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Archive for August, 2017

I like the Baltic nations, as illustrated by what I wrote last year.

I’m a big fan of…Estonia, Latvia, and Lithuania. These three countries emerged from the collapse of the Soviet Empire and they have taken advantage of their independence to become successful market-driven economies. One key to their relative success is tax policy. All three nations have flat taxes. And the Baltic nations all deserve great praise for cutting the burden of government spending in response to the global financial crisis/great recession (an approach that produced much better results than the Keynesian policies and/or tax hikes that were imposed in many other countries).

No wonder the Baltic nations are doing a good job of achieving economic convergence.

I’ve specifically praised Estonia on several occasions.

Estonia’s system is so good (particularly its approach to business taxation) that the Tax Foundation ranks it as the best in the OECD. …Estonia…may be my favorite Baltic nation if for no other reason than the humiliation it caused for Paul Krugman.

Indeed, I strongly recommend this TV program that explored the country’s improbable success. And here’s some data showing that Estonia is leading the Baltics in convergence.

Now I have a new reason to admire Estonia. Having experienced the brutality of both fascism and communism, they have little tolerance for those who make excuses for totalitarianism. And the issue has become newsworthy since Greece decided to boycott a ceremony to remember the victims of communism and fascism.

Estonian Minister of Justice Urmas Reinsalu responded to his Greek counterpart, Stavros Kontonis following the uproar caused by the decision by Greece to not participate in the recent European Day of Remembrance for Victims of Stalinism and Nazism in Estonia.

The letter sent by Reinsalu is a masterpiece of moral clarity. He unambiguously condemns all ideologies that are contrary to free societies. Let’s look at some excerpts.

Our values are human rights, democracy and the rule of low, to which I see no alternative. This is why I am opposed to any ideology or any political movement that negates these values or which treads upon them once it has assumed power. In this regard there is no difference between Nazism, Fascism or Communism.

Amen. That’s basically what I wrote just a few days ago.

Reinsalu points out that free societies (sometimes called liberal democracies, with “liberal” used in the “classical liberal” sense) don’t oppress people, which is inherent with fascist and communist regimes.

Condemnation of crimes against humanity must be particularly important for us as ministers of justice whose task it is to uphold law and justice. …Every person, irrespective of his or her skin colour, national or ethnic origin, occupation or socio-economic status, has the right to live in dignity within the framework of a democratic state based on the rule of law. All dictatorships – be they Nazi, Fascist or Communist – have robbed millions of their own citizens but also citizens of conquered states and subjugated peoples.

The Estonian Justice Minister refers to the bitter experience of his nation.

Unlike Greece, Estonia has the experience of living under two occupations, under two totalitarian dictatorships. …In light of the experience of my country and people, I strongly dispute your claim that Communism also had positive aspects. ……in 1949, …the communist regime deported nearly 2 percent of the population of Estonia only because they as individual farmers refused to go along with the Communist agricultural experiment and join a collective farm. This was in addition to the tens of thousands who had already been imprisoned in the Gulag prison camps or deported and exiled earlier. Thousands more would follow, taken into prison up to mid-1950.

He points out that communism is incompatible with freedom.

…it is not possible to build freedom, democracy and the rule of law on the foundation of Communist ideology. …this has been attempted… This has always culminated in economic disaster and the gradual destruction of the rule of law…there are also countries and peoples for whom the price of a lesson in Communism has been millions of human lives.

The bottom line, he writes, is that all forms of totalitarianism should be summarily rejected.

…we must condemn all attempts or actions that incite others to destroy peoples or societal groups…there is no need to differentiate. It makes no difference to a victim if he is murdered in the name of a better future for the Aryan race or because he belongs to a social class that has no place in a Communist society. We must remember all of the victims of all totalitarian and authoritarian dictatorships.

Kudos for Minister Reinsalu. He doesn’t shrink from telling the truth about communism and other forms of dictatorship.

None of this should be interpreted to mean that western societies are perfect. Heck, I spend most of my time criticizing bad policy in the United States and other western nations. But there’s no moral equivalence.

Here’s Reinsalu’s entire letter, which contains additional points.

I’ll close by elaborating on one of his points. Reinsalu wrote about the miserable track record of communism and made some powerful points.

But I think he was too diplomatic. He should have highlighted the jaw-dropping body count of communist regimes.

He did mention some of the horrid policies of the Soviet Union (perhaps more than 60 million victims), but he also could have listed the incomprehensible misery that communism caused in places such as Cuba, Cambodia, and North Korea. Or China back in the Mao era.

That being said, his letter is a very powerful indictment of the moral bankruptcy of his Greek counterpart (which perhaps isn’t a surprise given the ideology of the Syriza government).

And it’s also an indictment of all of the apologists for communist tyranny.

P.S. Poland is another country that experienced the dual brutality of fascism and communism. So it shouldn’t be surprise that Poles share the same moral clarity as Estonians.

Perhaps this is why Poland has done a reasonably good job of undoing bad Soviet policies.

P.P.S. While I’m a fan of nations such as Estonia and Poland, they need further market-based reforms to compensate for demographic decline.

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I wrote last week about evil of totalitarian ideologies such as communism and fascism and pointed out that both antifa and Nazis should be treated with complete disdain and ostracism.

And that led me to find common ground with my left-of-center friends, even though I don’t like many of their policies.

I don’t like redistribution…programs are financed with taxes and that the internal revenue code is enforced by coercion…if you catch me in a cranky mood, I’ll be like the stereotypical libertarian at Thanksgiving dinner and wax poetic about what’s wrong with the system. That being said, I much prefer the coercion found in western democracies compared to the totalitarian versions of coercion found in many other parts of the world. At least we have the rule of law, which limits (however imperfectly) capricious abuse by government officials. …our Constitution still protects many personal liberties, things that can’t be taken for granted in some places. Moreover, there is only a trivially small risk of getting abused by the state in western nations because you have unpopular views. And there’s little danger of persecution by government (at least nowadays) based on factors such as race and religion. This is what makes liberal democracy a good form of government (with “liberal” in this case being a reference to classical liberalism rather than the modern version). Unfortunately, there are some people in America that don’t believe in these principles.

Now let’s look at an aspect of this issue from a left-of-center perspective.

Writing for the New Republic, John Judis analyzes the different types of socialism. He starts with some personal history of his time as a socialist activist.

In the early 1970s, I was a founding member of the New American Movement, a socialist group… Five years later, I was finished with…socialist organizing. …nobody seemed to know how socialism—which meant, to me, democratic ownership and control of the “means of production”—would actually work… Would it mean total nationalization of the economy? …wouldn’t that put too much political power in the state? The realization that a nationalized economy might also be profoundly inefficient, and disastrously slow to keep up with global markets, only surfaced later with the Soviet Union’s collapse. But even then, by the mid-1970s, I was wondering what being a socialist really meant in the United States.

He then notes that socialism has made a comeback, at least if some opinion polls (but not others) and the campaign of Bernie Sanders are any indication.

…much to my surprise, socialism is making a comeback. The key event has been the campaign of self-identified democratic socialist Bernie Sanders, who almost won the Democratic nomination and is now reputedly the most popular politician in America. Several opinion polls have also found that young people now think favorably of socialism and ill of capitalism… For the first time since the ‘60s, socialism looks like a politics with a future in the United States.

But Judis notes that it’s unclear what socialism means.

The old nostrums about ownership and control of the means of production simply don’t resonate in 2017. …In the 2016 campaign, however, Sanders began to define a socialism that could grow… I think there is an important place for the kind of democratic socialism that Sanders espoused.

He says there are many flavors of socialism, but ultimately puts them in two camps.

There is no scientific definition of socialism… It’s a political tradition with many different flavors—Marxist, Christian, social-democratic, Fabian, Owenite, Leninist, Maoist. In looking at the choices facing American socialists now, …a choice between a socialism rooted in Marx’s apocalyptical promise of revolution, or the abolition of capitalism and a socialism that works more gradually toward the incorporation of public power and economic equality within capitalism. One could be called “Marxist socialism” and the other “social democratic”—or, to borrow from John Maynard Keynes, “liberal socialism.”

And “liberal socialism” basically means capitalism combined with European-style redistributionism.

In Western Europe, …socialists were forced to define their objectives more clearly. And what has emerged is a liberal conception of socialism. …social democracy has probably reached its acme in the Nordic countries, where the left has ruled governments for most of last half-century. …That’s not Marx’s vision of socialism, or even Debs’s. In Europe, workers have significant say in what companies do. They don’t control or own them. Private property endures. …private capital is given leave to gain profits through higher productivity, even if that results in layoffs and bankruptcies. But the government is able to extract a large share of the economic surplus that these firms create in order to fund a full-blown welfare state.

Which means “liberal socialism” is, well, liberalism (the modern version, i.e., statism, though Thomas Sowell has a more unflattering term to describe it).

By the standards of Marxist socialism, this kind of social democracy appears to be nothing more than an attenuated form of capitalism. …But…As the Soviet experiment with blanket nationalization showed, it can’t adjust to the rapid changes in industry created by the introduction of automation and information technology. …the market is a better indicator of prices than government planning. …the older Marxist model of socialism may not even be compatible with popular democracy. …What’s the difference between this kind of socialist politics and garden-variety liberalism? Not much. …American socialists need to do what the Europeans did after World War II and bid goodbye to the Marxist vision of democratic control and ownership of the means of production. They need to recognize that what is necessary now—and also conceivable—is not to abolish capitalism, but to create socialism within it.

For what it’s worth, the leftists I know are believers in “liberal democracy,” which is good, and they also are believers in “liberal socialism,” which is good, at least when compared to “Marxist socialism.” Sort of like comparing Barack Obama and Hillary Clinton to Nicolás Maduro and Kim Jong Un.

I disagree with Obama and Clinton, of course, and I would argue that what they want is bad compared to small-government capitalism.

But I utterly despise the totalitarian regimes in Venezuela and North Korea.

Let’s conclude by highlighting a key difference between “liberal socialists” and supporters of small government. My leftist friends are content to allow capitalism so long as they can impose high taxes on “economic surplus” to finance lots of redistribution.

They think that such policies don’t cause significant economic harm. I try to explain to them that punishing success and subsidizing dependency is not a good recipe for long-run prosperity. And I also tell them that demographic changes make their policies very unsustainable.

But at least these decent people on the left are not totalitarians. So when I look at this amusing image from Reddit‘s libertarian page, I agree that everyone who supports big government is a collectivist of sorts. But “Social Democracy” (assuming that’s akin to “liberal socialism”) is not really the same creature as the other forms of collectivism (assuming “social justice” is akin to antifa).

Which is why this image is more accurate.

The bottom line is that Nordic-style big government is misguided, but state-über-alles totalitarianism is irredeemably horrible.

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While I realize there’s zero hope of ripping up America’s awful tax code and getting a simple and fair flat tax, I’m nonetheless hopeful that there will be some meaningful incremental changes as part of the current effort to achieve some sort of tax reform.

A package that lowers the corporate rate, replaces depreciation with expensing, and ends the death tax would be very good for growth, and those good reforms could be at least partially financed by eliminating the state and local tax deduction and curtailing business interest deductions so that debt and equity are on a level playing field.

All that sounds good, and a package like this should be feasible since Republicans control both Congress and the White House (especially now that the BAT is off the table), but I warn in this interview that there are lots of big obstacles that could cause tax reform to become a disaster akin to the Obamacare repeal effort.

Here’s my list of conflicts that need to be solved in order to get some sort of plan through Congress and on to the President’s desk.

  • Carried interest – Trump wants to impose a higher capital gains tax on a specific type of investment, but this irks many congressional GOPers who have long understood that any capital gains tax is a form of double taxation and should be abolished. The issue apparently has some symbolic importance to the President and it could become a major stumbling block if he digs in his heels.
  • Tax cut or revenue neutrality – Budget rules basically require that tax cuts expire after 10 years. To avoid this outcome (which would undermine the pro-growth impact of any reforms), many lawmakers want a revenue-neutral package that could be permanent. But that means coming up with tax increases to offset tax cuts. That’s okay if undesirable tax preferences are being eliminated to produce more revenue, but defenders of those loopholes will then lobby against the plan.
  • Big business vs small business – Everyone agrees that America’s high corporate tax rate is bad news for competitiveness and should be reduced. The vast majority of small businesses, however, pay taxes through “Schedule C” of the individual income tax, so they want lower personal rates to match lower corporate rates. That’s a good idea, of course, but would have major revenue implications and complicate the effort to achieve revenue neutrality.
  • Budget balance – Republicans have long claimed that a major goal is balancing the budget within 10 years. That’s certainly achievable with a modest amount of spending restraint. And it’s even relatively simple to have a big tax cut and still achieve balance in 10 years with a bit of extra spending discipline. That’s the good news. The bad news is that there’s very little appetite for spending restraint in the White House or Capitol Hill, and this may hinder passage of a tax plan.
  • Middle class tax relief – The main focus of the tax plan is boosting growth and competitiveness by reducing the burden on businesses and investment. That’s laudable, but critics will say “the rich” will get most of the tax relief. And even though the rich already pay most of the taxes and even though the rest of us will benefit from faster growth, Republicans are sensitive to that line of attack. So they will want to include some sort of provision designed for the middle class, but that will have major revenue implications and complicate the effort to achieve revenue neutrality.

There’s another complicating factor. At the risk of understatement, President Trump generates controversy. And this means he doesn’t have much power to use the bully pulpit.

Though I point out in this interview that this doesn’t necessarily cripple tax reform since the President’s most important role is to simply sign the legislation.

Before the 2016 election, I was somewhat optimistic about tax reform.

A few months ago, I was very pessimistic.

I now think something will happen, if for no other reason than Republicans desperately want to achieve something after botching Obamacare repeal.

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Most people understand that there’s a Social Security crisis, but they only know half the story.

The part of the crisis they grasp is that the program is basically bankrupt, though I doubt many of them realize that the long-run shortfall is a staggering $44 trillion.

The part of the crisis that generally is overlooked is that the program is a lousy deal for workers. They pay record amounts of tax into the system in exchange for a shaky promise of a modest monthly check. For all intents and purposes, they are being charged for a steak, but they’re getting a hamburger (with Medicare, by contrast, people are charged for a hamburger and they receive a hamburger but taxpayers pay for a steak that nobody gets).

For groups with lower-than-average life expectancy, such as poor people and minorities, Social Security is even worse. They pay into the system throughout their working lives, but then they don’t live long enough to collect a decent amount of benefits.

I narrated a video that was partly focused on how people could have more retirement income if we shifted to a system of personal retirement accounts, but this video from Learn Liberty directly addresses this issue.

By the way, I have one minor complaint with this excellent video. Social Security is not forced savings. There’s no money set aside. Yes, there’s a “trust fund,” but it contains nothing but IOUs. And if you don’t believe me, see what the Clinton Administration wrote back in 1999.

It would be more accurate to say the system is a pay-as-you-go, tax-and-transfer entitlement.

But I’m digressing, so let’s focus on some potential good news. Americans actually have a pretty good track record of saving for their own retirement. Indeed, total pension assets (measured as a share of economic output) in the United States rival those of nations that have mandatory private retirement systems.

So it presumably shouldn’t be that difficult to transition to a private retirement system in America.

Which was a key takeaway from a column in the Wall Street Journal last week by Andrew Biggs of the American Enterprise Institute. He starts with a pessimistic observation on how major politicians have addressed the crisis.

During last year’s presidential campaign, the candidates promised not to cut Social Security benefits (Donald Trump) and even to increase them (Hillary Clinton). …the Trump administration should reconsider its pledge not to cut Social Security benefits. The program is 25% underfunded over the long term, the Congressional Budget Office projects.

But the good news is that many Americans already are saving for retirement, so it wouldn’t be disruptive to extend personal retirement accounts to the entire population.

…private plans such as 401(k)s have allowed more people than ever to save for retirement…61% of workers… Contributions to private plans have…risen from an average 5.8% of wages in 1975 to 8% in 2014. …in 1984 only 23% of households received benefits from private retirement plans. By 2007 that had risen to 45%. Moreover, during the same period the benefits that the median household received from private plans rose by 141% above inflation, versus only 25% for Social Security benefits.

This is a system that should be expanded, with a prudent transition from a bankrupt Social Security system to a safer and more lucrative system of personal retirement accounts.

And that would be a much better outcome than what the current system will give us.

…Scandinavian-level tax rates or multi-trillion dollar unfunded entitlement liabilities.

P.S. Responding to those who worry about stock market downturns and the implications for retirement income, my colleague Mike Tanner showed that even people retiring after the 2008 crash would have been better off with personal retirement accounts.

P.P.S. You can enjoy some Social Security cartoons here, here, and here. And we also have a Social Security joke if you appreciate grim humor.

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I generally use Texas as a good example when discussing public policy. Particularly compared to places such as California.

I like the sensible attitude about guns, but the absence of an income tax is particularly admirable when considering economic issues, and I confess to being greatly amused when I read about jobs and investment escaping high-tax states like California and moving to the Lone Star State.

But being more pro-market than California is a low bar to clear. And I’ve written that government is too big in Texas.

And now, because of Hurricane Harvey, I have another reason to criticize the state.

Texas has a law against “price gouging,” which means politicians there (just like the politicians in places like Venezuela) think they should get to determine what’s a fair price rather than allow (gasp!) a free market.

The state’s Republican Attorney General is even highlighting his state’s support for this perverse example of price controls.

>Price gouging by Texas merchants in the path of Hurricane Harvey has drawn the attention of Texas Attorney General Ken Paxton, who said Saturday that his office is looking into such cases. …”We’ll be dealing with those people as we find them,” he said. …Paxton issued a warning about price gouging Friday as the hurricane approached the Texas coast. Texas law prohibits businesses from charging exorbitant prices for gasoline, food, water, clothing and lodging during declared disasters.

Paxton is right about Texas law, but he is threatening to enforce a terrible policy.

To help explain why Texas law is bad and why the Attorney General is misguided, here’s a video from John Stossel on so-called price gouging.

It’s disgusting that Mississippi arrested John. The guy should have received a medal for putting his money at risk to serve others.

To augment Stossel’s analysis, here’s a video from Learn Liberty that explains why politicians shouldn’t interfere with the price system.

And here’s Walter Williams discussing the role of “windfall profits” and how high returns encourage the reallocation of resources in ways that benefit consumers.

The bottom line on this issue is that buyers understandably want low prices, particularly in emergency situations.

But that makes no economic sense. However, since buyers generally outnumber sellers, politicians will always have an incentive to demagogue on the issue.

I’m not surprised when we get economic illiteracy from certain politicians. Nonetheless, it’s very disappointing when Texas lawmakers sink to that level. I hope Mr. Paxton at least is feeling guilty.

P.S. But I’ll close on an upbeat note by sharing my collection of Texas-themed humor: Here, here, here, and here.

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When I write about politicians in their role as politicians (rather than their policy prescriptions), it’s usually to mock them for venality, corruption, immorality, sleaze, incompetence, or hypocrisy.

Today, I want to plead with them to exercise self-restraint. Some folks may have seen the stories about President Trump using up the Secret Service budget because of all his vacation trips to his various resorts.

There’s nothing illegal about his actions, but I wish Trump (as well as his predecessors and successors) would sometimes pause and think about whether they’re squandering other people’s money.

But since it’s highly unrealistic to expect politicians to have empathy for taxpayers, maybe we need some reforms. Here’s some of what I wrote in a column for Fortune.

…the Secret Service is way over budget because of President Donald Trump’s frequent vacations… It’s easy to zing Trump for being a hypocrite, as he previously complained about the cost and duration of President Barack Obama’s vacations. …But let’s look at this issue from the perspective of taxpayers. Every time the president hops on Air Force One for a weekend getaway at one of his resorts, that involves a major shift of manpower by the Secret Service, along with major outlays for travel, lodging, and other costs. …it’s time to consider some sensible reforms that could limit the agency’s burden on taxpayers.

I came up with a couple of ideas, which could be implemented by attaching conditions to the spending bills that fund the White House and the Secret Service.

…Congress should put an annual limit on expenditures for unofficial White House travel. …the average American gets 10 paid vacation days a year. …Presidents are not average, of course, so they should get taxpayer-financed protection for around four weeks of vacation. Any more than that would still have a Secret Service detail, but the president would have to pick up the incremental expenses… There should also be similar restrictions for the presidential family, especially with regard to overseas business trips. If Trump’s children feel it is necessary to go overseas to sign a deal, then the company at the very least should pay half the cost for Secret Service protection.

In other words, if the President wants to go to one of his golf clubs every weekend, he would always have full protection from the Secret Service, but he would pay for the added expense. It could come from his own pocket, or from his campaign coffers.

I don’t care, so long as there’s a limit on how much taxpayer are hit.

But what if Trump takes more official trips? Wouldn’t that require more money for the Secret Service?

That’s possible, but I also suggested in the article another way to save money that wouldn’t sacrifice security.

Another reasonable reform would be to…protect taxpayers by limiting the number of other administration staffers that go on junkets. …cut in half the number of political advisors, speechwriters, and flunkies that have turned White House trips into costly boondoggles.

The bottom line is that presidential junkets shouldn’t turn into an excuse to have hundreds of non-Secret Service staffers tagging along at high cost.

And I stressed in the article that I’m not picking on Trump.

They would be permanent reforms to address the systemic problem of wasteful spending and administrative bloat in Washington. This problem existed before the current president. And in the absence of reform, it will be an issue with future administrations.

To emphasize this point, here are some excerpts from a 2014 article from the U.K.-based Guardian (h/t: Mark Steyn) about the excesses of one of Obama’s European trips.

President Barack Obama’s visit on Tuesday will strain the city like never before with €10m ($10.4m, £8.4m) of Belgian money being spent to cover his 24 hours in the country. The president will arrive on Tuesday night with a 900-strong entourage, including 45 vehicles and three cargo planes.

The article didn’t say how many of the 900 staffers were Secret Service agents, but I’m guessing maybe 200 or 300. Heck, even if it was 400 or 500, why did taxpayers have to pick up the tab for another 400 or 500 (or more) staffers who weren’t there for security-related reasons?

Yes, presidents need to have staff to conduct business, but we live in a world with advanced communications technology.

I’m a former congressional staffer, and I’ve had lots of friends work for various administrations, so I understand that a nice overseas trip can be fun for people who otherwise toil in obscurity.

But as the risk of being a curmudgeon, I don’t want taxpayers to foot the bill. I want there to be a mentality of frugality. And if politicians won’t adopt that mentality (and they almost certainly won’t, as shown by this example), then it would be nice to attach some strings to limit their excesses.

P.S. I grouse about goodies for American politicians, but I’d probably be even more upset if I was a taxpayer in Europe.

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Back in April, I looked at the candidates running for the French presidency and half-jokingly wondered which one would win the right to preside over the country’s decline.

But once the field was winnowed to two candidates, Emmanuel Macron and Marine Le Pen, I wrote that voters should pick the socialist over the socialist. My title was sarcastic, but I was making a serious point that Marine Le Pen had a very statist platform, whereas I cited evidence that Macron had some sensible proposals.

Mr. Macron aims to rebalance the economy by cutting 120,000 public sector jobs, streamlining the pension system and dropping state spending back to 52 percent of G.D.P. Mr. Macron leads an emerging centrist consensus that recognizes that…the main obstacle retarding France’s economy is its attachment to a welfare state culture of…generous benefits. …Mr. Macron…once said that stifling taxes threaten to turn France into “Cuba without the sun”.

Indeed, in addition to the reforms listed in the Macron has proposed to lower France’s corporate tax rate to 25 percent, and he also want to liberalize labor markets.

All of which seems rather surreal. After all, Macron was a minister in the failed socialist government of Francois Hollande, so who would have thought that we would be the one to lead an effort to shrink the burden of government?

Yet consider the fiscal agenda President Macron is pushing.

France’s 2018 budget will focus on cutting taxes to boost economic activity as the government seeks to cement its support among the business community, Prime Minister Edouard Philippe said. …Philippe told RTL Radio on Wednesday he wants to lower levies that “hurt the competitiveness of our country.” Government ministries this week received letters setting out their spending limits for 2018. President Emmanuel Macron is seeking cuts of 20 billion euros ($23 billion) and tax reductions of 11 billion euros next year… “We have to get out of the spiral of public spending,” government spokesman Christophe Castaner said in a separate interview on France Inter. “France has been addicted to ever increasing spending, paid for by taxes.”

Wow. I wish the Republicans in Washington were as sensible as these French socialists (actually, since they created a new party, it would be more accurate to say they are former socialists).

But there is precedent for this kind of surprise. It was the left-wing parties that started the process of pro-market reforms in Australia and New Zealand. And it was a Social Democrat government in Germany that enacted the labor-market reforms that have been so beneficial for that nation.

That’s the good news.

The bad news is that French voters may have buyer’s regret.

The Wall Street Journal recently opined on this topic.

…the question isn’t whether Emmanuel Macron can save France. The question is whether France can save itself. Voters have the best chance in a generation to revive an economy in decline, yet they seem to quail at the critical moment. …voters are having second thoughts about economic reform. Mr. Macron’s approval started falling in July after he announced plans to cut housing benefits—by €5 a month for each recipient. Feminists are in arms over his plan to reduce the government’s women’s-rights budget to €20 million ($23.6 million) from €30 million. That’s before he gets to the labor reforms that will dominate the autumn.

Shifting from the editorial page, the WSJ has a report on the growing opposition to reform.

As Emmanuel Macron sets out to shake up France’s rigid labor market, the young president is losing the public support he may need to weather protests by the country’s powerful unions. …Mr. Macron will have to tread carefully in rolling out his labor reforms in September. For months, the 39-year-old president has been in talks with powerful labor unions in a bid to contain planned street protests. Now the prospect is growing that the ranks of those demonstrations could swell with students, retirees and other segments of French society… Mr. Macron’s government wants to make it easier for French firms to hire and fire workers. …The hard-left General Confederation of Labor, France’s most militant union, is already calling for strikes and demonstrations.

It’s not surprising, of course, to see opposition from those seeking to protect their privileges.

Though it theoretically shouldn’t matter since Macron’s party has a huge majority in the French Assembly.

That being said, politicians do have a habit of buckling when faced with voter unrest.

And Macron is committing some unforced errors, as reported by the U.K.-based Telegraph.

Emmanuel Macron spent €26,000 (£24,000) on makeup during his first three months as president of France, it has emerged. …Le Point reported that his personal makeup artist – referred to only as Natacha M – put in two bills, one for €10,000 and another for €16,000.The Elysee Palace defended the high fee saying: “We called in a contracter as a matter of urgency”. The same makeup artist also applied foundation to Mr Macron during his presidential campaign. Aides said that spending on makeup would be “significantly reduced”. …Le Point put the overall figure for Mr Hollande’s makeup at €30,000 per quarter. Nicolas Sarkozy, meanwhile, paid a whopping €8,000 per month for his, according to Vanity Fair.

Since it appears that these costs are borne by taxpayers, this is all rather depressing.

Macron, however, at least can claim that he’s not the most frivolous with other people’s money. Monsieur Hollande won the prize for waste when you add his hairdresser to the equation.

…all these sums pale into comparison with the £99,000 Mr Hollande paid his personal barber. The huge amount sparked accusations of “shampoo Socialism”. …The hairdresser, Olivier Benhamou, was hired to work at the Elysée Palace in 2012 for the duration of Mr Hollande’s five-year term.  Mr Benhamou also reportedly enjoyed a housing allowance and family benefits.

As I wrote about this last year and suggested that this narcissistic waste made Hollande eligible to win the “Politician of the Year” contest.

But let’s shift back to the serious issue of economic liberalization.

To be blunt, France’s economy is suffocating from statism. I’m not even sure what’s the biggest problem.

The answer is “all of the above,” with is why France desperately needs pro-market reform.

We’ll learn later this year whether Macron can save his country.

P.S. The story that tells you everything you need to know about France was the poll last decade revealing that more than half the population would flee to America if they had the opportunity.

P.P.S. If it wasn’t for France, we never would have had the opportunity to enjoy this very clever and amusing Scott Stantis cartoon.

P.P.P.S. Or watch this rather revealing Will Smith interview about French taxation.

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