Category: moral hazard

When in Rome

Italy, housing, corruption, government, bureaucracy

Americans concerned with government corruption really should study Italy.

Why?

“You know Italians,” septuagenarian Elio Ciampanella was quoted in the New York Times last week. “If there is a law, they will try to find ways to go around it!”

But it is not just ordinary citizens — the people — who are evading bad laws. It is government workers who won’t do their jobs, and who engage in a wide range of corrupt deals and shady incompetence.

I know, this seems awfully unfair to the Italians. What I’ve said is the case with governments around the world. But not equally. (Scandinavian countries have a long history of government worker probity, if not ultra-competence.) And Italians do have a well-earned reputation for government corruption.

Arguably, it’s the form freedom takes in Italy.

Be that true or not, Mr. Ciampanella’s story, as related in the Times, is a fascinating one. He asked for a government-subsidized apartment, and had to wait ten years to get one … only to discover the problem wasn’t a lack of apartments, but a surfeit.

Yes, the government owned too many apartments to keep track of!

And so they didn’t.

And gave special deals to “special people.”

In other words: incompetence and corruption as a way of life.

Market institutions that behave so chaotically and with so little attention to efficiency go out of business. But government? That’s “necessary,” so: too big to fail. And so, commonly excused.

No wonder, then, that the common-sense approach to government is to limit it.

This is Common Sense. I’m Paul Jacob.

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Tags bureaucracy, corruption, housing, Italy

folly free trade & free markets meme moral hazard national politics & policies

Trump’s Dangerous Idea

Donald Trump, trade, protectionism, Donald Trump, war, borders, Bastiat

A lot of people were impressed by the reasonableness of Donald Trump’s foreign policy speech yesterday … despite the usual hyperbolic promises of “best” and “great” and “beautifully.”

Its general tenor? Refreshing. Rejecting post-Cold War foreign policy for a return to “national interest” and “America first”? Long overdue. Like Trump, I think we should eschew nation building.

But still there is that one big problem: Trump is a mercantilist. He believes in protectionism. He thinks that trade has to be “fair” in order to benefit both participants. He thinks NAFTA and similar trade agreements (which generally promoted trade while still reserving a lot of room for government futzing about) are what hurt American industry. Trump is always blaming the “bad deals” made with Mexico and China, rather than placing the blame where it squarely belongs, on

America’s world-high corporate income tax, and
chaos of regulatory excess, and
impenetrable tax code.

But protectionism makes sense to a lot of people. They are incredulous when they hear the (well-established) idea that free trade — even unilateral free trade — is a benefit to the people who live under it.

Surely, they snort, when you target aid or protection to some industries, you are doing good, right?

Wrong. Oh, yeah, of course protectionism protects the chosen few, the advantaged. That’s what it obviously does. But it doesn’t protect the general interest – consumers pay more and producers allocate resources to less valued uses.

You have to look beyond the obvious (“the seen”) to get the full picture (“the unseen”).

Trump’s at his most dangerous right here — forget his loose talk — by continuing to pretend that protectionism helps America.

We cannot afford another Smoot-Hawley.

This is Common Sense. I’m Paul Jacob.

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Tags 2016 Presidential race, Bastiat, borders, Donald Trump, Presidential campaign 2016, protectionism, trade, war

ideological culture media and media people moral hazard nannyism national politics & policies

Austan Antic, Hey!

Austan Goolsbee , Bill O’Reilly, Bernie Sanders, free stuff

The other day, Fox News Network’s Bill O’Reilly asked University of Chicago economist Austan Goolsbee a question. The subject was the socialistic gimme-gimme attitude of youthful Bernie Sanders supporters. The previous segment, “Watters’ World,” had paraded interviews with a handful of college students, asking them to clarify just how much free stuff they wanted.

It was a funny segment, if you think young people talking foolishly about government is funny.

Calling Sanders “the Giveaway King,” O’Reilly asked Goolsbee his general impression of the gimme-gimme attitude. It was the softest of softball questions. “What do you think about that?”

Talk about open-ended. Any response given thus says a lot about the interviewee, seeing how broad he may answer.

“Well, look, I’ve told you I’ve never been a big fan of socialism,” spake President Obama’s famed advisor. “I’m an economics professor.” Chuckling, he went on. “I’ve got the sense you don’t want these people getting free air to breathe. You’d like them to mail in their checks to make sure they work for it.”

Goolsbee could have started off as sensibly as he ended: “I’m against free stuff. Socialism doesn’t work.…”

He didn’t. He immediately reduced O’Reilly’s position to that of a straw man, using the reductio ad absurdum.

Why? For levity’s sake? Well, both O’Reilly and Goolsbee were jovial.…

But his nasty quip fulfilled a purpose, making sure that ideologues on the left continued to have license to think the worst about their opponents.

Thus Austan Goolsbee, despite his protests, carried water for crazed socialism.

This is Common Sense. I’m Paul Jacob.

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Tags Austan Goolsbee, Bernie Sanders, Bill O'Reilly, free stuff

Accountability folly ideological culture incumbents moral hazard political challengers

What’s Principle Got to Do with It?

Post author By CS Admin
Post date April 26, 2016
1 Comment on What’s Principle Got to Do with It?

Maryland Primary, Chris Van Hollen,Donna Edwards, super PAC, the National Rifle Association, NRA

Today’s Maryland Primary features a competitive race to replace Democrat Senator Barbara Mikulski, a 30-year veteran. Two House members, Chris Van Hollen and Donna Edwards, are seeking the Democratic nomination.

“[T]his is a contest between two candidates,” National Public Radio’s Kojo Nnamdi notes, “who agree on 99 percent of the relevant issues.”

The campaign got interesting, however, with an attack ad first run by a super PAC, Working for Us, and then by Rep. Edwards’s campaign. The ads hit Van Hollen for a special deal he had made trying to get his 2010 DISCLOSE Act passed. The legislation aimed to force non-profit groups to disclose their donors to the government.

Fearing the hostility of the National Rifle Association, Van Hollen cut a backroom deal exempting the gun rights group, along with several other powerful liberal organizations.

Whatever one thinks of the DISCLOSE Act — and I’ll proudly disclose my contempt — shouldn’t we all agree that drafting laws that apply to most groups except those with political clout is flat-out wrong?

Rep. Donna Edwards, an original co-sponsor of the DISCLOSE Act, wasn’t amused by Van Hollen’s sell-out. She withdrew her support.

I don’t agree with all her principles, but I am glad she has some.

In Washington, it’s lonely for the principled. President Obama came to Van Hollen’s defense. So did the Washington Post, praising Van Hollen (editorially) as a “leading champion of gun safety,” and via Glenn Kessler’s Fact Checker column, which twisted logic to award the Edwards ad three Pinocchios. Democratic congressional leaders, Nancy Pelosi and Harry Reid, also lauded Van Hollen and attacked Edwards.

Washington: city of celebrated sell-outs.

This is Common Sense. I’m Paul Jacob.

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Tags Chris Van Hollen, Donna Edwards, Maryland Primary, NRA, super PAC, the National Rifle Association

Accountability folly free trade & free markets general freedom moral hazard nannyism national politics & policies

Bailed — Before Bailout

health insurance, experts, obamacare, insurance, costs, illustration, meme

Last Wednesday, UnitedHealthcare Group Incorporated (UNH) announced that it will drop coverage of plans under Obamacare in all but a few states by 2017.

The market signaled a thumb’s up: UNH stock prices shot up over 2 percent.

The company, described in the news, somewhat vaguely, as the country’s largest insurer, is sending us a signal: the Affordable Health Care Act and its “Obamacare”?

Not affordable.

An insurance policy must make sense to both parties, the insured and the insurer. The insured gets peace of mind … and coverage when the rare events insured-for take place. The insurer has written enough insurance contracts out there, prices based on actuarial risk, to allow it to make a profit even with payouts.

The problem with the ACA is that it raised costs (in part by forcing insurers to take on patients with pre-existing conditions) while regulating terms of policies offered … and prices, too.

Plus, face it: the idea that one should insure for regular checkups is just one of the many absurdities built into the system.

It’s just too much meddling to work, in the long run. Bailouts and subsidies of those insurance companies that stick with the plan will then make the program unaffordable … for America’s taxpayers.

Over-regulated and over-subsidized, Obamacare suffers from the preposterous idea that a bird’s eye view of the economy from the politicians’ perch gives enough information to run complex systems servicing millions of people with diverse needs.

Expect more big stories with tags lines ballyhooing a “serious blow to Obamacare.”

This is Common Sense. I’m Paul Jacob.

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Tags Affordable Healthcare Act, experts, health insurance, ObamaCare

Accountability moral hazard national politics & policies political challengers responsibility

Obscene Amounts

George Clooney, Campaign finance, money, big money, election, Hillary Clinton

Actor George Clooney, star of the current Coen brothers picture, Hail Caesar!, is a major fundraiser for Hillary Clinton. When asked on NBC’s Meet the Press if the $353,000 per couple dinner he organized last Friday constituted an “obscene amount of money,” he answered, simply, “yes.”

Clooney went on to explain, “It’s ridiculous that we should have this amount of money in politics.”

He’s an advocate for campaign finance reform. He is, specifically, “against” Citizens United, though he doesn’t know that it isn’t a law but a Supreme Court case that overturned previously passed legislation that regulated what people and corporations could do to support or oppose (or mention) candidates in elections. The government, authorized by the campaign finance legislation, had suppressed a movie.

Interestingly, that movie was a polemical documentary against … Hillary Clinton.

Campaign finance regulation has been shown to help incumbents. Not unexpectedly, since the regulations are written by sitting legislators against their competitors.

But “getting money out of politics” would advantage other groups, too. For example, one consequence of limiting political donations would be to nudge challengers to (a) be rich and mostly self-funding (like Trump is said to be), and (b) be more demagogic, leveraging the “free” publicity from major media.

More demagogues aren’t needed.

But then, the whole issue is demagogic, appealing to the knee-jerk reaction of everyday people who are, indeed, often nonplused by how others spend their money.

As for Clooney, he’d like not to have to spend money for his candidate.

We’d all like the important things in life to just happen. But it turns out we have to work for what we want.

This is Common Sense. I’m Paul Jacob.

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