Taxes, Morality, and Math

The economics of taxation is simple. The more you tax of something, the less you get of it.

In some cases, such as taxing tobacco, people sometimes argue this is a good result. In other cases, such as taxing work, entrepreneurship, and investment, it seems crazy.

The morality of taxation, by contrast, is more challenging. At least for me.

I’m not an anarcho-capitalist, so I can’t unilaterally declare that all taxes are evil and unjustified. And I’m definitely not a statist who thinks all of our incomes belong to the government.

At the risk of oversimplifying matters, I agree with Calvin Coolidge.

Taxes that are used to finance genuine “public goods” are justifiable. Taxes used to finance the schemes of vote-buying politicians are immoral.

Regarding morality, there’s another issue that’s worth discussing.

Consider this story from Governing.

Across the country, states that are flush with cash are cutting taxes on income, sales and Social Security benefits. …But good times never last forever. Some fiscal experts are worried that states are setting themselves up for a fall. …“I see this as a temporary increase in revenues that we’re likely going to see dry up in the next year or two,” says Kim Rueben, director of the State and Local Finance Initiative at the Urban-Brookings Tax Policy Center.

What’s galling about the story is that the focus is on whether governments can do without extra revenue.

But what about taxpayers? You know, the people who have to earn and produce before politicians can seize and squander?

That’s why I very much appreciate a recent column in the Washington Post by former Indiana Governor Mitch Daniels.

A newspaper account early this year reported on pending legislation that would “slash billions of dollars worth of taxes” in my home state of Indiana. The article was more interesting for its word choices than for its content. Twice, it stated that the proposal would “cost the state” money. Twice, it warned that the state would “lose out” on large sums. …The article simply showed the implicit biases now thoroughly ingrained across what these days is referred to as the corporate press. …property in a free society belongs not to the state but to its people, and it should be expropriated by the state only for truly necessary purposes, in truly necessary amounts. It’s more than just a matter of money, because every act of taxation imposes a diminution of freedom.

Kudos to Daniels for channeling Coolidge.

The bottom line is that taxes diminish freedom. Politicians should never take our money unless proposed spending is for the general welfare – as defined by the Founding Fathers and as authorized by the Constitution.

Now that we’ve discussed the economics of taxation and the morality of taxation, here’s a final observation about the math of taxation.

Tax cuts are not a “cost” to government, they’re a “savings” to taxpayers. This is why provisions in the tax code that allow taxpayers to keep more of their money should not be referred to as “tax expenditures.” Even if they are bad policy.

P.S. By modern political standards, Mitch Daniels is on the right side. But that doesn’t mean he is a poster boy for libertarianism. At one point, he flirted with the notion of a value-added tax, so I was happy when he decided against a presidential race. He also presided over irresponsible spending increases when he was head of the Office of Management and Budget for President George W. Bush.

Read Full Post »

Capitalism and Morality

Since libertarians are motivated by the non-aggression principle, it’s easy to understand why they support the capitalist system of voluntary exchange rather than alternative systems based on government coercion.

But there are some who think markets are immoral, and that’s the topic of this book and this related video.

Virgil Henry Storr and Ginny Seung Choi are the authors of Do Markets Corrupt Our Morals, and the Mercatus Center explains the book’s core message.

…people in market societies are wealthier, healthier, happier and better connected than those in societies where markets are more restricted. More provocatively, they explain that successful markets require and produce virtuous participants. Markets serve as moral spaces that both rely on and reward their participants for being virtuous. Rather than harming individuals morally, the market is an arena where individuals are encouraged to be their best moral selves.

And Professor Michael Munger from Duke University explores the implications in his review.

The useful thing about this book…is that it considers a more dynamic problem than the classical literature on the morality of markets. …doesn’t “commodification” and the pursuit of gain for its own sake distort, and ultimately corrupt, the human impulses of altruism and mutual aid on which society depends? …Their answer is “perhaps, but not necessarily.” And, compared to other actual systems that might be used to organize large scale human activity, they argue that markets are actually more likely to nurture moral spaces in which people can find ways to cooperate and help each other.

He identifies the main arguments about the putative shortcomings of markets.

…there are three central charges commonly leveled against the morality of markets. One is the claim that markets exploit workers and turn them into brutes; the second is that the commodification of things and the use of prices to direct allocation decisions corrupts the moral sense humans naturally possess and would otherwise use to motivate cooperation; and the third is that a common consequence of markets, extreme inequality, is corrosive to collective institutions of community and democracy.

And here’s Munger’s summary of the answers to those three questions.

Markets, in the Storr and Choi view, actually improve the lives of workers, rather than making them brutes. …it quickly becomes cheaper to “pay” workers with better and more comfortable conditions, safer working spaces, and more interesting activities…higher pay and the improvements in access to desirable consumer products that come with a market economy mean that workers have leisure time and the resources to enjoy it.

…commodification and division of labor foster a dramatic increase in scope and variety of new communities for humans to join and be part of. Further, the relation among workers in a firm, or the relation between a seller and a repeat customer, create new and important “moral spaces” in which the importance of character and personal familiarity produce both legitimately warm comradery and an increase in the efficiency of contracts and cooperation because of improvements in trust and personal commitment.

…market systems can in fact be associated with high levels of inequality, but it appears that increased inequality may often be the price a society pays for reducing poverty, a trade-off that very poor citizens are likely to embrace. Further, Storr and Choi show that (a) market societies generally have lower inequality than non-market societies, and (b) market societies show a great deal more social mobility, or a capacity for the very poor to become much more wealthy than their parents, than non-market systems.

In other words, markets generate higher income, better lives, and upward mobility.

Not a bad result.

My two cents on this debate is to expand on Munger’s point about capitalism when “compared to other actual systems.” In my humble option, this is what really matters.

Yes, markets can be cold and impersonal. And, yes, “creative destruction” is no fun when you’re part of the “destruction” (even if it results in your children and grandchildren living better lives).

But if our goal is prosperity, there’s no alternative that comes close.

Especially since every alternative empowers politicians and their cronies. Indeed, my readings on this topic reminded me of this passage in Atlas Shrugged when one of the anti-market interventionists said it was time to replace the “aristocracy of money” and one of the book’s good guys noted that this meant an “aristocracy of pull.”

And when an economy is based on political influence and power, P.J. O’Rourke warns that there’s an inevitable consequence.

P.S. Here’s David Burton’s bullet-point comparison of the morality of capitalism and socialism.

P.P.S. And Walter Williams has a great video on the morality of markets.

Read Full Post »

Libertarian Jesus vs. Socialist Jesus

As part of my collection of pro-and-con libertarian humor, I’ve shared some images of “Libertarian Jesus.”

• Libertarian Jesus I
• Libertarian Jesus II (though I suppose this is actually an example of anti-Libertarian Jesus)
• Libertarian Jesus III

There’s another perspective, of course. Many mainline protestant denominations have very statist political agendas, and there’s a “liberation theology” strain of Catholicism.

Some of these people even might argue that Jesus was a socialist. Back in 2009, I shared some excerpts from a skeptical column by Cal Thomas on this topic. Today, let’s take a deeper look.

In a video for Prager University, Larry Reed looks at the Bible to determine whether Jesus was a socialist.

I’m certainly not an expert on theology, but I definitely liked Larry’s point about the warning against envy in the 10 Commandments.

After all, “Thou shall not covet” certainly seems inconsistent with class-warfare policy.

Let’s see what others have written on this topic.

In her Wall Street Journal column, Mary Anastasia O’Grady explains that socialism, with its emphasis on the collective, is inconsistent with Catholic religious teaching.

Socialists pose as humanitarians and sometimes even as Christians but their system strangles the person, who is at the heart of Catholic teaching. Catholic University of America research fellow Father John McNerney, author of “Wealth of Persons” (2016), describes the “real wellspring” of human progress as emanating from “the unique, irreplaceable and unrepeatable . . . reality of the individual acting in relation to his neighbor.” …Economists understand that the profit motive is integral to entrepreneurship. But it is about much more than material gains. Father McNerney illustrates the point in his book with the story of Agnes Morrogh-Bernard, a Sister of Charity who worked in the west of Ireland in the aftermath of that country’s notorious 19th-century famine. Starvation had wiped out whole communities, when not physically, spiritually. …Sister Agnes recognized that “mere philanthropic handouts could not recover” the annihilated Irish spirit. The community needed a creative outlet; it needed work. …Agnes’s “entrepreneurial acumen,” Father McNerney writes, was “the spark that ignited the bright star of a small industry in post-famine Ireland.”

Writing for FEE, Randy England opines on what is found in the Bible

Jesus spoke many times of the poor. He talked about the last judgment when he would commend those who help others, especially the poor… He said it was easier for a camel to go through the eye of a needle than for a rich man to get into heaven… Jesus’ exhortations to help the poor have been used as arguments for the redistribution of wealth from the rich to the poor. …Jesus looked to personal charity and the state of the rich man’s heart. …It is notable that Jesus never even hinted that third parties or the state should forcibly redistribute the rich man’s wealth. On the one occasion when Jesus was presented with an opportunity to work an equal distribution of wealth, he quickly declined… Instead, he warned against greed while declining to play the busybody.

In other words, Jesus wasn’t a socialist. Or, if we want to be more accurate (since he presumably didn’t have any views about government ownership, central planning, or price controls), he wasn’t a redistributionist.

At least not if that required government coercion.

P.S. Also from the humor collection, President Trump disagrees with Jesus.

P.P.S. On the topic of religion and public policy, I’ve been critical of Pope Francis. His heart may be in the right place, but he’s misguided about the policies that actually help the less fortunate. For what it’s worth, it would be helpful if he was guided by the moral wisdom of Walter Williams rather than the destructive statism of Juan Peron.

Read Full Post »

The Immorality of Socialism

Since I think comparative economics can be very enlightening, I’m quite pleased to see a new study by David Burton of the Heritage Foundation, which uses several metrics to assess the relative merits of socialism and free enterprise.

This is not necessarily an easy task since socialism is a moving target.

Some people still adhere to the technical definition, which means government ownership, central planning, and price controls. While others assume that socialism is high tax rates and lots of redistribution.

Here’s David’s summary.

State ownership of the means of production is the central tenet of traditional socialist or communist thought. Traditional socialist and communist economic policies involve state-owned enterprises and a high degree of state control over all aspects of economic life. Over time, politicians came to understand that they did not need to have legal ownership of, or legal title to, businesses or other property in order to control them by regulation, administrative actions, or taxation. Furthermore, not having legal title meant that they could disclaim responsibility when government control did not work out well. Thus, the meaning of the term “socialist” evolved considerably during the last half of the 20th century to mean a strong state role in the economy, the pursuit of aggressive redistributionist policies, high levels of taxation and regulation, and a large welfare state—but not necessarily government ownership of the means of production.

Regardless of how it’s defined, it doesn’t work. And the closer a country is to technical socialism, the greater the economic misery.

David reviews and analyzes a lot of material and I recommend the entire report.

For today’s purposes, though, I want to focus on his ethical arguments.

Here’s how he describes the morality of capitalism.

As a libertarian, I’m especially sympathetic to the argument about cooperative exchange versus coercion.

As an economist, I’m naturally sympathetic to the argument about prosperity versus poverty.

And I hope everyone agrees with the arguments about individual choice and civil society.

Now let’s look at David’s description of the morality of socialism.

For what it’s worth, I think the final point is the most compelling.

Socialism (whether the technical version or the redistribution version) basically creates a zero-sum game in which people are told it is moral to take from others simply because they produce more.

And this doesn’t necessarily mean the poor taking from the rich. Yes, that’s a big part of it, but there are all sorts of government programs that burden lower-income and middle-class people in order to line the pockets of the well-connected.

Last but not least, David charitably focuses on democratic socialism rather than Marxist socialism, so he’s not even counting the horrible abuses that you find in socialist regimes such as Cuba, North Korea, and Venezuela.

P.S. While I realize we shouldn’t laugh about an ideology that has produced so much misery, I do have a collection of anti-socialist humor.

P.P.S. I strongly recommend this speech by Dan Hannan about the superiority of markets over socialism.

Read Full Post »

How Big Government Sabotages Poor People and Enriches Well-Connected Fat Cats

I don’t like coerced redistribution. When the government uses the threat of force to take from Person A to give to Person B, it simultaneously reduces Person A’s incentives to produce while also luring Person B into dependency.

But not all coerced redistribution and government intervention is created equal.

I don’t like welfare programs, for instance, in part because taxpayers are writing huge checks to support a plethora of programs, but also because there is very strong evidence that the modern welfare state has caused more poverty.

Nonetheless, I understand that there are well-meaning people who support these programs. Their motives are pure in that they simply want to alleviate perceived suffering. And since they’ve never learned about the adverse indirect effects of government intervention and presumably haven’t given any thought to the ethics of government coercion, I don’t think of these people as being bad or immoral. Just uninformed.

But there are some forms of redistribution and intervention that are so self-evidently odious and corrupt that you can’t give supporters the benefit of the doubt. Simply stated, there’s no justifiable argument for using government coercion to hurt poor people in order to benefit rich people.

Let’s look at two examples.

First, the Export-Import Bank is a quintessential example of corporate welfare. The program forces taxpayers to guarantee the contracts of big corporations and foreign buyers, and there’s now a fight over whether it should be extended.

Needless to say, ordinary voters don’t want their money being used enrich big companies.

So if you were one of the beltway insiders who benefited from this corrupt institution, how would you try to get the program extended? Would you be upfront and argue that big companies like Boeing deserve tax dollars? Would you argue that politicians are really smart and wise and that they should interfere with the free market?

That would be the honest way of supporting the Ex-Im Bank. But you won’t be surprised to learn that advocates instead have resorted to lies. Here are some excerpts from a Reuters story.

The U.S. Export-Import Bank has mischaracterized potentially hundreds of large companies and units of multinational conglomerates as small businesses, a flaw in its record keeping that could undermine the export lender’s survival strategy. …A comparison of some 6,000 businesses characterized by Ex-Im as “small” with information supplied by corporate data collector Dun & Bradstreet, which Ex-Im also uses to vet applicants, and other sources turns up some 200 companies that appear to be mislabeled and many more whose classification is uncertain.

Um… I would say they lied rather than characterize it as a “flaw in its record keeping.” But let’s set that aside and look at some of the “small businesses” that had their snouts in the Ex-Im trough.

…analysis showed companies owned by billionaires such as Warren Buffet and Mexico’s Carlos Slim, as well by Japanese and European conglomerates, were listed as small businesses and Ex-Im acknowledged errors in its data in response to those findings.  …A division of Austria’s Swarovski jewelers shows up, as does North Carolina’s Global Nuclear Fuels, which is owned by General Electric and Japan’s Toshiba and Hitachi. …The list of small businesses in Texas, for example, includes engineering and construction company Bechtel, which has 53,000 employees.

Gee, Warren Buffet and foreign conglomerates don’t exactly sound like my idea of small businesses.

Hopefully this will provide more ammunition of those fighting to wean big companies from the public teat.

Bank officials and supporters have used the Ex-Im’s support for American small business as a first line of defense against a campaign by conservatives to shut it down as an exponent of “crony capitalism.” …“Rarely does Ex-Im miss a (public relations) opportunity to claim that it primarily helps small business, but Ex-Im is again playing fast and loose with the facts,” said Representative Jeb Hensarling, a Texas Republican who chairs the House Financial Services Committee. “The bulk of Ex-Im’s help indisputably goes to large corporations that can finance their own operations without putting it on the taxpayer balance sheet.”

For our second example, we have the absolutely horrifying spectacle of the Obama Administration trying to shut down Wisconsin’s school choice system.

Why? Well, because currying favor with union bosses is more important than improving educational opportunities for students from disadvantaged communities.

George Will explains what’s happening in his Washington Post column.

It is as remarkable as it is repulsive… Eager to sacrifice low-income children to please teachers unions, the Justice Department wants to destroy Wisconsin’s school choice program. Feigning concern about access for disabled children, the department aims to handicap all disadvantaged children by denying their parents access to school choices of the sort affluent government lawyers enjoy. …Wisconsin’s school choice program was pioneered by an American hero, Mississippi-born Annette Polly Williams, who died Nov. 9 at age 77. During her three decades in Wisconsin’s legislature, she overcame the opposition of fellow Democrats to offering education choices to low-income parents. At the end of her life, however, she saw an African American attorney general, serving an African American president, employing tortured legal reasoning in an attempt to bankrupt private schools that enlarge the education options of disadvantaged children. …Closing the voucher program is the obvious objective of the teachers unions and hence of the Obama administration. Herding children from the choice schools back into government schools would swell the ranks of unionized teachers, whose union dues fund the Democratic Party as it professes devotion to “diversity” and the downtrodden.

By the way, you probably won’t be surprised (given the White House’s cavalier approach to the rule of law) to learn that the Obama Administration is using is utterly nonsensical legal theory.

…federal lawyers argue that because public funds, in the form of tuition vouchers empowering parents to make choices, flow to private schools, the schools become “public entities.” …this is like arguing that when food stamps are used for purchases at Wal-Mart, America’s largest private employer ceases to be private — it becomes an extension of the government. Inconveniently for the Justice Department, the U.S. Supreme Court has said the fact that a “private entity performs a function which serves the public does not make its acts state action.”

The preposterous legal reasoning is a farce, but that doesn’t get me overly upset.

What does bother me is the way the White House is acting like the modern-day equivalent of George Wallace, standing in the schoolhouse door to prevent low-income (and largely minority) students from getting an opportunity for better education.

I guess that a black President (who sends his own kids to private school) consigning black children to the back of the proverbial bus shouldn’t surprise me too much. After all, some divisions of the NAACP also have decided that being politically allied with union bosses is more important that educational opportunity for minority kids.

But that doesn’t make it morally acceptable. Put yourself in the shoes of a low-income parent. Wisconsin’s school choice programs gives you some hope that your kids can break free of poverty. Imagine what it feels like, then, when some of the politicians who claim to be on your side then decide that your children are expendable pawns. How disgusting.

Since we’re talking about things that are disgusting, let’s shift back to the Ex-Im Bank. I’ve actually had some Republican types tell me that corporate welfare is okay because it “helps to offset” some of the redistribution from rich to poor.

I confess that I’m dumbstruck by such arguments. It’s sort of like hearing someone say it’s okay to murder, rape, and steal because other people are doing it.

This is why it’s not easy being a libertarian. Yes, we believe in small government for utilitarian reasons such as faster growth, higher living standards, and more jobs. But we’re also motivated by morality, by the belief that there’s right and wrong and that good people should strive to uphold the former and fight the latter.

That’s not a popular view in Washington, which is best characterized as an incestuous racket for the benefit of interest groups, politicians, cronyists, lobbyists, bureaucrats, contractors, and other insiders.

P.S. On a completely separate (and non-political) issue, I can’t resist seeking some sympathy after what happened to me this morning. I took two of my cats to the vet for their spay and neuter appointments. Some of you pet owners already know that most cats don’t like car rides, so you might have some inkling of what I’m about to report.

In happier times

About five minutes into the drive, one of the cats vomits in the little cat carrier. That obviously wasn’t a happy development, particularly since it left me with an unpleasant choice of enduring a very unpleasant smell or having the window open and enduring a very bitter chill. But then, a few minutes later, the other cat…um, how should I phrase this…loses control of her bowels.

Which means that the next 20 minutes was almost as unbearable as watching a state-of-the-union address. I was running late for the appointment, so I couldn’t stop someplace and try to deal with the mess. And the two cats kept moving around in their carrier, making things worse. Trying to breathe through my mouth, even with the window down, was at best a pitiful attempt to mitigate my suffering.

An utterly miserable situation. Almost 1/10th as bad as an IRS audit.

Read Full Post »

Is This a Case of Government Overreach or an Example of Proper Law Enforcement?

Normally this blog focuses on big issues such as the economic damage of government spending and the self-defeating foolishness of high tax rates.

Today, though, it’s time for another edition of “You Be the Judge.”

In this game, we look at stories and issues that require us to balance common sense, the principles of a free society, and justice.

Previous editions of this game include: Putting politicians on trial, vigilante justice, brutal tax collection tactics, child molestation, pay levels at government-owned firms, sharia law, healthcare, incest, speed traps, jury nullification, and vigilante justice (again).

Our latest example comes from Alaska, where someone with very questionable judgement was busted for floating down a river while consuming vast quantities of alcohol. Here’s some of the story from the Fairbanks Daily News.

A Juneau man faces a rare DUI charge for allegedly having a 0.313 breath-alcohol content as he floated through Fairbanks on an inflatable raft Sunday night. Alaska’s driving under the influence law applies to people operating motor vehicles, water craft and airplanes. …when Alaska State Troopers received a report of a “heavily intoxicated” man floating down the Chena River near the Parks Highway bridge at 6:40 p.m. Sunday, a wildlife trooper boat responded and arrested 32-year-old William Modene. …At 0.313, Modene’s breath-alcohol content was almost four times the legal limit for operating a vehicle, 0.08. …Under Alaska’s DUI law, operating a water craft means to “navigate a vessel used or capable of being used as a means of transportation on water for recreational or commercial purposes on all waters, fresh or salt, inland or coastal, inside the territorial limits or under the jurisdiction of the state.”

So here’s the issue we have to decide: Mr. Modene doesn’t sound like a model citizen, and he may be swimming in the shallow end of the gene pool, but the question on the table is whether the government should have arrested him for DUI?

From a legal perspective, is it accurate to say that he was “operating” a water craft or “navigating” a vessel?

I’m not an expert on such matters, but it seems to me that he was doing nothing more than floating down a river. There’s nothing in the story, for instance, to indicate he had a motor on his raft.

From what we know, Mr. Modene posed zero danger to other people. He was merely a drunk, minding his own business as he floated along.

My gut instinct is that this case should be tossed. The government would be in a much stronger position if it had charged him with “being drunk in public” or something like that. But even in that case, floating down a river may not meet the test of being “in public.”

There’s a separate issue, of course, about whether the government can and should intervene if someone is engaging in self-destructive behavior. If there’s a report that someone has just taken a bottle of sleeping pills, most of us presumably would agree that it would be okay for the government to break down his door and tote him to a hospital to have his stomach pumped.

But the self-destructive behavior has to pose an immediate danger. We’d hopefully all reject, for instance, the notion of some Bloomberg-esque ban on unhealthy food because people sometimes shorten their lives by overeating.

Since I probably average one beer a month, I’m not competent to make sweeping statements about alcohol, but it’s my understanding that a blood alcohol level of .4 is when people begin to die. Since Mr. Modene was already above .3, perhaps there’s some argument for police intervention.

But set that aside. Pretend you’re on the jury and you have to vote on whether Modene is guilty of DUI. What’s your verdict? And if you also want to weigh in on whether the government had a right to interfere with his raft trip, don’t be bashful.

For me, that second question is more challenging. That’s why I like sticking with simple questions of right vs. wrong, such as whether I side with Switzerland or France on the issue of whether fiscal sovereignty and financial privacy should be undermined to help high-tax nations impose their bad tax laws on an extraterritorial basis.

Read Full Post »

The Moral Case for Free Enterprise

A couple of months ago, I discussed a column by Arthur Brooks, in which he explained that libertarians and conservatives need to make a moral argument for capitalism and not just rely on statistics and economic analysis.

This is correct, I believe, and I cited myself as an example. When the flat tax became an issue in the 1990s, I gave lots of speeches, and I pontificated about lower marginal tax rates and getting rid of double taxation. I quickly learned, though, that people were most excited about getting rid of the corruption in the current system.

Brooks now makes his case for the morality of capitalism in a new video.

A superb job. His insights on earned success are very important. Indeed, this is why the dependency culture is misguided for both taxpayers and recipients.

President of the American Enterprise Institute

And it’s also why I try to stress that bloated government is basically a racket that either allows people to obtain unearned benefits or makes it harder for people to achieve earned success.

P.S. Brooks also is more than capable of making traditional economic arguments, as you can see from what he wrote about Europe’s collapsing welfare states.

P.P.S. And he has produced some first-rate research on the loss of ethics in Europe compared to the United States.

Read Full Post »

The Moral Case for Capitalism and Small Government

We know that the United States and most other developed nations are in deep trouble if we leave government policy on auto-pilot. And we know the painful day of reckoning will arrive even faster if we continue the Bush-Obama policies of expanding the burden of the public sector.

All this sounds very depressing, but the good news is that we know the types of policies that will solve the problem.

The bad news is that we often don’t do a very good job of convincing people of the changes that are needed.

Part of the answer is that libertarians and small-government conservatives are probably too utilitarian. Not in our hearts, but in the way we talk.

Arthur Brooks of the American Enterprise Institute addresses this problem in a column for the Washington Examiner.

…many who strongly believe in free enterprise steer clear of all public “moral” arguments. This is a mistake and a missed opportunity. A great deal of research shows that people from all walks of life demand a system that is morally legitimate, not just efficient. …Privately, free enterprise’s champions…celebrate capitalism because they believe that succeeding on merit, doing something meaningful, seeing the poor rise by their hard work and virtue, and having control over life are essential to happiness and fulfillment. But in public debate, conservatives often fall back on capitalism’s superiority to other systems just in terms of productivity and economic efficiency. …The dogged reliance on materialistic arguments is a gift to statists. It allows them to paint free enterprise advocates as selfish and motivated only by money. Those who would expand the government have successfully appropriated the language of morality for their own political ends; redistributionist policies, they have claimed to great effect, are fairer, kinder, and more virtuous. …Average Americans are thus too often left with two lousy choices in the current policy debates: the moral Left versus the materialistic Right. The public hears a heartfelt redistributionist argument from the Left that leads to the type of failed public policies all around us today. But sometimes it feels as if the alternative comes from morally bereft conservatives who were raised by wolves and don’t understand basic moral principles. …There just doesn’t seem to be a good alternative to the “statist quo,” and as a consequence, the country is slipping toward a system that few people actually like.

I think Brooks is correct. Most libertarians and conservatives are not motivated by GDP numbers. They believe in small government because it is morally sound (no government-imposed stealing) and fair (you don’t get rich without offering something of value).

During public policy debates, though, we rely on utilitarian arguments.

I offer myself as an example. When the flat tax became a big issue in the 1990s and I started giving lots of speeches about tax reform, I would make dry and technical arguments about marginal tax rates and capital formation. But I quickly learned that much of the support for the flat tax was motivated by a belief in a fair and moral system – no cronyism, treating everybody equally, ending corruption, shutting down loopholes, etc. So I modified my speeches and gave much more attention to the moral arguments.

That being said, there’s no silver bullet in public policy fights. We probably need a combination of morality and utilitarianism. And it’s obviously important to put things in terms ordinary people can understand. That, I believe, is what made Reagan so effective. And it’s what I try to do with this blog (albeit on a much more limited level).

Read Full Post »

How to Reconcile Liberty, Morality, Conservatism, and Libertarianism with Carney’s Fusionist Theorem

As a libertarian who became interested in public policy because of Ronald Reagan, it won’t surprise you to know that I’m more of a “right libertarian” than “left libertarian.”

I fully agree with positions that motivate left libertarians, such as the war on drugs doing more harm than good, foreign entanglements such as NATO no longer serving America’s national security purpose, and the importance of preserving constitutional protections of civil liberties. But since I’m a fiscal policy economist, I normally consort with conservatives.

And my frequent interactions with conservatives sometimes lead me to wonder why we aren’t closer allies. Well, maybe we can be if both sides read what Tim Carney wrote for today’s Washington Examiner.

His column is about Rick Santorum’s inability to unite proponents of limited government, but that’s secondary to the insightful analysis on how conservatives and libertarians can be natural allies. Here are key passages.

For many of today’s liberals, if something is bad — like the traditional light bulb, a very high health-insurance deductible, a gas-guzzling car, or a lack of racial diversity — the government ought to outlaw it. Maybe they can’t comprehend the mind-set of many of today’s conservatives, who revere both individual liberty and traditional morality as the necessary conditions for human happiness and thus say that certain behaviors are immoral but shouldn’t be illegal. Not only are traditional morality and limited government totally compatible, today they are intimately linked, as the Left uses big government to subsidize abortion providers and force all employers to pay for their employees’ contraceptives. …the moral law should guide our personal actions, and individual liberty should guide our political decisions. …When liberals cry that conservatives are trying to legislate morality, that’s typically projection and misdirection from liberal attempts to legislate morality — they say we’re trying to outlaw buying contraception because we oppose their efforts to mandate buying contraception. …More often than not, in the United States these days, it’s the secular Left imposing its morality on the religious Right. Don’t want to photograph a gay wedding? You’re fined. Don’t want to sell the morning-after pill at your pharmacy? You’re driven out of your job. Don’t want to pay for your employees’ sterilization? You’re a criminal. Don’t want to subsidize Planned Parenthood with your tax dollars? Tough, pay up. An alliance between libertarians and conservatives is natural and right today. …The proper conservative response is to fight for the liberty of all Americans, including religious conservatives, to manage their own affairs according to what they believe is correct. Increasing the size of government, even in the name of a more moral society, simply gives the Left more weapons to turn on the Right in the culture war — Obamacare is the perfect example.

Maybe Tim’s column makes sense to me because I’m somewhat of a social conservative in my personal life. I’ve never smoked, never done drugs, don’t like gambling, rarely drink, don’t deal with prostitutes (other than the non-sexual ones serving in government), and have a traditional view on the importance of family. But I’ve never thought my boring personal preferences should be part of the law.

But as Tim explains, leftists believe in imposing their views on everyone else. And the last sentence in the excerpt shows why conservatives and libertarians should be united in opposition to statism. Big government gives the left the tools to advance an agenda that undermines both morality and liberty.

So with that in mind, I’m going to do something similar to Mitchell’s Law and Mitchell’s Golden Rule. But in this case, I’ll actually give credit to someone else. As shown in the picture, libertarians and conservatives should unite behind Carney’s Fusionist Theorem.

Read Full Post »

I May Be a “Dickhead,” but at Least Mercedes-Benz Had to Apologize

Along with many others, I complained a couple of days ago that Mercedes-Benz was morally bankrupt for using the image of a notorious racist, communist, and murderer as part of a marketing gimmick.

Well, the company has backed down. We won. It’s only symbolic, but let’s enjoy a small victory.

Here are some excerpts from a Foxnews.com story.

Daimler AG, the German company that manufactures Mercedes-Benz luxury cars, called its promotional use of an image of Marxist revolutionary Ernesto “Che” Guevara a “thoughtless” and “stupid” decision that was not intended to offend people. …In a statement sent to FoxNews.com, Daimler said it “was not condoning the life or actions of this historical figure or the political philosophy he espoused.”

That’s probably not the most heartfelt and sincere apology ever issued, but it will have a positive impact. Somewhere at Daimler AG, there’s a marketing executive that is going to lose a bonus (and maybe even a job). Other people in the fields of advertising and public relations will have seen the backlash and be much less likely to make similar mistakes.

And perhaps a few people who were ignorant will actually learn a bit about history and begin to understand the evil nature of communism.

I doubt this will have any impact on the empty-headed kids who wear Che t-shirts, but you can’t have everything.

From a personal perspective, the best thing about this episode is that I’ve been attacked by a water-carrying apologist for totalitarianism.

In my line of work, one way to measure whether you’re doing a good job is the degree to which you get criticized by bad people.

Being called a “dickhead” by this tool may be even better than the time a left-wing British columnist called me a “high priest of light tax, small state libertarianism.”

Read Full Post »

Walter Williams on the Moral Difference Between Markets and Statism

Since starting this blog, I’ve cited several columns by Walter Williams (see here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, and here), in large part because he’s so good at explaining economic concepts, but also because he’s very effective when demonstrating how big government undermines both freedom and prosperity.

His latest column, though, is now among my favorites since he succinctly explains the moral difference between markets and government.

In a free-market system, in order for one to get more for himself, he must serve his fellow man. This is precisely what Adam Smith, the father of economics, meant when he said in “An Inquiry Into the Nature and Causes of the Wealth of Nations” (1776): “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” …Free-market capitalism is relatively new in human history. Before the rise of capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving one’s fellow man.

I’ve tried to make similar points, particularly in my post about government coercion vs. private charity. But Walter has a way with words.

I also like the way he closed his column. After explaining that big businesses often oppose capitalism, he then shows the similarity between tyrants and other statists.

Free-market capitalism has other enemies — mostly among the intellectual elite and political tyrants. These are people who believe that they have superior wisdom to the masses… Tyrants do not trust that people acting voluntarily will do what the tyrant thinks they should do. They want to replace the market with economic planning and regulation. The Wall Street occupiers and their media and political allies are not against the principle of crony capitalism, bailouts and government special privileges and intervention. They share the same hostility to free-market capitalism and peaceable voluntary exchange as tyrants. What they really want is congressional permission to share in the booty from looting their fellow man.

If you want to learn more about this remarkable economist, here’s a video about Walter’s life and here’s an interview about his latest book.

Read Full Post »

Walter Williams vs. Barack Obama on Class Warfare

It isn’t fair to compare and contrast the views of a distinguished economist with the envious ramblings of a career politician/community activist. But it’s also not right for the government to use coercion to impose bad policy, so I don’t feel guilty about sharing this excerpt from a recent Walter Williams column.

President Barack Obama, in stoking up class warfare, said, “I do think at a certain point you’ve made enough money.” This is lunacy. Andrew Carnegie’s steel empire produced the raw materials that built the physical infrastructure of the United States. Bill Gates co-founded Microsoft and produced software products that aided the computer revolution. But Carnegie had amassed quite a fortune long before he built Carnegie Steel Co., and Gates had quite a fortune by 1990. Had they the mind of our president, we would have lost much of their contributions, because they had already “made enough money.” Class warfare thrives on ignorance about the sources of income. Listening to some of the talk about income differences, one would think that there’s a pile of money meant to be shared equally among Americans. Rich people got to the pile first and greedily took an unfair share. Justice requires that they “give back.” Or, some people talk about unequal income distribution as if there were a dealer of dollars. The reason some people have millions or billions of dollars while others have very few is the dollar dealer is a racist, sexist, a multinationalist or just plain mean. Economic justice requires a re-dealing of the dollars, income redistribution or spreading the wealth, where the ill-gotten gains of the few are returned to their rightful owners. In a free society, for the most part, people with high incomes have demonstrated extraordinary ability to produce valuable services for — and therefore please — their fellow man. People voluntarily took money out of their pockets to purchase the products of Gates, Pfizer or IBM. High incomes reflect the democracy of the marketplace. The reason Gates is very wealthy is millions upon millions of people voluntarily reached into their pockets and handed over $300 or $400 for a Microsoft product. Those who think he has too much money are really registering disagreement with decisions made by millions of their fellow men. In a free society, in a significant way income inequality reflects differences in productive capacity, namely one’s ability to please his fellow man.

Here’s my contribution to the debate, a video listing five reasons why class-warfare tax policy is destructive.

The only point worth adding is that not all wealth is legitimate. Those who profit from crony capitalism and/or insider connections have accumulated money through coercion, not through their ability to serve the needs of others.

That’s why I explained, in this interview, that it is important for defenders of capitalism to draw a bright-line distinction between earning honest wealth through free markets and obtaining dishonest loot via statism.

Read Full Post »

“Capitalism without Bankruptcy Is Like Religion without Hell”

After any news appearance, I torment myself by watching the clip and telling myself I should have said something differently or raised a different point.

But I’m actually happy with this appearance on Fox Business News because I (hopefully) explained the difference between wealth that is honestly accumulated and loot that is obtained through government coercion.

I also am pleased when I get to use the line about “capitalism without bankruptcy is like religion without hell.” One of the reasons I loathe bailouts is that such corrupt practices discredit capitalism.

If the Occupy Wall Street folks actually understood the difference between capitalism and cronyism, there’s a chance they might join the right side.

Read Full Post »

Is It Wrong to Warn other Motorists about Speed Traps?

Whenever I find a story that involves a thorny issue of right vs wrong, I like to see what readers think.

Indeed, this has become a semi-regular feature of this blog. I’ve cited some tough cases in previous posts, dealing with difficult topics such as vigilante justice, brutal tax collection tactics, child molestation, Sharia law, healthcare, incest, jury nullification, and vigilante justice (again).

Today’s episode of “You Be the Judge” features a legal case in Florida involving whether motorists can be ticketed for warning other drivers about speed traps.

When the Florida Highway Patrol pulls someone over on the highway, it’s usually because they were speeding. But Eric Campbell was pulled over and ticketed while he was driving the speed limit. Campbell says, “I was coming up the Veterans Expressway and I notice two Florida Highway Patrol Cars sitting on the side of the road in the median, with lights off.” Campbell says he did what he always does: flashed his lights on and off to warn drivers coming from the other direction that there was speed trap ahead. According to Campbell, 60 seconds after passing the trooper, “They were on my tail and they pulled me over.” Campbell says the FHP trooper wrote him a ticket for improper flashing of high beams. Campbell says the trooper told him what he had done was illegal. But later Campbell learned that is not the case. He filed a class action suit which says “Florida Statue 316.2397” — under which Campbell was cited — “does not prohibit the flashing of headlights as a means of communications, nor does it in any way reference flashing headlights or the use of high beams.” …Since 2005, FHP records show more than 10,429 drivers have been cited under the statute. …Campbell says FHP had no right to ticket him or anyone under the current law and he adds the agency is not being honest when it says it doesn’t write tickets to increase revenue or punish people, but rather to get the motorist to slow down on the highway. If that were true, Campbell says the FHP should be delighted with him, because drivers did slow down before troopers could give them a ticket.

I despise the use of speed traps, particularly since they always seem to be set up in places with inappropriately low speed limits, so it won’t surprise you that my gut instinct is to side with the motorists. And since there apparently isn’t any law in Florida against flashing your high beams, this is a slam-dunk issue.

But let’s take this to the next level: Should there be a law against flashing high beams?

Presumably not, but I confess this example raises broader issues. Let’s say the cops are doing something completely legitimate, such as searching for a murderer. I assume all of us would view it as wrong for an otherwise innocent person to warn the murderer the cops were about to search a certain area.

In cases like that, an obstruction-of-justice charge (or maybe aiding-and-abetting, I’m not a lawyer, so I’m guessing) seems appropriate. But where do you draw the line? If you know your friend is smoking pot, should you be liable for not ratting him out? Hopefully not, but what if your friend is a rapist? In that case, I hope we would all agree it would be right to inform the cops. But keep in mind the real issue is whether you should be subject to arrest if you don’t.

These are hard issues, and they underscore the importance of having laws that are just. It’s much easier to support strong enforcement if we know the government isn’t using the law to generate revenue or harass people engaged in victimless behavior.

Read Full Post »

Are We Obligated to Obey Unjust Laws?

After World War II, some Germans tried to defend venal behavior by claiming that they were “just following orders” from their government.

Governments in America have never done anything nearly as awful as the Nazis, but there certainly are some very unpleasant blemishes in our past – and some very bad laws today.

This raises an interesting moral quandary. To what extent are we – as moral individuals – obliged to obey (or help enforce) bad law?

As is so often the case, Walter Williams has strong feelings and compelling analysis.

Decent people should not obey immoral laws. What’s moral and immoral can be a contentious issue, but there are some broad guides for deciding what laws and government actions are immoral. Lysander S. Spooner, one of America’s great 19th-century thinkers, said no person or group of people can “authorize government to destroy or take away from men their natural rights; for natural rights are inalienable, and can no more be surrendered to government — which is but an association of individuals — than to a single individual.” French economist/philosopher Frederic Bastiat (1801-50) gave a test for immoral government acts: “See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” He added in his book “The Law,” “When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law.”

I don’t pretend to know where to draw the line, but, as suggested by my posts about jury nullification, I fully subscribe to the libertarian principle that “not everything that’s illegal is immoral, and not everything that’s immoral should be illegal.”

So if you’re dodging taxes, cutting hair without a license, or smoking pot, the government better not put me on a jury if you get arrested. An if you have an expired registration sticker on your car, an unregistered gun, or a stockpile of normal light bulbs you plan on selling after the ban takes effect, you can safely confide in me.

Read Full Post »

If You Were on a Jury, Would You Convict this Woman?

Time for another episode of “You Be the Judge.” I periodically come across stories that present very difficult (at least for me) moral quandaries, so I figure why not see how other people react.

I’ve cited some tough cases in previous posts, dealing with thorny topics such as brutal tax collection tactics, child molestation, Sharia law, healthcare, incest, jury nullification, and vigilante justice.

And speaking of vigilante justice, that’s the topic of today’s post. A woman in Spain was not very happy when the man who raped her daughter decided to gloat about the crime, so she decided to do something about it. Here’s an excerpt from a story in the UK-based Telegraph.

A Spanish mother has taken revenge on the man who raped her 13-year-old daughter at knifepoint by dousing him in petrol and setting him alight. He died of his injuries in hospital on Friday. Antonio Cosme Velasco Soriano, 69, had been sent to jail for nine years in 1998, but was let out on a three-day pass and returned to his home town of Benejúzar, 30 miles south of Alicante, on the Costa Blanca. While there, he passed his victim’s mother in the street and allegedly taunted her about the attack. He is said to have called out “How’s your daughter?”, before heading into a crowded bar. Shortly after, the woman walked into the bar, poured a bottle of petrol over Soriano and lit a match. She watched as the flames engulfed him, before walking out. The woman fled to Alicante, where she was arrested the same evening. When she appeared in court the next day in the town of Orihuela, she was cheered and clapped by a crowd, who shouted “Bravo!” and “Well done!”

The story is from 2005, and I confess that I have no idea how the case was resolved. But let’s imagine that something like this happened in the United States and you were on the jury. How would you vote? Would you practice jury nullification? Or what if you were the prosecutor, and had some discretion in what crime to prosecute. What charge would you file?

I know this is an impulsive answer and probably not the right approach, but I would be have been part of the crowd at the court cheering the woman.

Read Full Post »

Would You Vote to Convict a Wheelchair-Bound Guy Who Slugs a Child Molester?

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, healthcare,  incest, 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.

Read Full Post »

Somebody Tell Michael Gerson that Coercion Isn’t Charity

Michael Gerson is upset that the GOP budget would trim some money from the foreign aid budget. In his Washington Post column, he regurgitates Obama Administration talking points, claiming that less foreign aid will kill tens of thousands of poor children in Africa.

USAID estimates that reductions proposed in the 2011 House Republican budget would prevent 3 million malaria treatments. …this means about 1.5 million people in need of treatment would not receive it. About 3 percent of untreated malaria infections progress to severe malaria — affecting 45,000 children. Of those children, 60 to 73 percent will not survive, yielding 27,000 to 30,000 deaths. …global health programs are not analogous to many other categories of federal spending, such as job training programs or support for public television. A child either receives malaria treatment or does not. The resulting risk of death is quantifiable. The outcome of returning to 2008 spending levels, as Republicans propose, is predictable. …One can be a budget cutter and still take exception to cuts at the expense of the most vulnerable people on earth. …Cuts for global health programs should be of special concern to those of us who consider ourselves pro-life. No pro-life member of Congress could support welfare savings by paying for abortions.

Gerson’s moral preening is a bit tedious. He’s a guy who presumably is part of top 2 percent of income earners in America. And I bet his family’s overall level of consumption must be in the top 1 percent worldwide. Yet he wants to take money from the rest of us, with our lower living standards, so he can feel morally superior.

Having met Gerson a couple of times, I don’t doubt his sincerity, and I’m guessing he probably gives a lot of money to charity. Moreover, I doubt he personally benefits from more spending in these areas (i.e., he’s not an overpaid bureaucrat, a consultant with a fat contract from USAID, or anything like that).

But I still have a hard time taking him seriously because he thinks the coercive power of government should be used to spend money in ways that he finds desirable – even if that means that people with much lower levels of income and wealth are picking up the tab for something that Gerson wants.

My Cato colleague, Roger Pilon, had a column in yesterday’s Wall Street Journal examining the broader issue of whether federal spending is an appropriate way of fulfilling charitable impulses. As Roger notes, it’s not charity when you make other people pay for things that you think are important.

‘What Would Jesus Cut?” So read the headline of a full-page ad published in Politico last month by Sojourners, the progressive evangelical Christian group. Urging readers to sign a petition asking Congress “to oppose any budget proposal that increases military spending while cutting domestic and international programs that benefit the poor, especially children,” it was the opening salvo of a campaign to recast the budget battle as a morality play. Not to be outdone, Catholics for Choice took to Politico on Tuesday to run “An Open Letter from Catholic State Legislators to Our Colleagues in the US Congress.” The letter condemned “policies that unfairly target the least among us,” echoing a blogger at the National Catholic Reporter who averred last month that the federal budget is, after all, “a moral document.” …The budget battle is thus replete with moral implications far more basic than Sojourners and Catholics for Choice seem to imagine. They ask, implicitly, how “we” should spend “our” money, as though we were one big family quarreling over our collective assets. We’re not. We’re a constitutional republic, populated by discrete individuals, each with our own interests. Their question socializes us and our wherewithal. The Framers’ Constitution freed us to make our own individual choices. The irony is that Jesus, properly understood, saw this clearly—both when he asked us to render unto Caesar what is Caesar’s and unto God what is God’s, and when he spoke of the Good Samaritan. The ads’ signers imagine that the Good Samaritan parable instructs us to attend to the afflicted through the coercive government programs of the modern welfare state. It does not. The Good Samaritan is virtuous not because he helps the fallen through the force of law but because he does so voluntarily, which he can do only if he has the right to freely choose the good, or not. Americans are a generous people. They will help the less fortunate if left free to do so. What they resent is being forced to do good—and in ways that are not only inefficient but impose massive debts upon their children. That’s not the way free people help the young and less fortunate.

Read Full Post »