Richard Rahn


Demagoguery Dangers in Deutschland

It is common for politicians in trouble to seek scapegoats for their own incompetence and wrong-headedness, but when this begins getting widespread popular support, both the people’s liberties and pocketbooks are in danger. Given its history, one would think Germany’s people would be particularly resistant to demagogy. Unfortunately, that is not the case. Recently, Franz Muntefering, head of Germany’s left-wing Social Democratic Party (the SPD), which also is the lead party in the governing coalition, accused business leaders of being “anti-social” and like “swarms of locusts.” Rather than denounce him for attacking businesspeople and “international capital,” other SPD leaders joined in the denunciations. Attacks on a despised minority or class in all societies

The Wrong Medicine

What would you think of someone who withheld curative medicine from a sick person? Many governments are, in effect, doing just this. There are billions of people throughout the world suffering from various ailments who could be made well if only more money were invested in new drug research and development (R&D;). The reason this money is not invested is because all too many countries outside the United States have price controls on drugs, leading to under-investment in new and improved medicines. These same price controls also have the side effect of making drugs more expensive for U.S. consumers. Many in Congress and the media demand more re-importation of U.S. made pharmaceutical products from countries with price controls, like Canada, or direct price controls in the U.S.

Where is the Balance Sheet?

If you spent more each month than you made and got deeper and deeper into debt, but had an asset equal to your debts, like a big expensive boat you never used, what would you do? If you were rational, you would sell the boat. The U.S. government has spent more than it receives in tax revenue for most of the last 75 years, and, as a result, the national debt and the associated interest payments have gotten bigger and bigger. But what is not well known is that the U.S. government also has many trillions of dollars of assets, which may exceed the value of the debt. I say “may” because, in fact, no one knows because the government has no accurate balance sheet of what it owns and what it owes. For instance, the federal government owns somewhere between 600 and 700 million acres of

The Injustice of ‘Tax Justice’

What does the phrase “tax justice” mean? A definition is important because some groups claim to favor “tax justice” but really want to increase taxes on productive people and transfer resources to the state. Webster’s, in part, defines justice “as the assignment of merited rewards or punishments.” There is an organization called the “Tax Justice Network.” Many of its leaders are, or have been, associated with the Fabian Socialists in Britain and other socialist groups around the world. Yet, this group just held a “briefing” for members of the U.S. Congress and their staffs. The organization strongly opposes tax competition between governments and has a “manifesto for tax justice,” with the underlying goal of

The Best of Times

Do you think things are getting better or worse around the world? Objectively, there is a correct answer, and that is unambiguously – better. No matter how you measure it – economic growth, life expectancy, childhood mortality, democratic countries, economic freedom, literacy, tax rates, crime rates, etc. – things are improving for most people in most places; and, in fact, they have never been better. There are always pessimists, and one can always find things to be pessimistic about: “Will bird flu cause millions of human deaths?” The news media survive on bad news and fear. That so much time and coverage is given to individual tragedies, e.g., the Scott Peterson and Michael Jackson trials, the Terry Schiavo case, and the pope’s passing, or

Weapons of Mass Disinformation

If someone advocates an ideology that has contempt for the individual and has caused untold economic misery and the deaths of hundreds of millions at the hands of their governments, what would you think of that person? The ideology I refer to is, of course, socialism and its numerous variations, including the utopian socialists, the Fabian socialists, the National Socialists, and, naturally, the communists. Socialism is simply an economic system where the government (or collective) owns and controls the means of production. Given that the two centuries of socialists’ experiments, whether by utopians, Marxists, or Fabians, always ended in economic failure and a loss of personal liberty, why are people around the globe still proudly proclaiming themselves socialists? Socialist


Assume you are a legal political refugee in the United States from a communist country. You are not well educated and have limited skill with the English language, but you are a master stonemason — a real artist in stone. Because of your skill, you have no trouble getting jobs, but by their very nature your jobs are limited and transitory. In the warm months, you most often work in the Northern states, and in the winter in the Southern states. You do not have one regular employer because you go from specialized job to specialized job and often are paid in cash. You occasionally want to send money to your elderly parents who still live in the old country, but you cannot use a bank because you do not have a bank account. The reason you do not have a bank account is are required by

Forum: The U.N. – An Economic Menace

The United Nations fancies itself a vehicle that reduces global poverty and increases economic wellbeing. But, in fact, the U.N. advocates policies that will do the opposite. U.N. reports and committees issue a steady stream of demands for tax increases. Most would fall on Americans and citizens of other very successful countries, with revenues given to the U.N. and leaders of dysfunctional and corrupt countries. Edward Mortimer, the U.N. secretary general’s communications director, in a Feb. 16 letter in The Washington Times, disputed some of my statements about the U.N. in a Commentary section column published the preceding week. Normally, I do not respond publicly to letters about my columns. I am making an exception because people need to be aware of the U.N.’s

Pricey Regulatory Tab

How much lower is your real income because of excessive regulation? And how much higher is unemployment because of too much regulation? Economists have been trying to answer these questions for the last several decades. Great strides have been made, and now Steve Entin, former Treasury official and president of the Institute for Research in the Economics of Taxation (IRET), is providing us an even more complete answer. To understand the complexity of regulation costs, start with the basics. If you ask an elected or government official how much regulation costs, you will likely be told the budget of the specific departments that produce regulations. If you ask a businessman the same question, he will probably cite the additional equipment required and all the extra workers needed to

Best for Business

Which countries do you think have the best business environments? Economists, politicians and business people fiercely debate this question. There is obviously no one correct answer because there are many variables, depending on such things as whether a particular business is capital- or labor-intensive, import- or export-dependent, etc. Forbes magazine has just issued its list of the “2000 biggest, most powerful public companies on the globe,” providing some new empirical evidence on this subject. One can take issue with some of the Forbes criteria, but the measures are probably as good as any. We reviewed the Forbes list and did a country-by-country analysis, looking for common measures of success and failure. To put the 52 countries represented on an equal plane,

Tax Rates vs. Revenues

The U.S. Treasury has just released some new data that will bring cheer to the advocates of lower tax rates and heartburn to those who advocate higher tax rates. By way of background, for the last three decades, there has been a fierce debate about which tax rates maximize tax revenue. Economist Art Laffer drew a curve that merely illustrated the well-known concept that at some point a tax rate becomes so high people will find legal or illegal ways of avoiding the tax, and tax revenue actually will fall. Mr. Laffer was derided by high-tax advocates, who misrepresented his and fellow supply-siders’ statements as implying all tax cuts would immediately increase revenues. In fact, we supply-siders said some tax rates were above their revenue-maximizing point. Cutting these

Drifting From Freedom

Do you feel more or less free today than you did 10 years ago? If you happen to be a property developer, sit on the board of a public corporation, often travel by air, like to spend your own money supporting political candidates and causes you believe in, or are outspoken in your Christian beliefs, you almost certainly answered the above question, “Less free.” Our Founding Fathers and other political thinkers recognized that free peoples most often lose their freedoms not in one sudden blow, but by the endless erosion of liberties they once had. As a student in biology, you may have learned that if a frog is put in a pot of water slowly brought to a boil, the frog will not be aware of what is happening until it is too late. There is increasing evidence Americans, like the

Right Questions in Right Order

Knowing what we now know, would you design our tax system, Social Security system, the United Nations and the World Bank as they are designed and now operate? Unless you are brain dead, you would have answered no to all the above. International organizations and government programs were all established to solve a perceived problem at the time of their creation. So before recommending how the organization or program can be “reformed,” should we not first ask if the original problem still exists and, if so, is the organization or program the right vehicle for solving it? Let’s start off with the easy one — the World Bank was set up after World War II as a tool in the Cold War. The idea was to provide loans to governments and their projects that would assist in

Curious Case of Somaliland

What is Somaliland? Don’t be embarrassed if you don’t know. Very few people know, and that is the beginning of the problem. Somaliland is not Somalia, but is a part of what used to be Somalia — and it may or may not be an independent country. As you may recall, Somalia was the country in which the famous “Black Hawk Down” incident (and later movie) occurred. Somaliland is on the Horn of Africa, surrounded by Somalia, Ethiopia, Djibouti and the Gulf of Aden. First, a little history: In the days when Africa was controlled by European colonists, there were three contiguous Somalias: French Somalia now known as Djibouti; British Somalia now known as Somaliland (but only by the Somalilanders); and Italian Somalia, now known as Somalia. In 1960, British Somaliland

What We Don’t Know

Do you know how long you will live? Do you know how long the average American will live 50 years from now? Do you know what birthrates will be for the next 50 years? Do you know the rate of immigration for the next 50 years? Do you know the rate of economic growth for the next 50 years? Of course, neither you nor anyone else the answer to any of the above questions. However, those who tell you we do not need to change Social Security or need only make minor adjustments to the existing system can honestly do so if they know the answers to the above questions — which they do not. Let’s start with what we do know. The present Social Security system is a “pay-as-you-go” system, in which the taxes paid by workers and their employers are used to fund the monthly benefit checks

The Trial of John Snow

Treasury Secretary John Snow “can stay as long as he wants, provided it is not very long,” is destined to go down in history as one of those classic Washington phrases. The phrase appeared in an article in The Washington Post as a quote from “a senior administration official” one week before the president finally announced Mr. Snow would be retained. For some time, officials of the Bush administration also made it known they were looking for a replacement, but in the end seemed unable to find someone both willing to take the job and clearly superior to Mr. Snow. John Snow came to the job two years ago with good reviews after the disappointing performance of his predecessor, Paul O’Neill. So what went wrong? Mr. Snow came to the job after heading a

Do We Need a National ID Card?

Are you in favor of a national identity card? Even though many Americans are against the idea of a national identity card, it is coming. In fact, in many ways, it is already here. Every American citizen and every foreign worker in America is required to have a Social Security card. Your Social Security card is only supposed to be used to gain employment and receive Society Security benefits, but try applying for credit without giving your Social Security number — and most often you will be turned down. You cannot board an airliner or certain trains, cash a check, go to a hospital, obtain a hotel room or even enter some office buildings without showing a photo ID. You cannot travel to foreign countries without a passport. Yes, we have no national ID card but, instead, we are required

Euro vs. $ Myths

The dollar has fallen about 35 percent against the euro over the last three years. What in practical terms does the fall mean, how important is it, and what should be done? Three years ago, the typical American worker had to work about 15 minutes to earn enough after taxes to buy a “Big Mac Meal” in either the U.S. or Italy, while the typical Italian worker had to work approximately 25 minutes to buy the identical “Big Mac Meal” in either country. Today, the American worker still has to work about 15 minutes to buy that same “Big Mac Meal” in the U.S., but if he travels to Italy, it will cost him about 25 minutes of U.S. work time to buy the same meal. Likewise, an Italian worker will still have to work 25 minutes to buy the “Big Mac

End Corporate Income Tax

On Nov. 18, in a speech given at the Finance Ministry in Vienna, Austria, the very highly regarded European economist and first woman president of the Mont Pelerin Society, Professor Victoria Curzon Price, called for eliminating the corporate income tax. There, in the center of socialist Europe, was not only the call to get rid of this destructive tax, but almost everyone in an audience of economists, various government finance officials and public policy experts appeared to agree with her. The idea and practice of the corporate income tax has been dying slowly for the last two decades. The corporate income tax is a highly destructive tax that greatly distorts proper economic decision-making, taxes the same income more than once, is endlessly complex, and provides a declining share