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Archive for the ‘Collectivism’ Category

Back in 2012, I shared a sadly amusing image about how the modern political process has degenerated into two wolves and a sheep voting what to have for lunch.

I was making an argument in that column against majoritarianism (and that is a critical issue, as explained in this video), but there’s also a very important moral component to this debate.

Walter Williams addresses this issue in his latest column. He starts by asking a hypothetical question.

Suppose I saw a homeless, hungry elderly woman huddled on a heating grate in the dead of winter. To help the woman, I ask somebody for a $200 donation to help her out. If the person refuses, I then use intimidation, threats and coercion to take the person’s money. I then purchase food and shelter for the needy woman. My question to you: Have I committed a crime? I hope that most people would answer yes. It’s theft to take the property of one person to give to another.

In other words, it doesn’t matter how Person A wants to spend money, it’s wrong for Person A to steal from Person B.

Walter than asks some critical follow-up questions, all of which are designed to make readers realize that theft doesn’t magically become acceptable simply because several people want to take Person B’s money.

Would it be theft if I managed to get three people to agree that I should take the person’s money to help the woman? What if I got 100, 1 million or 300 million people to agree to take the person’s $200? Would it be theft then? What if instead of personally taking the person’s $200, I got together with other Americans and asked Congress to use Internal Revenue Service agents to take the person’s $200? The bottom-line question is: Does an act that’s clearly immoral when done privately become moral when it is done collectively and under the color of law? Put another way, does legality establish morality?

Amen. Walter is exactly right.

And this is a point I need to internalize.

I’m often writing about the economic evidence for smaller government, but I suspect advocates of economic liberty and smaller government won’t win the debate unless we augment our arguments by also making the moral case against government-sanctioned theft.

And perhaps one way of getting this point across is to educate people about the fact that we used to have a very small federal government with little or no redistribution. Walter elaborates.

For most of our history, Congress did a far better job of limiting its activities to what was both moral and constitutional. As a result, federal spending was only 3 to 5 percent of the gross domestic product from our founding until the 1920s… James Madison, the acknowledged father of our Constitution, said, “Charity is no part of the legislative duty of the government.” In 1794, when Congress appropriated $15,000 to assist some French refugees, Madison stood on the floor of the House of Representatives to object, saying, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”

Here’s the bottom line according to Professor Williams.

We’ve become an immoral people demanding that Congress forcibly use one American to serve the purposes of another. Deficits and runaway national debt are merely symptoms of that larger problem.

Though I would slightly disagree with the way Walter phrased it.

I would argue that a bloated government is the symptom of growing immorality. Deficits and debt are then symptoms of that problem.

P.S. I want to quickly address another issue.

When I quote Art Laffer, I’m almost always going to be in agreement with what he says.

But, as I wrote last year, we’re in disagreement on the issue of whether states should be allowed to tax sales that take place outside their borders.

And now Art has a short video that rubbed me the wrong way.

He endorses legislation that would create a sales tax cartel and says – right at the start of this video – that this is because “states should have the right to be able to tax whatever they want to within their state.”

I agree, but this is why I’m against the so-called Marketplace Fairness Act. That legislation would allow state governments to tax outside their borders.

Simply stated, a merchant in one state should not be forced to collect taxes for a government in another state.

P.P.S. This also explains why FATCA is such horrible legislation. It is an effort by the U.S. government to coerce banks in other nations to enforce bad IRS law.

If we care about liberty, we should make sure the power of government is constrained by borders.

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We’re supposed to believe that President Obama is some sort of expert on constitutional law.

Richard Epstein was not overly impressed by his track record as a lecturer at the University of Chicago, and here’s a good parody of the President’s selective view of the Bill of Rights.

Likewise, we now have a Michael Ramirez cartoon that captures the spirit of the President inaugural address earlier this week.

Collective Action Cartoon

If you’re amused – in a tragic way – by cartoons showing the huge gap between Obama’s ideology and America’s founding principles, you’ll doubtlessly enjoy this and this.

And in the spirit of cooperation, I even drafted a new Declaration of Dependency to help Obama explain his vision.

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Like Sweden and Denmark, Germany is a semi-rational welfare state. It generally relies on a market-oriented approach in areas other than fiscal policy, and it avoided the Keynesian excesses that caused additional misery and red ink in America (though it is far from fiscally conservative, notwithstanding the sophomoric analysis of the Washington Post).

Nonetheless, it’s difficult to have much optimism for Europe’s future when the entire political establishment of Germany blindly thinks there should be more centralization, bureaucratization, and harmonization in Europe.

The EU Observer has a story about the agenda of the de facto statists in the Christian Democratic party who currently run Germany.

“Harmonization über alles!”

…what Merkel and her party are piecing together is a radical vision of the EU in a few years time – a deep fiscal and political union. The fiscal side involves tax harmonisation, a tightly policed Stability and Growth Pact with automatic sanctions for countries that breach debt and deficit rules, and the possibility of an EU Commissioner responsible for directly intervention to oversee budgetary policy in a crisis-hit country. …On the institutional side, the CDU backs a directly elected President of the European Commission as well as clearly establishing the European Parliament and Council of Ministers as a bi-cameral legislature with equal rights to initiate EU legislation with the Commission.

Keep in mind that the Christian Democrats are the main right-of-center party in Germany, yet the German political spectrum is so tilted to the left that they want tax harmonization (a spectacularly bad idea) and more centralization.

Heck, even the supposedly libertarian-oriented Free Democratic Party is hopelessly clueless on these issues.

Not surprisingly, the de jure statists of Germany have the same basic agenda. Here’s some of what the article says about the agenda of the Social Democrat and Green parties.

…its commitments to establish joint liability eurobonds and a “common European fiscal policy to ensure fair, efficient and lasting receipts” would also involve a shift of economic powers to Brussels. While both sides have differing ideological positions on the political response to the eurozone crisis – they are talking about more Europe, not less.

The notion of eurobonds is particularly noteworthy since it would involve putting German taxpayers at risk for the reckless fiscal policies in nations such as Greece, Italy, and Spain. That’s only a good idea if you think it’s smart to co-sign a loan for your unemployed and alcoholic cousin with a gambling addiction.

All this makes me feel sorry for German taxpayers.

Then again, if you look at the long-run fiscal outlook of the United States, I feel even more sorry for American taxpayers. Thanks to misguided entitlement programs, we’re in even deeper trouble than Europe’s welfare states.

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I made a serious point the other day about how government plays a very important role in the lives of entrepreneurs.

But since I was talking about the staggering burden of red tape and regulation, I wasn’t being very supportive of the President’s assertion that government deserves a big chunk of the credit when a business is successful.

This cartoon makes the same point, but adds taxation to the mix.

As far as I recall (I sound like a politician under oath when I write something like that), this is the first Branco cartoon I’ve used, but I think it’s the best one in this post, so I’m looking forward to more of his (her?) work.

Regular readers know about Michael Ramirez, of course, and he has an amusing take on the you-didn’t-build-that controversy.

I’ve used lots of Ramirez cartoons over the past few years, and you can enjoy some of his work here, here, here, here, here, here, here, here, herehereherehereherehere, and here.

The Obama campaign has been complaining that the President’s words were misinterpreted, so this Eric Allie cartoon is quite amusing and appropriate.

You can laugh at more Allie cartoons here, here, here, and here.

Fortunately for Obama, he has some allies to help him out, as Lisa Benson reminds us.

More funny Lisa Benson cartoons can be seen here, here, herehere, here, here, herehere, and here.

Last but not least, we have another Allie cartoon. I think this is the first time I’ve used two cartoons by the same person, but I think you’ll agree they’re worth sharing.

This gives me an opportunity to end on a serious note. The Obama campaign is asserting that the President was simply stating that private sector prosperity is made possible by the provision of “public goods” such as roads and bridges.

This is a perfectly fair point, as I explain in this video about the Rahn Curve.

But what Obama conveniently overlooks is that spending on so-called public goods is only about 10 percent of the federal budget. The vast majority of government spending is for unambiguously harmful outlays on transfers, consumption, and entitlements.

Which is why the second Allie cartoon is so good. Even when government does something that is theoretically good, it causes a lot of collateral damage because of the excessive size and scope of the welfare state.

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As part of his campaign to expand the size and scope of the federal government (and to justify his advocacy of class-warfare taxation), President Obama has been asserting that all of us benefit from government spending.

It’s why he now echoes Elizabeth Warren’s claim that entrepreneurs owe their success to government programs and activities.

It’s also why he cites the Internet as an example of wise, prudent, and far-seeing government intervention.

Sounds like a powerful example. The kind of anecdote that leaves libertarians momentarily speechless.

But there’s just one small, tiny, itsy-bitsy, teeny-weeny problem with Obama’s example. It ain’t true.

Here are some excerpts from a first-rate column by Gordon Crovitz in the Wall Street Journal.

It’s an urban legend that the government launched the Internet. …The truth is a more interesting story about how innovation happens—and about how hard it is to build successful technology companies even once the government gets out of the way. …If the government didn’t invent the Internet, who did? Vinton Cerf developed the TCP/IP protocol, the Internet’s backbone, and Tim Berners-Lee gets credit for hyperlinks. …But full credit goes to the company where Mr. Taylor worked after leaving ARPA: Xerox. It was at the Xerox PARC labs in Silicon Valley in the 1970s that the Ethernet was developed to link different computer networks. Researchers there also developed the first personal computer (the Xerox Alto) and the graphical user interface that still drives computer usage today. …So having created the Internet, why didn’t Xerox become the biggest company in the world? The answer explains the disconnect between a government-led view of business and how innovation actually happens. Executives at Xerox headquarters in Rochester, N.Y., were focused on selling copiers. From their standpoint, the Ethernet was important only so that people in an office could link computers to share a copier. …As for the government’s role, the Internet was fully privatized in 1995, when a remaining piece of the network run by the National Science Foundation was closed—just as the commercial Web began to boom. Economist Tyler Cowen wrote in 2005: “The Internet, in fact, reaffirms the basic free market critique of large government. Here for 30 years the government had an immensely useful protocol for transferring information, TCP/IP, but it languished. . . . In less than a decade, private concerns have taken that protocol and created one of the most important technological revolutions of the millennia.”

It’s nice to see this urban legend of effective government punctured weakened, but let’s close out this post with a thought experiment. Let’s assume that the federal government deserves the lion’s share of the credit for the Internet.

Our Tax Dollars at Work?

Or we’re sometimes told that NASA generated big benefits, such as Tang and microwave ovens, and maybe those claims are true.

Would any of this justify Obama’s proposals to expand the size and cost of the federal government?

Since I’ve actually explained in one of my videos that there are some forms of government spending – such as capital spending – that can generate positive rates of return, this is an empirical question.

But here’s where Obama’s argument breaks down. If you look at federal outlays for “major public physical capital investment” and “conduct of research and development,” they add up to less than 10 percent of the federal budget.

So the parts of the budget that theoretically might generate some positive spin-offs are trivial. The vast majority of spending, by contrast, is consumed by inefficient tax-and-transfer entitlement programs.

And what are Obama’s two biggest “accomplishments” since taking office? The so-called stimulus and Obamacare, two pieces of legislation that expand the unambiguously unproductive portions of the federal budget.

In other words, like most other politicians, Obama is like an unethical used car salesman. He lures the unsuspecting onto the lot with glib talk of good roads and the Internet, but they wind up driving away with a lemon known as the welfare state.

P.S. Speaking of Elizabeth Warren, here’s an amusing parody of her views as they apply to the world of intimacy. And here’s a video mocking her “Soul Man” claims of Indian ancestry.

P.P.S. Just like I recently apologized to hyenas and gang members, I now apologize to used car salesmen for putting them on the same level of politicians.

P.P.P.S. The government may not have invented the Internet, but it sure is anxious to tax it, with everyone from state politicians to U.N. bureaucrats trying to stick their hands in the cookie jar.

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Addendum: My Cato colleague Jim Harper and others tell me that government played a bigger role than argued by Crovitz, so the first part of this post overstates the argument against government as incubator. But that underscores the importance of what I wrote in the concluding part of the post.

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Being a libertarian, I’m used to disappointment. So when something actually goes according to plan, I get very happy.

On that basis, I should be utterly and deliriously overjoyed about my endorsement of Francois Hollande to be President of France.  I wanted him to win, in part because he would engage in statist experiments that would help discredit bad policy.

Well, all my dreams are being fulfilled. Here’s some of a new report in the Wall Street Journal.

French Socialist President François Hollande is set to increase the minimum wage by more than inflation, betting consumers will help revive the country’s stalling economy, while his government levies more taxes on the wealthy and large corporations in a bid to reduce the budget deficit. …The government also is preparing to unveil tax increases to make good on its pledge to reduce the budget deficit to 4.5% of yearly output this year and 3% in 2013. The list includes a new tax on dividends, a new top income-tax bracket of 75% for people earning more than €1 million a year, and increases in the wealth and inheritance taxes.

It’s not terribly surprising that Hollande’s going the fully Monty with higher taxes. Indeed, I’ve already mocked those plans.

But I’m surprised that he’s pushing a higher minimum wage as well, particularly with unemployment already at high levels. This video explains why minimum wages undermine job creation and hurt the less fortunate, but Hollande apparently thinks his plan will stimulate growth.

Other European nations have become more rational and now understand that labor markets need to be more flexible.

The Smic increase and the fiscal plan are in line with Mr. Hollande’s election promises but position France at odds with most other euro-zone nations, which are seeking to keep a lid on labor costs to improve their competitiveness and rein in their budget deficits through spending cuts rather than tax increases.

The comment about “spending cuts” is nonsensical, however. Even though traditionally left-leaning organizations such as the World Bank have concluded that government is far too big in Europe, most governments have imposed huge tax increases. Only the Baltic nations have focused on spending cuts.

As such, we can expect more news like this in France.

In France, economic growth has evaporated, with national statistical office Insee forecasting a further rise in the jobless rate, from 10%. Flag carrier Air France last week said it needs to shed more than 5,000 jobs, around 10% of its workforce, by the end of next year.

The nation’s dwindling productive class, meanwhile, will get even smaller since we’re already seeing evidence that investors and entrepreneurs are going to escape to other nations with less punitive tax regimes.

I joked last month that Obama would never be able to make America as socialist as France, and Hollande is confirming that tongue-in-cheek prediction with his crazy policies.

But I should state that I don’t actually want the French people to suffer. But if they elect bad people who impose bad policy, then I want to make lemonade out of lemons and at least help the rest of the world learn from their mistakes.

As my friend (and soon-to-be American citizen) Veronique de Rugy explained in a video, we don’t want America to become more like France.

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International agreements are not necessarily bad. There’s probably some sort of treaty about air traffic control rules as planes cross national borders, and even I can’t think of a reason to get worried about such a pact.

But that would be the exception that proves the rule. International treaties usually are bad because they are vehicles for governments to engage in cartel-like behavior. The Paris-based OECD’s so-called Multilateral Convention on Mutual Administrative Assistance in Tax Matters, for instance, is designed to become an International Tax Organization – controlled by high-tax nations that want to stifle tax competition.

Another example is the Law of the Sea Treaty (LOST), which George Will eviscerates in his Washington Post column.

There they go again. Like those who say climate change is an emergency too obvious and urgent to allow for debate, some proponents of the United Nations Convention on the Law of the Sea, a.k.a. the Law of the Sea Treaty (LOST), say arguments against it are nonexistent. Secretary of State Hillary Rodham Clinton says any such arguments “no longer exist and truly cannot even be taken with a straight face.” …Clinton’s insufferable tone is not a reason for the necessary 34 senatorsto reject ratification. It is, however, a reason for enjoying their doing so. …For centuries there has been a law of the sea. There might be marginal benefits from LOST’s clarifications and procedures for resolving disputes arising from that law — although China and the nations involved in contentious disputes about the South China Sea have all ratified LOST, not that it seems to matter. But those hypothetical benefits are less important than LOST’s actual derogation of U.S. sovereignty by empowering a U.N. bureaucracy — the International Seabed Authority (ISA), based in Jamaica — to give or withhold permission for mining, and to transfer perhaps hundreds of billions of dollars of U.S. wealth to whatever nation it deems deserving — “on the basis of equitable sharing criteria, taking into account the interests and needs of developing states, particularly the least developed and the land-locked among them.” Royalties paid by nations with the talent and will for extracting wealth from the seabed will go to nations that have neither, on the principle that what is extracted from 56 percent of the earth’s surface is, the United Nations insists, “the common heritage of mankind.” And never mind U.S. law, which says that wealth gained from the continental shelf — from which the ISA would seek royalty payments — is supposed to be held by the U.S. government for the benefit of the American people. …Donald Rumsfeld…opposes LOST because it “remains a sweeping power grab that could prove to be the largest mechanism for the worldwide redistribution of wealth in human history.” It “would regulate American citizens and businesses without being accountable politically to the American people.” Which makes it shameful that the Chamber of Commerce is campaigning for LOST through an organization with the Orwellian name the American Sovereignty Campaign. If the Navy supports LOST because the civilian leadership does, fine. But if the Navy thinks it cannot operate well without LOST, we need better admirals, not better treaties. Here is an alternative proposal for enhancing the lawfulness of the seas: Keep the money LOST would transfer to ISA, and use it to enlarge the Navy.

That’s a long excerpt, but that’s because the whole piece is worth reading.

I particularly enjoy his dig at the Chamber of Commerce, which endorsed the TARP bailout and the faux stimulus and is building upon that record of failure by supporting a treaty that would undermine American companies. I know I’m being unfair since they’re sometimes on the right side, but the term “useful idiots” comes to mind.

But that’s a digression. Global governance is a very bad idea. It is pro-statism and anti-democratic. And in the case of LOST, it’s an excuse to redistribute money from America to the rest of the world.

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