OECD Pushes Welfare-State Policies on Thailand

July 25, 2025 by Dan Mitchell @ International Liberty

Hong Kong used to be a role model for good economic policy, but China’s crackdown has had a negative effect, so Singapore is now considered the jurisdiction with the most economic freedom.

But I also like to cite Taiwan, which is a top-20 nation for economic liberty.

Especially if the alternative is Thailand, which only ranks #65.

Unsurprisingly, differences in economic freedom translate to differences in per-capita GDP. Here’s a chart based on the Maddison database.

One reason for the big gap is that Thailand has a bigger burden of government spending.

This second chart utilizes IMF data to compare the three nations.

Looking at these two charts, one obvious conclusion is that Thailand should reduce the burden of government spending.

It makes sense, after all, to mimic the policies of nations that are much richer.

Unfortunately, the bureaucrats at the Organization for Economic Cooperation and Development must have flunked Econ 101.

The Paris-based bureaucracy just published a report that explicitly urges the Thai government to increase taxes and spending.

I’m not joking. Here are some excerpts.

 

Thailand has made significant progress in expanding its social protection system in recent years, but there is scope to further expand coverage and increase benefit levels. …spending on social protection (excluding healthcare) is only 2.1% of gross domestic product (GDP), which remains low in international comparison… Additional public spending requires increasing Thailand’s tax-to-GDP ratio… 

Raising more tax revenues will require reform across a wide range of direct and indirect taxes. There is scope to increase the standard value added tax (VAT) rate (currently at 7%)… The role of the personal income tax could be strengthened… Further, the dividend withholding tax rate could be increased. …the ceiling on social security contributions…could be raised to increase the contributions from higher incomes.

For those keeping score, the OECD wants more income tax revenue, more payroll tax revenue, and more value-added tax revenue.

And if you read the entire report, they want more energy taxes, more excise taxes, and other taxes as well.

Here’s the OECD’s list of recommendations.

We may as well call this the turn-Thailand-into-France recipe.

Except France became a (relatively) rich nation when government was very small and then made the mistake of adopting an expensive welfare state.

The OECD wants Thailand to adopt a costly welfare state today, which means the country (notwithstanding absurd OECD analysis) will never become rich.

To make matters worse, the OECD is subsidized by money from American taxpayers. So I’m helping to pay for terrible advice that will hurt the people of Thailand.

P.S. Adding insult to injury, OECD bureaucrats get tax-free salaries. So those hypocrites push tax increases on everyone else while being insulated from suffering any real-world consequences.

P.P.S. To be fair, the OECD wants all nations to have higher taxes and bigger welfare states, so it’s not selectively attacking Thailand.

James Bond, You Let us Down!

By Rich Kozlovich

Ian Fleming, who created James Bond, was also an intelligence agent serving in the British Royal Navy's Naval Intelligence Division during World War II playing a role in in covert operations, and his experiences played a role in the creation of the James Bond character, and the Bond stories.  As I read world events I have to wonder if he saw the fictional evil organizations he created in parallel with organizations that really do exist.  I believe he did.  

It turns out SPECTRE, a global criminal enterprise led by Ernst Stavro Blofeld, and SMERSH, a former Soviet counterintelligence agency, along with Quantum, a criminal syndicate are real.  Real in the sense they're representational parallels to those who really are trying to rule the world, and doing it through something called globalism.  Globalists are still trying to run the world.  The names may not be the same as Fleming's fictional organizations, but their goals are.  Let's call them the SPECTRE Cabal.

For years as I watched the world, I kept wondering what in the world are these wealthy and powerful people trying to accomplish by pushing globalism. Then I realized globalism was a front for a criminal cabal that James Bond failed to destroy, James Bond being a representative parallel character for those who are supposed to be standing for truth, justice and freedom. 

Globalism is nothing more than an effort to push the world into a socialist form of governance that would in effect be nothing more than a return to feudalism.  Whether you call them kings, or dictators, it's the rich and powerful controlling the peasants.

1. They tell us we should eat bugs to prevent global warming, and like it. 
2. They would force us to shelter in place, shut down our businesses, and accept experimental medicines to prevent the flu, all destroying the concept of individual liberties. 
3. They would tell us we have to live in clustered communities within walking distance to everything we need, making it easier to control everyone. 
4. They want to end car ownership, air travel without permission.
5. They want to eliminate cash so they can then control who could buy and sell depending on their political and/or religious views.
6. They would be the kings, and their lackeys would be the administrators who would be in charge of controlling the peasants.  In America they're called the FBI, CIA, and the Administrative state, etc.    

Starting with the United Nations, a "wretched hive of scum and villainy" if there ever was one.  I would like to start out by saying I didn't originate that phrase.  It's is a quote from an article I read.  I think I got it from Dan Mitchell in his "Wretched Hive of Scum and Villainy" series, who I believe got it from the first Star Wars movie quoting Obi-Wan Kenobi (played by Alec Guinness) calling the community, Mos Eisley,  a "wretched hive of scum and villainy".   And that should be the definition not only the UN, but the EU, WEF, WHO, WTO, and a host of others.

That phrase is so rich in eloquently defining just how corrupt and vile the these groups are I just had to use it, as the United Nations and these others have turned out to be the Mos Eisley of international politics: 

 

"a wretched hive of scum and villainy". 

 

It's also no surprise the International Criminal Court demonstrates there's no such thing as an "international community, only national interests", most of which are based on corruption, self-interest and lies, and as far as I'm concerned, it's corrupt to the core!  Israel, as well as the United States aren't signatories of the Rome Statute agreement so the ICC has no jurisdiction in either nation, and there is no state of Palestine. 

 

When it was created there was fear this unaccountable court would become a tool of leftists and anti-Semites to attack Israel and the United States in order to promote antisemitic and leftist agendas.  They were right. They're an uncontrolled body that makes up it's own rules, and is in dire need of a good smack in the mouth, and I think it should be declared a terrorist organization.  

Recently the world's ruling class, most of them either thugs or leftist misfits, descended on NYC to Rant at U.N. General Assembly:

 

"North Korea’s Kim Jong-un, China’s Xi Jinping, Russia’s Vladimir Putin,  Turkish strongman Recep Tayyip Erdogan, Vietnam’s communist dictator To Lam, Iranian President Masoud Pezeshkian, Indian Prime Minister Narendra Modi, and socialist Brazilian President Luiz Inácio Lula da Silva. Ukrainian President Volodymyr Zelensky and Nepalese communist leader KP Sharma Oli will also be in attendance, as well as British Prime Minister Keir Starmer and French President Emmanuel Macron,  among others." 

 

U.N. Secretary-General Antonio Guterres, who traditionally speaks first before the world leaders, has used the weekend prior to the event to pressure countries to adopt what is currently a 56-page international legal document known as the “Pact for the Future,” which would commit member nations to a massive global wealth redistribution plan intended to fund the U.N.’s “Agenda 2030” proposals to end poverty, racism, discrimination against women, and other social maladies...... presenting his 2024 priorities encompassing everything from global financial structures to climate control.

 

Totalitarian schemes each and every one of them.  Their presentation of what the Pact For the Future is substantially different than reality, as described in this Pact for the Future article:

 

.....neither this Pact nor the agenda items embraced by its constituent “agreements” will surprise anyone who has been watching the clamoring effort by the UN, WEF, and WHO to consolidate power to global “experts,” especially since the Plandemic. What should alarm us is the veneer of legitimacy being conferred upon an effort to replace Western Civilization — the moral and economic aspirational model for human progress — with an unelected, unaccountable global governing body seeking to impose an ideologically warped, one-world global vision by coercion and force. 

 

Guterres "despairs" the chaos "enveloping the world and guess who's fault it is?  You got it...It's the Jews fault!  Why?  They actually decided to make a real fight of it, and were winning, at least until this latest cease fire.  That really upset Guterres claiming there's no end in sight for the fighting, and Israel's defense of their  nation, “exponentially increase what is already a humanitarian nightmare with untold regional consequences”, calling for an "immediate humanitarian ceasefire and the unconditional release of all hostages.”   

 

Well he wasn't so stupid as to believe Hamas would willingly give up those hostages, and if they need humanitarian aid, then let the Muslim world provide it, which they're not.  Why?   It's also interesting no one called for a cease fire until Israel started winning.  Why?

 

One of the groups who thinks they should be able to tell us how to live is the, Club Of Rome, another leftist out of control globalist movement that, "would restrict your ability to decide how you travel, what you eat, and how you live your life – all in the name of sustainability and the global economic system".   And who are they?  There are 100 members "selected from current and former heads of state and government, UN administrators, high-level politicians and government officials, diplomats, scientists, economists, and business leaders from around the globe."   What could possibly go wrong?

One person commented the "Club of Rome are part of the vast network controlling the Blob. They are the depopulationist wing following Paul Ehrlich. They are evil to the core. Anti-humanists who must be thwarted by any and all means." 

Then there's the Organization for Economic Cooperation and Development (OECD), the Paris-based international bureaucracy is trying to become some sort of global tax enforcer for left-wing policy, which is substantially funded by American taxpayers.  

Never to be at the bottom of the list is the World Economic Forum, whose former Chairman thinks China is the finest example of good governance in the world.   

The International Monetary Fund thinks poor nations can grow faster if they raise taxes and increase the burden of government spending.

At one point W.H.O. demanded 1.5 Billion from world leader in order to handle emergencies.  They would become the de facto power over any decision as to what those emergencies are and what the world should do about them.  Which would be exactly the same "solutions" they promoted during the false covid "crisis".  A passport for tyranny.   Trump dropped funding to WHO, and now not only will they not be ruling the world, they're out of money.  Good.

• WHO Demands Slovakia Surrender Its Democracy—Prime Minister Fico Fires Back: No to the Tyrannical.
• RFK Urges Other Countries to Join the U.S. in Leaving the WHO: “We Don’t Have to Suffer the Limitations of a Dying WHO”
• RFK Jr.: U.S. and Argentina Are Building Alternative to W.H.O.

And the outlined plan for all of this?  COP 29, and that's not much different than COP 30, And they're insulted by the mere 250 billion dollars nations are willing to devote to the scientific fraud of climate change. They're wanting over a trillion a year in what can only be considered a form of reparations to third world nations for these false claims western civilization is responsible for climate change, which has caused them suffering, and western civilization needs to be punished.  

Welllll, it just ain't gonna happen folks, because in point of fact now we have a modern James Bond, and his name is Donald Trump, and he's made it clear, he's going to deal with the SPECTRE Cabal, and put an end to this corruption and this return to feudalism.   Will his efforts last? No! You have to know the left is like rust, it never sleeps, and never dies.  

While tyrants can be replaced, tyranny lives forever, and must be fought forever, so James Bond must also live forever.  

Western Society Will Be Destroyed Without a Commitment to Truth - American institutions are suffering from a collapse in public support. Among the institutions worst affected are government, the press and education. One could be forgiven for believing that government must be the most important, given its pervasiveness in our lives and its law enforcement powers; followed by the media, which -- of late -- does the government's bidding; and then perhaps education.

Advice for DOGE: No More Subsidies for the Paris-Based OECD

March 10, 2025 by Dan Mitchell @ International Liberty 

As I explained in this 2010 video, the Organization for Economic Cooperation and Development (OECD) is an international bureaucracy based in Paris that advocates for higher taxes and bigger government.

I then wrote in 2011 that eliminating subsidies for this statist bureaucracy was a “minimal test of GOP fiscal responsibility.”

And I followed up in 2012 by noting that sending America tax dollars to Paris was – on a per-dollar basis – the most destructive part of the entire federal budget. 

Sadly, nothing has changed. The OECD is still churning out propaganda, pushing for higher taxes in America and around the world.

Adding insult to injury, American taxpayers finance the biggest share of the OECD’s budget.

Those subsidies should have been eliminated decades ago. But better late than never. Those subsidies should be ended now. A perfect target for DOGE.

I made the case against the OECD last month in an article for IFC Review. Here are some excerpts.

Ronald Reagan and Margaret Thatcher had implemented major reductions in personal and business tax rates. …the US and UK tax reforms were so effective that other governments felt pressure to lower their tax rates. …Thanks to this virtuous cycle of tax competition, there was a 20-year-plus period of tax rate reductions. …So-called tax havens were a major factor in encouraging lower tax burdens…

Needless to say, there were plenty of politicians who disapproved of this liberalising process. As far as they were concerned, tax competition was “harmful” and “unfair” since it hindered their ability to impose higher tax burdens. This is where the OECD began to play a pernicious role. …

The bureaucrats in Paris were happy to become a vehicle for pushing tax harmonisation instead of tax competition. …The OECD’s first victory was the erosion of financial privacy. …The next step for the OECD is the proposed corporate tax cartel. …Once the OECD coerces all governments into that cartel, it is a good bet to predict that there will be further efforts for tax harmonisation. Some governments are already agitating for a global wealth tax…

One approach is to discourage the OECD’s fiscal imperialism by threatening to reduce the bureaucracy’s funding. The United States is the biggest sponsor of the OECD, and the bureaucrats would not want to see their gravy train derailed. Especially since they receive rather generous tax-free salaries.

To elaborate, I’ll re-share this interview I did in 2017.

The bad news is that the OECD is still being subsidized by American taxpayers.

The good news is that Republicans may finally be irritated enough to derail the aforementioned gravy train.

The OECD’s global corporate tax cartel is largely designed to grab more money from American companies. Trump, to his credit, already has ended any American participation in that cartel.

In a column for the Hill, Jack Salmon of the Mercatus Center wrote about the latest developments in that fight.

While President Trump is currently shaking international norms, there is one area where his challenge to global institutions is profoundly good: ending America’s acquiescence to the Organisation for Economic Cooperation and Development’s tax cartel. On his first day back in office, Trump signed a memorandum making clear that this “Global Tax Deal” has “no force or effect” in the United States…, signaling a return to full U.S. tax sovereignty and a decisive rejection of European economic defeatism.

For years, the OECD…has sought to impose a European-style model of high taxation and economic stagnation on the rest of the world. Its flagship initiative is a…scheme designed to siphon U.S. business revenues into the coffers of bloated European governments. …American companies would have borne nearly 60 percent of the cost…

Trump’s memorandum should be just the beginning. If the OECD remains committed to undermining tax competition and redistributing American tax revenues to Europe, why should the U.S. continue to fund it?

Amen.

The United States has a bloated an unaffordable public sector.

I think program reductions are desperately needed and that will cause short-term pain for some Americans.

There’s no reason why pampered foreign bureaucrats (with lavish and tax-free compensation packages) should be spared. Especially when they are directly and indirectly trying to push higher taxes on American families and American businesses.

Germany Incentivizes Sickness by Subsidizing Sick Days

January 24, 2025 by Dan Mitchell @ International Liberty

Back in 2019, I compared OECD nations based on the total burden of social welfare spending as a share of economic output.

France was the worst of the worst, unsurprisingly, followed by Finland and Belgium.

That column also differentiated by types of spending.

• Greece had the biggest burden of pension spending.
• France had the biggest burden of heath spending.
• Belgium had the biggest burden of redistribution spending.

Today, let’s look at an even narrower slice of the social welfare state.

According to a new article in the Economist, Germany arguably has the most lavish sickness benefits in Europe. Maybe the most extravagant in the world.

That sounds very kind and compassionate, but it seems this policy is creating perverse incentives and undermining national prosperity.

Here are some excerpts from the article.

Germany is now “the world champion when it comes to sick days,” according to Oliver Bäte, the boss of Allianz, Europe’s biggest insurer. …Ola Källenius, the boss of Mercedes, agrees with Mr Bäte. He warns of the “economic consequences” of a sickness rate in Germany that is often twice as high as in other European countries. …Germany has one of the most generous sick-leave regimes in the world and it is costing businesses dearly. …

“It’s very hard to police,” says Jochen Pimpertz of the German Economic Institute (iw). In a study he found that the total nominal cost of sick pay for employers rose from €36.9bn to €76.7bn between 2010 and 2023 (a 57% increase, adjusted for inflation). …There is clear correlation between the generosity of the system and the number of sick days, says Nicolas Ziebarth of the Leibniz Centre for European Economic Research. Germany’s arrangements are lavish compared with elsewhere in Europe and have become easier to manipulate.

The article mentions that there used to be similar problems in some Scandinavian nations, and that reminded me that Sweden enacted some good reforms a few decades ago.

So I did a search for “sick days Sweden” and found a study published by the OECD in 2020.

Authored by Philip Hemmings and Christopher Prinz, it included this chart showing that spending on sick days was dramatically reduced over a 20-year period, dropping from 5  percent of GDP in the late 1980s to 2 percent of GDP about 20 years later.

How did Sweden get these remarkable results?

The answer was simple. They reduced, in two stages, the amount of money people got for being sick (or, in many cases, for pretending to be sick). Here are a few excerpts from the study.

Sick-leave compensation reform (1990s). Pushed by a major economic downturn in the early 1990s, Sweden embarked on a series of sickness benefit reforms as part of a broader attempt to curb public spending. This included the introduction of a 14-day sick-pay period covered by employers (1992). In addition there were significant changes to compensation:  Before 1991, sickness benefits replaced 100% of earnings for 90 days and 95% thereafter, with no time limit. As of 1993, there was no payment on the first day of sickness absence (i.e. one “waiting day”), compensation then varied over time: 75% of previous earnings (days 2 and 3 of absence), 90% (until day 90), 80% (to the end of first year) and 70% thereafter.

This reform promoted a sharp drop in absence spells, especially in short-term absences… When the economy recovered in the late 1990s, sick-pay rates were increased, to 90% of the previous wage until the end of the first year and 80% thereafter. This led to a significant rise in absence rates, especially longer-term absences… Overall, the cost of being absent significantly affected absence behaviour. …

Starting in 2006, Sweden undertook a series of reforms to sickness and disability policies, which contributed to further considerable drops in both sickness absence rates and disability claims. These reforms included (Economic Survey of Sweden, OECD 2012b) among other things the introduction of…more rigorous implementation of existing regulations… Requirements for individuals on sick leave to consider a wider scope of jobs… A 2.5-year ceiling on the duration of sick leave compensation… More stringent disability-pension entitlement criteria.

The broader lesson from Sweden’s successful reforms is that Ronald Reagan was right.

As was Thomas Sowell.

The more you subsidize of something, the more you get of it.

And, at the risk of stating the obvious, it’s not a good idea to subsidize dependency and idleness.

P.S. Sweden has implemented a lot of good reforms in recent decades. What happened with sickness benefits is laudable, but I’m even more impressed by the country’s partially private Social Security system and the impressive 1992-2001 period of spending restraint. Though a lot more needs to be done.

The OECD Pushes Leftist Policy in Chile

January 16, 2025 by Dan Mitchell @ International Liberty

My primary criticism of the Organization for Economic Cooperation and Development is that the Paris-based international bureaucracy is trying to become some sort of global tax enforcer for left-wing policy.

Indeed, I founded the Center for Freedom and Prosperity in 2000 precisely because the OECD started its “harmful tax competition” project, which threatened low-tax jurisdictions with financial protectionism if they didn’t agree to help Europe’s welfare states enforce their anti-growth tax laws.

For the past 10 years, I’ve been fighting the OECD’s campaign to impose corporate tax harmonization and increase tax burdens on business (which, of course, means higher tax burdens on workers, consumers, and shareholders).

But there’s another activity of the OECD that also deserves attention. My secondary criticism of the bureaucracy is that it urges bad policy on a country-by-country basis.

On several occasions, I’ve criticized the bureaucrats for pushing bad policy on the United States (the fact that American taxpayers pay the biggest share of the OECD’s bloated budget makes that doubly outrageous).

Today, I’m going to criticize the bureaucrats for pushing bad policy on Chile.

I’ll start with the observation that Chile currently has a left-wing president, so it hardly needs any help doing dumb things.

Yet the OECD just published its Economic Survey of Chile and explicitly recommends higher taxes to fund bigger government. They don’t even hide this statist agenda. It’s explicitly summarized in Table 1.4 of the report.

Here’s some of what was written.

Tax revenues of close to 21% of GDP are insufficient to meet spending needs and future fiscal pressures due to necessary spending in the green and digital transitions, to deal with more frequent and severe climate risks, and higher spending from population ageing. A comprehensive tax reform can increase fiscal space. Such reform should consider raising more revenue from personal income taxes, …higher immovable property taxes, and environmental and tobacco ones, even if transitory, while gradually lowering regressive income tax deductions and exemptions.

You may be wondering about the Chile’s fiscal situation. Has government been starved of resources? Has spending already been cut to the bone? Are the OECD’s recommendations a way of compensating for excessive frugality in the past.

Hardly.

Here are two more charts from the report. As you can see from the one of the right, the spending burden in Chile has already been on an upward trajectory.

At the risk of stating the obvious, I’ll point out that the public sector in Chile already is way too big and exceeds the gr0wth-maximizing size of government.

Yet the current socialist government wants to make it bigger and the OECD is aiding and abetting that mistake.

I’ll close with one final chart from the report. It shows that Chile was doing a decent job of converging with the developed world but that progress ground to a halt about 10 years ago and now there’s backsliding.

For what it’s worth, I don’t think any of this is a coincidence.

There was a great period of pro-market reform in Chile in the late 1970s and early 1980s, followed by a couple of decades that can be described as status quo.

And during that time, there was a lot of economic progress.

But things started heading south about a decade ago.

• I wrote back in 2014 that the country’s newly elected leftist president was taking the country in the wrong direction. And she did.
• She was then followed in office by Sebastian Pinera, who supposedly leaned to the right but governed like a big-government Republican.
• And now the country is plagued by Gabriel Boric and his awful economic agenda.

So I’m not surprised that Chile no longer is converging.

And I’m not surprised that the OECD is pushing Chile to further sabotage its own economy.

The OECD Pushes Higher Taxes for High-Tax Greece

December 9, 2024 by Dan Mitchell @ International Liberty

Fifteen years ago, I explained that the bailout of Greece (by the IMF-EC-ECB “troika“) was a mistake because the net effect was a much bigger tax burden and no reduction in the spending burden.

And I did the same thing five years ago and found the same (predictable) result.

In other words, politicians responded to a crisis of over-spending by raising taxes.

Let’s see if anything has changed.

Here are the latest numbers for Greece’s spending burden and tax burden, courtesy of the IMF. Lo and behold, we find the same evidence of failure.

I could wrap up my column at this point by recycling my argument that bailouts are a bad idea.

And I certainly don’t mind writing I-told-you-so columns.

But I want to make a more-important point about the knee-jerk statism of the Paris-based Organization for Economic Cooperation and Development.

The OECD just released its Country Survey about Greece. Amazingly, the bureaucrats are suggesting even-higher taxes. I’m not joking. Here are some excerpts.

…more domestic resources will be needed to maintain high rates of public investment. …Tax revenue has increased from 33.4% of GDP in 2000 to 41% in 2022, above the OECD average. …Previous Economic Surveys pointed to the need to simplify the tax system by reducing the use of tax expenditures including tax allowances, credits, exemptions and reduced tax rates. …Continuing the government’s efforts to make tax compliance easier can boost collection… The effectiveness of the value added tax (VAT) remains also hampered by a wide range of goods and services that are exempt or taxed at reduced rates. …Greece also has room to raise excise taxes… The introduction of ETS2 also provides an opportunity to revise fuel excise taxes and phase out fossil fuel subsidies to harmonise and raise effective carbon prices.

By the way, the Survey generally has sensible observations about the economic impact of various taxes.

The part that is troubling is that the OECD thinks the Greek government should be bigger and that is should have more money.

Here’s a table summarizing the recommendations and I’ve highlighted which ones raises tax burden and which ones raise the spending burden.

At the risk of over-simplifying, the OECD thinks Greece should move in the wrong direction, but in a way that minimizes economic damage.

I have a different view. Move in the right direction.

Instead of taking advice from the wrong type of people, maybe Greece should put Javier Milei in charge of fiscal policy?

P.S. Just in case anyone thinks there is anything deceptive about the chart at the beginning of this column, here’s a look at the long-run data on taxes and spending in Greece.

The bottom line is that the tax burden and spending burden have increased in the past 15 years, but the numbers over the past 45 years are far more depressing.

Greece is way beyond the growth-maximizing size of government. And even OECD economists agree!

P.P.S. The political appointees are the reason why the OECD produces rubbish. But, to be fair, they don’t discriminate. The bureaucrats push for higher taxes and bigger government in every region of the world (China, Central America, Africa, Asia, Northern Europe, the United States, etc).

P.P.P.S. The Greek government has had interesting and unusual ways of moving in the wrong direction.

A Sincerity Test for the United Nations

November 18, 2024 by Dan Mitchell @ International Liberty

I get annoyed by the virtue-signalling leftism from the United Nations. And it irks me when the U.N. peddles dishonest analysis. And I’m also nauseated by the bureaucracy’s pervasive corruption.

 

But, unlike the International Monetary Fund and Organization for Economic Cooperation and Development, the U.N. has very little ability to turn bad ideas into bad policy.

Which is why I rarely write about the United Nations. But rarely is not the same as never.

I’m going to pontificate about the U.N. today because Michael Rubin of the American Enterprise Institute has put forth a very good proposal. He wants the bureaucracy to act like it believes global warming is real.

More than 67,000 delegates are in Baku, Azerbaijan, to attend the United Nations’ annual climate summit. …The United Nations itself sent hundreds of “observers” on behalf of both U.N. Secretary-General Antonio Guterres and specialized agencies. …There is normal hypocrisy, and then there is John “[private jets are] the only choice for somebody like me,” Kerry hypocrisy — but all pale in comparison to U.N. hypocrisy. The private and jumbo jets ferrying delegates to Baku, the idling sedans and limousines, the steak dinners and caviar mock any pretense that their climate concern is real.

In reality, the annual environmental conference is glorified tourism under the guise of activism. Nothing occurs in Baku that the U.N. could not conduct online and in video breakout sessions at a tiny fraction of the cost and carbon footprint. The same is true for almost every other U.N. conference. U.N. employees often fly first or business class. If the U.N. went online, it could slash not only its travel expenses but administrative ones as well. …Moving environmental conferences online would end U.N. climate hypocrisy and could serve as a test to curtail U.N. jet-setting and shrink the administrative bureaucracy that supports that lifestyle.

Amen. This change would be good for taxpayers and good for the environment.

 

When I issued my Eighteenth Theorem of Government, I was mostly thinking about the preening nitwits in the British royal family and the hypocrites in who go to Davos.

But it obviously applies perfectly to the type of people who attend U.N. climate conferences.

P.S. I’ve participated in two conferences at the United Nations. Sadly, both were in New York City so I didn’t get to travel to some exotic location.

Fiscal Dishonesty or Fiscal Insanity?

October 31, 2024 by Dan Mitchell @ International Liberty

I realize the election is just a few days away and there are many bad ideas to analyze from both candidates, but I can’t resist sharing this preposterous soundbite from a woman at the (horribly misnamed) International Growth Centre at the London School of Economics.

I have the video set to begin at the start of the soundbite and the relevant part only lasts about 10 seconds. For those who don’t want to bother clicking on a video, she says, “The big issue is that developing countries don’t collect enough tax. For example, in Zambia, where I’m from, we only collect a third of the revenue that we need.”

Those are two of the most absurd sentences ever uttered.

Let’s start with her second sentence about Zambia only collecting “a third of the revenue that we need.”

I went to the IMF’s World Economic Outlook database and found that government revenues are about 21.4 percent of GDP in Zambia. At which point three things came to mind.

• The tax burden is already far higher than it was when North American and Western European nations became rich in the 1800s and early 1900s (when fiscal burdens averaged about 10 percent of GDP).
• The very successful Asian Tigers of Taiwan, Singapore, and Hong Kong show that a government easily can finance things such as roads, education, and health care with revenues of less than 20 percent of GDP.
• If Zambia tripled its tax burden, as the woman favors, the tax burden would be the highest in the world, diverting nearly 65 percent of the economy into the hands of politicians. Which is worse even than France.

Here’s a chart showing the numbers.

I realize that most readers don’t spend any time thinking about Zambian fiscal policy, so now let’s shift to the more important issues, which is her assertion the first sentence that “developing countries don’t collect enough tax.” 

Sadly, the woman is not alone. International bureaucracies such as the International Monetary Fund, United Nations, and Organization for Economic Cooperation and Development have also latched onto the bizarre theory that poor nations can grow faster if they raise taxes and increase the burden of government spending.

This isn’t April 1. I’m not joking.

To understand why this is nonsense, here’s a video from the Center for Freedom and Prosperity.

I highlighted two absurd sentences from the first video.

Here’s the sentence I want to highlight from the second video: “There’s no nation anywhere in the world that has become rich with big government.”

Indeed, when I debate folks on the left, I give them my “never-answered question.” I ask them to identify a country in recorded history that has successfully used higher taxes and more spending as a route to prosperity.

Not surprisingly, they never have a good response (they sometimes give bad responses because they misinterpret Wagner’s Law).

Further Confirmation of the 7th Theorem of Government

October 1, 2024 by Dan Mitchell @ International Liberty

When people (correctly) complain about Washington’s inefficiency and incompetence, I tell them that one of the problems is that the federal government is simply too big.

Indeed, this is the core message of my 7th Theorem of Government.

Simply stated, when politicians expand the size and scope of government, that increases the likelihood that there won’t be energy, expertise, or resources to address problems where government should play a role.

This is true in the United States. And it’s true in other nations.

That’s not merely me being an ideologue. There’s plenty of academic evidence showing that smaller governments are more competent.

Let’s expand on that argument. The U.K.-based Economist has an article that summarizes the insight of the 7th Theorem. Here are some excerpts.

You may sense that governments are not as competent as they once were. …A flagship plan to expand access to fast broadband for rural Americans has so far helped precisely no one. Britain’s National Health Service soaks up ever more money, and provides ever worse care. …

You may also have noticed that governments are bigger than they once were. Whereas in 1960 state spending across the rich world was equal to 30% of GDP, now it is above 40%. …All of which raises a paradox: if governments are so big, why are they so ineffective? The answer is that they have turned into what can be called “Lumbering Leviathans”. …governments have overseen an enormous expansion in spending on entitlements. …

On average across the OECD, social expenditure in countries with available data rose from 14% of GDP in 1980 to 21% in 2022. …Leviathans may not remain lumbering for ever. Running large deficits in order to fund transfer payments will, eventually, become too expensive—as countries such as Greece and Italy discovered in the 2010s.

I have two comments about the article.

First, I was initially tempted to simply write a column with a snarky title such as “Most Accurate Headline, Ever.”

Second, the article raises an important issue, but the Economist (as you might suspect) got some things wrong. It wants readers to think that the problem is that “redistribution is crowding out spending on other functions of government” and that politicians “fail to raise revenues.”

 

Since tax revenues are at or near record highs in almost all nations, there’s no need to waste any space on that issue.

With regards to the “crowding out” assertion, the Economist uses this chart of US data to claim that non-entitlement spending “has crashed” from 25 percent of GDP to 15 percent of GDP.

What the article doesn’t tell readers, however, is that this drop is mostly because defense budgets now consume a smaller share of economic output.

Moreover, the article fails to point out that inflation-adjusted non-entitlement spending has increased significantly.

The Office of Management and Budget has detailed data going back to 1962 for domestic discretionary spending. This is the type of spending (not Social Security or other entitlements) that has been slashed according to the article.

But here’s what actually happened. As you can see, outlays for this type of spending have jumped by more than 400 percent. And it would be an even bigger jump if we had data going back to the early 1950s.

If this is crashing, I hope my household budget crashes to the same degree.

On a more serious note, the article is correct in that United States (and other nations) have a major problem with entitlement spending.

But the Economist is wildly wrong when it argues that nations need more non-entitlement spending. What’s actually needed is rigorous spending caps.

The OECD Pushes (Again) for Class-Warfare Taxation

July 31, 2024 by Dan Mitchell @ International Liberty

If Joe Biden and Kamala Harris proposed to give taxpayer funds to pro-tax, pro-spending groups like the Center for American Progress or the Center on Budget and Policy Priorities, Republicans presumably would argue against handouts.

After all, why should taxpayers be forced to subsidize left-wing activism?

 

While this sounds like a strictly hypothetical question, the sad reality is that American taxpayers already are funding a group that pushes for higher taxes and bigger government.

The Organization for Economic Cooperation and Development is a Paris-based international bureaucracy that is dominated by Europe’s welfare states.

For decades, the OECD has pushed for policies for all sort of tax increases. The bureaucrats mostly push for class-warfare policies (higher income tax rates, higher capital gains taxes, higher death taxes, higher business taxes, etc), but the OECD also doesn’t hesitate to push for taxes that would pillage ordinary people (energy taxes, value-added taxes, etc).

Just a few days ago, the OECD stayed true to form with a new report urging more class warfare.

This report…explores how tax systems can mitigate…inequality with a focus on the distribution of income and wealth and identifies scope for potential reform. …Strengthening progressivity through domestic tax systems can take the form of setting more progressive tax schedules, broadening the bases of progressive taxes… Improving equity calls for increasing overall tax revenues… International tax collaboration can empower countries to more effectively implement their domestic tax policies. Progress in international tax transparency…has significantly strengthened the effectiveness of domestic taxation and gives governments new scope to tax capital.

In addition to a generic embrace of various class-warfare taxes, the OECD also could not resist marrying demagoguery with dishonesty (an OECD trait) when analyzing the taxation of income that is saved and invested.

In many countries, capital income receives more favourable tax treatment than labour income.

This is simply not true. The OECD bureaucrats are ignoring the fact that various forms of capital income (such as dividends and capital gains) are examples of double taxation.

If the corporate income tax is included, the overall tax burden on capital is higher than the tax burden on labor (as the OECD itself has acknowledged on multiple occasions).

Defenders of the OECD will claim I’m being unfair because the report explains that policy makers should be aware of “incentives to work, save and invest, and ultimate implications for economic growth.”

Yet that is just a throwaway line. To the extent that the report mentions growth, the OECD implies that more class warfare will, “mitigate inequality and support more inclusive growth.”

Ironically, the political types at the OECD routinely assert that higher taxes and bigger government will be good for prosperity even though the professional economists in Paris produce research showing the opposite is true.

The bottom line if that Republicans should have defunded the OECD a long time ago. But that apparently is asking too much of the “stupid party.”

The OECD’s Tax-and-Spend Agenda for the United States

 June 26, 2024 by Dan Mitchell @ International Liberty

The Organization for Economic Cooperation and Development is a Paris-based international bureaucracy that originally was created to engage in benign activities such as gathering statistics about member nations. 

 

It still does some of that, but it also has become an advocacy organization, pushing an agenda that reflects the statist orientation of the Western European nations that dominate the OECD’s membership.

The bureaucracy is especially notorious for its anti-tax competition efforts, such as the global corporate tax cartel.

 

But it also pushes for bad policy in member nations. Heck, it pushes for bad policy in non-member nations. Basically, OECD bureaucrats think “higher taxes” is the answer for almost any question. 

I even created a sarcastic fill-in-the-blanks macro back in 2015 that can be used for any of their publications.

The bureaucrats even target the United States, which seems kind of foolish since American taxpayers finance the biggest share of the OECD’s budget.

For example, they just released their Economic Survey of the United States and recommended massive tax increases. Everything from higher corporate tax rates to increased double taxation of dividends and capital gains. As well as higher individual tax rates, busting the wage-base cap, and expanding the death tax.

Most of those tax increases target upper-income taxpayers, which OECD economists recognize is a recipe for less prosperity, but OECD tax bureaucrats don’t care.

Moreover, they didn’t forget about the rest of us. The bureaucrats also want a carbon tax and an increase in the payroll tax rate.

I’m not joking. Here’s their list, directly copied from page 135.

To be fair, the OECD Survey also includes a few changes on the spending side of the budget.

But the bureaucrats failed to identify a single department to eliminate (there are many juicy targets). Not did they call for structural entitlement reform.

They merely suggested tinkering with program formulas – an approach that repeatedly has failed to produce meaningful savings.

Oh, and they also regurgitate their recommendation for a new parental leave entitlement.

P.S. You may be wondering why the OECD pushes bad policy. The answer is simple. That is the message that politicians prefer, and the bureaucrats at the OECD need to please those politicians in order to continue enjoying their lavish budgets and exceedingly generous tax-free salaries.

P.P.S. You may also be wondering why Republicans continue to send tens of millions of dollars to Paris to subsidize the OECD. That’s a very good question. I assume the answer is a mix of stupidity and masochism.

Promote U.S. Prosperity by Rejecting the OECD Tax Cartel

February 18, 2024 by Dan Mitchell @ International Liberty

I support tax competition because it is our best hope of avoiding “goldfish government.”

 

As such, I’m very opposed to tax harmonization schemes, all of which are designed to make it easier for politicians to impose higher tax burdens. .

That’s why I’m so hostile to the Organization for Economic Cooperation and Development. Politicians from high-tax nations have co-0pted that Paris-based bureaucracy and are using it to push for a global tax cartel.

Adam Michel of the Cato Institute recently wrote an in-depth study on the OECD’s proposed business tax cartel and explained why the United States should not participate.

I recommend that people read that report. But for those who have limited time, I’m going to share some excerpts from his new column for National Review, which addresses the same topic.

To protect their businesses from facing competition, the European Union and the Organization for Economic Co-operation and Development (OECD) have concocted an international tax cartel to weaken America’s most successful international businesses. The new tax rules discourage international investment by imposing tens of billions of dollars in compliance and economic costs. …

Instead of endorsing the European plan, Congress should double down on America’s successful tax cuts by further cutting business rates and simplifying other tax rules. A low enough corporate-tax rate would break the OECD’s tax cartel, benefit domestic workers, and attract new businesses. …

Republicans have raised concerns about the OECD plan and proposed retaliatory measures in response to the OECD taxes. But, as is too often the case, they are being too timid. …Supporters of the OECD plan will argue that the new world-order tax cartel is here to stay, so it’s time for the United States to get on board. They dubiously claim that United States will benefit from new tax revenue…

Fortunately, the agreement is more fragile than they let on. Cartels are inherently unstable. Instead of ceding tax sovereignty and encouraging businesses to conduct their activity elsewhere, Congress should increase the attractiveness of the United States as an investment destination and reject the OECD’s tax tyranny.

Amen.

Tax competition is the right approach, not tax harmonization.

The simple – and accurate – way of summarizing the OECD’s plan is that some governments win and almost everyone else loses.

 

Note that only some governments win.

Countries with very sensible business tax systems (Ireland, Estonia, etc) will lose, as will jurisdictions with good overall tax policy (Bermuda, Cayman Islands, etc).

Workers and businesses lose everywhere, of course.

I’ll close with some bad news. The Biden Administration enthusiastically supports the OECD scheme, even though it largely targets American companies.

P.S. November’s election may not make a difference. The Trump Administration was bad on tax competition issues between 2017-2020, so it would be putting hope over experience to expect good policy if Trump wins a second term.

Time to (Finally) Defund the OECD?

March 28, 2023 by Dan Mitchell @ International Liberty

Nearly 13 years ago, I narrated this video about the Organization for Economic Cooperation and Development, a Paris-based international bureaucracy that uses American tax dollars to advocate for bigger government and higher taxes.

Everything I said in that video is still true, except now the federal budget is far bigger and the OECD has had about a dozen more years to push for dirigiste policies

It is particularly disgusting (and hypocritical) that the OECD is a big cheerleader for higher taxes, yet its bureaucrats get tax-free salaries.

Not only does the OECD urge higher taxes in countries all around the world (even poor countries!), it also lobbies to undermine tax competition by advocating for policies such as Joe Biden’s corporate tax cartel.

And it adds insult to injury that American taxpayers are subsidizing this nonsense.

But maybe that will come to an end. Reporting for Bloomberg Tax, Samantha Handler and Chris Cioffi explain that Republicans are threatening to end U.S. subsidies for the Paris-based bureaucracy.

Republicans are plotting ways to push back on the landmark global tax deal agreed to by nearly 140 countries, including by calling to pull US funding for the OECD that’s leading the negotiations. …“There’s concerns about the work product of the OECD,” said Rep. Adrian Smith (R-Neb.), the Ways and Means trade subcommittee chairman. …The US currently funds 19.1% of Part I of the OECD’s budget, according to the letter addressed to House Appropriations State, Foreign Operations, and Related Programs Chairman Mario Diaz-Balart (R-Fla.) and ranking member Rep. Barbara Lee (D-Calif.). …Chairman Jason Smith (R-Mo.) sent a letterlast month to the OECD Secretary-General Mathias Cormann, urging him to reject all proposals that would affect US jobs and tax revenue. Jason Smith called Pillar Two’s undertaxed profits rule “fundamentally flawed.”

Needless to say, Republicans should defund the OECD. Giving American tax dollars to the bureaucrats in Paris is a subsidy for the left.

For all intents and purposes, this is an IQ test for Republicans. Presumably, they are smart enough to understand that they should not send money to the Democratic National Committee or MSNBC. You would think they would also be smart enough not to subsidize a bureaucracy that advocates for the DNC/MSNBC agenda.

Unfortunately, Republicans have a well-deserved reputation for being the “stupid party.”

• They had total control of Washington from 2002-2006 during the Bush year. Did they defund the OECD? No.
• They had todal control of Washington from 2017-2018 during the Trump years. Did they defund the OECD? No.

To make matters worse, Republicans are sometimes so stupid that they actively help the OECD push for bad policy. Here’s another blurb from the article.

Momentum started building on the global tax talks under the Trump administration, with the US participating actively in the negotiations.

To be fair, the Trump Administration sort of proposed to defund the OECD back in 2017, but there was zero follow-through (hardly a surprise since Trump wound up being a big spender).

Instead, his dilettante Treasury Secretary actively supported the OECD.

The bottom line is that I’m happy that some Republicans are threatening to defund the OECD but I’m not overflowing with confidence that they will have the intelligence and diligence to make it happen. Even if they wind up back in power after the 2024 election.

P.S. There is at least one Republican who is very principled on the issue of the OECD.

P.P.S. The OECD sometimes resorts to grotesque dishonesty while pushing for bigger government.

P.P.P.S. I’ve been accused of “trading with the enemy” because I argue against the OECD. Heck, the bureaucrats even threatened to throw me in a Mexican jail.