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Two big-picture assumptions guide my views of law enforcement.

  • First, there are some very bad people in the world. To protect the rest of us, I want government to catch, convict, and punish those thieves, rapists, murderers, and other low-life scum.
  • Second, government officials have a tendency to misbehave and we should be thankful that America’s Founding Fathers bequeathed us a Constitution that protects our liberties.

In other words, there’s a balancing act.

Many people belong in jail, but I’m glad we have the presumption of innocence, protection against unjust searches, and all sorts of due process legal protections and oversight policies that make it hard for the government to mistreat us or put us in jail (my views even led me to side with Ruth Bader Ginsburg over Clarence Thomas on one occasion).

Let’s consider what happens when law enforcement does not respect that balancing act. In this case, we’re going to look at misbehavior by the Federal Bureau of Investigation.

Here are excerpts from a remarkable story by Michael Finnegan of the Los Angeles Times.

The privacy invasion was vast when FBI agents drilled and pried their way into 1,400 safe-deposit boxes at the U.S. Private Vaults store in Beverly Hills. They rummaged through personal belongings of a jazz saxophone player, an interior designer, a retired doctor, a flooring contractor, two Century City lawyers and hundreds of others. Agents took photos and videos of pay stubs, password lists, credit cards, a prenuptial agreement, immigration and vaccination records, bank statements, heirlooms and a will, court records show. …It took five days for scores of agents to fill their evidence bags with the bounty: More than $86 million in cash and a bonanza of gold, silver, rare coins, gem-studded jewelry and enough Rolex and Cartier watches to stock a boutique.

Here are some more details.

The key thing to understand is that what happened with the FBI wasn’t a heat-of-the-moment mistake, like we saw with law enforcement in Uvalde, Texas.

The bureaucrats at the FBI and the U.S. attorney’s office explicitly planned to act in a dishonorable fashion.

…newly unsealed court documents show that the FBI and U.S. attorney’s office in Los Angeles got their warrant for that raid by misleading the judge who approved it. They omitted from their warrant request a central part of the FBI’s plan: Permanent confiscation of everything inside every box containing at least $5,000 in cash or goods, a senior FBI agent recently testified. …The failure to disclose the confiscation plan in the warrant request came to light in FBI documents and depositions of agents in a class-action lawsuit by box holders who say the raid violated their rights. …“The government did not know what was in those boxes, who owned them, or what, if anything, those people had done,” Robert Frommer, a lawyer who represents nearly 400 box holders in the class-action case, wrote in court papers. “That’s why the warrant application did not even attempt to argue there was probable cause to seize and forfeit box renters’ property.” …The plaintiffs in the class-action suit have asked U.S. District Judge R. Gary Klausner to declare the raid unconstitutional. If he grants the request, it could force the FBI to return millions of dollars to box holders whose assets it has tried to confiscate. It could also spoil an unknown number of criminal investigations by blocking prosecutors from using any evidence or information acquired in the raid, including guns and drugs. …The 4th Amendment protects people against “unreasonable searches and seizures.” It requires the government to get a warrant by showing in a sworn statement that it has probable cause to believe that a particular place needs to be searched and describing specific people or things to be seized.

In an article for the Federalist, Evita Duffy finds the FBI’s actions to be very disturbing.

…allegations of FBI corruption and hubris are coming to light after a lawsuit last week revealed FBI agents misled a judge so they could illegally seize and withhold property from innocent American citizens. Agents took more than $86 million in cash, jewelry, and gold from 1,400 safe deposit boxes during the raid of a Beverly Hills vault company in March 2021. …the hundreds of citizens whose assets were seized by the FBI are not suspected of any crimes, according to court documents. ….After the raid, the feds demanded that box holders submit to an investigation before having their possessions returned. …as the Institute for Justice points out, the government had no right to seize their property and force them to prove their innocence in the first place.

Ms. Duffy’s article also lists other examples of FBI misbehavior.

And that pattern helps to explain why Charles Cooke of National Review argues it may be time for radical change.

Since 1935 — and, indeed, even before that, back when it was just the Bureau of Investigation — it has been a violent, expansionist, self-aggrandizing, and careless outfit… I now think that the FBI ought to be destroyed from the ground up. End it. Disassemble it. Dissolve it. Repeal its charter, evacuate its building, spoliate its budget and supplies. …Bit by bit, year by year, case by case, the FBI has turned itself into a sort of unmoored Super Police Force, which, despite being nominally accountable to the executive branch, is “independent” from political control. In essence, the FBI’s pernicious tendency toward empire-building is of a piece with that exhibited by the rest of the modern federal government… In the heart of its capital city, the United States now has a bureau that intervenes with impunity in our ideological and partisan disputes; that has developed a massive, statutorily unwarranted intelligence-collection wing; and that has never managed to escape the paranoia and corruption of its execrable, tyrannical founder.

I suspect that few if any policymakers will want to follow Cooke’s advice.

But why not at least have some sort of adverse consequences for the bureaucrats who lied? Have any of the FBI officials been fired or charged with lying to the court? Has anyone in the U.S. attorney’s office lost their license to practice law?

The answer almost surely is no. It seems there are never negative consequences when bureaucrats and other public officials misbehave.

P.S. There’s a actually a third big-picture assumption that guides my views on law enforcement, and that’s the notion that there should be far fewer laws (for examples, see here, here, and here).

P.P.S. Heck, I’ll add a fourth big-picture assumption, which is that governments should not use law enforcement as a means of generating extra revenue. That approach leads to terrible outcomes (and understandable reactions).

It is disappointing that the bureaucrats at the International Monetary Fund routinely advocate for higher taxes and bigger government in nations from all parts of the world (for examples, see here, here, here, here, here, and here).

It is disturbing that the IMF engages in bailouts that encourage bad fiscal policy by governments and reckless lending policies by financial institutions.

And it is disgusting that those IMF bureaucrats get tax-free salaries and are thus exempt from the damaging consequences of those misguided policies.

One set of rules for the peasants and one set of rules for the elite.

The latest example of IMF misbehavior revolves around the bureaucracy’s criticism of recently announced tax cuts in the United Kingdom.

A BBC report by Natalie Sherman and Tom Espiner summarizes the controversy.

The International Monetary Fund has openly criticised the UK government over its plan for tax cuts…In an unusually outspoken statement, the IMF said the proposal was likely to increase inequality and add to pressures pushing up prices. …Chancellor Kwasi Kwarteng unveiled the country’s biggest tax package in 50 years on Friday. But the £45bn cut has sparked fears that government borrowing could surge along with interest rates. …Lord Frost, the former Brexit minister and close ally of Prime Minister Liz Truss, criticised the IMF’s statement. …”The IMF has consistently advocated highly conventional economic policies. It is following this approach that has produced years of slow growth and weak productivity. The only way forward for Britain is lower taxes, spending restraint, and significant economic reform.” …Moody’s credit rating agency said on Wednesday that the UK’s plan for “large unfunded tax cuts” was “credit negative” and would lead to higher, persistent deficits “amid rising borrowing costs [and] a weaker growth outlook”. Moody’s did not change the UK’s credit rating.

So what should be done about the IMF’s misguided interference?

Writing for the Spectator in the U.K., Kate Andrews has some observations about the underlying philosophical and ideological conflict..

…the International Monetary Fund has weighed in on the UK’s mini-Budget, offering a direct rebuke of Liz Truss and Kwasi Kwarteng’s tax cuts. …its spokesperson said…‘Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture’… But this rebuke from the IMF is the kind of battle the Truss camp might be happy to have. …The IMF takes a political stance on inequality, viewing its reduction as a good thing in itself. Truss and Kwarteng reject this premise – summed up in the Chancellor’s statement last Friday when he called for the end of redistribution politics – and think it’s far more important to focus on ‘growing the size of the pie.’ The IMF’s ‘intervention’ is likely to become an example of the ‘Treasury orthodoxy’ that Truss was so vocal about during the leadership campaign: her belief that a left-wing economic consensus will not tolerate any meaningful shake-up of the tax code or supply-side reform.

Truss and Kwarteng are correct to reject the IMF’s foolish – and immoral – fixation on inequality.

All you really need to know is that the IMF publishes research implying it is okay to hurt poor people if rich people are hurt by a greater amount.

Let’s close by addressing whether tax cuts are bad for Britain’s currency and financial markets

Paul Marshall explained the interaction (and non-interaction) of fiscal and monetary policy in a column for the U.K.-based Financial Times.

Since 2010, the G7 policy framework has been one of tight fiscal and loose monetary policy. …This combination of fiscal austerity and monetary largesse has not been a success. Austerity has not prevented government debt ratios steadily climbing to historic highs. …Meanwhile quantitative easing has fuelled asset inflation for the super-rich and has more or less abolished risk pricing in financial markets. And…it has produced inflation which is still out of control. But now the global policy consensus is in the process of pivoting… A distinctive feature of the UK’s fiscal pivot is the emphasis on reducing the burden of tax on work and business. This is sensible. …the bigger problem for Liz Truss’s government is the Bank of England. It seems that the governor, Andrew Bailey, did not get the memo. Our central bank has been behind the curve since inflation first started to rise sharply in 2021. …The Bank of England effectively lost control of the UK bond market last Thursday when it raised interest rates by 50 basis points, instead of the 75bp that the US Federal Reserve and the European Central Bank raised by. Its timidity is now having an impact on both the gilt market and sterling. That is the essential context for the market reaction to the mini-Budget. Once you lose market confidence, it is doubly hard to win it back. …a more muscular stance from the BoE to underpin financial market confidence in the UK, even at the expense of some short-term pain.

He is right.

The Bank of England should be focused on trying to unwind its mistaken monetary policy that produced rising prices. That’s the approach that will strengthen the currency.

And Truss and Kwarteng should continue their efforts for better tax policy so the economy can grow faster.

But better tax policy needs to be accompanied by much-need spending restraint, which is what the United Kingdom enjoyed not only during the Thatcher years, but also under Prime Ministers Cameron and May.

P.S. The IMF also interfered in British politics when it tried to sabotage Brexit.

P.P.S. One obvious takeaway is that the IMF should be eliminated.

Based on Sunday’s election in Italy, the nation’s next Prime Minister almost certainly will be Giorgia Meloni, which has some worried that Italy is returning to the “far right” fascism of Benito Mussolini.

From an economic perspective, though, it would be more accurate to say that Mussolini is “far left.”

Or to say that he is a collectivist, which puts him in the same camp as socialists and communists.

In an article for the Independent Institute, Angelo Codevilla discussed how Mussolini began his career as a socialist activist, but ultimately was forced out of the party because of his nationalist views..

He was active in socialist circles, both Italian and international, giving speeches to workers and helping to organize strikes… He got to know Vladimir Lenin… Benito became a full-time socialist activist…as editor of its socialist newspaper. …he supported himself writing essays and editing a journal called Lotta di classe—class struggle… In 1911 the party entrusted the 28-year-old with editorship of its flagship publication, Avanti!. …He had become Italian socialism’s brightest star. …In…1914…he committed socialist heresy by writing that class struggle is a bad idea because the nation is more important than social class. He called his few scattered followers fasci, bundles, of individuals. …Hence he labeled the movement “Fasci Rivoluzionari d’Azione Internazionalista” and its members “Fascisti.” …the party expelled him.

In other words, Mussolini was part of the conflict between “national socialism” and “international socialism.”

Both versions of socialism favored big government, but they differed in how they viewed the nation state.

And this conflict, driven in part by the events of World War I, led Mussolini to develop fascism as a distinct strain of statism.

…continuing to call himself a socialist and propagandizing his evolving blend of nationalism and socialism…Mussolini shifted to building fascism into a party. …Hegel, following Napoleon, had made patriotic worship of the scientifically administered, progressive state the political essence of modernity. Mussolini’s vision of Italy followed from that. “The bureaucracy is the state,” he said. …Mussolini explained, …The state personifies the country, and disciplines its several elements to its service. “Soon, we will be the state.”

And he was right, at least in the sense that he and his fascists soon took over the government.

In the 1921 elections, Mussolini’s Fascists had gained only .04% of the vote. But chaos reigned in the streets because of socialist, Communist, and anarchist mobs, as well as because of the perhaps 40,000 fascist squadristi (the Blackshirts) who fought them. …Mussolini organized the descent of some 30,000 squadristi on Rome to demand he be named prime minister. …the king appointed Mussolini to head a government with almost no fascists. But…Mussolini gradually dispossessed the rest. …Fascist Italy was the first country in which the elected legislature gave up its essential powers to the executive…thus establishing the modern administrative state. …Socioeconomic organization was fascism’s defining feature. Only employers’ and employees’ organizations approved by the government were allowed. …No longer would corporations be responsible to owners.

Mussolini’s fascism was different than traditional socialism in that the goal was to have the government control the economy, but not to have government take over “the means of production.”

Both approaches were very hostile to free markets, of course.

I’ll close with some excerpts about Italian fascism and FDR’s failed New Deal.

After Franklin Roosevelt’s inauguration in 1933, Mussolini’s enthusiasm for likening the New Deal to fascism’s political-economic order… he made clear that “the spirit of [FDR’s program] resembles fascism’s since, having recognized that the state is responsible for the people’s economic well-being, it no longer allows economic forces to run according to their own nature.” …Fascists rejoiced that FDR had forsaken liberal for corporativist principles… It could hardly have been otherwise since the essence of the National Industrial Recovery Act—the involuntary inclusion of all participants in categories of economic activity and their subjection to government-dictated prices, wages, and working conditions—was at least as detailed as those in fascism’s corporate law. 

Since I’ve written about how the New Deal (and much of modern leftism) is based on fascist economics, I obviously agree.

But I’ve also explained that it’s better to refer to such policies as corporatist or interventionist since fascism nowadays also implies support for some of Hitler’s lunatic ideas about race and conquest.

P.S. The main message of today’s column is that it’s silly to label Mussolini (and his political heirs) as being on the far right. But it’s also true that Mussolini’s nationalist approach to statism is different than the ideas advocated by Marx (and his political heirs).

Dissecting and explaining these differences is why I think the left-right ideological spectrum should be replaced by this triangle.

By the way, the top of the triangle could say “Classical Liberalism,” but I used “Libertarian” so American readers would easily understand.

P.P.S. There’s a “Political Compass Test” that does a good job of determining one’s philosophical orientation, but it completely botches where Mussolini belongs.

The people of Iran are protesting against their tyrannical government. The trigger for the anger and unrest is the murderous brutality  of the nation’s so-called Morality Police.

I can’t help but wonder, though, whether there’s also national discontent because of bad economic policy.

According to the latest edition of Economic Freedom of the World, Iran has one of the world’s most repressive governments. Of the 165 jurisdictions, only Libya, Argentina, Syria, Zimbabwe, Sudan, and Venezuela rank lower.

In other words, the Iranian government restricts economic freedom just like it restricts political freedom.

And that has very adverse consequences for the prosperity of the Iranian people, notwithstanding the fact that the nation has abundant energy resources.

Here’s a chart, derived from the Maddison database, that shows how Iran has fallen far behind Bahrain when measuring per-capita economic output.

I picked Bahrain because that’s the nation in the Middle East that ranks highest for economic liberty (#39).

This gives us another example of the “anti-convergence” that occurs when two nations have big differences in economic freedom.

The bottom line is that Iran has a horrible government for more reasons than we’re seeing in today’s headlines.

P.S. Here’s a comparison of economic liberty over time in both Iran and Bahrain.

P.P.S. Western sanctions against Iran obviously undermine prosperity, just as similar sanctions hurt places such as Cuba, North Korea, and Venezuela. I like when people make this point since it shows they (at least implicitly) are making the case for free trade. But I disagree if they want people to believe that such sanctions explain more than a small fraction of the problems in those nations.

Economics Humor

Time for another edition of economics humor (previous versions here, here, here, and here).

We’re going to start with the topic of free trade, which people sometimes oppose when casting ballots but inevitably support when spending dollars.

Next, we have a bookstore that understands how to categorize Keynesian economics.

Our third item is an amusing stereotype of economists.

Perhaps you now understand why I have several columns based on why people should not trust economists.

Now let’s turn to the issue of inflation.

I’ve written about the topic of rising prices, but I didn’t realize the situation had reached the crisis level captured by this tweet.

So how do we stop the problem of inflation to protect helpless victims like Leonardo DiCaprio?

My last – and favorite – item for today shows that it is sometimes unpopular to offer good answers.

As the guy falls to his death, at least he will be comforted by knowing he is right.

Maybe his last thought will even be about a permanent solution.

I strongly supported Brexit in part because I wanted the United Kingdom to have both the leeway and the incentive to adopt pro-market policies.

Imagine my disappointment, then, when subsequent Conservative Prime Ministers did nothing (Theresa May) or expanded the burden of government (Boris Johnson).

Where was the reincarnation of Margaret Thatcher? Didn’t the Tory Party understand the need to restrain big government?

Perhaps my prayers have finally been answered. After jettisoning Boris Johnson (albeit for scandal rather than bad policy), the Tories elected Liz Truss to lead the nation.

And she appointed Kwasi Kwarteng to be Chancellor of the Exchequer (akin to U.S. Treasury Secretary). The two of them have just unveiled some major changes in U.K. fiscal policy.

Allister Heath’s editorial for the Telegraph has a celebratory tone.

…the best Budget I have ever heard a British Chancellor deliver, by a massive margin. The tax cuts were so huge and bold, the language so extraordinary, that at times, listening to Kwasi Kwarteng, I had to pinch myself to make sure I wasn’t dreaming, that I hadn’t been transported to a distant land that actually believed in the economics of Milton Friedman and FA Hayek. …The neo-Brownite consensus of the past 20 years, the egalitarian, redistributionist obsession, the technocratic centrism, the genuflections at the altar of a bogus class war, the spreadsheet-wielding socialists: all were blown to smithereens by Kwarteng’s stunning neo-Reaganite peroration. …All the taboos have been defiled: the fracking ban, the performative 45pc tax rate, the malfunctioning bonus cap, the previous gang’s nihilistic corporation tax and national insurance raids. The basic rate of income tax is being cut, as is stamp duty, that dumbest of levies. …Reforms of this order of magnitude should really have happened after the referendum in 2016, or after Boris Johnson became Prime Minister in 2019… Truss..has a fighting chance to save Britain, and her party, from oblivion.

The Wall Street Journal‘s editorial has a similarly hopeful tone while also explaining the difference between good supply-side policies and failed Keynesian demand-side policies.

This is a pro-growth agenda that is very different than the tax-and spend Keynesianism that has dominated the West’s economic policies for nearly two decades. …Mr. Kwarteng axed the 2.5-percentage-point increase in the payroll tax imposed by former Prime Minister Boris Johnson, and canceled a planned increase in the corporate income tax rate to 26% from 19%. …Kwarteng also surprised by eliminating the 45% tax rate on incomes above £150,000. The top marginal rate now will be 40%… A frequent complaint is that there’s no evidence tax cuts for corporations or higher earners will boost demand. Maybe not, but that’s also not the point. Britain doesn’t need a Keynesian demand-side stimulus. It needs the supply-side jolt Ms. Truss is trying to deliver by changing incentives to work and invest. A parallel complaint from the same crowd is that Ms. Truss’s policies—which they just said won’t stimulate demand—will stimulate so much demand the policies will stoke inflation. This has been the experience with debt-fueled fiscal blowouts since the pandemic, but Ms. Truss’s plan is different. She’s not throwing around money to fund consumption. She’s using the tax code to spur production.

The editorial concludes with a key observations.

Britain has become the most important economic experiment in the developed world because Ms. Truss is the only leader willing to abandon a stale Keynesian policy consensus that has produced stagflation everywhere.

Here’s a tweet that captures the current approach, with “liberal” referring to pro-market classical liberalism.

This is the “Singapore-on-Thames” approach that I’ve been promoting for years. Finally!

In a column for Reason, Robert Jackman gives a relatively optimistic libertarian assessment of what to expect from Truss.

…will her arrival in Downing Street bring an end to the big-state, big-spending style of her predecessor? …Within the Westminster village, Truss has long been regarded as a torchbearer for liberty—a reputation that stretches back to her days working at various small-state think tanks. Since entering Parliament in 2010, she has been a member of the Free Enterprise Group… As trade secretary, Truss was responsible for delivering on the good bit of Brexit—jetting around the world to sign tariff-busting trade deals. She was good at it too, quickly securing ambitious agreements with Australia and Japan. …But will Liz Truss’ premiership put Britain back on track to a smaller state? Some things aren’t that simple. …Truss has long been an advocate of relaxing Britain’s punitive planning laws, which would make it easier to build much-needed homes and energy infrastructure.

As you might expect, the analysis from the U.K.-based Economist left much to be desired.

Liz Truss, Britain’s new prime minister, is now implementing Reaganomics…comprising tax cuts worth perhaps £30bn ($34bn) per year (1.2% of gdp)… The fuel that fiscal stimulus will inject into the economy will almost certainly lead the boe to raise interest rates… No matter, say Ms Truss’s backers, because tax cuts will boost productivity. Didn’t inflation fall and growth surge under Reagan? …Ms Truss’s cheerleaders seem to have read only the first chapter of the history of Reaganomics. The programme’s early record was mixed. The tax cuts did not stop a deep recession, yet by March 1984 annual inflation had risen back to 4.8% and America’s ten-year bond yield was over 12%, reflecting fears of another upward spiral in prices. Inflation was anchored only after Congress had raised taxes. By 1987 America’s budget, excluding interest payments, was nearly balanced. By 1993 Congress had raised taxes by almost as much as it had cut them in 1981.

By the way, the article’s analysis of Reaganomics is laughably inaccurate.

Meanwhile, a report in the New York Times, writtten by Eshe Nelson, Stephen Castle and , also has a skeptical tone.

But I’m surprised and impressed that they admit Thatcher’s policies worked in the 1980s.

Britain’s new prime minister, Liz Truss, gambled on Friday that a heavy dose of tax cuts, deregulation and free-market economics would reignite her country’s growth — a radical shift in policy… the new chancellor of the Exchequer, Kwasi Kwarteng, abandoned a proposed rise in corporate taxation and, in a surprise move, also abolished the top rate of 45 percent of income tax applied to those earning more than 150,000 pounds, or about $164,000, a year. He also cut the basic rate for lower earners and cut taxes on house purchases. …It is hard to overstate the magnitude of the policy shift from Mr. Johnson’s government, which just one year ago had announced targeted tax increases to offset its increased public spending… The chancellor’s statement in Parliament on Friday underscored the free-market, small-state, tax-cutting instincts of Ms. Truss, who has modeled herself on Margaret Thatcher, who was prime minister from 1979 to 1990. Thatcher’s economic revolution in the 1980s turned the economy around.

The article includes 11 very worrisome words.

…so far there has been no indication of corresponding spending cuts.

Amen. Tax cuts are good for growth, but their effectiveness and durability will be in question if there is not a concomitant effort to restrain the burden of spending.

Truss and Kwarteng also should have announced a spending cap, modeled on either the Swiss Debt Brake or Colorado’s TABOR.

P.S. In addition to worrying about whether Truss will copy Thatcher’s track record on spending, I’m also worried about her support for misguided energy subsidies.

Socialism and Immigration

I’ve written many columns about the migration from high-tax states to low-tax states.

The obvious takeaway is that people want to move to places where they can keep more of their money. And if they don’t have money, they want to move to places where lower tax burdens create more economic opportunity.

The same principle is true when considering international migration.

Nations with lower tax burden attract more investors, entrepreneurs, and job creators. And they also attract the people who want the new jobs that are created.

We’re seeing an example of this in the Western Hemisphere.

Charles Lane of the Washington Post has a very good column today, explaining a big reason why so many migrants are coming to the United States.

…the exodus from failed left-wing Latin American regimes has global repercussions…many people seeking relief from poverty and oppression go to the wealthiest and freest nation in their own hemisphere: the United States. Right now, escapees from Cuba, Venezuela and Nicaragua make up a rapidly growing share of the influx at the border between the United States and Mexico. …All of the above should inform the debate about “root causes” of migration… the historic debacle represented by the departure of over 6 million from Venezuela… That is a fifth of the entire country. …The foreseeable failure of subjecting the economy to top-down control and denying people basic freedoms can.The exodus is thus a tremendous compliment to the United States and other democratic capitalist countries.

As I said, a very good column. I feel obliged to point out that Mr. Lane was being redundant when he wrote “failed left-wing,” but let’s conclude by examining a couple of policy issues.

First, some people argue that illegal migration can be reduced if American taxpayers send foreign aid to Latin America. But since foreign aid tends to subsidize bad policy, that approach almost surely will backfire.

Second, we should make sure the people who come to America are arriving for opportunity rather than handouts. That’s true whether we have a restrictive policy or an open-door policy.

P.S. The second point doesn’t apply for potential migrants from countries such as Denmark that have overly generous welfare policies.

P.P.S. It’s a problem that Biden wants to drive away highly productive people.

I wrote just yesterday about Europe lagging behind the United States, and that’s in addition to many similar columns over the past year.

But let’s not forget that Europe is also the cradle of classical liberalism, and that the continent became rich because of market-oriented policies.

As I often say when giving speeches in developing nations, it is a good idea to copy Europe’s rich nations. But I then include a very important caveat. Copy the policies that those counties had when they became rich.

Back in the 1800s, that meant very small government, very low taxes, and very low levels of red tape (i.e., the types of policies that helped trigger the industrial revolution).

Heck, the fiscal burden of government in Western Europe was relatively modest as recently as 1960.

It wasn’t until the mid-1960s that the welfare state exploded in size (aided and abetted by the imposition of value-added taxes).

Now taxes drain huge amounts of money from people’s pockets and government budgets now divert immense amounts of money from the economy’s productive sector.

P.S. The news isn’t all bad. As fiscal burdens increased in Europe. some other policies moved in the right direction.

Many people are stunned by the data I shared early last year showing that ordinary people in the United States tend to be much richer than their peers in advanced European nations.

Here’s some more evidence, courtesy of the Manhattan Institute’s Chris Pope.

As you can see, the poorest people in America are about equal to the poorest people in Germany, France, Canada, and the United Kingdom, but Americans are ahead of their peers when looking at the top 90 percent of the population.

For the top 70 percent, Americans are comfortably ahead.

But not everybody agrees.

Here’s a tweet from John Burn-Murdoch of the U.K.-based Financial Times. He has a very negative portrayal of the United States (and the United Kingdom).

The tweet from Burn-Murdoch includes a link to an article he wrote.

Here are some excerpts.

…one good way to evaluate which countries are better places to live than others is to ask: is life good for everyone there, or is it only good for rich people? …If you’re a proud Brit or American, you may want to look away now. …Norway is a good place to live, whether you are rich or poor. …The rich in the US are exceptionally rich — the top 10 per cent have the highest top-decile disposable incomes in the world, 50 per cent above their British counterparts. But the bottom decile struggle by with a standard of living that is worse than the poorest in 14 European countries including Slovenia. …transpose Norway’s inequality gradient on to the US, and the poorest decile of Americans would be a further 40 per cent better off while the top decile would remain richer than the top of almost every other country on the planet. …Until those gradients are made less steep, the UK and US will remain poor societies with pockets of rich people.

The United States is a poor society with some very rich people?!?

Is that possibly true?

As you might expect, that is utter hogwash. Here’s a chart, based on data from the Paris-based (and left-leaning) Organization for Economic Cooperation and Development.

It shows “actual individual consumption” in the OECD’s member nations, and people in the United States are far better off than people in any other nations.

Indeed, they have 50 percent more consumption than the average person in other OECD countries.

All you need to know is that Burn-Murdoch took some data about America’s poorest people and wants to mislead readers into thinking it also applies to the general population.

And he doesn’t even show his calculations. For what it’s worth, his numbers are not very consistent with some other data sources that are publicly accessible.

Professor Noah Smith also debunks the FT‘s report.

…when we look at how Americans in the middle of the distribution are doing, we see that America is not a “poor society” at all — in fact, it’s one of the richest on Earth. …the median American has a higher income than the median resident of almost any other country… Some people argue that because European countries buy health care for their citizens via the government — which is not counted in disposable income — that it’s not fair to use disposable income as the comparison measure here. But this isn’t right. The U.S. has a relatively low percentage of out-of-pocket health spending — our employers and our government pick up most of the tab. In fact, when we look at “adjusted disposable income”, which includes the value of government services like health care, we find out that the U.S. comes out even more ahead relative to other countries. …someone at around the 18th percentile of income in America in 2019 — a working-class person on the edge of being considered poor — lived in a household making $21,400 a year. That’s about the same as the median income of households in Japan, and about 84% of the median income of households in the UK. In other words, a working-class American on the edge of poverty makes as much as a middle-class person in some rich countries.

I’ll close by noting something else that was misleading in the FT report. Burn-Murdoch compares Norway to the U.S. and U.K., but that nation’s oil wealth makes it very unrepresentative.

Since the report concludes by endorsing more redistribution, it would be more honest and appropriate to compare American living standards to the performance of Europe’s other welfare states.

But Burn-Murdoch did not do that because his already flimsy case would look even weaker.

Also, note that he did not highlight Switzerland. After all, it is richer than Norway, even though it does not enjoy abundant natural resources.

I suspect that’s because Switzerland is a libertarian-oriented nation with a comparatively small welfare state. In other words, it’s a role model for good policy, whereas the reporter seems interested in promoting dirigisme.

P.S. Speaking of libertarians, the Burn-Murcoch story in the Financial Times begins with this passage.

Where would you rather live? A society where the rich are extraordinarily rich and the poor are very poor, or one where the rich are merely very well off but even those on the lowest incomes also enjoy a decent standard of living? For all but the most ardent free-market libertarians, the answer would be the latter.

At the risk of stating the obvious, libertarians want a society with the smallest-possible government. Limiting coercion (the non-aggression principle) is the main motive.

Libertarians will view the resulting distribution of income as just, but they also will point out that freer societies do a much better job of generating broadly shared prosperity than government-dominated societies.

The bottom line is that Burn-Murdoch is either extraordinarily ignorant about libertarianism or he suffers from Nancy MacLean levels of bad faith and dishonesty.

California Humor

California is a beautiful state, but it seems politicians are trying to drive away people and businesses with terrible policies.

And here’s a satirical video about the exodus.

Our second item reminds me of the famous joke comparing coyotes in California and Texas.

Next we have a grim look at the state’s possible future.

For our fourth item, here are some excerpts from an article published by America’s top site for political satire, the Babylon Bee.

Florida Governor Ron DeSantis flew 50 migrants to an affluent island in Massachusetts… Progressives have labeled the action as “cruel” and “heartless,” but when California governor Gavin Newsom volunteered asylum for the migrants in his own state, they declined the offer since they had only recently escaped a collapsing communist state without electricity. …The migrants say that California’s trash-littered sidewalks, water shortages, and electrical outages bear too much resemblance to the Venezuela they left behind for it to be a desirable destination. …At publishing time, Newsom had reiterated his offer in a video at his $5 million home, gesturing to the plentiful electricity around him, but migrants have said that this reminds them too much of the opulence enjoyed by Chavez and then Maduro while they wreaked havoc on the nation.

Per tradition, I’ve saved the best for last.

With so many businesses and middle-class households fleeing California, here’s a helpful reminder that they should not push for dirigiste policies in their new states.

P.S. For what it’s worth, there’s actually some evidence that the folks moving into Texas are more conservative than average. Though I wonder if Colorado has been pushed to the left by California migrants. Let’s hope not since TABOR is definitely worth preserving.

P.P.S. Other California-themed jokes (not counting the state’s elected officials) can be found here, here, herehere, and here.

P.P.P.S. And here’s something I wish was just a joke.

Every American school kid presumably learns about the Boston Tea Party and other events that culminated with the United States gaining independence from from the rule of King George III.

Think of it as America’s first tax revolt.

But that’s not the only interesting story regarding taxes and English royalty.

I wrote in both 2017 and 2020 that Prince Harry and Meghan Markle (now the Duke and Duchess of Sussex) were going to suffer some adverse tax consequences by residing in the United States.

The recent death of Queen Elizabeth II gives us another opportunity to comment about tax policy. It seems the royal family has some very nice tax preferences.

For some background, Jyoti Mann reported on the topic for Business Insider.

King Charles III..spent half a century turning his royal estate into a billion-dollar portfolio and one of the most lucrative moneymakers in the royal family business. …Over the past decade, he has assembled a large team of professional managers who increased his portfolio’s value and profits by about 50 percent. …The conglomerate’s holdings are valued at roughly $1.4 billion, compared with around $949 million in the late queen’s private portfolio. These two estates represent a small fraction of the royal family’s estimated $28 billion fortune. …The growth in the royal family’s coffers and King Charles’s personal wealth over the past decade came at a time when Britain faced deep austerity budget cuts. …the Duchy of Cornwall…has funded his private and official spending, and has bankrolled William, the heir to the throne, and Kate, William’s wife. It has done so without paying corporation taxes like most businesses in Britain are obliged to, and without publishing details about where the estate invests its money. …leaked financial documents known as the Paradise Papers revealed that Charles’s duchy estate had invested millions in offshore companies, including a Bermuda-registered business.

Before continuing, I can’t resist making two comments.

First, the United Kingdom has not “faced deep austerity” or “budget cuts.” The most that can be said is that spending “only” grew at the rate of inflation when David Cameron and Theresa May were in charge.

Second, it is not newsworthy that the royal family uses so-called offshore companies. It’s probably safe to say that 99 percent of people with cross-border investments (including people like you and me with IRAs and 401(k)s) benefit from some form of financial interaction with tax-neutral jurisdictions such as Bermuda and the Cayman Islands.

Now let’s peruse a story for the New York Times by Jane Bradley and 

King Charles will not have to pay inheritance tax on the Duchy of Lancaster estate he inherited from the Queen due to a rule allowing assets to be passed from one sovereign to another. Charles automatically inherited the estate, the monarch’s primary source of income… The new king will avoid inheritance tax on the estate worth more than $750 million due to a rule introduced by the UK government in 1993 to guard against the royal family’s assets being wiped out if two monarchs were to die in a short period of time… The clause means that, to help protect its assets, members of the royal family do not have to pay the 40% levy on property valued at more than £325,000 ($377,000) that non-royal UK residents do. …The Queen began voluntarily paying income and capital gains tax on the estate in 1993 and Charles may decide to follow suit.

Let’s focus specifically on the death tax.

Is it unfair for the royal family to benefit from good tax policy (such as no death tax) when other residents of the United Kingdom don’t get the same treatment? The answer is yes, of course.

But the right way to deal with that inequity is for the U.K. to eliminate its death tax, not to extend it to Kings, Queens, and Princes.

Let’s focus, though, on a passage from the article that deserves a lot of attention. We are told that the exemption from the death tax was designed to “guard against the royal family’s assets being wiped out if two monarchs were to die in a short period of time.”

Technically, the assets wouldn’t be wiped out. But that scenario would result in a loss of nearly 65 percent of the family’s wealth.

I’m not expecting anyone to shed many tears about the plight of British royalty.

Instead, I want everyone to think about investors, entrepreneurs, and business owners in the United Kingdom. Is it okay for them to lose 65 percent of their money simply because there are two deaths “in a short period of time”?

The answer is no. The death tax is an evil and destructive tax. That’s true for royalty.

And, notwithstanding predictably bad analysis from the OECD,  it’s true for us peasants as well.

I celebrate when my friends on the left stumble into economic insights.

For instance, many of them sound like Milton Friedman when they pontificate in favor of higher tobacco taxes because they want people to smoke fewer cigarettes.

As a libertarian, I don’t think it’s government’s job to control our private lives, but I applaud when people understand that higher taxes on something will lead to less of that thing.

I get frustrated, of course, that they don’t apply that insight in other areas.

After all, if higher taxes on tobacco leads to less smoking, surely it is true that higher taxes on employment leads to less work.

Or less investment, less innovation, less entrepreneurship, etc, etc.

Let’s consider a new example of how this works in the case of sin taxes.

The New York Times has an article by Ted Alcorn about whether higher taxes on alcohol are an appropriate way of dealing with the damage caused by excessive drinking.

Here are some excerpts.

Oregon also has among the highest prevalence of problem drinking in the country. Last year, 2,153 residents died of causes attributed to alcohol, according to the Oregon Health Authority — more than twice the number of people killed by methamphetamines, heroin and fentanyl combined. …policies that experts consider most effective at curbing excessive drinking have been ignored. For example, even as alcohol-related deaths soared to record highs in the last few years, alcohol taxes have fallen to the lowest rates in a generation. …The U.S. Community Preventive Services Task Force, an independent group of experts, has endorsed measures to deter excess drinking, including raising the price of alcohol. …One way that governments can influence the price of alcohol is by taxing its producers or sellers, who pass the cost on to consumers. This is comparable to taxes on tobacco, which scores of studies show to be a powerful tool for reducing smoking. A large body of evidence shows that higher alcohol taxes are associated with less excessive drinking and lower rates of disease and injury deaths.

This all sounds reasonable.

Raise taxes and you save lives.

But it’s not that simple, as J.D. Tuccille explained in Reason a few years ago.

…you don’t need an outright ban on alcohol to fuel the production of bathtub gin and its equivalents. A new report shows that the same result has been achieved in many countries through the imposition of excessively high taxes… World Health Organization (WHO) research, published in 2014 (PDF), …”illicit and informally produced alcohol accounts for nearly a quarter of the alcohol consumed globally.” …What’s the attraction of drinking the local equivalent of bathtub gin when commercially produced products are widely available? “Unrecorded alcoholic beverages are generally less costly than recorded alcohol,” WHO dryly acknowledged in 2014. The IARD report goes into a bit more detail as to why that might be, noting that “these beverages are untaxed and outside of regulated production that can increase cost,” which means there “is often a significant price difference between illicit and legitimate products, driving demand.”

In other words, governments can impose lots of taxes on alcohol, but one consequence is to encourage the black market.

My two cents on this issues is that all taxes should be low, including so-called sin taxes. That is not because I’m oblivious to the damage of drinking, smoking, drugs, or sugar.

My opposition is driven by three factors.

  1. I don’t want politicians having more money to waste.
  2. Sin taxes will encourage problematic black markets..
  3. People should have the freedom to make dumb choices.

I’ll close by addressing a common counter-argument, which is that people who make dumb choices can impose costs on the rest of society.

But if people drive while drunk or stoned, focus on penalizing the people who make those bad choices so that they will have an incentive for more responsible behavior.

And if smokers and gluttons impose high costs on government health programs, maybe that’s yet another reason for restoring free markets in health care.

Simply stated, the answer almost always is less government rather than more government.

Libertarian Humor

Time for a new edition of libertarian humor.

I wrote yesterday about a controversy involving the Heritage Foundation and closed by wondering about the implications for those of us who favor small government.

My view is that libertarians can be strong allies with limited-government conservatives such as Reagan.

But this cartoon strip shows what happens most of the time when consorting with Republicans.

I’m always happy to share anti-libertarian humor, even when I think it’s based on false premises (such as libertarian breakfast cereal, libertarian Somalia, libertarian lifeguards, and a libertarian ambulance service).

Which is why I chuckled at our second item, even though the vast majority of parking lots are on private property and are properly lined.

Our third item looks at what causes people to change ideologies.

Very clever.

Libertarians are sometimes accused of being…well…socially awkward.

So Babylon Bee is helping them out with a collection of potential pick-up lines.

As usual, I’ve saved the best for last. Many libertarians are fans of the Star Wars movies, and our final item could be the reason.

There’s also a libertarian version of Star Trek. And a version for Games of Thrones as well.

At the risk of over-simplifying, there are three types of Republicans/conservatives today (at least from an economic perspective).

  • Reaganites – principled supporters of smaller government and individual liberty.
  • Trumpkins – populists or national conservatives who don’t care about the size of government
  • Bushies – the establishment crowd that often supports a bigger burden of government

Regular readers know which option I prefer, but I can appreciate anyone who has a consistent point of view (hence, my Ninth Theorem of Government).

Today’s column, however, is about how right-leaning organizations deal with the different strains of conservatism. Particularly when they have to deal with politicians.

I’m motivated to cover this topic since the Heritage Foundation (where I worked from 1990-2006) is under attack.

We’ll start with some excerpts from an article in the Dispatch by Audrey Fahlberg  Charlotte Lawson.

…some former employees believe Dr. Kevin Roberts, president of the Heritage Foundation since December 2021, and other senior leaders have lost sight of the think tank’s original mission. Where it used to function as a haven for conservative intellectuals to shape the Republican Party’s agenda, many worry that the institution is attaching itself to a faction of the conservative movement that prioritizes partisanship over policy. …Several former employees cited Heritage’s departure from its foundational commitments—without the knowledge or consent of the scholars hired to translate them into policy positions—as their reason for leaving. Others pointed to one-on-one confrontations with the members of the leadership team over the organization’s ideological trajectory. Fights over who sets Heritage’s “one-voice policy”—which requires that all staff be publicly aligned on any given issue—have caused much of the friction. …Whereas scholars at right-leaning 501(c)(3) research institutions like Cato Institute, the Hudson Institute, and the American Enterprise Institute (AEI) are permitted and often encouraged to disagree with each other about policy issues, Heritage prides itself in projecting the same voice on every policy issue.

The main bone of contention is whether to give full support to Ukraine.

The disputes extended beyond the debate over Ukraine and preceded Roberts’ leadership. Several former experts and researchers detailed limitations on their intellectual freedom beginning in the Trump era… “There were several instances where I was asked to scrub the phrase ‘President Trump’ from my pieces. I think it was to tamp down any suspected criticism,” said one former Heritage employee, speaking on the condition of anonymity to speak candidly about internal dynamics. “We were definitely discouraged from mentioning the Biden administration by name as well, unless we were attacking them.” …At the tail end of the Trump presidency, one former communications staffer said, the media team shut down requests to schedule economics scholars for television appearances about the U.S.-Mexico-Canada Agreement to preemptively quash any public criticism of Trump’s support for the trade deal. …Some tension has emerged between establishment conservatives and the national conservatives on Capitol Hill, though national conservatives are from the dominant force in the GOP today. That’s not necessarily the case at Heritage. Tori Smith—a former trade policy analyst at Heritage…observed that a similar “tension is playing out at Heritage, and the nationalist conservatives are winning, it’s abundantly clear.”

In a column for the Washington Post, Josh Rogin opined about this controversy inside the conservative movement.

The Heritage Foundation’s turn toward the “new right” is the clearest symbol yet that the MAGA movement’s foreign policy is becoming institutionalized… Some former staffers told me Roberts has prioritized political messaging over policy formation. As Heritage becomes beholden to the MAGA movement’s political whims, these analysts allege, the organization is now following the mob rather than leading it… On Ukraine, Heritage has broken with center-right think tanks such as the American Enterprise Institute and the Hudson Institute and is now aligned with the Center for Renewing America (run by Donald Trump’s former budget director Russ Vought), the Koch Institute, and conservatives at the Quincy Institute, who all argue for “restraint,” meaning the opposite of the long-standing internationalist bipartisan D.C. foreign policy consensus. …at the National Conservatism Conference, Roberts said, “I come not to invite national conservatives to join our conservative movement, but to acknowledge the plain truth that Heritage is already part of yours.” …on Fox News, Roberts said it’s time for the United States to declare independence from the “liberal world order.”

I’m not an expert on foreign policy, but I fully agree with the folks at Heritage that non-military foreign aid will not help Ukraine.

But I am wholly sympathetic to that country’s fight against Putin’s aggression. And I’m not sure if Heritage’s opposition to the “liberal world order” means standing aside while Ukraine is attacked.

I’ll close with a broader point about Trump, so-called national conservatism, and think tanks. Heritage’s president said that his organization is “already part of yours” in a speech to national conservatives.

This worries me. At the risk of understatement, national conservatives don’t seem very interested in controlling the size and scope of government.

I’m a believer in “fusionism,” the idea that conservatives and libertarians can be strong allies on economic issues. But that won’t be the case if groups like the Heritage Foundation throw in the towel.

P.S. Not surprisingly, I did side with my former employer when it was attacked by Paul Krugman.

Since I’ve repeatedly written that people should have the right to sell their organs, I obviously  think they should be able to rent their organs as well.

Which is my hopefully clever way of introducing this new John Stossel video.

I made the case for legal prostitution back in 2017.

Let’s update that argument by sharing some excerpts from a column that Karol Markowicz wrote the following year for the New York Post.

She explains that the sex trafficking has been exaggerated. More important, legalization is the best way of reducing the problem.

…there’s the issue of our overblown statistics, and the resulting hysteria, when it comes to sex trafficking. …One example had the Dallas Morning News noting that there were 200,000 sex-trafficking cases prosecuted in one year in Houston alone. The actual number was: two. …The media play a role in such hysteria with sensational reporting. Take, for example, the monthlong sting by law enforcement agencies across 17 states… CNN’s headline on its story about the sting was, “More than 1,000 arrests in sex trafficking operation.” Yet the story quotes a Cook County, Ill., sheriff who ran the operation as saying, “At least 1,020 sex buyers were arrested, and 15 people face trafficking-related charges.” Fifteen out of 1,020 is under 2 percent, and even that could be inflated. …Prostitution is referred to as “the world’s oldest profession” for a reason. It has existed in every society in human history and will continue to exist no matter how hard politicians try to drive it underground, making it less safe in the process. McNeill writes, “those who are truly interested in decreasing exploitation in the sex industry would be better off supporting decriminalization of prostitution.”

Ms Markowicz is right, as is Ms. McNeill, who provided the closing quote in the above excerpt..

Prostitution is more dangerous when it’s illegal. Just as the market for cocaine is more dangerous because it’s been criminalized.

I hasten to add that being in favor of legal prostitution is not the same as approving of prostitution. I’m not a lifestyle libertarian. I’ve never been with a prostitute (other than the non-sexual ones that dominate both the Republican Party and Democratic Party in Washington, DC).

Moreover, I very much suspect that most of the women who join the world’s oldest profession don’t have upbeat assessments of their lives, unlike “Aella” in the above video.

But Aella made a very good point. Women opt for sex work because it beats the alternatives. They can make more money – and all of that cash presumably never gets taxed.

I’ll close by predicting that more and more states eventually will legalize prostitution, but not for libertarian reasons. Instead, politicians will simply see it as a way of grabbing more tax revenue.

After all, that’s what has led many states to legalize marijuana.

P.S. Hopefully, those states won’t then make the mistake of over-taxing prostitution. Based on how they have overtaxed pot, I’m not overly optimistic.

P.P.S. My left-leaning friends are bizarrely fixated on prostitution.

P.P.P.S. If you want some odd examples of taxation and sex work, check out these stories from Austria, Germany, and the United Kingdom.

According to polling data, President Biden is not getting good grades for economic policy.

Part of that is because of inflation, though I’ve repeatedly pointed out that the blame belongs with the Federal Reserve rather than Biden. And the big mistake from the Fed took place before Biden even took office.

Unfortunately, the President is not trying to make things better. His appointments to the Fed suggest he doesn’t understand the need for good monetary policy.

And all of his major legislative initiatives (the so-called stimulus, the misnamed Inflation Reduction Act, the pork-filled infrastructure legislation, and the cronyist handouts to the semiconductor industry) have increased the size and scope of government.

For what it’s worth, I think Biden’s big challenge – both politically and economically – is that Americans are losing ground. Simply stated, prices are increasing faster than incomes.

But that isn’t stopping the Administration from trying to turn a sow’s ear into a silk purse.

Alan Rappeport of the New York Times reported a few days ago that the Biden’s Treasury Secretary, Janet Yellen, is claiming that Bdenomics is a big success.

…the Biden administration is pivoting to recast its stewardship of the U.S. economy as a singular achievement. …The case was reinforced on Thursday by Treasury Secretary Janet L. Yellen… Ms. Yellen said the legislation that Mr. Biden signed this year to promote infrastructure investment, expand the domestic semiconductor industry and support the transition to electric vehicles represented what she called “modern supply-side economics.” …After months of being on the defensive in the face of criticism from Republicans who say Democrats fueled inflation by overstimulating the economy, the Biden administration is fully embracing the fruits of initiatives such as the $1.9 trillion American Rescue Plan of 2021.

The editors at the Wall Street Journal are not impressed.

Janet Yellen…tenure as Treasury Secretary hasn’t enhanced her reputation. …the White House is rolling her out in election season to portray the U.S. economy as a Valhalla of growth, fairness and optimism. …If you’re in a green business the White House likes, you’re in clover. If not, you’ll endure the costs of more regulation and taxes. In the Biden era, big government and big business are in political business together. …Ms. Yellen’s whoppers, …including a claim that “the causes of inflation are largely global.” …U.S. inflation has been substantially home-grown. …The Federal Reserve kept the money spigots open for too long, in part to finance the borrowing needed for all of the spending. …Ms. Yellen is also at pains to stress how much fairer the economy is since Mr. Biden took office… She fails to mention that the U.S. economy contracted by about 1% of GDP in the first six months of this year, even as real wages were falling. Real average hourly earnings declined 3% over the 12 months through July, and average weekly earnings by 3.6%. They’ve fallen 4.2% since Mr. Biden took office.

Meanwhile, the latest inflation data has not strengthened Biden’s case.

Jim Tankersley of the New York Times wrote about the issue yesterday.

Hotter-than-expected inflation in August was unwelcome news for President Biden, who has sought to defuse Republican attacks over rising prices in the run-up to November’s midterm elections. …Mr. Biden has claimed progress in the fight against inflation, including with the signing last month of an energy, health care and tax bill that Democrats called the Inflation Reduction Act. …But polls continue to show inflation is hurting Mr. Biden and his party… Mr. Biden threw a belated celebration at the White House on Tuesday to mark his signing of the Inflation Reduction Act. …But the country’s economic reality remains more muddled, as the inflation report underscored. Food prices are continuing to spike, straining lower-income families in particular. …Most importantly — and perhaps most damaging for Mr. Biden and Democrats — Americans’ wages have struggled to keep pace with fast-rising prices, an uncomfortable truth for a president who promised to make real wage gains a centerpiece of his economic program.

Let’s close with this chart, which shows what has happened to inflation-adjusted weekly earnings since Biden took office.

Yes, there was one recent month with good data, but that doesn’t seem like a big cause for celebration.

P.S. Paul Krugman’s defense of Bidenomics is just as weak as Janet Yellen’s (and his criticisms of good presidents are equally weak).

This probably does not quite belong in my collection of “most depressing charts,” but it is definitely very bad news that taxes now impose a greater burden on the average American household than the combined cost of food, clothing, education, and health care.

This is remarkable, especially since education and health care are needlessly expensive because of government intervention.

The dismal numbers in this chart come from an article in Reason by Elizabeth Nolan Brown.

There are not numbers she pulled out of the air. They are from a new report by the Bureau of Labor Statistics.

Here are some excerpts from Ms. Brown’s article.

New consumer spending data from the Bureau of Labor Statistics (BLS) provides some sobering perspective on how much Americans are paying in taxes. …Overall, taxes accounted for about 25 percent of average consumer spending. …On average, each “consumer unit” paid more than $16,000 in taxes last year. This outpaces average spending on food, clothing, education, and health care combined. …This included $8,561.46 in federal income tax, $2,564.14 in state and local income taxes, $2,475.18 in property taxes, $5,565.45 in Social Security deductions, and $105.21 in other taxes.

Ms. Brown’s article says the total tax burden is more than $16,000 while my chart shows that the average tax burden is approaching $19,000. The difference is that she subtracts out so-called stimulus payments, but I think it is more accurate to view those as handouts rather than as tax rebates.

Regardless, the real burden for the average household is actually higher than either number thanks to an absurdly complex tax system.

Household have to spend time, energy, and money to figure out their taxes. And they also pay indirectly because businesses have to pass on their even-higher tax compliance costs to households.

Finally, we should be asking ourselves whether we are getting the same value from coercive taxes that we get from our voluntary spending on food, clothing, education, and health care. All it takes is one trip to McDonald’s and my answer is no.

Heck, given the grotesque inefficiency of government and the economic harm caused by excessive spending, we get negative value from our taxes.

Last month, I wrote an article comparing Switzerland’s admirable fiscal policy with the profligate tendencies of other European nations.

I included a chart showing that the burden of government spending in Switzerland is far below where it is in countries such as Belgium, Greece, and France – where the public sector consumes about 60 percent of economic output.

And then there are nations such as Germany, Spain, Sweden, Denmark, and Italy, where more than 50 percent of GDP is diverted to finance bloated budgets.

Given this background, I was not surprised to read an article in the New York Times about European politicians engaging in another spending binge.

Nationalizations. Subsidies. Cash handouts. Price caps. Profit taxes. …Governments are resorting to old-school solutions, …throwing vast amounts of money at the energy crisis engulfing the region… E.U. governments have already earmarked more than $350 billion to subsidize consumers, industry and utility companies; ministers met on Friday to narrow down their options for the bloc’s direct intervention in markets to grab excess profits, cap electricity prices and subsidize utilities companies. “Government intervention is back in vogue in a really big way,” said Mujtaba Rahman, Europe director at the consulting firm Eurasia. …The huge public spending is in addition to a nearly trillion-dollar stimulus package adopted over the past year to deal with the economic fallout from the pandemic, mostly through borrowing. …spending billions…may be the only way to keep voters on board with Europe’s strong support of Ukraine against Russia.

The fact that Europe “turns once again to big spending” surely must win a prize for least surprising headline.

What is surprising, though, is some of the mistakes in the article. The reporter, Matina Stevis-Gridneff, seems to think that Europe has been some sort of bastion of laissez-faire fiscal policy.

It’s back to 20th-century economics in Europe. …The standoff with Russia over Ukraine is upturning European economic orthodoxy at rapid speed with barely a peep of dissent at the European Union’s headquarters in Brussels, a bastion of neoliberalism that not so long ago imposed brutal austerity on its own members, most notably Greece, even after it became clear it was harmful. …The ballooning debt load would have normally caused an uproar in the bloc, where fiscal conservatism has dominated policy and politics for years. …Paolo Gentiloni, the top E.U. economic official, ..said that the E.U. would begin to consider changes to its stringent fiscal rules

I’m not sure which part of the above excerpt is most at odds with reality.

  • “A bastion of neoliberalism.” To be blunt, that’s wildly wrong.
  • “Brutal austerity.” To be blunt, that’s wildly wrong.
  • “Fiscal conservatism has dominated policy.” To be blunt, that’s wildly wrong.
  • “Stringent fiscal rules.” To be blunt, that’s wildly wrong.

Though, to be fair, Greece was forced to engage in real austerity for a few years last decade. Though that only happened after a lengthy period of profligacy.

And the Greek people suffered immensely because the government over-spent for so many years.

What’s tragic is that other European nations, led by Italy, almost surely will suffer Greek-style fiscal crises. And the European Central Bank is making a bad situation even worse.

P.S. My other “least surprising headline” columns can be found here, here, and here.

A core libertarian principle is that people have the right to do whatever they want with their own bodies. And that includes things that may be harmful, such as taking drugs, smoking, and over-eating.

It also includes personal choices that are not harmful, but may upset the sensibilities of others, such as selling your organs.

As you might expect, I also think people should be allowed to sell their plasma.

But this rubs some people the wrong way.

Vanessa Veselka has a column in the New York Times grousing about the fact that poor people in the United States have the freedom to benefit from voluntary exchange.

Very few countries allow payment for plasma, in part out of concern that financially vulnerable people would risk their health for money. Other developed nations place stricter limits on the number of times one can donate. In Britain, plasma can be given every two weeks; in Germany, it’s up to 60 times a year. The United States allows a person to sell plasma 104 times a year. The word “sell” is, of course, rarely used in the United States. Instead, the term is “donate,” which allows companies to pretend they are not in the business of scavenging the bodies of poor people for biological treasure. Our system of “donation” is so successful that the United States provides about two-thirds of the plasma available worldwide and accounts for 35 percent to 40 percent of the plasma used in medicine in Europe — so much of which comes out of the veins of America’s poor.

The author is right, of course, that people sell rather than donate their plasma.

Other than that, however, her hostility does not make sense. The only good news is that Ms. Veselka does not want to prohibit plasma sales.

I have no problem with people being paid for plasma. I just think that companies should take less of the plasma and that donors should be paid more.

Since I sold plasma during my college years, I would have been happy if there was more compensation. But I also would have been happy if I was paid more when I worked at the Heritage Foundation and Cato Institute.

We all want to receive more income and we all want to pay less for the things we buy.

What makes capitalism a moral system is that there’s no ability to use coercion to turn our preferences into reality.

P.S. Returning to the topic of organ sales, there’s also a very persuasive utilitarian case because many lives would be saved. Plasma sales presumably have the same indirect effect.

I’ve been pontificating in favor of school choice from the early days of this column, in part because I believe in the benefits of competition and in part because there’s such overwhelming evidence that government schools have deteriorated.

In recent years, I’ve shared good news about states implementing and expanding school choice, with Arizona and West Virginia deserving special praise.

But I’ve always wondered which states do the best job and which states do the worst job with education policy.

Thanks to the Heritage Foundation, we now have an answer. Its Education Freedom Report Card looks at four variables (choice, transparency, regulation, and spending) to rank the states.

As you can see from this map, Florida is in first place for overall education policy, followed by Arizona, Idaho, Indiana, and South Dakota.

The worst state isn’t a state. It’s the District of Columbia.

New York is next, followed by New Jersey, Maryland, Massachusetts, and Connecticut.

The best part of the report is that you can also see how states rank in the four categories.

As a fiscal policy person, I’m naturally interested in how states rank with regards to spending, especially since that variable shows that you can get good results without spending a lot of money (congratulations to Idaho for winning that category, followed by Utah and North Carolina).

Very similar to the “ROI data” on cities that I looked at back in 2015.

But the data that really intrigues me is the ranking on school choice.

For background, here its some of what’s written in the report.

Our report card measures four broad categories (School Choice, Transparency, Regulatory Freedom, and Spending) that encompass more than two dozen discrete factors. ...Florida is the top-ranked state across the board. Families looking for a state that embraces education freedom, respects parents’ rights, and provides a decent ROI for taxpayers should look no further than The Sunshine State.

But I want to focus specifically on school choice. On that basis, Arizona is in first place, followed by Indiana, Florida, Missouri, and Oklahoma.

Hawaii is in last place, followed by Massachusetts and North Dakota.

Here’s some discussion of the report’s methodology.

States with more education choice have more educational liberty. “Education Choice” has five sub-categories: (a) Private School Choice, (b) Private School Choice Program Design, (c) Charter Schools, (d) Homeschooling, and (e) Public School Choice.

Charter schools are better than regular government schools, so it’s good they’re included.

And ranking states on their homeschooling laws is even better.

P.S. There are very successful school choice systems in CanadaSwedenChile, and the Netherlands.

P.P.S. Getting rid of the Department of Education would be a good idea, but the battle for school choice is largely won and lost on the state and local level.

When I wrote about the 2021 edition of Economic Freedom of the World, I noted that both Chile and Canada were drifting in the wrong direction.

In the just-released 2022 version, there’s not any good news about those two countries, but I was more struck by the very bad news about the United Kingdom, which fell out of the top 20 thanks to a big drop in its score.- from 8.16 to 7.71 (more evidence that Boris Johnson was bad news).

Here are the jurisdictions with the most economic liberty.

The bad news is that every nation in the top 20 had less economic liberty in 2020 than in 2019.

American readers will be interested to see that the United States dropped from #6 to #7.

And Switzerland leapfrogged New Zealand to claim the #3 slot.

Denmark, Japan, and Estonia jumped several spots in the rankings. Not because their scores increased, but rather because other nations moved in the wrong direction at an even-faster pace (note that Denmark now ranks above the USA).

By the way, few people will be surprised to see that Venezuela remains in last place, though fairness requires that I acknowledge that it was one of the few countries to get a better score.

Here are some of the other key findings.

The index published in Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. …The EFW index rates 165 jurisdictions. The data are available annually from 2000 to 2020… The most recent comprehensive data available are from 2020. Hong Kong remains in the top position, though its rating fell an additional 0.28 points. Singapore, once again, comes in second. The next highest-scoring nations are Switzerland, New Zealand, Denmark, Australia, United States, Estonia, Mauritius, and Ireland. …lowest-rated countries are…Iran, Libya, Argentina, Syria, Zimbabwe, Sudan, and lastly, Venezuela. …Nations in the top quartile of economic freedom had an average per-capita GDP of $48,251 in 2020, compared to $6,542 for nations in the bottom quartile.

The final sentence in the above excerpt is key. More economic liberty is strongly associated with more national prosperity.

I was curious about whether Hong Kong would retain the #1 slot. And it did, even though its score dropped to 8.59. For what it’s worth, the authors are not optimistic about the future.

Hong Kong has been…at the top of the EFW index for all years for which we have data, and this remains the case in 2020. In previous annual reports, we sounded the alarm bell about signs of declining economic—and other—freedoms in Hong Kong. In particular, we highlighted the new security law imposed in 2020 by the Chinese government with potential sentences of life imprisonment and the accompanying arrests in its aftermath. In this year’s report, Hong Kong’s overall EFW rating fell by a stunning 0.28 points to 8.59 for 2020 from 8.87 in 2019. …Hong Kong’s decline was much larger than the world’s average decline.

Speaking of declines, here’s a very sad chart. It shows that global economic liberty suffered a big drop from 2019 to 2020.

The pandemic is the main reason for the decline.

The policy responses to the coronavirus pandemic, including massive increases in government spending, monetary expansion, travel restrictions, regulatory mandates on businesses related to masks, hours, and capacity, and outright lockdowns undoubtedly contributed to an erosion of economic freedom for most people. Not surprisingly, virtually all jurisdictions, 146 out of the 165 to be exact, recorded lower scores in 2020 than in 2019, and the global average of the summary EFW index fell by 0.18 points. … these various policies…very well may have saved millions of lives, or they may have been completely ineffectual. That is a question for epidemiologists and health economists to work out. Our concern is economic freedom, and, on that margin, there is no question that government policies responding to the coronavirus pandemic have reduced economic freedom.

We’ll probably have to wait two years to see whether governments undo pandemic-related policy mistakes.

Next year’s version will reflect 2021 data, and many nations such as the United States were still imposing bad fiscal and monetary policy at that time.

It’s possible that we will see some improvement next year, but I’ll be even more curious to see EFW‘s 2024 edition, which will be based on 2022 data.

My fear is that politicians and bureaucrats will have self-interested reasons to retain the additional power they grabbed during the pandemic. But I’ll keep my fingers crossed.

Let’s close with a depressing look at the nations that lost the most economic freedom in the current edition.

For personal reasons, I’m sad to see the big declines in Taiwan, Georgia, Singapore, and Panama.

And it’s amazing (in a bad way) that Argentina and Greece managed to fall so much, given that they started with bad scores.

Sadly, every developed nation moved in the wrong direction. The industrialized countries that moved in the wrong direction by the smallest amounts are Switzerland (-.12), Australia (-.13), Sweden (-.14), and Denmark (-.14).

There isn’t much good news coming from Washington, DC, especially since Biden was able to push through a (fortunately watered-down) package of more spending and higher taxes.

But there have been some very positive developments at the state level over the past couple of years.

I’ve already written several times about how school choice has been spreading, led by big reforms in states such as Arizona and West Virginia.

The other big development is that states are lowering tax rates and replacing discriminatory “progressive” tax systems with simpler and fairer flat taxes that are more friendly to growth.

In a column for Forbes, Patrick Gleason of Americans for Tax Reforms discusses the latest developments in state tax policy – most notably Idaho’s shift to a flat tax.

…he second half of the year is resulting in further income tax relief and strengthening the recent trend of states moving from graduated to flat income taxes. Most recently, Idaho legislators returned to the state capital in Boise on the first day of September for a special session called by Governor Brad Little (R) for the purpose of making Idaho the newest flat tax state. …Governor Little’s proposal, which state legislators passed on September 1, moves Idaho to a flat 5.8% personal income tax. Idaho currently has a progressive income tax code with a top rate of 6%, which kicks in at less than $8,000 in annual income. …HB 1, which Little will soon sign into law, will also cut Idaho’s corporate tax rate from 6% to 5.8%.

North Dakota also is contemplating tax reform.

…in North Dakota, Governor Doug Burgum (R) unveiled a new tax proposal that would also move North Dakota to a flat tax. North Dakota currently has a two-tier income tax with rates of 2.04% and 2.9%. Governor Burgum’s proposal would move to a flat 1.5% income tax.

From a big-picture perspective, the last couple of years have been great news for taxpayers in certain states.

here are currently nine states with a flat income tax, 18 when counting the nine no-income-tax states that charge a flat 0%. Four states (Arizona, Iowa, Georgia, and Mississippi) codified laws in 2021 and 2022 that will phase in flat taxes in the coming years. When Governors Little and Burgum enact their tax proposals as is expected, Idaho and North Dakota will become the the fifth and sixth states in past two years alone to adopt a flat tax, bringing the total number of flat or zero tax states to 24.

I’ll conclude by observing that I put together a 5-column method in 2018 for ranking state tax system.

At the beginning, 18 states were in the two good columns (no income tax or flat tax).

Today, we’re approaching 25 states and a few other states have moved in the right direction (reducing so-called progressive tax systems).

The bottom line is that it is costly to escape bad policy in Washington, but at least we have more options if we want to find good policy at the state level.

Over the past few months, I’ve written a 7-part series on Bidenomics, reviewing the president’s record on issues such as subsidies, inflation, protectionism, household income, fiscal policy, red tape, and employment.

Regarding the last item, a big problem is that the share of the population with jobs (measured by either the labor-force participation rate or the employment-population ratio) has not recovered.

It hasn’t recovered to where it was before the pandemic and it hasn’t recovered to where it was before Obama took office.

That’s bad news. Our economy’s output (and our national income) depends on the quantity and quality of both labor and capital.

This does not reflect well on Biden.

But not everyone agrees. Paul Krugman has leapt to the President’s defense. He even claims that American workers are enjoying a “Biden boom.”

President Biden has presided over a huge employment boom… Bidenomics has been good for American workers, whether they know it or not. …Haven’t they seen the purchasing power of their wages fall, thanks to inflation? The answer is yes, but. …that decline was entirely caused by rising prices for food and energy, which have a lot to do with global forces and little, if anything, to do with U.S. policy… If you want to assess the impacts of Bidenomics on wages, you should probably compare wages with prices excluding food and energy. And on that basis, real wages have basically been flat since Biden took office. …So, yes, the Biden boom has been good for workers.

The most shocking part of the column is that Krugman never addresses the problem of missing workers.

I’m not joking. You can read his entire article and you won’t find anything about the labor-force participation rate or the employment-population ratio.

He does mention the number of people working and wants us to believe those numbers are a cause for celebration, but even he felt the need to acknowledge that, “the job gains under Biden probably reflected a natural recovery from lockdowns.”

And I think it’s worth noting that we have 4 million fewer jobs than Biden claimed we would have if his so-called stimulus scheme was approved.

In other words, the president’s policies almost certainly have hindered the natural recovery that should have occurred.

Now let’s tackle the issue of inflation-adjusted wages for the people who do have jobs.

Krugman claims that workers have enjoyed a “boom” because “real wages have basically been flat.”

But even that claim is only possible if you ignore what’s happened to prices for food and energy.

Call me crazy, but this is the economic equivalent of “Other than that, Mrs. Lincoln, how was the play?”

The bottom line if that inflation-adjusted wages have been falling during Biden’s tenure.

I’ll conclude by noting that Krugman could have written a column blaming the Fed for the weak employment data. That would have been legitimate.

And he could have written a column arguing that Trump had the same big-spending policies when he was in office. That also would have been legitimate.

Instead, he wrote a column that may be even more of a joke than his “exploding cigar” about Estonia.

Last week, I shared some great information from Superabundance, a new book that shows how economic liberty has made us much better off, as measured by how much more we can buy per hour worked.

Today, let’s look at a related benefit of capitalism, which is that we don’t have to work nearly as many hours to achieve high living standards.

Here’s a tweet from Chris Freiman, a professor of philosophy at William & Mary University. As you can see, people in market-oriented nations work far fewer hours than they did 150 years ago. In some cases, hours worked per year have dropped by more than 50 percent.

When economists study these issues, they generally say the willingness of people to supply labor (whether to work and how much to work) depends on compensation. In other words, people give up leisure because they want money so they can consume.

But that choice can be complicated. It is governed by an “income effect” and a “substitution effect.”

For those who want to learn the economics, here’s a good description from the University of Washington.

  • Substitution effect of an increase in the real wage, w. As w increases, income increases by working more and a worker substitutes work for leisure so labor supply, NS, increases.
  • Income effect of an increase in the real wage, w. As w increases, working the same number of hours still gives an increase in income so that a worker may decrease the number of hours worked and maintain the previous level of income so labor supply, NS, decreases.

Simply stated, people like both income and leisure. So we all make choices about how much to work depending on our preferences and tradeoffs.

However, that decision can be influenced by economic policy. If there are generous government handouts, for instance, people may decide to work fewer hours. Or not at all.

And a decision to work only a small amount may be a result of high implicit marginal tax rates that are embedded in redistribution programs.

Taxes also play a big role. High marginal tax rates can discourage labor supply, which helps to explain why people work more hours in the United States than in Europe.

And that’s true even though Americans are much richer, thus showing how the substitution effect can outweigh the income effect. At least in the short run.

In the long run, the above chart shows how the income effect is dominant.

But let’s forget about economic jargon. What the chart really shows is how free markets enable societies to generate so much income that we can enjoy better lives in exchange for far less effort.

Yesterday’s column was about the referendum for a new leftist constitution in Chile.

Fortunately, Chilean voters overwhelmingly rejected that awful plan (a surprisingly positive outcome since those same voters were foolish enough to vote for a leftist president last December).

Today, we’re going to look at potential constitutional changes in the United States. But our focus won’t be on how the Constitution should (or should not) be changed, but rather on the process.

Why? Because there’s a serious effort for a constitutional convention, similar to the meeting back in 1787 (though it’s unclear whether we have people like James Madison and Alexander Hamilton today).

This is something that is allowed by the Constitution, so long as it has support from 34 states. Here’s a map showing what’s happened to date.

The map comes from an article that Grace Panetta and Brent Griffiths wrote for Business Insider.

They have a good description of how the process works.

Article V to the US Constitution provides two ways to amend the nation’s organizing document… The first is for a two-thirds majority of Congress to propose an amendment, with three-fourths of states ratifying it. This is how all 27 of the current amendments to the Constitution were added… The second method — never before accomplished — involves two-thirds of US states to call a convention. …two-thirds of the state legislatures are needed to call a convention and three-fourths must vote to ratify any amendments. …Conservatives and liberals alike say this requirement would doom hyperpartisan or plain loony amendments.

Conservatives are the main proponents of a constitutional convention.

The December 2021 ALEC meeting represents a flashpoint in a movement spearheaded by powerful conservative interests…to alter the nation’s bedrock legal text since 1788. It’s an effort that has largely taken place out of public view. But interviews with a dozen people involved in the constitutional convention movement, along with documents and audio recordings reviewed by Insider, reveal a sprawling, well-funded…and impassioned campaign taking root across multiple states. …Rob Natelson, a constitutional scholar and senior fellow at the Independence Institute who closely studies Article V of the Constitution, predicted to Insider there’s a 50% chance that the United States will witness a constitutional convention in the next five years.

Some folks on the left also like the idea.

The right isn’t alone in pursuing a convention. On the left, Cenk Uygur, a progressive commentator, founded Wolf PAC… Five Democratic states passed Wolf PAC’s call for a campaign finance reform-focused convention: California, New Jersey, Illinois, Vermont, and Rhode Island.

Now the issue is getting more attention.

Writing for the New York Times yesterday, Carl Hulse reports on the campaign for a new constitutional convention.

Elements on the right have for years been waging a quiet but concerted campaign to convene a gathering to consider changes to the Constitution. They hope to take advantage of a never-used aspect of Article V, which says in part that Congress, “on the application of the legislatures of two-thirds of the several states, shall call a convention for proposing amendments.” …backers of the convention idea now hope to harness the power of Republican-controlled state legislatures to…strip away power from Washington and impose new fiscal restraints, at a minimum. …leading proponents of the convention idea come from the right and include representatives of the Tea Party movement, the Federalist Society, grass-roots right-wing activists… And some liberals have welcomed the idea of a convention as a way to modernize the Constitution and win changes in the makeup and power of the Supreme Court, ensure abortion rights, impose campaign finance limits and find ways to approach 21st-century problems such as climate change.

I have two comments regarding this effort.

First, much of the impetus comes from prudent people who are disturbed by the reckless profligacy in Washington. These folks are right to be concerned, but I have been telling them that they need to pursue a spending limit amendment (like the Swiss “Debt Brake” or Article 107 of Hong Kong’s Basic Law) rather than a balanced budget requirement.

Simply stated, spending caps work.

Second, I wonder whether any sort of constitutional change can get the necessary support from 3/4ths of the states. I doubt left-wing states like California, New Jersey, and Illinois would ratify a good amendment to control spending, just like right-wing states like Texas, South Dakota, and Utah presumably would reject a leftist amendment to do something like restrict political speech.

Maybe Colorado’s TABOR can be a role model.

When I went to Chile last December to write about that nation’s election (see here, here, here, here, and here), I concluded my coverage with a column about the risks of changing that nation’s constitution.

This video from Reason is a fresh look at that topic.

The people of Chile make their choice today.

What’s at stake is whether they want to preserve a constitution based on liberties or replace it with one based on entitlements (the long-standing debate between “negative rights” and “positive rights”).

This should be an easy choice. The current constitution limits the power of government and has helped Chile become the Latin Tiger. Incomes have jumped and poverty has plummeted.

Let’s look at some analysis and commentary.

We’ll start with a story for the New York Times by Jack Nicas, which explains what is happening today.

Voters in Chile on Sunday could transform what has long been one of Latin America’s most conservative countries into one of the world’s most left-leaning societies. In a single ballot, Chileans will decide whether they want…universal public health care; gender parity in government; empowered labor unions; …rights for animals and nature; and constitutional rights to housing, education, retirement benefits, internet access, clean air, water, sanitation and care “from birth to death.” …If voters approve the text, Chile…would suddenly have more rights enshrined in its constitution than any other nation. …The 170-page text would make the Chilean state, which has long had a limited role in its citizens’ lives, the guarantor of more than 100 rights… In addition to housing, health care and education, the new constitution would enshrine the right to…free time, physical activity, sex education, cybersecurity, the protection of personal data and “free and full legal advice” for anyone “who cannot obtain it.” …implementing the new constitution would cost the government 9 percent to 14 percent of Chile’s gross domestic product.

Now that we have the basics, let’s look at whether the new constitution is a good idea.

Writing for National Review, Daniel Di Martino condemns the document.

Chileans…will vote on whether to adopt or reject a proposed constitution written by a socialist-controlled assembly. The document, consisting of 388 articles, would create an unequal justice system and grant more rights for those who claim indigenous ancestry. It would effectively end private health care and education, and it would allow the congress to confiscate Chileans’ pension savings. …The proposed Chilean constitution reads like a longer, more woke, and even more socialist version of Venezuela’s constitution. …It’s a socialist policy wish list. …The proposed constitution would abolish the free-market protections that enabled Chile to become so prosperous. …The proposal prohibits any for-profit educational enterprise at every level, with the result that many private schools would close. …The proposed new law of the land would authorize the government to confiscate accumulated private retirement savings… Chileans have a choice to make in September. Will they vote no on the proposed constitution and keep Chile free and prosperous, or will they vote yes and follow the socialist path of Venezuela?

In case you think Di Martino is exaggerating, a Washington Post report by John Bartlett and Samantha Schmidt reaches the same conclusion, albeit without the criticism.

Chile’s new constitution, a 388-article charter that envisions a progressive, feminist future for the South American nation. …The constitution is one of the first in the world to be drafted in the context of a climate crisis, and to be written by a convention with gender parity. …It’s a woke constitution propelled by left-leaning millennials and built for a modern nation led by one. …One section…would make the government responsible for preventing, adapting to, and mitigating the effects of climate change. …The charter would make the government responsible for providing free higher education, health care and many other services. It would guarantee a right to housing, and to leisure time. It would require that at least half of all members of government and congress, and employees of public and public-private companies, be women.

As you might expect, Mary Anastasia O’Grady of the Wall Street Journal is not a fan.

The document removes the certainty of personal choice—including in healthcare, pensions and education—weakens property rights, increases the role of the state in the economy and moves the country away from representative democracy and toward mob rule. …the high-performing Chilean economy of the past three decades could be headed to a level of mediocrity similar to that of its neighbors Bolivia and Argentina. …The U.S. Constitution has been successful, in large part, because it constrains government power. Conversely, turning a constitution into a laundry list that mistakes entitlements for rights, and promises to guarantee those rights by empowering the state, is a ticket to poverty and tyranny.

Daniel Raisbeck of Reason wrote about the superiority of the current system last month.

Chile’s current, pro-free market constitution…has served the country well, bringing staggering economic success by Latin American and even global standards. But in an October 2020 referendum, 78 percent of Chilean voters chose to ditch the constitution… It seemingly mattered little to voters that, for years, Chile has had one of the region’s highest per capita GDP. …Poverty…decreased from 45 percent in 1982 to a mere 8 percent in 2014… Not bad for a nation whose economy between 1950 and 1970 was, according to a Library of Congress country study, “the poorest among Latin America’s large and medium-sized countries.”

It’s no surprise that conservatives and libertarians oppose the draft constitution.

But the document is so radical and impractical that the left-leaning Economist opined against the pact.

The document is far less…growth-friendly than the current constitution. It gives trade unions the sole right to represent workers, guarantees them a say in corporate decision-making and allows them to strike for any reason… It says that everyone has the “right to work” and that “all forms of job insecurity are prohibited”. That could make it rather hard to fire anyone. Landowners, such as farmers, could potentially lose the property rights to water on their land. Compensation for expropriated land would not be at a market price but at whatever Congress deems a “just” one. The draft creates a portfolio of socioeconomic rights that could blow up the budget. It requires the establishment of several new bodies, such as an integrated national health system, and cradle-to-grave care, without giving much thought to how they would be funded. The state would oversee the provision of housing, to which it says every person has a right. …Rather than scrapping the old constitution, Chileans should scrap the new one.

And even the Washington Post editorialized against it.

Opponents of the new constitution…worry that uncertainty will hinder investment while a new congress tries to translate new constitutional provisions on mining and other natural resources into legislation. Then there is the complexity of a document that consists of 54,000 words, 388 articles and 178 pages — including a provision on the state’s duty to “promote the culinary and gastronomic heritage of the country.”

But the hard left is mobilized and supportive.

Indeed, David Adler wrote in the U.K.-based Guardian that Chile’s leftist constitution should be a model for all nations.

…a visionary document that would not only update, expand and advance Chileans’ basic rights – to health, housing, abortion, decent work and a habitable planet – but also set a new standard for democratic renewal in the 21st century. …a document that responds directly to the escalating crises of inequality, insecurity and a changing climate. The constitution establishes new universal public services for health, education, and clean water. It endows nature with rights…it finally turns Chile into a full democracy, with gender parity in public institutions, self-determination for Indigenous peoples, collective bargaining for all workers… Chile has shown the way to a new constitutional order – rich with rights.

At the risk of understatement, Mr. Adler is nuts.

You can’t create rights to get goodies unless you also create a “right” to take from others. And that’s a distasteful recipe for a system that punishes success and rewards indolence.

What makes Adler’s analysis so foolish is that there’s compelling research showing that economic liberty produces the outcomes associated with so-called positive rights.

Today’s vote will show whether Chileans understand that free markets lead to more upward mobility and higher living standards. If they want less poverty, they should want more capitalism, not a dirigiste constitution.

Let’s revisit the issues of Bidenomics.

Previous editions of this series have focused on Biden’s dismal record with regards to subsidies, inflation, protectionism, household income, fiscal policy, and red tape.

The assessment has not been positive, which shouldn’t be very surprising since Biden is basically a slow-motion version of Bernie Sanders.

Today, we’re going to look at Biden’s record on jobs…and that’s not going to improve the assessment.

The problem is employment rather than unemployment.

In a column for the Wall Street Journal, Nicholas Eberstadt writes about the millions of Americans who have disappeared from the labor force.

Never has work been so readily available in modern America; never have so many been uninterested in taking it. …For every unemployed person in the U.S. today, there are nearly two open jobs, and the labor shortage affects every region of the country. …Why the bizarre imbalance between the demand for work and the supply of it? One critical piece of the puzzle was the policy response to the pandemic. …Washington pulled out all the monetary and fiscal stops….created disincentives for work as never before. …In 2020 and 2021, a windfall of more than $2.5 trillion in extra savings was bestowed by Washington on private households through borrowed public funds. …With pre-Covid rates of workforce participation, almost three million more men and women would be in our labor force today.

To be fair, bad pandemic policies began with Trump.

But Biden promised changes yet has delivered more of the same.

Why does this matter?

It’s not just a numbers issue. When people drop out of the labor force, that translates into a weakening of America’s societal capital.

Mr. Eberstadt explains.

The signs that growing numbers of citizens are ambivalent about working shouldn’t be ignored. Success through work, no matter one’s station, is a key to self-esteem, independence and belonging. A can-do, pro-work ethos has served our nation well. America’s future will depend in no small part on how—and whether—her people choose to work.

Thanks to a stronger work ethic and spirit of self reliance, the United States historically has had an advantage over other nations.

But it’s increasingly difficult to feel optimistic about the long-run outlook for America’s societal capital.

Ironically, Joe Biden seemed to understand this in the not-too-distant past.

Hypocrite of the Year

Politicians are generally despicable people, but the worst of the worst almost certainly would include the ones who oppose school choice in order to curry favor with teacher unions.

Like Joe Biden, for instance.

But if you want the worst of the worst of the worst, then we need to look at politicians who oppose school choice while having their own kids in private schools.

In other words, they are hypocrites who also support horrible education policy.

Like Elizabeth Warren, for instance.

Today, we’re going to highlight one of these reprehensible people.

In a column for the Washington Free Beacon, Chuck Ross writes about a Pennsylvania Senate candidate who wants poor kids to be stuck in sub-par schools, but has his own kids at a fancy private school.

Pennsylvania Senate hopeful John Fetterman (D.) opposes vouchers that let children in failing public school districts attend private and charter schools. But the progressive champion…sends his kids to an elite prep school. Fetterman’s kids attend the Winchester Thurston School in Pittsburgh, where parents pay up to $34,250… Fetterman and his wife Gisele have sent at least one of their three kids to Winchester Thurston for the past seven years. …Fetterman’s embrace of school choice for his own family opens him up to allegations of hypocrisy on several fronts. …Fetterman has publicly opposed vouchers that parents in poor-performing districts like his own could use to send their kids to private and charter schools. In 2018, he told an organization founded by Bernie Sanders supporters he opposed vouchers for families.

Some people are criticizing Fetterman’s hpocrisy, though I would have said something much stronger than “shame on him.”

“Shame on him,” said David P. Hardy, a distinguished senior fellow at the Commonwealth Foundation and co-founder of Boys’ Latin of Philadelphia charter school. “Fetterman could send his kids to [Woodland Hills], but he’s got money, so he can send them somewhere else,” Hardy told the Washington Free Beacon. “But the poor people there are stuck going to those schools, and he doesn’t give them any way out.”

It’s hardly a suprise that politicians often are hypocrites.

That’s true with regard to taxes. And that’s true with regards to the pandemic.

But it’s nauseating when they’re hypocrites on school choice since they are denying kids a chance for a better life by trapping them in failing government schools.

I wrote last year that today’s Americans are much richer than their parents and grandparents (and the gap becomes even more enormous when comparing with earlier generations).

But the data I cited almost surely understate the improvement in living standards.

That’s the core takeaway of a new book, Superabundance, authored by Marian Tupy of the Cato Institute and Professor Gabe Pooley from Brigham Young University in Hawaii.

The book is filled with an immense amount of data and analysis, all of which shows that life is getting better. For purposes of today’s column, we’re going to highlight some fascinating numbers about the “time price” of various goods.

The authors explain that the “time price (TP) denotes the amount of time that a person needs to work in order to earn enough money to be able to buy something.”

In simple terms, this calculation shows how many hours we had to work to buy something in the past compared to how many hours we have to work to buy the same thing today.

For some items, such as food, there’s enough long-run data to see how the “time price” has changed over the past 100 years. The bottom line is that there’s been an amazing increase in our purchasing power.

What about non-food items?

Well, many of the things we buy today did not exist 100 years ago, so let’s look at four decades of data to see what’s happened to purchasing power in the United States.

As you can see, we can obtain almost everything by working far fewer hours.

For people who like hard data, the book is like an encyclopedia.

You can also get numbers for a “personal resource abundance multiplier” to see how much and how fast living standards have increased.

For example, a 97.2% decline in the price of eggs relative to the wages of a blue-collar worker between 1919 and 2019 means that:

  • a) The same length of work that got the blue-collar worker one egg in 1919 got him 36 eggs in 2019
  • b) That worker’s “egg abundance” rose by 3,500%
  • c) That worker’s egg abundance increased by 3.65% per year
  • d) The egg abundance doubled every 19.34 years.

For those who want to augment numbers with analysis, Chapter 8 describes what happened.

Even after Homo sapiens embraced agriculture some 12,000 years ago, progress was painfully slow. People lacked basic medicines and died relatively young. They had no painkillers, and people with ailments spent much of their lives in agonizing pain. Entire families lived in bug-infested dwellings that offered neither comfort nor privacy. They worked in the fields from sun- rise to sunset, yet hunger and famines were commonplace. …In a remarkable and sudden transition, though, standards of living sky- rocketed over the last two centuries, first in Western Europe and North Amer- ica, and then in other parts of the world. The consequences of that increase in economic growth were monumental. For the first time in human history, our species overcame Malthusian limits on production and consumption. The Age of Innovation ushered in unprecedented and even unimaginable improvements in wealth, life expectancy, nutrition, health, clothing, working conditions, and education. Extreme poverty, infant and maternal mortalities, and child labor declined.

Chapter 9 describes why it happened.

Individuals, who lack equal legal rights, and face onerous regulatory burdens, confiscatory taxation, or insecure property rights, will be disincentivized from turning their ideas into inventions and innovations. Conversely, people who function under conditions of legal equality, sensible regulation, moderate taxation, and secure property rights will apply their talents to their benefit and, ultimately, to that of society. …Free markets serve one other beneficial role in human society: they build trust and cooperation. Competition, as everyone knows, is an essential part of a capitalist economy. It drives businesses to innovate and to provide consumers with less costly and better products. If businesses fail to innovate, they go under. …Capitalism is also one of the most cooperative of human endeavors, though. Goods and services are traded among strangers and across vast distances, guided to a great degree by the price mechanism and by the reputation of the trading parties. …In the short run, competition produces winners and losers (although over the long run it is very difficult to find anyone in a market society who does not daily enjoy substantial gains or “wins” from market competition).

I’ll also add this flowchart from Chapter 9 to show the importance of free markets and entrepreneurship.

I’ll add one final point, which is that we don’t need perfect policy to get more prosperity.

The economy simply needs “breathing room,” which will exist so long as politicians don’t get too crazy about over-taxing, over-spending, and over-regulating.

After all, even small differences in annual economic growth compound into big changes in living standards.

The world is much freer today than when I was born, largely because the “Evil Empire” collapsed.

The Soviet Union was awful. It killed at least 20 million of its own people (some say as many as 60 million). It enslaved and impoverished its own citizens, as well as those who languished behind the “Iron Curtain.”

Ronald Reagan deserves the lion’s share of the credit for the collapse of communism – in part because he restored America’s economic vitality and built up the nation’s military, but also because he directly condemned the immorality of Marxism (often using humor).

But since the last dictator of the Soviet Union just died, let’s examine Mikhail Gorbachev’s role.

An editorial in today’s Wall Street Journal is worth reading because it explains that his biggest achievement was not using bloodshed to preserve communist rule.

Mikhail Gorbachev…rose through the Communist ranks but presided over the end of the regime. His greatest achievement was allowing the Cold War to end without a war or a worse conflagration that the world feared for decades. …He understood that the country he inherited in 1985 when he became general secretary of the Communist Party was losing the Cold War to a revitalized West. Its economy wasn’t the juggernaut of central-planning genius that the CIA had assessed at the time. …Ronald Reagan had reversed the U.S. malaise of the 1970s with a defense buildup and reforms that unleashed America’s private economy. …Gorbachev’s reforms were intended to revive the Soviet regime to be able to compete with Reagan’s America. …The countries of Eastern Europe, long enslaved as members of the Warsaw Pact, saw their moment to break free. Gorbachev refused to send in the tanks as his Soviet predecessors had done in Hungary and Czechoslovakia. …mutual trust between Gorbachev and Reagan…helped to bring the Cold War to an end with freedom as the victor.

George Will is also grateful that Gorbachev allowed Soviet communism to whither away without violence. Here’s some of what he wrote in his Washington Post column.

Failing upward into the world’s gratitude, Mikhail Gorbachev became a hero by precipitating the liquidation of the political system he had tried to preserve… Like Christopher Columbus, who accidentally discovered the New World, Gorbachev stumbled into greatness by misunderstanding where he was going. …Gorbachev’s most noble facet, his “extraordinary reluctance” to use violence to hold the Soviet system together. …President Ronald Reagan…described the Soviet Union as “the focus of evil in the modern world.” …he launched a high-tech challenge to a Soviet Union in which 30 percent of hospitals lacked indoor plumbing. …The Soviet Union’s brittle husk crumbled as Gorbachev struggled to preserve it. His reputation rests on the world’s amnesia about this.

Professor William Taubman of Amherst also opined in today’s Wall Street Journal.

He seems more sympathetic to Gorbachev than George Will, but also lauds him for opting against a bloody crackdown.

Mikhail Gorbachev…deserves to be celebrated… When he entered office in 1985, Gorbachev had almost unlimited power. He could have presided indefinitely over the status quo. Instead, he…acquiesced in the dismemberment of the Soviet empire without the violence that accompanied the collapse of most other empires. …he persuaded communist hard-liners to vote themselves out of office. …Gorbachev was happy to give up domination of Eastern Europe… Gorbachev tried to save the Soviet Union but ended up hastening its destruction. When it became clear in late 1991 that his great project was doomed, he could have lashed out, mobilizing the military to save him and what was left of the U.S.S.R., at the risk of civil war. Instead, he bowed out with dignity.

Matt Welch of Reason also weighs in, emphasizing that Gorbachev was not great, but that he allowed a great thing to happen.

f the late Mikhail Gorbachev had gotten his way, the world would look a lot different than it does now. Socialism would still be the dominant economic system from Leipzig to Yakutsk. The Warsaw Pact would still exist; a unified Germany would not, nor would the independent Baltic states. Above all, the planet would still be blighted by the wheezing and malevolent existence of what Ronald Reagan rightly described as “the evil empire”—the Union of Soviet Socialist Republics. …Yet we should not judge the eighth and final Soviet leader, who died Tuesday at the age of 91, by his base geopolitical desires but rather by the glorious human flourishing that his actions—and especially his inactions—allowed to take place. …November 9, 1989 became the most liberating day of the most liberating month of the most liberating year in human history.

Last but not least, David Satter shared some insights in a column late last year for the Wall Street Journal.

During its 70-year life, the Soviet regime killed at least 20 million of its citizens for political reasons. …however, the Soviet Union wasn’t indomitable. In 1988 the Soviet leader Mikhail Gorbachev allowed a space for free information in Soviet society, creating a contradiction between free speech and a system based on lies. When glasnost wasn’t repressed, it led to the collapse of the system. …President Reagan rejected the idea that the West had no alternative to accommodation. In the words of former Secretary of State Henry Kissinger, he took the offensive “ideologically and geostrategically.” …As for his strategy, Reagan said it was simple: “We win. They lose.” …the U.S. rearmament drive began to bear fruit. …Stunned by these developments, the Soviets eventually decided to take the risk of major reforms.

As you might expect, I like the emphasis on Reagan’s role. Yet another reason why he is the only great president of my lifetime.

The takeaway from today’s column is that Gorbachev mostly deserves praise for what he didn’t do. By opting against a crackdown, he allowed the Soviet Union to wind up on the “ash heap of history.”

And that’s a great result.

P.S. Here’s my collection of columns about the grim 100th anniversary of communism.

P.P.S. And here’s my collection of anti-collectivism humor, including many columns mocking communism.

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