Rent-Seeking in French and English

Two recent news reports remind us anew just how much the neo-socialist Obama machine has made the American economic system resemble the dysfunctional French one.

The first piece reports how the French socialist government has approved a law targeting an especially wicked corporate menace out to destroy civilization itself.  The law, which passed the French lower house of parliament unanimously, is intended to protect French brick-and-mortar bookstores from the dreaded enemy  It had the full support of both the left and the "right."

The bill prohibits discounting off the list price of any book shipped to a customer (as opposed to being sold to the customer in person).  This would mean that online retailers, of which Amazon is just the biggest, will be forced to sell books at higher prices than the bookstores will.  That would be mighty convenient -- for the booksellers, not the consumers.

The excuse for this silly law is, of course, that the online retailers are not dealing "fairly" -- by selling cheap books!  Discounting books and shipping them for free is "a strategy of dumping," as France's minister of culture asserted.  (Where would a government even have a minister of culture if not in France?)

But "dumping," as typically defined (say, by various international trade organizations) means selling a product below its cost of manufacture, or selling it abroad at less than what you sell it for domestically.  And nobody in his right mind thinks that Amazon sells below cost, or that it sells cheaper to Americans than to customers abroad.  Jeff Bezos, who just broke into the top 25 on the Forbes list of 400 richest Americans (he is now worth a respectable $23 billion), didn't get there by selling at a loss.

Of course, also irksome to the French (as it is to so many American states) is that Amazon pays little corporate tax.  The French will propose at an upcoming summit meeting of European nations that they join together to create new rules to tax internet-based businesses.

So far, the French war on internet sales is working.  In its market, only 13% of printed-book sales are by internet-based companies, whereas in the U.S., 40% of such sales are by Amazon alone.

Naturally, the Obama neo-socialist administration is much inclined to the same tactics.  An especially revolting such instance was the subject of a case just decided by the D.C. Circuit Court of Appeals.

It turns out that in 2011, the IRS arrogated unto itself a new power to regulate.  Under a provision of a hitherto unused provision of an obscure 1884 statute, which allows it to regulate "representatives of persons," the IRS decided it could by itself create a new licensing scheme for those who prepare tax filings for others commercially.  Yes, it claimed that now, every commercial tax preparer has to take various courses, pass certain exams, and -- surprise! -- pay licensing fees to the tune of hundreds of dollars.

The IRS made the decision to do this after the big players in the tax prep business -- H&R Block and Jackson Hewitt -- lobbied the corrupt agency to destroy mom-and-pop shops.  Indeed, one owner of more than twenty Jackson Hewitt shops crowed that "more regulation is good for us" in that it has blocked "a decline in the business because of all these moms and pops who open up out of nowhere."

Yeah, let's kill Mom and Pop so we can screw their customers.  There's something vaguely Freudian about this business model...

The IRS power-grab has been halted, however, by the D.C. Circuit Court, thanks to the brave work of the estimable Institute for Justice (IJ).  The IJ went to court representing several of the small players in the business.  The IJ lawyers' argument was that the IRS was overreaching by seizing this antique law, forgotten for well over a century, as an excuse to build up a huge new regulatory death panel.  This argument clearly resonated with the judges, one of whom drily noted to the IRS counsel, "A hundred and thirty years of not thinking they gave you that power might make it a little less convincing when you say it does."

As to the IRS argument that the agency is just trying to make sure that the quality of advice that the mom-and-pop shops give are up to the IRS high standards, another of the judges wryly pointed out to the IRS counsel that a 2011 study done by the Treasury's own inspector general showed that the IRS itself had a risible 61% error rate in the advice its own agents gave the taxpayers!

One of the Obama administration's most vicious ploys has been to use the IRS as its political storm trooper division -- that is, as a handy weapon against its political enemies.  The IRS, with its formidable power, deliberately neutralized the Tea Party movement in the last election, which may well have cost Romney the election.  That was the "Chicago miracle election."

Under Obama, the IRS has become despicably venal, self-serving, and dictatorial.  The next president should clean out those fetid stables with a flood of criminal investigations.

Gary Jason is a philosophy instructor and a senior editor of Liberty.  He is the author of Philosophic Thoughts: Essays on Logic and Philosophy, forthcoming through Peter Lang Publishing.

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