Escape the echo chamber.
Longtime readers might notice that the theme has changed — and is kind of boring.
The reason? Russians hacked my web sites! I feel Hillary’s pain.
So, I wiped the WordPress directories clean and installed the latest from scratch. Hopefully, this will work.
Maybe I will get a fancier theme in the future, but for now I am working on a big new project on my Quiz2D site. Stay tuned!
I has been a while since I have written a blog post. Even my Facebook feed related to this site has been largely neglected. Here’s why:
The big hurricane this fall brought extra moisture through my leaking asbestos roof, and the leaking window frames in the room upstairs which shares a wall with my office. Notice the mold on the left.
Well, I am finally back in my office. The ceiling is repaired and painted. Rain stays on the outside of the house. Both of my computer tables are available, etc. (I still need to do something about the landscaping.)
In the meantime, my ISP made updates. I had to change email clients do to encryption. (I miss Pocomail!) If you sent me an email and I never returned it, try again. I lost track of some conversations while moving to Thunderbird.
Also, please let me know of any bugs on the web site proper. My ISP also updated PHP, which broke the political quiz on my other site. (Just fixed it today.)
Now that the weather is getting nice and things are settling down a bit, I might just do some writing. On what, remains to be determined. (I put a poll on the Facebook discussion group, for those who want to have some say in the matter.)
Free Liberal or Eco-Conservative? That is the question.
The Democrats are descending into socialism. The Republicans are flirting with fascism. Congress has become a dysfunctional food fight. These are dangerous times for civility and democracy. We need an alternative and fast.
Some of my longtime friends say we need to revive the original meaning of Liberal. Recently, a member of the Holistic Politics discussion group suggested a Free Liberal Party. The idea has merit; I bought the freeliberal.org domain years ago for this possibility. I have a book fermenting in the back of my brain on the subject of mixing classical liberal economics with reducing inequality.
On the other hand, there are quite a few Never Trumpers in the Republican Establishment. They are politically homeless, but still powerful and knowledgeable on the inner workings of government. They need new allies in order to regain real power. Trump and the ghost of the Reform Party took away their blue collar allies.
A conservative version of the Green Party might work. Once upon a time the Republican Party was the part for environmentalists. Recall Theodore Roosevelt. Think of the old conservation societies that conserved nature for hunting purposes. Think of country clubs, long the biggest users of electric vehicles. An Eco Conservative alliance is very natural.
And without such an alliance, conservatives may become an endangered species. The political Right has depended on the old folks vote, on people who will be dead before global warming become a real problem. The younger generations have reason to be concerned about the future, whether we are talking carbon dioxide buildup or chronic fiscal deficits.
Though I bought the freeliberal.org domain years ago, and once helped distribute a free newspaper called The Free Liberal, I grow leery of the Liberal brand. I have learned the hard way that words have very sticky connotations. While the truly educated and those from across The Pond know the original meaning of Liberal, for the masses, the word connotes Ted Kennedy, Hillary Clinton, an alphabet soup of government programs, and agonizing quantities of bureaucratic paperwork. And for egalitarians in the potential target market, the word is said with a snarl, with the prefix “neo.”
I think an Upper Left coalition would do better with a different name. I have one in mind that is a bit ugly, but has clear connotations.
Of course Eco-Conservative is also problematic. Conservatives don’t like Eco- and cool young people instinctively flinch at “Conservative.” So I wouldn’t use this name either — except as a generic placeholder. (I have a much better name in mind, but haven’t bought the domains yet.)
The better question is: Which coalition?
Historically, I had pleasant experiences pitching the freedom-equality alliance idea. During my Asheville days I spent many a pleasant hour quaffing beers with progressives who considered the Clintons to be right wingers. I have written articles for lefty sites like Oped News with decent responses. The aforementioned Free Liberal was well received in the lefty coffee shops we distributed it to.
But those where the days when the far Left was against Hate and into Consciousness and yoga. Today, the far Left is into actively hating “Hate,” and they study Modern Indignation Studies instead of advanced anger management. The mavens in the movement see the danger of a liberalitarian alliance and are responding viciously with a wide assortment of strawman attacks and name calling worthy of The Donald.
I have become less hopeful on the prospect of building a new Upper Left coalition.
But I could be wrong. Maybe the Democrats are due for a split. Maybe a Never Bernie faction will walk out as the Cultural Marxists take over their party. Being a heterosexual white male Democrat is becoming as awkward as being a black Republican. I could envision the remainder of the New Democrats (people like Bill Clinton and Al Gore) walking out and joining a new coalition if the identity politics faction gets yet more traction.
Then again, I could see Al Gore joining an Eco-Conservative alliance. He was rather conservative back in the day.
The ugliness I see coming from the Left today is what I used to get from many conservatives. Upon hearing certain libertarian positions, I got variations of “You just want to smoke weed” or “You toke, therefore you are stupid.”
Today, many conservatives are much cooler with the idea of drug legalization. And now it is the Right, including the Christian Right, that is on the defensive and is thus in favor of freedom of speech and association. The environmental bits are a harder sell.
But I suspect much of the global warming denial on the Right is more teamism than natural inclination. Let the oil companies and the anti-intellectuals keep the Republican Party, there many tens of millions of people from the original Republican base who are ripe for an Eco-Conservative message, with a bit of reasonable libertarianism mixed in. leaning.
Go back almost century, and recall the demographics and sense of life of the Republicans of the day. The Republicans were the blue bloods, the mainline Protestants, the prosperous city dwellers, the preservationists, the classical music listeners — the sort of people who watch PBS and listen to NPR today. They were also the party of the well educated, not the party of science denial.
They were also the anti racist party. The first nonwhite in the presidential succession was a Republican (Charles Curtis, Vice President under Hoover).
They were also the party of peace back in the 20s. Recall the Kellogg Briand Pact.
That Grand Old Party is long gone. Today’s Republican Party is a mix of Know-Nothings and Southern Democrats.
There is plenty to build on besides the Never Trumpers. Many in the original Republican base left long before The Donald came on the scene.
When I was on vacation a week ago, I weighed the tradeoffs between Upper Left and Eco Conservative while listening to the waves. I got lots of plusses and minuses when contemplating Upper Left. I got nearly all plusses when weighing the possibility of an Eco Conservative alliance.
But I was factoring in personal factors as well as overall viability.
So yes, my personal biases affect my inclination.
Which is why I’d like to hear from others. Which alliance do you consider more viable? More useful? Please comment below or on the Facebook discussion board.
“Free Trade” isn’t.
For those who haven’t noticed: We live in a hugely expensive welfare state. Domestically produced goods are taxed from multiple angles. We have corporate income taxes at the state and federal level for corporate profits, and then tax the profits again when the owners sell shares or collect dividends. Wages are taxed via Medicare taxes, Social Security taxes, the federal income tax, and state income taxes.
Imports without tariffs aren’t free trade; they are subsidized trade.
Once upon a time our leaders knew this, and enacted low tariffs anyway. Much of the world was digging out from the rubble of World War II, and we feared a Communist takeover of the Free World if we didn’t lend a hand. Our low tariffs were an intentional subsidy to preserve democratic capitalism.
Today, the biggest beneficiary of this policy is nominally Communist China.
The People know there is something wrong, that our heartland is being economically gutted. They have been trying to get the Establishment’s attention for decades. Eventually they go so fed up that they elected a blatantly dishonest, foul-mouthed adulterer who has all the charm and manners of a pro wrestling heel to be our President.
It didn’t begin with Trump or the recently resurgent Racist Right. This has been fermenting for a while from both ends of the political spectrum. Remember H. Ross Perot? He might have become President if he hadn’t dropped out of the race for a bit, and then picked a running mate who was laughably unprepared. Remember the WTO protests? Those were Leftists.
The Establishments — both D and R — are losing out to those ignorant of textbook economics. Because the basic textbooks are dangerously wrong.
With the right premises the textbook argument against tariffs is logically impeccable.
Let us consider a simple case: an automobile tariff. Let’s consider a parallel universe where Toyota’s are still imported from Japan, Volkswagons from Germany, etc. Slap a 25% tariff on foreign made automobiles and what happens?
GM stockholders get a windfall. Consumer advocates complain about expensive unreliable gas guzzlers. Conservatives complain about uppity labor unions. Economists lament the resulting inefficiency: those extra workers building Oldsmobiles could be working on higher value goods such as solar panels, video games, or viral websites featuring cute kitten pictures.
Meanwhile, the government gets little revenue from the tax. The tax is easy to dodge: just buy from the Big Three.
In this scenario the tariff is indeed a net bad. It costs consumers while doing little for the Treasury. Score one for the Establishment.
But this scenario is artificial!
Here in the real world domestically produced goods are taxed too. The Big Three pay federal corporate income taxes — now only 21%. The factories in Michigan are subject to 6% state corporate income tax. Shareholders pay income tax on dividends — somewhere between 10% and 37%, which is a total profit tax between 29% and 50%. The workers pay between 10% and 37% marginal income tax rates, depending on their pay rates and deductions. For non executives, the entirety of their wages are subject to payroll and Medicare taxes (15.3% of nominal wages). Michigan auto workers pay a flat 4.25% state income tax on their wages.
That 25% tariff is starting to look a bit low by comparison.
(Astute readers will note that corporations don’t actually pay the full corporate income tax. In part this is because of overly generous depreciation schedules. The other reason is that today multinational corporations can move their profits to tax havens through accounting trickery. If tariffs are set at least as high as the corporate income tax rate, this cheat goes away. Liberals take note!)
Some readers might be troubled by my comparing tariffs to income and payroll taxes. After all, corporate income taxes are paid by corporations, payroll taxes by a combination of employers and employees, etc.
This is where reading the economic textbooks pays off. An income tax is a tax on the transactions that produce the income. A tariff is a tax on the transaction between purchaser and foreign producer. Exactly who takes the tax hit depends on “elasticity.” (Look it up.)
The picture would be clearer if we used consumption taxes instead of income taxes. Suppose we replaced the income and payroll taxes with a 30% across-the-board national sales tax, as the Fair Tax people advocate. (They cheat by advertising a 23% number. If you have a 30% sales tax, the tax is 23% of the total cost.) That 30% tax would fall on domestically produced consumer goods and Chinese imports equally.
A Fair Tax coupled with complete elimination of tariffs is the same as a 30% across-the-board tariff rate on consumer goods. In 2016, the Libertarian candidate was more protectionist than Donald Trump! (Gary Johnson endorsed the Fair Tax.)
I have a question for Free Traders: would the Fair Tax be unfair mercantilism? If we had such a tax should imports be exempt?
One could answer: “Yes, domestic goods should be taxed more since producers consume government services.” Also, domestic factories are ugly, often smelly, require government infrastructure and protection, and require government regulators to protect us from dangerous chemicals. When we move production to China, we move away the pollution to somewhere out of sight and smelling range.
But domestic production produces positive local externalities as well. That Oldsmobile factory can turn welfare recipients into productive citizens. It can make manual laborers into middle class Americans who can afford to pay for their own health insurance.
I’d rather pay for an overpriced Oldsmobile than pay taxes for welfare and Medicare for All.
The advocates of Free Trade point out that when we replace domestic goods with imports we free up labor for higher value items. Just look how well that worked in Allentown, Youngstown, Detroit, Kannapolis…
Sometimes Creative Destruction isn’t all that creative.
Here’s a wakeup call to academia: not everyone is college material. Not everyone is suited to be a symbol manipulator. For millennia, the bulk of humankind has been hunters, fighters, and farmers. Symbol manipulation was for shamans and weirdos. We are short on hunting grounds, the farms have been merged, and job opportunities in the military are limited.
By subsidized outsourcing of manual production, we are freeing up locals to be gang members and spaced out druggies — along with the police and prison guards who take care of them.
I’d rather pay for an overpriced Oldsmobile than for an archipelago of prisons and security forces to protect me from the unemployable who aren’t in prison yet.
Note that I am not calling for full on mercantilism, protection of special industries, or anti dumping laws. I am calling for flat, across-the-board, tariffs that are comparable to our domestic taxes. This is a neutral position, if we treat foreign nations as black boxes.
(And as someone who prefers to limit meddling in foreign lands, I think treating foreign economic policies as black boxes is a Good Idea.)
Astute economists will note a problem with my proposal: if nations use a mix of income taxes and comparable tariffs, international trade goods get double taxed. That Japanese Toyota gets taxed by Japanese taxes before it comes here to be taxed with my proposed tariff.
And so the wonks keep calling for a more optimal system: zero tariffs by everyone.
These days, I disagree with the wonks. Two reasons:
Suppose two countries (A and B) agree to zero out import duties and only tax domestic labor and profits. This is fair and momentarily efficient.
Then Country A starts running a trade surplus with B for some reason (it matters not what). Country A gets a tax windfall. If a conservative government is running Country A, then producers in Country A get a tax cut — which encourages businesses to move their profit generating activities from Country B to Country A.
Meanwhile Country B loses tax revenue. They can either do without some government services, or raise taxes. The latter could drive away producers reducing the tax base further. (So could the former if the government services are actually useful for producers.)
We have an unpleasant positive feedback effect.
The impulse to cheat becomes enormous. Country B could resort to non tariff barriers. They could increase net revenues in the short run by subsidizing some of the remaining producers (while undermining the rule of law). Or they could switch from income to consumption taxes, and have tariffs under a different name.
To stop such cheating you need an international body with clout: neutral bureaucrats with the power to review a very wide range of domestic tax and regulatory policies. You need to disable democracy.
None of this is hypothetical. It has all happened in the European Union.
I’d rather suffer a bit of economic inefficiency than turn over government to globe trotting bureaucrats.
When the Big Three got fat and sloppy, consumers were rescued by quality auto imports from Japan. International trade was very useful.
But those high quality, high gas mileage, Japanese autos existed in part because Japan had a mercantilist economy which fostered the local auto industry. Had the Big Three been allowed in before the Japanese perfected their own brands, history might have been less pleasant.
Perfect Competition is only efficient in the short run. Perfect Competition creates a Winner-Take-All dynamic that leads towards monopoly and oligopoly.
Imperfect Competition preserves economic diversity. Having economic speed bumps around the nations of the world creates a home court advantage in each nation, nurturing businesses that aren’t currently world class. This makes the world more diverse and interesting. And as long as the speed bumps aren’t too high, we get to sample the diversity in the form of premium luxury brands, exotica, and extreme niche products.
(And where Comparative Advantage is truly compelling, the speed bumps are just another source of tax revenue.)
If everyone switched from income to consumption taxes, we could have stable trade without international bodies, and the speed bumps would be minimal.
But we would also have a tax system that is regressive. The rich can better afford to save. Wealthy families could accumulate wealth over generations without paying tax.This could be a problem.
Perhaps a combination of wealth and consumption taxes could work.
But I have one other objection: an across-the-board consumption tax would be fair. I don’t want to be completely fair. I actually want to subsidize imports from the truly needy nations of the world.
Sub Saharan Africa is currently experiencing the demographic explosion that just about every other region has experienced when making the transition to the modern world. If they don’t complete their Industrial Revolution at a breakneck speed, humanitarian and environmental catastrophes will happen soon.
I want to actively subsidize trade with these developing nations. So my preference is flat tariffs for all, save for imports from the poorest nations.
Since I left the Libertarian Party a decade ago, I have reverted to a more pragmatic and utilitarian vision of liberty, more Milton Friedman and less Murray Rothbard. Way back when I was in high school I was impressed with Friedman’s Negative Income Tax. Today, I want to simplify the idea and have a flat tax for The 99% coupled with free money for everyone.
But one of my favorite political pundits, P.J. O’Rourke, says NO. He says that a universal basic income is one of this month’s two worst political ideas. He points out that if his younger self had gotten a thousand dollar a month stipend, he would have remained an insufferable useless hippie.
He has a point. Some people will manage to live unproductive lives on a universal basic income, writing bad poetry, chanting Marxist slogans, crafting bad art, and sporting bad hair.
But people are doing this now, with much bigger government grants. We call them college professors, and fine artists.
P.J. makes a major mistake in applying the UBI idea to his younger self: $1000/month today would be far less than a thousand a month was back when he was an insufferable hippie. We had a rather serious bout of inflation in between then and now. To live as a happy hippie on a kilobuck/month today would require serious frugality, or even a bit of farming and other productive, if non-monetary, work. But under a UBI, unlike welfare, you could supplement your free government check with some legal monetary work without losing your benefits. Yes, you would pay taxes on that work, but the rate would be no more than what doctors and lawyers pay today — and they still show up for work from time to time.
Yes, this money is “unearned.” So are inheritances. I have a question for the Republicans in the audience: should inheritances be banned? I can say from direct experience that some who receive major inheritances do live lives of unproductive socialistic yammering. (I knew a few trustafarians back in my Asheville days.) Should we ban all inheritance to make such people get a job?