Free Markets, Free People

Freedom and Liberty

Tiananmen Square 20 Years After

China, despite its economic progress, remains a rigidly totalitarian state that certainly doesn’t wish to be reminded of the pro-democracy rallies 20 years ago, or the bloody government crackdown that ended them:

China blanketed Tiananmen Square with police officers Thursday, determined to prevent any commemoration of the 20th anniversary of a military crackdown on pro-democracy protesters that left hundreds dead.

The government reacted angrily to a mention of the anniversary by Sec. State Hillary Clinton:

“The U.S. action makes groundless accusations against the Chinese government. We express strong dissatisfaction,” a Foreign Ministry spokesman, Qin Gang, told reporters at a regular briefing.

“The party and government have already come to a conclusion on the relevant issue,” he said. “History has shown that the party and government have put China on the proper socialist path that serves the fundamental interests of the Chinese people.”

And to ensure that the people of China have few venues in which to discuss this anniversary, the “fundmental interests of the Chinese people” are being “served” by blocking various internet sites:

Access was blocked to popular Internet services like Twitter, as well as to many university message boards. The home pages of a mini-blogging site and a video-sharing site warned users they would be closed through Saturday for “technical maintenance.

Known activists and dissidents are under close supervision:

One government notice about the need to seek out potential troublemakers apparently slipped onto the Internet by mistake, remaining just long enough to be reported by Agence France-Presse. “Village cadres must visit main persons of interest and place them under thought supervision and control,” read the order to Guishan township, about 870 miles from Beijing.

In a report released Thursday, the rights group Chinese Human Rights Defenders said 65 activists in nine provinces have been subjected to official harassment to keep them from commemorating the anniversary.

Ten have been taken into police custody since late May, the group said. Dozens of others, mostly from Beijing, are either under police guard or have been forced to leave their homes, according to the report.

The mass media has, as expected, cooperated with the state as well:

There was no mention of the day’s significance in Thursday’s Beijing newspapers. The state-run mass-circulation China Daily led with a story about job growth signaling China’s economic recovery.

An interesting counterpoint to the claims that China has become more democratic over the years, and is actually doing a much better job with human rights than it has in the past. The fear of a simple remembrance of government brutality 20 years ago says that’s not at all true. And the government’s concerted effort to wipe that memory away prove it.

~McQ

Japanese “Lost Decade” Redux

It certainly seems like it. Reason magazine finds the current way the US is addressing the economic crises to be pretty familiar:

The scenario was eerily familiar. A long real estate bubble that had expanded extra rapidly for the previous five years suddenly burst, and asset prices came crashing back down to earth. Banks and financial institutions were left holding piles of worthless paper, and the economy soon headed south. The national government responded to the crisis by encouraging more lending and spending previously unfathomable amounts of money on public works projects in an effort to stimulate consumer spending and restart growth.

Of course that’s where we are now and what that led too in Japan has come to be known as the “lost decade” (now three decades old).

One of the things we’ve pointed out is there is an element within this model that both Japan and now the US has used that is focused on “pain avoidance” (GM and Chrysler are prefect examples of that). Part of that is driven by the belief by those in power that the government can address problems within markets and lessen the impact. The second part of that, of course, is by convincing the public that’s the case, they then have to try to do what they claim they can do. But the law of unintended consequences has a bad habit of pushing its way into such situations and turning them sour:

The Japanese experience shows that when the government is an active participant in the market, many firms would rather accept state support than initiate the inevitable financial reckoning. Such a status quo does not provide a sustainable foundation for the economy. Instead, it restricts economic growth and creates a cycle of stagnation.

A friend, talking about the recession and eventual recovery, said that we’ll come out of it “okay” because “Americans are neurotically productive”. True. But so are the Japanese. While we have a fantastic workforce which is among the most productive in the world, even they won’t be able to overcome restricted economic growth caused by the government’s deep intrusion into various markets.

Comparing Japan’s reaction to the US reaction in similar circumstances is instructive:

When a recession began to set in after the 1990 stock market crash, Japan responded by reversing its tight money policy, cutting rates to 4.5 percent in 1991, 3.25 percent in 1992, 1.75 percent from 1993 to 1994, 0.5 percent from 1995 to 2000, and as low as 0.1 percent in September 2001.

A similar pattern took place in the United States. From 2000 to 2002, the Federal Reserve slashed the target discount rate from 6 percent to 0.75 percent. Fearing irrational exuberance, to borrow Alan Greenspan’s famous phrase, the Fed then raised the rate as high as 6.25 percent in June 2006. But now that the bubble has burst and the economy contracted, the Fed has cut the discount rate 12 times, lowering it to the current 0.5 percent. Federal Reserve Chairman Ben Bernanke has repeatedly stated that he sees interest rate cuts as a way to “support growth and to provide adequate insurance against downside risks.”

In both the Japanese and the American cases, post-bubble policy makers believed that lowering interest rates would make credit easier to obtain, thus recreating the environment that had spurred economic growth to begin with. But this meant that the supposed cure for a bubble created by easy credit was to extend even more easy credit.

These rate cuts only perpetuated the distortion of economic decisions and prevented savings, investment, and consumption from realigning with true preferences, as opposed to the illusory ones created by easy credit and artificially low interest rates. The lesson is that when monetary policy is used to “smooth” or “tweak” the market, it inevitably causes unintended consequences that in some cases can be very damaging to long-term economic growth.

Of course it is hard to say what future growth might be had the US government not done what it has done. But again, using Japan of that era vs. the US of that era, the difference is between 1.3% growth on average vs. 3.5% growth here. In economic terms that is a huge difference.

Reason also does a nice job of dismantling the “failure of regulation” argument. As they point out, what must be examined is how the regulatory environment then in place spawned the crisis vs. the claim that not enough regulation was in place.

For instance, government housing policy of the era:

The push to expand homeownership had two big effects. First, it greatly increased the number of buyers, driving up housing prices. Second, it provided mortgages to a large number of people who had a high risk of default.

That policy was further enabled by the capital reserve requirements which, in effect, encouraged heavy lending and an insensitivity to risk. Instead of admitting that and understanding that such policies are dangerous, the reaction has mostly been to ignore that and shift the blame to the private sector with calls for “more regulation”.

And then, going back to the “pain avoidance” point (justified as “too big to fail” by the government), what has happened is, as in the case of GM and Chrysler before the bankruptcies, government propping up failed businesses:

The Bank of Japan tried to ease economic pain by loaning large amounts to businesses. But the attempts to recapitalize the market ignored underlying management problems in the dying firms. It was a costly mistake. Intense lobbying from special-interest groups representing various sectors of the Japanese economy perpetuated the ill-fated loans and funneled government money to zombie businesses.

The United States has already begun to copy this policy, lending billions of dollars to financial institutions and auto companies and buying up billions more in bank equity in an effort to recapitalize the marketplace. The effect has been to keep poorly managed firms alive with taxpayer money.

Had they been allowed to fail and go through the reorganization process, those problems would have at least been addressed. They haven’t, at this point, in most of the financial sector and in the auto sector, it remains to be seen.

Of course the government’s deep involvement in these sectors and businesses sets up a natural conflict of interests. While a business is market oriented, and takes signals from consumers, governments are agenda driven and politically oriented. And it then comes down to a matter of incentives. In the first case the incentive of a business is to serve its consumer base. But that’s not the case with politicians necessarily, is it?

Lawmakers’ incentives are to serve their constituencies or their own political careers. This can put them at odds with the businesses they are suddenly attempting to manage. The more the government is involved in directing business activity, the less likely those firms will succeed in maintaining long-term growth, and the more likely they will turn into Japanese-style zombies.

While we’d like to believe that lawmaker’s constituencies consist of the people in their state or district, in reality they consist of special interests who help keep them in office. The ability to deliver to those special interests and keep their support and dollars flowing is just to much to resist for most.

Additionally:

Studies from Okimoto’s center and the Bank of Japan concluded that data revealing the scope of the economic malaise were suppressed and that regulations were developed with governmental interests in mind.

Given how the discussion has been driven here by the likes of Barney Frank and Chris Dodd, there’s little doubt that regulations will be “developed with governmental interests in mind”.

In reality it all comes down to power, or the illusion of power, and politics. Short-term politics with no real eye on the future impact of actions taken today. And these actions are based in a false premise that the market is not self-correcting and that it must be both controlled and tweaked by government.

Japan bought into that premise, and so has the US:

The principle of creative destruction—the economic mutation that continuously breaks down old forms and creates newer, more productive and efficient ones—was ignored in the hope that legacy corporations could somehow save Japan. From Wall Street to Detroit, under both George W. Bush and Barack Obama, the American government has been equally unwilling to let once-formidable companies fail.

And that, in my opinion, will see us repeat the Japanese experience, despite the small glimmers of hope we’ve been seeing in the reports in recent days. This isn’t about short term increases in home sales and construction spending. This is about the long term economic health of our economy.

Unsurprisingly, I’m not seeing moves by the government that work toward the most positive outcome in that regard.

~McQ

I Don’t Think That Means What He Thinks It Means

Dan Neil, an LA Times entertainment writer, takes this lesson from the GM bankruptcy:

The final chapter of that merger plays out this week as GM weathers a reorganization that will leave the federal government owning 70% of the company. In the midst of the deepest recession since the 1930s, it’s hard not to see GM’s bankruptcy as a signal moment in a larger history. If mighty GM can fail, cannot also the United States? And the answer is, absolutely.

This is the lesson of GM’s bankruptcy, and it has little to do with market share and miles per gallon. It’s a rebuff of the notion of exceptionalism. Any organization that fails to sufficiently safeguard its means of self-correction and reform, that forsakes long-term investment for short-term gain, that piles up debt year after year, will eventually fail, no matter how grand its history or noble its purpose. If you don’t feel the tingle of national mortality in all this, you’re not paying attention.

While I essentially agree with the thrust of his point, I don’t think the term “exceptionalism” as it is used when speaking of America, has anything to do with flouting the laws of economics. They are called “laws” for a reason, and no one has yet to find an “exception” to them. We have, however, discovered over and over again that attempts to make exceptions to them fail miserably.

The exceptionalism most speak of when they use the term in conjunction with America has to do with law, ethics and philosophy of life – the foundations of the country that make it exceptional. But economics? Of course we can “fail” if we do the stupid things we’re doing. And, unfortunately, we seem bound and determined right now to prove that point. But that has nothing to do with our “exceptionalism”.

~McQ

“Transparancy” Apparently Trumps The 1st Amendment

From the White House Blog in an entry written by Norm Eisen, special counsel to the president for ethics and government reform in “the spirit of transparancy”:

… [T]he President’s March 20, 2009 Memorandum on Ensuring Responsible Spending of Recovery Act Funds. Section 3 of the Memorandum required all oral communications between federally registered lobbyists and government officials concerning Recovery Act policy to be disclosed on the Internet; barred registered lobbyists from having oral communications with government officials about specific Recovery Act projects or applications and instead required those communications to be in writing; and also required those written communications to be posted on the Internet.

However, a couple of changes have been made, among them:

First, we will expand the restriction on oral communications to cover all persons, not just federally registered lobbyists. For the first time, we will reach contacts not only by registered lobbyists but also by unregistered ones, as well as anyone else exerting influence on the process. We concluded this was necessary under the unique circumstances of the stimulus program.

So thinking this through, could “anyone” include a TV or print reporter asking an oral question to a government official concerning Recovery Ac Policy? Or a particular Recovery Act project that might impact their viewership or readership? Is it possible the information provided, if government officials are subjected to such oral scrutiny, might end up “exerting influence on the process”?

How about a concerned citizen who happens to be a blogger?

Doesn’t this give government officials the cover to duck such oral inquiries?  How does that enhance transparency?

And ultimately, doesn’t this smack of a wee bit of a conflict with the 1st Amendment (free speech, free press, the right to petition government)?

And if “the unique circumstances of the stimulus program” are enough to limit 1st Amendment rights, per this paragon of “ethics and government reform, what other “unique circumstances” might be cited in the future to do the same sort of thing, given the precedent this sets?

As Mark Tapscott says:

This is the Camel’s nose under the tent, being poked because of special circumstances.

Carter Wood notes:

“Lobbyists and organizations that lobby complained that the White House’s restrictions on lobbying on stimulus fund projects were discriminatory and unfair because the same restrictions didn’t apply to people like corporate executives or officials. So these memorandumly noted changes address that fairness issue by expanding the ban on orally petitioning the government or expressing one’s views through speech. In the interests of transparency the First Amendment must be sacrificed.

“The restrictions are also ambiguous enough that a lobbyist or other petitioner won’t be sure how to fully comply. So if someone runs afoul of White House officials, a phone call to a news outlet or a friendly prosecutor can punish the offender. Ambiguous rules plus capricious application equals negative rule of law.”

The only transparency in this process is the fact that the White House is telling you the rule. But the rule then precludes oral questioning which might make the process even more transparent. If even the remote possibility exists that such communication might “exert influence on the process” then it is prohibited.

The White House’s apparent intent is to run a transparent process. The result is overreaching by the executive branch with poorly thought through restrictions on speech that are seemingly unconstitutional. The problem is they obviously don’t feel that to be the case. Or if they do, they think they should have the right to restrict certain forms of communication between government and anyone they decide if “unique circumstances” are existent (guess who get’s to determine whether they are or not?).

Frankly that should bother you.

However, fear not – I’m sure those that continually cited the Bush administration for alleged expansion of executive power will be among the first to address this obvious abuse of Constitutional power and call for an immediate revocation of the rule.

~McQ

Closing Dealerships Via Barack-Foolery?

I watched this story percolate throughout the day, wondering if there was anything of substance to it. Even now I’m not entirely sure how much is pure speculation and how much can be decisively proven. If any of it turns out to be true, however, then the repercussions could prove politically fatal. Doug Ross has the scoop:

A tipster alerted me to an interesting assertion. A cursory review by that person showed that many of the Chrysler dealers on the closing list were heavy Republican donors.

To quickly review the situation, I took all dealer owners whose names appeared more than once in the list. And, of those who contributed to political campaigns, every single one had donated almost exclusively to GOP candidates. While this isn’t an exhaustive review, it does have some ominous implications if it can be verified.

However, I also found additional research online at Scribd (author unknown), which also appears to point to a highly partisan decision-making process.

[…]

I have thus far found only a single Obama donor (and a minor one at that: $200 from Jeffrey Hunter of Waco, Texas) on the closing list.

Chrysler claimed that its formula for determining whether a dealership should close or not included “sales volume, customer service scores, local market share and average household income in the immediate area.”

In fact, there may have been other criteria involved: politics may have played a part. If this data can be validated, it would appear to be further proof that the Obama administration is willing to step over any line to advance its agenda.

Doug notes some anecdotal evidence to back up his theory, and reading through the various personal accounts from dealerships who claim to be successful, and yet who are being shut down, lends some credibility to the idea. As does the fact that the closing list is reportedly populated almost exclusively with Republican donors and/or those who gave money to Obama’s Democratic rivals. But the real test is in a comparison of the lists of dealerships staying open and those that are closing against a campaign donor database (which I haven’t done, but feel free to scrutinize them for yourself).

Nevertheless, the following bit of research from Red State strikes an ominous chord:

Eric Dondero recognizes some of the dealers’ names on the hit list:

“Vern Buchanan is a Republican Congressman from the Tampa Bay area. Robert Archer is the son of former Republican Congressman Bill Archer. John Culberson, a libertarian-leaning Conservative, is now the Congressman for that West Houston District. He was heavily supported in his election efforts by the Archers Family.”

“Additionally, James Crowley, owner of a Chrysler Dealership in Escondido, California is on the list to be closed. Crowley is a big backer of libertarian-leaning Republican Cong. John Campbell of Orange County.”

The list is heavy with influential Republicans and libertarians. Another name on the list is Ray Huffines, who owns a large dealerhsip in the Metro-Dallas/Ft. Worth area. The Huffines family have been major contributors to Rep. Ron Paul (R-TX) over the years.

It’s hard to know what to make of all this, but at first blush it certainly looks like the decisions to close dealerships may have been influenced by the political affiliations of the dealers. Under regular circumstances that would elicit a big shrug, but when Chrysler’s decisions are basically being made for them, well, that’s a whole ‘nother kettle of fish (via Reliapundit):

A lawyer for Chrysler dealers facing closure as part of the automaker’s bankruptcy reorganization said on Tuesday he believes Chrysler executives do not support a plan to eliminate a quarter of its retail outlets.

Lawyer Leonard Bellavia, of Bellavia Gentile & Associates, who represents some of the terminated dealers, said he deposed Chrysler President Jim Press on Tuesday and came away with the impression that Press did not support the plan.

“It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers,” Bellavia said. “It really wasn’t Chrysler’s decision. They are under enormous pressure from the President’s automotive task force.”

Given the other sorts of thuggery that have been alleged in these Chrysler proceedings, this should come as no shock. But the fact that these closings will have to be approved by the creditors in the bankruptcy case lends a certain bit of intrigue to this case and raises a lot questions in my mind.

Assuming that the closings are motivated by political payback from Obama, how will that plan affect the stakeholders in the new company? If there really are profitable dealerships being shutdown just because they gave money to the wrong candidates, then it stands to reason that the remaining dealers will be something less than the cream of the crop, and therefore the new Chrysler will have a less than optimal distribution chain for its products. It’s not entirely clear why shutting down dealerships helps Chrysler anyway, since they are essentially the real customers of the carmaker, but it seems to me that those who plan to profit from the new venture would have something to say about the plan in the bankruptcy case. Presumably, they will want to protect their investment by challenging any plan for closings that does not maximize their return. If and when they do, it could get very interesting for Obama (again, assuming that any of this is true).

It should be noted that until some further confirmation surfaces, this story should be treated with a healthy dose of skepticism. Indeed, if it weren’t for the rather dictatorial way the Obama administration has dealt with the entire automaker bailout fiasco, these allegations of political payback would ring pretty hollow. Yet, considering the past bullying, the story definitely merits further consideration, so keep your eyes and ears open for more.

The Burping Of The Lambs

The food police are interested in changing your diet – all in the name of climate change:

A government-sponsored study into greenhouse gases found that producing 2.2lb of lamb released the equivalent of 37lb of carbon dioxide.

The problem is because sheep burp so much methane, a potent greenhouse gas. Cows are only slightly better behaved. The production of 2.2lb of beef releases methane equivalent to 35lb of CO2 Tomatoes, most of which are grown in heated glasshouses, are the most “carbon-intensive” vegetable, each 2.2lb generating more than 20lb of CO2. Potatoes, in contrast, release only about 1lb of CO2 for each 2.2lb of food. The figures are similar for most other native fruit and vegetables.

Funny how that works in a carbon based eco system, wouldn’t you say? But don’t concern yourself, it’s all for your own good:

“We are not saying that everyone should become vegetarian or give up drinking but moving towards less carbon intensive foods will reduce greenhouse gas emissions and improve health,” said Kennedy.

Because everyone knows that potatoes are much healthier than tomatoes. Hashbrowns for all.

Oh, and barley and hops? FAIL!

Alcoholic drinks are another significant contributory factor, with the growing and processing of crops such as hops and malt into beer and whisky helping to generate 1.5% of the nation’s greenhouse gases.

My goodness, just look at what is happening to us.

~McQ

Newspeak Update: Spending Cuts = Dictatorship

Bizarro world continues unabated. The logic behind this assertion is … uh, “subtle” to say the least (my emphasis):

First, on “constitutional dictatorship,” there is, somewhat surprisingly, Minnesota, where Gov. Tim Pawlenty, a favorite of the Repblican right wing (assuming there is anything else than a right wing in the GOP these days) is apparently going to use all of his powers under the Minnesota have exercised such powers, but Pawlenty’s exercise in unilateral government seems to be of a different magnitude. Perhaps we should view Minnesota as having the equivalent of a Weimar Constitution Article 48, the “emergency powers clause” that allowed the president to govern by fiat. Throughout the 1920s, it was invoked more than 200 times to respond to the economic crisis. Pawlenty is sounding the same theme, as he prepares to slash spending on all sorts of public services. The fact that this will increase his attractiveness to the Republican Right, for the 2012 presidential race that has already begun, is, of course, an added benefit, since one doubts that he is banking on a political future within Minnesota itself (which didn’t give him a majority at the last election; he was elected, as was Gov. Rick Perry of Texas, only because of the presence of third-party candidates). One might also look forward to whether he will refuse to certify Al Franken’s election to the Senate even after the Minnesota Supreme Court, like all other Minnesota courts, says that he has won. Whoever thought that Minnesota would be the leading example of a 21st-century version of “constitutional dictatorship” among the American states?

I don’t know who Sandy Levin, the author of the above screed, is but I have to believe he has become lost in his own rhetoric. We are honestly being asked to accept the premise that a Governor, using his constitutionally-approved and legislature-granted powers, is somehow a “dictator” for … slashing spending in a time of budget shortfalls?

Gov. Tim Pawlenty promised Thursday to bring Minnesota’s deficit-ridden budget back into balance on his own if the session ends Monday without an accord, using line-item vetoes and executive powers to shave billions in spending.

[…]

Pawlenty held out the possibility of a negotiated agreement, but said he was prepared to use vetoes, payment suspensions and so-called unallotment to cut the two-year budget to $31 billion. That’s about $3 billion smaller than the slate of spending bills sent to him.

The move infuriated Democrats who run the Legislature. House Speaker Margaret Anderson Kelliher of Minneapolis dubbed Pawlenty “Governor Go It Alone.” Pawlenty shot back that without the step Kelliher would be “Speaker Special Session.”

“There will be no public hearings. There will be no public input. There will just be a governor alone with unelected people whispering in his ear of what to cut and what not to cut,” Kelliher said, calling it “bullying.”

Apparently this is exactly what Levinson and the Minnesota left want us to believe — i.e. that using duly constituted powers is the equivalent of behaving as a dictator. How utterly ridiculous.

If this were a situation where the governor was unilaterally deciding to burden the taxpayers more, or he was singling out a particular group of people to bear the brunt of arbitrary government rules, I could see where the dissenters here would have a point. If the executive branch suddenly declared, without any legislative input, that English was the official language of Minn. and no other languages would be recognized anywhere in the state upon penalty of law, then, legally granted powers or not, I would understand and support Levinson et al.

Instead, the perfectly preposterous idea that balancing a state budget, using the very powers granted the governor to accomplish the task, is now deemed the equivalent of the Weimar Republic emergency powers (you know, the ones that allowed Hitler to declare himself supreme dictator over Germany).

To be sure, the focus of this vitriolic (and, I’d say, hysterical) attack on Pawlenty stems from his threatened use of “unallotment” powers:

The procedure exists under state statute, and “the first prerequisite to unallotment is that the Commissioner of Finance ‘determines that probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the biennium will be less than needed.”

Then the ball is in the governor’s court:

“After the Commissioner of Finance determines that the amount available for the biennium is less than needed, the governor must approve the commissioner’s actions before the commissioner can either reduce the amount in the budget reserve or reduce allotments.”

The Legislature is consulted but does not have any power or ultimate say in the governor’s actions. The process starts at the beginning of the next fiscal biennium, which means that Pawlenty won’t enact anything until July 1. And what he’ll do is anyone’s guess.

“Depending on what he does with line-item vetoes, I figure we’ll see anywhere from a half a billion to $2 billion in unallotments,” Schultz said. “It’s unprecedented in dollar amount and in willingness to use it.”

Is it good policy or politics?

Schultz points out that unallotment is on the books for “emergency conditions” in which “the Legislature can’t do its job,” such as a budget forecast that comes out when lawmakers aren’t in session.

But in Schultz’s opinion, Pawlenty is “creating the emergency conditions that allow him to use it.”

“He appears to not want to negotiate in good faith,” Schultz offered. “Working with the Legislature is supposed to be a cooperative venture, not a take-it-or-leave-it one.”

The problem, of course, is that the legislature keeps sending a bill that proposes more spending than Minnesota’s revenues will allow. Because the governor and the legislature can’t agree on identifying new revenue sources (e.g. Leg. wants to tax the rich, Gov. wants to borrow against tobacco settlement), then the two sides are at an impasse. Despite what some might say, a proposed $3 billion deficit with no budget alternative in place does represent a fiscal emergency. After all, the money has to come from somewhere, or the services (giveaways, or whatever) will have to be cut, and the government may be forced to shut down. Why that doesn’t represent a fiscal emergency of the very type contemplated by the unallotment statute remains a bit of mystery for us less hysterical folks.

Jumping out the weeds, and regardless of how one might view the necessity of spending more or less via the Minnesota budget, I am simply flabbergasted that anyone could possibly suggest that forcing the government to spend less is in anyway, shape or form equivalent to dictatorship. To accept such premise is accept the idea that government spending is the sole source of freedom. I categorically reject any such notion. And if dictatorship is to be defined as standing in firm opposition to it, then sign me up.

Trade War?

It would appear the first shots in what could develop into a global trade war have been fired:

Ordered by Congress to “buy American” when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

Outrage spread in Canada, with the Toronto Star last week bemoaning “a plague of protectionist measures in the U.S.” and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.

Reports are Canadian McDonalds are only using Canadian potatoes and calling them “freedom fries” – okay, I’m kidding. But this isn’t a kidding matter. You remember how, when caught with the “buy American” clause in the stimulus package, Obama tried to wave it away by saying it didn’t mean what it said and Congress promising to water it down?

Yeah, like many political promises made by Congress and the President, this one has now proven to be false.

The buy American provisions in the stimulus package, signed into law in February, were just the beginning. Last week, Obama unveiled a series of proposals aimed at increasing taxes by nearly $200 billion over the next decade on U.S. companies doing business abroad. At a White House event, Obama said the measures were designed to “close corporate loopholes” that permit companies to “pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.”

Those sorts of measures are sure to speed the recovery. [/sarc]

Clueless.

~McQ

Drug Czar Wants To Banish Idea US Fighting “War On Drugs”

I don’t know if this is a bit of clever semantics or a real shift in policy, it’s just too early to tell, but if true, it may signal the beginning of a move toward sanity as it concerns drugs:

The Obama administration’s new drug czar says he wants to banish the idea that the U.S. is fighting “a war on drugs,” a move that would underscore a shift favoring treatment over incarceration in trying to reduce illicit drug use.

In his first interview since being confirmed to head the White House Office of National Drug Control Policy, Gil Kerlikowske said Wednesday the bellicose analogy was a barrier to dealing with the nation’s drug issues.

“Regardless of how you try to explain to people it’s a ‘war on drugs’ or a ‘war on a product,’ people see a war as a war on them,” he said. “We’re not at war with people in this country.”

But, of course, that’s precisely what a “war on drugs” has to be – a war on users, suppliers, growers, processors and the supporting network of people who get it from A to B. That’s precisely what we’ve been fighting from its inception and it is a war that’s being lost. It is time to consider the problem again and approach it with a different strategy. After all if input (I) + process(P) = output(O) and you never vary I or P, how can you expect O to ever be any different?

The Obama administration is likely to deal with drugs as a matter of public health rather than criminal justice alone, with treatment’s role growing relative to incarceration, Mr. Kerlikowske said.

Drugs are only a “criminal justice” problem because government chose prohibition – a policy that had been tried and failed miserably decades before – over a more rational and sane approach to drug use. There is no reason that a program that is much less of a threat to all of our freedoms and liberty shouldn’t be tried in the face of the miserable failure of the “war on drugs”. Perhaps then we’d see the violence inherent in the market created by government prohibition, as well as world record incarceration rates, subside dramatically. We can do this much, much better than we’re doing now.

~McQ