Here’s a video lecture recently given by Richard M. Ebeling titled The new road to serfdom and the continuing relevance of Austrian economics.
Economic Liberty Lecture Series: Richard M. Ebeling from The Future of Freedom Foundation on Vimeo.
Tag: Economics
‘In Praise of Sweatshops’ lecture
The third in the series of three Lectures on Liberty will be held on Thursday April 8 at the historic Granada Theater in downtown Emporia. The speaker will be Benjamin Powell, professor of economics from Suffolk University in Boston. The topic is “In Praise of Sweatshops.” The lecture is free and open to the public and begins at 7:00 pm.
The ESU Lectures on Liberty was conceived by Greg Schneider, professor of History at Emporia State University, to bring in important academics who support the idea of research and scholarship on critical issues regarding liberty in American history. The lecture series is underwritten by the Fred C. and Mary R. Koch Foundation in Wichita.
For more information, contact Dr. Schneider, gschneid@emporia.edu, 620-341-5565.
The Granada Theater is at 807 Commercial Street in downtown Emporia. Google maps shows that from Central and Rock Road in Wichita, it’s a 84 mile drive that should take one hour and 22 minutes. Click here for the Google map with driving directions.
Stealing Capitalism: The Crime of the Century
By Jill S. Sprik
It’s been 105 years since a clandestine plot was hatched to purloin America’s capitalist system and replace it with socialism. Most of us were unaware of what was taking place right under our naïve noses, but recent events have now made it clear. Here’s how it happened:
Continue reading at Stealing Capitalism: The Crime of the Century.
Kansas employment trends
From the Bureau of Labor Statistics, the trend in Kansas private sector employment and government employment.
Related content is at Kansas Loses Private Sector Jobs as Government Grows , Government employees thrive, Governor Claims Growth While Jobs Disappear, Kansas continues to suffer from job growth deficit, and Kansas Governor Kathleen Sebelius and Kansas jobs.
State taxes and unemployment rates
A few days ago someone left a comment to a post in this blog that argued — I think so, anyway — that low-tax states are not doing well in this economy, with the measure of “wellness” being the state’s unemployment rate. The author provided a link to an article titled Do taxes kill jobs?. That article contained a table of the states with columns for taxes paid per person and the state’s unemployment rate.
The author of the comment made this claim: “How are states with lower taxes doing in this economy? Not very well.”
Here’s a plot of the taxes paid per person and unemployment rate of a states. I didn’t include Alaska, as it is an extreme outlier value because of special circumstances in that state.
Is there a trend visible? If there is, it’s not pronounced.
What kind of man was Ludwig von Mises?
What kind of man was Ludwig von Mises? As this unique film shows, Mises (1881-1973) was a man who never stopped fighting for freedom: not when the Nazis burned his books, not when the Left blackballed him at universities, not when it seemed as if statism had won. With courage and genius, he fought big government until the day he died … in 25 books, hundreds of articles, and more than 60 years of teaching.
Mises’s battles against Communists, Nazis, and other socialists, are featured in this film, as are his ideas of Liberty.
Among his many accomplishments, Mises showed that socialism had to fail, that central banking causes recessions and depressions, that the gold standard is honest money, and that only laissez-faire capitalism is fully compatible with Western civilization.
Mises was the twentieth century’s foremost economist, and one of its most important champions of Liberty. Here is a film that does justice to this extraordinary man, and to his equally extraordinary ideas.
Importance of economic freedom explained in Wichita
Yesterday Robert Lawson appeared in Wichita to deliver a lecture titled “Economic Freedom and the Wealth and Health of Nations.” The lecture explained how Lawson and his colleagues calculate the annual “Economic Freedom of the World” index, which ranks most of the countries of the world in how the “policies and institutions of countries are supportive of economic freedom.” The conclusion is that economic freedom is a vital component of well-being, income, health, and both personal and political freedom.
Robert LawsonThe Economic Freedom of the World annual report is available in its entirety at FreeTheWorld.com.
Lawson started his lecture by noting two methods of organizing an economy. There’s the way of Adam Smith, in which liberty, private property, and free trade are paramount, and government is to have a limited role. The other way is that of Karl Marx, where society would be planned and controlled by a central authority according to a national strategy.
Lawson said he became interested in measuring freedom as a way to investigate the truth of the claims of Smith and Marx. By collecting data about economic freedom, we could learn more about which system — economic freedom or planned economies — works best.
Lawson defined economic freedom as consisting of free markets, private property and personal choice; freedom to trade both within a country and foreign trade; freedom to enter markets; and security of property and the rule of law. He said that there is a role for government in this system to protect property rights and provide basic infrastructure, but the role of government is limited.
Measuring economic freedom is complex and multidimensional. Data comes from 141 countries using 42 components that are grouped into five broad areas: size of government, including expenditures, taxes, and enterprises; legal structure and security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor, and business. Ratings are on a scale from zero to ten, with ten representing the most freedom.
Some of the components of the ranking are based on objective data, while some are subjective, perhaps from a survey. Lawson said that the report and book detail the methodology used in creating the index.
The result is that Hong Kong ranks as most economically free country. Singapore is second, which Lawson said poses a problem. Singapore is economically free, but it is not politically liberal in terms of civil liberties. There is a strong positive relationship between political freedom and economic freedom, but there are exceptions like Singapore.
The United States ranks sixth. Sweden is ranked fortieth, which is still in the upper quartile of countries. Lawson said that while Sweden has a reputation as a welfare state, the U.S. and Sweden are not all that different. Taxes in Sweden are about 50 perfect higher than ours, and Sweden has many more labor regulations, but otherwise the countries are similar.
The big differences in the world, Lawson said, are between countries like the U.S. and countries like Venezuela and Zimbabwe.
China is ranked eighty-second, below the midpoint. Lawson said that China is a problem to rank, having Shanghai which is relatively free, and then outer provinces which are still tightly controlled and repressive.
Russia ranks eighty-third, right below China. Some of the former Soviet republics like Estonia are doing well, but the Ukraine has made little progress towards freedom.
India ranks eighty-sixth. It is not an economically free county, but is more free now than in the past, Lawson said.
To show how economic freedom impacts the lives of people, Lawson used a series of charts that showed the impact of economic freedom on various measures.
Economic freedom is very important in determining the incomes of people. The countries in the highest-ranking quartile of the economic freedom index have a per-capita income of $32,443. For countries in the lowest quartile the income is only $3,802. Economic growth rates are higher in the freer countries, too, although the difference is not as great as with income.
Lawson said that a frequent criticism of free economies is income inequality. He showed a chart presenting the share of income earned by the poorest ten percent in each country, grouped by quartile. There is very little difference between the groups. “It doesn’t really matter what kind of economic system you have — free market or not — it does not correlate in any way with income inequality. It’s simply not true that market economies, in general, are more unequal.”
A follow-up, Lawson said, is that if you are poor, where do you want to be? The answer is in the economically free countries. The per-capita income of the poorest ten percent in the least economically free countries is $896, while in the most economically free it is $9,105.
Life expectancy is also positively correlated with economic freedom, ranging from 59.40 years in the least-free countries to 79.12 in the most-free countries.
Is there a relationship between economic systems and the environment? Lawson showed a chart showing that the free countries do better in a measure of environmental performance.
Lawson said that political rights and civil liberties are also strongly associated with economic freedom, the example of Singapore notwithstanding. India is another exception, being a fairly liberal democracy but ranking low in economic freedom.
Speaking about the United States, Lawson said that the numbers are likely to go down in the future. While the U.S. ranks above the world average, its measurement of freedom has been declining since 2000. At the same time, the rest of the world is on an upward trend. “It’s no longer accurate to say the United States is among the very top tier in the economic freedom index,” Lawson said, adding that he blames George Bush for this. The decline is partly due to the increasing size of government, but the largest cause of the decline is in the area of property rights. This area is measured largely by surveys asking people how they feel about property rights in America. The perception, Lawson, said, is that the security of property rights are on the decline.
A question from the audience asked about reliance on foreign aid. Lawson replied that the economic freedom index methodology doesn’t include foreign aid. But there has been research done using the index and foreign aid, which concluded that countries get more foreign aid when they do worse on the index. Furthermore, after receiving more foreign aid, countries do worse in the index.
A question about the cost of living in countries was answered by the use of purchasing power parity.
Responding to a question about deficits, Lawson said that the size of government deficits doesn’t enter into the index calculations. The amount of government spending is part of the index, however. Lawson said that Milton Friedman argued that it wasn’t very important to freedom whether the government runs deficits. The size of government spending is important, Friedman said, with the method of financing the spending much less important.
A question revealed that health care doesn’t play a part in the index calculations, as the composition of spending is not a factor. If the U.S. government decides to spend more on health care, its rating will probably decline, as government spending is in the index.
A question asked how it can be that China and India are growing very rapidly, but still rank low in the index. Lawson answered that it’s the change or increase in the index that has been important for these two countries. There has been great change in both countries. “It takes only a tiny bit of relaxation to see a flourishing of growth in both China and India.” He added that both countries need to continue their reforms in order to maintain their rates of economic growth.
Lawson added that regulation, not taxation, is the biggest threat to prosperity and economic freedom in America.
Lawson’s lecture was sponsored by the Gilder Lehrman Institute of American History and underwritten by The Fred C. and Mary R. Koch Foundation.
Kansas historic preservation building tax credits discussed
Sometimes on blogs people don’t take the time to read comments left to posts. Sometimes those comments provide valuable discussion and illumination of public policy issues. So here I take a moment to elevate a few comments left to a recent blog post.
On Wednesday afternoon, a reader — we’ll call him “Larry” — left this comment to my post Kansas historic preservation tax credits should be eliminated. In that post, I argue that tax credits for the preservation of historic buildings are economically the same as a direct payment by the state to the developer, and that this practice is bad public policy that should be ceased. Here’s what Larry wrote:
Bob, I want to understand your point of view. I do not claim to be an expert in this area so these are observations / questions.
1. Wasn’t Wichita High School owned by the WATC and therefore tax exempt?
2. If a developer puts, say $6M into the building to get it open the property with 68 units renting for $1000 to $2000 a month then I would assume it would have a value that in turn would generate higher taxes than the building now pays, correct?
3. As I understand the Historic Tax Credit the person that put up the $6M and now has to pay the new property tax can take a credit of about 25% of the eligible construction cost (not all of the construction cost is eligible) against the new taxes he/she would pay to the state, correct?
So if I have this right a building that is paying no taxes to the state has $6M spent on it and now is paying taxes into the state coffer but will pay 25% less in taxes than it would have if the building were not historic. Do I have it right? If so where is the payment you allude to being made by the state to the developer? Also don’t forget that when renovating a historical building you can not renovate it using the most economical methods but have to keep it “historically” correct and that in itself is more expensive.
Then the reader “Pat” wrote this comment:
Larry, you are correct in that there is no money given to the developer by the state. No payments. Typically, the tax credits are used as barter for a developer to sell the credits at a significant discount on the open market to those that need are in need of a “credit”. On historic projects, the money raised by the sale of the tax credits has to be used on certain eligible costs. The building will not pay property taxes on a reduced valuation but will pay taxes on its fair market value.
Wednesday evening I left this comment:
For Larry’s points 1 and 2, I’ll take his word that these are correct. I don’t think I’ve ever made a claim to the contrary.
For point 3, the issue of the historic preservation tax credits and property taxes are entirely separate matters. The savings of 25% of building costs arising from the historic preservation tax credit is a one-time event, while property taxes are an ongoing event year after year.
The payment made by the state to the developer is the tax credit itself, which might take the form of a document from the state containing language like “This certificate may be sent to the state of Kansas instead of a check for $1,000,000 in payment of taxes.”
As Pat correctly notes, the recipient of such a certificate might keep it and use it to pay all or part of their taxes, or might sell it to someone at any price they mutually agree on. This ability to sell the tax credit document has been cited by WDDC president Jeff Fluhr as important.
So how is issuing a tax credit not the same as making a payment to the developer?
(By the way, Pat, if I knew I was getting a tax credit, I would immediately adjust my periodic tax payments to the state. It’s not necessary to wait until annual tax time to benefit from the credit.)
Furthermore, the fact that the tax credit may be used for only certain purposes is a total red herring. If I gave you $100 on the condition that you could spend it only on a Monday, would you deny that I had enriched you by $100? Or would you contend that I had enriched you by something less than $100? I would think that you would simply shift your spending around and benefit fully from the $100 that I gave you.
Finally, the fact that historic renovation is expensive is just like having granite countertops. It’s a premium amenity that is freely chosen by those who value it, it benefits those who choose it, and should be fully paid for by them.
Interesting? Or not?
