Am I a liar, and is the AntiTax a good idea?
Got to love some good clickbait! The standard rule for questions in the headlines of articles applies.
Andrew recently went on Los Libertinos again:
and responded to my previous appearance:
There is a lot to unpack there, and I am happy to keep the conversation going.
Also, but thanks to Carlos for hosting this back and forth. If you don’t listen to it yet, his show is well worth checking out: https://www.youtube.com/channel/UCBfYYGqx0SFaJ1EnY-RFhqw
I have also said it before, but will say it again publicly: I am happy to talk to Andrew any time. Pick the platform, podcast, video, or even just a private phone call. You can reach me, or the Mises caucus of Ohio more generally at misescaucusohio@gmail.com.
Andrew had a lot of complaints and disagreements with what I said, some correct, some incorrect, and some hilarious. But the one that really bothers me? His dismissal of the inflation statistics. So I am going to spend most of this piece talking about that, and then go through a short form response to each of his other points. If you want to skip the math and economics, just go to the bullet points at the end. Onto the inflation statistics:
Inflation and the Cantillon Effect:
Are you ready? Let’s get nerdy!
On his last appearance on Los Libertinos, Andrew from popular liberty claimed that I was straw manning his argument with regards to the inflation rate. He said I should know better, that the Cantillon effect means that rural inflation is less than urban inflation, and that gives him his numbers.
He says this as if I had not already responded to his arguments on inflation here:
But since he has gone into a bit more detail this time, I will return the favor.
My statement was that I don’t understand where Andrew was getting his numbers. Do I now know where he is getting his numbers? No. Because saying that inflation in rural areas is less than urban areas does not actually tell you what the inflation rate is.
What do I mean? The overall, long run US inflation rate is a little over 3%. Here are 3 sources that support that number:
3.1% average since 1916: https://inflationdata.com/Inflation/Inflation/DecadeInflation.asp
3.1% average since 1913: https://www.in2013dollars.com/us/inflation/1913?endYear=2021&amount=100
3.1% average since 1913: https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-
Just for fun, here are also 2 pieces about how the average stock market return after inflation is 7% (though we all know that most money managers underperform the stock market):
https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp
https://www.mrmoneymustache.com/2011/06/06/dude-wheres-my-7-investment-return/
Ok, now you know what I think the inflation rate is, and where I got my number. What does Andrew say? Paraphrased: ‘the inflation rate in rural areas is less than cities’.
Ok, fine. So it is 2%? -5%? 0.005%? That doesn’t answer the question. Where did 1% and 0.5% come from? He says:
“If you have like a rural inflation rate, and that's what I use, you're looking at like you know 0.5% to 1% a year and this is actually borne out in the data.” (time stamp 65:01)
What data? What study? What professionally collected statistic can you point to that says that this is the inflation rate in rural America?
When I looked for data on this, here is the only paper I found showing rural inflation (and to be fair, I only spent an hour or so, so more data is definitely out there, but Andrew has never presented it): https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr173.pdf
But hey, when you read it and look at the chart on page 28, you see that rural and urban inflation have been nearly identical, at least from 1988 to 2002. However, it is Andrew making the claim that rural inflation is significantly different from the average, so providing the data is on him.
The only time Andrew cited a specific reason for his number was when he said that 1 year on his job he was given a 0.7% cost of living adjustment (he also talked about Houston, which I cover below, but it’s also not rural.) I assumed that that was not his source, because it would make no sense, but maybe it is? But that would be pretty bad. We are talking about long term investments, you can’t take the inflation rate of any random year and assume that it is stable for the next 30. You also cannot take a single town and assume that it is the average of all of rural America. You also cannot take the value that a single company decides to use for cost of living adjustments and assume that that is an accurate representation of inflation. I assumed that his one, personal example was not the source, but if it was, then I guess I do know where Andrew got his inflation rate, and it would be a meaningless guess of a number.
What else was wrong with what Andrew said? He incorrectly explained the Cantillon effect, and kinda half reversed it.
What does the Cantillon effect say? That inflation does not occur equally throughout an economy, or all at the same time. The bankers (or some other politically connected group) get the money first, and inflation spreads from there unequally.
How does Andrew miss the point of this? The Cantillon effect says that it takes more time for the inflation to reach certain sectors. It does not say that it never reaches them. If rural America was on a ten year lag from urban America, rural America would still be having 3% inflation, because urban America also had 3% inflation ten years ago. Being on a delay does not mean less inflation, just later inflation.
How does Andrew reverse the Cantillon effect? He forgets/ignores that what the Cantillon effect describes means that those who get the money last are the most impacted by inflation. Those who get the money last, rural communities in this example, see their purchasing power fall the most, and experience more price inflation relative to wage inflation. Don’t trust me? Think that I am explaining it wrong? Here are an article and 2 videos of other people explaining it:
https://www.austriancenter.com/cantillon-effect-populism/
Longer video:
Shorter video:
Unlike the Corporate Media claims, inflation hurts the rural and poor areas the most. That is why it is such an effective populist issue (though only when it is noticeable).
But what about the higher cost in the big cities? What about how NY real estate is climbing way faster than everywhere else? Even if prices are higher in the big city, it doesn’t mean that inflation is. If LA cost 4 times are much as Lockhart Texas for a given product, and inflation makes both of their prices double, the ratio between the prices stays the same. Things are still more expensive in LA, but they had the same inflation rate. And even if the inflation rate is higher in LA, that money will eventually spread out and even out.
And for rising real estate prices in NYC? Inflation is unequal, both geographically and across different types of goods, and it does vary a bit. But at the end of the day, we care about the long run and overall inflation, not just cost for one highly regulated product. Long term inflation in NYC, looking at the CPI as a whole, is average (data below).
But isn’t the CPI a screwed up and political number that does not accurately reflect changes in cost of living? Yes, but it is good enough for an approximation, and Andrew has offered nothing better. If he has something better (and not just a single datapoint that a corporation without a scientific rigor decided to use), I am happy to hear it. But he hasn’t shown it yet and has used the CPI when trying to prove his point.
What about averages? Aren’t averages incorrect for any individual situation? Sure, the last 10 years has lower than average inflation, many areas have lower than average inflation, that is how averages work. But as we look at longer time horizons, the values get closer to the average. And if you are picking a specific city, it is grossly irresponsible to assume that you would do better than average rural inflation (which Andrew has not demonstrated is that different from overall average inflation). That is like how the government budget office always assumes that there will never be another recession: grossly negligent and ignoring the lessons of history. If you overpromise and plan for only the best possible outcome, things fall apart when you run into a standard hiccup. If anything, to be safe you would assume below average returns and leave wiggle room.
Even if Andrew was somehow right in the past (that rural communities were protected from inflation), that would have been destroyed by globalization, the internet, and improved supply lines. Prices on Amazon are the same for big or small towns. Things made in China and shipped in on Walmart trucks are pretty similar across the US. Small towns in the US are buying things from the same places as San Francisco, and if prices diverge too much, arbitrage will level the playing field on inflation.
Andrew did bring up one piece of actual data in his argument: the inflation rate in a few large cities. Houston Texas had an inflation rate of 1.1% over the last 10 years. He uses that to say that inflation varies across regions and thus New York has all of the inflation. But how does he explain that major leftist cities also have inflation rates below the average? New York also had 1% inflation over the last 10 years and San Francisco had 2.8%. Where is his 11 pulling up all of the 1s to be an average of 3? (inside reference to the podcast)
Inflation varies over time, not just geography. And when the AntiTax is supposed to be a long term plan, you can’t just look at the short term. What was Houston’s average inflation rate over the last 30 years? 2.2%. Over 80 years? 3.6%. Over 106 years (as far back as my chart goes)? 3.1%. Over the same time period, New York City was 3.2%, and San Francisco was 3.4%. Just about average, and nothing near what Andrew would expect you to believe.
Sources:
https://www.in2013dollars.com/Houston-Texas/price-inflation/1915-to-2021?amount=20
https://www.in2013dollars.com/New-York/price-inflation/1915-to-2021?amount=20
https://www.in2013dollars.com/San-Francisco-California/price-inflation/1915-to-2021?amount=20
The final reason why I can pretty confidently say that Andrew is incorrect about inflation? The insanity that would exist if he was correct.
Let’s look at the last 100 years. If each inflation rate is correct, how much of its previous value would the dollar have?
3% inflation: 1.03^100 - 1 = 1821% increase. So prices would have rise to roughly 19x
1% inflation: 1.01^100 - 1 = 170%. So prices would have roughly tripled
0.5% inflation: 1.005^100 - 1 = 65%. So prices would have risen by a little over half.
Which of these is more realistic for rural America? Are they still buying 45 cents a gallon of gasoline (what the price would be with the 1% inflation), buying gold for $34 an ounce (the price with 0.5% inflation), and so on? Do Big Macs cost cents, and you can get a king size candy bar for a dime? Do baseball cards still cost pennies? No? Then Andrew’s numbers are ridiculous on the face of it.
It is even more ridiculous in practice, since the inflation in cities would have to be 4 or 5 percent to balance out rural inflation being that low. A 5% inflation rate in cities vs 0.5% in rural areas would mean that the prices in cities have increased 100 times more than those in rural areas. That is insane.
I would also recommend reading the second part in my response to Andrew on the AntiTax. This subject is covered there as well, though in less detail. This was also posted over a month before Andrew’s podcast appearance, though in all fairness he may just not have read it:
If Andrew really believes that inflation variability is that massive, show me anywhere in the US that had an average inflation rate below 1.5% over the last 30 years. You can even stop in 2019 instead to avoid these last crazy years. Your claim in your initial article was 0.5% or 0.25% inflation, and the chart was of a 25 year period. If that was at all reasonable, a single data point with a 30 year average below 1.5% shouldn’t be that hard to find.
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Point by Point
Now for the quick rebuttals! I will try to keep each response fairly quick, and if you want to hear something fleshed out in more detail, encourage Andrew to go on a podcast with me and we can have a back and forth that has less lag. The benefit of that is that we can respond in real time, and make sure that we are not talking past each other. A number of these disagreements, on both sides, come from talking past each other and could be resolved in 90 seconds in a real time back and forth.
(Or just ask in the comments and I will elaborate)
Also, I have critiques both ways in there. Both from Andrew to me, and vice versa.
Now, let's get critical!
Also, going to break this into 4 categories:
Andrew doesn’t know what he is talking about
I was wrong
Honest misunderstandings
Andrew is misremembering the past
Andrew doesn’t know what he is talking about:
Is that a bit of an extreme title for a section? Sure, but he did publicly call me a liar, and get the basic facts of the matter wrong. I think that in general Andrew does know what he is talking about, but on these points . . .
Am I a liar? Does the Mises caucus do lobbying?
I claimed that the Mises caucus does lobbying as one of our three planks. Andrew used this as his main point and called me a liar, citing that Michael Heise (correctly) said that the three prongs of the Mises caucus strategy are inter party activism, local candidates, and issue coalitions.
But you know what is fun? Andrew never defines issue coalitions, and when he tries to refute our strategy later, he doesn't mention it. Why does that matter? Because issue coalition is lobbying. It is working with the Republicans to defend gun rights, and working with Democrats to stop no knock raids. Andrew says that the Mises caucus does no lobbying, so he has clearly never read our website: https://lpmisescaucus.com/platform/Also, just for fun, I did confirm this with Michael Heise, since he is Andrew’s appeal to authority for this topic:
If someone is going to call me a liar, I would prefer that they at least do some basic fact checking, but hey. Rather than an apology, I would love it if Andrew would respond to my second AntiTax rebuttal, the piece against archotropism, or just stop dodging appearing on a podcast with me. I am happy to keep going out and tearing apart the AntiTax on podcast without him otherwise, and I am excited that my arguments will be more concise and correct next time.
Do I think Andrew is a liar? (He hasn’t claimed that I said this, but I think it is relevant to the above point)
No. As I said in my previous interview, I think that he is acting in good faith, and that we have many of the same end goals. It is mostly a question of strategy, and reasonable people can disagree. Also, if he was trying to lie about me I think that he would choose something harder to verify.
Did Andrew represent the Mises caucus strategy well and then disprove it?
No. He substituted the Issue Coalition prong with “national elections”. That is kinda the opposite of what the very local focused caucus does. He also apparently doesn’t know what the issue coalitions prong means, because if he did, I'm pretty sure that he would be in favor of it since it is also one of the strategies that he is going for.
Andrew says that I don’t understand inflation and that he already addressed my points.
Yeah, but no. See all of my above stuff. I do also like that in his original piece on the AntiTax he used 0.5% and 0.25% as his interest rates, and now has moved to 0.5% to 1%.
I was wrong:
Sometimes I am wrong, and I am happy to admit it. The reason that I have repeatedly asked Andrew for an actual computer to computer conversation is so that when I am wrong, I can be wrong for less time. I don’t like it, and would rather be wrong for as short a time as possible. But when I am, I am happy to own up to it and be less wrong in the future.
Andrew said that I was wrong about him asking the Mises caucus to put a significant amount of resources into the AntiTax. He is right.
I claimed that Andrew was saying that the Mises caucus should drop a significant bit of what we are doing and put those resources into the AntiTax. (I said everything that we were doing at first, and then corrected it, and that made it sound even worse). I think that I was conflating his AntiTax argument with the general argument about being in the Republican party instead of the Libertarian party, but either way I was wrong and will admit it.
Sorry about mischaracterizing your argument, you have explicitly stated in this interview previously that you are not trying to poach resources from the Mises caucus. My bad:
Andrew said that I was wrong about him prioritizing the AntiTax during the covid regime.
I had not actually heard the show with Andrew, Pete and Dave, or if I did, I didn’t remember it. He did state clearly that this was a multi pronged approach, and that covid was the lower priority. I hadn’t seen that, so I am a bit confused about where he said that I was quoting him, but I was wrong either way.
Sorry about that. Not sure where I got that information, if I had formed an assumption or miss-remembered things, or was responding to the argument or someone else. But I was wrong, and will make sure to get it right in the future.
Honest misunderstandings and disagreements:
Sometimes people talk past each other, and miss things. I don’t think that any of these are in bad faith from either side. Also, sometimes we just agree to disagree.
I am good being referred to as Drake.
Seems that Andrew didn’t know what to call me? Drake is good. If you want to make up some other title, that is fine as long as it sounds good.
Why did I not talk about the state and federal sections of the AntiTax?
Because in my eyes, those parts are really minor and unimportant. Local taxes are, on average, 13% of your total tax burden. For Andrew’s plan to start effecting state or federal taxes, the AntiTax would need to cover 100% of the local tax revenue. By Andrew’s math, covering 100% of local tax revenue (in his best scenario, example 2 in this document: https://www.subscribestar.com/posts/409181) it would take 58 years for the AntiTax to start affecting anything more than local taxes. By my math it would take centuries. But even at 58 years, it is not a part of the AntiTax that I care about.
However, to Andrew it seems that it is one of the core parts of his plan in his eyes, so I should not have glossed over it. Though since it is one of the big parts of his plans, I would appreciate it if at least once he would say publicly how long it would take the AntiTax to effect non-local taxes.
Do Libertarians pretend that there is not a market and demand for aggression?
No. For an example, take public choice theory. Libertarians talk about it often, and it is literally about the different amounts of value people place on specific government action. Just because someone doesn’t talk about something with exactly the terms and framework that you want them to use, doesn’t mean that they want to pretend it doesn’t exist. Though, I think that Andrew would disagree with what I am saying here, and I would be happy to talk more.
Why did I bring up lobbying as a point against Andrew when he addressed it?
Addressing a point doesn’t mean it no longer counts against you. If Dave Smith laid out a plan to get on the debate stage, and it even looked workable, but it cost $10 million, you could still use it as an argument against him running as a Libertarian. Addressing an issue doesn’t mean that I am not going to bring it up as a flaw in your plan, since at least in my eyes it is incredibly difficult and expensive and those resources could be better used elsewhere.
Also, see below, but I don’t think you have brought it up as consistently as you think.
Is the Defend the Guard act workable?
There are many liberties that have been won, without concession, though time, money, and effort. Legalizing homeschooling, constitutional carry, and more. You start off losing, making progress, and eventually start winning. Anything from gay marriage to drug decrim would have been thought of as crazy in the past, but opinions change. Andrew is correct about the past, but in 2020, Defend the Guard got all the way to a tied vote in a state congress, and once one state changes, more will follow. Especially with Biden in charge and as the wars just get longer, it is gaining more steam, and I think that it has a good shot of success. Even if it doesn’t, I have seen it successfully be a major recruiting tool, especially among the military to join the side of liberty.
When talking about people in the town opposing someone new entering, I was talking about the average people, not the rulers.
I thought it was clear, but I guess I may have explained it badly. The people in the town (not the rulers) will have the incentive to keep out immigrants. The rulers will then act out the will of said people or be voted out. Andrew likes that that reduces immigration, but it also reduces the need to compete with other towns if you are not actually competing for anyone to move there. If anything, 70% of the town may want to drive out the other 30% instead.
Source (Andrew requested one since he didn’t consider the theory about incentives strong enough:
Scandinavian welfare states turning hostile to immigrants. When new people are pulling from your pool of money, you don’t want more new people. It is also one of the causes for those countries aborting almost every fetus with down syndrome.
Immigrants raise government expenditures.
I thought it was clear, but I guess I may have explained it badly. The people in the town (not the rulers) will have the incentive to keep out immigrants. The rulers will then act out the will of said people or be voted out. Andrew likes that that reduces immigration, but it also reduces the need to compete with other towns if you are not actually competing for anyone to move there. If anything, 70% of the town may want to drive out the other 30% instead.
Time preference for power.
I don’t agree with Andrew’s time preference for power, or for his categorization of left and right. Read more here, in my response to his framework. (quick preview, I disagree with most of it) -
Property tax goes up by 10% a year! …what?
So Andrew said this, and I am pretty confused. Assuming it was an exaggeration. But also, I really doubt that the strategy of buying out future taxes would work. Even if the government agreed, I am pretty sure that the price wouldn’t make sense. After all, you could just invest the same money yourself and use the interest from that to pay for the property taxes. Especially if you are a business owner, you can make a higher return than the stock market by putting it into your own company.
So if it works, great, but I am really doubtful. And if the government does allow it, and at a low enough rate to make it worth it for you, the rate would be low enough that your pile of cash wouldn’t produce enough return and the government would start losing money.
Does Andrew want to repeal financial restrictions on government investments, and replace them? Will this be easy?
I did say “all”, but I don’t consider a bit of hyperbole to be a mistake.
Honestly, I am a bit confused at this point. It seems like he wants to repeal the restrictions and put new ones in place. To quote Andrew:
“Prohibiting that kind of corruption and graft is one of the reasons I’m fundraising for lobbying for state-level regulations”
But on the other hand, he was now talking about special economic zones? Or making the entirety of Florida a special economic zone? But it is the state regulating this, so is the state making a special economic zone from itself . . .
Yeah, I honestly don’t know what he wants to do at this point. Does he want to tweak things a little to allow a different kind of managed fund, or make major changes so the city can invest in crypto, or does he want to use special economic zones to create a loophole?
“I expect it to fly through committee unopposed”
Yeah, that quote sounds a bit crazy to me. Special economic zones are pretty hard to set up historically, and you want the whole state to be one? (maybe? I am still not sure). This seems like wishful thinking, though if you are right, I will be happy to admit that this worked better than I thought.
Consolidating all taxes into property taxes hurts property owners most.
If you consolidate all of the taxes into a property tax, that hurts property owners most. Or people who own a lot of land for their business. A work from home tech startup (often run by leftists) gets a benefit, and a farm owner (often on the right) gets hurt. This seems like the opposite of what you would want.
Andrew is misremembering the past:
Does Andrew actually talk about the lobbying aspect every time he brings up the AntiTax?
No. In his biggest interview about the AntiTax (and I say that because it is the only interview on my podcast app with the word AntiTax and it is what comes up when you search for Andrew and the AntiTax on google), he never mentions it. He doesn’t mention it in his original substack article either. I am actually curious if he ever mentioned it publicly before my first rebuttal to him, and if so, I didn’t see it.
So when he says the ‘he always explained upfront that the law would need to be changed at the state level’, as far as I can tell it was not true. Though it seems that he changed after my first response?
Does Andrew always explain the AntiTax as a contract?
I have never heard him call it a contract before. I have listened to his interview with Pete, Biblical Anarchy, and read his piece on the AntiTax, as well as the rebuttal to my first piece. He never mentions contracts. He never talks about Peter Schiff. If anything, he talks a lot about sovereign wealth funds (though he has since dropped that from his argument) and how like a pension you need to keep good people in office to keep this working (very unlike a contract).
https://www.subscribestar.com/posts/409181
https://www.subscribestar.com/posts/440075
So, Andrew said I misrepresented him by not talking about it being a contract? This is what I have heard. What he called the official breakdown of the AntiTax on Pete’s show, his writings, and another podcast. Just for fun, I even searched the transcript of the Dave, Pete, and Andrew episode that I listened to. The word contract isn’t in it. So how would I mischaracterize something by not something that I have never heard?
I know I didn’t hit everything, but I am kinda done typing at this point. The most frustrating part of this exchange has been when it seems that Andrew is arguing with a straw man completely different from what I have said. I believe, based on this interview, that Andrew feels the same way. You know what would fix that really quickly, without me typing for a couple of hours and listening to multiple podcasts multiple times to cross reference things? Actually talking. (Also, I would love to read his FAQ, but I cannot find it on his subscribestar, website, or YouTube channel).
But until then, I am still fairly convinced of what I said last time: If given the option to invest or not invest, a city should invest. But it will be a very minor change with little effect and I do not think it is worth this amount of time and money when it is not the silver bullet you describe it as. Though, of course, I hope that I am wrong because I would rather have one more effective method of reaching liberty. I believe that you are saying the truth as you see it, and that we have many end goals in common. Soon we will hash this out and can go on to debate something easy and non-controversial, like border policy.
P.S. The Florida LPMC gave me access to the recording of their meeting with Andrew. No mention of contracts or Peter Schiff. Lots of talk about investing in crypto instead of the stock market (which doesn’t have the same reliable track record). And reiterated the incorrect point about city government officials only working 5 hours a month, when it is more like 3-20 hours a week for city council and 5-40 for a mayor.
I would also reiterate my complaint about it being unclear which of the extra additions (like the degeneracy taxes, voting on where revenue goes, lump sum buyouts, and so on) are or are not part of the AntiTax. I would also love to see a list of them, because it seems like each time Andrew talks there are more that weren’t mentioned before.