To say that Cuba is not a “food country” is quite an understatement, now that food shortages are seemingly commonplace. Tasty food is one thing, but many people in Cuba might not have any food to begin with.

Most people in Cuba are skipping meals — out of necessity, not for dietary or nutritional reasons — and live in “extreme poverty.” Rather than starve, or face increasing rates of violence and electrical blackouts, an on-the ground reporting indicates that 20 percent of the population left the country between 2022 and 2023.

These outcomes — especially shortages — are intimately linked with socialist governments, related economic policies, and, in particular, price controls. In July, Cuban authorities imposed a new round of price controls on powdered milk, chicken, and pasta, among other goods. Vendors in Cuba are now not allowed to sell chicken parts above a price of 680 pesos, whereas market prices are typically around 700 pesos. 

Food availability follows changes in supply and demand, so there might be less food following, say, a drought or flood. But markets mitigate these shocks through prices: as food becomes (relatively) scarce, prices rise, and prices fall when food becomes relatively abundant. Price controls prevent the market process and prices from operating — they hurl wrenches into the gears of commerce — and make matters worse. 

Price controls are huge red flags. These are not red flags celebrating socialism. These are he-doesn’t-like-your-best-friend red flags. These are he-gaslights-you-all-the-time red flags. These are she-always-picks-your-outfits red flags. If any of these red flags are observable when we date, most of us would walk away. Unfortunately, we don’t often walk out on price controls. We let them wreck our lives.

Price control’s reddest flags relate to the nature of exchange, morality, and freedom. When consenting adults realize a mutually beneficial trade is possible, who are we to stop them? Blocking such exchanges keeps both trading partners from improving their lives and, as such, should be considered an injustice.

Government officials are clearly willing to infringe upon people’s freedoms, so that might not be a damning (enough) argument. Can we say more about price controls? Hold my beer, the economist says.

Aside from raising our moral hackles, price controls have demonstrable effects on wellbeing: price controls increase poverty and hunger. Contrary to the utopian dreams of policymakers, price controls distort market activity in perverse ways. They are meant to lower prices on goods and make it easier for people to acquire them; and they might help some people and score political points — both are temporary — but they cause shortages instead.

Price controls create shortages and, in the case of food, make it more likely people will go hungry. Such policies sow the seeds of discoordination, not sustenance. Rather than roast chickens flying into the mouths of comrades, price controls empty cabinets and drain food stores (this is a reference to Mises’s Economic Calculation in the Socialist Commonwealth, medieval myths about the land of Cockaigne, and The Birds, a play by the Greek playwright Aristophanes).

Legally binding price controls — in this case price ceilings — make it illegal to voluntarily exchange food above the capped price. While enforcement varies — and there is likely a growing black market in Cuba to avoid the watchful eye of nosy government officials — many vendors are fined for offering their goods. Over 4,000 fines were issued for those who broke the July price controls.

When capped prices are below market prevailing prices, shortages follow. Consumers are encouraged to buy more goods at lower prices; as a result, there might be fewer goods available. If they can’t charge market prices, producers are discouraged from bringing their goods to market, or they provide lower quality goods; as a result, there might be fewer goods available. None of these behaviors put (good) food in bellies for very long.

Unfortunately, none of this is new for people living in Cuba, as they’ve lived with price controls on food and other goods like taxi rides, beverages, and haircuts for over a decade. Food rations, once a relic of the Cold War, are also making a comeback.

In Flaws and Ceilings, Christopher and Rachel Coyne note that price controls have disastrous effects on markets. This logic is a cornerstone of economic science, whether people live in Cuba, China, California, or Canada. It is a logic that remains valid regardless of a country’s economic system. To summarize, Coyne and Coyne state that,

What is clear is that price controls set in motion a series of unintended consequences as producers and consumers respond to the new incentives created by the introduction of controls. More often than not, these unintended consequences exacerbate the very problem that proponents of controls claim to correct.

The injustices associated with price controls and the resulting food shortages, in this case, are red flags we are now seeing play out, once again, in Cuba.

Throw in taxes and tariffs on food in Cuba, and it shouldn’t be surprising that food markets are increasingly becoming distorted, shortages are frequent, and people remain impoverished. Perhaps we should leave food markets alone and let consumers and producers coordinate their wants and desires through voluntary exchange.

The federal minimum wage was last raised fifteen years ago this month. Vice President Harris has been on record supporting raising this to $15 per hour, co-sponsoring a proposed bill for doing so with Sen. Bernie Sanders in 2019. Today, lawmakers in Arizona, Alaska, and Oklahoma, not to mention plenty of municipalities throughout all fifty states, are considering raising the minimum wage of their respective areas. 

Progressives will tell you that the passage of such laws will help workers in their uneven struggle with the bosses. Others insist that this will also pump more money into the economy. 

Nothing could be further from the truth. Let’s consider the recent experience of California. It raised the minimum wage of restaurant workers from $16 to $20 per hour. In just the first two months after the law took effect, 10,000 jobs were destroyed and prices at restaurants have risen. 

In 2019, lawmakers in New York City passed a nearly identical piece of legislation. They increased the minimum wage from $13 to $15 per hour (equivalent to $18.72 today). The result was eerily similar. 90 percent of restaurants surveyed had raised prices, nearly 77 percent reduced employee hours, and 36 percent eliminated jobs. As then-president of the Queens Chamber of Commerce, Thomas Grech, pointed out, “[small businesses are] cutting their staff. They’re cutting their hours. They’re shutting down.” 

None of this is difficult to understand.

Our everyday experiences tell us exactly what happens when the price of anything rises. When egg prices soared earlier this year, for example, consumers responded by purchasing fewer eggs. Likewise, when gasoline prices rise, US drivers reconsider travel plans. Some don’t travel at all. 

When prices rise, people find substitutes to further reduce their purchasing of the now more expensive items. California, for instance, has the nation’s highest gasoline prices. That’s one reason why California has led the nation in electric car sales, which do not run on expensive gasoline. 

Employers respond similarly. When workers become more expensive, employers seek to automate. In 2022, the Government Accountability Office reported that “Workers with lower levels of education and who perform routine tasks — think cashiers or file clerks — face the greatest risks of their jobs being automated.” Increasing the minimum wage will only make this more likely. 

What minimum wage advocates won’t acknowledge – at least openly – is that wages are a price, specifically the price of labor. By proposing minimum wage increases, lawmakers around the country are effectively telling employers, “We want you to hire fewer workers.” Yet, when employers respond to this implicit edict by laying people off, blame is shifted to a myriad of superfluous explanations, none of which address the cluster of closures around the dates that minimum wage legislation takes place. 

The simple fact is that when the price of anything increases, people respond by purchasing less. With minimum wage legislation, reduced employment is concentrated on the very people who are supposed to be the beneficiaries. Instead of raising wages by decree, lawmakers should put the horse before the cart and focus on increasing worker productivity which will in turn earn them higher wages. 

This effect is so obvious that lawmakers use it to impact policy. Rep. Don Beyer of Virginia proposed a 1,000 percent tax on assault weapons. In his own words, this was proposed to “inhibit and restrict sales [of assault weapons].” 

Special, additional taxes have also been levied on sugary drinks, alcohol, and tobacco. In each case, the goal is to raise the prices of these items to curtail their consumption in the name of public health and safety. 

Clearly, people understand that when the price of something rises, we purchase less of it. Similarly, lawmakers understand that if they want people to buy less of something, they can use policy to make it more expensive. 

Given the disastrous effects of such policies, why then do bureaucrats continue to propose them? Perhaps lawmakers are so divorced from reality as to not see what is happening all around the country. More likely, they arrogantly believe that this time will be different; that their version of a minimum wage will work where every other has failed. Unfortunately, this is what every previous lawmaker believed, too. Just like them, today’s lawmakers will find that the laws of economics are as immutable as the law of gravity. 

Lawmakers playing around with the price system do more harm than good and history is rife with examples demonstrating this. It is time for bumbling bureaucrats to cease their would-be machinations and allow private citizens to find ways to serve one another more effectively. 

The national debt surpassed a mind-boggling $35 trillion last week — approximately $100,000 for every man, woman, and child living in the United States. This means a family of four’s share of public debt, ~$400,000, is likely more than they owe on the mortgage of their house. Runaway government spending is no surprise. What is surprising is that one bill passed a couple years ago may end up costing trillions, with a “t,” more than the public was told. That bill is the Inflation Reduction Act (IRA).

Many have rightly called the IRA ‘the New Green Deal Lite.’ The massive bill was primarily geared towards funding green energy projects. Some of that funding took the form of direct subsidies for conservation and energy efficiency projects. The main goal was to divert hundreds of billions of dollars into green energy projects. The uncapped lion’s share of the cost comes in the form of special tax credits through the internal revenue code.

Initially the Congressional Budget Office scored the IRA in September 2022 as reducing federal deficits by more than $200 billion over a decade. The Center for a Responsible Federal Budget summarized the CBO’s score for the IRA as costing ~$391 billion in energy subsidies and tax credits as well as ~$108 billion in healthcare subsidies. The CBO estimated the IRA would raise ~$738 billion in revenue over a decade by increasing a variety of taxes and repealing various tax exemptions — a classic “spend now, pay later” scheme.

Yet the Joint Committee on Taxation put out revised estimates less than a year later (June 2023) that the clean energy tax credits, rather than costing roughly $270 billion, would cost closer to $663 billion. That’s about a $400 billion dollar increase in expected costs. And that’s likely too low.

Recent clarifications and definitions of the tax code, particularly Section 45Y about Clean Electricity Production Credits and Section 48E about Clean Electricity Investment Credits, combined with provisions of the Inflation Reduction Act, have opened the possibility that the IRA may eventually add trillions of dollars to the national debt due to future use of these tax credits. One estimate puts the total cost of these green energy credits closer to $3 trillion over their entire lifetime- which might be much longer than people realize. 

The first and most important problem is the open-ended timeline of the IRA. While 2032 was mentioned in the bill as a possible termination date, the bill also specified that the US hitting 25 percent or less of its 2022 emissions level was another possible endpoint. Here’s the catch, though. It is whichever date happens later!

Given historical trends, emissions won’t hit 25 percent of 2022 levels by 2032. The implausibility of reducing emissions to that level means we have no idea when these renewable energy tax credits will expire. There is a good chance they won’t hit that level before 2040, or even 2050. So the program could very well run more than twice as long as people thought. And every year, as governments heavily subsidize “green” energy, more and more tax credits will be claimed.

A second problem is all the distortions created by unequal treatment of renewable energy sources and fossil fuel sources. The new IRS rules define “zero-emissions” as no emissions created in the process of generating energy. Emissions from manufacturing and installing renewable energy assets don’t count. Nor do emissions created when servicing them. Nor do emissions created by other electricity generation to keep wind turbines turning when there is no wind or to provide supplemental energy to stabilize the intermittency of wind and solar energy.

When it comes to “net zero” policies, some emissions are more equal than others. Apparently it doesn’t matter that fossil fuels are used to min the minerals and raw materials used to create wind turbines, solar panels, and batteries. And the fuel burned by ships and trucks in the production process are also apparently benign.

But fossil fuels are treated differently. Fossil fuel energy assessment requires “life-cycle” analysis to calculate their emissions. That means in addition to the emissions created when generating electricity, all the emissions that didn’t count for wind and solar do count for fossil fuels: emissions generated in extracting, refining, and transporting, etc.

This heavy subsidizing of renewable energy installation has led to another problem in many electricity markets: near zero marginal cost electricity provision during the day. While the fixed costs of wind and solar are largely underwritten with subsidies and tax credits (and mandates when those incentives are insufficient), thermal fossil fuel energy generation has to compete with basically zero marginal price of solar and renewable energy throughout the day.

Another contributor to the cost and inefficiency of the IRA renewable energy credits is the “80-20” investment rule. If renewable energy facilities are upgraded or expanded to the extent that the new investment represents 80 percent or more of the current market value of a project, that project can apply for significant energy credits, even if it applied in the past. This rule will encourage aggressive depreciation of assets and premature, costly additions or upgrades.

Of course, the emissions created when installing new blades or solar panels, or the emissions created when transporting and storing discarded blades and solar panels, are “more equal” than other emissions. Even if one doesn’t think net-zero policy is the modern equivalent of tilting at windmills, the uneven playing field being created here should concern everyone who cares about justice and prosperity.

All this adds up to an open tab that renewable energy companies can use over and over again and that taxpayers will pick up. Unless Congress acts to close these loopholes, a $35 trillion debt will look quaint when the US surpasses $45 trillion or even $50 trillion in the 2030s. If this happens, the Inflation Reduction Act of 2022 will be a surprisingly large contributor.

Republicans are marching towards a high-stakes November election. Alas, they seem to have left some important conservative principles behind. The 2024 GOP Platform is notable for what it omits: its lack of commitment to fiscal responsibility is a major oversight. 

Admittedly, Republican rhetoric has long exceeded Republican policy when it comes to spending restraint. The rhetorical change is meaningful nonetheless. There is a world of difference between falling short of a standard and abandoning it altogether.

The word “debt” does not appear in the platform. “Deficit” does, but only in the context of international trade (“trade deficit”). Aside from a throwaway line about “slashing wasteful Government spending,” there is nothing in the document to suggest Republicans care about fiscal prudence.

Ignoring a problem doesn’t make it go away. Perpetual deficits and ever-growing national debt threaten the economy, increase partisan rancor, and imperil national security. If conservatism is about conserving our founding principles, the GOP’s abandonment of spending restraint is one of the most anti-conservative policy shifts in a generation.

Deficit spending harms economic growth. When spending exceeds tax revenues, Uncle Sam makes up the difference by borrowing. This diverts capital from private markets, where it would have financed investments to increase future productivity. Instead, that capital gets redirected to current consumption. Eating our seedcorn deprives future generations of higher living standards.

There’s another economic problem with deficits: they can spark inflation. When governments spend too much, central banks might feel obliged to run the printing press to ease borrowing conditions. Consequently, the deficits and debt often bring debasement.

Consider the Federal Reserve’s monetary policy response to the pandemic. Our central bank wanted to stabilize the market for government debt. To this end, it bought more than 50 percent of the newly created government debt, and paid for that debt with newly created money. With money growth outpacing the demand to hold it, prices everywhere shot up.

The deficits-debt cycle also makes partisan politics nastier. The percentage of federal expenditures on debt service has sharply increased since the COVID crisis. Furthermore, government borrowing costs are much higher now than they were over the past ten years. Interest payments now suck up more of the federal budget, leaving less to spend on important political priorities. Since Republicans and Democrats disagree about what those priorities are, the resulting fiscal strain amplifies partisan divisions. Politicians must fight harder just to maintain their slice of a shrinking pie.

Finally, excessive debt is a national security threat. We no longer live in a unipolar world. Rival powers such as China, Russia, and Iran are stronger than ever. Armed conflict is a real possibility. The US must be able to ramp up spending on arms rapidly if a conflict breaks out, as it did in the 1940s. That’s feasible for a nation with low debt levels. It becomes more difficult as a nation’s debt-to-GDP rises. Embracing restraint during tranquil times leaves room to expand during turbulent times.

When it comes to government spending, the GOP should return to its roots. Last summer, a group of conservatives committed to America’s historic creed offered a better approach to fiscal matters. These Freedom Conservatives declared that misguided government policies were making “food, shelter, health care, and energy…unaffordable to many Americans.” They also recognized “skyrocketing federal debt…is an existential threat to the future prosperity, liberty, and happiness of Americans.” This is the correct approach to deficits and debt.

Republicans are right to change their platform to address new policy challenges. But they shouldn’t renounce conservative priorities. If they aren’t serious about spending restraint, they aren’t serious about conserving anything.

An Englishman named Joseph Priestley made a discovery 250 years ago that marked the beginning of modern chemistry and continues to have important ramifications today. His remarkable find was, in a word:

Oxygen.

Unlike inventions, which create something new, discoveries acknowledge something that already exists and quantify it to explain its significance. Of course, oxygen has always existed, and its utility to human life is completely independent of the need for explanation. We know exactly what it is, why it is important, and what it actually does.

As the world moved from an age of mysticism to an age of reason, science refused to accept superficial explanations of the world and its environment, and scientists sought to explain how things worked. Previously, the elements that made up the material world were limited to the simplistic: earth, air, fire and water. There is still something charming about rationalizing that everything is made up of some combination of these four things.

Air was hard to define since it basically could not be seen or touched, yet it could be experienced in things as dramatic as wind and as mundane as breath. But modern science refused to be satisfied with something as ephemeral as air and wanted to explore just what comprised air. Scientists asked themselves and their colleagues tough questions because in developing the scientific method, it was critical that observations not be unique to one person or laboratory. Experiments must be duplicatable so that others can confirm a universal discovery to build on it.

Into this rapidly developing and changing world entered Joseph Priestley.  As a young man, he showed intellectual prowess, but because he was not a member of the established church, he was denied admission to both Oxford and Cambridge. In modern times, it seems strange that religious affiliation would be such an important admission requirement.

As a dissenter, Priestley’s educational opportunities limited him to less prestigious, but more inquisitive, higher education. He would attend Daventry Academy, which would prepare him primarily for preaching, but his study of theology changed him from accepting religious dogma as an explanation for the natural world and into a “rational dissenter.” He came to see the natural world as part of God’s creation that was to be explored and rationally analyzed in the context of the Bible to gain an understanding of how it worked. In short, his theological views placed an emphasis on scientific discovery as a means to augment faith.

Even though his studies did not include science, as such, he was encouraged to accept a rational world that reflected a Divine Creator. Science became almost a subset of theological study. Gone was the mysticism that accepted the World without inquiry. Now science would become a tool to explain how God acted, supplementing theology to solve questions about the natural world. For Priestley, there was no tension between faith and reason; rather, the Bible and science were studied in combination to explain a rational world order.

Understanding air seemed like an interesting inquiry since defining something that could not be seen was a significant challenge. Priestley would conduct several experiments to capture gases that were in the atmosphere and isolate them with very crude, but nevertheless effective, laboratory instruments. Hard to believe, but two-and-a-half centuries ago, he was able to break down the component parts of air into eight separate gases — one of which was oxygen.

After isolating oxygen to test its properties, Priestly noticed that a candle burned much brighter with only oxygen, and he found that a mouse in a closed container lived much longer with pure oxygen than with regular air. Experimenting upon himself revealed that he felt more energetic when breathing oxygen.

He would write papers explaining his experiments and engage in debates with other scientists over the interpretation of what oxygen was and how it could be used. His inquisitive mind would get the best of him when he became an advocate for both the American and French revolutions. In his view, the old regimes had to be destroyed to accelerate a scientific, utopic millennium. These ideas did not sit well with his community, and so it was that rabble rousers burned Priestley’s church along with his house and adjoining laboratory. His non-conformist views were not welcomed any more.

Priestley decided that if the old world would not appreciate him, he would leave England and ply his ideas in America. Thus, he moved his family to Philadelphia, where he was re-acquainted with Benjamin Franklin. He found America to be much more welcoming and more tolerant of both his religious beliefs and scientific ideas.

Making fast friends with other leading figures of the day, including Thomas Jefferson, he was an active member of Philadelphia’s Philosophical Society. In America, he would isolate carbon monoxide and continue to write and inquire about the natural world. Many of his discoveries were accidents, and he never had the presence of mind to patent his ideas to monetize his brilliance. Looking over his achievements, he discovered some things as mundane as using Indian rubber as an eraser and making carbonated beverages with carbon dioxide.

Priestley’s curious mind never stopped seeking answers by experimentation and testing ideas. His death at age 71 would finally end his inquiries into the natural world. One hundred years after his discovery of oxygen, a meeting of scientists to reflect on his life and achievements resulted in the founding of the American Chemical Society.

Joseph Priestley’s discovery of oxygen was the beginning of a better understanding of the chemical elements that make up the natural world, but his beliefs were a threat to the old order, which was happy to accept an unexamined life and ignore a better understanding of the creation. His persecution would lead him to realize that America, with its freedoms of religious liberty and expression, was the ideal place for an inquiring mind to push the boundaries of discovery, unfettered by ideology, religious, scientific, or otherwise.

During his first year as president, Javier Milei has been waging a bitter but largely successful campaign against inflation.

Now, Argentines received more welcome news: their economy is growing again.

“Economic activity rose 1.3 percent from April, above the 0.1 percent median estimate from analysts in a Bloomberg survey and the first month of growth since Milei’s term began in December,” Bloomberg reported on July 18. “From a year ago, the proxy for gross domestic product grew 2.3 percent.”

The positive economic report, based on data from the Argentine government, is a surprise to many.

The 2.3 percent year-over-year increase defied expectations of a decline of similar magnitude, Bloomberg reported. As Semafor notes, the Argentine economy was projected to have the least economic growth of any country in the world in 2024, according to the International Monetary Fund.

A ‘Wrecking Ball’?

Argentine economists I spoke to said that the numbers are encouraging, but the country’s economy is far from being out of the woods.

As most people know, Milei inherited an economic mess decades in the making. When the self-described anarcho-capitalist assumed office in December, Argentina was suffering from the third highest inflation rate in the world—211 percent year over year. The poverty rate was north of 40 percent, and Argentina’s economy was declining.

With his country’s economy in a full tailspin from decades of Peronism, Milei proposed a series of economic reforms dubbed “shock therapy” that consisted primarily of three components: slashing government spending, cutting bureaucracy, and devaluing the peso.

Critics warned that these measures would be disastrous, and many took it for granted that the remedies would deepen Argentina’s recession.

The former head of the International Monetary Fund’s Western Hemisphere Department, Alejandro Werner, said Milei’s strategy could tame inflation, but at great cost.

“A deep recession will also take place,” Werner wrote, “as the fiscal consolidation kicks in and as the decline in household income depresses consumption and uncertainty weighs on investment.”

Felix Salmon, the chief financial correspondent at Axios, concurred, comparing Milei’s policies to “a wrecking ball.”

“Milei’s budget cuts will cause a plunge in household income, as well as a deep recession,” wrote Salmon.

Despite these warnings, Milei delivered his “shock therapy” plan in the first few months of his presidency. Tens of thousands of state workers were cut as were more than half of government ministries, including the Ministry of Culture, as well as the Ministries of Labor, Social Development, Health, and Education (which Milei dubbed “the Ministry of Indoctrination”). Numerous government subsidies were eliminated, and the value of the peso was cut in half.

Even before Milei’s policies were given a chance to succeed, many continued to attack them.

“Shock therapy is pushing more people into poverty,” journalist Lautaro Grinspan wrote in Foreign Policy in early March. “Food prices have risen by roughly 50 percent, according to official government data.”

Yet the official government data Grinspan cited was a report from December 2023, before Milei had even assumed the presidency.

Contrary to the dire predictions, the results of Milei’s policies have been better than even many of his supporters had dared hope.

During the first half of 2024, inflation cooled for five straight months in Argentina, the Associated Press reported in July. Though consumer prices were up 4.6 percent in June from the previous month, that’s down from a 25 percent month-over-month increase in December, when monthly inflation peaked in Argentina. Meanwhile, in February the government saw its first budget surplus in more than a decade. And just days ago, an economic report was published showing a massive decline in poverty in Argentina.

Many doubted that these successes were possible, and the conventional wisdom said that wringing inflation out of the economy and slashing government spending could only be achieved at great cost: a deepening recession.

Escaping Recession? 

The data suggest that, contrary to what so many people predicted, Argentina may not be slipping deeper into recession following Milei’s shock therapy. Instead, its economy is healing.

“Argentina is officially out of recession after 7 months of Javier Milei’s economic reforms,” Daniel Di Martino, a University of Columbia student pursuing his PhD, tweeted. “Remember, the economy was in recession since mid-2023, half a year before he got into office.”

Others, however, warn that it’s premature to say that Argentina is out of its recession.

“I will be careful of claiming ‘out of the recession,’” Nicolás Cachanosky, a native of Argentina and Associate Professor of Economics at the University of Texas at El Paso, told me. “Maybe the Argentine economy is getting out of a recession. Maybe not. All I’m saying is that it is too early to confirm, given these numbers.”

Cachanosky notes that interannual figures can be misleading, and that the data in question are relative values and not technically growth rates. While it’s still unclear where Argentina’s economy will go from here, it bears exploring why so many people, including many economists, doubted that its economy could be growing again already. There are two primary reasons, one of which is legitimate. 

The first reason is a legitimate concern that sharp reductions in government spending will likely result in short term pain, even though it’s a necessary step toward economic healing. 

“The government spends a bunch of money and keeps people employed,” one economist I spoke with told me. “When that slows down, you’re going to be able to measure the impact of that.”

This is why some free market economists I spoke with expressed doubts that Argentina had already escaped recession. Cutting tens of thousands of jobs, even unproductive ones, and slashing hundreds of millions in subsidies is bound to have an impact on economic activity. Long term that impact will be positive because it will result in a more efficient allocation of resources, but it’s not unreasonable to assume it will first result in economic pain. 

A second reason is a poor understanding of economics.  

In the Keynesian school of economics, it’s taken as gospel that government spending fuels economic growth. This is why you’ll find so many Keynesians who argue that even destructive phenomena like war and hurricanes are actually good for the economy, because they stimulate government spending.

This was the argument economist Paul Krugman made several years ago when he said that an alien invasion, real or fake, would be good for the economy, since it would mobilize a massive amount of military spending, similar to World War II.

The idea is simple: government spending is good even if it’s producing goods that are unnecessary, such as weapons created for an alien invasion that is not even real.

The idea that Argentina would be slashing government spending during a recession runs counter to Keynesian orthodoxy, which teaches that recessions are precisely when “fiscal stimulus” is needed the most, since negative economic conditions often result in a predictable market failure: a decline in spending. 

Broken Windows and Economic Growth

In other words, Argentina is flipping the macroeconomic script. In a world in which government spending hikes are deemed “a perfect solution in battling recessions,” Milei is providing the opposite: he’s slashing government outlays.  

Yet a Mercatus Center study conducted by Tony Caporale and Marc Poitras, titled “The Trouble with Keynesian Stimulus Spending,” points out the obvious problem with such stimulus schemes:

[The Keynesian] approach fails to account for several significant sources of cost. Besides the cost of waste inherent in government spending, financing the spending requires taxation, which entails an excess burden, the reduction in output resulting from workers’ reduced incentive to work. Furthermore, the employment of even previously idle resources involves lost opportunities to invest in alternative uses of these resources.

Caporale and Poitras are talking about an elementary economic concept: opportunity costs. These costs refer to what one foregoes or gives up to purchase a good or service, an idea the economist Frédéric Bastiat explored in his famous “broken window” parable. Economist Jonathan Newman offers a tidy summary of the story, which appeared in Bastiat’s 1850 essay That Which Is Seen, and That Which Is Not Seen.

It goes like this: a boy throws a brick at a baker’s window and a crowd gathers to discuss the economic consequences. They console the baker by pointing out that glass-repair companies need business, too, so it isn’t all bad news. After further reflection, they conclude that total employment and spending in the community has increased because of the broken window, and that this little spark of spending by the baker to repair the window sets off a chain reaction of spending. Now the glazier has extra cash to spend on various items, and the people who sold him those things now have extra income, and so on.

The crowd draws the conclusion that destruction is beneficial for the economy because it stimulates spending and employment.

Does this sound absurd and too good to be true? Well, it is. Bastiat’s parable revealed the absurdity of Keynesian economics before Keynesian economics existed.

Bastiat was challenging readers to see the unseen. Economists shouldn’t focus solely on the glazier’s profits that resulted from the rock thrown at the baker’s window, any more than they should focus solely on the jobs created by military spending. They must also focus on the costs of these actions, too.

This is the flaw that has long plagued Keynesians, and it helps explain why so many took it as gospel that slashing government spending in Argentina would deepen its recession.

When it came to Milei’s reforms, critics and prognosticators were focusing on the seen: tens of thousands of lost jobs, and billions in reduced spending. On one hand, this is perfectly rational. These cuts will come with easily measurable costs, and are likely to reduce economic activity in the short term. On the other hand, whether they are seen immediately or not, there are countless opportunities created by Milei’s reforms, which are dismantling the least productive parts of Argentina’s economy: its bureaucracy.

Whether Argentina’s burst in economic activity in May was a blip or the beginning of a long-term trend of economic recovery is something only time will tell. (Data indicate there was a sharp increase in agricultural production, which could be explained by favorable seasonal conditions or some other factor.) 

It’s certainly possible that, after decades of economic pain from Peronism and mass money-printing, Argentina has more work to do before its economic recovery arrives. Yet Adam Smith once noted that the formula for prosperity is surprisingly simple, and it doesn’t contain government “stimulus”: just “peace, easy taxes, and a tolerable administration of justice.”

Milei knows this, fortunately. And he is showing no signs of relenting in his campaign to crush inflation and government spending to return Argentina to prosperity.

“What [is] the alternative?” he told the BBC. “To continue to print money like the previous administration that generates inflation and ends up affecting the most vulnerable?”

Over the past three years, Western societies have devoted immense resources to promoting and even mandating Diversity, Equity, and Inclusion (DEI) initiatives and practices, such as antiracist and unconscious bias trainings, in almost all spheres of society. Indeed, the DEI regime has become so all-encompassing and penetrating that ordinary people, ones whose life trajectories have no intersection with an academic activist culture or parts of the internet  soaked in a cultural war, find their livelihoods are nonetheless entangled, frankly, saddled with, or even jeopardized by a variety of DEI policies, programs, and the discourse itself.  

So, what exactly is DEI, that over half of workers in the US receive its training at work? What exactly is DEI that companies, universities, and government can require a written commitment to its principles? Isn’t DEI just another name for the commonsensical opposition to discrimination against people on the grounds of their race, sex, sexuality, or any number of immutable attributes? The answer is no. 

As Helen Pluckrose writes in her 2024 book The Counterweight Handbook: Principled Strategies for Surviving and Defeating Critical Social Justice—at Work, in Schools, and Beyond, the DEI regime is “inextricably connected with an illiberal, authoritarian ideology,” which has assumed a few names since the summer of 2020, among them: “woke” and “cancel culture.” But, Pluckrose summarizes, it can be more precisely referred to as “Critical Social Justice,” which she understands as a particular “approach to social justice activism.”  

What is Critical Social Justice (CSJ)? 

Two pillars of the CSJ theory readily manifest themselves to people familiar with neo-Marxism and postmodernism. One is hegemony, invisible systems of oppressive power into which everyone has been socialized, and the other is discourse, which serves hegemonies claimed to be prevailing in Western societies, such as “whiteness,” “patriarchy,” “colonialism,” “heteronormativity,” “cisnormativity,” “transphobia,” “ableism,” “fatphobia,” so on. The third pillar of this ethical framework is a sort of identity or group politics that charts this so-called invisible power structure not based on socioeconomic status but on some nebulous and superficial conceptualizations of race, gender, and sexuality.  

Pluckrose points out to her readers that CSJ theory interprets social justice, commonly understood as a principle advocating fairness and equality for all, in a profoundly different way — it is a “critical approach,” referring to a distinctive standpoint ingrained in identity-based power dynamics. As the term’s authors Ozlem Sensoy and Robin DiAngelo explain, this theoretical perspective “recognizes that society is stratified (i.e., divided and unequal) in significant and far-reaching ways along social group lines that include race, class, gender, sexuality, and ability.”  

The buzzword “critical,” thus construed, the spirit of which is epitomized in overblown academic jargon such as “critical learner,” “critical pedagogy,” and “critical scholarship,” bears no resemblance to the commonsensical understanding of the concept of “critical thinking” as the evaluation of truth claims on the grounds of reasoning and evidence, but refers to the scrutiny of prejudices and discriminations assumed to have woven into the social fabric, policing the use of language that perpetuated oppressive attitudes, beliefs, and narratives, and ultimately dismantling the imbalanced power structures. To be “critical” (or “woke”) is, therefore, to cast an indictment at alleged social injustices with blind conviction and to be obliged to awaken others to the invisible power structures. Indeed, to quote the CSJ theorist Alison Bailey, “a critical learner is someone who is empowered and motivated to seek justice and emancipation.”  

It should be patently clear to even casual observers that what those CSJ assumptions and declarations constitute is a doctrine that is, in Pluckrose’s apt words, “dogmatic,” “authoritarian,” and “cynical.” May I add that the CSJ dogma is also blatantly anti-intellectual and manipulative? How could it not be, when critical researchers claim that Critical Scholarship is “not out to create truth” but “an active identification of and engagement with power,” and critical pedagogy does not regard claims students make as “propositions to be assessed for their truth value, but as expressions of power that function to re-inscribe and perpetuate social inequalities”?  

The Explosion of a “Dogmatic and Authoritarian Ideological Movement” 

Pluckrose and her co-author James Lindsay, in their 2020 best-seller book Cynical Theories, chronicled how CSJ started as a fringe faction in academia but quickly evolved into a significant cultural force in mainstream society in 2015 and finally ignited a “dogmatic and authoritarian ideological movement” in the late spring of 2020 against a period of lockdown, an ambiance of fear over a virus, and a black man’s death.  

Following a summer of mass protests that convulsed much of the Anglosphere and parts of Europe, CSJ was mainlined into the most important institutions: corporations, schools, nonprofits, media, entertainment, sports, political parties, and lastly, government. As if overnight, politicians, celebrities, businesses, and civil and even religious communities knelt before CSJ, pledging their allegiance to its tenets.   

In her latest book, The Counterweight Handbook, Pluckrose summarized ten of its core tenets. To name a few: 

“Knowledge is a social construct created by (dominant) groups in society.” 

“Most people cannot see the systems of oppressive power that they are complicit in because they have been socialized into having those very specific biases and thus unconsciously act on this socialization.”  

“Only those who have studied Critical Social Justice theories — particularly the marginalized groups who subscribe to them — are fully able to see the invisible power systems and must convey them to everybody else.”  

Predictably, not everyone would concur with those simplistic, divisive, and acrimonious worldviews that are questionable at least and preposterous at worst. Since the publication of her 2020 bestseller, Pluckrose has received hundreds of emails daily from people in all walks of life who are certainly nonbelievers, but are subjected to mandatory DEI training or re-education programs and bullied to affirm CSJ claims such as  

“All white people are (and only white people can be) racist;”  

“Policing language and silencing speech is not only necessary but also good;”  

 “Denial of racism/homophobia/transphobia, etc., is evidence of racism/homophobia/transphobia, etc.”  

Ordinary people engulfed in this “dogmatic and authoritarian ideological movement” — one led not by grassroots organizations but, mysteriously, by bureaucracy in corporations, schools, and, most perplexingly, liberal democratic governments — reached out to Pluckrose, seeking help to escape those n counterproductive, stifling, erosive, toxic, and frankly racist CSJ practices.  

The Counterweight Handbook 

Pluckrose’s book does a good job explaining why the foundational premises of CSJ theory are religion-like scriptures that are unproven and also unprovable. Once the inner (il)logic of that seemingly esoteric but in effect pontifical theory is exposed, quickly peels away a thin veneer of high-flown aura of those CSJ scholar-activists, revealing themselves to be nothing more than mere subpar sophists. The book also contains smart ideas on how to refute that overbearing sophistry on its own terms and using its own language should one find oneself in need of voicing dissent when asked to commit to a cult that one does not believe.  

Not only is this book an accessible guide to understanding the “once insurgent but increasingly entrenched ideology” that has inflicted upon society a culture of alienation, fear, resentment, revenge, hostility, and polarization, but this Handbook, as its name suggests, also offers practical tools for action to “concerned individuals,” that is, the “employee, volunteer, student, parent, or even employer,” who wish to survive or defeat the imposition of CSJ program, policy, or protocol at their workplace or classroom.   

The Handbook provides a wealth of resources. The uninitiated can avail themselves of a “color-coded system” for determining whether this ideology is adopted in their organizations. For example, when receiving notification of a new policy that uses the language of “diversity, equity, and inclusion,” Pluckrose suggests one seek more detailed information, rather than rushing to a reactionary mode. One should ask for clarification on the definition of, for example, the concept of “diversity” — does it mean, as ordinary people would assume, “accepting and appreciating differences in a pluralistic fashion”? Or does it mean, as CSJ understands it, “seeking to privilege those seen as marginalized and marginalize those seen as privileged while enforcing conformity of opinion”? 

People who wish to oppose CSJ initiatives or narratives can resort to five custom-made approaches, depending on institutional circumstances and personal skill sets. When one’s concern is met with outright rejection or radio silence by box-ticking bureaucrats or ideological conformity by overzealous co-workers, various ways to troubleshoot those challenges are on hand. Also available are suggestions for networking with other skeptics, forming communities of resistance, and initiating grassroots movements.  

Overall, the Handbook seeks to assist people with informed, principled, and firm but also prudent and diplomatic strategies that are ready-made and adaptable for addressing Critical Social Justice problems.  

Paris, city of love and many rats, has the honor of hosting the Olympic Games this year. The spectacle will draw roughly five million people to the heart of France. Athletes from across the globe represent their nations performing feats of incredible strength, speed, and skill. American athletes will be presenting their talents in Nike sponsored apparel. America indeed has the most Olympic gold medals, and is anticipated to take home the lion’s share this year.

Nike, named after the Greek goddess of victory, swooshes in and garners attention in Paris. Back in New York City, however, Nike stock has been taking a beating. Just last week the NYSE posted Nike having its 52-week low at $71.23. Just three years prior, in 2021, the stock was at a peak of roughly $170. Forbes writes, “Nike stock is down 48 percent over the last three years, including dividends, far worse than the S&P 500’s 34-percent return.”

Current CEO John Donahoe has been leading Nike since 2020. According to CNBC: “Since Donahoe took over as Nike’s top executive, its stock is down more than 25 percent as of Friday’s close, significantly underperforming both the S&P 500 and the XRT — the retail-focused ETF — which saw gains of around 67 percent and 66 percent in that time period, respectively.” Additionally, the June 27 unofficial earning call transcripts confirm Nike’s rather negative outlook: “Nike Direct was down 7 percent. Nike Stores were down 2 percent, and Nike Digital was down 10 percent…. We expect first-quarter revenue to be down approximately 10 percent.” The range of speculation for Nike’s losses span from intense new competition to lack of innovation from the winged Greek goddess. But Nike’s spectacular blunder may run deeper.

Recall the tumultuous times of 2020, a devastating concoction between the COVID-19 shutdowns and the rioting after the tragic death of George Floyd. Nike, within four days of George Floyd’s death, launched a “Don’t Do It” message linking the firm to matters of social justice. This was not a new campaign for Nike. Just two years prior, the shoe conglomerate promoted a controversial figure, Colin Kaepernick, the football player who knelt during the national anthem. That campaign generated backlash that saw consumers burning Nike products. Unfortunately, the summer of 2020 saw more than products burn; entire stores and streets were lit a flame.

The summer of 2020 saw rioting and looting across the country, with damages estimated up to $1 billion dollars, per Axios. Nike stores were targeted in just about all American metropolitan areas including Los Angeles and Chicago. Chicago Black Lives Matter organizer BLM, Ariel Atkins, stated that such lootings were justified as reparations. The Black Lives Matter hashtag can be found linked to the “Don’t Do it” message as well. Nike associated itself with the organization that cheered the burglary of its very own stores that same year.

Nike wanted to make an impact in the community, venturing beyond selling shoes and sports apparel. The results include a current 2-percent reduction in labor force, the latest of which included 740 personnel from its HQ in Oregon. Pledging support in turbulent times did not go far enough in 2020. In 2021, Nike set objectives for attaining more equity and fairer wages amongst all employees. These goals were also attached to management salary determinations for 2025. The 5 year road map stated “For the first time, Nike said, it will also be tying its executive compensation to the company making progress in deepening diversity and inclusion throughout its workforce, protecting the planet, and advancing ethical manufacturing.” Given the stock’s current bearish behavior on Wall Street, that is indeed ‘bad news bears’ for everyone seeking a raise.

Economist Milton Friedman, in the 1970s, reflected on the perils of businesses attempting to broaden their scope beyond providing profits to shareholders. His essay “Social Responsibility of Business is to Increase Its Profits” straightforwardly explains, “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Nike has promoted athletes when consumers would rather burn their merchandise, and associated itself with organizations which burglarized their stores. Nike may not be out of the game just yet, but she has fallen from Olympus.

Europe is on the brink of responding to American industrial policy with its own protectionist measures, contributing to a destructive arms race of state intervention. In 2022, the US passed the CHIPS act, a $280 billion collection of funds for investment into new “technological” industries. In doing so, the United States, once a supposed bastion of free trade and economic liberalism, ushered in a new era of industrial policy. 

While it is perhaps too soon to evaluate the success of the CHIPS act at achieving its stated goal of creating a fully domestic supply chain for “strategically important” manufactured goods, the bill’s price tag and the development in the American Chips industry that predates the bill suggest it is may at best be wasteful and distortionary. Yet, the cost of the CHIPS act may be many times larger than its simple price tag. Our friends in Europe see American consolidation of technological industries as a threat to their own economies. Unsatisfied with their equivalent CHIPS act, many in Europe are calling for fundamental reform to the European economy in response to American and Chinese actions. Former Italian Prime Minister Mario Draghi is at the center of this push for European “competitiveness,” and in an upcoming report to the European Commission, he is anticipated to call for a series of drastic reforms. In response to our interventionism, Europe seems set on implementing its own harmful industrial policy, heralding a new era of economic warfare between power blocs. 

The basic motivation behind European calls for centralization is not a new one. European leaders believe themselves to be in a weak position, and they see centralization of the economy through industrial policy as a way to strengthen their hand. This feeling of weakness is not hard to explain. The European economy has been persistently weak since the 2008 recession. The Eurozone crisis precipitated nearly a decade of slow growth. Just as the continent was beginning to recover, the COVID pandemic forced lockdowns and overzealous spending, which in turn produced years of inflation. As if the continent wasn’t doing poorly enough, Russia invaded Ukraine, precipitating further sanctions and an end to the supply of Russian natural gas. A slow economy has discouraged investment, and Europe is lagging behind in strategically important industries. 

Draghi, for his part, sees the problem as one of disunity. He argues that while Europe has “the same natural size advantage…fragmentation is holding us back.” Rather than focus solely on reducing barriers to economic integration, however, he and others in Europe seem set on simply trying to copy American industrial policy. In a speech in June he called for the EU to use “subsidies and tariffs to offset unfair advantages created by industrial policies and real exchange rate devaluations abroad.” Rather than save the continent’s economy, Europe leaders will likely only succeed in copying our mistakes. 

Taken at face value, some aspects of this push for unification are grounded in sound economic logic. Draghi calls, in part, for regulatory standardization in telecommunications and tech industries in general. Past research has found that in technological industries in particular, differences in regulatory regimes between countries obstruct the creation of large-scale networks. As a result, Europe is unable to create the extensive supply chains that new industry requires, and cannot benefit from economies of scale. 

Those calling for European “competitiveness” do not mean actual economic competition. Instead, their goal is strategic power through centralization and intervention. European leaders believe that the continent must have “key” industries to produce goods like microchips, regardless of whether Europe actually has a comparative advantage in those industries. 

This kind of political competition between governments, rather than market competition between companies, leads to lower efficiency as governments protect unprofitable industries. True, private industry would still have a role, but Draghi and others want to encourage consolidation through state support. Consolidation may be economically optimal, and if so the market will tend towards it as larger firms see increased profitability. State intervention, however, would mean that chosen private companies would be protected from internal competition through subsidies and tariffs, reducing efficiency and growth. The US CHIPS act, for instance, has so far paid out the vast majority of its grants to a small handful of massive companies. State intervention will only ensure that the supply chain for CHIPS and other prioritized goods conforms to the interests of politicians and bureaucrats, rather than those of producers and consumers. 

Yes, state sponsorship may boost European production of, say, microchips relative to what would be present in a free market, at least in the short term. If so, advocates of intervention will hail it as a victory. And it may be a victory, for politicians. But it will be a loss for the consumer, and, in the long run, for European strength as well. If it wants to, in the short term, the state can ensure that any one good is produced at a greater quantity than it could be in the free market. But that particular increase always comes at the cost of an overall reduction in wealth. 

Every euro spent on state subsidies is a euro taken from the private sector, and thus a euro that cannot be spent on the development of an industry for which there is actual market demand, depriving other industries in the process. 

Draghi himself acknowledges the need to facilitate investment in startups, but subsidies and other forms of protectionism would make it impossible for new companies to get off the ground. 

Rather than engage in a losing battle of control and consolidation, the EU should side-step it entirely, decoupling Draghi’s beneficial push for an open intracontinental market from the harmful tilt towards state industrial policy. In fact, the EU could benefit substantially by leveraging the competition inherent between its member states, and the opportunity for specialization that having more than two dozen nations, each with their own particular advantages in production, would provide. 

Abandoning state intervention may well require accepting some harsh truths. Europe may simply not be able to produce every single good with a potential strategic use, and that may upset some in Europe, but relying on trade for some goods and allowing the market to instead focus on those industries in which Europe excels at will lead to better long-term performance, and even eventual profit from American and Chinese mistakes. European companies could, for instance, take advantage of taxpayer-subsidized American chips to produce goods further down the supply chain, like computers or electric vehicles. 

If carried out, this new era of European industrial policy will further weaken a sluggish continental economy, and may drag the US economy along with it. EU attempts at direct investment and subsidy will likely spur calls from American interest groups for even more subsidies and investment on our end. While the Biden administration says that it is unbothered by EU measures, other US officials warn that they will incur a US response when actually implemented. 

Ultimately, the replacement of global, interconnected, supply chains with attempts at autarky through subsidy will only impoverish every country involved. And as Europe attempts to respond to the CHIPS act, expect American politicians to cry foul, and call for even further spending in response. Protectionism may beget more protectionism, as governments compete to bolster their power at one another’s expense. 

The annual tax gap (the difference between the amount of tax collected and the amount legally owed) is estimated to be at least $400 – $600 billion a year, depending on the year and who is making the estimate. The rich are often blamed, either for evading taxes or for not paying their “fair share,” whatever that is. The facts, however, reveal a different story. The top one percent have an average tax rate of about 26 percent, compared to about 3 percent for the bottom half. The top one percent pay about 42 percent of total federal income taxes, compared to 2.3 percent for the bottom half of all taxpayers. Thus, it would appear that the rich actually pay much more than their fair share and are entitled to a tax break, an argument that is almost never made by a politician. Elon Musk reportedly paid about $11 billion in taxes one year, which is more than the GDP of some countries, but that isn’t enough to satisfy some politicians and pundits.  

One possible solution to close the tax gap that has been floated around is to hire 87,000 additional IRS agents, supposedly to squeeze more taxes out of the rich. The problem with that proposal, aside from the fact that the rich are already paying more than their fair share, is that nowhere near 87,000 new IRS agents are needed to further fleece the few really rich people in this country. What is more likely is that they will be unleashed against the middle class, which is where most of the money is.  

Rather than narrow the tax gap by hiring more “tax police” (the term used in Russia), a better approach would be to eliminate the reasons why people evade taxes. Once the causes of tax evasion have been identified, it might be possible to find ways to reduce the extent of evasion.  

Why People Evade Taxes 

There is no need to conduct studies to identify the reasons why people evade taxes.  Fortunately, those studies have already been done. Here are the top 10 reasons that have popped up in the literature.  

1) The government is tyrannical. Tyranny can come in many forms. The Judenvermögensabgabe (“Jewish Capital Levy”) that forced Jews (or anyone) to pay taxes to Hitler is one of the more egregious examples given in the literature. Other forms of tyranny might include persecuting or harassing people because of their religious or political beliefs, imprisoning political opponents, confiscating private property, conducting searches without a warrant, punishing people for engaging in peaceful protests or for engaging in victimless crimes, etc. People would be more willing to pay taxes if the level of tyranny were reduced (or preferably eliminated).  

2) Tax rates are too high. During the 1950s, the top marginal tax rate was more than 90 percent. Such a high tax rate not only discouraged productive economic activity, but also strongly encouraged tax evasion. Although tax rates are no longer that high, they are still sufficiently high to entice some taxpayers to evade taxes, especially if they feel they are being exploited by government. An excessively high tax rate was one of the top reasons why people justified tax evasion in many surveys.   

3) The tax system is unfair. The perception that the tax system is unfair was one of the common justifications of tax evasion in many studies. and also frequently cited in the religious literature. The obvious solution to reduce tax evasion in this case would be to make the tax system fairer. The problem, however, is that it is difficult to reach consensus on what the attributes of a fair tax system might be. 

4) Inability to pay. Inability to pay was one of the strongest arguments to justify tax evasion in the historical literature, and it also in recent surveys. To partially alleviate this problem, we could reduce tax rates. Another option would be to exempt income earned below a certain threshold, which is already part of the existing tax system. 

5) Tax funds are wasted. There is a widespread perception that the government wastes a lot of money. Anyone who has been in the military or who has worked for government has probably witnessed massive waste firsthand. Examples include the purchase of $400 hammers, billion-dollar websites that don’t work, and bridges to nowhere. Fewer taxpayers would feel justified in evading taxes if such news of massive government waste were rare, rather than the norm. 

6) Tax funds are spent on immoral projects. One way to reduce this justification for tax evasion would be to reduce or eliminate funding for projects that are considered morally reprehensible to a large segment of citizens. Taxpayer funding of abortion is one such target for defunding, but it is not the only one. Public money for what some people refer to as “gender affirming care,” is another example that dubious taxpayers might resist funding.

7) Tax funds are spent to support unjust wars. Some people protested US involvement in the Vietnam War by filing tax returns that claimed an inflated number of dependents, which reduced their tax liability to zero. They were not able to get away with this ploy, however. The IRS fined them and made them pay the correct amount of taxes, but they were able to voice their protest symbolically. Invading countries that pose no threat to the United States could be given as more modern examples, but they are not the only ones. This justification might be extended to wars and military actions that US taxpayers are forced to support, even if they are considered just wars, such as the war between Russia and Ukraine and the war between Israel and the Palestinian people, some of whom support Hamas. It might also be pointed out that American tax dollars have been used to fund both sides of the Israeli-Palestinian conflict. In addition to giving billions of dollars in military and other aid to Israel, the US government gave millions to Hamas to help the Palestinian refugees. Whether the funds were actually spent on refugees is difficult to determine, since the spending was never supervised. The fact that Congress has, as of this writing, refused to allow an audit to determine how the funds given to Ukraine have been used, raises red flags about how the funds might be misspent. One thing we do know is that US taxpayer funds were used to pay Ukrainian bureaucrats’ salaries and pensions. 

8) People pay for benefits they do not receive. Much federal spending does not benefit the people who fund the projects. Many, perhaps most, federal projects might be considered special interest projects because they fund a small minority of people at the expense of the general public. Taxpayers who live in Missouri and Arizona are not inclined to fund the building of a bridge in West Virginia, for example. Federal subsidies to the public transportation systems in New York City or Los Angeles are funded by taxpayers who live hundreds or thousands of miles away. Funds spent on any foreign aid project would also fall into this category.  

9) Tax payments are pocketed by corrupt politicians, their families or friends. Using taxpayer funds to pay excessive legal fees to a boyfriend, or funneling federal contracts to friends and family are some examples of the kind of government abuse that justifies tax evasion in the minds of some taxpayers.  

10) Taxes support governmental institutions in which the people have lost trust. Several studies have found that there is a correlation between confidence in government, the police, the civil service or the justice system and willingness to pay taxes. The less confidence they have in these institutions, the fewer qualms they have about evading taxes.

The obvious conclusion to be drawn from these studies is that tax evasion could be reduced if people had more confidence in their government and in governmental institutions. 

It is possible to reduce tax evasion without sending armed IRS agents to kick in doors or confiscate assets. The ten reasons given above provide some guidance to creating a tax system most people would voluntarily support. If implemented, these would not only reduce tax evasion but would result in a more just society.