I.
Scott Sumner writes:
Sophisticated skeptics often tell us that people exaggerated the risk that Trump would abolish democracy and become a dictator. That’s true, they did exaggerate the risk.
But these pundits miss the more important point. Trump failed to achieve his goal precisely because people overreacted. A “hysterical” reaction can be a good thing. It was the reaction of investors, politicians, allies and voters that stopped Trump from following through with his instincts.
Trump’s worst instincts are not “negotiating positions”. He really did endorse China’s policy of putting a million Uyghurs into concentration camps. He really did endorse Duterte’s policy of murdering drug suspects. He really does respect Putin more than Zelenskyy. He really did support using force to take Greenland from Denmark. When people panic, Trump is stopped. When there isn’t enough panic, Trump indulges in his worst instincts.
This could be a candidate for my annual New Year’s Resolution—changing my mind. I’ve always thought the right way to think about panicking is never. It is never the “right time to panic”—the nature of panic being irrational. Sumner shines a new light on the question for me. Panic has a place, can serve a purpose. Sad but true.
II.
Veronique de Rugy writes:
Some argue that the solution is the European model of value-added taxes and high payroll levies. Michel estimates this would increase the average American household’s tax bill by roughly $12,000 per year, a heavy burden for the lower and middle classes.
But there’s a deeper problem: Europe’s approach doesn’t work, either.
Look at France, which has everything the American left claims to want: a 20% VAT, top income tax rates exceeding 45%, a lingering remnant of its old wealth tax and a state that consumes roughly 57% of GDP with its spending, among the highest in the developed world.
But with public debt standing at approximately 116% of GDP, France didn’t tax its way to solvency.
Veronique is making the key point of her article on why solving the government’s deficit problem cannot be fixed through taxation. As the title says and article makes clear, “Gov’t Doesn’t Collect Too Little, It Spends Too Much”.
Here in the peak of tax season, this is quite apropos. Our collective appetites for government are too ambitious for our collective capabilities to fund them.