Author: Redactor

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free trade & free markets ideological culture national politics & policies too much government

Déjà vu Economics

Last week I noted the revival of interest in F.A. Hayek’s classic political tract, The Road to Serfdom. This week? The ongoing revival of interest in Hayek’s theory of boom and bust.

According to economist Gerald P. O’Driscoll, Jr., today’s debate about stimulus spending mirrors the debate in the Great Depression between John Maynard Keynes and Hayek. Republished letters from October, 1932, Times of London, are eerily up-to-date.

The letter from Keynes and his allies, arguing that spending — any spending whatsoever — would spring the economy out of depression strikes me as a tad bizarre. All spending is equal? Make that several tads bizarre.

Can you say déjà vu?

The Hayekian response seems at once more sophisticated as well as commonsensical. For instance, Hayek recommended an immediate repeal of the infamous Smoot-​Hawley Tariff. He recognized a major factor for the Depression’s low expectations and business doldrums: The trade-​killing legislation that hit the New York Times’s front page the day before Black Tuesday, 1929.

O’Driscoll and other economists have been making much of the enduring significance of the Hayek-​Keynes debate. But there are differences between the Depression and now, aren’t there? 

Back then, the loss part of the profit-​and-​loss system hadn’t been so completely undermined by recovery policy. Today we have bailouts, and these only increase risk-​taking, likely to make the next bust even bigger — and today’s Keynesianism perhaps worse than the disease itself.

This is Common Sense. I’m Paul Jacob.

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ideological culture media and media people

Sometimes a Great Reversal

After World War II, European Social Democrats — the heirs of Karl Marx’s delusional vision — broke with their heritage. They rewrote their political principles, compromising. No longer would they go for socialism whole hog; they abandoned its key feature, the replacement of markets with total government control.

This was a great moment for modern civilization. It bequeathed Europe (and, perhaps, America) a clunky and intrusive (and unsustainable) welfare states, sure … but that’s far, far better than Communism.

We may be witnessing a similar groundswell of ideological shift in America’s stronghold of the status quo, the media. This week the editorial board of the Los Angeles Times endorsed budgetary rules that would take power and unlimited budgetary discretion from California’s out-​of-​control legislature:

It’s unfortunate that automated budgeting is necessary. But it is necessary. The state must continue to invest in the social welfare of its people, but we must do it in accordance with California’s projected growth so that we do not repeatedly yank from the young, the elderly and the poor the very services that we provided only a year or two before.

This may not sound revolutionary. But, as Tim Cavanaugh put it on Reason magazine’s Hit and Run, the Times — long an opponent of spending limits — has “acknowledge[d] clearly and publicly that out-​of-​control spending, not insufficient tax revenue, is suffocating the Golden State.”

And that is revolutionary. Not American Founder-revolutionary, but Social Democrat-compromise‑y revolutionary.

This is Common Sense. I’m Paul Jacob.

Categories
Accountability free trade & free markets national politics & policies too much government

How to Keep Your Health Insurance Plan

Like the medical insurance coverage you have now? Don’t worry, you can keep it under the new “health care” regime … Or so President Obama and his Democratic allies promised during the recent debates over reform of medical insurance and delivery institutions.

Now we’re now learning, per “internal White House documents,” that the insurance plans we were told would enjoy grandfathered protection under the new law won’t be immune at all. Looks like more than half of current company plans must be chucked by 2013.

We shouldn’t be surprised. Apparently, the goal has always been destruction of private insurance. But why? Well, so government can swoop in to “rescue” us after private firms collapse under the weight of all the new taxes and regulations.

The State of Massachusetts offers a preview of what awaits us. Insurance regulators there were recently warned by a department in charge of “monitoring solvency” that a new round of price caps on insurance rates would jeopardize private insurers’ solvency. Officials imposed the caps anyway. Now those private firms face losses that, if the price controls persist, can lead only to bankruptcy.

Despite all this, there is a way to keep your current health insurance coverage. All folks in Congress have to do is repeal their recent “reforms.” All you have to do is make sure they do.

To ensure that you have better options in the future? Well, very different reforms will be required. And repeals of different laws.

This is Common Sense. I’m Paul Jacob.

Categories
Accountability media and media people

Catastrophic Q & A

Suppose I say that the world will blow up tomorrow unless we shut down industrial civilization. I can’t really prove this. But, if you allow me certain unsubstantiated assumptions, that is what the extrapolations show.

Hey, maybe I’m wrong, but what if I’m right? To be on the safe side, all mankind better lapse into hunter-​gatherer mode immediately.

If you’re not taking me seriously, well — me neither. But my unserious argument isn’t very far from the approach of certain environmentalist doomsayers, as unable to defend their theoretical house of cards as I am to defend mine.

Exhibit A: Australian journalist Andrew Bolt’s interview with a leading environmental alarmist, Tim Flannery. Bolt does his best to pin Flannery down with respect to some of the wilder claims that Flannery’s made in his career. But it’s no go.

When Bolt points out that Flannery once claimed that Australian towns like Brisbane might “run out” of water by 2007 or 2009, his interviewee first sidesteps the question and then says it’s a lie that he ever said any such things. So Bolt comes up with a quote from Flannery’s writing that belies the denial. Flannery now “responds” by noting variability in rainfall and trying to promote a lecture series.

And so on. Bolt is determined to hold Flannery to account for his alarmism; Flannery insists on persisting with flimsy flimflam.

Read the whole thing. It’s awfully illuminating. (And boy, do I mean “awfully”!)

This is Common Sense. I’m Paul Jacob.

Categories
media and media people too much government

Boring Ferry Story?

Government has a notorious record of wasting money when it engages in regular business activity. One reason is that governments tend to pick up businesses that fail, and deliver goods at prices that often have nothing to do with costs. So of course government businesses lose money. They’re set up that way.

But it’s worse than that.

Three years ago I told the sad story of Washington State’s ferry system for Puget Sound. For over a score of years, ferry system managers have been unable to provide a comprehensible audit, unable even to account for cash flow. 

Now, a series of stories for Channel 5 in Seattle, by Susannah Frame, has exposed the operation for wasting “millions and millions of taxpayer dollars,” according to Ken Schram, a popular Seattle-​area pundit who works for another news service on another channel.

Schram claims not to know “why every news organization in the Puget Sound isn’t outraged.” He sees this as a non-​partisan issue, and is befuddled by lack of interest from news consumers. And he’s especially annoyed by Washington State’s governor, who blew off the news story, saying she couldn’t keep track of everything. Schram calls her arrogant, and goes further: “I find her lack of regard and respect for taxpayers offensive.”

I’m on Schram’s side, except I wonder: Is this really all so inexplicable? Maybe everybody just knows, deep down, that government businesses never will run as well as real businesses.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Road to Number One

Good news and bad news.

The good news: F.A. Hayek’s Road to Serfdom, an exploration of the fallacies of socialism and the very real political hazards of bureaucratic, centralized planning, has been riding high on Amazon.com’s bestseller list. It even made it to No. 1 on the list, and is No. 6 as I write.

Pretty amazing for a reprint of a 66-​year-​old treatise on how economic controls foster tyranny.

Economist Hayek’s most accessible tome first hit it big in the 1940s, especially after Reader’s Digest excerpted it. The book resurges in popularity now thanks to something a bit different than a Digest excerpt. Glenn Beck featured it on his controversial talk show, praising it in glowing terms.

But there’s a deeper reason for its comeback, the reason Beck turned to in the first place: Its insights seem particularly relevant in an era of spastic expansion of government power. 

That’s the bad news.

Gene Healey, at Cato Institute’s blog, suggests that “the underlying reason for the sustained interest in Hayek’s book is that it taps into a profound dissatisfaction in the public mind with the machinations of its government. Both Presidents Bush and Obama have presided over huge growth in the size of the federal government.… Things seem out of control.”

Maybe, with Hayek’s help, we can hang a U‑ee and reverse course.

This is Common Sense. I’m Paul Jacob.