You Don’t Make the Tax Laws, but You Do Pay the Taxes

The Internal Revenue Code is a massive part of the laws of the United States of America. It is complex. I daresay no single human being, even the most expert tax lawyer, understands all of it, and most people understand none of it. Many provisions are almost incomprehensible except perhaps to that most expert tax lawyer, and even he is probably uncertain about many details. Highly paid tax accountants and tax lawyers constitute a large industry, spending their time trying to tease out the meaning of the tax code and to divine how the IRS will interpret its legislative power.

Yet one thing is certain: virtually nothing in the code is there by accident. Every incomprehensible provision is there to serve the interest of someone who made it worthwhile for a politician to direct his staffers to put it there at an opportune point in the legislative process.

You didn’t determine any of these provisions. Unlike those who did put them there, often with billions of dollars at stake, you don’t count. Your role in the entire taxing affair is simple and normally boils down to two things: one is to pay the amount that the IRS tells you to pay, and the other is to be punished with penalties and interest if you don’t satisfy the IRS.

A third, of course, thankfully never reached by most people, is to go to prison for tax fraud. Imagine that: tax fraud. The mind rebels at the very concept. It’s as if Jesse James and his gang rode into your town, took everyone’s wallet and watch, and then shot a few people for failing to hand over everything the gang demanded.

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Community, True and False

Leftists affect to love the community. When they make or support a political proposal, they are likely to say that it is for the community, that it is what the community wants. In discussions with such people, I find that they think I’m crazy for challenging their conception of community and what serves the community’s peace and good order. They take me to be some sort of rugged individualist, the sort of character Ayn Rand might relish.

They’re wrong about me. I place a high value on community, and I feel sorry for people who have no membership in one.

But I distinguish true community and false community. The line that separates them is the locus of points at which people bring government compulsion to bear to compel those who disagree with them to fall into line or suffer punishment, the line that separates those who recognize and respect everyone’s natural rights and those who do not.

True communities form spontaneously and function voluntarily. False communities represent groups of people who use political means to victimize those outside the group and violate their natural rights. True communities have no need for cops; false communities cannot get by without them. False communities are more accurately described as political factions.

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Does Ideological Dystopia Await Us?

Imagine a world in which the great majority has no respect for facts or for truth of any sort, where ideological convictions rule almost everyone’s understanding of the world, where truth has become an endangered rhetorical species on the brink of extinction.

In such a world, facts would still exist, of course, and true propositions would still stand in stark contradiction of false ones, but hardly anyone would care.

The scientists would have been co-opted to support the prevailing ideological narrative, along with the news media, the schools and universities, and all the organs of respectable opinion. People who dissented from the orthodoxy, especially on such sensitive matters as global warming, abortion rights, and discrimination against various state-defined victim classes, would be convicted of hate crimes or some such thing and packed off to prison.

Too dystopian for your taste? No matter. This future is, I think, one with a substantial likelihood of coming to pass.

Some of us thought that the internet would save us from the lies and self-interested distortions of rulers and their running dogs. But experience has shown us that the internet is a powerful engine for transmitting mistakes, innocent and not-so-innocent, as well as outright lies and genuinely fake news. So cyberspace has become not a forum for sorting out truth and falsehood, but a battleground of ceaseless ideological combat where truth seekers, if any remain, stand little chance of sorting out true reports from false reports and propositions.

Some continue to maintain that truth will ultimately triumph because it conforms to reality, whereas falsehood does not. But I’m not convinced. Masses of people have often plunged over the cliff for the sake of ideological commitments, and they may well do so again, all the advanced technology notwithstanding. Indeed, that technology may be the high-speed train that takes us there.

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My Personal Trade Deficit Is Killing Me – or So Trump Would Have You Believe

A few days ago, my lunch was as follows. Besides some Chilean grapes I had acquired via Lucio and a host of other, unknown middlemen (gracias al Mano Invisible), I had some homemade Oaxaca-style cheese and some homemade tortillas I purchased from local people who peddle their products along the beach road. (Oh, yes, I seasoned my quesadillas with some very tasty locally made salsa picante de habanero y pina.) Well, so what?

You see, it got me to thinking. I am running a terrible trade deficit with the local Mexicans. I keep giving them pesos, and all they give me in return are delicious foods and very helpful labor services from time to time. As President Trump would tell you, this is an awful situation for anyone to be in.

If I’m ever going to be as prosperous as Trump is making the USA, I will have to find a way to get the local people to buy my consulting services, while I buy nothing from them. By accumulating a pile of worthless pesos—as worthless as the foreign currency payments that U.S. exporters gain when they only hoard them, rather than using them directly or indirectly to finance imports—I will make myself Great Again.

I may get pretty hungry in the process, but what the hell, I’ll be as Great as Trumpian America. After all, as any mercantilist will tell you—and Trump tells you incessantly—the only thing that matters is getting a lot of money by selling to foreigners, whereas getting a lot of foreign-made goods and services is a terrible thing.

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Tariffs Cause Americans to Accept Inferior Deals

Suppose I decided to go back into the business of being a professor of economics specializing in economic history in the USA. Suppose further that 100 jobs are available, and 101 applicants for these jobs have been ranked by the hiring institutions. Everyone agrees that I am the worst of the lot. Each of the applicants is willing to work at the going rate.

However, before any hires can be made, the government lays a 500% tariff on the services of imported economic historians, and it turns out each of the applicants except me is a foreigner. Given the tremendous increase in the salary that would have to be paid to (superior) foreign sellers of the service, I get a hundred job offers even though I am by general agreement the worst of the bunch.

This is how tariffs work. They make superior offers less desirable for buyers by making them more costly. The result is that buyers end up with goods and services that, absent the tariff, they would not want to buy. Everyone is worse off—except me, of course. I am the sort of shoddy substitute that ends up being chosen despite my manifest inferiority for doing the job.

If directly or indirectly the government uses its power to get you to Buy American, the slogan might as well be, Buy Crap. You don’t need to put a gun to someone’s head to get him to exercise the option that in his judgment is best for him.

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Tariffs Remove Options and Necessarily Reduce Economic Well-Being

There is a principle in economics that says, other things being equal, one cannot improve people’s economic well-being by adding constraints to their choices.

For example, tariffs add constraints by directly or indirectly increasing the prices that buyers must pay to acquire the goods that, absent the tariffs, they prefer to buy from foreign suppliers. They will adjust in various ways when tariffs are imposed or increased, of course, but even after the adjustments, their economic well-being will be less than it would have been if new or increased tariffs had not been placed on imported goods.

You simply can’t make people better off by removing options from them. The protectionist’s claim to the contrary flies in the face of irrefutable economic logic.

A protectionist might claim, however, that this consideration must be “balanced” by considering how domestic sellers gain when tariffs reduce the competition they face from foreign suppliers. This “balancing,” however, is nothing more than an observation that thieves who break into a home and tie up the homeowners, thereby constraining them by removing their options to protect their property, can then make off with stolen property. This sort of “gain” is not what economics is about; this is what crime is about.

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