Category: free trade & free markets

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free trade & free markets

A Cato Alert

President Obama suggests that all economists agree that the best way to dig the economy out of its giant hole is to dig that hole faster and harder. Too much debt? Pile on more. Consumers not “buying enough”? Tax and borrow more to spend more to subsidize more buying.

I don’t get it. Were I Robinson Crusoe on a desert island I sure would want to consume. Berries and bananas, fish, maybe deer.

But I’d also want to produce. I’d make tools to help me to gather and hunt, and to prepare and store food. Desiring shelter, I’d realize that I can’t live in a hut unless I first build the hut.

On Crusoe’s island, there would be no politicians around to tax me to death before I could finish the hut. But here in our mixed economy, there sure is.

The Cato Institute, a D.C.-based think tank, has been spreading the word that not all economists believe that the best way to improve the economy is to nuke taxpayers and producers. At Cato.org I’ve heard economists insist that bailouts have NEVER worked to stimulate the economy. Further, Cato has taken out a full-page ad in major newspapers, like the Washington Post and the New York Times, disputing the notion that the solution to the recession is a massive government spending spree.

The Cato statement is signed by hundreds of economists. Many more signed it after the ad was published.

Will it help? I have the audacity to hope.

This is Common Sense. I’m Paul Jacob.

Categories
Accountability Common Sense free trade & free markets too much government

New Prez Pleads for Common Sense

I like a president who pleads for common sense.

Here’s the story, headlined in the New York Times: “Obama Calls for ’Common Sense’ on Executive Pay.”

The president announced a salary cap for top executives working for companies garnering the greatest gobs of booty under the most recent federal bailout. The cap? Half a million bucks.

President Obama allayed a few qualms, right away. He said that “This is America, we don’t disparage wealth. . . .” And he said, “we certainly believe that success should be rewarded.”

But he does talk about the “height of irresponsibility” in Bush administration bailouts, with execs taking huge bonuses after running their companies into the ground. Who wasn’t sickened by this? Obama sees it as common sense to make sure we don’t reward massive failure with the usual rewards of success.

Still, America is also about respecting contracts. Those corporations had negotiated very explicit contracts with their execs regarding the big bucks. And — surprise, surprise — Congress wrote up the law on the gargantuan bailouts without requiring those contracts be renegotiated.

And consider: Do we really want our politicians setting non-government salaries?

This is all a side issue, though. Take the bailouts themselves. Where’s the common sense there? They do reward failure. They will not help the economy. If our leaders had acted according to common sense, the whole salary issue wouldn’t even have come up.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Is More Regulation the Answer?

Regulation. We’re told that it would have saved us from this and that event associated with the current economic downturn.

Well, probably not.

First off, remember that we have had regulation during this period. Clinton upped regulatory oversight of businesses; so did Bush.

Next, the mere fact that there are regulations doesn’t make them effective. Take Bernard Madoff. What Madoff engaged in was a swindle — not a hard-to-control best-intentions-turned-wrong investment fiasco but an actual, intentional fraud.

But as columnist Steve Chapman recently observed, the federal bureaucrats whose job it was to regulate investment businesses investigated Madoff “at least eight times in 16 years,” never, ever “coming close” to the fraud.

”So what,” Chapman asks, “makes you think that future bureaucrats, no matter how vast their authority, will be able to do better?”

Another thing about regulation is that there are several kinds.

When the founding fathers talked about regulating trade, they didn’t mean micromanaging trade to get specific outcomes. The founders meant “to make regular,” as in establishing standards . . . like what is the difference between sound investments and elaborate frauds.

That’s hard enough. Micromanaging a million businesses, to prevent certain unfortunate outcomes, is pretty much impossible.

Past performance is a good indicator of future performance. Just adding a bunch of regulators? That’s no help, since we haven’t discovered any new magic since the last batch failed.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

No Paradox?

When you read the papers, good news turns bad with a turn of a phrase.

The Wall Street Journal, reporting on a general decrease in private spending, cannot help but mention that old alleged problem of “the paradox of thrift.”

“Usually,” writes Kelley Evans, ”frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation’s standard of living. But in a recession, increased saving — or its flip side, decreased spending — can exacerbate the economy’s woes.”

Evans goes on, elaborating about the community-wide effects of cutting back spending: Consumer-oriented businesses going out of business.

So, do you see the paradox? In normal times, we say savings is good. But when things are bad, and people wise up to save more — or pay off debt — businesses relying on previous levels of spending are hurt.

Household debt has gone down for the first time since 1952. That’s good for the future, because this savings will allow future investment. For right now, though, the savings and debt reduction come at a social cost.

But this will go on only as long as the rate of savings shifts. When people’s rates of savings to spending stabilizes at a new level, the economy will be able to stabilize, too.

Not so much a paradox as a painful adjustment period. That’s life.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets general freedom national politics & policies

The Freedom to Opt Out

A new administration is poised to take over, with medical care a high priority. There’s been lots of talk, lots of trust put on big government. Unfortunately, the doctors, hospitals, insurers and others that opposed HillaryCare, way back when, now jockey to get whatever benefits they can out of whatever new system that develops . . . which, jumping the gun, they consider a “done deal.”

And yet the simplest, most sensible bit of legislation about health care garners almost no attention.

Introduced by Representative Sam Johnson several months ago, the Medicare Beneficiary Freedom to Choose Act would allow seniors who go on Social Security to opt out of Medicare.

At present, when you retire with Social Security benefits, you are required — forced — to accept Medicare part A benefits. Doctors whom you hire for cash can be penalized.

Quite a system.

You might think anyone who’s for freedom of choice would support the bill.

You might think it uncontroversial, since it simply allows people who have saved money for their own medical care to continue to use that money.

It doesn’t affect anybody negatively. It doesn’t reduce Medicare taxes that anyone is forced to pay. It simply lets people who want to opt out of a bureaucratic system do just that.

And it would save the government money.

Oh, maybe now I get it. The name of the game is money, spending, and . . . regulation of our lives.

“Congress knows best.”

That is the very antithesis of Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies tax policy

State Violence in Vladivostok

While our president was finagling his way to support two out of three of the Big Three automakers, folk in Vladivostak were protesting Vladimir Putin’s new high tariffs on foreign-made used automobiles. As many as 6,000 protesters on Russia’s Pacific Coast took to the streets, some even calling for Putin’s ouster.

Used cars are a big deal on the eastern end of the Russian empire. Over 200,000 people in and around Vladivostok work on — or professionally trade — used cars. The used car business heavily undergirds the economy of the area . . . just across the East Sea from Japan. (I add this topographical note in case you forgot your grade school geography lessons.)

Not only did Putin insist on keeping the high tariffs, he sent in extra police to beat heads. The police attacked not only protesters, but journalists, too — without regard for nationality.

On the Sunday before Christmas, smaller protests were held around the vastness of Russia, including Moscow.

Don’t dismiss the tariff as “mere” economic policy — Putin sure doesn’t. One protester went on record, saying, “First, we have been deprived of our right to elect, now they are taking away our right to choose cars.”

An important lesson for America, too. Government policy skews our ability to choose. Favors to local business (whether by subsidy or tariff) decrease our ability to contract to get what we want. Which, often, includes imports.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets government transparency

Keep Bailing?

Not too happy about the $700 billion financial bailout or billions more for the Big Three automakers? Don’t worry, that’s just peanuts!

The overall government “bailout” is quite a bit larger — as in ten times larger. The federal government — in other words, you and me (and our rulers) — is ready to provide more than $7.7 trillion to bailout whoever might need to be bailed out.

This includes $3.2 trillion already taken from the Federal Reserve by financial institutions. And it also includes money from the Federal Deposit Insurance Corporation and Federal Housing Administration mortgage guarantees.

The total amount of $7.7 trillion is equivalent to half our yearly gross national product. So, should families, when they get in financial trouble, borrow and spend half their yearly income? No, I think this is one of those “don’t try this at home” type deals.

When Congress approved the legislation for $700 billion to establish the Troubled Asset Relief Program (TARP), there was talk of the need for transparency. But there has been precious little transparency for all this other money spewing forth from the Federal Reserve and various government entities.

Paul Kasriel, chief economist at Chicago-based Northern Trust Corp. says, “given that the Fed is taking on a huge amount of credit risk now, it would seem to me as a taxpayer there should be more transparency.”

Yes, how about a smidgen of transparency? Or better yet, an end to all these bailouts.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Voter Intimidation You Can Believe In

Big labor is tired of the private balloting that workers currently enjoy when deciding whether to unionize. The unions want to get rid of such balloting. By law. There’s a bill floating around in Congress that would do this.

Is a President Obama going to sign it?

The unionized share of the work force has shrunk in recent decades. Many employees don’t see the benefit of joining a union. Because voting on whether to certify a union is done by private ballot, one can’t claim that they are scared of retaliation from the boss.

So what would unions gain from a law that bans private balloting?

Well, if union organizers know how people are voting, and people voting know that the organizers know how they are voting, there would be much more opportunity to pressure and even intimidate employees into voting the “right” way.

Unions hope this would help turbo-charge recruitment efforts. As columnist Donald Lambro puts it, passage of the bill would make it “easier to unionize workplaces without the bother of the private ballot to protect workers in a free and democratic election.”

This anti-democratic bill has been around for a while. But now the chances of passage have increased dramatically. Candidate Barack Obama, at least when addressing union crowds, often promised he would push to make it happen. Will he do so?

You can bet the unions are watching. So should we.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Wicked Trimmers of Cost

Robberies. Corruption. Furious government-enabled debt expansion in the name of curing the effects of prior furious government-enabled debt expansion. Murders. War.

And now, carpooling.

Yes, just when you think maybe it really is time to move to Canada to escape American insanity, you hear about how our neighbors to the north are harassing people for daring to save money on gas.

The alleged villain is an online startup called PickupPal.com. This is a website enabling people going places to hook up with other people going places. The site actively fosters collusive cooperation among travelers. My blood boils! Grr!

Two problems with this, if you live in Ontario.

First, Ontario strictly regulates ridesharing. Ontario riders can carpool only to and from work; must ride with the same person every day; may pay that person for their trouble only once a week; may not cross municipal boundaries during the ride; etcetera.

Second, Ontario bus companies are huge fans of these regulations. So the bus companies sued PickupPal. And the Ontario courts have just fined PickupPal over $11,000 Canadian dollars for making possible a $60 ride from Toronto to Montreal. PickupPal must also somehow enforce the Toronto regulations on their website.

Finally, the world is safe again for Ontario bus service.

This is Common Sense. I’m Paul Jacob.

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

Obaminableonomics

There’s a new school of economic thought: Obaminableonomics.

Come to think of it, though, maybe there’s nothing so very new about this Obaminable economic school — after all, it just combines typical big-government redistribution with a few nominal nods in the direction of fiscal self-discipline.

You can get a concise idea of the Obaminable approach to economics from a headline that floated into my In Box the other day. I quote: “Obama Promotes Fiscal Restraint, Big Spending.” According to the reporter, the president-elect “wants to project fiscal restraint even as his economic team assembles a massive recovery package that could cost several hundred billion dollars.”

Huh?

Well, President-Elect Barack Obama thinks he erases the contradiction by contrasting his short-term plans with his long-term plans. Short-term, government must spend like there’s no tomorrow, because this is what we allegedly need to see happening if we are to regain confidence in our future. Yes, we absolutely must see an endless parade of babbling bureaucrats going hog-wild with taxpayer dollars on a wide array of ludicrous, unworkable schemes. Absolutely.

After that, though, will come the line-by-line budget review, the ruthless cutting out of bloat.

Well, any alcoholic will tell you that he can stop whenever he likes. Just so, our rulers keep putting off the restraint of fiscal restraint.

This is Common Sense. I’m Paul Jacob.