Category: free trade & free markets

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Accountability free trade & free markets

The Fed Feeds a Scam

D. Stockman

Real and effective “anti-establishment” ideas come from unexpected places. That is, they are unexpected if you read only the dominant media and its insider sources, or follow politics only during the quadrennial presidential farce.

Quite a few news junkies would be surprised at David Stockman’s critique of current Federal Reserve behavior and policy, for example. In “Why Ronald Reagan Is Rolling In His Grave: The Keynesian Putsch At The Fed,” he charges the central bank with having managed “an economic coup d’etat” by engaging in an ongoing wealth redistribution scam — shoveling wealth to the rich.

Stockman sees the confidence of Fed Chair Yellen’s macro-policy micromanagement agenda as a scary case of hubris, of self-appointed effrontery. “Yellen & Co believe they are in charge of virtually everything on the main street economy . . . based on nothing more than their own subjective and unexplained wisdom.”

Stockman is in high form, here. Yellen’s latest pronouncement, he says, is “unaltered Keynesian claptrap. It is the arrogant over-reach of a model-obsessed academic zealot who has no respect whatsoever for the real main street economy and for the historically proven truth that free markets are the best route to prosperity and higher living standards for the people. . . .”

Her policies, he claims, amount to “‘trickle down’ economics with malice of forethought.”

Does that sound Bernie Sanderish to you? It shouldn’t.

The case for limited government and against the Fed (and federal government management in general) are that it is modern unlimited government that serves the few at the expense of the many. Stockman is just restating very old wisdom.

Remind your Occupier friends of this. They are on the wrong team.

This is Common Sense. I’m Paul Jacob.

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D. Stockman

 

Categories
folly free trade & free markets

Prophecy Failed

Eggs, New York Times, Economics, collage, photomontage, http://cognitivebiasparade.prosite.com/

In the first week of June we were told to expect egg shortages. The avian flu had infected millions of hens: egg production would plummet.

This was news, reported as “Egg Rationing in America Has Officially Begun.” The Washington Post cited a few signs in Texan retail groceries warning customers that the stores were not in the wholesale biz, supplying eggs for restaurants and the like.

And then the follow-up: On Tuesday the New York Times reported, “Bird Flu Sends Egg Prices Up, but Slowing Demand Prevents Shortages.”

Author Stephanie Strom is probably not responsible for the title. Her copy was not horrible.

It’s hard to get over the title, though. Economist Mike Munger offered his reaction headline: “NY Times Causes Head of Mungowitz to Explode.”

Why?

One word: “but.”

The title should have read, “Bird Flu Sends Egg Prices Up, So Naturally Slowing Demand Prevents Shortages.”

Why that “slowing demand”?

I’ll let Munger explain it:

There can never, NEVER be a shortage if prices are free to adjust. Because a shortage is insufficient supply at current prices. Lagniappe: This was in the “Science” section. Yes, it was.

People buy less when prices rise. So those who value eggs less cede those humpy dumpties to folks who want them more. Fitting. Harmonious!

So the title was witless, Munger insists, “on the order of ‘Water:  Still Wet!’ or ‘That Crazy Sun:  Rising in the East Again This Morning.’”

I like “good news” stories. Too bad the Times wasn’t quite up to delivering the good news that was clearly fit to print.

This is Common Sense. I’m Paul Jacob.

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Eggs

 

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folly free trade & free markets general freedom national politics & policies

Raise Your Hand, Dry and Secure

B.S.

Presidential candidate Bernie Sanders made a splash last week with an off-the-cuff comment. “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.”

The candidate whose initials are “B. S.” doesn’t call himself a Socialist for nothing.

The Democratic-caucusing “Independent” Senator from Vermont was expressing a tired old sentiment. See his error? (Raise your hand if you know.)

To make any connection between “feeding the hungry” and cutting back on competitive products one would have to believe there is a fixed stock of wealth, and that we waste it on different brands and whole varieties of antiperspirants and sports shoes.

But there is no such fixed supply.

Supplies are concocted to meet consumer values, wants, and getting rid of competitive products means that some values are not being met . . . and that some folks are not being employed at the rates they could be with more diversity of commodities.

The best way to “feed the hungry” is for the hungry to feed themselves, by being productive — if children, then being fed by productive parents. And to do that, folks need to find their market niche. Which might very well entail another deodorant or shoe.

There is a realm where one person gains at the expense of someone else: redistributive government. If Sen. Sanders wants government to give more money to feed hungry people, he should consider cutting back on some other government expenditure.

Why didn’t B. S. suggest that? Perhaps more than feeding the hungry, he’s interested in feeding government, and his own pride in his own b.s. ideology.

This is Common Sense. I’m Paul Jacob.

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B.S.

 

Categories
folly free trade & free markets nannyism

A New, Freer Sector

Food Folly

Current trends in public policy and law seem to be pointing not to consistent principles, but contradictory ones.

Wyoming just made it legal for farmers to sell directly to local customers, in such venues as farmers’ markets — without government inspection and conformity to the usual, clunky set of regulations that apply when selling to other businesses for resale.

The bill, recently signed into law by the governor, also allows neighbors to sell homemade foods to one another informally and at special community events like bake sales.

An obvious win for freedom. Who can argue against a free market in foodstuffs at the community level, where normal transactions tend to be customary and casual, and also obviously subject to regulation by reputation?

But government regulations still apply maximally to farmers and supermarkets and grocery chains. And yet, many of the arguments for local free markets apply equally to these currently controlled ones. Free competition would likely lead to the re-introduction of reputation economies into big agribiz markets. Could very well be transformative.

For our health.

After all, it’s not as if government has really helped us in this realm. We are right now working our way out of a government-sponsored health and diet paradigm that we are learning was exactly wrong.

The official “anti-fat” hysteria made us fat.

A more competitive approach, allowing for different philosophies to operate — as they can at the community level, with old recipes co-existing with the new-agey ones, as well as with non-pasteurized milk and organic farms and local cheese and everything else — would encourage new ways of meeting old food fears as well as accommodating new food fads.

Extend freedom. (Not waistlines.)

This is Common Sense. I’m Paul Jacob.

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Food Folly

 

Categories
free trade & free markets general freedom Ninth Amendment rights tax policy

Taxation Rules

Overburdened Pack Mule

It turns out the United States is a tax haven.

Haven? Heavens! I live here. I don’t feel that low-tax feeling when April 15 rolls around.

But the Cato Institute’s Dan Mitchell, an expert on all things tax-policy — a dirty job, but somebody’s gotta do it — says “The U.S. Is a Tax Haven . . . and That’s a Very Good Thing.”

He is a huge fan of international tax competition. He likes it when governments at least marginally decrease the tax burden on prospective producers and investors, so as to lure production and investment from other tax jurisdictions. In his opinion, “we need some way to restrain the greed of the political class.”

Fans of big government disagree. Tax competition hinders their master plans to control and plunder the rest of us.

Mitchell knows that we mere U.S. citizens tend to lug a big tax load. But the United States is in fact “a tax haven. Not for Americans, of course, but . . . we have some good rules for foreigners.” In addition to their ability to exploit the especially robust corporate privacy rules of a state like Delaware, foreign investors can avoid taxes on interest and capital gains on their stateside investments.

Now, Mitchell says, let’s apply those “same good policies to Americans.”

Hear hear! Havens I can access are even more appealing than those I can’t.

This is Common Sense. I’m Paul Jacob.

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Overburdened Pack Mule

 

Categories
free trade & free markets

A Ride on the Private Side

If you’d like to catch a flight without the usual delays and post-911 regulation-inflicted hassles, used to be you had to own your own plane, charter one, or buy a time share in one.

Now you can use a smartphone app to book a seat on a private jet — just as you use an app to book an Uber driver outside the confines of the hyper-regulated taxi industry. Sure, private-jet seats are still pricey. But the New York Times reports that lower-end bookings are comparable in price to that of first-class seats on Delta or American.

Private JetNew services find spots for you on planes en route to pick somebody up that would otherwise be empty, or let you subscribe to blocks of time for use on a variety of jets. Result? More and more passengers are able to ride private jets thanks to startups like JetSmarter and Magellan Jets.

Those of us who lack the means to exploit this option-expanding development should still welcome it as a step in the right direction, away from burdensome regulatory regimes that slow us all down. I doubt we’ll get rid of the regulatory bog at the airport any time soon. After all, we’re still stuck with the government-subsidized USPS postal monopoly despite the competition in package delivery provided by UPS and FedEx.

But without the pressure and example of such relatively unencumbered alternatives, our situation would be worse; our prospects, dimmer.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Job Growth in 2014

President Barack Obama takes full credit for the job growth in 2014. Democrats on the Internet relentlessly push these growth rates with typically goofy superlatives like “highest ever” or “highest growth rate in decades.”

So, what did Obama and the Democrats do in 2013 and 2014 that led to the growth we saw last year?

Well, Obama refused to renegotiate with Republicans on any unemployment or budget reforms.

As 2013 ended, we heard Democrats complaining that stingy Republicans were letting federal government extensions of unemployment compensation (which had been re-extended many times) lapse altogether. Obama predicted disaster. The Keynesian economists who circle the Democratic Party like moths to a candle held to a simple prophecy:  because of a hit to “aggregate demand,” unemployment would increase.

Instead, in 2014 employment bounced back.

In a droll quasi-opinion piece, “President Costanza’s Jobs Boom,” the Wall Street Journal reports that “job growth in 2014 was roughly 25 percent higher than any post-2009 year. Joblessness plunged to 5.6 percent from 6.7 percent. Net job creation averaged 246,000 a month.”

Citing a National Bureau of Economic Research study by economists Marcus Hagedorn, Iourii Manovskii and Kurt Mitman, which treated the abrupt policy change as a “natural experiment,” the Journal reveled in the knowledge that the increase in incentives from lapsed benefits led unemployed workers to (gasp!) seek jobs.

And they found them. Granted, many of the new jobs are not as good as their pre-bust jobs. But they are jobs, which is better than nothing.

So when your big-government promoting friends attribute 2014’s job growth to Democratic policies, ask which policies, precisely. And ask why Obama’s predictions of 2013 for disaster in 2014 didn’t pan out.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Bye-Bye, Community Banks

The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010 by President Barack Obama. Its supporters said that would increase financial stability and transparency, prevent bailouts, and protect consumers from “abusive practices.”

I’m dubious the new regulatory regime will accomplish any of these goals.  What has really happened since passage? An extreme consolidation of financial institutions.

Marshall Lux and Robert Greene, in a new study, show that the long-term trend in which community banks have diminished in number and importance has doubled in severity since Dodd-Frank.

You don’t have to be a “small-is-beautiful” fetishist to worry about this. The bigger banks remaining are just all that much bigger in the “too big to fail” department.

Greene and Lux explain the mechanisms at play under Dodd-Frank. The regulations are not geared to the size of the regulated institutions, so economies of scale in regulatory compliance arise, bigger than ever.

Todd Zywicki, writing in the Washington Post, makes it clear how these “regulatory costs tend to fall proportionally heavier on smaller banks.” Leading to consolidation.

Just as Zywicki had predicted.

Zywicki, Lux, and Greene are demonstrating an old principle. Economist Ludwig von Mises explained it decades and decades ago. Mises dubbed regulations into market operations “interventionism,” and identified the pattern of such activity as almost an archetype. Interventionists

  1. see a “problem”;
  2. propose a “fix”;
  3. the fix puts us in a worse fix, as unintended consequences multiply;
  4. politicians and bureaucrats scramble to add an additional fix to the mix.

That is why laws keep piling up. Leading ultimately to calls for more laws.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets general freedom too much government

The Two Americas

Dear Reader: This “BEST of Common Sense” comment originally aired on July 4, 2007. A longer version published at Townhall.com was picked up by Rush Limbaugh and read on his radio show. —PJ

Could Democratic presidential candidate John Edwards actually be right about something? Not where to go to get a haircut, mind you, I mean about there being two Americas.

There is the vibrant America . . . and the stagnant one.

There is the America of ever-increasing wealth, innovation, creativity, new products and services. Choices galore.

And there is the politician’s America: The regulated America, the subsidized America, the earmarked America. The failing America.

In one America, it is what you produce that gets you ahead. In the other, it’s who you know.

In one America, to earmark some money means setting aside funds (into savings) for a purchase — a car, house, college.

In the other America, to earmark is to grab from taxpayers to give to cronies. It is the highest rite of career politicians: Buying their votes with other people’s money. Oh, there have been reforms, sure. But a recent bill in the House had 32,000 earmark requests.

In one America, we decide what we pay for. We choose constantly about little things and big. We call the shots. Or we walk down the street and associate with someone else. So we have some faith in those we work with.

In the other America, we vote. But we rarely get what we vote for.

Maybe that’s why the new Democratic Congress just registered the lowest approval rating in poll history.

It surely isn’t because folks love the Republicans.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets general freedom too much government

Against Enabling Segregation

Rosa Parks, born February 4, 1913, became a symbol of the Civil Rights Movement for her actions on December 1, 1955. Ordered to move from the first row of the “colored” section after seats reserved for white passengers had filled up, Parks refused.

“When that white driver stepped back toward us, when he waved his hand and ordered us up and out of our seats, I felt a determination cover my body like a quilt on a winter night.”

Economist Thomas Sowell believes that the conflict might never have even come up as an issue, had the bus been privately run.

“Why was there racially segregated seating on public transportation in the first place?” he asked on the occasion of her death in 2005. “[T]here was certainly plenty of racism in the South, going back for centuries. But racially segregated seating” did not have the same unbroken history. Sowell pointed out that no matter what their own views, owners of the private transit lines of the 19th and early 20th century lacked motive to enforce segregation and thereby alienate many of their passengers.

When markets aren’t overrun by politics, both buyers and sellers must focus on the value they want from trade — a good product or competent service. Participants are penalized if they routinely set aside those benefits in order to indulge an animus.

In the 20th century, the trend towards taxpayer-funded mass transit displaced economic incentives with political ones.

Only governments can force entire industries to routinely act on an irrational prejudice.

This is Common Sense. I’m Paul Jacob.