Category: free trade & free markets

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

$700 Billion Bad Bet

The administration’s proposed $700 billion bank bailout has finally passed the Congress — in large part because of fear that the economy would crumble if “something” wasn’t done.

But the magic men in Washington don’t have any guaranteed fixes in their bag of tricks. Certainly robbing the taxpayers of $700 billion — that’s a billion, 700 times — won’t cure the economy.

It will, long run, hurt the economy. How? By hampering realistic adjustment to current market conditions. It means taking $700 billion from productive economic activities to buy up debt at prices nobody in the private market is willing to pay. As economist Arnold Kling points out, “If [Bernanke and Paulson] were taking their plan to a venture capital firm to seek funding, they would be laughed out of the office.”

How did we get here? In previous years, the federal government compelled banks to give mortgages to persons who really couldn’t afford them. Meanwhile, the easy credit policies of the Federal Reserve made it easy for banks to obey these irresponsible demands.

Hence the housing bubble. Which popped.

The only long-term solution is to get the government out of the market. Stop trying to paper over the horrendous consequences of past government interventions with even worse government interventions. The free market ought to be free. Otherwise, we’ll one day end up with no market at all.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

When Do We Become Adults?

What is being an adult all about?

Doesn’t maturity have to do with taking responsibility for your life, for your decisions?

Of course, it is often appropriate to ask for help, to underwrite dreams or salvage the shipwrecks of them when we screw up.

But even when seeking help, you do it like a grown-up rather than, say, a whining child. You ask for the help. Politely. As opposed to assuming that other people just owe it to you, to heck with their own circumstances and priorities.

Yet government now subsidizes every big-ticket project on our every wish list, hurling more money at us when we botch the job. It’s as if they’re paying us to be irresponsible.

No shock, then, when people do in fact act irresponsibly, buying homes or making loans they can’t really afford.

Ford, GM, and Chrysler — the Big Three of American automakers — now ask for a $50 billion low-interest loan from the U.S. government. Why? So they can modernize their plants to make more efficient cars. What, just $50 billion?

What about me? I need to re-shingle my roof.  Please, government, give me a million. Just take it from my neighbors, no problem.

You know, if Chrysler had been allowed to fail back in Iaccoca days, GM and Ford may have learned a lesson — grown up — and wouldn’t think to ask for handouts today. Or need to.

This is Common Sense. I’m Paul Jacob.

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

A Question Worth Asking?

The presidential candidates talk about leadership and change. What’s the one question that combines both, but is not asked? Simple: What happens if it all comes crashing down?

After the worst stock market drop since 9/11, the question doesn’t seem so out of place. Our federal government’s debt is rising fast. Even if we balanced the budget tomorrow, the government would have a deep, multi-trillion dollar debt. Trillions and trillions, you might say.

So, Mr. Obama; so, Mr. McCain — what do you do when the Treasury can’t find anyone to invest in all the debt we have created, and must maintain? What do we do when the compounding of interest and increased deficits make monthly maintenance impossible?

Neither of you have even suggested a balanced budget early in your first term. So what do you do when our credit goes crunch?

Add to this the federal government’s obligations to the citizenry, in the form of Social Security retirements and Medicare and pensions and such, and what can you do?

How do you stave off — or, if not, survive — a worldwide depression?

The scenario is not fantastic. Just look at current figures and crunch the numbers.

So, what would Senators Obama and McCain say? I’d be curious what Bob Barr and Ralph Nader would say, too. Have they thought of the possibility?

This is one question that sure would make the upcoming debates interesting.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets local leaders too much government

Gateway Capitalism

You’ve heard of “gateway drugs.” What about “gateway capitalism”?

The mayor of Clayton, California, apparently believes that two little girls selling zucchinis and melons by the roadside is the start of something bad.

The city cracked down on Katie and Sabrina Lewis’s veggie stand. Mayor Gregg Manning defended the bust, saying that “They may start out with a little card-table and selling a couple of things, but then who is to say what else they have. Is all the produce made there, do they make it themselves? Are they going to have eggs and chickens for sale next?”

Heavens! Capitalism run amok! Streetside vendors are to be allowed only when city governments run the show, as in the growing movement to establish old-fashioned day-markets. You know, Saturday Markets and Sunday Markets and the like.

But veggie stands, like dreaded lemonade stands, are illegal in Clayton.

You can understand the concern, I guess: Traffic problems. This police operation started off on one complaint. But most neighbors defend the stand, saying that traffic was never a problem.

So now 11-year-old Katie has gotten political. She circulated a petition to reopen the stand, and has lots of signatures. Best of luck to Katie and Sabrina, but I am afraid that the lesson you’ll really be learning isn’t about capitalism at all. It’s about bureaucracy.

And an awful void of common sense.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets nannyism

Jerry Brown’s Latest Trip

Some politicians are loathe to allow freedom of action even when they’re going out of their way to allow freedom of action.

California Attorney General Jerry Brown doesn’t want the federal government to harass patients who use medical marijuana, or to harass those who provide it. To implement this laissez-faire policy, Brown wants to make darn sure that any businessmen who provide cancer patients with marijuana are the ones who get raided and arrested.

What’s going on?

Cannabis for medical use has been legal in California since 1996, when voters passed Proposition 215. The federal government has not been playing along, however.

To clarify things, Attorney General Brown has issued an 11-page guideline to help “legitimate patients” avoid being arrested. The guidelines also confirm the legality of medical marijuana co-ops. Brown hopes that under the new guidelines patients will steer clear of the unapproved dispensaries.

Who is an unapproved provider? Anyone who actually makes money selling medical marijuana. Supposedly, it’s okay for a cancer patient to ease his pain with the plant, so long as there is no economic incentive for anyone to help him ease it. It must be done by nonprofit co-operatives.

Bruce Mirken of the Marijuana Policy Project doesn’t agree that socialist medicine is good, capitalist medicine bad. “Last I heard,” he says, “Walgreens isn’t a charity.”

He’s right.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Bootless Economic Policy

When I was a kid, what we now call flip-flops were called thongs. When I use the word “thong” about footwear, today, I get funny looks from the kids.

Whether it’s today’s thong, or yesteryear’s, both are skimpy. When you walk, the footwear goes “flip flop, flip flop”; what happens to the underwear, well . . .

Modern Democratic Party economic policy is like the underwear — it quickly creeps into uncomfortable places. Republican economic policy resembles the Democrats’, but also the footwear. Take John McCain’s economic policy: “flip flop, flip flop.”

Recently, McCain pompously took credit for “putting” and “keeping [Americans] in their homes.” Give me a break! He’s not paying the mortgage. I liked it better when, after the housing bubble began to burst, McCain said we should be wary of subsidizing bad business decisions with a massive bailout.

But not long after saying that he then specified a whole bunch of bailout measures. Flip. Hillary Clinton chortled that at last he was getting it, but he wasn’t going far enough.

His basic problem, though, goes back to his philosophy. He said that he’s “committed to using all the resources of this government and great nation to create opportunity and make sure that every deserving American has a good job and can achieve their American dream.”

Flop. To ensure his goal, he should not use all the resources of government!

Sometimes less is more. Like . . . sandals.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Wind Turbine Blues

I’m all for alternative sources of energy . . . providing that they actually produce enough to cover their costs.

Sad to say, it’s beginning to look like wind power is for the birds, if not the bats.

One big fear some people had about wind turbines was that they might kill too many birds. Think giant food processors in the sky.

But it turns out that the bigger danger is to bats. Dead bats are found all around wind turbines. Why?

Wind pressure. The poor little creatures can’t stand the quick change in air pressure around those spinning blades.

Meanwhile, the Massachusetts Technology Collaborative, the government agency overseeing the state’s rebate programs for alternative energy, has put a halt to subsidizing small wind turbines. No more bucks for housetop windmills, folks.

The agency sponsored a study that has calculated that the average energy output for the turbines reviewed was no more than 27 percent of what installers had projected. It could be worse, and sometimes is. In Britain, a study found that some poorly placed turbines sucked up more energy converting current from DC to household AC than produced, making them economic and energy sink holes.

We should remember, when activists start talking about revolutionizing things, that subsidies are for the birds, and technology based on hope alone, bats.

It’s from successful business operations that future revolutions come, not from mere wishful thinking. Or any amount of government subsidy.

This is Common Sense. I’m Paul Jacob.

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

McCain’s Admission

John McCain is a man on a mission. But it was his admission that Republicans in Washington have lost their way that jumped out at me as I listened to his speech accepting the Republican Party presidential nomination.

“I fight to restore the pride and principles of our party,” he told Republicans. “We were elected to change Washington, and we let Washington change us.”

Everyone already knows this. We’ve watched power politics triumph over principle.

But it was still nice to hear McCain say it. The first step toward solving a problem is to recognize you have one.

McCain went on to admit, “We lost the trust of the American people when some Republicans gave in to the temptations of corruption. We lost their trust when rather than reform government, both parties made it bigger.”

Oh, yeah, a whole lot bigger.

I began shouting about Republicans selling out principle early on, when, after Republicans took the House back in the 1990s, they quickly also took a dive on enacting term limits.

And the sell-outs just kept coming. Republicans traded their rank and file supporters for a bevy of big special interests.

McCain says he wants to take the party “back to basics,” vowing “low taxes, spending discipline, and open markets.”

That’s the right message. And McCain’s opposition to earmarks is to his credit. But are voters ready to believe it?

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Stay Awake for the Brownouts

Years ago, I would actually listen to lectures by economists on how the electric grid might function better. Pretty much only one thing remains in my head, the conclusion: Regulatory agencies and government-run electrical companies tend to be very inefficient when it comes to capitalizing their enterprises.

Have you nodded off, yet?

Sorry. There’s always been something a bit boring about these discussions. But the subject matter is really worth staying awake for.

Why?

Well, experts predict that in as soon as three years, Washington, D.C., Virginia, and Maryland — the area where I live — will be enduring rolling brownouts.

It’s not the fault of PJM, the already-regulated electric transmission company servicing the area. It’s the fault of members of Virginia’s State Corporation Commission and Maryland’s Public Service Commission.

Yes, ever more people are moving into the area. But the officials in charge of allowing new electric infrastructure to be set in place are refusing to grant permission to lay down the miles of new high-voltage electric lines the increasing demand requires.

What’s their rationale? Board members say they need more studies. Bureaucrats love studies. Could it be that friends and family and business partners of the board would be amongst those doing the studies?

I bet economists would have a less incendiary explanation. But the upshot is clear. Bureaucracies can be dangerously slow institutions to rest progress upon.

This is Common Sense. I’m Paul Jacob.

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Accountability Common Sense free trade & free markets insider corruption

A Real Reform for Obama

Barack Obama’s record as a maverick, either in the U.S. Senate or his years as an Illinois legislator, is slender at best. Behind the self-avowed reformer’s rhetoric, his policies seem typical, demanding ever-bigger government, ever-more intrusive government.

But there’s at least one reform practiced by candidate Obama that could yield some very good changes indeed: His rejection of government funding of presidential campaigns.

Note I say “practiced by,” not “advocated by.” Obama has opted out of the system for tactical reasons only. In doing so he broke a promise earlier in the campaign that he would accept matching funds – along with the limits on his own general election spending that this would entail. But he had scooped up so much financial support so fast that he decided it would be shooting himself in the foot to accept spending restrictions.

Obama may be uncomfortable with his flip-flop. I applaud it – no, not the hypocrisy of it, but the example it sets for policy.

We should never force taxpayers to fund campaigns they may not support. And while we’re at it, let’s cut away the tangle of campaign laws regulating how much money we can give a candidate, or what and when and where we can say things about candidates.

If Obama could sign on to that proposal, he could really punch away at McCain on the issue. Obama would then be advocating real reform. Real good reform.

This is Common Sense. I’m Paul Jacob.