Saturday, December 22, 2007

Hey Look, a Link

Someday I intend to write a big long link-heavy Ron Paul post. Someday.

For now, here's a Greenwald post that even IOZ approves of.


Tuesday, December 11, 2007

Since When Is Congress Fair

Over at Balloon Juice we have this post, attempting (unsuccessfully) to defend the FairTax proposal against an onslaught of liberal commenters.

As a jumping off point let's grab one of many comments:
I haven’t been following these posts, so forgive me if this has been brought up before, but the fatal flaw I see in this scheme is the assumption that big business would pass any savings realized under it on to the consumer, instead of taking it as profits.

In my considerable years on the planet, I’ve found it to be a rare occurence. In fact, off the top of my head, I can’t think of a single time it’s happened. Seems to me, they’ve sold corporate dereg on the same premise in the past.

Dereg of the cable industry was supposed to lower our cable bills. Anybody ever get a reduction in rates? Same with electricity. Competition was supposed to lower rates and they were supposed to use their profits to upgrade the grids. Didn’t happen. Why should anyone believe it would happen here?

Not exactly a model of political discourse but it serves my purpose. In discussions like this, where a government action potentially reduces the costs of producing a product, people often either state that the costs will all be passed down to the consumer, or will all be kept by the company. Both are gross oversimplifications. If a market is competitive, competition drives prices downward until firms decide it's not profitable to sell, and consumers reap benefits from any increase in supply-side efficiency. In more monopolistic situations (complete monopolies are a myth, as is perfect competition, but some markets are more competitive / less monopolistic than others), producers don't end up lowering prices as much when their costs go down because consumers will pay anyway.

The point of the above is not to imply anything about the FairTax's progressivity or lack thereof; my point is this: even if FairTax results in prices and taxes collected staying roughly the same throughout the economy, the effect will not be the same throughout every industry. And not just because of differences in the level of competition; items whose production is more labor intensive than others will see a greater cost reduction from the elimination of the income tax.

There will be winners and losers, and you can bet the losing industries will make a big stink - if they don't go out of business entirely. The losers will be big losers, because this will be a massive transition. To paraphrase Lone Star from Spaceballs, this isn't about money; it's about a shitload of money.

For a "libertarian" proposal, the FairTax displays a remarkable amount of faith in the legislative process. It presumes that our current Congress, if given the chance to recreate a tax which collects dollars numbered in the TRILLIONS, won't end up giving all sorts of exemptions and favors to politically connected industries. It presumes that all the industries adversely affected by the seismic shift in tax collection won't lobby for exemptions. It presumes that a massive national consumption tax won't get tweaked for purposes of social manipulation - i.e., increasing the taxes on cigarettes or SUVs or abortions, or decreasing the tax on condoms or corn or miniature American flags.

But let's assume that, by some miracle, the FairTax that passes initially imposes exactly the same tax on every good and service. That's how it's written up according to; the "pre-bate" is just a function of whether you're filing jointly and how many kids you have.

Our present tax system didn't come about all at once; it's not like we all started filling out 1040s and saving our charity receipts as soon as the 16th amendment passed. There will still be a massive incentive to tweak the tax code after the initial FairTax is passed, and even if it starts off the same for all goods and services, it won't stay that way for long. The political fallout from the massive, uneven transition will only increase the pressure to tweak the system.

Our tax system isn't complicated and corrupt because we tax income instead of consumption; it's complicated and corrupt because it involves a shitload of money. That's not going to change unless we implement ACTUAL libertarian ideas about social and military spending, as opposed to shell games like the FairTax. In other words, it's not going to change period.

This might sound like whiny obstructionism; we can't do anything because Congress will just screw it up! That's a fair objection in some cases, but FairTax is an attempt to swat a fly with a sledgehammer. Want to simplify the tax code? Simplify the tax code. Eliminate deductions and complications, one by one. Don't build a brand new trillion dollar institution from scratch on the reasoning that if it works perfectly well we'll all benefit. Talk about big government.

Monday, December 10, 2007

Plenty of Blame to Go Around

Some are more surprised than others at the latest revelation that Nancy Pelosi was among a small bipartisan group of Congresscritters briefed by the CIA in 2002 about our new and innovative interrogation techniques, including waterboarding. They did not object.

Now I have no less contempt for Democrats than anyone else, but let's think about this for a second - this was 2002. A quick google search reveals that President Bush's approval ratings in September of 2002 were 70%; even Cheney and Rumsfeld polled in the 60s. Failing to stridently oppose the neo-conservative agenda seems politically stupid for the Democrats now, but in 2002 it would have been a principled, prescient, honorable political suicide.

The nation was collectively insane in 2002. The President should never, ever have 70% approval ratings, let alone the 87% he had around when the Patriot Act passed. To expect the President not to abuse that power, and to expect the opposing party to put up an objection, is to forget what this country was like in 2002. Politicians willing to commit political suicide lose elections long before they make it to Congress. This is not news. Pelosi deserves no more and no less contempt than anyone else in the Democratic party for letting the popular president have his way in 2002. Our political system produces politicians, and successful politicians are concerned first and foremost with keeping their jobs.

I'm all for endorsing anti-torture candidates even if they're a little nuts, but this little episode doesn't tell me anything about Democrats or Pelosi that I didn't already know. The lesson here is that 70% approval rates are as ripe for abuse as any other form of power.


Wednesday, December 05, 2007

Local Knowledge, You Goddamn Technocrat

Sometimes I get my hopes up about Matt Yglesias. Here he is, exhibiting an admirable level of cynicism with respect to the staggeringly expensive missile defense system we're building to piss off Russia and defend against Iran's nonexistent nuclear weaponry:
Naturally, though, the exorbitant financial cost of the program counts as a point in its favor. The US would never want to build something cheap, useless, and incredibly damaging to our relationship with Russia. But since the missile defense initiatives are so damn costly, they're also incredibly profitable to the people who build them, and thus to the members of congress who get their campaign contributions and to the think tankers who they support. The best way to kill this initiative would be a scientific breakthrough that allowed its goals to be achieved cheaply and with some efficacy. If that was on hand, diplomatic considerations just might win out.
And then you get to posts like this:
In practice, arguments about federalism are almost universally made opportunistically. People favor devolving power to the states when they think doing so will produce policies they approve of, and people favor concentrating power in Washington when they think doing so will produce policies they approve of. Everyone knows this. And while one might condemn the hypocrisy of it all, this always strikes me as a good thing to be hypocritical about. I don't really have a principled view about the appropriate division of powers between states and the federal government and don't really intend to develop one. The congressional policy being enacted here seems to me to be a good one, so that's good enough for me.

I like Matt so I'll try and limit my ire to the title of the post, but if he wants a principled view I'll give him a principled view. Here it is:

If a function can be performed by a state or local government, it shouldn't be performed by the federal government.

A larger, more powerful government has more corruption, because bribing one official gets you more power. It has less efficiency, because its policies have to be implemented and enforced over a greater number of people in a larger geographic area.

Anyway, it's easy to recite the general arguments for federalism, and liberals who have been around the block have heard them before - and they'll be the first to point out that those arguments were used to defend some vile discriminatory practices that took place in the South. They can be forgiven for questioning the motives of people arguing federalist principles, but that does not render those principles meaningless. I'd argue that fundamental rights to equality under the law are much more necessarily federal than rules governing the nutritional content of school lunches.

The federal government, especially today, has a completely corrupt decision-making process. It is the ultimate sausage factory, and electing Democrats is not going to change that. Matt understands this when it comes to foreign policy, but he maintains a naive optimism that a good idea will stay a good idea after the federal government decides how to implement it - let alone the technocratic belief that if we just come up with The Right Policy we can solve all of our problems. Does he really want the federal government, granter of billions of fattening farm subsidies, making nutrition rules? Here's a clue.