It’s amazing to me how many people think that voting to have government take money by force through taxes to give money to poor people is compassion. Helping poor and suffering people is compassion. Voting for our government to use guns to give money to help poor and suffering people is immoral, self righteous, bullying laziness. People need to be fed, medicated, educated clothed, and sheltered, and if we’re compassionate we’ll help them, but you get no moral credit for forcing other people to do what you think is right. There is great joy in helping people, but no joy in doing it at gun point.
Penn Jillette, God No!: Signs You May Already Be an Atheist and Other Magical Tales, 2011
March 23, 2012
QotD: Compassion
March 21, 2012
This is why Paul Ryan’s budget proposals will go nowhere
It’s because he’s not only requiring the middle classes to take a hit for the team, but he’s also trying to get rid of all the custom-crafted deductions, loopholes, shelters, and special favours in the tax code. Middle class voters have been sending their elected representatives to Washington to add to the special tax “tweaks” that disproportionally benefit the middle class. That’s how politicians ensure their re-election chances.
Unveiling his new budget proposal, Paul Ryan once again reminds us that he is one of the few men in Washington with guts and brains operating in harmony. His budget asks the big question in American politics: What is the middle class willing to give up in order to save the country?
I am afraid that the answer will be: Not very much.
[. . .]
The reaction to Ryan’s tax plan will be the truly telling thing. He proposes to create two relatively low tax brackets but to do so in a way that achieves revenue neutrality by eliminating most deductions and exclusions. Almost certainly this will mean reducing or eliminating the mortgage-interest deduction, deductions for state and local taxes, and deductions for charitable giving. (Ramesh’s beloved child tax credit probably will survive, unfortunately.) The Committee to Reinflate the Bubble will fight tooth and talon to defend the mortgage-interest deduction, and they’ll have a great many middle-class homeowners behind them.
H/T to Kathy Shaidle for the link.
Update: Nick Gillespie thinks that the Ryan budget proposal is merely an echo of Obama’s plan, not a serious attempt to get the government’s finances in order:
In brief, the Ryan plan is not as bad as [President Obama’s] budget, which wants to spend $3.8 trillion in FY2013 and envisions spending $5.8 trillion in FY2022. Over the next 10 years, Obama assumes that federal spending would amount to 22.5 percent of GDP while revenues would average just 19.2 percent of GDP. That ain’t no way to run a country.
In this sense, Ryan’s plan is slightly better but still doesn’t pass the laugh test. He would spend $3.5 trillion in 2013 and $4.9 trillion in 2022 (all figures in the post are in current dollars unless otherwise noted). Spending as an average of GDP would average 20 percent of GDP and revenue would amount to just 18.3 percent.
[. . .]
Yet Ryan’s plan is weak tea. Here we are, years into a governmental deficit situation that shows no sign of ending. How is it that Ryan and the Republican leadership cannot even dream of balancing a budget over 10 years’ time? All of the discussion of reforming entitlements and the tax code and everything else is really great and necessary — I mean that sincerely — but when you cannot envision a way of reducing government spending after a decade-plus of an unrestrained spending binge, then you are not serious about cutting government. If Milton Friedman was right that spending is the proper measure of the government’s size and scope in everybody’s life, then the establishment GOP is signaling what we knew all along: They are simply an echo of the Democratic Party.
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March 12, 2012
QotD: Corporate income tax rates
If you assume that there’s no behavioural response, then each percentage point added to the federal CIT will generate roughly $2b in new revenues. So you’d conclude that the January 1, 2012 reduction in the CIT rate from 16.5% to 15% would reduce revenues by about $3b, and increasing the federal rate from 16.5% back to (say) 24% would increase CIT revenues by some $15b — almost one per cent of GDP.
This is the the sort of answer ‘static analysis’ gives. In a world in which multinationals file 57,000-page tax returns, one can only marvel at the faith in human nature among those who would make policy based on the belief that the only behavioural change on the part of corporations to an increase in CIT rates will be to put larger numbers on the cheques they send to the Receiver-General.
Stephen Gordon, “How much new revenue will be generated by an increase in federal corporate taxes?”, Worthwhile Canadian Initiative, 2012-03-11
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March 10, 2012
Canadian Conservatives: “You are not that party”
Andrew Coyne’s presentation to the Manning Centre conference in Ottawa:
What I believe in are a set of principles having to do with the freedom of the individual, the usefulness but not infallibility of markets, and the legitimate but limited role of the state. There are, in brief, a few things we need government to do, based on well-established criteria on which there is a high degree of expert consensus. The task is simply to get government to stick to those things, rather than waste scarce resources on things that could be done as well or better by other means: that is, government should only do what only government can do.
As I say, these ideas are not novel, or controversial. Indeed, you would find support for them, to a greater or lesser degree, across the political spectrum.
Nevertheless, there was a party, once, that believed in these things, to a somewhat greater extent than the other parties. That party called itself conservative, whether with a small or a large C, so I suppose you could call the things it believed conservatism. But you are no longer that party.
For example, that party favoured balanced budgets. But you are not that party. In fact, you boast of how your decision to add $150-billion to the national debt saved the economy.
That party favoured cutting or at least controlling spending, after the massive spree of the Liberals’ last years. But you are not that party. In fact, you boast of how you have increased spending by 7% per year — $37-billion in one year!
That party favoured a simpler, flatter tax system, that left people free to decide how to spend, save or invest their money for themselves. But you are not that party. In fact, you boast of the many gimmicks and gew-gaws with which you have festooned the tax code.
That party favoured abolishing corporate welfare. But you are not that party. In fact you boast of the handouts you make, often accompanied by ministers or indeed MPs bearing outsized novelty cheques. In some cases, you even put the Conservative logo on them.
The story of the last decade is how the rock-ribbed small-c conservatives of the old Reform Party were tamed, neutered, and blinkered into becoming a blue-painted Liberal Party. It worked, in the sense of getting their hands on the levers of power, but their souls were tainted, corrupted, and eventually disposed of in the process.
March 4, 2012
Passenger rail as the ultimate political luxury good?
A post at Coyote Blog from last month looks at the eye-popping financial arrangements keeping the New Mexico “Railrunner” passenger service in operation:
Of course, as is typical, the Republic article had absolutely no information on costs or revenues, as for some reason the media has adopted an attitude that such things don’t matter for rail projects — all that matters is finding a few people to interview who “like it.” So I attempted to run some numbers based on some guesses from other similar rail lines, and made an educated guess that it had revenues of about $1.8 million and operating costs of at least $20 million, excluding capital charges. I got a lot of grief for making up numbers — surely it could not be that bad. Hang on for a few paragraphs, because we are going to see that its actually worse.
The equipment used in the New Mexico Railrunner operation looks remarkably similar to what GO Transit runs in the GTA:
Click to see original image at Coyote Blog
Anyway, I got interested in checking back on the line to see how it was doing. I actually respected them somewhat for not running mid-day trains that would lose money, but my guess is that only running a few trains a day made the initial capital costs of the line unsustainable. After all, high fixed cost projects like rail require that one run the hell out of them to cover the original capital costs.
As it turns out, I no longer have to guess at revenues and expenses, they now seem to have crept into the public domain. Here is a recent article from the Albuquerque Journal. Initially, my eye was attracted to an excerpt that said the line was $4 million in the black.
[. . .]
Now it looks like taxes are covering over half the rail’s costs. But this implies that perhaps $10 million might be coming from users, right? Nope, keep reading all the way down to paragraph 11
The Rail Runner collects about $3.2 million a year in fares and has an annual operating budget of about $23.6 million. That does not include about $41.7 million a year in debt service on the bonds — a figure that include eventual balloon payments.
So it turns out that I was actually pretty close, particularly since my guess was four years ago and they have had some ridership increases and fare increases since.
At the end of the day, riders are paying $3.2 million of the total $65.3 million annual cost. Again, I repeat my reaction from four years ago to hearing that riders really loved the train. Of course they do — taxpayers (read: non-riders) are subsidizing 95.1% of the service they get. I wonder if they paid the full cost of the train ride — ie if their ticket prices were increased 20x — how they would feel about the service?
Click to see original image at Coyote BlogIf all of that wasn’t enough, the financing arrangement has a nasty sting in the tail: in the mid 2020’s, the state will owe two separate payments of over $200 million. Enjoy the subsidized rides now, folks … the payment comes due just in time for your kids to face as they graduate.
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February 29, 2012
“Taken together, the [Canadian] music industry demands make SOPA look like some minor tinkering with the law”
Michael Geist on the representatives of the Canadian music industry and their breathtaking demands for modifications to Bill C-11:
The steady procession of Canadian music industry representatives to the Bill C-11 committee continues today with the Canadian Independent Music Association (CIMA) ready to add to an already long list of industry demands to completely overhaul the bill. The music industry demands keep growing, but CIMA’s list is the most radical to date as it would create liability risk for social networking sites, search engines, blogging platforms, video sites, aggregators, and many other websites featuring third party contributions. If that were not enough, the industry is also calling for a new iPod tax, an extension in the term of copyright, a removal of protections for user generated content, parody, and satire, as well as an increase in statutory damage awards. Taken together, the music industry demands make SOPA look like some minor tinkering with the law.
Note that industry had already called for SOPA-style reforms such as website blocking and expanded liability that could extend to sites such as YouTube before the hearings began. This week has seen an industry lawyer inaccurately portray global approaches to digital lock rules and a musician association demand full statutory damages of up to $20,000 per infringement for non-commercial infringements by individuals.
Those demands are nothing compared to what CIMA has in mind, however. Topping the list is a massive expansion of the enabler provision. The music industry wants to remove a requirement that the so-called pirate sites be “designed primarily” to enable copyright infringement.
[. . .]
There is virtually no limit to prima facie liability under this provision as most sites can be said to enable some infringement, particularly if they allow for users to post or interact with the site. This includes sites like Google, Facebook, Reddit, and Youtube. All of these sites — indeed virtually any blogging platform, social network, search engine, or website that offers third party contributions — would face the risk of a prima facie claim under the music industry’s vision of the enabler provision.
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February 26, 2012
The Freeman: An open letter to statists everywhere
In a posting from twelve years ago, Lawrence W. Reed has some questions he’d like statists to answer:
You clever guys are always coming up with new schemes for government to do this or that, to address this issue or solve that problem, or fill some need somewhere. You get us limited-government people bogged down in the minutiae of how your proposed programs are likely to work (or not work), and while we’re doing the technical homework you seldom do, you demonize us as heartless number crunchers who don’t care about people.
Sometimes we all get so caught up in the particulars that we ignore the big picture. I propose that we step back for a moment. Put aside your endless list of things for government to do and focus on the whole package. I need some thoughtful answers to some questions that maybe, just maybe, you’ve never thought much about because you’ve been too wrapped up in the program du jour.
At the start of the 1900s, government at all levels in America claimed about 5 percent of personal income. A hundred years later, it takes more than 40 percent — up by a factor of eight. So my first questions to you are these: Why is this not enough? How much do you want? Fifty percent? Seventy percent? Do you want all of it? To what extent do you believe a person is entitled to what he (or she) has earned?
[. . .]
This raises a whole series of related questions about how you see the nature of government and what you’ve learned, if anything, from our collective experiences with it. I see the ideal government as America’s founders did — in Washington’s words, a “dangerous servant” employing legalized force for the purpose of preserving individual liberties. As such, it is charged with deterring violence and fraud and keeping itself small, limited, and efficient. How can you profess allegiance to peace and nonviolence and at the same time call for so much forcible redistribution?
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February 23, 2012
Thomas Sowell on the “Fairness Fraud”
It’s become endemic in political discourse — the “fairness” argument. Thomas Sowell explains why it’s a fraud:
During a recent Fox News Channel debate about the Obama administration’s tax policies, Democrat Bob Beckel raised the issue of “fairness.”
He pointed out that a child born to a poor woman in the Bronx enters the world with far worse prospects than a child born to an affluent couple in Connecticut.
No one can deny that. The relevant question, however, is: How does allowing politicians to take more money in taxes from successful people, to squander in ways that will improve their own reelection prospects, make anything more “fair” for others?
[. . .]
To ask whether life is fair — either here and now, or at any time or place around the world, over the past several thousand years — is to ask a question whose answer is obvious. Life has seldom been within shouting distance of fair, in the sense of even approximately equal prospects of success.
Countries whose politicians have been able to squander ever larger amounts of a nation’s resources have not only failed to make the world more fair, the concentration of more resources and power in these politicians’ hands has led to results that were often counterproductive at best, and bloodily catastrophic at worst.
More fundamentally, the question whether life is fair is very different from the question whether a given society’s rules are fair. Society’s rules can be fair in the sense of using the same standards of rewards and punishments for everyone. But that barely scratches the surface of making prospects or outcomes the same.
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February 19, 2012
Building a football stadium: corporate welfare at its most grotesque
Patrick Reusse writes for the Minneapolis Star Tribune. He’s a sports columnist, so his job — to some degree anyway — depends on the local professional sports teams (the Vikings, the Twins, the Wild, and the Timberwolves) sticking around and being competitive. Part of the sticking around these days is finding a new home for the Minnesota Vikings, who are at the end of their 30-year lease on the Hubert H. Humphrey Metrodome in downtown Minneapolis. Reusse is critical of those who don’t want their tax money going into the pockets of billionaire owner Zygi Wilf:
We so easily could be another decayed downtown, if not for the corporations, and the law firms and the accounting firms, and the retailers that remain committed to being in the city, when everything could be cheaper and more convenient by joining the sprawl in Maple Grove or Eden Prairie or Eagan.
Last month, Sandra Colvin Roy, another of the dedicated lefties on the Minneapolis City Council, announced opposition to the plan for a new Vikings stadium in downtown Minneapolis without a citywide referendum (that she knows would fail).
[. . .]
And yet it’s not only Roy and her lefty colleagues who offer a roadblock to Minneapolis coming up with its stadium share. There are righties in the Legislature with equally mysterious thoughts on the city’s entertainment tax.
“You know who pays for this?” Rep. Sarah Anderson of Plymouth said. “The citizens in my district, my constituents that decide to go to Minneapolis, maybe go out to a restaurant for the night.”
Some way, we have wound up with politicians who would put the cleaver to a great asset for the state’s largest city, and then offer the silliest of explanations, like 1) several score of people sleeping outside on government property, and 2) a few guys from Plymouth who would rather not pay an extra 3 percent for a Dewars and water at the Seville.
What stands in the way of a stronger heartbeat for downtown Minneapolis are the collections of the nearsighted that we have elected.
As you’ll know if you’ve read the blog for any length of time, I’m a big fan of the Minnesota Vikings, despite never having lived there or even visited the state. I’d be very upset if they became the L.A. Vikings. But I also totally sympathize with Minnesotans who don’t want their taxes being used to give corporate welfare to the billionaire owner of the football club. Pouring money into facilities for professional sports teams is one of the very worst ways to use tax dollars, as the lads at Reason.tv explain:
And from an article last year at Hit & Run:
To put it bluntly, regardless of how much money the state treasury might be rolling in, a public stadium is not a good use of money. Indeed, sports economists Dennis Coates and Brad Humphries estimate the presence of a major-league franchise reduces overall GDP by about $40 per resident in a given metro area.
The Vikes’ ownership has graciously offered to put up $400 million and the state is looking at ponying up $300 million, which means county and local taxpayers (read: suckers) would be on the hook for the remaining $400 million. So generous of the owners, don’t you think? Needless to say, the team would get all naming rights and a host of other related goodies.
[. . .]
Here’s a real surprise: Almost 75 percent of local residents don’t think public money should be used for a new stadium but the folks literally invested in the team and the building of the stadium are all for it!
February 18, 2012
“Somewhere in the near-eternal labyrinth of the Drummond report there must be evidence that the McGuinty’s Liberal government did something right over the last decade. If there is, I haven’t found it yet.”
Terence Corcoran brings the gloom on the Ontario government’s most likely response to the Drummond report:
Ontario, get ready for The Big McGuinty. The 562-page report from the government-appointed Commission on the Reform of Ontario’s Public Services, chaired by economist Don Drummond, has all the makings of a diversionary shell game in which everybody is directed to follow the pea of spending cuts while the real game is something else.
With attention now focused on carving Mr. Drummond’s 362 recommended slices off the great Ontario spending bologna, the real bait-and-switch objective, The Big McGuinty of this giant exercise in fiscal self-flagellation, is something else altogether: tax increases.
Does anybody seriously think the Liberal government of the Rev. Dalton McGuinty, after a decade of installing feel-good spending increases and extravagant policy schemes, is suddenly going to roll it all back and reverse a decade of ideological commitment to government intervention and liberal spending programs?
The Drummond report would require policy-backtracking on a vast scale. Somewhere in the near-eternal labyrinth of the Drummond report there must be evidence that the McGuinty’s Liberal government did something right over the last decade. If there is, I haven’t found it yet.
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February 3, 2012
Reason.tv: A non-hagiographic analysis of FDR, the New Deal, and the expansion of federal power
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January 25, 2012
January 10, 2012
When “everyone agrees” about excessive executive pay, something else is being sold
Tim Black on the amazing unanimity of thought that the most pressing problem in the world right now is big pay packets for corporate CEOs:
Occupy London, the Labour Party, the Lib-Con coalition, the Archbishop of York… It doesn’t matter to what or to whom you look, you’ll find the same simple-minded sentiment: the root cause of our economic and social problems is greed. The greed, that is, of bankers, of overpaid CEOs, of those at the top of society who simply have and want too much.
[. . .]
If there was ever a striking indication of the deadening political conformism, the dearth of social imagination, that so characterises our contemporary impasse, it is there in the sheer ubiquity of the Greed-is-Bad argument.
So what is driving this pervy, across-the-board obsession with the pay packets of super execs? It’s certainly not impelled by a desire to get to grips with the economic crisis that holds most of the developed world in its grip. No doubt there are some simple-minded souls in a state of Occupation who believe that blaming and bashing company CEOs or bankers is somehow to understand the economic crisis. But just as the remuneration packages of a few bankers and bosses did not bring about the current crisis, so seeking to limit their wages, to impose a maximum national wage, will not solve the crisis. And while £3million or £4milllion for a CEO’s annual salary does seem huge, such figures amount to very little in the grand economic scheme of things. As the Investor’s Chronicle points out: ‘The average FTSE 100 CEO is paid £3.9million year. But this is only one four-thousandth (0.025 per cent) of the average market capitalisation of a FTSE 100 company.’
The current fashion for attacking large pay packages, then, is economic neither in impulse nor intent. Rather it is driven, in the first instance, by a narrow moralism. For its numerous proponents, either in party offices or in spartan tents, it represents an easy posture, a cheap critical pose. One Guardian columnist virtually gave the game away: ‘Like phone hacking or MPs’ fiddled expenses, this is an issue that only needs to be described to seem reprehensible.’ That is, to the right-thinking types on liberal broadsheets, criticising large salaries is just too good an opportunity to miss. Indeed, like attacking tabloids and MPs, it is a mark of one’s membership of the right-thinking to have a pop at the really, really rich.
But there’s a deeper, darker impulse driving this cheap attack on exorbitant pay packages than just preening self-righteousness. And that’s the belief that the large pay packets pursued by the undeservedly wealthy are a symbol of a society-wide pathology. The cheap attack on top earners is also an attack on the material aspirations of the rest of us. We are, in short, just too greedy now to be left to our own unregulated, uncontrolled devices. A report from the High Pay Commission — a grandiosely monikered body established by centre-left think tank Compass, a few trade unionists and business secretary Vince Cable — makes this clear by drawing the highly questionable link between this putative celebration of ‘greed’ — or ‘an elevation of the concept of the rational self-interested man to unprecedented heights’ — and the August riots. ‘It should not perhaps surprise us’, the report states, ‘that the rioters took the trappings of wealth that they could not afford — the TVs and designer trainers. It reflects a sense of entitlement that pervades society from the very top to the bottom.’
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January 8, 2012
George F. Will on big government
Even fans of bigger government should recognize the accuracy of this short summary:
Liberals have a rendezvous with regret. Their largest achievement is today’s redistributionist government. But such government is inherently regressive: It tends to distribute power and money to the strong, including itself.
Government becomes big by having big ambitions for supplanting markets as society’s primary allocator of wealth and opportunity. Therefore it becomes a magnet for factions muscular enough, in money or numbers or both, to bend government to their advantage.
The left’s centuries-old mission is to increase social harmony by decreasing antagonisms arising from disparities of wealth — to decrease inequality by increasing government’s redistributive activities. Such government constantly expands under the unending, indeed intensifying, pressures to correct what it disapproves of — the distribution of wealth produced by consensual market activities. But as government presumes to dictate the correct distribution of social rewards, the maelstrom of contemporary politics demonstrates that social strife, not solidarity, is generated by government transfer payments to preferred groups.
[. . .]
The tax code, government’s favorite instrument for distributing wealth to favored factions, has been tweaked about 4,500 times in 10 years. Generally, the beneficiaries of these changes are interests sufficiently strong and sophisticated to practice rent-seeking.
Not only does redistributionist government direct wealth upward; in asserting a right to do so it siphons power into itself. A puzzling aspect of our politically contentious era is how little contention there is about the ethics of coercive redistribution by progressive taxation and other government “corrections” of social outcomes it considers unethical or unaesthetic.
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January 7, 2012
Conrad Black: Current events vindicate Margaret Thatcher
The current situation in Europe proves that British prime minister Margaret Thatcher was right all along:
Though it is probably happening too late to be overly gratifying to her, events are piling on to vindicate Margaret Thatcher completely in her reservations about British integration in Europe. Her response to the proposal to reduce Britain to a local government in a federal Europe was, memorably: “No, no, no, and never.” And her reward for her refusal to get on board what was then the thundering bandwagon of Eurofederalism, was to be sent packing by her own ungrateful party, though she was the only British political leader who had won three consecutive, full-term election majorities since before the First Reform Act expanded the electorate in 1832.
She was immensely popular with millions of Britons as a patriotic and courageous leader who took Britain off financial life support, saved it from strangulation by over-mighty, almost anarchistic unions, built a prosperous, home-owning democracy, threw the Argentinians out of the little corner of the British Empire they had wrongfully seized (the Falkland Islands), and played a starring role in winning the Cold War.
[. . .]
And as she liberalized the economy; imposed a free, secret ballot for labour strikes; lowered all taxes; privatized industry, housing, airports, almost everything except the National Health Service and the BBC; jolting economic growth resulted. Unfortunately, its most conspicuous exemplars included many successful entrepreneurs and financier types who offended British sensibilities by their garish and spivvy ostentation. The basis of Margaret Thatcher’s support was the Daily Telegraph-reading, gin and tonic-drinking, cricket-loving middle class, the backbone of the nation. But her enemies identified her with an infelicitous combination of Colonel Blimp fuddy-duddies and sticky-fingered, vulgar parvenus.
She had a somewhat hectoring manner in debates, and was notoriously impatient with what she considered pusillanimity from senior colleagues, sometimes calling cabinet members “blanc-manges,” or “suet puddings,” or even “spineless, boneless, men” (not necessarily inaccurately). Naturally less known was her exquisite courtesy and unaffected and egalitarian kindness to subordinates and strangers. It annoyed feminists that she was such a traditionalist, and weak men that she was a strong woman. But she triumphed by perseverance and courage; to the end, though a stirring speaker, she was nervous before a speech. She was a strong woman, but not at all a mannish one.
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