Savages with Cell Phones, and Women Making Waves

Once again, the extraordinary Daniel Greenfield nails it fabulously with his insightful article, “Savages with Cell Phones“, deconstructing the Baltimore riots.

I highlight some of Daniel’s (Sultan Knish) indicting words reaching from the top of society to the bottom, showing that both groups are aliens to the REAL America we all love and defend.

Second up Arie Egozi providing some insight to the percolating tensions on all the borders of Israel. Yes, war is inevitable. Next up is a breath of fresh air with two lovely ladies discussing a relatively new no-profit organization, “Women Making Waves” dedicated to helping young women during their academic formative years of life.

Finally, Brother Ganoe stops by from Tel Aviv to say hello and show some of this amazing experiences in the Land he loves, Israel.

Should Taxes Fund Philosophy? The cost of subsidizing state philosophy departments is hard to justify JASON BRENNAN

In the past few days, philosophy bloggers have been writing with concern about how more philosophy departments around the country are closing, and how various Republican state legislators are trying to pass bills that cut many philosophy faculty. Most of the bloggers I’ve read seem to assume, unreflectively, that such cuts are a bad thing.

To my surprise, philosophers rarely seem to reflect on the opportunity cost of funding philosophy departments.

Let’s say East Podunk State spends $2 million a year funding a small philosophy program, which graduates 10 majors per year. Suppose (contrary to fact) that this was funded entirely through taxes on corporate profits, with free tuition, room, and board for all philosophy majors.

Is this a good deal? To know, we’d need to do some cost-benefit analysis. The problem here is $2 million spent on philosophy is not $2 million spent on all the other things worth spending money on.

Daily Nous recently had a thread on this, and I made a similar point:

I’m not convinced studying philosophy teaches people how to think. Educational psychologists have been studying “transfer of learning,” and there’s now a lot of evidence that the assumptions upon which liberal arts education is based are false. Most students don’t apply what they learn in class outside of class. We don’t actually succeed in teaching student soft-skills. They don’t use the tools we give them for anything outside of writing essays. Etc.

Richard’s answer, that philosophy has intrinsic value, is more plausible. But then this still leaves open cost-benefit analysis questions: There are lots of intrinsically valuable things out there worth doing. Why spend tax money on this thing (philosophy) rather than on some other intrinsically valuable thing (e.g., public death metal concerts open to all)?

Further, even some things are intrinsically valuable (such as philosophy and death metal concerts), we have to ask why these things should be funded through taxes rather than left to individual choice. You don’t have to be a libertarian to think that not everything worth having or doing is permissibly done/best done by government.

I love philosophy, and I believe most people would benefit greatly from understanding it and applying it outside of its domain. But that doesn’t mean that it’s worth funding many or most philosophy departments in public universities.

After all, the evidence about transfer of learning seems to show that students usually don’t get the value out of it that we hope they would. And even if you’re a resolute statist, you’ve got to ask why it’s worth spending hundreds of millions on philosophy in public universities, when that money could have gone to funding children’s hospitals, repairing infrastructure, or Opeth in the Park.

Jason Brennan is Assistant Professor of Strategy, Economics, Ethics, and Public Policy at Georgetown University where he teaches ethics, political economy, moral psychology, entrepreneurship, and public policy. As well as writing many books, Brennan also blogs at Bleeding Heart Libertarians, where this post first appeared.

Jason Brennan is Assistant Professor of Strategy, Economics, Ethics, and Public Policy at Georgetown University. He blogs regularly at Bleeding Heart Libertarians.

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.

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.

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

Worst in Nation Hawaii Health Connector Looking for Another $28M by Andrew Walden

Good money after bad?

Ranked last year as “worst in the nation,” with sign-up costs estimated at $56,819 per enrollee, the Hawaii Health Connector is begging Legislators for another $28 million.  The sales pitch?  A financial plan which openly states the Connector will lose money for another eight years.

The Connector is set up as a State-mandated non-profit organization with insurance company representatives on the Board of Directors.  The unique setup allows the Connector to evade Hawaii’s public records laws, but Hawaii’s lone Republican Senator Sam Slom argues the “$28 million in ‘debentures’ … are in reality General Obligation bonds.  Their issue by a private non-profit is unconstitutional….” On March 25 the House Consumer Protection and Health Committees agreed, yanking the funding mechanism from the bill and leaving the details for the House Finance Committee to work out in a hearing now set for Wednesday April 8 at 2pm in room 308. UPDATE: FIN passed SB1028 un-amended–it is headed for a referral to Conference Committee.

At the February 15 deadline, the Health Connector touted 13,356 sign-ups in the three-month enrollment period–but as many as 7,700 are Micronesian immigrants forced off Medicaid and into plans provided by the Health Exchange.  Estimated to save the State $20 million per year, the move alarms Dr. David Derauf of the Kokua Kalihi Valley clinic.  In a February 26 column in the Honolulu Star-Advertiser, Derauf points out:

“As a result of these changes, many will suffer serious consequences to their health. Some will die.

“For this particular group of lawfully present immigrants, the state under Medicaid currently pays 100 percent of the costs of the program, which ensures that low-income people have access to medically necessary care at no cost.

“By transferring them to a Connector plan, much of the state’s cost will shift to the federal government, which provides significant insurance subsidies for people near the poverty line.

“However, even with those subsidies, an individual will still have to pay up to $2,250 in copays and co-insurance in a single year — an impossible amount for someone working 40 hours a week at minimum wage and earning only $1,343 a month. At these income levels, seemingly insignificant copays can prevent people from getting the medications and treatment they need.”

Kelii Akina, President of the Grassroot Institute explains: “Before the Affordable Care Act, Hawaii had a workable public-private partnership that ensured 93% healthcare coverage for the population.  It was a model that other states were studying and planning to implement in some form without a federal mandate.  Now consumers as well as the state government are facing skyrocketing costs.”

Other populations are being suggested as forcible Obamacare converts.  A bill offering benefits to “innocent” ex-convicts includes lifetime health care “…provided that the claimant enrolls in the Hawaii health insurance exchange….”  With labor negotiations ongoing,Governor David Ige is suggesting putting the State’s 40,000 employees into the Connector.

While reaping the benefits of Micronesian misfortune, Connector officials talk up the State’s60,000 new Medicaid enrollees–signed up not by the Connector but by the State Department of Human Services.  While the Connector managed to waste $205 million on its failed enrollment software, the State DHS blew another $144 million on balky Medicaid signup systems leading to the February ouster of the State’s Medicaid Director.  Both efforts ended up relying on human enrollment workers to complete applications.

Says Slom: “I serve on the Connector Oversight Committee. When I seek fiscal answers I get double talk. The enrollment figures are bogus. The business plan is flawed. The Connector depends on endless subsidies and has lost millions of taxpayer dollars in questionable contracts. The Connector must be dis-connected now.”

VIDEO: IRS Commissioner Admits the Tax Code Cannot Be Understood

“The best thing [Congress] could do would be simplify the tax code,” Koskinen told the National Press Club on March 31. “I don’t know how anybody understands all the ramifications of it.”

The IRS Commissioner also quipped that, “the IRS code is longer than the Bible, with none of the good news.” Read more.

Time to Abolish the ‘Karl Marx inspired’ Florida Regional Planning Councils

All Florida counties must be a member of a United Nations endorsed Regional Planning Councils (RPC) and they (we) are required to pay dues that come out of YOUR (OUR) TAXES

WHY ?

Capture-eflorida-FL-Regions-3_thumb[3]

Florida’s eight regions. For a larger view click on the image.

Regional Planning Councils are unconstitutional bodies of unelected people who disseminate (re-distribute) your wealth in the form of federal grants to the counties (and some cities). These federal grants are NOT “free” it is your tax money.

“Karl Marx created sustainability” measures onto the citizens at the expense of your property rights. The goal of the Communist Party is to get control of your private property. This mission started when they created the unconstitutional property taxes. Level 2 is the RPC’s.

The Communist march to enslave you is patient and as time passes these councils lead to the loss of representative government and tyranny

In January 2012 the Republican National Committee (RNC) unanimously passed a resolution against U.N. Agenda 21, and it was included in the 2012 Republican Party Platform. Why are RPC’s still operating in Florida and other states controlled by Republicans? Is the RNC full of lip service and not able to back up with action what they spew from their mouths?

Why are Florida counties forced into these unconstitutional United Nations originated RPC’s ?

You must start someplace and that someplace is the grass roots. Now!

If you want to be re elected Mr. Florida Politician, especially those in Florida’s conservative counties. I suggest you start planning for this contingency. We are done with this infringement and infiltration of United Nations ideology into our free state and Constitutional Republic.

Remember this. Sustainable development is really just a disguised form of Marxism, with its top-down control of economic decisions, violation of private property rights, and emphasis on Social Justice — a term, incidentally, coined by none other than Karl Marx.

The theory of Communism may be summed up in one sentence: Abolish all private property rights.

Oil Boom and Government Glut

The government buys 5 million barrels of oil for its stockpile by JEFFREY A. TUCKER.

It’s a sweet thing when Uncle Sam becomes a mega-buyer of your product.

While the price of oil continues to plunge to record lows, drivers are celebrating, and oil executives are sweating it out. But never fear, the government is running to the rescue — of the oil industry. The Department of Energy is planning to enter the market with a purchase of 5 million barrels. It’s necessary for national security, don’t you know.

Oil prices have fallen 55 percent in the last year. The trend defied every expectation, and it’s been wonderful for drivers, businesses, and consumers. It’s an impressive illustration of how prices reveal information about underlying resource realities.

Technology has blasted away the last decade’s wild and misguided fears of a shortage. Production is at an all-time high in response to unprecedented demand. The stunning events have been a boon to consumers, as downward pressure keeps pushing on prices at the pump.

The market is giving us oil as never before. It is not failing. It is succeeding beyond belief.

“Experts” keep saying the trend is temporary, but no one knows for sure. We could see $20 per barrel before year’s end.

The new purchase is for the Strategic Petroleum Reserve, a hoary leftover from Gerald Ford’s presidency. It pays oil companies for their products, as the DoE says, “to protect the United States from severe petroleum supply interruptions through the acquisition, storage, distribution and management of emergency petroleum.”

But far from seeing “disruption,” we are seeing more and better distribution. You can tell from its language that this is the most thrown-back program imaginable. It illustrates a complete lack of understanding of the price system, which is the signaling mechanism that reveals shortages and surpluses in the market. Prices coordinate the interests of buyers and sellers with facts about underlying scarcity. Rising prices signal facts about supply and demand, incentivizing less consumption and more production. Falling prices encourage consumers to buy more and producers to make less.

The price system actually works, unlike these lame attempts at central planning. The proposed purchase by the government constitutes only half a day’s worth of production in the United States — as if an intervention so small would make the difference between prosperity and disaster.

If it is really necessary to have a “strategic reserve” for oil, wouldn’t we also have to have the same for carrots, beef, iPads, tennis shoes, wine, or raisins? Actually, we have one of those too: a National Raisin Reserve, an equally bizarre anachronism from the Great Depression that requires raisin farmers to give as much as half their crop to the government in order to keep raisin prices high.

The full Strategic Petroleum Reserve covers less than two months of US production, which is itself only 10 percent of world production. Why not make it six months? Why not a year? And what’s a half-day, more or less? There is no rational way to decide.

Let’s imagine there really were some weird catastrophe that caused all distribution to stop. Prices would surge through the roof and inspire a gigantic increase in oil production from all over the world.

But let’s also pretend, because of some foreign policy issue, that the United States also stopped all imports, and then tapped the “Reserve.” It’s not the consuming public that would benefit. It would be the government itself, making sure that the military and all the “essential” government agencies stayed running.

In other words, this program is not about you and me, even in theory. To understand why the Reserve exists, look who benefits most directly: the oil industry itself. It’s a guaranteed market, a kind of subsidy to big business, just as food stamps are for agriculture. Perhaps this is why this proposal is being made again right now, just as prices are falling so dramatically. It’s just thinly veiled corporate welfare.

The Reserve-subsidy came about during a period when oil prices were controlled by the government, and the oil industry was facing very serious financial pressure. The Reserve helped to alleviate that pressure — a classic case of how one intervention leads to others, until all special interests are satisfied with the new equilibrium. The SPR was a fix for a “market failure” created by government-failure.

Oil prices haven’t been controlled since the late 1970s, completely removing any objective conditions for why this needs to exist at all. The only time we ever had gas lines was when we had a “czar” telling people how much they could buy and what they were allowed pay for gas, and the lines disappeared when the controls were removed.

What harm does the Strategic Petroleum Reserve do? Most of the time, it’s simply an unconscionable waste of taxpayer money. When its supplies are actually deployed, dumping oil on the market from a government-mandated reserve, it puts downward pressure on the price and reduces the incentive to step up production right when it is needed most.

The Reserve is a perfect illustration of the dangers of any government program: once one starts, it is extremely difficult to get rid of it, no matter how irrelevant the original rationale has become. Here we are 40 years later, with astounding increases in supply and the technology for refinement and distribution, but we are still paying for this economically illiterate central plan for stockpiling oil.

It needs to be completely abolished, just as Ronald Reagan suggested in 1980 (before he later changed his mind to favor its expansion). The SPR is just like the Post Office in this sense: it exists solely due to that magic combination of economic ignorance and special-interest pleading.

ABOUT JEFFREY A. TUCKER

Jeffrey Tucker is a distinguished fellow at FEE, CLO of the startup Liberty.me, and editor at Laissez Faire Books. Author of five books, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

Profits Are the Only Business of Business by D.W. MACKENZIE

Forty-three years ago today Milton Friedman published his article “The Social Responsibility of Business Is to Increase its Profits.” It is to Friedman’s credit that most of this short article rings as true today as it did on September 13, 1970. It is at the same time disappointing that this piece remains timely precisely because too few Americans have understood and accepted Friedman’s arguments against corporate executives promoting social welfare over private profit.

How do the specifics of Friedman’s article look today? Does an executive who spends profits to promote “social ends,” to fund education, or to “fix the environment” impose what amounts to a tax? Yes, Friedman is correct.

Is the imposition of such a de-facto tax undemocratic? Perhaps it is. Friedman admits that the shareholders could fire a CEO for imposing a de-facto “social responsibility tax”- so the shareholders can vote against their CEO. Legally, the CEO is an agent of the stockholder, their employee. However, proposals to spend part of corporate profits on socially responsible ends aim at overriding the interests of shareholders; it undermines the democratic element of corporations.

Do arguments for redirecting corporate policies toward social responsibility erode personal liberty, aim at conformity, and promote socialism and collectivism? Yes. Stockholders invest in a corporation for profit, for personal gain. If the CEO starts aiming at social ends at the expense of private shareholder interests, then the corporations is effectively being run as if it were owned by society. This is, in effect, socialism. As Friedman put it, the social justice doctrine “would extend the scope of the political mechanism to every human activity.” The idea of aiming at social responsibility actually means directing corporate funds toward one person’s particular opinion about the interests of “society.” Social welfare and social justice are, at very best, vague concepts. As Ludwig von Mises put it in his 1949 treatise, “under socialism one will dominates.”

Friedman also claims that taxation by the state is the legitimate mechanism for collecting funds to promote socially responsible ends. We have constitutional, legislative, and judicial mechanisms to collect and spend legal tax dollars. Is this claim true? Are legal tax mechanisms better at promoting social responsibility than the illicit use of corporate funds for these purposes? Friedman notes, quite correctly, that people who push for socially responsible corporate policies are those who have failed to convince their fellow citizens to support their personal version of social responsibility. Having failed in an attempt to use the political mechanism, they resort to trying to politicize the market mechanism. Friedman is right, but this brings us back to my assessment of Friedman’s article: Friedman has himself failed to convince his fellow citizens that his view of profit is correct.

I agree that democracy can only work if public discourse works. The best ideas will rise to the top of an open and free debate among rational, reasonable people. I agree that people who press for corporate social responsibility are usually collectivists who press for conformity and disdain opposite points of view. However, the fact that political debate involves a high degree of intransigence and emotion means that the democratic process does not function very well.

Consequently, I must disagree with Friedman’s assertion that the public sector can work effectively to promote social responsibility. The fact that so many people continue to press for social responsibility and economic justice against Friedman’s advice shows that his support of government taxation for social responsibility is unfounded. Friedman is correct in noting that the great merit of private enterprise is that it makes people responsible for all their actions, either selfish or unselfish. However, lack of personal responsibility in the public sector does not promote responsibility in thinking about how to best use tax dollars in a socially responsible manner.

The main elements of Friedman’s article are correct. The sum of these elements is highly questionable when it comes to his confidence in political mechanisms. Profits are the only business of business. Social responsibility should be the business of government, but it is time to recognize that the modern tax and regulatory state has failed in this endeavor.

ABOUT D.W. MACKENZIE

D. W. MacKenzie is an assistant professor of economics at Carroll College in Helena, Montana.

Going Postal, Again: The USPS is in the red for the eighth straight year by DOUG BANDOW

The United States Postal Service (USPS) lost $5.5 billion last year. That is the eighth annual loss in a row and the third-highest ever. The only silver lining is that the loss was below the red-ink tsunami of $15.9 billion in 2012.

Why does the federal government deliver the mail? Why does it have a monopoly over delivering the mail?

Admittedly, the Postal Service is one of the few government programs with actual constitutional warrant. The Constitution authorizes Congress to establish post offices. And early American politicians rushed to take advantage of their opportunity, creating the Post Office Department in 1792.

Alas, one-time revolutionaries turned the system into a fount of federal patronage. Local postmasters became perhaps the president’s most important appointments, at one time accounting for three-quarters of all federal employees. The postmaster general actually was a member of the cabinet from 1829 to 1971.

With politics rather than service as the post office’s priority, Congress took the next step and approved the Private Express Statutes, which prevented anyone from competing with the government in delivering first-class mail. And Uncle Sam enforced his monopoly, fining would-be competitors, including celebrated libertarian author Lysander Spooner.

The feds continue to prosecute anyone with the temerity to compete with the USPS, even threatening the Cub Scouts for once offering to deliver Christmas cards.

Believing that Americans existed to serve the USPS left the system ill-equipped to adapt to changing circumstances. In 1971, Congress turned the Post Office Department into the semi-independent USPS. That removed its direct role in politics, but the USPS still is exempt from taxes and regulations, including local parking restrictions. Congress retained its control over postal policies and, of course, preserved the system’s delivery monopoly.

But banning competition could not preserve the postal market. The number of pieces of mail peaked in 2001 and continues to fall despite a rising population. Mail pieces dropped from 213 billion in 2006 to 155 billion last year, and the number is expected to decline to 130 billion by 2020. The USPS’s last profitable year was 2006. Since then, losses have run between $2.8 billion and $15.9 billion. The Postal Service has maxed out its borrowing from Uncle Sam and missed four retiree program payments. With characteristic understatement, the Government Accountability Office observed, “Given its financial problems and outlook, USPS cannot support its current level of service and operations.”

The postal unions insist that nothing is wrong — at least, nothing that a federal bailout wouldn’t solve. They reserve particular ire for the requirement that the USPS prefund workers’ retirement. Had this rule not been in place, noted former postmaster general Patrick Donahoe, the Postal Service would have earned money last year.

But prefunding protects taxpayers. Washington’s unfunded (government) retirement liability is about $800 billion and growing every year. That no other agency is required to prefund is unfair to taxpayers, not the Postal Service, since every agency should have to set aside sufficient money to fulfill its financial promises. With the Postal Service earning too little to pay and with nothing left of its federal credit line, the USPS has defaulted four times over the last three years on its mandated contributions.

Even Donahoe acknowledged that prefunding is appropriate. He contacted me after I wrote about the issue a couple of years ago and disputed only the amount the USPS should set aside. He said he asked postal workers what they thought of an unfunded system in light of Detroit’s bankruptcy, when city coffers were empty.

The unions may simply assume that Congress would bail them out if need be. Legislators normally can be counted on to do the wrong thing, but with the unfunded liability for Social Security and Medicare around $100 trillion, there won’t be a lot of cash available when the big retirement bills come due. Tens of millions of elderly retirees have the edge in fighting with postal workers over a diminishing public pot. The postal workers shouldn’t bet their retirement on winning that political battle.

There’s no other obvious way for the USPS to become solvent. Over the last half-century, the postal authorities raised rates 50 percent faster than the rate of inflation. Pushing hikes even faster in the future would encourage more people to use alternatives. Squeezing postal consumers would work only for truly essential first-class delivery services, but what are they? Bills are paid online; digital magazines and greeting cards go instantly and inexpensively. Junk mail trumps online spam only in the ability to blanket every address in a neighborhood.

The USPS has reduced costs through facility closures and staff reductions despite strong opposition. Cuts in compensation, retirement benefits, and workforce levels and improvements in productivity also are obvious responses, but they must overcome union opposition. Proposals for reducing services abound: end Saturday delivery, cut delivery to just three or four days a week, close more post offices, stop door-to-door delivery (with neighborhood “cluster boxes”). All of these anger consumers, encouraging them to go elsewhere — including to Federal Express and UPS, which offer better options for packages. Irritated workers and customers also complain to Congress, creating political roadblocks for the USPS.

Odder ideas involve offering services that already are widely available, such as check cashing and photocopying. Perhaps the strangest, from the Greeting Card Association, is to transform post offices into “centers of continuous democracy” and offer “community bulletin boards, licenses, permit applications, [and] citizen polling/opinion gathering.” In other words: a bizarre mix of political activism and government regulation, with no obvious way to raise the billions annually needed to balance the books.

Instead of attempting to save an unnecessary political monopoly, Congress should look abroad, where numerous countries, some pushed by the European Union, have introduced competition and innovation into their postal markets. Even such unlikely states as Indonesia, Russia, and Sweden have pursued postal liberalization.

The Organisation for Economic Co-operation and Development, made up of wealthy industrialized states, including the United States, reported that such reforms have yielded “quality of service improvements, increases in profitability, increases in employment and real reductions in prices.” Only in the supposed laissez-faire paradise of America — where a union-led “Grand Alliance to Save Our Public Postal Service” just formed to ensure that whatever has been will forever be — do such ideas seem radical.

Even President Barack Obama appeared to get it. A few years back, he admitted, “It’s the post office that’s always having problems.” In contrast, “UPS and FedEx are doing just fine.” That suggests an obvious solution.

Better management and less politics would help. In fact, revenue was up a bit last year, much of it for package delivery, despite the bigger loss. But over the long term, the USPS cannot escape from a seeming death spiral of bigger losses, higher rates, poorer services, fewer customers, bigger losses, and so on.

Uncle Sam should get out of the postal business. Privatize the USPS and drop the federal first-class monopoly. No one can say for sure what would happen. But if history is a guide, innovative entrepreneurs would be more likely to find cost-effective solutions than will today’s mix of politicians and bureaucrats.

ABOUT DOUG BANDOW

Doug Bandow is a senior fellow at the Cato Institute and the author of a number of books on economics and politics. He writes regularly on military non-interventionism.

Congressman Yoder: “A bold proposal”

The Internal Revenue Service admitted in a 2012 report that Americans waste around $168 billion and 6.1 billion hours every year trying to comply with the tax code. At over 4 million words, the code is a lengthy nightmare and thousands of jobs are lost as individuals and small businesses must waste precious resources paying accountants and lawyers to navigate its complexities.

Not only is it a constant drain on our economy, but it is also fundamentally unfair. This year alone, over half of all Americans – and many corporations – will pay no income tax due to the numerous loopholes existing in the current code. Much like today’s political system, the tax code’s main strategy is class warfare, with its primary purpose being the redistribution of wealth, not the generation of revenue to finance the operation of government.

It’s been said that the power to tax is the power to destroy, and this should be the motto of the current Administration as it deploys the powers of the tax code to trample the constitutional rights of Americans. From targeting the free speech of conservative groups and individuals, to spying and reading Americans’ emails without a warrant, to seizing Americans’ assets without due process, the IRS cares not for the Constitution.

That is why I am a cosponsor of Representative Rob Woodall’s HR 25, The Fair Tax. It scraps the tax code by repealing the income, employment, estate, and gift taxes. Most importantly, it abolishes the IRS.

By moving from an income-based tax system to a consumption-based tax system, Americans would be encouraged to earn, save, and invest, which in turn would create an economic boom in our country.  Everyone would pay what they owe based upon what they consume, without loopholes, social engineering, or government-picked winners and losers.

The Fair Tax admittedly is a bold proposal.  But simply moving deck chairs on the Titanic won’t work. The IRS is broken and it’s lost the trust of the American people. It’s time for Congress to take up real change and to take bold acts. It’s time to stop the IRS from suffocating our economy and trampling our constitutional rights. It’s time to consider and pass the Fair Tax and give each individual the tools to realize the American Dream.

Representative Kevin Yoder Congressman

Watch him question an IRS official on the agency’s toxic culture at a recent House hearing:

EDITORS NOTE: Congressman Yoder represents the third district of Kansas.

IRS: Legally Blind…Literally!

“One should judge a man mainly from his depravities. Virtues can be faked. Depravities are real.” – Klaus Kinski

The last two years have once again provided the American people with great illumination into the arrogant, deceitful and nefarious ways in which the IRS treats the hardworking citizens who pay their tab. Hardly a day, week or month has gone by without a new revelation that left most of us dropping our jaws further and further and further.

In fact, there has been so much lawlessness that people became almost immune to the escalating nature of their egregious conduct. This week’s vile and disgusting revelation: the agency had a legally blind individual conducting the inspection of Lois Lerner’s hard drive. Yes, you read that right – the IRS used a blind employee to inspect Lerner’s hard drive.

Political appointees who play cat and mouse with Congressional investigators are something we’ve come to expect. But for a federal agency like the IRS to engage a blind employee as a pawn in a political chess match is best described in terms of moral depravity.

It’s yet another reason Congress must pass the FairTax Plan as soon as possible.

The FairTax is the only tax reform/replacement plan that disbands, defunds and eliminates the IRS. The flat tax doesn’t, the proposed income tax reforms don’t and neither do the other plans bantered about by various Members of Congress. Nope – they have to pass the genuine article, the real deal, the one and only FairTax Plan.

Peggy Green-Ernst to lead AFFT government relations

This is why I am so pleased to announce the FairTax campaign’s newest secret weapon for getting the FairTax passed. Enter Texas FairTax supporter, Peggy Green-Ernst, who has joined AFFT as our new Director of Government Relations. In this role Peggy will be directing AFFT’s federal and state government relations and lobbying activities, and will be expanding the FairTax Memorial initiative that was first initiated by the Florida FairTax team.

Peggy hails from the great state of Texas where she serves as the volunteer legislative director for the Texas FairTax organization. Her professional and political career encompassed the corporate, business, academic and nonprofit sectors, where she was:

  • Executive Director of the Housing Roundtable
  • Director of Government Relations for the National Gypsum Company
  • Commissioner, Texas National Research Laboratory Commission (appointed by then-Texas Governor Ann Richards)

Peggy is a seasoned political strategist who excels in coalition building, policy analysis, political action committee (PAC) administration and media management. She’s smart, engaging and politically savvy.

A Texan by birth, Peggy spent her formative years enjoying an international education while supporting her father’s military career. She graduated from Southern Methodist University (SMU) in Dallas, TX with a master’s degree in business administration.

Peggy will be joining AFFT Chairman and President Steve Hayes in Washington in a few weeks and has already begun to aggressively book meetings with cosponsors, cosponsor prospects and other influencers. It’s going to be a great week in Washington when Peggy comes to town. I can’t wait to hear all about it!

Got Purpose?

“Light yourself on fire with passion and people will come from miles to watch you burn.” – John Wesley

In my prior professional career, one of the jobs I enjoyed the most was serving the company’s executive leadership as a 360°, leadership feedback coach. 360° feedback is a human resources tool in which employees and leaders receive confidential, anonymous performance feedback from direct reports, peers and management via a competency management tool incorporating the company’s preferred management competencies and leadership behaviors.

The feedback is then shared with the employee during a two and a half to three hour confidential coaching session. Coaching preparation is intense and includes analyzing and aligning both numerical and graphical data with unvarnished, sometimes brutal, written commentary.

Occasionally, I would prepare a report that portrayed an extraordinary leader. The more I analyzed the person the more excited I became to meet them. And when I finally came face-to-face with the individual behind the numbers and graphs, it didn’t take long to understand why the executive was revered as a powerhouse leader.

Time after time, what separated the truly superb leader from the good or even great leader was passion and purpose.

Powerhouse leaders have a passion for what they do, a passion for leading people and a clearly defined sense of purpose for who they are and where they are going. These are truly remarkable people. I saw that kind of passion and purpose this week in a young man who came to my home to prepare his company’s moving estimate. In the course of gathering information he shared that he was of Cuban descent and spoke about the loss of freedom he experienced in his early years while living in his native country. I wish you could have seen the intensity of expression when he described the freedom he gained when coming to America. He then asked me what I did. I told him about the FairTax®. He immediately got it, and quickly commented on how important it is that America understands the lost freedom inherent in taxing income. He then began to tell me about a book – and he insisted I read it. He also told me about the author’s freedom project and why it had ignited in him such an extraordinary passion; so much so that he committed to donating $100 per paycheck to buy more and more books so he could give them to people that he meets through his work.

Folks, that’s the power of passion! It’s a power so strong that it drove this young man to make a huge financial commitment for an advocacy project that he uniquely understands – individual freedom. 

Imagine what could happen to the FairTax campaign if this movement experienced an explosion of passion and purpose – passion for accelerating the pace of the campaign’s progress, passion for driving a new awakening about what it means to have freedom from the tyranny of income taxation and the IRS, and passion for being a nation that has the courage to enact a tax plan that is fair and simple for all taxpayers – regardless of income, family size, marital status or political persuasion.

Have you found your FairTax purpose – your FairTax passion? As Bishop T.D. Jakes said, “If you can’t figure out your purpose, figure out your passion.  For your passion will lead you right into your purpose.” Is your purpose in serving as a grassroots volunteer – maybe telling people you meet about the FairTax, sharing Facebook posts, supporting local education efforts or joining Glen Terrell’s letters to the editor team? Is your passion seeing the FairTax campaign gain new cosponsors in Congress or in recruiting new AFFT 1040 Club members? Whatever your FairTax passion, whatever your FairTax purpose, bring it on! If you don’t know, I challenge you to jump in with both feet and begin exploring different opportunities.

You may be amazed at what happens next.

Unemployment Benefits: The Government Gets What It Pays For

Have the perverse incentives been proved? by ROBERT P. MURPHY…

Just about everyone agrees that incentives affect behavior, but economists really mean it. That’s because economists take the logic of incentives further than most other people are willing to. Such analysis often reveals that government policies have unintended consequences that seem shocking to the average person. The list includes welfare programs that lead to higher rates of birth out of wedlock, seat-belt laws that lead to more pedestrian deaths, and even the possibility of changes in estate taxation that lead to people strategically timing their deaths.

But perhaps one of the most perverse distortions comes from unemployment benefits. Economists argue that these can provide an incentive for people simply not to work. Indeed, a new NBER working paper by Marcus Hagedorn, Iourii Manovskii, and Kurt Mitman estimates that the abrupt end of unemployment benefit extensions led to 1.8 million additional new US jobs created in 2014.

The theory here is straightforward: when the government subsidizes an activity, other things equal, people will engage in more of it.

If politicians want to encourage more people to go to college, what do they do? Provide financial support, either directly in the form of tuition assistance, or indirectly through loans with lower interest rates than students could obtain in a free market. If politicians want to encourage people to reduce their consumption of fossil fuels, they might offer tax rebates for the purchase of electric cars or insulation in their homes.

By the same token, then, suppose that politicians wanted to encourage laid-off workers to refrain from accepting a new job. What would they do? Naturally, they would offer to send the jobless workers checks so long as they remained unemployed. This logic, of course, is exactly why “unemployment insurance benefits” are perverse. Even though their avowed purpose is to provide a safety net for those unfortunate enough to lose work, it is undeniable that the existence of such a program provides an incentive for job seekers to prolong their search for new positions.

Whenever an economist proposes something “heartless” in this fashion, the tenderhearted critic reacts with outrage and points out that real human beings aren’t the soulless robots that populate economic models.

This is certainly true, but it misunderstands the claim. The economist is not arguing that the existence of government unemployment benefits will cause every single worker to “rationally” remain on the couch. Rather, a more nuanced model of the labor market is one of “search,” where job applicants and employers are trying to find each other. The longer the search lasts, the better the match will be, but of course the longer the spell of unemployment. By introducing financial payments during unemployment, the government tips the scales in favor of a longer search before accepting an offer. It might not change the behavior of any particular worker, but with a pool of many millions of unemployed people, surely a generous unemployment insurance program will have a noticeable impact.

I hasten to point out that it’s not merely Chicago-school or Austrian economists who subscribe to this view. For example, Paul Krugman, Robin Wells, and Kathryn Graddy wrote in the 2010 edition of their popular textbook:

People respond to incentives. If unemployment becomes more attractive because of the unemployment benefit, some unemployed workers may no longer try to find a job, or may not try to find one as quickly as they would without the benefit. Ways to get around this problem are to provide unemployment benefits only for a limited time or to require recipients to prove they are actively looking for a new job.

So we see that this view really is standard among professional economists. (This fact led to some awkwardness when Krugman in early 2014 excoriated heartless Republicans for endorsing this theory, without mentioning that he himself included it in his textbook.) The only argument is over the empirical size of the effect.

Here is where the new NBER paper provides results that surprised many readers.

Keynesian economists in particular argue that the supply-side impact of unemployment benefits is swamped during a slack labor market by the direct demand-side impact. In other words, many Keynesians argue that during the Great Recession, the frequent extensions of federal unemployment benefits increasedemployment, because the checks allowed unemployed workers to continue spending and hold up aggregate demand. That is why it was so significant that the authors of the new paper found the following (from their abstract):

We measure the effect of unemployment benefit duration on employment. We exploit the variation induced by the decision of Congress in December 2013 not to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states at the beginning of December 2013 were abruptly cut to zero.… In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized.

The interested reader can directly consult the paper to review the particular econometric technique the authors used to try to tease out causation from correlation (relying on discontinuities at state borders, for example).

The interesting takeaway for the general reader is that the surprisingly robust growth in the US economy in 2014 may have been due to Congress’s late 2013 decision to cease extensions of unemployment benefits. In short, when the federal government stopped sending checks to people who remained unemployed, more of them found work.

ABOUT 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 and a Research Fellow at the Independent Institute. You can find him at http://consultingbyrpm.com/.

Florida Subsidizing Corporate Tax Dodgers

As Florida policymakers consider cutting corporate profits tax revenues, nonpartisan research institute Integrity Florida released a study to provide more transparency about the actual corporate profit tax rates being paid by the Fortune 500 corporations headquartered in Florida to state governments in the U.S.

Key Findings about the Fortune 500 corporations headquartered in Florida:

  • While the corporate profits tax rate in Florida is 5.5 percent, the 13 profitable Fortune 500 corporations headquartered in Florida paid a 2.7 percent average corporate profits tax rate to state governments in the U.S. between 2011 and 2013.
  • The 13 profitable Fortune 500 corporations headquartered in Florida made $35.1 billion in estimated corporate profits between 2011 and 2013.
  • The 13 profitable Fortune 500 corporations headquartered in Florida paid $945.7 million in total estimated corporate profits taxes to all state governments in the U.S. between 2011 and 2013.
  • Florida taxpayers paid more than $2.4 billion to 10 of Florida’s 17 top Fortune 500 corporations for state government contracts between 2011 and 2013.
  • Florida taxpayers have provided 13 of the 17 Fortune 500 corporations headquartered in the state more than $147 million in subsidies.
  • Floridians gave the largest profitable corporations in the state more public money through government contracts and subsidies than those corporations paid back in state taxes on their profits nationally between 2011 and 2013.
  • Policies that allowed these corporations to take advantage of low corporate profits tax rates, along with large government contracts and subsidies, could be a result of the corporations’ significant lobbying and campaign contributions, including the more than $22 million they spent for those purposes in Florida just between 2012 and 2014.

Key Policy Recommendations:

  1. Florida policymakers should consider adoption of the model state corporate profits tax disclosure act. At a minimum, any corporation seeking a government contract or taxpayer-funded subsidy should be required to disclose publicly the organization’s corporate profits tax rate and amount of state and local tax revenue paid during the years the entity receives a government contract or subsidy.
  2. The Florida Department of Economic Opportunity’s Economic Development Incentives Portal should be expanded to publicly disclose the details of every state and local subsidy deal.
  3. Florida’s lobbyist disclosure laws should be enhanced to detail the exact compensation provided by clients to their lobbyists as well as the specific legislative and executive policies being influenced by their lobbying activities.
  4. Site selection consultants and other professional services firms that seek subsidies for corporations should be required to register as lobbyists.
  5. The Florida Legislature should implement the budget transparency recommendations of the User Experience Task Force to help the public follow their money.

Click here to read the report “Subsidizing Corporate Tax Dodgers”.

ABOUT INTEGRITY FLORIDA

Integrity Florida is a nonpartisan, nonprofit research institute and government watchdog whose mission is to promote integrity in government and expose public corruption.  Our vision is government in Florida that is the most open, ethical, responsive and accountable in the world. Integrity Florida and its research have been cited by major news outlets including CNN, the BBC, the Wall Street JournalNew York TimesWashington Post, Reuters and the Associated Press.

Integrity Florida policy solutions have been incorporated into 10 new laws increasing government transparency and accountability in Florida. Founded in January 2012 by Dan Krassner, Nicole Krassner and Michael Dema, Integrity Florida is based in Tallahassee, Florida.  Research Director Ben Wilcox joined the organization in February 2012. Learn more about Integrity Florida by clicking here.