Category: too much government

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ideological culture too much government

The “Obamacare” Conspiracy

Some “unintended consequences” aren’t.

The order of the market is an unintended consequence of market participation. By buying and selling, we’re just trying to get what we want. But we also send signals that help other folks accommodate our values and plans, which then allows markets to form some semblance of orderliness.

In government, on the other hand, laws get advanced to help this person or that, or whole groups of people. But economists often note that the actual consequences of many policies are at great variance with their advertised benefits. These often negative outcomes we term (following F.A. Hayek) the “unintended consequences.”

It’s worth noting that sometimes politicians do intend those hidden, bad consequences.

Economist David Henderson brings up an instance of this:

One insurance agent I spoke to speculated that politicians and other government officials who support these regulations not only understand these effects, but also like them. Why? Because they cause more people to go without insurance and thus create a demand for government-provided insurance.

Henderson then cites a provision of Obamacare, now kicking in: Regulations mandating medical insurance companies to spend a prescribed percentage of premiums “on actual medical care.” The result will be, almost certainly, the demise of whole hunks of the health insurance industry.

Thereby increasing political demands for government-provided insurance.

Some of the folks who concocted this regulation, and some who voted for it, certainly knew the likely result. And welcomed it.

Politicians are not equally clueless.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Video: Rating Agency Madness

The seeds of disaster can often be found in good intentions — a simple regulatory requirement designed to avoid disaster — as explained by economist Lawrence White:

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insider corruption too much government

Resigned to Graft?

It has been alleged that Brazil’s Labor Minister, Carlos Lupi, had demanded kickbacks from “charities and non-governmental organizations in exchange for funding from the ministry.” He has also been accused of receiving both a state and a federal government salary. Such talk has undermined his ability to work for the already-beleaguered government of President Dilma Rousseff. So he resigned.

We’ll see what happens to Lupi. But the charges reveal a problem we will always have as long as governments are big. The very ability to “make or break” a project, business or career is itself an opportunity to charge a premium for such service.

The bigger and more arbitrary government is by design, the more opportunity there is for corruption.

So why isn’t all government corrupt?

Well, separation of powers allows one government sector to watch over the others, perhaps jealously. And, as Brazil’s case shows, a free press helps.

But there’s also the cultural element.

A generally honest culture where people follow higher principles as a matter of habit can offset the dangers of governmental arbitrariness. This explains, perhaps, why Scandinavian countries managed under big government as successfully as they did, for so long. Going into the modern welfare state, Scandinavians were generally honest and morally upright.

Over time, though, this element recedes, as opportunities for corruption work their way into every level of society. As has happened in northern Europe generally.

Small, limited, citizen-controlled government is less corruptible. It also encourages a culture of honest dealing.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture too much government

Lies and Denials

Politics is often the art of lying about the effects of policy, and Hugo Chavez, Venezuela’s Prevaricator-in-Chief, is a master politician. As consumer-price inflation hits a 27 percent per annum rate, he blames capitalism.

One report summarizes his position: “Mr. Chavez said the market had become a perverse mechanism where the big monopolies, the big trans-nationals, and the bourgeoisie, dominate and ransack the people.”

So he’s extended price controls from staples to all sorts of goods, with some prices being immediately subjected to a rate freeze. Big firms will have to report costs to the government, so bureaucrats can determine a “fair price.”

Were it not a ratcheting up of oppression and hardship, I’d say this is all getting rather funny. Price controls notoriously fail to achieve what they aim. In the United States, Nixon-era wage and price controls set stagflation into overdrive. Long lines at the gas pumps, shortages in supermarkets, and rising prices. What a mess.

There’s good theory to explain why price floors and price ceilings cause major problems. But according to the head of the country’s price control board, “The law of supply and demand is a lie.”

Hugo and his cronies deny the relevance of the central bank’s doubling the volume of money in circulation since late 2007. Supply of money increases? No possible effect on skyrocketing prices, supply and demand being a lie, you see.

Meanwhile, people have begun to hoard products. It’s now almost impossible to even find coffee in Venezuelan stores.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Locovore Law

America’s agricultural policies are notoriously crazy. The federal government subsidizes one crop while discouraging its use at the consumer end. The old New Deal program of paying farmers not to grow crops is still in place. The high tariff on sugar artificially increases prices far above the world price.

To compensate, the federal government helped develop a refined sugar substitute, high fructose corn syrup — an even more “sugary” sugar — and then infected nearly the whole food supply with it.

So, some sympathy for the “locavore” movement, the folks who believe we should eat foods grown in the areas we live. It seems more natural. Less goofy.

But it’s also a lot more costly, considering that buying locally tends to forsake gains from trade.

So a law to prop up locavore production and consumption, like the legislation introduced early in November by Sen. Sherrod Brown (D-OH) and Rep. Chellie Pingree (D-ME), cannot help but shuffle two steps back for every misstep forward. Basically, it’s about more subsidy, including $30 million for “Value-Added Producer Grants,” $15 million for “farmer food safety training,” $90 million for something called a “Specialty Crop Block Program.” The least obviously bad part would direct the “USDA Research, Education, and Extension Office to coordinate classical plant and animal breeding research activities,” though I don’t see why farmers can’t manage this on their own. This is the Age of the Internet, after all, of Information.

Congress: Forget it; repeal current agribusiness subsidy and protectionism, instead.

This is Common Sense. I’m Paul Jacob.

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

Video: Milton Friedman on Drug Legalization

Nobel Laureate economist explaining why drug prohibition makes no sense:

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free trade & free markets too much government

Keeping Parks Open

“It is not necessary for park budgets to be threatened during state fiscal crises.”

Good news. The vast majority of states now endure tightened budgets and panicked scurrying to rescue their finances from frighteningly bloody conditions of red.

In this financial environment, cutting non-essential services sometimes seems like a no-brainer. Park funding tends to get hit hard.

A PERC Case Study by Holly L. Fretwell, Funding Parks: Political versus Private Choice — quoted above — looks into a solution that most politicians rarely consider: private management.

Not full privatization, mind you. That’s too tough for most people to take.

Private management of publicly owned parks, on the other hand, makes a kind of obvious sense.

Fretwell looks at Recreation Resource Management, the largest park management operation in the country. The company leases rights to run state and federal recreation sites, managing more than 175 such units in twelve states. In arrangements such as RRM’s, lessees pay “an annual lease, or rental fee, in addition to a percentage of the total fees earned.”

When run by businesses, parks “are not subject to the same political appropriations process” as government-run parks. By leveraging the profit motive — and its associated economies — parks can serve the public without over-taxing us at a time when we are sorely pressed for money. Contracts with private firms can avoid at least some of the problems of bureaucratic incentives.

The bottom line advantage, she insists, is “consistent, quality stewardship.”

Which is surely what we all want.

This is Common Sense. I’m Paul Jacob.

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general freedom property rights too much government

Plymouth’s Great Reform

Times too tough for much thanksgiving? Some of my readers, surely, are feeling the bracing effects (to put it mildly) of a severe economic slump — a so-called “recession” that I’ve been calling, more simply (and I think more honestly) a “depression” — and all I can say is I have some glimmering of such troubles. Things could definitely be better.

But at Thanksgiving, it might do us good to consult William Bradford’s account of the History of “Plimoth Plantation,” a document that recounts how his fellow Pilgrim settlers established, endured, barely survived, recovered, and eventually thrived in Massachusetts.

By the spring of 1623 — a little over three years after first settlement in Plymouth — things were going badly. Bradford writes of the tragic situation:

[M]any sould away their cloathes and bed coverings; others (so base were they) became servants to [the] Indeans, and would cutt them woode & fetch them water, for a cap full of corne; others fell to plaine stealing, both night & day, from [the] Indeans, of which they greevosly complained. In [the] end, they came to that misery, that some starved & dyed with could & hunger.

The problem? The colony had been engaging in something very like communism.

The experience that was had in this comone course and condition, tried sundrie years, and that amongst godly and sober men, may well evince the vanitie of that conceite of Platos & other ancients, applauded by some of later times; — that [the] taking away of propertie, and bringing in comunitie into a comone wealth, would make them happy and florishing; as if they were wiser then God.

Bradford relates the consequences of common property:

For this comunitie (so farr as it was) was found to breed much confusion & discontent, and retard much imploymet that would have been to their benefite and comforte. For [the] yong-men that were most able and fitte for labour & service did repine that they should spend their time & streingth to worke for other mens wives and children, with out any recompence. The strong, or man of parts, had no more in devission of victails & cloaths, then he that was weake and not able to doe a quarter [the] other could; this was thought injuestice. The aged and graver men to be ranked and equalised in labours, and victails, cloaths, &c., with [the] meaner & yonger sorte, thought it some indignite & disrespect unto them. And for mens wives to be commanded to doe servise for other men, as dresing their meate, washing their cloaths, &c., they deemd it a kind of slaverie, neither could many husbands well brooke it.

Yes, the s-word: Slavery. Common property was mutual slavery.

The solution? The plan for society that Bradford attributed to God. He brooked no pleading that common property didn’t work because of corruption, sin. As he put it, “seeing all men have this corruption in them, God in his wisdome saw another course fiter for them.” The course? I’ll use a word of coined by Robert Poole, one of the founders of Reason magazine: Privatization.

Basically, what the Pilgrims privatized was land, and the fruits thereof, assigning to

every family a parcell of land, according to the proportion of their number for that end, only for present use (but made no devission for inheritance), and ranged all boys & youth under some familie. This had very good success; for it made all hands very industrious, so as much more corne was planted then other waise would have bene by any means [the] Govror any other could use, and saved him a great deall of trouble, and gave farr better contente. The women now wente willingly into [the] feild, and tooke their litle-ons with them to set corne, which before would aledg weaknes, and inabilitie; whom to have compelled would have bene thought great tiranie and oppression.

Thus began the years of bounty in Massachusetts. There’s much more in Bradford’s account worth reading, including the increasingly tragic relations with the native Americans. And, indeed, one learns from reading such first-hand accounts how imperfect a creature is man.

But it is obvious that some systems of property and governance work better than others, and, on the day that our government has set forth as a day of Thanksgiving, it is worth being thankful for living in a land that has upheld — to at least some degree — the system of private property that America’s Pilgrim’s learned to see as God’s “fitter course” for corruptible man.

Times may be tough today. On the bright side, they’ve been tougher. One reason for the progress we have seen — even as we endure a major setback, and perhaps a bigger one to come, as the international financial system implodes — is the system of private property that underlies our personal and economic liberties.

Let’s hope we can recover the best in this tradition.

This is Common Sense. I’m Paul Jacob.

Categories
tax policy too much government

Many Thanks to Grover

Since the Super Committee failed to come up with the promised $1.2 trillion in pretend deficit reduction over the next decade, many in the nation’s capital blame Americans for Tax Reform President Grover Norquist.

Our taxes — and even the taxes of people with the nerve to be wealthy — are not being increased. This, you must understand, is all Grover’s doing, the fault of the Taxpayer Protection Pledge he “pushed” on more than 275 members of Congress.

His pledge articulates a simple, straightforward idea: Taxes are too high and politicians should stop increasing them. Incumbent politicians appear fearful of breaking this pledge. If they go back on their word, they risk being defeated come the next election.

Last Sunday, 60 Minutes’ correspondent Steve Kroft blurted out to Norquist, “You’ve got them by the short hairs!”

Norquist responded, “The voters do, yeah.”

Are we really supposed to be sad about the system of accountability known as elections?

Former Wyoming Senator Alan Simpson whined that Norquist “may well be the most powerful man in America today.”

“The tax issue is the most powerful issue in American politics going back to the Tea Party,” Norquist explained.

If you think the federal government is too small and does too little, a pledge not to raise taxes makes scant sense. But if you think, like Norquist, that government is a whole lot bigger than it should be, pledging not to make it bigger still is a no-brainer.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies too much government U.S. Constitution

The Post Office’s Future?

At some point approaching catastrophe, one has to stop offering googly sounds of uplift and hope, and just speak the truth.

Postmaster General Patrick Donahoe may understand that. The U.S. Post Office, he recently told the National Press Club, is “in a deep financial crisis because we have a business model that is tied to the past.” Deep ties to the past, indeed. Setting up a postal system was written into the Constitution.

Early in the system’s history, postal positions served as rewards to friends of successful politicians. This put a lot of bad apples into the cider; the business soured. Postage skyrocketed.

This sorry situation brought entrepreneurs into the market, delivering letters at a fraction of the government system’s prices. The politicians fought back, took the competitors to court, and won — on dubious Constitutional grounds.

But they did overhaul the system, reducing prices.

That was a long time ago. Today’s situation may be worse. As Donahoe put it, “We are expected to operate like a business but we do not have the flexibility to do so. Our business model is fundamentally inflexible.”

No surprise, Congress is inflexible. But there are competing bills rumbling around to allegedly fix the financial woes of the institution Donahoe calls “a national treasure.”

Well, if it’s a treasure, sell it off: The federal government could use the money. (Though likely not well.)

And the people could use a good privatized mail service. Or two. Or more.

This is Common Sense. I’m Paul Jacob.