Economic Growth

I was honored to learn this morning that The Village Voice had included me in their listing of the "10 Worst Rightblogger Ideas of 2016."

Here’s a link to the piece, and here’s the money quote:

“Local control is not a trump card that allows municipalities to restrict economic freedom,” declaimed Tom Giovanetti at the Institute for Policy Innovation. Get outta here with this “consent of the governed” bullshit — we’re talking about money!

The macro context here is what Village Voice views as those nutjob libertarians and their insistence on economic freedom, and the micro context is the debate over cities like Austin, Texas regulating Uber out of the city. Village Voice sees this as democracy in action, of course, while I see it as the tyranny of the majority infringing on the economic freedom of the average guy.

Now, I’m being a bit tongue-in-cheek here, of course, but since you know a man by his enemies, I’m delighted that the lefties at the Village Voice find my arguments to be ridiculous.

In a few weeks we have another policy change coming out of Washington—this time new regulations on money market funds—that seems almost intentionally designed to cause harm to the private sector and to slow economic growth. I’m starting to wonder whether this is simply more Big Government incompetence or something more insidious?

I tend to attribute most failures of government to ineptitude rather than conspiracy. There’s no reason to think the average government employee is any wiser or more knowledgeable than the average person in the private sector—in fact, there’s every reason to believe otherwise, since various federal protections make it harder to weed out incompetent federal employees.

But suppose for a moment that I am wrong—that at the highest levels of the most important federal agencies, there are actually devilishly clever people playing the game several moves ahead of the rest of us. Making moves that are vital to the survival of their most cherished and most useful institution—the federal government—regardless of the impact on the American people.

That scenario might be more probable or less probable, depending on your degree of cynicism, but it hinges on a defensible premise—that the interests of the federal government and the interests of the American people are NOT the same thing. The federal government is not a proxy for the country. As Ronald Reagan said in his first inaugural address, “We are a nation that has a government—not the other way around.” It’s said that the smartest thing the Devil ever did was convince people he didn’t exist. Well, the smartest thing the federal government ever did was convince the American people that its interests are their interests. The truth is, the federal government is the most powerful special interest in America.

So if you’re the federal government, what is your greatest threat? Not war or terrorism, because war and terrorism have proven to be windfalls for federal government growth. Almost certainly the single most important institutional concern of the federal government today is managing its own debt, which has risen to an unimaginable $19.4 trillion dollars. Interest alone on the debt is now one of the largest line items in the federal budget, and so servicing its debt and avoiding insolvency is as important to the federal government as it would be to any business or household.

We’re in a political environment right now where, stunningly, in a very short period of time, free trade and the treaties that liberalize trade have gotten a bad rap.

The United States is the cleanest place on earth to refine oil. We have the highest environmental standards, the best technology, and the strongest rule-of-law institutions.

That Canadian oil is going to be refined somewhere. If not in the U.S., it’s going to be refined elsewhere. Contrary to Obama’s implication, that oil is NOT going to remain in the ground.

That means the Keystone XL pipeline was the best option for the environment.  Now that oil will be shipped by rail and by ship, where a spill is more likely and more damaging, where the refining will be more harmful to the environment, and where the jobs and other economic benefits will happen.

Just the latest example of how for liberal-progressivism, symbol is more important than substance. It’s about how it makes liberals feel, now—not about reality or the long-term impact of the policy.

We'll, here's some good news: The House voted today to lift the senseless and outdated ban on U.S. crude oil exports.

And while this may seem like a no-brainer, there are any number of no-brainer pieces of legislation that Congress isn't bothering to move, so this is progress.

There is no argument against allowing U.S. crude oil exports except for an extreme anti-fossil fuels mindset, which is as unrealistic as it is wrong.

Here's a piece written by IPI's Dr. Merrill Matthews on why the ban is outdated and should be repealed.

It's important for the Republican Congress to be passing this kind of commonsense legislation that the majority of the American people support, even if they suspect President Obama is going to veto it.

Let him. Force him to explain his rationale to the American people. Get him on record, and force all other Democratic candidates and elected officials whether they agree with the President or not.

One of the things that is so frustrating people right now is Congresses not bothering to pass good legislation because of the threat of a veto. In this baseball playoff season, Republicans need to stop playing wiffleball and start playing hardball.

You may be victimized today by those who are either economically ignorant or purposefully deceitful into thinking that good employment news was released today. In fact, you might even hear that the Federal Reserve has at last achieved one of its policy mandates of “full employment.”

Now, it’s true that economists do not define full employment as a zero percent unemployment rate. It’s actually impossible to ever reach zero percent unemployment, so economists have typically defined full employment as an unemployment rate of somewhere between 3.5 and 5 percent. [During the Reagan years, full employment was casually considered to be an unemployment rate of around 4 percent.]

So, with today’s announced creation of 173,000 new jobs and an unemployment rate of 5.1 percent, some are celebrating. But they are wrong.

Republicans should enthusiastically support Trade Promotion Authority (TPA). Yes, Obama is mostly right on trade. Even a stopped clock is right twice a day.

This TPA extends past the Obama admin into the next, hopefully Republican, administration. So it's not just for Obama.

"Why not wait until we're sure the next president is a Republican?" some say. Here's the problem: Right now you can peel off a certain number of Dem votes for TPA because it's for a Dem president. If a Republican is president, you'll never get those Dem votes.

Now is the time for TPA. Not just because it's right, but because it's in the strategic interest of the next (hopefully) Republican president as well.

Trade may be the one area in which Congressional Republicans and the president can work together, and Obama has called the Trans Pacific Partnership a high priority that would not only strengthen the U.S. as a leader in the Pacific Rim, but also create jobs, boost investment, and be a boon to small businesses.   

Unfortunately, those of us who support responsible use of innovative energy technologies such as fracking were unable to break through the FUD (fear, uncertainty and doubt) spread by those who were pushing the Denton fracking ban. For various reasons insufficient effort went into addressing the health and environmental concerns of those who are normally in favor of energy production, but who have become fearful from the junk science being peddled by environmental extremists. And so, in Act I, the ban passed by a substantial margin.

Act II begins now, with several lawsuits filed already the day after the election. These lawsuits are not indicators of greed but rather of the very significant legal problems inherent in the ban. Contrary to what some ban proponents have stated, the simple fact that the ban was placed on the ballot does not indicate legal soundness. In fact, the ban is almost certain to be found illegal on multiple fronts—the only question is which set of legal perils prevails first.

Great piece in National Review today by Senator Mike Lee (R-UT) on eliminating the Export-Import Bank.

I couldn't have said it any better, Senator Lee, though I did try.

Several times.

Lots of stories in the news about prices for Super Bowl tickets dropping for various reasons. Here's one.

Believe it or not, there's a policy angle to this: For those of who believe that markets create efficiencies and are the best way to allocate scarce resources, it's important for us to maintain secondary markets for things like event tickets, and to make sure when you buy a ticket, you have the right to resell it.

We wrote a paper on this topic a few months back, which can be found here.

Last night's State of the Union address, which even many among the Talking Left seemed to agree was a pointless execise, struck me as an exercise in misdirection.

The President started off talking about teachers spending extra time with students, autoworkers working hard, farmers, doctors, fathers and mothers and soldiers. The theme seemed to be "the real state of our union is in our hearts," and it was an attempt to divert attention away from real, empirical measurements of how well we're doing, which is pretty awful.

Consider:

On the subject of the minimum wage, people seem almost immune to objective, empirical arguments, but one has to state them anyway, if almost only for the record:

Wages are the price of labor. Higher skilled labor is worth a higher price. Lower skilled labor is worth a lower price.

When you set a legal price control on labor, which is what a minimum wage is, you make it illegal for low skill workers to sell their labor. It's as simple as that.

People generally seem to understand that prices reflect value, except when it comes to labor.

What if we made a law that said fast food hamburgers could cost no less than $20? People would be outraged, and would (correctly) argue that this made it impossible for low-income folks to afford fast food hamburgers.

Well, if you pass a law that says people who work in fast food places can make no less than $20, you make it impossible for low-skill workers to sell their labor to the fast food place. The owner of the business must respond to the price control, just like the consumer must respond to price controls.