A Few Thoughts on Catalonia

The Catalan independence movement has drawn some support among libertarians.

From a theoretical standpoint, any group’s attempt to break away from a larger political entity is hard to argue with. Ultimately, though, the principle of self-determination, taken to its logical extreme, would mean dissolving the state and replacing it with voluntary associations. Which is why some classical liberals have taken a more limited view of self-determination.

Ludwig von Mises, for instance, argued in Liberalism that the only defensible self-determination was that of individuals, not nations, and since it is impracticable on technical grounds, it is necessary to accept the will of the majority in a given territory.

Fred S. McChesney, Rest in Peace

I first met Fred S. McChesney (1948–2017) at the Federal Trade Commission in the early 1980s. Ronald Reagan had just been elected to the presidency and had appointed James C. Miller III as the FTC’s chairman. Robert D. Tollison had been confirmed as the Director of the FTC’s Bureau of Economics. I am not sure how Fred ended up on the FTC’s professional staff after having practiced law in the D.C. area, but he was serving as the Bureau of Consumer Protection’s Associate Director for Policy and Planning when I interviewed for a position in his “shop.” That interview did not turn into a job offer from Fred, which was a blessing in disguise because I ended up working instead for Bob Tollison. Fortunately, that near-miss did not preclude our future friendship.

Being nearly the same age and with similar doctoral training in economics, Fred at the University of Virginia (UVA), me at Texas A&M, we later became intellectual soulmates, although I hasten to emphasize that I am not a lawyer. Fred was: He held a Juris Doctorate from the University of Miami’s Law School and had been counted among the first generation of students to graduate from the program created by then-Dean Henry Manne to produce lawyers with Ph.D.-level knowledge of microeconomic theory. Joint economics Ph.D.-J.D. degree programs are now thriving at George Mason University, New York University, and other schools, but Fred was on the leading edge of Henry Manne’s curricular innovation.

A Brief History of Silicon Valley

Tech Insider created a four-minute video on the history of Silicon Valley. It’s fun to watch and informative, especially for younger people who weren’t alive when “the Valley” went from groves and orchards to Apples and Googles.

The video doesn’t address one key question: How long will Silicon Valley survive? I discuss this in an earlier Beacon post titled “Death Valley? Peter Thiel and Steve Jobs on What Could Kill Silicon Valley.”

Network effects are keeping Silicon Valley vibrant in California, but everything has a tipping point. Too many burdensome taxes and regulations, coupled with increasing worldwide tech competition to create the next insanely great thing, could eventually turn Silicon Valley into Death Valley.

Don’t Shed Any Tears over the Repeal of Cook County’s Soda Tax

On Wednesday, the commissioners of Cook County, Illinois, repealed the controversial soda tax that went into effect in August of this year. December 1, 2017, will be the first day residents of Cook County will no longer be required to pay a one-cent-per-ounce tax on sugar sweetened beverages—and they’re better off without it. Although some of the costs are irreversible—one vending machine company estimated the tax cost them about $75,000 to reconfigure their machines—Cook County is now on a better path.

At one cent per ounce, Cook County’s soda tax was smaller than many of the soda taxes enacted elsewhere, which range from one and a half cents to two cents per ounce. Still, the Illinois Policy Institute (IPI), an independent but libertarian-leaning think tank, estimates that the tax effectively raises the price of soda by 50 percent. IPI reports that the after-tax price of a 12-pack of soda has risen from $4 to $5.97. That’s more than five times the local tax on beer, a stunning retail price hike confirmed by the professional fact-checkers at Politifact. A well-known principle of public finance is that some of the burden of a tax imposed at any link in the supply chain eventually gets shifted forward to consumers.

Spanish Central Government Threatens Catalonia

From the BBC:

The prime minister of Spain has two requests for the leader of Catalonia.

First: Clarify whether the region is, indeed, declaring independence from Spain. And second: If that is the case, take it back.

Otherwise, Prime Minister Mariano Rajoy says, Spain will suspend Catalonia’s current autonomy, institute direct rule and possibly even jail the Catalan president.

It seems like Madrid means business and plans to use whatever means necessary to prevent Catalan independence. I will certainly fault Catalonia’s leaders for declining to issue a clear declaration one way or the other on independence. It seems that they are using the threat of independence as bargaining power and Madrid is calling the bluff. No wonder the many people who recently voted to support secession seem disappointed and confused by the government’s dance.

Google Scientist Takes On “Robogeddon”

The future of work has always been a hotly debated subject. The heat has been turned up recently with advances in robotics and artificial intelligence (AI). One view, expressed by Stowe Boyd, lead researcher at GigaOM Research, is that robots will yield a net reduction in jobs for humans, “The central question of 2025 will be: What are people for in a world that does not need their labor, and where only a minority are needed to guide the ‘bot-based economy?” This view believes that there will be less demand for human labor in the future, resulting in a net reduction in human jobs over time.

An alternative view, however, is that technology is not destiny, and that throughout history, technology has been a job creator overall, not a job destroyer. Dr. Fei-Fei Li, chief AI scientist with Google Cloud expressed this perspective at the Startup Grind Global Conference 2017. Li, who is not an economist, provides, nevertheless, a succinct two-minute economic argument against “robogeddon” (watch until 16:46):

Dr. Li correctly notes that AI and robotics will cause job displacements (they already have), and yet new jobs have been created and will be created in the future. An economy heavily dependent on AI and robotics will demand people who work well with computers and robots, and who are comfortable working in environments of accelerating change. Such an economy will also pay a premium for uniquely human characteristics such as empathy, creativity, judgment, dexterity, touch, or critical thinking that allow businesses to reach deeper into the needs of consumers, as Li notes. The jobs that people perform in the future will be more uniquely “human.”

Technological change always brings uncertainties and disruptions. But history shows that human ingenuity and entrepreneurship has enabled new technologies to coexist with a growing human labor force. Some jobs, likely very different jobs than today, never succumb to widespread automation.

The big question is will the U.S. education system evolve to produce people who can compete in the global economy of the future, or will other countries produce the best talent? As the global workforce becomes ever-more interconnected, network-based, and virtual, increasingly someone in Minneapolis will compete with someone in Hong Kong, Bangkok, or New Delhi. It is critically important that U.S. schools develop the uniquely human skills and characteristics that will be highly valued in the future.

Crisis in Catalonia Caused by Judiciary

After the violence unleashed at the polls by the Spanish national government, many in Europe are holding their collective breath waiting for Catalonia to declare independence. As we reflect on this crisis in Spain, we would do well to recall just who made all this trouble: the judiciary. The legislature of Catalonia and the Spanish parliament had come to a peaceful agreement. In 2010, after 4 years of deliberation, Spain’s Constitutional Court struck many provisions of this legislative agreement. Verfassungsblog has a good commentary on this decision. The court’s action sparked the call for a vote on independence in which 90 percent of those going to the polls voted for secession. Now we are waiting to see if Catalonia issues a declaration of independence and attempts to set itself up as an independent nation. There is great concern that the Spanish central government will send in troops to prohibit this from happening.

A good lesson to be learned from this crisis is that the courts, when possible, should defer to decisions of the elected branches of government when they have successfully mediated a settlement on a controversial issue. But for the judiciary’s actions in this case, there would have been no independence vote or the saber rattling that is coming from Madrid.

* * *

William J. Watkins, Jr. is a research fellow at the Independent Institute and the author of the book, Crossroads for Liberty: Recovering the Anti-Federalist Values of America’s First Constitution.

The Core of the Classical Liberal Tradition: Adam Smith’s Concept of Justice

One of the best-known quotations from Adam Smith’s The Wealth of Nations (1776) defines natural liberty: “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man.”

Smith inserted the condition “so long as he does not violate the laws of justice” ahead of the directive because it was central to his conception of liberty. What everyone remembers is “free to pursue his own interest,” with the last often turned into “self-interest.” But Smith’s conception of human sociality and economy—I like the word “humanomics”—was far deeper than modern utilitarianism.

What did Smith mean by justice, and why is it so important for understanding his message? The carefully articulated answer was in his first book: The Theory of Moral Sentiments (1759, pp. 78-91).

Justice for Smith was the negative of his proposition on injustice, which stated that improperly motivated (that is, intentionally) hurtful actions alone deserve punishment because they are the objects of a widely shared sense of resentment.

Tax Reform Is a Scam: Tell Us What We Really Pay!

In another post, Randall Holcombe rightly notes the pressing need for tax reform. Holcombe argues that Trump’s proposed tax reform is “an improvement over the current system.”

That may be true; time will tell. Yet, today my news feed reports nonchalantly that the Republican Congress passed a budget in excess of $4 trillion. That is $12,693 per capita. Stated differently, the federal government spends $50,000 for every four Americans. Picture a family of four for comparison’s sake. Where is the spending reform?

That doesn’t get to the real cost of government, which also includes local and state spending amounting to another $3 trillion. Total: $7 trillion or $21,700 per capita. In excess of $86,000 for every four Americans. Find three friends and start paying!

It’s a mark of our age that the high cost of government no longer elicits outrage or comment. The two major political parties bicker about social and cultural issues, thus distracting us from the bipartisan willingness to extract wealth from Americans.

The Reagan Revolution (or the “Republican Revolution” of 1994) is long dead. What remains is the shell game of shifting costs from one group or another through “tax reform.”

Federal tax reform is one way to conceal the costs of government by focusing public attention on only one aspect of taxation (ignoring state, local, property, sales, corporate and other taxes). Even then, the true cost of government to an individual is obscured by the complexity of money transfers.

Back in the 1970s, economist James Buchanan emphasized the problem of “fiscal illusion.” Government spending was (is) out of control, in part, because of “the failure of citizens to estimate properly the true tax costs” of spending programs. “These costs are underestimated, sometimes by a factor of two-thirds. The people who pay taxes do not realize how much they pay. . . .”

Radical tax reform would make the “true tax costs” of government evident to the ordinary person, instead of concealing it by layers of taxation.

That is the type of reform we need.

Don’t hold your breath waiting for the current political class to deliver it.

Response to Vegas Attacks Shows the Heart and Mind of the Left

In response to the senseless violence in Las Vegas, several on the Left have brazenly indicated what they truly think about middle America–folks that go to work, worship on Sundays, listen to country music, drive pick ups, and simply try to build an honest life with family.

Hayley Geftman-Gold, one of CBS’s top lawyers, went on Facebook and offered her honest assessment of the shooting:

 If they wouldn’t do anything when children were murdered [likely a reference to Sandy Hook] I have no hope that Repugs will ever do the right thing, I’m actually not even sympathetic bc country music fans often are Republican gun toters.

Red-State America is repugnant (“Repugs”), a collection of “deplorables” as Hillary Clinton described them before the 2016 election, and deserve to be gunned down by a madman. Of course, the Ivy-educated lawyer and NYC resident quickly apologized once the heat was on, but can anyone doubt that her initial opinions represent that of a substantial number of people living in the “bubble”? Look at the first post right below her original one and see the affirmation from her bubble friends.

Or what about Associate Professor George Ciccariello-Maher of Drexel University? His response to the tragedy was to proclaim that “Trumpism” and “white victimization” motivated the shooter. He further opined that “white people and men” engage is this type of conduct “when they don’t get what they want.” Tenure and academic freedom have saved him from having to back peddle like Geftman-Gold. After all, this is the same guy who said that all he wanted for Christmas was a “white genocide.” Lovely. But this is the kind of nonsense that passes for academic scholarship today and is being poured into the minds of young people.

The shooting in Las Vegas was a terrible event. The ugly response of the Leftist mind should give us pause as we see how they view a large segment of fellow citizens.

* * *

William J. Watkins, Jr. is a research fellow at the Independent Institute and the author of the book, Crossroads for Liberty: Recovering the Anti-Federalist Values of America’s First Constitution.

  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org