It Is Good to Be the King: Taxpayers Pay $413,000 for French President’s Unused Luxury Shower
Bastien François, a professor of political science at the Sorbonne, writes that “The French political system is incomprehensible to the rest of the world… In France we call it a republican monarchy. That phrase says it all.”
Indeed, according to the press, a £250,000 ($413,000) shower with air conditioning and radio surround sound that was “built to the exact specifications of the French President Nicolas Sarkozy” was paid for by the EU taxpayer during the French Presidency of the European Union in July 2008.
It was “disposed of soon afterwards, unused, together with most of the equipment bought for the £16million ($26 million) conference.” The press also reported “other expenses included £1million ($1.65 million) spent on the opening dinner alone – more than £23,000 ($38,000) for each of the 43 heads of state.”
The VAT Debate: Should Politicians in Washington Get a Huge New Source of Tax Revenue as a Reward for Overspending?
Based on five criteria, James Pethokoukis of Reuters connects the dots and warns that President Obama is going to propose a value-added tax.
Does President Obama have a secret plan to raise taxes on middle-class Americans — and,well, pretty much everybody else — with a European-style, value-added tax? Actually, it’s not such a big secret. …Obama’s campaign promise to not raise taxes on households making less than $250,000 a year was always considered a joke here inside the Beltway. …Maybe it was a joke inside the campaign, too. Since being elected, Obama has raised cigarette taxes and has advocated raising healthcare taxes, energy and small business taxes, in addition to corporate taxes. What’s more, economic advisers like Larry Summers seem eager to get rid of all the Bush tax cuts, not just those on so-called wealthy Americans. And it’s also no secret that economists love the idea of a VAT. It promotes savings over consumption, and its hidden nature may mean it has less behavioral impact on taxpayers. …Liberals love the idea of a VAT because it’s, well, so European — also because it does raise tons of revenue to expand government. And that is what Obama wants: more revenue to pay for bigger government. Is a VAT better than the soak-the-rich approach favored by Democrats such as Nancy Pelosi and Charlie Rangel? Sure. Of course, the concern is that a VAT would be in addition to new soak-the-rich taxes.
While the timing is unclear, his prediction is correct. The politicians in Washington want much bigger government, but they know that it will be difficult to achieve that goal without a big new source of revenue. The VAT would be perfect from their perspective. It is a form of national sales tax, but would be hidden in the price of products and therefore easy to increase. Moreover, every time they increase the VAT, they would use that as an excuse to raise income tax rates for “distributional fairness.” It is no exaggeration to say that the VAT is the biggest fiscal threat to the cause of limited government.
One final point about the column. Economists don’t love the VAT, per se, but they do view it as being less destructive – per dollar raised – than the income tax. But less destructive is still destructive. And since the VAT would be in addition to the taxes we have now (and actually create the conditions for higher income tax rates), its enactment would create a lose-lose situation for taxpayers.
New Video Reviews Evidence against Big Government
The burden of government spending has skyrocketed during the Bush-Obama years. Many politicians claim that all this new spending represents necessary “investments” to boost economic growth. But as this new video explains, both cross-country comparisons and empirical analysis suggest government is far too big — not only in Europe, but also in America.
This is the second of a two-part series. The first installment, which focuses on eight theoretical reasons why excessive government undermines growth, can be viewed here.
Filed under: Government and Politics; International Economics and Development; Tax and Budget Policy
Kristof on the Drug War
New York Times columnist Nicholas Kristof cites the Cato report about Decriminalization of Drugs in Portugal by Glenn Greenwald. Here’s an excerpt:
Above all, it’s time for a rethink of our drug policy. The point is not to surrender to narcotics, but to learn from our approach to both tobacco and alcohol. Over time, we have developed public health strategies that have been quite successful in reducing the harm from smoking and drinking.
If we want to try a public health approach to drugs, we could learn from Portugal. In 2001, it decriminalized the possession of all drugs for personal use. Ordinary drug users can still be required to participate in a treatment program, but they are no longer dispatched to jail.
“Decriminalization has had no adverse effect on drug usage rates in Portugal,” notes a report this year from the Cato Institute. It notes that drug use appears to be lower in Portugal than in most other European countries, and that Portuguese public opinion is strongly behind this approach.
A new United Nations study, World Drug Report 2009, commends the Portuguese experiment and urges countries to continue to pursue traffickers while largely avoiding imprisoning users. Instead, it suggests that users, particularly addicts, should get treatment.
Senator Webb has introduced legislation that would create a national commission to investigate criminal justice issues — for such a commission may be the best way to depoliticize the issue and give feckless politicians the cover they need to institute changes.
Good stuff. Read the whole thing.
French Folly
Following the dubious example set recently by U.S. legislators, French politicians have informally proposed slapping punitive tariffs on goods from countries who refuse to curb greenhouse gas emissions. The German State Secretary for the Environment has, quite rightly, called foul:
There are two problems — the WTO (World Trade Organization), and the signal would be that this is a new form of eco-imperialism,” Machnig said.
”We are closing our markets for their products, and I don’t think this is a very helpful signal for the international negotiations.”
I have a paper forthcoming on the carbon tariff issue, but in the meantime here’s a recent op-ed (written jointly with Pat Michaels) on climate change policy mis-steps.
Maybe Europe Isn’t Lost to Islamic Terrorism
Europe has come into a lot of criticism lately. Much of it is justified. For instance, cutting military forces while expecting the U.S. to maintain security guarantees is more than little irritating for Americans facing trillions of dollars in deficits and tens of trillions of dollars in unfunded liabilities for various bail-outs and social programs.
However, predictions of a radical Islamic takeover of Europe look less realistic these days. Forecasting the future is always risky. Nevertheless, the feared growing population of Islamic extremists hasn’t appeared. Reports the Guardian:
A district of derelict warehouses, red-brick terraces, and vibrant street life on the canals near the centre of Brussels, Molenbeek was once known as Belgium’s “Little Manchester”. These days it is better known as “Little Morocco” since the population is overwhelmingly Muslim and of North African origin.
By day, the scene is one of children kicking balls on busy streets, of very fast, very small cars with very large sound systems. By night, the cafes and tea houses are no strangers to drug-dealers and mafia from the Maghreb.
For the politically active extreme right, and the anti-Islamic bloggers, Molenbeek is the nightmare shape of things to come: an incubator of tension and terrorism in Europe’s capital, part of a wave of “Islamisation” supposedly sweeping Europe, from the great North Sea cities of Amsterdam and Rotterdam to Marseille and the Mediterranean.
The dire predictions of religious and identity-based mayhem reached their peak between 2004 and 2006, when bombs exploded in Madrid and London, a controversial film director was shot and stabbed to death in Amsterdam, and angry demonstrators marched against publication of satirical cartoons about the Prophet Muhammad.
For Bruce Bawer, author of While Europe Slept, the continent’s future was to “tamely resign itself to a gradual transition to absolute sharia law”. By the end of the century, warned Bernard Lewis, the famous American historian of Islam, “Europe will be Islamic”. The Daily Telegraph asked: “Is France on the way to becoming an Islamic state?” The Daily Mail described the riots that shook the nation in the autumn of 2005 as a “Muslim intifada”.
Yet a few years on, though a steady drumbeat of apocalyptic forecasts continues, such fears are beginning to look misplaced. The warnings focus on three elements: the terrorist threat posed by radical Muslim European populations; a cultural “invasion” due to a failure of integration; and demographic “swamping” by Muslim communities with high fertility rates.
A new poll by Gallup, one of the most comprehensive to date, shows that the feared mass radicalisation of the EU’s 20-odd million Muslims has not taken place. Asked if violent attacks on civilians could be justified, 82% of French Muslims and 91% of German Muslims said no. The number who said violence could be used in a “noble cause” was broadly in line with the general population. Crucially, responses were not determined by religious practice – with no difference between devout worshippers and those for whom “religion [was] not important”.
“The numbers have been pretty steady over a number of years,” said Gallup’s Magali Rheault. “It is important to separate the mainstream views from the actions of the fringe groups, who often receive disproportionate attention. Mainstream Muslims do not appear to exhibit extremist behaviour.”
Obviously, the future is uncertain. Terrorism will remain a threat to both America and Europe. However, we must reduce the number of those hostile to the the U.S. and allied countries as well as stop those already determined to do us ill. So far, thankfully, the news from Europe in this regard appears to be good.
You’ve Just Got to Love the Way the European Union Operates
Daniel Hannan, the British Member of the European Parliament who gained fame with his devastating critique of Gordan Brown, has been equally trenchant in criticizing the excesses of the European Union. On his blog he explains the latest self-serving intricacies of voting in the upcoming election for the European Parliament:
How many MEPs will be elected a week on Thursday? Wait! Come back! I’m going somewhere with this! I realise the issue might not sound intrinsically sexy but, believe me, it demonstrates everything that’s wrong with the Brussels system. Bear with me and you will see how flagrant is the EU’s contempt for the ballot box — and for its own rule book.
Had the European Constitution Lisbon Treaty been ratified, there would have been 754 MEPs in the next Parliament. But under the existing scheme — that provided for by the Nice Treaty — there are meant to be 736. Three countries have rejected the European Constitution in referendums, and it is not legally in force. So how many MEPs will be elected a week on Thursday?
You don’t need me to tell you, do you? The EU’s primary purpose is to look after its own. Eighteen unconstitutional or “phantom” Euro-MPs will be elected anyway (hat-tip, Bruno), and will draw their full salaries and allowances. The only concession to the letter of law is that they won’t be allowed to vote. In other words — in an almost perfect metaphor for the entire Euro-system — they will be paid without having any function. (Incidentally, a couple of BNP trolls keep posting here to asking when I’m going to publish my expenses. I did so ages ago — see here — and all Conservative MEPs have done the same: our Right to Know forms are available online here.)
The number of Euro-MPs in the chamber might seem a recondite issue, but it goes to the heart of how the EU behaves. Other, more important, parts of the European Constitution have also been implemented, without the tedious process of formal ratification: a European foreign policy, the harmonisation of justice and home affairs, justiciability for the Charter of Fundamental Rights. These things would have been regularised by the European Constitution, but have been enacted despite its rejection.
It’s almost as good as unconstitutionally giving Washington, D.C. a congressman!
In fact, the attempt to consolidate continental government without giving the European people much say over the political system they live under is even more bizarre than electing MEPs who might never be able to vote. If implemented, the Lisbon Treaty will reduce the ability of the European people to hold their government accountable, but that’s just the point to the Eurocratic elite actively pushing further centralization of power. About the only barriers left to the implementation of the Lisbon Treaty are the Irish people and Czech President Vaclav Klaus, as I detail in a recent article on American Spectator online.
Filed under: Foreign Policy and National Security; Government and Politics
The Global Economy Is Not Immune to Swine Flu
World governments should be careful not to play politics with the Mexican swine flu outbreak. The health consequences should of course be rigorously addressed—but without adding economic consequences, which is what several countries appear poised to do.
Public health scares have a history of seeping into trade policy without anything resembling sufficient consideration of the evidence. Governments in Russia and East Asia are already banning pork exports from Mexico, even though there is zero evidence that they pose a health hazard. It hearkens back to unfounded bans of U.S. beef in recent years by the European Union and South Korea.
If the U.S. government jumps on board, U.S. exports could be targeted for retaliatory trade actions. One quarter of U.S. pork production is exported, as well as billions of dollars of our soybeans used as feed by foreign hog farmers.
Exploiting this crisis could turn what is so far a manageable health problem into an unnecessary trade and diplomatic conflict. Obviously the global economy does not need the extra strain.
The Problem with the EU in Afghanistan
President Barack Obama, like President George W. Bush before him, has gone hat-in-hand to the Europeans to request (beg?) for more troops for Afghanistan. Alas, the European governments gave him the back of their collective hand: they may like President Obama more than his predecessor, but that doesn’t mean they, or their peoples, want to do any more in Afghanistan.
But then, it’s not clear that getting more European troops would help much. Reports the (Australia) Herald Sun:
When asked by the Britons to attack Afghan rebels, the commander of a [Czech] special operations unit (SOG) said “we’re not going to, it’s dangerous,” then ordered his men to get in trucks and return to the base.
On another occasion, an SOG commander decided that the task the Britons had set ran counter to the unit’s mission.
Yet another time, a commander said he could not help as his soldiers were on vacation.
“I find it hard to recover from the news I get about this unit. It harms the reputation of the army,” Czech Defence Minister Vlasta Parkanova told the daily.
Some help.
Obviously, some European troops, including Czechs, fight hard and well. But most of the countries deploy their forces to ensure that they don’t have to fight. NATO provides precious few benefits for America in Europe or elsewhere. After 60 years, the U.S. should leave NATO to the Europeans.
Washington’s Government-Centric View of the World
Too many people in Washington look out upon the beauty and bounty of America and see a vast wasteland, enlivened only by government programs. If government isn’t doing it, they think, then it isn’t being done. When the Republicans threatened to nick the budget of the National Endowment for the Arts, First Lady Hillary Rodham Clinton wailed that the proposal “not only threatens irrevocable damage to our cultural institutions but also to our sense of ourselves and what we stand for as a people.” Seriously, she thought that if the then-$167 million of the NEA were eliminated, the $37 billion that Americans spent on the arts that year would somehow disappear in a puff of smoke?
Sen. Edward M. Kennedy was even more sweeping when he said in 1992, “The ballot box is the place where all change begins in America” — conveniently forgetting the market process that has brought us such changes as the train, the skyscraper, the automobile, the personal computer, and charitable or self-help endeavors from settlement houses to Alcoholics Anonymous to Comic Relief.
And today the Washington Post weighs in with the chart below. It’s titled “Percent of GDP spent on social/family expenditures,” and it shows the United States at a shockingly low 0.7 percent, while Obama-esque countries like Sweden and France are above 3 percent. But could it really be true that America spends less than 1 percent of its wealth on families and children? Of course not. The proper title for the chart would be “Percent of GDP spent by government on social/family expenditures.” (Indeed, given the federal nature of the United States, it’s possible that the proper title would be “Percent of GDP spent by the central government on social/family expenditures.”) Every American family spends a large portion of its income on children’s needs, and a larger portion on the needs of children and parents.
The point of the article, as the caption above the chart indicates, is to argue that the Japanese government needs to spend more on programs that would encourage women to join the paid workforce. (If the government hired all the mothers in Japan and paid them to care for their neighbors’ children, would that be a better world? It certainly would raise Japan’s position on the Post’s chart!) If that’s what Post reporters believe, they’re certainly free to advocate that position. But they shouldn’t assume or imply that the government is the entire society. Families in Japan and the United States spend most of their income — or at least most of their after-tax income — on child and family needs. The chart ignores that reality and seeks to make Japanese and Americans embarrassed that government taxes and spends less in their countries than in the European welfare states.
Filed under: Education and Child Policy; Tax and Budget Policy
Amusing, but Tragically Accurate, Video on Ag Subsidies from the U.K.’s Taxpayers Alliance
It is unclear whether European Union agriculture policy is more absurd or less absurd than American agriculture policy. Both systems reward special interests. Both systems distort markets. Both systems deprive people in the developing world. Both systems are bad news for taxpayers. The real issue is whether it is possible to reverse these terrible policies. Maybe a bit of satire will do the trick. Our friends at the Taxpayers Alliance in England have put together a video which uses humor to explain the absurdity of Europe’s so-called common agricultural policy.
After watching this video, I’m feeling a bit envious. My mini-documentaries on economic issues (see examples here, here, and here) have received some good feedback, but perhaps we could change more minds in America by using mockery instead of wonkery.
Filed under: General; International Economics and Development; Trade and Immigration
The Joys of Global Gridlock
The G-20 Summit in London on April 2 will feature politicians from around the world jockeying to promote bad ideas. Thankfully, there is a silver lining to this dark cloud since the United States and Europe do not agree on which bad idea deserves the most prominence. As the Wall Street Journal explains, the United States wants more nations to squander money of Keynesian-style schemes (see here to understand why bigger government is not stimulus). The Europeans, meanwhile, want to persecute tax havens and give the Keystone Cops at the IMF more money:
The U.S. will press world leaders to boost emergency government spending to lift the global economy, risking a rift with European nations more concerned with revamping financial regulation. In President Barack Obama’s first foray into economic diplomacy, Washington will urge the shift at a summit next month in London, U.S. officials say, as markets look for a unified plan of action from the world’s most economically powerful nations. Washington’s focus is at odds with France, Germany and other European nations that want the Group of 20 summit on April 2 to focus on rewriting rules governing financial markets. … U.S. officials, who could receive support from China and other countries with big stimulus programs, contend additional government spending is needed to reduce the depth and length of the downturn. Britain also may have an easier time seeing eye-to-eye with the U.S. than other European countries because both London and Washington are concerned that tighter financial regulation could harm their financial centers. Administration officials also say the G-20 isn’t ready to put new regulations in place, so focusing in that area would be counterproductive. … Even if the U.S. gets its way, the G-20 won’t ignore financial regulation. The G-20 has approved the concept of regulating the world’s largest financial institutions through international “colleges” of regulators.
The International Herald Tribune has more details on the misguided European proposals. At no point, though, is there any explanation of why the global economy would benefit from a bigger and more powerful IMF. The IMF certainly did not correctly predict the current financial turmoil. Nor has the IMF either correctly identified the government policy mistakes that caused the crisis or proposed policies that would help resuscitate the global economy. So why reward the bureaucrats with more money and power? The attack against tax havens is even more dubious. Desperate politicians like Gordon Brown are seeking scapegoats to distract voters, but it is unclear why tax havens should be blamed for asset bubbles caused by weak monetary policy and housing subsidies in “onshore” nations:
European finance ministers intend to push for a doubling of resources for the International Monetary fund to $500 billion, and to back the use of sweeping new sanctions against tax havens, according to a draft document. Confronted by a deepening global economic crisis, the top financial officials in the 27 European Union member countries are expected to agree in principle Tuesday to provide additional temporary funding for the IMF if necessary, and to support significant tightening of financial regulation. At a meeting in Brussels, the EU finance ministers are due to endorse a draft document, already approved by senior officials from national capitals, that will align the positions of European governments before the meeting of the heads of the Group of 20 developing and emerging economies in London next month. “It is essential,” the document says, “that the IMF has the appropriate financial means to assist countries particularly affected by the current crisis. EU member states support a doubling of IMF resources and are ready to contribute to a temporary increase if needed.” … The draft document…calls for the definition of a set of criteria by which to judge those that do not comply with international standards. “A tool box of sanctions” would be used to deal with such tax havens, the draft adds. These would include “the capacity to prohibit sales of financial products generated in these jurisdictions and the capacity to restrict companies’ operations into and from these jurisdictions.”
Gridlock generally is a good thing in Washington. If Republicans and Democrats are fighting, it slows the pace of legislation – which almost always protects liberty and prosperity. On the international level, where politicians scheme to set up cartels for the benefit of governments, gridlock is even more desirable.
Switzerland, Austria, and Luxembourg Defend Financial Privacy…and Get Support from the Czech Republic
The Birmingham Star reports on how Switzerland, Austria, and Luxembourg are defending their human rights policies of protecting financial privacy:
Switzerland, Luxembourg and Austria are fighting attempts to put them on blacklist for being tax havens and over-secretive in banking rules. Luxembourg officials hosted discussions with the Swiss and Austrian finance ministers over the weekend, resulting in a demand for involvement in talks on the issue prior to the G20 summit next month. Luxembourg treasury officials said the small European group wanted to be involved in the debates about bank secrecy which were currently being discussed in meetings to which they did not belong, such as the G20.
Equally important, the Czech Republic is standing up for the sovereign right of jurisdictions to have strong human rights laws. The Finance Minister correctly explains that Switzerland’s laws should not be sacrificed on the altar of bigger government. The EU Business reports:
Czech Foreign Minister Karel Schwarzenberg defended Switzerland on Sunday against threats by EU member states to put it on a tax haven blacklist, saying sovereignty is “worth more” than lost taxes. “Certainly tax coffers here and there miss out on a couple of million euros… The independence of a country and the traditions of an independent, neutral Switzerland is however worth more than that,” Schwarzenberg said. “Why must one spoil that at all cost?” he added in an interview with the Swiss newspaper NZZ am Sonntag. The Czech Republic holds the rotating presidency of the European Union, and Switzerland has come under intense pressure in recent months over its banking secrecy laws.
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets