Wednesday, April 5, 2017

There's Good News About Civil Asset Forfeiture

Some types of theft are legal in America.
But there’s a catch. You can only legally steal if you work for the government. It’s a process called “civil asset forfeiture” and it enables government officials to confiscate your property even if you have not been convicted of a crime. Or even charged with a crime.

I’m not joking. This isn’t a snarky reference to the tax system. Nor am I implying that bureaucrats can figuratively steal your property. We’re talking about literal theft by the state.
And it can happen if some government official decides – without any legal proceeding – that the property somehow may have been involved in criminal activity. Or maybe just because you have the wrong skin color.
What Happened to Due Process?
A column in the Wall Street Journal explains this grotesque injustice.

The Capital Gains Tax Is Risky Business

There are many powerful arguments for junking the internal revenue code and replacing it with a simple and fair flat tax.
  1. It is good to have lower tax rates in order to encourage more productive behavior.
  2. It is good to get rid of double taxation in order to enable saving and investment.
  3. It is good to end distorting preferences in order to reduce economically irrational decisions.
Today, let’s review a feature of good tax reform that involves the second and third bullet points.
Under current law, there is double taxation of corporate income. This means that companies must pay a tax on income, but that the income is then taxed a second time when distributed to the owners of the company (i.e., shareholders).
This means that the effective tax rate is a combination of the corporate income tax rate and the tax rate imposed on dividends. And this higher tax rate is an example of why double taxation discourages capital formation and thus leads to lower wages.
But this double taxation of dividends also creates a distortion because there isn’t double taxation of corporate income that is distributed to bondholders. This means companies have a significant tax-driven incentive to rely on debt, which is risky for them and the overall economy.
Curtis Dubay has a very straightforward explanation of the problem.

Unpopular Policies Can Be Good Politics

For three decades, I’ve been trying to convince politicians to adopt good policy. I give them theoretical reasons why it’s a good idea to have limited government. I share with them empirical evidence demonstrating the superiority of free markets over statism. And I’m probably annoyingly relentless about disseminating examples of good and bad policy from around the world (my version of “teachable moments”).
But if you want to get a politician to do the right thing, you need more than theory, data, and real-world case studies. You need to convince them – notwithstanding my Second Theorem of Government – that good policy won’t threaten their reelection.
My usual approach is to remind them that Ronald Reagan adopted a bunch of supposedly unpopular policies, yet he got reelected in a landslide because reducing the burden of government allowed the private sector to grow much faster. George H.W. Bush, by contrast, became a one-term blunder because his tax increase and other statist policies undermined the economy’s performance.

After Studying Basic Economics, Mayor Vetoes Minimum Wage Increase

There can be no denying that legislatively speaking, the Fight for Fifteen movement garnered huge wins during the last election cycle both on city and state levels.
Unfortunately, no matter how much success or popularity an initiative manages to earn at the ballot box, there are economic laws that cannot be avoided, even when good intentions are accounted for—something some politicians are starting to figure out.
Instead of signing the legislation, Mayor Pugh used her power to veto it!

Mnuchin Wants to Feed the Slimiest Creature in the Entire Swamp

Tax Day is only a few weeks away, which means it’s that time of the year when the country actually stands united in its hatred of governmental theft for a few weeks, before retreating back to their ideological corners to commence political warfare as usual.
Loathing the Internal Revenue Service (IRS) is not an exclusive to libertarians and limited government activists. In fact, the IRS is probably the most hated government agency of them all. And given the long list of disreputable options to choose from, garnering that title is extremely impressive.
For Mnuchin, making America great again means making the IRS even bigger.
Unfortunately for the prospects of tax relief, President Donald Trump, the newly elected “man of the people” who vowed to drain the proverbial swamp of all corruption upon taking up residence at 1600 Pennsylvania Avenue, nominated a Treasury Secretary who wants to make that swamp a little wider.

Peter Navarro Responds to His Trade Critics (Sort of)

White House National Trade Council Director Peter Navarro’s views have been roundly criticized by economists and policy professionals from across the political and ideological spectra. There seems to be an emerging consensus that the more Navarro speaks and writes, the more he marginalizes his influence within the administration. It is with that cause and (positive) effect in mind that I continue pulling on this thread.
A couple of weeks ago, Navarro wrote an op-ed in the Wall Street Journal, offering some really unconventional perspectives about trade policy and revealing a profoundly unique understanding of economics. I replied (in long form) on the Cato blog and (in shorter form) with a letter to the editor of the WSJ.
This afternoon, the WSJ published a response from Navarro to me and the authors of the two other letters published in response to Navarro’s original op-ed. And in response to Navarro’s response, Cafe Hayek’s/Mercatus’s/GMU’s Don Boudreaux wrote this letter to the WSJ editor:

Don't Raise Uncle Sam's Credit Limit

Once again, the United States government is rapidly approaching a fiscal debt ceiling. After March 16, 2017, Uncle Sam will not be legally allowed to borrow any more money to cover its budget deficits, unless Congress votes to raise the debt limit, once again, like it has every time in the past.
The per capita burden of the national debt for those submitting and paying federal taxes is almost $123,500 per taxpayer.
Uncle Sam’s debt has been growing at a frightening rate over the last several decades. It took almost two hundred years, from around 1790, when the government of the United States was established, to 1980 for the federal government to accumulate $1 trillion of debt through deficit spending.
In the twenty-year period, 1980 to 2000, that national debt grew to $5 trillion. Then during the eight years of George W. Bush’s Republican Administration from 2001 to 2009, the debt doubled to around $10 trillion. And over the eight years of Barack Obama’s Democratic Administration, the national debt doubled, once more, to just short of $20 trillion.

Trade Wars Make Casualties of Us All

Military warfare is not the only kind of warfare that causes injury to innocent bystanders. The same inescapably happens in the economic wars waged by governments. But in economic warfare, the apparent victims of “collateral damage” are often, in fact, targeted victims themselves.
On March 29, 2017, The Wall Street Journal ran a story highlighting the Trump Administration’s likely intention of getting tough in trade talks about American beef sales to the European Union.  Being more concerned with the "natural” than with the United States, the European Union long ago imposed trade restrictions on imports of American beef that had been raised using artificial hormones.
“America” and “Europe” do not exist as living, breathing entities.

How the Market Is Already Repealing Obamacare

There’s a common misconception that if you’re opposed to government services, programs and/or departments, then you’re opposed to building roads, education, people getting affordable health care and even people taking care of the sick and elderly. These misconceptions are becoming more apparent as the free market offers solutions and options using innovation and technology, as the government continues to fall in on itself.
Six months into the pregnancy, we received a letter explaining that due to the changes in the law, our policy would no longer cover maternity services.
I continue to be amazed at the ingenuity of people and individuals working toward solutions in the marketplace, in spite of government. Over time government has assumed more and more control over medical decisions that individuals make everyday.

Why Is Trump Waging War on the Freedom Caucus?

Why is Trump attacking the House Freedom Caucus? He has tweeted that “we must fight them.”
My first thought: this is inevitable. Destiny is unfolding before our eyes!
There is the obvious fact that the Freedom Caucus was the reason the GOP’s so-called replacement for Obamacare went down to defeat. They fought it for a solid reason: it would not have reduced premiums or deductibles, and it would not have increased access to a greater degree of choice in the health-insurance market.
At minimum, any reform must unfreeze the market.
These people knew this. How? Because there was not one word of that bill that enabled the health care industry to become more competitive. Competition is the standard by which reform must be judged. The core problem of Obamacare (among many) was that it froze the market in an artificial form and insulated it from competitive forces. At minimum, any reform must unfreeze the market. The proposed reform did not do that. 

Open Your Eyes: Social Democracy is Collapsing

A sign of strange times: 1984 by George Orwell has become a bestseller yet again. Here is a book distinguished for its dark view of the state, together with a genuine despair about what to do about it. 
Strangely, this view is held today by the Right, the Left, and even people who don’t think of themselves as loyal to either way. The whole fiasco happening in D.C. seems insoluble, and the inevitable is already taking place today as it did under the presidents who preceded Trump: the realization that the new guy in town is not going to solve the problem.
Now arrives the genuine crisis of social democracy. True, it’s been building for decades but with the rise of extremist parties in Europe, and the first signs of entrenched and sometimes violent political confrontations in the United States, the reality is ever more part of our lives. The times cry out for some new chapter in public life, and a complete rethinking of the relationship between the individual and the state and between society and its governing institutions. 

Thursday, March 30, 2017

Will Trumpism Last?

Will Trumpism Last?
Trump is a unique phenomenon. We did not see any other Republicans campaigning on Trumpism. Those that attempted it went down in flames in primaries. Will Trumpism last?
I believe Trumpism has a future after Trump’s term in office. Even if Trump had lost the election, I would have still written that Trumpism would have continued.
There were two key reasons why Trump was successful: nationalism and authenticity.

What Trumpism Isn’t

First, what Trumpism isn’t. Notably absent from Trumpism are social issues. Trump did not campaign on hating homosexuals, restoring Biblical morality, family values, drug prohibition, etc. Even his lip service opposing abortion seemed nothing more than a forced shibboleth to give Evangelicals something to latch onto.
On the other hand, during the convention Trump stated he was proud of openly gay Republicans and has appointed an openly gay billionaire to his transition advisory team. Social conservatives are on the wrong side of history, and the Republican Party will be stronger if they deemphasize those issues.

The True Value of Voting

The True Value of Voting
Donald Trump in the Oval Office with Rod Serling.
Trump’s first day in office.
Today is Inauguration Day! It marks the peaceful transition of violent power over the lives of billions in American and abroad from one person to another.
As we celebrate or mourn or shrug off today’s inauguration of Donald Trump, let us reflect on the election. I don’t mean the campaigning and the candidates, but rather the act of voting.
The question we must ask ourselves is which act is more meaningful: voting or farting.

Bastiat and the Dangers of Trumpism

Bastiat and the Dangers of Trumpism
What is the greatest threat from Trumpism? It isn’t racism, as I wrote here. Nor is it his foreign policy, which I touched on as part of this article.
Clinton was better on economics, which is rare for a Democrat. Yes, Clinton wanted to raise income taxes, but Trump also wants to raise taxes in the form of import tariffs. This brings us to the biggest danger of Trumpism: war due stemming from bad economic policy.
Ironically, war was also the biggest danger of a Clinton presidency, and I still maintain that she would have been the more dangerous of the two. Clinton’s foreign policy could best be summed up as “war is peace.” Trump lacks Clinton’s enthusiasm for bombing the Middle East and Russia.
The difference is:
  • Clinton explicitly wanted to escalate existing wars and initiate new ones.
  • Trump does not seem to want war, but he advocates policies that make war a more likely side effect.

How Evil Is Trump?

How Evil Is Trump?
Is Donald J. Trump the most evil president to take office? Many of his opponents would have you believe so. The hysteria against trump is beyond any president in modern history, even surpassing the anti-Obama reaction from the fringe right. There’s even a dating website for helping Americans meet Canadians for romance so that they can flee to Canada and escape Trump’s evil dictatorship.
But let’s put this into perspective.
Has Trump expressed support for secretly infecting blacks with syphilis? If not then he’s less evil than countless bureaucrats working in federal health department who did just that for forty years and the presidents who created the evil system that enabled it.
Andrew Jackson on the twenty dollar bill
Genocidal maniac.
Has he advocated genociding Mexicans and kicking them off their land to make room for white Americans to colonize? If not then he is less evil than the man celebrated on the Federal Reserve’s $20 bill, Andrew Jackson.

Argentina Already Tried Trumponomics

Try to think of a country that elected a populist president: someone who wants to boost manufacturing jobs, insists that domestically-sold products should be made domestically, and threatens to use tariffs to shut off foreign competition. How would that work out?
I am, of course, referring to President Cristina Kirchner of Argentina, not President Donald Trump.
It’s too soon for Trump to have implemented his economic plans, but we can see how Trumponomics will work by looking southwards to Argentina. It is a portent of the doom that awaits us.

In Defense of Ideology

August 2009 
There have been many statements recently to the effect that we should not let “ideology” or “philosophy” stand in the way of solving our economic problems. Indeed, the Obama administration (like the previous Bush administration) is keen to persuade us to drop all this prejudice and to go after each problem–banking, stimulus, and so forth–on its own terms. We should examine each solution on its own merits.
President Obama’s inaugural address includes an apparent attack on ideology:
What the cynics fail to understand is that the ground has shifted beneath them–that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works….

Remembering David Rockefeller, the Economist

David Rockefeller, grandson of John D. Rockefeller, died recently at the age of 101. He was known for many things. But perhaps the least known of his accomplishments was his dissertation for which he was awarded a Ph.D. in economics from the University of Chicago in 1940. This dissertation was published by the University of Chicago Press as a book in 1941, titled Unused Resources and Economic Waste. Although the book is hard to find, I was able to secure a copy and read it. I include here the Preface from the book.
Unused or Wasted
Risk can cause resources to go unused if demand turns out to be too low or costs too high.
The book is very heavily influenced by Frank H. Knight. This means that there is much subtlety, self-critical reflection and, above all, caution in the claims made. It also shows the less beneficial influence of Abba P. Lerner insofar as Rockefeller buys the market-socialist idea that under a form of socialism the attributes of pure competition might be approximated. Nevertheless, this idea is of quite minor importance in the book.

Deregulate to Speed Recovery from 'Creative Destruction' of Trade and Innovation

Deregulate to Speed Recovery from 'Creative Destruction' of Trade and Innovation

A recent report by the Economic Policy Institute blamed trade with China for the loss of 3.4 million manufacturing jobs since 2001. Don Boudreaux of George Mason University analyzes this claim in detail here, where he points out that innovation and automation are more likely culprits. But whether the jobs are lost as a result of international trade or domestic commerce, his most important point is that this is creative destruction.
It is to creative destruction, a process first properly recognized by Joseph Schumpeter (whose 134th birthday it is today), that we owe much of human progress and wealth creation since the industrial revolution. Old ways of doing things are replaced by new ways that create more wealth for everyone. Oftentimes there is a social benefit as well, with creative destruction forcing radical social change. Computers, for instance, creatively destroyed the typing profession, freeing (overwhelmingly) educated women up to do more creative jobs and compete with men as equals in the workplace.

Economic Freedom in the U.S. Fell Last Year Due to Rising Regulatory and Tax Burdens

Economic Freedom in the U.S. Fell Last Year Due to Rising Regulatory and Tax Burdens

The United States recently slipped to its lowest level yet in world rankings of economic freedom compiled by the Heritage Foundation and The Wall Street Journal. As The Hill notes:
In the latest report, the U.S. ranks 17th out of 180 countries with an economic freedom score of 75.1 out of 100. Last year, the U.S. ranked number 11.
Hong Kong, Singapore, and New Zealand topped the list, with respective scores of 89.8, 88.6, and 83.7. Other countries that placed ahead of the U.S. included Canada, Taiwan, and Britain, among others.
The Heritage report said countries with scores between 80-100 are considered economically “free,” while countries scores between 70-79.9 are considered “mostly free.”

Gates Foundation Should Credit Market Reforms for Poverty Reduction

Gates Foundation Should Credit Market Reforms for Poverty Reduction

Last week, the Bill and Melinda Gates Foundation released its annual letter, celebrating its investments in the developing world. Following their typical upbeat style, this year’s letter served as a thank-you note to their friend and fellow philanthropist, Warren Buffett. Buffett, who has donated a substantial portion of his fortune to the Foundation over the years, recently wrote a letter asking what humanitarian return there has been on his investment. The Gates Foundation provided this summary of its report back:

March 27 Is International Whisk(e)y Day!

March 27 Is International Whisk(e)y Day!

Cheers! It’s International Whisk(e)y Day! Not to be confused with World Whisky Day (May 20). What should you do to celebrate? Anything you like!
International Whisk(e)y Day doesn’t discriminate. It embraces those who prefer whiskey and those who prefer whisky! Meet up with friends and try something new, open that mysterious bottle you’ve been saving, introduce someone new to your favorite spirit. Raise a glass! But International Whisk(e)y Day is bigger than just a glass of whiskey, because we know, “there’s more to whiskey than what’s in the glass.”

This Week in Ridiculous Regulations

Ryan Young

The Trump administration’s 60-day regulatory freeze is now over, but many of this week’s new regulations are simply extensions of previous delays. So despite a relatively normal count of final rules, few of them actually implement new policies. Delayed rules range from imported lemons to hybrid car noise.
On to the data:

New Report: Federal Employee Union Subsidy Costs $162 million

Trey Kovacs

Last Friday afternoon, the Office of Personnel Management (OPM) released its biennial report, “Official Time Usage in the Federal Government—Fiscal Year 2014.”
The survey uses a flimsy methodology to calculate how much time federal employees spend performing union business instead of serving the taxpayer. In FY 2014, federal employees spent 3,468,170 hours on official time, at a total cost of $162,522,763.18—a $5 million dollar increase from FY 2012. Unfortunately, union official time undoubtedly costs more than the report suggests.

United Kingdom Invokes Article 50 to Leave the European Union

In a historic moment, British Prime Minister Theresa May today invoked Article 50 of the Treaty on European Union, which formally starts the process of Britain leaving the bloc. Her Majesty’s Government has announced plans to fold all of existing EU law into British law as part of the process, to be included in the Great Repeal Bill, which will be published on Thursday.
The Great Repeal Bill will begin what may prove the greatest deregulatory endeavor undertaken by any modern government. Some 19,000 pieces of EU law will have to be translated into a form compatible with Britain being outside the EU, and then Parliament and government will have to work together to deliver the promise of freedom from bureaucracy that was an important part of many people’s decision to vote to leave the EU.
How they will do it remains to be seen, but last year Rory Broomfield of The Freedom Association and I suggested that a Royal Commission on Regulatory Reduction would be appropriate in our book, “Cutting the Gordian Knot.”

The Improvisational Fed, and Unpredictable Regulations

Ryan Young

Improvisation can be a wonderful thing when performed by talented hands—Charlie Parker, Miles Davis, and the like. The Federal Reserve, especially for the past several weeks, has fancied itself an improvisational talent on that level. But like most humans, Janet Yellen is no Charlie Parker. They should consider a return to the Paul Volcker/early Alan Greenspan adherence to a defined rule. But that isn’t the end of the story—any substantive Fed reforms will fail unless they are coupled with a thorough program of regulatory reform reaching through the entire executive branch. This post will examine a few worthwhile Federal Reserve reforms, then some regulatory reforms, most of which have already passed the House.

The Case against the Consumer Financial Protection Bureau: FAQ

Competitive Enterprise Institute General Counsel Sam Kazman answers 7 frequently asked questions about CEI’s legal challenge to the Consumer Financial Protection Bureau, State National Bank of Big Spring v. CFPB.
What is the Consumer Financial Protection Bureau (CFPB)?
The Consumer Financial Protection Bureau (CFPB) is a federal regulatory agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The CFPB was set up as an independent agency that receives its funding from the Federal Reserve, not through Congress, and it enforces 19 federal consumer protection statutes. The CFPB’s jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, and other financial companies operating within the United States.

Mr. Robot and the Future of Money

Iain Murray

Last week, the cult USA channel TV show Mr. Robot showed once again why it is required viewing for anyone interested in technology. In a conversation between E Corp CEO Phillip Price and a top government official named Jack (a thinly-veiled Jack Lew?), he talked about his plans to get official government backing for his virtual currency, eCoin:
Jack (James Lloyd Reynolds) : “…it’s unconstitutional, you can’t make your own currency.  That is the Federal Government’s job!  We simply cannot let you make big loans in eCoin that you would not make in dollars.”
Phillip Price (Michael Cristofer): “Jack look at me.  I am not the problem here.  The problem here is hard cash is fading rapidly. That’s just the way of the world right now.  And Bitcoin is spreading.  And if Bitcoin takes over, we are all in a world of hell! It is unregulated.  It has already reached its transaction volume maximum.  And, it is partly controlled by Chinese miners.”
Jack: “You just accepted two trillion dollars from them!”

Wednesday, March 29, 2017

Memo to the White House—if it matters, measure it

Memo to the White House—if it matters, measure it

The Fraser Institute’s motto is that “if it matters, measure it.” Our motto is a constant reminder of the importance of measuring the effect of government policy interventions on people’s lives, and it guides our work every day.
Of course, measuring complex social phenomena is much easier said than done. We recognize that some things are extremely difficult to measure, and that there are often disputes among well-intentioned and knowledgeable researchers about the best way to measure them.

Growing government, increased regulation primary threats to economic freedom in Canada

Growing government, increased regulation primary threats to economic freedom in Canada

Since comprehensive data for Economic Freedom became available in 1970, Canada’s had a secure place in the world’s top 10 jurisdictions. But could Canada be at the beginning of a long slow decline, like the one that has afflicted the United States over the last decade and a half?
The U.S. entered the 2000s strong. In 2000, its economic freedom score was 8.65 out of 10 and it was the world’s second freest economy after Hong Kong. This was the peak of U.S. economic freedom. Decay set in under the George W. Bush and Obama administrations. By 2014, the most recent year of data, the U.S. score had fallen to 7.75 and its ranking to 16th. Over that time, it suffered a serious decline in “Size of Government” and worse declines in “Rule of Law and Property Rights” and “Freedom to Trade,” all essential elements of economic freedom.

Global free trade, an essential element of economic freedom, is under threat

Global free trade, an essential element of economic freedom, is under threat

It's a “Mad, Mad, Mad, Mad World,” to quote the title of a 1960s movie, when someone like Xi Jinping (pictured above), the despotic leader of a communist country that follows a “beggar-thy-neighbour” trade policy, declares himself the champion of free trade. Things don’t get much saner when the leader of a country, which voted itself out of the world’s deepest and largest common market, declares herself “one of the firmest advocates for free trade anywhere in the world.”
Free trade is essential to economic freedom—individuals should have the right to buy from and sell to anyone anywhere. Yet, it’s under threat globally. Left-wing and right-wing populist movements in Europe and the United States denounce free trade while Asia’s Trans Pacific Partnership is on the ropes. It was once called the “gold standard” of trade agreements by Hillary Clinton who, under left and right populist pressure, then opposed it.