Archives: July, 2011

Questioning the Beijing Consensus

Two good op-eds take a critical look at the so-called Beijing Consensus that purports to be an alternative to liberalism because of China’s economic success under authoritarian rule with its mix of interventionist and market-oriented policies. The key to China’s impressive progress in the past few decades has of course been its move from extreme poverty and a highly repressed economy toward economic freedom. In today’s Wall Street Journal, Liu Junning, a champion of liberal democracy in China, reminds readers of that fact and of “The Ancient Roots of Chinese Liberalism” (as noted in an earlier post by David Boaz). Writing in an Indian daily, Cato senior fellow Deepak Lal explains that state capitalism has not been the source of Chinese growth and warns against “China’s Hubris,” which is leading to a more assertive state and a decrease in personal liberty.

Cato Video on $2 Trillion in Spending Cuts

A new video produced by Cato’s Caleb Brown and Austin Bragg does a typically stellar job of visualizing the alleged $2 trillion in spending cuts currently being negotiated on Capitol Hill as part of a deal to raise the debt ceiling.

The video is based on my recent chart, which shows that $2 trillion in cuts over ten years is relatively small considering that the federal government is projected to spend almost $46 trillion over that same time frame. Indeed, rather than actually cutting spending, federal spending (and debt) would continue to grow – just at a slightly lower rate.

The video also highlights Chris Edwards’ concern that the cuts will be phony: instead of actual terminations in programs or reductions in entitlements, there is a strong possibility that budget gimmicks will be used to arrive at the savings.

Liberalism and Debate in China

The Asian edition of the Wall Street Journal has just published essays by two Chinese liberal scholars who have spoken and written for the Cato Institute. Mao Yushi created quite a storm in China with his article on the website of Caixin magazine criticizing Mao Zedong (no relation). He received threatening phone calls and warning visits. Nevertheless, he has now published a version of the essay in English, translated by my former colleague Jude Blanchette, now working in China for the Atlas Economic Research Foundation. It’s still pretty tough:

Mao Zedong was once a god. With the uncovering of more and more documents and information, he is gradually returning to human form.

Some still view Chairman Mao as a god, however, and view any critical discussion of him as blasphemous….

Mao not only created suffering for China, he exported his theory to the world so that all could share in his cruelty. He encouraged armed revolution in Malaysia, India, Thailand, the Philippines, Burma, Indonesia, Nepal and Sri Lanka. Perhaps Mao’s greatest student was Pol Pot, who stands as the most ruthless killer in recent history. More than 30 years after his death, the world is still dealing with Mao’s legacy….

After Mao’s death, Hua Guofeng and Ye Jianying seized the Gang of Four, and China’s Supreme Court sentenced them to death. Yet the leader of the Gang of Four can still be glimpsed hanging above the Gate of Heavenly Peace and his picture is printed on the money we use every day.

Meanwhile, Liu Junning tells Journal readers that Maoism is not the whole of China’s heritage. Indeed, he says (as noted in Libertarianism: A Primer and The Libertarian Reader), Laozi (Lao-tzu or Lao-tse) was one of the earliest exponents of ideas we might now call liberal or libertarian:

Indeed, what we now call Western-style liberalism has featured in China’s own culture for millennia. We first see it with philosopher Laozi, the founder of Taoism, in the sixth century B.C. Laozi articulated a political philosophy that has come to be known as wuwei, or inaction. “Rule a big country as you would fry a small fish,” he said. That is, don’t stir too much. “The more prohibitions there are, the poorer the people become,” he wrote in his magnum opus, the “Daodejing.”

For Mencius, a fourth-century B.C. philosopher and the most famous student of Confucius, a kingdom would be able to defend itself from outside attack if the king “runs a government benevolent to the people, sparing of punishments and fines, reducing taxes and levies… .”

Note that Laozi and other classical thinkers also drew a connection between good, limited government in general and prosperity in particular.

To say that the narrative of liberty vs. power is uniquely “Western” is to turn a blind eye to the struggles of those who have gone before us. Individual rights are not a Western development any more than paper and gunpowder are inventions that are uniquely Chinese. Is Marxism “German”? Is Buddhism “Indian”? Of course not. When ideas are born, they take flight into the world to be used, improved or discarded by all of humanity. Constraints on political power and the protection of individual rights belong to all….

China will truly prosper only when individuals such as Liu Xiaobo, Ai Weiwei and the many other Chinese patriots who speak for reform are safe in the knowledge that they can do so without a late-night knock on the door from the government.

My own thoughts on the ideas of the American Revolution and of the Chinese Communist Party appeared at the Britannica Blog on Monday.

Is There Still Time?

The Washington Post says that “there is a real question as to whether [Texas governor Rick] Perry has waited too long” to begin a presidential campaign. And that Sarah Palin is dithering “even as the window for announcing narrows” and “time is running out for her.” Fox News agrees that “time is running out” for any new presidential candidates.

That’s the conventional wisdom. But I’m old enough to think about history.

Barry Goldwater announced his candidacy for president on January 3, 1964, about nine weeks before the New Hampshire primary. A decade later, Ronald Reagan announced his challenge to President Gerald Ford on November 20, 1975. After that unsuccessful race, he announced another, this time successful candidacy, on November 13, 1979.

I’m not suggesting that Sarah Palin, Rick Perry, or Chris Christie is another Ronald Reagan or even another Goldwater. Nor am I unaware of the changes in the campaign process. But I do wonder if a candidate with real appeal really has to announce his or her candidacy so many months before earlier candidates did.

What’s Up Queenie?

Miss Manners has some useful advice today for any American who might encounter the Queen of England.

DEAR MISS MANNERS: As an American, if I meet the Queen of England, am I required to bow to her?

GENTLE READER: Where were you during history class?

Never mind. Here is what you missed:

We Americans fought a revolution against the British crown. As Miss Manners trusts that you will be relieved to hear, we won. Therefore, we do not prostrate ourselves before someone who is not our sovereign — just as the British bow to no sovereign but their own.

But we do not even bow to our own leaders. Although we believe that all human beings are worthy of respect, we do not believe that any one of them is born at a higher level than the rest of us.

Thomas Jefferson caused a stir when, as president, he greeted the British ambassador in slippers and ordinary clothes.  Jefferson had been playing on the floor with his grandkids.  The Brit left in a huff because Jefferson had not bothered to put on some fancy outfit.  Jefferson told him to chill out.

European Political Elite React to Deteriorating Fiscal Outlook with Decisive Moves to…Kill the Messenger

I’m not a big fan of the rating agencies. I’ve warned in TV interviews that they generally wait too long before downgrading profligate governments.

So when the rating agencies finally catch up to everyone else and lower their outlook for failing welfare states such as Greece and Portugal, one would think that this would be seen as a useful – albeit late – warning sign. But European politicians are not very happy about this development. At the risk of mixing metaphors, they want everyone to keep their heads buried in the sand and to continue complimenting the emperor on his new clothes.

Here are some excerpts from a BBC report.

The European Commission has strongly criticised international credit ratings agencies following the downgrade of Portugal by Moody’s. The Commission said the timing of the downgrade was “questionable” and raised the issue of the “appropriateness of behaviour” of the agencies in general. Earlier, Greek Foreign Minister Stavros Lambridinis said the agencies’ actions in the debt crisis had been “madness”. Ratings agencies have downgraded Greece and Portugal many times recently. …German Finance Minister Wolfgang Schaeuble told a news conference that he wanted to “break the oligopoly of the ratings agencies” and limit their influence. …”The timing of Moody’s decision is not only questionable, but also based on absolutely hypothetical scenarios which are not in line at all with implementation,” said Commission spokesman Amadeu Altafaj. “This is an unfortunate episode and it raises once more the issue of the appropriateness of behaviour of credit rating agencies.” Commission President Manuel Barroso added that the move by Moody’s “added another speculative element to the situation”.

This is not the first time this has happened, by the way. Back in January, I mocked the President of the European Council for whining that “bond vigilantes” had the nerve and gall to demand higher interest rates to compensate for the risk of lending money to incontinent governments.

Colleges Bloated with Money? Some of Us Already Knew

Inside Higher Ed today released the results of a very telling survey of college business officers. From IHE’s article on the survey:

About one in six business officers at both public and private nonprofit colleges described the financial health of their respective institutions as “excellent,” and another 57 percent of public-college CFOs and 47 percent of private-college CFOs characterized their respective institutions’ financial health as “good.”

That’s right: Despite the continuing negative effects of our economic malaise, the financial sky is not crashing down on the Ivory Tower – far from it! Perhaps most interesting is this quote from Kent John Chabotar, president of Guilford College and a former CFO at Bowdoin College:

Many of my financial colleagues think that the academic program is over-budgeted and sometimes even bloated, so cuts may seem to them to be restoring the proper balance.

What? “Bloated”? What about the devastating penury schools are supposedly suffering?

To be fair, as Chabotar goes on to note, financial officers have an incentive to say all is well, lest they seem to be less than stellar money managers. But we know – or at least you do if you’ve read “Federal Higher Education Policy and the Profitable Nonprofits” –  that there is very good reason to believe colleges are, indeed, flush with cash: Many make big profits – from $2,000 to perhaps as high as $13,000 per student – off of undergrads. And how do they do that? Primarily through taxpayers, who furnish massive subsidies in the form of aid to schools and students. So many academic programs most likely are bloated.

Of course, many schools and higher education associations would likely disagree with that. And if nothing else, we at the Center for Educational Freedom love a debate. That’s why on July 19 we will be hosting a forum to discuss high profits in “nonprofit” higher ed, an event that will feature Vance Fried, author of “Profitable Nonprofits”; M. Peter McPherson, President of the Association of Public and Land-grant Universities; and Grover J. “Russ” Whitehurst, director of the Brown Center on Education Policy at the Brookings Institution. Register here if you want to attend in person, or watch online from the comfort of your own desk.