Category: free trade & free markets

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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.

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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.

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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.

Categories
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.

Categories
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.