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Five Reasons to Dump the Sales Tax

Sales taxes negatively affect the economy, disproportionately hurt the poor and lower middle class, and are an unreliable source of revenue for governments.

Whether it is to fund road repair and construction, local jails, or supplement public school funding, politicians are enamored with sales taxes. A penny here and a penny there taken from the pockets of consumers, they argue, cannot be harmful. Yet there are compelling arguments that sales taxes have a depressive effect on the economy, disproportionately affect the poor and lower middle class, and are not a reliable source of revenue.

Far too often, politicians use deceptive tactics to get sales tax increases approved. Before voting on any sales tax increase, voters deserve to consider the following reasons why sales taxes should be rejected.

1. Sales taxes punish consumer spending and hurt the local economy. 

It is generally understood that taxes influence behavior, and that we get less of a behavior when it is taxed. That is why activists demand high taxes on cigarette and alcohol sales. Their goal is to make those products more expensive so that less people will be inclined to purchase them. Why then do we tax consumer spending generally?

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Sweatshops and Social Justice: Can Compassionate Libertarians Agree?

This article originally appeared at C4SS.org on November 17, 2011. It was the last in a series, the fallout from which led me to end my brief flirtation with “market anarchism.” There’s no room for genuine discussion in an echo chamber, and arguments over intellectual purity get boring pretty quickly. They’re still probably over at C4SS and Strike-the-root, churning out articles from the ideological vending machine.

In the past several months, Matt Zwolinski and Ben Powell took to the pages of the Journal of Business Ethics, as well as the Bleeding Heart Libertarians blog, to defend what they consider to be the mainstream libertarian position on sweatshops: that sweatshops represent a positive good in developing economies.

Citing Kevin Carson and I as representative of the “left-libertarian” position against sweatshops, Matt Zwolinski took us to task in his recent article, “Answering the Left-Libertarian Critique of Sweatshops.” I cannot speak for Mr. Carson, but I do not consider my opposition to sweatshops a “left wing” position; I consider it the only sensible position for libertarians and other champions of a free market to take.

First, let’s be clear about the definition of a sweatshop. A sweatshop is not any working environment in a developing economy; it is a working environment that is considered to be unreasonably difficult or dangerous. Many factors might contribute to a factory being labeled a “sweatshop,” including long hours without breaks, low pay, overcrowding, poor lighting and ventilation, unsanitary conditions, and few to zero considerations for employee safety. Low pay is just one of these factors and may not even be the chief factor in determining whether a particular place of employment can be called a sweatshop.

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More on Sweatshops and Free Markets

This article originally appeared at C4SS.org on April 2, 2011. It was the second in a series, the fallout from which led me to end my brief flirtation with “market anarchism.” There’s no room for genuine discussion in an echo chamber, and arguments over intellectual purity get boring pretty quickly. They’re still probably over at C4SS and Strike-the-root, churning out articles from the ideological vending machine.

When Paul Krugman defended sweatshops in the pages of the New York Times and Slate Magazine in 1997, he understandably raised a chorus of criticism, so when I wrote “Do Sweatshops Belong in a Free Market?” I expected at least some cognitive dissonance. After all, sweatshops are an issue that many feel passionately about. However, I was surprised at the level of the resistance that greeted what I thought was not a very controversial position. This article is an attempt to clarify my argument and respond to some of this criticism.

In my opinion, a sweatshop is an antiquated form of wage slavery that does not belong in a free society any more than conscription or the Atlantic slave trade. Economists like Paul Krugman have provided an ideological foundation for sweatshops because they are an integral part of the globalist worldview, but that is a worldview libertarians, anarcho-capitalists, and other like-minded individuals oppose. It is in our interest to not only distance ourselves from this exploitative form of labor, but to repudiate it entirely.

Force and aggression do not always involve the threat of immediate physical harm. A person may be coerced into surrendering their property (or their labor) under a variety of conditions. For example, being tricked into signing a contract he or she cannot read or understand, having the welfare of his or her family threatened, or being required to rent equipment essential to the job while being paid barely enough to cover those expenses. All of these are common practices at sweatshops.

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Do Sweatshops Belong in a Free Market?

This article originally appeared at C4SS.org on March 18, 2011. It was the first in a series, the fallout from which led me to end my brief flirtation with “market anarchism.” There’s no room for genuine discussion in an echo chamber, and arguments over intellectual purity get boring pretty quickly. They’re still probably over at C4SS and Strike-the-root, churning out articles from the ideological vending machine.

Libertarians and market-anarchists often cite the non-aggression principle (no force, no fraud) when summarizing their philosophy, so I am perplexed when I hear support for sweatshops in conversations with individuals who self-identify as libertarians or market anarchists. In fact, sweatshops, those citadels of cheap labor associated with laissez-faire capitalism and industrialization, perpetuate both force and fraud against the people employed there, so they are incompatible with a free or libertarian society.

By supporting this form of economic exploitation, many libertarians and market anarchists both undermine their philosophy and alienate potential supporters among the working class.

Sweatshops are generally considered to be factories or workshops in which employees, often children, work over nine to ten hours a day for wages that barely cover basic necessities. The working conditions at these factories or workshops are often considered to be hazardous or unsafe. Sweatshops do not provide their employees any benefits, such as health insurance or worker’s compensation, and employees do not enjoy any form of job security. Today, sweatshops can be found all over the world, but they are most common in developing nations, such as India, China, and Mexico.

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Commentary

Those Troublesome TIFs

Published October 2, 2013 at the Rock River Times

In “Trouble with TIFs,” I discussed Tax Increment Financing (TIF), and how TIF districts deprive local governments and school districts of revenue. I also talked about how several studies have shown the unfavorable results of using TIF districts to address blight. In most cases a blighted area was no better off after TIF than it was before, and in some cases it was worse.

There is no doubt that when taken as a whole, Rockford’s experiment with Tax Increment Financing has been a failure. City leaders, however, continue to create new TIF districts and bet on their ability to stimulate growth, despite sobering evidence to the contrary. Not only have TIF districts failed to spur widespread development and raise property values, they threaten to drown our city in a sea of red ink.

In 2010, the consolidated balance for Rockford’s 30 TIF districts was $1.9 million in the red. That deficit was projected to increase to $4.1 million in 2022, before the trend would turn positive. Less than three years later, the consolidated balance for Rockford’s 32 TIF districts was $2.76 million.

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Rockford Rewards Failure in Response to Stimulus Fund Scandal

Published September 22, 2013 at the Rockford Register Star

Earlier this month, Rockford City Administrator James Ryan released a memo with his recommendations for how the City should respond to a U.S. Health and Human Services Office of Inspector General’s audit. The audit covered roughly $599,000 in federal stimulus funds Rockford received in 2009. In part, Ryan recommended returning nearly $300,000 in funds that were improperly spent.

Ryan’s memo outlines a clear failure (whether intentional or not) to follow stimulus fund guidelines on the part of Rockford Human Services Department staff. This failure may constitute, at the very least, a neglect of duties.

George Davis, Executive Director of the Rockford Human Services Department, first became aware that the Office of Inspector General was looking into Rockford’s use of federal stimulus funds in the fall of 2011.  He told City Administrator James Ryan, “Given our general accounting practices and Department fiscal procedures I don’t expect that we will have any significant issues.”

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Questions Raised by Stimulus Funds Memo

Published September 18, 2013 at the Rock River Times

After weeks of delay, the City of Rockford finally released the results of its internal review of the U.S. Health and Human Services Office of Inspector General’s audit, which covered roughly $599,000 in federal stimulus funds spent in 2009 and 2010. This memo, written by Rockford City Administrator James Ryan, raises several alarming questions about the possibility of wrongdoing by City staff and its grant recipients. There are, in fact, at least two instances where further investigation may be warranted.

The first demonstrates a clear failure (whether intentional or not) to follow stimulus fund guidelines on the part of Rockford Human Services Department staff, and may constitute, at the very least, a neglect of duties.

George Davis, Executive Director of the Rockford Human Services Department, first became aware that the Office of Inspector General was looking into Rockford’s use of federal stimulus funds in the fall of 2011. He told City Administrator James Ryan, “Given our general accounting practices and Department fiscal procedures I don’t expect that we will have any significant issues.”