Osama bin Laden’s Boomeranged Plans

January 1, 2012 by

(A previous version of this article appeared in The Christian Science Monitor.)

Islamic extremists always have hated the presence of US armed forces in the Middle East. In an effort to coerce us into leaving, they called for a holy war and mounted a massive terrorist attack. The result: a lot more US forces in the Middle East. Terrorists may be good at blowing people up, but they are not political geniuses. The best way to remove US troops from a given territory is by waging peace on us, not war.

In his 1998 fatwa urging the killing of Americans everywhere, and in his 1996 “Declaration of War Against the Americans Occupying the Land of the Two Holy Places,” Osama bin Laden bewailed the American military bases in Saudi Arabia. He vowed to “expel the Jews and the Christians out of the Arab Peninsula” by initiating a guerrilla [terrorist] war. “And by this war, great losses will be induced on the enemy side, that would shake and destroy its foundations and infrastructures, that will help to expel the enemy defeated out of the country.”

Bin Laden partially got his wish, but not in the way he intended. The U.S. did withdraw Air Force operations from Saudi Arabia, for the most part. It happened only after we “induced” great losses on bin Laden’s side, rather than the other way around.

Bin Laden’s attack on September 11, 2001 proved to be one of the biggest strategic miscalculations of all time. While he no doubt relished the thought of having killed thousands of Americans, his broader objective backfired. Apart from he eventually being killed, it prompted the deployment of more American soldiers in the Middle East than bin Laden probably ever dreamed of. There are more than a hundred thousand U.S. troops there.

In his war declaration, bin Laden mocked the US’s quick withdrawal from Lebanon in 1983, from Yemen following a 1992 bombing of a hotel there, and from Somalia after 18 US Army Rangers were killed there in 1993. He apparently concluded that a new round of attacks would produce a similar outcome. That sentiment probably was reinforced by our tepid response to the US embassy bombings in Kenya and Tanzania in 1998, when we launched a few cruise missiles into the Sudan and Afghanistan.

But bin Laden did not understand that different kinds of terrorist attacks provoke different kinds of responses. We as a nation are slow to anger. But when we get angry, we are ferocious. We not only pummeled bin Laden’s terror network but annihilated two regimes that harbored it.

Smarter Muslims who dislike the US presence in the Middle East should have been furious with bin Laden after what he did on 9/11, not only from a moral standpoint but also from a strategic one. Radical Muslims, by contrast, continue to cheer that terrorist attack. Little do they realize how badly their own interests were damaged.

Even less obvious to radicals is that waging peace is the best way to keep us out of the Middle East. US forces got heavily involved in the Middle East because a radical Iraqi ruler decided to invade his neighbor to the south in 1990, with tremendous repercussions for the interests of the US and rest of the world. That ruler’s threat to peace over the ensuing 12 years made us stay there. Only now, after he’s been long removed, has the US finally decided to substantially reduce its forces in Iraq.

Of course, the continued presence of bad guys in that region will keep us there for the foreseeable future, as is the case elsewhere, like the Korean peninsula.

This should be a lesson to those who are under the mistaken impression that the US deploys its military abroad for reasons of “hegemony” or “empire.” No, the actual reason is to counter bullies, terrorists, or warring factions. And once they are gone, we go home. The steep reduction of US forces in Germany following the Cold War is a good example.

But extremists do not think in rational terms like this. That is one reason why they are called extremists. It leaves us with the messy job of trying to eradicate them before they can inflict further terror on civilization. Meanwhile, because of their actions, it looks like we will be taking up residence in their home territory for years to come.

Patrick Chisholm is editor of PolicyDynamics.

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Nice Countries, but Firm Countries, Finish First

January 1, 2012 by

(A previous version of this article appeared in The Christian Science Monitor.)

The United States will be friends with practically any other country, as long as that country is also willing to be friends. But woe to those who aim to do the U.S. harm.

Being open and friendly, but tough when one needs to be, is a strategy for success. In other words, nice guys but resolute guys finish first.

That holds true not just for individuals, but also for nations. And the United States is one such nation.

The world is blessed to have many countries – especially developed Western countries – that promote the ideals of freedom, democracy, peace, economic cooperation, and humanitarianism. It is a far cry from centuries past, when the major countries’ primary goal was to divide and conquer.

But there is an unenlightened contingent. Numerous countries, especially rogue states, still insist on spewing out insults and vitriol, and blaming their internal troubles on other countries. They have the medieval mentality that belligerence is the key to advancement.

The latter group of countries is why the former group can’t be too nice. Giving into bad guys’ demands can have disastrous consequences. A famous example is when Great Britain acceded to Hitler’s desire to usurp more territory in 1938, thinking that once his immediate demands were satisfied he would no longer be a threat. Britain’s leaders were under the erroneous impression that bad guys could be dealt with solely through talks, diplomacy, and appeasement.

The United States can sometimes be too nice, too. In 1994 it signed an agreement with Pyongyang to allow North Korea limited nuclear-power generation in exchange for a freeze on its nuclear weapons program. As it turned out, North Korea did no such thing.

By and large, though, the United States combines niceness with toughness.

America is akin to a rich, successful, and happy person. Such a person is affable and receptive toward everyone he meets. Yet he is vigilant, too. Being rich, he’s envied. There are people who don’t like him just because of his good fortune or his outsized influence. Some wish to hurt him. For those people, he’s firm. He plays hardball right back with them. And he doesn’t give in to their demands.

America is willing to be friends with almost any country as long as that country is willing to be friends with America. And if that other country is not willing, America still holds out hope that someday it will change its mind.

During the cold war it was the Soviet Union that was the antagonist, not the U.S.. Because the Soviets were ideologically against the American way of life, no amount of trying to befriend them would have worked. The only thing the U.S. could do was be ever-prepared and ever-vigilant – make sure the Soviets see the weapon at America’s side, while always having an olive branch stuck in its back pocket. After the Soviets finally shed their bad attitude, the U.S. happily and readily presented them with that crumpled old olive branch.

Another example was Libya. In the wake of Saddam Hussein’s ouster, Libya finally realized that being cooperative with America, not antagonistic, was in its best interests. So it shed its program of weapons of mass destruction.

Whether it is a nation or a person, a key to success is to be friendly and kind to anyone who reciprocates, yet tough toward those who try to inflict harm.

A computer model even illustrated this lesson. Developed by The Santa Fe Institute, was a digital fish tank. Users could introduce new life forms to observe whether their species thrived or died out among the other life forms. According to tech guru Winn Schwartau, each life form had a complex set of rules governing its behavior. Over time, wrote Schwartau, the life form that consistently dominated abided by the following rules:

“1. My species will always play nice with you. I will never be aggressive to you. We will make every attempt to cooperate and work with you and everyone in our (global) fish tank.

2. If you screw with me, I will annihilate you without any warning. Period.”

That was written pre-9/11. Like Japan and Germany 60 years prior, Al Qaeda, the Taliban, and Saddam Hussein discovered how seriously we take Rule #2.

And as long as we keep abiding by both rules, America, like the fish in the digital fish tank, will stay on top.

Patrick Chisholm is editor of PolicyDynamics.

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Deterrence’s End

January 1, 2012 by

(A previous version of this article appeared in The Christian Science Monitor.)

During the Cold War, deterrence helped preserve the peace. Now, America and the world are facing the truly frightening prospect of future cold wars, as hostile regimes around the world come closer to develop-ing their own nuclear weapons. North Korea, it appears, already has them. Iran is getting closer to having them. Iraq likely would have had them by now if not for our intervention. (There are very credible reports that Saddam Hussein merely put is nuclear program on hold, with the intention of restarting it later.)

It is easy to imagine a proliferation of nuclear-armed nations within a few decades. Deterrence worked for 40 years with the Soviet Union, notwithstanding numerous close calls. Many believe deterrence will keep Iran at bay as well. But the concept of deterrence is breaking down. Iran and North Korea do not require long-range missiles to attack the United States. They have an alternative delivery system: terrorist organizations. Launching a strike against us would be a matter of using such organizations or their own operatives to smuggle in weapons of mass destruction (WMD).

The attacking nation could keep its participation secret. As several observers have pointed out, this reality negates the idea of deterrence. Were such an attack to occur, determining culpability would be very difficult, if not impossible. A smuggled-in nuclear bomb detonated in an American city would leave little if any trace of physical evidence as to who carried out the attack. This would hold true for biological weapons and other WMD as well.

It is akin to the criminal world: if the identity of murderers always could be known, the fear of certain retribution would result in fewer murders. Similarly, in the past the fear of certain retribution deterred rogue nations. But now that their complicity can be kept secret, we are much more vulnerable to catastrophic attacks.

Even if we could eventually ascertain a nation’s complicity, the mere fact that it may think we could never do so, and try to get away with it, is enough to negate deterrence.

The situation reflects the larger changes that have been taking place since the end of the Cold War. We have entered the era of “Fourth Generation Warfare” (a phrase coined in 1989 in a “Marine Corps Gazette” article, which denotes warfare against nongovernmental terrorist or criminal groups like Al Qaeda). This type of warfare is typically waged by highly mobile, secretive terrorist or paramilitary groups that do not necessarily act under the direct control of a foreign government. They blend in with civilian populations, and often are glad to sacrifice their lives to kill civilian or military personnel. They may act as proxies for hostile governments, which supply weapons, training and other support. The advent of WMD means such groups can inflict casualties on a scale that in previous times would have required large armies.

The geopolitical scene has changed as well. No longer (for now) are we squaring off with a hostile superpower, but with an assortment of rogue states that have or could soon have WMD. The increasing availability of lethal technology means the risks of the unthinkable are rising every year. Given the nature of petty tyrants, it is only a matter of time before one of them decides to use WMD, including nuclear weaponry, against us or one of our allies.

The North Korea situation demonstrates what happens when rogue regimes are allowed to obtain WMD. It is an excruciating predicament indeed (and shows that we – as opposed to rogue nations – can still be deterred). The immediate lesson is that we must prevent more of these predicaments, as we did with Iraq.

We are living in unique times indeed, where the widespread availability of WMD is profoundly changing the geopolitical equation. For our planet to survive, America and the allies have to do things they would not normally do. It includes preemptive military action. Though such action certainly carries large risks and consequences, assuming diplomacy and sanctions fail to persuade, there is no other way to stop the onset of a world full of nuclear-armed despots. Otherwise, if they gain access to WMD, they will not be deterred.

Patrick Chisholm is editor of PolicyDynamics.

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Enviros’ Deafening Silence on the Estate Tax

October 22, 2009 by

(A previous version of this article appeared in The Christian Science Monitor.)

The Obama administration aims to prevent the demise of an institution that encourages the destruction of wildlife habitat and open space. And in this legislative battle, the major environmental organizations are nowhere to be found.

At issue is the notoriously perverse incentive that forces people to sell their pristine land to developers: the estate tax.

If you own land, a business, or other high-value assets, when you die the government may take a substantial portion of that for itself, depending on the total dollar amount the assets. In the past, the government would allow one’s heirs to keep up to $600,000 of the assets, and slap a 55 percent tax on anything above that amount. Beginning in 1998 the exemption started to rise with each new year; currently it is $3.5 million.

It is scheduled to be completely phased out in 2010 and then permanently reinstated at the $1 million exemption level in 2011 when the Bush tax cuts are due to expire. Supporters of death-tax repeal are hoping that a zero death tax in 2010 would result in political support for permanent repeal. But if the Obama administration gets its way, those hopes will be dashed.

The administration has proposed not completely phasing it out in 2010 after all, which would quash any political momentum for repeal. Instead, the $3.5 million exemption level would be maintained in 2010 and thereafter. Congress still needs to act on this – expected by the end of 2009.

One of the most sinister effects of the estate tax is the needless loss of millions of acres of farmland, forestland, and wildlife habitat. When a landowner dies, his or her heirs are often shocked to find out that they must pay huge sums to the government within nine months of the death, based on the value of the land. To pay the money, they are typically forced to sell the land – often to developers.

A particular problem is the breakup of contiguous tracks of land, which are necessary for larger animals to forage and roam.

A 2000 study by the U.S. Forest Service’s Southern Research Station found that about 1.3 million acres per year of forestland had to be sold to pay the estate tax, and of the land sold, 29 percent was developed or converted to other uses. And 2.6 million acres of trees are chopped down each year to pay the estate tax. To be sure, those acreage numbers now could be lower because of the gradual phase-out of the estate tax, but in 2011 if the estate tax is reinstated, the numbers will likely shoot up again.

One would think the major environmental organizations would be clamoring for the permanent repeal of the estate tax.

But this is not the case. Most such organizations are silent on the issue. Some, such as Friends of the Earth, even support the estate tax. A spokesperson there told me that heirs would sell their land to developers anyway, even if there were no estate tax.

While some selling still would take place, the question is, would more selling be going on with the estate tax, or without it? It’s the former. After all, the tax gives most families no option but to sell. Without the tax, a large percentage of those families undoubtedly would choose to keep and preserve their land.

The FoE spokesperson also noted, presumably with a straight face (we spoke over the phone), that the estate tax encourages conservation (!) through conservation easements. These are where landowners get some tax relief in exchange for preserving their land. It is certainly plausible that an easement could induce some heirs to preserve their land, who otherwise would have sold it if there were no estate tax. But conservation easements are complex undertakings; most landowners and heirs do not go through the time and expense of setting them up. The result: far more land subject to the estate tax is sold than placed into easements.

In 1998 – the latest year for which I found statistics – the Office of Management and Budget estimated that deductions for conservation easements over the ensuing five years (1999-2003) would reduce estate tax revenue by less than two-tenths of one percentage point (0.18 percent).

Two New York Democratic members of Congress certainly seem to believe the estate tax is taking a toll on the environment. Concerned about dwindling open space on Long Island, Senator Charles Schumer and Congressman Tim Bishop put forward a bill several years ago that would defer the estate tax for those who agree to not sell their land to developers.

I suspect that a big reason for environmental groups’ support for or silence on the issue has to do with other factors. Most employees of and donors to major environmental groups hail from the left side of the political spectrum, where anything that reeks of tax cuts for the rich is anathema. Even for those organizations sympathetic to repealing the estate tax, publicly supporting that could alienate much of their donor base.

R.J. Smith of the Competitive Enterprise Institute said that in the 1970s, environmental organizations began to get captured by the left. Convinced that the source of environmental degradation was a free-market society based on private property rights, young radicals migrated into traditional conservation organizations like the National Audubon Society. He said they eventually took them over and moved their basic philosophy toward a hostility toward free markets.

And slapping huge tax on what a rich person owns when he dies is certainly being hostile to free markets.

The estate tax flap amply demonstrates that the major environmental groups and their donors are redistributionists before they’re environmentalists. If they truly were serious about helping the environment, they wouldn’t let their desire to sock it to the rich get the better of their desire to help the environment.

Patrick Chisholm is editor of PolicyDynamics.

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Punishing the Wealthy Punishes Us All

October 20, 2009 by

(A previous version of this article appeared in The Christian Science Monitor.)

Lest there be any confusion about the overarching philosophy of Barack Obama, his presidential campaign and his policy proposals thus far have cleared that up: income redistribution and penalization of the rich. Though emotionally appealing to many, this philosophy hurts all Americans in the long run.

Pre-presidency, from his remarks on using the Supreme Court to redistribute wealth, to his “spread the wealth” comment to Joe the Plumber, to his plans to cut taxes on all but the top 5 percent of workers, Obama’s strongest and most consistent campaign message was that the rich aren’t taxed enough. His actions – and inactions – as president have borne this out. They include attempts to reduce a tax deduction for charitable contributions by high-income taxpayers, increase various taxes on various industries and on large estates, allow the top two income tax rates rise to 36 and 39.6 percent respectively in 2011 when the Bush tax cuts expire, and lower the already-modest amount of taxes the bottom 50 percent of income earners pay, and increase subsidies to them.

The most alarming proposal is in the latest health care bill, which phases out health benefits as one’s income goes up. When combined with other tax policies, it would amount to an estimated 70 percent marginal tax rate – i.e. for each additional dollar you earn, 70 cents of it is taxed away.

This is a true class warfare-style strategy: punishing the rich and rewarding the non-rich. It would be terrible for our economy and hurt the rich, poor, and middle class alike.

The reason America’s standard of living is high – and why our poor would be considered middle class in the majority of other countries – is because we produce so many goods and services per person. Monetary rewards, and/or a desire to break out of one’s current economic class, are largely what motivate us to produce those goods and services.

Raising taxes on the rich reduces those monetary rewards, which in turn lowers the incentive to work harder or smarter. That’s bad enough. To raise taxes on the rich while reducing them on the middle class – and increasing subsidies to the middle class – reduces that incentive even more.

It’s akin to your boss cutting your pay if you put in longer hours, and raising your pay if you work shorter hours.

Actually, lowering taxes on the middle class and raising them on the rich harms economic growth even more than leaving middle-class tax rates in tact while raising them on the wealthy. It results in a higher marginal tax rate – the tax rate on what you earn above a certain dollar amount. It is marginal tax rates – not overall tax rates – that so affect our incentive to produce. Why put in extra work if the extra income that comes with it is going to be taxed higher?

As the Wall Street Journal noted, “small-business people – and the number of small businesses – live or die by marginal rate changes.”

A study by Martin Feldstein and Daniel Feenberg of the National Bureau of Economic Research found that following the 1993 tax increases, high-income taxpayers reported 8.5 percent less taxable income that year than they would have if their tax rates had not increased. This is largely because, along with shifting compensation from taxable cash to untaxed fringe benefits, people such as the self-employed and senior executives can reduce their taxable earnings by a combination of working fewer hours and taking more vacations – i.e., fewer goods and services produced.

The ill effects of slower economic growth particularly play out over the long term. Europe, with its high marginal tax rates, serves as a good example. In 1973, per-capita income for the United States was about 26 percent higher than that of Germany. After three and a half decades of slower growth in Germany, the gap had widened to 32 percent. The numbers for France are similar.

Per-capita income of Germany and France is about the same as that of our least-wealthy state, Mississippi. A study by Edward Prescott of the Federal Reserve Bank of Minneapolis concludes that Europe’s higher taxes account for almost all the difference in labor force participation rates between Europe and the United States. As taxes have risen over the past three decades, European workers have responded by working less.

There are plenty of other good reasons not to penalize rich people. They are by far the biggest savers. Were it not for their savings, there would be little money available for the rest of us for housing loans, education loans, or car loans. Funds for productive investment by businesses also would be scarce. And most people owe their jobs to a rich person – the owner of the business they work for. (Though many business owners certainly are not rich.)

It’s not as if the rich are undertaxed. According to 2007 figures – the latest year of available data – the top 1 percent of taxpayers pay 40 percent of all individual income taxes. The left lambasted the Bush tax cuts because the top 1 percent’s taxes were reduced along with those of everyone else who pay taxes. Well of course – if you cut taxes on everyone, people paying most of the taxes will be affected.

Barack Obama’s message is loud and clear: penalize the wealthy, and reduce the incentive to become wealthy. That would harm the long-term well-being of Americans of all stripes.

Patrick Chisholm is editor of PolicyDynamics.

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Bring Back Human Intelligence

October 15, 2009 by

(A previous version of this article appeared in The Christian Science Monitor. TIDES World Press Update placed it under its “Articles of Significant Import” heading. TIDES stands for the Translingual Information Detection, Extraction and Summarization program, a U.S. Defense Advanced Research Projects Agency – DARPA – research effort.)

The democratization of technology is generally a wonderful thing. The Internet, powerful computers, cellular phones and other such devices, which were once available only to governments or a select few, are now available to almost anyone. But with this comes the nagging thought that deadly technologies are also widely available. One no longer needs a standing army to carry out mass destruction; individuals or small groups of bad guys can generate untold suffering, be it through the use of conventional or unconventional weapons.

Such groups thrive on guerrilla warfare tactics. They blend in with the civilian population and launch surprise attacks, as happened on September 11, 2001.

Given this reality, the role of intelligence gathering in uncovering terrorist plots has taken on a dramatic new significance. The CIA, FBI, and other agencies that employ human intelligence – or HUMINT, in the feds’ parlance – are our first line of defense against the new enemy. They arguably have become the most important function of the U.S. government.

The key to busting up terrorist plots is by infiltrating the groups with real-live humans; satellite photos and other electronic gizmos are not nearly enough.

But America’s HUMINT capabilities weakened significantly during the past few decades, accelerating in the 1990s and suffering a further blow in 2009 with the Obama administration’s decision to appoint a special prosecutor to investigate CIA interrogators.

It started with the Church Committee investigation in the 1970s, which was an effort to expose and correct some of the CIA’s excesses during the Cold War. But in view of the enemy we are up against now, the changes went too far.

In the aftermath of the Church Committee investigation, scores of Middle East case officers were laid off or forced to retire. The Foreign Intelligence Surveillance Act (FISA) of 1978 imposed strict rules on intelligence gathering, and created large bureaucratic hoops that CIA and FBI officers had to go through before they could wiretap suspected terrorists. In fact, FISA-related obstacles were largely responsible for the FBI’s decision not to search the computer and apartment of Zacarias Moussaoui (the alleged “20th hijacker”) prior to September 11.

In the mid-1990s the intelligence agencies’ hands became even more tied. The Aldridge Ames spy case resulted in a purge at the CIA, making the remaining case officers reluctant to get to know foreigners out of fear of becoming a suspect, according to Robert Baer, a former CIA field officer and author of See No Evil: The True Story of a Ground Soldier in the CIA’s War on Terrorism.

Aggravating the situation were 1995 CIA guidelines associated with the practice of gleaning information from foreigners with questionable human rights backgrounds, leading to multiple layers of bureaucracy whenever a case officer wanted to recruit an asset. A new Director of Operations in 1995 fired all “access agents” – foreigners who have access to potential intelligence sources – according to Baer. By 1995, HUMINT reports on many Islamic terrorist groups slowed to a trickle.

The culture of political correctness affected the intelligence community as well. Especially at the FBI, agents were reluctant to conduct surveillance on ethnic Arabs out of fear of being accused of racial profiling.

A U.S. News and World Report article carried the disturbing revelation that in the months prior to September 11, the bin Laden unit at FBI headquarters turned down a request from one of its field offices to send a confidential informant to participate in an Al Qaeda training camp. There is no word from the FBI on why the request was rejected, but the incident is not surprising in light of the atmosphere within the intelligence community at the time.

Though collecting HUMINT is supposed to be the CIA’s chief function, fewer than 10 percent of its employees work outside of the United States, according to the book The Human Factor: Inside the CIA’s Dysfunctional Intelligence Culture by Ishmael Jones.

And now its job is even harder. The majority of its HUMINT reports since 9/11 reportedly have come from prisoner interrogations. In addition to the negative impact on CIA morale, the Obama administration decision likely will result in less information and/or less valuable information gleaned from interrogations.

Bureaucracies are susceptible to sclerosis over the course of their lifetimes – a gradual weakening of their original mission amid a steady accumulation of rules, regulations, politics, political correctness, lawsuits, careerism, and administration (much of it imposed by Congress). Our intelligence agencies are not immune.

Obviously, the shock of September 11 prompted the hiring of a lot more Arabic-speakers. And fortunately, the 1995 CIA guidelines on recruiting foreign agents have been significantly loosened, according to an Agency spokesman. FISA has been loosened as well, but not nearly enough. U.S. intelligence operations are still subject to a labyrinth of rules and regulations deriving from Congress and the executive branch. Considering the extreme danger the country is facing, policymakers have a lot more to do to facilitate the gathering of HUMINT.

Patrick Chisholm is editor of PolicyDynamics.

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Sayonara, California

September 20, 2009 by

(A previous version of this article appeared in The Christian Science Monitor.)

Some people say California is one day going to break off and sink into the Pacific. In the literal sense, this is a myth. Figuratively speaking, however, it is an apt metaphor.

The state is known for its high taxes and myriad regulations. And with a budget passed in February that jacks up the top tax income rate to 10.56% and the sales tax to 8.5% (among numerous other taxes and surcharges), that reputation got driven home even further.

The inevitable result? Businesses will flee the state even faster. Fewer businesses will want to move there. And entrepreneurs won’t want to set up shop there.

California’s economy is larger than that of most countries of the world. But California is only a state, not a country. That makes it unable to get away with what countries can get away with. When the latter enact far-reaching social welfare measures, businesses grumble but almost all of them stay put; it is exceedingly difficult to relocate to another country. But if a U.S. state acts the same way, companies can move to another state with relative ease.

People and businesses vote with their feet – they pack up and move out. Given this reality, taxes and regulations have to be treated with even more delicacy at the state level than at the national level.

California’s social welfare measures are too numerous to mention here, but I’ll mention just a few. You’ve heard of family leave; California has paid family leave. Premiums that businesses pay for workers’ compensation have increased, as have unemployment insurance costs. And the statute of limitations for personal injury claims has been extended.

The state’s business-unfriendliness is borne out in surveys. Of all the states in the union, California’s business climate ranks dead last, according to a survey of 287 senior-level executives, conducted by Development Counsellors International. In the Small Business Survival Committee’s 2008 index, California ranks a dismal 49 out of 50.

The Census Bureau evidently does not keep figures on the rate of business out-migration, but one can get an idea of the trend by looking at net out-migration figures of U.S.-born people. More than 2 million of them left California during the 1990s, primarily resettling in neighboring states where the business climate is more favorable.

From 1997 to 2007, more than 1.4 million more Americans left the state than entered it, according the American Legislative Exchange Council. (This doesn’t include immigrants, who presumably view California’s quality of life as superior to the third-world country that most of them came from. But for how long?)

Of course, business out-migration is just fine with some Californians. Profit, in their eyes, is evil. As far as they’re concerned, the fewer businesses in the state, the better. Other more moderate Californians understand the benefits of having businesses around, but think their state’s quality of life will be enhanced by more generous social welfare benefits.

But what generally happens when businesses flee an area and/or fewer of them get established is the quality of life declines. Jobs get less abundant and incomes get lower (or at least don’t rise as quickly), and infrastructure tends to weaken. The environment may suffer as there is less money available to clean it up. The crime rate usually rises as well.

California won’t go downhill overnight. The perverse effects of excessive taxation and regulation typically manifest themselves over years or decades. To be sure, other things are keeping people and businesses in the state – e.g. a large market, good universities, beautiful landscapes, good weather – but more and more of them are deciding such attractions just aren’t worth it.

The state is caught in a vicious circle. Constituencies sympathetic to businesses are leaving California in increasing numbers. Meanwhile the state’s generous social welfare programs pull in lower-income people – both from the within and outside the United States. And they typically vote against the interests of businesses.

With fewer pro-business and more anti-business voters (i.e. fewer Republicans and more Democrats), the result is even more regulations and higher taxes, driving even more businesses out, and so on.

Californians have slipped from having the 3rd highest per capita income in the country in 1959, to the 13th highest now. What’s their solution to reverse the trend? Measures to make the state business-friendly again? No. Most of the state’s elected representatives are trying to remedy the situation with more tax increases; part of the vicious circle.

Occasionally, thanks to a quirk in California’s legislative process that enables a one-third minority to veto the majority’s wishes, the pro-business forces hold the line, such as this past summer when a budget was passed that cut spending and didn’t raise taxes. But it passed by the skin of its teeth.

It could be worse. California is one of only three states that require a two-thirds supermajority to pass tax laws. Were its constitution like that of most states which lack such a provision, taxes would be even higher, and businesses fewer.

Other states should take heed from California’s experience. It shows what happens when a U.S. state transforms itself into a welfare state.

Patrick Chisholm is editor of PolicyDynamics.

Filed Under: Articles Published Elsewhere, California and Welfare States Leave a Comment

Envy Management

September 15, 2009 by

(A previous version of this article appeared in The Christian Science Monitor.)

The top 1 percent. Tax cuts for the rich. Wealth and privilege. Those are powerful phrases. Powerful because they appeal to one of the most prevalent and universal of all human emotions: envy.

The politics of class warfare will always be with us because envy will always be with us. Though no one ever admits it, this emotion is undoubtedly a factor behind some people’s support for higher taxes on the rich. Taken to extremes, it in large part gave rise to degenerative ideologies such as communism and even anti-Semitism. It is also the basis of many wrongs, small and large, that people commit in their everyday lives.

Where did envy come from in the evolutionary scheme of things? My initial conjecture was that it is so prevalent today because humans are not biologically “programmed” for industrialized societies, in which specialization and the division of labor necessitate differences in incomes. Millions of years of evolution designed us to live in hunter-gather societies, where everyone generally was in the same boat economically.

But that conjecture was wrong. Helmut Schoeck’s classic Envy: A Theory of Social Behavior makes clear that unchecked envy was actually far more common in pre-affluent societies. There are plenty of things other than economic status to get envious about, such as someone’s leadership position, hunting skills, social skills, or access to members of the opposite sex.

And in fact, envy based on economic differences was very pronounced in such societies. Small differences in incomes rather than large ones actually are more often a cause of envy. Within a given group, whenever someone accumulated a disproportionate amount of assets based on skill or hard work (or luck), that person often would be ostracized and/or his possessions confiscated. It is one reason why primitive societies stayed primitive; no one was permitted to get ahead economically. “No one dares to show anything that might lead people to think he was better off,” writes Schoeck. “Innovations are unlikely. Agricultural methods remain traditional and primitive, to the detriment of the whole village, because every deviation from previous practice comes up against the limitations set by envy.”

Among the Mambwe, an African tribe, achieving success brought accusations of sorcery. Villagers were convinced that that if someone regularly produced a better crop than his neighbors, it was not the result of better cultivation methods, but of sorcery. Successful people were looked upon as sinister, supernatural, and dangerous.

Sound familiar? In our society, those who become rich through working hard and producing things of value are often suspected of getting where they are through devious means.

A comment by the actor Ethan Hawke, brought up by a “socially conscious” mother, is telling: “I was raised to have a general mistrust of anybody who was wealthy,” he told an interviewer.

Only in societies where enough people hold their envy in check can economic advancement take place. Ours is one such society. In fact, I would venture to guess that envy is less prevalent in the United States than in any other society, which is one reason why we’ve been so economically successful.

Of course, Americans are still subject to the same laws of human emotion as everyone else, so one does not have to look hard to find manifestations of envy. Politicians exploit that emotion all the time. Notable was Al Gore’s “top 1 percent” mantra during his presidential campaign, presidential candidate John Edwards and his “two Americas” rhetoric – “one privileged, the other burdened,” and President Barrack Obama’s plans to raise taxes on the top five percent.

One may ask, how could Gore, Edwards, and Obama, who are wealthy themselves, be envious?

First, they may not be, but exploit the fact that plenty of other people are. Second, maybe it’s guilt. Many wealthy people engage in class-warfare-style thinking because they feel ashamed about their possessions, or don’t want to be the object of envy, according to Schoeck. Third, the rich can be envious of those who are even richer. A Fortune magazine cover a few years ago playfully betrayed this sentiment. It featured business magnate Richard Branson with the sub-headline: “The Money. The Family. The Island. (Damn him.)”

The great conundrum is how the emotion of envy ever got programmed into our brains during the course of evolution. “What adaptive value could envy have had in the prehistoric past?” asks author and psychiatrist Willard Gaylin. “None that I can imagine, for it never brings gratification.” Envy represents a vicious and hateful resentment of people, he writes, that is independent of their actual encroachment on one’s pleasures.

Thoughtfulness and reason can do much to counter the emotion of envy. It is useful to realize, for example, that rich people are the ones responsible for providing most of the rest of us with jobs, products, and (through their savings) loan money to buy a house or go to college.

Those feeling the pangs of envy coming on should ignore it. Laugh it off. Lie down until the feeling goes away. Recognize it as a useless emotion that never produces any benefits, and that causes untold woes.

Patrick Chisholm is editor of PolicyDynamics.

 

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Protect Our Electronics Against EMP Attack

September 7, 2009 by

(A previous version of this article appeared in USA Today.)

The saturation of society with modern electronics, while certainly a good thing overall, gives us an Achilles heel. The more dependent we become on such electronics, the more vulnerable we are to societal chaos if a substantial portion of them fail simultaneously. It is said that an electromagnetic pulse, or EMP, could cause such a failure.

An EMP is generated by a nuclear explosion, or by a smaller-scale “e-bomb.” If a terrorist or rogue nation detonated a nuclear bomb a few hundred miles above the United States, the resulting shock wave could damage or disrupt electronic components throughout the country. The consequences could be catastrophic. Our life-sustaining critical infrastructure such as communications networks, energy networks, and food and water distribution networks could all break down.

EMP was a prominent concern during the Cold War with the Soviet Union. That concern is rearing its head again, now that it appears we are headed toward cold wars with Iran, North Korea, and other third-world regimes bent on acquiring nuclear weapons such as Venezuela. The possibility of terrorist groups getting a hold of nuclear missiles adds to the danger.

Some of the literature on EMP gives the impression that such an event would fry every computer in the country, that planes would fall out of the sky, and that society would be thrust back into 19th century technological backwardness. Such claims may be far fetched, but EMP is nevertheless a deadly serious issue.

Fortunately, protecting electronics and critical infrastructure against EMP is doable. It involves enclosing every electronic component with a metallic cage that blocks out electromagnetic waves.

Sound impossible? Actually, electronic components already enjoy some form of shielding against electromagnetic interference. Federal Communications Commission standards require it. Such shielding is designed to prevent everyday electromagnetic radiation from entering and/or exiting the device. Your computer contains this shielding, from metal housings down to the little metal coverings soldered to your motherboard, to electrically conductive gaskets that seal openings. There even are housings the size of rooms or buildings that protect sensitive equipment inside. Without electromagnetic shielding, many electronic devices would not work properly.

However, most existing shielding may not be enough to protect against EMP. While U.S. military standards often require electronic components to be protected against EMP, commercial standards do not. And while our power grid is shielded against things such as lighting strikes, it is not tested for protection against EMP.

Upgrading to shield against EMP would entail using more robust shielding materials, especially for the cords, cables and/or wires that connect devices to external entities such as power supplies or networks. Cables and wires act as antennas through which an EMP travels directly into a device.

To what extent would an EMP destroy electronics in their current configurations? Certainly not 100 percent. Not all electronics are connected to cables or wires. And many of those that are connected may only temporarily be disrupted or not be disrupted at all, thanks to the existing shielding against electromagnetic interference. But an EMP that is powerful enough or that is close enough could ruin many electronic devices such as computers.

Unlike what was depicted in the 1983 movie The Day After, automobiles may keep functioning after an EMP attack. The electronics within automobiles enjoy robust shielding because of the harsh electromagnetic environment on existing roadways. Aircraft have even stronger electromagnetic shielding, so they likely would not fall out of the sky. “Some of the (aircraft’s) equipment may not work, but the propulsion and control system usually is pretty robust,” said Dr. William A. Radasky, president of Metatech Corp.

Radasky, one of the world’s few experts on protecting electronics against EMP, thinks that most electronics would undergo only a temporary disruption in the event of EMP. “You may just have to restart the computer and everything would be fine,” said Radasky. But a temporary shutdown of a control system for a critical infrastructure system, he said, would be “troublesome.” And if just 1 percent of all electronics failed, havoc could ensue. “Just think about the power outage in August of ’03 when a couple of wires hit a tree,” observed Radasky. “That was a single failure, propagated over a huge area. Now imagine, at the speed of light every place in the United States, some portion of electronics failing. Now you have a very widespread problem.”

The only way to know the extent to which an EMP would knock out electronics is to conduct testing with EMP simulators.

Unfortunately, since the end of the Cold War, most EMP simulators in the United States have been closed, according to Radasky. And the few that remain open are for military use, not civilian use.

The Department of Homeland Security should set up civilian EMP simulators, and encourage – or require – those in charge of our critical infrastructure to upgrade their facilities and conduct tests to assess EMP vulnerability.

It would be wise to follow Switzerland’s lead. According to Radasky, that country during the Cold War hardened some of its critical infrastructure against EMP, such as water works. “They felt that if there was high-altitude burst over Europe, they were going to be affected whether they were a combatant or not.”

It is a thorny question as to whether the FCC should revise its standards to require electronics manufacturers to build in EMP protection. This could be prohibitively expensive for the manufacture of individual components. But businesses and government agencies should install EMP protection at the system level. (This also would provide protection against other electromagnetic disturbances such as lightning.)

One positive development is the increasing use of fiber optic cables. Most of them do not contain metal, so they are invulnerable to EMP, according to Radasky. The more common they become, the less exposed systems are to EMP.

But the Achilles heel remains. Our dependence on electronics grows larger as a new era of nuclear cold war draws closer. It behooves us to protect our electronics against EMP.

Patrick Chisholm is editor of PolicyDynamics.

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Pinch Yourself. You Made the Ultimate Cut.

September 1, 2009 by

(A shorter version of this article appeared in Personal Excellence magazine.)

Imagine being the one among 6 ½ billion living persons to hold the most powerful office on earth. Barack Obama as well as past presidents must have figuratively or literally pinched themselves at some point to make sure what’s happened to them was for real. Or imagine being among the fortunate few who have traveled to space. Or who’ve won the lottery. Or who’ve made the cut for the NBA. Or who have achieved any elite, exclusive designation.

Well you can start pinching yourself. Every day. That’s because the chances of you ever living were less than one in a trillion. In fact, you’re infinitely lucky to have a life.

You’re lucky because of the remote chances of your forbearers ever being born, still more luck in that your parents happened to meet each other (of all the potential mates), lucky because they conceived during the short, two or three-day window when the spermazoa from which you originated were alive, and lucky because the two unique cells carrying your genetic code happened to combine out of the billion possible cell combinations.

Flash back to your very beginnings – way back, when you were conceived. During the time of conception, out of about a hundred million sperm cells released, about 1 in 10, or 10 million, were capable of fertilizing an ovum, according to biologists. And 1 of about 100 of the latter were released. That means the chances of any two particular sex cells joining at that particular time were about one in a billion.

There was a frenzied struggle of millions of sperm cells vying to find a single egg cell. Of the 10 million, about a million made it into the uterus. Only a few thousand of those happened to swim to the entrance of the Fallopian tubes. A few hundred of those wandered to the right place: the immediate vicinity of the egg. Just one – the one carrying half the genetic blueprint of you – penetrated the egg.

Had any other sex cell made contact, someone genetically similar to you would have been born, but it wouldn’t have been you.

And that’s just during the short, two-day time period during which the sperm from which you originated were alive, or during the month that the egg from which you originated was released. Had your parents conceived a few days earlier or later, you wouldn’t be reading this right now. Had any of your grandparents, great-grandparents or preceding generations conceived a few days earlier or later, you likewise wouldn’t be reading this.

To take it further, start from a point 200 years before you were born. What was the probability of you coming onto the scene two centuries later?

Two-hundred years is about eight generations. That works out to 256 great (x8) grandparents. (Four grandparents, eight great grandparents, 16 great-great grandparents, etc.) Had none of those 256 been born, you wouldn’t have either. Assume very conservatively that each of them had a one-in-a-billion chance of being born; to arrive at the chances of you being here, you’d multiply a billion by a billion 256 times. So the probability is about 1 in 1,000,000,000 to the power of 256. That’s 2,304 zeros. Essentially, infinitely remote.

Savoring Life

What to make of the fact that amid all this, it was you who made the cut?

For starters it should give you a feeling of tremendous satisfaction. Savor your incredible achievement. Every day. Think about it: You were the only one among billions – nay trillions – of potential humans who ended up having a life. Whether you believe that happened out of chance, fate, or predestination, you truly are exceptional. Just as a winner of an Olympic gold medal should relish that accomplishment every day of his or her life, so should you for the accomplishment of making it here.

This says a lot about other people, too. The infinitely low likelihood of any one particular human being born should make you to look upon every other person you come across (except, of course, troublemakers) with a certain reverence. From the youngest newborn to the oldest senior citizen, from your next-door neighbor to the tribesman in the remote depths of Africa, each person overcame the unimaginably negative odds of ever coming into this world. We all made it into a tremendously elite, exclusive club here in this tiny corner of the universe. And we all should regard each other with the dignity and respect that comes with such exclusivity.

Most of us are awed upon first seeing a newborn, just by virtue of the fact that he or she is a newborn. But there’s another reason to be awed. This is “The One”. This is the baby who overcame the mother of all obstacle courses to make it to the delivery room. This is the baby who beat out billions of other wanna-be humans vying to become one of us. The baby doesn’t yet know how truly exceptional and extraordinary he or she is, but we do.

It’s so easy to take the things in this world for granted. But knowing that your chances of ever experiencing them were so low, savor every moment. Feast your eyes on the sky, the grass, the trees, the animals, the people. Listen to the sounds of nature. Feel the breeze on your skin. Or the warmth of the sun. Do it knowing that you were so extremely close to never experiencing any of it at all.

We’ve all heard stories of people having a close brush with death, who subsequently have a new appreciation for life and live every day with newfound vigor. As you had a close brush with never existing at all, that’s the way you should live your life as well.

Such an attitude makes the ordinary become extraordinary. Mundane, routine things of life like waking up in the morning, eating breakfast, looking out your window, or driving down your street take on a whole new meaning with the realization that it was only you among billions of potential humans who ever got to experience such things.

Viewing life in this way also could help to cope with an early loss. A person may die young, but the key thing is that he or she lived. Having the opportunity to live at all, even if it’s only for a short time, is an extraordinary phenomenon.

This mindset also helps us accept ourselves as we are: our genetically determined traits that we may not be happy about, be they related to physical appearance, mental ability, predisposition for a certain disease, or other condition. If you had a different genetic make-up – i.e. if, during conception, there was a different mix of genes and therefore different sex cells joined to form the embryo – then you wouldn’t have been you. A different person would have been born in your place, and you wouldn’t have existed. So what would you prefer? Life with all of its flaws, or no life at all?

While we all should strive to rise to the top, be it in our careers or other endeavors, not all of us will get there. But don’t get too distressed about it. You already prevailed in one of the most intensely random and intensely competitive struggles known to nature: conception. The reward: the opportunity to commingle with the other winners on this ultra-fascinating planet. And at the top of the food chain to boot.

It’s akin to the professional football player who may never be on a team that wins the Super Bowl. Despite that, after all is said and done, for the rest of his life he can hold his head high that he was one of the elite few ever to have made it to the NFL.

Eyewitness to the World

As one of the fortunate few to be born into this universe, learn about and experience as much of it as you can. Read books or watch shows about the geologic wonders of our home, the earth. Get a telescope to eyewitness the vast marvels beyond our earth. Get a microscope to observe the universe of phenomena too small for the naked eye to see.

Or just perch yourself anywhere and observe the sights and sounds around you whatever they may be, marveling at this incredible place. Whether it be a natural wonder of the world or your neighborhood street, everything is extraordinary if you think about it hard enough.

And be thankful that you were born into this day and age. Apart from living more comfortably than any time in history, so much more is known about the world and universe than ever before; each of us made it into an incredibly multifaceted place about which there is an endless reservoir of information thanks to the efforts of scientists, researchers, and teachers who’ve come before us. Being lucky enough to be born into such an amazing place and not learning about and experiencing as much of it as you possibly can would be a tragedy indeed.

The natural and animal worlds are extraordinary enough. But just focusing on the continuing saga of humankind is a riveting, action-packed, non-stop adventure in and of itself. Crack open any history book for such an account. Check your favorite news outlet for the latest installments. And stick around to find out what happens next.

Thank An Asteroid

All other things being equal, without any particular one of us making life’s cut, there still would be people galore, just not us. But what if other things weren’t equal – what if a few things had been a little different in earth’s geologic history? Then, the human race likely would not have existed at all.

Scientists say the dinosaurs’ demise paved the way for the rise of mammals and the eventual evolution of humans. But what if the asteroid that allegedly led to the dinosaurs’ extinction had taken just a slightly different course and missed earth? Evolution would have taken a whole new trajectory. Intelligent life still may have evolved, but maybe not in the form of humans, so certainly not any of us.

There were plenty of other near-misses throughout geologic time as well. For example during the birth of our solar system, even a microscopic change in the original motion or mass of the components would have lead to massive changes in the final composition of the size and position of the sun and planets, according to astrophysicist Neil Comins, author of What If the Moon Didn’t Exist? With such changes, earth may never have supported life. Even if it did, the evolution of life likely would have taken a much different course, and none of us would have been here.

The Mother of All Lotteries

So not only were your chances of being here ultra low from a biologic perspective, but from a geologic perspective as well.

It’s like winning the lottery among a billion entrants, and then going on to win another lottery with another billion entrants. The odds are minuscule that any of us would do so. But when it came to life on earth, we all beat those odds.

You were given the ultimate gift, and there’s no way you should ever take it for granted. So celebrate life. Relish it. Marvel at it. Give thanks every day for your life. Go out and take advantage of all life has to offer. Never pass up an opportunity to get the most out of life as you possibly can. Look around right now and contemplate how close you came to never witnessing any of it.

Above all, treat other people with the respect and dignity that come with knowing that they, too, made the ultimate cut.


Patrick Chisholm is editor of PolicyDynamics.

 

SIDEBAR:

The Winners’ Circle

Imagine that on an unannounced date sometime during the next 60 years, a lottery is going to be held. The prize: life. You have to be present to win, but you only can be present for two days of those 60 years. Not only that, but even in the highly unlikely event that you did show up on the right day, you’d be competing against a billion other entrants for the single prize. Winner take all. (Albeit a slight chance of two winners.)

So you don’t get your hopes up.

But guess what. As luck would have it, out of all of those 60 years or 21,900 days, you happen to show up on the very day of the lottery.

You’re stunned. But you still don’t get your hopes up, given the billion other entrants who showed up on the right day.

They carry out the drawing. And the winner is … you! You’re granted a life on earth as a human. You absolutely can’t believe your luck. Whether it was blind chance or divine intervention, you give profuse thanks to whoever or whatever gave rise to your extraordinary fate.

The life you’re granted has some flaws, and there’s no guarantee that you’ll enjoy a full lifespan. But who cares? You’re just ecstatic that you earned a life at all, given the gargantuan deck that was stacked against you. You really feel special, like you’re sitting on the top of the world, amid that vast and endless field of competitors you beat out. You were given the ultimate gift, and there’s no way you’ll ever take it for granted. You’re going to get the most out of it that you possibly can, do the most good that you possibly can, treat the prize with as much reverence and humility that you possibly can, and never forget where you came from.

Being granted the privilege of walking the earth, you look around and see lots of winners of other lotteries. Each of them happened to be present on the right day, too, and also beat out a billion other entrants to get here. You really feel a kinship with them, knowing that all of them, like you, overcame incredible odds to make it onto this highly exclusive planet. So you look upon them with the respect and dignity they deserve.

Of course, the 60 years represents the length of time that your father’s body was producing sperm cells. Over a lifetime the average male produces anywhere from a half trillion to a trillion spermazoa. Each one is genetically unique. They only live for a few days at most. Your dad happened to pick the day that the sperm carrying half of your genetic code happened to be alive.

The average female meanwhile produces and releases about 400 egg cells over her lifetime. A new egg is released about once a month. The egg that contained the other half of your genetic code happened to be released shortly before your parents conceived you. As with the sperm cell, had any other another egg cell been released, the baby born on or around your birthday would not have been you.

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Decidedly Unhealthy for Entrepreneurship

August 1, 2009 by

(A previous version of this article appeared in The Christian Science Monitor.)

Small business creation is probably the single best thing for the economy. Most jobs come from small businesses. And nearly every big business started out that way, when someone decided to take the plunge and become self-employed. But now, a lot less business creation goes on than could be going on. The culprit? The government subsidy (via the tax code) for employer-provided health insurance.

And President Obama has no plans to change that. In fact, if he gets his way on health care redesign, he’d exacerbate it.

Lots of people decide not to become self-employed because it would mean losing their employer-provided health insurance. Although I know of no studies that estimate the extent to which this happens, anecdotal evidence indicates that it is very common.

And it is totally unacceptable. Traditional barriers to starting a business include taxes and regulations. But health insurance? People should not have to pay more for this when starting a business, just as they do not have to pay more for their car insurance, groceries, or any number of other personal expenses when starting a business.

The problem stems from the bizarre tradition of getting health insurance through one’s employer, thanks (or rather, no thanks) to a quirk in the tax code. Just as people do not get their car insurance through their employer, they should not have to get their health insurance through their employer. Sure, they can try to buy it on their own, but that would mean paying anywhere from a couple hundred to a couple thousand dollars a month. The institution of employer-provided health insurance has practically destroyed the market for individual health insurance.

Because employers are the main purchasers of health insurance, the marketplace is a lot less competitive than would otherwise be the case. By contrast, if everyone had to buy health insurance on their own, health care providers and insurance companies would be forced to compete much more aggressively based on price and quality. A diversity of plans would sprout up tailored to a diversity of individual needs. Many people, for example, would opt for high deductibles and pay out-of-pocket for smaller expenses.

Right now, health care providers are not so incentivized to charge lower prices because they know that patients’ insurance companies will pick up the tab, even for check-ups and other minor procedures. (This is like your car insurance paying for oil changes.) If, on the other hand, there were a large population of out-of-pocket-paying people shopping around based on price and quality, the price of health care would plummet.

The market for veterinary care provides a valuable insight. Columnist James Freeman, writing in USAToday.com a few years ago, points out that the same surgeries performed on humans can be performed on our canine friends for about one-tenth the price. This is mainly because veterinary care providers are forced to aggressively compete for cost-conscious customers. Were the same to happen with human health care, prices probably would not be as low as those of veterinary care, but they still would fall considerably.

So if everyone obtained their health insurance directly rather than through employers, not only would health care be a lot less expensive, but it would play no role in a would-be entrepreneur’s decision to quit a regular job in order to start a business.

The peculiar institution of employer-provided health insurance stems from – what else? – government intervention in the marketplace. During World War II, when government-imposed wage and price controls prevented salaries from being raised, employers started to offer health insurance to attract workers. Politicians and IRS officials then instituted a generous tax break for it. It is essentially a disguised government subsidy favoring employers and employees, at the expense of the self-employed, the non-employed, and those who work for companies that do not offer health insurance. (Note: A subsidy is when a certain group of people gets a government handout paid for by higher taxes on everyone else. A tax break is another way to do the same thing. Taxes on everyone else have to be higher in order to make up for the government’s lost revenue.)

To help correct the wildly distorted health insurance market and achieve a level playing field for the employed, the self-employed, and the non-employed alike, the tax break for employer-provided health insurance should be abolished. Or as a second-best remedy, there should be an equivalent tax break for individuals when buying health insurance.

Incredibly, President Obama and the Left would further burden businesses by requiring them to pay a new payroll tax if they don’t already provide health insurance. They want to start a huge new government program to try to correct the ill effects of another government program, and would only make things a lot worse.

You’d think that if they’re going to socialize healthcare, they at least could decouple it from employment.

A far better solution is to eliminate that original government program – i.e., the tax subsidy. Then, businesses would get out of the business of providing health insurance to their employees (and spend the savings on higher salaries), people would shop around for it on their own, health care prices would plummet, more people would opt for self-employment, and a lot more businesses would be created.

Patrick Chisholm is editor of PolicyDynamics.

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George Lakoff, Where Are You Now?

June 15, 2009 by

(A previous version of this article appeared in The San Francisco Chronicle.)

How times have changed. The budget deficit is on track to be a trillion dollars year for the next 10 years, and the Left is as pleased as punch. Yet only a few years ago when the budget deficit was a few hundred billion, they went ballistic. They feigned concern over the burden on future generations. If we don’t take care of it now, they repeatedly warned, then our children and grandchildren will pay for it later.

They called it the baby tax. In trying to better connect with voters, the Democratic leadership tried out the old standby of re-labeling things. Back in 2005 they heeded the advice of George Lakoff, a Berkeley professor of linguistics and cognitive sciences, who recommended calling the Bush budget deficit a baby tax.

George Lakoff, where are you now?

The Left’s acquiescence to today’s trillion-dollar deficits has exposed how insincere they were about their earlier “baby tax” rhetoric. Higher taxes, whether it be on today’s generation or future generations, are just fine with them.

Money to pay down the budget deficit comes from income taxes. The rich pay most of the income taxes: the top 1 percent of earners pay about 40 percent of all income taxes, the top 10 percent pay around 70 percent, and the top 50 percent pay in the neighborhood of 97 percent. If higher taxes on present-day rich people do not bother Democrats, why should higher taxes on future rich people bother them?

In fact, many if not most Democrats think higher taxes on the rich are a good thing. So in this sense, a Democrat might consider a budget deficit to be desirable, since it means higher taxes on the wealthy people of tomorrow.

Another strike against the Left’s baby tax credibility is that, while they used to purport to care about the future tax burden of our babies, they rarely give a hoot about the tax burden of yesterday’s babies: us. In addition to paying for the budget deficits of past years, today’s workers – mainly higher-income ones – are paying for the government spending going on right now.

If the those on the left really were concerned about the future tax burden of our babies – rich ones, poor ones, and middle-class ones alike – then they’d be joining the tea parties in droves. Obviously, they aren’t.

If and when we get a president again who wants to cut taxes across the board, and the Left starts to howl “baby tax”, don’t believe them for a minute.

Patrick Chisholm is editor of PolicyDynamics.

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