The Herd Mind

Authored by Dan Sanchez via The Foundation for Economic Education,

The State is a state of mind; it is the herd mindset itself.

Randolph Bourne famously wrote, “War is the health of the State.” This has long been the byword for anti-war, anti-state libertarians, and rightly so. But Bourne did not mean exactly what most libertarians take this phrase to mean. To understand the maxim’s original meaning, as Bourne used it in his great unfinished essay “The State,” one must understand his distinctions among three concepts that are often conflated: Country, State, and Government.

For Bourne, a Country (or Nation) is a group of individuals bound together by cultural affinity. A State is a Country/Nation collectively mobilized for attack or protection. As he distinguished between the two:

“Country is a concept of peace, of tolerance, of living and letting live. But State is essentially a concept of power, of competition: it signifies a group in its aggressive aspects.”

The State and the Government 

And Government, according to Bourne, “is the machinery by which the Nation, organized as a State, carries out its State functions” and “a framework of the administration of laws, and the carrying out of the public force.”

What libertarians commonly refer to as “the State,” Bourne termed “the Government” instead. So, the way libertarians often interpret his famous aphorism is what Bourne would have expressed if he had written, “War is the health of the Government.” This also happens to be true, but it is not what he meant.

For Bourne, the State is not a distinct ruling body subsisting extractively on the ruled, i.e., a “gang of thieves writ large,” as the great Murray Rothbard incisively conceived it. Rather, he saw it as a certain orientation of a whole people: a spiritual phenomenon pervading an entire populace that animates and empowers such a ruling body. As Bourne expressed it:

“Government is the idea of the State put into practical operation in the hands of definite, con­crete, fallible men. It is the visible sign of the invisible grace. It is the word made flesh. And it has necessarily the limitations inherent in all practicality. Government is the only form in which we can en­vis­age the State, but it is by no means identical with it. That the State is a mystical conception is some­thing that must never be for­got­ten. Its glam­or and its significance linger be­hind the frame­work of Government and direct its activities.”

In peacetime, Bourne explained, the State is largely relegated to the background; individuals are then more concerned with their own affairs and purposes. But during the build-up to war, and especially following its breakout, the foreign enemy looms large in the public imagination. Hence, the Country is overtaken by war fever and develops what Garet Garett called a “complex of vaunting and fear.” This hybrid mania of boastful belligerence and timorous terror (“fight-or-flight”) causes the populace to regress from a civilization to a herd. The people seek safety in numbers: in a multitude unified for a single purpose (a “great end”) and directed by a single agency. The varied dance of individuals gives way to the uniform huddle and stampede of the unitary drove, with the Government as drover.

As Bourne wrote:

“The State is the organization of the herd to act offensively or defensively against another herd similarly organized.”

And in wartime, the “mystical conception” of the State “comes into its own” as the “herd-sense” becomes dominant in the Country and the “aggressive aspects” of the group come to the fore. This is what Bourne meant by, “War is the health of the State.” The dictum speaks to the flourishing of an ideal and the resulting transformation of a whole society, not merely the aggrandizement of a Government.

Yet, war is also the health of the Government, which is the single directing agency to whose banner the State-minded masses flock. Under the perceived exigencies of war, the people:

“…proceed to allow them­selves to be regimented, coerced, de­ranged in all the environments of their lives, and turned into a solid manufactory of destruction to­ward whatever other people may have, in the appointed scheme of things, come with­in the range of the Government’s disapprobation. The cit­i­zen throws off his con­tempt and indifference to Government, identifies him­self with its purposes, revives all his military memories and symbols, and the State once more walks, an au­gust presence, through the imaginations of men.”

Economically, this means that the manpower and resources of the Country undergo “mobilization”: a vast redirection away from the provision of individual consumer wants and toward the all-important war effort. In this way too, the Government swells in power and grandeur, as the consumer-directed market economy is supplanted by the Government-directed “War Economy,” or even “War Socialism” (Kriegssozialismus, as the Germans called it in World War I).

The "General Will"

In the fever of war, the individual will is sacrificed for the “General Will,” which ostensibly expresses itself through the Government. Individuals renounce their identities for the sake of uniting Voltron-like into a State, like the gestalt “Leviathan” pictured on the cover of Thomas Hobbes’s book by that name.

As Bourne put it:

“War sends the cur­rent of purpose and activity flow­ing down to the lowest lev­els of the herd, and to its re­mote branches. All the activities of society are linked together as fast as possible to this central purpose of making a military offensive or military defense, and the State be­comes what in peace­times it has vainly struggled to be­come—the inexorable arbiter and determinant of men’s businesses and attitudes and opinions.”

The herd is mobilized, not only against the foreign foe, but against any dissidents within the group who resist assimilation into the Borg-like hive- or herd-mind and who refuse to join the swarm or stampede into war: in other words, against “enemies foreign and domestic.”

 As Bourne explained:

“The State is a jealous God and will brook no rivals. Its sovereignty must pervade every­one and all feel­ing must be run into the stereo­typed forms of romantic patriotic militarism which is the traditional expression of the State herd-feeling. (…) In this great herd-machinery, dis­sent is like sand in the bearings. The State ideal is primarily a sort of blind animal push to­wards military unity. Any interference with that unity turns the whole vast impulse to­wards crush­ing it.”

The State crushes dissent through Government policies restricting civil liberties, but also through private citizens acting as “amateur agents” of the Government: who berate skeptics into silence, report critics to the authorities for “disloyalty,” or even take the security of Herd and Homeland into their own violent hands. Remember that in Bourne’s framework, the Government is by no means identical with the State. As such, the State can animate a private citizen even more than it does an officeholder. As Bourne remarked:

“In every country we have seen groups that were more loyal than the King—more patriotic than the Government—the Ulsterites in Great Britain, the Junkers in Prussia, l’Action Francaise in France, our patrioteers in America. These groups exist to keep the steer­ing wheel of the State straight, and they pre­vent the nation from ever veer­ing very far from the State ideal.”

This an extremely apt description of the Fox News types who castigate Barack Obama for his lack of “patriotism” and the insufficiency of his war-making. The spirit of the State dwells within Sean Hannity even more so than it dwells within the President of the United States. What is ironic is that a war-drumming jingo like Hannity usually imagines himself a paragon of manhood; yet his dull, stampeding herd mindset marks him out as less of a man, and more of a beast.

Bourne"s Legacy 

Randolph Bourne was not a libertarian, but a dissident progressive. Still, we libertarians can learn a great deal from him. For instance, perhaps our terminology, as penetrating and illuminating as it is, has led us to focus too much on the herdsmen in office who drive, shear, milk, and butcher us, and not enough on the more fundamental problem: our society’s bovine propensity to become a manipulable herd in the first place, especially when spooked. Occasionally thinking in terms of Bourne’s typology can be a useful corrective in this regard.

Bourne’s terminology and analysis also shed light on the all-important question of how to achieve liberation. The State lives in the minds of the Government’s victims. Simply overthrowing a Government will only spook the herd even worse. The State will not only survive such an overthrow, but it will likely even feed off of it, as the panicked herd acts even more herd-like in the crisis, granting new herdsmen even more tyrannical power than the old ones had.

The State is a state of mind; it is the herd mindset itself. As such, it can only be overthrown in the battleground of the mind. Once the State is spiritually dethroned and the populace fully transfigures from herd to civilization, the “Government,” like a shepherd without a flock, will no longer even merit its designation. It will then merely be a heavily armed, but even more heavily outnumbered, gang of rustlers writ small.

Accomplishing this becomes ever more urgent as Americans are driven into ever more calamitous wars. It is increasingly apparent that breaking the spell of the State that turns men into beasts may be the only way we can avoid being driven to self-destruction by alarmist warmongers and their terrorist symbionts, like buffalo being stampeded off a cliff by herd-spooking hunters.

 

Dark Humor From Socialist Hellhole Venezuela

Authored by Daniel Mitchell via The Foundation for Economic Education,

Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet paper.

But maybe that doesn’t matter. After all, if people don’t have anything to eat, they probably don’t have much need to visit the bathroom.

The Washington Post reports that farmers are producing less and less food because of government intervention, even though the nation is filled with hungry people.

Venezuela, whose economy operates on its own special plane of dysfunction. At a time of empty supermarkets and spreading hunger, the country’s farms are producing less and less, not more, making the caloric deficit even worse. Drive around the countryside outside the capital, Caracas, and there’s everything a farmer needs: fertile land, water, sunshine and gasoline at 4 cents a gallon, cheapest in the world. Yet somehow families here are just as scrawny-looking as the city-dwelling Venezuelans waiting in bread lines or picking through garbage for scraps.

 …“Last year I had 200,000 hens,” said Saulo Escobar, who runs a poultry and hog farm here in the state of Aragua, an hour outside Caracas. “Now I have 70,000.” Several of his cavernous henhouses sit empty because, Escobar said, he can’t afford to buy more chicks or feed. Government price controls have made his business unprofitable…the country is facing a dietary calamity. With medicines scarce and malnutrition cases soaring, more than 11,000 babies died last year, sending the infant mortality rate up 30 percent, according to Venezuela’s Health Ministry.

…Child hunger in parts of Venezuela is a “humanitarian crisis,” according to a new report by the Catholic relief organization Caritas, which found 11.4 percent of children under age 5 suffering from moderate to severe malnutrition… In a recent survey of 6,500 Venezuelan families by the country’s leading universities, three-quarters of adults said they lost weight in 2016 — an average of 19 pounds. This collective emaciation is referred to dryly here as “the Maduro diet,” but it’s a level of hunger almost unheard-of… Venezuela’s disaster is man-made, economists point out — the result of farm nationalizations, currency distortions and a government takeover of food distribution. …The price controls have become a powerful disincentive in rural Venezuela. “There are no profits, so we produce at a loss,” said one dairy farmer.

Here’s where we get to the economics lesson. When producers aren’t allowed to profit, they don’t produce.

And when we’re looking at the production of food, that means hungry people.

Even the left-wing Guardian in the U.K. has noticed.

Hunger is gnawing at Venezuela, where a government that claims to rule for the poorest has left most of its 31 million people short of food, many desperately so.

…Adriana Velásquez gets ready for work, heading out into an uncertain darkness as she has done since hunger forced her into the only job she could find at 14. She was introduced to her brothel madam by a friend more than two years ago after her mother, a single parent, was fired and the two ran out of food. “It was really hard, but we were going to bed without eating,” said the teenager, whose name has been changed to protect her.

…Venezuela’s crisis has deepened, the number of women working at the brothel has doubled, and their ages have dropped. “I was the youngest when I started. Now there are girls who are 12 or 13. Almost all of us are there because of the crisis, because of hunger.” She earns 400,000 bolivares a month, around four times the minimum wage, but at a time of hyperinflation that is now worth about $30, barely enough to feed herself, her mother and a new baby brother.

This is truly sad.

Our leftist friends like to concoct far-fetched theories of how prostitution is enabled by everything from low taxes to global warming.

In the real world, however, socialism drives teenage girls (or even younger) to work in brothels.

That’s such a depressing thought that let’s shift the topic back to hunger and toilet paper.

Especially since Venezuela’s dictator is bragging that the nation’s toilet paper shortage has been solved!

This is definitely a dark version of satire.

But Venezuela is such a mess that it’s hard to know where to draw the line between mockery and reality.

For instance, here’s another “benefit” of limited food. If you don’t eat, it’s not as necessary to brush your teeth.

And in the socialist paradise of Venezuela, that makes a virtue out of necessity since – surprise – there’s a shortage of toothpaste.

The Washington Post has the grim details.

Ana Margarita Rangel…spends everything she earns to fend off hunger. Her shoes are tattered and torn, but she cannot afford new ones. A tube of toothpaste costs half a week’s wages.

“I’ve always loved brushing my teeth before going to sleep I mean, that’s the rule, right?” said Rangel, …“Now I have to choose,” she said. “So I do it only in the mornings.” …The government sets price caps on some basic food items, such as pasta, rice and flour.

…those items can usually be obtained only by standing in lines for hours or by signing up to receive a subsidized monthly grocery box from the government… Since 2014, the proportion of Venezuelan families in poverty has soared from 48 percent to 82 percent…

Fifty-two percent of families live in extreme poverty, according to the survey, and about 31 percent survive on two meals per day at most.

Isn’t socialism wonderful! You have the luxury of choosing between two meals a day, or one meal a day plus toothpaste!

By the way, the central planners have a plan.

Though it won’t make Bugs Bunny happy.

Rabbit is now on the menu! Here are some excerpts from a CNN report.

Let them eat rabbits. That was basically the message from President Nicolas Maduro to Venezuelans starving and struggling through severe food shortages… 

 

The Venezuelan leaders…recommend that people raise rabbits at home as a source of food.

 

…The agriculture minister argued that rabbits easily reproduce and are a source of protein. He also recommended citizens consider raising and growing other animals and vegetables at home. It’s just the latest attempt to try and solve the food shortage problem. The government forces citizens to pick up groceries on certain days of the week depending on social security numbers.

Gee, isn’t this wonderful. The government cripples markets so they can’t function and then advocates people live like medieval peasants.

Maybe there should be price controls on clothing, along with having the government in charge of distribution. That will wreck that market as well, so people can make their own clothes out of rabbit pelts.

I wonder whether a certain American lawmaker is rethinking his praise of Venezuelan economic policy?

Based on what he said as recently as last year, the answer is no.

Japan's Demographic Time Bomb Keeps Ticking

Via Daniel Mitchell of The Foundation for Economic Education,

When I warn about the fiscal and economic consequences of America’s poorly designed entitlement programs (as well as the impact of demographic changes), I regularly suggest that the United States is on a path to become Greece.

Because of Greece’s horrible economy, this link has obvious rhetorical appeal.

But there’s another nation that may be a more accurate “role model” of America’s future. This other country, like the United States, is big, relatively rich, and has its own currency.

For these and other reasons, in an article for The Hill, I suggest that Japan is the nation that may offer the most relevant warning signs. I explain first that Japan shows the failure of Keynesian economics.

…ever since a property bubble burst in the late 1980s, Japan’s economy has been in the doldrums, and its politicians deserve much of the blame. They’ve engaged in repeated binges of so-called Keynesian stimulus. But running up the national credit card hasn’t worked any better in Japan than it did for President Barack Obama. Instead of economic rejuvenation, Japan is now saddled with record levels of debt.

In other words, Japan already is a basket case and may be the next Greece. And all this foolish policy has been cheered on by the IMF.

I then highlight how Japan shows why a value-added tax is a huge mistake.

Japan’s politicians also decided to impose a value-added tax (VAT) on the nation. As so often happens when a VAT gets adopted, it turns into a money machine, as legislators start ratcheting the rate higher and higher. That happened in Europe back in the 1960s and 1970s, and it’s happening in Japan today.

And regular readers know my paranoid fear of the VAT taking hold in the United States.

But here’s the main lesson in the column.

The combination of demographic changes and redistribution programs is a recipe for fiscal crisis.

…the biggest economic threat to the country is the way Japan’s welfare state interacts with demographic changes. It’s not that the welfare state is enormous, particularly compared with European nations, but the system is becoming an ever-increasing burden because the Japanese people are living longer and having fewer children. …America faces some of the same problems. …if we don’t reform our entitlement programs, it’s just a matter of time before we also have a fiscal crisis.

To be sure, as I note in the article, Japan’s demographic outlook is worse. And that nation’s hostility to any immigration (even from high-skilled people) means that Japan can’t compensate (as America has to some degree) for low birth rates by expanding its population.

Indeed, the demographic situation in Japan is so grim that social scientists have actually estimated the date on which the Japanese people become extinct.

Mark August 16, 3766 on your calendar. According to…researchers at Tohoku University, that’s the date Japan’s population will dwindle to one. For 25 years, the country has had falling fertility rates, coinciding with widespread aging. The worrisome trend has now reached a critical mass known as a “demographic time bomb.” When that happens, a vicious cycle of low spending and low fertility can cause entire generations to shrink — or disappear completely.

Though I guess none of us will know whether this prediction is true unless we live another 1750 years. But it doesn’t matter if the estimate is perfect. Japan’s demographic outlook is very grim.

By the way, the problem of aging populations and misguided entitlements exists in almost every developed nation.

But I mentioned in the article for The Hill that there are two exceptions. Hong Kong and Singapore have extremely low birthrates and aging populations. But neither jurisdiction faces a fiscal crisis for the simple reason that people largely are responsible for saving for their own retirement.

And that, of course, is the main lesson. The United States desperately needs genuine entitlement reform. While I’m not overflowing with optimism about Trump’s view on these issues, hope springs eternal.

Welcome Aboard... But First US Marshals Will Scan Your Retina

Submitted by Jeffrey Tucker via The Foundation for Economic Education,

For some 15 years, airport security has become steadily more invasive. There are ever more checkpoints, ever more requests for documents as you make your way from the airport entrance to the airplane. Passengers adapt to the new changes as they come. But my latest flight to Mexico, originating in Atlanta, presented all passengers with something I had never seen before.

We had already been through boarding pass checks, passport checks, scanners, and pat downs. At the gate, each passenger had already had their tickets scanned and we were all walking on the jet bridge to board. It’s at this point that most people assume that it is all done: finally we can enjoy some sense of normalcy.

This time was different. Halfway down the jetbridge, there was a new layer of security. Two US Marshals, heavily armed and dressed in dystopian-style black regalia, stood next to an upright machine with a glowing green eye. Every passenger, one by one, was told to step on a mat and look into the green scanner. It was scanning our eyes and matching that scan with the passport, which was also scanned (yet again).

Like everyone else, I complied. What was my choice? I guess I could have turned back at the point, decline to take the flight I had paid for, but it would be unclear what would then happen. After standing there for perhaps 8 seconds, the machine gave the go signal and I boarded.

I talked to a few passengers about this and others were just as shaken by the experience. They were reticent even to talk about it, as people tend to be when confronted with something like this.

I couldn’t find anyone who had ever seen something like this before. I wrote friends who travel internationally and none said they had ever seen anything like this.

I will tell you how it made me feel: like a prisoner in my own country. It’s one thing to control who comes into a country. But surveilling and permissioning American citizens as they leave their own country, even as they are about to board, is something else.

Where is the toggle switch that would have told the machine not to let me board, and who controls it? How prone is it to bureaucratic error? What happens to my scan now and who has access to it?

The scene reminded me of movies I’ve seen, like Hunger Games or 1984. It’s chilling and strange, even deeply alarming to anyone who has ever dreamed of what freedom might be like. It doesn’t look like this.

Why Now?

I’ve searched the web for some evidence that this new practice has been going on for a while and I just didn’t notice. I find nothing about it. I’ve looked to find some new order, maybe leftover from the Obama administration, that is just now being implemented. But I find nothing.

Update: a reader has pointed me to this page at Homeland Security:

As part of U.S. Customs and Border Protection’s (CBP) border security mission, the agency is deploying new technologies to verify travelers’ identities – both when they arrive and when they leave the United States – by matching a traveler to the document they are presenting. CBP’s goal is to enhance national security and protect a traveler’s identity against theft through the use of biometrics.

Biometric information (such as finger, face, or iris) measures a person’s unique physical characteristics. CBP incorporated fingerprints for biometric identification and verification in 2004, and is now testing facial and iris imaging capabilities to help improve travelers’ identity protection, the integrity of our immigration system, and our national security.

I happened to be on the "one daily flight" that gets exit scanned.

Another change has to do with new rules for Homeland Security just imposed by the Trump administration. They make deportation vastly easier for the government. I have no idea if these rules are the culprit for intensified emigration checks.

What people don’t often consider is that every rule that pertains to immigration ultimately applies to emigration as well. Every rule that government has to treat immigrants a certain way also necessarily applies to citizens as well.

Chandran Kukathas is right when he says that “controlling immigration means controlling everyone.”

Regulating immigration is not just about how people arrive, but about what they do once they have entered a country. It is about controlling how long people stay, where they travel, and what they do. Most of all, it means controlling whether or not and for whom they work (paid or unpaid), what they accept in financial remuneration, and what they must do to remain in employment, for as long as that is permitted. Yet this is not possible without controlling citizens and existing residents, who must be regulated, monitored and policed to make sure that they comply with immigration laws.

To be sure, there might have been some tip off that security officials received that triggered these special measures for this flight only. Maybe they were looking for something, someone, in particular. Maybe this was a one-time thing and will not become routine.

The point is that it happened without any change in the laws or regulations. Whatever the reason, it was some decision made by security. It can happen on any flight for any reason. And who is in charge of making that decision?

On the plane, finally, my mind raced through the deeper history here. Passports as we know them are only a little over a century old. In the late 19th century, the apotheosis of the liberal age, there were no passports. You could travel anywhere in the world through whatever means you could find. Nationalism unleashed by World War I ended that.

And here we are today, with ever more controls, seeming to follow Orwell’s blueprint for how to end whatever practical freedoms we have left. And we are going this way despite the absence of any real crisis, any imminent threat? The driving force seems to be this: our own government’s desire to control every aspect of our lives.

Think of it: there might be no getting out of the country without subjecting yourself to this process. It"s a digital Berlin Wall. This is what it means to put “security” ahead of freedom: you get neither.

Which Country Punishes Productive People The Most?

Submitted by Daniel Mitchell via The Foundation for Economic Education,

Back in 2014, I shared some data from the Tax Foundation that measured the degree to which various developed nations punished high-income earners.

This measure of relative “progressivity” focused on personal income taxes. And that’s important because that levy often is the most onerous for highly productive residents of a nation.

But there are other taxes that also create a gap between what such taxpayers earn and produce and what they ultimately are able to consume and enjoy. What about the effects of payroll taxes? Of consumption taxes and other levies?

Looking at the Evidence

To answer that question, we have a very useful study from the European Policy Information Center on this topic. Authored by Alexander Fritz Englund and Jacob Lundberg, it looks at the total marginal tax rate on each nation’s most productive taxpayers.

They start with some sensible observations about why marginal tax rates matter, basically echoing what I wrote after last year’s Super Bowl.

Here’s what Englund and Lundberg wrote.

The marginal tax rate is the proportion of tax paid on the last euro earned. It is the relevant tax rate when deciding whether to work a few extra hours or accept a promotion, for example. As most income tax systems are progressive, the marginal tax rate on top incomes is usually also the highest marginal tax rate. It is an indicator of how progressive and distortionary the income tax is.”

They then explain why they include payroll taxes in their calculations.

The income tax alone does not provide a complete picture of how the tax system affects incentives to work and earn income. Many countries require employers and/or employees to pay social contributions. It is not uncommon for the associated benefits to be capped while the contribution itself is uncapped, meaning it is a de facto tax for high-income earners. Even those social contributions that are legally paid by the employer will in the end be paid by the employee as the employer should be expected to shift the burden of the tax through lower gross wages.”

Englund and Lundberg are correct. A payroll tax (sometimes called a “social insurance” levy) will be just as destructive as a regular income tax if workers aren’t “earning” some sort of additional benefit. And they’re also right when they point out that payroll taxes “paid” by employers actually are borne by workers.

They then explain why they include a measure of consumption taxation.

One must also take value-added taxes and other consumption taxes into account. Consumption taxes reduce the purchasing power of wage-earners and thus affect the return to working. In principle, it does not matter whether taxation takes place when income is earned or when it is consumed, as the ultimate purpose of work is consumption.”

Once again, the authors are spot on. Taxes undermine incentives to be productive by driving a wedge between pre-tax income and post-tax consumption, so you have to look at levies that grab your income as it is earned as well as levies that grab your income as it is spent.

All Things Considered

And when you begin to add everything together, you get the most accurate measure of government greed.

Taking all these taxes into account, one can compute the effective marginal tax rate. This shows how many cents the government receives for every euro of additional employee compensation paid by the firm. …If the top effective tax rate is 75 percent, as in Sweden, a person who contributes 100 additional euros to the economy will only be allowed to keep 25 euros while 75 euros are appropriated by the government. The tax system thus drives a wedge between the social and private return to work. …High marginal tax rates disconnect the private and social returns to economic activity and thereby the invisible hand ceases to function. For this reason, taxation causes distortions and is costly to society. High marginal tax rates make it less worthwhile to supply labour on the formal labour market and more worthwhile to spend time on household work, black market activities and tax avoidance.”

Here’s their data for various developed nations.

Keep in mind that these are the taxes that impact each nation’s most productive taxpayers. So that includes top income tax rates, both for the central governments and sub-national governments, as well as surtaxes. It includes various social insurance levies, to the extent such taxes apply to all income. And it includes a measure of estimated consumption taxation.

And here’s the ranking of all the nations. Shed a tear for entrepreneurs in Sweden, Belgium, and Portugal.

Slovakia wins the prize for the least-punitive tax regime, though it’s worth noting that Hong Kong easily would have the best system if it was included in the ranking.

U.S. Ranking

For what it’s worth, the United States does fairly well compared to other nations. This is not because our personal income tax is reasonable (see dark blue bars), but rather because Barack Obama and Hillary Clinton were unsuccessful in their efforts to bust the “wage base cap” and apply the Social Security payroll tax on all income. We also thankfully don’t have a value-added tax. These factors explain why our medium-blue and light-blue bars are the smallest.

By the way, this doesn’t mean we have a friendly system for upper-income taxpayers in America. They lose almost half of every dollar they generate for the economy. And whether one is looking at Tax Foundation numbers, Congressional Budget Office calculations, information from the New York Times, or data from the IRS, rich people in the United States are paying a hugely disproportionate share of the tax burden.

Though none of this satisfies the statists. They actually would like us to think that letting well-to-do taxpayers keep any of their money is akin to a handout.

Now would be an appropriate time to remind everyone that imposing high tax rates doesn’t necessarily mean collecting high tax revenues.

In the 1980s, for instance, upper-income taxpayers paid far more revenue to the government when Reagan lowered the top income tax rate from 70 percent to 28 percent.

Also, keep in mind that these calculations don’t measure the tax bias against saving and investment, so the tax burden on some upper-income taxpayers may be higher or lower depending on the degree to which countries penalize capital formation.

P.S. If one includes the perverse incentive effects of various redistribution programs, the very highest marginal tax rates (at least when measuring implicit rates) sometimes apply to a nation’s poor people.

P.P.S. Our statist friends sometimes justify punitive taxes as a way of using coercion to produce more equality, but the net effect of such policies is weaker growth and that means it is more difficult for lower-income and middle-income people to climb the economic ladder. In other words, unfettered markets are the best way to get social mobility.

Would Ayn Rand Have Cast President Trump As A Villain?

Submitted by Steve Simpson via The Foundation for Economic Education,

After Donald Trump announced a number of cabinet picks who happen to be fans of Ayn Rand, a flurry of articles appeared claiming that Trump intended to create an Objectivist cabal within his administration.

“Ayn Rand-acolyte Donald Trump stacks his cabinet with fellow Objectivists,” proclaimed one article. Would that it were so. The novelist and philosopher Ayn Rand was a passionate champion of individual freedom and laissez-faire capitalism and a fierce opponent of authoritarianism. For her, government exists solely to protect our rights, not to meddle in the economy or to direct our private lives.

A president who truly understood Rand’s philosophy would not be cozying up to Putin, bullying companies to keep manufacturing plants in the United States, or promising “insurance for everybody” among many other things Trump has said and done.

And while it’s certainly welcome news that several of Trump’s cabinet picks admire Rand, it’s not surprising. Her novel Atlas Shrugged depicts a world in decline as it slowly strangles its most productive members. The novel celebrates the intelligent and creative individuals who produce wealth, many of whom are businessmen. So it makes sense that businessmen like Rex Tillerson and Andy Puzder would be among the novel’s millions of fans.

But a handful of fans in the administration hardly signals that Trump’s would be an “Ayn Rand” administration. The claims about Rand’s influence in the administration are vastly overblown.

Pull-Peddling Cronies

Even so, there is at least one parallel we can draw between a Trump administration and Rand’s novels, although it’s not favorable to Trump. As a businessman and a politician, Trump epitomizes a phenomenon that Rand harshly criticized throughout her career, especially in Atlas Shrugged. Rand called it “pull peddling.” The popular term today is “cronyism.” But the phenomenon is the same: attempting to succeed, not through production and trade, but by trading influence and favors with politicians and bureaucrats.

Cronyism has been a big issue in recent years among many thinkers and politicians on the Right, who have criticized “big government” because it often favors some groups and individuals over others or “picks winners and losers.”

Commentators on the Left, too, often complain about influence peddling, money in politics, and special interests, all of which are offered as hallmarks of corruption in government. And by all indications, Trump was elected in part because he was somehow seen as a political “outsider” who will “drain the swamp.”

But as the vague phrase “drain the swamp” shows, there’s a lot more concern over cronyism, corruption, and related issues than there is clarity about what the problem actually is and how to solve it.

Ayn Rand had unique and clarifying views on the subject. With Trump in office, the problem she identified is going to get worse. Rand’s birthday is a good time to review her unique explanation of, and cure for, the problem.

The Problem: Unlimited Government

The first question we need to be clear about is: What, exactly, is the problem we’re trying to solve? “Drain the swamp,” “throw the bums out,” “clean up Washington,” “outsiders” vs. “insiders” — these are all platitudes that can mean almost anything to anyone.

Are lobbyists the problem? Trump and his advisers seem to think so. They’ve vowed to keep lobbyists out of the administration, and Trump has signed an order forbidding all members of his administration from lobbying for 5 years.

It’s not clear whether these plans will succeed, but why should we care? Lobbyists are individuals hired to represent others with business before government. We might lament the existence of this profession, but blaming lobbyists for lobbying is like blaming lawyers for lawsuits. Everyone seems to complain about them right up until the moment that they want one.

The same goes for complaints about the clients of lobbyists — the hated “special interests.” Presidents since at least Teddy Roosevelt have vowed to run them out of Washington yet, today, interest groups abound. Some lobby for higher taxes, some for lower taxes. Some lobby for more entitlements, some for fewer or for more fiscal responsibility in entitlement programs. Some lobby for business, some for labor, some for more regulations on both. Some lobby for freer trade, some for trade restrictions. The list goes on and on. Are they all bad?

The question we should ask is, Why do people organize into interest groups and lobby government in the first place?

The popular answer among free-market advocates is that government has too much to offer, which creates an incentive for people to tap their “cronies” in government to ensure that government offers it to them. Shrink government, the argument goes, and we will solve the problem.

Veronique de Rugy, senior fellow at the Mercatus Center, describes cronyism in these terms:

This is how cronyism works: A company wants a special privilege from the government in exchange for political support in future elections. If the company is wealthy enough or is backed by powerful-enough interest groups, the company will get its way and politicians will get another private-sector ally. The few cronies “win” at the expense of everyone else.

(Another term for this is “rent seeking,” and many other people define it roughly the same way.)

There’s a lot of truth to this view. Our bloated government has vast power over our lives and trillions of dollars worth of “favors” to dole out, and a seemingly endless stream of people and groups clamor to win those “favors.” As a lawyer who opposes campaign finance laws, I’ve often said that the problem is not that money controls politics, it’s that politics controls money — and property, and business, and much of our private lives as well.

Still, we need to be more precise. “Favors,” “benefits,” and “privileges” are too vague a way to describe what government has to offer. Among other things, these terms just raise another question: Which benefits, favors, or privileges should government offer? Indeed, many people have asked that question of cronyism’s critics. Here’s how the Los Angeles Times put it in an editorial responding to the effort by some Republicans to shut down the Export-Import Bank:

Governments regularly intervene in markets in the name of public safety, economic growth or consumer protection, drawing squawks of protest whenever one interest is advanced at the expense of others. But a policy that’s outrageous to one faction — for example, the government subsidies for wind, solar and battery power that have drawn fire on the right — may in fact be a welcome effort to achieve an important societal objective.

It’s a valid point. Without a way to tell what government should and should not do, whose interests it should or should not serve, complaints about cronyism look like little more than partisan politics. When government favors the groups or policies you like, that’s good government in action. When it doesn’t, that’s cronyism.

Government Force and Legal Plunder

In Rand’s view, there is a serious problem to criticize, but few free-market advocates are clear about exactly what it is. Simply put, the problem is the misuse of the power that government possesses, which is force. Government is the institution that possesses a legal monopoly on the use of force.

The question we need to grapple with is, how should it use that power?

Using terms like “favors,” “privileges,” and “benefits” to describe what government is doing when cronyism occurs is not just too vague, it’s far too benign. These terms obscure the fact that what people are competing for when they engage in cronyism is the “privilege” of legally using force to take what others have earned or to prevent them from contracting or associating with others. When groups lobby for entitlements — whether it’s more social security or Medicare or subsidies for businesses — they are essentially asking government to take that money by force from taxpayers who earned it and to give it to someone else. Call it what you want, but it ultimately amounts to stealing.

When individuals in a given profession lobby for occupational licensing laws, they are asking government to grant a select group of people a kind of monopoly status that prevents others who don’t meet their standards from competing with them — that is, from contracting with willing customers to do business.

These are just two examples of how government takes money and property or prevents individuals from voluntarily dealing with one another. There are many, many more. Both Democrats and Republicans favor these sorts of laws and willingly participate in a system in which trading on this power has become commonplace.

“Rent seeking” doesn’t capture what is really going on. Neither, really, does “cronyism.” They’re both too tame.

A far better term is the one used by nineteenth-century French economist Frederic Bastiat: “legal plunder.” Rand uses the term “political pull” to describe those who “succeed” by convincing friends in government to use the law to plunder others or to prevent them from competing.

And she uses the phrase “the Aristocracy of Pull,” which is the title of a whole chapter in Atlas Shrugged, to describe a society in which political pull, rather than production and trade, has become the rule. It’s a society that resembles feudalism, in which people compete to gain the favor of government officials in much the same way that people in feudal times competed for the favor of the king so they could use that power to rule over one another and plunder as they pleased.

The cause, for Rand, is not the size of government, but what we allow it to do. When we allow government to use the force it possesses to go beyond protecting our rights, we arm individuals to plunder one another and turn what would otherwise be limited instances of corruption or criminality into a systemic problem.

For example, when politicians promise to increase social security or to make education “free,” they are promising to take more of the incomes of taxpayers to pay for these welfare programs. When they promise to favor unions with more labor laws or to increase the minimum wage, they are promising to restrict businesses’ right to contract freely with willing workers. When they promise to “keep jobs in America,” they are promising to impose tariffs on companies that import foreign goods. The rule in such a system becomes: plunder or be plundered. What choice does anyone have but to organize themselves into pressure groups, hire lobbyists, and join the fray?

Rand memorably describes this process in the famous “money speech” in Atlas Shrugged:

But when a society establishes criminals-by-right and looters-by-law — men who use force to seize the wealth of disarmed victims — then money becomes its creators’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

Observe what kind of people thrive in such a society and who their victims are. There’s a big difference between the two, and Rand never failed to make a moral distinction between them.

Wealth Creators vs. Wealth Appropriators

In the early 1990s, Atlantic City resident Vera Coking found herself in the sights of a developer who wanted to turn the property on which she lived into a casino parking lot. The developer made what he thought was a good offer, but she refused. The developer became incensed, and instead of further trying to convince Coking to sell or finding other land, he did what a certain kind of businessman has increasingly been able to do in modern times. He pursued a political “solution.” He convinced a city redevelopment agency to use the power of eminent domain to force Coking to sell.

The developer was Donald Trump. His ensuing legal battle with Coking, which he lost, was the first of a number of controversies in recent decades over the use of eminent domain to take property from one private party and give it to another.

Most people can see that there’s a profound moral distinction between the Trumps and their cronies in government on the one hand and people like Vera Coking on the other. One side is using law to force the other to give up what is rightfully theirs. To be blunt, one side is stealing from the other.

But the victims of the use of eminent domain often lobby government officials to save their property just as vigorously as others do to take it. Should we refer to all of them as “special interests” and damn them for seeking government “favors”? The answer should be obvious.

But if that’s true, why do we fail to make that distinction when the two sides are businesses — as many do when they criticize “Wall Street,” or the financial industry as a whole, or when they complain about “crony capitalism” — as though capitalism as such is the problem? Not all businesses engage in pull-peddling, and many have no choice but to deal with government or to lobby in self-defense.

John Allison, the former CEO of BB&T bank (and a former board member of the Ayn Rand Institute, where I work), refused to finance transactions that involved the use of eminent domain after the Supreme Court issued its now-infamous decision in Kelo v. City of New London, which upheld the use of eminent domain to transfer property from one private party to another. Later, Allison lobbied against the TARP fund program after the financial crisis, only to be pressured by government regulators into accepting the funds. In an industry as heavily regulated as banking, there’s little a particular bank can do to avoid a situation like that.

Another example came to light in 2015, when a number of news articles ran stories on United Airlines’s so-called “Chairman’s Flight.” This was a flight from Newark to Columbia, South Carolina, that United continued to run long after it became clear it was a money-loser. Why do that? It turns out the chairman of the Port Authority, which controls access to all the ports in New York and New Jersey, had a vacation home near Columbia. During negotiations over airport fees, he made it clear that he wanted United to keep the flight, so United decided not to cancel it. Most of the news stories blamed United for influence-peddling. Only Holman Jenkins of the Wall Street Journal called it what it was: extortion by the Port Authority chairman.

The point is, there’s a profound moral difference between trying to use government to plunder others and engaging with it essentially in self-defense. It’s the same difference between a mobster running a protection racket and his victims. And there’s an equally profound moral difference between people who survive through production and trade, and those who survive by political pull.

Rand spells out this latter difference in an essay called “The Money Making Personality:”

The Money-Maker is the discoverer who translates his discovery into material goods. In an industrial society with a complex division of labor, it may be one man or a partnership of two: the scientist who discovers new knowledge and the entrepreneur — the businessman — who discovers how to use that knowledge, how to organize material resources and human labor into an enterprise producing marketable goods.

The Money-Appropriator is an entirely different type of man. He is essentially noncreative — and his basic goal is to acquire an unearned share of the wealth created by others. He seeks to get rich, not by conquering nature, but by manipulating men, not by intellectual effort, but by social maneuvering. He does not produce, he redistributes: he merely switches the wealth already in existence from the pockets of its owners to his own.

The Money-Appropriator may become a politician — or a businessman who “cuts corners” — or that destructive product of a “mixed economy”: the businessman who grows rich by means of government favors, such as special privileges, subsidies, franchises; that is, grows rich by means of legalized force.

In Atlas Shrugged, Rand shows these two types in action through characters like steel magnate Hank Rearden and railroad executive Dagny Taggart, two brilliant and productive business people who carry a crumbling world on their shoulders. On the opposite end of the spectrum are Orren Boyle, a competitor of Rearden’s, and Jim Taggart, Dagny’s brother and CEO of the railroad where she works. Both constantly scheme to win special franchises and government contracts from their friends in Washington and to heap regulations on productive businesses like Rearden’s. Rearden is forced to hire a lobbyist in Washington to try to keep the bureaucrats off of his back.

When we damn “special interests” or businesses in general for cronyism, we end up grouping the Reardens in with the Orren Boyles, which only excuses the behavior of the latter and damns the former. This attitude treats the thug and his victim as morally equivalent. Indeed, this attitude makes it seem like success in business is as much a function of whom you know in Washington as it is how intelligent or productive you are.

It is unfortunately true that many businesses use political pull, and many are a mixture of money-makers and money-appropriators. So it can seem like success is a matter of government connections. But it’s not true in a fundamental sense. The wealth that makes our modern world amazing — the iPhones, computers, cars, medical advances and much more — can only be created through intelligence, ingenuity, creativity and hard work.

Government does not create wealth. It can use the force it possesses to protect the property and freedom of those who create wealth and who deal with each other civilly, through trade and persuasion; or it can use that force to plunder the innocent and productive, which is not sustainable over the long run. What principle defines the distinction between these two types of government?

The Solution: A Government Limited by the Principle of Rights

As I noted earlier, the common view about cronyism is that it is a function of “big” government and that the solution is to “shrink” or “limit” government. But that just leads to the question: what’s the limiting principle?

True, a government that does less has less opportunity to plunder the innocent and productive, but a small government can be as unjust to individuals as a large one. And we ought to consider how we got to the point that government is so large. If we don’t limit government’s power in principle, pressure group warfare will inevitably cause it to grow, as individuals and groups, seeing government use the force of law to redistribute wealth and restrict competition, ask it to do the same for them.

The common response is that government should act for the “good of the public” rather than for the narrow interests of private parties. The Los Angeles Times editorial quoted above expresses this view. “What’s truly crony capitalism,” says the Times, “is when the government confuses private interests with public ones.”

Most people who criticize cronyism today from across the political spectrum hold the same view. The idea that government’s job is to serve “the public interest” has been embedded in political thought for well over a century.

Rand rejects the whole idea of the “public interest” as vague, at best, and destructive, at worst. As she says in an essay called “The Pull Peddlers”:

So long as a concept such as “the public interest” … is regarded as a valid principle to guide legislation — lobbies and pressure groups will necessarily continue to exist. Since there is no such entity as “the public,” since the public is merely a number of individuals, the idea that “the public interest” supersedes private interests and rights, can have but one meaning: that the interests and rights of some individuals takes precedence over the interests and rights of others.

If so, then all men and all private groups have to fight to the death for the privilege of being regarded as “the public.” The government’s policy has to swing like an erratic pendulum from group to group, hitting some and favoring others, at the whim of any given moment — and so grotesque a profession as lobbying (selling “influence”) becomes a full-time job. If parasitism, favoritism, corruption, and greed for the unearned did not exist, a mixed economy [a mixture of freedom and economic controls] would bring them into existence.

It’s tempting to blame politicians for pull-peddling, and certainly there are many who willingly participate and advocate laws that plunder others. But, as Rand argues, politicians as such are not to blame, as even the most honest of government officials could not follow a standard like “the public interest”:

The worst aspect of it is not that such a power can be used dishonestly, but that it cannot be used honestly. The wisest man in the world, with the purest integrity cannot find a criterion for the just, equitable, rational application of an unjust, inequitable, irrational principle. The best that an honest official can do is to accept no material bribe for his arbitrary decision; but this does not make his decision and its consequences more just or less calamitous.

To make the point more concrete: which is in the public interest, the jobs and products produced by, say, logging and mining companies — or preserving the land they use for public parks? For that matter, why are public parks supposedly in “the public interest”? As Peter Schwartz points out in his book In Defense of Selfishness, more people attend private amusement parks like Disneyland each year than national parks. Should government subsidize Disney?

To pick another example: why is raising the minimum wage in “the public interest” but not cheap goods or the rights of business owners and their employees to negotiate their wages freely? It seems easy to argue that a casino parking lot in Atlantic City is not “in the public interest,” but would most citizens of Atlantic City agree, especially when more casinos likely mean more jobs and economic growth in the city?

There are no rational answers to any of these questions, because “the public interest” is an inherently irrational standard to guide government action. The only approach when a standard like that governs is to put the question to the political process, which naturally leads people to pump millions into political campaigns and lobbying to ensure that their interests prevail.

Rand’s answer is to limit government strictly to protecting rights and nothing more. The principle of rights, for Rand, keeps government connected to its purpose of protecting our ability to live by protecting our freedom to think and produce, cooperate and trade with others, and pursue our own happiness. As Rand put it in Atlas Shrugged (through the words of protagonist John Galt):

Rights are conditions of existence required by man’s nature for his proper survival. If man is to live on earth, it is right for him to use his mind, it is right to act on his own free judgment, it is right to work for his values and to keep the product of his work. If life on earth is his purpose, he has a right to live as a rational being: nature forbids him the irrational. Any group, any gang, any nation that attempts to negate man’s rights, is wrong, which means: is evil, which means: is anti-life.

A government that uses the force it possesses to do anything more than protect rights necessarily ends up violating them. The reason is that force is only effective at stopping people from functioning or taking what they have produced or own. Force can therefore be used either to stop criminals or to act like them.

The principle, then, is that only those who initiate force against others — in short, those who act as criminals — violate rights and are subject to retaliation by government. So long as individuals respect each other’s rights by refraining from initiating force against one another — so long as they deal with each other on the basis of reason, persuasion, voluntary association, and trade — government should have no authority to interfere in their affairs.

When it violates this principle of rights, cronyism, corruption, pressure group warfare and mutual plunder are the results.

There’s much more to say about Rand’s view of rights and government. Readers can find more in essays such as “Man’s Rights,” “The Nature of Government,” and “What Is Capitalism?” and in Atlas Shrugged.

Conclusion

In 1962, Rand wrote the following in an essay called “The Cold Civil War”:

A man who is tied cannot run a race against men who are free: he must either demand that his bonds be removed or that the other contestants be tied as well. If men choose the second, the economic race slows down to a walk, then to a stagger, then to a crawl — and then they all collapse at the goal posts of a Very Old Frontier: the totalitarian state. No one is the winner but the government.

The phrase “Very Old Frontier” was a play on the Kennedy administration’s “New Frontier,” a program of economic subsidies, entitlements and other regulations that Rand saw as statist and which, like many other political programs and trends, she believed was leading America toward totalitarianism. Throughout Rand’s career, many people saw her warnings as overblown.

We have now inaugurated as 45th president of the United States a man who regularly threatens businesses with regulation and confiscatory taxation if they don’t follow his preferred policies or run their businesses as he sees fit. A recent headline in USA Today captured the reaction among many businesses: “Companies pile on job announcements to avoid Trump’s wrath.”

Are Rand’s warnings that our government increasingly resembles an authoritarian regime — one that issues dictates and commands to individuals and businesses, who then have to pay homage to the government like courtiers in a king’s court — really overblown? Read Atlas Shrugged and her other writings and decide for yourself.

Mass Exodus From High-Taxes - Which States Did Americans Leave In 2016?

Submitted by Johnny Kampis via The Foundation for Economic Education,

Migration patterns for 2016 show that Americans tended to move away from high-tax states and into states where residents keep more of what they earn.

United Van Lines, the nation’s largest moving company, recently released its annual movers study report showing that South Dakota overtook Oregon as the top inbound destination. Generally, more people moved toward the West, and states in the Northeast saw the largest exodus of residents. The top four outbound states in 2016, in order, were New Jersey, Illinois, New York, and Connecticut.

(Photo: Tax Foundation)

The Tax Foundation pointed out in a recent blog post that those results are similar to the organization’s annual state business tax climate index.

In fact, New Jersey, which saw an outbound rate of 63 percent—meaning nearly two people moved out of the Garden State for every person who moved in, also finished last in that index. New York had the second-worst business tax climate, according to the Tax Foundation. Connecticut was eighth-worst while Illinois was more middle of the pack.

The Tax Foundation said the absence of a major tax such as the corporate income tax, individual income tax, or sales tax is a common factor among most of the states that rank in the top 10 on the business climate tax index.

Nicole Kaeding, author of the migration post, noted that taxes are sometimes overcited as a primary reason why people move out of states, but they certainly can play a significant role, as is evidenced by the similar results in the Tax Foundation and United Van Lines studies.

“Tax rates and structure affect a state’s economy,” she wrote.

“States with less burdensome tax structures and lower rates tend to have better economic growth. Increased job opportunities can result from the better economic growth.”

She noted, for example, a person moving to Chicago for a job might decide to commute from nearby Indiana where the individual income tax rate is 3.3 percent, rather than live in Illinois, where the same rate is 3.75 percent.

The 'Soda Police' Just Learned A Valuable Lesson About Taxes

Submitted by Daniel Mitchell via The Foundation for Economic Education,

I don’t like tax increases, but I like having additional evidence that higher tax rates change behavior. So when my leftist friends “win” by imposing tax hikes, I try to make lemonade out of lemons by pointing out “supply-side” effects.

I’m hoping that if leftists see how tax hikes are “successful” in discouraging things that they think are bad (such as consumers buying sugary soda or foreigners buying property), then maybe they’ll realize it’s not such a good idea to tax – and therefore discourage – things that everyone presumably agrees are desirable (such as work, saving, investment, and entrepreneurship).

Though I sometimes worry that they actually do understand that taxes impact pro-growth behavior and simply don’t care.

But one thing that clearly is true is that they get very worried if tax increases threaten their political viability.

This is why Becket Adams, in a column for the Washington Examiner, is rather amused that Mayor Kenney of Philadelphia has been caught with his hand in the tax cookie jar.

Philadelphia Mayor Jim Kenney fought hard to pass a new tax on soda and other sugary drinks. He won, and the 1.5-cents-per-ounce tax is now in place, affecting both merchants and consumers, because that’s how taxes work. Businesses pay the levies, and they offset the cost by charging higher prices. That is as basic as it gets. The only person who doesn’t seem to understand this is Kenney, who is now accusing business owners of extortion. “They’re gouging their own customers,” the mayor said.

Yes, consumers are being extorted and gouged, but the Mayor isn’t actually upset about that.

He’s irked because people are learning that it’s his fault.

Philadelphians are obviously outraged by the skyrocketing cost of things as simple as a soda, which has prompted some businesses to post signs explaining why the drinks are now so damned expensive. Kenney said that this effort by businesses to explain the rising cost is “wrong” and “misleading.” The mayor apparently thought the city council could impose a major new tax on businesses, and that customers somehow wouldn’t be affected.

In other words, it’s probably safe to say that Mayor Kenney has no regrets about the soda tax. He’s just not pleased that he can’t blame merchants for the price increase.

Even the IMF is Skeptical of High Taxes

The International Monetary Fund, by contrast, may actually have learned a real lesson that higher taxes aren’t always a good idea. That bureaucracy is infamous for blindly supporting tax increases, but if we can believe this story from the Wall Street Journal, even those bureaucrats don’t think additional tax hikes in Greece would be a good idea.

IMF officials have said Greece’s economy is already overtaxed. New taxes that came into affect on Jan. 1 are squeezing household incomes further. Economists say even-higher income taxes—in the form of lower tax-free income allowances—could add to a mountain of unpaid taxes. Greeks currently owe the state €94 billion ($99 billion), equivalent to 54% of gross domestic product, and rising, in taxes that they can’t pay.

Here are some stories to illustrate the onerous tax system in Greece, starting with a retired couple that will probably lose their house because of a new property tax.

…the 87-year-old former economist and his 81-year-old wife are unable to repay the property tax imposed on their 70-year old house, a family inheritance. The annual tax is around ‎€33,000, but Mr. Kokkalis’s pension—already cut by half—is €28,000 a year. The couple borrowed money when the tax was imposed, initially as a temporary austerity measure in 2011. But they are already behind on nearly €200,000 of tax payments and can’t borrow more. Mr. Kokkalis says the state is calculating tax based on outdated property prices that have since collapsed, and that if he tried to sell the house now, nobody would be interested. “They impose taxes on an imaginary value,” Mr. Kokkalis says. “This is confiscation.”

I’ve already written about this punitive property tax. The good news is that property taxes generally are transparent, so people know how much they’re paying.

The bad news is that the tax in Greece is far too onerous.

And I’ve also noted that small businesses are being wiped out in Greece as well. The WSJ has a new example.

Tax increases under previous rounds of austerity have put a middle-class lifestyle beyond reach for many. “Our only goal now is survival,” says arts teacher Mimi Bonanou. Until recent years she also made a living as a practicing artist, selling her works in Greece and abroad. But increasingly heavy taxes that self-employed Greeks must pay at the start of each year, based on the state’s often-ambitious forecast of their incomes, have forced her to rely on teaching alone.

All things considered, Greece is a painful example that a country can’t tax its way to prosperity (though some politicians never learned that lesson).

Moreover, it’s nice to have further evidence that even the IMF recognizes that Greece is on the wrong side of the Laffer Curve.

And if a left-leaning bureaucracy is now willing to admit that excessive taxation can lead to less revenue, maybe eventually the Republicans on Capitol Hill will install people at the Joint Committee on Taxation who also understand this elementary insight.

5 Blood-Boiling Cases Of Government Overreach

Submitted by Kelly Wright via The Foundation for Economic Education,

Every year the number of regulations, dictates, rules, decrees, guidelines, statutes, laws, and bylaws in the United States grows by leaps and bounds. Just look at the growth in the number of final rules contained in the Federal Register:

Government Overreach

Now it seems we can’t go a week without hearing a new story about someone being punished, with fines or even jail time, for activities that would be encouraged in a free society. I’ve taken the liberty (pun intended) of compiling some of the more egregious examples of this trend for your reading pleasure (or displeasure).

1. Single mom faces possible jail time for selling $12 worth of ceviche to an undercover police officer.

Mariza Ruelas had her day in court in early November. Her crime? She sold a $12 plate of ceviche, an authentic Mexican dish, to an undercover cop on Facebook.

I know what you’re thinking: Why are police setting up stings to catch people selling food to willing customers over Facebook? Don’t they have actual crimes to investigate — like ones with actual victims? I wish I knew the answers to those questions.

2. Federal prosecutors threaten Aaron Swartz with a life-crushing sentence for downloading academic articles.

On January 11^th 2013, Aaron Swartz ended his own life, concluding one of the biggest miscarriages of justice in contemporary history.

In the months leading up to his suicide, Swartz had been embroiled in a legal battle with the federal government after prosecutors charged Swartz under the draconian Computer Fraud and Abuse Act. His crime? Downloading thousands of academic articles from the JSTOR database.

The CFAA is a particularly cruel piece of legislation, as it carries severe mandatory minimum sentencing requirements, resulting in Swartz facing up to 35 years in prison for a nonviolent crime.

Many legal observers at the time pointed out that had Swartz robbed a bank, aided al-Qaeda, or produced child pornography he would have faced a more lenient sentence.

Swartz’s story was detailed in great depth in the documentary The Internet’s Own Boy. The documentary was released under the Creative Commons — a nonprofit initiative Aaron Swartz himself was an early architect of — so you can watch it for free on YouTube.

3. Government claims ownership of all water, jails Oregon man for 30 days for collecting rainwater on his own property.

Way back in 2012 the libertarian blogosphere was abuzz over an egregious case of local government tyranny out of Oregon. Gary Harrington was sentenced to spend 30 days in jail for the crime of collecting rainwater using three reservoirs (that’s newspeak for “ponds”) on his property.

Oregon law states that all water is a public resource, to be owned communally by the collective population of Oregon, and as such any attempts to obtain or store water must first begin with applying for the proper permits to do so. Yes, really.

One of the reservoirs on his property had been there for 37 years, Harrington said. To add insult to injury, Harrington’s applications for permits were initially approved by the state’s Water Resource Department, but were rescinded after a state court reversed their decision.

As a result of this 1920s-era law, Harrington was ordered to turn himself in to the county jail to serve his 30-day sentence.

4. Maryland church ordered to evict homeless people from its property or pay a $12,000 fine.

No good deed goes unpunished in the Land of the Free.No good deed goes unpunished in the Land of the Free^TM. In late 2016, Reverend Katie Grover was met with a $12,000 citation attached to the door of the Patapsco United Methodist Church in Dundalk, Maryland. The alleged crime was allowing several homeless people to sleep on the church’s property in violation of the county regulation prohibiting “non-permitted rooming and boarding.”

The church wasn’t even letting the homeless sleep indoors, rather they were just allowing a few homeless people to sleep on some of the benches located in the church’s yard.

5. San Antonio chef fined $2,000 for feeding homeless people.

In early 2015, the chef and founder of the not-for-profit food truck Chow Train, Joan Cheever, was cited by police officers for the outrageous crime of serving hot meals to the city’s homeless population.

The citation, which she received for transporting the food in a different vehicle than her licensed food truck, carries with it a fine totaling $2,000.

As is par for the course in these sorts of cases, there isn’t an observable wronged party. The only apparent “crime” here is the violation, unwitting or otherwise, of an arbitrary government dictate. In this case in particular, no one called the police requesting assistance. Cheever was doing what she had done for more than 10 years, except this time her charity stepped outside of the parameters set forth by an unelected bureaucrat at the city’s health department.

Parting Words

These cases brought to light a troubling trend unfolding in the US that couldn’t be summarized better than by the indispensable words of Ayn Rand, writing in Atlas Shrugged,

When you see that trading is done, not by consent, but by compulsion — when you see that in order to produce, you need to obtain permission from men who produce nothing — when you see that money is flowing to those who deal, not in goods, but in favors — when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you — when you see corruption being rewarded and honesty becoming a self-sacrifice — you may know that your society is doomed.

Hopefully the tendency to criminalize mundane activities or even charitable giving itself can be arrested before anyone else finds themselves on the business end of the growing regulatory state.