Abracadabra! County Pulls a Subsidy Out of a Hat

Jacob Grier, the blogger-barista-magician with a highly coveted Vanderbilt degree, has been writing about Montgomery County’s plans to evict Barry’s Magic Shop from the site in Wheaton, Md., where it has survived for 31 years. As he wrote last June:

The real story is that simply because a few county planners have decided that the land could be better used to attract developers than as a magic store, the man who owns the building has had his property forcibly taken from him and a small business that has thrived for decades is being evicted years before its lease is up.

The county used eminent domain to take the building in order to build a walkway as part of a grand plan for Wheaton. The plan has been in the works for years, and there are no immediate plans for actually building the walkway, but the building has been seized.

But today there’s good news! For Barry’s and its customers, anyway, if not for Maryland taxpayers and property owners. In addition to spending over $2 million to take the building and build the walkway, taxpayers – in the person of Montgomery County Executive Isiah Leggett – are also going to spend $260,000 to relocate the magic shop.

So first the county spends taxpayers’ money to seize private property in the name of its own vision of what that corner of Wheaton should look like. Then it spends more taxpayers’ money to subsidize a small business.

Here’s an idea: Why not let the market decide where businesses locate, without subsidizing the businesses and without seizing their property? As Jacob says,

This is a story that should make people angry. Angry that George Chaconas had his land taken from him. Angry that Barry Taylor and Suzie Kang are being evicted years before their lease is up. Angry that this is all being done with taxpayers’ money to subsidize the developers who will eventually move into the area, just because some guy named Joseph Davis thinks that’s the way things ought to be.

Montgomery County, Maryland: Where everything goes according to plan. Or else.

It’s Official—Democratic Leaders Want a Third War

Yesterday, Sen. Joe Biden (D-DE) made clear what many of us have been suspecting for some time: the Democrats want to “redeploy” out of Iraq and into Sudan. Unfortunately, the full transcripts aren’t on Nexis yet, but here’s Biden:

“I would use American force now. I think it’s not only time not to take force off the table. I think it’s time to put force on the table and use it.”

“Let’s stop the bleeding. I think it’s a moral imperative.”

Whatever one’s views on the merits of starting a third war with an Islamic country in the span of six years, what was most alarming was Biden’s desire to look past the fact that what is going on in Darfur is essentially a civil war. There are two sides fighting, and multiple rebel groups that make up the resistance. Still, he practically begged US envoy Andrew Natsios (who, in fairness, doesn’t have the soundest track record) to overlook the fact that atrocities are being committed on both sides, and to reduce the conflict into Good Guys vs. Bad Guys so that we could get involved. Here’s a part of that exchange (link is to an audio clip):

BIDEN: Are the atrocities that are being carried out sanctioned by, cooperated with, or blind eye being turned by Khartoum, umm, not significantly greater than the atrocities that are occurring at the hands of the rebels?

NATSIOS: There is no equivalency whatsoever, Senator.

BIDEN: Well, I wish you’d stop talking about it–

NATSIOS: Well, I’m talking about it, Senator, because the rebels think they can get away with it. And it’s getting worse, and what’s happening is no one’s saying anything about it because it’s politically sensitive. We can’t let any civilian get–

BIDEN: No, it’s not politically sensitive, I mean, why won’t you just say, is genocide still the operative word?

NATSIOS: Yes.

BIDEN: So genocide is occurring in Darfur?

NATSIOS: Yes.

This is illustrative of the nature of so many foreign policy debates in Washington. If someone can get the other side to agree to a slogan of their side (“Saddam is a threat to global security,” say), then the debate ends. If “genocide” is occurring in Darfur, fire up the B-2s. And never mind all the “nuance” about the nature of what’s actually going on and who’s killing whom over there. If Biden had been reading his New York Times more closely, he would know that things aren’t so simple.

Biden’s unrelenting attempt to interpret a highly complex civil war where America has no discernible security interest through the lens of Bush-style Manichaeanism doesn’t inspire much confidence in the Democrats’ vision of U.S. national security policy. (And to the extent we do have a security interest, it’s probably in acquiescing to Khartoum, since they’ve sporadically cooperated with the war against al Qaeda and would probably be less likely to continue doing so if we start a war with them.)

The whole thing harkens back to when Howard Dean was simultaneously standing against the Iraq war and favoring U.S. military action in, umm, Liberia.

Scant Evidence? That’s Voter Fraud Calling

One of the more clever country song titles I ever heard was If the Phone Don’t Ring, You’ll Know It’s Me.

That’s something like the predicament of searchers after the menace of voter fraud, who can’t seem to find much of it. The New York Times today reports that “scant evidence” exists of a significant problem.

Voter fraud is the idea that individuals might vote multiple times, in multiple jurisdictions, or despite not being qualified. This is distinct from election fraud, which is corruption of broader voting or vote-counting processes. While voter fraud (and/or voter error) certainly happens, it is apparently on a trivial scale. It probably has not changed any election results, and probably will not do so if ordinary protective measures are maintained.

This is important because voter fraud has been used as an argument for subjecting our nation’s citizens to a national ID. The Carter-Baker Commission found little evidence of voter fraud, but went ahead and called for adopting REAL ID as a voter identification card. One of the Commission’s members apparently retreated from that conclusion, having learned more about REAL ID.

For proponents of a national ID, if the phone’s not ringing, that’s voter fraud calling.

A Good Tax Increase?

Fannie Mae and Freddie Mac are quasi-private mortgage companies that receive huge implicit subsidies from taxpayers. So it is difficult to know how to react to a deal between the Bush Administration and Congressman Barney Frank (D-MA) that would skim some money from Fannie and Freddie and use the money for so-called affordable housing. The bill would curtail the ability of Fannie and Freddie to use their subsidized status to expand into new markets, which is good. The bill also would make Fannie and Freddie shareholders unhappy, which is good (or at least amusing) since they have been implicitly profiting from government rather than market forces. But the deal also means more money for politicians to redistribute, which is akin to giving an alcholic keys to a liquor store. The Wall Street Journal reviews the good and bad of the deal:

[Rep Frank’s] bill would tax Fannie and Freddie to the tune of 1.2 basis points of their total book of business – or just over 1/100th of 1% of all the mortgages Fannie and Freddie have bought and packaged to sell to investors. That’s more than $500 million a year, with potential to grow. The Bush Administration has insisted that the fund be disbursed based on non-political criteria, but, c’mon, this is Washington. While the first year’s payout is supposed to go for housing on the Gulf Coast, a honey pot this sweet will soon be passed out based on the interests of the most powerful Members. The larger political danger is that such a fund gives Congress an even greater stake in seeing Fan and Fred grow. The fund amounts to an annual dividend payout to Congress. The Fannie Tax would thus make it even less likely that these “government-sponsored enterprises” (GSEs) will ever be weaned off their implicit taxpayer subsidy and act like normal private companies. Congress could also look at this earmarked tax precedent and try to apply it elsewhere – say, on the profits of energy companies for a “global warming fund.” …the current meltdown in the subprime and Alt-A mortgage markets has led to calls – by the same people now dunning Fan and Fred – for all kinds of new lending oversight, rules and restrictions. Mr. Frank’s latest brainstorm is to stick investors in mortgage-backed securities with the losses when subprime borrowers default. It’s hard to imagine a measure better designed to cut off credit to those Mr. Frank claims to want to help. If investors don’t have legal certainty about the debt they are buying, they won’t lend the money.

Does the Public Understand Causality?

Thankfully, Ezra Klein admits that an L.A. Times op/ed I co-authored with Mike Tanner is not inaccurate. (Phew!) However, he still accuses us of misleading readers.

Klein writes, “The [Levy and Meltzer] study says the evidence suggests [that health insurance improves health], but causality is difficult to discern” [emphasis added]. Seems to me that the Tanner/Cannon claim to which Klein objects – that Levy and Meltzer “were unable to establish a ‘causal relationship’ between health insurance and better health” – positively flows from Klein’s characterization. So tell me again what the fuss is about?

Ah, yes. Klein believes that our characterization misleads the reader. He presumes that “most readers understood that passage to say that the researchers couldn’t establish a relationship between health insurance and health.”

Note that Klein drops the word causal. That’s because he assumes that readers of the L.A. Times’ op/ed page would equate were unable to establish a ‘causal relationship’ ” with were unable to establish any relationship.” That is, either readers of the L.A. Times’ op/ed page don’t know what the word causal means, or they have a blind spot for it when it appears in print. (I do not exaggerate. Klein writes explicitly of “the public’s unfamiliarity with the concept of ‘causality.’”)

That assumption about readers of the L.A. Times’ op/ed page means that Klein is not denouncing what Tanner and I actually wrote (note the substantial agreement above), but what he assumes was the readers’ misinterpretation of what we wrote. Perhaps he should direct his ire at them.

Two conclusions are possible:

  1. Klein, Tanner, and I all have a dim view of readers of the L.A. Times’ op/ed page. Tanner and I are trying to deceive them, while Klein is their savior.
  2. Klein is the only one with a dim view of the readers of the L.A. Times’ op/ed page, and he is willing to slight them if that’s what it takes to defend the idea of universal coverage.

Whatever the case, it’s nice to think that if readers of the L.A. Times’ op/ed page do understand causality, then any attempt Tanner and I made to deceive them would have failed, and Klein would have nothing to criticize.

(Another oddity…Klein accuses my initial response of avoiding his chief criticism regarding causality by “focus[ing] mainly” on the issue of cost-effectiveness. Actually, I spent 600 words on his main criticism and only 131 words on cost-effectiveness. Que peut-on dit dire?)

England Contemplating Territorial Tax Regime

The core principles of good tax policy are low tax rates, taxing income only one time (no more double-taxation of saving and investment), no special loopholes (which also means simplicity), and territoriality (only tax income inside national borders). The Anglo-Saxon world is often guilty of violating the last principle, generally imposing worldwide taxation. Fortunately, tax competition is eroding the ability of nations to impose bad tax policy. The United States, for instance, approved the Homeland Investment Act a couple of years ago, which temporarily allowed companies to repatriate foreign-source income at a much lower rate of tax. The United Kingdom is now considering a a much better solution – a permanent change that would move much closer to a territorial tax regime. As is so often the case, tax competition is the impetus for the reform. British policy makers are afraid that companies are moving abroad to escape the anti-competitive burden of having foreign-source income subject to tax by both the nation where it was earned (which is appropriate) and the British Exchequer. Tax-news.com reports on this potentially important development:

The United Kingdom government is reportedly working on proposals that would allow British-based multinationals to repatriate billions of pounds in profits earned overseas free of tax. According to a report by the Financial Times, the Treasury is preparing to launch a consultation document this Spring which will discuss a number of options, including an European-style “participation exemption” for foreign dividends, as well as a different approach to the anti-avoidance rules that impose tax on profits generated in low-tax jurisdictions. The move by the British government is being viewed as part of its effort to improve the corporate tax regime, after several warnings from business groups that recent additions to UK tax legislation are making the country increasingly uncompetitive compared with its economic rivals. Seemingly heeding these calls, Chancellor of the Exchequer Gordon Brown announced in his budget statement last month a 2% cut in corporate tax to 28%, bringing the UK below the OECD corporate tax average. …it is anticipated that the change would be welcomed by companies, as they would no longer have to apply complex tax strategies to minimise taxes on repatriated profits.

Kurt Vonnegut, Libertarian?

No, probably not. He called himself a socialist. But his satires of war and government often sounded libertarian themes. One libertarian argues that his 1952 novel Player Piano, though usually understood as a critique of technology and automation, can also be seen as a prescient criticism of “neocon America,” in which “the centralization of corporate/government power over the economy and security forces is a legacy of the last war, which was largely responsible for putting engineers and managers in charge of a command economy.”

And he did write one of the great libertarian short stories, “Harrison Bergeron,” the story of a world in which the U.S. Handicapper General gives everyone “handicaps” in order to make us all equal–masks for the beautiful, weights for the strong or fast, buzzers in the brains of the smart. The tagline of the 1995 Showtime movie starring Sean Astin and Christopher Plummer was “All men are not created equal. It is the purpose of the Government to make them so.”

Socialist or not, we could use more satirists and fewer red team/blue team party-liners. We will miss Kurt Vonnegut.

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