Feeds:
Posts
Comments

Posts Tagged ‘Big Government’

I don’t know whether to be impressed or horrified by Paul Krugman.

I’m impressed that he’s always “on message.” No matter what’s happening in America or around the world, he always has some sort of story about why events show the need for bigger government.

But I’m horrified that he’s so sloppy with numbers.

My all-time favorite example of his fact-challenged approach deals with Estonia. In an attempt to condemn market-based fiscal policy, he blamed that nation’s 2008 recession on spending cuts that took place in 2009.

Wow. That’s like saying that a rooster’s crowing causes yesterday’s sunrise. Amazing.

Let’s look at a new example. This is some of what he recently wrote while trying to explain why the U.S. has out-performed Europe.

America has yet to achieve a full recovery from the effects of the 2008 financial crisis. Still, it seems fair to say that we’ve made up much, though by no means all, of the lost ground. But you can’t say the same about the eurozone, where real G.D.P. per capita is still lower than it was in 2007, and 10 percent or more below where it was supposed to be by now. This is worse than Europe’s track record during the 1930s. Why has Europe done so badly?

Krugman answers his own question by saying that the United States has been more loyal to Keynesian economics.

…what stands out from around 2010 onward is the huge divergence in thinking that emerged between the United States and Europe. In America, the White House and the Federal Reserve mainly stayed faithful to standard Keynesian economics. The Obama administration wasted a lot of time and effort pursuing a so-called Grand Bargain on the budget, but it continued to believe in the textbook proposition that deficit spending is actually a good thing in a depressed economy.

I have to confess that alarm bells went off in my head when I read this passage.

If Krugman was talking about the two years between 2008 and 2010, he would be right about “staying faithful to standard Keynesian economics.”

But 2010 was actually the turning point when fiscal policy in America moved very much in an anti-Keynesian direction.

Here’s the remarkable set of charts showing this reversal. First, there was zero spending growth in Washington after 2009.

Second, this modest bit of fiscal restraint meant a big reduction in the burden of government spending relative to economic output.

Wow, if this is Keynesian economics, then I’m changing my name to John Maynard Mitchell!

So is Krugman hallucinating? Why is he claiming that U.S. policy was Keynesian?

Let’s bend over backwards to be fair and try to find some rationale for his assertions. Remember, he is making a point about U.S. performance vs. European performance.

So maybe if we dig through the data and find that European nations were even more fiscally conservative starting in 2010, then there will be some way of defending Krugman’s claim.

Yet I looked at the IMF’s world economic outlook database and I crunched the numbers for government spending in the biggest EU economies (Germany, UK, France, Italy, Spain, Netherlands, Sweden, Belgium, accounting for almost 80 percent of the bloc’s GDP).

And what did I find?

Contrary to Krugman’s claims, total government spending in those nations grew slightly faster than it did in the United States between 2009 and 2014.

So on what basis can Krugman argue that the U.S. had a more Keynesian approach?

Beats the heck out of me. I even looked at the OECD data on deficits to see whether there was some way of justifying his argument, but those numbers show the biggest reduction in red ink (presumably a bad thing according to Keynesian stimulus theory) took place in the United States.

But I will close by acknowledging that Krugman’s column isn’t just focused on fiscal policy. He also argues that the Federal Reserve has been more Keynesian than European central banks. My impression is that both the Fed and the ECB have been keeping interest rates artificially low, so I’m not sure that’s an effective argument (or an effective policy!), but I’ll leave that issue to the folks who specialize in monetary policy.

P.S. If you want additional examples of Krugman’s factual errors, see here, here, here, here, here, here, here,here, here, and here.

Read Full Post »

Way back in 2010, I shared two very depressing numbers to illustrate how Obama’s policies were creating “regime uncertainty.”

I shared data on the cash reserves of companies and suggested it was bad news that those firms thought it made more sense to sit on money rather than invest it.

I also shared numbers on the excess reserves that banks were keeping at the Federal Reserve and speculated that this was because of a similarly dismal perspective about economic prospects.

At the time, I figured that those numbers eventually would get better. But I was wrong.

Companies are still sitting on the same about of cash and banks have actually increased the amount of money they have parked at the Federal Reserve.

Now let’s look at some more data that doesn’t reflect well on Obamanomics.

The Federal Reserve Bank of Cleveland has some very discouraging analysis about worker compensation.

…real wages have barely risen—real compensation per hour has risen only by 0.5 percent, much less than at this point in past recoveries. The lack of strong wage growth has been one factor that has held down the growth of income, consumer spending, and the recovery. …Some longer-term changes in the economy have likely played a larger role in depressing real wage growth. …Productivity growth in the nonfarm business sector has averaged only 1.46 percent since 2004 and 0.85 percent since 2010. As the growth of labor productivity is a key determinant of real wage growth in the long run, the slowdown of productivity has probably helped to depress wage growth.

And here’s a chart from the article.

The brown line at the bottom is what’s been happening under Obamanomics. As you can see, compensation has basically been unchanged for the past five years. In other words, living standards have stagnated.

The Cleveland Fed data shows dismal earnings and productivity data for all Americans. And it’s important to understand how those numbers are related.

Some folks in Washington think that companies should act like charities and give workers lots of money simply because that’s a nice way to behave.

In the real world, though, workers get paid on the basis of how much they produce. So when productivity numbers are weak, as the Cleveland Fed points out, you also get weak data for worker compensation.

But now let’s dig even deeper and ask what determines productivity numbers. There are many factors, of course, but saving and investment are very important. In other words, capital formation. Simply stated, you need people to set aside some of today’s income to finance tomorrow’s growth.

And growth, as measured by inflation-adjusted changes in output, is entirely a function of population growth and productivity growth.

So the bottom line is that workers will only earn more if they produce more. But they’ll only produce more if there’s more saving and investment.

And this is why Obama’s policies are so poisonous. His tax policy is very anti-saving and anti-investment. And the increases in the regulatory burden also make it less attractive for investors and entrepreneurs to put money at risk.

Obama thinks he’s punishing the “rich,” but the rest of us are paying the price.

Now let’s look specifically at American blacks.

Deroy Murdock explains in National Review that they should feel especially angry at the gap between Obama’s rhetoric and performance.

Republicans should ask black Americans for their votes from now through November 2016. They should do so by challenging blacks to ask themselves an honest question: “What, exactly, have you gained by handing Obama 95 percent of your votes in 2008 and 93 percent in 2012?”

Deroy then lists a bunch of depressing statistics on what’s happened since 2009.

Here are the numbers that I think are most persuasive.

U.S. labor force participation has declined during that same period, from 65.7 to 62.7 percent. For blacks in general, …dipping from 63.2 to 61.0 percent of available employees in the work pool. For black teenagers, however, this number deteriorated — from 29.6 to 25.7 percent. The percentage of Americans below the poverty line inched up, the latest available Census Bureau data found, from 14.3 to 14.5 percent overall — between 2009 and 2013. For black Americans, that climb was steeper: The 25.8 percent in poverty rose to 27.2 percent. Real median household incomes across America retreated across those years, from $54,059 to $51,939. …such finances also reversed for black Americans, from $35,387 to $34,598. …Home ownership slipped from 67.3 percent of Americans in the first quarter of 2009 to 64.0 in the fourth quarter of 2014. For blacks, that figure slid from 46.1 to 42.1 percent.

Here’s Deroy’s bottom line.

Obama has betrayed blacks as a community, failed Americans as a people, and enfeebled the United States as a nation.

To be sure, it’s not as if Obama wanted to hurt blacks. He just doesn’t understand or doesn’t care that statist policies undermine economic performance.

And when you hurt economic growth, the folks at the bottom rungs of the economic ladder generally suffer the most, and that’s why there are so many grim statistics about the economic health of black America.

The good news is that we know how to solve the problem. The bad news is that Obama is in the White House until January 2017.

Read Full Post »

When writing about the Organization for Economic Cooperation and Development, an international bureaucracy based in Paris, my life would be simpler if I created some sort of automatic fill-in-the-blanks system.

Something like this.

The OECD, subsidized by $____ million from American taxpayers, has just produced a new _________ that advocates more power for governments over the _________ sector of the economy.

But this may not be sufficiently descriptive.

So maybe I should create a multiple choice exercise. Sort of like when students take tests and get asked to circle the most appropriate answer.

The bureaucrats at the Paris-based OECD, working in cooperation with union bosses/class-warfare advocates/other tax-free international bureaucrats/politicians, have released a new report/study/paper urging more power/control/authority for governments in order to increase regulation/taxes/spending/redistribution/intervention.

You may think I’m trying to be funny, but this is totally serious.

How else would you describe a bureaucracy that consorts and cooperates with leftist groups like Occupy Wall Street and the AFL-CIO and routinely published propaganda in favor of Obama’s agenda on issues such as global warming, government-run healthcare, so-called stimulus, and class-warfare taxation.

And never forget that American taxpayers finance the biggest chunk of this bureaucracy’s budget.

Adding insult to injury, the bureaucrats at the OECD get tax-free salaries, which makes their relentless support for higher taxes on the rest of us even more obnoxious.

Now we have some new examples of the OECD’s statist mischief.

Here’s some of what the Center for Freedom and Prosperity recently uncovered.

At its sixth annual conference, the George Soros-founded Institute for New Economic Thinking will feature prominent left-wing economists Thomas Piketty, Joseph Stiglitz, and self-described Marxist and Greek Finance Minister, Yanis Varoufakis. By itself that wouldn’t be remarkable, but the meeting will come with the implicit endorsement of the U.S. taxpayer thanks to the sponsorship of the Organization for Economic Cooperation and Development (OECD), which gets over 20 percent of its funding from the United States.

So why is the OECD subsidizing a left-wing gabfest and giving publicity to way-out-of-the-mainstream characters like Piketty?

Part of the answer, one suspects, is that the bureaucracy has a bloated budget.

But the bigger reason is presumably that the bureaucrats want to push a statist ideological agenda.

…tax collectors have hijacked the OECD… Over the last decade and a half, they have threatened and cajoled low-tax jurisdictions into counter-productive reforms that make their economies less attractive to those suffering under the excessive taxes required to fund European welfare states. …They have essentially turned the OECD into a global tax cartel, or an OPEC for politicians.

None of this is a surprise because it’s part of a bigger pattern.

The OECD gets its money from governments. Most of those governments are European welfare states. The bureaucrats at the OECD get very generous tax-free salaries.

So of course they’re going to pump out whatever propaganda is needed to please their political (and pay) masters.

Here are some other recent examples, both of which were disseminated by the OECD’s Washington Center, which mostly exists to make sure that Congress and the White House maintain the gravy train of handouts to Paris.

Our first example of economic malpractice is this nonsense about a so-called gender wage gap. Note that the OECD is forced to admit the numbers are “unadjusted.”

That’s because lots of research shows that the wage gap disappears once you adjust for factors such as hours worked, types of professions, and work history.

By the way, just in case you think I’m only citing pro-market sources, it’s very much worth noting that even one of President Obama’s economic advisers confessed that the left’s gender-gap numbers are bogus.

Now let’s look at another chart.

I’ve previously explained that what matters most for the poor is economic growth.

Yet statists prefer to focus on the rich-v-poor gap because they want to mislead folks into thinking the economy is a fixed pie (as depicted here) and the income of the rich is at the expense of the poor.

And that’s the purpose of this OECD chart.

This very much reminds me of the OECD’s laughably dishonest research on poverty, which purports to show that there is more poverty in the United States than there is in economically distressed nations such as Greece, Turkey, Hungary, and Portugal.

As you can see from this video, statism is now the OECD’s chief product.

Which is why Republicans in Congress, if they actually on the side of taxpayers, should defund this destructive bureaucracy.

Read Full Post »

With tax day fast approaching, it’s time to write about our good friends at the Internal Revenue Service.

One of the new traditions at the IRS is an annual release of tax scams. It’s know as the “dirty dozen” list, and while it may exist mostly as a publicity stunt, it does contain some useful advice.

And that’s true of this year’s version. But I worry that the IRS is looking at a few trees and missing the forest.

The Washington Examiner was kind enough to let me write a cover story on the “dirty dozen” list. Here’s my effort to add some context to the discussion.

…our friends at the Internal Revenue Service have a relatively new tradition of providing an annual list of 12 “tax scams” that taxpayers should avoid. It’s an odd collection, comprised of both recommendations that taxpayers protect themselves from fraud, as well as admonitions that taxpayers should be fully obedient to all IRS demands. Unsurprisingly, the list contains no warnings about the needless complexity and punitive nature of the tax code. Nor does the IRS say anything about how taxpayers lose the presumption of innocence if there’s any sort of conflict with the tax agency. Perhaps most important, there’s no acknowledgement from the IRS that many of the dirty dozen scams only exist because of bad tax policy.

In the article, I list each scam and make a few observations.

But I think my most useful comments came at the end of my piece.

…maybe the tax system wouldn’t engender so much hostility and disrespect if it was simple, transparent, fair, and conducive to growth. And that may be the big-picture lesson to learn as we conclude our analysis. When the income tax was first imposed back in 1913, the top tax rate was only 7 percent, the tax form was only two pages, and the tax code was easily understandable. But now that 100 years have gone by, the tax system has become a mess, like a ship encrusted with so many barnacles that it can no longer function. …the bottom line is that the biggest scam is the entire internal revenue code. The winners are the lobbyists, politicians, bureaucrats and insiders. The losers are America’s workers, investors, and consumers.

In other words, if we actually want a humane and sensible system, we should throw the current tax code in the garbage and replace it with a simple and fair flat tax.

And that’s exactly the message I shared in this interview with C-Span.

Here are a few of the points from the discussion that are worth emphasizing.

The current tax code benefits Washington insiders, not the American people.

But I’m not optimistic about fixing the tax code, in part because the crowd in DC would lose some power.

We’ll never get good tax reform unless there’s genuine entitlement reform to restrain the growing burden of government spending.

The flat tax and national sales tax are basically different sides of the same coin.

If you want class-warfare tax rates on the rich, keep in mind that high rates don’t necessarily translate into more revenue.

The no-tax-hike pledge is a vital and necessary component of a strategy to restrain government.

Itemized deductions benefit the rich, not the poor.

If you care about poor people, focus on growth rather than inequality.

We should mimic Hong Kong and Singapore, not France and Greece.

P.S. I wrote last week that the Senate GOP put together a budget that is surprisingly good, both in content and presentation. A reader since reminded me that the Chairman of the Senate Budget Committee was a sponsor of the “Penny Plan,” which would lower non-interest outlays by 1 percent per year.

Since Mitchell’s Golden Rule simply requires that spending grow by less than the private sector, Senator Enzi’s Penny Plan obviously passes with flying colors.

Read Full Post »

I don’t know which group is more despicable, Greek politicians or the voters who elected them. In both cases, they think they’re entitled to other people’s money.

But since the “other people” in this case happen to live in nations such as Germany and Finland, and those folks don’t want to write blank checks to a bunch of moochers and looters, Greece faces a difficult choice.

Either the Greeks behave like adults and rein in their bloated public sector. Or they throw a tantrum, which presumably means both a default on payments to bondholders and a return to the unstable drachma currency.

My guess is they’ll eventually go with the latter option.

But maybe there’s hope for Greece. One of the Prime Minister’s chief economic advisers, an out-of-the-closet communist, has announced his resignation. Here are a few of the details from a story in the EU Observer.

Giannis Milios, a member of Syriza’s central committee and long time economic advisor to Greek prime minister Alexis Tsipras, resigned Wednesday… A professor of economic policy who defines himself as a Marxist, Milios is considered one of the most loyal members of the left-wing party.

So does this signal a shift to more mature and sensible policy?

Perhaps not. According to an article in the Wall Street Journal, the problem in Greece isn’t really the communists. It’s the American leftists like Paul Krugman!

Germany, many other governments and senior policy makers in Brussels believe…that recklessness has been encouraged by misguided political and economic philosophies and bad advice from abroad. It isn’t so much that many in Mr. Tsipras’s Syriza party are Marxists—the eurozone can handle followers of the bearded 19th-century German philosopher. It is more that they are seen to be excessively influenced by a 20th-century British economist—John Maynard Keynes—and his living Anglo-Saxon disciples. At finance ministers’ meetings in Brussels, Mr. Varoufakis has been accompanied by American economists James Galbraith and Jeffrey Sachs. From across the Atlantic, the new government gets strong rhetorical backing from Paul Krugman, Joseph Stiglitz and others.

Wow, this is remarkable. Who would have guessed that run-of-the-mill American leftists are more damaging to economic policy than communists!

I guess this is because the Marxists are probably harmless crazies who hang out in coffee houses and gripe about the capitalist class.

The American leftists like Krugman, by contrast, do real damage because they use discredited Keynesian theory to argue that politicians should be spending even more money to “stimulate” an economy that’s in a crisis because of previous bouts of government spending.

Sort of like trying to get out of a hole by digging even deeper.

What’s amazing is that Krugman and other American statists are pushing bad policy when there are successful examples of nations escaping fiscal crisis with genuine spending cuts.

John Dizard wrote an interesting article about Greece for the Financial Times. He began his article by quoting Krugman, who wrote that the plans of the crazy Greek government are “not radical enough.” Dizard also shared another quote from Krugman, which criticized proponents of lower spending because “the best the defenders of orthodoxy can do is point to a couple of small Baltic nations.”

So Dizard decided to compare Greece with those Baltic nations of Estonia, Latvia, and Lithuania.

There are…some practical lessons to learn from…the contrasting ways that Greece has dealt with the world after the global financial crisis compared with the relatively poor Baltic states. Greece took a path of gradual fiscal adjustments weighted towards tax increases, accompanied by a partial debt default. The Baltic states adopted rapid and deep cuts in their state expenditure and current account deficits.

And here’s a shocking bit of news, though it won’t be surprise to folks in the real world. The Baltics have done far better.

The big issue in the Baltic states is upward wage pressure from tight labour markets. That is what we call a high-class problem. This understates the Baltic countries’ achievements. …They also did this without much benefit from concessionary multilateral finance or international debt haircuts.

Dizard looks at some of the differences between the Baltic nations and Greece.

There were virtually no dismissals from the Greek civil service over this period. Salaries were cut, but public sector staffing was reduced with lay-offs of temporary contract workers and early retirements. This had the effect of reducing already low service levels and transferring costs from payrolls to pension obligations. Latvia fired one-third of its civil servants. …The tax burden [in Greece] on salaried workers, compliant domestic businesses and property owners was substantially increased. In contrast, the Baltic states have fairly flat and relatively low tax rates.

All this is music to my ears since I’ve already written about the successful spending cuts in the Baltic countries.

And I particularly enjoyed having the opportunity, back in 2012, to correct the record when Krugman tried to blame Estonia’s 2008 recession on spending cuts that occurred in 2009.

P.S. Since today’s column focused on the statist ideas of Paul Krugman and because he’s a leading voice for the notion that more government spending somehow “stimulates” growth, I can’t resist sharing an explanation of Keynesian economics I gave back in 2009 as part of some remarks to Colorado’s Steamboat Institute.

Feel free to watch the whole video, but fast forward to 3:30 if you’re pressed for time. I’m being snarky, of course, but I also think my debunking of so-called stimulus is spot on.

P.P.S. By the way, the above video is from the Q&A portion of my remarks. If you watch my my actual speech, and if you pay attention about the 1:35 mark, you’ll see I was talking about the importance of having government grow slower than the economy’s productive sector back in 2009 even though I didn’t unveil Mitchell’s Golden Rule until two years later.

P.P.P.S. Since we’re picking on Krugman, here’s something that’s making the rounds on Twitter.

Good ol’ Professor Krugman praised the European approach of bigger government back in 2010, and everything that’s happened since that point has made his assessment look foolish.

Sort of reminds me of the time he attacked me for my gloomy assessment of California and claimed that the Golden State’s job market was strong. But it turns out that California had the 5th-highest unemployment rate in the nation.

P.P.P.P.S. Let’s close with the observation that the mess in Greece shouldn’t be blamed on Krugman. Sure, he’s giving bad advice, but Greek politicians deserve the lion’s share of the blame. Moreover, to the extent that outside advisers get blamed, we should remember that economists like Joseph Stiglitz and Jeffrey Sachs also are involved, and in some cases exercising more influence than Krugman.

Read Full Post »

Summarizing the federal government is not easy. There’s nearly $4 trillion of spending to disentangle. There’s a 75,000-page tax code to decipher. And there’s a regulatory morass that defies understanding.

So when people ask me questions about the cost of the federal government, there’s never a satisfactory answer.

I sometimes respond by pointing to sub-par growth rates during periods when the burden of government is expanding.

For what it’s worth, I think the best way of approaching such questions is to look at broad measures of statism vs. markets, such as you get with the Economic Freedom of the World rankings, and then compare nations with better scores and those with worse scores.

Though if I’m feeling snarky, I sometimes direct people to my collection of cartoons that simply portray government as a blundering, malicious, incompetent blob.

Today, though, I’m going with a different approach.

We’re going to try to capture the spirit of Washington. And we have a couple of videos, each of which deals with one tiny aspect of Leviathan, but they both do an excellent job of showing the perverse zeitgeist of this parasitical town.

Last year, I wrote about a grotesque example of waste at one of the new bureaucracies created by the Dodd-Frank bailout bill.

The head of that bureaucracy recently testified before a House Committee at was asked what steps were being taken to protect the interests of taxpayers. Here’s a video of the exchange.

Wow. Lots of taxpayer money flushed down a toilet and this Obama appointee cavalierly says “why does that matter to you?”

This is the fiscal equivalent to Hillary Clinton saying “what difference at this point does it make” about four butchered Americans.

And kudos to Congresswoman Wagner for saying it matters because it was the American people’s money (though I’ll wait to see how she votes on the Export-Import Bank to see whether she was posturing or if she actually cares about protecting other people’s money).

Now let’s look at our second video.

You probably didn’t realize that there was something called a Raisin Administrative Committee, but you probably won’t be surprised to learn that the federal government has Soviet-style rules that give this Committee cartel-like powers over raisin growers.

Check out this video from Reason TV to see an example of bizarre, stupid, and destructive government intervention.

Geesh. This re-confirms in my mind why we need to get rid of the Department of Agriculture. And it’s yet another piece of evidence that FDR was either incompetent of malicious on economic policy.

But the main lesson of this video is that it symbolizes the federal government. The well-connected insiders benefit and ordinary people suffer.

P.S. Remember the powerful graph showing that giant increases in education spending have had no positive impact on student performance?

Well, here’s the equivalent chart from the world of mass transit. Spending has skyrocketed but ridership is stagnant.

Yet another reminder that government is just a giant money pit of waste (and a reminder that we should also abolish the Department of Transportation).

Read Full Post »

I’ve pointed out that Washington is a cesspool of legal corruption. But if you don’t believe me (and you have a strong stomach), feel free to peruse these posts, all of which highlight odious examples of government sleaze.

But occasionally elected officials cross the blurry line and get in trouble for illegal corruption.

For those of you who follow politics, you may have seen news reports suggesting that Robert Menendez, a Democratic Senator from New Jersey, will soon be indicted for the alleged quid pro quo of trying to line the pockets of a major donor.

Attorney General Eric Holder has signed off on prosecutors’ plans to charge Menendez, CNN reported on Friday. …A federal grand jury has been investigating whether Menendez improperly used his official office to advocate on Melgen’s behalf about the disputed Medicare regulations when he met with the agency’s acting administrator and with the secretary of Health and Human Services, according to a ruling by a federal appeals court that became public last week. The ruling also said the government was looking at efforts by Menendez’s office to assist a company Melgen partly owned that had a port security contract in the Dominican Republic.

I certainly have no interest in defending Senator Menendez, but I can’t help but wonder what’s the difference between his alleged misbehavior and the actions of almost every other politician in Washington.

Here’s what I assume to be the relevant part of the criminal code, which I downloaded from the Office of Government Ethics (yes, that’s a bit of an oxymoron).

Stripped of all the legalese, it basically says that if a politician does something that provides value to another person, and that person as a result also gives something of value to the politician, that quid-pro-quo swap is a criminal offense.

Now keep this language from the criminal code in mind as we look at some very disappointing behavior by Republican presidential candidates at a recent Iowa gathering.

As Wall Street Journal opined, GOPers at the Ag Summit basically competed to promise unearned benefits to the corporate-welfare crowd in exchange for political support (i.e., something of great value to politicians).

Iowa is…a bad place to start is because it’s the heartland of Republican corporate welfare. Witness this weekend’s pander fest known as the Ag Summit, in which the potential 2016 candidates competed to proclaim their devotion to the Renewable Fuel Standard and the 2.3-cent per kilowatt hour wind-production tax credit. The event was hosted by ethanol kingpin Bruce Rastetter… Two of the biggest enthusiasts were Rick Santorum and Mike Huckabee… The fuel standard “creates jobs in small town and rural America, which is where people are hurting,” said Mr. Santorum, who must have missed the boom in farm incomes of recent years.

But it’s not just social conservatives who were promising to swap subsidies for political support.

Self-styled conservative reformers may be willing to take on government unions, which is laudable, but they get timid when dealing with moochers in Iowa.

Scott Walker, who in 2006 said he opposed the renewable fuel standard, did a switcheroo and now sounds like St. Augustine. He’s for ethanol chastity, but not yet. The Wisconsin Governor said his long-term goal is to reach a point when “eventually you didn’t need to have a standard,” but for now mandating ethanol is necessary to ensure “market access.”

And establishment candidates also tiptoed around the issue, suggesting at the very least a continuation of the quid pro quo of subsidies in exchange for political support.

Jeb Bush at least called for phasing out the wind credit, which was supposed to be temporary when it became law in 1992. But he danced around the renewable standard, which became law when his brother signed the energy bill passed by the Nancy Pelosi-Harry Reid Congress.

Geesh, maybe this is why Bush won’t promise to oppose tax hikes.

And there are more weak-kneed GOPers willing to trade our money to boost their careers.

Chris Christie wouldn’t repudiate the wind tax credit, perhaps because in 2010 the New Jersey Governor signed into law $100 million in state tax credits for offshore wind production. He also endorsed the RFS as the law of the land…, but what voters want to know is what Mr. Christie thinks the law should be. Former Texas Governor Rick Perry sounded somewhat contrite for supporting the wind tax credit, which has been a boon for Texas energy companies.

The only Republican who rejected corporate welfare (among those who participated) was Senator Ted Cruz.

The only Ag Summiteer who flat-out opposed the RFS was Texas Senator Ted Cruz , who has also sponsored a bill in Congress to repeal it. In response to Mr. Rastetter’s claim that oil companies were shutting ethanol out of the market, he noted “there are remedies in the antitrust laws to deal with that if you’re having market access blocked.”

Though even Cruz deviated from free-market principles by suggesting that anti-trust bureaucrats should use the coercive power of government to force oil companies to help peddle competing products.

Sigh.

By the way, I don’t mean to single out Republicans. Trading votes for campaign cash is a bipartisan problem in Washington.

But it is rather disappointing that the politicians who claim to support free markets and small government are so quick to reverse field when trolling for votes and money.

At least politicians like Obama don’t pretend to be a friend before stealing my money.

P.S. Normally I try to add an amusing postscript after writing about a depressing topic.

I’m not sure whether this story from the U.K.-based Times is funny, but it definitely has an ironic component.

Judge Juan Augustín Maragall, sitting in Barcelona, ruled that prostitutes should be given a contract by their employers, who should also pay their social security contributions. …In giving his verdict in the civil case, brought over a breach of labour regulations, the judge went further than expected, ruling that the women’s rights had been flouted by the management and forcing the company to pay the social security payments of three prostitutes backdated to 2012. Because of the ruling all brothels will be forced with immediate effect to issue contracts to staff and pay their social security contributions.

Now here’s the ironic part.

The ruling will generate tax revenue even though it’s actually illegal to employ prostitutes!

…it is against the law to make money from pimping, which carries a four-year jail term.

I guess the Judge could have ruled that the customers were the employers, but somehow I suspect it would have been difficult to extract employment taxes from those men.

Just like it would be difficult to extract employment taxes from the women.

Though the hookers won’t mind getting unemployment benefits so long as someone else is paying the taxes.

Conxha Borrell, of the Association of Sex Professionals, welcomed the ruling.

I guess we should add this to our great-moments-in-human-rights series.

Though maybe I should start a great-moments-in-economic-ignorance series since the prostitutes will be the ones who bear the burden of the tax even if the pimps are the ones writing the checks to the government (just as workers bear the burden of the “employer share” of the Social Security payroll tax).

P.P.S. Maybe Spanish hookers should reclassify themselves as porn artists who allow audience participation? That way, they can take advantage of Spain’s preferential tax rate for smut.

P.P.P.S. The Germans at least have figured out an efficient way to tax prostitutes.

P.P.P.P.S. Though maybe prostitutes should become politicians. The business model is quite similar, and I suspect you can “earn” more income selling access to other people’s money rather than selling sex to men who have to use their own money.

Read Full Post »

Older Posts »

Follow

Get every new post delivered to your Inbox.

Join 2,740 other followers

%d bloggers like this: