Category: Economics

“Progressives” And Progress

Thomas Sowell has a challenging editorial arguing that the left is invested in social failure:

The old advertising slogan, “Progress is our most important product,” has never applied to the left. Whether it is successful black schools in the United States or Third World countries where millions of people have been rising out of poverty in recent years, the left has shown little interest.

Progress in general seems to hold little interest for people who call themselves “progressives.” What arouses them are denunciations of social failures and accusations of wrong-doing.

One wonders what they would do in heaven.

There’s something to that argument. I certainly don’t think that progressives want to deliberately oppress people — that’s a crude stereotype. Rather, it’s more about the paving stones on the road to Hell. The “progressive” movement has the best of intentions, the problem is that the best intentions don’t translate into sound policy.

For example, in a perfect world, universal health care would be a reality. Abstracted from any concept of economics, it’s easy to argue that everyone should have the ability to get whatever health care they need whenever they need it without having to pay.

In a perfect world, I’d also like to be dating a fabulously wealthy supermodel with a Ph.D. who think I’m the greatest thing since sliced bread. Alas, we don’t live in a perfect world.

In our world, resources are finite and human needs are infinite. Exactly what constitutes a “decent” standard of living? By just about every measure, even the poor in this country live better than the fabulously wealthy did just a few decades ago. Technological progress has allowed people to live longer with a better quality of life than was physically possible just a few short years ago. Yet, the “progressive” movement still finds all manner of faults with today’s society.

And therein lies the problem.

There is no easily definable standard of what a “decent” standard of living is — it’s entirely subjective, and by nature a welfare state will always have to grow at rates that aren’t sustainable. It’s somewhat ironic that as the Democratic Party lurches leftward, following the “progressives,” the old bastion of state socialism in Europe is moving in a rightward direction. Both France and Germany elected leaders who promise the sort of reforms that would have once been unthinkable in those countries. As Europe faces extreme demographic pressure and the challenges of economic growth saddled by the weight of an unaffordable social “safety net,” reform isn’t an option, it’s a necessity.

Yet here in America, it seems like politics are moving in the other direction — towards the very same problems that Europe is facing.

The problem is that the left views the world through the lens of economic determinism. Hillary Clinton went out and said directly that poverty is not a social issue, but an economic one. The problem with that statement is that it simply isn’t true: the vast majority of poverty in this country is caused by behavior rather than economics. The key to significantly reducing poverty in this country is actually quite simple: make sure people stay in school, don’t have kids out of wedlock, and work full-time. The problem for the left is that government can only do so much to encourage people to do those things: they can’t force people to work, marry, and stay in school. The solution lies not with the state, but with communities, churches, and individuals.

The “progressive” movement keeps pushing the same old state-based solutions, all of which have already been tried. If state-based solutions were the answer, the Great Society programs of Lyndon B. Johnson would have significantly reduced poverty in America: instead both poverty and dependency increased.

It is precisely that dependency that makes “progressive” policies so potentially dangerous. The more one is dependent on the state, the more that dependency increases rather than decreases poverty. The real ticket to prosperity in this country is simple: hard work, family relationships, and spending wisely. Welfare undermines all of those things by replacing them with the government dole. The successes of the 1997 welfare reform program were in encouraging people to engage in the sort of personal behaviors that lead people out of poverty. The solution to poverty isn’t economic (although economics plays some role — the economy has to grow to keep poverty low), but largely social.

The reality is that the “progressive” movement isn’t really progressive. In many way, it’s the “progressives” who are the conservatives — they’re fighting to keep the society arrangements of the 1960s and 1970s in which there was strong state control over the economy, unions had massive amounts of political and economic power, and the leading minds viewed poverty as something that the government could fix.

However, we live in the 21st Century, and applying last century’s solutions to today’s problems is not the correct approach. What we need is a system that maximizes the ability of the individual to achieve economic and personal success free of government involvement while encouraging the behaviors that make that possible. That means strengthening America’s education system, further cementing the gains of the 1997 welfare reform plan, encouraging marriage, and ensuring that every American has a basic level of economic literacy.

So much of the “progressive” agenda takes us away from those goals. More taxes hurts the economy, and just as a rising tide lifts all boats, a sinking one strands the most vulnerable of our society. The sexual revolution has cheapened marriage, weakening the very mortar that holds our society together. Educational reform can’t happen if the government is unwilling to demand accountability, innovation, and choice — and that requires standing up to the teacher’s unions. The path out of poverty requires entrepreneurialism — which is much harder when small businesses must navigate through a complex maze of government regulations.

It’s time conservatives stopped playing defense on economic issues. We have the keys to significantly reducing poverty in this country. The values of the conservative movement are values which can lift people out of poverty. It’s said that the GOP represents the rich — well, it’s only natural that we would want more people to be rich. We can do that, but only if we’re willing to stand our ground and not take half measures that only further the problem.

The “progressive” movement won’t actually progress this country — quite the opposite. What we need now is not a defensive conservatism, but a full-throated defense of conservative values as the solution to poverty in America. That requires a leadership willing to deliver that message where it’s most needed: America’s inner cities.

We can reduce poverty in this country, and we can do it in a way that doesn’t make people more dependent, but more independent. That is the basis of the American Dream, and it is something worth defending. The only question is whether our political culture can produce the leaders willing to make it happen.

The Globalization Backlash And State Power

Investor’s Business Daily has an editorial noting polls showing an opposition to free trade and an increasing desire to increase taxes on the wealthy:

A Financial Times-Harris poll of more than a thousand people found that those in the U.S., Britain and France were three times more likely to think globalization hurts their country than helps it.

And “in response to fears of globalization and rising inequality,” wrote Financial Times reporter Chris Giles, “the public in all the rich countries surveyed . . . want their governments to increase taxation on those with the highest incomes.”

That is, people want to tax the rich — an age-old urge — believing it will somehow help feed the poor. Unfortunately for those who believe this, it doesn’t work that way.

“Taxing the rich” might be satisfying on some level, given the general level of envy people have for those who are more successful. But carried out as a matter of national policy, such ideas will have disastrous consequences for the world economy, leading to less growth, less investment, fewer jobs and lower standards of living.

It’s a well-established fact that globalization — simply another word for free trade — has been, overall, a major boon, raising both incomes and standards of living worldwide. And that includes rich countries as well as poor ones.

The problem is that most people don’t base their opinions on economic evidence, but on a combination of what the media tells them and unscientific feelings. Despite the fact that globalization has been one of the most important factors towards making the late-20th to early-21st Centuries a golden age of prosperity worldwide, people still use it as a convenient boogeyman. It plays on xenophobia in a time of uncertainty, which is virtually always a sure bet. Blaming globalization for the failure of socialism in places like France has been a staple of the left for some time — but even the socialistic French are embracing a more competitive worldview.

Likewise, the drive for higher taxes has a very simple explanation: jealousy. People want to take the successful down a peg in the futile hope that it will make themselves feel better. History and common sense makes it clear that such schemes never work, but that hasn’t stopped people from justifying tax policy on envy.

Yet there’s also a darker side to all this. Ilya Somin has a fascinating post at The Volokh Conspiracy on the economics of the Third Reich and how it matters in terms of policy debates today:

Two recent books further explain the socialist elements of Nazi economic policy, and will hopefully put the final nails in the coffin of the myth that the Nazis were “capitalists” or free marketeers. In The Wages of Destruction: The Making and Breaking of the Nazi Economy, historian Adam Tooze describes the statist nature of Nazi economic policy in great detail, and concludes that the Nazis imposed greater government control over the economy than any other noncommunist regime in modern history. (pp. 658-60). Tooze notes that, even before the outbreak of World War II, government military spending accounted for some 20% of the GDP, while much of the rest of the economy came under government control as a result of the Four Year Plan and other similar measures.

In Hitler’s Beneficiaries: : Plunder, Racial War, and the Nazi Welfare State, Gotz Aly argues on the basis of extensive evidence, that German support for Nazi rule was maintained by the creation of a massive welfare state funded in large part by plunder captured in Hitler’s foreign conquests, but also partly by means of “soak the rich” taxation within Germany itself…

These two new books are useful complements to Avraham Barkai’s 1990 work Nazi Economics, which explored the ideological origins of Nazi economic policy and showed how Nazi economic theorists explicitly advocated statism, while rejecting free markets. Like some modern opponents of globalization and free trade, the Nazis viewed economics as a zero-sum game between nations, where increasing wealth for one country could, in the long run, only be achieved by impoverishing or conquering others.

The same attitude seems to be popular today — which certainly doesn’t make anti-globalization advocates the same as Nazis — but allows for the kind of atmosphere in which totalitarian governments can flourish. Somin explains why this 60-year-old history is still relevant to today’s policy discussions:

Why does any of this matter today? The fact that the Nazis pursued socialist policies does not in and of itself discredit socialism, any more than Hitler’s apparent commitment to vegetarianism discredits the case against eating meat.

Nonetheless, the socialist element of National Socialism matters for three reasons. First, as noted above, some still claim that Nazism was a form of “capitalism” and try to use this association to discredit free markets. Second, and far more important, Tooze and Aly show that far-reaching state control over the economy was an essential element in Nazi policy, without which Hitler could not have carried out his plans for conquest and mass murder. It also helped quiesce potential German opposition to Nazi policies; both by imposing state control on economic resources that any opposition movement would need to support itself, and by “buying off” potential opponents through welfare state handouts (as Aly emphasizes).

The concentration of economic power in the hands of the state does not always lead to atrocities as extreme as Hitler’s. But it does significantly increase the risk that these types of abuses will occur – not to mention numerous lesser (though still severe) atrocities. In the twentieth century, both left-wing (communist) and right-wing (Nazi) forms of state domination of the ecoomy paved the way for war, repression, and mass murder. There is little reason to expect better results from similar policies in the future. This is an important point, given the recent renewed popularity of socialist ideas in some parts of the Third World, such as parts of Latin American.

While it’s unfair and inaccurate to say that anti-globalization forces are innately totalitarian, what can one say about the way in which many on the left are embracing the dictator Hugo Chávez at the same time he moves the country closer to one-party rule?

Ideas have consequences, and the consequences of a system in which states restrict free trade and engage in punitive taxation on the rich is that the state suddenly has a great deal more economic power. Whenever the state gains in economic power at the expense of the people, a measure of republican rule is lost and it becomes easier for the state to consolidate power. The state already has a virtual monopoly on violence (except in times of revolution) — giving them both the guns and the butter only makes it that much easier to take total control.

The problem with this globalization backlash is that it’s inevitably tied with increasing the power of the state — to control imports and exports, to manage the economy, and to regulate “fairness.” None of those things are acts which the state should be doing — a group of government bureaucrats are hardly the best people to be deciding what’s “fair” and what is not. By doing so, it expands the scope of government power and diminishes the power of the people. Not only is that economically unsound — there’s a direct correlation between high tax rates and economic under-performance — but it’s the sort of thing that makes it much easier for governments to become oppressive.

The lessons of the 20th Century make it clear that the keys to success are not in isolationism, but in an open society and a strong entrepreneurial ethic. The story of the 21st may be of how the increasingly decadent and self-absorbed West faded as the entrepreneurial Far East became the world’s superpowers — or it could be how in the face of economic problems, the same factors that led to the two most devastating wars in world history once again turned the world apart. As the great saying by Satayana goes, those who forget history are doomed to repeat it. The question is whether people are choosing to learn from history or make the same fatal mistakes once more.

UPDATE: Mitch Berg has more on the topic of what Hitler learned from the left. The mistake most people make is thinking that Hitler despised Communism because he disagreed with their economic theories — state control of production suited Hitler just fine. He wanted to exterminate the Communists (and the German labor unions who were heavily influenced by the Communists) because they posed a threat to his power.

It’s also important to note that the welfare state was a German invention — Otto von Bismarck is the intellectual heir to the welfare state as we know it now, and for Bismarck, the welfare state was ultimately a method of social control. By paying off the various groups in German society, the central government could rule freely. The Democratic Party in many ways tries to uphold the same general model — economic redistributionism as a way of centralizing society. Even if the Democrats don’t directly support the Bismarckian model, what they propose is virtually indistinguishable from it, and the results would likely be the same. Once the state seizes mass economic power, it’s much easier for that state to succumb to the autocratic and totalitarian temptations that every government has — which is why the Founders wisely restricted the scope and power of the central government to avoid that temptation. We undo that at our own peril.

UPDATE: And here’s another example of the “progressive” left shilling for Hugo Chávez.

We Care About The Children (But Only For Five Years)

Wired reports on the Democrats plan to add $35 billion in new spending for children’s health insurance by dramatically raising federal excise taxes on tobacco products. The problem with this plan is that it makes no economic sense — they won’t be able to raise the money projected, and furthermore they only will be able to sustain the funding for five years.

Funding anything with tobacco excise taxes is a bad idea — because it isn’t a stable funding source. If you raise the price of cigarettes, more people will quit smoking. If you raise the price of luxury items like cigars (the current bill increases the maximum federal tax on cigars by over 20,000% to up to $10 a cigar) then people will stop buying cigars. For example, I’ll smoke at most a few cigars a month, no more than 1 per week. If the amount of tax pushes the price of cigars up to where even the cheapest cigars are north of $15 a cigar, I won’t smoke them at all. Instead of contributing a few dollars to the federal budget a year in excise taxes, it’ll be zero. Multiply that by the thousands or millions of causal cigar smokers, and it’s clear that the government simply can’t count on raising $35 billion solely on the backs of smokers.

By 2012, Congress either has to raise taxes elsewhere or the program dies. Either outcome is bad. It’s the sort of voodoo math that Congress gets away with all the time — pretending that they’re doing something to help by creating another program they can’t fund.

If Congress wants to fund children’s healthcare, that money should come out of the general fund and should be matched by commensurate reductions in discretionary spending. Spending a few million per district on pork-barrel projects should be a lesser priority than covering the insurance gap for children, right?

Except for Congress, it doesn’t work that way. They want to have their pork and eat it too — and meanwhile the American taxpayer gets stuck with the bill.

UPDATE: I wonder how many uninsured children could get healthcare instead of Charlie Rangel getting a $2 million dollar taxpayer-funded shrine to himself in New York?

Gas Beats Booze

…at least if you’re a Mexican agave farmer.

Mexican farmers are setting ablaze fields of blue agave, the cactus-like plant used to make the fiery spirit tequila, and resowing the land with corn as soaring U.S. ethanol demand pushes up prices.

The switch to corn will contribute to an expected scarcity of agave in coming years, with officials predicting that farmers will plant between 25 percent and 35 percent less agave this year to turn the land over to corn.

Biofuels aren’t a bad concept — but making them out of food stocks is an extremely dumb idea. For one, we don’t have nearly enough agricultural capacity to grow enough corn to meet demand for biofuels. Secondly, it’s driving up the price of corn, which happens to be an important staple crop in the developing world. The only reason why corn-based ethanol is so popular is because Midwestern farmers are making a killing off of it. While that’s very good news for farmers, it’s not so good for the rest of us. Already Mexicans are dealing with dramatically increasing prices for corn tortillas, which is a critical part of the diet of many of Mexico’s poor. While we’re not seeing the same effect in the US quite yet, it’s a very real concern.

Fortunately, there is a solution in the form of cellulosic ethanol, which uses agricultural waste products instead of viable food crops. The problem is that it requires an extra step in processing to break down the cellulose in the plant walls of the biomatter being processed.

Biofuels are likely to be an important supplement to petroleum, but it’s important for policymakers to balance the competing factors of food and energy production — it’s just not smart to burn food for fuel, and unless the proper balance is struck, we may have cheaper gas, but higher food costs — which ends up hurting more people than it helps.

UPDATE: Even worse, German beer prices are going up due to the biofuels boom… which is an absolute tragedy — and another example of how government subsidies only screw up the market’s natural resource allocations.

Bravely Slaying Non-Existent Dragons

BusinessWeek reports on the recently-passed House bill which bans so-called “price gouging” by oil companies:

The legislation would penalize individuals or companies for taking “unfair advantage” or charging “unconscionably excessive” prices for gasoline and other fuels.

Opponents said the language was too vague and that the Federal Trade Commission, which would enforce the law, has not clearly defined price gouging.

“I don’t know what `unconscionably excessive’ means,” said Rep. Joe Barton, R-Texas.

The bill’s chief sponsor, Democratic Rep. Bart Stupak of Michigan, said he had no doubt the FTC would be able to determine price gouging once the agency had a law to uphold.

The measure would establish the first federal law against energy price gouging. The FTC now can investigate price manipulation under antitrust laws. Currently, 29 states have price gouging statutes; enforcement varies widely.

A Congress which has been passing budget-busting spending bills and stuffing every piece of legislation with more pork than a Carolina barbecue is the last arbiter of what defines “unconscionably excessive” pricing for anything.

The New York Times has an excellent piece on why such “price gouging” is less about greedy oil companies and more about years of bad policy:

The Federal Trade Commission has been skeptical about accusations of price-gouging on gasoline prices. In 2004, the agency studied price changes in gasoline from 1991 through late 2003. It concluded that about 85 percent of the price variability — both up and down — reflected changes in crude oil prices.

To be sure, this year is different. Crude oil prices are actually a bit lower right now, at the onset of the summer driving season, than they were at this time last year. But gasoline prices are slightly higher than they were a year ago.

The Energy Information Administration is predicting that crude oil prices will average about $66 a barrel this summer, versus $70 last summer. But it predicts that gasoline will average about $2.95 a gallon this summer, up from an average of $2.84 last summer.

INDUSTRY executives say the anomaly reflects a temporary drop-off in refinery activity, partly because of scheduled maintenance and partly because of unscheduled interruptions. On top of that come ethanol prices, which have soared, because refiners now blend a small percentage of ethanol into standard gasoline.

The broader issue is that refinery capacity has not kept up with American demand for gasoline. Oil companies, caught with vast amounts of excess refining capacity in the early 1980s, systematically reduced capacity during the long lean years when energy prices and profit margins were the pity of Wall Street.

There are three main reasons why gas prices are so high right now, none of them having anything to do with oil company greed. The first is that there are so many regional gasoline blends required by state laws that supply issues are complicated. The GAO found:

The increasing numbers of special gasoline blends have made it more complicated and costly to supply gasoline, elevating the risk of localized supply disruptions. Producing special gasoline blends can require changes at refineries, making it more complicated and costly to produce gasoline. Special blends also add to the number of fuels shipped through pipelines, reducing the efficiency of the pipelines and raising costs. In addition,
because the tanks at the fuel terminals were often built before the proliferation of blends, they are often too large and too few to efficiently handle the increased number and smaller size batches of special gasoline blends and, as a result, total storage capacity has fallen. Further, in some cases, the proliferation of blends has reduced the supply options available to some retailers, making them more susceptible to supply disruptions.

These special requirements cause major problems with inefficiencies which raise the cost of gasoline for everyone — including states which don’t mandate their own special gasoline blends.

Secondly, there is the high cost of ethanol which is frequently added to even normal gasoline. This is causing major disruptions in the price of corn, which increases not only the costs of corn-based ethanol, but also meat, dairy, and other products which rely on corn-based animal feeds. Using corn for fuel is a horrendously bad idea — unless you’re a corn farmer who can make a windfall on the increased price of corn. For the rest of us, it increases the cost of both our food and our fuel as the cost of corn-based ethanol continues to rise.

Finally, there’s the big issue: this nation simply doesn’t have enough refining capacity. Building a new refinery is an expensive proposition, and if biofuels really are the wave of the future, it makes little sense to make the decades-long investment of a new conventional refinery when the industry has shifted towards alternative energy production. For an oil company to build a new refinery, they have to navigate a sea of bureaucratic red tape, find a location that won’t attract protesters, and then actually be able to recoup their investment. That simply isn’t a viable strategy these days — nobody wants an oil refinery next door, and oil companies can’t pour billions into a new refinery that produces a blend of gasoline that may not be legal in 10 years.

These problems aren’t going to go away. We need more refining capacity, we need fewer fuel requirements, and we need a more realistic policy towards the usage of biofuels. However, Congress seems more interested in grandstanding over “price gouging” than in actually fixing the problems that plague our nation’s oil supplies. As long as Congress has their priorities dangerously out of whack, it’s likely that gas prices will continue to rise, and the only ones doing the gouging will be Congress and the special interests that control them.

A Growing, Greener Economy

The Washington Post notes that US carbon emissions dropped 1.3% last year as the economy grew by 3.3%.

European carbon emissions continued to rise, despite Europe embracing the Kyoto Protocols.

This is an example of why efforts like Kyoto are ultimately counter-productive. The problem isn’t in the developed world, where technological advances allow for greater efficiency over time, but in the developing world where the voracious appetite for electricity and fuel is causing rapid expansion of inefficient power plants and millions of new vehicles to be put on the roads. The Kyoto Protocol does nothing to stop that, but penalizes the growth of the developing world, which in turn reduces the capital available for developing more efficient technologies.

The US is in fact a leader in environmental technologies — but we need to do more. That means seriously developing a 21st Century power grid featuring clean nuclear technologies, cleaner coal, and less dependence on Middle Eastern oil. All of that requires doing things that environmentalist groups hate — developing nuclear plants, engaging in more domestic oil drilling, and increasing our coal production. We have viable and rational options for more energy independence, but if the goal is to rely on wind, solar, or other unreliable technologies, we won’t be able to pull it off. Wind and solar are excellent ways of supplementing our power grid, but they’re not (yet) viable over large scales.

Michael Chrichton had it right — the environmentalist movement operates from religious rather than scientific principles — which is why it’s important that policymakers stop encouraging the indulgences of carbon credits and the ritual shunning of nuclear power and concentrate on what works. That may not be what the environmentalist movement wants, but we all need a cleaner environment and a more efficient economy, and to get there we need to balance the needs of both.

Bush’s Immigration Gamble

Mickey Kaus takes a look at today’s immigration compromise in the Senate and finds it to be a major political loser for the President:

This is looking more and more like the Bush administration’s domestic version of Iraq: a big risky gamble, based on wishful thinking and nonexistent administrative competence, that will end in disaster. What disaster? 1) Lower wages for struggling unskilled–and semi-skilled–American workers (including, especially, underclass men) even when the labor market should be tight; 2) Income inequality moving further in the direction of Latin America–maybe even to such an extent that social equality between the rich and their servers becomes difficult to maintain; and 3) A large semi-assimilated population along our southern border with complex, understandably binational allegiances–our own Quebec. … Actually, I can see why some Republicans might not be so bothered by (1) and (2). But what about Democrats? …

This immigration compromise is essentially an amnesty deal for 12 million illegal immigrants. Such a “compromise” is not going to be acceptable to many, if not most Republicans unless it includes something more than the promise of enforcement down the road. The deal is essentially the 1986 immigration policy redux, and it will have the same effects.

Make no mistake about it, the first Republican candidate who comes out on the side of enforcement before amnesty will rocket up in the polls. We already know where McCain stands, and Romney has proposed an immigration policy substantially similar to what’s going through the Senate. Will Giuliani keep his law-and-order image by asking for an enforcement-first approach? Will Fred Thompson use this issue as the springboard for his entrance into the race?

Neither party is getting it on this issue. There is a massive groundswell of people from both the right and the left who don’t want to see Americas borders opened. We have the rule of law in this country, and to give amnesty to millions of people who have decided to break the law is a violation of the principles of fairness and equality. Every day, people risk their lives to come to this country and are rejected — meanwhile, illegals pay no attention to the law, and they will end up getting amnesty while political prisoners and asylum seekers end up waiting for years for the same opportunity. We are a nation of laws, and when we legitimize breaking the law we erode our own legal foundation.

President Bush’s approval ratings are almost entirely due to his strong support with Republicans. If he signs a bill like this into law, he’ll join Ehud Olmert in the single-digit range soon enough.

Cutting Taxes, Cutting The Deficit

BizzyBlog notes that the AP is trying to bury the lede on April’s Treasury Department report showing surging government revenues. The Treasury Department recorded record tax collections of $383.6 billion, which smashes previous revenue records by over 15%. The hard evidence shows that the supply-side view that decreasing marginal tax rates increase revenues is being vindicated and some have predicted that the federal deficit could be gone by next year.

Unlike political rhetoric, balance sheets don’t lie. The economy is performing exceptionally well, unemployment is at levels that are both low and sustainable, inflation isn’t a worry, and even with the collapse of the housing bubble and high oil prices, the markets are still going strong. Granted, there could be any number of things that could interfere with that growth from oil scares to Democratic meddling in the economy, but the fundamentals of the US economy remain strong.

Much of that is due to the fact that we have a tax climate that makes that growth possible. There is a direct correlation between the 2003 tax cuts and the current cycle of growth. We wouldn’t be seeing such strong revenue figures had the 2003 tax cuts not fostered business investment and reduced the powerful disincentives for growth in the old tax regime.

The Democratic Party would kill the goose that laid the golden egg by returning this country back to a state in which tax policy discourages rather than encourages economic growth. Tax collections require people to actually make money, which doesn’t happen when every attempt to do so ends up creating more and more tax liability. To undo the 2003 tax cuts would likewise undo the economic growth we’ve seen in the last few years — and would unsure that the deficit doesn’t fade away as it appears set to do.

The fact that the media seems strangely reticent to report on the state of the US economy — except when they can find something bad to say is telling. The supply-side tax cuts in 2003 are doing exactly what they were designed to do — boost the US economy and keep it strong and productive for years to come. The numbers show quite clearly that it’s working — and if it ain’t broke, it makes little sense to try to break it — unless you have a party whose political concerns matter more than understanding the truth.

So Much For The Spirit Of 1776

“A right to tax, without limit or control, is essentially a power to destroy.”
– Chief Justice John Marshall, McCulloch v. Maryland, 17 U.S. 316, 391 (1819)

Matt Stoller has an ode to the joys of paying taxes at MyDD that seems to accurately describe how the left feels about taxes these days. To Stoller, taxes are as American as Mom, apple pie, and the flag:

Our tax code is the DNA of our nation’s moral compass. I am proud to pay taxes because I take pride in America, and paying some tiny burden to keep our society running is an extremely small price to pay for being able to call myself an American citizen. The old expression ‘you get what you pay for’ is apt for all sorts of situations. People tend to express what they value in how much they are willing to pay for it. I am willing and feel privileged for the right to pay for my country. The right-wing is embittered to do so, if they do so at all. And that, more than anything, says something about how much they value this experiment called America.

Of course, it’s somewhat ironic to be saying that taxation is the “DNA of our nation’s moral compass.” For one, it’s one of the ugliest mixed metaphors I’ve ever read. Secondly, America was founded on a rejection of confiscatory taxation. Boston Tea Party The Founders of this country recognized that the power of the state and the rights of the individual are at odds — they certainly didn’t have the view that what makes America great was our tax code — in fact, when this nation was founded there was no such thing as an income tax. It’s rather difficult to argue that the 16th Amendment, which wasn’t passed until well after the founding of this nation, is responsible for America’s greatness.

That’s where the left gets it utterly wrong. The Founders had a very jaundiced view of government — it’s why we have a Constitution of enumerated powers, a Bill of Rights, and a tradition of limiting the power of the state. Such features were designed expressly to maximize the ability of the individual to succeed in life. In fact, Jefferson’s first drafts of the Declaration of Independence didn’t talk about the “pursuit of happiness” but borrowed directly from Locke and spoke of “life, liberty, and property.” The idea that our national greatness derives from our government rather than from the people would be deeply alien to the Founders. It goes against our real national DNA — which can be read in the texts of the Declaration of Independence, the Constitution, the Federalist Papers, and our other founding documents.

The greatness of our country comes not from the power of the state — if that’s the measure of greatness than the US should be at the bottom of the heap and nations like North Korea should be ruling the world. Yet we have one of the the oldest continually-running democracies on the globe. Our economic power is unmatched, and when there’s a genocide in Europe it’s our military that does most of the heavy lifting. The reality is that this nation is, by objective standards, the greatest on the planet, and that isn’t because we have an intrusive and bothersome state, but because for the most part our government stays out of the way.

Our Founding Fathers weren’t happy to turn over their fortunes to the state because they knew that controlling the economic destiny of individuals is no less onerous than trying to control our political destinies. The idea that we should happily pay taxes — no matter how onerous they are — isn’t an affirmation of American citizenship, but a rejection of what the Founders made clear when they broke free of England. The deliberately bequeathed to us a system of government of separated powers, federalism, and individual rights. The modern left does not seem to understand why they did that, and seems to reject that essential vision.

Our abiding respect for the rights of the individual is what makes America great. Go to the DMV or the welfare office and ask yourself, “is this what makes this country what it is?” Then go visit a church, a synagogue, a charity, or any of the other ad hoc community associations that have little if anything to do with the state but make up the best part of America. It is those small, personal, and responsible organizations that provide much of America’s greatness. At the end of the day, putting one’s faith in the large, the impersonal, and the bureaucratic is a fool’s errand. Federal government, by its very nature, will always be large, inefficient, and impersonal. That’s why the Founders limited its scope to only those powers enumerated in the Constitution. We can make government as small, as efficient, and as personal as possible, but it will never be able to replace the elements of civil society that make democracy work. Those who have tried have lost both civil society and democracy.

If one honestly believes that taxes are the reason that America is great, then you haven’t listened to what the Founders have said. Governments do not make nations great, but are only reflections of the people. When the size and scope of government serves to stifle the power of the individual to shape their lives, then democracy withers and dies. The left may have the best intentions, they may wrap themselves in the mantle of patriotism, but ultimately their policies and their voracious appetite for government revenue is a betrayal of the values that this country was founded upon.

Apple & EMI Ditch DRM

Apple and EMI Records have announced that they will begin selling tracks on iTunes without DRM — in other words, files that can play on other players than the iPod.

This is a smart move on the part of both. DRM was always a pointless endeavor — people who wanted to download music could still do so, and the only people effected by DRM were the average consumer. By getting rid of it, the overall rates of piracy won’t change, but consumers will benefit more. (In fact, it’s quite possible that releasing tracks free of DRM may reduce piracy by providing a better alternative.)

DRM is simply anti-consumer. Dedicated pirates will always find a way to “liberate” content, and the technological arms race between media companies and pirates will always end up on the side of pirates. Even if the media companies found a way to control everything, the consumers would reject it — witness what happened with Circuit City’s deeply foolish DIVX pay-per-view discs. Consumers don’t want to be treated like criminals and just want to enjoy their media when and where they want it.

Apple’s DRM has always been the least annoying of all of them, but it’s still nice to have the ability to buy a track from iTunes and play it on a Linux machine or another device that doesn’t support Apple’s DRM. One could always burn a CD with the track and re-rip it, but that caused a loss in quality and made things more difficult than they needed to be. By realizing that consumers want unfettered music, Apple and EMI get to be industry leaders that will hopefully persuade other content creators to also open their media up and allow people to have more market choices.