Category: free trade & free markets

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free trade & free markets general freedom Ninth Amendment rights tax policy

Taxation Rules

Overburdened Pack Mule

It turns out the United States is a tax haven.

Haven? Heavens! I live here. I don’t feel that low-tax feeling when April 15 rolls around.

But the Cato Institute’s Dan Mitchell, an expert on all things tax-policy — a dirty job, but somebody’s gotta do it — says “The U.S. Is a Tax Haven . . . and That’s a Very Good Thing.”

He is a huge fan of international tax competition. He likes it when governments at least marginally decrease the tax burden on prospective producers and investors, so as to lure production and investment from other tax jurisdictions. In his opinion, “we need some way to restrain the greed of the political class.”

Fans of big government disagree. Tax competition hinders their master plans to control and plunder the rest of us.

Mitchell knows that we mere U.S. citizens tend to lug a big tax load. But the United States is in fact “a tax haven. Not for Americans, of course, but . . . we have some good rules for foreigners.” In addition to their ability to exploit the especially robust corporate privacy rules of a state like Delaware, foreign investors can avoid taxes on interest and capital gains on their stateside investments.

Now, Mitchell says, let’s apply those “same good policies to Americans.”

Hear hear! Havens I can access are even more appealing than those I can’t.

This is Common Sense. I’m Paul Jacob.

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Overburdened Pack Mule

 

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free trade & free markets

A Ride on the Private Side

If you’d like to catch a flight without the usual delays and post-911 regulation-inflicted hassles, used to be you had to own your own plane, charter one, or buy a time share in one.

Now you can use a smartphone app to book a seat on a private jet — just as you use an app to book an Uber driver outside the confines of the hyper-regulated taxi industry. Sure, private-jet seats are still pricey. But the New York Times reports that lower-end bookings are comparable in price to that of first-class seats on Delta or American.

Private JetNew services find spots for you on planes en route to pick somebody up that would otherwise be empty, or let you subscribe to blocks of time for use on a variety of jets. Result? More and more passengers are able to ride private jets thanks to startups like JetSmarter and Magellan Jets.

Those of us who lack the means to exploit this option-expanding development should still welcome it as a step in the right direction, away from burdensome regulatory regimes that slow us all down. I doubt we’ll get rid of the regulatory bog at the airport any time soon. After all, we’re still stuck with the government-subsidized USPS postal monopoly despite the competition in package delivery provided by UPS and FedEx.

But without the pressure and example of such relatively unencumbered alternatives, our situation would be worse; our prospects, dimmer.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies

Job Growth in 2014

President Barack Obama takes full credit for the job growth in 2014. Democrats on the Internet relentlessly push these growth rates with typically goofy superlatives like “highest ever” or “highest growth rate in decades.”

So, what did Obama and the Democrats do in 2013 and 2014 that led to the growth we saw last year?

Well, Obama refused to renegotiate with Republicans on any unemployment or budget reforms.

As 2013 ended, we heard Democrats complaining that stingy Republicans were letting federal government extensions of unemployment compensation (which had been re-extended many times) lapse altogether. Obama predicted disaster. The Keynesian economists who circle the Democratic Party like moths to a candle held to a simple prophecy:  because of a hit to “aggregate demand,” unemployment would increase.

Instead, in 2014 employment bounced back.

In a droll quasi-opinion piece, “President Costanza’s Jobs Boom,” the Wall Street Journal reports that “job growth in 2014 was roughly 25 percent higher than any post-2009 year. Joblessness plunged to 5.6 percent from 6.7 percent. Net job creation averaged 246,000 a month.”

Citing a National Bureau of Economic Research study by economists Marcus Hagedorn, Iourii Manovskii and Kurt Mitman, which treated the abrupt policy change as a “natural experiment,” the Journal reveled in the knowledge that the increase in incentives from lapsed benefits led unemployed workers to (gasp!) seek jobs.

And they found them. Granted, many of the new jobs are not as good as their pre-bust jobs. But they are jobs, which is better than nothing.

So when your big-government promoting friends attribute 2014’s job growth to Democratic policies, ask which policies, precisely. And ask why Obama’s predictions of 2013 for disaster in 2014 didn’t pan out.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Bye-Bye, Community Banks

The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010 by President Barack Obama. Its supporters said that would increase financial stability and transparency, prevent bailouts, and protect consumers from “abusive practices.”

I’m dubious the new regulatory regime will accomplish any of these goals.  What has really happened since passage? An extreme consolidation of financial institutions.

Marshall Lux and Robert Greene, in a new study, show that the long-term trend in which community banks have diminished in number and importance has doubled in severity since Dodd-Frank.

You don’t have to be a “small-is-beautiful” fetishist to worry about this. The bigger banks remaining are just all that much bigger in the “too big to fail” department.

Greene and Lux explain the mechanisms at play under Dodd-Frank. The regulations are not geared to the size of the regulated institutions, so economies of scale in regulatory compliance arise, bigger than ever.

Todd Zywicki, writing in the Washington Post, makes it clear how these “regulatory costs tend to fall proportionally heavier on smaller banks.” Leading to consolidation.

Just as Zywicki had predicted.

Zywicki, Lux, and Greene are demonstrating an old principle. Economist Ludwig von Mises explained it decades and decades ago. Mises dubbed regulations into market operations “interventionism,” and identified the pattern of such activity as almost an archetype. Interventionists

  1. see a “problem”;
  2. propose a “fix”;
  3. the fix puts us in a worse fix, as unintended consequences multiply;
  4. politicians and bureaucrats scramble to add an additional fix to the mix.

That is why laws keep piling up. Leading ultimately to calls for more laws.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets general freedom too much government

The Two Americas

Dear Reader: This “BEST of Common Sense” comment originally aired on July 4, 2007. A longer version published at Townhall.com was picked up by Rush Limbaugh and read on his radio show. —PJ

Could Democratic presidential candidate John Edwards actually be right about something? Not where to go to get a haircut, mind you, I mean about there being two Americas.

There is the vibrant America . . . and the stagnant one.

There is the America of ever-increasing wealth, innovation, creativity, new products and services. Choices galore.

And there is the politician’s America: The regulated America, the subsidized America, the earmarked America. The failing America.

In one America, it is what you produce that gets you ahead. In the other, it’s who you know.

In one America, to earmark some money means setting aside funds (into savings) for a purchase — a car, house, college.

In the other America, to earmark is to grab from taxpayers to give to cronies. It is the highest rite of career politicians: Buying their votes with other people’s money. Oh, there have been reforms, sure. But a recent bill in the House had 32,000 earmark requests.

In one America, we decide what we pay for. We choose constantly about little things and big. We call the shots. Or we walk down the street and associate with someone else. So we have some faith in those we work with.

In the other America, we vote. But we rarely get what we vote for.

Maybe that’s why the new Democratic Congress just registered the lowest approval rating in poll history.

It surely isn’t because folks love the Republicans.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets general freedom too much government

Against Enabling Segregation

Rosa Parks, born February 4, 1913, became a symbol of the Civil Rights Movement for her actions on December 1, 1955. Ordered to move from the first row of the “colored” section after seats reserved for white passengers had filled up, Parks refused.

“When that white driver stepped back toward us, when he waved his hand and ordered us up and out of our seats, I felt a determination cover my body like a quilt on a winter night.”

Economist Thomas Sowell believes that the conflict might never have even come up as an issue, had the bus been privately run.

“Why was there racially segregated seating on public transportation in the first place?” he asked on the occasion of her death in 2005. “[T]here was certainly plenty of racism in the South, going back for centuries. But racially segregated seating” did not have the same unbroken history. Sowell pointed out that no matter what their own views, owners of the private transit lines of the 19th and early 20th century lacked motive to enforce segregation and thereby alienate many of their passengers.

When markets aren’t overrun by politics, both buyers and sellers must focus on the value they want from trade — a good product or competent service. Participants are penalized if they routinely set aside those benefits in order to indulge an animus.

In the 20th century, the trend towards taxpayer-funded mass transit displaced economic incentives with political ones.

Only governments can force entire industries to routinely act on an irrational prejudice.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Experience Denied

Jan Ellison is grateful for the low-wage jobs she had as a kid.

“The difference from the way my own children are being raised is that I was acutely aware of the financial burden of these [educational and other] pursuits. . . . I made money of my own from age 11 onward. I had a paper route. I cleaned houses and swimming pools. I took clerical temp jobs. . . . I can’t say that any of this was important work, but the act of doing it mattered.”

She learned to “work for the ticket” that would take her to better things.

That minimum wage laws make it harder to gain such experience is a problem raised not by Ellison but by a Cafe Hayek reader, Mike Wilson, who calls her memoir “as powerful a case against raising the minimum wage as I have encountered.” (Strictly speaking, against establishing or enforcing any wage-rate floor.)

Wilson’s sensible point is that when you’re just starting out in the work force, you must develop the habits and skills needed to do a job well and to then go beyond it. These include punctuality, mastering procedures, accepting corrections with grace, being civil, staying productive and careful when you’re tired, and more.

What you can bring immediately to a job is willingness to learn what’s necessary. But the higher your pay must be before you’ve made yourself worth that pay, the harder for employers to give you the chance to make yourself worth it.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Death by Metro

“Metro has a reputation for shoddy service and a history of not learning from its mistakes,” Aaron Wiener admitted in a column for The Washington Post. But this extremist zealot’s basic argument for government-run, taxpayer-subsidized mass transit might best be understood by its headline: “Metro’s a mess. All the more reason to ride it.”

A woman died last week riding the city’s subway system. She was overcome when train cars became stuck in a tunnel filling with smoke. Another 84 riders were hospitalized, two in critical condition.

DC Fire was so woefully slow in response — victims say more than 30 minutes — that afterwards no public official was willing to say precisely how slow. Not the new mayor; not the Chairman of Washington’s Metro board. The latter provided an excuse, claiming he “cannot speak to it” because of the investigation by the National Transportation Safety Administration.

Upon arrival, the rescuers’ radios didn’t work. “[D]espite hundreds of millions of dollars in upgrades and new training and safety protocols at the transit agency,” The Washington Post reported, “a critical piece of infrastructure — emergency communications — remains a significant problem.”

This isn’t Metro’s first accident, either. Six years ago, nine people died when two Metro trains collided.

Without profits, and run “politically” as a public entity, there just isn’t the same incentive to make the necessary investment in infrastructure required to run the subways safely. A private company with Metro’s record of accidents and failure in addressing safety concerns would likely be shut down.

Sadly, Metro faces no such threat.

But the transit agency faces a different one: ridership has fallen to the lowest point in a decade. People are voting with their feet.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies subsidy too much government

Subsidy for Everybody!

According to Vice President Joe Biden, the debate is over. Health care, by which he means medical assistance, is a basic right — to be obtained through government, and made effective by the Affordable Care Act — not a “privilege.”

By “right” he means  “something others are forced to provide,” in this case by taxes, regulations, and the full panoply of U.S. law. Today’s “liberals” like to use the word “privilege” to mean anything obtained without direct government assistance. And therein lies a huge problem.

In his first weekly address of the year, Biden touted how great the ACA, “Obamacare,” is. How affordable it is for families, for everyone! It’s a panacea, though Biden didn’t use the word.

Actually, he didn’t say that we have a right medical care. He said we have a right to health “insurance,” which we’re forced to purchase — and for which many are subsidized, too.

How far does he go with this?

“An awful lot of people who didn’t think they could or would find quality, affordable health insurance are actually able to get assistance from the government to help them pay for their health care plans at a cheaper rate,” he earnestly intoned. “A family of four with an income of around $95,000, they can still get a subsidy to lower their health care premiums.”

You can see where the problem is. If a household making $95,000 per annum can receive subsidies, who’s paying for all this?

Perhaps you.

Can you see why Obamacare’s a prescription for financial disaster?

This is Common Sense. I’m Paul Jacob.

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free trade & free markets subsidy

Rent Too High?

Remember Jimmy McMillan? He’s “the rent is too damn high!” shouting, six-time New York City mayoral candidate with the, er — Rent is Too Damn High Party.

McMillan is at least partly right. It’s no mystery that rents are so high. Government policies are aimed at just that result.

In New York City, rent control discourages new supply as well as maintaining existing supplies — causing shortages leading to higher prices. In many cities, particularly in Blue political metropolises, zoning has pretty much the same effect.

Meanwhile, pumping subsidies into the demand side of the rental housing market doesn’t exactly decrease prices.

Last weekend, the Tyler Morning Telegraph offered up “Housing Choice Voucher program helps families,” reporting on 65-year-old Brinda Meier’s effort to land one of 500 “popular” Housing Choice Vouchers offered with grants of federal tax dollars distributed through Tyler’s Neighborhood Services Department. The voucher goes to help pay the rent.

That’s nice, of course, and no doubt why the program is popular. But the landlord actually cashes the voucher check. Moreover, to the extent these rent subsidies allow folks to afford higher rents, they in turn keep those rents higher — including for folks whose voucher numbers won’t come up in the “please Uncle Sam help pay my rent” lottery.

We discover that Meier, who lives on Social Security and food stamps, is preparing to move across town. She’s found a new place to rent, $200 cheaper than her current place — and in a better neighborhood. She tells the reporter that she’ll move without regard to whether she wins the rent subsidy.

So taxpayers may subsidize someone who doesn’t need it, serving only to keep rents too darn high.

This is Common Sense. I’m Paul Jacob.