3 Myths about Economic Intervention

Whenever a social or economic problem arises, most people’s default position is that the government should “do something about it.” Indeed, most people think that if the government does nothing, nothing will get done. It’s crazy to think our elected officials should sit idly by. But when the government does intervene, things can go wrong.

Let’s explore the empirical evidence when it comes to the effectiveness of three popular government interventions.

Myth #1: Occupational licensing increases the quality and safety of services provided in the market.

Occupational licensing has been one of the most rapidly growing labor market institutions in the United States over the last few decades. According to the Brookings Institution (the most influential think tank in the world),

In the early 1950s less than 5 percent of US workers were required to have a license from a state government in order to perform their jobs legally. By 2008, the share of workers requiring a license to work was estimated to be almost 29 percent.

Nowadays it isn’t just highly skilled professionals who need a license; florists, truck drivers, and even hair stylists in many states find that they can’t practice their trade without first overcoming expensive and time-consuming barriers.

The primary justifications for occupational licensing are to guarantee a minimum level of safety and quality for the services sold in the market. However, there isn’t much evidence that occupational licensing actually achieves these goals. A paper published by the National Bureau of Economic Research found that more difficult requirements to earn a dental license lead to higher prices for consumers but not to superior dental outcomes.

Other research has found that more stringent licensing requirements for opticiansmortgage brokers, and teachers have no impact on the quality of the services provided, while at the same time increasing the cost of these services. Even the merit of medical licenses is questionable. “The link between [medical] licensing and service quality is tenuous at best,” according to one review of the evidence on medical licensure and service quality. Most importantly, in a recent paper published by the Brookings Institution, the author notes,

The evidence from the economics literature suggests that licensing has had an important influence on wage determination, benefits, employment, and prices in ways that impose net costs on society with little improvement to service quality, health, and safety … a reduction in licensing restrictions … would lead to employment growth in affected occupations and a reduction in prices.

That evidence paints a clear picture: Occupational licensure erects entry barriers that hinder a person’s ability to practice a given profession while providing no measurable benefits to consumers. Indeed, it imposes net costs on society through higher consumer prices and lower levels of employment than would likely have been the case otherwise.

According to the Brookings paper, “Standard economic models imply that the restrictions from occupational licensing can result in up to 2.85 million fewer jobs nationwide, with an annual cost to consumers of $203 billion.”

At the very least, state and local governments ought to seriously consider slowing the growth of licensing restrictions as a means to mitigate their growing economic costs.

Myth #2: Patent protection spurs innovation.

An innovative company invests a large amount of money in research and development for a new product. The company then proceeds to release that product to the market. Soon after, other companies start producing the same product, and this competition leads to a general price decline as well as customers buying from many companies rather than just one. As a result of this competition, the original innovator’s return on investment is close to 0 percent.

When innovators understand that they likely will not recoup their investments because of the competitive nature of the marketplace, they won’t bother innovating at all — so the established wisdom goes. To provide incentives for innovation, intellectual property advocates argue, the government must provide a temporary monopoly status for the creators of new products, thus increasing the price of the product. This temporary monopoly is supposed to promote innovation by increasing the incentive to innovate.

However, with monopoly protection comes political rent-seeking. Firms that hold government-granted monopolies seek to extend the length of their monopoly status. Similarly, firms who do not yet have monopoly status in the form of a patent attempt to obtain one.

Another problem with patents isn’t necessarily that they fail at providing an incentive to innovate; it’s that existing patents may hinder the subsequent innovation that would have been built on these patented products.

The net effect of patents on innovation seems to be neutral at best, and probably negative. According to a paper published in the Journal of Economic Perspectives,

Overall, the weight of the existing historical evidence suggests that patent policies, which grant strong intellectual property rights to early generations of inventors, may discourage innovation. On the contrary, policies that encourage the diffusion of ideas and modify patent laws to facilitate entry and encourage competition may be an effective mechanism to encourage innovation.

Similarly, the authors of a working paper published by the Federal Reserve Bank of St. Louis find that “there is no empirical evidence that [patents] serve to increase innovation and productivity, unless the latter is identified with the number of patents awarded — which, as evidence shows, has no correlation with measured productivity.”

Even if there are some industries (pharmaceuticals, perhaps) where government intervention can promote innovation, patent laws can heavily distort the direction of those innovations, subsidizing some consumers at the expense of the rest of us.

A paper by economists from Harvard, MIT, and the University of Chicago found that distortions in the US patent system cause the pharmaceutical industry to invest more in drug development for people who are late-stage cancer patients than for people who are in the early stages of cancer or for cancer prevention.

The Economist summarized the findings:

The patent system encourages [pharmaceutical companies] to pump out drugs aimed at those who have almost no chance of surviving the cancer anyway. This patent distortion costs the US economy around $89 billion a year in lost lives.

Distortions like these cast doubt on the belief that society can rely on government to produce efficient patent laws.

Myth #3: Antitrust laws benefit consumers.

Competition is vital to a thriving market economy. It increases productivity,increases the availability of consumer goods, and reduces consumer prices. Many people believe, therefore, that government intervention is necessary to ensure that large firms do not dominate entire markets of goods and services and end up exploiting consumers.

According to the conventional wisdom, 19th-century “robber barons” were monopolists who used such techniques as predatory pricing to drive out competitors and then charge obscene prices. Consequently, on behalf of the people, the government stepped up and passed antitrust legislation, most notably the Sherman Antitrust Act of 1890, which put an end to the rapacious monopolists.

But is this popular version of history accurate? That some firms dominate large shares of a given market does not necessarily imply that they are acting as monopolists (that is, restricting output and raising prices). Indeed, these firms often gained their market share by expanding output, lowering prices, and offering the best prices to consumers. In other words, they were so good that their competitors simply couldn’t keep up.

Historian Thomas E. Woods writes,

Mainstream economics identifies monopolists by their behavior: they earn premium profits by restricting output and raising prices. Was that behavior evident in the industries where monopoly was most frequently alleged to have existed? Economist Thomas DiLorenzo, in an important article in the International Review of Law and Economics, actually bothered to look. During the 1880s, when real GDP rose 24 percent, output in the industries alleged to have been monopolized for which data were available rose 175 percent in real terms. Prices in those industries, meanwhile, were generally falling, and much faster than the 7 percent decline for the economy as a whole. We’ve already discussed steel rails, which fell from $68 to $32 per ton during the 1880s; we might also note the price of zinc, which fell from $5.51 to $4.40 per pound (a 20 percent decline) and refined sugar, which fell from 9¢ to 7¢ per pound (22 percent). In fact, this pattern held true for all 17 supposedly monopolized industries, with the trivial exceptions of castor oil and matches.

In other words, the conventional wisdom justifying antitrust laws isn’t based on an accurate representation of economic history.

Still, it may be worth asking if antitrust policy in the United States has achieved the supposed goal of saving consumers from predatory monopolists. The answer appears to be no.

In a highly cited paper published in the Journal of Economic Perspectives, the authors assessed the evidence regarding the efficacy of federal antitrust policy and found that there was “no evidence that antitrust policy in the areas of monopolization, collusion, and mergers has provided much benefit to consumers.” Further: “in some instances … [anti-trust policy] may have lowered consumer welfare.”

That’s a pretty shocking conclusion given how casually most people accept the efficacy of anti-trust law. Instead of relying on government intervention to break up monopolies, perhaps the government should start dismantling the barriers it creates that inhibit competition in the first place. According to a paper by economists at the Federal Reserve Bank of Minneapolis, “Government policies themselves, such as tariffs and other forms of protection, are an important source of monopoly” that lead to “significant welfare losses.”

The solution to monopoly — and professional licensure, and the incentives of innovation — is less government intervention, not more.

Corey Iacono is a student at the University of Rhode Island majoring in pharmaceutical science and minoring in economics.

The Other Half of the Inflation Story

Credit expansion adds noise to price signals by Sandy Ikeda.

More money means higher prices. It’s too bad not everyone understands that connection. Even some economists don’t get it. Readers of the Freeman do, I’m sure. And they also understand why that’s a bad thing.

Increasing the supply of money and credit, other things equal, will cause a general rise in wages and prices across an economy. When the Federal Reserve, the central bank of the United States, excessively “prints money,” the result is “inflation” as it’s now commonly called. For those who get the new money after everyone else has spent theirs, inflation means incomes will now buy fewer goods, and every dollar lent before prices rose will be worth less when it’s returned.

If inflation continues, people will eventually learn to demand more for what they sell and lend in order to compensate for the purchasing power that inflation keeps eating away. That, in turn, will cause prices to rise faster, which makes planning for households and businesses even more difficult. In the past, that difficulty has led to hyperinflation and a breakdown of the entire economic system.

But as awful as all this may be, it’s really only half the story, and perhaps not even the worse half. What follows is a highly simplified story of what happens.

The structure of production

If you’d like to build a sturdy house, you’ll need to have some kind of blueprint or plan that will tell you two things:

  1. how the frame, floor, walls, roof, plumbing, and electrical system will all fit together; and
  2. the order in which to put these components together.

Even if the house was made entirely of identical stones, you would need to know how to fit them together to form the floor, walls, chimney, and other structural components. No two stones would serve exactly the same function in the overall plan.

The economy is like a house in the sense that each of its parts, which we might call “capital,” needs to mesh in a certain way if the eventual result will be order and not chaos. But there are two big differences between a house and an economy. The first is that the economy is not only much bigger, but it consists of a multitude of “houses” or private enterprises that have to fit together orcoordinate, and so it’s an unimaginably more complex phenomenon than even the most elaborate house.

The second major difference is that a house is consciously constructed for a purpose, typically for someone to live in it. But an economic system is neither consciously designed by anyone nor intended to fulfill any particular purpose, other than perhaps to enable countless people with plans to do the best they can to achieve success. It’s a spontaneous order.

The way all the pieces of capital, from all the diverse people in the economy who own them, fit together is called the capital structure of production.

Credit expansion distorts the structure of production

When people decide to spend a certain portion of their incomes on consumption today, they are at the same time deciding to save some portion for consumption for the future. The amount that they save then gets lent out to borrowers and investors in the market for loanable funds. The rate of interest is the price of making those transactions across time. That is, when you decide to increase your saving, other things equal, the rate of interest (what some economists call the “natural rate of interest”) will fall. The falling interest rate makes borrowing more attractive to producers who invest today to produce more goods in the future.

That’s great, because when the market for loanable funds is operating freely without distortions, that means when people who saved today try to consume more in the future, there actually is more in the future for them to consume . Businesses today invested more at the lower rates precisely in order to have more to sell in the future when consumers want to buy more.

Now, if the Federal Reserve prints more money and that money goes into the loanable funds market, that will also increase the supply of loans and lower the interest rate and induce more borrowing and investment for future output. The difference here is that the supply of loans increases not because people are saving more now in order to consume more in the future, but only because of the credit expansion. That means that in the future, when businesses have more goods to sell, consumers won’t be able to buy them (because they didn’t save enough to do so) at prices that will cover all of the businesses’ costs. Prices will have to drop in order for markets to clear. Sellers suffer losses and workers lose their jobs.

And, oh yes, all that credit expansion also causes inflation.

While this process sounds rather involved, it’s still a highly simplified version of what has come to be known as the Austrian business cycle theory. (For a more advanced version, see here.) Of course, each instance in reality is significantly different from any other, but the narrative is essentially the same: credit expansion distorts the structure of production, and resources eventually become unemployed.

The explanation is more involved than the typical inflation-is-bad story that we’re more familiar with. Indeed, that probably explains why it’s the less-well-known half of the story. Even Milton Friedman and the monetarists pay little attention to the capital structure, choosing instead to focus on the problems of inflationary expectations.

Again, for Austrians, the problem arises when credit expansion artificially lowers interest rates and sets off an unsustainable “boom”; the solution is when the structure of production comes back into alignment with people’s actual preferences for consumption and saving, which is the “bust.” Most modern macroeconomists see it exactly the opposite way: the bust is the problem, and the boom is the solution.

An intricate, dynamic jigsaw puzzle

To close, I’d like to use an analogy I learned from Steve Horwitz (whom I heartily welcome back as a fellow columnist here at the Freeman).

The market economy is like a giant jigsaw puzzle in which each piece represents a unique unit of capital. When the system is allowed to operate without government intervention, the profit-and-loss motive tends to bring the pieces together in a complementary way to form a harmonious mosaic (although in a dynamic world, it couldn’t achieve perfection).

Credit expansion, then, is like someone coming along and making too many of some pieces and too few of others — and then, during the boom, trying to force them together, severely distorting the overall picture. During the bust, people realize they have to get rid of some pieces and try to discover where the others actually fit. That requires challenging adjustments and may take some time to accomplish. But if the government tries to “help” by stimulating the creation of more superfluous pieces, it will only confuse matters and make the process of adjustment take that much longer.

Inflation is bad enough. Unfortunately, it’s only half the story.

Sandy Ikeda

Sandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

NIGHTMARE ON MONROE STREET: Florida Student Assessment Tests

Someone please wake me up from this bad dream!  Did our state and federal government just resurrect Dr. Mengele and unleash him on our kids?

This has got to be the cruelest hoax of the century.  Let me get this straight.

There is a social engineering testing company we have paid $220 million to experiment on our kids and they can, and will be, selling the data they mine from our kids to others to track and manage their future?

We are forced to give our children to them for WEEKS of time they could have spent learning, and we don’t even know what’s in the tests?  And our kids will be punished if they tell us?

These tests were supposed to help us grade the teachers and schools, but we’re not even going to use this data because we know it’s invalid but we’re still testing anyway?

And we have to pay $Billions for specialized computers, software, networking, technicians and testing facilities to corporate cronies who have spent tens of millions lobbying our legislatures just to do this testing?

And these tests must be given to all our kids in public school no matter if they have been in special ed or are sick or the federal government will not give us our own tax money back we gave them for education?

And this company, AIR, has failed so badly in Utah, where WE PAID them $5 million to test it, that Utah is throwing it out, but we went ahead anyway?

And the tests failed in Florida’s roll out so badly that testing was repeatedly shut down for days and weeks all over the state, but we’re still using the results on children to make life changing decisions about them?

Please tell me this is just a bad dream and I will wake up and hear that our public schools are safe once again; That certified teachers are trusted to teach their students without government scripts, and grade their own students based on their mastery of the subjects taught on pencil and paper tests given in their own desks that we can share with parents.

Supreme Court to DoJ: Fourth Amendment Is Not a “Useless Piece of Paper”

A big win for personal liberty and the Bill of Rights EVAN BERNICK.

Any news that the Fourth Amendment is still being actively enforced by the courts is good news. At oral argument in Rodriguez v. United States, a case involving drug-sniffing dogs, Justice Sotomayor urged that if the arguments made by the Justice Department’s lawyer were accepted, the Fourth Amendment would become “a useless piece of paper.”

On Monday, in an engaged opinion written by Justice Ginsburg, the Supreme Court rejected those arguments and breathed some life into an essential check on government power.

The facts of the case: On March 27, 2012, Nebraska police officer Morgan Struble stopped Dennys Rodriguez for swerving once towards the shoulder of the road. After questioning Rodriguez and issuing him a written warning, Struble asked permission to walk his drug-sniffing dog around the outside of Rodriguez’s vehicle.

When Rodriguez refused, Struble made him exit the vehicle and wait for backup to arrive. Roughly eight minutes later, a second officer showed up, and Struble led his dog around the car. The dog gave an “alert” for illegal drugs, and a subsequent search turned up a bag of methamphetamine.

The Supreme Court held in Illinois v. Caballes (2005) that the use of drug-sniffing dogs during routine traffic stops does not violate the Fourth Amendment if the stop is not “prolonged beyond the time reasonably required to complete that mission.” In this case, however, the “mission” was already complete because Officer Struble had finished all of the inquiries and paperwork associated with the traffic stop itself.

The question for the Court was thus whether police can begin another mission — that is, an investigation not associated with the violation that occasioned the stop — without reasonable suspicion that the driver (or a passenger) has committed some separate offense.

At oral argument, the Justice Department’s lawyer, Ginger Anders, contended that the fact that the initial mission (writing Rodriguez up for crossing the white line) was complete should not preclude the officer from embarking on another mission. She added, “From the officer’s perspective, I think there’s an interest in officers having some leeway to sequence the stop.”

Such unwarranted “leeway” was not forthcoming.

In her opinion for the Court, Justice Ginsburg drew a principled distinction between “highway and officer safety” interests implicated by routine traffic stops and interests in “detect(ing) crime in general or drug trafficking in particular.” She determined that the dog sniff was not related to the former interests and, therefore, was not within the scope of the initial traffic stop.

Ginsburg summarized the government’s arguments thus: “(B)y completing all traffic-related tasks expeditiously, an officer can earn bonus time to pursue an unrelated criminal investigation.” But pursuit of the unrelated investigation, as Ginsburg explained, would be unreasonable if it were not supported by individualized suspicion because it would extend the seizure beyond the amount of “time reasonably required to complete (the stop’s) mission.”

The Fourth Amendment has not weathered the past half-century well. The Court’s embrace of balancing tests tied to “reasonable expectations” of privacy that “society” is “prepared to recognize as legitimate” has resulted in an an expanding zone of government intrusion.

Although the Fourth Amendment was designed to act as a bar against searches and seizures absent individualized suspicion, it has been construed to permit precisely such searches and seizures in the context of so-called “administrative inspections,” a broad category which encompasses inspections of buildings and workplaces, “administrative searches” of people and their possessions, and searches of businesses in “closely regulated” industries.

The Fourth Amendment’s decline has been abetted as well by the Court’s reflexive deference to law enforcement and its willingness to create doctrines out of whole cloth to ensure that police officers enjoy far more leeway than doctors, pilots, and others who routinely make life-or-death decisions under stressful conditions. The judicially-created doctrine of qualified immunity has effectively insulated police from liability for Fourth Amendment violations and ensured that victims bear the burden of their own injuries.

Monday’s decision, with its insistence upon individualized suspicion, is a welcome return to first principles. Public officials are our servants, not our masters, and they must be held accountable for the responsible exercise of the limited authority delegated to them. Any intrusion upon a person’s liberty without a rational, evidence-based justification is one that that the Constitution does not tolerate.

Justice Sotomayor’s criticism of the government at oral argument brought to mind the words of James Madison, who argued in Federalist 48 that mere “demarcation on parchment” of constitutional limits would be insufficient to secure liberty. InRodriguez, the Court adhered to its duty to give effect to those barriers.

Evan Bernick

Evan is the Assistant Director of the Center for Judicial Engagement at the Institute for Justice, a libertarian public interest law firm.

Israel Puts Price Controls on Books, Sales Plummet

A lesson on the terrible consequences of price controls comes from Israel this week, the Blaze reports:

A new Israeli law controlling the price of books and mandating guaranteed minimum compensation for writers has had the complete opposite effect of what lawmakers had intended. . . .

Under the new law’s dictates, any new book that’s been on the shelf 18 months or less may not be discounted. During the same time period, Israeli authors are guaranteed to earn a minimum of 8 percent of the price of the first 6,000 books sold and 10 percent of all subsequent books sold, the Jerusalem Post explained last year.

The results were swift and predictable:

Publishers told Haaretz that the law “has upset the entire literary food chain” with sales of new book titles down between 40 and 60 percent and down 20 percent for books overall. . . . Booksellers say they’ve experienced a 25 percent drop in children’s book sales in just one year, according to Channel 2.

The combination of price controls on books and minimum wages for authors has had pronounced effects on new, young, and unestablished writers:

Publishers have been hesitant to bank on new writers under the government mandate, because they don’t want to take the financial risk on books they’re not allowed to put on sale. And from a consumer perspective, those looking for new books are less likely to drop some $25 on the debut novel of a writer they’ve never heard of.

“Almost the only way for unknown writers to become popular is to put their first book on sale, even to give it for free if possible, to publicize their name and get their audience and eventually make money from their writing,” [Boaz] Arad said. Thus the new law has been particularly devastating on new authors who can’t get their work to the public.

Arad, chief of the Ayn Rand Center-Israel, said that the parliament blithely ignored the fates of similar laws in Europe, telling the Blaze, “It’s no surprise that we face a book market struggling and suffering and it’s the most unbecoming situation for the ‘People of the Book.’”

Good intentions fail to trump the laws of supply and demand once again.

To “protect” authors, the government has driven off readers.

Read more coverage of the story here.

Anything Peaceful

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Ammunition Under Attack: If Obama can Ban one Bullet He will Ban Them All [+Video]

History tells us that when governments take away the individuals rights to own firearms tyranny follows. When the government is the only  group with guns then the people are defenseless and cannot resist what follows. At times government has allies in it’s effort to disarm the citizenry.

Stephen P. Halbrook, in his column How the Nazis Used Gun Control, writes:

The perennial gun-control debate in America did not begin here. The same arguments for and against were made in the 1920s in the chaos of Germany’s Weimar Republic, which opted for gun registration. Law-abiding persons complied with the law, but the Communists and Nazis committing acts of political violence did not.

In 1931, Weimar authorities discovered plans for a Nazi takeover in which Jews would be denied food and persons refusing to surrender their guns within 24 hours would be executed. They were written by Werner Best, a future Gestapo official. In reaction to such threats, the government authorized the registration of all firearms and the confiscation thereof, if required for “public safety.”

The interior minister warned that the records must not fall into the hands of any extremist group. In 1933, the ultimate extremist group, led by Adolf Hitler, seized power and used the records to identify, disarm, and attack political opponents and Jews. Constitutional rights were suspended, and mass searches for and seizures of guns and dissident publications ensued. Police revoked gun licenses of Social Democrats and others who were not “politically reliable.”

Read more.

The National Shooting Sports Foundation reports:

Anti-hunting groups are working to ban the use of traditional ammunition with lead components. California has banned hunting with traditional ammunition and other states are under pressure to join the anti-hunting movement.

The economic impact of a ban on traditional ammo? Price increases will drive hunters away. In California, 36% of hunters said they will hunt less or stop hunting all together due to the ban. States will lose as a key contributor to the economy, bringing with it jobs and tax revenue.

This leads inevitably to an environmental impact. Fewer hunters mean fewer conservation dollars. Sportsmen and women pay taxes on every firearm or ammunition purchase – contributing to the largest source of conservation funding. Banning traditional ammunition will lead to funds drying up. These funds support the habitat and wildlife conservation projects that have helped populations soar in recent decades.

Wayne LaPierre, Executive Vice-President of the National Rifle Association, in Your Ammo Is Next On Obama’s List writes:

President Barack Obama is setting the table to ban your ammunition—all of it.

Don’t be fooled by the administration’s recent decision to back off from its proposed ban on common rifle ammunition. Even their own words—“at this time”—leave no doubt that their scheme to ban even more ammunition will be back.

Already, Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) Director Todd Jones has suggested that “any 5.56 round”—not just the M855 version—should be banned.

Even now, congressional Democrats are urging the president to move “swiftly” on the ban.

We know they’re coming back and we must, and will, be ready.

Read more.

The Second Amendment was not written to protect the government against the people, it was written to protect the people from the government.

RELATED ARTICLE: Michigan Priest Urges Parishioners to Arm Themselves Against an Increasingly Dangerous Society

Tax “Refunds”: Your Interest-Free Loan to the Government

What that check really means by DANIEL BIER.

It’s April, which means that most people will soon be getting checks from the government for overpaying on their taxes. It feels good to get a big chunk of money — especially since it was yours to begin with — but that tax “refund” cost you more than you realize.

Getting a refund means that, throughout the year, the IRS took more of your income than the law allows, and after you file your tax return, they have to give it back. But losing that money for months and months cost you something — goods and services you were not able to buy (and hence benefit from), investments you didn’t make, debt you didn’t pay down, savings you did not accumulate, etc.

A tax refund is, in essence, an interest-free loan from you to the government. Over at FiveThirtyEight, Ben Casselman and Reuben Fischer-Baum show you just how much that loan cost you.

More than three in four taxpayers get refunds, and the average amount they get back is close to $3,000, according to IRS data. That means that for many Americans, their annual refund is the biggest single check they’ll get all year.

What could you have done with that $3,000? Interest rates are very low for savings accounts right now, so that wouldn’t get you much, but if you had invested it in stocks (say, an index fund for the S&P 500), it would have earned you an extra $239.

The stock market can be risky, but the great thing about money is that you can do lots of things with it. Casselman and Fischer-Baum calculate:

Nearly 40 percent of American households carry a credit card balance, and those loans carry high interest rates. . . If instead of getting a $3,000 refund come April, you’d been able to pay off $250 in credit card debt each month (or put $250 a month less on your card), you would have avoided more than $300 in interest expenses by Tax Day.

And then there’s the cost of just not being able to buy things you need when you need them: a car, appliances, or whatever else you had to delay purchasing because the government “borrowed” your income. You missed out on the benefits those goods would have provided. Even if you have zero net tax liability at the end of the year and get all your money back, you’ll still be paying this cost.

People aren’t necessarily being stupid about their taxes, though. The tax code is so intricate and so complex that it can be impossible to predict what you’ll owe, and if you underpay, God help you, the IRS will charge you interest, as well as possible fines and fees.

The tax withholding system is designed to encourage taxpayers to overpay. It’s a sneaky, invisible tax levied on those without the financial savvy or expert advice to avoid it. And, as Don Boudreaux has pointed out in the past, it is a costly and regressive system that disproportionately hurts people who get income from wages versus those (mostly rich people) who get income from non-wage sources, like capital gains.

It’s nice to get your money back — but don’t forget, “refunds” aren’t free money.

Check out FiveThirtyEight’s calculator to see how much your interest-free loan to Uncle Sam cost you this year.

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.

Earth Month: 22 Ways to Think about the Climate-Change Debate

Reasoned agnosticism is a welcome antidote to hysteria by MAX BORDERS.

Reasonable people can disagree about the nature and extent of climate change. But no one should sally forth into this hostile territory without reason and reflection.

“Some scientists make ‘period, end of story’ claims,” writes biologist and naturalist Daniel Botkin in the Wall Street Journal, “that human-induced global warming definitely, absolutely either is or isn’t happening.”

These scientists, as well as the network of activists and cronies their science supports, I will refer to as the Climate Orthodoxy. These are the folks who urge, generally, that (a) global warming is occurring, (b) it is almost entirely man-made, and (c) it is occurring at a rate and severity that makes it an impending planetary emergency requiring political action. A Climate Agnostic questions at least one of those premises.

Trying to point out the problems of the Climate Orthodoxy to its adherents is like trying to talk the Archbishop of Canterbury into questioning the existence of God. In that green temple, many climatologists and climate activists have become one in the same: fueled both by government grants and zealous fervor.

Room for debate

But the debate must go on, even as the atmosphere for dialogue gets increasingly polluted. The sacralization of climate is being used as a great loophole in the rule of law, an apology for bad science (and even worse economics), and an excuse to do anything and everything to have and keep power.

Those with a reasoned agnosticism about the claims of the Climate Orthodoxy will find themselves in debate. It’s April 22nd — Earth Day. So I want to offer 22 ways to think about the climate-change debate. I hope these points will give those willing to question man-made climate change some aid and comfort.

1. Consider the whole enchilada

First, let’s zoom out a few orders of magnitude to look at the Climate Orthodoxy as a series of dots that must be connected, or better, a series of premises that must be accepted in their totality.

  • The earth is warming.
  • The earth is warming primarily due to the influence of human beings engaged in production and energy use.
  • Scientists are able to limn most of the important phenomena associated with a warming climate, disentangling the human from the natural influence, extending backward well into the past.
  • Scientists are able then to simulate most of the phenomena associated with a warming earth and make reasonable predictions, within the range of a degree or two, into the future about 100 years.
  • Other kinds of scientists are able to repackage this information and make certain kinds of global predictions about the dangers a couple of degrees will make over that hundred years.
  • Economists are able to repackage those predictions and make yet further predictions about the economic costs and benefits that accompany those global predictions.
  • Other economists then make further predictions based on what the world might be like if the first set of economists is right in its predictions (which were based on the other scientists’ predictions, and so on) — and then they propose what the world might look like if certain policies were implemented.
  • Policymakers are able to take those economists’ predictions and set policies that will ensure what is best for the people and the planet on net.
  • Those policies are implemented in such a way that they work. They have global unanimity, no defections, no corruption, and a lessening of carbon-dioxide output that has a real effect on the rate of climate change — enough to pull the world out of danger.
  • Those policies are worth the costs they will impose on the peoples of the world, especially the poorest.

That is a lot to swallow. And yet, it appears that the Climate Orthodoxy requires we accept all of it. Otherwise, why would the Intergovernmental Panel on Climate Change (IPCC) publish a document called “Summary for Policymakers”?

2. Models are not evidence

The problem with models is that they are not reality. Whenever we try to model complex systems like the climate, we’re only getting a simulacrum of a system, designed to represent projected scenarios. So when a climatologist presents a model as evidence, he is playing a kind of game. He wants you to think, by dint of computer wizardry, that he has drawn for you a picture of the world as it is. But he hasn’t. And if observation of surface temperatures over the last 18 years has shown one thing, it’s that climate models have been inadequate tools for forecasting complex natural phenomena.

3. Forecast is not observation 

In the first IPCC assessment of 1992, the authors wrote, “Scenarios are not predictions of the future and should not be used as such.” Whether one views the models as predictions or as scenarios, the evidence is barely within the most conservative of these in the most recent assessment, which is essentially designed to hide good news.

When one attempts to forecast — that is, to tell the future — one is not engaging in observation. That is not to claim that prediction isn’t a part of the scientific enterprise; it’s simply to say that when one’s predictions (or scenarios) are off, one’s theory is suspect, and it must be modified and tested again. Any theory, and any forecast scenarios on which it’s based, have to be tested in the crucible of observation. The Climate Orthodoxy has thus far failed that test.

4. Climate systems are complex

As I alluded to above, climate systems are complex systems. And complex systems are notoriously immune to certain types of prediction and forecast. As Edward Lorenz famously taught us when he coined the term “butterfly effect,” the slightest changes in initial conditions can give rise to wild, unpredictable outcomes in the system. It’s no different for a simulation. “I realized,” said Lorenz of his findings, “that any physical system that behaved non-periodically would be unpredictable.” Now, those concerned about climate change will try to use this perspective to suggest changes to the atmosphere could cause wild, unpredictable climatic catastrophes. And that might turn out to be true. (But it might not. We’ll discuss Pascal’s Climate Wager later.) What we should be concerned about for now is how easy it is for a single tiny error (or purposeful fudge) in a climate model to generate ranges that, though they can feed hysteria, are out of touch with reality.

5. Garbage in equals garbage out

Complex systems also make modeling difficult to undertake because a model is a kind of simulation whose success turns on the accuracy of inputs. Computer scientists have an apt saying for such simulations: “Garbage in, garbage out.” If any of your variables are in error, your results are suspect. And the more variables you introduce, the more likely you are to introduce errors. But for the model to resemble reality, you have to be more granular by including more and more variables that represent causal relationships in the world. As more variables get introduced, the likelihood of introducing false inputs goes up proportionally. And those errors compound. In The Black Swan, Nicolas Nassim Taleb writes:

Simply, we are facing nonlinearities and magnifications of errors coming from the so-called butterfly effects … actually discovered by Lorenz using weather forecasting models. Small changes in input, coming from measurement error, can lead to massively divergent projections — and that generously assumes we have the right equations.

In other words, the lower “res” the model, the less it conforms to reality’s details. The higher “res” the model, the more likely it is to be infected with errors. This is one of the great paradoxes of modeling.

6. Data can be detached

The problem with numbers is that they’re sometimes detached from the phenomena they’re meant to describe. If we see a record of a person’s body temperature from 1969 — at 99.1 degrees — we might assume he had a fever. But knowing the context of that measurement may lead us to tell a different story about what caused his temperature at that time: for example, that the man had been sitting in a hot tub. Climate data from the past can offer even less context, clarity, and accuracy.

But let’s suppose all the world’s thermometers — both satellite and land — have neither heat-island effects nor any other distortions, and that they offer an accurate description of the earth’s temperature. Let us also assume that the temperature readings over the last hundred years are completely accurate and represent the planet as a whole, and that the temperature data derived from inferential methods such as ice core samples and tree rings also paint an accurate picture of surface temperatures well into the past, which is doubtful.

We are still left with a problem: We cannot simply look at the outputs of the climate system (temperature), because they are linked to all-important inputs — that is, those factors that caused any changes in temperature. The inability for climate scientists to tell a more conclusive causal story about factors in past warming is another reason to remain agnostic about trends over longer timescales.

7. Decomposability is a virtual impossibility

Another serious problem with the theory of anthropogenic global warming (AGW) is that, if it is a theory at all, it seems to be a cluster of interconnected theories and interconnected models. Let that settle for a moment. Consider that the IPCC, the central climate-science organization whose job is to give the definitive word on climate change, has to assemble the work of hundreds, maybe thousands, of scientists and weave it into a comprehensive report. But as Norgaard and Baer write in Bioscience, “Models developed and heretofore interpreted within individual scientific communities are taken out of their hands, modified, and used with other models in ways over which the original scientific communities no longer have control.”

Now, in stitching together the various individual theories, studies, and models of such a diverse and inevitably error-prone community, the problem goes deeper. Never mind that the IPCC central committee has deep incentives to interpret the data in a way that creates the impression of a single, uniform theory. Suppose that every climate scientist that gets picked by the IPCC for its report claims 95 percent confidence. Even if each scientist were 95 percent certain of his particular prediction or set of parameters, we can’t be so certain about the agglomeration of 10 scientists’ opinions about disparate phenomena, much less 50. Nor can any given scientist be 95 percent confident about the work of any other scientist.

8. Stats stand in for certainty

People crave certainty, and politicians want to provide it. So when we hear that a scientist is 95 percent confident about his or her conclusions, we feel like that’s close enough, derived as it presumably is through some sort of statistical analysis. “Yet since things are ultimately uncertain,” writes theoretical mathematician William Byers:

We satisfy this need by creating artificial islands of certainty. We create models of reality and then insist that the models are reality. It is not that science, mathematics, and statistics do not provide useful information about the real world. The problem lies in making excessive claims for the validity of these methods and models and believing them to be absolutely certain.

Byers’s book The Blind Spot: Science and the Crisis of Uncertainty is a welcome antidote to this sort of scientific hubris.

Climatologist Judith Curry put matters a little differently. When a journalist asked her how the 95 percent number was determined, she replied, “The 95% is basically expert judgment, it is a negotiated figure among the authors. The increase from 90–95% means that they are more certain. How they can justify this is beyond me.”

The reporter then asked if it was really all so subjective. Curry’s reply: “As far as I know, this is what goes on. All this has never been documented.”

9. AGW might not be a theory at all

What makes a scientific theory a theory at all? This has been debated among philosophers of science, but most people generally agree that a certain set of minimum criteria should be in place. Among them, at least, are these:

  1. Is the theory testable? Can we formulate hypotheses grounded in the theory, then figure out a way to test the hypotheses?
  2. Is the theory falsifiable? Is there evidence that could call the theory into question? What evidence would exclude the theory?
  3. Does the theory unify? Does the theory unify seemingly unrelated phenomena under a single explanatory framework?

AGW is not testable in any laboratory sense, of course, but many natural phenomena are not. And yet we’ve already discussed the problems of testing models against available evidence — considering the models’ hypotheses and seeing whether these track with what we can observe. One might argue that models stand for hypotheses, and suffice for a testability criterion. But this is unclear.

Perhaps the most damning of the three for AGW is the falsifiability criterion. That is, the Orthodoxy has created a situation in which models play a major role in the theoretical framework. But when the models fail to track with observation, the Orthodoxy claims the timescales are not sufficient to determine a climate trend — for example, that discussing the pause of the last 18 years is “cherry picking.” Fair enough. But then what sort of data wouldcount to falsify the theory? And what, going forward, is a time scale sufficient to determine a climate trend? 100 years?

If we accept these longer timescales as sufficient to smooth out natural variability, we might reasonably ask the Orthodoxy to remain agnostic about AGW while another 70 years of data come in. (After all, they have had to rely on spurious proxies to “trick” temperature trends in the past.) But the Orthodoxy then changes tack and argues that’s too long to wait! After all, we might be going through an emergency that requires immediate action. So, despite the insufficient timescale, they expect everyone to accept the climate consensus as the basis for policymakers’ faith-based initiatives.

Finally, does AGW unify diverse phenomena under a single explanatory framework? AGW is meant to explain everything from ocean acidification to melting sea ice, to rising sea levels, to regional desertification. The trouble is with the explanatory part. When taken in isolation, each of these purported consequences of global warming either aren’t happening as predicted, or, if they are, they can be explained by factors outside AGW theory. So it’s not clear that AGW satisfies any unification criterion, either.

10. It’s matter of degree

What if the Climate Orthodoxy is wrong and the “lukewarmists” like Judith Curry turn out to be right? If we look at the empirical data over the last 30 years or so, they might be. As Rational Optimist author writes, “I found myself persuaded by the middle-of-the-road, ‘lukewarm’ argument — that CO2-induced warming is likely but it won’t be large, fast or damaging.” The Climate Orthodoxy might have been hyperventilating over a degree of warming over a century. (And, of course, policies driven by hysteria could mean the poorest people might be prevented from joining the middle class for the sake of an almost imperceptible change.)

11. Pascal’s Climate Wager

Suppose we all agreed that 100 years of accurate temperature data would be sufficient to determine a climate trend. The Climate Orthodoxy argues that we must act now to prevent climate change, in case they are right. People familiar with theology will recall this is the analogous to Pascal’s Wager, in which 17th-century Christian philosopher Blaise Pascal tells us we’d better believe in God, Heaven, and Hell. If we believe and we’re wrong, we haven’t lost anything, according to Pascal. But if we disbelieve and we’re wrong, we have eternity to suffer. Similarly, we must believe, suffer, and sacrifice now to stave off climate change.

There are a number of problems with this rationale, but the biggest one is rather ironic. There is no viable political climate solution currently on the table that is capable of mitigating any predicted warming. Taking the IPCC’s own assumptions, Patrick Michaels and Paul “Chip” Knappenberger found that there is no winning “wager” here:

Assuming the IPCC’s value for climate sensitivity (i.e., disregarding the recent scientific literature) and completely stopping all carbon dioxide emissions in the US between now and the year 2050 and keeping them at zero, will only reduce the amount of global warming by just over a tenth of a degree (out of a total projected rise of 2.619°C between 2010 and 2100).

If you think that a rise of 2.482°C is vastly preferable to a rise of 2.619°C then all you have to do is set the carbon tax large enough to drive U.S. emissions to zero by mid-century — oh yeah, and sell that tax to the American people.

So even if all the models turn out to be true, there is little we can do with policy at this point. So unlike Pascal’s Wager, there is no amount of repenting and belief that could save us. We’re either all going to climate hell, anyway, or something ain’t right. The whole conversation about “climate action” appears to be moot at this point. Don’t believe it? Check the Handy Dandy Climate Temperature Savings Calculator.

12. The debate is not over, and the science is not settled

Freeman Dyson, a brilliant theoretical physicist, is no man of the right. But he is intellectually honest enough to wear the mantel of “heretic.” Here’s why:

I am especially unimpressed by the claim that a prediction of rapid and dangerous warming is “settled science,” as firm as evolution or gravity. How could it be? It is a prediction! No prediction, let alone in a multi-causal, chaotic and poorly understood system like the global climate, should ever be treated as gospel. With the exception of eclipses, there is virtually nothing scientists can say with certainty about the future. It is absurd to argue that one cannot disagree with a forecast. Is the Bank of England’s inflation forecast infallible?

Indeed. And to say that the debate is over is not to say that those willing to debate have nothing to say. It is rather to say that you have turned off your curiosity, your humility, and your willingness to engage in discourse so that you can get what you want.

And what should we say about all this “consensus” talk? Science writer Ronald Bailey (no agnostic about climate change) wisely says:

One should always keep in mind that a scientific consensus crucially determines and limits the questions researchers ask. And one should always worry about to what degree supporters of any given scientific consensus risk succumbing to confirmation bias. In any case, the credibility of scientific research is not ultimately determined by how many researchers agree with it or how often it is cited by like-minded colleagues, but whether or not it conforms to reality.

13. Climate science isn’t climate policy

One of the biggest problems with the Climate Orthodoxy is that one set of experts that is cocksure about the science really has no expertise in the economics of climate change or in climate-change policy. How in the world is an expert in albedo effects going to have anything meaningful to say about whether climate change is good or bad for the world today — much less 50 years into the future? This profound disconnect has never stopped scientists like James Hansen from advocating for certain types of policies.

Seeing this disconnect, however, the Orthodoxy has begun training up so-called specialists in the economics of climate change, led by such “experts” as Sir Nicholas Stern, whose models and predictions are the stuff of both speculation and spectacle. More tempered in his prognostications is Yale’s William Nordhaus, but economists such as Robert Murphy offer very good reasons to question Nordhaus’s almanac, as well.

If you think modeling the climate is hard, try modeling an economy. As economist Arnold Kling writes,

I think that if the press were aware of the intellectual history and lack of scientific standing of the models, it would cease rounding up these usual suspects. Macroeconometrics stands discredited among mainstream academic economists. Applying macroeconometric models to questions of fiscal policy is the equivalent of using pre-Copernican astronomy to launch a satellite or using bleeding to treat an infection.

Whatever the pedigree of the economist, his laurels, or his letters, mixing macrometeorology with macroeconomics is like trying to read tea leaves.

14. The climate orthodoxy is inherently corruptive

Here’s the heretic Dyson again:

The politicians and the public expect science to provide answers to the problems. Scientific experts are paid and encouraged to provide answers. The public does not have much use for a scientist who says, “Sorry, but we don’t know.”

He’s right. It is nearly impossible to inoculate science from the influence of those who pay the bills. As I wrote in “The Climate Complex Strikes Back” (Freeman, February 2015), “That government money shouldn’t corrupt is just another application of the unicorn fallacy so common among well-meaning greens.” And it’s even tougher not to develop blind spots and biases when those who fund you claim to be on the side of the angels. That is why we must put our faith not in centralized hierarchies of experts but in the Republic of Science itself.

15. Reasoned agnosticism is not “denial”

Godwin’s law surfaces quickly in the debates about global warming. Here’s Botkin again:

For me, the extreme limit of this attitude was expressed by economist Paul Krugman, also a Nobel laureate, who wrote in hisNew York Times column in June, “Betraying the Planet” that “as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.” What had begun as a true scientific question with possibly major practical implications had become accepted as an infallible belief (or if you’re on the other side, an infallible disbelief), and any further questions were met, Joe-McCarthy style, “with me or agin me.”

Of course, the term “denier” is meant to evoke Holocaust denial.

16. AGW might be beneficial on net

If Stern and Nordhaus (see #11) can engage in economic speculation, then we can, too. In fact, when we look back at warmer periods in the history of civilization, we see relative flourishing.

According to Matt Ridley, writing in the UK Spectator, Professor Richard Tol of Sussex University aggregated 14 major academic papers about the future effects of climate change. Tol determined that things look rosier than the Orthodoxy would have us believe:

Professor Tol calculated that climate change would be beneficial up to 2.2°C of warming from 2009 (when he wrote his paper). This means approximately 3°C from pre-industrial levels, since about 0.8°C of warming has happened in the last 150 years.

And in a more recent paper, Tol looks back over the last 100 years. He concludes that climate change raised human and environmental welfare during the 20th century:

By how much? He calculates by 1.4 per cent of global economic output, rising to 1.5 per cent by 2025. For some people, this means the difference between survival and starvation.

Sure, it’s speculative, even looking back. But isn’t it just as likely that there will be benefits as costs? It might turn out that if the planet does warm a couple of degrees, there will be new forms of flourishing.

17. One hundred years of certitude

One wonders what people in 1915 would have thought about our lives today. The pace of technological change has been staggering. And though a few people tried to make predictions, they were not cut out for the task. Likewise, we cannot readily say what forms of energy we’ll use, and what technologies they will power. As Troy University economist Daniel Sutter reminds us,

A dynamic market economy will feature too much creative destruction to allow detailed planning for the distant future. Nothing is sure in a market economy ten years from now, much less 100 years, and discounting in cost-benefit analysis simply reflects this reality. The economic future becomes more predictable when government controls economic activity, but then stagnation results. Discounting in climate change economics tells us to create wealth to protect future generations. Economic freedom and the institutions of the market economy, not central planning of energy use, is the prudent policy approach to a changing climate.

Inherent in our inability adequately to plan and predict is a recommendation that we adapt instead.

18. Adaptation as policy prescription

If the climate is warming some, and it might be, then what is the best policy? One can make a powerful case for adaptation. Adaptation is not about doing nothing. It means liberalizing the world on a number of dimensions of economic freedom to ensure that countries are rich enough to be resilient. A wealthy and adaptive people like the Dutch can figure out how to live with rising waters. A rich and resilient people like the Hong Kong Chinese can figure out how to build a city-state on a rock in 50 years. A rich and resilient citizenry of the world should be able to handle what a degree or two of change in average global temperature has in store for us — especially as we will undergo untold technological transformations over the next decade or two.

19. Climate policy has a defector problem

The problem with climate-change policies like carbon taxes is that they require near-global unanimity to work. That is, if the United States adopts a carbon tax, energy becomes more expensive for Americans. But if energy becomes more expensive here, it might be less expensive in other parts of the world. And, indeed, businesses and the energy industry will engage in energy arbitrage. Developing countries like India, China, Brazil, and Russia will welcome these energy arbitrageurs with open arms. They might develop even as we stagnate. And they should: they are lifting billions of people out of poverty. But there’s a problem here for climate policy. Every signatory to a climate treaty has strong incentives to defect. And as defectors do their thing, carbon continues to pour into the atmosphere. Nothing changes to mitigate climate change; industry simply shifts around.

20. Climate policy has an efficacy problem

Suppose we don’t accept Pascal’s Climate Wager and we conclude that no climate policy under consideration will do much to mitigate warming. Those who claim that action is vital respond to this claim by saying, “We have to start somewhere!” But if you’re conceding that no policy under consideration does very much, why would you start with a failed policy? It appears to be more empty rhetoric used to justify an unprecedented level of taxation designed to feed some of the most insatiable and predatory governments in the world.

21. Climate policy has a corruption problem

Earlier, I suggested that the Climate Orthodoxy has a corruptive influence on science. We shouldn’t stop there. The “climate industrial complex“ is large and growing. Scores of green energy companies are on the take, donating campaign contributions to politicians who control the purse strings at the Department of Energy. Legacy energy utilities lick their chops, seeing opportunities to game the system in a carbon-tax environment that is unfavorable to their competitors. Traders get in on energy credit schemes. Green NGOs play “Baptists” to all the corporate “bootleggers,” and when you scrutinize it all — including the billions of dollars the federal government pours into the “science” — the whole things starts to smell like one festering pile of corruption.

22. The confidence game

If you’re feeling uncertain, consider that the Climate Orthodoxy has to do everything it can to pull members of the public like you into assent. Here’s one final nod to Dyson:

The public prefers to listen to scientists who give confident answers to questions and make confident predictions of what will happen as a result of human activities. So it happens that the experts who talk publicly about politically contentious questions tend to speak more clearly than they think. They make confident predictions about the future, and end up believing their own predictions. Their predictions become dogmas, which they do not question. The public is led to believe that the fashionable scientific dogmas are true, and it may sometimes happen that they are wrong. That is why heretics who question the dogmas are needed.

If you are a Climate Agnostic, that’s okay. (You won’t burn at the stake; you’ll merely burn in the heat of a baking planet.)

Postscript: We are creative conservationists

As the world changes for this reason or that, we are growing richer, stronger, smarter, and more resilient. We are becoming more conscious about the environment and its natural treasures. On almost every environmental dimension — including air quality, water quality, the extent of forestland, and the return of wildlife — things are getting better. Whether you think most of these gains are a consequence of environmental regulations or improvements in market efficiencies, one thing is clear: wealthier is healthier. We should continue to cherish the beauty of the planet and continue to grow economically so we can afford to protect its wonders. Being agnostic about climate change does not require that we stop loving Planet Earth, it only means keeping a cool head and an open mind, even when the discourse overheats.

Max Borders

Max Borders is the editor of the Freeman and director of content for FEE. He is also co-founder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.

Is the “Austrian School” a Lie?

Is Austrian economics an American invention? by STEVEN HORWITZ and B.K. MARCUS.

Do those of us who use the word Austrian in its modern libertarian context misrepresent an intellectual tradition?

We trace our roots back through the 20th century’s F.A. Hayek and Ludwig von Mises (both served as advisors to FEE) to Carl Menger in late 19th-century Vienna, and even further back to such “proto-Austrians” as Frédéric Bastiat and Jean-Baptiste Say in the earlier 19th century and Richard Cantillon in the 18th. Sometimes we trace our heritage all the way back to the late-Scholastic School of Salamanca.

Nonsense, says Janek Wasserman in his article “Austrian Economics: Made in the USA”:

“Austrian Economics, as it is commonly understood today,” Wasserman claims, “was born seventy years ago this month.”

As his title implies, Wasserman is not talking about the publication of Principles of Economics by Carl Menger, the founder of the Austrian school. That occurred 144 years ago in Vienna. What happened 70 years ago in the United States was the publication of F.A. Hayek‘s Road to Serfdom.

What about everything that took place — most of it in Austria — in the 74 years before Hayek’s most famous book? According to Wasserman, the Austrian period of “Austrian Economics” produced a “robust intellectual heritage,” but the largely American period that followed was merely a “dogmatic political program,” one that “does a disservice to the eclectic intellectual history” of the true Austrian school.

Where modern Austrianism is “associated with laissez-faire economics and libertarianism,” the real representatives of the more politically diverse tradition — economists from the University of Vienna, such as Fritz Machlup, Joseph Schumpeter, and Oskar Morgenstern — were embarrassed by their association with Hayek’s bestseller and its capitalistic supporters.

These “native-born Austrians ceased to be ‘Austrian,'” writes Wasserman, “when Mises and a simplified Hayek captured the imagination of a small group of businessmen and radicals in the US.”

Wasserman describes the popular reception of the as “the birth of a movement — and the reduction of a tradition.”

Are we guilty of Wasserman’s charges? Do modern Austrians misunderstand our own tradition, or worse yet, misrepresent our history?

In fact, Wasserman himself is guilty of a profound misunderstanding of the Austrian label, as well as the tradition it refers to.

The “Austrian school” is not a name our school of thought took for itself. Rather it was an insult hurled against Carl Menger and his followers by the adherents of the dominant German Historical School.

The Methodenstreit was a more-than-decade-long debate in the late 19th century among German-speaking social scientists about the status of economic laws. The Germans advocated methodological collectivism, espoused the efficacy of government intervention to improve the economy, and, according Jörg Guido Hülsmann, “rejected economic ‘theory’ altogether.”

The Mengerians, in contrast, argued for methodological individualism and the scientific validity of economic law. The collectivist Germans labeled their opponents the “Austrian school” as a put-down. It was like calling Menger and company the “backwater school” of economic thought.

“Austrian,” in our context, is a reclaimed word.

But more important, modern Austrian economics is not the dogmatic ideology that Wasserman describes. In his blog post, he provides no actual information about the work being done by the dozens of active Austrian economists in academia, with tenured positions at colleges and universities whose names are recognizable.

He tells his readers nothing about the  books they have produced that have been published by top university presses. He does not mention that they have published in top peer-reviewed journals in the economics discipline, as well as in philosophy and political science, or that the Society for the Development of Austrian Economics consistently packs meeting rooms at the Southern Economic Association meetings.

Have all of these university presses, top journals, and long-standing professional societies, not to mention tenure committees at dozens of universities, simply lost their collective minds and allowed themselves to be snookered by an ideological sleeper cell?

Or perhaps in his zeal to score ideological points of his own, Wasserman chose to take his understanding of Austrian economics from those who consume it on the Internet and elsewhere rather than doing the hard work of finding out what professional economists associated with the school are producing. Full of confirmation bias, he found what he “knew” was out there, and he ends up offering a caricature of the robust intellectual movement that is the contemporary version of the school.

The modern Austrian school, which has now returned to the Continent and spread across the globe after decades in America, is not the dogmatic monolith Wasserman contends. The school is alive with both internal debates about its methodology and theoretical propositions and debates about its relationship to the rest of the economics discipline, not to mention the size of the state.

Modern Austrian economists are constantly finding new ideas to mix in with the work of Menger, Böhm-Bawerk, Mises, and Hayek. The most interesting work done by Austrians right now is bringing in insights from Nobelists like James Buchanan, Elinor Ostrom, and Vernon Smith, and letting those marinate with their long-standing intellectual tradition. That is hardly the behavior of a “dogmatic political program,” but is rather a sign of precisely the robust intellectual tradition that has been at the core of Austrian economics from Menger onward.

That said, Wasserman is right to suggest that economic science is not the same thing as political philosophy — and it’s true that many self-described Austrians aren’t always careful to communicate the distinction. Again, Wasserman could have seen this point made by more thoughtful Austrians if he had gone to a basic academic source like the Concise Encyclopedia of Economics and read the entry on the Austrian school of economics.

Even a little bit of actual research motivated by actual curiosity about what contemporary professional economists working in the Austrian tradition are doing would have given Wasserman a very different picture of modern Austrian economics. That more accurate picture is one very much consistent with our Viennese predecessors.

To suggest that we do a disservice to our tradition — or worse, that we have appropriated a history that doesn’t belong to us — is to malign not just modern Austrians but also the Austrian-born antecedents within our tradition.

Steven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.

B.K. Marcus

B.K. Marcus is managing editor of the Freeman.

The Economics of Karaoke (and Other Necessities)

Even sticker shock can reveal something about scarcity by Robert P. Murphy.

I am a mild-mannered economist by day. But by night, I am a zombie and a karaoke singer (sometimes simultaneously). So, when I travel to events, the other attendees often want to organize a karaoke outing. My recent trip to Philadelphia was no exception. There were two occasions where even I — a professional economist — was flummoxed by the price for a particular service, but on reflection I was glad that the market had made it an option.

The first jolt came when I went to self-park at my hotel in downtown Philadelphia. The weekend rate was around $33 per night (with tax), which was several dollars more than the more prominently posted daily rate (applicable on weekdays).

“It costs me more to park per day than to rent this car,” I grumbled as I went down into the bowels of the property.

A moment later, I realized this was a non sequitur. After all, it would hardly help me if the price for renting the car were higher. I used to live in New York City, so I was used to high parking prices. Really, I should have been thinking, “Man, I’m so lucky that the market economy provides me this virtually new car to drive from Nashville to Philly at less than it costs me to park!”

I actually love parking garages, because they epitomize the market solution to the constraints of the big city. People often think in terms of space (meaning square footage) being expensive in a densely populated city, but more accurately, it’s the area of real estate on the ground that’s so expensive. The market response to the problem of parking is to take the relatively small “footprint” of part of a city block and then (a) dig down and (b) build up. The invisible hand decided to get the cars out of everybody’s way by effectively stacking them in very tall, tightly packed columns.

My other episode with market prices where “this time, it’s personal” occurred the next night, as a group decided to go out for karaoke. It was a Saturday, so of course 18,000 other people in the Philadelphia area had the exact same thought. The problem is that if you have a group of six or more people, at best everybody will get to sing one song if you go to a conventional karaoke bar.

Once again, the market has options for those who are willing to pay extra. In our case, we reserved two hours in a private karaoke room at an Asian restaurant. (I’m not going to say how much I had to pay for this — in case anybody from my group reads this and feels bad — but let’s just say I could’ve rented more than one car for a day at that rate.)

Here, too, when the guy on the phone quoted me the price, I thought it was excessive. But then I reminded myself that we were in a high-traffic area on a Saturday night. We wanted this business to build a (relatively) sound-insulated room equipped to play karaoke songs just for our small group — while people brought us drinks. Truly, Louis XIV would have been blown away by such luxuries, though the book wouldn’t have had any of the songs he would have tried to look up. As it turned out, the market was even more bountiful than I realized when I made the reservation. The unexpectedly high price quote I got on the phone was just the minimum I was guaranteeing for our party. Because our group ordered enough drinks, we actually got the karaoke room itself “for free.”

In this world of finite resources and unlimited human desires, there is scarcity. As in nature, the fact of scarcity creates a tendency for hostility among members of a species, as they compete for the limited goodies available. But unlike the merciless struggle of biological competition, human society enjoys peaceful cooperation through market-based competition. Specifically, humans employ (often imperfectly) the institution of private property, which assigns specific rights of usage and control to particular individuals.

One outgrowth of private property is the emergence of market prices, which merely reflect the terms on which people have exchanged portions of their respective property. Rather than fuming at the “outrageous” price a merchant asks for a good or service, we should always remember that we are expecting the merchant to do something for us — we don’t call them “bads” and “disservices.” It makes sense to complain about taxes, war, and the weather — things over which we have no individual control — but in the market economy, nobody really forces you to pay prices for anything.

I have a friend who worked for a hedge fund when he was younger, and when single ladies at the bar asked him what he did for a living, he would say, “I help move resources to where people can use them the most.” Although this was a strange way of putting things, it was perfectly accurate. Among other ways of viewing market prices, we can interpret them as a communication mechanism. If, say, there aren’t enough parking spaces or individual karaoke rooms in Philadelphia, this information is transmitted to the relevant parties in the form of higher returns to existing parking garages and karaoke bar owners, as they find they can raise their prices and still fill their capacity.

If politicians proposed to block radio transmissions whenever the news was bad, everyone would recognize the futility of such a measure. By the same token, market prices themselves aren’t bad — they are simply messengers conveying underlying facts about scarcity. Market prices need to be free in order to do their job.

Robert P. Murphy

Robert P. Murphy has a PhD in economics from NYU. He is the author of The Politically Incorrect Guide to Capitalism and The Politically Incorrect Guide to The Great Depression and the New Deal. He is also the Senior Economist with the Institute for Energy Research.

Film Suprime 2.0: Doubling Down on Disaster

subprime 3.0 poster

For a larger view click on the image.

The central role housing policy played in causing the financial crisis has been gaining greater and greater acceptance, but much more remains to be done as new efforts are underway to double down on disaster.

Earlier this year, my colleague Peter Wallison came out with his new book Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis and Why It Could Happen Again (full disclosure: Peter’s book is based in large measure on my research).

Now, journalist and author Paul Sperry and Compass Films of New York Director Cornelia Mrose are making Subprime 2.0, a film that will document the true causes of the financial crisis and warn that the culprits are using a false narrative to justify policies that are leading America into the next and even greater crisis (full disclosure: Subprime 2.0 will also utilize my research).

As unbelievable as it sounds given the recency and severity of the last policy disaster, a new war for market share has begun between FHA and Fannie and Freddie as both HUD and the Federal Housing Finance Agency recently announced steps to lower lenders standards in an effort to get mortgages into the hands of people who may not be able to afford them.  The means are unchanged—higher debt loads on homes, higher debt loads on family budgets, and higher debt loads on credit-challenged borrowers.

  • The Subprime 2.0  team is committed to telling this story.
  • The Subprime 2.0  team has launched a crowd-funding campaign on Indiegogo.com (link: Subprime 2.0).
  • But Subprime 2.0 needs your help to become a reality.
  • The Subprime 2.0  team needs to raise $150,000 from those who understand that this story must get wider dissemination.
  • The Subprime 2.0  team is making the film to reach all Americans, including those who have no clue what caused the financial crisis.

Thanking you in advance for your generous support, which may be given both on an acknowledged and anonymous basis.

Florida 2016: E-verify Constitutional Amendment Ballot Petition Started

Floridians for E-Verify Now have begun to collect the 683,149 petitions needed to place mandatory e-verify constitutional amendment on the 2016 ballot.

If passed the amendment would take effect on July 1 of the year following passage by the voters. The amendment requires that all Florida employers who hold business licenses shall verify the employment eligibility of all new employees through the U.S. Department of Homeland Security’s E-Verify system. The Department of Business and Professional Regulation shall administer this amendment through regulations, random audits, investigations of complaints, and enforcement actions. Authorizes penalties for violations of this amendment. Provides definitions.

Dr. Frank Morris, the former Executive Director of the Congressional Black Caucus Foundation and former Dean of Graduate Studies at Morgan State University, speaks on why Floridians need to Amend the Florida Constitution to prohibit illegal alien hiring:

Key provisions of the proposed Florida constitutional amendment are:

  • Mandates that all employers use the Federal E-Verify program to verify the employment eligibility of all new hires.
  • Prohibits the hiring of illegal aliens
  • Provides for penalties to employers that violate provisions of the amendment. Violators of this amendment can face suspension of their business license.
  • Mandates that the state enforce this amendment through regulations, random audits, investigation of complaints, and other enforcement actions.
  • Any Florida citizen has standing to seek judicial relief to compel the state to meet its constitutional obligation to enforce compliance with this amendment.

Click here to read the full text of the e-verify constitutional amendment.

Those interested in putting this amendment on the 2016 ballot may download the ballot petition at www.FloridiansForEverifyNow.org.

The Climate Change War Heats Up

AA - Climate Change Vs Capitalism

Climate change march denounces capitalism.

There is so much at stake for the charlatans that have foisted the failed “global warming” hoax, followed by the equally dubious claims and predictions regarding “climate change”, that it should come as no surprise that they have begun to wage a propaganda war on the courageous scientists who led the struggle to educate the public about the truth and the organizations who supported their efforts.

Along the way, many groups and publications claiming scientific credentials abandoned those standards to pump out global warming and climate change propaganda. Scientists discovered they could secure grant money for “research” so long as it supported claims that the North and South Poles, as well as all the world’s glaciers were melting. “Research” that predicted vast hurricane activity or a massive rise in ocean levels became routine headlines. None of it occurred. Both the government and liberal foundations provided millions to maintain the hoax.

Now we have a President claiming that his daughter’s asthma was due to “climate change.” It is obscene nonsense. If this was just a disagreement between scientists, we could look on as the facts determine the outcome, but there are vast agendas as stake so we have to keep in mind that billions have been wasted on “renewable energy” alternatives to replace fossil fuels; the oil, coal, and natural gas that are the heart’s blood of modern nations and our lives.

We have to ask why the United Nations Framework on Climate Change takes such a dim view of the world’s population that it cites its use of energy and other resources as a reason to reduce it instead of celebrating it. Hard-core environmentalists do not like humans because they build houses, start businesses, need roads, and generally consume a lot and then create trash. Climate change is also the platform the U.N. is using to “transform” the world’s economy.

We have to ask why our government is engaged in shutting down the coal-fired plants that provide the bulk of the electricity we use. This isn’t just a war on coal. It is a war on our entire economic system, capitalism. It is a war on Americans by their own government.

Lately, politicians at the federal level have declared war on those scientists whose research and findings have helped the public conclude, along with eighteen years of a natural cooling cycle, that “global warming” is no threat and that we have far greater threats to address than the vague notion that “climate change” is a problem we humans can affect in any way. We can’t and we don’t.

A recent example has been letters sent to seven university presidents by Arizona Rep. Raul Grijalva, the ranking Democrat on the House Natural Resources Committee asking for information on scientists and professors who had given congressional testimony that raised questions about “climate change.” Grijalva had no legal authority to request such information, but his intention was intimidation. In 2013, when asked about his legislative agenda by These Times, he replied “I’m a Saul Alinsky guy” referring to the activist whose book, “Rules for Radicals”, spells out ways to attack one’s political enemies.

Pete Peterson, the executive director of the Davenport Institute for Public Engagement at Pepperdine’s School of Public Policy, identified Grijalva’s letters as “scare tactics” concluding that we have come to a time when “The inability of politicians to confront another’s argument much less to attempt to persuade the other side, has become standard operating procedure. Now this toxic approach is extending to the broader world of policy—including scientific research.”

Around the same time, Sen. Sheldon Whitehouse, Sen. Barbara Boxer, and Sen. Ed Markey sent a letter to a hundred companies, grade groups and other organizations “affiliated with the fossil fuel industry asking whether they spent money to support climate research.” The message was simple: do not sponsor research that would reveal inaccuracies or falsehoods regarding claims that “climate change” was a threat. The inference was that scientific research receiving such funding would betray scientific standards in ways that government or foundation funding would not.

Suffice to say the letters evoked outrage. As a policy advisor to the free market think tank, The Heartland Institute, I was aware of the response of its president, Joe Bast who called the letters something that “fascists do.” He was not alone. The Washington Times called the Senators “climate change Toquemadas” and The Wall Street Journal said the letters were nothing more than an effort to silence science.

When Sen. Whitehouse aired his unhappiness in an April 14 blog post the Huffington Post, “Right-Wing Groups Get Overheated on Climate Questions”, Bast responded asking, “If the Senator’s letter wasn’t intended as harassment of individuals who disagree with his extremist views on the climate, why the overly broad demand, the ridiculous deadline, the implied threat of action, and the news release saying it was intended to expose a diabolical conspiracy of ‘right-win groups’?”

When “climate change” reaches the political heights of Congress and the White House, it should come as no surprise that the charlatans who want to use this hoax for their own benefit and agendas are going to unleash efforts to smear and intimidate those scientists who have put true facts before the public.

In late March, Michael Bastash of The Daily Caller reported that “A new Gallup poll shows that Americans’ concern about warming has fallen to the same level it was in 1989. In fact, global warming ranked at the bottom of a list of Americans’ environmental concerns, with only 32 percent saying they were worried about it a ‘great deal.’”

That’s what has the politicians and U.N. officers on the offensive to silence scientists and defame think tanks and other organizations that have helped Americans come to the sensible conclusion that a “warming” isn’t happening and the planet’s climate is something over which they have no control.

© Alan Caruba 2015

RELATED ARTICLE: Here’s the Deal on the Court Fight Over Obama’s Carbon Regulations

Some Basic Economic Truths

During the summer of 1985 my oldest son, Mark, decided to leave his job as a chemistry teacher in a Silver Spring, Maryland, Catholic Boy’s High School to complete his Master’s thesis and his Doctoral work in Metallurgical Engineering at the University of Oklahoma.  With little money to finance the move, he was looking for ways to transport his wife; his five-year-old stepson, Chris; and his four month old infant son, David, from Washington, D.C. to Norman, Oklahoma.

Having recently retired from my job with a major oil company in suburban Philadelphia, I offered to help with the move.  So, on the appointed day I drove to Silver Spring and loaded every cubic foot of my trunk and my rear seat with some of their belongings.  As we headed west on Interstate 70, my son took the lead in a borrowed Mercury station wagon, with every cubic foot filled to capacity; my daughter-in-law followed close behind in their worn-out old Toyota, the baby strapped into a car seat beside her; and I brought up the rear with five-year-old Chris riding “shotgun” in the passenger seat beside me.

The trip across the country was not up to my usual standard for cross-country driving.  Since the Interstate highway from Indianapolis to St. Louis was completed, but unposted, I had always taken that to mean that they wanted me to use my own discretion.  As a result, I was accustomed to driving the 1.030 miles from Philadelphia to St. Louis in just under fifteen hours.  But on our trip in August 1985, from the D.C. area to St. Louis, it was drive two hours, nurse the baby, drive two hours, nurse the baby, and on and on.  Then, after a night’s rest in St. Louis we set out again the next morning for the last leg of our trip from St. Louis to central Oklahoma.

As we had lunch in a roadside restaurant in Joplin, Missouri, I remarked that we were just a few miles north of Camp Crowder, Missouri, where I spent the first week of my U.S. Army military career, and that I’d like to revisit the place sometime just to see if it was the same as it was in the summer of 1953.

That was the last word on the subject until we crossed the Missouri/Oklahoma state line fifteen or twenty minutes later.  It was then that young Chris said, “Grandpa, tell me about some of your war wounds.”

Not wanting to go into detail on how I was machine-gunned by a group of South Koreans in a “friendly fire” incident during basic training, I decided to tell him some stories about wounds I received when I was a boy, just a few years older than he.  So I proceeded to describe a long ugly scar I have on my right knee that I received when I was just ten or eleven years old.  When I had described the scar, Chris said, “Grandpa, how did you get that wound?”

I said, “Well, as I recall, my friends and I were at the local ballpark in my hometown, crawling around under the bleachers, when I knelt on a broken soda bottle.”  To which he replied, “What were you doing crawling around under the bleachers?”

I said, “We were looking for small change, nickels and dimes that people had inadvertently dropped while watching a softball game.”

“Why were you looking for nickels and dimes?” he asked.

To which I replied, “We wanted to buy some sodas.”

He thought for a moment, a puzzled look on his face.  Then he said, “Grandpa, you can’t buy a soda for five or ten cents.  Sodas cost sixty cents.”

Not when I was your age,” I replied.  “When I was your age we could by a soda for five cents.”

That came as a big surprise to him.  He said, “How did that happen, Grandpa?”

I said, “The Democrats did it.”

“The Democrats did it?  Why did they do that?”

Thinking I’d impart a bit of economics wisdom, I said, “Well, the Democrats discovered many years ago that if they passed a law taking money away from people who have jobs and who work for a living, and give it to people who don’t have jobs or who don’t want to work, the people who get the free money will always vote for them on election day.  That helps to create what we call inflation and that’s why a soda costs a lot more than five cents today.”

This was obviously a new concept for him and I could almost hear the wheels turning in the seat beside me.  Finally, he said, “Grandpa, could the Democrats pass a law that would make candy free?”

I replied, “Sure they could.  But think about it… if the Democrats made a law saying that candy would be free, how long do you think the people who make candy would continue to make it?”

New concept; I could hear the wheels turning again.  Then he said, “Grandpa, am I a Democrat?”

I said, “Well, it’s too early to tell.  We’ll have to wait a few years to find out.”

Then he asked, “Grandpa, could the Democrats make a law that some candy would cost money and some would be free?”

I replied, “Yes Chris, the Democrats could make some candy free and others that would cost money.  But are you asking whether the Democrats could make a law saying that the kind of candy you like would be free and all the rest would cost money?”

A big smile crossed his face.  He nodded his head and said, “Yeah!”

I said, “You’re a Democrat.”

I’m happy to report that my step-grandson has turned out just fine, in spite of his Democratic leanings as a five-year-old.  He graduated from the University of Oklahoma with a degree in Economics and is now a successful executive with a major Oklahoma City bank.  But now, thirty years later, there is evidence that many who were as ignorant of basic economic principles as my grandson was at age five, are still burdened by the same economic illiteracy.

The proof of what I say can be found in the television commercials of a company called Lear Capital, Inc.  In their most recent TV ads they tout the current low price of silver, showing a two dimensional graph in which the abscissa, or x-axis, represents time, and the ordinate, or y-axis, represents the fluctuations in the price of silver.  If one were to believe the graph, the market price of silver during a significant time period represented on the graph dipped to less than the price of production.  In fact, that claim is made quite clearly in the Lear Capital voice-over.

When I saw the ad I couldn’t help but be reminded of my grandson’s attitude toward the candy market when he was just five years old.  The fact that a precious metals marketing firm would continue spending big bucks attempting to convince television viewers that mining companies are continuing to mine silver when the market price is less than the cost of production, is proof that there are some adults out there in TV land who still believe in the Tooth Fairy.

When I posed the hypothetical question to my grandson thirty years ago, asking him how long he thought candy manufacturers would continue to make candy if there was no profit in doing so, it never occurred to me that, some thirty years later, silver miners might be doing just that.

However, there is some empirical evidence that there are fewer consumers who might fall for that advertising scheme than we might think.  Another Lear TV ad that has run on a daily basis for many months proclaims that the first one-hundred callers to their 800 number will receive up to $500 worth of free silver… just for calling their number.  If, in fact, callers to that 800 number are actually given silver coinage, they could be given a silver ten-cent piece, just for their taking the time to listen to a sales pitch, and the marketer could still claim truth in advertising by hanging their hats on the words “up to.”

Nevertheless, it is frightening to think that Madison Avenue advertising firms have such a low opinion about the economic smarts of the American people that they would air such an insulting advertisement.  My step-grandson has discovered some important economic truths.  Apparently, some in the corporate world and on Madison Avenue have not.

Withholdings Mask the Pain of Income Taxes

As small business owners, my wife and I do not have income taxes withheld from the money we earn. As many small business owners do, we have to periodically write checks to the state and federal governments for taxes owed. I mailed these tax payments this past week and, while writing out the checks and observing the amounts, I couldn’t believe how much money I had to pay to finance this out-of-control government. I cannot be the only one writing these substantial checks who feels this way. I would feel better about writing these checks if I was reasonably confident that my tax money was being spent judiciously but I know otherwise, and so do many of you.

Here’s the hard truth; many of you worked about half of last calendar year to pay for a government that couldn’t give a hoot about efficiency or balanced budgets. As I sealed those envelopes – tax checks included – I began to wonder how long this can possibly continue. Now, to be clear, I am not making the case that tax payments to the government are categorically a net societal negative. American citizens should fund a constitutionally-limited, efficient, and citizen-centric government which provides quality services clearly defined by our Constitution, and I am not aware of any credible Republican, conservative, or libertarian candidate running on a platform of “no taxes, for anyone, at anytime.”

Our military, our court system and, at the state and local level, our police, fire and education infrastructures are all funded by the hard-earned tax dollars of American citizens. But, I am making the case that the exploding budgets of many local and state governments, along with our federal government, have diminished the credibility of these elected officials in the eyes of the millions of American citizens who are busting their hides to continue to pay for this free-for-all largesse.
Is this what government calls "fair share"?Further diminishing the credibility of the Washington D.C. “tax and spend” crowd, and their sophisticated “fair-share” messaging operation, is a recent Tax Policy Center report showing that the top 20% of income-earners (those making $134,300 per year and above) are already paying an astonishing 84% of ALL income taxes collected by the federal government.

Digest that statistic for a moment; just two out of ten Americans are paying nearly 85 cents of every dollar paid in income taxes to the federal government. If this isn’t a “fair share” of the hard-earned dollars of Americans then the liberal “tax and spend” crowd owes us a detailed explanation of what percentage constitutes their mythical “fair share.”

Having debated this issue many times, both while running for office and hosting shows on talk-radio, I can assure you that these people will never give you either a “fair share” amount or a reason why that specific amount is backed up by data because neither exists. The “fair share” amount doesn’t exist because the tax and spend crowd doesn’t want to give you a hard number that would limit them in the future from surpassing that number. Their attitude is that if they can take 50% of your income, why not take 51% or 52%? In addition, there are volumes of data showing that lowering marginal tax rates on productive American citizens to reasonable levels actually INCREASES the tax revenue generated from the wealthiest Americans. Sadly, the tax and spend crowd never lets facts get in the way of a good soundbite.

As the April 15th tax deadline approaches, I hope that those voters equivocating over which candidate they want to embrace in the 2016 election presidential cycle take a good look at their paychecks. Income tax withholding has softened us. Many of us no longer have to go through the motions of actually picking up a pen and writing out a check to the government to pay our individual tax bills. We all owe it to ourselves to look at the amounts we are paying and to ask ourselves why we aren’t demanding better. If you had to write those checks to a private company in exchange for an expectation of services provided, and they insisted on maintaining a status quo of inefficiency and unaccountability, you would take your money elsewhere. I love this country, as do you, and I’m not going “elsewhere,” but perhaps it’s time the D.C. insider crowd that sees your money as their personal slush fund does.

We are being fleeced and I’m tired of it. Something’s gotta give.

RELATED ARTICLES:

Obamacare’s $800 Billion Tax Hike Explained in One Chart

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Why Are So Many Employers Unable to Fill Jobs?

EDITORS NOTE: This column originally appeared in the Conservative Review.