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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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A couple of years ago, Newt Gingrich accused Obama of being a socialist, causing some squawking and grousing about incivility from the more sensitive types in Washington.

I jumped to the President’s defense, pointing out that Obama is a different type of statist.

I’m gratified that Thomas Sowell of Stanford University’s Hoover Institution agrees with me.

It bothers me a little when conservatives call Barack Obama a “socialist.” He certainly is an enemy of the free market, and wants politicians and bureaucrats to make the fundamental decisions about the economy. But that does not mean that he wants government ownership of the means of production, which has long been a standard definition of socialism. What President Obama has been pushing for, and moving toward, is more insidious: government control of the economy, while leaving ownership in private hands. That way, politicians get to call the shots but, when their bright ideas lead to disaster, they can always blame those who own businesses in the private sector. Politically, it is heads-I-win when things go right, and tails-you-lose when things go wrong. This is far preferable, from Obama’s point of view, since it gives him a variety of scapegoats for all his failed policies… Thus the Obama administration can arbitrarily force insurance companies to cover the children of their customers until the children are 26 years old. Obviously, this creates favorable publicity for President Obama. But if this and other government edicts cause insurance premiums to rise, then that is something that can be blamed on the “greed” of the insurance companies.

So what is the right technical description of what Obama is proposing? Well, if you allow nominal private property, but impose government control, it’s called fascism. Sowell agrees, and also adds some history for the unenlightened.

One of the reasons why both pro-Obama and anti-Obama observers may be reluctant to see him as fascist is that both tend to accept the prevailing notion that fascism is on the political right, while it is obvious that Obama is on the political left. Back in the 1920s, however, when fascism was a new political development, it was widely — and correctly — regarded as being on the political left. Jonah Goldberg’s great book “Liberal Fascism” cites overwhelming evidence of the fascists’ consistent pursuit of the goals of the left, and of the left’s embrace of the fascists as one of their own during the 1920s.Mussolini, the originator of fascism, was lionized by the left, both in Europe and in America, during the 1920s. Even Hitler, who adopted fascist ideas in the 1920s, was seen by some, including W.E.B. Du Bois, as a man of the left. …What socialism, fascism and other ideologies of the left have in common is an assumption that some very wise people — like themselves — need to take decisions out of the hands of lesser people, like the rest of us, and impose those decisions by government fiat. …Only our own awareness of the huge stakes involved can save us from the rampaging presumptions of our betters, whether they are called socialists or fascists. So long as we buy their heady rhetoric, we are selling our birthright of freedom.

All this being said, I want to reiterate something else that I wrote back in 2010. It is counterproductive to call Obama a fascist because that term is now linked to the specific form of evil produced by Hitler and the National Socialist Party.

So if you disapprove of Obama’s policies, call him a statist or a corporatist. Heck, you can say he believes in cronyism or maybe even collectivism. Those terms get across that he wants more government without causing needless controversy that distracts from the main message.

But make sure you apply the same term to Republicans who impose the same types of policies, such as Bush and Nixon.

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Haiti may be the poorest nation in the Americas. Cuba may have the dictator with the longest lifespan. But Venezuela arguably has the worst government.

Not the clownish dictator, Hugo Chavez, is trying to repeal the laws of economics. How’s that working out for him?

Well, here’s some of what the New York Times wrote.

By 6:30 a.m., a full hour and a half before the store would open, about two dozen people were already in line. They waited patiently, not for the latest iPhone, but for something far more basic: groceries. …Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition. Some residents arrange their calendars around the once-a-week deliveries made to government-subsidized stores like this one, lining up before dawn to buy a single frozen chicken before the stock runs out. Or a couple of bags of flour. Or a bottle of cooking oil. The shortages affect both the poor and the well-off, in surprising ways. A supermarket in the upscale La Castellana neighborhood recently had plenty of chicken and cheese — even quail eggs — but not a single roll of toilet paper. Only a few bags of coffee remained on a bottom shelf. Asked where a shopper could get milk on a day when that, too, was out of stock, a manager said with sarcasm, “At Chávez’s house.” At the heart of the debate is President Hugo Chávez’s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find. …many economists call it a classic case of a government causing a problem rather than solving it. Prices are set so low, they say, that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest.

Here’s a chart that I’ve used before, using international data to compare living standards in Venezuela, Argentina, and Chile since 1980. One nation (take a wild guess) has tried statism, one nation has tried a mix of statism and capitalism, and the other has tried capitalism.

And just in case you need one more reason to despise Chavez’s despotic government, the regime is copying Hitler, Stalin, Mao, and other murderous tyrants in imposing gun control.

(h/t: Greg Mankiw)

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After reading a story about economic liberalization in Cuba, I wondered (somewhat tongue in cheek) whether we should trade Obama for Castro.

I also blogged about the former socialist president of Brazil, who seemed to have more sense than Obama because he recognized that you can’t redistribute unless people first produce.

We now have another example of a foreign statist who has had an epiphany. Here’s an excerpt from a Canadian Press story about the President of Russia recognizing that big government is a recipe for stagnation.

Russian President Dmitry Medvedev on Friday challenged the legacy of his powerful predecessor, Vladimir Putin, condemning the state’s heavy role in the economy and the centralization of power at the Kremlin… “The proposition that the government is always right is manifested either in corruption or benefits to ‘preferred’ companies,” he said. “My choice is different. The Russian economy ought to be dominated by private businesses and private investors. The government must protect the choice and property of those who willingly risk their money and reputation.” …Medvedev said that the country must begin to tackle the problem immediately to avoid “the point of no return from the (economic) models that are moving the country backwards.” “Corruption, hostility to investment, excessive government role in the economy and the excessive centralization of power are the taxes on the future that we must and will scrap,” he said.

There’s a serious point to all this, of course, and it’s the fact that we know we are on a road that will lead to a Greek-style economic collapse. Yet Obama’s response is to step on the accelerator.

(h/t: Powerline)

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There’s an odd debate in the blogosphere. As happens every Thanksgiving, libertarians and conservatives take joy in pointing out that there was mass starvation and suffering during the early years of the Plymouth Colony because of a socialist economic model. Here’s what John Stossel recently wrote.

Long before the failure of modern socialism, the earliest European settlers gave us a dramatic demonstration of the fatal flaws of collectivism. Unfortunately, few Americans today know it. The Pilgrims at Plymouth Colony organized their farm economy along communal lines. The goal was to share the work and produce equally. That’s why they nearly all starved. When people can get the same return with less effort, most people make less effort. Plymouth settlers faked illness rather than working the common property. Some even stole, despite their Puritan convictions. Total production was too meager to support the population, and famine resulted. This went on for two years. “So as it well appeared that famine must still ensue the next year also, if not some way prevented,” wrote Gov. William Bradford in his diary. The colonists, he said, “began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length after much debate of things, (I) (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. And so assigned to every family a parcel of land.” In other words, the people of Plymouth moved from socialism to private farming. The results were dramatic. “This had very good success,” Bradford wrote, “for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many.”

My colleague Dan Griswold has a blog post making the same point. And here’s a new video from the prolific folks at Reason TV.

This story must bother the statists. For the first time I can remember, they tried to push back this year. A blogger called Liberal Curmudgeon attempted to puncture the supposed myth, blaming the Colony’s woes on lazy Englishmen.

The real problem, though, was that the men recruited for Jamestown and Plymouth were expecting quick and easy riches without having to work at all.

That’s an interesting theory, and Andrew Sullivan swallows it, hook, line, and sinker (apparently any criticism of Rush Limbaugh and Glenn Beck must be true).

But this argument suffers from a couple of flaws. Don Boudreaux deals with one of the problems in his post, but I have a much simpler criticism for Andrew Sullivan, the Liberal Curmudgeon, et al.

If the Plymouth Colony initially was failing because of the wrong type of people, why did those wrong people suddenly succeed once communalism was replaced with private property?

Maybe statists have a good answer to this question, but I won’t be holding my breath.

So the real lesson of Thanksgiving (at least from an economics perspective), is that incentives matter. The Pilgrims figured this out and changed course. Nearly four hundred years later, the question for today is whether Obama is similarly capable of learning from his mistakes.

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Hugo Chavez is a palpably evil thug, and he confirms this status with a new proposal to issue cards that almost certainly will be used to ration food. Left-wing despots claim that their policies put “people above profits,” but they never can explain why people (especially the masses) have much higher living standards in countries where “capitalist greed” runs rampant.

Presented by President Hugo Chávez as an instrument to make shopping for groceries easier, the “Good Life Card” is making various segments of the population wary because they see it as a furtive attempt to introduce a rationing card similar to the one in Cuba. The measure could easily become a mechanism to control the population, according to civil society groups. “We see that in short-term this could become a rationing card probably similar to the one used in Cuba,” Roberto León Parilli, president of the National Association of Users and Consumers, told El Nuevo Herald. “It would use more advanced technological means [than those used in Cuba], but when they tell you where to buy and what the limits of what you can buy are, they are conditioning your purchases.” Chávez said Tuesday that the card could be used to buy groceries at the government chain of markets and supplies. …In theory, the government could begin to favor the import of products to be sold through the government chains and have more control over the type of products purchased and the people buying them. Jaime Suchlicki, director of the University of Miami’s Institute for Cuban and Cuban-American Studies, said that Venezuela’s current problems of scarce supplies are very similar to those Cuba faced when Fidel Castro introduced the rationing card. “The card emerged when goods began to become scarce,” Suchlicki said. “The government had seized many companies that did not work because the government managed them poorly. Then they decided to distribute groceries through those cards.” And although the cards were introduced as a mechanism to deal with scarcities, Suchlicki said, they later became an instrument of control.

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The federal government is capable of enormous waste, which obviously is bad news, but the worst forms of government spending are those that actually leverage bad things. The old welfare system, for instance, paid people not to work and have babies out of wedlock (this still happens, but it’s not as bad as it used to be). Paying exorbitant salaries to federal bureaucrats is bad, but it’s even worse if they take their jobs seriously and promulgate new regulations and otherwise harass people in the productive sector of the economy. In a previous video on the economics of government spending, I called this the “negative multiplier” effect.

One of the worst examples of a negative multiplier effect is the $100 million that taxpayers spend each year to subsidize the Paris-based Organization for Economic Cooperation and Development. This video has the gory details.

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I don’t know whether he is a poster child for the dangers of inbreeding or a rich dolt who is seeking meaning in his life, but Prince Charles takes left-wing hypocrisy to an entirely new level. His “carbon footprint” almost surely is bigger than 99.9 percent of the world’s population, yet this pampered and clueless aristocrat thinks he was put on the earth to save the rest of us from sins such as “global warming” and “unbridled commerce.” If he gave up the throne and dedicated himself to a life of genuine self-denial, I would call him a clueless moron. Until that happens, he is best categorized as a hypocritical clueless moron.
The Prince of Wales says he believes he has been placed on Earth as future King ‘for a purpose’ – to save the world. Giving a fascinating insight into his view of his inherited wealth and influence, he said: ‘I can only somehow imagine that I find myself being born into this position for a purpose. ‘I don’t want my grandchildren or yours to come along and say to me, “Why the hell didn’t you come and do something about this? You knew what the problem was”. That is what motivates me. ‘I wanted to express something in the outer world that I feel inside… We seem to have lost that understanding of the whole of nature and the universe as a living entity.’ His impassioned comments come during a film about his belief that unbridled commerce has led to the destruction of farmland and countryside. …But the Prince has previously come under fire for hypocrisy over his eco-values. Last year he commandeered a jet belonging to the Queen’s Flight to attend the Copenhagen climate change summit, generating an estimated 6.4 tons of carbon dioxide – 5.2 tons more than if he had used a commercial plane. …Graham Smith, of the anti-monarchy group Republic, said: ‘He is under the impression he has been sent to save the world and deliver us from our sins. It’s quite delusional.

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Republican is a dirty word for many African-Americans, often for good reason. But blacks should be equally hostile to Democrats – at least if actual results count for anything. This is the basic message of this video sent to me by a black friend. 

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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.

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As I noted in this TV interview, that last thing a parasite should want is to kill its host animal. This is why leftists are making a big mistake by over-taxing, over-spending, and over-regulating. Simply stated, if they want to live as moochers, they need to make sure someone is producing. In other words, don’t steal so much that the victims stop generating any wealth. Michael Barone, writing about the corrupt “Chicago Way” for Townhall, makes a similar point:

One prime assumption of the Chicago Way is that there will always be a bounteous private sector that politicians can plunder endlessly. …So it’s natural for a Chicago Way president to assume that higher taxes and a hugely expensive health care regime will not make a perceptible dent in the nation’s private sector economy. There will always be plenty to plunder. Crony capitalism also comes naturally to a Chicago Way president. Use some sweeteners to get the drug companies and the docs to sign onto the health care plan. If the health insurers start bellyaching, whack them a few times in public to make them go along. Design a financial reform that Goldman Sachs and JPMorgan Chase can live with even while you assail “Wall Street fat cats.” The big guys will understand that you have to provide the voters with some political theater while you give them what they want.

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Just when you thought leftism couldn’t get any weirder, there’s a column in the Washington Post advocating a government ban on discrimination against ugly people. If you read the article, there actually is a lot of research showing that attractive people have a big advantage over unattractive people (and Greg Mankiw has written about the advantage tall people have over short people). That being said, it is amazing that anyone actually thinks the government can somehow offset the lottery of genetic luck. But if legislation is enacted, I plan on filing a lawsuit against Gisele Bundchen because she clearly is discriminating in favor of tall, good-looking football players when she should be dating me:

In the 19th century, many American cities banned public appearances by “unsightly” individuals. A Chicago ordinance was typical: “Any person who is diseased, maimed, mutilated, or in any way deformed, so as to be an unsightly or disgusting subject . . . shall not . . . expose himself to public view, under the penalty of a fine of $1 for each offense.”    Although the government is no longer in the business of enforcing such discrimination, it still allows businesses, schools and other organizations to indulge their own prejudices. Over the past half-century, the United States has expanded protections against discrimination… Yet bias based on appearance remains perfectly permissible in all but one state and six cities and counties. Across the rest of the country, looks are the last bastion of acceptable bigotry.   …in California in 2001, Jennifer Portnick, a 240-pound aerobics instructor, was denied a franchise by Jazzercise, a national fitness chain. Jazzercise explained that its image demanded instructors who are “fit” and “toned.” …In a survey by the National Association to Advance Fat Acceptance, 62 percent of its overweight female members and 42 percent of its overweight male members said they had been turned down for a job because of their weight. …Prevailing beauty standards penalize people who lack the time and money to invest in their appearance. And weight discrimination, in particular, imposes special costs on people who live in communities with shortages of healthy food options and exercise facilities.   So why not simply ban discrimination based on appearance? …Opponents of a ban on appearance-based discrimination…warn that it would trivialize other, more serious forms of bias. After all, if the goal is a level playing field, why draw the line at looks? “By the time you’ve finished preventing discrimination against the ugly, the short, the skinny, the bald, the knobbly-kneed, the flat-chested, and the stupid,” Andrew Sullivan wrote in the London Sunday Times in 1999, “you’re living in a totalitarian state.”

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I got some interesting feedback about my pseudo-defense of Obama against the accusation that he is a socialist. It was a faux defense because my goal was simply to point out that Obama is guilty of a different form of statism. For those interested in more information, Jonah Goldberg’s Liberal Fascism book is first rate (and he has a discontinued blog on the topic for those too impatient to wait for a book), and Steve Horowitz does a great job addressing this topic for the Freeman:

Talking the talk of “free markets” but proposing policies that mostly amount to collaborations between well-placed private-sector interests and the State is the hallmark of “corporatism,” or “state capitalism,” or even economic fascism.  From the bailouts of the banking system to “green jobs” to health insurance “reform” to various pieces of the “stimulus,” the real winners from the Obama administration’s policies (and Bush’s before him) have been those in corporate world lucky enough to be in the favored industries and to have sufficient political connections to benefit from the changes. Rather than take over various industries, Obama seems to believe he can work with industry leaders and labor to negotiate and manage them collectively in the national interest.  This is the essence of the “third way” of Italian Fascism.  It is not socialism, as private ownership is nominally maintained, but it is not capitalism, since private owners are not fully allowed to make independent decisions based on perceived profitability.  Those decisions must take a back seat to predetermined  national priorities. Again, consider the health insurance package.  It’s not a single-payer system, which would arguably be more truly socialist.  Instead, we will have a system of nominally private insurance companies heavily regulated and controlled so that they serve political goals, such as trying to guarantee that everyone has insurance regardless of income or medical history.

Keep in mind, though, my point about it being foolish to call Obama a fascist since the term is now inextricably linked to racism and militarism. Far better to point out that he is a statist or a corporatist.

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Newt Gingrich writes in the Washington Post today to defend his assertion that Obama is a socialist. He cites several examples of the President’s big-government agenda, which are excerpted below. These are all examples of bad policy, to be sure, but other than the student loan takeover, these are all examples of fascism rather than socialism. Socialism, technically speaking, is government ownership of the means of production. Fascism, by contrast, involves government control and direction of resources, but cloaked by a system of nominal private ownership.

Calling Obama a fascist, however, is counterproductive. Other than a few economists and historians, people don’t understand that fascism developed (with Mussolini perhaps being the best example) as a social/economic system. Instead, most people associate it with Hitler’s lunatic ideas on matters such as race and militarism. That’s why I prefer to call Obama a statist or a corporatist. Those words accurately describe his governing philosophy without creating the distractions caused by calling him a socialist or fascist.

Creating czar positions to micromanage industry reflects the type of hubris of centralized government that Friedrich von Hayek and George Orwell warned against. How can a White House “executive compensation czar” know enough to set salaries in multiple companies for many different people? Having a pay dictatorship for one part of the country sets the pattern for government to claim the right to set pay for everyone. If that isn’t socialism, what word would describe it?

Violating 200 years of bankruptcy precedent to take money from bondholders and investors in the auto industry to pay off union allies is rather an anti-market intervention.

Proposing that the government (through the Environmental Protection Agency or some sort of carbon-trading scheme) micromanage carbon output is proposing that the government be able to control the entire U.S. economy. Look at the proposals for government micromanagement in the 1,428-page Waxman-Markey energy tax bill. (I stopped reading when I got to the section regulating Jacuzzis on Page 442.) If government regulates every aspect of our use of power, it has regulated every aspect of our lives. What is that if not socialism?

Nationalizing student loans so that they are a bureaucratic monopoly. This will surely lead to fraud on the scale we see in Medicare and Medicaid, from which more than $70 billion per year is stolen.

Expanding government mortgage intervention to 90 percent of the housing market.

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Since we’re already depressed by the enactment of Obamacare, we may as well wallow in misery by looking at some long-term budget numbers. The chart below, which is based on the Congressional Budget Office’s long-run estimates, shows that federal government spending will climb to 45 percent of GDP if we believe CBO’s more optimistic “baseline” estimate. If we prefer the less optimistic “alternative” estimate, the burden of federal government spending will climb to 67 percent of economic output. These dismal numbers are driven by two factors, an aging population and entitlement programs such as Medicare, Medicaid, and Social Security. For all intents and purposes, America is on a path to become a European-style welfare state.

If these numbers don’t depress you enough, here are a couple of additional observations to push you over the edge. These CBO estimates were produced last year, so they don’t count the cost of Obamacare. And as Michael Cannon repeatedly has observed, Obamacare will cost much more than the official estimates concocted by CBO. And speaking of estimates, the long-run numbers in the chart are almost certainly too optimistic since CBO’s methodology naively assumes that a rising burden of government will have no negative impact on the economy’s growth rate. Last but not least, the data above only measures federal spending. State and local government budgets will consume at least another 15 percent of GDP, so even using the optimistic baseline, total government spending will be about 60 percent of GDP, higher than every European nation, including France, Greece, and Sweden. And if we add state and local spending on top of the “alternative” baseline, then we’re in uncharted territory where perhaps Cuba and North Korea would be the most appropriate analogies.

So what do we do? There’s no sure-fire solution. Congressman Paul Ryan has a reform plan to reduce long-run federal spending to less than 20 percent of GDP. This “Roadmap” plan is excellent, though it is marred by the inclusion of a value-added tax. Bill Shipman of CarriageOaks Partners put forth a very interesting proposal in a Washington Times column to make the federal government rely on states for tax revenue. And I’ve been an avid proponent of tax competition as a strategy to curtail the greed of the political class since it is difficult to finance redistribution if labor and capital can escape to jurisdictions with better tax law. Any other suggestions?

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Here’s an excellent idea for all American readers. One of the guys who posts on National Review Online is urging everyone to identify themselves as “some other race” on the census form. And writing “American” next to that box would be an added bonus. The goal, he explains, is to undermine the government’s racial bean-counting intrusiveness. Forward this to every American resident you know.

Fully one-quarter of the space on this year’s form is taken up with questions of race and ethnicity, which are clearly illegitimate and none of the government’s business… My initial impulse was simply to misidentify my race so as to throw a monkey wrench into the statistics; I had fun doing this on the personal-information form my college required every semester, where I was a Puerto Rican Muslim one semester, and a Samoan Buddhist the next. …Instead, we should answer Question 9 by checking the last option — “Some other race” — and writing in “American.” It’s a truthful answer but at the same time is a way for ordinary citizens to express their rejection of unconstitutional racial classification schemes. In fact, “American” was the plurality ancestry selection for respondents to the 2000 census in four states and several hundred counties.

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During the Cold War era, there was something known as the Brezhnev Doctrine, which was the notion that once a nation was taken over by communists, there was no going back. A similiar principle takes place in the battle between statism and freedom in America. The left understands that once people get hooked on government dependency for some aspect of their basic needs, it is very difficult, if not impossible, to restore liberty. This is why the Democrats are willing to temporarily lose Congress in exchange for imposing a collectivist healthcare system – especially since they are confident Republicans will never have the cojones to undo the damage. Mark Steyn explains:

…the governmentalization of health care is the fastest way to a permanent left-of-center political culture. It redefines the relationship between the citizen and the state in fundamental ways that make limited government all but impossible. In most of the rest of the Western world, there are still nominally “conservative” parties, and they even win elections occasionally, but not to any great effect (let’s not forget that Jacques Chirac was, in French terms, a “conservative”). The result is a kind of two-party one-party state: Right-of-center parties will once in a while be in office, but never in power, merely presiding over vast left-wing bureaucracies that cruise on regardless. …Once the state swells to a certain size, the people available to fill the ever expanding number of government jobs will be statists — sometimes hard-core Marxist statists, sometimes social-engineering multiculti statists, sometimes fluffily “compassionate” statists, but always statists. The short history of the post-war welfare state is that you don’t need a president-for-life if you’ve got a bureaucracy-for-life: The people can elect “conservatives,” as the Germans have done and the British are about to do, and the Left is mostly relaxed about it…. Look at it from the Dems’ point of view. You pass Obamacare. You lose the 2010 election, which gives the GOP co-ownership of an awkward couple of years. And you come back in 2012 to find your health-care apparatus is still in place, a fetid behemoth of toxic pustules oozing all over the basement, and, simply through the natural processes of government, already bigger and more expensive and more bureaucratic than it was when you passed it two years earlier. That’s a huge prize, and well worth a mid-term timeout. …government health care is not about health care, it’s about government. Once you look at it that way, what the Dems are doing makes perfect sense. For them.

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President Obama is proposing a series of major tax increases. His budget envisions higher tax rates on personal income, increased double taxation of dividends and capital gains, and a big increase in the death tax. And his health care plan includes significant tax hikes, including perhaps the imposition of the Medicare payroll tax on capital income – thus exacerbating the tax code’s bias against saving and investment. It is unclear why the White House is pursuing these punitive policies. The President said during the 2008 campaign that he favored soak-the-rich taxes even if they did not raise revenue, but his budget predicts the proposals will raise lots of money.

Because of the Laffer Curve, it is highly unlikely that all of this additional revenue will materialize if the President’s budget is approved. The core insight of the Laffer Curve is not that all tax increases lose money and that all tax cuts raise revenues. That only happens in rare circumstances. Instead, the Laffer Curve simply reveals that higher tax rates will lead to less taxable income (or that lower tax rates will lead to more taxable income) and that it is an empirical matter to figure out the degree to which the change in tax revenue resulting from the shift in the tax rate is offset by the change in tax revenue caused by the shift in the other direction for taxable income. This should be an uncontroversial proposition, and these three videos explain Laffer Curve theory, evidence, and revenue-estimating issues. Richard Rahn also gives a good explanation in a recent Washington Times column.

Interestingly, the DC government (which certainly is not a bastion of free-market thinking) has just acknowledged the Laffer Curve. As the excerpt below illustrates, an increase in the cigarette tax did not raise the amount of revenue that local politicians expected. The evidence is so strong that the city’s budget experts warn that a further increase will reduce revenue:

One of the gap-closing measures for the FY 2010 budget was an increase in the excise tax on cigarettes from $2.00 to $2.50 per pack. The 50 cent increase in the cigarette tax rate was projected to increase revenue but also reduce volume. Collections year-to-date point to a more severe drop in volumes than projected. Anecdotal evidence suggests that Maryland smokers who were purchasing in DC in FY 2008, because the tax rate in the District was less than the tax rate in Maryland, have shifted purchases back to Maryland now that the tax rate in the District is higher. Virginia analyzed the impact of demand when the federal rate went up by $0.61 in April and has been surprised that demand is much stronger than they had projected–raising the possibility that purchasing in DC has moved across the river.  Whatever the actual cause, because of the lower than anticipated collections, the estimate for cigarette tax revenue is revised downwards by $15.4 million in FY 2010 and $15.2 million in FY 2011. Given that cigarette tax rates in neighboring jurisdictions are now lower than that of the District, future increases in the tax rate will likely generate less revenue rather than more.

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The Premier of Newfoundland and Labrador (akin to a state governor in the U.S.) defended his decision to get surgery in America with the statement that it was “my heart, my choice, and my health.” This is an admirably libertarian statement, and the “my choice, and my health” part could be the rallying cry for those of us who don’t want government-run healthcare. The only problem is that the Premier is a reprehensible hypocrite who wants to keep Canadian citizens trapped in a statist system even though he was able to escape the system using his personal wealth. To add insult to injury, he is going to try and get taxpayers to reimburse him for his US-based treatment:

An unapologetic Danny Williams says he was aware his trip to the United States for heart surgery earlier this month would spark outcry, but he concluded his personal health trumped any public fallout over the controversial decision. …”This was my heart, my choice and my health,” Williams said late Monday from his condominium in Sarasota, Fla. “I did not sign away my right to get the best possible health care for myself when I entered politics.” …Williams said he didn’t announce his departure south of the border because he didn’t want to create “a media gong show,” but added that criticism would’ve followed him had he chose to have surgery in Canada. “I would’ve been criticized if I had stayed in Canada and had been perceived as jumping a line or a wait list. … I accept that. That’s public life,” he said. …Williams said his decision to go to the U.S. did not reflect any lack of faith in his own province’s health care system. …Williams also said he paid for the treatment, but added he would seek any refunds he would be eligible for in Canada. “If I’m entitled to any reimbursement from any Canadian health care system or any provincial health care system, then obviously I will apply for that as anybody else would,” he said.

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Watch it here.

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Many of the leaders of the conservative movement just released the Mount Vernon Statement, which is supposed to identify a common set of principles. It culminates with these words:

A Constitutional conservatism based on first principles provides the framework for a consistent and meaningful policy agenda. It applies the principle of limited government based on the rule of law to every proposal. It honors the central place of individual liberty in American politics and life. It encourages free enterprise, the individual entrepreneur, and economic reforms grounded in market solutions. It supports America’s national interest in advancing freedom and opposing tyranny in the world and prudently considers what we can and should do to that end. It informs conservatism’s firm defense of family, neighborhood, community, and faith.

These are fine words, but what do they achieve? Should there be a no-tax increase pledge? A commitment to reduce the size of government, or to shut down agencies, programs, and departments that are not proper functions of the federal government?

To be sure, a statement of principles is not supposed to be a policy platform, so perhaps it’s not the right place to call for, say, replacing a bankrupt Social Security system with individual accounts.

On the other hand, it isn’t too much of a stretch to imagine President Obama’s speechwriters putting very similar language in one of his speeches. So if the principles of the conservative movement are so vague that collectivists and statists can pretend to support them, what exactly is the point?

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Mark Steyn has a typically witty column that covers everything from the infamous Audi Superbowl commercial to the kid who was stopped by TSA for having Arabic-language flash cards. But he closes his piece with this powerful statement:

…the difference between America and Europe is that, when the global economy nosedived, everywhere from Iceland to Bulgaria mobs took to the streets and besieged Parliament demanding to know why government didn’t do more for them. This is the only country in the developed world where a mass movement took to the streets to say we can do just fine if you control-freak statists would just stay the hell out of our lives, and our pockets. You can shove your non-stimulating stimulus, your jobless jobs bill, and your multi-trillion-dollar porkathons.

There are obviously millions of Europeans who want to be left alone and millions of Americans who like sticking their snouts in the public trough, but Mark’s observation is generally true. The United States is the only major nation that still has a libertarian tradition of individual liberty and personal responsibility. This is why we need to stop government-run healthcare and roll back the nanny state. Yes, it is bad that bigger government undermines growth and prosperity, but the real danger is that collectivism will destroy the American soul.

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Politicians in Washington have come up with something far more impressive than turning lead into gold or water into wine. Using self-serving budget rules, they can increase the burden of government spending and say they are cutting taxes instead.

This bit of legerdemain is made possible, thanks to the convolutions of the personal income tax, by adopting or expanding refundable tax credits. But in this case, “refundable” does not mean the government is returning money to taxpayers. Instead, it means that money is being redistributed to people who do not earn enough to be subject to the income tax.

This is hardly a trivial issue. According to the Congressional Budget Office, the amount of income redistribution being laundered through the tax code is now so large that the bottom 40 percent of the population has a negative “effective” income tax rate. In simple terms (though perhaps with profound political implications), the income tax is a revenue generator for a big share of the population.

And the problem is going to get worse if the President’s budget is approved. Buried in the fine print, on pages 188-189 of the Analytical Perspective of the Budget, you will see that the President is proposing to increase this hidden form of spending by more than $152 billion over the next ten years.

It is worth noting that proponents argue that it is okay to classify this new spending as tax cuts because it somehow offsets other tax payments, especially the payroll tax. I’m sympathetic to lower taxes on everybody, including the poor, but surely it is better to be honest and simply cut the taxes that people pay. The current methodology, by contrast, is open to abuse. Heck, I’m surprised politicians don’t classify other forms of spending as tax cuts. Maybe corporate welfare can be reclassified as a corporate tax cut (I better stop lest I give the political class any ideas).

Defenders also assert that some so-called refundable tax credits, particularly the earned income tax credit, are designed to encourage work. That is partly true, but credits like the EITC are withdrawn as income climbs, and this means poor people face punitive marginal tax rates, so the overall effect on hours worked may be negligible.

The right approach, of course, is to get the federal government out of the racket of redistributing income.

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It seems that the European Union’s governing entities, the European Commission and the semi-ceremonial European Parliament, combine the worst features of statism and collectivism from the entire continent. The Euro-crats make lots of noises about subsidiarity and other policies to leave decision making in the hands of national and local governments, but virtually every policy coming from Brussels is a new power grab for unelected and unaccountable bureaucrats. The latest example is possible EU-wide driving laws for the purposes of imposing absurdly low speed limits and to requiring foolish rules against more comfortable and safer large cars. Here’s what the UK-based Express wrote about the topic:

Brussels bureaucrats want to slap draconian European Union driving laws on Britain’s roads in a new “green” campaign on motorists, it emerged last night. Measures being considered include a barrage of new maximum speed limits in town and city areas. British motorists could also be forced to undertake exams in “environmentally-friendly” road skills as part of an EU-wide overhaul of driving tests. And many large cars and other so-called gas-guzzling vehicles face being banned from newly-declared “green zones” in urban centres. The latest threat of meddling from Brussels comes in an Action Plan on Urban Mobility drawn up by European Commission transport chiefs. …Mats Persson, of the Euro-sceptic think tank Open Europe, commented: “This illustrates that the EU simply can’t stop interfering in every aspect of people’s lives.”

Meanwhile, a different tentacle of the European octopus is proposing that the European Union be given the power to audit budget numbers from member nations. Given the fiscal fiasco in Greece, this seems like it might be a reasonable step – until one remembers that the EU’s auditors every year give a failing grade to the EU’s own budget practices. The EU Observer reports on the issue, but the phrase “blind leading the blind” somehow did not get included:

…the European Commission has indicated it will seek audit powers for the EU’s statistics office, Eurostat, in order to verify elements of national government accounts. …Speaking to journalists after a meeting of EU finance ministers on Tuesday (19 January), outgoing EU economy commissioner Joaquin Almunia said greater Eurostat auditing powers could have avoided the mistakes that led to the Greek revision. He said the commission will propose “a new regulation in order to obtain powers, which we’ve already requested, to give Eurostat the possibility of carrying out audits.”

Last but not least, that same EU Observer story has a tiny bit of good news, or at least a dark cloud with a silver lining. Some of Europe’s governments want to impose an EU-wide tax on banks. This certainly fits the theme of ever-growing levels of bureaucracy and interference from Brussels, but the good news is that there is still (even under the statist Lisbon Treaty) a national veto on tax matters. So even though some of the big nations in Europe want to demagogue against the financial sector, the EU’s taxation commissioner (and former communist from Hungary) sadly indicated that such a tax probably would not make it through the process:

While discussion on Greece took up considerable time, EU finance ministers did have an opportunity to discuss a Swedish proposal for an EU-wide bank levy to mitigate the effects of future financial crises. …British, Belgian and German ministers were amongst those who showed moderate support for the idea. However, outgoing EU taxation commissioner Laszlo Kovacs said it was unlikely to fly because of EU unanimity voting in the area of taxation.

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