The More Things Change . . .

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I will confess that I found this past presidential campaign sheer hell. I detested both Clinton and Trump, and voted for neither. I hoped that both would lose, and my only consolation was that they both did lose: Trump was defeated decisively in the popular vote, while Clinton was defeated decisively in the Electoral College contest. My view was and is that Trump will transform the Republican Party into a populist one, pushing nativism, protectionism, corporatism, and isolationism. It saddened me to see writers I had previously admired — such as Larry Kudlow and Steve Moore — who have long argued against the populist siren call to the Republican Party, succumb to it at last, in the form of Trump — The Boss. They, along with a large group of other soi-disant free market commentators, have been seduced by populism. This group I call “the Herd.”

Now, when those of us who are classical liberals — i.e., believers in the free movement of products, of physical capital, and of human capital — expressed alarm at Trump’s explicitly expressed nativism, animus toward Mexicans and Chinese, sexism of the crudest sort, and obvious protectionist aversion to free trade, the Kudlow-Moore Herd mooed, “Oh, he’s just saying that to get the workers’ votes. Don’t worry — he isn’t serious — it’s just bait for the bubbas.” The Herd never asked why the rest of us would ever be attracted by the pitch “Vote for The Boss — he would never do what he says he will!”

Well, even before assuming office, The Boss has started making major decisions as if he were already in charge. It’s as if he couldn’t wait. And it seems he was serious in his campaign.

One highly touted decision The Boss made recently was to coerce Carrier, a division of United Technologies that makes HVAC units, to keep roughly half the workers who were slated to lose jobs when the plant was moved to Mexico. Under pressure, Carrier agreed to keep about 800 of the jobs here. (The Boss’ propaganda ministry said it was 1,150 jobs, but it turns out that included 350 support jobs that were slated to stay anyway.) Gregory Hayes, United Technologies’ CEO, gave in to The Boss, and The Boss and his myrmidons hailed this as a triumph. Indiana, veep-elect Mike Pence’s state, sweetened the deal by giving the company $7 million in tax incentives (read: taxpayer subsidies), but clearly Hayes was most concerned with the continuing bad publicity driven by The Boss and his Herd, and the threat of a 35% tariff on Carrier gas furnaces made in Mexico.

The Herd never asked why the rest of us would ever be attracted by the pitch “Vote for The Boss — he would never do what he says he will!”

The reactions to The Boss’ gambit have been fascinating, to put it mildly. Richly ironic was Sarah Palin’s denunciation of the deal as “crony capitalism.” She wrote ruefully, “When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent. . . . Republicans oppose this, remember? Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is one big fail.” This is rich, considering Palin was one of the Republican Party elite who came out in support of Trump. And she may come to rue her small speck of intellectual honesty, since she has been rumored to be under consideration for government positions and The Boss has shown he tends to appoint his supporters to administrative posts.

Moving now from the ironic to the surreal, the arch-free-market opponent Bernie Sanders also criticized the deal. Yes, socialist Sanders was angry that The Boss didn’t “save” all the jobs by immediately imposing a massive import tax on the products of any company that dares to offshore its operations. Sanders thinks that “United Technologies took Trump hostage and won,” by getting tax breaks in exchange for only half the jobs. In fact, Sanders holds that The Boss has endangered the jobs of countless American workers, because “he has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives. Even corporations that weren’t thinking of offshoring jobs will most probably be reevaluating their stance [now].”

Surreal indeed! The loopy old Stalinist tool can’t imagine any other reason why businesses would legitimately want to move operations abroad than to get tax breaks. Certainly not to escape our punitive corporate income taxes, currently the highest in the industrialized world, and about triple the rate of Ireland. Certainly not because of our dysfunctional common law system, the only one without the “loser-pay” (or “British”) rule that limits frivolous lawsuits. Certainly not to escape Obamacare, a law that saddles companies with the obligation to provide costly health insurance to their full-time employees whenever they have more than 49 of them. And certainly not because of the metastasizing cancer of regulation, which under Obama has simply exploded. Here the senile socialist Sanders complains that United Technologies made a profit last year of $7.6 billion, and its top execs received $50 million each. (Imagine that! Top execs being paid less than one tenth of one percent of the billions in profits they helped produce! Outrageously generous!)

The loopy old Stalinist tool can’t imagine any other reason why businesses would legitimately want to move operations abroad than to get tax breaks.

In a revealing interview with CNBC’s Jim Cramer, United Technologies’ CEO Hayes explained his thinking. Nobody listening to the interview could doubt that Hayes is a decent and patriotic man, but also a man committed to running his company profitably and for the long term. He signaled that he caved to The Boss’ demands because he feared government retaliation against the other three United Technologies divisions — Pratt Whitney engines, Otis Elevator, and the aerospace division — no less than against Carrier. As he put it, “I was born at night, but not last night. I also know that about 10% of our revenue comes from the US government.”

Hayes outlined the reasons why his company had moved Carrier’s — but no other divisions’ — operations down to Mexico. While the skills of the employees at the other divisions are extraordinarily high, the skills at the assembly line for HVAC units are much lower. Moreover, Hayes noted, not only are labor costs lower in Mexico (80% lower) but the company’s existing Mexican plants, the absentee rate was only 1% and the turnover rate only 2%. These figures are much lower than those for the American plant.

Here Hayes touched upon two points I have to work to explain to my business ethics students — who, despite their choice of major, often incline to the Clinton-Sanders-Obama view of capitalism. First, besides intellectual virtues, employers have to consider moral virtues as well. And employees are often not “perfect substitutes” here: some are more inclined to show up for work reliably and work enthusiastically and conscientiously, because for them work is a moral prerequisite for being a virtuous person. Unfortunately, this attitude is more prevalent abroad than in heavily unionized American factories. (I attribute this to the unionization, not the Americanization, of the workers.) Second, what makes employees more valuable is their productivity, not their relatively low salaries. The top paid quarterback in the NFL is a lucky fellow named Luck, who earns $26.4 million a year from the Colts organization. Suppose I called the Colts management and offered my services for a mere 1% of that cost. Would the Colts jump at the chance to “snap up” an old, out-of-shape, overweight, nearsighted, clumsy, uncoordinated philosopher who has never played football in his ludicrous life? Hardly. But if the Colts management could find a man with the skill set of Mr. Luck for significantly less, then they might consider it.

What makes employees more valuable is their productivity, not their relatively low salaries.

Hayes explored this latter point when he noted that United Technologies sent 45,000 employees through their “employee scholar” program, with 38,000 receiving degrees. United Technologies spent $1.2 billion over the last two decades on increasing the skills — the intellectual virtue — of its workforce. And Cramer — an intellectually honest progressive liberal, which is as rare as a sympathetic fascist — pointed out for his CNBC audience (to wit, progressives who make money off capitalism even as they despise it) that United Technologies had early moved a plant from Nogales, Mexico to Florence, South Carolina — at a cost of $60 million in the first year. Notice that neither The Boss’ propaganda machine nor the Herd of establishment Republican apologists even mentioned the onshoring of the bigger Otis plant at great expense, nor the huge amount of money the company has put into improving the skills of tens of thousands of American workers. They mentioned only the 800 inefficient assembly-line jobs.

Hayes noted that United Technologies will now invest $16 million in the existing Carrier plant, to automate it as much as possible, to make it “cost competitive.” So the jobs “saved” by The Boss are not destined to last long. Yeah, the Mexicans won’t “steal them,” but the robots will. In short, don’t blame Juan — blame R2D2!

Hayes made one other point that one wishes The Boss could grasp: “The genie of globalization is not going back into the bottle. . . . Free trade is still essential to the growth of this country. This country was founded on two principles: immigration and free trade.” Boss, let me introduce you to Thomas Jefferson!

But the Herd was mightily pleased with what The Boss did to United Technologies. Larry Kudlow and Neil Cavuto, who should know better than to tout protectionism and cronyism, approved on air, with Cavuto adding the deft ad misericordiam touch that these jobs were saved just in time for Christmas — which rather makes The Boss the Savior.

The jobs “saved” by Trump are not destined to last long. The Mexicans won’t “steal them,” but the robots will.

One of the founding members of the Herd — Glenn Reynolds — chimed in his support for The Boss’ crony capitalism. Reynolds wrote an amazing — really, psychedelic — piece favorably comparing The Boss and his tweets with FDR and his radio “fireside chats.” Like, far out, man, America is in the Great Depression redivivus, and the Boss is here to save us!

Of course, as Reynolds himself concedes, FDR probably extended the Depression by seven years, but he certainly made economically illiterate Americans feel like he cared. And I guess it’s better to feel the pain you cause in others than to be oblivious to it, although I am more inclined to say you shouldn’t cause the freaking pain to begin with.

But Reynolds’ point is that The Boss, in “saving” these pathetically few jobs, showed more “compassion” than Obama, because when Obama was asked about saving jobs at this Carrier plant, the Prez said that the answer was improved job (re)training. That caused Reynolds to wax sanctimonious, saying that when a factory closes (from outsourcing, free trade, automation, or just plain producing a product the public doesn’t want), the people laid off and the local economy suffer. And the existing job retraining programs — including the Trade Adjustment Assistance program (TAA) — don’t work well. Here Reynolds quotes a study done by the Heritage Foundation that says the TAA doesn’t work — though considering the infamous hit-report the Heritage Foundation did some years back on the cost of immigrants to the nation, which cemented the organization’s turn from conservativism to populism, I no longer put any credence in its reports.

Now, readers of this journal over the last eight years will, I believe, not accuse me of being a blind Obama supporter — far from it. But in this case, Obama is correct and Reynolds, the Heritage Gang, and the rest of the Herd is wrong. We all learned from Joseph Schumpeter that economic progress is driven by “gales of creative destruction,” when old, less efficient ways of doing business are eliminated by newer, more efficient ones. Cathode ray tube TVs died rapidly when flat screens came out; VHS tapes died rapidly when DVDs became available. And human-piloted cars, trucks, and buses may soon be replaced by autopiloted ones. And we all know what Schumpeter pointed out, that this process is often a hardship on some workers as they undergo retraining for more productive jobs. No doubt, if truck, delivery van, and bus drivers, as well as cab and Uber drivers are all put out of work by self-driving cars, some people will find it hard to find other, more productive jobs over a relatively short period of time. But most will find other, more productive work, easily.

FDR probably extended the Depression by seven years, but he certainly made economically illiterate Americans feel like he cared.

For those workers who can’t make the shift easily, the answer is precisely to retrain them. What other options are there? To let them languish on food stamps? Or (as the lumpenprotectionists, Luddites, and nativists would urge) simply outlaw progress? Let’s face it: progress is a bitch!

Let’s consider this for a moment. No doubt many truck and cab drivers will oppose self-piloting vehicles. But we as a country lose roughly 38,000 people a year in auto accidents, more than we lost in the Korean War. Does Mr. Reynolds — so much more compassionate than we unpatriotic, cosmopolitan, hard-hearted, elitist, and egoistic globalists — really want to see those deaths occur forever, lest some cabbie in Queens can’t find work?

As to why the TAA and the other few dozen other government retraining programs don’t work well, they don’t work well for the same reason public schools don’t work well: when the government runs a monopoly, it fails just all other monopolies do. The answer (in both cases) is to separate the government funding from the service by voucherizing it.

Specifically, we should kill all the retraining programs, along with (say) the Department of Energy, and use all that money for vouchers for long-term unemployed so that they can go to a public or private community colleges to get retrained (or get the high-school diploma they should have gotten when they were young). I would allow trade unions and private industries to use these vouchers to expand their apprenticeship and training programs they already have, and to open full-fledged trade schools as well. For example, the United Electrical, Radio and Machine Workers of America could run a chain of trade schools where people could come to learn the trades, paying the union with vouchers and perhaps by agreeing to be dues-payers for some period of time (say, ten years). Oh, and end the Obama Administration’s war on for-profit colleges, a war that killed so many hundreds of decent trade schools for no reason other than a desire to please the teacher’s unions. (The fall of the ITT college chain alone eliminated 130 campuses.)

There are several reasons why The Boss’ “victory for American jobs” is in fact disastrously bad.

First, it forces Carrier to keep paying high wages to its employees, thus ensuring that it will be unable to compete with foreign-produced products in the long term. This is the kind of “good deal” the US autoworkers received: ludicrously sweet contracts that drove two of the major American automakers into bankruptcy.

Government retraining programs don’t work well for the same reason public schools don’t: when the government runs a monopoly, it fails just all other monopolies do.

Second, it punishes American consumers, who will be forced not just to pay continuing high prices for Carrier’s products but also to pay higher taxes to provide the subsidies. The Boss’ “big-hearted” concern for the workers obviously did not extend to the consumers or taxpayers.

Third, as Bastiat would note, while the populace — with the Herd leading the cheers — hails the Boss for the 800 jobs saved, it will not see the many of thousands of jobs that will be lost. Any company, foreign or domestic, that is thinking of building new plants here knows that if any of those facilities turn out to be unprofitable — say, because the workers form a union as unreasonable as the UAW — and the company moves to close the plant, The Boss will punish it with whatever sort of sanctions he can dream up. As the French have discovered, the harder you make it to fire workers, the more reluctant companies will be to hire them in the first place, so you wind up with chronic high unemployment.

This is where the Herd may be miscalculating. Kudlow, Moore, Laffer, Cavuto, Reynolds, et.al. assume that with lower corporate taxes and fewer regulations, the economy will boom and job growth explode as companies repatriate foreign profits and open new plants here. But in the face of The Boss’ demagogic, autocratic governance, the companies may instead use the money to buy back stock in their own outfits or invest the money abroad. The good effects of The Boss’ more classically liberal policies may be trumped by the bad effects of his populist ones.

The harder you make it to fire workers, the more reluctant companies will be to hire them in the first place, so you wind up with chronic high unemployment.

In fact, the Herd’s admiring lowing in response to his bullying of Carrier may be confirming to The Boss that his protectionism is working. He moved on rapidly to attack another company — Rexnord Corporation — for daring to move a plant to Mexico and “viciously fire” 300 existing employees. So far the company hasn’t caved, leading The Boss to renew his threat to hit Mexican imports with a 35% tariff. Ford, which he threatened earlier, still appears to be moving forward with plans to build small cars in Mexico. So The Boss may well be forced to carry through with his threat.

This is all reminiscent of Obama’s first year, in which he started trade wars with Mexico and Canada, while engaging in crony capitalism with environmentalist companies. As the cynical but insightful French put it, the more things change, the more they stay the same.




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Manna from Heaven

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When we talk of economics, we often do it by means of labels and mantras. Discussing economic subjects in this way means that we do not fully discuss them; we just use words and phrases that suggest preconceived notions. I think this is because economics is predominantly political, and “political” is another way of saying “snake oil sales.”

One mantra that I often hear is people’s invocation of a Robin Hood morality, the morality of robbing Peter to pay Paul: Robin Hood cared for the poor downtrodden (Paul) with the wealth he stole from the fat cats (Peter). What is ignored about this fairy tale is that Peter is the lord of the land who uses his governmental authority to confiscate the property of Paul, the peasants. Robin is a hero because he fights the totalitarian government of Peter to return confiscated wealth to oppressed taxpayers.

What got me thinking about the labels that political commentators use in discussing economics was Hillary Clinton’s assertion that Donald Trump’s plan to cut taxes in order to revive the economy was just “Trumped up trickle-down.” “Trickle-down” is the label often used by the political enemies of leaving wealth in the hands of CEOs and others of corporate administrative rank. The “trickle-down” label comes from the idea that these people spend the wealth hiring workers to construct whatever their companies’ products may be. Thus, wealth “trickles down” from the wealthy administrators to the needy workers.

Robin Hood is a hero because he fights the totalitarian government to return confiscated wealth to oppressed taxpayers.

But what is the government’s economic system of high taxes and “wealth redistribution”? In its intention, the wealth redistribution system is also trickle-down. In this system, government takes the place of corporate administration. It accumulates wealth — by taxation. This wealth is then supposed to trickle down to the subjects of the government, by means of redistribution programs. So, why is trickle-down bad when wealth trickles down from company administration, but good when it trickles down from government?

The feudal system that I mentioned when talking about Robin Hood was actually a wealth redistribution system. But in such systems, does wealth really trickle down? “Trickle-down” is appropriate to the sales pitch used by politicians when they claim that they intend to do such things as pay for infrastructure, education, and retirement. However, the wealth redistribution system is, in fact, trickle-out. “Trickle-out” means that the government takes wealth from its subjects and distributes it to its preferred lobbyists. Think military contractors, Elon Musk, and Planned Parenthood. Those are a few examples. Does the wealth ever get back to the subjects? Well, some does, but the amount that the subjects get is inversely proportional to the number of lobbyists who get some of the wealth before it makes its way back.

Politicians claim the place of God: they sell themselves as all-powerful beings that you need to take care of you.

The lobbyists and their clients reward the government by giving back some of the loot they received, prompting politicians to increase their take by selling more and more “economic stimuli” to the public, as if they were actually providing some kind of free food.

In the book of Exodus, God gives the children of Israel a miraculous food called manna, which is meant to sustain them on their journey out of servitude to the king of Egypt. In the modern form of this story, politicians claim the place of God: they sell themselves as all-powerful beings that you need to take care of you. They prefer this story about themselves to the reality of “trickle-down,” which is how we truly get our bread from heaven. In every light rain, water trickles down from above; this water is the food for plants, and thus the origin of our daily bread. And I think this is why politicians hate trickle-down economics: our food comes from sources beyond their control. This kind of economics dethrones them from their delusion of almighty power; and it exempts us — if we reflect on it — from our dependency on them.




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The Sounds of Silence

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People make up their ideas of the world by listening to what other people say — in a speech, on a survey, to their friends. But maybe we could learn something if we reflected on what people do not say.

Here are 33 things that nobody in America says. Or, possibly, thinks.

  1. The tax rates are just about right, except for people like me. My taxes should be higher.
  2. I am a member of the 1%.
  3. The policeman is your friend.
  4. I hate all people of other races, but I keep quiet about it, to avoid being criticized.
  5. I got my job from affirmative action.
  6. No one is qualified to teach kids their ABCs unless certified by the government.
  7. I know someone who died from climate change.
  8. The Constitution was written to abolish capital punishment, preserve the lives of endangered fish, and ensure a living wage for all Americans.
  9. When the government provides a service, it usually does a better job than private business.
  10. Some Americans are so poor that they have to steal from other people.
  11. Some Americans are so poor that they have to murder other people.
  12. Open borders would increase Americans’ pay rates while improving Americans’ security.
  13. American public schools are very good.
  14. American public schools are good.
  15. American public schools are acceptable.
  16. American literature, music, and art are better than they were in the past.
  17. I have a perfect right to tell my neighbor what opinions she may express.
  18. The government is better at handling my money than I am.
  19. The American government has a good plan for dealing with terrorism.
  20. I believe in everything my pastor says.
  21. If you don’t like this country, stay right here.
  22. If you graduated from an elite university, you must be smart.
  23. Few people actually get important jobs just because they come from wealthy families.
  24. It makes good sense that people can vote before they are trusted to drink a legal beer.
  25. It makes good sense that people can serve three years as Special Forces operatives before they are trusted to drink a legal beer.
  26. At least one Muslim country recognizes equal rights for Christians, gays, and women.
  27. America’s Middle Eastern wars succeeded.
  28. The War on Drugs succeeded.
  29. The War on Poverty succeeded.
  30. The Libertarian Party will eventually take power.
  31. President Obama has improved race relations.
  32. Donald Trump is a deeply spiritual man.
  33. When I have an important decision to make, I ask myself, “What would Hillary Clinton do?”



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Paul Ryan and the Extreme Populist Establishment

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When it comes to the Republican Party’s base, there isn’t “an establishment” — there are two. The Realistic Conservative Establishment (the RCE) consists of those in power (in the media and industry) who speak to and for those Republicans who embrace free market capitalism and limited government (the free movement of goods, labor and capital globally). The Extreme Populist Establishment (the EPE) consists of those in power who speak to and for those Republicans who embrace populist economics (opposition to free trade, to immigration across the board, and to companies moving operations abroad to avoid America’s corporate taxation and regulation).

The two establishments are fighting to get the Republican base to nominate their preferred candidates and pursue their preferred policies. The focus now is on the presidential primary, with the EPE generally supporting Donald Trump, with the backup position of Ted Cruz or Ben Carson. The RCE support is split among the remaining candidates (except Rand Paul, who is more the libertarian choice). But nowhere is the split between the two Republican establishments more clear than in their respective treatments of one of the unsung heroes of our time, House Speaker Paul Ryan.

You should measure the success of a negotiation not merely against what you get, but against what you get facing the opposition you have.

Ryan only recently took over after then-Speaker John Boehner resigned from a controversial tenure, a bitterly disappointing one to the populist base and the EPE. After weeks of turmoil, Ryan reluctantly agreed to become speaker. He met with deep skepticism by the EPE. Now Ryan has accomplished several things, and the EPE has attacked him furiously. As a classical liberal, I am angry at the short-sighted EPE commentators attacking what I perceive as major accomplishments.

Consider Ryan’s recently negotiated budget deal. EPE hero Rush Limbaugh was outraged at it, saying it gave Obama everything, and the conservatives nothing, and opining that “what has happened here is worse than betrayal.” Others echoed this sentiment. But I contend that the Ryan deal is in fact a good one, especially considering the fact that the Democrats still have the power to stop bills in the Senate and hold the White House. I mean, Earth to EPE pundits: you should measure the success of a negotiation not merely against what you get, but against what you get facing the opposition you have. Let’s look at some of the major provisions of the deal so condemned by the EPE.

First, Ryan secured about $700 billion in tax cuts — extending some useful deductions and making some (such as the R&D tax credit) permanent. Oh, and the tax cuts include greater expensing of small business costs, and renewable energy credits are phased out.

The second major victory the Ryan deal won was an increase of $573 billion in spending for defense, and another $163 billion for veterans’ programs. To those of us who have voted Republican as opposed to Libertarian all these years, this is huge. Realist conservatives and classical liberals view defense as the most important function of the federal government, and while the previous “sequester” deal did lower the deficit, it did so by cutting defense spending massively. Would I have preferred that this increase in defense spending not been accompanied by increases in spending for pet Democratic social programs? Sure, but defense spending has been held hostage by the Democrats, with the ransom being increased domestic spending; and that won’t change until there is a Republican in the White House. Concession on this issue was what it took to secure Obama’s signature on the compromise deal.

The third victory achieved by the deal escaped notice by the EPE commentators as much as by the mainstream media (the Progressive Liberal Establishment). The deal puts major restrictions on the highly politicized and deeply corrupt IRS. These restrictions include forbidding the use of personal email accounts for conducting IRS business (Lois Lerner’s cute little trick), as well as barring the targeting of nonprofits based upon their political or other ideological beliefs. This was a deeply satisfying victory for those of us who feel we have been politically targeted by the IRS.

This asinine prohibition was passed by a Democrat Congress and signed into law by a Republican president nearly 40 years ago, in the middle of the oil crisis.

Of course, if the Republicans can elect a president this year, I would push for that president to appoint a special prosecutor to investigate Lerner — along with the dozens of IRS creeps who worked with her to annihilate the Tea Party — for violations of the civil rights of taxpayers.

But the fourth victory is one that is a profound gamechanger. It will transform not just the American economy but the politico-economic order of the whole world. Again, this victory escaped the notice of the EPE pundits no less than the mainstream media. Ryan’s deal amazingly succeeds in repealing one of the most idiotic laws ever passed — the law prohibiting American oil companies from exporting domestically produced oil. This asinine prohibition was passed by a Democrat Congress and signed into law by a Republican president nearly 40 years ago, in the middle of the oil crisis. Really, how stupid is it to attempt to get the country’s oil companies to drill for more oil — by walling them off from the world market? The policy guaranteed that the major oil companies would focus on oil exploration abroad. So it sent more American jobs abroad, made us even more dependent on foreign oil, and sent vast billions of dollars out of the country, to enrich our enemies. The ill-considered law no doubt delayed our oil fracking revolution by decades. Ryan’s compromise not only suspends this law, but permanently repeals it.

The elimination of the export ban is massive. We can now compete head-to-head with the Middle Eastern and Latin American oil states, along with Russia. We can help Europe become completely free from dependence on Russian energy, thereby dramatically weakening Putin’s power to cause mischief. By keeping world prices low, we starve Putin of petro-dollars with which to build up his military. In fact, the continuing low price of oil has drained Russia’s reserve fund by 30%, and it is projected to be empty by the end of the year. We can become Asia’s number one supplier of fossil fuels, keeping our friends (Japan, Taiwan, and South Korea) close and our enemy (China) closer. Moreover, by selling them oil and natural gas, we can lower our trade deficit enormously. Finally, we can cut the Venezuelan socialist regime off at the knees.

Indeed, just a few days after the deal was signed, the first two tankers carrying American domestic crude for ports abroad. The first ship left Corpus Christi, Texas, bound for Trieste, Italy, loaded with oil drilled from the Eagle Ford Shale field by ConocoPhillips. The second ship left Houston carrying oil to Marseilles, France. The shipping should ramp up rapidly: the Corpus Christi terminal alone is capable of sending out 400,000 barrels a day (BPD) as is, and developments under way will boost that to 575,000 BPD in the near future. The CEO of ConocoPhillips suggests that the demand from foreigners for our oil will hit 2,000,000 BPD by 2020. If the price of oil recovers and moves into the $50 range, exportation should just explode. So much for “peak oil” and eternal dependence on the OPEC thieves.

We can now compete head-to-head with the Middle Eastern and Latin American oil states, along with Russia.

This is a success that was way beyond the dreams of us who believe that our fracking revolution will make us energy independent. But the only way to get anti-fossil-fuel Democrats in Congress and our global-warming-obsessed president to agree was to offer them all a lot of useless spending — such as renewing subsidies temporarily for unproductive forms of energy such as wind and solar power.

Of course, should the Republicans win the White House in 2016 and hold both chambers of Congress, these subsidies can be easily ended. But should the Democrats keep the presidency and take back the Senate — which they will surely do if Trump gets the nomination — it would be almost impossible for them to reinstitute the ban on exporting oil.

In fine, Ryan outfoxed the Democrats magisterially — amazing for someone who just stepped into the job.

What peeves the EPE commentators about the deal? Their stated objections are obviously weak. They complain that in the bill Ryan negotiated, ObamaCare was not eliminated, the taxes intended to pay for it (such as the steep tax on “Cadillac” health care plans) were deferred for two years, funding for Planned Parenthood was not ended, and the budget deficit increased. The replies are simple. If Ryan had put the elimination of ObamaCare in the bill, it would not have passed, or if it did, Obama would not have signed it.

Should the Democrats keep the presidency and take back the Senate — which they will surely do if Trump gets the nomination — it would be almost impossible for them to reinstitute the ban on exporting oil.

Ironically, soon after getting this bill done, the ever-clever Ryan was able to put through Congress bills repealing ObamaCare outright and ending funding of Planned Parenthood and place them on the desk of the president, who of course immediately vetoed them. Ryan thus kept his promise to force Democrats to vote publically on the issues, and put them on the desk of the president to veto. But for this, the long-time EPE pundit Lou Dobbs bashed Ryan, saying that getting those bills through Congress was mere theater.

What really angered the EPE crowd is that Ryan dared to cut a deal at all. The EPE crowd would rather be right than be president. And that’s the way they will continue to play it.




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What’s So Selfish About Capitalism?

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It is a mischaracterization of the free-market society that is as old as capitalism itself. One recent recycle comes from self-designated “libertarian socialist” and “anarchist” Noam Chomsky: “It’s just, I’m out for myself, nobody else — and that’s the way it ought to be” (Power Systems, p. 157).

Now it is absolutely true that laissez-faire capitalism allows someone to be “selfish” (in the most shallow sense), basically because such capitalism allows an individual to be any number of things. A man can spend every penny he has on trinkets (from which expanding circles of merchants and others will actually benefit), or he can donate all he owns to charity — or select among all the types of intermediate options. Freedom of property gives people these choices, in the same way as freedom of religion provides them with a smorgasbord of theisms, atheisms, and agnosticisms. The separation of state and religion doesn’t mean that everyone will embrace, say, Seventh-day Adventism, nor does it follow that the separation of state and economics means that everyone will embrace “selfishness” — or any one exclusive behavior.

The fear that freedom of charity — ending redistributive taxation, thereby completing the separation of state and charity — will mean not a diversification, but the utter death of charity, proceeds from the premise that the one thing everyone will do under capitalism is nothing — for or with anyone else. But this contention that individual liberty entails an abject disregard for others corresponds to no social reality. Does freedom of assembly mean that people will never assemble — in any way? Does freedom of trade mean that everybody will in fact stop trading? Does freedom of speech and of the press — an unregulated market in ideas — mean not that we will have a rich and engaging culture, but that nobody will exchange any ideas about anything?

Laissez-faire capitalism allows someone to be “selfish” because such capitalism allows an individual to be any number of things.

Consider freedom of sexuality. Now it is also absolutely true that capitalism allows someone to indulge in what was formerly euphemized as “self-abuse.” Does that mean that without government control of sex — without a nationalization of the means of reproduction — individuals will do nothing but lock themselves away in their rooms? That there will be no dating, no courting, no marriages? No births, no propagation of the species — is that how “rugged individualism” will “atomize” society? Will all of capitalism’s “sham-liberty” (Engels) degenerate us into an anti-civilization of hermits, morons, and masturbators? Is that the fate from which only coercion — by a hereditary monarch, a Putsch oligarchy, or the Election Day majority-plurality — can save us?

Forebodings of societal necrosis notwithstanding, there is no conflict between liberty and community — the former is each tree, the latter the forest. By allowing each adult to act on his own choices, liberty empowers consenting adults to interact in various ways within a multiplicity of modes: religious-philosophical, professional-economic, sexual-romantic, cultural-artistic, fraternal-humanitarian, and many more. Hence the profound error of thinking that capitalism — voluntarily funded government limited to the defense of person and property — has any one “way it ought to be” concerning socioeconomic matters (such as Chomsky’s “I’m out for myself, nobody else” burlesque). Its only commandment is political: the prohibition of the initiation of force or fraud — by either state or criminal agents. We may therefore confidently retire verso Engels’ and recto Thomas Carlyle’s “cash nexus” caricature of the open society. Whatever the skirmish, the conflict of freedom vs. control is that of diversity vs. conformity — the multifaceted, multihued consent nexus of capitalism vs. the flat, sanguineous coercion nexus of statisms left and right. When some lobbyist hands us the line “If government doesn’t do it, it doesn’t get done,” what he’s really telling us is: it doesn’t get done his way only.

Many of the giants of classical liberalism recognized the affinity of compulsion and conformity. Jefferson wondered: why subject opinion to coercion? His answer: “To produce uniformity.” And Ludwig von Mises, in a survey of paradoxical charges against the free market, observed: “The atheists make capitalism responsible for the survival of Christianity. But the papal encyclicals blame capitalism for the spread of irreligion. . . .” Irreligionists identify capitalism with religion because capitalism (unlike leftism) doesn’t suppress religion, while religionists identify capitalism with irreligion because capitalism (unlike rightism) doesn’t suppress that. Let us put aside the question of whether such behavior — the refusal to extend to others the protection of law that one demands for oneself — constitutes “selfishness” in the most destructive sense. What this example illustrates perfectly is the statist projection inherent in linking laissez faire, which neither suppresses nor subsidizes, to any homogenized culture. A “capitalist society” is no more synonymous with “selfish materialism” than with “selfless spirituality.” The only thing everyone in a libertarian political order does — with no one’s mind, body, and property but his own — is act, not for his exclusive “gratification” against any consideration for others, but on his own judgment protected against any violence from others.

With regard to the nature of civil liberties, the freedom to withhold one’s wealth from the state — apparently the gravamen of the charge of capitalist “selfishness” — is wholly like any other human right. The state has no more claim to the individual’s private property than to his private body or his private mind. (Indeed, what a person does with his own property or body is what he does with his own mind — all coercion is “thought control.”) If we do not grant government the ability to more wisely or morally use a citizen’s mind or body, we do not grant it the ability to more wisely or morally use his property. Yet that is exactly what the accusation of “selfishness” wants to guilt us into conceding: that the state (essentially a handful of guys with guns) will manage each and every person’s money “better” than these people (essentially the entirety of the population) will do themselves. Just who is manning this administration — mortals or gods?

Will all of capitalism’s “sham-liberty” degenerate us into an anti-civilization of hermits, morons, and masturbators?

The importance of private property to political dissent was memorably demonstrated by an unexpected but significant source. In response to President George W. Bush’s launching of the Iraq War, the National War Tax Resistance Coordinating Committee issued a public statement entitled “An Appeal to Conscience: In Support of Those Refusing to Pay for War on Iraq,” which upheld a citizen’s right not to pay “all or a portion of one’s federal taxes as a form of conscientious objection.” Among the signatories were many who proudly wore the label “socialist,” including . . . Noam Chomsky. Now here were outright collectivists defending the right of every individual to keep his money from the taxmen, for no reason other than to reflect his private conscience — that is, his personal disagreement with government policy, even when the government was enthroned by the Election Day majority-plurality. (And certainly Bush 2000 won a much greater percentage of the popular vote than Chile’s Allende, whose “democratically elected” credential is repeated by the Left as calculatingly as Castro’s dictator status is not.) The “Appeal to Conscience” didn’t even contain a little pledge that each tax resister would spend his withheld wealth on good things (e.g., children’s charities) and not on bad ones (hookers and heroin).

Since war is a government undertaking, we must note the converse in America today: almost every government project is conceived as some kind of “war” — hence a War on Poverty and a War on Drugs no less than a War in Iraq and a War on Terror. If, as a matter of principle, a citizen may stop giving money to the state as a practical expression of his “conscientious objection” to any particular war — if he can in that manner legitimately protest national security and other policies — we thereby recognize that private property is essential to freedom of conscience. What then is left of any variant of wealth seizure? What are we left with but capitalism in its purest form?

Yet that is the very politics denounced by the Left, including even its antiwar tax resisters, as “selfishness.” One cannot help recalling the scene in A Man for All Seasons where Sir Thomas More, accused of high treason, explains that his believing a “loyal subject is more bounden to be loyal to his conscience than to any other thing” is a matter of necessity “for respect of my own soul.” Thomas Cromwell, the state’s advocate and More’s antipode in this “debate” — a rigged trial in which the defendant’s life is in peril — tries to undermine this statement of conviction in a common manner, sneering, “Your own self, you mean!” More doesn’t deny it: “Yes, a man’s soul is his self!”

Possibly the “egalitarian” supporters of the “Appeal to Conscience” believed that its broad principles should apply to only specific people — namely, themselves and those sufficiently parallel. That returns to the fore the refusal to extend to others the protection of law that one demands for oneself. Said refusal is a good working definition of what many actually champion as the corrective to capitalist “selfishness”: the social-democratic “welfare” state — the mixed economy:

To be capitalist or to be socialist?— that is the question. Precisely what is the mix of the mixed economy? When is it capitalist and when is it socialist? When does it protect property and when does it confiscate it? When does it leave people alone and when does it coerce them? When does it adhere to the ethics of individualism and when does it obey the code of collectivism? And just which is the metaphysical primary — the individual or the collective (e.g., the nation, the race, the class)? The fundamental truth about the mixed economy is that mixed practices imply mixed principles, which in turn imply mixed premises — i.e., an incoherent grasp of reality. With socialism, the chaos was economic; with “social democracy,” it’s epistemological. Ultimately, the latter can no more generate rational policies than the former could generate rational prices. The mixed economy doesn’t present us with a mosaic portrait of the just society, but with a jigsaw of pieces taken from different puzzles.

Unable to provide any philosophically consistent answers, the mixed economy demonstrates that the question of which rights will be protected degenerates into a struggle over whose rights will be protected. One example that virtually suggests itself: while a myriad of voices clamor for censorship, who ever says, “There have to be some limits on free speech, and we should start with mine”? Concerning “economic” issues, do we ever hear, “Y’know what? Give the competition the subsidies. Me, I’ll bear the rigors of the market”? As for intellectual and moral integrity: do we see the National Organization for Women (NOW) and fellow “progressives” bring to other issues the laissez faire they demand for the abortion industry — a heresy that elicited a charge of “possessive individualism” from Christopher Hitchens when in office as socialist inquisitor — except, that is, when these “progressives” demand tax dollars for abortions (and deny reproductive rights, the putative sine qua non for gender equality, to males)? Do we see the National Rifle Association (NRA) and fellow “conservatives” bring to other issues the laissez faire they demand for the gun culture — a deviation that roused Robert Bork, majoritarian mongoose to any perceived libertarian snake, to attack the NRA via a comparison with the ACLU — except, that is, when these “conservatives” demand that private property owners be prohibited by law from refusing entry to persons carrying firearms?

Whatever the skirmish, the conflict of freedom vs. control is that of diversity vs. conformity.

No matter what combination of contradictory positions any particular avatar of the mixed economy advocates on any given day, he is always a libertarian with his own liberty and a capitalist with his own capital, but an authoritarian with the freedoms of others and a socialist with their property. Such is the “idealism” that distinguishes modern liberalism and its special-interest lobbies from the “selfishness” of classical liberalism and its establishment of the same rights for oneself and one’s neighbors.

With social diversity now multiplying the types of special interests in many social democracies, the resulting political conflicts cannot be dismissed, let alone defused — least of all by the bromide that “we all accept that our tax dollars go to things we disapprove of.” No one in fact accepts that. Even though taxation exists to separate people from control of their money, selective tax protests span the spectrum of otherwise pro-taxation pressure groups. We’ve seen collectivists — reputed foes of all private property — endorse antiwar protesters who demand as a matter of individual conscience their right not to pay taxes. Years ago in The Nation, an ad told readers that “your tax dollars” funded what it alleged was Israel’s mistreatment of the Palestinians. Public school supporters, who never voice concern over how many “Americans really want to give tax dollars” to that monopoly, suddenly claimed great concern with what “Americans really want” at the prospect of those dollars going to “school vouchers.” And among traditionalists, tax protests involve everything from abortion to art (if it offends them) to foreign aid (for the countries they don’t like) to free condoms and free needles. Under a system that denigrates the concept of equal rights for all, everyone wants to be exempt from paying taxes for the things he disapproves of, but no one wants — any guesses why? — his neighbors to be exempt from paying taxes for the things they disapprove of.

There’s not a mote of doubt as to what — with the double standard as its only standard — exposes itself as the inherent politics of “selfishness”: the hypocrisy of social democracy. All the warring camps of social democrats brazenly acknowledge that hypocrisy — in the other camps. A snowy day stuck indoors will pass much more tolerably with a back-and-forth Googling of “liberal hypocrisy” and “conservative hypocrisy.” (Each camp also detects tyranny — “fascism” — in only the others; compare Jonah Goldberg vs. Naomi Wolf.)

And what of social democracy’s central claim to “social justice”: its redistribution of wealth from the “most greedy” (richest? most materialistic? least philanthropic?) to the “most needy”? Consider one form of redistribution that no North American or European “welfare” state allows — or ever would allow. Let us stipulate that I have no problems with (a) the government’s taking a portion of my money for the purpose of tempering my “greed,” (b) the idea of those tax dollars going to the “most needy,” and (c) the percentage the state takes. But there is one thing: I don’t consider the current recipients to be anywhere near the “most needy.” My definition does not include my fellow Americans, who even at their poorest are richer than most people on the planet. To get right to it: I believe that the “most needy” — the “least of these” — are undeniably the starving children of the Third World, and I insist that my tax dollars all be sent to them.

The mixed economy demonstrates that the question of which rights will be protected degenerates into a struggle over whose rights will be protected.

Now why is that a problem? I am not declaring a right to withhold my taxes from the government, with no assurance about what I will do with the money — unlike the antiwar leftists who signed the “Appeal to Conscience.” Nor am I trying to control what others’ taxes pay for. All I’m asking is that my money go to those who my independent judgment and individual conscience tell me are the “most needy.” Why should I pay for full medical coverage for all Americans, when the Third World children don’t have any food? Why should I pay for textbooks for American children, when the Third World children don’t have any food? So, why can’tmy tax dollars go to them? Because the Election Day majority-plurality decides that “charity begins at home” (i.e., nationalism trumps humanitarianism)? If the neediest-recipient principle justifies my money’s transfer to my fellow Americans, why doesn’t it justify the money’s transfer from these Americans to the starving Third World children? Isn’t the principle violated by the dictionary “selfishness” of voting other people’s money into one’s own coffer (“tax booty for me, tax burden for thee”)?

The redistribution of wealth in a “welfare” state is not directed by a neediest-recipient or any other principle. It is purely a matter of power. With its rejection of consistent property rights, social democracy forces all people to throw all money onto the table (which some resist more successfully than others) and then allows them to take what they can (with some better able to take than others). That’s right: The money goes from those who are politically unable to hold on to their wealth, to those who are politically capable of grabbing on to that wealth. The former are no more guaranteed to be the “most greedy” than the latter are to be the “most needy.” It would be criminal not to cite Lord Bauer’s denuding of foreign aid: the “transferring [of] money from poor people in rich countries to rich people in poor countries.” And it would be downright felonious to omit business subsidies. Any redistribution of wealth operates in only one way: from each according to his ability to contract via civil society, to each according to his ability to coerce via the state — a feature applicable (by degree) to both socialist dictatorship and social democracy.

The confusion of limited government with “selfishness” is reflected in the socialistic thesis that such government comprises nothing but the “class self-interest” of the business (“capitalist”) class. This thesis implodes almost immediately when we begin to ask precisely what concrete policies manifest that specific “class self-interest.” If respect for everyone’s property rights actually favors “capitalists,” why do corporations seek subsidies and “eminent domain” confiscations? If unregulated commerce leads to monopolization by these “capitalists,” why do real-world businessmen look to state regulation to gift them with monopoly entitlements? And if free trade gives an advantage to this class, why do each country’s business — and union — leaders lobby for protectionism?

The classical liberals formulated their principles of private property, laissez faire, and free trade — rejected by “socialists of all parties” and big business alike — not against the yearning of the have-nots for a better life, but in opposition to policies that favored the few over the common good, that is, the routine of “merchants and industrialists . . . demanding and receiving special privileges for themselves” (in the words of Robert B. Downs). Free-market economics (The Wealth of Nations) and American nationhood both arose as part of the revolt against such mercantilism — corporatism, in today’s parlance. The American “welfare” state, in contrast, began as a neomercantilist reaction against that revolt. “The essential purpose and goal of any measure of importance in the Progressive Era was not merely endorsed by key representatives of businesses involved,” observed Gabriel Kolko; “rather such bills were first proposed by them.” Big business has never stopped being a major driver of big government. Would President Bush’s 2003 prescription drug bill (the “largest expansion of entitlements in nearly forty years,” according to Jonathan Chait) have gone anywhere without its hundreds of billions in industry subsidies? Would Obamacare even exist without the “advice” and approval of the health insurance cartel?

If respect for everyone’s property rights actually favors “capitalists,” why do corporations seek subsidies and “eminent domain” confiscations?

Corporate privilege is a raison d’être — not a corruption — of the “welfare” state (aka “corporate liberalism”). Charity is not the purpose of the “welfare” state, much less its innovation. Concern for “the poor and stranger” long preceded its birth and will long survive its death. Like family life or the division of labor, charity is (to quote Paine’s view of society vs. state) “part of that order which reigns among mankind [that] is not the effect of government. It had its origin in the principles of society and the natural constitution of man.” What had its origin in government is the swarm of anticompetitive measures benefitting “connected” entities — the fixed economy of the mixed economy. Without tariffs, for instance, how many people would always prefer to buy domestic goods? And how many would ever write out checks to a multinational conglomerate for nothing in return? Those are the “market failures” that the opponents of a free market fear.

Any state initiation of force exists not for a noble end (which, as Jefferson said of truth, requires no such coercion), but for a sordid one. Regarding military conscription, Ayn Rand pointed out that a “free (or even semi-free) country has never lacked volunteers in the face of foreign aggression.” However: “Not many men would volunteer for such wars as Korea or Vietnam.” Likewise, people will allocate money for the education of their children, sound retirement funds, the less fortunate, and especially the services of a limited government. What they won’t do is give it to “teachers” who can’t teach, Ponzi schemes, Boeing, or Chrysler — or the Taliban, which just a few months before 9/11 received from Uncle Sam a total of $43 million for its “help” in the victory-elusive War on Drugs (a sum that too obviously pales next to the multiple billions handed over to Vice President Cheney’s compadres for the purpose of building infrastructure — in Iraq). Only pursuits of folly and injustice seek the means of force or fraud.

Portraying laissez-faire capitalism as the tailored benefactor of big business is transparently a projection on the part of the mixed economy’s corporate liberals. The consistent socialists, on the other hand, care no more whether commerce is privileged or left alone by government than whether religion is privileged or left alone by government. They want the abolition of commerce, of religion, of a free market in anything, of any independent institution of civil society: the replication of totalitarian theory and history.

Will only the unfettered state stop the virulence of “selfishness”? Ideally yes, asserted Plato, for whom the “highest form of the state” was one “in whichthe private and individual is altogether banished from life, and things which are by nature private, such as eyes and ears and hands, have become common, and in some way see and hear and act in common, and all men express praise and blame and feel joy and sorrow on the same occasions. . . .” Reductio ad fundamentum: There will be no more “selfishness” when there are no more selves.

Capitalism is being condemned for not assenting to the proposition that money grows on trees.

The unfettered market boasts no ability to effect a change in “human nature” — in social reality. There will always be situations in which people compete to get or to keep one position, one prize. But while the market can do nothing about this conflicting “selfishness” (and will do nothing about different parties’ demands for a guarantee of monopoly), it commands the common self-interest that people have in all competition being governed by an equitable rule: a ban on the use of force or fraud by any rival, the only possible such rule. The analogue of the market is not the jungle, but the stadium — more broadly, a network of stadiums and other venues.

Capitalism’s multiplicity of open competitions enables each individual to find the field where he can succeed. The free market’s profit-and-loss dynamic (to quote Adam Smith) “encourages every man to apply himself to [the] particular occupation” most sought after by others. These interactions synthesize the most prosperous social order as defined by the participants themselves — all of them, as opposed to any one party’s wish for the “way it ought to be.” It is an ideal that has been realized to the degree thata market mechanism has been implemented. In contrast, socialism’s “equality” has meant nothing but poverty for all. And in a jarring echo of the Great Depression, the mixed economy’s regulatory sector in recent years orchestrated a general downturn in the US (where the crisis was Orwellianly blamed on “deregulation”) and in Europe (the “PIIGS”). State intervention in production (i.e., one party’s wish for the “way it ought to be”), once heralded as the alternative to the market’s alleged class conflicts, evidently produces only the “common ruin of the contending classes” — to redirect a phrase from The Communist Manifesto. When the prescribed cure for “selfishness” actually afflicts the common good, we must reexamine the diagnosis of the condition.

Preponderant among the essential criticisms of limited government has been the charge that it fails to recognize as natural rights such things as food, clothing, and shelter, to say nothing of education (“from pre-K to Ph.D.”), advanced medicine, and whatever else might be tacked on. The sober reply: these items are not natural rights because they are not natural produce. It costs a man nothing not to coerce his fellow citizens, thereby respecting their rights to worship, speak, etc. But how can he provide everyone’s “right” to all those scarce materials and services? And why should he, when he himself is promised a “right” to those things whether he does any work or not? Realistically speaking, capitalism is being condemned for not assenting to the proposition that money grows on trees. And the condemners are quite serious in that belief: “The world has enough for everyone’s need, but not enough for everyone’s greed.” Wealth simply exists, and only capitalist “selfishness” prevents its equal distribution to every soul on earth.

Ultimately, the free-market society is guilty only of affirming each individual’s right to control his own mind, body, and property, a conviction that calls for a single sentence: if that is “selfishness,” let us make the most of it.

Recommended Reading

  • Yaron Brook and Don Watkins, Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government, 2012.
  • Nick Gillespie and Matt Welch, The Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong with America, 2012.
  • David Kelley, Unrugged Individualism: The Selfish Basis of Benevolence, 2003.
  • Robert P. Murphy, The Politically Incorrect Guide to Capitalism, 2007.
  • Andrew P. Napolitano, It Is Dangerous to Be Right When the Government Is Wrong: The Case for Personal Freedom, 2011.
  • John Stossel, No, They Can’t: Why Government Fails — But Individuals Succeed, 2012.



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Now and Ever Shall Be

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Playing the Odds

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In the old days, the mob and similar outfits ran the numbers racket in most of your larger American cities. The numbers racket was simple: you pick a three-digit number, give the guy your money, and, if your number comes up, you get a payoff about 600 times as big as the bet. As the overall payout was around 60%, the mob was sure to get a very respectable return on their end.

I think it was in the ’60s that the government started muscling in. Now it’s called the lottery, but it’s the same racket, except the odds were better when it was the mob running it because they did not feel it was incumbent upon them to withhold income tax.

Oh yeah, and now it’s legal. There is a new game now.

Here’s how it works. You pick a federal law. Any law will do. Then you violate that law. That’s right: you break it. Next, you wait to see whether the government decides that the violation entitles you to a cash payout. If so, you go to the government and provide proof that you violated the law. Then you just fill out the usual numerous forms and, eventually, the government hands you the cash.

A guy I know who likes to crack wise calls it “statutory roulette.” The odds that you will choose the right law to break aren’t particularly good, but it could happen.

Here’s an example.

Let us say it is 2009 and Victor, a guy in Juarez, Mexico, chooses to violate US immigration law by sneaking across the border to Texas. So he sneaks. He finds work, gets married, and, in the fullness of time, has a few kids. He files income taxes, but not with a Social Security Number (SSN), because, as he is what is sometimes called an “illegal alien,” he can’t have one. Instead, he has to use an Individual Taxpayer Identification Number (ITIN). All this time, he stays in Texas. His children, having been born in the US, are automatically US citizens, which is only right. Victor keeps his nose relatively clean. He is not convicted of any felonies or even serious misdemeanors. Things are going pretty good for Victor.

Now it’s called the lottery, but it’s the same racket, except the odds were better when it was the mob running it.

So, as of November 14, 2014, Victor is still “unlawfully present” in the United States when, out of the blue, President Barack Obama approves an executive action that changes everything. The action is called Deferred Action for Parental Accountability (DAPA). And, just like that, Victor is eligible for a three-year deferral of deportation, a work permit, and an SSN.

It is hard to believe, I know, but you can look it up right here.

Here’s the good part. With the SSN, Victor can now refile his taxes for the past three years. And since he has that SSN, he is also retroactively eligible for the Earned Income Tax Credit (EITC). The EITC is a cash grant given to working people with kids. It is available only for people who are not in one of your higher income brackets. Which Victor is definitely not.

So. It seems that Victor is now eligible for a cash payment from the feds of somewhere around six to nine thousand American dollars.

At a Finance Committee hearing, Senator Chuck Grassley of Iowa asked John Koskinen, the IRS Commissioner, whether this EITC thing for people who are in the country illegally is on the level. The IRS guy gave a long-winded answer that somewhat conspicuously did not include the word “no.” The exchange was on the TV. You can watch it here.

Just make sure you keep all the evidence that proves you actually did the crime, or the feds won’t pay up.

The senator couldn’t believe what he was hearing, so he said he wanted an answer in writing. The letter the IRS guy sent the senator is here.

Get the picture? That’s right, straight from the horse’s mouth: Victor is entitled to the dough.

Victor entered the country illegally. He lived in the country illegally. I mean, it wasn’t even legal for him to work here. And now, the federal government is going to give him a many-grand payoff for the time when he was “unlawfully present.” What can I say, Victor? Your number came up.

It is widely known that a reliable way to increase your chance of winning when you play the numbers or the lottery is to bet on more than one number. The more numbers you bet on, the better the odds are that one of your numbers will come up. In much the same way, it stands to reason that to improve your chances of winning in “statutory roulette,” it would be highly advisable for you to violate lots and lots of federal laws. The more of them you break, the better the odds that you’ll break one that ultimately entitles you to a wad of c-notes. Just make sure you keep all the evidence that proves you actually did the crime, or the feds won’t pay up.

Which is only fair.




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Why Libertarianism Will End Poverty

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As a fan of Friedrich Nietzsche, I have a fondness for clever, memorable aphorisms, on the model of his “All that which does not kill me makes me stronger,” which is one of my personal mottos. Another such aphorism (though not by Nietzsche) is: “Socialists believe that no one should own anything; libertarians believe that everyone should own something.” What this gets at, among other things, is the idea that both socialists and libertarians have an answer to the problem of poverty, but our answer differs sharply from theirs. This is an important point to hammer home to voters.

The leftists and socialists say that they want to help the poor and that the libertarians and conservatives are the enemies of the working class and we don’t care about the poor. This naturally drives working class voters to vote Democrat when they should be voting Libertarian. I can’t speak for conservatives, and I can’t speak for other libertarians either. But, speaking for myself, I can say that I do care about the poor, and my brand of libertarianism, which comes from a liberal-tarian or neoliberal strain, is very intently focused upon ending poverty.

Both socialists and libertarians have an answer to the problem of poverty, but our answer differs sharply from theirs.

My idea is to tell voters that libertarianism will end world poverty. That is a bold claim, and I expect most voters will reply: “Why? And how?” One answer can be found in my own reinterpretation and application of the business management philosophy called Six Sigma.

Six Sigma is a technique developed in the manufacturing industry and is widely credited with the high quality of electronics devices that are manufactured today. A mathematical approach to business management and products manufacturing, its basic idea is that hard math and statistics should be used to manage a business and control the work product of a factory. The key mathematical equation used by Six Sigma practitioners, which I would like you to understand, is: Y = f(X) + e, where X represents input, f(X) represents the process that is applied to the input, Y represents the output, and e represents the errors and imperfections inherent in human existence.

The core teaching of Six Sigma is that most business processes are inefficient and wasteful, and that vast amounts of money can be saved by redesigning the process to eliminate waste. The Six Sigma method analyzes the X and the f(X) in order to find the most efficient method of achieving the desired Y. The method uses math and science to find the best process to achieve efficiency, quality, and success. Six Sigma assumes that with the same input X, e.g. with the same amount of work, labor, effort, and raw materials, the output Y can be very different — if the process, the f(X), is different. What matters is the f(X), not the X, because you need a good process to get the most output out of your input.

Six Sigma is not mere abstract theory. It has been used in practical reality, for example by Motorola, Bank of America, and major car manufacturers in Detroit. The data suggest that when a Fortune 500 company implements Six Sigma, and when it does so correctly, and especially when it uses it on manufacturing processes and factories, average net profits increase by as much as 1 billion dollars a year.

The lower class and middle class bear a tax burden far worse than the taxes actually paid by the rich.

Now, let me get to the main argument in this essay. We can consider a national economy to be akin to a business or a factory. The work that people do, and the natural resources and raw materials that go into their work, are the input. The money they make and the consumable goods and services they produce are the output. And the political system, be it libertarian capitalism or socialist left-liberalism, is the process that takes inputs and creates outputs. My argument is that the process of heavy government intervention in the economy, pioneered by the New Deal and implemented by Obama and the Democrats today, is very wasteful. If Motorola could save a billion dollars by more efficient processes, then the United States of America could probably save trillions of dollars by a more efficient politico-economic process. And the trillions of dollars of added wealth would end up in the hands of the people, of the working class. I fully believe that if all the economic waste were eliminated in the USA, and if the rest of the world implemented free market economics, then the added wealth would be enough to end poverty, so that the vast majority of humans would achieve a middle class or upper class standard of living.

Why would capitalism be a more efficient economic system than Democratic left-liberalism? The answer to that question lies beyond the scope of this article. In my recent nonfiction book Golden Rule Libertarianism, I take 100 pages to explain why a system of money and prices and free choices among competing businesses is the best way to coordinate the diverse economic activity of billions of different producers and consumers in a division of labor economy. The arguments in my book can be called the Hasanian answer. There is also the Randian answer, the Rothbardian answer, the Milton Friedman answer, etc. Let’s take the Hasanian answerfor granted, for the sake of my argument, and leave the details for a different discussion.

Why would libertarianism put money in the hands of the poor and middle-class, as opposed to the rich? As a factual matter, the government spends trillions of dollars taken from the taxpayers, so if you end the tax-and-spend leftist policies, then that money will remain in the taxpayers’ hands, to be spent by the people. Of course, leftists claim that the rich are the ones who pay taxes, and that tax-and-spend helps the poor. In fact, however, the lower class and middle class bear a tax burden far worse than the taxes actually paid by the rich. This is because of the low tax rates for long-term capital gains and dividends, where the rich get their money, and the ability of the rich to hold their money in offshore tax shelters, which enable them to avoid paying taxes; and also because of the many taxes that target the poor, such as the property tax and the sales tax, and social security withholding. The high tax brackets for middle-class salaries also hurt. One thousand dollars is a ton of money for a working-class person or a middle-class person, whereas 1 million dollars is meaningless to a billionaire. So taxes hit the lower class with an impact far greater, proportionately, than their impact on the upper class. Tax cuts help the working class and middle class and often have minimal direct benefits for the rich.

A libertarian Six Sigma approach would eliminate the waste in government spending, creating huge savings for the American people. Government in the United States, including federal, state, and local governments, is the biggest spender of the people’s money, and the examples of bureaucratic failure, waste, and incompetence in government spending are too many for anyone to list. There are bridges to nowhere, statues built for no reason, railroad lines that nobody wants to use . . . mountains of waste, range upon range, all costing the taxpayers trillions upon trillions. The government is necessarily inefficient, because the government does not need to compete against anyone, and people are forced to accept what the government does. By eliminating waste at all levels of government, we could probably save $4 trillion of Americans’ hard-earned money annually — one quarter of government expenditures. Then, if you let people be free to be productive, and you unlock the money-making potential of every worker, especially the highly intelligent and creative people, and if you give them broad freedom to trade with others without regulatory controls, I believe that another $4 trillion would be added to GDP. $4 trillion plus $4 trillion is $8 trillion.

The US GDP was $16 trillion in the most recent estimate, and it is plausible to think that if we replaced a flawed f(X) with an efficient, waste-free f(X), then Y could increase by 50%. This is in line with what Six Sigma improvements have achieved for businesses that replace bad processes with good processes. In terms of Six Sigma using math and science to discover the correct process for a business, which is a core tenet of Six Sigma, I think that the work done by Milton Friedman, who completed an exhaustive, thorough scientific research using hard data and statistical math to show that capitalist-leaning economies generate more wealth than socialist-leaning economies, is true to the Six Sigma approach of statistical analysis. So my application of Six Sigma would take it as a given, proven by the libertarian economists, that the libertarian process is the right one to use to redesign the economy.

Libertarians are not the enemies of the poor and the working class; we are their best friends, with their best interests at heart.

Let us consider the number I mentioned: $8 trillion recovered due to libertarian policies. America has about 300 million citizens. Let’s assume that the poorest 90% comprises 270 million people. If we eliminated economic waste and saved or created $8 trillion, and divided that among 270 million people, then each poor or middle-class person would get an additional $29,600 a year. That would give a reasonable amount of money, enough to live a decent, happy life. This distribution would not be accomplished by means of a welfare system but by the normal, efficient practices of a capitalist economy, including simply letting people keep the money they would otherwise pay in taxes. And if we eliminate most regulations on the economy, almost everything will be cheaper to buy, allowing poor people to achieve middle-class buying power. Our policies would create new wealth for the poor to claim as their own private property. In other words, we could end poverty by using reason and logic, instead of the mushy illogic of the Left.

I conclude by repeating the point with which I opened: libertarians are not the enemies of the poor and the working class; we are their best friends, with their best interests at heart. The leftist, Democratic poor don’t understand this, but we would be well advised to teach it to its natural audience, working class voters. Remember this aphorism: socialists believe that no one should own anything; libertarians believe that everyone should own something.




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Election 2014: The Ballot Measures

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Libertarians should take encouragement from some of the ballot measures in the Nov. 4 election:

Medical freedom

Arizona voters passed Proposition 303, which seeks to allow patients with terminal illnesses to buy drugs that have passed Phase 1 (basic safety) trials but are not yet approved by the Food and Drug Administration.

To libertarians, this is an old and familiar cause and one in which it is easy to find allies if people are paying attention, which most times they are not. The movie Dallas Buyers Club provided an opening, and this year legislatures in Colorado, Missouri and Louisiana passed what are now called “Dallas Buyers Club” laws. In Arizona, the cause was promoted by the Goldwater Institute.

Opponents have said that such laws will give many terminal patients false hope, which is surely true. But it is better to give 90% false hope if 10% (or some other small share) obtain real benefit, if the alternative is an egalitarian world of no hope for all. And it ought to be the patient’s decision anyway.

What the FDA will do about the “Dallas Buyers Club” laws is a question; as with marijuana, the matter is covered by a federal law, if one of questionable constitutionality. At the very least the Arizona vote, a whopping 78% yes, should give other states, and eventually Congress, a political shove in favor of freedom.

Marijuana

Legalization measures were first passed in 2012 by the voters of Colorado and Washington (the two states that had the Libertarian Party on the ballot in 1972). They have been followed this year by the voters of Alaska, which passed Measure 2 with 52%; Oregon, which passed Measure 91 with 55%; and the District of Columbia, which passed a decriminalization measure, Initiative 71, with 65% yes.

Alaska and Oregon were early supporters of marijuana for medical patients, as were Colorado and Washington. When the opponents say medical marijuana is a stalking horse for full legalization, they are right. It is — which means that more states will join Alaska, Washington, Oregon, and Colorado.

On Nov. 4 Florida rejected medical marijuana, but only because it required a 60% yes vote. Florida Amendment 2 had nearly 58%.

Taxes

In Massachusetts, which several decades ago was labeled “taxachusetts,” voters approved Question 1, which repeals the automatic increases of the gas tax pegged to the Consumer Price Index.

In Tennessee, Amendment 3, forbidding the legislature from taxing most personal income, passed with a 66% yes vote. Tennessee is one of the nine states with no general income tax, though it does have a 6% tax on interest and dividends, which will continue.

In Nevada, 79% of voters rejected Question 3, to create a 2% tax on adjusted business revenue above $1 million. Proponents called it “The Education Initiative” because the money was to be spent on public schools; opponents called it “The Margin Tax Initiative.” The measure was put on the ballot with the help of the Nevada branch of the AFL-CIO, which then changed its mind and opposed it. Good for them; most people and organizations in politics never admit of making a mistake.

Debt

In Oregon, Measure 86 would have created a fund for scholarship grants through the sale of state bonds. The measure was put on the ballot by Oregon’s Democratic legislature and supported by the education lobby. It was opposed by the founder of the libertarian Cascade Policy Institute and by the state’s largest newspaper, the Oregonian, because of the likely increase in public debt. It also would have allowed the legislature to dip into the fund for general spending if the governor declared an emergency. In this “blue” state, the measure failed: 59% no.

Regulation

In Massachusetts, which has had mandatory bottle deposits on carbonated beverages since 1982, voters rejected Question 2, an initiative to extend the bottle law to sports drinks, juices, tea and bottled water (but not juice boxes). The vote was a landslide: 73% no.

Abortion

Libertarians are divided on abortion, depending on whether they consider a fetus to be a person. Voters in Colorado rejected Amendment 67, which would have defined an embryo or fetus as a “person” or “child” under state criminal law. The vote was 64% no.

In North Dakota, a “right to life” amendment the state legislature put on the ballot as Measure 1 was rejected, also 64% no.

In Tennessee, voters approved Amendment 1, which asserts state control over abortion but would leave to the legislature what sort of control it would be. Opponents called it the “Tennessee Taliban Amendment.” It got 53% of the vote.

All of these measures are probably symbolic only, because the question has been coopted by the U.S. Supreme Court under Roe v. Wade and later decisions. Still, symbolism can matter.

Alcohol

In Arkansas, where about half the counties are dry, Issue 4 would have opened the entire state to alcohol sales. It failed, with 57% voting no. That’s a loss for freedom if a gain for federalism.

Guns

Washington voters passed Initiative 594 to require background checks for sales of guns by non-dealers. The measure was bankrolled by Michael Bloomberg, Bill and Melinda Gates, and a liberal Seattle venture capitalist and given an emotional push by shootings at a nearby high school. Washington remains a concealed-carry state.

Minimum wage

Politically, this is a lost issue for libertarians. On Nov. 4, Arkansas voted to raise its minimum from $7.25 (the federal minimum) to $8.50 by 2017; Alaska, to raise its minimum from $7.75 to $9.75 by 2016, and index it to inflation; Nebraska, to raise it from $7.25 to $9 by 2016, and South Dakota, to raise it from $7.25 to $8.50 by 2015, then index it. These measures passed by 65% in Arkansas, 69% in Alaska, 59% in Nebraska and 54% in South Dakota.

In Massachusetts, voters approved Question 4, mandating paid sick days in private business. The yes vote was 59%.

Governance

In Oregon, voters rejected the sort of “top two” election system operating in neighboring Washington. In that system, anyone can file in the primary and declare their party allegiance, and the top two vote-getters, irrespective of party, advance to the November election, which becomes a run-off. California has a similar system. Little parties like the Libertarian Party hate it, because it keeps them off the November ballot except in some one-party districts.

Oregon voters were offered a top-two system in 2008 and voted 66% against it. This time, for Measure 90, they voted 68% against it.




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Lemony Lerner's Series of Unfortunate Events

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The media are abuzz with the IRS affair. As you may have heard, former IRS official Lois Lerner, in charge of tax exempt groups, directed harassment operations targeting conservative groups. She also recommended auditing Republican Senator Charles Grassley. Appearing in front of the House Oversight Committee (HOC) in May 2013 and again last March, she pled the Fifth and refused to answer any questions. Later, IRS commissioner John Koskinen announced that potentially damning emails that were subpoenaed by the committee had disappeared in a series of computer crashes affecting Lerner’s machine, as well as the machines of at least six other IRS officers with whom she was not discussing anything important anyway.

Soon thereafter, neighbors of the plush EPA office in the District of Columbia reported hearing a huge "you can do that?" cry of relief. The EPA, you see, is also being investigated by the HOC, for unrelated power grabs. It promptly announced that it, too, had been a victim of these temperamental machines and that disk crashes had eliminated all compromising emails that had been subpoenaed. So there.

The administration had already spent millions retrieving emails containing only irrelevant, harmless messages, and duly supplied them to the HOC, chaired by Congressman Darrell Issa (R-Calif.). Surely, the administration implied, enough is enough. Besides, President Obama himself had designated conservative groups as a "threat to our democracy" as early as 2010. With such divine sanction, how could the IRS be blamed for its actions?

The gremlins sneak in with the mail, escape from the mail rooms, kick office doors, gnaw hard drives, eat magnetic tapes, shred paper records, and hypnotize IT managers into a hardware destruction trance.

Some journalists are starting to smell a fish, but not our modern-liberal media. Oh no. They are jumping to the defense of Lerner, claiming that Republicans are on a witch hunt. This reference to the paranormal may be more accurate than they think. It is the only explanation that makes sense.

Consider the accumulation of bad luck, hardware problems, incompetence, and plain carelessness that was apparently at work. Lerner's drive crashed, and so did the drives in her colleagues' machines — in June 2011, just ten days after being informed of the pending investigation for the targeting of conservative groups. Then, in September, the IRS canceled its contract with email backup software vendor Sonasoft, purged its Exchange email server of old mail, destroyed the tape backups, and decommissioned 22 perfectly good storage servers that were used to archive emails and documents, all the while breaking the laws and rules that mandate the IRS to keep backups. The details of what happened at the EPA are not public yet, but they'll probably reveal a similar pattern of cataclysmic incompetence and bad luck.

This long chain of implausible events cannot be random. The only explanation is supernatural.

Any sane, right-thinking person is forced to conclude that the Republicans send invisible gremlins with the Freedom of Information Act (FOIA) requests they issue to our honest, hard-working federal officials. The gremlins sneak in with the mail, escape from the mail rooms, kick office doors, gnaw hard drives, eat magnetic tapes, shred paper records, and hypnotize IT managers into a hardware destruction trance. These critters are hellbent on destroying records just to embarrass Democratic officials. The fact that the officials are saved from the even greater embarrassment of having to wear those unsightly orange prison jumpsuits is purely coincidental.

Fortunately, there is a solution. After all, the US is still at war in Afghanistan, as the press tends to forget. So Obama could stop the madness by simply classifying the work of all federal bureaucrats as wartime secrets, thereby defeating further FOIA requests.

It is high time that the Republican FOIA freaks stop terrorizing our nation with their invisible gremlins. Sanity must return.

References
Forbes timeline: http://www.forbes.com/sites/paulroderickgregory/2013/06/25/the-timeline-of-irs-targeting-of-conservative-groups/
EPA data: http://thehill.com/policy/energy-environment/210564-epa-says-hard-drive-crashed-emails-lost




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