Regulation

Dec 062008
 

Civil Service Reform

Yet during the past 60 years, it has been the civil service (viewed as professional and technocratic) and not political appointees (seen as corrupt or unqualified) that has gained the upper hand in public opinion. Indeed, many senior officials in the federal government would view the very term political as pejorative.

— Paul Musgrave in Slate, 2 December 2008

Have the courage of your inconsistencies

So I say to Americans: if you want your young people to develop character, have the courage of your inconsistencies! Excoriate sin, especially in public places, but turn a blind eye to it when necessary.

— Theodore Dalrymple at City Journal (h/t Arts & Letters Daily)

Joe Biden’s economic advisor

He holds a Bachelors Degree in Fine Arts from the Manhattan School of Music; a Masters Degree in Social Work from the Hunter School of Social Work; a Masters Degree in Philosophy and Ph.D. in Social Welfare from Columbia University.

— Quoted by Banion King at SCSU Scholars

Industrial policy: GM’s magical plan

Now, the most obvious response to all of this is to say that I’m the fish at this table, because this is not a real business plan, but simply a political document. It exists to provide political cover to members of Congress. But if that’s the case, it’s an unintentionally beautiful illustration of why industrial policy fails. It’s both economically crucial and very hard to allocate capital well; that’s why people who are good at it make so much money. Businesses struggle to do this well, and they’re really trying. What do you think the odds are that this is a wise use of money, when the people involved are barely pretending to try?

— Jim Manzi at The American Scene

Nov 302008
 

I don’t know if it’s allowed to blog about an article that’s over 10 days old, but I just came across one by Jim Manzi called “Factory Guy.” In the comments Jim in turn links to an article he wrote earlier this year: “A more equal capitalism: preserving the free-market consensus.” He summarizes the dilemma thusly:

So here we have our current economic situation: We are rich and economically successful, but increasingly unequal. If we give up the market-based reforms that allow us to prosper, we will lose by eventually allowing international competitors to defeat us; but if we let inequality grow unchecked, we will lose by eventually hollowing out the middle class and threatening social cohesion.

Conservatives and libertarians understand the first part of this, but have their heads in the sand about the 2nd. Because they won’t face reality, leftwingers eat their lunch at the polls, and then join with rich businesspeople in making the situation worse by enacting regulations and controls that make the rich richer and the poor poorer. (Milton Friedman explained how that part works.) Liberals have nothing to say about it, because there are no liberals.

Manzi explains the social cohesion part:

Absolute income equality, a.k.a. communism, is a poor goal, but if inequality becomes sufficiently extreme it undermines the social support required for a democratic and capitalist society to flourish. To take only the most obvious example, how much do you think high-income Americans would make in the absence of our armed forces? All of the material delights that we enjoy ultimately require men to stand watch all night looking through Starlight scopes mounted on assault rifles, and die if necessary, to protect the commercial, law-bound society that provides those delights. Would you do that for a millionaire hedge-fund manager who happens to live within a country that he considers some lines on a map, and who considers you a sucker for doing it? The United States is nowhere near such a dystopia, but it’s generally not a good idea to keep pulling bolts from an airplane in mid-flight just because it hasn’t crashed yet.

I’m not sure about the few suggestions Manzi gave for what to do about it, but I am extremely pleased that somebody who appreciates markets is discussing it at all. I have a few ideas of my own, but I don’t have the resources to give them the study they would require, and I have found nobody with whom to discuss them.

Conservatives and libertarians are hopeless. They won’t admit that there is a problem. And leftwingers fear and loathe markets so much that they can’t hear anything except reasons for why markets (i.e. choice) need to be shut down and control turned over the state.

You can’t get a discussion going of good vs bad regulation. All you get is regulation vs deregulation. At least that’s what I’ve been saying until now. But Manzi is providing a small ray of hope that it doesn’t need to be that way.

Nov 222008
 

We’re getting a good look at what “re-regulation” of our economy means. It means that government regulators can violate the privacy of individuals’ records for partisan political gain, and get by with a belated slap on the wrist.

Mind you, it doesn’t always work this way. When a couple of employees in the administration of Bush the Elder took a peek at Bill Clinton’s passport files during the 1992 campaign, they were fired immediately.

But that was a Republican administration. In Ohio, under Democrat Governor Ted Strickland, some employees took a look at Joe the Plumber’s records for information to use against him. They’re getting by with short-term suspensions. Nobody is getting fired over there, which serves to send the message to future privacy violators that if you do it for the right cause (i.e. the right side) it may very well be worth the risk.

When Linda Tripp’s records were illegally leaked for partisan political purposes, nothing substantial was done about it. Guess which party benefited from that one?

When health care workers violated the privacy of celebrities at UCLA’s medical center, at least one person was fired. But I suppose there was no overt partisan political cause to be served by that one.

Yes, government regulation is a wonderful thing to have. Keeps those nasty free marketers under control.

Nov 202008
 

We knew it was unsustainable, but it’s good to see the era of Democrat-style re-regulation coming to an already. And I like that term, “bailout fatigue.” From the Washington Post:

Stung by the escalating costs of various Wall Street bailouts, lawmakers pressed the executives to say how they would spend $25 billion from the taxpayers.

“The American people have bailout fatigue,” said Rep. Spencer Bachus (Ala.), the panel’s senior Republican.

Several lawmakers also berated the auto titans for traveling on private jets to ask for a government handout.

“There’s a delicious irony in seeing private luxury jets flying into D.C. and people coming off of them with tin cups in their hands,” said Rep. Gary L. Ackerman (D-N.Y.). “It’s almost like seeing guys show up in the soup kitchen in high hat and tuxedo.”

Nov 182008
 

CAFE standards are an abomination. I’ve always known that. If we need to internalize the external costs of our fossil fuel addiction, the most direct, corruption-free way is the market-oriented approach: a fossil fuel tax or a carbon tax.

Leftists keep whining that they can’t get public support for such a thing. But they don’t try. They keep wanting to make it a net tax increase, which of course won’t fly. I wouldn’t be in favor of that, either.

But there could be countervailing cuts in other taxes. Consumption taxes are regressive, but a carbon tax could be balanced by a cut in one of our most regressive payroll taxes, the FICA tax, perhaps in combination with one of the few Obama proposals that I could get behind: abandoning the fiction that Social Security is a insurance system and taxing the wealthy in proportion to their income.

But back to CAFE. The kiddie leftists among us (some of them aged 50 and up) are wetting their pants in eager anticipation of re-regulation, as they call it. Well, let’s look at how their type of regulation works.

Holman Jenkins, Jr. at the WSJ explains. General Motors is going to be allowed to claim that the Chevy Volt is a 100 mpg car. It wasn’t Yankee ingenuity, sophisticated engineering, entrepreneurial energy, or environmental consciousness that produced a 100 mpg car. It was instead a matter of using political clout to lobby the regulators to rig the rules. The Big Three car makers have been given special political favors as far back as Carter and Reagan, and those companies are still better at manufacturing political influence than fine automobiles. By classifying the Volt as a 100mpg car and selling it at a loss, GM is going to be able to sell more gas hogs to other customers, on which it might make money.

But it won’t cure our addiction to oil.

So much for the age of re-regulation. Even if the EPA backs away from some of this attempt at manipulation this is not a process by which such decisions are going to be made on the basis of cost/benefit to the environment. This is a process by which decisions will be made on the basis of political clout.

P.S. I’ve learned over the years to value the WSJ’s reporting on such regulatory issues very highly, but to not trust it to always report everything that needs to be reported. So here’s a recent NY Times article on the subject, which contains additional information that shows how this corrupt regulatory system works.

Oct 312008
 

Your average “environmentalist,” given a choice between growing the government and doing something good for the environment, will throw the environment under the bus every time. I’ve been saying that for several years now, but Steve Sailor suggests that a new opportunity may be coming whereby these people can prove me right again. It’s in his article, “Infrastructure blowout.”

The usual tax and spend crowd wants the govt to spend money on infrastructure to boost the economy. But it takes a lot of time to do any big projects, given the need for environmental impact statements and other hurdles. Steve asks, “Is the Democratic Congress really going to suspend the Environmental Protection Act and all the rest of the environmental impedimentia?”

The answer is: Sure it will, if that’s what’s needed to grow the government. But keep in mind that boosting the economy is not really the point, either. Growing the government is the main objective, and that can be accomplished by 15-year spending plans that do have to go through all the environmental motions.

Oct 112008
 

Bush says the crisis won’t be solved overnight. But the $700 billion bailout? That he had to have overnight. (He and the Democrats, that is.)

From the WSJ:

Emerging from a meeting with finance ministers from the group of seven leading industrial nations, U.S. President George W. Bush said Saturday that turmoil in financial markets requires a “serious global response,” but cautioned that the world wide economic crisis won’t be solved “overnight.”

Oct 072008
 

Bush says we need to be patient. “It’s going to take a while.”

So why was he so impatient last week? Why the big hurry to pass something, anything, even if it was all larded up with more of the same poison that sickened the economy in the first place? Why couldn’t we have taken a while to examine the causes of the financial crisis and come up with measures that would actually address it?

Sep 302008
 

From the LA Times

Though Obama said no one person was at fault in the financial crisis and that there was a “lot of blame to spread around,” he urged voters to consider McCain’s record of favoring deregulation of the nation’s financial markets as they weighed which candidate would best steer the nation’s economic “ship into port.”

“With so much at stake — with our economy at risk, our children’s future in the balance — the greatest risk in this election is to repeat the same mistakes of the past,” Obama said. “We can’t take a chance on that same losing game.”

McCain also called for bipartisanship, yet he likewise criticized his rival.

“Sen. Obama and his allies in Congress infused unnecessary partisanship into the process,” McCain said, referring to the failed House vote. He continued: “Now is not the time to fix the blame; it’s time to fix the problem.”

Obama says there is a lot of blame to spread around. OK, let’s start spreading. I blame farm subsidies myself. Maybe not for the whole thing, and not directly, but farm subsidies are somewhere down there at the root of our financial problems — part of the system of pork trading that makes Senator Hayseed vote for big, uncontrolled housing programs for Senator Barney Frank in exchange for his support for pork for the agribusinesses back at Senator Hayseed’s home.

McCain said now is not the time to fix the blame, now is the time to fix the problem. So how do we have the slightest idea what to fix if we don’t know what caused the problem?

Maybe one of the reasons the House defeated Paulson’s $700 billion proposal is that its high-level supporters like Obama and McCain say such stupid things. It indicates a lack of seriousness.

Speaking of ag subsidies and the need to be serious about the financial crisis, one place Paulson could get money would be from a give-back in this year’s $300 billion Farm bill. It included $40 billion in new spending — for an industry that is experiencing better than usual times and prices. $40 is a long way from $700, but that would be a healthy start that would do a lot more than just provide 5.7 percent of the money Paulson is looking for. And why wouldn’t this be a good time to start building down the ag subsidy system anyway? Say cut $40 additional billion in spending. If even the EU is thinking about cutting its subsidy program, why not us?

[edits, 4-Oct]