Categories
free trade & free markets too much government

The Housing Boom’s Inflated “Wisdom”

Watch how the received wisdom gets worded: “A sustained rebound in home prices is considered critical to getting the economy back on track.”

That’s from a Washington Post business report on falling home prices. Its passive voice construction covers up who holds the opinion.

The sentence could have been written differently: “Many politicians, policy wonks, and industry shills believe that only a sustained rebound in housing prices can put the economy get back on track.” But that would have helped the reader see the special interests behind the statement.

We need housing prices high and rising again . . . to fulfill the plans of the very people who set up the house of cards that just came down.

Harvard economist Jeffrey Miron’s reaction is worth quoting in full: “No, no, a thousand times no!

Housing prices are falling because they soared to ridiculous levels during the bubble. Any policy that attempts to keep prices high — or, equivalently, that attempts to prevent foreclosures or juice housing construction — is fighting a crucial market adjustment to past distortions.

The housing boom mania — fed by multiple government subsidies and massive financial intervention coupled with cheap money from the Federal Reserve — served some people at the expense of the public at large. Progress doesn’t depend on it. Real progress depends on rejecting such nonsense.

By the way, other things equal, inexpensive housing is good for us. The whole “rising prices” mania defeats the alleged rationale for mortgage subsidies in the first place.

This is Common Sense. I’m Paul Jacob.

Categories
jury rights and duties

The New Nullifiers

It’s happened before: The people are speaking up. In court. As jurors. As citizens.

A Missoula District Court could not impanel a jury in a marijuana possession case. Potential jurors refused to say that they would follow the law in convicting a person for possessing a sixteenth of an ounce of the popular weed. One juror wondered why the county was “wasting time and money prosecuting the case at all.” The flummoxed Deputy Missoula County Attorney Andrew Paul called it “a mutiny.”

The judge said he’d never seen anything like it.

Too bad.

Jury nullification is an old idea, a democratic idea. I wrote about it a few years ago, in reference to the growing movement to recognize it as a principle of law. Voting isn’t the only check citizens have against bad laws. Juries have a right to judge the law as well as the facts in the case, no matter what usurping judges tell them.

The most spectacular instances of jury nullification in American history regarded slavery. Many northern juries revolted against enforcing the Fugitive Slave laws, to the consternation of slave-owners.

The current case didn’t quite get to full nullification, in legal terms. Instead, it approached nullification practically, forcing prosecutors to bargain the case down.

This citizens’ revolt against some of the absurdities in our War on Drugs indicates that we can expect bigger changes in the future.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

The Latest Mixed-Economy Mix

Mix special interests, politicians-on-the-make, and expanding bureaucracies and what do you get? E15 gasohol.

Matthew Wald of the New York Times’s “green” blog reports that government ethanol mandates and subsidies make it harder to sell gas efficiently. Converting gas tanks to accommodate the new 15 percent ethyl alcohol/gas blend, E15, could mean shortages of gas for customers with cars that can’t use it. Moreover, ethanol can damage some engines and gas pumps.

A slew of engine manufacturer associations have sued the EPA to block approval of E15. On the other side of the special-interest coin, it’s worth noting that it was the ethanol industry that pushed for E15 approval in the first place.

The approval by itself wouldn’t mean much if buyers and sellers weren’t being forced to use ethanol. New fuel products have been introduced by market participants in the past; with E15, producers and resellers could offer — and consumers buy — the fuel that makes the most economic and technological sense. Instead, the current innovation is an artifact of government policy. You can be sure that the problems caused by imposing ethanol will trigger other political “solutions” that worsen market disruptions, triggering even worse “solutions,” and so forth.

Our “mixed economy” isn’t generally efficient, like free markets tend to be. In a mixed economy, the political winners win big; the rest of us lose.

It’s a mixed bag. The headier mix resulting from freedom? Far better.

This is Common Sense. I’m Paul Jacob.

Categories
Accountability folly too much government

Our Limited Abilities Require Other Limits

Last week I asked, in effect, Who regulates the regulators?

It does no good to say “the people,” because — as much as I want government to be ultimately controlled by the people — if you’re like me, you don’t know enough to micro-regulate high finance.

But there’s something I didn’t mention last Wednesday: The regulators don’t have that knowledge, either.

Even keeping eyeballs on simple fraud turns out to be difficult. Trying to micromanage high finance? Much harder.

But the congenital inability of regulators properly to regulate doesn’t mean that we must consign ourselves to a never-ending, Sisyphean cycle of boom and bust.

Many of the instruments of the modern federal government try to do too much. These very institutions, because they hubristically attempt to regulate away boom bust deliver just the opposite. They make sure booms go bust in messy ways.

Here’s a fresh example: “Lack of regulation” wasn’t the main reason for this latest bust. More important? The “too big to fail” subsidy. By giving Wall Street, big bankers, and financial intermediaries the impression that they would be bailed out in case of implosion, those very same folks behaved in such a way to risk said implosion, and thus needing the bailouts.

Which happened.

Which started the cycle all over.

Only by going back to basics can we improve our long-term economic outlook — not by government micromanaging the economy.

Nicely, citizens like you and me can understand these “basics.”

And defend them.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies porkbarrel politics

It’s the Season

Ho, Ho, Ho. It’s that time of year again. Shopping. Selecting the right gift. Thinking of those special someones.

Yes, it’s Omnibus Spending Bill time, the Satan Clause time of year, when politicians fill up the stockings of their naughty friends in the lobbying business, and give generously.

With our money.

This year, Harry Reid went all out. He pushed an omnibus spending package that included so many earmarks that Congress had to use its whole box of Crayons just to keep some order to the bill’s marked corners. Yes, there were over six thousand “special holiday gifts” for special interests.

As I said, “Ho, Ho, Ho.”

That’s not an elfin chuckle, that’s a popular euphemism for what the politicians are who cooked up this list without checking it twice.

But an unseasonable gust took the wind out of Reid’s sails. Pressured by folks back home, the bill was soundly defeated. As Daniel Mitchell put it, it was the American people — not the special interests — who got the Christmas present:

[F]iscal conservatives, libertarians, and Tea Partiers have won an important battle, but this is just one skirmish in a long war. If we want to save America from becoming another Greece, we better make sure that we redouble our efforts next year.

At last, special interests get a lump of coal. It’s something to celebrate. And repeat. Ho, Ho, Ho! Like that ol’ elfin chuckle.

This is Common Sense. I’m Paul Jacob.


Categories
folly

The Candy-Cane Killers

Tragic holiday horror! Diabolical kids with bad sweaters, scheming with Grinch-like dastardliness to stab at the heart of the season! Openly distributing thinly disguised blades . . .

Openly! Well, the school administrators were on the case in a jiffy.

The ten culpable kids at the Haymarket, Virginia, high school — called, by a cruel joke of destiny, Battlefield High — belonged to the secret commando unit “Christmas Sweater Club,” so-called because they wear “the craziest sweaters they can find.”

Just the kind of loosely-knit cover story you’d expect from such warped-and-woofed yarn spinners.

On the fateful morning, before classes began, club members ruthlessly tossed two-inch candy canes to arriving schoolmates. These student instigators told Channel 9 that school officials charged them with trying to “maliciously maim” their fellow students. “They said the candy canes are weapons because you can sharpen them with your mouth and stab people with them.”

By the time disciplinary notices were issued, however, the complaint had lapsed into something about “creating a disturbance.” Mom Kathleen Flannery related an administrator’s earnest appraisal: “Not everyone wants Christmas cheer.”

Lesson? Obviously, tiny candy canes in the wrong hands are dangerous, especially if converted by frenetic licking into ferocious little shivs that could turn a playground into a killing field!

Also, tiny brains in the wrong school officials’ heads can be dangerous, too . . . especially when they can’t be sharpened at all.

This is Common Sense. I’m Paul Jacob.

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

Madison’s Angels to the Rescue?

Something called “behavioral economics” has arisen in recent decades, testing and probing many of the assumptions-cum-postulates of basic microeconomics. Researchers have discovered that human beings are prone to biases, cognitive errors, and a whole bevy of choice glitches. We are not perfectly rational.

Shocking, I know.

Some people draw an odd moral from this: Since people are such fools, they require the help of government to regulate them from utter folly and ruin.

Economist David Henderson quotes one of his Facebook friends, TV creative director John Papola, as supplying the “most succinct criticism” of this tack: “Why in the world do behavioral economists who study our flaws and irrational quirks advocate centralized power in the hands of a small group of flawed overlords? If people are irrational, so are government regulators, only they have corrupting monopoly power.”

You’ve seen this kind of argument before, in political theory. James Madison famously noted that

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.

Just so: Were we entirely rational, no regulation would be necessary — no laws would. But, given universal human limitations, the regulators themselves require regulation, and a (non-existent) supply of non-biased, error-resistant rationality, to boot.

Forget vast reams of regulations and huge teams of bureaucrats. Instead, perfect the basic rule of law, regulating markets by a well-conceived basic set of rules.

And expect some imperfection.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture

No Labels, No Clue

Some big players at the game of politics misinterpret the nature of today’s general political discontent, and offer only hollow novelty in response.

Take the “No Labels” movement.

A number of big-name politicians, including New York Mayor Michael Bloomberg and Indiana Senator Evan Bayh, push the idea of a centrist, can-do spirit, a bi-partisan effort that will transcend the nastiness of the current Establishment Insider/Tea Party Outsider split. Their trendy-sounding “No Labels” label communicates their allegedly co-operative, spectrum-transcendent message. Their slogan? “Not Left. Not Right. Forward.”

According to Linda Killian, of Politics Daily, “the message No Labels is espousing is exactly what a majority of Americans, who are fed up with both parties, say they want from their government.”

This seems to fly in the face of what I’ve gleaned of American disgust. And it distorts the actual landscape of power. No Labels “pragmatism” is as mainstream as you can get, as Matt Welch noted in Reason:

Barack Obama and John McCain both ran for president as post-ideological pragmatists. So did, in their own ways, George W. Bush and Bill Clinton. It remains an attractive pose, and will always draw cheers from the indefatigable problem-solvers drawn to power like cowbirds to cattle.

America’s growing disaffection with politicians springs from the continual betrayals of common sense by both parties — including centrist can-doers.

“No Labels”? Phooey. Instead: “No Bailouts. No Over-spending. No Ignoring the Voters.”

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Big Box, Big Apple

Whether to let a business open up should not hinge on opinion polls. But a recent survey of New Yorkers does underscore the absurdity of banning Wal-Mart from the Big Apple.

If you’re used to seeing a Wal-Mart every 30 miles, you may be surprised to learn that there’s not a single Wal-Mart in New York’s five boroughs. Unions have marshaled political clout to keep the company out. Now, with the store again trying to gain a foothold in the area, “community” activist Pat Boone complains that “We need good paying jobs, not minimum wage jobs.” Wal-Mart pays more than minimum wage. But ask yourself: Is no pay for no work really better than a reasonable entry-level wage that sustains some folks’ homes and hearths?

And who is the “we” that this “community” activist speaks of? The unemployed workers who would flock to the job-application lines if Wal-Mart came to town? The 71 percent of New Yorkers who, according to Douglas Schoen’s survey of 1000 New Yorkers, would cram the store’s aisles?

Too often, political power caters to interest groups eager to force others to conform to their own way of thinking. Markets, by contrast, are all about offering a value and then letting people decide for themselves whether they want to pay for it.

So let Wal-Mart open up, New York. Let honest, hard-working people get the best deals for food and supplies.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Tire Trade War, Tiring

Political folly comes around, again and again, like a puncture in a rapidly deflating tire as you drive down the freeway. The end is never good.

President Obama and congressional Democrats pushed a tariff hike on China-made tires, up to 35 percent — and the WTO okayed it. They excuse their action because they wish to “retaliate” against China for its alleged monetary “manipulations” — manipulations that bear remarkable resemblance to our own Federal Reserve’s policies, by the way — which they say cause our current trade imbalance.

And, like non-economists everywhere, these buffoons judge the trade deficit a horrible thing. The fact that U.S. consumer’s get great benefit from lower-priced goods coming from China, and can — as a result of less expensive, Chinese-made tires – afford to replace their tires more often, thereby saving lives and health-care costs, doesn’t appear in politicians’ protectionist arguments.

It’s the economy that’s making our representatives stupid, of course. Blaming foreign competition is an easy out, when times get tough. It helps you avoid blaming your own country’s regulations, taxes, and (ahem) monetary policy.

This blame game is nothing new. The Smoot-Hawley Tariff was pushed through early in the Great Depression, and it made a lot of sense to . . . politicians.

But the the trade wars the infamous tariff engendered became a major factor in making the Great Depression so Great.

Our politicians, reviving tired old policies — regarding tires, no less — merely make matters worse. Greatly worse.

This is Common Sense. I’m Paul Jacob.