Campaign finance regulation met celebrity culture for one morning this week. I was not completely bemused.
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Zero Cheers for the Chinese Communist Party
The Chinese Communist Party celebrates its 90th birthday today. Pardon me if I do not attend the party.
It is undeniably true, as the authorities in Beijing are trumpeting, that the Chinese Mainland under one-party communist rule has enjoyed spectacular economic success during the past 30 years. China’s rapid growth was unleashed by the reforms of the late communist leader Deng Xiaoping that began in the late 1970s, but those reforms—private ownership of business, farms and housing, market pricing, foreign investment, and trade liberalization, among others—were hardly an extension of the Communist Party’s agenda. In fact, those reforms were a direct repudiation of everything the Chinese Communist Party and its co-founder Mao Tse-tung believed and practiced before and after the communist takeover of 1949.
Under Mao, tens of millions of Chinese starved in the Great Leap Forward of 1958–60. Millions suffered cruelly at the hands of the Red Guards during the Cultural Revolution of 1966–76. During the first 30 years of communist rule, the Chinese people enjoyed neither economic nor political and civil freedom. Even amid rising economic prosperity today, China’s one-party state continues to imprison, torture, and kill people who practice their faith or question the party. That is not much of a record to celebrate.
The Chinese people do not need communist rule to prosper. We can see that plainly enough 112 miles across the Taiwan Strait. Under the rule of the Nationalist Party, the 23 million people of Taiwan made the transition from military rule to a lively, multiparty democracy with freedom of speech, assembly, and religion. Behind liberal economic reforms dating back to the 1960s, the Taiwanese people have achieved a per capita gross domestic product (at purchasing power parity) that is four and a half times greater than on the mainland—$35,700 vs. $7,600.
It does not take much imagination to envision what Mainland China would be like today if it had followed the path of Taiwan rather than that of the 90-year-old Chinese Communist Party.
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Bacon with a Soupçon of Hypocrisy
NPR’s Morning Edition today ran a surprisingly sympathetic report on “libertarian summer camp” — the Porcupine Freedom Festival, held every year in New Hampshire.
How did it go? There was a lot of bacon, apparently. And a good time was had by all — many of whom, I gather, are a shade or two more radical than I am. It sounded like a fun, slightly zany, and not completely unworkable experiment in living, right down to the alternative currencies in gold and silver. Correspondent Robert Smith seems to have set out looking for “nasty, brutish, and short,” and what he found was just… different.
The main complaints?
First:
“There are no guarantees in a free market,” which is nothing if not obviously false. Businesses offer guarantees all the time and completely of their own volition, always seeking the elusive customer. There may be no sure thing in a free market, but the regulated market can’t deliver that either. Businesses are bound to keep their guarantees by the fear of losing customers. Bureaucrats are bound to keep their guarantees by… by… well, not too much, really.
And second:
[A]s George is making the omelets I spot something. His eggs come in big racks approved by the USDA. And the propane he’s using to cook the omelet — didn’t someone have to pay gas taxes on that?
“Unfortunately, it’s impossible to live completely state free,” George says.
What happens to be the case in our world is not necessarily the case in all possible worlds, and what we have now is very likely not the case in the best of all possible worlds. But for some reason mainstream journalists seem to conclude that it is, at least when faced with libertarian alternatives. “Why can’t you live by your principles in this unlibertarian world?” too often collapses into “No one could ever live by your principles in any possible world.”
This seems a hasty conclusion to me, to say the least, and one for which it’s strange to see libertarians singled out. No one asks the advocates of single-payer health care to do without private health care until their preferred system is enacted. No one asks the opponents of free immigration to abstain from all products and services ever touched by undocumented workers (though I admit, it would be a hoot if they tried).
Maybe it’s the influence of Atlas Shrugged, which does seem to argue for this type of ideological purity. But Atlas Shrugged was a fiction of a very particular type — idealized, deliberately made stark and simple, even — gasp! — unrealistic, the better to set out some hard-to-grasp principles. On a societal level those principles may very well be correct, or something a lot like them, even if I can’t live by them all alone while everyone else does not.
Still — not too bad, NPR. Not too bad at all.
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Virginians Want to Bring the Boys Home
A strong majority of voters in Virginia, a state that is home to the Pentagon, Naval Station Norfolk (the world’s largest naval base), U.S. Joint Forces Command, and the fourth highest percentage of veterans of any state, want American troops out of Afghanistan and Libya.
According to a Quinnipiac University poll, 55 percent of Virginians polled think the United States “should not be involved in Afghanistan now,” and 60 percent oppose involvement in Libya.
According to the poll, fewer Virginians support those wars than any of the other people or topics the poll asked about. Only 38 percent now support the Afghan war, and 31 percent support the Libyan military involvement, compared to 42 percent who don’t want to repeal the 2010 health care law, 43 percent who would vote to re-elect President Obama, 48 percent who approve of Obama’s job performance, 42 percent who would vote for George Allen for senator, and 43 percent who would vote for Tim Kaine.
All those candidates should probably take note of the poll’s results on both health care and foreign wars.
Quinnipiac surveyed 1,434 registered voters and claims a margin of error of 2.6 percentage points. The poll apparently did not ask about the war in Iraq.
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The “Tax Expenditure” Con Job
For both political and policy reasons, the left is desperately trying to maneuver Republicans into going along with a tax increase. And they are smart to make this their top goal. After all, it will be very difficult – if not impossible – to increase the burden of government spending without more revenue coming to Washington.
But how to make this happen? President Obama is mostly arguing in favor of class-warfare tax increases, but that’s a non-serious gambit driven by 2012 political considerations. Moreover, there’s presumably zero chance that Republicans would surrender to higher tax rates on work, saving, and investment.
The real threat is back-door hikes resulting from the elimination and/or reduction of so-called tax breaks. The big spenders on the left are being very clever about this effort, appealing to anti-spending and pro-tax reform sentiments by arguing that it is important to get rid of “tax expenditures” and “spending in the tax code.”
I recently warned, however, that GOPers shouldn’t fall for this sophistry, noting that “If legislation is enacted that results in more money coming into Washington, that is a tax increase.” I also explained that tax breaks are not spending, stating that “When politicians tax (or borrow) money from one person and give it to another, that’s government spending. But if politicians allow a person keep more of their own money, that’s a tax cut.”
To be sure, the tax code is riddled with inefficient and corrupt loopholes. But those provisions should be eliminated as part of fundamental tax reform, such as a flat tax. More specifically, every penny of revenue generated by shutting down tax preferences should be used to lower tax rates. This is a win-win situation that would make America more prosperous and competitive.
It’s also important to understand what’s a loophole and what isn’t. Ideally, you determine special tax breaks by first deciding on the right benchmark and then measuring how the current tax system deviates from that ideal. That presumably means all income should be taxed, but only one time.
So what can we say about the internal revenue code using this neutral benchmark? Well, there are lots of genuine loopholes. The government completely exempts compensation in the form of employer-provided health insurance, for instance, and everyone agrees that’s a special tax break. There’s also the standard deduction and personal exemptions, but most people think it’s appropriate to protect poor people from the income tax (though perhaps we’ve gone too far in that direction since only 49 percent of households now pay income tax).
Sometimes the tax code goes overboard in the other direction, however, subjecting some income to double taxation. Indeed, because of the capital gains tax, corporate income tax, personal income tax, and death tax, it’s possible for some types of income to be taxed as many of three or four times.
Double taxation is a special tax penalty, which is the opposite of a special tax break. The good news is that there are some provisions in the tax code, such as IRAs and 401(k)s, that reduce these tax penalties.
The bad news is that these provisions get added to “tax expenditure” lists, and therefore get mixed up with the provisions that provide special tax breaks. This may sound too strange to be true, but here’s a list of the biggest so-called tax expenditures from the Tax Policy Center (which is a left-leaning organization, but their numbers are basically the same as the ones found at the Joint Committee on Taxation).
Since this post already is too long, I’ll close by simply noting that items 2, 4, 7, 8, 11, and 12 are not loopholes. They are not “tax expenditures.” And they are not “spending in the tax code.” Every one of those provisions is designed to mitigate a penalty in the tax code.
So even if lawmakers have good motives (i.e., pursuing real tax reform such as the flat tax) when looking to get rid of special tax breaks, they need to understand what’s actually a loophole.
But since politicians rarely have good motives, there’s a real threat that they will take existing tax penalties and make them even worse. That’s another reason why tax increases should be a non-starter.