In all these New Deal laws there was infringement of the individual's liberty. The employer was no longer free to hire and fire whom he would, nor to buy labor below a certain price; neither side to the labor contract was free. An American boy, with a tear in his eye and adventure in his heart, was no longer free to steal away over the kitchen roof at night and go forth to meet the world; there was no work for him in the world out there because the law said he was child labor and any employer who hired him would be forbidden access to the channels of interstate commerce. The wage earner had to have a union card and a Social Security number. The farmer was no longer free to do what he would with his own ground or his own wheat. No wage earner was any longer free to be so improvident as to consume the whole of his own earnings and forget his old age.I highly recommend this book.
To enforce these laws it was necessary to create new agencies of government. Each new agency issued its own rules and regulations, having the force of law; and in a little while these administrative agencies were passing ten times as many laws as Congress, all binding on the people.
So bureaucratic authority developed and became not only aggressive but indispensable--indispensable, that is, if the hand of government was going to touch every kind of human activity. Congress, the only elective law-making body, could pass only general laws, and then only after long debate; whereas the administrative agencies could pass specific laws, which were sometimes not printed at all but only mimeographed, and often got mislaid at the source. The confusion was unbearable until they were required to publish their laws in a bulletin called the Federal Register. After that any body who wanted to know what the law was--even a member of Congress--had to read the Federal Register.
And not only did the administrative agency make its own laws--that is, rules and regulations having the force of law--but when it came to the enforcement of them it acted as prosecutor, jury and judge, all three in one, and appeals from its decisions to regular courts of law were, for technical reasons, costly and difficult.
All of this took place in the executive sphere of government, with its axis in the Office of the President. Never before had the executive principle of government been so exalted--over the parliamentary principle, which is the Congress, and the judicial principle, which is the Supreme Court.
But this was a new time. Jealous individualism was waning. These New Deal laws were popular with the people; and the Supreme Court, after having liberalized itself, consistently upheld them. Two of the conservative Justices retired. In their room Mr. Roosevelt appointed men to his own liking. Then Chief Justice Hughes, who apparently thought he had saved the Court from disaster, resigned, and that was the end of the feud. The President had won. As it turned out the Supreme Court did the New Deal no harm at all. It got all the laws it really wanted. (pp. 281-282)
Sunday, October 25, 2009
New Deal History
I've been reading a very interesting and entertaining history of the United States written by Garet Garrett and entitled THE AMERICAN STORY. Mr. Garrett has a marvelous ability to see through the fog. Here is a sample:
Tuesday, October 20, 2009
Middle School Economics 3
Here is another good one from the same middle school civics and economics textbook I've been quoting from:
UPDATE 10-24: Before I write about my concerns with this quote, I want to comment on the comments by Craig and Tim.
I agree with Craig that this illustration of a subsidy is incomplete because it does not include a consideration of where the money for the subsidy comes from. If government chooses to subsidize any activity, we can certainly confine our analysis of the impact of the subsidy to what happens after the subsidy is received. But, government gets the money for the subsidy because it has the power to tax. The power to tax means that the money for the subsidy is taken from people. It is money that people would have spent or saved if it had not been taken from them. Perhaps the subsidy will indeed result in more of some good thing, but because the subsidy money is taken from people it is is also the case that the money reduces other good things. A good economic lesson to learn is: "There is no such thing as a free lunch." That lesson could be taught by this textbook if it offered a more complete discussion of what must be the case with any government subsidy. But it doesn't.
Now Tim's comment seems a bit out of place relative to what I've quoted. I think he is thinking about how the U.S. government has actually intervened in the market process for wheat production, which has resulted in a greater quantity of wheat produced in the U.S. than would have otherwise have been the case. I think this is why he is considering crowding out wheat production in other countries. And, if you read my update to my first post on middle school economics, Tim's comment is another illustration of one U.S. government policy being at odds with other U.S. government efforts in some other arena. Certainly, this seems to me another important lesson for our middle school students to learn about how the real world works, but it seems it is going to be neglected.
My first reaction to the quote is that if the author wants to discuss government efforts to control prices, then the discussion should not be about subsidies. Actual government efforts to control prices have mostly involved government trying to set minimum prices (e.g., minimum wages) or maximum prices (e.g. rent controls).
A second point to suggest is that the author should not use an agricultural illustration for keeping prices down because historically the U.S. government policy toward agriculture has been to impose a price floor. Even in the middle of The Great Depression when so many people were without jobs and thus without their usual source of income, U.S. government policy was to impose a price floor on agricultural products so that prices would by higher than they otherwise would have been. Still today, the prices of agricultural products are often higher than they otherwise would be because of U.S. government agricultural policies. So, by choosing to offer up this specific illustration, it seems to me this textbook encourages our middle school students to think U.S. government policy is to keep agricultural prices low, which is pretty much the opposite what is true.
A third point is about what economic analysis suggests in the general result of a subsidy. If government offers to subsidize an activity, you are going to get more of that activity. Government really cannot directly subsidize a price. This is why government is likely to use a price ceiling if the goal is to try to keep a price low. Typically when economists discuss a government subsidy, the outcome is expected to be a higher price associated with the subsidized activity, not a lower price. And, I think this brings us back to the U.S. government policies toward agriculture. The government has wanted to subsidize farmers, but the way this was done was for government to impose a price floor. Instead of keeping agricultural prices low, the U.S. government has acted in an effort to keep prices for agricultural products higher than they would otherwise be, and these efforts have gone so far is to directly pay agricultural producers to take land out of cultivation.
Agricultural policy is a great case study for the economic analysis of price floors, but it is a really poor case study for discussing the results of government subsidies. And, if the author wants to discuss government efforts to keep a price low, then the discussion should really be about an illustration of a price ceiling, e.g., rent controls.
“The federal government may sometimes intervene in business to help control prices. One way the government does this is by subsidizing, or giving money to, certain industries. For example, to make sure that people can buy flour, cereal, and other wheat products cheaply, the government might give subsidies to wheat farmers. Because they are receiving money from the government, the farmers do not have to charge high prices for their crops. As a result, prices for wheat products stay low.”Yes, indeed, this has been the history of U.S. government intervention into agriculture, eh? Anyone else getting nervous yet?
UPDATE 10-24: Before I write about my concerns with this quote, I want to comment on the comments by Craig and Tim.
I agree with Craig that this illustration of a subsidy is incomplete because it does not include a consideration of where the money for the subsidy comes from. If government chooses to subsidize any activity, we can certainly confine our analysis of the impact of the subsidy to what happens after the subsidy is received. But, government gets the money for the subsidy because it has the power to tax. The power to tax means that the money for the subsidy is taken from people. It is money that people would have spent or saved if it had not been taken from them. Perhaps the subsidy will indeed result in more of some good thing, but because the subsidy money is taken from people it is is also the case that the money reduces other good things. A good economic lesson to learn is: "There is no such thing as a free lunch." That lesson could be taught by this textbook if it offered a more complete discussion of what must be the case with any government subsidy. But it doesn't.
Now Tim's comment seems a bit out of place relative to what I've quoted. I think he is thinking about how the U.S. government has actually intervened in the market process for wheat production, which has resulted in a greater quantity of wheat produced in the U.S. than would have otherwise have been the case. I think this is why he is considering crowding out wheat production in other countries. And, if you read my update to my first post on middle school economics, Tim's comment is another illustration of one U.S. government policy being at odds with other U.S. government efforts in some other arena. Certainly, this seems to me another important lesson for our middle school students to learn about how the real world works, but it seems it is going to be neglected.
My first reaction to the quote is that if the author wants to discuss government efforts to control prices, then the discussion should not be about subsidies. Actual government efforts to control prices have mostly involved government trying to set minimum prices (e.g., minimum wages) or maximum prices (e.g. rent controls).
A second point to suggest is that the author should not use an agricultural illustration for keeping prices down because historically the U.S. government policy toward agriculture has been to impose a price floor. Even in the middle of The Great Depression when so many people were without jobs and thus without their usual source of income, U.S. government policy was to impose a price floor on agricultural products so that prices would by higher than they otherwise would have been. Still today, the prices of agricultural products are often higher than they otherwise would be because of U.S. government agricultural policies. So, by choosing to offer up this specific illustration, it seems to me this textbook encourages our middle school students to think U.S. government policy is to keep agricultural prices low, which is pretty much the opposite what is true.
A third point is about what economic analysis suggests in the general result of a subsidy. If government offers to subsidize an activity, you are going to get more of that activity. Government really cannot directly subsidize a price. This is why government is likely to use a price ceiling if the goal is to try to keep a price low. Typically when economists discuss a government subsidy, the outcome is expected to be a higher price associated with the subsidized activity, not a lower price. And, I think this brings us back to the U.S. government policies toward agriculture. The government has wanted to subsidize farmers, but the way this was done was for government to impose a price floor. Instead of keeping agricultural prices low, the U.S. government has acted in an effort to keep prices for agricultural products higher than they would otherwise be, and these efforts have gone so far is to directly pay agricultural producers to take land out of cultivation.
Agricultural policy is a great case study for the economic analysis of price floors, but it is a really poor case study for discussing the results of government subsidies. And, if the author wants to discuss government efforts to keep a price low, then the discussion should really be about an illustration of a price ceiling, e.g., rent controls.
Middle School Economics 2
The following is a suggestion in a middle school text on civics and economics for teachers to discuss with their students:
UPDATE 10-24: As I read the text, it seems to me at this point the students do not have sufficient understanding of the economic world to make these judgments. Perhaps this is proven by the answers given to the question how government helps protects workers. Minimum wage laws do not protect workers, unless you mean only the workers who keep or are able to get jobs after the minimum wage is imposed. Minimum wages lead to unemployment, which surely cannot be protecting those unemployed workers who would otherwise have had jobs. And, is it ironic? In the list of ways government helps workers we have both minimum wage laws and protecting people from discrimination. Of course, if people have preferences for discriminating in hiring employees, minimum wages laws reduce the cost of acting on such preferences, and thus lead to increased discrimination that government wants to protect people from. In other words, if students had sufficient economic understanding, they would perhaps be as perplexed as I am, when their teacher notes that government protects workers with minimum wage laws. And, they would perhaps be curious about why government would attempt to protect workers with minimum wage laws and anti-employment discrimination laws, when the first policy makes it more likely there will be a perceived need for the second policy. But, perhaps there is an opportunity here as well to teach the lesson that being a politician is a pretty good gig because there is always a need for making more public policy to deal with the messes made by your earlier public policies.
Now consider the government control question. The answer yes to whether government should control the economy is enormously naïve, even though this sort of stuff is standard political bill of fare. I think the idea that companies take advantage by polluting seems nonsense to most economists (and remember this is in the section of the textbook teaching economics). One of the greatest sources of pollution are all of us in our role as consumers and workers when we drive cars to play and to work and to school and to shop, even when we shop for “needs” such as the weekly groceries. Companies pollute for the same reasons we as consumers pollute, we find it is cheaper than collecting the waste to dispose of in some other way. Of course, the monopoly part of this answer is nonsense because most monopolies are created, even enforced (see unions), by government. In addition, the answer completely neglects one of the most important issues concerning this question, and that is whether government can get sufficient information to do better with any identified problem than would voluntary action, not to mention whether the incentives faced by our governors, even when they are our elected representatives, will choose to act in ways that would direct government to truly serve the public interest rather than rent seeking. And, the no response is simple and inadequate for the same reasons. The incentives and information issues both suggest government cannot accomplish what it states it seeks to accomplish.
So, here again, I have to wonder if trying to bring economics to our middle schools might be such a good idea. I do think our middle school students should learn about how the world around them works. But, the quotes I've posted here suggest to me it is pretty likely that what our middle school students will learn from their textbooks on Civics & Economics will be at odds with learning how the world around them works.
The U.S. Economic System – Identify – What are some ways the government helps protect workers? By establishing minimum wage laws, laws guaranteeing workers' safety, and laws to protect people from discrimination – Make Judgments – Do you think that the U.S. Government should control parts of our economy? Why or why not? Possible answers: Yes – without government control some companies would take advantage of the public interest by polluting, creating monopolies, and other problems. No – the government should stay out of business because it interferes with people's ability to make a living.The material in italics are suggestions about what the answers to the questions might be. As you might guess, I have concerns. How about you?
UPDATE 10-24: As I read the text, it seems to me at this point the students do not have sufficient understanding of the economic world to make these judgments. Perhaps this is proven by the answers given to the question how government helps protects workers. Minimum wage laws do not protect workers, unless you mean only the workers who keep or are able to get jobs after the minimum wage is imposed. Minimum wages lead to unemployment, which surely cannot be protecting those unemployed workers who would otherwise have had jobs. And, is it ironic? In the list of ways government helps workers we have both minimum wage laws and protecting people from discrimination. Of course, if people have preferences for discriminating in hiring employees, minimum wages laws reduce the cost of acting on such preferences, and thus lead to increased discrimination that government wants to protect people from. In other words, if students had sufficient economic understanding, they would perhaps be as perplexed as I am, when their teacher notes that government protects workers with minimum wage laws. And, they would perhaps be curious about why government would attempt to protect workers with minimum wage laws and anti-employment discrimination laws, when the first policy makes it more likely there will be a perceived need for the second policy. But, perhaps there is an opportunity here as well to teach the lesson that being a politician is a pretty good gig because there is always a need for making more public policy to deal with the messes made by your earlier public policies.
Now consider the government control question. The answer yes to whether government should control the economy is enormously naïve, even though this sort of stuff is standard political bill of fare. I think the idea that companies take advantage by polluting seems nonsense to most economists (and remember this is in the section of the textbook teaching economics). One of the greatest sources of pollution are all of us in our role as consumers and workers when we drive cars to play and to work and to school and to shop, even when we shop for “needs” such as the weekly groceries. Companies pollute for the same reasons we as consumers pollute, we find it is cheaper than collecting the waste to dispose of in some other way. Of course, the monopoly part of this answer is nonsense because most monopolies are created, even enforced (see unions), by government. In addition, the answer completely neglects one of the most important issues concerning this question, and that is whether government can get sufficient information to do better with any identified problem than would voluntary action, not to mention whether the incentives faced by our governors, even when they are our elected representatives, will choose to act in ways that would direct government to truly serve the public interest rather than rent seeking. And, the no response is simple and inadequate for the same reasons. The incentives and information issues both suggest government cannot accomplish what it states it seeks to accomplish.
So, here again, I have to wonder if trying to bring economics to our middle schools might be such a good idea. I do think our middle school students should learn about how the world around them works. But, the quotes I've posted here suggest to me it is pretty likely that what our middle school students will learn from their textbooks on Civics & Economics will be at odds with learning how the world around them works.
Monday, October 19, 2009
Economics In Middle School
Recently I've been reading bits and pieces of a few middle school textbooks on Civics and Economics. I'm sure at least a few economists think it is a good idea to begin teaching economics earlier in the educational life of our kids. After all, there seem to have been many surveys that suggest the level of economic literacy is pretty darn low. So, let's start earlier to help our citizens become economically literate. But, perhaps it is also possible that what gets taught reduces economic literacy. Consider the following from one of those middle school textbooks:
So, what do you think? Could the quotation above tend to encourage our middle school students to misunderstand the nature of the real world?
UPDATE 10-24: I like the comments by both Kari and Casey, and Casey comes close to my response when I read the quoted passage. The textbook is suggesting that competition leads to scarcity. Of course, this is not a lesson that comes from the study of economics. Scarcity is a given. As Casey points out, competition through the market process mitigates or lessens the impact of scarcity in our lives. So, the lesson told in this quote is pretty much just the opposite of the lessons learned from economics. In addition, if we look again at the first paragraph quoted, there is a suggestion that competition affects our individual lives. This is surely the case. But, when you look at both paragraphs together, this textbook seems to suggest that competition affects our lives in a bad way. This of course is not true. At least, it is not true if economists understand at least something about how the world works. Competition within the market process is one part of the explanation for the wonderful material prosperity we enjoy today, and as Casey suggests, without that material prosperity far, far fewer people would live on this earth today. Thus, I am concerned that the lessons suggested by this quotation may well encourage our middle school students to misunderstand the nature of the real world.
In order to make a profit, people need to provide a good or service. In order to provide a good or service, they need resources. As you know, however, resources are not unlimited. As a result, businesses and individuals must compete for the resources they need. This competition eventually affects everyone, not just business owners. In time, it affects the prices we pay for the goods we want.I have to say that in all my years of teaching I don't think I've ever said any thing like this to my students. Oh, on the face of it, the words written here do sound a bit like economics, and I suppose they do sound a bit like things I have talked with my students about, especially in a course in microeconomic principles. But, there are aspects of what is written above that concern me.
One result of the competition for these resources is scarcity. Scarcity is the lack of a particular resource. When a resource becomes scarce, it is harder for producers to obtain. Products made with that resource also become more difficult to obtain. As a result, the prices for these items usually rise.
So, what do you think? Could the quotation above tend to encourage our middle school students to misunderstand the nature of the real world?
UPDATE 10-24: I like the comments by both Kari and Casey, and Casey comes close to my response when I read the quoted passage. The textbook is suggesting that competition leads to scarcity. Of course, this is not a lesson that comes from the study of economics. Scarcity is a given. As Casey points out, competition through the market process mitigates or lessens the impact of scarcity in our lives. So, the lesson told in this quote is pretty much just the opposite of the lessons learned from economics. In addition, if we look again at the first paragraph quoted, there is a suggestion that competition affects our individual lives. This is surely the case. But, when you look at both paragraphs together, this textbook seems to suggest that competition affects our lives in a bad way. This of course is not true. At least, it is not true if economists understand at least something about how the world works. Competition within the market process is one part of the explanation for the wonderful material prosperity we enjoy today, and as Casey suggests, without that material prosperity far, far fewer people would live on this earth today. Thus, I am concerned that the lessons suggested by this quotation may well encourage our middle school students to misunderstand the nature of the real world.
Thursday, October 01, 2009
Sole Task of Economics
Ludgwig von Mises:
Economics is not about goods and services, it is about the actions of living men. Its goal is not to dwell upon imaginary constructions such as equilibrium. These constructions are only tools of reasoning. The sole task of economics is analysis of the actions of men, is the analysis of processes. (Human Action, p. 354)
Sunday, September 27, 2009
Health Care Reform: Essential Economic Insights
COGAN, HUBBARD, & KESSLER:
[HT: Greg Mankiw]
According to provisions in both House and Senate bills, mandated plans must have low copayments and provide coverage of health-care services that is at least equal in scope to a typical, current employer-sponsored plan. But these are the very flaws that are responsible for high and rising health-care costs, flaws that stem directly from the misguided tax exclusion for and the extensive state regulation of health insurance. By locking in these flaws, the mandates will inhibit precisely the innovation needed to reform U.S. health care....Comprehensive, low-deductible, low-copayment insurance has brought us to where we are today. The administration's plan to expand and lock-in this flawed paradigm will ultimately defeat the goal of making health services more affordable for everyone.If one wants to use government and public policy to "solve" a "problem," then it seems to make good sense to first understand the cause of the "problem." These 3 economists understand the sources of the health care problem today are past government policies. Thus, government actions today that do not correct the past bad government policies, even more that lock in the past bad policies, should not be expected to lead to better results in the future.
[HT: Greg Mankiw]
Of Entrepreneurs & Philosophers
LUDWIG VON MISES:
It is not the business of the entrepreneurs to make people substitute sound ideologies for unsound. It rests with the philosophers to change people's ideas and ideals. The entrepreneur serves the consumers as they are today, however wicked and ignorant. [Human Action, p. 297]
Wednesday, September 23, 2009
Consumers Captain Economic Ship
LUDWIG VON MISES:
The direction of all economics affairs is in the market society a task of the entrepreneurs. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain's orders. The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him." [Human Action, p. 270]
Monday, September 21, 2009
Intergenerational Injustice
Pajamas TV offers an interesting look at the intergenerational impact of the national government's recent bailouts and stimulus.
If you are college age or younger this is must viewing.
If you are an adult with children, you may also be interested in viewing, but maybe you will be even more interested in trying to keep this away from your children. Why?
Consider that when I followed this link I discovered that I can expect to pay about $276 per month until I die for the bailouts and the stimulus. That will be a total of only about $76,000 because of these government actions. In contrast, my son, who is now 9, will pay about $285 per month across all the years that he is a federal income taxpayer. My son's total payments for bailouts and stimulus, this time around, will be about $154,000 over his lifetime. Of course, this is only a small part of the impact of today's government policies on my son since it calculates nothing for the impact of social security, medicare, health care "reform," etc., etc., etc.
I think this illustrates pretty nicely why I follow Thomas Jefferson in concluding that government debt is intergenerationally unjust. My son is still quite a number of years away from voting age, and by the policies of our government we are binding him to pay for our own bailouts and stimulus.
If you are college age or younger this is must viewing.
If you are an adult with children, you may also be interested in viewing, but maybe you will be even more interested in trying to keep this away from your children. Why?
Consider that when I followed this link I discovered that I can expect to pay about $276 per month until I die for the bailouts and the stimulus. That will be a total of only about $76,000 because of these government actions. In contrast, my son, who is now 9, will pay about $285 per month across all the years that he is a federal income taxpayer. My son's total payments for bailouts and stimulus, this time around, will be about $154,000 over his lifetime. Of course, this is only a small part of the impact of today's government policies on my son since it calculates nothing for the impact of social security, medicare, health care "reform," etc., etc., etc.
I think this illustrates pretty nicely why I follow Thomas Jefferson in concluding that government debt is intergenerationally unjust. My son is still quite a number of years away from voting age, and by the policies of our government we are binding him to pay for our own bailouts and stimulus.
Obama & His Taxes
WSJ REVIEW & OUTLOOK:
"President Obama didn't make much news on his round of five Sunday talk shows yesterday, with one notable exception. The President revealed a great deal about his philosophy of government and how he defines a tax increase. It turns out the President thinks a health-care tax is not a tax if he thinks the tax is for your own good."Yeah, I know. I'm very lucky the President is looking out for my own good.
The Wages of Government
THE WSJ REPORTS that:
It seems to me more accurate to say that "a group of companies are being coerced by government to change their pay policies." And, if government passes legislation or writes regulations about pay policies, then it would seem accurate to say that government has forced companies to change their pay policies. Or, if we would prefer to match rhetoric with more rhetoric, how about we say instead that "a group of companies have decided to give into to the big government bully." I think my use of coercion and force is more accurate, but telling the story in terms of the "big government bully" might help tell a story with more political traction.
Check out the paragraph that lists some of the proposed changes. I've read this entire news article, and I don't think I can find any analysis that explains why it is thought that these companies have bad pay policies now. So, I have no way to judge whether these changes make any sense. What's more, it seems to me that any company's pay policies should seek to achieve the company's purposes, and not the purposes of government.
Oh, and I wonder how "generous" is defined?
Finally, since we are considering the responses of business to the coercion of government, is it completely silly to ask where Congress or President Obama constitutionally have the power to coerce, or to force, businesses to change their pay policies? I can't see that they do in the Constitution I have.
"A group of blue-chip companies is lining up behind efforts to voluntarily change their pay practices, in part to head off potentially more onerous restrictions out of Washington. . . . .I suppose rhetoric is a beautiful thing, at least to some. I would like an explanation as to why it makes sense to say a group of companies will voluntarily change their pay policies when at the same time these companies are trying to placate government.
Many of the Conference Board's principles resemble those of the Obama administration, including tying a 'significant portion' of incentive compensation to a company's long-term success, rather than rewarding short-term gains that some worry promote risky behavior. The proposal also calls for doing away with certain pay practices, such as 'overly generous golden-parachute payments' in the event of a takeover, and long-term employment contracts that require generous severance payments."
It seems to me more accurate to say that "a group of companies are being coerced by government to change their pay policies." And, if government passes legislation or writes regulations about pay policies, then it would seem accurate to say that government has forced companies to change their pay policies. Or, if we would prefer to match rhetoric with more rhetoric, how about we say instead that "a group of companies have decided to give into to the big government bully." I think my use of coercion and force is more accurate, but telling the story in terms of the "big government bully" might help tell a story with more political traction.
Check out the paragraph that lists some of the proposed changes. I've read this entire news article, and I don't think I can find any analysis that explains why it is thought that these companies have bad pay policies now. So, I have no way to judge whether these changes make any sense. What's more, it seems to me that any company's pay policies should seek to achieve the company's purposes, and not the purposes of government.
Oh, and I wonder how "generous" is defined?
Finally, since we are considering the responses of business to the coercion of government, is it completely silly to ask where Congress or President Obama constitutionally have the power to coerce, or to force, businesses to change their pay policies? I can't see that they do in the Constitution I have.
Friday, September 18, 2009
Never Merely Consumer
Ludwig von Mises:
"Living and acting man by necessity combines various functions. He is never merely a consumer. He is in addition either an entrepreneur, landowner, capitalist, or worker, or a person supported by the intake earned by such people." [Human Action p. 253]Hmm, where does the politician fit? Or, has Mises neglected to include politician in his list of various functions?
Thursday, September 17, 2009
Happy Constitution Day!
If you would like to celebrate our constitution, then I have a suggestion. Check out the POLITICIAN'S PLEDGE at the 10th Amendment Center. Take a look around while you are there. I like the looks of the center. While you are there, consider clicking on "Petition" and letting your representatives know what you think about the constitution and our government.
Saturday, September 12, 2009
ObamaCare: Would I lie to you?
GREG MANKIW:
"At first, it sounds like the President is threatening to veto the bills being considered in Congress because, according to CBO, they will add significantly to deficits in the out years. If true, that would be a big story. But the provision he mentions in the next sentence seems to suggest he is just passing the buck.
Translation: 'I promise to fix the problem. And if I do not fix the problem now, I will fix it later, or some future president will, after I am long gone. I promise he will. Absolutely, positively, I am committed to that future president fixing the problem. You can count on it. Would I lie to you?'"
Chinese Tire Tariffs & The President
WSJ:
"The White House leaked word late Friday evening that the U.S. will impose heavy tariffs on imported Chinese tires used by millions of low-income Americans. We wonder if President Obama understands the political forces he's unleashing with this blatant protectionism.Well, I guess that's okay since I like paying higher prices for tires.
[ . . . ]
As a candidate, Mr. Obama courted union support, and the United Steelworkers filed the tire case anticipating he would pay them back. Some in the business and policy communities thought Mr. Obama didn't really mean it, and that like Bill Clinton he would stand for the national economic interest in open trade once he became President. Mark that down as another misjudgment. In his first big trade test in the White House, Mr. Obama has allied himself with the protectionists, and the world will see his political surrender and rush to exploit it."
Obama's Takeover of Student Loans
WSJ:
"The furor over President Obama's trillion-dollar restructuring of American health care has left his other trillion-dollar plan starved for attention. That's how much the federal balance sheet will expand over the next decade if Mr. Obama can convince Congress to approve his pending takeover of the student-loan market.I guess "ObamaCare" has been used as shorthand for "health care reform." But, maybe we should start to see "ObamaCare" as President Obama's view of government, i.e, Obama's government is one that cares for all our needs.
The Obama plan calls for the U.S. Department of Education to move from its current 20% share of the student-loan origination market to 80% on July 1, 2010, when private lenders will be barred from making government-guaranteed loans. The remaining 20% of the market that is now completely private will likely shrink further as lenders try to comply with regulations Congress created last year. Starting next summer, taxpayers will have to put up roughly $100 billion per year to lend to students."
Wednesday, September 02, 2009
The Age of Liberalism
LUDWIG VON MISES:
It is a purposeful distortion of facts to blame the age of liberalism for an alleged materialism. The nineteenth century was not only a century of unprecedented improvement in technical methods of production and in the material well being of the masses. It did much more than extend the average length of human life. Its scientific and artistic accomplishments are imperishable. It was an age of immortal musicians, writers, poets, painters, and sculptors; it revolutionized philosophy, economics, mathematics, physics, chemistry, and biology. And, for the first time in history, it made the great works and the great thoughts accessible to the common man. (p. 155)
Tuesday, September 01, 2009
President To Speak To Your Kids On September 8
PRESIDENT OBAMA is going to speak to all the nation's school kids on September 8. What do you think about that?
I think the President is a politician, and this President seems to think he is pretty special and awe inspiring. So, of course, if the President asks the nation's youth to study hard, then I'm sure they will. But, because the President is a politician I'm afraid this is truly intended to be another one of his political events. I may be wrong. I think this is a very bad idea because it seems like something from one of the other counties in the world which has little use for individual liberty. Then again, a President who thinks redistributing wealth is good seems not to have high regard for individual liberty to begin with. Maybe the recent election is some measure of how far this country now falls short of holding liberty in high regard?
If you click through on the link above you can find another link to "resources" to help teachers figure out what they should teach their students about the President's address to them. Here is one of the suggestions for talking with students before his speech:
How many kids do you think will offer this answer? I think not very many because it seems to me our schools are no longer very good at teaching a curriculum for a prosperous republic.
I think the President is a politician, and this President seems to think he is pretty special and awe inspiring. So, of course, if the President asks the nation's youth to study hard, then I'm sure they will. But, because the President is a politician I'm afraid this is truly intended to be another one of his political events. I may be wrong. I think this is a very bad idea because it seems like something from one of the other counties in the world which has little use for individual liberty. Then again, a President who thinks redistributing wealth is good seems not to have high regard for individual liberty to begin with. Maybe the recent election is some measure of how far this country now falls short of holding liberty in high regard?
If you click through on the link above you can find another link to "resources" to help teachers figure out what they should teach their students about the President's address to them. Here is one of the suggestions for talking with students before his speech:
"Why is it important that we listen to the President and other elected officials, like the mayor, senators, members of congress, or the governor? Why is what they say important?"Let me take a stab at answering. It is important to listen to those in government because they are the men and women who use force in our daily lives. Government uses force in our lives properly when it functions basically as the "protective state," which means it uses force to enforce private property rights and voluntary contracts, and it means government uses power and force to protect us from attack by people living in other countries of the world. It is important to listen to those in government because it seems these days that most of the people in government do not understand this. Instead, most of the people in government today support public policies that use force in ways that are predatory on activities of all of those outside of government who every day try to do the best for themselves and their family by being productive. Therefore, it is important to listen to those in government because if we don't pay close enough attention (and remember the old adage "watch what they do, not what they say"), then those in government will become ever more successful predators and the prosperity we enjoy today will be foolishly lost to ourselves and the very kids the President will speak to next week.
How many kids do you think will offer this answer? I think not very many because it seems to me our schools are no longer very good at teaching a curriculum for a prosperous republic.
Friday, August 28, 2009
Cash for Clunkers Follow Up
BRUCE YANDLE has a nice essay on the economic analysis of cash for clunkers:
"Frederic Bastiat’s brilliant parable of the broken window reminds us that a street hoodlum throwing a brick through a window generates a series of job-generating transactions that might raise GDP by a trivial amount, if it could be measured. Indeed, the idea seems so compelling that people today often speak of the silver lining found in the clouds that create hurricanes. Think of the roofers that become employed. But Bastiat’s key lesson is that a window has been destroyed—and it had value. Before touting the total benefits of clunkers, we must take account of the destroyed vehicles and engines that represented part of the wealth of the nation. As Tony Liller, vice president for Goodwill, put it: “They’re crushing these cars, and they’re perfectly good. These are cars the poor need to buy.”Read the whole piece and gain a significant measure of economic literacy.
Finally, over the eons, human communities have contrived all kinds of devices to transmit critical survival skills and compatible behavioral norms. One of these has to do with conservation of wealth. “Waste not, want not,” we are told. “A penny saved, is a penny earned,” we are reminded. Using politics to pay people who destroy valuable vehicles, or to hold crops off the market, or to produce ethanol that may use more energy in production than it adds when burned, teaches a lesson of anti-matter and wealth destruction. When all these considerations are made, Cash for Clunkers sounds like a sorry idea that should not be the model for future policy.
Let’s stop Cash for Refrigerators before the idea spreads further."
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