Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

After Mubarak

It’s difficult to have any sympathy for Hosni Mubarak, or any other member of Egypt’s current ruling elite. Egypt has been ruled by a succession of authoritarian dictators since 1954, when Gamal Abdel Nasser took control of the Government in 1954, a dictatorship continued by Anwar Sadat and Hosni Mubarak, in turn. One always hopes that a popular movement to overthrow a dictaror will be followed by a flowering of democracy, but, sadly, that rarely happens, historically, and is even less likely to happen if Mubarak is toppled.

In all probability what will follow Mubarak in Egypt will be a government run by members of the Muslim Brotherhood, and their allies.  This means that Egypt’s most likely post-Mubarak government will be an Islamist, radical government, similar in many respects the Islamic Republic of Iran.

As Lawrence Wright points out in The Looming Tower, Mubarak’s jails have been an incubator for Islamist radicals. And why should we expect otherwise? The liberal, Western, Democratic states have been fairly supportive of Mubarak, and Sadat before him, ever since Sadat disavowed warfare as a method of destroying “the Zionist entity”, as Israel is generally known by the Arab states. Even among proponents of democratic reform inside Egypt, the support that the West has given Mubarak has made the West appear to be, at best, amoral, and, at worst, positively duplicitous. This has undercut the influence in the popular culture of Egyptian proponents of Western-style democracy.

As a result, it has been the Islamists who have seen their influence rise among the general population in recent years.  Indeed, the Islamist influence on Egyptian culture is immediately noticeable by looking at the following pictures posted a year ago by Pajamas Media. The pictures are of the graduating classes of Cairo University in 1978 and 2004.  Notice how the women are dressed.

Cairo University Graduating Class, 1978

Cairo University Graduating Class, 1978

Cairo University Graduating Class, 2004

Cairo University Graduating Class, 2004

The devolution from the modern era to a more conservative past is obvious.

The upshot of all this is that a post-Mubarak regime is likely to be undemocratic, Islamist, and hostile to the West in general, and the US–and, of course, Israel– in particular.  With Egypt having such a large population and corresponding cultural influence on the rest of the Arab world, there is much reason to believe that that a post-Mubarak Egypt will be the cause of a significantly less stable, and more troublesome environment in the Middle East.

Our policy failures in Egypt have been bi-partisan, and made for ostensibly the best of reasons, but their results seem likely to be disturbing. Still, it’s difficult to see what other choices were available to us.  Had we imposed too much pressure on the Mubarak regime to democratize, the end result would likely have been either a) much the same as we are facing now, or b) simply caused Mubarak to turn to China to replace the security and stabilization support provided by the West.  Sadly, the policy options we faced were those presented by the real world, and not the idealized world we might wish for. Although, one notes, had we forced Mubarak into the arms of the Chinese, we might have more acceptable moral support to offer the proponents of Egyptian democracy at the present moment.

Now, we don’t even have that.  The Egyptians are going to do whatever they’re going to do, and we have little choice but to sit by as passive observers.

Book Review: The Politically Incorrect Guide to Socialism

I regularly receive review copies of new books from Regnery Publishing. Occasionally, one stands out above the rest, such as Kevin D. Williamson’s The Politically Incorrect Guide to Socialism.

I am not a huge fan of many of the Politically Incorrect Guides.  While they are all relatively enjoyable reading, all to often they suffer from a shotgun approach to their subject, in that they try to bring too many threads together in a relatively brief book, rather than telling a single, compelling story.  Williamson’s Guide does not suffer from this problem, but rather sticks to a simple, powerful theme. From the democratic socialism of Sweden and India, to the authoritarian socialism of Hugo Chavez’s Venezuela, to the hard communism of the Soviet Union, Williamson exposes and explains the central problem of socialism: The futility of central planning.

The trouble with socialism is not that it redistributes income to create perverse incentives–although it does do that–but rather that it attempts to do something that is literally impossible, which is to centrally plan the economy.  Indeed, even planning relatively small parts of the economy are impossible. To illustrate this problem, Williamson uses the relatively simple problem of trying to plan for milk production:

There are 115 million households in the United States. If we imagine a weekly milk consumption budget for each of them, that’s 5.9 billion household weeks to plan for. Adding in a fairly restrictive list of variables–call it zero to twenty quarts a week, four levels of fat content, organic/non-organic, soy/dairy, and three flavor options, you end up with around 6 trillion options to choose from…

If they took just one second to consider each of these options, it would take them 190,128 years just to tun through the possibilities of one year’s milk consumption in the United States.

Ah, but if it were only that simple. Milk consumption is, alas, variable over time.  Some families may use more milk making ice cream in the summer months. Some families may decide to reduce consumption for health reasons.  The actual demand for milk–or any other good, for that matter–is essentially unknowable in any rational sense.

In country after country, covering a variety of issues, Williamson points out how, time after time, the record of socialism is one of utter failure. Whether it’s the provision of food, housing, education or medical care, Williamson demonstrates how central planning invariably produces worse outcomes than free markets.

Except, of course, for those who are planners or their associates.  Things always work well for them.

In addition to his central thesis, Williamson demonstrates, along the way, how the inability to use price signals further hampers the ability of socialism to rationally match supply with demand, because economic calculation is impossible in the absence of real price data. And, perhaps even more importantly, he inquires into why the central planning impusle is ultimately antithetical to liberty and democratic governance.

This is definitely a book for the layman. Williamson explains in clear, simple language, the fundamental economic and political principles that make socialism so damaging. He doesn’t delve deeply into abstruse theoretical arguments, but rather looks at the controversial policies of the last few years to detail their shortcomings with with clarity and simplicity that should strike a chord with even those who have a minimal understanding of economics or politics.

I highly recommend this book.

Observations: The QandO Podcast for 23 Jan 11

In this podcast, Bruce, Michael, and Dale discuss the sudden end of Kieth Olberman’s “Countdown”, the Republicans’ proposals to cut government spending, state bankrupties, and much more.

The direct link to the podcast can be found here.

Observations

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 2010, they can be accessed through the RSS Archive Feed.

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Observations: The QandO Podcast for 16 Jan 11

In this podcast, Bruce, Michael, and Dale discuss the Gabby Giffords shooting and the response to it.

The direct link to the podcast can be found here.

Observations

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 2010, they can be accessed through the RSS Archive Feed.

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Observations: The QandO Podcast for 09 Jan 11

In this podcast, Bruce, Michael, and Dale discuss the Gabby Giffords shooting and the response to it.

The direct link to the podcast can be found here.

Observations

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 2010, they can be accessed through the RSS Archive Feed.

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December Unemployment

The employment numbers from this morning are no cause for any sighs of relief, yet.  The number of persons employed increased faster than the increase in population–which seems to be unusually small compared to recent months.

In any event, according to my calculation method, this is where we stand (all numbers in thousands):

DECEMBER 2010
Civilian Non-Institutional Adult Population:
238,889
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 158,145
Actually employed: 139,206

UNEMPLOYMENT RATE: 13.6%

The labor force participation rate continues to decline, coming in at 64.3% this month, a 30-year low.  The actual size of the labor force was 153,690.  Using the historical average participation rate of 66.2%, that means the current labor force is running with about 4.45 million fewer workers than it should.

This month’s non-farm payroll increase of 103k new jobs is really just a drop in the bucket. We would need 11 million jobs created to get the unemployment rate back to 5%.  Even if there were no increase in population at all, we would need to create 300k new jobs per month for 37 months to get those 11 million jobs back. The only possible bright spot is that, this year, the first of the baby boomers hit 65 and begin retiring. So maybe the actual labor force participation rate is due to naturally drop, as is the size of the labor force.

All we have to do, then, is figure out how to pay social security to more retirees with a shrinking labor force.  That should be fun.

Observations: The QandO Podcast for 19 Dec 10

In this podcast, Bruce, Michael, and Dale discuss the accomplishments of the lame duck Congressional session.

The direct link to the podcast can be found here.

Observations

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 2009, they can be accessed through the RSS Archive Feed.

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Observations: The QandO Podcast for 12 Dec 10

In this podcast, Bruce, Michael, and Dale discuss the Obama Tax Compromise, and its repercussions this week.

The direct link to the podcast can be found here.

Observations

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 2009, they can be accessed through the RSS Archive Feed.

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Observations: The QandO Podcast for 05 Dec 10

In this podcast, Bruce, Michael, and Dale discuss the Budget Comission, and Washington’s refusal to even consider making any of the hard choices it represents.

The direct link to the podcast can be found here.

Observations

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 2009, they can be accessed through the RSS Archive Feed.

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November Unemployment

Once again this month, the employment report, weak as it is, hides even worse weakness in the labor market. Despite the banner headline of 39,000 new jobs, the number of Americans actually employed declined from 139.061 million to 138.888 million, a decline in employment of 173,000. And, of course, 39,000 new jobs isn’t really helpful anyway, when you consider that last month, the labor force increased by 122,000. We need to be creating 122k+ jobs a month just to keep even with population growth.

The real unemployment rate continues to rise, according to my personally devised measure of employment (Population numbers are in thousands):

NOVEMBER 2010

Civilian Non-Institutional Adult Population: 238,715
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 158,029
Actually employed: 138,888

UNEMPLOYMENT RATE: 13.8%

Compare and contrast that with April of this year:

APRIL 2010

Civilian Non-Institutional Adult Population: 237,329
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 157,112
Actually employed: 139,455

UNEMPLOYMENT RATE: 12.7%

Since April, the number of Americans actually employed has declined from 139.455 million to 138.888 million, a drop of 567,000 employed.