Free Markets, Free People

Daily Archives: February 22, 2009


MYOB

In my last post, I argued that the Seventeenth Amendment should be repealed.  Once upon a time, Americans from across the political spectrum could agree on at least one principle of good governance: federalism, or more generally, localized decision-making.

To put a fine point on it:

  • Your state knows its own values and interests better than the national government does.
  • Your county knows its own values and interests better than the state government does.
  • Your city knows its own values and interests better than the county government does.
  • Your neighborhood knows its own values and interests better than the city government does.
  • Your household knows its own values and interests better than the neighborhood does.
  • And you arguably know your own particular values and interests better than other members of your household do.

Depending on who’s won lately, the people in power at higher levels of organization may approximately reflect your values and interests, but the further away they get, the less likely this is to be the case.  Simply put, the more people you have to represent, and the further they are away from you, the harder it is to faithfully represent them all.

Even if your Congressman is a tremendously intelligent and virtuous man, what he doesn’t know about his constituents’ beliefs and circumstances could fill libraries.

So as a general rule, it makes sense that we should want matters to be decided at the most local level possible.  If you have a personal problem, you have the greatest incentive to fix the problem, your values will determine what trade-offs you’re comfortable with, and the matter probably shouldn’t leave your household — or at worst, your peer groups.  If it doesn’t naturally spill over into other people’s lives, they don’t want you to make it their problem.

Largely because so much power has accrued at higher levels of government, people increasingly turn to the impersonal and ignorant forces of those higher levels to handle their problems.  Today, the federal government has so much power, reaching down to the most local possible decisions, that people focus an inordinate amount of their attention and aspirations on who controls it and what they do with it.  Everyone’s fate is determined by whose collective hand controls the Biggest Lever.

I cannot stress enough how dangerous a development this is. Let’s leave aside, for the moment, how centralized control and planning tend to double down on mistakes rather than correct them.  They have much more insidious effects.

Making everything a national issue has poisoned the national debate.  It is a significant cause of the Culture War (see Roe v Wade, or Defense of Marriage Act).  It has contributed to making politics personal, and it’s why so many people have become emotionally invested in the person of the President.  Think about how much more common it has become for both parties to use the language and imagery of dictators to describe the president — usually when we disagree with him.

Bottom line: it is difficult to tolerate your neighbor’s difference of opinion if his opinion controls your life.  It has become too difficult to mind one’s own business.

Let that marinate for a minute, and I’ll move on to my suggestion for one solution. Continue reading


Podcast for 22 Feb 09

In this podcast, Bruce, Michael, and Dale talk about the first month of the Obama Presidency.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.


BlogTalk Radio – 8pm (EST) Tonight

Call in number: (718) 664-9614

Yes, friends, it is a call-in show, so do call in.

Subject(s): Obama’s first month in office, Hillary Clinton’s swing around Asia and the stimulus, the housing bailout and whatever else strikes our fancy.


Arnold Schwarzenegger: Dope Of the Week

Where to start with this joker:

California Republican Gov. Arnold Schwarzenegger suggested that his party is out of touch with average Americans on the issue of health care.

“You’ve got to listen to the people. If the nation is screaming out loud, ‘We need health care reform. We want to have universal health care. We want to have everyone insured. We want to bring the costs down. We want everyone to have access.’ I mean, that’s what they want; that’s what you do,” Schwarzenegger said on ABC’s “This Week.”

Arguing that California Republicans were out of touch with the majority of Californians who wanted to raise taxes to fix the state’s budget crisis, Schwarzenegger said it is “the same nationwide.”

He said Republicans need to embrace what the people want, even if it means accepting tax increases that go against their party principles:

“Even though it maybe is against your principles or philosophy, you still have to go, because that’s what the people want you to do,” he said.

A) Healthcare: the nation isn’t screaming any of that out loud. A definite minority want it. But just as large a minority don’t want any part of it. A third minority isn’t sure one way or the other.

B) If the purpose of government is to simply give the people everything they want, then there’s no reason for a budget, a legislature or a governor. Just put everything to a direct vote via referendum, write a program that can figure the cost of each “yes” referendum, figure the tax necessary to fund the approved program and assess the tax. If you must have a legislature or governor, they would only write the law and rubber stamp it based on the referendum (per the Schwarzenegger “philosophy” only unanimous approvals allowed) and the “governor” is there to do nothing more than to sign it into law – period. Once taxes reach 100% nothing else can be signed into law and the legislature is in permanent recess and the governor is no longer needed (hey I can be just as absurd as Schwarzenegger).  

Oh, wait, I forgot – you have to have a governor and a legislature to pile up trillions of dollars of debt “giving the people what they want” and drive the state into bankruptcy – my bad. 

C) Why have principles if you’re not supposed to live by them/act on them. Why run on them, tell voters they’ll be your guide and get elected because of them? Schwarzenegger has gone from a somewhat entertaining RINO to an outright idiot.

“Even though it may be against your principles or philosophy” do it anyway because that’s what the people want? This guy would obviously rather be liked than principled (if he ever was really principled). Principles are a hindrance to his pursuit of approval (see what steroids will do to your brain?). And my guess is, he’d label this nonsense as “leadership”.

Lord help California. Schwarzenegger makes Gray Davis look great.

~McQ


Repealing the Seventeenth Amendment

George Will argues we should repeal the Seventeenth Amendment.  I doubt it will happen–too many people are convinced of the Populist notion that the more direct the democracy, the better.  But I’ve been arguing for years that this measure would restore a great measure of federalism to the US, and that we would generally benefit from such a change.

Doug Mataconis of Below the Beltway isn’t so sure.  He writes,

As I’ve noted before, it’s a provocative argument, but I think there’s something missing:

My take on the subject is this — from a procedural point of view the 17th Amendment is certainly one of the factors that has made the expansion of Federal power, and the erosion of Federalism, more easy to accomplish. Returning to direct election of Senators *might* have a positive impact, but that will only happen if the Senators elected have a proper understanding of their role under the Constitution.

And if the state legislators appointing them have that same understanding.

Given the political climate in America today, having Senators who are beholden to the whims and wishes of state legislators is unlikely to produce a better breed in the Upper House than having Senators who are beholden to the whims and wishes of voters.

In some sense, repealing the 17th Amendment involves turning back the clock in more ways than one. We can return to the procedural methods that the Framers first put in place, but that doesn’t mean that the philosophy that will guide the Senate will change in any significant respect.

I can’t comment on whether we’d get a “better breed”, but the procedural change would change the practice, if not the philosophy, of senators.  As I argue in the comments, the purpose of many of the checks and balances in the Constitution of the early republic was to have people in power answer to those who were jealous of their own power. Repealing the Seventeenth wouldn’t cure all ills, but it would help.

For example, the federal government has extended its power over state and local matters by using its superior funding power to provide goodies, and attaching strings to that money.

If we posit that state legislators want to arrogate more power to themselves, then–given the power–they will resist those strings. US Senators, realizing that their appointment to the Senate (and all the attendant benefits) requires pleasing the state legislators, will avoid attaching those strings. They don’t need to understand anything except who’s buttering their bread.

Let’s say that state legislators still like the idea of getting federal money without having to levy their own taxes. Well, if the Senate tries to appropriate no-strings-attached money for the states, naturally the House and President will resist. They don’t want to levy taxes and receive no controlling benefit in return.

A smaller number might be ideologically committed to using the superior federal power of taxation to fund these goodies, but not having strings attached to federal money would dull the incentive.


With Hat In Hand …

Pretty sad when you have the Secretary of State soliciting funds for debt instruments:

US Secretary of State Hillary Clinton has urged China to keep buying US debt as she wrapped up her first overseas trip, during which she agreed to work closely with Beijing on the financial crisis.

Ms Clinton made the plea shortly before leaving China, the final stop on a four-nation Asian tour that also took her to Japan, Indonesia and South Korea, where she worked the crowds to try to restore America’s standing abroad.

In Beijing, she called on authorities in Beijing to continue buying US Treasury bonds, saying it would help jumpstart the flagging US economy and stimulate imports of Chinese goods.

“By continuing to support American Treasury instruments the Chinese are recognising our interconnection. We are truly going to rise or fall together,” Ms Clinton said at the US embassy here. 

Of course, its absolutely necessary that China (and the rest of the world) continue to buy these bonds and fund this spending debacle or taxes will have to be raised dramatically (and not just on the ‘rich’) and/or more money will have to be printed. That’s not to say that both of those won’t be done anyway whether China continues to buy or not.  My guess is it’s only a matter of time. Don’t forget, health care reform legislation and environmental legislation are yet to come. Both may end up taking even more out of the private side of the economy than the so-called “stimulus” did.

~McQ


Obama meets with Harper on “Buy American”

President Barack Obama made a trip to Canada this week to settle fears over the “Buy American” provision in the so-called “stimulus” package:

President Barack Obama on Thursday moved to reassure business and trade partners that the “buy American” provision of the economic stimulus package will not further harm the economy.

Critics of the measure, including foreign trade partners, business groups and even some U.S. industries that use steel and other products, have called “buy American” protectionist and complained it will drive up the cost of business.

Obama, who met with Canadian Prime Minister Stephen Harper for several hours in Ottawa, said he told his counterpart the United States would abide by existing trade pacts.

“I want to grow trade and not contract it,” Obama said. “And I don’t think that there was anything in the recovery package that is adverse to that goal.”

The provision mandates that any construction or infrastructure project in the “stimulus” bill would be required to use American metals, like iron and steel, unless costs were to exceed 25%. This misguided provision has sparked fears of a trade war.

In 1845, Frédéric Bastiat wrote the Petition of the Candlemakers, satire that pointed out the follies of protectionism to French lawmakers:

You are on the right track. You reject abstract theories and little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry.

We come to offer you a wonderful opportunity for your — what shall we call it? Your theory? No, nothing is more deceptive than theory. Your doctrine? Your system? Your principle? But you dislike doctrines, you have a horror of systems, as for principles, you deny that there are any in political economy; therefore we shall call it your practice — your practice without theory and without principle.

We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us.

We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds — in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.

Competition spurs improvements and lower prices. Protectionism is what brought us the Smoot-Hawley tariff in 1930, an interventionist economic policy that exacerbated economic problems which eventually led to the Great Depression.

Policies like “Buy American” will only cause retaliation in other parts of the world. We cannot afford that in the middle of a recession.


Obama seeks tax increases to fund welfare state cut deficit

With Wall Street already showing absolutely no confidence in Barack Obama and Tim Geithner, the president is announcing tax increases in an attempt to cut the budget deficit by half in four years:

A summary of Obama’s budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete, multi-hundred-page document to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation’s costly and inefficient health care system tomorrow, when he addresses lawmakers and budget experts at a White House summit on restoring “fiscal responsibility” to Washington.

Yesterday in his weekly radio and Internet address, Obama said he is determined to “get exploding deficits under control” and said his budget request is “sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don’t, and restoring fiscal discipline.”

Reducing the deficit, he said, is critical: “We can’t generate sustained growth without getting our deficits under control.”
[...]
To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from “winding down the war” in Iraq, a senior administration official said. The budget assumes continued spending on “overseas military contingency operations” throughout Obama’s presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes “a fairly aggressive effort on tax enforcement” that would target corporate loopholes, the official said. And Obama’s budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-World War II high, to 22 percent.

Add this to the list of “Things Not To Do During A Recession.” Soak the achievers and give absolutely meaningless tax cuts, $13 dollars a week, to the rest of us while the government continues to plunge us further into debt.

Enough with wealth envy and populism. Let’s cut taxes for everyone, cut spending and kill the corporate income tax.


Signing On To The “Name And Shame” Policy

Gotta love this chutzpah:

Invoking his own name-and-shame policy, President Barack Obama warned the nation’s mayors on Friday that he will “call them out” if they waste the money from his massive economic stimulus plan.

“The American people are watching,” Obama told a gathering of mayors at the White House. “They need this plan to work. They expect to see the money that they’ve earned — they’ve worked so hard to earn — spent in its intended purposes without waste, without inefficiency, without fraud.”

This from a guy who just signed into law the biggest waste, fraud and abuse bill ever concocted by our so-called representatives in Washington DC.

~McQ

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