Quote of the Day

Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn’t have a surplus, then it must come from taxes. If taxes don’t go up, then it must come from increased borrowing. If lenders won’t lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.

Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.

~Peter Schiff in today’s WSJ

Political Theater

Don Boudreaux

Here’s a letter of mine appearing in today’s Washington Times:

I agree with every sentence of Steve Chapman’s essay on Barack Obama save this one: “But Mr. Obama came to public attention because of a speech, at the 2004 Democratic convention, that showed he was capable not only of a clear thought but of genuine passion” (“a ‘My Pet goat moment,” Commentary, Wednesday).

The most we can conclude from that speech is that Mr. Obama is capable of displaying passion that appears genuine to audiences longing to hear it, much like a soap-opera star is capable of displaying passion for an actress whom that star might hold in utter contempt the moment the tape stops rolling.

Let’s not confuse theater with reality.

DONALD J. BOUDREAUX
Chairman
Economics Department
George Mason University
Fairfax

Madoff Scandal

2_63_madoff_bernard01Kurt Bouwhuis, Mackinac Center Intern

The following is the best description I could find regarding the Madoff Scandal:

Madoff was arrested on one charge of securities fraud Thursday and released on $10 million bail. He faces up to 20 years in jail in what authorities say was “a giant Ponzi scheme.” Such a scheme can involve taking investments from clients, spending the money on yourself and repay the clients out of other clients’ accounts.” – Foxnews.comFull article Here.

Are Politicians Like Santa Clause?

This is a portion of a post from the SFE blogger Isaac Morehouse.  Full post located here.

“…We demand to be promised a world without risk and without failure; interest rates that constantly fall and house and stock prices that constantly rise – as well as wages, but not CEO wages or profits.  These are mutually incompatible goals.  They are impossible to achieve.  Yet we demand that our politicians promise them and “do something” about them.  We might as well ask that they make it rain more and less at the same time.  Not only are they incapable of doing it, even if they could the goals are not realizable at the same time.”

Harsanyi on the Czar

“Many people are asking: Why can’t these companies go bankrupt and
reorganize like everyone else? In bankruptcy court, the process allows
the auto industry to negotiate with creditors, stakeholders and
unions.

Well, the auto industry spent nearly $50 million lobbying Congress in
the first nine months of this year while unions spent hundreds of
millions to put Democrats in Washington. Those are two reasons.”

Great Post from Cafe Hayek

What Deregulation?

Kurt Bouwhuis, Mackinac Center Intern

The Federal Register, which lists new regulations, averaged 72,844 pages annually during the Carter years from 1977 to 1980. These were presumably, by Pearlstein’s 25-year standard, the last time before now that Americans didn’t have “faith” in open, unregulated markets. Then the average fell to 54,335 during the Reagan years, rose to 59, 527 during the Bush I years, to 71,590 during the Clinton years, and, finally, to a record 75,526 during the administration of that great believer in laissez-faire, George W. Bush.

This is from the article entitled Are We Ailing from Too Much Deregulation? by David R. Henderson

Cars Might Disappear (like airplanes did)

1215airplanesJack McHugh with a sober reminder: and the SFE Blog

“So we must provide a bailout because a GM bankruptcy would make the US auto industry evaporate. Just like airline bankruptcies wiped out air travel in the U.S.

Younger readers may not remember the time before the airline bankruptcies, when anyone could go to an airport, get on a big powerful jetliner, and travel anywhere in the world in a matter of hours. The skies were filled with those jets, taking millions of people hither and yon at great speed and convenience.

Of course, that’s all gone now. Since the airline bankruptcies it’s become a quieter world, with only the occasional military aircraft visible in the skies. Our horizons have narrowed considerably, limited as we are to slow cross-country travel by automobile, and on ships to different continents. Sadly, soon the cars will go away also, and we’ll return to duller lives in which most people never travel more than 20 miles beyond their home village.

~~~~~~~

Too bad the government doesn’t create a process by which companies that can’t pay their bills could get temporary protection from creditors, contingent on their fixing the problems that got them in trouble in the first place. I suppose federal courts could oversee the process. It would allow those companies to actually come out not just with clean balance sheets, but better able to compete in their markets. Ah well – maybe in the old days our government would have been able a create a common-sense process like that, but of course those days have passed.

Oh, wait a minute . . .”

Lawrence Reed on the Great Depression

greatmyths-cvrKurt Bouwhuis, Mackinac Center Intern

Did FDR prolong or save us from the Great Depression?

On Nov. 27, 2008, Lawrence Reed, president emeritus of the Mackinac Center, was interviewed on “The Mike Rosen Show” on KOA in Denver, Colo. The show’s guest host that day was Jon Caldara, president of the Independence Institute. Reed discussed his monograph “Great Myths of the Great Depression” and how it relates to today’s discussion of government over-regulation and financial bailouts. The interview is 43 minutes and 38 seconds.

Audio file located here.


Boudreaux on GM Execs Arrogant Stupidity

Dear Editor:

Detroit auto executives advocate “government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover” (”GM exec: bankruptcy not an option for industry,” December 3).

I remind these executives that each American is already perfectly free and able, with no action from government, to “get a stake” in these companies.  Of course, few Americans now choose to do so – a fact that reflects the considered judgment of millions of people that these companies are unworthy recipients of investment funds.  If millions of investors, spending their own money, refuse to invest in GM, Ford, and Chrysler, why should Congress force them to make such investments?  Why should we trust that Congress will make wiser investment decisions with other people’s money than these people themselves make with their own money?

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

Time for Reflection: “The Unity of the People”

by Mario Rizzo at ThinkMarkets

After most presidential elections in recent years there is talk of uniting the country, somehow overcoming differences and working for the betterment of the nation. This is a dangerous idea if it is taken seriously.

In a (classical) liberal society with a minimal state this ideal is a real and benign possibility. This is because in such a society government restricts its activities to those that benefit each and all. Although people naturally differ in their priorities — the goals for their lives, how they wish to allocate their incomes, how they conceive of happiness, and their personal moral codes — they do have one interest in common. This is the preservation and enhancement of a system of voluntary social cooperation.

Social cooperation is the great means by which each of us can attain, or strive to attain, our diverse individual goals. We do this by helping other people attain their individual goals through exchange. So a system of social cooperation does not eradicate individual differences. It does not seek to unite people in a single hierarchy of purposes to better the nation. It certainly does not require people to agree on what “betterment” means.

A system of social cooperation is an abstract and complex order that is maintained by a framework of rules. These are the ones familiar to classical liberals: mainly, property, contract and protection of the individual’s physical integrity. (Classical liberals do have disagreements about the need for rules outlawing anticompetitive behavior and for policies dealing with external effects and public goods. But even here the implicit theory is the benefit of each and all.)

Social cooperation in a liberal order is not limited to market exchanges but finds manifestation in all of the voluntary institutions of civil society including those of the nuclear or extended family. Many of these have the character of reciprocity even if the agents are not conscious of it. For example, friends may each gratuitously offer moral support to the other in times of need. But if one friend continually refused to reciprocate the relationship would end.

The statist-liberal insistence on agreement at the level of national purposes is destructive of freedom because it moves beyond the realm in which people have common economic or moral goals. The idea of national purpose does not rest on pre-existing common values and goals but on the political suppression of individual differences.

To illustrate: Do we, as a Nation, “think” that We ought to save more? Or that We ought to increase public borrowing for economic stimulus? Do We believe that government (taxpayers’) resources ought to be injected into failing American automobile manufacturers? Should more money go, instead, to save homeowners from foreclosures? Should more money be sent to save starving children in Africa?

The simple answer is: The questions are senseless. We all don’t have the same priorities. The idea of a Nation’s priorities among these options is a fiction designed to give the impression that the political system expresses some inner national character or some rational assessment of alternatives. Moreover, no one can seriously claim that there is some objective morality that will enable us to order uniquely these alternatives in a way that commands our assent. Once we leave the realm of those relatively few rules that sustain social cooperation – those that benefit each and all – we enter a world in which political priorities are set by special interests motivated by their partiality and avidity. In this world what counts is the political manipulation of the hapless guy.

You Better Not Oppose Regulation

Kurt Bouwhuis, Mackinac Center Intern

scary11scary2These screen shots were pulled off of the CNN website.  I am hoping “held accountable” means nothing more than questioned.  It seems odd to say that if you oppose regulation, you should be held accountable.  What if it were proven that regulation caused our financial crisis?  Should those who advocated regulation be held accountable?

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