Leave Them Teams Alone

Nick Gillespie and Matt Welch have a great article in Sunday’s Washington Post on the absurdity of Congress demanding that Major League Baseball do something about steroids right now, or else. They point out that, in the first place, “Major League Baseball, along with other sports leagues and private-sector ventures, simply should not be required to submit their business plans – much less blood and urine samples – to Congress or any other government body.” And in the second place, steroids just aren’t that big a deal, much as Congress wants them to be.

Alas, Reason’s editors do trip up on one point. They write that baseball’s exemption from federal antitrust legislation should be repealed. Why? Because it “has caused more harm than good by allowing owners to collude against players and prospective competitor leagues and by allowing cartel arrangements and restraints on trade unimaginable in other industries.”

Aside from the general problems with antitrust law, the notion that baseball owners “collude” in “cartel arrangements and restraints on trade” reflects a misunderstanding of the organization of a sports league. The different teams in Major League Baseball are not competitors like Coke and Pepsi. They’re not even quite like McDonald’s franchisees, who clearly don’t compete in the way different companies do. Rather, the economic unit is MLB, which is in the business of providing baseball games for entertainment. The competition on the field is real, but the teams are not actually economic competitors. As the Supreme Court ruled in a case involving the NFL:

The NFL owners are joint venturers who produce a product, professional football, which competes with other sports and other forms of entertainment in the entertainment marketplace. Although individual NFL teams compete on the playing field, they rarely compete in the marketplace… . The league competes as a unit against other forms of entertainment.

Gillespie and Welch are more right than they know. Congress should stay entirely out of baseball’s business, including by not siccing antitrust regulators on a single economic unit often misunderstood as 30 competing businesses.

Escaping Ireland’s High Personal Tax Rates

While Ireland has a very attractive 12.5 percent corporate tax, the tax treatment of individuals is much less benign. The top tax rate on personal income is 42 percent, and capital gains are hit with a 20 percent levy. As a result, more than 3,000 of Ireland’s most productive people have become non-residents for tax purposes, including at least half of the nation’s wealthiest citizens. The Sunday Business Post reports:

Although Ireland’s tax rates are relatively low by international standards, an increasing number of high-net-worth individuals are deciding to leave the country of their birth and move to places with more welcoming and forgiving tax regimes. …New figures prepared by the Revenue Commissioners finally reveal just how many tax exiles have decamped Ireland for other jurisdictions. According to new figures obtained by The Sunday Business Post, there are 19 high-net-worth individuals who are Irish domiciled but who are legally non-resident for tax purposes. The figures, from the Department of Finance, only includes individuals whose net worth (their assets less their liabilities) is valued at more than €50 million. …Of the top 20 individuals on the Irish Rich List, at least half are tax resident outside Ireland. John Magnier and JP McManus, the Irish horseracing tycoons, are both based in Geneva, as is Hugh Mackeown, the chairman of the Musgrave Group, the €4.6 billion Cork retail giant. Michael Smurfit, the packaging magnate, is the honorary Irish consul to Monaco, while dancer Michael Flatley also pays his tax in the principality. Billionaire financier Dermot Desmond officially resides in Gibraltar. …The 19 names on the list are just the top of the tax exile iceberg, however. According to the Department of Finance, it only includes individuals who filed an annual return in Ireland for the 2005 financial year. …It is not just the high rollers who are relocating to tax-efficient economies. According to the Revenue Commissioners, Ireland now has more than 3,000 tax exiles who claim non-residency. Many of these individuals are not in the top 250, but have serious wealth nonetheless.

European Politicians Want China to Adopt a Welfare State

Guided by the mercantilist superstition that imports somehow are bad, politicians in Europe are trying to figure out how to reduce the amount of Chinese goods available to European consumers. To their credit (to offer a back-handed compliment), the policies they are advocating - for China to adopt European-style levels of income redistribution - would be very effective. High tax rates and excessive levels of government spending would hamstring China’s economy. The EU Observer reports on European efforts to export bad policy:

EU top officials along with employment and social affairs commissioner Vladimir Spidla on Friday went to Beijing to advocate improvement of social welfare and worker protection. … “If we talk to them about health and safety at work, about social security and they see themselves that there is a necessity to change things in order to have a sustainable economy in the long-term that will also decrease possibilities for social dumping,” said Mr Spidla, according to AFP. ”If they decide to copy the European pension model, it means they consider it to be the best,” he continued. Social dumping – when countries with weak labour and safety standards export cheap goods to a state with more rigorous legislation and protection – is a strong point of contention between Brussels and Beijing. …Mr Spidla said he hoped the EU’s dialogue would “help China develop modern systems of social security.”

Financial Times Gives Publicity to Swiss Canton’s Radical Low-Tax Policies

Regular readers know that Canton Obwalden recently voted to implement a 1.8 percent flat tax. That reform, combined with other supply-side policies, is garnering some favorable publicity for the sparsely-populated canton. The Financial Times reports on the pro-growth changes, and acknowledges the vital role of tax competition:

…in recent months, Obwalden, whose population accounts for just 34,000 of Switzerland’s 7.5m total, has been punching above its weight. Desperate to stem a haemorrhage of business and wealthier residents to more cosmopolitan places, the Christian Democrat-dominated cantonal government has turned to taxation to stop the slide. …the government [adopted] an ultra-low, flat-rate tax – that took effect on January 1 this year. The move has attracted attention beyond Switzerland’s borders. The European Commission has taken issue with its most prominent non-member on the allegation that Switzerland’s differential cantonal taxes put European Union companies at a disadvantage. Some EU countries have also been riled by Switzerland’s ability to attract high-profile millionaires through one-off tax deals. Last year, Johnny Halliday, the ageing French rock star, became the latest in a stream of foreigners to up sticks. …Proponents argue that allowing cantons, and even individual towns and villages, to set their own rates stimulates competition and keeps taxes down by boosting efficiency. …The reduction in corporation tax to 6.6 per cent, and a further cut to 6 per cent from January 1, has led to a fivefold increase in the number of new companies setting up in both 2006 and 2007. While Mr Wallimann concedes many are just letterbox operations, some have created genuine jobs. He says there has been no rancour with other cantons or accusations of beggar-thy-neighbour policies. “Everyone in Switzerland understands tax competition. It keeps everyone on their toes.

Don’t Believe Everything You Read

Readers may have noticed that the fringes of the blogosphere have been aflame with attacks on the Cato Institute and several of our staff members—and former staff members, and former Board members, and occasional writers, and friends, and people we once met at a cocktail party—all because of our attempt to separate the grand old cause of classical liberalism from racism and bigotry.

Readers may also have noticed that we haven’t responded to any of these attacks. I published one statement setting forth my view that people who write racist newsletters “are not our comrades, not part of our movement.” And that’s been the extent of our response. (Though of course a few of my colleagues who maintain private blogs have written about the current controversy there.)

Indeed, you might note that this blog has never mentioned the name of the proprietor of the website where many of the vicious attacks have appeared, who is also widely reported to be the author of those reprehensible passages that have so embarrassed his political patron. Some people tell us they deplore “libertarian infighting.” Well, I’d make two responses to that: We’re not fighting. And people who defend racist writings (though almost never by actually quoting them, I note) are not what I’d call libertarians.

Let it not be thought that by ignoring these critics we tacitly concede their wild accusations and innuendos. Many of the things that have been written about us are false, or intentionally misleading, or wildly conspiratorial, or frankly nuts. (Of course, a few of the charges are true. I do in fact live near the Orange Line of the Washington Metro, and Reason magazine’s Washington office is on the Red Line, and red is next to orange in the color spectrum.) The reason we’ve refrained from answering these libels stems from a bit of folk wisdom I learned growing up in the South: Never wrestle with a pig; in the first place, you get dirty; and in the second place, the pig likes it. 

Besides, we’d rather take on bigger game. My colleagues and I will continue to spend our time arguing with big-government liberals and big-government conservatives, criticizing the Iraq war and the federal tax code, publishing the ideas of Bastiat, Mises, and Hayek in languages around the world, and skewering wasteful and unconstitutional government programs.

But I’ll take just a moment to repeat what I said a few days ago:

Libertarians should make it clear that the people who wrote those things are not our comrades, not part of our movement, not part of the tradition of John Locke, Adam Smith, John Stuart Mill, William Lloyd Garrison, Frederick Douglass, Ludwig von Mises, F. A. Hayek, Ayn Rand, Milton Friedman, and Robert Nozick. Shame on them.

The People Who Govern Us

Thank God we have Congress to run our lives:

Congresswoman Marcy Kaptur [(D-Ohio)] came to a House committee hearing on Thursday prepared to ask U.S. Treasury Secretary Henry Paulson tough questions about his involvement in the subprime mortgage crisis.

Unfortunately, she was questioning the chairman of the Federal Reserve.

The Ohio Democrat, at a House of Representatives Budget Committee hearing, said she wanted to know what Wall Street firms were responsible for the securitization of subprime mortgages.

She then asked: “Seeing as how you were the former CEO of Goldman Sachs…” But the only person testifying at the hearing interrupted.

“No, no, no, you’re confusing me with the Treasury Secretary,” said Federal Reserve Chairman Ben Bernanke.

“I’ve got the wrong firm? Paulson, Oh, OK. Where were you sir?” Kaptur said.

Bernanke noted that he was head of the Princeton University economics department.

I guess her staff didn’t brief her very well. But really, if she can’t tell the difference between the secretary of the Treasury and the chairman of the Federal Reserve Board, should she be overseeing the budget of the United States government?

And you know how critics of term limits say that we don’t want to lose all the expertise of the experienced members of Congress? Representative Kaptur has been in Congress for 25 years. I guess that expertise will be kicking in real soon.

Hat tip: Jon Henke.