Category: free trade & free markets

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free trade & free markets ideological culture too much government

From Local to Federal

Both the politics of “getting what we want” and the politics of reasonable principles — too often two very different things — rely, ultimately, upon the local, upon voters in actual communities.

In a review of a book with the provocative title How Local Politics Shapes Federal Policy, economist Robert Meiners considers the political economy of America’s most famous dam:

[M]ultiple states wrestled for control of the multi-state Colorado River and for control of the electricity that might be generated. When there is a pot of gold on the table, the stakes are high. Eastern interests opposed the dam. The rhetoric was about “states’ rights” . . . but likely had more to do with eastern members of the legislature seeing no benefit, only costs, for themselves. Again, assuming the dam had net benefits, there is no reason the national government needed to be involved in a project that provide benefits to six states at best.

The book’s author tells the story in terms of ideology, but the reviewer counters that it looks, to him, “more like traditional rent-seeking and logrolling. . . .” Our folks in Congress “constantly think about how to satisfy local interests at the expense of non-local taxpayers,” and that’s certainly the current problem.

And here ideology comes back into the picture. If you think that some people’s lives or property should be sacrificed for some other people’s lives and property, then the ultimate result is the mess we have today. Voters have little option but to take a stand and “ideologically” place limits on politicians and their very own selves.

In our limits, our liberty.

Lacking those limits, we’re each others’ hosts and leeches.

This is Common Sense. I’m Paul Jacob.

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

The $820 Billion Oops

Getting good estimates is not easy. Anyone who’s hired a contractor knows to make sure the estimates are sound by insisting that bidders stick to their estimates.

This is not what happens in government, though. Projects almost always start out with a whopping figure for an estimate . . . and then as the project gears up the costs shoot higher and higher — it soon becomes clear that the high initial cost estimate was a low-ball figure after all.

My “favorite” recent example of this has been California’s high-speed rail project, which soared by the billions before even breaking ground.

But move over, transit. Here’s medicine — 2008’s Patient Protection and Affordable Care Act, better known as “Obamacare,” has just received an estimate upgrade. When passed, the legislation’s enthusiasts boasted a ten-year cost estimate of “only” $940 billion. Now, the Congressional Budget Office has revised the decade’s cost tally up to $1.76 trillion.

According to Philip Klein in the Washington Examiner, the CBO says that weakness in the economy leads to more people “obtaining insurance through Medicaid than it estimated a year ago at a greater cost to the government . . . fewer people will be getting insurance through their employers or the health care law’s new subsidized insurance exchanges.”

I “daringly” predict that this estimate, too, will turn out to be woefully below the actual figure . . . unless something novel happens, like Americans rallying around a “throw the bums out” campaign to elect a Congress and a President that will surgically remove Obamacare from the body politic. Before it kills us.

This is Common Sense. I’m Paul Jacob.

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

Blame Policy

Petroleum-based fuels are going up in price, so naturally people start looking for someone to blame. Call up the Usual Suspects:

  1. Speculators. These futures market folks never get credit for lowering the prices of gas, but they can always be counted on to serve as easy “bad guy” targets when prices go up. Same this time. You’ve heard the rumors, the rancor. (It’s nuts.)
  2. President Obama. You know, for not allowing drilling and pipelines and such. Go to a meeting of conservatives and you’ll hear someone yell out “Drill, baby, drill!” Now, I’m all for drilling, and it’s stupid to clamp down on future supplies of oil — indeed, investors in the futures market for oil see these political and bureaucratic restrictions on exploration and mining and refining, etc., and no doubt bid up the price of oil — but really, don’t blame just Obama, blame, also,
  3. Romney and Santorum and Gingrich. All these presidential candidates have engaged in hysterical, belligerent rhetoric about Iran, threatening warfare in the Persian Gulf region. War is bad for supply lines. Compromising supply lines means compromised supplies. Which means less oil. Which means rising prices.

So of course futures traders will bid up those prices — they would lose money if they didn’t — and in so doing they make the likely future conditions palpable to contemporary decision makers.

That’s their economic function. Don’t blame the messenger.

So, if you think the U.S. should bomb Iran to prevent that country from bombing the U.S. in a few years (after which the U.S. could easily make the populous nation, full of innocents, a sea of irradiated glass), don’t gripe.

One consequence will be (must be) rising prices.

This is Common Sense. I’m Paul Jacob.

 

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free trade & free markets ideological culture insider corruption

Billions and Billionaires

Where do billionaires come from?

Douglas French, president of the Ludwig von Mises Institute, reminds us where the term “millionaire” came from. It was

coined in 1720 during John Law’s “Mississippi Bubble” to describe those making vast fortunes in Law’s Mississippi Company stock that rose from 150 livres to 10,000 in the matter of months. But just as quickly, the stock and the currency wildly inflated by Law’s Banque Royale, crashed and Law was forced into exile.

Today’s plethora of billionaires — which in 15 years has increased fivefold — is (argues French) at least in part the result of Ben Bernanke’s monetary manipulations. He’s the John Law of our time. “What were once Law’s millionaires are now Bernanke’s billionaires. . . . Bernanke has been on the job for six years, and the Gates, Buffetts, and Slims of the world are reaping the benefit. But for how long?”

Keeping track of today’s billionaires has become both a form of popular entertainment (Forbes’s list) as well as a topic for careful study. The political “philanthropy” of George Soros and Charles Koch inspires both enthusiasm and dread in activists, left and right; Warren Buffett has become something of a hero to the 99 percenters, what with his repeated pitches for higher taxes on the rich.

But Buffett is a sly one. He makes his money in a variety of ways — one of which Peter Schiff recently explained: “Buffett actually stated in September 2008 that he would not have invested in Goldman Sachs if not for the implicit guarantee of federal assistance. As a result, he profited at the expense of taxpayers at the very time when they were losing their savings in the markets.”

Not all billionaires are created equal.

This is Common Sense. I’m Paul Jacob.

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First Amendment rights free trade & free markets general freedom ideological culture

A Nickel’s Worth of Freedom

“If we are going to pay for your contraceptives,” said Rush Limbaugh on air, referring to Ms. Sandra Fluke’s congressional testimony, “and thus pay for you to have sex, we want something for it. We want you to post the videos online so we can all watch.”

In my Townhall column this weekend, “’Tis a Pity He’s a Boor,” I responded with a “No, thanks.” But I did defend what I took to be the point Rush was trying to make: “The issue isn’t about contraceptives, but the right to choose . . . on your own nickel.”

The flak Rush received became an avalanche of advertiser pull-outs from his show. And an apology.

And this all points to something interesting about freedom.

Rush has freedom of speech. He would still have it if every advertiser in the world refused to touch him and he took to blogging. His freedom requires no one to support him. Free speech doesn’t force anyone to listen – or advertise.

Similarly, Ms. Fluke has freedom of association, sexually and otherwise, including her relationships with the university in question and its contracted insurance company. But such freedom doesn’t obligate her school or insurance company or other consumers (through passed-on costs) to pay for her contraceptives. We all have freedom.

The same freedom of contract that allows advertisers to drop Rush’s show also allows businesses to choose employee benefit plans, workers to choose where they will work, and insurance companies to decide what terms they will offer.

Or it should. And in the specific case of contraception coverage did, until the Obama Administration dictated otherwise.

Several nasty words ago, that’s what started this brouhaha.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

Closed: No Competition

Ancient societies were mostly closed societies. Modern society (at least as conceived by most of America’s “founding fathers”) was to be something very different: open.

But today there’s way too much “managed” competition, basically closing out businesses not on some insider list.

Julie Crowe, a veteran of the armed forces and lifelong resident of Bloomington, Illinois, wanted to start up a van ride service, mainly to drive party-going Illinois State students safely home. There are big buses for Bloomington revelers, but no vans.  Her new service would have provided interesting competition for existing outfits, and her idea of providing safer, more personal, comfier rides home — arguably better than taxicabs, and certainly better than the buses — smacks of a plausible business plan.

But the city denied her a permit to even try, on the grounds that her proposal wasn’t “in the public interest.”

Preposterous, of course. Or, as her lawyer, Jacob Huebert, puts it,

How can city planners know the “right” number of vehicles to serve the community? They can’t possibly know that, any more than they can know the right number of supermarkets or the right number of restaurants.

Huebert is associate counsel at the Liberty Justice Center, a project of the Illinois Policy Institute, which has as its stated goal ensuring “that the rights to earn a living and to start a business, which are essential to a free and prosperous society, are available not just to a politically privileged few, but to all.”

A great cause. The “eternal vigilance” required to establish and maintain a free, open society means challenging idiotic government encroachments one case at a time.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

A Kickstarter in the Pants

Wikipedia surprised a lot of people, changed a lot of minds: Online collaboration can accomplish great things. Following Wikipedia, other interactive, collaborative, not-quite-commercial Web-based projects have offered more evidence that the Internet can transform everyday life.

Take Kickstarter.com. It’s really ramped up to something impressive, as Carl Franzen points out at Talking Points Memo:

One of the company’s three co-founders, Yancey Strickler, said that Kickstarter is on track to distribute over $150 million dollars to its users’ projects in 2012, or more than entire fiscal year 2012 budget for the National Endowment for the Arts (NEA), which was $146 million.

Lots of folks around the world — including shirttail acquaintances of mine — have successfully used the Internet service to fund outré projects. Basically, they drew up proposals and placed them on Kickstarter, and people the world over chipped in to get the projects off the ground. As Franzen explains, all sorts of projects find funding that way, “everything from iPod Nano watches to children’s books on reproduction.”

While I look at this as a great development, another way in which free peoples can get good things done without government, not everyone is so positive — the above-quoted Strickler, for instance: “Maybe there’s a reason for the state to strongly support the arts.”

Or maybe not. Maybe Kickstarter is pointing towards the right way to fund projects that, before the Internet, were hard to invest in or otherwise sponsor.

Maybe it’s about time.

This is Common Sense. I’m Paul Jacob.

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education and schooling free trade & free markets

Will They Ever Learn?

In which industries do prices and costs rise fastest? Those in which government is most involved.

The process is no mystery. Regulate supply by limiting entry into the business — to “increase quality,” of course — will raise prices, as producers behave oligopolistically. Government does this with health care providers, and have done so increasingly for the last century. If, at the same time, you subsidize the consumption, that amounts to increasing demand, which also puts upward pressure on prices. This has been accelerated in America since the beginning of Medicare, and with each additional healthcare program.

Typical government intervention double whammy.

Higher education is also not exempt from the play of supply and demand. One policy advocate’s explanation of this, which you can read excerpted, online, at National Review’s site, is worth considering. He explains what happens as vendors rake in profits under a regulated-and-subsidized system: they

sponsor crowd-pleasing sports events on weekends, building public goodwill. Other profits are used to hire professional lobbyists to plead for both more subsidies and more freedom to set prices. You also convince the government to allow you and other incumbent . . . sellers to form a private organization with the authority to decide whether new sellers can become “approved . . . vendors” for the purposes of receiving public subsidies. Unsurprisingly, few new sellers are approved.

Predictably, the analysis is followed by halfway measures that don’t lead to a free market in education at all. That’s just too radical.

Education policy wonks, like educators themselves, seem never to learn . . . economics.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

Stark Protectionism

The markets of the ancient world were often sewn up by kings and courts and priesthoods. In Egypt or Assyria or Rome, you had to pay off a guild to practice a trade, at least if yours was a common craft, and even ask permission of the sovereign.

Closed entry was the norm, and it certainly contributed to the age’s forbidding pyramid of wealth (which overshadows present One Percenter concerns): Vast hordes of the very poor and the “just scraping by”; tradesmen; slaves to the landed and wealthy; and then the very few rich and powerful. In Europe, this system opened up, in fits and starts, after the fall of Rome, but the basic idea was retained in the policy of mercantilism, against which Anders Chydenius, Adam Smith, and the exponents of laissez faire argued so persuasively. The social advantages of competition for customers and laborers and capital became widely recognized.

And yet free trade never won full sway anywhere.

Cut to today. Dateline: St. Louis, Missouri.

Michael Munie

Michael Munie wanted to go into the moving business, but needed the permission of . . . his competitors.

This, the very opposite of “free enterprise,” is the living embodiment of mercantilist “public-private” collusion, where the state secures existing businesses from “upstart” competitors in what Timothy Sandefur calls “an especially stark example of legislative protectionism.”

So, best wishes to Mr. Munie’s lawsuit, Munie v. Skouby, and the Pacific Legal Foundation, which has helped him bring it. Freedom requires the breaking down of barriers to business entry. Always has. Always will.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture political challengers

New Orbits for Old

A recent study using something called “gravitational microlensing” suggests that every star has at least one planet. There are a lot of planets out there. So there “must” be Earth-similar planets. And “therefore” life. Intelligent life. And, and, and . . .

Back on Earth, the search for intelligence amongst the Republican presidential candidates (not to mention the Democratic incumbent) is a more haphazard affair. We lack that crucial microlensing.
Mars, the red planet
Yesterday I noted a peculiar alignment: Ron Paul defending Mitt Romney, with the other Republican wannabes piling against Romney in a disgraceful showing of anti-capitalism. Rep. Paul defended Romney not out of Republican loyalty, but out of principle. Does this suggest an affinity between the two, heretofore unnoticed?

Maybe. On the face of it, Romney doesn’t seem all that dissimilar from Barack Obama – not in foreign policy, surely not in big government instincts (the purveyors of unconstitutional medical regulations, each) — but his work in business does suggest that Romney might be an improvement on Obama, if elected. Marginally moving towards Paul’s apogee.

But the country needs more than just a marginal improvement, right now. Another centrist — even one who understands the social utility of the hostile takeover — won’t balance budgets. Not when the Washington orbit remains retrograde, unable to stop spending and borrowing like tomorrow is somebody else’s problem.

Which is why Ron Paul’s candidacy will retain traction for many primaries to come. Since our problems are the mainstream, Paul fills the need for something extra-mainstream — and, to normal political folks, that will undoubtedly seem “extra-terrestrial.”

In Washington, all intelligent life lies beyond the usual orbits.

This is Common Sense. I’m Paul Jacob.