Category: free trade & free markets

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free trade & free markets national politics & policies

The Right Stuff Needs No Subsidy

When the president, in a rare fit of fiscal sanity, proposed cutting back on NASA, the subsidized sector of the high tech industry — the military-industrial complex — felt a shiver.

The first, I hope, of many.

NASA has long had a special, high-toned place in that hierarchy of government-funded industries. It’s the civilian wing of the military’s industrial juggernaut. As if to prove that government can accomplish things, NASA actually landed men on the moon. And it kept an ungainly shuttle program going long after its rightful expiration date.

But it’s time for private enterprise to take over in the space industry.

High time.

Still, questions remain — at least in the public mind. As a fascinating MSNBC article put it, “Can private companies build and operate space vehicles safe enough to carry astronauts?” The article’s author, James Oberg, focuses on the emerging market of space taxis, but does ponder the possibility of putting real astronauts out in space, privately. He consulted skeptical NASA engineers, who wondered how unsubsidized, for-profit businesses could mimic NASA’s record.

Where’s their collective experience?

Answer: Let most of NASA go, and that experience would be up for hire.

Our hopes for the future conquest of space depend, in part, on ceasing to subsidize it. Congress and the president should embrace that future, and realize that it is time to relinquish their control over another whole industry.

This is Common Sense. I’m Paul Jacob.

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

Don’t Kill The Angels

President Obama is blasting what he calls “the furious efforts of industry lobbyists” to fend off tighter regulation of the financial industry.

Pretending that Fed credit expansion and governmental incentives to take on temporarily cheap mortgages had no part in the current crisis, officials carefully direct our attention elsewhere. Widespread moral hazard stemming from bailouts, both guaranteed and implied? Shhhh.

But the government, uninterested in regulating itself and its own excesses, is instead targeting you and me.

“Tighter regulation” means less freedom to make your own decisions about your own time and resources.

Venture Beat magazine reports on a provision of Senator Chris Dodd’s proposed reform that would make it much harder for so-called “angel” investors to fund new start-ups.

An angel investor is somebody willing to fund a new business with his own wealth, even when venture capitalists managing others people’s funds decline to invest. Dodd’s bill would force start-ups raising funds to register with the SEC and wait 120 days for the filing to be processed. It would also increase the minimum capital that “accredited investors” must have in the bank before the government will permit them to invest.

Based on nobody’s considered judgment about a particular venture but only on lawmakers’ nebulous fear of entrepreneurial risk, the proposed law would kill in the crib many pioneering and timely, must-act-now innovations.

Accidentally, I’m sure, current businesses would be spared competition from upstarts.

And this is supposed to help the economy?

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Carrying On About Carry-Ons

Poor Chuck Schumer. A vendor now charges for a service that it didn’t previously charge separately. So the senator wants to outlaw this.

“Airline passengers have always had the right to bring a carry-on bag” without separate fees, Schumer fumes. It’s a “slap in the face to travelers” that some airlines now consider charging for carry-on bags, a policy already in place at Spirit Airlines.

Horrors! The ugly spectacle of businessmen acting as if they . . . have the right to run their businesses freely, not merely as lackeys of congressional overseers.

Spirit, which is simultaneously reducing base ticket prices, says airplanes will empty faster if there’s less luggage looming overhead. I don’t like paying the fees, but airlines do have costs. And competition. An airline that kept heaping up fees until it was charging $1,800 per ticket wouldn’t get off the ground. Not if another airline was charging far less for the same journey.

The proper response to terms of trade that one dislikes is to complain to the vendor, take one’s business elsewhere, or both — not to decry any scrap of autonomy as a “loophole” in a regulatory regime not yet exhaustively draconian.

Yes, let airlines charge for carry-ons. And let Schumer take the bus to and from DC. This will give him less time to pursue phony-baloney crusades.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

No More Woolworths

The New York Times offers summer internships at $900 per week. From what I’ve gathered, most other editorial and journalistic internships don’t pay nearly that much.

Many pay nothing.

So why would anyone work for nothing? Well, for experience.

Thomas Sowell, in his recent book Applied Economics, tells the story of a young man named Frank, who applied for a position in a retail store and got it. When he asked about his wages, his employer said, “Pay you! You don’t expect me to pay you, do you? Why, you should pay me, for teaching you the business!” This, as Sowell notes, seems harsh, exploitative: Three months of hard work without pay.

But Sowell asks “Who benefited most?”

The answer is the young Mr. Frank Winfield Woolworth, who went on to found a retail empire, eventually hiring his old boss, the same man who wouldn’t pay him. But the old man sure did teach Woolworth the business.

Unfortunately, such relationships are illegal. “Convinced that many unpaid internships violate minimum wage laws,” the New York Times relates, “officials in Oregon, California and other states have begun investigations and fined employers.” The regulators’ campaign against internship programs is now going nationwide.

Bottom line: No more Woolworths.

Sure, the Woolworth chain died long ago. What’s left of the company is called Foot Locker. But I’m talking about future innovators, future Frank Woolworths.

Which makes this crackdown a prime example of a counter-productive policy.

This is Common Sense. I’m Paul Jacob.

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

In Case You Were Worried

It’s magic. Not only does the recently passed health care reform cover more people, it cuts deficits too.

Ha! You know it, I know, we all know it: Major government entitlement programs always end up costing far, far more than their original advocates claim.

Or should we just trust trust the reform’s advocates no matter what past experience and rational accounting say?

Democratic Congressman Jim Clyburn turned to MSNBC to explain all about how Obamacare would slash the deficit. “We’re extending the life of Medicare by nine years, and if you’re taking the waste, fraud and abuse out of this, the savings that you get there will come as things grow. Savings will grow.”

Ah, waste! Fraud! Abuse! Politicians love such talk, at least until the waste and fraud gets renamed “stimulus spending.”

Then Clyburn said: “You look at the community health centers. Savings will grow more in out years than in the first few years. So I believe — well, that’s my assessment, and that’s the way I’m explaining it to members. I hope I’m right.”

So there is hope.

Also, 32 million people will be coming into insurance plans and out of emergency rooms. (Unless there’s an emergency.) Also, Clyburn’s wife had bypass surgery and the bill included $15 for an aspirin. What we must understand is that the new command-and-control regime will “build savings into the system.”

Could what this third-ranking House Democrat really be trying to say is that he has no idea what he’s talking about?

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Keystone Cops in Philly Folly

This March, armed Pennsylvania State Police bravely raided three popular bars in Philadelphia.

They confiscated liquors that allegedly had not been properly registered with the state Liquor Control Board. Brewers and importers must pay a $75 registration for each separate potable they sell in the state.

Some unnamed concerned citizen had complained. The three bars were affiliated, so maybe a resentful competitor had something to do with it.

According to the owners, many of the confiscated ales had been duly registered. But when the state police couldn’t instantly confirm this, they just grabbed cases and kegs and towed them away.

Even in the case of unlicensed ales, what is the virtue of raiding a bar to sloppily “check” their status and then steal supplies? Especially when it’s not the bar owners who are legally obligated to register the brands?

Some clerk could have just dropped by, inspected the booze, asked a few questions. Or just called the brewery and said, “Hey, you forgot to register such-and-such.”

Of course, the whole idea of requiring separate registrations of each separate beverage is silly to begin with.

Further, the state police could have, and should have, simply declined this wrongheaded mission.

Apparently we can’t count on better lawmaking and better, more sensible regulations. But we do count on our police.

This is Common Sense. (Let’s practice it.) I’m Paul Jacob.

Categories
Accountability free trade & free markets too much government

Krugman’s Crazy Crotchets

Paul Krugman is getting sillier and sillier these days. He’s supposed to be an economist, and not long ago some people in Sweden gave him an award for his economic work. So why would he suggest that economic incentives just don’t matter?

The New York Times columnist bashed Republican Senator Jon Kyl for stating that generous unemployment benefits can reduce the incentive to look for new work. Krugman says that this isn’t the textbook view of things shared by himself and the Democrats. “What Democrats believe,” Krugman says, “is what textbook economics says.”

Gee. So what does textbook economics say?

James Taranto of the Wall Street Journal actually checked a textbook in economics. According to this textbook, “Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job.”

Interesting. So who wrote this textbook? Yes, that’s right: Paul Krugman.

This partisan fellow, Krugman, often seems to go out of his way to be contradictory as possible. Does he believe his own babbling? Or is he just trying to get a rise out of us?

Or is it to please his editors over at the Times?

Call it an economic incentive.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

The Color of Boom and Bust

You’ve heard of “green collar jobs.” But what about “glass collar jobs”?

The Heartland Institute just put out a handy little pamphlet called The Cap and Trade Handbook, by James M. Taylor. It debunks various aspects of today’s obsession with fixing the global climate by laying on new restrictions, regulations and taxes. On page 5, Taylor addresses, colorfully, the “green jobs” issue.

Would cap-and-trade create new jobs? The handbook says, “sure, forcing people to buy expensive alternative energy means some new jobs would be created in the wind and solar industry. But even more jobs would be destroyed in the more efficient conventional energy sectors. . . .”

True — new jobs would come at a cost. The pamphlet then considers what would happen if the government hired thugs to break our windows. Sure, “such a program would create a lot of new ‘glass collar’ jobs in the window repair industry.” But employment would not increase on net, and we’d obviously be worse off, not better.

Unfortunately, the big headline on the page insists that “There will be no employment boom in the ‘green collar’ jobs sector.” Not true, as explained.

Just as subsidizing mortgages led to a housing boom this past decade, cap-and-trade policy would likely create a new boom industry that also would not sustain itself. And then explode. Spectacularly. Disastrously.

Financial bubbles break. That’s bad, no matter what color.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

High Tech versus Disaster

Amidst all the tragedy dealt by the earthquake in Haiti, there have also been inspiring tales of coping and survival — some occasioned by the wonders of modern technology.

Consider the cell phone and its muscular cousin, Apple’s versatile iPhone.

The iPhone was the star of Dan Woolley’s self-rescue effort. Woolley, an American filmmaker, was in Haiti when the earthquake buried him in rubble. Help would not arrive until three days later. So he consulted an iPhone application to learn how to make a tourniquet for his leg and bandage his own head wound. Without the software, Woolley might not have survived.

Few in Haiti have iPhones, but many have access to some kind of cell phone. For weeks after the earthquake, electricity was out. Landlines were dead too. But in a patchy way the cellular network was up within days. Voice calls remained iffy, but you could easily send text messages.

Without electricity, though, how to power up a drained cell phone and contact a loved one? That’s where street-corner entrepreneurs came in, hooking up power strips to car batteries and charging 40 cents or so to charge a cell.

We often take technology for granted. But the high-tech that makes life easier in normal times can also help us contend with disaster. As do the markets that make the technology and its maintenance possible.

This is Common Sense. I’m Paul Jacob.

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education and schooling free trade & free markets too much government

Take That Money

I didn’t notice it right away, but President Obama included some strange stuff about student loans in his State of the Union address. He called the current system an “unwarranted” taxpayer subsidy to banks.

Well, yeah. His solution? Another unwarranted taxpayer subsidy.

The president seeks to give families a $10,000 tax credit for sending kids to college. He also insists that no student spend more than 10 percent of his income to pay back loans, and that the unpaid portion of loans be forgiven after 20 years.

Further, if the former student happens to work for the government, the loan would be forgiven in half that time — just ten years!

This amounts to a huge special favor to government workers, of course. It may sound nice and patriotic when the president calls it “public service,” but it seems less so when you realize that government workers now earn, on average, more than private sector workers. Perhaps the fact that public employee unions are a big spending political powerhouse for Obama and Democrats matters in some small way.

Alas, more vote buying.

The president used an interesting phrase, explaining what he’s up to. He instructs us to “take that money” now loaned by banks and “give to families.” This is pseudo-specific. It’s not the same money.

But a politician obscuring the real source of wealth is nothing new.

This is Common Sense. I’m Paul Jacob.