What Is Regulation?

Excerpts by David Boaz' essay by the same name

"[p]eople in business adopt for themselves numerous forms of regulation and rules of behavior — called “governance” in economic jargon — doing so independently of government or without being told to do so by corporate bosses." . .

But none of us “anti-regulation” folks are against “rules of behavior that people in business adopt for themselves independently of government.” The world is full of rules, from wearing clothes in the office to customary trade practices to the rules for managing common-pool resources that Ostrom studied. Anyone who opposed such “forms of regulation” wouldn’t be a libertarian or even an anarchist — he’d be a nihilist. (Of course, one could sensibly oppose particular rules; but no one seriously wants a world without rules of behavior.) . .

"Some have summarized their work by saying that institutions other than free markets often work well. But that statement can mislead you to conclude that government solutions are the answer. Free markets are only a subset of free institutions. A better way to sum up their work is that what Ms. Ostrom and Mr. Willamson really show is that voluntary associations work." . .

The Concise Encyclopedia of Economics defines “regulation” this way: “Regulation consists of requirements the government imposes on private firms and individuals to achieve government’s purposes.” That’s the kind of regulation that is controversial among economists and often criticized by libertarians. It is entirely different from “rules of behavior that people in business adopt for themselves independently of government.” Those sorts of rules — often called “governance,” as the New York Times notes — are private and voluntary, made by the voluntary interactions of a few or many people.

The work of Ostrom and Williamson supports the idea of spontaneous order, an order that emerges as result of the voluntary activities of individuals and not through the commands of government. Spontaneous order can be hard to grasp, though it is the background of our entire world — language, common law, money, and the economy are all spontaneous orders (though government has intruded into some of those orders). It’s misleading to say that work of Ostrom and Williamson is somehow supportive of “regulation,” given the way that word is commonly used.

Government do-gooders

The government promotes cash for clunkers, destroying a good (cars) that are naturally recycled because it is efficient to do so, yet demands that we recycle goods (paper, plastic) that are inefficient to recycle. How intellectually dishonest.

The government thus takes the least expensive cars off the street and then tells the people, who they just left walking- because they can't afford the more expensive vehicles that are left for sale- they are looking out for them. How condescending.

In the mean time, taxpayers are incentivizing and subsidizing fellow citizens who already have cars, into buying a new car they otherwise could not afford, or would not buy. This moves resources to fill needs that otherwise would have not existed without a government program. How arrogant.

The end result is a waste of scarce resources, less economic growth over time and a smaller pie from which everyone feeds. How callous.

In short, cash for clunkers inhibits economic growth, which lowers the standard of living, the cost of which are lives. How merciless.

That is just stunning government stupidity or arrogance. Either way, it is an inexcusable assault on liberty.

Poetic words vs. Real actions

Excerpts from, Reading Between the Lines of Obama's Poetry, by Jonah Goldberg in National Review

"All bad poetry springs from genuine feeling," Oscar Wilde once remarked.

Irving Kristol took Wilde's observation and ran with it. "The amateur's feelings are sincere enough -- why else should he be writing poetry? -- but he takes the writing of poetry to be more important than the poem itself," . . ."For him, writing poetry is a kind of symbolic action, in which he liberates his most earnest sentiments, and it is in this impatient action and in this instant liberation that he seeks fulfillment.". .

"It seems to me," Kristol wrote, "that the politics of liberal reform, in recent years, shows many of the same characteristics as amateur poetry. It has been more concerned with the kind of symbolic action that gratifies the passions of the reformer than with the efficacy of the reforms themselves.". .

For Kristol, the "outstanding characteristic" of the New Politics was its "insistence on the overwhelming importance of revealing, in the public realm, one's intense feelings -- we must 'care,' we must 'be concerned,' we must be 'committed.' Unsurprisingly, this goes along with an immense indifference to consequences.". .

One thing was clear about Obama's candidacy: It was all about the poetry of "genuine feeling." He may have been cool and aloof, but supporting him was a statement of passion, of self-image. He made supporters feel good about themselves. "We are the ones we've been waiting for," he said. "We are the change that we seek."

Obama insisted that his rhetoric wasn't "just words" but something greater, more profound -- certainly not the "bad poetry" that Wilde and Kristol attacked. But it was hard to find the substance. "What's troubling about the campaign," warned liberal historian Sean Wilentz, "is that it's gone beyond hope and change to redemption."

Obama's feelings are sincere and genuine, as Wilde and Kristol would say. But we are at the point at which the gifted poet must distinguish himself from the amateur. Is the poetry a means to an actual end? Or is it all there is?

The cry for socialism driven by the success of capitalism

Future Prospects for Economic Liberty by Walter Williams in Imprimis

Ironically, the free market system is threatened today not because of its failure, but because of its success. Capitalism has done so well in eliminating the traditional problems of mankind—disease, pestilence, gross hunger, and poverty—that other human problems seem to us unacceptable. So in the name of equalizing income, achieving sex and race balance, guaranteeing housing and medical care, protecting consumers, and conserving energy—just to name a few prominent causes of liberal government these days—individual liberty has become of secondary or tertiary concern.

Crony capitalism

Excerpts from: Rhett Butler Comes to Washington by James V. DeLong

It would be wise for businesses to band together to defend free-market culture and make their money from our civilization’s rise. . .

the distinction between being pro-market and being pro-business. Much as the Left tries to conflate these, they are different indeed.

Business, especially big business, is happy with crony capitalism, franchised monopoly, or any other device that will avoid the Darwinism of the free market. Of the billions of dollars now spent lobbying, almost none supports the free market as a concept or an institution. “While everyone benefits from a free and competitive market,” Zingales writes, “no one in particular makes huge profits from keeping the system competitive and the playing field level. True capitalism lacks a strong lobby.”

Zingales has interesting things to say about the history and implications of the “serious tensions [that] emerge between a pro-market agenda and a pro-business one,” in the United States and elsewhere, and his conclusions are not cheery. He thinks the administration is “launch[ing] us on a vicious spiral of more public resentment and more corporatist crony capitalism so common abroad—trampling in the process the economic exceptionalism that has been so crucial for American prosperity.” . . .

A tipping point comes when the lobbying for special advantage turns into lobbying for programs that destroy the economic health of the nation, and this is where those billions in lobbying money are, increasingly, going. . .

Since business is business, companies can adopt the philosophy of Rhett Butler in “Gone with the Wind,” that as much money can be made from a civilization’s destruction as from its rise. Furthermore, while it might be thought to raise some problems of personal ethics, management can take the next step and say they owe it to the shareholders to help that destruction along if that is where the opportunities are. . .

So while one cannot escape one’s time, and if destruction is at hand it is reasonable to go into the salvage business, it would be wiser for businesses to band together to defend free market culture and make their money from our civilization’s rise instead.

Obama for Heisman

A fun jab and commentary on political economy tied to humor.
From the Washington Examiner, by David Freddoso, Next: Help Obama win the Heisman Trophy!>From a reader:

I just went to this link and, in the "Type your nominee here!" field, entered "Barack Obama." The winner of this Nissan-sponsored promotion will actually receive one official vote for the Heisman award as sort of the people's choice.

You can actually go back and vote once each day between now and the Heisman award in December.

Everything is interconnected in the world of prices

Excerpts from Thomas Sowell, Magic numbers in Politics:

Back in the days of the Soviet Union, two Russian economists who had never lived in a country with a free-market economy understood something about market economies that many others who have lived under such economies all their lives have never understood. Nikolai Shmelev and Vladimir Popov said: “Everything is interconnected in the world of prices, so that the smallest change in one element is passed along the chain to millions of others.”

What does that mean? It means that a huge increase in the demand for ice cream can mean higher prices for catcher’s mitts, among other things.

When more cows are needed to produce more milk to make ice cream, then fewer cows will be slaughtered and that means less cowhide available to make baseball gloves. Supply and demand mean that catcher’s mitts are going to cost more.

While this may be easy enough to understand, its implications are completely lost on many people in politics and in the media. If everything is connected to everything else in a market economy, then it makes no sense to have laws and policies that declare some given goal to be a “good thing,” without regard to the repercussions, which spread out in all directions, like waves that spread across a pond when you drop a rock in the water.

Our current economic meltdown results from the federal government — under both Democrats and Republicans — declaring home ownership to be a “good thing” and treating the percentage of families who own their own home as if it was some sort of magic number that had to be kept growing — without regard to the repercussions on other things. . .

Politicians may not know much — or care much — about economics, but they know politics and they care a lot about keeping their jobs. So a great distracting hue and cry has gone up that all this was due to the market not being regulated enough by the government. In reality, it was precisely the government regulators who forced the banks to lower their lending standards.

The other big lie is that this was a failure of economists and others to foresee that the housing boom would turn to bust and set off financial repercussions across the economy.

In reality, everybody and his brother saw it coming and said so — including yours truly in the Wall Street Journal of May 26, 2005.

Nobel prize costs

Excerpt from Robert Tracinski from Real Clear Politics.

This is an attempt by the Nobel committee to play on Obama's vanity in order to influence his decisions on Iran and Afghanistan. The message is: how could you possibly let Israel attack Iran's nuclear facilities, or how could you send an additional 40,000 troops to "escalate" the war in Afghanistan-after we've just given you the Nobel Peace Prize?

In appealing to Obama's moral vanity, they know their man well-and it will probably work.

In this respect, Obama is the perfect successor to the last American president to win the Nobel: Jimmy Carter. Consider the legacy of Carter's term in office.

Carter withdrew American support for the shah in Iran, then failed to mount any effectual response to the seizure of the US embassy and its staff-all of which allowed the Ayatollah Khomeini to establish a brutal Islamist regime which has been the world's leading state sponsor of terrorism, a supporter of Palestinian terrorism, civil war in Lebanon, and insurgencies in Iraq and Afghanistan, and a regime that has repeatedly murdered and tortured its own citizens.

By allowing a Communist takeover in Nicaragua, Carter encouraged a legacy of socialist strongmen that is still riling Latin America to this day.

Carter's weakness in Latin America and Iran also emboldened the Soviets to invade Afghanistan, inaugurating three decades of bloody civil war and providing the proving ground for the Taliban and al-Qaeda.

So Carter's legacy is three decades of chaos and killing-and the growth of three of today's biggest threats to world peace. Yet Carter is infamous for his haughty, priggish sense of moral superiority.

This is what the Nobel Peace Prize really stands for: irresponsible moral posturing in the service of the leftist delusion that appeasement will bring peace, when all it really brings is more war.

Come to think of it, that makes Barack Obama the perfect recipient.

Economic growth, natural resources or human capital?

Italics are mine.

"When the dollar is weak, capital chases the inefficient illusion reflected in assets of the earth over true growth. [gains in tech, innovation, productivity, human capital, etc...]So in order to fix the global economy, we must first fix the dollar." - John Tamny

http://www.forbes.com/2009/10/10/dollar-inlfation-economy-opinions-columnists-john-tamny.html

We need a new recipe

It is sad to think that with so many Americans suffering, there are easy economic solutions the government could do today that would end the economic carnage without effort. Here is a recipe.

Cut taxes-income, capital gains, fees, et al.
De-regulation
Tort reform
Strengthen the dollar
Shrink the size of government
Replace income with fair or flat tax
Begin to pay off the national debt

Just serve in generous portions and America will be healthy again.

Who keeps the world free?

Excerpts from National Review

Dictators such as those in Cuba, Iran, Libya, North Korea, Russia, Syria, and Venezuela predated George Bush. They hate the United States not just because of Bush’s tough-guy rhetoric. The problem instead is that their agendas — getting nukes, bullying neighbors, taking back disputed land, supporting terrorists, jacking up oil prices, and stifling political dissent — are not reconcilable with America’s traditional vision of a democratic, free-market global system.

What keeps the so-called civilized world civilized each day is largely the willingness of the U.S. to invest vast resources to protect admirable but weaker nations. America keeps Europe, Japan, South Korea, Taiwan, and democracies in Asia and Latin America safe from regional bad actors. That way these countries can help spread shared ideas about freedom and progress to less fortunate others.

http://article.nationalreview.com/?q=YzA1Mjg2NDBjMGQ2OTEwMzZjMWZmYzhkODE2YmI0ZGU=

It's just a matter of time

Editors of Wall Street Journal

Candor about taxes is rare in Washington, so when House Speaker Nancy Pelosi admits that Democrats may have to impose a huge new tax on the middle class to fund their spending ambitions, believe her.

Speaking with PBS's Charlie Rose on Monday, Mrs. Pelosi mused publicly about the rising possibility of enacting a value-added tax, or VAT, as part of broader tax reform. "Somewhere along the way, a value-added tax plays into this," she said. "Of course, we want to take down the health-care cost, that's one part of it. But in the scheme of things, I think it's fair to look at a value-added tax as well."

The allure of a VAT for politicians is that it applies to every level of production or service, rakes in piles of money, and is largely hidden from those who ultimately pay it—namely, consumers. With a $9 trillion 10-year budget deficit, $4 trillion in spending in fiscal 2010 alone, and a $1 trillion (at a minimum) health-care entitlement in the wings, Mrs. Pelosi knows that not even the revenue from the expiration of the lower Bush tax rates in 2011 will cover the bills. Nearly every European country that has passed national health care has also eventually imposed a VAT, and it's foolish to think the U.S. will be different.

Mrs. Pelosi is the second prominent Democrat to call for a VAT in recent weeks. John Podesta, an adviser to President Obama and president of the very liberal Center for American Progress, called in September for a "small and more progressive" VAT. Mrs. Pelosi and Mr. Podesta argue a new tax is necessary to address the nation's exploding financial liabilities, as if those liabilities exploded on their own. Of course, VATs always start "small" and get bigger. The bills for the Democratic spending blowout are coming due even sooner than advertised, and the middle class will pay, whatever Mr. Obama's campaign promises.

The dollar debacle

From: David Malpass in the Wall Street Journal

Measured in euros (a more stable ruler than the ever-weakening dollar), U.S. real per capita GDP is down 25% since 2000, while Germany's is up 4% and tops ours.

The solution is a strong U.S. jobs and wealth program. It has to include stable money, a flatter, more competitive tax structure, spending restraint, and common-sense bank regulation so small business lending can restart. Treasury has to rapidly lengthen the maturity of the national debt and take steps to protect the Fed from market losses on its long-term debt holdings.

Instead, Washington's current economic program pushes capital away by weakening the dollar, threatening higher tax rates, borrowing short (the Fed's near trillion-dollar overnight debt, Treasury's mounds of bill and note issuance) to lend long (mortgages, student loans, entitlements), doubling down on government subsidies, and rechanneling bank loans to governments and big businesses instead of the small business job-growth engine.

http://online.wsj.com/article/SB10001424052748703298004574458923186941870.html

Examples of government waste

From the Heritage Foundation

My favorite examples of government waste

Washington spends $25 billion annually maintaining unused or vacant federal properties.

Government auditors spent the past five years examining all federal programs and found that 22 percent of them--costing taxpayers a total of $123 billion annually--fail to show any positive impact on the populations they serve.

Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job.

The Securities and Exchange Commission spent $3.9 million rearranging desks and offices at its Washington, D.C., headquarters.

The Pentagon recently spent $998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida.

Health care fraud is estimated to cost taxpayers more than $60 billion annually.

A GAO audit found that 95 Pentagon weapons systems suffered from a combined $295 billion in cost overruns.

The refusal of many federal employees to fly coach costs taxpayers $146 million annually in flight upgrades.

Despite trillion-dollar deficits, last year's 10,160 earmarks included $200,000 for a tattoo removal program in Mission Hills, California; $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming; and $75,000 for the Totally Teen Zone in Albany, Georgia.

The federal government owns more than 50,000 vacant homes

The Federal Communications Commission spent $350,000 to sponsor NASCAR driver David Gilliland

Members of Congress have spent hundreds of thousands of taxpayer dollars supplying their offices with popcorn machines, plasma televisions, DVD equipment, ionic air fresheners, camcorders, and signature machines--plus $24,730 leasing a Lexus, $1,434 on a digital camera, and $84,000 on personalized calendars.

More than $13 billion in Iraq aid has been classified as wasted or stolen. Another $7.8 billion cannot be accounted for.

Fraud related to Hurricane Katrina spending is estimated to top $2 billion. In addition, debit cards provided to hurricane victims were used to pay for Caribbean vacations, NFL tickets, Dom Perignon champagne, "Girls Gone Wild" videos, and at least one sex change operation

Congress recently gave Alaska Airlines $500,000 to paint a Chinook salmon on a Boeing 737

Washington has spent $3 billion re-sanding beaches--even as this new sand washes back into the ocean

The Defense Department wasted $100 million on unused flight tickets and never bothered to collect refunds even though the tickets were refundable

Over one recent 18-month period, Air Force and Navy personnel used government-funded credit cards to charge at least $102,400 on admission to entertainment events, $48,250 on gambling, $69,300 on cruises, and $73,950 on exotic dance clubs and prostitutes

The National Institutes of Health spends $1.3 million per month to rent a lab that it cannot use

Congress recently spent $2.4 billion on 10 new jets that the Pentagon insists it does not need and will not use

Lawmakers diverted $13 million from Hurricane Katrina relief spending to build a museum celebrating the Army Corps of Engineers--the agency partially responsible for the failed levees that flooded New Orleans

Washington recently spent $1.8 million to help build a private golf course in Atlanta, Georgia

Congressional investigators were able to receive $55,000 in federal student loan funding for a fictional college they created to test the Department of Education

The Conservation Reserve program pays farmers $2 billion annually not to farm their land

The Commerce Department has lost 1,137 computers since 2001, many containing personal data

John Stossel on income redistribution

A must read, link below.

http://townhall.com/columnists/JohnStossel/2009/10/07/transfer_machine

A lesson in political economy

Excerpt from Michelle Malkin, Spin doctors for Obamacare.

The curtains opened on yet another artfully staged performance of Obamacare Theater this week. One hundred and fifty doctors took their places on the plush lawn outside the West Wing -- many acting like "Twilight" groupies with cameras instead of credible medical professionals. The president approved the scenery: "I am thrilled to have all of you here today, and you look very spiffy in your coats."

White House wardrobe assistants guaranteed the "spiffy." As the New York Post's Charles Hurt reported, the physicians "were told to bring their white lab coats to make sure that TV cameras captured the image." President Obama's aides hastily handed out costumes to those who came in suits or dresses before the doc-and-pony show began.

A history of the roots of tyrants

Excerpts from: Walter Williams, Elites and tyrants from Townhall

Today's leftists, socialists and progressives would bristle at the suggestion that their agenda differs little from Nazism. However, there's little or no distinction between Nazism and socialism. Even the word Nazi is short for National Socialist German Workers Party. The origins of the unspeakable horrors of Nazism, Stalinism and Maoism did not begin in the '20s, '30s and '40s. Those horrors were simply the end result of long evolution of ideas leading to consolidation of power in central government in the quest for "social justice." It was decent but misguided earlier generations of Germans, like many of today's Americans, who would have cringed at the thought of genocide, who built the Trojan horse for Hitler to take over.

Few Americans have the stomach or ruthlessness to do what is necessary to make their governmental wishes come true. They are willing to abandon constitutional principles and rule of law so that the nation's elite, who believe they are morally and intellectually superior to the rest of us, can have the tools to implement "social justice." Those tools are massive centralized government power. It just turns out last century's notables in acquiring powerful central government, in the name of social justice, were Hitler, Stalin, Mao, but the struggle for social justice isn't over yet, and other suitors of this dubious distinction are waiting in the wings.

http://townhall.com/columnists/WalterEWilliams/2009/10/07/elites_and_tyrants

Olympic Gold for Narcissism

Excerpts from Olympic Gold for Narcissism by George Will. Itallics are my comments.

In the Niagara of words spoken and written about the Obamas' trip to Copenhagen, too few have been devoted to the words they spoke there. Their separate speeches to the International Olympic Committee were so dreadful, and in such a characteristic way, that they might be symptomatic of something that has serious implications for American governance. . .and the economy

In the 41 sentences of her remarks, Michelle Obama used some form of the personal pronouns "I" or "me" 44 times. Her husband was, comparatively, a shrinking violet, using those pronouns only 26 times in 48 sentences. Still, 70 times in 89 sentences was sufficient to convey the message that somehow their fascinating selves were what made, or should have made, Chicago's case compelling. . .

The president told the Olympic committee that: "At this defining moment," a moment "when the fate of each nation is inextricably linked to the fate of all nations" in "this ever-shrinking world," he aspires to "forge new partnerships with the nations and the peoples of the world."

Good grief. The memory of man runneth not to a moment that escaped being declared "defining" -- declared such by someone seeking to inflate himself by inflating it. . .

He continued

"No one expects the games to solve all our collective problems." That's right, no one does. So why say that? Then, shifting into the foggy sentimentalism of standard Olympics blather, he said "peaceful competition between nations represents what's best about our humanity" and "it brings us together" and "it helps us to understand one another."

or this

"Nearly one year ago, on a clear November night, people from every corner of the world gathered in the city of Chicago or in front of their televisions to watch the results of the U.S. presidential election. Their interest wasn't about me as an individual. Rather, ... "

When they say "its not about me", it really is about them- to them.

Inflation's moral hazzard

From: Theodore Dalrymple, City Journal

asset inflation—ultimately, the debasement of the currency—as the principal source of wealth corrodes the character of people. It not only undermines the traditional bourgeois virtues but makes them ridiculous and even reverses them. Prudence becomes imprudence, thrift becomes improvidence, sobriety becomes mean-spiritedness, modesty becomes lack of ambition, self-control becomes betrayal of the inner self, patience becomes lack of foresight, steadiness becomes inflexibility: all that was wisdom becomes foolishness. And circumstances force almost everyone to join in the dance.

http://www.city-journal.org/2009/19_3_otbie-inflation.html

Compact wisdom in a complex world

"Hit a dog with a stick, and you won't know where to find him. Leave him a bowl of food and you can be sure to know where he is." -Arthur Laffer

“Send not to know for whom the bell tolls, it tolls for thee.”-John Donne

“those who attempt to level, never equalise. What they end up doing is concentratin. There is no safety for honest men, but by believing all possible evil of evil men, and by acting with promptitude, decision, and steadiness on that belief.” -Edmond Burke