Categories
too much government

Is “Less Big” Possible?

The idea of a streamlined welfare state is utterly foreign in today’s political climate. Offering some social services, but not others? Anathema — at least to our “progressives.”

It is also, even more obviously, not nurtured by current political process.

After all, we’ve witnessed two major expansions in “welfare” programs in the last decade, the bipartisan Medicare “Part D” and the Democrats’ “Obamacare.” The first was underfunded from the start, and the second was and remains a mess. Both are financial time bombs.

But if you think America has it bad, it’s worse in France.

Jean Tirole, the new (just announced) Nobel Laureate in Economics, calls the condition of the French labor market “catastrophic.” And he thinks France’s government has to be smaller.

Now, he’s no heir to J.-B. Say and Fredéric Bastiat. He does not support an extremely limited government, a “nightwatchman” state. He says he likes France’s basic model. But it has grown too far in size and scope:

Tirole remarked that northern European countries, as well as Canada and Australia, had proven you could keep a welfare social model with smaller government. In contrast, he said France’s “big state” threatened its social policies because there will not be “enough money to pay for it in the long run.”

He’s basically just demanding that government live within its means.

It’s not too far from common Tea Party sentiment.

But tell that to your average progressive pol. Or blogger. Or activist. Given protective cover for ever-​growing spending by the likes of New York Times’s Nobel columnist, Paul Krugman, any idea of federal spending cutbacks have been and remain off limits.

Maybe Professor Tirole can convince them.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets initiative, referendum, and recall national politics & policies

The 22 Franc Minimum Wage

Fox News’s Bill O’Reilly and 2012 Republican presidential candidate Mitt Romney agree with America’s progressives: raising the minimum wage is common sense.

The Swiss had a chance to prove their solidarity with that notion yesterday, when they voted on whether to establish a minimum wage in the country, a rather high one of 4000 francs per month (something close to 22 francs per hour). They voted the proposal down.

Overwhelmingly. By over 76 percent.Frederic Bastiat's classic essay, What Is Seen and What Is Unseen

Unlike in America, this minimum wage would have affected a huge hunk of the population. One out of ten Swiss workers earns less than the proposed minimum. In America, only about a single percentage of workers earns close to the national minimum.

This matters, as Frédéric Bastiat clearly explained, because price regulations can have two effects: a loss of production, or none at all — “either hurtful or superfluous.” No effect, when the price floor (as in a minimum wage) is set lower than the level most prices are already at (or, for which workers already work). But when the price floor gets set higher, goods go off the market — with too-​high wage minimums, workers with low productivity cease to get hired.

Swiss voters could scarcely afford to risk the jobs of ten percent of the workforce.

In America, raising the minimum wage is usually a matter of sacrificing a few people (whom voters mostly don’t know — Bastiat’s “unseen”) while rejoicing in the higher wages of those workers retained (the “seen”).

In Switzerland, the government declared the down vote a victory for common sense.

Which it was.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

The Freedom Cure

To solve our problems, we need the freedom — to plan, to create, to market and profit. We need the freedom to use the capital we gain by solving problems — whether the capital comes in the form of money, knowledge, or reputation — to solve other problems.

That’s as true in medical industry as in any other productive endeavor. But medical freedom is shrinking thanks to taxes and regulations imposed by Obamacare and numerous previous interventions.

Consider the many life-​saving gadgets and drugs that we now take for granted. Medical doctor Paul Hsieh observes that creating these does not happen automatically. Even slightly higher taxes or tighter regulations “can mean the difference between a product coming to market— or being abandoned as not worth the effort.” We know how existing devices save lives. What we don’t know is what lives will by lost for lack of inventions that never maker it to market but, in a freer political environment, would have. It is the difference between what Bastiat called “That Which Is Seen, and That Which Is Not Seen.”

How can we ensure the largest possible field for the invention and propagation of life-​saving technology, like genetically cased medicine or 3D-​printed body parts? For starters, get rid of new taxes on medical devices and eliminate FDA regulations. Chuck the whole apparatus of Obamacare. Then enact ever-​more fundamental market reforms until patients, doctors, drug and device companies use their judgment completely unimpeded.

The debate about freedom in medicine shouldn’t be just about whether you will be allowed (!) to “keep your doctor.”

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Disaster Economics 101

Could House Speaker Nancy Pelosi have spilled the beans, laid bare her party’s vision of economic growth in one offhand utterance?

A terrible tragedy in impoverished Haiti. An earthquake. The scope of the damage staggers the imagination … and spurs outpourings of charitable aid from America, and across the globe.

And this is where Mrs. Pelosi chimes in. As if she had never heard of the Broken Window Fallacy, she just blurted it out, hazarding that Haiti “can leap-​frog over its past challenges, economically, politically, and demographically in terms of the rich and the poor and the rest there, and have a new — just a new, fresh start.”

Over 70,000 dead, Haiti in ruins, and she’s talking about hope for a “real boom economy.” 

Now, I know, politicians like to spend money. They think it does a lot of good — though in Haiti’s case, the billions spent, previously, have sure fizzled. But Pelosi isn’t just arguing that the aid is going to remake an impoverished country. She thinks that scurrying about rebuilding is a net positive. 

If you wonder why politicians so like economic booms, even the most artificial ones, look no further. They cannot distinguish between real progress and the frenzy of making up for disaster.

Perhaps that’s why they are so nonchalant about the disasters their own taxes and regulations so often cause. 

This is Common Sense. I’m Paul Jacob.