Coloradans resoundingly rejected a tax hike for education spending last week. In a new op-ed, I note how wise that decision was, and explain how lowering taxes actually does improve education—while saving taxpayers millions of dollars along the way.
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Per Dollar Spent, OECD Subsidies May Be the Most Destructively Wasteful Part of the Federal Budget
I’m not a fan of international bureaucracies.
I’ve criticized the United Nations for wanting global taxes. I’ve condemned the International Monetary Fund for promoting bigger government. I’ve even excoriated the largely unknown Basel Committee on Banking Supervision for misguided regulations that contributed to the financial crisis.
But the worse international bureaucracy, at least when measured on a per-dollar-spent basis, has to be the Paris-based Organization for Economic Cooperation and Development.
[caption align=right]
OECD Headquarters: Living the good life at US expense[/caption]
American taxpayers finance nearly one-fourth of the OECD’s budget, at a cost of more than $100 million per year, and in exchange we get a never-ending stream of bad policy recommendations.
This Center for Freedom and Prosperity study has all the gory details. The OECD bureaucrats (who get tax-free salaries, by the way) endorsed Obamacare, supported the failed stimulus, and are big advocates of a value-added tax for America.
What’s especially frustrating is that the OECD initially was designed to be a relatively innocuous bureaucracy that focused on statistics. Indeed, it was even viewed as a free-market counterpart to the Soviet Bloc’s Council for Mutual Economic Assistance.
My, how things change.
Perhaps the most odious example of bad OECD policy is the campaign against tax competition. Beginning during the 1990s, the OECD has attacked low-tax jurisdiction for the supposed crime of having good tax laws that attract jobs and capital from high-tax nations such as France and Greece.
So why did the OECD launch this project to prop up Europe’s welfare states? The answer can be found in an excellent new study from Professor Andrew Morriss at the University of Alabama Law School and Lotta Moberg, a Ph.D student in economics at George Mason University.
It’s a publication designed for academic journals, but it avoids jargon and gibberish, so a regular person can read and understand how the OECD has morphed from a harmless (though presumably still wasteful) bureaucracy into a force for global statism. Here are some of the key findings in the study.
[T]his transition was in part the result of entrepreneurship by a group of OECD staff, who spotted an opportunity to expand their mission, bringing with it a concomitant increase in resources and prestige. They accomplished this by providing a framework for interests within a group of high tax states to create a cartel that would channel competition in tax policy away from areas where those states had a competitive disadvantage and toward areas in which they had a competitive advantage. …These states then sought to restrict tax competition, which in turn required them to create a means of delegitimizing such competition and by preventing each other from defecting from the cartel by lowering tax rates unilaterally. …The French … realized that single-country financial controls were unworkable within a global financial system.
In other words, the bureaucrats at the OECD and governments from decrepit welfare states like France both saw a benefit in creating a tax cartel.
This “OPEC for politicians” is grossly contrary to good tax policy, international comity, and national sovereignty. But those factors didn’t matter.
Unfortunately, it’s quite likely that we will see further schemes from the OECD and other international bureaucracies. The politicians have learned that transnational cartels increase their power.
[T]he evolution of the OECD from a facilitator of economic competition to a cartel enforcer represents something new in international organization behavior. …The cartelization of tax policy is an important effort to hold off the impact of the forces unleashed by competition on a more level playing field, but it is certainly not the only one. …If the opportunity is provided, it may be better from a politician’s point of view to form a cartel on taxation as a protection. With a cartel, there are fewer constraints on domestic policy, improving the politicians’ welfare by increasing the degrees of freedom available to satisfy domestic constituents and win re-election.
This video has more information on why the OECD is contrary to the interests of American taxpayers.
Needless to say, it is outrageous that the politicians in Washington are sending more than $100 million to Paris every year to subsidize this bureaucracy. For all intents and purposes, we are being coerced into paying for a bunch of European bureaucrats so they can then advocate even bigger government in the United States.
And those bureaucrats get tax-free salaries while pushing for higher taxes for the rest of us!
Can anyone think of a more destructive item in the federal budget, at least when measured on a per-dollar-spent basis? I can’t. That’s why I’ve been fighting the OECD for years, even to the point that the bureaucrats threatened to put me in a Mexican jail for the “crime” of standing in the public lobby of a public hotel.
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North Dakota Rejects ObamaCare ‘Exchange’
Here’s the story, from the Bismarck Tribune:
Angered by a federal health care law that most of them despise, North Dakota House Republicans defeated legislation Thursday to give state officials authority over a health insurance marketing agency that the law requires states to establish.
(Correction: ObamaCare does not require states to create an Exchange.)
They said endorsing state administration of the agency, which is called a health insurance exchange, would be tantamount to approving the federal health reform law itself.
“I certainly am not going to legitimize Obamacare with my vote,” said Rep. Wes Belter, R‑Fargo. “We, as a state of North Dakota, need to follow some of the other states who have said no… It is the law, but the fight should not be over.”
Supporters … said Thursday’s vote was the state’s last realistic chance for running its own exchange, since deadlines are looming and the Legislature does not meet again until January 2013…
After a debate that lasted almost two hours, representatives voted 64–30 late Thursday to reject the legislation. All but 10 of the House’s 69 Republicans voted against the bill, while 20 of its 25 Democrats supported it…
Opponents of the bill said they resented the pressure, which they said was caused by unrealistic deadlines in the federal health care law.
Rep. Keith Kempenich, R‑Bowman, compared the situation to high-pressure sales tactics in a used car lot.
“If the federal government was really sincere on trying to reform health care, they wouldn’t have put these artificial dates in,” Kempenich said. “Whenever I’ve seen things that get rushed like this, or they get where you’re pressured like this, usually, they’re full of it, and that’s what this is starting to look like.”
Kudos to the North Dakota Policy Council’s Brett Narloch.
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This Week at Libertarianism.org
Libertarianism.org’s first week was a terrific success. If you haven’t visited yet, I encourage you to do so. The site’s an excellent place to learn about and explore the theory and history of liberty.
This week Libertarianism.org added
- A new video in our Libertarian View series. Blogger and GMU professor Don Boudreaux tells how his working-class upbringing and economics training led him to libertarianism.
- George H. Smith published a new essay in his Excursions series. Smith examines colonial reaction to the Declaration of Independence’s list of grievances as well as the political principles informing its drafting.
- Jason Kuznicki wrote a long blog post on the difference between “ideal acts morality” and “common sense ethics”—and how these two approaches play out in politics and real life.
- Miles Pope began a series of posts on Jan Narveson’s classic book, The Libertarian Idea.
- I blogged about Elizabeth Warren’s popular argument for paying higher taxes and how it relates to the intriguing subset of political philosophy dealing with political obligation.
- Finally, Libertarianism.org expanded its social networking reach to Google+. So if you’re a Google+ user, be sure to circle Libertarianism.org. And while you’re at it, we’re also on Facebook and Twitter.
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Legalize Drugs? Greenwald v. Walters
Best-selling author Glenn Greenwald debated former drug czar John Walters at Brown University last night before 300 students and faculty. Glenn authored Cato’s landmark study on the decriminalization of drugs in Portugal and he will be speaking at our drug conference next week.
The Foreign Corrupt Practices Act: Clarification Is Not Enough
The Foreign Corrupt Practices Act, enacted in 1977 and the subject of a high-profile federal enforcement campaign in recent years, is a feel-good piece of overcriminalization that oversteps the proper bounds of federal lawmaking in at least four distinct ways, any of which should have prevented its passage. It is extraterritorial, purporting to punish overseas misdeeds which deprive no Americans of liberty or property and whose punishment is better left in the hands of authorities elsewhere. It is vicarious, inflicting massive liability on businesses and unknowing higher-ups over the actions of rogue local subsidiaries, salespeople and facilitators. It is punitive, menacing its targets with twenty-year prison terms and inflicting huge penalties over less-than-huge misbehavior. And finally, it is vague, leaving companies to guess at the proper line between tolerated payments (e.g., gratuities to speed up visa and license issuance in developing countries) and improper “bribes,” and even such basic questions as who counts as an “official.” In the face of a mounting outcry from the business community, the Obama administration has now finally conceded that there is some validity to this last point, and Criminal Division chief Lanny Breuer says the Department of Justice will develop guidelines to provide greater clarity as to what it believes the law does and does not forbid. Better than nothing, but why not consider the case for wider reform or even repeal?
To begin with, it’s hardly as if the law has succeeded in cleaning up the climate of official corruption that afflicts so many ill-governed countries around the globe. It does, however, confer a huge competitive advantage on companies not within the reach of the U.S. Department of Justice, above all those of China, which does not even pretend to apply similar rules to its overseas enterprises, and also including Europe, which has mostly chosen to address the problem in less adversarial ways. (See, for example, this Economist editorial on Britain’s FCPA-equivalent.)
Chicago-Kent law professor Andy Spalding has argued that the FCPA in fact amounts to a form of unintended economic sanctions against developing countries, sometimes with “tragic” and anti-humanitarian results. Guest-posting at PrawfsBlawg, Spalding offered the example of India, where a poor rural population stands in desperate need of roads:
India lacks the financial and administrative (or authoritarian?) capacity to build the needed roads, so it has aggressively solicited outside investors. Nonetheless, of all public requests for road construction proposals in India, almost half receive absolutely no bids. No one is willing to build these roads, at any price. Why aren’t more U.S. construction companies seizing this profit opportunity? Answer: corruption. The infrastructure sector is notoriously corrupt; the FCPA risks are far too high.
Query: if the criminal penalties now associated with FCPA enforcement have made the costs of building roads in developing countries prohibitive, such that roads aren’t built, farmers can’t sell, and kids can’t eat, have we done the right thing?
More on FCPA at Overlawyered and at my former website Point of Law.
Broadcast Media Deserve Better Than Second-Class First Amendment Protection
Who controls the content of TV and radio broadcasts, parents or the FCC? In the 1978 case of FCC v. Pacifica Foundation, the Supreme Court held that, because over-the-air broadcast media is like an “unwanted intruder” in the home that is uniquely accessible to children, the FCC has a role in maintaining the cleanliness of the transmissions. Because of these unique characteristics, the regulation of broadcast media was held to a lesser constitutional standard than other types of media. That ruling was largely based on the technology of the time: three channels, little cable, and no VCRs, much less Internet, DVDs, and satellite TV.
Since that time, the FCC has regulated broadcasts under that lower constitutional standard, including fining stations for so-called “fleeting expletives” uttered by celebrities on live awards shows, the infraction from which this case springs (it was Bono, then Cher, then Paris Hilton and Nicole Richie). This case is visiting the Supreme Court for the second time. In 2009, the Court ruled that an FCC rule against “fleeting expletives” was not an unlawful under administrative law, the law governing executive agencies’ power. On remand, the Second Circuit struck down the rule on First Amendment grounds, largely on the reasoning that Pacifica had been obviated by technological change.
Cato has joined forces on an amicus brief with a wide range of groups advocating freedom in technology policy — the Electronic Frontier Foundation, the Center for Democracy & Technology, Public Knowledge, and TechFreedom — to underscore for the Court just how different the world is today from 1978. While the groups joining the brief do not necessarily agree with each other all the time, we agree on this fundamental truth: broadcast media (the most prominent way we become informed) should not receive watered-down First Amendment protection. We point out how the existence of Video-On-Demand services like Netflix, DVRs, Internet sites like Hulu, as well as massive access to DVDs, has radically transformed how we consume media. Broadcast media is no longer an “unwanted intruder,” but more like an invited guest. Moreover, with the existence of parental control mechanisms like the V‑Chip, parental locks included in cable and satellite boxes, and even services like “TV Guardian” — which filters live TV based on the closed-captioning signal — parents have all the tools at their disposal to ensure that children aren’t exposed to fleeting expletives or anything else unwanted. So why does the FCC need a vague and overbroad rule that could not pass heightened scrutiny and can only survive under a watered-down First Amendment standard? We live in a world that few could have imagined in 1978. It’s time for a new rule that gives broadcast media the same level of speech protection as any other kind.
The Court is expected to hear argument in FCC v. Fox Television Stations in January.