Category: free trade & free markets

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

Déjà vu Economics

Last week I noted the revival of interest in F.A. Hayek’s classic political tract, The Road to Serfdom. This week? The ongoing revival of interest in Hayek’s theory of boom and bust.

According to economist Gerald P. O’Driscoll, Jr., today’s debate about stimulus spending mirrors the debate in the Great Depression between John Maynard Keynes and Hayek. Republished letters from October, 1932, Times of London, are eerily up-to-date.

The letter from Keynes and his allies, arguing that spending — any spending whatsoever — would spring the economy out of depression strikes me as a tad bizarre. All spending is equal? Make that several tads bizarre.

Can you say déjà vu?

The Hayekian response seems at once more sophisticated as well as commonsensical. For instance, Hayek recommended an immediate repeal of the infamous Smoot-Hawley Tariff. He recognized a major factor for the Depression’s low expectations and business doldrums: The trade-killing legislation that hit the New York Times’s front page the day before Black Tuesday, 1929.

O’Driscoll and other economists have been making much of the enduring significance of the Hayek-Keynes debate. But there are differences between the Depression and now, aren’t there?

Back then, the loss part of the profit-and-loss system hadn’t been so completely undermined by recovery policy. Today we have bailouts, and these only increase risk-taking, likely to make the next bust even bigger — and today’s Keynesianism perhaps worse than the disease itself.

This is Common Sense. I’m Paul Jacob.

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

How to Keep Your Health Insurance Plan

Like the medical insurance coverage you have now? Don’t worry, you can keep it under the new “health care” regime . . . Or so President Obama and his Democratic allies promised during the recent debates over reform of medical insurance and delivery institutions.

Now we’re now learning, per “internal White House documents,” that the insurance plans we were told would enjoy grandfathered protection under the new law won’t be immune at all. Looks like more than half of current company plans must be chucked by 2013.

We shouldn’t be surprised. Apparently, the goal has always been destruction of private insurance. But why? Well, so government can swoop in to “rescue” us after private firms collapse under the weight of all the new taxes and regulations.

The State of Massachusetts offers a preview of what awaits us. Insurance regulators there were recently warned by a department in charge of “monitoring solvency” that a new round of price caps on insurance rates would jeopardize private insurers’ solvency. Officials imposed the caps anyway. Now those private firms face losses that, if the price controls persist, can lead only to bankruptcy.

Despite all this, there is a way to keep your current health insurance coverage. All folks in Congress have to do is repeal their recent “reforms.” All you have to do is make sure they do.

To ensure that you have better options in the future? Well, very different reforms will be required. And repeals of different laws.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Road to Number One

Good news and bad news.

The good news: F.A. Hayek’s Road to Serfdom, an exploration of the fallacies of socialism and the very real political hazards of bureaucratic, centralized planning, has been riding high on Amazon.com’s bestseller list. It even made it to No. 1 on the list, and is No. 6 as I write.

Pretty amazing for a reprint of a 66-year-old treatise on how economic controls foster tyranny.

Economist Hayek’s most accessible tome first hit it big in the 1940s, especially after Reader’s Digest excerpted it. The book resurges in popularity now thanks to something a bit different than a Digest excerpt. Glenn Beck featured it on his controversial talk show, praising it in glowing terms.

But there’s a deeper reason for its comeback, the reason Beck turned to in the first place: Its insights seem particularly relevant in an era of spastic expansion of government power.

That’s the bad news.

Gene Healey, at Cato Institute’s blog, suggests that “the underlying reason for the sustained interest in Hayek’s book is that it taps into a profound dissatisfaction in the public mind with the machinations of its government. Both Presidents Bush and Obama have presided over huge growth in the size of the federal government. . . . Things seem out of control.”

Maybe, with Hayek’s help, we can hang a U-ee and reverse course.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets tax policy too much government

Cinema Without Subsidy

Yesterday I insisted that states stop subsidizing filmmaking. Implied, I hope, was the notion that states needn’t provide tax credits to lure movie shoots to their state, either.

No sooner did I wrap up that argument (with the premature proclamation “end of story”) than I read a fine article on Show Me Daily about how “States Can Entice Businesses and Industries Without Credits.” The article begins talking about making films in Wisconsin, where the tax credits were just cut by two thirds. And yet the state has nabbed some major film efforts.

According to Show Me, “Wisconsin sets a great example. . . .” Every state has something going for it, unique locations, geography, architecture, people, climate, what-have-you. “Firms will locate” where they do for relevant reasons; “they don’t need to be bribed with generous incentive packages.”

But, but, but, but! some will sputter. Film companies are special firms. They start up, inhabit a location for a while, and then vamoose. State regulations and business taxation often makes it very difficult to shoot in a particular place. Filmmakers need special help around encumbering bureaucratic obstacles.

I’m sympathetic. For example, the business-and-occupation taxes that increasing numbers of states are instituting are horrendously burdensome: They take from gross revenues, of all things!

But the proper way around such counter-productive laws is outright repeal, setting up better state revenue programs . . . ones that are not so generally destructive of industry, including the film industry.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Knot Cannibalism!

Midas, in honor of his peasant-turned-king father, King Gordias, dedicated an ox-cart to the gods, tying it with a knot so complex no one could undo it. It was there years later when Alexander of Macedon stopped by, and turned his hand to untying it. He couldn’t. So he took his sword and cut it open.

Some seemingly insoluble problems are best solved by stepping back and “cutting the Gordian knot.”

Take a current knot, fictional cannibalism. The auteur responsible for the gore-fest The Offspring recently sought funding for another cannibalism horror film, to be entitled The Woman.

The funder turned him down. “This film is unlikely to promote tourism in Michigan or to present or reflect Michigan in a positive light,” said the head honcho of the funding institution, the state’s film commission.

Two years ago, that tax-funded organization produced 26 separate efforts. “Isn’t that just amazing?” Commissioner Janet Lockwood gurgled.

But her turning down funding for a horror film, for reasons of content, have let loose a storm of criticism. Some say that when government says “no” to an artistic product on content grounds, that’s censorship.

They are right.

Others say they don’t want their tax dollars going to vile, disgusting depictions of cannibalism and other vices and crimes.

And they are right, too.

The solution? Cut the knot of this problem in one swipe: Governments shouldn’t fund films. End of story. [Roll credits.]

This is Common Sense. I’m Paul Jacob.

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free trade & free markets general freedom too much government

Prophet of Loss

What if Karl Marx was . . .  half right?

Marx’s theory of history elaborated that, with each bust of the boom-and-bust cycle, the rich would nab ever more property — capital — until impoverished workers united to take all that capital for “themselves” (as a collective) and run it for the common good.

That’s dialectical materialism. It didn’t predict what happened even in Communist countries. But something vaguely Marxian is going on now.

Today, when there’s a bust, government bails out the failed rich guys — even buying companies.

Further, governments keep hiring more people to “stimulate” the economy. Government workers increase as a percentage of the workforce, with higher-than-average wages and benefits.

This used to be called “creeping socialism.” Politicians move us closer to total government — measure by measure, tax by tax, law by law. No revolution necessary.

Except . . . well, as politicians put more of our eggs into the collectivist basket, each down-swoop of the business cycle makes the whole system less stable — and (with increasing taxes and debt) more burdensome to sustain.

It could all lead to revolt — a taxpayer revolt.

Taxpayers, who’ve had to put up with a lot of nonsense over the years, aren’t even a tad bit interested in the foolishness of communism — or a corporate, fascist super-state.

That’s where Marx and his followers had it all wrong. Only the build-up of instability seems Marxian. Americans’ response is to seek limits on government.

This is Common Sense. I’m Paul Jacob.

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folly free trade & free markets

Finding Common Sense in China?

Las Vegas gambling entrepreneur Steve Wynn says that “common sense” has “disappeared in Washington, DC.” In a recent interview on CNBC, he complained about the federal government’s “wild, uncontrolled spending” and “unbelievable, unsustainable debt.”

Good point, of course, but nothing new. Still, Wynn’s rant went further.

Wynn is opening a new headquarters for his casino empire in Macau, China, and was asked if he expected to find “common sense in Macau.” He didn’t mince words, arguing that the “opportunities” were “far superior abroad than in America.”

But what about the regulation and government oversight in Macau, China, versus the U.S.?

“Macau has been steady,” he replied. “The shocking, unexpected government is the one in Washington. That’s where we get surprises everyday. That’s where taxes are changed every five minutes. That’s where you don’t know what to expect tomorrow. To compare political stability and predictability in China to Washington is like comparing Mount Everest to an ant hill.

“Macau and China is stable. Washington is not. Is there a businessman or a media person in America . . . that isn’t frightened about what the next crazy idea is coming from Washington? . . . Everything is cuckoo and God knows what’s next.”

Wynn closed by saying, “The uncertainty of the business climate in America is frightening, frightening to everybody. . . . there’s a sense of fear that the politicians are ruining us . . .  It’s got to stop.”

Amen.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets government transparency

Ignorance Is Strength (for Boodle Mongers)

Journalist Mark Tapscott helps spread the word about the boondoggles perpetrated by the Department of Agriculture. But his work is being thwarted by the Super Friends of Government Transparency, the Democratic Congress.

The Ag Department manages Congress’s wretched, anti-productive policy of paying farmers to grow fewer crops. It also applies these New-Deal-era policies in the silliest manner possible — for example, by giving former basketball star Scottie Pippen $130,000 over five years not to grow crops.

Other Dust-Bowl-afflicted tillers of the field rescued with taxpayer-funded largesse include Sam Donaldson, Ted Turner, Larry Flynt and Ben Bradlee. The ridiculous payouts were exposed thanks to the efforts of a nonprofit outfit called Environmental Working Group (EWG), which posted an Agriculture Department database on its website. It obtained the data from reluctant officials by dint of the Freedom of Information Act.

Back in 2002, Tapscott reported that then-Senate Majority Leader Tom Daschle had tried but failed to exempt such embarrassing spending details from freedom-of-information laws. Because he failed, the EWG could keep updating its database. But in 2008, the Democrats finally let the Department of Agriculture off the hook. Complying with information requests about its crazy subsidies is now “optional.”

So Aggie officials don’t bother.

Tapscott presses the obvious point: Wasn’t the new Democratic majority slated to embody the “most honest and transparent” Congress ever?

Perhaps their new slogan will be Ignorance is Strength?

This is Common Sense. I’m Paul Jacob.

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folly free trade & free markets

Hedging Our Bets

Do congressmen know anything about anything?

Perhaps that’s an unfair question. These guys demonstrate a whole heckuva lot of savvy when it comes to logrolling, porkbarrelling, taxing, spending. Oh, and sniping, grandstanding and griping, and of failing to read bills they pass. I apologize if I implied any deficiency of proficiency in such areas.

I just wonder whether they know anything about real life outside the ways and byways of Capitol Hill.

For example, on the question of whether altering investment strategy in response to changing economic news constitutes “fraud.” If risk management equals fraud, lots of firms should close down tomorrow to protect themselves from congressional subcommittees eager to pretend that government policies have played no major part in screwing up the economy.

Power Line blogger John Hinderaker, after wading through transcripts of the senatorial interrogation of officers from Goldman Sachs, concludes that the senators, “seemingly without exception, are embarrassingly ignorant of modern risk management techniques. . . . [of] how and why firms like Goldman Sachs hedge their exposure to various economic trends . . . [They seem] to think that there was something ‘evil’ about taking a short position — that all investors were somehow required to try to keep the housing bubble going.”

Hinderaker’s observations are more detailed than I can recapitulate here. But the bottom line — that those who would run our lives don’t understand the bottom lines of those who actually work and trade for a living — is nothing new.

This is Common Sense. I’m Paul Jacob.

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

The Chamber, Loaded Against the Free Market

You are familiar with the notion that businesses support the free market, while concerned citizens demand some sort of “regulatory oversight” by government.

It’s a canard.

Oh, some businessmen do indeed support free markets and decry subsidies — and lots of businesses oppose this regulation or that — but, on the whole, the major support for a regulatory regime, or for subsidies and tariffs, for almost any scheme of government control of business, is usually business itself.

Like individuals, businesses too often turn to government for special advantages — over other businesses, or over taxpayers.

That’s why the United States Chamber of Commerce gave Congressman Ron Paul such low marks. You could hardly find a more pro-free-market gentleman in Washington. But, as Timothy Carney notes in the Washington Examiner, 90 percent of Democrats got higher marks on the Chamber’s 2009 congressional scorecard than did Paul, who also got the lowest marks of any Republican.

Why?

Rep. Paul opposed the recent stimulus bill. And he opposed subsidizing the tourism industry as well as solar energy.

The Chamber is a typical business lobbying outfit, favoring an inefficient, mixed economy because some of its leading members hope to milk the taxpayers.

If you are a member of the Chamber but support the fair play of the free market, not the rigged play of government-business “partnerships,” you might want to speak up against your Chamber’s policies.

Or join another group.

This is Common Sense. I’m Paul Jacob.