2020: Libertarian Victory?

In a stunning departure from its long-standing tradition of analytical rigor, the Cato Institute has declared Joe Biden “president elect”:

Screen shot from cato.org, 11/8/2020

While votes are still being counted and we have weeks of re-counting and election-fraud litigation ahead of us, this formerly prominent think tank has now decided to climb down the precarious ladder of political punditry. I can only wonder what the constitutional experts on the Cato payroll say – or dare not say – about this.

Fortunately, not all of their output is undergoing this metamorphosis of discernment. Michael Tanner, a Cato senior fellow and an accomplished public-policy scholar, has published an article detailing other outcomes of the election that, he points out, are of interest to libertarians. His long list of ballot initiatives stretches from tax policy in Colorado and Illinois to drug liberalization in New Jersey and Oregon.

Tanner explains clearly why the initiatives on his list are important to libertarians, making a good case for every item on the list. However, there are two points missing, which we will return to in a moment. First, a summary of Tanner’s list.

His top issue is the War on Drugs, which, he says “took a major hit”. Every single initiative toward drug legalization passed, he explains,

including proposals to legalize medical marijuana in Mississippi, recreational marijuana in Arizona, Montana, New Jersey and South Dakota, to decriminalize hallucinogenic plants in Washington, DC, as well as a far-reaching measure to decriminalize drugs – including cocaine, heroin, and LSD – in Oregon.

Next up is tax policy, where Tanner notes that voters in both Colorado and Illinois voted against higher taxes. In fact, in Colorado the ballot measure to destroy TABOR – a constitutional measure to limit taxation – was defeated and the initiative to cut the state income tax was approved. There was also a tax policy item on the ballot in California, Tanner explains:

Possibly the biggest question put to California voters, Prop. 15, would have changed property tax rules for commercial properties, resulting in an overall ax increase of $7.5-$12 billion.

According to Tanner, the outcome on this item is still uncertain.

Most of the rest of the items on Tanner’s list cover civil liberties (largely matters under the Fourth Amendment) and criminal justice reform. Some items pertain to economic regulations, including the now-infamous attempt by the state of California to force “gig workers” over in the employment fold.

For the most part, this account of ballot initiatives does indeed have a libertarian profile. Deregulation is essential for economic freedom, and even social deregulations can have positive economic effects. For example, the right of gay couples to marry can be helpful in their entrepreneurship as they get access to the same tax code as married, heterosexual couples. However, the deregulation of narcotics – what Tanner refers to as a “major hit” to the War on Drugs – does not belong under that banner. As I explained recently, the attention that libertarians give to drug legalization is a major reason why their movement never really translates into electoral victories. It puts on full display their indifference to how legal drugs affect the ability of a libertarian society to defend its own liberty.

There is a technical difference between decriminalization and legalization, but that difference does not play out in practice. Wherever the use of these drugs is associated with criminal impunity, drug use will expand, and wherever drug use expands, society gradually deteriorates. Respect for property rights, even public safety, weakens, as does the ability of members of a community to support themselves and their families.

If anyone needs proof of this, a review is recommended of what alcoholism has done to our society over the decades, even centuries. Is liberty advanced by an expansion of this destructive domain of human society?

A common argument for legalization, one that Tanner does not mention, is that lawmakers want a new tax base. This was a major argument in Colorado when legalization of THC was being debated. It has also been an often-heard argument in the fledgling legalization debate in Wyoming, and I cannot help wondering how long it will take before the state of Oregon fully legalizes all drugs and puts an excise tax on their sales.

Ironically, the same libertarians that celebrate the defeat of tax-hiking ballot initiatives also celebrate the de facto creation of a new tax base in more states across the country.

Perhaps in the future, the Cato Institute and other outfits that propose legalization should add a caveat to their efforts: legal drugs, so long as they cannot be taxed. However, I doubt that this would ever happen: libertarian legalizers like drugs more than they hate taxes.

This preference is visible in the priorities that libertarian think tanks make. Not only do they allocate about ten percent of their staff resources to any research and policy work related to government spending, but they also isolate their fight against tax hikes from that very same spending. It is well known that opposition to higher taxes without proposition of spending reform eventually folds to higher taxes and higher spending.

There is, namely, one question that every opponent to tax hikes will eventually trip up on: “So how do you want to pay for [insert any given government spending program here, preferably one of high emotional value]?”

Tanner’s list is conspicuously void of examples of efforts to reduce government spending. This is not his fault, of course – he is only reporting on ballot initiatives from across the country. However, it is very important to understand the significance of the silence on spending. It is more common with state laws that mandate ballot initiatives for tax hikes than it is with state laws that mandate ballot initiatives for spending hikes. In fact, the latter does not exist anywhere; there is not a single state where voters have to approve an increase in appropriations for state and local governments before the increase goes into effect. Government spending is for the most part autopiloted through the legislative process; the squabbling that always takes place tends to be limited to small, isolated items of no real consequence to the bottom line.

In other words, while there are good reasons for libertarians to celebrate the defeat of tax-hiking initiatives in California, Colorado and Illinois, there are even better reasons to ask what the point is of those victories when government spending keeps growing by its own volition. Over time, resistance to higher taxes becomes increasingly difficult as government spending keeps growing. Colorado is a case in point: its TABOR, which only applies to the General Fund, held the line well on state government spending in the 1990s, the Centennial State’s first decade with TABOR. Since then, however, its effect on government spending has weakened.

Proponents maintain that without TABOR, government spending would have been even higher today. That is an unverified statement – there is no study that shows how many more spending initiatives would have passed the state legislature if TABOR had not been in place – but it is not unlikely that they have a point.

The question, of course, is how much higher spending would have been, but with reference to Tanner’s list there is an even more important question to ask. Why isn’t the libertarian movement pushing for the same hurdles to be placed in front of spending hikes as they have created to thwart attempts to raise taxes?

Again, Michael Tanner’s account of libertarian causes that moved forward in the November 3 election, is worth a read. It is inspiring in some ways, but its foremost contribution is in shedding light on what is not on the list. If there is any lesson to be learned here for libertarians, there it is.

If Cato gets its wish and Biden become president, we will wake up one day with a top tax bracket of 62 percent. More of us will also have the displeasure of waking up to the foul smell of legalized marijuana. Therefore, the one question that every libertarian has to ask himself is: would you rather smoke a legal joint and pay a 62 percent marginal income tax, or stay away from the joint and pay 26 percent?