On the Record | Where Stands Boris Johnson on the Big State?

Please see my latest wire as Brexit diarist for The New York Sun, ‘Where Stands Boris Johnson on the Big State?’:

’Twas the week before Christmas and all through the House — of Commons — Brexiteers cannot help but stir at the prospect that Britain’s independence from the European Union is, at last, a likelihood. So on the eve of the Queen’s Speech setting out the Government’s agenda for the new year, who wants to play Grinch and ruin the festive atmosphere? Certainly not I.

Rumors circulate out of 10 Downing Street that the incoming ministry will reintroduce a sharper Withdrawal Agreement within days, shorn of “soft” Brexit inducements included to entice Remainer Tory MPs last October. As well as legislation severing any lingering strands of Brussels’ entanglements, come December 2020. Britain will exit with a trade deal freed from the EU’s euphemistic “level playing field” of regulatory alignment, or make a “clean break.”

All this lies in the future. Americans, particularly supporters of President Trump, are transfixed by Boris Johnson’s ability to remain on top of the greasy pole of politics — despite the divisions allied against him at the general election. Even Vice President Joe Biden has got in on the action with the epiphany that Mr. Johnson’s trouncing of Labour’s Jeremy Corbyn bodes ill for merchants of socialism and anti-Semitism.

Up to a point, I say (quoting the demurral made famous by Evelyn Waugh in “Scoop”). Britons no doubt desire to “get Brexit done” and chart their own social, economic, and political course — a position Mr. Biden vigorously opposed. Yet Mr. Johnson’s Conservative manifesto also proffered generous outlays for infrastructure, health services, and welfare outreach, effectively neutralizing Labour’s surfeit of state spending and scheme to nationalize, once again, British industry.

F.H. Buckley calls this the “sweet spot” of politics: “tacking right on social issues [e.g., Brexit] while going middle of the road or left of center on economics.” By adopting this “Red Tory” approach to government policy, my friend Professor Buckley sees continuing electoral success for America’s and Britain’s center-right parties, despite the fact that “libertarian ideologues insist this isn’t conservatism.”

Let’s call this advocacy of “wet” Toryism “pre-Brexit” conservatism. Is, though, Brexit no more than independence from the rising statism of the European Union? Isn’t the promise of Brexit more individual freedom across the board? Or, to “invert” Margaret Thatcher’s 1988 Bruges speech, have Britons’ “successfully rolled back the frontiers of Brussels, only to see them re-imposed at Westminster”?

No, responds one branch of the Brexit brigade. Nor are they any less “One Nation” Tories than those who rally round Boris Johnson and the incoming government. The phrase “One Nation Conservatism” comes from Benjamin Disraeli himself . . .

Read more . . .

Remarks are welcome on DMI’s Facebook page.

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My thanks to editor Seth Lipsky of The New York Sun.

On the Record | Britain Verges on Defeat over Brexit

Please see my latest wire as Brexit diarist for The New York Sun, ‘Britain Verges on Defeat over Brexit’:

Mark your calendars for April 12. For the clock is reset on that date for Britain regaining independence. Reaching that date, with Brexit unhampered and unsullied, is the new goal. Nothing stands between Britons and freedom but the political class on either side of the English Channel. Yet with another series of votes tonight, parliamentarians seem determined to snatch defeat from the jaws of victory.

Too bad British MPs forgot their Aristotle. He counseled that some political acts “are so called as being evil in themselves.” Politicians cannot “save” Brexit by sacrificing British liberties a bit here and a bit there. “It is not excess or deficiency of them that is evil,” Aristotle cautioned. “It is impossible to act rightly; one is always wrong.”

Brexiteers who buckled last week to support Prime Minister Theresa May’s flawed Withdrawal Agreement, citing the “lesser evil” argument, don’t get a pass from Aristotle, either. To wit: “Nor does acting rightly or wrongly in such cases depend upon circumstances.”

Thus surveying the available candidates to usher Brexit to victory and finding the field wanting in my last wire, I quoted the Psalmist, “Put not your trust in princes.” I add now the verse’s concluding lines. “. . . Nor in the son of man, in whom there is no help.”

My point is simple. One should never endorse, carte blanche, any political program just because people voted for it. Scepticism and due diligence are always in order. Brexit is the right thing to do not because the majority of Britons voting in the 2016 referendum — 17.4 million — decided to exit the European Union. Brexit is the right thing to do because its principles are laid upon the foundations of justice.

Read more . . .

Remarks are welcome on DMI’s Facebook page.

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My thanks to editor Seth Lipsky of The New York Sun.

On the Record | Will Thatcher’s Ghost Haunt Mrs. May?

Please see my latest wire as Brexit diarist for The New York Sun, ‘Will Thatcher’s Ghost Haunt Mrs. May?’:

What an irony that Prime Minister Theresa May’s crisis over Brexit is coming to a head on the 28^th anniversary, to-day, of the fall from power of Margaret Thatcher. If only the Iron Lady were alive today.

She was challenged for leadership in November 1990 by fellow Tory Michael Heseltine. His perfidy fell short of toppling her outright, but Mrs. Thatcher failed to secure the margin needed to survive the vote. So a further vote of confidence became necessary. After consulting colleagues, Mrs. Thatcher concluded she lacked the support to see off the second round.

What was Mrs. Thatcher’s political sin that turned her caucus against her? Obstinacy in the face of growing resistance to a poll tax that levied rates regardless of one’s ability to pay was the catalyst for her removal, say opponents, who did not lack for self-justification.

Read more . . .

Remarks are welcome on DMI’s Facebook page.

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Addendum. Though I remain sympathetic to Edmund Burke’s sentiments expressed to the electors of Bristol in 1774 — ‘that a politician betrays, instead of serving you, if he sacrifices [his judgement] to your opinion’ — Public Choice Theory has heightened my suspicions of politicians and government officials who claim to have skills and knowledge of which the general public is deprived.

As Adam Smith observed in The Wealth of Nations, no one person enjoys the breadth and depth of knowledge required to direct the whole economic programme of a nation (cited in my New York Sun wire). F.A. Hayek explored this theme in his Nobel Prize for Economics acceptance speech in 1974, ‘The Pretense of Knowledge’.

Public Choice also questions the conventional wisdom that private individuals are self-interested, whereas public officials are directed by the best interests of the commonweal. Does this mean that public actors never consider their own interests when making political decisions?

Finally, with respect to Brexit and Britain’s efforts to leave the trade apparatus imposed by the European Union: economics teaches that the best option available, based on the division of labour and the law of comparative advantage, is free trade. While there is much discussion of Britain securing free trade deals with the global community, it is far more likely that ‘managed’ trade agreements will be secured — still a better option than what the EU presents. Nevertheless, it suggests that the UK Government, in a paternalistic fashion, does not trust its business community to strike out on its own, unsupervised. But as Ludwig von Mises wrote, ‘If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reasons also reject every kind of government action.’

Thus it is with Theresa May’s draft Withdrawal Agreement with the EU. The document not only insinuates that Government officials must protect British citizens from their own worst instincts for freedom, but it abrogates the 2016 referendum that voted to restore lost liberties and UK sovereignty.

Does anybody now question why Britons feel more secure in their own opinions over the wisdom of their elected representatives? Those same Government officials who run roughshod over the rule of law and trample in the mud the traditions of British parliamentary democracy?

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My thanks to editor Seth Lipsky of The New York Sun.

On the Record | Brexit cunning leaves Eurocrats nonplussed

Please see my latest wire for The American Spectator, ‘Brexit cunning leaves Eurocrats nonplussed’:

Baldrick, of Blackadder fame, a member of Team Brexit? Who knew? For the uninitiated, Blackadder is a British comedy series, starring Rowan Atkinson (of Mr. Bean renown) in the title role, as various scheming rogues through the march of history. Tony Robinson plays his dogsbody Baldrick, who in times of crisis invariably says, “I have a cunning plan.”

Baldrick’s “outing” as the fourth Brexiteer — the three UK Government principals are David Davis at Exiting the European Union, Liam Fox at International Trade, and Boris Johnson at the Foreign and Commonwealth Office — comes courtesy of this Politico headline, “Brussels fears Britain’s ‘Brexit chaos’ part of cunning plan.” EU officials are nonplussed at the cool nonchalance of their Westminster counterparts. “Trade attachés in particular who know their British colleagues as tough, canny negotiators are suspicious of the seemingly fickle and aimless procrastination from the British government,” Politico reports. “The Brits’ chaotic early posture in the Brexit talks has left them wondering whether London is pulling some sort of deft ploy — a strategy of pretending not to have a strategy.”

One EU official is worried that when negotiations resume in September, the British team is “going to swamp us with [position] papers on the fault lines — exactly the issues where they know we [the EU27 countries] are divided.” Further remarks from the Maltese prime minister will encourage Brits anxious over their government’s competence to pull the country out of the European Union. “People who say the Brits don’t know what they are doing are wrong,” Joseph Muscat told the Dutch daily de Volkskrant. “I have lived in Britain, I know the British mentality. A non-prepared British government official simply doesn’t exist.” But Brexiteers shouldn’t get cocky. “A seasoned EU diplomat said that if London had constructed an elaborate ruse to gain the upper hand in Brexit, it had fooled even the British negotiators,” according to Politico. “If it is indeed a mise en scène, this diplomat said: ‘It would be an extremely sophisticated one.’”

As I conclude:

In the end, all we can do is wait and trust in the skill, strategy, and foresight of the Brexit negotiators. As Blackadder fans will attest, poor Baldrick’s cunning plans were outlandish nonsense, meant to evoke scorn from his superior and laughter from the audience. And Brexit is no laughing matter. But Baldrick is just the sort of patriotic “everyman,” common in English theatre, who voted for Brexit and whom the Government serves: he is full of ideas for making good — for himself, his family, and his nation. As long as his cunning never tires, never fear, for Britain will prosper. “It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people,” Adam Smith wrote of the ruling class of his day. “Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.” Trust in the people animates Brexit. No wonder the EU is flummoxed.

Read more . . .

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My thanks to editor Wlady Pleszczynski of The American Spectator.

On the Record | British Tribune of Trade Could Steal the March on Trump’s Protectionism

Please see my latest wire for The New York Sun, ‘British Tribune of Trade Could Steal the March on Trump’s Protectionism’:

Britain after Brexit is wasting no time announcing to the trading world it is open for business. Minister of International Trade Liam Fox speaks of free trade with an optimism that must inspire envy in America’s market conservatives. Who can imagine government praising the virtues of free trade?

Economic growth, Mr. Fox asserts, is supported by three pillars of market freedom. One is liberty of trade, unshackled from state interference, since “the idea that governments should restrict the right of individuals to exchange their hard work for goods and services at an agreed price in an open market is one of the gravest infringements of personal liberty.”

Two is entrepreneurship, where “competition leads to innovation” that in turn “powers progress.” Three is competitive advantage, whereby markets “specialise in the production of goods where they have the greatest efficiency.”

Read more . . .

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My thanks to editor Seth Lipsky of The New York Sun whose encouragement acts as a necessary inducement to write.

On the Record | Why Not Add America’s Advantage to the Anglosphere Commonwealth?

Please see my latest article for the American Thinker, ‘Why Not Add America’s Advantage to the Anglosphere Commonwealth?’:

“England and America are two countries separated by the same language,” George Bernard Shaw once remarked. Post-Brexit, why allow any barriers to stand between the world’s two greatest allies?

During debate over the United Kingdom referendum to exit the European Union, Remain supporters argued that British trade would suffer; Leave campaigners countered that Britain had the world as its oyster, pointing to her proud history of overseas trade during which the “second” British Empire flourished. But why should Britain limit herself? Why not include her “first” imperial American offspring?

For even as the War of Independence created the worst relations imaginable between the two countries, with peace America wasted little time in renegotiating trade deals with her former mother country.

When the United States became tangled up in Britain’s conflict with revolutionary France upon the high seas, President Washington sent John Jay as his envoy to London, resulting in the eponymous treaty which resumed trans-Atlantic “amity, commerce, and navigation.”

Disagreement at the climax of the Napoleonic conflict brought the two nations to arms again during the short-lived, fairly inconsequential War of 1812. But tranquility and, more important, a dynamic alliance, has reigned ever since. Now another opportunity presents itself.

“Of all the many splendid opportunities provided by the British people’s heroic Brexit vote,” British historian Andrew Roberts writes, “perhaps the greatest is the resuscitation of the idea of a Canzuk Union.”

Read more . . .

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My thanks to the editors at the American Thinker.

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And allow me to wish my American friends a happy Constitution Day! — celebrating the adoption of the U.S. Constitution on this date in Philadelphia, 1787.

On the Record | Donald Trump addresses America’s Debt

Please see my latest post for the Quarterly Review, ‘Donald Trump addresses America’s Debt’:

‘The Open Conspiracy.’ That is what Henry Hazlitt, the renowned New York journalist, called the political effort to ‘monetise the debt’ by inflating the currency so that U.S. government debts incurred to-day will cost less to pay to-morrow; or, as is the case, years into the future — if ever.

But in an interview with CNBC on 5^th May, Donald Trump, presumptive Republican presidential candidate, took a swing at the conspiracy by matter-of-factly stating that, as President, he would seek to restructure the payment of U.S. Treasury bonds at lower returns.

Trump then cracked the conspiracy wide open four days later, acknowledging America’s — and all countries with fiat money — dirty little secret: ‘you never have to default because you print the money’.

And, in the process, Trump unleashed yet more political opprobrium upon his head.

Read more…

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My thanks to Dr Leslie Jones of the Quarterly Review; and my appreciation to Professor Steven Kates of RMIT University for guidance on calculating inflation.

On the Record | Government Greed Axes the Golden Goose

Please see my latest post for the Quarterly Review, ‘Government Greed Axes the Golden Goose’:

President Barack Obama mounted the bully pulpit again last month, to decry the practice of ‘tax inversion’ and those corporations with the effrontery to believe in private property and the profit motive, thus escaping exorbitant tax bills by moving operations out of the United States for the welcoming low-tax jurisdictions of foreign lands.

According to an AP News report:

“Obama called it ‘one of the most insidious tax loopholes out there’ because it shortchanges the country. He said less tax revenue means the government can’t fully spend on schools, transportation networks and other things to keep the economy strong. He said the practice also hurts middle-class Americans because ‘that lost revenue has to be made up somewhere.’”

Oh, dear! Where does one begin to enumerate President Obama’s recurring penchant for economic (and constitutional) illiteracy?

Read more…

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My thanks to Dr Leslie Jones of the Quarterly Review.

Will America follow Canada’s economic fight against impertinent obstructions?

Twenty-six years after the United States and Canada concluded their historic free trade agreement, it may startle some to see how their constituents size up the trading relationship.

In a report published last month, Nanos Research (in collaboration with the University of Buffalo) found that when Canadians were asked to ‘rank the top two countries that are closest with Canada in terms of business values’, the United States polled at 61 per cent, far beyond the next two challengers, with Britain at 20 per cent and Germany at 12 per cent.¹

Meanwhile, when Americans were asked the same question in relation to their own business values, Canada came in at a mere 24 per cent, followed close at the heels by Britain and Japan, both at 21 per cent.²

Were citizens asked to describe the socio-economic fabric of their countries, no doubt a plurality of Americans would respond through a mantra coloured by the heroics of their Founding, noting their adherence to limited government, free market values, and individual freedom, principles which FEE founding father Leonard Read described as ‘the essence of Americanism’.³

Canadians, still hewing to the country’s tory origins (which skew social democratic), would list their traditions of robust government, interventionist economic policies, and communal politics. Indeed, many Canadians reflexively identify themselves as the ‘un-Americans’ — our own Confederation moment, aspects of which continue to show up in the Nanos/UB survey on border security. And yet in many respects, Canadians — or at least their federal government — have come to exemplify those American values which its southern neighbours have allowed progressive ideals to supplant.

During the Great Recession of 2007-09, for instance, Canadian banking rules regulating adequate reserves and conservative lending practices meant that Bay Street experienced few of the credit disturbances or the financial meltdowns that became regular occurrences on Wall Street. And, under the Liberal governments of Jean Chrétien and Paul Martin and the Conservative government of Stephen Harper, Ottawa has pursued measures of deficit reduction and lower government expenditures as a percentage of GDP, policies virtually orphans on Capitol Hill with its $500 billion deficits and $18 trillion debt. Canada’s commitment to global competitiveness is clearly visible it its reduction of corporate taxes to 15 per cent, where in America corporate taxes are amongst the highest in the West at 35 per cent.

According to the 2014 Index of Economic Freedom, published annually by the Heritage Foundation, Canada ranks sixth in the world, making it the ‘freest economy in the North American region.’ Its debt to GDP stands at 86 per cent — its path toward fiscal prudence slowed by the Great Recession. The United States, meanwhile, does not even place in the top ten, ranking twelfth among leading nations. Its debt to GDP now exceeds 100 per cent.

Canada’s economic successes are replicated within the Anglosphere, with Australia and New Zealand surpassing it on the Heritage Index (third and fifth, respectively), with Ireland at ninth and the United Kingdom placing fourteenth. (Britain’s former colony of Hong Kong, reunited politically to mainland China since 1997 under a ‘one country, two systems’ agreement, ranked first.)

All is not lost for the United States, though. Already the country has made strides in the right direction, largely through forced sequestrations and its indomitable entrepreneurial spirit to succeed. As Adam Smith observed in The Wealth of Nations:

The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security, is so powerful a principle, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often incumbers its operations; though the effect of these obstructions is always more or less either to encroach upon its freedom, or to diminish its security.⁴

America’s fundamentals remain strong; only its government agenda of Keynesian policies and interventionist programmes, including the Fed’s adherence to quantitative easing, need to be reformed. ‘Interventionist policies create uncertainty, raise the costs of financial intermediation and discourage investment. I might almost say that the problem is not that the government has done too little, but that it has done too much,’ writes Roger Koppl in From Crisis to Confidence: Macroeconomics after the Crash. ‘The problem is changing rules, uncertain regulations, shifting Fed policy. The problem is the variability and unpredictability of government economic policy.’⁵

These economic interventions are among the ‘impertinent obstructions’ with which the federal government burdens the states, business enterprises, and individual men and women. Canada’s own time of reckoning came in the mid-90s, when the choice was between reform or collapse. Forward-thinking leaders, putting national well-being before any ideological qualms, faced reality and restructured downward the Welfare State. Much the same scenario took place in Australia and New Zealand, with the United Kingdom making up for opportunities lost under its Labour governments.

To-day, with slight hiccups, the economic future of all these countries is promising. Now America is poised on a similar precipice. As Leonard Read observed, the key is leadership and a faith in ‘the spiritual antecedent of the American miracle’:

As this belief in the use of force as a means of creative accomplishment increases, the belief in free men—that is, men acting freely, competitively, cooperatively, voluntarily—correspondingly diminishes. Increase compulsion and freedom declines. Therefore, the solution to this problem, if there be one, must take a positive form, namely, the restoration of a faith in what free men can accomplish.⁶

Will the United States follow the Commonwealth example and, following the November mid-term repudiation of ‘Big Government’ and in preparation for the presidential contest in ’16, rally against coercive intervention and for economic prosperity?

ENDNOTES

^1. CAN-AM Relationship Drift Continues, The Nanos-UB North American Monitor — Year 10, 11.

^2. Nanos/UB Survey, 12.

^3. See Leonard E. Read, ‘The Essence of Americanism’, The Freeman, 48:9 (September 1998), 527-32.

^4. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Edwin Cannan, ed., Vol. 2 (London: Methuen & Co., 1904 [1776]), IV.v, 43.

^5. Roger Koppl, From Crisis to Confidence: Macroeconomics after the Crash (London: Institute of Economic Affairs, 2014), 14.

^6. Read, ‘The Essence of America’, 531.

Why Progressive Taxation Abuses Tory Policies for the Common Good

Arguable it is that the traditional Tory is more amenable to the exercise of government and the financial burdens therein assumed than is the Whig; modern conservatism, arising from Burke’s pen and Peel’s practice (under the previous tutelage of Pitt the Younger and the 2^nd Earl of Liverpool) were conscious steps away from the Toryism of paternalism and protection—Toryism which had its philosophical foundations in feudal society where the prince exercised charity through personal noblesse oblige but also through the State offices he assumed. Samuel Johnson, the idiosyncratic Tory par excellence, took the American colonists-in-rebellion to task for their Enlightenment views on taxation, arguing in ‘Taxation no Tyranny’ that

the supreme power of every community has the right of requiring from all its subjects, such contributions as are necessary to the publick safety or publick prosperity, which was considered by all mankind as comprising the primary and essential condition of all political society, till it became disputed by those zealots of anarchy, who have denied to the parliament of Britain the right of taxing the American Colonies.¹

Progressive taxation builds on this notion, on the basis that those who earn more can afford to pay more.² From Johnson a theoretical underpinning for graduated taxation can also be adduced, for he held that ‘A tax is a payment exacted by authority from part of the community for the benefit of the whole. From whom, and in what proportion such payment shall be required, and to what uses it shall be applied, those only are to judge to whom government is intrusted.’³ Johnson died in 1784, while the first income tax in the United Kingdom was introduced by Pitt thirteen years later, as a means of funding the nascent Napoleonic Wars.

Our understanding of political economy has evolved much since the time of Johnson; indeed, it was only in the year following Johnson’s essay that Adam Smith published his An Inquiry into the Nature and Causes of the Wealth of Nations,⁴ incidentally the same year that the Declaration of Independence was announced in Philadelphia. We now have a better understanding of capitalist enterprise, the importance of investment and entrepreneurship, and the limitations of the State in promoting, much less engaging in, productive activities. Far better for the marketplace to create wealth and employment opportunities than to have the State redistribute wealth ineffectually.

Yet beliefs that entrepreneurial activity behaves neutrally to disincentivising taxing policy still exist, nowhere more so than in the reborn idea of ‘progressive’ taxation, which takes the charitable precept that ‘from whom much is given, much is expected’ and enacts it into law. Taken to extreme lengths, it violates Laffer Curve analysis that shows that beyond a certain revenue maximising point—roughly 20-30 per cent—high marginal rates of taxation curb business incentives and, instead of raising more revenue for the State, actually raise less.⁵

To add insult to injury, though progressive taxation was introduced originally as a tax upon the rich, it now encompasses the middle class, both because ‘soak the rich’ policies can no longer fund the burgeoning Welfare State and due to pay rises (largely due to inflationary pressures) which float the earnings of the higher middle class into corresponding tax brackets.

As John Chamberlain wrote of the economic effects,

Psychologically speaking, there is obviously some point where the progressive tax must recoil upon itself, destroying the base from which it might hope to achieve a maximum of “take.” Just where the point is we cannot tell: there is no way of measuring businesses that are unborn, or energies and creative enthusiasm that simply fail to well up. But when a progressive tax dampens the impulse to generate income, then the tax base itself must narrow and diminishing returns set in.⁶

Whatever can be said in favour of progressive taxation as an historical artefact (rooted in feudal duties of noblesse oblige), in practice it has grown out of all proportion as a means of helping at the bottom by skimming more from the top. The appetite of the leviathan State knows no bounds.

Here endeth the first lesson; all which serves as preamble for my essay ‘Taxing the middle class to extinction’, published by courtesy of the Institute of Economic Affairs.

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#DMI_Reads Update — Here is a list of current reading for the month of July:

• William Graham Sumner, The Challenge of Facts and Other Essays, Albert Galloway Keller, ed. (New Haven: Yale University Press, 1914) [insightful essays on politics and economics from the father of American sociology; I quote extensively from ‘What Makes the Rich Richer and the Poor Poorer?’ in the IEA essay above]; and
• Albert Taylor Bledsoe, Was Davis a Traitor; or Was Secession a Constitutional Right Previous to the War of 1861? (Richmond, VA: Hermitage Press, 1907 [1866]) [an examination of the ‘compact’ theory of American Union (as opposed to the ‘nationalist’ theory) and the legitimacy of state secession, with a view to the Civil War actions of Confederate president, Jefferson Davis].

ENDNOTES

^1. Samuel Johnson, ‘Taxation no Tyranny; an Answer to the Resolutions and Address of the American Congress [1775]’, in The Works of Samuel Johnson, LL.D., vol. 8 (London: Nichols and Son, 1816), 155-204; see 156.

^2. For an excellent overview of progressive taxation, see John Chamberlain, ‘The Progressive Income Tax’, The Freeman: Ideas on Liberty, 11:11 (November 1961): 30-42.

^3. ‘Taxation no Tyranny’, 162. Emphasis added.

^4. Curiously, Smith too laid the theoretical groundwork for progressive taxation: ‘The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.’ See An Inquiry into the Nature and Causes of the Wealth of Nations, R.H. Campbell and A.S. Skinner, eds., Glasgow Edition of the Works and Correspondence of Adam Smith, vol. 2b (Indianapolis: LibertyClassics, 1981), V.ii.b.3.

^5. Daniel J. Mitchell, ‘Taxation and government spending’, in A Beginner’s Guide to Liberty, Richard Wellings, ed. (London: Adam Smith Institute, 2009), 36-46; see esp. 42-43.

^6. John Chamberlain, ‘The Progressive Income Tax’, 32.

Economic Laws Trump Political Prestidigitation

‘It is the highest impertinence and presumption ... in kings and ministers, to pretend to watch over the œconomy of private people,’ observed Adam Smith. ‘If their own extravagance does not ruin the state, that of their subjects never will (Wealth of Nations, II.iii.36).’

This theme is explored in two essays posted this month. The first, ‘No Crystal Ball Needed to Forecast Fundamentals of Sound Economics’, takes a look at what constitutes ‘wealth producers’ and ‘wealth destroyers’, and why government — when it goes beyond providing the basic framework of law and order, and acting as a service provider of last resort — is so often a member of the latter group and not the former.

The second essay, ‘Raising the minimum wage while debasing the currency: an illogical economic policy?’ (published courtesy of the Institute of Economic Affairs), argues that instituting minimum wage laws while engaging in quantitative easing of the money supply is a hopeless venture; each activity considered alone is less than innocuous, but pursing both at the same time is an exercise in futility as any doubtful benefits are cancelled out and nullified.

Smith recognised that ‘All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord (IV.ix.51).’ To-day, encouraged by social democrats and their Progressive ideology, governments are addicted to these systems, whether through the aforementioned minimum wage laws and currency debasement or other forms of welfare economics. But, in the end, economic laws trump political prestidigitation.
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#DMI_Reads Update — Two volumes are in the reading queue this month: The Case for Capitalism (E.P. Dutton, 1920) by Hartley Withers and Lectures on the French Revolution (Liberty Fund, 2000) by Lord Acton.

Do you know of a little-known and under-appreciated volume on the French Revolution that you’d like to recommend? Write and tell me about it. And do people still read Thomas Carlyle on the subject? I’ve looked at the first few pages of his massive tome and been daunted, but am game to have another look if anyone is willing to make an argument in its favour.