Maybe the Real Lesson Is that It's Best to Shut Down the Federal Government Before a New Fiscal Year Begins
Posted in Boondoggle, Fiscal Policy, Government Spending, Government stupidity, Waste, tagged Boondoggle, Fiscal Policy, Government Shutdown, Government Spending, Government stupidity, Waste on September 30, 2013| 10 Comments »
The politicians, bureaucrats, lobbyists and interest groups in Washington are hyperventilating that the federal gravy train may get sidetracked for a day or two by a shutdown fight between Republicans and Democrats.
I'm not sure why they're so agitated. After all, the shutdown is really just a slowdown since only non-essential bureaucrats are sent home. And everyone winds up getting paid for those unplanned vacations, which is why the bureaucrats I know are crossing their fingers for a lengthy confrontation.
But that describes what may happen when the new fiscal year begins tomorrow. What's been happening in recent days, culminating today, is a feeding frenzy of end-of-the-fiscal-year wasteful spending.
Here are some details from a Washington Post expose.
This past week, the Department of Veterans Affairs bought $562,000 worth of artwork. In a single day, the Agriculture Department spent $144,000 on toner cartridges. And, in a single purchase, the Coast Guard spent $178,000 on "Cubicle Furniture Rehab." …All week, while Congress fought over next year's budget, federal workers were immersed in a separate frantic drama. They were trying to spend the rest of this year's budget before it is too late. …If they don't, the money becomes worthless to them on Oct. 1. And — even worse — if they fail to spend the money now, Congress could dock their funding in future years. The incentive, as always, is to spend. So they spent.
If you're a taxpayer, you'll be especially delighted to know that the "use it or lose it" spending orgy is so intense that federal contractors have to cater lunches for their sales staff. Can't have them away from their desks, after all!
It was the return of one of Washington's oldest bad habits: a blitz of expensive decisions, made by agencies with little incentive to save. Private contractors — worried that sequestration would result in a smaller spending rush this year — brought in food to keep salespeople at their desks. Federal workers quizzed harried colleagues in the hallways, asking if they had spent it all yet. …"Use it or lose it" season is not marked on any official government calendars. But in Washington, it is as real as Christmas. And as lucrative. …In 2012, for instance, the government spent $45 billion on contracts in the last week of September, according to calculations by the fiscal-conservative group Public Notice. That was more than any other week — 9 percent of the year's contract spending money, spent in 2 percent of the year.
The IRS may win the prize for the most egregious example of last-minute waste.
In 2010, for instance, the Internal Revenue Service had millions left over in an account to hire new personnel. The money would expire at year's end. Its solution was not a smart one. The IRS spent the money on a lavish conference. Which included a "Star Trek" parody video starring IRS managers. Which was filmed on a "Star Trek" set that the IRS paid to build. (Sample dialogue: "We've received a distress call from the planet NoTax.")
But it's not just tax collectors who flush our money down the toilet in creative ways.
One recent study, for instance, found that information technology contracts signed at year's end often produced noticeably worse results than those signed in calmer times. …they listed dumb things they had seen bought: three years' worth of staples. Portable generators that never got used. One said the National Guard bought so much ammunition that firing it all became a chore. "When you get BORED from shooting MACHINE GUNS, there is a problem," an anonymous employee wrote.
Impressive examples of waste, though I confess I'm curious about the part about ammo and the National Guard. Does this mean bullets are like milk and have to be fired before an expiration date?
Beats me, but at least someone in the government acknowledged that (at least up to a point) it's cool to fire a machine gun. Maybe that person should hook up with the Texas cop who likes tanks.
Oh, and you'll be happy to know that spendaholic bureaucrats and crafty interest groups keep track of time zones so they can squander money until the very last second.
On Monday, Richer's people will sell until midnight. Then they will keep selling. "Money rolls across the continent," the feds say. Cash not spent in Washington might be spent by federal offices in California in the three hours before it is midnight there. When it is midnight in California — 3 a.m. in Washington — they will keep on. There are federal offices in Hawaii, after all. And it will still be three hours until midnight there.
Makes me think that we may need a slogan for the bureaucracy. Perhaps this modification of the Postal Service's unofficial motto: "Neither snow nor rain nor heat nor gloom of night – nor even different time zones – stays these bureaucrats from spending every possible penny of other people's money."
But let's close on an upbeat note. Whether you give credit to the Tea Party, to Republicans, to gridlock, or to Obama, the good news is that the federal government in the past two years has been wasting money at a slower rate.
So taxpayers can smile…or at least not frown as much. The bureaucracy and contractors may be throwing a party today, but not with the same reckless abandon they displayed between 2001 and 2010.
Playing Hardball on a Government Shutdown Is the only Short-Run Way to Make Fiscal Progress
Posted in Debt, Deficit, Entitlements, Fiscal Policy, Government Spending, tagged Debt, Deficit, Entitlements, Fiscal Policy, Government Spending, Obamacare on September 29, 2013| 33 Comments »
I haven't written much about the budget fights over a government shutdown, Obamacare, the continuing resolution, and the debt limit for the simple reason that the battles are mostly about politics and strategy rather than policy.
At the risk of oversimplifying, here's what's happening.
On one side are those who want to use the debt limit (legislation allowing additional borrowing) and the continuing resolution (a spending bill for the fiscal year that starts October 1) as leverage to weaken Obamacare and restrain spending.
On the other side are those who say big confrontations are too politically risky, particularly since good changes are impossible with Harry Reid controlling the Senate and Obama in the White House.
In this "insurgents" vs "establishment" fight, I think it's possible for good people to have opposing positions, but my sympathies are with the former over the latter. Here are a couple of observations to illustrate why I think the insurgents are correct.
1. The biggest fiscal policy victory of the 21st Century – sequestration – was only possible because of hard-ball tactics on the debt limit in 2011.
2. It's always better to be on offense. If folks like Senator Ted Cruz weren't making the President's unpopular healthcare law the focus of attention, the crowd in Washington might be busy right now trying to do something destructive such as class-warfare tax hikes. Or repealing sequestration.
3. It's common sense in any negotiation to ask for more than you think you'll get and to appear as inflexible as possible. While I think many of the "establishment" types are willing to do the right thing (as evidenced by near-unanimous votes for the Ryan budgets), they sometimes lead with their fallback position, which means the final result will be even further to the left.
4. The "political risks" of a shutdown fight or a debt limit fight are greatly overblown. As I explained in an article for National Review back in 2011, Republicans achieved a policy victory and – at worst – a political draw in the big shutdown fights of 1995-1996. And my recent testimony to the Joint Economic Committee explained why there's no risk of default if there's a fight on the debt limit.
All this being said, the insurgent strategy can backfire. The media serves as an echo chamber for proponents of bigger government, so expect story after story about how a government shutdown threatens the economy (even though we've had plenty of shutdowns in recent decades with no negative impact).
And expect stories about how a debt limit fight could mean default, even though that's preposterously inaccurate.
But that echo chamber can be effective, particularly when statist GOPers such as Karl Rove mimic those left-wing talking points.
So the real issue is whether we can get some incremental progress – such as a one-year delay of Obamacare's individual mandate – when a deal finally is reached.
The main thing to understand, though, is that no progress would be possible if the insurgents weren't forcing the issue.
P.S. If you want to end on a lighter note, there are some good one-liners about the debt limit at the bottom of this post, and you can enjoy some good debt limit cartoons by clicking here and here.
Are Government Schools a Form of Child Abuse?
Posted in Education, Government stupidity, Gun control, Political Correctness, School Choice, tagged Education, Government stupidity, Gun control, Political Correctness, School Choice on September 28, 2013| 37 Comments »
I'm a big fan of school choice. If we bust up the government education monopoly and create a competitive education market, we'll get a much better education system at much lower cost.
This isn't just idle theorizing. The evidence shows that competition produces better results.
That will be especially good news for children from poor and minority neighborhoods, as even the Washington Post has admitted.
There's even good evidence for school choice from other nations, such as Chile, Sweden, and the Netherlands.
And since we're looking at international evidence, it's worth noting that America spends more per student than any other nation, yet gets very mediocre results.
However, there's also a non-educational argument for busting up the government school monopoly. Simply stated, we have to rescue kids from brainless school bureaucrats who impose crazy forms of anti-gun political correctness.
What am I talking about? Well, check out these excerpts from a Fox News report.
Two seventh-grade students in Virginia Beach, Va., were handed long-term suspensions Tuesday that will last until the end of the school year for playing with an airsoft gun in one of their front yards while waiting for the school bus. WAVY-TV reports that 13-year-old Khalid Caraballo and Aidan Clark will face an additional hearing in January to determine if they will be expelled for "possession, handling and use of a firearm" because the guns were fired at two others playing in Caraballo's yard. …Khalid claims he never took the toy gun to the designated bus stop or Larkspur Middle School, according to the report. Two other students who fired guns were also suspended.
Your eyes are not deceiving you. The kids were punished for playing with toy guns while on private property.
Yet apparently school bureaucrats don't think their power is limited by school boundaries.
A neighbor saw Khalid shooting the airsoft gun in his yard and called 911, telling the dispatcher, "He is pointing the gun, and it looks like there's a target in a tree in his front yard," the station reported. …The school's so-called "zero-tolerance" policy on guns extends to private property, according to the report.
At least one of the parents has the right view of things.
If you outlaw Zombie Hunters, only outlaws will have Zombie Hunters
Khalid's mother, Solangel Caraballo, said it's ridiculous that her son and his friends were suspended because they were firing the airsoft gun on private property. "My son is my private property. He does not become the school's property until he goes to the bus stop, gets on the bus, and goes to school," Caraballo told the station.
Now let's add some important caveats. Even though the toy guns only shoot little plastic pellets, it seems that the boys may have shot at some kids who weren't part of their play. That's something that should be punished.
And it's also possible that the boys are troublemakers and the school was simply using this episode as an excuse to get rid of them.
So maybe there's some sort of "rough justice" happening behind the scenes. Simply stated, there's probably a back-story.
But there's no question that we're seeing a bad trend.
Bureaucrats suspended a little boy for taking bites out of a pop tart in such a way that it was shaped like a gun.
Bureaucrats suspended a 7-year boy for pretending to throw a non-existent grenade on the playground.
Bureaucrats suspended a 6-year old boy in Maryland for making a gun shape with his finger.
Bureaucrats busted a 5-year old girl in Pennsylvania for having a pink plastic gun that shoots bubbles.
A teacher in Rhode Island caught an 8-year old boy with some plastic toy army men.
Bureaucrats evacuated a school because an 11-year old boy made a motion detector for his science experiment.
Bureaucrats in Florida kicked an 8-year old boy out of school for a year because he had a plastic gun in his backpack.
A dual award in Virginia, with half the prize for the bureaucrats who suspended a 10-year old boy for a toy gun and half the prize for the cops who then arrested the kid.
A third-grader got in trouble for having toy army men on his birthday cupcakes.
Two second-graders got suspended for holding pencils like they were guns.
Bureaucrats suspended a kindergartener for having a lego-sized toy gun.
Bureaucrats wanted a deaf child to change his sign-language name because it required him to shape his fingers in a way that resembled a gun.
It's almost to the point where sending your kids to a government school could be considered a form a child abuse.
May the Force of Political Satire Be With You
Posted in Humor, Political Humor, Politicians, tagged Humor, Political Humor, Politicians on September 27, 2013| 20 Comments »
It's always the right time to make fun of our overlords in Washington.
Sometimes we can laugh at cartoons, like this portrayal of a politician and lobbyist interacting.
In other instances, we can enjoy good jokes, such as the blind rabbit who finds a politician.
Or we can be amused by satire, such as these excerpts from Dave Barry.
Today, though, we have a very good image. Fans of Star Wars will appreciate these words of wisdom from Obi-Wan Kenobi.
You can read about how these men and women spend their time screwing us and wasting our money.
And we have some examples of what people in Montana, Louisiana, Nevada, and Wyoming think about big-spending politicians.
This little girl is rather blunt about our political masters, here are a couple of good images capturing the relationship between politicians and taxpayers, and here is a somewhat off-color Little Johnny joke.
Last but not least, let's not forgot to include this joke by doctors about the crowd in Washington.
P.S. If you want humor specifically targeting Obama, you'll enjoy this Pope message, this Pennsylvania joke, this Reagan-Obama comparison, this Bush-Obama comparison, this sign, this video satire, and this bumper sticker.
Bono Understands the Need for Capitalism, so Now Let's See if There's any Hope for Obama
Posted in Free Markets, Poverty, tagged Bono, Capitalism, Free Markets, Poverty on September 26, 2013| 18 Comments »
Sometimes you find support for capitalism and small government in some rather unexpected places.
I was surprised, for instance, when I found out that Gene Simmons, the lead singer for Kiss, stated that, "Capitalism is the best thing that ever happened to human beings. The welfare state sounds wonderful but it doesn't work."
That's pretty hard core.
Bad news for Denmark's Lazy Robert?
Or what about the Finance Minister of Denmark's left-wing government, who admitted that, "We live in a world of global competition for jobs… That requires a modernization of the welfare state."
That's not hard core, to be sure, but it certainly suggests that he understands the need to reduce the burden of government spending.
And my jaw hit the floor when I read that former KGB bigwig Vladimir Putin remarked that, "Many European countries are witnessing a rise of [the] dependency mentality when not working is often much more beneficial than working. This type of mentality endangers not only the economy but also the moral basics of the society."
I'm not about to take lessons in societal morality from a strongman like Putin, but it's nonetheless surprising that he recognizes that handouts can turn people into supplicants.
So after reading all these examples, perhaps you won't be overly shocked to learn that Bono, head of the famous U2 band, is a supporter of capitalism. He's no Milton Friedman, as you'll see, but check out this quote from an interview in the Guardian.
My father was Labour, classic Dublin Northside household. And I still carry that with me. And though I believe that capitalism has been the most effective ideology we have known in taking people out of extreme poverty, I don't think it is the only thing that can do it, and in some ways I wish it wasn't.
Even with his caveats, it's big news when one of the world's leading anti-poverty campaigners acknowledges that free markets are the best tool for improving the lives of poor people.
"Please don't use naughty words like capitalism in my presence"
Bono's comments sort of remind me of when the former leftist president of Brazil remarked that, "…it was necessary to first build capitalism, then make socialism, we must have something to distribute before doing so."
Neither Lula nor Bono are libertarians, of course, but at least their views are rooted in reality. Which is more than can be said for many of the people in Washington who have never produced anything and have no idea how markets actually work.
Perhaps even more stunning is the fact that Bono defends tax competition and fiscal sovereignty.
…at the heart of the Irish economy has always been the philosophy of tax competitiveness. Tax competitiveness has taken our country out of poverty. People in the revenue accept that if you engage in that policy then some people are going to go out, and some people are coming in. It has been a successful policy. On the cranky left that is very annoying, I can see that. But tax competitiveness is why Ireland has stayed afloat.
Wow, there's no ambiguity to that statement. I'd like to think he's knowledgeable about the benefits of tax competition because he's watched my videos or read my writings, but the real story is that he lived through and personally experienced the Irish miracle.
He saw his relatively poor country become very successful, in large part because of big improvements in tax policy. And he obviously understands the importance of maintaining Ireland's low corporate tax rate (which I've also argued is very important to keep Ireland from sinking further into statist stagnation).
Let's close with a couple of additional examples of folks on the left who have confessed some very un-PC thoughts, such as the New York Times columnist who bravely wrote that, "This is painful for a liberal to admit, but conservatives have a point when they suggest that America's safety net can sometimes entangle people in a soul-crushing dependency. …Most wrenching of all are the parents who think it's best if a child stays illiterate, because then the family may be able to claim a disability check each month."
"We've learned from you that communism doesn't work"
Perhaps most amazing is that a high-ranking official from China's communist government stated that, "If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack."
Last but not least, surely it's big news that even Fidel Casto confessed that, "The Cuban model doesn't even work for us anymore."
P.S. Sometimes even Obama says reasonable things, such as the time he remarked that "No business wants to invest in a place where the government skims 20 percent off the top." Or the time he said that it was best to ""let the market work on its own." Unfortunately, when you read the fine print and look at the context, there's no indication that the President actually has learned anything about economics.
P.P.S. My favorite examples of liberals crossing the ideological aisle are Justin Cronin and Jeffrey Goldberg, both of whom wrote very powerful anti-gun control columns.
Should American Taxpayers Pay a $1 Billion Bribe to Get Syria to Drop Chemical Weapons?
Posted in Boondoggle, Foreign Policy, Libertarianism, tagged Boondoggle, Foreign Policy, Libertarianism, Syria on September 25, 2013| 15 Comments »
Maybe it's because I have a bit of a old-fashioned moralistic streak to me, but I viscerally object to the notion that good people should pay bad people not to do bad things.
That's why, a few years ago, I didn't react favorably when the former dictator of Libya asked for several billion dollars per year to stop illegals from crossing the Mediterranean to Europe.
And this also explains why I don't think American taxpayers should cough up $1 billion to bribe Syria's dictator into giving up his chemical weapons.
In this interview with Neil Cavuto on Fox News, I make the basic libertarian argument that we shouldn't be involved in Syria's civil war, but I also make a practical argument that – if you accept that American tax dollars should be spent – it would be much cheaper to bribe a few high-level people in Assad's government.
Since I'm not a foreign policy expert, I don't think I said anything particularly memorable in the above segment.
But one line apparently did resonate. Here's Senator Rand Paul, speaking later that day.
I have to admit that made my day. Sort of like when Chairman Brady mentioned Mitchell's Golden Rule in his opening statement when I testified last week to the Joint Economic Committee.
Of course, I'd like it even better if some of the ideas I support (like the flat tax or smaller government) actually wound up being implemented, but at least it's nice to be noticed.
Fighting for freedom is often a thankless task in DC
Being a libertarian in Washington, after all, is not the easiest job. To quote former Senator Phil Gramm, it's like trying to do the Lord's work in the Devil's city.
P.S. Any time I begin to get cocky and think I'm some sort of hot shot, something happens to pull me back down to earth. In my Syria interview, you may have noticed that my mouth looked a bit red. That's because I made the mistake of eating some red candies that were in the car that took me to the interview.
As the old saying goes, you can dress me up, but you can't take me out. That's why I'm glad Senator Paul picked up on my line (which I stole from somebody, so I can't really take credit) about threatening Syria with Obamacare. Otherwise, I probably would have been reluctant to even post the interview.
P.P.S. As I intimated in the interview, the best way to learn more about foreign policy is to read the scholarly writings of my colleagues from the Cato Institute. You also can't go wrong by perusing these columns by Mark Steyn, George Will, and Steve Chapman.
Is Defending the Second Amendment akin to Supporting Slavery?
Posted in 2nd Amendment, England, Gun control, Liberty, United Kingdom, United Nations, tagged England, Gun control, Liberty, Second Amendment, United Kingdom, United Nations on September 24, 2013| 15 Comments »
The English are an interesting tribe. There is much to like about their country, including the fact that voters repeatedly elected Margaret Thatcher, one of the world's best leaders in my lifetime.
On the other hand, the United Kingdom has veered sharply to the left in recent decades, and Thatcher must have been very disappointed that her Conservative Party now is but a hollow shell, controlled by statists who actually think people should voluntarily pay extra tax to support wasteful and corrupt government.
And the politicians openly pursue Orwellian tax-collection tactics!
No wonder the country now faces a very grim future.
But the thing that most irks me about the British political class is the fanatical embrace of anti-gun policies. Consider some of these examples.
There was a proposal to prevent children from watching Olympic shooting events.
A British veteran of the Iraq war was arrested after his local trainees included a gun when mailing his possessions back to England.
In an example of private sector political correctness, a bookstore put shooting magazines in the porn section.
A man got arrested for finding a gun in his yard and turning it over to the police.
Starting pistols have been banned from some school races.
A man was arrested for shooting a burglar who invaded his house.
Given these example of anti-gun zealotry, you won't be surprised to learn that some English pundits think America is primitive and backwards for retaining an individual right to bear arms.
You may be thinking, "so what, they have their bad laws and we have our good laws." But it seems at least some Brits want to disarm not just their own citizens, but Americans as well.
Writing for the UK-based Guardian, Henry Porter asserts that it is time for the United Nations to somehow undermine private gun ownership in the United States.
…what if we no longer thought of this as just a problem for America and, instead, viewed it as an international humanitarian crisis – a quasi civil war, if you like, that calls for outside intervention? … If this perennial slaughter doesn't qualify for intercession by the UN and all relevant NGOs, it is hard to know what does.
Mr. Porter doesn't specify how the United Nations and other non-governmental organizations are supposed to accomplish this task.
Does he want Obama to ram through the U.N. treaty that leftists hope would trump the Second Amendment?
If so, all I can say is good luck trying to enforce gun bans. The American people would engage in widespread disobedience if our own politicians tried to take away our constitutional freedoms.
I'd like to see UN bureaucrats try to disarm these great Americans
And if a bunch of U.N. bureaucrats tried to do the same thing…well, that's such a ridiculous notion that I'm reminded of my fantasy about what might have happened if the United Nations had tried to stop Texas from executing a child murderer who originally was from Mexico.
But the call for UN intervention is not the most absurd part of the article.
What could be sillier, you ask? How about the fact that Mr. Porter implies that gun owners are akin to slave owners. It's not an explicit accusation, but you can see in this excerpt that he wants readers to draw that conclusion.
Half the country is sane and rational while the other half simply doesn't grasp the inconsistencies and historic lunacy of its position, which springs from the second amendment right to keep and bear arms, and is derived from English common law and our 1689 Bill of Rights. We dispensed with these rights long ago, but American gun owners cleave to them with the tenacity that previous generations fought to continue slavery.
So if you "cleave" to your guns, you're on the same level as the people who defended slavery. I guess this is the U.K. version of Obama accusing some Americans of "clinging to guns."
Ironically, Mr. Porter self identifies as a "journalist specialising in liberty and civil rights." But he doesn't specify what side he's on, so I guess we can assume – based on this column – that he specializes in undermining liberty and curtailing civil rights.
P.S. The Guardian is known as a left-wing newspaper, but I've always had a special place for them in my heart ever since one of their writers accused me of being "a high priest of light tax, small state libertarianism." He meant it as an insult, of course, but I think of it as the nicest thing ever written about me. Even better than this.
Warning: Government-Run Healthcare Is Very Hazardous to Your Health
Posted in Big Government, England, Health Care, Health Reform, United Kingdom, tagged Big Government, England, Health Care, Health Reform, United Kingdom on September 23, 2013| 22 Comments »
Back in 2010, I guest-hosted Larry Kudlow's CNBC program for a couple of days. During one of the segments on my last show, I crossed swords with the other host, Simon Hobbs, as we argued whether patients needlessly died because of the government-run healthcare system in the United Kingdom.
Since neither one of us had data at our fingertips, it was basically a he-said/he-said exchange.
A few days after that tussle, however, I posted some evidence supporting my side of the discussion.
And over the past few years, I've posted additional material showing thousands of extra fatalities resulting from the U.K.'s government-run healthcare system. Including the fact that hundreds and hundreds of patients are allowed to starve to death!
Today, I'm going to administer the coup de grâce. I don't think anybody will be able to pretend that bureaucrats and politicians do a good job after watching this powerful news report from the United Kingdom
There is a lot of powerful data in that report, but the number that jumps out at me is that death rates are 45 percent higher in the United Kingdom than they are in the United States.
That's not statistical noise. That's a huge gulf and it shows a massive failure on the part of government on the other side of the Atlantic.
By the way, none of this is to suggest that the American system is perfect. We have huge problems caused by direct government intervention (programs such as Medicare and Medicaid) and indirect government intervention (with the tax-code's healthcare exclusion being at the top of my list).
So while England's big-government approach puts people on waiting lines and causes needless deaths, America's big-government approach causes third-party payer which cripples the free market and leads to high prices and inefficiency.
But if I have to choose between the United States and the United Kingdom, it's not even close. The American system is not as screwed up as the British system, though I realize that's damning with faint praise.
Let's close by reminding ourselves that Paul Krugman infamously wrote that, "In Britain, the government itself runs the hospitals and employs the doctors. We've all heard scare stories about how that works in practice; these stories are false." The news report you just watched suggests that he's putting ideology above evidence. And if you want more data (some of it very distressing and tragic), you can click here.
Medicare: Recipients Pay for Hamburger, They Get a Hamburger, but Taxpayers Are Being Charged for a Steak
Posted in Entitlements, Fiscal Policy, Health Care, Health Reform, Medicare, tagged Entitlements, Fiscal Policy, Health Care, Health Reform, Medicare, Unfunded Liabilities on September 22, 2013| 23 Comments »
One of the challenges of good entitlement reform (or even bad entitlement reform) is that recipients think they've "earned" benefits.
If you tell them that programs such as Medicare are unsustainable and need to be changed, some of them suspect you're trying to somehow cheat them. After all, they were forced to cough up payroll taxes during their working year.
That's true, but the real issue is how much did they pay in tax and how much are they getting back.
Here's a very sobering chart from the recently released Long-Term Fiscal Outlook from the Congressional Budget Office.
It shows that people in their 50s, 60s, and 70s paid, on average, between $45,000-$65,000 of taxes into Medicare. That's a big chunk of money, but it's far less than the $160,000-$270,000 that Medicare will spend on them.
I'm tempted to say that current retirees and older workers are being charged for a hamburger but they're getting a steak.
But that's not accurate. As most recipients will tell you, Medicare leaves a lot to be desired, which is what you might expect with a government-run system.
So the right way to look at the program is that recipients are being charged for a hamburger, they're getting a hamburger, but taxpayers (the ones who make up the funding gap) are being charged for a steak.
Which is why structural reform is the only good way of dealing with the program's giant unfunded liability. As explained in this video from the Center for Freedom and Prosperity.
As discussed in the video, the reform (which has been part of the Ryan budget that's been approved by the House) basically leaves the program as is for current retirees and older workers, but younger workers are allowed to move to a new system that gives them – upon retirement – the ability to choose their preferred health policy.
P.S. Don't forget that we also need to reform Medicaid and Social Security, the other two big entitlement programs.
A Government Database about our Sex Lives: Gee, What Could Go Wrong?
Posted in Government intervention, Health Care, Health Reform, Obama, Privacy, tagged Government intervention, Government-Run Health Care, Health Reform, Obama, Obamacare, Privacy on September 21, 2013| 15 Comments »
I've shared several videos that make the case against Obamacare.
Here's one narrated by a Dutch woman warning that America shouldn't repeat the mistakes of European government-run healthcare.
Here's one from Reason TV about how free markets produce lower healthcare costs.
Here's one explaining the need to deal with the government-caused third-party-payer crisis.
And I had to reluctantly admit that even one of Karl Rove's group produced an effective video on Obamacare harming young people.
I think all of those videos are well done and contain critical information, but I suspect the humor in this clever video may change even more minds. Or at least it will be more widely watched.
Fortunately, the creepy Uncle Sam is only symbolic at this stage. While Obama probably would prefer a single-payer system like the one in the United Kingdom, where doctors and other medical personnel actually are government bureaucrats, the immediate danger is that Obamacare will turn health care professionals into agents of the government.
And the politicians will then direct doctors and others to collect information that the government shouldn't possess.
If you think I'm exaggerating, read some of the chilling details from Betsy McCaughey's recent New York Post op-ed.
'Are you sexually active? If so, with one partner, multiple partners or same-sex partners?" Be ready to answer those questions and more the next time you go to the doctor, whether it's the dermatologist or the cardiologist and no matter if the questions are unrelated to why you're seeking medical help. And you can thank the Obama health law. …The president's "reforms" aim to turn doctors into government agents, pressuring them financially to ask questions they consider inappropriate and unnecessary, and to violate their Hippocratic Oath to keep patients' records confidential. …Dr. Richard Amerling, a nephrologist and associate professor at Albert Einstein Medical College, explains that your medical record should be "a story created by you and your doctor solely for your treatment and benefit." But the new requirements are turning it "into an interrogation, and the data will not be confidential."
I don't like the idea of government bureaucrats having my private information, but what's probably most worrisome about this Obama Administration scheme is that the data won't be confidential.
As McCaughey writes, it's just a matter of time before hackers or incompetent bureaucrats make that information public.
Patients need to defend their own privacy by refusing to answer the intrusive social-history questions. …Are such precautions paranoid? Hardly. WikiLeaker Bradley Manning showed how incompetent the government is at keeping its own secrets; incidents where various agencies accidentally disclose personal data like Social Security numbers are legion.
Do you want details about your sex life put at risk of disclosure? That's what this issue is all about, not to mention the fact that what we do behind closed doors is none of the government's business.
And I'm sure you'll be delighted to know it's not just data about your sex life that will be available for bureaucrats and identity thieves.
Here's what Senator Orrin Hatch of Utah recently wrote.
Individuals signing up are required to provide personal information such as Social Security numbers, tax returns and household income information that will be entered into the Federal Data Services Hub (Data Hub) — a new information sharing network that allows other state and federal agencies, including the Internal Revenue Service (IRS) and the Department of Homeland Security, to verify a person's information. The problem? …Last month the department of Health and Human Services Office of Inspector General (HHS-OIG) issued a report saying the federal government had failed to meet multiple deadlines for testing operations and reporting data security vulnerabilities involved with the Data Hub. …The repercussions of opening the exchanges with an unproven security system could be devastating, putting the personal and financial records of millions of Americans at the fingertips of data thieves. Other government certified systems have already proven to be less than reliable in protecting personal information. Look no further than the accidental release by the IRS this past July of thousands of taxpayer Social Security numbers on its website. …we can't stand on the sidelines and let the Administration potentially expose the personal data of millions of Americans to more fraud.
By the way, everything written by McCaughey and Hatch also helps to explain why we should resist privacy-destroying schemes such as the Internet sales tax cartel being pushed by greedy politicians. I know I wouldn't want all my online purchases in a database where state and local bureaucrats would be able to snoop for details.
And we also should oppose international tax harmonization schemes that are predicated on governments all over the world collecting and sharing private information about our finances. That kind of data would be a gold mine for hackers and identity thieves, not to mention there are huge risks of making that information available to corrupt, incompetent, and venal governments.
The common theme is that we shouldn't let government have more information about us, particularly when the politicians want that data to pursue bad tax policy or bad health policy.
Time to Retire the "Hypocrisy in Government" Award?
Posted in Hypocrisy, OECD, Organization for Economic Cooperation and Development, Taxation, tagged Hypocrisy, OECD, Organization for Economic Cooperation and Development, Taxation on September 20, 2013| 11 Comments »
If I had to identify a "least-favorite" international bureaucracy, it almost certainly would be the Paris-based Organization for Economic Cooperation and Development.
The OECD doesn't waste as much money as the United Nations, it might not cause as much macroeconomic instability as the International Monetary Fund, and it presumably doesn't produce as much bad research as the World Bank, but it surely wins the maximum-damage-per-dollar-spent award.
Pampered OECD bureaucrats enjoy luxury while promoting statism
The OECD is pushing for new global rules that will result in higher taxes on the business community.
It has allied itself with the nutjobs from the so-called Occupy movement to push for bigger government and higher taxes.
The OECD is pushing a "Multilateral Convention" that is designed to become something akin to a World Tax Organization, with the power to persecute nations with free-market tax policy.
It supports Obama's class-warfare agenda, publishing documents endorsing "higher marginal tax rates" so that the so-called rich "contribute their fair share."
The OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and employment.
It even concocts dishonest poverty numbers to advocate more redistribution in the United States.
All of these stories should enrage people who value economic liberty. But American taxpayers deserve to be especially irate since we pay almost 25 percent of the OECD's lavish budget.
I'm definitely not happy about the Paris-based bureaucracy, which is why I've been fighting against the OECD for years. I even fought them when they threatened to throw me in a Mexican jail.
But all my previous criticisms will seem trivial when you lean about the most jaw-dropping display of hypocrisy ever displayed by a government official.
Here's a remarkable comment from one of the top bureaucrats at the OECD.
Pascal Saint-Amans, director of the OECD's centre for tax policy and administration, added: "The golden era of 'we don't pay taxes anywhere' is over."
Why is this statement worth highlighting? Is it because the OECD is wasting our money persecuting jurisdictions with no income taxes? That's one of the many bad activities of the OECD, but it's not what makes Monsieur Saint-Amans' statement such a stunning display of tone-deaf hypocrisy.
The reason his comments are so absurd is that bureaucrats at the OECD are exempt from paying tax!
I'm not joking. The OECD's website openly acknowledges that:
Emoluments (basic salary and allowances) are payable in arrears, with the exception of the installation allowance which is payable on taking up duty. Emoluments are exempt from taxation in most Member countries of the Organisation, including France.
Yes, you read correctly. OECD bureaucrats "are exempt from taxation."
And when the OECD says "most Member countries," that pretty much means every nation in the world other than the United States. But even that's not really true since Americans who work at the OECD get extra salary to cover their tax bill to the IRS, so they wind up with just as much in their bank accounts as the workers from other nations who officially get tax-free salaries.
Keep in mind, by the way, that the bureaucrats also get a plethora of fringe benefits. But we're not just talking about their gold-plated health benefits and generous pensions. OECD bureaucrats get a bevy of special allowances.
Ordinary people like you and me are expected to pay for our kids and our housing out of our paychecks. And that's after government takes a big bite. And one of the reasons our taxes are so high is so that we can pay big salaries to tax-exempt OECD bureaucrats…and to also give them extra money for kids and housing.
Life must be nice if you're a member of the gilded class.
Given Monsieur Saint-Amans privileged tax status, you would think that this pampered member of the bureaucratic elite would be somewhat cautious about criticizing a "golden era" when people "don't pay taxes anywhere."
But apparently it doesn't bother him to demonstrate a spectacular level of hypocrisy. Indeed, I suspect that he has set the all-time record for hypocrisy in government.
What do you think? Has this OECD bureaucrat engaged in a more egregious form of hypocrisy than these other examples?
1. The bureaucrats at the IRS presumably like having more power and money to enforce Obamacare, but they don't want to be subjected to the law.
2. Or how about rich left wingers who bleat about compassion but who are stingy with their own money.
3. And the wealthy leftists who use tax havens while trying to deny others from protecting their money.
4. There are members of the Washington elite who don't have to live under the gun control laws they impose on others.
5. What about the politically connected business types who endorse higher taxes in exchange for favors from Washington.
6. Or the politicians who evade the taxes they impose on ordinary citizens.
7. How about Canadian politicians who support government-run healthcare but then come to America when they need treatment.
8. And it's absurd that Europeans claim they're more compassionate when Americans do far more to help the less fortunate.
9. To close this list on a humorous note, we also have Occupy Wall Street protesters who fight "The Man" while wanting to make "The Man" more powerful.
Maybe my views are affected by my disdain for the OECD, as well as my hostility for taxes, but I certainly think Monsieur Saint-Amans wins the prize.
However, maybe this isn't a fair competition. After all, he was a tax collector for the French government before joining the OECD, so that gives him an almost super-human level of expertise in promoting bad policy. I'm sure he's quite proud that there are thousands of people in his country that are forced to pay more than 100 percent of their income to the government.
That being said, I'm sure he's quite happy that he pays nothing.
P.S. Years ago, the predecessor to Monsieur Saint-Amans testified to the Finance Committee in Washington. I arranged for one of the Senators to ask Jeffrey Owens whether he thought it was hypocritical to advocate higher taxes for everyone else while simultaneously being exempt from income tax. Mr. Owens truculently replied that he could make more money if he worked in the private sector (which didn't answer the question, but he obviously wanted people to think he was making a big sacrifice by working at a tax-free position).
Even though it was irrelevant, I'm sure what he said was true. But what's important to understand is that he had "value" to the private sector only because of his insider connections with tax authorities in member nations. In other words, he had high value in a world of big government and crony capitalism. So you won't be surprised to learn that Mr. Owens went to one of the Big 4 accounting firms after retiring from the OECD.
So Mr. Owens presumably is getting paid a lot of money today. And he's finally paying tax. But he's still part of the parasite class. Just like the former Obama Administration officials that are now getting rich serving as advisers and lobbyists helping clients deal with Obamacare. These people may not get paychecks from the government, but they sure as heck get paychecks because of government.
Which is yet another example of why big government is inherently corrupting.
Testifying to the Joint Economic Committee about "Debt Limit Brinksmanship"
Posted in Debt, Deficit, Fiscal Policy, Government Spending, Mitchell's Golden Rule, tagged Debt, Deficit, Fiscal Policy, Government Spending, Mitchell's Golden Rule on September 19, 2013| 19 Comments »
As we get closer to the debt limit, the big spenders in Washington are becoming increasingly hysterical about the supposed possibility of default if politicians lose the ability to borrow more money.
I testified yesterday to the Joint Economic Committee on "The Economic Costs of Debt-Ceiling Brinkmanship" and I explained (reiterating points I made back in 2011) that there is zero chance of default.
Why? Because, as I outline beginning about the 3:10 mark of the video, annual interest payments are about $230 billion and annual tax collections are approaching $3 trillion.
I actually made five points in my testimony. The first three should be quite familiar to regular readers.
First, America's main fiscal problem is that government is too big. That's the disease Deficits and debt are symptoms of that underlying problem.
Second, you achieve good fiscal policy by following "Mitchell's Golden Rule" so that government grows slower than private sector economic output.
Third, we've made some progress in the last two years thanks to genuine fiscal restraint, and we can balance the budget in a very short period of time if lawmakers impose a very modest bit of spending discipline in the future.
The fourth point, which I already discussed above, is that there's no risk of default – unless the Obama Administration deliberately wants that to happen. But that's simply not a realistic possibility.
My fifth and final point deserves a bit of extra discussion. I explained that Greece is now suffering through a very deep recession, with record unemployment and harsh economic conditions. I asked the Committee a rhetorical question: Wouldn't it have been preferable if there was some sort of mechanism, say, 15 years ago that would have enabled some lawmakers to throw sand in the gears so that the government couldn't issue any more debt?
Yes, there would have been some budgetary turmoil at the time, but it would have been trivial compared to the misery the Greek people currently are enduring.
I closed by drawing an analogy to the situation in Washington. We know we're on an unsustainable path. Do we want to wait until we hit a crisis before we address the over-spending crisis? Or do we want to take prudent and modest steps today – such as genuine entitlement reform and spending caps – to ensure prosperity and long-run growth.
Seems like the answer should be simple…at least if you're not trying to get reelected by bribing voters with their own money.
P.S. My argument for short-term fighting today to avoid fiscal crisis in the future was advanced in greater detail by a Wall Street expert back in 2011.
P.P.S. You can enjoy some good debt limit cartoons by clicking here and here.
A Rare Sign of Fiscal Sanity in France
Posted in Big Government, Competitiveness, Fiscal Crisis, Fiscal Policy, France, Government Spending, Higher Taxes, Laffer Curve, Taxation, tagged Big Government, Competitiveness, Fiscal Crisis, Fiscal Policy, France, Government Spending, Higher Taxes, Laffer Curve, Taxation on September 18, 2013| 8 Comments »
We have an amazing man-bites-dog story today.
Let's begin with some background information. A member of the European Commission recently warned that:
"Tax increases imposed by the Socialist-led government in France have reached a "fatal level"…[and] that a series of tax hikes since the Socialists took power 14 months ago – including €33bn in new taxes this year – threatens to "destroy growth and handicap the creation of jobs".
Given the pervasive statism of the European Commission, that was a remarkable admission.
But the Commissioner who issued that warning, Olli Rehn, is Finnish, so French politicians presumably don't listen to his advice any more than they listen to the thoughtful, well-meaning, and generous suggestions I make.
Indeed, based on the actions of the current President and the former President, we can say with great confidence that French politicians compete over who can pursue the most misguided policies.
But maybe, just maybe, there are some people inside France who realize the house of cards is in danger of collapse.
Here are some excerpts from a story I never thought I would read. At least one senior official in France has woken up to the dangers of ever-rising taxes and an always-growing burden of government spending.
France's state auditor urged the government Tuesday to redouble efforts to limit spending rather than increases taxes… The head of the state auditor, Didier Migaud, said the interruption in deficit reduction stemmed primarily from lower-than-expected tax revenue, due to the weak economy. Yet, he said "the spiraling welfare debt was particularly abnormal and particularly dangerous." During his first year in power, President François Hollande relied on large tax increases to plug holes in public finances, including social programs such as pensions, unemployment benefits and health care. But economic stagnation in 2012, coupled with a mild recession at the start of 2013, has waylaid the plan, while both companies and households are crying foul over what some have called "a tax overdose." Mr. Migaud added his voice, saying: "The strategy of fixing the system by collecting new revenue is reaching its limits."
Before any further analysis, I have to make one correction to the story. Hollande's plan was not "waylaid" by a recession. Instead, his policies doubtlessly helped cause a recession. You don't impose huge tax hikes on productive behavior without some sort of negative impact on economic performance.
So the "holes in public finances" are at least partially a result of the Laffer Curve. As I've repeatedly warned, higher tax rates rarely – if ever – collect as much money as politicians expect.
Returning to the specific case of France, the fiscal variable that should set off the most alarm bells is that the burden of government spending has soared to 57 percent of GDP. And based on projections from the BIS, OECD, and IMF, that number is going to get even worse in the future.
This is the data that presumably has convinced Monsieur Migaud that France is approaching the point of no return on taxes and spending.
Interestingly, the French people may be ahead of their politicians. Polling data from 2010 and 2013 show that ordinary people very much understand the need to limit the size and scope of government.
Heck, a majority of French people have said they would be interested in escaping to the United States if they had the opportunity. And successful people already have been leaving the country because of punitive tax rates.
But I'm not sure I believe the aforementioned polls. If the French people genuinely have sound views, why do they keep electing bad politicians? Of course, the same thing could be said about the United States, so perhaps I shouldn't throw stones in my glass house.
P.S. My favorite example of government running amok in France is the law threatening three years in jail if you say your husband is a fat slob or if you accuse your wife of being a nag.
P.P.S. The most vile French official may be the current Prime Minister, who actually had the gall to complain that some of his intended victims weren't quietly entering the slaughterhouse.
P.P.P.S. Just in case you think I'm exaggerating about France being a fiscal hellhole, more than 8,000 households last year were subjected to a tax burden of more than 100 percent . Obama must be very envious.
It's Amazingly Simple to Balance the Budget
Posted in Balanced Budget, Economics, Fiscal Policy, Government Spending, tagged Balanced Budget, Economics, Fiscal Policy, Government Spending on September 17, 2013| 8 Comments »
I'm testifying tomorrow to the Joint Economic Committee about "The Economic Costs of Debt-Ceiling Brinkmanship."
I won't give away what I'm going to say (though you can probably figure out my views rather easily by reading this, this and this), but I do want to share a chart from my testimony.
It shows that it is remarkably simple to balance the budget with a modest amount of spending restraint.
Based on Congressional Budget Office data, we can balance the budget in just three years if spending grows by "only" 1 percent per year.
The chart also shows that you can balance the budget in just four years if spending is allowed to grow "just" 2 percent annually.
And if you for some reason think that the burden of government spending should rise faster than inflation, then we can balance the budget in seven years by restraining spending so that it grows 3 percent each year.
Here are a couple of relevant observations.
There's no need to raise taxes. Indeed, there's amply room to lower the tax burden and reform the corrupt tax code.
If you use honest budget numbers, there's no need to impose steep spending cuts, though that actually would be desirable.
Good things happen when you follow my Golden Rule for fiscal policy.
Our main goal should be reducing the burden of government relative to private output, not balancing the budget.
That being said, one of the reasons that it's so simple to balance the budget is that we've actually enjoyed two consecutive years of government spending being lower than it was the year before. Something to keep in mind just in case you thought the Tea Party didn't make a difference or if you didn't think sequestration was a big victory.
Here's the video I keep recycling that explains why it's important to restrain the growth of spending and also shows that when you address the disease of spending, you easily deal with the symptom of deficits.
If it worked for Bill Clinton, it could also work for Barack Obama.
The Moral Bankruptcy of the U.K.'s Faux Conservative Government
Posted in David Cameron, England, Statism, Tax avoidance, Taxation, United Kingdom, tagged David Cameron, England, Statism, Tax avoidance, Taxation, United Kingdom on September 16, 2013| 14 Comments »
As an advocate of small government, I'm often distressed that I sometimes have to rely on Republicans in Washington to fight statism.
Why am I distressed? Because some of the worst people in Washington are GOPers. They may give lip service to fiscal responsibility when campaigning, but then conveniently forget that rhetoric when it's time to make decisions.
Which helps to explain why spending grew faster under Bush than Obama.
But as bad as Republicans are, there's no way they could be as bad as the faux Conservative Party in the United Kingdom.
Consider the fundamental debate about whether big government is good and whether we have a moral obligation to maximize the amount of money we turn over to politicians.
Normal people think government is too big and they don't want to reward a corrupt political class with extra revenue.
And they have strong legal standing for that position. Here's what Judge Learned Hand famously opined in 1947.
Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.
Judge Hand obviously is correct. It is nonsense to argue that taxpayers have an obligation to pay more than is legally required.
But not everybody is guided by common sense. And if there was a prize for an absence of common sense (as well as a prize for absence of integrity or principles), the David Cameron government in the United Kingdom would be a strong contestant for that award.
Here's the latest example of the intellectual bankruptcy of that supposedly conservative government. An official was just forced to resign because – prior to joining the government – he advised people to legally minimize their tax liabilities.
I'm not joking. Here's an excerpt from a Reuters report.
A tax adviser to the British government has been forced to resign after he was recorded giving tips at a conference on how to pay less tax and "keep money out of the Chancellor's grubby mitts", a Treasury minister said. The BBC Panorama investigative program filmed David Heaton – before he joined the government as an adviser on how to clamp down on aggressive tax avoidance – telling delegates at a conference how they could exploit tax loopholes. "Mr Heaton's statements are directly at odds with the government's approach to tackling tax avoidance," Treasury minister David Gauke said in a statement. "Therefore, it is right that Mr Heaton resigned from his position."
David Gauke, by the way, is infamous for having stated that legal tax avoidance strategies "damage our ability to fund public services and provide support to those who need it." Hmmm….that phrase seems vaguely familiar. I gather the Tory Party thinks government should be guided by "From each according to his ability, to each according to his need."
Just in case you think I'm pulling a quote out of context, click here or here for additional evidence of the pervasive statism of the current regime in London.
And take a look at this government poster I photographed in the London subway system. Orwell would be proud.
No wonder I"m so glum about the long-run outlook for the United Kingdom.
And the late great Margaret Thatcher must be spinning in her grave.
P.S. I wrote that this was the "latest example" of the Cameron government's intellectual bankruptcy. For previous examples, see here, here, here, here, and here.
P.P.S. I started this post with the quote from Judge Learned Hand. Leftists, by contrast, like to share the quote from Justice Oliver Wendell Holmes about "taxes are the price we pay for a civilized society." What they conveniently forget to include is that he made that statement in 1927, when federal taxes amounted to only $4 billion and the federal government consumed only about 5 percent of economic output. Yes, I'll gladly pay for that amount of civilization.
P.P.P.S. What's more hypocritical, the supposed conservatives in the U.K. badgering people to pay extra tax or American leftists utilizing tax havens to lower their own taxes?
Underwhelming Left-Wing Humor about the "Black NRA"
Posted in Constitution, Crime, Gun control, Humor, Political Humor, tagged Constitution, Crime, Gun control, Humor, Political Humor on September 15, 2013| 18 Comments »
I'm more than willing to give credit to leftists who come up with clever political satire.
This cartoon about Fox News, for instance, is rather amusing, and this imagery about the greed of the developed world is effective even though it's misguided.
I've even shared funny videos, cartoons, and images that mock libertarians.
So when Sarah Silverman put together a pro-gun control video mocking the idea of a "black NRA," I was prepared to laugh.
Having watched it, you can put me in the underwhelmed category. My computer skills are deficient and I only know how to embed YouTube videos, so you'll have to click here if you want to watch her full video, but here's a video from Carl Jackson that includes some of what Silverman did along a very effective response.
My reaction, for what it's worth, is that Silverman is very attractive so it's a shame she's a leftist (my attitude about Stephanie Cutter as well). But on a more substantive level,
1. It's almost laughable that a multi-millionaire like Silverman, who doubtlessly lives in a very safe area and almost surely relies on armed private security, wants to restrict the gun rights of ordinary Americans.
2. Do Silverman and the other characters in the video really think that criminals are impacted by gun control laws? Do they have enough sense to understand that the bad guys prefer when law-abiding people are disarmed?
But enough about my reactions. Here's a very good video response from PJ Media.
If you want more videos on the general topic of gun control, here are some of my favorites.
Ted Nugent talking about gun ownership and the right of self defense.
A look at Switzerland's strong gun culture and the importance of self defense as a protection against oppression.
And some very powerful testimony to some weasels on Capitol Hill (make sure to pay attention around the 5:00 mark).
Ice-T talking about the real reason to defend and support the 2nd Amendment.
A Reason TV video with five facts for Vice President Biden's task force.
A look at how a young woman can defend herself.
A 15-year old speaking truth to power.
And if you want gun control videos that are both funny and on the right side, here's my collection.
A revealing look at how leftists think about gun control.
A heartwarming adoption story.
An amusing cartoon conversation between an anti-gun ideologue and a supporter of the Constitution.
Joe Biden's self-defense advice.
Since this post is about blacks and gun control, let's close with a link to what Thomas Sowell has to say about the topic.
Is It Time to Feel Sorry for the President and other Obamacare Supporters?
Posted in Government intervention, Health Care, Health Reform, Obama, tagged Big Government, Government intervention, Government-Run Health Care, Health Reform, Obamacare on September 14, 2013| 31 Comments »
I've certainly offered more than my fair share of Obamacare criticism. Since I'm a public finance economist, I'm mostly concerned that the law increases the fiscal burden of government.
But I'm also irked that Obamacare will worsen the third-party payer crisis, which it the main problem with our health care system in America.
Feeling sympathy for Obamacare supporters
And it should go without saying that I'm nauseated by the corruption that has been facilitated by the new regime.
All that being said, I'm almost at the point where I feel sorry for Obamacare supporters. There's been a growing avalanche of bad news about government-run healthcare and they somehow have to justify this festering pile of you-know-what.
For instance, it must not be fun having to explain to people that their private financial and medical information will now be in the hands of some of the least competent people in America. Which means we're sure to see more stories like this.
A MNsure employee accidentally sent an e-mail file to an Apple Valley insurance broker's office on Thursday that contained Social Security numbers, names, business addresses and other identifying information on more than 2,400 insurance agents. An official at MNsure, the state's new online health insurance exchange, acknowledged it had mishandled private data. A MNsure security manager called the broker, Jim Koester, and walked him and his assistant through a process of deleting the file from their computer hard drives. Koester said he willingly complied, but was unnerved. "The more I thought about it, the more troubled I was," he said. "What if this had fallen into the wrong hands? It's scary. If this is happening now, how can clients of MNsure be confident their data is safe?"
Or imagine what it must be like when some of your biggest allies start complaining about the law. Such as union bosses.
Top labor leaders left the White House on Friday after an hour-long meeting with President Barack Obama, still looking for a way to address concerns that "Obamacare" will hurt their members' healthcare plans. The dispute with unions – traditional allies of Democrats – as the Obama administration begins to roll out Obama's signature healthcare reforms is providing political ammunition for Republicans who want to defund or repeal the law. …Earlier this week, AFL-CIO members passed a resolution calling for significant changes to the healthcare law, stopping short of asking for its repeal, but exposing the rift between the labor movement and the Obama administration.
Or government bureaucrats.
A new survey of 2,500 federal employees and retirees found that 92.3 percent believe federal workers should keep their current health insurance and not be forced into ObamaCare. Only 2.9 percent say they should become part of the new health insurance exchanges.
And what about stories about cost overruns.
According to data published by the Department of Health and Human Services, the cost of the computer cloud that stores cost, coverage, and performance data for insurance plans sold under the Affordable Care Act (also called the ACA or Obamacare) has more than tripled since the contract was originally awarded in 2011. Press reports indicate that the Centers for Medicare and Medicaid Services (CMS) awarded a $10.8 million contract to Terremark – a subsidiary of Verizon – early in 2011. The contract called for the company to design a system to help consumers find an insurance plan and transfer it to CMS' computer cloud, among other duties. This week CMS announced the contract is now for $35.5 million – more than triple the original amount.
And how about all the bad news about limited choice in the infamous Obamacare exchanges.
Only one company will participate in West Virginia's new individual health insurance marketplace. Media outlets report that Highmark Blue Cross Blue Shield and Carelink/Coventry applied and were accepted to participate in the individual marketplace. But Carelink/Coventry has withdrawn. …The health insurance marketplace is part of the Affordable Care Act. Enrollment begins Oct. 1. Coverage will begin Jan. 1, 2014.
Or rising insurance costs.
For the vast majority of Americans, premium prices will be higher in the individual exchange than what they're currently paying for employer-sponsored benefits, according to a National Journal analysis of new coverage and cost data. Adding even more out-of-pocket expenses to consumers' monthly insurance bills is a swell in deductibles under the Affordable Care Act. Health law proponents have excused the rate hikes by saying the prices in the exchange won't apply to the millions receiving coverage from their employers. But that's only if employers continue to offer that coverage–something that's looking increasingly uncertain. Already, UPS, for example, cited Obamacare as its reason for nixing spousal coverage.
So let's add all this up. Our privacy will be compromised, our choices will be limited, our costs will increase, and the government will squander more of our money. All for a law that even left-wing groups are learning to despise.
That's why I almost feel sorry for the President and his media flunkies.
But notice I said "almost." In reality, I feel zero empathy for those who undermine our freedom with statism.
Indeed, I want to add to their misery with some satire. So let's close this post with a few new Obamacare cartoons, starting with this gem from Steven Breen.
Gary Varvel adds his insight.
And here's a clever cartoon from Lisa Benson, though let's hope and pray something saves us from single-payer.
Last but not least, Bob Gorrell shows the overall impact of this costly new entitlement on the economy.
I have plenty of additional Obamacare cartoons here, here, and here, all of which help mock a bad law.
But let's remember a very serious point. As suggested by the Benson cartoon, the left sees Obamacare as a stepping stone to single-payer. And if you think Obamacare's a mess, I invite you to peruse the horror stories about the U.K. system linked at the bottom of this post.
Is the Left's New Attack on Self Insurance an Example of Obamacare Sleaze and Corruption or an Example of Why Government-Run Healthcare Doesn't Work?
Posted in Big Government, Government intervention, Health Care, Health Reform, tagged Big Government, Government intervention, Government-Run Health Care, Health Reform, Obamacare on September 13, 2013| 3 Comments »
I've written about how Obamacare is a costly boondoggle.
I've written how it victimizes children, low-income workers, and retirees.
And I've explained how it exacerbates the real problem in our healthcare system.
I've even pointed out that there's something good in the law.
But I've never bothered to discuss how bad laws usually aren't as damaging as we think because folks in the private sector often figure out ways to work around some of the most onerous rules created by our overlords in Washington.
For example, some employers have figured out how to avoid Obamacare while still providing health insurance.
That's the good news. The bad news is that the crowd in Washington is diligently working to make the law worse.
The Wall Street Journal has a must-read editorial on the left's "crackdown on the booming ObamaCare alternative known as self-insurance." It starts with a brief description of the ERISA law that allows self insurance – including the fact that those who self insure escape the costly and corrupt state-level mandates that cause regular insurance policies to be needlessly expensive.
Under this model, businesses and many unions bypass commercial health plans and instead pay directly for the medical claims of their workers. Self-insured plans enjoy lower costs and more flexibility because they are insulated from state regulations and mandates under a 1974 federal law known by the acronym Erisa.
While ERISA traditionally was something that only big firms could utilize, many small employers are now looking at self insurance as a way of providing health insurance to their employees without getting dragged into the costly swamp of Obamacare.
Self-insurance used to be concentrated among national companies that could spread risk over large pools of employees. But self-insurance is now filtering down to businesses with 199 workers or fewer, as a hedge against ObamaCare's federal mandates and the danger that costs on its small-business exchanges will soar. Some insurers are now selling popular products that allow groups as small as 25 to self-insure. In a 2012 study, the Urban Institute found ObamaCare's incentives will cause as many as 60% of small firms to convert without regulatory changes.
Needless to say, the left is unhappy about this development because Obamacare only "works" if a large amount of people are forced to join the infamous exchanges.
So does this mean they'll try to fix what's wrong with Obamacare? Of course not. Instead they want to limit the freedom to self insure.
…the White House, liberal pressure groups and state and federal regulators are trying to close what they call the self-insurance "loophole" before more escape. Their political and actuarial fear is that if enough businesses don't join, the exchanges could fail because too few younger and healthier people will subsidize everybody else. …Note how businesses that pay for their workers' health care are suddenly a "threat." Wasn't coverage the point of ObamaCare?
You probably won't be surprised to learn that the statists aren't trying (at least for now) to repeal the ERISA law. That would generate hostility from big companies, many of whom are in bed with the politicians. Instead, there's an effort underway to screw small employers.
…the left's political target is so-called stop-loss insurance that is essential to the little guys. Unlike corporate America, small employers are more exposed to the risk of a single high-cost case of serious illness, so they buy this form of catastrophic coverage as a self-insurance backup. Liberals are pushing state legislatures to outlaw stop-loss policies for small and mid-sized business. Another poison pill is fixing the dollar levels where stop-loss policies are allowed to start paying—aka "attachment levels" akin to deductibles—so high that they are too risky for small businesses to buy.
The details are not overly important. All you need to understand is that politicians and bureaucrats want to make self insurance either illegal or impossibly expensive for small employers.
So what's the bottom line? The WSJ editorial hits the nail on the head with these concluding words.
President Obama famously promised that if you like your health plan you can keep it, but this Erisa gambit will also scramble the plans of the businesses that already self-insure as a safe harbor. …Liberals hate Erisa's pluralism in favor of total government control, and small business is merely the appetizer.
Amen. Many of the left don't like things such as pluralism, federalism, and competition. Instead, they are motivated by a perverse desire to make everyone equal, even if it means we're all suffering equally. Particularly if that suffering facilitates a redistribution scheme.
In the title to this post, I asked whether the attack on self insurance is an example of sleaze and corruption or an example of why government intervention doesn't work. The obvious answer to that question – as perfectly illustrated by this poster – is "Yes, all of the above."
There's cronyism because the government is hurting small employers and protecting big business. But there's also run-of-the-mill government failure, which inevitably happens when you make productive behavior more costly while also creating incentives for more dependency.
I frequently close my posts by sharing some humor. And if you're looking for a chuckle, there are some great Obamacare cartoons here, here, and here.
But today I want to finish up with a serious point. While it's increasingly obvious that Obamacare won't work, that doesn't mean it will collapse on its own. You need new legislation to undo the damage caused by previous legislation (as well as all the other programs and intervention that existed before Obamacare).
Fortunately, I have a six-part hypothesis explaining why we should be optimistic that this can happen.
Least Surprising News Flash Ever: Study Finds Bureaucrats Are Lazy
Posted in Big Government, Bureaucracy, Bureaucrats, Government Spending, tagged Big Government, Bureaucracy, Bureaucrats, Government Spending on September 12, 2013| 22 Comments »
I've shared some remarkable data showing that bureaucrats get paid more than people in the private sector.
I've also dug into the Department of Labor's JOLTS data to debunk those who argue bureaucrats aren't overpaid.
I've even showed that they work fewer hours (though that's probably a good thing since presumably the nation will be in better shape if bureaucrats are out of the office rather than molesting people in the economy's productive sector).
Well, now we can add something else to the list, though it won't surprise anybody who has been to the Post Office, DMV, or tried to generate any sort of action from a government agency. It turns out that bureaucrats are lazy. Here are some interesting excerpts from a National Post column from Canada.
Who says civil servants are lazy? Well, they do actually. The study that finds these effects is based on a social survey that asked people to agree or disagree, on a scale of one to seven, with the statement "I see myself as someone who tends to be lazy," with the endpoint options being "Does not apply to me at all" and "Applies to me perfectly." …the survey in question was for Germany for the years 2004-5. (The just-published analysis of its results has been done by Robert Dur and Robin Zoutenbier, economists at the Erasmus University Rotterdam.) …if there was a country where you'd think people would be ashamed to admitting to laziness, it's probably Germany. So if the story holds there, it probably holds everywhere. …What results do the Rotterdam economists get? When they control for other things that are both correlated with self-declarations of…laziness and also differ systematically across sectors, such as age, gender, education, family status and so on, it does turn out that public-sector workers tend to be…more lazy than private-sector workers. A one-unit increase in self-declared laziness on that seven-unit scale increases the likelihood of a person's being in the public sector by almost one per cent. …Turning the data around, the results suggest that workers who are…lazy have a probability of almost exactly one-third of working in the public sector. By contrast, workers who self-declare as…energetic have only about a one-fifth chance of ending up in the public sector.
Gee, knock me over with a feather. Lazy people are more likely to work for the government. And they even admit it!
However, it seems that there are some causation/correlation issues. It may be that you don't work for the government because you're lazy. Instead, working for the government may make you lazy.
When the researchers looked only at younger workers they found that…there was no difference in laziness. Only with people further along in their careers did the correlation between laziness and the public sector show up. Either it takes time for lazy people to find their public sector niche or naturally energetic people get worn down by the bureaucracy. They learn laziness.
As a taxpayer, I confess this causes me some mixed feelings. I'm irked that bureaucrats are getting lavishly compensated at my expense. And I don't like the idea of them goofing off while playing Solitaire or updating their Facebook pages.
But then I remind myself that this may be the least-destructive way for them to occupy their time. Sure beats them being hard at work coming up with crazy new regulations.
In any event, this chart shows that American taxpayers at least can be thankful we're not in Denmark.
Or any of the Nordic countries. I don't know if bureaucrats in those nations are lazy, but they sure are expensive.
And I'm surprised that Japanese bureaucrats are relatively inexpensive, particularly when the nation's long-run fiscal outlook is so bad.
P.S. Since we're making fun of bureaucrats, here's a good jab at the Post Office from Jimmy Kimmel. And to see how government operates, we have the Fable of the Ant. But this Pearls before Swine cartoon strip is my favorite.
Two Huge Victories in Colorado for the Second Amendment
Posted in 2nd Amendment, Election, Gun control, tagged Election, Gun control, Second Amendment on September 11, 2013| 25 Comments »
Back in 2012, I reported on some academic research showing that Democrats lost about 25 seats in the 2010 mid-term elections because of support for Obamacare.
But it's not just big-government entitlement programs that are politically unpopular. Bill Clinton admitted that his ban on so-called assault weapons boomeranged against Democrats in the 1994 elections and he acknowledged that "The N.R.A. could rightly claim to have made Gingrich the House speaker."
But we don't have to go back nearly 20 years to find evidence showing that gun control is unpopular.
In a remarkable development, two incumbents from the Colorado State Senate – including the Senate President – were ousted yesterday from their seats in a special recall election. Here's some of what's being reported in this morning's Denver Post.
An epic national debate over gun rights in Colorado on Tuesday saw two Democratic state senators ousted for their support for stricter laws, a "ready, aim, fired" message intended to stop other politicians for pushing for firearms restrictions. Senate President John Morse and Sen. Angela Giron will be replaced in office with Republican candidates who petitioned onto the recall ballot.
What makes these results so amazing is that voters in these Senate seats have a history of voting for leftists. Obama won both of them comfortably, garnering 59.7 percent and 61.2 percent of the vote. Neither seat could be considered red-state territory.
…[Giron's] district is heavily Democratic, Pueblo is a blue-collar union town. Morse's district included Manitou Springs and a portion of Colorado Springs — and more liberals. …It's unclear when the city of Pueblo was last represented in the Senate by a Republican.
It's also worth noting the unprecedented nature of this election.
The turn of events made Morse and Giron the first Colorado state lawmakers to be recalled.
The pro-Second Amendment backlash also is causing a headache for the state's governor, who was once seen as a politician with national potential.
Gov. John Hickenlooper — once deemed so unbeatable that the GOP couldn't even find a candidate to run against him in 2014 — now faces falling approval ratings and a crowded field of Republican contenders, in part for backing stricter gun measures.
Last but not least, the Atlas Project (don't know what that is or who they are, but they have lots of good data on the recall election) reports that the anti-Second Amendment people had a huge money advantage, outspending supporters of the Constitution by a 5-1 margin.
Republicans trail badly in the money race. In total, Democratic groups have raised over $2.6 million and spent almost $2.3 million in the two races. Republican interests have raised not even $523,000 and spent less than $482,000. Clearly, Democrats are taking the recall threat seriously and are both better funded and better organized.
In other words, even though there had never been a successful recall in Colorado history, and even though advocates of gun rights were targeting Senators in two districts that voted overwhelmingly for Obama, and even though the statists had a huge money advantage, what mattered most was that voters did not want their gun rights eroded by politicians.
Opponents of the Second Amendment probably thought they could win because they weren't trying to ban guns (at least not in the short run). Instead, they "merely" required background checks and restricted large-capacity magazines. But the people of Colorado recognized and understood that the pro-gun control cranks such as Mayor Bloomberg view "modest" gun control schemes as nothing more than stepping stones to gun bans and gun confiscations.
Polling data shows the American people would engage in massive civil disobedience if politicians tried to ban guns. But it's also comforting that voters also are willing to overcome heavy odds to knock off politicians who push for any type of gun control.
This is one further bit of evidence that we should be optimistic about the future of the Second Amendment. The political elite may want the American people disarmed, but we've seen major progress in the other direction in recent years because of pressure from ordinary Americans. Not only have pro-gun control politicians been punished, but dozens of states have taken steps to expand and protect the rights of gun owners.
And let's not forget how Obama's attempt to exploit the Connecticut school shooting flopped.
That being said, we should never get overconfident. Yes, it's good that some honest liberals (here and here) have recognized that gun control is misguided. And it's great that we have powerful polling data from cops showing that they realize gun control does not mean less crime.
But there are still lots of politicians hoping to take advantage of some future tragedy to push their statist anti-gun agenda. Simply stated, eternal vigilance is the price of liberty.
P.S. Click here and here for links to some good anti-gun control humor, but I want to close by sharing a link to this poster, which seems to drive leftists crazy and deservedly is the fourth-most viewed post in the history of my blog.
The Inbred Corruption of Washington
Posted in Big Government, Corruption, Cronyism, Sleaze, tagged Big Government, Corruption, Cronyism, Sleaze on September 10, 2013| 49 Comments »
At the risk of oversimplifying, there are two major challenges to overcome when you're a pro-freedom policy wonk in Washington.
The first challenge is getting people to connect the dots.
They may understand that the job market is weak and they may understand that redistribution programs are overly generous, but can you help them understand that the job market is weak in part because redistribution programs make work relatively unattractive?
They may understand that the federal government is bloated and they may understand that there's a big problem with corruption in Washington, but can you make them understand that there's a lot of sleaze in Washington because government has so much power?
They may understand that the corporate tax burden is very high and they may understand that American companies sometimes aren't very competitive, but can you help them understand that it's difficult for firms to compete because they're saddled with high tax rates?
The second challenge is getting policy makers to do the right thing when doing the wrong thing means more money and power for the political class.
Let's consider the problem of corruption. And I don't just mean illegal corruption, though there's plenty of that in Washington. I'm talking about the everyday graft and sleaze that is perfectly legal, such as when dozens of politicians are caught red-handed supporting legislation that would line their pockets.
Using fiscal policy as an example, how do you get these people to do the right thing? They may understand – at least conceptually – that the United States faces a huge long-run fiscal nightmare because of an ever-growing burden of government spending. They may even vote for the Ryan budget, which theoretically commits them to supporting meaningful entitlement reform.
But the real fight occurs when you ask them to support policies – such as sequestration – that actually slow the growth of Leviathan and require them to say no to lobbyists. Particularly when many lobbyists are their former colleagues and staffers!
To get a sense of what I mean, check out these excerpts from a book review in The Economist.
Washington has always had a permanent establishment of politicians, lobbyists and journalists. But this class has exploded in size in recent decades, and has become more introspective and self-serving. …The lobbying industry has spent billions greasing the revolving door: in 2009 alone, special interests spent $3.47 billion lobbying the federal government. In 1974 3% of retiring policymakers became lobbyists. Now 50% of senators and 42% of congressmen do. …a "change election" that was supposed to sweep aside the old order and create a politics fit for the 21st century. …But the Washington machine soon took over. …once in the capital, these same figures cashed in on their public service by getting lucrative jobs as lobbyists, bankers or talking heads. David Plouffe, an adviser to the president, joined the jackals at Bloomberg television. Mr Orszag went to Citigroup. Meanwhile, the city's politicos grew richer while the rest of the country was mired in recession. Washington now has a higher income per person than Silicon Valley.
The final sentence of that passage is very depressing. Or it should be. Do we really want a society where becoming part of the political machine is the easiest path to wealth? Are there any nations that have prospered using that model?
Or is that a symptom of a country on a downward slide?
I don't know the answer, but it's very depressing to look at this map and see that 10 of the 15 richest counties in the nation are part of the Washington metropolitan area.
We now have something akin to an imperial capital being supported by coerced tribute from the serfs in the outer provinces.
And as this video explains, all of this unearned wealth is made possible by a bloated budget, a Byzantine tax code, and a maze of complicated regulations.
P.S. The latest example of Washington graft is the way that Obamacare has turned into a get-rich-quick scheme for DC insiders.
P.P.S. Down in Louisiana, Boudreaux and Thibodeaux have a rather sensible view about political corruption.
The Mexican Version of Obamanomics Won't Work any Better than the American Version
Posted in Big Government, Economics, Government Spending, Higher Taxes, Tax Increase, Taxation, tagged Big Government, Economics, Government Spending, Higher Taxes, Mexico, Tax Increase, Taxation on September 9, 2013| 19 Comments »
Based on the dismal data from the Minneapolis Federal Reserve (as well as our own experiences), we know Obamanomics doesn't work in the United States.
But we also know bigger government doesn't work in France. And we know it doesn't work in Japan. We know it doesn't work in Spain. We know it doesn't work in Argentina. We know it doesn't work in Greece.
I could continue, but I think you get the point.
But some people never learn. The President of Mexico has unveiled a new scheme to increase taxes to finance bigger government. Here are some details from the New York Times.
President Enrique Peña Nieto proposed on Sunday a sweeping overhaul of his country's tax system, intended to collect billions of dollars to finance new social programs. …Mr. Peña Nieto described the broad outlines of his plan, which would eliminate many loopholes and exemptions that favor the richest Mexicans. He proposed new taxes on capital gains, carbon emissions and soft drinks, and increased income taxes for those making over about $39,000 a year.
But give Senor Nieto credit. Unlike most politicians, who claim that higher taxes are for deficit reduction, he freely admits that he wants to expand the welfare state and create more dependency.
…the revenue it would generate would pay for a new universal pension for all Mexicans over 65, a new unemployment insurance scheme and more spending for schools and infrastructure.
Amazingly, there are some who think a bigger burden of government spending will improve Mexico's anemic economy.
…he is trying to swiftly inject some dynamism into an economy that has failed to grow any faster than 2 percent a year, on average, since 2001.
Yeah, good luck with that. I'm still waiting for someone to show me an example of a nation that became prosperous by making government bigger (and if any leftist readers say the Nordic nations, I'll simply point out that they became wealthy when government was small and that their economies have grown much slower since the welfare state was adopted).
But Nieto is probably right about his policies transforming Mexico.
"In the next months, we will be deciding what history we are going to write for the next decades," Mr. Peña Nieto said last week in the annual presidential address on the state of the nation. "We have 120 days for 2013 to be remembered as a year of great transformations."
Just like 1917 was a year of transformation for Russia.
While it appears that the government has the votes to push through its bad plan, there are a few rational voices in Mexico.
…analysts warn that collecting more taxes will not solve Mexico's problems unless the government changes the way it spends them. "Before a new wave of taxes," Mr. Pardinas of the Institute for Competitiveness said, "there should be a re-engineering of public spending. We know there are obscenities in public spending."
Heck, maybe we can get Mr. Pardinas to come to Washington. We have plenty of obscenities in our budget.
But let's maintain our focus on Mexico. The first thing I do when I analyze any nation is to look at the data from Economic Freedom of the World. As you can see from the chart, Mexico is suffering from statism. It ranks only 91 out of 144 nations and it's score has dropped significantly since 2005.
That being said, if you scroll down to page 114 and look at the details, you'll also see that Mexico's best grade (or, to be more accurate, the country's least-worst grade) is for fiscal policy.
Mexico's bigger problems are in the areas of trade policy, rule of law, monetary policy, and regulation. So it's theoretically possible that President Nieto could make Mexico more prosperous if he raised taxes while simultaneously adopting significant free-market reforms for other sectors of the economy.
But don't hold your breath waiting for that to happen. Politicians who support bad policy in one area generally tend to support bad policy in other areas.
As explained in this video, the recipe for prosperity is free markets and small government. Well, Mexico doesn't have free markets and its President now wants to compound the damage by increasing the size of government.
Anybody want to guess how this turns out?
Personal Retirement Accounts Are Great…but only if You Can Stop Future Politicians from Confiscating the Accumulated Wealth
Posted in Economics, Entitlements, Government Thuggery, Social Security, Social Security Privatization, tagged Economics, Entitlements, Government Thuggery, Poland, Social Security, Social Security Privatization on September 8, 2013| 13 Comments »
Most Western nations have huge long-run fiscal problems because of unfavorable demographics and misguided entitlement programs.
That's the bad news.
The good news is that dozens of nations have fully or partially shifted to mandatory private savings as a pro-growth way of modernizing bankrupt tax-and-transfer Social Security systems.
But good news in the short run doesn't mean good news in the long run if greedy politicians decide to loot the wealth accumulated in personal retirement accounts.
That's already happened in Argentina and Hungary, and now it's happened in Poland. Here's part of a Financial Times report about the government stealing money from private pension funds.
Poland's government on Wednesday took an axe to part of the country's pension system in a bid to bolster public finances. Premier Donald Tusk said that part of the country's obligatory pension system run by private funds would be dramatically revamped, with 120bn zlotys ($37bn) in government bonds held by the 14 funds being transferred to the government pension scheme and cancelled… The funds will keep control of the 111bn zlotys they hold in equities and current benchmarks will be loosened. The funds will be banned from investing in more government debt. Tusk said that the millions of Poles currently enrolled in the privatised system would have the choice of staying in the scheme or of transferring their assets into the government-run pension system. Market reaction to the long anticipated move was negative. The Warsaw Stock Exchange, where the private funds, known as OFEs, have a big presence, was down by more than 2 per cent. Yields on 10-year Polish government bonds jumped to 4.75 per cent, the highest in a year.
Is anyone surprised by the "negative" reaction?!? Of course markets are unhappy when politicians arbitrarily seize wealth for short-term political games!
Sounds like Poland wants to become the Argentina of Europe. Though there's always plenty of competition in the contest for bad government policy.
But we do have a bit of good news.
Here is some interesting polling data from an article on the political preferences of young Americans.
…51 percent of Millennials believe that when government runs something it is usually wasteful and inefficient, up from 31 percent in 2003 and 42 percent in 2009: "Hardly a ringing endorsement for a bigger government providing more services." There's more: 86 percent of Millennials support private Social Security accounts and 74 percent would change Medicare so people can buy private insurance. Sixty-three percent believe free trade is a good thing. Only 38 percent of Millennials support affirmative action.
Wow, 86 percent of young people support personal retirement accounts. That's very encouraging, particularly since the general population supports this pro-growth reform by a more-than 2-1 margin.
Here's a video that explains why a privatized or "personalized" Social Security system is the only way of dealing with the current system's bankruptcy without screwing younger workers.
I think the video is a good summary explanation, but I also invite you to look at these two charts, one showing the impressive private wealth being accumulated in Australia thanks to personal retirement accounts and the other showing the staggering future shortfalls for America's pay-as-you-go Social Security scheme.
If those charts don't convince you, I suspect you're a genetic statist.
P.S. The thievery of the Polish government is a helpful reminder of why it's good to have some of your money offshore, preferably managed by a non-US company. After all, does anyone doubt that American politicians are capable of the same venal behavior? They're probably looking at the money in IRAs and 401(k)s and salivating at the thought of how many votes they could buy with all that money. If (or when) that tragic day arrives, the Americans who have their money beyond the grasp of the federal government will be very happy.
P.P.S. Here's a good joke about the Social Security system. Except it's not really a joke because it's too close to the truth.
P.P.P.S. You can see President Obama's proposed "solution" to the Social Security crisis by clicking here. I don't think you'll be surprised to learn that it means a big shift of money from taxpayers to politicians.
Even John McCain Is Having Second Thoughts about the Wisdom of Drug Prohibition
Posted in Crime, Drug War, Freedom, Libertarianism, Liberty, tagged Crime, Drug War, Freedom, Libertarianism, Liberty, War on Drugs on September 7, 2013| 20 Comments »
What do John Stossel, Mona Charen, Gary Johnson, Pat Robertson, Cory Booker, and Richard Branson all have in common?
And let's add voters from the states of Colorado and Washington to this list. So what unites this unusual collection of people?
They've all expressed doubts about the War on Drugs. And that's a good thing.
As explained in this video, the Drug War has been a very costly failure. Indeed, it's been such a boondoggle that we can now add John McCain to the list of those who think maybe it's time to consider decriminalization.
Sen. John McCain (R-AZ) signaled Thursday that he's receptive to legalizing pot. Tim Steller, a columnist for the Arizona Daily Star, reported over Twitter from a town hall in Tucson, Ariz. that McCain cited the "will of the people" in expressing an openness to legalization.
I'm glad Senator McCain is moving in the right direction, though I'm not sure I like his reasoning. The "will of the people" sometimes means two wolves and a sheep voting on what to have for lunch.
I much prefer the logical arguments of my Cato colleague Jeffrey Miron, who is a Senior Lecturer in economics at Harvard. Here's some of what he recently wrote for the Huffington Post.
I have come to regard legalization as a policy no-brainer. Virtually all the effects would be positive, with minimal risks of significant negatives. An important piece of that research has been examination of drug policy in the Netherlands, where marijuana is virtually, although not quite technically, legal.
Jeff just visited Amsterdam and here's what he found in that supposed den of iniquity.
Legalization advocates point to Amsterdam as evidence that legalization works, at least for marijuana. Legalization critics, such as former White House Drug Czar Gil Kerlikowske, believe instead that Dutch policy is flawed, generating crime and nuisance effects. Only first-hand observation could give me a clear view of which description is more accurate. …the Red Light District could not have felt safer or more normal. Yes, marijuana was widely available. …But nothing about the District felt unsafe, or suggested elevated crime or violence; I have felt less safe in many American and European cities. …The absence of violence is not surprising. Prohibition, not drug use, is the main reason for the association between violence and drugs, prostitution, gambling, or any banned good. In a legal market, participants resolve disputes with lawyers, courts, and arbitration. In an illegal market, they cannot use these methods and resort to violence instead. Thus the critical determinant of violence is whether an industry is legal, as the history of alcohol prohibition illustrates. That industry was violent during the 1920-1933 period, when the federal and many state governments banned alcohol, but not before or after. And if the government banned tobacco, or coffee, or ice cream, or any good with substantial demand and imperfect substitutes, a violent black market would arise.
There's no evidence, by the way, that legalization means more drug use.
In 2009, the past year marijuana use rate was 11.3 percent in the United States but only 7.0 percent in the Netherlands. This does not prove that legalization lowers drug use; many other factors are at play. But these data hardly support the claim that prohibition has a material impact in reducing use. When we were toured Amsterdam on a canal barge, the guide commented that, "Despite legal drugs and prostitution, Amsterdam is a safe city." My son, who has heard me rant about prohibition for years, looked up and quipped, "He should have said "Because drugs and prostitution are legal, right?" Exactly.
Sounds like Jeff's done a good job as a father (and if I'm allowed to brag, I haven't done a bad job either).
In closing, let me emphasize that libertarian does not mean libertine. My Republican friends are wrong when they think libertarians are like the guy in the upper left of this poster.
You can support legalization without being a drug user or without thinking that it's a good idea for other people to smoke pot. Heck, I'm probably one of a small minority of people in my generation to never try any drug.
But that doesn't mean I want to squander lots of tax money and reduce human freedom to persecute others who are engaged in victimless activities. Especially when it means a massive increase in the power of government!
Let's not forget, after all, that politicians used the Drug War as an excuse to enact reprehensible and costly laws on asset forfeiture and money laundering. One foolish policy leads to a couple of other misguided policies. That's Mitchell's Law on steroids!
Must-Read Article about Germany's Green-Energy Disaster
Posted in Boondoggle, Corruption, Cronyism, Environmentalism, Germany, Government intervention, Subsidies, Taxpayer Ripoff, tagged Boondoggle, Carbon Tax, Corruption, Cronyism, Environmentalism, Germany, Government intervention, Green Energy, Subsidies, Taxpayer Ripoff on September 6, 2013| 19 Comments »
I've written before that Obama's Solyndra-style handouts have been a grotesque waste of tax dollars.
I've argued that they destroy jobs rather than create jobs.
I've gone on TV to explain why government intervention in energy creates a cesspool of cronyism.
I've even shared a column from Obama's hometown newspaper that criticizes the rank corruption in green-energy programs.
And it goes without saying that I've disseminated some good cartoons on the issue.
But even though green-energy programs are a disgusting boondoggle, American taxpayers and consumers should be thankful they're not in Germany.
Our programs may be wasteful and corrupt, but we're amateurs compared to what's happening on the other side of the Atlantic.
Here are some passages from a must-read story in Der Spiegel.
The government predicts that the renewable energy surcharge added to every consumer's electricity bill will increase from 5.3 cents today to between 6.2 and 6.5 cents per kilowatt hour — a 20-percent price hike. German consumers already pay the highest electricity prices in Europe. But because the government is failing to get the costs of its new energy policy under control, rising prices are already on the horizon. Electricity is becoming a luxury good in Germany.
As is so often the case with government intervention, the promises from politicians about low costs were a mirage.
Even well-informed citizens can no longer keep track of all the additional costs being imposed on them. According to government sources, the surcharge to finance the power grids will increase by 0.2 to 0.4 cents per kilowatt hour next year. On top of that, consumers pay a host of taxes, surcharges and fees that would make any consumer's head spin. Former Environment Minister Jürgen Tritten of the Green Party once claimed that switching Germany to renewable energy wasn't going to cost citizens more than one scoop of ice cream. Today his successor Altmaier admits consumers are paying enough to "eat everything on the ice cream menu."
Perhaps the most shocking part of the story is that Germans are being forced to pay $26 billion in subsidies to get less than $4 billion of green energy.
For society as a whole, the costs have reached levels comparable only to the euro-zone bailouts. This year, German consumers will be forced to pay €20 billion ($26 billion) for electricity from solar, wind and biogas plants — electricity with a market price of just over €3 billion. Even the figure of €20 billion is disputable if you include all the unintended costs and collateral damage associated with the project. …On Thursday, a government-sanctioned commission plans to submit a special report called "Competition in Times of the Energy Transition." The report is sharply critical, arguing that Germany's current system actually rewards the most inefficient plants, doesn't contribute to protecting the climate, jeopardizes the energy supply and puts the poor at a disadvantage.
Here's what it means for ordinary people.
In the near future, an average three-person household will spend about €90 a month for electricity. That's about twice as much as in 2000. Two-thirds of the price increase is due to new government fees, surcharges and taxes. …Today, more than 300,000 households a year are seeing their power shut off because of unpaid bills. Caritas and other charity groups call it "energy poverty."
Not surprisingly, politically well-connected interest groups are the ones reaping the benefits.
…the renewable energy subsidies redistribute money from the poor to the more affluent, like when someone living in small rental apartment subsidizes a homeowner's roof-mounted solar panels through his electricity bill. The SPD, which sees itself as the party of the working class, long ignored this regressive aspect of the system. The Greens, the party of higher earners, continue to do so. Germany's renewable energy policy is particularly unfair with respect to the economy. About 2,300 businesses have managed to largely exempt themselves from the green energy surcharge by claiming, often with little justification, that they face tough international competition. Companies with less lobbying power, however, are required to pay the surcharge.
Let's conclude with an ominous excerpt from the article. Even though prices already are very high, energy will get even more expensive in the future.
If the government sticks to its plans, the price of electricity will literally explode in the coming years. According to a current study for the federal government, electricity will cost up to 40 cents a kilowatt-hour by 2020, a 40-percent increase over today's prices.
And isn't it nice to know that Obama is doing everything he can to impose these policies in the United States?
This cartoon from Michael Ramirez is a perfect summary of Obama's policy.
You can see why Ramirez won my political cartoonist contest.
P.S. I don't like being the bearer of bad news, but green-energy subsidies are just one part of the statist/green agenda. The IMF, for instance, has recommended a huge carbon tax (about $5,500 per year for a family of four!) for the United States. A few gullible folks think this might not be a bad idea if the money gets used to lower other taxes, but they're the same people who get suckered into buying oceanfront property in Kansas.
P.P.S. Germany may be more responsible (less irresponsible) than certain other European nations, but the country's political elite is hopelessly statist. Even the supposedly pro-liberty political party tilts left and wants bigger government. Yet the Washington Post still thought it was appropriate and accurate to declare that Germany is "fiscally conservative." Sure, and I'm a socialist.
P.P.P.S. But at least the mess in Europe has generated some amusing videos (here, here, and here), as well as a very funny set of maps.
Tax Havens and Tax Competition Are Crucial if We Want to Restrain Predatory Government
Posted in Economics, Financial Privacy, Fiscal Policy, Jurisdictional Competition, Sovereignty, Tax Competition, Tax Haven, Taxation, tagged Economics, Financial Privacy, Fiscal Policy, Jurisdictional Competition, Sovereignty, Tax Competition, Tax Haven, Taxation on September 5, 2013| 45 Comments »
I'm very worried about America's fiscal future. Simply stated, data from several sources (BIS, OECD, and IMF) indicates that we face a future Greek-style fiscal crisis unless policy makers implement genuine entitlement reform.
Unfortunately, politicians have little incentive to control spending and reform programs if they think that higher taxes are an option.
So how do we control their appetite for more revenue? There's no silver bullet solution, but part of the answer is that we need tax competition and tax havens. Politicians are less likely to over-tax and over-spend if they're afraid that the geese that lay the golden eggs can fly across the border.
In other words, tax competition is a necessary but not sufficient condition to promote good policy. And that's why I'm willing to defend tax havens, even if it requires bringing a message of liberty to traditionally hostile audiences such as readers of the New York Times and viewers of CNN.
That's also why I share well-written and compelling articles on the topic, such as this editorial by Pierre Bessard from Switzerland's Liberales Institut and this column by Allister Heath of England's City AM business newspaper.
I have a new piece to add to this collection. Professor Philip Booth and Dr Richard Wellings of the London-based Institute of Economic Affairs have produced a succinct and powerful case for tax competition and tax havens.
Here are some excerpts from the article they wrote for IFC Review. They start by warning that politicians have done a crummy job in most developed nations.
If we consider the performance of high-tax Western countries in recent years – which includes, amongst others, every EU country, plus the US – it has been pretty grim. These are countries which, despite their high levels of taxation, are building up huge debts. These countries also regulate their financial systems heavily, often through bodies which have huge discretion, and yet they have recently suffered the worst financial crisis since the Second World War. You would think that it would be this model – the corporatist model of high taxes and extensive regulation – that would be coming under scrutiny. However, like small children who wish to shift the blame, the EU is focusing its attention on International Financial Centres (IFCs).
Well said, though I would make one small correction. These nations have "huge debts" in part because of – not "despite" – "high levels of taxation." That's because of the Laffer Curve causing revenues to be lower than expected when taxes are raised and also because politicians can't resist spending any revenue that is generated.
Returning to the article, Booth and Wellings make the important observation that these so-called tax havens largely exist because of bad policy in other nations.
Just as offshore centres came into being as a result of incompetent regulatory and tax policy from the US government in the 1960s and 1970s, these centres are just as important today in ensuring the free flow of international capital. The nature of our corporation tax systems is such that investors can be taxed several times over on the same profits. Companies can be taxed when they make profits; investment funds can be taxed on their returns; and investors in funds can be taxed by their home tax authorities. In addition, capital gains tax systems often end up taxing companies when their share price rises as a result of the retention of profits or the anticipation of future profits even though extra tax is levied on those profits when they accrue. If governments reformed their corporation tax systems so that they were coherent and focused on the shareholder rather than on the activities of companies themselves, there would be much less need for IFCs.
Amen. If politicians in high-tax nations really want to hurt tax havens, they should lower tax rates and reform their tax systems.
But I'm not holding my breath waiting for that to happen, so we need some external pressure to encourage good policy.
Booth and Wellings explain how tax competition leads to better policy, which leads to better economic performance.
…competition brings major economic benefits. There are very strong incentives for politicians to increase public spending (and hence taxes) in order to gain the support of powerful special interest groups and raise their chances of re-election. Partly as a result, most Western governments now confiscate around two-fifths of people's earnings. Such high tax rates mean many wealth-creating economic activities are no longer viable. Indeed, long-term studies suggest that every one per cent added to the level of taxation (as a share of GDP) tends to reduce economic growth by about 0.15 per cent a year. Accordingly, a 10 percentage point increase would decrease average growth rates by around 1.5 per cent a year. High rates of taxation therefore have a very significant and negative long-term impact on living standards.
But I think this passage is the most important part of the article. Tax competition is necessary to protect people from greedy and short-sighted politicians.
This is one reason why IFCs are so important. They act as a deterrent to predatory politicians who wish to raise tax rates to highly damaging levels. Policymakers know that, if they set tax rates too high, business activity will shift to lower tax jurisdictions. The point at which tax increases no longer result in additional revenue to governments is therefore shifted downwards by competition from IFCs. This means tax rates will tend to be closer to the optimal rate for economic growth.
The authors also explain that slower growth has a big impact on government finances.
Lower levels of overall economic output mean fewer resources are available to spend on areas such as health and education. Arguments that high tax rates are necessary to fund essential public services are therefore deeply flawed. High-tax, high-spend policies are entirely counter-productive since their negative effect on economic output inevitably results in lower public spending in the long term. While state spending may absorb a larger share of the economy under the high-tax approach, the overall size of the economy will be very much smaller, limiting the resources available to government.
In other words, if the statists want both prosperity and ample tax revenue, they're better off supporting modest-sized government and reasonable tax rates.
But this may be the fundamental divide between proponents of economic liberty and supporters of statism. Advocates of big government act as if they are more interested in punishing success than they are in enabling upward mobility for the less fortunate.
That seems perverse, but it's the explanation that matches their behavior.
But it's not my job to psychoanalyze statists. Let's close by sharing my video primer on tax competition.
By the way, Professor Greg Mankiw at Harvard has made very similar points.
P.S. Leftists love to criticize "tax havens," perhaps because they feel guilty about using them.
P.P.S. While the U.K. government is very misguided on fiscal policy issues (with the exception of Mark Field), there are a couple of Brits in the European Parliament. You'll enjoy these short speeches by Dan Hannan and Godfrey Bloom.
P.P.P.S. I'm happy to share the news that late-reporting precincts have pushed me into a tie in the Costco poll on whether governments should try to tax outside their borders and persecute low-tax jurisdictions. As I noted last month, I was trailing by a 51-49 margin (though even that was somewhat surprising since I thought the poll used misleading language). Anyhow, here's the debate and you can still cast a vote by clicking here.
P.P.P.P.S. Perhaps the most persuasive evidence is that the New York Times inadvertently admitted that tax competition is one of the few effective ways of fighting excessive government.
Turning New York City into Detroit?
Posted in Class warfare, Competitiveness, Economics, Fiscal Policy, Higher Taxes, Laffer Curve, Local government, New York, Tax Competition, Tax Increase, Taxation, tagged Class warfare, Competitiveness, Economics, Fiscal Policy, Higher Taxes, Laffer Curve, Local government, New York, Tax Competition, Tax Increase, Taxation on September 4, 2013| 9 Comments »
I recently speculated whether Detroit's fiscal problems should be a warning sign for the crowd in Washington.
The answer, of course, is yes, though it's not a perfect analogy. The federal government is in deep trouble because of unsustainable entitlement programs while Detroit got in trouble because of a combination of too much compensation for bureaucrats and too many taxpayers escaping the city.
A better analogy might be to compare Detroit to other local governments. Some large cities in California already have declared bankruptcy, for instance, and you can find the same pattern of overcompensated bureaucrats and escaping taxpayers.
And the same thing may happen to New York City if the next Mayor is successful in pushing for more class-warfare tax policy. Here are some excerpts from an excellent New York Post column by Nicole Gelinas.
Mayoral candidate Bill de Blasio…thinks New York can hike taxes on the rich and not suffer… De Blasio's scheme is this: Hike income taxes by 13.8 percent on New Yorkers making above half a million dollars annually. …After five years, de Blasio would let this tax surcharge lapse, and — he says — find another way to pay.
But there's a big problem with de Blasio's plan. Rich people are not fatted calves meekly awaiting slaughter.
In 2009, the top 1 percent of taxpayers (the 34,598 households making above $493,439 annually) paid 43.2 percent of city income taxes (they made 33.9 percent of income), according to the city's Independent Budget Office. Each of these families paid an average $75,477. No, most people won't up and leave (though if 20 percent did, they'd leave New York with less money than before the tax hike). But they can rearrange their incomes. Unlike most of us, folks making, say, $10 million have considerable control over how and when they get paid. That's because much of their money comes from cashing out a partnership, or selling stock or a house or a painting. To avoid a tax hike, it's easy enough for them to pay themselves earlier by selling their stuff earlier — before the tax hike. The city made $800 million in extra taxes last year because rich people sold their stuff before President Obama increased investment taxes in December. Or, people can pay themselves later — after the five years' worth of higher taxes are up.
Gelinas makes some very important points. She warns that the city would have less money if just 20 percent of rich people escaped. She doesn't think that will happen, but she does explain that rich people can stay but take some simple steps to reduce their taxable income.
This is because rich people are different from the rest of us. As I've previously explained with IRS data, they get the vast majority of their income from business and investment sources rather than from wages and salaries.
This means, as Gelinas notes, they have considerable control over the timing, level, and composition of their income.
So if Mr. de Blasio wins and succeeds in pushing through his tax agenda, don't expect to see much – if any – additional revenue. This will be a tailor-made example of the Laffer Curve in action.
In this video on class warfare taxation, I explain that the Laffer Curve is one of five reasons why soak-the-rich taxes are misguided.
I'll close by addressing a common argument from folks on the left. They assert that places such as New York City (or states such as California) can impose higher taxes because they provide more in exchange.
I sort of agree, though not with the notion that people are getting "more in exchange" from the politicians in New York City and California.
Instead, it's clear that some people are willing to pay more because they like the non-political features of NYC and the Golden State. For those who like museums, fancy dining, and Broadway shows, there's no easy substitute for New York City. And for people who like the ocean and a Mediterranean climate, it's hard to compete with California.
But there are limits. Last month, I shared a very powerful map from the Tax Foundation showing there's been a huge shift of taxable income out of New York and California between 2000 and 2010.
Governor Jerry Brown recently succeeded in pushing through a huge tax hike in California, so I expect even more people will leave that state, regardless of the climate.
And if Mr. de Blasio is elected and imposes a big tax hike in New York City, I suspect some rich people will decide enough is enough.
No, they won't move to Connecticut or New Jersey, both of which have become high-tax nightmares in recent decades. But there are a good handful of zero-income tax states, and the rich folks in New York City will figure out that there are also good restaurants in places such as West Palm Beach, Florida, and Austin, Texas.
Excellent Washington Post Editorial (Yes, Really) on School Choice
Posted in Education, Hypocrisy, Obama, School Choice, Union Bosses, tagged Education, Hypocrisy, Obama, School Choice, Union Bosses on September 3, 2013| 40 Comments »
School choice should be a slam-dunk issue. There's very powerful evidence that we can provide superior education for lower cost if we shift away from monopoly government schools to a system based on parental choice.
Yet some leftists oppose this reform, even though poor and minority kids would be the biggest beneficiaries. Here's some of what I wrote last year about how the left deals with this issue.
…the school choice issue exposes the dividing line between honest liberals and power-hungry liberals. Regardless of ideology, any decent person will favor reforms that enable poor kids to escape horrible government schools. Lots of liberals are decent people. The ones who oppose school choice, by contrast, are…well, you can fill in the blank.
The Washington Post, to its credit, belongs in the "decent" category. Here's some of the paper's editorial on school choice in Louisiana.
Nine of 10 Louisiana children who receive vouchers to attend private schools are black. All are poor and, if not for the state assistance, would be consigned to low-performing or failing schools with little chance of learning the skills they will need to succeed as adults. So it's bewildering, if not downright perverse, for the Obama administration to use the banner of civil rights to bring a misguided suit that would block these disadvantaged students from getting the better educational opportunities they are due.
The editorial eviscerates the nonsensical data that the Obama Administration is using as it puts the interests of powerful teacher unions above the needs of disadvantaged children.
The government argues that allowing students to leave their public schools for vouchered private schools threatens to disrupt the desegregation of school systems. …Since most of the students using vouchers are black, it is, as State Education Superintendent John White pointed out to the New Orleans Times-Picayune, "a little ridiculous" to argue that the departure of mostly black students to voucher schools would make their home school systems less white. …The government's argument that "the loss of students through the voucher program reversed much of the progress made toward integration" becomes even more absurd upon examination of the cases it cited in its petition. …a school that lost five white students through vouchers and saw a shift in racial composition from 29.6 percent white to 28.9 percent white. Another school that lost six black students and saw a change in racial composition from 30.1 percent black to 29.2 percent black. "Though the students . . . almost certainly would not have noticed a difference, the racial bean counters at the DOJ see worsening segregation,"… The number that should matter to federal officials is this: Roughly 86 percent of students in the voucher program came from schools that were rated D or F. Mr. White called ironic using rules to fight racism to keep students in failing schools; we think it appalling.
Not only appalling, but also hypocritical. The President is sending his children to an ultra-expensive private school, but doesn't want poor families to have any choice to get a good education.
Unfortunately, though, it is not a surprise from an administration that…has proven to be hostile — as witnessed by its petty machinations against D.C.'s voucher program — to the school choice afforded by private-school vouchers. …Louisiana parents are clamoring for the choice afforded by this program; the state is insisting on accountability; poor students are benefiting. The federal government should get out of the way.
Kudos to the Washington Post for urging a withdrawal of federal intervention. Now if we can get the Post to apply the same federalism lesson to Medicaid, transportation, and other issues, we'll be making real progress.
For more information on the overall issue of school choice, I strongly recommend this video from the Center for Freedom and Prosperity Foundation.
By the way, don't believe propaganda from politicians and union bosses about "underfunded" schools. The United States spends more per capita than any other country.
This isn't an issue of money. The problem is that monopolies don't deliver good results. Particularly monopolies controlled by self-serving union bosses that use political muscle to protect undeserved privileges.
P.S. Not surprisingly, Thomas Sowell nails this issue, as does Walter Williams, with both criticizing the President for sacrificing the interests of minority children to protect the monopoly privileges of teacher unions.
P.P.S. Chile has reformed its education system with vouchers, as have Sweden and the Netherlands, and all those nations are getting good results.
P.P.P.S. There are some other honest and sincere liberals on this issue.
Question of the Week: What's More Worrisome, Big Brother Monitoring Where You Drive or Big Brother Controlling How You Drive?
Posted in Big Government, Leviathan, nanny state, Privacy, tagged Big Brother, Big Government, Leviathan, nanny state, Privacy on September 2, 2013| 8 Comments »
If you don't like the NSA collecting and monitoring all your communications, you probably won't be thrilled about new technologies that will give government power to monitor where you drive and control how you drive.
Let's look at a couple of options and then ponder which is more offensive.
We'll start with government monitoring of where you drive. Here's part of what Holman Jenkins wrote for the Wall Street Journal.
…the real threat to our autonomy gathers speed. "Autonomous" vehicles are part of the threat—because they won't be autonomous at all. This column has warned for years about plate-recognition cameras, increasingly armed with face-recognition capabilities, that will make it impossible to go anywhere or do anything in public without being monitored. …The population is aging. An older, more timid society is likely to be in favor of penning up fellow citizens in a mesh of monitoring to regulate routine behavior. The authoritarianism of the weak, always a problem in society, will find an ally in the bureaucracy's craving for resources.
Holman cites a few examples.
Traffic cameras…overwhelmingly ring up drivers for offenses that wouldn't trouble a cop. New Jersey is just the latest state scandalized by discovery that yellow lights are set below the state minimum in order to yield more red-light camera tickets. …In some future discrimination or hate-crime lawsuit, will vehicle records be called up to show you locked your doors in a minority neighborhood but not in a white neighborhood? Will the state decide to raise your ObamaCare copays because a face-recognition camera also recognized a cigarette dangling from your lip? When our every action in space and cyberspace can be monitored and policed, we no longer police ourselves to any meaningful extent. We become not citizens but children. The state is our parent. The real threat is that many of our fellow citizens will like it this way.
This sounds very Orwellian and very bad, but there are other ways for government to make driving an unpleasant experience.
Let's see what the UK-based Daily Mail is reporting about an obnoxious European proposal to give government control over your gas pedal.
Drivers face having their cars fitted with devices that slam on the brakes if they go over the speed limit, under draconian new road safety measures being drawn up by officials in Brussels. All new cars would have to include camera systems that 'read' the limits displayed on road signs and automatically apply the brakes. And vehicles already on the road could even be sent back to garages to be fitted with the 'Big Brother' technology… The EC's Mobility and Transport Department hopes to roll out the 'Intelligent Speed Adaptation' technology (ISA) as part of a new road safety programme.
And how will this big-brother system work?
The ISA technology works in one of two ways – either through satellites, which communicate limits automatically to cars from databases, or by using cameras to read road signs. It then deploys one of three controls to slow drivers: 'advice', in which the motorist is simply notified of the speed limit by an alarm, giving them the opportunity to slow down; 'driver select', which arrests the car's speed but gives the driver the option of disabling the device; or 'mandatory', which would not let a driver breach the speed limit under any circumstances. …A spokesman for the AA said at lower speeds the new technology could actually create dangers. He said: 'If you were overtaking a tractor and suddenly needed to accelerate to avoid a head-on collision, you would not be able to.'
I'm glad people from the Automobile Association are warning that the system poses risks, but opposition should be based on more than utilitarian arguments. How about the freedom to be left alone and not monitored and pestered while you travel?
But let's set that issue aside and contemplate whether it's worse to have the government track where you drive or worse to have the government control how you drive.
Maybe this makes me a bad libertarian, but I'm not overly worried about the first option. Perhaps this is because I have a relatively staid life. I drive to work and I drive to softball. Every so often, I drive to the grocery store or to an airport. The bureaucrats tracking me would go crazy with boredom. Heck, I'd probably feel some pressure to spice up my social life simply because I'd feel sympathy for them.
Maybe they'll force us to drive green cars?
By contrast, I would be very irritated if the government got control over my accelerator. It's already annoying that revenue-hungry local governments and anti-automobile greenies conspire to set speed limits considerably below safe and efficient levels. But at least there's very little risk if you drive within 10 miles of the limit and you always have the choice to drive even faster if you're willing to take a chance that some random cop will pull you over. But if the government imposes some system that forces my car to stay within the speed limit, I won't be a happy camper.
I'll be very curious to read the comments for this post. In the meantime, I'm going to close with a few optimistic words.
Simply stated, government may have the technology to spy on us, but that doesn't mean they have the brains, ability, or manpower to make much use of this power.
Money laundering laws are a good example. It's rather offensive that the government has set up a system that forces banks and other financial institutions to spy on all of our financial transactions.
But other than imposing high costs on the financial sector, this system doesn't have much impact on the average person. To be sure, some poor people lose access to the financial system. And, yes, there are horror stories about people who have their accounts frozen because they've engaged in an unusual transaction, but most of us will live our lives without ever noticing that the government has created this Orwellian regime.
Likewise, I don't think the monitoring and collection of traffic data will impact our lives. At least not until the point the government uses its power in some of the ways described by Holman Jenkins. But I don't think that's going to happen anytime soon.
I'm also somewhat hopeful that car-control technologies won't get abused. At least not right away. Local governments, for instance, would probably oppose a system to control travel speeds for the simple reason that they want to maintain the revenue from speeding tickets.
Moreover, I bet many Americans would rise up in revolt if the government tried to take control of our gas pedals. Politicians who pushed for such a scheme would lose election and bureaucrats who tried to impose such a system via regulation would get slapped down.
We've lost some of our freedoms and fighting spirit, but there are some lines the government still can't cross. Driving faster than the government allows is as American as apple pie.
P.S. Speaking of American traditions, what about the young (and not-so-young) people who sometimes do a bit of romancing while in their cars? Maybe the bureaucrats (motivated by this Obama-NSA joke) will insist that we also install internal cameras in our vehicles.
Even Scandinavian Welfare States Realize Too Much Dependency and Too Many Handouts Are Destructive
Posted in Dependency, Europe, Government Spending, Redistribution, Welfare, Welfare State, tagged Denmark, Dependency, Europe, Government Spending, Redistribution, Welfare, Welfare State on September 1, 2013| 25 Comments »
We're making a tiny bit of progress in the battle against the welfare state. No, policy hasn't changed yet, but at least there's growing recognition that maybe, just maybe, it's not a good idea to pay people not to work. Particularly when you trap them in lives of dependency and despair and undermine progress in the fight against poverty.
This chart shows that various handouts discourage low-income people from earning more money, and a recent blockbuster study from a couple of my colleagues at the Cato Institute revealed that welfare pays more than entry-level employment in dozens of states.
And a growing number of people are now aware that there's been an explosion of food stamp dependency, so one hopes that all this knowledge eventually will translate into a new round of welfare reform.
Why am I optimistic? Well, because awareness already is leading to change in some very unexpected places. Even Scandinavian nations are realizing that there has to be a limit to incentive-killing and taxpayer-sapping redistribution.
Here are some excerpts from a remarkable Bloomberg report about developments in Denmark.
"We live in a world of global competition for jobs," the 40-year-old minister said in an interview in Copenhagen. "For any finance minister wanting to be taken seriously, it's something to deal with. That requires a modernization of the welfare state." The AAA rated nation, whose economy contracted 0.2 percent in the first half, needs to contain welfare spending or risk losing the respect of investors, Corydon said. Danes, who like Swedes and Norwegians, are used to generous jobless pay as well as state-financed education and health care, need to learn that those privileges come at a cost, he said. …Denmark's challenge now is to ensure its welfare habits don't leave it unable to compete with populations that work harder at a lower cost, he said.
That's a noteworthy passage, both because the Danish Finance Minister recognizes jurisdictional competition as a check on the welfare state (something confirmed by a study from German economists) and because Denmark is ruled by Social Democrats.
Yet even these leftists are grasping that it makes no sense to have a system that generates perverse incentives.
…out-of-work Danes in some cases earn even more than those in low-skilled jobs. An Aug. 27 report by the Economy Ministry showed that about 250,000 Danes have no economic incentive to give up their unemployment benefits and take a job. That compares with 2.64 million people in full- and part-time jobs, according to Statistics Danmark. …The Social Democrat-led coalition of Prime Minister Helle Thorning-Schmidt, in office since 2011, has pushed through cuts including limiting unemployment benefits to two years from four years.
It's hardly radical libertarianism to reduce unemployment benefits from four years to two years, but it is rather significant when even politicians realize that it's not good – as illustrated by these powerful cartoons – to lure people into the wagon when nations need more people pulling the wagon.
The article even mentions "Lazy Robert," a famous deadbeat who became the first Danish member of the Moocher Hall of Fame last April. No wonder Danes may be saying that enough is enough.
There's even a bit of good news on the tax side of the fiscal ledger.
The government has responded to the economic slump by cutting the corporate tax rate, as well as some other taxes.
Sounds like Danish policy makers could give some lessons to their self-destructive American counterparts.
But you won't be surprised to learn that there's still plenty of bad policy in Denmark. The politicians can't resist, for instance, the siren song of Keynesian economics.
It plans to spend 44 billion kroner ($7.8 billion) next year on building railroads, highways and hospitals. …Corydon,…said he wants to keep public investments close to a 30-year high to create jobs.
By the way, it's a bit depressing that Denmark actually ranks higher than the United States in the most recent Economic Freedom of the World rankings.
Yes, their welfare state is too big, their tax system is a nightmare, and they are saddled with one of the world's most expensive bureaucracies, but Denmark has ultra-free market policies in other areas.
But even those laissez-faire policies no longer are apparently enough to compensate for bad fiscal policy.
P.S. Denmark may have Lazy Robert, but the United Kingdom has Natailija, Tracey, Anjem, and Gina and Danny, so if there was a welfare Olympics, the U.K. would have a lot more medals.
P.P.S. Speaking of poverty, you may be surprised that bureaucrats at the OECD assert that America has more poverty than some very poor nations. But that's only because the Paris-based bureaucracy is trying to advance Obama's redistribution agenda by redefining poverty to mean differences in income rather than lack of income. Sort of makes you wonder why we're subsidizing their statist agenda with our tax dollars.