Saturday, May 12, 2012

THINKING IN THE TANK: SINKING BY THE RIO GRANDE FOUNDATION

Think-tank thinking in New Mexico is often less thoughtful than its presumptions suggest it to be. One example is its E-Bulletin (6 May) from the Rio Grande Foundation (RGF), which describes itself as a “research institute dedicated to increasing liberty and prosperity for all of New Mexico’s citizens. We do this by informing New Mexicans of the importance of individual freedom, limited government, and economic opportunity.”

The first item prompted my response to, then an exchange of emails with, Paul Gessing, its Executive Director, and Gessing, an American citizen. In this case, the distinction between the institutional and the individual is, I think, without a difference. For the logic from his public statement to his personal, but neither privileged nor confidential, statements in defense of it is seamless. Our exchange follows my comments.

Gessing writes, “The left (including the President) hates profits and wants people and businesses to pay higher taxes.” Gessing is unclear about the connection between these two ideas. He does not indicate a limit on hatred or a cap on taxes, so perhaps anything goes: abolition of profits by an effective corporate tax of 100 percent. Such a vague assertion is itself an absurdity on its face. The lack of clarity about the connection may be, however, a deliberate attempt to condemn both ideas by mutual association—not exactly an informational as opposed to a propagandistic strategy.

Far more problematic is the emotion-imputing or motive-mongering gross over-generalization about “the left.” It takes less than a nanosecond to realize that this statement is false, stupid, and demagogic. That undefined population denoted by “left” includes many people, as does the “right,” who own equity positions in businesses so that profits can provide the basis for returns or appreciation. To think in such simple dichotomies is unworthy mentation by any adult and certainly by an Executive Director of a think tank. Worse, to impute emotions or motives on the basis of stereotypes is to demonize political opponents and to use the left’s imputed hatred of profits to rouse the right’s hatred of the left. Gessing makes “information” a form of inflammation.

The implications of Gessing’s official statement about tax loophole lead to his really unorthodox personal ideas, expressed in his last email in our exchange, that the funding of government should be “voluntary” and that voluntary funding is related to “the social contract as it is being written these days.” I have no idea what he means by “is being written today.” Aside from making government a recipient of charity, with all of the uncertainties of funding which that status would imply, it means underfunding and free-riding. In addition, Gessing suggests the existence of some social contract which would minimize or eliminate taxes to fund the government resulting from it.

What “voluntary” funding means is tax avoidance by those willing and able to dodge their “heavy tax burdens.” Gessing opines that “tax competition”—whatever that is: my guess is a kind of rivalry between those trying to escape taxes and those trying to make them inescapable—“insures governments cannot get too out of control”—governments a little out of control are apparently acceptable—“in terms of their tax and regulatory policies.” This position is ingenious because it assumes that a lack of tax revenues would restrain tax and regulatory policies, although Gessing’s usual complaint is federal deficit spending which nevertheless permits undue “tax and regulatory policies.” The ingenious becomes bizarre when Gessing concludes that tax avoidance explains why the rich “are wealthy and successful in the first place”—a position which implies that profit-making goods or services are not the basis of wealth “in the first place.” He leaves me wondering whence the wealth in the first place.

Bottom line: The RGF position is to shrug off tax fairness; as RGF official Gessing puts it, “Sure, it may not be ‘fair’ that businesses and the wealthy can legally avoid heavy tax burdens.” What Gessing himself stands for is an alternative to democracy, the shape of which would be virtually indistinguishable from either oligarchy on the one hand or anarchy on the other or a combination of both. The point of agreement by RGF and Gessing is a repudiation of America’s core value: equality. In this repudiation, neither institution nor individual are alone on the right.




The first item in the bulletin “Apple and Corporate IQ Tests” reads as follows:

The New York Times recently reported on tax avoidance schemes undertaken by Apple, the world’s most profitable company. The left (including the President) hates profits and wants people and businesses to pay higher taxes. Of course, Apple didn’t get to be so profitable by unnecessarily paying taxes that its competitors are smart enough to avoid.

The fact is that businesses, unlike some individuals, have the money and wisdom to hire tax planners to reduce their tax bills. Is this a bad thing? No, tax competition insures that governments cannot get too out of control in terms of their tax and regulatory policies. Should the rest of us be concerned? Well, I for one would rather have resources stay in the private sector than in the coffers of inefficient governments. Sure, it may not be “fair” that businesses and the wealthy can legally avoid heavy tax burdens. Next time the government asks for more taxes, it is worth realizing that some of the very people targeted for higher taxes will simply flee or find a loophole to avoid the tax. That is why they are wealthy and successful in the first place.

I responded to only the few of the words, which I quoted:

The left (including the President) hates profits and

Why in the world do you have to make statements like this one? You do not sound like the Executive Director of a think tank, even in an e-bulletin. Do I really need to say that many people on the left or, like me, left-leaning, like companies to make profits so that they can declare and issue dividends in return for our investments.

And do I need to say that taxes are just the funds levied for purchases of goods and services from the government? If people want higher taxes, they want more such goods and services; if they want lower taxes, they want fewer such goods and services. So talk about the goods and services, not the taxes. But, the truth is, the right wants to lower taxes without specifying what fewer goods and services will be purchased--and what the consequences for individuals and society as whole will be.

Paul responded:

I don’t want ANY goods and services from the federal government.
Please give me my money back!

Yes, Obama does not like profits:
http://www.realclearpolitics.com/video/2011/02/07/obama_corporate_profits_have_to_be_shared_by_american_workers.html

I responded:

First, I note that you do not respond to your “left hates profits” statement.

Second, thanks for the unsolicited statement below. I am sure that I can and probably shall address it in an interesting way.

I know that you understand that you are advocating an end of the federal government and thus of a country of united states under a constitution thereby united states and common interests for the general good.

I know that you know that no goods and services from the federal government means that the people would have no executive branch department--Defense--or agencies--CIA, NSA, FBI, DEA, etc.--to provide a unified defense against foreign threats; no executive branch departments--State, Treasury, Commerce--providing data and support for American companies in national and international trade; no national laboratories (most in Energy) to provide basic research for private companies; no Supreme Court or Justice to resolve disputes between states and their citizens; and no need for elected representatives using democratic processes to make the necessary laws to guide the resolution of those disputes.

Well, it did not take many words to give up on America and democracy in the modern world. For what? How do separate states and separate laws encourage business and increase profits without a federal government providing goods and services, like a standard currency? What will your money be worth when you get it back?

Wow! I am having fun considering your audacious and complete anti-federalism.

Paul responded:

I’m making a personal statement. I would be pleased to fund the federal government in a voluntary context. We’re talking about the heart of the social contract and I’m not a fan of the way it is being written these days.

This statement ended our exchange. Although none of my responses is a complete statement of arguments and supporting facts, each indicates some of the major problems, economic and political, with Paul’s positions.

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