BBC Story Highlights Moral Bankruptcy of Europe’s High-Tax Politicians

As noted previously, high-tax European governments are upset that taxpayers are fleeing to Switzerland. The economic aspects of this issue are important, but a BBC story raises two interesting philosophical questions. First, the socialist candidate for the French presidency accuses Switzerland of “looting” its neighbor. But this implies that individuals belong to the government and that they do not have the individual freedom and sovereignty to choose where they want to live. Second, the European Union’s Ambassador to Switzerland argues that low tax rates are a subsidy. This argument implies that income belongs to government and it creates a moral equivalence between an interest group that seeks to seize other people’s wealth through the political process and taxpayers who merely want to keep more of their own money. Sounds absurd, but read the BBC report:

Switzerland’s decentralised taxation system is causing irritation among its European Union neighbours. The row was triggered by the decision, late last year, of the French rock star Johnny Hallyday to leave France and take up residence in the Swiss Alpine resort of Gstaad. …In France, where Hallyday is a national icon, there is anger. Advisers to the French presidential candidate Segolene Royal have accused Switzerland of “looting” its neighbours. …Swiss cantons are allowed to set their own taxes and many are now engaging in an internal corporate tax-cutting competition. Canton Obwalden, in central Switzerland, slashed its corporate tax rate to just 6.6% at the start of 2006; it attracted 376 new companies in just 11 months. The European Commission has warned that this may constitute an unfair subsidy under the European Free Trade Agreement. “Talk to any tax expert,” said Michael Reiterer, the commission’s new ambassador to Switzerland. “This is recognised as a subsidy. And there we think Switzerland should think a bit whether behaviour which is clearly outlawed in the EU is the best policy to follow in such a close relationship between two partners.” …Stefan Kux, head of economic development for Zurich, is not the least bit worried by the complaints from Brussels, in fact he sees them as quite positive. “We are profiting from the mistakes of our neighbours,” he explained. “They are making economic promotion for us for free, everyone now knows that Switzerland has an excellent tax system, so I’m very grateful.” …within the Swiss government there is little patience with Europe’s objections over tax. “The Swiss position is on very safe ground,” insisted Adrian Sollberger, spokesman for Switzerland’s office of European policy. “We do not have an agreement to harmonise taxes, none whatsoever, so by definition there cannot be any infringement of any agreement between Switzerland and the EU.” …the Swiss government will not budge; ministers say they view an attack on the tax system as an attack on Swiss sovereignty. The row is sure to simmer on. Meanwhile the businesses and the celebrities just keep on coming.

John McCain’s Empty Threat

The NYT has a front-pager this morning on the fact that “In Senate, Allies of Bush Attempt to Halt Iraq Vote.” It describes a resolution offered by John McCain, Joe Lieberman, and Lindsey Graham that seeks to “set benchmarks for the Iraqi government and describe the troop increase as a final chance for the United States to restore security in Baghdad.”

“Final chance?” Sounds serious. But is it? Consider McCain and Lieberman were at AEI earlier this month, warning, in the case of Senator McCain, that if we were to leave, it would be “the beginning of the end, in some respects” of Western civilization.

But say you’re an adviser to Maliki, and you see these two offering a resolution that says this is your last chance, this is it, we’ll pull the plug if you can’t get it together. (Put aside the fact that there’s no chance either of them would ever vote to actually cut off funding for the war, the only practical tool Congress has to stop it.) Then your researchers bring you their AEI presentation in which McCain says it’s the beginning of the end of Western civilization if we leave.

Would you be worried? Would you think “Uh oh, if we don’t meet all of the American objectives, John McCain and Joe Lieberman are going to stop supporting the war. Of course, in their own minds, leaving on those terms would mean the beginning of the end of Western civilization, but they still might do it!” Doubtful.

If John McCain and Joe Lieberman think the stakes are as high as they implied at AEI, then they should just say flat-out: We can’t leave, no matter what, unless we achieve our goals. That’s an honest position, although one I think profoundly misguided.

Of course, the American people wouldn’t be too hot on such a proclamation. They certainly wouldn’t be inclined to, say, elect someone who said that to be president. But consistency’s never been McCain’s strong point.

It’s almost like the guy’s running for president or something.

The Ol’ College Lies

Most college kids have no choice but to subsist on Ramen noodles, and every year skimping on aid keeps tons of fully-qualified students out of higher education, right? Wrong, but you’d certainly believe such things if you listened to the nations’ student interest groups, or most of our politicians.

“We must address the crisis in college affordability that affects every low- and middle-income family and threatens our economic progress,” said Senator Edward M. Kennedy (D-MA) after the House recently passed a bill that would cut in half interest rates on subsidized federal student loans. “I applaud the efforts of my colleagues in the House and look forward to taking up this critical issue in the Senate very soon.”

The problem with continuing to propagate these ideas, as I and others have argued many times, is that if anything, making student aid cheaper and more plentiful actually drives college “sticker prices” higher by pulling up demand and allowing colleges to increase prices with impunity. We’ve also argued that politicians encouraging practically everyone to go to college – and providing them with big subsidies to do so – is hugely wasteful, pushing many kids into higher education who aren’t prepared for it, and squandering huge bundles of student and taxpayer money in the process.

A few articles in today’s newspapers illustrate well the yawning gap between the rhetoric and reality of higher education.

First, there is a collection of pieces in USA Today which reveal that as much as students complain about crushing college costs and massive debt, recent grads are both generally happy with their college experiences, and substantially to blame for their own debt burdens.

In a survey of 100 recent graduates, USA Today found that 68 percent of respondents thought that their college experiences were worth the price, and 44 percent thought the value of their education exceeded the costs. Even more interesting were the newspaper’s findings about debt and spending:

More than a third said some debt was unavoidable, but 60% said they should have “absolutely” monitored spending more closely.

Books, lab supplies — “those are just excuses we all make to justify our high debt load,” says pilot Brian Lee, 27, of Hacienda Heights, Calif., who owes more than $70,000 in loans and $20,000 on credit cards. In truth, he says, much unnecessary spending goes to “luxuries like eating out and fancy gadgets.”

Now, you should take these findings with a grain of salt, because a newspaper survey of only 100 recent graduates probably isn’t representative of graduates in general. (I couldn’t find a description of USA Today’s methodology to prove this one way or the other). However, the sob-stories about kids working as hard as they can but still coming up short on college funds that start most news pieces about college costs also aren’t representative, and almost always leave out relevant details about kids’ spending choices.

Sometimes, reporters even ignore evidence of wasteful spending that is right in front of their eyes. (Hit the link, watch the video, and then check out this article.) At the very least, the USA Today pieces provide some desperately needed balance.

The second story of interest today, from the Tennessean, shows that not only do many students waste their money while in college, but lots of kids receive aid who will never get their sheepskins:

Only 1 of every 4 students who received the first batch of lottery-funded HOPE scholarships will graduate in 2007-08 with their awards intact….

A report prepared by the Tennessee Higher Education Commission for state lawmakers also showed that, between 2005 and 2006, 47 percent of students at four-year schools lost their HOPE scholarships and 65 percent at two-year schools failed to keep their awards….

At this point, all involved in the program seem to agree on one thing: High school students in the state need to arrive at college better prepared.

It is one thing to get the money to go to college. It is another thing entirely, apparently, to be able to make good use of it.

None of this, of course, says that there aren’t some kids with great aptitude for higher education who genuinely can’t afford it. There are. But considering student aid’s inflationary effect on tuition, many students’ wasteful spending habits, and all the kids getting aid on whom it is squandered, and it seems pretty clear that we all – the truly poor included – would be better off if government just got out of the aid business completely and returned the money to taxpayers.

Doha, TPA Extension, and the Farm Bill: the Axis of Frustration

President Bush went to Illinois yesterday, asking for Congressional renewal of his authority (called “Trade Promotion Authority”) to negotiate trade agreements and send them to Congress for an up-or-down vote without amendment. The present TPA expires at the end of June 2007. For those of us who have strong doubts about the ability of members of Congress to take the broad view when considering trade agreements, TPA is a necessary–but not sufficient–condition for the United States to pursue trade liberalization in partnership with other nations, including the ailing Doha round of world trade negotiations and other preferential trade agreements like those underway with South Korea and Malaysia. (This Washington Post article has a good overview of the stakes and politics behind the battle for TPA.)

(Side Note: it was surely no accident that President Bush chose to make his case at the headquarters of a successful exporter [a sterling company Caterpillar may be] rather than, as Grant Aldonas suggests in the Post article, a company that delivers cheap imports to consumers. Mercantalism is alive and well, in case there were any doubts.)

Basically, the bind is this: without TPA, Doha is dead. But many are suggesting that lawmakers will be reluctant to extend TPA if no Doha deal is imminent. Similarly, the new Farm Bill, due for enactment in September, may be an extension of the unsatisfactory 2002 Farm Bill if the Doha round does not exert significant pressure to reform, even though reform of U.S. agricultural policy would go a long way to helping the round succeed.

Don’t look to key members of Congress for their support in unraveling this knot, though. An article at the Delta Farm Press website contains some worrying statements from the new House Agriculture Committee Chair Colin Peterson. The money quote:

There’s pressure on us to change the farm bill because “that’s the only way we can get a trade deal,” said Peterson, a Minnesota Democrat. “Now, I’m sorry, but I’ve had enough of these trade deals. And unless we can get something good out of, I don’t give a darn if we get one.”

Something tells me that Chairman Peterson’s statement was not meant to be a be read as an endorsement of unilateral trade liberalization.

Amazing Grace, How Sweet the Story

Amazing Grace is a beautiful song, but I’ve never been entirely comfortable with it. I didn’t like that line “saved a wretch like me.” I don’t think I’m a wretch. Nor are most of my friends.

But once I learned the story behind the song (with a little help from my friends at the Mackinac Center), I became more sympathetic: John Newton, who wrote Amazing Grace, really was a wretch. Now a new movie is going to bring that story to millions of people.

John Newton was a slave trader and by his own testimony an infidel. He was converted to Christianity but continued in the slave trade. Eventually, however, he renounced that vile life and became an evangelical minister in the Church of England and an abolitionist. “Was blind but now I see,” indeed.

Among the people who heard his preaching was a young member of parliament, William Wilberforce, who was inspired to lead a long campaign for the abolition of slavery – from his maiden speech in 1789 to the final passage of the Abolition Act a month after his death in 1833.

This is one of the greatest stories in history. And now it is the subject of an impressive new movie. I’ve only seen the trailer, but the production values are obviously good, and I’m told that the movie is great. Michael Apted directed. Ioan Gruffudd (best known as Horatio Hornblower) plays Wilberforce. It also features the fine British actors Albert Finney, Rufus Sewell, Ciaran Hinds, Michael Gambon, and Toby Jones. It opens on February 23.

The story of Newton, Wilberforce, abolition, and Amazing Grace is very popular among evangelical Christians. It’s an unambiguous advance for human freedom and dignity in which evangelicals played central roles. And that’s why the movie is produced by Bristol Bay Productions (owned by Philip Anschutz, a billionaire conservative) which also produced Ray. Anschutz owns another film company which produced The Chronicles of Narnia.

If God’s amazing grace caused John Newton to give up slave trading, then who could object? But you don’t have to be a Christian to appreciate what promises to be a well-made movie about this great triumph of liberty.

And for those of us who struggle in the vineyards year after year, trying to secure the blessings of liberty to ourselves and our posterity, the story reminds us that humanity has made great progress toward freedom, that each battle for freedom can be long and seemingly futile, but that the goal is worth time and money and effort.

I was once challenged by a Chicago School economist, who thinks everything can be measured, to name the most important libertarian accomplishment in history. I said it was the abolition of slavery. OK, name another, he replied. “The bringing of power under the rule of law,” I suggested. He wanted to know how you would measure that. But even without a caliper we can see the importance of that accomplishment. We can also see that neither of these is yet a final victory.

May Amazing Grace inspire us to continue working, as long as it takes, to liberate men and women from the arbitrary rule of others and to constrain power with the chains of law.

Cross-posted from Comment is free.

Visa Policies Costing U.S. Billions of Dollars

The United States is losing billions of dollars a year and the goodwill of millions of people by unnecessarily strict visa policies that discourage tourists, students and business travelers from coming to the United States.

The problem has become so critical that a broad coalition of American businesses, universities and other interest groups are planning to launch a campaign today for needed visa reform.

The U.S. government was obviously not doing enough before September 11, 2001, to keep dangerous people out of the country, but changes to U.S. visa policy since then have gone far beyond legitimate security needs. Tighter visa rules are keeping out potentially millions of visitors who pose no security threat to the United States.

As an article in this morning’s Financial Times reported:

The National Foreign Trade Council estimated that US businesses lost more than $30bn in the two years before mid-2004 because of the visa restrictions imposed after the 2001 terrorist attacks. That figure is likely to be much larger now.
“American businesses now routinely hold training seminars, conferences and sometimes even board meetings outside of the US,” said Bill Reinsch, head of the NFTC. “At the same time you see foreign universities attracting more students by advertising the fact that they don’t have a US-style visa regime.”

One step toward a more rational U.S. visa policy would be to extend the visa waiver program to such economically developed allies as Poland, Hungary, the Czech Republic, Greece, and South Korea. The program allows tourists and business travelers to enter the United States for up to 90 days without a visa. Expanding the program to selected countries would boost tourism and goodwill toward the United States without compromising national security.

I write about the need to expand the program in a new Cato Free Trade Bulletin and talk about it in a new Cato podcast.