The Double Standard of Corporate Tax Cut Opponents

Tom Moran’s column, A monstrous tax bill that wounds Obamacare, too, didn’t stop at ObamaCare. The litany of complaints included this:

-It is not partisan Democrats who say this bill is designed to hurt blue states like New Jersey, with high incomes and high taxes. That comes from all of MacArthur's Republican colleagues in the delegation, as well as private conservative groups like the state Chamber of Commerce. New Jersey is one of four states that will pay higher taxes under this bill, thanks to the new cap of $10,000 on deductions for state and local taxes.

I left this comment, edited for clarity:

There is a huge double standard regarding the SALT deduction.

The main argument most advanced against limiting the state and local tax deduction is that the same income shouldn’t be taxed twice. Fair enough. (The SALT issue is actually more complex. But leave that aside for the moment.)

But then the same argument applies to the corporate income tax: It is double taxation. The owners of the corporation are taxed twice—once at the corporate level, and again when they receive dividend and capital gain income. The people railing against the SALT deduction limitation, if they are consistent, should be cheering on the corporate income tax rate cuts in the Republican tax bill—even to the extent of calling for the elimination of the corporate income tax. They don’t. It’s a double standard.

-----------------------------------------

I mentioned the complexity of the SALT issue. Consider that, in New Jersey—the highest property tax state in the country—about 2/3 of the property tax bill is for government schools. This means that “contributions” to government schools are tax deductible. High tax states are already latching on to a way to get around the limit on property tax deductions. California and New Jersey are considering restructuring their public school systems into 501(c)3 organizations so residents can deduct the portion of their taxes that now goes to the schools as charitable deductions (believe it or not).

Which begs the question, why should NJ residents get the deduction for government schools, while money they spend on private or homeschool options are not? This seems unfair.

Then there are towns in which the cost of garbage collection is included in the property taxes. This means that garbage collection fees are tax deductible!

Anyway, the limits on SALT deductions has unleashed an avalanche of creative thinking about how to minimize the effects. The interesting thing about this is that the SALT limits mainly hit high tax states and, within those high tax states, hits mainly the wealthy who pay the most taxes. This put Democrats in the position of protecting the wealthy in their respective states, because most of the income taxes they collect is paid by the wealthy, who they fear will flee for lower tax states.

This could be avoided by a simple flat-rate income tax. Oh well.

Interesting. (Robert Frank covered this issue nicely on CNBC on Thursday, December 21, 2017.)

Related Reading:

Why Pick On ‘Rich Corporations’, Benefactors of the Middle Class?

The Left’s Insatiable Lust to Soak American Business

Toward Less-Unfair Corporate Taxes

Double-Taxation Means Double Injustice for Romney—Ari Armstrong for The Objective Standard

GOP’s ‘Horrid’ Tax Bill Exposes Monstrousness of ObamaCare

A monstrous tax bill that wounds Obamacare, too

That’s the New Jersey Star-Ledger’s editorial page editor Tom Moran:

The best estimate is that 13 million Americans will lose coverage, and the rest will see premiums jump by about 10 percent. In New Jersey alone, 340,000 would lose coverage. 

In its final form, the tax bill eliminates the mandate to buy insurance coverage under Obamacare. Millions of people with limited incomes are likely to take advantage and opt out, since the monthly premium is a genuine burden, even after federal subsidies. Younger and healthier people will be the first to go, since they aren't as dependent on regular care. 

Remember, Republicans tried to kill Obamacare outright in July but couldn't muster the votes for such a brutal move. So now, they are trying to squeeze the life out of it slowly, as a python would.

I left this comment:

13 million Americans will not “lose coverage.” 13 million Americans, freed from the mandate, will have the option to buy or not to buy without the thuggish coercion of the tax fine hanging over their heads. The estimate that 13 million Americans were not free “to take advantage and opt out” exposes the evil of ObamaCare. I’ll agree that the Republicans didn’t have the guts to repeal ObamaCare outright, and replace it with genuine free market reforms that could have greatly expanded health insurance options while dramatically lowering the cost. Their method is sneaky like a snake. A broad-based, transparent reform should have accompanied the repeal of the mandate. But that aside, the mere fact that more individual liberty would “squeeze the life out of” ObamaCare is the worst indictment of that monstrous law one could imagine; proof that ObamaCare is contrary to the principles of a free society, immoral, and should be repealed.

--------------------------------

One of the reasons why “the rest will see premiums jump by about 10 percent” is because young people were forced to buy overpriced policies to subsidize those premiums. Which begs the question: how did our health insurance premiums become so wrapped up in Washington tax politics? Welcome to government controlled healthcare.

Related Reading:

In ObamaCare Repeal Debate, Who is the Real ‘Taker’

Replacing ObamaCare Should Mean Replacing Government Planning With Individual Planning

Christmas: In America, Land of the First Amendment, a Holiday for Everyone

Can non-Christians celebrate Christmas? Many do, and why not? I’m an atheist and I have no problem celebrating Christmas, even though it has no religious significance for me.

What’s great about Christmas is that it is both a religious holiday, being based upon the birth of the Christian icon Jesus, and a secular holiday as well. That makes it a holiday for everyone.

How can I say that? I am indebted to philosopher Ayn Rand for resolving that seemingly contradictory proposition. In answer to the question of whether it is appropriate for an atheist to celebrate Christmas, Rand observed:

Yes, of course. A national holiday, in this country, cannot have an exclusively religious meaning. The secular meaning of the Christmas holiday is wider than the tenets of any particular religion: it is good will toward men—a frame of mind which is not the exclusive property… of the Christian religion.

This makes perfect sense. A national religious holiday in a secular nation founded on the principle of separation of church and state (religious/conscientious freedom) is a logical impossibility. Since to have a secular government means to have one that is neutral with regards to the fundamental beliefs of all of its citizens, an American national holiday by definition cannot be religious. As the First Amendment to the U.S. Constitution reads, "Congress shall make no law respecting an establishment of religion."

In fact, what we today call Christmas originally didn't have any connection to Jesus at all, writes Onkar Ghate in U.S.News & World Report:

Before Christians co-opted the holiday in the fourth century (there is no reason to believe Jesus was born in December), it was a pagan celebration of the winter solstice, of the days beginning to grow longer. The Northern European tradition of bringing evergreens indoors, for instance, was a reminder that life and production were soon to return to the now frozen earth.

The Romans celebrated the Winter Solstice with the holiday Saturnalia. In Northern Europe, the holiday was called Yule.

Indeed, as philosopher Leonard Peikoff observes over at Capitalism Magazine, the leading secular Christmas symbol - Santa Claus - actually contradicts some standard Christian tenets:

Santa Claus is a thoroughly American invention. ... In 1822, an American named Clement Clarke Moore wrote a poem about a visit from St. Nick. It was Moore (and a few other New Yorkers) who invented St. Nick's physical appearance and personality, came up with the idea that Santa travels on Christmas Eve in a sleigh pulled by reindeer, comes down the chimney, stuffs toys in the kids' stockings, then goes back to the North Pole.

...Santa implicitly rejected the whole Christian ethics. He did not denounce the rich and demand that they give everything to the poor; on the contrary, he gave gifts to rich and poor children alike. Nor is Santa a champion of Christian mercy or unconditional love. On the contrary, he is for justice -- Santa gives only to good children, not to bad ones.

When Congress declared Christmas a National Holiday, Christmas ceased being a strictly religious observance and became a secular holiday. A legal religious holiday in a nation dedicated to freedom of religion and conscience is a contradiction. (The Founders used the terms “religion” and conscience” interchangeably. They understood religious freedom to encompass the freedom not to believe in or practice any religion—in effect, not just freedom of religion, but freedom from religion as well.) Being a national legal holiday, Christmas can have non-religious, non-Christian meaning just as validly as a Christian meaning. It’s a matter of individual preference. Otherwise, what’s the point of freedom of conscience?

So, regardless of your personal beliefs, go ahead and enjoy Christmas on your own terms.

On that note, let me extend to everyone a hearty wish for a joyous, safe, and thoroughly non-contradictory…

MERRY CHRISTMAS!

Related Reading:

How the Welfare State Stole Christmas, by Yaron Brook and Don Watkins

Don't Need Christ to Celebrate Christmas

Why Christmas Should be More Commercial—Leonard Peikoff

The Moral Lessons I Drew From the Christmas Movie ‘Elf’

‘Elf’ is a 2003 Christmas movie with valuable life lessons. Superficially, the movie purports to show the “Christmas Spirit” as placing selfless spiritual values—like concern for others—over selfish material concerns like business and money-making. But the lesson drawn from the actions of the characters and the movie’s conclusion implies a different, opposite moral message.

Elf is the story of a human (Will Ferrell) adopted by Papa Elf (played by Bob Newhart), one of Santa’s elves. Upon growing up (physically, but still emotionally child-like), Buddy leaves the North Pole in search of his father, who doesn’t know his son exists. Buddy finds his father, employed as an executive for a publishing company run by a tyrannical, over-demanding boss who allegedly lacks “Christmas Spirit.”

Walter (James Caan), Buddy’s father, reluctantly takes Buddy into his home with his wife and their approximately 10-year old son Michael (Daniel Tay). But Buddy comes to feel unwanted by his father, and runs away. Upon finding Buddy’s runaway note, Michael rushes to his father, who is at work trying to complete a book project on Christmas Eve at the commandment of his boss. Michael walks into the meeting and tells his father that Buddy had run away, and asks for his help in finding his half-brother.

Walter now faces a decision; go after Buddy immediately or finish the project as demanded by his boss. Initially, Walter chooses to put off looking for his runaway son, to the chagrin and anger of Michael, and instead stay and satisfy his boss, who threatens to fire him if he doesn’t complete the project by the end of that day, Christmas Eve.

At that point Michael, himself feeling somewhat neglected by his father’s generally excessive focus on his work, rebels, accusing his father of “always thinking only of yourself.” (Earlier in the movie, Michael had accused his father of “caring only about money.”)

At this point, important questions are begged. Is the pursuit of money and success an end in itself, or a means to an end?  Was Walter really thinking “only of himself”—acting in his rational self-interest—by hierarchizing his job over his family? Or were his priorities screwed up, leading him down a personally self-destructive path?

Michael’s rebellion is like a slap in the face to Walter. He must decide what values are most important in his life; his job or his sons. But Walter’s dilemma does not involve the choice implied in this scene; to choose between his family or the pursuit of money. The actual choice is; his family or his stressful job working for a jerk boss. This is the choice Walter faces. He is on the spot between his particular job and his sons, and must now decide what his most important values are—the most selfish choice he’s ever had to make.

Walter chooses his family, thus losing his job. It’s the “right” choice, because he has put concern for others above selfishness. But, did he? Is it a choice between selflessness and selfishness? The choice Walter ultimately makes point to some important life lessons, albeit perhaps not the lessons intended by the movie’s producers. The obvious message one is supposed to draw from the movie is that when faced with the choice between selfless concern for others or the selfish pursuit of money—between the spiritual and the material—we must choose the former, which allegedly embodies the “Christmas Spirit.”

By forsaking his job for his family, Walter supposedly made the correct, selfless choice. But was it really selfless? Are spiritual values the embodiment of selflessness, and the material the embodiment of selfishness? This narrative applied to the moral dilemma Walter faces is rooted in a false premise; an alleged dichotomy between your mind and your body; between the spiritual and the material. Interestingly, whatever the producers’ intentions, the movie itself refutes this false narrative and premise. There is no such choice or dichotomy. The moral choice is between selflessness and selfishness. But not in the way seemingly meant in the movie, or as almost certainly taken by most viewers.

The most important lessons (or moral messages) that I drew from this heart-warming movie are not explicitly drawn out and demonstrated to the viewer. But the lessons are there, nonetheless. The movie doesn’t explicitly answer the questions posed above. But the implicit answers embedded in Walter’s choices say something important about money and values. Money is a means to serving one’s happiness and spiritual well-being, not an end in itself. One must not pursue money, whatever the cost. Indeed, to pursue money at all costs is not only not selfish. It is self-destructive. And one does not have to. The pursuit money and success and to pursue love and the nurture of family are both important, selfish values. Human beings are a unified whole of mind and body. There is no conflict there. To achieve a flourishing life, one must integrate one’s values—all of them, spiritual and material—into a proper hierarchy, and act accordingly.

Yes, Walter gives up his crappy job for his family. Keeping it for so long at the expense of his family life was very unselfish; meaning, not in his rational self-interest, as he comes to learn. But he doesn’t choose his family at the expense of the pursuit of money. In the end, Walter achieves both material, money-making business success—he starts his own publishing company with a successful book launch—and a good family life, sacrificing neither to the other. His ultimate choices and motives are thoroughly, and properly, selfish. Therein lies the lesson of Elf: Both spiritual and material values are crucial to a flourishing life. On the issue of the spiritual vs. the material, it’s not either-or. But you must integrate and hierarchize your values rationally, and choose wisely—i.e., long term—because you can have neither spiritual nor material flourishing without the other.

Answering a Correspondent’s Comment on On 'Deserving' a Higher Minimum Wage

In response to my article On 'Deserving' a Higher Minimum Wage, correspondent uzza commented:

Minimum wage has nothing to do with the collective. As you say, only individual producers create and own wealth. A minimum wage doesn’t transfer wealth from the state to the employee, it forces individual employers to pay a portion of their wealth to the employees who create that wealth. Minimum wage laws prevent employers from taking wealth from its rightful owners and redistributing it to themselves, a.k.a stealing.

What’s morally wrong is for the employer to forcibly take from one person and keep it for themself [sic]. No one deserves to be forced to turn over his wealth to another against his will. No one deserves the wealth they create to be forcibly confiscated by an employer. When an employer gains wealth by such means, they are stealing the property of others.

Nor is it the place of an employer to judge what employees are worth. What a person 'earns' and what the wealth they produce is 'worth' is determined by the market. The market gives it a certain worth, the employer redistributes that worth by giving a percentage to the employees who created it. Without minimum wage laws employers are free to, and typically do, set that percentage at an arbitrary amount approaching zero, in defiance of both the market and morality. Minimum wages laws simply prevent employers from taking the wealth of others and redistributing it to themselves.

It’s not only markets that uzza is confused about.

Uzza apparently doesn’t understand the difference between government action (political power) and private action (economic power). Government is the only institution that may legally coerce, by direct or threatened physical force, obedience to its edicts (laws). Private individuals cannot coerce, only persuade through voluntary cooperation. Voluntary cooperation is the nature of employer-employee relationships. Physical coercion—guns, shackles, fines and prison—is the nature of all laws, including minimum wage laws. Of course “A minimum wage doesn’t transfer wealth from the state to the employee.” The state has no wealth other than what it can take from private producers. Minimum wage laws transfer wealth from the employer to the employee under threat of guns, shackles, fines and prison—assuming, of course, that the employee is lucky enough not to be qualified only for one of the jobs outlawed by the minimum wage law, in which case he wouldn’t have a job.

Uzza apparently doesn’t understand the difference between slavery and employment. Contra Marx, employment isn’t analogous to slavery. They are, in fact, opposites both morally and practically. Slaves cannot quit. Employees can, unless her employer can convince her to stay via compensation or other rewards. While he doesn't specifically mention Marx’s absurd equation of slavery employment, which he termed “wage slavery,” Marx is implied.

“Workers” have been around forever, through all of the millennia of poverty-ridden stagnation, toiling to survive with no hope of achieving a better life than their parents—generation after generation after generation. Suddenly, around 250 years ago, general economic progress appeared, lifting the productivity and standard of living of the common man into a steady and dramatic upward trajectory. What changed? The liberation of the human mind under free market capitalism in turn paved the way for the rise of the professional entrepreneurial business industrialist. The professional business entrepreneur is the creator who organized and integrated the knowledge of the scientist, the imagination of the inventor, providers of investment capital, and labor under what one of the greatest of these creators, Steve Jobs, called “one of the most amazing inventions of humans,” the “incredibly powerful” legal construct called the company.

Yet, Uzza apparently is still persuaded by the obsolete notion that the source of wealth is mere physical labor. Business organizations—the organization of all factors of production into a productive purpose, the building of factories, the provision of the tools of production, capital investment, end products, knowledge and training, etc.—require no human effort to create and maintain, the “labor theory of value” implies. Businesses are simply a natural raw material, like a rock or a tree or iron ore, that employers just happen to stumble upon and commandeer. The jobs just grow on these trees. The myriad critical decisions required to maintain and grow the business? They don’t exist. Business enterprises are not created by amazing visionary leaders. Instead, the knowledge discovered by the scientist magically transforms into valuable end products by mindless muscular employee labor, like the labor of a slave or a mule—but which somehow magically coordinates itself into a common production goal. The prime source of production, intellectual labor, doesn’t exist. That’s because the spirit—i.e., the mind—doesn’t exist, according to the dialectical materialist Marx: Hence, the notion that any gain by the employer is theft of the employee, who stays in the job voluntarily because he is too stupid to know that the paycheck which he voluntarily agreed to accept in exchange for his contribution to the productive mission of the business is really slave wages.

To claim that it is not “the place of an employer to judge what employees are worth” completely ignores reality. Of course, an employer can be wrong on his judgement. But it is his business and his job to judge. Also, his right; if not his right, then whose? But, unlike the government, he cannot force his judgement on anyone. Another correspondent, Mike Kevitt, observes that “The market, here, is the employer's and employee's mutual determination, by their own judgments, of the value of the employee's role in the creation of wealth. That value is percentage of the value of the wealth. The government can't judge it any better than anybody else. And it doesn't have the right to do so.” I would add, and the consumer. What we call “the market” is the cumulative voluntary economic judgements of employers, employees, and consumers. The “market” is not some disembodied decision-maker. Nor are the government’s coercive edicts the market.

Employees contribute to the creation of wealth. The business is the creator, and the businessman, or employer, is the prime mover. Steve Jobs created the iPhone. Everyone else is a contributor. But without Jobs, no iPhone. It is the man who formed the pizza business who is the creator. Everyone else is a contributor, paid accordingly—that is, according to the market; that is, according to the judgement of the consumer who buys the pizza, which informs the judgement of the pizza businessman as to how much to pay his employees, who then judge whether the offered wage is worth giving his labor for.  But in the end, no pizza business creator, no pizza business.

Uzza apparently believes that employees are incapable of developing economic power from which they can then bargain for and command higher pay. Knowledge, ability, skill, conscientiousness, experience, a teamwork temperament, hard work, and good moral character—that is, virtue—have no economic value. Employees, by definition, are helpless incompetents. Therefore, without minimum wage laws, employers would set all wages “at an arbitrary amount approaching zero” if left free to do so. Of course, uzza doesn’t explain how, if this “race to the bottom”—this “arbitrary amount approaching zero”— is true, why then do less than 5% of employees nationwide actually labor for minimum wage. How is it that few people who star at minimum wage remain at minimum wage. And he doesn’t explain how, being utterly incompetent, the employee manages to create the wealth that the employer allegedly steals by hiring him.

Mandatory minimum wage laws are the real wage theft—the theft of the employer’s and/or his business’s wealth for the unearned “raise” of his employees; the one’s who haven’t been priced out of their jobs.

Related Reading:


If We’re to Have Labor Laws, Should They Work Both Ways?

How Minimum Wage Laws Facilitate "Wage Theft"—Against Employers

"Wage Theft": A Marxist Weapon for Robbing Businessmen

This Labor Day, Celebrate Intellectual Labor

Some Fallacies Behind the Drive for the NJ Minimum Wage Increase Amendment

How NOT to Fight a Minimum Wage Hike

Gravity Payments' Voluntary 'Minimum Wage' vs. Minimum Wage Laws

The Economic and the Moral Case Against Minimum Wage Laws: Perfect Together

Star-Ledger letter: Raising the minimum wage to $15 would cost small businesses dearly—A businessman’s dissent against the minimum wage increase.

Why Don’t Most Americans Get that Government Wealth Redistribution is Theft?

Related Viewing:

"Why Marxism?" An Evening at FEE with C. Bradley Thompson—Foundation for Economic Education

What Word Comes to Mind from the New Government Climate Report? Nonobjective

Recently, a report—National Climate Assessment and dubbed “The most comprehensive climate science report in the world”—was released. The report, “involving 51 scientists and 13 federal agencies,” is “filled with omens and portents dire,” according to a New Jersey Star-Ledger interview with Robert Kopp, a Rutgers “climate policy scholar.”

Note the title “policy scholar”. This man is a climate expert, not a political, economics, energy, historical, or physics expert, all disciplines that must be consulted when deciding what government policies, if any, should be pursued.

I left these comments, edited and expanded for clarity:

To put it bluntly, the term that actually comes to mind as I read Kopp’s summary of the National Climate Assessment is; nonobjective.

What jumps out at me first is the question, if the climate is warming and human activity is a contributing factor, why does it follow that draconian restrictions on that activity—specifically, drastic curtailing of fossil fuels—must be instituted? That’s a huge non-sequitur. What about the monumentally greater benefits of reliable economical energy, and the massive hardship that would result in forcibly curtailing fossils? No consideration.

Kopp plugs highly unreliable wind and solar as a substitute for reliable fossil fuels, yet omits the only known [non-carbon] power source capable of replacing fossils for electricity generation—nuclear power.

Kopp makes the astounding statement that “every time carbon dioxide is emitted into the atmosphere, it causes the planet to warm a little bit,” and therefor “net carbon dioxide emissions [must] go to zero.” This ignores the theory that co2’s influence on warming is not linear, but logarithmic—increasing levels of co2 have a decreasing effect on warming, as much evidence shows. This statement also implies that human-emitted co2, a gas that comprises just 4 one hundredths (0.04) of a percent of the atmosphere, most of it “natural”—is the only cause of global warming; and that human beings must suffer to keep the atmosphere at pre-human levels. Why?!? Do humans not count as part of nature?

Oh. That’s right. It’s the storms and fires, etc., which Kopp disingenuously states are “visible to people”—making the leap that storms and fires of recent memory should be seen as evidence of catastrophe. Not mentioned; they’ve always been visible, and always plagued mankind, only now humans are safer than ever from these events, as measured in the rapid decline in climate-related deaths over the past century, indicating that reliable mass-scale energy is more important to human safety than a slightly more stable global average temperature.

There’s plenty more. But one more thing. It is implied that the scientists “paid by the fossil fuel industry” are suspect enough to ignore their findings. If scientists funded by fossil fuel companies cannot be trusted, then the same goes for government-funded scientists—that is, funded by politicians. Given the political influence of the “renewable energy” industry and the ideological Environmentalists, why should this report be trusted when it is entirely funded by politicians—unlike fossil fuel funding, which very often is indirect in the form of small donations out of many to think tanks with a broad mission? Exxon donating to the libertarian Reason Foundation whose scholars do pro-freedom work along a broad spectrum of issues is a far cry from Exxon directly paying a group of scientists to put out a report (such a report should still not be dismissed outright even though a healthy skepticism is warranted).

Climate catastrophists from the scientific community make reports like this one—one-sided that doesn’t address dissenting views—but lectures us that we should give up our vital life-enhancing energy, regardless of the effect on our well-being. By what moral right does a climate scientist dictate our lives? Maybe we humans would prefer being warm in winter rather than adjust outside temperatures to -9° from -11°, or move away from flood zones rather than give up economical reliable travel to the shore or access to plentiful food.

There is a hint of common sense, though. Kopp says it’s time to adapt to whatever problems climate change brings. That’s more like it. Anyway, I’ll wait for analysis from responsible, non-politically funded sources before drawing any conclusions [about this report]. There are plenty of those. There is another view, and there is a mountain of serious well-documented work from individuals and think tanks and scientists to back it up—which, understandably, climate catastrophists apparently need to ignore to sound semi-plausible. A good place to start looking for a more objective view is with two books, The Moral Case for Fossil Fuels by Alex Epstein and The End of Doom: Environmental Renewal in the 21st Century by Ronald Bailey. Neither denies climate change; both confront the climate catastrophe case head on; both take human well-being as their standard—Epstein making the human case for reliable energy, and Bailey the case that human economic and environmental progress are corollaries—over some utopian “perfect climate” ideal that subordinates human needs.

----------------------------------------------------

I am obviously not buying into the notion that drastic energy-curtailing—and thus life-curtailing—policies automatically follow from an assessment that climate is changing due to human activity. I think the Left-statists sense this. Hence, climate change is peddled as an impending catastrophe worse than economic paralysis and collapse, rather than a manageable and natural by-product of human flourishing.

NOTE: I have not read the report the National Climate Assessment. However, given that the interviewee, Robert E. Kopp, is listed as a “lead author” of the report, I’ll take his comments as accurately portraying the essentials of the report.

Related reading:

‘Climate Denier’: The Leitmotif of the Climate Propagandist

The Moral Case for Fossil Fuels—Alex Epstein

The End of Doom: Environmental Renewal in the 21st Century—Ronald Bailey

Candidates Should Debate Energy, Not Rising Sea Levels

Note to Net Neutralityists: Be Careful What You Wish For

The distortions in the way the Trump FCC’s rollback of the Obama FCC’s so-called Net Neutrality rules is being reported is disgraceful. For example, AP reported:

The Federal Communications Commission repealed Obama-era “net neutrality” rules Dec. 14, giving internet service providers like Verizon, Comcast and AT&T a free hand to slow or block websites and apps as they see fit or charge more for faster speeds.

No. The FCC didn’t “give” the ISPs anything. It restored the rights of ISP providers to manage content traffic on their own networks—the networks that they built—as they see fit.

The original Obama rules did give something—a free ride to big content providers like Google, Facebook, and Netflix that lobbied for Net Neutrality regulations so they didn’t have to pay a voluntarily agreed-upon price or contractual conditions with the ISPs. In other words, the high-minded sounding “net neutrality” rules were just a crony regulation.

More seriously—though given far too little attention—the Net Neutrality power grab by government is a threat to free speech. In the name of “protecting consumers,” the rules put a handful of politically-appointed bureaucrats in charge of managing the flow of content across the internet. Thus the market—the cumulative choices of consumers that ultimately drives the ISP’s management—will no longer be the governing factor. The whims of government officials will. Once a precedent is net, its consequences spread and metastasize.

And it didn’t take long.

Intellectual freedom is crucial to the maintenance of a free and civil society. It’s no accident that the Founders made the protection of intellectual freedom explicit through the very First Amendment to the Constitution. The FCC’s 2015 so-called “net neutrality” rule was an opening wedge of control and an attack on that freedom where it is the most unfettered—the internet. It didn’t take long to see why and how that rule was only a start. As the Washington Post recently reported in The Switch: Tech companies pushed for net neutrality. Now Sen. Al Franken wants to turn it on them:

For years, tech companies have insisted that they're different from everything else. Take Facebook, which has long claimed that it's a simple tech platform, not a media entity. “Don't be evil,” Google once said to its employees, as though it were setting itself apart from the world's other massive corporations.

But now, some policymakers are increasingly insisting that firms such as Google, Facebook and Twitter really aren't that special after all — and that perhaps it's time they were held to the same standard that many Americans expect of electricity companies or Internet providers.

Sen. Al Franken (D-Minn.) became the latest and most vocal of these critics Wednesday when, at a Washington conference, he called for tech companies to follow the same net neutrality principles that the federal government has applied to broadband companies such as Verizon, AT&T and Comcast.

There you have it. The lure of political power—the power of the gun to coerce and control—is insatiable. Electric companies, bad as those monopolies are, carry mere electricity. Internet providers carry intellectual content. When government took the step of forcing “net neutrality” on the Internet Service Providers, they took a huge step toward control of the intellectual life of Americans. Now they’re agitating to take the next step—extend that control to content providers. Once we started down the road of government control of the internet camouflaged as “net neutrality,” there was nothing to stand in the way of power-lusters to expand their reach. A “call” for “net neutrality” on Google, Facebook, Twitter, et al, will eventually turn into a legal mandate and control if it is not stopped.

Alex Epstein saw this coming in 2006:

The widespread support for net neutrality among successful Internet companies — including Google, Microsoft, Yahoo, eBay, and Amazon — is short-sighted and contemptible. These companies, which have benefited greatly from the unimpeded freedom of the Internet, are now trying to deny the same freedom to innovative ISPs and ambitious competitors under the egalitarian banner of “equal access.” This is an invitation for any clever moocher to demand “equal access” to their hard-earned resources; indeed, Google is already being sued because its proprietary search engine allegedly gives “unfair” rankings to certain companies. [My emphasis]

To be clear, the FCC’s 2015 “net neutrality” rule didn’t replace an unregulated internet. There was regulation, by the FTC, targeted at specific complaints as they arose. Nor was the “net neutrality” some iron-clad guarantee of strict sameness in how ISPs managed traffic on their systems. There were plenty of “loopholes” for the ISPs to exploit under “net neutrality”. The ISP’s could still discriminate—but only after getting FCC permission. ” As my Mercatus Center colleague Brent Skorup has tirelessly pointed out,”  Andrea O'Sullivan points out,

the OIO [Open Internet Order, aka “Net Neutrality”] did not require all internet actors—ranging from ISPs to content platforms to domain name registrars and everything else—to be content-blind and treat all traffic the same. Rather, it erected an awkward permission-and-control regime within the FCC that only affected a small portion of internet technology companies. [my emphasis]

In other words, the government seizes control.

But the details are beside the point. As the great James Madison once said in the context of defending religious liberty from government encroachment, “The free men of America did not wait till usurped power had strengthened itself by exercise, and entangled the question in precedents. They saw all the consequences in the principle, and they avoided the consequences by denying the principle."

The principle involved today is the idea that the companies that have given us unprecedented freedom to talk to one another should be controlled by the state. A state that can dictate how content can be carried on the ISP’s networks can also dictate what content can and cannot be allowed on the networks. Franken’s jab at the content providers shows the principle in action. Therefore, we should deny that principle—the principle that the government should have any say whatsoever in what content flows on the internet and how it flows, what it costs, how it is managed, etc. Electricity is one thing. But for all the hollow talk by net neutralityists about protecting consumers, who in their right mind would want the state to dictate what we say and how we say it to each other?

Which gets us back to Franken. As O'Sullivan observes over at Reason,

FCC Chairman Ajit Pai made this very point last week at an R Street Institute event on the repeal. Major edge service providers like Google, Facebook, Reddit, and Twitter have made their opposition to OIO deregulation loud and clear to their user base. Some have displayed automatic messages on their front pages, urging visitors to take action and encourage others to do the same. Yet at the same time, these services engage in kinds of content blocking that they say broadband providers could possibly do.

This hypocrisy is relevant for more than just ideological inconsistency. It's about economic power. By encouraging harsh regulation of ISPs that effectively controls the rates that major tech companies can be charged for bandwidth, these companies are engaging in a kind of regulatory capture.

While I dispute O’Sullivan’s characterization of the edge service (content) providers demanding that net neutrality be imposed on the ISPs as economic power—regulation is actually political power, and there is a night-and-day difference there—the point is clear. Franken is right: If net neutrality is the goal, then why shouldn’t the “tech companies . . . follow the same net neutrality principles that the federal government has applied to broadband companies such as Verizon, AT&T and Comcast?” The principle demands it. There’s no logical reason why they shouldn’t.

Which is precisely why the net neutrality rules should have been repealed. Avoid the consequences of the principle by denying the principle!

Let’s not be suckered by the statists or the cronyists. “Net Neutrality” is not about consumer protection, which is already adequately covered by anti-fraud and breach-of-contract laws. It’s about government control—about erecting a “permission-and-control regime within the FCC.” Government-imposed “net neutrality” rules are stupid in terms of economics and stifling of innovation, and unfair in terms of violating the property rights of the ISPs that built their networks. But “net neutrality” mandates are also downright dangerous to intellectual freedom—our freedom to express our thoughts—and should be repealed. We should do no less than follow Madison’s advice, and deny the government any say in controlling how the ISPs and tech companies manage their businesses and networks, as a matter of principle. Our ability to freely speak, communicate, debate, and rebut ideas is at stake. Repeal the government’s Net Neutrality rules and forbid them from ever re-imposing such rules again.

Better yet, abolish the FCC as the major threat to freedom of speech that it is. Net Neutrality supporters profess concern about the “power” of the ISP’s to control content flow on their networks. But it’s their networks, after all. Their power—economic power—derives from their ability to build and provide an offer of internet service, which consumers are free to accept or reject. The power that should be of concern is the government’s power—political power; the power to coerce and control and enforce edicts at the point of a gun. That’s the power that the FCC brings to bear on the flow of information and ideas across the internet. It’s not enough to say the government would never use its power to stifle that flow. But that’s not the point. It can use it covertly, by way of regulatory extortion, just as easily though less detectably as it can overtly. But even if not, a government of a free country should never have that power to begin with—not the power to control intellectual discourse nor, more broadly, the power to interfere in private economic contract between private citizens or their companies without evidence of rights violations. Our intellectual and economic freedom should not be at the mercy of government officials or politics

Good riddance to Net Neutrality. We need legal neutrality—a government that protects rights equally and at all times. Don’t give the next administration the opportunity to reimpose these rules, or something even worse. Abolish the Federal Communications Commission now.

Related Reading:

Net Neutrality: Toward a Stupid Internet—Raymond C. Niles for The Objective Standard

Net Neutrality: Toward a Stupid Internet—Raymond C. Niles for The Objective Standard

David Harsanyi: Forget Net Neutrality, and Abolish the FCC—David Harsanyi

Save the ‘Net’; Abolish the FCC—David Harsanyi

S-L—'Net neutrality too valuable to lose now.': No, Internet Freedom too Valuable to Lose, Ever