Category: free trade & free markets

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free trade & free markets

Tire Trade War, Tiring

Political folly comes around, again and again, like a puncture in a rapidly deflating tire as you drive down the freeway. The end is never good.

President Obama and congressional Democrats pushed a tariff hike on China-made tires, up to 35 percent — and the WTO okayed it. They excuse their action because they wish to “retaliate” against China for its alleged monetary “manipulations” — manipulations that bear remarkable resemblance to our own Federal Reserve’s policies, by the way — which they say cause our current trade imbalance.

And, like non-economists everywhere, these buffoons judge the trade deficit a horrible thing. The fact that U.S. consumer’s get great benefit from lower-priced goods coming from China, and can — as a result of less expensive, Chinese-made tires – afford to replace their tires more often, thereby saving lives and health-care costs, doesn’t appear in politicians’ protectionist arguments.

It’s the economy that’s making our representatives stupid, of course. Blaming foreign competition is an easy out, when times get tough. It helps you avoid blaming your own country’s regulations, taxes, and (ahem) monetary policy.

This blame game is nothing new. The Smoot-Hawley Tariff was pushed through early in the Great Depression, and it made a lot of sense to . . . politicians.

But the the trade wars the infamous tariff engendered became a major factor in making the Great Depression so Great.

Our politicians, reviving tired old policies — regarding tires, no less — merely make matters worse. Greatly worse.

This is Common Sense. I’m Paul Jacob.

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

Commerce, Compulsion and the Constitution

Every once in a while a judge attends to the Constitution, and freedom lovers cheer wildly as if this were very strange, even wondrous. I guess it is, considered in light of the sweep of human history.

Should the Democrats’ “health care reform” package kick in fully, it would compel people to purchase medical insurance by punishing abstainers with a steep, extra tax. So hurray for Judge Henry Hudson of the federal district court in Richmond, according to whose recent decision the Commerce Clause of the Constitution does not empower Congress to point a gun to our heads and force us to buy health insurance.

If the Constitution could be honestly read that way, it would mean that the Founding Fathers had fought to replace British tyranny with an even worse home-grown one. But no, no Founder thought that giving the federal government power to smooth trade relations among the states equaled authorization for universal, compulsory purchase of books, booze, bobby pins — or whatever Congress-Approved “health care” delivery system some future central planners might concoct. Nor does it.

We’re not out of danger yet, obviously. There are many more battles to come, many other provisions of “Obamacare” that have yet to be challenged and quashed in courts or in Congress. But in any tough job, you need to accomplish the first step.

Judge Hudson’s common-sense conclusion sounds like a great first step to me.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies

Neutrality or Tragedy?

Everybody likes freebies. New York renters often seek apartments advertised with “utilities included.” Why? So they can run their air conditioners 24/7.

Similarly, a lot of people are pushing for something called “Net neutrality.” We must guarantee a “free and open Internet,” they say.

Sounds good. After all, “free” is a good deal, if you can get it. But “free” comes at a cost. “Not having to pay for it” can become “paying through the nose” pretty quickly.

Here’s the problem: The rise of VoIP, streaming video and audio, and similar broadband luxuries has strained the Internet. Regulating the Net for “neutrality” prevents price and quality-of-service discrimination by owners of the Net’s infrastructure.

Might as well require all landlords to provide all utilities “free” . . . distributing the costs of extra usage via basic rent charges. That would be “Apartment neutrality.”

It would also be a big waste, and not just of electricity.

When suppliers of goods aren’t allowed to price and move product to their advantage, we get something  like the “tragedy of the commons.” The term comes from the medieval commons, a field that all villagers could use. They were, historically, overgrazed. Devastated. Hence the need to divvy up the fields into private plots, allowing trade to increase wealth, to the benefit of all.

U.S. regulators, tackling Net neutrality this month, should be wary of laying waste to the Net in the name of “openness.” Never confuse “free” of price with freedom itself.

This is Common Sense. I’m Paul Jacob.

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

Gore’s Gas-Based Admission

Al Gore gives the impression of someone never willing to acknowledge error if said error happens to be self-serving.

This impression is wrong.

If I have ever suggested that Gore never admits self-serving mistakes, I hereby rescind and repudiate that suggestion. He appears more than willing to retire a dishonest assertion . . . so long as he has another dishonest assertion to replace it with.

Ed Morrissey tells the tale at Hot Air, opining that Al Gore’s revised opinion about the virtue of government subsidies for corn-based ethanol seems just a little too convenient.

Gore now acknowledges that the energy-conversion ratios of first-generation ethanol “are at best very small,” and that corn subsidies probably bid up food prices. He even admits that he pushed for the funding to help farmers in states like Tennessee and Iowa. So it came to pass that taxpayers paid billions, in part to help Gore run for president.

Wait, there’s more.

Having recanted his support for “first-generation” ethanol, Gore now wants to use wood and grass to make ethanol. A new and better way, n’est-ce pas? No. There’s this small detail: Grass etc.-based ethanol is even more inefficient than corn-based ethanol.

Why top a bad blunder at taxpayer expense with an even worse blunder at taxpayer expense? Could this have anything to do with Al Gore’s investment in Abengoa Bioenergy, a firm begging for government subsidies for second-generation ethanol?

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Chimp-o-nomics

Government is almost defined by one kind of business it runs: The last-use-of-force business, such as police and courts and military. Since we don’t pay for these services in fees, contracts, and sales — we’re taxed, instead — we don’t usually call them “businesses.”

But governments have gotten involved in a lot of other more business-like businesses: Roads, libraries, mass transit, waterworks, garbage collection, etc. Of course, government being government, it supports most such enterprises largely with taxes, not fees for services rendered.

Yet there are exceptions.

Take Jackson, Michigan. It runs a number of swimming pools, and charges for usage. The pools lose money. Which taxpayers subsidize. Typical. But Jackson also runs a putt-putt golf course. And it makes money at that business.

All to the good? A government business that actually comes out in the black — what a deal!

Well, Bill Chrysan, proprietor of Putterz Golf & Games in nearby Ypsilanti, doesn’t think so. He notes that the government golf course doesn’t pay property taxes and has its maintenance done at taxpayer expense. With advantages like this, it’s hard to compete against — and it hardly pays its way like other businesses.

For that and other reasons, this one putt-putt course provides no model. Governments shouldn’t run businesses, says James Hohman of the Mackinac Center for Public Policy, for the “[s]ame reason that chimps shouldn’t drive. Just because some can do it doesn’t mean that it should be encouraged.”

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture national politics & policies video

Video of the Week: Quantitative Easing Explained

Earlier this week I did a short Q&A about the latest in monetary policy: quantitative easing. This video goes into much more detail. And is pretty funny:

For an extended, non-animated explanation of QE, try a helpful article by monetary economist Leland Yeager: “The Fed’s Easy Money.”

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free trade & free markets ideological culture

Three Cheers for Robert Murphy

Here’s something worth three cheers. Possibly four.

Robert Murphy is a prolific young economist of the free-market “Austrian” school of economics, which has a vibrant online presence at Mises.org, the website of the Ludwig von Mises Institute.

In October, Murphy decided to challenge Paul Krugman, the prominent economics professor, author and New York Times columnist, to a debate on Keynesian versus Austrian business cycle theory. After all, as Nobel-Prize-winning economist and partisan left-wing scribbler, Krugman tends to insist on policies the opposite of what any reasonable economic conclusion might be.

Krugman’s extremist, Big Government über alles positions should make for a great fireworks display in a well-attended debate with the scrupulously sane and reasonable Murphy. Point-counterpoint. The debate would also be a great venue for Murphy to publicize the sorely needed Austrian explanation of why massive governmental perversion of capital structure and market incentives ain’t exactly the best way to foster economic growth.

Murphy launched an Internet campaign, complete with goofy (and funny) animated YouTube video, to pressure Krugman. Murphy is asking folks to pledge a sum to the Fresh Food Program at a New York food bank that would be collected only if Krugman does debate him.

At last count, pledges have topped $50,000.

I hope Krugman agrees. Feeding hungry people is a good cause, and so is saving the economy from annihilation by Krugmanesque economics.

Meantime, give Murphy at least three huzzahs for pluck.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Hair-razing!

“Hands up! Drop the clippers! Step awayyyyyyy from the barber chair!”

That might not be exactly what the deputies and inspectors, under color of bureaucratic authority, warbled as they raided at least nine barber shops in Orange County, Florida. But armed men did invade the central-Florida shops in August and September, and without warrants.

They did arrest “criminal” thatch dispatchers for handling hair despite lack of a license.

The “authority” here was that of the Department of Business and Professional Regulation, whose inspectors were aided in their quest to protect the public from bad trim jobs by the dozen-plus deputies joining the raids. In a few cases, pot or guns were found along with maleficent lack of licensure. But the pretext was to clamp down on unauthorized peaceful means of making a living.

In one raid, the barbers of the assailed shop all did have current licenses, but had to sit around in handcuffs while that fact was confirmed.

The Orlando Sentinel notes that most of the 37 people arrested as a result of the “unprecedented” raids were charged with only the misdemeanor of “barbering without a license.” It’s not obvious why anybody would want to divert resources from real crime fighting to conduct such idiotic assaults. Nobody really thinks that barbers habitually graduate from illegal buzz cuts to home invasions and murders.

I hope the victims consider suing. That might help prevent this travesty from happening again.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

How They Did It

For 70 days, 33 Chilean miners were trapped a half mile below the surface of the earth —  “swallowed into the bowels of hell,” as one miner says — waiting for rescue. A billion viewers watched as they finally began to emerge to safety.

A fierce determination at both ends of the slowly constructed shaft aided the rescue. The miners had to outlast the first few weeks of despair, when they had scant information about the rescue mission. Throughout the ordeal they maintained the mine and their own morale. The rescuers had to figure out how to first get supplies to the miners and then create the narrow but stable shaft through which the miners could escape, as all 33 of them did.

A less-noted aspect of the story is that the rescue could not have happened without technology that did not exist even a quarter century ago. This included everything from the powerful drill bit donated by Center Rock Inc., a Pennsylvania company, to copper-fiber socks that consumed foot bacteria. But especially that drill bit.

Wall Street Journal columnist Daniel Henninger observes that Center Rock’s drill bit exists because of the firm’s pursuit of profit in an economy where pursuit of profit is possible. It exists because of what Henninger calls the “profit=innovation” dynamic. Indeed, capitalism saves lives every day; markets make our lives better and sometimes makes our lives possible.

You don’t have to mine very hard to get a moral out of the story.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Brains in Crisis

The Atlantic offers a fascinating portrait of the Honorable Ron Paul in “The Tea Party’s Brain.” Its blurb neatly explains the subject’s significance: “One way to measure the surprising . . . rise of the Tea Party is to chart the relative position of Ron Paul, who has never flinched from his beliefs. He’s not alone anymore.”

But I want to focus not on writer Joshua Green’s take on Ron Paul but on Austrian economics — which Rep. Paul, almost alone in Washington, supports — and economic policy regarding crises:

The Austrian school . . . had fallen away after the Great Depression, which it claimed was caused by an expansion of the money supply and could be met only with chastened submission as the market corrected itself. Herbert Hoover’s Treasury secretary, Andrew Mellon, offered similar counsel, famously urging Hoover to “liquidate” and “purge the rottenness out of the system.” But this failed to stop the catastrophe.

From Green’s statement you would think that President Hoover had accepted Mellon’s advice. He had not. Hoover often took pride in the fact that he did all sorts of things to prevent prices from coming down — from “liquidating” — after 1929.

Green followed the above-quoted passage with a plug for strong, activist government to pry the economy out of crisis. In light of the facts? Not so persuasive.

A truth for Tea Party brains: The Great Depression featured a spendthrift, meddling Republican prez followed by an even more spendthrift, more meddlesome Democrat.

A pattern history now repeats.

This is Common Sense. I’m Paul Jacob.