The Benefits of Frictionless Trade, as Seen in Saarland

The European Union comes in for a lot of criticism, including around these parts. Not all my colleagues have been so critical. Still, burdensome regulations by an unaccountable bureaucracy would trouble any libertarian. 

But this article in the Washington Post reminded me of the original promise of the Common Market, which grew into the European Union:

The degree to which the European Union’s post-nationalist vision has transformed the continent is evident in the German region of Saarland, an area of 1 million residents hard on the French border. 

The region — marked by lush forests, gentle hills and rich coal deposits that once made Saarland an industrial jackpot — has changed hands eight times over the past 250 years. In the past century alone, it was traded between France and Germany four times.

The first of those came in the aftermath of World War I, when France claimed the territory as compensation for German destruction of France’s own coal industry.

Germany lost the land again after World War II and only got it back in 1957.

As recently as the 1990s, the nearby border was subject to strict controls. But today, it’s largely invisible. French citizens commute to Saarland for work or pop by to buy a dishwasher. Germans cross Saar into France for lunch or to pick up a bottle of wine. French — the language of the longtime enemy and occupier — is part of the fabric of Saarland, and it’s welcome.

“We’re neighbors. We’re friends. We marry each other. One hundred years ago, we killed each other. It’s been a great evolution,” said Reiner Jung, deputy director at the Saar Historical Museum in the region’s capital, Saarbrücken.

Of course, countries could drop their trade barriers without creating a supranational bureaucracy. But too many people misunderstand economics and believe giving up their trade barriers is a cost, so creating a customs union, a common market, or even a European Union may often be the only way to get the substantial benefits of free trade. And frictionless trade is even harder to achieve without multinational negotiations. So there are pros and cons to arrangements such as the European Union, but we shouldn’t underestimate the great benefits of commerce and movement across national borders.

Posted on November 16, 2018  Posted to Cato@Liberty

Midterm Elections Review and Policy Outlook

What do the midterm election results mean for liberty? David Boaz knows that the impact of shifting partisan majorities is rarely a clear-cut good or bad. What new opportunities for positive change could come from a Democratic House? Will the expanded Republican majority in the Senate help with the confirmation of originalist judges? Are we heading towards an impeachment battle?

While the new alignment on Capitol Hill offers some potential for improvement, there is always the concern for bipartisan “compromise” at the expense of the American people. Republicans and Democrats might get together and agree to grow government and spend more, in which case the gridlock that commonly accompanies divided government might be preferable.

Join us as David Boaz answers these and other questions in his breakdown of the election results and how they will impact Cato’s work going forward.

Posted on November 13, 2018  Posted to Cato@Liberty

The Senselessness of World War I, from Beginning to End

One hundred years ago Sunday, at the eleventh hour of the eleventh day of the eleventh month of 1918, the bloodiest war in history ended. In the New Yorker, historian Adam Hochschild writes about the senseless beginning of the war in an “epic chain of blunders, accusations, and ultimatums” and about its senseless end: “In the five weeks since the Germans first requested peace negotiations, half a million casualties had been added to the war’s toll…. Worse yet, British, French, and American commanders made certain that the bloodshed continued at full pitch for six hours after the Armistice had been signed [at 5 a.m., with the news immediately radioed and telephoned to commanders on both sides].”

Wilson's War book cover Jim Powell

Cato senior fellow and historian Jim Powell wrote about the blunders and consequences of World War I in his book Wilson’s War: How Woodrow Wilson’s Great Blunder Led to Hitler, Lenin, Stalin, and World War IIHe summarized his argument in Cato Policy Report four years ago:

World War I was probably history’s worst catastrophe, and U.S. President Woodrow Wilson was substantially responsible for unintended consequences of the war that played out in Germany and Russia, contributing to the rise of totalitarian regimes and another world war. 

Indeed World War I was a catastrophe, a foolish and unnecessary war, a war of European potentates that both England and the United States could have stayed out of but that became indeed a World War, the Great War. In our own country the war gave us economic planning, conscription, nationalization of the railroads, a sedition act, confiscatory income tax rates, and prohibition. Internationally World War I and its conclusion led directly to the Bolshevik revolution, the rise of National Socialism, World War II, and the Cold War. 

On this weekend as we celebrate the end of this tragedy we should mourn those who went to war, and we should resolve not to risk American lives in the future except when our vital national interests are at stake.

Posted on November 9, 2018  Posted to Cato@Liberty

David Boaz gives a lecture on libertarianism at Claremont McKenna College

Posted on October 29, 2018  Posted to Cato@Liberty

Young People like ‘Socialism,’ but Do They Know What It Is?

Fifty-seven percent of Democrats and 51 percent of young people have a positive view of socialism, Gallup reports, slightly more than those who have a positive view of capitalism. That’s frightening. The record of socialist countries, from the Soviet Union and Mao Zedong’s China to today’s Venezuela, is horrific: little or no economic growth, hunger, authoritarian government, people risking their lives to flee.

So why are people talking about socialism again? It seemed to start with Senator Bernie Sanders’s presidential campaign in 2016. Then came a new breed of Democrats fed up with the influence of money in both parties, typified by Alexandria Ocasio-Cortez’s upset victory over a prominent Democratic congressman. The Democratic Socialists of America (DSA) says its membership skyrocketed after Ocasio-Cortez’s June win.

Americans like free enterprise, and very few of them want a more powerful government.

Socialism is back, after seemingly being buried in the dustbin of history with the collapse of the Soviet Union in 1989, for several reasons. Young people never knew, and many older voters have forgotten, what the Union of Soviet Socialist Republics (USSR) and its Eastern European client states were like. The financial crisis of 2008 certainly gave capitalism a bad name. Bailouts for Wall Street, a very slow economic recovery, and endless wars left people on all sides of the political spectrum looking for alternatives. For some people that alternative was a tough-talking billionaire president, but with his harsh rhetoric toward immigrants and other groups, he seemed like a typical unfeeling capitalist to many other voters.

So now half of Americans 18-29 say they have a positive view of socialism. But there’s a lot of confusion about what that means. The traditional definition of socialism, as summarized in the Concise Encyclopedia of Economics, is “a centrally planned economy in which the government controls all means of production.” That’s what the Communist Party implemented in the Soviet Union and China. It was the goal of the British Labour Party, and the nationalizations of coal, iron and steel, railroads, utilities, and international telecommunications after World War II led to decades of economic stagnation.

But most American “socialists” probably don’t support government ownership of the means of production. Ask self-proclaimed socialists what they want, and you get vague and lovely answers. Ocasio-Cortez says that “in a modern, moral and wealthy society, no person in America should be too poor to live.” In the Liza Minnelli musical Flora the Red Menace, the Communist organizer sings, “Are you in favor of democracy, the rights of man, everlasting peace, milk and cookies for the kids, security, jobs for everyone, and against slums, the filthy rich, and making cannon fodder of our youth? Then you’re a Communist!”

Sanders has often pointed to Denmark as an example of democratic socialism. But don’t tell that to the Danes. In 2015 the Danish prime minister said he knew that “some people in the U.S. associate the Nordic model with some sort of socialism. I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”

If Denmark is the model for today’s American socialists, then they should leave the DSA and join Democrats for Higher Taxes and Transfer Payments.

A deeper dive into Gallup’s latest poll shows a decided lack of interest in the kind of government control that socialism would entail. Asked if they had a positive or negative image of various things, respondents gave very high marks to small business, entrepreneurship, and free enterprise, and 56 percent approval to capitalism. The federal government and socialism lagged far behind at 39 and 37 percent. (These are numbers for all respondents, not just young people as above.)

Only 44 percent agreed that “government should do more to solve our country’s problems.” Only 25 percent said there is too little government regulation of business, 39 percent said too much, and 33 percent the right amount. In 2017 Gallup found that 67 percent of Americans believed big government was a bigger threat to the future than big business was. Only 26 percent picked big business, and 5 percent said big labor.

Perhaps most telling: If socialism means anything, it means giving more power to government. But almost no one in the new Gallup poll thinks the federal government has too little power: just 8 percent in the new poll, about where it’s been since 2002.

There’s lots of talk in the United States about socialism these days, and lots of debate about how high taxes and spending ought to be. But Americans like free enterprise, and very few of them want a more powerful government.

Posted on October 25, 2018  Posted to Cato@Liberty

Fat Cats in the New Yorker

Fat Cats in the New Yorker

This cover image in the New Yorker, titled – obviously – “Fat Cats,” is brought to you by Gucci, Fidelity Investments, Gemfields, Northern Trust, Big Pharma, Mastercard Black Card, First Republic Private Wealth Management, Ocean Reef Club, Swann Auction Galleries, Suntrust Private Wealth Reserve, Ike Behar, Wells Fargo, and other purveyors of goods and services to … well, fat cats.

And most especially, on the flip side of this cartoon mocking rich men in suits, as economist Lawrence H. White noted on Facebook, is a two-page spread advertising made-to-measure suits from Giorgio Armani. 

Who was it who first said, “Think left, live right”?

 

 

Posted on October 23, 2018  Posted to Cato@Liberty

Bipartisanship Means Spending Taxpayers’ Money

Everybody’s deploring partisan polarization these days, especially this presidential term, especially this week. Including the Cato Institute’s president, Peter Goettler: “two years in Washington has taught me that tribalism is a huge factor in driving the political process and discourse.” On the other hand, as I’ve written  before, bipartisanship is typically a conspiracy against the taxpayers. Here’s the latest example, from the Wall Street Journal:

‘We Don’t All Hate Each Other’: Senate’s Bipartisanship Obscured by Kavanaugh Fight

The intense partisanship engulfing Supreme Court nominee Brett Kavanaugh has diverted attention from a raft of recent bipartisanship in the Senate during the past few weeks, drowning out issues that could appeal to voters in the midterms.

The chamber on Wednesday passed legislation to reauthorize the Federal Aviation Administration for five years by a 93-6 vote. That legislation included a measure to double funding for big infrastructure projects around the world, combining several little-known government agencies into a new body with authority to do $60 billion in development financing.

Posted on October 6, 2018  Posted to Cato@Liberty

David Boaz discusses the USMCA on BoldTV

Posted on October 5, 2018  Posted to Cato@Liberty

None of My Business: P. J. Explains Money, Banking, Debt, Equity, Assets, Liabilities, and Why He’s Not Rich and Neither Are You

P. J. O’Rourke, America’s leading political satirist and Cato H. L. Mencken Research Fellow, has been dubbed “the funniest writer in America” by the Wall Street Journal. In his new book, None of My Business: P. J. Explains Money, Banking, Debt, Equity, Assets, Liabilities, and Why He’s Not Rich and Neither Are You, the best-selling author delves into the world of business, offering his humorous, incisive musings on everything from banking and investments to China and the future of Bitcoin—and, of course, how the “crazy things” that government does to money manage to make the financial world even more mind-boggling.

Whether explaining what cleaning his chicken coop taught him about investing, how covering war zones for Rolling Stone taught him economics, or what his teenage daughter revealed to him about the digital economy, O’Rourke is always sure to deliver pithy insights with a healthy dose of humor.

Posted on September 12, 2018  Posted to Cato@Liberty

None of My Business: P. J. Explains Money, Banking, Debt, Equity, Assets, Liabilities, and Why He’s Not Rich and Neither Are You

P. J. O’Rourke, America’s leading political satirist and Cato H. L. Mencken Research Fellow, has been dubbed “the funniest writer in America” by the Wall Street Journal. In his new book, None of My Business: P. J. Explains Money, Banking, Debt, Equity, Assets, Liabilities, and Why He’s Not Rich and Neither Are You, the best-selling author delves into the world of business. He offers his humorous, incisive musings on everything from banking and investments to China and the future of Bitcoin — and, of course, how the “crazy things” that government does to money can make the financial world even more mind-boggling.
Whether explaining what cleaning his chicken coop taught him about investing, telling how covering war zones for Rolling Stone taught him economics, or sharing what his teenage daughter revealed to him about the digital economy, O’Rourke is always sure to deliver pithy insights with a healthy dose of humor. Join the Cato Institute for this rousing discussion of the wild world of finance.

Posted on September 6, 2018  Posted to Cato@Liberty

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