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How can we have fire protection and other services without taxes?

in Ask Dr. Ruwart, Economic Liberty, Liberator Online, Taxes by Mary Ruwart Comments are off

How can we have fire protection and other services without taxes?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Question:

If there were no taxes, how would we pay for hospitals, military defense and rescue workers? It would stink if a privatized fire fighter let your house burn because you didn’t pay for them. And what if a small town had only one station, and it begins over-pricing because they’re the only one in town?

taxes

Answer:

Actually, many small towns today, including my own, utilize private fire fighters who are primarily volunteers.  Each year, a community-support organization collects donations from bake sales, garage sales, barbeques and other fund-raising events to pay for their equipment. Almost everyone contributes as a customer, donor, volunteer, or organizer. Smaller communities would probably continue to utilize such strategies in a libertarian society.

In larger communities, homeowners could subscribe to one of multiple fire-fighting services.  Mortgage companies and insurers would likely require such a subscription as part of their contract, as many do today. Thus, most people would carry such subscriptions, which would probably be about half of what we pay in taxes today.

Someone without a subscription could still call a fire-fighting service and get immediate service; they would simply pay more than a person with a subscription. In some cases, a service might put out a fire gratis simply as good-will advertising to other neighbors, who might decide to switch their subscription to a group they’ve seen in action.

You can find more examples of how fire protection and other important services would be paid for in a libertarian society in my short articles here and here.

I go into more detail in my book “Healing Our World,” available from the Advocates [latest 2003 edition] or as a free download [older 1992 edition] at my website.

Afghan Soldier Uniforms That Didn’t Match The Terrain Cost Taxpayers $28 Million

in Liberator Online, Military, News You Can Use, Taxes by Alice Salles Comments are off

Afghan Soldier Uniforms That Didn’t Match The Terrain Cost Taxpayers $28 Million

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Recently, Defense Secretary James Mattis was in the news for complaining about the Pentagon’s offhand spending habits.

While this may sound somewhat contradictory thanks to Mattis’ earlier claims indicating he would, indeed, love if defense had access to even more taxpayer money, his complaint brought light to yet another issue we often see happening with government.

uniforms

According to a recent Special Inspector General for Afghanistan Reconstruction (SIGAR) report, the agency spent $28 million on camouflage uniforms for Afghan soldiers that, unfortunately, do not work well with Afghanistan’s terrain. This means that, the $28 million that was used to purchase forest-patterned uniforms should have never been spent this way.

The decision to purchase these uniforms was made after a former Afghan defense minister saw the model online and “liked” them. However, only two percent of the country’s terrain is woodland.

And who picked up the bill? The U.S. taxpayer.

In his response to the Department after this discovery was made, Mattis criticized officials who allowed this “cavalier” expenditure to take place, adding that this decision wasted taxpayer dollars “in an ineffective and wasteful manner.”

Claiming that this careless spending is an indicator of an “attitude that can affect any of us at the Pentagon or across the Department of Defense,” Mattis rightly pointed out that this makes the department lose focus on what matters.

But what Mattis may have missed is that government waste exists and is part of how government operates. It’s a feature, not a bug.

The Defense Department isn’t more or less likely to be wasteful than the Education Department or the Health and Human Services department. What makes any — and all — government agencies prone to waste is the very fact that these organizations aren’t worried about how they spend this money.

When you spend other people’s money, you’re more likely to abuse it. After all, only you know how better spend your own money.

But that’s not all.

Agencies often make huge mistakes when judging policies or particular approaches simply because they do not have the knowledge necessary to know what will work. Real-world consequences are often ignored because bureaucrats and officials make all the decisions, often basing their assessment on faulty or incomplete information.

Because knowledge is dispersed and difficult to access, governments are naturally incapable of acting with all variables in mind. As a result, they cannot ensure that the service in question will meet the demand.

Whether it’s Afghanistan, Iraq, or Syria, government officials have repeatedly claimed to have the answer, leading the country into military campaigns that not only backfired but that will also cost several generations of Americans.

While Mattis is right to be worried, it would serve him and others in similar positions to remember that there’s little one can do to put an end to waste within the government that doesn’t involve stripping government from free, easy, and endless sources of revenue.

How can we solve America’s economic woes?

in Ask Dr. Ruwart, Economic Liberty, Economics, Liberator Online, Social Security by Mary Ruwart Comments are off

How can we solve America’s economic woes?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Question:

How can you balance the budget, pay off the debt, and slash spending without doing away with entitlements, like Social Security and Medicare, that people have paid into for decades?

economic

Answer:

We can only balance the budget by privatizing entitlements like Social Security and Medicare and ending foreign wars. The ONLY way we can keep the promises made to our seniors without massive inflation is to increase our rate of wealth creation. One way to do that is by deregulating business. Each regulator destroys about 150 private sector jobs each year, so each one fired is true economic stimulus.

Another way to increase wealth creation is to cut the tax rate and end tariffs and other barriers to importation. This drives domestic capital into efficient businesses, stimulating the economy further. Even at lower tax rates, a robust economy means more tax dollars collected to offset the entitlement programs, which should be privatized ASAP so that young people aren’t forced into these Ponzi schemes.

Arizona Bill Could Be A Win For Sound Money

in Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

Arizona Bill Could Be A Win For Sound Money

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

A bill being considered by the Arizona legislature could be the park of a sound money revolution. Much like the marijuana legalization movement ignited by anti-drug war advocates across the states, this new movement could help strike the root of all of our economic woes.

MoneyAccording to the Tenth Amendment Center, House Bill 2014 would initiate the sound money revolution by eliminating state capital gains taxes on gold and silver specie. Thus encouraging individuals to use the metals as currency. The bill, which passed the House on the 13th, will need a final approval from the Senate. And if approved, the legislation would then initiate a movement that could help put an end to the Federal Reserve’s monopoly on money.

By removing the burden of applying state capital gains taxes on income “derived from the exchange of one kind of legal tender for another kind of legal tender” and redefining legal tender as ““a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues,” coins having precious metal content could become, once again, a legal form of currency.

By passing this bill, the Arizona legislature would be allowing silver and gold specie to be treated as money, essentially “legalizing the constitution.”

Currently, Arizona law requires individuals to pay capital gains taxes whenever they use gold and silver in transactions or any time they want to exchange the metal for Federal Reserve notes. Due to inflation, the purchasing power of fiat money decreases, which then causes the metal’s nominal value to rise. Thus the “gain” taxes. Even if they are fictional. The result is obviously unfair because it penalizes those using gold and silver as money.

By passing HB 2014, Arizonans would not have to add the amount of any net capital gain tied to the exchange of different kinds of legal tender, freeing the consumer from being subject to state taxes.

This could open up currency competition in Arizona, causing other states to perhaps do the same once they realize competition will help to bring the government monopoly over the currency down.

To advocates of states’ rights like Tenth Amendment founder Michael Boldin, this piece of legislation in Arizona is a great first step to “end the fed’s monetary monopoly,” even if it won’t put an end to it overnight. By giving the individual Arizona resident his freedom to trade freely, he will be securing the purchasing power of his money as a result.

As CA Moves to Legalize Recreational Weed, Startups Work Hard to Meet the Demand

in Drugs, Liberator Online, News You Can Use, Personal Liberty by Alice Salles Comments are off

As CA Moves to Legalize Recreational Weed, Startups Work Hard to Meet the Demand

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

California could soon be legalizing marijuana for recreational use.

If Proposition 64 passes this November, recreational marijuana would be legal in the Golden State for individuals aged 21 or older. Taxes would be established and then used to back government-run drug law enforcement, research, and what the architects of Prop 64 call “environmental restoration, cleanup, and enforcement efforts” resulting from illegal marijuana production.

PotWhile the initiative allows the state to profit from legalization, helping to boost the militaristic approach to the war on drugs locally, the law could benefit individual users and business owners who commercialize weed. And that’s what the startup community living in the heart of the American tech revolution is celebrating.

According to some reports, Silicon Valley’s class of pot entrepreneurs can’t wait until the votes have been all counted. Instead of sitting and waiting to see how things play out, they are already putting a “signature Valley spin on the age-old practice of selling marijuana,” using what they have learned from the social media explosion in order to prepare the market for consumers dying to use their smartphones to order some ounces of girl scout cookies, Bruce Banner, or perhaps sour diesel.

But they are not stopping there. They are also eager to develop software for growers and dispensaries, helping to “blow open the doors to innovation on the technology side of the cannabis industry,” says Chris Walsh, editorial director of Denver-based Marijuana Business Daily.

While this enthusiasm shows the importance of allowing markets to let consumers make all decisions, it is also a risky business, considering marijuana is still illegal under federal law.

During the upcoming months and even years, many states will be joining the list of states legalizing marijuana, but federal regulators will, most likely, be the last ones to embrace the trend.

Estimates suggest that by 2020, marijuana sales in America will exceed $22 billion. While there’s a huge opportunity for entrepreneurs to join the industry, barriers lifted by the very laws removing the criminal element and regulating the sale and use of weed may make it difficult for those who aren’t already established or well-connected to succeed.

To those who are already in the business or getting ready to cash in, there’s still an issue with the financial aspect of the marijuana industry, considering the fact that most investment firms will steer away from marijuana entrepreneurs due to federal pressure. But companies like Snoop Dogg’s Casa Verde Capital have already thought of that, offering startups the means to get going with their ideas without having to worry about convincing powerful, well-connected men in suits their business plan will work despite all odds.

As more states join the legalization movement, opportunities will be made available. It’s up to those willing to take the risk of going against the feds to embrace them.

Should we privatize the police for public safety?

in Ask Dr. Ruwart, Criminal Justice, Liberator Online, Libertarian Answers on Issues, Libertarianism, Personal Liberty by Mary Ruwart Comments are off

Should we privatize the police for public safety?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

QUESTIONS: How would poor individuals/communities afford police protection in a libertarian society? If rich/white communities’ private police kill poor/minority individuals who pass through the rich/white communities’ streets, what recourse do the dead individuals have?

PoliceANSWERS: Today, much of the police budget comes from traffic fines or property taxes.  The poor pay these property taxes through their rent.   If the police force was a private one, the poor would have lower rents and thus more money in their pocket with which to pay their police fees.  If they didn’t like the service they were getting, they could simply end their subscription.

For the poor, the option of not paying is much more important than it is to those who are better off.  When crimes are committed today, the wealthier victims will often get preferential care.  If the minority victims are ignored, which is often the case, they have little recourse.   Being a paying customer gives them clout in a privatized system; they simply take their money and go elsewhere or provide their own protection in the form of a firearm or a guard dog. Today, they pay whether they get service or not, so they can’t readily afford other options.

The myth in our society is that the poor don’t pay for police protection and other government services.  In fact, they often pay more and get much less.

Private police do not have the immunity from prosecution that our public police illegitimately enjoy.  If they killed minority individuals without just cause, they could be tried for murder, just as an individual citizen would.  The families of the victims would likely demand such prosecution.

A private police service wouldn’t be very attractive to customers, even the rich/white ones, if minorities were unjustly killed.  All but a few would likely withdraw their subscriptions.  Who wants a police force in their neighborhood that shoots people for the most trivial of reasons?  No one wants their children to grow up in such a neighborhood. To most people, regardless of their color or socio-economic class, all lives matter.

Since most businesses operate on a small profit margin (10% or so), losing even a few customers means a big dent in the bottom line.  Private police want their paycheck too and are motivated to truly serve and protect when we each have the choice whether or not to employ them.

Airbnb to Collect Taxes from Los Angeles Users

in Economic Liberty, Liberator Online, News You Can Use, Personal Liberty, Property Rights, Taxes by Alice Salles Comments are off

Airbnb to Collect Taxes from Los Angeles Users

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Airbnb, the short-term rental app, has recently agreed to go along with officials in Los Angeles by requiring users to collect hotel taxes from their clients. The three-year agreement was signed early this week. And according to LA city officials, money collected by Airbnb in Los Angeles would bring $5.8 million in annual revenue.

ProtestThe agreement follows the city’s efforts to regulate Airbnb and similar companies locally.

As City Council members discussed what to do with Airbnb in the past few months, the company lobbied its users to stand up against suffocating regulations in a series of emails sent out regularly.

In one of these emails, Airbnb explained that the LA City Planning Commission was considering putting a 90 day cap on the number of nights Airbnb hosts can list their space, a rule Airbnb called “restrictive and arbitrary.” City officials were also considering limiting the number of listings hosts can have, which could affect users who have more than one room to rent, and instituting a registration procedure that would render the process of hosting through Airbnb difficult and expensive.

Another rule LA city officials had considered would also force Airbnb to turn over users’ personal information to the authorities, giving them information on how many nights a host books through the site and how much money renters make. Airbnb warned its users that the city did not detail how this information could be used.

Accusing property owners of evicting tenants to turn their properties into “commercial hotel and motel businesses,” Councilman Mike Bonin was one of the first in Los Angeles to propose Airbnb regulations. But while it is true, many users have, in fact, evicted their tenants in order to list their properties on Airbnb, that alone is not an excuse to regulate Airbnb out of existence. After all, the system works because it’s still affordable.

To tourists looking for an affordable accommodation option, the extra financial burden tied to the hotel tax could mean that renting through Airbnb might not be that affordable after all. To those who use the service as renters to make ends meet, being part of Airbnb may not be as appealing if rates are high because of the new rules.

In an article for US News, Mercatus Center’s Matthew Mitchell urges regulators to “deregulate traditional industries” if their goal is to help all industries and local businesses thrive. Instead of regulating the sharing economy and stifling competition, deregulation could also make it easier for visitors to stay and spend money locally.

Airbnb’s decision to go along with Los Angeles city officials may represent the company’s willingness to compromise, but a real solution to this dilemma will only be produced when lawmakers are honest about their goals.

After all, regulation will always makes things difficult for the consumer and the businessman, no matter how you slice it.

Pennsylvania School Bus Waste Story Nothing New

in Economic Liberty, Education, Liberator Online, News You Can Use, Personal Liberty, Taxes by Advocates HQ Comments are off

Pennsylvania School Bus Waste Story Nothing New

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Another day, another story of government waste.

School BusEach year, Watchdog.org reports, Pennsylvania school districts spend over $54 million of taxpayer money on transportation services provided by contractors who do not have to compete for exclusive contracts with the state and local education agencies. Due to the state’s lack of rules regarding competitive bids, many are calling for an audit and a change of rules.

But would opening up the districts to a competitive bidding process alone do the trick?

According to late free market economist Milton Friedman, there are at least 4 ways money can be spent. “You can spend your own money” on things and services you consider important to yourself, trying to “get the most for your money.” You may also spend your money on somebody else, forcing yourself to look for something that will be meaningful or useful to the recipient while remaining mindful “about the cost.” Or you can either spend somebody else’s money on yourself or others.

According to Friedman, when you spend money earned by somebody else on other people, you’re not “concerned about how much it is,” and that, he concluded, is what government does.

While the waste promoted by Pennsylvania school districts is nothing unheard of, media outlets seldom discuss the lack of incentives in keeping a budget among government officials, whether they are local, state, or federal employees.

If bureaucrats are not concerned about the source of resources, they won’t be concerned with how much they spend. Opening the state’s districts to a competitive process might be of help, but it still won’t solve the government’s money spending problem.

In an article for the Mises Institute, Ryan McMaken makes the case that government is never able to allocate tax money efficiently.

He justifies his argument by claiming that once money is taken from an owner through taxation, the coercive nature of the transaction keeps those allocating it from learning just how valuable roads, law enforcement, and even public education truly are to those paying for them. He also argues that, when government spending is not limited by tax revenues alone, government officials have an endless source of revenue, either in the form of cheap money coming from a central bank or a federal government grant. And that alone is enough incentive to keep government employees from acting responsibly.

Without a free and unrestricted market in business transactions between service providers and consumers, transactions are imposed by the government, not sought after by the individual. Therefore, government cannot assess just how much those services are worth if they do not have a way to gauge demand.

If lawmakers and officials want what’s best for Pennsylvania’s children and their taxpaying parents, the only way to give them what they need—and want—is to remove perverse incentives from the equation, allowing parents to act on their ability to choose what’s best, and most valuable, to their children.

City Uses Pot Taxes to Help the Homeless

in Business and Economy, Drugs, Economic Liberty, Liberator Online, Personal Liberty, Taxes by Advocates HQ Comments are off

City Uses Pot Taxes to Help the Homeless

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Drug legalization continues to be an important topic. And as local governments look to marijuana taxes as a reliable way to boost their revenue, more Americans now see a greater number of practical reasons to lobby their states to liberate access to cannabis and other prohibited substances.

HomelessIn Colorado, where sales and consumption of recreational marijuana is legal, legalization of pot helped to boost the economy, injecting about $2 million into the local economy during the first month of legalization alone. Over time, the flood of cash coming from pot sales also helped the state’s education system. Now, the Colorado city of Aurora is also putting the legal cannabis money to what many believe to be a top priority project.

According to the Huffington Post, Aurora has recently announced that it will be allocating $1.5 million in recreational marijuana tax revenue for programs that focus on the city’s homeless population.

Due to this program, a local nonprofit group known as the Colfax Community Network should receive $200,000 from this special fund, while other organizations will be provided with vans to be used for homeless outreach. All paid by taxes tied to marijuana sales.

Toward the end of the year, the city of Aurora is projected to raise $5.4 million in marijuana tax revenue, a figure that could prompt legislators across the country to take the idea of the legalization of recreational marijuana seriously.

But what about other recreational drugs?

In March of 2016, a group of 22 top medical experts called for the decriminalization of all nonviolent drug use and possession. According to the group of doctors brought together by Johns Hopkins University and The Lancet, the global war on drugs was and still is a failure. Instead of maintaining these failed policies in place, these experts urged countries to “move gradually toward regulated drug markets and apply the scientific method to their assessment.”

Mentioning torture, abuse, and a dramatic downward change in life expectancy in Mexico since the country’s government decided to militarize its response to the drug trade in 2006, these doctors also cited use of incarceration as a drug control measure, which has destroyed the lives of many nonviolent drug users. Resorting to incarceration as opposed to treatment, these experts concluded, is the “biggest contribution” to the HIV and Hepatitis C epidemics among drug users.

When discussing domestic policy, the same group also concluded that prohibitionist laws in the United States have contributed to “stark racial disparities” when it comes to drug law enforcement.

While the debate surrounding drug use and commerce may naturally lead to a taxation debate, current laws keeping consumers from having access to their drug of choice continue to hurt more than help. Especially in poor areas of the country.

As libertarians all know, the free trade of goods and services is all consumers need to have access to so they may prosper and self-regulate, but if the pot taxation argument helps us bring more drug warriors to our side, we shouldn’t be ashamed of using it.

The damage done by the drug war calls for a drastic change.

How will ending the income tax help the poor?

in Ask Dr. Ruwart, Economic Liberty, Liberator Online, Taxes by Mary Ruwart Comments are off

How will ending the income tax help the poor?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Question:

I was unable to persuade a liberal friend that the income tax is evil because it is essentially forced labor through coercion, or that we could largely pay for the elimination of the income tax simply by halting our overseas empire (it seemed best to use a liberal priority in this instance). He maintained that eliminating the income tax would benefit only the wealthy. Could you help me show that eliminating the income tax is in everyone’s best interest?

TaxesAnswer:

Ultimately, the poor are hurt most by income taxes and government spending of any kind.

When government spends, it must tax or run a deficit. Both harm the poor. Deficit spending results in inflation. People on a fixed income, low income, or no income at all are hurt most by inflation. The little money that they have buys even less than before.

When government taxes middle or upper income individuals, money is diverted from consumer spending, spending which otherwise would create jobs that might lift some of the poor out of poverty.

Instead, the tax dollars go to government spending, which delivers half the service at twice the price of the private sector. Gross domestic product (GDP), a measure of wealth creation, goes down as government spending goes up (for details, see Chapter 12 of my book, “Healing Our World,” available as a free download [1992 edition] at www.ruwart.com or [greatly expanded and footnoted 2003 edition] for purchase from The Advocates).

Less wealth creation means that goods and services are more expensive than they otherwise would be. The poor are hurt the most when prices rise or do not fall as they otherwise would.

Thus, when government spends, GDP falls and inflation grows, middle and high income individuals cut back on discretionary spending, like vacations; the poor, however, must cut back on necessities, such as food, safe housing, and preventative medicine.

On the other hand, when government spending slows, inflation slows too and jobs increase. Some of the poor move into the workforce and become more affluent.

Income taxes are bad for everyone, but the poor are hurt the most. The hidden negatives are often overlooked, and those who are trying to help the poor often hurt them out of ignorance.

LA County Wants to Spend $425 Million Just to Connect Bike Paths (Not Build Them)

in Economic Liberty, Liberator Online, News You Can Use, Taxes by Alice Salles Comments are off

LA County Wants to Spend $425 Million Just to Connect Bike Paths (Not Build Them)

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

In November, Los Angeles County residents will be asked to vote on a new half-cent sales tax increase that would add $120 billion to the county’s public transit fund. The hike would extend the current sales tax for 18 years and raise its rate for four decades. Just the type of tax hike Californians do not need right now.

bikepathlaWhile the proposal was met with enthusiasm by the LA River Revitalization Corporation, a group that hopes to see an “unbroken 51-mile river spine, giving Los Angeles a ‘linear central park,’” the idea of using $425 million of that money to simply connect existing bicycle paths and provide access to the river—which is often mocked over the absence of water—is somewhat hard to process, even for some of the most pro-big government members of California’s media.

While the goal of the proposal is to use the $120 billion to double LA’s existing rail network, LA Weekly focused on the proposal’s goal of linking the bike paths and questioned county officials, asking whether these bike paths would “be paved with gold,” “[l]ined with tuxedo-wearing attendants serving riders hot cocoa,” or perhaps “speakers carefully hidden behind the shrubbery” will be made to play soft jazz throughout the day and that’s why the plan is so expensive.

In an official statement, Metro spokeswoman Pauletta Tonilas responded to the concerns claiming that since the LA river is “constrained by urban development,” and its roads, freeways, and rail provide a great deal of over-crossings, “bike path requires heavy civil construction.”

According to Tonilas, a complete “LA River Bike Path” will function “as the backbone of biking and walking infrastructure for densest parts of” the county.

Even bicycle activists like Joe Linton, who serves as the editor of StreetsblogLA, believe that the county is spending too much on the project. After all, LA Weekly reports, the goal is to “connect the existing paths,” not build new ones.

According to research from 2013, bike paths cost an average $133,000 per mile. The most costly paths can cost about $537,000 per mile. With those figures in mind, LA Weekly claims that the construction of an entirely new, 51-mile bike path should cost Angelenos anything between $7 million and $27 million. So why is the proposal’s estimated cost so high?

While the answer to that question may not be that easy to answer, this is not the first time we hear about bike path proposals carrying hefty price tags. In 2012, New York Governor Andrew Cuomo planned to spend $400 million on a 3-mile bike lane that would have realistically cost about $40 million.

At the federal level, the US government is often targeted by its own watchdog agency, the Government Accountability Office, for wasting billions in improper payments. In 2008 alone, GAO reports, the federal government wasted $72 billion on improper payments. While this particular report is associated with a series of agencies and doesn’t touch on transportation expenditure, it’s a great example of how easy it is for governments to misuse taxpayer money.

In an article for Heritage Foundation, Brian M. Riedl provides us with 50 examples of government waste. And while bike paths haven’t made the list then, it would be incredible to see the overblown expenses tied to the LA County’s bike bath plan getting audited. But first, Angelenos must agree with the proposal in the November ballot.

Why aren’t free markets dominating in countries with weak or failed governments?

in Ask Dr. Ruwart, Economic Liberty, Economics, Liberator Online by Mary Ruwart Comments are off

Why aren’t free markets dominating in countries with weak or failed governments?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Question: If a free market with no government oversight and protections for the People is a successful model, then how come countries with failed/weak governments are not mopping up all the worlds’ business?

Free Market

Short Answer: If by “failed/weak” governments you are referring to the Third World, some “mopping up” is indeed occurring. Since governments that exploit their people the most usually have the lowest wages, U.S. and European manufacturers are utilizing the “cheap labor” there. If by “failed/weak” governments you mean something else, please give me more detail and I’ll try to answer you.

By the way, a free market is not one without “protections for the People.” Truly free markets usually require those who defraud or harm others to compensate their victims; this usually keeps them more honest than government oversight does. Indeed, the penalties for violating government regulations usually do little or nothing to restore victims and may even cost them more. For example, those polluting river water were usually successfully sued by those downstream for damages in both Great Britain and the western territories of the U.S. before they became states). Once the U.S. government took over the waterways, however, downstream landowners rarely got compensation, even from the fines imposed by government. They not only had to put up with the pollution, they had to pay taxes for the government oversight.

Makes you wonder who is being protected from whom, doesn’t it?

White House Sacks the Treasury in the Name of Corporate Welfare

in Economic Liberty, Healthcare, Liberator Online, News You Can Use, Taxes by Alice Salles Comments are off

White House Sacks the Treasury in the Name of Corporate Welfare

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Friday, one day before the President’s day holiday weekend, the Barack Obama Administration announced that $7.7 billion of taxpayer dollars would be allocated to Affordable Care Act insurers through the law’s reinsurance program.

From the Americans for Tax Reform website:

“For 2015 Obamacare reinsurance, the administration will pay out $6 billion raised from a fee on private health insurance and an additional $1.7 billion that under federal law belongs to the Treasury department.”

Seal According to pro-taxpayer organization, at least $1.7 billion of the $7.7 being used to cover insurers is being funneled illegally.

Doug Badger of the Galen Institute explains that ACA’s reinsurance program works by silently taxing every individual in America with health insurance. In 2015 and 2016, each individual with insurance is being allegedly taxed a total of $107. According to Badger, the program is designed to “prop up insurers that have agreed to sell Obamacare policies in the individual market.”

While the administration continues to claim that ACA is working, insurers that participate are losing money. But since the reinsurance program exists to cover the losses of the insurers, the administration seems to think keeping corporations happy with the deal is more important than following the law.

With the failure of the system, and with a growing number of consumers referring to alternative methods to have access to care, the administration is having to get creative.

According to the New York Post, not one dollar out of the $7.7 billion being promised to insurers should be taken from the Treasury under ACA law.

From the New York Post:

“The law states a fixed share ‘shall be deposited into the general fund of the Treasury of the United States and may not be used’ to offset insurance companies’ losses.

But the administration gave all of it to the insurance companies last year, and got away with that heist. So now they’re trying it again.”

While the administration projected it would be raising $12 billion for the ACA reinsurance program in 2014, it was $2 billion short. In order to handle the situation, the administration decided to keep the money from the Treasury, using it instead to hand it over to the participating companies.

The administration isn’t a stranger to this type of move. According to the House Energy and Commerce Committee, at least $8.5 billion in taxpayer money has already been illegally funneled to ACA’s corporate welfare programs.

Another initiative designed to shield insurers enshrined in ACA also seeks to secure the investment of insurers. The initiative is known as the Risk Corridor program, and it has also been tied to scandals in the past.

In 2014, insurers requested $2.87 billion in “risk corridors” payments, but the administration only offered 12.6 percent of that value.

The risk corridor program works by redistributing funds from insurers that make money with the Obamacare exchange to insurers that don’t. Not knowing how sick their customers were going to be due to the new healthcare law and its mandates, insurers were not being able to set premiums realistically, making it hard for companies to turn a profit.

Despite falling short on the risk corridor payments, the administration decided to bail out insurers that weren’t making money off the exchanges last year. ACA chief Andy Slavitt, who’s also the former Vice-President for United Health, made the announcement in December of 2015, saying the federal government was going to bail out insurers and offer them the amount they had previously asked. Later, however, Congress blocked the $2.5 billion “risk corridor” payment. The effort was championed by several conservative and libertarian organizations that came together to urge Congress to act.

If nothing is done this time around, taxpayers will have to foot the bill and cover the $7.7 billion the administration has vowed

New Jersey’s Takeover of Camden Proves Freedom is Better Than Taxpayer-Backed Revitalization Projects

in Economic Liberty, Liberator Online, News You Can Use, Personal Liberty, Taxes by Alice Salles Comments are off

New Jersey’s Takeover of Camden Proves Freedom is Better Than Taxpayer-Backed Revitalization Projects

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Governor Chris Christie has recently announced that the state will take control of Atlantic City’s finances. As the city’s huge debt looms over its residents and the state vows to take over, critics and experts take a closer look at a previous major takeover of the city of Camden. And since many argue that state intervention ended up failing some of Camden’s most vulnerable residents, the promise of a better Atlantic City after intervention seems somewhat unrealistic.

In 2002, the state of New Jersey poured millions of taxpayer dollars into one of the largest takeover projects in US history. At least one law school, an aquarium, and a hospital were updated. But despite the taxpayer-backed incentives, the lives of residents did not improve. Instead, poverty and crime rates in the city remain high.

Camden

Despite the interventionist failures since 2002, the state announced in 2013 that it had decided to take over the education in Camden. As you will see, the results were equally disappointing.

According to a report from 2009, the initial revitalization campaign in the city counted with $175 million in bonds and loans and a one-time $7.5 million appropriation from the state budget. Shortly after, the then-Governor Jim McGreevey appointed a chief operating officer to take over the local government and the school board. The plan was to create jobs, bring in new businesses, fix the schools and the sewers, and demolish unsafe vacant businesses.

But as the takeover came to an end in 2010, Camden remained one of the most dangerous cities in New Jersey. And despite the state’s repeating efforts to reform the education system in the city, Camden school districts remain problematic.

The New Jersey government has been responsible for running the Paterson, Newark, and Jersey City school districts for more than 20 years. In 2013, it took over Camden’s as well. During the first years under state control, Camden failed to meet performance requirements in at least five areas.

While Paterson, Newark, and Jersey City report that their graduation rates had improved, local educational leaders claim that the improvement is due to the work members of the community have been doing in partnership with educational groups.

According to Paterson Education Fund’s executive director Rosie Grant, the state takeover meant little to the community.

“The gains that we have made,” she told The Record, “have been for the most part despite the state takeover.” Instead, Grant believes that the city’s decision to break the region’s largest high schools to form smaller academies is what made Paterson great.

But not all is lost in Camden.

When it comes to education, the real revolution arrived in the form of school choice.

According to a 2015 video by Jim Epstein, school choice gave local families in Camden the ability to choose. Instead of relying solely on state-run schools that continue to fail Camden’s children to this day, the implementation of charter schools has given residents the opportunity to enroll their children in institutions where children actually learn, despite their economic background.

If the state’s intervention in Camden has anything to teach other cities across the country is that pouring taxpayer money into an issue won’t make it better. Boosting choice—and freedom—on the other hand, usually works.

If the current administration is serious about saving Atlantic City, it will avoid pouring money into the problems the city is facing. Opening its doors for businesses and competition, however, may just do the trick.

Increasing Costs Tied to Obamacare Make Healthcare Ministries More Appealing Than Insurance Providers

in Economic Liberty, Healthcare, Liberator Online, News You Can Use by Alice Salles Comments are off

Increasing Costs Tied to Obamacare Make Healthcare Ministries More Appealing Than Insurance Providers

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

As the country is distracted by the presidential election, issues that aren’t getting as much air time as Donald Trump or Hillary Clinton become a side show.

With reports concerning the ineffectiveness of the Affordable Care Act, or Obamacare, hitting the news but being ignored by major news channels, crusaders take it to the Internet to discredit Obamacare critics. As new reports argue that Americans are fed up, smaller publications seek to downplay some of the fears brought up by conservatives and libertarians all along. When faced with evidence that shows ACA is making healthcare less affordable, will these pro-Obamacare crusaders back down?

Health Care

Exactly two days before Christmas, the New York Magazine ran an article tailored to take conservative-leaning Americans to task. The subject? One of the left’s most adored achievements (and one of the right’s biggest, and most disputed, creations): Obamacare.

According to Jonathan Chait, the author, the NY Mag piece was conceived in order to debunk arguments presented by Ross Douthat, who wrote a column on Obamacare for New York Times earlier that same week.

While the piece discusses the number of covered Americans before and after the enactment of Obamacare and other points made by Douthat, it’s when Chait focuses on the cost of healthcare before and after the enactment of ACA that things get interesting.

In the NY Mag piece, Chait introduces a seemingly detailed blueprint of how ACA has bent the overall healthcare cost to the average consumer. Yet he ignores actual evidence proving that no, Obamacare hasn’t helped to keep the cost of healthcare low. As a matter of fact, the constant meddling with the insurance business and the healthcare industry in the past has done nothing but to increase the overall cost of health care. Now, those who lost their previous plans and who are unable to sign up for insurance after Obamacare went into full force are being cornered. As a result, they are choosing to pay the IRS fee instead of getting coverage.

Even those who supported President Barack Obama’s signature law are getting desperate.

But as a number of consumers lose their hope, a report recently published by the Wall Street Journal shows that things might have just gotten worse.

According to the WSJ, the cost of health insurance is such a heavy burden for those who lost their insurance plans after ACA became the law of the land that many consumers are now turning to healthcare ministries to cover their medical expenses.

That’s right. Health insurance costs are so out of control that consumers are turning to ministries, which operate outside the insurance system, in order to get access to the health care they need.

Instead of functioning as an insurance provider, these ministries provide health care cost-sharing arrangements to those who share the same religious beliefs.

Ministries now count with about 500,000 members nationwide thanks to ACA. Previous to the law, there were about 200,000 members enrolled in the system. But things could get crowded soon, making it hard for ministries to take in more members.

While ACA gives these ministries an exception to the law, only groups that have operated continuously since at least December 31, 1999 are eligible. Without the possibility of expanding the number of participating ministries, helping those in need could become too heavy of a burden.

When the exception was added to the law, it hoped to satisfy a relatively small number of groups that argued that nonparticipation was a matter of religious freedom. Now, ministries are being sought after as a matter of survival. And as ministries become crowded, insurance commissioners begin to complain, claiming these groups operating outside ACA are hurting consumers.

But with ministries costing about 30 percent less than private insurance, consumers who choose the more affordable path can’t be blamed for taking the easier way out.

Claiming to have the consumer’s best interest at heart, insurance commissioners from Kentucky, Washington, and Oklahoma have, in the past, decided to take action against ministries in their states. Thankfully, legislatures blocked the efforts. But as the cost of care continues to grow and the number of uninsured only shrinks because of the threat associated with non-compliance, other states may attempt to put an end to faith-based healthcare providers again, hurting thousands of consumers if they succeed.

In light of this report, will NY Mag’s Chait finally agree that Obamacare is making healthcare less affordable? Probably not. Nevertheless, ministries may have to fight yet another battle to stay open if membership growth remains steady.

What’s Your Solution?

in From Me To You, Liberator Online by Brett Bittner Comments are off

What’s Your Solution?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

As libertarians, it’s pretty easy to point out the flaws and holes in solutions pitched to address the issues we face. It’s also very easy to just say no to everything, because the answer doesn’t pass muster with a libertarian worldview.

The hard part, yet the one that helps you be taken seriously as a part of the conversation, is to have your solution, a libertarian solution, ready to share when you oppose the option(s) presented.

solutionIn my experience, we are quick to oppose a politician’s proposal because it increases spending and/or taxes. Or we see that it isn’t authorized by the Constitution. Or we have examined the likely outcomes, and find fault with those outcomes.

Even in cases of strict opposition, like a new tax, build a case to present about why the proposal is bad and offer a libertarian solution to reduce or eliminate the perceived need for increased spending.

When I worked against the continuation of a sales tax, our “Ax the Tax!” campaign focused on the wasteful spending that accompanied the tax.

We pointed out:

  • that additional spending on new capital projects increased the liability for future budgets for operations and maintenance of those projects, likely leading to future tax increases.
  • the projects were wasteful and unnecessary, designed to get the support of small constituencies to support the “whole pie” in order to get their “piece.”
  • several projects duplicated and directly competed with existing private sector businesses or replaced something that failed in the eyes of the market.
  • the regular budgeting process planned for the tax’s continuation to make the spending appear necessary. In this case, road “improvements” (paving and intersection changes) were 98% dependent on the continuation of the sales tax.

We were also involved early in the process, showing up to events and meetings to discuss why the ideas proposed were not acceptable. By being involved early, we won a small victory by reducing the size (and cost) of the proposed project list by a third before it was even presented to voters for the referendum. By showing these faults and offering that there were ways to address them all without the tax, we nearly defeated it, despite being outspent 100:1.

We built a coalition of like-minded and some unlikely allies, and our unified messaging that addressed our solutions received MULTIPLE positive news stories about our opposition to spending $600 million in taxpayer money.

Regardless of why you oppose a proposal, no ready solution negates your inclusion in the conversation, which limits your exposure outside your immediate allies. Those allies already have your support, so you end up “preaching to the choir” rather than getting more people on your side.

Libertarians cannot always be a force of opposition. Inclusion in the discussion gives us a way to share a libertarian solution and offer some common sense guidance to the outcome.

Do Libertarian Ideas Go Too Far?

in Ask Dr. Ruwart, Communicating Liberty, Economic Liberty, Liberator Online, Libertarianism, Taxes by Mary Ruwart Comments are off

Do Libertarian Ideas Go Too Far?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Question:

Ron SwansonI am coming around to libertarian ideas, but so many libertarian policies, while moving in the right direction, seem to go way too far. For instance, the idea of no taxation, only user fees, seems great. But it seems that some taxation would be necessary to pay government workers, maintain ambassadors and embassies to other nations, host state visits from other nations, and (a necessary evil) pay lawyers to defend the government against lawsuits, as well as a host of other little things that there couldn’t be a user fee for. Can zero taxation really stand up to reason?

Answer:

Yes!

Government workers would be paid by those individuals or groups that made their employment necessary. Lawyers defending the government in lawsuits, for example, would be paid for by the guilty party. Since government officials would not enjoy sovereign immunity in a libertarian society, they could be liable for attorney fees and damages for any wrongdoing. In other answers posted on the Web site, I’ve detailed the mechanism by which restitution could be made.

Since a libertarian government would not be restricting trade between nations, establishing embargoes, setting tariffs, handing out taxpayer guaranteed loans, etc., our top officials would not be wining and dining dignitaries from other countries as they do today. Naturally, heads of state from other countries could visit the U.S. at their own expense. Without the ability to pick the U.S. taxpayer’s pocket, however, few would bother.

If embassies were maintained in foreign nations, they would be supported by fees from travelers or others who might utilize their services.

Today, those who are too poor to travel pay taxes to support services for people who can afford to see the world. Taxes are one way in which government makes the poor poorer and the rich richer.


Editor’s Note: As former Advocates President Sharon Harris notes in this article from a past edition of the Liberator Online, making the case for ending the income tax is not a difficult task. One thing to consider when discussing libertarian ideas is the concept of the Overton window, which can be raised with a little help from this post from that same issue.

 

Free the Hops: Sin Taxes Drive Up the Cost of Beer

in Economic Liberty, Liberator Online, News You Can Use, Personal Liberty, Taxes by Jackson Jones Comments are off

Free the Hops: Sin Taxes Drive Up the Cost of Beer

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Your favorite frothy adult beverage would be a little cheaper if sin taxes were not part of the equation, according to a new report from the Tax Foundation, a nonpartisan policy research center.

Each state taxes beer by the gallon, with the costs ranging from just 2 cents in Wyoming to $1.29 in Tennessee.

“State and local governments use a variety of formulas to tax beer,” Scott Drenkard writes at the Tax Foundation. “The rates can include fixed per-volume taxes; wholesale taxes that are often a percentage of a product’s wholesale price; distributor taxes (sometimes structured as license fees as a percentage of revenues); case or bottle fees (which can vary based on size of container); and additional sales taxes (note that this measure does not include general sales tax, only those in excess of the general rate).”

There is a trend to be found in the rates, as well. States in the Southeast tend to have the highest beer taxes. Seven of the top 10 states with the highest beer taxes are located in the area of the country known as the “Bible belt.” Northeastern states tend to have lower beer taxes.

Beer Tax

Beer Tax

The Beer Institute estimates that consumers pay $5.6 billion in federal and state excise taxes annually. “Surprisingly, taxes are the single most expensive ingredient in beer,” the beer centric think tank notes, “costing more than the labor and raw materials combined.”

Although the Tax Foundation report does not touch on the cost of federal and state regulation of beer, which adds to the cost of production, particular of micro-breweries and small craft beer producers.

In a June 2014 editorial at US News, Matthew Mitchell and Christopher Koopman, both research fellows at the Mercatus Center, explained that the excessive regulations, which are just another form of taxation, create burdensome barrier to entry for small brewers looking to take their product to market.

“Once in business, brewers face more hurdles. Among the least efficient regulations are the ‘franchise laws’ that restrict their ability to sell beer directly to consumers, instead mandating that they sell through distributors. These rules can even dictate how brewers may contract with distributors,” wrote Mitchell and Koopman. “For example, some grant distributors exclusive territories, and others limit the ability of a brewer to choose to work with someone else. A recent survey found that in most cases, these rules make consumers worse off.”

Beer taxes may be an easy target for lawmakers looking to raise revenue for big government programs and regulation may be a convenient way to protect big beer brewers, but these policies are keeping Americans from the frothy goodness that is their favorite brew. Raise a glass and tell your lawmakers to “free the hops!”

No One “Pays” Taxes

in Communicating Liberty, Liberator Online, One Minute Liberty Tip by Sharon Harris Comments are off

(From the One-Minute Liberty Tip section in Volume 20, No. 15 of the Liberator Online. Subscribe here!)

“You don’t ”pay’ taxes. The government TAKES them.” — comedian Chris Rock.Chris Rock

Not only is this quote funny (especially when you hear Chris Rock say it), it makes a profound point — one well worth remembering when talking about taxes and politics.

The word “pay,” in connection with taxes, is just government propaganda. Using it — saying we “pay taxes” or “paid our taxes” — hides and distorts the true nature of taxation. And that’s something libertarians shouldn’t do.

Here’s what I mean.

In common usage, the word “pay” strongly implies some kind of consensual agreement. If you’re selling apples and I want one, I pay you for it. If I don’t want the apple, I don’t have to pay. If someone else has a better deal on apples, I’m free to trade with him instead. Or I can skip apples altogether.

Similarly, if I borrow money from a loan company, I agree to pay it back with interest. If a competing company offers lower interest rates, I’m free to trade with them instead. I also of course have the option of not borrowing money at all.

Those are payments, voluntarily agreed to.

However, the word “pay” is inappropriate for a coerced exchange — like taxation.

As the great Lysander Spooner famously pointed out, if a criminal points a gun at you and demands all the money in your pocket, you aren’t “paying” the robber when you hand over your money. You didn’t “pay” — you were robbed!

If burglars enter your home at night and steal your valuables, you didn’t “pay” the burglar. He TOOK your money! You were robbed.

Libertarians view taxes as a form of coercion, no different in essence from robbery or theft. (By the way, a startlingly large number of Americans now agree with us on this. See the story “New Poll: Millions of Voters Say They’re Libertarian” above.)

So we should never use language like “pay taxes” or “paid taxes.” Saying so legitimizes taxation. It implies that taxation is just another form of legitimate exchange, like paying for goods and services you voluntarily purchased.

PickpocketInstead, when someone else uses that term, we should, if appropriate, gently disagree. And respond with something like: “Actually, I didn’t ‘pay’ taxes. No one PAYS taxes. The government just seizes money from you. There’s a big difference. Payments are voluntary. Taxes are coercive. Like… theft.”

Your wording, of course, will depend on who you’re speaking with and where. But one thing’s certain — you’ll have trouble improving on Chris Rock’s monologue:

“The messed-up thing about taxes is you don’t ‘pay’ taxes. The government TAKES them. You get your check and money is GONE! It was not an option! That ain’t a payment — that’s a JACK! I been TAX JACKED!”

Silicon Valley Innovators: Gov’t Is Biggest Barrier to U.S. Innovation

in Liberator Online by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 21 of the Liberator Online. Subscribe here!)

Innovation's biggest barrierWhat’s the worst drag on American technical innovation?

According to some of the most creative and successful people in America, it’s… government.

In a new “Silicon Valley Insiders Poll,” The Atlantic asked 50 “Silicon Valley Insiders” — described as leading “executives, innovators, and thinkers” — this question: “What’s the biggest barrier to innovation in the United States?”

The top three answers:

  1. “Government regulation/bureaucracy” — cited by 20% of respondents. 
  2. “Immigration policies” — cited by 16%.
  3. “Education” — yet another thumping government failure — cited by 14%. 

As Reason’s Nick Gillespie notes in the Daily Beast: “Given the role it plays in setting immigration policy and controlling education at all levels through a mix of money and mandates, that means government takes the gold, silver, and bronze medals at making life harder.”

(Fourth place was “Talent Shortage,” cited by 10% of respondents, which is also at least in part a consequence of the second and third government-created barriers.)

Further, it’s not just the tech sector reporting serious damage from government. A 2010 survey conducted by the National Federation of Independent Businesses asked small business owners to identify the biggest problems they face. Twenty-two percent of respondents said the single most important problem facing small businesses was “Taxes. Another thirteen percent said “Government Regulations and Red Tape.” Both, of course, are direct manifestations of Big Government. Combined, they add up to 35% — making Big Government the biggest problem small businesses say they face.

And Americans in general seem to agree. As we reported earlier this year, a Gallup poll found a record 72% of Americans picked big government as “the biggest threat to this country in the future” compared with big business or big labor.

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