Archive for October, 2009
Is the Economy Booming Again?
The lead headline in Friday’s Wall Street Journal proclaims
Economy Snaps Long Slump
But buried on page C10 is a more skeptical view:
If the Obama administration were managing a company, it might have hoped the latest gross-domestic-product numbers would be greeted with cries of “great quarter, guys!”
At least the stock-market obliged, rising on the back of better-than-expected GDP data Thursday morning. But then bulls have become used to looking to Washington for inspiration. Zero rates and stimulus programs boost economic data as well as nudge money toward riskier assets.
Fully 2.2 percentage points of the third quarter’s 3.5% growth figure related to vehicle purchases and residential construction, both juiced by government support. Federal spending added 0.6%.
If these GDP data were company earnings, they would be what analysts euphemistically call “low quality.” Investors buying into the market off the back of them are ignoring weekly unemployment-claims data that came in above 500,000 again on the same day.
The danger is that all these short-term fixes leave the economy dangerously addicted to taxpayer-funded steroids. The circularity in the housing market, whereby Washington provides tax breaks to first-time buyers, guarantees most of the mortgages written, and then buys most of those, beggars belief, and suggests a worrying case of amnesia following the bursting of the housing bubble. (emphasis added)
Johan Norberg warned about the dangers of repeating the very mistakes that created the bubble and bust in the first place in Financial Fiasco: How America’s Infatuation with Homeownership and Easy Money Created the Economic Crisis (available in hardcover, e-book, or Kindle).
Filed under: Cato Publications; Finance, Banking & Monetary Policy
Battle for Libertarian Voters in Virginia
Almost two months ago I quoted a Washington Post op-ed that said that this fall’s gubernatorial race in Virginia would depend on
the all-important independent voters — the disproportionately moderate, young, prosperous, suburban and libertarian-leaning people who typically decide Virginia contests.
It looks like Frank B. Atkinson, a high-powered Richmond lawyer who served in the Ronald Reagan and George Allen administrations and has written two books on Virginia politics, knew what he was talking about. At least on my television here in the Virginia suburbs of Washington, D.C., the race has been dominated by two kinds of ads: Democratic nominee Creigh Deeds tells us over and over again that his Republican opponent Bob McDonnell is a reactionary social conservative. McDonnell counters with endless plays of Deeds’s stumbling admission that he’d like to raise taxes.
Judging by the polls, it looks like people are more worried about taxes and the overreach of the Obama administration than about McDonnell’s career-long ambition to roll back social change.
Of course, the bad news is that both candidates are right: McDonnell is a reactionary social conservative, and Deeds will raise taxes. The even worse news: Deeds voted for the anti-marriage constitutional amendment in the Virginia legislature, though he later flipped his position; and as a legislator and attorney general, McDonnell backed transportation tax increases. So if you’re a pro-tax, anti-gay Virginia voter, you have a wealth of choices on Tuesday. Freedom-loving, “leave us alone” voters, a tougher day.
Filed under: General; Government and Politics; Political Philosophy
Our Libertarian Future
Brink Lindsey described a “libertarian consensus that mixes the social freedom of the left with the economic freedom of the right” in his book The Age of Abundance. Matt Welch and Nick Gillespie said that right now is a “libertarian moment.” I saw a “civil liberties surge” in public opinion polls on marijuana laws and gay marriage. And now Jacob Weisberg foresees the imminent end to various kinds of prohibition in these United States:
Within 10 years, it seems a reasonable guess that Americans will travel freely to Cuba, that all states will recognize gay unions, and that few will retain criminal penalties for marijuana use by individuals. Whether or not Democrats retain control of Congress, whether or not Obama is re-elected, and whether they happen sooner or later than expected, these reforms are inevitable—not because politics has changed but because society has.
For good measure, he adds that we’re not going to prohibit either abortion or gun ownership. “Conservatives would be wise to give up on the one, liberals on the other. In each of these cases, popular demand for an individual right is simply too powerful to overcome.”
Sounds like libertarian heaven:
The chief reason these prohibitions are falling away is the evolving definition of the pursuit of happiness….
Republicans face a risk in resisting these new realities. Freedom is part of their brand; if the GOP remains the party of prohibition, it will increasingly alienate libertarian-leaners and the young. But the party as presently constituted has very little capacity to accept social change. Democrats face a danger in embracing cultural transformations too eagerly. Nearly four decades after George McGovern became known as the candidate of amnesty, abortion, and acid, cultural issues are still treacherous territory for them. Why get in front of change when you can follow from a safe distance and end up with the same result?
Of course, if the Democrats raise taxes and the deficit high enough, and do what they’re threatening to do to health care, marijuana may be the only medicine you don’t have to get on a waiting list for, but you won’t be able to afford it. And the marriage penalty may make everyone decide they can’t afford to get married. And flights to Cuba may be too expensive on our dwindling after-tax incomes.
Filed under: Cato Publications; General; Government and Politics; Political Philosophy
Weekend Links
- “Government should not subsidize health insurance — for the uninsured, the poor, the elderly or anyone else — or regulate health insurance markets.” Here’s why.
- This is what happens to health care when you are not the customer.
- An update on the EU Lisbon Treaty.
- Why Fannie and Freddie mustn’t be left out of reform efforts.
- Skepticism over nuclear diplomacy with Iran. (PDF) Subscribe to the Nuclear Proliferation Update here.
- Podcast: “Obama: Kinder Bud to Federalism?” featuring Aaron Houston of the Marijuana Policy Project.
Politicians Fiddle While America’s Corporate Tax System Burns
KPMG has released its annual global survey of corporate tax systems. For the 10th consecutive year, the average corporate tax rate fell, and it is now down to 25.5 percent — and just 23.2 percent in the European Union!
In the United States, unfortunately, the corporate tax rates remains stuck at about 40 percent. Only one developed nation, Japan, has a more punitive regime.
That’s something to keep in mind the next time a politician complains that jobs are going to China, where the corporate tax rate is 25 percent.
Filed under: Government and Politics; Tax and Budget Policy
Paranormal Legislative Activity?
Here’s an entertaining and timely video from the Sunlight Foundation:
Readthebill.org is where you can learn more about H. Res. 554.
Have a transparent Halloween everybody!
Filed under: Government and Politics; Telecom, Internet & Information Policy
Stimulus Jobs Reporting Charade
I have been reluctant to engage in the squabbling over the accuracy of the stimulus job “creation” figures because I believe it is more important to focus attention on the underlying “rob Peter to pay Paul” reality of Washington’s endeavor. As I mentioned yesterday, the government cannot “create” anything without also inflicting economic damage because the money ultimately comes at the expense of the private sector via taxation. There are countless other problems with government job “creation” efforts, including economic miscalculation, inefficiency, waste, etc. — not to mention the immorality of robbing poor Peter.
Yesterday, the White House issued a defense in response to an Associated Press finding that previously released numbers were overstated. The following sentence raised my eyebrow:
The reports are not from the government, but from the very people putting Recovery Act funds to work — governors, mayors, county executives, private businesses and community organizations across the country.
Today the federal government is supposed to release new job creation figures. I believe most of the numbers will originate with state government officials tasked with collecting and reporting jobs “created” with the stimulus dollars that passed through their state. Based on my own experience as an ex–state government employee responsible for collecting and reporting data purporting to show how well state programs were performing, I feel compelled to comment on the accuracy of today’s release.
Not only will today’s state-reported numbers be impossible to prove, they will be flush with erroneous, deceptive, and as Reason’s Sam Staley says, bogus claims. As Sam notes:
The numbers of jobs created or “saved” are simply counts provided by state agencies spending stimulus money. They simply record the number of people hired under the contract or for the project. They are not the result of investigative follow up, or a consistent methodology for identifying real jobs created or saved. (Indeed, these methodological problems have plagued economic development program evaluations for decades as states have claimed jobs were created by various tax incentive programs but no real way to verify the accuracy of the numbers.)
When I worked in Indiana’s state Office of Management and Budget, part of my job was to collect “performance measures” from state agencies. The idea was to offer Indiana taxpayers the appearance that the governor was holding state agencies accountable for how they spent money. In reality, we had no idea if the numbers state agencies gave us were accurate. There were no audits, and once the agencies figured out the whole effort was really a political gimmick, they often just gave us self-serving nonsense. Nonetheless, the numbers were pawned off on the public because it served political ends.
The Obama administration will continue to trumpet the number of jobs the stimulus package “created.” It will brag that the government’s efforts were not only successful, but that they were conducted with unprecedented transparency and accountability. But taxpayers and citizens should not buy into these claims. The stimulus jobs report is simply political theater: a charade intended to maintain public support for, or acquiescence to, Washington’s multiplying encroachments.
More on ‘Hate Crimes’
Law professors James Jacobs and Kimberly Potter make an interesting point:
Laws do not spring forth from a groundswell of public opinion, but rather are the product of lobbying by interested (“interest”) groups that must mobilize support among politicians. The hate crime laws are passed because of the lobbying efforts of organizations that advocate on behalf of blacks, Jews, gays, and lesbians, a few other ethnic and nationality groups, and in some cases, women. …Regardless of what it accomplishes, the passage of legislation boosts morale and the status of the organizations and their constituencies.
That’s from their excellent book on the subject, Hate Crimes: Criminal Law and Identity Politics (Oxford University Press, 1998), p. 66.
If liberals write laws to “send messages,” can social conservatives do the same thing if they control the legislative assembly? Perhaps enact a criminal law against, say, adultery. Note that the point is not necessarily that the law be actually enforced or have any impact as far as reducing adultery in the jurisdiction. If the point is simply to “send a message,” liberals are going to be hard-pressed to lodge objections to conservative symbolic lawmaking.
For more on hate crimes, go here and here.
The Myth of ‘Market Failure’ in Health Care
One argument in favor of a government overhaul of the health care system is that the free market had its chance, and failed when it comes to providing the best possible care. But as David Goldhill discovered while researching for the September cover article in The Atlantic, the United States has anything but a free-market health care system.
He explains his findings below:
For real market-based reform, see Cato’s new Policy Analysis, “Yes, Mr. President: A Free Market Can Fix Health Care.“
The New Republic and Guilt by Association
I watched with interest the J Street debate between Matt Yglesias and The New Republic’s Jonathan Chait over the question “what it means to be pro-Israel.” Matt’s a very efficient thinker, and Chait’s a particularly sharp debater. I witnessed him slug it out at length in a debate with David Boaz a while back, not something I’d like to do.
Chait made a straightforward argument: to be pro-Israel, someone has to accept two premises. First, one has to believe that historically, Israel is the more sympathetic party in the Middle East. Second, one has to believe that the U.S. should not be even-handed in the Middle East, but rather should be on Israel’s side.
But what was most interesting about his argument was his accusation of guilt by association against J Street. It was a problem, Chait argued, that J Street had been embraced by people who did not meet his definition of pro-Israel. Chait rang the alarum that “The American Conservative magazine, which was founded by Pat Buchanan, …has been saying nice things about J Street.” In addition, “the famous Walt and Mearsheimer have been saying extremely nice things about J Street — embracing J Street.”
Filed under: Foreign Policy and National Security; Government and Politics; Political Philosophy
Wisdom of the Anti-Federalists
Everybody reads the Federalist Papers. (I hope!) Written by Alexander Hamilton, James Madison, and John Jay, they are generally regarded as the most profound collection of political theory ever written in America. And since they deeply inform our understanding of our fundamental law, they are essential to understanding the American version of limited, constitutional government. But the ratification of the Constitution was a close thing in 1787–89, and the Anti-Federalists (who said that actually they were the federalists, while their opponents were nationalists) also had some insightful things to say about liberty and limited government.
Now the invaluable Liberty Fund has made available a collection of anti-federalist writings, The Anti-Federalist Writings of the Melancton Smith Circle. The publisher says:
The Anti-Federalist Writings of the Melancton Smith Circle makes available for the first time a one-volume collection of Anti-Federalist writings that are commensurate in scope, significance, political brilliance, and depth with those in The Federalist. Included in this volume as an appendix is a computational and contextual analysis that addresses the question of the authorship of two of the most well-known pseudonymous Anti-Federalist writings, namely, Essays of a Federal Farmer and Essays of Brutus. Also included are the records of Smith’s important speeches at the New York Ratifying Convention, some shorter writings of Smith’s from the ratification debate, and a set of private letters Smith wrote on constitutional subjects at the time of the ratification struggle.
One reason it’s important to study the ideas of the Anti-Federalists was offered by Jeffrey Rogers Hummel in The Encyclopedia of Libertarianism:
Most of the Amendments comprising the Bill of Rights restricted the national government’s direct authority over its citizens. Only one section dealt with the relationship between the state and central governments; the 10th Amendment “reserved” to the states or the people all powers not “delegated to the United States by the Constitution.” Nothing better illustrates that, whereas the Anti-Federalists had lost on the ratification issue, they had won on the question of how the Constitution would operate. The Constitution had not established a consolidated national system of government as most Federalists had at first intended, but a truly federal system, which is what the Anti-Federalists had wanted. In simpler terms, the Federalists got their Constitution, but the Anti-Federalists determined how it would be interpreted.
In a world where it’s easy to find a “Dirty Dozen” of Supreme Court decisions that have expanded government and eroded freedom, that may be hard to believe. But it’s important to read both halves of early American debate over the Constitution in order to understand the foundations of our system.
Filed under: Cato Publications; Law and Civil Liberties; Political Philosophy
The Death of Private Investment
The Bureau of Economic Analysis released third-quarter gross domestic product numbers yesterday, and overall real growth at 3.5 percent was pretty good.
But examining the components of GDP reveals a more disturbing picture. While consumption, exports, and the government sector were up, private investment has fallen through the floor.
Figure 1 reveals a dramatic collapse of private investment over the last two years. In nominal dollars, private investment in 2009 has only been at about the same level as the bottom of the last recession eight years ago (BEA Table 1.1.5).
Figure 2 has the same data in real 2005 dollars (BEA Table 1.1.6). It shows that private investment is stuck in a rut at about 17 percent below the lowest level reached at the bottom of the last recession.
We Should All Pay for Cal Athletics!
You might recall that a few weeks ago University of California at Berkeley Chancellor Robert Birgeneau co-authored a Washington Post op-ed calling on the federal government to provide direct support — meaning taxpayer dollars — to select public universities. Birgeneau decried decades of “material and progressive disinvestment by states in higher education,” despite, as I pointed out, no such disinvestment actually occurring.
Well now we know where much of the precious investment in Cal was going — to subsidize sports. According to Inside Higher Ed, over just the past few years Berkeley has provided tens-of-millions of dollars in subsidies and loan forgiveness to its sports programs, which are supposed to be self-supporting.
Now, the whole college athletics undertaking is one that deserves lots of scrutiny for its subsidies and excesses. Cal is certainly not alone in this. But for Birgeneau to take to the pages of the Washington Post, cry poverty, and call for the nation’s taxpayers to foot his school’s bills while he quietly pushes millions of dollars to water polo, rugby, golf, and sundry other sports? That takes a lot of gall. Of course, rent-seeking gall is not in short supply when it comes to higher education.
Thankfully, at least this time it looks like the arrogant aggressiveness is going to backfire. Birgeneau is scrambling, and seems doomed to be thrown for a loss.
Filed under: Education and Child Policy; Tax and Budget Policy
Putting Private Insurance Out of Business
Over at Think Progress, Matt Yglesias takes me to task for saying that the so-called public option in the House’s health care bill “would all but eliminate private insurance and force millions of Americans into a government-run system.”
Yglesias apparently still buys into the myth that the public option is, well, an option.
For people who receive health insurance through their employers, which is to say the vast majority of the Americans who currently have health insurance, the House bill would change very little. Or, rather, the biggest change would simply be the confidence that if, in the future, you cease to get health insurance from your employer (maybe you’ll lose your job or want to change jobs) that you’ll still be able to get health care. What’s more, of the minority of Americans who would be getting health care through the new “exchange,” the majority will probably sign up for private health insurance and everyone will have the option of doing so. If the government-run public plan is, for whatever reason, vastly more appealing than the private options then it will dominate. But if you believe the government can’t run health care well, there’s no reason to think that will happen. Whatever you think of that, though, the basic fact is that even if the public option does dominate the exchange most people will still have private employer-provided insurance.
That might be true if the new government-run program were going to compete on anything close to a level playing field. But, because the public option is ultimately supported by the taxpayers, the playing field can never be level. True, the bill does say that the new program is supposed to be self-sustaining, covering administrative and benefit costs entirely out of premium revenues. But remember that Medicare Part B was originally supposed to support 50 percent of its costs through premiums. That has shrunk to the point where premiums pay for less than 25 percent of the program’s cost.
And the government has a myriad of ways to prevent the true cost of the program from showing up in premium prices. For example, the government-run plan will not have to pay state or federal taxes, and unlike private insurance plans, who can be sued in state courts, the government-run plan could only be sued in federal court.
At the very least, the program carries with it an implicit guarantee against future losses. Suppose the public option prices its products too low and loses money. Can you imagine that Congress is simply going to let it go bankrupt, go out of business? Would a Congress that has bailed out banks and automobile companies because they are “too big to fail” resist subsidizing the government’s insurance plan if it began to lose money? Even without the actual bailout, such an implicit guarantee has a value. For example, the implicit guarantees behind Fannie Mae and Freddie Mac were estimated to have saved those institutions $6 billion per year.
All of this means that the government-run plan would be significantly cheaper than private insurance, not because it would out-compete private insurance or because it was more efficient, but because it had unfair advantages. The lower cost means that businesses, in particular, would have every incentive to dump workers from their current health insurance plan into the government plan. And, if other provisions of the bill make insurance more expensive, as is likely, the incentive for employers to shift workers to the government plan would be even greater. Estimates suggest that nearly 90 million workers could eventually be forced into the government plan.
As Robert Samuelson, dean of economic columnists, writes in the Washington Post, “a favored public plan would probably doom today’s private insurance.”
Samuelson is right. There is nothing “optional” about a public option. And that is just the way the Left wants it.
VOIP News: Cato Is Tops! But Let’s Clarify Something
Though I hadn’t heard of it before, I was delighted to see a publication called VOIP News cite the Cato Institute as one of 15 “Greatest Enemies of Net Neutrality.” As VOIP News says, we are indeed a “voice of reason during political debates.”
Alas, I’m selectively quoting. What they actually said, snidely, was that Cato is a “hired voice of reason during political debates, because of its pseudo-academic affiliations.” (I don’t know why they italicized “voice of reason” – I always thought Reason was the voice of reason.)
But my selective quotation is as accurate as the selective research that VOIP News did for this fluffy hit piece. You see, Cato recently published a lengthy paper that articulates the benefits of net neutrality (referred to as the end-to-end principle).
Where do you find that in the paper? Here’s the first paragraph of the executive summary:
An important reason for the Internet’s remarkable growth over the last quarter century is the “end-to-end” principle that networks should confine themselves to transmitting generic packets without worrying about their contents. Not only has this made deployment of internet infrastructure cheap and efficient, but it has created fertile ground for entrepreneurship. On a network that respects the end-to-end principle, prior approval from network owners is not needed to launch new applications, services, or content.
The paper expresses well-founded concerns about net neutrality regulation—taking a good engineering practice and making a mandate of it for lawyers and bureaucrats to implement. From the executive summary’s third paragraph:
New regulations inevitably come with unintended consequences. Indeed, today’s network neutrality debate is strikingly similar to the debate that produced the first modern regulatory agency, the Interstate Commerce Commission. Unfortunately, rather than protecting consumers from the railroads, the ICC protected the railroads from competition by erecting new barriers to entry in the surface transportation marketplace. Other 20th-century regulatory agencies also limited competition in the industries they regulated. Like these older regulatory regimes, network neutrality regulations are likely not to achieve their intended aims.
It’s tough sledding, working through most of a one-page executive summary. But many publications go that far in researching the pieces they publish.
I do sincerely appreciate the nod to our prominence in this debate. I hope VOIP News does a better job of portraying where we stand and why in the future.
Filed under: Cato Publications; Telecom, Internet & Information Policy
Cause for Alarm in Iraq, or Just a Ripple?
Najim Abed al-Jabouri, former mayor of Tal Afar, has a piece in the Times that seems like cause for alarm:
Both the military and the police remain heavily politicized. The police and border officials, for example, are largely answerable to the Interior Ministry, which has been seen (often correctly) as a pawn of Shiite political movements. Members of the security forces are often loyal not to the state but to the person or political party that gave them their jobs.
The same is true of many parts of the Iraqi Army. For example, the Fifth Iraqi Army Division, in Diyala Province northeast of Baghdad, has been under the sway of the Islamic Supreme Council of Iraq, the Shiite party that has the largest bloc in Parliament; the Eighth Division, in Diwaniya and Kut to the southeast of the capital, has answered largely to Dawa, the Shiite party of Prime Minister Nuri Kamal al-Maliki; the Fourth Division, in Salahuddin Province in northern Iraq, has been allied with one of the two major Kurdish parties, the Patriotic Union of Kurdistan.
More recently, the Iraqi Awakening Conference, a tribal-centric political party based in Anbar Province (where Sunni tribesmen, the so-called Sons of Iraq, turned against the insurgency during the surge) has gained influence over the Seventh Iraq Army Division, which was heavily involved in recruiting Sunnis to maintain security in 2006.
Hadi Mizban/Associated Press
Now, via Spencer Ackerman, we find out that there may be support for al-Jabouri’s fear that “these political schisms are partly responsible for coordinated terrorist attacks like those on Sunday or the so-called Bloody Wednesday bombings of Aug. 19, which killed more than 100.” 61 Iraqi army and police officers were just arrested in connection with Sunday’s blasts, part of the effects of which you see over there on the side of the post.
Another Education Road Sign Screaming “Stop!”
This morning the National Center for Education Statistics released a new report, Mapping State Proficiency Standards Onto NAEP Scores: 2005-2007. What the results make clear (for about the billionth time) is that government control of education has put us on a road straight to failure. Still, many of those who insist on living in denial about constant government failure in education will yet again refuse to acknowledge reality, and will actually point to this report as a reason to go down many more miles of bad road.
According to the report, almost no state has set its “proficiency” levels on par with those of the National Assessment of Educational Progress (NAEP), the so-called “Nation’s Report Card.” (Recall that under No Child Left Behind all children are supposed to be “proficient” in reading and math by 2014.) Most, in fact, have set “proficiency” at or below NAEP’s “basic” level. Moreover, while some states that changed their standards between 2005 and 2007 appeared to make them a bit tougher, most did the opposite. Indeed, in eighth grade all seven states that changed their reading assessments lowered their expectations, as did nine of the twelve states that changed their math assessments.
Many education wonks will almost certainly argue that these results demonstrate clearly why we need national curricular standards, such as those being drafted by the Common Core State Standards Initiative. If there were a national definition of “proficiency,” they’ll argue, states couldn’t call donkeys stallions. But not only does the existence of this new report refute their most basic assumption – obviously, we already have a national metric — the report once again screams what we already know: Politicians and bureaucrats will always do what’s in their best interest — keep standards low and easy to meet – and will do so as long as politics, not parental choice, is how educators are supposed to be held accountable. National standards would only make this root problem worse, centralizing poisonous political control and taking influence even further from the people the schools are supposed to serve.
Rather than continuing to drive headlong toward national standards — the ultimate destination of the pothole ridden, deadly, government schooling road – we need to exit right now. We need to take education power away from government and give it to parents. Only if we do that will we end hopeless political control of schooling and get on a highway that actually takes us toward excellent education.
Filed under: Education and Child Policy; General; Government and Politics
Thursday Links
- A Financial Super-Regulator: The dangers of giving the Fed too much power.
- The financial regulators’ pipe dream: “Most new regulation will do nothing to limit crises because markets will innovate around it. Worse, some regulation being considered by Congress will guarantee bigger and more frequent crises.”
- The shape of things to come? More war will come before peace in the Middle East, says journalist and foreign affairs analyst Leon Hadar.
- The illegal cigarette trade in Ireland reaches “epidemic proportions“ after the government imposes draconian regulations on tobacco products.
- Podcast: “Too Big to Fail Is Just Too Big“
Why National Democrats are Like Wile E. Coyote
Illinois state senator James Meeks, an African American Democrat and long-time opponent of school choice, just switched sides.
In doing so, he swells the small but growing ranks of Democrats in Florida, New Jersey, and the nation’s capital, among others, who support giving parents an easy choice between public and private schools.
Like Wile E. Coyote, national Democrats have run off a political cliff in their reflexive opposition to educational freedom. And like Wile, they’re experiencing a temporary suspension of the law of gravity — not yet suffering for their mistake.
But we all know that the cloud at Wile’s feet eventually dissipates, and he realizes that he’s no longer on solid ground. By then, it’s too late.
As someone much happier under divided government than one party rule, I hope national Democratic leaders get a clue, and notice that the’ve left solid ground on education. There is still time for Obama and company to make it back to the cliff’s edge, calling for the expansion rather than the termination of DC’s K-12 scholarship program, and voicing support for education tax credits at the state level, as many of the party’s state leaders have already done.
States are going to continue passing and expanding private school choice programs with or without the support of national Democrats. If president Obama and friends continue clinging to the anvil of government schooling while that happens, we all know how it’s going to turn out.
Beep. Beep.
(HT: Alexander Russo)
Feds Giveth Jobs & Cars, Then Taketh Away Again
The bad news this morning on the impact of both the federal stimulus and the Cash for Clunkers program should not come as a surprise to anyone who has paid attention to the history of government intervention in the economy.
New data that the jobs created by the stimulus have been overstated by thousands is compelling, but it’s really a secondary issue. The primary issue is that the government cannot “create” anything without hurting something else. To “create” jobs, the government must first extract wealth from the economy via taxation, or raise the money by issuing debt. Regardless of whether the burden is borne by present or future taxpayers, the result is the same: job creation and economic growth are inhibited.
At the same time the government is taking undeserved credit for “creating jobs,” a new analysis of the Cash for Clunkers program by Edmunds.com shows that most cars bought with taxpayer help would have been purchased anyhow. The same analysis finds the post-Clunker car sales would have been higher in the absence of the program, which proves that the program merely altered the timing of auto purchases.
Once again, the government claims to have “created” economic growth, but the reality is that Cash for Clunkers had no positive long-term effect and actually destroyed wealth in the process.
Right now businesses and entrepreneurs are hesitant to make investments or add new workers because they’re worried about what Washington’s interventions could mean for their bottom lines. The potential for higher taxes, health care mandates, and costly climate change legislation are all being cited by businesspeople as reasons why further investment or hiring is on hold. Unless this “regime uncertainty” subsides, the U.S. economy could be in for sluggish growth for a long time to come.
For more on the topic of regime uncertainty and economic growth, please see the Downsizing Government blog.
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