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Archive for the ‘Statism’ Category

I haven’t paid much attention to Hillary Clinton. Looking through my archives, I found a few posts criticizing her statist inclinations on issues such as taxation, geography, economics, the War on Drugs, class warfare, and financial privacy.

Compared to other major political figures, that’s a pretty meager list.

Moreover, to the best of my recollection, other than a few cartoons, I’ve never shared any Hillary humor (whereas Bill is a never-ending source of material).

That needs to change, and thanks to a quiz that was showed up in my inbox, that change happens today.

The quiz provides a series of quotes and asks the reader to identify the author (unlike the quizzes I usually share, which allow readers to decide how they feel on various issues).

Anyhow, here’s the quiz, taken verbatim from my inbox.

=====================================

Answer all the questions (no cheating) before looking at the answers.

Who said it?

1) “We’re going to take things away from you on behalf of the common good.”

A. Karl Marx
B. Adolph Hitler
C. Joseph Stalin
D. Barack Obama
E. None of the above

2) “It’s time for a new beginning, for an end to government of the few, by
the few, and for the few……and to replace it with shared responsibility,
for shared prosperity.”

A. Lenin
B. Mussolini
C. Idi Amin
D. Barack Obama
E. None of the above

3) “(We)…..can’t just let business as usual go on, and that means
something has to be taken away from some people.”

A. Nikita Khrushev
B. Josef Goebbels
C. Boris Yeltsin
D. Barack Obama
E. None of the above

4) “We have to build a political consensus and that requires people to give
up a little bit of their own … in order to create this common ground.”

A. Mao Tse Dung
B. Hugo Chavez
C. Kim Jong Il
D. Barack Obama
E. None of the above

5) “I certainly think the free-market has failed.”

A. Karl Marx
B. Lenin
C. Molotov
D. Barack Obama
E. None of the above

6) “I think it’s time to send a clear message to what has become the most
profitable sector in (the) entire economy that they are being watched.”

A. Pinochet
B. Milosevic
C. Saddam Hussein
D. Barack Obama
E. None of the above

Scroll down for the answers

Answers
(1) E. None of the above. Statement was made by Hillary Clinton – 6/29/2004
(2) E. None of the above. Statement was made by Hillary Clinton – 5/29/2007
(3) E. None of the above. Statement was made by Hillary Clinton – 6/4/2007
(4) E. None of the above. Statement was made by Hillary Clinton – 6/4/2007
(5) E. None of the above. Statement was made by Hillary Clinton – 6/4/2007
(6) E. None of the above. Statement was made by Hillary Clinton – 9/2/2005

=====================================

Actually, this isn’t humor. It’s horror. The last thing America needs is another statist president. Bush and Obama already have done enough damage.

Though many of the quotes are taken out of context in order to make Hillary look radical. For what it’s worth, the leftists at Politifact rate the email quiz as a pants-on-fire lie. I think “significant exaggeration” would be more accurate.

Let’s not forget that she cavalierly dismissed the likely economic damage of her 1993 healthcare scheme, asserting that “”I can’t be responsible for every undercapitalized entrepreneur in America.”

P.S. This quiz is somewhat similar to the infamous Al Gore-Unabomber quiz. For what it’s worth, I flunked that quiz with a score of only 42 percent.

P.P.S. Speaking of Gore, I’m also surprised I have so little humor with him as the target. All I could find was this video and a couple of one-liners from Leno and Conan. He also played a cameo role in this joke featuring Monica Lewinsky.

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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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Over the past several years, I’ve repeatedly argued that you get more unemployment when the government pays people to be unemployed. But I’m not just relying on theory. I’ve cited both anecdotes and empirical research to bolster my case.

You won’t be surprised to learn that many politicians have a different perspective. They say it is compassionate to provide unemployment insurance benefits. And they say it is cruel and heartless to put a time limit on those payments.

And if you believe Nancy Pelosi, unemployment handouts actually are good for the economy!

You might think this is one of these never-to-be-resolved Washington debates, but we actually have two natural experiments over the past year that show one side was right and the other side was wrong.

Writing for the Wall Street Journal, John Hood of the North Carolina-based John Locke Foundation describes what happened when his state decided to limit unemployment benefits.

Here are the changes that were made.

A year ago, North Carolina became the first state in the nation to exit the federal government’s extended-benefits program for the unemployed. …Gov. Pat McCrory and the state legislature…reduced the amount and duration of unemployment-insurance benefits, which had been higher in North Carolina than in most states. As a result the state lost its eligibility to participate in the extended-benefits program on July 1, 2013. …liberal activists pounced. …media outlets excoriated North Carolina for ending extended benefits. New York Times columnist Paul Krugman called it a “war on the unemployed.”

And here are the results.

North Carolina didn’t descend into the Dickensian nightmare critics predicted. For the last six months of 2013, it was the only state where jobless recipients weren’t eligible for extended benefits. Yet during that period North Carolina had one of the nation’s largest improvements in labor-market performance and overall economic growth. According to the U.S. Bureau of Labor Statistics, the number of payroll jobs in North Carolina rose by 1.5% in the second half of 2013, compared with a 0.8% rise for the nation as a whole. Total unemployment in the state dropped by 17%, compared with the national average drop of 12%. The state’s official unemployment rate fell to 6.9% in December 2013 from 8.3% in June, while the nationwide rate fell by eight-tenths of a point to 6.7%.

But we didn’t just have a state-based experiment. Hood explains that the same thing happened on the national level six months later. Congress rejected Obama’s call for another extension of benefits.

So what happened?

Still not convinced that leaving the extended-benefits program encouraged both job creation and job acceptance? As of Jan. 1, 2014, the extended-benefits program expired nationwide. Yet there has been no sudden exodus of discouraged workers to the fringes of the national economy. Both job creation and household employment are up. The nation’s employment-population ratio was 58.9% in May, up from 58.6% in December.

This is a powerful point.

We may not have a strong job market, but the numbers definitely have improved since the start of the year.

There’s actually an important lesson here. You don’t need perfect policy to get better performance. The private economy will generate growth so long as it has some breathing room.

Heck, sometimes the absence of bad policy is enough to boost economic performance. The post-2010 gridlock didn’t lead to a lot of good policies, but it did end the threat of major new statist initiatives from the Obama White House. And that was enough, in my humble opinion, to give us better numbers.

But better numbers are not the same as impressive numbers. This is still the weakest economic recovery since the Great Depression. So while it’s good to have a bit of improvement, we should be dissatisfied until we at least get back on the long-run trendline for 3 percent average real growth.

And what needs to happen to give us that kind of growth? The answer is simple: Free markets and small government.

P.S.  Since the main point of today’s column is unemployment insurance, let’s close with some great cartoons on that topic from Michael Ramirez, Robert Gorrell, and Chuck Asay, as well as a superb Wizard-of-Id parody.

P.P.S. On a separate topic, here’s a superb video of a 1948 cartoon comparing free markets to the poisonous ideology of “isms” such as communism, fascism, and socialism.

Very well done, particularly considering that it’s almost 70 years old. And if you want to see how economic growth can make a huge difference over that amount of time, check out this comparison of Argentina and Hong Kong.

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I’ve often explained that “third-party payer” is a major problem in our healthcare sector.

This occurs when consumers can buy healthcare with other people’s money. For instance, nearly half of all healthcare spending in America is directly financed by government. And a big chunk of supposedly private healthcare spending is actually the result of government policies that encourage and subsidize over-insurance (in which case, people may be buying healthcare with their own money, at least indirectly, but in a system akin to a pre-paid all-you-can-eat buffet).

Anyhow, one of the big downsides of this system is that third-party payer undermines market discipline and leads to higher prices and massive inefficiency in the health sector.

This then leads to a perverse outcome as politicians point to the higher prices and inefficiency and say this is evidence of market failure!! In a stereotypical example of “Mitchell’s Law,” they then propose more government to ostensibly deal with problems created by government (and people wonder why I have lots of gray hair).

We have the same problem in higher education, except it may be even worse if you look at these charts. Simply stated, government loans and grants have enabled colleges, schools, and universities to dramatically boost tuition and engage in massive bureaucratic featherbedding.

Interestingly, the Obama Administration has a proposal that sort of addresses this issue. The Department of Education is proposing “gainful employment” regulations that would, among other provisions, limit loans and financial aid on the basis of whether a school produces students with high student-loan debt relative to post-graduate earnings.

This sounds like it might be a good idea. After all, it would presumably lead to less government spending.

But there’s a catch. A giant catch, as explained by Brian Garst of the Center for Freedom and Prosperity.

…if it is truly needed to protect students, why are public and private non-profit universities excluded? For-profit schools only serve about 20% of all higher education students, and yet are the exclusive target of the regulation.

Yes, you read correctly. The Obama Administration is not trying to save money or impose accountability. Instead, it is seeking to undermine competition.

You may think I’m making this up, but a former senior bureaucrat at the Department of Education bragged, in a speech to a left-wing group, that the goal is to stamp out for-profit schools.

Here’s another excerpt from the folks at the Center for Freedom and Prosperity.

Former deputy undersecretary of education Robert Shireman, who initiated the Gainful Employment regulations, is currently under investigation for ethics violations and conflicts of interest relating to these effort. He has made clear through public comments that he sees eradicating private-sector colleges as his ultimate goal. In a recent speech delivered at the Center for American Progress, he said he does not believe that a business should own a college.

This fight illustrates why government intervention is so corrupting.

I don’t like any federal subsidies to education, whether for K-12 or for higher education. I don’t care whether the subsidies are for government schools, non-profit private schools, or for-profit private schools.

So I would like to cut off loans, grants, and other funds to for-profit schools, but that should happen at the same time that handouts also are being eliminated for other types of schools (Tim Carney has a very good explanation of why there are no good guys in this fight).

Let me close with an analogy.

I don’t want federal money in the healthcare system. So that means I don’t want payments of taxpayer money to private hospitals and private physicians.

But I would be even more agitated if the Obama White House said that it would “save money” by cutting off health funds, but only monies going to the private providers. The net result is that we all would be forced into VA-type treatment from government.

The moral of the story is to shrink government across the board.

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Back in 2010, I shared a remarkable chart showing how quickly economic output doubles in a fast-growth economy, but it also showed how long it takes for GDP to expand if an economy only grows 1 percent or 2 percent per year.

My main message was that nations should follow good policy because:

…even modest differences in economic growth can have a big impact on relative prosperity with a couple of decades.

But what’s really astounding – in a bad way – is that there used to be no growth. I recently posted a remarkable video from Learn Liberty that showed how the world was mired in poverty for century after century until growth exploded around 1800.

Now Don Boudreaux has a similar must-watch video for Marginal Revolution University.

The moral of the story is that poverty is, or at least was, the natural state of humanity.

But then something remarkable happened. The power of government was constrained and the vitality of markets was unleashed. The rest, as they say, is history.

And if you want to see a remarkable case study, the Fund for American Studies has its own great video showing how one nation went from misery to prosperity in just 100 or so years.

And to augment that video, here’s a chart from Wikipedia.

Just something to have in the back of your mind when some statist naively tells you the economy is a fixed pie and that successful entrepreneurs only become rich by making other people poor.

That’s simply not true.

Actually, allow me to revise my remarks. In the left’s fantasy world of taxes, bailouts, handouts, and cronyism, there is no growth and some people are able to use government coercion to become rich by ripping off others.

But in all likelihood, this satirical image shows the true impact of statism and redistribution.

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If some special-interest lobbies give money so that a left-wing group can propose something like a value-added tax to finance bigger government, that’s no surprise.

And if a bunch of subsidy recipients donate money to Barack Obama or some other statist politician because they hope for new programs, that’s also standard procedure in DC.

I’ll fight these initiatives, of course, but I don’t get overly upset when these things happen.

What does drive me crazy, though, is when proponents of big government want to use my money to subsidize left-wing activism.

This is why I’m against taxpayer handouts for groups such as Planned Parenthood and AARP. If they want to endorse bigger government, get voluntary contributions to push that destructive agenda.

All I ask is that you don’t coerce me to subsidize statism.

I get especially upset when international bureaucracies use my money to push for bigger government. And it the past few days, the International Monetary Fund (IMF) and Organization for Economic Cooperation and Development (OECD) have delivered a one-two punch for statism.

And they used our money!

The IMF advocated for more government in their recent survey of the United States.

The recent expansion of Medicaid and the increase in health insurance coverage have been concrete steps whose effect on poverty and health outcomes should become more evident over time. An expansion of the Earned Income Tax Credit—to apply to households without children, to older workers, and to low income youth—would be another effective tool to raise living standards for the very poor. …the minimum wage should be increased. …Action is also needed to achieve a sustained increase in both Federal and State spending on infrastructure paid for by…additional revenues, and an expansion of financing sources… The Federal gas tax should be significantly increased. …Some progress has already been made…through implementation of the Affordable Care Act… Addressing the expected depletion of the social security trust fund will require…increases the ceiling on taxable earnings for social security… In addition, the U.S. should introduce a broad-based carbon tax and move toward the introduction of a Federal-level VAT.

Keep in mind, by the way, that the IMF already has endorsed a giant energy tax on American consumers, as well as a value-added tax.

Though, to be fair, they’re not discriminating against Americans. The IMF has a long track record of pushing for bad policy in other nations.

Meanwhile, the statists at the OECD also are pushing for a wide range of bad policies.

The report encourages close cooperation between businesses and government… The Survey highlights that income inequality is high in the United States. …While this cannot be improved easily, the report praises reforms recently adopted or being considered: health care reform will help vulnerable families access high-quality care; OECD Carbon Obamadealing with mental health will help reduce job loss and disability; preschool education would be a good investment in children’s future and help middle-class parents; and paid maternity leave would help working women. …The OECD recommends introducing an adequate pricing of greenhouse gas emissions and supporting innovation in energy saving and low carbon technology.

Unsurprisingly, the OECD endorses a panoply of tax hikes to enable a bigger and more bloated public sector.

Act toward rapid international agreement and take measures to prevent base erosion and profit shifting… Make the personal tax system more redistributive… The federal government could…develop a social insurance programme for paid leave for all workers funded by a small increase in the payroll tax… Taxing the extraction of non-renewable resources offers the potential to raise revenue… Increase reliance on consumption taxation.

The OECD favors higher taxes for everyone, so it’s not as if they’re targeting Americans.

But it’s nonetheless irritating when a bunch of pampered international bureaucrats take money from American taxpayers and then use those funds to produce “research” calling for even higher tax burdens.

Especially when those bureaucrats are exempt from the income tax!!!

And keep in mind that this isn’t the first time that the OECD has acted as a public relations team for Obama’s statist agenda.

P.S. The one silver lining to the dark cloud of the IMF is that the bureaucrats inadvertently generated some very powerful evidence against the VAT.

P.P.S. And the OECD accidentally produced some data showing the poor results of governments schools in the United States, so that’s a bit of consolation as well.

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On many occasions, I’ve explained that economic output is a function of how much labor and capital are productively utilized.

This is why I relentlessly criticize policies that undermine GDP growth by hindering the use of these “factors of production.”

That’s a bit of economic jargon, but it helps to explain why we shouldn’t be discriminating against capital by double taxing income that is saved and invested.

And it helps to explain why we shouldn’t be discouraging labor by subsidizing unemployment and idleness.

But it’s time to issue a very important caveat. The goal of policy should be economic freedom, not maximizing GDP.

There’s nothing wrong with people choosing to be out of the labor force – so long as they’re not expecting taxpayers to pay their expenses.

Many women, for instance, may want to be at home with children, particularly during their younger years.

Moreover, some older workers may want to retire early.

So while I think it’s bad news that labor force participation has dropped under Obama, there’s more than one possible way to look at that data when you factor in the voluntary choices of some segments of the potential workforce.

But it’s very difficult to give any sort of optimistic or positive spin to these numbers from the Senate Budget Committee. They show a very worrisome trend among prime-working-age men.

These are people who should be in the labor force.

Here’s what John Hinderaker at Powerline wrote about these sobering figures.

An unprecedented number of men–one in six–between the ages of 25 and 54, what should be their prime earning years, are either unemployed or out of the work force entirely.

Here’s the breakdown.

One in eight, the highest proportion since record-keeping began in 1955, are out of the labor forceAnother 2.9 million men in the 25-54 age group haven’t given up–they are still in the labor force–but are currently unemployed.

And here are the consequences.

…the damage done to a generation of American men (and women too, of course) will not easily be undone. Those who missed a chunk of what should have been their most productive years, or departed the labor force entirely, will suffer from Obamanomics for the rest of their lives. The damage being done by our current, inept economic policies is literally incalculable.

Here’s another chart, this one comparing idleness among men in 2007 and 2014.

So how do we fix this problem, keeping in mind that this is not a partisan issue since the bad trend started under Bush?

The big-picture answer is free markets and small government.

In other words, you create jobs by having Washington get out of the way.

P.S. Over the years, the President has made some remarkable statements.

  • In my video on class warfare, I noted that Obama said in 2008 that – for reasons of “fairness” – he wanted to raise the capital gains tax even if the government lost revenue.
  • A couple of years ago, he arrogantly remarked that “at some point you have made enough money.”
  • In 2011, the President was complaining about bank fees and asserted that, “you don’t have some inherent right just to, you know, get a certain amount of profit…”
  • And in 2012, Obama made his infamous “you didn’t build that” statement, which generated some very amusing political cartoons.

With these statements in mind, here’s some Obama humor.

No substantive policy message, I’ll admit, but still funny. Sort of like this t-shirt, this Pennsylvania joke, this Reagan-Obama comparison, this Wyoming joke, this Bush-Obama comparison, this video satire, and this bumper sticker.

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It’s not as sophisticated as Professor Bryan Caplan’s Purity Quiz and it doesn’t have the simple elegance of the World’s Smallest Political Quiz, but at least you don’t need to answer any questions to see where you stand in this Venn Diagram that my intern shared with me.

We don’t know who created it, but it’s a clever shortcut to help people to identify their philosophical alignment based on what they think are the proper roles of government.

I’ll do a bit of nit-picking later in this column, but my immediate observation is that I belong in the “Minarchism” camp but that I’m willing to settle for “Classical Liberalism.”

Philosophical Circles

Now it’s time to quibble.

1. There’s no scope for federalism in this Venn diagram, and that may affect the answers of some people. I am completely against the notion that Washington should have any role in our education system, for instance, but I wouldn’t lose much sleep if state and local governments operated school choice systems. Does this mean I’m in the “modern conservatism” camp?

2. I’m also not clear why the person who created the Diagram decided that buses and subways are part of “classical liberalism.” I don’t consider transportation to be a core function of the state. Though this may be another issue where federalism plays a role. I’m not going to get overly agitated if the taxpayers of New York City want to tax themselves (and only themselves) to operate mass transit. Just don’t ask me to pay for it.

3. For reasons I’ve explained before, there’s a difference between socialism (government ownership of the means of production) and redistributionism (government taxing some to give things to others). So at the risk of being pedantic, I would reclassify the big red circle as “total statism.”

But let’s not make the perfect the enemy of the good. This Venn Diagram/Circle Test is very well done.

P.S. The worst political quiz I ever took was the one that pegged me as a “moderate” with “few strong opinions.”

P.P.S. Reason’s political candidate quiz, by contrast, produced a much more logical conclusion.

P.P.P.S. I’ve written a few times about the politicized corruption at the IRS. Building on recent revelations, Kevin Williamson has a superb column at National Review on this topic.

The first excerpt notes that the IRS engaged in an ideological witch hunt.

…the evidence, now conclusive and irrefutable, that the Internal Revenue Service, under the direction of senior leaders affiliated with the Democratic party, was used as a political weapon from at least 2010 through the 2012 election. …the IRS targeted these conservative groups categorically, regardless of whether there was any evidence that they were not in compliance with the relevant regulations. Simply having the words “tea party,” “patriot,” or “9/12”…in the name was enough. Also targeted were groups dedicated to issues such as taxes, spending, debt, and, perhaps most worrisome, those that were simply “critical of the how the country is being run.” Organizations also were targeted based on the identity of their donors. Their applications were delayed, their managements harassed, and the IRS demanded that they answer wildly inappropriate questions, such as the content of their prayers.

Our second excerpt explains that the witch hunt was directed by partisans in Washington.

…the direction came from Washington and was, in the words of the agency’s own e-mails, “coordinated with” a senior manager there, Rob Choi, director of rulings and agreements. This began at the behest of Democratic officeholders, including Senator Carl Levin of Michigan, who requested that the IRS disclose to him information about tea-party groups that it would have been illegal for the IRS to disclose.

In our final excerpt, Kevin explains why this is – or at least should be – very troubling for anyone who thinks America should have the rule of law.

The IRS is not just a revenue agency — it is a law-enforcement agency, a police agency with far greater powers of investigation and coercion that any normal police force. Its actions in this matter are not only inappropriate — they are illegal. Using government resources for political ends is a serious crime, as is conspiring to mislead investigators about those crimes. …The most important question that must be answered in this matter does not involve the misbehavior of IRS officials and Democratic officeholders, though those are important. Nor is it the question of free speech, vital and fundamental as that is. The question here is nothing less than the legitimacy of the United States government. When law-enforcement agencies and federal regulators with extraordinary coercive powers are subordinated to political interests rather than their official obligations — to the Party rather than to the law — then the law itself becomes meaningless, and the delicate constitutional order we have enjoyed for more than two centuries is reduced to a brutal might-makes-right proposition. …The IRS investigation is no mere partisan scandal, but a moral challenge for the men and women who compose the government of this country.

Amen.

Unconstrained government enables corruption and oppression.

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Sigh. Another day, another grim Obamacare update.

Actually, we have two updates on the never-ending disaster of government-run healthcare.

Our first story comes from the Washington Times, which reports that the company hired to fix the failed Obamacare website is way behind schedule and way over budget.

Fixing the Obamacare website to get it ready to handle a second round of enrollments will cost the federal government $121 million… The deal, which Accenture announced on its website Tuesday, costs more than the $93.7 million it took to build HealthCare.gov in the first place. It’s also $30 million more than the government projected for fixes just a few months ago… “There doesn’t seem to be a light at the end of the tunnel for Obamacare website expenses,” said House Oversight and Government Reform Committee Chairman Darrell E. Issa, California Republican.

I’m mystified, by the way, why taxpayers always have to cough up more money on these contracts.

If some company promises to do X in exchange for Y amount of money, shouldn’t that contract be binding?

Instead, this is just the latest chapter in the endless book of government cost overruns.

Our second story comes from the Washington Examiner, which reports that there are some big problems with Obama’s supposed success of bribing and coercing people into Obamacare.

…officials from President Obama down have touted 8 million Americans signing up for coverage through the program’s exchanges. But, among other things, they haven’t revealed how many of those individuals formally completed their enrollment by paying their premiums. …>what the committee heard back was that just 67 percent of individuals signing up for health insurance through the federal health exchange as of April 15 paid their first month’s premiums and actually completed enrollment.

Gee, if that’s a success, I’d hate to see a failure.

And the story also notes that the White House has been unable to trick sufficient numbers of young people into overpaying for healthcare. That’s very bad news for the insurance companies that put their trust in government.

In addition, just 25 percent of enrollees were between the ages of 18 and 34, according to the report. The administration had been aiming for roughly 40 percent of enrollees to come from this younger demographic to help offset the cost of providing coverage to older and sicker participants.

I guess this means stupid birth control ads weren’t enough to get young folks to flush away their dollars.

Geesh, no wonder I’m tempted to feel sorry for the President.

But let’s not forget that there actually are some people who are benefiting from Obamacare. It’s too bad, though, that we can’t all be corrupt DC insiders.

Let’s close with some cartoons from Townhall. Since we’ve already talked about the absurdity of counting coerced enrollments as an indicator of success, we may as well share a funny Glenn McCoy cartoon that makes the same point.

If you like this cartoon, Ted Cruz’s office put together a satirical – yet accurate – look at the “success” Obama has achieved. And this Eric Allie cartoon has the same message.

And here’s Henry Payne on Obama’s mission-accomplished moment. Reminds me of the low-expectations theme Lisa Benson used in another very amusing Obamacare cartoon.

Yup, the mission has been accomplished. A few million more Americans are now more dependent on government (which Mark Steyn explained was one of the left’s main goals) and the political class has made it harder for people to achieve the American dream.

P.S. Switching topics, I can’t resist sharing this Michael Ramirez cartoon.

That’s because it reminds me of this joke about what would happen if Noah tried to build the ark today.

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Using a comparison of Jamaica and Singapore, I recently argued that growth should trump inequality.

Simply stated, a growing economic pie is much better for poor people that incentive-sapping redistribution programs that trap people in dependency.

In other words, nations with smaller government and less intervention produce better results than nations with bloated governments and lots of meddling.

You see that relationship by comparing Jamaica and Singapore, and you also see it when examining other nations.

This is fresh in my mind since I just spoke at the Kyiv stop on the Free Market Road Show.

I told the audience about the reforms that Ukraine needs to strengthen economic performance, but I probably should have simply read what one expert recently wrote about Ukraine and Poland.

Here’s some of what Allister Heath had to say for London’s City A.M.

In the dreadful communist days, Ukraine and Poland used to be equally poor. The former was part of the Soviet Union, and Poland was one of the USSR’s satellite nations, belonging to the Warsaw pact. In 1990, both countries had roughly the same GDP per capita – their economies were eerily similar. A quarter of a century later, everything has changed… It’s a tale of two economic models, and a central reason why Russia – a waning world power desperate to cling on to its historic zone of influence – has felt able to bully Ukraine in such a shocking way. …The big difference is that Poland has pursued free-market policies, reducing the size of its state, introducing a strict rule of law and respect for property rights, privatising in a sensible way, avoiding the kleptocracy and corruption that has plagued regimes in Kiev, and embracing as much as possible Western capitalism.

Allister cites World Bank data to state that “Poland’s GDP per capita is now 3.3 times greater than Ukraine’s.”

I prefer the Angus Maddison data, which doesn’t show quite the same divergence. But if you look at the chart, you still see an amazing change in relative living standards in the two nations.

Ukraine v Poland

These numbers are shocking. Even with the Maddison data, Poland quickly passed Ukraine after the collapse of communism and now enjoys more than twice the level of per-capita output (and would probably have about three times as much per-capita GDP if the numbers were updated through 2014).

This doesn’t mean, by the way, that Poland is a pro-market paradise. As Allister explains, it’s not exactly Hong Kong or Singapore.

Poland’s tax system remains far too oppressive, the red tape is too strict and the bureaucracy still too redolent of the bad old days, the labour market is excessively regulated, parts of the population rejects elements of the new order and the country remains relatively poor, which explains why so many of its most ambitious folk have moved to the UK and elsewhere. But Poland has been one of the great success stories of the post-communist era, whereas Ukraine, tragically, has been one of the great failures.

To add some details, Freedom of the World ranks Poland as the 59th-freest economy in the world.

That’s not great, but it’s a lot better than Ukraine, which ranks only 126 out of 152 nations (behind even Russia!).

More important, Poland’s overall score was only 3.90 in 1990 and now it is up to 7.20.

Ukraine, by contrast, has only climbed to 6.16.

As I’ve already stated, their big problem is Putinomics. If they want to catch the West, they need free markets and small government.

P.S. If you examine the five major factors in Freedom of the World, Ukraine does best in the fiscal policy measure (in part because it has a flat tax!), but it has a horrible grade for monetary policy and doesn’t do well in the other areas.

P.P.S. On the issue of ethnic division in the country, Ukraine also would benefit from Swiss-style decentralization.

P.P.P.S. This chart comparing Argentina, Chile, and Venezuela also should be very persuasive to every open-minded person.

P.P.P.P.S. I visited the Maidan Square, which is where the recent revolution took place.

Here’s one of the main buildings that caught fire.

IMG-20140430-00301

Here are pictures of those killed by (presumably) government snipers.

IMG-20140430-00299

And here’s yours truly playing tourist.

IMG-20140430-00303

It’s only an armored personnel carrier, but it got me thinking that maybe I should copy other Americans and get my own tank?

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Greetings from Obamaland!

Actually, that’s wrong in two respects. First, I’m actually in France. And even though I’ve joked that Obama wants to make America like France, technical accuracy requires me to admit that my real location is Paris, France Road Showwhere I participated earlier today in the latest stop on the Free Market Road Show.

Second, I used the “Obamaland” joke when writing a few days ago about my visit to Greece. So I should probably not over-utilize any literary crutch.

With those caveats out of the way, allow me to wax poetic about troubles in the land of wine, cheese, and 35-hour work weeks.

Actually, I won’t wax at all. Let’s look at what a former Frenchwoman has to say.

Veronique de Rugy of Mercatus, a native of France who escaped to the United States, has a column looking at the turmoil and angst in her home country.

…another European Union member is quietly slipping into economic despair. After years of fiscal mismanagement, France is in a bad, bad place. …France spends more of its GDP on government-57 percent-than any other country in the Eurozone. The country’s unemployment rate is at a 16-year high of 11 percent, and a startling number of richer and younger French people are leaving for more hospitable economic environments abroad. …Since the creation of the Eurozone in 1999, France has only managed a 0.8 percent annual growth rate.

The statists in France seem to think the right way of dealing with this crisis is to double down on statism.

…the French government’s response to anemic growth and higher unemployment has been to tack toward less economic freedom, not more. …President Francois Hollande of the Socialist Party has refused to trim France’s social-welfare spending-the highest of all developed economies-and has chosen instead to chip away at the country’s huge deficit by raising taxes.

Hollande’s statism doesn’t seem to be earning him any friends.

Hollande’s commitment to big government hasn’t won him any friends. The French rank him as the least popular president of the Fifth Republic, and young people are voting with their feet. According to the data from French consulates in London and Edinburgh, the number of French people living in London is probably somewhere between 300,000 and 400,000. That’s more than the number of French people living in Bordeaux, Nantes, or Strasbourg.

I know one reason they’re running away.

Taxes, mandates, and regulations make everything so expensive that a McChicken sandwich at McDonald’s, which costs only $1 in the United States,McD France costs about three times as much in Europe based on current exchange rates (as you can see from the pictures I snapped in the metro).

Anyhow, the people of France seem to understand that’s something’s amiss.

Hundreds of thousands of them are escaping as fast as they can. Even the New York Times can’t help but notice!

And in recent local elections, President Hollande’s party took a bath.

Here’s some of what the New York Times reported about recent local elections.

French voters dealt a blow to the government of François Hollande on Sunday, rejecting left-leaning candidates for local office in at least 155 cities while embracing more conservative politicians…the Socialists lost former strongholds like Toulouse and Limoges, as well as many smaller towns. …Economic troubles cast a long shadow over the elections, as Mr. Hollande’s efforts to reverse the trend showed few results… Overall unemployment in France at the end of 2013 was about 11 percent.

Doesn’t sound like the socialists are doing so well. So does this mean Hollande may get tossed out of office in a few years?

Perhaps, but the real question is whether that would make a difference. It seems that the so-called right-wing politicians in France (and elsewhere in Europe) are so squishy and statist that they make Republicans look like paragons of principle.

Here’s some more of what Veronique wrote in her Reason article about Hollande’s predecessor.

…data compiled by tax-watchdog groups and the media in 2012 show that during Sarkozy’s rule, from 2007 to 2012, taxpayers were subjected to 205 separate increases, including excise taxes on televisions, tobacco, and diet sodas, multiple increases in capital taxation, and a wealth-tax hike. Sarkozy is also responsible for increasing the top marginal income tax rate from 40 to 41 percent in 2010, and again to 45 percent in 2012.

In other words, Paul Krugman is right that there’s a plot against France.

But he’s wrong to imply that folks like me are in the cabal. The real threat to France is French politicians.

P.S. The best April Fool’s humor I saw was this “story” sent by a friend in the Bahamas. Sounds like it could have been written by John Stossel.

In an absolutely astounding announcement today, Janet Yellen made a stern and heartfelt apology for 100 years of asset bubbles, depressions, recessions, panics, banking crises, and all-around inflation caused by the Federal Reserve.

Flanked on both sides by former Fed Chairmen Ben Bernanke, Alan Greenspan, and Paul Volker, Ms. Yellen stated emotionally, “As grand wizards of the financial system, we must accept full responsibility for the consequences that our decisions have had on the lives of ordinary people around the world…”

“Frankly,” Ms. Yellen continued, “I can’t believe in this day and age that total control of the money supply is awarded to a tiny handful of unelected central bankers. It is a most undemocratic system and should be abolished immediately.”

If you like Federal Reserve humor, allow me to call your attention to this video from the Fed Chairman’s childhood, this special Fed toilet paper, Ben Bernanke’s hacked Facebook page, the Bernanke-who-stole-Christmas image, a t-shirt celebrating the Fed Chairman, and the famous “Ben Bernank” video.

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As much as I condemn American politicians for bad policy, things could be worse.

We could be Greek citizens, which would be very depressing. Indeed, you’ll understand why I put Obamaland in the title after you read today’s column.

Simply stated, Greece is a cesspool of statism. The people seem to be wonderful (at least outside of polling booths), but government intervention is pervasive and atrocious.

Here’s an example. As I was coming in a taxi from the airport to the city yesterday, we passed some sort of protest. There were a couple of hundred people at the rally and probably about 50 riot cops.

I naturally wondered about the situation, expecting that it was radical statists or some of the crazies from Golden Dawn. But the cab driver explained that it was pharmacists.

So why are pharmacists protesting? I found out from some of the locals at the Free Market Road Show that this is a heavily regulated and protected sector of the Greek economy.

The government has rules, for instance, that products such as aspirin and other painkillers can only be purchased at pharmacies. The bureaucracy also rigs all the prices to preclude competition. And there are even government policies that make it very difficult for new pharmacies to compete against the established firms.

When special interests have that much power, no wonder Greece is in trouble.

Thought there are some sectors of the business community, such as online entrepreneurs, that are treated like crap. Literally.

Here’s another example from a Wall Street Journal report, albeit one where a modest bit of progress has been achieved.

For the first time in more than a hundred years, Greece is sacking public servants. In 1911, Greece introduced jobs for life under Prime Minister Eleftherios Venizelos. Now, a century later, his descendant, Kyriakos Mitsotakis, Greece’s minister for administrative reform, is faced with the delicate task of slimming down the massive public sector this law helped create. …In exchange for…aid, Greece has promised to cut the government workforce by at least 150,000 by 2015 through attrition, and to lay off an additional 15,000 outright by the end of this year. Another 25,000 would be placed in the temporary labor pool. Of those goals, the first has been reached: Greece had 713,000 government workers at the end of 2012, down 122,000 from the end of 2010. …But the labor pool is still a work in progress. Last July, the first 4,000 employees were put in that pool, while another 8,000 or so followed a few months later. Few of them are expected to be rehired. And with Greece’s unemployment rate already close to 30%, few expect to find jobs in the private sector.

I actually feel a bit sorry for some of these people.

They probably took jobs in the bureaucracy without ever thinking about who was paying their salaries and without giving any thought to the featherbedding and waste that accompany most public sector positions.

But I bet they voted for the politicians that dramatically expanded the number of bureaucrats, so it’s hard to feel too much sympathy.

In any event, they’re understandably worried now that the gravy train is being derailed.

Or maybe the gravy is still there, but in different forms.

It appears that there’s still taxpayer money floating around that can be wasted in interesting ways.

Here are some excerpts from the Guardian about EU-funded “anger management” for some of Greece’s senior tax bureaucrats.

Until Greece’s economic meltdown, anger management was an alien concept at the country’s finance ministry. …Today these are the buzzwords flying around the ground-floor training room at 1 Handris Street. For tax inspectors attending mandatory seminars at the government building, anger management, like patience and politesse, are now seen as essential prerequisites of an increasingly stressful job. “Today, in Greece, everyone is either unhappy or angry when they have to go and pay at the tax office,” Fotis Kourmouris, a senior official at the finance ministry’s public revenues department said. “There is a lot of negative emotion … in the framework of better customer service, classes in psychological and emotional intelligence had become necessary.”

I wouldn’t call it “negative emotion.”

This is a long-overdue revolt of the Greek tax slaves.

…inspectors have found themselves at the sharp end of popular rage. In recent months visiting auditors have been chased out of remote villages, hounded out of towns and booted off islands by an increasingly desperate populace. “We’ve had multiple cases of violence at tax offices by angry members of public, including physical assaults; shots were fired in one case, and one attacker came with an axe,” said Trifonas Alexiadis, vice-chairman of the national association of employees at state financial services.

But when you read how the Greek government is trying to rape and pillage taxpayers, you can understand the anger.

A series of new tax laws has further fuelled public anger. Since the outbreak of the crisis, close to 30 new levies have been introduced by governments desperate to augment empty state coffers. “Too much pressure is being put on people who can’t pay,” said Alexiadis, who suggested that in such circumstances the classes were not only ill-conceived but “juvenile and unnecessary”. …accountant Heracles Galanakopoulos agreed. “They produce a law that nobody understands and then produce another three to explain it. By the time people get here they are really very angry,” he lamented… “I spend at least five or six hours a day reading up on all these new laws and still can’t keep up. Anger management is a nice idea but in a system that is so absurd it’s not going to make a jot of difference.”

Amen. As I’ve argued before, Greece’s problem is high tax rates. Evasion is simply a function of a bad tax code.

Let’s close with some Greek-related humor.

I very much recommend this very funny video from a Greek comedian and this politically incorrect map of how the Greeks view the rest of Europe.

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Senator Rand Paul is being criticized and condemned by the Washington establishment.

That’s almost certainly a sign that he’s doing the right thing. And given the recent events in Russia and Ukraine, we should say he’s doing a great thing.

Rand PaulThis is because Senator Paul is waging a lonely battle to stop the unthinking and risky move to a world where governments – including corrupt and evil regimes – collect and share our private financial information.

I’ve written about this topic many times and warned about the risks of letting unsavory governments have access to personal information, but the Obama Administration – with the support of some Republicans who think government power is more important than individual rights – is actively pushing this agenda.

The White House has even endorsed the idea of the United States being part of a so-called Convention on Mutual Administrative Assistance in Tax Matters, even though that would require the sharing of large amounts of personal financial data with thuggish and corrupt regimes such as Argentina, Azerbaijan, China, Greece, Mexico, Nigeria, Russia, and Saudi Arabia!

I’m sure Vladimir Putin very much appreciates this insider access so he can monitor dissidents and track political opponents. His government even signed onto a recent G-20 Communique that endorsed automatic information-sharing.

Heck, there’s even a Russian heading up the Financial Action Task Force, which is endlessly pushing to give governments untrammeled access to private information. FATF even wants banks and other financial institutions to spy on customers, regardless of whether there’s the slightest evidence of any wrongdoing.

The general mindset in Washington is that we should all bury our heads in the sand and blithely allow this massive accumulation of power and information by governments. After all, Putin and other thugs would never abuse this system, right?

Senator Paul battles the statists

Fortunately, at least one lawmaker is trying to throw sand in the gears. Like Horatius at the bridge, who single-handedly thwarted an invasion of Rome in 509 BC, Senator Paul is objecting to this massive invasion of privacy.

He has this old-fashioned appreciation for the Constitution and doesn’t think government should have carte blanche to access private financial data. He even – gasp! – thinks that government power should be restrained by the 4th Amendment and that there should be due process legal protections for individuals.

No wonder the DC establishment doesn’t like him.

One example of this phenomenon is that Senator Paul has placed a “hold” on some tax treaties. Here are some excerpts from a recent article in Politico.

Paul for years has single-handedly blocked an obscure U.S.-Swiss tax treaty that lawmakers, prosecutors, diplomats and banks say makes the difference between U.S. law enforcement rooting out the names of a few hundred fat-cat tax evaders — and many thousands more. …International tax experts for years have seethed over Paul’s block on the Swiss and several other tax treaties. These sorts of mundane tax protocols used to get approved by unanimous consent without anyone batting an eyelash — until Paul came to town.

These pacts are “mundane” to officials who think there shouldn’t be any restrictions on the power of governments.

Fortunately, Senator Paul has a different perspective.

Kentucky’s tea party darling says the treaty infringes on privacy rights. …Paul, a libertarian Republican widely believed to be eyeing a 2016 presidential run, says his hold stems from concerns about Fourth Amendment protections against “unreasonable search and seizure.” “These are people that are alleged, not convicted of doing anything wrong,” Paul said a few weeks ago. “I don’t think you should have everybody’s information from their bank. There should be some process: accusations and proof that you’ve committed a crime.”

The article also notes that Senator Paul is one of the few lawmakers to fight back against the egregious FATCA legislation.

Paul’s protest is also linked to his abhorrence of the soon-to-take-effect Foreign Account Tax Compliance Act, which will force foreign banks to disclose U.S. account information to the IRS, and domestic banks to reciprocate to other nations’ revenue departments. …the senator has legislation to repeal FATCA and hesitates to support a treaty that enables a law he views as U.S. government overreach.

I don’t know how long Senator Paul can withstand the pressure in his lonely fight for individual rights, but I’m glad he’s waging the battle.

Even the Swiss government and Swiss banks have thrown in the towel, having decided that they have no choice but to weaken their nation’s human rights laws on financial privacy because of threats of financial protectionism by the United States.

So let’s give three cheers to our modern-day Horatius, a very rare elected official who is doing the right thing for the right reason.

For more information on the importance of financial privacy, here’s my video on the moral case for tax havens.

P.S. I shared some good jokes about Keynesian economics a few weeks ago.

Now, via Cafe Hayek, I have a great cartoon showing the fancy equation that left-wing economists use when they tell us that the economy will grow faster if there’s a bigger burden of government spending.

Keynesian Miracle Cartoon

Now you can see how the Congressional Budget Office puts together its silly estimates.

Indeed, Chuck Asay even produced a cartoon on CBO’s fancy methodology.

The next step is to find the secret equation that CBO uses when it publishes nonsensical analysis implying that growth is maximized when tax rates are 100 percent.

But to be fair, the politicians who pay their salaries want them to justify bigger government, so should we expect anything else?

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Two years ago, I shared a video about the Environmental Protection Agency’s brutal and thuggish tactics against an Idaho family.

Constitution Limits Government PowerThat story had a very happy ending because the Supreme Court struck a blow for property rights and unanimously ruled against the EPA (too bad that similarly sound analysis was absent when the Justices decided the Kelo case).

Now we have a new example of the EPA running amok

Let’s look at a horrifying report about another family in the cross hairs of a rogue bureaucracy.

All Andy Johnson wanted to do was build a stock pond on his sprawling eight-acre Wyoming farm. He and his wife Katie spent hours constructing it, filling it with crystal-clear water, and bringing in brook and brown trout, ducks and geese. It was a place where his horses could drink and graze, and a private playground for his three children.

Sounds like the American dream, but also responsible stewardship since ponds usually have a positive role in limiting erosion.

Unfortunately, the EPA’s pinhead bureaucrats saw an opportunity for pointless and destructive intervention.

But instead of enjoying the fruits of his labor, the Wyoming welder says he was harangued by the federal government, stuck in what he calls a petty power play by the Environmental Protection Agency. He claims the agency is now threatening him with civil and criminal penalties – including the threat of a $75,000-a-day fine. …The government says he violated the Clean Water Act by building a dam on a creek without a permit from the Army Corps of Engineers. Further, the EPA claims that material from his pond is being discharged into other waterways. Johnson says he built a stock pond — a man-made pond meant to attract wildlife — which is exempt from Clean Water Act regulations.  The property owner says he followed the state rules for a stock pond when he built it in 2012 and has an April 4-dated letter from the Wyoming State Engineer’s Office to prove it. …But the EPA isn’t backing down and argues they have final say over the issue. They also say Johnson needs to restore the land or face the fines.

As you can imagine, this was not exactly good news for the property owner.

Johnson says he was “bombarded by hopelessness” when he first received the administrative order from the EPA. …The EPA order on Jan. 30 gave Johnson 30 days to hire a consultant and have him or her assess the impact of the supposed unauthorized discharges. The report was also supposed to include a restoration proposal to be approved by the EPA as well as contain a schedule requiring all work be completed within 60 days of the plan’s approval. If Johnson doesn’t comply — and he hasn’t so far — he’s subject to $37,500 per day in civil penalties as well as another $37,500 per day in fines for statutory violations.

But kudos to Mr. Johnson. Unlike so many others, he’s not going to roll over and acquiesce to EPA brutishness.

Johnson plans to fight. “This goes a lot further than a pond,” he said. “It’s about a person’s rights. I have three little kids. I am not going to roll over and let [the government] tell me what I can do on my land. I followed the rules.”  …Johnson says his legal fight with the government agency is a teachable moment for his kids. “This is showing them that they shouldn’t back down,” Johnson said. “If you need to stand up and fight, you do it.”

Needless to say, the EPA is not the only out-of-control bureaucracy in Washington.

Let’s now read about the thuggish actions against blueberry growers by the Department of Labor.

Bureaucrats from that entity decided to launch a legal jihad against some growers and they relied on bad numbers and grotesque strategy.

Another example of big government run amok.

In late July 2012, officials from the Department of Labor’s Wage and Hour Division visited Pan-American Berry Growers, B&G Ditchen and E&S Farms for spot inspections. …the Labor Department’s Wage and Hour division district director, Jeff Genkos, accused the growers of minimum-wage violations and declared the blueberries “hot goods” under the 1938 Fair Labor Standards Act. This charge is usually reserved for, say, T-shirts sewn by child laborers. The effect was to stop the fruit from being shipped to customers. He then ordered the growers to pay back wages and penalties and asked them to sign away any right to appeal the deal.

What was most shocking about the DOL’s actions is that they engaged in Mafia-type tactics and “made an offer they couldn’t refuse.”

This put the growers in an impossible spot. Either they could collectively pay $240,435 or let millions of dollars’ worth of berries rot. And they only had a day or two to make a decision. They did what any prudent employer would do: They paid the money, and the hot goods order was lifted.

And you won’t be surprised that the bureaucracy cooked the numbers in the first place.

It turns out that Labor’s bureaucrats had divined that the average worker could only pick around 60 pounds of blueberries an hour, some 30 pounds below what workers usually pick. They then counted the number of workers employed and concluded the growers must have had workers employed off the books. …In January, Oregon magistrate judge Thomas M. Coffin ruled for the growers. “In essence, to avoid the potential loss of millions of dollars worth of berries, defendants had to agree to the DOL’s allegations without an opportunity to present a defense or confront the DOL’s evidence in an administrative or court hearing,” he wrote.

I’m glad at least one court has ruled against the Department of Labor. Let’s hope that the final result is positive when all the appeals have been exhausted.

Both of these stories belong in my collection of “Government Thuggery in Action.”

Previous examples include:

If you peruse those examples without getting angry at big government, you probably need a lengthy bit of soul-searching.

If you’re a normal person, you’ll want this t-shirt (and don’t be a perv, just the t-shirt!).

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The political left obviously hopes that it can score political points by pitching some Americans against others with a campaign based on income inequality and class warfare taxation.

Is there any merit to this approach? Are the less fortunate suffering because some are succeeding? And would more government alleviate this problem, to the extent it actually exists?

George Will has a must-read column in the Washington Post on the topic of inequality, including a very relevant observation that the rich on Wall Street are the ones who benefit from the easy-money policy embraced by the Washington establishment.

In this sixth year of near-zero interest rates, the government’s monetary policy breeds inequality. Low rates are intended to drive liquidity into the stock market in search of higher yields. The resulting boom in equity markets — up 30 percent last year alone — has primarily benefited the 10 percent who own 80 percent of all directly owned stocks.

But his main point is that the lack of growth in the real economy has been very damaging to ordinary Americans.

And that lack of growth – acknowledged by both the Washington Post and Congressional Budget Office – is because politicians have been increasing the burden of government.

Richard Fisher, president of the Federal Reserve Bank of Dallas, says the total reserves of depository institutions “have ballooned from a pre-crisis level of $43 billion to $2.5  trillion .” And? “The store of bank reserves awaiting discharge into the economy through our banking system is vast, yet it lies fallow.” The result is a scandal of squandered potential: “In fourth quarter 2007, the nation’s gross domestic product (GDP) was $14.7 trillion; at year-end 2013 it was estimated to be $17.1 trillion. Had we continued on the path we were on before the crisis, real GDP would currently be roughly $20 trillion in size. That’s a third larger than it was in 2007. Yet the amount of money lying fallow in the banking system is 60 times greater now than it was at year-end 2007.” …there is abundant money for businesses. But, says Fisher, the federal government’s fiscal and regulatory policies discourage businesses from growing the economy with the mountain of money the Fed has created. This is why “the most vital organ of our nation’s economy — the middle-income worker — is being eviscerated.” And why the loudest complaints about inequality are coming from those whose policies worsen it.

Trillions of dollars sitting on the sidelines because of bad government policy.

Seems like Chuck Asay’s cartoon is right on the mark.

Let’s dig deeper into this topic by looking at what a couple of experts have written on the topic of inequality.

Here are some excerpts from a column by Ronald Bailey for Reason.

Here’s everything you need to know.

Are the poor getting poorer? No. In fact, over the past 35 years most Americans got richer. Has income inequality increased in the United States? Yes. Does it matter? Well, President Barack Obama thinks so.  …Is that true? No. …The real defining economic challenge of our time isn’t to end inequality. It’s persistent joblessness and weak economic growth perpetuated by feckless Obama administration policies.

If you want to know the details (and you should), Bailey explains that what matters is growth because that means all groups can enjoy rising incomes. And that’s exactly what you find in the data.

Using the CBO data, the Brookings Institution economist Gary Burtless has shown that from 1979 to 2010, the last year for which data are available, the bottom fifth’s after-tax income in constant dollars rose by 49 percent. The incomes of households in the second lowest, middle, and fourth quintiles increased by 37 percent, 36 percent, and 45 percent, respectively. The poor and the middle class got richer. …The rich got richer too, and they got richer faster. …So inequality in the U.S. has increased. But if most Americans’ incomes are rising, does it matter if some are getting a larger share?

He also makes the key observation that you shouldn’t just compare income groups over time.

This is because there is mobility. A poor household one year may not be part of the “bottom 20 percent” five years later.

Here’s more of what Bailey wrote.

Those worried about rising income inequality also often make the mistake of assuming that each income quintile contains the same households. They don’t. Between 2009 and 2011, for example, 31.6 percent of Americans fell below the official poverty threshold for at least two months, but only 3.5 percent stayed below it over the entire period. …In 2009, two economists from the Office of Tax Analysis in the U.S. Treasury compared income mobility in two periods, 1987 to 1996 and 1996 to 2005. The results, published in the National Tax Journal, revealed that “over half of taxpayers moved to a different income quintile and that roughly half of taxpayers who began in the bottom income quintile moved up to a higher income group by the end of each period.” …The Treasury researchers updated their analysis of income mobility trends in a May 2013 study for the American Economic Review, finding that about 75 percent of taxpayers between 35 and 40 years of age in the second, middle and fourth income quintiles in 1987 had moved to a different quintile by 2007. …In January, scholars from Harvard and University of California, Berkeley bolstered the Treasury economists’ conclusions. Parsing data from the 1950s and 1970s, the researchers, who are involved with The Equality of Opportunity Project, reported that “measures of social mobility have remained stable over the second half of the twentieth century in the United States.

Let’s continue with more wonky data.

Writing for National Affairs, Scott Winship delves into the issue, beginning with an explanation of the left’s hypothesis.

To hear many liberals tell it, increasing inequality is holding back growth, crushing the prospects of the poor and middle class, and even undermining American democracy. Such concerns are prominent in President Obama’s rhetoric, and seem also to drive key parts of his policy agenda — especially the relentless pursuit of higher taxes on the wealthy. …Perhaps the most common assertion regarding the ill effects of inequality in our time is that an unequal economy just doesn’t work for most people — that inequality impedes growth and harms standards of living.

He then unloads a bunch of data and evidence to show why the statists are wrong, including reliance on bad methodology.

…does it in fact reduce growth? There is no clear evidence that it does. …one of the most widely cited papers in the inequality debates — a 2011 study by IMF economists Andrew Berg and Jonathan Ostry showing that inequality hurts growth — suffers from this very problem of focusing primarily on developing countries.

But if the research looks at industrialized nations, it becomes apparent that it is not bad for growth when some people become rich.

Recent work by Harvard’s Christopher Jencks (with Dan Andrews and Andrew Leigh) shows that, over the course of the 20th century, within the United States and across developed countries, there was no relationship between changes in inequality and economic growth. In fact, between 1960 and 2000, rising inequality coincided with higher growth across these countries. In forthcoming work, University of Arizona sociologist Lane Kenworthy also finds that, since 1979, higher growth in the share of income held by the top 1% of earners has been associated with stronger economic growth across several countries.

There’s a lot more in the article, but this already is a long post. I encourage you to read both articles in their entirety.

The bottom line is that you don’t help poor people by savaging rich people (though it is very appropriate to target rich people who have undeserved wealth because of crony policies such as TARP and Ex-Im Bank).

Pizza FairnessThe left mistakenly acts as if the economy is a fixed pie and one person’s success necessarily means the rest of us are worse off. So in an effort to increase the relative amounts received by the poor, they pursue policies that cause the pie to shrink.

As Margaret Thatcher famously said, it seems they’re willing to hurt the poor if they can hurt the rich even more.

That’s not the way the economy works when people are liberated from the heavy yoke of statism.

Simply stated, you’re not going to be doing much to help the poor unless you focus on policies that generate faster long-run growth.

P.S. It’s not related to the issue of inequality, but George Will also included this delicious sentence in his column. It’s too good not to share.

We spend $1 trillion annually on federal welfare programs, decades after Daniel Patrick Moynihan said that if one-third of the money for poverty programs was given directly to the poor, there would be no poor. But there also would be no unionized poverty bureaucrats prospering and paying dues that fund the campaigns of Democratic politicians theatrically heartsick about inequality.

P.P.S. I also can’t resist sharing this video showing a European Parliamentarian denouncing the politicians and bureaucrats of the European Commission for hypocritically trying to squeeze more tax from the private sector while simultaneously benefiting from special tax breaks only available to themselves.

Gotta love any politician who is willing to quote Murray Rothbard and also state that government is a racket. And Dan Hannan has made similar points.

I can only wonder, by the way, what Mr. Bloom would say if he knew about the bureaucrats at the Organization for Economic Cooperation. They are totally exempt from income tax, yet they spend a lot of their time trying to impose higher taxes on other nations (including the United States).

You can also see him wax poetic in these two videos. And his better-known fellow MEP, Dan Hannan, also has weighed in on the same topics.

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With Crimea potentially breaking away from Ukraine and the ongoing risk of conflict, it’s time to revisit the topic.

I explained a few weeks ago that decentralization was one way of defusing the crisis.

Now Kevin Hassett of the American Enterprise Institute has a refreshing and important analysis explaining how bad economic policy has hindered Ukraine’s development.

He explains that Ukraine was one of the former Soviet Bloc nations that made the mistake of not copying the more market-oriented nations of Western Europe.

Prior to the breakup [of the Soviet Empire], Eastern Europe was underdeveloped relative to the West, mostly because of the failure created by central planning. When a market economy is unleashed in such a setting, “convergence” of the standard of living to that of the developed world can be quite rapid. …A large academic literature has emerged analyzing the impact of “going west.” The literature documents that those nations that assimilated into the EU saw dramatic economic growth. …The countries, like Ukraine, that failed to take that path have stagnated.

The impact is remarkable. Using EU membership as a proxy for nations that “went west,” Kevin put together a graph showing how the more market-oriented nations have dramatically out-performed the rest.

Hassett Putin Effect

He notes that per-capita income has climbed far faster in the western-oriented nations.

Income per capita has grown sharply since the mid 1990s, more than doubling for the former Soviet countries, and increasing about 50 percent for the Eastern Bloc countries (such as the Czech Republic) that have joined the EU. …The three lines on the bottom of the chart depict what has happened to those nations that have not joined the EU. Each of these countries has stagnated, seeing a standard of living that has barely budged since the fall of the USSR.

So what’s the moral of the story? Kevin bluntly writes that people who want to affiliate with Putin are traitors because they are condemning their fellow citizens to economic misery.

Vladimir Putin’s desire to maintain a zone of influence has had a dramatically negative effect on the economic well-being of citizens of the affected countries. It is hard to imagine how anyone could look at such data and not conclude that Putin supporters outside Russia are traitors, if not to their nations at the very least to their compatriots’ prospects of economic security and prosperity.

Now I want to build on what Kevin wrote by stating that “going west” is important because it is a proxy for more economic freedom.

Let’s take another look at his chart, but augment it with some numbers from Economic Freedom of the World.

I collected both the absolute ranking and relative economic freedom scores for the former Soviet Bloc nations, and then put together averages for each of the categories in Kevin’s chart. The first number is the average ranking and the second number is the average score. As you can see, the nations that have enjoyed more growth are the ones that have the most economic liberty.

EFW Putin Effect

Time for some caveats. Because of data limitations, the EFW Index does not have numbers for nations such as Kosovo. Moreover, Kevin didn’t include the former Soviet states that are in Asia, and I confess I don’t know for sure whether that means nations such as Armenia and Georgia are excluded.

But those issues only influence the green and red lines, and adding or subtracting those nations doesn’t change the look of the graph.

That having been said, the real moral of the story is that Ukraine needs economic liberty. It doesn’t have that now, and it almost surely won’t have that if it falls more under Putin’s influence.

Why? Because Ukraine already has been practicing Putinonomics (which is a sordid mix of cronyism, regulation, corruption, and weak rule of law), so more Russian control presumably will mean jumping from one frying pan to another.

Simply stated, if you want more prosperity, there’s no substitute for free markets and small government. The more nations move in that direction, the richer they will become.

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Regular readers may have noticed that I generally say that advocates of big government are “statists.”

I could call them “liberals,” but I don’t like that using that term since the early advocates of economic and personal liberty were “classical liberals” such as Adam Smith, John Locke, and Jean-Baptiste Say. And proponents of these ideas are still called “liberals” in Europe and Australia.

I could call them “socialists,” but I don’t think that’s technically accurate since the theory is based on government ownership of the means of production. This is why I’ve been in the strange position of defending Obama when some folks have used the S word to describe him.

I could call them “fascists,” which Thomas Sowell explains is the most accurate way of describing the modern left’s economic ideology, but that term also implies racism. But while leftists sometimes support policies that hurt minorities, they’re not motivated by racial animus.

I could call them “corporatists,” and I actually have used that term on occasion, but I think it’s too narrow. It’s not really an ideology, but rather a description of the sleazy alliance of the left and big business, such as we saw for TARP and Wall Street, or Obamacare and Big Pharma.

I’m motivated to write about my favorite way of expressing opprobrium because I just read a very interesting column in the U.K.-based Telegraph by Tim Stanley, an American historian.

He delves into the issue of whether it’s right to call Hitler a socialist.

…the Nazis did call themselves National Socialists. But…labels can be misleading. …Hitler wasn’t a socialist became apparent within weeks of becoming Chancellor of Germany when he started arresting socialists and communists. He did this, claim some, because they were competing brands of socialism. But that doesn’t explain why Hitler defined his politics so absolutely as a war on Bolshevism… Marxism is defined by class war, and socialism is accomplished with the total victory of the Proletariat over the ruling classes. By contrast, Hitler offered an alliance between labour and capital in the form of corporatism… It is true that the economy was socialised in the latter part of the 1930s, but not for the sake of building socialism. It was to prepare for war. Politics came before economics in the fascist state to the degree that it’s hard to conceive of Hitler as a coherent economic thinker at all. …Marxism defines history as a class struggle. Hitler saw it as a racial conflict… he was sometimes prepared to use socialist economics to pursue his agenda.

These all seem to be valid points, but I wonder whether it makes a difference.

Tarantulas, black widows, and brown recluses are all different species of arachnids, but it’s also correct to say that they are all poisonous spiders.

And I sure as heck wouldn’t want any of them to bite me.

Similarly, socialism, Marxism, and fascism may have specific motivations and characteristics, but they’re all forms of statism.

And I definitely don’t want to acquiesce to any of those coercive ideologies.

Which seems to be Tim Stanley’s conclusion as well.

The moral lesson is that power corrupts everyone: Left, Right, men, women, gay, straight, black, white, religious, atheist. The best countries have constitutions that limit the government, cherish the private sphere and largely leave the individual to make their own mistakes.

Now let’s look at a real-world example of a country that is suffering because of statism.

Allister Heath of City A.M. in London explains what is happening in Venezuela.

IF you want to see how to destroy an economy and a society, look no further than Venezuela. …the country is on the verge of total collapse… Food is running out, as are other essentials, even though the country claims the world’s largest oil reserves. There are shortages of toilet paper and soap, empty shelves and massive crowds queuing for hours in front of supermarkets. …The reason? A brain-dead rejection of basic economics, and a hardline, anti-market approach of the worst possible kind. There are maximum prices, other prices controls, profit controls, capital controls, nationalisations, expropriations and every other statist, atavistic policy you can think of. An extreme left wing government has waged war on capitalism and won; and as ever, ordinary people are paying the price. …The lesson from all of that is clear. Socialism doesn’t work. Price controls don’t work. Stealing people’s property doesn’t work. Chasing away foreigners doesn’t work. Destroying the supply-side of an economy doesn’t work. …It is a spectacularly horrible case of what FA Hayek called the Road to Serfdom.

For all intents and purposes, Venezuela is sort of like France, but without the rule of law. Which means bad policies become catastrophic policies.

And Allister is right. It is ordinary people who suffer. Venezuela’s long-term experiment with statism has resulted in stagnation and chaos. Once one of the richest nations in Latin America, it is now falling behind nations that have liberalized.

The Venezuelan government can’t keep food on the shelves, and it is moving closer and closer to Cuban-style rationing of basic necessities.

And people familiar with the history of statist regimes won’t be surprised to learn that Venezuela also is disarming the citizenry.

P.S. One business leader got a lot of heat for observing that Obamanomics was more like fascism than socialism. And another caught a bunch of grief for using an analogy about tax hikes and the Nazi invasion of Poland.

If they used “statism” instead, they would have been more accurate and avoided criticism.

P.P.S. This image is a funny but accurate illustration of the difference between socialism and capitalism. And here’s a socialism-for-kids image, but it’s really a parody of Obama’s class-warfare mentality.

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In recent weeks, I’ve pontificated on Obama’s spendthrift budget, Congressman Dave Camp’s timid tax reform plan, and the corrupt cronyism of Washington.

I got to elaborate on all these topics – and more – in this interview with Professor Glenn Reynolds, more widely known as Instapundit.

If there was an overall theme, it’s that President Obama’s statist agenda is not helping the country.

Other than my hair looking strange, I think this was a good interview.

But here’s a point I probably should have included when assessing the President’s performance. If you look at the Census Bureau’s data on median household income (adjusted for inflation), you’ll see that the median American is earning less during the Obama years. And that’s true whether you use 2008 or 2009 as the base year.

Median Household Income

Now let me provide three caveats on this data, two that help Obama and another that is less favorable.

1. First, if you look at the historical data from the Census Bureau, you’ll see that median household income is a lagging indicator. That means that incomes don’t improve in the first year or two of a recovery.

In other words, you can argue, with considerable justification, that Obama inherited bad numbers.

2. Second, median household income is an incomplete measure of living standards. If you peruse the data, you’ll see that median income for 2012 (the latest available year) is lower than it was the year Reagan left office.

I’m a big Reagan fan, so I’m tempted to say the country has lost ground since he left office, but that would be an exaggeration. We obviously have higher living standards today, notwithstanding the Census Bureau numbers.

3. But I’m not making excuses for Obama. My third and final caveat is that the median numbers don’t tell the full story. If you look at the Census Bureau’s numbers for various income groups, you’ll see that the only cohort that has enjoyed higher real income during the Obama years is….drum roll, please…the rich!

You read correctly. The bottom 20 percent have suffer lower incomes. The three middle-income quintiles have lost ground. Even the top 20 percent have lower median incomes. The only group that is ahead is the top 5 percent.

In other words, Obama may use lots of class-warfare rhetoric to pretend he’s on the side of ordinary people.

But his policies (TARPSolyndra, etc) have been enormously beneficial to the cronyists and insiders that have made the Washington metropolitan area so wealthy.

Here’s some of what Senator Portman of Ohio had to say about the topic.

It’s been five years since the experts said the recession was over, but for millions of Americans, it feels like it never ended. We’re living through the weakest economic recovery since World War II, and a lot of folks are struggling to make ends meet. Unemployment remains stubbornly high; the number of long-term unemployed is actually at record levels. But these statistics only tell half the story. Eleven million Americans have become so discouraged that they’ve given up looking for work altogether. Poverty rates have gone up, salaries have gone down, with the average family now bringing home $4,000 less than they did just five years ago.

Just in case you doubt Portman’s remarks, here’s the chart I produced using data from the Minneapolis Federal Reserve Bank.

It shows every recovery since end of World War II. The red line is Obamanomics.

Hmmm….this is almost enough to make one think that maybe we should try free markets and small government instead.

P.S. This Gary Varvel cartoon provides a good synopsis of Obama’s economic policy.

Political Cartoons by Gary Varvel

I also like Varvel’s take on Obamacare, and here’s another one of his cartoons on Obamanomics.

Varvel is the best at exposing the spending-cut hoax in DC, as you can see from this sequester cartoon and this deficit reduction cartoon. This cartoon about Bernie Madoff and Social Security, however, is at the top of my list.

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Just like Clark Kent could change into Superman, President Obama has a remarkable ability to change into King Obama.

Tired of that pesky Constitution? Irritated that the Founding Fathers created a system based on separation of powers? Well, there’s a superhero to overcome those obstacles.

Faster than a last-minute Obamacare reg! More powerful than the Tenth Amendment! Able to leap the enumerated powers clause in a single bound! (“Look! Up in the sky!” “It’s a bird!” “It’s a plane!” “It’s SuperPresident!”)… Yes, it’s SuperPresident … strange visitor from corrupt Chicago, who came to Washington with powers and hubris far beyond those of the Founding Fathers! SuperPresident … who can change the course of the Constitution, bend the Bill of Rights in his bare hands, and who, disguised as Barack Obama, mild-mannered uniter who stops the rise of the oceans and heals the planet, fights a never-ending battle for redistribution, statism, and the French way!

And what has our superhero done lately?

He’s arbitrarily and unilaterally changed the Obamacare law.

Since it’s the 18th time he’s done that, this may not seem very newsworthy. But the latest change is particularly interesting because the President is ordering certain companies to maintain their existing payrolls.

Check out this blurb from a Fox News story.

Obama officials made clear in a press briefing that firms would not be allowed to lay off workers to get into the preferred class of those businesses with 50 to 99 employees. …Firms will be required to certify to the IRS–under penalty of perjury–that ObamaCare was not a motivating factor in their staffing decisions. To avoid ObamaCare costs you must swear that you are not trying to avoid ObamaCare costs.

When this story first came to my attention, thanks to James Taranto, something seemed eerily familiar.

Where had I read about a government ordering companies to freeze in place their employment levels.

I went through all the usual suspects in my mind. Was it Argentina? Was it France? How about California?

And then it struck me that life was imitating fiction. Obama’s policy is so bad that it resembles a scene in an Ayn Rand novel.

In her most famous work, Atlas Shrugged, the political elite try to halt the economy’s decline by imposing Directive 10-289, which seeks to freeze in place all factors of production – including the number of workers at each firm.

All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment.

Obama’s latest diktat doesn’t go nearly as far as Directive 10-289, thankfully, but it’s more than a bit disturbing that we’ve gotten to the point where a bunch of hacks in Washington think that they have the right to tell private companies how many people they’re allowed to have on the payroll.

But I guess we shouldn’t be surprised.

This isn’t the first time that the real-world unfolding of Obamacare has resembled a scene from Atlas Shrugged. Back in 2011, I wrote about how the waiver process for escaping the law was almost identical to the corrupt system of unfreezing railroad bonds in the book.

P.S. While searching online to get the details of Directive 10-289, I saw that John Sexton, writing for Breitbart, beat me to the punch.

P.P.S. If you prefer to get anti-statism satire from Superman instead of Atlas Shrugged, you may enjoy this cartoon.

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What’s the defining characteristic of our political masters?

Going all the way back to when they ran for student council in 6th grade, is it a craven desire to say or do anything to get elected?

Is it the corrupt compulsion to trade earmarks, loopholes, and favors in exchange for campaign cash?

Or is it the knee-jerk desire to buy votes by spending other people’s money?

The answer is yes, yes, and yes, but I want to add something else to the list.

One of the most odious features of politicians is that they think they’re entitled to all of our money. But it goes beyond that. They also think they’re doing us a favor and being magnanimous if they let us keep some of what we earn.

Think I’m joking or exaggerating?

Consider the fact that the crowd in Washington says that provisions in the internal revenue code such as IRAs are “tax expenditures” and should be considered akin to government spending.

So if you save for retirement and aren’t subject to double taxation, you’re not making a prudent decision with your own money. Instead, you’re the beneficiary of kindness and mercy by politicians that graciously have decided to give you something.

And the statists at the Washington Post will agree, writing that folks with IRAs are getting “a helping hand” from the government.

Or if you have a business and the government doesn’t impose a tax on your investment expenditures, don’t think that you’re being left alone with neutral tax policy. Instead, you should get on your knees and give thanks to politicians that have given you a less-punitive depreciation schedule.

And the Congressional Budget Office, the Joint Committee on Taxation, and the Government Accountability Office will all agree, saying that you’re benefiting from a “tax expenditure.”

The same attitude exists in Europe. But instead of calling it a “tax expenditure” when taxpayers gets to keep the money they earn, the Euro-crats say it is a “subsidy” or a form of “state aid.”

Speaking at the European Competition Forum in Brussels, EU commissioner Joaquin Almunia said he would investigate whether moves by national governments to tailor their tax laws to allow companies to avoid paying tax had the same effect as a subsidy. Subsidising certain businesses could be deemed as anti-competitive, breaching the bloc’s rules on state aid. …The remarks by the Spanish commissioner’s, who described the practice of “aggressive tax planning” as going against the principles of the EU’s single market, are the latest in a series of salvos by EU officials aimed at clamping down on corporate tax avoidance. …He added that the practice “undermines the fairness and integrity of tax systems” and was “socially untenable.”

Needless to say, Senor Almunia’s definition of “fairness” is that a never-ending supply of money should be transferred from taxpayers to the political elite.

The head of the Paris-based Organization for Economic Cooperation and Development wants to take this mentality to the next level. He says companies no longer should try to legally minimize their tax burdens.

International technology companies should stop considering it their “duty” to employ tax-dodging strategies, said Angel Gurria, head of the Organization for Economic Cooperation and Development. …The OECD, an international economic organization supported by 34 member countries including the U.S., U.K., Germany and Japan, will publish the results of its research on the issue for governments to consider within the next two years, Gurria said.

And you won’t be surprised to learn that the OECD’s “research on the issue” is designed to create a one-size-fits-all scheme that will lead to companies paying a lot more tax.

But let’s think about the broader implications of his attitude about taxation. For those of us with kids, should we choose not to utilize the personal exemptions when filling out our tax returns? Should we keep our savings in a regular bank account, where it can be double taxed, instead of an IRA or 401(k)?

Should we not take itemized deductions, or even the standard deduction? Is is somehow immoral to move from a high-tax state to a low-tax state? In other words, should we try to maximize the amount of our income going to politicians?

According to Mr. Gurria, the answer must be yes. If it’s bad for companies to legally reduce their tax liabilities, then it also must be bad for households.

By the way, it’s worth pointing out that bureaucrats at the OECD – including Gurria – are completely exempt from paying any income tax. So if there was an award for hypocrisy, he would win the trophy.

P.S. Switching topics to the NSA spying controversy, here’s a very amusing t-shirt I saw on Twitter.

The shirt isn’t as funny as the Obama-can-hear-you-now images, but it makes a stronger philosophical point.

P.P.S. Let’s close with an update on people going Galt.

I wrote with surprise several years ago about the number of people who were giving up American citizenship to escape America’s onerous tax system.

But that was just the beginning of a larger trend. The numbers began to skyrocket last year, probably in part the result of the awful FATCA legislation.

Well, we now have final numbers for 2013.

Expats_1998_2013

What makes these numbers really remarkable is that expatriates are forced to pay punitive exit taxes before escaping the IRS.

Which is why there are probably at least 10 Americans who simply go “off the grid” and move overseas for every citizen who uses the IRS process to officially expatriate.

Not exactly a ringing endorsement of Obamanomics.

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One of the many differences between advocates of freedom and supporters of statism is how they view “rights.”

Libertarians, along with many conservatives, believe in the right to be left alone and to not be molested by government. This is sometimes referred to in the literature as “negative liberty,” which is just another way of saying “the absence of coercive constraint on the individual.”

Statists, by contrast, believe in “positive liberty.” This means that you have a “right” to things that the government will give you (as explained here by America’s second-worst President). Which means, of course, that the government has an obligation to take things from somebody else. How else, after all, will the government satisfy your supposed right to a job, education, healthcare, housing, etc.

Sometimes, the statists become very creative in their definition of rights.

You may laugh at these examples, particularly the ones that focus on seemingly trivial issues.

But don’t laugh too hard, because our friends on the left are busy with very grandiose plans for more “positive liberty.”

The EU Observer reports on efforts in Europe to create expanded rights to other people’s money.

Austerity programmes agreed with the troika of international lenders (the European Commission, European Central Bank and International Monetary Fund) are in breach of the EU’s Charter of Fundamental Rights, according to a German legal expert. …under the EU charter of fundamental rights, a legal text which became binding for member states in 2009, several austerity measures enshrined in the MoUs can be fought in courts. …His study highlights that the MoUs “have seriously limited the autonomy of employers and trade unions to negotiate wages.” …Education and health care reforms prescribed in the memorandums are also questionable because they are focusing too much on cutting budgets, he said. …He noted that the concept of “financial stability” was put above all other considerations. “But financial stability cannot be achieved without social stability,” he said.

But it’s not just one oddball academic making these claims.

…the Council of Europe’s social rights committee noted that public policies since 2009 have been unable to stem a generalised increase in poverty on the continent. The committee identified some 180 violations of European Social Charter provisions on access to health and social protection across 38 European countries. In the bailed-out countries, the committee found several breaches – particularly in terms of wages and social benefits. Ireland was found in breach of the social charter for not ensuring the minimum levels of sickness, unemployment, survivor’s, employment injury and invalidity benefits. Greece and Cyprus have “inadequate” minimum unemployment, sickness, maternity and old age benefits, as well as a restrictive social security system. Spain also pays too little to workers on sick leave.

This crazy thinking also exists in the United States. A former Carter Administration official, now a law professor at Georgetown, has written that countries with good policy must change their systems in order to enable more tax revenue in nations with bad policy.

Do states like Switzerland, which provide a tax haven for wealthy citizens of developing countries, violate internationally recognized human rights? …bank secrecy has a significant  human rights impact if governments of developing countries are deprived of resources needed to meet basic economic rights guaranteed by the United Nations Covenant on Economic, Social, and Cultural Rights. …The Covenant explicitly recognizes individual rights to adequate food, clothing, and housing (Article 11); health care, clean water, and sanitation (Article 12); and education (Article 13). The Covenant also imposes obligations on member states to implement these rights.

And the right to redistribution isn’t just part of the U.N. mission.

There’s also a European set of Maastricht Principles which supposedly obligates nations to help each expand the burden of government.

Articles 19 and 20 of The Maastricht Principles call on states to “refrain from conduct which nullifies or impairs the enjoyment and exercise of economic . . . rights of persons outside their territories . . . or which impairs the ability of another State to comply with that State’s . . . obligations as regards economic rights.” …recognizing the fact that secrecy for offshore accounts makes it difficult for developing countries to implement Covenant obligations. It therefore seems indisputable that offshore accounts impede the fulfillment of internationally recognized human rights.

You may be thinking that all this sounds crazy. And you’re right.

You may be thinking that it’s insane to push global schemes for bigger government at the very point when the welfare state is collapsing. And you’re right.

You may be thinking that it’s absurd to trample national sovereignty in pursuit of bad policy. And you’re right.

And you may be thinking this is a complete bastardization of what America’s Founding Fathers had in mind. And you’re right.

But you probably don’t understand that this already is happening. The IRS’s awful FATCA legislation, for instance, is basically designed for exactly the purpose of coercing other nations into enforcing bad American tax policy.

Even more worrisome is the OECD’s Orwellian Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which is best viewed as a poisonous acorn that will grow into a deadly World Tax Organization oak tree.

P.S. And the Obama Administration already is pushing policies to satisfy the OECD’s statist regime. The IRS recently pushed through a regulation that says American banks have to put foreign tax law above U.S. tax law.

P.P.S. Statists may be evil, but they’re not stupid. They understand that tax havens and tax competition are a threat to big government.

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Some things in life are very dependable. Every year, for instance, the swallows return to Capistrano.

And you can also count on Dan Mitchell to wax poetic about the looming collapse of French statism.

Back in 2011, I said France was engaged in economic self-destruction.

In September 2012, I wrote that it was time to start the countdown for France’s fiscal crisis.

In October of that year, I pontificated about France’s looming fiscal suicide.

Last April, I warned that the fuse was burning on France’s fiscal time bomb.

In June of 2013, I stated that the looters and moochers in France were running out of victims to plunder.

And in October of last year, I expounded on France’s economic death spiral.

Geesh, looking at that list, I guess I’m guilty of – in the words of Paul Krugman – being part of the “plot against France” by trying to discredit that nation’s economy.

Or maybe I’m just ahead of my time because we’re now seeing articles that almost sound like they could have been written by me appearing in establishment outlets such as Newsweek. Check out some amazing excerpts from an article by Janine di Giovanni, who lives in France and serves as the magazine’s Middle East Editor.

…what is happening today in France is being compared to the revocation of 1685. …the king closed churches and persecuted the Huguenots. As a result, nearly 700,000 of them fled France, seeking asylum in England, Sweden, Switzerland, South Africa and other countries. The Huguenots, nearly a million strong before 1685, were thought of as the worker bees of France. They left without money, but took with them their many and various skills. They left France with a noticeable brain drain.

It’s happening again, except this time the cause is fiscal persecution rather than religious persecution. French politicians have changed the national sport from soccer to taxation!

Since the arrival of Socialist President François Hollande in 2012, income tax and social security contributions in France have skyrocketed. The top tax rate is 75 percent, and a great many pay in excess of 70 percent. As a result, there has been a frantic bolt for the border by the very people who create economic growth – business leaders, innovators, creative thinkers, and top executives. They are all leaving France to develop their talents elsewhere.

It’s an exaggeration to say “they are all leaving,” but France is turning Atlas Shrugged from fiction to reality.

“Au revoir, bloodsuckers”

Many of the nation’s most capable people are escaping – ranging from movie stars to top entrepreneurs.

What I find most amusing is that France’s parasitical political elite is whining and complaining that these people won’t remain immobile so they can be plundered.

And when the people who have the greatest ability leave, that has an impact on economic performance – and ordinary people are the ones who suffer the most.

…the past two years have seen a steady, noticeable decline in France. There is a grayness that the heavy hand of socialism casts. It is increasingly difficult to start a small business when you cannot fire useless employees and hire fresh new talent. Like the Huguenots, young graduates see no future and plan their escape to London. The official unemployment figure is more than 3 million; unofficially it’s more like 5 million.

The article also gives some details that will help you understand why the tax burden is so stifling. Simply stated, the government is far too big and pays for things that should not be even remotely connected to the public sector.

Part of this is the fault of the suffocating nanny state. …As a new mother, I was surprised at the many state benefits to be had if you filled out all the forms: Diapers were free; nannies were tax-deductible; free nurseries existed in every neighborhood. State social workers arrived at my door to help me “organize my nursery.” …The French state also paid for all new mothers, including me, to see a physical therapist twice a week to get our stomachs toned again.

Government-subsidized “toned” stomachs. Hey, maybe big government isn’t all bad. Sort of reminds me of the taxpayer-financed boob jobs in the United Kingdom (British taxpayers also pay for sex trips to Amsterdam).

More seriously, all the wasteful spending in France erodes the work ethic and creates a perverse form of dependency.

I had friends who belonged to trade unions, which allowed them to take entire summers off and collect 55 percent unemployment pay. From the time he was an able-bodied 30-year-old, a cameraman friend worked five months a year and spent the remaining seven months collecting state subsidies from the comfort of his house in the south of France. Another banker friend spent her three-month paid maternity leave sailing around Guadeloupe – as it is part of France, she continued to receive all the benefits. Yet another banker friend got fired, then took off nearly three years to find a new job, because the state was paying her so long as she had no job. “Why not? I deserve it,” she said when I questioned her. “I paid my benefits into the system.”

So what’s the bottom line? Well, the author sums up the issue quite nicely.

…all this handing out of money left the state bankrupt. …The most brilliant minds of France are escaping to London, Brussels, and New York rather than stultify at home. …“The best thinkers in France have left the country. What is now left is mediocrity.” From a chief legal counsel at a major French company: “France is dying a slow death. Socialism is killing it…”

As the old saying goes, this won’t end well. Maybe France will suffer a Greek-style meltdown, but perhaps it will “merely” suffer long-run stagnation and decline.

Which is a shame because France is a beautiful country and is ranked as one of the best places to live if you happen to already have a considerable amount of hard-to-tax wealth (and the French also were ranked among the top-10 most attractive people).

But bad government can screw up a country, even if it does have lots of natural advantages.

And that’s exactly what generations of French politicians have done to France. The tax system has become so bad that more than 8,000 French households had to pay more than 100 percent of their income to the government in 2012.

The French government has announced, by the way, that it intends to cap taxes so that no household ever pays more than 80 percent to the state. Gee, how merciful, particularly since the French President has echoed America’s Vice President and asserted that it’s patriotic to pay higher taxes.

That’s why I’ll stand by my prediction that President Obama will never be able to make America as bad as France. Heck, France has such a bad approach on taxes that Obama has felt compelled to oppose some of that country’s statist initiatives.

P.S. The prize for silliest example of government intervention in France goes to the law that makes it a crime to insult your spouse’s personal appearance.

P.P.S. The big puzzle is why the French put up with so much statism. Polling data from both 2010 and 2013 shows strong support for smaller government, and an astounding 52 percent of French citizens said they would consider moving to the United States if they got the opportunity. So why, then, do they elect statists such as Sarkozy and Hollande?!?

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Let’s start 2014 with a depressing story about the reprehensible way in which big companies get in bed with big government.

If asked to list the example of cronyism that I find most nauseating, the Export-Import Bank would be at the top of my list.

The Obamacare handouts for Big Insurance and Big Pharma obviously belong on the list as well.

But don’t forget the corrupt TARP giveaways to Wall Street, the handouts for GM (though at least we got some good parody from that farce), the corrupt H&R Block collusion with the IRS, and the sleazy ethanol handouts to agribusinesses.

We could list more examples, but let’s look at something from today’s newspapers. We normally think of the light-bulb ban as silly environmentalism, but the invaluable Tim Carney writes in the Washington Examiner that the real impetus was from corrupt companies.

Say goodbye to the regular light bulb this New Year. …Starting Jan. 1, the famous bulb is illegal to manufacture in the U.S., and it has become a fitting symbol for the collusion of big business and big government.

Tim explains how companies worked the political system.

People often assume green regulations like this represent the triumph of environmental activists trying to save the plant. That’s rarely the case, and it wasn’t here. Light bulb manufacturers whole-heartedly supported the efficiency standards. General Electric, Sylvania and Philips — the three companies that dominated the bulb industry — all backed the 2007 rule… The lighting industry was the main reason the legislation was moving. …“Philips formed a coalition with environmental groups including the Natural Resources Defense Council to push for higher standards.”

Equally important, Tim explains why the companies thought cronyism was an effective way to line their pockets with undeserved wealth.

Competitive markets with low costs of entry have a characteristic that consumers love and businesses lament: very low profit margins. GE, Philips and Sylvania dominated the U.S. market in incandescents, but they couldn’t convert that dominance into price hikes. Because of light bulb’s low material and manufacturing costs, any big climb in prices would have invited new competitors to undercut the giants — and that new competitor would probably have won a distribution deal with Wal-Mart. So, simply the threat of competition kept profit margins low on the traditional light bulb. …the bulb-makers turned to government. Philips teamed up with NRDC. GE leaned on its huge lobbying army — the largest in the nation — and soon they were able to ban the low-profit-margin bulbs.

The better alternative, needless to say, is freedom.

There is a middle ground between everyone using traditional bulbs and traditional bulbs being illegal. It’s called free choice: Let people choose if they want more efficient and expensive bulbs. Maybe they’ll chose LEDs for some purposes and cheap bulbs for others. But consumer choice is no good either for nanny-staters or companies seeking high profit margins.

Reading Tim’s piece, it makes me wonder what sleaze was involved in the rules forcing us to use inferior washing machines.

P.S. Here are my 10 most-viewed posts of 2013.

*Last January, I shared some gun control humor and readers must like mocking the gun grabbers because that post easily got the most views.

*And in October, Libertarian Jesus racked up the second-highest number of views.

*Interestingly, the third most-viewed post was one from 2012. I guess you won’t be surprised to learn it was another example of gun control humor.

*We also go into the archives – back to 2011 – for the post with the fourth-highest number of views. It’s the classic set of cartoons about the rise and fall of the welfare state.

*Another oldie came in fifth place with this 2012 post featuring – you guessed it – gun control humor.

*In sixth place, we get some 2012 lessons on how a story about beer can be used to explain the failures of class warfare tax policy.

*We finally see another 2013 post with our revelation about the most free-market “state” in North America.

*But then we return to 2011 because lots of people waited until 2013 before reading the classroom experiment with socialism.

*In ninth place, you can read a libertarian fantasy from last April.

*Rounding out the top 10 is a celebration of Obama’s biggest fiscal defeat.

My favorite post of the year, for what it’s worth, reveals my fiscal wonkiness.

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Nope, the answer isn’t smoking. Or fatty food. Or 16 oz. sodas.

And it’s not alcohol, driving too fast, or standing between politicians and a TV camera.

Che Mercedes

Why is murder “chic” for some people?

In the past 100 years or so, the biggest cause of premature death has been government.

Back in 2011, while criticizing the Baltimore Symphony for using the Soviet hammer and sickle in a promotion, I linked to a website showing how many millions of people were murdered by the dictators who ruled the Soviet Union.

You’ll find similar data in this video, as well as some equally shocking numbers for other examples of democide (death by government).

I don’t know if all the numbers in the video are right. I don’t even know if the government bought 1.6 billion hollow point bullets. And I certainly hope our tax dollars didn’t help finance Pol Pot’s democide in Cambodia.

But I fully agree that government is the greatest killer of all time.

This doesn’t mean, by the way, that I think all governments are equally evil. I wouldn’t even make the claim that there’s a link between big government and democide (though that’s probably true given the track record of National Socialists in Germany and Soviet Socialists in China and the Soviet Union).

Instead, I’ll simply regurgitate some of what I wrote back in August.

…be thankful that there are some libertarians willing to raise a stink about government even if the rest of the world thinks we’re a bit odd. As we’ve seen dozens of times, most recently with the IRS and NSA, bureaucrats and politicians have a compulsive tendency to grab more power and make government more intrusive. …I’ll end today’s post by mentioning the fable of the frog that gets put in a pot of water and doesn’t jump out because the temperature feels comfortable. But then the heat is slowly raised and the frog no longer has the energy to escape when he finally figures out he’s being cooked. Well, libertarians are the ones who loudly complain when the government puts us into pots.

In other words, governments are less likely to do really awful things if there are some of us fighting when they do mildly bad things.

Don’t forget that when enough mildly bad things occur and you get economic stagnation, one result is the kind of social chaos and rioting that has occurred in some European nations.

And those are the conditions that sometimes lead to takeovers by the types of governments that do really awful things.

Let’s close with two bits of satire. First, here’s something I saw on Twitter. It’s for the statists who claim that communism is a good theory, but that it hasn’t been properly implemented.

Needless to say, I can’t see the appeal of a theory that says we are slaves to each other. But the point of this poster is that real-world communism is always about murder and oppression.

Communism in Real Life

Second, this is a good opportunity to emphasize one of the messages from the end of the video.

A common trait of dictators is that they want the citizenry disarmed.

This poster is the fourth-most viewed post I’ve ever produced. But not because I said anything clever.

Instead, people like this poster and share it with their friends because it makes a very important point about the dangers of unlimited state power.

So what’s the moral of the story? I guess the message is that small government is tolerable. Medium-sized government is bad. And unlimited government is horrible.

Actually, George Washington said the same thing with much greater clarity: “Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.”

P.S. I suppose this shouldn’t be a joking matter, but here’s an amusing look at communist efficiency from the Beijing Olympics.

P.P.S. And the fourth video at this link has some great examples of Reagan’s use of humor against communism.

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After nearly five years in office, what’s President Obama’s most significant accomplishment?

This is a serious question, so no jokes about the Nobel Prize he received for not being Bush. And no partisan GOP answers about the 2010 election, either.

Put yourself in the position of a future historian and think about what you would put in a book to describe Obama’s biggest accomplishment.

I don’t think anyone, regardless of ideology, would pick the so-called stimulus. Advocates of small government say it was a waste of money based on deeply flawed Keynesian theory.

Proponents of big government, by contrast, also aren’t big fans of the stimulus, though they’re dissatisfied because they think Obama should have wasted even more money.

Another potential answer is Obamacare. Libertarians and conservatives, needless to say, would say it was a significant accomplishment in the same sense that the Titanic had a significant maiden voyage.

Leftists, by contrast, obviously can’t be pleased by the way Obamacare is imploding  in the short run, but they nonetheless may think that it will be worth it in the medium run because more people will be dependent on government (though they may regret their choice in the long run).

Killing Osama bin Laden is probably a good answer, but if terrorism and conflict with the Islamic world are still big issues in the future, then I suspect the achievements of Seal Team Six won’t be seen as making that much of a difference.

For what it’s worth, I think the change in public opinion may be the President’s most long-lasting and significant accomplishment. Take a look at these remarkable results just published by Gallup. A record share of the population now say that big government is the biggest threat to the nation’s future.

Gallup Big Government Polling Data

Wow. I’m tempted to say that this is strong evidence of the effectiveness of the Cato Institute (and there is independent data to support that position), but I feel compelled to admit that Obama also deserves a good bit of the credit.

Even more amazing, President Obama has done something that is probably beyond even the ability of Cato. He’s convinced partisan Democrats that big government is a serious threat. Look at how the numbers have dramatically changed since 2008.

Gallup Big Govt Democrat Polling Data

What’s particularly amazing about the shift among Democrats isn’t that 56 percent now view big government as the major threat today, compared to 32 percent about five years ago. What’s shocking is that this change happened with a Democrat in the White House.

This is newsworthy because partisan Republicans and Democrats have a tendency to say things are good or bad depending on whether “their team” is in charge.

While these numbers are remarkable, I suppose it’s too early to say the growing concern about big government is the most significant accomplishment of the Obama presidency.

That being said, anxiety about big government may lead to big political changes in 2014 and 2016, and those political changes may then lead to big policy changes such as entitlement reform and tax reform.

And if that happens, then the shift in public opinion during the Obama years may turn out to be profoundly important. In other words, Obama may turn out to be another Herbert Hoover – a politician whose statist policies set the stage for dramatic changes in public policy.

And if that happens, Obama truly will deserve to be named “libertarian of the year.”

P.S. While big government is the biggest threat to the country’s future, big business and big labor can be very dangerous to liberty when they get in bed with big government.

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The genius of capitalism is that there is a link between effort and reward. In a genuine market economy (as opposed to cronyism), people can only make themselves rich by working harder and smarter to satisfy the needs and wants of others.

The blunder of statism is that the link between effort and reward is damaged. Punitive tax rates, for instance, punish people for producing. Redistribution programs, meanwhile, create incentives for dependency. And regulation throws lots of sand in the gears of the economy, while also creating big opportunities for corrupt cronyism.

I sometimes try to make this clear by citing the failure of communism. And by failure, I’m not talking about the brutality of Soviet-style dictatorships. Instead, I’m referring to the basic failure of state-controlled economies. Heck, places such as Cuba and Venezuela can’t even produce enough toilet paper!

And North Korea is such a basket case that it reduced physical requirements for military service after pervasive famine led to a stunted generation.

But I don’t want anyone to accuse me of red-baiting, so let’s pretend communism never existed and look at an unfortunate episode from American history.

When the colonists created the Plymouth Colony, they used a socialist model. This video from Reason TV explains how that system foundered.

Gee, what a surprise. Socialism was the problem and capitalism was the solution. When you give people property rights and establish a clear link between effort and reward, good things happen.

As Bono now understands. More remarkable, even Obama once said we should “let the market work.” So maybe there’s hope.

In honor of the season, let’s share a few more Thanksgiving cartoons, all of which – as you might expect – make fun of Obamacare.

Continuing a theme from some of yesterday’s cartoons, we have the Turkey of the Year.

TG II Cartoon 1

And an observation on how well the law is working.

TG II Cartoon 2

This Lisa Benson cartoon is very appropriate since the Mayflower carried the first colonists to Plymouth.

TG II Cartoon 3

P.S. I don’t want to pass up this opportunity for some well-deserved mockery of the evil philosophy of communism,. You can see some great Reagan jokes in the fourth video of this link and the first video in this link. And this doctored image makes a very powerful point in an amusing fashion.

P.P.S. Back in 2010, I also debunked the leftist counter-argument in a post that included the Reason video and a John Stossel column on the topic of the Pilgrims and property rights.

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I’m glad I work for a principled and libertarian organization. At the Cato Institute, there’s never any pressure to say or do the wrong thing for partisan reasons.

When Republicans screw up, I don’t have to think twice about exposing their misdeeds.

I have repeatedly criticized President Bush (and his former top aide) for expanding the burden of government. Buying votes with other people’s money isn’t compassionate.

Incurable spendaholics?

I have excoriated former GOP Hill staffers who became lobbyists for various special interests groups looking to fleece taxpayers. Stealing is wrong, even when you get a lot of money to use government as middleman.

I have slammed a former Reagan Administration official for defending earmarks. I think it is morally offensive that he gets rich by facilitating the transfer of money from taxpayers to powerful interest groups.

I have condemned the former Senate Republican leader for defending Obamacare. I think it is disgusting that he puts his lobbying income ahead of America’s best interests.

I have denounced Illinois Republican legislators for killing school choice. I think it is downright nauseating that they condemn inner-city children to terrible schools in exchange for campaign contributions from teacher unions.

And I have pointed out that statist policies don’t become acceptable merely because they come from Republican presidential candidates. The road to serfdom oftentimes is bipartisan.

We now have another candidate for our “Republican Hall of Shame.” The governor of Ohio, John Kasich, is embracing Obamacare. Moreover, not only does he want bad healthcare policy, but he’s using third-world tactics and making morally reprehensible arguments.

The Wall Street Journal savages Kasich in a stinging editorial. Here’s a key excerpt that explains the overall situation.

…there are still a few disciples with faith in an ObamaCare higher power, and one of them happens to run Ohio. Governor John Kasich is so fervent a believer that he is even abusing his executive power to join the Affordable Care Act’s Medicaid expansion. Not to be sacrilegious, but the Republican used to know better. Now Mr. Kasich seems to view signing up for this part of ObamaCare as an act of Christian charity and has literally all but claimed that God told him to do so.

But Gov. Kasich has a slight problem. The legislature hasn’t approved this budget-busting part of Obamacare. So Kasich has decided that he can arbitrarily change policy, just like Obama did with the employer mandate and the Obamacare exemption for Capitol Hill.

The problem is that his evangelizing failed to convert the Ohio legislature, which is run by Republicans who understand the brutal budget and regulatory realities of participating in new Medicaid. So Mr. Kasich simply decided to cut out Ohio’s elected representatives and expand Medicaid by himself. …he appealed to an obscure seven-member state panel called the Controlling Board, which oversees certain state capital expenditures and can receive or make grants. …Mr. Kasich asked the panel to approve $2.56 billion in federal funding, and then he’ll lift eligibility levels via executive fiat. It’s a gambit worthy of President Obama, who also asserts unilateral powers to suspend laws that displease him and bypass Congress.

But what’s really nauseating is that Kasich equates big government and welfare spending with religious values.

Mr. Kasich really must feel like he’s guided by the Holy Spirit… “When you die and get to the meeting with St. Peter, he’s probably not going to ask you much about what you did about keeping government small. But he is going to ask you what you did for the poor,” to quote one of his favorite lines.

I suppose I could make a joke about communists presumably being super religious if you use this twisted metric, but there’s a serious point to be made. I’m not a religious scholar, but I wrote several years ago that, “Doesn’t Christianity (and, I assume, Judaism and other faiths) require individuals – using free will – to act charitably? Using the coercive power of government to forcibly redistribute other people’s money, by contrast, is moral preening at best.”

Moreover, Kasich must be delusional if he thinks making government bigger is good for the poor. Redistribution traps the poor in dependency and a larger public sector hinders economic growth, making life even more difficult for the less fortunate.

Heck, just compare Hong Kong and Argentina over the past 50-plus years and ask yourself which jurisdiction afforded more opportunity for those trying to climb the economic ladder.

Fortunately, the battle isn’t over yet.

Thirty-nine House Republicans signed a formal protest and some of them are threatening to sue, and well they should. They argue that circumventing the legislature subverts the Ohio constitution’s separation of powers and exceeds the statutory legal authorities of the Controlling Board, which is supposed to “take no action which does not carry out the legislative intent of the General Assembly.”

I don’t know whether a legal case will be successful, but I can share data showing that Ohio already is in deep fiscal trouble.

It ranks 39th in the Tax Foundation’s State Business Tax Climate Index.

It was the 7th-worst state on controlling spending over the past decade.

It ranks in the bottom 10 on measures of bureaucrats to teachers.

It was listed as one of America’s 11 states facing an economic death spiral.

And John “Barack” Kasich thinks he’ll make Ohio better by adding an additional layer of government spending to finance Obamacare expansion?!?

What makes this situation so sad is that Kasich was Chairman of the House Budget Committee in the mid-1990s, so he deserves some of the credit for restraining federal spending during that period, a very successful policy that led to better economic performance and budget surpluses.

P.S. Kasich’s push to expand Medicaid shows one of the reasons the program should be reformed. He’s being lured by the promise that Washington will pick up the entire tab for the first few years. Afterwards, state taxpayers will get saddled with some of the burden, but Kasich probably assumes he won’t be around to deal with that problem. This is why the entire program should be block-granted to the states. If Kasich really thinks God wants a bigger Medicaid system, he should go to Ohio voters and ask them to pay for it.

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As an advocate of small government, I’m often distressed that I sometimes have to rely on Republicans in Washington to fight statism.

Why am I distressed? Because some of the worst people in Washington are GOPers. They may give lip service to fiscal responsibility when campaigning, but then conveniently forget that rhetoric when it’s time to make decisions.

Which helps to explain why spending grew faster under Bush than Obama.

But as bad as Republicans are, there’s no way they could be as bad as the faux Conservative Party in the United Kingdom.

Consider the fundamental debate about whether big government is good and whether we have a moral obligation to maximize the amount of money we turn over to politicians.

Normal people think government is too big and they don’t want to reward a corrupt political class with extra revenue.

And they have strong legal standing for that position. Here’s what Judge Learned Hand famously opined in 1947.

Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.

Judge Hand obviously is correct. It is nonsense to argue that taxpayers have an obligation to pay more than is legally required.

But not everybody is guided by common sense. And if there was a prize for an absence of common sense (as well as a prize for absence of integrity or principles), the David Cameron government in the United Kingdom would be a strong contestant for that award.

Here’s the latest example of the intellectual bankruptcy of that supposedly conservative government. An official was just forced to resign because – prior to joining the government – he advised people to legally minimize their tax liabilities.

I’m not joking. Here’s an excerpt from a Reuters report.

A tax adviser to the British government has been forced to resign after he was recorded giving tips at a conference on how to pay less tax and “keep money out of the Chancellor’s grubby mitts”, a Treasury minister said. The BBC Panorama investigative program filmed David Heaton – before he joined the government as an adviser on how to clamp down on aggressive tax avoidance – telling delegates at a conference how they could exploit tax loopholes. “Mr Heaton’s statements are directly at odds with the government’s approach to tackling tax avoidance,” Treasury minister David Gauke said in a statement. “Therefore, it is right that Mr Heaton resigned from his position.”

David Gauke, by the way, is infamous for having stated that legal tax avoidance strategies “damage our ability to fund public services and provide support to those who need it.” Hmmm….that phrase seems vaguely familiar. I gather the Tory Party thinks government should be guided by “From each according to his ability, to each according to his need.”

Just in case you think I’m pulling a quote out of context, click here or here for additional evidence of the pervasive statism of the current regime in London.

And take a look at this government poster I photographed in the London subway system. Orwell would be proud.

No wonder I”m so glum about the long-run outlook for the United Kingdom.

And the late great Margaret Thatcher must be spinning in her grave.

P.S. I wrote that this was the “latest example” of the Cameron government’s intellectual bankruptcy. For previous examples, see here, here, here, here, and here.

P.P.S. I started this post with the quote from Judge Learned Hand. Leftists, by contrast, like to share the quote from Justice Oliver Wendell Holmes about “taxes are the price we pay for a civilized society.” What they conveniently forget to include is that he made that statement in 1927, when federal taxes amounted to only $4 billion and the federal government consumed only about 5 percent of economic output. Yes, I’ll gladly pay for that amount of civilization.

P.P.P.S. What’s more hypocritical, the supposed conservatives in the U.K. badgering people to pay extra tax or American leftists utilizing tax havens to lower their own taxes?

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I spoke earlier today at the 2013 Liberty Conference in Lausanne, Switzerland. But I don’t think anybody is going to remember my speech about the collapse of the welfare state, even though I presented lots of powerful data from the BIS, OECD, and IMF, and also shared a very funny cartoon showing what happens when there’s nothing left for interest groups to steal.

Escaped the North Korean gulag

At a normal conference, my remarks may have resonated, but I freely admit that I was completely overshadowed by the presentation of Shin Dong-Hyuk, who is the only person to have successfully escaped from the North Korean gulag.

In the future, if I ever get discouraged and think the fight for freedom is too difficult, I will watch this video and realize that nothing in my life will ever compare to the horror of living under communism. It’s not nearly as powerful as today’s first-person presentation, but the video will give you some sense of the utter barbarity of the North Korean government.

If you want more information, here is his Wikipedia entry, but I also suggest you watch this short speech by Blaine Harden, a journalist who wrote the story of Shin’s escape.

Keep in mind, by the way, that North Korea is an awful and repressive country even for the people who aren’t in the gulags. Malnutrition is such a problem, for instance, that children are stunted and the North Korean army had to lower its requirements to allow soldiers as short as 4’8″.

So perhaps now you understand why I get so upset when people in the west glorify communist thugs such as Che Guevara, or use the Soviet hammer and sickle as a cutesy marketing gimmick.

I hope nobody would ever think to wear a Hermann Göring t-shirt or use the swastika in a value-neutral fashion, so why should it be okay to whitewash and/or rehabilitate communists?

P.S. I was never a fan of former Indiana Governor Mitch Daniels, but he deserves lasting applause for seeking to protect children from the anti-western, soft-on-communism crap published by the late historian Howard Zinn.

P.P.S. Since today’s post is about a very dour topic, let’s close with a bit of humor about  the communist version of efficiency.

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As illustrated by this chart, economists are lousy forecasters.

To be more specific, economists are no better than fortune tellers when trying to make short-run macroeconomic forecasts. Heck, if we actually knew what was going to happen over the next 12 months, we’d all be billionaires.

But we can (on occasion) make sensible predictions about the long-run impact of various government policies. All other things being equal, for instance, it’s safe to say that countries with bigger governments will grow slower than nations that don’t divert as many resources from the private sector. Even the World Bank and European Central Bank agree with that common-sense proposition.

Another can’t-fail prediction is that bailouts will reward bad behavior and lead to dependency. That’s why I’m not at all surprised by the news that Greece will get another bailout.Greek Bailout 1 Indeed, if there was a least-surprising-headline contest, it would go to the EU Observer for this headline.

A third bailout? You mean the first two didn’t work? I’m shocked! Which is why we need to change to a least-surprising-headlines contest, Greek Bailout 2because we also have this headline from City AM.

And this one from the UK-based Times. Which they may want to save for when it’s time for the fourth bailout. Greek Bailout 3And the fifth bailout. And…well, you get the idea.

Makes you wonder why the Germans (and the Dutch, Finns, Swedes, etc) keep subsidizing bad behavior elsewhere. Greek Bailout 4Yet these people apparently don’t care about moral hazard, so we see this headline from the Telegraph.

Last but not least, here’s what the BBC wrote. Greek Bailout 5

Given all these headlines from today, you can see why I felt safe in predicting a couple of days ago for Canadian TV that Europe was still in bad shape. Simply stated, government is far too big and costs far too much.

Yes, there are a few bright spots, such as Switzerland and the Baltic nations, but the fiscal debate in Europe is mostly between those who want higher taxes and those who want higher spending.

With that kind of contest, there are no winners other than politicians.

P.S. The ostensible purpose of the interview was to discuss Europe’s supposed recovery. I explained a few days ago why nobody should be impressed by the anemic growth on the other side of the Atlantic. But I think any changes in short-run economic performance – for better or worse – are far less important than the long-run projections of expanding government and growing dependency in Europe.

P.P.S. Americans shouldn’t feel cocky or superior. Long-run projections from the BIS, OECD, and IMF all show that the United States will be in deep trouble if we don’t engage in genuine entitlement reform.

P.P.P.S. Since I was talking to a Canadian audience, I mentioned that Europe should copy the spending restraint Canada enjoyed in the 1990s. You can click here to learn more about happened north of the border (and why the United States also should copy the same policy).

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