Topic: General

North Korea’s Kim Dynasty Consumes Its Own: No Love in this Family

North Korea’s “Dear Leader” Kim Jong-il has been dead not quite two years, but his son, Kim Jong-un, appears to have taken control.  And in a much bloodier fashion than predicted, with the execution of his uncle and one-time mentor Jang Song-taek.  However, no one knows whether the regime is stabilizing or destabilizing.

The ascension of Kim fils never seemed certain.  Not yet 30 when his father passed, Kim had had little time to secure the levers of power.  Moreover, Pyongyang is a political snake-pit. 

Over the last two years hundreds of officials, many in the military, have been removed from office.  Until Jang the most dramatic defenestration was of army chief of staff Ri Yong-ho.  His departure in July 2012, alleged for reasons of health, was dramatic and sudden. 

Of greater concern to the West was North Korean policy.  The country had established a reputation for brinkmanship and confrontation.  The new government reinforced this approach. 

For instance, rhetorical attacks on and threats against South Korea and the U.S. rose to unprecedented heights.  The Democratic People’s Republic of Korea recently detained an 84-year-old American Korean War veteran and tourist for six weeks on bizarre charges.

Equally important, there is no evidence of reform, either economic or political.  Observed Bruce Klingner of the Heritage Foundation:  Kim Jong-un “has increased public executions, expanded the gulags for political prisoners, and increased government punishment for anyone caught with information from the outside world.” 

Now comes Jang’s ouster.  There is no reason for the West to mourn his passing.  But previously family members only disappeared. 

Jang’s execution could demonstrate that Kim Jong-un is solidifying his rule.  Removing another minder appointed by his father would seem to leave Kim more securely in charge.  Moreover, a willingness to execute likely deters anyone but the most determined or desperate from challenging the leadership. 

Nevertheless, the DPRK could be heading for further instability.  The episode is unprecedented, which suggests that something is amiss in paradise.  Jang could have been the casualty of a messy power struggle likely to grow worse.  If he can be taken down, no one is safe.  Fear may widen leadership divisions, spur internal resistance, and draw in the military. 

As I point out in my latest article in National Interest online:

Political uncertainty in Pyongyang almost certainly will reduce the already minimal likelihood of domestic reform and foreign engagement.  If Kim truly has consolidated power, he might feel freer to act.  However, even then orchestrating a wider purge would absorb time and effort.  And if he fears continuing opposition to his reign he probably will put off any potentially controversial policies, especially if they conflict with the interests of the military, which still potentially wields ultimate power.

Further, Jang was associated with economic reform and China relations.  After his death Jang was criticized for his economic activities.  It is hard to imagine economic reform speeding up in a government sundered by a power struggle in which a top economic official was just executed.

The greatest danger is that Kim Jong-un’s apparent ruthlessness may be less constrained internationally than that of his father and grandfather.  If the younger Kim is taking on full dictatorial power, he might misperceive domestic authority as translating into international strength.  Or if his authority is under challenge at home, he might be tempted to provoke a foreign crisis. 

The DPRK long has been the land of no good options, the geopolitical problem with no good answers.  Even if Jang’s execution changes nothing, it reminds us that North Korea remains a threatening yet mysterious presence in Northeast Asia.  And the ongoing leadership transition—whether solidified or unsettled—isn’t likely to bring peace or stability to the region.

WSJ: Dems Nuked Filibuster to Defeat Halbig v. Sebelius

Wall Street Journal editorial surmises that Senate Democrats eliminated the filibuster for non-Supreme Court judicial appointments so they could pack the U.S. Court of Appeals for the D.C. Circuit with judges that would block an important ObamaCare case called Halbig v. Sebelius:

Democrats surprised Republicans in November with how quickly they dismantled the filibuster, and we are beginning to see why. Another major challenge to ObamaCare is being heard by a D.C. Circuit district judge, this time concerning whether subsidies can be delivered by the federal exchanges. Then there’s the new IRS proposed rule curtailing the political speech of 501(c)(4) groups. This rule will also probably make its way to the D.C. Circuit, and blocking GOP-leaning groups from politicking is part of the Democratic strategy for holding the Senate in 2014.

Democrats figure they have a better chance to win if they have more nominees on the appeals court—either in a three-judge panel or en banc. The plaintiffs could appeal to the Supreme Court if they lose, but you never know if the Justices will take a case.

Case Western Reserve University law professor Jonathan H. Adler and I laid the groundwork for Halbig and three other cases challenging President Obama’s attempt to tax Americans without congressional authorization in this law-journal article.

Ryan-Murray Budget Deal Replaces Real Spending Restraint of Sequester with Budget Gimmicks and Back-Door Tax Hikes

How disappointing, but how predictable.

Politicians approved legislation in 2011 that was supposed to impose a modest bit of spending restraint over the next 10 years.

It wasn’t much. The enforcement mechanism, known as sequestration, merely was supposed to guarantee that spending climbed by $2.3 trillion rather than $2.4 trillion over the 10-year period.

But something is better than nothing, and the sequester that took place this year was a bitter defeat for President Obama and other advocates of bigger government.

Progress on the Laffer Curve*

The title of this piece has an asterisk because, unfortunately, we’re not talking about progress on the Laffer Curve in the United States.

Instead, we’re discussing today how lawmakers in other nations are beginning to recognize that it’s absurdly inaccurate to predict the revenue impact of changes in tax rates without also trying to measure what happens to taxable income (if you want a short tutorial on the Laffer Curve, click here).

But I’m a firm believer that policies in other nations (for better or worse) are a very persuasive form of real-world evidence. Simply stated, if you’re trying to convince a politician that a certain policy is worth pursuing, you’ll have a much greater chance of success if you can point to tangible examples of how it has been successful.

That’s why I cite Hong Kong and Singapore as examples of why free markets and small government are the best recipe for prosperity. It’s also why I use nations such as New Zealand, Canada, and Estonia when arguing for a lower burden of government spending.

And it’s why I’m quite encouraged that even the squishy Tory-Liberal coalition government in the United Kingdom has begun to acknowledge that the Laffer Curve should be part of the analysis when making major changes in taxation.

UK Laffer CurveI don’t know whether that’s because they learned a lesson from the disastrous failure of Gordon Brown’s class-warfare tax hike, or whether they feel they should do something good to compensate for bad tax policies they’re pursuing in other areas, but I’m not going to quibble when politicians finally begin to move in the right direction.

 

The Wall Street Journal opines that this is a very worthwhile development.

Chancellor of the Exchequer George Osborne has cut Britain’s corporate tax rate to 22% from 28% since taking office in 2010, with a further cut to 20% due in 2015. On paper, these tax cuts were predicted to “cost” Her Majesty’s Treasury some £7.8 billion a year when fully phased in. But Mr. Osborne asked his department to figure out how much additional revenue would be generated by the higher investment, wages and productivity made possible by leaving that money in private hands.

By the way, I can’t resist a bit of nit-picking at this point. The increases in investment, wages, and productivity all occur because the marginal corporate tax rate is reduced, not because more money is in private hands.

I’m all in favor of leaving more money in private hands, but you get more growth when you change relative prices to make productive behavior more rewarding. And this happens when you reduce the tax code’s penalty on work compared to leisure and when you lower the tax on saving and investment compared to consumption.

Another Misguided Plan to Burden America with a Value-Added Tax

It’s no secret that I dislike the value-added tax.

But this isn’t because of its design. The VAT, after all, would be (presumably) a single-rate, consumption-based system, just like the flat tax and national sales tax. And that’s a much less destructive way of raising revenue compared to America’s corrupt and punitive internal revenue code.

But not all roads lead to Rome. Proponents of the flat tax and sales tax want to replace the income tax. That would be a very positive step.

Advocates of the VAT, by contrast, want to keep the income tax and give politicians another big source of revenue. That’s a catastrophically bad idea.

To understand what I mean, let’s look at a Bloomberg column by Al Hunt. He starts with a look at the political appetite for reform.

There is broad consensus that the U.S. tax system is inefficient, inequitable and hopelessly complex. …a 1986-style tax reform – broadening the base and lowering the rates – isn’t politically achievable today. …the conservative dream of starving government by slashing taxes and the liberal idea of paying for new initiatives by closing loopholes for the rich are nonstarters.

I agree with everything in those excerpts.

So does this mean Al Hunt and I are on the same wavelength?

Not exactly. I think we have to wait until 2017 to have any hope of tax reform (even then, only if we’re very lucky), whereas Hunt thinks the current logjam can be broken by adopting a VAT and modifying the income tax. More specifically, he’s talking about a proposal from a Columbia University Law Professor that would impose a 12.9 percent VAT while simultaneously creating a much bigger family allowance (sometimes referred to as the zero-bracket amount) so that millions of additional Americans no longer have to pay income tax.

The Core of Big Brother

Over at SeeThruEdu I’ve got a post responding – sort of – to a recent article on the Common Core by National Review’s Ramesh Ponnuru. It’s only “sort of” because for the most part Ponnuru is right on the money: Some of the allegations against the Core are highly dubious, but so are many of the arguments proffered for it. My only quibble is that Ponnuru says that the Core doesn’t represent “Big Brother in the classroom.” Narrowly that’s right – the Core itself is just the standards – but when you look at the data collection and overall federal policy of which the Core is an integral part, fears about Big Brother – or maybe Big Micromanager – coming to a school near you are reasonable.

Check it out!

Be Thankful for “Diminished Productivity” in Washington

Let’s do a simple thought experiment and answer the following question: Do you think that additional laws from Washington will give you more freedom and more prosperity?

I don’t know how you will answer, but I strongly suspect most Americans will say “no.” Indeed, they’ll probably augment their “no” answers with a few words that wouldn’t be appropriate to repeat in polite company.

That’s because taxpayers instinctively understand that more activity in Washington usually translates into bigger and more expensive government. And big government isn’t so fun for those who pay the bills and incur the costs.

So what’s the purpose of our thought experiment? Well, new numbers have been released showing that the current Congress is going to set a modern-era record for imposing the fewest new laws.

But while most of us think this is probably good news, Washington insiders are whining and complaining about “diminished productivity” in Congress. The Washington Post is very disappointed that lawmakers aren’t enacting more taxes, more spending, and more regulation.

…this Congress — which is set to adjourn for the year later this month — has enacted 52 public laws. By comparison, …90 laws were encated during the first year of the 113th Congress and 137 were put in place during the first year of the 111th Congress.

Just in case you don’t have a beltway mindset, another Washington Post report also tells you that fewer laws is a bad thing.

…whatever gets done in December will still be part of a year with record-low congressional accomplishment. …According to congressional records, there have been fewer than 60 public laws enacted in the first 11 months of this year, so below the previous low in legislative output that officials have already declared this first session of the 113th Congress the least productive ever.

Let’s actually look at some evidence. The first session of the current Congress may have been the “least productive” in history when it comes to imposing new laws, but what’s the actual result?