What is a Fair Share of Taxes?

Fred Foldvary Economics, Liberty

What is fair is different from what is just. What is just is determined by the ethic of natural moral law as expressed by the universal ethic. The universal ethic prescribes that all acts, and only those acts, that coercively harm others, are evil. Justice is the implementation of the universal ethic in law. Justice is applied by prohibiting and penalizing evil acts, and by keeping all other acts free of restrictions or imposed costs.

The premises from which natural moral law derive are the biological independence of thinking and feeling, and the equal moral worth of all human beings. Thus a foundation of justice is equality before the law. People with equal conditions should be treated the same.

Equality implies that all persons are equal self-owners. If one person imposes his will on another, the victim becomes a slave, and the tyrant becomes a master, in violation of equality. Self-ownership implies that one fully owns one’s labor, and therefore any tax on wages or the products of labor, or the spending of wages, violates self-ownership, and is unjust.  Continue reading →

The Mystique of Hedge Funds

Warren Gibson Economics, History , , , , , , ,

Hedge funds are controversial these days. Though it’s unlikely that the average citizen or the average congressman could say just what hedge funds do, many are certain they must be reined in by additional regulation because they can—and do—cause widespread damage to our financial system. Almost everyone takes it for granted that regulation of some sort is the solution, ignoring the possibility that at least some of the problems are actually caused by regulation.

What is a hedge fund? The name implies hedging, a strategy that reduces risk. If you bet on several horses in a race, you are hedging your bets—spreading your risk. You can buy gold to hedge against inflation. You can sell interest-rate futures to hedge the risk that rising interest rates would pose to your bond portfolio.

The first hedge fund was created in 1949 by Alfred Jones. He believed he could pick stocks that would outperform and those that would underperform the overall market. But Jones didn’t know where the overall market was going, so he would buy his expected outperformers and sell short the expected underperformers. He thereby insulated his portfolio from general market moves, which would affect about half his holding positively and half negatively.

Most present-day hedge funds don’t do much hedging, but the name persists. Instead, they engage in a bewildering variety of trading methods, including buying on margin (using borrowed funds) and selling short (selling borrowed assets so as to profit from a price drop). They trade stocks, bonds, options, currencies, commodity futures, and sophisticated derivatives thereof. Some try to anticipate global political or economic events, while others seek opportunities in specific industries or companies. Continue reading →

Forward to the Failed Past

Fred Foldvary Current Events, History, Politics , , , , , ,

Some politicians like to use the slogan, “forward.” Sometimes it is more emphatic: forward!

But one may well ask, forward to what? Time and the current of events are always moving us forward already, so evidently the forward-seekers want to change the existing flow sideways. The slogan “forward” has often been used by those who seek greater state-imposed collectivism. As propaganda, “forward!” sounds better than “leftward!” or “towards ever greater statism!”

Several publications of socialist parties during the 1800’s were titled “Forward.” Lenin continued this tradition when he founded the Bolshevik newspaper “Vpered” (or “Vperyod”), which is “forward” in Russian. German socialists had already published the periodical “Vorwärts,” and the German national socialists continued the use of the slogan. Several communist and socialist parties still use “Forward” as the title of their publications. Continue reading →

The Pigou Club

Fred Foldvary Current Events, Economics , , ,

Professor N. Gregory Mankiw of Harvard University initiated and hosts “The Pigou Club” of economists, journalists, and politicians who have favorably written about pollution levies as an efficient way to reduce emissions. Arthur Cecil Pigou was the economist who was the first to deeply analyze externalities (uncompensated effects on others) in his 1920 book The Economics of Welfare.

Pigou proposed a levy on negative external effects equal to the social cost, so that buyers and users pay the full social cost of products. The most common applications are tolls to prevent traffic congestion, parking meters that vary by time of day, and pollution levies.

The policy of charging those who create negative externalities is named Pigouvian, or Pigovian. Mankiw advocates higher gasoline taxes, but that would also tax those car owners with cars that run quite cleanly and are driven in roads that are not congested. The best Pigovian policy is to focus the charge on the negative element such as harmful emissions.  Continue reading →

Around the Web

Brandon Christensen Current Events, Links
  1. The Case to Keep Dividing Africa
  2. The Cato Institute recently held its 30th annual monetary conference, and the Economist reports
  3. Gun Control’s Racist Origins
  4. The Past is Gone: Why Liberals Should Rethink States’ Rights
  5. Republicans Must Get Real on Foreign Policy

Leaving the Left: Three Dangerous Features I Left Behind

Brandon Christensen Current Events , , , , , , ,

The blatant hypocrisy, the obstinate ignorance and the penchant for authoritarianism within the American Left today are the three reasons why I left the Left in the first place. Riffing off of my recent post on Leftist thought and its major deficiencies, I thought I’d point out a few more recent examples.

Remember, Leftists by and large don’t realize that what they are doing is a) hypocritical, b) ignorant, and c) authoritarian. It is, as Brian Gothberg pointed out, more of a cognitive block than anything. However, there is really no excuse for this cognitive dissonance once it has been explained. Perhaps I need to work on doing a better job of this, but I suspect, as does Dr. Delacroix, that most of it is simply obstinate ignorance and a failure by Leftists to actually read what their opponents are writing.

Writing over at EconLog, David Henderson points out the blatant hypocrisy of the Left in regards to freedom of speech. He draws readers to the attention of calls for solidarity by Leftist academics blogging at Crooked Timber (it’s to the right, on our blog roll, and has been for quite some time) for one of their own after he was targeted by Right-wing groups for his vile thoughts on the NRA’s CEO (a Mr. Wayne LaPierre). Henderson writes: Continue reading →

No Upticks in Mass Shootings…

Brandon Christensen Current Events, Liberty, Politics

…so, what is to be done?

Brad Plumer of the Washington Post has a graph up on mass shootings:

Mass Shootings in the US 1980-2010

Plumer explains:

Mother Jones found that 24 of the last 62 worst mass shootings have taken place in the past seven years alone. That seemed like a clear increase.

But is this the right way of looking at things? Over at Reason, Jesse Walker criticizes my post and points to data from James Allan Fox, a criminologist at Northeastern, who has found that there’s been no discernible increase in mass shootings since 1980 […]

Why the difference? Fox is looking at all mass shootings involving four or more victims — that’s the standard FBI definition. Mother Jones, by contrast, had a much more restrictive definition, excluding things like armed robbery or gang violence. They were trying to focus on spree killings that were similar in style to Virginia Tech or Aurora or Newtown. The definitions make a big difference: On Fox’s criteria, there’s no uptick. On Mother Jones’, there’s a clear increase […]

So, duly noted. One final point, though: Even if mass shootings are simply staying constant, and not actually increasing, that might still be of interest given that the overall rate of gun violence and homicide in the United States appears to be on the downswing.

So, not only have mass shootings not increased, but violence overall in the US is decreasing as well.

Every time something horrific happens, be it mass shootings, a collapse of the financial sector, a terrorist attack, whatever, there are calls from the people for the government to “do something.” These calls do not emanate from the Left alone.

The Austrian (and Austrian School) economist Ludwig von Mises recognized this nearly a century ago. I understand why there are calls from people for their government to “do something” after something awful happens. I understand why politicians respond to such calls. I always feel awful when I read about things like some psychopath gunning down little children at school or people losing their homes in an economic downturn.

Also, I always feel a little bit awkward standing athwart these calls waiving cold, hard evidence around that states disasters are extremely rare, and that passionate calls for more government intervention in our lives when there is absolutely no need for it is an invitation for more trouble, not less.

(h/t Tyler Cowen)

On another note, Pierre Lemieux and Jacques Delacroix have comments on guns and psychopaths. Both are worth reading.

Around the Web

Brandon Christensen Economics, Links

  1. Seven Sins of our Forced Education

  2. Growth: Markets Broad and Deep
  3. Going Off the Rawls. A philosophical conversation with David Gordon.

  4. Learning to Love Volatility

  5. Schools for Slavery

The Fiscal Cliff

Fred Foldvary Current Events, Economics, Politics , , , , , , , ,

The “fiscal cliff” is the economic plunge that will occur in the U.S.A. if Congress does not change the big tax hikes and spending reductions that will otherwise start on January 1, 2013. The income tax rate cuts enacted at the beginning of the ozo years (2000 to 2009), as well as the payroll tax cuts that followed the Crash of 2008, were temporary and are scheduled to expire at the close of 2012.

Congress enacted the Budget Control Act of 2011 to require “sequestration” – automatic sharp spending reductions in 2013 – unless it enacted the recommendations of a “supercommittee,” which then failed to achieve a consensus on raising revenues and cutting spending.

Now in mid November 2012 the economy is a train heading towards the cliff, and if Congress does not lay down a track to make the train veer off to the side, the economic train will plunge into another depression. Continue reading →

Guns and Debate: An Issue Within An Issue?

Brandon Christensen Current Events, Liberty, Politics

I’ve been making the rounds on Facebook in regards to the inevitable catcalls for more gun control. Two things have jumped out at me.

1) The people who are calling for more gun control (whatever that means) are not very good with numbers. I suspect this ignorance is of the obstinate kind.

For example, when I politely pointed out to a friend-of-a-friend that, statistically-speaking, gun-related violence amounts to almost nothing, he responded with a half-assed blog post by a DC policy wonk with a title that read something like “9 Things You Need to Know About Gun Control.” There were at least 12 things on the list. Continue reading →

Autism and National Public Radio

Jacques Delacroix Religion , , , , , , ,

I am obsessed with the question of widespread misinformation and even of stupidity among otherwise intelligent and formally educated people. That’s one big reason why I listen to National Public Radio.

On a recent episode of “Meet the Nation,” there is a far-ranging discussion of autism. The discussion begins well with a report on studies which show differences in frequency of diagnosis of autism according to socioeconomic status (some studies, predictably, with race as a stand-in) and also, according to spatial patterns. The latter, is important. It means that there are geographic clusters of autism. A New York sociologist showed that those patterns are not geographical in a simple physical sense but that they vary according to school district boundaries. Continue reading →

End Prohibition on Self-Defense in Schools

Warren Gibson Current Events, Liberty , , ,

Of all the reactions to the horrible shooting at Stony Ridge Sandy Hook, this one from the Libertarian Party is the most sensible thus far.  It focuses on the federal Gun Free School Zone Act which prohibits firearms in schools.  It goes on to cite incidents where armed citizens have been able to stop or cut short these sorts of shootings.  Hat tip: Jeff Hummel.

Race and Ethnicity

Jacques Delacroix History , , , ,

My Facebook friend, VXA who is a disgruntled Afghan immigrant but quite smart some of the time asks this question: What’s the difference between race and ethnicity?

I am a sociologist by trade and I think I know the answer.

Both are vague terms. Race is a well established habit to classify people according to certain selected physical characteristics. The physical features are selected generally according to their usefulness within a given social agenda. Thus the presence or absence of  hair on the second knuckle of the index finger never is selected because it’s not useful. Skin color and hair shape often are because they allow for quick classification.  Medieval Europeans had no category “negro.” They would describe people in physical terms without assigning them to a  social category “Du Guesclin, the Marshall, was very dark of skin and hair.” It turns out that famous French historical figure was probably a man of some African blood. He would have been considered “colored” in Georgia in 1850. Same goes for Pushkin, the Russian national poet. Continue reading →

No, Thanks.

Jacques Delacroix Current Events , , , ,

I am not much on my blog these days because I am still trying to recover from the defeat. It’s not going well. As you can imagine, mine is not a case of doomed man-love for Gov. Romney. I am not Chris Matthew with the thing, the tingle, going up his leg when he thinks of Barack Obama, and the Governor is not Mr Obama.

I am musing about re-emigration. It’s ridiculous at my age, as well as impractical. Still, there is the strangest turnabout since the Soviet Union took Pres. Reagan’s invitation to get lost: Canada is doing better than the US economically as well as according to several of my values. I am remembering that treaty that put and end to the French and Indian Wars. I think it left the back door open for speakers of French.

And then, if I am going to live under statism why not do it under those who have much practice at it, and who also cook much better than Mexicans? (I am referring here to American restaurants here, obviously) I wonder if the French would take me back? Perhaps, if I promised to keep my mouth shut about the quality of French popular music? Some of you have noticed that I keep up with my French, just in case. That’s my Vichy side. (Look it up.)

This immigrant does not find much to be thankful for this year, for the first time ever. I think an economic disaster is coming to the USA. I hope I am simply wrong. By the way, where are my liberal critics who are always so eager to prove to me how completely and utterly wrong I am when I need them?

Labor Unions as Squeegee Men

Warren Gibson Liberty

ImageIt seems like only yesterday, but it was in the 1980’s that squeegee men had their heyday, particularly in New York City.  These were young men who would approach cars stopped in traffic.  Without asking, they would start “cleaning” the victim’s windshield – often using just a dirty rag.  It was usually evident to the driver that a generous gratuity would be a good idea, as a smashed windshield would be a distinct headache.

As a lecturer at San Jose State University, I am victimized each month by a group of “squeegee men” known as the California Faculty Association.  A certain sum is extracted out of my paycheck and handed over to these gangsters so they can continue pressing their statist demands.  “Membership” in the union remains optional at extra cost, notwithstanding a recent dirty trick in the form of an announcement that everyone would be enrolled as a “member” unless they sent a letter to the union asking to be excluded.

What benefits do these squeegee men confer on me?  The pay I get for teaching one class is trivial so whether it rises or falls makes little difference to me.  I have other motives for teaching.  The benefits were pretty good, but having voluntarily cut back to one class, I no longer get benefits.  I see no return at all from the money that the union extracts from me.

A couple of years ago there was talk of a strike.  I had fond hopes that it would come to pass because I have long wished for an opportunity to cross a picket line.  That would have been great fun.  Alas, it’s unlikely, as budget woes have taken the steam out of such threats.

But wait, wasn’t the union legitimized by a vote of the faculty?  Yes, a vote was taken a few years before I got there.  In no way does that excuse the theft of my money.  It does exemplify the basic social malady of our time, which is social democracy – the idea that voting can legitimize acts that trample minority rights.

Unions have been taking it on the chin lately.  Most recently the Michigan legislature passed, and the governor signed, a “right to work law.”  Such laws, now on the books of some 24 states, make payment of union dues of any kind optional. The primary argument against these laws is that they enable “free riders,” non-payers who supposedly benefit from union activities, like motorists who drive off without paying the squeegee men.  This problem could be solved by excluding non-payers from union-negotiated settlements.

While it’s great fun to watch the unions getting pummeled, I must add a note of opposition to right-to-work laws.  If employers want to make union membership a condition of employment, and are able to find good workers willing to accept that condition, the law should not prohibit such arrangements.  The proper place of the law in labor relations is the prevention and punishment of criminal acts, principally violence and intimidation, and nothing more.  Any union that conducts its business in a peaceful manner – without threats against either employers or holdout workers – should not be molested.