VIDEO: Obama’s ‘Julia’ Will Have Better Life Because of Tax Reform

Julia and her husband, James, are worried about their future.

James lost his job and can’t find work. Julia has not received a raise in many years and is unhappy at her job.

They are struggling just to make ends meet and provide for their children. Every year, the government takes more of their hard-earned money. Money that they would like to use for things like a vacation ends up going to Uncle Sam.

But things could change for Julia and James.

Congress is talking about updating the tax code.

Recent analysis shows the economy could grow significantly larger because of tax reform. In time, the average American family’s wages could rise by more than 7.5 percent. That would be almost $4,000 extra in the pockets of families earning $50,000 per year.

Under an updated tax code, businesses could add 1.7 million new full-time jobs. That means that James could find a job to help support his family. Julia could get a raise and a promotion at work.

Not only can they start saving for a vacation … But they can save for their kids’ college fund as well.

James and Julie would be able to do things like renovate their home or buy a new car.

Imagine this: Julia could turn her hobby into a small business. She could even quit her boring desk job and become happily self-employed.

Tax reform means greater financial independence and opportunity for Americans at all income levels.

Just think how it could help you.

COMMENTARY BY

A Note for our Readers:

Trust in the mainstream media is at a historic low—and rightfully so given the behavior of many journalists in Washington, D.C.

Ever since Donald Trump was elected president, it is painfully clear that the mainstream media covers liberals glowingly and conservatives critically.

Now journalists spread false, negative rumors about President Trump before any evidence is even produced.

Americans need an alternative to the mainstream media. That’s why The Daily Signal exists.

The Daily Signal’s mission is to give Americans the real, unvarnished truth about what is happening in Washington and what must be done to save our country.

Our dedicated team of more than 100 journalists and policy experts rely on the financial support of patriots like you.

Your donation helps us fight for access to our nation’s leaders and report the facts.

You deserve the truth about what’s going on in Washington.

Please make a gift to support The Daily Signal.

SUPPORT THE DAILY SIGNAL

EDITORS NOTE: Americans need an alternative to the mainstream media. But this can’t be done alone. Find out more >>

The National Debt Just Hit $20 Trillion. Here’s How Congress Can Restore Fiscal Sanity.

Our national debt just topped $20 trillion. That’s 13 zeros, or $20,000,000,000,000.

This also means that the federal government now owes almost $1.5 trillion more than the entire U.S. economy produced in 2016. To put this number into context, here are some other things that add up to $20 trillion:

So how exactly did we get here?

Simply put, massive government spending is the single largest driver of high national debt.

Of the entire federal budget, just four entitlement programs—Medicare, Medicaid, Obamacare, and Social Security—account for most of that spending. In fiscal year 2016, these entitlements consumed 52 percent of all tax dollars.

Without reforms, these programs and interest on the debt will be driving 83 percent of all spending growth projected over the next decade.

Entitlements continue to grow at this rate because they are on autopilot. The programs were enacted in law years ago so that agencies are authorized to spend whatever is needed to keep them running.

Congress has the final say about funding for these programs, but lawmakers choose not to reform them because it is politically difficult to cut popular programs—even if they are unsustainable.

Safeguards could prevent these programs from growing to unsustainable levels in the absence of political will.

Normally, Congress limits how much debt the government can take on by enforcing a debt limit. When the government reaches this limit, the Treasury Department no longer can borrow money to finance government operations.

Reaching the debt limit should be a wake-up call to lawmakers that their level of spending is unsustainable and that they need to enact budget reforms.

But that’s not the effect that reaching the debt limit has had in recent years.

Indeed, spending and debt have grown and the government has repeatedly hit the debt limit, only to be raised without making any reforms. Lawmakers have failed to adopt any long-term solutions.

The debt limit has been suspended since November 2015. Congress just suspended it again through Dec. 8 as part of the Trump-Pelosi-Schumer deal that provided relief for victims of Hurricane Harvey.

Suspending the debt limit lets the Treasury borrow unlimited funds to pay for governmental operations. Basically, this is a blank check for government borrowing. Once the suspension ends, the debt limit is raised based on how much debt was issued during the suspension.

For example, in February 2014, Congress raised the debt limit to $17.2 trillion and then suspended the debt limit until March 2015. When the suspension ended and Congress reset the debt limit, it set it nearly $1 trillion higher at $18.1 trillion.

The United States cannot afford to keep ignoring the debt limit and taking on more debt without serious reform. If the U.S. remains on the current fiscal course, publicly held debt will reach 90 percent of gross domestic product in 10 years.

As the debt grows, so will debt-servicing costs.

The Congressional Budget Office estimates that in 2027, net interest payments on the national debt will consume $768 billion tax dollars. When the government is forced to spend more money servicing the debt, there is less money available for other national priorities, like national defense or lower taxes.

This massive, now $20 trillion debt is a threat to the economy and the American people. Lawmakers and the new administration must reform entitlements, enforce the debt limit, and put the budget back on a path to balance to truly control the national debt.

Mollie McNeill is a research assistant for economic and budget policy at The Heritage Foundation. Twitter: 

A Note for our Readers:

Trust in the mainstream media is at a historic low—and rightfully so given the behavior of many journalists in Washington, D.C.
Ever since Donald Trump was elected president, it is painfully clear that the mainstream media covers liberals glowingly and conservatives critically.
Now journalists spread false, negative rumors about President Trump before any evidence is even produced.
Americans need an alternative to the mainstream media. That’s why The Daily Signal exists.
The Daily Signal’s mission is to give Americans the real, unvarnished truth about what is happening in Washington and what must be done to save our country.
Our dedicated team of more than 100 journalists and policy experts rely on the financial support of patriots like you.
Your donation helps us fight for access to our nation’s leaders and report the facts.
You deserve the truth about what’s going on in Washington.
Please make a gift to support The Daily Signal.

SUPPORT THE DAILY SIGNAL

EDITORS NOTE: Safeguards could prevent government programs from growing to unsustainable levels in the absence of political will (Photo: Ingram Publishing/Newscom). Americans need an alternative to the mainstream media. But this can’t be done alone. Find out more >>

Thousands of impoverished people arriving in the U.S. while Americans are homeless

The image above is of Irma damage in Florida. The cost of hurricanes Harvey and Irma to the U.S. economy can be $290 billion or more.

As I have said until you are surely sick to death of it, President Donald J. Trump is expected to present to Congress a ‘determination’ within days about how many third world impoverished people will be admitted to the U.S. beginning on October 1.

But, here is the thing—he has complete authority to say that NO refugees will be admitted in FY18 because the Refugee Act of 1980 gives that power to the President!

In the last 2 days, three reporters (that I know of) wrote about suspending, or shutting down, the UN/US Refugee Admissions Program for this year.

Frank Sharry

Frank Sharry, open borders advocate.

First, Thomas Allen at VDARE wrote this (read it all, it is full of historical knowledge about the program).  Allen mentions this:

But even Open Borders activists recognize Trump has the legal authority to set the number at zero for 2018. Frank Sharry [Email him] a leading Treason Lobbyist, told a group of activists at the National Partnership for New Americans conference in September 2017 that Trump could “zero the program out” if he chose to. And Congress certainly could zero out the funding of the program if it chose to.

Not only did Sharry acknowledge this, but so did Bill Frelick from Human Rights Watch, here.

Bill Frelick of Human Rights Watch: “…there is no requirement that the U.S. resettle a single refugee….”

And, indeed HIAS executives reported (here) that George W. Bush delayed a Presidential determination in the wake of 9/11 without any legal consequences to him. (The administration must have been worried about Islamic terrorists getting in to the U.S. even then!)

Harvey leaves American homes in Texas ruined by flood waters. Maybe the refugee contractors could get their volunteers busy helping Americans first!

Harvey trash

Destruction from hurricane Harvey.

Next, read Daniel Horowitz yesterday at Conservative Review.

And, finally don’t miss Leo Hohmann at World Net Daily where I am quoted saying this:

Ann Corcoran, who has followed refugee resettlement for more than a decade, said Trump has plenty of reason to do just that and still come across as a great humanitarian by focusing on needy Americans.

“The public should be outraged to learn that in the wake of Hurricanes Harvey and Irma, which have left tens of thousands of Americans homeless, that we are poised to take in thousands of impoverished refugees when we now have our own refugees, struggling people who have lost their homes, lost everything, with their lives shattered, living in tents, shelters and RVs,” Corcoran said.

To bring in more from other countries in a time like this would be the ultimate insanity.”

Read it all.

The refugee industry (the resettlement contractors and the cheap labor lobby) want you to think that the President must submit a determination of at least 50,000 for the upcoming fiscal year, but it just isn’t so!

Tell the President what you think by clicking here to get instructions…Tell your members of Congress and U.S. Senators too!

America First!

The Top Three Arguments against a Universal Basic Income

Unfortunately, a welfare state by any other name is still a welfare state. Brittany Hunter — by  Brittany Hunter

Every so often a new study is released, concluding that a universal basic income (UBI) is needed to fix this country’s welfare system. Most recently, the Roosevelt Institute claimed that switching to a UBI system could actually grow the economy by $2.5 trillion by the year 2025.

The study is full of hypothetical situations in which Americans receive a UBI of varying amounts. The research concludes that the higher the UBI, the more prosperous the economy. But like many UBI apologists, the study misses the major problems with such a system. Here are the three main ones:

1. It’s Expensive

Proponents claim that the UBI would be an efficient replacement for the country’s bloated welfare apparatus, and so would actually reduce overall costs.

Unfortunately, a welfare state by any other name is still a welfare state. And the UBI is just replacing one pricey system for another. And unlike the current welfare state, which has standards for determining who qualifies for certain aid, a UBI would be given to everyone. This would dramatically increase the pool of citizens receiving benefits from the state and inflict massive expenses across the board.

The Roosevelt Institute study posits two different ways to fund the UBI. But neither would benefit the national economy or the taxpayer. The study’s “positive” findings about economic stimulation are only applicable if the program is funded by increasing the federal deficit. So basically, in order to “grow” our economy, we must first plunge the American people even further into debt.

The second scenario presented in the report was a UBI funded through increased taxation. In this instance, the study found no net benefit to the overall national economy. In fact the report even went so far as to state:

When paying for the policy by increasing taxes on households rather than paying for the policy with debt, the policy is not expansionary. In effect, it is giving to households with one hand what it is taking away with the other. There is no net effect.”

There would be an effect, however, on the American taxpayer. When the Resolution Foundation, a think tank in the UK crunched the numbers to see what the cost would be to the taxpayer, they found that the amount paid would actually be much more than the amount received.

Commenting on the problems with the UBI as they related specifically for the UK, Robert Colvile writes:

…From the first pound you earned to the £43,001st, you’d pay a combined rate of income tax and National Insurance of around 35-40 per cent, after which the higher rate of tax would kick in as normal. In other words, to get that £3,692 from the Government, you’d pay thousands of pounds more.”

What this type of proposal really means is that a vast sum of people will be paying more in taxes than they already do. Colvile also notes that “In fact, it would represent a transfer of £120 billion of extra taxation into the welfare state – the equivalent of the entire budget of the NHS in England.”

If this is the case for the UK, it would most certainly be the case for the US.

This money has to come from somewhere. It will not appear out of thin air. And unfortunately, it is the American people who would be stuck with the bill for a grandiose UBI system.

2. Incentives Work, Handouts Don’t

Incentives are a powerful force. And there is no greater incentive than financial security and holding a job is essential to that end. When something comes easy, it is easily taken for granted. And while it would be nice to believe otherwise, giving cash handouts to every American incentivizes them to try that much less.

By removing the financial incentive to work, the state is encouraging idleness, something contrary to the entrepreneurial spirit so deeply woven throughout our country’s history.

During the Clinton era, the welfare state saw tremendous decreases. But that didn’t mean there were millions of Americans struggling to get by. Employment actually increased because individuals were incentivized to get jobs when there was no longer a guaranteed safety net.

3. The Welfare State Isn’t Going Anywhere

As previously mentioned, there are always claims that a UBI could decrease, reform, or even abolish our welfare system. But no one seems to have any idea as to how this transition would actually look.

This is because there is no transitory plan in place. And any such plan that came to fruition would surely be political suicide since you run the risk of angering someone. And for politicians who rely on the support and approval of their constituents, this is sure to bring some unwanted criticisms.

Anyone in the policy realm knows that there is no better way to alienate older constituents than threatening to take away their Social Security benefits. In fact, even the mere mention of decreases usually causes rooms of senior citizens to fear for their well being. Even if there is an alternative plan presented to them, it does not calm the fears of what might happen during the transitionary period. It is for this reason that Social Security is often called the “third rail” of politics.

Additionally, trying to get individuals transitioned off of one welfare plan, and into the next requires, at least temporarily, the funding of both programs. A decision to enact a UBI would not magically abolish the American welfare system. America’s welfare programs have been around for so long, it would take time to unroot it. Too many people have become reliant on our welfare state to have it simply wiped out overnight.

And who is going to pay for the process in the meantime? Well, the American taxpayer of course.

If anything, incorporating a UBI in America would most likely result in an additional layer of the welfare being added on top of our existing programs. This would, in effect, increase the state’s power rather than decrease it. Governments are rarely keen on relinquishing their power, and there is great power in controlling the welfare of the citizenry. It is therefore highly unlikely that the welfare state as we know it today would simply cease to exist.

There Is No Welfare Utopia

Bastiat famously said, “The state is that great fiction by which everyone tries to live at the expense of everyone else.” This is exactly why any form of welfare state is bound to fail. You cannot take from one, give to another and expect everyone’s hardships to be solved.

The UBI creates the illusion of decreasing the welfare state when the facts of the matter all point to the contrary. Everyone would like to live in a society where no one wanted for anything and everyone was provided for. But we live in a society of individuals with individual aspirations and goals. Pretending that we can centrally plan a welfare system with so many distinct wants and needs is unrealistic and unobtainable.

Our current system cannot be maintained because it’s too expensive. Period. Already programs like Social Security are projected to run out of money within the next decade and there is no plan for how to approach this coming storm. Why would anyone think broader welfare state situation would be any different?

If we cannot financially maintain our current system, it would be an unwise to believe we could somehow afford a UBI. As Colvile says when comparing one welfare system with the other, “It’s old wine in new bottles – redistributive, seventies-style taxation under a trendy new branding.”

Brittany Hunter

Brittany Hunter

Brittany Hunter is an associate editor at FEE. Brittany studied political science at Utah Valley University with a minor in Constitutional studies.

‘Liberal Socialism’ is Another False Utopia by Richard M. Ebeling

Very often bad and failed ideas do not die, they simply reappear during periods of supposed social and political crisis in slightly different intellectual garb, and offer “solutions” that would merely help to bring about some of the very types of crises for which they once again claim to have the answers. Socialism in its various “progressive” mutations represents one of the leading so-called solutions of our time.

The Marxian-style socialism of the nineteenth and the first half of the twentieth centuries is now long passé.

The latest manifestation of this appeared on August 24, 2017 in the New Republic in an online article by John B. Judis on, “The Socialism America Needs Now.” He is heartened by the wide appeal, especially among younger voters, that Bernie Sanders received during the 2016 presidential contest. He thinks that this may herald a rebirth and a renewed possibility for a socialist alternative to the current American political and economic system.Having traveled over the decades from the 1970s to the present from a radical, revolutionary socialist to a more “moderate” one today, Mr. Judis admits that the Marxian-style socialism of the nineteenth and the first half of the twentieth centuries is now long passé. The embarrassing experience of “socialism-in-practice” in the form Lenin and Stalin created in the Soviet Union or by Chairman Mao in China will not fly anymore.

From Soviet Central Planning to “Liberal Socialism”

Central planning seemed not to work too well, and the “communist” variation on the socialist theme also had a tendency to be authoritarian with some drawbacks for human life and liberty. (He tactfully avoids mentioning that Marxist-inspired regimes in the twentieth century murdered well over a 100 million people – with some estimates suggesting the number might have been closer to 150 million or more in the name of building the “bright, beautiful socialist future.” (See my article, “The Human Cost of Socialism in Power”.)

He turns his mind and ideal to the “democratic socialist” parties and regimes in Western Europe in the post-World War II era, or as Mr. Judis prefers to call it – following John Maynard Keynes -“liberal socialism.” What makes this form of socialism “liberal”? It is the belief that there can be “socialism with a human face.” In other words, a form of “economic” socialism that leaves in place democratic politics with a respect for a broad range of personal and civil liberties.Virtually all socialists condemned and called for the abolition of private ownership of means of production.

We have heard this all so many times before. While Mr. Judis wishes to suggest that there is no real or definitive definition of “socialism” (any more than there are of “liberalism” or “democracy”), the fact is that throughout the nineteenth century and well into the twentieth, virtually all socialists condemned and called for the abolition of private ownership of means of production, and imagined in its place some form of socialist central planning directed by government in the name of “the people.”

Mr. Judis actually more or less admits this, and that the only great debate among socialists and communists in the late nineteenth and twentieth centuries was over how the socialist utopia would be brought about, whether through violent revolution or through the democratic ballot box. The Russian Marxists led by Vladimir Lenin insisted that only revolution and a “dictatorship of the proletariat” could bring “the workers” to power and assure their permanent triumph over the exploitive capitalist class. The German democratic socialists opted for democratic means to power and rejected the dictatorship of Lenin and later Stalin.

But it is nonetheless the case that well into the post-World War II period this was a dispute over political means and not ideological ends, which remained for both branches of the socialist movement the abolition of capitalism and the imposition of socialist central planning. Communists wanted to bring about this transformation of society in one fell swoop through violent means and imposed dictatorship.  The German Social Democrats and the “Fabian” socialists in Great Britain proposed democratic means, with socialism coming more gradually and through incremental extensions of government control and planning over more and more parts of society. But for both, the end result would be the same: centralized government direction of economic affairs and social change.

As the 1950s turned into the 1960s and 1970s, more and more “democratic” socialists in Western Europe grudgingly accepted the fact that comprehensive socialist central planning was a failure as practiced in the Moscow-dominated Soviet bloc countries; and it brought little of the prosperity that government planning promised to provide as an escape from poverty in the “third world” countries of Asia, Africa and Latin America.

The collectivist dream and delusion springs eternal.

Plus, the tyranny and brutality of Soviet-style socialism made it ethically difficult to defend. So the democratic socialists turned to the interventionist-welfare state to achieve their “social justice” ends without nationalizing all the means of production or centrally planning all economic activity in society. (See my article, “Barack Obama and the Meaning of Socialism”.)

Social Justice Tourism

But those communist regimes were not so repulsive that democratic socialists in the West would not continue to give moral indulgence and wishful hopes that somehow Marxian socialism would finally work and fulfill its promise in, Mao’s China, Castro’s Cuba, or Ho Chi Minh’s Vietnam, or in the Sandinista’s Nicaragua, or any other failed utopia we can find in recent history. The collectivist dream and delusion springs eternal. After all, even a rude, crude, and rough Marxist regime isn’t the United States – please, almost anything other than capitalist America!

Even today, the enlightened “progressive” can take a tour of Castro’s Cuba with the leftist magazine, The Nation. Don’t miss out! This November 2017 you can go with The Nation and, their advertisement promises, “learn about the Cuban Revolution from experts at some of its most pivotal locations, including the Moncada Barracks, the site of the first armed assault by Fidel Castro and his band of rebels on July 26, 1953.”

The progressive political pilgrim to the collectivist promised land will be spending his or her “days meeting with prominent Cuban professors, government officials,” including “urban planners” and “health care workers.” Don’t miss out on your chance to visit one of the remaining socialist “utopias” before global capitalism succeeds in taking it away.Che arbitrarily sent hundreds to their deaths, sometimes literally by his own hand.

No doubt, these “social justice” tourists will not be taken to La Cabana prison, where Che Guevara was assigned by Castro the role of state prosecutor against “enemies of the people,” following Fidel’s triumphant entrance into Havana and seizure of power in January 1959. In the role as unrestrained judge and jury, Che arbitrarily sent hundreds to their deaths, sometimes literally by his own hand.

Nor are they likely to have quoted to them Che’s words that, “My ideological training means that I am one of those people who believe that the solution to the world’s problems is to be found behind the Iron Curtain.” And that “I can’t be the friend of anyone who doesn’t share my ideas.” Or that Che was the one who in 1960 instituted communist Cuba’s system of forced labor camps. This would not fit in with the heroic face of Che on the t-shirts that, no doubt, some of these “progressive” travelers to utopia would be wearing. After all, Fidel and Che did it all for “the people,” and, well, they did have “good intentions.”

Of course, while such political pilgrims are pleased to visit these places and bask in the moral satisfaction that the few remaining communist regimes in the world are still trying to make that “better world,” even if with the heavy hand of dictatorship, censorship of art, music and political views, the imprisonment of political opponents, and torture and execution of “enemies of the people” (all of which they still mostly turn a blind eye to), they prefer to live in their own Western countries and dream the “liberal socialist” dream, as clearly Mr. Judis is doing.

Liberal Socialism as the Regulatory and Redistributive State

What, precisely, is this democratic or “liberal” socialism to which Mr. Judis hopes a younger generation of Americans will turn in the years ahead? It turns out to be the same “utopia” of the interventionist-welfare state that Western countries have been following since the end of the Second World War, though, admittedly, to different degrees in different places around the world.

Mr. Judis wants the government to intensively and pervasively regulate, command, restrict and direct various aspects of the private enterprises in society, while ensuring that American society can still take advantage of the self-interested incentives and innovations that can improve the material conditions of life. But the direction, form, and extent to which private enterprisers shall be allowed to do those productive and innovative things with their businesses will be confined to and constrained within those avenues that serve the “higher” and “non-market” values and purposes of “society.”

Matching the regulatory and interventionist state must be the redistributive welfare state.

Matching the regulatory and interventionist state must be the redistributive welfare state. The excessive and unnecessary income and wealth of the businessmen and private sector investors of America must be taxed – heavily – to assure greater material egalitarianism, and to fund all the social services and government-provided safety nets, which “would bring immeasurable benefit to ordinary Americans. A good watchword is economic security – something that is very lacking to all except the wealthiest Americans.”

At this point, it might be wondered what, then, marks off Mr. Judis’ “liberal socialism” from the already existing modern American “liberal” interventionist-welfare state? It turns out that it is all a matter of intentions and the intended recipients. In Mr. Judis’ view, mainstream modern American liberals have lost their way; they too frequently sleep with the enemy (think Bill and Hillary Clinton) in the form of excessively collaborating with businessmen and bankers to the latter’s benefit; American liberals and progressives have stopped sufficiently emphasizing “economic justice” for middle America with their increasingly primary focus on “identity politics.”

Liberal Socialism and Democratic Politics Without Romance

Also, unlike the communists and many radical socialists and some progressives, Mr. Judis calls for moving towards his notion of a better socialist future through a more active participation in the Democratic Party. The task is to nudge and shove mainstream modern American liberals in the Democratic Party further to the socialist left, which in many of their hearts these people already know is right. And to use the Democratic Party as the vehicle to propagandize and persuade more in society that socialism is good and just and the best for them.

In other words, Mr. Judis calls for using the methods of the earlier German Democratic Socialists and the British Fabians, only do so in a way that does not seem to be as threatening or undermining of all the institutions of existing society as those earlier groups often did with their call for the total abolition of capitalism.

What is sometimes called “crony capitalism” is just Pareto’s “bourgeois socialism.”

Mr. Judis’ “liberal socialism” is really just the existing interventionist-welfare state placed – “democratically” – in the “right” elected hands, so those manning and managing the machinery of government will do what he wants political authority to do, rather than what it is currently being done by Republicans and the current Democratic Party establishments.

A way for Mr. Judis to more easily defend his desire and ideal is to suggest that the existing political-economic system in America today is a free market, “neo-liberal” capitalism, rather than what the Italian economist, Vilfredo Pareto (1848-1923) once more accurately labeled it: “bourgeois socialism.” That is, a system of government regulation, redistribution, favors and privileges that benefits many in the private enterprise sectors of society rather than a more “proletarian socialism” that simply would take from “the rich” to give to “the workers” and “the poor.”

What is sometimes called “crony capitalism” is just Pareto’s “bourgeois socialism.” Pareto also understood with amazing clarity in the 1890s one of the insights of modern Public Choice theory, that “participatory democracy” of the community as a whole is a theoretical and practical illusion in a complex society. Politics in an unrestrained democracy always becomes a contest among special interest groups capable of gaining concentrated benefits from State intervention and redistribution at the diffused expense of the rest of the society.

In democratic societies it takes the form of coalitions of special interest groups who succeed in offering campaign contributions and votes to politicians desiring elected political office, who then fulfill their campaign promises to those groups once in the actual halls of political power.

The communist “classless society” had one of the most intricate social webs of favoritism and plunder ever.

In totalitarian societies, such as in the former Soviet Union, it took the form of hierarchical positions within the Communist Party and within the central planning bureaucracy, including the state enterprise managers, who had the decision-making power over access to and use of the socialized means of production. Thus, the communist “classless society” had one of the most intricate social webs of power, privilege, favoritism and plunder ever seen in human society.

This “politics without romance,” to use Nobel Laureate, James M. Buchanan’s (1919-2013) phrase, shows why the notion of “the people” owning, controlling, regulating and overseeing the collective direction of an economy is pure illusion and deception concerning the reality of how and why political power works the way it does.

What Mr. Judis and far too many who share his views about capitalism and some form of socialism – “liberal” or otherwise – fail to understand is that any and all forms of planning, regulation, and political redistribution in fact takes power and decision-making out of the hands of the people about whom they express their concerns.

Real Participatory Liberation under Free Market Liberalism

It is the open, competitive market economy that, precisely, gives each and every individual wide latitude and liberty over his own personal affairs. It is the market that enables each of us to make his own choices concerning the profession, occupation, or productive calling to pursue. It is the market that enables each and everyone of us to have the freedom to make our own choices to earn an income and spend that income as we consider best in terms of the values, beliefs, purposes and desires that we think may bring meaning and happiness to our individual lives.

It is the free society that provides truly participatory opportunities to form groupings of almost any type.

It is the free society of individual liberty and voluntary association that provides truly participatory opportunities to form groupings of almost any type to further the ends outside of the narrower arena of market transactions to better our lives materially, socially, culturally and spiritually. See my article, “Individual Liberty and Civil Society” for more about this.

At this point no doubt, Mr. Judis would reasonably ask, but what about those who are unable to provide for themselves, due to personal tragedy, unfortunate circumstances, or simply bad luck? Is this not the reason why enlightened and decent societies had to move “leftward” to establish and financially provide for those unable to personally meet the essentials of everyday life and to have opportunities to fulfill their potentials as a human being? Is not the welfare state of “liberal socialism” the inescapable necessity of having a humane society?

The classical liberal responds that these very concerns can be far better and more successfully solved and served through the voluntary institutions and associations of civil society than to turn such tasks over to the government. In the nineteenth and early twentieth centuries, before the modern welfare state, all such “social problems” were handled with wide and positive effects by charities, philanthropies and for-profit organizations in places such as Great Britain and the United States. That their workings and successes are virtually unknown to most people in modern society shows the extent to which their history and social nobility has gone down a memory hole of collectivist misinterpretation and misunderstanding of what a society of liberty did and could provide (for more about this, see my article, “A World Without the Welfare State”).

Furthermore, the transfer of such welfare responsibility to the government reduces each and every recipient to a ward of the State. It is politicians and bureaucrats who decide the education your children will receive in government schools; they are the ones who determine the retirement possibilities you will have, the healthcare to which you will have access and its type, the wages and work conditions under which you may be allowed to be employed or unemployed, and the forms and types of associations you may enter into as well as the activities and membership you are permitted.

“Liberal socialism” is not the path to liberation, but of continuing servitude to the those with political power.

The “liberal socialism” about which Mr. Judis dreams is not the path to liberation, but of continuing servitude to those with political power and who have the presumption to imagine that they know better how people are to care for their own lives than those individuals (See my article, “Democratic Socialism Means Loss of Liberty”).

One would have thought that after more than seven decades of the interventionist-welfare state as the political left’s “liberal socialist” alternative to Marxian socialist central planning, it would be realized that it is just another constraining and corrupt manifestation of the unworkability of any collectivist system of control and command.

Mr. Judis’ program for a socialist America also shows the intellectual bankruptcy of those on “the left.” The revolutionary transformation of society, for which they yearn, ends up being nothing more than the existing interventionist-welfare state, except with the desire that people who agree with Mr. Judis should be at the helm of political power rather than those with whom he disagrees.

Richard M. Ebeling

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.

Trump Says Tax Reform Could Create ‘Millions and Millions of New Jobs’ by Fred Lucas

President Donald Trump hit his campaign themes of bringing back American jobs and raising wages in launching his quest for tax reform, while blasting special interest loopholes.

“Let’s put, or at least try to put, the partisan posturing behind us and come together as Americans to create the 21st century tax code that our people deserve,” Trump told the audience Wednesday at the Loren Cook Company in Springfield, Missouri.

“If we unite, in the name of common sense and the name of common good, then we will add millions and millions of new jobs, bring back trillions of dollars, and we will give America the competitive advantage it so desperately needs and has been looking for so long,” Trump continued.

“Instead of exporting our jobs, we will export our goods.”

Democrats have framed past Republican efforts at tax reform as a gift to the rich, but Trump put his own populist stamp on the issue by talking about how the current complex tax code harms average Americans, leading to fewer jobs, and how a new system would be fairer, expand economic growth to more than 3 percent, and make America more competitive.

“If we achieve sustained 3 percent growth, that means 12 million new jobs and $10 trillion dollars of new economic activity over the next decade,” Trump said.

Trump noted that Springfield, Missouri, was the birthplace of Route 66.

“This is the place where the main street of America got its start, and this is where America’s Main Street will begin its big, beautiful comeback that you are seeing right now,” Trump said.

“This is a comeback of historic proportions. You’re seeing it happen right now. We’re here today to launch our plans to bring back Main Street by reducing the crushing tax burden on our companies and on our workers.”

Referencing the slow pace of Congress on other issues, Trump said, “I don’t want to be disappointed by Congress. I think Congress is going to make a comeback.”

In the speech, Trump laid out his four principles for tax reform.

The first is to greatly simplify the tax code. Currently, as studies show, more than 90 percent of individuals and businesses use either paid tax preparers or special software to file their taxes. According to the IRS Taxpayer Advocate Service, taxpayers spend 6 billion hours per year complying with the tax code.

Trump wants Americans to be able to file taxes on a single page.

The second is to slash corporate taxes, which he said would bring back jobs to the United States, which would mean more companies competing for U.S. workers, and “a pay raise Americans have been looking for, for many, many years.”

Trump later said that under tax reform, Americans would get a “big, fat, beautiful paycheck.”

The United States corporate tax rate is 16.4 percentage points higher than the worldwide average, according to the Tax Foundation. The United States has the highest corporate tax rate among the 35 advanced economies in the Organization for Economic Cooperation and Development, and according to OECD data, the combined corporate tax rate is 39 percent compared to the average of 24 percent among member countries.

“The strategy of our economic rivals has worked. They’ve made their taxes lower and far lower in many cases than ours, and jobs left our country,” Trump said.

He added, “We have totally surrendered our competitive edge to other countries. We’re not surrendering anymore.”

Trump’s third principle was middle class tax relief.

“They’ve been the forgotten people, but they’re not forgotten anymore, I’ll tell you that,” Trump said.

He added that one of his goals was helping parents afford child care, an issue that is “so important to my daughter [Ivanka Trump], it’s one of her very big beliefs.”

The fourth principle is to bring back trillions of dollars from companies that do business overseas and park their profits offshore. Fortune 500 corporations are holding more than $2.6 trillion in profits offshore to avoid $767 billion in U.S. federal taxes, according to the Institute on Taxation and Economic Policy.

House Minority Leader Nancy Pelosi attacked Trump’s proposal as “flawed logic.”

Others were more supportive, such as Alfredo Ortiz, CEO of the Job Creators Network.

“The president is determined to energize the American economy, especially with the necessary tax cuts for job creators – small businesses all across the country who create 70 percent of all new jobs,” Ortiz said in statement.

Trump and Congress should go all in to fix the tax code, said Brent Gardner, chief government affairs officer for Americans for Prosperity.

“We deserve a tax code built for growth. For too long, the tax system has been rigged to favor the powerful and well-connected, but tax reform will level the playing field and allow for the growth of family paychecks, the growth of jobs, and the growth of the American economy.”

About Fred Lucas

Fred Lucas is the White House correspondent for The Daily Signal. Send an email to Fred. Twitter: @FredLucasWH

A Note for our Readers:

The Hill is full of debates over the future of economy. Everything from spending cuts to tax reform to free trade agreements to tax competition are hotly debated.

The Daily Signal is here to ensure you receive clear, concise, and reliable facts on all issues impacting our economy.

We are a dedicated team of more than 100 journalists and policy experts funded solely by the financial support of the general public. And we need your help! The media today is resorting to marketing ploys and clickbait tactics to spread news not steeped in fact.

Your financial support will help us fight for access to our nation’s leaders and report the facts. Because you deserve the truth about what’s going on in the economy. No amount of pressure is going to stop us from maintaining the integrity of the news. You deserve to hear the facts.

Make a gift to support The Daily Signal today!

SUPPORT THE DAILY SIGNAL

RELATED VIDEO: Full speech of President Trump in Springfield, Missouri on August 30th, 2017.

EDITORS NOTE: The featured image of President Donald J. Trump talking about his principles for tax reform during a rally Wednesday in Springfield, Missouri. (Photo: Kevin Lamarque/Reuters/Newscom)

GoFundMe page demonstrates that the U.S. can’t afford more refugees!

What a coincidence, just as I posted my previous report from California about refugees adding poverty to already impoverished areas, here comes more news about refugees who can’t afford housing (Afghans again too).  Hat tip:Joanne

It is commendable that citizens may now take up the cause of this mother and son (private charity should be the primary source of support anyway!), but notice this is temporary until this Afghan ‘refugee’ can get her Social Security Disability!

GoFundMe:

We (Chuck Ackerman & Catherine Donnelly) are looking to raise rent for our new neighbors on Cleveland’s west side, a mother and her 14-year-old son who are refugees from Afghanistan. We will call them “Aisha” and “Majid”. Because of the situation they have fled, we’re not using their real names.

US together

US Together is a Hebrew Immigrant Aid Society subcontractor

As volunteers with refugee settlement agency US Together, we met the family soon after they arrived in the U.S. in December 2016. Aisha is an amazing cook and host while soccer-loving Majid wants to be a doctor someday. Although Aisha is working on her English, Majid uses his great English skills to translate for his mother.

But the violence they left behind has left Aisha with many physical and mental traumas that prevent her from working. As an educated woman, Aisha faced persecution in Afghanistan and bears the scars. Since her medical history has been tough to document, her first application for Social Security Disability was denied.

She is working with a great local lawyer to appeal and we feel they have a strong case. But the appeal is expected to take 12-18 months and in the meantime, the family needs to pay rent.

Their rent is $550 per month, so we are looking to raise $6,600, or 12 months of rent. That said, every cent counts! Each month of rent we can raise will get the family closer to the date they can get the benefits they need to meet their own needs. The next date they need $ for rent is December 1, 2017. We’ll be keeping the fundraiser going until we meet the goal or the family wins their appeal.

As refugee support groups face drastic funding cuts these days, the resources available for families like this one who are already here are dwindling. That’s why we are turning to you for help.

By giving to this fundraiser, you will help this family achieve the peace of mind and breathing room they need for Aisha to work on her health and recovery from trauma and for Majid to focus on succeeding in high school and build the foundation he needs to one day become a doctor and help others.  [I don’t want to sound too cynical but I swear in every refugee story there is a kid who wants to be a doctor!—ed]

It’s true that the family has other needs, though this fundraiser is focused on the basics of maintaining their housing. But if you have any ideas or resources you’d like to share or have questions about their other needs, please let us know!

We are so grateful for your support!

Watch this space for updates—we may plan a good, old-fashioned rent party!

Help spread the word!

Bringing poverty to America…..

Mark Hetfield

Mark Hetfield

New readers need to know that when the original Refugee Act of 1980 was debated in Congress, sponsors like Ted Kennedy, promised it was not about importing poverty!

Resettlement contractors like US Together get federal support for the family for about 3 months at which point they drop them like hot potatoes to get ready for their next paying clients.

They actually call them clients!

By the way, US Together is a subcontractor of the Hebrew Immigrant Aid Society where its CEO makes over $300,000 a year.  Sure hope Mark Hetfield is contributing to this poor woman’s  rent as he is busy lobbying Congress for more refugees (and trashing Trump!).

RELATED ARTICLES: 

As violence in Burma escalates, U.S. resettling more Rohingya Muslims

History Is Repeating Itself, Tragedy or Farce Unclear So Far

Europe begins to appreciate the reality of Islamic terrorism

Obama Policy That Encourages Banking Discrimination Is Finally Ending by Daniel J. Mitchell

Trump has been President for more than 200 days and those of us who want more economic liberty don’t have many reasons to be happy.

Obamacare hasn’t been repealed, the tax code hasn’t been reformed, and wasteful spending hasn’t been cut.

The only glimmer of hope is that Trump has eased up on the regulatory burden. More should be happening, of course, but we are seeing some small steps in the right direction.

Let’s share one positive development.

Operation Choke Point

Professor Tony Lima of California State University opined back in January in the Wall Street Journal that Trump could unilaterally boost growth by ending a reprehensible policy known as “Operation Choke Point.”

…the Trump administration could shut down Operation Choke Point. This program, enforced by the Federal Deposit Insurance Corp., targets “risky” banking customers and pressures banks to deny them credit. It’s unnecessary: If these industries are really risky, banks would not want their business. The real purpose of Operation Choke Point is to target industries that are out of favor…, among them: Coin dealers, money-transfer networks and payday lenders. Sales of ammunition and firearms (Second Amendment, anyone?) and fireworks (legal in some states). …Other legal goods and services such as surveillance equipment, telemarketing, tobacco and dating services. …Denying credit hampers an industry’s growth. Eliminating Operation Choke Point would encourage growth. It costs nothing. And someday it may reduce enforcement spending.

And Professor Charles Calomiris from Columbia University echoed those views a few weeks later.

Imagine you have a thriving business and one morning you get a call from your banker explaining that he can no longer service your accounts. …That’s what happened to many business owners as the result of an Obama administration policy called Operation Choke Point. In 2011 the Federal Deposit Insurance Corp. warned banks of heightened regulatory risks from doing business with certain merchants. A total of 30 undesirable merchant categories were affected…the FDIC explained that banks with such clients were putting themselves at risk of “unsatisfactory Community Reinvestment Act ratings, compliance rating downgrades, restitution to consumers, and the pursuit of civil money penalties.” Other FDIC regulatory guidelines pointed to difficulties banks with high “reputation risk” could have receiving approval for acquisitions.

Keep in mind, by the way, that Congress didn’t pass a law mandating discrimination against and harassment of these merchants.

The Washington bureaucracy, along with ideologues in the Obama Administration, simply decided to impose an onerous new policy.

In effect, the paper pushers were telling financial institutions “nice business, shame if anything happened to it.”

But at least when mobsters engage in that kind of a shakedown, there’s no illusion about what’s happening.

Telling Bankers Their Business

Professor Calomiris explained that this regulatory initiative of the Obama Administration made no sense economically.

It is rather comical that regulators would use the excuse of regulatory risk management to punish banks. Banks are in the business of gauging risk and have every incentive to avoid customer relationships that could hurt their reputation. Regulators, on the other hand, have shown themselves unwilling or unable to acknowledge risk, the most obvious example being the subprime mortgage crisis in 2008.

And he also explained why Operation Choke Point was such a reprehensible violation of the rule of law.

The FDIC’s regulators never engaged in formal rule-making or announced penalties for banks serving undesirable clients. Such rule-making likely would have been defeated in congressional debate or under the Administrative Procedures Act. Instead, regulators chose to rely on informal decrees called “guidance.” …Financial regulators find regulatory guidance particularly expedient because it spares them the burden of soliciting comments, holding hearings, defining violations, setting forth procedures for ascertaining violations, and defining penalties for ignoring the guidance. Regulators prefer this veil of secrecy because it maximizes their discretionary power and places the unpredictable and discriminatory costs on banks and their customers.

Well, we have some good news.

The Trump Administration has just reversed this terrible Obama policy. Politico has some of the details.

The Justice Department has committed to ending a controversial Obama-era program that discourages banks from doing business with a range of companies, from payday lenders to gun retailers. The move hands a big victory to Republican lawmakers who charged that the initiative — dubbed “Operation Choke Point” — was hurting legitimate businesses. …House Judiciary Chairman Bob Goodlatte…and House Financial Services Chairman Jeb Hensarling (R-Texas), along with Reps. Tom Marino (R-Pa.), Blaine Luetkemeyer (R-Mo.) and Darrell Issa (R-Calif.) praised the department in a joint statement. “We applaud the Trump Justice Department for decisively ending Operation Choke Point,” they said. “The Obama Administration created this ill-advised program to suffocate legitimate businesses to which it was ideologically opposed by intimidating financial institutions into denying banking services to those businesses.”

And Eric Boehm of Reason is pleased by this development.

A financial dragnet that ensnared porn stars, gun dealers, payday lenders, and other politically disfavored small businesses has been shut down. Operation Choke Point launched in 2012… It quickly morphed into a questionably constitutional attack on a wide range of entrepreneurs who found their assets frozen or their bank accounts closed because they were considered “high-risk” for fraud. …Assistant Attorney General Stephen Boyd called Operation Choke Point “a misguided initiative” and confirmed that DOJ was closing those investigations… “Law abiding businesses should not be targeted simply for operating in an industry that a particular administration might disfavor,” Boyd wrote. …The repudiation of Operation Choke Point is a welcome development, says Walter Olson, a senior fellow at the libertarian Cato Institute.

shared a video last year that explained Operation Choke Point in just one minute. But that just scratched the surface, so here’s a video from Reason that explains in greater detail why Operation Choke Point was so repulsive.

Kudos to the Trump Administration for reversing this awful policy.

But hopefully, this is just the first step. Regulators are still squeezing financial institutions in an attempt to discourage them from doing business with low-tax jurisdictions. This policy of “de-risking” exists even though so-called tax havens generally have tighter laws against dirty money than the United States.

Trump should put an end to that misguided policy.

Ultimately, what’s really needed is a complete rethink of money-laundering laws and regulations.

Amazingly, some politicians actually want to make these laws even worse. Ideally, Trump will move completely in the other direction.

P.S. While it’s good that Trump has reversed Operation Choke Point, his Administration has moved in the wrong direction on civil forfeiture policy. One step forward and one step backward is not a recipe for more growth and prosperity.

Reprinted from International Liberty.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute 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.

RELATED ARTICLE: Operation Choke Point Is Over. But Without Major Reforms, It Could Happen Again.

Millennials Are in a Love Triangle with Capitalism and Socialism by Andrew J. Taylor

There’s been a lot of talk recently about how Millennials – the generation born between roughly 1980 and 2000 – think about economics. Much of it was sparked by the fanatical support for self-described “Democratic Socialist” Bernie Sanders from young people in the Democratic primary for president last year.

Millennials have economic attitudes that are different from older Americans.

Gallup found in April 2016 that, whereas Hillary Clinton had a net favorability rating of -23 among 18-24 year-olds, Sanders’s score was +39.

Harvard University poll administered at about the same time revealed how this has been translated into policy views. The survey reported that only 42% of Millennials supported capitalism. According to a contemporaneous Gallup poll, that was about 10 percentage points lower than the general population. The Harvard survey showed 33% of Millennials wanted socialism.

So Millennials have economic attitudes that are different from older Americans. But is their economic behavior different? Do they walk the socialist walk?

Here, the evidence is decidedly mixed.

Health Care

Socialists tend to embrace public goods because all citizens can consume them. Millennials certainly like them. A Pew Research Center poll from June revealed 45% of 18–29-year-olds favored a single-payer health care system. This was 14 percentage points higher than any other single age group.

Census data show Millennials adopted health insurance more rapidly than any other age cohort when Obamacare began in 2014-15. I’m not entirely sure what kind of political philosophy this behavior illustrates, but it does seem to suggest Millennials embraced the Affordable Care Act, legislation most people believe moved health care in this country solidly to the left.

Recycling and Personal Consumption

Socialism, unlike capitalism, makes a virtue of constrained personal consumption. A major reason for this, of course, is that it is less suited to production. But the connection has helped fuse ecology to socialism in the platforms of left-wing parties across the globe.

You may have heard the argument that Millennials are more environmentally conscious than the rest of us – they don’t use plastic shopping bags or flush the toilet, etc. A survey commissioned by Rubbermaid reported earlier this year that two-thirds of Millennials would give up social media for a week if everyone at their company recycled.

Interestingly, however, the data on behavior do not bear this out. A 2014 Harris poll conducted for the Institute of Scrap Recycling Industries (ISRI) revealed that whereas roughly a half of respondents over thirty said they “always” recycled, only a third of the younger group did.

Millennials talk about saving the planet for humanity, behavior a socialist mindset deems heroic, but they do not seem to be doing more than anyone else to secure our world’s survival.

Transportation

Millennials also use public transportation much more than other groups. Over one-fifth ride a bus or train on a daily or almost-daily basis according to a Pew survey from late 2015. This was nearly double the proportion of any other age group.

Indeed, younger people seem to have much less love than their elders for that ultimate of American private goods, one’s own car. The number of licensed drivers in both the 24-29-year-old and 30-34-year-old cohorts decreased by about 10% between 1983 and 2014 according to the University of Michigan’s Transportation Research Institute. The drop for 18-year-olds was a fifth. At the same time, everyone over 45 continues their love affair with the automobile.

This seems consistent with the socialist rejection of material goods, but whether this is correlation or causation is unclear.

Sharing Economy

Moreover, Millennials have almost single-handedly nurtured the “sharing” economy – a marketplace in which peer-to-peer transactions are facilitated by a software platform that permits participants to divide consumption, as exemplified by Uber and Airbnb. According to Vugo, 57% of all ridesharing customers are aged 25 to 34.

The sharing economy may sound quite socialist because it seems to eschew private ownership. But as Duke professor Mike Munger has pointed out, people, in general, wish to consume the services that tangible goods provide, not the goods themselves. The sharing economy, in fact, provides access to the services of more material goods than the user would otherwise have – whether that’s a five-minute ride in a car or a two-day stay in a house. Its fundamental principles, therefore, are capitalist.

Entrepreneurialism

A 2014 Bentley University survey of Millennials reported that two-thirds of respondents expressed a desire to start their own business. But Millennial behavior is different. An analysis by the Wall Street Journal last year found that the proportion of Americans under 30 who own a business has dropped by 65% since the 1980s. Millennials might say they want to be Mark Zuckerberg, but they’re not particularly entrepreneurial.

There does exist therefore a disconnect between Millennial economic attitudes and behavior. What explains it? The generation is intrigued by the idea of socialism. It embraces many of its values and the public policies that would bring it about. But Millennials’ behavior is ambiguous. Entrepreneurship in private enterprise is not a particularly appealing career path to them in practice.

Additionally, Millennials’ reduced consumption is probably as much a function of economic necessity as it is a sacrifice of their personal wants to some grand social plan. The Great Recession has left them playing financial catch-up. A Pew analysis of census data reveals 15% of 25-to-35-year-olds still live with their parents. Traditionally that fraction has been around one tenth. A 2016 study by the left-leaning Center for American Progress found that Millennials make less than Gen Xers did in their early 30s. They only earn about the same as Boomers, who are 30 years older and 50% less likely to have graduated from college.

So perhaps there’s another explanation: When they appear to be rejecting capitalism, it’s often because Millennials are simply adjusting America’s core economic principles to new technologies and economic realities.

Reprinted from Learn Liberty.

Andrew J. Taylor

Andrew J. Taylor

Andrew J. Taylor is professor of Political Science in the School of Public and International Affairs at NC State University. He received his Ph.D. from the University of Connecticut and teaches courses in American politics, including Introduction to American Government, the Presidency and Congress, the Legislative Process, Public Choice and Political Institutions, and the Classical Liberal Tradition.

Child Labor Was Wiped Out by Markets, Not Government by Antony Davies & James R. Harrigan​

In 1938 the US government passed the Fair Labor Standards Act mandating a forty hour work week, establishing a minimum wage, and prohibiting child labor. Because of legislation like this, government is often credited for making the American work environment safer and more fair. Yet, as Antony Davies and James Harrigan demonstrate with historical data, market forces were already making things easier on the American worker long before the FLSA.

Note: After this episode, Words and Numbers will be audio-only. Subscribe to the Word and Numbers podcast via iTunes.

Antony Davies

Antony Davies

Antony Davies is associate professor of economics at Duquesne University and Chief Academic Officer at FreedomTrust.

He is a member of the FEE Faculty Network.

James R. Harrigan

James R. Harrigan

James R. Harrigan is CEO of FreedomTrust.

Socialism – Not Oil Prices – Is to Blame for Venezuela’s Woes by Kristian Niemietz

So the Left is finally talking about Venezuela again. That is a good thing. For about a decade, large sections of the Left were in the grip of VenezuelamaniaWe would not hear the end of it. Venezuela’s version of socialism was their shining example, the model which the rest of the world should emulate.

When the country’s meltdown could no longer be denied, they dropped it like a hot potato. And a long period of silence ensued. But recent events have forced the issue back on the agenda again.

The Double Life of Oil Prices

The responses vary. Commentators on the Stalinist Left now sound like a copy of the Pravda from the 1930s, fabulating about saboteurs and counter-revolutionaries undermining the economy. The more media-savvy sections of the Left, however, realise that they are unlikely to win many people over if they sound too much like the villain in a Cold War movie.

So they have adopted a more innocuous-sounding line, blaming Venezuela’s woes primarily on the decline in oil prices. Of course, Venezuela is doing badly, they argue. Any economy that is so dependent on commodity prices would do badly under those circumstances. It has nothing to do with socialism.

It sounds superficially plausible. But do you remember which prominent Chavista said this during the oil price boom:

Of course Venezuela is doing well. Any economy that is so dependent on commodity prices would do well under those circumstances. It has nothing to do with socialism.”

You guessed right: none of them. Oil prices lead a double life in the Chavista-Corbynista mindset. When oil prices skyrocket, the ensuing boom is proof that social works, but when they fall again, the ensuing decline has nothing to do with socialism.

It is true that low oil prices would hurt Venezuela’s economy. But here’s the thing: we don’t currently have low oil prices. We had abnormally high oil prices in the decade leading up to 2014/15. Oil prices have not “collapsed”. They have merely reverted to a level which is more in line with the long-term average. More precisely, they are back (in real terms) to where they were in 2004, about the time when Venezuelamania started. And they are still noticeably higher than they were in the two decades before then.

When Oil Prices Were Peaking

Perhaps more important, though, the problems that we commonly associate with Venezuela, especially shortages of basic essentials like food and medicine, predate the drop in oil prices. Take this description:

…of milk, eggs, sugar and cooking oil there was no sign. Where were they? … Welcome to Venezuela, a booming economy with a difference. Food shortages are plaguing the country at the same time that oil revenues are driving a spending splurge … Milk has all but vanished from shops… eggs and sugar are also a memory.”

This is from a Guardian article, published in 2007 – when oil prices were about to reach their historic all-time peak. Or this one, from a year before the drop in oil prices:

…food shortages in Venezuela have not only peaked but they have lasted longer than ever. … Venezuela’s central bank … has been publishing a scarcity index … [It] puts this year’s figure at [a level which] is similar to countries undergoing civil strife or war-like conditions.”

There are a handful of alternative history novels in which the fall of the Berlin Wall never happens, and the German Democratic Republic still exists today. It is a fascinating thought experiment, but the authors all face a problem in creating that backdrop: when the Wall fell, the GDR was not just politically, but also economically finished. How do you get around this, if you want your alternative history to be at least somewhat plausible?

Two authors have found a simple, but seemingly effective solution: in their version, the GDR regime discovers oil reserves just off the Baltic coast. The GDR is soon swamped with petrodollars; it becomes a socialist, Northern European version of Saudi Arabia.

The authors’ thinking must have been: “Let’s just give them oil reserves. Surely oil revenue can make any economy work, even a socialist one.”

I like the idea. But Venezuela’s experience shows that the authors were over-optimistic.

Oil Isn’t Enough

Socialists have always argued that socialism will eventually work, it just needs the right circumstances. They are now effectively saying:

Of course socialism works. All you need is the world’s largest proven oil reserves, the longest oil price boom in history, and the highest oil price level ever recorded in history. That boom must obviously go on forever. Even then, you will have constant shortages of food, medicines and other basic essentials. But on the plus side, you will have Western intellectuals lining up to tell you how lucky you are.”

It doesn’t quite cut the mustard, does it?

Reprinted from CapX.

Kristian Niemietz

Kristian Niemietz

Dr. Kristian Niemietz is the Institute for Economic Affairs’ Head of Health and Welfare.

RELATED ARTICLE: Venezuela: Wave of Arrests As Government Turns Against Elected Opposition

Government, Not Automation, Destroys Jobs by Jairaj Devadiga

A few weeks ago, road and highways minister Nitin Gadkari said that driverless cars would be banned in India in order to “protect jobs.” This kind of fallacious argument is nothing new. For the past year or so, newspapers have frequently published articles arguing that automation is to blame for job losses. Even seemingly intelligent people like Bill Gates have made outlandish suggestions, such as taxing robots, to compensate workers who might lose their jobs as a result.

Bad government policies are the root cause for unemployment.

By doing a superficial analysis, one may indeed say that automation causes job losses. But by digging a bit deeper, one sees that bad government policies are the root cause for unemployment.

Circumventing Regulation

Take the case of driverless cars. Driving is not a job that requires specialized skills. Low skilled workers are abundant and also inexpensive to hire. Why, then, is Uber so interested in developing driverless cars? It is because governments around the world have imposed costly regulations, or outright banned Uber to protect the taxi cartels.

Never mind that this creates an immediate job loss for Uber drivers, it also gives Uber an incentive to invest billions in developing driverless cars to circumvent the burdensome regulations. This will ensure that all drivers will lose their jobs in the long run, including the taxi cartels governments are trying to protect.

Lant Pritchett, at the Centre for Global Development, wrote last month of a similar problem in the US. Workers from Central and Latin America could easily work low-wage jobs in the US.But minimum wage laws and immigration restrictions make labor artificially expensive.

Technological progress is distorted when government tries to protect certain industries.

That is precisely why Amazon is pouring billions into drones. In the absence of government intervention, it would be far cheaper to hire low skilled immigrants for delivering parcels. But since government won’t allow that, it is cheaper to use drones. Most delivery jobs in the US will be eliminated in the near future as a result of bad immigration policies. Policies which were, ironically, crafted to save those jobs.

Note the tremendous inefficiency this creates. The world’s scarcest resources, entrepreneurs and scientists, are working to economize the most abundant resources, namely low skilled labor. All of that entrepreneurial and scientific talent is being wasted due to bad government policies. Pritchett rightly laments that this makes it harder for poor people to escape poverty.

Pritchett’s observation is nothing new. In January, I wrote that even Karl Marx understood how technological progress is distorted when government tries to protect certain industries or occupations. A case in point is Indian manufacturing, which the government tried to protect from foreign competition.

Ill-conceived government policies are why low skilled jobs are dying an untimely death.

Countries at a similar level of development have labor intensive manufacturing which makes use of cheap labor. In India, the opposite has happened. Whatever little manufacturing takes place in the country is extremely capital intensive. Why did this happen?

Laws Are Expensive

Before 1991, government imposed extremely high tariffs on imports to encourage domestic manufacturing. Manufacturing grew, but it became more capital intensive over the years, even though cheap labor was abundantly available. The explanation for this lies in India’s complex labor laws.

India has nearly 250 labor laws between the centre and the states. The cost of complying with these labor laws is so high that companies found (and still find) it cheaper to use machines than to hire people, creating the phenomenon of jobless growth.

All of this evidence points to just one culprit, when it comes to unemployment. It is not greedy corporations and it is not automation. Ridiculously ill-conceived government policies are the sole reason that low skilled jobs are dying an untimely death.

Jairaj Devadiga

Jairaj Devadiga

Jairaj Devadiga is an economist who illustrates the importance of property rights and freedom through some interesting real-world cases. When he is not doing research, he enjoys reading about medicine, astronomy, computers, and law among other things. Readers may email him at jairajdevadiga@gmail.com with questions, suggestions, feedback etc.

Why Do So Many Intellectuals Oppose Capitalism? by Alberto Mingardi

Following the valuable advice of co-blogger David Henderson, I’ve gotten my hands on Milton Friedman on Freedom, a new collection edited by the Hoover Institution. The book will surprise all of us who never properly appreciated the insights and wisdom of Friedman’s political thinking. His own peculiar blend of classical liberalism comes out all the more as subtle and relevant.

Among the several chapters, I did particularly enjoy a 1974 interview with Reason magazine. Friedman was then interviewed by the editorial trio (Tibor Machan, Joe Cobb, Ralph Raico), who were challenging him from what they considered a more consistent libertarian position.

The interview is rich and interesting in many ways. Friedman defends a negative income tax and school vouchers as “devices for enabling the free market to play a larger role.” He admits that the work of E.G. West made him revisit his own rationale for compulsory education (but not to abandon vouchers as a practical policy proposal), and he discusses inflation and the gold standard.

Friedman also speaks on a matter which has likewise been pondered by many of his contemporaries: why intellectuals oppose capitalism.

To these questions, some have replied that the main reason is resentment (intellectuals expect more recognition from the market society than they actually get); some have pointed out that self-interest drives the phenomenon (intellectuals preach government controls and regulation because they’ll be the controllers and regulators); some have taken the charitable view that intellectuals do not understand what the market really is about (as they cherish “projects” and the market is instead an unplanned order).

Friedman rejects the resentment view and proposes a version of the self-interest thesis by looking at the demand-side, so to speak. And it shows – behind the veil of his civility – very little consideration for the tastes of his fellow intellectuals for complex arguments, which seems to me quite a criticism.

Here’s the passage:

REASON: Perhaps we can go back to your comment about intellectuals. What do you think of the thesis put forth by von Mises and Schoeck, that envy motivates many contemporary intellectuals’ opposition to the free market?

FRIEDMAN: Well, I don’t think we’ll get very far by interpreting the intellectuals’ motivation. Their critical attitudes might be attributed to personal resentment and envy but I would say that a more fruitful direction, or a more fundamental one, is that intellectuals are people with something to sell. So the question becomes, what is there a better market for? I think a major reason why intellectuals tend to move towards collectivism is that the collectivist answer is a simple one. If there’s something wrong pass a law and do something about it. If there’s something wrong it’s because of some no-good bum, some devil, evil and wicked – that’s a very simple story to tell. You don’t have to be very smart to write it and you don’t have to be very smart to accept it. On the other hand, the individualistic or libertarian argument is a sophisticated and subtle one. If there’s something wrong with society, if there’s a real social evil, maybe you will make better progress by letting people voluntarily try to eliminate the evil. Therefore, I think, there is in advance a tendency for intellectuals to be attracted to sell the collectivist idea.

REASON: It’s paradoxical but people might then say that you are attributing to the collectivist intellectual a better feeling for the market.

FRIEDMAN: Of course. But while there’s a bigger market for Fords than there is for American Motors products, there is a market for the American Motors products. In the same way, there’s a bigger market for collectivist ideology than there is for individualist ideology. The thing that really baffles me is that the fraction of intellectuals who are collectivists is, I think, even larger than would be justified by the market.

Reprinted from Library of Economics and Liberty.

Alberto Mingardi

Alberto Mingardi

Alberto Mingardi is Director General of Istituto Bruno Leoni, Italy’s free-market think tank.

VIDEO: Might Atlas replace American workers?

A new version of  the Boston Dynamics robot Atlas is designed to operate outdoors and inside buildings.

It is specialized for mobile manipulation. It is electrically powered and hydraulically actuated. It uses sensors in its body and legs to balance and LIDAR and stereo sensors in its head to avoid obstacles, assess the terrain, help with navigation and manipulate objects.

This version of Atlas is about 5′ 9″ tall (about a head shorter than the DRC Atlas) and weighs 180 lbs.

EDITORS NOTE: The column with video is courtesy of Boston Dynamics.