Archives: 11/2011

Rand and Hayek on NPR

NPR started a three-part series this morning on influential intellectuals. They looked at Ayn Rand this morning, and there are reports that they will cover F. A. Hayek tomorrow and John Maynard Keynes Wednesday. The segment quotes Rand from a televised interview with Mike Wallace (which you can view at the link) and then comments on the prevalence of her ideas today:

“Both parties today are for socialism, in effect — for controls. And there is no party, there are no voices, to offer an actual pro-capitalist, laissez-faire, economic freedom and individualism,” she said. “That is what this country needs today.”

If Rand were alive today, she might be pleased to see that, more and more, Americans do have that choice. And her ideas are alive and well-represented in the U.S. Capitol.

If by “well-represented,” you mean “often heard in protest as Congress passes Wall Street bailouts, corporate takeovers, health care takeovers, and trillion-dollar spending bills,” then yes.

NPR’s commenters weren’t very happy to hear Ayn Rand discussed. I especially appreciated this one:

The “objectivity” of ruthless plunderers from a displaced Russian bourgoise who refused to acknowledge the punishment of her class was brought on by its crimes against the people. Objective thinking people accept responsibility for their actions and the consequences that follow.

Marxism may be dead in Russia, but not in the NPR listener community! No doubt this commenter is knitting the names of American bourgeoisie who will one day be sent to gulags.

A Property Rights Victory in the Magnolia State

One of the unambiguously good results from last Tuesday’s off-year elections came in Mississippi, the state I called home the year before I moved to D.C.  By the impressive margin of 73% to 27%, voters in the Magnolia State took a stand against judicially sanctioned eminent domain abuse, specifically the government’s taking of private property in the name of so-called “economic development.”  

By passing Measure 31, which prohibits most transfers of condemned land to private parties for 10 years after condemnation, Mississippi joins 44 other states in enacting legislation that strengthens property rights in the wake of the Supreme Court’s horrific ruling in Kelo v. New London.  In Kelo (2005), you’ll recall, the Court held that state and local governments can condemn private property not for some sort of public project like a highway or military base nor because it is a “blight” that creates a health or safety risk, but simply to transfer to another private party who claims to put it to better economic use. 

We at Cato are all in favor of economic development, of course, but not if that development comes via raw government power that treads on constitutionally protected individual rights.  If a developer thinks he can put a given piece of land to a higher-value use, let him buy that property fair and square from the owner rather than effectively forcing a sale at below-market value.

Indeed, Kelo’s holding was flawed precisely because its rationale that transferring ownership of “economically blighted” property would promote economic development is bad economics. If a proposed project were actually a better use of a given property, the developer would be willing to pay a price sufficient to induce the current owners to leave.

Kelo also undermines property security, making owners less willing to invest in their property and use it productively, lest the government swoop in, declare it “blighted,” and sell it to someone else. And securing property rights is not just a good thing economically.  It also helps prevent powerful private interest groups from undercutting the property rights of minorities and other groups who may be vulnerable due to prejudice or political disadvantage.

And the American people agree: Kelo turned out to be a Pyrrhic victory for developers and their public-official cronies, such that most of the country is now better protected against eminent domain abuse than it was before Kelo.  Notably absent from the list of states where property rights are better off, however, is New York (see my comment on a recent instance of eminent domain abuse in the Empire State).

The judiciary’s abdication of its role as a protector of property rights is bad enough, but our elected officials haven’t done much better. Tellingly, the drivers of successful anti-Kelo legislation have tended not to be state legislators (with some exception) but rather citizen-activists.  While special-interest groups, such as big car companies in Mississippi, may pressure legislators to avoid anti-Kelo legislation, even as referenda show that popular opinion is on the side of the property rights activists.

Measure 31 is not perfect, but it is a step in the right direction. The Founders took care to protect private property rights in the Constitution, and it’s heartening to see citizens taking an active role to vindicate those protections even when the Supreme Court abdicates its duty to do so.

For more commentary on the Mississippi vote, see Ilya Somin’s recent op-ed.

Federal Energy Failures

In the Washington Post, Steven Mufson does a nice job describing how Solyndra is just one of many energy subsidy failures of recent decades.

I covered some of the same topics as Mufson–including the Clinch River Breeder Reactor and the Synthetic Fuels Corporation–in this study at Downsizing Government. However, I presented the politics of these two projects a bit differently than Mufson. He sort of suggests that the Reagan administration was gunning to kill the Clinch River project, and that only the Carter administration was to blame for Synthetic Fuels.

Regarding Clinch River, President Carter should be credited with trying hard to kill it, but Congress blocked him. The Reagan administration initially supported the project, but that changed as the bad news mounted over time. I noted:  “The combination of bad economics, environmental problems, and cost overruns gave the upper hand to project opponents in Congress, and funding was cut off by a fairly narrow vote in the Senate.”

Regarding Synthetic Fuels, the Reagan administration was once again initially supportive, and it only later changed course due to falling oil prices and numerous scandals in the program. When it became clear that the political winds were changing, I noted that ”there was a mad dash to hand out subsidies before Congress shut the project down.”

That sounds familiar doesn’t it?

This Week in Government Failure

Over at Downsizing the Federal Government, we focused on the following issues this past week:

  • The “government efficiency” snake-oil salesmanship from politicians has become tiresome, especially when it comes from high-profile Republicans like Mitt Romney.
  • An establishment commission is planning to “reform the nation’s housing policy by crafting a package of realistic and actionable policy recommendations” for the Beltway establishment’s consideration. Hold onto your wallets, taxpayers.
  • Certain people saw the “Christmas Tree Tax” as an opportunity to further partisan aims rather than provoke a discussion and debate on the proper role of the federal government.
  • On so-called shallow loss proposals to provide subsidies for farms in cases when farm revenues fall slightly below the record high levels of the past few years.
  • Politicians who fixate on “government efficiency” probably aren’t truly interested in reducing the size and scope of government.

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Per Dollar Spent, OECD Subsidies May Be the Most Destructively Wasteful Part of the Federal Budget

I’m not a fan of international bureaucracies.

I’ve criticized the United Nations for wanting global taxes. I’ve condemned the International Monetary Fund for promoting bigger government. I’ve even excoriated the largely unknown Basel Committee on Banking Supervision for misguided regulations that contributed to the financial crisis.

But the worse international bureaucracy, at least when measured on a per-dollar-spent basis, has to be the Paris-based Organization for Economic Cooperation and Development.

OECD Headquarters: Living the good life at US expense

American taxpayers finance nearly one-fourth of the OECD’s budget, at a cost of more than $100 million per year, and in exchange we get a never-ending stream of bad policy recommendations.

This Center for Freedom and Prosperity study has all the gory details. The OECD bureaucrats (who get tax-free salaries, by the way) endorsed Obamacare, supported the failed stimulus, and are big advocates of a value-added tax for America.

What’s especially frustrating is that the OECD initially was designed to be a relatively innocuous bureaucracy that focused on statistics. Indeed, it was even viewed as a free-market counterpart to the Soviet Bloc’s Council for Mutual Economic Assistance.

My, how things change.

Perhaps the most odious example of bad OECD policy is the campaign against tax competition. Beginning during the 1990s, the OECD has attacked low-tax jurisdiction for the supposed crime of having good tax laws that attract jobs and capital from high-tax nations such as France and Greece.

So why did the OECD launch this project to prop up Europe’s welfare states?  The answer can be found in an excellent new study from Professor Andrew Morriss at the University of Alabama Law School and Lotta Moberg, a Ph.D student in economics at George Mason University.

It’s a publication designed for academic journals, but it avoids jargon and gibberish, so a regular person can read and understand how the OECD has morphed from a harmless (though presumably still wasteful) bureaucracy into a force for global statism. Here are some of the key findings in the study.

[T]his transition was in part the result of entrepreneurship by a group of OECD staff, who spotted an opportunity to expand their mission, bringing with it a concomitant increase in resources and prestige. They accomplished this by providing a framework for interests within a group of high tax states to create a cartel that would channel competition in tax policy away from areas where those states had a competitive disadvantage and toward areas in which they had a competitive advantage. …These states then sought to restrict tax competition, which in turn required them to create a means of delegitimizing such competition and by preventing each other from defecting from the cartel by lowering tax rates unilaterally. …The French … realized that single-country financial controls were unworkable within a global financial system.

In other words, the bureaucrats at the OECD and governments from decrepit welfare states like France both saw a benefit in creating a tax cartel.

This “OPEC for politicians” is grossly contrary to good tax policy, international comity, and national sovereignty. But those factors didn’t matter.

Unfortunately, it’s quite likely that we will see further schemes from the OECD and other international bureaucracies. The politicians have learned that transnational cartels increase their power.

[T]he evolution of the OECD from a facilitator of economic competition to a cartel enforcer represents something new in international organization behavior. …The cartelization of tax policy is an important effort to hold off the impact of the forces unleashed by competition on a more level playing field, but it is certainly not the only one. …If the opportunity is provided, it may be better from a politician’s point of view to form a cartel on taxation as a protection. With a cartel, there are fewer constraints on domestic policy, improving the politicians’ welfare by increasing the degrees of freedom available to satisfy domestic constituents and win re-election.

This video has more information on why the OECD is contrary to the interests of American taxpayers.

Needless to say, it is outrageous that the politicians in Washington are sending more than $100 million to Paris every year to subsidize this bureaucracy. For all intents and purposes, we are being coerced into paying for a bunch of European bureaucrats so they can then advocate even bigger government in the United States.

And those bureaucrats get tax-free salaries while pushing for higher taxes for the rest of us!

Can anyone think of a more destructive item in the federal budget, at least when measured on a per-dollar-spent basis? I can’t. That’s why I’ve been fighting the OECD for years, even to the point that the bureaucrats threatened to put me in a Mexican jail for the “crime” of standing in the public lobby of a public hotel.

North Dakota Rejects ObamaCare ‘Exchange’

Here’s the story, from the Bismarck Tribune:

Angered by a federal health care law that most of them despise, North Dakota House Republicans defeated legislation Thursday to give state officials authority over a health insurance marketing agency that the law requires states to establish.

(Correction: ObamaCare does not require states to create an Exchange.)

They said endorsing state administration of the agency, which is called a health insurance exchange, would be tantamount to approving the federal health reform law itself.

“I certainly am not going to legitimize Obamacare with my vote,” said Rep. Wes Belter, R-Fargo. “We, as a state of North Dakota, need to follow some of the other states who have said no… It is the law, but the fight should not be over.”

Supporters … said Thursday’s vote was the state’s last realistic chance for running its own exchange, since deadlines are looming and the Legislature does not meet again until January 2013…

After a debate that lasted almost two hours, representatives voted 64-30 late Thursday to reject the legislation. All but 10 of the House’s 69 Republicans voted against the bill, while 20 of its 25 Democrats supported it…

Opponents of the bill said they resented the pressure, which they said was caused by unrealistic deadlines in the federal health care law.

Rep. Keith Kempenich, R-Bowman, compared the situation to high-pressure sales tactics in a used car lot.

“If the federal government was really sincere on trying to reform health care, they wouldn’t have put these artificial dates in,” Kempenich said. “Whenever I’ve seen things that get rushed like this, or they get where you’re pressured like this, usually, they’re full of it, and that’s what this is starting to look like.”

Kudos to the North Dakota Policy Council’s Brett Narloch.