David Boaz: In Obama’s economic stimulus push, we’re seeing Naomi Klein’s Shock Doctrine in reverse

On the economy, Obama is trying to scare the American people in order to ram through a progressive agenda

"Profound economic emergency," the president says. Failure to pass his spending plan could "turn a crisis into a catastrophe". Any delay will mean "paralysis" and "disaster". It's all out of the "shock doctrine" playbook: scare people to death and then demand that your agenda be enacted without delay.

Naomi Klein made waves two years ago with her book The Shock Doctrine, in which she claimed that conservative governments use crises to ram through free-market policies. As she put it in an interview: "The Shock Doctrine is a political strategy that the Republican right has been perfecting over the past 35 years to use for various different kinds of shocks. They could be wars, natural disasters, economic crises, anything that sends a society into a state of shock to push through what economists call 'economic shock therapy' – rapid-fire, pro-corporate policies that they couldn't get through if people weren't in a state of fear and panic."

And that's just what we're seeing today – only in reverse.

Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?


It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.

Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is "an opportunity for us". After all, he said: "You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before" such as taking control of the financial, energy, information and healthcare industries.

That's just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think. "Some people stockpile canned goods and water in preparation for major disasters," Klein wrote. "Friedmanites stockpile free-market ideas." But that is exactly what American left-liberals have been doing in anticipation of a Democratic administration coming to power at a time when the public might be frightened into accepting more government than it normally would. For instance, the Centre for American Progress, run by John Podesta, who was President Bill Clinton's chief of staff and President-elect Obama's transition director, has just released Change for America: A Progressive Blueprint for the 44th President.

Paul Krugman, the Bush-bashing New York Times columnist, endorsed Emanuel's enthusiasm: "Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal healthcare system, that will change the shape of American society for generations to come."

Arianna Huffington had called Klein's book "prophetic". As the Obama team began drawing up plans, she proved just how right she was, declaring: "A crisis is a terrible thing to waste. And it might be this particular crisis that will make it possible for the Obama administration to do some really innovative, bold things on healthcare, on energy independence, on all the areas that have been neglected."

None of this should surprise us. It's crazy to think that most governments will respond to a crisis by reducing their own powers and deregulating the economy, as Klein would have us believe. Political leaders naturally respond to crisis by riding in as the man on the white horse and taking control.

As Rick Perlstein, liberal historian, wrote: "The Oval Office's most effective inhabitants have always understood [that a crisis is the best opportunity to make radical change]. Franklin D Roosevelt hurled down executive orders and legislative proposals like thunderbolts during his first hundred days, hardly slowing down for another four years before his window slammed shut; Lyndon Johnson, aided by John F Kennedy's martyrdom and the landslide of 1964, legislated at such a breakneck pace his aides were in awe. Both presidents understood that there are too many choke points – our minority-enabling constitutional system, our national tendency toward individualism and our concentration of vested interests – to make change possible any other way."

Robert Higgs, the libertarian historian, is less enthusiastic. In Crisis and Leviathan, he demonstrated that government growth in the US has not been slow and steady, year in and year out. Rather, its scope and power tend to shoot up during wars and economic crises.

Occasionally, around the world, there have been instances where a crisis led to free-market reforms, such as the economic reforms in Britain and New Zealand in response to deteriorating economic conditions. Generally, though, governments seek to expand their power, and they take advantage of crises to do so. But they rarely spell their intentions out as clearly as Rahm Emanuel did.

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Posted on February 12, 2009  Posted to Barack Obama,Books,Comment,Comment is free,Democrats,Global recession,guardian.co.uk,Obama administration,Republicans,The Guardian,United States,US economic growth and recession,US economy,US politics,World news

David Boaz: The media sensationalises racist attacks against Barack Obama

Racist attacks on Barack Obama are few and far between, but that hasn't stopped the media from sensationalising them

Liberal journalists are combing the back roads of America looking for evidence of the resurgent racism being generated by the prospect of a black man becoming president. The striking thing is how little they've turned up in a country of 300m people with plenty of racial conflict in its history.

Here's how the Associated Press led a roundup story on Friday: "Race, an inescapable but explosive issue on which both presidential candidates have tread carefully if not tried to ignore, is increasingly popping up as it's becoming more likely the country will elect its first black president."

But since they couldn't find anything coming from John McCain, Sarah Palin or any of their staff or surrogates that would justify such a claim, the first evidence cited was that Democratic congressmen John Murtha and John Lewis had accused Barack Obama's opponents of racism.

Eventually the AP story got around to citing the evidence of racism directed toward Obama that its vast nationwide reporting staff had turned up:

• In San Bernardino County, California, the October newsletter of the Chaffey Community Republican Women, Federated, showed Obama's face on a phoney $10 government food stamp coupon adorned with a watermelon, ribs and a bucket of fried chicken. Diane Fedele, president of the group, apologised and she had no racist intent: "It was just food to me. It didn't mean anything else." The state GOP denounced the newsletter.

• In Nevada, Colorado and Michigan, TV ads show a clip of [the Rev Jeremiah] Wright declaring "God damn America!" in a sermon. "How can we forget these hateful sermons from Obama's pastor for over 20 years?" says one ad by the Our Country Deserves Better PAC, a Sacramento, California-based group that was formed to campaign against Obama.

• In Danville, Virginia, The Voice, a local newspaper, published a column by McCain's Buchanan County campaign chairman, Bobby May, that mocked an Obama administration. It said he would change the national anthem to the "Black National Anthem" while mandating that churches teach black liberation theology. Also, it said Obama would appoint Al Sharpton and Jesse Jackson to the Cabinet and put prominent blacks like Oprah Winfrey on currency. McCain's campaign dropped May from his job.

• In West Plains, Missouri, a remote town of 10,000 people near the Arkansas border, a prominent highway sign by an unknown creator shows a turban-wearing cartoon caricature of Obama, with an exaggerated smile, full lips and oversized teeth. It says: "Barack 'Hussein' Obama equals more abortions, same-sex marriages, taxes, gun regulations."

So what do we have here? One unknown group in Sacramento has run some ads reminding voters that Obama's decades-long pastor and spiritual adviser is pretty radical. The fact that Wright is black doesn't make that a racist argument. If McCain had sat in the pew for 20 years listening to a pastor who said, say, that "the pagans, and the abortionists, and the feminists, and the gays and the lesbians are responsible for the 9/11 attacks because they caused God to withdraw his protection for America," you can bet that would be an issue.

Otherwise, the AP has found three individuals in remote towns who have directed racial slurs at the first black candidate with a real chance to be president. That's pretty remarkable. We've made great progress since the civil rights revolution, but who would have guessed there'd be so little backlash?

That won't stop journalists from looking for it, though. Google "Obama racism", and you'll find hits like "Racism is the only reason Obama might lose" (because of course the most liberal Democrat in the Senate would be a shoo-in otherwise) and "Racist attacks on Obama growing more heated" (yes, on white supremacist and neo-Nazi websites) and "Racist Obama effigy hung in Ohio" (yes, one guy in rural Ohio hung a white-sheeted ghost labelled "Obama" in his yard, and his white neighbours are appalled).

On the web Sunday we got the headline "'Socialist', 'Muslim' – Ugly reception for Obama", who campaigned in the Cape Fear BBQ and Chicken in Fayetteville, North Carolina. But in fact it appears that there was just one woman who shouted "socialist" at him and also told a reporter that she suspected he was a "closet Muslim". The other white diners told her to quiet down and be civil. Reporters descended on her, though, and she did manage to direct a slur at General Colin Powell, who had endorsed Obama that morning: She called him "a Rino, R-I-N-O, Republican In Name Only".

Compared to the level of open anti-Catholic bias against John Kennedy in 1960, racism in the 2008 campaign is a dog that didn't bark.

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Posted on October 22, 2008  Posted to Barack Obama,Comment,Comment is free,guardian.co.uk,John McCain,Media,Race issues,Sarah Palin,The Guardian,US elections 2008,US politics

David Boaz: Jim Webb’s identity-based economic populism

The potential vice-presidential candidate supports liberal economic policies because of his Scots-Irish heritage

Richard Just at the New Republic magazine is not impressed with Virginia senator Jim Webb as a running mate for Barack Obama. Webb is fundamentally illiberal, he writes, a misogynist and an ethnic nationalist and "something of an apologist for the Confederacy." So why do lots of liberals like Webb, Just asks. "In the years since he left the Republican party, Webb has found his way to certain policy stands that liberals correctly find attractive. He was right about Iraq, and, on economics, he is right to criticise the disparity between rich and poor." Just can't figure out how a fundamentally illiberal Scots-Irish nationalist can arrive at all those good liberal tax-hiking, big-spending, trade-restricting positions that "liberals" like.

But in fact Webb's liberal positions on economic issues stem directly from his self-image as an oppressed working-class white man. When I read his book Born Fighting: How the Scots-Irish Shaped America, I was struck by how it burned with a passionate hatred of the English in both England and America, who in Webb's view had been keeping his people down for hundreds of years. Throughout the book he complains about "the Wasp hierarchy" and the "Cavalier aristocracy" from which the hard-working Scots-Irish have been systematically excluded. Just notes that too: "Perhaps the most unappealing thing about Webb's worldview is that it seems to be built largely on resentment. In his book Born Fighting, you can practically feel the resentment coming off the page."

Webb complains that affirmative action "focused only on the disadvantages that had accrued to blacks," while "the white cultures whose ancestors had gained the least benefit from the elitist social structure" were "grouped together with the veneer that had formed the aristocracy." Webb points out that in a landmark 1974 study from the National Opinion Research Centre, family incomes among different white ethnic groups varied far more than the black-white differential. White Protestants other than Episcopalians were at the bottom of the income rankings. White Baptists had an educational level at the same level as black Americans and far below that of Jews. A later NORC study, he went on to write, showed that as late as 2000 white Baptists and "Irish Protestants" had less educational attainment than the national average.

And the whole tone of Webb's discussion is not "Maybe we should have done less fighting and drinking and more reading." Rather, it's: "The English have kept us down." His complaint about affirmative action is not that blacks (and other racial minorities) get it. It's that his people don't.

In a Wall Street Journal column just after his election to the Senate, Webb applied his identity-based politics to current political issues. He complained about "our society's steady drift toward a class-based system," in which the rich make millions while workers face "stagnant wages and disappearing jobs" in an era of globalisation. In his campaign he called for ensuring that "free trade becomes fair trade."

Jim Webb supports Richard Just's economic policies because he is a burning mass of ethnic resentment. Maybe liberals should worry about that.

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Posted on June 20, 2008  Posted to Comment,Comment is free,guardian.co.uk,Race issues,The Guardian,United States,US economic growth and recession,US elections 2008,US politics

Full profile

David Boaz is the executive vice-president of the libertarian Cato Institute, a non-profit-making public policy research foundation headquartered in Washington DC. He is a leading authority on US domestic issues such as education choice, drug legalisation, the growth of government, and the rise of libertarianism.

He is the author of Libertarianism: A Primer, described by the Los Angeles Times as "a well-researched manifesto of libertarian ideas", the editor of The Libertarian Reader, and coeditor of the Cato Handbook on Policy. His latest book is The Politics of Freedom: Taking on the Left, the Right, and Threats to Our Liberties.

Boaz is the former editor of New Guard magazine and was executive director of the Council for a Competitive Economy prior to joining Cato in 1981. His articles have been published in the Wall Street Journal, the New York Times, the Washington Post, the Los Angeles Times, National Review, and Slate.

He is a frequent guest on national television and radio shows, and has appeared on ABC's Politically Incorrect with Bill Maher, CNN's Crossfire, NPR's Talk of the Nation and All Things Considered, John McLaughlin's One on One, Fox News Channel, BBC, Voice of America, Radio Free Europe, and other media.

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Posted on May 22, 2008  Posted to Global,guardian.co.uk,Profiles,Resources,The Guardian

Hillary and the imperial presidency

US elections 2008: Clinton's promise to curtail executive power and restore checks and balances is belied by her record

In a speech to newspaper editors earlier this month, senator Hillary Clinton denounced the "imperial presidency" of George Bush and promised to pursue a different course if she becomes president.

But that promise is hardly more believable than her claims to have dodged sniper fire in Bosnia.

Clinton's primary case for her candidacy is her White House experience during the presidency of her husband. And those years were marked by expansions of federal and executive power, secrecy and claims of executive privilege.

In her campaign she says that she would "restore the checks and balances and the separation of powers". But back in 2003, she told ABC's George Stephanopoulos: "I'm a strong believer in executive authority. I wish that, when my husband was president, people in Congress had been more willing to recognise presidential authority." She encouraged President Clinton to intervene in Haiti and Bosnia and to bomb Serbia, all without congressional authorisation.

In the case of the bombing of Serbia, Congress actually took a vote. The House of Representatives refused to authorise the air strikes, but the Clinton administration "sort of just blew by" that technicality, in the words of a White House spokesman.

President Clinton also ordered air strikes on Afghanistan, Sudan and Iraq, all without congressional approval. That's practically the definition of an imperial president, and it sharply undermines Hillary Clinton's statement in this campaign that "I do not believe that the president can take military action - including any kind of strategic bombing - against Iran without congressional authorisation."

The Clinton administration also vastly expanded the use of executive orders to usurp Congress's lawmaking powers. President Clinton used executive orders to nationalise millions of acres of land, impose pro-union rules that Congress wouldn't pass, strengthen the federal government's hand in disputes over federalism, self-authorise his military actions in Yugoslavia and more. The most succinct and pointed defence of his unilateral legislating came from White House aide Paul Begala: "Stroke of the pen. Law of the land. Kind of cool."

As William Olson and Alan Woll pointed out in a 1999 Cato Institute study, President Clinton often legislated through an even more obscure vehicle than executive orders. "Several of President Clinton's major policy actions, for which he has been severely criticised, were accomplished not through formal directives but through orders to subordinates, or 'memoranda'. Those include his 'don't ask, don't tell' rule for the military; his removal of previously imposed bans on abortions in military hospitals, on foetal tissue experimentation, on Agency for International Development funding for abortion counselling organisations and on the importation of the abortifacient drug RU-486; and his efforts to reduce the number of federally licensed firearms dealers."

In another Clinton-era study, Timothy Lynch took the administration to task for its warrantless searches and wiretapping, its unauthorised military actions and its legal claim that the federal government has "plenary powers" to legislate on any matter, notwithstanding the limitations imposed by the Constitution.

Senator Clinton told the newspaper editors: "I will restore openness in government. When I am president, the era of Bush/Cheney secrecy will be over." But the Clinton administration fought in court to keep secret the names of those who participated in first lady Hillary Clinton's task force on healthcare reform. And Bill Clinton repeatedly claimed executive privilege to resist investigations by Congress and independent counsels into his pardons of Puerto Rican terrorists, his perjury in the Monica Lewinsky case and other matters. In his battles with independent counsel Kenneth Starr, Clinton became the first president since Watergate to take a claim of executive privilege to court and lose. "Openness" is not a quality the Clintons have been noted for.

The big problem with Hillary Clinton's promise to be a less imperial president is her expansive conception of the role of the federal government in society. Clinton wants the federal government to have vast powers to do good as she sees it. She told the newspaper editors: "I believe in the power of the presidency to set big goals for America and to solve the problems of Americans, to ensure that our people have the tools they need to turn challenges into opportunities, to fulfil their God-given potential and to build better lives for themselves and their children."

At other times she has proclaimed herself a "government junkie", promised to devote herself to "redefining who we are as human beings in the post-modern age" and declared that her administration would help Americans to "quit smoking, to get more exercise, to eat right, to take their vitamins".

Any president who views the federal government as a vast, sprawling nanny, a nurturing mother for every adult, is going to view resistance to her plans as an affront to decency. And as President Bill Clinton demonstrated, if Congress won't act or votes against the president's policies, the president must act in the name of all the people to give the people what they need. Aggrandisement of presidential power has consistently gone along with growth in the size, scope and power of the federal government.

The latest Washington Post-ABC News poll shows that only 39% of Americans regard Hillary Clinton as "honest and trustworthy". It's hard to imagine that even 39% of voters would believe her promise to restore checks and balances and reduce the power of the office she seeks to occupy.

For more blogs on the US elections, click here.

For more US election coverage, click here.

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Posted on April 30, 2008  Posted to Comment,Comment is free,George Bush,guardian.co.uk,Hillary Clinton,The Guardian,US politics

Sex, religion and conservatives

Why do conservatives support laws against discrimination for characteristics that they approve of, but not for characteristics they don't approve of?

In their attempt to oppose laws prohibiting discrimination on the basis of sexual orientation (that is, laws supporting gay rights) while supporting other such laws, conservatives have long tied themselves in knots. You shouldn't compare antigay discrimination to racial discrimination, they said, because race is an immutable characteristic, while homosexuality is a chosen behavior. Thus it's appropriate to ban discrimination on the basis of race. And also, they'll allow, all the other characteristics protected in the US by the 1964 Civil Rights Act - race, color, religion, sex and national origin.

But wait a minute, I used to say to conservatives. It's obvious to thinking people that sexual orientation isn't chosen - it may be genetic or environmental, but it certainly isn't chosen. As far as the individual is concerned, it's an innate or immutable characteristic. So if that's your standard, then discrimination against gays is just as unreasonable as discrimination against blacks. (Yes, conservatives could counter that orientation might be immutable, but sexual behavior is still chosen. Sort of like saying that you might be born Jewish, but you could stay in the closet and not practice your faith, and then you wouldn't suffer any discrimination.) And meanwhile, religion is a chosen behavior. Right? In most Christian churches, you must make a conscious decision to join the church, and that decision is normally made after reaching the age of reason.

Thus, it seems, conservatives are doubly wrong: They say that discrimination on the basis of immutable characteristics should be banned, but discrimination on the basis of chosen behavior should not. But they are wrong to say that sexual orientation is chosen, and wrong to imply that religion is immutable like race.

But then there's a twist: In fact, it always seemed to me, religion isn't really chosen. Most people join the church their parents attend. If your parents are Catholic, so are you. If your parents are Baptist, so are you. We see this in ethnic/religious disputes from Iraq to Serbia to Northern Ireland to India, where it's hard to distinguish between ethnic groups and adherents to particular religions. But we also see it among Americans who practice the faith of their fathers and often attend the actual church where their great-grandparents worshiped. So maybe the conservatives can reasonably consider religion to be biological or innate.

But now a massive new study from the Pew Research Center tells us that I was right all along, and the conservatives are indeed doubly wrong. Many people, at least in the United States, do change their religion. Indeed, it appears that 44% of Americans have switched religious affiliations, either to join another religion or to drop any religious affiliation.

So we're back where we started: Conservatives support legal protection against discrimination for chosen characteristics that they approve, but not for characteristics they don't approve of. It's not a matter of logical categories.

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Posted on February 29, 2008  Posted to Comment,Comment is free,Conservatives,Equality,Gay rights,guardian.co.uk,Religion,The Guardian,United States

An unsuitable job

US elections 2008: If John McCain wins the nomination, he shouldn't put a foreign policy novice like Mike Huckabee a heartbeat away from the presidency

With John McCain's narrow wins in New Hampshire and South Carolina making him a shaky Republican frontrunner, people have engaged in some absurdly early speculation as to whom he might choose as a running mate. One early favourite is former Arkansas governor Mike Huckabee, the darling of the evangelicals. But if McCain is the man he and his supporters say he is, he won't do that to the country.

McCain's official campaign biography says: "As the son and grandson of distinguished Navy admirals, John McCain deeply values duty, honour and service of country." That's the theme of his campaign. His determination to prove his own integrity inspired his decade-long fight to impose strict new regulations on campaign finance. Told that his support for the Iraq war might doom his presidential candidacy, McCain repeatedly says: "I'd rather lose an election than a war." Newspaper endorsements, like this one from the State in South Carolina, echo those sentiments:

John McCain has shown more clearly than anyone on the American political scene today that he loves his country, and would never mislead or dishonour it. He is almost unique in his determination to do what is right, whatever the cost.

McCain will also be 72 years old if he is inaugurated a year from now, however, making him the oldest man ever to enter the White House. He likes to talk about his 95-year-old mother to illustrate his good genes, but the presidency is a very stressful job, there are indeed terrorists out to get the American president, five and a half years in a North Vietnamese prison can't be good for your health and he has had a bout with skin cancer. Furthermore, his mother's age notwithstanding, his father died at 70 and his grandfather at 61. So he has to recognise the possibility at least that he might not serve out his term. At a time of international turmoil, it is essential that a president, especially one so committed to duty, honour and country, leave the country in capable hands in that eventuality.

Could McCain honourably serve his country by putting Mike Huckabee a heartbeat from the presidency? There's some political plausibility. Huckabee is younger. He would reassure religious conservatives who might be sceptical of McCain. He's a charming and effective campaigner.

But from a policy perspective, he's a conservative candidate who is also a big-spending nanny statist. He bills himself as a "Christian leader" and says that his rise in the polls can only be attributed to God's will. As I wrote in the San Francisco Chronicle: "Huckabee doesn't just want a government that will stamp out sin. He wants a government that will worry about your body as much as your soul." He says that "it is government's responsibility to try to create a culture of health", including pressuring employers to "encourage" healthier lifestyles among their employees. He wants a federal ban on smoking in the workplace and other public places. He's even threatened to ban cigarettes altogether. He wants federal regulation of local schools and restaurant menus.

But more importantly for McCain, Huckabee has no experience and apparently no knowledge of foreign policy. When the journal Foreign Affairs inexplicably asked him for an essay, he wrote about the "Bush administration's arrogant bunker mentality" - and then, when his remarks were reported, he ran away from them. He demonstrated his minimal knowledge about Pakistan in his remarks on Benazir Bhutto's assassination. He spouts the usual nonsense about energy independence and veiled protectionist rhetoric like "We can't have free trade if it's not fair trade." When asked about the blockbuster National Intelligence Estimate on Iran's nuclear capability, he said that "nobody's going to be able, if they've been campaigning as hard as we have been, to keep up with every single thing, from what happened to Britney last night to who won Dancing with the Stars."

To be sure, neither Bill Clinton nor George Bush had much foreign policy experience as governor either (and we've seen how well that worked out), but Huckabee seems to have far less background even than they did.

It's hard to imagine that a man who values national security and his own duty as much as McCain does would put a self-styled "Christian leader" who doesn't read foreign policy stories in the newspaper a heartbeat from the Oval Office.

For more blogs on the US elections, click here.

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Posted on January 24, 2008  Posted to Comment,Comment is free,Foreign Policy,guardian.co.uk,John McCain,Mike Huckabee,The Guardian,United States

Investment returns

America shouldn't try to correct its record-high trade imbalance with China by rushing to increase exports

As US Treasury secretary Henry Paulson meets in Beijing with Chinese vice-premier Wu Yi to discuss the US-China trade balance, the US commerce department has just released its monthly report on the widening trade deficit. Journalists report this in hand-wringing terms that consistently reflect little understanding of real economics. "Oh no, imports from China are up," blares my radio. "The only solution is to increase American exports to China."

And that's supposed to be the free-trade position, a counter to the argument for tariffs or other coercive measures to prevent China from forcing its products on innocent American consumers. (I'm omitting the safety and health problems with Chinese products for now, as we heard the same economic complaints when Japan was the biggest non-white exporter to the US. Somehow we've never worried so much about imports from Canada, the UK and Germany.)

But this whole framework is misguided. Twenty-four years ago in the Cato Journal, the economist Ronald Krieger explained (comment beginning on page 667) the difference between the economist's and the non-economist's views of trade. The economist believes that "The purpose of economic activity is to enhance the wellbeing of individual consumers and households." And, therefore, "Imports are the benefit for which exports are the cost." Imports are the things we want - clothing, televisions, cars, software, ideas - and exports are what we have to trade in order to get them. (I see that Tim Worstall made the same point just last month on Comment is Free in response to the German foreign minister.)

Adam Smith wrote in 1776: "Nothing can be more absurd than this whole doctrine of the balance of trade." When two parties trade, each expects to gain. It doesn't matter whether they live in different neighbourhoods, different states or different nations. Each of us seeks to give away as little of our own wealth as possible to get as much possible from others. And as consumers pursue their wellbeing, trade will inevitably balance, though monthly statistics will offer many "imbalances" to raise alarms about. Secretary Paulson shouldn't worry too much about increasing exports, and he definitely shouldn't pressure the Chinese to send American consumers fewer products.

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Posted on December 14, 2007  Posted to Asia Pacific,Business,China,Comment,Comment is free,guardian.co.uk,International trade,The Guardian,US economy

This perfect book

Ira Levin should be remembered for his dystopian novel This Perfect Day, which ranks alongside Brave New World and 1984

Ira Levin - who died this week at the age of 78 - was known for his bestselling novels Rosemary's Baby, The Stepford Wives and The Boys from Brazil, all of which became successful movies. But another of his novels, This Perfect Day, deserves to be better known than it is. Indeed, given its tight plot about a revolt against an all-providing world government, I don't know why it hasn't gained the attention of Hollywood. As libertarian historian Ralph Raico wrote in The American Enterprise back in 1998:

This Perfect Day belongs to the genre of "dystopian" or anti-utopian novels, like Huxley's Brave New World and Orwell's 1984. Yet it is more satisfying than either. Not only is its futuristic technology more plausible (computers, of course), but the extrapolation of the dominant ideology of the end of the 20th century is entirely convincing.

The novel is set 141 years after the Unification, the establishment of a world government guided by a central computer. The computer, Uni, provides all the members of the human race with everything they need - food, shelter, employment, psychotherapy, and monthly "treatments" that include vaccines, contraceptives, tranquilizers, a drug to prevent messy beard growth, and a medication that reduces aggressiveness and limits the sex drive.

It's a perfect world, as described in the children's rhyme that opens the book:

Christ, Marx, Wood and Wei, Led us to this perfect day. Marx, Wood, Wei and Christ, All but Wei were sacrificed. Wood, Wei, Christ and Marx, Gave us lovely schools and parks. Wei, Christ, Marx and Wood, Made us humble, made us good.

Everyone loves Uni, which gives them everything they could want. And the great medical advances of the Unification ensure that everyone lives to the maximum human lifespan of 62. No one questions the wisdom and benevolence of Uni. Except Chip, whose crotchety grandfather gave him that secret and illegal nickname and urged him to try to think about things just before he got his monthly treatment. Eventually Chip's thoughts take a radical turn, and he meets a few other people who are similarly disgruntled at the perfect world. A rip-roaring plot ensues.

I love a good dystopian novel in which a few hardy rebels try to make a revolution. And Raico is right to note that Levin did a good job of imagining an extension of some of the intellectual trends of the 20th century. In today's papers we can read of politicians and intellectuals on both right and left trying to use government to increase happiness and "socially desirable behavior." Uni is the consummation of those desires, but Levin understands that government-provided happiness isn't all it's cracked up to be.

But in one way Levin was himself caught in the intellectual milieu of his times. (The novel was published in 1970.) He understood the cost to freedom of a government that controlled and provided everything. But he did seem to believe that such central planning would be efficient. He had Chip worry that if the rebels managed to shut down Uni, planes would fall out of the sky, people would die, trains would crash, food wouldn't get to the dinner table.

In this starry-eyed view of the economic efficiency of planning, Levin was led by the world's most famous economists. John Kenneth Galbraith, for instance, wrote, "the Russian system succeeds because, in contrast with the Western industrial economies, it makes full use of its manpower." And Paul Samuelson wrote in his widely used textbook: "What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth.... The Soviet model has surely demonstrated that a command economy is capable of mobilizing resources for rapid growth." Actually, Levin, a novelist writing in the late 1960s, can be excused for his misconceptions more than Galbraith and Samuelson, economists who wrote those lines in the 1980s, only a few years before the final collapse of Soviet-style socialism.

In 1985, I had the economist Don Lavoie send Levin a copy of his fine book National Economic Planning: What Is Left?, inscribed something like "in the hopes of persuading you that central planning is no more workable than it is humane."

But this is a minor quibble about a great novel. The big problem with This Perfect Day is that it's out of print. If that isn't a market failure, I don't know what is. Publishers, filmmakers - wake up! Bring this book back into print and onto the big screen.

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Posted on November 16, 2007  Posted to Comment,Comment is free,guardian.co.uk,The Guardian

Is America’s nanny state growing?

Despite bans on smoking and trans-fats, we're not necessarily less free.

In the Washington Post, Anita Allen of the University of Pennsylvania reviews Nanny State: How Food Fascists, Teetotaling Do-Gooders, Priggish Moralists and Other Boneheaded Bureaucrats Are Turning America into a Nation of Children by David Harsanyi. She makes a point that I've thought a lot about in discussions of our growing "nanny state":

But Americans were never as free as Harsanyi imagines... . It is true that in 1960 US automobile drivers did not have to wear seat belts. But overreaching rules of other sorts reigned supreme. Under "blue laws," most retail stores and virtually all liquor stores were closed on Sundays, presumably so everyone could stay sober and go to church. More profoundly, in 1960 married couples could not legally obtain birth control in Connecticut, mixed-race couples could not marry in Virginia, black kids in Georgia attended underfunded segregated public schools and homosexual sex was against the law.

No free-marketer, Allen leaves out a few other attributes of 1960, like 90% income tax rates and rigid regulation of transportation, communications and finance.

Open the newspaper on any random page, and you can find evidence of the growing tendency to meddle in our lives: seat-belt laws, smoking bans, trans-fat bans, potty parity and on and on. But are those things worse than the older laws that Allen cites? And if you go back further than she did, you can find worse indignities: established churches, slavery, married women denied property rights. So while we should deplore the deprivations of freedom that Harsanyi explores, we should not necessarily conclude that we're progressively less free.

Allen also complains that

Readers have to wait until the final pages of this book to learn exactly why Harsanyi thinks the nanny state is a bad thing. The nanny state creates a moral hazard, he claims. "People act more recklessly when (purported) risk is removed." Plus, "the rigidity of nanny regulations does not allow consumers to practice common sense and protect themselves."

That's a good consequentialist reason to oppose the nanny state, but it's not the best reason. The real reason that we should be free to make our own decisions about seat belts, smoking and fatty foods is that we're adults; that we're endowed by our Creator with the unalienable rights of life, liberty and the pursuit of happiness; that to be free is to have moral autonomy and personal responsibility.

Still, any author should be thrilled to have the Washington Post recommend that we "read Harsanyi as a 21st-century John Stuart Mill."

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Posted on October 15, 2007  Posted to Comment,Comment is free,guardian.co.uk,Politics,The Guardian,World news

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