Browsing the blog archives for February, 2015.

Update on Venezuela

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The oil-rich and once expanding Venezuelan economy is in shambles. The country is running out of basics, from food to toilet paper. While retaining preferred exchange rates for select food and medicine at 6.3 bolivars per dollar, the official value of the Venezuelan currency has plummeted from about 50 to 170 in the last several days, an admission that the central government’s attempt to control the currency has failed miserably. Meanwhile, the government is seeking to overturn a World Bank ruling that it owes Exxon Mobil $1.6 billion due to under-compensation when the Chavez regime nationalized some of its oil projects. I’m sure Exxon Mobil wants to be paid in U.S. dollars, not bolivars.

But as Venezuela continues its downward economic spiral, the police state is intensifying its clamp on society. Mass protests are common. Police shot and killed a teenager in San Cristobal during a protest against the Maduro regime. The city’s pro-democracy mayor has been arrested for allegedly plotting the overthrow of the national government. As usual, Maduro sympathizers continue to claim that the U.S. is behind the protests and is actively seeking regime change. I ordinarily wouldn’t discount this charge completely, but President Obama seems to be somewhat of a sympathizer himself.

The take-home point here is the connection between economic and political tyranny. Economic freedom is fundamental to any prospering society and includes rights to make both production decisions—what is produced and how it will be priced—and personal decisions—where to work and what to buy. When a government restricts economic rights by nationalizing industries, controlling prices, and manipulating the value of its own currency, it is stifling individual liberty. Government has a monopoly on ultimate force, which must be garnered to institute such restrictions. In the end, the socialism-fascism mix employed by Chavez and Maduro not only destroys the economy, but also ends in arrests and violence.

The U.S. is not Venezuela, but the same principles apply. A confiscatory and irrational tax code is enforced by an IRS with an endless staff of taxpayer-financed attorneys and a legal ability to confiscate assets, sometimes without stated charges. Obamacare requires that individuals purchase government-specified health coverage or pay a fine. And if some on the left eventually get their way, businesses will be required to pay all workers $15 or more per hour regardless of what they actually contribute to the organization. Refuse to do so and you’ll be fined. Refuse to pay the fine and your assets will be seized. You could even end up in jail.

It’s important that we learn from what’s happening in Venezuela. Government isn’t always a bad thing, but most of its regulations restrict both economic and individual liberty. In the end, all laws must be ignored, selectively applied, or administered with force. None of these options are good, which is why

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The Politics of Political Talk Radio

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I’m a fan of good talk radio (Wilkow on Sirius is my favorite). I don’t like every host but I enjoy an open discussion of ideas and I appreciate the genuine passion that goes with it. But I’m not the only one. About 50 million Americans listen to talk radio each week.

The history of talk radio is fascinating. The format saved AM radio after the FM onslaught. Rush Limbaugh was a groundbreaker, but many others have followed. No two personalities are alike, but almost all of them lean conservative. My theory to explain this is that individuals on the right appreciate fact-based discussions and debates; talk radio (as opposed to TV or other video media) emphasizes the spoken word, and it’s much more difficult to make an emotional argument without visual images. Whether I’m right or not, talk radio is clearly dominated by the political right. Some of the left continue to clamor for fairness and “equal time,” but it’s a free market.

Like any other programming, talk radio is financed by advertising. A host that cannot build and retain an audience sufficient to attract enough ad revenue will be out of the industry. This is where it gets interesting.

During the last several years, many on the left have sought to silence talk radio hosts by threatening their advertisers. In a 2012 satirical monologue, Rush Limbaugh referred to referred to Georgetown University law student as a “slut” because she argued that the federal government should require the Catholic university to provide her with free contraception. Left-wing political groups responded by organizing social media campaigns threatening retaliation against sponsors, many of which eventually shifted their ad campaigns to programs deemed to be less controversial. As the Wall Street Journal recently reported, this campaign has taken a toll. Even with large audiences, advertising on talk radio programs costs about half of what it costs on music radio stations because large accounts are difficult to acquireThis effort tells us a lot about many on the left. Rather than seek to win an argument in the marketplace of ideas, they seek to squelch the opposition. Of course, they have the right to attempt to dissuade advertisers from sponsoring talk radio in a free society, and it’s understandable why many large firms prefer a “safer” route when it comes to marketing. However, it’s interesting to compare their response to the rise of talk radio to the right’s response to network news. Most “conservatives” don’t think much of the news on ABC, NBC, CBS, or CNN, but they just change the channel.

My point here is one of instinct. When those on the right see a problem, most are content to let the market solve it. If you don’t like a product, don’t buy it. If you don’t like Jon Stewart, don’t watch him. But when those on the left see a problem, many seek to control the outcome. They say things like “companies shouldn’t be allowed to…” or “this guy should be off the air.” Their faith is not in free choice and liberty, but in government intervention.

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Gas, Highways, and Obama’s $4 Trillion Budget

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In a recent post, I addressed a call from statists to increase the gas tax. I suggested that Republicans accept the proposal, but only if the plan included a revenue-neutral cut in income tax rates across the board. I reasoned that a use tax is always better than an income tax and that such an offer wouldn’t be accepted anyways because leftists just want to raise taxes. My post generated several more questions worth answering.

Washington can’t be trusted, so shouldn’t we oppose all tax increases regardless of the trade-offs? I don’t think so. I agree that Washington can’t be trusted, which is why I don’t think any tax trades (i.e., raise one and cut another) should include new taxes. This is why I opposed Herman Cain’s 9-9-9 plan. In theory, it would have been better than the current system, but would have also created a new tax on sales. I prefer a sales tax to an income tax, but over time, the 9-9-9 rates would change and we’d be stuck with an additional tax. We should only add a sales tax if we eliminate the income tax in the same bill.

Washington shouldn’t finance highway construction anyway, so why consider raising the gas tax even if income tax rates are lowered? In a perfect world, I’d rather turn all road construction over to states, local governments, and private entities. Arguably, there is a limited federal role for highway construction, but only for roads that are vital to the national transportation system. The Feds should not be in the business of sending funds back to the states for any other projects. The quagmire here is that the Feds already built the roads and someone has to maintain them. My point is simple: IF the federal government is going to engage in highway projects, than it should do so only with funds its collects from a usage tax, not the general coffers. The gas tax is far from perfect, but it’s better than the alternatives.

Obama’s proposed budget makes my point. The President is asking for increases in “grants” for local road projects from the general fund. Federal grants to local governments are unconstitutional, inefficient, and unnecessary. States and local governments can raise their own taxes to pay for such programs. My proposal is simple: ALL revenues derived from the gas tax must go to pay for vital national highway projects (not projects of state or local interest) through the Federal Highway Trust Fund (FHTF), and NO revenues from other sources should pay for any highway projects. If it is necessary to raise the gas tax to achieve this, then do so, but ONLY with an across-the-board, dollar-for-dollar cut in income tax rates.

Why should we trade income tax rates for gas tax rates when the income tax should be abolished or completely overhauled to a flat tax anyway? Sometimes we have to take incremental gains when we can get them. Followers of this blog know my strong preference for a sales tax (not a VAT, and not in addition to any income taxes) or a simplified flat (income) tax. The former is better, but the latter is easier to achieve, at least in the short term. My disgust for the current system aside, we still need to take action that moves us in the right direction. The left understands this point very well. Just consider how long they’ve worked on shifting healthcare from an individual responsibility toward a single payer system. Their progress has occurred one step at a time over decades.

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