Pepperdine University economist Gary Galles explains that protectionism isn’t patriotic. A slice:
Americans’ supposed enemies in the patriotic protectionism story – foreign producers – are actually their friends. And their supposed friends – domestic producers and the U.S. government – are actually their enemies.
How are domestic producers frequently domestic consumers’ enemies? It is in domestic producers’ joint interest to restrict competition between one another, raising their profits to the detriment of consumers. As Adam Smith noted, “People of the same trade seldom meet together … but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,” which is why he endorsed competition, rather than businessmen, because it undermined their ability to abuse consumers.
In fact, the only producers who clearly are friends of consumers are those who do not pursue special privileges that raise prices, but who compete to advance consumers’ interests by improving on offers available from others. Yet domestic rivals frequently treat such consumer benefactors as bitter enemies.
Yet “progressive” opponents of tax cuts speechify and write as if the only effect of income-tax cuts is to allow the rich to keep more of their earnings. But in taking such a myopic stance on income taxes, “progressives” are inconsistent. When they evaluate the effects of carbon taxes to reduce greenhouse-gas emissions, they sing a different tune.
“Progressives” understand that raising the tax rate on carbon emissions has relevant economy-wide effects that extend well beyond the immediate impact on the bottom lines of industrial polluters. “Progressives” correctly point out that imposing or raising a carbon tax changes the behavior of businesses; it prompts businesses to emit less carbon into the atmosphere. And with less carbon emitted into the atmosphere, the risks of climate change fall.
You don’t have to accept the arguments for climate change to appreciate the need to evaluate a carbon tax’s consequences by looking beyond its immediate impact on business incomes to its wider impact on society.
But the same “progressives” who appropriately emphasize the society-wide impact of a carbon tax too often mysteriously ignore the society-wide impact of income taxes.
Opponents should stop treating income-tax cuts as if their only consequence is to raise the after-tax incomes of the rich.
The relevant economic question instead is this one: What is the economy-wide impact of cutting income taxes?
Jeffrey Tucker insightfully compares and contrasts charity with taxes.
Alberto Mingardi writes wisely about what he calls “the Catalonian mess.”
Wall Street Journal columnist William McGurn praises the morality of Charles Koch. A slice:
Asked the biggest misimpression people have of him, Mr. Koch says it’s that he’s trying to “manipulate the system so that I can make more money.” At 81, he points out, he hardly needs more millions. What he wants to encourage, he says, is an economic system open enough so that ordinary people who work hard and have their own unique abilities can build lives of dignity and hope for their families.
Also in the Wall Street Journal is this excellent review by Bill Easterly of Muhammad Yunus’s new book, A World of Three Zeros. A slice from Bill’s review:
Mr. Yunus prefers to criticize the market system—and mainstream economics—for its celebration of selfish greed as the basis of everything. This is a common misunderstanding of Adam Smith’s invisible hand, which privileges individual choice, not individual selfishness. If consumers choose to buy products with social benefits, or refuse to buy those that inflict social harms, nothing about the capitalist system prevents them from doing so. If investors want to accept lower returns in exchange for investing in socially conscious businesses, they are free to do that too.
Leah Libresco ponders gun control with open eyes.
AEI’s Michael Strain busts some myths about immigration.
John Stossel and Maxim Lott mark the 100th anniversary of Soviet communism. (HT Warren Smith)
