Category: free trade & free markets

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free trade & free markets national politics & policies

Who Wins With Faith-based Money?

A fascinating Wall Street Journal profile of one of this age’s pre-eminent investment advisors, Jim Grant, provides more than the usual “business interest.” Mr. Grant proves to be a very thoughtful man, not given following the Yes Men crowd.

He notes, for example, how deflation fears have unhinged the minds in charge of the financial sector. “The Fed, in assaulting a phantom deflation, precipitated an actual one.”

And this “inflation/deflation” problem is only the tip of a very large and scary monetary iceberg. He calls our fiat money system a marvel — “astounding,” in his exact wording — but that’s not necessarily a good thing:

That a currency of no intrinsic value is accepted as money the world over is an achievement that no monetary economist up until not so many decades ago could have imagined. It’ll be 40 years next month that the dollar has been purely faith-based. I don’t believe for a moment it’s destined to go on much longer. I think the existing monetary arrangements are so precarious, so ill-founded and so destructive of the economic activity they are supposed to support and nurture, that they will be replaced by something better.

Let’s hope so.

But why has the system survived so long?

Mr. Grant has an answer: It serves Wall Street and “its supporting ‘interest group’” of “nimble, market-savvy, plugged-in folks.”

Exactly: Many of our biggest institutions don’t serve “the people” so much as the select few.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Bankrupted by Cushy Pension Contracts

Central Falls, Rhode Island, is not a large city. It is a town of under 20,000 people. And its government is broke, facing likely bankruptcy.

Municipal bankruptcies are not common. But they might become so. Why? The blame is easy to place: the proverbial gun-under-the-table contracting foisted on small localities by state governments.

That’s what happened in Central Falls, anyway.

Even the New York Times has an idea of the underlying problem:

The city, just north of Providence, is small and poor, but over the years it has promised police officers and firefighters retirement benefits like those offered in big, rich states like California and New York. These uniformed workers can retire after just 20 years of service, receive free health care in retirement, and qualify for full disability pensions when only partly disabled.

Walter Olson, of the Cato Institute, elaborates on this account: “‘Promised’ is a word of art here, because the city wasn’t really making all of these concessions on a voluntary basis. . . .” The concessions to unions were, instead, forced on the town by “public-sector arbitration” (which has almost nothing to do with private arbitration) that has led to a widespread “crisis in municipal finance,” which, the Times states, has brought one in four Rhode Island municipalities to the brink.

Olson makes the reasonable case that public-sector employee unions are a very bad idea to begin with. The end comes either with serious reform or bankruptcy.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets insider corruption too much government

Medallions “Stink of Tyranny”

Not long ago on Townhall.com I briefly told the tale of two journalists, both arrested for taking pictures at a public meeting. This stunk of tyranny, to me. “Government cameras on citizens? Dangerous. Citizen lenses trained on government? Essential safety devices.”

What I didn’t mention was that the public meeting was for the District of Columbia’s taxi-cab commission. The commission oversees what was once a remarkably free system of taxis, but has become more regulated while also earning a reputation for corruption. Pete Tucker, one of the reporters, was on the scene to cover a breaking story related to that corruption: The commission’s proposal to regulate the industry using the over-used and idiotic “medallion” system, familiar to New Yorkers and far too many other city-dwellers.

Well, Tucker’s work has reached the completion stage, now, with Reason TV’s video about the medallion system up on YouTube. It’s an eye-opener.

The gist of the piece may be familiar: Government regulation helps bigger businesses at the expense of smaller ones . . . as well as consumers. You may have read similar tales from economists such as those in the French Liberal School (Frédéric Bastiat), the Chicago School (Milton Friedman), the Austrian School (Ludwig von Mises), and Public Choice (James Buchanan). Courtesy of the Reason video, now you can see ordinary citizens making the case. One said, “We know tyranny when we smell it.”

The stench is also of corruption, which has driven the politics behind the new regulatory scheme.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture national politics & policies

Desperate Times

“War is the health of the state.”

A generation after Randolph Bourne coined this maxim, followers of John Maynard Keynes — the architect of peacetime over-spending by governments — pushed their master’s notions to their illogical conclusion, saying that “war gets a country out an economic slump.” Why? How? You see, only in wartime does government spend so much money, command so many resources.

But War Keynesianism makes little sense. Wars are actually quite bad for the economy — if economy is understood as “people in general.” And though we often hear that “World War II got us out of the Great Depression,” it’s worth noting that times were tight during the war, and that after VE and VJ Days, when the U.S. government pulled back on spending, Keynesian economists feared the country would spiral back into depression. To their surprise, after a short period of adjustment, the economy took off.

Indeed, not only does War Keynesianism make no sense “in theory,” the facts disprove it, as economic historian Robert Higgs has ably and repeatedly demonstrated. And yet, he recently lamented that the truth is just not getting out there: Intellectuals keep pushing the silly doctrine. Sad.

It’s easy to see why, though. Big governments are spinning out of control, and the intellectual case for them is as bankrupt as their own financials. Insider intellectuals are desperate.

War is the ultimate desperate measure.

Today the U.S. is at war in five different countries.*

This is Common Sense. I’m Paul Jacob.

* Afghanistan, Iraq, Libya, Pakistan (drone attacks), Yemen (drone attacks)

Categories
free trade & free markets too much government

Reform Challenge

Taxpayers fund about half of all medical industry transactions, and governments regulate that as well as a huge chunk of the rest. No wonder medicine is in chaos.

Economist Charles Sable asserts that he knows how to make health care better. Arnold Kling, on EconLog, reports Sable as saying that “health care providers need to be able to improve by learning from and correcting mistakes. He then proceeds to offer legislation to force that.”

But Kling offers an interesting challenge: “If you know a better way to run health care organizations, why don’t you start a health care organization?”

As opposed to dictating by law how others should manage theirs.

Kling, an economist who has run a business or two, thinks that when “a liberal/progressive proposal is supposed to do X,” the liberal “expert” should “start a private entity to do X.” He sees no reason why the medical industry would be immune to such challenge:

If health care providers are doing a bad job, what stops you from implementing a better model and taking over the market? Are consumers too stupid to know the difference between providers who make lots of unnecessary mistakes and providers who don’t? If they are so stupid as consumers, why do you expect them to be smart as voters?

In the real world, we could use people with ideas who really run with them — not stand back and tell some other folks how to run yet another bunch of folks’ lives and businesses.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets ideological culture

Auto Bailouts & Obama Bombast

I never expected a Washington Post writer to so soundly assail a presidential stream of pro-bailout nonsense.

In a “Fact Checker” column entitled “President Obama’s phony accounting on the auto industry bailout,” Glenn Kessler concludes that a “virtually every claim” by the president in recent comments about the auto industry “needs an asterisk, just like the fine print in that too-good-to-be-true car loan.”

President Barack Obama says General Motors will rehire all workers laid off during the recession. But he’s referring to only a sliver of the 68,000 employees General Motors has dropped from its work force since 2006.

Obama says Chrysler has repaid “every dime” it got from taxpayers “during my presidency” — years ahead of schedule. But he omits four billion forked over to Chrysler during the last month of the Bush presidency! So . . . Chrysler has repaid every dime except four billion dollars. (That’s 40 billion dimes, by the way.)

And so forth. Kessler leaves the job of analyzing the wisdom of shoveling billions of taxpayer dollars into the coffers of failing firms to others. So he doesn’t observe that capital forcibly rerouted into “creating jobs” in foundering enterprises cannot be turned to more productive uses in the more successful enterprises from which the capital was grabbed. This is another fact Obama neglects.

It’s not the 2008 presidential campaign any more. Maybe the left-leaning press will no longer automatically bail out Obama when he distorts the truth?

Let’s see where we are in mid-2012.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

The Hewitt-Romney Rationalization

Those who insist that RomneyCare isn’t as bad as ObamaCare need a reality check.

Both impose new price controls; both impose new taxpayer-funded subsidies; both force people to buy health insurance; both massively expand government interference in our lives.

Former Governor Mitt Romney seemed to acknowledge the similarities when he suggested, shortly after Obamacare had passed, that he’d “be happy to take credit” for the president’s accomplishment. Now, though, with the glaring parallels so politically inconvenient, he pretends that parsecs of distance separate the two plans.

RomneyCare apologist Hugh Hewitt says that RomneyCare’s mandate forcing people to buy health insurance offends only “a handful of libertarian purists.” (Which I’d submit is far better than being a pure socialist or even a half-and-half socialist.) According to Hewitt, if we have no great objection to, say, smog-emission mandates, what’s the big deal about being compelled to buy a product?! Anyway, he adds, states have the right to impose such mandates, whereas the federal government is constitutionally barred from doing so.

Regardless of how we assess particular attempts to combat pollution, pollution at least conceivably violates the rights of others. Your not buying something does not violate anybody else’s rights; being compelled to buy something does violate somebody’s rights — yours.

Sure, RomneyCare affects “only” 6.5 million people, whereas ObamaCare affects some 300 million. But expanding governmental interference in the medical industry and into the lives of everyone is, either way, destructive and immoral.

This is Common Sense. I’m Paul Jacob.

Categories
education and schooling free trade & free markets individual achievement

Entrée “Preneurial”

Today is Memorial Day, but the larger season is one of graduations, from college and high school and even lower grades. It’s fitting, then, to take a step back and consider the philanthropy of Peter Thiel, who is working on a different course.

Thiel, PayPal co-founder and early Facebook investor, made headlines last year as he began his anti-scholarship program, “20 Under 20.” He is giving $100,000 to 20 young people under 21, but on one condition — that they not go to college.

Instead, his bequests amount to angel seed money for young go-getters to do something original, entrepreneurial.

Now, Thiel has announced his first 20 recipients. An AP story by Marcus Wohlsen leads with the circumstances of one recipient, Nick Cammarata, a young genius programmer. Cammarata wasn’t one of those grade A students. Instead of studying hard, he did what he liked, including reading books on subjects he was interested in. And programming, which got him attention outside his school and town.

Like other recipients of the Thiel hundred grand grant, he plans to parlay the money into a hopeful tech project.

The article dutifully quotes skeptics of Thiel’s program, and mentions the oft-quoted statistic that workers with college degrees have been laid off at a lower rate than non-degreed workers.

But this misses the main point of Thiel’s intent. He’s not interested in making “workers.” He’s interested in creating entrepreneurs. The people who hire workers.

A very different goal.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Fly Him to the Moon

Some astronomers think of the Earth-Moon system as a “double planet,” our moon being so big and all. Undoubtedly, the Moon has been important for life on this planet, what with the amazing working of tidal effects — it may have even scooped up asteroids and other inter-planetary detritus, protecting our biosphere.

So “liking” the Moon, or wanting to know more about it, is not lunacy. (That “lunacy” derives from “Luna,” our natural satellite’s Latin name, is irrelevant. Really.) But sticking to the Bush-era “Constellation program,” a hopelessly expensive shoot-man-to-the-Moon-again project, long after it proved an idiotic waste of money, is lunatic. One of the great things about dropping the program has been witnessing Barack Obama talk up private enterprise in space. It’s always gratifying to hear the president speak something other than warmed-over socialism.

Enter Sen. Richard Shelby, of Alabama. He calls Obama’s plan to rely increasingly on private enterprise to send stuff into space “a welfare program for the commercial space industry.”

So, is this Republican stalwart thereby a strict free-marketeer, a laissez-faire “no subsidy” man?

No. His “Shelby provision” tacked onto an emergency military spending bill, last year, kept Constellation funding (but not the project itself) going to the tune of $1.4 million. Per day.

And it turns out that one of NASA’s main Constellation contractors hails from his home state, and contributes mightily to Shelby’s campaign coffers.

Worse than lunacy.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Backbreaking Spending

Pennsylvania’s Republican governor, Tom Corbett, went into back surgery last week. The Pennsylvanians who voted him into office may be hoping he’s getting a backbone installed. But no such luck: Doctors call his treatment “routine.”

Too bad, for Corbett needs something to help him stick to his campaign promise of  “saying no” to spending.

Since taking office Corbett has  radically increased the salaries of his executive staff as well as stuck the state with another big sports stadium project.

Just what a cash-strapped state needs!

There’s a huge philosophical problem with forcing some folks (say, opera buffs) to pay for the entertainments of other folks (say, my fellow sports fans). It’s just not right. (It’s wrong the other way ’round, too.)

It’s also silly economics. And increasingly unpopular. People are “stadium fatigued,” according to Chris Friend in The Philly Post. Worse yet, the particular minor league stadium Corbett just pushed will accrue benefits chiefly to the New York Yankees, not the Philadelphia Phillies (or even the Pittsburgh Pirates). It’s a bizarre project, when you think about the cui bono of it.

Finally, when you think of who pays, the stadium’s $20 million price tag marks only a fraction of the cost, since the bond for that figure will balloon over time, with interest due.

Paid for by Pennsylvania taxpayers.

I love sports. I look forward to the day when the industry is as self-sufficient as it ought to be, and people like Corbett have the spines to stay out.

This is Common Sense. I’m Paul Jacob.