Government – Page 116 – artdiamondblog.com

“How Do We Get on the Special Interests, Special Treatment Bandwagon?”

Uncreative destruction. “Jose Luis Garcia pours sodium silicate into a junkyard car engine to render it inoperable at a lot in Sun Valley, Calif., on Tuesday. The process destroys the car’s engine in a matter of minutes.” Source of photo and part of caption: online version of the WSJ article quoted and cited below.

(p. A4) WASHINGTON — Who doesn’t like the government’s “cash for clunkers” program? Your mechanic, for one.

Owners of automotive repair shops say the program to help invigorate sales of new cars is succeeding at their expense.
Bill Wiygul, whose family owns four repair shops in Virginia, said he has already had five or six customers decide against repairs. A man who sits on the board of Mr. Wiygul’s bank traded in his car rather than repair it. “He’d been a customer at our Reston store since it opened,” Mr. Wiygul said.
The clunkers program, formally known as the Car Allowance Rebate System, offers subsidies of as much as $4,500 to consumers who trade in older vehicles and buy new, more fuel-efficient models. The program was initially given $1 billion. That money was spent in one week.
The Senate reached a deal to extend the clunkers program Wednesday night, agreeing to vote on a measure Thursday that would add $2 billion to the program, the Associated Press reported.
The House approve a $2 billion extension last week.
For Mr. Wiygul and other mechanics, until now the recession has brought them more customers as people fixed cars rather than go into debt for new ones. He has hired five people and is expanding one of the shops.
Auto dealers who offer the rebates on new cars in exchange for clunkers must agree to “kill” the old models by disabling the engines and shipping the dead vehicle to a junkyard.
The loss of such potential work — as many as 250,000 vehicles will be destroyed in the program’s first round — prompted Mr. Wiygul to question the federal program’s focus on dealers and big business at the expense of the little guy.
“How do we get on the special interests, special treatment bandwagon? How much is it going to cost me and to whom shall I send the check?” he said. “Who picks the winners in this game ’cause obviously the game is fixed.”

For the full commentary, see:
GARY FIELDS. “Clunkers Plan Deflates Mechanics.” The Wall Street Journal (Thurs., AUGUST 6, 2009): A4.

Huge Increase in Money Supply Increases Odds of Inflation

Source of graph: online version of the WSJ article quoted and cited below.

(p. A15) . . . , starting in early September 2008, the Bernanke Fed did an abrupt about-face and radically increased the monetary base — which is comprised of currency in circulation, member bank reserves held at the Fed, and vault cash — by a little less than $1 trillion. The Fed controls the monetary base 100% and does so by purchasing and selling assets in the open market. By such a radical move, the Fed signaled a 180-degree shift in its focus from an anti-inflation position to an anti-deflation position.

The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart nearby). It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless. The currency-in-circulation component of the monetary base — which prior to the expansion had comprised 95% of the monetary base — has risen by a little less than 10%, while bank reserves have increased almost 20-fold. Now the currency-in-circulation component of the monetary base is a smidgen less than 50% of the monetary base. Yikes!
. . .

With an increased trust in the overall banking system, the panic demand for money has begun to and should continue to recede. The dramatic drop in output and employment in the U.S. economy will also reduce the demand for money. Reduced demand for money combined with rapid growth in money is a surefire recipe for inflation and higher interest rates. The higher interest rates themselves will also further reduce the demand for money, thereby exacerbating inflationary pressures. It’s a catch-22.
It’s difficult to estimate the magnitude of the inflationary and interest-rate consequences of the Fed’s actions because, frankly, we haven’t ever seen anything like this in the U.S. To date what’s happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn’t a pretty picture.

For the full commentary, see:
ARTHUR B. LAFFER. “Get Ready for Inflation and Higher Interest Rates; The unprecedented expansion of the money supply could make the ’70s look benign.” The Wall Street Journal (Weds., June 10, 2009): A15.
(Note: ellipses added.)

“The Voluntary Slaves of a ‘Compassionate’ Government”

Thomas Szaz has been defending liberty for many decades. It is good to see him still eloquently at it:

(p. A13) If we persevere in our quixotic quest for a fetishized medical equality we will sacrifice personal freedom as its price. We will become the voluntary slaves of a “compassionate” government that will provide the same low quality health care to everyone.

For the full commentary, see:
THOMAS SZASZ. “Universal Health Care Isn’t Worth Our Freedom.” Wall Street Journal (Weds., JULY 15, 2009): A13.

Penn Government Protects Us from “Little Old Ladies Baking Pies”

“After a state crackdown forbidding the sale of homemade pies, members of St. Cecilia Catholic Church in Rochester, Pa., proceeded with their annual Lenten fish fries anyway. The pie flap helped draw healthy crowds.” Source of photos and caption: online version of the WSJ article quoted and cited below.

(p. A1) ROCHESTER, Pa. — On the first Friday of Lent, an elderly female parishioner of St. Cecilia Catholic Church began unwrapping pies at the church. That’s when the trouble started.

A state inspector, there for an annual checkup on the church’s kitchen, spied the desserts. After it was determined that the pies were home-baked, the inspector decreed they couldn’t be sold.
“Everyone was devastated,” says Josie Reed, a 69-year-old former teacher known for her pumpkin and berry pies.
. . .

The disappearance of Mary Pratte’s coconut-cream pie, Louise Humbert’s raisin pie and (p. A10) Marge Murtha’s “farm apple” pie from the fish-fry fund-raisers sparked an uproar that spread far beyond the small parish.
. . .

(p. A10) The ruckus at St. Cecilia’s could lead to changes in Pennsylvania state law. State Sen. Elder Vogel Jr. has drafted legislation aimed at allowing nonprofits, including churches, to serve food prepared at home. That would cover fish fries held during Lent. “Once again, you’ve got the heavy hand of government coming in,” he says. “These ladies bake pies, out of the goodness of their hearts.”
Sen. Vogel, who sits on the state legislature’s agriculture committee, says state officials seem willing to change the law. “They have more work on their hands than going after little old ladies baking pies.”
The inspector’s warning to St. Cecilia’s carried no fine. But the inspector has raised some hackles by telling the women that the state would allow them to bake pies for sale in their own kitchens, if they paid $35 to have them inspected as well.
“Well, that’s just ridiculous,” says Ms. Humbert, 73, one of the parish bakers. She has been bringing raisin pies to the church for more than a decade and says she thought the women’s kitchens “are probably a lot cleaner than some restaurants,” but might not meet “nitpicky” requirements.
Ms. Pratte, 88, has been attending St. Cecilia’s since she was a girl. She missed a step and spent two and a half weeks in the hospital earlier this year. She said it would be “kind of hard” to get to the church to do any baking. “I’d rather just make them at home,” she says of her coconut-cream pies. Others say it’s difficult to bake good pies in a strange oven.
Thanks to the publicity caused by the crackdown, the St. Cecilia’s fish fries attracted more visitors than ever before.

For the full story, see:
KRIS MAHER. “Pennsylvania Pie Fight: State Cracks Down on Baked Goods; Inspector Nabs Homemade Desserts At St. Cecilia Church’s Lenten Fish Fry.” The Wall Street Journal (Fri., APRIL 10, 2009): A1 & A10.
(Note: ellipses added.)

Economists, Planners and Politicians Inflicted Iatrogenic Illness on Economy

In the passage below, Gilder was writing of the 1970s, 1980s and 1990s. But sadly, iatrogenic illness is of more than mere historical interest.

(p. 49) In recent decades, the U.S. economy has suffered from a combination of hypochondria and iatrogenic illness. The hypochondria stems from spurious statistics and deceptive anecdotes and erroneous theories of American decline. It results in a period of fear and anxiety, propagated by the media, measured in public opinion polls, and enhanced by alarmist demagoguery. Iatrogenic illnesses are diseases caused by the doctor–in this instance by hundreds of economic Ph.D.s, government planners, and politicians who have responded to the pangs of hypochondria by inflicting thousands of real cuts on the entrepreneurs who make (p. 50) the economy go, as if, like the physicians of the Middle Ages, the experts believe in bleeding the patient as a way of restoring him to productive health.

Source:
Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

Amazon Rebels Against Hawaii Tax

After Amazon’s rebellion, summarized in the quote below, the Governor of Hawaii vetoed the tax, and Amazon has now invited its former affiliates to rejoin the program.
Lesson: sometimes entrepreneurial enterprise can fight the government, and win.

(p. B7) Amazon.com Inc. has informed its marketing affiliates in Hawaii that it is ending its business with them to avoid collecting sales tax in the state.

Lawmakers in Hawaii, following in the footsteps of North Carolina and Rhode Island, have passed legislation that would require companies to collect sales tax if they have marketing affiliates in the state. Affiliate marketers run blogs or Web sites and get a sales commission by featuring links to outside e-commerce sites.

For the full story, see:
GEOFFREY A. FOWLER. “Amazon Cuts Ties to Affiliates in Hawaii.” Wall Street Journal (Weds., JULY 1, 2009): B7.

Democrats Continue Earmarks for Those Who Donated to Their Campaigns

(p. A5) WASHINGTON — A House panel approved a big Pentagon spending bill this week that included nearly 150 items tucked in by lawmakers on behalf of companies and other entities whose employees donated to their campaigns.

The Democratic Congress and President Barack Obama swept into power on a promise to reform the process of lawmakers trying to dictate in detail how funds are spent, known as “earmarks.” When Mr. Obama signed a spending bill for the current fiscal year in March, he said the earmark-laden legislation should be an “end to the old way of doing business, and the beginning of a new era of responsibility and accountability.”
But as lawmakers work their way through spending bills for the next fiscal year, which begins Oct. 1, earmarks appear alive and well — including those written for companies, foundations, and universities whose employees and political-action committees gave money to the campaigns of congressmen doing the earmarking.
The $636.3 billion 2010 defense-spending bill passed Wednesday by the House Appropriations Committee includes more than 1,100 earmarks, totaling more than $2.7 billion.
Members of the Defense Appropriations Subcommittee — the 18 members of Congress who wrote the bill — secured a total of 148 earmarks worth $461 million for entities whose employees have given $822,765 in campaign donations to those lawmakers since 2007. The data were compiled by the nonpartisan Taxpayers for Common Sense, which analyzed nearly 400 earmarks.

For the full story, see:
JAKE SHERMAN. “Bill Shows Earmarks Are Alive and Well.” Wall Street Journal (Sat., JULY 25, 2009): A5.

Property Rights Would Allow American Indians to Prosper

(p. A19) President Barack Obama courted the Indian vote. During the campaign, he visited Montana’s Crow Reservation last May and was adopted into the tribe under the Crow name “One Who Helps People Throughout the Land.” There he said, “Few have been ignored by Washington for as long as Native Americans,” and vowed to improve their economic opportunities, health care and education.

Two vital steps in this direction are to strengthen property rights and the rule of law on reservations. Virtually every study of international development shows that both of these are crucial to prosperity. Indian country is no different. The effect of insecure property rights is evident on a drive through any western reservation. When you see 160 acres overgrazed and a house unfit for occupancy, you can be sure the title to the land is held by the federal government bureaucracy.
. . .

My own research, published in the Journal of Law and Economics, shows that for tribes with state jurisdiction, per capita income grew 20% faster between 1969 and 1999 than for their counterparts under tribal court jurisdiction. All Indians are less likely than whites to get home loans, but the likelihood of a loan rejection falls by 50% on reservations under state jurisdiction.
. . .

Mr. Obama’s rallying cry was “change,” and that is exactly what he needs to bring about in Indian policy. The first Americans deserve to be freed from the bureaucratic shackles that have made them victims, and allowed to establish property rights and legal systems that can make them victors.

For the full commentary, see:
TERRY L. ANDERSON. “OPINION; Native Americans Need the Rule of Law.” The Wall Street Journal (Mon., MARCH 16, 2009): A19.
(Note: ellipses in original.)

“It Is No Time to Concede”

Gary Becker. Source of caricature: online version of the WSJ interview quoted and cited below.

(p. A9) “What can we do that would be beneficial? [One thing] is lower corporate taxes and businesses taxes and maybe taxes in general. Particularly, you want to lower the tax on capital so you raise the after-tax return to investing and get more investing going on.”
. . .
What Mr. Becker has seen over a career spanning more than five decades is that free markets are good for human progress. And at a time when increasing government intervention in the economy is all the rage, he insists that economic liberals must not withdraw from the debate simply because their cause, for now, appears quixotic.
As a young academic in 1956, Mr. Becker wrote an important paper against conscription. He was discouraged from publishing it because, at the time, the popular view was that the military draft could never be abolished. Of course it was, and looking back, he says, “that taught me a lesson.” Today as Washington appears unstoppable in its quest for more power and lovers of liberty are accused of tilting at windmills, he says it is no time to concede.

For the full interview, see:
MARY ANASTASIA O’GRADY. “OPINION: THE WEEKEND INTERVIEW; Now Is No Time to Give Up on Markets.” The Wall Street Journal (Sat., MARCH 21, 2009): A9.
(Note: ellipsis added.)

Gary Becker. Source of photo: http://larryevansphotography.com/Gary%20Becker_2.jpg

“Eminent Domain as an Instrument Against the Weak”

Source of book image: http://www.dichosbooks.com/images/33353510.jpg

(p. A13) Roughly 70% of Americans own their own homes, a statistic that goes a long way toward explaining why the Supreme Court’s ruling in 2005 in Kelo v. City of New London was so widely reviled. Before Kelo, most Americans probably took it for granted that their home was their castle, protected by the Constitution from arbitrary seizure by government. The Fifth Amendment’s takings clause says: ” . . . nor shall private property be taken for public use, without just compensation.”

In Kelo, a majority of five justices came up with an extremely broad interpretation of “public use.” The high court’s four liberal members, joined by the ever-changeable Anthony Kennedy, ruled that government has the right to seize a private home for virtually any purpose — including handing it over to private developers.
. . .
“Little Pink House” is a modern morality tale. It shows how the politically powerful can use eminent domain as an instrument against the weak. Justice Sandra Day O’Connor said it best in her dissent in Kelo: “The fallout from this decision will not be random.” She predicted that “the government now has license to transfer property from those with fewer resources to those with more.” The beneficiaries, she wrote, are likely to be those citizens “with disproportionate influence and power in the political process.”
Owning property is one of Americans’ most basic constitutional rights. It’s too bad Susette Kelo didn’t get to exercise hers.

For the full review, see:
MELANIE KIRKPATRICK. “Bookshelf; Evicted, But Not Without a Fight; The government took her home. The Supreme Court approved.” Wall Street Journal (Mon., Jan. 26, 2009): A13.
(Note: ellipsis in first paragraph quote was in original; ellipsis between paragraphs was added.)

The book being reviewed, is:
Benedict, Jeff. Little Pink House. New York: Grand Central Publishing, 2009.

Obama EPA Censors Global Warming Skeptic

“Alan Carlin, 35-year Environmental Protection Agency veteran.” Source of caricature and caption: online version of the WSJ article quoted and cited below.

(p. A11) In March, the Obama EPA prepared to engage the global-warming debate in an astounding new way, by issuing an “endangerment” finding on carbon. It establishes that carbon is a pollutant, and thereby gives the EPA the authority to regulate it — even if Congress doesn’t act.

Around this time, Mr. Carlin and a colleague presented a 98-page analysis arguing the agency should take another look, as the science behind man-made global warming is inconclusive at best. The analysis noted that global temperatures were on a downward trend. It pointed out problems with climate models. It highlighted new research that contradicts apocalyptic scenarios. “We believe our concerns and reservations are sufficiently important to warrant a serious review of the science by EPA,” the report read.
The response to Mr. Carlin was an email from his boss, Al McGartland, forbidding him from “any direct communication” with anyone outside of his office with regard to his analysis. When Mr. Carlin tried again to disseminate his analysis, Mr. McGartland decreed: “The administrator and the administration have decided to move forward on endangerment, and your comments do not help the legal or policy case for this decision. . . . I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office.” (Emphasis added.)
Mr. McGartland blasted yet another email: “With the endangerment finding nearly final, you need to move on to other issues and subjects. I don’t want you to spend any additional EPA time on climate change. No papers, no research etc, at least until we see what EPA is going to do with Climate.” Ideology? Nope, not here. Just us science folk. Honest.

For the full commentary, see:

KIMBERLEY A. STRASSEL. “OPINION: POTOMAC WATCH; The EPA Silences a Climate Skeptic.” The Wall Street Journal (Fri., JULY 3, 2009): A11.
(Note: ellipsis in original; italics added by Strassel.)