November 2012 Volume 64, No 6 JULY/AUGUST 2014 Features 7 Private Cities 101 by Mark Lutter 13 Swiss Freeports and the Invincible Tax Evader by J. Dayne Girard 20 Earthquake Europe by Iain Murray 25 The Economy Needs More Planning – Central Planning, That Is by Lawrence W. Reed Page 13 34 How Physician Licensing Hurts Medicine and Helps Pseudoscience by Daniel J. Bier Tech 28 Everything I Know About Economics I Learned from Tinder by Joseph S. Diedrich 30 Make It Rain by Thomas Bogle 32 Virtual Worlds, Real Economics by Matthew McCaffrey Page 32 Columns 2 Perspective ~ Tax Flight 4 The Pursuit of Happiness ~ Hazlitt’s Way to Will Power by Jeffrey Tucker 15 The Future Belongs to Liberty ~ Tax Exiles Flee America by Doug Bandow 18 Anything Peaceful ~ Maybe You Can Get Blood from a Stone by Lawrence W. Reed Page 15 22 Wabi-Sabi ~ Libertarians As Seen from the “Other Side” by Sandy Ikeda Culture 36 Frak! Has Your Mother Sold Her Mangle? by Sarah Skwire 38 Class War in the Time of Robin Hood by B.K. Marcus Poetry 6 Duende by Doug Ramspeck 24 Waking Without You by Hannah Bonner PERSPECTIVE Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 Phone: (914) 591-7230; E-mail: [email protected] www.fee.org Tax Flight President Lawrence W. Reed When federal and state taxes are accounted for, The Executive Director Wayne Olson United States has the highest corporate tax rate in the Chief Operating Officer Carl Oberg world (tinyurl.com/pwwgr4a). When it comes to the top Editor Max Borders Managing Editor Michael Nolan marginal rates of individual earners—including state Poetry Editor Luke Hankins taxes—many Americans are seeing more than half their income simply taken away. It’s no surprise, then, that Columnists some of the most productive citizens are leaving for more Charles Baird David R. Henderson hospitable climes. Doug Bandow Sandy Ikeda Tom Bell Sarah Skwire This is called jurisdictional tax arbitrage. At a certain Stephen Davies Jeffrey Tucker point, if you want to grow your business or keep the fruits Burton W. Folsom, Jr. Iain Murray of your enterprise, it makes sense to take advantage of more favorable taxation rates in other countries. In other Foundation for Economic Education Board of Trustees, 2013–2014 words: leave. Chairman Roger Ream Some call this “unpatriotic”’ Others attempt to Vice Chairman Harry H. Langenberg characterize it as some evil superclass that wants to game Secretary Ingrid A. Gregg complex global rules out of sheer greed. Treasurer Michael S. Yashko Canadian pundit-turned-politician Chrystia Freeland Sarah Atkins Kris Alan Mauren writes: Peter Boettke Don Smith Harold J. Bowen, III Chris Talley Jeff Giesea John Westerfield What is more relevant to our times, though, is that Stephen R. Hennessy the rich of today are also different from the rich The Foundation for Economic Education (FEE) is a nonpolitical, of yesterday. Our light-speed, globally connected nonprofit educational champion of individual liberty, private property, economy has led to the rise of a new super-elite that the free market, and constitutionally limited government. consists, to a notable degree, of first- and second- The Freeman is published monthly, except for combined January- generation wealth. Its members are hardworking, February and July-August issues. Views expressed by the authors do not necessarily reflect those of FEE’s officers and trustees. To receive a highly educated, jet-setting meritocrats who feel sample copy, or to have The Freeman come regularly to your door, call they are the deserving winners of a tough, worldwide 800-960-4333, or e-mail [email protected]. economic competition—and many of them, as a The Freeman is available electronically through products and services result, have an ambivalent attitude toward those provided by ProQuest LLC, 789 East Eisenhower Parkway, PO Box 1346, of us who didn’t succeed so spectacularly. Perhaps Ann Arbor, Michigan 48106-1346. More information can be found at www.proquest.com or by calling 1-800-521-0600. most noteworthy, they are becoming a transglobal community of peers who have more in common with Copyright © 2014 Foundation for Economic Education, except for graphics material licensed under Creative Commons Agreement. one another than with their countrymen back home. Permission granted to reprint any article from this issue with Whether they maintain primary residences in New appropriate credit, except as noted. York or Hong Kong, Moscow or Mumbai, today’s Cover © Dabarti CGI/Shutterstock.com super-rich are increasingly a nation unto themselves. 2 THE FREEMAN: FEE.org/Freeman | JULY/AUGUST 2014 PERSPECTIVE It’s not immediately clear from the foregoing passage The United States is no longer a home where value whether we’re supposed to love or hate this new “super- creators are welcome. They are viewed as geese with golden elite.” But for the social democratic author of Plutocrats, eggs to be slain for a laundry list of progressive ends. And this nation-unto-itself is just crying out for annexation by progressive populism, with all its talk of one-percenters a voracious steroid-State that depends on transfers for its and “inequality,” will continue to drive good people to take very existence. flight. Worse, progressive Quicker than you can populism drives the say “Koch Brothers,” the justification for global tax left has painted a picture IN THE OPINION collectors to jet off in hot not of entrepreneurs and of these editors, it’s a good thing pursuit. investors who are trying entrepreneurs still have a place In the opinion of these to protect capital from editors, it’s a good thing predatory politicians to go. If it were less costly to pick entrepreneurs still have a and bureaucrats, but of a up and go, more of us might place to go. If it were less wealthy Uebermenschen costly to pick up and go, who have purchased the follow. In a global economy, at more of us might follow. political process. And it least valuable capital is protected In a global economy, at is the grain of truth in from the parasitic political classes least valuable capital is this latter description protected from the parasitic that stokes the fires of for a little while longer. political classes for a little redistributionist populism. while longer. After all, It is up to us to reframe such views and to disentangle many of those who are taking their money and running the makers from the takers—the crony capitalists from the are still stewards of capital, meaning it can still be value creators. For if we do not, we will find that those deployed for the creation of goods and services. If who make the world a better place through principled Leviathan can get its tentacles on that capital, it will be lost entrepreneurship will simply take themselves away to in the belly of the transfer State—feeding the addictions Panama or Hong Kong. What will be left behind are of welfare queens, corporate cronies and the military- precisely the sort of people who are willing to purchase industrial complex. the political process to ensure that rents flow into their In honor of those one-percenters who have gotten the coffers. Actually, this is not prediction. This is happening hell out of dodge, let us raise a glass and a stogie. Here’s already. The question is, when will this brain-cum-capital hoping there is still sanctuary in the Caymans for turtles drain complete itself? and tycoons. 3 THE PURSUIT OF HAPPINESS Hazlitt’s Way to Will Power JEFFREY TUCKER n Economics In One Lesson, Henry We have big aims but something goes wrong on the way to Hazlitt presented simple and achieving them. Imemorable rules for applying Hazlitt examined why this happens and what to economics to understanding how do about it. He wrote the book while working as a the world works. It would end up financial journalist in New York, so the entire intellectual as one of the best-selling economics framework was heavily influenced by the economics books of all time. It continues to be literature he was reading. He was reading about issues like an invaluable teaching tool for anyone opportunity cost, long-term and short-term choices on just discovering economic logic. the margin, and demonstrated preference. It must have Twenty-four years earlier, however, he had written a occurred to him at some point that economics is a great book nearly as compelling. It was popular at the time but way to understand the human mind and to better follow today hardly anyone knows about it. It too was influenced the path toward self-mastery. by economic thinking. This was the dawn of the Desire and will Roaring Twenties, just as BY WILLPOWER, He begins his book alcohol prohibition was with the dramatic claim imposed on the country, Hazlitt means our intellectual that there is no will expansionary credit and character-based capacity independent of desire. was shortening time Desire is the driving force horizons, and Freudian for achieving our aims. This of our choices. The key to psychoanalysis was requires syncing up our choices obtaining power over the becoming the popular with our goals. will, then, is to master the rage. The book was on desire. Our desires need to psychology, a kind of self- be cultivated and shaped help manual called The Way to Will Power (1922). This with intelligence and deliberation so that we can make book did for the cause of personal freedom and self- choices consistent with our goals. mastery what his most famous book did for economics.