By George, I Think They’ve Got It: ‘Far Too Many Laws’

Occupy protesters come to Washington and finally notice what the problem is:
Timothy Evans, a D.C. taxicab inspector, . . .  notices too many inside a taxi jerking slowly up Fifth Street NW — not the seven or eight passengers he sometimes sees sardine-stuffed into the Crown Victorias and Town Cars that make up the bulk of the city fleet, but still too many. He pops on his car’s flashing lights. The cab stops, and out they come, six of them. While Evans goes to chat with the driver, his partner, Carl Martin, calmly absorbs invective — not from the driver but from the riders, a group of activists from California who are in town for the Occupy Congress protest. Nadine Hayes, 59, of Camarillo, is none too happy her driver ended up with $50 worth of tickets — $25 for overloading, $25 for an improper manifest. “He was doing us a service and taking us to where we wanted to go,” she said. “I think we’ve got far too many laws. I think the American people are being so oppressed.”

Posted on January 30, 2012  Posted to Cato@Liberty

Chinese Currency and the U.S. Financial Crisis

Some people might have been surprised to read in Sunday's New York Times magazine that I believed "that all that easy money from China helped make the housing bubble much bigger and last longer, which created a far bigger crisis when the bubble finally burst." As you might suspect, it was only those two little words "from China" that gave me pause. But I'm very grateful to Adam Davidson and his colleagues at NPR's Planet Money for giving me a chance to elaborate on their blog. Here's a brief excerpt:
China was eager to buy our debt, both Treasury bonds and Fannie and Freddie's debt. But it was Congress that ran the deficits, and the Fed that kept interest rates artificially low. We don't need to go to Beijing to find the villains in this piece.... Our economy could use plenty of reforms – lower, flatter, simpler taxes; a more stable monetary policy or even a move toward free markets in money; reduced regulatory burdens; the de-monopolization of services from education to mail delivery; and less government spending. In all those cases, the problem and the solution are right here in the USA.
Read it all! And special bonus links: Steve Hanke responds to the argument for a tougher policy toward China at Planet Money. And Adam Davidson talked with me about libertarianism in 2010 (plus a much longer version also featuring Mark Calabria).

Posted on January 30, 2012  Posted to Cato@Liberty

Obama’s Wistful Military Metaphor

George Will takes President Obama to task for the theme in his State of the Union Address that America should be more like the army:
War, said James Madison, is “the true nurse of executive aggrandizement.” Randolph Bourne, the radical essayist killed by the influenza unleashed by World War I, warned, “War is the health of the state.” Hence Barack Obama’s State of the Union hymn: Onward civilian soldiers, marching as to war.... The armed services’ ethos, although noble, is not a template for civilian society, unless the aspiration is to extinguish politics. People marching in serried ranks, fused into a solid mass by the heat of martial ardor, proceeding in lock step, shoulder to shoulder, obedient to orders from a commanding officer — this is a recurring dream of progressives eager to dispense with tiresome persuasion and untidy dissension in a free, tumultuous society. Progressive presidents use martial language as a way of encouraging Americans to confuse civilian politics with military exertions, thereby circumventing an impediment to progressive aspirations — the Constitution and the patience it demands.
He reminds us that President Franklin D. Roosevelt pioneered such rhetoric, and that FDR supporters demonstrated appalling enthusiasm for actual dictatorship:
In his first inaugural address, FDR demanded “broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.” He said Americans must “move as a trained and loyal army” with “a unity of duty hitherto evoked only in time of armed strife.” ... Commonweal, a magazine for liberal Catholics, said that Roosevelt should have “the powers of a virtual dictatorship to reorganize the government.” Walter Lippmann, then America’s preeminent columnist, said: “A mild species of dictatorship will help us over the roughest spots in the road ahead.”
Ben Friedman deplored this theme in the speech as well:
There is an even bigger problem with this “be like the troops, put aside our differences, stop playing politics, salute and get things done for the common good” mentality. It is authoritarian. Sure, Americans share a government, much culture, and have mutual obligations. But that doesn’t make the United States anything like a military unit, which is designed for coordinated killing and destruction. Americans aren’t going to overcome their political differences by emulating commandos on a killing raid. And that’s a good thing. At least in times of peace, liberal countries should be free of a common purpose, which is anathema to freedom.
As did I, in the first few minutes of this post-speech interview on Stossel. Cato scholars have also quoted that appalling inaugural speech from FDR -- asking for “broad executive power" at the head of "a trained and loyal army” -- several times. Let's hope that after George Will's skewering, Obama will drop this theme. Hierarchy, centralization, common purpose, command, and control are appropriate for an army, not for a free people.

Posted on January 29, 2012  Posted to Cato@Liberty

Arlo Sings Bailouts

Only days after the president declared, "No more bailouts, no more handouts," I see that Arlo Guthrie is touring the South in February and March. What's the connection? If you have the good fortune to see him, be sure to ask for "I'm Changing My Name to Fannie Mae." That 2008 song was itself a new version of Tom Paxton’s classic song “I’m Changing My Name to Chrysler,” sung here by Arlo: “When they hand a million grand out, I’ll be standing with my hand out....If you're a corporate titanic and your failure is gigantic, Down in Congress there's a safety net for you." The 2008 version is sung here by Arlo and here by Paxton. Besides the name of the company, they had to make a few other changes in the lyrics, like “When they hand a trillion grand out, I’ll be standing with my hand out.” But that was October 2008. By the end of December, I was noting that it was a Merry Christmas for GMAC, which learned on Christmas Eve that the Federal Reserve had approved its application to become a bank holding company. That gave GMAC “access to new sources of funding, including a potential infusion of taxpayer dollars from the Treasury Department and loans from the Fed itself,” as the Washington Post explained. GMAC wasn’t the only company that suddenly became a “bank holding company” in order to cash in on the $700 billion financial bailout. Late one night in November, American Express was granted the same privilege, along with Morgan Stanley, Goldman Sachs, and CIT. Which was why I suggested then that Tom and Arlo needed a new version: "I’m Changing My Name to Bank Holding Company." For now, enjoy "I'm Changing My Name to Fannie Mae":   http://www.youtube.com/watch?v=vAG0XMRty5Y

Posted on January 29, 2012  Posted to Cato@Liberty

What Ron Paul Talks About

The New York Times has an interesting graphic, under the heading "Choice Words," that shows how differently Ron Paul talks about the role of government from all the other candidates. There's a complete version here, but I've excerpted a section. The Times notes that the graphic depicts "selected words used by President Obama in his State of the Union addresses, and by Republican presidential candidates in their debates, television interviews and major speeches since May." Read more...

Posted on January 27, 2012  Posted to Cato@Liberty

The State of the Union on Stossel

Here's an edited version of last night's special "Stossel" show following the State of the Union Address. Our Cato tape editors have cut right to my opening one-one-one with Stossel, wherein I talk about Obama's "blueprint" for America and my suggestion for a bumper sticker reading YES YOU DID. Later Matt Welch, Megan McArdle, and Gov. Gary Johnson join the discussion and take on issue of taxes, Iraq, the looming but mostly ignored entitlements crisis, outsourcing, and the president's audacious claim that his $50 billion bailout of GM and Chrysler had been a good deal. Skip the commercials, watch it here:

Posted on January 25, 2012  Posted to Cato@Liberty

How to End a Depression

Great article in the Sunday Washington Post by James Grant on the depression of 1920-21 and how after President Warren G. Harding's response, "the unemployment rate fell from 15.6 percent to 9 percent (on its way to 3.2 percent in 1923), while constant-dollar output leapt by 16 percent. After which the 1920s proverbially roared."
And how did the administration of Warren G. Harding, in conjunction with the Federal Reserve, produce these astonishing results? Why, by raising interest rates, reducing the public debt and balancing the federal budget.
Pundits often accuse Herbert Hoover of "doing nothing" to counter the depression of 1929. Boy, are they wrong. Grant thinks Harding doesn't get his due:
When he wasn’t presiding over a macroeconomic miracle cure, Harding convened a world disarmament conference and overhauled the creaky machinery of federal budget-making. For his trouble, historians customarily place him last, or next to last, in their rankings of U.S. presidents. Incredibly, they consign him near the bottom even in the subcategory of economic management, about 40 places behind Franklin D. Roosevelt, who inherited a depression that he didn’t actually fix.
The Hoover-Roosevelt-Bush-Obama do-something-anything-everything approach to economic recovery seems to result in elongated depressions. Take a look:   Maybe we should try the Harding do-nothing approach -- which isn't actually do-nothing; he cut taxes and spending and balanced the budget. Cato scholars have written about how Harding ended a depression here and here.

Posted on January 22, 2012  Posted to Cato@Liberty

Ron Paul, President of Twitter

Ron Paul didn't do as well with Republican voters in South Carolina as he had done in Iowa and New Hampshire. But he's still the king of Twitter. (And tweeters, of course, are the people who in one day faced down Hollywood and forced leading senators to withdraw their online-piracy bills.) Natalie Jennings of the Washington Post reports:
NBC’s Chuck Todd might have summed up Thursday’s events best with this tweet:
Books about this campaign will have chapters simply titled: "January 19th"
Mitt Romney faced mounting pressure to release his tax returns as reports surfaced Wednesday night he might have assets in bank accounts in the Cayman Islands. The Des Moines Register declared that Rick Santorum actually got more votes than Romney in the Iowa caucuses. Rick Perry announced he would suspend his campaign in a morning news conference. Newt Gingrich’s second wife, Marianne, said in interviews with ABC and The Washington Post that the former speaker had asked her for an open marriage. And Gingrich exploded at moderator John King within the first few minutes of the CNN debate that night. And yet, through it all, Ron Paul maintained his lead on the@MentionMachine leaderboard this week. We measured tweets from Wednesday at 7 p.m. through Friday at 4 p.m.
Lots of Cato commentary on Ron Paul here. Some Mitt Romney analysis here. Some pretty sharp criticisms of Rick Santorum here. Aaaand my colleagues haven't been too keen on Newt Gingrich and Barack Obama either. What kind of policies would we like to see a presidential candidate propose? Check out the Cato Handbook for Policymakers.

Posted on January 22, 2012  Posted to Cato@Liberty

The Panel Makers’ Petition

One of the most famous documents in the history of free-trade literature is Bastiat's famous “Candlemakers’ Petition.” In that parody, the French economist and parliamentarian imagined the makers of candles and street lamps petitioning the French Chamber of Deputies for protection from a most dastardly foreign competitor:
You are on the right track. You reject abstract theories and have 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. . . . 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 . . .  is none other than the sun.
For after all, Bastiat’s petitioners noted, how can the makers of candles and lanterns compete with a light source that is totally free? Thank goodness we wouldn’t fall for such nonsense today. Or would we? We may be about to find out. Makers of solar panels have petitioned the U.S. Department of Commerce and the International Trade Commission to slap tariffs on imported Chinese panels. Christopher Joyce of NPR reports that Gordon Brinser, CEO of Solar World, complains that U.S. manufacturers can't compete with cheaper Chinese imports. The Chinese panels aren't free; but just as Bastiat's candlemakers complained, the competition is hard to counter. Perhaps the comparison is unfair. After all, the Coalition for American Solar Manufacturing isn't asking for protection from the sun, only from Chinese panel producers who are allegedly “dumping” panels into the American market “at artificially low prices.” What’s the difference, though? Any source that supplies solar panels to American consumers and businesses is a competitor of the American industry. And any source that can deliver any product cheaper than American companies is a tough competitor. Domestic producers will no doubt gain by imposing a tariff on their Chinese competitors. But companies that install solar power will lose, by having to pay higher prices for panels. Businesses would always prefer a world without competitors. If they can't outcompete their rivals in the marketplace, they may be tempted to ask the government for protection. And our "antidumping" laws actually invite such complaints. But economists agree that consumers, and the businesses that use imported products, lose more on net than producers gain. Protectionism is a bad deal for the American economy. Let's hope the uncompetitive solar panel manufacturers get told to go build a better mousetrap. More on "antidumping" laws here.

Posted on January 19, 2012  Posted to Cato@Liberty

Today, at Least, Britannica Rules the Web

Congratulations to Wikipedia for going dark for a day in protest of the "online piracy" bills being considered in Congress. But what do we do for information today? You know, we've gotten used to being able to find information now. So here's an idea: Try the original encyclopedia, the one written (in most cases, ahem) by scholars and experts, Britannica. You could start with their article on libertarianism. Or indeed their article on censorship. And then move on to the columns that I wrote there for most of 2011, on such topics as the debt ceiling crisis, the French Revolution, the founding documents of the United States and the Communist Party of China, the false charge of isolationism, marriage equality in 1967 and 2011,  government waste ("this is the business you have chosen"), the Stonewall protests, the triumph of feminism, and why Keynes threw towels on the floor. Good heavens -- that ought to keep you busy on Wednesday. And then Thursday at noon, as Wikipedia and other sites reopen, you can go down to Capitol Hill at noon to see a panel of experts explain what's wrong with the bills that the websites are protesting.

Posted on January 17, 2012  Posted to Cato@Liberty

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