Tuesday, October 24, 2006


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.'"

Thursday, October 19, 2006

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.

Tuesday, October 17, 2006

A Lousy Political Class

"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."

Saturday, October 14, 2006

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."

Thursday, October 12, 2006

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

Blogs not blocked
Democrat Underground
America blog
The Huffington Post

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:"

Tuesday, October 10, 2006

Rent Seeking Kills

"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."

Thursday, October 05, 2006

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.