Archives: 11/2009

Vikings and Pirates and Taxes, Oh My!

Today’s episode of “Hagar the Horrible” could be an epigraph for the new Fall 2009 issue of Cato Journal.

Hagar_The_HorribleThis issue includes Greek economists Michael Mitsopoulos and Theodore Pelagidis on “Vikings in Greece: Kleptocratic Interest Groups in a Closed, Rent-Seeking Economy” as well as Peter Leeson, author of The Invisible Hook: The Hidden Economics of Pirates, writing (with David Skarbek) on the effects of foreign aid. As for taxes, well, editor Jim Dorn has assembled a number of useful papers:

  • Andrew T. Young on taxing, spending, and “fiscal illusion”
  • Michael J. New on the “starve the beast” hypothesis
  • Alan Reynolds on Paul Krugman’s misunderstanding of the monetary and fiscal lessons of the Great Depression and Japan’s lost decade

And on the general rapaciousness of the state, don’t miss Jason Kuznicki’s careful review of government racial discrimination from the end of Reconstruction until the civil rights movement.

Wednesday Links

  • Things you might not want to know: Have you ever thought about how dirty the money in your wallet might be?
  • The case for dropping out of NATO.
  • Gene Healy on the “arrogance of power” involved in running for president these days: “What sort of person wants the job badly enough to spend years living out of a suitcase, begging for cash, glad-handing through primary states, and saying things that no intelligent person could possibly believe?”
  • Doug Bandow: “The fall of the Wall, and the evil system behind it, deserves to be celebrated. Not just on Nov. 9. But every day.”

More Trade News

My colleague Dan Griswold pointed out yesterday some unfortunate editing in the Washington Post. Here are a couple of other trade-related items in the news recently:

  • Sen. Max Baucus (D, MT and Chairman of the Senate Finance Committee) has seemingly thrown his weight behind the idea of “border measures” (i.e., carbon tariffs).  After paying the semi-obligatory lip service to the United States’ obligations under international trade law – and I say only “semi-obligatory” because some U.S. lawmakers appear not to care about it at all – Baucus goes on to deliver this rhetorical gem:

    I think often the United States has to lead,” Baucus said, noting that what lawmakers come up could be used as a model for other countries to copy.

    So the U.S. would saddle its consumers with higher prices in exchange for little benefit environmentally and in the process risk retaliation and alienating countries who it insists are necessary for global cooperation on climate change?

    Some leadership.

    And it may well be that the Chinese have the jump on the United States here, in any case. They’re proposing to introduce a carbon tax of their own, to prevent double-taxation in the form of carbon tariffs by the developed countries (banned under WTO rules) and to keep the carbon tax revenue – collected, remember, from U.S. consumers! – for themselves, all while seeming to play nice on climate change. I bet those who proposed carbon tariffs are sorry they spoke out now. (HT: Scott Lincicome)

  • Brazil has published a list of over 200 mostly consumer and agricultural goods that would be subject to retaliatory tariffs as part of the on-going dispute over U.S. cotton subsidies (an excellent backgrounder to that dispute is available here).

    I note with sorrow that the list also contains intermediate goods, which of course would mean saddling Brazilian manufacturers with higher prices. Even if the Brazilian government isn’t too concerned about  burdening its consumers with extra taxes, rarely a concern of politicians apparently, you’d think they would hesitate to impose higher costs on manufacturers, who employ people.

    Again, it is important to draw a distinction here between the mercantalist political logic of retaliatory tariffs and the economic insanity of increasing costs to your own people in “retaliation” for the harm another country’s policies have done to you. (And no, I don’t count the “game-theory” argument as an “economic” one here. That is a fancy way of saying that in an international relations, i.e. political, sense, retaliation can bring about the desired change.  I’m talking about the fact that costs to consumers from tariffs – whatever their rationale – far outweighing the benefits that producers derive from protection). But this latest development is a sign that Brazil is serious about getting the U.S. to reform its agricultural policies, something it should be doing anyway.

    Brazil was, it should be noted, given permission from the WTO to suspend intellectual property rights protections as a form of retaliation, a new but increasingly attractive way of exacting retribution, but only after a certain amount of damages had been collected the usual way.

  • As The Dems Turn (To School Choice)

    We’ve been writing a fair amount over the last several months about increasing support for school choice among members of the Democratic Party. The focus has typically been on legislators, but a new report from the Center for Education Reform give a glimpse into possible widespread support among private-schooling Dems and Dem donors in Washington, DC.

    The Trustees delves into the political affiliations of board of trustee members of the “ten most prestigious private schools that support the  D.C. Opportunity Scholarship Program.” Based on trustees’ total donation amounts to the two major presidential candidates in 2008, or to candidates, party committees, and parties themselves, the report suggests that trustees lean Democratic by a ratio of roughly 9 to 1.

    Importantly, only about 37 percent of trustees were found to have made any contributions, so the 9-to-1 ratio doesn’t necessarily mean that trustees overall are similarly skewed. In addition, the underlying assumption seems to be that if the schools participate in the voucher program their trustees support school choice, which doesn’t necessarily follow. A trustee may very well think a school should take some voucher kids but also think the program ought not to exist. And, of course, trustees almost certainly don’t all agree one way or the other.

    Those things said, this is yet more evidence supporting an increasingly inescapable conclusion: Democrats – who have historically opposed school choice much more so than Republicans – are finding that they just can’t do it anymore. There is no justification for consigning kids to awful schools.

    Of course, members of both parties – or no party at all – who support only small, hamstrung programs still have a lot of thinking to do

    Freedom for Thee, But Not for We

    I expected and got some pushback about my post comparing the Berlin Wall to the wall along our southern border. Happily, it was more civil than the reactions I often get when I talk about immigration and free movement of people.

    One fair comment focused on the key distinction between the Berlin Wall and our border wall: the direction the guards were facing.

    From the perspective of the state, it’s easy to conceive of border guards facing “in” or “out”—and those facing in suggest much worse than those facing out. But from the perspective of the individual, what matters is whether or not the border guards are facing you. Our border wall keeps Mexicans and Central Americans from freedom and a better life precisely the way the Berlin Wall did East Germans.

    Another pointed out the inconsistency between liberal immigration policies and the welfare state. But the solution is not to wall off the country; it’s to wall off the welfare state. David Friedman has pointed out that liberal immigration policies can create political incentives to hold down welfare benefits.

    Twenty years ago, West Germany took into its fold an impoverished population whose capacity for self-governance had surely been eroded by years of totalitarian rule. Today, one of that population is its center-right chancellor. Liberalizing immigration would be a project far smaller for the United States, it would bring overall economic benefits, and it would help restore our country’s status as a beacon of freedom.

    Those who wish to immigrate to the United States did not create the political or economic conditions in their birth countries. Yet many treat their desire for a life like ours as blameworthy. It’s incoherent for individualists to think that way about immigrants to the United States while treating the reunification of Germany as something to celebrate. Such incoherence is reflected in our ’wall’ policies, which indeed boil down to “freedom for thee (Europeans), but not for we (Americans).”

    Fort Hood and Political Correctness

    This morning, Politico Arena asks:

    The Fort Hood tragedy: Why does it matter, or not, what we call it? Is it being politicized?

    My response:

    If we want to be technical, what we call the Fort Hood massacre matters, and James Taranto got it right in Monday’s Wall Street Journal:  It was not a terrorist attack, targeting noncombatants, but an act of guerrilla warfare, carried out by one of our own in apparent contact with the enemy, and hence an act of treason.

    But the deeper and far larger problem is why the Army didn’t act sooner against this man and, even more, why it is, as Dorothy Rabinowitz put it in yesterday’s Journal, that “the tide of pronouncements and ruminations pointing to every cause for this event other than the one obvious to everyone in the rational world continues apace.”  After all, it is not as if “the Hasan problem,” richly detailed elsewhere, were unknown to the Army.  So why was nothing done?  We all know why.  It was stated simply in an NPR report yesterday:  “A key official on a [Walter Reed] review committee reportedly asked how it might look to terminate a key resident who happened to be a Muslim.”  If this isn’t ”political correctness,” nothing is.

    And it goes beyond the naive analyses that say we can do nothing about these kinds of problems.  It infects our very culture, from the newsroom to the college campus and far beyond, crippling sound analysis and judgment.  We learn just this morning, for example, again in the Journal, that the FBI may not have briefed the Army, or done so sufficiently (it’s unclear), about Hasan’s intercepted emails with Anwar al-Awlaki, the radical Yemeni imam.  There may have been intelligence reasons for compartmenting that information.  But in other cases it is an obsession with privacy that cripples investigation, itself a species of political correctness.  Yet the conflicting “rights” at issue in risk contexts are never more than right claims until they’re delineated by statute or adjudication.  Too often, however, that obsession blinds us, including in our legislation and adjudication, to the rights on the other side.  After all, the 3,000 who died on 9/11 and the soldiers who died at Fort Hood had rights too.

    The Fort Hood massacre cries out for further investigation.  But it must be clear-eyed and free from the prejudice that today is rightly called “political correctness.”

    “Freedom in Crisis” on YouTube

    My “Freedom in Crisis” speech, which has gotten some compliments as I’ve delivered it in various venues, is now available on the web, complete with accompanying Powerpoint illustrations.

    Find it also on the Cato site here. And a partial transcript (pdf) was printed in Cato’s Letter. (Get a free subscription to Cato’s Letter here.) And to hear speeches like this live, watch for details on the next Cato University, July 25-30, 2010, in San Diego.