David Boaz

“Cat groomers, tattoo artists, tree trimmers and about a dozen other specialists across the country . . .  are clamoring for more rules governing small businesses,” reports the Wall Street Journal in a front-page story today. “They’re asking to become state-licensed professionals, which would mean anyone wanting to be, say, a music therapist or a locksmith, would have to pay fees, apply for a license and in some cases, take classes and pass exams.” And despite all the talk about deregulation and encouraging entrepreneurship, “The most recent study, from 2008, found 23% of U.S. workers were required to obtain state licenses, up from just 5% in 1950,” according to Morris Kleiner of the University of Minnesota.

The Cato Institute has been taking on this issue for decades. In 1986 Stanley Gross of Indiana State University reviewed the economic literature on the impact of licensing on cost and quality. Kleiner wrote in Regulation in 2006:

Occupational regulation has grown because it serves the interests of those in the occupation as well as government. Members of an occupation benefit if they can increase the perception of quality and thus the demand for their services, while restricting supply simultaneously. Government officials benefit from the electoral and monetary support of the regulated as well as the support of the general public, whose members think that regulation results in quality improvement, especially when it comes to reducing substandard services.

In today’s Los Angeles Times I write that social conservatives are pointing to real problems, but the only policy solutions they discuss are completely irrelevant to what they call “the high cost of  a dysfunctional society”:

. . . Reducing the incidence of unwed motherhood, divorce, fatherlessness, welfare and crime would be a good thing. So why the focus on issues that would do nothing to solve the “breakdown of the basic family structure” and the resulting “high cost of a dysfunctional society”? Well, solving the problems of divorce and unwed motherhood is hard. And lots of Republican and conservative voters have been divorced. A constitutional amendment to ban divorce wouldn’t go over very well, even with the social conservatives. Far better to pick on a small group, a group not perceived to be part of the Republican constituency, and blame it for social breakdown and its associated costs.

That’s why social conservatives point to a real problem and then offer phony solutions.

But you won’t find your keys on the thoroughfare if you dropped them in the alley, and you won’t reduce the costs of social breakdown by keeping gays unmarried and preventing them from adopting orphans.

The U.S. ambassador to Iraq expects to have 17,000 people on his staff after the United States “withdraws” from Iraq at the end of the year, he told the Senate this week. This is astounding. A typical American embassy in a small country might have 100 employees, in a big country such as Great Britain or Russia maybe a few hundred. A staff of 17,000 (including contractors) is not an embassy, it’s an occupation force. Or at least a viceroy‘s staff. Here’s the Washington Post report:

The top U.S. diplomat in Iraq on Tuesday defended the size and cost of the State Department’s operations in that country, telling lawmakers that a significant diplomatic footprint will be necessary after the withdrawal of U.S. troops at the end of this year.

James F. Jeffrey, the U.S. ambassador in Iraq, told the Senate Foreign Relations Committee that his staff of 8,000 will grow in the coming year to about 17,000 people, the vast majority of whom will be contractors.

And while the State Department is spending about $2 billion annually on Iraq operations now, it plans to spend an additional $1 billion on the construction of facilities in each of the next several years….

We’re spending $2 billion a year now on State Department operations in Iraq alone, and we intend to spend $1 billion a year on construction for some years to come. That’s some withdrawal! I know that when Sen. Barack Obama asked to be entrusted with the presidency by repeatedly saying, “I will bring this war to an end in 2009. It is time to bring our troops home,” he only said “troops.” But I can’t believe that the voters who heard him anticipated leaving thousands of Americans and spending billions of dollars in Iraq for many years.

If members of Congress are looking for ways to cut a trillion-dollar deficit, they might look at our construction and employment and nation-building plans in Iraq.

At the Britannica Blog I take a look back at Ronald Reagan on the occasion of his impending 100th birthday (February 6):

Libertarians have mixed feelings toward Ronald Reagan. When we’re feeling positive, we remember that he used to say, “Libertarianism is the heart and soul of conservatism.”

Other times, we call to mind his military interventionism, his encouragement of the then-new religious right (“I know you can’t endorse me, but I endorse you.”), and his failure to really reduce the size of government. But the more experience we have with later presidents, the better Reagan looks in retrospect….

And in those moments we’re tempted to paraphrase the theme song of All in the Family and say, “Mister, we could use a man like Ronald Reagan again.”

Bonus: The entry contains links to Encyclopedia Britannica entries on such topics as libertarianism and individualism, normally available only to subscribers. More Britannica reflections on Reagan here. Some other Cato thoughts on Reagan here.

Bloomberg reporter Andrew Frye plays it deadpan here.  I don’t think I need to comment, either, except to note that the taxpayers’ commitment to AIG peaked at $182 billion:

American International Group Inc.’s mortgage insurer does more business in Republican-leaning states as it signs up more reliable customers than those in “more liberal” areas, Chief Executive Officer Robert Benmosche said.

“All of the states where we’re a leader, where we’re the No. 1 insurer, are red states, all of the states where we’re at the bottom are blue states,” Benmosche, 66, said yesterday at a conference in Washington. “Part of what we found out is that our model is about culture and it’s about the attitude in the public. And what we find is where there’s more of a tendency for people to be more liberal, more that the government is responsible for what happens to me.”

Benmosche oversees an insurer propped up by more than $40 billion in government capital while competing mortgage guarantors operate without U.S. Treasury Department assistance.

More on chutzpah in the Bailout Nation here and here.

My first weekly blog/column at the Britannica Blog asks

What do Steven Jay Russell and Bradley Manning have in common? Manning of course is the U.S. Army private accused of passing massive amounts of Department of Defense and Department of State cables to WikiLeaks. Russell is the serial con man featured in the movie, I Love You Phillip Morris. Manning faces a maximum sentence of 52 years, while Russell is currently nine years into a sentence of 144 years (45 years for embezzlement and 99 years for escaping)….

Well, one thing they have in common is that they are both being held in solitary confinement 23 hours a day.

Is solitary confinement outrageous and inhumane for nonviolent prisoners? Read more here.

And while you’re at Britannica.com, read my entry on libertarianism.

NPR reports on rising food prices across the world. They may have played some role in the revolts in Tunisia and Egypt, and if so, those wouldn’t be the first revolutions sparked by inflation. NPR reporter Marilyn Geewax mentioned several reasons that food prices are rising — droughts, floods, oil prices, financial speculation — but not the obvious one: the continuing creation of unbacked money by central banks around the world. As Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon.” And as Jerry O’Driscoll wrote just two weeks ago, about rising food prices, “Inflation is here.” But that point isn’t yet universally understood, at least not at our government radio network.

Anyway, I turned off the radio and turned on the television, where TCM was just broadcasting the 1942 MGM propaganda film “Inflation” (made at the request of the Office of War Information but then never released because it was too anti-capitalist even for wartime propaganda). Edward Arnold plays the Devil, in league with Hitler and posing as a businessman who who encourages people to buy more, evade price controls, stockpile goods, and use the black market. (The film was made by Cy Endfield, who had been a member of the Young Communist League at Yale and went on to make such films as Zulu and Universal Soldier.) The film features what appears to be President Franklin D. Roosevelt’s April 28, 1942, radio speech, “Total War and Total Effort.” As the young couple in the film go to buy a new radio, the shopkeeper turns on the radio and they hear FDR say:

You do not have to be a professor of mathematics or economics to see that if people with plenty of cash start bidding against each other for scarce goods, the price of those goods (them) goes up.

Yesterday I submitted to the Congress of the United states a seven-point program, a program of general principles which taken together could be called the national economic policy for attaining the great objective of keeping the cost of living down. I repeat them now to you in substance:

First. we must, through heavier taxes, keep personal and corporate profits at a low reasonable rate.
Second. We must fix ceilings on prices and rents.
Third. We must stabilize wages.
Fourth. We must stabilize farm prices.
Fifth. We must put more billions into War Bonds.
Sixth. We must ration all essential commodities which are scarce.
Seventh. We must discourage installment buying, and encourage paying off debts and mortgages.

As it happens, I have a 1942 OWI poster with that same message hanging in my kitchen:

In fact, of course, price inflation was the natural result of a substantial increase in the money supply before and during the war. All of FDR’s policies — cartels, destruction of crops, wage and price controls, rationing — were misguided attempts to deal with the consequences of monetary manipulation and other bad policies.

By the way, FDR famously said, “The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.” Which might explain another propaganda film produced by MGM, this one in 1933, that extolled the virtues of FDR’s policy of inflation, utilizing the argument that is variously called “stimulus” or “the broken window fallacy.” The film cited the successful results of Civil War inflation. “What inflation has done before it will do again! . . . What a man! And what a leader! Yowzer! Happy days are here again!” Yeah, that went well. And by 1942 MGM was back on board, making a government propaganda film opposing inflation.

For background on inflation, read Cato adjunct scholar Lawrence H. White at the Concise Encylopedia of Economics.

Karl Rove, the architect of Republican victories in 2000 and 2004 and Democratic victories in 2006 and 2008, denounces President Obama’s “spending binge” and “liberal activism” as described in the State of the Union address. The Wall Street Journal‘s tagline on the column is, “On Tuesday, Republicans offered an alternative to the president’s big-government vision.” What Rove omits is that he and President Bush started the spending binge, delivered big government, and indeed came into office with a big-government vision, as Ed Crane pointed out in 1999.

Just take a look at the analysis in Rove’s Wall Street Journal column:

Most of his hour-long speech was a paean to liberal activism, as the president called for redoubling outlays on high-speed rail and “countless” green energy jobs.

Liberal boondogglery indeed. But Rove’s former colleague, White House speechwriter Michael Gerson, wrote on the same day in his Washington Post column:

 In his 2006 State of the Union address, which I helped write, President George W. Bush proposed a 22 percent increase in clean-energy research at the Energy Department, a doubling of basic research in the physical sciences and the training of 70,000 high school teachers to instruct Advanced Placement courses in math and science. I have no idea if these “investments” passed or made much difference. I doubt anyone knows.

Green nonsense is rampant in Washington.

Rove criticizes Obama for

a federal budget that’s increased 25% in two years, raising government’s share of GDP to 25% from roughly 20%.

Obama is a world-class spender. But spending increased 83 percent during Bush’s presidency, from $1.863 trillion to $3.414 trillion. He increased federal spending faster than any president since Lyndon Johnson. And yes, Obama is pushing the government’s share of GDP up; but Bush increased the federal government’s share of GDP by 2.2 percentage points, before the financial crisis, the bailouts, and TARP.

Read more…

The national debt has just passed $14 trillion. It’s approaching the so-called “debt limit” of $14.3 trillion, and members of Congress face a vote on raising the limit that doesn’t limit. President Obama will no doubt stress his commitment to reducing deficits in his speech tonight, but it’s unlikely that he will propose any actual budget cuts or any serious entitlement reforms. And we’re told that he will propose new spending on infrastructure, education, and research in the face of trillion-dollar deficits as far as the eye can see.

We’ve become so used to these stunning, incomprehensible, unfathomable levels of deficits and debt — and to the once-rare concept of trillions of dollars — that we forget how new all this debt is. In 1980, after 190 years of federal spending, the national debt was “only” $1 trillion. Now, just 30 years later, it’s sailing past $14 trillion.

Historian John Steele Gordon points out how unnecessary our situation is:

There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled.

It is hard to escape the idea that this happened only because Democrats and Republicans alike never said no to any significant interest group. Despite a genuine economic emergency, the stimulus bill is more about dispensing goodies to Democratic interest groups than stimulating the economy. Even Sen. Charles Schumer (D., N.Y.) — no deficit hawk when his party is in the majority — called it “porky.”

Annual federal spending rose by a trillion dollars when Republicans controlled the government from 2001 to 2007. It has risen another trillion during the Bush-Obama response to the financial crisis. So spending every year is now twice what it was when Bill Clinton left office. Republicans and Democrats alike should be able to find wasteful, extravagant, and unnecessary programs to cut back or eliminate. They could find some of them here in this report by Chris Edwards.

Tea Partiers and other taxpayers should listen carefully tonight, to both speeches. Is either party prepared to require the government to live within its means? Or will both parties continue to spend with abandon and raise the “debt limit” every few months?

Alex Pareene of Salon makes some fair points in his posting, “Tea Partiers don’t actually care about ‘liberty.'” It’s disappointing to hear that New Mexico Tea Partiers booed Gary Johnson’s support for legalizing marijuana. And it’s true that a new poll shows Tea Partiers pretty strongly against marriage equality. But the poll does show them just a smidgen more supportive than either conservatives or Republicans. And other polls (click “Social Issues” on the left) have shown somewhat more support among self-identified Tea Party supporters, or a clear division between libertarian-minded and culturally conservative Tea Partiers. In general, Tea Party activists — organizers and people who attend events — seem somewhat more libertarian than people who simply tell pollsters they consider themselves to be members or supporters of the Tea Party movement.

Tea Party groups have declined invitations to criticize federal court rulings on gay marriage. They have studiously avoided taking positions on social issues, even when social conservatives stomp their feet and demand that the Tea Party start talking about abortion and gay marriage.

I have said before that “The tea party is not a libertarian movement, but (at this point at least) it is a libertarian force in American politics. It’s organizing Americans to come out in the streets, confront politicians, and vote on the issues of spending, deficits, debt, the size and scope of government, and the constitutional limits on government. That’s a good thing. And if many of the tea partiers do hold socially conservative views (not all of them do), then it’s a good thing for the American political system and for American freedom to keep them focused on shrinking the size and cost of the federal government.” That still seems a valid point: Whatever views individual Tea Partiers may hold on an array of issues, as the Tea Party they are organized to constrain taxes, spending, deficits, debt, and the size of government, and that’s a libertarian direction.

Pareene seems simply wrong when he triumphantly ends his post with this supposedly damning quotation from Cato:

(A post from the Cato Institute makes its cheerful willingness to abandon the non-economic planks of its platform explicit: “Candidates and representatives hoping to appeal to the Tea Party, we argue, need to focus on a unifying economic agenda that takes into account this strong libertarian undercurrent.”)

Just read the quotation. My colleague David Kirby is saying that Republicans should avoid divisive social issues — presumably meaning abortion, gay marriage, and projects like the Terri Schiavo intervention — lest they lose the support of libertarian-leaning Tea Party activists. That is, he’s urging the Republican Party to abandon its non-libertarian agenda in order to unify a broad coalition of conservatives, libertarians, and independents. Pareene seems to have misread it.