The Greeks Drown in Taxes While Their Government Spends

I’ve put forth lots of arguments against tax increases, mostly focusing on why higher tax rates will depress growth and encourage more government spending.

Today, let’s look at a practical, real-world example.

I wrote a column for The Hill looking at why Greece is a fiscal and economic train wreck. I have lots of interesting background and history in the article, including the fact that Greece got into the mess by overspending and also explaining that politicians like Merkel only got involved because they wanted to bail out their domestic banks that foolishly lent lots of money to the Greek government.

But the most newsworthy part of my column was to expose the fact that “austerity” hasn’t worked in Greece because the private sector has been suffocated by giant tax hikes.
…the troika…imposed the wrong kind of fiscal reforms. …what mostly happened is that Greek politicians dramatically increased the nation’s already punitive tax burden. The Organization for Economic Cooperation and Development’s fiscal database tells a very ugly story. …on the eve of the crisis, the tax burden in Greece totaled 38.9 percent of GDP. This year, taxes are projected to reach 52.0 percent of economic output. Every major tax in Greece has been dramatically increased, including personal income taxes, corporate income taxes, value-added taxes, and property taxes. It’s been a taxpalooza… What’s happened on the spending side of the fiscal ledger? Have there been “savage” and “draconian” budget cuts? …there have been some cuts, but the burden of government spending is still a heavy weight on the Greek economy. Outlays totaled 54.1 percent of GDP in 2009 and now government is consuming 52.2 percent of economic output.
For what it’s worth, the spending numbers would look better if the economy was stronger. In other words, Greece’s performance wouldn’t be so dismal if GDP was growing rather than shrinking.

And that’s why tax increases are so misguided. They give politicians an excuse to avoid much-needed spending cuts while also hindering growth, investment and job creation.
Let’s close by reviewing Greece’s performance according to Economic Freedom of the World. The overall score for Greece has dropped slightly since 2009, but the real story is that the nation’s fiscal score has dramatically worsened, falling from 5.61 to 4.66 on a 0-10 scale. In other words, during a period of time in which Greece was supposed to sober up and become more fiscally responsible, the politicians engaged in an orgy of tax hikes and Greece went from a failing grade for fiscal policy to a miserably failing grade.
Here’s a the relevant graph from the EFW website. As you can see, the score has been dropping for a decade, not just since 2009.

This is a remarkable result. Greek politicians should have been pushing the nation’s fiscal score to at least 7 out of 10, if not 8 out of 10. Instead, the score has gone in the wrong direction because of tax increases.

Though I don’t expect Hillary and Bernie to learn the right lesson.

For more information, here’s my five-picture explanation of the Greek mess. Also, how can you expect good policy from a nation that subsidizes pedophiles and requires stool samples to set up online companies?

Some Greece-Related Humor

Let’s close by recycling my collection of Greek-related humor.

This cartoon is quite good, but this one is my favorite. And the final cartoon in this post also has a Greek theme.

We also have a couple of videos. The first one features a video about…well, I’m not sure, but we’ll call it a European romantic comedy and the second one features a Greek comic pontificating about Germany.

Last but not least, here are some very un-PC maps of how various peoples – including the Greeks – view different European nations.

Republished from International Liberty.
Daniel J. Mitchell
Daniel J. Mitchell
Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.
This article was originally published on Read the original article.

Why Ayn Rand Would Have Cast Trump as a Villain

After Donald Trump announced a number of cabinet picks who happen to be fans of Ayn Rand, a flurry of articles appeared claiming that Trump intended to create an Objectivist cabal within his administration.

Ayn Rand-acolyte Donald Trump stacks his cabinet with fellow Objectivists,” proclaimed one article. Would that it were so. The novelist and philosopher Ayn Rand was a passionate champion of individual freedom and laissez-faire capitalism and a fierce opponent of authoritarianism. For her, government exists solely to protect our rights, not to meddle in the economy or to direct our private lives.

A president who truly understood Rand’s philosophy would not be cozying up to Putin, bullying companies to keep manufacturing plants in the United States, or promising “insurance for everybody” among many other things Trump has said and done.

And while it’s certainly welcome news that several of Trump’s cabinet picks admire Rand, it’s not surprising. Her novel Atlas Shrugged depicts a world in decline as it slowly strangles its most productive members. The novel celebrates the intelligent and creative individuals who produce wealth, many of whom are businessmen. So it makes sense that businessmen like Rex Tillerson and Andy Puzder would be among the novel’s millions of fans.

But a handful of fans in the administration hardly signals that Trump’s would be an “Ayn Rand” administration. The claims about Rand’s influence in the administration are vastly overblown.

Pull-Peddling Cronies

Even so, there is at least one parallel we can draw between a Trump administration and Rand’s novels, although it’s not favorable to Trump. As a businessman and a politician, Trump epitomizes a phenomenon that Rand harshly criticized throughout her career, especially in Atlas Shrugged. Rand called it “pull peddling.” The popular term today is “cronyism.” But the phenomenon is the same: attempting to succeed, not through production and trade, but by trading influence and favors with politicians and bureaucrats.

Cronyism has been a big issue in recent years among many thinkers and politicians on the Right, who have criticized “big government” because it often favors some groups and individuals over others or “picks winners and losers.”

Commentators on the Left, too, often complain about influence peddling, money in politics, and special interests, all of which are offered as hallmarks of corruption in government. And by all indications, Trump was elected in part because he was somehow seen as a political “outsider” who will “drain the swamp.”

But as the vague phrase “drain the swamp” shows, there’s a lot more concern over cronyism, corruption, and related issues than there is clarity about what the problem actually is and how to solve it.

Ayn Rand had unique and clarifying views on the subject. With Trump in office, the problem she identified is going to get worse. Rand’s birthday is a good time to review her unique explanation of, and cure for, the problem.

The Problem: Unlimited Government

The first question we need to be clear about is: What, exactly, is the problem we’re trying to solve? “Drain the swamp,” “throw the bums out,” “clean up Washington,” “outsiders” vs. “insiders” — these are all platitudes that can mean almost anything to anyone.

Are lobbyists the problem? Trump and his advisers seem to think so. They’ve vowed to keep lobbyists out of the administration, and Trump has signed an order forbidding all members of his administration from lobbying for 5 years.

It’s not clear whether these plans will succeed, but why should we care? Lobbyists are individuals hired to represent others with business before government. We might lament the existence of this profession, but blaming lobbyists for lobbying is like blaming lawyers for lawsuits. Everyone seems to complain about them right up until the moment that they want one.

The same goes for complaints about the clients of lobbyists — the hated “special interests.” Presidents since at least Teddy Roosevelt have vowed to run them out of Washington yet, today, interest groups abound. Some lobby for higher taxes, some for lower taxes. Some lobby for more entitlements, some for fewer or for more fiscal responsibility in entitlement programs. Some lobby for business, some for labor, some for more regulations on both. Some lobby for freer trade, some for trade restrictions. The list goes on and on. Are they all bad?

The question we should ask is, Why do people organize into interest groups and lobby government in the first place?

The popular answer among free-market advocates is that government has too much to offer, which creates an incentive for people to tap their “cronies” in government to ensure that government offers it to them. Shrink government, the argument goes, and we will solve the problem.

Veronique de Rugy, senior fellow at the Mercatus Center, describes cronyism in these terms:
This is how cronyism works: A company wants a special privilege from the government in exchange for political support in future elections. If the company is wealthy enough or is backed by powerful-enough interest groups, the company will get its way and politicians will get another private-sector ally. The few cronies “win” at the expense of everyone else.
(Another term for this is “rent seeking,” and many other people define it roughly the same way.)

There’s a lot of truth to this view. Our bloated government has vast power over our lives and trillions of dollars worth of “favors” to dole out, and a seemingly endless stream of people and groups clamor to win those “favors.” As a lawyer who opposes campaign finance laws, I’ve often said that the problem is not that money controls politics, it’s that politics controls money — and property, and business, and much of our private lives as well.

Still, we need to be more precise. “Favors,” “benefits,” and “privileges” are too vague a way to describe what government has to offer. Among other things, these terms just raise another question: Which benefits, favors, or privileges should government offer? Indeed, many people have asked that question of cronyism’s critics. Here’s how the Los Angeles Times put it in an editorial responding to the effort by some Republicans to shut down the Export-Import Bank:
Governments regularly intervene in markets in the name of public safety, economic growth or consumer protection, drawing squawks of protest whenever one interest is advanced at the expense of others. But a policy that’s outrageous to one faction — for example, the government subsidies for wind, solar and battery power that have drawn fire on the right — may in fact be a welcome effort to achieve an important societal objective.
It’s a valid point. Without a way to tell what government should and should not do, whose interests it should or should not serve, complaints about cronyism look like little more than partisan politics. When government favors the groups or policies you like, that’s good government in action. When it doesn’t, that’s cronyism.

Government Force and Legal Plunder

In Rand’s view, there is a serious problem to criticize, but few free-market advocates are clear about exactly what it is. Simply put, the problem is the misuse of the power that government possesses, which is force. Government is the institution that possesses a legal monopoly on the use of force.

The question we need to grapple with is, how should it use that power?

Using terms like “favors,” “privileges,” and “benefits” to describe what government is doing when cronyism occurs is not just too vague, it’s far too benign. These terms obscure the fact that what people are competing for when they engage in cronyism is the “privilege” of legally using force to take what others have earned or to prevent them from contracting or associating with others. When groups lobby for entitlements — whether it’s more social security or Medicare or subsidies for businesses — they are essentially asking government to take that money by force from taxpayers who earned it and to give it to someone else. Call it what you want, but it ultimately amounts to stealing.

When individuals in a given profession lobby for occupational licensing laws, they are asking government to grant a select group of people a kind of monopoly status that prevents others who don’t meet their standards from competing with them — that is, from contracting with willing customers to do business.

These are just two examples of how government takes money and property or prevents individuals from voluntarily dealing with one another. There are many, many more. Both Democrats and Republicans favor these sorts of laws and willingly participate in a system in which trading on this power has become commonplace.

“Rent seeking” doesn’t capture what is really going on. Neither, really, does “cronyism.” They’re both too tame.

A far better term is the one used by nineteenth-century French economist Frederic Bastiat: “legal plunder.” Rand uses the term “political pull” to describe those who “succeed” by convincing friends in government to use the law to plunder others or to prevent them from competing.

And she uses the phrase “the Aristocracy of Pull,” which is the title of a whole chapter in Atlas Shrugged, to describe a society in which political pull, rather than production and trade, has become the rule. It’s a society that resembles feudalism, in which people compete to gain the favor of government officials in much the same way that people in feudal times competed for the favor of the king so they could use that power to rule over one another and plunder as they pleased.

The cause, for Rand, is not the size of government, but what we allow it to do. When we allow government to use the force it possesses to go beyond protecting our rights, we arm individuals to plunder one another and turn what would otherwise be limited instances of corruption or criminality into a systemic problem.

For example, when politicians promise to increase social security or to make education “free,” they are promising to take more of the incomes of taxpayers to pay for these welfare programs. When they promise to favor unions with more labor laws or to increase the minimum wage, they are promising to restrict businesses’ right to contract freely with willing workers. When they promise to “keep jobs in America,” they are promising to impose tariffs on companies that import foreign goods. The rule in such a system becomes: plunder or be plundered. What choice does anyone have but to organize themselves into pressure groups, hire lobbyists, and join the fray?

Rand memorably describes this process in the famous “money speech” in Atlas Shrugged:
But when a society establishes criminals-by-right and looters-by-law — men who use force to seize the wealth of disarmed victims — then money becomes its creators’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.
Observe what kind of people thrive in such a society and who their victims are. There’s a big difference between the two, and Rand never failed to make a moral distinction between them.

Wealth Creators vs. Wealth Appropriators

In the early 1990s, Atlantic City resident Vera Coking found herself in the sights of a developer who wanted to turn the property on which she lived into a casino parking lot. The developer made what he thought was a good offer, but she refused. The developer became incensed, and instead of further trying to convince Coking to sell or finding other land, he did what a certain kind of businessman has increasingly been able to do in modern times. He pursued a political “solution.” He convinced a city redevelopment agency to use the power of eminent domain to force Coking to sell.

The developer was Donald Trump. His ensuing legal battle with Coking, which he lost, was the first of a number of controversies in recent decades over the use of eminent domain to take property from one private party and give it to another.

Most people can see that there’s a profound moral distinction between the Trumps and their cronies in government on the one hand and people like Vera Coking on the other. One side is using law to force the other to give up what is rightfully theirs. To be blunt, one side is stealing from the other.
But the victims of the use of eminent domain often lobby government officials to save their property just as vigorously as others do to take it. Should we refer to all of them as “special interests” and damn them for seeking government “favors”? The answer should be obvious.

But if that’s true, why do we fail to make that distinction when the two sides are businesses — as many do when they criticize “Wall Street,” or the financial industry as a whole, or when they complain about “crony capitalism” — as though capitalism as such is the problem? Not all businesses engage in pull-peddling, and many have no choice but to deal with government or to lobby in self-defense.

John Allison, the former CEO of BB&T bank (and a former board member of the Ayn Rand Institute, where I work), refused to finance transactions that involved the use of eminent domain after the Supreme Court issued its now-infamous decision in Kelo v. City of New London, which upheld the use of eminent domain to transfer property from one private party to another. Later, Allison lobbied against the TARP fund program after the financial crisis, only to be pressured by government regulators into accepting the funds. In an industry as heavily regulated as banking, there’s little a particular bank can do to avoid a situation like that.

Another example came to light in 2015, when a number of news articles ran stories on United Airlines’s so-called “Chairman’s Flight.” This was a flight from Newark to Columbia, South Carolina, that United continued to run long after it became clear it was a money-loser. Why do that? It turns out the chairman of the Port Authority, which controls access to all the ports in New York and New Jersey, had a vacation home near Columbia. During negotiations over airport fees, he made it clear that he wanted United to keep the flight, so United decided not to cancel it. Most of the news stories blamed United for influence-peddling. Only Holman Jenkins of the Wall Street Journal called it what it was: extortion by the Port Authority chairman.

The point is, there’s a profound moral difference between trying to use government to plunder others and engaging with it essentially in self-defense. It’s the same difference between a mobster running a protection racket and his victims. And there’s an equally profound moral difference between people who survive through production and trade, and those who survive by political pull.

Rand spells out this latter difference in an essay called “The Money Making Personality:”
The Money-Maker is the discoverer who translates his discovery into material goods. In an industrial society with a complex division of labor, it may be one man or a partnership of two: the scientist who discovers new knowledge and the entrepreneur — the businessman — who discovers how to use that knowledge, how to organize material resources and human labor into an enterprise producing marketable goods. 
The Money-Appropriator is an entirely different type of man. He is essentially noncreative — and his basic goal is to acquire an unearned share of the wealth created by others. He seeks to get rich, not by conquering nature, but by manipulating men, not by intellectual effort, but by social maneuvering. He does not produce, he redistributes: he merely switches the wealth already in existence from the pockets of its owners to his own. 
The Money-Appropriator may become a politician — or a businessman who “cuts corners” — or that destructive product of a “mixed economy”: the businessman who grows rich by means of government favors, such as special privileges, subsidies, franchises; that is, grows rich by means of legalized force.
In Atlas Shrugged, Rand shows these two types in action through characters like steel magnate Hank Rearden and railroad executive Dagny Taggart, two brilliant and productive business people who carry a crumbling world on their shoulders. On the opposite end of the spectrum are Orren Boyle, a competitor of Rearden’s, and Jim Taggart, Dagny’s brother and CEO of the railroad where she works.

Both constantly scheme to win special franchises and government contracts from their friends in Washington and to heap regulations on productive businesses like Rearden’s. Rearden is forced to hire a lobbyist in Washington to try to keep the bureaucrats off of his back.

When we damn “special interests” or businesses in general for cronyism, we end up grouping the Reardens in with the Orren Boyles, which only excuses the behavior of the latter and damns the former. This attitude treats the thug and his victim as morally equivalent. Indeed, this attitude makes it seem like success in business is as much a function of whom you know in Washington as it is how intelligent or productive you are.

It is unfortunately true that many businesses use political pull, and many are a mixture of money-makers and money-appropriators. So it can seem like success is a matter of government connections. But it’s not true in a fundamental sense. The wealth that makes our modern world amazing — the iPhones, computers, cars, medical advances and much more — can only be created through intelligence, ingenuity, creativity and hard work.

Government does not create wealth. It can use the force it possesses to protect the property and freedom of those who create wealth and who deal with each other civilly, through trade and persuasion; or it can use that force to plunder the innocent and productive, which is not sustainable over the long run. What principle defines the distinction between these two types of government?

The Solution: A Government Limited by the Principle of Rights

As I noted earlier, the common view about cronyism is that it is a function of “big” government and that the solution is to “shrink” or “limit” government. But that just leads to the question: what’s the limiting principle?

True, a government that does less has less opportunity to plunder the innocent and productive, but a small government can be as unjust to individuals as a large one. And we ought to consider how we got to the point that government is so large. If we don’t limit government’s power in principle, pressure group warfare will inevitably cause it to grow, as individuals and groups, seeing government use the force of law to redistribute wealth and restrict competition, ask it to do the same for them.

The common response is that government should act for the “good of the public” rather than for the narrow interests of private parties. The Los Angeles Times editorial quoted above expresses this view. “What’s truly crony capitalism,” says the Times, “is when the government confuses private interests with public ones.”

Most people who criticize cronyism today from across the political spectrum hold the same view. The idea that government’s job is to serve “the public interest” has been embedded in political thought for well over a century.

Rand rejects the whole idea of the “public interest” as vague, at best, and destructive, at worst. As she says in an essay called “The Pull Peddlers”:
So long as a concept such as “the public interest” … is regarded as a valid principle to guide legislation — lobbies and pressure groups will necessarily continue to exist. Since there is no such entity as “the public,” since the public is merely a number of individuals, the idea that “the public interest” supersedes private interests and rights, can have but one meaning: that the interests and rights of some individuals takes precedence over the interests and rights of others. 
If so, then all men and all private groups have to fight to the death for the privilege of being regarded as “the public.” The government’s policy has to swing like an erratic pendulum from group to group, hitting some and favoring others, at the whim of any given moment — and so grotesque a profession as lobbying (selling “influence”) becomes a full-time job. If parasitism, favoritism, corruption, and greed for the unearned did not exist, a mixed economy [a mixture of freedom and economic controls] would bring them into existence.
It’s tempting to blame politicians for pull-peddling, and certainly there are many who willingly participate and advocate laws that plunder others. But, as Rand argues, politicians as such are not to blame, as even the most honest of government officials could not follow a standard like “the public interest”:
The worst aspect of it is not that such a power can be used dishonestly, but that it cannot be used honestly. The wisest man in the world, with the purest integrity cannot find a criterion for the just, equitable, rational application of an unjust, inequitable, irrational principle. The best that an honest official can do is to accept no material bribe for his arbitrary decision; but this does not make his decision and its consequences more just or less calamitous.
To make the point more concrete: which is in the public interest, the jobs and products produced by, say, logging and mining companies — or preserving the land they use for public parks? For that matter, why are public parks supposedly in “the public interest”? As Peter Schwartz points out in his book In Defense of Selfishness, more people attend private amusement parks like Disneyland each year than national parks. Should government subsidize Disney?

To pick another example: why is raising the minimum wage in “the public interest” but not cheap goods or the rights of business owners and their employees to negotiate their wages freely? It seems easy to argue that a casino parking lot in Atlantic City is not “in the public interest,” but would most citizens of Atlantic City agree, especially when more casinos likely mean more jobs and economic growth in the city?

There are no rational answers to any of these questions, because “the public interest” is an inherently irrational standard to guide government action. The only approach when a standard like that governs is to put the question to the political process, which naturally leads people to pump millions into political campaigns and lobbying to ensure that their interests prevail.

Rand’s answer is to limit government strictly to protecting rights and nothing more. The principle of rights, for Rand, keeps government connected to its purpose of protecting our ability to live by protecting our freedom to think and produce, cooperate and trade with others, and pursue our own happiness. As Rand put it in Atlas Shrugged (through the words of protagonist John Galt):
Rights are conditions of existence required by man’s nature for his proper survival. If man is to live on earth, it is right for him to use his mind, it is right to act on his own free judgment, it is right to work for his values and to keep the product of his work. If life on earth is his purpose, he has a right to live as a rational being: nature forbids him the irrational. Any group, any gang, any nation that attempts to negate man’s rights, is wrong, which means: is evil, which means: is anti-life.
A government that uses the force it possesses to do anything more than protect rights necessarily ends up violating them. The reason is that force is only effective at stopping people from functioning or taking what they have produced or own. Force can therefore be used either to stop criminals or to act like them.

The principle, then, is that only those who initiate force against others — in short, those who act as criminals — violate rights and are subject to retaliation by government. So long as individuals respect each other’s rights by refraining from initiating force against one another — so long as they deal with each other on the basis of reason, persuasion, voluntary association, and trade — government should have no authority to interfere in their affairs.

When it violates this principle of rights, cronyism, corruption, pressure group warfare and mutual plunder are the results.

There’s much more to say about Rand’s view of rights and government. Readers can find more in essays such as “Man’s Rights,” “The Nature of Government,” and “What Is Capitalism?” and in Atlas Shrugged.


In 1962, Rand wrote the following in an essay called “The Cold Civil War”:
A man who is tied cannot run a race against men who are free: he must either demand that his bonds be removed or that the other contestants be tied as well. If men choose the second, the economic race slows down to a walk, then to a stagger, then to a crawl — and then they all collapse at the goal posts of a Very Old Frontier: the totalitarian state. No one is the winner but the government.
The phrase “Very Old Frontier” was a play on the Kennedy administration’s “New Frontier,” a program of economic subsidies, entitlements and other regulations that Rand saw as statist and which, like many other political programs and trends, she believed was leading America toward totalitarianism. Throughout Rand’s career, many people saw her warnings as overblown.

We have now inaugurated as 45th president of the United States a man who regularly threatens businesses with regulation and confiscatory taxation if they don’t follow his preferred policies or run their businesses as he sees fit. A recent headline in USA Today captured the reaction among many businesses: “Companies pile on job announcements to avoid Trump’s wrath.”

Are Rand’s warnings that our government increasingly resembles an authoritarian regime — one that issues dictates and commands to individuals and businesses, who then have to pay homage to the government like courtiers in a king’s court — really overblown? Read Atlas Shrugged and her other writings and decide for yourself.

Republished from Learn Liberty.
Steve Simpson
Steve Simpson
Steve Simpson is the director of Legal Studies at the Ayn Rand Institute where he writes and speaks on a wide variety of legal and philosophical issues.
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Lower Taxes Means More Craft Beer

The past few years have seen a dramatic increase in the craft brewing industry across the United States. We had an 80% jump in the number of breweries in the country in just the three years from 2012 (2,401 breweries) to 2015 (4,225 breweries).

As a result, beer lovers have many more varieties of beer to choose, and the competition is keeping prices low.

Yet, the number of breweries per capita differs dramatically amongst the states. According to the Brewers Association, people in Vermont have 9.4 breweries for every 100,000 adults over 21. Sadly, Oklahomans have only 0.5 breweries per 100,000.

Economics can explain this. A good economist might say that the number of breweries in a state depends upon the demand for beer. Indeed, in the 5 states with the greatest number of breweries per capita, people consume an average of 33.62 gallons of beer per year — compared to 31.94 gallons per year in the 5 states with the fewest breweries per capita. So consumption is playing a role.

Not Just Supply and Demand

Taxes also have an influence. The 5 states with the fewest breweries per capita have an average tax of 40 cents per gallon of beer compared to 18 cents per gallon in the top 5 brewery states.

Laws about how breweries can do business also play an important role in the number of breweries per capita. In a state with a “self-distribution law,” breweries are able to sell their beer directly to restaurants, bars, and other businesses without using a distributor as a middleman. This can lower their distribution costs considerably.

Many distributors represent the major macro brewers and allocate little time to the smaller craft brewers. Recent studies have found that states that allow self-distribution have 50% more breweries per capita. None of the 5 lowest ranked states allow self-distribution, while all of the 5 highest states do.

Baptists and Beer-brewers

Note that all 5 of the states with the lowest numbers of breweries — Alabama, Georgia, Louisiana, Oklahoma, and Mississippi — are in the South. Southern states tend to have higher beer taxes, laws against self-distribution, and other laws hindering breweries from opening.

Politicians need support to keep these laws in place, and Southern states have a combination of moral and economic interests supporting such laws — a combination that is not seen anywhere else in the US.

First, politicians need voters who want these laws. Southern Baptists are not only against their adherents drinking alcohol, they are also against other people drinking alcohol. The Southern Baptist Convention’s 2006 resolutions included the following: “RESOLVED, That we urge Southern Baptists to take an active role in supporting legislation that is intended to curb alcohol use in our communities and nation.”

So states with lots of these Baptists are likely to have more restrictive laws. Southern Baptists make up over 30 percent of the population in Oklahoma, Mississippi, and Alabama. Beer-tax rates in these states are $0.40, $0.43, and $1.05 per gallon. Furthermore, none of these states currently allow self-distribution, although Oklahoma recently changed their law (the change is effective later this year).

The other source of support for these anti-brewery laws is economic interests. Who would benefit economically from there being fewer breweries? This would be current competitors, which include macro breweries and their distributors. If fewer microbreweries open, then the alternatives for beer consumers will be beers manufactured by the major breweries.

In a recent paper, I found that in the South, the larger the percentage of campaign contributions from big breweries, the fewer microbreweries these states had. In any other region of the country, this relationship did not hold.

More Taxes and Regulations, Less Beer

Fortunately, times are changing. As states struggled through the great recession, politicians looked for ways to increase entrepreneurship and employment. Several southern states have recently changed their laws and seen a boom in the number of microbreweries. This has been particularly true in North Carolina, which went from around 50 breweries in 2011 to 161 in 2015.

So, what can we predict with economics? Breweries will open as long as it is profitable. When taxes and regulations raise the costs of opening a brewery, we will see fewer of them. Politicians have to answer to their constituents. When anti-alcohol religious beliefs are strong, it is difficult for politicians to vote against their constituents and change laws.

However, when economic times are bad, politicians will weigh the lost votes from this moral group with the gained votes from the general population as a result of higher employment and economic growth.

Reprinted from Learn Liberty.
Stephan F. Gohmann
Stephan F. Gohmann
Stephan F. Gohmann, Ph.D. is endowed professor of economics at the University of Louisville College of Business. As the BB&T Distinguished Professor in Free Enterprise, Gohmann is developing and teaching the economics course, The Moral Foundations of Capitalism, and participating in community outreach efforts to discuss these concepts with diverse audiences. He is a member of the FEE Faculty Network.
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The Facts About the Dakota Access Pipeline That Protesters Don’t Want You to Know

For more than three months, thousands of protesters, most of them from out of state, have illegally camped on federal land in Morton County, North Dakota, to oppose the construction of a legally permitted oil pipeline project that is 85 percent complete.

The celebrities, political activists, and anti-oil extremists who are blocking the pipeline’s progress are doing so based on highly charged emotions rather than actual facts on the ground.

This 1,172-mile Dakota Access pipeline will deliver as many as 570,000 barrels of oil a day from northwestern North Dakota through South Dakota and Iowa to connect to existing pipelines in Illinois. It will do this job far more safely than the current method of transporting it by 750 rail cars a day.

The protesters say they object to the pipeline’s being close to the water intake of the Standing Rock Sioux Reservation. However, this should be of no concern as it will sit approximately 92 feet below the riverbed, with increased pipe thickness and control valves at both ends of the crossing to reduce the risk of an incident, which is already low.

Just like the companies that run the 10 other fossil-fuel pipelines crossing the Missouri River upstream of Standing Rock, Energy Transfer Partners—the primary funder of this pipeline—is taking all necessary precautions to ensure that the pipeline does not leak.

But even if there were a risk, Standing Rock will soon have a new water intake that is nearing completion much further downstream near Mobridge, South Dakota.

From the outset of this process, Standing Rock Sioux leaders have refused to sit down and meet with either the Army Corps of Engineers or the pipeline company.

The Army Corps consulted with 55 Native American tribes at least 389 times, after which they proposed 140 variations of the route to avoid culturally sensitive areas in North Dakota. The logical time for Standing Rock tribal leaders to share their concerns would have been at these meetings, not now when construction is already near completion.

The original pipeline was always planned for south of Bismarck, despite false claims that it was originally planned for north of Bismarck and later moved, thus creating a greater environmental danger to the Standing Rock Sioux.

The real reasons for not pursuing the northern route were that the pipeline would have affected an additional 165 acres of land, 48 extra miles of previously undisturbed field areas, and an additional 33 waterbodies.

It would also have crossed zones marked by the Pipeline and Hazardous Materials Safety Administration as “high consequence” areas, and would have been 11 miles longer than the preferred and current route.

North Dakotans have respected the rights of these individuals to protest the pipeline, but they have gone beyond civil protesting.

Though these protesters claim to be gathered for peaceful prayer and meditation, law enforcement has been forced to arrest more than 400 in response to several unlawful incidents, including trespassing on and damaging private land, chaining themselves to equipment, burning tires and fields, damaging cars and a bridge, harassing residents of nearby farms and ranches, and killing and butchering livestock. There was even at least one reported incident where gun shots were fired at police.

The recent vandalization of graves in a Bismarck cemetery and the unconscionable graffiti marking on the North Dakota column at the World War II Memorial in Washington, D.C., are examples of how the protesters’ actions do not match their claims of peaceful demonstration.

Equally disturbing is the meddling by the Obama administration in trying to block this legally permitted project through executive policymaking. This has encouraged more civil disobedience, threatened the safety of local residents, and placed an onerous financial burden on local law enforcement—with no offer of federal reimbursement for these increasing costs.

All that remains for the pipeline project to be completed is for the Army Corps of Engineers to issue a final easement to cross the Missouri River at Lake Oahe. With no legal reason remaining to not issue it, I am confident the Trump administration will do what’s right if it’s not settled before President Donald Trump takes office.

The simple fact is that our nation will continue to produce and consume oil, and pipelines are the safest and most efficient way to transport it. Legally permitted infrastructure projects must be allowed to proceed without threat of improper governmental meddling.

The rule of law matters. We cannot allow lawless mobs to obstruct projects that have met all legal requirements to proceed.

Commentary by Congressman Kevin Cramer (R-ND). Originally published at The Daily Signal.

8 Snapshots of America’s Fiscal Outlook

America is facing a looming budget crisis, but you wouldn’t know it from the way Congress keeps spending.
By 2027, net interest on the national debt will cost the American people $768 billion, Social Security and health care spending will consume 59 percent of the entire budget, and Obamacare will have cost taxpayers nearly $1 trillion.
No, these aren’t doomsday prophecies. These are actual projections from the Congressional Budget Office’s latest 10-year budget projection.
Twice a year, the Congressional Budget Office updates its annual “Budget and Economic Outlook.” This report projects the nation’s fiscal conditions for the next 10 years based on current laws.
January’s update painted a grim picture of out-of-control spending, growing debt, and irresponsible budgeting. Here are eight charts using data from the report that illustrate the nation’s current fiscal path.
1. Out-of-control spending.
Massive government spending drives budget deficits and the national debt. In 2016, federal spending reached 20.9 percent of the economy and is projected to grow even larger in 2017. By 2027, federal spending will be nearly 23.5 percent of gross domestic product. At the same time, revenues remain above historic averages. Clearly, Congress has a spending, not a revenue, problem.
Credit: Congressional Budget Office/Federal Budget in Pictures.

2. A mountain of debt.
The U.S. debt is steadily approaching $20 trillion. In the next few weeks, our debt will exceed the combined 2016 economic output of India, the United Kingdom, Japan, Germany, Canada, Brazil, Australia, Taiwan, and Thailand. Of this debt, a staggering $14.1 trillion was held by the public in 2016.
Credit: Congressional Budget Office/Federal Budget in Pictures.

3. The interest on the debt.
With every additional dollar of debt the government takes on, taxpayers pay more money in debt-servicing costs. In 2016, net interest payments on the national debt cost $241 billion. By 2027, this cost will triple and American taxpayers will be on the hook for $768 billion in net interest payments.
Credit: Congressional Budget Office/Federal Budget in Pictures.

4. Social Security ‘s unsustainable path.
Social Security’s programs are running persistent deficits. Revenues from the payroll tax and taxing workers’ benefits simply aren’t enough to cover the cost of Social Security Old-Age, Survivors, and Disability Insurance payouts. By 2025, Social Security’s deficits will account for 19 percent of all federal budget deficits.
Credit: Congressional Budget Office/Federal Budget in Pictures.

5. Higher government expenses on health care.
Health care spending is the largest portion of the federal budget. Programs like Medicare, Medicaid, Obamacare subsidies, and the Children’s Health Insurance Program consumed 29 percent of the federal budget in 2016.
By 2027, these programs will consume $2.2 trillion. Over the next 10 years, Obamacare will be responsible for nearly $1 trillion in additional health care spending.
Credit: Congressional Budget Office/Federal Budget in Pictures.

6. Structural problems in the federal budget.
Between 2016 and 2027, the Congressional Budget Office projects that federal spending as a whole will increase by $2.8 trillion. Just three major budget categories—health care, Social Security, and interest on the national debt—will be responsible for 83 percent of this spending growth. 
Credit: Congressional Budget Office/Federal Budget in Pictures.

7. Who’s paying.
Ever wonder where the government gets all of its money? In 2016, American taxpayers funded nearly 50 percent of federal revenues through the individual income tax. Payroll taxes covered another 34 percent of government revenues, while corporate income taxes and other revenues brought in 19 percent of all revenues.
Credit: Congressional Budget Office/Federal Budget in Pictures.

8. Health care in the federal budget.
In 2016, federal health care (Medicare, Medicaid, Obamacare, and Social Security) consumed 53 percent of the entire federal budget. By 2027, these programs will consume 59 percent of the entire federal budget, without reform.
Credit: Congressional Budget Office/Federal Budget in Pictures.

Without structural reform, these drivers of debt will continue to spiral out of control and eventually lead the U.S. to a budget crisis. To prevent that scenario, Congress should take preemptive measures now while it has the opportunity to do so.

Commentary by Mollie McNeill.  Originally published at The Daily Signal.

This Republican Carbon Tax Proposal Is Anything but Conservative

The Climate Leadership Council, a group of self-described conservatives, released a new report rashly titled “The Conservative Case for Carbon Dividends.”
Tactfully so, it avoided the word “tax” in its title.
The plan calls for a gradually increasing tax on carbon dioxide emissions—a recommended $40 per ton of emissions to start—tacked onto the use of energy that Americans depend on most, such as gas, oil, and coal. The tax would target the beginning of the supply chain: “the mine, well or port.”
Those pushing the plan say the tax level would be set to reduce carbon dioxide emissions by more than what is accomplished by “current regulations”—presumably the Clean Power Plan.
In this ideal world, revenue from the tax would be reimbursed to Americans each quarter, with an estimate of $2,000 per family in the first year. This would be accompanied by repeal of the Clean Power Plan and other unnamed Environmental Protection Agency regulations on carbon dioxide emissions.
Finally, the harm to businesses would be mitigated by border tax adjustments for companies that export to or import from countries that do not tax carbon dioxide emissions
The goal? An “insurance policy” against “the risks associated with future warming [which] are too big and should be hedged.”
Advocates of this plan make the outrageous claim that such a carbon tax would help working-class Americans, strengthen the economy, shrink the size of government, stabilize geopolitics, and unify Republicans.
Hopefully, this is yet another carbon tax plan masquerading as “conservative” policy to be dead on arrival.
Eighty-two percent of the energy Americans consume comes from conventional fuels, the kinds that would be taxed under this plan.
America’s economy—from electricity and fuel to food, products, and services—depends on conventional energy, and when prices go up, the effects ripple throughout the entire economy.
Tax increases harm economic growth and opportunity by absorbing resources people have that could otherwise be used to create jobs, save, and invest. A carbon tax is particularly destructive as it directly targets the use of energy, a critical input to nearly every good, service, and activity.
Taxes at the “mine, well or port” just mean the increased costs of doing business will be passed down to customers.
The plan also has the added benefit, if you love big government, of hiding the tax in small increments along the supply chain so that people can never really tell how much the tax is.
This tax shell game allows the big spenders in Washington to more easily raise taxes without anyone noticing too much. Think about the turtle in the kettle that gets ever so slightly warmer over time. At first, just a nice relaxing bath—then, turtle soup.
A carbon tax would add an unnecessary cost that would be passed on to consumers, no matter how creative Congress can be in mitigating the effects with compensation caveats. Americans don’t want to pay more for energy.
The Heritage Foundation modeled a very similar plan to the one proposed by the Climate Leadership Council, using the same model employed by the U.S. Energy Information Administration.
Heritage looked at the economic impact of a $36 per ton carbon tax that increases according to the EPA’s estimates for the social cost of carbon. Heritage analysts assumed a 100 percent return of revenues back to taxpayers—a mighty assumption, but one the Climate Leadership Council makes.
The result is not the rosy picture painted by the Climate Leadership Council. By 2035, Americans will face:
  • An overall average shortfall of nearly 400,000 jobs.
  • An average manufacturing shortfall of over 200,000 jobs.
  • A total income loss of more than $20,000 for a family of four.
  • An aggregate gross domestic product loss of over $2.5 trillion.
  • Increases in household electricity expenditures between 13 and 20 percent.
Those hit hardest are low-income Americans (despite the 100 percent rebate) and industries like manufacturing.
The clincher, though, is a carbon tax will not accomplish the environmental benefits that are the entire purpose of this exercise—regardless of what one believes about global warming.
The same climate sensitivity modeling used by the EPA shows that totally eliminating all carbon dioxide emissions in the U.S. would reduce warming by only 0.137 degree Celsius by the end of the century, and only 0.278 degree Celsius if the entire industrialized world totally eliminated all carbon dioxide emissions.
Former EPA Administrators Lisa Jackson and Gina McCarthy have admitted as much. Former Secretary of State John Kerry agreed while at the Paris climate agreements in 2015.
Further, the EPA can provide no health benefits from the Clean Power Plan, let alone an estimate of how much warming is avoided. “
To add to the irony, a carbon tax would choke economic opportunity—the best means people have to adapt and protect themselves.
Meanwhile, China, India, and others will be building power plants to provide reliable and inexpensive energy to more people, including millions who do not yet have access to electricity, in efforts to lift their people out of poverty into better, healthier standards of living.
Since when is it an “enduring conservative conviction” to create problems when trying to solve problems—and in this case a perceived problem that isn’t well defined?
Some things just do not go together. Conservatives and a carbon tax is one.

Commentary by Katie Tubb. Originally published at The Daily Signal.