Few express opinions different from what they are paid to say, and such is equally true for those who work for government. On an almost daily basis, the world is treated to presidential spokespeople denying what most people understand to be true. Last week, Jason Furman, President Obama's chief economic adviser, who used to have a reputation as a competent economist, embarrassed himself by trying to deny - in response to a Congressional Budget Office report - that the president's proposal to increase the minimum wage would cost jobs. All too many professionals are willing to ignore empirical evidence when it conflicts with their beliefs or those of their employers. Perhaps in no place do we see greater evidence of this than in the field of climate science. If the climate scientists who produced their grossly defective, predictive models had been employed by private companies that depended on the accuracy of their predictions, they would have been fired. Private economic forecasters who are consistently wrong tend to lose their credibility and at least some of their income.  There is one group of economic forecasters, though, who suffer very little loss of prestige or income, even though they may often be wrong. They are those who work for the Federal Reserve and other government agencies.

Among the general public, the International Monetary Fund (IMF), the World Bank and their lesser known younger sibling, the Organization for Economic Cooperation and Development (OECD), have reputations far exceeding their actual achievements. The OECD was originally set up as an organization to promote trade among the developed countries and to build statistical databases. It has now morphed into an organization whose principal goal appears to be the collection of more taxes for its member governments. Last week, Angel Gurria, secretary-general of the OECD, said it was the "duty" of international companies to stop employing tax-reduction strategies -- aiming some of his comments directly at Apple and Google. Mr. Gurria seems to think the purpose of business is to pay taxes. Not so. The purpose of a business is...

How would most Americans and Congress react if a foreign government passed laws regulating U.S. businesses and people in the United States? Probably with justified outrage. The Foreign Account Tax Compliance Act or FATCA is U.S. financial imperialism at its worst.  It's causing great resentment in much of the world, which is hurting U.S. interests. The administration and many in Congress seem to have learned nothing from the Obamacare disaster. Now that they have destroyed the world's best health care system, they are in the process of further destroying what was at one time a very functional global financial system. In its place, they would erect a tax law whose costs were far higher than its benefit, that may drive hundreds of billions of dollars of job-creating foreign capital out of the United States, and that could trigger a global financial crisis.  Only the Democrats could do something so sinister and masochistic -- and try to stymie any Republican effort to repeal it.

Without the rule of law, a civil and prosperous society cannot long endure. The annual reports of The Economic Freedom of the World and The Index of Economic Freedom show very large declines in the international ranking of the United States in the rule of law over the past decade. The Obama administration is becoming increasingly arbitrary concerning what laws it chooses to enforce or not enforce, while, at the same time, through executive orders and administrative decisions, just making up "law" outside of the constitutional process. Perhaps the clearest examples of this abuse can be found at the IRS, which increasingly acts as a rogue agency with the support of its masters at the Treasury and Justice Departments.  The IRS has a long record of ignoring the Constitution and the rule of law.  Now it's become much worse.

The struggle between the productive and the destructive never ends. The productive are those who add more value and wealth than they consume, and the destructive are those who destroy more value and wealth than they create. Will 2014 be a year of production or destruction? Those private individuals, firms or institutions such as the Federal Reserve and the International Monetary Fund (IMF) that make economic forecasts for the United States or the global economy are actually making judgments about the outcomes of the struggles between the productive and the destructive. The good news is that most people will work hard and honestly to create more wealth for their families in 2014 -- whether they are creating a new business or product, or just doing a really good job. The bad news is that in the United States, individuals and businesses now face $54 billion more in new federal taxes and a torrent of new regulations and rules that, for the most part, make life harder.

Last week, President Obama said that "income inequality" is the major problem that his administration would focus on for the remainder of his term. He proposed increasing the minimum wage as a way to solve this issue. The president's statement is a perfect example of how politicians misdiagnose problems and then offer solutions that make matters worse. The real problem is the lack of economic growth, which reduces economic opportunity, particularly for the least skilled. Increasing the minimum wage helps those who actually receive an increase in their wage, but it makes it worse for all of those who lose a job or can't get one because the minimum wage is far above the market clearing rate. As can be seen in this table, most minimum-wage workers are young people who quickly obtain higher wages as their work skills improve.

Have you noticed that many government regulations are so complex and vague that it is impossible to know if you are in compliance? Examples are the 70,000-plus pages of Internal Revenue Service regulations and the reported 30,000-plus pages of Obamacare regulations. Who do you think has a self-interest in all this complexity and vagueness? The Food and Drug Administration was set up to protect us from consuming bad food or drugs. It has morphed into an agency that keeps potentially beneficial drugs from us, and now is even banning our ability to know what diseases to which we may be prone, and thus, blocking our ability to take potential corrective or preventative action. The FDA has gone from being a protector to a destroyer of health and liberty.  Other overreaching government regulators are also squeezing liberty out of existence.  Here are some examples.

If you have ever been before a judge for any reason, did you think about whether the judge was appointed by a Democrat or a Republican? Probably not. People expect judges, regardless of political leanings, to be fair and competent -- and for the most part, this expectation has been fulfilled in America, unlike many other places in the world. The action by the Senate Democrats last week, though, to kill the long-standing agreement that required a 60 percent supermajority vote for the confirmation of a federal court judge (with the exception of the Supreme Court) and change to a simple majority vote causes many to fear the increased politicization of the federal judiciary. The immediate cause of the Senate action in changing its rules appears to be the desire of the Obama administration to appoint three new federal judges to the U.S. Court of Appeals for the District of Columbia Circuit. This court is often viewed as the most important appellate court, in part because many of the cases involving alleged federal government overreach go to that court. That's why Obama wants to "pack" it with liberal judges.

"I wouldn't start here if I were you," is the punch line of an old Irish joke, which monetary scholar Kevin Dowd cites to illustrate the deeper and deeper hole the Federal Reserve is getting us into. Mr. Dowd, in a paper delivered last week (11/14) at the Cato Institute's 31st annual Monetary Conference, concluded:

"The modern financial system has not only kicked away most of the constraints against excessive risk-taking, but positively incentivized systemic risk-taking in all manner of highly destructive ways . We have gone from a system that managed itself to one that requires management, but cannot be managed. We have gone from a system that was guarded by market forces operating under the rule of law to one that requires human guardians instead -- but we have not solved the underlying problem of how to guard the guardians themselves."

What do you think the minimum wage per hour should be? How did you come up with that number? The federal minimum wage is $7.25 per hour, and the Obama administration proposed raising it to $10.10 per hour last Thursday (11/08).  Last week, the voters in New Jersey passed a $8.25 per hour minimum wage, while the voters in the town of SeaTac, Wash., passed a $15 per hour minimum wage. A noted labor economist, Walter Williams, has written: "Among academic economists, there is little or no debate over the unemployment effects of minimum wages. Our only debate is the magnitude of unemployment." In 1977, Mr. Williams authored a classic paper showing that one of the major reasons for the original federal minimum wage back in 1938 was the desire of racist, white-only unions to keep skilled black tradesmen from getting jobs owing to their willingness to work for less than the union rate. It should be no surprise that those who argue most strongly for higher minimum wages are unions, seeking protection from those who need the work and would be willing to work for less, and members of the political class who spout lofty slogans about how they are out to protect the working poor. Do both these groups want more unemployment?

Do you think the government is too big, taxes too much and regulates your lives more than it should? Polls consistently show that most Americans think there is too much government. Nevertheless, those in the majority who say they want smaller government continue to vote for people who ultimately give them larger government. All too many are willing to vote for those politicians who promise more benefits to some to be paid for by others, without understanding that they will eventually become the "others." The American Founders clearly understood the danger. As Thomas Jefferson said, "When the people realize they can vote themselves benefits, all is lost." What has gone wrong and why? In an incisive, new book, "Terms of Engagement: How Our Courts Should Enforce the Constitution's Promise of Limited Government," Clark Neily lays much of the blame at the feet of the judiciary.    Mr. Neily is the senior attorney for the Institute for Justice, and is perhaps best known for success in the Heller case, where the Supreme Court held that the Second Amendment protects an individual's right to own guns.

Should government employees have privileges and legal immunities that the rest of us do not have? The government shutdown battle is, in part, a dispute about the extra subsidies members of Congress and their staffs are slated to get from Obamacare. Civilian government employees often whine about the lack of respect they receive from their fellow Americans. Part of the antipathy many feel toward the government class is because they, on average, are paid more, receive more benefits, are almost impossible to fire, and are rarely penalized for abusive, rude and even illegal conduct that would get civilian workers fired, fined and, in some cases, sent to jail. It can be argued that it is unfair to paint all government workers with a charge that they are impertinent slackers when, in fact, many government employees work very hard and take many risks to help their fellow Americans. If civilian government employees were put on a more level playing field, where the real slackers and abusers were either fired or forced to shape up, the respect for all government employees would grow. So what can be done to achieve this?

The good news is that there are more countries managing their economies in a fiscally responsible way than there were two years ago. Fiscally responsible means keeping average annual deficits less than average annual economic-growth rates, keeping net debt from exceeding one-third of gross domestic product, and maintaining a relatively small government. The bad news is that most of the world's biggest economies, including that of the United States, are getting deeper and deeper in debt as a result of excessive spending, and will ultimately have to pay the price. The chart below gives the details.  They are not pretty for us nor for most of the West.

Leaders who cannot see beyond Stage One often cause great harm. Unfortunately for the United States and the world, President Obama continues to exhibit a strange naïveté and a lack of wisdom about domestic and foreign problems -- Syria just being the latest example. The famous Russian "reset" was one of the first policies that later turned into an embarrassment. The president shows compassion when he talks about those who were gassed in Syria, and he shows compassion when he speaks about minorities, the young and those who have the fewest opportunities. Yet by placing additional burdens on job creation, many of his tax and regulatory policies have led to the biggest increases in unemployment among those he says he cares most about. A compassionate speech is no substitute for sound action. A wiser president would realize his policies are not working and reverse course. Wise people learn from their mistakes, while the unwise double down.

The widespread belief is that the American constitutional republic, if not actually broken, is in a state of disrepair. In his new, best-selling book (currently #1 on Amazon), "The Liberty Amendments: Restoring the American Republic," Mark R. Levin, president of the Landmark Legal Foundation and nationally syndicated talk-show host, proposes a number of amendments to the Constitution as a fix. Mr. Levin argues that amendments are needed because the nation has entered an age of "post-constitutional soft tyranny" -- as defined by the great 19th-century French historian and philosopher, Alexis de Tocqueville, who wrote in "Democracy in America":

"It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes and stupefies a people, ‘till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd."

Why does the Obama administration claim it wants you to pay less for your airline ticket, but more for the shrimp you buy?  One reason the economy keeps stumbling along is that businessmen, consumers and taxpayers are having a hard time planning because of endlessly inconsistent and often lawless policy directives from the Obama White House. On the same day last week, the administration announced that it was seeking to block the proposed American Airlines-US Airways merger, allegedly to protect consumers against higher prices - and that it might impose higher duties (taxes) on shrimp from foreign competitors to protect U.S. shrimpers, meaning that all who eat shrimp will have to pay more. The Justice Department, under the leadership of ethically and intellectually challenged Eric H. Holder Jr., came up with a study that concluded that airline ticket prices would be higher and service worse if American Airlines and US Airways merged. The conclusion was immediately challenged by affected parties (the companies and the unions) and many transportation economists. I do not know, as a frequent flier, whether I will be better or worse off with the proposed merger. I do know, however, that the folks at the Justice Department also do not know - but trying to block the merger massages their egos and their lust for power.

Terrorists, money launderers, drug dealers and tax evaders use automobiles, airplanes, telephones, computers, banks and countless other goods and services that we all use. Yet all too many government policymakers think that if we make these things very difficult to use, the bad guys will go away -- forgetting, of course, that all the rest of us suffer from mindless regulation and control. Banks and other financial service firms have become the targets of choice for the unthinking government class and its allies -- because in popular culture, bankers are often cast as the evil villains, despite the fact that the world economy could not function without them. Thirty years ago, the excuse for more financial services' regulation was that "drug dealers" used banks. That argument morphed into "banks facilitate money laundering," which was made a crime in the United States in 1986. Then after Sept. 11, 2001, that excuse evolved into "terrorists use banks." More recently, the justification for more rules has become "banks around the world enable businesses and individuals to avoid taxes." There are always new excuses for more regulation -- but the demands remain the same:

Stall speed is the airspeed at which an aircraft stops producing lift. Unless immediate corrective action is taken, such as reducing the wing's angle of attack or the weight of the aircraft, the results are not likely to be good. An economy can hit "stall speed" when it becomes burdened with too much dead-weight loss. The eurozone economies have hit stall speed, with France, Germany, Italy and Spain, as well as most of the smaller economies, having negative growth. In addition, the United Kingdom and Japan are barely above stall speed with an annual growth rate of less than 1 percent. The United States, Canada, Russia and Brazil are in the danger zone, all with annual rates of less than 2 percent growth. The basic questions are: Why has growth stalled, and what needs to be done to revive it? Good economists know the following:

San Cristobal, Galapagos Islands.  It is odd to be on a small volcanic island on the equator in the Pacific Ocean, 600 miles west of Ecuador, for a meeting of economists and a few other academics and think-tank types. One of the lesser purposes of the meeting is to discuss what we can learn from natural selection and animal behavior that might have relevance for the world economy and modern societies. And no, this is not a government boondoggle. We are a bunch of limited-government, free-market types, here on our own tab and not burdening any taxpayer with our eccentricities.  When Charles Darwin first landed here back in 1835, he was struck by the many indigenous animal and plant species, and specialization of the animals in order to best prosper. The variations in rainfall, from island to island and within an island, determine what plants grow where, which, in turn, determine which animals use them for food and shelter. Even the tortoises vary from one island to another, depending on the food source. The animals have had hundreds, if not thousands, of generations to evolve and exploit the food and terrain available. Humans, more specifically Americans, have had only three generations to adapt to the Internal Revenue Service.  We need to adapt evolutionary defenses against it.

Vienna, Austria.  The problem of Internal Revenue Service misbehavior is not confined to its actions in the United States, but extends to its dealings with foreign individuals, institutions and countries. All sovereign nations have just as much right to create their own tax laws and privacy protections as does the United States.  So it is disappointing that the folks at the IRS and the Obama Treasury and Justice departments seem to have forgotten this basic principle.  All are now engaged in a full-scale assault on the basic property and human rights of many non-Americans, as well as many Americans who live abroad or have assets in foreign countries. Representatives of major European think tanks and taxpayer groups are attending the annual Resource Bank meeting here in Vienna, hosted by the Austrian Economics Center and the Hayek Institute. They are appalled by the actions of the IRS.  So should we all.

Every few years, at least from the time of President Franklin D. Roosevelt, there is a scandal involving abuse of power at the Internal Revenue Service. We are again in the midst of one of these periodic abuse scandals, with many solemn promises that the problems will be corrected and will not happen again. As always, the rhetoric is far from the reality for two basic reasons. The first is the nature of the income tax, which, by definition, is subjective in its interpretation of the definition of "income" and thus subject to abuse. The second is the type of person that the IRS attracts as an employee. In the former, the agency is corrupt in the Orwellian sense. When the federal government's General Services Administration or the IRS takes a number of its employees to Las Vegas for a conference, is this a taxable benefit (income) or not? The answer is this case is "no" because this is the type of benefit the political class enjoys. In the latter, because the IRS is feared, loathed and resented, it attracts all too many workers who are insensitive to the needs and problems of others, and some even enjoy being bullies. These flaws of the IRS cannot be mended -- thus the only real solution is to put an end to the IRS itself.

[Note from JW:  Dr. Rahn here presents an economic discussion of immigration - after all, he is an economist.  It is not a discussion of the national security threat of immigration, specifically that of illegal immigration from Mexico. A lively discussion of Dr. Rahn's arguments is expected on the TTP Forum!] How many new immigrants should the United States allow each year? How many guest workers? These are not easy questions, which is why there is as much fierce debate within the two parties as between them. The two main reasons given for restricting current immigration are the myths that immigrants take away American jobs and that immigrants are more likely to go on welfare, thus putting an additional burden on the taxpayers. Rather than taking away American jobs, good economists understand that immigrants who work create wealth in America, which in turn creates more and higher paying jobs for everyone. To explain the economics of this adequately would take more space than this entire commentary, but the truth of the assertion can be seen in the fact that high-wage countries with many immigrants such as Switzerland, Australia and Canada tend to have much higher labor force participation rates and lower unemployment rates than low-wage countries.

There is considerable evidence that drinking one glass of red wine per day for most middle-aged men has more health benefits than costs. There is also considerable evidence that drinking three or more glasses of wine per day causes more health problems than benefits. Even so, the owner of your favorite winery might encourage you to drink at least three glasses a day, perhaps with the following argument: "If you and my other customers drink three times as much, it will enable me to hire more workers, thus increasing employment." What the winery owner conveniently ignores is the damage the additional drinking causes to both your health and your pocketbook, and the fact that if you spend less on wine, you probably will be spending more on other goods and services, thus increasing employment in those areas. Many of the economic arguments I hear from the political class -- including members of Congress and President Obama -- are equally fallacious. It is tiresome to hear the president (as he did again last week during his news conference) and others say, time and time again that if we just tax and spend a bit more, our problems will diminish.

With money running low, government functions become inviable As a mental challenge, try to think of all of the governmental activities — federal, state and local — that could be privatized. Now, go a step further. Suppose you were required to develop a plan to privatize, or make self-supporting through user fees, nearly every activity of government. Could you or a group of your friends do it? Try it. I expect your success will surprise you. The reason this is relevant is because most governments will reach their borrowing limits in the not-too-distant future, which means they will have to operate on current revenue from taxes and fees. Many governments have reached or are reaching their ability to increase taxes, and income-tax systems will begin to fall under their own weight. Governments will be forced to downsize and privatize — or private citizens and groups will just take over as they are increasingly doing because of failing government schools, for example. The U.S. government was created to protect people and property and to ensure liberty; but more and more often, it does just the opposite.

Do you think you receive fair value for the money you spend on taxes? The fact is you don't, because there is excessive corruption in both the way your tax money is collected and in the way it is spent. Many countries are notorious for the tax collectors being "on the take." At the federal level, it is rare for an Internal Revenue Service agent to put his hand out, but that does not rule out considerable corruption. The corruption starts with Congress. Members of Congress "buy votes" by handing out "free stuff." It includes expenditures on programs that few, if any, congressmen would spend their own money on, plus programs that are filled with waste and fraud that go on year after year (e.g., studies have shown that Medicare and Medicaid misspend up to a third of their budgets). Members of Congress also buy campaign contributions by proposing and voting for expenditures that reward certain companies, industries, and unions Solyndra and the General Motors bailout come to mind. This kind of buying of votes and campaign contributions goes on in most democracies. The United States may be the world's leader in vote and contribution buying through special provisions in the tax code. It is not hard to figure out why the members of the House Ways and Means Committee and the Senate Finance Committee, the two tax-writing committees, tend to receive much larger campaign contributions than others who sit on less influential committees.

There has been global outrage about the proposal from the Cyprus government to have a significant one-time tax on those who have deposits in Cypriot banks. It has been correctly called a theft of private capital. What many fail to realize is that from the beginning, governments have been engaged in this type of theft, including the U.S. government. As the debt crisis deepens, governments are likely to increasingly engage in various forms of capital expropriation despite the fact that such activities are economically destructive and morally offensive. The U.S. government is now doing precisely what the Cypriot government is proposing, but only with a lighter and more subtle touch. There are a number of actions governments take to expropriate capital without explicitly saying so.  For example, if you have a savings account, a CD or money market fund, there is a good chance that you are receiving less than 1 percent interest on the money, thanks to the Federal Reserve, while government-caused inflation is running at roughly 2 percent. Thus, you are, in effect, suffering a 1 percent expropriation of your savings each year -- without Congress ever having voted for such expropriation. It gets worse.