Crime is increasing in American cities, but don’t count on police to protect you. The Defund the Police movement has less to do with that than most people think.
Original Article: “You Can’t Depend on the State to Maintain Public Order“
Daniel Ellsberg died on June 16, and he remains one of the nation’s most prominent whistleblowers who leaked secret government information to the public. Upon his death the general consensus among the writers of memorials for Ellsberg was that he was right to leak government secrets. As the editorial board at The Orange County Register recently put it, he was “a true American hero.”
They’re right about Ellsberg. During the Vietnam War, through his release of the so-called Pentagon Papers in 1971, Ellsberg made public a large trove of secret government documents that exposed many of the Federal government’s lies about its involvement throughout Indochina. Much of the information applied to the Johnson Administration which had been lying about the war to both the public and the Congress. Naturally, the release of this information, which smashed the Federal government’s credibility on foreign policy, also called into question countless claims about the Nixon Administration. Nixon, of course, had already authorized an illegal and secret bombing campaign in Cambodia in 1969.
At the time, the response to Ellsberg’s deeds was hardly one of universal acclaim. Yet, over time, criticism has waned and Ellsberg’s critics have been exposed for what they were: knee-jerk defenders of a regime devoted to war crimes and crimes against the Bill of Rights.
In fact, it has become so difficult to criticize Ellsberg that defenders of today’s regime have had to devise ways to claim that Ellsberg’s leaks were heroic, but the leaks by more recent whistleblowers—such as Julian Assange and Edward Snowden—have been traitorous. The fact that Ellsberg himself always supported leakers like Snowden and Assange is studiously ignored.
Yet, what was true for leakers in 1971 remains true today: it is heroic to expose the lies of governments, and those who seek to jail truthtellers are the real criminals who choose to protect state power at the expense of freedom and basic human rights.
The Original Response to Ellsberg’s Leak
It does not require any courage or independent thinking to support Daniel Ellsberg in 2023. To do so is to do what is already accepted and popular. This is why journalists almost universally support Ellsberg today. It’s easy.
Yet, to support modern-day Ellsbergs—such as Assange, Snowden, Reality Winner, Chelsea Manning, and Jack Texeira—requires some degree of independent thought, skepticism, and disregard for the regime. This is why so few journalists in the corporate media support these modern-day leakers. To do so might endanger journalists’ positions with the organs of power within mainstream media. Moreover, most corporate journalists are firmly on the side of the regime. They have no interest whatsoever in undermining it.
Indeed, many journalists at the time of the release of the Pentagon Papers condemned Ellsberg. For example, at the 1971 meeting of the Associated Press Managing Editors Association a speaker insisted that approval of Ellsberg is akin to approval of any “pamphleteer” who publishes “a plan of a secret submarine or a list of foreign agents abroad, obtained from any peddler of secrets.” The editors of TIME magazine, meanwhile, reminded readers that the federal government ought to use the “remedy” of prosecuting whistleblowers if publishing secrets might “endanger national security.” The editors fail to mention that the federal government itself gets to determine what the amorphrous phrase “national security” actually means.
Politicians, of course, freely attacked Ellsberg with that term that is forever a favored refuge of the simple-minded: “traitor.” The Nixon Administration prosecuted him under the Espionage Act of 1917. Ellsberg himself suspected he would spend the rest of his life in jail, but he escaped conviction thanks to the administrative incompetence of Nixon’s “Plumbers.” The Nixon Administration had already violated so many of Ellsberg’s basic procedural rights in the lead up to the trial that no court would side with the administration. Ultimately, however, it must be noted that the Supreme Court took no action to meaningfully limit the Espionage Act. The Court took the easy way out in spite of the fact that the Act has always been unconstitutional, immoral, and contrary to basic property rights. As David Gordon has summed it up:
The [Espionage Act] blatantly violated the text of the Constitution. The First Amendment states that “Congress shall make no law … abridging the freedom of speech”; and as Justice Hugo Black liked to say, “‘no law’ means ‘no law’.” Congress had earlier violated the First Amendment with the Sedition Act of 1798; but along with the Alien Act of the same year, it was repudiated by Thomas Jefferson and was generally regarded as a disaster. Nevertheless, the Supreme Court said that the Espionage Act was constitutional.
In other words, Ellsberg managed to walk free on a technicality, but the threat of prosecution against other whistleblowers, who have done the same thing as Ellsberg, remains.
The Myth of the “Good” Leaker
The fact that media opinion and public opinion generally sides with Ellsberg has done little to shield modern-day leakers from both public condemnation and legal prosecution.
Modern supporters of Ellsberg who also condemn men like Snowden and Assange attempt to justify this contradiction by creating narratives like the myth of the “good leaker.” Kevin Gosztola has shown this tendency in how many who favor prosecuting Snowden and Texeira have attempted to claim that Ellsberg was a “responsible” leaker who held back information that might have been damaging to US national security. Yet, Gosztola shows this was not actually the case. Ellsberg did indeed expose the name of at least one clandestine CIA officer. Moreover, Ellsberg himself has noted that when he did withhold information from his leaks, it was not to protect the regime or its agents. Rather, Ellsberg feared releasing that data might hurt efforts to negotiate an end to the war. Ellsberg did not care “if the names of U.S. intelligence sources were exposed.”
Ellsberg was also aware that defenders of the US security state used his case to discredit modern-day leakers and manipulate the narrative. Gosztola notes:
Ellsberg said the pundit class has used him as a “foil” against any “new revelations” of systematic government abuses of power. They have claimed certain leaks were different than his leaks to make it easier to discredit people who took great risks to reveal the truth.
Why the Regime Loves Secrets
Naturally, it is necessary to create the myth that Ellsberg is “good” and Assange, et al, are “bad” so as the get around the pesky reality that most everyone today accepts it was for the best that many Vietnam-era lies were exposed. At the time, of course, this was hardly self-evident to millions of Americans who had been sufficiently propagandized into the idea that the federal government ought to be able to do more or less whatever it wants in the name of “national security.”
This attitude certainly continues today, and it is this lazy deference to the prerogatives of the federal security state that allows federal agents and their enablers to keep alive efforts to arrest Assange and Snowden so the CIA and FBI can take their pound of flesh.
This attitude, of course, is thoroughly incompatible with the idea of self-government and the rule of law. In the years immediately following the end of the Cold War, even many Conservatives began to see the damage the Cold War had done to basic American freedoms in this respect. Thus, Sam Francis would write in 1992:
A self-governing people generally abhors secrecy in government and rightly distrusts it. The only way, then, in which those intent upon…the expansion of their power over other peoples, can succeed is by diminishing the degree of self-government in their own society. They must persuade the self-governing people that there is too much self-government going around, that the people themselves simply are not smart enough or well-informed enough to deserve much say in such complicated matters as foreign policy…We hear it…every time an American President intones that “politics stop at the water’s edge.” Of course, politics do not stop at the water’s edge unless we as a people are willing to surrender a vast amount of control over what the government does in military, foreign, economic, and intelligence affairs.
Governments like to keep secrets because it is politically expedient. It helps smooth the ways for more wars, and larger wars. It helps ensure the taxpayer gravy train keeps flowing, and that the taxpayers are untroubled by real facts about government lies and government crimes. Ellsberg—and other heroes like Assange, Snowden, and Manning—undermine the regime by telling the truth. This is why modern journalists and politicians hate them.
Should a state be allowed to set, as a condition for out of state firms to do business, that they consent to being sued there in disputes with no relation whatever to the state? Today in Mallory v. Norfolk Southern Railway Co. the Supreme Court said “sure.” That’s likely to set off a boom in forum‐shopping lawsuits at the expense of both economic rationality and fairness — and yet it’s also a plausible reading of the Court’s precedents on personal jurisdiction. Hence the Court’s deep split today, which crossed ideological lines.
The Court’s previous development of sound rules for personal jurisdiction has been one of its great successes of recent years and has materially rolled back many excesses of the previous litigation explosion. On the other hand, consent matters — matters so much, in fact, that it can sometimes require swallowing doubts about fairness of outcomes. That’s a lesson of the Court’s successful jurisprudence on arbitration — though that same lesson is rejected by many of those cheering today’s outcome.
Justice Alito’s concurrence notes that the Dormant Commerce Clause, which itself has been shrinking in application lately, might offer a way to stanch the practical damage. We should look for other ways too.
Earlier this week, the Food and Drug Administration issued a draft of proposed guidelines for clinical researchers conducting trials on psychedelic drugs. Even though the Drug Enforcement Administration categorizes psychedelic drugs as Schedule I (meaning that the law enforcement agency has determined they have “no currently accepted medical use and a high potential for abuse”), clinical researchers have known for decades that psychedelic drugs can help treat a variety of mental health disorders.
Government‐approved Phase 3 clinical trials of the psychedelic MDMA* (colloquially called “molly” or “ecstasy”) show the drug can be effective in treating post‐traumatic stress disorder (PTSD). News reports claim the FDA is expected to approve the drug for PTSD treatment later this year. Regulators in Australia approved it last February. The FDA recently approved a clinical trial using MDMA to treat schizophrenia. Psilocybin, the psychedelic found in “magic mushrooms,” has been shown helpful in treating tobacco addiction, depression, and suicidal ideation, particularly in patients receiving palliative end‐of‐life care. Research dating back to the 1950s finds that LSD (lysergic acid diethylamide) shows promise in treating anxiety, depression, addiction, and psychosomatic diseases. Of course, none of this matters if the DEA doesn’t agree to reschedule these drugs and continues asserting they have “no currently accepted medical use.” Accepted by whom?
Generally, when the FDA approves a controlled substance for medical use the Secretary of Health and Human Services must next formally request the DEA reschedule the drug. The DEA then has 90 days to issue an interim final rule. But the DEA doesn’t have to follow the health care agencies’ recommendations.
In 1985 the DEA placed MDMA on Schedule I as an emergency action. Clinicians and clinical researchers challenged the decision and, in a 1986 hearing, provided mountains of scientific evidence that convinced administrative law judge Francis L. Young to conclude:
If the Administrator of DEA carefully considers the entire record now provided in this proceeding, there is no reason why he cannot come to the informed decision the law requires of him as the Agency head.
Needless to say, nothing in this opinion is to be taken as being in any way critical of the Agency’s emergency scheduling of MDMA which became effective on July 1, 1985. That action was taken pursuant to certain statutory authority with which this proceeding is not concerned. That action was wholly unilateral, reflecting a view based on evidence then available to the Agency but without opportunity for the presentation of countervailing evidence or argument. This proceeding, a wholly separate process, has provided that opportunity. A complete record, with input from different perspectives, has now been assembled for the benefit of the Administrator, the head of the Agency.
The record now assembled contains much more material about MDMA than the Agency was aware of when it initiated this proceeding by publishing a notice almost two years ago.
Based upon this record it is the recommended decision of the administrative law judge that the substance 3, 4‑methylenedioxymethamphetamine, also known as MDMA, should be placed in Schedule III.
Dated: MAY 22 1986
Francis L Young, Administrative Law Judge
Judge Young vacated the DEA’s decision to place MDMA on Schedule I, placing it on Schedule III (“moderate to low potential for physical and psychological dependence”). One month later, Acting DEA Administrator John Lawn overruled the administrative law judge and moved MDMA back to Schedule I, stating that, though expert clinical researchers presented over 200 cases of MDMA‐assisted psychotherapy at the hearing, none of them had been published in medical journals.
Think of all the research that has been stifled, and all the lives that could have been saved or improved, if Administrator Lawn had not made that fateful decision.
And it’s not just psychedelics. Who can state with a straight face that cannabis has “no accepted medical use?”
Thus, even if the FDA approves MDMA to treat PTSD and other mental health disorders, clinicians and patients will still have to wait for a law enforcement agency to sign off on the decision. And this is not just a federal law enforcement decision. Each state has its own controlled substance system patterned after the federal system. According to the Multidisciplinary Association for Psychedelic Studies (MAPS), 27 states have laws that require parity with the federal controlled substances schedule. In those cases, the states automatically reschedule controlled substances to conform with a DEA rescheduling. But the remaining 23 states require lawmakers or regulators to make their controlled substance schedules conform.
Recently Representatives Dan Crenshaw, Morgan Luttrell, and Jack Bergman–all military veterans– introduced the “Mike Day Psychedelic Therapy to Save Lives Act,” which would provide federal grants for research into using MDMA to treat PTSD and traumatic brain injury patients. It is gratifying to see lawmakers begin to appreciate the potential benefits of psychedelics.
But law enforcement is in command of the war on drugs. Unless Congress acts, we will continue to see cops practicing medicine. And the people—veterans and non‐veterans— will continue to suffer.
*3,4‑methylenedioxymethamphetamine
One hears this kind of thing from modern monetary theory (MMT) advocates whenever their economic theories are attacked: “We say not spending constrained,” they grumble, “We don’t mean ‘now spend’.” However, what politicians hear is that they can have anything they really want because they can just print the money for it. “It’s a fact,” an MMTer might say. “Sovereign governments with their own currencies can never go bankrupt. They can always print more money.”
This myopic gibberish is what I affectionately call “the MMT-and-bailey fallacy,” which I named for its similarity to the motte-and-bailey fallacy. In this case, the “motte” is the idea that sovereign governments can’t go bankrupt. It’s technically true. The United States government can always print more dollars. The “bailey” is the idea that printing more money doesn’t mean “spend now” to politicians or that the spending encouraged by telling politicians their budgets are unconstrained doesn’t lead to societal destruction. Let’s be clear: to elected politicians, “not constrained” is the same thing as “spend now.” After all, they’re incentivized to get as many short-term benefits from their limited terms as possible.
On the other hand, history is littered with the remains of regimes that didn’t understand their constraints as well as the abundant number of bodies of innocent people that ended up as collateral damage. When the state fails to understand its constraints, it inevitably collapses its monetary system and its economy, and it turns society into a desperate grab for rapidly vanishing necessities. You might think one 1920s Germany or 2000s Zimbabwe would be enough. Obviously, a sovereign state can print as much money as it wants. The consequences, however, are more complicated and have a much longer reach than many MMTers admit.
Austrian economics teaches that the modern economy is a complex and deeply intertwined collection of production pathways, some short-term, others needing a vast roundabout web of long-term connections to function and produce the consumption goods they aim to create.
When the government decides to produce money out of thin air and buy real goods with that new money, the expected flows of goods are disrupted. Goods that were intended for some long-term projects are now snapped up by the government, which does something else (usually something less profitable) with them. The long-term projects must either find substitutes, accept delays, or increase their spending. Marginal projects become untenable and are scrapped, likely wasting even more resources.
The new money, however, is an excellent tool for the government. Would-be cronies will court the government for its lucrative contracts. Better yet (for the cronies), those contracts will be paid out in new money, and the cronies will have the ability to buy goods at the prices that stand before the inevitable price inflation occurs.
It’s possible that the short-term effects of pulling huge amounts of commodities out of profitable endeavors and devoting them to government boondoggles is not so bad—at first. However, those disruptions, repeated in large amounts over long periods, eventually result in the breakdown of many of the more roundabout processes to which we owe much of our prosperity and comfort.
I’ve heard people use MMT to justify policies like universal healthcare. When politicians and cronies hear this, they spontaneously salivate, like Pavlov’s dogs. Ignored is the fact that the amount of new money that would have to be produced in order to offer free universal healthcare for one year is a fairly large fraction of the total amount in circulation now. That, of course, is with today’s incentives, where the enormity of healthcare costs is already a subject of constant shrieking. With the incentive to conserve removed, healthcare costs would rapidly balloon even larger. The number of resources that would have to be pulled away from other productive pathways is practically unbounded.
This is not to mention the likelihood that government-run healthcare would rapidly become as inefficient as the Department of Motor Vehicles. What about “dealing with” the price inflation that such profligate printing would cause? Well, we’d only need to raise taxes—but to what? 50 percent? 75 percent? 90 percent?
The MMTers admit that the government would need to tax all that money out of productive people to keep price inflation down—every year or maybe every quarter. Every month? It would depend on the current inflation rates! The government would also have to do it forever or until the system collapses, whichever comes first.
A sizable fraction of MMTers, regardless of the “motte” that they provide about money printing, love to ignore and minimize the “bailey” that unrestricted funding of politicians’ pet projects would produce. To call it a feeding frenzy would make a whole school of piranha blush.
These MMTers—the more short-sighted and corruptible ones—are just the latest bunch of court intellectuals who took on the state-sanctioned scholar’s cap. A rash of absurd policies and predictions from the Keynesians and neo-Keynesians stuck them with the jester’s cap. Now politicians want “new ideas,” and the MMTers have stepped in.
They and their “new ideas” still serve the politicians’ selfish interests, as all court intellectuals must, but have not yet been tarnished by the series of major failures the Keynesians pretend they aren’t responsible for causing. If politicians listen to the MMTers, the MMTers will eventually become jesters too. I would be fine with that result, except for the horrific collateral damage that would follow their money-printing schemes.
State legislatures, like other actors in our system of government, are creatures of constitutional law. They are ordinarily subject not only to the federal Constitution but to the constitution, laws and legal decisions of their own states. That’s basic intuition, and six Supreme Court justices agreed today that the Elections Clause does not carve out an exception. That’s consistent with a long line of previous cases and practices from the early days of the Republic through the present day.
As the Court emphasized, state courts do not have free rein to impose their own caprices in this area; federal courts can rein them in if they “transgress the ordinary bounds of judicial review” on Elections Clause matters.
Three Justices would have held the case moot, of whom two (Thomas joined by Gorsuch) voiced some inclination toward a particular originalist reading that would have accorded state legislatures a broad swath of unreviewable power. Thomas also warns that the Court’s announced standard for reviewing state court action is likely to yield outcomes that are at best unpredictable.
Despite much angst from commentators, it was never likely that today’s Court would endorse a supercharged version of the so‐called independent state legislature theory. One practical consequence worth noting: some thought the Court might be headed toward reversing its close 2015 decision upholding Arizona’s creation of an independent redistricting commission. That’s now highly unlikely.
Einstein might have been one of history’s most brilliant men, but even his great mind could not have made socialism work. Unfortunately, he wasn’t smart enough to see that.
Original Article: “A Great Man Cannot Salvage a Bad Idea“
Testifying before the Senate Banking Committee last week, Fed Chair Jay Powell acknowledged inflation has come down but suggested it hasn’t slowed because of monetary policy. Insisting that the Fed still has work to do to bring inflation down, he told the Committee:
I won’t say [food and energy are] not affected at all by monetary policy, but they’re principally affected by other things in the economy.
Really, where monetary policy takes effect is in the service sector, and that’s where we haven’t seen much progress. Inflation, broadly, is coming down, but as I said in my remarks, we still have a long way to go. Inflation’s still running between 4 and 5 percent.
Powell’s remarks bring up several interesting policy questions. For starters, the Fed does not have any particularly good price setting powers for different sectors of the economy, which is why all economists learn that monetary policy tries to stabilize the overall price level. Put differently, there is no reason to expect the Fed’s tightening to affect only the services sector. Given that service‐based companies are generally less capital intensive than goods‐producing companies, it makes sense that the service sector may be even less responsive – at least directly – to monetary policy changes.
Moreover, from February through April the average monthly change in the services category for Personal Consumption Expenditures is very close to its long‐term average. The long‐term average monthly change, measured from January 1959 to April 2023, is 0.32 percent, while the average change from February 2023 to April 2023 (the three most recent dates available) is 0.35 percent. So, price changes in the service sector have been trending down.
It’s also clear the annual rates of PCE services price increases are elevated at least partly due to the below average changes experienced prior to the COVID crisis. The average monthly change from January 2010 to February 2022, for instance, was just 0.2 percent, while the average from March 2022 to April 2023 was 0.45 percent.
Beyond these simple comparisons of percentages, more sophisticated research suggests that there is little reason to expect monetary policy to have much of an effect on prices in the services industry. As a Cato study using a VAR technique finds, Fed policy has hardly mattered in explaining inflation (services or otherwise). Figure 1 below reproduces the breakdown of inflation into its demand, supply, and monetary policy components from 1960 onwards. As the graph shows, supply factors dominate – they account for over 80% of the variation in service‐sector inflation, both in the short‐term and long‐term. In the near term, monetary policy explains less than 2% of inflation. In the longer term, the effects increase but never account for more than 5% of service‐sector inflation.
Figure 1: Contributions to Various PCE Inflation Metrics by Source
If, as some suggest, the Fed tries to rapidly tighten credit conditions now, it would be doing so primarily because the month‐to‐month change in service sector prices remains above its long‐term average. For the last three months, this average change was just 0.027 percentage points higher than its long‐term average. For the previous 12 months, it was only 0.13 percentage points higher.
As we’ve argued before, it seems perfectly reasonable that the members of the Federal Open Market Committee would pause their tightening campaign. As a larger issue, it is unclear why people would want any government agency to have the ability to constrain credit for arbitrary reasons such as those discussed above.
For a detailed analysis, please see this Cato working paper.
Over the last year, news media have run numerous stories of offices, shopping malls, and other commercial properties going into foreclosure or being sold at substantial discounts. Given local government’s reliance on property tax revenues, a collapse in commercial property values might appear to have disastrous consequences for city and county finances. But circumstances differ widely from one region to another (and even between local governments within a region), so the impact of the commercial real estate decline will vary greatly.
Among the factors we must consider when evaluating the revenue impact of lower commercial real estate valuations are, first, what proportion of revenue comes from property taxes on commercial real estate, next, how closely assessed values tracked market values before the collapse, and finally, whether and when properties will be reassessed to conform with reduced market prices more closely.
San Francisco—a city at the epicenter of the commercial property collapse—provides an example of how to evaluate these three factors. (For more about why San Francisco finds itself at the epicenter please see my recent post on the city’s policy failures.)
Commercial Property Tax Dependency
Local government is heavily reliant on property taxes generally, but many entities diversify their revenue sources with income taxes, sales and excise taxes, and other levies, as well as non‐tax revenues.
San Francisco anticipates $6.4 billion in revenue in fiscal year 2023–24. Of this total, $4.4 billion is expected to come from tax revenues. The combined city/county government levies a variety of taxes aside from the property tax, including sales tax, hotel room tax, utility user tax, parking tax, real property transfer tax, sugar sweetened beverage tax, and a unique tax on executive pay. Property taxes are expected to contribute $2.5 billion of the $4.4 billion of anticipated tax revenue.
Since the current real estate valuation slump is only affecting certain categories of properties, it is also essential to understand how assessed value breaks down by category. According to San Francisco Assessor’s latest annual report, three major commercial property categories (office, retail and hotel) accounted for 27% of total assessments in 2021. This proportion slightly understates the share of property tax revenue derived from commercial property, because only residential property is eligible for a homeowners’ exemption. In California, this exemption is only $7,000 per owner occupied property and thus not as significant a factor as in Texas.
Overall, San Francisco’s commercial property valuation decline places at risk about $700 million of annual revenue or about 11% of total general fund collections. It is easy to see how this proportion might vary across cities and counties. Suburban communities that are primarily residential are likely to have very little exposure to commercial valuations, while cities hosting large malls and office clusters should be at greater risk.
Assessed Versus Market Values
Due to Proposition 13, the relationship between properties assessed and market value is complex. The 1978 measure limited assessment increases to 2% annually if a property does not change hands and is not subject to major construction. For properties that have not been reassessed since Proposition 13’s implementation, their market values have risen about ten‐fold on average, but their assessed value have increased by a factor of only about 2.4.
While it is unlikely that many high‐value commercial properties have avoided reassessment through the entire life of Proposition 13, significant gaps between assessed and market value have emerged over shorter periods: between 2012 and 2022 alone, California property prices more than doubled (it should be noted that I am using a residential price index for these value increases; the changes in commercial property valuations are likely to be different).
To reasonably estimate the potential impact of underassessments, it would be necessary to review a sample of local properties. San Francisco’s City Controller is performing such an analysis but the results have yet to be published.
While no other state has Proposition 13, there can still be variances between assessed and market valuations outside of California. For example, a Georgia property assessor reviewed a sample of ten commercial properties and found that, on average, they were assessed at 40% below market value (his findings were published in a paywalled edition of Fair & Equitable, the magazine of the International Association of Assessing Officers).
Reassessment Timing
Just as assessments may not reflect market values on the way up, they may also lag declining resale values. But this is less affect is less likely to persist given the incentive that property owners have to minimize their property tax liabilities.
In California, property owners can ask their assessor for a reduction, and, if not satisfied, they can appeal the assessor’s decision to a county board. San Francisco’s Assessment Appeals Board has an active docket of appeals cases at the moment, with some filers requesting assessment reductions of more than 50%. In one extreme case, the owner of the Westin St. Francis Hotel in San Francisco’s Union Square is seeking a 90% reduction in its assessed valuation.
Owners of commercial real estate may hesitate to seek downward reassessments if they are marketing their properties since potential buyers might use the lower assessment as a basis for negotiating a sales price. And, in California, at least, retroactive reassessments are not possible. So, in some cases, a commercial property may be assessed above market value at least during the current tax year.
Conclusion
Although San Francisco may be considered ground zero for the commercial property collapse, the budgetary impact has been limited this far. The city’s FY 2022–23 revenues are running just 1% below prior year levels and the city is forecasting small increases for the next five fiscal years. That said, these are nominal amounts, and it is fair to conclude that San Francisco’s projected revenues are expected to grow at or below the rate of inflation and are significantly underperforming recent growth rates.
San Francisco is receiving some protection from undervaluation before the pandemic and revenue source diversification. That said, the city’s unique challenges may also impact its sales tax and hotel room tax collections as well as its property tax revenues.
For other jurisdictions, results can be expected to vary. Blanket nationwide assessments may well prove to be a poor substitute for an in‐depth look at each city’s and county’s unique characteristics.
For the past ten weeks, American conservatives have been boycotting Bud Light in response to a beer can featuring transgender figure Dylan Mulvaney. Since then, sales of the beer have been plummeting. However, this week, a new benchmark has been passed: Anheuser-Busch InBev’s Bud Light is no longer the top-selling beer in the United States. Instead, it has been overtaken by Modelo, as the following graph from the Wall Street Journal shows:
Figure 1: Share of beer sales in US retail stores
Source: Wall Street Journal.
However, Modelo taking the top spot has sparked a debate in and of itself as some conservative figures have made the complaint that Modelo is still largely owned by Anheuser-Busch. In America, the company was broken up by an antitrust law; however, outside of North America, Modelo is still owed by Anheuser-Busch. As such, the boycott does not really work. In response to this, other right-wing figures have taken the firm stance that this complaint is cynical and that “Bud Light is suffering massive and sustained losses.”
This raises the economic question regarding whether a boycott of one part of a company is sufficient or if one must boycott the entire company. This answer has two major parts. The first part turns to the concept of economic calculation, which Ludwig von Mises describes by saying:
The preeminence of the capitalist system consists in the fact that it is the only system of social cooperation and division of labor which makes it possible to apply a method of reckoning and computation in planning new projects and appraising the usefulness of the operation of those plants, farms, and workshops already working.
Mises further addresses the fact that there are countless decisions that businesses must make daily. What factors of production should be used? Where should the business be located? What specialized employees should they have? What technology do they need? Which procedures should they use? What investments should be made? Through all these questions, Mises comes to one answer: economic calculation. Businesses make their decisions based off profit and loss, as Mises states later: “Profit is the reward for the best fulfillment of some voluntarily assumed duties. It is the instrument that makes the masses supreme. The common man is the customer for whom the captains of industry and all their aides are working.”
Mises even explains that, while it does not always feel like it, economic calculation even applies to the biggest of big businesses. They must sell what is profitable, and they must abandon what is not. To some, it may seem silly to say something should or should not be profitable over an ad. However, if Bud Light’s ad had been successful and sales had skyrocketed, no one would be saying that the ad did not really affect the product; the company would be bragging about their marketing.
At the end of the day, value is subjective. When making profit and loss decisions, businesses must recognize the subjective values of the consumers, who have clearly spoken regarding their preferences. As Mises explained regarding economic calculation, profit and loss decisions and market prices determine everything from the general location of the factory to the specific employee that is hired. As such, boycotting one specific product of one specific company still forces businesses to recognize in their calculation what the consumers want.
The flip side of this coin is to look at the reductio ad absurdum of the concept that one must boycott all Anheuser-Busch products in order to properly send a message. To this, one could easily ask, “Why stop there?” Those of us in the Austrian school know that the values of consumers do not just impute to the price of the beer but all the way back to the original factors of production. As Murray Rothbard has explained:
Producers’ goods are valued in accordance with their expected contribution in producing consumers’ goods. Higher order producers’ goods are valued in accordance with their anticipated service in forming lower-order producers’ goods. Hence, those consumers’ goods serving to attain more highly valued ends will be valued more highly than those serving less highly valued ends, and those producers’ goods serving to produce more highly valued consumers’ goods will themselves be valued more highly than other producers’ goods. Thus, the process of imputing values to goods takes place in the opposite direction to that of the process of production.
One could claim that by buying beer of any kind, a consumer keeps the factors of production oriented toward beer. If one really wanted to hurt Anheuser-Busch, the consumer could boycott beer in its entirety. This would result in the factors of production fleeing to other markets. As such, Anheuser-Busch would have no ingredients for their beer because wheat would be used instead for the higher-valued good of bread.
Of course, any reader would read this and think, it’s ridiculous to boycott the entire product across the board, even from other companies. Boycotts can be successful with far less than that. Boycotting one single product of a company like Anheuser-Busch—especially their former best-selling product—can still drastically impact their decision-making regarding profits and losses and can still make an enormous difference.