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Libertarian Tea Parties

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Libertarian Tea Parties

On April 15, 2009 (the date that US tax returns are due) dozens of libertarian groups around the country will stage protests, called Tea Parties (named after the famous Boston Tea Party of 1773). The purpose is to “voice opposition to the out-of-control spending and taxation started by the Bush administration and carried on by Obama.”

This sort of grassroots activity is exactly what’s needed these days. The organizers are to be commended. It’s only in the United States that something like this would happen. More Americans need to mobilize, organize, demonstrate, and express themselves in this way, because: (1) it’s the right thing to do; (2) it’s effective; (3) it keeps the flame of Liberty alight; and (4) it serves as an example for the rest of the world.

My one suggestion is to not personalize this by blaming President Obama. The problem isn’t the president, it’s the economic-political System in the US. The System *wants* people to personalize things, and to express hostility. That insures that accusations merely flow back and forth, and nothing constructive gets accomplished.

Flat Income Tax

And while we’re at it, let’s not forget the idea of income tax reform, and, in particular, the idea of a flat tax. To adopt a flat tax would go a long way towards getting the US economy back on track. The flat tax is a winning proposition for everybody. It can lower the marginal tax rate across the board, yet generate more tax revenue. This happens because:

  1. People and companies don’t need to waste so much time (days, weeks) merely figuring out their taxes and doing the necessary accounting on an ongoing basis;
  2. Compliance will be improve because everybody will view the system as fair and positive;
  3. Companies and the rich will spend less time finding clever ways to avoid their taxes and more time producing what they’re in business to produce.
  4. In an economy stimulated by the flat income tax there would be more business activity, more income, and more total income tax paid, even though the marginal rate is reduced.

Written by John Uebersax

April 12, 2009 at 4:26 pm

Will Europe Run the 21st Century? – Not With High Taxes!

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Will Europe Run the 21st Century? – Not With High Taxes!

Recently I went to a shop in Brussels that specializes in English-language books — seeking recommendations for new works on Europe’s political outlook. Someone suggested a book, “Why Europe Will Run the 21st Century“, by Mark Leonard. Unfortunately, the book looks to me like pro-EU propaganda, without much substance or insight.

There is something very naive in the European intellectual milieu: a vain hope that somehow a central EU government will solve all the problems of Europe — and, to judge from this book’s title — apparently those of the entire world. Somehow this reminds me of the absurd idealistic mentality that tried to cast World War I in a positive light: the “war to end all wars.” What I mean is that Europeans have suffered from centuries of internecine warfare and this has deeply colored their outlook. Their vision of the future seems tied to the the premise of a united Europe. Unite Europe, as this opinion goes, and all the problems will fix themselves.

This differs starkly from the view in the US, where there has never been such internal division. The exception of the Civil War notwithstanding, Americans see themselves as one country and one people, with a common history and destiny. Political salvation for Americans is not seen as coming from becoming united. Rather, they see problems as coming more from what one might call an excessive unity — a federal government that is too strong and insufficiently responsive to citizens.

I won’t belabor the point, because to me, it is simply an observable fact: Europeans place far too much hope in a centralized EU government. Given Europe’s history, this is understandable; but, unfortunately, Europeans seem unwilling to make the connection that they are headed towards the same kind of lopsided federal model that has gotten the US into trouble. Federalism doesn’t work.

And in the case of Europe, the looming federalism is even more aversive, because the central government has no clear accountability to the citizens of Europe. Let’s state this plainly:  the EU is a democracy in name only. A democracy is a political system in whichthe people control the government. It is not the presence of elections, nominally designated elected officials, or a ‘constitution’ that make a democracy. It is whether the citizens actually have a significant voice and role in determining government policy. This does not exist in Europe. Most European citizens don’t even understand the government. Many do not even speak the official languages of French, German, or English!

As I’ve already written on this subject, I won’t repeat myself here.

Rather, to return to Leonard’s book, I’d would offer that Europe will not likely “run the 21st century”, or, or that matter, accomplish much of anything until it wakes up to the grim reality that high taxes are ruining the lives of its citizens.

Taxes are too high in western Europe. It’s that simple. The marginal income tax rates are excessively high — much higher, as is well known, than in the US. When you factor in the VAT tax (21% in Belgium!), people pay more than half of their earnings to the government as direct taxes.

There’s more.  High taxes inflate the prices of goods and services. The price of food in Brussels is unbelievable. I can barely afford it — and have a good professional salary. It must be hurting the poor people considerably. The high prices are partly a result of excessive taxes. When you buy something, you are, in a sense, paying the taxes of the seller, who naturally passes his or her taxes onto you, the consumer. There’s nothing ethically wrong with that; it’s just the way things work.

This fine point is something that those who advocate high-tax socialism as a means of redistributing income should consider more carefully. Even if we assume that producers are ‘greedy capitalists’, they will inevitably pass their taxes onto consumers. There is no price control; prices, rather, are up to the discretion of the seller, determined by the laws of supply, demand, and competition.  Since all sellers pay high taxes, all will raise prices sufficient to assure a certain net income.

In fact, the best way to reduce prices is to permit competition.  But in a high-tax environment it is more difficult for people to start businesses.  Hence, higher taxes mean less competition, and higher prices.

Since rich and poor consumers pay the same prices, this disproportionately burdens the poor.

In any case, under the present western European model, you, the consumer, (1) not only have to struggle with high income taxes, but every time you buy something (2) you pay an unreasonably high VAT tax, and (3) have to contend with the incremental price, added onto the natural value of the commodity, required so that the seller and manufacturer can pay his or her high taxes and stay in business.

Where is the Outrage?

Mostly what I see throughout Europe is a moribund economy, lassitude, and, in a psychological sense,  cultural depression. Europeans are, by nature, intelligent and hard working. But now they are unmotivated and lacking a sense of direction or purpose. High taxes as a central causal factor.

At best, Europeans are, at the personal level, treading water, economically. They struggle, barely getting by day to day. This might be acceptable to a person  if there were some genuine reason that ones economic situation might improve very soon, but there is no evidence of that. Rather, it seems likely that the economy will become more strained in the years ahead — that is, *unless* until some fundamental positive changes are made.

One plausible and commonly expressed view is that the current ‘pension economy’ is now being propped up with the wave of immigrants engineered by politicians in recent decades. That certainly has the outward appearances of a short term fix. (Among other things, wWho is going to pay for pensions of these immigrants when they retire?

The bottom line is that we are living in the 21st century, and people have a right to expect a decent life! Why is it that, despite the incredible advances in technology, the quality of life is still miserable for so many people? Why must so many people struggle through each day, living, for all practical purposes, without “the blessings of life, liberty, and the pursuit of happiness”? How can things be mismanaged that badly?

Citizens ought to be outraged, but, strangely, they’re not.

Lack of Critical Thinking

There is a remarkable difference between the US and Europe in this respect. When you talk about high taxes in the US, everybody joins in the chorus of complaint. But when one broaches the subject with Europeans, one more often gets a response like: “Yes, taxes are high, but look at all the benefits.” When pressed for specifics, people frequently point to social assistance programs — especially financial support for the elderly.

This is, up a point, a legitimate concern. We all want — or should want — a social system with a good safety net, something that takes care of the old and the infirm. We should accept that as a given.

But how does one proceed from that premise automatically to the conclusion that any amount of  taxation is justifiable on that basis? This lack of critical thinking is at the basis of Europe’s social problems. Perhaps the inferential leap can be justified if one posits of a wise and altruistic government — one that levies no more taxes than are necessary. But who could be so naive as to, given all the contrary evidence, believe that?

There are two related issues here. The first is the likely hypothesis that the government is taxing too much to support the programs which justify public taxes. That is an empirical question that could be easily addressed (and perhaps it has been): some competent economists at a think tank or university should simply analyze this.

A complication, unfortunately, might be that, if one were to look rationally and objectively at the evidence, one might discover that *no* amount of taxation — even 100% — would be sufficient to prop up the pension systems of Europe in coming years. But at least enquiry into the subject would pave the way for finding workable alternatives.

Why Bother to Work?

This brings us to the second point: the impact of high taxes on economic growth. It is an obvious and easily verified fact: when the government takes most of your income, you ask yourself, “why bother to work?”

That is the question in Europe now, as it has been for years. Why bother to work? That is the question most people — aside from the few clever ones with insider connections who have discovered ways to beat the tax system — in Europe ask themselves. And this is a terrible foundation for a society. Europe is basically comprised of people who have no incentive to work! And, in a sense, inasmuch as work is hard, that means they have an incentive not to work.

Social Liberals for Low Taxes!

So I propose to turn round the historical liberalism of Europe on its head. Europeans have accepted an aversive economy because of their strong desire to help others. Good! Let’s keep that positive social ethic. But I propose this: if we truly want to help people, then we must stimulate the economy. This will do two important things.

  1. First, it will raise revenue — actively employ more people, and more money will be available for social programs. This is the economic paradox which Americans (and, it seems some Asian countries) grasp so much better than Europeans: that lower taxes stimulate economic growth, and economic growth increases overall tax revenue. Or to say it another way: lower individual taxes produce greater total tax revenue.
  2. Second, a stimulated economy will harness the greatest natural resource any country has: its human capital. The wealth of a nation is not the coal, or gold, or iron buried in its mountains, nor the crops of its fields. It is the spirit of the individual. It is the feeling that makes one wake up each morning and say, “today let me see what I can accomplish, for myself and others!” It is this feeling or spirit that motivates people to work energetically, creatively, and productively — generating goods and services for the benefit and enjoyment of others. More than anything else it is this spirit which a society must foster in order to truly be prosperous.

Written by John Uebersax

December 31, 2008 at 2:25 pm

Ron Paul’s new book – The Revolution: A Manifesto

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You HAVE to check out this new book by Texas Congressman Ron Paul.

Some people say America is finished. But they’re wrong.

America is still the last, best hope for establishing a government of the people, by the people, for the people.

Yes, America has fallen onto bad times and has made mistakes. That merely proves that a modern democracy is difficult to establish. If other countries were as large and as free as the United States is, they’d likely be making the same or worse mistakes.

Ultimately, if America cannot succeed in this grand experiment, then nobody can. Or, stated conversely, if modern democracy is feasible at all, then America will find a way to make it work.

This new book is a case in point of how America is still fundamentally committed to the ideals of justice and liberty. The Republican/Democrat political establishment has managed to engineer an oppressive political system. But Americans are still fundamentally free — that’s something built into the principles and spirit of the nation. In a free environment it’s only a matter of time before someone speaks out — and Ron Paul has done so.

His new book is titled The Revolution: A Manifesto

The timing of the book couldn’t be better — obviously planned to coincide with the upcoming November elections.

Here are some excerpts from the editorial review at Amazon:

* The government is expanding.
* Taxes are increasing.
* More senseless wars are being planned.
* Inflation is ballooning.
* Our basic freedoms are disappearing.

The Founding Fathers didn’t want any of this. In fact, they said so quite clearly in the Constitution of the United States of America. Unfortunately, that beautiful, ingenious, and revolutionary document is being ignored more and more in Washington. If we are to enjoy peace, freedom, and prosperity once again, we absolutely must return to the principles upon which America was founded. But finally, there is hope . . .

In THE REVOLUTION, Texas congressman and presidential candidate Ron Paul has exposed the core truths behind everything threatening America, from the real reasons behind the collapse of the dollar and the looming financial crisis, to terrorism and the loss of our precious civil liberties. In this book, Ron Paul provides answers to questions that few even dare to ask.

Written by John Uebersax

June 11, 2008 at 5:53 pm

Analysis of Nader’s Platform – 2008

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As of March 5, 2008, Ralph Nader’s campaign has now placed a preliminary platform online. You can find it here: http://www.votenader.org/issues/

Let’s review the items one by one.

1. Adopt single payer national health insurance

As I understand it, this would work by having, in essence, a single, national, government-run health insurance agency. There are two rationales for this: (a) to achieve universal health coverage (at present, 40 millions Americans have no health insurance); and (b) to reduce overhead costs associated with the ‘private insurance bureaucracy’, which, it is claimed, consumes about 31% of every health care dollar.

Clearly we need to address issue (a). However about (b) we should be cautious. First, competition generally brings costs down. I don’t understand the argument that a single government-run health insurance agency would somehow have lower administrative costs than those of privately-owned companies. The former would be performing the same tasks, only with no competition and so with less incentive to find ways to increase efficiency, reduce costs, and improve service quality.

And where would you go if you had a complaint? Think about it: would you want the IRS to be in charge of your health care reimbursement?

I worked in a private health insurance company once, and it seemed to me they were always finding ways to improve service, process, and efficiency. They recognized and took seriously a responsibility to promote patient health and welfare. With improvements in computer and communications systems, private health insurance service is getting continually better.

2. Cut the huge, bloated, wasteful military budget

Definitely. This is a good platform policy.

3. No to nuclear power, solar energy first

Probably good. I’d rather we say instead “other energy sources, especially solar energy”.

4. Aggressive crackdown on corporate crime and corporate welfare

Nader coined the term, ‘corporate welfare’, in 1966. For him it means the government’s bestowal of grants, tax breaks, or other special benefits on corporations. This platform plank is related to the need for lobby reform, which is definitely a good idea. The phrase ‘aggressive crackdown’ hints at a basic animosity Nader holds towards corporations.

Further, corporate crime and ‘corporate welfare’ are separate issues.  The former is a legal-criminal matter; here we need to enforce existing laws.  However, what Nader calls ‘corporate welfare’ is a social policy issue.

Nader, of course, has a long history as an anti-corporate crusader, and tends to overstate things in this area. Economist Eric Blair, in his blog, put it well:

When I hear Nader speak of government’s ‘corporate paymasters’, I get flush with embarrassment, because it’s the sort of gross oversimplification that makes people think liberals are all dumb. It is based on a false us-versus-them dichotomy. All of us, capitalists and laborers alike, want to have a healthy economy where we all have some kind of income and lots of the stuff we want to consume with that income readily available. Gosh, that’s going to involve corporations, especially if we want things to be efficiently done.

See Eric’s article Critique of Ralph Nader’s 2004 Platform for details. Eric’s comments above are in line with my thoughts about Redeeming Corporations and Renewing America. Use corporations for good; don’t scrap them or see them as innately bad things.

For background on Nader’s position, see this article:

http://www.thirdworldtraveler.com/Nader/CutCorpWelfare_Nader.html

5. Open up the Presidential debates

To bring more third-party and independent ideas into public view during elections. Definitely.

6. Adopt a carbon pollution tax

To reduce greenhouse emissions. We do need to reduce greenhouse emissions, but it’s not clear that a tax like this is a way to do it. Arguably, a ‘disincentive tax’ like this should be linked to offsetting societal costs associated with the thing taxed. For example, cigarette tax revenue should be directed to treating smoking-related illness, preventing smoking, etc. It’s hard to see how that principle would apply here — but maybe we could spend it developing alternative energy sources.

Other various criticisms of a carbon tax can be found here:

http://en.wikipedia.org/wiki/Carbon_tax

7. Reverse U.S. policy in the Middle East

If that means to switch from making enemies and war to making friends and peace, yes.

8. Impeach Bush/Cheney

This one sticks out like a sore thumb. Why impeach Bush/Cheney? Because of the war? Then why not impeach the US Congress while we’re at it? Or how about the majority of voters who implicitly endorsed the Bush administration in the 2004 elections? Come on, this is back to hate politics. Let’s raise the level of public discourse, and focus on issues, not personalities.

9. Repeal the Taft-Hartley anti-union law

Huh? Again, Nader’s atavistic 60’s liberalism shows. Does he really thinks labor unions are going to save America? Personally, I tend to see labor unions as an example of “meet the new boss, same as the old boss.” That is, labor unions are quasi-governments which (1) are run by selfish, greedy leaders; (2) exploit and coerce workers; and (3) are in the long run much less transparent and democratic than the regular government is.

10. Adopt a Wall Street securities speculation tax

At first I rejected this as being too unrealistic. Then I realized that what matters here is not Nader’s hypothetical solution, but that he’s raising the issue at all. The issue is that people, companies, and sometimes machines(!) presently engage in millions of short-term stock trades, solely for speculation. A company buys millions of dollars worth of stock and then sells it an hour later with a big profit. Sometimes this is based is on insider information; other times it involves deliberate manipulation by huge financial corporations to influence stock prices.

Further, knowledgeable traders can make huge profits even when stock prices decrease! All this creates an incentive for vastly powerful financial institutions to produce a fluctuating stock market.

This has created a bizarre, nightmarish economic machine which controls our economy, our society, and our lives, and enslaves us. It’s a huge, huge issue. I’m just not sure that a tax is a way to do handle the problem. We have enough taxes already. I believe we should simplify the tax code (e.g., a flat tax), not make it more complex.

It might be an utterly naive suggestion, but maybe it would be better to simply ban short-term stock speculation altogether, rather than to specially tax it.

11. Put an end to ballot access obstructionism

Make it easier for third-party and independent candidates to get on election ballots. Yes.

12. Work to end corporate personhood

Should corporations have the same rights as individuals? I guess it depends on what rights we’re talking about. A complex question. For background, see:

http://en.wikipedia.org/wiki/Corporate_personhood_debate

Overall Appraisal

Nader/Gonzalez are doing what third-party candidates should: to diversify the issues being considered in the election. Follow their election, listen to their speeches, research their ideas. Nader has 40 years’ worth of articles you can find online explaining his views.

Nader deserves credit for working to raise the public awareness and for better focusing on important issues than the Democrat-Republican candidates.

Written by John Uebersax

March 6, 2008 at 1:41 pm

Flat Tax

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Let’s continue to hammer away at one of the core problems with the current presidential race: Republicans and Democrats are both part of the status quo; part of the System that wants to keep people distracted, divided, oppressed, and afraid. They want to keep attention away from ideas that would promote real reform in America.

One of these ideas is the flat tax. This would vastly simplify tax laws by having all people pay a constant tax rate, say, 15% or 20%, regardless of income. Proponents argue that this would increase tax revenue, despite lowering tax rates by: (1) increasing compliance; and (2) stimulating economic growth.

Opponents object mainly based on social equity arguments. As this is the main criticism, it needs to be addressed squarely. Here’s a statement of the objection with an unusually clear rejoinder, adapted from the Wikipedia article on flat tax:

Inequality

Social democrats in particular oppose flat tax plans since they believe they weaken the redistributive effect of progressive taxation. Even with overall economic growth, tax-rate disparity is seen as undesirable, as it may be linked to poorer health, higher crime rates, and more social unrest among the poor.

However, proponents argue that this does not consider the effects of the sizable exemptions included in most flat tax proposals. Further it is possible to envision a scenario in which all parties are better off under a flat tax than without, despite inequality; in this case, according to utility theory, the flat tax scenario dominates the status quo (meaning it is preferred in all cases); the ‘inequity’ becomes a mere abstract consideration, as contrasted with the tangible economic benefit achieved by each individual. This assumes, of course, that there is not some third alternative which benefits each individual in a more equitable way.

In short, let’s put the argument this way:

  • Under Plan A, Bill Gates lives in a nice house and I live in a hut.
  • Under Plan B, Bill Gates gets a $20 million mansion and I get a nice house.
  • There is no Plan C.

I’m much better off under Plan B. It should be irrelevant to me if Bill Gates gets a mansion; I ought to grateful to get a nice house. In fact, it would be completely irrational to reject the plan only because Bill Gates gets a mansion; that would be ‘cutting off my nose to spite my face.’ People do unfortunately tend to think that way, because envy is such a strong emotion. But if you think like that the price you pay is to keep living in a hut!

In any case, the flat tax is just an example. Whether you agree or disagree, the fact is that this is an important possibility. It clearly demonstrates: (1) that there are good ideas out there, ones we should be actively considering, and (2) how the media and main political parties collude to keep important and positive reform ideas like this off the radar screen.  Don’t let them.

Written by John Uebersax

February 15, 2008 at 10:45 am