Category Archives: Economics

Why Trump’s Message Resonates With Working-Class Voters

working class Trump supporters

This is the tl;dr version of my contribution to the TLP Round Table on Donald Trump’s rise to the status of presumptive Republican nominee.

Various motivations for Trump’s popularity have been posited over the course of the election cycle. Tribalism and xenophobia. Social order authoritarianism. Anger at the establishment. Anti-PC backlash. A yen for creative destruction.

I even have some sympathy for that last one. What is the point of preserving a GOP that has failed so resoundingly to deliver on the promise of limited government? Why not blow on the tiny orange flame of a Trump-match and see if it catches fire? Some wildfires make the ecosystem stronger.

But that is not my point here. There is another faction of Trump support, which has been overlooked amid all the self-righteous indictment of his surprising success. That faction consists of working class voters who spend their lives on the financial brink, who could not come up with $400 to face an emergency, but who, as a result of the statist, two-party-dominated system, cannot escape the inevitability of big government.

We advocates of free markets too often fail to explain, cogently, why free trade and voluntary exchanges deliver the best outcomes for the most people. We fail to explain why it is not just big corporations, businesses and entrepreneurs that get hurt by government interventions into the free market—but also the workers. And when those workers complain about the various ways in which they struggle to make ends meet, we too often dismiss it as a deficiency of effort, rather than a legitimate complaint against the system.

This makes no sense. We know better. We know that over-regulation, barriers to entry, excessive government spending, crony capitalism, and welfare for the rich are all bad for the economy and particularly bad for workers. We know these policies cause work to be less remunerative and hit poor people the hardest.

Why then, when they complain, do so many of us respond by dismissing them as lazy, unmotivated, unproductive and entitled? We should be capitalizing on their complaints. They are incontrovertibly legitimate.

The Mercatus Center at George Mason University recently published a study estimating that regulatory drag has stunted the size of the U.S. economy and made Americans significantly poorer than they would otherwise be. Their numbers, while shocking, seem woefully inadequate to reflect the true costs working people pay for intrusive government.

Through “subsidies,” regulations and entitlements, government intervention into the market drives up prices-relative-to-incomes on most of the things consumers need most. Housing, education, and healthcare all far outpace inflation. Meanwhile, government consumes 36% of GDP, and on everything from contact lenses to gasoline to occupational licensing, Americans must pay more while struggling to participate in a system that is rigged against their efforts.

It is simply not possible to sell people on the wealth potential of a free market while castigating them for failing to succeed in a system that requires hundreds of hours and thousands of dollars to get the mandatory license for a job washing hair.

In that regard, the Democrats have a point (incomplete and poorly made, to be sure) when they say, “you didn’t build that” or, “you’ve also been lucky.” Would-be business owners pay their extorted dues to the government-backed bureaucracy. In return, they are protected from competition by various barriers to entry, government-enforced monopolies, tax-payer funded subsidies, and other massive transfers of wealth from taxpayers to the favored recipients of government largesse. It makes a certain twisted sense to demand more compensation in proportion to their success.

One of these men understands how money and economies function. He led a grassroots movement that motivated millions of young voters. In response, the GOP changed its rules to keep him from gaining traction. The other one is the new face of the Republican Party.

One of these men understands how money and economies function. He led a grassroots movement that motivated millions of young voters. In response, the GOP changed its rules to keep him from gaining traction. The other one is the new face of the Republican Party.

Don’t like it? Great. I don’t either. Let’s repeal the barriers to entry, the legal monopolies, the government grants and below-market loans. Let’s get rid of the regulations and the occupational licensing, the mandated dues and the bureaucratic red tape and all the other bullshit.

This is, in fact, what we put Republicans in the House and Senate to do.

Yet over and over and over again, with a few principled exceptions (e.g., Rand Paul, Justin Amash, Thomas Massie, and, yes, Ted Cruz), Republicans have broken their word, expanded government, and asked us to be patient while they focus on getting reelected.

Revealing the true direction of their priorities, the GOP establishment acted to keep Ron Paul supporters from gaining traction in their ranks. The liberty movement has not died as a result, but it may have left the party. Inside the GOP, it has been replaced by an orange-faced baboon leading an army of alt-righters shouting “cuck” repetitively as they rock back and forth in fear of outside stimulation.

I will not deny a certain satisfying schadenfreude at that turn of events. And there is value in knowing such a cancer festers on the right. But there is equal value in understanding that Trump would not be succeeding on their support alone. He is also propelled by a significant faction of working-class voters desperate for better jobs, a stronger economy, and higher purchasing power.

Sanders is right about a lot of problems, wrong about the solutions. Sanders supporters who can understand the distinction may be an untapped area of future liberty votes.

Sanders supporters may be an untapped area of future liberty votes.

In that regard, Trump’s message resonates with voters on the right for some of the same reasons Bernie Sanders’ message resonates on the left. If big government, high taxes, and crony capitalism are inevitable – because neither of the viable parties intends to do much about them – why not use one’s vote to fight for a bigger piece of the stunted pie? Trump at least pays lip service to the struggle. He promises jobs and protectionism, a reprieve from debt and stagnation.

Of course I know he will not deliver. Trump’s “solutions” will further hurt working class people, by driving up prices and contracting the size of the economy.

Trump is Sanders in orange-face.

The point is, if a liberty-movement aims to rise from the ashes of the Trump-fire, it must speak to the struggles motivating voter support for these two surprise candidates. It must explain why no amount of further tinkering will alleviate the real pain that government intrusions into the economy cause to real people, why the only solution is to unwind those intrusions in the first instance.

Then it needs to actually deliver.

Sarah Baker is a libertarian, attorney and writer. She lives in Montana with her daughter and a house full of pets.

It’s Time To Double Tap The Republican Party And Build Its Replacement

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The Republican Party primary voters did it. They nominated Donald Trump as their presidential nominee.

I predicted as far back as August 2015 that Donald Trump would destroy the Republican Party and it appears he has. Trump is the choice of it seems Republican voters. His numerous racist and xenophobic statements and positions and his hostility to the Constitutional limits of his power weren’t a problem in the end.

There is no home in a Republican Party ruled by Donald Trump for those who hold classical liberal views and/or traditional conservative values. Those libertarians, conservatives, conservatarians, Constitutionalists, classical liberals, and the rest who believe in the principles of the American founding are now politically homeless. The day after Trump knocked Ted Cruz out of the race, I left the Republican Party.

The Republican Party is a dead political party. It’s a zombie just shuffling forward in search of human flesh. The #NeverTrump movement should double tap the Republican Party. It is little more than a Grand Zombie Party now and start building its replacement.

The #NeverTrump movement is beginning to realize that the Republican Party is beyond saving. A couple of Iowans, Joel Kurtinitis at The Blaze and Steve Deace at Conservative Review, want the movement to think bigger than just defeating Donald Trump. They’re both on board the “we need a new party train.” I completely agree with both men.

We need a party that argues in favor of the classical liberal principles of America’s founding. We need a party that recognizes that populism is just another form of statism.

Why Not The Libertarian Party?

The Libertarian Party is America’s third largest political party. It will likely have ballot access in alll 50 states plus the District of Columbia this year. It is running some pretty good candidates for president. I hope they get the 5% of the vote necessary to receive Federal campaign matching funds. This would be good for American politics.

However, as a long-term solution, the LP is not what I’m looking for. The Libertarian Party’s primary purpose is an educational tool for libertarian ideas and that’s great. But a new home is needed for the broad classical liberal spectrum for winning and governing.

What Should This New Party Look Like?

Some thoughtful pieces have come out recently about the direction this new party would take. The first one is a two-part series run on The Federalist by Paul D. Miller about bringing back The Federalist Party. The second part outlined a platform suggestion.

Decentralizing power is the best way—perhaps the only way—for an increasingly pluralistic people to govern themselves: a pluralistic people calls for plural governments. Americans are increasingly divided not merely by race, class, and gender—which has always been true—but by differing sets of values, by religious and sectarian identities, by basic understandings of justice and democracy that have drifted apart in recent generations.

The progressive left and quasi-fascist right believe the increasing fragmentation of American life is a malady which must be cured by the strong hand of government. In fact, those very movements are both cause and consequence of the fragmentation of American society, and their agendas can never create the imagined unity of the romantic past or utopian future.

The Federalist accepts the pluralism of American life as a reality to be accommodated, not a disease to be cured. The way to safeguard human dignity and self-government in a culturally pluralistic nation is to revive the institutions of plural government; that is, to devolve power to the several governments closer to the people they govern.

A more decentralized Federal government must be a major part of the platform. After all, we are a nation of 50 different states, each with their unique values and cultures. A “one-size fits all” approach to government fails. But decentralization alone is not enough. The Federal government has some roles.

Jeff Goldstein at Protein Wisdom had some thoughts of his own on a possible new party platform. I recommend reading the entire piece but I wanted to highlight his 6 main planks.

1) Individual liberty
2) Federalism and representative republicanism
3) Constitutionalism
4) Judicial originalism
5) National sovereignty
6) Free-market capitalism

These are a good start. The only minor quibble I would have is I’m more of a Randy Barnett “judicial engagement” type than a judicial originalist. I can get on board with the rest easily though.

I think we need to add a few planks though and call the whole thing “Nine For Freedom” or something. Here are my suggestions:

7) Growth and opportunity: The old economy is dead. The idea of having a job right out of college and staying with the same company until you retire doesn’t happen anymore. We’re shifting towards a “gig economy” where many people are freelancers. Uber, Lyft, Airbnb, Fiverr, Ebay, and many other innovations make it easy for almost anyone to be in business for themselves. The economy itself has an anemic growth rate that shows signs of getting worse. We need to unleash the American people by getting government out of the way. We need to lower the world’s highest corporate tax rate, reduce regulations, and attack crony capitalism that delivers privileges to a well connected few. We need to reform our outdated Industrial Era education system, promote school choice, and fix higher education so that you don’t have to have a bachelor’s degree to wait tables. Finally, we need to have a free market approach to fix or replace Obamacare.

8) Welfare and Entitlement Reform: We have a major problem with our welfare state. It still traps people in dependence and discourages work. Social Security Disability fraud is bleeding the system dry. We can’t have this as a nation. At the same time, we shouldn’t hold people who do need a temporary hand up in disdain. Most people don’t make welfare a lifestyle. You can hit this many ways. The guys over at the Foundation for Government Accountability have great ideas to reform welfare. If we want to go bolder, we may want to consider scrapping the alphabet soup of welfare programs and replace it with some kind of basic income program. If you want to undermine the sources of support for the Trumpist right and the progressive left, you have to attack the welfare state.

9) A Strong, Secure, And Free America: We will aggressively confront the enemies of this country. We will stand for liberty and freedom allaround the world. We will have a military and intelligence capability that is second to none. However, we will not engage in military crusades for democracy, seek dragons to slay, and engage in dubious neocon nation building schemes. We believe in the power of diplomacy and we believe in free trade. America will be involved in the world but we will not police the world alone. We will ask our allies to do more to protect themselves not because they’re not important but because we cannot and will not do it alone. Finally, while we will be vigilant about detectingthreats from abroad, we will not listen to your phone calls, read your emails, track your online browsing, or otherwise spy on you without a warrant. America should not throw away its founding principles even in wartime.

We have an opportunity to reshape the political landscape. The Republican Party is little more than a home for racists, kooks, reactionary populists, demagogues, con artists, and political opportunists. It no longer serves the purposes of liberty.

Let’s build something that does.

I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at The Hayride.com and Rare. You can also find me over at the R Street Institute.

Want To Bring Jobs Back To America? Cut Taxes And Regulations

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Originally published at The New Minutemen.

Demagogues like Donald Trump and Bernie Sanders are campaigning based on the promise to bring jobs back to America. Both blame others (Trump blames foreigners and Sanders blames the rich) for the plight of the middle class. Like many demagogues before them, both men are drawing much support.

However, neither demagogue points out the real reason why companies won’t bring jobs back to America. The country’s tax and regulatory structure is internationally uncompetitive and strangling of small businesses.

The U.S. income tax code is complicated and is harming economic growth. It is in dire need of reform, especially since it is what most small businesses pay. We need to move away from using it to punish financial success or for social engineering and simply use it to collect revenue. It needs to be easy to understand, with few deductions, and fair.

The corporate tax code is even more of a disaster. The U.S. has the second highest rate in the world at 40% (35% Federal rate + average of states.) Our economic competitors have corporate rates that are much lower. If given a choice, corporations are going to head overseas because the tax costs are much lower.

What America needs is tax and regulatory reform, not cheap demagoguery. What I propose is simple, reduce corporate and income tax rates down to 17% and make it flat. The first $5,000 is taxed 17% so that everyone will have the skin in the game. After that, the next $5,001-$55,000 is tax-free. Then every penny over $55,000 is taxed 17%.

Not just taxes need to be addressed, but also regulations. Thankfully, there’s already a piece of legislation already designed to help on that front. The REINS Act needs to be passed into law. This would require Congress to vote on each proposed regulation that has an economic impact of $100 million or more.

If we fix America’s tax and regulatory code, the jobs will come back because it will be less expensive for companies to do business in America. That goes for both big and small businesses.

But you won’t hear this from the demagogues Trump and Sanders because both men are big government statists. To get America moving, let’s stop listening to these two and shrink the size of government. Only then will companies bring jobs back to America.

I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at The Hayride.com and Rare. You can also find me over at the R Street Institute.

What IS the Difference Between Democrats and Socialists?

Hillary_Clinton Bernie_Sanders

The DNC Chair, Debbie Wasserman Schultz was asked a very provocative question from a very unlikely person. The unlikely person was Chris Matthews and the unlikely question was the following:

“You’re chairman of the democratic party. Tell me the difference between you and a socialist”

The reason Matthews asked the question was because of the rising popularity of self-identified socialist Sen. Bernie Sanders (I-VT) who is challenging Hillary Clinton to be the presidential nominee of the Democrat Party. Clearly, Matthews along with most people who follow politics, does not believe that Bernie can actually prevail against Hillary (Bernie’s popularity among progressives notwithstanding). Given the tradition of both the Democrats and Republicans to give a prime time speaking slot during their respective national conventions, Matthews asked Schultz if Bernie would receive that honor.

Here is the video of the exchange.

At first blush, the question seems simple enough. Why couldn’t she answer?

But the more I thought about the question, it occurred to me that I couldn’t answer the question either (but in my defense, I’m not the DNC Chair either). I’m sure there must be a difference but unlike Chris Matthews, I don’t believe it’s a “huge” difference.

How does one go about answering this question? No two Democrats think exactly alike any more than any two Socialists or any two adherents to any other philosophy for that matter. Perhaps the better way to determine the differences between democrats and socialists is to compare party platforms.

This raises another problem: which party platforms?

For the Democrats, it makes the most sense to compare the DNC 2012 Platform (the most recent), but what about the Socialists? It seems that most third parties are Socialist in nature. Among these parties are the Socialist Workers Party, Socialist Equality Party, Party for Socialism and Liberation, Socialist Action, and Socialist Party USA.

It seems that I have no other choice but to pick one. I’ll compare the DNC 2012 Platform to that of Socialist Party USA (2013-2015). For the purposes of this post going forward, the contents of this particular platform is what “socialists” believe. I will also restrict the range of issues to socioeconomic issues where there is probably broad agreement among those who subscribe to Socialism as the best way to organize society and government.

As I examined the two platforms, I realized that making apples-to-apples comparisons would be more difficult than I expected. To the credit of the Socialists, their platform is much more to the point and easier to understand than the DNC’s. Here’s an excerpt from their economics plank:

The Socialist Party stands for a fundamental transformation of the economy, focusing on production for need not profit. So-called fair trade is meaningless as long as the world economy is dominated by a few massive corporations. Only a global transformation from capitalism to democratic socialism will provide the conditions for international peace, justice, and economic cooperation based on the large-scale transfer of resources and technology from the developed to the developing countries.

• We demand the immediate withdrawal of the United States from the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA), and oppose the creation of a widened Free Trade Area of the Americas (FTAA).
• We call for worker and community ownership and control of corporations within the framework of a decentralized and democratically determined economic plan.
• We call for a minimum wage of $15 per hour, indexed to the cost of living.
• We call for a full employment policy. We support the provision of a livable guaranteed annual income.
• We call for all financial and insurance institutions to be socially owned and operated by a democratically-controlled national banking authority, which should include credit unions, mutual insurance cooperatives, and cooperative state banks. In the meantime, we call for reregulation of the banking and insurance industries.
• We call for a steeply graduated income tax and a steeply graduated estate tax, and a maximum income of no more than ten times the minimum. We oppose regressive taxes such as payroll tax, sales tax, and property taxes.

See what I mean? For all their failure to understand very basic economic principles, these Socialists understand economy of words. They have some terrible ideas but at least they know how to organize them!

That was the first 256 words from the Socialist “Economy” plank. What can we learn from the Democrat’s first 256 words about their economic policy?

This is where it becomes difficult to make comparisons. The DNC’s 2012 Platform doesn’t have a single section for economics. Under the heading “Moving America Forward” their platform is divided under categories such as “Putting Americans Back to Work,” “The Middle Class Bargain,” “Cutting Waste, Reducing the Deficit, Asking All to Pay Their Fair Share,” and “Economy Built to Last.”

To the DNC 2012 Platform:

Four years ago, Democrats, independents, and many Republicans came together as Americans to move our country forward. We were in the midst of the greatest economic crisis since the Great Depression, the previous administration had put two wars on our nation’s credit card, and the American Dream had slipped out of reach for too many.

Today, our economy is growing again, al-Qaeda is weaker than at any point since 9/11, and our manufacturing sector is growing for the first time in more than a decade. But there is more we need to do, and so we come together again to continue what we started. We gather to reclaim the basic bargain that built the largest middle class and the most prosperous nation on Earth—the simple principle that in America, hard work should pay off, responsibility should be rewarded, and each one of us should be able to go as far as our talent and drive take us.

This election is not simply a choice between two candidates or two political parties, but between two fundamentally different paths for our country and our families.

We Democrats offer America the opportunity to move our country forward by creating an economy built to last and built from the middle out. Mitt Romney and the Republican Party have a drastically different vision. They still believe the best way to grow the economy is from the top down—the same approach that benefited the wealthy few but crashed the economy and crushed the middle class.

Democrats see a young country continually [snip]

Sounds like a whole lot of nothing right? This is a typical political speech in which lots of words are spoken but nothing of substance is being said. “[H]ard work should pay off, responsibility should be rewarded, and each one of us should be able to go as far as our talent and drive take us.” Wow, how absolutely earth shattering! Who doesn’t agree with the statement above?

The DNC 2012 Platform goes on like this the rest of the way, short on specific policy proposals but long on flowery prose. To the extent there is something I can sink my teeth into: the wealthy don’t pay enough taxes, the undefined middle class needs more subsidies and tax breaks (the middle class being the largest voting bloc), and we’ll keep the Republicans hands off of Social Security and Medicare.

Maybe I need to scrap the idea of comparing platforms. What do Democrats believe these days?

I would love to be wrong, but I’m quite sure that much of the Socialist Party USA Platform would resonate with rank and file Democrats and “Occupy” Democrats in-particular.

“We call for a minimum wage of $15 per hour, indexed to the cost of living.” Many rank and file Democrats agree with this; Seattle has already passed a $15 per hour minimum wage.

“We call for a steeply graduated income tax and a steeply graduated estate tax, and a maximum income of no more than ten times the minimum. We oppose regressive taxes such as payroll tax, sales tax, and property taxes.” This almost certainly resonates with the Occupy Democrats. Could such a plank make its way on the 2016 DNC Platform?

“We call for a full employment policy. We support the provision of a livable guaranteed annual income.” Any serious objections from Chris Matthews on this one?

“We call for increased and expanded welfare assistance and increased and expanded unemployment compensation at 100% of a worker’s previous income or the minimum wage, whichever is higher, for the full period of unemployment or re-training, whichever is longer.” Certainly those who support Bernie Sanders would be on board; Hillary supporters maybe not. To extent there is disagreement, it’s only a matter of degree.

“We oppose the court-created precedent of “corporate personhood” that illegitimately gives corporations rights that were intended for human beings.” Democrats (and probably some Republicans) around the country are shouting “hallelujah” and “amen” reading this statement.

It seems to me that there isn’t a great deal of daylight between Democrats and Socialists on socioeconomic issues. Is it any wonder why the DNC Chair couldn’t answer the question?

The only reason Democrats and progressives don’t call themselves socialists is because the term probably doesn’t do well in focus groups.

Socialists or Democrats?

Bernie Sanders or Hillary Clinton?

To quote Hillary: “What difference at this point does it make?”

John Oliver Takes on Mandatory Minimum Sentences

For those of you who don’t have HBO and are unfamiliar with Last Week Tonight With John Oliver (very much in the same vein as The Daily Show only uncensored) the segment below is a must watch. While John Oliver is certainly of the Left, he definitely has a libertarian streak on social and criminal justice issues. In this segment, Oliver takes on the travesty known as mandatory minimum sentences (i.e. zero tolerance policies with even more severe consequences).

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