David Boaz

In the New York Times my old friend Tyler Cowen writes:

Another conservative economist and Nobel laureate, James M. Buchanan, emeritus professor of economics at George Mason University,...

I guess Tyler has never read Buchanan's 2005 book, Why I, Too, Am Not a Conservative, reviewed here by another distinguished economist, William A. Niskanen.

Cato Mencken Fellows Penn Jillette and Teller launch a new hour-long show, "Penn & Teller Tell a Lie," on the Discovery Channel this Wednesday at 10 p.m. Eastern and Pacific Time. Discovery says:

Penn & Teller bring their unique vision of the world in a new interactive series with a twist. In each episode, Penn & Teller make up to seven outrageous claims. While most of the wildly unbelievable stories are absolutely, positively true - one of them is a BIG FAT LIE. It will be up to viewers to spot the fake and VOTE LIVE  online or with the new GUESS THE LIE app.

They'll put lots of scientific claims and myths through rigorous testing, continuing their longstanding interest in science, truth, and skepticism. If you have a DVR, note that Showtime is rebroadcasting an episode of their former series, this one a skeptical look at the environmental movement, at the exact same time: 10:30 p.m. Wednesday. And if you can't wait till Wednesday, listen to Cato's podcast with Penn Jillette recorded a few weeks ago.

Just reading the headlines of the Solyndra stories in major newspapers the past month tells a story that just keeps getting more discouraging: Obama-backed green firm shuts down The Washington Post, September 1, 2011 Solar firm to cease operations; Solyndra had received a $535-million loan guarantee. It plans to seek Chapter 11. Los Angeles Times, September 1, 2011 A Third Solar Company Files for Bankruptcy The New York Times, September 7, 2011 FBI raids offices of solar-panel firm The Washington Post, September 9, 2011 E-mails cite rush on loan to solar firm The Washington Post, September 14, 2011 Treasury to probe loan to Solyndra; The Federal Financing Bank's role in the failed firm's borrowing will be the focus. Los Angeles Times, September 16, 2011 White House official: Funding Solyndra further was risky The Washington Post, September 16, 2011 Amid Solyndra probe, Energy Dept. moving billions in loans The Washington Post, September 17, 2011 SOLAR FIRM'S OBAMA LINKS PROBED; A fundraiser's role in a loan program that aided Solyndra stokes concern about the company's influence. Los Angeles Times, September 17, 2011 Questions Raised Over Letting Another Lender Help a Failing Solar Company The New York Times, September 17, 2011 Justice Dept. urged to probe Solyndra The Washington Post, September 20, 2011 Solyndra officials to invoke Fifth before House panel The Washington Post, September 21, 2011 Solyndra's ex-employees tell of high spending, factory woes The Washington Post, September 22, 2011 In Rush To Assist A Solar Company, U.S. Missed Signs The New York Times, September 23, 2011 Government OKs new green loans; Two execs of bankrupt solar firm Solyndra plead the 5th before a congressional panel. Los Angeles Times, September 24, 2011 A solar pariah had Republican parents, too The Washington Post, September 27, 2011 Where Solyndra said yes, others demurred The Washington Post, September 27, 2011 Obama aides voiced doubts about loans like Solyndra's; A top concern was that the vetting process wasn't rigorous enough. Los Angeles Times, September 27, 2011 Energy Dept. knew Solyndra had violated its loan terms The Washington Post, September 29, 2011 U.S. Backs New Loans For Projects On Energy The New York Times, September 29, 2011 Energy chief cleared Solyndra loan breaks The Washington Post, September 30, 2011 I found these headlines on Nexis, but of course they can be found on the newspapers' websites. I linked to two of the stories last week. Some have tried to dismiss the Solyndra story. Private investors make plenty of mistakes, too. Companies fail, sometimes through no fault of their own. But this story has all the hallmarks of government decision making: officials spending other people's money with little incentive to spend it prudently, political pressure to make decisions without proper vetting, the substitution of political judgment for the judgments of millions of investors, the enthusiastic embrace of fads like "green energy," political officials ignoring warnings from civil servants, crony capitalism, close connections between politicians and the companies that benefit from government allocation of capital, the appearance -- at least -- of favors for political supporters, and the kind of promiscuous spending that has delivered us $14 trillion in national debt. It may end up being a case study in political economy.

Is the taxpayers' lost $535 million in the green-energy company Solyndra just an unfortunate business failure, or is there something more scandalous involved? You should read every word of this front-page New York Times article. Sure, it says that "no evidence has emerged that political favoritism played a role in what administration officials assert were merit-based decisions." But the story is full of smoking guns. Here's the opening:

President Obama’s visit to the Solyndra solar panel factory in California last year was choreographed down to the last detail---the 20-by-30-foot American flags, the corporate banners hung just so, the special lighting, even coffee and doughnuts for the Secret Service detail. “It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” the president declared in May 2010 to the assembled workers and executives. The start-up business had received a $535 million federal loan guarantee, offered in part to reassert American dominance in solar technology while generating thousands of jobs. But behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public. Barely a year later, Solyndra has become one of the administration’s most costly fumbles after the company declared bankruptcy, laid off 1,100 workers and was raided by F.B.I. agents seeking evidence of possible fraud. Solyndra’s two top officers are to appear Friday before a House investigative committee where, their lawyers say, they will assert their Fifth Amendment right against self-incrimination.

Read more...

Tom Palmer is very fond of this quotation from Voltaire on the connections among commerce, toleration, and the erosion of prejudice:

Go into the Exchange in London, that place more venerable than many a court, and you will see representatives of all the nations assembled there for the profit of mankind. There the Jew, the Mahometan, and the Christian deal with one another as if they were of the same religion, and reserve the name of infidel for those who go bankrupt. There the Presbyterian trusts the Anabaptist, and the Church of England man accepts the promise of the Quaker. On leaving these peaceable and free assemblies, some go to the synagogue, others in search of a drink; this man is on the way to be baptized in a great tub in the name of the Father, by the Son, to the Holy Ghost...

You can find it in Tom's essay "Globalization and Culture," which is included in Realizing Freedom: Libertarian Theory, History, and Practice. I found a very similar thought in a Wall Street Journal review of the book Ghetto at the Center of the World by Gordon Mathews. The book focuses on "the most notorious flophouse in Asia," which accommodates people from all over the world, but especially from Africa and South Asia and especially merchants who trade cheap Chinese-made goods to buyers from other countries. The review notes:

Interpersonal relations at the building, the author says, might not be reliably friendly, but "they are generally peaceful." He adds: "As a Pakistani said to me vis-à-vis Indians, 'I do not like them; they are not my friends. But I am here to make money, as they are here to make money. We cannot afford to fight.' "

Voltaire and Mathews, like many other observers, have noticed that people trying to make money don't generally get too upset about other people's race or religion. This is part of the "doux commerce" or "sweet commerce" thesis that goes back to the Middle Ages. Albert O. Hirschman wrote about it in 1982, and much of Deirdre McCloskey's current work explores the idea of "doux commerce" and bourgeois virtues.

President Obama says the rich should pay higher tax rates, citing billionaire Warren Buffett, who says he pays a lower tax rate than his secretary. Various analysts have pointed out that Buffett takes very little salary and gets most of his income in the form of dividends and capital gains, which reflect income that was already taxed once at the corporate level. But what about the broader argument, that the rich don't pay enough in taxes, that maybe they even pay less than the middle class? In May, the Wall Street Journal ran an article headlined, "High-Earning Households Pay Growing Share of Taxes." John D. McKinnon reported:

Upper-income taxpayers have paid a growing share of the federal tax burden over the last 25 years. A 2008 study by the Organization for Economic Cooperation and Development, for example, found that the highest-earning 10% of the U.S. population paid the largest share among 24 countries examined, even after adjusting for their relatively higher incomes. "Taxation is most progressively distributed in the United States," the OECD study concluded. Meanwhile, the percentage of U.S. households paying no federal income tax has been climbing, and reached 51% for 2009, according to a new analysis by the Joint Committee on Taxation.

An accompanying graphic shows the growing share of income taxes paid by the wealthy (in green) and how the U.S. ratio of taxes on the wealthy in relation to their income compares to that in other rich countries:

Rachel Donadio reports in the New York Times:

COMITINI, Italy — With only 960 residents and a handful of roads, this tiny hilltop village in the arid, sulfurous hills of southern Sicily does not appear to have major traffic problems. But that does not prevent it from having one full-time traffic officer — and eight auxiliaries. The auxiliaries, who earn a respectable 800 euros a month, or $1,100, to work 20 hours a week, are among about 64 Comitini residents employed by the town, the product of an entrenched jobs-for-votes system pervasive in Italian politics at all levels.

She goes on to explain that much local spending comes from the national government, which is now in dire straits:

But what may be saving Comitini’s economy is precisely what is strangling Italy’s and other ailing economies throughout Europe. Public spending has driven up the public debt to 120 percent of gross domestic product, the highest percentage in the euro zone after Greece’s.

The Washington Examiner reports:

Six of [the Washington-area mass transit system] Metro's top executives are assigned agency-owned vehicles that they can drive home, the transit system acknowledged Tuesday, one day after saying none of them had take-home vehicles. That is in addition to the 116 Metro employees who receive take-home vehicles, including 88 managers and superintendents, first reported by The Washington Examiner.

I wonder if executives and managers at automobile companies get free subway passes?

Lots of media are reporting that a new poll from the Associated Press and the National Constitution Center shows that 53 percent of Americans believe that "the government [should] give legal recognition to marriages between couples of the same sex." Google "gay marriage poll," and you get 284 news items. Good. It's news. Even though it's just about what other recent polls have found. And even though 48 percent also said they supported a federal constitutional amendment to ban gay marriage, suggesting that at least 1 percent of respondents are as confused about their position as Rick Perry and Michelle Bachmann. But the survey had much else in it, as well. In fact, here's an interesting data point from the survey, released a day earlier than the gay-marriage results:

82 percent of respondents say "The Federal Government should not have the power to require all Americans to buy health insurance."

That is, 82 percent of Americans oppose the central plank of President Obama's health care policy, the one that's roiling the courts right now and headed for the Supreme Court. But Google "poll health care mandate," and you get no national media results. It's sorta like it didn't happen. But it did, and Democratic campaign consultants have no doubt noticed it. As usual, not everything in the poll was encouraging. 61 percent say they oppose "giving the President more power at the expense of the power of Congress and the courts," but that's down from 73 and 75 percent the past two years.