States have always thrived on the fear of the taxpayers, and states have always justified their existence in part on the idea that without the state, we’d all be overrun by barbarians, or murdered by our neighbors. Charles Tilly, a historian of the state, frequently noted that the modern state as we know it, was born out of war, and was created to wage war. War and the state are inseparable. Moreover, support for the state is so central to maintaining continued funding and deference to the state’s monopoly power, that Randolph Bourne famously went so far as to say that "war is the health of the state." By extension, agents of the state — whether elected officials or bureaucrats — fancy themselves as guardians of prosperity and civilization. Without them, they apparentlyRead More »
Articles by Ryan McMaken
One of the cardinal rules of government accounting and rhetoric is to call any slowdown in the growth rate of government spending a "cut." This gives the impression that less is being spent when more is being spent. It’s just that less is being spent than the government had planned on spending otherwise. With the discussion over the Trump budget this week, there’s lots of talk of cuts, but it’s important to remember that there are absolutely no cuts whatsoever in the actual amount of money the government plans to spend. According to the Trump plan, there is a slight decrease in total spending increase compared to what had been planned in the baseline budget. Trump wants to increase spending by 16 percent from 2016 to 2020, while the baseline assumed a 20 percent increase.Read More »
It has long since become a doctrine of the modern American welfare state that the federal government must be the primary administrator of the nation’s so-called safety net. Any attempt to devolve the welfare state to the states is routinely treated as backward and reactionary.This doctrine remains in place though many US states are far larger and wealthier than many European countries that have welfare states of their own. Naturally, each of these states have economies large enough to manage state-based welfare programs. But, the federal government extracts so many billions of dollars from each state — primarily for the federal welfare state and the military — that states are left without the resources they would need to do their own.How US States Compare to their EuropeanRead More »
A strange caricature of the laissez-faire liberal (i.e., libertarian) ideology persists. Namely, that libertarians are all required to pursue an individualistic lifestyle in which each person lives on his or her own with few social or economic connections with others. This stereotype has been perpetuated for decades by both conservatives and leftwing social democrats looking for a good straw man with which to beat up the more libertarian-minded among them. Recently, for example, Pope Francis singled out the laissez-faire liberal ideology for an attack claiming that liberals (whom he imprecisely calls "neoliberals") are incapable of forming a real community because they shun the idea of anything being done as a communal activity. Specifically, according to Francis,Read More »
During the 2016 presidential election, Bernie Sanders refused to answer questions about Venezuela during an interview with Univision. He claimed to not want to talk about it because he’s "focused on my campaign." Many suggested a more plausible reason: Venezuela’s present economy is an example of what happens when a state implements Bernie Sanders-style social democracy. Similarly, Pope Francis — who has taken the time to denounce pro-market ideologies for allegedly driving millions into poverty — seems uninterested in talking about the untrammeled impoverishment of Venezuela in recent years. Samuel Gregg writes in yesterday’s Catholic World Report: Pope Francis isn’t known as someone who holds back in the face of what he regards as gross injustices. On issues likeRead More »
05/17/2017Ryan McMakenFollowing the 2008 financial crisis, many observers were surprised by how much many Americans began saving. From 2009 to 2012, total household debt fell considerably, dropping by more than 12 percent from 2008 to 2013. According to the Wall Street Journal, that drop was described by Fed researchers as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.” Since 2013, though, household debt has again marched upward. And now, according to the New York Fed, household debt in the US has now topped its previous pre-crisis level. According to the Fed:The CMD’s latest Quarterly Report on Household Debt and Credit reveals that total household debt achieved a new peak in the first quarterRead More »
Attorney General Jeff Sessions announced last week that federal law enforcement agencies and federal prosecutors should work harder to charge suspects with more serious crimes and seek longer prison terms. This move by Sessions signals a departure from the policies of AG Eric Holder under Obama who had employed policies designed to focus on more serious crimes and lesson the number of defendants charged with non-violent drug offenses. Sessions, it seems, believes the US had better get touch on crime, or be swept up in a wave of criminality. The Washignton Post reports:In speeches across the country, including his first major address as attorney general, Sessions has talked of his belief that recent increases in serious crime might indicate that the United States stands atRead More »
The World’s Central Banks Are Frozen with Fear
Money and BanksMoney and Banking1 hour agoRyan McMaken2016 was supposed to be the year that the Federal Reserve "normalized" its policies. As much as two years ago — after years of a near-zero target rate — the Fed was swearing that it would begin to raise rates back to "normal" levels and cut its balance sheet. That never happened. Yes, the Fed has increased its target rate from 0.25 percent to 1 percent over the past 19 months. But if we look at this on context, it would be absurd to declare a target rate of 1 percent as anything other than an easy-money stance. Remember that throughout the 1990s, the Federal Funds rate was usually between five percent and six percent. After December 2008, though, the target rate
Public-Sector Unions Keep the Gravy Train Flowing to Fire Departments
Taxes and SpendingPolitical Theory7 hours agoRyan McMakenFirefighting isn’t what it used to be. Thanks to fire suppression technology, structural fires are now very rare, and statistics show that firefighters rarely fight fires anymore. Mostly, firefighters respond to run-of-the-mill medical emergencies in fancy million-dollar trucks. Governing magazine lays out the change over time: In 1980, according to the National Fire Protection Association, the nation’s 30,000 fire departments responded to 10.8 million emergency calls. About 3 million were classified as fires. By 2013, total calls had nearly tripled to 31.6 million, while fire calls had plummeted to 1.24 million, of which just 500,000 of
Dismantle the FBI, and Give its Money Back to the States
U.S. HistoryPolitical Theory5 hours agoRyan McMakenWith James Comey’s firing, we’re told the FBI is in turmoil, and Washington DC cocktail parties are all atwitter over the excitement of the scandal. But don’t worry about the FBI. If history has proved anything, the Bureau, no matter how much chaos it may endure, can always rely on a fat check from Congress — funded by the American taxpayers. But why does the US need a huge national police force at all? Can’t state police forces do just as well? The FBI continues to assert never-proven claims that bigger governments are better at law enforcement than smaller onces. This myth is not only untrue, but very expensive for taxpayers. The FBI’s Gravy TrainThe FBI is
What Do Governments Want from Bitcoin?
7 hours agoRyan McMakenSeveral large regimes have hinted they’ll be looking more favorably on bitcoin, leading to record prices for the digital currency. Everett Numbers reports at The Anti-Media: The price of bitcoin just surpassed $1,800, its second all-time high this week. As governments worldwide eye the blockchain technology and ready new cryptocurrency rules, there is no sign bitcoin’s astronomical rise in value, up 81 percent this year, is overAccording to Coindesk’s Bitcoin Price Index, the average price of bitcoin hit $1,839.23 on Thursday after starting the day’s trade session at $1,732.13. That jump of more than $100 follows the historical achievement Tuesday of bitcoin breaking $1,700 for the first time.What’s drivingRead More »
Money-Supply Growth Fell to an 8-year Low in March
4 hours agoRyan McMakenThe supply of US dollars has slowed during early 2017 with March’s year-over-year percentage increase hitting a 103-month low of 5.9 percent. The last time the year-over-year growth rate was lower was during September of 2008, when the growth rate was 5.2 percent. Monthly year-over-year growth rates in the money supply have been falling each month since October. (All the numbers used here were posted in mid-April 2017.)Over the past eight months or so, money supply growth rates have become somewhat volatile with the growth rate surging from 6.7 percent in late 2015 up to 11.3 percent by late 2016, and down again to March’s multi-year low. The M2 measure also showed a downward turn in recent months,Read More »
Three Ways Trump’s Tax "Cuts" Will Raise Taxes
Financial MarketsMoney and BanksTaxes and SpendingMoney and BankingPolitical Theory2 hours agoRyan McMakenTax cuts are great when they are actually tax cuts. In a system with a central bank, though, tax cuts are never tax cuts if there are no spending cuts to accompany them. This is because tax cuts without spending cuts simply mean more deficit spending. Unfortunately, it is clear that under Trump the federal government has every intention of spending as it always has. Indeed, the Trump administration plans to spend even more than its predecessors by raising military spending without making any sizable cuts to any other program. So what does it mean if the government plans to spend more but says it will cut its revenue
Napolitano: The GOP Didn’t Touch the Core of Obamacare
HealthPolitical Theory8 hours agoRyan McMakenOn Kennedy yesterday, Judge Andrew Napolitano explained how the GOP’s "repeal" of Obamacare does nothing to touch the four foundations of the Obamacare plan. The new plan "assumes the premise of Obamacare," Napolitano noted, explaining that the ideological and legal foundations of Obamacare are still in place. Napolitano continued:There are 4 premises of Obamacare. The first is that somehow the federal government can regulate the delivery of healthcare. The second is that somehow the federal government is obliged to provide for health care.The third is the federal government can order you to purchase insurance for health care. The fourth is that all physicians must
California, Illinois, and New York Keep Losing People to Other States
Taxes and SpendingPolitical Theory2 hours agoRyan McMakenIt seems that many residents of the West Coast and the Northeast are leaving those regions behind. In March, for example, the Sacramento Bee reported that California "exports its poor to Texas…while wealthier people move in." Former Californians report that a lackluster job market, a high cost of living, and high taxes are pushing them out. This week, Chicago Magazine reported on Chicago’s highly publicized diaspora. One interviewee reported the crime, high cost of living, and taxes drove him out of Illinois and across the state line to norther Indiana. “I couldn’t have this size house in Illinois,” he said. Last week, Bloomberg reported
Migrants from Other States Are "Stealing Our Jobs"
U.S. EconomyPolitical Theory7 hours agoRyan McMakenAs Ludwig von Mises noted, unrestrained immigration is not without its downside. This is due to the fact that linguistic and cultural majorities have a habit of using the political system to exploit the linguistic and cultural minorities. As these majorities change due to migration, this can lead to political conflict. For Mises, the answer to this was more fluidity in borders, and the use of secession and decentralization as tools in minimizing the power held by majority groups over minority groups.Note, however, that these are political issues, and are artifacts of the political system — not the economic system. Conspicuously absent from Mises’s work are economic
It’s no secret that in coastal cities — plus some interior cities like Denver — rents and home prices are up significantly since 2009. In many areas, prices are above what they were at the peak of the last housing bubble. Year-over-year rent growth hits more than 10 percent in some places, while wages, needless to say, are hardly growing so fast.
Lower-income workers and younger workers are the ones hit the hardest. As a result of high housing costs, many so-called millennials are electing to simply live with their parents, and one Los Angeles study concluded that 42 percent of so-called millennials are living with their parents. Numbers were similar among metros in the northeast United States, as well.
Why Housing Costs Are So High
It’s impossible to say
One-Third of Americans Are on Government Healthcare
Taxes and SpendingPolitical Theory2 hours agoRyan McMakenThe US House of Representatives voted to day to "repeal and replace" Obamacare. Unfortunately, those who use the phrase "repeal and replace" are greatly exaggerating the extent to which the Affordable Care Act is actually repealed. While perhaps a tiny step in the right direction, the new legislation signals no departure whatsoever from the long-established trend of expanding the role of government programs in subsidizing the regulating the health care industry. Perhaps worst of all, since this is being called a "repeal," many may be prompted to think that the US health care system is a "free market" system, or that government spending has only a very small role in the industry. This couldn’t be further from the truth. In fact, the US is fourth in the world in terms of per capita government spending on health care, behind only Norway, Luxembourg, and the Netherlands. That’s government spending, not overall spending: In fact, those numbers from the World Health Organization (WHO) are from 2014, and with the expansion in Medicaid spending under Obamacare, it’s entirely plausible that the US has moved into third place in the past two years.
How Governments Outlaw Affordable Housing
The EntrepreneurPolitical TheoryPricesPrivate Property5 hours agoRyan McMakenIt’s no secret that in coastal cities — plus some interior cities like Denver — rents and home prices are up significantly since 2009. In many areas, prices are above what they were at the peak of the last housing bubble. Year-over-year rent growth hits more than 10 percent in some places, while wages, needless to say, are hardly growing so fast. Lower-income workers and younger workers are the ones hit the hardest. As a result of high housing costs, many so-called millennials are electing to simply live with their parents, and one Los Angeles study concluded that 42 percent of so-called millennials are living with their parents. Numbers were similar among metros in the northeast United States, as well.Why Housing Costs Are So HighIt’s impossible to say that any one reason is responsible for most or all of the relentless rising in home prices and rents in many areas. Certainly, a major factor behind growth in home prices is asset price inflation fueled by inflationary monetary policy. As the money supply increases, certain assets will see increased demand among those who benefit from money-supply growth. These inflationary policies reward those who already own assets (i.e.
Americans Are More Mobile Than Many Other Societies — And That’s Not Always Good
U.S. HistoryPolitical Theory55 min agoRyan McMakenBloomberg reported last week that worker mobility has returned to pre-recession levels. That is, Americans have returned to the feverish pace of moving out of state last experienced before the economy began to soften ten years ago. This, we are told, is a good sign for efficiency and economic growth: Mobility of Americans represents part of the nation’s dynamism, and low migration has concerned economists because it tends to hurt the labor market’s ability to function. All other things being equal, worker mobility is certainly a positive thing because it means workers can move to where their skills are needed most, benefiting both employer and employee. However, since workers are not mere economic inputs — but are also human beings with relationships and interests outside their wage-earning activities — there are social costs associated with residential mobility that economists often ignore. Indeed, residential mobility can be associated with higher levels of stress, crime, poor health, and what sociologists call "social disorganization.
The Pope’s Favorite Straw Man: "Individualism"
Media and CulturePolitical Theory7 hours agoRyan McMakenSince his election in 2013, Pope Francis has repeatedly attacked what he now calls the "liberal-individualist" or "neoliberal" vision of the world. With last week’s statement to the Pontifical Academy of Social Sciences, Francis has renewed the attack, but in the process has exhibited a number of political biases and demonstrably false assumptions. This line of attack began almost as soon as Francis’s pontificate began. In 2013, for example, he denounced “trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world…"The Pope has also repeatedly suggested that he believes financial markets are essentially unregulated and that many of the the world’s regimes are laissez-faire minimalist states. Obviously, such claims can easily be shown to be empirically false. The financial sector is one of the most heavily regulated worldwide, and the governments in the richest countries in the world — the United States included — spend approximately one-fifth of total GDP on government welfare programs alone.
Colorado House Votes to Bar State Agents from Assisting Federal Police
Legal System10 hours agoRyan McMakenThe Colorado House of Representatives voted 56-7 on Wednesday to pass legislation mandating that "the state, a state agency, or an agency of a political subdivision of the state shall not knowingly assist or aid a federal agency or agency of another state in arresting a Colorado citizen for committing an act that is a Colorado constitutional right." It is believed that the bill was introduced as a repudiation of the Trump administration’s repeated hints that it plans to crack down on states that have legalized recreational marijuana. In February, White House Spokesman Sean Spicer announced "I do believe that you’ll see greater enforcement of [federal law against marijuana]." Unfortunately, the Colorado legislation does contain phrases that soften the power of state law, which defines a "right" as "a right enumerated in the Colorado constitution that has not been declared unconstitutional by a federal or Colorado appellate court."This leaves an opening for opponents of the state’s marijuana laws who could still gain state-level assistance if they can get a federal court to strike down the state’s marijuana provisions. Nevertheless, in the absence of such action, this legislation does appear to tie the hands of state and local police.
How Government Meddles in Your Easter Chocolate
Big Government5 hours agoRyan McMakenIt’s Easter time again, which means it’s time to talk about chocolate. Simaran Sethi at the Los Angeles Times this week highlights the plight of cacao farmers:What wasn’t factored into the celebration [over falling chocolate prices] is the deep suffering of the subsistence farmers who grow cacao, the seeds of a pod-shaped fruit that, once harvested, become the cocoa traded on the commodities market and destined for the chocolate eggs and bunnies that fill most Easter baskets.It’s become somewhat obligatory in recent years to mention cacao farmers every Easter as consumers buy chocolate in especially large quantities. In 2015, for example, on Easter 2015, The Guardian noted: In west Africa, cocoa workers scratch a living on small farms, usually no bigger than five hectares. Years of low incomes, uncertainty over land rights and ageing cocoa trees passing their most productive years have shaped an industry ravaged by poverty and child labour.1Cacao Farms: The Latest "Sweatshop" Basically, the cacao farm has become a sweatshop in the eyes of some Western op-ed writers. Cacao farms, we are told, are ravaged by slave-level wages, by child labor, and by other horrors.
Danger: Federal Tax Revenue Growth Falls to 80-Month Low
Taxes and SpendingPolitical Theory4 hours agoRyan McMakenA new report from the US Treasury Department shows that growth in federal receipts has fallen to the lowest level seen in 80 months, with the 12-month average falling 1.3 percent from March 2016 to March 2017. The last time federal receipts fell as far was during July of 2010 when they dropped 2.4 percent from July of the previous year. More importantly, the last time receipts fell this much, while in a downward trend, was in July 2008 shortly before the financial crisis. March 2017 was the fourth month in a row during which federal receipts were down year over year, while growth rates overall have been falling quickly since mid-2015.
If we remove the rolling averages and simply look at straight year-over-year growth, we find that growth rates have been bumping along near zero percent for the past year. By this measure, the overall trend has been downward since mid-2013.
This isn’t to say that the federal government is hurting for revenues, of course. Through mid-2015, the feds were pulling in record receipts, and only over the past year have receipts begun to flatten out. Nevertheless, they remain above pre-recession levels.Read More »
End Airline Protectionism: Allow Foreign Carriers on Domestic Routes
21 hours agoRyan McMakenIn the wake of the United Airlines debacle — in which the airline had airport police assault one of its own customers — customers have begun to ask why there doesn’t seem to be more competition for United to contend with. They ask: would United treat its customers so poorly if they had more competition? Maybe not. Is the Airline Industry Competitive? Compared to governments — which enjoy near-absolute monopolies — airlines are quite competitive. But compared to many private-sector industries, they are not especially competitive. It is true that a small number of firms dominate the airline business in North America. Investopedia claims the three top carriers enjoy 70 percent of the business, and Salon and the NYT say the top four enjoy 80 percent. By the numbers provided here, we find that the top four combing for around 80 percent according to 2015 enplaned passengers:
Nevertheless, the fact that there are only a handful of firms dominating the industry does not prove that the airline business is an oligopoly or a cartel or is "non-competitive." True oligopolies and monopolies can only exist when governments fully prevent firms from entering the marketplace.Read More »
Trump Abandons Economic Reforms to Embrace War Spending
Taxes and SpendingWar and Foreign Policy04/11/2017Ryan McMakenIn February, David Stockman pointed out that the Trump administration appears none too interested in addressing many of the economic issues that Trump claimed would be at the center of his administration. Instead, Stockman noted, Trump spent all his time obsessing over his travel ban — which he still can’t get beyond the courts — and other non-economic issues. Stockman noted: It’s the economy, stupid. … Trump was elected because flyover America is hurting economically. The voters of Racine, Wisconsin and Johnstown, Pennsylvania are imperiled not because of some refugees, they’re imperiled because their jobs have all been disappearing for decades. The problem is far more the Federal Reserve, Janet Yellen, the bubbles they’re creating on Wall Street…And that was even before Trump mishandled the Obamacare repeal. But now that it’s April, it’s all the more clear that Stockman was right. Trump and the GOP have already abandoned the Obamacare issue — and the Trump administration has now signaled there won’t be any attempts at tax cuts anytime soon. In February, Trump was promising a corporate tax cut bill "in two or three weeks." Now, nothing’s even on the horizon. Obamacare has also been relegated to the back burner.
Monopoly and CompetitionPrivate PropertyUnited Airlines managed to provoke a firestorm of opposition over the weekend when the airline overbooked one of its flights and resorted to removing at least one passenger by smashing his face and physically dragging him off the plane. At least two other passengers filmed the altercation between the non-violent passenger and the law enforcement officers — it’s unclear if they were private security agents or government police officers. In response, the airline issued a creepily Orwellian "apology" for "re-accommodating" the passenger who had been selected "by computer" to make room for some airline staffers. The response over social media has been swift with countless posters on Twitter vowing to boycott the airline.My purpose here, however, is not to dissect what United should have done differently or how they can better manage space on the airplane — which should be regarded as private property.1 It should be obvious that on a philosophical and moral level, United is entitled to remove anyone it wishes from its airplanes for any reason it pleases — provided the airline properly compensates all affected customers.
Global EconomyPolitical TheoryImmigration restrictions and trade restrictions are often two policies that go hand in hand. Donald Trump, of course, provides an instructive example of a politician who has won elections while promoting both policies. Usually ignored, however, is the fact that trade restrictions work contrary to to the goal of immigration restrictionism. That is, by restricting the movement of goods and services across borders, trade protectionists are creating the very conditions that are likely to increase incentives for workers to emigrate from low-wage areas into higher-wage areas. That is, if goods and services can’t move across borders, then people are more likely to move in order to reach those goods and services. The More Immigration Is Restricted, the More Important Free Trade Becomes As to the matter of immigration itself, we’ll leave that to other articles on this site — and there are plenty of them — to explore the matter. But, for the sake of argument, let’s say that the Congress passes a variety of highly-restrictive anti-immigration laws — and a large portion of the population is fine with it. As explained by Murray Rothbard in Power and Market, this government intervention in the market place would bring with it an array of market distortions.
One of the benefits of being an extremely powerful lobby in Washington is the ability to live off the taxpayers without ever having to tell the taxpayers what you they with their money. This includes two of the most powerful lobbies in DC: the Fed and the Pentagon.1 In recent years, thanks to Ron Paul, the "Audit the Fed" movement has gained a high profile in Washington and continues to be an election issue. Far less salient, however, is the issue of Auditing the Pentagon. And, unfortunately, like the Fed, the Pentagon is able to quash efforts to make the massive military establishment more transparent and more accountable in its spending. Needless to say, the legislation went nowhere. Nevertheless, as The Guardian reports, the GAO and Office of the Inspector General (IG) have published an endless stream of reports documenting financial mismanagement: $500m in aid to Yemen lost here, $5.8bn in supplies lost there, $8,000 spent on helicopter gears that really cost $500.Meanwhile, according to sparse internal audits, the Pentagon doesn’t know what happened to more than six trillion dollars spent in recent years. And, the Pentagon’s own report admits the Pentagon wasted $125 billion (more than one-sixth of an entire year’s budget) in "administrative waste.Read More »
The Wall Street Journal reports today that the US trade gap shrunk during the first two months of this year. Matt Drudge presented this report as evidence that the United States is "great again" with the headline in the usual Drudge fashion announcing "GREAT AGAIN: Trade Gap Shrinks as Exports Rise." The problem with this assertion is that the so-called trade gap is not simply a measure of how much US firms export to other countries. It’s a measure of relative consumption and foreign investment in the United States. So, if if increasing exports were evidence of the US being "great again" a decline in the trade deficit proves no such thing.
As Reuters reports, a factor in the shrinking trade gap is the fact that "slowing domestic demand weighed on imports." In other words, Americans apparently had less money to spend on goods and services imported from other countries. Did Americans just decide to spend more money on domestic goods instead of foreign goods? It’s possible. But the more likely explanation is that Americans simply had less money to spend. This is hardly evidence of anything being "great again." Moreover, the shrinking deficit was also driven by rising foreign demand for American imports. Tim Worstall at Forbes explains: The trade deficit closed because foreign countries are growing nicely and sucking in American imports.Read More »