Category: national politics & policies

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

A Million for Each Congressperson

A business filed for bankruptcy last week.

These have been tough times, so that’s not a shock. What makes the story juicy is that the FBI raided the company’s headquarters two days later.

The company? Solyndra, a solar panel manufacturer. A few months earlier, it had been boasting a profitable return on investment. And, as President Obama had proclaimed the previous year in a visit to the California outfit, Solyndra was precisely the kind of company that deserved federal government assistance. It was so cutting edge, so innovative, that it deserved a huge loan guarantee, to the tune of $535 million.

The raid occurred on the same day as the president’s “jobs” speech last week. Yet, Mr. Obama neglected to include an update on his administration’s previously self-praised policy of industrial subsidy pertaining to that very company.

Republicans are making much of this. They are themselves not immune to (indeed, during the Bush years they excelled at) just this sort of corruption.

And it is corruption. The Solyndra deal went down after major investors in the company gave millions in support of the Obama presidential campaign. It was fast-tracked as part of the federal government’s Keynesian “stimulus” spending.

This is how the politics of modern mercantilism — of systematic “business-government partnerships” — works. The moneymen support the politicians who support the moneymen.

It’s one way to get rich.

And gain (and maintain) power.

But it’s not good for the country.

This is Common Sense. I’m Paul Jacob.

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Common Sense general freedom national politics & policies

The Same America

This episode was written immediately after the events of 9/11/01.

This is war. And on our shores. Thousands of American citizens murdered in cold blood. But despite our pain and suffering as a people, we are still strong. Not only militarily, but also in our love of freedom and our commitment to defend it come what may.

Some have argued that America will never be the same. In a sense that’s true: we’ll certainly never forget this savage and senseless attack. And we have much work to do to make certain it doesn’t happen again. But it’s important to be careful how we go about it.

In the wake of this unprecedented brutality, two out of three Americans say they would be willing to trade some civil liberties to get more security. But this is isn’t our real choice. Nothing about increasing our security requires abridging our civil rights. We don’t have to let the terrorists win, not in any respect. For these terrorists would like nothing better than to knock America off our foundation, our principles, the things that make us truly the greatest country the world has ever known. They hate our freedom. Let’s sustain that freedom. Let’s show the whole world: we are the same America.

The same America whose rifle shot for freedom was heard ’round the world in 1776, and is still being heard today. The same America that freed Europe from the Nazis and Asia from imperial Japan. Let it be known in the face of this terror today that we are indeed the same America, the land of the free and the home of the brave.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government

Off to See the Wizard?

Tonight, President Barack Obama will ride down Pennsylvania Avenue with his sinking approval ratings, to stand beside our most unpopular Congress ever, so he can give a speech about jobs (before the football game starts). Our prez is a good speaker, but I doubt this speech will do any more to soothe our economic stress than have past speeches.

Speeches don’t create wealth — or jobs.

But image can entice votes, and with the election year rapidly approaching, he needs to look like he has a plan.

Or at least a clue.

So, the White House back room boys have been busy re-packaging. News reports say the president will suggest spending $300 to $400 billion to stimulate the economy. But he won’t use the word “stimulus.” For some reason, that word rings hollow.

Rest-assured, his non-stimulus stimulus will be “revenue neutral.” In other words, the spending will happen now while the offsetting spending cuts (or tax increases) will happen . . . later.

Not every provision of whatever plan Obama orates will be a terrible idea, but the thrust of it — the notion that with proper central planning and fiddling by our wizard-in-chief the federal government can create prosperity — will be tragically mistaken.

We need a president who understands that Americans could pick themselves up, dust themselves off and get moving economically . . . if only Washington politicians would stop stage managing the whole show.

This is Common Sense. I’m Paul Jacob.

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national politics & policies

The High Rise Before the Fall

Many Americans who have never driven in ol’ London town have driven over the London Bridge — in Arizona. I’m an outlier, here, in that I’ve been over many a London bridge, but not to Lake Havasu’s.

But that doesn’t make me an expert on the Shard London Bridge, a London skyscraper (yes, skyscraper) nearing completion. Popularly called “The Shard,” it will be the tallest building in Europe.

So prepare yourself: Expect a major economic collapse in the old country.

Yes, for the last century, the building of record-height skyscrapers could have served as a leading economic indicator . . . of disaster. As Mark Thornton explains, record-setting skyscraper construction is

a sign of a looming economic crisis. The model has successfully identified the Panic of 1907, the Great Depression, the Stagflation of the 1970s, the Tech Bubble, and the Housing Bubble.

In a scholarly paper on the subject, Thornton cautions not to use this strange correlation “as a guide to fiscal and monetary policy” or, superstitiously, an excuse to regulate “skyscraper heights . . . to prevent economic crisis.”

But the connection between building heights and boom-and-bust remains suggestive. Extra-big skyscrapers rise during extra-big booms, themselves fueled by central bank credit inflation. That is, inflation — and its usual consequences (which include unexpected deflation and financial collapse).

If only our central banks could maintain a stable money supply, rather than constantly tinkering with money to fine-tune the economy, our biggest buildings might not serve as such good predictors of our biggest economic downturns.

This is Common Sense. I’m Paul Jacob.

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Accountability national politics & policies

The Last Dark Chapter?

Last week, the Presidential Commission for the Study of Bioethical Issues revealed that United States federal government researchers purposely infected unwilling Guatemalans with deadly sexually transmitted diseases (syphilis, gonorrhea and chancroid) back in the 1940s.

Between 1946 and 1948, U.S. personnel experimented on more than 5,000 Guatemalans — including prisoners, mental patients, and even children — without their consent. At least 83 Guatemalans died during the project.

In at least one case, a woman dying from the syphilis she had been given was infected with other diseases to boot. Unconscionable.

One commission member, Raju Kucherlapati of Harvard Medical School said, “These researchers knew these were unethical experiments, and they conducted them anyway.”

Anita Allen of the University of Pennsylvania added, “These are very grave human rights violations.”

Commission chair Amy Gutmann pointed out that, “This is a dark chapter in our history. It is important to shine the light of day on it.”

She’s right. And note that this dark crime was committed by members of America’s “greatest generation.” When some people have power over others bad things seem to happen — throughout history, even among people like us. Not surprisingly, holding power accountable, especially when it’s exercised thousands of miles or oceans away, has proven mighty difficult.

This ought not be repeated. If we are the government, we must do something about it. But in an era of secret CIA prisons, what’s really to prevent it from happening again?

This is Common Sense. I’m Paul Jacob.

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Accountability national politics & policies

Mann FOIA Dump

Michael Mann’s Last of the Mohicans was a great film.

But the work of Michael Mann the climatologist?

Quite another story.

He’s the biggest name behind the much-disputed “hockey stick” graph of world temperatures — the “hockey stick” being the shape of the upward temperature spike in recent times. Mann was also one of the biggest offenders in the Climategate scandal, where emails showed more politicking than objectivity going into how climate models were concocted and presented to the public.

In May, a Virginia state judge ordered the University of Virginia to release Mann’s data and emails under the state’s Freedom of Information Act. Attorney General Ken Cuccinelli and the American Tradition Institute (ATI), smelling something fishy in Mann’s work, sued for access to the basic data. ATI now has a disk with info, saying the info dump is about a third of what they requested.

ATI folks haven’t had time to study the data.

Mann has been exonerated from the charge of “research misconduct” by the National Science Foundation — the organization found no “direct evidence” of “data fabrication or data falsification.” Still, Mann’s obvious bias continues to do more than raise eyebrows.

Ronald Bailey, who reports on all this for Reason, yearns to make FOIA battles superfluous. He urges “publicly funded researchers” to place their raw data up on the Internet for public testing — true transparency (and completely in the spirit of scientific method).

Well, that might happen . . . after a few more FOIA battles.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government

Default by a Thousand Cuts

Alan Greenspan half-smilingly argues that U.S. Treasury bonds will never be defaulted because “we can always print money.” How reassuring.

It’s one thing to pull money out of the proverbial magic cookie jar and place it in bank ledgers (“high-powered money,” or QE1, QE2) while people are substituting consumption with saving, fearful of the near-term prospects (increasing their “demand for money”). It’s quite another to do that while people expect prices only to rise. Massive increase in the supply of money (“printing money”) while people anticipate inflation (lowered “demand for money”) can lead to runaway inflation, hyperinflation.

America hasn’t experienced that since the Civil War. But Germany has (after World War I), as has Zimbabwe (just recently). It can ruin a whole way of life.

After Germany’s hyperinflation, Nazism arose.

Greenspan may have been trying to make a subtle point, but the blunt point remains: Default is likely, for inflation itself serves as a form of default. Under Greenspan’s scenario, the Federal Reserve, conspiring with Treasury, would, by “simply” printing money, pay debt with decreased-value dollars.

The ancient Chinese had a perverse form of torturous execution: Death by a thousand cuts. Inflation is like that, it’s torture for almost everyone, default by a . . . gazillion devaluations.

The only way around this is to make very different cuts — in federal spending.

That’s not torture, that’s the road to recovery.

It’s unlikely, of course, because, to politicians and insiders, cutting spending seems like torture.

This is Common Sense. I’m Paul Jacob.

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

Big Government Bigger Than All Else

No sooner had the president signed the new debt limit, and then up went federal debt — to $14.58 trillion.

Brave new world, that has such numbers in it.

What’s so amazing about this number is that it is larger than last year’s GDP of $14.53 trillion.

I know, Gross Domestic Product figures are a mess, and don’t measure exactly what we think they measure. But they are the most popular form of national income accounting, and indicate, in a very rough sense, “the size of the economy” for a given year.

And, boy, for our federal government to owe the amount of the whole economy it rules, and more — what a milestone!

The last time debt was more than GDP? The late 1940s.

Recovery happened swiftly, then. This should give us hope: There is a way out.

But remember: World War II didn’t bring us out of the Great Depression, the end of the war did.

And remember, further: Most of the big names in economics — by then, Keynesians all — had predicted a huge economic downturn as government spending plummeted and wartime regulations (chiefly wage and price controls) hit the dustbin.

Bad prediction. The economy soon took off.

Why? Less government spending, less regulation.

Alas, I don’t see that happening, today or tomorrow. With the budget deal, overall spending is now set to rise still further. The medical industry — a huge growth sector for government spending as well as private spending — is set for increasing regulation.

Brace yourself.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government

Fiddling in the Flames?

The president and congressional leaders came to some sort of an agreement last night. It sounded a tad vague to me. Apparently, politicians still fear taking pride in identifying actual cuts.

Harvard economist Jeffrey Miron, writing last week, argues that the deals then on the table amounted to “fiddling while Rome burned.”

The only thing surprising about the above sentence, to savvy readers, might be the suggestion that “Harvard economist” is not a contradiction in terms. But hey: Judge for yourself.

“The problem with the Democratic position is that it regards redistribution, rather than economic productivity, as the prime goal of government policy,” Miron reasonably asserts. The problem with the Republicans? A “refusal to distinguish between the tax revenue that comes from higher rates and that which comes from fixing tax loopholes that inappropriately privilege certain consumption or production.”

Higher tax rates won’t work, because “the available revenue from the wealthy is far too small. And higher taxes discourage economic growth, making deficits worse.”

But Obama’s idea of closing some loopholes is not a horrible idea, Miron argues. These so-called loopholes are bad policy to begin with, integral, as they are, to bipartisan folly, favoring some folk at the expense of the rest. Picking winners — what some tart up as “industrial policy,” but most of us identify as “buying votes.”

Miron says that Medicare, though, is the biggest ongoing fiscal destabilizer. Cuts must be made there.

Those will likely be the hardest to secure.

This is Common SEnse. I’m Paul Jacob.

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free trade & free markets insider corruption national politics & policies

The Clipping and Culling Crisis

I just came across a paper on an old bout of hyperinflation — the “Kipper- und Wipperzeit” financial crisis in 17th century Germany — worth studying, considering that today’s smart money is on the radical debasement of today’s already-undermined dollar.

The Kipper- und Wipperzeit hyperinflation started out as a government program to bilk the people of wealth, but got out of hand. It became a free-for-all.

Back before credit money and fiat money, governments made special deals with miners and minters and the like, to coin money to spec. Those insiders put less metal into the coins than before, but called the coins the same. Debasement, pure and simple: Theft — fraud, to be exact.

It helped make a few major fortunes, fund some wars and the like.

But apparently moneylenders caught on, and began “clipping” the coins. Minters employed subcontractors to look for better-quality coins in circulation, paying for them in clipped coins. Soon everyone was clipping coins, and then culling them (hence the term “Kipper- und Wipperzeit” — “clipping and culling time”) to hoard the highest-value coins (with the most metal) and pawn off into the general circulation the lowest-value coins (with the least). Gresham’s Law in action led to spiraling prices and the breakdown of trade.

A great example of calculated, “clever” government policy spilling into the general population, leading first to rampant moral corruption and then ruin.

Something to remember, as clever folks contemplate “monetizing” today’s sovereign debt.

This is Common Sense. I’m Paul Jacob.