Category: free trade & free markets

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

Life, the Universe, and Everything

The answer is 42.

The question? Not Douglas Adams’s Ultimate Question concerning “life, the universe, and everything.” Instead, it’s the answer to the question, “How many mandates does the State of Oregon place on the medical insurance packages Oregonians are allowed to buy?”

Forty-two.

The number is far too large — and yet the number will likely increase this year, courtesy of the state legislature, despite the fact that the current mandates raise the cost of medical insurance for Oregonians.

Steve Buckstein, speaking before the state’s House Committee on Health Care, for-instanced Iowa, which sports 16 fewer mandates. The state has lower percentages of uninsured folks and lower premiums than in states with higher numbers of required services.

Buckstein, a policy analyst for Cascade Policy Institute, was arguing for HB 2977, which would allow Oregonians to purchase medical insurance from other states. This would add competition to the current highly over-regulated market.

Buckstein shouldn’t have to do this. The purpose of the federal union was to create a vast free trade zone. Misguided state mandates such as the ones he’s fighting rest upon prohibiting state citizens from buying outside the state, which runs up against the grain of the Constitution. For too long Congress has exempted the medical insurance industry from the correct application of the Commerce Clause, leading to a crippled industry and opening the way for disastrously unworkable ideas like, well, “Obamacare.”

This is Common Sense. I’m Paul Jacob.

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

Stop the Mortgage Madness

The New York Times wonders how “home buying [might] change if the federal government shuts down the housing finance giants Fannie Mae and Freddie Mac.” Despite vague agreement that misguided government policy somehow encouraged short-sighted, irresponsible conduct, many want government to keep it up.

It’s supposedly “well understood” that Fanny and Freddie “misused” government’s support to back “millions of shoddy loans.” Shoddy how? Shoddy because awarded to high-risk debtors on terms impossible without the government’s easy credit, subsidies, regulations, exhortations and bailout net. Many of the loans would not have been made by creditors obliged to consider not only potential profits but also all the actual and potential costs, without government interference.

In the article’s very next paragraph, however, we learn that although the consequences of “misused” government support for untenable loans are now “well understood,” there’s a “much more divisive question” now in play: “whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans.”

Huh? You mean, many politicians and beneficiaries of government largesse are “divided” over whether a policy of destructively encouraging irresponsible conduct should be clung to with only cosmetic, if any, changes — even though this policy sank the economy?

Scavengers picking carcasses may not care about the long run. But the rest of us should.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Bleaching the Bay

In economics, it’s called an “unintended effect”; in pharmacology, a “side effect.” In plumbing, it’s one heckuva stink.

Yes, it’s time again for a perennial Common Sense subject: Government messing around in our toilets.

The push to “save water” gushed into a number of proposals over the years, the closest-to-consumer one being the many government edicts demanding that toilets use less water.

Governments can make a regulation and process lawbreakers. But they can’t change the laws of liquid dynamics. Federal legislation for smaller-reservoir toilets yielded a generation of poorly flushing toilets — demanding double flushing to get solids down. It took years for inventive engineers and entrepreneurs to redesign toilets so that they could actually do their job right.

But Congress’s intrusion into your bathroom wasn’t enough for busybodies in San Francisco. They had to go further, with low-flow toilets that used even less water.

The consequence has now become pretty obvious: Too little water in the public sewage system, leading to slow-moving masses of ugh, clogging pipes, and, well stench.

San Francisco has proved that “well-intended” government regulation into our bathrooms quite literally stinks.

Frisco sewerage officials have stocked up on $14 million worth of bleach to “act as an odor eater and to disinfect the city’s water before it’s dumped into the bay.” Environmentalists are predictably and, well, understandably concerned.

What begins as an environmental concern ends as an environmental disaster.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

A Necessary Solution?

Wisconsin Governor Scott Walker is playing hardball. On Meet the Press, he defended himself:

Wisconsin is “broke,” and unions use their power to block necessary cost-saving measures, Walker said.

“It’s about time somebody stood up and told the truth in this state, and said, ‘Here’s our problem, here’s the solution,’ and acted on it,” he said.

But how sensible is his proposal to remove collective bargaining regarding benefits for most public employee unions? As everyone points out, the unions are agreeing to his other proposals, such as paying for more of their insurance than before.

Why is he being so unreasonable, so “arrogant”?

Last Sunday, I considered the whys on Townhall. Contracts with public employees are completely out of whack because compensation is negotiated outside market competition and by politicians more afraid of the political clout of the powerful unions than their principals (the taxpayers) whose money they’re spending. So, wage rates and especially promises of future medical and pension benefits are sky high and open to abuse.

The union reps can’t be trusted, either. So honed to getting the most for union members (their principals), their monomaniacal purpose washes away every other thought. Now that the corner they’ve shoved the state into has been made apparent, they’ll concede points, sure. But taking away bargaining leverage?

No way. They want to be able to do it all over, when good times roll.

And that is why Gov. Walker’s proposal seems so sound.

This is Common Sense. I’m Paul Jacob.

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

Why Such Slow Growth

Why such slow growth, after the federal government spent trillions to spark recovery?

Could it be that binges of throwing borrowed money around don’t matter? Spending money can’t be the solution if the problem is low or dark expectations of the future — and the spending of borrowed money feeds that dark view.

So what is the solution?

Well, take a step back. According to economic historian Robert Higgs, the key to economic growth is “private domestic business net investment.” And that’s down.

The peak occurred in 2007. The next two years saw the very opposite of growth, a precipitous fall in investments in private business. Last year, Higgs tells us, “net private investment increased smartly for three quarters, reaching an annual rate of $270 billion in the third quarter, then contracted sharply — by almost 47 percent — to $144 billion in the fourth quarter,” which is about a third of what it was at peak in 2007.

“Jobs,” which everybody’s thinking about, don’t come from spending as such. New jobs happen when people who save take their unspent money and invest it in production processes that they hope will yield goods that consumers in the future will spend money on.

So, private investment depends on positive expectations, a kind of rational hope.

What could government do?

Provide less reason for fear by putting a halt to doing things that elicit rational fear instead of rational hope.

Saner government, more productive economy.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets tax policy

How Not To Be in Pictures

Everybody wants to be in pictures, it’s said. Michiganders, who’ve been funding moviemaking with their taxes for years, should try digital cameras and YouTube. The state’s governor, Rick Snyder, has proposed a new budget slicing and dicing the state’s generous (read: foolhardy) film subsidy and tax credit system.

This is called a “blow to Hollywood.” One nifty headline dramatizes the new situation: “Michigan to Hollywood — Get Off My Lawn,” with photo of Clint Eastwood on the porch of his Gran Torino house, wielding a shotgun.

Over the top.

Tax credits and tax subsidies given only to moviemakers are wrong on several grounds, as I’ve argued before (see “Knot Cannibalism” and “Cinema Without Subsidy”). Of course, the red tape and high taxes associated with setting up any business are wrong, too. You may say that the state’s gotta raise funds, but it most definitely shouldn’t kill the geese that lay the eggs, golden or Technicolor.

Taxes should apply equally, all around. Low taxes evenly spread will entice businesses — including moviemakers — into an area, if other locales remain over-taxed and confusing.

Some will cry “jobs!” but the word isn’t magic. Real jobs can be measured. Michigan’s subsidies created mainly temporary part-time jobs for Michiganders. According to a commissioned study, “Michigan spent $378,240.74 per job in 2008; $586,779.18 per job in 2009.”

No film incentive, it turns out, “has generated as much revenues as it has taken from the treasury.”

Cut. Print.

This is Common Sense. I’m Paul Jacob.

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

Ride the Market Express

What’s the biggest expense for people in the lowest income bracket? Housing? Food? Medical care?

No.

It’s transportation.

Across all income levels, transportation comes in as the second largest expenditure. It’s a big deal.

Places to go; people to see. Often, it’s business to do. Our way of life depends on moving things and people around.

The Washington Post headlined a recent story, “Infrastructure is a priority, survey shows, but paying for it isn’t.” The implication? Americans want a free lunch.

That’s bad. But not true.

The Post should have made it clear that people are specifically skeptical about “paying for it” through higher taxes. The Rockefeller Foundation Infrastructure Survey found that over 70 percent of us oppose raising the gas tax, 64 percent are against adding tolls to existing highways, and 58 percent aghast at the thought of a tax on each mile driven.

However, the survey’s most interesting number was 78 — that’s the overwhelming percentage of Americans who want private sector investment in transportation projects. As consumers, we know we’re not responsible for all the costs and cost overruns involved in bringing most products or services to market. When we decide to purchase something we do pay some of these costs, but not before. Privatizing transportation would allow market forces like “price” and “consumer demand” to get better transportation to market, with investors — not consumers — taking the bulk of the risk.

Or we could let politicians and bureaucrats continue to make things worse.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets ideological culture initiative, referendum, and recall

The Real Reaganism

Last week Americans honored the late Ronald Reagan on the occasion of his 100th birthday. There was one man who certainly made a difference.

Reagan’s cumulative pressing of his core belief in freedom and free markets was more important than any single accomplishment — or mistake. His dogged commitment to the principles of freedom changed the course of history, even as Reagan, the politician, didn’t always live up to his lofty beliefs. As president, he ran up (then) record budget deficits and he flip-flopped on draft registration, for example.

Still, as much as President Reagan could fall short, his legacy grows sweeter over time, in part because of a second major idea. He believed that the common sense of the people was far more capable and worthy of trust in making the important decisions we face than are politicians left to their own devices.

That’s why Mr. Reagan took time from his 1980 campaign to send a letter to New Jersey activist Sam Perelli, who was lobbying his state’s legislators to establish a process where citizens could put issues on the ballot. “George Bush and I congratulate you on your efforts to attain, for the people of New Jersey, the right to initiative and referendum,” Reagan wrote. “We urge you to keep up your fight and we endorse your efforts.”

Mr. Reagan is remembered for his faith in freedom and in our democratic ability to defend that freedom.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

Defrosting the Obamalogic

I thought I was done talking about Obama’s Chamber of Commerce speech. But the Mises Institute’s Jeffrey Tucker has tackled another goofy element in it. The president claimed that government regulators “make our lives better” and “often spark competition and innovation.” In his example, the government’s “modest” regulatory targets imposed “a couple decades ago” allegedly mean that “a typical fridge now costs half as much and uses a quarter of the energy that it once did — and you don’t have to defrost.”

One wonders what profit-seeking folks like the Rockefellers and Carnegies, Edisons and Fords did without regulatory impetus. Hide the innovations people are happy to pay for until regulators come along and force entrepreneurs to make money from them?

As it happens, there’s a history to refrigerators. Patents for auto-defrosting fridges were first issued in 1928, and by 1951 these fridges were making their way into homes. In the 1970s they proliferated. As Tucker explains, this is normal market practice. “A company found a way to package [frost-free freezers] as a luxury good available in some markets. Another company saw the advance and emulated it. . . .”

Nobody had to point guns at fridge makers.

In “Blow Hot, Blow Cold,” Robert H. Miller reveals the usual way government “helps progress” — by struggling to rebuild what it previously destroyed. Example? The electric-generating windmill industry that the New Deal’s Rural Electrification Act so handily suppressed.

Progress is built into markets. Governments? Not so much.

This is Common Sense. I’m Paul Jacob.

Categories
First Amendment rights free trade & free markets too much government

Practicing Competence Without a License

You just can’t win. Well, you can; but if you do win — or even just make a decent go of it — that only proves you’re cheating.

Before you object, please take a breath. Note the sterling sentences, above, with subjects and predicates and everything. I must be practicing grammar without a license! At least, that’s what the charge would be if I were to dispute the syntax of pronouncement from the North Carolina Department of Transportation.

See, an official at NCDOT has accused David Cox, a member of a citizens group, of “practicing engineering without a license.” This was not just colorful rhetoric. The accuser filed a complaint with the state licensing bureau.

Cox’s group wants city and state officials to authorize traffic lights at a couple intersections. The Department of Transportation hired an engineering consultant to demonstrate that the traffic lights are unnecessary. In response, Cox helped prepare a sophisticated counter-analysis with diagrams and traffic projections. Cox, a computer scientist, did such a great job that he allegedly crossed the line from legal bumbling to illegal knows-what-he’s-doing.

I shan’t tear this notion to bits myself. You’re no doubt doing so in your head, and without first obtaining governmental permission — you outlaw! I will say that in this case, “practicing engineering without a license” might as well mean “petitioning of government without a license.”

But we don’t need licenses for that. We have the right. A constitutionally recognized right.

This is Common Sense. I’m Paul Jacob.