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Archive for November, 2019

I wrote yesterday about Japan’s experience with the value-added tax, mostly to criticize the International Monetary Fund.

The statist bureaucrats at the IMF are urging a big increase in Japan’s VAT even though the last increase was only imposed two months ago (in a perverse way, I admire their ability to stay on message).

Today, I want to focus on a broader lesson regarding the political economy of the value-added tax. Because what’s happened in Japan is further confirmation that a VAT would be a terrible idea for the United States.

Simply stated, the levy would be a recipe for bigger government and more red ink.

Let’s look at three charts. First, here’s a look at how politicians in Japan have been pushing the VAT burden ever higher.

What’s been the result? Have politicians used the money to lower other taxes? Have they used the money to reduce government debt?

Hardly. As was the case in Europe, the value-added tax in Japan is associated with an increase in the burden of spending.

Here’s a chart (based on the IMF’s own data) showing that government is now consuming almost 35 percent of economic output, up from about 30 percent of GDP when the VAT was first imposed.

I’ve added a trend line (automatically generated by Excel) to illustrate what’s been happening. It’s not a big effect, but keep in mind the VAT never climbed above 5 percent until 2014.

Now let’s look at some numbers that are very unambiguous.

Japan’s politicians imposed the VAT in part because they claimed it was a way of averting more red ink.

Yet our final chart shows what’s happened to both gross debt and net debt since the VAT was imposed.

To be sure, the VAT was only one piece of a large economic puzzle. If you want to finger the main culprits for all this red ink, look first at Keynesian spending binges and economic stagnation.

But we also know the politicians were wrong when they said a VAT would keep debt under control

I’ll close with a political observation.

The left wants a value-added tax for the simple reason that it’s the only way to finance European-type levels of redistribution (yes, they also want class-warfare taxes on the rich, but that’s mostly for reasons of spite since even they recognize that such levies don’t actually generate much revenue).

But it’s very unlikely that a VAT will be imposed on the United States by the left. At least not acting alone.

The real danger is that we’ll wind up with a VAT because some folks on the right offer their support. These people don’t particularly want European-type levels of redistribution, but they think that’s going to happen. So one of their motives is to figure out ways to finance a large welfare state without completely tanking the economy.

They are right that a VAT doesn’t impose the same amount of damage, on a per-dollar-collected basis, as higher income tax rates. Or increases in double taxation (though it’s important to realize that it would still penalize productive behavior by increasing the wedge between pre-tax income and post-tax consumption).

But their willingness to surrender is nonetheless very distressing.

The bottom line is that the most important fiscal issue facing America is the need for genuine entitlement reform. Achieving that goal is an uphill battle. But if politicians get a big new source of revenue, that uphill battle becomes an impossible battle.

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It seems that the International Monetary Fund and the Organization for Economic Cooperation and Development have an ongoing contest to see which bureaucracy can be the biggest cheerleader for bad fiscal policy.

  • They compete (OECD vs IMF) to promote more spending.
  • They compete (OECD vs IMF) to push higher tax burdens.
  • They compete (OECD vs IMF) to advocate class warfare.

You can even see them competing to encourage bad policy in various nations.

In Japan, for instance, the OECD has been pushing for higher taxes while the IMF has been pushing for Keynesian spending.

But now the IMF is upping the ante by adding its bad advice on tax policy.

Japan’s politicians raised the value-added tax just two months ago.

But that’s not enough for the IMF. The bureaucrats already are urging a far bigger increase in the levy.

Japan needs to raise its consumption tax further to fund growing social security costs, the International Monetary Fund recommended… The tax “would need to increase gradually” to 15% by 2030 and 20% by 2050, the IMF said in a report. …IMF Managing Director Kristalina Georgieva praised the smooth implementation of the Oct. 1 hike that took the consumption tax to 10% from 8%.

Needless to say, one of the main lessons from this sordid experience is that it’s never a good idea to give politicians a new source of revenue.

Look at what’s happened ever since the VAT was first imposed in 1989.

And now the IMF wants to push the rate up to 15 percent. And then 20 percent.

By the way, it’s worth noting that Japan’s politicians actually welcome this bad advice.

The nation faces a big demographic crunch (increasing life expectancy and low birth rates), and that means entitlement spending is on track to consume an ever-larger share of economic output.

To give you an idea of what’s happening, here’s a chart from the IMF’s report on Japan. It only looks at health-related spending, so keep in mind that the red line would be significantly hihger if Japan’s version of Social Security was included.

The bottom line is that Japan’s politicians want options to finance a growing burden of government spending.

And since decades of failed Keynesian policy have saddled the nation with record levels of debt, ever-larger sources of tax revenue are their preferred choice.

Sadly, the IMF is more than happy to rationalize that bad approach.

P.S. Japan’s politicians could reform entitlements, of course, but don’t hold your breath waiting for that to happen. Instead, expect this “depressing chart” to get even more depressing.

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By global standards, the United States is a bulwark of capitalism. Yes, government is too big and there’s far too much intervention, but we have enough private property and free enterprise to be ranked #5 for economic liberty. Which helps to explain why Americans enjoy higher living standards than Europeans.

But capitalism had to be learned. One of the first European settlements in North America, the Plymouth Plantation in Massachusetts, was based on socialism.

And it was real socialism, with common ownership of the means of production.

Unsurprisingly, it was not a rousing success. Indeed, it was a miserable failure.

Here’s Larry Reed’s analysis of what happened.

We should never forget that the Plymouth colony was headed straight for oblivion under a communal, socialist plan… Land was held in common. Crops were brought to a common storehouse and distributed equally. For two years, every person had to work for everybody else (the community), not for themselves as individuals or families. Did they live happily ever after in this socialist utopia? Hardly. The “common property” approach killed off about half the settlers. Governor Bradford recorded in his diary that everybody was happy to claim their equal share of production, but production only shrank. Slackers showed up late for work in the fields, and the hard workers resented it. …The disincentives of the socialist scheme bred impoverishment and conflict until, facing starvation and extinction, Bradford altered the system. He divided common property into private plots… Communal socialist failure was transformed into private property/capitalist success, something that’s happened so often historically it’s almost monotonous.

And here are some excerpts from a column that Professor Ben Powell wrote back in 2004.

Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did. In 1620 Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on “equality” and “need” as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. …Because of the poor incentives, little food was produced. Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. …This change, Bradford wrote, “had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been.” Giving people economic incentives changed their behavior. …Once the Pilgrims in the Plymouth Plantation abandoned their communal economic system and adopted one with greater individual property rights, they never again faced the starvation and food shortages of the first three years.

By the way, the settlement in Jamestown, Virginia, also had a very unsuccessful experiment with socialism.

Every Thanksgiving, I like to remind people about America’s failed experiment with big government.

This year, I want to build on that history lesson by looking at how capitalism’s invisible hand is making our modern holidays ever-more affordable.

We’ll start with Mark Perry of the American Enterprise Institute, who explains how free enterprise makes Thanksgiving possible.

…most of you probably didn’t call your local supermarket ahead of time and order a Thanksgiving turkey this year. Why not? Because you automatically assumed that a turkey would be there when you showed up, and it probably was there when you appeared “unannounced” at your local grocery store and selected your Thanksgiving bird. Or it will be there…when you “skip the trip” to the grocery store and get free 2-hour delivery from Amazon Prime Now… The reason your Thanksgiving turkey was waiting for you without an advance order? Because of the economic concepts of “spontaneous order,” “self-interest,” and the “invisible hand” of the free market. Turkeys appeared in your local grocery stores primarily because of the “self-interest” (greed?) of thousands of turkey farmers, truck drivers, and supermarket owners and employees who are complete strangers to you and your family. But all of those strangers throughout the turkey supply chain co-operated on your behalf and were led by the “invisible hand” to make sure your family had a turkey (or two) on the table to celebrate Thanksgiving.

By the way, just imagine what would happen if a government bureaucracy (like the Department of Agriculture) was in charge of Thanksgiving. Everything would cost more and have lower quality.

And the entire experience would be like a trip to the Department of Motor Vehicles.

But this isn’t just a story about how food appears on store shelves because of market forces rather than central planning.

It’s also a story about the competitive forces of capitalism make that food ever-more affordable. As shown in this chart from Marian Tupy of Human Progress, the cost of a Thanksgiving dinner is dropping over time.

But even that’s not the full story.

We’re also getting richer over time thanks to free enterprise.

So the amount of work that is required to buy Thanksgiving dinner is falling even faster. Here’s a chart from Mark Perry.

Now you know what to be thankful for.

P.S. I embedded a couple of humorous anti-libertarian memes in the column. If you want some more Thanksgiving-themed humor, you can click here and here for some mockery of Obama. And here’s a satirical look at a future Thanksgiving in a nation controlled by our friends on the left.

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In pure socialist systems, governments own and operate companies (the “means of production“). Such an approach also requires central planning and price controls.

But you don’t need socialism to have government-controlled companies. There are plenty of “state-owned enterprises” that exist in supposedly market-oriented nations.

Including in the United States. The federal government, for instance, owns and operates the air traffic control system and the postal service, to cite two big examples.

So what happens when politicians are de facto shareholders?

Today, thanks to some new research from the Asian Development Bank Institute, we’re going to look at the economic consequences of such firms.

Throughout history, and especially since the end of World War II, state-owned enterprises (SOEs) have been created in much of the world… Although private companies play a dominant role in market-based societies, enterprises with government ownership are still key players in the global economy, making their performance important for economic growth and competitiveness… Thus, scholars and policymakers around the world have been left with a task of reassessing the efficiency of state ownership. …In this paper, we aim to investigate whether certain ownership types consistently show superior economic performance relative to others when controlling for other economic factors. …we aim to fill in this gap and report further empirical evidence on the relative efficiency of public and private companies.

According to the study, state-run companies play a very large role in some countries.

The authors consider some of the theoretical reasons why state-run firms might not be very efficient, including “public choice.”

Agency theory…states that in a corporation, managers (or agents) may follow a personal agenda rather than work on behalf of, and for the interest of, the principals who own the corporation. Within a SOE, in particular, …the managers of SOEs are those who are appointed by the government…and seek firm-specific rents, such as high pay, fringe benefits, and low effort levels. Unlike their peers who operate in private-owned enterprises and may face the risk of replacement and dismissal due to their firms’ low performance…, the chief executive officers (CEOs) of SOEs are put under little financial constraint, and their compensation is not necessarily linked to firm performance… Public choice theory…also provides a cornerstone conceptual framework on which SOEs’ underperformance can be explained. This framework assumes that…special interests affect…governments’ own objectives.

They put together a dataset of more than 25,000 companies, both government and private, and then looked at key performance metrics.

Not surprisingly, government-run firms are not very efficient compared to their private counterparts.

…we find significant evidence that SOEs are outperformed by their POEs counterparts. The findings are consistent over both simple univariate comparisons and multivariate regressions. Government firms appear to be less profitable than POEs. They are also more dependent on debt and financial support from outside sources rather than equity. Hence, we provide support for the view that public firms are less efficient than private firms… The cross-sectional comparisons also show that government firms tend to be more labor intensive and have higher labor costs than non-government ones. …The differences in profitability appear to be economically important. The average return on assets for private firms is 8.010, almost twice that for SOEs. …SOEs have a higher liabilities-to-assets ratio, meaning that they tend to rely more on debt than shareholder funds. … state-owned companies…generate smaller sales volumes and have a higher cost per one employee. In other words, firms owned by private sectors are more labor efficient than government ones. …our findings suggest that privatization could be considered as a driver for firm efficiency.

For those that like perusing quantitative results, here are the results of their statistical regressions.

I’ve highlighted the key difference.

As already noted, government-run firms accumulate more debt.

This is presumably because investors assume that government-run companies won’t default.

Not because they don’t lose money, but rather because the political pressures that led to their creation also will prevent their demise.

SOEs can enjoy a “soft” budget constraint since they are backed by the government for their funding… They have the advantage of borrowing funds at a lower rate rather than accessing the equity market to raise capital… Thus, the discipline that capital markets impose on state-held firms and the threat of financial distress for them is less important than their private counterparts. …it is worth noting that such “soft” budget constraints, to a certain extent, could also be a source of inefficiency in government firms.

In other words, the growth-enhancing process of “creative destruction” is blocked when governments are in charge of companies.

For what it’s worth, this is a big problem in nations such as China.

Though we also saw a version of this in the United States, with the big bailouts of Fannie Mae and Freddie Mac, both of which are government-sponsored enterprises (private ownership, but created by government and controlled by government).

And there are many other examples of bad results when the federal government has intervened in the business world.

The bottom line is that government should not be owning, operating, controlling, or directing private companies. These forms of intervention inevitably produce inefficiency, subsidies, cronyism, corruption, and waste.

And it means that people like you and me wind up with less income and lower living standards because politicians are misallocating labor and capital.

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I’m a big fan of Marco Rubio. The Florida Senator has been very good on some big issues and on some small issues. And he’s willing to fight important philosophical battles.

No politician is perfect (for instance, Rubio defends sugar subsidies), so I’ve always judged them by whether – on net – they’re on the side of more freedom or more statism.

Which is the ideal framework for today’s column.

Earlier this month, Rubio wrote a column for National Review asserting it is time for “common-good capitalism.”

Pope Leo XIII wrote that the ultimate goal for any society should be to “make men better” by providing people the opportunity to attain the dignity that comes from hard work, ownership, and raising a family. …What makes this society possible is the rights of both workers and businesses, but also their obligations to each other. …In the economy Pope Leo described, workers and businesses are not competitors for their share of limited resources, but partners in an effort that strengthens the entire nation. …This…doesn’t describe the economy we actually have today. Large corporations have become vehicles for shareholders and banks to assert claims to cash flows, rather than engines of productive innovation. Over the past 40 years, the financial sector’s share of corporate profits increased from about 10 to nearly 30 percent. The share of profits sent to shareholders increased by 300 percent. This occurred while investment of those profits back into the companies’ workers — and future — dropped 20 percent. …This is what it looks like when, as Pope Francis warned, “finance overwhelms the real economy.” …Diagnosing the problem is something we should be able to achieve… Ultimately, deciding what the government should do about it must be the core question of our politics. …What we need to do is restore common-good capitalism. …our nation does not exist to serve the interests of the market; the market exists to serve our nation.

Some of this rhetoric rubs me the wrong way (and citing an economic illiterate like Pope Francis is appalling), but what really matters is whether Rubio is proposing more power for government or less power for government.

That’s hard to say because he doesn’t offer much in terms of policy.

Though I’m not overly impressed by the handful of ideas that were mentioned.

I don’t pretend to know anything about rare-earth minerals, but it’s laughable to think the Small Business Administration is a wellspring of innovation, and there’s plenty of evidence that paid parental leave is bad policy (child tax credits aren’t bad, but there are other tax policies that are far better for families).

On the other hand, Rubio also has been making the case for “full expensing,” which is a very good policy.

Since we don’t have any additional details, I don’t know whether his new agenda is a net plus or a net negative.

Kevin Williamson of National Review, by contrast, is definitely not a fan of Rubio’s approach. Here’s some of what he wrote last week.

Senator Rubio…joins the ranks of those who propose to reinvent capitalism — “common-good capitalism,” he calls it. …Senator Rubio, working from remarks originally delivered in a speech at Catholic University, references a series of popes — Leo XIII, mostly, but also Benedict and Francis — to describe (whether the senator understands this or not) the familiar moral basis of fascist economic thinking… I write this as a fellow Catholic: God defend us from these backward, primitive-minded Catholic social reformers. …power is what is at issue. Men such as Senator Rubio desire for themselves the power to overrule markets — to limit trade and property rights, enterprise and exchange — in the service of what Senator Rubio describes as the “common good.” The problems with that are…Senator Rubio does not know what the common good is and has no way of knowing. …What we need from men in government is not the quasi-metaphysical project of reinventing capitalism in the name of the “common good.” …This is not a brief for anarchism. …We need stability and predictability from a government that secures our liberty and our property in the least obtrusive way that can be managed.

And he followed up two days later with another critical column, even equating Rubio’s agenda to Elizabeth Warren’s loony proposal.

From Senator Marco Rubio and his “common-good capitalism” to Senator Elizabeth Warren and her “accountable capitalism,” politicians right and left who want politicians to have more power over private economic decisions assume a dilemma in which something called “capitalism” must be balanced against or made subordinate to something called the “common good.” This is the great forgetful stupidity of our time. …Capitalism, meaning security in one’s own property and in the right to work and to trade, is the common good… What is contemplated by Senator Rubio and Senator Warren — along with a few batty adherents of the primitive nonidea known in Catholic circles as “integralism” and everywhere else more forthrightly as “totalitarianism” — is to invert the purpose of the U.S. government. …We’re supposed to give up our property rights so that these two and their ilk can use corporate welfare to fortify their own political interests? …The “stakeholder” thesis put forward by Rubio and Warren would strip shareholders of control of their own property and use that property in the service of interests of other parties, who are not its rightful owners. …the great prosperity currently enjoyed by North Americans and Western Europeans — and, increasingly, by the rest of the world — is a product…of capitalism… It wasn’t magic. It wasn’t the cleverness of Senator Rubio or Senator Warren. It wasn’t the big ideas of Pope Francis, to the modest extent that he has any economic ideas worth identifying as such.

Oren Cass argues that Williamson is both unfair and wrong about Rubio.

Williamson believes that Rubio wants to “be . . . the bandit, taking control of other people’s property”; “strip shareholders of control of their own property,” which “is robbery”; “redefine away the property rights of millions of Americans”; “limit . . . property rights”; and “run Apple or Facebook or Ford.” …I’ve read the Rubio speech carefully and can find none of this. …Rubio’s project is to explore the vast gray expanse between the white of liberty and the black of property theft. …This is the terrain on which many of American history’s great public deliberations have unfolded, yielding policies from Hamilton’s Report on Manufactures to the “internal improvements” of the early 1800s, the tariff debates between McKinley and Bryan, Teddy Roosevelt’s trust-busting, Franklin Roosevelt’s New Deal, Kennedy’s space race, and Reagan’s import quotas. Property theft all of it, at gunpoint no less, if I understand Williamson correctly. …Someone will have to make a value judgment as to what “goods” are in fact “good” and thus worthy of providing publicly.

Cass is right that there’s a lot of space between pure capitalism and awful statism. I’ve made the same point.

But it does worry me that he favorably cites a bunch of historical policy mistakes, such as protectionism, antitrust laws, and the New Deal.

Jonah Goldberg makes the should-be-obvious point that the United States is hardly a laissez-faire paradise.

For as long as I can remember, people on the left have complained about “unfettered capitalism.” …Senator Bernie Sanders said earlier this year that “we have to talk about democratic socialism as an alternative to unfettered capitalism.” …Recently, the concern with capitalism’s unfetteredness has become bipartisan. Senators Josh Hawley and Marco Rubio have taken up the cause in a series of speeches and policy proposals. Conservative intellectuals such as Patrick Deneen and Yoram Hazony have taken dead aim at unrestrained capitalism. J. D. Vance, the author of Hillbilly Elegy, and Tucker Carlson of Fox News have suggested that economic policy is run by . . . libertarians. My response to this dismaying development is: What on earth are these people talking about? …If you think there are no restraints on the market or on economic activity, why on earth do we have the Department of Labor, HHS, HUD, FDA, EPA, OSHA, or IRS? The United States has one of the most progressive tax systems in the world (i.e., the share of taxes paid by the rich versus everyone else). If you take into account all social-welfare spending, we spend more on entitlements than plenty of rich countries. Now, if you think we don’t spend, regulate, or tax enough, fine. Make your case. If you think we should spend and tax differently, I’m right there with you. But the notion that the United States is a libertarian fantasyland is itself a fantasy.

Amen.

And this brings me to my modest contribution to this discussion.

I’ve already admitted that Rubio hasn’t provided enough details to assess whether he wants more liberty or more statism.

That being said, I’m skeptical of “common-good capitalism” in the same way I’m suspicious about “nationalist conservatism” and “reform conservatism” (and we know for a fact that “kinder-and-gentler conservatism” and “compassionate conservatism” meant more statism).

So here’s my challenge to Rubio and Cass (as well as everyone else who proposes an alternative to Reagan-style small-government conservatism). Please specifically identify how much government you want. Yes, there is a “vast gray expanse” between pure laissez-faire and pure statism, as Cass noted. But he didn’t say where in that expanse he wants America to be.

To help people respond to this challenge, here’s a chart, based on the data from Economic Freedom of the World. In that “vast gray expanse” between pure capitalism and pure statism, should policy makers try to shift America in the direction of Hong Kong? Or in the direction of Sweden, or even Greece?

The bottom line is that we need to climb the scale (i.e., have more overall economic liberty) if we want more prosperity.

That’s what will help facilitate all the things, such as good jobs and strong communities, that Senator Rubio wants for America.

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I want lower taxes. I want to reform taxes. And I want to abolish existing taxes and block new taxes.

But I also recognize that the biggest fiscal problem, both in America and elsewhere in the world, is that there’s too much government spending.

This creates a bit of a quandary. Given the various pressures and trade-offs in the world of fiscal policy, should supporters of limited government embrace additional tax relief?

Steve Moore opines in the Washington Times that it’s time for further tax cuts.

Every single plausible Democratic candidate for president has endorsed tax increases as centerpieces of their economic agenda. …Meanwhile, Mr. Trump and the Republicans in Congress have the 2017 tax cut to trumpet… Middle class incomes have hit an all-time high as has the stock market and employment. …Mr. Trump and the Republicans need a new tax cut plan… Mr. Trump has said he wants any new tax cut to be aimed at the middle class. …Let the liberals spend the next 11 months trying to explain why higher taxes and lower take home pay is better for families than lower taxes and MORE take home pay.  That should be fascinating to watch.

Steve specifically mentions some good ideas, such as lower marginal tax rates, a lower tax burden on capital gains, protecting more savings from double taxation, and allowing workers to shift some of their payroll taxes to personal retirement accounts.

But are these ideas smart policy?

Robert Verbruggen of National Review is very skeptical.

…it’s shocking that anyone is even thinking about tax cuts as a smart policy right now. …Our deficit has grown by a quarter since the 2018 fiscal year to hit nearly a trillion dollars in 2019, Baby Boomers are retiring, and the president has consistently said he has no intention of cutting the old-age entitlements that drive our spending. …tax cuts at this point would just add to the debt and hasten the day of our fiscal reckoning. We have a bunch of bills piling up. Let’s start paying them. …We need some mix of spending cuts and tax hikes to survive this. …Politicians almost certainly don’t have the guts to get serious about all this until a true crisis forces them to. But at very least, they should stop making matters worse.

So who is right?

The answer may depend on the goal.

If the objective is to simply get more votes in 2020, I’m not the right person to judge the effectiveness of that approach. After all, I’m a policy wonk, not a political strategist.

So let’s focus on the narrower issue of whether further tax relief would be good policy. Here are five things to consider, starting with two points about taxes and the economy.

1. Will tax cuts improve long-run economic performance? It’s impossible to answer this question without knowing what kind of tax cut. Increasing child credits may or may not be desirable, but that kind of tax relief doesn’t boost incentives for additional economic activity. Other types of tax reforms, by contrast, can have a very positive effect on incentives for work, saving, investment, and entrepreneurship.

2. Will tax cuts improve short-run economic performance? This is actually the wrong way to analyze fiscal policy. Advocates of Keynesian economics are fixated on trying to tinker with the economy’s short-run performance. That being said, some types of tax cuts – particularly reforms designed to attract global capital – may generate quicker positive effects.

Now let’s broaden our scope and consider tax cuts as part of overall fiscal policy.

3. Should policy makers focus on deficit reduction? Excessive government borrowing is undesirable, but it’s important to understand that red ink is the symptom and government spending is the underlying disease. Treat the disease and the symptoms automatically begin to go away.

4. Will tax cuts interfere with a bipartisan deal? Some people imagine that America’s fiscal problems can be addressed only if there’s a package deal of tax increases and spending cuts (dishonestly defined). Such an outcome is theoretically possible, but entirely unrealistic. Tax increases almost surely would be a recipe for additional spending.

5. Is there a starve-the-beast constraint on spending? There’s a theory, known as “starve the beast,” that suggests lower taxes can help constrain government spending. Given that Trump has simultaneously lowered the tax burden and increased the spending burden, that’s obviously not true in the short run. But the evidence suggests a firm commitment to lower taxes can inhibit long-run spending.

Based on these five points, I side with Steve Moore. It’s always a good idea to push for lower taxes.

And I definitely disagree with Robert Verbruggen’s willingness to put tax increases on the table. A huge mistake.

That being said, the Trump Administration’s reckless approach to discretionary spending and feckless approach to entitlement spending makes any discussion of further tax relief completely pointless.

So, at the risk of sounding like a politician, I also disagree with Steve. Instead of writing a column discussing additional tax cuts, he should have used the opportunity to condemn big-spending GOPers.

P.S. For what it’s worth, more than 100 percent (yes, that’s mathematically possible) of America’s long-run fiscal problem is excessive spending.

P.P.S. If you doubt my assertion that higher taxes will lead to more spending, I invite you to come up with another explanation for what’s happened in Europe.

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If I had to identify the most economically destructive part of Senator Elizabeth Warren’s agenda, I’d have a hard time picking between her confiscatory wealth tax and her so-called Medicare-for-All scheme.

The former would dampen wages and hinder growth by penalizing saving and investment, while the latter would hasten America’s path to Greece.

By contrast, it’s easy to identify the most ethically offensive part of her platform.

Just like President Obama, she’s a hypocrite who wants to deny poor families any escape from bad government schools, even though her family has benefited from private education.

To make matters worse, she’s even lied about the topic.

Corey DeAngelis of the Reason Foundation has been on top of this issue. I recommend his article. And if you like exposing dishonest politicians, here’s a very snarky PG-13-rated tweet.

The Washington Free Beacon has some additional details.

Sarah Carpenter, a pro-school choice activist who organized a protest of Warren’s Thursday speech in Atlanta, told Warren that she had read news reports indicating the candidate had sent her kids to private school. Though Warren once favored school choice and was an advocate for charter schools, she changed her views while seeking the Democratic presidential nomination. …Warren denied the claim, telling Carpenter, “My children went to public schools.” …however, …Warren’s son, Alex Warren, attended the Kirby Hall School for at least the 1986-1987 school year… The college preparatory school is known for its “academically advanced curriculum” and offers small class sizes for students in grades K-12. …Carpenter pressed Warren to reconsider her education plan, which would place stringent regulations on both charter and private schools. She told the candidate that she simply didn’t have the resources to exercise the same choices for her children that Warren appears to have made for her son.

Moreover, private schools are a family tradition, as the Daily Caller revealed.

Sen. Elizabeth Warren, a Democrat representing Massachusetts, has a granddaughter who rubs shoulders with the children of movie stars at the trendy Harvard-Westlake School in Los Angeles, California. Tuition at Harvard-Westlake costs $35,900 each year. There’s also a $2,000 fee for new students. Harvard-Westlake offers a bevy of amazing opportunities for students including study-abroad programs in Spain, France, China, Italy and India. There’s also the Mountain School, “an independent semester program that provides high school juniors the opportunity to live and work on an organic farm in rural Vermont.”

If you want to learn more about Warren’s disingenuous posture, I also recommend this article by Chrissy Clark of the Federalist.

Anyhow, what makes her hypocrisy especially odious is that she was semi-good on the issue. At least back before political ambition caused here discard her moral compass.

Education Week looked at Warren’s record and confirmed she used to be sympathetic to school choice, albeit only for parents who wanted to choose among various types of government schools.

Massachusetts Sen. Elizabeth Warren’s education..plan’s contention that the nation must “stop the privatization and corruption of our public education system” and keep money from being “diverted” away from public schools through vouchers. …supporters of school choice cried foul. They pointed to what Warren and her daughter Amelia Warren Tyagi wrote in The Two-Income Trap, a book they authored in 2003, as evidence that she once backed a voucher system for parents seeking education options for their children, but has now abandoned that position for political expediency and to please teachers’ unions. …In 2003, Warren and Tyagi wrote that while…many schools might technically be public, they said, many parents effectively paid tuition for good public schools through their ability to purchase a home in their attendance zones. …So how to solve it? “A well-designed voucher program would fit the bill neatly,” the two authors stated, adding that “fully funded” vouchers would “relieve parents from the terrible choice of leaving their kids in lousy schools or bankrupting themselves to escape those schools.” …Essentially, what Warren and Tyagi wanted was an open enrollment system of public schools.

So why has her position “evolved”?

She’s decided that getting to the White House is more important than the best interests of poor children. The Daily Caller reports on Warren’s kowtowing to union bosses.

Democratic Massachusetts Sen. Elizabeth Warren is pledging to crack down on school choice if elected, despite the fact that she sent her own son to an elite private school, publicly available records show. The 2020 presidential candidate’s public education plan would ban for-profit charter schools…and eliminate government incentives for opening new non-profit charter schools, even though Warren has praised charter schools in the past. …Warren has pledged to reduce education options for families, but she chose to send her son Alexander to Kirby Hall, an elite private school near Austin. Tuition for Kirby Hall’s lower and middle schools — kindergarten through eighth grade — is $14,995 for the 2019-2020 school year. A year of high school costs $17,875. …“I do not blame Alex one bit for attending a private school in 5th grade. Good for him,” said Reason Foundation director of school choice Corey DeAngelis, who first flagged Alexander’s private schooling Monday. “This is about Warren exercising school choice for her own kids while fighting hard to prevent other families from having that option.” …Warren’s crackdown on elite charter schools would leave elite private schools like Kirby Hall unscathed, while greatly eliminating charter schools as a parallel option for lower-income families.

It’s important to note that this is an issue where honest people on the left are on the right side.

Here’s a recent editorial from the Washington Post.

…when it comes to education, Ms. Warren has a plan that seems aimed more at winning the support of the powerful teachers unions than in advancing policies that would help improve student learning. …Ms. Warren took a page from the union playbook in calling for a clampdown on public charter schools. In addition to banning for-profit charter schools (which make up about 15 percent of the sector), she would subject existing charters to more scrutiny and red tape and make it harder for new charters to open… Ms. Warren’s change of heart (which started in 2016, when she opposed a referendum that would have lifted caps on charter schools in Massachusetts), along with the silence of other Democrats who once championed charter schools (New Jersey Sen. Cory Booker and former vice president Joe Biden come to mind), is no mystery. The teachers unions wield outsize influence in the Democratic Party, and they revile the mostly non-unionized charter sector. …The losers in these political calculations are the children whom charters help. Charters at their best offer options to parents whose children would have been consigned to failing traditional schools. They spur reform in public school systems in such places as the District and Chicago. And high-quality charters lift the achievement of students of color, children from low-income families and English language learners. Research from Stanford University’s Center for Research on Education Outcomes found, for example, that African American students in charter schools gained an additional 59 days of learning in math and 44 days in reading per year compared with their traditional school counterparts. More than 3.2 million children already attend charter schools, and 5 million more would choose a charter school if one could open near them.

And Jonathan Chait of New York magazine is certainly not a conservative or libertarian, but he’s part of the honest left. As you might imagine, he’s also disappointed that Warren chose union bosses over poor children.

To be fair, there are plenty of other folks on the left who have sold their souls to the National Education Association and American Federation of Teachers – including, most disappointingly, the NAACP.

P.S. Some Republicans are hypocrites on the issue as well.

P.P.S. Speaking of hypocrites, President Obama’s Secretary of Education sent his kids to private schools, yet he fought to deny that opportunity to poor families. The modern version of standing in the schoolhouse door.

P.P.P.S. If you want to learn more about school choice, I recommend this column and this video.

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