Archives: September, 2008

Mark Sanford on Bailouts

South Carolina governor Mark Sanford, who spoke last Saturday night to our Cato Club 200 retreat, has a great column in the Washington Post today on the federal government’s accelerating tendency to respond to every crisis with an expansion of its powers. He writes:

An ever-expanding scope of federal commitment and power is not what made this country great. Expanded power in one place comes at a cost in other places. American cornerstones such as individual initiative and an entrepreneurial spirit — born in free and open societies with private property rights and the rule of law — have never fit particularly well within the context of an ever-growing federal government.

For 200 years, the “business model” in our country has rested on a simple fact: that while one may reap rewards from taking risks, one should also be prepared to face the consequences of those risks. Some of the proposed actions with regard to the credit market turn that business model on its head — absolving those who took too much risk, or bought too much house, from the weight of their own choices. If Congress passes the proposed bailout, we will be destined to have far greater problems in time, leaving those who are prudent in their finances to foot the bill for those who are not.

He goes on to appeal to the wisdom of Milton Friedman, Ronald Reagan, and Edward Gibbon in cautioning Congress not to put us on the path to “decline and fall.”

Bonus: Mark Sanford on Real ID here (podcast audio), here (speech video) and here (speech PDF).

“Too Tasty to Fail”

The National Oceanic & Atmospheric Administration (NOAA) – housed at the U.S. Dept. of Commerce because Dick Nixon wasn’t getting along with his own Secretary of the Interior – has determined that the decline in the harvest of Chesapeake Bay blue crabs is a “commercial fishery failure.”  With that declaration by the “stewards” of the nation’s fisheries, Chesapeake crab fishermen are looking at a bailout (popular word these days) of up to 15 million taxpayer dollars over the next three years.

The Examiner reports that Maryland Watermen’s Association President Larry Simns and his members were “elated.”  Go figure.  Simns says that this is not a handout because the money would be used to put the crabbers to work restoring fisheries, planting trees, etc.  Perhaps they can staff the exhibits at the NOAA-partnered Smithsonian Institution’s “Ocean Hall” opening this weekend too.

What kind of message does this latest government intervention send to other commercial fishermen?  Overfish, deplete your source of income, and the taxpayer will numb your pain.  Of course, NOAA bureaucrats will then cite resulting fishery depletions as justification for a budget increase.  Big Government 101.

All Are Welcome Aboard!

When I started reading AEI director of education policy studies Rick Hess’s latest article, I feared a Stern-esque public defection. “Oh no,” I thought. “He’s about to denounce school choice as a failure without any consideration for what it needs to work.” Then came the pleasant surprise: Hess makes clear that school choice hasn’t produced transformative competition and innovation because, so far, almost no competition or innovation has been allowed to occur.

Pointing to everything from enrollment caps, to profit prohibitions, to suffocating bureaucracy in choice vehicles ranging from charter schools to voucher programs, Hess concludes that “the lessons are increasingly clear. If school choice is to enjoy a brighter future than wave upon wave of supposed school reforms, it is time for reformers to fight not just for choice but for good choices.”

I couldn’t agree more, and want to be the first to welcome Hess aboard the good ship Free-Market Education! We here at Cato have been sailing it for some time now, and offer all kinds of guides for anyone who wants to cruise with us, including the Cato Education Market Index; Dismal Science: The Shortcomings of U.S. School Choice Research and How to Address Them; and Markets vs. Monopolies in Education: A Global Review of the Evidence. We’d especially like to invite choice equalitarians to join us, those folks who want options for the poor but don’t see that choice’s real power can only be unleashed when schools are unfettered and choice widespread. Low barriers to entry for entrepreneurs, price change, the ability to make a profit, unsubsidized competition—all these things are critical to thriving industries that give us everything from iPods to dress shirts, but as scarce as Ecuadorean polar bears in moribund k-12 education. That’s not a coincidence.

Free markets work, Hess understands, but not when they’re in name only.

The Washington Post Visits Cato

In the Washington Post this morning:

Bailout Raises Libertarians’ Market Value: Cato Institute’s Scholars Pained and Pumped By Government Action

[F]aced with a proposed $700 billion government bailout of  Wall Street, this town’s most gung-ho libertarians and free-marketeers are reaching for their coffee and their keyboards. They are invigorated. The prospect of doom and ruination for everything they hold dear only makes them stronger.

Another $700 Billion

For the second time in six years, the Bush administration has asked Congress for nearly unlimited authority without an independent professional review of the evidence that led the administration to request such authority.

In making the case for the Iraq war resolution, according to Senator John D. Rockefeller, “the administration repeatedly presented intelligence as fact when it was unsubstantiated, contradicted or even nonexistent. As a result, the American people were led to believe that the threat from Iraq was much greater than actually existed.”

As it turned out, of course, no “weapons of mass destruction” were ever discovered.

The skeletal proposal for the Troubled Asset Relief Program states that “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act without regard to any other provision of law regarding public contracts” – again without an independent professional review of the evidence that led the administration to request such extraordinary authority.

In both cases, the administration requested urgent congressional approval of these measures when members of Congress were anxious to go home to run for reelection. And a final irony: the total direct cost of the Iraq war to date has been about $700 billion, the same amount that the administration has requested to buy bad mortgages.