Mark Steyn Correctly Worries about Obama’s Looming Syrian Adventure

I’ve already shared some analysis of Mark Steyn’s libertarian-leaning views on foreign policy, so it’s very timely to see what he just wrote about Syria.

Here’s some of his new article in National Review. His humor is sharp, but he makes a very important point.

The administration’s ingenious plan is to lose this war in far less time than we usually take. In the unimprovable formulation of an unnamed official speaking to the Los Angeles Times, the White House is carefully calibrating a military action “just muscular enough not to get mocked.” That would make a great caption for a Vanity Fair photo shoot of Obama gamboling in the surf at Martha’s Vineyard, but as a military strategy it’s not exactly Alexander the Great or the Duke of Wellington.  …From the New York Times: “A wide range of officials characterize the action under consideration as ‘limited,’ perhaps lasting no more than a day or two.” Yeah, I know, that’s what Edward III said about the Hundred Years’ War. But Obama seems to mean it

Steyn notes that British voters already have said no to “ineffectual warmongering.”

This week, David Cameron recalled Parliament from its summer recess to permit the people’s representatives to express their support for the impending attack. Instead, for the first time since the British defeat at Yorktown in 1782, the House of Commons voted to deny Her Majesty’s Government the use of force. Under the Obama “reset,” even the Coalition of the Willing is unwilling. …“This House will not fight for king and country”? Not exactly. What the British people are sick of, quite reasonably enough, is ineffectual warmongering.

For what it’s worth, Obama doesn’t think he should be bound by that silly little clause in the Constitution about only Congress having the power to declare war. Which at least makes him consistent, since he doesn’t feel bound by the fact that Article I, Section 8, doesn’t authorize the federal government to be involved in health care.

But I’m digressing. Let’s look at what Steyn identifies as the real problem. We account for a huge share of the globe’s military spending, yet we don’t get much bang for the buck.

The problem with the American way of war is that, technologically, it can’t lose, but, in every other sense, it can’t win. No one in his right mind wants to get into a tank battle or a naval bombardment with the guys responsible for over 40 percent of the planet’s military expenditures. Which is why these days there aren’t a lot of tank battles. The consummate interventionist Robert Kagan wrote in his recent book that the American military “remains unmatched.” It’s unmatched in the sense that the only guy in town with a tennis racket isn’t going to be playing a lot of tennis matches. …America’s inability to win ought to be a burning national question, but it’s not even being asked.

Particularly since there are no real friends competing to rule Syria.

For a quarter-century, from Kuwait to Kosovo to Kandahar, the civilized world has gone to war only in order to save or liberate Muslims. The Pentagon is little more than central dispatch for the U.S. military’s Muslim Fast Squad. And what do we have to show for it? Liberating Syria isn’t like liberating the Netherlands: In the Middle East, the enemy of our enemy is also our enemy.  …So we’ll get rid of Assad and install the local branch of al-Qaeda or the Muslim Brotherhood or whatever plucky neophyte democrat makes it to the presidential palace first — and then, instead of napalmed schoolyards, there will be, as in Egypt, burning Christian churches and women raped for going uncovered.

Steyn then summarizes what’s at stake.

…the hyperpower is going to war because Obama wandered off prompter and accidentally made a threat. So he has to make good on it, or America will lose its credibility. But he only wants to make good on it in a perfunctory and ineffectual way. So America will lose its credibility anyway.

It’s unfortunate that politicians misallocate military spending for parochial reasons, but it’s equally worrisome that they risk blood and treasure in ways that don’t make sense.

Syrian intervention, however, would take foolishness to an entire new level.

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A Funny Look at How Obamacare Screws Young People

During the big-spending Bush years, economic and fiscal people inside the Administration often would sympathize with my complaints about bad policy, but say that there was nothing they could do since all the big decisions were being made by the political types in the White House.

In other words, Karl Rove and his crew were the ones who helped encourage Bush to hurt the country for short-run political gain.

So you can imagine I’m reluctant to give favorable attention to anything associated with Rove, but this new video from one of his organizations is too good not to share. The Department of Health and Human Services has a video contest to sucker gullible young people into signing up for Obamacare, and here’s the satirical gem put together by Crossroads GPS.

And since we’re mocking the Obama Administration’s wasteful video contest, let’s enjoy a great Lisa Benson cartoon on the same topic.

Perhaps not quite as good as my all-time favorite Benson cartoon, which perfectly captures Obama’s fiscal policy, but still an excellent contribution to the debate.  I also very much like her fiscal cliff cartoon, this Keynesian economics cartoon, and this one about jump-starting the economy with tax hikes.

In conclusion, let’s remember that young people are suffering for reasons other than Obamacare. Here’s a video from the Center for Freedom and Prosperity Foundation that looks at four examples of how Obamanomics is especially bad news for those under age 30.

Though, to be fair, everyone is suffering from the President’s statist policies. As shown by these charts from the Minneapolis Federal Reserve, the United States is enduring the weakest economic recovery since the Great Depression.

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Mirror, Mirror, on the Wall, Barack Obama (Surprisingly) Is Not the Biggest Spender of All

I got involved in a bit of a controversy last year about presidential profligacy.

Some guy named Rex Nutting put together some data on government spending and claimed that Barack Obama was the most frugal President in recent history.

I pointed out that Mr. Nutting’s data left something to be desired because he didn’t adjust the numbers for inflation.

Moreover, most analysts also would remove interest spending from the calculations since Presidents presumably shouldn’t be held responsible for servicing the debt incurred by their predecessors.

But even when you make these adjustments and measure inflation-adjusted “primary spending,” it turns out that Nutting’s main assertion was correct. Obama is the most frugal President in modern times.

When you look at the adjusted numbers, though, Reagan does a lot better, ranking a close second to Obama.

I also included Carter, Nixon, and LBJ in my calculations, though it’s worth noting that none of them got a good score. Indeed, President Johnson even scored below President George W. Bush.

Some of you may be thinking that I made a mistake. What about the pork-filled stimulus? And all the new spending in Obamacare?

Most of the Obamacare spending doesn’t begin until 2014, so that wasn’t a big factor. And I did include the faux stimulus. Indeed, I even adjusted the FY2009 and FY2010 numbers so that all of stimulus spending that took place in Bush’s last fiscal year was credited to Obama.

So does this mean Obama is a closet conservative, as my misguided buddy Bruce Bartlett has asserted?

Not exactly. Five days after my first post, I did some more calculations and explained that Obama was the undeserved beneficiary of the quirky way that bailouts and related items are measured in the budget.

It turns out that Obama supposed frugality is largely the result of how TARP is measured in the federal budget. To put it simply, TARP pushed spending up in Bush’s final fiscal year (FY2009, which began October 1, 2008) and then repayments from the banks (which count as “negative spending”) artificially reduced spending in subsequent years.

And when I removed TARP and other bailouts from the equation, Obama plummeted in the rankings. Instead of first place, he was second-to-last, beating only LBJ.

But this isn’t the end of the story. My analysis last year only looked at the first three years of Obama’s tenure.

We now have the numbers for his fourth year. And if you crank through the numbers (all methodology available upon request), you find that Obama’s numbers improve substantially.

As the table illustrates, inflation-adjusted non-interest spending has grown by only 0.2 percent per year. Those are remarkably good numbers, due in large part to the fact that government spending actually fell in nominal terms last year and is expected to shrink again this year.

We haven’t seen two consecutive years of lower spending since the end of the Korean War!

Republicans can argue, of course, that the Tea Party deserves credit for recent fiscal progress, much as they can claim that Clinton’s relatively good numbers were the result of the GOP sweep in the 1994 elections.

I’ll leave that debate to partisans because I now want to do what I did last year and adjust the numbers for TARP and other bailouts.

In other words, how does Obama rank if you adjust for the transitory distorting impact  of what happened during the financial crisis?

Well, as you can see from this final table, Obama’s 2013 numbers are much better than his 2012 numbers. Instead of being in second-to-last place, he’s now in the middle of the pack.

I used a slightly different methodology this year to measure the impact of TARP and related items, so all of the numbers have changed a bit, but Reagan is still the champ and everyone else is the same order other than Obama.

So what does all this mean?

As I constantly remind people, good fiscal policy occurs when the burden of government spending is falling as a share of economic output.

And this happens when policy makers follow my Golden Rule and restrain spending so that it grows slower than the private economy.

That’s actually been happening for the past couple of years. Even after you adjust for the quirks of how TARP repayments get measured.

I’m normally a pessimist, but if advocates of small government can maintain the pressure and get some concessions during the upcoming fights over  spending levels for the new fiscal year and/or the debt limit, we may even see progress next year and the year after that.

And if we eventually get a new crop of policymakers who are willing to enact genuine entitlement reform, the United States may avoid the future Greek-style fiscal crisis that is predicted by the BIS, OECD, and IMF.

That would almost be as good as a national championship for the Georgia Bulldogs!

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Another Failed Gun Control Experiment

It sounds strange, but my two favorite columns on gun control were authored by self-identified leftists. But they didn’t let ideology trump common sense.

Justin Cronin, for instance, explained that restrictions on gun ownership undermined his ability to protect his family. And Jeffrey Goldberg looked at the evidence and concluded that guns make people safer.

This doesn’t mean I don’t appreciate gun control columns by non-leftists. This Larry Correia piece, for instance, is must reading if you want to understand about magazine limits and so-called assault weapons.

And if you like real-world evidence, Jeff Jacoby of the Boston Globe examines what happened after Massachusetts adopted onerous gun control legislation. He starts by explaining the law and what supporters promised.

In 1998, Massachusetts passed what was hailed as the toughest gun-control legislation in the country. Among other stringencies, it banned semiautomatic “assault” weapons, imposed strict new licensing rules, prohibited anyone convicted of a violent crime or drug trafficking from ever carrying or owning a gun, and enacted severe penalties for storing guns unlocked. …One of the state’s leading anti-gun activists, John Rosenthal of Stop Handgun Violence, joined the applause. “The new gun law,” he predicted, “will certainly prevent future gun violence and countless grief.” It didn’t.

Legal gun ownership plummeted.

The 1998 legislation did cut down, quite sharply, on the legal use of guns in Massachusetts. Within four years, the number of active gun licenses in the state had plummeted. “There were nearly 1.5 million active gun licenses in Massachusetts in 1998,” the AP reported. “In June [2002], that number was down to just 200,000.”

Jacoby then explains, however, that the advocates of gun control were not very successful in restraining the behavior of criminals.

But the law that was so tough on law-abiding gun owners had quite a different impact on criminals. Since 1998, gun crime in Massachusetts has gotten worse, not better. In 2011, Massachusetts recorded 122 murders committed with firearms, the Globe reported this month — “a striking increase from the 65 in 1998.” Other crimes rose too. Between 1998 and 2011, robbery with firearms climbed 20.7 percent. Aggravated assaults jumped 26.7 percent.

Gee, what a surprise. The bad guys responded to incentives and committed more crimes once they knew that victims were less likely to be in a position to defend themselves.

To be fair, the statists do have a response.

Don’t hold your breath waiting for gun-control activists to admit they were wrong. …“Massachusetts probably has the toughest laws on the books, but what happens is people go across borders and buy guns and bring them into our state,” rationalizes Boston Mayor Tom Menino. “Guns have no borders.”

But here’s where Jacoby administers a knock-out punch. He looks at evidence from other states and shows that there’s no plausible alternative explanation to the proposition that more gun control is correlated with more crime.

…why didn’t the gun-control lobby warn legislators in 1998 that adopting the toughest gun law in America would do Massachusetts no good unless every surrounding state did the same thing? Far from explaining why the new law would do nothing to curb violent crime, they were positive it would make Massachusetts even safer.  …But crime in Massachusetts didn’t just continue, it began climbing. As in the rest of the country, violent crime had been declining in Massachusetts since the early 1990s. Beginning in 1998, that decline reversed — unlike in the rest of the country. …Guns-across-borders might have explained homicide levels in Massachusetts continuing unchanged. But how can other states’ policies be responsible for an increase in Massachusetts homicides? Relative to the rest of the country, or to just the states on its borders, Massachusetts since 1998 has become a more dangerous state. …In 1998, Massachusetts’s murder rate equaled about 70 percent of the rate for Vermont, New Hampshire, Maine, Connecticut, Rhode Island, and New York. Now it equals 125 percent of that rate. Clearly something bad happened to Massachusetts 15 years ago. Blaming the neighbors may be ideologically comforting. But those aren’t the states whose crime rates are up.

Game. Set. Match.

But just in case you’re still not convinced, check out some of the empirical work generated by John Lott.

• 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.
• Lott debunked myths about so-called assault weapons.

Or check out some of the fact-based research on guns and crime by David Kopel.

In other words, even if you don’t care about the Constitution, there’s no case for gun control. Jeff Jacoby’s column is simply the 100th nail in the coffin.

P.S. Since I usually try to include something at least  vaguely amusing in my posts, click here to see some of my favorite examples of gun control humor.

P.P.S. You probably won’t be surprised to learn that cops overwhelming agree that gun control  is ineffective.

P.P.P.S. Jacoby does very good work and deserves more attention. Here are links to some of his columns that caught my eye.

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Even European Commission Bureaucrats Realize that Taxes Can Be Too High!

I’m not a big fan of the European Commission. For those not familiar with this entity, it’s sort of the European version of the executive-branch bureaucracy we have in Washington. And like their counterparts in Washington, the Brussels-based bureaucracy enjoys a very lavish lifestyle while pushing for more government and engaging in bizarre forms of political correctness.

But just as a stopped clock is right twice a day, it appears that the European Commission is right once every century. Or perhaps once every millennium would be more accurate. Regardless, here are parts of a story I never thought would appear in my lifetime.

Olli Rehn: “Taxes shouldn’t be any higher than this”

According to the UK-based Independent, the European Commission – or at least one European Commissioner – now realizes that there’s such a thing as too much tax.

Tax increases imposed by the Socialist-led government in France have reached a “fatal level”, the European Union’s commissioner for economic affairs said today. Olli Rehn warned that a series of tax hikes since the Socialists took power 14 months ago – including €33bn in new taxes this year – threatens to “destroy growth and handicap the creation of jobs”.

Wow, that sounds like something I might have said.

But even though I endorsed him, Hollande has ignored my advice.

President Hollande has kept his electoral promise to attack French deficits and accumulated debt. He has done so, however, almost entirely by tax increases rather than by cuts in a state apparatus which swallows 56.6 per cent of the country’s GDP.

It’s worth noting, by the way, that tax hikes haven’t worked. Deficits today are still far higher than they were before the financial crisis. Yet the crazy French are not slowing down.

it has emerged that final budget plans for 2014 will include at least €6bn in tax rises. This figure does not include the impact of a programmed rise in the basic rate of VAT from 19.6 per cent to 20 per cent from January next year. …Mr Hollande’s 75 per cent “temporary” tax on incomes over €1m – also blocked by constitutional objections – may also finally take effect in 2014.

Geesh, no wonder even European bureaucrats are saying enough is enough.

Just like the IMF said that Greece had reached the tipping point where taxes were too high.

Just like the United Nations acknowledged the Laffer-Curve insight that taxes can be too high.

Just like the OECD admitted that better tax policy leads to more taxable income.

Just like the European Central Bank found big Laffer-Curve responses to changes in tax policy.

Hmmm…, makes you begin to think there’s a pattern and that people finally understand the Laffer Curve. Though let’s not get too optimistic since this common-sense observation about tax rates, taxable income, and tax revenue has not had any impact on the pro-tax bureaucrats at the Joint Committee on Taxation in Washington. But that’s a separate story.

I feel guilty about writing something favorable about the European Commission, so I want to close with some information showing that this bureaucracy is on the wrong side more than 99 percent of the time. Which should surprise anyone since it is headed by a former Maoist (who is eminently forgettable – other than the fact that he is unintentionally engaged in a contest to see who can be the most laughable European bureaucrat).

Let’s look at some highlights from the past few years.

European Commission bureaucrats lash out at credit rating companies for warning that governments may not be able to pay their bills.

European Commission bureaucrats squander millions of dollars on empty political correctness as they publish calendars that omit Christmas.

European Commission bureaucrats pissed away millions of dollars to create a green-skinned “Mr. Fruitness” superhero.

European Commission bureaucrats wasted money on comic books portraying themselves as super heroes.

But let’s set aside their perks and boondoggles and instead look at the bad policies generated by this army of paper pushers.

The European Commission pushes for tax harmonization because it is “unfair” for some nations to have lower taxes.

The European Commission advocates gender quotas at private businesses.

The European Commission is hostile to entrepreneurship and supports ever-higher levels of regulation and red tape.

The European Commission supports higher taxes as a “solution” to overspending by national governments.

The European Commission has decided that taxpayer-funded vacations are a human right.

The European Commission finances killing ducks at the absurd price of $750 each.

In other words, the crowd in Brussels is just as wasteful as the folks in Washington. And just as profligate as the people in Paris. And just as reckless as the group in London. And…well, you get the idea.

P.S. While the purpose of this post is to congratulate the European Commission on a rare bit of sanity, it’s worth noting that there’s another bureaucracy in Brussels called the European Parliament. I don’t think they’ve ever displayed any evidence of sanity. But since it doesn’t have much power, it also has little opportunity to do really stupid things. That being said, they enjoy a level of pampering that must make American lawmakers green with envy.

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Obamacare: A Get-Rich-Quick Scheme for Washington Insiders

Want to know why – as shown by this map – most of America’s richest counties are part of the metropolitan DC region?

Part of the answer is that federal bureaucrats are overpaid. Another part of the answer is that the Washington area is filled with consultants and contractors, and this shadow government workforce also is overcompensated by taxpayers.

But I’m guessing that DC’s vast population of lobbyists and influence peddlers dominate the upper end of the income spectrum.

And that community of back scratchers and deal makers are getting even richer thanks to Obamacare. Here’s some of what The Hill is reporting today.

ObamaCare has become big business for an elite network of Washington lobbyists and consultants who helped shape the law from the inside. More than 30 former administration officials, lawmakers and congressional staffers who worked on the healthcare law have set up shop on K Street since 2010. Major lobbying firms such as Fierce, Isakowitz & Blalock, The Glover Park Group, Alston & Bird, BGR Group and Akin Gump can all boast an ObamaCare insider on their lobbying roster — putting them in a prime position to land coveted clients. …The voracious need for lobbying help in dealing with ObamaCare has created a price premium for lobbyists who had first-hand experience in crafting or debating the law.  Experts say that those able to fetch the highest salaries have come from the Department of Health and Human Services (HHS) or committees with oversight power over healthcare.  Demand for ObamaCare insiders is even higher now that major pieces of the law — including the healthcare exchanges and individual insurance mandate — are being set up through a slew of complicated federal regulations.

You’ll also be happy to know that beltway insiders can expect years and years of undeserved loot thanks to rules, regulation, and red tape that will be unveiled for another seven years.

…the healthcare law has generated steady work — a trend that is likely to continue for years to come. That’s because ObamaCare runs on a long timeline, well into the next administration. Unless the law is severely crippled, the reform’s rules and requirements will be rolling out through at least 2020. That’s good news for lobbyists who want to sign up clients for the long haul.

This is the social science equivalent of a kick-in-the-you-know-what. A bunch of political hacks pass legislation that increases both the fiscal burden and the regulatory burden on the rest of us, but they make it very convoluted so that they can cash in and make big bucks navigating the law for deep-pocket clients.

This is a win-win for the political elite and a lose-lose for America’s productive sector.

And it’s a perfect example of what I was trying to get across in this video I narrated about the link between big government and corruption.

There are lots of specific examples of Obamacare’s corruption.

Michael Barone has exposed the sleaziness of the waiver process, Tim Carney revealed the special deals for politically connected companies, and I suggested the process was eerily similar to a passage from Atlas Shrugged.

But don’t forget Obamacare is just one example of the sleaze that defines Washington. Maybe the best way of understanding the game is to watch Andrew Ferguson explain DC’s parasite economy.

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The Pervasive Evil of Communism…and the Moral Bankruptcy of Communist Apologists

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

Escaped the North Korean gulag

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

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

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

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

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

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

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

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

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Why Tax Migration and Federalism Mean Doom for Left-Wing States such as New York, California, and Illinois

Maybe this means I’m not a nice person (notwithstanding my high score for tenderness in a recent test), but I can’t help but be happy when I read bad news about fiscal policy in high-tax welfare states.

And because I’m a huge fan of tax competition, I get even happier when I find out that bloated governments are in trouble because people are escaping to places where government isn’t quite so greedy.

With that in mind, I smiled when I read what the Washington Examiner just wrote about tax competition and tax migration inside the United States.

States like California…can’t afford to be hospitable to business while also funding massive public employee entitlements. …job-creating businesses flee big-government Blue States for limited-government Red States. In short order, Blue States find themselves in financial straits. …between 2000 and 2010, the big Blue States of New York, California, and Illinois chased off hundreds of thousands of residents taking billions in income with them ($45.6 billion, $29.4 billion, and $20.4 billion respectively). Each of these states have highly progressive, high-marginal rate tax codes. California, for example, has 10 income tax brackets and a top rate of 13.3 percent. New York has eight brackets and an 8.82 percent top rate. Where did all those formerly Blue State income go? To low-tax, Red State jurisdictions, including Florida (no income tax), Texas (no income tax), and Arizona (4.54 percent top rate). Those three alone raked in $67.3 billion, $17.7 billion, and $17.6 billion, respectively.

Indeed, there have been studies looking at how specific states are driving high-income taxpayers to emigrate. And that means big Laffer-Curve effects.

Which is good news because even politicians are probably capable of learning – sooner or later – that high tax rates won’t raise much revenue if the geese that lay the golden eggs decide to fly away.

And since a picture tells a thousand words, here’s the map of taxable income migration put together by the Tax Foundation using IRS data.

Before closing, I want to highlight one other passage from the Examiner column that touches on a very critical point.

Thanks to the few federalist principles that are still protected in the Constitution, Americans remain free to vote with their feet and escape economically suffocating places like California in order to move to the vastly more hospital economic climates found in Red States like Texas.

Amen. Federalism is a very valuable way of protecting people from statism. We see it when people move from New York. We see it when they escape from California. We see it from a big-picture perspective in the Tax Foundation map.

Federalism enables to producers to escape the looters and moochers.

But federalism has been weakened over the years by the expansion of federal government. If we want to bolster competition among the states – and therefore constrain the greed of the political class, we need to devolve programs from Washington.

This is why welfare reform during the Clinton years was such a good idea. And it’s why block-granting Medicaid is so desirable (above and beyond the fiscal need to implement good entitlement reform).

P.S. It’s rather appropriate that I’m writing about federalism since I’m now in Lausanne, Switzerland, for the 2013 Liberty Conference and Switzerland is probably the world’s best example of genuine federalism.

P.P.S. One small correction to the Examiner’s piece. Illinois is a high-tax state. Illinois is a big-government state. Illinois is a state heading toward fiscal collapse. There are many things wrong with the Land of Lincoln, but it hasn’t compounded those other mistakes with a “progressive” tax that discriminates against those who add more to economic output. Indeed, the fact that Illinois has a flat tax helps to explain why politicians had such a hard time pushing through a tax hike a couple of  years ago. They eventually succeeded, but the politicians faced an uphill battle because they couldn’t play the divide-and-conquer game of raising taxes on a limited segments of the population.

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A “Moderate” Dan Mitchell with “Few Strong Opinions” for a Kinder, Gentler Era of “Tenderness”

Early this year, I took a libertarian purity test put together by Professor Bryan Caplan at George Mason University.

The good news is that I got a 94. Sounds like a solid A, right?

Well, the bad news is that the test wasn’t on a 0-100 scale. The maximum grade was 160, so it seems I’m just a big-government squish!

In my defense, that still ranks me above the vast majority of people in Washington.

That being said, I’m jealous that my former grad school colleague Matt Kibbe (now head of FreedomWorks) got a higher score. Here’s a summary of the test put together by Ben Domenech.

So what’s the real story? Am I “a high priest of light tax, small state libertarianism,” as I was described by a left-wing British journalist?

Or am I a closet statist, as suggested by a critic from Canada?

I think I belong on the former category, but I have to confess that I just took a “social attitude” test that was sent to me by a friend in London and the results are a bit disconcerting.

I was horrified to learn that I got a score of 18.75 for socialism. To be sure, I don’t know if that’s 18.75 percent, or 18.75 on a scale of 0-1000.

Regardless, I’d much prefer to get a score of zero on any measure of coercive collectivism.

And what’s the deal with the 40.625 for tenderness? Makes me sound like some sort of new-age wimp who goes around trying to instigate group hugs.

Last but not least, what’s “radicalism”? Is it simply a measure of being outside the mainstream? Without any guidance, there’s no way of interpreting that score.

Even more irritating, the accompanying analysis says that I’m a “moderate” and “a centrist with few strong opinions.”

On the other hand, it also says that I’m a “laissez-faire capitalist” and that I “would generally be described as libertarian.”

My two cents, for what it’s worth, is that the analysis part of this exercise needs some work. But feel free to take the test and add your two cents to the discussion.

I’ll simply state that I can’t be a squish if my policy heroes are people like Barry Goldwater, Ronald Reagan, and Margaret Thatcher.

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Obamanomics, as Captured by Cartoonists

As evidenced by my political cartoon contest, I’m a big fan of that form of satire.

And if I’m looking at cartoons specifically about statist economic policy, my favorites include Chuck Asay’s dead pig cartoon, as well as his cartoon about the big bad wolf.

And this Michael Ramirez headwinds cartoon is one of the most-viewed posts in the history of my blog, though I personally prefer his European lemming cartoon.

Now let’s add some more cartoons to the collection, beginning with a Michael Ramirez gem about Detroit.

As with most clever humor, there’s a strong element of truth in this image. Thanks to Obamanomics, Detroit and Washington have some unfortunate similarities.

Next we have a good contribution from Lisa Benson.

For obvious reasons, I like cartoons that portray Washington as a bloated slob. For other good examples, see here, here, here, here, here, here, here, here and here.

This Gary Varvel cartoon may be the best of today’s group.

It reminds me, for some reason, of this Chuck Asay tractor cartoon.

And given Obama’s miserable record on jobs, let’s close with this Glenn McCoy cartoon.

I guess this is sort of like giving all the 5-year olds on a soccer team a participation trophy. And I think press-as-cheerleader is a good touch. Which reminds me of my favorite Glenn McCoy cartoon about the unobtainable fox.

If I haven’t exhausted your interest in economic cartoons, I also recommend this Henry Payne classic about Obama and Greece, a first-rate cartoon on Keynesian stimulus by Scott Stantis, and this Eric Allie iceberg cartoon.

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Least. Surprising. Headline. Ever.

As illustrated by this chart, economists are lousy forecasters.

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

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

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

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

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

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

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

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

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

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

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

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

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

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Mirror, Mirror, on the Wall, Which States Provide the Most Handouts of All?

About two years ago, I shared a map put together by a pro-statism organization that supposedly showed that welfare benefits were very miserly and not sufficiently generous to lift people out of poverty.

My gut instinct was to reject the findings. As I wrote at the time:

The poverty line is set considerably above a level that would indicate material deprivation…far above the average level of income in most nations of the world. …Welfare checks are just one of many forms of redistribution, and the data used to create the map do not count food stamps, Medicaid, housing subsidies and a plethora of other means-tested programs.

My skepticism was further augmented when I ran across an amazing chart showing that it made more sense to live off the government in Pennsylvania rather than earn more income.

It turns out that I was right to be skeptical. My colleagues at the Cato Institute have just released a detailed study calculating the amount of handouts available in each state. They then investigated whether the level of redistribution was so high that people might decide it didn’t make sense to be productive members of society.

You probably won’t be surprised to learn that it’s better to live off the government in most states.

Welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job, and the balance between welfare and work may actually have grown worse in recent years. The current welfare system provides such a high level of benefits that it acts as a disincentive for work. Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.

Here are some of the details from the study, which used the example of a mother and two children.

…the federal government currently funds 126 separate programs targeted toward low-income people, 72 of which provide either cash or in-kind benefits to individuals. …no individual or family receives benefits from all 72 programs, but many recipients do receive aid from a number of the programs at any given time. …this study seeks to determine the approximate level of benefits that a typical welfare family, consisting of a single mother with two children, might receive, and to compare those benefits with the wages that a recipient would need to earn in order to take home an equivalent income.

What shocked me the most were a couple of tables showing how living off the taxpayers is a pretty good deal.

The first table shows how much a household would have to earn – before tax – to have the same lifestyle that is available from the welfare system. The study also looks at median salary in each state and shows that eight states actually provide handouts that are greater than that amount!

The study also reveals that handouts give recipients far more than is needed to reach the federal poverty level. Indeed, the panoply of benefits is so excessive in some places that recipients are pushed to more than twice what is needed to get out of poverty.

Or maybe it would be more accurate to state that handouts are so excessive that recipients are lured into dependency.

I’ll close with a couple of surprises from the study. I was shocked that Illinois and Maine both ranked among the least extravagant states. Maine “earned” third place in the Moocher Index, so I assumed they would be especially profligate. But I guess having a lot of people on welfare doesn’t necessarily mean that they’re getting a lot of money.

And Illinois has veered far to the left on fiscal policy in recent years, so I assumed politicians were giving out lots of goodies. But apparently bureaucrats are first in line for handouts and that reduces the amount of loot available for other groups.

On the other hand, I didn’t expect to find New Hampshire being about as profligate as Vermont.

Most of the other states are where you would expect them to be. Fiscal hell-holes like New York and California redistribute money like crazy, while zero-income tax states such as Texas, Florida, and Tennessee are comparatively frugal.

P.S. Here’s a map showing which states have the most food stamp dependency.

P.P.S. Let’s not forget that the poverty rate was falling steadily before the federal government declared a “War on Poverty.”

P.P.P.S. If you’re thinking about moving, you may want to avoid “death spiral states.”

P.P.P.P.S. The U.K. welfare system also makes work unattractive compared to living off taxpayers.

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The Common-Sense Case for Dynamic Scoring

As regular readers know, one of my great challenges in life is trying to educate policy makers about the Laffer Curve, which is simply a way of illustrating that government won’t collect any revenue if tax rates are zero, but also won’t collect much revenue if tax rates are 100 percent. After all, very few people will be willing to earn and report income if the government steals every penny.

In other words, you can’t estimate changes in tax revenues simply by looking at changes in tax rates. You also have to consider changes in taxable income. Only a fool, for instance, would assume that you can double tax revenue by doubling tax rates.

But how do you explain this to the average person? Or, if you want a bigger challenge, how do you get this point across to a politician?

Over the years, I’ve picked up a few teaching examples that seem to be effective. People are always shocked, for example, when I show them the IRS numbers on how rich people paid a lot more tax when Reagan cut the top tax rate from 70 percent to 28 percent.

And they’re also more likely to understand why class-warfare tax policy won’t work when I show them the IRS data on how upper-income taxpayers have considerable control over the timing, level, and composition of their income.

Perhaps my favorite teaching technique, though, is to ask folks to pretend that they’re running a restaurant and to think about what might happen to their sales if they double the price of hamburgers. Would it make sense to assume that they would get twice as much revenue?

Almost everybody understands that hamburger sales would plummet and that they would likely lose revenue.

Well, great minds (or at least wonky minds) think alike, because the Tax Foundation has released a great video on dynamic scoring and they use donuts to make the same point.

The video suggests that it would be a good idea to modernize the revenue-estimating process.

I fully agree. The Joint Committee on Taxation, which is responsible for revenue estimates on Capitol Hill, is notorious for using antiquated and biased methodology.

I elaborate (and use my hamburger example) in this video I narrated for the Center for Freedom and Prosperity.

P.S. The Joint Committee on Taxation also is responsible for producing biased estimates of so-called tax expenditures.

P.P.S. Only 15 percent of CPAs (the folks who see first-hand how taxes impact behavior) agree with the Joint Committee on Taxation’s methodology.

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Another Great Moment in the Annals of Absurd Government Law Enforcement

Government officials do some really crazy things in the name of law enforcement.

I recently wrote about an armed raid on an animal shelter in order to execute a baby deer.

That was paramilitary overkill (pun intended), though it probably didn’t waste as many tax dollars as the regulatory overkill of the year-long sting operation by the Food and Drug Administration against an Amish farm for the horrible crime of selling unpasteurized milk to consenting adults who prefer unpasteurized milk.

And let’s not forget Robert Norlander, the thuggish, dumpster-diving IRS agent, who sought to ruin the life of an innocent man because…well, for no reason.

Well, we now have something that may be even more absurd.

Radley Balko reports in the Huffington Post about “a massive police action last week that included aerial surveillance, a SWAT raid and a 10-hour search.”

Sounds like the cops must have been up against the mafia. Or a bunch of bank robbers, right?

Not exactly. They raided an organic farm.

…the real reason for the law enforcement exercise appears to have been code enforcement. The police seized “17 blackberry bushes, 15 okra plants, 14 tomatillo plants … native grasses and sunflowers,” after holding residents inside at gunpoint for at least a half-hour, property owner Shellie Smith said in a statement.

The cops claimed that they were looking for marijuana. Even if that was the actual goal, why not just send a couple of cops to the door? We’re talking about an organic farm, after all, not a crack house run by the Hell’s Angels.

But let’s at least be thankful the cops seized okra plants. The people of Arlington, Texas, can now walk the streets safely, freed from the danger of vegetables running amok.

So what triggered this raid?

…authorities had cited the Garden of Eden in recent weeks for code violations, including “grass that was too tall, bushes growing too close to the street, a couch and piano in the yard, chopped wood that was not properly stacked, a piece of siding that was missing from the side of the house, and generally unclean premises,” Smith’s statement said. She said the police didn’t produce a warrant until two hours after the raid began, and officers shielded their name tags so they couldn’t be identified.

Oh. My. God. These criminals had improperly stacked wood? And insufficiently mowed grass? No wonder they needed a SWAT team!

If you read Radley’s entire story, it seems clear that the real issue is that neighbors didn’t like the messy conditions of the farm and they pressured the local government to do something about it.

I probably wouldn’t like living next door to somebody who kept a piano in their yard, so I’m sympathetic to their concerns.

Stories like this are why I picked my license plate

And even though I’m libertarian and much prefer that neighborhood standards be determined by private agreements, even I’m not going to get overly agitated by zoning rules about couches in the front yard.

But why deal with this trivial conflict by ordering “aerial surveillance, a SWAT raid and a 10-hour search”?

Sounds like the local police force has a bloated budget and tries to justify its wasteful practices by concocting needlessly risky operations.

P.S. The government’s harassment of another organic farm was the runaway winner of my contest for the worst example of government thuggery.

P.P.S. As I already mentioned, I don’t think this raid was about marijuana, but I don’t want to miss an opportunity to say that it’s time to end the foolish Drug War. People who abuse drugs may be stupid, but they’re not infringing on my rights. But the War on Drugs had led to all sorts of policies that do infringe on our rights, from disgusting asset forfeiture policies to pointless snooping on our bank accounts.

P.P.S. To close with some humor, check out what Dave Barry had to say about great moments in government.

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Why Did the Libertarian Chicken Cross the Road?

The good thing about being a libertarian is that you are motivated by freedom, which is a very noble principle, and you have lots of evidence on your side, whether the issue is economics or personal liberty.

You can’t afford to be smug, of course, since it’s still a big uphill battle to convince politicians not to engage in plunder.

But at least you can sleep soundly at night knowing that you’re on the side of the angels.

And that even means you have self-confidence about your ideas and you can laugh when someone puts together some clever anti-libertarian humor.

Here’s the latest example, sent to me by a TV journalist.

What makes this funny is that libertarians are sometimes quick to defend their rights, even when nobody’s trying to take them away.

Which is why we sometimes get pigeonholed as being weird, like the family in the lower left of this poster, or paranoid, like the guy in the #8 spot of this poster.

But let’s be thankful that there are some libertarians willing to raise a stink about government even if the rest of the world thinks we’re a bit odd. As we’ve seen dozens of times, most recently with the IRS and NSA, bureaucrats and politicians have a compulsive tendency to grab more power and make government more intrusive.

I started yesterday’s post with a mother-in-law joke, so I’ll end today’s post by mentioning the fable of the frog that gets put in a pot of water and doesn’t jump out because the temperature feels comfortable. But then the heat is slowly raised and the frog no longer has the energy to escape when he finally figures out he’s being cooked.

Well, libertarians are the ones who loudly complain when the government puts us into pots.

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The Arbitrary Diktats of Generalissimo Obama

There’s an old joke that the definition of quandary is when your mother-in-law drives off a cliff in your new car.

But since I’m not married, I can’t use that joke.

Besides, I’m a policy wonk, so the type of quandary that catches my attention is when the Obama Administration delays big parts of Obamacare (hooray!), but does so by cavalierly deciding to disregard the law (boo!).

Unfortunately, this isn’t a joke.

I wrote about this topic last month and asserted that one of “the defining characteristics of a civilized government is adherence to the rule of law.”

Why is this important? Here’s some of George Will’s analysis of how Obama is subverting the law.

President Obama’s increasingly grandiose claims for presidential power are inversely proportional to his shriveling presidency. …at last week’s news conference he offered inconvenience as a justification for illegality. …Serving as props in the scripted charade of White House news conferences, journalists did not ask the pertinent question: “Where does the Constitution confer upon presidents the ‘executive authority’ to ignore the separation of powers by revising laws?” The question could have elicited an Obama rarity: brevity. Because there is no such authority.

Will then cites the infamous example of Nixon arguing that, “when the president does it, that means it is not illegal” and compares that to Obama’s lawlessness.

Nixon’s claim, although constitutionally grotesque, was less so than the claim implicit in Obama’s actions regarding the ACA. Nixon’s claim was confined to matters of national security or (he said to Frost) “a threat to internal peace and order of significant magnitude.” Obama’s audacity is more spacious; it encompasses a right to disregard any portion of any law pertaining to any subject at any time when the political “environment” is difficult.

And he also dings Obama for creating – out of thin air – a special handout for members of Congress and their staffs.

…his complicity in effectively rewriting the ACA for the financial advantage of self-dealing members of Congress and their staffs.  …Obama directed the Office of Personnel Management, which has no power to do this, to authorize for the political class special subsidies unavailable for less privileged and less affluent citizens. If the president does it, it’s legal? “Exactly, exactly.”

Charles Krauthammer is equally uncomfortable with the erosion of the rule of law. His column includes a good summary of how Obamacare is being arbitrarily enforced. Or, to be more accurate, how it’s not being enforced.

…the administration…unilaterally waived Obamacare’s cap on a patient’s annual out-of-pocket expenses — a one-year exemption for selected health insurers that is nowhere permitted in the law. It was simply decreed by an obscure Labor Department regulation. Which followed a presidentially directed 70-plus percent subsidy for the insurance premiums paid by congressmen and their personal staffs — under a law that denies subsidies for anyone that well-off. Which came just a month after the administration’s equally lawless suspension of one of the cornerstones of Obamacare: the employer mandate. Which followed hundreds of Obamacare waivers granted by Health and Human Services Secretary Kathleen Sebelius to selected businesses, unions and other well-lobbied, very special interests.

He then accurately explains that we are entering an unpleasant world where the law is not what’s written, but whatever politicians arbitrarily decide on any given day.

The point is whether a president, charged with faithfully executing the laws that Congress enacts, may create, ignore, suspend and/or amend the law at will. …Such gross executive usurpation disdains the Constitution. It mocks the separation of powers. And most consequentially, it introduces a fatal instability into law itself. If the law is not what is plainly written, but is whatever the president and his agents decide, what’s left of the law? The problem is not just uncertain enforcement but the undermining of the very creation of new law. What’s the point of the whole legislative process — of crafting various provisions through give-and-take negotiation — if you cannot rely on the fixity of the final product, on the assurance that the provisions bargained for by both sides will be carried out?

He closes by noting that Obama seems quite proud of his illegal behavior and he warns that America is becoming a banana republic.

…this president is not only untroubled by what he’s doing, but open and rather proud. As he tells cheering crowds on his never-ending campaign-style tours: I am going to do X — and I’m not going to wait for Congress. That’s caudillo talk. That’s banana republic stuff. In this country, the president is required to win the consent of Congress first. At stake is not some constitutional curlicue. At stake is whether the laws are the law. And whether presidents get to write their own.

This is a very troubling issue, so let’s enjoy some gallows humor with some cartoons about Obama’s lawlessness.

Those of you who read Orwell’s Animal Farm will agree that this Eric Allie cartoon is especially insightful.

Here’s a Chip Bok cartoon about The One deciding which laws to enforce. Sort of reminds me of this joke about his approach to the Constitution.

Not surprisingly, disregard of the law even extends to the President’s top legal appointee. Michael Ramirez shows how the Attorney General decides which laws to enforce.

And Lisa Benson has the same theme in a cartoon that includes other Cabinet officials.

Here’s another Chip Bok cartoon, this one focusing on the illegal decision to grant subsidies to politicians and their staff.

And since we’re making fun of self dealing for the political class, let’s look at a couple of cartoons that focus on Obama’s arbitrary gift for Capitol Hill.

By the way, I like the Steve Kelley cartoon because he echoes my comments about “brain drain.”

Last but not least, here’s Ken Catalino making fun of Washington’s gilded class putting themselves first.

Let’s close with a final serious point.

Here’s some of what I wrote a couple of years ago to describe the banana republic of Argentina.

…the problem is crony capitalism. Argentina’s economy, for all intents and purposes, is one giant Fannie Mae/Freddie Mac/Obamacare/General Motors/Goldman Sachs Obamaesque dystopia. Government has enormous influence over every major economic decision. It’s like being in the middle of Atlas Shrugged, as political connections are the way to get rich. This type of approach is far worse than the Scandinavian welfare state. Yes, the official size of government is bigger in places such as Sweden, but the negative role of government intervention is far more pervasive in Argentina.

But I actually understated the problem.

Much of what I wrote was a critique of interventionism and the corruption that is facilitated by big government.

That’s part of what defines a banana republic (with Obamacare being a perfect example), but arbitrary law is another characteristic.

And that’s what’s so worrisome about what the Obama Administration is doing.

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Europe’s Soft Bigotry of Low Economic Expectations

The United States is suffering through the weakest economic expansion since the Great Depression, which is a damning indictment of Obamanomics.

But that doesn’t mean the United States has the world’s worst-performing economy. Japan’s statist economy has been mired in stagnation for more than 20 years, which is about what you might expect in a nation where the government is so omnipresent that it even regulates coffee enemas.

But if you really want to feel good about America’s economy (at least in relative terms), then a comparison to Europe is probably akin to snorting cocaine.

The welfare states on the other side of the Atlantic are in such poor shape that they celebrate even the tiniest glimmer of good news. Here are some blurbs from a story in the EU Observer.

The eurozone economy has moved out of recession, according to unexpectedly strong data published on Wednesday (14 August) by Eurostat, the EU’s statistical agency.

So what is this “strong data” mentioned in the story? Did eurozone economies grow at a 4 percent annual pace? 5 percent?

Well….not exactly.

Economic output rose by 0.3 percent across both the euro area and the EU28 during the second quarter of 2013, compared with the previous quarter. Surprisingly, it was Portugal which, despite recent social unrest and political turmoil over its bailout programme, saw the biggest jump in growth, with its economy growing by 1.1 percent. Finland and Germany recorded growth of 0.7 percent, while, France recorded a 0.5 percent growth rate, which will dampen concerns that the country’s economy will remain stagnant in 2013. The statistics indicate that the European economy is recovering faster than expected and could post an overall growth rate for 2013.

Huh, 0.3 percent is something to celebrate?!? These are quarterly numbers, so you should multiply by four to get annual rates, but even that doesn’t translate into “strong data.”

Moreover, if you look at the actual report from eurostat, you’ll see that the year-over-year numbers still show recession. So it’s far from clear that one quarter of anemic growth should be considered the start of a recovery.

Yet the expectations are so low in these over-taxed and over-regulated welfare states that the mandarins at the European Commission are breaking out the champagne.

In a statement, EU eurozone commissioner Olli Rehn described the news as “encouraging” and said that “the European economy is gradually gaining momentum.”

I guess the European economy is gaining momentum if you use a glacier as your benchmark.

I’m not trying to mock Europeans just for the heck of it. The serious point in this post is that the United States has been gradually moving in the direction of becoming a French-style welfare state during the statist Bush-Obama years.

And even though I like to think of America as being special, the consequences of more spending, more taxes, and more regulation are just as bad on this side of the ocean as they are on the other side of the ocean.

As you can see from the chart, America has enjoyed a big advantage over Europeans if you look at living standards. And maybe we always will maintain an advantage if they move even farther in the wrong direction at the same time that the United States is adopting counterproductive policies.

But why would we want to copy the misguided policies of nations that are collapsing?

Particularly when we have examples of jurisdictions that are now more prosperous than the United States and they lead the world in maintaining the tried-and-true recipe of free markets and small government.

P.S. If you look at the EU data, you’ll see that the Baltic nations are doing better than average, which is at least somewhat due to the fact that they have pursued better policy than their European neighbors.

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Taxes Even Impact When We’re Born and When We Die

As a fiscal policy economist, one of my responsibilities is to educate policy makers about the impact of taxation.

Simply stated, I try to help them understand that taxes alter behavior. If you tax something at a higher rate, you get less of whatever is being taxed.

Politicians actually understand this basic lesson when it suits their purposes. Many of them will pontificate that we need higher tobacco taxes to discourage smoking.

I don’t think it’s government’s job to dictate our private lives, so I don’t agree with the policy, but I give them an A+ for economics. Higher taxes on tobacco will lead to less tobacco consumption.

My frustration is that politicians conveniently forget this elementary analysis when the discussion shifts to taxes on productive activities such as work, saving, investment, and entrepreneurship.

And they also fail to realize that the higher taxes on tobacco will lead to more illegal smuggling and other actions that result in far less revenue than politicians think they’ll collect.

But let’s set that aside and look at some truly remarkable examples of how taxes influence things that – at first glance – seem completely impervious to fiscal policy.

Would anyone think, for instance, that taxes could impact the day people are born? Well, here’s some new research, as summarized by Dylan Matthews at the Washington Post.

…where there are humans making choices, there are public finance economists asking how tax incentives influence them. …Williams’s Sara LaLumia, the University of Chicago’s James Sallee and the Treasury Department’s Nicholas Turner took it upon themselves to figure out if policies like the Child Tax Credit (CTC), the dependent exemption and the Earned Income Tax Credit (EITC, which is more generous for families with more children) are pushing mothers with due dates in January to move their children’s births forward, so as to reap another year of tax benefits. …What they find is that, after controlling for other factors that could affect birth timing, an additional $1,000 in per-child tax benefits is associated with a 1 percent increase in the probability of a birth occurring in December rather than January.

This study isn’t an outlier. Other research has reached similar conclusions. Indeed, in some case the impact of taxation is found to be much larger.

They actually aren’t the first ones to tackle this question. They cite at least four previous studies that found that parents alter birth timing to maximize tax and other public benefits. …Syracuse’s Stacy Dickert-Conlin and Harvard’s Amitabh Chandra found a 29.6 percent increase in December births resulting from a $500 increase in tax benefits.

Notice, by the way, that the research is also saying that government handout influence behavior, a point that I’ve repeatedly made when analyzing the harmful impact of redistribution programs on work incentives.

Let’s close by recycling some research that shows how taxes even influence when people die.

When Australia repealed the death tax back in the 1970s, researchers found that people lived longer in order to protect family assets.

And don’t forget that the U.S. death tax was repealed for one year back in 2010. I imagine we’ll see some fascinating and illuminating research on this period once economists have a chance to collect and crunch the data.

Though there’s already strong anecdotal evidence that death rates may have been impacted.

At least the statists can be happy that the death tax is now back in place – and that it’s even more onerous than the death tax policies in places such as France, Venezuela, and Greece.

But the main lesson of this post isn’t to complain that we have some very bad features to our tax code.

Instead, the goal is to simply get more people to realize that government policies have real-world effects and specifically that higher taxes will influence behavior.

In the grand scheme of things, it presumably doesn’t make much difference what days people are born and when they die. But when we apply these lessons to the broader economy, it turns out that taxation has a huge impact on economic opportunity and prosperity.

P.S. Heck, taxes even cause gay people to adopt their partners.

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More Compelling Evidence that America’s Corporate Tax System Is Pointlessly Destructive

It’s probably not an exaggeration to say that the United States has the world’s worst corporate tax system.

We definitely have the highest corporate tax rate in the developed world, and we may have the highest corporate tax rate in the entire world depending on how one chooses to classify the tax regime in an obscure oil Sheikdom.

But America’s bad policy goes far beyond the rate structure. We also have a very punitive policy of “worldwide taxation” that forces American firms to pay an extra layer of tax when competing for market share in other nations.

And then we have rampant double taxation of both dividends and capital gains, which discourages business investment.

No wonder a couple of German economists ranked America 94 out of 100 nations when measuring the overall treatment of business income.

So if you’re an American company, how do you deal with all this bad policy?

Well, one solution is to engage in a lot of clever tax planning to minimize your taxable income. Though that’s probably not a successful long-term strategy since the Obama Administration is supporting a plan by European politicians to create further disadvantages for American-based companies.

Another option is to somehow turn yourself into a foreign corporation. You won’t be surprised to learn that politicians have imposed punitive anti-expatriation laws to make that difficult, but the crowd in Washington hasn’t figured out how to stop cross-border mergers and acquisitions.

And it seems that’s a very effective way of escaping America’s worldwide tax regime. Let’s look at some excerpts from a story posted by CNBC.

Some of the biggest mergers and acquisitions so far in 2013 have involved so-called “tax inversions” – where a US acquirer shifts overseas, to Europe in particular, to pay a lower rate.

The article then lists a bunch of examples. Here’s Example #1.

Michigan-based pharmaceuticals group Perrigo has said its acquisition of Irish biotech company Elan will lead to re-domiciling in Ireland, where it has given guidance it expects to pay about 17 per cent in tax, rather than an estimated 30 per cent rate it was paying in the US. Deutsche Bank estimates Perrigo will achieve tax savings of $118m a year as a result.

And Example #2.

New Jersey-based Actavis’s acquisition of Warner Chilcott in May – will also result in a move to Ireland, where Actavis’s tax rate will fall to about 17 per cent from an effective rate of 28 per cent tax, and enable it to save an estimated $150m over the next two years.

Then Example #3.

US advertising company Omnicom has said its $35bn merger with Publicis will result in the combined group’s headquarters being located in the Netherlands, saving about $80m in US tax a year.

Last but not least, Example #4.

Liberty Global’s $23bn acquisition of Virgin Media will allow the US cable group to relocate to the UK, and pay its lower 21 per cent tax rate of corporation tax.

And we can expect more of these inversions in the future.

M&A advisers say the number of companies seeking to re-domicile outside the US after a takeover is rising. …Increased use of tax inversion has coincided with an intensifying political debate on US tax – with Democrats, Republicans and the White House agreeing that the current code, which imposes a top rate of 35 per cent but offers a plethora of tax breaks, is in need of reform.

I’ll close with a very important point.

It’s not true that the current code has a “plethora of tax breaks.” Or, to be more specific, there are lots of tax breaks, but the ones that involve lots of money are part of the personal income tax, such as the state and local tax deduction, the mortgage interest deduction, the charitable contributions deduction, the muni-bond exemption, and the fringe benefits exclusion.

There are some corrupt loopholes in the corporate income tax, to be sure, such as the ethanol credit for Big Ag and housing credits for politically well-connected developers. But if you look at the Joint Committee on Taxation’s list of so-called tax expenditures and correct for their flawed definition of income, it turns out that there’s not much room to finance a lower tax rate by getting rid of unjustified tax breaks.

So does this mean there’s no way of fixing the problems that cause tax inversions?

If lawmakers put themselves in the straitjacket of “static scoring” as practiced by the Joint Committee on Taxation, then a solution is very unlikely.

But if they choose to look at the evidence, they’ll see that there are big Laffer-Curve effects from better tax policy. A study from the American Enterprise Institute found that the revenue-maximizing corporate tax rate is about 25 percent while more recent research from the Tax Foundation puts the revenue-maximizing tax rate for companies closer to 15 percent.

I should hasten to add that the tax code shouldn’t be designed to maximize revenues. But when tax rates are punitively high, even a cranky libertarian like me won’t get too agitated if politicians wind up with more money as a result of lowering tax rates.

You might think that’s a win-win situation. Folks on the right support lower tax rates to get more growth and folks on the left support the same policy to raise more tax revenue.

But there’s at least one person on Washington who wants high tax rates even if they don’t raise additional revenue.

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Very Good News: The Tea Party Has Altered the Spending Trajectory in Washington

Why does the Tea Party attract such vitriolic opposition, whether from Obama’s IRS or big-government Republicans like Karl Rove?

The answer is simple. People in Washington don’t like the Tea Party because this citizen uprising is making it difficult to engage in business-as-usual shenanigans.

I shared a couple of columns (here and here) back before the 2010 elections about the potential impact of the Tea Party, but it wasn’t until earlier this year that I put together some hard numbers showing that this small-government movement has made a difference.

Simply stated, Washington’s spending trajectory is still headed in the wrong direction, but we’re becoming Greece (or Portugal, Spain, Italy, etc) at a significantly slower pace.

That’s hardly libertarian Nirvana, to be sure, but let’s remember the golden rule, which is that fiscal policy is headed in the right direction so long as the private sector grows faster than the burden of government spending.

And that’s what’s been happening. Indeed, we’ve even experienced a couple of years with no growth in the size of the public sector! Here’s some of what Steve Moore wrote for today’s Wall Street Journal.

According to the Congressional Budget Office, annual outlays peaked at $3.598 trillion in fiscal 2011. After President Obama’s first two years in office, many in Washington expected that number to hit $4 trillion by 2014. Instead, spending fell to $3.537 trillion in fiscal 2012, and is on pace to fall below $3.45 trillion by the end of this fiscal year (Sept. 30). The $150 billion budget decline of 4% is the first time federal expenditures have fallen for two consecutive years since the end of the Korean War. This reversal from the spending binge in 2009 and 2010 began with the debt-ceiling agreement between Mr. Obama and House Speaker John Boehner in 2011.

This chart shows what’s happened to federal spending over the twenty years. We’ve gone from decent policy under Clinton to profligacy last decade and now a period of fiscal responsibility.

As you can imagine, President Obama is not happy about this development, particularly since sequestration was a huge political and policy defeat for the White House.

So it’s understandable he’s trying to seduce GOPers into a budget deal that would replace sequestration with tax hikes. Steve explains this would be very misguided.

As long as Republicans don’t foolishly undo this amazing progress by agreeing to Mr. Obama’s demands for a “balanced approach” to the 2014 budget in exchange for calling off the sequester, additional expenditure cuts will continue automatically.

But even if Republicans don’t fall into Obama’s tax-hike trap, we shouldn’t overstate this victory.  After all, recent spending cuts are not overly impressive when you compare them to the spending orgy that took place during the Bush Administration and the early years of the Obama Administration.

Admittedly, this fiscal progress follows the gigantic budget blowout that began with the last year of George W. Bush’s presidency and the first two years of Mr. Obama’s. In fiscal 2009 alone, federal spending surged by $600 billion. That same year, outlays as a share of GDP reached a post-World War II high of 25.2%. But by the end of this fiscal year, outlays as a share of GDP could fall to as low as 21.5%. At least for now, the great Washington spending blitz of the Obama first term is over.

Moreover, some of the “spending cuts” are simply a back-door form of revenue, an issue I explained when comparing the fiscal record of all Presidents from LBJ to Obama.

Some $80 billion of the outlay savings have come from one-time partial repayments back to the government for the hundreds of billions spent on the bailouts of banks and of Fannie Mae and Freddie Mac.

But let’s not pick too many nits. We’re making a bit of progress, which is bad news for all the interest groups feeding at the federal trough.

The sequester is squeezing the very programs liberals care most about—including the National Endowment for the Arts, green-energy subsidies, the Environmental Protection Agency and National Public Radio. Outside Washington, the sequester is forcing a fiscal retrenchment for such liberal special-interest groups as Planned Parenthood and the National Council of La Raza, which have grown dependent on government largess.

That being said, Steve notes that the short-term progress will quickly fade away if nothing is done to deal with entitlements.

…the fiscal story isn’t all rosy. The major entitlements remain on autopilot and are roaring toward insolvency. Thanks in large part to Mr. Obama’s aversion to practical fixes, the Congressional Budget Office calculates that through July of this year Social Security, Medicare and Medicaid spending are up $73 billion from just last year. This doesn’t include ObamaCare, which is scheduled to add $1 trillion of new costs over the next decade.

Remember, though, that there’s a huge difference between genuine entitlement reform and gimmicks such as price controls and means-testing that merely translate into a year or two of illusory savings.

Let’s close on an upbeat point. As Steve explains in his conclusion, the left must be glum that Obama’s reelection wasn’t the trigger for a new expansion of the welfare state.

Liberals had hoped that re-electing Mr. Obama, the most pro-spending president since LBJ, would unleash another four years of Great Society government expansion. Instead, spending caps and the sequester are squashing these progressive dreams. Welcome to the new fiscal reality in Washington.

I’ll go even farther than Steve. It’s not just that Obama’s victory didn’t translate into bigger government. I think the 2012 election was a closing chapter in an unfortunate era of big-government Republicanism.

And as illustrated by this poll showing a hypothetical contest between Reagan and Obama, the American people would welcome the chance to support a candidate who favored small government and free markets.

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More Americans Going Galt

President Obama promised he would unite the world…and he’s right.

Representatives from dozens of nations have bitterly complained about an awful piece of legislation, called the Foreign Account Tax Compliance Act (FATCA), that was enacted back in 2010.

They despise this unjust law because it extends the power of the IRS into the domestic affairs of other nations. That’s an understandable source of conflict, which should be easy to understand. Wouldn’t all of us get upset, after all, if the French government or Russian government wanted to impose their laws on things that take place within our borders?

But it’s not just foreign governments that are irked. The law is so bad that it is causing a big uptick in the number of Americans who are giving up their citizenship.

Here are some details from a Bloomberg report.

Americans renouncing U.S. citizenship surged sixfold in the second quarter from a year earlier… Expatriates giving up their nationality at U.S. embassies climbed to 1,131 in the three months through June from 189 in the year-earlier period, according to Federal Register figures published today. That brought the first-half total to 1,810 compared with 235 for the whole of 2008. The U.S., the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside.

I’m glad that the article mentions that American law is so out of whack with the rest of the world.

We should be embarrassed that our tax system – at least with regard to the treatment of citizens living abroad and the treatment of tax exiles – is worse than what they have in nations such as France.

And while there was an increase in the number of Americans going Galt after Obama took office, the recent increase seems to be the result of the FATCA legislation.

Shunned by Swiss and German banks and facing tougher asset-disclosure rules under the Foreign Account Tax Compliance Act, more of the estimated 6 million Americans living overseas are weighing the cost of holding a U.S. passport. …Fatca…was estimated to generate $8.7 billion over 10 years, according to the congressional Joint Committee on Taxation.

I very much doubt, by the way, that the law will collect $8.7 billion over 10 years.

And it’s worth noting that President Obama initially claimed that his assault on “tax havens” would generate $100 billion every year. If you don’t believe me, click here and listen to his words at the 2;30 mark.

So we started with politicians asserting they could get $100 billion every year. Then they said only $8.7 billion over ten years, or less than $1 billion per year.

And now it’s likely that revenues will fall because so many taxpayers are leaving the country. This is yet another example of how the Laffer Curve foils the plans of greedy politicians.

You may be tempted to criticize these overseas Americans, but I’ve talked to several hundred of them in the past few years and you can’t begin to imagine how their lives are made more difficult by the illegitimate extraterritorial laws concocted by Washington. Bloomberg has a few more details.

For individuals, the costs are also rising. Getting a mortgage or acquiring life insurance is becoming almost impossible for American citizens living overseas, Ledvina said. “With increased U.S. tax reporting, U.S. accounting costs alone are around $2,000 per year for a U.S. citizen residing abroad,” the tax lawyer said. “Adding factors, such as difficulty in finding a bank to accept a U.S. citizen as a client, it is difficult to justify keeping the U.S. citizenship for those who reside permanently abroad.”

Imagine what your life would be like if you had trouble opening a bank account or conducting all sorts of other financial activities. Things that are supposed to be routine, but are now nightmares.

I collected some of the statements from these overseas Americans. I encourage you to visit this link and get a sense of what they have to endure.

And then keep in mind that all of these problems would disappear if we had the right kind of tax system, such as the flat tax, and didn’t let the tentacles of the IRS extend beyond America’s borders.

P.S. Based on people I’ve met in my international travels, I’d guess that, for every American that officially gives up their citizenship, there are probably a dozen more living overseas who simply drop off the radar screen. Many of these people can’t afford – or can’t stand – to deal with the onerous requirements imposed by hacks, bullies, and lightweights in Washington such as Barbara Boxer.

P.P.S. Remember the Facebook billionaire who moved to Singapore to escape being an American taxpayer? Many of us – including me – instinctively find this unsettling. But if we believe that folks should have the freedom to move from California to Texas to benefit from better tax policy, shouldn’t they also have the freedom to move to another nation?

The same is true for companies.

If our tax law is bad, we should lower tax rates and adopt real reform.

Unless, of course, you think it’s okay to blame the victim.

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More Double Taxation of Dividends and Capital Gains Would Turn Tax Reform into Tax Deform

Even though I’m a big fan of tax reform, I explained back in June that I’m not very comfortable with the “blank slate” tax reform plan put forth by Senators Max Baucus (D-MT) and Orrin Hatch (R-UT).

My main gripe is that they start with the assumption that there should be more double taxation of income that is saved and invested, which is contrary to the principles of neutrality in pro-growth plans such as the flat tax and national sales tax.

This isn’t academic nitpicking. Check out the charts in this post and see how the United States is shooting itself in the foot by imposing some of world’s highest tax rates on capital income.

So why make a bad situation even worse?

The Tax Foundation addresses this issue in a new report on what would happen if there was more double taxation of capital gains and dividends.

A conventional static revenue estimate, which assumes away tax-induced growth changes, might suggest the federal government would collect more revenue by taxing capital gains and dividends as ordinary income. When growth effects are added to the analysis, however, the higher revenue disappears. Ending the individual income tax’s rate cap on long-term capital gains and qualified dividends would reduce capital formation, productivity, and wages to such an extent that it would be a major revenue loser for the federal budget. Few tax increases would actually cost revenue, but the capital gains (and dividend) tax is one of them.

Here are some of the details from the study.

…the desired capital stock is extremely sensitive to its expected after-tax return. The Tax Foundation model predicts that after a several year adjustment period, the capital stock would be 16.9 percent less than otherwise, work hours would be about 1.25 percent less, and GDP would be 6.3 percent lower than otherwise. Because tax collections depend on the size of the economy, these anti-growth effects would be expected to have a negative feedback on tax collections. When our model takes the smaller economy into account, it estimates that ending the rate cap on long-term capital gains and qualified dividends would actually reduce federal revenues by $122 billion.

As you can see in the chart, estimates of annual tax hikes turn into the reality of annual revenue losses once these Laffer Curve-type effects are added to the equation.

Now let’s conduct a thought experiment. Economics is an inexact science (to put it mildly), so perhaps the Tax Foundation economists are wrong. As a matter of fact, let’s assume they dramatically overstate the economic impact of double taxation.

For the sake of simplicity, let’s do a rough cut-the-baby-in-half exercise and assume that GDP only falls by about $500, which implies that there is no loss of tax revenue.

Does that mean it’s okay to increase the double taxation of dividends and capital gains?

The answer – which should be screamed from every rooftop – is no! It makes zero sense to reduce the economy’s output and make the American people poorer. Particularly when there is no upside (and I don’t think more tax revenue is an upside, but we’ll leave that issue for another day).

For more information (at least with regards to the tax treatment of capital gains), here’s a video I narrated for the Center for Freedom and Prosperity.

P.S. I also highly recommend a primer on capital gains taxation put together by the Wall Street Journal.

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Left-Wing Nursery Rhymes

I’ve already shared the statist version of the fairy tale about The Little Red Hen.

And I’ve also shared the Obama version of the fable about The Ant and the Grasshopper.

So how about the left-wing version of The Little Engine that Could. Or, in this case, couldn’t.

My lovely and charming daughter sent this to me. I don’t know if this is a real book, but it sounds like it could be amusing. Sort of like the Politically Correct Storybook.

And if you like this type of humor, I also recommend the modern-day fable about bureaucracy, featuring an ant and a lion. And I’ve also posted a revised version of Green Eggs and Ham.

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Deconstructing Barack Obama, Part III

Two days ago, I shared an insightful article from Kevin Williamson as we contemplated the President’s ideology.

Yesterday, we reviewed an article by Richard Epstein in hopes of deciphering Obama’s approach to economic policy.

Let’s conclude our series by looking at whether there’s something special about the scandals swirling around the White House.

Big government is the mother’s milk of corruption, so it would be foolish to expect any administration to have a perfectly clean record. So what we’re looking for is some indication as to whether President Obama is better or worse than average.

There’s definitely a lot of smoke. Here’s some of what Victor Davis Hanson wrote for National Review on “Obama’s Watergates.”

The truth about Benghazi, the Associated Press/James Rosen monitoring, the IRS corruption, the NSA octopus, and Fast and Furious is still not exactly known. Almost a year after the attacks on our Benghazi facilities, we are only now learning details ofCIA gun-running, military stand-down orders, aliases of those involved who are still hard to locate, massaged talking points, and the weird jailing of Nakoula Basseley Nakoula. We still do not quite know why Eric Holder’s Justice Department went after the Associated Press or Fox News’s James Rosen — given that members of the administration were themselves illegally leaking classified information about the Stuxnet virus, the Yemeni double agent, the drone program, and the bin Laden document trove.

But is there fire underneath all the smoke? Hanson obviously is rather suspicious.

Almost everything the administration has assured us about the IRS scandal has proven false: It was not confined to rogue Cincinnati agents; liberal and conservative groups were not equally targeted; and there were political appointees who were involved in or knew of the misdeeds. The NSA debacle can so far best be summed up by citing Director of National Intelligence James Clapper, who has now confessed that he lied under oath (“clearly erroneous”) to the U.S. Congress. Even his earlier mea culpa of providing the “least untruthful” statement was an untruth.

Indeed, he suggest that the current administration is eerily reminiscent of the Nixon White House.

There is also nothing new in administration denials. Both President Obama and his press secretary, Jay Carney, characterized the Benghazi, IRS, AP, and NSA allegations as “phony.” So too Nixon’s press secretary, Ron Ziegler, characterized the Watergate break-in as “a third-rate burglary attempt” and insisted that “Certain elements may try to stretch the Watergate burglary beyond what it is.” In August 1972, when news of the break-in first got out, Nixon himself assured the nation, “I can say categorically that . . . no one in the White House staff, no one in this Administration, presently employed, was involved in this very bizarre incident.” The Obama administration’s variation on outright denial is “What difference, at this point, does it make?” And when Jay Carney declares, “I accept that ‘stylistic’ might not precisely describe a change of one word to another,”  I am reminded of Ron Ziegler’s quip, “This is the operative statement. The others are inoperative.”

In some ways, Hanson argues, the current Administration is worse than Nixon.

Nixon tried to use the IRS to punish his enemies, although Lois Lerner and William Wilkins appear to have had far less integrity than did Nixon’s IRS chief, Johnnie Walters, who resisted rather than abetted Nixon’s illegal efforts. As in the case of doctoring CIA talking points and pressuring CIA operatives, so too Nixon tried to cloak misdeeds as “national security” operations. Nixon went after members of the press; Obama had the communications of James Rosen of Fox News — and even those of Rosen’s parents — monitored. Mr. Nakoula was the poor soul the authorities almost immediately jailed for his supposedly right-wing, Islamophobic film. He proved a sort of updated version of the caricatured crazy Cuban burglars and the unhinged Gordon Liddy, whose freelancing zeal allegedly caused the Watergate problem in the first place. The only difference is that the latter really did commit relevant illegal acts, while Nakoula’s videomaking was uncouth, not criminal — and irrelevant to the Benghazi deaths.

So where’s it all going to lead? Hanson thinks it will get worse.

I expect more participants in the Obama-administration misdeeds will invoke the Fifth, and the dodges will ultimately have little effect, other than to remind us that many in the administration have lots to hide. …Nixon left office with historic low poll numbers and the economy a wreck.  …So too already with the unraveling of Obama.  …Because something terribly wrong occurred in Benghazi, with the IRS, with the treatment of the Associated Press and James Rosen, and perhaps with Edward Snowden and the NSA, and those involved are seeking to mask their culpability, the scandals grind on. They will not end until the truth sets us all free. So expect a long-drawn-out and sordid saga.

I agree that there will be more scandals, as well as more news from existing scandals, but I’m not sure any of this suggests Obama is any worse than other Presidents. Or that his appointees are any worse than the appointees of previous Presidents.

I’m not trying to defend the White House. Obamacare is an example of a law that was only made possible because of bribery, and now the Administration is in the process of arbitrarily and illegally rewriting its own signature legislation!

And let’s not forget boondoggles such as Solyndra, where lots of money conveniently wound up in the pockets of Obama donors.

But is there any reason to think that these examples of corruption are worse than TARP? Or some of the other ways that Republicans get in bed with big government and special interests?

In other words, I think the problem is Washington, not any particular politician or political party.

That being said, I reserve the right to change my mind if evidence comes to light that the White House was directing/ordering/approving the illegal partisan activities of officials at the IRS, FEC, and elsewhere.

P.S. If you enjoy the writing of Victor Davis Hanson and you’re not suffering from high blood pressure, read what he wrote about the squalid waste at the Department of Agriculture.

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Deconstructing Barack Obama, Part II

Yesterday, Part I of this series looked at what motivates Barack Obama. We reviewed a Kevin Williamson column that made a strong case that Obama is an ends-justifies-the-means statist.

Today, we’re going to look at the President’s approach to economic policy and we’ll focus on an article by my former debating partner, the great Richard Epstein.

And since Epstein and Obama were colleagues at the University of Chicago Law School, he has some insight into the President’s mind.

In a nutshell, Professor Epstein says “Obama’s Middle Class Malaise” is the predictable result of bad policy. And the bad policy exists because the President has no clue about economic policy.

…the president is using the bully pulpit to argue for redistributive, pro-regulatory, pro-union policies that he claims will serve the middle class. …The President, who has never worked a day in the private sector, has no systematic view of the way in which businesses operate or economies grow. He never starts a discussion by asking how the basic laws of supply and demand operate, and shows no faith that markets are the best mechanism for bringing these two forces into equilibrium. Because he does not understand rudimentary economics, he relies on anecdotes to make his argument.

I’m not sure whether I fully agree. I suspect Obama doesn’t understand anything about economics, but it’s possible that he does understand, but simply doesn’t care.

Epstein then makes an elementary point about the harmful impact of government intervention.

Unfortunately, our President rules out deregulation or lower taxes as a way to unleash productive forces in the country. Indeed, he is unable to grasp the simple point that the only engine of economic prosperity is an active market in which all parties benefit from voluntary exchange. Both taxes and regulation disrupt those exchanges, causing fewer exchanges to take place—and those which do occur have generated smaller gains than they should. The two-fold attraction of markets is that they foster better incentives for production as they lower administrative costs. Their comparative flexibility means that they have a capacity for self-correction that is lacking in a top-down regulatory framework that limits wages, prices, and the other conditions of voluntary exchange.

I particularly like his point about self-correction. I frequently explain in speeches that markets are filled with mistakes, but that at least there’s a big incentive to learn from those mistakes. With government, by contrast, mistakes get subsidized.

Professor Epstein looks at recent economic history and wisely doesn’t get trapped in partisanship. He correctly notes that we got good results under both Reagan and Clinton when the burden of government was reduced.

Obama speaks first of how the economic engine began to stall, but he offers no timeline. His general statement may square with the economic malaise of the Carter years, but it hardly describes the solid growth during most of the Reagan and Clinton years, as both presidents grasped, however imperfectly, that any expansion of the government footprint on the economy could dull the incentives to production. The situation turned south the past ten years. The second George Bush administrative gave us No Child Left Behind and Sarbanes-Oxley, while Obama followed with Obamacare and Dodd-Frank.

The Bush-Obama years, by contrast, have been rather dismal.

Epstein next speculates whether Obama has any understanding that his policies hurt those he supposedly wants to help.

…his speech offers not one hint that he is aware of the deep conflict between his abject fealty to union objectives and the poor people he wants to lift up. Yes there is an increasing gap between the rich and poor, but that gap won’t narrow if the President keeps plumping for a higher minimum wage that will block poor individuals, many of whom are African-American, from getting a toehold in the economy. No jobs at artificially high wages—which is what will happen, per Wal Mart—is no improvement over plentiful jobs at market wages.

By the way, an even more egregious example of Obama hurting the less fortunate is his opposition to school choice.

Let’s conclude by looking at my favorite part of the article. Epstein writes that Obama is so deluded that he thinks his biggest failures are actually his greatest successes.

…he constantly thinks of his greatest regulatory failures as his great successes. No other president has “saved the auto industry,” albeit by a corrupt bankruptcy process, or “taken on a broken health care system,” only to introduce a set of unworkable mandates that are already falling apart, or “investing in new technologies,” which tries to pick winners and ends up with losers like Solyndra. The great advances in energy have come from private developments, most notably fracking, and not from the vagaries of wind and solar energy, which no one has yet figured out how to store for future use when needed. …It is easy to see, therefore, why people have tuned out the President’s recent remarks. They have heard it all countless times before. So long as the President is trapped in his intellectual wonderland that puts redistribution first and regards deregulation and lower taxation as off limits, we as a nation will be trapped in the uneasy recovery.

Here’s a good example of Obama’s upside-down world where he thinks failure = success. The Washington Examiner today commented on the President’s latest scheme to intervene in housing markets. They start by explaining how Obama’s policies already have failed.

…in February 2009, Obama spoke in Mesa, Ariz., on the housing crisis, promising that his then-forthcoming Home Affordable Mortgage Program would help “between seven and nine million families” stay in their homes. A little over four years later, HAMP was exposed as a flop by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). Just 1.6 million households had actually received HAMP assistance, seven million fewer than Obama promised in February 2009. Worse, many of the HAMP-assisted households ended up defaulting again. As of March 31, according to SIGTARP, 46 percent of the oldest HAMP modifications re-defaulted, compared to 37 percent of the more recent beneficiaries. Many homeowners would have been better off without HAMP, according to SIGTARP: “Re-defaulted HAMP modifications often inflict great harm on already struggling homeowners when any amounts previously modified suddenly come due.”

But the President hasn’t learned from his mistakes. He still wants the government to dictate how the housing market operates.

…middle Americans have every right to be suspicious when Obama says his newest round of policies will make homes more affordable. …while Obama expressed mild interest in reducing the federal government’s role in the housing sector, he also insisted that the government must ensure that Americans will always be able to buy 30-year, fixed-rate mortgages. Why? No other country on the planet has a housing market dominated by 30-year fixed mortgages, and many countries that have no long-term mortgage market at all, like Canada, avoided the 2008 housing bubble and financial crash entirely. There is simply no reason why America should repeat the same housing policy mistakes of the past. But for reasons that aren’t immediately apparent, that appears to be pretty much what Obama is determined to do in his remaining years as president.

I especially like the point about Canada avoiding the financial crisis and the housing bubble. There’s a simple explanation. Our neighbors to the north avoided the government mistakes that caused the housing bubble in America.

Remember, if more government is the answer, you’ve asked a very strange question.

P.S. There’s no such thing as too much Richard Epstein. You can click here for his analysis of the flat tax and click here to watch him destroy George Soros in a debate.

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Deconstructing Barack Obama, Part I

I’ve argued that Obama’s not a socialist.

I wasn’t trying to defend him. I was simply making the point that it’s technically more accurate to refer to him as a statist or a corporatist.

But he may be even worse than that, at least according to a must-read Kevin Williamson analysis of Obama for National Review.

He starts with how Obama seems to be a run-of-the-mill leftist.

Obama has been called many things — radical, socialist — labels that may have him dead to rights at the phylum level but not down at his genus or species. His social circle includes an alarming number of authentic radicals, but the president’s politics are utterly conventional managerial liberalism.

But Kevin then suggests that there’s something different about the President.

President Obama is nonetheless something new to the American experience, and troubling. It is not simply the content of his political agenda, which, though wretched, is a good deal less ambitious than was Woodrow Wilson’s or Richard Nixon’s. Barack Obama did not invent managerial liberalism, nor has he contributed any new ideas to it. He is, in fact, a strangely incurious man. …Obama’s most important influences have been tacticians such as Abner Mikva, bush-league propagandists like the Reverend Jeremiah Wright, and his beloved community organizers. Far from being the intellectual hostage of far-left ideologues, President Obama does not appear to have the intellectual energy even to digest their ideas, much less to implement them.

Then we have some examples of Obama’s “managerial liberalism.”

The result of this is his utterly predictable approach to domestic politics: appoint a panel of credentialed experts. …IPAB is the most dramatic example of President Obama’s approach to government by expert decree, but much of the rest of his domestic program, from the Dodd-Frank financial-reform law to his economic agenda, is substantially similar.

While this may appear to be incremental statism, Kevin argues that it represents something quite radical.

…it amounts to that fundamental transformation of American society that President Obama promised as a candidate: but instead of the new birth of hope and change, it is the transformation of a constitutional republic operating under laws passed by democratically accountable legislators into a servile nation under the management of an unaccountable administrative state. The real import of Barack Obama’s political career will be felt long after he leaves office, in the form of a permanently expanded state that is more assertive of its own interests and more ruthless in punishing its enemies.

Echoing Thomas Sowell, who explained that Obama’s agenda technically could be described as fascism, Kevin says that the current administration’s approach is a soft form of totalitarianism.

…he also has advanced it without legislative assistance — and, more troubling still, in plain violation of the law. President Obama and his admirers choose to call this “pragmatism,” but what it is is a mild expression of totalitarianism, under which the interests of the country are conflated with those of the president’s administration and his party.

For all intents and purposes, we are now governed by a leftist bureaucracy.

…the United States is not going to fall for a strongman government. Instead of delegating power to a would-be president-for-life, we delegate it to a bureaucracy-without-death. You do not need to install a dictator when you’ve already had a politically supercharged permanent bureaucracy in place for 40 years or more. As is made clear by everything from campaign donations to the IRS jihad, the bureaucracy is the Left, and the Left is the bureaucracy. Elections will be held, politicians will come and go, but if you expand the power of the bureaucracy, you expand the power of the Left, of the managers and minions who share Barack Obama’s view of the world. Barack Obama isn’t the leader of the free world; he’s the front man for the permanent bureaucracy, the smiley-face mask hiding the pitiless yawning maw of total politics.

And the law apparently doesn’t mean much in this new world.

…he has decided — empowered to do so by precisely nothing — that the law will not be enforced until after the elections. Neither does the law empower him arbitrarily to exempt millions of his donors and allies in organized labor from the law, but he has done that too. This is a remarkable thing. The health-care law gives the executive all sorts of powers to promulgate regulations and make judgments, but it does not give the executive the power to decide which aspects of the law will be enforced and which will not, or to establish a different timeline from the one found in the law itself. For all of the power that Congress legally has given the president in this matter, he feels it necessary to take more — illegally.

Kevin shows that lawlessness goes far beyond Obamacare.

In a similar vein, President Obama has refused to cut off foreign-aid funds to the Egyptian government, though he is required by law to do so in the event of a coup d’état, which is precisely what happened in July in Egypt. …The law also prohibits the president and his allies from using the instruments of government to persecute their rivals, but that is precisely what the IRS has been up to for several years, as it turns out. And not just the IRS: Tea-party activist Catherine Engelbrecht was subject to an IRS audit, two FBI visits, an OSHA investigation, and an ATF inspection of her business (which does not deal in A, T, or F).  …The president not only ignores the law but in some cases goes out of his way to subvert it. …He has attempted to make “recess appointments” when Congress is not in recess and has been stopped from doing so by the federal courts, which rightly identified the maneuver as patently unconstitutional.

Another example is the recent IRS regulation that forces American banks to put foreign law above U.S. law.

Indeed, Kevin explains that the White House’s disdain for the law is even worse than Nixon’s.

…what is particularly disturbing is the quiet, polite, workaday manner with which the administration goes about its business — and with which the American public accepts it. As Christopher Hitchens once put it, “The essence of tyranny is not iron law; it is capricious law.” Barack Obama makes a virtue out of that caprice… President Nixon’s lawlessness was sneaky, and he had the decency to be ashamed of it. President Obama’s lawlessness is as bland and bloodless as the man himself, and practiced openly, as though it were a virtue. President Nixon privately kept an enemies list; President Obama publicly promises that “we’re gonna punish our enemies, and we’re gonna reward our friends.”

So what’s the bottom line? According to Williamson, we have a might-makes-right White House.

He has spent the past five years methodically testing the limits of what he can get away with, like one of those crafty velociraptors testing the electric fence in Jurassic Park. Barack Obama is a Harvard Law graduate, and he knows that he cannot make recess appointments when Congress is not in recess. He knows that his HHS is promulgating regulations that conflict with federal statutes. He knows that he is not constitutionally empowered to pick and choose which laws will be enforced. This is a might-makes-right presidency, and if Barack Obama has been from time to time muddled and contradictory, he has been clear on the point that he has no intention of being limited by something so trivial as the law.

In other words, the ends justifies the means.

Do I agree with this analysis? I think Kevin is spot on in terms of policy. Obama unambiguously has expanded the power of the political class in Washington.

The more interesting question, though, is whether the President is following a deliberate plan to change the nation. Or is government expanding – as it normally does – because of corruption, incompetence, politics, ideology, greed, and self interest?

I’m not a big believer in secret plans, so my normal instinct is to accept the conventional explanation for ever-growing government. On the other hand, Kevin points out that Obama is quite open about “fundamentally transforming” America and he pursues his agenda even when that means running roughshod over the law.

All I can say is that you should read the entire article. You’ll have a greater appreciation of the challenges we face if we want to restore the American ideal of economic liberty and personal freedom.

P.S. With regards to the is-Obama-a-socialist debate, Steven Horwitz (a former grad school colleague) makes some insightful observations.

P.P.S. Since we’re discussing who is a socialist and who isn’t, Cal Thomas has some wise words on whether religious faith requires socialist politics.

P.P.P.S. If you really want to see an example of bizarre name calling, there are some people who think Obama is a conservative.

P.P.P.P.S. And if you enjoy irony, some leftists are more rational than others.

P.P.P.P.P.S. Last but not least, I’ve cited some other first-rate Kevin Williamson columns in previous posts, including one on the corrupt nexus of Washington and Wall Street, another on limits to supply-side economics, and a delicious take down of Krugman, which I link to at the bottom of this post.

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It’s Not Just My Imagination: Late-Night Comics Becoming more Balanced

Over the years, I’ve shared lots of political humor from the late-night talk shows. Much of this humor is left leaning, but I can appreciate good jokes even if they’re at my expense.

In recent months, though, I’ve speculated that there’s been a shift away from Obama, especially on the part of Jay Leno (see here, here, and here).

Well, it seems that I was right in sensing a change. Here’s a report from Fox News about a new study.

A study of gags by late-night comics during the first half of the year found an abrupt change from 2012. Now Obama and Democrats are providing the lion’s share of punchlines. Obama was the target of 288 monologue jokes made by Jay Leno, David Letterman, Jimmy Fallon, Craig Ferguson and Jimmy Kimmel, according to an analysis released Monday by the Center for Media and Public Affairs at George Mason University. The next most joked-about individual was New York City Democratic mayoral candidate Anthony Weiner, at 120.

To put it mildly, this is a big change.

In 2012, Mitt Romney was the butt of more than twice as many jokes as Obama, and Republicans were similarly the target of more than double the jokes that were made on Democrats.

But it appears that I shouldn’t have singled out Leno for being a closet libertarian. Jimmy Fallon may deserve that honor.

Fallon was the toughest comic on Democrats, targeting them 240 times compared to 76 for Republicans. Letterman had 139 jokes about Republicans and 102 about Democrats, the CMPA found.

And since we’re on the topic, here’s the latest batch of jokes from the late-night comics, courtesy of NewsMax.com.

Jay Leno

• Detroit has become the largest city in U.S. history to file for bankruptcy. What happened was Detroit’s population dropped something like 70 percent, but the government got bigger. The tax base got smaller, but the government got bigger. Thank God that kind of thing could never happen in Washington.
• According to a new study, lying gets easier over time. People get better at lying the more they do it. See, that’s why you have to have term limits.
• Anthony Weiner has been caught in yet another sexting scandal. At the beginning of this campaign he said that other texts and photos were likely to come out. Well, they have. Finally, a politician who keeps his promises!
• The Obama administration has admitted that under Obamacare, you might not be able to keep your doctor. At first the president guaranteed you’d be able to keep your doctor, and now they’re saying you “might” be able to. Today Obama changed his slogan from “Yes we can” to “Perhaps we could try. Can’t promise anything.”
• I have been learning more about this NSA spying scandal. What are the odds that the only person they weren’t monitoring was Anthony Weiner?
• The Vatican announced that the late Pope John Paul II will become a saint after they approve a miracle where he cured a woman of severe brain injury, which is pretty impressive. Not as impressive, though, as the miracle of Anthony Weiner still being married, but that’s impressive.
• Seven women have come forward to say they’ve been sexually harassed by San Diego Mayor Bob Filner. The mayor has agreed to intensive rehab therapy. They say it’s a 12-step program. Here’s a simple 12-step program: Just stay 12 steps away from all women.
• More problems for America’s creepiest mayor, San Diego’s Bob Filner. An eighth woman has now come forward to say that she was sexually harassed by him. She said she would’ve come forward sooner but the line was too long.
• Mayor Filner now wants the city of San Diego to pay for his sexual harassment lawsuit. He says it’s only fair because he harassed women only on government time, never his own time.

David Letterman

• The show tonight may run a little longer than usual, and I’ll tell you why. We have about 300 Anthony Weiner jokes to get through.
• The new blockbuster movie, “The Wolverine,” stars Hugh Jackman, and he’s pumped up. To get all buffed out, he had to consume 6,000 calories a day. Hearing this, the governor of New Jersey, Chris Christie, said “Oh, yeah? Then what did you have for dinner?”

Conan

• Experts are predicting that the royal baby could pump $380 million into the British economy. So the question is: How do we get this kid to move to Detroit?
• President Obama has issued a statement about the royal baby. He told him to hang on to the birth certificate. Those things come in handy.
• It’s been reported that LeBron James will no longer play Olympic basketball for the United States. LeBron said he won’t play for any country that has less money than he does.

Jimmy Fallon

• We have former New York Governor Eliot Spitzer on the show tonight. He’ll be here only for about five minutes, but we’re charging him for the full hour.
• Everybody is still talking about the other baby, the royal baby. In fact, I saw that President Obama released a statement congratulating Prince William and Kate Middleton on the birth of their son. Then he said, “And whatever you do — hang on to that birth certificate.”
• President Obama gave a big speech yesterday on the economy. It was actually longer than his last State of the Union address — though it should be noted that he opened with 20 minutes of Anthony Weiner jokes.
• Russian President Vladimir Putin was on vacation last week, and apparently he caught a giant 46-pound fish. Putin called it a crowning achievement, while the manager of the aquarium said, “What am I supposed to do? He’s president.”

Jimmy Kimmel

• Anthony Weiner has vowed to continue to fight. He said he is staying in the race because he cares deeply about the people of New York — except for the one he is married to.

Craig Ferguson

• In a new interview, Republican Senator John McCain implied that he might vote for Hillary Clinton in 2016. McCain’s getting old. He also said he’d consider voting for oatmeal.

I’m not surprised to see lots of Weiner jokes (here are some from when he first got in trouble).

But I would have expected more jokes about the one-party kleptocracy of Detroit. Maybe that’s expecting too much.

What I really like to see, by the way, is more jokes targeting government. I don’t particularly care whether the humor is going after Republicans or Democrats.

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Why Do Bureaucrats Hate Bambi?

The bad news is that governments do a lot of things they shouldn’t do. The good news is that I never run out of material.

I’ve even created some sub-categories, such as my U.S. vs U.K. government stupidity contest and my great-moments-in-local-government series.

But I never thought I would have a special category about bureaucrats vs. Bambi.

1. Bureaucrats in Virginia filed three misdemeanor charges against a man for the horrible crime of rescuing a deer that was hit by a car.

2. Bureaucrats in Maryland fined two men $90 each for not having life jackets when they had the gall to rescue a deer that fell through some ice.

3. Bureaucrats in Indiana are threatening prison time for a family that rescued a baby deer from coyotes.

The paper pushers of the world seem to harbor a special grudge against these harmless ruminants, since we now have another story about a baby deer. But this time, Bambi was the victim, not the family.

Here are some of the unbelievable details from a local news report.

Two weeks ago, Schulze was working in the barn at the Society of St. Francis on the Kenosha-Illinois border when a swarm of squad cars arrived and officers unloaded with a search warrant. “(There were) nine DNR agents and four deputy sheriffs, and they were all armed to the teeth,” Schulze said. The focus of their search was a baby fawn brought there by an Illinois family worried she had been abandoned by her mother.

My first reaction when reading this was “what the @#$*?” Is he public sector really so bloated that 13 bureaucrats have nothing better to do than to serve a search warrant for a baby deer?

And why on earth were they heavily armed? Were they expecting Osama Bin Bambi?

But don’t answer yet, because it gets more absurd.

The Department of Natural Resources began investigating after two anonymous calls reporting a baby deer at the no-kill shelter. The warden drafted an affidavit for the search warrant, complete with aerial photos in which he described getting himself into a position where he was able to see the fawn going in and out of the barn.

I’m not sure what part of this excerpt gets me more upset, the fact that some snitch informed on the shelter for having a baby deer, or the fact that the government is so wasteful that bureaucrats went through the cost of arranging aerial surveillance!

Dangerous criminal executed

As a taxpayer, I get agitated about the waste of money. As a decent human being, this next part bothers me even more.

“I was thinking in my mind they were going to take the deer and take it to a wildlife shelter, and here they come carrying the baby deer over their shoulder. She was in a body bag,” Schulze said. “I said, ‘Why did you do that?’ He said, ‘That’s our policy,’ and I said, ‘That’s one hell of a policy.'”

The local cops justified the overkill approach by equating an animal shelter with a crack house.

“Could you have made a phone call before showing up, I mean, that’s a lot of resources,” WISN 12 News investigative reporter Colleen Henry asked. “If a sheriff’s department is going in to do a search warrant on a drug bust, they don’t call them and ask them to voluntarily surrender their marijuana or whatever drug that they have before they show up,” Niemeyer said,

Horrified citizens are complaining and fighting back, though I’m not holding my breath that justice will be served.

Schultz said she plans to sue the DNR for removing Giggles without even a court hearing. She also questioned what such an operation costs taxpayers. “They went way over the top for a little tiny baby deer,” Schultz said,

Remember, though, that this type of government thuggery is hardly unusual.

The Food and Drug Administration raided a dairy for the terrible crime of selling unpasteurized milk to people who prefer unpasteurized milk.

New York City imposed a $30,000 fine on a small shop because it sold a toy gun.

The pinheads at the Equal Employment Opportunity Commission went after Hooters for not having any male waiters in hot pants and tight t-shirts.

An unlucky guy wound up in legal hot water for releasing some heart-shaped balloons to impress his sweetheart.

Yup, our tax dollars at work. And Obama thinks government is too small and needs more of our money so it can do even more things.

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America Is a Tax Haven…and That’s a Very Good Thing

I like tax havens for the simple reason that we need some ways of restraining the greed of the political class.

Simply stated, if profligate politicians think that we are “captive customers,” they are much more likely to impose (even) higher tax rates (as we’ve seen in the past couple of years in Europe). But if they think that we have escape options, they’ll probably exercise some self control.

That’s why I defend nations such as Switzerland, which often are persecuted by politicians from high-tax nations.

It’s also why I defend the tax system of the United States.

Huh?!? What do I mean by that?

Well, while there are many bad things about the American tax system (including pervasive double taxation and a very uncompetitive corporate tax system), one of few redeeming features of our tax system is that we are a tax haven.

Not for Americans, of course, but it turns out we have some good rules for foreigners.

Here’s some of what was recently published by the Heartland Institute.

Some international tax experts note a big irony…in continued U.S. government pressure to compel overseas banks to give up information on Americans with bank accounts in the belief those people may be hiding money from the taxman. The irony: Much of the world considers the United States to be one of the world’s biggest tax havens. …”it’s very easy for anybody in the world today to set up, let’s say, a Delaware Corporation. You can do it online. You have to give very little information to get it up and running. And Delaware’s not alone. There are other states where you can do it as well,” said Jim Duggan, a tax, wealth and estate planning attorney with the Duggan Bertsch LLC law firm in Chicago.

Other experts agree.

He’d get no argument from Kevin Packman, chairman of the Offshore Tax Compliance Team at the Holland & Knight international law firm. “There are a number of countries that have said the U.S. is the biggest tax haven in the world,” Packman said. “There’s something to be said for that view.” He noted there are many countries where people are rightly concerned about government moves to impose confiscatory taxes or seize assets. They view the United States as more respectful of property rights and therefore look for ways to move investments into the U.S., including by setting up Delaware or other corporations, and parking money in U.S. banks.

I’ve already noted that Delaware is one of the world’s best tax havens because of its attractive incorporation policies, but we also have very attractive federal tax rules.

Dennis Kleinfeld adds his analysis in an article for Money News.

Tax havens serve two vitally important purposes to everyone lucky enough to have private investment capital. First, they are a source by which foreign capital can be routed into the United States or other countries with tax efficiency.  Second, they represent a safe haven where investors’ private capital can flee from overbearing governments of all kinds — democratic, republic, dictatorship, monarchy and just plain thugs and despots — and with a comfortable level of privacy, confidentiality and secrecy. What is the world’s largest tax haven? …the United States can lay claim to that title.  …the United States would not be able to maintain its economy without large inflows of foreign capital. Foreign investors can invest in the United States virtually tax free — in structures that are legally protected from risks and, currently, with secrecy. With fairly simple planning, a foreign investor can avoid tax on interest as well as gains from sale of securities — all protected by the legal system… As for secrecy, Delaware or Nevada are quite accommodating. In these states, a foreign company or individuals can form a limited liability company and open a bank account, but if the investor does its or his business outside the United States, there is no U.S. tax or reporting.

Just as important, Dennis explains that tax havens are not only good for the American economy, but also for individuals seeking to protect themselves from rapacious government.

There are no investors — the people who actually create investment capital — who have any complaint against offshore tax-haven financial centers. …To politicians, your capital is their means to advance their political goals. Notwithstanding their propaganda of serving the American people, the needs of the people are always subservient to the voracious needs of political advancement.  How can private investors protect themselves from becoming the spoils of war from the marauding armies of politicians fighting for power? For that, investors need tax havens.

By the way, leftists also agree that the United States is a tax haven for non-Americans, so that’s not in dispute.

But there is a big argument about whether it’s good for America to have these policies. I’ve argued over and over again in favor of tax havens as a general principle (I recommend my New York Times piece if you want a good short summary), but it’s also worth noting that America’s tax haven policies have helped to attract trillions of dollars to the U.S. economy.

By the way, I suppose it’s time to confess that I lost my recent debate on tax havens for the Costco Connection. Though I argued last month that the magazine phrased the question in a very misleading way, so the fact that the margin was only 51-49 could be an indication that I was actually somewhat persuasive.

And maybe some late-reporting precincts could still turn the tide, so feel free to add your opinion if you still haven’t voted.

But I’m digressing. Let’s conclude by assessing where we stand. Tax experts on the right and left agree that the United States is a tax haven for foreigners who need a safe place to invest their money.

There’s also no doubt that foreigners take advantage of these policies in ways that attract huge amounts of money to the American economy – more than $25 trillion according to the Commerce Department!

P.S. You won’t be surprised to learn that hypocritical leftists love using tax havens to protect their money even though they want to deny that freedom to the rest of us.

P.P.S. I’m such an avid defender of tax havens that I almost wound up in a Mexican jail. That’s dedication!

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23 Ways of Poking Fun at Libertarians

The very first bit of anti-libertarian humor I ever posted was this clever video about the anarcho-capitalist paradise of Somalia.

I then shared two cartoons, one on libertarian ice fishing and the other showing libertarian lifeguards.

That was followed by a very funny list of the 24 types of libertarians.

But I haven’t shared anything making fun of people like me since this “think I do” montage last year.

Thanks to Buzzfeed, however, we now have something new for our collection. They came up with “23 Libertarian Problems” and here are two of my favorites from the list.

Just in case loyal libertarian readers don’t like self-deprecating humor, you can expunge your unhappiness by enjoying some anti-GOP humor here, here, here, and here and some anti-Democrat humor here, here, here, and here.

And if you’re still unhappy, cheer up with this libertarian fantasy.

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