Congressional Corruption

Kimberly Strassel:

This budget week, there was one thing on which Democrats and Republicans agreed: It's time to do something about earmarks. And in a nod to voter disapproval with these special-interest projects, this year Congress will do its pork spending in secret.

Welcome to Congress's new and dirtier earmark game, in which the big spenders are setting all the rules. In front of the cameras, both parties claim to have found earmark religion, and are talking up a bill that would reform the way Congress asks for billions in goodies for lawmakers' home districts. Behind the scenes, they're working feverishly to keep the earmarks rolling, this time using a technique outside of the legislative process and hidden from public view.

The gears on this new underground earmarking machine started whirring late last year, when Republicans failed in a lame-duck session to pass the 2007 spending bills. The GOP pork crowd wanted to use its last weeks in power to push through 12,000 more bridges to nowhere. Saner heads noted that the party had just lost an election in part due to these corrupting payoffs and urged restraint. The standoff resulted in Republicans punting the 2007 spending responsibility to the Democrats.

That put the new House appropriations chief, Wisconsin's David Obey--a spender for our time--in the distasteful position of having to live up to his party's election promises to fix the earmark boondoggle. He begrudgingly promised a "moratorium." And last week, when Mr. Obey celebrated the passage of his $464 billion 2007 spending bill, he bragged that Democrats had fulfilled their promise and "stripped all earmarks from the measure."

"This decision doesn't come without pain," intoned Mr. Obey. "Many worthwhile earmarks are not funded in this measure, but we had to take this step to clear the decks, clean up the process and start over."

The key language here is "not funded in this measure," and it explains why Mr. Obey is still smiling through his pain. Congressional members, led by appropriators and an army of staff, have already figured out a new way to keep their favors in the money, and it might as well be called 1-800-EARMARKS (which unfortunately is already taken). All across Washington, members are at this moment phoning budget officers at federal agencies--Interior, Defense, HUD, you name it--privately demanding that earmarks in previous legislation be fully renewed again this year. There might not be a single official earmark in the 2007 spending bill, but thousands are in the works all the same.

And getting far less scrutiny than before--if that's even possible. Under this new regime, members don't even have to go to the trouble of slipping an earmark into a committee report, where it might later (once the voting is over) come in for criticism. All the profligates need now to keep the money flowing is a quiet office and a cellphone.

Well, well, well, who would have guessed, eh?

Illegal Immigration

When will illegal immigration end? Victor Davis Hanson offers an answer:

We hear all sorts of solutions for ending illegal immigration. Build a wall! Beef up border security! Fine employers, and create a massive guest-worker program. Or America could insist on tamper-proof identification cards, or detention, deportation or even amnesty for some illegal aliens -- or all of these measures somehow combined.

But ultimately the solution lies in the hope that a Tijuana might become as prosperous as a San Diego -- now a few miles away but a world apart.

After all, Hong Kong used to be a magnet for illegal immigrants who streamed in from impoverished Red China. Not so much any longer. Shanghai, for example, in two decades has become almost as wealthy as the old British colony.

East Berliners used to risk their lives to cross the wall into the West. Now billions of dollars are being invested in restoring the eastern half of a united Germany's capital. . . .

I suspect this is the case because people seem to be seeking better chances of becoming prosperous by coming to the United States. Our government can make greater efforts to "close the border," or greater efforts to catch and punish employers who break the laws against hiring illegal workers, or each of these and even more. And, I suspect such efforts will reduce the flow of illegal immigration to our country. After all, such efforts will increase the price of choosing to immigrate illegally to the United States. But such efforts will probably cannot end illegal immigration because it seems to me the bottom line is that the governments of Mexico and of many other countries to our south are simply not very good at providing the institutional necessary conditions for economic prosperity [see Mancur Olson, Power and Prosperity] in their countries. These governments are not very good at enforcing contracts and private property rights, they tend to be characterized by much corruption and by many forms of economic predation.

Can't Trust Politicians

James Taranto:

When NBC's Tim Russert asked John Edwards on Sunday if he, as president, would accept a nuclear-armed Iran, the silver-tongued lawyer got tongue-tied: "I--there's no answer to that question at this moment. I think that it's a--it's a--it's a very bad thing for Iran to get a nuclear weapon. I think we have--we have many steps in front of us that have not been used. We ought to negotiate directly with the Iranians, which has not, not been done. The things that I just talked about, I think, are the right approach in dealing with Iran. And then we'll, we'll see what the result is. . . . I think--I think the--we don't know, and you have to make a judgment as you go along, and that's what I would do as president."

Less than two weeks earlier, Mr. Edwards had spoken by satellite to Israel's annual Herzliya Conference. "Let me be clear: Under no circumstances can Iran be allowed to have nuclear weapons. . . . To ensure that Iran never gets nuclear weapons, we need to keep all options on the table. Let me reiterate--all options must remain on the table."

Why did Mr. Edwards's views morph so quickly from hawkish to weaselly? Probably because confrontation with Iran is very unpopular among the Democratic antiwar base. Last week Ezra Klein of The American Prospect, a left-liberal magazine, confronted Mr. Edwards about the Herzliya speech, and the candidate waffled. Although allowing that "it would be foolish for any American president to ever take any option off the table," he offered this criticism of President Bush: "When he uses this kind of language 'options are on the table,' he does it in a very threatening kind of way." Does Mr. Edwards mean to be docile?

Mr. Klein asked if America can live with a nuclear Iran. "I'm not ready to cross that bridge yet," Mr. Edwards answered. There's a world of difference between the unequivocal "under no circumstances" and the coy "I'm not ready." And that "yet" suggests it is only a matter of time before he does cross the bridge.

Once again we see an illustration that politicians seem to have heard what public choice assumes, i.e., voters are rationally ignorant. Even in a world with audio and video, even in a world with left and right bloggers watching every appearance, we find politicians (read about Senator Clinton in this piece as well) saying one thing before one group, and another thing before another group.

Totten's View From Lebanon

Michael Totten writes about a very interesting conversation concerning the situation in Lebanon. The entire piece is worth reading. But, what I want to point specifically to here is his summary of our policy these days:

The problem with all this is that it’s purely intellectual and theoretical. None of it is going to happen. Like it or not, the United States is retreating for now into a “realist” posture where tyrants and the status quo are frozen in place. Many Republicans and even most Democrats are behind this even though it’s the old right-wing position the left used to hate.

I think this is well put. The US is seemingly retreating to a policy stance "where tyrants and the status quo are frozen in place."

Bash Bush

Tim Graham:

On Friday night's edition of Inside Washington airing locally on Washington PBS station WETA, the first topic was whether the media's been unfair to President Bush, given his abysmal approval ratings. NPR reporter Nina Totenberg said Bush received a "free ride" for years, so now the worm has turned and the coverage is fierce. Then the host turned to Newsweek's Evan Thomas, who was frank in his assessment of the media's role:

Gordon Peterson: "What do you think, Evan? Are the mainstream media bashing the president unfairly?"

Evan Thomas: "Well, our job is to bash the president, that's what we do almost --"

Peterson: "But unfairly?"

Thomas: "Mmmm -- I think when he rebuffed, I think when he just kissed off the Iraq Study Group, the Baker-Hamilton Commission, there was a sense then that he was decoupling himself from public opinion and Congress and the mainstream media, going his own way. At that moment he lost whatever support he had."

The message in that is very simple: the president must never "decouple" himself from the "mainstream media," because they are the key players in maintaining public opinion.

Is a media that thinks its role is to "bash" President Bush playing a useful role in our system of political economy? I wonder if Thomas would have considered saying instead that the media's job, in general, was to "bash" every President, or was to bash all elected officials? Why isn't the role of the media to provide accurate reporting on the events of the nation?

Many people on the conservative side of the commentary isle have asserted that the media, in general, is biased against Republicans and against conservatives. Doesn't "my job is to bash Bush" fit this assertion? Or, is it just that the media is biased against this particular President?

Many insights from public choice economics follow from the assumption of rational ignorance on the part of voters. It seems to me that most politicians behave in ways that take advantage of that rational ignorance. I wonder if many in the news industry have also learned to take advantage of the rational ignorance of voters?

Have people in the news industry learned, just as politicians seem to have learned, that because of rational ignorance voters won't really notice that what is said and written can change from week to week and month to month? Have they learned that because of rational ignorance people don't really make much effort to discover whether what is reported is true or not? Have many in the news industry learned that because of rational ignorance they can pick a side and say many things that are inaccurate and untrue in an effort to get their favored side in politics elected?

[via Instapundit]

Governor Richardson on Iraq

Governor Richardson of New Mexico is running for President. He said this yesterday:

"The reality is, we have done in Iraq what we said we would do. We have rid the world of a brutal dictator. We have brought about free and fair elections three times over," he said. "The Iraqis now have a constitution, over 200,000 armed soldiers and they have oil revenue. It's time for our troops to leave with honor."

I don't agree that it is time for our troops to leave Iraq, but it seems to me there is an important perspective expressed in the rest of the Governor's statement. I think in some ways that we should consider saying that our war in Iraq is over. After all, our war was against the dictatorial government of Saddam Hussein, and that government was defeated. Today the government of Iraq is not at war with us, nor are we are war with it. It seems to me that our efforts in Iraq at this time are to help the government of Iraq provide the necessary internal security as well as national security against outside agents that are supported by other countries such as Iran.

I think it is important for the United States to support the government of Iraq in these ways for as long as that government seeks such support. But, perhaps this relationship should be formalized by terms of a treaty that both governments agree to. Instead of debating whether "an escalation of the war" is good or bad policy, I think the policy discussion should accept the idea that our war with Iraq was finished with the formation of a constitutional government of Iraq. Now, both the government of the United States and the government of Iraq should formally negotiate a treaty by which we agree to aid Iraq in internal security matters as well as national security matters. If the government of Iraq no longer wants the presence and help of the US, then certainly we should withdraw. Here at home, assuming Iraq wants us to continue to help with security, Congress and the President should be discussing the terms and obligations of a formal treaty to aid in specific ways.

It seems to me that the conceptual idea that is the premise of Governor Richardson's comment, should be accepted because I think it would provide a more sound basis for our own discussion of our foreign policy with respect to Iraq.

Taheri On Iraq

Amir Taheri takes a look at the situation in Iraq. He seems well informed, but his analysis seems very little like what so many in Washington and in our news industry believe about Iraq these days:

If it is a civil war, we should identify the two camps and decide which to support. If it is a sectarian war, the only way to end it is either by geographical separation (as was the case with Croatia and Serbia) or through massive foreign occupation, as in Bosnia.

What is happening in Iraq, however, is neither a civil nor a sectarian war (although elements of both exist within the broader context). This war is a political one - between those who wish Iraq to succeed as a new democracy and those who want it to fail.

Those who want the new Iraq to succeed represent the overwhelming majority of Iraqis of all ethnic and religious backgrounds. Those who want it to fail are made up of Saddamite bitter-enders, some misguided pan-Arab nationalists, death squads financed by Tehran - and a variety of non-Iraqi terrorist outfits who have come to Iraq to kill and die in the name of their perverted vision of Islam.

In short, the war in Iraq is part of the broader war against terrorism and its many dark forces.

Read his entire analysis. He seems to understand the elements and the details of what has been happening in Iraq. Our political leaders in Congress, who have been rather loudly debating what our efforts in, or out of, Iraq should be, don't seem to be talking in terms of such details as Mr. Taheri brings to bear in his analysis. Could it be that Mr. Taheri has it wrong?

When I listen to our representatives in Congress talk about Iraq, almost none of them provide such details as the basis for their conclusions. Consequently, it is difficult for me to believe any politician who is not talking about continuing to provide security for the new constitutional government of Iraq, and who is instead talking only about what sounds like retreat. I think if the retreatists would just pick one of Mr. Taheri's choices between (a) it is a civil war and we must pick a side, or (b) it is a sectarian war and we must partition on the basis of religious belief, then I could at least conclude that they were being sincere, even though I tend to be persuaded by Mr. Taheri's conclusion. Instead, I conclude that most of those in Washington today who are saying they won't support the Commander in Chief are simply playing politics with national security issues. That is not good, but what can we do, eh? This is pretty much exactly what I tell my students the study of public choice theory says we should expect from our elected leaders.

Iran: Between State and Revolution

Amir Taheri in the WSJ ($$):

"Mizanan, ya na?" (Will they hit or not?) In Tehran these days, this question is the talk of the town. The "they" is seldom spelled out. Yet everyone knows that it refers to the United States. . . .

The bulk of the Khomeinist leadership, including the "Supreme Guide" Ali Khamenei, however, take the threat seriously and are preparing public opinion for a climb-down by the Islamic Republic. The American naval build-up in the Persian Gulf, the new U.S. offensive against Iran's agents and armed clients in Iraq, Tehran's failure to seize power in Beirut through its Hezbollah proxy, and plummeting oil prices are all cited by Ayatollah Khamenei's entourage as reasons why a climb-down might be necessary.

Sometime in the next few weeks, Iran is likely to offer a "compromise formula" under which it would suspend its enrichment program, as demanded by the Security Council, in exchange for a suspension of sanctions. This will be accompanied by noises from Tehran about readiness to help the U.S. in Iraq, plus possible concessions in Lebanon and over the Palestine-Israel issue. . . . .

So, what should the Bush administration do when, and if, the mullahs unveil their compromise formula? First is to see the mullahs' move as deja vu all over again. Each time the mullahs are in trouble they become the essence of sweet reasonableness. They deploy their traditional tactics of taqiyah (obfuscation), kitman (dissimulation) and ehtiat (caution) to confuse the "infidels" and divide their ranks. The Iranian leadership did this in the early days of the Khomeinist revolution in 1979 by persuading the clueless Jimmy Carter that the ayatollah was the only force capable of preventing Iran from falling into communist hands. In 1984 and '85, they seduced the Reagan administration with an offer of releasing the American hostages in Beirut in exchange for the secret U.S. arms deliveries Iran needed to stop the Iraqi advance. In 1987 they stopped their attacks on Kuwaiti oil tankers in the Persian Gulf after an American task force sunk the Revolutionary Guard's navy in a 10-hour battle.

In 1988, fear of an even bigger U.S. military attack persuaded Ayatollah Khomeini to "drink the cup of poison" by agreeing to end his eight-year war with Iraq. In 1998, the mullahs offered a "grand bargain" to the Clinton administration as a means of averting U.S. retaliation for the Iranian-sponsored killing of 19 American soldiers in an attack in Khobar, Saudi Arabia. . . .

The Khomeinist revolution has not succeeded in destroying the plurimillennial idea of Iran as a nation-state. But each time the Khomeinist revolution found itself on the defensive, the Western powers, including the U.S., helped it restore its legitimacy and regain its breath. The same illusions that produced the détente, which arguably prolonged the life of the Soviet Union, have also helped the Khomeinist revolution survive long after its sell-by date.

Today, Iran is once again facing the schizophrenia imposed on it through the conflict between state and revolution. A majority of Iranians, including many in the ruling elite, wish Iran to re-emerge as a nation-state.

The U.S. has no interest in helping the Khomeinist revolution escape the consequences of its misdeeds. This does not mean that there should be no diplomatic contact with Tehran or that pressure should be exerted for the sake of it. Nor does it mean that military action, "to hit or not to hit," is the only question worth pondering with regard to the Islamic Republic.

No one should be duped by a tactical retreat in Tehran or a temporary modification of the regime's behavior. What is needed is a change in the nature of the regime. The chances of setting such change in motion have never been as good, and the current showdown should be used to communicate a clear message: As a nation-state, Iran can and will be a friend. As a revolution, it would always remain a foe.

This is very interesting. Perhaps we should not be duped by a Tehran retreat, but that does seem to be what has happened in the past. I don't think the politics being played in Washington these days gives me any reason to think that our national political leaders will not be duped this time around as well.

Kagen on Congress & the War

ROBERT KAGEN:

Other critics claim that these are political cop-outs, which they are. These supposedly braver critics demand a cutoff of funds for the war and the start of a withdrawal within months. But they're not honest either, since they refuse to answer the most obvious and necessary questions: What do they propose the United States do when, as a result of withdrawal, Iraq explodes and ethnic cleansing on a truly horrific scale begins? What do they propose our response should be when the entire region becomes a war zone, when al-Qaeda and other terrorist organizations establish bases in Iraq from which to attack neighboring states as well as the United States? Even the Iraq Study Group acknowledged that these are likely consequences of precipitate withdrawal.

Those who call for an "end to the war" don't want to talk about the fact that the war in Iraq and in the region will not end but will only grow more dangerous. Do they recommend that we then do nothing, regardless of the consequences? Or are they willing to say publicly, right now, that they would favor sending U.S. troops back into Iraq to confront those new dangers? Answering those questions really would be honest and brave.

Of course, most of the discussion of Iraq isn't about Iraq at all. The war has become political abstraction, a means of positioning oneself at home.

[. . . .]

. . . Here's a wild idea: Forget the political posturing, be responsible, and provide the moral and material support our forces need and expect. The next president will thank you.

Hagel, Congress, War

Peggy Noonan has an interesting commentary about a recent speech (rant?) by Senator Hagel about the war and about Congress. I think it is related to a recent post of mine.

Here is what she concluded about Senator Hagel and about Congress:

"But Mr. Hagel said the most serious thing that has been said in Congress in a long time. This is what we're here for. This is why we're here, to decide, to think it through and take a stand, and if we can't do that, why don't we just leave and give someone else a chance?

Mr. Hagel has shown courage for a long time. He voted for the war resolution in 2002 but soon after began to question how it was being waged. This was before everyone did. He also stood against the war when that was a lonely place to be. Senate Democrats sat back and watched: If the war worked, they'd change the subject; and if it didn't, they'd hang it on President Bush. Republicans did their version of inaction; they supported the president until he was unpopular, and then peeled off. This is almost not to be criticized. It's what politicians do. But it's not what Mr. Hagel did. He had guts."

I suggested in my earlier post that our leaders in Congress were trying to have things both ways. I think she makes the same suggesti0n in the paragraph just above. I'm not sure I want to agree that "this is almost not to be criticized," because on national security matters I think we really need truly responsible leaders who will not run and hide or try to have things both ways. It does seem that Senator Hagel was imploring his colleagues to be such responsible leaders.

Noonan also throws Senator Kerry into her mix with:

"A note too on John Kerry, who, on the floor of the Senate, also talked about Iraq this week, and said he would not run for president. Clearly he saw the lipstick writing on the wall: This is the year of the woman. He also might have been acting on the sense that this is a time of ongoing and incipient political flux. The major parties seem as played out as they are ruthless, and the arc of political fame is truncated: nobodies become somebodies become has-beens before half the country knows their name. The Democrats have no idea what they stand for, the Republicans only remember what they stood for.

But there was Mr. Kerry, liberated by the death of a dream and for once quite human as he tried to tell it the way he actually saw it. Took the mock right out of me. Good for him, and for Mr. Hagel. . . ."

Then, she concludes:

"I wonder if we are seeing the start of a new seriousness."

Hmm, wouldn't that be interesting? I'm afraid I doubt it.

I will join Mrs. Noonan in saying good for Senator Hagel. Surely Senator Hagel's justified rant is not enough. Debating expressions of no confidence in the President, without first engaging a serious debate about waging the war against jihadism, which has been declared against us and much of the rest of the world, seems to me insufficient and damaging to our security interests. Debating expressions of no confidence without first debating the way forward against those who have declared us there enemies, offers no real leadership. What did Senator Hagel offer this week in this regard? What is Senator Hagel's view of our war against jihadism?

Congress & the Constitution

The Wall Street Journal says Congress does not have the Constitutional power to micromanage war, and the talk and efforts at Democrat resolutions about Iraq presume to do just that.

In addition to being feckless, all of this is unconstitutional. As Commander-in-Chief, the President has the sole Constitutional authority to manage the war effort. Congress has two explicit war powers: It has the power to declare war, which in the case of Iraq it essentially did with its resolution of 2003. It also has the power to appropriate funds.

There is a long and unsettled debate over whether Congress can decide to defund specific military operations once it has created a standing Army. We lean toward those who believe it cannot, but the Founders surely didn't imagine that Congress could start dictating when and where the 101st Airborne could be deployed once a war is under way.

Mr. Bush was conciliatory and respectful in his State of the Union Address Tuesday night, asking Congress to give his new Iraq strategy a chance. In a better world, the Members would do so. But if they insist on seeking political cover by trying to operate as a committee of 535 Commanders-in-Chief, Mr. Bush will have to start reminding Congress who really has the job.

Of course, members of Congress do have the Constitutional power to play politics, and it seems to me many members of Congress are choosing to play politics with national security.

But then such analysis probably takes this resolution more seriously than most of the Senators do. If they were serious and had the courage of their convictions, they'd attempt to cut off funds for the Iraq effort. But that would mean they would have to take responsibility for what happens next. By passing "non-binding resolutions," they can assail Mr. Bush and put all of the burden of success or failure on his shoulders.

I've heard it said that politics ends where our shore begins. I do not know if this is an accurate characterization of a tradition in our politics or not. It is my opinion that members of Congress should think it is.

I suspect that instead of honestly and publicly confronting the leadership challenges posed by our war with jihadism, many members of Congress are simply trying to have things both ways. If we end up taking our military out of Iraq and bloody chaos follows, then they want to be able to point to the past when they supported resolutions to do just that. If, instead, the constitutionally elected government of Iraq is protected and held secure by our military (and other) efforts, then they hope you will forget they voted for such resolutions. I think they understand, as public choice economics suggests, that generally voters are "rationally ignorant." But, I think these politicians also understand that even just talk, much less passage, of such resolutions increases the probability that we will end up taking our military out of Iraq with bloody chaos to follow. That is why they hope voters are rationally ignorant and forgetful. I hope we don't forget. But I suspect the insights of public choice are pretty good on such matters.

Pigou Club and Government Policy

Russell Roberts makes a very good point:

Greg Mankiw tries to expand the Pigou Club:

Some of my libertarian friends aren't members of the Pigou Club because they view gasoline taxes as a case of excessively intrusive government. But if this tangle of regulation is the alternative, isn't it time for them to reconsider?

But that's a different club. As I understand it, members of the Pigou Club support an increase in the federal gasoline tax on various externality grounds—pollution, global warming and international security issues. I'd be happy to replace all or even most attempts to reduce gasoline consumption via command-and-control and replace them with a higher tax rate. But that Club is a quixotic club—Archer Daniels Midland and others who benefit from ethanol regulation along with whoever it is that benefits from CAFE standards (regulators and politicians who get lobbied to see it tweaked or delayed?) will make sure that Club's mission is never achieved. But the Pigou Club's goal very well may be achieved and will add a higher gasoline tax to the existing tangle of regulations.

The federal tax on gasoline has been increased many times since its inception in 1932. Have any of those increases been accompanied by regulatory simplification?

It seems to me that most of the time economists offer policy advice and evaluation without thinking very much about whether it is practical or not. They also often offer advice without giving much thought to how the political process is likely to play out, even if the advice is taken. In the case at hand, I tell the students in all of my classes that the economic policy approach to pollution is a corrective, or Pigovian tax. The idea is, of course, to replace all the inefficient current policy approaches with a Pigovian tax. But, this simply doesn't look like politics would ever accomplish this substitution. Instead, as Russell Roberts suggests, what we most likely would get if the economists advice was followed was a corrective tax piled on top of all the inefficient policies and regulations already in place.

Victor Davis Hanson Is Worried

Hugh Hewitt recently interviewed Victor Davis Hanson. I find that VDH generally presents views that I find to be thoughtful and compelling. You can read the transcript of the entire interview yourself, but perhaps it is well worth your time to at least consider how the interview concluded:

HH: Let me ask you then, in terms of assessing the peril in which the country finds itself, and perhaps it’s not obvious, is it similar to the peril that the late Roman Republic found itself in when Caesar crosses Rubicon, and everything starts to descend? Or is it more like a simple period of political instability such as mark the 30’s and the depressions before that?

VDH: You know, that’s a great question, because I’m very worried, because in some sense, the jihadists are just a rag tag bunch of failed extremists. They don’t compare with the Wehrmacht, or they don’t compare with 7,000 nuclear weapons, but then you stop and say well, wait a minute. They did what none of those people did. They took out 3,000 Americans at the heart of American military and economic power in Washington and New York, and then you realize as you start thinking about it, this is a worldwide ideology that transcends countries, Indonesia, Philippines, Iran, all these places. And then more importantly, in the age of globalization, miniaturization, and nuclear proliferation, you really don’t need those assets that threatened the United States before. And then you add one other wrinkle to it. Never in the history of the United States, as I see it, have we had an elite who are more diffident and conflicted about is the United States different? Is it exceptional? Is it better than the alternative? Is it worth defending? And at this sort of perfect storm, bin Laden and these people have come along and said you know what? We can wage a psychological terrorist war against the people who don’t think that they really deserve to continue as a people in the way they had before.

HH: Then I take that to mean that the threat is indeed much higher than most people think. . . .

I think the threat is very real and very significant. It seems far too many of those elected to Congress simply are not serious about their responsibility to protect our country. Perhaps we cannot get away from politicians who choose to play politics with the national interest, but I also don't think we have to embrace such politicians or their views. Unfortunately, the views of such politicians seem to be trumpeted by most of the news industry, and perhaps far too widely accepted at face value by our fellow Americans.

Scholars & Politics

DAVID HARDY:

"I've posted before on how the antigun Joyce Foundation was using its millions to, essentially, rent law reviews as fora for second amendment attacks. It'd invested in symposium issues of the Chicago-Kent Law Review and Fordham Law Review, getting them to bring in outsiders as symposium editors, inviting only anti-second amendment articles, and then paying for copies to distribute to judges and legislators. Understand, most law reviews run on a shoestring. Authors are unpaid, editors get a pittance ($600 a year when I did it). Some tax-exempt place comes in and offers tens of thousands, it's unprecedented.

The spring issue of the Stanford Law and Policy Review is coming out with a symposium issue on, you guessed it, gun laws and the second amendment. So I did a bit of research and found this note on Joyce Foundation's homepage, under its 2004 grants:

'Ohio State University Foundation
John Glenn Institute for Public Service & Public Policy
Columbus, OH $125,000
To host a symposium at Stanford Law School on the connections between the Second Amendment and the Fourteenth Amendment, to publish papers in a major law review, and disseminate findings via the Web. (2 yrs.)'"

I guess I shouldn't be surprised, eh? After all, I teach economics. Even those in the academy are self-interested.

[via Instapundit]

More In Store For Us?

Victor Davis Hanson writes about the question: Just how serious is the threat of radical Islam? There seem to be many in this country, and many among our political leaders, who choose to answer that radical Islam is not a significant threat. VDH argues the opposite view, and I think his essay is well worth thinking about. He offers several reasons for his conclusion. Here is one interesting observation:

"A jihadist of the first order swears that he hears religious voices and through his mesmerizing speech prevents his audiences from blinking. He promises a world without the United States and swears he will wipe Israel off the map. As relish he brags about shutting down the Straits of Hormuz and choking off global petroleum commerce. And these are not impossible threats, since Ahmadinejad has at his disposal billions in petrol-dollars, soulless commercial partners in Russia, North Korea, and China who will sell him anything, and a certain apocalyptic vision that, Jim-Jones like, convinces him that he can achieve eternal fame in this world—the downtrodden Shiite Persians at last trump the Sunni Arabs as the true warriors of Islam—and Paradise in the next.

And all this is reified by an ongoing nuclear program. Set against all that, our own wise men and women demonize those who will not “talk” with the Iranian theocracy, so convinced are they either of their own moral superiority and beguiling rhetoric, or of the rational sense of the Iranians. In other words, suggest modestly that Iran is creepy enough to keep distant from—and suddenly that wariness is slurred as a neocon plot to wage war with Teheran.

So, yes, I have no apologies for labeling radical Islam as a danger comparable to Hitler, Mussolini, Tojo, Stalin, or Mao.That admission does not make any of us who share these worries fond of war, far from it. Rather we fear that radical Islam has much in store for us ahead, and the more America prepares for it, the less our citizens and others less strong will suffer."

It seems to me that most of the conflicts in the world these days involve radical Islam, and that those fighting in the name of jihad seek to impose their views, by force and repression, on any who disagree. They do not seem to fight for progress and prosperity, but rather for either a return to a distant past before the progress and prosperity we know today is possible, or for such chaos in the world that their religious belief in the 12th imam saving the world will come true. It seems to me jihadism is a serious threat to us and to progress and prosperity the world over. Certainly jihadism is now interrupting opportunities for progress and prosperity in many countries.

I also like the suggestions VDH makes about how we should proceed:

". . . only a four-pronged fundamental approach, much of which we are presently engaged in, will ultimately work: kill jihadists whether in Somalia or Anbar or the Hindu Kush; promote consensual government and market economies that so drive the jihadists crazy and offer a chance that some day the Middle East will achieve parity with other regions—and thus cease blaming the West for its self-induced failures; work with regional governments, whether the newly established Afghans or Iraqis, or the Ethiopians or the Jordanians or the Israelis to fight the jihadists; and collapse the world oil market though conservation, more exploration, alternative fuels, and nuclear power. 20 -dollar-a-barrel oil will take immediately nearly $500 billion a year out of the coffers of Middle East exporters—and with that loss, floating petrodollars for weapons and terrorists."

I think each of his suggestions is important, and I want to add something with respect to offering the Middle East a chance at prosperity. Economic progress and prosperity follows from economic freedom. Without governments that protect economic freedom the regions of the world that breed and feed jihadism today will have little chance to begin down the path of economic progress and prosperity. I don't know if a government that protects economic freedom can result from a war that topples a tyrant, but I am sure that governments in the Middle East, outside of the government of Israel, are not protecting economic freedom today.

More Minimum Wage

Washington Post:

"The House yesterday overwhelmingly approved the first increase in the federal minimum wage in nearly a decade, boosting the wages of the lowest-paid American workers from $5.15 to $7.25 an hour over the next two years."

I've written about the economic effects of the minimum wage several times here in the past. Instead of trying to add something new in view of the action by the House, I will point to what two others have recently written about the minimum wage.

George Will writes:

A federal minimum wage is an idea whose time came in 1938, when public confidence in markets was at a nadir and the federal government's confidence in itself was at an apogee. This, in spite of the fact that with 19 percent unemployment and the economy contracting by 6.2 percent in 1938, the New Deal's frenetic attempts had failed to end, and perhaps had prolonged, the Depression.

Today, raising the federal minimum wage is a bad idea whose time has come, for two reasons, the first of which is that some Democrats have an evidently incurable disease -- New Deal Nostalgia. Witness Nancy Pelosi's "100 hours" agenda, a genuflection to FDR's 100 Days. Perhaps this nostalgia resonates with the 5 percent of Americans who remember the 1930s.

[. . . .]

But the minimum wage should be the same everywhere: $0. Labor is a commodity; governments make messes when they decree commodities' prices. Washington, which has its hands full delivering the mail and defending the shores, should let the market do well what Washington does poorly. But that is a good idea whose time will never come again.

Frederic Sautet writes:

"Poverty does not result from a low price of labor (and artificially constraining it will therefore not solve it). The roots of poverty are to be found elsewhere (such as low labor productivity). Labor’s returns are influenced by human capital investment, but also by capital accumulation elsewhere in the economy. Capital accumulation and factor productivity depend on entrepreneurial activity and the division of labor (Kirznerian and Smithian effects). Thus the conditions for entrepreneurship and the division of labor are crucial to a growing economy and higher wages. Giving people the incentives to seize profit opportunities and to invest in their human capital via low taxation is the best way to reduce poverty in the long run. Minimum wage legislation cannot reduce poverty overall; it only masks it for a while."

Democrats & Trade

Recently Senator Max Baucus wrote an op-ed piece in the WSJ ($$) about the policy agenda of Democrats with respect to international trade:

"At a time when our country's competitive strength depends increasingly on an aggressive trade policy, Americans are far less willing to embrace one. Many equate trade and globalization with ballooning deficits, stagnating wages and layoffs. Meanwhile, even as China and India have continued their economic reawakening, America has lacked the leadership to tackle the associated challenges through trade. U.S. policy has lurched frantically from one trade agreement to the next, eking out just enough votes to push each one through Congress."

I'm not sure I like the sounds of this. I'm thinking that "an aggressive trade policy" isn't going to be very consistent with a policy of free trade.

Lebanon's Tyranny

Michael J. Totten writes about his recent visit to the land of Hezbolah:

It looked – and felt – totalitarian in Bint Jbail. Everyone watched us. If Said was right that the locals weren’t allowed to speak freely (assuming they dissented from Nasrallah’s party line) it must feel totalitarian to people who live there as well.

I think it is worth reading the entire essay. Then it may be worth reflecting on these views from one who lives in Lebanon:

“We have been screaming about this conflict for 30 years now,” Henry said as he dealt himself a hand of Solitaire from a deck of cards in his pocket. “But no one ever listened to us. Not until September 11. Now you know how we feel all the time. You have to keep up the pressure. You can never let go, not for one day, one hour, not for one second. The minute you let go, Michael, they will fight back and get stronger. This is the problem with your foreign policy.”

“Since 1975 we have been fighting for the free world,” Said said. “We are on the front lines. Why doesn’t the West understand this? America can withdraw from Iraq, you can go back to Oregon, but we are stuck here. We have to stay and live with what happens.”

Is Henry's question important? Would our policy be different if we did understand this?

Our Leaders And War

Dean Barnett:

". . . . Every time I talk to our politicians, I almost always get the sense that the horserace interests them much more than that boring leadership stuff. There’s a reason why so many of these guys haven’t read books on Radical Islam or have no idea who’s a Sunni and a Shiite. The subjects bore them."

Could this be accurate?

I guess it sounds about right to me.

Free Speech, eh?

MARK TAPSCOTT:

"How does one know when the critical point in a Republic's loss of its basic liberties like freedom of speech has been passed? A Dec. 22 notice from the Federal Election Commission looks very much like that point for America.

The notice concerned a complaint the FEC received from one Sydnor Thompson that Kirk Shelmerdine had improperly committed an independent expenditure on behalf of the Bush-Cheney re-election campaign during the 2004 race."

Now, before continuing with excerpts from Tapscott's report, let's put the story in context. Not long ago, Congress "reformed" campaign finance statutes, the President signed, and then there was a further review by the Supreme Court which said the reforms were constitutional. This story falls within the rubric of those "constitutional" campaign finance reforms.

Here is more of the story:

"When he committed the independent expenditure, Shelmerdine had none of the big-time sponsors normally associated with front-line NASCAR drivers like Tony Stewart and Jeff Gordon. In fact, Shelmerdine had no significant sponsors at all during the four races in which he raced during 2004 while committing that independent expenditure.

Here's how Shelmerdine described himself and his reasons for putting the Bush-Cheney 04 bumper sticker on his race car:

"I put the decals that are the subject of this complaint on the car solely because I thought that doing so would bring attention to the car and publicity for me and the car.

"It was not my intention, in any manner, to be a supporter of President Bush or to influence the Presidential election.

"I am not a registered voter. I have never been actively involved in politics.
I have not publicly endorsed or aided any politician. I have never contributed any money or considerations of any kind to any politician, Political Action Committee, etc.

The decals that were placed on the car would cost and have a value of
$50.00 or less."

The truth is, Shelmerdine's independent expenditure might have been seen by a handful of people outside the pits.

But don't worry, the FEC magnanimously declined to bring down the full weight of the law on Shelmerdine for this dastardly act of plastering a single bumper sticker on a race car that hardly anyone saw.

No, the FEC graciously and mercifully settled on sending a mere "admonishment" to Shelmerdine. After all, as soon as he knew about the FEC action against him, Shelmerdine "out of an abundance of caution" took the bumper sticker off his race car."

I'm sure glad Congress reformed campaign finance because we can't take the chance that some race car will have a political bumper sticker on it.

On the other hand, just consider all the things that government might choose to say is "an independent expenditure on behalf of a political campaign." Maybe I should exercise "an abundance of caution" and stop writing about public policy? After all, either supporting or opposing any public policy is bound to sound like supporting or opposing some politician running for office, and certainly writing in support or opposition is at least an expenditure of time and we all know "time is money."

By the way, who said the constitution protects free speech?

[via Instapundit]

Cartoons & Politicians

DON BOUDREAUX:

"If you want to laugh, you might watch cartoons of the Road Runner and Wile E. Coyote -- but you don't watch these cartoons in order to learn the laws of physics. Indeed, if you take seriously the 'physics' portrayed in these cartoons, you'll soon kill yourself.

Likewise, if you take seriously the pronouncements on international trade issued by politicians such as U.S. Senators Byron Dorgan and Sherrod Brown, you'll learn nothing except how utterly bizarre and cartoonish allegedly serious adults can be when discussing international trade. (Alas, unlike Warner Bros. cartoons, politicians aren't good for laughs, for their detachment-from-reality has serious and sad real-world consequences.)

[. . . .]

A large and growing U.S. trade deficit is evidence that investment capital is flowing generously into the United States rather than away from the high-wage, high-labor-standards American economy.

But what relevance do facts and logic possess when political grandstanding must be done to appease the greedy interest groups who are so vital to keeping arrogant, obnoxious, and utterly repulsive politicians in power?"

Hmmm, good point, eh?

Prairie Dogs And Property

Eduardo Penalver:

"There's a terrific story in today's NY Times about a conflict between some ranchers over a prairie dog colony. Apparently, a couple of Kansas ranchers want to preserve a prairie dog colony on their property but their neighbors believe this will harm their property values, so they want to invoke a state law that permits the state to exterminate the colony against the property owners' wishes and at the property owners' expense. This is sort of a latter-day Miller v. Shoene, one of my favorite takings cases. The prairie dog story is great on a number of levels. First, I always love stories -- great for teaching purposes -- where the normal sides are reversed in a property-rights dispute. Here we have environmentalists (according to the story, two environmental groups are backing the pro-prairie dog ranchers) on the property-rights side, where they are usually not to be found. On the other side, we have a bunch of conservative Kansas ranchers, who, I would guess, are usually not great fans of the state telling people what to do with their property. But here they are, arguing that the state should physically invade private property against the owners' wishes to keep the owner from maintaining this prairie dog colony and then make him pay the state for its trouble. (I feel like my head is going to explode.) The other great part about the story is Larry Haverfield, the rancher who wants to preserve the colony. He sounds like a reincarnation of Aldo Leopold, especially when he starts talking about all the species that have been (or that he hopes will be) attracted to his farm by the colony. The story is definitely worth a read."

My head is spinning. Whose prairie dogs are they anyway?

Do economists agree on environmental policy?

John Whitehead: "Robert Whaples asks 'do economists agree on anything?' in the Economists' Voice. His answer is Yes. Here are what the surveyed economics think on questions related to environmental economics [my comments in brackets]:

* The typical economist thinks that climate change will not change GDP by the end of the 21st Century [I agree, all the impacts are 200 years away, right?]
* 65% agree with an increase in energy taxes [right on]
* 63% favor more nuclear energy [ditto]
* 54% think that CAFE standards should be increased [ugh]
* 'economists lean against drilling for oil in the ANWR by about three to two' [I'm one of the three]"

Rule of Law

Yesterday I posted something on the rule of law. Here is something from Michael J. Totten that is also about the rule of law:

"PM Siniora saw today’s mass protests (plural because March 14 staged another in Tripoli) as 'freedom of expression', and proof that 'freedom should be protected in Lebanon'. On Friday, he accused Hizbullah of staging a coup d’etat. I am sorry, but if you're going to accuse someone of staging a coup, you have to keep at it and not spin it into 'freedom of expression'. There are other things you need to do, like mobilize your army and security forces against the organizers of this coup. Let it be war between the legitimate authority and the illegal militia before it becomes a war between sects."

It seems to me that making the war be between legitimate authority and illegal forces attempting a coup would mean the leaders of the country are committed to protecting and enforcing the rule of law.

Law & Prosperity

Lawrence Solum posts a short essay on the meaning of the rule of law, and he asks why the rule of law is important. Here is his answer:

"What values are served by the rule of law? Why is the rule of law important? Those are big questions, but we can at least give some quick and dirty answers. One reason that the rule of law is important has to do with predictability and certainty. When the rule of law is respected, citizens and firms will be able to plan their conduct in conformity with the law. Of course, one can dig deeper and ask why that predictability and certainty are important. Lot's of answers can be given to that question as well. One set of answers is purely instrumental. When the law is predictable and certain it can do a better job of guiding conduct. Another set of answers would look to function of law in protecting rights or enhancing individual autonomy. The predictability and certainty of the law creates a sphere of autonomy within which individuals can act without fear of government interference."

Note that the rule of law means people can "plan their conduct," and that it "creates a sphere of autonomy" for people vis a vis government. The rule of law is the important foundation for Mancur Olson's (Power and Prosperity) "socially contrived exchange." The rule of law is the foundation upon which capital and insurance markets are built, and therefore, the rule of law is the foundation of economic prosperity.

Iraq Reports

Michael Fumento:

"In a Nov. 29 blog, 'Will the real Ramadi please stand up?' I observed that three articles on conditions in Ramadi and al Anbar Province had appeared within a week of each other giving entirely different points of view. Mine and one in the Times of London said we're winning the war in Ramadi; a Washington Post A1 story co-authored by 'Fiasco' author Thomas Ricks claimed exactly the opposite. The difference, I said, could be explained simply. I and the Times writer reported from Ramadi. Ricks and his co-author have not only never been to Ramadi, they wrote their piece from Washington. Well now the WashPost has printed another article on the city, this time an upbeat one. What gives? You guessed it.The second one was reported from Ramadi. Case closed, thank you very much. Unfortunately, it's little solace knowing how few journalists ever leave their safe little hovels in Baghdad hotels or Washington, D.C."

Pharmaceuticals

GLENN REYNOLDS writes about an email interchange with someone working for Pfizer:

"It's kind of sad that such a small email means so much, but I suppose that these guys get a lot more criticism than praise, despite the miracles they produce. But it occurs to me that -- while so-called 'Big Pharma' may not be perfect -- drug companies have done a lot more to make my life better than their critics have. Maybe someone should point that out more often."

I think he just did, and I think it is good to keep in mind that businesses are about advancing the well-being of individuals, and not just advancing themselves. Even when someone in business mostly thinks of himself or herself, to advance his or her own interest means providing goods or services that mean others are better off. That old Adam Smith idea of an invisible hand was a great insight, eh?

Senator Rangel, War & The Minimum Wage

DONALD BOUDREAUX:

"Rep. Charles Rangel (D-NY) believes that by forcing the children and grandchildren of high government officials into the military, the draft would reduce Uncle Sam's likelihood of going to war ('Rangel: Bring On the Draft,' Nov. 21). In other words, Rep. Rangel recognizes that government makes irresponsible decisions whenever politicians have no large, personal stakes in the matters they decide.

Rep. Rangel's insight applies more broadly than he suspects. It means also, for example, that minimum-wage legislation is ill-advised, for very few politicians have family members who are likely to lose jobs as a result of raising the minimum wage."

Bulls-eye!

The Nature Of This War

IRAQ THE MODEL:

"Lebanese industry minister Pierre Gemayel was assassinated a few hours ago this afternoon…

Prime ministers, MPs and journalists; all are targets for terrorist regimes if they dare show their opposition to Damascus or Tehran.

The message is clear and loud, I just wonder how many more messages do we need before the world realizes that these murderous regimes are not so much into dialogue?

I accuse Syria of being behind this crime. Syria thinks that just because they made a 'friendly' gesture towards Iraq yesterday they would have the right to unleash their dogs in Lebanon today.

That's their definition for dialogue.

These regimes and their allied gangs will not stop their crimes; they will do anything they can to stop the movement of democratic changes and reform in the region and to keep their despotic, dark age regimes in power."

Democrats On Trade

The WSJ has commentary about the Democrat party position on protectionism. Apparently there is a debate within the party at this time. It is interesting to read that some notable Democrat Presidents did not warm up to protectionism:

"Amid the breakdown of the international trading system in the 1930s, the man who began to rebuild it was a Democratic Secretary of State, Cordell Hull. With FDR's support, he negotiated a series of bilateral trade deals that Harry Truman used as the basis for the revival of the multilateral trading system known as GATT in 1947.

Two decades later, John Kennedy pushed for freer trade with Latin America as part of his Alliance for Progress. And however reluctant at first, Bill Clinton eventually supported and signed Nafta, the creation of the World Trade Organization and most-favored-nation trading status with China. Mr. Clinton also refused to impose steel tariffs, a temptation that captured President Bush.

This is a proud pro-growth tradition, helping to keep America competitive as the world's greatest destination for capital and goods. The question now is whether Democrats newly elected to Congress will squander that legacy and turn to the populist, protectionist left. The early portents aren't encouraging."

Why might the Democrat party support protectionism and not free trade?

". . . Union politics, pure and simple. Once a free-trade supporter, the AFL-CIO began to turn protectionist in the 1960s and is now a relentless opponent of open global markets. Union leaders invested heavily in this past election, and they are boasting about the exit polls showing that nearly one in four voters last week came from a union household. Those voters went Democratic by more than 60%, and now union leaders expect legislative repayment."

Imagine that? Unions, a.k.a. labor monopolies, are protectionist and unions deliver significant numbers of votes for Democrat candidates. Of course, I think any public policy supported by a monopoly, especially a monopoly that primarily exists because the coercive power of government supports it, is most likely a policy that will not be economically efficient.

Maybe most of the Democrat politicians will turn against protectionism:

"We don't think there's much political profit in a protectionist turn. Whatever applause Democrats received from the AFL-CIO, they would lose as much support from business. They'd also advertise themselves as a party of a narrow special interest rather than the larger national good. This is why no truly protectionist candidate has won his party's Presidential nomination, Democrat or Republican, since Hoover. Voters have an instinctive sense that the only way to prosper is by competing in the global economy, not shrinking from it."

Maybe. On the other hand, whether voters have "an instinctive sense" for good economics or not (and I suspect "they" don't after the recent state votes with respect to minimum wages), economics suggest that most voters will be "rationally ignorant."

Liberty

Neil Boortz:

"It is clear that something is terribly wrong in Washington right now. We just went through an election where principles of individual liberty and limited government were not even on the table. I am hard-pressed to name one leading Republican or Democrat who still extols the virtues of freedom, individualism, free markets and limited government. "

Seems true. I'm trying not to be discouraged.

Minimum Wage

The Wall Street Journal has an article this morning about what the agenda of the Democrat Congress may be, and it includes an increase in the minimum wage:

"Raising the minimum wage is one fight the Democrats are expected to win. That would be a victory for organized labor, which has pushed for an increase for years, but a defeat for the restaurant and retail industries and small-business owners, who argue it would hurt the economy by forcing them to hire fewer workers.

Mrs. Pelosi has promised to bring legislation to the floor within the first 24 hours of the new Congress to boost the minimum wage to $7.25 an hour from the current $5.15. The idea is popular with voters: Six states overwhelmingly passed ballot initiatives Tuesday to raise the minimum wage and tie future increases to inflation. Republicans may feel hard-pressed to oppose the move.

At a news conference yesterday, President Bush cited the minimum wage as 'an area where we can ... find common ground.'"

There is an old refrain in all of this that I want to mention.

Who is fighting for an increase in the minimum wage? Labor unions. Why? Because labor unions benefit from increases in the minimum wage.

Is anyone harmed by an increase in the minimum wage? Yes, some people who would otherwise be employed will lose their jobs. Businesses (in retail and small business) who employ workers that will be paid the increased minimum wage will see increased costs, so they will see decreased profit (a.k.a. income to the small business owners). Consumers will see increased prices.

What happens to the workers who will be unemployed? Well, perhaps some of those workers will become another statistic counted as those in our country who are below the poverty line. This means a scenario for the Democrat party that is almost a "have your cake and eat it to" story,since increasing the minimum wage can make it easier for the Democrat party to argue that something must be done about the growing number in poverty.

On the other hand, it seems that most of the workers harmed by an increase in the minimum wage will be teenagers who will not be able to find employment.

An increase in the minimum wage will change incentives in other ways as well. It will increase the incentive employers see to hire illegal workers, while at the same time increasing the incentive illegal workers see to risk illegally entering this country.

As you can tell, I do not support an increase in the minimum wage because I don't think any of the economic results are good for our system of political economy.

If you support an increase in the minimum wage (and apparently many do since many of the ballot measures passed in this election) perhaps you can convince me the results will be good, or that the results I think will occur simply will not occur.

What Does It Mean?

After any election, there is discussion of what the election means. I wonder what yesterday's election means? There are many suggestions out there in the public square today.

Here's one observation I'm interested in that is offered byAustin Bay:

"The big race in 2006 was Lamont versus Lieberman. Joe Lieberman won. Joe’s core issue: VIctory in the War on Terror, which means victory in Iraq. That’s a warning to Nancy Pelosi and Co. If they go “nutsroots-Lamont Left” they will squander their victory. Ed Driscoll suggests 2006 is a race-to-the center. Lieberman has carved out one the strongest personal political position in America. For Joe, it’s November lemonade made from the bitter lemons of August."

I think another suggestion was actually offered on election day by Tom Sowell:

"Democrats have learned to avoid admitting to being liberals and this year are running a number of moderate candidates.

If these new moderate candidates are elected and give the Democrats control of Congress, that control will be exercised by senior Democrats who will hold leadership positions -- and all of them are liberal extremists, whether people like Nancy Pelosi in the House or Ted Kennedy and John Kerry in the Senate.

Getting people to vote for moderates, in order to put extremists in power, may be the newest and biggest voter fraud."

Both these suggestions suppose that this election involved, at least on the surface, a bit of a move toward the right of the political spectrum because this election seems to bring a few more hawkish Democrats to Congress. But, Austin Bay seems to suspect the Democrat leadership will not notice this lesson, and Tom Sowell seems to suspect that the Democrat leadership actually designed their strategy to gain Congress by fooling the voters.

What does this election mean? I think both of these suggestions are worth considering, and, unfortunately, I'm tending to agree with Sowell because there also seems to have been a strong strain in the electorate this time to throw the incumbents out. Yet, after throwing the Republican bums outs, the replacement leaders in Congress still look like incumbent bums, only now they have the big D after their names.

Wal-Mart & The Poor

Arnold Kling discusses this paper by Hausman and Leibtag which measures consumer benefits from Wal-Mart. Kling writes:

At the MIT economics alumni event this morning, Jerry Hausman spoke about his research on Wal-Mart. He says that Wal-Mart lowers prices to consumers primarily by bargaining down the prices charged by suppliers, such as Procter and Gamble. It also uses cost-saving logistics. Lower labor costs may contribute to its low prices, but not as much as the other factors.

Hausman argues that driving down prices of suppliers is a benefit, because prices are being driven closer to marginal cost. In welfare-economics terms, you can think of Wal-Mart as a substitute for a regulator who would try to improve efficiency by forcing imperfectly competitive producers to move down the demand curve.

The magnitude of the benefit is enormous. Hausman looked at food, and for that category alone Wal-Mart increases consumer welfare by 25 percent (I'm a bit worried that the theory behind his calculations holds only for much smaller differences, but I don't have an alternative.) Since food is about 12 percent of GDP, multiplying .25 by .12 gives a benefit of .03, or 3 percent of GDP from Wal-Mart.

[ . . . . ]

Oh, and by the way, Hausman finds that poor people get 50 percent more benefit from Wal-Mart than rich people.

What Is Government Good At?

RUSSELL ROBERTS:

"I was talking to some people last night about different approaches to government. A woman asked me if there was anything I thought government did better than the private sector. Sure, I replied. Killing people. That is the government's best thing and governments have had unparalleled success in killing people over the last 100 years. Start with the murder of innocents. Hitler and Stalin dwarf the worst serial killer. Even if you count 9/11 as a private act of murder, that's a few thousand versus many millions. No comparison.

Then there's war. Government is very good at war relative to the private sector. Some wars are better than others. Some are ghastly. But there is no disputing that government armies, regardless of the merits of the cause, are better at killing people than private armies.

Come on, someone else said, before I could lengthen the list with maybe the enforcement of contracts and the rest of a very short list. What about education and health care? We can't leave that to the private sector. That launched us into a long discussion of the current state of the public schools and whether the vigilance of the FDA in protecting us from dangerous drugs has been a net benefit or a net loss. . . .

This seems to me to be a very revealing conversation. I think there is one word that characterizes the essence of government, and that word is coercion. Government is inherently coercive. It seems to me that Russell Roberts' answer to the question about what government does better than the private sector is based upon this observation. Now, what about education and health care? Since government is inherently coercive, if I thought government did these things better than the private sector, then I would have to think that education and health care could be better done with coercion than without. I don't happen to think that.

Economies Are Long-Run Processes

Doon Boudreaux writes:

"Economies are long-run processes; they should be evaluated as such. What happens in any arbitrary time period - a month, a quarter, or even a year - typically is too filled with short-run distortions and lags to present a reliable picture of an economy's long-run trajectory."

This is a very important observation. Economies should be characterized as long-run processes. Of course, the "data" we use to measure and characterize our economy empirically are measured over short-run periods of time. However, we "slice" time to get a snapshot picture of our economy, we can't clearly understand from the snapshot much about the long-run processes of the economy.

Voting & Rational Ignorance

Economic analysis suggests that voters can be expected, in general, to be rationally ignorant about public policy issues as well as about candidates. There are many implications of this analysis that I think we observe in our politics. Greg Mankiw writes about an implication of this sort of analysis that might not be so obvious:

"So the next time a friend of yours tells you he's not voting, don't try to change his mind. It's a good bet that if he's not voting, he's not been following the election closely anyway. Maybe he watched a baseball game instead of the debates. Maybe he is bored silly with all the talk of targeted tax cuts, privatized social security, and campaign finance reform. Maybe he's as ignorant about public policy as those focus groups of undecided voters that are the media's latest darling.

So rather than pushing your friend to the polls, perhaps you should thank him for staying at home. He's making your vote count just a little bit more."

You should read his whole explanation.

Iraq Nukes & NY Times

JIM GERAGHTY:

"I'm sorry, did the New York Times just put on the front page that IRAQ HAD A NUCLEAR WEAPONS PROGRAM AND WAS PLOTTING TO BUILD AN ATOMIC BOMB?

What? Wait a minute. The entire mantra of the war critics has been 'no WMDs, no WMDs, no threat, no threat', for the past three years solid. Now we're being told that the Bush administration erred by making public information that could help any nation build an atomic bomb.

Let's go back and clarify: IRAQ HAD NUCLEAR WEAPONS PLANS SO ADVANCED AND DETAILED THAT ANY COUNTRY COULD HAVE USED THEM.

I think the Times editors are counting on this being spun as a 'Boy, did Bush screw up' meme; the problem is, to do it, they have to knock down the 'there was no threat in Iraq' meme, once and for all. Because obviously, Saddam could have sold this information to anybody, any other state, or any well-funded terrorist group that had publicly pledged to kill millions of Americans and had expressed interest in nuclear arms. You know, like, oh... al-Qaeda.

The New York Times just tore the heart out of the antiwar argument . . . "

[ via Instapundit which has more ]

Politics & Public Finance

An article in the Washington Times discusses what might happen with respect to national public finance if the Democrat party wins Congress:

But Republicans such as former House Majority Leader Dick Armey of Texas said that if the Democrats take over, 'they will try to find some way to raise taxes to finance their spending programs.'

Democrats gave voters a peek into the kind of spending proposals they want to enact in their election agenda titled 'A New Direction For America.' The campaign agenda does not say how much their proposals would cost, but an analysis by the National Taxpayers Union based in part on CBO estimates puts the price tag at more than $79 billion a year.

These legislative proposals include $16.2 billion a year for lower-interest college loans, nearly $1 billion more per year for scientific research, $4 billion in additional Pell Grants for college students and $28.8 billion more for health care, including increased subsidies for the Medicare prescription-drug program for the elderly.
Perhaps one of the biggest spending initiatives in the Democrats' agenda is a program called 'AmeriSave,' under which the government will match the first $1,000 contributed to an IRA, 401(k) or other investment retirement account. The program would cost taxpayers $37.5 billion in the first five years.

Another measurement of spending increases a Democratic Congress would seek can be found in amendments they have offered in the Senate in the past two years. According to an analysis by the Senate Republican Policy Committee, Senate Democrats proposed $95.2 billion in increased spending for fiscal 2006 and $74 billion for fiscal 2007.

Mr. Panetta blames both Republicans and Democrats for the sizable budget deficits of the past six years and does not see that changing dramatically anytime soon, despite this year's sharp decline in the deficits as a result of unexpectedly stronger federal tax revenues.

"This Congress has been the worst on borrowing and spending that I've seen in my lifetime, with record deficits. Responsibility for that rests with both parties. My theory is that they will continue to borrow and spend in the future," he said.

I thought that, perhaps, a discussion of national public finance would benefit from seeing these three charts which provide the larger context. When looking at that national government's public finance I think it is best to consider receipts, outlays, and the deficit in terms of the percent of GDP.

The chart of the deficit numbers suggests that the deficit during the Bush Administration has not been exceptional when compared to the period of the last 30 years. Certainly the deficit during the Bush administration makes quite a contrast with the budget surplus at the end of the Clinton administration. But budget surplus during the Clinton years does seem the exception since 1960.

The chart of outlays suggests that the lenth of the period during the Clinton administration during which outlays trended downward seems out of the norm since as long ago as 1930. Nonetheless, outlays as a percent of GDP seems to have stayed right around 20% since about 1950 or 1960. The experience during the Bush administration doesn't seem unusual when compared to the entire period depicted in the chart.

The chart of receipts suggests that receipts have been right around 17% or 18% since about 1950 or 1960. The recent experience during the Bush administration seems to fit that pattern.

It seems that public debate tends to attribute national public finance to the President, and following that practice I've referred to the experience reflected by the years of the Clinton presidency and the Bush presidency. But, perhaps focusing on the President presents not quite the right target. After all, the President does not have the power to tax, nor does the President have the power to fix the amount of appropriations. These powers reside in Congress. Perhaps the charts suggests that it doesn't much matter which party controls Congress, the public finance of Congress has pretty much been in the same neighbor relative to national output since about 1950 or 1960.

Social Security -- Back Again

OpinionJournal - Featured Article:

"Social Security was supposed to be a killer issue for Democrats this election year after they defeated President Bush's reform plans in 2005. But suddenly the tables are turning on several Democratic candidates because of their endorsement of the tax-increase agenda of the American Association of Retired Persons, or AARP.

The liberal entitlement lobby has asked candidates around the country to fill out a questionnaire asking, 'Will you support a balanced Social Security plan to continue the program's guaranteed benefits for future generations?' That may sound innocuous, but here's how AARP defines its balanced plan on its Web site near the above question: 'AARP believes that a bipartisan plan that balances additional contributions from high income workers with modest adjustments in future benefits can maintain guaranteed Social Security benefits for future generations.'

Those italics are ours, because in Washington 'additional contributions' means a tax increase. And by 'high income workers,' AARP can only mean anyone earning more than $94,200, which is the 2006 income level above which the 12.4% Social Security portion of the payroll tax no longer applies. Employers and workers each pay half of the payroll levy, and the income cap already rises each year with inflation."

Of course I written about social security here before. Increasing taxes for social security is, plain and simple, a bad idea. I think one of the most serious problems with social security is that it is a program built on dishonesty. The program is called an insurance program, but it is not an insurance program. It is often talked about as something akin to a government retirement or pension program, but it is not that either. Plain and simple, social security is a program that redistributes income from today's workers to those who are retired. Increasing taxes is a good way to continue to be dishonest about this program, and in the meantime increasing taxes means more money for government to spend today under the camouflage of "fixing social security." Increasing taxes today means the payroll tax will general more EXCESS tax revenue today, while at the same time committing future workers to greater tax payments (or budget reductions) in the future to "pay off" the Treasury securities "purchased" with the EXCESS payroll tax revenue. Increasing taxes continues the lie that is social security.

There is a second significant problem with social security, in my opinion. Social security is intergenerationally unjust. Increasing the social security payroll tax today also makes this intergenerational injustice more severe. Why? Because increasing the payroll tax today is not just a tax on today's workers, it is also a commitment to an increased tax on future workers. Many of those future workers aren't workers today, many aren't yet voters, and many haven't even been born yet. It is unjust, it seems to me, to have a government program that forces people to pay when they cannot even vote to say no we don't want that.

I don't want my son and my grandchildren to be paying for my golf when I retire, and I certainly don't want to vote for a program that forces my son and grandchildren, as well as your children and grandchildren, to pay for my golf when I retire. I want the social security program to really be fixed by changing it from an intergenerational income redistribution program to a program that truly can be called INSURANCE against the risk of living in retirement beyond a person's assets. Raising the payroll tax does not do this. It is a bad idea. It would continue the lie and the injustice.

War

Ahmadinejad speaks (WSJ commentary $):

"And so, with his usual sense of timing, the Iranian President issued the following public warning to Europe last Friday: 'We have advised the Europeans that the Americans are far away, but you are the neighbors of the nations in this region. We inform you that the nations are like an ocean that is welling up, and if a storm begins, the dimensions will not stay limited to Palestine, and you may get hurt. It is in your own interest to distance yourself from these criminals (Israel). . . . This is an ultimatum.'"

Political Issues

I would like to ask my students, as well as others, to add comments here that identify the three most important political issues in this campaign season. I'm not really interested in encouraging a partisan discussion of the issues, but I would like to have those who comment also add a few words about why the issues are important and even about how the issues might be best resolved.

After seeing the issues, I then hope to look at them from both the perspectives of economics and liberty.

A Lousy Political Class

Instapundit:

"As I've said before, the Republicans deserve to lose, though alas the Democrats don't really deserve to win, either. I realize that you go to war with the political class you have, but even back in the 1990s it was obvious that we had a lousy political class. It hasn't improved, but the challenges have gotten greater. Can the country continue to do well, with such bad political leadership? I hope so, because I see no sign of improvement, no matter who wins next month."

It seems hard to disagree.

Corruption: Just A Little Here, A Little There

John Solomon:

"Senate Democratic leader Harry Reid has been using campaign donations instead of his personal money to pay Christmas bonuses for the support staff at the Ritz-Carlton where he lives in an upscale condominium. Federal election law bars candidates from converting political donations for personal use.

Questioned about the campaign expenditures by The Associated Press, Reid's office said Monday he was personally reimbursing his campaign for $3,300 in donations he had directed to the staff holiday fund at his residence.

Reid also announced he was amending his ethics reports to Congress to more fully account for a Las Vegas land deal, highlighted in an AP story last week, that allowed him to collect $1.1 million in 2004 for property he hadn't personally owned in three years.

In that matter, the senator hadn't disclosed to Congress that he first sold land to a friend's limited liability company back in 2001 and took an ownership stake in the company. He collected the seven-figure payout when the company sold the land again in 2004 to others.

Reid portrayed the 2004 sale as a personal sale of land, making no mention of the company's ownership or its role in the sale."

Libertarian Democrats v. Libertarian Republicans?

CATO UNBOUND is hosting an interesting debate this month that began with an essay by Markos Moulitsas on libertarian democrats.

I like JANE GALT'S response to the idea of libertarian democrats:

"For most people, the economic areas of life dominate their contact with the government. And the powers granted to the tax authorities are broader and more abusive than any other civil authority that deals with US citizens. They have their own special, and opaque, court system in which their cases are tried. The rules for criminal acts are, by and large, clear and commonsensical; most people have a pretty good idea of what constitutes assault with a deadly weapon, murder, burglary, criminal trespass, and so forth. People may be falsely accused of being involved in a terror plot, but at least they have a solid notion of what 'conspiracy to commit terrorist acts' means. Tax law, on the other hand, is incomprehensibly complex, and the courts tend to make their decisions based less upon what is just than upon what maximises revenue collection for the government. Securities law, environmental law, zoning questions, building codes, and so forth, are similarly flawed.

Democrats say: but look at all the goodies we get! And that's a fair argument–but not a convincing one to libertarians, who want to maximise freedom of action and minimise interference of government, not maximise security and minimise white collar crime. That's why they tend to vote Republican: they disagree with the Republicans on many issues, but if you want to minimise the power of the state, you need to hack deep into the apparatus limiting economic freedoms, because that is where there is the most state to minimise. The Democrats will, I expect, get a fair number of libertarian votes this election, including mine. But it will be a vote of protest against the various sins of the Republican party, not a conversion to the notion that sexual freedoms are the only ones that really matter"

Of course I like the emphasis here on economic freedom. It is my sense that the Democrat party is, in general, relatively little interested in protecting economic freedom. Both parties, in general, are subject to the same sorts of criticisms when they govern. Corruption and abuse of power, as well as the interest to accommodate rent seeking, seem to me pretty equally found on both sides of the political isle. The constitution, as written, seems to me a fine document for protecting economic freedom, and at least with the Republican party I see a larger chance of Supreme Court justices who will read the constitution as written.

While Jane Galt may see value in a protest vote in this election, I see little value in protest votes in general, and especially in this election. The inherent nature of any legislature encourages rent seeking. It seems to me the only chance to constrain government's intrusions on economic freedoms is for the Judicial branch of government to see it's job as protecting individual economic freedoms. Over the course of the final two years of the Bush Administration, there may well be at least one or two more Supreme Court justices that retire. If there is any hope of moving government in ways that increase and enhance individual economic freedom, I think it is very important to replace those retiring justices with justices who believe the constitution protects economic freedom. This will not happen if Democrats can filibuster in the Senate. It seems to me a protest vote in this election weakens the chances of increasing the realm of economic freedom in our system of political economy.

Microfinance & Peace Prize

MUHAMMAD YUNUS, recently awarded the Nobel Peace Prize, suggests ($$ WSJ) that microfinance might be useful in the United States:

"Many people ask, Why not just give free cash, especially under such dire circumstances? In Bangladesh, we've learned that when aid is free, not only do the poor get the least of it, but everyone inflates their needs. While some handouts are clearly necessary in such times, we focus on lending small amounts of money. This lets us keep costs down and rebuild funds for the next disaster. Most importantly, our Grameen banks are ready to act at a moment's notice. They can respond to a disaster without waiting for anyone's permission, immediately becoming like humanitarian agencies by suspending loan payments, and providing cash, food and medicines. Once rebuilding starts, the bankers keep detailed records of the money lent, and people are allowed to repay bit by bit.

That is the strategy we followed after the 1998 flooding, which covered 50% of Bangladesh's land and affected customers at about 70% of our branches. More than 700 Grameen borrowers or their family members were killed and just over half (a million borrowers) were affected by the flooding. That represents a small percentage of the overall population affected, but the Bank and its staff where there right away to help with immediate needs. Later, microlenders helped people restructure their loans or gave out new loans on more favorable terms.

Microlending has already helped millions reach a better life through their own initiative. It has also given them valuable skills as well as crucial financial back-up in case they ever face a natural disaster like Katrina. So it might be time to think about another type of support for Katrina's victims: the microloan. As our small, flood-battered country has learned, giving someone a hand up doesn't always require a handout. The most important thing is to help people get back to work while letting them hold on to their self-respect. Microloans can do just that."

PETER BOETTKE offers an interesting insight:

"I have long thought that the discipline of economics should be given the Nobel Prize for Peace in recognition of the demonstration of how social cooperation under the division of labor results in a regime of private property and freedom of trade. From David Hume and Adam Smith to J. B. Say and Frederic Bastiat to Ludwig Mises and F. A. Hayek, the demonstration of how the harmony of interest can emerge on the market through the pursuit of mutually advantageous exchange is the core message of the discipline of economics and the foundation for peaceful coexistence among all people.

Well the committee got it right this year when they gave the award to Muhammad Yunus for his work with micro-lending and the positive impact it has had on the world's poor.

Work at GMU has long addressed the issue of micro-lending and economic development. Emily Chamlee-Wright's thesis work under the late Don Lavoie was based on field work on micro-lending among female entrepreneurs in Ghana. Emily's work was subsequently published as The Cultural Foundations of Economic Development and is an excellent work. More recently, Steve Daley and Frederic Sautet have published a study of micro-finance in the Philippines, which raises several very critical issues that go to establish the limits of micro-finance as a panacea for economic development. Micro-lending can get people started, but the crucial issue is the graduation into the commercial market."

Department of Interior

BRIAN BODISSEY has a post that indicates the Department of Interior has blocked certain weblogs:

"Here’s a quick runthrough of what I’ve found so far at work. You’ll see that its pretty one-sided.

Blocked Blogs:
Captain’s Quarters
Cox and Forkum
Gates of Vienna
Little Green Footballs
Michael J. Totten
Michelle Malkin
Power Line
Protein Wisdom
Rantings of a Sandmonkey
Roger L. Simon
The Adventures of Chester
The American Thinker
The Belmont Club
The Doctor is In
Wizbang

Blogs not blocked
DailyKos
Democrat Underground
America blog
Atrios.blogspot.com
JuanCole.com
The Huffington Post
Talkingpointsmemo.com

In fact, every blog linked to off of DailyKos seems to work."

Assuming this is the case, why in the world would a government agency want to do this?

[via Instapundit]

More Congressional Corruption?

Captain's Quarters:

"Once again, we discover why the Democrats quietly dropped their 'culture of corruption' theme for the upcoming midterms. The AP catches Harry Reid without a disclosure on real-estate deals that netted him $700,000 in profit:"

Rent Seeking Kills

ALEX TABARROK WRITES:

"It's illegal to offer compensation for a transplantable human organ. As a result of the price control there is a shortage of organs and thousands of unnecessary deaths. None of this is news to readers of this blog. The price control on organs, however, kills in another less well recognized manner. The reduced supply of organs raises their value. Organ donors can't capture that value so who does? Transplant centers.

Transplant centers are artificially high profit centers because they capture some of the rents generated by the shortage of organs. As a result, there are too many transplant centers in the United States and each center performs too few transplants. Practice makes perfect so when a transplant center performs only a few operations a year lives are lost."

War Or Not?

DAVID RIVKIN AND LEE CASEY write in today's WSJ ($$):

"The national 'dialogue' over how the U.S. should respond to the threat of radical Islam is replete with claims and counterclaims about whether the Bush administration has violated the law by holding captured jihadist prisoners without trial, by intercepting al Qaeda communications without judicial warrants, by subjecting detainees to stressful interrogations, and so forth. In fact, almost all of this clamor arises from a basic dispute over whether the U.S. is -- or should be considered -- at war with al Qaeda and its allies, or whether it should address the threat of transnational terrorism as a law-enforcement matter -- as most of its European allies have done."

I think this is right. Is our country at war? Even though many (and many more than a simply majority) in Congress voted in support of a yes answer to this question, for some reason many of our political leaders continue to hold forth in public as though we are not at war. The news industry, on the whole, seems to also act as though the country is not at war. As Rivkin and Casey argue, our political debate simply seems to avoid a serious discussion of this basic question. After our country was attacked it seems most of us understood the attack as an act of war and agreed the response was to be at war from our side as well. Should our country now call our war off? If any of our political leaders have decided we should call our war off, then I think they should be leaders and raise their voices for a debate of precisely that quesion. If instead the debate in our public square continues as it has, then my conclusion is that many are simply playing politics with questions of our national security, and while our armed forces are in harm's way. I suppose this should be expected since we are, after all, at the height of another political season.

I suspect, in this political season, that the voices of criticism and opposition understand we are indeed at war because others have declared war on our country and on us as individuals. I also suspect we would be much more effective in our war efforts if our political debate was simply more honest at this time. But, perhaps, such an honest debate is simply not an attribute, in general, of our system of political economy.