Interventionism

Why do some economists oppose tax reductions?

A year ago January—what a moment!—the two parties were in a tax cut bidding war. Each side was attempting to gain political advantage by trumping the other guy's proposal. Everything was on the table: capital gains tax cuts, income tax cuts, inheritance tax cuts, and every manner of tax credit.

Voter opposition to major "free trade" agreements helped propel a surge in protectionist rhetoric this year. Even constituencies when should be naturally free trade—Republican conservatives—have fallen prey to old fallacies.

"Forget the minimum wage," says Nate, a dishwasher and cook's helper at our restaurant. "It's taxes that are killing me." He is a college student by day, washes about 1,000 dishes during the dinner rush, and stuffs and rolls grape leaves until midnight.

Two years ago, the Clinton administration fell into near total disrepute among the public. The primary reason was its plot to socialize and nationalize the entire medical industry and conscript doctors and patients into a central plan.

It was November 25, 1945, and the overpaid workers at General Motors were striking, again. Their gripe? Company profits were up, but wages were not. They demanded a shorter workweek and higher pay. Then as now, this government-backed union was using its legal privileges to stick it to consumers and employers. But there was one voice of sanity. 

To the outside world, it appears that all economists agree: free trade can never be compromised. Inside, the picture is far more complicated. Good economists, preeminently the Austrian School, favor liberty across the board. Yet among the mainstream, economists who favor big government at home likely reject free trade abroad.

Defenders of the free market are often stigmatized as uncritical apologists for big business. Nothing could be further from the truth, as readers of this book will at once discover.

Randall Holcombe identifies a paradoxical feature of much public argument about economic issues. Socialism has collapsed. The Workers Paradise is no more, and even professed socialists rush to proclaim their allegiance to the market.

The pattern is all-too-familiar: Congress and its bureaus of executive-branch henchmen arrogantly mock the Constitution, only to be applauded by the courts. Nowhere is this pattern more evident than the recent case of Leslie Salt Co. vs. the United States. Here are the facts.