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Since I’m an economist, I generally support competition.

But it’s time to admit that competition isn’t always a good idea. Particularly when international bureaucracies compete to see which one can promote the most-destructive pro-tax policies.

For instance, I noted early last year that the bureaucrats at the Organization for Economic Cooperation and Development (OECD) were pushing a new scheme to increase the global tax burden on the business community.

Then I wrote later in the year that the International Monetary Fund was even more aggressive about pushing tax hikes, earning it the label of being the Dr. Kevorkian of the world economy.

That must have created some jealousy at the OECD, so those bureaucrats earlier this year had a taxpalooza party and endorsed a plethora of class-warfare tax hikes.

Now the IMF has responded to the challenge and is pushing additional tax increases all over the world.

For example, the bureaucrats want much higher taxes on energy use, both in the United States and all around the world.

This chart from the IMF shows how much the bureaucracy thinks that the tax should be increased just on coal consumption.

The chart doesn’t make much sense, particularly if you don’t know anything about “gigajoules.” Fortunately, Ronald Bailey of Reason translates the jargon and tells us how this will impact the average American household.

The National Journal reports that the tax rate would be $8 per gigajoule of coal and a bit over $3 per gigajoule of natural gas. Roughly speaking a ton of coal contains somewhere around 25 gigajoules of energy, which implies a tax rate of $200 per ton. …The average American household uses about 11,000 kilowatt hours annually, implying a hike in electric rates of about $1,100 per year due to the new carbon tax. Since the average monthly electric bill is about $107, the IMF’s proposed tax hike on coal would approximately double how much Americans pay for coal-fired electricity. A thousand cubic feet (mcf) of natural gas contains about 1 gigajoule of energy. The average American household burns about 75 mcf of natural gas annually so that implies a total tax burden of $225 per residential customer.

To be fair, the IMF crowd asserts that all these new taxes can be – at least in theory – offset by lower taxes elsewhere.

…we are generally talking about smarter taxes rather than higher taxes. This means re-calibrating tax systems to achieve fiscal objectives more efficiently, most obviously by using the proceeds to lower other burdensome taxes. The revenue from energy taxes could of course also be used to pay down public debt.

Needless to say, I strongly suspect that politicians would use any new revenue to finance a larger burden of government spending. That’s what happened when the income tax was enacted. That’s what happened when the payroll tax was enacted. That’s what happened when the value-added tax was enacted.

If you think something different would happen following the implementation of an energy tax, you win the grand prize for gullibility.

But let’s give the IMF credit. The bureaucrats are equal opportunity tax hikers. They don’t just want higher taxes in the United States. They give the same message everywhere in the world.

Here are some excerpts from an editorial about Spanish fiscal policy in the Wall Street Journal.

Madrid last month cut corporate and personal tax rates, simplified Spain’s personal-income tax system and vowed to close loopholes. That’s good news… So leave it to the austerity scolds at the International Monetary Fund to call for tax increases. …Specifically, the Fund wants Spain to raise value-added taxes, alcohol and tobacco excise taxes, tourism taxes, and various environmental and energy levies: “It will be critical to protect the most vulnerable by increasing the support system for them via the transfer and tax system.”

Gee, I suppose that we should be happy the IMF didn’t endorse higher income taxes as well.

The good news is that the Spanish government may have learned from previous mistakes that tax hikes don’t work.

Rather than heed this bad advice, Prime Minister Mariano Rajoy and Finance Minister Cristobal Montoro are cutting government spending and eliminating wasteful programs to reduce pressure on the public fisc. Public spending amounted to 44.8% of GDP in 2013, which is still too high but down from 46.3% in 2010. The government projects it will fall to 40% by 2017.Madrid has also made clear that it believes private growth is the real answer to its fiscal woes. …In other words, economic growth spurred by low taxes and less state intervention yields more revenue over time. If Mr. Montoro can pursue the logic of that insight, there’s hope for Spain’s beleaguered economy.

I’m not overly confident about Spain’s future, but it is worth noting that, according to IMF data, government spending has basically been flat since 2010 (after rising by an average of about 10 percent annually in the previous three decades).

So if the politicians can maintain fiscal discipline by following my Golden Rule, maybe Spain can undo decades of profligacy and become the success story of the Mediterranean.

Let’s hope so. In any event, we know some Spanish taxpayers have decided that they’re tired of being fleeced.

We have one final example of the IMF’s compulsive tax-aholic instincts.

Allister Heath explains that the bureaucracy is pushing for a plethora of new taxes on the U.K. economy.

The IMF wants an increase in the VAT burden.

…the IMF wants to get rid or significantly reduce the zero-rated exemption on VAT, which covers food, children’s clothes and the rest. While it is true that the exemptions reduce economic efficiency, ditching them would necessitate a big hike in benefits and a major uplift in the minimum wage, which would be far more damaging to the economy’s performance and ability to create jobs for the low-skilled. It’s a stupid idea and one which would destroy any government that sought to implement it, with zero real net benefit. It would be a horrendous waste of precious political capital that ought instead to be invested in real reform of the public sector.

And an increase in energy taxes.

The report also calls for a greater reliance on so-called Pigouvian taxes, which are supposed to discourage externalities and behaviour which inflicts costs on others. It mentions higher taxes on carbon and on congestion as examples. But what this really means is that the IMF is advocating a massive tax increase on motorists, even though there is robust evidence which suggests that they already pay much more, in the aggregate, than any sensible measure of the combined cost of road upkeep and development, pollution and congestion.

And higher property taxes.

It gets worse: these days, one cannot read a document from an international body that doesn’t call for greater taxes on property. This war on homeowners is based on the faulty notion that taxing people who own their homes doesn’t affect their behaviour, which is clearly ridiculous. This latest missive from the IMF doesn’t disappoint on this front: it calls for the revaluation of property for tax purposes, which is code for a massive increase in council tax for millions of homes, especially in London and the home counties.

Understandably, Allister is not thrilled by the IMF’s proposed tax orgy.

The tax burden is already too high; increasing it further would be a terrible mistake. The problem is that spending still accounts for an excessively large share of the economy, and the political challenge is to find a way of re-engineering the welfare state to allow the state to shrink and the private sector to expand. The model should be Australia, Switzerland or Singapore, countries that boast low taxes and high quality services.

And I particularly like that Allister correctly pinpoints the main flaw in the IMF’s thinking. The bureaucrats look at deficits and they instinctively think about how to close the gap with tax hikes.

That’s flawed from a practical perspective, both because of the Laffer Curve and because politicians will respond to the expectation of higher revenue by boosting spending.

But it’s also flawed from a theoretical perspective because the real problem is that the public sector is far too large in all developed nations. So replacing debt-financed spending with tax-financed spending doesn’t address the real problem (even if one heroically assumes revenues actually materialize and further assumes politicians didn’t exacerbate the problem with more spending).

Here’s a remedial course for politicians, international bureaucrats, and others who don’t understand fiscal policy.

P.S. Wise people have speculated that international bureaucrats are quick to urge higher taxes because they don’t have to pay taxes on their lavish salaries.

P.P.S. This isn’t the first time the IMF has proposed massive tax hikes on energy consumption.

Some people confuse being libertarian with being libertine.

I’m sometimes asked, for instance, if I’m a libertarian because I want to smoke pot or do other drugs.

I respond that I’ve never done drugs and have no desire to use drugs.

Then I’m asked if I’m a libertarian because I want to gamble.

I respond by saying that I don’t gamble, even when I’m in Las Vegas or some other place where it’s legal.

Sometimes I’m asked if I’m libertarian because I want to use prostitutes.

I respond by explaining that I’d never patronize a prostitute because I want to at least be under the illusion that a woman actually wants to be with me.

At this point, some people conclude I’m boring, and that may be true, but this is also the point where I try to educate them about the libertarian philosophy.

I give them the usual message about small government and free markets, but I also explain that libertarians don’t believe that government should persecute people for victimless crimes.

This doesn’t mean we think it’s good to use drugs or that we personally approve of prostitution. And it doesn’t mean we’re oblivious to the downsides of gambling.

The libertarian message is simply that prohibition makes matters worse, not better. For instance, prohibition gives government the power to behave in reprehensible ways.

Let’s look at two examples, starting with this disturbing and powerful video from Reason TV (warning, both the subject material and language are not for the faint of heart).

Having watched the video, now ask yourself whether you think this is an appropriate way for governments to be using our tax dollars?

Remember, we’re not talking about cops busting people for impaired driving. That’s totally legitimate, regardless of whether they’re impaired because of drugs or booze.

The question is whether cops should look for excuses to pull people over simply in hopes of finding that they have some pot. And when they don’t find drugs, should they then go through obscene efforts in hopes of finding some contraband?*

Our second example isn’t as disturbing, at least on a physical level, but it should be equally troubling if we believe in decent and humane society.

It seems that SWAT teams have too much time on their hands and are now conducting raids on old folks playing cards.

On Saturday, state and local authorities raided a monthly poker tournament at a bar in the city of Largo, after an investigation into unlawful gambling, the Tampa Bay Times reported. The Nutz Poker League, which was running a free game open to the public at Louie’s Grill and Sports Bar at the time of the crackdown, said on its Facebook page that some of the police were in “full riot gear” and had their “weapons drawn.” …One woman present described the event in a blog post: “Today, while out playing poker with this poker league, we were raided by the [Florida Division of Alcoholic Beverages and Tobacco], all with men and women officers wearing black masks so we couldn’t see their faces. We were forced (by a threat of going to jail) to place our hands on the table where they could see them and to stay there until we were told.” …Luke Lirot, an attorney involved with the matter, told Card Player that players took cell phone photos and video of the raid, and that they were “ordered by officers to delete” the material. According to the Tampa Bay Times, the undercover investigation, dubbed “Operation Cracked Aces,” had been ongoing for months prior to the bust.

The community group that runs the recreational league has an appropriately libertarian view of this costly harassment.

“The ‘crime’ here is the waste of valuable public resources, and the misguided efforts to enforce an archaic law that was never intended to be used to criminalize events such as the one here, where six individuals were unjustly arrested and terrified, and now face prosecution,” the league said. “If state statutes can be exploited and stretched to criminalize these types of events, legislation needs to be adopted to clear up this unnecessary abuse.” Nutz Poker added that the raid was an example of “tyrannical [law] enforcement.”

By the way, the Florida raid is not an isolated incident.

Here are some excerpts from a report in the Baltimore Sun.

…at the Lynch Point Social Club in Edgemere, police say, …dozens of men would meet regularly to play no limit Texas Hold ‘Em poker games and gamble on electronic machines. County police said it was all off the books and against the law, and busted the club’s members in a raid involving a tactical unit last week. The organizer and dealers were arrested and face charges. Almost immediately after our story posted, there was a quick backlash against police. The story’s been shared nearly 200 times on Facebook and generated 40 comments as of this writing… commenters had no tie to the event but were angered at an investigation they believe was a waste of police resources. …But police say games like the ones hosted in Edgemere are against the law and must be enforced, and may even put the players at risk for becoming victims of a robbery.

Here’s the bottom line: A bunch of guys want to pass the time by playing cards and making wagers. They’re not hurting anybody else, yet cops decide to send a “tactical unit” to conduct a raid.

Once again, I’m glad there’s a backlash against the police. Cops should be protecting innocent people, not harassing them.

Or killing them.

And this is why libertarianism is a philosophy of human decency. We don’t believe in using coercive government power against people who aren’t harming others.

*I’m thinking an involuntary cavity search might be worth it if I got a $900,000 award after suing the government.

P.S. Since I feel very confident about libertarian principles, I don’t object to sharing anti-libertarian humor.

Here’s the latest example.

I’ve previously shared a cartoon with the same theme, and that post also makes the should-be-obvious point that fire departments would exist in a libertarian world.

And that link also has many more examples of libertarian humor.

When government suppresses the free market and takes over the healthcare sector, you get some really odd results.

Consider these stories from Sweden:

 A man sewing up his own leg after getting frustrated with a long wait.

The government denying a wheelchair to a double amputee because the bureaucrats decided his impairment might not be permanent.

Speaking of amputations, an unfortunate man was put on such a long waiting list that his only treatment, when he was finally seen, was to have his penis removed.

Today, we’re going to augment that list. But not with another story from Sweden, which is actually a much better country in terms of public policy than most folks realize.

Instead, we’re going to look at some great moments in government-run healthcare in both the United States and the United Kingdom.

Our first story is from the Chicago Tribune and it deals with Medicaid and Medicare spending.

But we’re not going to look at the aggregate data. Those numbers are very sobering, to be sure, and you can click here and here to learn more about that problem.

Instead, we’re going to drill down into the details and get some up-close evidence of why the programs are so costly. Simply stated, providers learn how to bilk the government.

A few years ago, Illinois’ Medicaid program for the poor noticed some odd trends in its billings for group psychotherapy sessions. Nursing home residents were being taken several times a week to off-site locations, and Medicaid was picking up the tab for both the services and the transportation.  And then there was this: The sessions were often being performed by obstetricians and gynecologists, oncologists and urologists — “people who didn’t have any training really in psychiatry,” Medicaid director Theresa Eagleson recalled. So Medicaid began cracking down, and spending plummeted after new rules were implemented.Illinois doctors are still billing the federal Medicare program for large numbers of the same services, a ProPublica analysis of federal data shows. Medicare paid Illinois providers for more than 290,000 group psychotherapy sessions in 2012 — more than twice as many sessions as were reimbursed to providers in New York, the state with the second-highest total. Among the highest billers for group psychotherapy in Illinois were three OB-GYNs and a thoracic surgeon. The four combined for 37,864 sessions that year, more than the total for all providers in the state of California. They were reimbursed more than $730,000 by Medicare in 2012 just for psychotherapy sessions, according to an analysis of a separate Medicare data set released in April.

Some of the specific examples are beyond belief. Keep in mind as you read the next passage that there are only 365 days in a year, and only about 261 workdays.

Of the Illinois OB-GYNs billing for group psychotherapy, Dr. Josephine Kamper had the highest number of sessions. She was paid for 10,399 sessions in 2012, at a cost to Medicare of $207,980. …Another OB-GYN, Lofton Kennedy Jr., billed for 9,154 group psychotherapy services. He declined to comment. The third-highest-billing OB-GYN, Philip Okwuje, charged Medicare for 8,584 group therapy sessions.  

Illinois isn’t the only place where taxpayers are getting ripped off.

A Queens, N.Y., primary care doctor, Mark Burke, was paid for more sessions than anyone else in the country — 20,841. He accounted for nearly one in every six sessions delivered in the entire state of New York in Medicare, separate data show. He did not return messages left at his office. Another large biller was Makeba Gordon, a social worker in Detroit. She was reimbursed for nearly 5,000 group therapy sessions for her 26 Medicare patients, an average of 190 each. She also billed for 2,820 individual psychotherapy visits for the same 26 patients, who allegedly would have received an average of 298 therapy sessions apiece in 2012. Gordon could not be reached for comment.

And I’m sure you won’t be surprised to learn that the bureaucracy in Washington doesn’t seem overly worried about this preposterous waste of money.

Aaron Albright, a spokesman for the U.S. Centers for Medicare & Medicaid Services, said in an email that Medicare has no policy regarding which physicians may perform group psychotherapy. During such sessions, “personal and group dynamics are discussed and explored in a therapeutic setting allowing emotional catharsis, instruction, insight, and support,” according to rules set out by one of Medicare’s contractors.

The second story comes from the United Kingdom.

Regular readers know that the government-run healthcare system in the United Kingdom is an ongoing horror story of denied care, sub-standard care, and patient brutality (click here to see some sickening examples).

You would think the U.K.’s political class would respond by trying to use money more effectively.

You would be wrong. The bureaucrats somehow have decided that tax monies should be used to finance a sperm bank, even though private sperm banks already exist.

Here are some excerpts from a report in the Daily Mail.

Britain is to get its first NHS-funded national sperm bank to make it easier for lesbian couples and single women to have children.For as little as £300 – less than half the cost of the service at a private clinic –  they will be able to search an online database and choose an anonymous donor on the basis of his ethnicity, height, profession and even hobbies. …The National Sperm Bank will be based at Birmingham Women’s NHS Foundation Trust, which currently runs an existing NHS fertility clinic and recruits sperm donors from the local population. Funded by a £77,000 Government grant, the bank will be run by the National Gamete Donation Trust (NGDT) which this year received  an additional £120,000 of public money to organise egg and sperm donation.

Some have criticized the initiative because it will purposefully increase the number of fatherless children.

…the move – funded by the Department of Health – is largely designed to meet the increasing demand from thousands of women who want to start a family without having a relationship with a man. Critics last night called it a ‘dangerous social experiment’ that could result in hundreds of fatherless ‘designer families’. …Ms Witjens rejected suggestions that children suffer adverse consequences from lacking a father figure. …Ms Witjens pointed to the removal of the reference to a ‘need for a father’ in the Human Fertilisation and Embryology Act, when taking account of a child’s welfare when providing fertility treatment.

I’m sympathetic to the argument that children do best in conventional households with fathers, but my main reaction to this story is that government shouldn’t try to either penalize or subsidize unconventional households.

And a government-sponsored sperm bank definitely falls into the latter category.

But I’m not surprised. Governments love to squanders other people’s money, and the U.K. government has considerable expertise (if you can call it that) in this regard.

Heck, the U.K. healthcare system is even financing boob jobs. But we’re not talking about reconstructive surgery for women who had mastectomies. They pay for breast augmentation for women who claim “emotional distress.”

Though maybe the U.K. government deserves a special prize. It developed a giveaway program that was so convoluted that nobody signed up to take the money.

I rarely delve into foreign policy and defense issues. And when I do, such as my post about the conflict in Ukraine, it’s usually because it gives me an opportunity to draw attention to a topic that is in my bailiwick (in the case of Ukraine, it gave me an excuse to write about federalism).

With this caveat in mind, let’s turn our attention to the Middle East. Unless you’re a hermit living in a remote cave, you presumably know that Israel is locked in another fight with Hamas.

I’ve previously explained that I’m very sympathetic to the notion that Israel has a right to defend itself.

But supporting Israel’s right to self defense doesn’t mean I should foot the bill. Yet that’s what’s happening. According to Wikipedia, Washington sends about $3 billion per year to subsidize Israel’s military.

And now that amount will be even larger because Congress just approved another $225 million to help finance Israel’s missle-defense system.

Congress approved a $225 million package to replenish Israel’s missile defenses with its last order of business before a five-week recess… The House’s 395-8 vote in favor late Friday followed Senate adoption of the legislation by voice vote earlier in the day. The money is directed toward restocking Israel’s Iron Dome, which has been credited with shooting down dozens of incoming rockets fired by Palestinian militants over 3½ weeks of war. …Iron Dome has enjoyed strong U.S. technological and financial support. Throughout its history, the U.S. has provided more than $700 million to help Israel cover costs for batteries, interceptors, production costs and maintenance, the Congressional Research Service said. The total already appeared set to climb above $1 billion after Senate appropriators doubled the Obama administration’s request for Iron Dome funding for fiscal 2015. Now it seems likely to rise even further.

But this doesn’t mean everyone is happy about all this spending.

Some libertarian-leaning fiscal conservatives opposed the added subsidies, or at least wanted Congress to come up with offsetting cuts.

Despite almost universal support for Israel in Congress, the Iron Dome money appeared in doubt only a day ago as Senate efforts stalled after an effort by Republican Sen. Tom Coburn of Oklahoma to find cuts elsewhere in the budget to pay for the aid.  …Voting against the measure in the House were…Republicans Justin Amash of Michigan, Walter Jones of North Carolina, Thomas Massie of Kentucky and Mark Sanford of South Carolina.

For what it’s worth, I applaud those four House Republicans.

I’m motivated in part by a desire to limit the burden of government spending in America, but I also think that Israel easily could afford more military outlays if it pared back its overly generous welfare state.

If you look at the IMF data, government spending consumes about 43.8 percent of Israel’s economic output. And according to the CIA Factbook, Israel’s military budget amounts to about 5.7 percent of GDP.

I’m not a math genius, but that certainly suggests to me that Israel’s government is diverting about 38 percent of economic output for non-military spending.

If national defense is important and worthwhile (and it is), then Israel should prioritize and reduce domestic outlays.

Heck, that’s what Roosevelt did during World War II and what Truman did during the Korean War. If you don’t believe me, look at lines 31-34 of this OMB spreadsheet.

By the way, some people accuse these GOPers of being anti-Israel, but I think that charge is grossly unfair. I’m not personally close to any of the Republicans who voted against the Iron Dome funding, but I’ve met and talked to all of them and I’ve followed their careers. Suffice to say that I’ve never heard even the slightest hint that any of them harbor any anti-Israel or anti-Jewish sentiments.

Indeed, here’s some of what Justin Amash wrote back in 2012.

Israel is our closest friend in a very troubled region. Our national defense benefits from Israel’s ability to defend itself and to serve as a check against neighboring authoritarian regimes and extremists. Assisting with training and the development of Israel’s military capacity allows the U.S. to take a less interventionist role in the region. I am hopeful that American troops soon can leave the region and Israel and its neighbors can live in peace without U.S. aid or involvement.

The last sentence is a pretty good description of libertarian foreign policy: Be prepared to defend ourselves, but don’t look for trouble outside our borders.

P.S. The government of Israel pays for people who do nothing but pray. Which means that my tax dollars are picking up part of the tab. Prayer is presumably a good thing. Just don’t ask me to pay for it.

P.P.S. While Israel’s government does dumb things, the governments opposing Israel sometime engage in truly evil acts.

P.P.P.S. If you want to learn more about the libertarian approach to foreign policy, my Cato colleagues are the real experts. I also call your attention to these thoughts from Mark Steyn, George Will, and Steve Chapman.

Many of you probably heard about the “Halbig” decision, in which a federal court struck a blow against Obamacare by ruling that the IRS was wrong to arbitrarily grant subsidies for health insurance policies purchased through a federal exchange.

And why did the judges rule against the IRS? Well, for the simple reason that the Obamacare legislation specifically says that subsidies are only available for policies purchased through exchanges set up by state governments. My Cato colleague Michael Cannon explains:

The PPACA authorizes the IRS to issue health-insurance tax credits only to taxpayers who purchase coverage “through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act.” The tax-credit eligibility rules repeat this restriction, without deviation, nine times. The undisputed plain meaning of these rules is that when states decline to establish an Exchange and thereby opt for a federal Exchange — as 34 states accounting for two-thirds of the U.S. population have done — the IRS cannot issue tax credits in those states.

The legal fight isn’t over, of course, and it’s quite likely that the Supreme Court will make the ultimate ruling (which is worrisome since Chief Justice Roberts already has demonstrated that he’s sometimes guided by politics rather than the law).

But that’s an issue for another day.

Our topic today is humor. Or maybe it’s hypocrisy. Or perhaps it’s duplicity. Heck, it’s all of those things and more. Why? Because a leading supporter of Obamacare (who often conveniently forgets to disclose that he got $400,000 of our tax dollars to help draft and promote the law) has been caught with his pants down.

As you can see in this video, Professor Gruber is now pretending the Halbig decision was wrong even though he repeatedly acknowledged in the past that states would have to set up exchanges in order for their citizens to get subsidies.

Wow.

I’ve never seen a more brutal video. And it’s effective because Gruber is hoisted on his own petard.

Heck, this puts him in the same category as Paul Krugman, who also has been caught changing his views (he used to admit that unemployment benefits increase joblessness, but more recently made the opposite argument to boost Obama’s agenda).

Though I should admit that hypocrisy and duplicity aren’t limited to the left. I’ve criticized Republicans, after all, for occasionally justifying their anti-tax views by citing the Keynesian analysis of the Congressional Budget Office.

But let’s not digress. Instead, let’s simply enjoy the emasculation of a statist.

And because the video is so enjoyable, I guess I’ll put it in the humor category.

And if you like humorous Obamacare-related videos, here are some other examples from the archives.

*Creepy Uncle Sam wants to conduct an OB/GYN exam.

*The head of the National Socialist Workers Party finds out he can’t keep his health plan.

*Young people discover that they’re screwed by Obamacare.

*The wrong circus comes to town.

*Remy of Reason TV sings about the joy of part-time work.

*A cartoon video imagines a world where buying coffee is like buying government-run healthcare.

*One of the biggest statists of the 20th century is angry that the Obamacare exchanges don’t work.

Let’s close with a pair of cartoons, both of which are related to the Halbig decision, at least in that we have an Administration that doesn’t seem to care about the rule of law.

We’ll start with Michael Ramirez.

Here’s Chip Bok’s contribution.

P.S. On a different topic, the battle over the Export-Import Bank is getting more heated. You probably won’t be surprised to learn that President Obama supports this corrupt example of corporate welfare (even though he said he was opposed back in 2008).

This is a rare issue where some honest leftists are on the correct side. That’s because, as illustrated by this Venn diagram (h/t: Charles Murray), some of them are willing to side with libertarians in the fight to makes sure big government and big business don’t get to conspire against taxpayers.

Sadly, too many DC leftists are hypocrites, happy to line the pockets of big companies if such policies also expand the power of government.

I had a very bad lunch today.

But not because of what I ate. My lunch was unpleasant because I moderated a noontime panel on Capitol Hill featuring Senator Ron Johnson of Wisconsin and my Cato colleague Chris Edwards.

And I should hasten to add that they were splendid company. The unpleasant part of the lunch was the information they shared.

The Senator, in particular, looked at budgetary projections over the next 30 years and basically confirmed for the audience that an ever-expanding burden of federal spending is going to lead to a fiscal crisis.

To be blunt, he showed numbers that basically matched up with this Henry Payne cartoon.

Here’s a chart from his presentation. It shows the average burden of spending in past years, compared to various projections of how much bigger government will be – on average – over the next three decades.

The Senator warned that the most unfavorable projection (i.e., “CBO ALT FISC”) was also the most realistic one. In other words, federal spending will consume a much larger share of economic output over the next three decades than it has over the past two decades.

But our fiscal outlook is actually even worse than what you see in his slide.

The Senator’s numbers are based on average spending levels over the 2015-2044 period. That’s very useful – and sobering – data, but if you look at the annual numbers, you’ll see that the trendline gives us additional reasons to worry.

More specifically, spending for the major entitlement programs (Social Security and Medicare, as well as Medicaid) is closely tied to the aging population. So as more and more baby boomers retire over the next couple of decades, spending on these programs will become more burdensome.

In other words, our fiscal problem will be much larger in 2040 than it will be in 2020.

Here are the long-run numbers from the Congressional Budget Office. The blue line is federal spending on various programs and the pink line is total spending (i.e., programmatic spending plus interest payments). And keep in mind that these numbers don’t include state and local government spending, which presumably will chew up another 15 percent of our economic output!

In other words, America will become Greece.

And don’t delude yourself into thinking that CBO must be wrong. I’m not a big fan of the Congressional Budget Office (particularly CBO’s economic analysis), but these numbers are driven by demographics.

Moreover, CBO’s grim outlook is matched by similarly dismal numbers from the IMF, BIS, and OECD.

By the way, CBO doesn’t do projections once federal government debt exceeds 250 percent of GDP, so the gray-colored trendline beginning about 2048 is not an official projections. It’s merely an estimate of the total spending burden assuming that the federal budget is left on autopilot.

Of course, we’ll never reach that level. We will suffer a fiscal crisis before that point. But when it happens to us, the IMF won’t be there to bail us out for the simple reason that the IMF’s credibility is based on the backing of American taxpayers.

And we’ll already have been bled dry!

So unless we find some very rich Martians (who are also stupid enough to bail out profligate governments), it won’t be a pretty situation. I’m not sure we’ll have riots, such as the ones that have taken place in Europe, but there will be plenty of suffering.

Fortunately, there is a solution. All we need is a modest bit of fiscal restraint so that government grows slower than the private sector. That would completely reverse Senator Johnson’s dismal long-run numbers.

And some countries have shown that multi-year periods of fiscal restraint are possible.

The real question, though, is whether politicians in America would be willing to adopt the entitlement reforms that are needed to control the long-run growth of spending.

When major changes occur, especially if they’re bad, people generally will try to understand what happened so they can avoid similar bad events in the future.

This is why, when we’re looking at major economic events, it’s critical to realize that narratives matter.

For instance, generation after generation of American students were taught that the Great Depression was the fault of capitalism run amok. But we now have lots of evidence that bad government policy caused the Great Depression and that the downturn was made more severe and longer lasting thanks to further policy mistakes by Hoover and Roosevelt.

The history textbooks are probably still wrong, but at least there’s a chance that interested students (and non-students) will come across more accurate explanations of what happened in the 1930s.

More recently, the same thing happened after the financial crisis. The statists immediately tried to convince people that the 2008 mess was a consequence of “Wall Street greed” and “deregulation.”

Fortunately, many experts were available to point out that the real problem was bad government policy, specifically easy money from the Fed and the corrupt system of subsidies from Fannie Mae and Freddie Mac.

So hopefully future history books won’t be as wrong about the financial crisis as they were about the Great Depression.

I raise these examples because I want to address another historical inaccuracy.

Let’s go back about 100 years ago to the s0-called “progressive era.” The conventional story is that this was a period when politicians reined in some of the excesses of big business. And if it wasn’t for that beneficial government intervention, we’d all still be oppressed peasants working in sweatshops.

There’s just one small problem with this narrative. It’s utter nonsense.

Let’s look specifically at the issue of sweatshops. Writing for the Independent Institute, Ben Powell looks at the history of sweatshops and whether workers were being mistreated.

He starts with a bit of history.

Sweatshops are an important stage in the process of economic development. As Jeffery Sachs puts it, “[S]weatshops are the first rung on the ladder out of  extreme poverty”. …Working conditions have been harsh and standards of living low throughout most of human history. …Prior to the Industrial Revolution,  textile production was decentralized to the homes of many rural families or artisans, and output was limited to what could be produced on the  spinning wheel and hand loom. …Yarn spinning was mechanized in 1767 with the invention of the spinning jenny, and water power was harnessed shortly  thereafter. With these inventions and steam power later, large-scale textile factories that are similar to today’s sweatshops emerged. The conditions in these  early sweatshops were worse than those in many Third World sweatshops today. In some factories, workers toiled for sixteen hours a day, six days per week.

Then he looks at what actually happened in Great Britain, which is where sweatshops began.

Yet workers flocked to the mills. …sweatshop workers…were attracted by the opportunity to earn higher wages than they could elsewhere. In fact, economist Ludwig von Mises defended the factory system of the Industrial Revolution,…writing, “The factory owners did not have the power to compel anybody to take a factory job. They could only hire people who were ready to work for the wages offered to them. Low as these wage rates were, they were nonetheless more than these paupers could earn in any other field open to them.” …Mises’s argument is supported by historical evidence. Economist Joel Mokyr reports that workers earned a wage premium of 15 to 30 percent by working in the factories compared with other alternatives. The transformation of Great Britain during this time was dramatic. As economist and historian Donald McCloskey describes it, “In the 80 years or so after 1780 the population of Britain nearly tripled, the towns of Liverpool and Manchester became gigantic cities, the average income of the population more than doubled… Peter Lindert and Jeffery  Williamson similarly find impressive gains in the standard of living between 1781 and 1851. Farm labor’s standard of living went up more than 60 percent,  blue-collar workers’ standard increased more than 86 percent, and overall workers’ standard increased more than 140 percent. Along with this increase in  the standard of living came a decrease in the share of women and children working beginning sometime between 1815 and 1820.

Ben then looks at the American experience. Once again, he finds that sweatshops allowed workers to earn more income than they could by staying on the farm.

And this was part of a process that enabled the United States to become much richer over time.

…workers flocked to the mills. At first, in the cities north of Boston it was mainly rural women and girls who left the farm to populate the early textile mills.  During the 1830s in Lowell, a woman could earn $12 to $14 a month (in 1830s dollars) and after paying $5 for room and board in a company boarding house  would have the rest left over for clothing, leisure, and savings. It wasn’t uncommon for women to return home to the farm after a year with $25 to $50 in a  bank account. This was far more money than they could have earned on the farm and often more disposable cash than their fathers had. …much like in Great Britain, living standards improved over time. In 1820, before the Industrial Revolution, annual per capita income in the United States stood at a little  more than $2,000. By 1850, it had grown by 50 percent to more than $3,000 and then doubled again by 1900 to more than $6,600. Along with the rise in  incomes came improvements in working conditions and greater consumption.

Eventually, of course, the sweatshops disappeared. But Ben explains that it was because of higher living standards rather than government intervention.

Sweatshops are eliminated mainly through the process of industrialization that raises a country’s income. The increased income comes from increased  worker productivity, which raises the upper bound of compensation. The increased productivity isn’t just in one firm, but in many firms and industries, and  thus workers’ next-best alternatives improve, raising the lower bound of compensation. As the economy grows, the competitive process pushes wages up.  Because health, safety, leisure, and so on are normal goods, workers demand more of their compensation on these margins as their total compensation increases. The result is the eventual disappearance of sweatshops.

Now let’s look at the broader issue of whether the “progressive era” was bad news for big business.

The answer is yes and no. Politicians imposed lots of legislation that was bad for the free market, but the crony capitalists of that era were big supporters of intervention.

Tim Carney elaborates in a column for the Washington Examiner.

Every American knows the fable of the Progressive Era and that “trust buster” Teddy Roosevelt wielding the big stick of federal power to battle the greedy corporations. We would be better off if more people knew the work of the man who dismantled this myth: historian Gabriel Kolko… His thesis: “The dominant fact of American political life” in the Progressive Period “was that big business led the struggle for the federal regulation of the economy.”

Here’s what really happened.

Many corporate titans in the early 20th Century, buying into the pervasive hubris of the day, believed that a state-managed economy was the inevitable end of a rational society—the conclusion of what Standard Oil’s top lobbyist Samuel Dodd called the “march of civilization.” Competition, in their eyes, was destructive redundancy. “Competition is industrial war,” James Logan of the U.S. Envelope Company wrote in 1901. “Ignorant, unrestricted competition carried to its logical conclusion means death to some of the combatants and injury for all.”  Steel baron Andrew Carnegie constantly strove to turn the steel industry into a cartel and keep prices high. Competition, however, always had a way pulling prices down. As Carnegie wrote in 1908, “It always comes back to me that Government control, and that alone, will properly solve the problem.” Kolko also showed how the socialists welcomed corporate-state collusion to advance monopoly as part of “progress.”

And, as Tim explains, it’s still happening today.

This has its echoes in contemporary progressive politics… When conservatives challenged Obamacare’s individual mandate, the White House had the backing of the insurance industry and the hospital lobby. After Obama won at the Supreme Court, liberal Bill Scher wrote in the New York Times that progressive victories historically flow from the Left’s alliances with Big Business. …Liberal scholar William Galston at the Brookings Institution explains the economics at play. “Corporations have sizeable cash flows and access to credit markets, which gives them a cushion against adversity and added costs,” he wrote in 2013, explaining why the big guys often welcome regulation.

In other words, big business often is the enemy of genuine capitalism and free markets.

Not only did the big companies, including insurance and pharmaceuticals, support Obamacare.

They’re now supporting the corrupt Import-Export Bank.

And they’re perfectly happy to support higher taxes, at least when the rest of us are being victimized.

They also supported the sleazy TARP bailout.

The moral of the story is not just the big business can be just as bad as big labor. The real moral of the story is captured by this poster.

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