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Thursday, July 31, 2014

When High Taxes Lead to Revolution - Peter St. Onge

Mises Daily: Thursday, July 31, 2014 by

History is full of tax revolts. It's a fairly popular pastime, if historians are to be believed. But when do they come? What's the spark and what's the gasoline?

In Sun-Tzu's Art of War, he argues that long military campaigns are unwise because they exhaust the people, and he says that long campaigns exhaust "seven tenths" of the wealth of the elites.

This is one of those oddly-specific claims that sometimes strike westerners as hilarious. But Sun-Tzu was a historian, and lived in an era with plenty of case studies of war's destruction. So it's worth exploring his rule of thumb here.

One of the problems we immediately face is a lack of good statistics for most historical periods. Even in the twentieth century, statistics can be incomplete, biased, or poorly collected. Before then, all bets are off — the statistics stink in history.

So we have two choices: either we completely ignore the past, and reinvent every wheel. Or else we estimate the past using these kinds of subjective commentaries like Sun-Tzu's. The model is a radar, used not to "see" something but to estimate its location with fragments of data.

So let's use this "radar" method on Sun-Tzu's "seven-tenths." One interpretation is that he thinks there's an upper limit to the devastation that can be imposed on your own citizens. This would be consistent with modern economic "marginal analysis," where people value a loss more as it grows bigger. For example, if you take $10 from a billionaire, it's not a big deal, but if you take his last $10 in the world he'll fight you to avoid going hungry.

In this light, Sun-Tzu is saying that once you pass the 70 percent threshold, people become desperate enough to shift from sheep to wolf.

We can translate this into a modern hypothesis, that the people will accept up to a 70 percent tax rate with manageable protest, but go much beyond that and you're likely to have problems. Now, we're still a way off this mark in the US: spending at all levels of government in 2014 was about 42 percent. The highest spenders in the world, according to the OECD, are the Scandinavians at about 50 percent.

While these are high numbers, they're still well below Sun-Tzu's 70 percent. And the trends are not as bad as they might seem. While the trend is worsening, we've still got a ways to go: OECD average tax take grew about 4 percent between 1975 and 2010. At that rate the US wouldn't get to 70 percent for another 250 years. Fortunately we'd have a "canary in the coalmine" as the Scandinavians would hit this threshold about 100 years earlier.

One caveat for Sun-Tzu's scenario is that regulation was pretty primitive in his day. By one estimate these regulations add another 11 percent to government's "take," bringing the number up to 53 percent, but still below 70 percent.

A second big caveat is that this is all assuming past trends continue. History doesn't have perfect case studies, so we don't know what happens when an internet-and-computer wielding state gets the upper hand. So we could get to 70 percent much faster.

On the other hand, the State has become much more clever at hiding its taxes. Payroll withholding and hidden regulatory costs might not stir the people the way that a direct requisition might. And then, of course, there is the hidden tax in a central banks' inflation of the money supply.

Taking it all in, my guess is that this back-of-the-envelope "radar" tally suggests that current tax trends are plenty sustainable, for better or worse. Unless the trend changes significantly, taxes will likely continue rising slowly and, like the frog in boiling water, people will grumble and that's that.

There may be other catalysts, of course — the "culture wars" or incessant stoking of ethnic and racial animosity could come to a head. But on current trends taxes won't be the spark.

Note: The views expressed in Daily Articles on are not necessarily those of the Mises Institute.

Peter St. Onge is a Summer Fellow at the Mises Institute and an Assistant Professor at Taiwan's Fengjia University College of Business. He blogs at Profits of Chaos. See Peter St. Onge's article archives.

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Relationship of Politics to Morality

July 31, 2014

​Editorial By Wendy McElroy, Daily Bell​

A manufactured conflict is flashing through libertarianism: self-described "humanitarians" versus insultingly-labeled "brutalists." In a much circulated article entitled "Against Libertarian Brutalism," the libertarian luminary Jeffrey Tucker defines the "humanitarians" (of whom he is one) as people who love liberty because it "allows peaceful human cooperation... creative service... keeps violence at bay... allows for capital formation and prosperity... leads to a world in which people are valued as ends in themselves." In short, "humanitarian libertarians" value liberty because of the sheer beauty of the society it creates. (Note: The article was published in a March issue of FEE but the faux conflict is still active.)

By contrast, "brutal libertarians" are said to find "what's impressive about liberty is that it allows people to assert their individual preferences, to form homogeneous tribes, to work out their biases in action, to ostracize people based on 'politically incorrect' standards, to hate to their heart's content so long as no violence is used... to be openly racist and sexist." In short, "brutal libertarians" value liberty because it allows them to hate and to discriminate.

Unfortunately, the article also defines "brutal libertarians" as being "rooted in the pure theory of the rights of individuals to live their values whatever they may be." In other words, we (I am a brutalist by the preceding definition) believe in living peacefully without imposing our moral values on others; we view the non-aggression principle as the non-aggression principle. Politically-speaking, I adhere to nonviolence and for this I am considered hate-filled.

Tucker offers the example of "a town that is taken over by a fundamentalist sect that excludes all peoples not of the faith, forces women into burka-like clothing, imposes a theocratic legal code, and ostracizes gays and lesbians." And, yet, everyone is there voluntarily. He continues, "The brutalists will... defend such a microtyranny on grounds of decentralization, rights of property, and the right to discriminate and exclude – completely dismissing the larger picture here that, after all, people's core aspirations to live a full and free life are being denied on a daily basis."

Ignore errors such as presuming that decentralization or property ownership are used by libertarians to defend a violation of rights. Forget how difficult (or impossible) it is to find someone who advocates and lives nonviolence because he is hate-filled. Or the strong tendency for such a person to also adopt a moral code of civil behavior toward others. I do not know any voluntaryist who does not also have a strong personal ethics that includes tolerance, if not kindness toward others. But also, they believe their moral sentiments must not be imposed; what cannot be accomplished by peaceful means should not be accomplished at all.

Consider instead how easily the article skips over the "voluntary" aspect of the town. Or how a voluntary town could "force" women into burka-like clothing. Or how the article presumes that accommodating the aspirations of others is the responsibility of strangers.

I've tried to extract something positive from the article's "humanitarian" argument, and there is an interesting question raised, albeit obliquely. The question: What is the relationship between politics and morality?

Politics and Morality

In his article "Myth and Truth About Libertarianism," Murray Rothbard addresses the lie that "[l]ibertarians are libertines: they are hedonists who hanker after 'alternative lifestyles'. His response applies with equal force to the accusation of brutalism. "The fact is that libertarianism is not and does not pretend to be a complete moral or aesthetic theory; it is only a political theory, that is, the important subset of moral theory that deals with the proper role of violence in social life."

One of my favorite authors on the distinction between politics and morality is Adam Smith (1723–1790). Smith is most celebrated as an economist and the author of Wealth of Nations, a central theme of which is a rejection of mercantilism – the crony capitalism of its day. But Smith saw himself primarily as a moral philosopher and much preferred his earlier work The Theory of Moral Sentiments, a central theme of which is that morality rests upon the natural sympathy individuals feel toward each other.

Smith has been cast as a cold-fish economist who argues on the basis of individual and private self-interest. The impression is rendered by short passages that are selectively lifted out of the massive Wealth of Nations. An example is the famous quotation: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."

Certainly, the positive aspects of self-interest is part of Smith's argument but the overall picture he presents has been badly distorted. Smith argues for the free market primarily on moral grounds. That is, on the basis of the general good (prosperity), justice, freedom, liberty from domination and moral autonomy. These moral benefits accrue especially to the working class and to the poor. Smith examines economics in the explicit context of morality and human progress.
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Wednesday, July 30, 2014

▶ Issues in the Economics of Medical Care | Timothy D. Terrell *vid*

Published on Jul 30, 2014

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 25 July 2014.

FDA corruption news, articles and information

POWERFUL! Coast Guard Admiral Lee Addresses Restrictive Regulations on Religious Liberty - YouTube

Makes one proud to have been a Coastie.

"I am not really a religious  man, only a sinner in a sailor suit," he  says.

Coast Guard  Rear Admiral William Lee, ditched his prepared speech,  and delivered a scathing indictment of federal rules regarding  expression of faith in the  Military.
The video has just now become  available.


But, then as you'd expect ... there are those who dishonor the US military uniform by choosing Treason over Morality: Traitors Within the Gates: CFR's Military Membership Roster

Tuesday, July 29, 2014

Introduction to Nullification

NOTE: This is the fourth in a series of articles covering basic constitutional principles

So far in the Constitution 101 series, we've established that the Constitution created a limited federal government meant to exercise only specific, enumerated powers. All other authority remains with the states and the people. We also discussed the fact that the people stand as the sovereign in the system, and the Constitution wasratified by the people, through preexisting political societies – the states.

This construction of the federal government was implicit in the original Constitution. The Tenth Amendment made it explicit.

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Understanding these concepts raises an important question: what keeps the federal government limited to its enumerated powers?

Words on parchment mean nothing without some mechanism to enforce them, and the founders intended the states to serve as that necessary check on federal power.

Before the Constitution was even ratified, James Madison laid out a blueprint for addressing federal overreach in Federalist 46. The "Father of the Constitution" said that if the federal government imposes "unwarrantable measures" (or even warrantable measures) the "means of opposition is powerful and at hand." He mentioned a number of steps states could take including "refusal to cooperate with officers of the union" and other "legislative devices, which would often be added on such occasions." Madison said that even a single state implementing these measures would impose "very serious impediments," and when several states take action together, he said it would "present obstructions which the federal government would hardly be willing to encounter."

Federalist 46 laid the foundation for nullification.

Broadly speaking, nullification includes any act or set of acts that serve to render a federal action null, void or simply unenforceable within the borders of a state.

Madison and Thomas Jefferson first formalized the principles of nullification in the Kentucky and Virgina Resolutions of 1798 in response to the Alien and Sedition Acts. These four laws granted judicial powers to the president and limited due process for resident aliens deemed "enemies," and outlawed criticism of the federal government, a clear violation of the First Amendment.

In the original draft of the Kentucky Resolutions, Jefferson rested his case for nullification on the Tenth Amendment, calling federal assumption of undelgated power "unauthoritative, void, and of no force." He declared nullification the "rightful remedy" to deal with federal violations of the Constitution.

Where powers are assumed which have not been delegated, a nullification of the act is the rightful remedy: that every State has a natural right in cases not within the compact, (casus non fœderis) to nullify of their own authority all assumptions of power by others within their limits that without this right, they would be under the dominion, absolute and unlimited, of whosoever might exercise this right of judgment for them.

The Virginia legislature passed similar resolutions drafted by Madison a month later.

That this Assembly doth explicitly and peremptorily declare, that it views the powers of the federal government, as resulting from the compact, to which the states are parties; as limited by the plain sense and intention of the instrument constituting the compact; as no further valid that they are authorized by the grants enumerated in that compact; and that in case of a deliberate, palpable, and dangerous exercise of other powers, not granted by the said compact, the states who are parties thereto, have the right, and are in duty bound, to interpose for arresting the progress of the evil, and for maintaining within their respective limits, the authorities, rights and liberties appertaining to them.

Some call nullification illegitimate, arguing the Constitution makes no provision for it. But notice that Jefferson called it a "natural right." Nullification rests upon a constitutional foundation and logically flows from the constitutional system, but it is not "constitutional" per se. It exists as a right reserved to the states and the people as a process to protect them from federal overreach and hold the government they created in check.

For a deeper discussion of nullification, check out my book, Our Last Hope: Rediscovering the Lost Path to Liberty. It lays out the historical, constitutional and moral case for nullification.

If you don't have a clue, Get it here!▶ Gold Standards: True and False | Joseph T. Salerno - YouTube

Published on Jul 29, 2014

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 25 July 2014.

Members of U.S. Military Subjected to Aggressive Collection Tactics of Litigious Loan Operation

From the observation perch of a sovereign US citizen the least expensive and most beneficial to our servicemen and women is NOT to amend another law with more gobblygook, but instead to Recall all US military persons from their occupation to more than 900 overseas bases. The benefits accruing to all would be:

  1. Reunite military personnel with their families
  2. Reduce taxes for Americans
  3. Reduce costs for the VA
  4. Reduce psychiatric illnesses for service personnel and their families
  5. Reduce foreign hatred for America as an Occupier and Oppressor
  6. Reduce need for illegal immigrant workers 

  1. Restore US national defenses
  2. Restore states' national guard forces to homeland at full complement
  3. Restore border security
  4. Restore military spending to homeland vendors
  5. Restore America's worker pool to higher skill levels
  6. Restore friendly foreign trade relationships
  7. Restore an informed voter electorate
...I'm sure the reader can add some more.

Tuesday, July 29, 2014

(photo: Sverre Haugland
/Cultura/Getty Images)
A Virginia-based retailer has been aggressively going after members of the U.S. military who have fallen prey to its collection tactics after customers miss payments on overpriced household goods.

USA Discounters has been described by members of the military as "ruthless" in suing them, including those stationed overseas once they fall behind on payments for appliances, computers, jewelry and other items that are sold for prices far higher than in big-box stores.

Military personnel are supposed to be shielded from such litigation under the Servicemembers Civil Relief Act (pdf) (SCRA). But nothing in the law prevents a company like USA Discounters from choosing where to file lawsuits. In these cases, the sales contract requires that the venue is Virginia, even if the customer made the purchases elsewhere. Often, that means a defendant would have to travel across country or even the world to appear before a civil court.

"This looks like somebody who has really, really researched the best way to get around the entire intent of the SCRA," John Odom, a retired Air Force judge advocate and expert on the SCRA, told ProPublica.

Over the past eight years, USA Discounters has filed more than 13,470 lawsuits, according to the investigative news website, which found the lender almost always wins. And with a court victory in hand, the company can then garnish the wages of service members—something it does more than any other business in the U.S.

This strategy is "designed to obtain default judgments against consumers without giving them any real opportunity to defend themselves," said Carolyn Carter of the National Consumer Law Center.

USA Discounters will sell to anyone who walks into their stores, but most of their locations are near military bases and they offer credit to any member of the armed forces.

When interviewed about his company's business and legal practices, USA Discounters' vice president Timothy Dorsey told ProPublica: "This company is committed to ensuring that the men and women who serve and sacrifice for our country are always treated with the honor and respect they deserve." Dorsey added that his company provides credit to many military personnel who otherwise wouldn't qualify for it.

He even claimed the use of Virginia for all lawsuits was for "the customer's benefit," since state law allows businesses to avoid using a lawyer to sue, thus saving on legal fees that are supposedly passed on to customers. The company says members of the armed forces may request to be sued in another state.

In addition, Virginia law states that if a defendant doesn't respond to the notice of suit, they may be represented by an attorney; however, the law allows the plaintiff to suggest an attorney to represent a defendant. One attorney, suggested by USA Discounters, represented defendants in all 11 of the cases ProPublica examined.

-Noel Brinkerhoff, Steve Straehley

To Learn More:

Monday, July 28, 2014

Ron Paul Rewind: Israel Encouraged Growth of Hamas

Written by Adam Dick

Friday July 11, 2014

As the death toll from the Israel government's air strikes increases and its military prepares for a ground invasion of Gaza that the Israeli government justifies as a response to Hamas hostilities, consider former Rep. Ron Paul's January 9, 2009 speech on the US House of Representatives floor explaining that Israel helped encourage the growth of Hamas to counteract the Palestine Liberation Organization. Paul, RPI's chairman and founder, proceeds to discuss in the speech the similarity between Israel's past actions regarding Hamas and the US Central Intelligence Agency's support for radicalizing Muslims to compete with the Soviet Union.

Watch Paul's speech here:

Richard Sale opens a window on the Israel government's effort to aid Hamas' growth in his June 18, 2002 United Press International article:

In the wake of a suicide bomb attack Tuesday on a crowded Jerusalem city bus that killed 19 people and wounded at least 70 more, the Islamic Resistance Movement, Hamas, took credit for the blast.
 Israeli officials called it the deadliest attack in Jerusalem in six years.
 Israeli Prime Minister Ariel Sharon immediately vowed to fight "Palestinian terror" and summoned his cabinet to decide on a military response to the organization that Sharon had once described as "the deadliest terrorist group that we have ever had to face."
Active in Gaza and the West Bank, Hamas wants to liberate all of Palestine and establish a radical Islamic state in place of Israel. It is has gained notoriety with its assassinations, car bombs and other acts of terrorism.
 But Sharon left something out.
Israel and Hamas may currently be locked in deadly combat, but, according to several current and former U.S. intelligence officials, beginning in the late 1970s, Tel Aviv gave direct and indirect financial aid to Hamas over a period of years.
 Israel "aided Hamas directly -- the Israelis wanted to use it as a counterbalance to the PLO (Palestinian Liberation Organization)," said Tony Cordesman, Middle East analyst for the Center for Strategic Studies.
 Israel's support for Hamas "was a direct attempt to divide and dilute support for a strong, secular PLO by using a competing religious alternative," said a former senior CIA official.
Read the complete article here