No doubt abusive litigation in America has spun out of control. But why should select industries receive special protection that others don’t enjoy? Lawmakers should focus on crafting sensible liability rules that apply equally to everyone.

In his book The Right to Earn a Living, Timothy Sandefur (an attorney with the Pacific Legal Foundation) summarizes, “The abuse of tort law by mercenary lawyers poses a major threat to American businesses and therefore to the economic liberties of everyone.”

One major problem Sandefur cites is that courts often fail to recognize explicit contracts limiting liability. He offers the example of a 2005 case in which a New Jersey court refused to recognize the liability waiver a woman signed before her son used a skate park. (The son broke his leg, and the mother sued the park despite her signed waiver.)

Whether people want to skate in a park or fly into space, they should be able to decide what level of risk they are willing to accept. When courts fail to recognize freely negotiated agreements limiting liability, that drives abusive lawsuits, puts producers out of business, and limits the creation of new businesses.

Spaceflight companies deserve legal protection from abusive lawsuits. And so do the rest of us here on planet Earth.

If you enjoyed this post, consider subscribing to The Objective Standard and making objective journalism a regular part of your life.

Related:

• The Right to Earn a Living: Economic Freedom and the Law by Timothy Sandefur
• Instrumentalism and the Disintegration of American Tort Law

Image: Wikipedia Commons

But the wind tax credit should be scrapped and replaced with lower taxes for all.

Producers of wind turbines claim that dropping the tax credit would mostly stop the expansion of the wind industry and cause thousands of layoffs. But if so, that proves only that wind cannot compete economically with other forms of energy. (That is not surprising, given that wind is geographically dispersed as well as highly variable and thus difficult to convert into usable electricity.)

When Congress “creates jobs” by tipping the scales of the market, it does so only by destroying jobs elsewhere and undermining people’s ability to create valued goods and services.

Morally, such tax credits favor some and thereby violate the rights of others. The tax credits essentially punish other producers more with higher net taxes. Not only does that violate the principle of equality under the law, it violates the rights both of producers and consumers to use their own resources in accordance with their own judgment.

Congress should stop handing out special tax “credits” to those companies best able to play the political game. Instead, Congress should focus on cutting federal spending and uniformly reducing tax rates for all producers.

If you enjoyed this post, consider subscribing to The Objective Standard and making objective journalism a regular part of your life.

Related:

• Obama Should Help End All Energy Subsidies, Not Play Favorites
• Energy at the Speed of Thought: The Original Alternative Energy Market

Image: Wikimedia Commons

Conservative writer Liz Peek praises this bill on the grounds “that union labor costs and work rules have become an obstacle to job growth.” No doubt her claims about unions are true. But the problems arise from various federal statutes, including the National Labor Relations (Wagner) Act signed by FDR in 1935, that violate the rights of employers and employees to contract as they see fit. One practical result has been to hamstring the American auto industry, as Daniel J. Mitchell pointed out even before the auto bailouts.

The conservative solution, as articulated by Peek, merely compounds previous violations of freedom of contract with new ones, apparently on the grounds that two wrongs somehow make a right. In her view, the bill is good because it “prohibits contracts requiring workers to pay union dues.” But why should the government be in the business of setting the terms of employment contracts? Employers should be free to hire whomever they want on whatever terms the parties mutually agree to accept.

More broadly, there is no “right to work” against an employer’s consent, any more than there is a “right to health care.” A right refers to a freedom of action—such as the right to seek employment or medical care from willing partners—not to an entitlement to a specific good, service, or outcome. People have the right to work for others only insofar as the employer freely consents to the terms of employment. (Of course, people always have the right to work for themselves using their own labor and resources.)

The solution to rights-violating labor laws is not to impose more rights-violating labor laws, but rather to repeal them all and restore liberty of contract.

If you enjoyed this post, consider subscribing to The Objective Standard and making objective journalism a regular part of your life.

Related:

• Mitch Daniels: Business is “One of the Noblest of Human Pursuits”
• America’s Unfree Market

Image: Bob Glass

That’s the stark challenge faced by the seven protagonists of the movie The Grey, starring Liam Neeson. An airplane carrying Alaskan oil field workers crashes during a storm, and they must battle harsh winter conditions and a pack of aggressive wolves while attempting to find their way back to civilization. In addition to spectacular cinematography and spellbinding action scenes, the movie demonstrates surprising philosophical depth in delivering its theme: “What does it really mean to fight for one’s life?”

The movie also dramatizes three related principles that are easy to forget during everyday life but that are made vividly clear in the context of the movie:

1) Man’s basic means of survival is his reasoning mind.

The wolves in The Grey survive using their claws, fangs, and instincts in accordance with their basic nature. Humans, however, cannot survive in this fashion. We lack the fur to keep us warm in subzero temperatures, claws and fangs to kill prey (or to protect ourselves against predators), and instincts to dictate our actions. To survive, we must use our minds, rearrange nature, and create the goods we need. Reason is our basic means of doing so.

2) Nature, to be commanded, must be obeyed.

Do you need to start a fire? Then you must identify the nature of the material at hand and proceed accordingly. Do you need to cross a violently rushing river? Then you must devise a method that holds the weight of a full-grown man; you must respect and apply the laws of physics. Wishful thinking, bluster, or drunkenness won’t make reality bend to your desires or make your problems go away. The only way to solve your problems or accomplish your goals is to face reality head-on, heed the facts, and act accordingly.

3) Modern man is extremely dependent on the benefits of technology.

Technology is an incredible enhancement to our lives. I would rather be typing a movie review on my MacBook Air in the comfort of my living room than shivering in a dark cave wondering whether I’ll be eaten by wolves tonight.

But it’s easy to take for granted the benefits of industrial civilization until we are reminded (in fiction or in real life) what life is like without those benefits. In Ayn Rand’s novel Atlas Shrugged, Hank Rearden hosts a fancy party during a storm. During the party, Francisco D’Anconia tells him:

“[Y]ou are able to have summer flowers and half-naked women in your house on a night like this, in demonstration of your victory over that storm. And if it weren’t for you, most of those who are here would be left helpless at the mercy of that wind in the middle of some such plain.”

The Grey reminded me how grateful I am for the many entrepreneurs, engineers, and businessmen who have created our modern industrial civilization. Without them, we wouldn’t enjoy the iPads, cell phones, automobiles, central heating, and electricity we so easily take for granted. Instead, we’d be like the protagonists of The Grey, struggling mightily against raw, untamed nature, hoping to survive another day.

For this reason, although The Grey is not a political movie, it also helped me better appreciate Ari Armstrong’s recent blog post, “Great Producers Deserve Our Gratitude, Not Obama’s Tax Hikes.”

In the hubbub of everyday life, it’s easy to forget some basic truths about man, nature, and the fundamental role of reason in our lives. A gripping tale of novel and dire circumstances, The Grey reminds us of what we must never forget if we want to live.

In a Thursday address at Buckley Air Force Base, Obama said he wants “the same set of rules for everyone.” Yet, on one hand, he said he wants to end subsidies and “taxpayer giveaways” to oil companies, while on the other hand he wants to establish “clean energy tax credits” and mandates that compel people to use politically favored energy sources.

In other words, Obama wants one set of rules for productive oil companies and a different set of rules for his political cronies who run parasitical “alternative” energy companies like Solyndra. Instead, Obama should call for the elimination of tax-funded subsidies and the even-handed lowering of taxes across the board.

A business subsidy—corporate welfare—is an abomination. As Mike Brownfield argued for the conservative Heritage Foundation last year, “The left’s anti-subsidy rhetoric is right on. Ending all energy subsidies, including those for oil and gas, would be good for American taxpayers and consumers.” More importantly, it would protect their rights to control their own wealth. Why, then, do some people condemn corporate welfare for oil companies even as they champion it for their own pet projects? Brownfield notes that, for such activists, “vilifying an industry [oil] is their end game.”

The problem of discriminatory taxes is trickier. However, clearly the wrong approach is to confuse subsidies with tax breaks. A subsidy involves forcibly confiscating the wealth of some parties and giving it to other parties. A tax break involves letting a business keep more of the wealth that it produces and properly owns. The two things are fundamentally different.

That said, the federal government ought not play favorites by punishing some businesses with higher tax rates. Discriminatory taxes violate the basic principle of equality under the law.

The solution to discriminatory taxes is not to impose even higher taxes on the historically favored businesses. To do so would be to act on the flawed principle that two wrongs somehow make a right. Instead, the proper approach is to start by dropping everyone’s taxes to the lower rate. Obama should not try to raise net taxes on oil companies; he should reduce net taxes on everyone paying more.

But Obama refuses to demand “the same set of rules for everyone.” Instead, he wants to pick the winners and losers in the economy—the rights and well-being of energy companies and their customers be damned.

If you enjoyed this post, please consider subscribing to The Objective Standard and making objective journalism a regular part of your life.

Related:

• Interview with Alex Epstein, Founder of Center for Industrial Progress
• Energy at the Speed of Thought: The Original Alternative Energy Market

Image: Creative Commons by Bernard Pollack

The “Buffett Rule” is based on the tired lie that (in the words of the Reuters reporter) “millionaires [pay] a smaller share of income taxes than middle-class taxpayers.” While it is true that the tax rate for capital gains is “only” 15 percent, generally the wealthy pay far more taxes than everyone else (as reports by the AP and the Heritage Foundation confirm).

But the reason not to raise taxes on the wealthy is not that they currently already pay a greater share of their income in taxes than others pay. The reason is that the wealthy, like others, have the right to use their earnings and property as they judge best. Indeed, as I have argued, that fact justifies dramatically lowering taxes on the wealthy.

As for Buffett, he is already perfectly free to write a check to the federal government for whatever amount he wishes, up to his entire fortune. Instead of acting with the courage of his convictions, Buffett recently wrote an extra check to the Treasury for what is to him a paltry sum of $49,000. As of November, he was worth $39 billion (about a quarter of a percent of the federal debt). If he seriously believes federal politicians and bureaucrats can spend his billions more intelligently than he can, he is free to let them try.

But for Buffett to advocate that the government forcibly seize more wealth from producers is immoral—and for the government to seize their wealth is a violation of their rights. Great producers who earned their money building the companies and technologies that enhance and prolong our lives should be free to use their resources according to their own discretion and for their own self-interested purposes.

Related:

• To Give Americans a “Fair Shot,” Obama Should Stop Violating Our Rights
• The American Right, the Purpose of Government, and the Future of Liberty

Image: Wikimedia Commons

As Newt Gingrich told Newsmax, Obama’s plan apparently would entail doubling the capital gains tax to 30 percent, something Gingrich justifiably characterizes as the “most destructive anti-jobs proposal by a president in my lifetime.” (The tax hike would be on top of the double taxation already applied to capital gains.)

But Obama’s proposed tax hikes are not merely economically destructive, they are the antithesis of actual fairness. Toward genuine fairness, a good first step would be to dramatically cut taxes on those who produce enormous wealth. Such producers earn their money by creating the technologies, products, jobs, and effective business practices that keep us alive and help us flourish. They deserve to use their resources as they judge best rather than see their earnings looted by federal politicians and the special-interest groups that many of those politicians serve. And yet, rather than applaud the giants of industry whose productivity enhances our lives in myriad ways, federal politicians punish them with insanely high taxes. (James Pethokoukis reviews relative tax burdens for the American Enterprise Institute, and I discuss the matter in a piece for Pajamas Media.)

To puff up his claim that forcing the wealthy to pay higher taxes is somehow more “fair,” Obama presumes that their wealth automatically belongs to the federal government. If politicians allow wealthy producers to keep more of the money they earn, he argued, then that is a “special tax subsidy,” no different than if the government hands the wealthy the money that somebody else earned.

The federal government should forcibly seize more of the earnings of the wealthy, Obama argued, in order to give that money to someone else, whether “a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet.” Elsewhere in his speech Obama suggested that politically-connected parasites posing as businessmen also deserve more corporate welfare. But, regardless of which interest groups win the federal payouts, Obama’s principle is the same: the wealth of the great producers should be forcibly confiscated and turned over to those who did not produce it but allegedly need it or profess to need it.

In other words, one’s “unalienable rights” to one’s “life, liberty, and the pursuit of happiness” must make way for the collectivist doctrine: “From each according to his ability, to each according to his need.”

Fairness does not mean letting the federal government forcibly confiscate more of the wealth of those who produce the goods, services, businesses, and jobs on which our lives depend. It means limiting the government to the protection of each person’s rights to his property and earnings, whether that person earns ten thousand dollars every year or ten billion.

Related:

• To Give Americans a “Fair Shot,” Obama Should Stop Violating Our Rights
  
• The Justice of Income Inequality Under Capitalism

Image: Public Domain

Though Daniels’ speech is a mixed bag, his identification of the nobility of business is spot on and is a refreshing contrast to Obama’s anti-business agenda. Businessmen are productive dynamos who trade value for value to earn their wealth. Steve Jobs, John Allison, Bill Gates, Jonathan Hoenig, and other businessmen deserve to be praised for pursuing their rational self-interest and for creating goods and services that further their lives and, consequently, the lives of those who trade with them.

Republican leaders desperately need to recognize and embrace the moral nature of business. And they need to work to protect the individual rights of businessmen and unshackle producers from regulations and discriminatory taxation.

Related:

• Capitalism and the Moral High Ground
• The Justice of Income Inequality Under Capitalism

Image: Wikimedia Commons

Thus, far from getting off easy on his taxes, Mitt Romney suffers unjust double taxation. John Berlau and Trey Kovacs explain this important context in an article for the Wall Street Journal. They write, “Our tax code layers taxation of dividends and capital gains on top of a top corporate tax rate of 35%,” and such “double taxation brings the effective tax rate on investment income to as much as 44.75%.”

At least Romney wants to limit the corporate income tax rate to 25 percent. But he should go much further and call for the abolition of all corporate taxes with a commensurate cut in federal spending. Not only would that end this injustice of double taxation, it would protect the rights of corporations to use their resources to create wealth, profits, and employment.

Romney’s critics are right about one thing: It is grotesquely unfair to tax individuals who earn less an even greater proportion of their income. Thus, as a good first step tax rates for all individuals should be reduced to 15 percent or less. Forcing some people to hand over a third or more of their earnings to the politicians and bureaucrats of the federal government is a blatant violation of their rights.

Related:

• Romney Should Call for Property Rights and Lower Taxes for Everyone
• To Protect Rights, Phase Out Payroll Tax Completely

Image: Creative Commons by Brian Rawson-Ketchum via Wikipedia

To castigate a man for not paying more taxes than the law requires him to pay is indecent. And to his credit, Romney told the Wall Street Journal: “I pay all the taxes that are legally required, not a dollar more.”

The Journal reports that Romney earned $21.7 million and paid $3 million in federal taxes. Further, notes the paper, much of Romney’s income came from investments, and given the “preferential rate for investment income” he paid “an effective rate of around 15%,” or “considerably less than the top rate of 35% levied on regular salary income.”

Unfortunately, Romney told the Journal, “I’m proud of the fact that I pay a lot of taxes.”

What he should say is this: “I’m proud of the fact that I earned significant wealth. The fact that some people pay an even higher percentage of their earnings to the federal government means that their right to dispose of their earnings as they see fit is violated that much more than mine. We should bring everyone’s effective tax rate down to a maximum of 15 percent and cut federal spending proportionately. That would be a good start.”

Related:

• The American Right, the Purpose of Government, and the Future of Liberty
• Santorum Stands for Big Government because He Stands for Collectivism

Image: Gage Skidmore