism. The controversy may not be helped by the forecast lack of tangible results set to emanate from the two sets of meetings… The need for a global bank levy provides one the more concrete topics for discussion, but there is no guarantee that participants around the table will come to an agreement. “In the G20, the idea of a bank levy is not supported by at least half of the members,” Russian ambassador to the EU Vladimir Chizhov told a group of journalists on Friday morning in Brussels. “Neither is it acceptable to Russia,” he continued, arguing that banks would merely pass on the extra costs to their clients.

Read Full Post »

I’m not a soccer fan, but I’m nonetheless disappointed that the American team lost. Having said that, at least we got farther than a certain team from a socialist nation (not that we can point too many fingers in that regard after what Bush and Obama have done). So in honor of the World Cup, here’s an image of a recent Wall Street Journal story.

Read Full Post »

This is another post with a long excerpt, but this editorial from the Wall Street Journal is excellent. I encourage you to click the link and read the whole thing.
…the larger story is the end of the neo-Keynesian economic moment, and perhaps the start of a healthier policy turn. For going on three years, the developed world’s economic policy has been dominated by the revival of the old idea that vast amounts of public spending could prevent deflation, cure a recession, and ignite a new era of government-led prosperity. It hasn’t turned out that way. …The Europeans have had enough and want to swear off the sauce, while the Obama Administration wants to keep running a bar tab. …Like many bad ideas, the current Keynesian revival began under George W. Bush. Larry Summers, then a private economist, told Congress that a “timely, targeted and temporary” spending program of $150 billion was urgently needed to boost consumer “demand.” Democrats who had retaken Congress adopted the idea—they love an excuse to spend—and the politically tapped-out Mr. Bush went along with $168 billion in spending and one-time tax rebates. …enter Stimulus II, with Mr. Summers again leading the intellectual charge, this time as President Obama’s adviser and this time suggesting upwards of $500 billion. When Congress was done two months later, in February 2009, the amount was $862 billion. A pair of White House economists famously promised that this spending would keep the unemployment rate below 8%. Seventeen months later, and despite historically easy monetary policy for that entire period, the jobless rate is still 9.7%. Yesterday, the Bureau of Economic Analysis once again reduced the GDP estimate for first quarter growth, this time to 2.7%, while economic indicators in the second quarter have been mediocre. …this is a far cry from the snappy recovery that typically follows a steep recession, most recently in 1983-84 after the Reagan tax cuts. …The response at the White House and among Congressional leaders has been . . . Stimulus III. While talking about the need for “fiscal discipline” some time in the future, President Obama wants more spending today to again boost “demand.” Thirty months after Mr. Summers won his first victory, we are back at the same policy stand. The difference this time is that the Keynesian political consensus is cracking up. In Europe, the bond vigilantes have pulled the credit cards of Greece, Portugal and Spain, with Britain and Italy in their sights. …The larger lesson here is about policy. The original sin—and it was nearly global—was to revive the Keynesian economic model that had last cracked up in the 1970s, while forgetting the lessons of the long prosperity from 1982 through 2007. The Reagan and Clinton-Gingrich booms were fostered by a policy environment for most of that era of lower taxes, spending restraint and sound money. The spending restraint began to end in the late 1990s, sound money vanished earlier this decade, and now Democrats are promising a series of enormous tax increases. Notice that we aren’t saying that spending restraint alone is a miracle economic cure. The spending cuts now in fashion in Europe are essential, but cuts by themselves won’t balance annual deficits reaching 10% of GDP. That requires new revenues from faster growth, and there’s a danger that the tax increases now sweeping Europe will dampen growth further. …We are told to let Congress continue to spend and borrow until the precise moment when Mr. Summers and Mark Zandi and the other architects of our current policy say it is time to raise taxes to reduce the huge deficits and debt that their spending has produced. Meanwhile, individuals and businesses are supposed to be unaffected by the prospect of future tax increases, higher interest rates, and more government control over nearly every area of the economy. Even the CEOs of the Business Roundtable now see the damage this is doing.

Read Full Post »

John Derbyshire of National Review has an interesting article on bureaucratic harassment of private business. He begins with a personal story of something that happened when he first came to the United States and was working at a food-preparation company:
The first federal regulator I ever knew was a fellow named Ernie. …Ernie was a power freak. If you showed him the respect he thought he was entitled to, he was generally harmless. If you crossed him, however, his wrath was terrible. The boss of the firm was a no-nonsense former Marine. …He put up with Ernie as best he could, but sometimes the forbearance required was too great. …On one occasion the boss lost it and yelled at Ernie. Ernie then had his minions go round the firm “tagging” all the preparation tables with what looked like old-fashioned white luggage tags. Peered at up close, the tags revealed printed messages saying that no food product could go anywhere near the tagged table until the tag was removed, with ferocious federal penalties threatened against transgressors. The tags could, of course, only be removed by Ernie. The tables were out of commission. We had to scrub those suckers three or four times over with green scouring pads and Comet before Ernie would deign to remove his tags and let the firm get on with their business. Another time, after some other go-round with the boss, Ernie determined that the firm’s ZIP code was printed on the dinner boxes in too small a font. The boss had to get rolls of stick-over labels printed up, and we menials spent a couple of days working our way through the freezer rooms relabeling the dinners so the ZIP code was in the FDA-approved font size. I guess this was real important to the nation’s health.
The substance of his article is another example of bureaucratic excess, though this time with much greater potential for economic damage. The federal bureaucracy and Washington political elite (with the support of big companies that don’t like competition) are hampering the development of an industry that is offering 100-percent safe genetic testing for consumers. The excerpt is long, but shows how government intervention is both unwarranted and driven by bad motives.
A firm named Pathway Genomics, based in San Diego, is one of many that have come up in the past few years offering to scan a person’s DNA and report on any significant disease-risk or drug-response markers. You swab your cheek with a sterile Q-Tip they provide, or spit into a sterile plastic tube, and you send the saliva sample off to them. They scan it and send you back the information. The cost of a test can be from $20 to $500, depending on how many markers are scanned for. Earlier this year Pathway entered into a deal with Walgrens, a nationwide drugstore chain with 7,500 outlets. The deal would have allowed Pathway to operate counters at 6,000 of those outlets, selling their service. Instead of signing up with Pathway via their website and sending in your saliva sample through the mail, you could do the thing right there in your local drugstore. Health reporter Rob Stein at the Washington Post did a story on the Pathway-Walgreens deal. The story appeared in the May 11 edition of the newspaper. By way of researching it, Stein called the FDA to ask them for a quote. …The call, however, woke the FDA from their dogmatic slumbers. …The regulocrats lumbered into action. A letter went out to Pathway warning them that their test was a “medical device” likely subject to FDA oversight and pre-marketing approval. Hearing of this, Walgreens canceled the deal with Pathway. Close behind the FDA, like jackals following tigers, came Congress. Henry Waxman, head of the House Energy and Commerce Committee, demanded a comprehensive document dump from three of the firms — every letter, every lab report, every e-mail. Last week the FDA escalated the war, sending letters out to five more of the firms (23andMe, Navigenics, DeCode, Illumina, and Knome) couched in similar terms to the original Pathway letter. …The logic of classifying these DNA scans as “medical devices” bears a closer look. What actually is a “medical device”? Answer: A medical device is anything the FDA declares to be a medical device. …You might still think it’s a bit of a stretch to call these tests “medical devices.” They are, after all, merely informational. Consumers are not being dosed with anything, or having anything attached to or implanted in their bodies, nor even inserted into their mouths for purposes of tongue depression. “Medical device”? Huh? …Lest you should think this is a straightforward tale of power-crazed regulators and tax-hungry politicians killing off an infant industry, please let it be noted that Big Government is by no means the only predator that struggling start-ups must face. There is also Big Business. In seeking to widen its regulatory scope, the FDA has some support from big, established biotech companies. Back in 2008, biotech giant Genentech petitioned the FDA to expand its authority into products involving “laboratory-developed tests” (LDTs). An LDT is one with an expert in the loop. An example of a non-LDT would be a home pregnancy test — no expert between test and interpretation. LDTs are more lightly regulated than non-LDTs, for understandable reasons. …It was natural for Genentech and other established companies to look with disfavor on impertinent startups taking advantage of regulatory loopholes. Big Business is just as capable of hating entrepreneurial startups as is Big Government. A business can only lobby, though. Government can act. ….The U.S.A. is a real nice place to have a job in government, and still a pretty nice place to work for a big corporation — especially one designated “too big to fail.” For the start-up entrepreneur in an ideologically fraught field, however, the environment is increasingly hostile. Why do they even bother?

Read Full Post »

Barack Obama and Angela Merkel are the two main characters in what is being portrayed as a fight between American “stimulus” and European “austerity” at the G-20 summit meeting in Canada. My immediate instinct is to cheer for the Europeans. After all, “austerity” presumably means cutting back on wasteful government spending. Obama’s definition of “stimulus,” by contrast, is borrowing money from China and distributing it to various Democratic-leaning special-interest groups.
 
But appearances can be deceiving. Austerity, in the European context, means budget balance rather than spending reduction. As such, David Cameron’s proposal to boost the U.K.’s value-added tax from 17.5 percent to 20 percent is supposedly a sign of austerity even though his Chancellor of the Exchequer said a higher tax burden would generate “13 billion pounds we don’t have to find from extra spending cuts.”
 
Raising taxes to finance a bloated government, to be sure, is not the same as Obama’s strategy of borrowing money to finance a bloated government. But proponents of limited government and economic freedom understandably are underwhelmed by the choice of two big-government approaches.
 
What matters most, from a fiscal policy perspective, is shrinking the burden of government spending relative to economic output. Europe needs smaller government, not budget balance. According to OECD data, government spending in eurozone nations consumes nearly 51 percent of gross domestic product, almost 10 percentage points higher than the burden of government spending in the United States.
 
Unfortunately, I suspect that the “austerity” plans of Merkel, Cameron, Sarkozy, et al, will leave the overall burden of government relatively unchanged. That may be good news if the alternative is for government budgets to consume even-larger shares of economic output, but it is far from what is needed.
 
Unfortunately, the United States no longer offers a competing vision to the European welfare state. Under the big-government policies of Bush and Obama, the share of GDP consumed by government spending has jumped by nearly 8-percentage points in the past 10 years. And with Obama proposing and/or implementing higher income taxes, higher death taxes, higher capital gains taxes, higher payroll taxes, higher dividend taxes, and higher business taxes, it appears that American-style big-government “stimulus” will soon be matched by European-style big-government “austerity.”
 
Here’s a blurb from the Christian Science Monitor about the Potemkin Village fiscal fight in Canada:

This weekend’s G-20 summit is shaping up as an economic clash of civilizations – or at least a clash of EU and US economic views. EU officials led by German chancellor Angela Merkel are on a national “austerity” budget cutting offensive as the wisest policy for economic health, ahead of the Toronto summit of 20 large-economy nations. Ms. Merkel Thursday said Germany will continue with $100 billion in cuts that will join similar giant ax strokes in the UK, Italy, France, Spain, and Greece. EU officials say budget austerity promotes the stability and market confidence that are prerequisites for their role in overall recovery. Yet EU pro-austerity statements in the past 48 hours are also defensive – a reaction to public statements from US President Barack Obama and G-20 chairman Lee Myung-bak, South Korea’s president, that the overall effect of national austerity in the EU will harm recovery. They are joined by US Treasury Secretary Tim Geithner, investor George Soros, and Nobel laureate and columnist Paul Krugman, among others, arguing that austerity works against growth, and may lead to a recessionary spiral.

Read Full Post »

I did a post yesterday about the IRS screwing up and sending housing tax credits to prison inmates. Apparently, the 100,000 bureaucrats at the IRS were unable to put 2 and 2 together and realize that jailbirds – by definition – are not buying new homes. I also appeared on MSNBC to talk about the issue, and took the opportunity to explain that much of the blame belongs with politicians who created a tax code that nobody understands.

Read Full Post »

Regular readers of this blog know that big corporations often are enemies of free markets and individual liberty. So it is hardly suprising to know that the Business Roundtable, a lobby representing CEOs of major companies, supported the wasteful and ineffective stimulus pprogram in 2009 and the bloated new healthcare entitlement in 2010. Big companies, after all, are quite proficient at working the system to obtain unearned wealth and to rig the rules against smaller competitors.
 
What is surprising, however, is that representatives of that organization now have the chutzpah to complain about a “hostile environment for investment and job creation.” Equally galling, the group has published a document called “Policy Burdens Inhibiting Economic Growth.” We’ve all heard the joke about the guy who murders his parents and then asks the court for mercy because he’s an orphan. The Business Roundtable has adopted that strategy, except this time taxpayers are the butt of the joke. Here’s an excerpt from the Washington Post report:
 
The chairman of the Business Roundtable, an association of top corporate executives that has been President Obama’s closest ally in the business community, accused the president and Democratic lawmakers Tuesday of creating an “increasingly hostile environment for investment and job creation.” Ivan G. Seidenberg, chief executive of Verizon Communications, said that Democrats in Washington are pursuing tax increases, policy changes and regulatory actions that together threaten to dampen economic growth and “harm our ability . . . to grow private-sector jobs in the U.S.” …The final straw, said Roundtable president John Castellani, was the introduction of two pieces of legislation, now pending in Congress, that the group views as particularly bad for business. One, a provision of the administration’s financial regulation overhaul, would make it easier for shareholders to nominate corporate board members. The other would raise taxes on multinational corporations. The rhetoric accompanying the tax proposals has been particularly harsh, Castellani said, with Democrats vowing to campaign in this fall’s midterm elections on a platform of punishing companies that move jobs overseas. …Seidenberg polled the members of the Business Roundtable and a sister organization, the Business Council. The result was a 54-page document, delivered to Orszag on Monday, chock full of bullet points about actions taken or considered by a wide array of executive agencies, including the White House Middle Class Task Force and the Food and Drug Administration. We believe the cumulative effect of these proposals will help defeat the objectives we all share — reducing unemployment, improving the competitiveness of U.S. companies and creating an environment that fosters long-term economic growth,” Seidenberg wrote in a cover letter for the document, titled “Policy Burdens Inhibiting Economic Growth.”

Read Full Post »

It’s been amusing, in an I-told-you-so fashion, to follow the fiscal crises in Greece, Spain, and other European welfare states.And I feel like a voyeuristic ghoul as I observe the incredibly misguided bailout policies being adopted by the political elites (who are trying to bail out the business elites who made silly loans to corrupt nations in Southern Europe). But I’m not sure how to describe my emotions (dumbfounded fascination?) about the latest bad idea emanating from Europe – to have a fiscal federation that would give bureaucrats in Brussels power over national budgets. It’s quite possible that this would result in some externally-imposed discipline for a basket case such as Greece, so it would not always lead to terrible results. But most of the decisions would be bad, particularly since the Euro-crats would use new powers to curtail tax competition in order to enhance the ability of governments to impose bad tax policy in order to seize more money. Moreover, fiscal centralization would exacerbate the main problem in Europe by creating a new avenue – cross-border subsidies – for people who want to mooch by getting access to other people’s money. The Wall Street Journal Europe has a good editorial on the issue:
Of all the possible responses to Europe’s sovereign debt woes, the notion of centralizing fiscal authority in Brussels may well be the most destructive. But that was exactly what European Central Bank President Jean-Claude Trichet proposed in testimony before the European Parliament Monday. Mr. Trichet’s idea is that an independent body within the European Commission should have broad power to sanction national governments for fiscal or macroeconomic policies that threatened the stability of the euro. This would amount, in Mr. Trichet’s words, to the “equivalent of a fiscal federation” for the euro zone. Mr. Trichet has spent nearly 40 years as a civil servant in one form or another, which may explain his belief that Europe’s budgetary problems can be solved by technocrats. …Fiscal centralization would also undermine competition between different fiscal and macroeconomic policies within the euro zone. That would delight some countries, and probably some at the European Commission as well. During this crisis, French Finance Minister Christine Lagarde has criticized Germany for becoming too competitive for the euro zone’s own good. And a decade ago, France was among the euro-zone countries that attacked Ireland for lowering its corporate income-tax rate to 12.5% to attract investment. …Ireland’s 12.5% corporate tax rate was an experiment that contributed to a lowering of rates around the world in the succeeding years.

Read Full Post »

There really isn’t much I can add to this story in USA Today about the IRS giving money to prisoners. Yes, it is a story about typical government incompetence. But it also shows the inevitable problems that occur when government engages in industrial policy and social engineering via the tax code. Let’s call this argument 1,549,628 in favor of the flat tax.

Despite efforts by the IRS to combat scams, thousands of individuals — including nearly 1,300 prison inmates — have defrauded the government of millions of dollars in home buyer credits, Treasury’s inspector general reported Wednesday. …1,295 prisoners, including 241 serving life sentences, received $9.1 million in credits, even though they were incarcerated at the time they reported that they purchased their home. These prisoners didn’t file joint returns, so their claims could not have been the result of purchases made with or by their spouses, the report said. 2,555 taxpayers received $17.6 million in credits for homes purchased before the dates allowed by law. 10,282 taxpayers received credits for homes that were also used by other taxpayers to claim the credit. In one case, 67 taxpayers used the same home to claim the credit.

Read Full Post »

Jeff Jacoby righteously – and rightfully – condemns the moral perversion that allows people to overlook the barbaric cruelty and oppression of communism.

If Jose Saramago, the Portuguese writer who died on Friday at 87, had been an unrepentant Nazi for the last four decades, he would never have won international acclaim or received the 1998 Nobel Prize for Literature. Leading publishers would never have brought out his books, his works would not have been translated into more than 20 languages, and the head of Portugal’s government would never have said on his death — as Prime Minister José Sócrates did say last week — that he was “one of our great cultural figures and his disappearance has left our culture poorer.” But Saramago wasn’t a Nazi, he was a communist. And not just a nominal communist, as his obituaries pointed out, but an “unabashed” (Washington Post), “unflinching’’ (AP), “unfaltering’’ (New York Times) true believer. A member since 1969 of Portugal’s hardline Communist Party, Saramago called himself a “hormonal communist’’ who in all the years since had “found nothing better.” …the idea that good people can be devoted communists is grotesque. The two categories are mutually exclusive. There was a time, perhaps, when dedication to communism could be absolved as misplaced idealism or naiveté, but that day is long past. After Auschwitz and Babi Yar, only a moral cripple could be a committed Nazi. By the same token, there are no good and decent communists — not after the Gulag Archipelago and the Cambodian killing fields and Mao’s “Great Leap Forward.’’ Not after the testimonies of Alexander Solzhenitsyn and Armando Valladares and Dith Pran. In the decades since 1917, communism has led to more slaughter and suffering than any other cause in human history. Communist regimes on four continents sent an estimated 100 million men, women, and children to their deaths — not out of misplaced zeal in pursuit of a fundamentally beautiful theory, but out of utopian fanaticism and an unquenchable lust for power. Mass murder and terror have always been intrinsic to communism. “Many archives and witnesses prove conclusively,’’ wrote Stéphane Courtois in his introduction to “The Black Book of Communism,’’ a magisterial compendium of communist crimes first published in France in 1997, “that terror has always been one of the basic ingredients of modern communism.’’ The uniqueness of the Holocaust notwithstanding, the savageries of communism and of Nazism are morally interchangeable — except that the former began much earlier than the latter, lasted much longer, and shed far more blood.

Read Full Post »

This new video from the Institute for Justice celebrates the backlash against the Supreme Court’s reprehensible Kelo decision that allowed politicians to seize private property for the benefit of commercial developers and other campaign contributors.

The best part of the video comes shortly before the three-minute mark, when the narrator notes that the corrupt politicians of New London, CT, have not received any additional tax revenue as a result of stealing Susette Kelo’s house. Sometimes, as I noted in an earlier blog entry, there is poetic justice.

Read Full Post »

There were closely-watched primaries yesterday in South Carolina and Utah. Most of the attention was on the Palmetto State, where an Indian-American woman won the GOP nomination for governor and an African-American won the nomination for the first district congressional seat. Both are positive developments since the respective candidates appear to be solid, limited-government conservatives. But the most important race, in my humble opinion, was the battle to unseat incumbent GOP Congressman Bob Inglis, who was a TARP-supporting, pro-tax Republican. As this Politico story indicates, he got completely stomped as voters wisely recognized that he had become a fan of big government.
Rep. Bob Inglis (R-S.C) became the third House member and the fifth member of Congress to be defeated this year, losing by an overwhelming margin Tuesday in a GOP primary that served as a referendum on Inglis’s conservative credentials. …After finishing a distant second in the June 8 primary, Inglis’s loss did not come as a surprise. Still, the margin of defeat was stunning: Spartanburg County Solicitor Trey Gowdy, who had slammed Inglis for his positions on everything from the Iraq war troop surge to drilling in the Arctic National Wildlife Refuge in an effort to paint the congressman as insufficiently conservative, won 71 percent to Inglis’s 29 percent. …Before the ballots had been cast Tuesday, many Republican operatives in Washington and South Carolina had written off the prospect of an Inglis victory, chalking up his seemingly inevitable loss to a combination of an anti-incumbent tide and local frustration with his departures from conservative orthodoxy. …As town halls raged last summer, Inglis came under glaring criticism from conservative activists after he told a room of angry town hall attendees to “turn off” Glenn Beck.

Read Full Post »

As the chart below indicates, the United Kingdom has a large budget deficit solely because government spending has increased to record levels (OECD data). Unfortunately, the new Tory-Liberal coalition government has decided that taxpayers should be punished for all the over-spending that occurred when the Labor government was in charge.

The Telegraph reports that the top capital gains rate will jump to 28 percent, up from 18 percent (the new government foolishly thinks this will result in more revenue). But the biggest change is that the value-added tax will increase to 20 percent. According to Business Week, the Chancellor of the Exchequer (the British equivalent of Treasury Secretary) actually bragged that the VAT increase was good since it would generate “13 billion pounds we don’t have to find from extra spending cuts.” Here are some further details from Business Week about the disappointing fiscal news from London.

British Chancellor of the Exchequer George Osborne increased the value-added tax rate to 20 percent from 17.5 percent in the first permanent change to the levy on sales of goods and services in almost two decades. “The years of debt and spending make this unavoidable,” Osborne told Parliament in London in his emergency budget today as he announced a package of spending cuts and tax increases to cut the U.K.’s record deficit. …“We understand that the budget deficit needs to be tackled but we think the focus needs to be cutting public spending over tax rises,” Krishan Rama, a spokesman for the industry lobby group, the British Retail Consortium, said in a telephone interview yesterday. …VAT has remained at 17.5 percent in every year except one since 1991, when John Major’s Conservative administration raised the rate from 15 percent to help plug a deficit.

The one tiny glimmer of good news from the budget is that the corporate tax rate is being reduced from 28 percent to 24 percent, which is probably a reflection of the strong and virtuous tax competition that is forcing greedy governments to lower tax rates in order to attract and/or retain business activity. There also is a two-year pay freeze for government bureaucrats, but this is hardly good news since a 30-percent pay cut is needed to bring compensation down to private sector levels.

Read Full Post »

These are the issues I discuss in this wide-ranging Fox Business News interview.

Read Full Post »

I’ve frequently argued that the main purpose of “taxing the rich” is not to collect more revenue. Smart leftists, after all, understand that there are very strong Laffer Curve effects at the top of the income scale since investors and entrepreneurs have considerable ability to control the timing, level, and composition of their income. So if higher tax rates on upper-income taxpayers don’t collect much revenue, why is the left so insistent on class-warfare taxation? The answer, I think, is that soak-the-rich taxes are a “loss-leader” that politicians impose in order to pave the way for higher taxes on the middle class. Indeed, I made this point in my video on class warfare taxation, and noted that are not enough rich people to finance big government. As such, politicians that want to tax the middle class hope to soften opposition among ordinary people by first punishing society’s most productive people. We already know that tax rates on the so-called rich will jump next January thanks to higher income tax rates, higher capital gains tax rates, more double taxation of dividends, and higher death taxes. Now the politicians are preparing to drop the other shoe. Excerpted below is a blurb from the Washington Post about a member of the House Democratic leadership urging middle-class tax hikes, and let’s not forgot all the politicians salivating for a value-added tax.

Tax cuts that benefit the middle class should not be “totally sacrosanct” as policymakers try to plug the nation’s yawning budget gap, House Majority Leader Steny Hoyer (D-Md.) said Monday, acknowledging that it would be difficult to reduce long-term deficits without breaking President Obama’s pledge to protect families earning less than $250,000 a year. Hoyer, the second-ranking House Democrat, said in an interview that he expects Congress to extend middle-class tax cuts enacted during the Bush administration that are set to expire at the end of this year. But he said the extension should not be permanent. Hoyer said he plans to call for a “serious discussion” about the affordability of the tax breaks. …The overarching point in Hoyer’s remarks is the need for a bipartisan plan that includes spending cuts and tax increases, in the tradition of deficit-reduction deals cut under former presidents George H.W. Bush and Bill Clinton. Drafting such a plan would require a reexamination of tax cuts enacted in 2001 and 2003, Hoyer says — cuts that benefited most taxpayers.

Read Full Post »

I was interviewed by CNN about the issues relating to Congressman Barton’s apology to BP. The network only used one of my quotes from the interview, and I was happy to see that I was not taken out of context (always a danger when you are taped in advance).

To augment my limited quote from the story, my main gripe with the $20 billion fund is that compensation claims should be part of the regular legal process and not the result of pressure from the White House. That being said, I won’t be too agitated about the fund – assuming that the money does not become a piggy bank for White House vote buying. On the broader issue of BP and the spill, protecting people from harm (either intentional harm, which is addressed by the criminal justice system, or unintentional harm, which should be addressed through the tort system) is one of the few legitimate functions of government.

One final comment. The CNN story, shortly after the 2:00 mark, makes it appear as if polling data shows the American people favor Obama’s approach. That is not the case. The polling data simply shows that people don’t think the spill is under control and that they think BP should pay all damages. That’s not contrary to Obama’s position, but neither is it contrary to the libertarian position.

Read Full Post »

A new study from the Mercatus Center at George Mason University examines some of the academic research about the relationship between government spending and economic performance. Reinforcing many of the points I made in my theory and evidence videos, the GMU study finds that big government undermines growth:

Although the studies are not all consistent, historical evidence suggests an undesirable, long-run effect from government spending: it crowds out private-sector spending and uses money in unproductive ways. …Professor Emeritus of Law at George Mason University Gordon Tullock suggests that politicians and bureaucrats try to gain control of as much of the economy as possible.5 Moreover, demand for government resources by the private sector leads to misallocation of resources through “rent seeking”—the process by which industries and individuals lobby the government for money. Rather than spend money where it is most needed, legislators instead allocate money to favored groups. …A 1974 paper by Stanford’s Gavin Wright found that political attempts to maximize votes explained between 59 and 80 percent of the difference in per capita federal spending to the states during the Great Depression. …An NBER paper that analyzes a panel of OECD countries found that government spending also has a strong negative correlation with business investment. Conversely, when governments cut spending, there is a surge in private investment. …Additionally, in a study of 76 countries, the University of Vienna’s Dennis C. Mueller and George Mason University’s Thomas Stratmann found a statistically significant negative correlation between government size and economic growth.

Read Full Post »

American taxpayers are not the only ones getting ripped off by lavish pay and perks for bureaucrats. The Daily Mail reports on a new study about public sector pay in the United Kingdom:

Public sector employees work nine years less than their private sector counterparts but are paid 30 per cent more, a bombshell report reveals today. Extraordinary research tells a tale of two Britains – a state sector awash with taxpayers’ cash while the rest of the economy struggles to stay afloat. Public sector workers enjoy better pay than those in the private sector, as well as better pensions, shorter hours, and earlier retirement. Over their lifetimes, those in the private sector work 23 per cent longer – equivalent to an extra nine years and ten weeks – than public sector employees. This is thanks to a combination of shorter hours, more time off and earlier retirement. The findings explode once and for all the old idea that public sector workers have better job security and gold-plated pensions because they have lower salaries. …The report, by centre-Right think tank Policy Exchange, also found that the chance of being made compulsorily redundant in the civil service is an astonishing 0.00007 per cent. Generous pension schemes in the state sector are now worth up to 15 per cent on top of salary, the report says, while public sector pay costs have soared by more than a third in real terms over the last seven years – three times faster than in the private sector. …etween 1997 and 2007 public sector productivity fell, while productivity in the private sector increased by nearly 28 per cent – leaving the former only two-thirds as productive as the latter. Between 2002 and 2009, the number working in the public sector increased nearly five times more quickly than numbers in the private sector.

Read Full Post »

Older Posts »

Follow

Get every new post delivered to your Inbox.

Join 2,403 other followers