The French Version of a Pot Calling the Kettle Black, or Maybe the other Way Around

There are some races you don’t want to win.

I’m glad, for instance, that Greece instead of America is winning the race to fiscal collapse (though both the BIS and OECD predict the U.S. faces a bigger long-run challenge).

And I’m happy that California is farther down the path to chaos and meltdown than my state of Virginia (as illustrated by this amusing cartoon).

So you will understand that I am worried when a French socialist defends bad economic policy by saying that his country is copying the United States.

Here are some excerpts from a CNBC report about Obama being a role model for Hollande’s economic team.

“He’s not nearly as socialist as I am”

The French politician who said Indian steel company ArcelorMittal should leave the country has told CNBC that his government is only acting like U.S. President Barack Obama. Industry Minister Arnaud Montebourg, a member of the governing Socialist party, caused controversy last week when he said that the Indian company, which employs close to 20,000 people in France, should leave after it said it would have to close down a factory. The French government announced on Thursday that it could nationalize the factory in question… The news raised the specter of the nationalizations of the early 1980s, which were instigated by Hollande’s predecessor Francois Mitterrand. Montebourg told CNBC after a meeting with trade unions in Paris: “Barack Obama’s nationalized…” Montebourg brushed off comparisons with that era. He said: “It’s a very good sign to send out (to investors). Nationalizing is a very modern step to take. Especially when you not only nationalize losses but profits as well, when you make public/private partnerships. This is our strategy. …He declined to answer a question about comments from Mayor of London Boris Johnson, who told Indian businessmen earlier this week to come to London instead of France.

I don’t actually think we’re as bad as France, and the rankings from both Economic Freedom of the World and the Index of Economic Freedom both show the United States with more economic freedom.

But a good overall score doesn’t mean that one nation is better than another in all regards. The United States still ranks above Sweden, even though the Swedes have implemented school choice and personal retirement accounts. And America still ranks above the Slovak Republic, even though that country (at least for now) has a simple and fair flat tax.

So maybe Monsieur Montebourg is right about the U.S. being a trendsetter for bad industry nationalization policy. Gee, what a high honor. I guess this is what it means to be called ugly by a frog.

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Why Are Republicans Willing to Help Obama Make America More Like Europe When the Welfare State Is Collapsing?

Washington frustrates me. The entire town is based on legalized corruption as an unworthy elite figure out new ways of accumulating unearned wealth by skimming money from the nation’s producers.

But one thing that especially irks me is the way people focus on the trees and forget about the forest. Politicians and journalists are now engaged in an inside-baseball game of analyzing every twist and turn of the fiscal cliff negotiations.

That’s all fine and well, but perhaps it would be a good idea to talk about the need to fix the real crisis of excessive spending instead of arguing about how fast we should be traveling in the wrong direction.

And let’s not delude ourselves. In the absence of real entitlement reform, the United States is doomed to repeat Europe’s mistakes.

And how are things going in Europe? Well, I’m glad you ask. Let’s look at some excerpts from an Associated Press report.

Another month, another record unemployment rate for the economy of the 17 European Union countries that use the euro. Figures released Friday by Eurostat, the EU’s statistics office, showed that the recession in the eurozone pushed unemployment up in the currency bloc to 11.7 percent in October, the highest level since the introduction of the euro in 1999. …Eurostat found that 18.7 million people were out of work across the eurozone, an increase of 173,000 on the previous month and 2.2 million higher than the year before. The wider 27-nation EU that includes non-euro countries such as Britain and Poland had an unemployment rate of 10.7 percent in October and a total of 25.9 million out of work. …”Talk of a `lost generation’ of young people now looks like an alarming possibility,” said Andrea Broughton, principal research fellow at the Institute for Employment Studies.

In other words, we may complain about America’s miserable track record on jobs during the Obama years, but at some point in the future we may someday look back on 8 percent unemployment as good news.

Unfortunately, the crowd in Washington doesn’t want to acknowledge that the real problem is spending. And I’m particularly irked (but not surprised) that Republicans now seem willing to go along with Obama even though they won this fight back in 2010 when they didn’t control the House and had fewer seats in the Senate. Here’s what I said to one of the local DC stations.

I realize I’m sounding glum, so let’s close out this post with a couple of amusing cartoons about America’s European future.

I’ve already shared the “European Lemming” cartoon. This one has the same theme.

Other Eric Allie cartoons can be enjoyed here, here , here, here, here, and here.

And here another cartoon with the same theme.

If you like this Bok cartoon, some of my other favorites can be seen here,  here, here, here, here, here, and here.

If you still haven’t cheered up, this bit of Dave Barry humor about the European fiscal crisis is a classic, and I’d also recommend this bit of unintentional satire.

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Talking Fiscal Cliff and GOP Fecklessness with the Instapundit

Unless the law is changed, big tax increases will be imposed on all taxpayers next year. This is the so-called fiscal cliff, and President Obama is using this unpalatable situation as an excuse to push for his class-warfare tax policy.

I talk about the political and economic ramification of this fight with Glenn Reynolds, author of the famous Instapundit blog.

As is my habit, there are a couple of points that deserve some elaboration.

• Budget deals don’t work – I wrote about this issue back in 2010, but I think the most persuasive piece of evidence came from the New York Times, which inadvertently admitted that the only successful budget deal was the 1997 pact that cut taxes rather than raising them.
• We should only raise taxes on those who say they want higher taxes – Since the Hollywood left (with some noble exceptions such as Jon Lovitz and Rob Schneider) is in favor of bigger government and higher tax rates, Glenn has suggested a restoration of the federal tax on movie receipts. That hasn’t worked very well in Spain, but I like the idea. In the same spirit, I’ve proposed a tax on CEO salaries since the big business community is trying to curry favor with the political class by endorsing tax hikes.
• Republicans won this fight in 2010 when they had less power – The same fiscal cliff fight took place two years ago, before the Republicans controlled the House and when they had fewer seats in the House. Yet GOPers prevailed because Senate Republicans stuck together. It would be a sign on remarkable incompetence if they lost this year’s fight since they now have much more power.
• Long-term incumbents get too comfortable with big government – I joked about politicians who come to Washington thinking it’s a cesspool, but eventually think it’s a hot tub, but that’s actually a very serious point. As I explain in this post, too many GOPers get corrupted by big government.
• It’s simple to balance the budget with modest spending restraint – According to Congressional Budget Office data, we can make the Bush tax cuts permanent and balance the budget in just 10 years if lawmakers simply exercise some modest fiscal restraint and limit spending so it grows by an average of 2.5 percent yearly.
• Most important, I sneak in an endorsement of my beloved Bulldawgs at the end of the interview – I’ve been very restrained and have not used this blog as a platform to celebrate Georgia being two wins away from the national title. Actually, the SEC Championship Game this weekend is the de facto national title game, though whichever team that prevails will have to take the pro forma step of mopping the floor with Notre Dame in January. This cartoon shows the state of play.

P.S. I appreciated Glenn’s reference to Lucy, Charlie Brown, and the football. To see my re-creation of that Peanuts classic, look at the cartoon in this post.

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Government Benefits Encourage Unemployment

It’s not something I should admit since I work at a think tank, which is based on the idea that substantive analysis can impact public policy, but I sometimes think humor and anecdotes are very effective in helping people understand issues.

On the topic of unemployment insurance, for instance, I wouldn’t be surprised to learn that this Michael Ramirez cartoon and this Wizard-of-Id parody have been effective in helping folks grasp the unintended consequences of excessive government benefits.

And I bet this story from Michigan and this example from Ohio will ring a bell with many people because they have some relative or buddy who also has used government benefits as an excuse to stay unemployed.

So when I went on Fox to discuss the issue, I mentioned that I had a couple of friends who goofed off instead of looking for work because they got unemployment benefits.

But since I am a think-tank policy wonk, I also explain that even left-wing economists such as Paul Krugman and Larry Summers agree that subsidizing unemployment means more joblessness. The academic research on this topic is virtually unanimous.

Keep in mind, by the way, that the negative impact of unemployment benefits is just the tip of the welfare-state iceberg. Professor Casey Mulligan has some very good work about the negative impact of redistribution programs, and this chart shows how dependency programs create very high implicit marginal tax rates for the less fortunate.

P.S. My opponent got screwed in terms of airtime, something that I can sympathize with since I’m often the one getting the short end of the stick, even when appearing on overseas television. This previous debate on unemployment insurance, by contrast, was very balanced.

P.P.S. If you want an example of unintentional humor, you can watch Nancy Pelosi asserting that paying people not to work is an effective means of creating jobs.

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The Comedy Version of Greece v Germany

It’s not easy to find some humor in the European fiscal crisis, though this Hitler parody video surely is a classic.

We now have a new video to enjoy.

There are some naughty words, so be forewarned.

And speaking of Greek-related humor, this cartoon is quite  good, but this this one is my favorite. And the final cartoon in this post also has a Greek theme.

P.S. If you like Greek-related humor, I have two more posts that have been very popular. The first one features a video about…well, I’m not sure, but we’ll call it a European romantic comedy and the second one has some very un-PC maps of how various peoples – including the Greeks – view different European nations.

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A Laffer Curve Warning about the Economy and Tax Revenue for President Obama and other Class Warriors

Being a thoughtful and kind person, I offered some advice last year to Barack Obama. I cited some powerful IRS data from the 1980s to demonstrate that there is not a simplistic linear relationship between tax rates and tax revenue.

In other words, just as a restaurant owner knows that a 20-percent increase in prices doesn’t translate into a 20-percent increase in revenue because of lost sales, politicians should understand that higher tax rates don’t mean an automatic and concomitant increase in tax revenue.

This is the infamous Laffer Curve, and it’s simply the common-sense recognition that you should include changes in taxable income in your calculations when trying to measure the impact of higher or lower tax rates on tax revenues.

No, it doesn’t mean lower tax rates “pay for themselves” or that higher tax rates lead to less revenue. That only happens in unusual circumstances. But it does mean that lawmakers should exercise some prudence and judgment when deciding tax policy.

Moreover, even though I’m a strong believer in the importance of good tax policy, it’s also important to understand that taxation is just one of many factors that determine economic performance. So lower tax rates, by themselves, are no guarantee of economic vitality, and higher tax rates don’t necessarily mean the world is coming to an end.

With those caveats in mind, take a look at this table from the Congressional Budget Office’s most recent Budget and Economic Outlook. Taken from page 109, it shows what will happen if the economy grows just a tiny bit less than the baseline projection. Not a recession, by any means, just a drop in the projected growth rate of just 1/10th of 1 percent.

As you can see, the 10-year impact is $314 billion, mostly due to lower tax receipts, though there is some impact on outlays because of  higher interest costs and a bit of additional entitlement spending.

So why am I sharing these numbers? Because let’s now think about President Obama’s proposed class-warfare tax hike. He wants higher tax rates on investors, entrepreneurs, small business owners and other “rich” taxpayers. And he wants more double taxation of dividends and capital gains. And a higher death tax rate, even higher than the ones imposed by France and Venezuela.

I think some opponents are exaggerating when they claim that this tax hike will cause a recession and cripple the economy. But I do think that it’s reasonable to contemplate the degree to which the Obama tax hikes will slow growth. More than 1/10th of 1 percent? Less than that? Would the damage occur in the first few years? Would it be spread out over time?

Those questions are hard to answer. Ask five economists and you’ll get nine answers, but there is compelling evidence that higher tax rates do have a negative impact.

But some people assume that taxes don’t matter at all. Using models that, for all intents and purposes, naively assume a simplistic linear relationship between tax rates and tax revenue, the number-crunching bureaucrats in Washington estimate that Obama’s proposed tax hikes will generate about $800 billion over 10 years.

I’m not going to pretend I know the economic impact of those higher tax rates, but for the sake of argument, let’s assume that the impact is minor. Indeed, let’s assume that it’s only 1/10th of 1 percent. Based on the CBO sensitivity analysis above, that means that about 40 percent of the projected deficit reduction will fail to materialize.

And that’s not even considering the fact that politicians will probably increase the burden of government spending because of the expectation of additional tax revenue.

Just something to keep in mind as this debate unfolds.

P.S. I actually shared this exact same data when testifying to the Senate Budget Committee earlier this year. Needless to say,  in some cases I think my testimony went in one ear and out the other.

P.P.S. The revenue-maximizing tax rate is not the ideal point on the Laffer Curve.

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Only the Media Is Baffled by the Notion that More Guns Lead to Less Crime

I don’t like to spend much time commenting on media bias. But every so often I find an example that cries out for attention.

In previous posts, I’ve discussed this slanted AP story on poverty, the Brian Ross Tea Party slur, this example of implicit bias by USA Today, and a Reuters report on job creation and so-called stimulus.

And I’ve also commented on a Washington Post story that turned a spending cut molehill into a “spending slash” mountain, a silly assertion in the New York Times that education spending has been reduced, and a Washington post claim that Germany is fiscally conservative.

The latest example comes from the Associated Press, which is mystified that crime is falling “despite” record firearm sales.

Gun-related violence has fallen steadily since 2006 in Virginia despite record firearm sales, according to a university professor’s analysis. Virginia Commonwealth University professor Thomas R. Baker compared state crime data from 2006 through 2011 with gun-dealer sales estimates obtained by the Richmond Times-Dispatch. Baker’s analysis shows the number of gun purchases soared 73 percent in the six-year period, while gun-related violent crimes fell 24 percent. Baker, who specializes in research methods and criminology theory, said the comparison seems to contradict the premise that more guns lead to more crime in Virginia.

Gee, there are more innocent people with guns and people are surprised that criminals are now more reluctant to commit crimes? I guess you have to be a reporter or an academic to be surprised by this common-sense observation.

John Lott, of course, wrote an entire book called More Guns, Less Crime. It’s very much worth reading. These posts will give you a flavor of his analysis:

• He punctures myths about so-called assault weapons.
• Lott explained how anti-gun laws facilitated the terrorist attack at Fort Hood.
• Writing after the Tucson shootings, Lott explained the benefits of concealed-carry laws.
• In the aftermath of the Heller decision, Lott explained how more guns resulted in less crime in DC.
• Lott explained how gun control made Jamaica a more dangerous country.

Shifting back to the topic of media bias, let’s close this post by sharing some amusing cartoons, which can be enjoyed here, here, and here.

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The No-Tax-Hike Pledge Is an IQ Test for Republicans

Eugene Robinson is one of the group-think columnists at the Washington Post. Like E.J. Dionne, he is an utterly predictable proponent of big government. So it won’t surprise you to know that he wants taxes to go up and he’s a big fan of Obama’s class-warfare agenda.

He’s also a very partisan Democrat and wants the GOP to lose. Again, that’s not exactly a stunning revelation.

So when someone like Eugene Robinson starts offering advice to the Republican Party about tax policy, a logical person instantly should be suspicious that he’s actually trying to advance his own ideological and partisan agenda.

An obvious analogy would be me giving the Alabama coaches some advice as they prepare to play my beloved Georgia Bulldogs on Saturday night (“hey, Coach Saban, you should have your quarterback play like he’s left-handed…that surely will surprise the Georgia defense…oh, and have your secondary and D-lineman trade places…I’m serious, that would be a brilliant strategy…I only want what’s best for you guys”).

In this spirit, Mr. Robinson wants the GOP to abandon the no-tax-hike pledge.

…we’re seeing the first signs in years that on the question of taxation — one of the fundamental responsibilities of government — the GOP may be starting to recover its senses. …the anti-tax pledge never made a bit of sense. …Grover Norquist…has dangerously loopy ideas about the proper size and scope of government. …Republicans who signed the pledge — and who now find themselves in a box — have only themselves to blame. …They pretended it was possible to provide the services that Americans need and want without collecting sufficient revenue.

In other words, a columnist who wants bigger government and a stronger Democratic Party is telling Republicans to raise taxes.

And he’s not alone. Some Democrats have openly admitted that their top political goal is suckering Republicans into a tax hike.

So if you’re a Republican, there are two possible reactions to Robinson’s column.

“Where’s Bob Dole when we need him?”

1. “Gee, Eugene is a swell guy to offer this advice. He really cares about my best interests, so I’m going to tell Grover to get lost and then I’m going to vote to give my opponents more money so they can create more dependency and make it harder for me to win future elections! I bet Chris Matthews will praise me for being a statesman.”

2. “Hmmm, let’s think about this. My opponent wants me to do X and I can see how doing X will be good from his perspective. Since my IQ is above room temperature, I’m going to explore doing Y or Z instead.”

For most of us, the answer is obvious. But, then again, there’s a reason the GOP is known as the “Stupid Party,” which is why the modified cartoon in this post showing Charlie Brown, Lucy, and a football is so appropriate.

“The DC cesspool isn’t bad once you get used to it”

But that’s not completely fair. Some Republican do the wrong thing with full knowledge and forethought. These are the politicians who perhaps came to Washington many years ago thinking it was a cesspool, but they’ve since learned to work the system and now they think it’s a hot tub.

P.S. This post is based on real-world analysis. Yes, there are hypothetical scenarios where even I would agree to a tax hike, but they’re about as realistic as the possibility of me throwing five touchdown passes for the Bulldogs on Saturday (hey, I have still have four years of eligibility!).

P.S.S. Here’s another example of a Washington Post columnist offering self-help suicide advice to the GOP.

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Disaster Relief Is Not a Responsibility of the Federal Government

If you read through Article I, Section VIII, of the Constitution, it says nothing about Congress having the power to subsidize or pay for disaster relief.

But I realize very few people care about the Constitution, so I’m going to make a utilitarian argument against Federal Emergency Management Agency (FEMA) and other forms of federal involvement in natural disasters.

Best of all, I don’t really need to do any heavy lifting. Someone else already has put together a very strong indictment, using Dauphin Island in Alabama as a case study.

Here are some excerpts from a great bit of reporting and analysis in the Austin Statesman, except in the second sentence I would replace “inertia” with “stupidity.”

Congratulations, you’re subsidizing the luxury vacation homes of the rich

Even in the off season, the pastel beach houses lining a skinny strip of sand here are a testament to the good life. They are also a monument to the generosity, and perhaps to the inertia, of the federal government… The western end of this Gulf Coast island has proved to be one of the most hazardous places in the country for waterfront property. Since 1979, nearly a dozen hurricanes and large storms have rolled in and knocked down houses, chewed up sewers and water pipes and hurled sand onto the roads. Yet time and again, checks from Washington have allowed the town to put itself back together. Across the nation, tens of billions of tax dollars have been spent on subsidizing coastal reconstruction in the aftermath of storms, usually with little consideration of whether it actually makes sense to keep rebuilding in disaster-prone areas. If history is any guide, a large fraction of the federal money allotted to New York, New Jersey and other states recovering from Hurricane Sandy — an amount that could exceed $30 billion — will be used the same way. Tax money will go toward putting things back as they were, essentially duplicating the vulnerability laid bare by the hurricane.  …Like many other beachfront towns, [Dauphin Island] has benefited from the Stafford Act, a federal law that taps the U.S. Treasury for 75 percent or more of the cost of fixing storm-damaged infrastructure, like roads and utilities. At least $80 million, adjusted for inflation, has gone into patching up this one island since 1979 — more than $60,000 for every permanent resident. That does not include payments of $72 million to homeowners from the highly subsidized federal flood insurance program.

Conservatives often complain about welfare programs that pay single mothers to have children out of wedlock. That’s a legitimate complaint since the welfare state has failed both poor people and taxpayers. But they should apply the same analysis and apply even more moral outrage to handouts that encourage rich people to keep rebuilding in disaster-prone areas.

And there’s no question that federal handouts and giveaways are a driving force. You also won’t be surprised that one of America’s worst Presidents also has a role in this story.

Dauphin Island is a case study in the way the federal subsidies have enabled repetitive risk taking. Orrin Pilkey, an emeritus professor at Duke University who is renowned for his research in coastal zones, described the situation there as a “scandal.” The island, four miles off the Alabama coast, was for centuries the site of a small fishing and farming village reachable only by boat. But in the 1950s, the Chamber of Commerce in nearby Mobile decided to link it to the mainland by bridge and sell lots for vacation homes. Then Hurricane Frederic struck in 1979, ravaging the island and destroying the bridge. President Jimmy Carter flew over to inspect the damage. Rex Rainer, the Alabama highway director at the time, recalled several years later that the president “told us to build everything back just like it was and send him the bill.” With $33 million of federal money, local leaders built a fancier, higher bridge that encouraged more development in the 1980s. Much of that construction occurred on the island’s western end, a long, narrow sand bar sitting only a few feet above the Gulf of Mexico. “You can always look back and say, ‘Maybe we shouldn’t have done that,’ ” said Mayor Jeff Collier, who noted that many of the decisions were made before he took office more than a decade ago. “But we can’t turn the clock back.”

I have just one message for Mayor Collier. I don’t care about your damn clock. Your people should be free to rebuild, but don’t ask me to pay for it.

We do have a tiny bit of good news to report, thanks to libertarians and some of their allies.

A coalition in Washington called SmarterSafer.org, made up of environmentalists, libertarians and budget watchdogs, contends that the subsidies have essentially become a destructive, unaffordable entitlement. …This argument might be gaining some traction. Earlier this year, Congress passed changes to the federal flood insurance program that are supposed to raise historically low premiums and reduce homeowner incentives for rebuilding in the most hazardous areas.

But we need to do more than get rid of federal flood insurance subsidies.

Less widely known about than flood insurance are the subsidies from the Stafford Act, the federal law governing the response to emergencies like hurricanes, wildfires and tornadoes. It kicks in when the president declares a federal disaster that exceeds the response capacity of state and local governments. Experts say the law is at least as important as the flood program in motivating reconstruction after storms. In the same way flood insurance shields families from the financial consequences of rebuilding in risky areas, the Stafford Act shields local and state governments from the full implications of their decisions on land use. Under the law, the federal government committed more than $80 billion to disaster recovery from 2004 to 2011, according to a report from the Government Accountability Office. While billions of dollars went to relieve immediate suffering, including cash payments to families left homeless by storms, nearly half of the money was spent helping state and local governments clean and restore damaged areas and rebuild infrastructure.

Finally, I can’t resist sharing this one last excerpt from the story.

People here have formed strong emotional attachments to their island. “There’s a lot of wildlife and a lot of bird life, and it’s just a great place to relax,” said Jay Minus, a lawyer in Mobile who owns two homes on the western end. “You can sit on the porch and watch the dolphins swim past your house.”

Gee, I’m overjoyed that Mr. Minus has a nice view of dolphins. But it strikes me as very perverse that ordinary taxpayers around America are getting raped so this representative of the top 1 percent can enjoy nice views.

This is obviously a perfect example of where my ethical bleeding heart rule should apply.

So what’s the answer? Simple, end the federal government’s role, including getting rid of FEMA. Shikha Dalmia of the Reason Foundation explains why in the Washington Examiner.

A New York Times editorial declared that the impending storm proved that the country needs FEMA-style “Big Government” solutions more than ever. Salon, New Republic and other liberal outfits heartily agreed. Why do liberals love FEMA so much? Certainly not for its glorious track record. Rather, FEMA has been a great vehicle for expanding the welfare state. …So how did the new and improved FEMA perform post-Sandy, a storm for which it had lots of advance warning? Not so well. It didn’t set up its first relief center until four days after Sandy hit — only to run out of drinking water on the same day. It couldn’t put sufficient boots on the ground to protect Queens residents from roving looters. The Red Cross — on whom FEMA depends for delivering basic goods — left Staten Island stranded for nearly a week, prompting borough President Jim Molinaro to fume that America was not a Third World country. But FEMA’s most egregious gaffe was that it arranged for 24 million gallons of free gas for Sandy’s victims, but most of them couldn’t lay their hands on it.

What’s most amazing is that FEMA doesn’t even play a role in emergency response, even though the politicians and bureaucrats always imply that the Agency exists to be a rapid-relief “first responder.”

But if you think FEMA’s inability to provide rapid relief subverts the core reason for its existence, think again. A few days after the Times’ valentine, FEMA head W. Craig Fugate told the newspaper that the agency’s rapid response role is really a fallacy. “The general public assumes we are part of the response team that will be there the first couple of days,” he said. But it is really designed to deal with disasters several days after the fact. How does FEMA do that? By indiscriminately writing checks — a task at which it evidently excels.

Yes, we finally find something FEMA does with considerable skill. It can waste money.

FEMA administrator Elizabeth Zimmerman testified before Congress last year that between 2005 and 2009, 14.5 percent of the agency’s $10 billion-plus disaster aid budget was handed to people who didn’t qualify. The agency tried to get 154,000 of these people to return the money (on average, each had received about $5,000), but they filed a class action lawsuit forcing FEMA to pay them a multimillion settlement. And it forgave the debt of every one with an income below $90,000. …The bigger problem is not with who gets FEMA money, but why. Less than a sixth of Alabama’s $566 million allotment after Katrina financed legitimate government functions such as debris removal, repairing damaged infrastructure and restoring public utilities. The rest was all handouts: food stamps, subsidies for trailer homes and low-interest loans for small businesses. The FEMA website is already advertising goodies for Sandy victims, including 26 weeks of unemployment benefits and up to $200,000 worth of low-interest loans for home repairs not covered by insurance. In addition, it wants to hand out $2 million loans to small businesses and nonprofits (of all sizes) experiencing “cash flow problems.” Farmers and ranchers could likewise qualify for $500,000 in loans to cover production and property losses. Anyone in Sandy’s path can latch on to the FEMA teat. This is not disaster relief but disaster socialism. It is one thing for the government to provide emergency housing, health care and food; it is quite another to compensate victims for every loss. If people knocked down by a storm deserve such federal largesse, why not open the coffers to anyone who suffers a car crash, a death in the family or a broken heart?

Or what if your house burns down? We instinctively know it would be stupid for the government to pay people to rebuild their houses after a fire because then they’ll decide it no longer makes sense to be responsible.

So why, then, does it make sense to subsidize irresponsibility on a broader scale? Particularly when it encourages people to make decisions that could place their lives in danger.

The bottom line is that the federal government shouldn’t take over roles that are better handled by the private sector (such as market-priced homeowner’s insurance) or state and local government (such as emergency response and infrastructure repair and maintenance).

FEMA does more harm than good. It encourages passivity on the part of both people in the private sector and state and local government officials. It’s damaging to the national character when people learn an entitlement mentality and sit around waiting for the federal government to give them freebies.

And how can anyone forget the spectacular incompetence of Louisiana Governor Kathleen Blanco and New Orleans Mayor Ray Nagin during and after Katrina in 2005. Both of them seemed to think it was appropriate to curl up in fetal positions and let Uncle Sam do their jobs.

P.S. I can think of two exceptions to the notion that there should be no federal involvement in disaster relief. First, Washington has a legitimate role in disasters resulting from foreign attack. So some sort of involvement after the 9-11 attacks was appropriate. Second, even a curmudgeon like me wouldn’t get bent out of shape about short-run emergency response. FEMA obviously doesn’t do that, so I’m thinking hypothetically. Perhaps if a hurricane hit a community and a nearby military base had heavy equipment that could help with the immediate clean-up.

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Giving Control of the Internet to the United Nations Would Be Like “Handing a Stradivarius to a Gorilla”

The United Nations may be useful as a forum for world leaders, but it is not a productive place to develop policy. The international bureaucracy compulsively supports statist initiatives that would reduce individual liberty and expand the burden of government.

• Global taxation with no democratic accountability or oversight.
• A “right” to taxpayer-financed birth control.
• An international scheme to undermine the right to keep and bear arms.
• A Law-of-the-Sea Treaty that would give international bureaucrats tax and regulatory powers over international waters.

And you won’t be surprised to learn that the United Nations also wants to control the Internet. Actually, to be more specific, some nations want to regulate and censor the Internet and they are using the United Nations as a venue.

Writing for the Wall Street Journal, Gordon Crovitz explains this new threat. He starts by describing the laissez-faire system that currently exists and identifies the governments pushing for bad policy.

Who runs the Internet? For now, the answer remains no one, or at least no government, which explains the Web’s success as a new technology. But as of next week, unless the U.S. gets serious, the answer could be the United Nations. Many of the U.N.’s 193 member states oppose the open, uncontrolled nature of the Internet. Its interconnected global networks ignore national boundaries, making it hard for governments to censor or tax. And so, to send the freewheeling digital world back to the state control of the analog era, China, Russia, Iran and Arab countries are trying to hijack a U.N. agency that has nothing to do with the Internet. For more than a year, these countries have lobbied an agency called the International Telecommunications Union to take over the rules and workings of the Internet.

He then warns about the risk of government control.

Having the Internet rewired by bureaucrats would be like handing a Stradivarius to a gorilla. The Internet is made up of 40,000 networks that interconnect among 425,000 global routes, cheaply and efficiently delivering messages and other digital content among more than two billion people around the world, with some 500,000 new users a day. …The self-regulating Internet means no one has to ask for permission to launch a website, and no government can tell network operators how to do their jobs. The arrangement has made the Internet a rare place of permissionless innovation.

Crovitz identifies some of the specific tax and regulatory threats.

Proposals for the new ITU treaty run to more than 200 pages. One idea is to apply the ITU’s long-distance telephone rules to the Internet by creating a “sender-party-pays” rule. International phone calls include a fee from the originating country to the local phone company at the receiving end. Under a sender-pays approach, U.S.-based websites would pay a local network for each visitor from overseas, effectively taxing firms such as Google and Facebook. …Regimes such as Russia and Iran also want an ITU rule letting them monitor Internet traffic routed through or to their countries, allowing them to eavesdrop or block access.

And he warns that the Obama Administration’s representative seems inadequately committed to advancing and protecting American interests.

The State Department’s top delegate to the Dubai conference, Terry Kramer, has pledged that the U.S. won’t let the ITU expand its authority to the Internet. But he hedged his warning in a recent presentation in Washington: “We don’t want to come across like we’re preaching to others.” To the contrary, the top job for the U.S. delegation at the ITU conference is to preach the virtues of the open Internet as forcefully as possible. Billions of online users are counting on America to make sure that their Internet is never handed over to authoritarian governments or to the U.N.

With all the support Obama got from Silicon Valley and the high-tech crowd, one would think this is an issue where the Administration would do the right thing. And it sounds like the U.S. is on the right side, but the real issue is whether the American representative is prepared to tell the dictators and kleptocrats to jump in a lake.

The moral of the story is that the United Nations should not be a policy forum. The bureaucrats seem to have no appreciation or understanding of how the economy works, perhaps because they live in a bubble and get tax-free salaries.

And I don’t say that out of animosity. The folks I’ve met from the United Nations have all been pleasant and I even participated in a U.N. conference as the token free-market supporter.

But just because someone’s nice, that doesn’t mean that they should have any power over my life or your life. And many of the nations pushing to control and regulate the Internet are governed by people who are neither nice nor pleasant.

P.S. You probably don’t want to know my innermost fantasies, but one of them involved the United Nations.

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The “Happy Planet Index” Ranks Venezuela, Albania, and Cuba Far Higher than the United States

Rankings can be very useful tools, assuming the methodology is reasonable and the authors use robust data. I’ve cited many of them.

• For a big-picture look at economic policy, the Economic Freedom of the World is the best ranking, though the Index of Economic Freedom is also quite good, and the Global Competitiveness Report also is useful.
• On tax policy, the Financial Secrecy Index measures how well a nation treats foreign investors, while the Tax Oppression Index measures how well a nation treats its own people.
• There are also more specialized rankings, such as the one measuring per-capita government debt, the Moocher Index of state-by-state government dependency, and my ranking of which President has been the biggest spender.

But I’ve also run into some really strange rankings since starting this blog, some of which are preposterous and others of which are rather subjective.

• One group claimed that America is one of the world’s most authoritarian nations.
• The statists at the OECD put together a ranking asserting that poverty is a bigger problem in the United States than in Greece, Portugal, or Turkey.
• A poll of world travelers ranked which nations had the most attractive people.
• In a 2010 ranking of influence in the world of global finance, the FCI 500 placed me higher than either George Soros or Paul Krugman.

That last one was good for my ego. My only comment is that I wish that I had real influence.

Speaking of preposterous rankings, I have something new for the list.

There’s a group that puts out something called the “Happy Planet Index,” which supposedly is a “global measure of sustainable well-being.”

But it’s really an anti-energy consumption ranking, modified by life expectancy data along with some subjective polling data about lifestyles. And it leads to some utterly absurd conclusions.

Here’s their map of the world. All you really need to know is that it’s supposedly bad to be a red country.

I’m perfectly willing to agree that people in Afghanistan and Angola are not part of a “happy planet,” but do they really expect people to believe that the United States is in the bottom category?

I’m not being jingoistic. Yes, I am a patriot in the right sense of the word, so I would like the United States to be at the top of most rankings.

But my job is to criticize bad public policy, so my life would be rather dull if the crowd in Washington adopted a much-needed policy of benign neglect for the economy.

My real gripe is that some of the world’s main cesspools get high rankings. The United States is 105th according to the clowns who put together the rankings, while Cuba somehow came in 12th place.

Venezuela also ranks near the top, and other jurisdictions that score at least 50 places above America include Albania, Pakistan, Palestine, Iraq, Moldova, and Tajikistan.

It’s not just that those nations all rank about the United States. They also are ahead of Sweden, Canada, Australia, Iceland, Singapore, and Hong Kong.

And I’d rather live in any of those nations than live in any of the ones I listed that got good scores according to the poorly named Happy Planet Index.

Heck, I’d also prefer to live in some of the nations that score even lower than the United States, such as Belgium, Denmark, Estonia, or Luxembourg.

The Luxembourg ranking is particularly absurd. It is down near the bottom, with a ranking of 138 and trailing such garden spots as Burkina Faso and the Congo.

But it also happens to be one of the world’s richest nations according to World Bank data, in part because it is a very good tax haven.

But the nuts who put together the Crazy Planet Index give Luxembourg the second-to-worst ranking for its “ecological footprint,” and I guess you’re supposed to be unhappy if you have enough wealth to use a lot of energy.

Gee, too bad Luxembourg couldn’t be more like the nations that get the highest rankings for their “ecological footprint.” The people of Afghanistan and Haiti must be very, very happy about that high honor.

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For Nutty English Bureaucrats, Ideological Bias and Political Correctness Are More Important than the Well-Being of Children

Earlier this month, as part of my ongoing series comparing bone-headed bureaucracy in both the United States and United Kingdom, I wrote a post about a moronic green-energy subsidy program in the U.K. that was so convoluted that nobody in the entire country signed up for it.

Only government could be so bloody incompetent that it can’t even do a good job of giving away subsidies and handouts.

Since I’m a big believer if fairness (properly defined), I normally take turns in this series, first featuring an example of government stupidity in the U.K., followed by an example of foolish bureaucracy in the U.S., and so on and so on.

But I have to break the pattern. Check out these excerpts from a story about English bureaucrats deciding that a foster family no longer could take of kids because they support the United Kingdom Independence Party, which doesn’t believe in unlimited immigration.

The husband and wife, who have been fostering for nearly seven years, said they were made to feel like criminals when a social worker told them that their views on immigration made them unsuitable carers. …Nigel Farage, the leader of Ukip, described the actions of Rotherham borough council as “a bloody outrage” and “political prejudice of the very worst kind”. …The couple, who do not want to be named to avoid identifying the children they have fostered, are in their late 50s and live in a neat detached house in a village in South Yorkshire. The husband was a Royal Navy reservist for more than 30 years and works with disabled people, while his wife is a qualified nursery nurse. Former Labour voters, they have been approved foster parents for nearly seven years and have looked after about a dozen different children, one of them in a placement lasting four years. They took on the three children — a baby girl, a boy and an older girl, who were all from an ethnic minority and a troubled family background — in September in an emergency placement. They believe that the youngsters thrived in their care. The couple were described as “exemplary” foster parents: the baby put on weight and the older girl even began calling them “mum and dad”. However, just under eight weeks into the placement, they received a visit out of the blue from the children’s social worker at the Labour-run council and an official from their fostering agency. They were told that the local safeguarding children team had received an anonymous tip-off that they were members of Ukip. The wife recalled: “I was dumbfounded. Then my question to both of them was, ‘What has Ukip got to do with having the children removed?’ “Then one of them said, ‘Well, Ukip have got racist policies’. The implication was that we were racist. [The social worker] said Ukip does not like European people and wants them all out of the country to be returned to their own countries. “I’m sat there and I’m thinking, ‘What the hell is going off here?’ because I wouldn’t have joined Ukip if they thought that. I’ve got mixed race in my family. I said, ‘I am absolutely offended that you could come in my house and accuse me of being a member of a racist party’.”

What a disgusting mix of ideological bias and political correctness.

I agree that government officials shouldn’t place children in homes where there’s racism. So if the bureaucrats discovered that a household had people from the English equivalent of the Ku Klux Klan or the New Black Panther Party, then it’s understandable and appropriate that they don’t get to take care of foster children.

But I’ve met many people from UKIP and I keep close track of what’s happening in the English political world. From everything that I can tell, UKIP is a mainstream political party that seems most concerned about the loss of sovereignty to the European Union.

Are there some racists in UKIP? I’m sure that some exist, just as there racists in the Labour Party, Conservative Party, and Liberal Democratic Party. And, for what it’s worth, there are some racist Republicans and some racist Democrats. Like other collectivist impulses, racism is probably an inherent flaw in the human species.

But I’m digressing. The purpose of this post is to express disgust at bureaucrats in England who decided that belonging to UKIP automatically meant a foster family was racist. Even worse, these bureaucrats then took three children from this family, which means they put political correctness and ideological bias ahead of the best interests of the kids.

Let’s hope that those children aren’t now stuck in an orphanage or some other sub-standard form of institutionalized care.

P.S. If you want to be entertained and to learn more about UKIP, I’ve posted some remarkable videos of their MEPs as they speak at the European Parliament.

Farage is the head of UKIP, and he completely skewers the head bureaucrats of the European Commission in this speech.

His most famous speeches specifically eviscerated the “damp dishrag” of the European Commission.

Here’s Nigel Farage mocking European bailouts.

And since you know my favorite issue is tax competition, you’ll understand why I like these two short speeches by UKIP MEP Godfrey Bloom.

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Question of the Week: “Dan, Why Do You Hate Republicans?”

I get several emails per week asking my view on various topics and many of the questions raise very interesting issues.

So I’ve decided to start a new feature. Every weekend, I will endeavor to answer one question.

My first chore is to explain why I hate Republicans, and as you can see here and here, there’s certainly ample reason to think I hold GOPers in low esteem.  The actual question, though, is:

You seem to be more critical of Republicans than Democrats and you went out of your way to attack Romney. Doesn’t that play into the hands of Obama?

The answer is yes and no. I don’t mean to sound like a politician, but I view my job as providing nonpartisan analysis on public policy issues. That means I criticize the statist schemes of the folks in Washington, regardless of whether the politicians have a “D” or an “R” at the end of their names.

To be fair, I’m probably a bit harder on Republicans, but only because they’re the ones who often pretend that they are on my side.

And sometimes they are on my side. My two favorite presidents are Reagan and Coolidge, and I have great admiration for those few politicians – such as Ron Paul – who almost always do the right thing.

But I also have discovered that bad Republicans usually do more damage than Democrats. Nixon was one of the most statist presidents of my lifetime, and Bush 41 and Bush 43 were almost as bad.

And even the politicians I’m willing to praise, including Ron Paul, sometimes do the wrong thing. And as much as I praise Reagan, he had some huge mistakes, such as the catastrophic health insurance program.

My simple rule of thumb is I will support a politicians who, in my estimation, will be a net plus for liberty. So notwithstanding my reputation for being a libertarian ideologue, I have a very practical approach to politics.

That’s the good news. The bad news is that it’s rather disappointing that so few Republicans satisfy that simple test.

But now let’s return to the question. Doesn’t that view play into the hands of Obama? As I said, yes and no

“Hey, you libertarians should vote for me”

I want to maximize liberty (or minimize statism) in the long run. So if I have a choice between a big-government Republican and big-government Democrat, I sometimes think we’re better off if the Democrat prevails.

Jimmy Carter, for instance, probably wasn’t that much worse than Gerald Ford. And he paved the way for Reagan.

And Bill Clinton, in retrospect, was a much better choice than Bush 41. And he paved the way for the GOP landslide in 1994.

So the question before us today is whether Barack Obama is paving the way for a good Republican…or whether he’s a Lyndon Johnson paving the way for a Richard Nixon.

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A Journalist’s First-Hand Report on the Corrupt Secrecy of an International Bureaucracy

As a taxpayer, I’m not a big fan of international bureaucracies. They consume a lot of money, pay themselves extravagant (and tax-free!) salaries, and generally promote statist policies.

The Paris-based Organization for Economic Cooperation and Development is a prime example. Originally created for benign purposes such as gathering statistics, it now is a bloated bureaucracy pursuing an anti-free market agenda.

But international bureaucracies also have a nasty habit of operating in the shadows and using thuggish behavior to thwart critics. And I have the scars to prove it from my efforts to protect fiscal sovereignty.

• Back in 2001, the OECD threatened to boycott its own global anti-tax competition meeting because one of the low-tax jurisdictions had the nerve to make me an adviser to its delegation.
• In 2008, the OECD threatened to have me thrown in a Mexican jail for the “crime” of standing in the public lobby of a hotel and providing advice to representatives of so-called tax havens.

But it’s not just the crowd in Paris that doesn’t believe in openness and fair play. A journalist recently traveled to South Korea to report on a World Health Organization conference on tobacco.

This doesn’t sound like the type of event that would involve skullduggery, but here’s part of what the reporter wrote for the Korea Times.

A monumental session during the World Health Organization’s (WHO) convention on tobacco control turned into an alarming attack on transparency, accountability and press freedom. …delegates of the member countries of the conference stripped the media of the ability to cover the meeting and escorted public onlookers from the premises. The decision to meet behind closed doors occurred when a discussion began about efforts to decrease tobacco use by increasing the price of tobacco products. Specifically, the convention attendees were discussing the framework for an international tobacco tax. This is one of the most controversial topics for debate in Seoul this week.

This is what is called a “learning moment.” And the journalist clearly recognized both the WHO’s hypocrisy and its troubling policy agenda.

As a reporter covering this meeting, this was not only a frustrating stance, but it raises some serious questions about an organization that for years has operated largely behind the scenes and without the benefit of much public scrutiny. When is the media more necessary than when an unaccountable, shadowy organization that devours millions of tax dollars each year from people across the world debates getting in the business of issuing global taxes? This effort to silence the press is particularly chilling since it is in direct conflict with the U.N. — the WHO’s parent organization—claims to fight to advance “free, independent and pluralistic media” across the world. Apparently, U.N. and WHO leaders believe in media rights in all cases except when the media covers them.

And remember, you’re paying for this thuggish behavior.

If you want to learn more about the underlying issue, I wrote about the WHO’s push for global tobacco taxation back in both May and September.

All of which is consistent with the broader ongoing push by the United Nations to get worldwide taxing power.

Needless to say, any form of global taxation would be a terrible development, but governments are sympathetic to such schemes since they view tax competition as a constraint on their ability to pursue redistribution and thus a limit on their efforts to buy votes with other people’s money.

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A Simple Lesson of Policy Diversity from “The Black Swan” Author: Don’t Put All Your Financial Eggs in One Regulatory Basket

Several months ago, I wrote a rather wonky post explaining that the western world became rich in large part because of jurisdictional competition. Citing historians, philosophers, economists, and other great thinkers, I explained that the rivalry made possible by decentralization and diversity played a big role in both economic and political liberalization.

In other words, it’s not just a matter of tax competition and tax havens (though you know how I feel about those topics).

Now I want to provide another argument in favor of the jurisdictional differences that are encouraged by national sovereignty. Simply stated, it’s the idea of diversification. Reduce risk by making sure one or two mistakes won’t cause a catastrophe.

This isn’t my insight. The author of The Black Swan understands that this simple principle of financial investment also applies to government. He recently explained his thinking in a short interview with Foreign Policy. The magazine began with a few sentences of introduction.

Nassim Nicholas Taleb has made a career of going against the grain, and he has been successful enough that the title of his book The Black Swan is a catchphrase for global unpredictability far beyond its Wall Street origins. …His newest project is helping governments get smarter about risks.

The rest of the article is Taleb in his own words. Here are some of my favorite passages, beginning with some praise for Switzerland’s genuine federalism and strong criticism of the EU bureaucracy in Brussels.

The most stable country in the history of mankind, and probably the most boring, by the way, is Switzerland. It’s not even a city-state environment; it’s a municipal state. Most decisions are made at the local level, which allows for distributed errors that don’t adversely affect the wider system. Meanwhile, people want a united Europe, more alignment, and look at the problems. The solution is right in the middle of Europe — Switzerland. It’s not united! It doesn’t have a Brussels! It doesn’t need one.

But it’s important to understand why he likes Switzerland and dislikes the European Union: Small is beautiful. More specifically, decentralized decision making means less systemic risk.

We need smaller, more decentralized government. On paper, it might appear much more efficient to be large — to have economies of scale. But in reality, it’s much more efficient to be small. …an elephant can break a leg very easily, whereas you can toss a mouse out of a window and it’ll be fine. Size makes you fragile.

Taleb elaborates on this theme, echoing many of the thinkers I cited in my wonky September post.

The European Union is a horrible, stupid project. The idea that unification would create an economy that could compete with China and be more like the United States is pure garbage. What ruined China, throughout history, is the top-down state. What made Europe great was the diversity: political and economic. Having the same currency, the euro, was a terrible idea. It encouraged everyone to borrow to the hilt.

Because it’s a short article, he doesn’t cite many specific examples, so let me elaborate. One of the reasons for the financial crisis is that the world’s financial regulators thought it would be a good idea if everybody agreed to abide the same rules for weighing risks. This resulted in the Basel rules that tilted the playing field in favor of mortgage-backed securities, thus helping to create and pump up the housing bubble. And we know how that turned out.

But that’s just part of the story. The regulatory cartel also decided to provide a one-size-fits-all endorsement of government debt. Now we’re in the middle of a sovereign debt crisis, so we see how that’s turning out.

Unfortunately, governments seem drawn to harmonization like moths to a flame. To make matters worse, the corporate community often has the same instinct. Their motive often is somewhat benign. They like the idea of one rulebook rather than having to comply with different policies in every nations.

But mistakes made for benign reasons can be just as bad as mistakes made for malignant reasons.

P.S. Last but not least, it’s worth noting that Taleb is not a big fan of democracy.

I have a negative approach to democracy. I think it should be primarily a mechanism by which people can remove a bad leader

I don’t know if this is because he recognizes the danger of untrammeled majoritarianism, much like Thomas Sowell, George Will, and Walter Williams. But if you want more information on why 51 percent of the people shouldn’t be allowed to oppress 49 percent of the people, here’s a very good video.

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A Humorous Look at Obama’s Very Scary Mandate

As I explained in my election post-mortem, I don’t think Obama has a mandate.

But that doesn’t mean we can’t enjoy a good cartoon about his interpretation of the results, and this Bob Gorrell cartoon definitely is amusing.

But it’s amusing – albeit in a disturbing way – because it hinges on something that is true.

America is heading into the fiscal toilet. Indeed, both the BIS and OECD predict that our long-run fiscal situation is more perilous than Europe’s welfare states.

To be fair, we were in a mess even before Obama took office. But Obama wants us to move in the wrong direction at an even faster pace. And he definitely opposes the types of entitlement reforms that could save the country.

That’s why the cartoon has some bite.

And speaking of cartoons about Obama and Greece, here’s another one with the same message. And the final cartoon in this post also has a Greek theme.

P.S. If you like Greek-related humor, I have two more posts that have been very popular. The first one features a video about…well, I’m not sure, but we’ll call it a European romantic comedy and the second one has some very un-PC maps of how various peoples – including the Greeks – view different European nations.

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Richard Epstein Discusses the Flat Tax

In addition to being my former debating partner, Richard Epstein is one of America’s premiere public intellectuals.

You can watch him make mincemeat out of George Soros in this video, for instance, and you can listen to his astute observations about his former law school colleague Barack Obama in this video.

Renaissance man of liberty

Given his stature, I’m glad that he agrees that the flat tax is the ideal way of reforming the corrupt internal revenue code. Here’s some of what he wrote about the topic for the Hoover Institution, beginning with an outline of the fundamental issues at stake.

The central challenge for government is to incur minimum political distortions while allowing taxes to raise the revenues needed to discharge essential government functions. …Without question, the form of taxation that best meets these dual requirements is a flat tax on consumption—a position which enjoys virtually no visible political support today. …Unless something is done to alter the direction of political discourse in the United States, the next four years will be a replay of the last four years. We will witness a slow decline in the standard of living across all groups within the United States.

For those not familiar with the lingo, a “flat tax on consumption” simply means a tax system with one rate and no double taxation of income that is saved and invested. That can be a national sales tax or value-added tax, but it usually refers to the “Hall-Rabushka” flat tax championed by Dick Armey and Steve Forbes. If you want more information, click here and here.

Epstein then gives some of the economic arguments for tax reform.

A sound tax system has as few moving parts as possible. We should scrap the current system in favor of a flat tax on consumption. Radically simplifying the tax system to a flat tax on consumption would facilitate two desirable economic changes. First, it reduces taxes to zero when capital is redeployed from one venture to another, which in turn would induce better investor monitoring of current firms. The ability of investors to sell out without adverse tax consequences thus provides an added incentive for efficient market behavior. Second, it eliminates the need to draw any distinction between ordinary income and capital gains, which is one of the weak points of the current system.

And he gives some reasons why the current system is unpalatable.

Current tax policy puts items like income and deductions into political play, generating deleterious short-term consequences. Evidence of this can be seen in the rapid response of investors, who are anticipating the future tax hikes and scaling back on their investments. The adverse responses are not confined to large firms but also extend to wealthy individuals who will bear the brunt of any tax increase. The proposed increase in the estate and gift taxes, targeted exclusively at high-income taxpayers, has set off an immediate flurry of tax planning efforts by well-to-do individuals to minimize the bite of these unknown and unwelcome tax changes. Typical of the common hijinks are the estate planning tactics recently reported in the Wall Street Journal by Annamaria Andriotis, which should belie the naïve belief that high-income taxpayers don’t respond to incentives. It is not just that people go to extra lengths to alter their patterns of giving in order to take full advantage of the life-time exemption from the gift and estate taxes and annual exclusions (now $13,000 per each donor/donee pair); it is that they engage in the conscious destruction of wealth in order to minimize the impact of taxes.

He also provides the Laffer-Curve argument for better tax policy.

The President thinks that revenue growth from taxes can be reduced to a simple task of addition and multiplication. Start with the current tax base, and multiply it by the increased tax rates in order to determine the added tax revenues. …Since the advent of the income tax in 1913, tax rates have gyrated from high to low and back again. …the typical response to these tax reductions is a spur in economic activity that results in the collection of larger amounts of capital gains taxes from wealthy individuals, who also prosper under the regime by their higher after-tax earnings. …If we sock it to the rich, we run the risk of impoverishing the nation.

Esptein concludes by explaining the world is not a zero-sum exercise. Good tax policy can make everybody better off.

Too many people agree with the implicit supposition of the President that taxation is a zero-sum game, whereby the rest of the population can gain amounts that are taken from the rich through taxation. Not so. The explicit tax increases on the rich will be passed on in a variety of ways to the population as a whole so that everyone is made worse off in the name of income equality.

I certainly agree. Statists assert that people like me and Espstein believe in trickle-down economics. That’s obviously a pejorative term, but we do believe in a system where more entrepreneurship and capital formation leads to higher living standards.

How can anybody look at this chart and think otherwise?

If you want more information, here’s my video on the flat tax.

This system is working in about 30 nations around the world. Isn’t it time America had a tax system that made sense?

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Amusing Obama Thanksgiving Cartoons

I’m not a big fan of Obama’s class warfare approach to tax policy, so I especially enjoy cartoons that make fun of his soak-the-rich ideology. You can see some of my favorites here and here.

Now let’s add two more cartoons to the mix, both with a Thanksgiving theme.

The first one makes fun of Obama for his deliberate ignorance about the budget. Honest leftists admit that we need real entitlement reform, but Obama wants us to believe that the nation’s fiscal problems can be solved by targeting the rich.

The next cartoon comes from the irreplaceable Michael Ramirez.

I like the multiple messages. He’s nailing Obama for engaging in envy, but I also think he’s helping people understand that it doesn’t make sense to rape and pillage the so-called rich if that means less future production.

You can enjoy some of my other favorite Ramirez cartoons by clicking here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, and here.

P.S. If you like holiday-themed cartoons about class warfare, you can see some Halloween versions here and here.

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Sandra Fluke Now Has a Human Right to Taxpayer-Financed Birth Control

Every so often, I share breakthrough stories about advances in “human rights” around the world.

• In France, it is against the law to say your husband is under-endowed or that your wife is fat.
• Across Europe, a satellite dish is now a human right.
• In Finland, broadband access is a basic right.
• There’s now an entitlement for free soccer broadcasts in Europe.
• In Italy, you have the right to…um…your testicles.

Now, in honor of Sandra Fluke, the United Nations has decided that contraception is a human right. Not just a human right, a universal human right. The New York Times reports on this big news.

The United Nations says access to contraception is a universal human right that could dramatically improve the lives of women and children in poor countries.

So what’s the big deal? Surely people should have the right to buy a condom.

Paid for with your tax dollars?

Yes, but we’re talking about the United Nations, so you won’t be surprised to learn that there shouldn’t be any “financial barriers” to birth control, which means  people have the right to have other people pay for their fun and games.

It effectively declares that legal, cultural and financial barriers to accessing contraception and other family planning measures are an infringement of women’s rights. …The global body also says increasing funding for family planning by a further $4.1 billion could save $11.3 billion annually in health bills for mothers and newborns in poor countries.

Well, Sandra Fluke surely will be happy about this news. Even though national governments safely can ignore U.N. pronouncements, this is yet another sign of a growing dependency mindset.

P.S. Speaking of Sandra Fluke, you can enjoy some laughs with this great Reason video, this funny cartoon, and four more jokes here.

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Europe’s Slow-Motion Fiscal Suicide

I shared an astounding chart last month showing that tax increases account for 90 percent of the so-called “austerity” in Europe.

The author the chart, Veronique de Rugy of the Mercatus Center, calls this “private sector austerity” and she correctly argues that her home continent is in desperate need of some austerity on the public sector instead.

The good news is that more analysts have joined the fight, explaining that Europe is in trouble because of a failure to address the real problem of excessive government spending.

Here are some excerpts from a column in USA Today by Matthew Melchiorre from the Competitive Enterprise Institute, beginning with a good summary of how Europe has erred by choosing to impose austerity on the private sector.

The folly of “austerity” composed mainly of tax hikes with less in the way of spending reductions has driven the economies of the Old World into the ground. We’re next unless Congress keeps Uncle Sam out of Americans’ wallets and takes a chainsaw to Washington’s budget. …How is this likely to pan out? To get an idea, we can look at Europe, which has followed a similar strategy and has had little success in reviving growth. Spending cuts have been weak. Today, not a single Euro Zone government is spending less as a percentage of GDP than it did in 2007, according to Eurostat data. Tax increases, on the other hand, have been rampant. The average cyclically adjusted total tax burden among Euro Zone countries increased by about 5% from 2007 to 2010, according to European Commission data.

Wow, spending hasn’t been reduced but taxes are higher. Sounds a lot like Obama’s disingenuous “balanced approach.”

But there are some exceptions to the big-government consensus. Melchiorre notes that Estonia and other Baltic nations decided to impose genuine budget cuts.

Several Baltic countries have broken the European straitjacket of growth-strangling tax “austerity,” and have enjoyed success relative to their peers as a result. Take Estonia, for example. The Estonian government implemented an austerity program in 2009…cutting into public employee wages by 40% and slashing total government spending by a whopping 16% by 2011.

This is music to my ears. I’ve been advocating the Baltic approach for a couple of years. And it turns out that nations following my Golden Rule get good results.

Estonia’s economy…bounced right back with 2 percent growth the following year and has since continued to prosper. For the past two years, Estonian industry has expanded more than twice as fast as that of Germany. …Tax increases don’t bring about prosperity. Shrinking government to live within its means does.

Amen to that, but I think the final point needs to be expanded. It’s not just that tax increases don’t work. It’s that they make matters worse.

The problem in most nations is that government is too big. In a best-case scenario, tax increases are a substitute for spending restraint. More often than not, though, tax hikes lead to higher levels of government spending.

This brings us back to the current fiscal fight in the United States. Obama has dug in his heels and demanded an increase in the top tax rates. He claims that this class-warfare approach is necessary for fiscal responsibility.

But ask yourself a question. We know that America’s long-run fiscal problem is entitlement spending. Will politicians be more likely or less likely to reform those programs if they think tax increases are an option?

If you answered “more likely,” you should move to Greece and see how well your system is working.

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We Should Worry about the Long-Run Burden of Government, not the Fiscal Cliff

I appeared on CNBC yesterday to talk about the “fiscal cliff” and the potential impact on economic performance.

You won’t be surprised to learn that I’m mostly concerned with how the issue gets resolved. Yes, there is some temporary uncertainty that is probably making markets skittish, but I’m much more worried about Obama bullying the GOP into agreeing to a class-warfare deal that leads to higher tax rates on investors, entrepreneurs, and small business owners, as well as more double taxation on saving and investment.

And the long-run damage caused by a more punitive tax system is much more important than any short-run delay in investment expenditures.

I made two points that deserve some elaboration.

First, not all government spending is created equal. As explained in the Rahn Curve video, outlays to provide core public goods are associated with better economic performance. Expenditures for human capital (education) and physical capital (infrastructure) are a mixed bag, depending on whether governments make wise decisions. The bad news, though, is that the vast majority of current government spending is diverted for what is called transfer and consumption spending, and these forms of redistributive outlays are associated with weaker economic performance.

Second, I’m glad I had the opportunity to explain how America’s fiscal status has deteriorated during the Bush-Obama years. One of the CNBC staff understated the magnitude of the problem by looking at just federal spending as a share of GDP and only over the past few years. I pointed out that total government spending is the right variable, and I explained that the trend line has been moving in the wrong direction since Bill Clinton left office.

In this chart, you can see the bad news using either the methodology of the Office of Management and Budget or the approach of the Organization for Economic Cooperation and Development. Since I’m not sure which approach is right, I basically split the difference when discussing the overall burden of government spending.

Keep in mind, by the way, that these numbers are just the tip of the iceberg. Without real entitlement reform, federal spending as a share of GDP will double and total government outlays will rise to at least 60 percent of GDP.

We need some sort of spending cap, ideally akin to the Swiss Debt Brake. But that won’t happen for at least the next four years.

But maybe, with enough pressure, we can convince politicians to comply with my Golden Rule. After 12 years of excessive spending, it’s time to let the private sector grow faster than the government.

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Higher Taxes Mean Bigger Government, not Lower Deficits

President Obama and other statists in Washington want a big class-warfare tax hike. They claim the additional revenue is necessary to reduce red ink.

But their ideological crusade is based on some blatant distortions.

• They tell us that tax increases are necessary, but even CBO data shows that the budget can be balanced in just 10 years if politicians merely limit federal spending so that it grows by “only” 2.5 percent per year.
• They tell us the “rich” should pay more, but we know upper-income taxpayer have considerable ability to alter the timing, level, and composition of their income, so we can expect significant Laffer Curve effects.
• They tell us that the money will be used to reduce the deficit, but at the same time they want to cancel the sequester, thus eliminating the only source of spending restraint from the 2011 debt-limit agreement.

In other words, the Obama tax hike will make government bigger, even if some naively support the tax hike because they want smaller deficits.

That being said, I’m not overly optimistic that Obama’s divisive proposal can be stopped, largely because I don’t think Republicans will take my advice on how to win this fight.

But at least the American people have an appropriately jaundiced view about what will happen if Obama does prevail.

Here are the results of a recent poll showing that a strong majority understand that more revenue will lead to an expansion in the burden of government spending.

Though I suppose these numbers don’t necessarily show that people are against higher taxes. Perhaps some of the 57 percent want higher taxes because they want more government.

After all, that’s the most logical interpretation of the election results in California, where voters approved a referendum to rape and pillage upper-income taxpayers.

But I suspect – and definitely hope – that most of the 57 percent understand that making America more like Europe is not a desirable outcome.

By the way, I shared some polling data last week showing that CPAs think that changes in tax rates lead to substantial Laffer Curve effects.

They were also asked their opinion on whether higher taxes will be used for deficit reduction.

As you can see, they were even more skeptical than the general public, with more than 60 percent definitely thinking that more revenue in Washington will lead to more spending.

To be sure, there’s no particular reason to think that CPAs have any special insight on this issue. On the Laffer Curve question, by contrast, they presumably do have insider knowledge of how taxpayers respond when tax policy changes.

But I’m digressing. The point of this post is to explain that higher taxes will lead to bigger government.

And if you don’t believe me, then why did the New York Times unintentionally admit that the only budget deal that actually resulted in a budget surplus was the one that cut taxes instead of raising them?

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In World Bank’s New Tax Report Card, “High Effort” Is a Very Bad Thing

Remember when you were a kid and your parents would either be happy or angry depending on whether your report card said you were trying hard or being a slacker? No matter whether your grades were good or bad, it helped to get an “A for Effort.”

But sometimes a high level of effort isn’t a good thing.

The World Bank has a new study that measures national tax burdens. But instead of using conventional measures, such as top tax rates or tax collections as a share of GDP, the international bureaucracy has developed an index that measures “tax effort” and “tax capacity” after adjusting for variables such as per-capita GDP, corruption, and demographics.

One goal of the study is to develop an apples-to-apples way of comparing tax burdens for nations at various levels of development. Poor nations, for instance, tend to have low levels of tax revenue even though they often have high tax rates. This is partly because of Laffer Curve reasons, but perhaps even more so because of corruption and incompetence. Rich nations, by contrast, usually have much greater ability to enforce their tax codes. So if you want to compare the tax system of Paraguay with the tax system of Sweden, you need to take these factors into account.

Here’s a description of how the authors addressed this issue.

Measuring taxation performance of countries is both theoretically and practically challenging. …tax economists have attempted to deal with this problem by applying an empirical approach to estimate the determinants of tax collection and identify the impact of such variables on each country’s taxable capacity. The development of a tax effort index, relating the actual tax revenues of a country to its estimated taxable capacity, provides us with a tempting measure which considers country specific fiscal, demographic, and institutional characteristics. …Tax effort is defined as an index of the ratio between the share of the actual tax collection in GDP and the taxable capacity.

This is a worthwhile project. There sometimes are big differences between nations and those should be part of the equation when comparing tax policies. Indeed, this is why my recent post on the rising burden of the value-added tax looked at data for nations at different levels of development.

But I’m irked by the World Bank study because it’s really measuring “tax onerousness.” I’m not even sure onerousness is a word, but I sure don’t like the term “tax effort” because it implies that a higher tax burden is a good thing. After all, we learned from our report cards that it’s good to demonstrate high effort and not be a slacker.

And just so you know I’m not just imagining things, the authors explicitly embrace the notion that bigger tax burdens are desirable. They assert (without any evidence, of course) that higher levels of tax promote “development” and that more money for politicians is “desirable.”

The international development community is increasingly recognizing the centrality of effective taxation to development. …higher tax revenues are important to lower the aid dependency in low-income countries. They also encourage good governance, strengthen state building and promote government accountability. …many developing countries experience a chronic gap between the actual and desirable levels of tax revenues. Taxation reforms are needed to close this gap.

If the authors of the study looked at economic history, they would understand that they have things backwards. “Effective taxation” doesn’t lead to “development.” It’s the other way around. The western world became rich when the burden of government was very small and most nations didn’t even have income tax regimes. It was only after nations because prosperous that politicians figured out how to extract significant shares of economic output.

But let’s set that aside and see which nations have the most and least onerous tax systems. Here’s a table from the report and it seems that Papua New Guinea has the world’s worst tax system and Bahrain has the best tax system. Among developed nations, New Zealand is the worst and Japan is the best. The United States (circled in red) gets a decent score. We’re not nearly as good as Switzerland and we’re slightly worse than Canada, but our politicians expend less “effort” than their counterparts in nations such as France, Italy, and Belgium.

By the way, I’m not endorsing either the methodology or the results. I like what the authors are trying to do (at least in terms of creating an apples-to-apples measure), but some of the results seem at odds with reality. New Zealand’s tax system isn’t great, but it certainly doesn’t seem as bad as the French tax code. And I have a hard time believing that Japan’s tax code is less onerous than the Swiss system.

The World Bank study also breaks down the data so that countries can be put into a matrix based on how much money they collect and how much “effort” they expend.

Here’s where the authors let their bias show. In their descriptions of the various boxes, they reflexively assume that higher tax collections are a good thing. Here is some of what they wrote in that section of the study.

The collection of taxes in this group of countries is currently low and lies below their respective taxable capacity. These countries have potential to succeed in deepening comprehensive tax policy and administration reforms focusing on revenue enhancement. …Botswana and Chile were originally in the low-effort, low-collection group, but they made it to the high-effort, high-collection group after recent improvements in revenue performance. …Although countries in this [high collection, low effort] group have already achieved a high tax collection, fiscally they still have the potential to implement reforms to reduce distortions and reach a higher level of efficiency of tax collection, since their tax effort index is low.

Very Orwellian, wouldn’t you say? We’re supposed to conclude that it’s bad if nations are “below their respective taxable capacity” because they can “succeed in deepening comprehensive tax policy” for purposes of “revenue enhancement.” Other nations, though, got gold stars because of “improvements in revenue performance.” And others were encouraged to try harder, even if they already collected a lot of revenue, in order to “reach of a higher level of efficiency of tax collection.”

But, to be fair, the study does include some semi-sensible comments acknowledging that there are limits to the greed of the political class. For all intents and purposes, the authors warn that there will be Laffer Curve effects if “high effort” nations seek to make their tax systems even more onerous.

Given that the level of tax intake in this group of countries is already high and stays above their respective taxable capacity, a further increase in tax revenue collection may lead to unintended economic distortions. …low-income countries with a low level of tax collection but high tax effort have less opportunity to increase tax revenues without possibly creating distortions or high compliance costs.

Just in case you’re not familiar with the lingo, “distortion” refers to the economic damage caused by high tax rates. This can be because high tax rates lead to a reduction in work, saving, investment, entrepreneurship, and other productive behaviors. Or it can be because high tax rates encourage people to make economically inefficient choices solely for tax planning purposes.

So the fact that the World Bank recognizes that taxes can hurt economic performance in at least some circumstances puts them ahead of the Congressional Budget Office and Joint Committee on Taxation. That’s damning with faint praise, to be sure, but I wanted to close on an upbeat note.

P.S. If you peruse the matrix, you’ll notice that New Zealand is considered a developing country. I’m sure that will be the source of amusement to my friends in Australia.

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Now that the Election Is Over, the Washington Post Admits that the Obama Recovery Has Been Terrible

I agree that Obama inherited a crappy economy, and I think it is silly to assert that he bears any responsibility for the severity of the 2007-2009 recession.

But it is very fair to hold him responsible for what’s happened since the recession ended. I’ve cited data from the Minneapolis Federal Reserve on both employment and gross domestic product to show that Obama has presided over the weakest recovery in the post-World War II period.

And I think it is fair to blame Obama for the economy’s anemic performance during that time, largely because his agenda of faux stimulus and Obamacare exacerbated the statist policies of Bush. In other words, he promised “hope” and “change,” but delivered more of the same.

Well, now that the election is over, even the Washington Post is willing to admit that Obama’s economic performance is dismal. Here’s a remarkable chart showing that growth is far below the average.

There are actually two very important conclusions to draw from this chart.

• First, the economy has not recovered the lost output from the recession, which is a point made by Nobel laureate Robert Lucas. That’s bad news.
• Second, it appears that the economy is now a lower-growth trend line. That’s worse news.

Indeed, I fear permanently lower growth is the legacy of the Bush-Obama years. We now have a substantially bigger burden of government spending, and things will get worse rather than better in the absence of real entitlement reform.

And we have a lot more cronyism and interventionism, which undermines economic efficiency. To make matters worse, Obama wants higher tax rates and more double taxation of saving and investment.

To be blunt, those are not the policies that create jobs and wealth.

Last century, a good rule of thumb was that the United States was about halfway between the high-growth, small-government economics such as Hong Kong and Singapore and the low-growth, big-government economies of Europe.

But as we move closer and closer to European-style economic policy, it should be no surprise that we get anemic European-style economic performance.

We know the recipe for growth and prosperity. But the political elite is oblivious or doesn’t care.

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Two Cheers for Spain’s Anti-Tax “Carrot Rebellion”

If there was a prize for fighting back against tax authorities, the Italians would probably deserve first place. I’m not aware of any other country where tax offices get firebombed. The Italians also believe in passive forms of resistance, with tens of thousands of boat owners sailing away to protect themselves from the government.

But the Spanish are beginning to get into the swing of things, perhaps because they are increasingly upset by the plethora of tax hikes imposed by the supposedly right-of-center government in Madrid.

Here’s part of a report from NPR about a new tax revolt on the Iberian Peninsula.

When the Spanish government hiked sales tax on theater tickets this past summer, Quim Marcé thought his theater was doomed. With one in four local residents unemployed, Marcé knew that even a modest hike in ticket prices might leave the 300-seat Bescanó municipal theater empty.

So what did he do to protect the theater from fiscal destruction?

Taxes are revolting, so why aren’t you?

“We said, ‘This is the end of our theater, and many others.’ But then the next morning, I thought, we’ve got to do something, so that we don’t pay this 21 percent, and we pay something more fair,” says Marcé in Spanish. …He…suddenly had an idea: Instead of selling tickets to his shows, he’d sell carrots. “We sell one carrot, which costs 13 euros [$16] -– very expensive for a carrot. But then we give away admission to our shows for free,” he explains in Spanish. “So we end up paying 4 percent tax on the carrot, rather than 21 percent, which is the government’s new tax rate for theater tickets.” Classified as a staple, carrots are taxed at a much lower rate and were spared new tax hikes that went into effect here on September 1.

Very clever. Senor Marcé is getting lots of praise for his novel approach, though it’s unclear whether the ravenous tax bureaucrats will come up with some sort of ruling to squash the tax revolt.

Spanish media have dubbed this the “Carrot Rebellion,” and the Bescanó theater has won kudos from arts advocates nationwide. Shows are sold out. …Marcé, the theater director, says he consulted a lawyer before launching his carrot sales. He’s got backing from the local mayor too. And no one has stopped him so far. …He says he’s a little worried the government might declare it illegal to sell carrots at theaters. But dozens of foods are considered “staples” and taxed at only 4 percent. So if that happens, Marcé says he might switch to selling tomatoes instead.

And if he has some leftover tomatoes that are rotten, perhaps they can be used – along with spoiled eggs and moldy cabbage – to express appreciation for any tax collectors that happen to visit (I won’t say what the carrots can be used for).

So why doesn’t the title of this post award “three cheers” for this Spanish tax revolt?

Well, as much as I admire non-compliance when tax systems are too onerous, I suspect that these Spaniards are protesting against the idea that they should pay for big government, but I wouldn’t be surprised to learn that they very much support a bloated welfare state if someone else is picking up the tab.

In other words, they’re probably hypocrites, and I wouldn’t be shocked to learn that their Irish and Greek compatriots also are protesting for the wrong reason.

Moreover, it’s not specified in the article, but I’m quite certain that the Spaniards actually are protesting in favor of tax distortions. The 4 percent tax on carrots and other “staples” presumably is a special exception to the normal value-added tax of 21 percent.

If they were protesting the VAT, I would give them three cheers, but if they’re simply protesting the fact that theater tickets are now treated the same as most other forms of consumption, then I’m tempted to give this tax revolt only one cheer.

But I’ll still give them two cheers because I’m in favor of just about anything that will reduce the amount of money diverted to finance government.

That’s because the real fiscal problem, in Spain and the United States, is that government is far too big. And trying to curb the rapacious appetites of politicians with a tax hike is akin to trying to cure a group of alcoholics by giving them the keys to a liquor store.

P.S. The greedy Spanish government may have jacked up some tax rates so high that they could be beyond the revenue-maximizing point, though I doubt the politicians care. Heck, even international bureaucracies such as the IMF have figured out that it’s self-destructive to push tax rates so high that governments lose revenue.

P.P.S. Just to cover my you-know-what, allow me to take this opportunity to stress that maximizing revenue should not be the goal of tax policy. I’m a big fan of the Laffer Curve, to be sure, but policy makers should target the growth-maximizing point.

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Even British Journalists Are Beginning to Acknowledge that Guns Deter Crime

While I have great admiration and affection for the English people, most of them are downright daft on the issues of guns. And the politicians are the worst of the lot, having imposed draconian gun bans.

But they’ve gone way beyond run-of-the-mill gun control.

This is the nation, for instance, that arrested a man for the “crime” of turning in a gun found on his property. Yes, you read correctly. I’m not making that up.

The government is so bloody clueless on this issue that we’ve seen mind-boggling examples of anti-gun political correctness.

• Disciplining children for making gun shapes with their hands.
• Banning starting pistols at races.
• Proposing to bar children from Olympic shooting events.
• A bookstore putting shooting magazines in the porn section.
• Arresting a woman for brandishing a knife to scare away thugs.

Okay, I cheated. The last example was about a knife rather than a gun, but I think it underscores the central point that the UK government believes in a helpless and passive citizenry.

But perhaps, in a small way, we’re seeing a bit of progress. It seems that a few people realize that this culture of surrender and appeasement isn’t always a good idea.

At least when it comes to thwarting pirates. Here is an excerpt from The Economist about a big decline in attacks off the Horn of Africa.

…the fall in the number of successful hijackings since the peak of 2009-11 has been dramatic. The International Maritime Bureau, a body that fights shipping crime, counted 219 cases of pirates trying to board a vessel in 2010 and 236 in 2011. This year’s total is just 71, against 199 for the same period last year. Successful seizures are down from 49 in 2010 to 28 in 2011 and only 13 this year.

Want to take a wild guess about the reason?

Five out of five pirates surveyed prefer unarmed victims

Yup, you’re right. Guns.

…the biggest game changer of all is…that more than a quarter of vessels now carry armed security guards. The shipping industry used to oppose this, fearing that armed guards would escalate violence. But not a single vessel with guards has been boarded. Usually a warning shot is enough to deter the pirates. Lieut-Commander Sherrif says: “The pirates go to sea to make money, not die in a firefight.” BIMCO, the biggest international shipping organisation, has recently produced a standard contract for the industry, known as GUARDCON. Most of the security firms supplying guards are British. Admiral Rix says that his company hires mostly former Royal Marines.

Let’s emphasize part of that passage. It says that “not a single vessel with guards has been boarded.”

That’s a perfect batting average. As John Lott might say, this is an example of “more guns, less crime.” What a novel idea.

Now for the bad news. I doubt that the writers at The Economist or the politicians at Westminster will draw the right lesson from any of this.

So we still have a long way to go before we liberate the British people from the anti-gun superstitions of the political elite. Maybe we should share these very clever pro-gun images (here, here, here, here, here, and here) with our friends on the other side of the Atlantic.

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The United Kingdom Throws Down the Gauntlet with a Strong Entry in the Government Stupidity Contest

I periodically compare moronic decisions and policies by governments in the United States and United Kingdom. You can peruse some jaw-dropping examples by clicking this link.

To show that politicians and bureaucrats don’t have a monopoly on stupidity, I’ve also shared a pair of examples that expose foolishness in the private sector.

“Won’t anyone take free money?”

I think the contest has been pretty even to date, but now we have an entry from the United Kingdom that may be hard to beat. The government created a new boondoggle program, but managed to make it so convoluted that no households have signed up for the handouts.

This is astounding. How incompetent does a government have to be that it can’t even give away money? Here are some laughable excerpts from the Telegraph.

The Green Deal encourages homeowners to take out a loan to make their house more energy-efficient. …households have had since October 1 to have their home assessed for the scheme prior to its launch. However Greg Barker, the climate change minister, has admitted that “no assessments have yet been lodged” on the Government’s official register by homeowners. Luciana Berger, the shadow climate change minister, described the Green Deal as a “shambles” and said its launch is “lying in tatters”. The Coalition hopes that owners of up to 14 million draughty homes will sign up to the scheme. …In an effort to kick-start interest, DECC last month announced a £125 million ‘cashback’ scheme, offering homes up to £1,000 if they sign up as ‘early adopters’. Ms Berger said that homeowners are being put off by the Deal’s complicated finance arrangements.

Not only did the giveaway fail to attract any household beneficiaries, only one firm out of 10,000 signed up to be “accredited Green Deal” participants.

As well as lack of interest from homeowners, building companies are also shying away from getting involved. According to the Federation of Master Builders, the UK’s biggest building trade body, only one firm from its 10,000-strong membership has signed up to become an accredited Green Deal installer.

Again, this is remarkable. When a government is too incompetent to give away other people’s money, you know that’s special.

Sadly, this is the exception rather than the rule. The burden of government spending is excessive in the United Kingdom, in part because of the faux budget cuts of David Cameron’s CINO regime.

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Must-Watch Video From Reason TV on How Free Markets – not Obamacare – Can Solve the Healthcare Mess

When I travel, particularly overseas, I run into a lot of people who are totally confused about the American healthcare system.

For all intents and purposes, they think the United States relies on the free market and that government (at least in the pre-Obamacare era) was largely absent.

So they are baffled when I tell them that nearly one-half of all health expenditures in America are directly financed by taxpayers  and that the supposedly private part of our healthcare system is massively distorted by government interference and intervention.

When explaining how government has screwed up private health insurance, I talk about third-party payer and  how genuinely private insurance works for home ownership and automobiles. And I cite examples of genuine free markets for cosmetic surgery and even (regardless of your views) abortion.

But from now on, I think I will simply tell people to watch this superb video from Reason TV.

This shows how a true free market operates. Efficiency and low prices are the norm, and consumers get a good deal.

My only quibble is that the video doesn’t explain how government policies – such as the healthcare exclusion in the tax code – should be blamed for the grotesque waste, inefficiency, and featherbedding in most parts of the medical industry.

But that’s a minor gripe. You should share this post with any and all fuzzy-headed friends and colleagues and tell them this is how smoothly the market would work if the government simply would get out of the way.

And if they want another example, here’s a report from North Carolina on free-market healthcare in action.

If we want this kind of system to be the rule rather than the exception, we need to scrap the healthcare exclusion in the tax code as part of a switch to a simple and fair flat tax. That will help bring some rationality to the health insurance market and address the part of the third-party payer crisis caused by indirect government intervention.

Then we also should reform Medicaid and Medicare to help address the part of the third-party payer crisis caused by the direct government intervention.

P.S. As this poster cleverly illustrates (and as Ronald Reagan correctly warned in the second video of this post), government is the problem, not the solution.

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Cartoonists Mock Obama’s Class-Warfare Agenda

I suppose I should write something serious about Obama’s class-warfare agenda, but I’m in Iceland and it’s almost time to head into Reykjavik for dinner. So let’s simply enjoy some humor that gets across the points I would make anyhow.

We’ll start with this great cartoon from Lisa Benson. In a perfect world, this monster would be named “Big Government.” But I’m not complaining too much since the obvious implication of the cartoon is that the soak-the-rich tax hikes will make the deficit worse – which implies that politicians will spend the money and/or that there will be a Laffer Curve response leading to less revenue than politicians predict.

You can see some of my favorite Benson cartoons here, here, here, here, here, here, here, here, here, here, and here.

Here’s a similar cartoon. But instead of feeding a deficit monster, it shows that a tax hike will enable a bunch of politicians to continue their binging at our expense.

Holbert is relatively new to me. The only other cartoon of his that I’ve used (at least than I can remember) can be seen here.

Our final cartoon isn’t about Obama’s class-warfare proposal, but it does show where we’re going if we allow the politicians to continue down the path of tax-and-spend dependency.

You can see two additional Glenn Foden cartoons by clicking here and here.

I especially like the “spa” comment in the basket cartoon. Sort of reminds me of the “frog” story showing how it would be impossible to impose statism in one fell swoop. People would recognize the danger and immediately revolt, much as a frog would immediately hop out if you tried to drop it in boiling water. But just as you can lure a frog into danger by putting it in lukewarm water and slowing turning up the heat until it’s been too weakened to escape, you can also slowly but surely hook people on dependency by creating little programs and eventually turning them into big programs.

That’s sort of where we are today. The burden of government spending has exploded and will get even worse if we don’t enact serious entitlement reform. But too many people now can’t envision a world other than the status quo and they are fearful of change – even though inaction eventually means a Greek-style fiscal crisis.

P.S. Given the theme of this post, you will probably enjoy this Chuck Asay cartoon and this Henry Payne cartoon. Or perhaps you won’t enjoy them if you stop and think about what they’re really saying. But they are both gems, so try to focus only on the humor.

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In a Debate for U.S. News & World Report, I Argue Obama’s Plan Is Worse than the Fiscal Cliff

I took part today in a nine-person debate on the fiscal cliff for U.S. News & World Report. We were all asked, “Is Going Over the ‘Fiscal Cliff’ Necessarily the Worst Outcome?”

I said “no” because there are worse options, and I specifically explained that Obama’s class warfare agenda is even more destructive.

Readers are allowed to vote up or down on each presentation, so I’ll be curious about the outcome.

Here are some of the key excerpts from my contribution to the debate, including a defense of the sequester and a very important point at the end about the Laffer Curve.

America actually will fall off two fiscal cliffs in January, but only one of them is bad. The good fiscal cliff is the so-called sequester, which is the inside-the-beltway term for automatic spending cuts. …anything that restrains the growing burden of government spending is a good idea, so a small step is better than nothing. The bad fiscal cliff is the automatic tax hike, which exists because the 2001 and 2003 tax cuts are scheduled to expire at the end of the year. This means higher tax rates for all taxpayers, as well as increased double taxation of dividends and capital gains. …that fiscal cliff would be bad news, it’s not the worst possible outcome. President Barack Obama has proposed a class-warfare plan that would repeal the sequester and maintain—and exacerbate—the tax hikes on the so-called rich. …But it gets worse. Obama wants to double the size of the soak-the-rich tax hikes, thus maximizing the potential harm to job creation. In other words, not just the automatic tax increases, but then additional tax hikes on top of that—all designed to penalize success and innovation. If Obama prevails, he’ll be rewarded for dogmatism, but he won’t find a pot of gold at the end of the class-war rainbow. Successful taxpayers will adjust their behavior in ways that reduce taxable income, which means the government won’t get much money even though it will impose a lot of damage.

Since I had only limited space for my essay, let me briefly elaborate by stating that the fiscal cliff is not the right outcome. As I explained in a column for the New York Daily News, the best option would be to keep the sequester and make all the tax cuts permanent.

Will GOP sheep accept Obama’s bad fiscal-cliff proposal?

But if I have to choose between the maximum destructiveness of Obama’s approach and the routine nastiness of the fiscal cliff, then I’ll take the latter.

By the way, if my subtle hint from above wasn’t sufficiently blunt, I’ll close by emphasizing that your support would be most welcome and highly appreciated. So don’t be bashful about going to this link and voting your conscience (unless, of course, you’re a statist, in which case you should keep reading this blog until you’ve cast out that demon).

I’ve prevailed in previous debates on makers-v-takers, double taxation, European fiscal policy, flat tax, Internet taxation, and Obamanomics. With your support, I can keep that good streak alive.

P.S. The only good cartoons I’ve seen about the fiscal cliff can be seen here and here.

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