Category: free trade & free markets

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free trade & free markets too much government

Washington to Regulate
Your Bake Sale

Informal production and distribution, from small farms and homes, were once not only common, but the backbone of everyday life.

Today, there’s a revival of much of this, as people begin to realize that corporate practices have increasingly relied upon putting additives in foods and plastics in other products.

I have sad news for locavores and other health food fans hoping to buck the trend of corporate practice: H.R. 875, the Food Safety Modernization Act of 2009. This new bill, now worming its way through the corridors of Capitol Hill, would require anyone who stores or sells any food products to any third party to register with the federal government and keep extensive records about every product bought, produced, modified, or sold.

How far will the law reach? I suspect it will have no limit, which one section clarifies: “In any action to enforce the requirements of the food safety law, the connection with interstate commerce required for jurisdiction shall be presumed to exist.”

In other words, the federal government will, if this bill is passed and “successfully” administered, regulate everything, including (and down to) your local organic truck farm, festival, or bake sale.

This bit of food totalitarianism thus takes its place in a long line of federal government regulations that, in the name of safety, regulates small operations out of existence.

It makes no sense.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Banker of the Year

It takes guts and self-confidence to buck a trend, especially to buck a boom. So most contrarians keep a low profile.

Meet Plano, Texas, banker Andy Beal. I read about him in the pages of Forbes magazine, which profiled this master contrarian in early April.

Beal has been buying toxic assets and broken-down banks in big huge gulps. And he’s been doing it without the help of government. Forbes says that he “has purchased $800 million of loans from failed banks, probably more than anyone else.”

How? Well, back in 2004 he stopped making loans. He almost stopped banking. He cut back his hours. He had to lay off a lot of employees.

Why? He didn’t trust the market. He thought the binge of borrowing and lending utterly foolish.

Forbes relates that his behavior puzzled regulators, who were worried that he was over-capitalized! How could he resist the huge profits?

Well, Beal sure showed the regulators. And his competition. Today he’s buying assets for pennies on the dollar.

Beal believes the current crisis was caused, in huge honking part, by government. Now that government is giving failed bankers huge hunks of money, his reaction is twofold:

1. He calls all the bailouts “crazy.”

2. He is taking the opportunity to make a fortune . . . without government help.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets general freedom

People Power

How many people does it take to run a civilization?

Lots.

And the more things you are doing — the more productive and wealthier you want your civilization to be — the more people it can use.

It’s people who do things. Without people, the things won’t get done. People aren’t the problem, they’re the solution.

But the non-problem of “too many” people bothers Jonathan Porritt, a “green” advisor to British Prime Minister Gordon Brown. Porritt says if Britain is to feed its population “sustainably,” her population will have to be reduced to 30 million. Britain’s current population is about 61 million, twice that. So . . . do we have 31 million volunteers?

Porritt says “Population growth, plus economic growth, is putting the world under terrible pressure.” That terrible pressure of making it easier and easier to survive.

Industrialized, capitalistic countries are often slammed for consuming a disproportionate share of the world’s economic output.

Less often mentioned is that these countries also produce the lion’s share of the output. They can do so to the extent that people with brains and initiative are free to function. Free to work, keep what they earn, benefit from planning ahead. Let people be free, and they’ll feed themselves fine. They will expand resources.

You want to “sustain” economic development, Mr. Government Official? Get out of the way.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

What Not to Blame

You’ve heard the calumny: The current economic debacle is the result of free markets.

This charge — often made with lip-smacking glee — makes no sense.

I’ve discussed some specifics, before. Here are three more points:

1. We haven’t had a free market. We live in a heavily regulated, subsidized, coddled-and-attacked, over-taxed society. If the current debacle proves any system unfeasible, then the one proven wrong is the one we have. It’s the mixed economy that has proven to have worse than mixed results.

2. Many on the left as well as on the right like to pretend that Republican talk of free markets has been effective. Both sides lie. The alleged party of “small-government” and “free markets” pigged out at the government trough, increasing the size and scope of government. To not see growth of regulation and spending and government debt under Republican governance is to not see the corpulent elephant in the room.

3. Blaming free markets is especially galling to actual proponents of free markets for a historical reason, too: Our idea grew up in reaction not to socialism, but to a system of government interference much like what we have today. Adam Smith called it “mercantilism.” Thomas Jefferson called it “Parasite Institutions.”

And it’s the parasite institutions that caused the current mess.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Our Fairy-Tale Economy

Everybody seems to hanker to get something for nothing. Because of that universal desire, and our inability to satisfy it, we have all these fairy tales about the tragic costs of magic.

Yes, the cost of something-for-nothing can be shockingly high. In some savvy tales, audacious hopefuls wind up giving away first-born children to pay for their something-for-nothing.

For half a year, our leaders have gone on a something-for-nothing binge, throwing money at a downturned economy. Lots of money. Trillions.

Where does it come from?

Magic?

Not exactly. Politicians and financiers use complicated tricky maneuvers to gain money they don’t have.

With the help of the Federal Reserve, they can sorta create money. But that creation has costs. It makes the money less valuable. We don’t always see this right away. Right now people are switching away from spending, so a lot of new money goes into savings. When people start spending again, though, prices will rise and money’s value will plunge. Gold into lead.

Politicians also get money by borrowing. But that also comes at a cost: It must be paid back. Here, politicians play an old fairy tale game, not exactly giving up their first-born, but saddling our children and grandchildren with debt. It’s a mean, wicked stepmother kind of policy.

Maybe we should be reading more fairy tales these days. For the realism.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Doctoring on the Installment Plan

How does a successful doctor deal with patients lacking insurance? Dr. John Muney decided to offer a deal. For $79 each month he would service patients with unlimited office visits, some tests, and even in-office surgeries — at all his AMG Medical Group centers.

Now, the deal’s not for me. I have insurance through work, and I also have a family, so that $79 would have to be multiplied by four. Real money. But for some people, I bet, this makes perfect sense.

Yet, if government gets its way, no patient of New York’s five boroughs — where Muney’s clinics are located — need ever consider the good doctor’s innovation. Why? Because the state Insurance Department has declared his service a form of insurance and says it requires a license from the state.

What were you thinking, Dr. Muney? This is a free country, and . . . you can’t just do what you want, you know.

Dr. Muney is fighting back. The application form for this contract has THIS IS NOT INSURANCE emblazoned on every page. He is challenging the bureaucracy’s ruling.

Once upon a time, doctors regularly engaged in this kind of pricing. Many doctors — perhaps most — engaged in pro bono work for the poor. Other had special rates, etc. But the American Medical Association pressured politicians to put an end to such competitive practices.

Thanks, AMA.

As for Dr. Muney, my thanks to you is not sarcastic. Hang in there.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

The Next Market To Melt

“During melting markets, all pension funds come under siege.”

I’m quoting from a February article by John Entine. This Reason magazine cover story is entitled “The Next Catastrophe,” and, like so many things these days, it’s scary. Entine explains how fragile pension funds can become when markets collapse.

Regular listeners know that I’ve been worried about what we might call the Ultimate Catastrophe. Increasing demands on Social Security and other entitlement programs, like Medicare, added to never-ending deficit spending, threaten to bankrupt the nation.

But Entine looks at a different economic crisis. He points out that all pension funds can become unhinged in chaotic markets. Old news. What’s new? Well, many government and union pension funds began taking riskier stances regarding stock investing a few decades ago. And with greater risk comes You Know What.

Worse yet, many funds have been hijacked by well-meaning do-gooders, investing in “socially responsible” causes rather than reasonably run profitable companies. These funds are worth over $2 trillion. That is, they are until their fundamentals prove weak or worse, and they go down, down, down.

As with the mortgage markets, it seems that pension management has undergone a huge paradigm shift, away from security and savvy, towards . . . nonsense.

Things are not looking up, up, up.

This is Common Sense. I’m Paul Jacob.

Categories
Accountability free trade & free markets too much government

Able to Raise Keynes

Recently on This American Life, economists told NPR listeners how the then-upcoming stimulus bill would amount to the very first legitimate and full test ever of Keynesian ideas.

Sure, politicians have been using John Maynard Keynes’s notions as an excuse to deficit spend ever since the Great Depression. But then, Lord Keynes had wanted politicians to spend even more, more than they dared.

Now, President Obama and our Democratic Congress have decided to spend enough billions, or trillions, to really do the trick.

Switch to Larry King’s latest interview with Bill Clinton. Our former prez assured us that the stimulus bill “would do what it is supposed to,” and he mentioned three things, only one of them vaguely about stimulus. He said the bill was better seen as a “bridge over troubled waters.”

Clinton said the real issue was declining asset values, which Congress would address later.

At Mises.org, Stephan Kinsella asked how this could amount to Keynesianism. Clinton used a different lingo entirely.

Here’s how: It’s not that the bill will give us Keynesian stimulus. It’s that it has stimulated politicians in the old, old Keynesian way.

Congressional Democrats know that the stimulus won’t work. So they are preparing the spin now. From them we heard the official excuse for the bill. From Clinton, the future excuse.

Politicians know zip about the economy. They just know how to spend our money. And our great, great, great grandchildren’s.

This is Common Sense. I’m Paul Jacob.

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

Ears Burning

At the recent World Economic Forum, Russian Prime Minister Vladimir Putin warned of our government’s flirtations with socialism, that is, a state-run economy.

Trying not to “gloat,” Putin told the U.S. that “Excessive intervention in economic activity and blind faith in the state’s omnipotence” is a “mistake.” He reminded listeners that state control of the old Soviet economy made the nation “totally uncompetitive.”

Putin then lectured us not to “turn a blind eye to the spirit of free enterprise.”

But why isn’t Putin lecturing Venezuela? That Latin American state’s president, Hugo Chavez, is a classic strong-arm socialist, marshaling the power of the state, as well as gangs of supporters, to threaten and intimidate his political opponents.

As with any wannabe dictator, Chavez has sought to dismantle term limits. Just 14 months ago, voters rejected his first attempt. But Chavez, having consolidated his hold on the media and other institutions, came right back with another vote to end the limits. This time he won. He can now serve for life.

Only in South America? No. New York City Mayor Michael Bloomberg recently voided his own term limits. And he didn’t even bother to allow a public vote on the issue. So, who’s the more anti-democratic, Chavez or Bloomberg?

When foreign tin-horn dictators start making as much or more sense than our own politicians, well . . . it’s long past time for us citizens to make serious changes.

This is Common Sense. I’m Paul Jacob.

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

Absurdity Then, Absurdity Now

There’s a famous quip by one English intellectual about another. “Oh, you know what so-and-so’s idea of a tragedy is: A beautiful theory killed by an ugly fact.”

Well, don’t I know it.

I wrote a column, recently, for Townhall.com, entitled “The Buxom Bailout Babes of the Umpteenth Brumaire.” In it I noted that while the Great Depression was a tragedy, today’s economic debacle, though a repeat of it, is more farce. To demonstrate its farcical nature I noted that some people are seriously talking about bailing out the newspapers, which have hit hard times.

And nothing, I assured my readers, could be more absurd than that. The point of having newspapers is to be critical of government. To have government support them would turn them into worse propaganda rags than they now are.

The trouble with this? Well, FDR, way back in the tragedy, also subsidized newspapers. Well, at least one.

Bailouts weren’t exactly the main thrust of the New Deal, but they happened. And, like most political acts, they were politically motivated. FDR was worried about Philadelphia, which was solidly Republican. The Democratic newspaper was failing.

So he bailed it out.

Simultaneously he set the IRS on the publisher of the Republican newspaper. In the next election, the area turned Democrat.

Here’s one theory that won’t be disproven: In government, it’s politics that matters.

This is Common Sense. I’m Paul Jacob.