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At my wedding

Very sad news from Vermont.

My dad passed away last night.

He lived a full life and good life, died peacefully, and was surrounded by his wife and seven of his kids at the end.

All things considered, a decent way for a bad thing to happen.

Although he didn’t seem very interested in politics and public policy as I was growing up, he was involved in the founding of the Conservative Party of New York.

So he must have given me some good genes. No wonder I don’t like RINOs.

And he definitely passed along being a Yankees fan. Some of my best memories include going to games at the old Yankee Stadium as a kid.

Many thanks to those who already have expressed condolences, as well as to those who will.

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The left wanted to get one thing from the Supercommittee, and that was to seduce gullible Republicans into a 1990-style tax increase deal in order to enable bigger government.

But I was pleasantly surprised when GOPers failed to surrender, which means that taxpayers didn’t get raped and pillaged. But winning a battle is not the same as winning a war.

The real fight is now whether the sequester is allowed to happen. In other words, will politicians preserve the provision that will automatically slow the growth of the federal budget so that spending over the next 10 years  grows by about $2.0 trillion rather than $2.1 trillion.

This may not seem like much of an achievement, but it is a very important indicator of what will happen in the future. If we want to protect against higher taxes in the long run, we need to figure out how to restrain government spending.

At the very least, this means following Mitchell’s Golden Rule so that the private sector grows faster than government. This would slowly but surely shrink the burden of federal spending as a share of economic output, though actual spending cuts would be preferable and they would more quickly get us where we need to be.

The main obstacle to the sequester, at least on the right, is that it would slow the growth of the defense budget. According to recent calculations, the Pentagon budget would increase by only about $100 billion over the next 10 years if the sequester is implemented.

That might not be enough to keep pace with inflation, and some are wondering whether this puts America’s national security at risk. But  this chart, which was developed by Cato Institute colleagues, shows that the United States dominates global defense spending.

Not only does the United States account for 48 percent of total defense spending, our allies in Europe and the Pacific Rim account for another 24 percent of military outlays.

And even if we use an absurdly expansive definition of possible enemies (Russia, China, all of Central/South Asia, and the entire Middle East and Africa), the military expenditures by those nations and regions don’t even amount to one-fourth of the world total.

More important, the combined spending by all potential adversaries is only about one-half of what the United States is spending, and only one-third of the combined spending of the United States and our allies.

This isn’t an argument for blindly slashing the defense budget. Nor is it an argument that says a sequester is the best way to prune military spending. But it certainly suggests that some modest restraint won’t put America in danger.

Moreover, perhaps the sequester will trigger some much-needed analysis of how best to protect America’s national security.

Maybe Mark Steyn and Steve Chapman are correct and it is time to revisit our spending on NATO, an alliance that was put together to fight the Warsaw Pact, an adversary that no longer exists.

Perhaps it means we shouldn’t spend huge sums of money to defend South Korea, which is far richer and stronger than its crazy northern neighbor.

Or maybe it means that the United States shouldn’t be engaged in nation-building exercises that exacerbate anti-American sentiment in other nations.

I’m not a defense/national security expert, so I don’t pretend to know the right approach to all of these issues.

But I have some familiarity with the way things get done in Washington. Politicians, lobbyists, interest groups, and bureaucracies will all act like the world is coming to an end if budgets are not endlessly expanded. That’s just as true for the Pentagon as it is for all other parts of the federal government.

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One of the sacrifices I make for liberty is traveling to foreign lands. Previous hardship duty includes trips to Monaco, Bermuda, Cayman IslandsSwitzerland, and Anguilla.

I’m currently in Antigua, which is a remarkably beautiful island. But nice places nonetheless have un-nice governments.

View from my window

When I arrived yesterday, I didn’t know the address where I was staying. That detail didn’t seem important since I was being picked up at the airport.

But there was a “residence in Antigua” slot on the immigration form and the bureaucrats refused to let me in the country without knowing that irrelevant piece of information.

This isn’t the first time this happened to me. I was once detained at Heathrow Airport in the U.K. because I didn’t know the address of my friend’s flat. After a couple of minutes, though, the bureaucrat was overcome by common sense and let me through.

That was not the case in Antigua. I had to wait an irritatingly long period of time before one of the bureaucrats accompanied me into the arrivals section to find the person who was picking me up. Then, after putting the address on the immigration form, I was finally allowed in the country.

I realize I’m whining a bit (just like I did with my personal stories about Amtrak, tax returns, traffic tickets, and air travel), but what possible purpose did it serve for the government of Antigua to create an unpleasant experience for me?

After all, there’s no welfare system in Antigua, so I wouldn’t be sneaking in the country to mooch off local taxpayers.

Unfortunately, the government did recently introduce an income tax after decades of independence without that burdensome levy. So perhaps it’s just a matter of time before politicians augment that mistake with a welfare state.

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In a perverse way (pun intended), I admire German politicians for their creativity. They will figure out ways to tax just about anything.

Their latest scheme is a plan that requires streetwalkers to put money in parking meters in exchange for a slip of paper that entitles them to…um…ply their trade for a specified period of time.

Here are some excerpts from the Daily Mail report.

German Parking and/or Prostitute Meter

Prostitutes working the streets of the former German capital are now having to pay £5.30 per night to a modified parking meter – to gain permission to ply their trade. Sex workers in Bonn face hefty fines for not forking out the new ‘income tax’ which has been brought in to try and regulate the outdoor aspect of the industry. It is to bring them into line with the country’s brothel workers who already pay out a percentage of their profits in tax, which varies depending on the region. …if caught without a valid ticket, offenders would be reprimanded. They would then face fines, and later a ban. The fee is a daily charge, and irrespective of how many punters are entertained. …specific quarters have been designated as sex work zones. City officials have created ‘consummation areas’, which are wooden parking garages where customers driving cars can retreat to with their prostitutes. Dortmund has a similar system where prostitutes buy tickets from petrol stations.

I suppose this is the point where I normally would make some snide comments about greedy politicians, or perhaps offer some analysis about the economic impact of taxation.

But this story is so bizarre that I can’t even get to that stage.

What happens if you’re just a regular motorist and you put money in the meter and press the wrong button?

And I know that most governments will put a boot on one of your tires to disable your car if you don’t pay your parking tickets. Does this mean hookers who don’t buy a street-walking pass will get a chastity belt?

Does the city government also charge for use of the garages in the “consummation areas”? And when did it become the responsibility of German taxpayers to finance something like that?!?

And for the hookers in Dortmund who get their passes at the petrol station, do the mechanics check “under the hood” if they use full service? (okay, pretty lame, but I couldn’t resist)

Most important, will the politicians take this idea to its logical conclusion and put prostitute meters in Parliament? In other words, require politicians to put money in a meter before  they try to buy support from interest groups by providing handouts and special preferences.

That’s one tax increase even I could support.

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I’d rather have 1,000,000 dollars. Or maybe even 1,000,000 airline miles.

But I suppose it’s worth a brief mention that International Liberty, as of this morning, has received more than 1,000,000 views.

I don’t know if that’s good or bad after two-plus years of blogging, but I’ve mentioned before that I’m encouraged to continue so long as there is a steady increase in the number of readers.

And that seems to be happening. Here’s a screen capture from my administrator page earlier today (click for larger image). In addition to breaking the one-million mark, last month was my first with more than 100,000 views.

I suppose this might be the time for a few additional observations about blogging. I’ve learned that Glenn Reynolds is the Top Dog of the Blogosphere. Nothing generates traffic like an Instapundit link. Indeed, traffic from his site is responsible for 9 of my top 10 posts and 22 percent of my total views. I owe him a steak dinner.

I’m also semi-gratified that International Liberty is at least somewhat international. It wasn’t until the end of last year that I learned to put up a “flag counter,” but in the past 7-plus months the blog has been visited by people from 193 jurisdictions, accounting for about 13 percent of total views.

I figured people from the Anglosphere would be most likely to visit the blog, but I’m surprised India is in 5th place. I also never would have guessed that Greece would be in 13th place and that I’d have more visitors from Portugal (18th place) than Spain (19th place).

I’d like to break the 200 mark, so the folks in places such as North Korea, Greenland, Chad, Niger, Turkmenistan, Pitcairn Island, Vatican City, and American Samoa need to join the parade.

Last but not least, I want to thank those of you who comment, as well as those who share blog posts with others, either via email, Facebook, or Twitter. You have played a role in whatever modest success this blog enjoys.

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I don’t care one way or the other about the gay marriage debate, for the simple reason that I’ve never been convinced it is the job of the state to sanction marriages.

So you won’t be surprised that I find Steve Chapman’s column about de facto polygamy rather persuasive.

When it comes to sexual relationships and cohabitation among consenting adults, Utah takes a permissive approach. If a guy wants to shack up with a lady, that’s fine. If he wants to shack up with several, no problem. He can father children by different roommates, with no fear of the law. But if he marries one woman and represents three others as his “spiritual wives,” like Kody Brown? Then he’s committed a felony. Not because of the stuff that goes on behind closed doors. It’s the public act of claiming to be part of a lifelong “plural marriage” that raises the specter of jail. …So Brown went to court claiming that his constitutional rights have been violated in various ways. Though it may come as a surprise to hear, he’s got a perfectly reasonable argument. Brown and his lawyer, George Washington University professor Jonathan Turley, don’t say the state must sanction such arrangements in law. Nor did Brown try to get multiple marriage licenses, in defiance of the state ban on polygamy. His case is about freedom, not state recognition. Unlike gay couples who say they should be allowed to legally wed, Brown isn’t asking the state to officially accommodate his chosen form of matrimony. He’s just asking to be let the hell alone. Other people, after all, are exempt from such control. Turley says Brown and his women “would not be prosecuted if they claimed no religious obligation and merely had casual or purely sexual associations.” He notes, “Monogamists are allowed an infinite number of sexual partners, and consequently have the right to bear children with multiple partners, so long as they do not claim to be committed to such partners in a union or family.” The law doesn’t prevent any man from living with several women, having sex with them and siring their offspring. This behavior is a problem only when a man claims to be permanently wedded to the women — only, that is, when he behaves more responsibly than a tomcat. …If Brown wants to live with five women and call them his girlfriends, his shorties, his harem, the Seattle Storm or the 101st Airborne, it is of no earthly concern to the rest of us. And if he wants to call them his wives, the state of Utah should say, “Knock yourself out, dude.” That, or nothing.

I will admit that I don’t like the idea of children being born into that situation, but I’m also not happy about children being born to single mothers. What really matters, though, is that I certainly wouldn’t want the government to interfere in such matters, absent real proof of abuse.

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I’ve already pointed out the two nicest things ever said about me. One was intentionally flattering, as Dick Armey mentioned in his book that I was one of the few people to take a principled stand against the TARP bailout back in 2008. The other was meant to be negative, as a left-wing English journalist said that I was “a high priest of light tax, small state libertarianism.” But I thought it was a wonderful endorsement.

Now the time has come for me to confess the nastiest things ever said about me. But I’m not thinking of the people who occasionally rip me in the comments section of this blog or attack me in the comments section of my videos.

Instead, I think it’s terrible when people say things that imply I might be getting soft and selling out.

This happens a lot in Washington, so much that free-market supporters call it the “strange new respect” award – a term that became infamous in certain circles after the Washington Post used it to applaud former Senator Bob Dole for acquiescing to the left on some issue.

Simply stated, if some statist person or institution is saying nice things about you, that probably means you’re doing something very bad. With that bit of background, here are the two awful things that were written about me.

o Albert Hunt used to write a weekly column for the Wall Street Journal, and was also a regular on CNN’s Capital Gang.  He was a scion of establishment left-wing thinking, so I was horrified in 1994 when he wrote that I was a “responsible economic expert on the right.” After all, left wingers usually say people like me are “responsible” if we are willing to roll over and surrender.

o More recently, Nicholas Shaxson just wrote an anti-tax haven book called Treasure Islands. In one of the chapters, he wrote that I was one of the “noisiest and most active defenders” of low-tax jurisdictions. That was fine, but then he cold-cocked me by writing that I was “a man of striking warmth and great personal charm.” It goes without saying that this means I wasn’t vigorous enough in my defense of liberty during our meetings.

I don’t know if there’s a three-strikes-and-your-out policy, but I will work diligently to make sure I don’t receive any more praise from the wrong people.

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It was wonderful to wake up this morning in Austria and learn that Osama bin Laden is dead.

I’m proud of America’s special forces for their courage and ability. And I tip my hat to the Obama Administration for nailing OBL rather than capturing him (at least I hope that was the plan). Apparently the CIA Director got to watch live from Langley and see the loathsome maggot meet his long-overdue fate. Very cool.

Time for some old-fashioned patriotism.

And here’s one of the most touching renditions of America’s national anthem I’ve ever seen, performed at Buckingham Palace after 9-11.

Let’s enjoy this moment.

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I would not be a very good juror, particularly if a judge expected me to suspend my moral judgments and narrowly follow the law. And I say this even though I realize that a good legal system should be based on that principle.

I’ve cited some tough cases in previous posts, dealing with thorny topics such as brutal tax collection stories, Sharia law, healthcareincest, and vigilante justice.

Our latest you-be-the-judge story comes from Massachusetts, where a 57-year old man in a wheelchair is in legal trouble for slugging a 27-year old guy with a baseball bat because of allegations that he molested a little girl. Here are excerpts from a story in the Daily Mail.

A wheelchair-bound paraplegic grandfather could face up to 10 years in jail after using a baseball bat to hit a man he suspected of molesting his three-year-old granddaughter. Frank Hebert, 57, has been hit with a felony assault charge over the incident involving 27-year-old Joshua Hardy. …Computer salesman Mr Hebert said: ‘I’m not a hero, that’s for sure. I’d do it again tomorrow, knowing the consequence. …Mr Hebert, who was left confined to a wheelchair with only partial use of his arms after a car crash in Falmouth a decade ago, was summonsed to Edgartown District Court on March 25 and charged with assault and battery with a dangerous weapon. …Mr Hebert claims it was over Christmas that the child began asking her grandparents to protect her. He said that on February 22 his partner took her daughter and granddaughter, who were visiting, back to the mainland to talk to police, while he lured Hardy to his Mac PC Sales and Service shop in Vineyard Haven. According to the Boston Herald, Mr Hebert said ‘fear’ prompted him to bring a baseball bat and to call state police to back him up. Mr Hebert said he pointed the bat at Hardy and ordered him to stay seated until police arrived. He said he used the bat after Hardy stood up and laughed at him.

If the government insists on bringing this case to trial, how would you vote?

I almost certainly would practice jury nullification and vote “not guilty.” To be sure, I say this with some hesitation because we don’t know for sure if the guy who got slugged, Mr. Hardy, actually did molest the child. And we also don’t know whether he was seriously injured or just bruised. It might also affect my decision if I found out that Mr. Herbert hit Hardy one time or twenty times.

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Some of these numbers are a bit dodgy, and some of the assumptions are pathetically flawed (more spending by government leads to less poverty being a clear example of faulty thinking), but this comparison of big numbers is very interesting.

I now know, for instance, that the net worth of Bill Gates is supposedly equal to the annual earnings of the porn industry. Maybe that will help me win a game of Trivial Pursuit some day.

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The world is filled with evil governments run by evil people who do evil things to innocent people. Libya is a stark example of this tragic reality. But that does not necessarily mean it is the responsibility of the United States government to intervene in Libyan affairs – particularly if there is no clear mission or implication for U.S. national security.

George Will opines on this issue today, asking more than a dozen probing questions about the wisdom of another nation-building experiment in the Muslim world. This excerpt has a handful of the questions that I think are most important. I’m especially concerned that the U.S. government might intervene after asking permission from the kleptocrats at the United Nations – thus doing the wrong thing in the worst possible way.

Today, some Washington voices are calling for U.S. force to be applied, somehow, on behalf of the people trying to overthrow Moammar Gaddafi. Some interventionists are Republicans, whose skepticism about government’s abilities to achieve intended effects ends at the water’s edge. All interventionists should answer some questions:

The world would be better without Gaddafi. But is that a vital U.S. national interest? If it is, when did it become so? A month ago, no one thought it was.

Before we intervene in Libya, do we ask the United Nations for permission? If it is refused, do we proceed anyway? If so, why ask? If we are refused permission and recede from intervention, have we not made U.S. foreign policy hostage to a hostile institution?

Would it be wise for U.S. military force to be engaged simultaneously in three Muslim nations?

I’m surely not an expert on these issues, but my aversion to nation building does not mean I’m opposed to slapping around people who attack the United States. If the President happened to drop a cruise missile on Gaddafi and said it was a delayed response for the Pan Am Lockerbie bombing, I wouldn’t lose a second of sleep.

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In the past 10 years, the burden of federal spending has skyrocketed, more than doubling from$1.86 trillion in 2001 to an estimated $3.82 this year.

President Bush deserves a lot of the blame thanks to the no-bureaucrat-left-behind bill that bloated the Department of Education, the corrupt farm bills, the pork-filled transportation bills, the new prescription drug entitlement, and bailouts for banks and auto companies.

Obama then came to office promising hope and change, but he simply grabbed the baton and continued the spending spree, adding more TARP bailouts, and then giving us the boondoggles of a fake stimulus and government-run healthcare.

Taxpayers finally said enough is enough last November and there’s a new Congress with marching orders to stop Washington’s spending orgy.

But Barack Obama and Harry Reid are saying no. They want us to believe that the House spending cuts are too severe.

What does this mean? Are Republicans trying to reduce spending to $2.98 trillion, which is where it was in 2008? That would be a spending cut of nearly $1 trillion and music to my ears. Or are they being even more aggressive, perhaps trying to cut spending to about $2.5 trillion, about halfway between the 2001 and 2008 totals? That would be a spending cut of almost $1.5 trillion, which would be a fantasy for a libertarian wonk like me.

If these were the options being considered, we could understand President Obama and Senator Reid vigorously resisting  spending cuts of that magnitude.

But that’s not what’s happening. Republicans in the House are not trying to reduce spending by a big amount. They’re not even trying to reduce the budget by $500 billion. Heck, they’re not even trying to lower this year’s spending levels by $100 billion.

Instead, the House GOP has put forward a very modest proposal to trim spending by $61 billion – and that tiny bit of nibbling around the edges of the welfare state has Barack Obama and Harry Reid acting as if the safety net is being ripped to shreds.

This video from my colleagues at the Cato Institute puts $61 billion of cuts in context – and indirectly shows that President Obama and Senator Reid have no credibility on fiscal policy.

I can’t resist making one final observation. The burden of government spending has jumped by about $2 trillion in the past 10 years. Does anybody think our economy is stronger as a result? More stable? More competitive? More vigorous? More entrepreneurial?

The answer to all these questions is a resounding no. So if the 10-year Bush-Obama experiment of bigger government has failed, isn’t it time we try a different approach?

To conclude, here’s one of my videos, looking at just a small fraction of the evidence in favor of smaller government.

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I’ve added a “flag counter” to gauge whether this blog is fulfilling, in at least a small way, its original mission of serving as a useful platform in the global fight for liberty.

I try to cover international developments in the battle against statism, but the majority of posts inevitably are about developments in the United States. But I always try to draw out a key economic lesson in my posts rather than just make a snarky point, so hopefully they are useful to everyone.

So we’ll see, starting today, how many flags show up and how many foreign visitors we get. The “widget” is on the right side and you’ll see it relatively quickly if you hit your down arrow a few times.

 

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Okay, perhaps the title of this post is a slight exaggeration, but I make my debut on the silver screen early next year. One of my softball buddies asked me to play a small role in an independent film called “Adams Morgan.”

I wondered whether I would wind up on the editing room floor, but I’m in the trailer (around the 1:00 mark), so I think it’s safe to say that a star is born (hey, there’s nothing wrong with a bit of healthy self-delusion).

The film opens on Valentine’s Day. Any suggestions who I should take to the premiere party, Julia Roberts? Angelina Jolie? Jennifer Anniston? Since discrimination is bad, maybe I should take all three.

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A paper posted on the Social Science Research Network looks at nations that are prospering compared to those that are stagnating. Not surprisingly, limited government and free enterprise policies are associated with better economic performance. Here’s an excerpt from this new research.

What can we conclude about the effect of various policies on economic growth? What lessons can we learn from the growth miracles of recent years, and how can we avoid the sorry fate of the growth disasters? The countries that have been most successful at increasing their economic growth rates, and therefore at raising the living standards of their population, have all shared a commitment to increasing economic freedom, limiting the role of government, stamping out corruption, and strengthening the rule of law. They relied on free markets, rather than on central planning. They lowered their tax rates, and some even adopted a flat income tax. They made their labor laws more flexible, and allowed their firms to hire new workers more easily. They privatized their inefficient state-owned enterprises. They lowered tariffs, and opened up to trade and international competition. They courted foreign investors, and created a favorable business environment to lure them in. In other words, growth miracles have occurred in countries whose governments have adopted policies that reflect the classical liberal ideals of economic freedom, limited government and rule of law. Our brief survey of economic successes around the world shows that this lesson is universal: Countries as diverse as China, Estonia, Germany, India, Chile, South Korea and Slovakia have benefited from applying a similar set of market-oriented policies.

The paper also makes a key point about economic growth and living standards.

Over time, even modest increases in the economic growth rate can, furthermore, lead to vast improvements in the standard of living. If China sustains the eight percent annual GDP growth rate that it has achieved since its market-oriented reforms began in 1978, its inhabitants will double their living standards every nine years. By contrast, in the United States, which has grown at an average annual rate of about two percent, a doubling of living standards would require thirty-six years.

This is an under-appreciated observation. The author cites a rather dramatic example, but the key observation is that even modest differences in economic growth can have a big impact on relative prosperity with a couple of decades. Here’s a chart I include in many of my Powerpoint presentations. It shows how long it takes to double GDP based on different growth rates.

Let’s look at a real-world example. Hong Kong has been growing by more than 5 percent each year for decades, while France has been growing by less than 2 percent annually. Now let’s ask a couple of big-picture questions. Why have Bush and Obama been trying to make us more like France? Do they fail to understand that this means less future prosperity for the American people? Don’t they realize that this means a loss of relative competitiveness?

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It was only a few decades ago that there was no such thing as money-laundering laws. Instead, the focus of law enforcement was on the underlying criminal behavior (such as robbery) that generated ill-gotten gains. In recent decades, however, politicians around the world have passed hundreds of laws, created hundreds of agencies, and spawned several international bureaucracies and treaties. The theory is that crime could be discouraged by making it more difficult for bad guys to make use of any resulting loot.

In reality, though, money-laundering laws have been a huge failure. From a cost-benefit perspective, there is an overwhelming case that these laws should be radically revised if not totally repealed.

The current approach has significantly increased the expense of providing financial services, which is particularly burdensome for the poor and others at risk of not being able to utilize the financial system. These laws also have dramatically eroded privacy, forcing financial service providers and professional advisers to spy on customers and clients. To get a sense of what this means, here’s a blurb from a recent article in the U.K.’s Law Society Gazette.

…an official from the World Bank’s Financial Market Integrity Unit…described his research on the kind of large-scale money laundering that takes place globally. At the end of his presentation, which he admitted touched only tangentially on the role of lawyers, he said that his research showed that the overwhelming majority of lawyer participation in money laundering took place by deliberate action of the lawyer, and not through unwitting manipulation by the criminal. Then I intervened. If that was the case, if money laundering overwhelmingly involves crooked lawyers and not unwitting ones, then why do we have the gigantic and unwieldy money laundering legislation in place for lawyers, with its duty to report suspicious transactions without tipping off the client, which turns the lawyer into a police officer? Obviously, if a lawyer is deliberately involved in the laundering, there are existing laws and professional rules to deal with it. But why must the balance of the rule of law, which depends on a client being able to confide information to a lawyer, be upset for a problem that does not exist? That is when the audience applauded. …I think it is time to use more of our resources to push for exposure of the lie on which the money laundering legislation is based. There is no evidence that unwitting lawyers’ reports are making any difference. Give us the evidence or repeal the legislation.

From a utilitarian standpoint, these costs might be justifiable if they resulted in a substantial reduction in crimes against people and property. Unfortunately, there is no evidence that money-laundering laws have reduced criminal behavior (heck, they don’t even do a good job of intercepting criminal funds).

Yet politicians and bureaucrats every year seek more laws and more powers in hopes of somehow turning a sow’s ear into a silk purse. The latest example is from the Financial Action Task Force, a Paris-based bureaucracy filled with people who make very good salaries thanks to the existing plethora of laws and regulations. These bureaucrats now want to make tax matters a predicate offense for money laundering. And they want such laws to apply across borders, so a bank in New York could be held accountable if a French worker or investor didn’t fully comply with France’s oppressive tax laws. Or a bank in Miami could be guilty of an offense if it helps a Venezuelan family protect its assets from Hugo Chavez’s thugocracy.

So many costs, so few benefits. This video elaborates.

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I’m an economist, so I should probably be most agitated about the economic consequences of TARP, such as moral hazard and capital malinvestment. But when I read stories about how political insiders (both in government and on Wall Street) manipulate the system for personal advantage, I want to go postal.

Yes, TARP was economically misguided. But the bailout also was fundamentally corrupt (as are so many things when government gets too big). And it was a form of corruption that lined the pockets of the ruling class. I don’t like it when lower-income people use the political system to take money from upper-income people, but I get completely nauseated/angry/disgusted when upper-income people use the coercive power of government to steal money from lower-income people.

Now, to add insult to injury, we’re being fed an unsavory gruel of lies and deception as the political class tries to cover up its sleazy behavior. Here’s a story from Bloomberg about the Treasury Department’s refusal to obey the law and comply with a FOIA request. A Bloomberg reporter wanted to know about an insider deal to put taxpayers on the line to guarantee a bunch of Citigroup-held securities, but the government thinks that people don’t have a right to know how their money is being funneled to politically-powerful and well-connected insiders.

The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request on the grounds that taxpayers ought to know how their money was being used. More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as “Did you just try to call me?” and “Monday will be a busy day!” None of the documents answers Pittman’s request for “records sufficient to show the names of the relevant securities” or the dates and terms of the guarantees.

Here’s another reprehensible example of sleazy behavior. The Treasury Department, for all intents and purposes, lied when it recently claimed that the AIG bailout would cost “only” $5 billion. This has triggered some pushback from Capitol Hill GOPers, as reported by the New York Times, but it is highly unlikely that anyone will suffer any consequences for this deception. To paraphrase Glenn Reynolds, “laws, honesty, and integrity, like taxes, are for the little people.”

The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments, according to a report by the special inspector general for the Troubled Asset Relief Program. …“The American people have a right for full and complete disclosure about their investment in A.I.G.,” Mr. Barofsky said, “and the U.S. government has an obligation, when they’re describing potential losses, to give complete information.” …“If a private company filed information with the government that was just as misleading and disingenuous as what Treasury has done here, you’d better believe there would be calls for an investigation from the S.E.C. and others,” said Representative Darrell Issa, the senior Republican on the House Committee on Oversight and Government Reform. He called the Treasury’s October report on A.I.G. “blatant manipulation.” Senator Charles E. Grassley of Iowa, the senior Republican on the Finance Committee, said he thought “administration officials are trying so hard to put a positive spin on program losses that they played fast and loose with the numbers.” He said it reminded him of “misleading” claims that General Motors had paid back its rescue loans with interest ahead of schedule.

 P.S. Allow me to preempt some emails from people who will argue that TARP was a necessary evil. Even for those who think the financial system had to be recapitalized, there was no need to bail out specific companies. The government could have taken the approach used during the S&L bailout about 20 years ago, which was to shut down the insolvent institutions. Depositors were bailed out, often by using taxpayer money to bribe a solvent institution to take over the failed savings & loan, but management and shareholders were wiped out, thus  preventing at least one form of moral hazard.

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Sean Penn for President? How about George Clooney? Or what would you think of President Ed Anser? (assuming he’s still alive)

Hollywood is filled with collectivists, probably because of a combination of guilt over immense wealth and a shallow desire to be trendy and chic.

Well, here’s a video of an actor campaigning for statist politicians. Do you think you could vote for him if he ran for office at some point in the future?

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I hate taxes more than anyone, but other policies matter as well, so if I had the choice of replacing current government policies with the ones that existed at the end of the Clinton years, I would gladly make that trade. Yes, it would mean higher tax rates, but it also would mean slashing government spending from 24 percent of GDP down to 18 percent of GDP. It would mean no sleazy TARP bailout, no Sarbanes-Oxley red tape, and no added power and authority for the federal government.

This is the argument that I made in this interview on CNBC, though my opponent tried to do his version of the Brezhnev Doctrine (what’s mine is mine, what’s yours is negotiable), so I concluded the interview by stating that in the real world higher taxes are completely unacceptable.

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Our fiscal policy goal should be smaller government, but here’s a video for folks who think that balancing the budget should be the main objective.

The main message is that restraining the growth of government is the right way to get rid of red ink, so there is no conflict between advocates of limited government and supporters of fiscal balance.

More specifically, the video shows that it is possible to quickly balance the budget while also making all the 2001 and 2003 tax cuts permanent and protecting taxpayers from the alternative minimum tax. All these good things can happen if politicians simply limit annual spending growth to 2 percent each year. And they’ll happen even faster if spending grows at an even slower rate.

This debunks the statist argument that there is no choice but to raise taxes.

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If you think nobody cares about you…if you’re depressed…just remember that things are worse than you think.

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Two things struck me about this debate. First, the guy from the Center for American Progress was either clueless or dishonest about double taxation. Second, nobody seems to understand that balancing the budget is a simple matter of restraining the growth of government spending. I want deep cuts, but that’s not even necessary.

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Caroline Baum of Bloomberg has an excellent column explaining why soak-the-rich taxes don’t work. Simply stated, wealthy people are not like you and me. They have tremendous control over the timing, composition, and level of their income. When the rich are hit with higher tax rates, they adjust their behavior and protect themselves by reducing the amount of taxable income they earn and/or report to the IRS. That usually causes collateral damage for the economy, but the class-warfare crowd is either oblivious or uncaring about real-world effects.

Why, after all this time and an extensive body of data, are we still questioning whether reductions in marginal and capital- gains tax rates increase economic activity enough to generate more revenue for the federal government? “Because they don’t like the answer,” Laffer says of the doubters. “It’s not tax cuts that pay for themselves. Tax cuts on the poor cost you lots of money. Tax cuts on the rich pay for themselves. Rich people can afford lawyers, accountants, and can defer income.” …The rich have the luxury to respond to incentives, to opt for more work and less leisure when the return on work is greater. They are motivated to take risks, maybe start a business, invent something, and get even richer while giving others the opportunity, through hiring, to do the same. The opposite is true for low-income workers. When the government raises taxes, someone struggling to put food on the table for his family may have to go out and get a second job to maintain his level of take-home pay. For this socio-economic group, higher taxes translate to more work. To ignore evidence that the rich behave differently is silly. The government can’t get more blood from a stone, yet it keeps trying. Instead of demagoguing tax cuts for the rich, Democrats should try embracing them for a change. …Academics are busy churning out articles claiming tax cuts for the rich deliver less bang for the buck because the rich save more of the money than the poor. That’s true. It also misses the point. The goal isn’t spending, or distributing other people’s money to create “aggregate demand.” That’s a wealth transfer, not a net stimulus. (Fiscal policy gets its punch from monetary policy, from the increase in the money supply to pay for the spending.) The goal should be to incentivize individuals to work hard, save and invest in the future. It’s about growing the pie. Sound familiar? We’re right back to square one. I, for one, would like to see the debate shift from class warfare over tax rates and targeted tax relief to tax reform. Either scrap the tax code and introduce a simple flat tax with no deductions, or scrap the IRS and move to a consumption tax. If you want to get money out of politics, there’s only one way to do it. Take the tax code out of Congress’s hands.

Baum’s column touches on most of the key issues, but she doesn’t address the political economy of class-warfare taxation. In this video on soak-the-rich tax policy, I provide five reasons why high tax rates are misguided – including the oft-overlooked point that politicians impose punitive taxes on the rich as a prelude to hitting the rest of us with higher taxes.

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A Milestone, I Guess

Okay, it is a meaningless figure, but I can’t help but feel like I’m being graded when the number of “followers” on my Twitter account rises or falls.

So the fact that I finally broke 500 gives me a temporarily warm feeling in my cold heart.

I’m still a small fish in a big sea, but I guess that’s better than being an even smaller fish.

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This disgusts me.

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I’m not a soccer fan, but I’m nonetheless disappointed that the American team lost. Having said that, at least we got farther than a certain team from a socialist nation (not that we can point too many fingers in that regard after what Bush and Obama have done). So in honor of the World Cup, here’s an image of a recent Wall Street Journal story.

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John Derbyshire of National Review has an interesting article on bureaucratic harassment of private business. He begins with a personal story of something that happened when he first came to the United States and was working at a food-preparation company:
The first federal regulator I ever knew was a fellow named Ernie. …Ernie was a power freak. If you showed him the respect he thought he was entitled to, he was generally harmless. If you crossed him, however, his wrath was terrible. The boss of the firm was a no-nonsense former Marine. …He put up with Ernie as best he could, but sometimes the forbearance required was too great. …On one occasion the boss lost it and yelled at Ernie. Ernie then had his minions go round the firm “tagging” all the preparation tables with what looked like old-fashioned white luggage tags. Peered at up close, the tags revealed printed messages saying that no food product could go anywhere near the tagged table until the tag was removed, with ferocious federal penalties threatened against transgressors. The tags could, of course, only be removed by Ernie. The tables were out of commission. We had to scrub those suckers three or four times over with green scouring pads and Comet before Ernie would deign to remove his tags and let the firm get on with their business. Another time, after some other go-round with the boss, Ernie determined that the firm’s ZIP code was printed on the dinner boxes in too small a font. The boss had to get rolls of stick-over labels printed up, and we menials spent a couple of days working our way through the freezer rooms relabeling the dinners so the ZIP code was in the FDA-approved font size. I guess this was real important to the nation’s health.
The substance of his article is another example of bureaucratic excess, though this time with much greater potential for economic damage. The federal bureaucracy and Washington political elite (with the support of big companies that don’t like competition) are hampering the development of an industry that is offering 100-percent safe genetic testing for consumers. The excerpt is long, but shows how government intervention is both unwarranted and driven by bad motives.
A firm named Pathway Genomics, based in San Diego, is one of many that have come up in the past few years offering to scan a person’s DNA and report on any significant disease-risk or drug-response markers. You swab your cheek with a sterile Q-Tip they provide, or spit into a sterile plastic tube, and you send the saliva sample off to them. They scan it and send you back the information. The cost of a test can be from $20 to $500, depending on how many markers are scanned for. Earlier this year Pathway entered into a deal with Walgrens, a nationwide drugstore chain with 7,500 outlets. The deal would have allowed Pathway to operate counters at 6,000 of those outlets, selling their service. Instead of signing up with Pathway via their website and sending in your saliva sample through the mail, you could do the thing right there in your local drugstore. Health reporter Rob Stein at the Washington Post did a story on the Pathway-Walgreens deal. The story appeared in the May 11 edition of the newspaper. By way of researching it, Stein called the FDA to ask them for a quote. …The call, however, woke the FDA from their dogmatic slumbers. …The regulocrats lumbered into action. A letter went out to Pathway warning them that their test was a “medical device” likely subject to FDA oversight and pre-marketing approval. Hearing of this, Walgreens canceled the deal with Pathway. Close behind the FDA, like jackals following tigers, came Congress. Henry Waxman, head of the House Energy and Commerce Committee, demanded a comprehensive document dump from three of the firms — every letter, every lab report, every e-mail. Last week the FDA escalated the war, sending letters out to five more of the firms (23andMe, Navigenics, DeCode, Illumina, and Knome) couched in similar terms to the original Pathway letter. …The logic of classifying these DNA scans as “medical devices” bears a closer look. What actually is a “medical device”? Answer: A medical device is anything the FDA declares to be a medical device. …You might still think it’s a bit of a stretch to call these tests “medical devices.” They are, after all, merely informational. Consumers are not being dosed with anything, or having anything attached to or implanted in their bodies, nor even inserted into their mouths for purposes of tongue depression. “Medical device”? Huh? …Lest you should think this is a straightforward tale of power-crazed regulators and tax-hungry politicians killing off an infant industry, please let it be noted that Big Government is by no means the only predator that struggling start-ups must face. There is also Big Business. In seeking to widen its regulatory scope, the FDA has some support from big, established biotech companies. Back in 2008, biotech giant Genentech petitioned the FDA to expand its authority into products involving “laboratory-developed tests” (LDTs). An LDT is one with an expert in the loop. An example of a non-LDT would be a home pregnancy test — no expert between test and interpretation. LDTs are more lightly regulated than non-LDTs, for understandable reasons. …It was natural for Genentech and other established companies to look with disfavor on impertinent startups taking advantage of regulatory loopholes. Big Business is just as capable of hating entrepreneurial startups as is Big Government. A business can only lobby, though. Government can act. ….The U.S.A. is a real nice place to have a job in government, and still a pretty nice place to work for a big corporation — especially one designated “too big to fail.” For the start-up entrepreneur in an ideologically fraught field, however, the environment is increasingly hostile. Why do they even bother?

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Regular readers of this blog know that big corporations often are enemies of free markets and individual liberty. So it is hardly suprising to know that the Business Roundtable, a lobby representing CEOs of major companies, supported the wasteful and ineffective stimulus pprogram in 2009 and the bloated new healthcare entitlement in 2010. Big companies, after all, are quite proficient at working the system to obtain unearned wealth and to rig the rules against smaller competitors.
 
What is surprising, however, is that representatives of that organization now have the chutzpah to complain about a “hostile environment for investment and job creation.” Equally galling, the group has published a document called “Policy Burdens Inhibiting Economic Growth.” We’ve all heard the joke about the guy who murders his parents and then asks the court for mercy because he’s an orphan. The Business Roundtable has adopted that strategy, except this time taxpayers are the butt of the joke. Here’s an excerpt from the Washington Post report:
 
The chairman of the Business Roundtable, an association of top corporate executives that has been President Obama’s closest ally in the business community, accused the president and Democratic lawmakers Tuesday of creating an “increasingly hostile environment for investment and job creation.” Ivan G. Seidenberg, chief executive of Verizon Communications, said that Democrats in Washington are pursuing tax increases, policy changes and regulatory actions that together threaten to dampen economic growth and “harm our ability . . . to grow private-sector jobs in the U.S.” …The final straw, said Roundtable president John Castellani, was the introduction of two pieces of legislation, now pending in Congress, that the group views as particularly bad for business. One, a provision of the administration’s financial regulation overhaul, would make it easier for shareholders to nominate corporate board members. The other would raise taxes on multinational corporations. The rhetoric accompanying the tax proposals has been particularly harsh, Castellani said, with Democrats vowing to campaign in this fall’s midterm elections on a platform of punishing companies that move jobs overseas. …Seidenberg polled the members of the Business Roundtable and a sister organization, the Business Council. The result was a 54-page document, delivered to Orszag on Monday, chock full of bullet points about actions taken or considered by a wide array of executive agencies, including the White House Middle Class Task Force and the Food and Drug Administration. We believe the cumulative effect of these proposals will help defeat the objectives we all share — reducing unemployment, improving the competitiveness of U.S. companies and creating an environment that fosters long-term economic growth,” Seidenberg wrote in a cover letter for the document, titled “Policy Burdens Inhibiting Economic Growth.”

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I was interviewed by CNN about the issues relating to Congressman Barton’s apology to BP. The network only used one of my quotes from the interview, and I was happy to see that I was not taken out of context (always a danger when you are taped in advance).

To augment my limited quote from the story, my main gripe with the $20 billion fund is that compensation claims should be part of the regular legal process and not the result of pressure from the White House. That being said, I won’t be too agitated about the fund – assuming that the money does not become a piggy bank for White House vote buying. On the broader issue of BP and the spill, protecting people from harm (either intentional harm, which is addressed by the criminal justice system, or unintentional harm, which should be addressed through the tort system) is one of the few legitimate functions of government.

One final comment. The CNN story, shortly after the 2:00 mark, makes it appear as if polling data shows the American people favor Obama’s approach. That is not the case. The polling data simply shows that people don’t think the spill is under control and that they think BP should pay all damages. That’s not contrary to Obama’s position, but neither is it contrary to the libertarian position.

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I may as well confess that I have a man-crush on Governor Christie. It’s not nearly as bad as Andrew Sullivan’s fixation on Obama (and it certainly hasn’t involved me changing my views), but this video and the excerpt below are two examples of a politician actually doing the right thing and giving intelligent and coherent explanations to justify his actions. The video shows him taking on the teacher unions and the story is about his veto of a class-warfare tax bill.

Christie may wind up “growing in office” and becoming a squish, but so far he is the nation’s most impressive Republican politician. That’s normally damning with faint praise, but not in this case.

It took about two minutes from the time Senate President Steve Sweeney certified the passage of the millionaires tax package for Gov. Chris Christie to veto the bills at his desk. “While I have little doubt that the sponsors and supporters of this bill sincerely believe that the state can tax its way out of this financial crisis, I believe that this bill does nothing more than repeat the failed, irresponsible and unsustainable fiscal policies of the past,” wrote Christie in his veto statement. “Now is not the time for more of the same. Ultimately, another tax increase will punish the state’s struggling small businesses and set our economy further back from recovery.”

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