Last week I reported that 40 percent of Virginia Republicans — and 56 percent of independents — now support gay marriage. But on Saturday the Virginia GOP nominated three statewide candidates whose views on homosexuality and marriage equality range from unwavering opposition to bigoted to insane. 

Gubernatorial nominee Ken Cuccinelli came out swinging against the “extremist” label in his convention acceptance speech:

“When did it become extreme to protect children from predators and human traffickers?” Cuccinelli asked. “When did it become extreme to guard our Constitution from overreach? When did it become extreme to secure the freedom of the wrongly convicted? And when did it become extreme to ask government to spend a little less so our economy can grow?”

Like Gov. Bob McDonnell four years ago, Cuccinelli will try to focus on jobs and the economy in his race against big-government crony capitalist Terry McAuliffe. But there’s a reason that a report by the Republican National Committee found that voters see the GOP as “scary,” “narrow minded,” and “out of touch” — and the Virginia Republican ticket is part of that reason.

Mobility is freedom, or at least an important part of it. Yet earlier this month challenges to expansions of that freedom came from, surprisingly, the Mises Institute of Canada, Reason magazine, and American Enterprise Institute. The issues are new automobile technologies, specifically self-driving cars and improved road pricing, and the challenges came from people who clearly don’t understand the technologies involved.

Self-driving cars, says Roger Toutant writing for the Mises Institute of Canada, will lead to “a national, state-operated, computer network that will be used to achieve an Orwellian level of vehicular control and information sharing. …The implications are ominous. In the future, private spheres will be invaded and all movements will be tracked.”

“Boot up a Google car,” agrees Greg Beato of Reason magazine, “and it’s not so easy to cut the connection with the online mothership.” If you get into a Google driverless car, “you immediately start sending great quantities of revealing information to a company that’s already hoarding every emoticon you’ve ever IMed.”

It is appropriate to question new technologies, but the answer is that’s not the way these cars work. None of the self-driving cars being developed by Volkswagen, Google, or other companies rely at all on central computers. Instead, all the computing power is built into each car.

No state-operated central computer will tell cars where to go. Instead, they will find the best route–perhaps consulting with private congestion-tracking services such as Inrix–or offer users a choice of routes, and go there on their own.

Nor do the cars send “great quantities of information” to Google or anyone else, as they do not rely on cell or other communications networks. Instead, they navigate largely based on on-board optical, infrared, and laser sensors. When you park your car at home, it may connect to your WiFi network to download software upgrades and map updates, but it won’t upload information about where you’ve been, and probably won’t even keep track of that information, without your permission.

Toutant confuses self-driving cars with proposals by some government agencies for the creation of wireless communications systems between vehicles (known as vehicle-to-vehicle or V2V) and between vehicles and infrastructure (V2I). These systems would apply to human-driven cars and are being developed completely independently from the self-driving cars. Toutant might correctly question whether V2V or V2I systems could potentially invade people’s privacy, but his attack on self-driving cars is misplaced. Volkswagen, Google, and other companies developing driverless cars had no faith that government would install V2V or V2I systems, so they built everything into their cars, which work perfectly fine without V2V and V2I systems that don’t yet exist.

Self-driving cars will be a huge leap in mobility and freedom, and thus should be supported by free-market groups like the Von Mises Institute and libertarian publications like Reason. While a few cautionary words might be appropriate to insure that people don’t yield any more privacy than they want to, the attacks made in the last few weeks are completely unwarranted.

Fully self-driving cars should be on the market by 2020, and since our auto fleet completely turns over about every 18 years, most cars on the road will be driving themselves by around 2030. But what roads will they drive on and how will we pay for them?

Historically, most road costs have been paid out of gasoline taxes, which–unlike manually collected tolls–can easily be collected without imposing delays on motorists. But gas taxes have several major disadvantages: they don’t send users signals about differences in costs between different roads; they don’t send road providers signals about what roads people are willing to pay for; they don’t automatically adjust for inflation or increasing fuel-economy; and, being collected mainly by federal and state governments, they don’t provide adequate funds for local roads.

As I explain in a 2012 Cato Policy Analysis, all of these problems can be solved by modern electronic systems that would collect fees based on how many miles people drive and what roads they drive on. As Mark Perry warns in an article published by the American Enterprise Institute, there is no doubt that such “mileage-based” or “vehicle-miles traveled” (VMT) systems, could potentially invade people’s privacy.

Unfortunately, Perry’s article is full of paranoid delusions about these systems. “The VMT system smacks of Big Brother,” he says. “It would force us to give up our privacy.” If he had actually reviewed any of the proposals for mileage-based fees, he would have discovered that they are all carefully designed to protect privacy.

Several different systems have been proposed, but typically, the systems keep track of the charges people incur as they drive without recording, in any way, where or when they drove. Since the information is not recorded, there is no way to ever upload the information to a central computer. Such systems have been successfully been tested in Oregon and several other states.

“No matter what method is used to track mileage,” alleges Perry, “the cost of implementing it would consume a large share of the revenue being collected.” Actually, the latest estimates are that the costs will not be significantly more, and may even be less, than the costs of collecting gas taxes.

Perry goes particularly over the top when he warns that “the government could use the VMT system as a mechanism to charge differential rates based on highway congestion levels.” Congestion costs Americans well over $100 billion a year, and economists agree that the only real solution is to charge differential rates based on highway traffic levels. That the VMT system makes this possible is one of its greatest features, not some sort of threat.

Furthermore, unlike gas tax funding, which requires that all roads be government-owned, mileage-based fees open the door to private roads. Thus, free-market advocates such as AEI should endorse these proposals, not spread unfounded rumors about Big Brother. 

It’s appropriate to ask questions about the effects of new technologies on privacy. But is also appropriate to do your homework before spreading hysterical fantasies about how these technologies will work. Contrary to the claims of these writers, both self-driving cars and mileage-based road pricing will greatly improve both our mobility and our freedom without threatening our privacy.

Articles on page A7 and A8 of Saturday’s Wall Street Journal, about rising wages in China and France, confirm something that I learned from Julian Simon. As the Journal reported:

The 14% wage rise for private-sector workers in 2012, reported by China’s National Bureau of Statistics on Friday, represented an acceleration from 12.3% in 2011.

And:

With high labor costs eating into his bottom line, Mr. Madec uses frozen ingredients—and even complete main courses—for the dishes served at Les Templiers.… a steady increase in labor costs and food prices has fueled an unexpected phenomenon: Many restaurants can no longer afford to prepare meals from fresh ingredients in their own kitchens.

And what’s the lesson I learned from Julian Simon? As I wrote in Libertarianism: A Primer,

Over the long run, in real terms, the only price that consistently seems to rise is the price of human labor. Looking back a hundred years or so, we see that prices of goods–from wheat to oil to computers–have fallen, while the real wage rate has quintupled in 50 years. The only thing getting more scarce in economic terms, that is, relative to all other factors, is people.

The stories coming out about IRS abuses of nonprofit groups are appalling. We will likely find out that arrogant and biased officials are to blame, as well as members of Congress who pushed them to be especially aggressive on conservative groups.

Past IRS abuses have stemmed from foul play by both politicians and bureaucrats. As Gene Healy mentions, numerous presidents have used the IRS as a political weapon. As for the bureaucrats, investigations during the 1990s revealed how IRS enforcement had run amok, with abusive tactics being used against small businesses and other taxpayers.

Some of the hearings were hair-raising, and the abuses led Congress to pass the IRS Restructuring and Reform Act of 1998. Useful links to hearing documents are here and here including Senator Roth describing the agency as having an “awesome power.” Washington Post coverage is here, including a story about how even President Clinton was “outraged” by the revelations of IRS abuse.

Going back further, this 1997 book by Shelley Davis describes some of the historical misdeeds and corruption of the IRS. This book review gives an overview of her investigations.

In recent years, efforts to close the “tax gap” have included proposals to augment the power of the IRS and increase the intrusiveness and compliance burden of tax rules. Yet Congress keeps raising tax rates and making the code more complex, which increases incentives for taxpayers to avoid taxes while reducing their ability to comply. Regarding the latest scandal—note that getting tax-exempt status is so valuable because the tax rates are so darn high.

This article by Bill Beach frames the tax gap issue: Congress can reduce the gap by either giving the IRS more police power or by reforms to cut rates and simplify the code. Hopefully the latest IRS scandal convinces Congress that the agency already has too much power. Thus the way to give Americans more freedom from the tax police and to also boost the economy is to scrap the current tax code in favor of a low-rate consumption-based system.

According to the latest Reason-Rupe poll:

The president’s health care law is losing public support… Only 32 percent of Americans say they liked the health care law when it was passed and still like it today. Seven percent liked the law when it was passed, but like it less now. Meanwhile, 45 percent disliked the health care law when it was passed and still dislike it. Four percent of Americans say they disliked the law when it passed, but like it more now.

These results are consistent with the Kaiser Family Foundation Health Tracking Poll, which has always reported a higher level of support for the law than other polls, yet whose latest results show support for Obamacare slipping to just 35 percent of adults.

Claiming that private schools in Milwaukee are discriminating against students with disabilities, the Department of Justice (DOJ) sent a letter to the Wisconsin Department of Public Instruction (DPI) demanding that private schools participating in the Milwaukee school choice program comply with Title II of the Americans With Disabilities Act. As Professor Patrick Wolf explains over at Education Next, the DOJ is wrong on the facts and wrong on the law.

Wolf is part of a team of researchers that has studied the Milwaukee school choice program over five years. Their statistical analysis “confirmed that no measure of student disadvantage—not disability status, not test scores, not income, not race—was statistically associated with whether or not an 8^th grade voucher student was or was not admitted to a 9^th grade voucher-receiving private school.” This is exactly what the law requires. Wisconsin law forbids discrimination on the basis of disability and requires schools participating in the voucher program to accept students on a random basis. 

Moreover, the DOJ is wrong on the law in treating private schools participating in the program as though they were government contractors. As Wolf explains:

Private organizations normally are exempt from Title II of ADA but the DOJ argues that the law applies to private schools in the MPCP because the government is contracting with them to provide a public service (the education of K‑12 students). This claim flies in the face of the facts and case-law surrounding the program. The voucher program does not involve any contracts, of any kind, between any government organization and the participating private schools. Students need to meet certain eligibility restrictions to participate in the program, as do interested private schools. Once both are deemed eligible by the state, students choose schools and government funds flow to the private schools based on the choices families have made and consistent with the laws governing the program, not based on any “contract.” In fact, the Wisconsin State Statute that governs the MPCP, §119.23, is entirely separate from Wisconsin State Statute §119.235 entitled “Contracts with Private Schools and Agencies.” Nothing could make the point clearer that the MPCP is not a case of government contracting for education services.

Wolf suspects that the DOJ’s letter came as a result of the Wisconsin DPI’s report that 1.6 percent of choice students have a disability. Since the DPI is not authorized to collect that information, they estimated the number of students with disabilities using the number of choice students given accommodations on the state accountability exam. However, as Wolf explains, that is a highly flawed proxy since only a minority of students with disabilities are given such accommodations. Wolf’s team of researchers estimated that the number of choice students with disabilities between 7.5 and 14.6 percent, with their best estimate being 11.4 percent.

The DOJ’s overreach may be unsurprising in light of other recent scandals, but it also sets a terrible precedent. Parents choosing to use their vouchers at private educational institutions do not render those institutions “government contractors” any more than grocery stores become “government contractors” when citizens use their EBT cards to purchase food there. The Obama administration’s unlawful and misguided attempt to hamper school choice programs with additional red tape should be vigorously resisted.

I have to start this post with a big caveat.

I’m not a fan of the Paris-based Organization for Economic Cooperation and Development. The international bureaucracy is infamous for using American tax dollars to promote a statist economic agenda. Most recently, it launched a new scheme to raise the tax burden on multinational companies, which is really just a backdoor way of saying that the OECD (and the high-tax nations that it represents) wants higher taxes on workers, consumers, and shareholders. But the OECD’s anti-market agenda goes much deeper.

• The OECD has allied itself with the so-called Occupy movement to push for bigger government and higher taxes.
• The OECD, in an effort to promote redistributionism, has concocted absurdly misleading statistics claiming that there is more poverty in the United States than in Greece, Hungary, Portugal, or Turkey.
• The OECD is pushing a “Multilateral Convention” that is designed to become something akin to a World Tax Organization, with the power to persecute nations with free-market tax policy.
• The OECD supports Obama’s class-warfare agenda, publishing documents endorsing “higher marginal tax rates” so that the so-called rich “contribute their fair share.”
• The OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and employment.

Now that there’s no ambiguity about my overall position, I can admit that the OECD isn’t always on the wrong side. Much of the bad policy comes from its committee system, which brings together bureaucrats from member nations.

The OECD also has an economics department, and they sometimes produce good work. Most recently, they produced a report on the Swiss tax system that contains some very sound analysis, including a rejection of Obama-style class warfare and a call to lower income tax burdens.

Shifting the taxation of income to the taxation of consumption may be beneficial for boosting economic activity (Johansson et al., 2008 provide evidence across OECD economies). These benefits may be bigger if personal income taxes are lowered rather than social security contributions, because personal income tax also discourages entrepreneurial activity and investment more broadly.

I somewhat disagree with the assertion that payroll taxes do more damage than VAT taxes. They both drive a wedge between pre-tax income and post-tax consumption. But the point about income taxes is right on the mark.

Interestingly, the report also endorses tax competition as a means of restraining the burden of government spending.

Evidence also suggests that tax autonomy may lead to a smaller and more efficient public sector, helping to limit the tax burden and improve tax compliance… Efficiency-raising effects of tax autonomy and tax competition on the public sector have also been reported in empirical research with Norwegian and German data… Tax autonomy generates opportunities to choose the level of public service provision and taxation, although in practice such “voting with your feet” seems mostly limited to young, highly educated and high-income households. Decentralised tax setting also fosters benchmarking of the performance of jurisdictions belonging to the same government level by voters, even in the absence of “voting with your feet”.

The report also notes that tax competition has reduced corporate tax rates.

Tax competition is likely to have contributed significantly to lowering corporate tax rates in Switzerland over the past 25 years. Indeed, empirical evidence shows that the responsiveness of sub-national governments to tax changes of other subnational governments (“tax mimicking”) is the strongest in the case of corporate taxation (Blöchliger and Pinero Campos, 2011). …Progressive corporate income taxes harm incentives for businesses to grow. Since growing businesses are likely to be high performers in terms of productivity, such disincentives are likely to hit high-performing businesses the most, with losses to aggregate productivity performance, which has been modest in Switzerland relative to best-performing high-income countries.

P.S.: This isn’t the first time the economists at the OECD have broken ranks with the political hacks that generally control the bureaucracy. In a 1998 Economic Outlook (see page 166) they wrote that “the ability to choose the location of economic activity offsets shortcomings in government budgeting processes, limiting a tendency to spend and tax excessively.” And in another publication (see page 1), the economists noted that “legal tax avoidance can be reduced by closing loopholes and illegal tax evasion can be contained by better enforcement of tax codes. But the root of the problem appears in many cases to be high tax rates.” These passages sound like they could have been authored by Pierre Bessard!

P.P.S.: I hasten to add that none of this justifies handouts from American taxpayers to the Paris-based bureaucracy any more than occasional bits of rationality from the World Bank (on government spending), IMF (on the Laffer Curve), or United Nations (also on the Laffer Curve) justify subsidies to those organizations.