I don’t like coerced redistribution. When the government uses the threat of force to take from Person A to give to Person B, it simultaneously reduces Person A’s incentives to produce while also luring Person B into dependency.
But not all coerced redistribution and government intervention is created equal.
I don’t like welfare programs, for instance, in part because taxpayers are writing huge checks to support a plethora of programs, but also because there is very strong evidence that the modern welfare state has caused more poverty.
Nonetheless, I understand that there are well-meaning people who support these programs. Their motives are pure in that they simply want to alleviate perceived suffering. And since they’ve never learned about the adverse indirect effects of government intervention and presumably haven’t given any thought to the ethics of government coercion, I don’t think of these people as being bad or immoral. Just uninformed.
But there are some forms of redistribution and intervention that are so self-evidently odious and corrupt that you can’t give supporters the benefit of the doubt. Simply stated, there’s no justifiable argument for using government coercion to hurt poor people in order to benefit rich people.
Let’s look at two examples.
First, the Export-Import Bank is a quintessential example of corporate welfare. The program forces taxpayers to guarantee the contracts of big corporations and foreign buyers, and there’s now a fight over whether it should be extended.
Needless to say, ordinary voters don’t want their money being used enrich big companies.
So if you were one of the beltway insiders who benefited from this corrupt institution, how would you try to get the program extended? Would you be upfront and argue that big companies like Boeing deserve tax dollars? Would you argue that politicians are really smart and wise and that they should interfere with the free market?
That would be the honest way of supporting the Ex-Im Bank. But you won’t be surprised to learn that advocates instead have resorted to lies. Here are some excerpts from a Reuters story.
The U.S. Export-Import Bank has mischaracterized potentially hundreds of large companies and units of multinational conglomerates as small businesses, a flaw in its record keeping that could undermine the export lender’s survival strategy. …A comparison of some 6,000 businesses characterized by Ex-Im as “small” with information supplied by corporate data collector Dun & Bradstreet, which Ex-Im also uses to vet applicants, and other sources turns up some 200 companies that appear to be mislabeled and many more whose classification is uncertain.
Um… I would say they lied rather than characterize it as a “flaw in its record keeping.” But let’s set that aside and look at some of the “small businesses” that had their snouts in the Ex-Im trough.
…analysis showed companies owned by billionaires such as Warren Buffet and Mexico’s Carlos Slim, as well by Japanese and European conglomerates, were listed as small businesses and Ex-Im acknowledged errors in its data in response to those findings. …A division of Austria’s Swarovski jewelers shows up, as does North Carolina’s Global Nuclear Fuels, which is owned by General Electric and Japan’s Toshiba and Hitachi. …The list of small businesses in Texas, for example, includes engineering and construction company Bechtel, which has 53,000 employees.
Gee, Warren Buffet and foreign conglomerates don’t exactly sound like my idea of small businesses.
Hopefully this will provide more ammunition of those fighting to wean big companies from the public teat.
Bank officials and supporters have used the Ex-Im’s support for American small business as a first line of defense against a campaign by conservatives to shut it down as an exponent of “crony capitalism.” …“Rarely does Ex-Im miss a (public relations) opportunity to claim that it primarily helps small business, but Ex-Im is again playing fast and loose with the facts,” said Representative Jeb Hensarling, a Texas Republican who chairs the House Financial Services Committee. “The bulk of Ex-Im’s help indisputably goes to large corporations that can finance their own operations without putting it on the taxpayer balance sheet.”
For our second example, we have the absolutely horrifying spectacle of the Obama Administration trying to shut down Wisconsin’s school choice system.
Why? Well, because currying favor with union bosses is more important than improving educational opportunities for students from disadvantaged communities.
George Will explains what’s happening in his Washington Post column.
It is as remarkable as it is repulsive… Eager to sacrifice low-income children to please teachers unions, the Justice Department wants to destroy Wisconsin’s school choice program. Feigning concern about access for disabled children, the department aims to handicap all disadvantaged children by denying their parents access to school choices of the sort affluent government lawyers enjoy. …Wisconsin’s school choice program was pioneered by an American hero, Mississippi-born Annette Polly Williams, who died Nov. 9 at age 77. During her three decades in Wisconsin’s legislature, she overcame the opposition of fellow Democrats to offering education choices to low-income parents. At the end of her life, however, she saw an African American attorney general, serving an African American president, employing tortured legal reasoning in an attempt to bankrupt private schools that enlarge the education options of disadvantaged children. …Closing the voucher program is the obvious objective of the teachers unions and hence of the Obama administration. Herding children from the choice schools back into government schools would swell the ranks of unionized teachers, whose union dues fund the Democratic Party as it professes devotion to “diversity” and the downtrodden.
By the way, you probably won’t be surprised (given the White House’s cavalier approach to the rule of law) to learn that the Obama Administration is using is utterly nonsensical legal theory.
…federal lawyers argue that because public funds, in the form of tuition vouchers empowering parents to make choices, flow to private schools, the schools become “public entities.” …this is like arguing that when food stamps are used for purchases at Wal-Mart, America’s largest private employer ceases to be private — it becomes an extension of the government. Inconveniently for the Justice Department, the U.S. Supreme Court has said the fact that a “private entity performs a function which serves the public does not make its acts state action.”
The preposterous legal reasoning is a farce, but that doesn’t get me overly upset.
What does bother me is the way the White House is acting like the modern-day equivalent of George Wallace, standing in the schoolhouse door to prevent low-income (and largely minority) students from getting an opportunity for better education.
I guess that a black President (who sends his own kids to private school) consigning black children to the back of the proverbial bus shouldn’t surprise me too much. After all, some divisions of the NAACP also have decided that being politically allied with union bosses is more important that educational opportunity for minority kids.
But that doesn’t make it morally acceptable. Put yourself in the shoes of a low-income parent. Wisconsin’s school choice programs gives you some hope that your kids can break free of poverty. Imagine what it feels like, then, when some of the politicians who claim to be on your side then decide that your children are expendable pawns. How disgusting.
Since we’re talking about things that are disgusting, let’s shift back to the Ex-Im Bank. I’ve actually had some Republican types tell me that corporate welfare is okay because it “helps to offset” some of the redistribution from rich to poor.
I confess that I’m dumbstruck by such arguments. It’s sort of like hearing someone say it’s okay to murder, rape, and steal because other people are doing it.
This is why it’s not easy being a libertarian. Yes, we believe in small government for utilitarian reasons such as faster growth, higher living standards, and more jobs. But we’re also motivated by morality, by the belief that there’s right and wrong and that good people should strive to uphold the former and fight the latter.
That’s not a popular view in Washington, which is best characterized as an incestuous racket for the benefit of interest groups, politicians, cronyists, lobbyists, bureaucrats, contractors, and other insiders.
P.S. On a completely separate (and non-political) issue, I can’t resist seeking some sympathy after what happened to me this morning. I took two of my cats to the vet for their spay and neuter appointments. Some of you pet owners already know that most cats don’t like car rides, so you might have some inkling of what I’m about to report.
About five minutes into the drive, one of the cats vomits in the little cat carrier. That obviously wasn’t a happy development, particularly since it left me with an unpleasant choice of enduring a very unpleasant smell or having the window open and enduring a very bitter chill. But then, a few minutes later, the other cat…um, how should I phrase this…loses control of her bowels.
Which means that the next 20 minutes was almost as unbearable as watching a state-of-the-union address. I was running late for the appointment, so I couldn’t stop someplace and try to deal with the mess. And the two cats kept moving around in their carrier, making things worse. Trying to breathe through my mouth, even with the window down, was at best a pitiful attempt to mitigate my suffering.
An utterly miserable situation. Almost 1/10th as bad as an IRS audit.
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[…] Honest folks on the left are equally upset about Biden’s reverse redistribution. […]
[…] I utterly despise government programs that redistribute from the poor to the rich (such as the Export-Import Bank, the National Endowment for the Arts, bailouts for student loan […]
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[…] And those policies often are at the expense of ordinary people, which is an especially repugnant form of redistribution. […]
[…] And those policies often are at the expense of ordinary people, which is an especially repugnant form of redistribution. […]
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[…] Let’s put all this in context. Today’s topic is gambling and the cancerous effect of government intervention and favoritism in that sector. But the lesson we should learn is that cronyism is a bad idea, period. Cronyism is also bad in agriculture. It’s bad in finance. It’s bad in the tax code. It’s bad in energy. It’s bad everywhere. […]
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[…] To be fair, leftists don’t hate all rich people. They’re willing to shower bailouts, subsidies, and handouts on wealthy people who give them lots of campaign […]
[…] I get very agitated that about the Export-Import Bank, which is a form of corporate welfare that transfers money from the general population to the […]
[…] I get very agitated that about the Export-Import Bank, which is a form of corporate welfare that transfers money from the general population to the […]
[…] I get very agitated that about the Export-Import Bank, which is a form of corporate welfare that transfers money from the general population to the […]
[…] all, I’m also guided by many of these factors. I have empathy for others, especially the disadvantaged. My goals are to have a more peaceful and prosperous society. And I’m guided by the libertarian […]
[…] all, I’m also guided by many of these factors. I have empathy for others, especially the disadvantaged. My goals are to have a more peaceful and prosperous society. And I’m guided by the libertarian […]
[…] all, I’m also guided by many of these factors. I have empathy for others, especially the disadvantaged. My goals are to have a more peaceful and prosperous society. And I’m guided by the libertarian […]
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[…] the “rich” is not at the expense of the rest of us (assuming honest markets rather than government cronyism). It doesn’t matter if the rich are earning more money. What matters is whether there’s […]
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[…] the interest of space, that’s enough examples, though I’ll at least mention that the Export-Import Bank is another example of a government policy that transfer money from the poor to the rich, as are agriculture […]
[…] the interest of space, that’s enough examples, though I’ll at least mention that the Export-Import Bank is another example of a government policy that transfer money from the poor to the rich, as are agriculture […]
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I haven’t heard the subject put any better.
[…] Now let’s return to where we started. Yes, a growing number of Americans are getting disillusioned, and with good reason. But will the good people in Washington appeal to them with a principled campaign against corporate welfare and other policies that help insider fat cats? […]
The two cat story is a great analogy, for your relationship with the Republican and Democratic parties. Here you are attempting to fix problems, and they make the situation far worse. You had to endure the stench for the remainder of time in the car/in office, knowing that the next time will probably be exactly the same.
Yes, but one must also close the loop back to the naiveté of compassionate redistribution, to see why support for these companies must now become ever more necessary.
As the compassion of redistribution flattens the effort vs. reward curve — by weighing down on the more exceptional to (temporarily only, of course (*)) blunt the consequences of mediocrity for the rest of society – motivation across the entire competence spectrum decreases. And as these companies become less and less able to compete internationally, as their workforces become less motivated than their worldwide peers, support becomes necessary to keep them alive.
The end result is demotivated moribund economies, which cannot broadly compete on the world stage and where a national effort is needed to support a few surviving niche industries. Individual prosperity starts lagging behind average world growth, as the limited success of a few supported companies must be diluted and redistributed to the large masses. Think France, and you are half way there.
The US has not completed this transition yet, but it is on its way to this irreversible outcome. It all starts with the presumption: “The United States is the richest country in the world. It sure can afford to (flatten the effort reward curve some) by being nicer to average people”.
[Of course, “average” is often an oxymoron, as these “average” American people are still in the world’s top 10% — and their redistributive aspirations will indeed drive them into the true “average”: The worldwide prosperity average. Darwinism and the inevitable decline of the stupid (as Gruber may say) are always at work, no matter how much the majority wishes to ignore this reality with “Yes, we can!” slogans. Yes! Of course you can march your standard of living down towards the world average! Not only you can, but it is the natural thing to do!! All it takes is the irresistible flattening of your national aggregate effort-reward curve and voila you will be France in less than one generation! – and wait to see how France ends up! Even France is only at the beginning of its voyage to decline]
So to tie it back to Mr. Mitchell’s point about libertarian morality: Over time, utility makes morality. It’s just simple Darwinism. Those with detrimental morals decline, and utility starts being perceived as morality. It is a primordial mechanism of cultural evolution…
(*) the effect is only temporary because the decreased growth rate, i.e. the growth deficit compared to average world growth, compounds to depress most citizens rather quickly (a generation or two, but also now faster and faster as everything human is irreversibly accelerating).
P.S. To be more precise, compassionate redistribution is only 20% naiveté and 80% self interest. Most voters, deep inside, believe that government coercion will take from others more than it will take from them. But the monster they create in democratic coercive redistribution inevitably must turn against and eat its own socialist children — once a few decades of sub-par growth wipe out prosperity.
P.P.S. Not to compound the cat misfortune and its link to an IRS audit… but apparently, the IRS will not let you take a casualty loss for your misfortune. See http://www.irs.gov/publications/p547/ar02.html#en_US_2013_publink1000225205
“Family pet. Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met.”
It’s tough indeed being a libertarian. There is no break!
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My sympathies for the cat difficulties. There is nothing I can offer about a reprehensible government.