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Archive for the ‘Statism’ Category

I very rarely feel sorry for statists. After all, these are the people who think that their feelings of envy and inadequacy justify bigger and more coercive government.

And I get especially irked when I think about how their authoritarian policies will hurt the most vulnerable in society.

But I nonetheless feel sorry for statists when I see them fumble, stumble, duck, and weave when asked why global evidence contradicts them.

In other words, it’s almost painful to watch when they are asked  why nations with varying degrees of statist policy – such as Venezuela, France, the United States (under Obama), Argentina, and Greece – suffer from economic stagnation and decline.

And it’s equally uncomfortable to watch them struggle and squirm when they’re asked to explain why jurisdictions with more pro-market policies – such as Bermuda, Estonia, Switzerland, the United States (under Reagan), Chile, and Singapore – tend to enjoy growth and rising living standards.

However, I can’t help adding to their discomfort. Let’s look at more evidence.

Here’s some of what Richard Rahn wrote for the Washington Times about Hong Kong’s economic miracle.

Hong Kong is about as close to the ideal free-market capitalist model that you can find on the planet — which came about largely by accident. …The British basically left Hong Kong to fend for itself… here was no foreign aid and no welfare state — but there was a competent government that kept the peace, ran an honest court system with the rule of law, provided some basic infrastructure, and little more. Also, Hong Kong had economic freedom — for the last several decades, Hong Kong has been ranked as the freest economy in the world (according to Economic Freedom of the World Index). Economic freedom allowed the people to create an endless number of productive enterprises, and because they had free trade, they could import necessary goods and services to fuel these enterprises. …average real income has gained parity with the United States, and it will probably be double that of France in a couple of years.

By the way, if you don’t believe the last sentence in that excerpt, check out this remarkable chart.

But the big takeaway is that free markets and small government have made the people of Hong Kong very rich. Gee, it’s almost as if there’s a recipe to follow if you want prosperity.

Let’s look at another example. Writing for the Wall Street Journal, former Senator Phil Gramm and Michael Solon compare economic policy and outcomes in Ukraine and Poland.

They explain that statist policies in Ukraine have stymied growth in a nation that otherwise could be very prosperous.

There is no better modern example of the power of an economic triumph than the experience of Ukraine and Poland in the post-Cold War era. …Ukraine has largely squandered its economic potential with pervasive corruption, statist cronyism and government control. …The per capita income of Ukraine, in U.S. dollar equivalence, has grown to only $3,900 in 2013 from a base of $1,570 in 1990. …Ukraine should be a wealthy country. It has world-class agricultural land, it is rich in hydrocarbons and mineral resources, and it possesses a well-educated labor force. Yet Ukraine remains poor, because while successful Central European nations have replaced their central-planning institutions with market-based reforms, Ukraine has never been able to break the crippling chains of collectivism.

Poland was in the same position as Ukraine after the collapse of the Soviet empire, but it followed better policy and is now several times richer.

By employing free-market principles and unleashing the genius of its people, Poland has triggered an economic triumph as per capita GDP, in U.S. dollar equivalence, soared to more than $13,432 by 2013 from $1,683 in 1990. Today Poland is the fastest-growing economy in Europe. …The man largely responsible for Poland’s transformation is Leszek Balcerowicz, the former finance minister who was later governor of Poland’s Central Bank. …The Balcerowicz Plan was built around permitting state firms to go bankrupt, banning deficit financing, and maintaining a sound currency. It ended artificially low interest rate loans for state firms, opened up international trade and instituted currency convertibility. …A miracle transition was under way and the rest is history.

Since I’ve also compared Ukraine and Poland, you can understand why I especially liked this column.

One final point. Today’s post looks at just a couple of nations, but I’m not cherry picking. There are all sorts of comparisons that can be made, and the inevitable conclusion is that markets are better than statism.

Here are some previous iterations of this exercise.

I’ve compared South Korea and North Korea.

The data for Chile, Argentina, and Venezuela is very powerful.

I’ve shown how Singapore has eclipsed Jamaica.

Here’s a comparison of Sweden and Greece.

And we can see that Hong Kong has caught up with the United States.

So hopefully you can understand why I have a tiny (very tiny) degree of sympathy for my left-wing friends. It can’t be easy to hold views that are so inconsistent with global evidence.

P.S. When presented with this kind of evidence, leftists oftentimes will counter by saying that many nations in Europe are rich by global standards, while also having large governments. True, but it’s very important to understand that they became rich nations when they had small governments. Moreover, some of them have wisely compensated for large public sectors by maintaining ultra-free market policy in other areas.

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Remember when Paul Krugman warned that there was a plot against France? He asserted that critics wanted to undermine the great success of France’s social model.

I agreed with Krugman, at least in the limited sense that there is a plot against France. But I explained that the conspiracy to hurt the nation was being led by French politicians.

Simply stated, my view has been that the French political elite have been taxing the nation into stagnation and decline and there is every reason to think that the nation is heading toward a severe self-inflicted fiscal crisis.

But it turns out I may have been too optimistic. Let’s look at some updates from Krugmantopia.

We’ll start with a report from the Financial Times, which captures the nation’s sense of despair.

…if the country’s embattled socialist president was hoping for some respite from what has been a testing year, he can probably think again. … the French economy barely expanded during the second quarter of this year after stagnating in the first. …the result will make it all but impossible to achieve the government’s growth forecast for 2014 of 1 per cent… Bruno Cavalier, chief economist at Oddo & Cie, the Paris-based bank, says one reason is the huge constraint on disposable income posed by France’s tax burden, which has risen from 41 per cent of GDP in 2009 to 45.7 per cent last year – one of the highest in the eurozone.

The government has responded by rearranging the deck chairs on the political Titanic.

French President Francois Hollande dissolved the government on Monday after open feuding among his Cabinet over the country’s stagnant economy. …France has had effectively no economic growth this year, unemployment is hovering around 10 percent and Hollande’s approval ratings are sunk in the teens. …Hollande’s promises to cut taxes and make it easier for businesses to open and operate have stalled, in large part because of the divisions among his Socialist party.

For what it’s worth, Hollande’s commitment to tax cuts and deregulation is about as sincere and genuine as my support for the Florida Gators.

After all, he’s the guy who imposed a new top tax rate of 75 percent (which he said was “patriotic”)

And that’s just the personal income tax. When you add other taxes to the mix, you get a system that is so onerous that more than 8,000 households paid more than 100 percent of their income to the French government!

No wonder successful people are escaping to other nations.

By the way, if you’re wondering why Hollande is appointing new people to his government, it’s because some of his ministers were complaining that so-called austerity was inhibiting Keynesian spending policies that would make government even bigger!

Austerity measures being pursued by France and elsewhere in the euro zone are quashing growth, FrenchEconomy Minister Arnaud Montebourg was quoted saying on Saturday… The outspoken minister, a fierce critic of budget austerity, is known for frequent attacks on big business and the European Commission, which he accuses of strangling economic recovery with its prioritization of deficit reduction. …While not as strident as the comments by Montebourg, French Finance Minister Michel Sapin similarly argued for moderated deficit reduction in an interview published in Italian newspaper La Repubblica. “The euro zone is at risk of getting stuck in a spiral of weak or negative growth. We absolutely must slow down the rate of deficit reduction,” Sapin was quoted as saying.

In other words, the French policy debate is between the far left and the crazy left.

Which is why this dour assessment from across the English Channel probably understates the depth of the problem.

Since Francois Hollande was elected President in 2012, French GDP per capita has fallen. Its economy is expected to grow by just 0.7 per cent this year. …the country now looks set for stagnation – with its unemployment rate entrenched above 10 per cent (and youth unemployment double that). …the problems are obvious. The French government accounts for a massive 57.1 per cent of the economy in state spending and transfers. The tax burden is so high at 57 per cent for French employees (the sum of income, payroll taxes, VAT, and social security contributions as a proportion of the gross employment cost)… The World Economic Forum says that France is near the worst performer on a host of measures: positioned 130 out of 148 countries for its regulatory burden, 134 for the tax rates on profits, 135 on cooperation in labour-employer relations, and 144 on hiring and firing practices. …No wonder investors have voted with their wallets. FDI into France is estimated to have fallen by 95 per cent in the last decade.

Wow. No wonder the French people are so glum about the economy, as reported by the EU Observer.

…in France, the eurozone’s second biggest economy, eight percent felt the country’s economy was good. …Only 34 percent feel the jobs crisis has peaked compared with 60 percent who are bracing themselves for a darker economic future.

Which raises a good question. If the French people are so pessimistic about the future, why do they keep electing socialists?!?

Particularly when they tell pollsters they support smaller government!

Last but not least, we have a story from the New York Times about the mind-boggling regulation and protectionism that , mostly because it illustrates the pervasive statism that is strangling France.

Alexandre Chartier and Benjamin Gaignault work off Apple computers and have no intention of ever using the DVD player tucked in the corner of their airy office. But French regulations demand that all driving schools have one, so they got one. Mr. Chartier, 28, and his partner, Mr. Gaignault, 25, are trying to break into the driving school business here… But they are not having an easy time. The other driving schools have sued them, saying their innovations break the rules. …their struggle highlights how the myriad rules governing driving schools — and 36 other highly regulated professions — stifle competition and inflate prices in France.

And what are these rules and regulations, other than the bizarre requirement to own a DVD player?

“The system is absurd,” said Mr. Koenig, who was a speechwriter for Christine Lagarde when she was the French finance minister. …he has been campaigning for changes, including calling for an overhaul of the written test, which he says goes far beyond making sure that a person knows the rules of the road. Instead, he said, it seems intended to trip students up with ridiculous questions, such as: If you run headlong into a wall, would you be safer if you were in a tank or in a car? (The answer: a car, because it has air bags.) …Some studies have concluded that the French are probably paying 20 percent more than they should for the services they get from regulated professions, which include notaries, lawyers, bailiffs, ambulance drivers, court clerks, driving instructors and more. …Francis Kramarz, an economist who has studied the French licensing system, says that barriers to getting a license are so high that about one million French people, who should have licenses, have never been able to get them. …Mr. Kramarz said that it often costs 3,000 euros, or about $3,900, to get a license. But others said the average was closer to 1,500 to 2,000 euros.

Gee, isn’t big government wonderful!

The statists say it helps the less fortunate, but it seems the poor are the ones most hurt by regulations that push the cost of getting a license to $2,000 or above.

P.S. In an uncharacteristic expression of mercy, President Hollande has announced that he wants to limit the fiscal burden so that no taxpayer has to surrender more than 80 percent  of their income to the government.

P.P.S. No wonder Obama will never make America as bad as France, regardless of how hard he tries.

P.P.P.S. Here’s the best-ever cartoon about French economic policy, though this cartoon deserves honorable mention.

P.P.P.P.S. Even the establishment, as indicated by stories in Newsweek and the New York Times (as well as The Economist and the BBC), is noticing that the French economy is dismal.

P.P.P.P.P.S. No matter how much I mock France, there are places in Europe with even worse economic policy.

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I’ve shared horror stories about government thuggery and I’ve shared horror stories about government stupidity.

Thanks to Mark Steyn, we have a story that exemplifies both the brain-dead nature of the public sector and the nasty nature of our bureaucratic overlords.

You may have read about the federal milk police. Well, here’s some of what Mark wrote about the Kafkaesque legal regime the federal government maintains for people who want to cross the border with….drugs? no…weapons? no…biological agents? no, nothing like that. We’re talking about  bagpipes.

…17-year-old Campbell Webster and Eryk Bean, of Concord and Londonderry, New Hampshire – understood that if you go to a highland fling a couple of hours north in Quebec you’re now obligated to get your bagpipes approved by US Fish & Wildlife. …So Messrs Webster and Bean got their CITES certificate and presented it to the US CBP agent at the Vermont border crossing. Whereupon he promptly confiscated their bagpipes on the grounds that, yes, their US Fish & Wildlife CITES paperwork was valid, but it’s only valid at 28 ports of entry and this wasn’t one of them. Nor is any other US/Canadian land crossing.

Geesh, those poor kids. Their valuable instruments get stolen by the keystone cops simply because the feds arbitrarily decided that federal government paperwork is only accepted at certain federal government outposts.

By the way, bagpipes apparently get all this unwanted attention because some older instruments have components that are made of ivory, and that’s verboten under environmental laws.

Anyhow, you won’t be surprised to learn that the petty paper pusher who confiscated the bagpipes is also a total jerk.

When the CBP agent seized Messrs Webster and Bean’s bagpipes, he told them – with the characteristic insouciance of the thug bureaucracy – that they were “never going to see them again”. But thanks to the unwelcome publicity the Homeland Security mafiosi were forced to cough ‘em up.

But the story doesn’t end here.

The kids apparently are quite the experts with their bagpipes and they’ll be competing in a contest in Scotland.

Mark explains the preposterous steps they’ll have to go through when they return.

The two pipers are now heading to a competition in Scotland. So they’ll be flying back via Boston, which is one of those 28 valid ports of entry. They’ve called Fish & Wildlife to arrange for the mandatory “inspection” of the bagpipes upon landing at Logan Airport. Unfortunately, the official Fish & Wildlife bagpipes inspector is taking a day off that day…she won’t be available to inspect the pipes. So she’s told them they’ll have to drive back to New Hampshire and then drive back to Logan the following day for the Fish & Wildlife bagpipes inspection. So…the bagpipers will have to take a day off on Thursday – just to comply with the diktats of the Department of Paperwork. … Every time you take a bagpipe in and out of the United States it’s a $476* round-trip fee.

Why can’t the bagpipe police simply give them some piece of paper saying their instrument have been deemed kosher? This is sort of like having to apply for a passport each and every time you travel outside America.

And notice that the federal government is charging the kids an inspection fee for the privilege of being harassed!

Sort of like getting an “aviation security fee” added to your airfare to finance the TSA’s patdowns of grandmothers.

Mark has a very dour summary, basically saying that the bagpipe police are a depressing illustration of the loss of freedom to the regulatory state.

Demanding a CITES certificate for bagpipes is a burden upon free-born citizens. Restricting the paperwork’s validity to only 28 ports of entry is an unduly onerous burden. Requiring the bagpipers to come back on the Wednesday to those 28 ports of entry because the inspector’s washing her hair on the Tuesday is an even more onerous and insulting burden. And charging an American $476 to play his bagpipe in Montreal is a shakedown racket unacceptable in a free society. …America is economically sclerotic because it’s being hyper-regulated to death.

P.S. Excerpts from some of my other favorite Mark Steyn columns can be read here, here, here, here, here, here, here, and here.

P.S. On a completely separate topic, here’s a brutal example of anti-Obama humor.

Ouch. Sort of like the Obama-Putin humor at the bottom of this blog post.

But I also share Obama humor where I sympathize with the President.

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I’ve written many times about America’s looming fiscal collapse, and I’ve also pontificated about America’s costly and failed welfare state.

I even have speculated about when America reaches a tipping point, with too many people riding in the wagon of government dependency (as illustrated by these famous cartoons, which even have a Danish equivalent).

If you read all my posts on these issues, I like to think you’d be very well informed on these topics. But if you want to save time, my colleague Tom Palmer put all these issues together in a recent speech in Australia.

Best of all, he includes lots of great material on the moral and historical aspects of this discussion.

The good news is that there are signs of progress, at least outside the United States. Denmark, for instance, has cut back on its welfare state.

And now, even the United Kingdom has engaged in some serious welfare reform.

Here are some excerpts from a column in the UK-based Telegraph.

 Why should there have been this improvement in the labour market? …The most convincing explanation is surely the Government’s welfare reforms. They have made it more difficult and less attractive to live off benefits, thereby increasing the supply of workers. In economists’ jargon, the natural rate of unemployment has fallen.

Another Telegraph column digs into the details.

…more jobs are being created in Britain than in the rest of Europe put together. …There has clearly been a game-changer… What confounded the eggheads was that the number of workers is growing four times faster than the number of working-age people: in other words, Britons have become far more likely than pretty much anyone else to look for –and find – work. Why?

The answer is simple economics and incentives.

Fewer people now claim the three main out-of-work benefits than at any time during the Labour years. This, of course, is perfectly explained by IDS’s reforms, which make it a lot harder to live on welfare. Those who have been on incapacity benefit for years have been summoned to assessment centres to see what work they’re fit to do. Far more of the unemployed are being penalised for missing job interviews. A benefits cap has been imposed; housing benefit is being reformed; and the so-called “spare room subsidy” has been abolished, making life more expensive for those on benefits with unused rooms. …this is not about punishing “shirkers”, but helping good people trapped in a bad system. Fixing that system means making life harder for people who have it pretty tough already, at least for a short while. But under the Labour regime, such people were being led down the path to dependency and poverty. A new road had to be built, leading to work. And only now is it becoming clear quite how many people are taking it.

Here’s a chart showing how actual job creation is beating the forecasts.

These are remarkable numbers, particularly when you compare them to the job forecast put forth by the Obama White House, which grossly over-stated the number of jobs that would exist under the so-called stimulus.

The key takeaway is that incentives matter. When you give people unemployment insurance, you reduce incentives to find work. When you give people Obamacare, you reduce incentives to earn income. When you give people welfare and food stamps, you reduce incentives for self-reliance.

And when you add together the panoply of redistribution programs operated by government, it’s easy to see why far too many people are being trapped in government dependency.

If you like charts, here’s a very sobering image of how the welfare state destroys incentives for upward mobility. And if you like anecdotes, here’s a dismal story about government making leisure more attractive than productivity.

P.S. At least one honest leftist acknowledges that there’s a problem.

P.P.S. On a lighter note, here’s a satirical Declaration of Dependency from the left.

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I’m currently in Asia, where I just finished a series of speeches about economic policy in China and Hong Kong.

These two jurisdictions offer very powerful lessons about the importance of economic policy.

Hong Kong is supposed to be Nirvana for libertarians. It holds the top spot in the Economic Freedom of the World rankings. It has an optional flat tax. It has a private retirement system. And based on IMF data, government spending “only” consumes 18.4 percent of GDP (compared to 38.6 percent of economic output in the United States and 54.4 percent of GDP in France).

In reality, Hong Kong is far from perfect. It may have a lot more economic freedom than other jurisdictions, but there is widespread government intervention in certain sectors, such as housing. And while a flat tax and spending burden of 18.4 percent of GDP sound good, let’s not forget that the western world became rich in the 1800s when there was no income tax and the public sector consumed less than 10 percent of GDP.

But when you rank countries on the basis of economic freedom, you don’t compare jurisdictions to a nonexistent libertarian utopia. You compare them to other nations. So Hong Kong gets the top spot. And that’s paying dividends. When you look at long-run comparisons with other nations, Hong Kong has grown faster and become more prosperous.

So what about China? This wasn’t my first visit to the country, but it was the first time I went to Shanghai, and it is a very impressive place. It’s obvious that China has enjoyed a lot of growth in the past few decades.

But just as you shouldn’t judge the United States by a visit to Wall Street, it would be a mistake to draw sweeping conclusions about China after a few days in Shanghai.

Indeed, average living standards for all of China are still far below American levels. Moreover, if you look at the Economic Freedom of the World rankings, China still has a lot of room for improvement. It ranks 123rd out of 152 nations, which is not only far below France (#40), but also Greece (#85), Haiti (#98), and Russia (#101).

That being said, China’s score is 6.22 out of 10, which is a vast improvement compared to where it was in 1980, when it had a score of only 4.00.

This has led to some wonderful outcomes. This chart (h/t: Mark Perry) shows the share of the world’s population living on less than $1 per day (blue line) and the share of East Asia’s population with the same level of deprivation (red line). A big reason the red line has fallen so dramatically is that severe poverty in China has largely disappeared.

The real question for China is the degree to which there will be ongoing improvement.

I think it would be good if China became more like Hong Kong and that this led to much higher living standards. Heck, I’d be happy if China became more like Taiwan or South Korea, both of which have become relatively rich nations by moving substantially in the direction of free markets and small government.

But I don’t think this will happen. In one of my speeches, I posed a series of questions, followed by some less-than-optimistic answers.

Is the financial system weak? (because of too much state control over capital flows and investment)

Is there too much cronyism? (with friends and relatives getting favorable access to business)

Will China’s demographics be a problem? (the one-child policy is not just tyrannical, but it also means China’s population is aging)

Is rapid growth sustainable? (in the absence of reforms to boost economic freedom)

Have stimulus plans led to malinvestment? (such as ghost cities and other boondoggles)

Since economists are lousy when they make predictions, it’s quite possible that I’m wrong and my pessimism is unwarranted. For the sake of the Chinese people, let’s hope so.

And what about Hong Kong? I suspect they’ll remain the freest economy in the world. After all, why wreck a good thing?

Then again, the United States was the world’s 3rd-freest economy as recently as 2001. Now, thanks to Bush-Obama statism, we’ve plummeted to 17 in the ranking.

But I doubt Hong Kong policy makers would be equally foolish.

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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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