Category: free trade & free markets

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free trade & free markets ideological culture too much government

Their Solution Is Our Problem

J.D. Tuccille at Reason took on journalist Matthew Yglesias’s vox.com video that I wrote about yesterday, focusing on Yglesias’s pooh-poohing of the sheer size of the national debt. Tuccille noted that Yglesias under-reported its humungosity, and that the Congressional Budget Office finds, counter to Pollyanna-liberals, no small reason to worry about the ballooning debt.

But I’m still shaking my head that Yglesias really did argue the federal debt is no problem, because — get this! —  the Fed can always just print more money. 

We know! What he sees as a solution we see as a problem.

The modish government-as-savior view of society seems pure simplicity: major inputs and outputs — money supply, fiscal spending, debt, inflation — all of which liberal-progressives will “expertly” adjust.

Fed this, no wonder people ask questions like “why haven’t we seen inflation, following the huge influxes of quantitative easing?” Well, it is not just about consumer prices, but investment prices, too, which we have long known to be more volatile than consumer goods; investments can easily suck up new money to create an unstable boom, which bursts.

The biggest problem for today’s market recovery — aside from subsidies and wage controls and all the folderol that directly discourage new jobs — is federal government irresponsibility itself (symbolized neatly by the federal debt) which signals to investors and other market participants that they cannot make viable long-term plans.

Economist Robert Higgs called this effect “regime uncertainty.” It’s the uncertainty bred by bad policy.

Just the kind Yglesias and his comrades adore.

Fiddle with the economy’s dials, oh wise ones, and uncertainty seems a certain result.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture too much government

Not a Problem?

Increasing public debt is bad for a number of reasons. Journalist Matthew Yglesias, speaking on vox.com, gives voice to a very different, very Pollyannish perspective: “Debt is just not a problem right now,” he says.

Why?

“The U.S. can never run out of dollars.” After all, the Fed can just print more.

That’s not an uncommon view where I live, near the center of privilege, Washington, D.C.

The video starts with an instruction: “Stop freaking out about the debt.” It sports nifty, simple graphics and comforting music. Matt Yglesias sounds convinced himself.

Nothing he says convinces me. But I’ll concentrate just on the frank inflationism.

Yglesias mentions inflation. But it’s obvious he means CPI numbers, even though he offers the short-hand “too much money chasing a fixed amount of stuff” definition to stand in for the “supply of money increasing faster than the demand for money” definition that I hear from competent economists.

But while he admits that price inflation can be a problem, what he is promoting is inflationism. That’s the doctrine that central bank fiddling with increases in the rate of money growth is the way to control the economy. And that it’s costless.

Like money cranks of the old days, he only sees the costs of not inflating the credit system.

It never enters into his ideologically-driven thoughts that maybe artificially lowering interest rates fakes out investors and consumers, getting them to make bad investments that destabilize relative prices that, when they unravel, wreak havoc.

Inflationists are folks who are always trapped by the cure they prescribe. We’re left with boom-bust forever and ever.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

The Missing Source

The New York Times says something is missing from comments by President Obama on how government has funded scientific research. What is it? The fact that the research can be, has been, and increasingly is funded privately.

Sometimes private efforts have immediate application, as is often true in the firms of electronics, pharmaceutical and other innovative industries.

But scientific research is also funded by wealthy individuals — James Simons, David Koch, Bill Gates, and Eric Schmidt come to mind immediately — without prospect of immediate financial payoff. Such wealthy men have financed investigations of disease, “hunts for dinosaur bones and giant sea creatures,” and “innovative ships, undersea craft and giant telescopes — as well as the first private mission to deep space.”

Good thing or bad thing, these privately inquiring minds?

In light of the billions too often splurged on wasteful or bad (but politically faddish) research programs, all without the assent of the source of those billions — us taxpayers — I see private inquiry into Nature and Nature’s laws as only a good thing.

We needn’t agree about the value of any particular private project. Maybe if you and I were funding research, we’d have different priorities from Bloomberg, Gates or whomever. But when they waste their money, it’s their money being wasted, not ours. And if the research we prefer is important enough to us, what’s to stop us from raising funds from like-minded others to enable the inquiries we want scientists to pursue?

In a free society, nothing.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Monopoly Phony

Why is New Jersey Governor Chris Christie against profit?

You expect such an idea from a leftist. The big man is no leftist.

Christie’s anti-profit bias came up within a long, rambling answer to the subject of a recent bill in the New Jersey legislature to decriminalize possession of small amounts of marijuana. He’s against it. But he’s been for “medical” marijuana. Ed Krayewski of Reason quotes the governor, who insists that legal cannabis distribution “be a hospital-based program, that way the profit motive is drained out a lot from it.”

I get his logic. He doesn’t want recreational use, but realizes there are legitimate medical uses. To allow the latter but discourage the former, he wants to monopolize the sale of the drug.

It’s the old “monopoly” idea leveraged to discourage over-use. Post-Prohibition, many states set up liquor control boards and sold liquor in state-owned or state-franchised stores. My state, Virginia, still does. They raised prices on the product, and made it harder to get. More monopoly, higher cost, less product.

But turn the subject on its head.

We want medicine to be cheaper. More accessible and more efficiently delivered.

So why do states limit the setting up of hospitals with hospital boards? Why the prescription system? Why, even, medical licensing? After all, quality controls can be imposed other ways.

Modern medicine has been subjected to monopolistic practices and cartelizing regulations for years. Decades. A century.

Such intervention limits supply and availability, and increases costs.

I suspect that Gov. Christie hasn’t really thought his position all the way through.

(He might be high on government.)

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

Perfect Vision

One prerequisite of solving problems is having problems to solve. That is, first you must realize that there is a problem — an inconvenience or difficulty that you no longer accept as inevitable. Then you can ask questions and try to find answers.

Suppose the problem is that (a) you have imperfect eyesight, and (b) you’re lazy, busy, a shut-in, a cheapskate, or all four. You want to update your prescription without spending the time and money to visit an optometrist. Questions: Any way you can just do this at home for, say, $35? How about over the Internet?

If we ask Mr. Google about “online eye exams,” we find several sites offering tests that aim only to tell you whether it’s time for a visit to the eye doctor. Not good enough! But we also learn from TechCrunch.com about Opternative, a company co-founded by optometrist Steven Lee. Opternative plans to offer professional-grade online eye exams.

“Doing eye testing day in and day out, I thought ‘there has to be a better way to do this,’” Lee says.

Lee still faces regulatory and other hurdles. But I appreciate the ambition — also that we still have enough capitalism in our quasi-capitalist system to make a venture like this potentially profitable. And if Opternative succeeds, we’ll be able to take its prescription to another website and order an inexpensive pair of glasses or contact lenses over the Internet.

I like that vision.

This is Common Sense. I’m Paul Jacob.

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ballot access free trade & free markets insider corruption too much government

King Kevin and Company

Oh, how the other half lives!

And lies.

By “other half,” I don’t mean “the wealthy.” They’re as honest as any other group. No, I’m talking about those with their hands on the levers of government power . . . along with their subsidy-seeking cronies.

Mayor Kevin Johnson, an all-star in the National Basketball Association before becoming a politician, is splurging nearly $300 million tax dollars — roughly the city’s entire yearly budget — to build the owners of the NBA’s Sacramento Kings a brand new arena.

People objected, with 23,000 citizens signing petitions to put this lavish subsidy to a vote. Yesterday, a judge ruled that the measure would be kept off the ballot: errors in the wording of the petition “disqualified” it.

In a prepared sore-winner statement, Mayor Johnson called the petitioners “outsiders” who “have tried to undermine the right of Sacramento to control the destiny of our Kings, our downtown and our future.”

Johnson doesn’t mean the right “of the people” to control. He means his right to dictate for Sacramento even against the will of the majority.

The leader of one group working against a public vote on the arena giveaway attacked local businessman Chris Rufer, charging that “Rufer’s funding . . . is supporting STOP’s effort to steal 4,000 jobs, steal a once-in-a-generation opportunity to transform downtown and makes him an accomplice in Seattle’s attempt to steal the Kings.”

Who’s stealing? Those spending their own money so people can vote? Or those blocking a vote so they can spend other people’s money?

“I’m against subsidy, period. It’s simply a moral argument,” Rufer explains. “If it was a subsidy for a fish pond, I’d be against it.”

This is Common Sense. I’m Paul Jacob.