The Power to Tax

According to the 2011 "Business Tax Climate" published by the Tax Foundation:

1. Worst state in the union for business taxes: New York.

2. Best state in the union for business taxes: South Dakota.

3. Most improved: Illinois.

4. Heading down fast: New Mexico.

5. At risk: Washington State

Full report here.

Just Don't Say No, Sometimes

Life is too short to say no to every cheeseburger you meet, even if your name is Michelle Obama.

You Know I'm Right

Michelle Caruso-Cabrera, anchor and reporter at CNBC; discusses her new book, You Know I'm Right.

Beware the Intellectuals

So one of the lessons of our century is: Beware the intellectuals. Not merely should they be kept well away from the levers of power, they also should be objects of peculiar suspicion when they seek to offer collective advice. Beware committees, conferences, leagues of intellectuals! For intellectuals, far from being highly individualistic and nonconformist people, are in fact ultra-conformist within the circles formed by those whose approval they seek and value. This is what makes them, en masse, so dangerous, because it enables them to create cultural climates, which themselves often generate irrational, violent and tragic courses of action.

Paul Johnson, "The Heartless Lovers of Humankind"

Their Righteous Cause

"The greatest evils inflicted upon humanity have been the work of those who are so confident of their efforts to do good that they do not hesitate to use the instruments of evil available to them on behalf of their righteous cause."

Vincent Ostrom

Patient Capitalism

Consumer Protection

This is a story about consumer abuse.

A consumer signs a contract he is told will make his life better. He pays $60,000 per year for three years, and ends up unhappy with the results. The promises of the original contract remain unfulfilled. He asks for his money back. He is denied.

The product? A law degree. The promise? A job. The response? You've got to be kidding. We don't give anybody their money back. What do you think this is, a business?

Read more here.

The Biases of Bureaucrats

"[While] there is a lot of interest in the psychology and neuroscience of markets, there is much less in the psychology and neuroscience of government. Slavisa Tasic, of the University of Kiev, wrote a paper recently for the Istituto Bruno Leoni in Italy about this omission. He argues that market participants are not the only ones who make mistakes, yet he notes drily that "in the mainstream economic literature there is a near complete absence of concern that regulatory design might suffer from lack of competence." Public servants are human, too.

Mr. Tasic identifies five mistakes that government regulators often make: action bias, motivated reasoning, the focusing illusion, the affect heuristic and illusions of competence."

Matt Ridley, in the Wall Street Journal

Tea Party to the Rescue

"Maureen "Moe" Tucker, former drummer of the Velvet Underground, has done the best job ever of explaining where the tea party stands and why it stands there. She also suggests the breadth and variety of the movement. In an interview this week in St. Louis's Riverfront Times, Ms. Tucker said she'd never been particularly political but grew alarmed by the direction the country was taking. In the summer of 2009, she went to a tea-party rally in southern Georgia. A chance man-on-the-street interview became a YouTube sensation. No one on the left could believe this intelligent rally-goer was the former drummer of the 1960s breakthrough band; no one on the left understood that an artist could be a tea partier. Because that's so not cool, and the Velvet Underground was cool.

Ms. Tucker, in the interview, ran through the misconceptions people have about tea partiers: "that they're all racists, they're all religious nuts, they're all uninformed, they're all stupid, they want no taxes at all and no regulations whatsoever." These stereotypes, she observed, are encouraged by Democrats to keep their base "on their side." But she is not a stereotype: "Anyone who thinks I'm crazy about Sarah Palin, Bush, etc., has made quite the presumption. I have voted Democrat all my life, until I started listening to what Obama was promising and started wondering how the hell will this utopian dream be paid for?"

Peggy Noonan, in the Wall Street Journal

Here's the video...

The Quotable Bastiat

"I do not address myself to those philosophers who, if not in their own names, at least in the name of humanity, profess to adore poverty.

I speak to those who hold wealth in esteem -- and understand by this word, not the opulence of the few, but the comfort, the well-being, the security, the independence, the instruction, the dignity of all."

Economic Sophisms, Second Series, "Natural History of Spoilation"

Je ne m'adresse pas à ces philosophes qui font profession d'adorer la misère, sinon en leur nom, du moins au nom de l'humanité.

Je parle à quiconque tient la Richesse pour quelque chose. — Entendons par ce mot, non l'opulence de quelques-uns, mais l'aisance, le bien-être, la sécurité, l'indépendance, l'instruction, la dignité de tous.

Sophismes Économiques, Physiologie de la Spoliation

It's Non-Fiction... Unfortunately

In a theater near you on October 15th.

For more information, visit: http://www.iwantyourmoney.net/

A Real Printing Problem

from NPR:
by Chana Joffe-Walt

This is a story about how an economist and his buddies tricked the people of Brazil into saving the country from rampant inflation. They had a crazy, unlikely plan, and it worked.

Twenty years ago, Brazil's inflation rate hit 80 percent per month. At that rate, if eggs cost $1 one day, they'll cost $2 a month later. If it keeps up for a year, they'll cost $1,000.

In practice, this meant stores had to change their prices every day. The guy in the grocery store would walk the aisles putting new price stickers on the food. Shoppers would run ahead of him, so they could buy their food at the previous day’s price.

The problem went back to the 1950s, when the government printed money to build a new capital in Brasilia. By the 1980s, the inflation pattern was in place.

It went something like this:

1. New President comes in with a new plan.
2. President freezes prices and/or bank accounts.
3. President fails.
4. President gets voted out or impeached.
5. Repeat.

The plans succeeded at only one thing: Convincing every Brazilian the government was helpless to control inflation.

There was one more option that no one knew about. It was dreamed up by four guys at the Catholic University in Rio. The only reason they enter the picture now — or ever — is because in 1992, there happened to be a new finance minister who knew nothing about economics. So the minister called Edmar Bacha, the economist who is the hero of our story.
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Listen to the story HERE.

Bastiat Reference in Chicago Tribune

"[In Chicago] the 5 percent sales tax forgiveness on back-to-school purchases last month, as study after study confirms, only shifts spending from other time frames with no net gain in sales. Ditto for last year's dollop — cash for clunkers — and this year's homebuyer tax credit.

In each of these examples, a politician or legislative body was either seeking to do good — reduce energy consumption, make something more affordable or put more money in workers' pockets — or was perhaps duped by, or just pandering to, a special-interest group or constituency.

As 19th century French economist Frederic Bastiat put it, "There is only one difference between a bad economist and a good one: The bad economist confines himself to the 'visible' effect; the good economist takes into account both the effect that can be seen and those effects that must be 'foreseen.'

The same bad vs. good demarcation holds for political candidates, city halls, lawmakers and public agencies."

Allen R. Sanderson of the University of Chicago, Chicago Tribune

Labor (verb):

1a : expenditure of physical or mental effort especially when difficult or compulsory

b (1) : human activity that provides the goods or services in an economy (2) : the services performed by workers for wages as distinguished from those rendered by entrepreneurs for profits
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A thought on labor:

Your labor is your most valuable asset: Capitalism compensates you for it, and socialism steals it from you.

Enemies of freedom and liberty often accuse entrepreneurs and capitalists of "exploiting" the working-class. Profits and greed, they argue, inevitably pit the employer and employee against each other. Nothing could be farther from the truth. Yet, contempt for the employer and fear are the tools socialists use to spread their own ideals. Once the workers are convinced that capitalism is evil, they then look to the government for the wealth and security that capitalism once provided.

Below are some various quotes regarding labor, wages, and profit. As you read them, ask yourself which group (capitalists or socialists) truly value the worker, the product of their labor, and the entrepreneurial spirit:
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"On the basis of political economy itself, in its own words, we have shown that the worker sinks to the level of a commodity and becomes indeed the most wretched of commodities; that the wretchedness of the worker is in inverse proportion to the power and magnitude of his production..."
- Karl Marx (1844) on the Political Economy

"We have stopped thinking in terms of a minimum wage. That belongs to yesterday, before we quite knew what paying high wages meant. Now so few people get the minimum wage that we do not bother about it at all. We try to pay a man what he is worth and we are not inclined to keep a man who is not worth more than the minimum wage."
- Henry Ford (1912) on Minimum Wages

"To establish, that in cases of even one unexcused day's absence from work, the worker should be fired from the enterprise or establishment, with loss of the right to use ration and commodity cards issued to him as a worker in said enterprise or establishment, and likewise with loss of the right to use an apartment given him in the housing of said enterprise or establishment."
- Resolution of the Central Executive Committee and the Council of People's Commissars of the USSR (1932)

“We do want more, and when it becomes more, we shall still want more. And we shall never cease to demand more until we have received the results of our labor.”
- Samuel Gompers, leader and first President of the American Federation of Labor (AFL) (1850-1924)

"Rather, it has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long rugged path towards prosperity and freedom."
- Barrak Obama (Jan 8th, 2009)

"Reckless greed and risk taking … must never endanger our prosperity again"
- Barrak Obama (Jan 20th, 2009) (Notice the contradiction...?)

"I think myself that we have more machinery of government than is necessary, too many parasites living on the labor of the industrious."
- Thomas Jefferson (1743-1826) on the role of government

"These capitalists generally act harmoniously and in concert, to fleece the people."
- Abraham Lincoln (1809-1865)

"Opportunity is missed by most people because it is dressed in overalls and looks like work."
- Thomas Edison (1847-1931) on hard work and commitment

"The people who are doing the work are the moving force behind the Macintosh. My job is to create a space for them, to clear out the rest of the organization and keep it at bay.
- Steve Jobs, CEO of Apple (1955- )

"Particular obstructive workers who refuse to submit to disciplinary measures will be subject, as non-workers, to discharge and confinement in concentration camps."
- Article 9 of a decree, signed by Lenin (14 November 1919)

"No one would have any argument with government, provided that his person was respected, his labor was free, and the fruits of his labor were protected against all unjust attack. When successful, we would not have to thank the state for our success. "
- Frederic Bastiat (1850) The Law

Trade Makes Us Less Likely to Kill

Michael Shermer writes in the Huffington Post:

"Trade makes us less likely to kill our potential trading partners. As Jared Diamond once told me about his research on Papua New Guinea hunter-gatherers: "Should you happen to meet an unfamiliar person in the forest, of course you try to kill him or else to run away. Our modern custom of just saying hello and starting a friendly chat would be suicidal." And yet something happened in the 1960s to bring about more peaceful interactions. Initially, peace was imposed upon the native New Guineans by fiat from the Western colonial government that ruled over the territory, but officials then insured continued peace by providing goods that the people needed, as well as the technologies to enable them to continue producing more resources on their own. In less than one generation, New Guinean hunter-gatherers who were fighting each other with stone tools were suddenly New Guinean consumer-traders operating computers, flying planes, and running their own small businesses. Where goods crossed New Guinea frontiers, New Guinea armies did not.

This is an example from my book of what I call Bastiat's Principle, from an observation by the 19th-century French economist Frédéric Bastiat: "Where goods do not cross frontiers, armies will." Although trade is not a sure-fire prophylactic against between-group conflict (there are exceptions to Thomas Friedman's observation that two countries with MacDonalds don't fight, but as a first order approximation it is accurate), it is an integral component to establishing trust between strangers that lessens the potential volatility that naturally exists whenever groups come into contact with one another, especially over the allocation of scare resources that have alternative uses, the very definition of economics.

And that brings us back full circle to trade, markets, and morality."

How to Help the "Bottom Billion"

Government Organization

When the government supports you, the government owns you...

Matt Ridley on Rational Optimism

Anniversary of Bastiat's Birth

The Quotable Bastiat

"The State is also subject to Malthus’s Law. It tends to exceed the level of its means of existence, it expands in line with its means and what keeps it in existence is the substance of the people. Misfortune thus afflicts those peoples who cannot limit the sphere of action of the State. Freedom, private activity, wealth, well-being, independence and dignity will all disappear."

Via http://bastiat.net/en/