The following article appears in the 4/19/13 edition of "The Freeman" a newsletter from the Foundation for Economic Education (FEE)

Special Laws for Special Friends

APRIL 29, 2013 by LAWRENCE W. REED

One of the pillars of the time-honored “fair field and no favor” view of government was equal treatment of all citizens. If a public legislative body passes a law, it shouldn't carve out exceptions without extraordinary, compelling reasons. Nor should it write a law intended, without saying so, to benefit one person or company at the expense of everyone else.

Sound reasonable? If so, you may have a problem with this paragraph from an Associated Press story printed in The Wall Street Journal on March 25:
“As reports circulated that ‘Late Night’ host Jimmy Fallon is poised to take over for Jay Leno, New York Governor Andrew Cuomo proposed a bill that would give a 30% [tax] credit to any ‘relocated television production’ that films before a large studio audience, has a $30 million budget and has been on the air for at least five seasons.”

Why doesn't Cuomo just spit it out? He had one and only one company in mind here—Comcast, which owns NBC. Cuomo wants Comcast to move Leno’s “Tonight” show from California to New York City.
Politicians pick winners and losers (mostly losers), carve out special breaks and privileges, and treat this group or that firm differently than they treat others with less clout and fewer connections. It happens all the time, and often in the name of “economic development.” (If this bothers you, then maybe, like me, you’re a Locofoco at heart).

In a country known for having forged the world’s highest living standard from what was wilderness scarcely 200 years ago, one would think that “economic development” is a well-understood concept. Unfortunately, it isn't.

In recent decades, economic development has come to mean something other than the spontaneous, entrepreneurial phenomenon that built America. It is often thought of as a kind of activist, public-policy responsibility of state and local governments. Giving a special tax break to one particular firm because somebody in government thinks it’s a “good idea” is bad enough; worse yet is the growing business of doling out taxpayer cash and other forms of subsidy to specific companies and groups.

Many politicians find this approach attractive because it brings with it the pageantry of ribbon-cuttings and photo opportunities. They love to say, “Look at the jobs I created.”

But if politicians and the people they appoint claim to be good at picking winners and losers with other people’s money in the public sector, shouldn’t they have proven it first by earning trillions with their own money in the private sector? And even if they did, is there anything about the political environment that would give us reasonable hope they could duplicate that success when it’s not their own money they’re playing with?

Even when it doesn’t degenerate into a thinly disguised system of cronyism, government placing its judgment ahead of the verdicts of the marketplace is more than just a role of dubious value. It is, indeed, utterly preposterous. As Milton Friedman was fond of saying, “No one spends someone else’s money as carefully as he spends his own.” Political actors are the best and most reliable examples of this truism.
How about just getting a few basics right, like protecting the peace and punishing wrongdoers, and stopping this business of creating special privileges aimed at a select few? Is that too much to ask of government in a society that claims to be “free” and “democratic”?

At the very least, let’s stop referring to the toxic environment of special favors as “free enterprise.” It may be “enterprise,” but it isn’t “free” if it’s rigged.

The solution is to talk

The following 3 minute video is from a question and answer session with Milton Friedman at Cornell University in 1978:

Milton defines the problem as follows:

Everyone wants to cut down government provided that those things that he has in interest in are maintained.

His solution:

The solution is for people like you and me to talk, to ourselves and our fellows and to try to persuade our fellow men to be of like mind, to change the climate of opinion in these respects, to try to correct the political structure...

Just say no to a national internet sales tax

A national sales tax on internet transactions is a very destructive idea.  Act now to stop this legislation.  Click on the link below to send an email message expressing your opposition to your Congressional Representatives:

http://taxeswithoutborders.com/

Gone with the wind

The following article appears in the Spring 2013 issue of "Regulation", a quarterly publication from the Cato Institute.

The High Cost of Low-Value Wind Power

Subsidized wind generates the least amount of power when it is most needed.
By Jonathan A. Lesser

The entire article can be found here:

http://www.cato.org/sites/cato.org/files/serials/files/regulation/2013/3/v36n1-8.pdf

The conclusions are as follows:

Continued subsidies for wind generation, both in the form of tax credits and mandatory renewable portfolio standards (RPS), represent bad economics and bad energy policy, for at least three reasons.

First and foremost, wind generation’s production pattern is not only volatile and unpredictable, it also has low economic value. Rather than displacing high variable-cost fossil generating resources used to meet peak demand, wind generation’s availability peaks when electricity demand is lowest. As a result, wind generation tends to displace low variable cost generation or simply forces baseload generators to pay greater amounts to inject power onto the grid because the units cannot be turned off and on cost-effectively. Thus, consumers and taxpayers are forced to subsidize low-value electricity.

Second, subsidized wind generation, like all subsidies, distorts electricity markets by artificially lowering electricity prices in the short run, but leads to higher prices in the long run. This imposes economic harm on competitive generators and consumers. Subsidies drive out competitors and increase financial uncertainty, thus raising the cost of capital for new investment in generation. In the long run, the impact of subsidies is electricity prices that are higher than what would prevail in a fully competitive market.

Third, subsidized wind generation results in additional social costs that are borne by consumers. Those costs include billions of dollars that must be spend on additional high-voltage transmission lines, which have their own adverse societal impacts, as well as additional costs that are incurred to integrate variable and intermittent wind generation onto the grid. In other words, wind generation imposes external costs on other market participants.

After 35 years of direct and indirect subsidies, there is no economic rationale for continued subsidization of wind generation. At the federal level, direct subsidies such as the federal production tax credit (PTC) should be ended immediately. Similarly, state-level subsidies, whether feed-in tariffs established by state regulators or statutory renewable portfolio standards (RPS) mandates, exacerbate market distortions and raise electricity prices, again to the detriment of consumers. These state subsidies should also be eliminated. Ultimately, continued subsidization of wind generation simply rewards a few niche generation companies and their suppliers, at the expense of the many. Given the massive federal debt and anemic U.S. economic recovery, this type of pernicious wealth redistribution cannot be justified.

Funding Government by the Minute

Please take 4 minutes to watch this very well made video from LearnLiberty.org.  You have seen and heard other discussions of our current Federal budget crisis but this video is extremely compelling.

http://www.youtube.com/watch?v=p0RkWqyn1y4&feature=youtu.be

Your Money or Your Life

“Taxation is theft, purely and simply.”
Murray N. Rothbard
The Ethics of Liberty

“Some experts have declared that it is necessary to tax the people until it hurts. I disagree with these sadists.”
Ludwig von Mises
Defense, Controls, and Inflation

“One thing is clear: The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government.”
Ron Paul

This article appears in Mises Daily: Monday, April 15, 2013 by Llewellyn H. Rockwell Jr.

April 15th is a horrible day, because it sums up all the wealth destruction called taxation that we are subjected to all year long.

As Murray Rothbard pointed out, taxation is the worst method of looting us. Inflation is destructive, of course, and it might make a loaf of bread cost $10. But at least you get a loaf of bread. With taxation, you get nothing—except theft and other violations of our civil liberties.

Society, as Mises noted, is divided into two competing classes by interventionist government: the taxpayers and the tax consumers. If you are a payer, you are automatically demonized as greedy. On the other hand, those who want the fruits of your labor involuntarily transferred to themselves and their favored pressure groups are the compassionate.

At the Mises Institute, we have a different view. You have a right to what you earn, and those who use the threat and reality of government violence to take it from you are muggers in expensive suits. As Murray said, the State is just a gang of thieves writ large.

The politicians blab about spending cuts, but it is all lying propaganda. They plan to increase spending, but use the specter of alleged spending cuts as another excuse to pick your pocket with more taxes. (Spending cuts? Please throw us in that briar patch, Br’er Government.)

Then there are the attacks on tax “loopholes,” when you are allowed to keep some of your own money. As Mises said, it is through these loopholes that capitalism breathes.

But centuries of pro-tax indoctrination has had its effect. Eighty percent of people, according to a Pew study, think it’s immoral to “underreport” one’s income. It’s as if the politicians own us, but generously let us keep some of our own earnings.

That Pew survey does provide one ray of hope: more and more young people dissent from the morality of coercive taxation. We saw the anti-tax passion of the Ron Paul movement, and we see it at the Mises Institute.

It’s true, more and more young people reject the notion of taxation. They want lower taxes. Most of all, they want no taxes. They think they should be able to keep their own earnings.

With our publications, classes, website, and conferences, we are reaching these young people about taxes and the rest of government.

The young don’t want to be sheared. And they are looking for the freedom answers, for example that private property should be inviolate, for moral and economic reasons. They understand, as did 16th-century economist Juan de Mariana, that the only free country is one where no one is afraid of the tax collector.