Category: free trade & free markets

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free trade & free markets too much government

Fix Health Care?

When the president of the United States tells us that we “can’t fix the economy without fixing health care,” what do you make of it?

If you’re like me, you want to unravel the health care mess. And making it better would surely help the economy. But do I agree with President Obama?

Well, no.

The president and his party want to increase government controls and establish new government programs, the usual whatnot.

That is, the usual stuff that is precisely “what not to do.”

Instead of increasing costs by regulation, we should decrease costs by having the government stop mandating what health insurance companies must provide. Or unentangle our hyper-expensive Food and Drug Administration, with its longest and most expensive research rules in the world.

Generally, our politicians want us to emulate various socialized systems from across the globe, while ignoring the aspects of those systems that are freer than ours.

Specifically, Obama wants to set up a tax-funded Medicare system for everybody, in competition with regulated private insurance companies. And since Medicare is one of the main drivers of high prices, you can see where this will lead.

Funny thing is, our medical costs have not been shooting up these past few years as much as they were before, while in heavily regulated-and-rationed Britain, costs have skyrocketed during this same period.

I’m reminded of the Hippocratic Oath: First, do no harm.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Small, Dull, Solvent

You didn’t have to be a small community bank to steer clear of the helter-skelter investments favored by the likes of Bank of America and AIG. But apparently it helped.

New York Times reporter David Segal writes that spending time with solvent bankers in places like Indiana was like stepping into an “alternate universe,” a place “where everything sounds a little strange because it makes perfect sense.”

Weird that it’s strange, eh? Sensible should be normal.

Turns out, the secret is to be boring. Clay Ewing, a banker in Jasper, says, “If banking gets exciting, there is something wrong with it.” So, no maniacal juggling of hyper-complicated subprime debt instruments just for the thrill of it.

Boring bankers also tell Segal: “If you don’t understand the risk you’re taking, don’t take it.” Also: “We want to be around for decades, so we’re not focused on the next quarter.”

Today, banks that abided by such common sense are solvent. And declining government bailout money.

Profligate bankers propelled by visions of infinite if inexplicable returns were not the only culprits in the housing bust. The Federal Reserve stoked the buildup of demented debt. As did many politicians.

But bankers who made bad decisions also deserve blame for surging blindly ahead. They could have done otherwise. They could have been, well, boring.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Marginal Gains in Germany?

Germany has a goal: Introduce a million electric or plug-in hybrid cars into the transportation mix by 2020. But a recent study by the German branch of the World Wildlife Foundation projected the impact: If successful, carbon dioxide emissions would decrease 1 percent in the transportation sector, 0.1 percent in Germany, total.

That’s not much.

The trouble with switching to so many electric cars is that they rely on increasing amounts of industrially produced electricity. Which would bring additional coal-fired plants online, thereby increasing carbon dioxide emissions.

Maybe the only way for electric cars to really impact carbon emissions is to increase nuclear power production at the same time. Nuclear power is the only practical, real-world-right-now way to increase energy and reduce carbon dioxide production by an appreciable amount.

Barring such a move, switching to electric cars expending energy gained from burning coal doesn’t offset our alleged global greenhouse problems. It is true that centralized coal-burning emissions can be scrubbed for pollutants, and we might expect progress here better than progress in auto-emission scrubbers. But that helps with problem of dirty air, a very different issue.

Even big steps addressing complex ecological problems tend to produce small gains, at best. One should question how much wealth to sink for nearly infitesimally small gains.

This is Common Sense. I’m Paul Jacob.

Categories
Accountability free trade & free markets too much government

Barney’s Bubble Babbling

To hear Congressman Barney Frank tell it, he was a lone voices of fiscal reason when the surge of ill-considered mortgage debt fueled the now-popped housing bubble.

Unfortunately for Frank, this is the age of the Internet. Bloggers have proved more than willing to collate inconvenient evidence.

Thanks to Ed Morrissey on HotAir.com, then, we have two testimonies of Frank-ish speechifying. Here’s Frank in 2009:

People haven’t fully understood. One of the causes of the terrible crisis we had over the last few years . . . it came from people being pushed into buying houses, taking out loans that they couldn’t afford. Part of that was a conservative view that rental housing was a bad thing. . . . People were pushing home ownership [for] people who shouldn’t have been there.

“People in power” pushed this, eh? Which people? The irresponsible conservatives. But here’s this same sir, Barney Frank, in a clip from 2005:

We have, I think, an excessive degree of concern right now about home ownership and its role in the economy. . . . This is not the dot-com situation. . . . [Y]ou’re not going to see the collapse that you see when people talk about a bubble. And so, those of us on our committee in particular, will continue to push for home ownership.

Oh dear. Barney, just be honest already and admit you helped destroy the economy, okay?

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Schumer Should Shut It

Government subsidies give government officials a license to order the recipients around:

  • Spend on this.
  • Merge with that.
  • Get rid of this CEO.

You take our money, you take our orders. Strings definitely attached.

But there are other kinds of bullying, often more subtle than formally enacted laws and regulations applied to otherwise independent firms.

Some government goons toss their weight around in the private sector entirely outside any legislative or regulatory process. How? By “conversing” with private firms about how they conduct business.

Recently we witnessed Senator Chuck Schumer chatting with Time Warner Cable about its test of broadband metering in Rochester, New York. The cable company’s notion was to price different levels of service. Customers using huge amounts of bandwidth were charged extra for that extra usage.

In normal markets, buyers constantly communicate happiness or unhappiness with what sellers are selling, both verbally and through buying patterns. No politician had to chat with Coca Cola to convince it to bring back “Coca Cola Classic.”

But politicians like scoring political points. And companies subject to such persuasive efforts know that more than persuasion is involved. There’s also the threat of force if the company doesn’t knuckle under to the politician. So Time Warner dropped its price-tier trial.

And we’re all just a little less free today than we were yesterday.

This is Common Sense. I’m Paul Jacob.

Categories
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.