Category: free trade & free markets

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free trade & free markets too much government

What About the Roads?

The classic political study Crisis and Leviathan, by Robert Higgs, argues that the state often exploits the sense of urgency that attends a crisis to enlarge itself as the way to “solve” the problem — even when government itself created the problem.

The federal government’s profligate credit policies, which fueled the now-busted housing bubble, come to mind. The government’s “solution” here is to lard some failed companies with subsidies and nationalize others. Why? Oh, no time to think, just hurry up and do it before investors get even more jittery.

Sometimes, though, officials scrambling for a solution consider solutions that might actually help. Crumbling infrastructure is on the minds of many city and state politicians. But the tough economy is also on their minds. Many are therefore more open these days to the idea of private financing of roads
and bridges. As Norman Mineta, former transportation secretary, puts it, ”Budget gaps are starting to increase the viability of public-private partnerships.”

I don’t know about the “partnership” part of it. Too often such ”partnerships” mean that a business is prevented from making good decisions, or is protected from the costs of bad decisions.

If we’re going to delegate a train or road to a private company, let them take full responsibility for it. Companies that succeed will get us from here to there just fine. And taxpayers won’t have to cough up money for the ones that fail.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets general freedom local leaders

Capitalism vs. Caste

An “Untouchable” in India’s caste system has changed his mind.

Chandra Bhan Prasad, an Indian writer and activist, was once the worst kind of socialist. According to a profile in the New York Times, he had been the kind of Maoist revolutionary who “carried a pistol and recruited his people to kill their upper-caste landlords.”

Now Prasad says the best way to lift low-caste members of society out of poverty is to increase economic freedom, let capitalism flourish. He accuses hardcore leftists of “hatred for those who are happy.”

Prasad is conducting a survey of India’s untouchables to learn about the impact of the economic liberalization that has been underway in India since the early ’90s. His survey finds that they are less likely to be confined to the traditional jobs of their caste, like skinning animals. And that they enjoy more social privileges than they once did.

The Times reporter advises that the results of greater economic freedom are uneven, that many untouchables are still mired in poverty while members of the upper caste still possess great advantage. Not very surprising, eh? You can’t expunge decades and centuries of bad policy and entrenched prejudice with a snap of the fingers.

On the other hand, if you want to bring millions out of grinding poverty, the abundant wealth created by capitalism sure comes in handy. Socialism will keep them poor just fine.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Unintended Consequences!!!

Here’s a revelation: A story headlined, “Bailout funds being spent in ways Congress never foresaw.”

What? Our omniscient congressmen failed to forecast the fate of their latest multifarious munificence?

You know, whenever I myself spend hundreds of billions on random questionable socialistic takeovers of the economy, I always demand an itemized account of exactly what I will get in return. Always.

It seems that the $700 billion just authorized by Congress is not only being spent on buying up troubled mortgages but is changing into a “broader bailout of all sorts of troubled businesses.” Some banks used the money to buy other banks instead of to “spur more lending.” And other recipients are paying dividends to stockholders.

Apparently, various central planners of our economy expected those receiving the money to use it in more publicly spirited fashion.

Such caviling ignores the real problem, which is more basic. You can’t cure the effects of gignormous debt creation and gignormous subsidizing of unwise enterprises with even more gignormous debt creation and gignormous subsidizing.

If massive intervention in markets caused the economy to curdle, roll back the massive intervention. Let investors take risks with their own money.

But don’t get drunk all over again, faster and harder, and expect that this time there won’t be any hangover.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets insider corruption nannyism too much government

The Boomers’ Bust

Remember when Bill Clinton ascended to the presidency? There were hurrahs. At last the Baby Boom generation had its own president!

We’ve gone through another Baby Boom president, and now we — and I’m talkin’ ’bout my generation, here — have our very own economic bust. Call it the Boomers’ Bust.

John Kass, writing in the Chicago Tribune, notes how different things look for Boomers, now. “In the ’70s,” Kass writes, “the slogan was ‘Do your own thing.” But today’s slogan might be ‘Washington, please save us.’”

Kass attributes some of the difference merely to age. When we were young, we took risks. Now that we’re older, we simply want to keep our houses and our cars and our TV sets, and our retirement plans.

The ominous marker in all this is the transfer of power. In our desires, demands, for security, we’ve given up a lot. Kass says we are giving up “liberty for all” and exchanging it with “power in the hands of a few.”

We can see it is who gains most: people and corporations on the inside track. But, as Kass points out, look who loses: “The casualty will be the entrepreneurs, those on the outside. . . . Such men and women will be on the outside for decades now.”

Since it was entrepreneurs who accomplished the most enduring good during the last 40 years, this will be tragic.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Socialism Fails . . . in Hawaii

We may have dismal years ahead of us. Democrats ruling Congress while Barack Obama, Mr. Redistributionist, will preside over an attempt to move in lurch step to massive new amounts of spending and taxes.

I write these words before the election, so maybe by the time you hear them, the electorate will have proved me wrong. But, hey: Under a McCain administration the federales would still not likely shy away from big government insanity.

There is, however, hope. When wishful thinking slams head-on into practical reality, sometimes we take stock. Sometimes we even say things like, “Know what? This is dumb and destructive. Let’s stop.”

We saw this in the 1980s and ’90s with the fall of the Berlin Wall, the collapse of the Soviet empire, and the turn toward freer markets in many former Soviet or other tyrannies (and near-tyrannies) around in the world.

And we’ve just seen an example here in the states, in Hawaii. There the state is ending its universal health care plan for children. Why? Because it was getting too expensive.

A government doctor in Hawaii named Kenny Fink reports, “People who were already able to afford health care began to stop paying for it so they could get it for free.” He adds that that this was not the purpose.

Of course not. Socialism is never supposed to kill economic incentives and self-responsibility. It just always does.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

When Good Economists Go Bad

It is weird to watch respected economists leap so far off the beam that you question their sanity.

The number who supported the federal bailout made me shake my head. I guess economists can panic, too, get all doe-eyed in the face of a power grab.

My confidence in sanity returned when I read Nobel Laureate Vernon Smith’s amazingly insightful article in the Wall Street Journal. He argued that the Treasury Department has now committed itself to a kind of auction with which it has no demonstrated competence. Smith’s practical take on the bailout folly reminds me of another Smith, Adam, way back in 1776, explaining why markets work better than governments to create the wealth of nations.

Then, a few days later, Paul Krugman received the Nobel Prize for Economics.

I had read Krugman years ago, and was impresssed with his good sense. But then he began writing op-eds for the New York Times, and, uh, I began questioning his sanity. On so many issues he seems to believe that the best government governs most. And he’s a very pro-Democratic Party partisan.

It is worth remembering, though, that Krugman is a left-winger who supports free trade, attributes Europe’s high unemployment to wage regulations, and regards anti-globalization activists as enemies of the world’s poor.

Maybe his new prize will remind him of his good sense. He might even rethink his allegiance to Party.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

Fear of Falling

The fear of falling is innate. Newborns have it.

The fear of falling prices is different.

What? Who fears falling prices?

Politicians and investors and the big boys in big business, that’s who. When all sorts of prices fall, it means that their plans for ever-upward growth hit the hard rocks of economic reality. And these downturns sure can hurt. A lot.

Yet there’s an awful lot of evidence that you just have to weather these periods. You shouldn’t panic. And you definitely should not try to “prop things up.”

But that is exactly what politicians generally try to do in an economic downturn — they try to prevent some set of prices from falling.

Post-Great War depression in Britain, and America’s own beginning of the Great Depression . . . in both downturns there were huge political forces at work, trying to prevent a sector of prices from hitting their natural floors. In those cases, it was mainly wages that got propped up.

The effect? Massive unemployment.

I’m no economic historian, so I hate to tread these waters. But I’m not going to play Santayana’s fool, forgetting history and then forced to repeat it like Sisyphus’s rock-and-roll classic on permanent skip-repeat/skip-repeat.

So remember: Propping up prices in the past didn’t work. They won’t work now with housing.

This is Common Sense. I’m Paul Jacob.

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Common Sense free trade & free markets

Why Plant Crops?

With the financial crisis and bailout bill, our energy problems have been pushed off the front page. But they’re not gone. We still need energy to run our cars, homes, businesses, you name it.

So, I wanted to address a goofy argument that has been made a lot about drilling for oil in the Arctic National Wildlife Refuge, way up north in Alaska. Some say that we shouldn’t drill because it won’t do anything at all to help lower the price of gas now.

We’re continually told that it will take seven to ten years for the oil found there to be pumped out, processed and pumped into our cars as gasoline.

Not shocking. It’s true. Most things do take some length of time to fully accomplish.

Say you order an appliance. It’s days before delivery. Have an idea for a book? It takes time to write, edit, and publish it. You’ll have to wait to get your first copy.

You know, the price of food is up, too, in part because of America’s stupid ethanol policy, which we’ve talked about before. Apply the logic of anti-drilling advocates and we won’t plant crops anymore because, after all, no food pops into existence ex nihilo, instantaneously. It takes months before harvest. Even longer for the food to trundle off to market.

So, why plant? Why drill? Why buy that book, knowing that you can’t read it until you get home?

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Designing a Cartel

Interior design: Most homeowners wing it, but a few call in the professionals.

Regulation of interior design: Most states just let our nation’s Graces freely contract with willing Wills. But a significant number of states, including Oklahoma and Connecticut, regulate these designing women and men.

Why? Have you heard a horrified outcry of Upton Sinclairesque proportions? I sure haven’t. I’m sure old Upton would have cooked up some story, if it had crossed his mind. He believed in regulating everything. He hated free enterprise, enough to lie for his cause.

So, who hates freedom of contract enough to regulate the industry?

Why, the industry itself!

A study released last year by the Institute for Justice shows that one group of interior designers, the American Society of Interior Designers, has been pushing regulation for years. Why? For one clear reason: to clear out the competition.

On the bright — or at least pastel — side, the group hasn’t been all that successful recently. So the group has raised its membership fees, redoubled lobbying efforts.

In response, a competing group, the Interior Design Protection Council, joined with the Institute for Justice to declare the month just passed, September, as Interior Design Freedom Month.

It’s too late to celebrate. But — wait a second — shouldn’t every month be Interior Design Freedom Month?

This is Common Sense. I’m Paul Jacob.

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

Don’t Bank On It

It’s not a chorus.

If you’ve been watching the “debate” over how best to con American voters into giving troubled banks $700 billion for bad loans, you might think it’s a chorus in the financial industry, especially from bank presidents.

You might assume they’re all shouting: GIVE US THE BAILOUT MONEY! NOW!

Not so. At least one banker dissents. John Allison, president of BB&T — with $136 billion in assets and 1500 branches — sent an open letter to Congress protesting the bad economics behind the bailout. He notes that his own company, though affected by the downturn, is in a much stronger position than many of BB&T’s competitors.

Why? Well, his bank did not join the orgy of bad lending, despite the enticement of the Federal Reserve’s easy credit policies and government pressure to give loans to bad-risk borrowers.

So why should the government reward the bad economic conduct of institutions that played along with the bad government policies? Why make it harder for the economy to recover by punishing sound and productive economic conduct with burdensome new government taxes?

Allison thinks the debate has suffered from domination, as he says, by those “financial institutions [that] made very poor decisions.”

Perhaps it’s because politicians have a whole lot more in common with foolish decision-makers than wise ones. . . .

This is Common Sense. I’m Paul Jacob.