Category: free trade & free markets

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Accountability free trade & free markets moral hazard national politics & policies political challengers porkbarrel politics responsibility subsidy too much government

Trump Proposes a Budget

Trump, budget, spending, big government, entitlements, welfare, cuts, pig

Will Donald Trump, infamously successful businessman, actually do something about the federal government’s out-of-control deficits and mounting debt?

Economist Pierre Lemieux, writing in the Financial Post, finds some reason for hope in President Trump’s “America First: A Budget Blueprint to Make America Great Again”:

The proposal to eliminate funding for agencies like the Corporation for Public Broadcasting, the National Endowment for the Arts, and the National Endowment for the Humanities is welcome. Artists should be able to stand on their own two feet with the support of private sponsors and organizations, of which there are many in America. Lovers of concerts should finance their own passion.

Though Lemieux gives good reason to want to cut “official arts and humanities” subsidies even sans their budgetary implications, imagine the backlash from Democrats, the media and the whole collegiate sector!

Actually, the backlash has already begun.

Can united government under the GOP cut even these most obviously least necessary aspects of government subsidy?

I’m not holding any pockets of air in my two lungs.

“Many monstrous bureaucracies would be reined in,” Lemieux goes on, listing proposed cuts to the Environmental Protection Agency (-31 percent), Department of Labor (-21 percent), and other departments of the so-called “discretionary” budget. But this is all small potatoes. “Really cutting federal expenditures would require reducing the welfare state — which Trump has no intention of doing.”

And the fortunes Trump wishes to throw at the military? No knack for parsimony there.

Though we can expect a little exceptional hack-and-slashery from Trump, Lemieux remains skeptical of any overall major effect.

Get used to ballooning debt.

Like you haven’t already.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets general freedom media and media people moral hazard nannyism property rights too much government

Of Salt and Socialism

Venezuela, socialism, free markets, capitalism, poverty, celebrities, freedom, repression, starvation

Nearly 75 percent of Venezuelans have lost 19 pounds or more in 2016. “People have become so desperate,” the Miami Herald reported recently, “that they are butchering and eating flamingos.”

While acknowledging the problem, TeleSUR, a television network based in Venezuela and funded by governments including Cuba, Ecuador, Nicaragua, and Venezuela, called the Herald’s story “kooky” and suggested taking reports “like alleged flamingo eating with a grain of salt.”

If, in socialist Venezuela, one could find a grain of salt.

In America, salt is necessary, too, when listening to our socialist Hollywood celebs blather about their kooky diets, for which some are blaming President Trump.*

Socialism kills. The deprivations in Venezuela are no joke, for along with economic chaos, Venezuelans are experiencing political repression on a grand scale. A new report from Luis Almagro, secretary general of the Organization of American States (OAS), documents the thousands arrested for protesting or “having posted something against the national government or a public official on Twitter.” The report details the “curtailment of civil, political and electoral freedoms” and “torture” and “censorship.”

Almagro calls for the suspension of Venezuela’s membership in the OAS, which is long overdue. The Human Rights Foundation demanded that nine years ago.

The Obama administration opposed such a move, as the Washington Post editorialized, in order to pursue “a legacy-making détente” with “the Castro regime in Cuba.”

At Townhall,** I urged Trump to support the effort to boot Venezuela out of the OAS, which might provide some assistance toward political change there . . . and Venezuelans eating more.

And perhaps to socialists in Hollywood and elsewhere eating crow . . . but not flamingo.

This is Common Sense. I’m Paul Jacob.

 

* I covered this last week, when I compared their Trump Diet nonsense to the “Maduro Diet,” named for Venezuelan President Nicolás Maduro, the socialist dictator presiding over the complete economic collapse of what, prior to socialism, had been South America’s richest country.

** From which this Common Sense is adapted.

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Accountability free trade & free markets national politics & policies property rights too much government

Three, Three, Three Mints in One!

monopoly, Microsoft, Google, Chrome, competition, cooperation

Microsoft just announced an innovation that might give folks who fear business behavior — or are extremely skeptical of the positive public outcome of markets — pause.

The Bellevue, Washington, company is adding Google calendar connectivity for its Macintosh users of Outlook 2016.

[Pause.]

You see, monopolies give us the willies. We do not trust them. Yet, despite our fears and suspicions, big business activity in a free market does not lead inevitably to One Corporation Ruling Them All. Or chaos.

Why believe that? This Microsoft Outlook story.

Most folks’ worries about monopoly come down to fear of out-of-control competition. In many industries, for the industry to work, there must be general cooperation among competitors. (Think of telephones and electricity distribution, etc.) The reason many people* want to regulate “natural monopolies” is that it seems only natural that businesses would balk at working together on shared standards — they would balk at any form of cooperation . . . they’re competitors, dagnabbit!

But evidence of competitors cooperating for consumer good is all around us. The classic case? Railroads, when the rail gauges in America were standardized to 4′ 9″ — without government edict.

The current case? This, where one of the three biggest computer outfits in the world offers customers on a competitive platform (Apple) easy syncing with a company that competes directly with it as well as its platform competitor (Google).

Why do this?

The better to serve their customers. As much as Microsoft might want to shun their competitors’ products, its customers do not share that view.

And that is enough.

Welcome to free-market capitalism.

This is Common Sense. I’m Paul Jacob.**

 

* It is worth noting that economists have a different concern regarding natural monopolies. Something about “cost curves.” Meanwhile, the opposite fear — of cooperation among businesses when cooperation would be generally harmful (price fixing) — has been an issue dealt with by economists since Adam Smith.

** Full disclosure: this came to my attention courtesy of a story on Apple’s News app.

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Accountability folly free trade & free markets general freedom moral hazard nannyism national politics & policies responsibility too much government

DumpCare

healthcare, Trumpcare, Obamacare, medicine, costs, regulations, Medicaid, single payer

Speaker of the House Paul Ryan insists that his “TrumpCare” plan to replace ObamaCare will decrease medical insurance rates. Others argue that his American Health Care Act will increase those rates. Likewise, he expects it to reduce strain on federal budgets; others deny this outright. The “coverage” issue is just as contentious.

TrumpCare is a mess because it is isn’t “DumpCare.” What’s needed is not yet another regulation-plus-subsidy system. We need repeal and then . . . more repeals.

Unfortunately, President Donald Trump has never really been on board with this. He has promised that no one would lose “coverage,” assuming that “coverage” is “health care.”

It is not. State charity programs like Medicaid (upon which ObamaCare relied way too much) are merely ways to pay for services. Dumping a gimcrack payment system is not the same as decreasing medical services. “DumpCare” wouldn’t dump care, only insane government.

For example, we know that health care outcomes for poor folks without Medicaid turn out to be better than poor folks with Medicaid.* Increasing the number of people on formalized subsidy programs is no panacea.

Besides, ObamaCare severely under-delivered on “coverage.”

New programs, nevertheless, are traps, regardless of demerit: once you provide a benefit, folks come to rely on it and demand more — objecting when it’s taken away. Which is why few programs are ever repealed, despite failing to meet original expectations.

So far, the “small government party” hasn’t found the courage to actually limit government. Do Republicans really believe what they say, that fewer regulations and subsidies will lead to lower costs and better service?

It seems Republicans won’t take their own prescription.

This is Common Sense. I’m Paul Jacob.

 

* Oregon’s 2008 Medicaid “natural experiment” provides reasons to question the merits of the program. As the initial, randomized, controlled study found, “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services. . . .”

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Accountability education and schooling free trade & free markets national politics & policies responsibility

The Leading Edge of Higher Ed

apprentice, Praxis, education, training, skills, college, costs

“People are paying tons of money to be kept out of the real world . . . being taught by people most of whom have never even worked in the business world. It’s kinda crazy.”

Well, yeah. There’s a lot of crazy in modern college life.

Which is one reason to work around it. That’s what Isaac Morehouse — quoted above — has done.

Morehouse is the founder of Praxis. You may have heard him on The Tom Woods Show or seen him interviewed on Fox News. “The mindset of ‘obey the rules, follow procedures, chase credentials, chase grades, and wait to be told what to do and you’ll be handed this magical ticket to a job,’” Morehouse told Fox’s Tucker Carlson, “it’s just not true.”

His alternative is simple: leverage the apprenticeship idea, combine it with counseling and instruction, and arrange with participating companies a guaranteed job at program’s end.

Our college system deserves a failing grade. Colleges sponge away fortunes (often borrowed) from students, while neglecting to train them to do much of anything but . . . college work.

This means not only that college grads have trouble finding work, but, as Mr. Morehouse discovered before he hit upon the Praxis idea, there are many, many companies trying to hire competent workers, but unable to find them.

A market opportunity!! Praxis unites demand and supply, connecting companies needing smart, energetic, cooperative workers with willing, eager young folks seeking meaningful (and well-paid) employment.

You can find a good overview of his effort — and a way to sign up! — at discoverpraxis.com.

Praxis’s testimonials are inspiring.

As the future should be.

This is Common Sense. I’m Paul Jacob.

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Accountability folly free trade & free markets local leaders moral hazard nannyism porkbarrel politics responsibility too much government

Small Target, Big Subsidy

Denver, incentive, California, development, rent, graft, corruption

Something has gone wrong when, to get a tenant to move into an empty space in your prime-location building, you need a $4 million subsidy.

And when I say “prime location,” I’m not engaging in Trumpian over-statement. The downtown Denver, Colorado, property location sees over 35,000 pedestrians per day . . . and that’s with the primo slot empty.

But to get that slot filled, the owners have negotiated with the city government to nab a $2 million “incentive” to fix the place up for Target, which is thinking of leasing the location to put up a smaller-than-usual “flexible-format” store. Oh, and another $2 million for “operational” costs, which seems to be some kind of a loan to be paid back from taxes to be collected — and shared by the city for 20 years with the owners.

In other words, it’s the darnedest business deal you’ll ever see (and never get): up-front money not from a bank or investors, but from Denver’s city government “BIF” — Business Investment Fund — which is obviously part of a convoluted scheme fed by taxes and devised by . . . people I wouldn’t trust with my money.

Structuring deals like this is how modern cronies — er, cities — operate, I know. Am I alone in judging it corrupt on the surface and corrupting in the details?

If prime commercial property has gone unused for about a decade — as this three-storied mall space has — I’d think that maybe the owners have set the rents too high or the city has been a bit too greedy with taxes.

Or both.

This is Common Sense. I’m Paul Jacob.

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

The Skinny on Trumponomics

ecomomics, economist, tariff, trade, protectionism, Trump

President Donald Trump does not trust economists. So he is demoting the Council of Economic Advisors, booting out of the Cabinet the Council’s chairperson.

If this were only because economists as economists cannot do what he has been able to do — make a big success in business and trade — we could give him something like a pass.

After all, successful entrepreneurs have a knack for guessing an unpredictable future. Economists, not so much. Why the difference? Maybe because entrepreneurs have “skin in the game.” Governments boards and bureaus — or endowed professorships — don’t risk anything like skin.

Besides, prediction is an art, not a science.

Could Trump be fooled by his knack for working with real risk?

But all this may be irrelevant.

Trump’s problem seems to be that he cannot find enough reputable economists to jump on board his protectionist bandwagon.

Trade barriers, high tariffs and punitive measures to control corporate behavior — among Trump’s most popular policies — aren’t big among economists.

According to Josh Zumbrun, writing in the Wall Street Journal, a “survey of every former living member of the CEA for both Republican and Democratic administrations found that not one member publicly supported Mr. Trump’s campaign.”

Economist Pierre Lemieux, writing in response to Zumbrun’s article, clarified Trump’s particular problem: economists “have methods and theories that prevent them from saying stupidities. They are difficult to turn into parrots. And they believe in the benefits of exchange.”

That latter notion, really basic, is what protectionists like Trump do not understand.

And the kind of predictions economists can successfully make run like this: “Well, that won’t work!”

It’s usually said about protectionism.

But whose skin is on the line now?

This is Common Sense. I’m Paul Jacob.

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Accountability free trade & free markets national politics & policies responsibility

No Set Prices?

bargaining, dickering, negotiating, free trade, price, illustration, Buying Power

“Paul,” an old boss of mine used to say, “there are no set prices.”

He meant that when a vendor said it would cost x, my choice wasn’t just yes or no. Negotiate. I could say, “Boy, I’d sure like that, but golly, I can’t afford to pay x. Any chance you’d consider 4/5ths of x?”

It was amazing how often I bought what was priced at x for less than x.*

Consider government waste — from the Pentagon’s $400 hammers to millions in cost overruns for weapons systems. Politicians pay lip service to getting waste under control, but actually do something about it?

Yeah, right.

That’s why I took notice last December when then President-Elect Trump tweeted “Cancel order!” in response to the high price of a future Air Force One from Boeing. Then, Trump sent Lockheed stock down 3 percent with another tweet:

Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!

“Mr. Trump . . . would like to squeeze Lockheed for a better deal . . .” the New York Times explained, adding that Trump had “sent shock waves through the military industry.”

Sen. Richard Blumenthal from Connecticut, where the F-35’s engines are manufactured, responded, “The suggestion that costs are out of control is just plain wrong.”

Well, last week, CNN reported that, “Defense giant Lockheed Martin has agreed to sell 90 new F-35 fighter jets to the US Defense Department . . . a deal that amounts to more than $700 million in savings over the last batch of aircraft delivered.”

There are no set prices.

This is Common Sense. I’m skinflint Paul Jacob. 

* Even when a vendor wouldn’t budge on price, I could always call back a day later and say I’d finagled a way to afford it. Even then, the message that cost mattered likely started any future negotiations from a better position. 

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Accountability free trade & free markets general freedom government transparency nannyism national politics & policies responsibility too much government

Sledgehammer to a Bureaucracy

EPA, environment, pollution, climate change, Trump

The media hysterically pushes the line that the new Trump administration is so much “in chaos” it even frightens seasoned (salt-and-pepper?) heads in the Republican Party. But perhaps folks at the Environmental Protection Agency have more reason to panic.

“It looks like the EPA will be the agency hardest hit by the Trump sledgehammer,” writes Julie Kelly over at National Review.

Ms. Kelly offers striking reasons to hit the agency hard, quoting from Steve Malloy, the author of Scare Pollution: Why and How to Fix the EPA. “I can think of no agency that has done more pointless harm to the U.S. economy than the EPA — all based on junk science, if not out-and-out science fraud.” Malloy looks forward to the new president’s promised rethink and restructuring of the agency.

Just how bad is it?

Environmentalists often cry foul over any corporate funding of ecological research. But if one worries about money influencing results, the case against grants funded by regulatory agencies for regulatory purposes is even stronger.

Especially when the agency is run by ideologues.

Trump’s transition team seeks to make all the EPA’s relevant data public, for peer and public review, and would really like to curtail the agency’s research funding entirely.

Pipe dream? Better than the recent nightmare: “For eight years,” writes Kelly, “President Obama used the agency as his de facto enforcer of environmental policies he couldn’t pass in Congress even when it was controlled by his own party.”

The EPA needs to be checked. And balanced. And more.

This is Common Sense. I’m Paul Jacob.

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Accountability folly free trade & free markets general freedom moral hazard

Oil’s Bad that Ends Bad

Mexico, oil, nationalize, socialism, neoliberalism

Sometimes socialism seems reasonable.

Emphasis on “seems.”

Take natural resource socialism. Ores and oil are “just there in the ground” and “belong to everybody.” So it “just makes sense” that “the people” should “own” the mining and drilling and refining industries, and run these operations to share the profits to help “everybody,” not just a few.

The Mexican government bought into this back in 1938, when it nationalized the U.S.- and Dutch-based oil companies. Today, the industry is under-capitalized, its equipment old and inefficient. Mexico itself is a mess. The government is corrupt and the people far poorer than would have been the case had they not bought into the nationalization mania.

The cause of the problems should not be in dispute. “By cutting off Mexican oil exploration from foreign investment and foreign know-how,” Ryan McMaken writes in an interesting analysis, “the Mexican state has only succeeding in making the Mexican oil industry less efficient, and less capable of taking advantage of the natural resources in Mexico.”

Which is why the government has been making tentative “liberalization” moves, de-monopolizing Pemex, the government’s oil outfit.

Unfortunately, though the damage done by bad government policy and monopolistic privilege is everywhere to see, many people (especially intellectuals) in Mexico blame “neo-liberalism” and non-existent “free markets” for rising prices and the specter of economic collapse.

Once bitten by the natural resource socialism bug, it’s apparently easy to dismiss evidence. Or the common-sense notion that government over-reach has made the mess they now struggle with.

This is Common Sense. I’m Paul Jacob.

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Mexico, oil, nationalize, socialism, neoliberalism