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Archive for June, 2021

California is a fascinating state for people who follow public policy. It has some immense advantages, such as climate, coastline, and natural resources.

But it also has high taxes, absurd regulations, a bloated bureaucracy, and a costly welfare state.

The net result of all these factors is mixed. There are some sectors that are still thriving, such as high tech, but there’s also evidence that the Golden State is losing ground.

And the comparative data will probably get worse over time because many taxpayers and businesses are now fleeing to lower-tax states.

Since I specialize in public finance, I’m tempted to say bad fiscal policy is California’s biggest problem. And that may actually be the case.

But if someone asks me for an example of what’s wrong with the Golden State, I’m going to direct them to this story in the Los Angeles Times.

The California Legislature on Monday approved a $100-million plan to bolster California’s legal marijuana industry, which continues to struggle to compete with the large illicit pot market nearly five years after voters approved sales for recreational use. …State officials initially expected to license as many as 6,000 cannabis shops in the first few years, but permits have been issued only for 1,086 retail and delivery firms. In 2019, industry officials estimated there were nearly three times as many unlicensed businesses as ones with state permits. …The $100 million would go to local agencies with the most provisional licenses for growing, manufacturing, distribution, testing and retail operations. Some of the money can be used by cities offering equity funding to cannabis businesses owned by people of color.

Yes, you read correctly.

The state did a smart thing (removing legal prohibitions on marijuana), but did it in the worst possible way (burdening the sector with high taxes and red tape).

As a result, there’s still a very robust black market.

Here are some additional details about how politicians and bureaucrats have made it difficult to operate a legal business.

Many cannabis growers, retailers and manufacturers have struggled to make the transition from a provisional, temporary license to a permanent one renewed on an annual basis — a process that requires a costly, complicated and time-consuming review. …some face two to four years to get through the licensing process. Many would face the prospect of shutting down, at least temporarily, if they don’t get a regular license by current state deadlines, Kiloh said. …Supporters of legalization blame the discrepancy on problems that they say include high taxes on licensed businesses, burdensome regulations… A key requirement to convert from a provisional license is to conduct a CEQA review to indicate how pot farms and other cannabis businesses will affect the surrounding water, air, plants and wildlife, and to propose ways to mitigate any harms. However, Kiloh said, some cities are just setting up ordinances and staffing to process licenses, meaning many businesses cannot meet the looming deadline. …industry officials note the money will go to a small fraction of California cities, and only those that have already decided to allow cannabis businesses. …said Kiloh, owner of the Higher Path cannabis store in Sherman Oaks. “The real problem is CEQA analysis is a very arduous process,” he added. “I think it would be good to have more reform of the licensing system instead of just putting money to it.”

Wow, provisional licenses, permanent licenses, CEQA analysis, taxes, regulations, reviews, and ordinances.

Sounds like my regulatory obstacle course. No wonder so many buyers and sellers of pot prefer the black market.

And Mr. Kiloh is correct. The solution is to deregulate, not to dump more money into the system.

No wonder California is a mess.

P.S. The late (and great) Walter Williams joking speculated whether California should set up East German-style border controls to prevent taxpayers from escaping.

P.P.S. There is a pro-secession group in California, though they should be careful what they wish for.

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I was a big fan of (and occasional guest on) John Stossel’s TV show, and I’m now a big fan of his videos (see here, here, here, here, here, here, and here).

So it was an honor to appear in his latest video about “Capitalism Myths.”

It’s a two-part series. In this first video, we discussed three myths about free enterprise.

Myth #1 – Capitalists get rich by ‘taking’ money from others.

Since voluntary exchange, by definition, is mutually beneficial, this is a truly absurd argument. Indeed, only the most vapid politicians and pundits suggest otherwise.

The most definitive research in this area came from Professor William Nordhaus of Yale, who estimated that, “innovators are able to capture about 2.2 percent of the total social surplus from innovation.”

Translated from economic jargon, that means the rest of society gets nearly 98 percent of the value created by rich entrepreneurs.

Myth #2 – The rich getting richer, and the poor getting poorer.

This is an issue I’ve repeatedly addressed, showing how poverty was the natural state of humanity until capitalism appeared a few hundred years ago.

Now we are incomprehensibly rich by comparison. At least in market-oriented nations.

Focusing on more-recent data, I’ve shown that living standards have dramatically increased in the post-World War II era.

In the video, John and I also discussed the Census Bureau’s data showing that the middle class is shrinking, but only because more people are becoming rich.

Myth #3 – Monopolies destroyed the free market.

Supporters of government intervention commonly argue that capitalism produces monopolies, meaning big producers capture the market and exploit consumers.

This is a rather puzzling argument since monopolies almost always are the result of government favoritism.

Even if we go back to the days of the so-called Robber Barons, we find that the consumers were only exploited when politicians decided to prohibit competition.

P.S. Next week, the second video will look at four other myths about capitalism.

P.P.S. On a related note, I have a five-part series (Part IPart IIPart III, and Part IV, and Part V) on “The Case for Capitalism.”

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Politicians and bureaucrats are (self-interested) conduits for taking money from one group of people and giving it to another group of people.

Milton Friedman famously explained that this is why they largely don’t care about how much money is spent or how effectively it is spent.

No wonder government programs, agencies, and departments waste so much money, year after year, decade after decade.

This observation about careless profligacy also applies to so-called emergency spending.

I’ve repeatedly written about the perverse impact of unemployment benefits that are so excessive that people have big incentives not to work.

But that’s just one problem with that program. Axios has a depressing report on how the turbo-charged benefits that were part of the coronavirus legislation triggered staggering levels of fraud.

Criminals may have stolen as much as half of the unemployment benefits the U.S. has been pumping out over the past year, some experts say. …fraud during the pandemic could easily reach $400 billion, according to some estimates, and the bulk of the money likely ended in the hands of foreign crime syndicates… Blake Hall, CEO of ID.me, a service that tries to prevent this kind of fraud, tells Axios that…50% of all unemployment monies might have been stolen… Haywood Talcove, the CEO of LexisNexis Risk Solutions, estimates that at least 70% of the money stolen by impostors ultimately left the country, much of it ending up in the hands of criminal syndicates in China, Nigeria, Russia and elsewhere.

USA Today reported on one Nigerian scammer who feasted on American tax dollars.

Mayowa is an engineering student in Nigeria who estimates he’s made about $50,000 since the pandemic began. After compiling a list of real people, he turns to databases of hacked information that charge $2 in cryptocurrency to link that name to a date of birth and Social Security number. In most states that information is all it takes to file for unemployment. …“Once we have that information, it’s over,” Mayowa said. “It’s easy money.” …prepaid debit cards issued by some state unemployment offices paved the way for fraud this year, security experts said. …Asked whether he feels bad about stealing from unemployed Americans, Mayowa pointed out that 70% of his peers in school are working the scams as side hustles, too.

But it’s not just the unemployment benefits.

The government also has been sending out “stimulus” checks to people, even if they were employed all during the pandemic.

And they didn’t even need to be alive, according to a report from CNS.

The federal government sent nearly 1.2 million “economic impact payments” authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to people who were dead and, therefore, not qualified to receive them, according to a report published today by the Government Accountability Office. …On its website, the IRS describes individuals who are not eligible for an “Economic Impact Payment”… “Taxpayers likely won’t qualify for an Economic Impact Payment if any of the following apply: … You can be claimed a dependent on someone else’s return. … You are a nonresident alien. … An incarcerated individual. A deceased individual.”

Hundreds of foreigners also got handouts, as reported by the Washington Post.

Hundreds of people have cashed U.S. stimulus checks at Austrian banks in recent months. Some of them appeared puzzled by the unexpected payments or were ineligible for the payouts, according to bank officials and Austrian media reports. …He and his wife received $1,200 each, although neither is a U.S. resident or holds U.S. citizenship — key eligibility requirements. …Similar instances have been reported in other countries.

By the way, it’s not just Austrians who received handouts. NPR has a story featuring people all over the world who got $1200 checks from Uncle Sam.

And let’s not forget the PPP program, which was another big chunk of the coronavirus handouts.

The Wall Street Journal has a report on the rampant fraud in that program.

The federal government is swamped with reports of potential fraud in the Paycheck Protection Program, according to government officials and public data…the government allowed companies to self-certify that they needed the funds, with little vetting. The Small Business Administration’s inspector general, an arm of the agency that administers the PPP, said last month there were “strong indicators of widespread potential abuse and fraud in the PPP.” …The watchdog counted tens of thousands of companies that received PPP loans for which they appear to have been ineligible, such as corporations created after the pandemic began… Given the limited criteria Congress set for the program, he said, “The scandal is what’s legal, not what’s illegal.”

Reason also has a story about PPP waste.

…carmaker Lamborghini has benefitted from the Paycheck Protection Program (PPP)… Within days of receiving $1.6 million in PPP loans for his construction and logistics businesses, Lee Price III of Houston bought himself a 2019 Lamborghini Urus for $233,337, plus a $14,000 Rolex watch and close to $5,000 worth of entertainment at a strip club and various bars around town. …His scheme was audacious but hardly original. The DOJ had already brought similar fraud charges against Miami man David T. Hines, who had allegedly spent his ill-gotten PPP loans on a new $318,000 Lamborghini Huracán EVO. …Loan recipients include companies founded by members of Congress and prominent D.C. lobbying firms. Presidential adviser Jared Kushner’s family businesses, including their media and real estate concerns, received PPP loans, as did the clothing brand of rapper and aspiring president Kanye West.

We already knew that the coronavirus pandemic resulted in a bigger burden of government.

None of us should be surprised that we also wound up with record levels of waste.

P.S. Remember, “more government” is not the answer to any sensible question.

P.P.S. At some point, we will run out of “other people’s money.”

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The bad news is that federalism has declined in the United States as politicians in Washington have expanded the size and scope of the national government.

The good news is that some federalism still exists and this means Americans have some ability to choose the type of government they prefer by “voting with their feet.”

  1. They can choose states that tax a lot and spend a lot.
  2. They can choose states with lower fiscal burdens.

You won’t be surprised to learn that people generally prefer option #2.

Researchers have found a significant correlation between state fiscal policy and migration patterns.

And it’s still happening.

In a column for the Wall Street Journal a few days ago, Allysia Finley and Kate LaVoie discuss some research based on IRS data about taxpayer migration patterns.

Here’s some of what they wrote.

New IRS data compiled by research outfit Wirepoints illustrate the flight from high- to low-tax states. …Retirees in the Midwest and Northeast are flocking to sunnier climes. But notably, states with no income tax (Florida, Nevada, Tennessee and Wyoming) made up four of the 10 states with the largest income gains. On the other hand, five of the 10 states with the greatest income losses (NY, Connecticut, New Jersey, Minnesota, California) ranked among the top 10 states with the highest top marginal income tax rates. …Florida gained a whopping $17.7 billion in AGI including $3.4 billion from New York, $1.2 billion from California, $1.9 billion from Illinois, $1.7 billion from New Jersey and $1 billion from Connecticut. California, on the other hand, lost $8.8 billion including $1.6 billion to Texas, $1.5 billion to Nevada, $1.2 billion to Arizona and $700 million to Washington.

Here’s a very informative visual, showing the share of income that either left a state (top half of the chart) or entered a state (bottom half of the chart).

Our friends on the left say that this data merely shows that retirees move to states with nicer climates.

That is surely a partial explanation, but it doesn’t explain why California – the state with the nation’s best climate – is losing people and businesses.

Heck, I even have a seven-part series (March 2010February 2013April 2013October 2018June 2019, December 2020, and February 2021) on the exodus from California to Texas.

Let’s return to the Finley-LaVoie column, because there’s some additional data that deserves attention. They point out that states with better policy are big net winners when you look at the average income of migrants.

The average taxpayer who moved to Florida from the other 49 states had an AGI of $110,000… By contrast, the average taxpayer who left Florida had an AGI of just $66,000. In sum, high-tax states aren’t just losing more taxpayers—they are losing higher-income ones. Similarly, low and no income states are generally gaining more taxpayers who also earn more. …When blue states lose high earners, their tax base shrinks, but their cost base continues to grow due to rich government employee pay, pensions and other benefits. …The result is that low-tax states are getting richer while those that impose higher taxes are getting poorer.

As you can see, Florida is a big beneficiary.

And I shared data a few years ago showing that states such as Illinois are big net losers.

Let’s conclude by asking why some politicians, such as the hypocritical governor of Illinois, don’t care when they’re on the losing side of these trends?

I don’t actually know what they’re thinking, of course, but I suspect the answer has something to do with the fact that departing taxpayers probably are more libertarian and conservative. So if you’re a big-spending politician, you probably are not very upset when migration patterns mean your state becomes more left-leaning over time.

That’s a smart political approach.

Until, of course, those states no longer have enough productive people to finance big government.

In other words, every government is limited by Margaret Thatcher’s famous warning.

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Socialism has a track record of failure.

And that’s true whether we’re using the technical definition of socialism (government ownership of the means of production), the fascist version (nominal private ownership but government control), or the Bernie/AOC version (confiscatory taxation and pervasive redistribution).

But the silver lining to the policy disaster is that we get some amusing memes to augment our collection.

Such as this observation on voting habits.

And here’s a good depiction of those who realize government doesn’t do a good job at anything, but nevertheless think it should have more power.

Since socialism and big government have never produced a single example of success, I think this meme is spot on.

I almost didn’t include this joke because the idiots holding the sign incorrectly equate Trump with capitalism, but the applause from Mao and Stalin makes it worthwhile.

This next meme is also a good way of describing Keynesian economics.

I don’t know if this next claim is completely true since there are example of defecting spies, but it’s safe to say that the entire flow of ordinary people is away from socialism and toward (relative) capitalism

I mentioned at the start of this column that there are different definitions of socialism, at least from a policy perspective.

Well, here’s the common theme for all of them.

As usual, I’ve saved the best for last.

This one strikes home for me since I’ve dated some left-of-center women over the past couple of decades.

I confess I generally don’t try to convert them, especially early in a relationship.

Though I have eventually shared copies of Atlas Shrugged in hopes of turning them into future Margaret Thatchers.

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Between March 2020 and January 2021, I authored a five-part series (see here, here, here, here, and here) on how big government hindered a quick and effective response to the coronavirus pandemic.

In this discussion with Brad Polumbo, I summarize some of my key points.

While I criticized the dismal performance of the FDACDC, and WHO, I also explained that there are costs and benefits to any approach.

I largely focus on the deleterious impact of government regulation and intervention, but I mentioned in the discussion that a laissez-faire approach has potential downsides.

My argument is simply that markets, on balance, will produce better outcomes.

For instance, Brad and I discussed how government regulators at the Food and Drug Administration did something good many decades ago by prohibiting thalidomide (which led to birth defects), but we also mentioned that academic research shows that our regulatory apparatus – on net – leads to bad outcomes because of lengthy delays in life-saving and live-improving drugs.

And we shouldn’t forget that the current system makes drugs far more expensive.

There are two other parts of the interview that merit special attention.

  • First, I mention that private companies should be allowed to require “vaccine passports.” I’m not saying they should, but I believe in property rights so it’s not the role of politicians to interfere in that choice.
  • Second, politicians should have adopted a more hands-off approach to mandatory lockdowns. This is not an argument against social distancing, masking, and other prudent behaviors, but mandates were largely unnecessary (and, in the case of what stores were allowed to operate, pointlessly discriminatory).

And I should have mentioned that politicians often didn’t follow the rules that they imposed on the rest of us.

P.S. The silver lining to the pandemic’s dark cloud is that we got some clever humor (see here, here, here, here, here, here, here, here, here, and here).

P.P.S. Actually, there’s a second silver lining. There’s been a lot of progress on school choice this year, which is partly a response to the self-serving actions of the government school monopoly during the pandemic.

P.P.P.S. There may even be a third silver lining. As mentioned in the discussion, I’m slightly hopeful that politicians and bureaucrats have learned that we need to set aside regulations and red tape, at least during emergencies. Heck, maybe they’ll even apply that lesson more broadly!

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Sometimes Bill Maher, the host of Real Time on HBO, says smart things and sometimes he says not-so-smart things.

His recent monologue on the “college scam” was an example of the former. It’s almost as if he was channeling Professor Daniel Lin.

Maher makes great points about how government subsidies for higher education are a backwards form of redistribution, taking money from lower-income people and giving it to higher-income people.

And I love what he says about credentialism, where people can’t climb the job ladder without getting useless degrees like masters in education.

But his monologue wasn’t perfect. He mentioned how tuition costs have exploded, but he didn’t make the should-be-obvious connection between rising costs and government subsidies.

To be more explicit, tuition expenses have skyrocketed because colleges and universities have raised prices to capture all the extra loot politicians are dumping into the system.

Which, by the way, is what happens in every sector of the economy (health care being an obvious example) where government tries to make things more affordable.

By the way, if you don’t want to trust Maher’s comments because he’s an entertainer rather than a policy expert, you may want to read a column in the Wall Street Journal by Tomas Philipson, an economics professor at the University of Chicago.

Here’s some of his analysis.

The student-loan crisis is rooted in government policy… The Biden administration’s American Families Plan is designed to perpetuate the cycle. The student-loan crisis has a long history but accelerated dramatically in 2010, when lawmakers moved the portfolio onto the Education Department’s balance sheet to “pay” for ObamaCare. …But Education Department bureaucrats, not experts in lending, didn’t bother with prudent practices, such as underwriting, that are routine in private credit markets. The result: A lender with the lowest cost of capital on the planet is now about $500 billion in the red. …And federal student loans are highly regressive. …The Brookings Institution found in April 2019 that Sen. Elizabeth Warren’s loan-forgiveness proposal would mainly help the rich, with families with income in the top 40% receiving about two-thirds of the benefits. …These policies reward professors and administrators who can then raise the price of their services. …Tuition rising as loan subsidies expand is no different. It isn’t a coincidence that education and health care, the industries in which government subsidies are most pervasive, took the highest price increases over the past 15 years—3.7% and 3.1% a year, compared with the 1.8% average across industries.

Amen, especially with regards to the final sentence. Student loans and other subsidies are the reason colleges and universities can get away with never-ending tuition increases.

And Joe Biden wants to make matters worse, as Bill Maher noted. Not that we should be surprised since that’s what Barack Obama wanted and what Hillary Clinton wanted.

The left is in favor of just about anything, other than the policy that would solve the problem.

P.S. There’s even academic research showing that government spending on higher education has a negative impact on economic performance.

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Back in 2016, I created a 2×2 matrix to illustrate the difference between redistributionism (tax Person A and give to Person B) and state planning (politicians and bureaucrats trying to steer the economy, either through direct ownership or industrial policy).

The main point of that column was to show that countries should try to be in the top-left section, where there is less redistribution and less government control.

But I also wanted to help people understand that redistributionism and socialism are not the same thing.

For instance, Sweden (in the bottom-left box) is a capitalist economy with a big welfare state, whereas China (in the top-right box) doesn’t have much redistribution but government has substantial control over economic activity.

From an American perspective, the good news is that the U.S. currently is in the top-left box.

The bad news is that President Biden wants the country in the bottom-left box. So, if we want to be technically accurate, we should not accuse him of socialism.

Instead, as Antony Davies and James Harrigan explained in a column for the Foundation for Economic Education, the real threat to the nation is “transferism.”

Socialism is state control of the means of production. …By contrast, capitalism is simply private ownership of the means of production. …more than four in ten Americans think “some form of socialism” is a good thing. But what is “some form of socialism?” A society is either socialist or it isn’t. The state either owns the means of production or it doesn’t. There is no middle ground. …It appears that what Americans really have in mind when they think about socialism is not an economic system but particular economic outcomes. …they are advocating what we should really call “transferism.” Transferism is a system in which one group of people forces a second group to pay for things that the people believe they, or some third group, should have. Transferism isn’t about controlling the means of production. It is about the forced redistribution of what’s produced.

Davies and Harrigan are correct.

Moreover, they deserve credit for predicting the future since they wrote the column in 2019!

Now let’s consider whether redistributionism (or transferism) is a good idea.

I’ve previously explained that a big welfare state causes economic damage, even if a nation otherwise is very pro-capitalist.

Consider, for instance, the remarkable data showing how Swedish-Americans and Danish-Americans generate much more prosperity than Swedes and Danes who still live in Scandinavia.

Or consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or elsewhere).

What’s worrisome is that Biden wants a much bigger welfare state and he doesn’t seem to understand that European-sized government means anemic European-style economic performance.

This is the message that Bret Stephens shared in one of his recent columns for the New York Times.

He starts by describing Biden’s agenda.

President Biden charts a course toward the largest expansion of government since Lyndon Johnson’s Great Society. After signing a $1.9 trillion Covid-19 relief bill in March and proposing a $1.5 trillion discretionary budget in April (a 16 percent increase from this year, on top of what’s likely to be at least $3 trillion in mandatory spending on programs like Medicare and Medicaid), the president wants $2.3 trillion more for infrastructure and $1.8 trillion for new social programs. That’s $7.5 trillion in discretionary spending. To put the number in perspective, we spent $4.1 trillion in inflation-adjusted dollars over nearly four years to wage and win the Second World War. What will America get for the money?

He then points out the potential consequences.

…before the U.S. takes this leap into a full-blown American social-welfare state, moderates in Congress like Senator Joe Manchin or Representative Jim Costa ought to ask: What’s the catch? …The real catch is that massive government spending has hidden costs that are difficult to capture in numbers alone. Take another look at Europe. Why does R&D spending in the European Union persistently lag that in the U.S. …Why does Europe’s tech start-up scene…so notably lag its competitors…? Perhaps…social safety nets typically come at the expense of risk-taking and economic dynamism. And why is France, which, according to the Organization for Economic Cooperation and Development, spends more on social welfare than any other nation in the developed world, such an unhappy place, with chronically high unemployment, endless labor unrest, a decades-old brain drain, rising political extremism, a wealth tax that failed and a medical system that was on the brink of collapse long before Covid struck? …Beyond the gargantuan cost, Congress should think very hard about the real catch: transforming America into a kinder, gentler place of permanent decline.

Amen.

Biden’s agenda inevitably will erode societal capital, leading to less work (because of lavish freebies such as per-child handouts) and lower levels of entrepreneurship (because of tax penalties on investment and risk-taking).

And this can lead to a tipping point, which is illustrated by my Theorem of Societal Collapse.

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I sometimes try to go easy on the IRS. After all, our wretched tax system is largely the fault of politicians, who have spent the past 108 years creating a punitive and corrupt set of tax laws.

But there is still plenty of IRS behavior to criticize. Most notably, the tax agency allowed itself to be weaponized by the Obama White House, using its power to persecute and harass organizations associated with the “Tea Party.”

That grotesque abuse of power largely was designed to weaken opposition to Obama’s statist agenda and make it easier for him to win re-election.

Now there’s a new IRS scandal. In hopes of advancing President Biden’s class-warfare agenda, the bureaucrats have leaked confidential taxpayer information to ProPublica, a left-wing website.

Here’s some of what that group posted.

ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. …ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period. We’re going to call this their true tax rate. …those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.

Since I’m a policy wonk, I’ll first point out that ProPublica created a make-believe number. We (thankfully) don’t tax wealth in the United States.

So Elon Musk’s income is completely unrelated to what happened to the value of his Tesla shares. The same is true for Jeff Bezos’ income and the value of his Amazon stock.*

And the same thing is true for the rest of us. If our IRA or 401(k) rises in value, that doesn’t mean our taxable income has increased. If our home becomes more valuable, that also doesn’t count as taxable income.

The Wall Street Journal opined on this topic today and made a similar point.

There is no evidence of illegality in the ProPublica story. …ProPublica knows this, so its story tries to invent a scandal by calculating what it calls the “true tax rate” these fellows are paying. This is a phony construct that exists nowhere in the law and compares how much the “wealth” of these individuals increased from 2014 to 2018 compared to how much income tax they paid. …what Americans pay is a tax on income, not wealth.

Some journalists don’t understand this distinction between income and wealth.

Or perhaps they do understand, but pretend otherwise because they see their role as being handmaidens of the Biden Administration.

Consider these excerpts from a column by Binyamin Appelbaum of the New York Times.

Jeff Bezos…added an estimated $99 billion in wealth between 2014 and 2018 but reported only $4.22 billion in taxable income during that period. Warren Buffett, who amassed $24.3 billion in new wealth over those years, reported $125 million in taxable income. …some of the wealthiest people in the United States essentially live under a different system of income taxation from the rest of us.

Mr. Appelbaum is wrong. The rich have a lot more assets than the rest of us, but they operate under the same rules.

If I have an asset that increases in value, that doesn’t count as taxable income. And it isn’t income. It’s merely a change in net wealth.

And the same is true if Bill Gates has an asset that increases in value.

Now that we’ve addressed the policy mistakes, let’s turn our attention to the scandal of IRS misbehavior.

The WSJ‘s editorial addresses the agency’s grotesque actions.

Less than half a year into the Biden Presidency, the Internal Revenue Service is already at the center of an abuse-of-power scandal. …ProPublica, a website whose journalism promotes progressive causes, published information from what it said are 15 years of the tax returns of Jeff Bezos, Warren Buffett and other rich Americans. …The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968. …The timing here is no coincidence, comrade. …someone leaked confidential IRS information about individuals to serve a political agenda. This is the same tax agency that pursued a vendetta against conservative nonprofit groups during the Obama Administration. Remember Lois Lerner? This is also the same IRS that Democrats now want to infuse with $80 billion more… As part of this effort, Mr. Biden wants the IRS to collect “gross inflows and outflows on all business and personal accounts from financial institutions.” Why? So the information can be leaked to ProPublica? …Congress should also not trust the IRS with any more power and money than it already has.

And Charles Cooke of National Review also weighs in on the implications of a weaponized and partisan IRS.

We cannot trust the IRS. “Oh, who cares?” you might ask. “The victims are billionaires!” And indeed, they are. But I care. For a start, they’re American citizens, and they’re entitled to the same rights — and protected by the same laws — as everyone else. …Besides, even if one wants to be entirely amoral about it, one should consider that if their information can be spilled onto the Internet, anyone’s can. …A government that is this reckless or sinister with the information of men who are lawyered to the eyeballs is unlikely to worry too much about being reckless or sinister with your information. …The IRS wields an extraordinary amount of power, and there will always be somebody somewhere who thinks that it should be used to advance their favorite political cause. Our refusal to indulge their calls is one of the many things that prevents us from descending into the caprice and chaos of your average banana republic. …Does that bother you? It should.

What’s especially disgusting is that the Biden Administration wants to reward IRS corruption with giant budget increases, bolstered by utterly fraudulent numbers.

Needless to say, that would be a terrible idea (sadly, Republicans in the past have been sympathetic to expanding the size of the tax bureaucracy).

*Financial assets such as stocks generally increase in value because of an expectation of bigger streams of income in the future (such as dividends). Those income streams are taxed (often multiple times) when (and if) they actually materialize.

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I’ve spent several decades trying to convince people that we should have free markets and small government in order to increase national prosperity.

Indeed, I’ve even pointed out how very small increases in annual growth can lead to big improvements in living standards over just a couple of decades.

But some folks on the left are not very receptive to this argument. They genuinely (but incorrectly) seem to think the economy is a fixed pie (which also explains, at least in part, why they are so focused on redistribution).

So let’s share some hard data in hopes of getting them to understand that more prosperity is possible.

We’ll start will this chart of inflation-adjusted per-capita economic output in the United States, which comes from Oxford University’s Our World in Data.

The obvious takeaway from this data is that Americans are much richer today than they were after World War II. Adjusted for inflation, we’re now about four times richer than our grandparents.

Some of our friends on the left may be thinking these numbers are distorted, that average output has only increased because the rich have gotten so much richer.

Well, it is true that the rich have gotten richer. But it’s also true that the rest of us have become richer as well.

Which is why I shared data earlier this year showing median living standards rather than mean (average) living standards.

Folks on the left may also suspect that the post-1950 data is an anomaly. In other words, maybe I’m guilty of cherry-picking data.

That’s a common practice in the world of policy, so I don’t blame people for being suspicious.

So take a look at this chart, which I also first shared earlier this year. It shows that the increase in living standards has been even more dramatic if you look at changes since 1820.

By the way, none of these observations are new. Back in 1997, Micahel Cox and Richard Alm wrote a must-read article for the Dallas Federal Reserve Bank’s Annual Report.

Here are some of their findings.

What really matters…isn’t what something costs in money; it’s what it costs in time. Making money takes time, so when we shop, we’re really spending time. The real cost of living isn’t measured in dollars and cents but in the hours and minutes we must work to live. …A pair of stockings cost just 25¢ a century ago. This sounds wonderful until we learn that a worker of the era earned only 14.8¢ an hour. So paying for the stockings took 1 hour 41 minutes of work. Today a better pair requires only about 18 minutes of work. …In calculating our cost of living, a good place to start is with the basics—food, shelter and clothing. In terms of time on the job, the cost of a half-gallon of milk fell from 39 minutes in 1919 to 16 minutes in 1950, 10 minutes in 1975 and 7 minutes in 1997. A pound of ground beef steadily declined from 30 minutes in 1919 to 23 minutes in 1950, 11 minutes in 1975 and 6 minutes in 1997. Paying for a dozen oranges required 1 hour 8 minutes of work in 1919. Now it takes less than 10 minutes, half what it did in 1950.

These two visuals from the article are very informative.

First, look at how consumer products went from rare luxuries early in the 20th century to everyday products by the end of the century.

Equally important, these products have become cheaper and cheaper over time.

As illustrated by this second visual from the article.

All the data in the Cox-Alm article is more than 20 years old, so the numbers would be even more impressive today.

Indeed, you can see some more up-to-date data from Mark Perry, Steve Horwitz, and James Pethokoukis.

Professor Don Boudreaux put these numbers in context a few years ago in a column for the Foundation for Economic Education. Here’s some of what he wrote.

What is the minimum amount of money that you would demand in exchange for your going back to live even as John D. Rockefeller lived in 1916? …Think about it. …If you were a 1916 American billionaire you could, of course, afford prime real-estate.  You could afford a home on 5th Avenue or one overlooking the Pacific Ocean…  But when you traveled from your Manhattan digs to your west-coast palace, it would take a few days, and if you made that trip during the summer months, you’d likely not have air-conditioning in your private railroad car. …You could neither listen to radio (the first commercial radio broadcast occurred in 1920) nor watch television. …Obviously, you could not download music. …Your telephone was attached to a wall.  You could not use it to Skype. …Even the best medical care back then was horrid by today’s standards: it was much more painful and much less effective. …Antibiotics weren’t available. …Dental care wasn’t any better. …You were completely cut off from the cultural richness that globalization has spawned over the past century. …I wouldn’t be remotely tempted to quit the 2016 me so that I could be a one-billion-dollar-richer me in 1916.  This fact means that, by 1916 standards, I am today more than a billionaire.  It means, at least given my preferences, I am today materially richer than was John D. Rockefeller.

The bottom line is that we have become richer and we can continue to become richer.

But how fast things improve is partly a function of government policy. If we can impose some restraints on the size and scope of government, that will give the private sector some breathing room to grow and prosper.

In other words, we don’t need perfect policy, but it is important to at least have good policy.

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During the Obama years, I shared a cartoon strip that cleverly makes the point that some people will choose not to work if they can get enough goodies from the government.

That Wizard-of-Id parody has been viewed more than 56,000 times, which suggests many readers also thought it was worth sharing.

But it obviously hasn’t been shared often enough with the crowd in Washington. Politicians have created a welfare state that penalizes work and rewards dependency.

Especially now that there are bonus payments for staying unemployed. Which makes it hard to businesses to find workers.

Our friends on the left, however, think there’s a solution to this problem.

In his column for the New York Times, David Leonhardt says there is not a labor shortage because employers can simply raise wages.

The idea that the United States suffers from a labor shortage is fast becoming conventional wisdom. But before you accept the idea, it’s worth taking a few minutes to think it through. Once you do, you may realize that the labor shortage is more myth than reality. …one of the beauties of capitalism is its mechanism for dealing with shortages. In a communist system, people must wait in long lines when there is more demand than supply for an item. That’s an actual shortage. In a capitalist economy, however, there is a ready solution. …When a company is struggling to find enough labor, it can solve the problem by offering to pay a higher price for that labor — also known as higher wages. More workers will then enter the labor market. Suddenly, the labor shortage will be no more. …Sure enough, some companies have responded to the alleged labor shortage by doing exactly this. …companies that have recently announced pay increases include Amazon, Chipotle, Costco, McDonald’s, Walmart, J.P. Morgan Chase and Sheetz convenience stores.

Leonhardt is correct that businesses can lure workers back into the job market by boosting wages. I’m glad he recognizes how the price system works.

But he completely ignores the issue of whether some jobs will simply disappear because they’re not worth the amount of money that would be required to out-compete government handouts.

That’s the key argument from the Wall Street Journal‘s editorial on the topic.

…the U.S. labor market turned in its second disappointing result in a row in May, according to Friday’s Labor Department report. That’s what happens when government pays Americans not to work. Employers created 559,000 net new jobs in the month, which sounds great until you notice that 1.5 million fewer workers in May said they were unable to work because their employer closed or lost business due to the pandemic. …The civilian labor force shrank in May by 53,000, and the number of men over age 20 who were employed fell by 8,000. …What gives? The Occam’s razor explanation is that in March the Biden Administration and Congress ladled out another mountain of cash to Americans—work not required. The extra $300 a week in enhanced jobless benefits is one problem, since millions of Americans can make more staying on the couch. …This is on top of regular jobless benefits, plus new or extended cash payments such as the $3,000 per child tax credit, additional ObamaCare subsidies, and the $1,400 checks to individuals. Again, no work required.

For all intents and purposes, politicians in DC have been undoing the great achievement of welfare reform. That 1996 law was designed to push people from idleness into employment, and it was largely successful.

But over the past couple of decades, laws like Obamacare have given people goodies without any conditionality, which has resulted in many people deciding once again that they don’t need to work.

And if Biden’s per-child handouts are made permanent, expect the problem to get even worse.

Since we started with a cartoon, let’s close with another cartoon.

This gem from Henry Payne captures the problem facing many small businesses.

Big companies have enough financial depth that they can adapt. They have considerable ability to get rid of low-skilled jobs, invest in labor-saving technologies, and even give some raises to employees they retain.

Many small businesses, however, are simply out of luck. That’s one group of victims.

The other victims are the people who get goodies from politicians. Yes, the various handouts make their lives easier in the short run, but once they get trapped in the quicksand of government dependency, it’s very difficult to escape.

P.S. Because he said some sensible things about “basic income” back in 2017, I had hoped Biden would be better on this issue. I should have known better based on his track record.

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Biden’s tax agenda – especially the proposed increase in the corporate rate – would be very bad for American competitiveness.

We know this is true because the Administration wants to violate the sovereignty of other nations with a scheme that would require all nations to impose a minimum corporate tax rate of 15 percent.

Indeed, the White House openly says it wants to export bad policy to other nations “so that foreign corporations aren’t advantaged and foreign countries can’t try to get a competitive edge.”

Other big nations (the infamous G-7) just announced they want to participate in the proposed tax cartel.

I was just interviewed on this topic by the BBC World Service and I’ve extracted my most important quotes.

But I encourage you to listen to the full discussion, which starts with (predictably awful) comments from the French Finance Minister, followed by a couple of minutes of my sage observations.

For what it’s worth, “reprehensible” doesn’t begin to capture my disdain for what the politicians are trying to achieve.

What’s particularly irritating is that politicians want us to think that companies are engaging in rogue tax avoidance. Yet, as I noted in the interview, national governments already have the ability to reject overly aggressive forms of tax planning by multinational firms.

Here’s some of what was reported about the proposed cartel by the Associated Press.

The Group of Seven wealthy democracies agreed Saturday to support a global minimum corporate tax of at least 15%… U.S. Treasury Secretary Janet Yellen said the agreement “provides tremendous momentum” for reaching a global deal that “would end the race-to-the-bottom in corporate taxation…” The endorsement from the G-7 could help build momentum for a deal in wider talks among more than 135 countries being held in Paris as well as a Group of 20 finance ministers meeting in Venice in July. …The Group of 7 is an informal forum among Canada, France, Germany, Italy, Japan, the UK and the United States. European Union representatives also attend. Its decisions are not legally binding, but leaders can use the forum to exert political influence.

As you just read, the battle is not lost. Hopefully, the jurisdictions with good corporate tax policy (Ireland, Bermuda, Hong Kong, Cayman Islands, Switzerland, etc) will resist pressure and thus cripple Biden’s cartel.

I’ll close by emphasizing that the world needs tax competition as a necessary check on the greed of politicians. Without any sort of constraint, elected officials will over-tax and over-spend.

Which is why they’re trying to impose a tax cartel. They don’t want any limits on their ability to buy votes with other people’s money.

And we can see from Greece what then happens.

P.S. The Trump Administration also was awful on the issue of tax competition.

P.P.S. Here’s my most-recent column about the so-called “race to the bottom.”

P.P.P.S. As noted in the interview, both the IMF and OECD have research showing the destructive impact of higher corporate tax burdens.

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Biden campaigned for higher taxes and a bigger welfare state, so I haven’t been surprised by his misguided fiscal agenda.

That being said, I was modestly hopeful that he would move trade policy in the right direction after four years of Trump’s protectionism.

To be sure, I didn’t think he would do the right thing because of some long-hidden belief in sound economics. But I figured he might reduce trade barriers simply to do the opposite of his predecessor.

We should be so lucky. Regardless of the policy, we’ve been getting statism.

Catherine Rampell of the Washington Post is not impressed by Biden’s protectionism.

Several months after he left office, some of President Donald Trump’s most foolish economic policies remain in place: his sweeping trade restrictions. …Trump began waging a series of trade wars three years ago — not primarily with U.S. adversaries, mind you, but with friends. Among the dumbest and most self-sabotaging measures were global tariffs levied on nearly $50 billion of imported steel and aluminum. …the countries most affected by Trump’s move were our close economic and military allies, including the European Union, Canada and Japan. …Despite Trump’s claims otherwise, the cost of the tariffs was primarily passed through to American consumers and companies. Downstream firms that use steel or inputs made of steel, which employ about 80 times more workers than the steel industry does, faced higher costs. One estimate found that Trump’s steel tariffs alone cost U.S. consumers and businesses about $900,000 for every job created or saved.

Getting rid of taxes on imported steel and aluminum would be a positive step for the economy.

But the real goal should be getting rid of all Trump’s taxes on global trade. Garrett Watson from the Tax Foundation recently shared estimates of how this would benefit the American economy.

…repealing the tariffs imposed under President Trump’s administration would be one of the simplest ways policymakers could boost economic growth. …About $460 billion worth of goods were subject to the tariffs, raising prices for consumers. In fact, we estimated the tariffs were about an $80 billion annual tax increase, reducing consumer purchasing power. …According to the Tax Foundation model, repealing tariffs imposed since 2018 would raise long-run GDP by 0.1 percent, long-run incomes (gross national product) by 0.2 percent, and create about 83,000 full-time equivalent jobs. This growth would boost after-tax incomes by about 0.3 percent for people across the income spectrum, helping low-income and middle-class taxpayers. …Repealing the tariffs would be a simple option to boost growth because it can be done without congressional authorization by President Biden, and would provide timely relief to businesses and households.

The last sentence is key. Trump had lots of unilateral authority to impose bad trade policy, and Biden has lots of unilateral authority to undo bad trade policy.

The fact that he hasn’t exercised that authority makes him just as guilty of anti-market trade policy as Trump.

The next thing to watch for is whether he continues Trump’s bad policy of sabotaging the World Trade Organization.

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While Paul Krugman sometimes misuses and misinterprets numbers for ideological reasons (see his errors regarding the United States, France, Canada, the United States, Estonia, Germany, the United States, and the United Kingdom), he isn’t oblivious to reality.

At least not totally.

He’s acknowledged, for instance, that there is a Laffer Curve and that tax rates can become so onerous that tax revenues actually decline.

Now he’s had another encounter with the real world.

In a column that was mostly a knee-jerk defense of Biden’s class-warfare tax policy, Krugman confessed yesterday that big government ultimately means big tax increases for lower-income and middle-class people.

…is trying to “build back better” by taxing only the very affluent feasible? Is it wise? …There’s a good case that the kind of society progressives want us to become, with a very strong social safety net, can’t be paid for just by taxing the rich. A country like Denmark, for example, does have a high top tax rate… But Denmark also has very high middle-class taxation, in particular a 25 percent value-added tax, effectively a national sales tax. …the fact that even the Nordic countries feel compelled to raise a lot of money from the middle class suggests that there are limits…to how much you can raise just by taxing the rich. So if you want Medicare for all, Nordic levels of support for child care and families in general, and so on, just raising taxes on the 400K-plus elite won’t get you there.

It may not happen often, but Krugman is completely correct.

European-sized government requires European-style taxes on everyone. And that means a big value-added tax, as Krugman notes. And it almost certainly also means big energy taxes, higher payroll taxes, and much higher income tax rates on middle-class taxpayers.

This chart from Brian Riedl shows that government spending already was on track to become a bigger burden for the American economy, and Biden is proposing to go even faster in the wrong direction.

The growing gap between the blue lines and red lines implies giant tax increases. At the risk of understatement, there’s no way to finance that ever-expanding government by just pillaging upper-income taxpayers.

By the way, Krugman is right about big government leading to higher taxes on ordinary people, but he’s wrong about the desirability of that outcome.

He wants us to think that big government means a “better America,” but all the economic data tells a different story. A bigger fiscal burden means much lower living standards.

P.S. If you want another example of Krugman being right on a fiscal issue, click here.

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How should Nazism be classified, particularly when compared to socialism? Are these ideologies at opposite ends of a spectrum, or are they simply different sides of the same collectivist coin?

In my humble opinion, both views are correct, which is why I think this triangle is the best way to classify various ideologies.

Nazis are motivated by race hatred and the socialists are motivated by class hatred, so they basically are at opposite ends at the bottom of the triangle.

But both ideologies are against free markets and both put the state over the individual, so they are far away from libertarianism (or classical liberalism) when looking from top to bottom.

These different ways of looking at the issue explain why Glenn Kessler of the Washington Post created a controversy when he decided to “fact check” this statement from gadfly Congresswoman Marjorie Taylor Greene.

According to Kessler, Greene deserved “four Pinocchios” for asserting that Hitler and the Nazis were socialists.

The full name of Hitler’s party was Nationalsozialistische Deutsche Arbeiterpartei. In English, that translates to National Socialist German Workers’ Party. But it was not a socialist party; it was a right-wing, ultranationalist party dedicated to racial purity, territorial expansion and anti-Semitism — and total political control. …the 1920 Nazi party platform…there are…passages denouncing banks, department stores and “interest slavery.” That could be seen as “a quasi-Marxist rejection of free markets. But these were also typical criticisms in the anti-Semitic playbook …Hitler adamantly rejected socialist ideas, dismantled or banned left-leaning parties and disapproved of trade unions. …We suggest Greene brush up on her history… She earns Four Pinocchios.

This is remarkable. The Nazis called themselves socialists, yet Kessler says Greene is lying for saying the same thing.

I’m not the only one to notice this bizarre example of media bias.

Professor Hannes Gissurarson from Iceland debunked Kessler’s hack analysis.

A ‘fact-checker’ at Washington Post, Glenn Kessler, asserts that a Republican Member of the House of Representatives is wrong in a recent comment on Hitler’s national socialism. It is not, as she had said, a branch of socialism. Kessler writes that the German Nazi Party, despite its name (the National-Socialist Workers’ Party), ‘was not a socialist party…’ In support of his case, Kessler quotes the first eight of the 25 points in the 1920 Nazi political programme… He lukewarmly concedes that in the Nazi programme there were also passages denouncing capitalism. But why does he not quote them as well? …It is hard not to discern the socialist overtones in these points. Why did the Washington Post fact-checker not quote them in full like the first eight? …according to Hayek national socialism could be considered to be the rebellious socialism of the lower middle class… Traditional socialists, democrats as well as communists, shared with Hitler’s national socialists the belief that conscious organisation had to replace the spontaneous order… Hayek is certainly right that there are strong family resemblances between traditional socialism and national socialism. Both are totalitarian creeds.

Professor David Henderson also eviscerated Kessler’s sloppy column.

Glenn Kessler, the Post‘s official fact checker, …analyzes various statements and claims to determine whether they are true. If he finds them false, he awards them Pinocchios, with the number of Pinocchios depending on the degree of falsehood. The highest number of Pinocchios he awards is 4. On May 29, Glenn Kessler earned his own Pinocchios. …Nazis…really were a socialist party. …Kessler attempts to buttress his case by listing the first 8 of 25 planks in the 1920 Nazi Party platform. Those planks do help his case that the Nazis were anti-Semitic (duh) and nationalists (ditto duh). But what about the other 17 planks? …pretty socialistic.

Here are some of those planks that Kessler conveniently omitted.

11. Abolition of unearned (work and labour) incomes. Breaking of rent-slavery. …

13. We demand the nationalization of all (previous) associated industries (trusts).

14. We demand a division of profits of all heavy industries.

15. We demand an expansion on a large scale of old age welfare. …

17. We demand a land reform suitable to our needs, provision of a law for the free expropriation of land for the purposes of public utility, abolition of taxes on land and prevention of all speculation in land.

Henderson also zings Kessler for using a misleading quote from Martin Niemoller.

By the way, the Nazis didn’t merely advocate for socialism in an early platform. They also implemented statist policies once they took power.

Back in 2007, Michael Moynihan wrote about the Nazi welfare state in a book review for Reason.

…the Nazis maintained popular support—a necessary precondition for the “final solution”—not because of terror or ideological affinity but through a simple system of “plunder,” “bribery,” and a generous welfare state. …Requisitioned Jewish property, resources stolen from the conquered, and punitive taxes levied on local businesses insulated citizens from shortages and allowed the regime to create a “racist-totalitarian welfare state.” …To understand Hitler’s popularity, …”it is necessary to focus on the socialist aspect of National Socialism.” …Adolf Eichmann viewed National Socialism and communism as “quasi-siblings,” explaining in his memoirs that he “inclined towards the left and emphasized socialist aspects every bit as much as nationalist ones.” As late as 1944, Propaganda Minister Josef Goebbels publicly celebrated “our socialism,” reminding his war-weary subjects that Germany “alone [has] the best social welfare measures.” Contrast this, he advised, with the Jews, who were the very “incarnation of capitalism.” …Hitler implemented a variety of interventionist economic policies, including price and rent controls, exorbitant corporate taxes, frequent “polemics against landlords,” subsidies to German farmers…and harsh taxes on capital gains, which Hitler himself had denounced as “effortless income.”

The bottom line is that the Nazis are justifiably hated for reasons that have nothing to do with economic policy.

But it’s also true that their economic policy was a version of socialism (fascism involves government control rather than government ownership, but the result is the same).

Here are two videos from Prager University for those who want more information. First, we can learn about communism and Nazism.

Second, we can learn about the history of fascism.

Let’s wrap up by quoting George Will on the interrelated ideas of fascism, Nazism, and socialism.

Fascism…was a recoil against Enlightenment individualism: the idea that good societies allow reasoning, rights-bearing people to define for themselves the worthy life. …Mussolini, a fervent socialist until his politics mutated into a rival collectivism, distilled fascism to this: “Everything within the state, nothing outside the state, nothing against the state.” The Nazi Party — the National Socialist German Workers’ Party — effected a broad expansion of socialism’s agenda…

Last, but not least, here’s a reminder that we should be very wary of demagogues who promise goodies.

P.S. Kessler should have “fact checked” the last part of Rep. Greene’s statement. As much as I dislike “democratic socialism,” today’s Democrats are not trying to impose a totalitarian system.

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Looking at the dismal performance of the FDA, CDC, and WHO, the obvious takeaway from the pandemic is that big government doesn’t work very well.

Indeed, that was the point of a five-part series (see here, here, here, here, and here) on the topic.

One implication of all this analysis is that it’s almost always a good idea to let the private sector take the lead.

Which is why businesses rather than governments should decide whether to impose vaccine requirements.

Today’s column is motivated by two stories, the first of which is from ABC News. It involves a Texas hospital that is getting sued because it requires employees to be vaccinated.

Over 100 employees have joined a lawsuit against Houston Methodist hospital in Texas for requiring all employees to get the COVID-19 vaccine. The network, which oversees eight hospitals and has more than 26,000 employees, gave workers a deadline of June 7 to get the vaccine. If not, staffers risk suspension and termination, according to the lawsuit. …The complaint cited that forcing employees to get the vaccine violates Nuremberg Code, a medical ethics code which bans forced medical experiments and mandates voluntary consent. …Houston Methodist…released a statement in response to the lawsuit Friday, saying 99% of the network’s employees have been vaccinated. “It is unfortunate that the few remaining employees who refuse to get vaccinated and put our patients first are responding in this way.”

Our second story is from Florida.

Here are some excerpts from a Washington Post column about whether cruise ships operating out of Florida can exclude non-vaccinated passengers.

Cruise lines see vaccine requirements as their quickest path back to sailing from the United States. But Florida, home to the largest operators and busiest cruise ports in the world, has passed a law saying those companies are not allowed to ask passengers for proof of vaccination status. …Jim Walker, a maritime attorney..called the vaccine law “singularly the greatest impediment to the resumption of cruising in the state of Florida.” …DeSantis told reporters that he wanted cruise lines to operate and be able to make decisions about how they want to handle health and safety rules — within certain parameters. …he said even if some people were okay with the idea of having to prove that they were vaccinated to take a cruise, “it will not stop at that.”

Simply stated, I believe in property rights. The hospital should have the liberty to require vaccinations as a condition of employment and cruise ship companies should have the liberty to require vaccinations as a condition of taking a cruise.

It doesn’t matter, buy the way, whether I think the hospital or the cruise ship companies are making wise choices. I’m not a shareholder, so my opinion is irrelevant.

I do have the right, of course, to decide whether to seek a job at the hospital, or to choose to be a patient there. Likewise, I also have the right to choose whether go on a cruise, or whether to seek a job on a cruise ship.

In both cases, I can make my choices based on whether I like their vaccine policy. Or for any other reason.

I’m a free person and the people running companies also have freedom. If we don’t mutually agree to a transaction, it doesn’t happen.

It’s called “freedom of association,” and it’s a principle of a free society.

The bottom line is that there should be no philosophical objection to “vaccine passports” in the private sector.

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In the world of public finance, Ireland is best known for its 12.5 percent corporate tax rate.

That’s a very admirable policy, as will be momentarily discussed, but my favorite Irish policy was the four-year spending freeze in the late 1980s.

I discussed that fiscal reform in a video about 10 years ago, and I subsequently shared data on how spending restraint reduced the overall burden of government in Ireland and also lowered red ink.

It’s a great case study showing the beneficial impact of my Golden Rule.

Spending restraint also paved the way for better tax policy, and that’s a perfect excuse to discuss Ireland’s pro-growth corporate tax system. The Wall Street Journal opined last week about that successful supply-side experiment.

Democrats want a high global minimum tax that would end national tax competition and reduce the harm from their huge tax increase on U.S. business. But tax competition has been a boon to global growth and investment, as Ireland’s famous low-tax policy makes clear. Far from a “race to the bottom,” Ireland adopted policies that were ahead of their time and helped its economy grow from a backwater into a Celtic tiger. …in the late 1990s …an EU mandate led Dublin to…pioneer…a new strategy: Apply the same low tax rate to every business. Policy makers settled on 12.5%, which was a tax increase for some companies but a cut for others. This was a classic flat-tax reform… Ireland has reaped the benefits. Between 1986 and 2006, the economy grew to nearly 140% of the EU average from a mere two-thirds. Employment nearly doubled to two million, and the brain drain of the 1970s and 1980s reversed. …Oh and by the way: After Ireland slashed its rate and broadened the corporate-tax base, tax revenue soared. Except for the post-2008 recession and its aftermath, corporate-profits taxes in some years account for about 13% of total revenue and exceed 3% of GDP. That’s up from as low as 5% of revenue and less than 2% of GDP before the current tax rate was introduced.

That’s a lot of great information, particularly the last couple of sentences about how Ireland collected more revenue when the corporate tax rate was slashed.

Indeed, I discussed that remarkable development in Part II of my video series on the Laffer Curve (and it’s not just an Irish phenomenon since both the IMF and OECD have persuasive global data on lower corporate tax rates and revenue feedback).

Though higher revenue is not necessarily a good thing.

I complained back in 2011, for example, about how Irish politicians began to spend too much money once a booming economy began to generate a lot of tax revenue.

Which is a good argument for a Swiss-style spending cap in Ireland.

Let’s wrap up by considering some fiscal lessons from Ireland. Here are four things everyone should know.

  1. Spending restraint is a powerful tool to achieve smaller government..
  2. Lower tax rates on productive behavior lead to jobs and prosperity.
  3. Lower corporate tax rates can generate substantial revenue feedback.
  4. A spending cap is needed to maintain long-run fiscal discipline.

Good rules for Ireland. Good rules for any nation.

P.S. Ireland has definitely prospered in recent decades, but GNI data gives a more accurate picture than GDP data.

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