Chuck Schumer is half right.
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10 Years of Drug Decriminalization in Portugal
Ten years ago this month, Portugal rejected the conventional approach to drug policy–more laws, stiffer prison sentences, more police–and went the other way by decriminalizing all drugs, even cocaine and heroin. The drug warriors predicted a disaster. They said drug use would spike and there would be a public health crisis. That did not happen. As Glenn Greenwald showed in a 2009 Cato report, Portugal is doing better than before and in many respects is doing better than other countries in the European Union that take the hard-line, criminal approach to drug use. The buzzword in Washington these days is “evidence-based research.” Well, there you have it.
More here and here. Thanks to the Huffington Post for the pointer.
Communism, Capitalism, Incentives, and Irony
This excerpt, from an article in the Washington Post on the 90th anniversary of China’s communist party, amused me:
“A real Communist Party member should always remember that their aim is to serve the people,” said Li Qingrong, who owns a travel agency in Yan’an, the city known as the birthplace of the communist revolution. “Nowadays, when you read the newspaper, you see so many cases of corruption. Maybe they should come here to Yan’an to see if their soul can be touched by the revolutionary spirit. Then maybe they would change their behavior.”
Li, who is not a party member, has seen her business double over the past year, with the influx of mostly communist tour groups organized by schools, government offices and workplaces to glimpse the party’s more humble early years.
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CAP Leftists Have Accidental Encounter with the Laffer Curve, Learn Nothing
The big-government advocates at the Center for American Progress recently released a series of charts designed to prove America is a low-tax nation. I wish this was the case.
The United States does have a lower overall tax burden than Europe, which is shown in one of the CAP charts, but that doesn’t exactly demonstrate that taxes are low in America. Unless, of course, you think weighing less than an offensive lineman in the NFL is proof of being skinny.
But the one chart that jumped out at me was the one showing that the United States collects less corporate tax revenue than other developed nations. The CAP document states, with obvious disapproval, that “Corporate income tax revenue in the United States is about 25 percent below the OECD average.”
The obvious implication, at least for the uninformed reader, is that the United States should increase the corporate tax burden.
But here’s some information that CAP didn’t bother to include in the study. The U.S. corporate tax rate is more than 39 percent and the average corporate tax rate in Europe is less than 25 percent.
So let’s ponder these interesting facts. CAP is right that the U.S. collects less tax revenue from corporations, but even they would be forced to admit (though they omit the info from their report) that the U.S. corporate tax rate is much higher. Let’s see…higher tax rate-lower revenue…lower tax rate-higher revenue…this seems vaguely familiar.
Could this possibly be an example of that “crazy” concept of (gasp!) a Laffer Curve? To be sure, it is only in rare cases, when tax rates get very high, that researchers find that high tax rates lose revenue. In most cases, the Laffer Curve simply implies that higher tax rates won’t raise as much money as politicians want.
But have our friends at CAP inadvertently identified one of those cases where a tax cut (i.e., a lower corporate tax rate) would “pay for itself”?
There certainly is strong evidence for this proposition. In a 2007 study, Alex Brill and Kevin Hassett of the American Enterprise Institute found that the revenue-maximizing corporate tax rate is about 25 percent (click chart to enlarge).
Somehow, I suspect this wasn’t their intention, but I want to thank the statists at CAP for reminding us about the self-destructive impact of high tax rates.
For those who want to learn more about the Laffer Curve, these three videos will make you more knowledgeable than 99 percent of people in Washington (not a big achievement, I realize, but the information is still useful).
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Ideas Have Had Consequences — in the United States and in China
At the Britannica Blog I take a look at the founding ideas of the United States and the Communist Party of China, both of which are celebrating anniversaries this weekend:
The ideas of the Declaration, given legal form in the Constitution, took the United States of America from a small frontier outpost on the edge of the developed world to the richest country in the world in scarcely a century. The country failed in many ways to live up to the vision of the Declaration, notably in the institution of chattel slavery. But over the next two centuries that vision inspired Americans to extend the promises of the Declaration—life, liberty, and the pursuit of happiness—to more and more people.
China of course followed a different vision. Take the speech of Mao Zedong on July 1, 1949, as his Communist armies neared victory. The speech was titled, “On the People’s Democratic Dictatorship.” Instead of life, liberty, and the pursuit of happiness, it spoke of “the extinction of classes, state power and parties,” of “a socialist and communist society,” of the nationalization of private enterprise and the socialization of agriculture, of a “great and splendid socialist state” in Russia, and especially of “a powerful state apparatus” in the hands of a “people’s democratic dictatorship.”
Tragically, unbelievably, this vision appealed not only to many Chinese but even to Americans and Europeans, some of them prominent. But from the beginning it went terribly wrong, as really should have been predicted.…What inspired many American and European leftists was that Mao really seemed to believe in the communist vision. And the attempt to actually implement communism leads to disaster and death.
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Deval Patrick’s Defense of Our $6 Trillion Government
In the apparent belief that the Tea Party movement and Americans’ general aversion to higher taxes are conjured out of thin air by master manipulator Grover Norquist, Massachusetts governor Deval Patrick offers this devastating riposte to Norquist’s support for limited government:
I remember sitting in the Dunster House dining hall at Harvard with Norquist when we were sophomores or juniors in college, while he explained his view of government, or lack thereof. It sounded logical — the notion that we could live independently of each other, making our own decisions in our own self-interest. But then who puts out the fires? Who answers the calls to 911? Who educates poor children? Who helps people with disabilities?
Good point. And we could go on. Without government, who would make shoes and ensure that they came in different sizes? Who would invent and build software programs? Who would supply us with home and automobile insurance to protect us from the risks of life? Who would feed and clothe and house us?
And then one might also wonder: Governor Patrick asks, “Who educates poor children?” in a society with limited government. Right now, government provides schooling for poor children, but all too few of them actually get educated. Check out the achievement gap for black students — in Massachusetts and elsewhere — in this Department of Education report. Perhaps Governor Patrick should make sure government is actually doing the things he worries about before he claims that a different system couldn’t do them.
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Government Spending Isn’t Working
Over at the Daily Caller, I provide a primer on why government spending doesn’t “stimulate” the economy over the short-run or the long-run.
I look at the huge size of government spending in the United States, and I review the effects of recent stimulus efforts.
Then I describe the government’s “leaky bucket,” which explains why spending harms the economy in the long run, whether or not there are any short-run stimulus effects.
With America heading rapidly toward a spending-fueled debt crisis, these certainly are the times the try men’s souls. Nonetheless, please have a Happy Fourth!