Free Colorado

Reading Kindle On the iPod Touch

2010-03-17T15:33:00.002-06:00

Earlier this year I purchased an iPod Touch, primarily for use as an ereader.

Since then, I have purchased one Kindle book for the machine (Jesus, Interrupted, by Bart Ehrman, which I highly recommend), and I'm thrilled with the way Kindle reads on my Touch. (By contrast, while FileMagnet works fine for pdfs, it does not allow fond adjustments with html. That is, you can make the type bigger, but the lines don't wrap. I resorted to inserting an html font command into an html file, which is a clumsy way to address the problem.)

I got an unexpected benefit with the Touch: I can take notes with the Notes application as I read. All I have to do is toggle between the Kindle app and the Notes app. Then I record the Kindle locator and some brief notes. Once I find a hot spot, I can cut and past the contents of a Note into email (I use my wife's hotmail account because it's easy to access), then send myself the notes.

In fact, this works so well that I might start taking notes on my Touch even when I read paper-and-ink books. True, the keypad is irritatingly small, and I struggle to peck out a message. But the alternative is either to take notes by hand, which I would then need to digitize to make them fully functional, or try to use a full-size keyboard, which is impractical when reading a book. So, as much as I didn't expect it, the Touch wins out as a note-taker while reading.

The Amazon Tax and the Affiliates Amendment

2010-03-12T07:56:00.007-07:00

Amazon dropped its Colorado Associates because the company reasonably expects that it is only the Associates program which may grant Colorado authority to subject the company to Colorado tax laws.

Various people have wrongly argued that, because the amended bill dropped language about "affiliates," Amazon would have been subject to the requirements of the law with or without its Associates program. However, what matters is what the federal courts regard as establishing a relevant presence in Colorado. The federal government, not the Colorado legislature, has authority to regulate interstate commerce. I have written about this matter at greater length in my previous article, "Stop the 'Amazon Tax!'"

Here I explore the language of Colorado's Amazon Tax in greater detail.

Originally, the bill said that "if a retailer enters into an agreement with an affiliate," the "retailer is deemed to be doing business in this state." In other words, the bill explicitly claimed that affiliate programs such as Amazon Associates permit Colorado to subject such retailers to Colorado tax laws.

The amended bill drops the language about affiliates. How, then, does the bill try to subject Amazon, an out-of-state businesses, to Colorado's tax laws?

The bill amends Colorado Statute 39-26-102(8) to state, "'Retailer' or 'vender' means a person doing business in this state, known to the trade and public as such, and selling to the user or consumer, and not for resale."

Previously the law defined a "retailer" or "vender" as "a person doing a retail business."

Existing statute (cited by the bill) already defines the meaning of "doing business in this state." 39-26-102(3) states:

"Doing business in this state" means the selling, leasing, or delivering in this state, or any activity in this state in connection with the selling, leasing, or delivering in this state, of tangible personal property by a retail sale as defined in this section, for use, storage, distribution, or consumption within this state. ...

By these definitions, then, Amazon is "doing business in this state" by selling and shipping stuff to Colorado consumers.

The bill further amends Statute 39-21-112 by adding a new subsection. Subsection (3.5)(b) states: "For purposes of this subsection (3.5), 'retailer' shall have the same meaning as set forth in section 39-26-102(8)." As we've seen, that is the part amended to define a "retailer" as "a person doing business in this state."

Then the bill cashes in on these definitions in 39-21-112(3.5)(c)(I), which states, "Each retailer that does not collect Colorado sales tax shall notify Colorado purchasers that sales or use tax is due on certain purchases made from the retailer and that the state of Colorado requires the purchaser to file a sales or use tax return."

The rest of this subsection defines the penalties for noncompliance, specifies that notifications "shall be sent separately to all Colorado purchasers by first-class mail," and specifies that the retailer must also submit a report to the state.

In other words, the Colorado law attempts to completely obliterate any "physical presence" standard in terms of subjecting out-of-state businesses to Colorado's tax laws. This means that the Colorado legislature is attempting to utterly disregard Article I, Section 8, of the U.S. Constitution, which grants the federal government sole authority to regulate interstate commerce.

Obviously, Amazon knows that the Colorado legislature lacks the authority to impose its tax law, absent federal approval. Whether or not the Colorado bill mentions "affiliates," federal courts are likely to require some sort of relevant "presence" in Colorado before the state can impose its tax laws on out-of-state businesses. The reason that Amazon dropped its Associates in Colorado is precisely to remove such a "presence."

What should we make of the bill's section on "a controlled group of corporations?" Here's what the bill says on that matter:

Commencing March 1, 2010, if a retailer that does not collect Colorado sales tax is part of a controlled group of corporations, and that controlled group has a component member that is a retailer with physical presence in this state, the retailer that does not collect Colorado sales tax is presumed to be doing business in this state. For purposes of subparagraph (II), "controlled group of corporations" has the same meaning as set forth in section 1563 (a) of the Federal "Internal Revenue Code of 1986", as amended, and "component member" has the same meaning as set forth in section 1563 (b) of the [same code].

So now not only do we have to see how the new law meshes with existing Colorado statutes, but we have to see how it meshes with IRS code. (Those who wish to peruse the IRS's delightful code may find it here.)

The text quoted above is offered by the bill as an amendment to 39-26-102, which, as we've seen, pertains to definitions. Notice that the new section does NOT alter the other definitions about "doing business in this state."

Notice something else important about the new definitional language: the bill is not claiming that ONLY "a retailer that does not collect Colorado sales tax [and] is part of a controlled group" and that "has a component member that is a retailer with physical presence in this state" is "doing business in this state." That is merely one explicitly defined example. Obviously the King Soopers down the street is also "doing business in this state." As explained above, the bill also declares that out-of-state companies such as Amazon are "doing business in this state" when the sell and ship stuff to Coloradans.

What is exasperating about this discussion is that I only just received an email claiming, "This bill has nothing to do with affiliates, as far as I can tell. ... The regulations apply to anyone from Colorado making a purchase through Amazon, regardless of whether or not they come through an affiliate."

Such commentators apparently believe that Colorado legislators are above the U.S. constitution and may impose tax laws on out-of-state businesses at will. Amazon knows better. Amazon knows that federal courts may view the Associates program as creating a relevant "presence" in Colorado, thereby granting Colorado the authority to impose tax laws on Amazon. Therefore, Amazon removed that "presence." (I would have the courts turn to a tight standard of "physical presence" implying a store front, but Amazon cannot count on the courts to do that.)

Somebody left a comment on my previous article wondering why Amazon did not wait to drop its Associates until the company fights "this out in the courts."

I responded:

[I]t is to Amazon's advantage to drop the Associates right now, rather than wait for a potential court battle to play itself out. To see why, note what Amazon says about its New York court battle, which remains in appeals:

"Effective June 1, 2008, Amazon.com LLC will begin collecting sales tax on items shipped to destinations within the State of New York as New York has enacted a new law requiring out-of-state sellers to collect and remit sales tax based on advertising. Amazon has filed a lawsuit challenging the constitutionality of this provision. However, as required by the law, we must still begin collecting New York sales tax beginning on that date."

In other words, Amazon wants to make sure that it does not have to comply with Colorado's onerous tax provisions while a potential court battle plays out.

The Amazon Tax is unjust and unconstitutional, and it should be repealed.

See RepealTheAmazonTax.com.

Tax Foundation Takes On Amazon Tax

2010-03-11T11:28:00.003-07:00

Yesterday I wrote a lengthy article about the Amazon Tax. In this follow-up I review an important new study from the Tax Foundation, "'Amazon Tax' Laws Signal Business Unfriendliness and Will Worsen Short-Term Budget Problems."

Note that, in my previous article, I used the phrase "physical presence" broadly, to include any sort of presence a state might claim to extend tax jurisdiction onto an out-of-state business. Joseph Henchmen, author of the Tax Foundation study, distinguishes a "physical presence" narrowly interpreted as an actual store front from an "economic presence." I meant to include any such "presence" in my previous article. (In the broad sense, any presence must be "physical" in nature, though a "presence" need not include a physical store front so far as various states want to define it.)

Given the Tax Foundation issued a news release about the study, I'll begin by reproducing much of that before reviewing the study itself.

As more states consider enacting so-called "Amazon tax" laws to force online retailers to collect sales taxes, a new Tax Foundation report cautions that such policies would not only fail to relieve short-term budget problems but also hurt long-term economic growth.

New York, Rhode Island, North Carolina and Colorado have Amazon taxes, and the Multistate Tax Commission last week indicated its plans to draft model legislation based on the laws in place in those states.

"Enactment of an Amazon tax is an aggressive and unconstitutional assertion of state power," said Joseph Henchman, the Tax Foundation's Tax Counsel and Director of State Projects, who authored the report. "These taxes are the latest in a series of efforts to eliminate the long-standing 'physical presence' standard and replace it with a nebulous, arbitrary 'economic presence' standard, where businesses can be taxed in every state where they have customers -- meaning retailers large and small must track more than 8,000 sales tax rates and bases."

"This flies in the face of the argument that Amazon taxes 'level the playing field' between brick-and-mortar and Internet-bases businesses," Henchman said.

Tax Foundation Special Report, No. 176, "'Amazon Tax' Laws Signal Business Unfriendliness and Will Worsen Short-Term Budget Problems," is available online at http://www.taxfoundation.org/ publications/show/25949.html.

Amazon taxes (also known as affiliate nexus taxes or affiliate taxes) require retailers that have contracts with "affiliates" -- independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business -- to collect the state' sales and use tax. Even groups such as the National Conference of State Legislatures and the Streamlined Sales Tax Project oppose Amazon taxes.

Amazon taxes are unlikely to produce revenue in the near term, according to the report. New York continues to face a lengthy legal constitutional challenge, and Rhode Island has even seen a drop in income tax collections due to the law.

Unconstitutionally expansive nexus standards such as Amazon tax laws threaten interstate commerce and the national economy by discouraging business expansion.

"The real concern should be the extent of state powers," Henchman said. "Should states be able to reach beyond their geographic borders and impose their tax system on everything everywhere? Do we really need to make sure that taxes are the same in all states, and that people can't shop by tax rates as they shop by price, quality or convenience?"

Henchman expands his arguments in the full study.

Henchman reiterates the basic reason why Amazon cut off its Associates program in Colorado: the tax measure is contingent on Amazon's "presence" in Colorado.

Henchman next points out that Rhode Island is actually losing money because of its Amazon Tax: "Rhode Island has seen no additional sales tax revenue from its Amazon tax, and because Amazon reacted by discontinuing its affiliate program, Rhode Islanders are earning less income and paying less income tax."

What is telling is that Colorado Democrats imposed an Amazon Tax here, even after the failure of such a tax elsewhere.

Henchman reinforces another point I've made: "Amazon taxes also do not 'level the playing field' between brick-and-mortar and online businesses; the laws actually mandate disparate burdens on online businesses." Henchman mentions that online retailers must "track thousands of sales tax bases and rates," but Colorado's law imposes even worse bureaucratic red tape.

Henchman describes how sixteen different states (including Colorado) have either imposed or attempted to impose an Amazon Tax.

"Use" taxes, taxes supposed to be paid by consumers on out-of-state purchases, arose in the 1930s, Henchman notes. In 1937 the Supreme Court approved "use taxes" but required them to be collected from in-state residents, not out-of-state businesses. However, Henchman notes, "use taxes are practically unenforceable."

Henchman also includes important background on attempts of states to simplify sales taxes:

Several dozen states have banded together to form the Streamlined Sales Tax Project (SSTP), an effort to simplify and harmonize state sales taxes in the hope that Congress or the Supreme Court will permit states to enforce use tax collection obligations on out-of-state companies. While the SSTP has made notable progress on adopting uniform sales tax definitions and procedures, meaningful efforts to simplify sales taxes (such as by reducing the number of sales taxing jurisdictions or aligning them with zip codes) have been actively avoided in the hopes of attracting more members. [See also Henchman's notes in the study.]

According to Henchman, the SSTP opposes states' Amazon Taxes, though a few states (again including Colorado) have broken ranks and tried to run roughshod over the U.S. Constitution.

Henchman briefly describes the Colorado amendment regarding affiliates: "Colorado followed in 2010 with a version that removed language asserting that affiliates trigger the obligation to collect sales tax but that added a requirement to notify residents with use tax liability." Notice that the amendment in no way removed the bureaucratic nightmare imposed on Amazon, as Colorado's left has tried to pretend.

Henchman has more on the Colorado amendment elsewhere:

The Council on State Taxation (COST) has alerted us that the Colorado bill, HB 1193, has been amended in two significant ways.

First, the bill drops the "Amazon" affiliate nexus provision but adopts an "ordinary" attributional nexus provision similar to those seen in New Jersey and a few other states. This is a less aggressive expansion of the definition of "physical presence," holding that a company has nexus if a "component member" of a larger "controlled group" has physical presence in Colorado. The Supreme Court has previously considered this is the "furthest extension" of nexus, and it sends a bad signal to the interstate business community.

Second, the bill makes life very unpleasant for out-of-state companies that do business in the state. Sellers must notify each buyer that sales tax is due on the transaction or face a $5 per transaction fine. Sellers must also send each buyer an annual tally of all purchases, and this information would be given to the state as well. It's essentially all the obligations of tax collection without the actual tax collection.

Thus, while the Colorado amendment solved one problem in alleviating some burdens on Associates, it created other problems, particularly by increasing the bureaucratic burdens on Amazon.

Critically, though, the bill still requires (as it must under the Commerce Clause) a business nexus in the state; some sort of relevant "presence." The amendment did nothing to address that (as that would have rendered the bill moot), and that is why Amazon dropped the Associates program. As I discussed, various leftist commentators have tried to pretend that the amendment makes Amazon's decision to drop its Associates arbitrary. It does not. Amazon sought to remove its business "presence" by closing down its Associates program. Nothing about the amendment addressed that gigantic problem.

I have touched on Henchman's major points; the rest of his study is worth perusing.

Join the Google Group "Repeal the Amazon Tax."
See Diana Hsieh's new web page, RepealTheAmazonTax.com.

Stop the 'Amazon Tax!'

2010-03-10T11:09:00.021-07:00

The Colorado legislature and governor recently imposed a new law saddling online retailers and their customers with severe tax liabilities and red tape. But the only way Colorado can try to tax an out-of-state company (such as Amazon) is if that company has a business presence in Colorado. As a consequence, Amazon cut off its Associates program for Colorado residents who advertise for Amazon online. The legislature was warned in advance that the tax policy could cost Colorado businesses and possibly end the Associates program.

Predictably, left-wing advocacy groups -- and their lap-dog media -- have decided to play the game of blame the victim, Amazon. They have utterly ignored the aspects of the law that compelled Amazon to take defensive action. Such tactics come straight out of the left's playbook: blame business for the problems caused by political controls.

Join the Google Group "Repeal the Amazon Tax."
See Diana Hsieh's new web page, RepealTheAmazonTax.com.

See the additional sections of this article:
* Denver Post Editorial
* Tax Law Is NOT About Equalizing Tax Standing
(Analysis of Final Bill)
* Amazon's Letter to Associates
* Amazon's Action Was Self-Defense, Not Vindictiveness
* Interstate Commerce and State Sales Taxes
* The Best Way to Equalize Taxes
* It's Not Just Amazon
* Amazon Restored Hawaii Associates
* More On the Affiliate Amendment (Tim Hoover's Biased Article)
* Mike Littwin's Smear Job
* Westword's Michael Roberts Interviews Fred Nicely
* Other Commentary of the Amazon Tax

See also my follow-up article, Tax Foundation Takes On Amazon Tax. Note that the author of the Tax Foundation's report more finely distinguishes a "physical presence" from an "economic presence" than I do here.

March 12 Update: See my latest article, "The Amazon Tax and the Affiliates Amendment."

Disclosures

As reviewed in my "Disclosures Unjustly Compelled by the FTC," I have a longstanding relationship with Amazon. (In this case offering disclosures is appropriate despite the fact that the FTC requires them.) Not only have I been an Amazon customer, but I have been an Associate and have collected some pittance from the program (less than $100 total). My book, Values of Harry Potter, also sells at Amazon. But obviously I am not taking the stance herein for any direct financial gain (of which there is very little), but because I believe that Amazon and other online retailers are being unjustly targeted by an oppressive tax law.

Denver Post Editorial

I do not mean to imply above that all media coverage of the Amazon Tax has been irresponsible. Today's Denver Post offers an excellent summary of the situation in an editorial:

The move by online retailer Amazon to drop its Colorado affiliates was a predictable result of the legislature's recent efforts to revoke tax exemptions.

We were convinced from the outset that House Bill 1193 was problematic, particularly in light of U.S. Supreme Court decisions that are unfavorable to states seeking to compel out-of-state retailers to collect sales taxes.

The Amazon situation only reinforces our belief that the issue of online sales tax collection ought to be addressed at the federal level.

The Colorado law requires online retailers to tell their customers how much Colorado sales tax they owe when those customers buy items by clicking through marketing affiliates based in this state. Those retailers are supposed to pass that information along to the state so the government can ensure the taxes are paid. [March 12 Update: a reader pointed out that this paragraph from the Post contains an error; the law seeks to collect the tax from all Colorado customers who buy from Amazon, regardless of whether they buy through an Associate.]

It's not surprising Amazon decided to just cut Colorado-based marketing affiliates rather than get involved in any aspect of sales tax collection. That's what online retailers have done to thwart so-called "Amazon laws" in other states, such as Rhode Island and North Carolina.

The Post offers additional useful information on the matter (though I disagree with some of its conclusions). It is interesting that the paper's editorial is more fair, objective, and informative than the paper's "news" coverage elsewhere, a matter I'll address below.

Notice that Amazon does NOT collect sales tax for either Rhode Island or North Carolina, which explains why Amazon dropped its Affiliates programs in those states, as it has done in Colorado.

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Tax Law Is NOT About Equalizing Tax Standing

Democratic legislators have disingenuously claimed that the tax law is merely about equalizing the tax standing between local retailers and online retailers. Such claims stray far from the truth.

A local retailer is located within a particular set of tax zones (state and county, and possibly city and various special districts). Within that location, the percentage of the tax is exactly the same for each purchase. The retailer calculates the percentage, tacks on the fee to the sale, and the customer pays it. Then the retailer pays the various taxes to the various taxing entities at the alloted times.

That is most certainly NOT what the Amazon Tax requires of online retailers. Here's what the final version of Bill 1193 actually says:

"Each retailer that does not collect Colorado sales tax shall notify Colorado purchasers that sales or use tax is due on certain purchases made from the retailer and that the state of Colorado requires the purchaser to file a sales or use tax return."

Failure to do so results in a $5 fee per infraction. Retailers must also submit an annual tax report to customers, stating that they owe the Colorado taxes. "The notification specified... shall be sent separately to all Colorado purchasers by first-class mail and shall not be included with any other shipments."

Furthermore: "Each retailer that does not collect Colorado sales tax shall file an annual statement for each purchaser to the Department of Revenue on such forms as are provided or approved by the Department..."

The bill is also quite vicious in its enforcement: "If any retailer that does not collect Colorado sales tax refuses voluntarily to furnish any of the information specified in [another part of] this section when requested by the executive director of the Department of Revenue [etc.], the executive director, by subpoena issued under the executive director's hand, may require the attendance of the retailer" at a government hearing. Moreover, the director is authorized by the bill "to apply to any judge of the district court of the State of Colorado to enforce such subpoena by an appropriate order..."

Obviously, this scenario is nothing like what local retailers must endure. Consider: if Amazon makes a $10 sale to somebody in Colorado, under the law Amazon is required to send out tax documents to the customer (via first-class mail) as well as to the state, and the customer is required to pay the sales tax. The postage and time required to comply with this bureaucracy -- for both Amazon and customers -- could easily overwhelm any profit that Amazon makes from the sale, and it would add considerably to the total purchasing price (including the value of time spent complying with the controls).

As Amazon recognized in its letter to Associates, the obvious intent of the bill is to make doing business in Colorado living hell unless retailers "voluntarily" collect the sales taxes directly.

In other words, the bill is a vicious combination of blackmail and threat of physical force.

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Amazon's Letter to Associates

Speaking of Amazon's letter to Associates, following is the text as I received it on March 8:

Dear Colorado-based Amazon Associate:

We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to "voluntarily" collect Colorado sales tax -- a course we won't take.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.

You may express your views of Colorado's new law to members of the General Assembly and to Governor Ritter, who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,

The Amazon Associates Team

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Amazon's Action Was Self-Defense, Not Vindictiveness

The story from the left -- including advocacy groups, Democratic politicians, and various media posers -- is that Amazon cut off the Associates program in Colorado merely out of vindictiveness, to "punish" Colorado for the tax law.

That left's story is self-serving nonsense.

Amazon has a beef with the Colorado politicians who enacted the law, not with Associates. Amazon benefits from its Associates program, because that program generates sales for Amazon. The company would be foolish to cut off this source of revenue merely out of vindictiveness, as a way to "punish" those who weren't even responsible for the tax law.

As pointed out above, the actual language of the law is severely punitive, and it imposes excessive costs on transactions. Amazon's attempts to get out from under Colorado's tax bureaucracy by shutting down the Associates program is, therefore, perfectly predictable and justifiable.

I was therefore surprised to read Joshua Sharf's view that grants important premises of the left. Sharf writes:

Clearly, this proposed tax, whose enforcement would have fallen on the affiliates [in the original version of the bill], would have created a huge administrative nightmare for the thousands of small affiliates in the state, many of whom would have folded up. It was also predictable under those circumstances that companies like Amazon might have folded up and terminated their affiliate contracts. But a concerted lobbying effort, led by my friends Marc and Claudia Braunstein, who own ShopAtHome.com, a business based entirely on affiliate relationships, and by the PMA, forced the State Senate to amend the tax so that the responsibility for tracking and paying the tax falls on purchasers now, rather than sellers. In other states, Rhode Island and North Carolina, that change wasn’t made, and Amazon pulled out. But it was expected that this would save the affiliate relationships here in the state.

So here’s where both sides are wrong, and where it becomes clear that Amazon has made at least a tactical error here. Their action is clearly not an attempt to evade paying the sales tax. The administrative burden of that tax falls on buyers, not Amazon, and if Colorado attempts to force a company based in Washington State to disclose the purchases of their Colorado customers, it's going to find itself needing a supplemental appropriation to the Attorney General's office. In fact, the predictable failure to raise revenue, combined with the black hole of legal expenses, might actually allow this change in tax policy to qualify under TABOR.

But precisely because of that, the action makes no sense to the affiliates. Without warning, thousands of Amazon’s sales partners found their incomes eliminated, despite their efforts. This looks an awful lot like friendly fire. These are business partners that the company has alienated and insulted. These are your allies, Amazon. ...

Now maybe Amazon is trying to get their affiliates to put pressure on the state to repeal the damn thing altogether, and Greg Brophy, chief among the Senators Who Get It, is already talking about that. But maybe Amazon is really ticked off at its affiliates. After all, they only lobbied to shift the administrative burden, and onto their customers, at that, rather than to stop the tax altogether. This is, at least, poor customer relations. It's also possible that Amazon sees it as cowardly, since the affiliates were counting on Amazon to foot the legal bill to fight this thing. Never mind that Amazon could have passed some of this cost along to its Colorado affiliates in the form of reduced referral fees. But regardless of what Amazon thinks it's trying to accomplish here, it’s awful PR.

But Sharf ignores critical elements of the bill, and he resorts to Making Stuff Up about Amazon's alleged motives. His criticisms are therefore completely unwarranted.

True, the bill was amended to remove language about "affiliates." But that amendment did not address the fundamental problem with the bill: the severe compliance costs loaded onto firms with a Colorado presence. The fact that some Associates (who certainly did not speak for me!) helped to amend the bill so that it screwed Amazon even harder without directly screwing Associates is irrelevant to the fundamental problem with the bill.

Amazon's action was not about being vindictive. It was not about "punishing" Colorado or Associates. It was justifiable self-defense in response to an unjust law.

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Interstate Commerce and State Sales Taxes

Why didn't the Colorado legislature simply declare that all sales to Colorado residents are subject to state sales taxes? The problem with such an approach is that we live in a federalist system, in which each state remains largely autonomous, subject to federal controls.

One of the major reasons the U.S. Constitution included the "commerce clause" was to prevent protectionist taxes among the states and to spur trade within the nation. Article I, Section 8 therefore grants to the U.S. Congress the power "to regulate Commerce... among the several States."

Colorado simply has no authority to tax businesses in other states. (Amazon is located in Washington.) The only plausible way that Colorado can tax an out-of-state business is if that business has a "physical presence" in Colorado. And that is what the dispute over Associates is all about (though one wouldn't know it from reading dishonest reports from the left).

(Colorado does, however, retain the authority to force residents to pay a "use tax" on goods bought from out of state. Such consumer-paid taxes are extremely onerous and rarely followed; they should be repealed.)

Amazon is currently collecting sales tax on goods shipped to New York:

Effective June 1, 2008, Amazon.com LLC will begin collecting sales tax on items shipped to destinations within the State of New York as New York has enacted a new law requiring out-of-state sellers to collect and remit sales tax based on advertising. Amazon has filed a lawsuit challenging the constitutionality of this provision. However, as required by the law, we must still begin collecting New York sales tax beginning on that date.

Wikipedia offers a couple of useful links for background on this. Saul Hansell wrote for the May 1, 2008, New York Times:

The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon has hundreds of thousands of affiliates—from big publishers to tiny blogs -- that feature links to its products. It says thousands of those have given an address in New York State, although it does not verify the addresses.

The state law says that if even one of those affiliates is in New York, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate. This is an extension of an existing rule that companies that employ independent agents or representatives to solicit business must collect sales taxes for the state.

A Reuters article from January 13, 2009, notes that the New York Supreme Court ruled against Amazon; the case remains in appeal.

I knew the left was drumming up a campaign against Amazon when I saw an article from the New York Times from December 26, 2009, titled, "Sorry, Shoppers, but Why Can't Amazon Collect More Tax?" The attempt by Colorado Democrats to join the bandwagon therefore came as little surprise. (I am surprised, however, by how self-destructive Colorado Democrats are behaving, having engaged in an all-out war on business in the middle of an economic crunch. The Amazon Tax is only one of several destructive tax laws passed by Colorado Democrats.)

Randall Stross, author of the biased but still informative NYT article, writes:

Today, Amazon collects sales tax in only five states, which gives it a continuing advantage over companies who do collect them in all or most states. Competitors aren’t the only ones hurt by Amazon’s stance on sales taxes: it also means the loss of considerable revenue to states and localities that badly need it. ...

In addition to its home in Washington State, Amazon has facilities in North Dakota, Kentucky and Kansas, and collects sales taxes in these states. The company also collects sales tax in New York, but not cheerfully: Amazon has gone to court to overturn a law passed last year that compels it to collect from New York residents.

The Denver Post's editorial fairly describes the problems of out-of-state taxation, from a perspective of wanting to remedy the matter through federal legislation:

If and when federal lawmakers take on the issue, it will not be as simple as merely requiring online retailers to collect state sales taxes.

Sales taxes are levied based on where a customer lives and can vary within a state. Online retailers would be compelled to keep track of some 8,000 sales tax rates, according to a recently completed report by the Tax Foundation.

The report also cited the efforts of several dozen states, which have come together to create the Streamlined Sales Tax Project.
If project members could agree on a simplified sales tax structure for online retailers, such a development could undercut the main defense that online retailers have in fighting sales tax collection -- that it's too complex a task.

If Colorado legislators must insist on charging sales tax on out-of-state purchases, they should drop the onerous consumer-paid use tax, repeal the horribly unjust Amazon Tax, and band with other states to lobby for a federal fix along the lines of what the Post describes.

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The Best Way to Equalize Taxes

Of course there is a far easier way to equalize the tax burdens for Colorado retailers: repeal all sales taxes.

Obviously the legislature wouldn't even consider doing that.

However, by arguing that the sales tax hurts local sellers, Colorado Democrats (and their Republican cohorts) implicitly grant that such taxes hurt business. The "solution," according to these legislators, is to hurt the business of others also, so as to equalize the pain that these politicians inflict. (The Amazon Tax hurts online retailers dramatically more than the sales tax hurts local retailers, so that tax is actually protectionist in nature.)

As onerous as the sales tax is to collect by retailers operating out of a fixed location, it is exponentially more difficult to collect by mail order companies trying to do businesses within Colorado. The reason is the large number of overlapping tax districts are practically impossible to follow for a small business. (That is why I no longer make any direct sales in Colorado.) In such cases, the effort to collect the tax overwhelms any potential benefit from doing business in Colorado. It is therefore a nuisance tax that reduces the amount of business in the state.

If the legislature wanted to pursue a ballot measure to totally do away with the sales tax in this state, I would be all for it, even if the income tax were increased in a revenue-neutral way. (My preference, of course, would be to simply eliminate the sales tax and reduce state spending proportionally.) But that approach would actually work, so of course it's not even on the table.

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It's Not Just Amazon

5280 helpfully provided the link to an article by Greg Avery for the Denver Business Journal. Avery writes:

Tuesday, high-end gadget and gift seller Hammacher Schlemmer & Company Inc. started cutting off its Colorado-based online affiliates, said Marc Braunstein, founder and president of ShopAtHome.com, a Greenwood Village-based online discounter that’s also one of the state's largest affiliate sales websites.

New York City-based Hammacher Schlemmer's departure isn't the earthquake in the industry that Amazon.com's is, but it raises the specter that other large online retailers will drop affiliates in coming days.

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Amazon Restored Hawaii Associates

A reader pointed me to two articles about an Amazon Tax in Hawaii. The result was that, after Hawaii dropped the unjust taxation, Amazon restored its Associates program there.

Geoffrey Fowler writes for the July 1, 2009, Wall Street Journal:

Amazon.com Inc. has informed its marketing affiliates in Hawaii that it is ending its business with them to avoid collecting sales tax in the state.

Lawmakers in Hawaii, following in the footsteps of North Carolina and Rhode Island, have passed legislation that would require companies to collect sales tax if they have marketing affiliates in the state. Affiliate marketers run blogs or Web sites and get a sales commission by featuring links to outside e-commerce sites.

Thankfully, this story had a happy ending, as the Amazon blog reports:

Earlier this month, Governor Linda Lingle vetoed the unconstitutional tax collection scheme passed by the Hawaii legislature in HB 1405. Because the effective date of that bill preceded both her veto and the legislature's veto override session, we had little choice but to end our advertising relationships with all Hawaii-based participants in the Amazon Associates Program. Now that the override session is over, and the legislature did not override Governor Lingle's veto of HB 1405, we would like to invite all Hawaii Associates whose accounts were closed due to the pending legislation to re-enroll in the Associates Program.

Unfortunately, our governor, Bill Ritter, decided instead to screw Amazon as well as the company's Associates and customers. But it is not too late for the Colorado legislature to return to sanity, repeal the Amazon Tax here, and allow Amazon to restore the Associates program.

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More On the Affiliate Amendment

Those who wish to see how the bill was amended can compare the first draft against the final bill of 1193. (See the legislative page for additional versions of the bill and notes about its passage.)

As mentioned above, the bill was amended to remove language about affiliates. However, while various parties pretend that this amendment made the bill workable for Amazon, the facts are otherwise. Amazon never promised to keep the Associates program intact with an amended bill. That was always wishful thinking on the part of certain legislators and Associates.

The amendment removed the incentive of Associates to leave Amazon -- because Associates would no longer have to process the burdensome tax paperwork themselves -- but the amendment certainly did NOT remove the incentive of Amazon to leave its Associates.

It is in this light that I review Tim Hoover's remarkably incompetent and biased article on the matter, written as a "news" story for the Denver Post.

Most importantly, Hoover never discusses the critical importance of interstate commerce and the relevance of a business's "physical presence" in the state. Hoover does use that last phrase, but only nine paragraphs into his piece, and in a way that fails to explain the significance of it.

Rather than explain why Amazon cut off its Colorado Associates, Hoover follows the vicious attacks of the left and pretends that the decision was arbitrary and without cause.

Hoover repeats the smears of the left:

Democrats, though, said Amazon's action was purely a public-relations tactic, punishing affiliates even though the final version of the bill removed the in-state marketers as means of collecting the sales tax.

"They (Amazon) absolutely killed the affiliates just to show that they can," said Sen. Michael Johnston, D-Denver.

Meanwhile, one liberal group called for a boycott of Amazon until the retailer renews its relationships with affiliates.

Amazon "chose to make an example of our state and unfairly punish their own business associates for political gain," the group ProgressNow Colorado said in a release.

Never mind the fact that the claims of Senator Michael Johnston and ProgressNow are bald-faced lies. Apparently Hoover sees it as his job merely to repeat slander, not correct it.

Later in his article, Hoover makes believe that Amazon had no reason for its move:

Amazon spokeswoman Mary Osako on Tuesday would not explain why the retailer had ended relationships with sellers in Colorado and instead repeated phrases from a letter the company sent to affiliates over the weekend.

"Although the legislation and regulations do not require online retailers to collect sales tax, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to 'voluntarily' collect Colorado sales tax," she said in an e-mail that quoted directly from the statement to affiliates.

In the bill's original form, the tax would have been collected through the in-state affiliates, as other states are attempting, but Johnston and other lawmakers helped re-engineer the bill to take affiliates out of the equation after threats from Amazon that it would dump them.

When the bill was changed, Democrats, in-state affiliates and even Republicans cheered.

Brophy wrote on his Twitter account at the time that affiliates were "no longer collateral damage in war on Amazon" and said, "Affiliates win!"

On Tuesday, though, Brophy said he was wrong. "I thought that (the new version of the bill) settled the question, but it didn't."
Amazon has said that it will only renew its relationships with affiliates if the law is repealed or significantly altered.

Granted that Amazon could have been more explicit in stating its reasoning for its decision, the relevance of interstate commerce and the "physical presence" of a business is obvious to anyone who conducts even a cursory investigation into the matter. As I've reviewed, the amendment regarding affiliates in no way resolved the problems that the law creates for Amazon. For Hoover to ignore these critical facts manifests his journalistic irresponsibility.

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Mike Littwin's Smear Job

Mike Littwin's article on the Amazon tax surpasses mere journalistic irresponsibility. It is a vicious smear job.

It is possible that somebody other than Littwin selected the title for his article: "Amazon's use of human shields evil." So my comments in this paragraph are directed at the party who did select it. A "human shield" means an innocent party that violent terrorists hide behind to prevent enemies from firing on the terrorists. To compare Amazon to violent terrorists is appalling and extremely unjust.

Littwin begins by declaring that Amazon is evil. Why? Because "Amazon has dropped the big one on the innocent affiliates, who have done absolutely nothing wrong except get caught in the crossfire." It is true that the Associates (including me) are innocent and that they have gotten caught in the crossfire. But the critical point that Littwin ignores is that this fire is coming entirely from Colorado politicians. Amazon too is an innocent victim.

Next Littwin claims: "No one seems sure exactly why Amazon fired its Colorado affiliates..." However, just a few paragraphs later Littwin himself points out the reason: "states can't force companies that are not physically in the state to collect sales tax. Amazon is somewhere in the wind, staying high above sales-tax rules." Did Littwin really fail to notice that that is the reason "why Amazon fired its Colorado affiliates?"

Then Littwin repeats the by-now standard slander that Amazon cut off its Associates out of sheer vindictiveness, without any real reasons.

Littwin does make a good point that, because stores like Barnes and Noble, Wal-Mart, and Target definitely have a "physical presence" in the state, they pay sales tax. It does seem unfair to screw some retailers harder than others with taxes. However, as discussed above, this tax bill is hardly a fair way to solve the problem. Littwin ignores Amazon's statement in its letter: "As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly."

At least Littwin grants: "And the reaction was not unexpected. Amazon had fired its affiliates in Rhode Island and North Carolina."

However, then Littwin then adds that Amazon "threatened to do the same in Colorado, which is why the legislators passed a law that wasn't based on affiliates." The law is in fact "based on affiliates" in the sense that the Associates program is what plausibly gives Colorado tax jurisdiction over Amazon. Again, the amendment pertaining to affiliates was absolutely meaningless in terms of alleviating the compliance problems for Amazon. But Littwin can't be bothered with such pesky facts; he's on a crusade to demonize a business.

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Westword's Michael Roberts Interviews Fred Nicely

Michael Roberts of Westword, who sometimes leans left in his economic commentary, conducted better research on the Amaon Tax than the Denver Post's news side did. Roberts called up "Fred Nicely, tax counsel for the Washington, D.C.-based Counsel on State Taxation (COST)." Here's what Nicely had to say to Roberts:

It [the Amazon Tax] definitely costs money. You have to go through and provide required notices. And, rather offensively, the Department of Revenue is able to get this information electronically, but the sellers are required to provide the information to the purchasers via the cost of first-class mail.

And there's another side of the equation -- a problem that's twofold. The states can impose huge penalties for a failure to collect the tax. But if you incorrectly charge tax for something that's not taxable, you open yourself up to class-action lawsuits from purchasers. So you can be hit both ways. ...

The hope is that legislators in Colorado will potentially do what Rhode Island is exploring, which is repealing its legislation. They may have to potentially make some changes to the state's constitution. But with other states, they should definitely be looking at complying with the Streamlined Sales and Use Tax Agreement. Those are steps Colorado should take.

Roberts reports that Nicely supports "a nationwide agreement that levels the playing field for companies interested in operating across state lines," such as promoted by the Streamlined Sales Tax Governing Board. Roberts isn't sure such an effort can be successful, but at least he fairly reviewed it.

Nice reporting, Westword. I hope you inspire the Denver Post to return to real journalism.

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Other Commentary of the Amazon Tax

I've covered the basic issues above. However, it might be useful to collect, summarize, and where appropriate criticize other commentary on the matter.

The single-term, economically illiterate governor Bill Ritter issued an evasive media release that effectively illustrates why he dropped out of the governor's race.

Ritter does make one important concession in stating, "the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process." Ritter thereby grants what so many leftists in this state have tried so hard to evade: Amazon dropped the Associates program because that was the only way Amazon could extricate itself from Colorado's onerous and business-killing tax bureaucracy. The only unfairness is the unjust tax law perpetrated by Bill Ritter and the Democratic legislature.

ColoradoSenateNews.com, a Republican site, issued a good release describing the Democratic hostility toward business:

Yesterday, [State Representative Jack] Pommer once again lead the anti-business attack when Amazon announced its decision to cut ties with Colorado affiliates. Later in the day, Ritter, Senate Majority Leader John Morse, D-Coloardo Springs, and Sen. Rollie Heath, D-Boulder, piled on the insults, calling Amazon’s decision “selfish” and “unjustified”.

Over at Mount Virtus, Ben DeGrow argues along similar lines as I argue here and comments on a variety of links.

In an early post for the Denver Post, Jessica Fender described aspects of the case. Fender precedes Hoover in fixating on the irrelevant amendment about affiliates while ignoring the much bigger issue of a business's "physical presence" in the state.

Fender does usefully quote Pommer as calling Amazon's action "flat out blackmail." In other words, Pommer believes that Amazon declining to submit to the legislature's blackmail is itself an instance of blackmail. What a vicious little troll.

T. L. James of People's Press Collective reviews State Senator John Morse's rant against Amazon. However, James wrongly characterizes Amazon's move as "symbolic." For reasons explained above, Amazon's action was legal self-defense with very practical implications for the company.

Over at the Huffington Post, Carol Hedges laughably claims that "firing the Colorado affiliates in no way changes Amazon's obligation under Colorado law." She disproves her own statement by pointing out, "However, if an Internet retailer does not have a physical presence in the state, it is are not compelled to collect tax." So which is it, Hedges? Hedges then proceeds with the typical leftist libel that Amazon "needlessly fired all of its Colorado affiliates, apparently out of spite." What hogwash. The fact that Hedges is a "Senior Policy Analyst" with the Colorado Fiscal Policy Institute offers a pretty good indication of the value of that organization.

March 11 Update: Following in Hedges footsteps, Dave Taylor adds his nonsense to the Huffington Post. Taylor claims, "as Carol points out in the earlier Post article, Amazon firing all of us Associates doesn't change anything about their tax liability in the state. The only way they can affect that is to simply stop selling product to everyone in Colorado." Taylor's statement is an outright fabrication. It has absolutely no grounding in the facts. If the Huffington Post cared anything about quality control, it wouldn't publish such obvious distortions.

John Tomasic of the Colorado Independent, who has already demonstrated his unreliability as a journalist, makes essentially the same mistake that Hedges makes.

Tomasic begins by pretending that Amazon's action is some sort of grand mystery, then he reviews the leftist smears of Amazon. He does quote a Wall Street Journal article that inexplicably confuses the amendment pertaining to affiliates with anything that matters. However, citing the same Wall Street Journal article, Tomasic then proceeds to explain exactly why Amazon cut off its Associates:

The similar North Carolina and Rhode Island laws passed last year held that Amazon’s in-state affiliated sites amounted to “a physical nexus” or presence in the states and so required the company to pay state taxes. Amazon disagreed, arguing that links at affiliate sites amount merely to promotion or advertising not a physical presence or some kind of local franchise representation. Amazon lost the battle and so pulled its affiliate business in those states.

So what exactly is the mystery here, Tomasic? He claims that "Colorado's law makes no mention of the 'affiliate-nexus' argument," but Amazon's "physical presence" in the state is the entire legal premise on which the law is based.

But then I have never seen Tomasic attempt to serve as anything other than a Democratic lap dog.

Nat Torkington whines that he got "fired for something outside [his] control," forgetting that the vindictive Colorado legislation was also outside of Amazon's control. Justice demands a clear identification of the victim -- Amazon -- and the perpetrators of the injustice -- the Colorado politicians who passed the unjust law.

Chuck Plunkett of the Denver Post points out, "There were plenty of signals that repealing a tax exemption for online retailers would face legal challenges and possibly just such a move as Amazon launched today." Plunkett also wonders why Denver Mayor John Hickenlooper, who is running for governor in Ritter's place, declined to take a position against the tax measure.

The far-left ProgressNow (more aptly called Regress Now) has called for a boycott of Amazon. Regress Now's commentary utterly ignores the destructive, protectionist nature of the tax bill.

With the socialist left demonizing Amazon and calling for a boycott, now is an excellent time to do some business with Amazon, in the name of justice.

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Subsidies Versus Discriminatory Taxation

2010-03-06T08:25:00.004-07:00

I applaud John Andrews and Citizens for Responsible Aurora Government for opposing "tax increment financing" (TIF) for the development of ranchland in that area. (Westminster might be looking at a similar mechanism to fund the now-"blighted" Westminster Mall; I'm not sure where that project has headed.) However, I caution free market advocates to carefully distinguish between outright subsidies and discriminatory taxation. It is unclear to me based on the information from Andrews whether the Aurora case involves both or only the latter.

I have not taken a deep look at how TIF works in Colorado. My understanding is that TIF essentially redirects some of a plot's property taxes back to the development costs of that plot. This is the equivalent of a property tax reduction for that plot. Sometimes, the property tax of surrounding "blighted" properties can also be funneled into that redevelopment; I'm not sure whether that's the case in Aurora. (Redirecting the property taxes of some plots to the owners of others is definitely a subsidy.)

Insofar as the TIF scheme involves only a plot's own property taxes, the TIF should be considered a discriminatory tax, not a subsidy. A subsidy is the forced redistribution of tax funds from one party to another. A discriminatory tax taxes different parties different rates based on political considerations.

If a TIF scheme results in raising tax rates on other people in an area to pay for city services, that is still a discriminatory tax, not a subsidy.

In general, I am opposed to any policy that increases discriminatory taxation. It's just not fair for governmental bodies to screw some citizens harder than others. It also makes for bad politics, as those with political connections get special tax breaks, while those without connections get screwed (worse).

However, I am NOT in favor of doing away with existing discriminatory taxation when that means raising net tax collections. If a mugger steals $10 from Abe and $20 from Ben every week, the situation is not improved if the mugger starts stealing $20 from Abe as well. Instead, I favor converting discriminatory taxes to equitable ones only when it results in the same (or less) total revenues, meaning some people will pay lower taxes.

A discriminatory tax involves taxing comparable parties different rates. I am not including taxes that treat basically different parties differently. For example, a progressive tax taxes the wealthy a higher percentage, but this applies universally. If you are wealthy and then you become poor, your tax rate will automatically drop. Likewise, when Colorado charges a sales tax on a purchase from a Colorado retailer but not from a Washington retailer, that is not discriminatory in the vicious sense, because federalism is incompatible with interstate taxation.

Having made that caveat, I am prepared to declare that discriminatory taxation is bad, and the proper remedy is to equalize tax rates such that total revenues stay the same or drops.

Races for Governor, U.S. Senate Getting Heated

2010-03-06T08:17:00.002-07:00

The following article originally was published March 5 by Grand Junction's Free Press.

Races for governor, U.S. Senate getting heated

by Linn and Ari Armstrong

While most of us celebrated Valentine's Day last month, the motto in Colorado's political races seemed to be "make war, not love." With the general election still eight months away, campaign season is already in full swing, complete with bitter attack ads.

The big news in the governor's race involves the net tax increases signed by Bill Ritter. Tim Hoover of the Denver Post summarizes the measures at http://tinyurl.com/rittertax.

We are particularly concerned about the tax hikes on industrial energy, software, and internet sales. While the economy is showing some signs of recovery, it remains a mess, and this is an especially lousy time to punish businesses. Democrats are all but begging certain businesses and entrepreneurs to fire people, flee the state, or refrain from moving here.

While Denver Mayor John Hickenlooper (the Democrat trying to replace Ritter) sat on his hands, Republican Scott McInnis admirably fought against the tax insanity. He said in a media release, "By signing these bills, Governor Ritter is essentially signing the pink slips of thousands of Colorado workers." The Democrats have handed their challengers plenty of ammunition heading into November.

Taxes have also become a big issue in the U.S. Senate race. While Jane Norton remains the clear Republican frontrunner, her opponents have stepped up criticism. Challenger Tom Wiens ran a radio ad stating, "Right here in Colorado, some Republican leaders backed Referendum C, the biggest tax increase in our state's history. I opposed it." Norton was among those "Republican leaders."

Yet at least Referendum C asked for voter approval, unlike Ritter's hikes, as Norton has countered. (Check out ClearTheBenchColorado.com, which is urging non-retention of four Supreme Court justices in part because of their betrayal of the Taxpayer's Bill of Rights.

Last month we were also blessed by a visit from His Chosenness Barack Obama. The reason for his visit is apparent: Democratic Senator Michael "The Pretender" Bennet is in deep trouble. (Perhaps Obama will provide the same benefit to Bennet that he gave to Martha Coakley out in Massachusetts.

To review, back in 2004 Ken Salazar trounced Pete Coors in the U.S. Senate race. In 2008, Obama asked Salazar to become Secretary of the Interior. It fell to Governor Ritter to fill the vacancy. Ritter stupidly snubbed experienced legislator Andrew Romanoff and instead picked Bennet. So, presumably, Obama feels partly responsible for turning a solidly Democratic Senate seat into a likely GOP victory.

Bennet, while a good fundraiser, is otherwise a terrible candidate. Democratic leaders who want a shot at winning had better hope that Romanoff wins the primary. Not only has Romanoff beat Bennet in the polls, but he has picked up major endorsements from state legislators and various unions. (Bennet has also been touting his union support, which is a good indication of why Democrats risk losing the seat.)

On the Republican side, Wiens's ad may actually help Norton. We had always thought of Norton's strongest challenger as Ken Buck, but he has not run a very exciting campaign, and he has some baggage as Weld County's District Attorney for raiding a business on a records fishing expedition and for invoking "hate crime" laws, which remain unpopular with Republicans.

By running relatively strong campaigns, Wiens and Cleve Tidwell may split the opposition to Norton, leaving her an even stronger frontrunner.

When Obama came to Colorado, Norton made headlines by running a television ad in which she said, "Mr. President, you should pledge to balance the budget, or else decline to seek reelection. That'd be change we can believe in."

However, when discussing the ad on Fox, Norton also said the recent Congressional jobs bill "was too small." Norton's spokesperson Nate Strauch said that what Norton meant was that "the impact was too small, not the price-tag was too small," but that leaves us wondering what sort of bill she thinks would have a bigger impact. Strauch mentioned the possibility of "suspending the payroll tax for small businesses," but absent spending cuts we don't see what good that would do.

At least Tidwell answered our survey at http://tinyurl.com/cosurvey10. On the plus side, he opposes so-called "stimulus" spending and corporate welfare. He calls for "dramatically lower" federal spending. He wants to reduce the jobs-killing minimum wage, and he said the anti-business Sarbanes-Oxley law should be repealed. He also wants to repeal campaign censorship laws and rescind FTC blogger controls.

We worry about some of Tidwell's views. He wants to restrict legal immigration as a protectionist measure. On matters of abortion, he punted to state control. We worry about that, because we believe the federal government has a legitimate role to play in protecting the individual rights of citizens, such as a woman's right to take the birth control pill even though it may prevent a fertilized egg from implanting in the uterus.

We respect Tidwell's efforts to articulate his views, and we hope voters will press every candidate to answer the tough questions in this pivotal election year.

Marijuana and Psychosis: Correlation or Causation?

2010-03-02T09:24:00.003-07:00

The Denver Post republished an article by Nicole Ostrow of Bloomberg News that begins, "Young adults who used marijuana as teens were more likely to develop schizophrenia and psychotic symptoms..."

Ostrow claims, "The authors said the study was the first to look at sibling pairs to discount genetic or environmental influence and still find marijuana linked to later psychosis."

No, the authors did not "discount genetic or environmental influence," nor did they discount other nongenetic differences between siblings.

Here's what the study (John McGrath etc., Archives of General Psychiatry) says instead: "Prospective cohort studies have identified an association between cannabis use and later psychosis-related outcomes, but concerns remain about unmeasured confounding variables. The use of sibling pair analysis reduces the influence of unmeasured residual confounding."

Reducing "the influence of unmeasured residual confounding" is hardly demonstrating the direction of causal flow.

Quite obviously, siblings are quite different from each other, not only genetically but according to their environmental interactions and, of critical importance, in their choices. (Does anyone doubt that "psychosis-related outcomes" are at least in many cases significantly the result of a person's poor choices?) The most obvious explanation for the study's findings is that the the siblings with the most problems tended to abuse drugs more. In other words, the drug abuse was a symptom of a person's problems, not a cause of them.

Notably, the study uses an extremely wide definition of "psychosis-related outcomes" that includes "nonaffective psychosis, hallucinations, and Peters et al Delusions Inventory score." But marijuana is a hallucinogenic drug. So, in part, the study is claiming, "People who take hallucinogenic drugs tend to suffer hallucinations." (And it cost how much money to figure that out?)

"Nonaffective psychosis" includes things like poor concentration and mood disorders, which are obvious short-term effects of using the drug as well as reflections of personalities with deeper problems.

And what, you may wonder, is the "Peters et al Delusions Inventory score?" It asks questions like the following:

"Do you ever feel as if people seem to drop hints about you or say things with a double meaning?"

"Do you ever feel as if some people are not what they seem to be?"

Besides the fact that some of these questions are ridiculous and need not indicate psychosis, again, people with more problems tend to abuse drugs more. Big insight, there.

Moreover, the differences associated with marijuana use are relatively small. For example, whereas 26 of 1246 people (two percent) who never used marijuana showed signs of "nonaffective psychosis," 12 of 310 people (3.9 percent) who had used marijuana for six years or more showed signs. Nintety of 1182 people (7.6 percent) who had never used marijuana showed signs of hallucinations, while 54 or 268 (20 percent) of those who had used marijuana for six years or more showed signs (again, not surprising given that marijuana is a hallucinogenic drug).

The upshot is that a small minority of people who didn't use marijuana showed "psychosis-related outcomes," while a somewhat larger minority of people who did use marijuana showed such signs. Again, this is consistent with the idea that people with more problems tend to abuse drugs more.

Now, I do not doubt that abusing marijuana (or any drug) can also contribute to a person's mental and emotional problems. Certainly drug abuse can reinforce a person's negative tendencies; I don't need a costly study to convince me of that. However, it is equally obvious that far and away the major problem is something other than the drug abuse. Mostly, the drug abuse is a symptom of deeper problems, not a cause of them. (Regardless, there are many other good reasons not to use marijuana except perhaps medicinally.)

I'm sure that won't stop politicians and bureaucrats from citing nonsensical news reports of meaningless studies to stir up more Reefer Madness. (Say, wouldn't paranoia about the impacts of smoking marijuana count as a "psychosis-related outcome?")

Are Young Americans More Liberal?

2010-03-01T15:52:00.003-07:00

In a recent column, E. J. Dionne claims, "Young Americans are the linchpin of a new progressive era in American politics." Those "born in 1981 or after" are "without question, the most liberal generation since [the] New Dealers."

There is a rather large problem with Dionne's article: he never explains what a "liberal" is or in what sense young Americans are more "liberal." In the true sense of the term, I am a "liberal," because I advocate liberty and individual rights, while the New Dealers were statist reactionaries who fought against market liberalism. So, absent any definitions or mention of specific beliefs, Dionne's article is worthless.

So let us turn to the Pew study cited by Dionne to get some specifics. Offhand, the "Millennials" don't sound like a bad bunch. Pew describes the Millennials as "confident, self-expressive, liberal, upbeat and open to change. They are more ethnically and racially diverse than older adults. They're less religious, less likely to have served in the military, and are on track to become the most educated generation in American history."

I regard this as great news: "One-in-four are unaffiliated with any religion, far more than the share of older adults when they were ages 18 to 29."

What about politics?

About half of Millennials say the president has failed to change the way Washington works, which had been the central promise of his candidacy. Of those who say this, three-in-ten blame Obama himself, while more than half blame his political opponents and special interests.

To be sure, Millennials remain the most likely of any generation to self-identify as liberals; they are less supportive than their elders of an assertive national security policy and more supportive of a progressive domestic social agenda. They are still more likely than any other age group to identify as Democrats. Yet by early 2010, their support for Obama and the Democrats had receded, as evidenced both by survey data and by their low level of participation in recent off-year and special elections.

Pew recommends Chapter 8 of its full report for more details. So let's see if that offers anything else of interest.

By a margin of 53 to 42, Millennials think "Government should do more to solve problems," as opposed to thinking "Government is doing too many things better left to businesses and individuals." This is the only age category in which a majority agree with the first statement. However, the question is ambiguous. Government should do certain things that only government can do -- run the military, for instance -- whereas certain things our government is now doing should be left to the private sector.

I do not doubt that these younger Americans are more seriously interested in seeing government involved in the economy. In part, that reflects a lack of experience and economic literacy. With the lap-dog media repeating political lies about how the market supposedly caused the housing bust, when it is clear that political interference in the economy actually caused it, and without the memory of Carter or Watergate, it is no big surprise that youngsters place too much faith in political action. Moreover, George W. Bush was so horrible in so many ways that youthful exuberance for Obama was to be expected. Obama's failures are already eroding that confidence.

What this represents is an outstanding opportunity for the true liberals of the country -- market liberals -- to help educate this generation on the benefits of a free market economy.

It is clear that the Millennials are more "liberal" in the good sense:

The distinctiveness of members of the Millennial generation is particularly evident in their social values, where they stand out for their acceptance of homosexuality, interracial dating, expanded roles for women and immigrants. At the same time, however, their views are not particularly distinctive in other areas, such as attitudes about business and the social safety net.

Given this apparent respect for individuals, it should not be too hard to persuade many Millennials that fully respecting individuals means respecting their rights, including their economic rights to control their property and freely associate with others.

At least Millennials are no more hostile toward business than are other groups:

Millennials’ views of business are not substantially different from those of older generations. On a three-question index of attitudes about business power and profits, Millennials’ opinions mirror those of Gen Xers and members of the Silent generation and are slightly less critical of business than are the views of Baby Boomers. Millennials are no more likely than other cohorts to say that big companies have too much power, and Millennials are nearly as likely as other cohorts to agree that the country’s strength is mostly built on the success of American business.

On one question, Millennials appear more supportive of business than their elders. A higher percentage of Millennials than other cohorts agrees that "business corporations generally strike a fair balance between making profits and serving the public interest."

Of course, these questions are ambiguous, so answers to them must be interpreted accordingly. Some businesses really are too big and powerful, precisely because politicians have granted them bailouts, other forms of corporate welfare, and protectionist advantages. "The public interest" is notoriously ambiguous, and the question wrongly implies that pursuing a profit is at odds with "the public interest." In fact a profit indicates that a company is ably serving its customers' needs.

Millennials "are not particularly supportive of an expanded government social safety net."

On the whole, thankfully Dionne is wrong to see in the Pew results youthful support for "liberalism" of the "progressive" (i.e., socialist) variety. What I see is a group of Americans who may be naive about the efficacy of political action and unknowledgeable about the benefits of market liberalism, but who may be very open to arguments about the need for individual rights and economic liberty.

The Whole Story On Norton's Jobs-Bill Comments

2010-02-26T12:46:00.005-07:00

As much as it humors me to be quoted by Colorado Pols and the Colorado Independent, those leftist publications are failing to tell the whole story behind Jane Norton's comments on the jobs bill. They are trying to score political points rather than get to the truth. While I seek to hold politicians from all parties accountable for their statements and votes, Colorado Pols and the Independent are beating up Republicans while giving Democrats a free ride.

On February 24, in the course of a Fox interview discussing her television ad attacking President Obama over the budget, U.S. Senate candidate Jane Norton said the Congressional jobs bill "was too small."

I wasn't sure what she meant by this, because the jobs bill contains two major elements. The Associated Press explains:

First, it would exempt businesses hiring the unemployed from the 6.2 percent Social Security payroll tax through December and give them an additional $1,000 credit if new workers stay on the job a full year.

Second, it would extend highway and mass transit programs through the end of the year and pump $20 billion into them in time for the spring construction season. The money would make up for lower-than-expected gasoline tax revenues.

The "jobs" bill, then, is part tax break and part "stimulus" spending. Which part of it did Norton think was too small? To find out, I called up her office and asked to speak to Cinamon Watson, Norton's Deputy Campaign Manager. The reason I asked for her is that my dad and I have communicated with her previously about Norton's campaign and the Armstrong Survey at http://tinyurl.com/cosurvey10. Watson said I should instead talk to Nate Strauch, Norton's Press Secretary, who called me back later in the day. (This all took place on February 25.) I didn't ask to speak to Norton directly, because I figured I'd never get through to her, and I figured I could get the relevant information out of her staff.

Here's what I wrote about my conversation with Strauch:

Nate Strauch, Norton's Press Secretary, said that what Norton meant was that "the impact was too small, not the price-tag was too small."

But that implies that she did favor some sort of jobs bill, just one with a larger impact, does it not?

Strauch said "she supported a number of different measures," such as "suspending the payroll tax for small businesses." So Norton wants to cut taxes without touching spending levels? That's not much of a policy.

Norton's comments about the jobs bill were brief and off hand. Strauch's clarification of her remarks fits perfectly with the nature of the bill. I'm satisfied that I now know Norton's basic position on the bill. (I don't think it's a very good position, as I indicated, because tax breaks without corresponding spending cuts don't help.)

Enter the Independent. In his article today, John Tomasic said, "Colorado GOP frontrunner for the U.S. Senate, Jane Norton doesn't talk to the press–not even to the conservative bloggers at People's Press Collective."

Tomasic's characterization is wrong for several reasons.

First, I'm not a "conservative blogger." I advocate individual rights. I advocate gay rights, legal abortion, free speech, and an end to the drug war. How is that "conservative?" I do not seek to "conserve" the status quo, I seek the significant social and political changes necessary to fully protect individual rights.

Second, I am not "at People's Press Collective" (PPC) in the sense that Tomasic seems to intend. By mutual consent, PPC republishes some of my articles. I recognize that PPC tends to lean more conservative and Republican friendly, but I am neither a conservative nor a Republican. (I am registered unaffiliated, and I voted for Democrats Bill Ritter and Mark Udall, among others. I have not yet decided how I will vote this year for governor and U.S. Senate.) I am not a writer for PPC in the same sense that Tomasic is a writer for the Independent; it's just not that sort of relationship.

Third, Tomasic wrongly implies that I asked to speak directly with Norton; I did not. I was fine speaking with Strauch.

Tomasic adds that I supposedly "joined the chorus of writers mocking Norton's commitment to communication with the people she aims to represent." Yes, there was some definite mocking going on when I pointed out that Norton has yet to reply to the Armstrong survey. However, I will note, as Tomasic should also note, that neither Michael Bennet nor Andrew Romanoff has replied to that survey. Indeed, getting through to Bennet's office was like pulling teeth, and one receptionist I spoke with was exceedingly rude and dismissive, though another representative was helpful. By comparison, Norton's office has been a joy to contact.

If Tomasic wishes to act like a real journalist, rather than a partisan hack, he will join me in asking Bennet, Romanoff, AND Norton to respond to the Armstrong Survey and other tough questions, and he will report the views of all candidates fairly. Until he does so, he should be dismissed as nothing more than a Democratic lap dog.

Tomasic's claim that Strauch's clarification of Norton's brief comment on the jobs bill somehow differs from Norton's intended meaning is unwarranted. (That said, I would very much like to hear more of Norton's views about "stimulus" spending and tax breaks absent spending cuts.) Colorado Pols's similar criticisms are likewise misplaced.

Look, there is not a single person in the state of Colorado, who, in the rough and tumble of an extemporaneous interview, will always state every point with perfect clarity and precision. I certainly could not always meet that standard. If we are to remain intellectually honest, we must put a speaker's comments in context and allow room for reasonable clarifications.

Is our goal to figure out what Norton's true views are or to play partisan "gotcha" games? It is the left that most vociferously complains about big money in politics, yet the only alternative is honest debate. I ask Colorado Pols, I ask John Tomasic, I ask the writers for the Colorado Independent and the People's Press Collective to join me in pursuing intellectually honest evaluation of the candidates, regardless of their party affiliation.

I'm sure there will be plenty of substantives points on which to criticize Jane Norton (for me, including her support for Referendum C) without Making Stuff Up about the meaning of the phrase "too small." We're bigger than that.

Liberty In the Books Web Page

2010-02-26T12:40:00.003-07:00

I've finished the Liberty In the Books web page (for now). See http://tinyurl.com/libertybooks

The readings cover basic economics, health policy, the Great Depression, the housing bust, and antitrust. I'll continue to add new review questions as the Denver group progresses.

I hope that the web page encourages others around the country to start similar reading groups. I also hope the review questions are useful for independent study. So tell your friends!

Review Questions for D. T. Armentano's Antitrust: The Case for Repeal

2010-02-26T12:26:00.003-07:00

This set of review questions is part of the Liberty In the Books program, a monthly discussion group. These questions cover Dominick T. Armentano's Antitrust: The Case for Repeal (Revised Second Edition).

Reading I: Through Page 50

1. What have been the basic results of antitrust enforcement, in Armentano's view? (Page xi)

2. What does "rent-seeking" mean, and how does it apply to antitrust? (Page xi)

3. What is the correct understanding of "competition," what is "pure competition," and how does this apply to antirust? (Page xii)

4. What is the meaning of "economies of scale," and what is the relevance to antitrust? (Page xiii)

5. What are the basic aims of antitrust? (Page xiii)

6. What were the general trends in antitrust enforcement in the 1950s and '60s, the 1970s and '80s, and the 1990s? (Pages xiii-xvi)

7. What were the antitrust-related complaints against Microsoft? (Pages 1-2)

8. What does the term "creative destruction" mean? (Page 4)

9. What are "network effects," and do they justify antitrust action? (Pages 4-5)

10. What is "path dependence," does it "lock in... inferior technology," and does it justify antitrust action? (Pages 5-6)

11. Did Microsoft unfairly bundle its web browser with its operating system? How does this complaint look in 2010? (Pages 6-8)

12. What role do exclusive contracts play on an open market, and do they ever justify antitrust action? (Pages 8-9)

13. What was the Lorain Journal case, did it justify antitrust action, and was the Microsoft case comparable to it? (Pages 9-10)

14. What does the Microsoft case illustrate about the nature of antitrust enforcement? (Pages 10-12)

15. What is the "barriers-to-entry doctrine," and what has been the actual behavior of firms punished under antitrust? (Pages 13-14)

16. What antitrust enforcement actions did IBM face? (Pages 14-15)

17. What was the trend of the data-processing industry in the mid-20th Century? (Page 15)

18. Are profits higher in concentrated industries in the short and long term? Why? (Page 16)

19. What is the actual cause of "monopoly power?" (Page 18)

20. What has antitrust done to business consolidations, and what has been the economic effect? (Page 18)

21. What is the problem with regulators and courts attempting to discover social benefits? (Page 19)

22. Are antitrust laws consistent with rights of property, association, and due process? (Page 19)

23. What lesson does Armentano find in the case of airline deregulation? (Pages 20-21)

24. Contrast the "public interest" with the "special-interest" theories of antitrust policy. (Pages 21-25)

25. What is the theory of "concentrated benefits, dispersed costs," and how does this apply to antitrust? (Page 24)

26. How does antitrust constitute an attempt to centrally plan the economy? (Pages 25-26)

27. What does the AT&T case reveal about antitrust policy? (Pages 26-29)

28. What is "allocative inefficiency" and "technical inefficiency" in standard antitrust doctrine? (Pages 31-33)

29. What real-world economic activity does the theory of "pure and perfect competition" exclude? (Pages 33-35)

30. Are "free-market monopolies" able to restrict production and raise prices? (Pages 35-39)

31. Contrast the popular account of Standard Oil with the factual history of the company's performance. (Pages 40-43)

32. Can studies of profitability justify antitrust enforcement? (Pages 43-44)

33. In Armentano's view, should antitrust be used even against legally enforced monopolies? (Pages 45-46)

34. Why does Armentano push for the complete repeal of antitrust, rather than only administrative reforms?

35. What is Murray Rothbard's critique of standard monopoly theory? (Pages 47-50)

Reading II: Page 51 to 106

1. What is the meaning of a "non-legal barrier to entry?" (Page 51)

2. What is "product differentiation," and what are some examples of it? (Page 51-52)

3. What are the "revealed preferences of consumers," and what do they have to do with antitrust? (Page 52, 54)

4. What is the difference between "pure competition" and the "actual competitive process," according to Armentano? (Page 53)

5. What is wrong with the assumption of "perfect information?" (Page 55)

6. Was there a monopoly in ready-to-eat cereals in the 1970s? (Page 55, 57)

7. Does risk of failure by potential new competitors, economies of scale for existing competitors, or efficiency of existing competitors justify antitrust action? (Page 56)

8. Can advertising constitute an unfair barrier to entry? (Pages 57-60)

9. Is it true that "more competitors are always better than less?" (Page 60)

10. Did the Aluminum Company of America constitute an unfair or inefficient monopoly? (Pages 60-63)

11. Is the ability of an established, successful firm to raise capital, offer innovative products, or lower prices unfair or harmful to consumers? (Pages 63-67)

12. What is "price discrimination," what are some examples from every-day life, and does it justify antitrust action? (Pages 69-73)

13. What are "tying agreements," and do they justify antitrust action? (Pages 73-76)

14. What are "resale price-maintenance agreements," are they fair, and do they justify antitrust action? How did the U.S. government once forcibly limit price competition? (Pages 76-77) (Note: The Supreme Court seems to have subsequently limited restrictions on pricing agreements; see http://en.wikipedia.org/wiki/ Leegin_Creative_Leather_Products,_Inc._v._PSKS,_Inc.)

15. What are "vertical mergers," and should they ever be legally restricted? What the government justified in intervening in Brown Shoe's acquisition of Kinney retailers? (Pages 77-79)

16. What are the different sorts of "horizontal agreements," and how are they treated under antitrust? (Page 81)

17. Is the "rule of reason" approach in antitrust in fact reasonable? (Page 82)

18. Are government regulators able to accurately define the "relevant market" for alleged monopolistic practices? (Pages 83-85)

19. Is there any clear relationship between market concentration and "economic power to reduce market output and raise market prices?" (Pages 85-86)

20. What is the problem with attempting to tie alleged monopolistic practices to output restriction? (Pages 86-87)

21. Can government regulators accurately determine "social benefits" of mergers? How does the Staples case illustrate the problems with intervention? (Pages 87-90)

22. Can "horizontal price coordination" create market efficiencies? Should it be outlawed? (Pages 90-94)

23. How did the federal government forcibly restrict competition in the trucking industry through the Interstate Commerce Commission? (Page 93)

24. Are attempts by firms to reduce output and raise prices generally effective? What is the appropriate remedy for such attempts, according to Armentano? (Pages 94-95)

25. Did the Addyston Pipe Case of the 1890s demonstrate the need for antitrust laws? (Pages 95-97)

26. How do "antitrust laws stand in direct violation of civil liberties, individual rights, and due process of law?" (Pages 99-106)

Review Questions for Henry Hazlitt's Economics In One Lesson

2010-02-26T11:18:00.002-07:00

This set of review questions is part of the Liberty In the Books program, a monthly discussion group. The questions cover Henry Hazlitt's classic Economics In One Lesson, 1979 edition.

Reading I: Through Page 70, Chapter IX: Disbanding Troops
and Bureaucrats

** Preface **

1. What is Hazlitt's purpose in writing this book?

2. What is Hazlitt's view of novelty in economic theory?

3. Hazlitt addresses fallacies in their popular form, not their academic form. Can Hazlitt do this and be fair to the theories in
their more sophisticated forms? What does Hazlitt's view say about the relationship between academics and popular culture?

4. In his preface, Hazlitt discusses his use of statistics. Likewise, in Chapter VII, he writes [page 54], "Statistics and history are
useless in economics unless accompanied by a basic deductive understanding of the facts." What is Hazlitt's basic view of the use and status of statistics?

** Chapter I: The Lesson **

5. Why is economics especially beset by fallacies?

6. What does Hazlitt mean by the "special pleading of selfish interests," and what is the result of such pleading?

7. Is it true that "certain public policies would in the long run benefit everybody?"

8. What is Hazlitt's "One Lesson?"

9. Is Hazlitt's "One Lesson" really adequate for understanding the essence of economics?

10. What are modern examples of "brilliant economists, who deprecate saving and recommend squandering on an national scale as the way of economic salvation?"

11. Hazlitt warns against the error "of looking at the consequences only for a particular group to the neglect of other groups." Is it possible to justly "balance" the interests of groups? Does Hazlitt's view depend on a utilitarian framework?

12. Hazlitt also warns against "a certain callousness toward the fate of groups that were immediately hurt by policies." What does this suggest in terms of transitioning from political controls to free markets?

13. While demagogues get by with snappy "half-truths," good economics "often requires a long, complicated, and dull chain of reasoning." Does this ultimately imply a pessimistic view? Is there a solution to the problem?

** Chapter II: The Broken Window **

14. What are some modern examples of the "broken window" fallacy at work?

15. What is the problem of the seen and the unseen? (See also Chapter V.)

** Chapter III: The Blessings of Destruction **

16. Is there such a thing as "accumulated" or "pent-up" demand?

17. What is the difference, in economic terms, between need and demand?

18. What is the "money illusion" or the "monetary veil," and how does this relate to wage levels?

19. What does Hazlitt mean when he says that supply equals demand?

20. What is the "optimal rate of replacement" of capital goods mean?

** Chapter IV: Public Works Mean Taxes **

21. Where does political spending come from?

22. What public works projects does Hazlitt consider "essential?" (See also Chapter IX.) Without entering a long debate over the matter, what are the other basic schools of thought on this issue?

** Chapter V: Taxes Discourage Production **

23. What is the effect of taxes on incentives?

** Credit Diverts Production **

24. What is credit?

25. What is the result of politically favoring one party with credit?

26. Hazlitt criticizes the view that some credit risks are "too great for private industry." Is his criticism always warranted?

27. Hazlitt uses the example of "government-guaranteed home mortgages." How do his comments line up with recent events?

28. Hazlitt leaves open the possibility of government loans "under certain emergency circumstances." Is he right about this, and, if so, what are those circumstances?

** Chapter VII: The Curse of Machinery **

29. What are some of the major examples Hazlitt uses of machinery displacing certain workers?

30. Is "industrial overproduction" a real problem?

31. Is there an upper limit to the number of jobs available?

32. What is the long-term impact of technological advances on employment? On standard of living?

** Chapter VIII: Spread-The-Work Schemes **

33. What are some examples of make-work schemes from Hazlitt and modern policy?

34. Is there any context in which make-work is appropriate?

** Chapter IX: Disbanding Troops and Bureaucrats **

35. What is the cost of providing employment to soldiers and bureaucrats?

Reading II: Page 71 (Chapter X: The Fetish of Full Employment) to Page 139 (Chapter XIX: Minimum Wage Laws)

** Chapter X: The Fetish of Full Employment **

1. Hazlitt writes (page 71), "The whole economic progress of mankind has consisted of getting more production with the same labor." Name some more recent examples.

2. What is the proper relationship between employment and production (page 71)?

3. Hazlitt discusses the erroneous "assumption that there is only a fixed amount of work to be done" (page 72). What are some modern examples of this fallacy?

4. In what context is reducing employment a good thing (page 73)?

** Chapter XI: Who's "Protected" By Tariffs? **

5. What are some modern examples of tariffs? Hint:
http://en.wikipedia.org/wiki/2002_United_States_steel_tariff
http://www.msnbc.msn.com/id/32808731/

6. What is comparative advantage?

7. What are the effects of eliminating a protective tariff (pages 76-82)?

** Chapter XII: The Drive for Exports **

8. What does Hazlitt mean when he writes, "In the long run imports and exports must equal each other" (page 85)?

9. Advanced bonus question: How would Hazlitt's analysis apply in the context of an international gold standard rather than national fiat currencies?

10. Should politicians "stimulate" foreign exports via subsidies?

** Chapter XIII: "Parity" Prices **

11. What are "parity prices?"

12. Why is it economically nonsensical and harmful to forcibly set prices at "parity?"

** Chapter XIV: Saving the X Industry **

13. What are the ways that politicians attempt to save Industry X (pages 98-100)?

** Chapter XV: How the Price System Works **

14. What does "production for use" mean (page 103)?

15. Describe "the problem of alternative applications of labor and capital" (pages 104-105)?

16. What is supply?

17. What id demand?

18. How does the price system address the problem of alternative uses of time and labor (pages 105-107)?

19. What is the relationship between price and the cost of production (page 106)?

20. What is the consequence of forcibly reducing the scarcity of some good (pages 107-109)?

** Chapter XVI: "Stabilizing" Commodities **

21. Aside from direct price controls, how have politicians tried to "stabilize" prices (pages 111-113)?

22. Are speculators economically damaging or productive (pages 111-112)?

23. What are the effects of forcibly "stabilizing" prices on speculators? On short and long term prices? On production? (Pages
112-115.)

** Chapter XVII: Government Price-Fixing **

24. What are the economic consequences of forcing prices below market levels (pages 119-120)?

25. What are the social consequences of price controls and rationing (pages 123-124)?

26. What are the real causes of price increases? What are the appropriate responses? (Pages 124-126.)

** Chapter XVIII: What Rent Control Does **

27. What are the effects of rent control?

** Chapter XIX: Minimum Wage Laws **

Background reading: Surprise! Youth employment rate hits record low

28. What determines the maximum wage an employer will pay to an employee (page 135)?

29. What are the consequences of subsidizing unemployment (page 137)?

30. What are the real causes of rising real wages (page 139)?

Reading III: Page 140 to the end

** Chapter XX: Do Unions Really Raise Wages? **

1. What is the source of the delusion that "labor unions can substantially raise real wages over the long run for the whole working population?" (Page 140)

2. Why do employers choose to pay workers more? (Pages 140-141)

3. What legitimate function does Hazlitt see unions serving? (Pages 140-141, 149)

4. What is the mark of a legitimate versus an illegitimate strike? (Pages 142-143)

5. How does forcibly increasing union wages hurt other workers and consumers? (Page 143-146)

6. What is the impact of unemployment welfare? (Pages 145-146)

7. What are the long-range impacts on investment of forced wage hikes? (Pages 147-148)

8. Besides forcing up wages, what other harmful controls have unions advocated? (Page 150)

** Chapter XXI: "Enough to Buy Back the Product" **

9. What is the "buy back the product" doctrine? (Page 153)

10. What is wrong with that doctrine? (Pages 154-155, 158)

11. What are equilibrium wages and prices? What are the consequences of forcing wages or prices up or down? (Page 158)

** Chapter XXII: The Function of Profits **

12. A business can make profits or losses. What is the consequence of forcibly limiting profits? (Pages 160-161)

13. What are the long-term effects of high profits in a particular industry? How do profit and loss function in a free economy? (Page 161)

14. How are profits typically achieved? (Pages 162-163)

** Chapter XXIII: The Mirage of Inflation **

15. What is the difference between wealth and money? (Pages 164-165)

16. What are the various justifications people give for inflationary policy? (Page 165-166, 171)

17. What is the basic process by which the money supply is inflated? (Pages 167-169)

18. What does inflation do to the "structure of production?" (Page 170)

19. In what sense can inflation counteract problems of above-market wage rates? (Page 172)

20. Why is inflation so popular among many government officials? (Pages 172-174)

21. What is the worst-case outcome of inflation? (Page 176)

** Chapter XXIV: The Assault on Saving **

22. What is the difference between consumer goods and capital goods, and how is savings related? (Pages 177-179)

23. What is the difference between saving and withholding spending? What causes each? (Pages 180-181)

24. What harmonizes savings and investment on a free market? (Pages 184-185)

25. What is the result of keeping interest rates artificially low? (Pages 185-187)

** Chapter XXV: The Lesson Restated **

26. Who is the Forgotten Man? (Pages 194-195)

27. How is the division of labor related to "the insane doctrine of wealth through scarcity?" (Pages 195-199)

** Chapter XXVI: The Lesson After Thirty Years? **

28. Has the lesson been learned? Will it be learned? (See especially pages 204, 208-209.)

Conservative Deceit About Christian Liberty

2010-02-26T09:24:00.002-07:00

Some of my fellow Coloradans wish to outlaw the birth control pill and subject my wife to the death penalty if she takes it, yet today David Limbaugh dismisses as "paranoia" concerns about "the intersection of Christianity and the public square." Limbaugh is amazed by "how much [critics] fear something that represents such a little threat to them."

Let us review, shall we? Many Christians in the United States advocate the following political goals:

* Outlaw all abortion, even in cases of rape, incest, fetal deformity, and risk to the woman's health, from the moment of fertilization, with criminal penalties extending to execution.

* Outlaw all fertility treatments, birth control (including the pill), medical research, and medical treatment that may involve the destruction of a fertilized egg.

* Impose mandatory waiting periods and ultrasounds before a woman may obtain an abortion. (This is a marginal step toward the goal of complete prohibition.)

* Outlaw all expression involving consenting adults that is arbitrarily deemed "obscene." (Various Christians want to outlaw all material deemed pornographic.)

* Force Americans to subsidize religious institutions for "faith based" welfare.

* Expand welfare (the forced redistribution of wealth) because of Biblical principles of helping the less-well off.

* Imprison American adults for consuming various drugs, including marijuana taken for medical purposes, regardless of the level of police powers necessary to achieve this goal. (Some Christians even want to return to alcohol prohibition.)

* Require religious prayer and religious instruction at tax-funded schools.

* Deny equal protection under the laws to homosexuals, including the right to form romantic contracts and adopt children.

A few Christians want to execute homosexuals and adulterers and explicitly call for theocracy (see Christian Reconstruction or the comments of a Christian radio host.)

No, nothing to worry about!

Limbaugh makes a couple of basic mistakes in his article. First, he pretends that the only relevant issue is freedom of expression. Second, he pretends that the only debate is between "the left" and Christian conservatives. Obviously the left with its campaign censorship laws and media controls at least matches conservative Christianity in its hostility toward free expression. Unfortunately, as seen with President Obama's expansion of President Bush's "faith based" welfare, the left increasingly mingles politics with religion as well.

True, many Christians fight for liberty in at least some areas. Whether that effort flows from Christian doctrine, or is ultimately incompatible with it, is a debate for another day. But for Limbaugh to dismiss as "paranoia" concerns about the efforts of many Christians to base politics on religion is ludicrous.

Schools Deal with the Devil

2010-02-25T23:28:00.003-07:00

WTVD out of North Carolina posted an interesting story illustrating how tax-funded schools deal with the devil.

Tieanna Trough, a student at Gray's Creek High School, "refused to write an essay on making a deal with the Devil... Trough says when the teacher told students to write an essay on how they would sell their souls -- or what trade they would make with the Devil -- she refused, saying that compromised her Christian values and her parents agreed."

The girl's mother complained, "We can't allow God into the classrooms, but yet they are going to allow the Devil in the classroom."

The mother "says an alternate assignment was also unacceptable, so they complained to school officials." Unfortunately, the report does not specify the nature of the "alternate assignment." Finally the school, the student, and her family agreed on an appropriate topic: "how and why money is important." (How that is any more Christian remains a mystery to me, given the New Testament's antipathy toward material wealth.)

Clearly both sides were being a little silly here. The student could have used the assignment to write a work of fiction illustrating the harm that comes with making a deal with the devil (which she obviously takes as something more than frightful myth). The teacher, on the other hand, could have promptly made alternative arrangements with the student.

Nevertheless, the story does illustrate a deeper problem with tax-funded schools. The student's mother has a legitimate complaint: why is it okay for tax funds to promote devil-dealing but not Christianity? To extend the argument, why is it okay to force people to fund the teaching of evolution but not creationism? The "separation of church and state" rules out the latter, but why is the former permitted?

If schools were voluntarily funded, policy would be set by the owners of the school in association with the funders and the students. If the student's parents didn't like the policy, they would be free to withdraw their daughter -- and their funds -- and send them elsewhere. Notably, this would give schools a strong incentive to make reasonable accommodations. (Some schools would cater to different world views; I'd personally favor a school that focused on secular education but that accommodated religious students.)

In the case of Gray's Creek, however, the girl's parents are forced the finance the school whether their daughter attends the school or not. Talk about a deal with the devil.

Strauch Clarifies Norton's Remarks on 'Too Small' Jobs Bill

2010-02-25T15:59:00.003-07:00

Both the Huffington Post and Colorado Pols have been having fun with Jane Norton's comment that the Congressional jobs bill "was too small."

Norton, the Republican frontrunner for the U.S. Senate seat, made the remark in an interview with Fox News yesterday.

I called up Norton's office while conducting research for an upcoming column I'm writing with my dad for Grand Junction's Free Press. Nate Strauch, Norton's Press Secretary, said that what Norton meant was that "the impact was too small, not the price-tag was too small."

But that implies that she did favor some sort of jobs bill, just one with a larger impact, does it not?

Strauch said "she supported a number of different measures," such as "suspending the payroll tax for small businesses." So Norton wants to cut taxes without touching spending levels? That's not much of a policy.

Does Norton plan to answer the Armstrong Survey at http://tinyurl.com/cosurvey10? Strauch said there are "a number of surveys in the queue right now and we are working through those."

Would I be horribly misunderstood if I called Norton's commitment to a timely response "too small?"

Review Questions for Thomas Sowell's Housing Boom and Bust

2010-02-25T14:57:00.002-07:00

Liberty In the Books reviewed Thomas Sowell's The Housing Boom and Bust. These are the review questions (for the original edition; there has since been a revised edition).

Reading Section I: Through Chapter 3

1. What were the general real-estate trends from 2000 to 2005?

2. How does the Federal Reserve influence mortgage trends?

3. What were the land use restrictions of the 1970s, and what were their effects?

4. In Sowell's view, what was the actual nature of the "affordable housing crisis," and what was the political response?

5. What were the "creative" ways to finance mortgages, and how were they influenced by federal policy?

6. What is the history and impact of the Community Reinvestment Act?

7. What were the impacts on the housing market of Freddie and Fannie, HUD, and the FHA?

8. Who issued warnings about a housing bubble? Who ignored those warnings?

9. What was the political response to the housing bust? "How's that working for you?"

Reading Section II: Chapters 4-5

1. What does Sowell mean by a "vision?" (Page 90)

2. What are the various aspects of the housing "vision" that created the housing boom and bust? (Pages 90, 95)

3. How does the "vision" of some relate to the narrow interest of others? (Page 91)

4. What was the Millennial Housing Commission and what where its findings and errors? (Page 92)

5. What was the brief history of political interference in housing in the 19th and 20th Centuries? (Pages 92-94)

6. What were the various motivations behind the crusade against alleged lending discrimination? (Pages 95-97)

7. Besides income, what are the other relevant factors related to mortgage lending? (Pages 98-100, 104)

8. How did government agencies and media outlets sensationalize lending statistics? (Pages 103)

9. In what ways did the federal government "encourage" banks to make risky loans? (Pages 105-107)

10. What impact did political interference in housing have on minorities? (Page 108)

11. In a political context, what is the meaning of terms like "community," the market," and "social?" (Pages 110, 113-114)

12. How are costs weighed in the market and in the political sphere? (Pages 114-116, 119-121)

13. Describe the background and implementation of Section 8 Housing. (Pages 123)

14. Compare the comments of George W. Bush and Hillary Clinton before and after the housing bust. (Pages 95, 123)

15. What problem did the FDIC seek to address, and how was that problem caused? (Pages 124-125)

16. Compare the administrations of Hoover, FDR, and Obama. (Pages 131-132, 141-145)

17. What is the effect on the economy and on politics of politically-funded jobs? (Pages 133-134)

18. What were the major interventions of the Great Depression that Sowell reviews? (Pages 135-136)

19. In Sowell's view, why did the Great Depression come to an end? (Pages 137-139)

20. What is the significance of the comment, "You never want a serious crisis to go to waste"? (Page 143)

21. BONUS QUESTION involving optional reading: Compare and contrast the views of Sowell and Robert Higgs (http://bit.ly/oQe23 ) regarding the relationship of WWII and economic recovery.

Review Questions for Amity Shlaes's The Forgotten Man

2010-02-23T20:41:00.002-07:00

Amity Shlaes's book The Forgotten Man is an excellent book for a reading club. This was the first book we covered in Liberty In the Books (back when my questions weren't very detailed). We split the reading into four monthly meetings, skipping some of the material. See also my detailed review of the book.

Shlaes Reading I: Introduction, Chapter 1, Chapter 3

1. Who is the "forgotten man?"

2. Why is Hoover upheld by some as a an alleged champion of "laissez faire?"

3. What are some of the differences between Hoover versus Coolidge and Mellon?

4. What were the major federal policies of 1929, and what were their effects?

Shlaes Reading II: Chapters 4-6

1. What were the general Federal Reserve policies of the early 1930s, and what were their effects?

2. What was the intellectual climate during the Hoover/FDR era?

3. What was tax policy -- and unemployment -- by the end of Hoover's term?

4. What were the themes of FDR's campaign rhetoric?

5. What were the powers and consequences of the NRA and AAA?

6. What were the general trends in FDR's monetary policy?

7. What was the basic nature of the struggle between Willkie and the TVA?

Shlaes Reading III: Chapters 7-9

[Sorry; no questions available.]

Shlaes Reading IV: Chapters 11, 13, 15, and Afterword

1. In what ways did the Federal government go after businesses and wealthy citizens?

2. What the were labor controls of the later 1930s, and what were their effects?

3. What was FDR's response to the Supreme Court's antipathy to some of his programs, and what was the result?

4. How did the fight between the TVA and private utilities play out?

5. What were the major themes of the 1940 election?

6. What is Shlaes's take on the "recovery" of FDR and the results of his federal spending programs?

Cleve Tidwell: Colorado 2010 Candidate Survey

2010-02-21T22:20:00.004-07:00

Cleve Tidwell is a candidate for U.S. Senate. Questions are shown in bold. See the other replies to the survey at http://tinyurl.com/cosurvey10.

SUMMARY

In a Twitter-length reply (140 characters maximum), please state why you are running for political office.

[No answer.]

ECONOMIC ISSUES

* Should the federal or state government spend money in an attempt to "stimulate" the economy? If so, on what sorts of projects?

The government cannot, in any way, spend its way out. Only business creates jobs. Period.

* Should tax dollars be directed toward energy projects, tourism, or any other form of business subsidies?

No. Tax credits or reductions for generating jobs and business for this should be done

* Should state or federal spending (depending on which office you seek) be higher or lower than it is currently?

Dramatically lower; spending frozen (except for emergencies) and deficit *elimination* targeted

* Should the state or federal minimum wage (depending on which office you seek) be repealed, maintained, or increased?

Reduced in order to allow businesses to hire more people and get them back to work

* Should college education be subsidized by tax dollars?

Agree with the principal that in exchange for military service education subsidized, otherwise no.

* Should antitrust law or its enforcement be changed?

Yes

* (Federal-level candidates:) Should Sarbanes-Oxley be repealed?

Yes

SOCIAL AND CHURCH/STATE ISSUES

What do you believe is meant by the "separation of church and state," and do you endorse it?

This was a Jefferson statement not the first amendment statement it gives us the freedom of religion and gov out
of our person live.

* Should religious institutions receive tax dollars for providing welfare or other faith-based services?

No

* Should the teaching of creationism or Intelligent Design be subsidized by tax dollars?

Federal government has no business in the affairs of peoples beliefs

* Should tax-funded schools establish a period of permitted or required prayer?

Federal government has no business in the affairs of peoples beliefs

* Should government officials promote religiously oriented displays and comments on government property and at government events?

Federal government has no business in the affairs of peoples beliefs

* Do you support gay marriage?

'Marriage' is not a domain of federal government.

* If you answered no to the question above, do you support domestic partnerships, civil unions, or comparable legal recognition of gay couples?

This is a local issue and not one to be decided by the federal government - personally I do not support it.

* Should gay couples be allowed to adopt children by the same standards as heterosexual couples?

This is a local issue and not one to be decided by the federal government

* Should government never, always, or sometimes mandate parental notification and consent before a minor may legally obtain an abortion, and, if sometimes, under what conditions?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Should government mandate waiting periods or ultrasounds before a woman may legally obtain an abortion?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Do you endorse the "personhood" measure that may appear on the 2010 ballot?

May be on the ballot - this is a local issue and not one to be decided by the federal government- is not defined
under the constitution

* Should abortion be legal in cases of fetal deformity?

This is not one to be decided by the federal government- is not defined under the constitution

* Should abortion be legal in cases of rape or incest?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Should abortion be legal in cases of risk to the woman's life, as determined by the health professional selected by that woman?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Should elective abortion be legal?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* If you believe that abortion should be legally restricted, what criminal penalties do you advocate for a woman and her doctor for obtaining or facilitating an illegal abortion?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Would execution ever be an appropriate penalty for obtaining or facilitating illegal abortions?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Should types of birth control be legal that may prevent a fertilized egg or zygote from implanting in the uterus?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Should fertility treatments be legal that may result in the freezing or destruction of a fertilized egg or zygote?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Should research involving the use of embryonic stem cells be legal?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

* Should abortions or embryonic stem cell research be subsidized by tax dollars?

This is a local issue and not one to be decided by the federal government- is not defined under the constitution

IMMIGRATION

* (Federal-level candidates:) Should the U.S. expand a legal guest-worker program or legal immigration, and, if so, by how much?

Us should protect its borders as well as the workers we already have. Cancellation of h1b visas until citizens are back to work first

* Should federal or state tax-funded benefits (depending on which office you seek), including K-12 education, be extended only to U.S. citizens, to legal immigrants and guest workers, or to everyone in the U.S. including illegal immigrants?

Dept of education should be abolished; this is a local issue (education)

PROPERTY RIGHTS

* What restrictions, if any, should be placed on the use of eminent domain?

Government should not have the right to remove property without proper redress to the owners.

* Do you endorse the use of eminent domain in the case of the Pinon Canyon military expansion? Do you support the military expansion if it does not involve eminent domain?

This is a local issue and not one of the federal government; personal property rights are paramount. I support
private property rights.

* Should the Endangered Species Act be altered or differently enforced?

[No answer.]

BILL OF RIGHTS

* Should McCain-Feingold and state campaign finance restrictions be repealed, maintained, or expanded?

Repealed

* Should the federal government control what radio or television stations may broadcast?

Not at all

* Should the FTC's rules regarding blogger endorsements be rescinded?

Absolutely

* Should students with licenses be legally permitted to carry concealed handguns on the property of tax-subsidized colleges?

2D amendment rights extend to anyone over 18 regardless (with the exception being k-12 schools)

* Should additional restrictions be added (or repealed) on gun ownership? Please specify.

Enforce the laws we already have. Period

* Do you believe that desecration of the U.S. flag should be outlawed by Constitutional amendment?

I believe they should have a federal law banning the burning as a political statement or incitement of crowds

* Do you believe that pornography or obscene materials involving consenting adults should be legally restricted?

No

OTHER

* Should state or federal laws (depending on which office you seek) pertaining to marijuana be altered, and, if so, how?

Its illegal; enforce the laws

* If there is any important issue that you believe we have missed, please state what it is and state your position on it.

Help Brad Beck Shave His Head for Cancer Research

2010-02-21T10:15:00.002-07:00

Brad Beck, founder of Denver's Liberty Toastmasters, will be shaving his head to raise money for the St. Baldrick's Foundation for childhood cancer research.

The Better Business Bureau lists St. Baldrick's as meeting "the 20 Standards for Charity Accountability."

Pitch in!

McPheters: FBI Agent, Mormon Bishop

2010-02-20T08:12:00.003-07:00

Yesterday I dropped by the local Costco and was surprised to run across an author at a book signing. The author was Mike McPheters; the book is Agent Bishop, the account of his life as an FBI agent and Mormon bishop. I asked him if I could come back with my video camera, and he agreed.

In the following video McPheters discusses his past and his book.

[February 21 Update:] Then we discussed several political issues: welfare, the draft, drug policy, and immigration. My goal was to discuss some tough questions with a light touch; I wasn't trying to provoke debate. I should note, though, that I regard the draft as a violation of individual rights, I oppose the drug war and believe it causes enormous harm, and I favor open immigration (with the caveats that I mention in the interview). I broke up our conversation by topic.

McPheters on Church and Welfare

McPheters on the Draft

McPheters on Drug Policy

McPheters on Immigration

New Interview on Values of Harry Potter

2010-02-19T22:45:00.003-07:00

This past Thursday I went to the Independence Institute to join Penn Pfiffner for a interview about my book, Values of Harry Potter. (Be sure to read my FTC disclosures regarding the Institute, lest you be unduly influenced!)

We discussed the theme of the heroic valuer found in J. K. Rowling's novels, the virtue of independence as practiced by the heroes, and the significance of the Unforgivable Curses. (Penn also offered a delightful FTC disclosure, as I had sent a review copy to the Institute. That government outfit is "more meddlesome than the Ministry," I mocked.)

The iVoices podcast is around eight minutes in length; listen in!

NYT Smears Tea Partiers

2010-02-17T12:36:00.003-07:00

I was initially baffled by a New York Times article on the Tea Parties, until I realized that the left, with its worship of command-and-control, literally cannot conceive of true grass-roots activism.

Do nuts and conspiracy theorists ever show up at leftist rallies? Obviously. All the time. But, because such rallies are officially organized by some recognized leftist group, the nuts can be ignored, and the leftist media need only report the official views of the organizing group.

But there is nobody organizing the Tea Parties. There are many amorphous, loosely organized groups, and in some cases some of these groups have developed more or less formal leadership. But there is no official spokesperson for a Tea Party. Somebody announces their intention to rally, and other people join in for their own reasons. In some cases some major group, such as the Independence Institute, has sponsored a rally in Colorado, but even then the individual participants came for their own reasons.

Obviously the Tea Parties have been spurred by annoyance with the way things are going in the District of Charlatans. But beyond that, there is no official doctrine of the Tea Parties. The only thing that can be said of the Tea Partiers is that they are upset about current trends, and beyond that they have their own ideas. Tea Parties are a collection of individuals, and that is something the leftist media simply cannot understand.

The approach of David Barstow of the New York Times, then, is to point out that some Tea Partiers are nutty, and smear all other Tea Partiers by implication and guilt by association.

I have attended a number of rallies loosely fitting into the Tea Party movement. I have spoken at a couple of them. I have interviewed many participants. Sure, I've seen some nuts. I've seen the anti-abortion zealots, the anti-immigrant bigots, a few with tasteless Nazi signs, and the conspiracy theorists. But they are certainly not representative of Tea Partiers.

Instead, based on my interviews with numerous participants at these rallies, I have found basically thoughtful voters who generally favor Constitutionally limited government and freer markets. Quite a number of people I've interviewed have expressed an integrated and sensible ideology of liberty, while others have given me confused doctrines offering a mish-mash of freedom and political controls.

Here are links to some of my coverage of these events:
Pork Roast Rally in Photos
Meet the 'Mob:' Longmont Protests Obamacare
Denver 9/12 Rally: Freedom Forever
Pro-Liberty Health Rally Draws Hundreds
Denver Tea Party Ralliers In Their Own Words
Coloradans Speak Out Against Obama Care
July 4 Tea Party Arvada Colorado

Barstow claims that "Tea Party members joined a coalition, Friends for Liberty, that includes representatives from Glenn Beck’s 9/12 Project, the John Birch Society, and Oath Keepers, a new player in a resurgent militia movement. ... These people are part of a significant undercurrent within the Tea Party movement that has less in common with the Republican Party than with the Patriot movement, a brand of politics historically associated with libertarians, militia groups, anti-immigration advocates and those who argue for the abolition of the Federal Reserve."

At least Barstow does not claim to be describing all participants of the Tea Parties. He merely taints the rest by associative guilt.

It is true that there are some people who would claim all the labels that Barstow vomits onto the page. It is also true that many Tea Partiers would reject all those labels. Many libertarians who want to abolish the Federal Reserve also advocate open immigration.

As for me, I reject libertarianism (though I used to be a Libertarian), I am part of no "milita group" save the one defined by Colorado's Constitution, I think Glenn Beck is often a clown but that he sometimes gets something right, I think the Birchers are flat-out nuts, I have no idea who the "Oath Keepers" are, I favor open immigration, and, yes, I think the Federal Reserve should be abolished in favor of a free market in currency.

And I refuse to let some idiot newspaper reporter guilt me out of civic participation because a few nuts or (gasp!) people who disagree with me happen to attend the same rally. I will speak for myself. "I will not be labeled, cataloged, filed, or coded."

I will advocate liberty and individual rights by whatever just means I can, regardless of what the New York Times thinks of it.

Sens. Udall, Bennet Screw Responsible Credit Users

2010-02-16T23:21:00.002-07:00

Nearly a year ago I warned that the credit card controls championed by Senator Mark Udall (and subsequently by Senator Michael Bennet) would "punish the responsible" and "make it harder for responsible cardholders to negotiate good terms."

Well, today my wife and I got a letter from Citibank regarding our credit card with the company:

Effective April 1, 2010, an annual fee of $60 is being added.

The reason we are making this change is to maintain the quality of our service amid the rising cost of doing business [emphasis added]. ... Each year, we'll credit the $60 fee back to your account once you have made $2,400 in purchases...

What great timing! It was just yesterday that Bennet promised people "notices in the mail from their credit card companies notifying them of upcoming changes in their accounts." That is most definitely a "change," apparently part of that grander package of "change" we have all been promised.

We're not going to commit to charging that amount with Citibank every year, and we're certainly not going to pay a $60 annual fee. Therefore, we're going to cancel the card, reducing our total credit availability.

While obviously Citibank is not going to finger Senators Udall and Bennet, particularly in today's vicious political climate for businesses, the most obvious contributer to this "rising cost of doing business" is the Congressional legislation.

Rarely a day goes by when I do not regret voting for that economic illiterate Mark Udall.

What Are the Implications of 'Personhood?'

2010-02-16T15:02:00.005-07:00

If fully implemented, the so-called "personhood" measure that may again appear on Colorado's ballot to define a fertilized egg as a person will outlaw all or almost all abortions, excepting procedures necessary to save the life of the woman. On that point advocates and critics of the measure agree. More contentious are claims about the measure's impact on birth control, fertility treatments, and legal issues surrounding miscarriages and women's health.

Ironically, a document from PersonhoodCO (the organization supporting the measure), "Scare Tactic Alert", attacks straw men, ignores substantive criticism, and obscures key issues of the debate even as it promises to reveal the "outright lies" of critics and to give "truthful answers." However, the document does clearly reveal the intentions of the measure's supporters on a number of important points. It is worth reviewing to note both where it misleads and where it clarifies the positions of the measure's sponsors.

"It Will Ban Abortion"

The document says flatly of the measure: "It will ban abortion." If passed and implemented, it will ban all elective abortions. It will ban all abortions even in cases of rape, incest, and fetal deformity.

Embryonic Stem-Cell Research Will Be Banned

Under the "personhood" measure, any scientific research or medical procedure that involved the destruction of a fertilized egg (or embryo at any stage) would be outlawed, as the measure's sponsors loudly declare.

Abortion Will Be Deemed Murder

The document makes clear that, under the "personhood" measure, a woman will be criminally charged for getting an abortion. A woman will be charged with a crime if she "acted with criminal culpability which includes the performance of an act and a matching criminal intent. These standards would be the same as would be applied to any mother who harms her children, born or preborn."

The document confirms: "actions taken with criminal intent will be punished under the existing criminal code, irrespective of whether the child is in or out of the womb."

Abortion Could Trigger the Death Penalty

Not only would abortion be considered murder under the "personhood" measure, it could be punished with the death penalty. This applies both to doctors who perform abortions and women who get them.

The document denies that the measure "will threaten doctors who perform legitimate surgeries." However, a "legitimate" surgery, according to the document, cannot include any intention "to kill the child in the womb."

The document states: "In Colorado, the death penalty is only available for first degree murder with aggravating factors. First degree murder requires deliberation and intent."

While the document does not directly state that the death penalty could also apply to women who obtain abortions, the document states that women will be punished "under the existing criminal code." By implication, if a woman deliberately and intentionally aborts an embryo or fetus, she could be subject to the death penalty.

Colorado Statute 18-1.3-1201(1)(a) states, "Upon conviction of guilt of a defendant of a class 1 felony, the trial court shall conduct a separate sentencing hearing to determine whether the defendant should be sentenced to death or life imprisonment..."

Birth Control That Can Prevent Implantation Will be Outlawed

The "Scare Tactic Alert" document claims it is a "lie" that the measure "will ban contraception." However, the document also defines "contraception" strictly to mean something that prevents the fertilization of an egg. Any form of birth control that prevents a fertilized egg from implanting in the uterus will be outlawed under the measure. Notably, this includes the birth control pill.

The document states: "the beginning of life (under normal sexual reproduction) takes place when the sperm touches the ovum. Barrier methods of contraception that prevent the union of the sperm and the egg will not be outlawed, since neither a sperm nor an egg by itself is a human being."

The birth control pill acts primarily as a contraceptive, in that it prevents the fertilization of an egg. However, according to the documentation distributed by the manufacturers of the birth control pill, it can also act to prevent the implantation of a fertilized egg.

For example, my wife takes TriNessa. According to WebMD, this birth control pill acts to "prevent pregnancy in 3 ways. One way is by preventing the release of an egg (ovulation). A second way is by changing the cervical mucus, making it more difficult for an egg to meet sperm (fertilization). A third way is by changing the womb lining, making it difficult for a fertilized egg to attach to the lining of the womb (implantation)."

Watson Pharmaceuticals, the producer of TriNessa, agrees that this pill can act to "reduce the likelihood of implantation."

As Diana Hsieh and I review in our paper on the subject (page 4), the birth control pill is more effective than condoms at preventing unwanted pregnancy. My wife and I find it to be the best form of birth control for us, and we utterly reject the insane claims of of the "personhood" advocates that using the birth control pill is morally wrong, much less the equivalent of murder that should subject women to severe criminal penalties.

Most Fertility Treatments Would Be Outlawed

PersonhoodCO claims it is a "lie" that the measure "will ban in vitro fertilization." However, as Diana and I explain in our paper, fertility treatments generally involve the destruction of fertilized eggs as a necessary aspect of effective treatment (see pages 6-7).

The "Scare Tactic Alert" document admits that fertility treatments that involve the destruction of fertilized eggs would be banned. The measure would, in effect, practically ban fertility treatments for nearly all women.

As Diana and I summarize, "[F]ertility clinics would be left with two options. They could fertilize one egg at a time, vastly raising the costs and time of the procedure because most eggs don't fertilize. Or they could implant all fertilized eggs into the woman, in some cases posing a health risk or producing more children than a couple can raise well. The practical result of Amendment 48 likely would be to shut down Colorado's seven reproductive clinics."

Doctors Would Be Subject to Prosecutorial Oversight

PersonhoodCO states, "[I]n those extremely rare situations where a woman needs treatment that might unintentionally result in the death of the child, the doctor would not have acted with intent to kill or even harm the child, but with intent to cure the mother." (Note here that PersonhoodCO is simply defining any procedure "where a woman needs treatment" as not counted as an "abortion.") Furthermore, when abortion was outlawed "there were no prosecutions of doctors for legitimate medical treatment," the document claims.

There are two main problems with these claims of PersonhoodCO. First, what counts as a "legitimate medical treatment" is precisely the issue in question. Now, who decides such matters is the woman in consultation with her doctor. Under the "personhood" measure, politicians, prosecutors, and judges will decide. Knowing this, doctors will tend to err on the side of not acting to protect a woman's health. If a doctor chooses not to take action in a difficult case, he will suffer no criminal penalty even if the woman dies. If the doctor chooses to act, he may be charged with murdering a zygote by a prosecutor who doubts the procedure was necessary.

Second, today doctors have much better equipment and procedures than they had several decades ago, so doctors today simply have more opportunities to medically intervene to protect a woman's health.

The broader issue is that doctors may effectively be prevented from acting in cases where "only" the woman's health, rather than her life, is at risk. By the logic of the "personhood" measure, a doctor should at least sometimes allow a woman to suffer long-term health consequences in order to save a zygote. The measure takes such determinations out of the hands of women and doctors and places them in the hands of government officials.

Suspicious Miscarriages Could Invite Prosecution

PersonhoodCO claims it is a "lie" that the measure "will threaten women who miscarry with criminal prosecution." The problem with that claim is that telling the difference between an unintentional miscarriage and an intentional act can be difficult. Who gets to decide whether a woman's diet, herbal remedies, or physical damage was intended to cause an abortion? Again, under the "personhood" measure, the answer is government officials, so far as prosecution is concerned.

The Abortion Industry?

One of the more dishonest claims made by PersonhoodCO is that criticisms are coming from "the abortion industry." No doubt clinics that perform abortions also oppose the measure. However, many independent critics, including Diana and me, are in no way a part of the "abortion industry," and PersonhoodCO's smears are childish and dishonest.

Diana and I wrote our paper, Amendment 48 Is Anti-Life: Why It Matters That a Fertilized Egg Is Not a Person, without financial compensation. We wrote and promoted that paper because we are horrified by the vicious nature of the "personhood" measure.

Any reader of our paper will realize that PersonhoodCO is attacking straw men in its "Scare Tactic Alert." We do not, for example, claim that the measure "will ban contraception." Instead, we claim, as PersonhoodCO itself claims, that the measure will ban forms of birth control that may prevent the implantation of a fertilized egg.

Conclusion

At least the "Scare Tactic Alert" clearly lays out many of the intentions and implications of the "personhood" measure. Unfortunately, the document also smears critics of the measure, distorts what critics of the measure have said about it, ignores substantive criticism published in 2008, and understates the impacts of the measure in areas such as the potential for criminal prosecution in cases of suspicious miscarriages.

By implying that all criticisms of the "personhood" measure are "scare tactics," PersonhoodCO wrongly suggests that substantive criticisms of the measure have been exaggerated. Notably, not a single advocate of the "personhood" measure has attempted to directly refute anything from the 2008 paper.

Critics of the "personhood" measure do not need to resort to "scare tactics" to defeat it. The objective facts about the measure and its implications are truly horrifying.

'Christian Soldiers' Seek Abortion Ban

2010-02-15T12:41:00.007-07:00

Anyone still unclear about the faith-based impetus of abortion bans should consider that, at a recent news conference, advocates of the so-called "personhood" measure broke out singing "Onward, Christian Soldiers" (as reported by the Denver Daily News). The proposal would grant full legal rights to fertilized eggs, banning abortion and any other action that could harm a zygote or embryo, with the possible exception of procedures to save a pregnant woman's life.

As I noted earlier today, the "personhood" measure seems to be in trouble, as the number of certified signatures will likely fall below the required minimum. As the News also points out, the number of signatures collected this year is nearly forty percent lower than the number collected in 2008. Wendy Norris notes that this year's news conference attracted only around twenty-five participants, a third of the 2008 showing. (Meanwhile, Norris reports, infighting has overtaken a national group supportive of the "personhood" drive.) While such internal struggles are good news to those favoring legal sanity and reproductive rights, the movement remains a potent threat, and one that must be fought on ideological grounds.

Obviously, the "personhood" movement is grounded in sectarian, religious faith. The purpose of the group is to impose sectarian beliefs by political force. (We will properly leave aside the fact that the Christian Bible does not actually demand abortion bans.)

Norris offers additional detail about the news conference. Gualberto Garcia Jones, one of the measure's main supporters, referred to advocates of the measure as an "army of faithful pro-life warriors." Leslie Hanks, another speaker at the conference, "thanked Focus on the Family Founder Dr. James Dobson." Hanks also recognized the Reverend Bob Enyart, who has advocated the death penalty for doctors and women who facilitate or obtain an abortion once the practice is outlawed (see page 16, note 1; see also Enyart's YouTube video on the matter, in which Enyart also advocates the death penalty for adultery).

As Westword reports, Keith Mason, spokesman for Personhood USA, has no intention of giving up: "we're going to keep fighting until we win."

Ironically, Personhood USA's own media release makes no mention of the group's faith-based roots. That did not cause Christian News Wire, "the nation's leading distributor of religious press releases," from suffering any confusion on the point.

Though the advocates of the measure clearly want to ban abortion because they believe such is the will of God, their formal arguments make scant reference to sectarian beliefs, for two reasons. First, the organizers want to potentially appeal to those of different worldviews, including other Christians who doubt their religion demands a ban on abortion. Second, the organizers are aware that strictly faith-based arguments likely would not withstand judicial scrutiny, which is why, for instance, advocates of "Intelligent Design" in tax-funded schools tried to distance their arguments from their sectarian origins.

Regardless of the motives behind the measure, its critics must defeat the arguments made in the proposal's favor, even when those arguments are merely pretext for a sectarian purpose.

Diana Hsieh and I thoroughly critiqued the "personhood" measure in our 2008 paper, Amendment 48 Is Anti-Life: Why It Matters That a Fertilized Egg Is Not a Person. Here it is worth pointing out the textual change of the measure as well as some of the bad arguments that continue to be made in the proposal's favor.

The 2008 measure stated, "As used in sections 3, 6, and 25 of Article II of the state constitution, the terms 'person' or 'persons' shall include any human being from the moment of fertilization." Those other sections pertain to rights to life, liberty, property, equality of justice, and due process of law.

The 2010 proposal changes the language: "As used in sections 3, 6, and 25 of Article II of the state constitution, the term 'person' shall apply to every human being from the beginning of the biological development of that human being."

Why the change? Mason explains to Westword:

The differences between this year's amendment and its 2008 predecessor "are minor," Mason concedes. "There's a slight change in the language. Now it says a person is a human being 'from the beginning of the biological development of that human being' in lieu of 'from the moment of fertilization.'"

He credits this change to Dianne Irving, a faculty member at Georgetown University: "She felt using the term 'biological beginning' was more inclusive and would include all babies -- even test tube babies. And that's our goal -- to protect every human."

In other words, the language was changed to make the measure even broader. Its advocates want the measure to do everything the 2008 language would have done, plus protect non-fertilized zygotes potentially created through cloning.

Ironically, though, the change in language could actually give the courts (so long as they are not overrun by religious zealots) license to interpret the measure less broadly, not more. The courts could define a "human being" as starting its "biological development" from birth. While the implications of the 2008 language were anything but clear, at least that language unambiguously referred to "fertilization." The new language is by one natural interpretation essentially a tautology: something is a human being from the moment it is a human being. But when something becomes a "human being" in the sense of personhood is precisely the issue in question.

This definitional problem points to a fundamental error made by those advocating the "personhood" measure. As Diana Hsieh and I wrote in 2008:

[T]he advocates of Amendment 48 depend on an equivocation on "human being" to make their case. A fertilized egg is human, in the sense that it contains human DNA. It is also a "being," in the sense that it is an entity. That's also true of a gallbladder: it is human and it is an entity. Yet that doesn't make your gallbladder a human person with the right to life. Similarly, the fact that an embryo is biologically a human entity is not grounds for claiming that it's a human person with a right to life. Calling a fertilized egg a "human being" is word-play intended to obscure the vast biological differences between a fertilized egg traveling down a woman's fallopian tube and a born infant sleeping in a crib. It is intended to obscure the fact that anti-abortion crusaders base their views on scripture and authority, not science.

No doubt the advocates of the proposal will seek to argue that "the beginning of the biological development of that human being" (normally) refers to the moment of fertilization. Those advocates have made it abundantly clear that their long-term goal is to elect sectarian politicians who will appoint sectarian judges who will interpret the "personhood" measure to grant full legal rights to fertilized eggs. In the meantime, however, if the "personhood" measure were passed, it would generate years of expensive and unresolved legal wars.

At least the advocates of the measure are clear that they do in fact want to ban abortion from the moment of conception. Garcia-Jones said, "The point of what we're trying to do, just for everyone who thinks we're trying to be sneaky, we're trying to end abortion." The group's web page states: "The goal is very simple, END ABORTION NOW by protecting all innocent human life from the beginning of biological development." The same page clearly counts fertilized eggs as "human beings."

Unfortunately, one consequence of the measure's language change will be to further confuse many voters about the intent and implications of the measure. While the advocates of the measure want to equate the moment of fertilization with the beginning of a human being, in the full sense of personhood with all the legal rights of a born infant, many voters will understandably think the measure means something else. If the measure were to pass and land in court, perhaps lawyers would drag in voters from 2010 to testify about the various interpretations given the measure.

Another variant of the group's equivocation is its use of the phrase, "preborn baby," invoked by Garcia-Jones in the group's recent media release. Ordinarily a "baby" means a born infant. However, often a pregnant woman will refer to her fetus as a "baby" as well. But merely using the same word to refer to a fertilized egg, a fetus, and a born infant does not make them equivalent. Again the advocates of the "personhood" measure rely on word games, rather than arguments, to "prove" that a fertilized egg should be granted the full legal rights of a born infant.

I'll have more to say about the claims of the "personhood" crusaders in a subsequent post. The critical point here is that the advocates of the "personhood" measure are motivated by sectarian faith, and they wish to impose their sectarian beliefs on the rest of us by political force. The non-sectarian arguments they offer are extremely weak, amounting to little more than word games intended to disguise the fundamentally sectarian nature of their cause. That cause should be rejected accordingly.