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Washington D.C. is the Most Unequal City in America

Posted by Daniel Greenfield 2 Comments Thursday, March 29, 2018 @ Sultan Knish Blog

Bernie Sanders, Michael Moore and Elizabeth Warren, three lefty millionaires, got together to solve "income inequality" in a town hall broadcast live from the Capitol visitors center.

Washington D.C., where two out of the three parasites do business, has the worst income inequality in the country. The bottom fifth of Washington D.C. account for just 2% of the city’s income. It has one of the highest poverty rates in the country and the highest food stamp use. And under Obama, the Imperial City of the politicians and the poor was surrounded by some of the wealthiest districts in the country.

“Income Inequality in America: The Rise of Oligarchy and Collapse of the Middle Class,” the Sanders, Warren and Moore town hall, comes to progs from the most unequal and oligarchic city in America

If Bernie, Liz and Michael really want to see income inequality, they can take a walk away from the marble and glass edifices of big government to see what big government had wrought. It isn’t any of their usual villains, the corporations and banks, who made Washington D.C. so miserable.

It’s the triumph of socialism.

Washington D.C. and its bedroom communities are what the entire country would look like if the left got its way. A socialist apartheid state divided between the business of government and the poor.

But the three socialist stooges aren’t just in the business of politics. They’re millionaire poverty pimps.

Bernie Sanders made over $1 million pushing conspiracy theories about income inequality. Denouncing big business let him rent a private Delta 767 with a menu of herb crusted lamb loin, chocolate ganache and fine cheeses. The Sanders clan is up to 3 homes now and Bernie is using his clout to get two of his kids elected to political offices. Who better to lecture us on the “Rise of Oligarchy” than an oligarch?

Bernie made it from living on unemployment to the 1 percent using the government. But there’s only room for so many senators who can run for president in Washington D.C. That’s one government program you can’t replicate for everyone living in D.C. slums on government money.

Elizabeth Warren is there to show Bernie what a truly ambitious socialist poverty pimp can do.

Lizzie owns a $740K condo in D.C. a far more expensive Victorian home in Cambridge and has a net worth of over $15 million. She picked up a $625K advance for A Fighting Chance, a book attacking corporations, paid to her by a corporation. Her follow-up, This Fight is Out Right, earned her only a $200K advance last year.

Harvard Law School’s “first woman of color” also made $350,000 for teaching one class.

But there’s only so much room for a fake Cherokee asbestos lawyer slash consumer advocate who likes to tell other people they didn’t accomplish anything before going back to one of her luxurious homes.

Like Bernie, Lizzie is just fighting for the “little guy”. Here’s what that looks like.

The Consumer Financial Protection Bureau, her own government agency, operates from a luxurious building that cost more per square foot than the Trump World Tower or the Bellagio in Vegas.

If only there were some sort of agency to protect taxpayers from the CFPB and Elizabeth Warren.

And then there’s Michael Moore.

Moore has his own fake working class story and he rode his fake anti-capitalist documentaries to a fortune in cash, much of it through alleged serial rapist Harvey Weinstein. At one point, Moore owned 9 homes. That’s more homes than Bernie Sanders and Elizabeth Warren combined. The pudgy leftist got famous pushing gun control, but has been known to go places with nine bodyguards.

The town hall paid tribute to unions. Michael Moore busted them.

Two of his writers were warned that if they operated under union rules, one of them would be fired. And so they had to keep working without health benefits instead.

Michael Moore and Bernie Sanders inveigh against employers. But they were terrible bosses.

Bernie, the friend of the working man, was known to his staff as “abusive”, a “screamer and a table-banger.” His campaign had its own #MeToo chapter with an accused sexual harasser being covered for by the Bernie campaign. "I remember feeling physically unsafe," his California outreach director said.

It’s hard to think of three worse choices to discuss income inequality and oligarchy than three millionaires with more than a dozen homes between them who treat their employees like garbage.

But Sanders, Warren and Moore aren’t just random rich people. They’re poverty pimps who got rich by pretending that they had something to say about the plight of working class people in America.

Washington D.C. is full of poverty pimps. They come in all shapes, sizes and colors. But the one thing that they have in common is that they get rich by keeping the poor where they are. Their only solution is to turn the working class into the welfare class where they can be milked for book deals and documentaries. And office buildings that cost more per square foot than a luxurious Vegas casino.

Much like Washington D.C., Sanders, Warren and Moore have something to tell us about income inequality and whose fault it really is.

"How do we create an economy that works for everybody?" Bernie asked.

Bernie’s answer is to turn the rest of the country into Washington D.C. with lots of government money for those on top and government subsidies for those on the bottom. There’s not much of a middle class in Washington D.C. and the Imperial City had one of the biggest middle class declines in the country.

It’s odd that Bernie and Lizzie don’t have much to say about that. But what can they say?

Take away everything except the government and its satellite industries, contractors, lobbyists, experts, non-profits and academics, and you end up with the apartheid urban template that is Washington D.C.

Moore, Warren and Sanders talk about a middle class because they know that’s where much of their audience comes from. But they ideologically loathe it. In their ideal world, there’s no middle class. None of the consumers who, as Bernie famously decried, want a “choice of 23 underarm spray deodorants.” And none of the small businessmen who, as Warren even more famously complained, think they built it.

The middle class is naturally conservative. It’s aspirational. It seeks security, not revolution. And what leftists are really peddling is a revolution that will leave them even more on top than they already are.

If you want to see income inequality in America, don’t tune in to watch three leftist millionaires put on their outrage show, look at their homes, and look at where that power and money comes from.

It doesn’t come from hard work.

It’s hard to point to anything that Bernie ever accomplished. Like Moore and Warren, he got very rich because of his politics. Income inequality made these three poverty pimps into millionaires.

They’re very rich because they’re members of the right party with the right views.

Washington D.C. and the big blue cities where income inequality is at its worst are full of those like them. Venezuela, the Soviet Union and North Korea don’t always happen overnight. The middle class is slowly hollowed out by a growing nomenklatura whose only expertise is in wealth redistribution.

And that’s how you end up with millionaire poverty pimps and no middle class.

The Bill of Rights, Gun Ownership, and the Constitution

March 30, 2018 by Dan Mitchell @ International Liberty
 

I don’t own an AR-15. I’m not a “gun person,” whatever that means. I hardly ever shoot. And I never hunt.

 

But I’m nonetheless a big supporter of private gun ownership. In part, this is because I have a libertarian belief in civil liberties. In other words, my default assumption is that people should have freedom (the notion of “negative liberty“), whereas many folks on the left have a default assumption for that the state should determine what’s allowed.

 

 

I also support private gun ownership because I want a safer society. Criminals and other bad people are less likely to engage in mayhem if they know potential victims can defend themselves. And I also think that there’s a greater-than-zero chance that bad government policy eventually will lead to periodic breakdowns of civil society, in which case gun owners will be the last line of defense for law and order.

 

I’m sometimes asked, though, whether supporters of the 2nd Amendment are too rigid. Shouldn’t the NRA and other groups support proposals for “common-sense gun safety”?

 

Some of these gun-control ideas may even sound reasonable, but they all suffer from a common flaw. None of them would disarm criminals or reduce gun crime. And I’ve detected a very troubling pattern, namely that when you explain why these schemes won’t work, the knee-jerk response from the anti-gun crowd is that we then need greater levels of control. Indeed, if you press them on the issue, they’ll often admit that their real goal is gun confiscation.

 

Though most folks in leadership positions on the left are crafty enough that they try to hide this extreme view.

 

So that’s why – in a perverse way – I want to applaud John Paul Stevens, the former Supreme Court Justice, for his column in the New York Times that openly and explicitly argues for the repeal of the 2nd Amendment.

…demonstrators should…demand a repeal of the Second Amendment. …that amendment…is a relic of the 18th century. …to get rid of the Second Amendment would be simple and would do more to weaken the N.R.A.’s ability to stymie legislative debate and block constructive gun control legislation than any other available option. …That simple but dramatic action would…eliminate the only legal rule that protects sellers of firearms in the United States.

The reason I’m semi-applauding Stevens is that he’s an honest leftist. He’s bluntly urging that we jettison part of the Bill of Rights.

 

Many – if not most – people on the left want that outcome. And a growing number of the are coming out of the pro-confiscation closet. In an article for Commentary, Noah Rothman links to several articles urging repeal of the 2nd Amendment.

They’re talking about repealing the Second Amendment. It started with former Supreme Court Justice John Paul Stevens and George Washington University Law Professor Jonathan Turley. …Turley and Stevens were joined this week by op-ed writers in the pages of Esquire and the Seattle Times. Democratic candidates for federal office have even enlisted in the ranksvvvvvvvv of those calling for an amendment to curtail the freedoms in the Bill of Rights. …anti-Second Amendment themes…have been expressed unashamedly for years, from liberal activists like Michael Moore to conservative opinion writers at the New York Times.  Those calling for the repeal of the right to bear arms today are only echoing similar calls made years ago in venues ranging from Rolling Stone, MSNBC, and Vanity Fair to the Jesuit publication America Magazine.

But others on the left prefer to hide their views on the issue.

 

Indeed, they even want to hide the views of their fellow travelers. Chris Cuomo, who has a show on MSNBC, preposterously asserted that nobody supports repeal of the 2nd Amendment.

It’s also worth noting that Justice Stevens got scolded by a gun-control advocate at the Washington Post.

One of the biggest threats to the recovery of the Democratic Party these days is overreach. …But rarely do we see such an unhelpful, untimely and fanciful idea as the one put forward by retired Supreme Court justice John Paul Stevens. …Stevens calls for a repeal of the Second Amendment. The move might as well be considered an in-kind contribution to the National Rifle Association, to Republicans’ efforts to keep the House and Senate in 2018, and to President Trump’s 2020 reelection bid. In one fell swoop, Stevens has lent credence to the talking point that the left really just wants to get rid of gun ownership. …This is exactly the kind of thing that motivates the right and signals to working-class swing voters that perhaps the Democratic Party and the political left doesn’t really get them.

The bottom line is that the left’s ultimate goal is gutting the 2nd Amendment. Not much doubt of that, even if some leftists are politically savvy enough to understand that their extremist policy is politically suicidal.

 

But let’s set aside the politics and look at the legal issues. There’s another reason why I’m perversely happy about the Stevens oped. Even though he was on the wrong side of the case, he effectively admits that the 2008 Heller decision enshrined and upheld the individual right to own firearms.

And the five Justices who out-voted Stevens made the right decision. I’m not a legal expert, so I’ll simply cite some people who are very competent to discuss the issue. Starting with what Damon Root wrote for Reason.

One problem with Stevens’ position is that he is dead wrong about the legal history. …For example, consider how the Second Amendment was treated in St. George Tucker’s 1803 View of the Constitution of the United States, which was the first extended analysis and commentary published about the Constitution. For generations of law students, lawyers, and judges, Tucker’s View served as a go-to con-law textbook. …He observed the debates over the ratification of the Constitution and the Bill of Rights as they happened. And he had no doubt that the Second Amendment secured an individual right of the “nonmilitary” type. “This may be considered as the true palladium of liberty,” Tucker wrote of the Second Amendment. “The right of self-defense is the first law of nature.” In other words, the Heller majority’s view of the Second Amendment is as old and venerable as the amendment itself.

Well stated.

 

Though the real hero of this story is probably Joyce Lee Malcolm, the scholar whose work was instrumental in producing the Heller decision. John Miller explains for National Review.

Malcolm looks nothing like a hardened veteran of the gun-control wars. Small, slender, and bookish, she’s a wisp of a woman who enjoys plunging into archives and sitting through panel discussions at academic conferences. Her favorite topic is 17th- and 18th-century Anglo-American history… She doesn’t belong to the National Rifle Association, nor does she hunt. …She is also the lady who saved the Second Amendment — a scholar whose work helped make possible the Supreme Court’s landmark Heller decision, which in 2008 recognized an individual right to possess a firearm.

Ms. Malcolm started as a traditional academic.

For her dissertation, she moved to Oxford and Cambridge, with children in tow. …Malcolm’s doctoral dissertation focused on King Charles I and the problem of loyalty in the 1640s… The Royal Historical Society published her first book.

But her subsequent research uncovered some fascinating insights about the right to keep and bear arms.

At a time when armies were marching around England, ordinary people became anxious about surrendering guns. Then, in 1689, the English Bill of Rights responded by granting Protestants the right to “have Arms for their Defence.” Malcolm wasn’t the first person to notice this, of course, but as an American who had studied political loyalty in England, she approached the topic from a fresh angle. “The English felt a need to put this in writing because the king had been disarming his political opponents,” she says. “This is the origin of our Second Amendment. It’s an individual right.” …Fellowships allowed her to pursue her interest in how the right to bear arms migrated across the ocean and took root in colonial America. “The subject hadn’t been done from the English side because it’s an American question, and American constitutional scholars didn’t know the English material very well,” she says. …The Second Amendment, she insisted, recognizes an individual right to gun ownership as an essential feature of limited government. In her book’s preface, she called this the “least understood of those liberties secured by Englishmen and bequeathed to their American colonists.”

And it turns out that careful scholarship can produce profound results.

…in 2008, came Heller, arguably the most important gun-rights case in U.S. history. A 5–4 decision written by Scalia and citing Malcolm three times, it swept away the claims of gun-control theorists and declared that Americans enjoy an individual right to gun ownership. “…it gave us this substantial right.” She remembers a thought from the day the Court ruled: “If I have done nothing else my whole life, I have accomplished something important.” …the right to bear arms will not be infringed — thanks in part to the pioneering scholarship of Joyce Lee Malcolm.

Let’s close with a video from Prager University, narrated by Eugene Volokh, a law professor at UCLA. He explains the legal and historical meaning of the 2nd Amendment.

 

 

In other words, the bottom line is that the Justice Stevens and other honest leftists are right. The 2nd Amendment would need to be repealed in order to impose meaningful gun control.

 

And I suppose it’s also worth mentioning that it won’t be easy to ban and confiscate guns if they ever succeeded in weakening the Bill of Rights. But hopefully we’ll never get to that stage.

 

 

John Brennan’s President… Remembering Comrade Gus Hall

Obama’s CIA director would sooner vacation in North Korea than at Mar-a-Lago

Paul Kengor March 30, 2018

Obama CIA director John Brennan, a subject of ongoing analysis at The American Spectator, recently uncorked an epic Twitter rant. Enraged by President Trump’s words aimed at FBI deputy director Andrew McCabe, Brennan steamed at the president: “When the full extent of your venality, moral turpitude, and political corruption becomes known, you will take your rightful place as a disgraced demagogue in the dustbin of history. You may scapegoat Andy McCabe, but you will not destroy America … America will triumph over you.

More than one faithful reader of this fine publication emailed me about the irony of such words coming from a man who wanted Gus Hall to be president of the United States.

Indeed.

For those too young to remember, Gus Hall was the longtime hack and head of Communist Party USA, beginning in 1959 until his death in 2000. Not even Joe Stalin as a Party general secretary came close to matching Gus Hall’s interminable tenure. Hall was unwaveringly dedicated to a global communist revolution and a truly Evil Empire that was ultimately and blessedly consigned to “the dustbin of history.” Brennan’s loaded words echoed a phrase that Bolshevism made infamous: From the delightful Leon Trotsky to the charming Yuri Andropov, the exhortation evidently remains etched in Brennan’s comradely memory. “Go the place where you belong from now on,” Trotsky thundered at the Mensheviks in 1917, “the dustbin of history!”.........To Read More.....

 

Stand for Laura Ingraham and a Free Press

Adult sponsors of companies sign on to bullying a conservative commentator off the air.

Jeffrey Lord March 30, 2018

But, of course.

So Laura Ingraham tweets the mildest of tweets, in this case about the news that David Hogg of Parkland student anti-gun activism fame, has been rejected by various colleges. This news of Hogg’s rejections — something totally normal in the world of being admitted to X or Y college — was put out there by Hogg himself in this talk with TMZ. Ingraham twitted by tweet:

David Hogg Rejected By Four Colleges To Which He Applied and whines about it. (Dinged by UCLA with a 4.1 GPA…totally predictable given acceptance rates.)

Hogg, who has made extensive use of his First Amendment free speech rights, immediately turns around and demands that a free press that displeases him — Ingraham’s Fox News show — be “boycotted” by advertisers.  Immediately the adults who sponsor Ingraham’s show stand up and do his bidding.

Let’s start with this interesting story you won’t see anywhere else.

Junk science: California calls coffee 'cancerous'

March 30, 2018 By Monica Showalter

People have been enjoying and drinking coffee for thousands of years and recent health studies suggest it's rather good for you, but now, all of a sudden, the State of California claims it has "science" to support the notion that coffee causes cancer. That's why some numbskull judge ruled that now all coffee must carry warning labels, same as dreaded, dangerous, cigarettes, warning everyone of cancer and attempting to get at least some people to stop. Can you say: 'judiciary out of control?'

Associated Press reports:

A Los Angeles judge has determined that coffee companies must carry an ominous cancer warning label because of a chemical produced in the roasting process.  Superior Court Judge Elihu Berle said Wednesday that Starbucks and other companies failed to show that benefits from drinking coffee outweighed any risks. He ruled in an earlier phase of trial that companies hadn’t shown the threat from the chemical was insignificant. The Council for Education and Research on Toxics, a nonprofit group, sued Starbucks and 90 other companies under a state law that requires warnings on a wide range of chemicals that can cause cancer. One is acrylamide, a carcinogen present in coffee.

What this activist suit and consequent judicial overreach represent is a sort of medicalization of food, nanny-state-style, as if food itself were some sort of toxic medicine, full of side effects, instead of a combination of risks and rewards, all ameliorated by moderation of use.........More so than the medicalization of food, this amounts to the politicization of food. .............Read more

My Take - We need to understand that a huge number of foods test carcinogenic. But testing carcinogenic and causing cancer are two different things. Testing carcinogenic under the current standard isn't necessarily even carcinogenic. They feed massive amounts of a compound to rodents that are genetically prone to grow tumors and then declare something carcinogenic when the grow tumors. And when the EPA was challenged this wasn’t good science the EPA claim these determinations aren’t a matter of science but of EPA policy. 

Well if their policy isn't based on science, what is it based on?

The Snitches in Your Kids' Dental Office

Michelle Malkin Mar 28, 2018

How sharper than a serpent's tooth to have a despotic pediatric dentist. Parents who decide, for whatever reason, that they don't like their children's oral care provider should be forewarned.

Empowered by government "mandatory reporter" laws, dental offices are now using their authority to threaten families with child abuse charges if they don't comply with the cavity police.

Mom Trey Hoyumpa shared a letter last week on Facebook from a dental office called Smiles 4 Keeps in Bartonsville, Pennsylvania. It informed her that if she did not make a dental appointment for "regular professional cleanings" for her child, she could be charged with "dental neglect." Citing a law called Pennsylvania Act 31 on child abuse recognition and reporting, the dental office threatened to report the mom to state authorities if she did not schedule an appointment........

On social media, parents who've encountered the toxic alliance of snoopy medical providers and child welfare agencies shared their own experiences with government bullies who operate on a presumption of guilt.

Brett Darken wrote: "Anyone familiar with 'family court,' DCF, state probate and guardianship courts know well this story. In any other context, it would be considered a threat, coercion and intimidation under RICO laws. But because it's the government, it's legal.".............. To Read More......

Vicki Momberg: South Africa Becomes the USSR of Race,

Woman gets prison sentence for using the “K-word.”

Dan Roodt, American Renaissance, March 30, 2018 66 Comments

South Africa’s ANC regime is about to pass a draconian piece of legislation on “hate speech” directly aimed at whites. However, even before “The Prevention and Combating of Hate Crime and Hate Speech Bill” could become law, a minor district judge or “magistrate” in Randburg, a suburb of Johannesburg, sentenced Vicki Momberg to an effective two years prison sentence for using the “K-word” in an altercation with a black policeman.

 

In South Africa the term “kaffir” (“heathen” in Arabic) is the equivalent of the US “N-word.” Both white liberals and members of the black elite have become obsessed with the word, which to them is the apotheosis of white racism. So when a cellphone video of Vicki Momberg, an estate agent from the coastal city of Durban, began circulating on social media in 2016, the full might of the state was brought to bear on her in a way that would be unthinkable if she were black.........

“Teased out by legal experts.” Yes, sure. If you’re white, you insult or complain to a black official at your peril. Thanks to affirmative action, the entire state bureaucracy is loaded with officials who are hardly literate, whether in the police, the court system, or at the Internal Revenue Service.

White taxpayers regularly lose money from their bank accounts, since black bureaucrats can act completely unreasonably according to special legislation that lets them confiscate funds without a court order. The cumulative effect of all this is a smoldering anger on both sides of the racial divide that could erupt at any moment...........To Read More....

 

Reforms to Sweden’s Retirement System and Lessons for the United States

March 28, 2018 by Dan Mitchell @ International Liberty
 

Given Social Security’s enormous long-run financial problems, the program eventually will need reform.

But what should be done? Some folks on the left, such as Barack Obama and Hillary Clinton, support huge tax increases to prop up the program. Such an approach would have a very negative impact on the economy and, because of built-in demographic changes, would merely delay the program’s bankruptcy.

Others want a combination of tax increases and benefit cuts. This pay-more-get-less approach is somewhat more rational, but it means that today’s workers would get a really bad deal from Social Security.

This is why I frequently point out that personal retirement accounts (i.e., a “funded” system based on real savings) are the best long-run solution. And to help the crowd in Washington understand why this is the best approach, I explain that dozens of nations already have adopted this type of reform. And I’ve written about the good results in some of these jurisdictions.

• Australia
• Chile
• Switzerland
• Hong Kong
• Netherlands
• Faroe Islands

Now it’s time to add Sweden to the list.

I actually first wrote about the Swedish reform almost 20 years ago, in a study for the Heritage Foundation co-authored with an expert from Sweden. Here’s some of what we said about the nation’s partial privatization.

Swedish policymakers decided that both individual workers and the overall economy would benefit if the old-age system were partially privatized. …Workers can invest 2.5 percentage points of the 18.5 percent of their income that they must set aside for retirement. …the larger part-16 percent of payroll-goes to the government portion of the program. …What makes the government pay-as-you-go portion of the pension program unique, however, is the formula used for calculating an individual’s future retirement benefits. Each worker’s 16 percent payroll tax is credited to an individual account, although the accounts are notional. …the government uses the money in these notional accounts to calculate an annuity (annual retirement benefit) for the worker. …the longer a worker stays in the workforce, the larger the annuity received. This reform is expected to discourage workers from retiring early… There are many benefits to Sweden’s new system, including greater incentives to work, increased national savings, a flexible retirement age, lower taxes and less government spending.

While that study holds up very well, let’s look at more recent research so we can see how the Swedish system has performed.

I’m a big fan of the fully privatized portion of the Swedish system (the “premium pension”) funded by the 2.5 percent of payroll that goes to personal accounts.

But let’s first highlight the very good reform of the government’s portion of the retirement system. It’s still a tax-and-transfer scheme, but there are “notional” accounts, which means that benefits for retirees are now tied to how much they work and how much they pay into the system.

A new study for the American Enterprise Institute, authored by James Capretta, explains the benefits of this approach.

Sweden enacted a reform of its public pension system that combines a defined-contribution approach with a traditional pay-as-you-go financing structure. The new system includes better work incentives and is more transparent to participants. It is also permanently solvent due to provisions that automatically adjust payouts based on shifting demographic and economic factors. …A primary objective…in Sweden was to build a new system that would be solvent permanently within a fixed overall contribution rate. …pension benefits are calculated based on notional accounts, which are credited with 16.0 percent of workers’ creditable wages. …The pensions workers get in retirement are tied directly to the amount of contributions they make to the system. …This design improved incentives for work… To keep the system in balance, this rate of return is subject to adjustment, to correct for shifts in demographic and economic factors that affect what rate of return can be paid within the fixed budget constraint of a 16.0 percent contribution rate.

The final part of the above excerpts is key. The system automatically adjusts, thus presumably averting the danger of future tax hikes.

Now let’s look at some background on the privatized portion of the new system. Here’s a good explanation in a working paper from the Center for Fiscal Studies at Sweden’s Uppsala University.

The Premium Pension was created mainly for three purposes. Firstly, funded individual accounts were believed to increase overall savings in Sweden. …Secondly, the policy makers wanted to allow participants to take account of the higher return in the capital markets as well as to tailor part of their pension to their risk preferences. Finally, an FDC scheme is inherently immune against financial instability, as an individual’s pension benefit is directly financed by her past accumulated contributions. The first investment selections in the Premium Pension plan took place in the fall of 2000, which is known as the “Big Bang” in Sweden’s financial sector. …any fund company licensed to do business in Sweden is allowed to participate in the system, but must first sign a contract with the Swedish Pensions Agency that specifies reporting requirements and the fee structure. Benefits in the Premium Pension Plan are paid out annually and can be withdrawn from age 61.

And here’s a chart from the Swedish Pension Agency’s annual report showing that pension assets are growing rapidly (right axis), in part because “premium pension has provided a 6.7 percent average value increase in people’s pensions per year since its launch.” Moreover, administrative costs (left axis) are continuously falling. Both trends are very good news for workers.

Let’s close by citing another passage from Capretta’s AEI study.

He looks at Sweden’s long-run fiscal outlook to other major European economies.

According to European Union projections, Sweden’s total public pension obligations will equal 7.5 percent of GDP in 2060, which is a substantial reduction from the…8.9 percent of GDP it spent in 2013. …In 2060, EU countries are expected to spend 11.2 percent of GDP on pensions. Germany’s public pension spending is projected to increase…to 12.7 percent of GDP in 2060. …The EU forecast shows France’s pension obligations will be 12.1 percent of GDP in 2060 and Italy’s will be 13.8 percent of GDP.

I think 8.9 percent of GDP is still far too high, but it’s better than diverting 11 percent, 12 percent, or 13 percent of economic output to pensions.

And the fiscal burden of Sweden’s system could fall even more if lawmakers allowed workers to shift a greater share of their payroll taxes to personal accounts.

But any journey begins with a first step. Sweden moved in the right direction. The United States could learn from that successful experience.

P.S. Pension reform is just the tip of the iceberg. As I wrote two years ago, Sweden has implemented a wide range of pro-market reforms over the past few decades, including some very impressive spending restraint in the 1990s. If you’re interested in more information about these changes, check out Lotta Moberg’s video and Johan Norberg’s video.

KGB Deception Is No Myth

Removing a few blinders from the Washington Post’s “Outlook.”

Diana West March 29, 2018

On March 18, 2018, the Washington Post Outlook section categorized KGB influence operations and my book, American Betrayal, both as “myth.” In response, I sent in the following essay, which Outlook has turned down.

 

I am the author of that unnamed “book written in 2013” whose research and argumentation, anchored in nearly 1,000 endnotes, were labeled a “myth” by Mark Kramer (“Five Myths about Espionage,” Outlook, March 18, 2018).

 

Here’s how Kramer made his case in “Myth No. 5”:

A surprisingly common misconception about spies is that they set out to change policy in the countries where they operate. A book published in 2013, for example, alleged that Stalin’s spies in the 1940s had effectively “occupied” the United States and guided the policies of the Roosevelt administration.

Since Kramer forgot to mention it, the title of that “book published in 2013” is: American Betrayal: The Secret Assault on Our Nation’s Character (St. Martin’s Press). On page 68, I set out to describe the impact of the secret honeycombing of the halls of power and influence in New Deal/wartime Washington, D.C. by an intelligence army of covert agents and communists under Kremlin discipline — more than 500 have now been identified — and came up with “for all intents and purposes occupied.”

A goodly number of these secret agents, of whom Alger Hiss is only the most famous, reached senior policy-making positions in the FDR administration. In Kramer’s telling, however, all they really did as they inched closer and closer to the Secretary of the Treasury or State or the President was filch classified documents. Questions concerning whether/how these secret agents and ideological communists influenced the direction of U.S. policy- and even war-making to the Kremlin’s advantage — questions my book explores — are to be dismissed as what Kramer describes as a “surprisingly common misperception.”

Given that Kramer wrote an op-ed last year about the long history of “Moscow’s active measures to influence U.S. politics and undermine U.S. foreign policy,” perhaps it is his own recent Outlook statement that is surprising; however, it is no myth.

That there exist “spies” — better known as agents of influence, for example — who seek to “change,” or, more realistically, influence policy-making and other activities of rival nations is a fact. It is an especially salient fact in the case of the fronts, networks and sophisticated campaigns of deception directed by the KGB, and overseen, at least in the post-Stalin era, as renowned Soviet dissident Vladimir Bukovsky reminds us, by the Central Committee of the Communist Party in Moscow. Lest there be any confusion, this has been going on for one hundred years — not only in “the 1940s.” My own book aside, I am afraid that when Mark Kramer, as director of Cold War Studies at Harvard, dismisses all of this and more as “myth,” it is akin to the Army Corps of Engineers dismissing as “myth” the presence of water in the Mississippi River.

The late Soviet expert Joseph D. Douglass, Jr. put it this way: “The Soviets live and breathe deception. You cannot understand what they are doing without understanding this. Indeed, you can’t even begin to understand communism without understanding deception, which is very rarely mentioned in textbooks on communism.”

I am guessing deception is very rarely mentioned in textbooks on espionage that Professor Kramer assigns in his “Cold War Studies” courses. What follows, then, is a chance for him to bone up.

The late intelligence expert Herbert Romerstein, also a seasoned congressional investigator, could not have expressed it more simply. In the first sentences of his 1991 monograph, titled, non-mythologically, “Soviet Agents of Influence,” he wrote:

An intelligence service has two main functions in a target country. One is to collect information from either classified or unclassified sources. The second is to influence the situation in that country.

Ex-Communist and ex-Soviet-agent Whittaker Chambers knew all about that effort to “influence the situation” from the Other Side. In his real-life experience, influence was paramount. A courier for the Communist Underground in New Deal Washington, Chambers served as a Soviet military intelligence operative until 1939 when he broke with the movement. Later, working with the FBI and then Congress, he would become the 20th century’s most famous public witness to Soviet espionage and American treason. In what Mark Kramer would probably call “a book published in 1952,” a.k.a. Witness, Chambers explained:

That power to influence policy has always been the ultimate purpose of the Communist Party’s infiltration. It was much more dangerous, and, as events have proved, much more difficult to detect, than espionage [stealing secrets], which beside it is trivial, though the two go hand and hand.

There is nothing magical, let alone mythical, about any of this.
 

Hope Hale Davis was a lesser-known member of the evolving communist underground Chambers worked with in D.C. In 1994, Davis, a lifelong Woman of the Left, published her memoir of the period, Great Day Coming. From the book jacket: “As underground members their job was to infiltrate high policy-making levels of government…” (Many of their doings in situ are also set forth in a book published in 2012, Stalin’s Secret Agents: The Subversion of Roosevelt’s Government by M. Stanton Evans and Herbert Romerstein.)

 

Davis recounts a “special meeting” of the “comrades” — all federal employees in a secret sub-cell of the larger underground apparatus — called “to deal with” the shocking news of the show trials of the so-called Old Bolsheviks, i.e., Stalin’s blood purges.

Vic announced that Steve had meant to come to Washington but the repercussions from the news were keeping him at headquarters.

“Vic” is Soviet agent Victor Perlo, who, as key defector Elizabeth Bentley revealed, later ran his own ring (the Perlo group); “Steve” is the notorious Comintern spymaster better known as “J. Peters,” the link between the American underground and the Soviet secret police.

 

Peters, born Sandor Goldberger, was also Whittaker Chambers’ Soviet control officer. Chambers, too, describes Peters’ occasional visits to underground gatherings in Witness: “He lectured them on Communist theory and Leninist organization and advised them on general and specific policy problems. For several of them were so placed in the New Deal agencies (notably Alger Hiss, Nathan Witt, John Abt and Lee Pressman) that they were in a position to influence policy on several levels.”
 

Davis’s memory is concordant. The cell meeting she describes was called for Soviet intelligence boss Peters to “emphasize that the success of the Popular Front depended on our correcting the widespread misunderstanding of the Moscow show trials.” (Emphasis added.)

They were told

to prepare to answer any doubt. Second, we must not expose ourselves as Party members. We groaned, knowing the problem this raised. Even answering at all, John said, marked you as a Communist. Yet he knew he had to take the chance. The trials had all but undone a year’s work on his chief, whom he had been allowed to try to recruit. (Emphasis added.)

That last bit is darkly fascinating. “John” is all but certainly John Abt, later chief counsel for the Communist Party USA. During the Moscow show trials (1936-1938), Abt had two notable “chiefs” whom he might well have been “allowed to try to recruit.” One was a U.S. Senate Chairman, the other the Attorney General.

 

Whatever the identity of “John” and his “chief,” subject for a year to the ministrations of communist recruitment, the questions themselves attune us to the painstaking, long-range practice of such operations. Decades later, in the hands of Stanislav Levchenko, KGB defector and master-practitioner of influence operations, they were aptly likened to courtship.

 

But “myth”?

 

Looking back on the bureaucratic heights key members of his underground apparatus had scaled by the 1940s, Chambers would write:

In a situation with few parallels in history, the agents of an enemy power were in a position to do much more than purloin documents. They were in a position to influence the nation’s foreign policy in the interests of the nation’s chief enemy, and not only on exceptional occasions, like Yalta (where Hiss’s role, while presumably important is still ill-defined) or through the Morgenthau Plan for the destruction of Germany (which is generally credited to [Harry Dexter] White), but in what must have been the staggering sum of day-to-day decisions.

Far from being imaginary, such infiltration and subversion would remain, and still remains, a dire national security threat. In 1982 congressional hearings on Soviet Active Measures, John McMahon, Deputy Director of the Central Intelligence Agency, explained why:

You can never overestimate the impact of an agent of influence. If you have an individual who is an adviser to a minister or a president, or if you have a minister himself as your agent of influence, you can do a tremendous amount in a country as far as actives measures are concerned. It is the most insidious, pernicious thing to deal with as far as a countermeasure is concerned.

Just don’t expect college credit at Harvard for bringing any of this up in class.
 

Curiously, Kramer goes on to acknowledge in passing the sort of influence operations he is simultaneously dismissing as myth before returning to his main point:

But the largest share by far of their personnel and resources goes toward the collection of secret information through human and technical espionage and the subsequent analysis of that information. This was just as true of the Soviet Union in the 1930s and ’40s as it is of the United States today. Influencing policy was rarely, if ever, their main goal — indeed, it was discouraged if it would raise red flags and thereby endanger access to classified materials.

Saying so doesn’t make it so.

Feel the Bern: Cartoon of the Day

Three Great Moments in Regulation

March 27, 2018 by Dan Mitchell @ International Liberty
 

As a policy wonk, I mostly care about the overall impact of government on prosperity. So when I think about the effect of red tape, I’m drawn to big-pictures assessments of the regulatory burden.
Here are a few relevant numbers that get my juices flowing.

• Americans spend 8.8 billion hours every year filling out government forms.
• The economy-wide cost of regulation reached $1.75 trillion in 2010.
• For every bureaucrat at a regulatory agency, 100 jobs are lost in the economy’s productive sector.
• A World Bank study determined that moving from heavy regulation to light regulation “can increase a country’s average annual GDP per capita growth by 2.3 percentage points.”
• Regulatory increases since 1980 have reduced economic output by $4 trillion.
• The European Central Bank estimated that product market and employment regulation has led to costly “misallocation of labour and capital in eight macro-sectors,” and also found that reform could boost national income by more than six percent.

But one thing I’ve learned over the years is that I’m not normal.
Most people don’t get excited about these macro-type calculations.
Instead they’re far more likely to get agitated by regulations that make their daily lives a hassle. Such as:

• Inferior light bulbs
• Substandard toilets
• Inadequate washing machines
• Crummy dishwashers
• Dribbling showers
• Dysfunctional gas cans

I certainly can sympathize. It’s galling that the clowns in Washington have made our existence less pleasant.

Most people also are quite responsive to anecdotes about red tape. Simply stated, big-picture numbers are like a skeleton, while real-world examples put meat on the bones.

Today, let’s look at some absurd examples of the regulatory state in action.

We’ll start with bone-headed pizza regulation, as explained by the Wall Street Journal.

FDA released guidance for posting calorie disclosures at restaurants with more than 20 locations, and the ostensible point is to help folks choose healthier foods. The regulations…are an outgrowth of the 2010 Affordable Care Act… The reason some restaurants have spent years fighting these rules is not because executives lay awake at night plotting how to make Americans obese. It’s because the rules are loco. …Take pizza companies, which have to display per slice ranges or the number for the entire pie. Calories vary based on what you order—the barbarians who put pineapple on pizza are consuming fewer calories than someone who chooses pepperoni and extra cheese. But the number of pepperonis on a pizza depends on the pie’s size and whether someone also adds onions and sausage. ..The rules are so vague that companies could face a crush of lawsuits, which will be abetted by this “nonbinding” FDA guidance.

By the way, you won’t be surprised to learn that academic researchers have found these types of rules have no effect on consumer choices.

A systematic review and meta-analysis determined the effect of restaurant menu labeling on calories and nutrients…were collected in 2015, analyzed in 2016, and used to evaluate the effect of nutrition labeling on calories and nutrients ordered or consumed. Before and after menu labeling outcomes were used to determine weighted mean differences in calories, saturated fat, total fat, carbohydrate, and sodium ordered/consumed… Menu labeling resulted in no significant change in reported calories ordered/consumed… Menu labeling away-from-home did not result in change in quantity or quality, specifically for carbohydrates, total fat, saturated fat, or sodium, of calories consumed among U.S. adults.

Shocking, just shocking. Next thing you know, somehow will tell us that Obamacare didn’t lower premiums for health insurance!

For our second example, we have a surreal story out of California.

A farmer faces trial in federal court this summer and a $2.8 million fine for failing to get a permit to plow his field and plant wheat in Tehama County. A lawyer for Duarte Nursery said the case is important because it could set a precedent requiring other farmers to obtain costly, time-consuming permits just to plow their fields. “The case is the first time that we’re aware of that says you need to get a (U.S. Army Corps of Engineers) permit to plow to grow crops,” said Anthony Francois, an attorney for the Pacific Legal Foundation. “We’re not going to produce much food under those kinds of regulations,” he said. …The Army did not claim Duarte violated the Endangered Species Act by destroying fairy shrimp or their habitat, Francois said. …Farmers plowing their fields are specifically exempt from the Clean Water Act rules forbidding discharging material into U.S. waters, Francois said.

Wow, sort of reminds me of the guy who was hassled by the feds for building a pond on his own property. Or the family persecuted for building a house on their own property.

Last but not least, our third example contains some jaw-dropping tidbits about red tape in a New York Times story.

Indian Ladder Farms, a fifth-generation family operation near Albany, …sells homemade apple pies, fresh cider and warm doughnuts. …This fall, amid the rush of commerce — the apple harvest season accounts for about half of Indian Ladder’s annual revenue — federal investigators showed up. They wanted to check the farm’s compliance… Suddenly, the small office staff turned its focus away from making money to placating a government regulator. …The investigators hand delivered a notice and said they would be back the following week, when they asked to have 22 types of records available. The request included vehicle registrations, insurance documents and time sheets — reams of paper in all. …the Ten Eyck family, which owns the farm, along with the staff devoted about 40 hours to serving the investigators, who visited three times before closing the books. …This is life on the farm — and at businesses of all sorts. With thick rule books laying out food safety procedures, compliance costs in the tens of thousands of dollars and ever-changing standards from the government…, local produce growers are a textbook example of what many business owners describe as regulatory fatigue. …The New York Times identified at least 17 federal regulations with about 5,000 restrictions and rules that were relevant to orchards. …Mr. Ten Eyck…fluently speaks the language of government compliance, rattling off acronyms that consume his time and resources, including E.P.A. (Environmental Protection Agency), OSHA (Occupational Safety and Health Administration), U.S.D.A. (United States Department of Agriculture) and state and local offices, too, like A.C.D.O.H. (Albany County Department of Health).

And here’s an info-graphic that accompanied the article.



Wow. No wonder a depressingly large share of the population prefers to simply get a job as a bureaucrat.

Needless to say, this is not a system that encourages and enables entrepreneurship.

Which is why deregulation is a good idea (and Trump deserves credit for making a bit of progress in this area). We need some sensible cost-benefit analysis so that bureaucracies are focused on public health rather than mindless rules.

And it also would be a good idea in many cases to rely more on mutually reinforcing forms of private regulation.

Since I’m a self-confessed wonk, I’ll close by sharing this measure of the ever-growing burden of red tape. I realize it’s not as attention-grabbing as anecdotes and horror stories, but it is very relevant if we care about long-run growth and competitiveness.

 

P.S. On the topic of regulation, I admit that this example of left-wing humor about laissez-faire dystopia is very clever and amusing.

P.P.S. I’ve used an apple orchard as an example when explaining why a tax bias against saving and investment makes no sense. I’ll now have to mention that the beleaguered orchard owner also has to deal with 5,000 regulatory restrictions.

Surviving Boko Haram

A survivor shares her story.

March 27, 2018  Jack Kerwick  15 

Unsurprisingly, Michelle Obama’s “hashtag” campaign from four years back failed abysmally to prevail upon the violent jihadist group Boko Haram to return the hundreds of Nigerian school girls who it abducted. And while the American media gave audiences the impression that this attack by militant Muslims against young Christian girls was a one-off, the truth is that Boko Haram has been conducting a reign of terror upon Nigeria’s Christian inhabitants for years. When men are included, the total number of victims of Boko Haram is estimated to be at 20,000.

Some, like 17 year-old Esther, have managed to return home. On a day that started like any other in October of 2015, Esther’s life would forever change. Esther’s mother had already passed away. She lived with her sick father, for whom she cared when she wasn’t in school. But the day that Boko Haram besieged her town would be the last day that she would ever see him alive. Esther and her father heard the first gunshots. They tried to escape, but the terrorists already had their home surrounded. Open Doors shares what happened next:..........Neither Michelle Obama nor anyone else associated with the so-called #MeToo movement in the West has uttered a syllable regarding the countless Esthers of the world, young women who have endured, not sexual harassment, but sexual brutality and its aftermath the likes of which are unimaginable to those of us who have the luxury and privilege of living in the United States of 2018.  ..............To Read More....

Who will make Libya stable again?

Despite the silence of the West, the Libyan wound still festers.

By Jonivan Jones March 27, 2018

Almost all international disputes for several years have been linked to the war in Syria, and other problem regions have been rarely recalled.

Nevertheless, the conflicts have not ceased.  One of the spots of tension is Libya, where now civil conflict is continuing.  More precisely, it should be said that the chaos that NATO created in 2011 never ended.

The collapse of the Libyan state order did not happen suddenly and did not appear as a continuation of the so-called "Arab Spring."  It all started in the spring of 2011, when Libya was not ready for a strike.  The question remains as to how much it could be ready at all.

In fact, there is dual power in Libya: the Government of National Accord, supported by the international community and headed by the U.S. protégé Fayez Saraj, and the "Eastern Cabinet," led by Abdullah al-Tani.  He is loyal to the House of Representatives in Tobruk, which in turn is supported by the commander of the Libyan National Army, Gen. Khalifa Haftar, considered a political opponent of Saraj..................More

Will John Bolton finally boot Ben Rhodes's White House minions?

John Bolton is reportedly set to clean house at the turmoil- and leak-ridden White House, still loaded with the worst of the Obama holdovers.

By Monica Showalter March 27, 2018

For more than a year now, we have been hearing of Obama-era holdovers still holding jobs in the White House. And not surprisingly, there's been turmoil, with leaks stoking feeding frenzies for the Democratic operatives with bylines known as the press.

The latest example of this was in the annoying leak about President Trump refusing to take the advice of these holdovers about not congratulating President Putin for his re-election in Russia. That one not only could have been the work of leftover Obamatons, but also could have been the work of NeverTrump dead-enders or Bush loyalists.

I ask you: why is this going on? President Trump has been in office more than a year, run through two national security advisers, and apparently, these disloyalists are still there, embedded like parasites, and the leaks are still going on. Why? This is not how basic politics works. A leader enters office and brings his loyalists with him, especially at the White House. It's been that way since the 19th-century spoils system, and it makes sense. Obama and former president George W. Bush certainly did it.............More

Trump vindicated on Paris Climate Accord pull-out

Like Obamacare promising lower health care costs and delivering higher ones, the Paris Accord promised lower emissions and delivered higher ones.  There's nothing like central planning, is there?

By Monica Showalter March 27, 2018

When President Trump announced the U.S. pull-out from the Paris Climate Accord last year, the left howled. Here's what the top bureaucrats at the United Nations had to say at the time: [United Nations spokesman Stephane] Dujarric reiterated [U.N. secretary-general Antonio] Guterres' June 1 statement calling the U.S. decision to withdraw "a major disappointment for global efforts to reduce greenhouse gas emissions and promote global security." "It is crucial that the United States remains a leader on climate and sustainable development," Dujarric said. "Climate change is impacting now. He looks forward to engaging with the American government and all other actors in the United States and around the world to build the sustainable future for our children and future generations." It was all such horse hockey................ To Read More

Feel the Bern: In Venezuela, hungry child gangs use machetes to fight for ‘quality’ garbage

By Eduard Freisler Special to the Miami Herald March 27, 2018                       

                                           

As Liliana picks lice from the tangled, thick hair of her boyfriend, Patricio, while they sit together on the sidewalk of a Caracas street, she’s also multi-tasking, keeping a watchful eye on her “family.”

When a 10-year-old girl named Danianyeliz kneels down to drink water from a puddle, Liliana reproaches her, urging her to have a sip from a juice bottle they’ve just found in a garbage bag.

At 16, Liliana has become the mother figure for a gang of Venezuelan children and young adults called the Chacao, named after the neighborhood they’ve claimed as their territory. The 15 members, ranging in age from 10 to 23, work together to survive vicious fights for “quality” garbage in crumbling, shortage-plagued Venezuela. Their weapons are knives and sticks and machetes. The prize? Garbage that contains food good enough to eat.

Liliana has a quick, wide smile and goes by the nickname Caramelo. She takes charge of each day for the group, deciding how much food her “family” will consume and how much they will stash away for another day. She settles conflicts that flare up and gives a hug, a kiss or a pat on the back as needed............To Read More....

Read more here: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article206950449.html#fmp#storylink=cpy

Read more here: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article206950449.html#fmp#storylink=cpy

The Fight over “Internet Taxation” Is Really a Proxy for an Important Battle on Whether Government Power Should Be Constrained by Borders

March 23, 2018 by Dan Mitchell @ International Liberty  

One of the key principles of a free society is that governmental power should be limited by national borders.

Here’s an easy-to-understand example. Gambling is basically illegal (other than government-run lottery scams, of course) in my home state of Virginia. So they can arrest me (or maybe even shoot me) if I gamble in the Old Dominion.

I think that’s bad policy, but it would be far worse if Virginia politicians also asserted extraterritorial powers and said they could arrest me because I put a dollar in a slot machine during my last trip to Las Vegas.

And if Virginia politicians tried to impose such an absurd policy, I certainly would hope and expect that Nevada authorities wouldn’t provide any assistance.

This same principle applies (or should apply) to taxation policy, both globally and nationally.

On a global level, I’m a big supporter of so-called tax havens. I’m glad when places with pro-growth tax policy attract jobs and capital from high-tax nations. This process of tax competition rewards good policy and punishes bad policy. Moreover, I don’t think those low-tax jurisdictions should be under any obligation to enforce the bad tax laws of uncompetitive countries.

There’s a very similar debate inside America. Some states – particularly those with punitive sales taxes – want to force merchants in other states to be deputy tax enforcers.

I’ve written about this topic and I think even my writings from 2009 and 2010 are still completely relevant. But let’s check some other sources, starting with a column in the Wall Street Journal. It’s from 2016, but the issue hasn’t changed.

The state of Alabama is openly defying the U.S. Supreme Court in an effort to squeeze millions of dollars of tax revenue from businesses beyond its borders. …This unconstitutional tax grab cuts to the heart of the Commerce Clause, which gives Congress the power to regulate trade “among the several States.” Alabama’s regulation directly contravenes the Supreme Court’s 1992 ruling in Quill v. North Dakota. In that case, the court held that North Dakota could not require an out-of-state office-supply company to collect sales taxes because the firm had no offices or employees there. …Alabama’s revenue commissioner, Julie Magee, is putting forward an untested and suspect legal theory: The state claims that if its residents buy more than $250,000 a year from a remote business, then the seller has an “economic presence”… There are around 10,000 sales-tax jurisdictions in the U.S., with varying rates, rules and holidays, and different definitions of what is taxable. Keeping track of this ever-changing patchwork is a burden, and forcing retailers to scramble to comply would profoundly hinder interstate commerce in the Internet age.

And here are some excerpts from a column published that same year by Fortune.

When politicians call for “fairness,” it’s important to take a closer look at their definition of fair. See, for example, the nationwide push in state capitols to slap online sales taxes on out-of-state retailers—a simple tax grab… states are constitutionally prohibited from collecting sales taxes from retailers that have no presence within their borders…thanks to the U.S. Supreme Court’s 1992 ruling in Quill Corp. v. North Dakota… Any national online sales-tax system will burden online retailers to a degree never felt by brick-and-mortar businesses. Local businesses only have to deal with a limited number of sales taxes—usually only the state, county, and local levies that apply to specific stores. Online retailers, on the other hand, would have to calculate and apply sales taxes across the entire nation—and roughly 10,000 jurisdictions have such taxes. Complying with this convoluted system would necessarily raise costs for consumers and stifle competition.

And the debate continues this year. The Wall Street Journal editorialized against extraterritorial state taxing last week.

A large faction of House Republicans are pressing GOP leaders to attach legislation to the omnibus spending bill that would let states collect sales tax from remote online retailers. South Dakota Rep. Kristi Noem’s legislation…would let some 12,000 jurisdictions conscript out-of-state retailers into collecting sales and use taxes from their customers. …Contrary to political lore, sales tax revenues have been increasing steadily in states with healthy economies. Over the past five years, Florida’s sales tax revenues have grown 27%. South Dakota’s are up by nearly 30% since 2013. …Twenty or so states have adopted “click-through” taxes to hit remote retailers that have contracts with local businesses. In 2016 South Dakota invited the High Court to revisit Quillby extending its sales tax to out-of-state sellers. …the Court could enable broader taxation and regulation of out-of-state businesses. This is what many states want to happen. …Raising taxes on small business and consumers won’t be a good look for Republicans in November, nor an inducement for investment and growth.

Jeff Jacoby also just wrote on this topic for his column in the Boston Globe.

First, the flow of interstate commerce must not be impeded by one state’s impositions. And second, there should be no taxation without representation; vendors should not be liable for taxes in states where they have no vote or political recourse. The Supreme Court upheld this “physical connection” standard in a 1992 case, Quill v. North Dakota. …the high court should reaffirm it. In the 26 years since the justices rebuffed North Dakota’s claim, the case against allowing states to exert their taxing power over remote sellers has grown even stronger. …there are now 12,000 taxing jurisdictions — not only states, counties, and cities, but also parishes, police districts, and Indian reservations. A lone online seller, unprotected by the Quill rule, could be obliged to remit taxes to any combination of them, with all their multitudinous rules and definitions, tax holidays and filing deadlines. …South Dakota can impose onerous burdens on companies operating within its borders, but not on vendors whose only connection to the state is that some of their customers happen to live there. The court got it right the first time. No merchant — whether selling online, via mail order, or in a traditional shop — is obliged to be a tax collector for states it doesn’t operate in.

And here are some passages from Jessica Melugin’s article for FEE. She makes the key point that extraterritorial tax powers would undermine – if not cripple – the liberalizing impact of tax competition.

…the Remote Transactions Parity Act (RTPA)…seeks to get rid of that physical presence limit on state taxing powers. It would let states reach outside their geographical borders and compel another state’s business to calculate, collect, and remit to that first state. …the long-term effect is that this arrangement will lessen the downward pressure on taxes between jurisdictions. Think of it like this: it’s the difference between driving your car across the D.C. border to Virginia to fill up with lower Virginia gas taxes—that’s how it works now and that’s what keeps at least some downward pressure on D.C. tax rates. If D.C. made the rate high enough, everyone would exit and fill up in Virginia. But if the approach in the RTPA is applied to this thought experiment, it would mean that when you pull into that Virginia gas station, they look at your D.C. plates and charge you the D.C. gas tax rate. …it’s a makeshift tax cartel among the states. …the RTPA is a small-business killer—which is why big box retailers support it. It crushes small competitors with compliance costs. State politicians are for it because they’d rather tax sellers in other states who can’t vote them out of office. Consumers will be left with less money in their pockets and fewer choices.

By the way, there are some pro-market people on the other side. Alex Brill of the American Enterprise Institute has written in favor of extraterritorial taxation.

…lawmakers have proposed legislation to allow (not require) states to collect sales tax on goods purchased from out-of-state sellers. …critics of this legislation…argue that “internet freedom is under attack by politicians willing to distort markets and tilt the playing field toward their favored businesses.” Internet freedom is certainly not being “attacked” by a policy to improve enforcement of existing tax liability. Second, these critics oppose the legislative reform based on the belief that just because the internet benefits people, online retail activities should be advantaged by public policy. If public finance were based on this type of specious logic, we would have a tax code far more unfair and distorted than it currently is.

I actually agree with both of his arguments. Giving states extraterritorial tax powers isn’t an attack on the Internet. And I also agree that tax policy shouldn’t provide special preferences.

But neither of his points address my concern that extraterritorial tax powers give too much power to governments and undermine tax competition.

Unless he’s going to argue that Nevada’s no-income-tax status is “distorted” compared to California’s punitive system. Or unless he’s going to argue that Delaware’s no-sales-tax status is “unfair” compared to New Jersey’s onerous system.

For more information, here’s my speech to congressional staffers from 2012.




P.S. For folks who like technical details, this fight is not about Internet taxation. It’s a battle between “origin-based” taxation (basically territorial taxation) and “destination-based” taxation (basically worldwide or extraterritorial taxation). I favor the former and oppose the latter, which helps to explain my opposition to the border-adjustment tax and the value-added tax.

P.P.S. I was afraid that congressional leaders would attach a provision to the new spending bill that would allow extraterritorial taxation by states. Fortunately, that didn’t happen. So the “omnibus” plan is a pork-filled affront to fiscal sanity, but at least it’s not a state-goverment-empowering, pork-filled affront to fiscal sanity.