Income Tax Nonsense

I'm watching the cries of anguish coming from the politicos on the left about the unfairness and unwise fiscal consequences of not raising income taxes on the "rich." The anguished cries would have a bit more credibility if they were advocating raising income taxes on everyone, not just "the other guy."

I'm always surprised that the "tax the rich" folks don't seem to have any sense of the moral and ethical aspects of taxing the other guy to spend as they see fit. Maybe they'd have a better feeling for it if we made the following proposal to them:

Depending on how you run the numbers, somewhere between 65% and 80% of all federal tax revenues go to making transfer payments, i.e., social security, medicare, medicaid, etc. So, as a practical matter, the business of the federal government is collecting money from the few and distributing it to the many. Rather than wasting money on massive bureaucracies to do that, let's eliminate the middle man. In most cities and suburbs and rural areas, everyone knows who has the money. Let's set aside one day a year when all the people who want the money go knocking on the doors of the people who have the money, and make them cough up whatever the seekers demand. We could get rid of hundreds of thousands of federal workers, who might actually find productive jobs. Then the federal government would shrink back to just being the government, i.e., focusing on the military, foreign affairs, managing federal lands, etc.

Am I Jonathan Swift?

Lisa Jackson and the EPA

Lisa Jackson wrote an op ed piece in today's WSJ, extolling the EPA and the wonderful things it has wrought. Among other things, she claims that EPA and other regulations have created 1.5 million jobs in what she calls the "environmental protection industry."

I can reduce unemployment easily. I can put two people at every cash register instead of one, and thereby cut the unemployment rate dramatically. But have I done anything worthwhile? No, because I've reduced productivity, and what I need to do to really solve the unemployment problem is increase productivity. When FDR put all those people to work on public works projects, the aggregate wealth of the country was increased, because they were improving roads and bridges and other infrastructure. (Whether we got the right amount of bang for the buck can be debated, but not the fundamental idea.) Employing lots of people to do environmental analyses, prepare impact statements, protect endangered species, figure out how to reduce stack emissions, etc., may or may not have a socially useful purpose, but together all that work reduces productivity. The fact that many people are employed doing it is no different than my idea of putting two people at every cash register. Trying to justify environmental regulation on economic grounds is impossible; it's simply an attempt to disguise the economic impact.

The "green energy" movement is one of the worst manifestations of this subterfuge. Every unit of energy produced by wind or solar increases the cost of energy production, which is why government subsidies are required. If you think the world must be saved from pollution, fine. But stop trying to say it's good economics. It's not.

Middle East Folly

Every president during my lifetime - republican and democrat - thinks part of his legacy will be bringing peace to the middle east. It is a foolish endeavor, but egos often know no bounds. When the president finally realizes that diplomacy won't work, he throws money at both sides. We taxpayers lose money, the largesse doesn't accomplish its goal, and the whole process repeats iteself in the next administration.

But Obama's latest giveaway may well be the stupidest one yet. Every serious student of middle east politics knew the most recent talks never had any chance of success, and most of them said so. But politicians can't admit failure, so to keep them from foundering Clinton offers to bribe the Israelis with more than $3 billion in military and other aid. Then the administration frets: Will the Israelis accept? Duh!! They're not as stupid as we are. In exchange for agreeing to hold off settlement building for 90 days, and showing up at the talks during that period, the Israelis get $3 billion plus. It's a no brainer. And we taxpayers take it on the chin again just to stoke the egos of the people in control in Washington.

The Real Estate Debacle

It's hard to think of an area where government involvement has created the problem, then exacerbated it and then acted to prevent it from being solved. But the real estate bubble comes immediately to mind.

Government policy has for a long time been aimed at getting too many people to own homes. Program after program has encouraged home ownership. The Fed pushed it by keeping interest rates too low; Fannie and Freddie enabled it with easy money, egged on by elected officials who had a political agenda; and regulators continually relaxed lending standards to the point at which standards really didn't exist.

Not surprisingly, the result was a huge bubble in prices. So is government now helping get prices down to normal levels? Just the opposite. Program after program is trotted out to keep prices high. That includes various mortgage relief efforts that are doomed from the outset, because they're contrary to getting prices down to where the market deems them affordable.

And now the state attorneys general jump in, seeing a political advantage in doing so. Where foreclosures need to happen, delaying them doesn't help. Do the state AGs really believe that holding off a foreclosure for a month or so is somehow miraculously going to enable home owners to start paying again?

And so the politicians - having created the problem in the first place - go merrily on making the problem worse instead of getting out of the way and letting artificiality return to reality. Is it any wonder that so many people have lost faith in politicians' ability to do anything sensible?