Price controls – both price ceilings and price floors – reduce the quantities of price-controlled goods and services that consumers actually get. Forcing the money price of a good or service down with a government-imposed price ceiling reduces the amount of this good or service that consumers actually get by reducing the quantity supplied (from what that quantity would be were the money price not forced downward). Forcing the money price of a good or service up with a government-imposed price floor reduces the amount of this good or service that consumers actually get by reducing the quantity demanded (from what that quantity would be were the money price not forced upward). In both cases, the government intervention reduces economic output.
Minimum wages, statutory prohibitions on so-called “price gouging,” and other price controls reflect irrational mysticism. These controls are all premised on the notion that by forcibly changing the nominal reported value of a good or service – that is, by forcibly changing the name of the value – the real value of the good or service will change to correspond to the dictated name. It’s a notion no less batty than is the belief, say, that the New York Times can actually change the number of people killed in a terrorist attack by changing the name of the number. Yet who believes that if, say, 18 people are killed in a terrorist attack that the number of dead people will miraculously be reduced by three if the New York Times reports that “15 people were killed in a terrorist attack”? The answer, of course, is no one. Indeed, anyone who would suppose that reality is changed simply when newspaper reports of it are changed is recognized as being too far detached from reality to take seriously.
Those who support price controls are just as detached from reality. The market-determined price of a good or service is as accurate a report as is possible of the value of each unit of a good or service. This value will not move up or down simply if the government orders it to move up or down.
[…]
None of this matters to proponents of price controls. Such proponents are satisfied with the fact that the names of the values of good or services are changed in ways that please the eye and ear of the economically illiterate. If it is now possible to say that the highest name of the value of a gallon of gasoline is $1.00, then these proponents are content to believe that the real value is indeed $1.00. If it is now possible to say that the lowest name of the value of an hour of low-skilled labor is $7.25, then these proponents are content to believe that the real value is indeed $7.25.
It’s a foolish superstition. It is, however, a superstition that is very widespread, especially among those who today fancy themselves to be immune to superstitions.
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2017-06-19.
July 10, 2019
QotD: Price controls
July 9, 2019
The main economic damage of Brexit is the extended period of uncertainty
At the Continental Telegraph, Tim Worstall interprets a recent Bank of England recommendation to really mean “do Brexit” and “get it over with”:
“The bank of England. London.”by Demetrio Neri_1959 is licensed under CC BY-NC-SA 2.0
To pull that out of the jargon, when every bugger’s running around screaming because they don’t know what’s going to happen then things are dark for the long term future of the economy. Just because the screaming and the running around means no bugger is doing anything else.
And here’s the thing – that lookin’ dark bit gets worse the longer the uncertainty lasts. To the point that the effect just of the not knowing becomes greater than the possible effect of any particular event in that universe of possibilities. It really is true that continuing to delay Brexit will, at some point, become worse than any particular Brexit outcome.
Thus get on with it, get it done. And given that we’ll get something of a bloody revolution if the Remainers win – we Brits being really quite keen on this democracy idea, we get to choose not they – then the getting on with it will have to be to leave. Yesterday would have been good, tomorrow if that’s not possible.
QotD: Tariffs
Over and above the general point that we don’t want to limit trade nor imports there’s another worry with tariffs and trade wars. Which is what the International Monetary Fund is complaining about. The imposition of more tariffs is a disruption to that global economy. One that is going to reduce growth, the very thing we all desire.
Tim Worstall, “IMF Says The U.S. And China Trade Tariffs Are A Major Risk To World Growth”, Seeking Alpha, 2019-06-07.
July 7, 2019
QotD: Speaking for the dead
Ask the men and women who stood on top of the Trade Center. Ask them and they will tell you: pass this amendment.
Unlike Congressman Cunningham, I wouldn’t presume to speak for those who died atop the World Trade Center. For one thing, citizens of more than 50 foreign countries, from Argentina to Zimbabwe, were killed on 9/11. Of the remainder, maybe some would be in favor of a flag-burning amendment; and maybe some would think that criminalizing disrespect for national symbols is unworthy of a free society. And maybe others would roll their eyes and say that, granted it’s been clear since about October 2001 that the Federal legislature has nothing useful to contribute to the war on terror and its hacks and poseurs prefer to busy themselves with a lot of irrelevant grandstanding with a side order of fries, they could at least quit dragging us into it.
And maybe a few would feel as many of my correspondents did last week about the ridiculous complaints of “desecration” of the Koran by US guards at Guantanamo – that, in the words of one reader, “it’s not possible to ‘torture’ an inanimate object”.
That alone is a perfectly good reason to object to a law forbidding the “desecration” of the flag. For my own part, I believe that, if someone wishes to burn a flag, he should be free to do so. In the same way, if Democrat Senators want to make speeches comparing the US military to Nazis and the Khmer Rouge, they should be free to do so. It’s always useful to know what people really believe.
Mark Steyn, “The Advantage of Knowing What People Really Think”, SteynOnline, 2017-06-14 (originally published in The Chicago Sun-Times, 2005-06-26).
July 4, 2019
Is there a country with which Justin Trudeau hasn’t messed up Canada’s relationship?
Ted Campbell responds at some length to a Globe and Mail article by Doug Saunders, outlining the degradation of diplomatic relations with almost all our allies and trading partners since Justin Trudeau became PM.
The Globe and Mail‘s award-winning international affairs correspondent Doug Saunders, someone with whom I (almost equally) often disagree and agree, has penned an insightful piece in the Good Grey Globe in which he says that “Suddenly, Canada finds itself almost alone in the world, with a Liberal government realizing that its optimistic foreign policy no longer entirely makes sense … [but, he concludes] … Even if the current crisis in liberal democracy proves temporary and short-lived, we know that it can recur – and likely will. If the institutions of 1945 no longer work and the doctrines of 2015 have failed to have an effect, we should develop new ones that will keep Canada connected to the better parts of the world for the rest of the century.”
[…]“After the Second World War,” Mr Saunders writes, “Canada gained a few more foreign-policy outlets. Canada played a large role in creating the institutions that governed the postwar peace: the United Nations and its various organizations; NATO; the global trade body that became the World Trade Organization; the Bretton Woods institutions, including the International Monetary Fund and the World Bank. Canada was decisive in the international agreement that authorized the future creation of the twin states of Israel and Palestine, giving it a role in the Middle East that expanded with its creation of the institution of peacekeeping after the Suez Crisis in 1956 … [but this really is a silly statement, albeit one that too many Canadians believe to be true. Canada didn’t create the “institution of peacekeeping” in 1956. It was already there, in the United Nation’s case since Ralph Bunch (USA) and Sir Brian Urquhart (UK) created it in 1948 and it had been around since, at least, Woodrow Wilson’s 14 Points speech in 1918, but it is now part of the Laurentian Elite‘s quite dishonest revisions of Mike Pearson’s sterling legacy as a diplomat and politician] … And, starting in the 1950s, Canada became a player and a spender in the new field of foreign aid and development. Under both Liberal and Progressive Conservative governments, Canada used those tools to play a small but well-regarded place in the liberal-democratic order – and to slowly but profitably build its trade and economic relations.”
[…]
I agree with Doug Saunders about the sources of Canada’s current weakness. He neglected to mention the root cause: Pierre Trudeau explicitly rejected, in the late 1960s, the “St Laurent Doctrine” and replaced it with a social “culture of entitlement” which meant that our place in the world had to be sacrificed on the altar of a reinforced social safety net. I agree that Donald J Trump is the key to our and the West’s current angst and confusion, not Vladimir Putin, Xi Jinping or Arab terrorists, all of whom are easier to understand, but I would argue that we would be much better placed to cope with president trump and the 21st century had we not abandoned our role as a leading middle power circa 1970. I have reservations about all three of Mr Saunder’s prescriptions:
- I’m not sure another G-N, not even a “committee to save the world” is a really good idea;
- I am nervous about interfering in the internal affairs of other countries ~ think about “do unto others” and all that; and
- I really doubt that Canadians are ready to spend what’s needed on our defence and, I suspect, they will not be until it is (almost) too late.
Like Mr Saunders, Mr Lang and Professor Paris, I, too, want to save the liberal world order and Canada’s place in it; I’m just not sure that any of the proposed solutions offered by Doug Saunders, by Eugene Lang or even by Professor Roland Paris are going to be enough. I think we need less formality and fewer organizations in international actions and a lot more ad hocery. I hope that we will have new, adult leadership here in Canada in the fall of 2019 and I hope that a new, grownup prime minister will begin, quickly, to mend relations with Australia, India, Japan and the Philippines and other Asian nations, to shore up our relations with Europe and, especially, with Iceland, the Netherlands, Norway, Switzerland and UK. I also hope Canada will open new, more productive dialogues with Africa, the Caribbean and Latin America and with Iran, Russia and China, also. I am convinced that Professor Stein is correct and we must have an “interests-based,” even a selfish suite of foreign, defence, immigration and trade policies. We should not go about looking for enemies, but we must understand that we have precious few friends and, for now, we cannot count on America to be one of them. America, Australia and Britain, China, Denmark and India, Japan, Mexico and the Philippines, and Singapore and Senegal, too, will all act in pursuit of their own interests; Canada needs to be willing and able to do the same and to work with them, even with Donald Trump’s America and Xi Jinping’s China and Vladimir Putin’s Russia when our interests converge and, politely, stand aside when they diverge. The G7 and G20 and a proposed new G9 are all harmless, but also, largely useless, talking shops. Both diplomacy and foreign affairs must be conducted on a case-by-case, country-by-country, issue-by-issue and interest-by-interest basis and diplomacy and foreign affairs can only be conducted with positive effect when Canada is respected for both its examples and values (soft power) and for its hard, economic and military power, too.
Thus, the first step in doing our part to “save the world” is probably the one that most Canadians will have near the bottom of their priority list: rebuilding Canada’s military ~ which must start, after a lot of the fat has been trimmed from a morbidly obese military command and control (C²) superstructure, with steadily growing the defence budget … and that cannot happen until the economy is firing on all cylinders, including energy exports to the world.
June 28, 2019
What does £1 trillion buy you?
Not much, apparently:
Tory MPs have been told by CCHQ to share this graphic boasting about their new commitment to make the UK carbon-neutral by 2050. No other major country has committed to the pledge although Theresa May is planning a desperate attempt at the G20 to talk other leaders into it. The fact that developed countries going ‘net zero’ simply means they’ll outsource all their emissions to the developing world instead seems to be completely lost on her…
The pledge will cost the UK at least £1 trillion, much of which will be borne by individuals and businesses rather than the exchequer, we don’t know the true cost as May hasn’t even done a proper Treasury analysis. Eco-fanatics love to talk about the burden this generation is placing on children and grandchildren. For a fleeting PR stunt Tory MPs are being told to boast about piling on mountains of economic harm for future generations by a leader who won’t be in office to deal with the consequences…
This is exactly the sort of virtue signalling that Justin Trudeau indulges in … I imagine he’s quite miffed that Theresa May got there first.
June 27, 2019
“Raise our taxes!” cried the hypocritical virtue signallers
We’ve been over this ground before. Some very rich people are getting fawning media coverage for their “selfless”, “virtuous” demand that the government raise their taxes. Except they’re far from selfless: they’re demanding that other people be forced to pay more tax, but they’re very much not putting their own money where their bleating mouths are. Most governments are happy to accept more money from you than your formal tax liabilities:
- The Canadian federal government
- The British government
- The US federal government
- The province of Ontario
- The City of Toronto
… are all very eager to accept your contributions. But most people don’t take advantage of this mechanism, especially the ones garnering headlines for their “altruism”. Because they’re virtue signalling, and almost certainly don’t actually want to be taxed more. Don’t believe what people merely say they want, watch what they actually do (economists call this “revealed preference“). Hypocrites, the lot of them.
June 26, 2019
What is the problem that a wealth tax is designed to solve?
Andrew Coyne asks the obvious question about the sudden keen interest in imposing wealth taxes:
“washdc040208-02” by carencey is licensed under CC BY-NC-SA 2.0
It is noteworthy how the debate on inequality has shifted in recent years: from the problem of poverty, whose evils are obvious, to the “problem” of great wealth; from the gap between the poor and the rest of us, to the gap between the rest of us and the rich, or indeed between the rich and the very rich.
But it is not obvious why it is wrong, in itself, that a small number of people should get stinking rich. It is clearly objectionable if they did so by illicit or unethical means — but then it is the means itself, not the wealth, to which we object. And it would be in poor taste, at the least, if they spent it all on themselves. But that is not how the great fortunes are typically disposed of — it’s physically impossible to spend more than a small fraction of it.
Perhaps the argument is less that the rich are too rich than it is that the government is too poor. You can make a case that government should spend more on certain things, especially in America. It doesn’t follow that you need to raise taxes to do so. A lot of good new spending could be funded by cutting bad old spending.
Suppose there were a case for raising taxes. Are wealth taxes the way to go? Wealth is, after all, merely the accumulation of past income — and we already tax income. If rich people are exploiting loopholes to avoid paying tax on their incomes, by all means close the loopholes. But the case for taxing income twice seems obscure.
Yes, we already have a kind of wealth tax, in the form of municipal property taxes — and they’re a notorious mess. They conform to none of the usual principles of good taxation, being neither simple, nor efficient, nor fair.
Why unfair? The bedrock criteria of tax fairness is supposed to be ability to pay. That’s only uncertainly related to wealth. Suppose the value of your house shoots up. Congrats: suddenly you’re wealthy. But your income is unchanged. And it’s income you need, or more accurately cash, to pay your taxes. It’s not clear why you should pay more in tax than someone with the same income, but a cheaper house.
June 22, 2019
The African Continental Free Trade Area (AfCFTA)
Alexander Hammond explains why a free trade deal among many African nations is good news for the United States and other non-African nations:
2018 map showing the African countries involved in the African Continental Free Trade Agreement.
Dark green indicates ratification, medium green are countries that signed in March 2018, and light green are countries that signed in July 2018 but did not ratify the agreement immediately.
Map by Themightyquill at Wikimedia Commons.
The poorest continent in the world is about to lend a hand to the United States. Last week, Africa implemented the world’s largest free-trade area, and that’s great news for American foreign policy. Back in December, U.S. National Security Advisor John Bolton unveiled a plan for the Trump administration’s titled the “Africa Strategy.”
The plan is simple — the United States will give less aid to Africa, instead prioritizing enhancing America’s “economic ties with the region.” Now that many African nations have unified under a single market, trading with the continent will become far easier — and a trade deal between the United States and Africa would help out everyone involved.
Streamlining Trade
The African Continental Free Trade Area (AfCFTA) trade deal officially came into force on May 30, a month after it reached the twenty-two-nation threshold needed to do so. Now, tariffs on 90 percent of the goods traded among AfCFTA member states will be removed — a move that, according to the UN, will boost intra-African trade by 52 percent in only a few years.
Given the United States’ new plans for the continent, the AfCFTA’s member states aren’t the only economies that will reap the benefits of an African single market.
A key component of the Trump administration’s Africa Strategy is to advance “U.S. trade and commercial ties” with Africa by creating “modern comprehensive trade agreements.” A single African market will be a far simpler trade partner for America. Now, only one set of trade deals will need to be negotiated with the AfCFTA — as opposed to fifty-five intricately-crafted trade deals with each small African economy. The U.S. Trade Representative has even released a report noting how time-consuming and costly it is to negotiate trade deals with each African nation. Because trade deals are long and expensive processes, creating a solitary trade deal with the AfCFTA will keep more money in the U.S. government’s purse.
June 20, 2019
The Centre for International Governance Innovation and the Transatlantic Commission on Elections Integrity for the Alliance of Democracies Federation
Did you read that headline? I certainly didn’t. And I wrote copy’n’pasted it. Have you ever heard of either of those organizational entities? I hadn’t until I read Colby Cosh’s article.
A wire story by The Canadian Press’s Joan Bryden arrives over the transom. Let me quote briefly from Bryden’s copy, as an exercise in describing how news sausage is sometimes ground. “An international report says Canada has taken ‘commendable’ steps to safeguard this fall’s federal election from foreign interference. But the report says this country needs to do more to regulate social media giants and should impose ‘major sanctions’ on those that fail to control fake news and other forms of disinformation on their platforms.”
An international report says Canada is vulnerable to fake news! Food for thought. But as I was mulling over this dread warning about sensationalistic information from questionable sources, a skeptical question came to mind: what is “an international report” exactly?
Bryden goes on to tell us, sort of: “The report,” she writes, “is part of a series of assessments conducted by the Centre for International Governance Innovation and the Transatlantic Commission on Elections Integrity for the Alliance of Democracies Federation.” Show of hands: how many of you found it possible to read that sentence without falling asleep? Don’t worry, you weren’t meant to read it — just to absorb its general miasma of seriousness.
Ottawans will know the Centre for International Governance Innovation: it is, essentially, a big pile of Jim Balsillie’s money, and ours. There is a CIGI Campus in Waterloo, Ont., built by Balsillie with matching funds from the provincial and federal governments, that contains the CIGI think-tank and collects rent from the U of W and Wilfrid Laurier U. The Transatlantic Commission on Election Integrity is another think-tank, an international one established amidst post-Trump panic by a range of institutions that includes Microsoft, BMW and other global companies and nonprofits.
Bill Gates didn’t write the “international report.” The report says it was “submitted to TCEI by Allan Rock, TCEI member.” Mr. Rock was, you may recall, a key figure in Jean Chrétien’s cabinet and then president of the University of Ottawa. He “submitted” the report … but did he write it? What the text says is that research and writing done by two University of Ottawa law students “were essential to the preparation of this report … Allan Rock expresses his sincere appreciation for their excellent work.”
So, yeah: it’s a jeremiad against fake news that is pretty much just a long op-ed written on contract by two underpaid young Canadians. After a few impressive-sounding (and foreign-funded) brand names are tacked on, this ends up in your newspaper as a distinguished “international report” justifying draconian regulation of social media.
Otto von Bismarck talks with the captive Napoleon III after the Battle of Sedan in 1870.
The “news sausage” comment is a reference to a quote frequently (but apparently mistakenly) attributed to German Chancellor Otto von Bismarck, that laws and sausages are things you should never watch being made.
June 14, 2019
Eliminating the trade deficit
A few weeks back, Robert Higgs explained why President Trump’s concerns about the trade deficit are, at best, misplaced and how “fixing” it would lead to a much worse situation:
Donald Trump addresses a rally in Nashville, TN in March 2017.
Photo released by the Office of the President of the United States via Wikimedia Commons.
So, let’s consider the president’s trade policy in, as it were, its very best light. Suppose, then, that the government succeeded in eliminating the trade deficit entirely. Residents of the USA would continue to sell huge quantities of goods to foreigners but buy nothing at all from foreign sellers. The trade deficit would be not only diminished but wiped out and replaced by a huge trade surplus. Trumpian triumph!
Note, however, that such an outcome would be impossible to sustain for long even if it could be attained (which in fact it could not). Foreigners would be spending huge quantities of dollars to purchase goods from Americans, but they would have no means of earning dollars because Americans would not be buying anything from them. Foreigners could continue to make such purchases only if they received dollar credits from foreigners. But lenders would have no incentive to lend dollars to the Chinese, say, when they knew that the Chinese would have no ability to repay the loans because they would have no means of earning dollars in the future by sales to Americans. So a big U.S. trade surplus requires that totally implausible assumptions be made about international transactions in general and international lending in particular.
But apart from such practical difficulties and impossibilities, a Trumpian trade triumph, even if it could be achieved, would be a horrible objective to attain. Americans would be employing labor services, natural resources, and other productive inputs to produce goods and shipping them to foreign buyers. In exchange, they would receive nothing but bank account balances. Such a deal! Surrendering huge volumes of valuable goods and receiving in return larger numerals in people’s bank account statements, more dollars that could not be used to purchase anything, no matter how important or desirable, from abroad — all such purchases having somehow been stopped by a harebrained government and the economic ignoramus in charge of it.
“[P]eople aren’t really arguing about the existence or logic of the Laffer Curve they just hate the empirical answer”
The Laffer Curve is one of those ideas that drives some people mad, because if it’s true (and empirically it appears to hold most of the time), it militates against raising taxes on the wealthy:
That working out where the peak of the Laffer Curve is is difficult is entirely true. That it’s going to be different for each tax in each different legal and societal set up is also true. But that doesn’t excuse drivel like this:
The ends of the curve are basic enough – at a tax rate of 0, the government will raise $0 in revenue, and at a tax rate of 100, the government will still raise $0 in revenue because people won’t work without take-home pay. At the extremes, the Laffer curve is correct, but that doesn’t tell us anything about the points in the middle. Laffer’s idea, however, was that a “tipping point” existed on the continuum in between, where people’s incentives to work and invest decreased because tax rates were too onerous.
If the end points are true – something admitted – then it’s a matter of simple, pure, and true logic that there are one or more revenue maximising points inbetween. For it’s simple enough for us to observe that there are tax rates which do raise revenue. And if we have tax rates which raise no revenue and tax rates which raise some then there are those one or more rates which raise the most.
So, please, can we stop the drivel?
Sure, Art Laffer himself is incorrect when stating that all tax cuts always pay for themselves through increased economic growth. But that doesn’t invalidate the logic of the curve, only the use to which it is put.
Fifty-four percent. That’s approximately it: the tax maximizing point on the curve when you include all of the taxes on income (including the things they often don’t call taxes — social security, unemployment insurance, and other non-tax taxes — but which are still withheld from paycheques or payable at tax deadline time). Go much above that and the government’s take begins to decrease, defeating the purpose of raising the tax rate in the first place. (Unless the real purpose is just to harm the rich … which might be true in a number of cases.)
June 12, 2019
The fantastic notion that Donald Trump is “at heart really a free trader”
Guest-posting at Catallaxy Files, Don Boudreaux explodes the farcical notion that President Trump is using protectionist tools with an eventual free trade goal:
Donald Trump addresses a rally in Nashville, TN in March 2017.
Photo released by the Office of the President of the United States via Wikimedia Commons.
In the case of Donald Trump, the claim that he is at heart really a free trader who raises tariffs today with the aim of bringing about lower tariffs tomorrow — and all because he is committed to achieving free traders’ ideal goal of maximum possible expansion of the international division of labor — is especially preposterous.
Trump has pontificated on trade for decades, and every word out of his mouth clearly reveals a man who knows nothing about the economics of trade and who is as clichéd an economic nationalist as can be imagined.
Behold this line from a 1990 interview he did in Playboy: “The Japanese double-screw the US, a real trick: First they take all our money with their consumer goods, then they put it back in buying all of Manhattan. So either way, we lose.”
Let’s examine this unalloyed gem of economic witlessness.
Overlooking Trump’s outrageous exaggerations, such as his claim that the Japanese buy up “all” of Manhattan, we start by stating an obvious truth: the voluntary purchase of a good is not a transaction in which the buyer is “screwed” or has his or her money “taken.” Instead, the buyer’s money is voluntarily spent. While every person of good sense sees a foreign seller who makes attractive offers to domestic buyers as someone who improves the well-being of each buyer who accepts the offer, Trump sees this seller as a con artist or thief.
And so Trump ignores the value to Americans of the imports we purchase. In typical mercantilist fashion, he believes that the ultimate purpose of trade is to send out as many exports as possible in exchange for as much money as possible — money that in Trump’s ideal world is never spent on imports. His view on this matter is even more bizarre than that of ordinary mercantilists. For Trump, imports are not merely costs that we endure in order to export, they are actual losses. (Although it goes without saying, I’ll say it nevertheless: Trump does not understand that imports are benefits and that exports are costs.)
Furthermore, by describing the money spent on imports as “our money,” Trump reveals his belief that money earned by each American does not belong to that individual but, instead, to the collective.
Also in the fashion of the typical mercantilist, the presumption is that the nation is akin to a gigantic household whose members all share in and collectively own its money. And just as Dad justly superintends little Emma’s and Bobby’s spending to ensure that they don’t dissipate the family’s wealth, Uncle Sam must superintend his subjects’ spending in order to ensure that we don’t dissipate the nation’s wealth.
One other flaw in the above quotation from Trump’s Playboy interview is notable: he believes that foreign investments in America inflict losses on us. He doesn’t pause to consider that when we Americans sell assets to foreigners we regain ownership of some of the dollars that Trump, in his previous sentence, lamented are lost to Americans when we bought imports.
Nor does he ask what the American sellers of these assets do with the sales proceeds. Perhaps we invest some or even all of them. And if so, perhaps these new American investments will prove to be more profitable than are the investments made in America by foreigners. (By the way, contrary to another mercantilist myth, Americans are not made better off when foreigners’ investments in America fail. Quite the contrary.)
An even deeper error infects Trump’s “understanding” of foreign investment: he implicitly — and, once again, like all mercantilists — assumes that the amount of capital in the world is fixed. Only then would it be true that each American sale of assets to foreigners necessarily reduces Americans’ net financial worth (which is presumably what Trump means when he says that “we lose” when the Japanese purchase Manhattan real estate).
June 9, 2019
People who call for higher taxes are almost always hypocrites
And the numbers prove it:
There are many people who tell us that taxation in the UK is too low. Just think of all the gorgeously bureaucratic things that could be done if only the government had more money! Then there’s the number of people who actually do pay more tax on the basis that they think the government should have more money. The second being a rather smaller number than the first.
Which does bring us to that basic point that economists do insist upon making. Revealed preferences are a much better guide to what people do in fact believe than are expressed. Or, as folk wisdom has it, talk is cheap. That many shout that taxes should be higher – usually to insist that them over there should be taxed more – is interesting and amusing. But the actual number of people who really believe taxes should be higher is the number of people who voluntarily offer up more of their own hard earned to the government.
Which means that, according to the aggregate views and actions of the population of Britain taxes last year were too low by exactly the amount of £11,069. Everyone else is just virtue signalling:
Donations to the Treasury have dwindled in recent years, however, even as the country’s debt remains relatively high. There were just 14 donations and bequests to reduce the national debt in the 2018-19 tax year, totalling £11,069, the UK Debt Management Office said.
That is the revealed preference of us all in aggregate.
It’s not just the UK where the number of people demanding higher taxes don’t actually put their own money where their mouths are — it’s true in Norway, the USA, and even the City of Toronto.
For ultra generous Canadians, Her Majesty will happily accept your donations here. To prove that you’re even more devoted to the challenge, you can even forego the tax credit, too!
June 7, 2019
QotD: Ruling France
De Gaulle, with his Fifth Republic, appeared to have settled the ancient argument between the monarchists and the republicans by creating a monarchy and calling it a republic. But the presidents of that republic — de Gaulle, Pompidou, Giscard d’Estaing, Mitterand, Chirac, Sarkozy, Hollande — have been a downward sequence. Each was at least slightly, and sometimes sharply, less talented than his predecessor.
In 2017, in utter exasperation, France embraced a 39-year old former banker and senior financial civil servant who had no more sought elective office than had Donald Trump before running for president, Emmanuel Macron. He achieved the office not by gaining control of a political party; French political parties are very fluid and rise and disappear and change their names every few years, but by standing as an independent and setting up a new party of rank political amateurs as legislators. It was magnificent in the country of Jean-Jacques Rousseau and other triumphant theorists. It ran on a euphoric platform: a green revolution, lower taxes, a better social benefit system, completed unification of Europe, stronger armed forces, everything that was desirable and the quick elimination of all that was not.
The predictable happened and Macron is now diminished by the incoherent rioting every weekend of mobs of angry bourgeois crabbing about taxes, reinforced by outright hooligans, all wearing the silly yellow vests all French drivers are required to have in their automobiles so they can put them on to signify an emergency. It is that splendid French combination of the perfect goal and the absurd result.
Conrad Black, “What’s the Matter With Europe?”, New English Review, 2019-05-06.
