Tag: laissez faire

Categories
tax policy too much government

For a Thousand Years

government, monster, politics

Time for a gas-​tax holiday. 

When the people lie prostrate, when the people groan under heavy burdens, when the people just can’t take it anymore — and when an election is coming up — that is the time for politicians to relieve everyone’s burden.

A bit.

Treasury Secretary Janet Yellen favors considering a temporary gas-​tax holiday to emulate some of the states. Reviving the Keystone oil pipeline — no, not something to consider, she says. But she’s okay with a brief gas-​tax break.

Let’s do better.

I propose a millennium-​long gas-​tax holiday, government-​barriers-​to-​drilling holiday, regulation-​of-​all-​industries holiday. Under my plan, government gets all the way out of the way of all markets so we can all be as prosperous as possible, whether or not a big economic crisis is underway.

But would there be any such crises — long-​term and intractable economy-​wide crises, I mean — if my plan were enacted?

When government does everything possible to injure the economy and prevent recovery, it takes a long time for markets to bounce back from shocks. If ever.

Un-fetter the markets, though, and economic actors would be able more rapidly to adjust to major jolts. If gas imported from overseas plummets, producers could then quickly adapt by expanding production. They cannot readily do so now because government imposes so many barriers.

The politicians’ preference for modest, namby-​pamby reprieves are not only substantially weak, they send the wrong signals. They get doled out as if government were doing us a special favor … by not beating us up so badly for a very little while.

We need freedom. On an ongoing basis.

This is Common Sense. I’m Paul Jacob.

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paternalism too much government

Save Me, Good and Hard

SEC, Security and Exchange Commission,

The problem with making my own decisions? I might make a mistake.

That’s not good for me, is it?

So what you government boys ought to do is make me scrape and bow and beg for permission. Make me fill out more forms, struggle with invasive new privacy-​invading requirements. Make it super-​hard to comply — so I give up before I do anything … ill-considered.

That way, you prevent me from taking actions that might just possibly go badly — like investing my own hard-​earned money the way I want to.

The SEC is seriously considering meeting this demand. 

Give it to me good and hard, SEC! 

But let me clarify. By “me” I mean every small independent investor. By “give it to me” I mean “don’t give it to me.”

Don’t do what Securities and Exchange Commission Chairman Jay Clayton and other SEC commissioners are considering: imposing a regulation to “effectively ban many middle-​class investors from buying mutual funds and exchange-​traded funds.”

Don’t make it lots harder to use the Robinhood app to make certain low-​fee or no-​fee purchases. Don’t prevent investors from buying funds through discount brokerages and apps like Robinhood unless they first fill out an intrusive questionnaire about their personal finances and pray for permission.

Don’t make us beg to invest.

Don’t. 

Stop mulling whether to further harass Americans who want to be free to make their own choices and live their own lives. 

Don’t enslave. 

Liberate. Laissez nous faire, you condescending thugs.

This Common Sense. I’m Paul Jacob.

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insider corruption political challengers too much government

Protesting “Capitalism”?

While Americans appear mildly unsettled or perhaps “ticked off” about recent government revelations, elsewhere in the world citizens move from “unease” to “unrest” and outright “protest.”

The protests that erupted first in Turkey and now in Brazil and elsewhere are filled with the ranks of the young, not a few of whom have noticed something: They are getting a raw deal.

Many of their issues are meat-​and-​potatoes: lack of jobs, burdensome student debts and, in Brazil, a bus fare rate increase made ugly in the context of cost overruns in taxpayer support for the World Cup and Olympics.

The young Turks protested, at first modestly, over planning for a park, but a harsh police crackdown led to more widespread marches, sit-​ins, and demonstrations — which now often bring up questions of the current administration’s repressive anti-​modernist, anti-​freedom agenda.

This more heroic theme resonates elsewhere, too.

In Bulgaria the issue most protested appears to be police brutality and the general spirit of repression. In Latin America, opposition to corruption has moved from old stand-​by to vital question of the day.

The saddest statement I heard was this appraisal, hailing from the BBC, of the general climate: “today capitalism is becoming identified with the rule of unaccountable elites, lack of effective democratic accountability, and repressive policing.”

Well, that’s not laissez faire capitalism that’s failed, but crony capitalism. Laissez faire’s truly free markets require a rule of law, the suppression of government corruption, and effective public accountability.

But that’s not what’s dominant. America itself serves, today, not as a beacon of liberty but of institutional control, of crony capitalism.

We need to protest that here, again, in the U.S.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy

Impossible, They Say

Modern economics takes a long, circuitous route to the old wisdom of classical political economy: Laissez faire is best.

This ideal of free markets was pretty clearly established by Adam Smith, J.B. Say, David Ricardo, and others long ago. Frédéric Bastiat explained it best in layman’s terms.

But modern economic theory, with lots of math I don’t pretend to follow, often backs it up, too. Sure, sure: Much of modern theory sort of assumes unlimited government as the alternative to “market failure.” But the more you look (and look critically) at that theory — and increasing numbers of economists are doing just that — the more the case for government involvement falls flat.

This struck me as I was reading economist Garett Jones:

There’s an old story about a mathematician asking Paul Samuelson for one idea in economics that was simultaneously true and not obvious. Samuelson’s answer [was the Law of Comparative Advantage].  Today, I’ve got another: The Chamley-​Judd Redistribution Impossibility Theorem.

Chamley and Judd separately came to the same discovery: In the long run, capital taxes are far more distorting tha[n] most economists had thought, so distorting that the optimal tax rate on capital is zero.  If you’ve got a fixed tax bill it’s better to have the workers pay it.

Jones goes on:

Under standard, pretty flexible assumptions, it’s impossible to tax capitalists, give the money to workers, and raise the total long-​run income of workers.

Not, hard, not inefficient, not socially wasteful, not immoral: Impossible. 

Hard as policy wonks and their patrons, the politicians, may try, any redistribution from the owners of capital to workers will make workers worse off.

Jones discusses some of the niceties of the theory.

But I confess: to me it’s all déjà vu. Or, to conjure up another French term, laissez faire all over again.

This is Common Sense. I’m Paul Jacob.

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Townhall — Sanity: Politically Possible?

Given the special interest politics at play in the U.S. and elsewhere, which policy — fiscal conservatism or Keynesianism — is more likely to be achieved in something like its pure form?

My Townhall column this weekend asks a question about political feasibility … of the most popular doctrine in 100 years. Take a look, 

Continue reading “Townhall — Sanity: Politically Possible?”
Categories
free trade & free markets national politics & policies too much government

$700 Billion Bad Bet

The administration’s proposed $700 billion bank bailout has finally passed the Congress — in large part because of fear that the economy would crumble if “something” wasn’t done.

But the magic men in Washington don’t have any guaranteed fixes in their bag of tricks. Certainly robbing the taxpayers of $700 billion — that’s a billion, 700 times — won’t cure the economy.

It will, long run, hurt the economy. How? By hampering realistic adjustment to current market conditions. It means taking $700 billion from productive economic activities to buy up debt at prices nobody in the private market is willing to pay. As economist Arnold Kling points out, “If [Bernanke and Paulson] were taking their plan to a venture capital firm to seek funding, they would be laughed out of the office.”

How did we get here? In previous years, the federal government compelled banks to give mortgages to persons who really couldn’t afford them. Meanwhile, the easy credit policies of the Federal Reserve made it easy for banks to obey these irresponsible demands.

Hence the housing bubble. Which popped.

The only long-​term solution is to get the government out of the market. Stop trying to paper over the horrendous consequences of past government interventions with even worse government interventions. The free market ought to be free. Otherwise, we’ll one day end up with no market at all.

This is Common Sense. I’m Paul Jacob.