Author: Redactor

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Thought

James M. Buchanan

If not an economist, what am I? An outdated freak whose functional role in the general scheme of things has passed into history? Perhaps I should accept such an assessment, retire gracefully, and, with alcoholic breath, hoe my cabbages. Perhaps I could do so if the modern technicians had indeed produced “better” economic mousetraps. Instead of evidence of progress, however, I see a continuing erosion of the intellectual (and social) capital that was accumulated by “political economy” in its finest hours.

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Thought

George Mason

There is a Passion natural to the Mind of man, especially a free Man, which renders him impatient of Restraint.

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First Amendment rights ideological culture video

Video: A “Free Speech Wall” Falls

If you agree to a “free speech wall,” you can’t complain about the speech that offends you, can you? Well, if you run a college, I guess you can:

Note that it wasn’t the use of the vulgar “f-bomb” that upset the professors. It was the use of one against the current U.S. president.

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education and schooling free trade & free markets

Strikes and Rumors of Strikes

The tale of how Chicago’s teachers union beat the Chicago School District, and got their way, is inspiring . . . if you belong to a union, if you don’t care about costs, if you don’t want to improve the quality of education.

And if you define “inspirational” as inspiring copycats.

That’s happened already, and may break out big time. Illinois’s Evergreen Park District (#124) is now on strike. Lake Forest High School District (#115) teachers recently concluded a strike, with a tentative agreement allegedly being finalized as I type. At least two other district teachers’ unions have declared strikes, and contract negotiations have stalled elsewhere. Add to that, AFSCME bigwigs wrote their 40,000 members that “direct action at the work site” might be necessary. I’m hoping that’s a work stoppage, and not sabotage. (“Direct action” sounds ominous, doesn’t it?)

Paul Kersey, writing on the Illinois Policy Institute website, opines that it “would be unfortunate if union officials chose to shut down key government services at a time when so many Illinoisans are struggling economically, but unfortunately it seems that the results of the Chicago Teachers Union strike may have encouraged many of them to do just that.”

Unions arose in the 19th century as a way to deal with poor working conditions, and, over time, the idea of a closed shop took hold with the specific program of excluding competitive workers. That made it easier to negotiate for higher wages, etc.

While private sector unions fought “evil businessmen” — that’s what I read in school — public employee unions fight . . . taxpayers. I always wonder how taxpayers feel, being dragooned into the role of “evil” skinflint.

This is Common Sense. I’m Paul Jacob.

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Thought

James M. Buchanan

The power to “tax” is simply the power to “take.”

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national politics & policies tax policy too much government

Avoid the Big Gov Trap

We do not face just one problem, but our many problems tend to come down to one thing: trying to do too much through government.

Last weekend, at Townhall, I noted that the most wildly popular economic policy doctrine of the last hundred years, Keynesianism, has not — its proponents say — been properly given a chance during the two biggest financial contractions of our time, the Great Depression and the recent mortgage-backed securities implosion. In both cases, more money was needed for proper “stimulus.”

Ironic, perhaps, since Keynesianism has been used as an excuse to run deficits and increase debt for scores of years.

Yes, even a doctrine designed to play into the hands of politicians gets abused by politicians.

The lesson: Excuses to grow government are not revolutionary insights, they’re traps.

Yesterday I talked about how the “Laffer Curve” point where raising the tax rate actually reduces revenue is lower for capital gains than for general income. But one consequence of a revenue-maximizing capital gains rate is that there would then be rich investors who wind up paying a smaller percentage of their incomes in taxes than do common laborers.

Tax fairness is an issue that should not be ceded to those caught in the clichés of the age. Think of tax fairness, instead, as a rationale for a limit. Not as an excuse to raise tax rates punitively, hatefully, foolishly (like the current president wants).

Bring all tax rates down to the level of the tax with the lowest revenue-maximizing rate. Don’t raise capital gains taxes, lower the income tax. 

Taxes would then be fair. And government would have to be reduced to accommodate the fairness, and thus more limited.

Less of a trap.

This is Common Sense. I’m Paul Jacob.

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Thought

James M. Buchanan

For the ordinary citizen, the power to tax is the most familiar manifestation of the government’s power to coerce. This power to tax involves the power to impose, on individuals and private institutions more generally, charges that can be met only by a transfer to government of economic resources, or financial claims to such resources—charges that carry with them effective powers of enforcement under the very definition of the taxing power. To be sure, governments may use tax revenues for financing public goods or transfers that citizens-taxpayers desire. But we must distinguish sharply here between a rationalization for the government’s possession of the power to tax and an understanding of that power in and of itself. The power to tax, per se, does not carry with it any obligation to use the tax revenue raised in any particular way. The power to tax does not logically imply the nature of spending.

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ideological culture tax policy

Curvewise, Gainswise

The so-called “Laffer Curve” — the graphic representation of the varying relationship between tax rates and tax revenues — really bugs people left of center.

The curve maps an economic reality, showing that not all increases in tax rates can increase tax revenues. Why object to reality?

Perhaps because, on the left, taxes are seen less as a practical means to raise government revenue than as an expression of one’s values. The more “leftist” one is, the more equality matters, which too often boils down to: the more one wants to punish the rich. Higher rates stifle the economy and garner less revenue? Big deal. Consequences be damned. One’s values must be expressed.

This came out in Barack Obama’s first presidential campaign. He famously didn’t care whether a capital gains tax rate increase would decrease revenues, as has happened in the past. For him, “fairness” was more important.

Interestingly, it appears that capital gains tax rates tend to top out Laffer-Curve-wise much lower than income taxes. The reason? One seeks a return on capital from invested savings, but one also fears the possibility of loss.  Risk. Pile higher tax rates onto the already palpable negative of uncertainty, and the investor will be tempted to consume his capital rather than engage further in risking his wealth for less reward.

But I confess: I sort of sympathize with the left’s attitude towards taxation. I don’t really want the government to maximize revenue, either. Government misspends most everything it takes in, so I’d prefer lower rates for reasons maximizing quality, not equality.

I bet that the poor, though, would be far better off were the rich not targeted for extra penalties. But that’s not an egalitarian concern, for me. It’s a humanitarian concern.

This is Common Sense. I’m Paul Jacob.

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Thought

Gore Vidal

As societies grow decadent, the language grows decadent, too. Words are used to disguise, not to illuminate, action: you liberate a city by destroying it. Words are to confuse, so that at election time people will solemnly vote against their own interests.

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ballot access First Amendment rights political challengers

“Top Two” Goes South

Washington State has a long history of popular antagonism to political parties. For years, the state enforced an open primary, which meant that Republicans could vote in Democratic primaries and Democrats in Republican primaries. This was very popular, because it led to widespread strategic voting.

Well, that’s a euphemism. In open primaries, what you get is not mere strategic voting so much as sabotage. I have heard of Democrats and others boasting of voting in Republican primaries, for example, supporting Pat Robertson. Why? They believed Robertson to be unelectable, and hoped putting Robertson ahead would undercut the GOP in independent voters’ eyes, and make running against the party easier in the general election.Shooting numbered ducks.

Well, a few years ago that system was thrown out as unconstitutional, as an abridgment of free association rights.

But instead of allowing party members to select candidates, Washington State movers and shakers cooked up something else altogether. They set up a system wherein anyone could use a party’s label — even if that party’s members don’t know said candidate or despise him. Robbing parties of any control over candidates offered in their name is far worse on the very constitutional issue that nullified Washington’s traditional open primaries. Though Top Two has been legally challenged, the U.S. Supreme Court just this week refused to hear arguments.

The name “Top Two” comes from the fact that only the top two vote-getters in this super-open primary are on the general election ballot. The new system has completely removed minor party candidates from the general election ballot, when most folks vote.

Top Two has had the same impact in California. Arizona voters will decide the issue this November, on their ballot as Prop 121.

This is Common Sense. I’m Paul Jacob.