Thoughts on the Passing Scene

From the Editor

Protesting Without a Clue

It’s been two months since Washington, DC, was overrun with mobs protesting the annual meetings of the World Bank and International Monetary Fund. But still I can’t stop thinking of the muddle and confusion that led so many people to take to the streets, waving banners and shouting slogans. Despite the ostensible purpose of grinding these meetings to a halt, these really weren’t protests against the Bank and the IMF. The protesters were actually an amalgamation of dozens of various interest groups, ranging from save-the-whalers to free-love Marxists to self-proclaimed anarchists to foes of biotechnology (oddly, the anarchists were the most organized of these groups). The only unifying thread tying these groups together was a fundamental ignorance of basic economic tenets. These were broad protests against capitalism and the free market. The fact that they see the Bank and the IMF as exemplars of capitalism suggests how skewed their thinking on other matters likely is.

This thinking was captured wonderfully in the banners held aloft. Typical is the one in the photograph on page 1. “Abolish Capitalism! Abolish the State!” it read. I talked to the person carrying it. He said he came more than 1000 miles for the protests. And for what? To display a woeful ignorance of what capitalism is. It is not a system, like socialism, or Stalinism, or mercantilism, imposed upon citizens and enforced by the state. Roughly, capitalism is the absence of any sort of system. It affords people the ability to act freely to pursue whatever interests they desire. I asked the fellow carrying this banner what alternative he would like to see in the place of both capitalism and the state. He said he wasn’t sure, but perhaps some sort of socialism like they have in Sweden. Then he mentioned Cuba. When I asked isn’t the state intrusive in people’s lives in those places, he just gave me a puzzled look.

Another banner that caught my eye read, “Free Trade Enslaves Our Brothers.” So much contradiction in so few words! Free trade enslaves no one. It isn’t about trade as much as it is about freedom–the voluntary exchange of goods and services between willful parties. “Voluntary” and “freedom” and “willful” are not the lexicon of slavery.

All this said, there are legitimate reasons to object to the everyday business of the World Bank and the International Monetary Fund. The chaos in Russia and the seeming hopelessness in much of Africa and Latin America are a tattered testament to past Bank and IMF failures. Too bad none of the protestors in Washington understand that.

A New Job for Antitrust

Fresh from their attempts to break up Microsoft, Joel Klein and the crack attorneys at the Justice Department’s Antitrust Division need new fields to conquer. Keeping their sights trained on the Internet industry, perhaps they should direct their fire at the National Association of Governors and the National Conference of Mayors. These seem to think that one answer to the Internet taxation conundrum lies in tax harmonization–if states and localities can work together to line up their tax rates and systems, then we can escape the whole problem of predatory taxation which the current Internet tax moratorium seeks to avoid.

But answering this siren song will only lead to a crash upon the rocks. Tax harmonization is the worst sort of price fixing. Tax competition among jurisdictions acts as a check on governments looking to raise taxes. In the private sector, even if a company is guilty of violating antitrust statutes, there is nothing that forces a consumer to buy its products anyway. Not so with government. We don’t have much choice of what we “buy.” People do have the leverage in being able to move, however, and taxes are often a consideration of those figuring out where to settle. The District of Columbia, for instance, has lost hundreds of thousands of residents over the past two decades–more than a quarter of its population–many of whom have fled to nearby lower-tax areas in neighboring Maryland and Virginia.

Tax uniformity will limit tax competition, and threatens to remove one of the legitimate checks we have on overweening government. Still, it’s near the top of the wish list of politicians around the country. Somehow I’m willing to bet the Clinton-Gore antitrust mavens won’t find themselves bothered by collusion and price fixing when these sins are committed by government officials.

CEI UpDate Editor Max Schulz can be reached at [email protected].