Regulation Nation: Federal Bureaucracy is as Busy as Ever

The shale energy boom may be taking place in North Dakota, Texas, Pennsylvania, and elsewhere. However, the Wall Street Journal editorial board notes that a less economically-helpful boom is happening in Washington, DC:

Washington set a new record in 2013 by issuing final rules consuming 26,417 pages in the Federal Register. While plenty of government employees deserve credit for this milestone, leadership matters. And by this measure President Obama has never been surpassed in the Oval Office.

The latest rule-making tally comes from the Competitive Enterprise Institute’s Wayne Crews, who on April 29 will publish his annual review of federal regulation in “Ten Thousand Commandments.” This is important work because politicians and the media treat regulation as a largely cost-free public good. Mr. Crews knows better.

Congress may be mired in gridlock, but the federal bureaucracy is busier than ever. In 2013 the Federal Register contained 3,659 “final” rules, which means they now must be obeyed, and 2,594 proposed rules on their way to becoming orders from political headquarters.

The Federal Register finished 2013 at 79,311 pages, the fourth highest total in history. That didn’t match President Obama’s 2010 all-time record of 81,405 pages. But Mr. Obama can console himself by noting that of the five highest Federal Register page counts, four have occurred on his watch. The other was 79,435 pages under President George W. Bush in 2008.

And the feds aren’t letting up. Mr. Crews reports that there are another 3,305 regulations moving through the pipeline on their way to being imposed. One hundred and ninety-one of those are “economically significant” rules, which are defined as having costs of at least $100 million a year. Keep in mind that the feds routinely low-ball their cost estimates so the public will continue to think regulation is free.

Federal agencies are hard at work writing more rules to implement Dodd-Frank, Obamacare, and environmental laws. “By far their greatest and most tragic cost has been slower economic growth, which has meant fewer jobs, lower incomes and diminished economic possibilities for tens of millions of Americans,” writes the editorial.

Our modern economy needs a revamped, transparent, balanced, and accountable regulatory system so businesses have more certainty to invest and hire workers.

My colleague Sheryll Poe put together this infographic to summarize the editorial.

[via memeorandum]

 

Rubio: On Tax Day 2014

U.S. Senator Marco Rubio (R-FL) on Tax Day 2014 notes, “Tax reform is critical. And it’s not just critical to take the hassle out of our lives. It’s critical for the economic future of our country. Our economy is stagnant. It’s not growing fast enough. It’s not creating enough jobs. And by the way, about 40% of the jobs that it is creating pays $16 an hour or less.”

Is reform of the tax code needed or a scraping of the entire income tax? Many are calling for either a flat tax or FairTax system.

To mark Tax Day 2014, Rubio sent out the below video addressing constituent concerns about the broken tax code system. Rubio points to the tax codes stifling effect on the economy as proof of the need for tax reform:

[youtube]http://youtu.be/RteG2ceXtk8[/youtube]

In the video, Rubio outlines various disconcerting facts about the increasingly complicated tax code and the unnecessary burdens it places on taxpayers:

  1. It takes 13 hours for the average taxpayer to file their taxes, including record keeping, planning, as well as filling out forms.
  2. Last year, Americans spent 6.1 billion hours and $168 billion complying with all their tax filing requirements.
  3. The tax code, rules and regulations now totals more than 73,000 pages, as opposed to 400 pages when it was created in 1913.
  4. Americans will pay $3 trillion in federal taxes and $1.5 trillion in state and local taxes this year.
  5. Americans must work 111 days this year to pay their federal, state and local taxes.

Rubio:

“One of the things holding back our economy is a broken tax code. We have a tax code, for example, that punishes companies for investing their profits back into their businesses, to hire more people, to give their workers raises, to expand their operations. We have a tax code that actually encourages our employers to take their business overseas. Those are some of the things we have to fix as well. So I agree with you wholeheartedly, and that’s why I hope this November we’ll have new leadership here in Washington that will move on this important item.”

RELATED STORY: Obama has Proposed 442 Tax Hikes Since Taking Office

TAX DAY APRIL 15, 2014: We Will Not Yield

My father was a federal civilian employee who voraciously adhered to his responsibilities under the federal Hatch Act. At that time, the Hatch Act prohibited federal employees from any partisan political activity, and violation penalties were severe including possible termination of employment.

In 1981, I became a federal employee and like my father before me, there was just something sacred about respecting and abiding by the Hatch Act. If for nothing else, it was the law.

The Hatch Act has stood for 75 years, and although major modifications were made in 2013, the prohibitions against partisan political activity during the workday and on federal property still stand.

And while most federal employees respect and abide by the tenants of the Act, IRS employees have chosen to ignore federal law.

On April 9, 2014, the U.S. Office of Special Counsel issued a press release outlining what can only described as outrageous violations of the Hatch Act by IRS employees and entire offices during the 2012 presidential election. The Counsel found:

  • An IRS customer service representative, while fielding questions on the IRS customer service help line, urged taxpayers to reelect a presidential candidate in 2012 by repeatedly reciting a chant based on the spelling of that candidates last name.
  • An IRS tax advisory specialist in Kentucky told a taxpayer she was assisting, that she was against a specific political party because “they are trying to cap my pension…and they’re going to take women back 40 years.” She then added, “My mom always said, “If you vote [she named the party], the rich are going to get richer and the poor are going to get poorer.”
  • Employees in the Dallas, TX IRS Taxpayer Assistance Center wore partisan political stickers, buttons and clothing to work, and displayed partisan screensavers on their IRS computers.

Are we supposed to believe that the IRS, the same federal agency that targeted conservative non-profits, will conduct non-biased, non-retaliatory tax examinations and audits of American taxpayers?

Especially when our nation’s Attorney General refuses to appoint a special prosecutor to examine the allegations and evidence against former IRS senior manager Lois Lerner, our President preemptively declared that there is not even a“smidgen of corruption” at the IRS, and the minority leader of the Congressional Oversight Committee investigating Ms. Lerner apparently corroborated with Lerner and her team!

Of course, Congress, can solve this problem with the immediate enactment of HR 25/S 122, the FairTax Act of 2013. This is why another announcement this week was so perplexing.

Senator John Cornyn (TX) rightly announced that, “Americans should never face persecution from their government for exercising their constitutional rights.” We couldn’t agree more Senator. But the Senator went on to say he introduced new legislation to “help ensure that no one is targeted by the IRS for their political or religious beliefs and will work to repair the serious breach of faith caused by the IRS’ actions.”

Congress has had 100 years to “repair” the IRS and the income tax code and they have failed on all counts. It is not repairable – it can’t be fixed! As a co-sponsor of S. 122, we would hope the good Senator knows the FairTax defunds and disbands the IRS in its’ entirety.

With the FairTax®, the IRS is gone. No more persecution, no more targeting, no more invasion of privacy and peering into every aspect of one’s personal, financial life.

Next week is yet another Tax Day. To many, this marks another year in which the FairTax was not enacted.

In times like these, I am reminded of Sir Winston Churchill who said to his alma mater, the Harrow School,

“Never give in, never give in, never, never, never, never-in nothing, great or small, large or petty – never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy. We stood all alone a year ago, and to many countries it seemed that our account was closed, we were finished. All this tradition of ours, our songs, our School history, this part of the history of this country, were gone and finished and liquidated. Very different is the mood today. Britain, other nations thought, had drawn a sponge across her slate. But instead our country stood in the gap. There was no flinching and no thought of giving in; and by what seemed almost a miracle to those outside these Islands, though we ourselves never doubted it, we now find ourselves in a position where I say that we can be sure that we have only to persevere to conquer.”

Ladies and gentlemen, our cause is great and our convictions clear. We will not yield to the force of opposition and we are not alone in our desire to have a system of taxation that is fair and free of threats.

We are a force and we will never give in, never give up and never go away. We are the FairTax and someday, we will see April 15 become just another spring day.

Higher Ed: Bubble, Toil and Trouble by SANDY IKEDA

Interest rates have been in the news again so for this week’s column I thought I’d do a little back-of-the-envelope economic analysis.

What Does this Sound Like to You?

The government artificially lowers interest rates for borrowers who want to invest in a particular sector of the economy. Other things equal, that will increase the demand for assets in that sector as borrowers are misled into believing they will be worth more in the future than they actually will be. The current price of those assets will climb as will the quantity supplied (i.e., the demand curve slides up the supply curve). Borrowers will then clamor to keep borrowing rates low (or even lower) so they can afford to complete their investments, although that would also attract new borrowers. So pressure on demand continues and investment costs soar as asset prices and output keep rising.

Now, because government has kept interest rates artificially low—below the rate that would accurately reflect the actual supply and demand in the loan market—there is too much investment in those assets in relation to the actual demand for it. That means when investors try to sell their assets they will find no market for them. At that point the bubble bursts, bringing complementary sectors down with it.

If the Shoe Fits

If you think this describes the housing market from 2001 to 2006, you’d be right. Just substitute housing/houses for asset/assets and “financial sector” for “complementary sectors” in the above narrative and you would get an accurate (though incomplete) summary of the recent housing boom and bust. (For an excellent discussion of this episode, see Peter Boettke and Steven Horwitz’s essay.)

But you could substitute “higher education” into the story as well.

As an author of the Economix blog over at The New York Times reports, data from the Bureau of Labor Statistics show that “college tuition and fees today are 559 percent of their cost in 1985. In other words, they have nearly sextupled (while consumer prices have roughly doubled).” There’s a nice diagram in the post illustrating this. Tuition has been far outpacing price increases over time for consumer items, medical care, and gasoline.

Author Catherine Rampell argues, however, that “the main cause of tuition growth has been huge state funding cuts.” As an employee of a state university I can confirm that these cutbacks have indeed been taking place over the past couple of decades. The author offers some evidence to support her claim, but if you look closely, the dramatic rise in tuition still seems to outstrip the relative fall in state subsidies.

More importantly, if what she argues is true, why is it that college enrollment over the same period has been rising?

In basic economic terms, she is arguing that because the colleges are bearing more of the actual costs, the supply curve for college education has been shifting upward and to the left—causing tuition to rise and enrollment to fall. But the evidence points to a rightward shifting demand curve (like the narrative I sketched at the outset), which accounts for both the higher tuition and higher enrollment.

According to the National Center for Education Statistics,

Enrollment in degree-granting institutions increased by 11 percent between 1990 and 2000. Between 2000 and 2010, enrollment increased 37 percent, from 15.3 million to 21.0 million.

Between 2000 and 2010, the number of 18- to 24-year-olds increased from 27.3 million to 30.7 million, an increase of 12 percent, and the percentage of 18- to 24-year-olds enrolled in college rose from 35 percent in 2000 to 41 percent in 2010.

The Stafford loan program, which subsidizes student loans, began in 1988.

If Rampell is right, then shouldn’t enrollment be falling? Instead it is rising disproportionately. Just as the housing bust left tracts of houses unused, a higher-education bust would create a small army of unemployed young people.

An Act of Independence?

But just as overbuilt housing can be used for some lower-valued purpose than it was intended for, investment in education—which is sometimes more accurately described as “spending on a credential”—often goes “underemployed.”  So growing underemployment of college grads is something we should keep an eye out for.

According to The Huffington Post, “half of recent grads are working jobs that don’t require a degree, according to research from the Center for College Affordability and Productivity, released in January.”

The same article notes, “In 2000, before the economy fell into a recession, the share of recent college graduates who were either jobless or underemployed hit an 11 year low of 41 percent, according to the Associated Press.”

Now, as an article from The Washington Post makes clear, that’s not necessarily a bad thing: Some jobs don’t require a specific degree. Also, it’s unrealistic in a dynamic economy to expect the major you choose when you’re 20 to match what your comparative advantage will be later in life.

Still, it’s probably true that many young people who would otherwise get the training they need for productive jobs from trade schools and community colleges are applying to and getting into four-year colleges, as the lower rates tend to offer a higher subsidy to the latter. (Example: The savings from a lower rate on a $50,000 liberal arts college loan is greater than the savings on a $10,000 loan for community college.)

This week Congress takes a holiday to celebrate Independence Day. One of the things they’re leaving undone is negotiating a measure to keep the rates on Stafford loans from rising from 3.4 percent to 6.8 percent. Given the very real possibility of a bubble in higher education, that may actually be a blessing.

The first step to avoiding a huge bust, though some kind of correction seems to be inevitable, would be to let the Stafford-loan rates rise to reflect the realities of the loan market. That could mean a significant break in the vicious boom-bust cycle in higher education.  The question is, does Congress have the will to do nothing?

ABOUT SANDY IKEDA

Sandy Ikeda is an associate professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism. He will be speaking at the FEE summer seminars “People Aren’t Pawns” and “Are Markets Just?

An Open Letter to Tallahassee: The FPSC has NO Jurisdiction over Health, Safety and Privacy

AN OPEN LETTER TO GOVERNOR SCOTT, FLORIDA STATE SURGEON GENERAL JOHN ARMSTRONG, FLORIDA ATTORNEY GENERAL PAM BONDI, AND FLORIDA STATE SENATORS AND REPRESENTATIVES:

Please STOP forwarding the e-mails and letters you get from Florida residents pertaining to any health, safety or privacy issues for smart meters to the Florida Public Service Commission (FPSC) for resolution. It is pointless. The FPSC has determined in ORDER NO. PSC-14-0146-FOF-EI, issued on April 1, 2014 (was this an April fools joke?), Docket NO. 130223-EI the following (page 10):

“Since such health, safety or privacy concerns have not yet been addressed by the Commission the Protestors contend this is the appropriate venue to raise these issues which the Protestors believe are within the Commission’s jurisdiction. However, none of the Commission’s authorizing statutes confers upon it jurisdiction over personal health, safety or privacy issues raised by the Protestors. Nor is the Commission authorized to enforce these extra-jurisdictional issues, which are the purview of the other agencies.” (Emphasis added)

The bottom line is the Florida Public Service Commission has mandated that all 4.5 million customers must accept Florida Power & Light Company’s (FPL’s) smart meter or pay an extortion fee, but apparently they have NO jurisdiction to ensure health, safety or privacy for that product.

When you forward the letters you receive from residents to the FPSC, they turn around and send them a letter stating that there is a proceeding being protested by citizens on this matter and hearings will be held later this year. The FPSC gives them a link to the docket page. The residents go to the FPSC Docket page and find my e-mail and address (since I am one citizen with a protest filing pending on this docket) and the residents call or e-mail me.

Since the issues of health, safety and privacy raised in the petition have been denied by the FPSC, as they claim they have no jurisdiction, could you please do your job and tell the people of Florida directly that NO Florida government agency wants to take responsibility. Will you be brave and tell them yourself that

• our Florida State Constitution is null and void as it pertains to privacy rights in one’s own home or private property rights and that the utilities get to decide who owns the data taken from their homes and they are compelled to give it to the utility or they may alternatively pay a fine to keep it private?
• all issues of health, safety and privacy has been relegated to the Federal Government and are outside the jurisdiction of the Florida government (the republic is officially over)?

If this is not the case, I ask the Governor, Attorney General, State Surgeon General as well as each legislator (who has jurisdiction over the FPSC) – who in Florida’s government does have jurisdiction to ensure that Floridians health, safety and privacy are properly safeguarded from the FPSC Orders?

Here are some of the main issues:

HEALTH:

Issue 1: Many customers have alerted the FPSC that they have either medical conditions (sensitivities to RF radiation and electro-magnetic fields) or medical implants and devices for which their doctors have advised them to avoid exposure to RF radiation.

FPSC response – not my job. Take the meter or pay up to comply with doctor’s advice.

Issue 2: Many residents with or without prior sensitivities to RF radiation became ill when such smart meters were placed on their homes. When the device was removed, their good health was returned.
FPSC response – not my job. Take the meter or pay up to protect your health.

Issue 3: FCC guidelines and approval only cover acute short-term exposure to RF radiation. They do not test for or cover long-term chronic exposure or accumulated exposure to RF, nor do they consider any biological effects. You cannot turn a smart meter off to avoid exposure.

FPSC response – not my job.

Issue 4: The legislative branch gave the State Health Dept. jurisdiction over non-ionizing radiation in Statute 501.122 – Consumer protections.

FPSC response – no responsibility to coordinate with the Health Dept.

SAFETY:

Issue 1: Smart meters are installed on homes and businesses in places that are wide open and accessible to the general public. It is possible for any citizen to lean up directly against these meters. The FCC Grant of Equipment Authorization (OWS-NIC514) for the Silver Spring Network radio module (900 MHZ) for utility meters, that FP&L is using in their GE smart meter, states the following on its grant notes: “The antenna(s) used for the transmitter must be installed to provide a separation distance of at least 20cm from all persons and must not be co-located or operating in conjunction with any other antenna or transmitter.”
The vast majority of Florida citizens do not even know what a smart meter is or the fact that it contains two transmitters, one for the NAN and one for the HAN. They do not know to stay 20cm away. We also haven’t figured out how they can co-locate two transmitters.

FPSC response – not my job.

Issue 2: Smart meter installations have resulted in fires and damage to customer equipment and appliances.
FPSC response – not my job.

PRIVACY:

Issue: The smart meter contains a computer and storage and is taking detail measurements (4 hours today, 15 minutes in the future), which will be stored by the utility, and is available to all government agencies (Third Party Doctrine). Such data means surveillance of citizens in their homes and such data is NOT needed for billing. The FPSC is fully aware that each utility it regulates regards the ownership of such data differently.

FPSC response – not my job to develop privacy rules.

PROPERTY RIGHTS:

Issue 1: In 1988 under Order 18893, the FPSC, at FP&L’s request, transferred the ownership of the meter enclosure to the customer. They said that it was not part of the utility function and simply housed a meter. Therefore the customer must bear all the costs and burdens of ownership and maintain the meter enclosure. In 2010, the FPSC mandated the smart meter, which is really network management and communication equipment (that also contains a meter). Such equipment establishes a wireless neighborhood area network through the meter, performing more than measurement functions, on our homes. It violates the terms and conditions of Order No. 18893. Essentially customers now have the costs and burdens of ownership but no rights and privileges, such as refusal of equipment that does not satisfy the original terms.

FPSC response – we have the powers of police state. (That they do!).

Issue 2: Many Floridians own rental properties and do not wish this equipment placed on their buildings. If the electric is in their tenant’s name, FP&L claims they have no right to decide, the tenant gets to choose the equipment.

FPSC response – okay by me.

MULTI-FAMILY HOUSING:

Issue: If you live in a multi-family dwelling and have a bank of meters behind your bed, how do you opt out?

FPSC response – we can’t answer that question so we will continue to ignore it.

Please direct your staff to prepare answers for the above issues and answer the inquiries from residents directly. I have decided that since I can’t answer their questions, I am now advising all residents that call me to vote Independent in this next election. If we get rid of the corrupt establishment politicians and officials and vote for an independent, such as Adrian Wyllie for Governor, who appears to be devoted to the Constitution, then maybe we can get a Public Service Commission that understands that they have two stakeholders – the utilities and the customer.

The FairTax Means Freedom by Rep. Rob Woodall

The Nobel Prize-winning economist, Milton Friedman, once said, “Sloth and lack of enterprise flourish when hard work and the taking of risks are not rewarded.”

While I believe this statement to be true, I am grateful it has never characterized the American spirit. Hard work and risk taking are precisely what built our great nation, and it is through these traits in Americans across the nation that we will once again have a thriving economy.

To unleash the tremendous resource that is the American worker, entrepreneur and innovator, we need only to align the tax code with our core principles. That is what excites me about the FairTax.

The FairTax means freedom. Those of us who are fighting so hard for it understand this. It is freedom from a burdensome, manipulative tax code that penalizes the very things we need to grow our economy. The FairTax means freedom for business owners and entrepreneurs to make decisions based on their own resources and vision, not a convoluted, punitive compilation of regulations.

It is no small thing that the FairTax also returns to Americans the freedom of anonymity. No federal bureaucracy should ever know as much about us as the IRS knows, particularly a federal bureaucracy as powerful as the IRS. Our Founders never intended this level of personal intrusion, and the FairTax is a giant step in the direction of personal liberty.

Any proposal that shifts the balance of power from Washington back to the people in such a significant way as the FairTax is certain to encounter political inertia.  From its inception, we have all experienced the pushback of those with a vested interest in the status quo.

The current tax code is by far the most effective tool for politicians to manipulate the behavior of Americans, and the FairTax removes this very powerful weapon from their arsenal. The fact that there is a strong resistance to it can neither surprise, nor discourage us.

The immense dedication of those in the FairTax community across the country is directly responsible for the consistent and significant progress we are seeing in Washington. Members of Congress become a co-sponsor of this bill because their constituents demand it, and that is exactly how it should be.

With 84 co-sponsors, the FairTax has become the most popular fundamental tax reform bill in Congress, and its support continues to grow. Your commitment has led to more FairTax supporters on the Ways & Means Committee than ever before and a committee hearing specifically on H.R. 25 for the first time in a decade.

As the Ways & Means Committee discusses tax reform, the FairTax emerges as a powerful voice in the conversation that is impossible to ignore, try as Washington special interests might. Its strength, however, is not found in bearing the seal of approval from the political establishment, but rather in who fuels the movement: the American people.

If we continue to convince more and more of our neighbors of the benefits of the FairTax, the call to action in Washington will one day overcome the loud voices calling for more of the same. Make no mistake—you all are leading that effort to change hearts and minds across America.

I cannot thank you enough for your commitment to our success and your conviction that our great nation deserves nothing less than the FairTax.

Congressman Rob Woodall represents the 7th district of Georgia and is the sponsor of HR 25.

EDITORS NOTE: The featured photo was taken by Gage Skidmore. This file is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.

If you think expanding school choice is expensive –consider the alternative! by Jeff Spaulding

President Obama has yet again omitted funding for the D.C. Opportunity Scholarship Program in his recently proposed 2015 education budget. Although his reasoning is likely more philosophical than financial, his decision makes analyzing the fiscal effects of opposing school choice worthwhile.

Data from the U.S. Department of Education (DOE) show that taxpayers are bearing additional costs for funding K-12 education as a result of the continued erosion in private school enrollment.

By the 2009-10 school year, the private school share of K-12 enrollment nationwide had dropped nearly three percentage points, down to 10 percent since its peak of 12.7 percent in the 1984-85 school year. The DOE currently projects that enrollment shift, if unabated, will continue—falling further, to 9.1 percent, in 2020.

Critically, public schools have had to fill that gap, causing a substantial net additional fiscal cost that is rarely acknowledged by public officials.

Looking only at 2009-10, if the private school share had held steady at the 1984-85 level, about 1.5 million fewer students would have been enrolled in public schools. With America’s per-student spending average of $10,652 in public schools in 2009-10, taxpayers would have saved $15.7 billion that year alone.

Taking a broader view, if the private school enrollment share had held steady at 12.7 percent from 1985 through 2010, spending on the K-12 public schools across the United States could have been as much as $222 billion less! Check out the chart below to see for yourself.

Just imagine what might have happened had a different set of policy options been pursued over the past 25 years. For example, a very limited and targeted school voucher program—phased in one cohort annually starting with kindergarten in 1986— likely would have been more than sufficient to maintain the 1985 private school enrollment share. At a theoretical voucher amount of half the public school average spending per pupil—awarded to just enough students each year to maintain a 12.7 percent private school enrollment share—taxpayers could have saved as much as $111 billion, through 2010, by “spending” on a new school voucher program.

Phasing in by cohort is merely a technical way of describing a voucher program that is expanded sequentially starting with a first group of incoming kindergarten students and then allowing all subsequent new classes of kindergarten students to be eligible. Thus, in year two of the program, both kindergarten and first grade students would be eligible. In year three, eligibility expands to students in kindergarten through second grade, and so on. Such a strategy would have served to moderate the voucher program’s growth and align its expansion more closely with the erosion rate in private school enrollment. Additionally, a phase-in by cohort could have been overlaid with other criteria, such as income limits or geographic boundaries, to control eligibility even more tightly if so desired.

In fairness, it would be rather difficult to design a nationwide school voucher program in such a restricted way that it would offset only the slow erosion in private school enrollment share (approximately 0.1 percent or 50,000 students per year). Because each new cohort is about four million students, any such program, even if restricted and phased in, likely would attract more participants than required just to offset the erosion rate. The upside is, if such a voucher program caused the private school enrollment rate to rise, the savings would be even more.

What has actually happened over this period of time? A sporadic expansion of school choice options on a state-by-state basis has served as a form of phase-in. Unfortunately, its pace has, thus far, been far too slow to fully offset the erosion in private school enrollment.

There’s no objectively “right” ratio for public school versus private school enrollment, but from a purely fiscal perspective, the larger the private school share the lower the public cost. For the ratio to return to somewhere near its 1985 level, the growth of school choice across the country will need to be accelerated by state lawmakers—because the president wants no part of it.

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Sarasota County, FL Public School District: Allegations of fraud, waste and abuse answered

Sarasota County School Board Members

Sarasota County School Board. Front row: Todd, Zucker, Brown. Back row: Goodwin, Kovach

I received a letter from a Sarasota County School District employee. The letter contained a number of concerns/allegations in it. I asked Sarasota Superintendent Lori White to respond to three of those concerns/allegations directed specifically at district activities.

Here are the specific Sarasota County school district allegations (bolded) verbatim and the RESPONSES from Scott Ferguson, Communications Specialist, Sarasota County Schools:

I have never seen such waste as what this [Sarasota school district] administration does with tax money. We have seen them toss brand new books in the dumpster that are still wrapped in cellophane.

RESPONSE: Below you will find the language from the state statute regarding disposal of instructional materials. We are very frugal in our purchasing efforts and buy only what is needed and will be used by our teachers and students. Textbooks typically rotate on a five-year purchase cycle. If textbooks or ancillary materials are still in reasonably good condition after the five years, we offer them to our charter schools on a first- come, first-served basis and they are responsible for boxing them and picking them up. During last year’s replacement of elementary reading materials, we also encouraged teachers to keep the leveled readers as additions to classroom libraries or send them home with students. One school raised money to ship some of the old materials to a school in Guatemala and some books were donated to local churches and after-school programs.

This year’s adoption of English-Language Arts materials for grades six-12 will replace 11-year-old resources. Older materials will all be recycled due to their condition. Our district implemented a new recycling program at each school last year; the district earns a small rebate based on the weight of goods recycled. Incidentally, older textbooks are often shrink-wrapped before being stored; the fact that a book is shrink-wrapped does not mean that it is new.

Language from state statute 1006.41: Disposal of instructional materials

(1) Instructional materials that have become unserviceable or surplus or are no longer on state contract may be disposed of, under adopted rule of the district school board, by:

(a) Giving or lending the materials to other public education programs within the district or state, to the teachers to use in developing supplementary teaching materials, to students or others, or to any charitable organization, governmental agency, home education students, private school, or state.

(b) Selling the materials to used book dealers, recycling plants, pulp mills, or other persons, firms, or corporations upon such terms as are most economically advantageous to the district school board.

(2) The district school board may prescribe by rule the manner for destroying instructional materials that cannot be disposed of as provided in subsection (1).

(3) All moneys received for the sale, exchange, or other disposition of instructional materials shall be deposited in the district school fund and added to the district appropriation for instructional materials.

An outrageous amount was spent on basketball hoops at an area high school so that they could be electronically lifted up after hours so that no one could use them when school was out. (How does the sum of $40,000 seem to you)

RESPONSE: The most recent gymnasium project is at Venice High School. It includes electronic basketball backboards; six backboards and system/hardware/wiring was about $39,000. We have similar systems in all of our comprehensive high schools. They are not there to prevent people from using the courts, but rather to respond to various changing needs of the space. Gym floors are first and foremost instructional spaces, used for classes like physical education. In addition, they support a large number of extracurricular activities, which often require different configurations of the space, including, in some cases, the use of the gyms as emergency shelters. Home games and assemblies in gyms require the four side basketball backboards to be lifted up, so that bleachers can be pulled out. Electronic basketball backboard lifts allow staff to change the configuration more quickly and safely than the previous manual systems.

Over $25,000 each was spent on several people to train them in the same course. One of these people is set to retire this coming month [March-April]. I guess now the schools will hire him as a consultant at an outstanding price – let the taxpayers beware!

RESPONSE: We know of no training for district employees that cost over $25,000 per person. We can research specific allegations but without specifics of what training the person alleges cost this much, we can’t further address this allegation.

I appreciate the candid replies from the School District and employees who voice concerns about expenditures of property taxpayer dollars. I will leave it up to the readers of this column to decide if Sarasota County School Board is properly supervising district expenditures or not.

Hard Times that Need Hard Answers

I am paying more for everything these days and this is brought home to me every time I go to the supermarket and contemplate buying anything from an avocado to a London broil. I can’t imagine what it must be like to feed a family with two or three children.

I never imagined living in a nation where an 18-year-old girl would move out of her parent’s home and then sue them to pay for her college tuition and other support. A judge put an end to that nonsense.

I often feel like I am drowning in nonsense. I delete upwards of eighty emails I receive every day because they tell me that I am going to receive millions of dollars from people I do not know, offer dubious business propositions, loans, or they are from companies in foreign countries whose language I neither read, nor speak.

The news media deluged me with constant speculation and rumor about a missing Malaysian jet liner that is likely at the bottom of the Indian ocean and not likely to be found for years, if ever. I feel sorry for the passengers, but this occurred while Russia’s Putin was breaking a whole bunch of treaties to reclaim Crimea.

What the media has not told you is that the Ukraine has been run by a seriously corrupt group of people who routinely plundered it and that, in taking over the Crimea, Putin has taken on a new financial burden and a region that receives its power from the Ukraine. So, while he has secured control of the Russian naval ports and some military installations, he has also added to Russia’s cost of operation when its economy is not that strong to begin with. The likelihood that he would invade Lithuania, Estonia, and Moldova is small and, in fact, he has spurred a sleepy NATO and European Union to gear up militarily.

The same media has managed to largely ignore the lies the President and his former Secretary of State, Hillary Clinton, told about the killing of a U.S. ambassador and three security personnel in Benghazi, Libya. It has largely ignored the corruption of the Internal Revenue Service by politicizing it into an instrument to deter Tea Party and patriot groups from being granted the same non-profit status that liberal groups routinely receive. There were other scandals such as Fast and Furious in which guns were provided to Mexican drug cartels that then were used to kill a U.S. Border Patrol agent and countless Mexicans.

When he lifted the sanctions against Iran in order to negotiate their cessation of efforts to build their own nuclear weapons, Obama ignored their decades of declared hatred of America and Israel, and the fact that Iran is the world’s leading sponsor of terrorism that is keeping the Middle East in turmoil. Syria is just one example. Why would anyone want to negotiate with Iran? Decades of negotiations with the nuclear armed North Korea achieved nothing.

The strength of the United States since the end of World War Two allowed nations to move toward greater democratization. It resisted the Soviet Union during the Cold War for some four decades and saw its collapse in 1991. Our record is not perfect. The decision to go to war in Vietnam was wrong. The decision to go to war with Saddam Hussein’s Iraq after he invaded Kuwait was right, but the later war to remove him from power achieved that goal while ending in total withdrawal from a nation with no experience of self-governance. The “red line” asserted for Syria when its dictator used poison gas was withdrawn within a day.

Hard times call for hard answers and hard decisions. America’s hard times, economically, are the direct result, not only of Obama’s failure to put right the financial ills of the 2008 banking crisis, but of piling on trillions in more debt with government “stimulus” programs that had never worked in the past.

Not only did the President deliberately lie repeatedly about Obamacare, its passage has played havoc, generating unemployment as companies large and small responded to the rescinding of existing health insurance programs and new rules of how many can be employed, full and part time. It literally forced the cancellation of health insurance that people liked in order to force them to purchase more expensive insurance they could barely afford and didn’t like.

Hard times have been made much harder for millions who are unemployed and have ceased looking for work because of the scarcity of jobs. Instead, the government expanded welfare programs from unemployment compensation to food stamps. It destroyed the self-reliance that Americans have believed in from its founding.

At home and abroad, the hard times have gotten harder and the President, protected by a compliant news media, has found plenty of time to play golf and vacation continually, while displaying an indifference to the welfare of Americans and others around the world that is breathtaking. As Putin was annexing the Crimea, the President was shown working on the “brackets” predicting the outcome of the NCAA men’s basketball season.

The only hope for the future now rests with the outcome of the November midterm elections. If disaffected Democrats and independents join with Republicans, returning power in the Senate and expanding it in the House holds some hope of responding to our economic malaise.

I have paid my taxes and my only thought while doing so was the realization that most of the nation’s budget is now devoted to “entitlement” programs that are predicted to be insolvent in the near future.

© Alan Caruba, 2014

RELATED STORY: The Real Inflation Fear – US Food Prices Are Up 19% In 2014 | Zero Hedge

“The IRS Is A Joke”

As of today, you have 14 days to get your 2013 tax return finished and dropped in the mail.

But ironically, in the year when a plethora of Affordable Care Act tax code regulations came into effect, the IRS put out the word that American taxpayers should not call them for help. Those are the same taxpayers who pay the salary and generous benefit packages of every single IRS employee!

That’s right. Our nation’s tax administrator, fiduciary agent and chief tax enforcement agency has said don’t call us this tax season. But if you insist on trying to be in the 61% of calls the IRS was able to answer last year, you will most likely hear a busy signal or a recorded message saying call someone else.

It’s infuriating that in 21st century America – when you simply need a hand with a mandatory or go to jail tax return – the agency that should provide you with a modicum of customer service while you navigate over 77,000 pages of tax code, – takes its’ 1% pay raise and bonus and thumbs its nose at you.

To recap: The IRS is a 100-year-old weaponized political agency tasked with collecting information on every person and business in the United States. They barely answer half of their phone calls while targeting political enemies and peering into every aspect of taxpayer’s financial lives.

As one commentator put it, “The IRS is a joke… an expensive, unproductive one at that.” The congressionally twisted tax code makes this joke especially cruel.

Speaking of the IRS, the tug-of-war between the House Oversight Committee and former IRS senior manager Lois Lerner continues. The Washington Examiner noted this week that another “tool” might be available to entice Ms. Lerner to finally disclose what she knows – the jail in the U.S. Capitol.

Put simply, the FairTax legislation completely eliminates the need for an outdated and abused tax code, as well as the IRS, the bureaucratic weapon used to enforce it.

There is only one reason our corrupted tax code and an agency like the IRS is allowed to do what it does: Not enough Americans have said, “ENOUGH!” and taken action to replace this embarrassment to our nation.

If only enough people will say ENOUGH, they can transform our nation by demanding their representatives enact the FairTax. If you agree, please take a few minutes this week to advance the FairTax Plan with some suggestions from the “Take Action” sidebar on the right.

Finally, on a personal note, after weeks and weeks and weeks of gathering documents and data, followed by expensive CPA compilation, today I mailed my 2013 tax return. Ironically, at the same time I’ve also started getting mail and phone calls from candidate representatives asking for my support in the 2014 elections (and it is only March).

As a private citizen, here is what I want to know about any candidate who seeks my personal support. Do you support the FairTax Plan?  Are you proud to publicly acknowledge your support of the FairTax?Can and will you defend the FairTax?  If the answers to my questions are not an enthusiastic yes, yes and yes, then I have one simple answer for them – see ya!

EDITORS NOTE: The featured image is titled “The End of a Bad Show”.

The Austrian Influences on Bitcoin by Jeffrey A. Tucker

There is a bit of Menger, Mises, Hayek, Rothbard, and Kirzner in every satoshi.

Bitcoin seemed to emerge out of the blue in early 2009 as a unified monetary and payment system, something anticipated by no one. It’s true that the people who saw its merits and viability early on were code slingers and hackers. They posted their masterworks in strange places, and they are not available at university libraries. It’s all a little much to get your mind around, and there’s no academic literature about it. But then, the beauty of bitcoin is that you can jump in, start using it, and learn from the ground up.

For my part, I was incredulous about Bitcoin for two years after I heard about it. It just seemed crazy that money could somehow be created by a computer without any external or physical foundation. In some ways, this seems contradictory to everything we know about money.

But now that the currency has taken hold, its infrastructure is being built, cash-to-Bitcoin machines are going up everywhere, and mainstream opinion is gradually coming around. Cryptocurrency is real and not going away.

It’s time for a retrospective on exactly who among economists anticipated such a radical idea that markets themselves could discover and sustain a money independent of the State. When looking for economists, we need to begin with those who regarded money as a market good, created through entrepreneurial experimentation.

That points directly to the Austrian School.

Carl Menger (1840–1921). “Money is not an invention of the state,” wrote the great founder of the Austrian School. “It is not the product of a legislative act. Even the sanction of political authority is not necessary for its existence. Certain commodities came to be money quite naturally, as the result of economic relationships that were independent of the power of the state.”

This runs against most of what we think we know. Money is produced by the State today and has been in most places in the world for the better part of one hundred years. This creates an illusion that the State is the reason for money’s existence.

This is untrue. Money was nationalized away from markets, just as the roads and schools were. None of the reasons for this development are good. Government likes to control the money because it can depreciate it and thereby have another revenue source besides taxes. It can guarantee its own debts to prevent markets from evaluating them realistically.

The banks oblige this wish. In exchange, they are protected from market competition and enjoy protection against bank runs. In essence, the government grants banks the right to counterfeit so long as government can enjoy the first fruits of the printing press.

Once you release yourself from the myth that government created money, new possibilities emerge. Menger describes the emergence of money in evolutionary terms. There is trial-and-error. There is innovation. There are fits and starts. Something can be money in one place and not in another. Its emergence is gradual and goes through many iterations. “This transition did not take place abruptly, nor did it take place in the same way among all peoples.” This is a good description of the emergence of Bitcoin.

Ludwig von Mises (1881–1973). In a book published in 1912, Mises deepened and broadened Menger’s original theory about the origin of money. He was seeking an answer to the question of money’s original price in terms of goods and services. He explained that at any one time, there are many goods competing for money status—that is, that the good would be acquired not just to consume but also to trade for other goods.

He explained that it is impossible for anything to just be labelled money and for it to obtain value. There must be more to it than that. Gold and silver, for example, obtained their money value by virtue of their prior use in barter. In this sense, money must extend from a living market experience.

How does this apply to Bitcoin? The underlying value of Bitcoin is connected to its incredibly innovative payment system. The technology combines a distributed network, a ledger updated and verified for each transaction, cryptography, and a direct peer-to-peer system of exchange to create the blockchain. Users played around with the results for fully 8 months before the attached currency (Bitcoin) obtained its first market value.

Giving value to this digital currency was not something that could be done by government or social contract. It takes real market experience with a value good—or, in the case of Bitcoin, a wonderful service that the whole world needs. Such is the origin of Bitcoin’s value. In fact, if there were no payment network bound up with the currency, the currency itself would have no value at all.

In my experience in explaining this to people, this is a real sticking point. Most people think of money and a payment system as different entities (dollars vs. Visa). With national money, this is entirely correct. But Bitcoin is different. It unites the two in one. That’s hard to think through.

Mises made two additional contributions. He said that central banking was not necessary and predicted that it would be detrimental to the soundness of money. History has proven him right. In his ideal, money would function entirely apart from the State—just as Bitcoin does. Also, Mises closely tied the cause of sound money to freedom itself. He compared sound money to constitutions that guarantee fundamental human rights.

F.A. Hayek (1899–1992). Hayek was Mises’s colleague in pushing for fundamental monetary reform for many decades. Together they warned of the dangers of central banking. They demonstrated how expansionary credit policy leads to price inflation and business cycle, and also fuels the growth of government. They begged and pleaded to reverse course. But they were doomed to be prophets of decline.

One year after Mises’s death, Hayek decided to take a different course. In 1974, he wrote “The Denationalization of Money.” He gave up on the idea of government involvement in money at any level and concluded that there had to be a complete separation, even at the level of reform. He suggested a revolution from below.

He once favored the gold standard, but with this book he said, in effect, “We certainly can do better than that, though not through government.” He explained that “we have always had bad money because private enterprise was not permitted to give us a better one.” He endorsed a system of privately created monies based on a variety of technologies, included indexes of commodity baskets. These monies would all compete for market dominance, same as with any other good.

This book seemed mind-blowing at the time. But with Bitcoin, it’s not so crazy. The technologies were not around during Hayek’s day but now we can see how much we’ve been missing in the age of nationalized money. Money has gotten worse rather than better—and this is different from other private commodities, like phones, cars, and computers. Money can indeed be a product of private enterprise. The right reform plan is to just forget about the government’s system and move onward to something more wonderful. In the competition for money and payment systems, the market system will win.

Murray Rothbard (1926–1995). The first I ever heard of the idea of private coinage, it was from Rothbard’s 1963 book, What Has Government Done to Our Money. The idea astonished me, though, again, the notion seems not entirely outlandish now. New research has emerged that has shown that private currency is a huge part of modern history, from England in the Industrial Revolution to the American nineteenth century.

This wasn’t his central contribution. Rothbard was a theorist of the idea of private property, spelling out its implications for the whole of the social order. It is private property that brings order, secures liberty, rationally allocates resources, keeps conflict at bay, allows for the adjudication of disputes, incentivizes production, and generally shores up human liberty. Rothbard firmly established that money is and must remain private property.

Why does that insight matter? It comes down to one word: banks. They first existed as warehouses, made necessary because of safety and the costs of transport. The function of banks as lenders is really something different. In either case, the rights to who owns what ought to remain clear. Alas, it was not to be the case. Banks love ambiguity over ownership. If they can warehouse your stuff and make money lending it out at the same time, that’s all the better for them. If they can get government backing for the practice, that’s even better.

Rothbard’s best idea of reform—spelled out at great length in his 1983 book The Mystery of Banking—was to re-institutionalize property rights in the realm of money. No more should there be confusion and uncertainty about the titles to money property. Just as in the rest of the world, there should be clear distinctions. You can warehouse your money or your can loan it to a lender at a risk but there should be no mixing of the two. In today’s world, no one has a clue who has a right to what.

Now consider Bitcoin. When I own it, you don’t. When you own it, I don’t. There are no intermediaries, no charge backs, no confusions about how many there are or to whom they belong. To pay is to transfer, not just on some fictional ledger that may or may not reflect. This is a Rothbardian dream come true.

To be sure, Mt. Gox muddied the situation substantially, but that is not intrinsic to Bitcoin itself. It was a result of one firm that was poorly run, and this firm was compromised by a hacking theft, a cover up, incompetence, or outright fraud (it’s still just starting to be sorted out—for instance, Mt. Gox just found 200,000 BTC it didn’t realize it had). But the beauty of the situation was that even with that institution’s obfuscation, users knew of the foul play. For years prior to bankruptcy, it was obvious that something was amiss. Bitcoin is still being traded. The newest firms are going the extra mile to make it clear that they hold all your property at all times. Plus, with paper wallets and cold storage, you don’t have to use third parties at all.

Unlike the gold that Rothbard favored as currency (he died in 1995, just as the web was privatized and began to mature), Bitcoins are both weightless and spaceless. This means that the warehousing function of Bitcoin is technically unnecessary. Every owner can be his or her own banker. This is a dream in many ways, since the the warehousing function is technologically contingent, not an eternal feature of the world.

Israel Kirzner (1930– ). Kirzner is a student of Mises’s who has dedicated his life’s work to understanding and expanding upon an insight of his teacher. Mises saw that economics resisted formal modelling for many reasons but a major factor was the presence of entrepreneurship. There is a reason that textbooks neglected this topic for decades. It contradicts the goal of perfect prediction and perfect control. Entrepreneurship introduces an element of chaos that defies every expectation. Kirzner elaborated.

This is the act of discerning unmet technologies and needs in a market setting and bringing them to life for consumption and production. Entrepreneurship means introducing something new that had previously been unknown. There is an element of surprise that is essential to entrepreneurship that drives forward the process of market development.

When we think of Bitcoin, how can we not think of entrepreneurial surprise? It was released not as a traditionally capitalist product but rather on a free forum. Anyone could download it and starting “mining” Bitcoin. But only those super-alert to the opportunity did so. One of those was the inventor himself, who is a very rich person today. This is what it means to be alert to and discover an opportunity.

Today there are many thousands of businesses that have grown up around Bitcoin. There are wallets, exchanges, retail and wholesale stores, service companies, and so much more. Each one represents a risk. Most will not make it. But some will. What determines their success or failure (leaving aside government regulations) is whether they meet the needs of the consuming public. No one can know the results in advance.

Kirzner is the master of describing this process, one that Menger said is at the heart of causing a new money to emerge. Thus have we come full circle: 120 years of scholarship that describes the very economic heart of cryptocurrency. To most people it is mystifying and amazing, and truly it seems that way. But there is a logic to it all, even if it is only obvious in retrospect.

How many years will it be before the economic science of the non-Austrian variety catches up? For now, most professionals in this field are politely ignoring the fact that Bitcoin has blown up nearly all conventional wisdom about monetary theory and monetary policy. (Konrad Graf, though, is already on the story). Indeed, Bitcoin was necessary in part because the current State-based system has utterly failed to keep up with the times. Had the market been allowed to work all along, instead of being restricted and truncated by state control, the system would likely be further along than it is.

Now is a good time to look back, dust off those neglected books, and rediscover the school of thought that anticipated all the core of what makes Bitcoin so incredible.

RELATED STORY: IRS Rules Bitcoin is ‘Property,’ Subject to Tax

20121129_JeffreyTuckeravatarABOUT JEFFREY A. TUCKER

Jeffrey Tucker is a distinguished fellow at FEE, CEO of the startup Liberty.me, and publisher at Laissez Faire Books. He will be speaking at the FEE summer seminar “Making Innovation Possible: The Role of Economics in Scientific Progress.”

Open Letter to Florida Power and Light CEO James L. Robo on Smart Meters

The Memory Hole blog published an open letter by James F. Tracy to James Robo, CEO of FP&L concerning its push to install smart meters on all of the homes of its customers. Memory Hole reports, “The letter below was sent to Florida Power and Light Chairman/CEO James L. Robo this week upon reviewing FPL’s policy to ‘opt out’ of Smart Meter technology for an ‘enrollment fee’ and subsequent monthly payments. Such payments amount to mob-style extortion that utility customers are forced to pay, simply to remain free from potential harassment or harm.”

James L. Robo
Chairman and Chief Executive Officer
Next Era Energy / Florida Power and Light
700 Universe Boulevard
Juno Beach, Florida 33408

Dear Mr. James L. Robo,

I am writing with regard to the “Smart Meter” appliance that your company, Next Era Energy / Florida Power and Light (NEE/FPL; NYSE: NEE) placed on my home and households throughout my Boca Raton neighborhood in April 2011, and your present bid for my family to “opt out” of exposure to such technology. As you are likely aware, after doing extensive research on the device and its implications for privacy and human health, in addition to conducting periodic measurements with my HF35-C RF Analyzer, I discovered how your Smart Meter apparatus was discharging microwave radiation on my family (which includes small children) in excess of 10,000 microwatts per square meter every thirty-to-ninety seconds. I requested that NEE/FPL remove the meter. NEE/FPL complied only after being repeatedly telephoned and furnished with my own observations delivered via certified mail and accompanied by copious scientific research that such “Smart Meter” technology poses a serious health hazard and privacy-related concerns (hereherehere, and here).

Yet Mr. Robo, as you are aware, even with this knowledge you have consciously chosen to act in a grossly irresponsible fashion by maintaining that the meters in question are safe, and have proceeded to keep them on millions of NEE/FPL customers’ homes throughout Florida without their awareness or express consent. This flagrant act demonstrated to such a manifold degree arguably constitutes fraud, negligence, and reckless endangerment on a truly astounding scale.

NOTE: An important interview with Take Back Your Power documentary producer Josh Del Sol:

[youtube]http://youtu.be/ozwCHuW0Clg[/youtube]

In your most recent paraphernalia to customers you disingenuously assert that there are “no credible studies” concluding that “Smart Meter” radiation is dangerous to human health. As you are well aware, the body of research on the negative health effects of microwave RF dates to the 1960s and consists of several thousand military and scholarly scientific studies. In fact, the only studies that lack credibility and defy basic scientific standards are those commissioned by NEE/FPL and its peer utilities throughout North America to avert public concern over such risks.

Mr. Robo, as a Harvard Man twice over one might conclude that you hold scientific inquiry and proof thereof in high regard. Your irresponsible conduct in this matter suggests that any such intellectual training is not only placed in abeyance but wholly betrayed. Moreover, your most recent proposition to allow families to “opt out” for a fee of what is essentially a gigantic scientific experiment is tantamount to mob-style extortion.

I will appreciate the opportunity of meeting and conversing with you in person so that you may explain to me whether you have a “Smart Meter” attached to your office, living room, or bedroom wall, as so many of your customers’ families do. I am also interested to know how you are able to proceed with a clear conscience given that you are presiding over such a dangerous health-related trial that will almost certainly cause countless health problems and an overall deteriorating quality of life on unsuspecting millions.

An honest Fourth Estate vigorously airing the perils of the technology you have unilaterally mandated for every single Florida resident might result in a far more circumspect if not hostile citizenry. Such inattention by the press has allowed you to successfully bamboozle the Florida Public Utility Commission into approving the widescale deployment of this dangerous system and the uncertain effort to allow customers to “opt out.”

If the “Smart Meter” technology you stipulate were really safe and beneficial, your customer base would be clamoring to pay the $95.00 initiation and $13.00 monthly fee to “opt in” to the “Smart Grid.” Yet because the technology is unproven, hazardous, and perhaps even useless you must foist it on your customers without their knowledge and then proceed to confuse them, even as you disingenuously offer the option to say, “No.”

Mr. Robo, I once again offer you my emphatic “No!” “No!” to the fraud, “No!” to the guile, “No!” to the invasion of privacy, and “No!” to the assault on my family’s health that your outrageous and unfounded technology poses.

Sincerely,

James F. Tracy

COUNTDOWN TO TAX DAY VIDEO: How does the FairTax Impact the Price of What I Buy?

A young man asks Steve Hayes when you buy a car is the price going to be higher under the FairTax®? No, because of the elimination of withholding from salary and increased take home pay you have more money to spend. Combine that with the cost savings to car makers, car sellers and transporters and everyone involved in bringing that car to market competition in the market will cause the base cost of that item to go down as those businesses are no longer paying income tax, matching withholding, or paying the cost to comply with the taxes. Your purchasing power will increase.

[youtube]http://www.youtube.com/watch?v=IoMWX_NnzgU&list=PLnk-hcDOMi7Rt7LDaw6py2RKwaZbvrQ3L&feature=share&index=15[/youtube]

Intimidation from the U.S. Patent Office: They Want Our Name!

fair tax april 15 is comingIt is often said that imitation is the sincerest form of flattery. That is, unless that imitation runs afoul with federal trademark law.

Since the mid-90’s, Americans For Fair Taxation® has owned and utilizes several FairTax® trademarks registered with the U.S. Patent and Trademark Office.

These trademarks have been an integral part of our public awareness campaign on the need for tax reform, and in our educational efforts to provide information regarding taxation, tax reform and HR 25 / SR 122, “The FairTax Act of 2013.”

Currently, in the state of Illinois, the “A Better Illinois” coalition and others are conducting a high-profile public awareness campaign themed, “A Fair Tax.” This tax reform plan promotes a differentiated tax system that subjects citizens to varying levels of income taxes.

This is in stark contrast to the FairTax®, which eliminates federal income taxes in their entirety, and replaces them with a single rate, national consumption tax.

Americans For Fair Taxation (AFFT) fully respects the right of individuals and organizations to advocate for the tax reform plan of their choice, using all lawful means.  We reject, however, any notion that advocacy initiatives may be conducted using any of (AFFT’s) federally protected marks, most especially when that advocacy causes confusion among consumers as is currently happening in the state of Illinois.

AFFT has spent nearly two decades building goodwill in and national recognition of the FairTax marks.

We will not allow that goodwill to be destroyed through any unauthorized usage of the same or confusingly similar marks for any tax reform plan except The FairTax – HR 25/S 122, and FairTax inspired and modeled state tax reform initiatives supported by state FairTax organizations.

We will always seek first to amicably resolve infringement situations while respecting AFFT’s exclusive right to use the FairTax marks; and when required, will initiate legal action to enforce our rights.

RELATED VIDEO: What is the FairTax legislation?

[youtube]http://www.youtube.com/watch?v=ABCDEFGH[/youtube]

 

EDITORS NOTE: The featured image is from the Robert N. Dennis collection of stereoscopic views of the Patent Office, Washington, D.C. circa 1860-1895.

Frustrating Michael Moore by Sheldon Richman

The filmmaker needs to discover truly radical political economy.

If Michael Moore would study a little political economy he might turn into a potent champion of individual liberty.

As we see in Moore’s new movie, Capitalism: A Love Story, Moore is offended by some truly offensive things: banks engaging in wild speculation without concern for the risk, taxpayer bailouts for banks and other businesses, cozy relations between Wall Street and Washington, politicians getting favors from companies that want benefits from government, and big institutions pushing less powerful individuals around. True, he’s offended by some inoffensive things as well, such as the cut in the 90 percent top income-tax rate nearly 30 years ago. But by and large, what he rails against should be railed against.

(Update: Moore gets the tax-rate story wrong, and I let it get by me. The 91 percent top marginal rate fell to 77 in 1964 and 70 in 1965; this was the Kennedy tax cut — I wonder why Moore didn’t say that Democrats John Kennedy and Lyndon Johnson were the rate cutters. Under Republican Ronald Reagan, whom Moore wishes to demonize for cutting taxes for the rich, the rate dropped to 50 and eventually to 28 percent. HT: Gary Chartier.)

Had he called his movie State Capitalism: A Love Story, I might be applauding (with some reservations). But he’s targeting the more ambiguous “capitalism,” which he uses interchangeably with “the free market.” He can be forgiven for this, however. Most people would say that the current U.S. economic system is capitalist. Moore has probably heard that all his life. He’d hear if he watched a Fox financial program. Would Ben Stein or Lawrence Kudlow disagree? Moore has also heard Republican politicians, George W. Bush, for example, praise the existing system, with all its deep government interventions, as capitalist. He did this even as he and Treasury Secretary Henry Paulson, former chief of Wall Street behemoth Goldman Sachs, stampeded Congress into passing the $700 billion TARP bailout last year. Moore takes such people at their word: The free market is capitalism, and capitalism is what we have today.

Can we blame him for thinking this way?

Yes, it’s sloppy thinking, and had he been more curious and read beyond the confines of “Progressive” literature, he could have gotten the straight story. But many knowledgeable advocates of the free market contribute to the confusion by exhibiting what Kevin Carson calls “vulgar libertarianism,” or what Roderick Long describes as “the tendency to treat the case for the free market as though it justified various unlovely features of actually existing corporatist society.” How often have you heard a free-market advocate condemn pro-business intervention in one breath, then defend existing dominant corporations in the next — as though they did not arise in the interventionist environment just condemned? Pro-market is not the same as pro-business. If some market advocates don’t understand that, why should Moore? Vulgar libertarianism is a disconnect that makes the free-market philosophy look like a corporate apologetic. It’s done incalculable damage to the cause of freedom, in part by alienating potential allies. Who knows, maybe even Michael Moore.

Aversion to Profit

This may go a long way in explaining Moore’s aversion to profit — at least other people’s. He associates profit with business, which he associates with (state) capitalism. So for him, profit per se is suspect. But he should see a problem here. Does he think he’s exploiting moviegoers when his production company ends up with a profit? Do the co-ops and worker-owned firms he loves exploit their customers when they sell their products for more than their money costs? When two people barter, are they mutually exploiting each other because each gets more value than he gives up? To consistently oppose profit, one would have to oppose all human action, since every action aims at a surplus of subjective benefit over subjective opportunity cost.

Cornered like this, Moore might say he’s only the against excessive profits that capitalist market power permits. But now we’re back where we started. To the extent that intervention hampers competition by erecting barriers to entry — which is the usual effect, intended or not — protected firms are free to charge higher prices and reap more profits than would have been the case in an open market. Corporate power and privilege derive from political power and can’t exist without it. In contrast to existing capitalism, the truly free market would have no legal barriers to competitive entry, assuring that prices and returns are economically justified and not the fruits of privilege. Strictly speaking, entrepreneurial profit in a true market gets competed away because the very process of capturing them reveals valuable information to others and invites imitation. It takes innovation and efficiency — that is, superior service to consumers — to create new profits. Only the State permits business to make profits by withholding benefits from consumers.

But Moore doesn’t know this. What he “knows” is that the choice is between the current corrupt system — and it is corrupt — and some vaguely defined scheme of control by benevolent politicians, which he calls socialism and democracy.

In his movie Moore expresses affection for socialism, but he’s not clear what he means. He never advocates collectivization of the means of production or the abolition of markets. Instead he suggests that socialism means workers having a say in how the companies they work for are run. But why assume that’s anti-free market? He praises worker-owned companies and notes that hundreds of them exist in the United States today. He might be surprised to learn that these things are entirely compatible with the free market. In fact, it’s a perfectly libertarian intuition to abhor being subject to the arbitrary whim of anyone — yes, even a private employer. If government regulatory and tax obstacles to new competition and self-employment did not exist, workers would have their maximum bargaining power and widest array of alternatives. I imagine we’d see more departures from the traditional firm. People used to get their “social insurance” from mutual aid societies. Maybe in a true free market, we’d see a bigger role for the employment counterpart to these public, yet not governmental, organizations.

What would Moore think about a system in which no one could collude with politicians to legally plunder the rest of us for their own benefit and everyone was free to enter into any cooperative arrangements to produce and offer goods to others in voluntary exchange? Michael, that’s the free market!

FDR’s Second Bill of Rights

Of course, Moore naively looks to government to provide things. His movie laments that FDR died before he could see his Second Bill of Rights enacted. Roosevelt wanted government to guarantee everyone a good education, job, home, health care, and so on. Has Moore ever wondered where government would get the resources for this? He can’t really believe that somewhere there’s a massive pot of collective wealth waiting to be distributed. He must realize that the tax system would provide the money. But how can he not know that if government appears to penalize wealth creation with confiscation, less wealth will be created?

Moore is unaware that he commits the “Nirvana fallacy.” This is the erroneous idea that our choice is between the admittedly imperfect world we’re bound to live in if government leaves us alone and an imagined utopia in which benevolent and all-wise rulers oversee and regulate everything. Of course that is not the choice. Moore’s preferred system, whatever he calls it, would be run by individuals whose insight into the public interest would be no sharper and whose motives no purer than other people’s. However, since they would wield political power — which is the legal authority to compel obedience– they would be far more dangerous than anyone in a free market could ever be. He knows how corrupt politicians are. Why does he think different people would run things in his utopia? Does he really want them in charge of everyone’s job, education, healthcare, housing, pension, and the rest? It’s hard to understand why he isn’t uncomfortable with the idea of the people being tenants and employees of the State.

Whether he realizes it or not, Moore favors a system in which an elite necessarily would make critical decisions for the rest of us. He’d be incredulous to hear that, but if he ever comes to understand it, libertarians might end up with an unlikely ally.

ABOUT SHELDON RICHMAN

Sheldon Richman is the former editor of The Freeman and TheFreemanOnline.org, and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America’s Families.

EDITORS NOTE: The featured photo of Michael Moore is by Andrew McFarlane. This file is licensed under the Creative Commons Attribution 2.0 Generic license.