Category: too much government

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Accountability folly too much government

Our Limited Abilities Require Other Limits

Last week I asked, in effect, Who regulates the regulators?

It does no good to say “the people,” because — as much as I want government to be ultimately controlled by the people — if you’re like me, you don’t know enough to micro-​regulate high finance.

But there’s something I didn’t mention last Wednesday: The regulators don’t have that knowledge, either.

Even keeping eyeballs on simple fraud turns out to be difficult. Trying to micromanage high finance? Much harder.

But the congenital inability of regulators properly to regulate doesn’t mean that we must consign ourselves to a never-​ending, Sisyphean cycle of boom and bust. 

Many of the instruments of the modern federal government try to do too much. These very institutions, because they hubristically attempt to regulate away boom bust deliver just the opposite. They make sure booms go bust in messy ways. 

Here’s a fresh example: “Lack of regulation” wasn’t the main reason for this latest bust. More important? The “too big to fail” subsidy. By giving Wall Street, big bankers, and financial intermediaries the impression that they would be bailed out in case of implosion, those very same folks behaved in such a way to risk said implosion, and thus needing the bailouts.

Which happened.

Which started the cycle all over.

Only by going back to basics can we improve our long-​term economic outlook — not by government micromanaging the economy.

Nicely, citizens like you and me can understand these “basics.”

And defend them.

This is Common Sense. I’m Paul Jacob.

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

Madison’s Angels to the Rescue?

Something called “behavioral economics” has arisen in recent decades, testing and probing many of the assumptions-​cum-​postulates of basic microeconomics. Researchers have discovered that human beings are prone to biases, cognitive errors, and a whole bevy of choice glitches. We are not perfectly rational.

Shocking, I know.

Some people draw an odd moral from this: Since people are such fools, they require the help of government to regulate them from utter folly and ruin.

Economist David Henderson quotes one of his Facebook friends, TV creative director John Papola, as supplying the “most succinct criticism” of this tack: “Why in the world do behavioral economists who study our flaws and irrational quirks advocate centralized power in the hands of a small group of flawed overlords? If people are irrational, so are government regulators, only they have corrupting monopoly power.”

You’ve seen this kind of argument before, in political theory. James Madison famously noted that 

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.

Just so: Were we entirely rational, no regulation would be necessary — no laws would. But, given universal human limitations, the regulators themselves require regulation, and a (non-​existent) supply of non-​biased, error-​resistant rationality, to boot. 

Forget vast reams of regulations and huge teams of bureaucrats. Instead, perfect the basic rule of law, regulating markets by a well-​conceived basic set of rules. 

And expect some imperfection. 

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets general freedom national politics & policies too much government

Commerce, Compulsion and the Constitution

Every once in a while a judge attends to the Constitution, and freedom lovers cheer wildly as if this were very strange, even wondrous. I guess it is, considered in light of the sweep of human history.

Should the Democrats’ “health care reform” package kick in fully, it would compel people to purchase medical insurance by punishing abstainers with a steep, extra tax. So hurray for Judge Henry Hudson of the federal district court in Richmond, according to whose recent decision the Commerce Clause of the Constitution does not empower Congress to point a gun to our heads and force us to buy health insurance.

If the Constitution could be honestly read that way, it would mean that the Founding Fathers had fought to replace British tyranny with an even worse home-​grown one. But no, no Founder thought that giving the federal government power to smooth trade relations among the states equaled authorization for universal, compulsory purchase of books, booze, bobby pins — or whatever Congress-​Approved “health care” delivery system some future central planners might concoct. Nor does it.

We’re not out of danger yet, obviously. There are many more battles to come, many other provisions of “Obamacare” that have yet to be challenged and quashed in courts or in Congress. But in any tough job, you need to accomplish the first step. 

Judge Hudson’s common-​sense conclusion sounds like a great first step to me.

This is Common Sense. I’m Paul Jacob.

Categories
folly too much government video

Video of the Week: California PERS Aristocracy

In vignette after vignette, this mash-​up provides a helpful (and amusing) take on California’s pension fiasco:

It’s not easy thinking about government-​enacted pensions, I guess. Everyone wants to retire young and well-​off, and no one wants to appear stingy. But there has to be responsibility in how these things are set up.

I touched upon the subject earlier this week, in “Pension Declension.” Two of my commenters — Charles Sainte Claire and SkipppingDog — strike me as perhaps not quite getting why pension reform is necessary.

What Charles and Skipping aren’t saying is that a defined benefit plan guarantees a certain return whether or not the money has been invested to produce such a return. So, where does the money to pay the defined benefit come from?

Yep, you guessed it: The taxpayers. Future taxpayers who can’t even be blamed for having elected the dishonest pols who cut these fraudulent deals with the politically active and powerful public employee unions.

In the public sector, the pressure will then be off the workers and politicians to actually fund today what will be spent tomorrow. Which means embracing the sort of chaos now destroying states and municipalities in California and across these United States.

What about in the private sector? Did someone say “private” sector? Well, even in the private sector, it will be the taxpayers who get stuck with the bill.

To suggest that defined benefit plans are the way to go is to suggest that workers can have whatever they desire and some magic person named The Taxpayer will always be there to pay for it. It is to embrace fleecing future generations.

Of course, we’ll be told that it “worked well in the past.” In a manner of speaking. After all, Bernie Madoff’s fraudulent scam worked well “in the past.” Most rip-​offs “work well” … that is, until the very moment when honest, hard-​working people realize they’ve been had.

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ideological culture too much government

Where Democrats Go Wrong

When we find ourselves in a pickle, it’s a good idea to ask: Where did we go wrong? 

I’ve often probed how America got itself into the present mess. I’ve noted how easy it is for politicians to lose touch with the common sense of the American people — so much so that they cannot even imagine balancing a budget while they are in office. 

Further, I’ve often castigated Republicans for betraying their promises to cut spending.

But what of Democrats? Where’s the common sense?

When President Obama proposed a non-​military pay freeze on federal workers, the Democratic National Committee’s “Organizing for America” (OFA) QUANGO asked its supporters for help. Fine. But what happened? The Democratic base went ape. Bananas. Noodles-​out nuts.

Example? David Dayen of the FDL News Desk. “We’ve officially gone around the bend,” he wrote, thereby going ’round the bend. He characterized the carefully worded letter sent out by OFA with a “this is what we’ve been reduced to” snipe.

Dayen and too many other Democrats think their ideology means always increasing government worker pay. Even if government workers prove almost impossible to fire, have great benefits, and comparatively high pay, they must not be asked to make a tiny sacrifice. Not even while others suffer.

If these partisans’ core concern were really helping Americans, including the poor, they wouldn’t be so fixed on keeping federal pay as high as it is.

But, priorities, you know.

This is Common Sense. I’m Paul Jacob.

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

Gore’s Gas-​Based Admission

Al Gore gives the impression of someone never willing to acknowledge error if said error happens to be self-serving.

This impression is wrong. 

If I have ever suggested that Gore never admits self-​serving mistakes, I hereby rescind and repudiate that suggestion. He appears more than willing to retire a dishonest assertion … so long as he has another dishonest assertion to replace it with.

Ed Morrissey tells the tale at Hot Air, opining that Al Gore’s revised opinion about the virtue of government subsidies for corn-​based ethanol seems just a little too convenient.

Gore now acknowledges that the energy-​conversion ratios of first-​generation ethanol “are at best very small,” and that corn subsidies probably bid up food prices. He even admits that he pushed for the funding to help farmers in states like Tennessee and Iowa. So it came to pass that taxpayers paid billions, in part to help Gore run for president.

Wait, there’s more. 

Having recanted his support for “first-​generation” ethanol, Gore now wants to use wood and grass to make ethanol. A new and better way, n’est-ce pas? No. There’s this small detail: Grass etc.-based ethanol is even more inefficient than corn-​based ethanol.

Why top a bad blunder at taxpayer expense with an even worse blunder at taxpayer expense? Could this have anything to do with Al Gore’s investment in Abengoa Bioenergy, a firm begging for government subsidies for second-​generation ethanol?

This is Common Sense. I’m Paul Jacob.