Category: free trade & free markets

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free trade & free markets too much government

Stay Awake for the Brownouts

Years ago, I would actually listen to lectures by economists on how the electric grid might function better. Pretty much only one thing remains in my head, the conclusion: Regulatory agencies and government-​run electrical companies tend to be very inefficient when it comes to capitalizing their enterprises.

Have you nodded off, yet?

Sorry. There’s always been something a bit boring about these discussions. But the subject matter is really worth staying awake for.

Why?

Well, experts predict that in as soon as three years, Washington, D.C., Virginia, and Maryland — the area where I live — will be enduring rolling brownouts.

It’s not the fault of PJM, the already-​regulated electric transmission company servicing the area. It’s the fault of members of Virginia’s State Corporation Commission and Maryland’s Public Service Commission.

Yes, ever more people are moving into the area. But the officials in charge of allowing new electric infrastructure to be set in place are refusing to grant permission to lay down the miles of new high-​voltage electric lines the increasing demand requires.

What’s their rationale? Board members say they need more studies. Bureaucrats love studies. Could it be that friends and family and business partners of the board would be amongst those doing the studies?

I bet economists would have a less incendiary explanation. But the upshot is clear. Bureaucracies can be dangerously slow institutions to rest progress upon.

This is Common Sense. I’m Paul Jacob.

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Accountability Common Sense free trade & free markets insider corruption

A Real Reform for Obama

Barack Obama’s record as a maverick, either in the U.S. Senate or his years as an Illinois legislator, is slender at best. Behind the self-​avowed reformer’s rhetoric, his policies seem typical, demanding ever-​bigger government, ever-​more intrusive government.

But there’s at least one reform practiced by candidate Obama that could yield some very good changes indeed: His rejection of government funding of presidential campaigns.

Note I say “practiced by,” not “advocated by.” Obama has opted out of the system for tactical reasons only. In doing so he broke a promise earlier in the campaign that he would accept matching funds — along with the limits on his own general election spending that this would entail. But he had scooped up so much financial support so fast that he decided it would be shooting himself in the foot to accept spending restrictions.

Obama may be uncomfortable with his flip-​flop. I applaud it — no, not the hypocrisy of it, but the example it sets for policy.

We should never force taxpayers to fund campaigns they may not support. And while we’re at it, let’s cut away the tangle of campaign laws regulating how much money we can give a candidate, or what and when and where we can say things about candidates.

If Obama could sign on to that proposal, he could really punch away at McCain on the issue. Obama would then be advocating real reform. Real good reform.

This is Common Sense. I’m Paul Jacob.

Categories
Common Sense free trade & free markets insider corruption nannyism national politics & policies too much government

Welfare Kings

Bear Stearns. You gotta like an investment company with the word “bear” in it. If you are the kind of investor to go bullish over anything big, Bear, Stearns & Co., Inc., was BIG. For years its subprime mortgage biz made investors go all squirmy with bullishness.

They could pretend that the word “bear” was there for irony.

Call it prophecy, instead: The Bear Stearns bull lies on the ground, gored. Time to sell off the carcass.

The Federal Reserve has forced through a takeover deal, with J.P. Morgan buying out the dead bull. At a low, low price — though not nearly as low had the Federal Reserve stayed out. It’s another so-​called capitalist bailout, an attempt to make a failure not seem so big.

This is not free-​market capitalism, folks. This is big business welfare-statism.

In their normal run of operation, businesses negotiate the uncertainties of markets using tools like the profit-​and-​loss statement, aiming for profit. When they don’t manage this, they fail. Remember that term, loss?

Well, in today’s truly bipartisan political economy, the bigger you are the more scared our rulers get when you fail. So they prop up, as best they can, the biggest failures.

Forget welfare queens. The welfare kings are businessmen on the take from government. The losers are everybody else, as idiotic risks and bad business practices get propped up by government.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies

Ptolemaic Obama

I’m all for democracy, but I’m sure glad science isn’t put up for a vote. If geocentrism were up for political grabs, would governments be forced to go against Galileo again? After all, a plurality could say: See, the sun rises and sets — all the proof you need that the sun revolves around the Earth!

Just so with trade policy. There are few truths so firmly established as comparative advantage and the notion that with free trade we all gain.

But some see only the negatives, fearing competition. Who? Some businessmen, some workers.

Which is why Barack Obama has been making noises to renege on NAFTA.

Now, NAFTA is no free trade utopia. It’s a real-​world political document that freed up a lot of trade, far from perfectly. Still, most of the complaints against it are nonsense.

Which is also why major Obama campaign consultants have whispered to Canadians that, no, Obama does not mean what he says. The candidate’s only saying nasty things about NAFTA to pick up extra votes.

I don’t know what Obama really believes. Right now he’s pandering to the protectionist Democrats. I am glad, however, not to feel such a need to lie.

And I am happy to affirm, once again, that the Earth revolves around the sun.

This is Common Sense. I’m Paul Jacob.

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

Nifty Doesn’t Cut It

Just because something can be done doesn’t make it economical to do. There is a big difference between physics and economics.

Take ethanol. It might seem nifty to grow the fuel for our cars and trucks like we do our food, in fields. But niftiness alone is not enough. Nifty notions, like un-nifty ones, must prove out in terms of all the costs involved.

A growing amount of research shows that ethanol doesn’t cut costs at all.

The most recent ethanol debunker I’ve come across is Robert Bryce, author of a forthcoming book with a provocative title, Gusher of Lies: The Dangerous Delusions of “Energy Independence.” Interviewed on ReasonOnline by Brian Doherty, Bryce offers some fascinating perspectives on energy economics and policies.

  • Did you know that for every gallon of ethanol, there’s at least 51 cents of subsidy?
  • Had you heard that corn-​based ethanol produces more greenhouse gases than does our use of fossil fuels?
  • Have you stopped to think about all the water that raising more corn would require, and the increasing expense of getting gargantuan more amounts to farms in the midwest?

These and other considerations lead Robert Bryce to call current ethanol policy a “scam”and “the longest running robbery of taxpayers in American history.”

Some forms of bio-​product may be more economically feasible than ethanol, like the biodiesel made from the unused parts of slaughtered animals. But we should wait to see how they cost out, too, without subsidy.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Stimulus, Response

Wall Street and the real estate markets have taken big hits, and so, to prevent a major recession, our president and representatives immediately began one-​upping each other about a “stimulus package.”

And my thoughts go back to my classroom days. In biology.

There were these frogs, see. Dead frogs. On the table. Some of the kids would take a battery with some wires attached, and prod the dead frog, stimulating nerves to make the dead, half-​dissected frogs jump.

Half the boys in the class thought it a hoot, half the girls thought it gross. Or maybe more than half.

Sometimes I think this is about as much as we ever were prepared for thinking about stimulus packages.

The economy is not a dead frog. it’s alive, and it’s received a shock. A better analogy might be to someone who’s received a blow to the head. You don’t necessarily immediately start applying shock therapy to get the person moving. Ask a nurse what to do. Most of the time, the body repairs itself. In due time. With care taken not to jar the person again.

But a blow to an ecosystem — like an economy — is more complicated than even some guy with a concussion. And, listening to the debate over the stimulus package, and then reading actual, astute economists consider the politicians’ proposals, and Iâ’m thinking …

Frog or no frog, the stimulus notions politicians prefer seem more directed towards influencing voters than getting the economy to jump back into action.

This is Common Sense. I’m Paul Jacob.