Friday, March 30, 2018
Thursday, March 29, 2018
We’re on the Precipice of an Economic Crisis–and Everyone Knows It’s Coming
We’re on the Precipice of an Economic Crisis–and Everyone Knows It’s Coming
Writing about federal spending last week, I shared five charts illustrating how the process works and what’s causing America’s fiscal problems.
Most importantly, I showed that the ever-increasing burden of federal spending is almost entirely the result of domestic spending increasing much faster than what would be needed to keep pace with inflation.
Let’s elaborate.
John Cogan, writing for the Wall Street Journal, summarizes our current predicament.
Now let’s see what another expert has to say on the topic. Brian Riedl of the Manhattan Institute paints a rather gloomy picture in an article for National Review.
Last but not least, Charles Hughes writes on the looming entitlement crisis for E21.
There have been several proposals from centrists and bipartisan groups to address the problem, such as the Simpson-Bowles plan, the Debt Reduction Task Force, and Obama’s Fiscal Commission.
For what it’s worth, I’m not a big fan of these initiatives since they include big tax increases. And oftentimes, they even propose the wrong kind of entitlement reform.
Heck, even folks on the left recognize there’s a problem. Paul Krugman correctly notes that America is facing a massive demographic shift that will lead to much higher levels of spending. And he admits that entitlement spending is driving the budget further into the red. That’s a welcome acknowledgment of reality.
Sadly, he concludes that we should somehow fix this spending problem with tax hikes.
That hasn’t worked for Europe, though, so it’s silly to think that same tax-and-spend approach will work for the United States.
I’ll close by also offering some friendly criticism of conservatives and libertarians. If you read what Cogan, Riedl, and Hughes wrote, they all stated that entitlement programs were a problem in part because they would produce rising levels of red ink.
It’s certainly true that deficits and debt will increase in the absence of genuine entitlement reform, but what irks me about this rhetoric is that a focus on red ink might lead some people to conclude that rising levels of entitlements somehow wouldn’t be a problem if matched by big tax hikes.
Wrong. Tax-financed spending diverts resources from the private economy, just as debt-financed spending diverts resources from the private economy.
In other words, the real problem is spending, not how it’s financed.
I’m almost tempted to give all of them the Bob Dole Award.
P.S. For more on America’s built-in entitlement crisis, click here, here, here, and here.
Daniel J. Mitchell
Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.
Most importantly, I showed that the ever-increasing burden of federal spending is almost entirely the result of domestic spending increasing much faster than what would be needed to keep pace with inflation.
Let’s elaborate.
John Cogan, writing for the Wall Street Journal, summarizes our current predicament.
Since the end of World War II, federal tax revenue has grown 15% faster than national income—while federal spending has grown 50% faster. …all—yes, all—of the increase in federal spending relative to GDP over the past seven decades is attributable to entitlement spending. Since the late 1940s, entitlement claims on the nation’s output of goods and services have risen from less than 4% to 14%. …If you’re seeking the reason for the federal government’s chronic budget deficits and crushing national debt, look no further than entitlement programs. …entitlement spending accounts for nearly two-thirds of federal spending. …What about the future? Social Security and Medicare expenditures are accelerating now that baby boomers have begun to collect their government-financed retirement and health-care benefits. If left unchecked, these programs will push government spending to levels never seen during peacetime. Financing this spending will require either record levels of taxation or debt.Here’s a chart from his column. Only instead of looking at inflation-adjusted growth of past spending, he looks at what will happen to future entitlement spending, measured as a share of economic output.
…restraint is not possible without presidential leadership. Unfortunately, President Trump has failed to step up.I largely agree. Trump has nominally endorsed some reforms, but the White House hasn’t expended the slightest bit of effort to fix any of the entitlement programs.
Now let’s see what another expert has to say on the topic. Brian Riedl of the Manhattan Institute paints a rather gloomy picture in an article for National Review.
…the $82 trillion avalanche of Social Security and Medicare deficits that will come over the next three decades elicits a collective shrug. Future historians—and taxpayers—are unlikely to forgive our casual indifference to what has been called “the most predictable economic crisis in history.” …Between 2008 and 2030, 74 million Americans born between 1946 and 1964—or 10,000 per day—will retire into Social Security and Medicare. And despite trust-fund accounting games, all spending will be financed by current taxpayers. That was all right in 1960, when five workers supported each retiree. The ratio has since fallen below three-to-one today, on its way to two-to-one by the 2030s. …These demographic challenges are worsened by rising health-care costs and repeated benefit expansions from Congress. Today’s typical retiring couple has paid $140,000 into Medicare and will receive $420,000 in benefits (in net present value)… Most Social Security recipients also come out ahead. In other words, seniors are not merely getting back what they paid in. …the spending avalanche has already begun. Since 2008—when the first Baby Boomers qualified for early retirement—Social Security and Medicare have accounted for 72 percent of all inflation-adjusted federal-spending growth (with other health entitlements responsible for the rest). …Brian speculates on what will happen if politicians kick the can down the road.
…something has to give. Will it be responsible policy changes now, or a Greek-style crisis of debt and taxes later? …Restructuring cannot wait. Every year of delay sees 4 million more Baby Boomers retire and get locked into benefits that will be difficult to alter… Unless Washington reins in Social Security and Medicare, no tax cuts can be sustained over the long run. Ultimately, the math always wins. …Frédéric Bastiat long ago observed that “government is the great fiction through which everybody endeavors to live at the expense of everybody else.” Reality will soon fall like an anvil on Generation X and Millennials, as they find themselves on the wrong side of the largest intergenerational wealth transfer in world history.Not exactly a cause for optimism!
Last but not least, Charles Hughes writes on the looming entitlement crisis for E21.
Medicare and Social Security already account for roughly two-fifths of all federal outlays, and they will account for a growing share of the federal budget over the coming decade. …Entitlement spending growth is a major reason that budget deficits are projected to surge over the next decade. …The unsustainable nature of these programs mean that some reforms will have to be implemented: the only questions are when and what kind of changes will be made. The longer these reforms are put off, the inevitable changes will by necessity be larger and more abrupt. …Without real reform, the important task of placing entitlement programs back on a sustainable trajectory will be left for later generations—at which point the country will be farther down this unsustainable path.By the way, it’s not just libertarians and conservatives who recognize there is a problem.
There have been several proposals from centrists and bipartisan groups to address the problem, such as the Simpson-Bowles plan, the Debt Reduction Task Force, and Obama’s Fiscal Commission.
For what it’s worth, I’m not a big fan of these initiatives since they include big tax increases. And oftentimes, they even propose the wrong kind of entitlement reform.
Heck, even folks on the left recognize there’s a problem. Paul Krugman correctly notes that America is facing a massive demographic shift that will lead to much higher levels of spending. And he admits that entitlement spending is driving the budget further into the red. That’s a welcome acknowledgment of reality.
Sadly, he concludes that we should somehow fix this spending problem with tax hikes.
That hasn’t worked for Europe, though, so it’s silly to think that same tax-and-spend approach will work for the United States.
I’ll close by also offering some friendly criticism of conservatives and libertarians. If you read what Cogan, Riedl, and Hughes wrote, they all stated that entitlement programs were a problem in part because they would produce rising levels of red ink.
It’s certainly true that deficits and debt will increase in the absence of genuine entitlement reform, but what irks me about this rhetoric is that a focus on red ink might lead some people to conclude that rising levels of entitlements somehow wouldn’t be a problem if matched by big tax hikes.
Wrong. Tax-financed spending diverts resources from the private economy, just as debt-financed spending diverts resources from the private economy.
In other words, the real problem is spending, not how it’s financed.
I’m almost tempted to give all of them the Bob Dole Award.
P.S. For more on America’s built-in entitlement crisis, click here, here, here, and here.
Reprinted from International Liberty.
Daniel J. Mitchell
Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.
This article was originally published on FEE.org. Read the original article.
Wednesday, March 28, 2018
Tuesday, March 27, 2018
Monday, March 26, 2018
Banning Plastic Bags Isn’t Just Bad Economics—It’s Bad for the Environment
Banning Plastic Bags Isn’t Just Bad Economics—It’s Bad for the Environment
In January, the British government announced its intention to extend their plastic bag tax to all shops. As of now, only establishments which have more than 250 employees need to impose the charge on single-use plastic bags. In the United States, certain states or cities even go beyond a tax and put an outright ban on them. But the UK government's own research suggests that this is actually bad for the environment.
In a section the report calls "global warming potential" (GWP), the agency assessed the environmental impact according to abiotic depletion (the disposal of products produced by crude oil), acidification (impact on soil, freshwater bodies, and the oceans), eutrophication (nutrients contained in water), human toxicity, freshwater aquatic ecotoxicity, marine aquatic ecotoxicity, terrestrial ecotoxicity, and photochemical oxidation (air pollution). These impact categories were also aligned with the GWP assessment of the 2007 IPCC report on climate change.
The researchers then looked at the number of times that a bag would need to be reused in order to have the same environmental impact as the conventional HDPE (High-density polyethylene) bag that people are used to. They reach the following conclusion:
The report used two Australian studies that state the following life expectancy for the carrier bags mentioned earlier: paper bags (kraft paper) were found to be single use, LDPE (low-density polyethylene) between 10 and 12 times, while non-woven PP (polypropylene) bags weren't included (only woven HDPE bags had their life expectancy included), and cotton bags had 52 trips on average.
These findings may be an approximation, but even if we informed the public and doubled the reuse of alternative carrier bags, then paper and cotton bags wouldn't even break even. In fact, many countries with a lower inclination to reuse bags would have an immense backlog on this issue. LDPE bags over-performed in reuse to GWP-ratio, however, most plastic bag taxes and bans include LDPE bags as well, which makes the policy all the more ineffective. The same could happen to woven HDPE swag bags, which also perform well in this ratio, yet swiftly fall under the ban because they are made from the same composition as the classic single-use plastic bag.
It could be that non-woven PP bags are indeed the better alternative, but, even if they are, we are looking at a heavy bag which needs an intense behavioral shift and large usage to be effective. Until that is achieved, years could go by in which consumers use bags which have a worse environmental impact than if they just reused a single-use plastic bag each time.
The problem with the debate around this issue is even larger. Let's pretend for a minute that we'd comprehensively informed a politician sitting in the parliamentary environment committee what the studies find. His plausible response would be that we will have to educate the population and ban other bags on the long-term as well. There is really no way you can win. The intentions are really all that matter for public policymakers: if voters think that this measure improves their environmental impact, despite findings suggesting that it does the opposite, then the policy will be introduced.
One important message to people is that measures that intuitively sound sensible might turn out to produce unintended consequences. It's really just Frédéric Bastiat's "that which is seen, and that which is not seen" all over again.
Bill Wirtz
Bill Wirtz is a Young Voices Advocate. His work has been featured in several outlets, including Newsweek, Rare, RealClear, CityAM, Le Monde and Le Figaro. He also works as a Policy Analyst for the Consumer Choice Center.
Environmental Impact and Reuse
In 2011, the UK's Environment Agency published an earlier-drafted life cycle assessment of supermarket carrier bags. The aim: establishing both the environmental impact of different carrier bags which are in use and their reuse practice. The intention was to inform public policymakers about the impact that a crackdown on plastic bags could possibly have. Needless to say, politicians had little concern for the actual assessment the report presented.In a section the report calls "global warming potential" (GWP), the agency assessed the environmental impact according to abiotic depletion (the disposal of products produced by crude oil), acidification (impact on soil, freshwater bodies, and the oceans), eutrophication (nutrients contained in water), human toxicity, freshwater aquatic ecotoxicity, marine aquatic ecotoxicity, terrestrial ecotoxicity, and photochemical oxidation (air pollution). These impact categories were also aligned with the GWP assessment of the 2007 IPCC report on climate change.
The researchers then looked at the number of times that a bag would need to be reused in order to have the same environmental impact as the conventional HDPE (High-density polyethylene) bag that people are used to. They reach the following conclusion:
"In round numbers these are: paper bag - 4 times, LDPE bag - 5 times, non-woven PP bag - 14 times and the cotton bag - 173 times."The attentive reader will now ask the correct deductive question: so what are the reuse levels that we experience in practice? Or: do people's behavior reflect the environmental impact of shopping bags accordingly?
The report used two Australian studies that state the following life expectancy for the carrier bags mentioned earlier: paper bags (kraft paper) were found to be single use, LDPE (low-density polyethylene) between 10 and 12 times, while non-woven PP (polypropylene) bags weren't included (only woven HDPE bags had their life expectancy included), and cotton bags had 52 trips on average.
These findings may be an approximation, but even if we informed the public and doubled the reuse of alternative carrier bags, then paper and cotton bags wouldn't even break even. In fact, many countries with a lower inclination to reuse bags would have an immense backlog on this issue. LDPE bags over-performed in reuse to GWP-ratio, however, most plastic bag taxes and bans include LDPE bags as well, which makes the policy all the more ineffective. The same could happen to woven HDPE swag bags, which also perform well in this ratio, yet swiftly fall under the ban because they are made from the same composition as the classic single-use plastic bag.
It could be that non-woven PP bags are indeed the better alternative, but, even if they are, we are looking at a heavy bag which needs an intense behavioral shift and large usage to be effective. Until that is achieved, years could go by in which consumers use bags which have a worse environmental impact than if they just reused a single-use plastic bag each time.
Only Intentions Seem to Matter
The most worrying thing about this research is that, despite its intention to inform public policymakers, it found no attention whatsoever. Quite the contrary, Her Majesty's Government is actually doing the complete opposite by extending the plastic bag tax to all stores.The problem with the debate around this issue is even larger. Let's pretend for a minute that we'd comprehensively informed a politician sitting in the parliamentary environment committee what the studies find. His plausible response would be that we will have to educate the population and ban other bags on the long-term as well. There is really no way you can win. The intentions are really all that matter for public policymakers: if voters think that this measure improves their environmental impact, despite findings suggesting that it does the opposite, then the policy will be introduced.
One important message to people is that measures that intuitively sound sensible might turn out to produce unintended consequences. It's really just Frédéric Bastiat's "that which is seen, and that which is not seen" all over again.
Bill Wirtz
Bill Wirtz is a Young Voices Advocate. His work has been featured in several outlets, including Newsweek, Rare, RealClear, CityAM, Le Monde and Le Figaro. He also works as a Policy Analyst for the Consumer Choice Center.
This article was originally published on FEE.org. Read the original article.
Friday, March 23, 2018
I Grew Up in a Communist System. Here’s What Americans Don’t Understand About Freedom
I Grew Up in a Communist System. Here’s What Americans Don’t Understand About Freedom
Individual freedom can only exist in the context of free-market capitalism. Personal freedom thrives in capitalism, declines in government-regulated economies, and vanishes in communism. Aside from better economic and legislative policies, what America needs is a more intense appreciation for individual freedom and capitalism.
I was born and raised in communist Romania during the Cold War, a country in which the government owned all the resources and means of production. The state controlled almost every aspect of our lives: our education, our job placement, the time of day we could have hot water, and what we were allowed to say.
Like the rest of the Eastern European countries, Romania was often referred to as a communist country. In school, we were taught it was a socialist country. Its name prior to the 1989 Revolution to overthrow the Ceausescu regime was the Socialist Republic of Romania.
From an economic standpoint, a petty fraction of property was still privately owned. In a communist system, all property is owned by the state. So if it wasn't a true communist economy, its heavy central planning and the application of a totalitarian control over the Romanian citizenry made this nation rightfully gain its title of a communist country.
Wrigley's chewing gum and Swiss chocolate were a rare delight for us. I remember how happy I was when I'd have a pack of foreign bubblegum or a bar of delicious milk chocolate. I'd usually save them for special occasions.
Fruity lip gloss, French perfume, and jeans were but a few of the popular items available only on the black market and with the right connections. God bless our black-market entrepreneurs! They made our lives better. They gave us the opportunity to buy things we very much desired, things we couldn't get from the government-owned retail stores which were either half-empty or full of products that were ugly and of poor quality.
The grocery stores were not any better. I get it, maybe we didn't need to be fashionable. But we needed to eat. So, the old Romanian adage "Conscience goes through the stomach" made a lot of sense.
During the late 1970s, life in Romania started to deteriorate even more. Meat was hardly a consumer staple for the average Romanian. Instead, our parents learned to become good at preparing the liver, the brain, the tongue, and other giblets that most people in the West would not even consider trying.
When milk, butter, eggs, and yogurt were temporarily available, my mom—like so many others of our neighbors—would wake up at 2:00 a.m. to go stand in line so she'd have the chance to get us these goodies. The store would open at 6:00 a.m., so if she wasn't early enough in line she'd miss the opportunity.
In 1982, the state sent their disciples to people's homes to do the census. Along with that, food rationing was implemented. For a family of four like us, our rationed quota was 1 kilogram of flour and 1 kilogram of sugar per month. That is, if they were available and if we were lucky enough to be in the right place at the right time when they were being distributed.
The one television channel our government provided for us often focused on programs related to crime and poverty in the western world. After all, people were poor and suffering because of capitalism, so we were told, so we needed socialism and communism to solve the inequalities of humanity.
The layman definition of capitalism is the economic system in which people and businesses engage in manufacturing, trading, and exchanging products and services without government interference. A free-market capitalist system works in a more efficient manner when not tampered with by government or central bank intervention in the credit markets, monetary policy, and interest rate fixing.
Private property and private property rights are at the core of capitalism. When in school, we learned that private property makes people greedy and is considered detrimental to society. Private property was associated with capitalism, the system that our textbooks claimed failed.
Economics is the study of the allocation of scarce resources which have alternative uses. Efficiency is thus of primary concern when the goal is economic progress.
In a centrally-planned environment, the various government individuals who are assigned the task of planning the economy could not possibly know how to properly allocate the scarce resources of an entire nation, no matter how smart or educated they are. Shortages are one of the consequences of improper allocation of the scarce resources.
The free market, however, through the multiple spontaneous interactions of businesses and consumers, directs the allocation of resources via the amazing process of supply and demand. It is precisely due to the profit and loss events that economic efficiency is stimulated.
In contrast, communism, socialism, fascism, or just about any government-controlled system lacks the profit incentive. The people, who are the human resources, have no desire to engage in a business where the reward is not attainable (unless it's done in the black markets). They accept the state and its bureaucratic cronies to dictate their faith.
Capital is chased away due to the high risk associated with governments who engage in high levels of controlling their economies and, often, corruption. The overall standard of living is dramatically lower than in most capitalist places, and the poverty is higher. Consequently, the collectivist country falls into an economic and social trap from which it is hard to escape. Only capitalism can save a nation from the failure of its central economic planning.
We, the lucky ones to live in a relatively free-market system, don't have these kinds of worries. We go to work, get leisure time to be on Facebook, watch TV, be with our families, read books, and enjoy a hobby or two. In short, we have the personal freedom to engage in and enjoy a variety of life events because of capitalism.
But there's another important motive to desire to live in a capitalist society. We are free to create and come up with all kinds of business ideas, no matter how crazy some might be. Because we don't have to worry about tomorrow, we have—or make—the time to read, explore, and innovate.
Capitalism makes it possible for us to challenge ourselves, to have goals, and to put forth the sweat to achieve them. It gives us the freedom to try new things and explore new opportunities. It gives us the chance to create more opportunities. It helps us build strong character because when we try, we also fail, and without failure, how do we know we've made mistakes? Without failure, how do we know we must make changes?
In retrospect, that was a dumb answer on my part. After several decades, I came to believe that the human condition of individual freedom can only exist in the context of free markets. Shortages are created by the intrusion of the state into the complex activity of the markets, whether it's price controls or poor allocation of resources.
When shortages are powerful and long enough to dramatically affect lives, people resort to revolt. Large revolts call for serious governmental actions including, but not limited to, eroding or completely eliminating individual rights (the right to free speech and to bear arms), the institution of a police state, and the enacting of a powerful state propaganda system. Capitalism is the path to the individual rights and liberty that build the solid foundation of a free society.
The economic policy of the 19th Century with limited regulations and minimal taxation attracted the needed capital to our country. The Industrial Revolution made spectacular advancements in human conditions due to the capital concentrated in the region. America lost its number one place due to legislating higher regulations, taxation, and protectionist policies.
But we are still enjoying some of the fruits today. Compared to many countries in the world, we still maintain stronger capitalist traits than most, however Hong Kong, Singapore, Switzerland, New Zealand, and a few other nations who lead the way in economic freedom have surpassed us (see the latest statistics).
It starts in our own backyard, in our home, in our small group, in our community. It starts with loving, involved, and dedicated parents who'd instill the values of personal responsibility and delayed gratification in their children. It continues with an education that entails both theory and hands-on practice in environments conducive to learning how to think independently and how to acquire life- and work-skills. It evolves into a purpose-driven life rich in learning and experiences. And this may be just the beginning of attaining the intellectual maturity to perceive the value that free markets and individual freedom afford most of us.
Carmen Alexe escaped Communist Romania during the Cold War. Her motive was individual freedom. She has close to 30 years in the lending industry, currently working as a Commercial Real Estate Consultant. She's been a real estate investor since 2001. She's also a passionate Salsa dancer. She's a free spirit doing research on and practicing how to live free in an unfree world. She shares her zeal for free markets, individual freedom, and personal responsibility by writing on her blog.
I was born and raised in communist Romania during the Cold War, a country in which the government owned all the resources and means of production. The state controlled almost every aspect of our lives: our education, our job placement, the time of day we could have hot water, and what we were allowed to say.
Like the rest of the Eastern European countries, Romania was often referred to as a communist country. In school, we were taught it was a socialist country. Its name prior to the 1989 Revolution to overthrow the Ceausescu regime was the Socialist Republic of Romania.
From an economic standpoint, a petty fraction of property was still privately owned. In a communist system, all property is owned by the state. So if it wasn't a true communist economy, its heavy central planning and the application of a totalitarian control over the Romanian citizenry made this nation rightfully gain its title of a communist country.
Socialism Creates Shortages
Despite the fact that Romania was a country rich in resources, there were shortages everywhere. Food, electricity, water, and just about every one of life's necessities were in short supply. The apartment building in which we lived provided hot water for showers two hours in the morning and two hours at night. We had to be quick and on time so we didn't miss the opportunity.Wrigley's chewing gum and Swiss chocolate were a rare delight for us. I remember how happy I was when I'd have a pack of foreign bubblegum or a bar of delicious milk chocolate. I'd usually save them for special occasions.
Fruity lip gloss, French perfume, and jeans were but a few of the popular items available only on the black market and with the right connections. God bless our black-market entrepreneurs! They made our lives better. They gave us the opportunity to buy things we very much desired, things we couldn't get from the government-owned retail stores which were either half-empty or full of products that were ugly and of poor quality.
The grocery stores were not any better. I get it, maybe we didn't need to be fashionable. But we needed to eat. So, the old Romanian adage "Conscience goes through the stomach" made a lot of sense.
During the late 1970s, life in Romania started to deteriorate even more. Meat was hardly a consumer staple for the average Romanian. Instead, our parents learned to become good at preparing the liver, the brain, the tongue, and other giblets that most people in the West would not even consider trying.
When milk, butter, eggs, and yogurt were temporarily available, my mom—like so many others of our neighbors—would wake up at 2:00 a.m. to go stand in line so she'd have the chance to get us these goodies. The store would open at 6:00 a.m., so if she wasn't early enough in line she'd miss the opportunity.
In 1982, the state sent their disciples to people's homes to do the census. Along with that, food rationing was implemented. For a family of four like us, our rationed quota was 1 kilogram of flour and 1 kilogram of sugar per month. That is, if they were available and if we were lucky enough to be in the right place at the right time when they were being distributed.
The one television channel our government provided for us often focused on programs related to crime and poverty in the western world. After all, people were poor and suffering because of capitalism, so we were told, so we needed socialism and communism to solve the inequalities of humanity.
Capitalism Advances Private Property
Considering the shortages created by the government-controlled economy of my birth country, I came to understand and appreciate capitalism, the one system that had the most dramatic effect in elevating human civilization.The layman definition of capitalism is the economic system in which people and businesses engage in manufacturing, trading, and exchanging products and services without government interference. A free-market capitalist system works in a more efficient manner when not tampered with by government or central bank intervention in the credit markets, monetary policy, and interest rate fixing.
Private property and private property rights are at the core of capitalism. When in school, we learned that private property makes people greedy and is considered detrimental to society. Private property was associated with capitalism, the system that our textbooks claimed failed.
Allocation of Resources
Romania was rich in natural resources, yet the difference between our standard of living and those from the West was quite dramatic. It was indicative of a flawed economic system that most countries in Eastern Europe adhered to during the Soviet Era. But one may ask why was there so much poverty when natural resources are so abundant?Economics is the study of the allocation of scarce resources which have alternative uses. Efficiency is thus of primary concern when the goal is economic progress.
In a centrally-planned environment, the various government individuals who are assigned the task of planning the economy could not possibly know how to properly allocate the scarce resources of an entire nation, no matter how smart or educated they are. Shortages are one of the consequences of improper allocation of the scarce resources.
The free market, however, through the multiple spontaneous interactions of businesses and consumers, directs the allocation of resources via the amazing process of supply and demand. It is precisely due to the profit and loss events that economic efficiency is stimulated.
Free Markets Attract Capital
Due to its profit incentives, capitalism encourages innovation. Innovation leads to progress and an increase in the standard of living. But progress and the climate which offers humans a high standard of living cannot be created without the capital to transform and turn resources into the final products that give us the—relatively—cheap energy and food, smartphones, fitness gyms, and overall the life we currently afford. Capital moves in the direction of less regulation, less government intervention, and less taxation. In short, capital moves to where there's more economic freedom.In contrast, communism, socialism, fascism, or just about any government-controlled system lacks the profit incentive. The people, who are the human resources, have no desire to engage in a business where the reward is not attainable (unless it's done in the black markets). They accept the state and its bureaucratic cronies to dictate their faith.
Capital is chased away due to the high risk associated with governments who engage in high levels of controlling their economies and, often, corruption. The overall standard of living is dramatically lower than in most capitalist places, and the poverty is higher. Consequently, the collectivist country falls into an economic and social trap from which it is hard to escape. Only capitalism can save a nation from the failure of its central economic planning.
Capitalism Helps Us Be Better Individuals
Similar to the old Soviet lifestyle, let's remember what the typical Venezuelan family of our times worries about on a daily basis. Food to put on the table and the safety of their children. They wake up in the morning wondering how many meals they can afford that day, where to get them from, and how to pay for them.We, the lucky ones to live in a relatively free-market system, don't have these kinds of worries. We go to work, get leisure time to be on Facebook, watch TV, be with our families, read books, and enjoy a hobby or two. In short, we have the personal freedom to engage in and enjoy a variety of life events because of capitalism.
But there's another important motive to desire to live in a capitalist society. We are free to create and come up with all kinds of business ideas, no matter how crazy some might be. Because we don't have to worry about tomorrow, we have—or make—the time to read, explore, and innovate.
Capitalism makes it possible for us to challenge ourselves, to have goals, and to put forth the sweat to achieve them. It gives us the freedom to try new things and explore new opportunities. It gives us the chance to create more opportunities. It helps us build strong character because when we try, we also fail, and without failure, how do we know we've made mistakes? Without failure, how do we know we must make changes?
Individual Freedom Can Only Exist in the Context of Free Markets
Before immigrating to the U.S., I had to go through a rigorous process. One of the events was the immigration interview with the American counselor who, among many other questions, asked why I escaped Romania and why I wanted to come to America. My short answer was freedom. Then he posed the interesting question: "If America was to go through a period of economic devastation with shortages similar to Romania, would you still feel the same way?" I didn't think too much about it, and I said, "Yes, of course, as long as I have freedom."In retrospect, that was a dumb answer on my part. After several decades, I came to believe that the human condition of individual freedom can only exist in the context of free markets. Shortages are created by the intrusion of the state into the complex activity of the markets, whether it's price controls or poor allocation of resources.
When shortages are powerful and long enough to dramatically affect lives, people resort to revolt. Large revolts call for serious governmental actions including, but not limited to, eroding or completely eliminating individual rights (the right to free speech and to bear arms), the institution of a police state, and the enacting of a powerful state propaganda system. Capitalism is the path to the individual rights and liberty that build the solid foundation of a free society.
Is America a True Capitalist Economy?
The short answer is no. Most of the world refers to the American system as being a capitalist one. Based on my short definition of capitalism, it is obvious that it is not quite a pure one, and I wish to clarify that the U.S. is not a truly free-market capitalist system.The economic policy of the 19th Century with limited regulations and minimal taxation attracted the needed capital to our country. The Industrial Revolution made spectacular advancements in human conditions due to the capital concentrated in the region. America lost its number one place due to legislating higher regulations, taxation, and protectionist policies.
But we are still enjoying some of the fruits today. Compared to many countries in the world, we still maintain stronger capitalist traits than most, however Hong Kong, Singapore, Switzerland, New Zealand, and a few other nations who lead the way in economic freedom have surpassed us (see the latest statistics).
What America Needs
Aside from better economic and legislative policies, what America needs is a more intense appreciation of individual freedom and capitalism. Such a crazy idea is not acquired through public schools or becoming a public servant. Young people don't need more years of schooling with more worthless college degrees and student loans in default. America needs more entrepreneurs and businessmen. It needs more people with drive and ambition, more self-starters, more innovators, more people who are willing to take chances.It starts in our own backyard, in our home, in our small group, in our community. It starts with loving, involved, and dedicated parents who'd instill the values of personal responsibility and delayed gratification in their children. It continues with an education that entails both theory and hands-on practice in environments conducive to learning how to think independently and how to acquire life- and work-skills. It evolves into a purpose-driven life rich in learning and experiences. And this may be just the beginning of attaining the intellectual maturity to perceive the value that free markets and individual freedom afford most of us.
Carmen Alexe
Carmen Alexe escaped Communist Romania during the Cold War. Her motive was individual freedom. She has close to 30 years in the lending industry, currently working as a Commercial Real Estate Consultant. She's been a real estate investor since 2001. She's also a passionate Salsa dancer. She's a free spirit doing research on and practicing how to live free in an unfree world. She shares her zeal for free markets, individual freedom, and personal responsibility by writing on her blog.This article was originally published on FEE.org. Read the original article.
Thursday, March 22, 2018
The Internet Revolutionized Communications, But That’s Just the Beginning
The Internet Revolutionized Communications, But That’s Just the Beginning
Because of the Internet, our lives are significantly different. Writings on any topic, no matter how obscure, can be found with a quick Google search. Citizens can challenge powerful authority figures such as the police by publishing videos of their misdeeds. Remote workers can participate fully in company life, and relatives can video chat each other cheaply from nearly anywhere in the world.
Yet, these innovations are only a fraction of what the adopters of the early Internet hoped to accomplish. Google searches and blog posts are innovations of a particular type: innovations in communication. That is, the rise of the Internet has revolutionized publishing. Anyone can be a creator and distributor of content, and anyone can access and read it. However, a subset of early Internet adopters (who go by many names: cypherpunks, crypto anarchists, and Internet Exceptionalists, to name a few) thought the Internet would go further. They thought we would have an Internet revolution in economics and in law.
Instead of relying on government-issued money, we would have digital cash, the ability to pay any person on the Internet instantly and anonymously. Instead of being regulated by our brick-and-mortar governments, we, the new settlers of the Electronic Frontier, would make our own rules.
These were the expectations of the Internet as of 1994 or so. What happened? Life has changed, certainly, but in the United States, we still use US dollars and US law. Perhaps these ideas were only fantasies.
But maybe these ideas were merely ahead of their time. By building on advances in cryptography and distributed systems, blockchain technology promises a future with globally available digital cash, tamper-proof property records, auto-enforced commitments, and even private law. In this piece, I’ll explore these hopes for the Internet, the attempts that failed, and the future possibilities of blockchain technology.
He argued that cyberspace represents a new frontier, a place separate from where our bodies live. Moreover, on the Internet, geographic borders (the usual markers of where government power begins and ends) don’t exist. In Barlow’s view, the citizens of cyberspace are subject to “increasingly hostile and colonial measures [that] place us in the same position as those previous lovers of freedom and self-determination who had to reject the authorities of distant, uninformed powers.” His solution? “We will create a civilization of the Mind in Cyberspace,” he proclaimed. “May it be more humane and fair than the world your governments have made before.”
Barlow’s declaration had its detractors. As David Bennahum put it, “I’m wondering what it means to form a social contract in cyberspace, one with the kind of authenticity and authority of a constitution. It sounds great in theory, but I don’t actually live in cyberspace: I live in New York City, in the state of New York, in the United States of America. I guess I’m taking things too literally. Apparently my mind lives in cyberspace, and that’s what counts. It’s my vestigial meat package, also known as my body, that lives in New York. Government, geography, my body: all are obsolete now thanks to ‘cyberspace, that new home of mind’” (Bennahum 2001).
Less snarkily, Harvard law professor Jack Goldsmith argued that cyberspace is “no different than real space” because many other communication technologies also involve people making transactions across borders. “To this extent,” he explained, “activity in cyberspace is functionally identical to transnational activity mediated by other means, such as mail or telephone or smoke signal” (Goldsmith 1998). In other words, the Internet is nothing more than a smoke signal with a better tech team. No legal changes are necessary.
Renowned cyberlaw1 legal theorists such as Jack Goldsmith, Timothy Wu, David Johnson, David Post, and Lawrence Lessig spent much of the 90s arguing this point. Goldsmith and Wu occupied the pro-regulation, “Internet is merely communications technology” camp, whereas Johnson and Post represented the Internet Exceptionalists, arguing that cyberspace should govern itself. (Lessig is harder to pin down.) In 1996, Johnson and Post presciently claimed that the Internet would throw “law into disarray by creating entirely new phenomena that need to become the subject of clear legal rules but that cannot be governed, satisfactorily, by any current territorial sovereign.”
Over twenty years later, the Internet Exceptionalists were finally proven right. One of the major dreams of the 90s, digital cash, has been implemented. Cryptocurrencies definitively show that the Internet is more than the sum of its parts, more than a leap in communications technology. Instead of making transfers from one centralized ledger to another (which Goldsmith correctly observes could be done over a telephone) cryptocurrency ledgers are stored and updated simultaneously on thousands of computers at once. This radical decentralization gives digital currencies an emergent property—the feeling that they are native to the Internet, more than transfers of data from one physical place to another.
Despite Barlow’s declaration of independence, governments have been reluctant to loosen their grip, leaving website owners effectively subject to all legal jurisdictions in which their assets could be seized.
As Goldsmith and Wu explain,
Goldsmith and Wu illustrate this line of thinking when they explain how eBay dealt with fraud. At first, eBay was a small community and social norms against fraud sufficed—people could be presumed to be well-intentioned. But it became apparent that extra measures were necessary.
For instance, OpenBazaar, an online marketplace that uses cryptocurrencies as payment, allows users to use very simple smart contracts (actually, 2-of-3 multisig addresses) to prevent fraud. As OpenBazaar describes it, “When a buyer wants to purchase a listing, instead of sending the funds directly to the seller, he will send the funds to the multisig account. The three people who control this account are the buyer, the seller, and a trusted third party selected beforehand.”
In the simplest case, the transaction goes smoothly, but if there is a dispute, the trusted third party decides whether to release the funds to the buyer or seller. Importantly, no one has control over the transaction apart from the buyer and seller (and only in the case of a dispute, their arbitrator), preventing fraud and making government seizure not only unwelcome but impossible.
This approach may seem bizarre, but this sort of private arbitration is used widely to resolve disputes in commercial agreements. It also has historical precedent: in medieval times, merchants who engaged in international trade, frustrated with the inadequacy of local courts to enforce contracts, created their own rules and their own courts. Rather than having to travel to the court of a distant noble who likely knew very little about trade practices, these new rules, known as the “law merchant,” allowed merchants to resolve disputes quickly before knowledgeable courts (Hadfield 2017).
Legal scholars such as Johnson and Post recognized that the law merchant provided an example for Internet dispute resolution. In 1996, as part of the Cyberspace Law Institute, they launched the Virtual Magistrate Project, an experiment in which a pool of “neutral arbitrators with experience in the law and in the use of computer networks” would resolve disputes in a timely manner. Unfortunately, the project hit a snag—there was no way to enforce decisions, and therefore the experiment ended after only a few cases. However, with smart contracts and cryptocurrencies, enforcement is relatively easy and well-defined. An arbitrator only has the power consensually granted to them in code, but once a dispute occurs, they can use that power to direct the money sent to a smart contract as they see fit.
“The scope of all these efforts is certainly narrow,” Peter Ludlow admitted, talking about the Virtual Magistrate Project, “but it would be a mistake to conclude from this that they will not evolve into full-blown legal systems with profound impact on future legal theory worldwide. It is important to remember that our current systems of law have humble and in some cases whimsical beginnings… Rather than be dismissive,” he continued, “perhaps we should consider the possibility that we are witnessing the birth of the juridical systems and practices of the new millennium” (2001).
Ludlow’s statement was made before blockchain technology existed, but the same spirit applies today. It is a mistake to assume that only government can provide certain services. As Johns Hopkins cryptography professor Matthew Green made clear, “If you think something is impossible but you don’t have an impossibility proof, then what you have is an open problem.” Blockchain alternatives to government services are still an open problem, but the solutions thus far indicate that order can be achieved without government coercion.
Barlow, John Perry. “A Declaration of the Independence of Cyberspace.” Electronic Frontier Foundation. February 08, 1996. Accessed February 28, 2018. https://www.eff.org/cyberspace-independence.
Ellickson, Robert C. Order Without Law: How Neighbors Settle Disputes. Cambridge, MA: Harvard University Press, 1991.
Goldsmith, Jack L. “Against Cyberanarchy.” The University of Chicago Law Review 65, no. 4 (1998): 1199.
Goldsmith, Jack L., and Tim Wu. Who Controls the Internet?: Illusions of a Borderless World. Oxford: Oxford University Press, 2008.
Johnson, David R., and David G. Post. “Law and Borders: The Rise of Law in Cyberspace.” Stanford Law Review 48, no. 5 (1996): 1367. doi:10.2307/1229390.
Waddell, Kaveh. “Why Google Quit China-and Why It’s Heading Back.” The Atlantic. January 19, 2016. Accessed February 28, 2018. https://www.theatlantic.com/technology/archive/2016/01/why-google-quit-china-and-why-its-heading-back/424482/.
Kate Sills holds degrees in Computer Science and Cognitive Science from UC Berkeley.
Yet, these innovations are only a fraction of what the adopters of the early Internet hoped to accomplish. Google searches and blog posts are innovations of a particular type: innovations in communication. That is, the rise of the Internet has revolutionized publishing. Anyone can be a creator and distributor of content, and anyone can access and read it. However, a subset of early Internet adopters (who go by many names: cypherpunks, crypto anarchists, and Internet Exceptionalists, to name a few) thought the Internet would go further. They thought we would have an Internet revolution in economics and in law.
Instead of relying on government-issued money, we would have digital cash, the ability to pay any person on the Internet instantly and anonymously. Instead of being regulated by our brick-and-mortar governments, we, the new settlers of the Electronic Frontier, would make our own rules.
These were the expectations of the Internet as of 1994 or so. What happened? Life has changed, certainly, but in the United States, we still use US dollars and US law. Perhaps these ideas were only fantasies.
But maybe these ideas were merely ahead of their time. By building on advances in cryptography and distributed systems, blockchain technology promises a future with globally available digital cash, tamper-proof property records, auto-enforced commitments, and even private law. In this piece, I’ll explore these hopes for the Internet, the attempts that failed, and the future possibilities of blockchain technology.
Crypto Anarchists Declare the Independence of Cyberspace
In 1996, John Perry Barlow, co-founder of the Electronic Frontier Foundation and lyricist for the Grateful Dead, wrote a grandiose declaration of independence. “Governments of the Industrial World,” he wrote, “you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind.”He argued that cyberspace represents a new frontier, a place separate from where our bodies live. Moreover, on the Internet, geographic borders (the usual markers of where government power begins and ends) don’t exist. In Barlow’s view, the citizens of cyberspace are subject to “increasingly hostile and colonial measures [that] place us in the same position as those previous lovers of freedom and self-determination who had to reject the authorities of distant, uninformed powers.” His solution? “We will create a civilization of the Mind in Cyberspace,” he proclaimed. “May it be more humane and fair than the world your governments have made before.”
Barlow’s declaration had its detractors. As David Bennahum put it, “I’m wondering what it means to form a social contract in cyberspace, one with the kind of authenticity and authority of a constitution. It sounds great in theory, but I don’t actually live in cyberspace: I live in New York City, in the state of New York, in the United States of America. I guess I’m taking things too literally. Apparently my mind lives in cyberspace, and that’s what counts. It’s my vestigial meat package, also known as my body, that lives in New York. Government, geography, my body: all are obsolete now thanks to ‘cyberspace, that new home of mind’” (Bennahum 2001).
Less snarkily, Harvard law professor Jack Goldsmith argued that cyberspace is “no different than real space” because many other communication technologies also involve people making transactions across borders. “To this extent,” he explained, “activity in cyberspace is functionally identical to transnational activity mediated by other means, such as mail or telephone or smoke signal” (Goldsmith 1998). In other words, the Internet is nothing more than a smoke signal with a better tech team. No legal changes are necessary.
The Internet is Fundamentally Different
Yet, there is a real truth to the arguments of the crypto anarchists: the Internet is fundamentally different. Unlike a telephone call, the Internet persists even after a person signs off. And unlike a letter sent in the mail, an Internet posting can affect thousands of people in other countries without giving any indication that borders will be crossed. With the telephone or the mail, recipients must be selected and the communication must be paid for, the cost increasing with each new recipient. However, a post on the Internet can be freely available to all. No prior form of communication creates this kind of virtual space.Renowned cyberlaw1 legal theorists such as Jack Goldsmith, Timothy Wu, David Johnson, David Post, and Lawrence Lessig spent much of the 90s arguing this point. Goldsmith and Wu occupied the pro-regulation, “Internet is merely communications technology” camp, whereas Johnson and Post represented the Internet Exceptionalists, arguing that cyberspace should govern itself. (Lessig is harder to pin down.) In 1996, Johnson and Post presciently claimed that the Internet would throw “law into disarray by creating entirely new phenomena that need to become the subject of clear legal rules but that cannot be governed, satisfactorily, by any current territorial sovereign.”
Over twenty years later, the Internet Exceptionalists were finally proven right. One of the major dreams of the 90s, digital cash, has been implemented. Cryptocurrencies definitively show that the Internet is more than the sum of its parts, more than a leap in communications technology. Instead of making transfers from one centralized ledger to another (which Goldsmith correctly observes could be done over a telephone) cryptocurrency ledgers are stored and updated simultaneously on thousands of computers at once. This radical decentralization gives digital currencies an emergent property—the feeling that they are native to the Internet, more than transfers of data from one physical place to another.
The Empire Strikes Back
Historically, territorial governments have been very successful in their attempts to force multinational Internet companies to comply with their demands. In an early cyberlaw case, France effectively banned Nazi paraphernalia on Yahoo’s auction sites, even though Yahoo’s servers were in the US. It was enough that the sites were accessible in France, and that Yahoo had French assets that could be seized and French interests that could be thwarted (Goldsmith and Wu 2008, 8). More sinisterly, China has forced search engines to censor their results, removing anti-government and pro-democracy sentiments (Waddell 2016).Despite Barlow’s declaration of independence, governments have been reluctant to loosen their grip, leaving website owners effectively subject to all legal jurisdictions in which their assets could be seized.
As Goldsmith and Wu explain,
There’s an old European joke that captures the problem. In heaven, the joke goes, you find French cooks, English government, Swiss trains, and Italian lovers. In Hell, by contrast, you find French government, Italian trains, English chefs, and Swiss lovers. Territorial control of the Internet seemed to promise a parallel version of legal hell: a world of Singaporean free speech, American tort law, Russian commercial regulation, and Chinese civil rights.”These territorial governments, Barlow’s “distant, uninformed powers”, cling to the belief that they are providing a needed service. After all, how else will order be created, if not with government? This argument sounds an awful lot like Hobbesian legal centralism, the belief that government is the “wellspring of social order” (Ellickson 1991, 10). However, whether the government can provide social order and whether only the government can provide social order are two different claims, and the arguments for regulation usually depend on the latter.
Goldsmith and Wu illustrate this line of thinking when they explain how eBay dealt with fraud. At first, eBay was a small community and social norms against fraud sufficed—people could be presumed to be well-intentioned. But it became apparent that extra measures were necessary.
…eBay quickly learned that to prevent fraud, enforce its contracts, and ensure stability in its auction services, it would depend critically on government coercion and the rule of law provided by a stable country like the United States,” Goldsmith and Wu argue. “These are a few of the many complex benefits that only territorial sovereigns can bring, and without which most aspects of the Internet that we love and cherish would not exist” (2008, 129).
Blockchains as a Tool for Private Ordering
At the time, eBay may have required government coercion, but the idea that “only territorial sovereigns” can prevent fraud is false. Law and economics scholars such as Robert Ellickson have shown that people can often find ways to trust each other without the state. Furthermore, blockchain technology and smart contracts offer a different solution.For instance, OpenBazaar, an online marketplace that uses cryptocurrencies as payment, allows users to use very simple smart contracts (actually, 2-of-3 multisig addresses) to prevent fraud. As OpenBazaar describes it, “When a buyer wants to purchase a listing, instead of sending the funds directly to the seller, he will send the funds to the multisig account. The three people who control this account are the buyer, the seller, and a trusted third party selected beforehand.”
In the simplest case, the transaction goes smoothly, but if there is a dispute, the trusted third party decides whether to release the funds to the buyer or seller. Importantly, no one has control over the transaction apart from the buyer and seller (and only in the case of a dispute, their arbitrator), preventing fraud and making government seizure not only unwelcome but impossible.
This approach may seem bizarre, but this sort of private arbitration is used widely to resolve disputes in commercial agreements. It also has historical precedent: in medieval times, merchants who engaged in international trade, frustrated with the inadequacy of local courts to enforce contracts, created their own rules and their own courts. Rather than having to travel to the court of a distant noble who likely knew very little about trade practices, these new rules, known as the “law merchant,” allowed merchants to resolve disputes quickly before knowledgeable courts (Hadfield 2017).
Legal scholars such as Johnson and Post recognized that the law merchant provided an example for Internet dispute resolution. In 1996, as part of the Cyberspace Law Institute, they launched the Virtual Magistrate Project, an experiment in which a pool of “neutral arbitrators with experience in the law and in the use of computer networks” would resolve disputes in a timely manner. Unfortunately, the project hit a snag—there was no way to enforce decisions, and therefore the experiment ended after only a few cases. However, with smart contracts and cryptocurrencies, enforcement is relatively easy and well-defined. An arbitrator only has the power consensually granted to them in code, but once a dispute occurs, they can use that power to direct the money sent to a smart contract as they see fit.
“The scope of all these efforts is certainly narrow,” Peter Ludlow admitted, talking about the Virtual Magistrate Project, “but it would be a mistake to conclude from this that they will not evolve into full-blown legal systems with profound impact on future legal theory worldwide. It is important to remember that our current systems of law have humble and in some cases whimsical beginnings… Rather than be dismissive,” he continued, “perhaps we should consider the possibility that we are witnessing the birth of the juridical systems and practices of the new millennium” (2001).
Ludlow’s statement was made before blockchain technology existed, but the same spirit applies today. It is a mistake to assume that only government can provide certain services. As Johns Hopkins cryptography professor Matthew Green made clear, “If you think something is impossible but you don’t have an impossibility proof, then what you have is an open problem.” Blockchain alternatives to government services are still an open problem, but the solutions thus far indicate that order can be achieved without government coercion.
Works Cited
Bennahum, David S. “United Nodes of Internet.” In Crypto Anarchy, Cyberstates, and Pirate Utopias, 39-45. Cambridge, MA: The MIT Press, 2001.Barlow, John Perry. “A Declaration of the Independence of Cyberspace.” Electronic Frontier Foundation. February 08, 1996. Accessed February 28, 2018. https://www.eff.org/cyberspace-independence.
Ellickson, Robert C. Order Without Law: How Neighbors Settle Disputes. Cambridge, MA: Harvard University Press, 1991.
Goldsmith, Jack L. “Against Cyberanarchy.” The University of Chicago Law Review 65, no. 4 (1998): 1199.
Goldsmith, Jack L., and Tim Wu. Who Controls the Internet?: Illusions of a Borderless World. Oxford: Oxford University Press, 2008.
Johnson, David R., and David G. Post. “Law and Borders: The Rise of Law in Cyberspace.” Stanford Law Review 48, no. 5 (1996): 1367. doi:10.2307/1229390.
Waddell, Kaveh. “Why Google Quit China-and Why It’s Heading Back.” The Atlantic. January 19, 2016. Accessed February 28, 2018. https://www.theatlantic.com/technology/archive/2016/01/why-google-quit-china-and-why-its-heading-back/424482/.
- The “cyber” prefix has apparently been hard to shake. ↩
Reprinted from Libertarianism.
Kate Sills
Kate Sills holds degrees in Computer Science and Cognitive Science from UC Berkeley.This article was originally published on FEE.org. Read the original article.
Wednesday, March 21, 2018
The GOP’s Proposed Internet Tax Would Crush Small Business
The GOP’s Proposed Internet Tax Would Crush Small Business
The Wall Street Journal editorial board was entirely correct yesterday when they said, “Republicans have spent the last year cutting taxes and regulations, which hasn’t been easy. But now some Members of Congress want to blunt their handiwork by passing an online sales tax. Yes, they actually believe this would be good policy and politics.”
Despite the talk of possibly attaching it to must-pass funding legislation and the rhetoric about the bill itself, consumers will experience the Remote Transactions Parity Act (RTPA) as a sales tax increase. If the bill becomes law, more of their purchases will be subject to sales taxes and the downward pressure on sales taxes among states will be reduced, so rates and bases in all the states are likely to go up in the longer term.
The RTPA seeks to get rid of that physical presence limit on state taxing powers. It would let states reach outside their geographical borders and compel another state’s business to calculate, collect, and remit to that first state. The cost of that tax will usually be passed along to the customer and will feel like a tax increase to consumers.
Additionally, the long-term effect is that this arrangement will lessen the downward pressure on taxes between jurisdictions. Think of it like this: it’s the difference between driving your car across the D.C. border to Virginia to fill up with lower Virginia gas taxes—that’s how it works now and that’s what keeps at least some downward pressure on D.C. tax rates. If D.C. made the rate high enough, everyone would exit and fill up in Virginia.
But if the approach in the RTPA is applied to this thought experiment, it would mean that when you pull into that Virginia gas station, they look at your D.C. plates and charge you the D.C. gas tax rate. There’s no exit. Consumers will wear their home jurisdiction like a tax albatross when they shop online.
The RTPA is the opposite of tax competition; it’s a makeshift tax cartel among the states.
These small businesses and independent sellers would also be subject to audits from up to 46 states (the current number of states that impose a sales tax) and could be hauled into the auditing state’s court. The costs associated with that are potentially lethal for a one-person shop selling on eBay or Etsy.
In an environment like that, many small firms would fold and some would be pushed onto bigger platforms, like Amazon, that will handle the tax issues for them—for a fee, of course. This ability to comply with onerous tax law, along with Amazon’s new business model of fast delivery—which requires warehouses that trigger sales taxes—explains Amazon’s support for RTPA.
In summary, the RTPA is a small-business killer—which is why big box retailers support it. It crushes small competitors with compliance costs. State politicians are for it because they’d rather tax sellers in other states who can’t vote them out of office.
Consumers will be left with less money in their pockets and fewer choices online.
Jessica Melugin
Jessica Melugin is associate director of the Center for Technology & Innovation at the Competitive Enterprise Institute. Her research focuses on technology issues including electronic commerce, Internet taxation, net neutrality regulation, and antitrust.
Despite the talk of possibly attaching it to must-pass funding legislation and the rhetoric about the bill itself, consumers will experience the Remote Transactions Parity Act (RTPA) as a sales tax increase. If the bill becomes law, more of their purchases will be subject to sales taxes and the downward pressure on sales taxes among states will be reduced, so rates and bases in all the states are likely to go up in the longer term.
Removing the Incentive to Keep Taxes Low
Right now, sales taxes are only assessed on purchases when the seller has a physical presence—like a warehouse, store, or office—in the buyer’s state. This is because the seller is the legal taxpayer, so the status quo is a "no taxation without representation" situation, not a special loophole set up for Internet retailers, as is sometimes claimed.The RTPA seeks to get rid of that physical presence limit on state taxing powers. It would let states reach outside their geographical borders and compel another state’s business to calculate, collect, and remit to that first state. The cost of that tax will usually be passed along to the customer and will feel like a tax increase to consumers.
Additionally, the long-term effect is that this arrangement will lessen the downward pressure on taxes between jurisdictions. Think of it like this: it’s the difference between driving your car across the D.C. border to Virginia to fill up with lower Virginia gas taxes—that’s how it works now and that’s what keeps at least some downward pressure on D.C. tax rates. If D.C. made the rate high enough, everyone would exit and fill up in Virginia.
But if the approach in the RTPA is applied to this thought experiment, it would mean that when you pull into that Virginia gas station, they look at your D.C. plates and charge you the D.C. gas tax rate. There’s no exit. Consumers will wear their home jurisdiction like a tax albatross when they shop online.
The RTPA is the opposite of tax competition; it’s a makeshift tax cartel among the states.
Killing Competition with Compliance Costs
There is also a heavy regulatory compliance burden. Under the RTPA, businesses will be left calculating for thousands of distinct sales tax jurisdictions, each with their own bases, rates, exemptions, and tax holidays. These distinct jurisdictions and their rules will hurt small, independent sellers and those who use platforms like Etsy and eBay. RTPA advocates point to free government-provided tax-calculating software as a way to ameliorate these compliance burdens. But there are serious concerns with the performance of that software and there are no allowances made in the bill for costs associated with testing or integrating these systems.These small businesses and independent sellers would also be subject to audits from up to 46 states (the current number of states that impose a sales tax) and could be hauled into the auditing state’s court. The costs associated with that are potentially lethal for a one-person shop selling on eBay or Etsy.
In an environment like that, many small firms would fold and some would be pushed onto bigger platforms, like Amazon, that will handle the tax issues for them—for a fee, of course. This ability to comply with onerous tax law, along with Amazon’s new business model of fast delivery—which requires warehouses that trigger sales taxes—explains Amazon’s support for RTPA.
In summary, the RTPA is a small-business killer—which is why big box retailers support it. It crushes small competitors with compliance costs. State politicians are for it because they’d rather tax sellers in other states who can’t vote them out of office.
Consumers will be left with less money in their pockets and fewer choices online.
Reprinted from the Competitive Enterprise Institute.
Jessica Melugin
Jessica Melugin is associate director of the Center for Technology & Innovation at the Competitive Enterprise Institute. Her research focuses on technology issues including electronic commerce, Internet taxation, net neutrality regulation, and antitrust.
This article was originally published on FEE.org. Read the original article.
Tuesday, March 20, 2018
Monday, March 19, 2018
The 2nd Amendment Really Is an Essential Safeguard against Crime and Tyranny
The 2nd Amendment Really Is an Essential Safeguard against Crime and Tyranny
For millions of Americans, the Second Amendment and its guarantee of the right of the individual to bear arms appears irrelevant and practically anachronistic. It seems a throwback to those earlier days of the Wild West, when many men, far from the law and order provided by the town sheriff and circuit judge, had to protect their families and land from cattle rustlers and outlaw bands. Such people are wrong.
If in our contemporary world, where the law fails to do its job of seeing that the guilty pay for their crimes, we take solace in the fantasy of extralegal solutions. We imagine that somewhere there is a Clint Eastwood on a metropolitan police force who uses some “magnum force” to see to it that the perpetrator of a crime doesn’t go unpunished. Or we want to think that there is a Charles Bronson occasionally roaming the streets of a large city at night fulfilling the “death wish” of the street criminal whom local law enforcement is not able to punish.
The crime once having been committed, it is some breakdown in the judicial system that prevents justice from being served. If only the law didn’t coddle the criminal or allow his defense attorney to use “loopholes” in the law, no criminal would ever escape his just deserts.
This popular conception of the legal system, law enforcement, and government, however, suffers from two fundamental flaws: first, it focuses on the legal process (and any supposed weaknesses in it) only after a crime has been committed; and second, it ignores completely the fact that it might be the government itself that is the potential perpetrator of crimes against the American citizenry.
Critics of the Second Amendment and private gun ownership never seem to have any reasonable answer. Silent prayer might be suggested, but if this were to be a formal recommendation by the government it might run the risk of violating the separation of church and state.
Even in an era promoting equality among the sexes, it nonetheless remains a fact that on average an adult man tends to be physically stronger than an adult woman, and most especially if there is more than one man confronting a single woman.
Several years ago, economist Morgan Reynolds wrote a book on the economics of crime. The following is from one of the criminal cases he discussed. It seems that four men broke into a house in Washington, D.C., looking for a man named “Slim.” When the occupant said that he didn’t know where Slim was, they decided to kill him instead. One of the defendants later testified,
Equally important, how many people might never have to be confronted with attack or murder if potential perpetrators were warded off from initiating violence because of the uncertainty that an intended victim might have the means to defend him- or herself from thieves, rapists, and murders? A gun can be a great equalizer for the weak and the defenseless, especially if an intended victim doesn’t have to waste precious seconds fumbling with the key to a mandatory trigger lock.
But what is an ordinary man to do when he finds that it is the government that is the perpetrator of violence and aggression against him and his fellow citizens? How do you resist the power of the state? Tens of millions of people were murdered by governments in the twentieth century. They were killed because of the language they spoke or the religion they practiced. Or because those in political control classified them as belonging to an “inferior race” or to a “social class” that marked them as an “enemy of the people.” Furthermore, the vast, vast majority of these tens of millions of victims were murdered while offering little or no resistance. Fear, terror, and a sense of complete powerlessness surely have been behind the ability of governments to treat their victims as unresisting lambs brought to the slaughter.
But part of the ability of government to commit these cruel and evil acts has been the inability of the victims to resist because they lacked arms for self-defense. However, when the intended victims have had even limited access to means of self-defense it has shocked governments and made them pay a price to continue with their brutal work.
The following is from historian John Toland’s biography of “Adolf Hitler,” in reference to the resistance of the Jews in the Warsaw Ghetto in 1943:
What if not only the Jewish population but the majority of all the “undesirable” individuals and groups in Germany and the occupied countries of Europe had been armed, with the Nazi government unable to know who had weapons, what types, and with what quantity of ammunition? It would be an interesting study in World War II history to compare private gun ownership in various parts of Europe and the degree and intensity of resistance by the local people to German occupation.
Acquisition of firearms during the Second World War as part of the partisan movement against the German invasion of the Soviet Union enabled active, armed resistance by Lithuanian and Ukrainian nationalist guerrillas against Soviet reoccupation of their countries to continue in the forests of Lithuania and western Ukraine well into the early 1950s.
It is hard to imagine how the people of the 13 colonies could have ever obtained their independence from Great Britain at the end of the eighteenth century if the local population had not been “armed and dangerous.” It is worth recalling Patrick Henry’s words in arguing for resistance against British control before the king’s armed forces could disarm the colonists:
The likelihood that government will feel secure in undertaking infringements on the freedoms of Americans would be diminished if it knew that any systematic invasion of people’s life, liberty, and property might meet armed resistance by both the victim and those in the surrounding areas who came to his aid because of the concern that their own liberty might be the next to be violated.
Though it may seem harsh and insensitive, when I read the advocates of gun control pointing to incidents of private acts of violence against children, I think to myself:
How many more tens of thousands of children were killed around the world in the last century by governments? And how many of those children, victims of government-armed violence, might have been saved if their families and neighbors had possessed the right to bear arms against political aggressors? How many children have been saved because their families have had weapons for self-defense against private violators of life and property? And how many could have been saved from private aggressors if more families had owned guns?
As a people, we have swum against the tide of collectivism, socialism, and welfare statism to a greater degree, for the most part, than have our western European cousins. As a result, in many areas of life, we have remained freer, especially in our market activities, than they. The fact that other peoples in other lands chose to follow foolish paths leading to disastrous outcomes does not mean that we should follow in their footsteps.
America was born in revolt against the ideas of the “old world”: the politics of monarchy, the economics of mercantilism, and the culture of hereditary class and caste. America heralded the politics of representative, constitutional government, the economics of the free market, and the culture of individualism under equality before the law. It made America great.
If in more recent times there has been an “American disease,” it has been our all-too-willing receptivity to the European virus of political paternalism, welfare redistribution, economic regulation and planning, and the passive acceptance of government control over social affairs.
We need not and indeed should not fall victim to one more of the European ailments: the disarming of the people under the dangerous notion that the private citizenry cannot be trusted and should not be allowed to have the means of self-defense against potential private and political aggressors in society. Let us stand apart once more and not fall prey to the false idea that somehow our European cousins are more enlightened or advanced than we on the matters of gun ownership and control. They are not.
Instead let us remember and stay loyal to the sentiment of James Madison, the father of the U.S. Constitution, who praised his fellow countrymen when he said, “Americans [have] the right and advantage of being armed—unlike citizens of other countries whose governments are afraid to trust the people with arms.”
Let us remain worthy of Madison’s confidence in the American people and defend the Second Amendment of the Constitution upon which part of that confidence was based.
Richard M. Ebeling
Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.
If in our contemporary world, where the law fails to do its job of seeing that the guilty pay for their crimes, we take solace in the fantasy of extralegal solutions. We imagine that somewhere there is a Clint Eastwood on a metropolitan police force who uses some “magnum force” to see to it that the perpetrator of a crime doesn’t go unpunished. Or we want to think that there is a Charles Bronson occasionally roaming the streets of a large city at night fulfilling the “death wish” of the street criminal whom local law enforcement is not able to punish.
The crime once having been committed, it is some breakdown in the judicial system that prevents justice from being served. If only the law didn’t coddle the criminal or allow his defense attorney to use “loopholes” in the law, no criminal would ever escape his just deserts.
This popular conception of the legal system, law enforcement, and government, however, suffers from two fundamental flaws: first, it focuses on the legal process (and any supposed weaknesses in it) only after a crime has been committed; and second, it ignores completely the fact that it might be the government itself that is the potential perpetrator of crimes against the American citizenry.
The Tragedy of the Unarmed Victim
Locks, bars on windows, and alarm systems are all useful devices to prevent unwanted intruders from gaining entrance into our homes and places of work. But what happens if an innocent victim is confronted with an invader who succeeds in entering his home, for example, and the safety of his family and possessions is now threatened? What if the invader confronts these innocent occupants and threatens some form of violence, including life-threatening force? What are the victims to do?Critics of the Second Amendment and private gun ownership never seem to have any reasonable answer. Silent prayer might be suggested, but if this were to be a formal recommendation by the government it might run the risk of violating the separation of church and state.
Even in an era promoting equality among the sexes, it nonetheless remains a fact that on average an adult man tends to be physically stronger than an adult woman, and most especially if there is more than one man confronting a single woman.
Several years ago, economist Morgan Reynolds wrote a book on the economics of crime. The following is from one of the criminal cases he discussed. It seems that four men broke into a house in Washington, D.C., looking for a man named “Slim.” When the occupant said that he didn’t know where Slim was, they decided to kill him instead. One of the defendants later testified,
I got a butcher knife out of the kitchen. We tied him up and led him to the bathroom. And we all stabbed him good. Then, as we started to leave, I heard somebody at the door. Lois [the dead man’s girlfriend] came in…. We took her back to the bathroom and showed her his body. She started to beg, ‘don’t kill me, I ain’t gonna tell nobody. Just don’t kill me.’ said we all could have sex with her if we wouldn’t kill her. After we finished with her, Jack Bumps told her, ‘I ain’t takin’ no chances. I’m gonna kill you anyway.’ He put a pillow over her head, and we stabbed her till she stopped wiggling. Then we set fire to the sheets in the bedroom and went out to buy us some liquor.”Would either of these two victims have been saved if the man had had a gun easily reachable by him in the house or if the woman had had a gun in her purse? There is no way of knowing. What is for certain is that neither was any match for the four men who attacked and killed them with a butcher knife. Even Lois’s begging and submitting to sexual violation did not save her. How many people might be saved from physical harm, psychological trauma, or death if they had the means to protect themselves with a firearm?
Equally important, how many people might never have to be confronted with attack or murder if potential perpetrators were warded off from initiating violence because of the uncertainty that an intended victim might have the means to defend him- or herself from thieves, rapists, and murders? A gun can be a great equalizer for the weak and the defenseless, especially if an intended victim doesn’t have to waste precious seconds fumbling with the key to a mandatory trigger lock.
But what is an ordinary man to do when he finds that it is the government that is the perpetrator of violence and aggression against him and his fellow citizens? How do you resist the power of the state? Tens of millions of people were murdered by governments in the twentieth century. They were killed because of the language they spoke or the religion they practiced. Or because those in political control classified them as belonging to an “inferior race” or to a “social class” that marked them as an “enemy of the people.” Furthermore, the vast, vast majority of these tens of millions of victims were murdered while offering little or no resistance. Fear, terror, and a sense of complete powerlessness surely have been behind the ability of governments to treat their victims as unresisting lambs brought to the slaughter.
But part of the ability of government to commit these cruel and evil acts has been the inability of the victims to resist because they lacked arms for self-defense. However, when the intended victims have had even limited access to means of self-defense it has shocked governments and made them pay a price to continue with their brutal work.
The Power of Armed Resistance
Many have been surprised by the lack of resistance by the European Jews who were killed by the millions in the Nazi concentration and death camps during the Second World War. For the most part, with a seemingly peculiar fatalism, they calmly went to their deaths with bullets to the back of the head or in gas chambers. Yet when some of the people were able to gain access to weapons, they did resist, even when they knew the end was most likely be the same.The following is from historian John Toland’s biography of “Adolf Hitler,” in reference to the resistance of the Jews in the Warsaw Ghetto in 1943:
Of the 380,000 Jews crowded into the Warsaw ghetto, all but 70,000 had been deported to the killing centers in an operation devoid of resistance. By this time, however, those left behind had come to the realization that deportation meant death. With this in mind, Jewish political parties within the ghetto finally resolved their differences and banded together to resist further shipments with force . . .In the end, the Germans had to commit thousands of military personnel and in fact destroy an entire part of Warsaw to bring the Jewish ghetto resistance to an end.
“At three in the morning of April 9, 1943, more than 2000 Waffen SS infantryman—accompanied by tanks, flame throwers and dynamite squads—invaded the ghetto, expecting an easy conquest, only to be met by determined fire from 1500 fighters armed with weapons smuggled into the ghetto over a long period: several light machine guns, hand grenades, a hundred or so rifles and carbines, several hundred pistols and revolvers, and Molotov cocktails. Himmler had expected the action to take three days but by nightfall his forces had to withdraw.
“The one-sided battle continued day after day to the bewilderment of the SS commander, General Jürgen Stroop, who could not understand why ‘this trash and subhumanity’ refused to abandon a hopeless cause. He reported that, although his men had initially captured ‘considerable numbers of Jews, who are cowards by nature,’ it was becoming more and more difficult. ‘Over and over again new battle groups consisting of twenty or thirty Jewish men, accompanied by a corresponding number of women, kindled new resistance.’ The women, he noted, had the disconcerting habit of suddenly hurling grenades they had hidden in their bloomers . . .
“The Jews, he reported, remained in the burning buildings until the last possible moment before jumping from the upper stories to the street. ‘With their bones broken, they still tried to crawl across the street into buildings that had not yet been set on fire…. Despite the danger of being burned alive the Jews and bandits often preferred to return into the flames rather than risk being caught by us.’ … For exactly four weeks the little Jewish army had held off superior, well-armed forces until almost the last man was killed or wounded.”
What if not only the Jewish population but the majority of all the “undesirable” individuals and groups in Germany and the occupied countries of Europe had been armed, with the Nazi government unable to know who had weapons, what types, and with what quantity of ammunition? It would be an interesting study in World War II history to compare private gun ownership in various parts of Europe and the degree and intensity of resistance by the local people to German occupation.
Revolts Against Tyranny
In the early years of the Bolshevik takeover in Russia, there were numerous revolts by the peasantry against Communist policies to collectivize the land or seize their crops as in-kind taxes. What made this resistance possible for many years was the fact that in the countryside the vast majority of the rural population owned and knew how to use hunting rifles and other weapons of various kinds.Acquisition of firearms during the Second World War as part of the partisan movement against the German invasion of the Soviet Union enabled active, armed resistance by Lithuanian and Ukrainian nationalist guerrillas against Soviet reoccupation of their countries to continue in the forests of Lithuania and western Ukraine well into the early 1950s.
It is hard to imagine how the people of the 13 colonies could have ever obtained their independence from Great Britain at the end of the eighteenth century if the local population had not been “armed and dangerous.” It is worth recalling Patrick Henry’s words in arguing for resistance against British control before the king’s armed forces could disarm the colonists:
They tell us . . . that we are weak—unable to cope with so formidable an adversary. But when shall we be stronger? . . . Will it be when we are totally disarmed, and when a British guard shall be stationed in every house? … Three million people, armed in the holy cause of liberty . . . are invincible by any force which our enemy can send against us.”The taking up of arms is a last resort, not a first, against the intrusions and oppressions of government. Once started, revolutions and rebellions can have consequences no one can foretell, and final outcomes are sometimes worse than the grievance against which resistance was first offered. However, there are times, “in the course of human events,” when men must risk the final measure to preserve or restore the liberty that government threatens or has taken away.
The likelihood that government will feel secure in undertaking infringements on the freedoms of Americans would be diminished if it knew that any systematic invasion of people’s life, liberty, and property might meet armed resistance by both the victim and those in the surrounding areas who came to his aid because of the concern that their own liberty might be the next to be violated.
Though it may seem harsh and insensitive, when I read the advocates of gun control pointing to incidents of private acts of violence against children, I think to myself:
How many more tens of thousands of children were killed around the world in the last century by governments? And how many of those children, victims of government-armed violence, might have been saved if their families and neighbors had possessed the right to bear arms against political aggressors? How many children have been saved because their families have had weapons for self-defense against private violators of life and property? And how many could have been saved from private aggressors if more families had owned guns?
Guns and American Liberty
The argument that virtually all other “civilized” countries should neither prohibit nor severely restrict the ownership and the use of firearms in general—and handguns intimidate Americans. America has been a free and prosperous land precisely because of the fact that as a nation we have chosen to follow political and economic avenues different from those followed by other countries around the world.As a people, we have swum against the tide of collectivism, socialism, and welfare statism to a greater degree, for the most part, than have our western European cousins. As a result, in many areas of life, we have remained freer, especially in our market activities, than they. The fact that other peoples in other lands chose to follow foolish paths leading to disastrous outcomes does not mean that we should follow in their footsteps.
America was born in revolt against the ideas of the “old world”: the politics of monarchy, the economics of mercantilism, and the culture of hereditary class and caste. America heralded the politics of representative, constitutional government, the economics of the free market, and the culture of individualism under equality before the law. It made America great.
If in more recent times there has been an “American disease,” it has been our all-too-willing receptivity to the European virus of political paternalism, welfare redistribution, economic regulation and planning, and the passive acceptance of government control over social affairs.
We need not and indeed should not fall victim to one more of the European ailments: the disarming of the people under the dangerous notion that the private citizenry cannot be trusted and should not be allowed to have the means of self-defense against potential private and political aggressors in society. Let us stand apart once more and not fall prey to the false idea that somehow our European cousins are more enlightened or advanced than we on the matters of gun ownership and control. They are not.
Instead let us remember and stay loyal to the sentiment of James Madison, the father of the U.S. Constitution, who praised his fellow countrymen when he said, “Americans [have] the right and advantage of being armed—unlike citizens of other countries whose governments are afraid to trust the people with arms.”
Let us remain worthy of Madison’s confidence in the American people and defend the Second Amendment of the Constitution upon which part of that confidence was based.
Reprinted from the Heartland Institute.
Richard M. Ebeling
Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.
This article was originally published on FEE.org. Read the original article.
Friday, March 16, 2018
What Bill Gates Gets Wrong About Cryptocurrencies
What Bill Gates Gets Wrong About Cryptocurrencies
Luis Pablo de la Horra
Luis Pablo De La Horra holds a Bachelor’s in English and a Master’s in Finance. He writes for FEE, the Institute of Economic Affairs and Speakfreely.today.
In a Q&A session on Reddit last week, Microsoft’s founder Bill Gates accused cryptocurrencies of causing “deaths in a fairly direct way,” leading to headlines such as this: "Bill Gates says crypto-currencies cause deaths."
Gates was, of course, referring to the fact that cryptocurrencies facilitate the purchase of illegal substances on the black market which sometimes leads to drug-related deaths. He also raised concerns about the negative consequences of the anonymity feature of cryptocurrencies, namely money laundering, tax evasion, and terrorism funding.
As the creator of the most successful operating system in history, Bill Gates should know better than anyone that a piece of software (or, in the case of cryptocurrencies, a payment system based on a new technology) cannot be blamed for the use someone makes of it. Charging cryptocurrencies with drug-related deaths is comparable to accusing Windows of causing terrorism because terrorists are using Microsoft’s operating system to store documents on how to make bombs.
The War on Drugs
Leaving aside this comment, Bill Gates has a point: cryptocurrencies facilitate anonymous (pseudonymous, to be more precise) transactions, undermining the capacity of the State to enforce the law in relation to certain illegal activities. However, this isn’t necessarily a bad thing, at least in some cases.
Let us take the case of drugs. In the U.S., the War on Drugs initiated by President Nixon in the 1970s appears to have resulted in more harm than good. Besides a clear violation of personal freedom, prohibition has contributed to an increase in drug overdoses, strengthening at the same time the role of violent cartels in drug-producing countries.
From an economic perspective, the War on Drugs costs taxpayers around $51 billion annually. Since the onset of the War on Drugs in 1971, the U.S. government alone (excluding state and local government spending) has spent more than $1 trillion.
The drug war has also had a tremendous impact on prison policies. In the period of 1974–2014, the prison population grew by about 600 percent. Even though it is difficult to measure the exact impact of the War on Drugs on this spectacular growth, we can state with certainty that a large part of this increase is due to the drug war. To justify this assertion, here is a number: in 1974, 41,000 went to prison due to drug offenses; in 2014, multiply the previous number by 10. (These policies had a severe impact on minorities, particularly black and Hispanic Americans.)
If drug-trading using cryptocurrencies continues to grow, it could end up making government efforts to stop the consumption of illegal substances useless, leading to the end of the War on Drugs and paving the way for an eventual legalization. This might sound utopian, but legalization of marijuana also seemed unreachable a few years ago. Today, the sale and possession are legal in eight states and counting.
What's So Bad about Getting Around Government?
How about tax evasion? First of all, it is not clear that tax evasion is immoral per se, as Bill Gates seems to assume. For instance, if law established that taxpayers must pay 95 percent of their income in taxes, tax evasion would be ethically justified as a means of retaining the earnings that one has rightfully earned. In developed countries, the tax burden is sufficiently high to at least cast doubt about the unethicality of tax evasion.
Cryptocurrencies possess all the characteristics to become perfect tax havens: earnings are not taxed; anonymity is preserved; and operating with them doesn’t involve third parties, which implies that there is no intermediary through which government can address tax evasion issues in foreign countries.
Faced with the impossibility of collecting as much in taxes as they do today due to a potential widespread use of cryptocurrencies, governments might be compelled to reduce the heavy tax burden they currently impose on their citizens. This, in turn, would reduce the size of governments, expanding the scope of personal and economic freedom.
It is true that in other areas—terrorism, say—the ethics get even trickier. Cryptocurrencies could become a useful tool for those seeking to fund terrorist activities. On the other hand, they could also inhibit governmental mass surveillance programs (at least in relation to economic transactions), pushing governments to be more respectful towards privacy and efficient when it comes to targeting and dismantling security threats.
In any case, a cost-benefit analysis of the impact of cryptocurrencies should be undertaken. Perhaps then opponents of the technology would be forced to concede the potential benefits of cryptocurrencies.
Reprinted from Intellectual Takeout.
Luis Pablo de la Horra
Luis Pablo De La Horra holds a Bachelor’s in English and a Master’s in Finance. He writes for FEE, the Institute of Economic Affairs and Speakfreely.today.
This article was originally published on FEE.org. Read the original article.
Thursday, March 15, 2018
James Damore and the Fascist Slur
James Damore and the Fascist Slur
On February 17, 2018, the Freethinkers of Portland State University (PSU) held a panel discussion featuring such speakers as former Evergreen State biologist Heather E. Heying, PSU philosophy professor Peter Boghossian, writer Helen Pluckrose, and the infamous author of the Google memo, James Damore. This panel was entitled “We Need to Talk About Diversity.”
In defense of the memo, Heather Heying told the crowd, “James argues accurately that there are differences between men and women. This is a strange position to be in to be arguing for something so universally and widely accepted in biology.”
The clip begins with Heather E. Heying explaining how women and men are biologically different and ends with the protest. A female protester screams, in reference to Damore, “He is a piece of s***. That is not ok. Even the women in there have been brainwashed.”
A male protester adds, “Should not listen to fascism. It should not be tolerated in civil society. Nazis are not welcome in civil society.”
The female protester returns with, “F*** the police and power to the people.”
The firing of Damore and the dismissal of his lawsuit by the National Labor Board should have been enough to quiet his critics. Instead, Damore has since become a cultural sensation. In addition to being labeled a misogynist, he is accused, among other things, of being an alt-right hero and a fascist Nazi.
It is fully ironic for any group to lecture anyone about civil society when they are chanting violent epithets and shutting down a public discussion. But the larger concern of this protest is their likening of James Damore and the other panelists to fascists and Nazis.
According to Wikipedia,
The tragedy, of course, is for the rest of us. By calling James Damore a fascist, an important societal label is misappropriated into a political culture war. Suddenly, what should be a descriptor for violent political ideology becomes a cheapened slur for anyone who disagrees with left-leaning thought.
What is even more disturbing about this label is what happens if James Damore’s points are proven to have some validity. If James Damore is a fascist, does that make valid arguments fascist, too?
There are many social psychologists who either disagree with Damore or believe the presentation of his points was exaggerated. Among these names are Janet Hyde, Michael Wiederman, Cordelia Fine, and even Catherine Hakim who is referenced in his memo. It would be more fruitful for Damore’s opponents to reference these thinkers and their elevated ideas to refute his position. But doing so takes critical thinking, initiative, and effort.
We must learn as a society to rescue the conversation surrounding complex issues. Ideas need to be debated and not shut down. Not everyone who disagrees with us is a [fill-in-hated-group-here]. They may be wrong, of course, but shutting down an idea through a slur is never a healthy way to move a disagreement forward.
Jaye Sarah Davidson
Jaye Sarah Davidson is a graduate from Florida State University's Film School. She has made short films that have played all over the United States. She has worked as a producer and editor for commercials, music videos, and nonprofits. She is very excited to be a part of the Liberty movement.
In defense of the memo, Heather Heying told the crowd, “James argues accurately that there are differences between men and women. This is a strange position to be in to be arguing for something so universally and widely accepted in biology.”
The Heckler's Veto
A video clip of the event shows a planned student disruption. It includes a walkout and an attempt to shut down the panel’s PA system.
The clip begins with Heather E. Heying explaining how women and men are biologically different and ends with the protest. A female protester screams, in reference to Damore, “He is a piece of s***. That is not ok. Even the women in there have been brainwashed.”
A male protester adds, “Should not listen to fascism. It should not be tolerated in civil society. Nazis are not welcome in civil society.”
The female protester returns with, “F*** the police and power to the people.”
The firing of Damore and the dismissal of his lawsuit by the National Labor Board should have been enough to quiet his critics. Instead, Damore has since become a cultural sensation. In addition to being labeled a misogynist, he is accused, among other things, of being an alt-right hero and a fascist Nazi.
It is fully ironic for any group to lecture anyone about civil society when they are chanting violent epithets and shutting down a public discussion. But the larger concern of this protest is their likening of James Damore and the other panelists to fascists and Nazis.
According to Wikipedia,
“Fascism is a form of authoritarian nationalism, characterized by doctoral power, forcible suppression of opposition and control of industry and commerce, which came to prominence in early 20th-century Europe.”It should be safe to say that a free event at a public university put on by a student group is the opposite of an authoritarian state whose aim is to control the means of production through force. Yet, these facts do not seem readily transparent to college kids.
"You're All a Bunch of Nazis"
The ultimate problem with these critics is that they are not challenging Damore based on good arguments. Calling someone a Nazi is easy and cheap. If you liken Damore to an ideological movement that led to the death of over thirty million people, then you never have to confront his ideas intellectually.The tragedy, of course, is for the rest of us. By calling James Damore a fascist, an important societal label is misappropriated into a political culture war. Suddenly, what should be a descriptor for violent political ideology becomes a cheapened slur for anyone who disagrees with left-leaning thought.
What is even more disturbing about this label is what happens if James Damore’s points are proven to have some validity. If James Damore is a fascist, does that make valid arguments fascist, too?
There are many social psychologists who either disagree with Damore or believe the presentation of his points was exaggerated. Among these names are Janet Hyde, Michael Wiederman, Cordelia Fine, and even Catherine Hakim who is referenced in his memo. It would be more fruitful for Damore’s opponents to reference these thinkers and their elevated ideas to refute his position. But doing so takes critical thinking, initiative, and effort.
We must learn as a society to rescue the conversation surrounding complex issues. Ideas need to be debated and not shut down. Not everyone who disagrees with us is a [fill-in-hated-group-here]. They may be wrong, of course, but shutting down an idea through a slur is never a healthy way to move a disagreement forward.
Jaye Sarah Davidson
Jaye Sarah Davidson is a graduate from Florida State University's Film School. She has made short films that have played all over the United States. She has worked as a producer and editor for commercials, music videos, and nonprofits. She is very excited to be a part of the Liberty movement.
This article was originally published on FEE.org. Read the original article.
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