Archives: 08/2012

Hey RNC, There Already Was a Gold Commission

The rumor is that Republicans, at their upcoming convention, will call for a government commission to study the feasibility of returning to a gold monetary standard.  The platform would also call for a policy audit of the Federal Reserve, a proposal that has passed the House but is currently stuck in the Senate (and apparently opposed by the Obama White House).

First let’s recognize that a GOP gold standard plank isn’t all that novel. Republican platforms in the past have often alluded to “a dependable monetary standard,” as both the 1980 and 1984 platforms made some reference to monetary matters.  In fact, the 1980 election did result in the creation of a Gold Commission. Cato recently republished the commission’s minority report, The Case for Gold, as a free ebook.  So if Republicans want to consider some sort of gold standard, there is already a significant amount written on the topic.  Cato also published a paper in 2008 by George Mason University professor Larry White on the economics of the gold standard.

On a broader level, what these platform additions truly represent is a dissatisfaction with the Federal Reserve, and not only its current monetary policies, but also its role in the numerous bailouts of 2008-9 and the extent to which its obsession with deflation contributed to the creation of a massive housing bubble.  If Republicans truly want to take on the Fed (something I’m not all that convinced of), then exposing the Fed’s repeated rescues and support of Wall Street would likely be far more effective.  I’ve long been puzzled by how President Obama manages to talk tough on Wall Street while he stands next to Tim Geithner.  If Mitt Romney wants to distinguish himself from the current president, the best thing he could do is call for Geithner to resign.

Republicans would also be wise to talk about the relationship between inflation and unemployment in the long run, which appears positive, rather than negative as the proponents of more Fed easing would have us believe.  The single-minded focus on gold is likely to serve more as a distraction than anything else.  I have about as much faith in the federal government picking the correct gold-dollar parity as I do in the Fed picking the correct interest rate.  And of course, who is to say that gold is the correct commodity to use in the first place? But then, this concern is less about gold and more about the Fed.  And while Republicans have regularly talked tough on the Fed, the truth is that it has usually amounted to little more than talk.

A Good Day for Liberty Everywhere Else

Good News

Russia joined the WTO yesterday!  This is kind of a big deal.  The country’s leaders, although still as authoritarian and illiberal as we all know they are, nevertheless committed to open Russia’s domestic markets to foreign competition by significantly reducing import duties and eliminating protectionist regulations.  Just as important, by locking in these policies in the form of international obligations, Russia has provided investors with some certainty and security that the government will not revert to harmful past practices.

The greatest beneficiary of Russia’s entry will be the Russian people, whose standard of living is sure to rise as they gain access to higher quality goods and services.  Some Russian manufacturers who have been supported by the state and insulated from competition will have a hard time adjusting, but many others will take advantage of cheaper inputs available from abroad to become more competitive in global markets.  Even if Russia shirks on some of its commitments (as the U.S., EU, and China certainly do), the globalization of Russia’s economy makes the entire world more free and slightly richer.

Bad News

Congress thinks you don’t really want that.  Eight and a half months after Russia’s two-decade-long WTO accession negotiations concluded, Congress still has not repealed an embarrassingly obsolete Cold War trade restriction.  The 1974 Jackson-Vanik amendment was supposed to pressure the Kremlin to allow Jews to leave the Soviet Union; now it allows the Kremlin to prohibit U.S. goods from entering Russia.  Some people in Congress (I’m looking at you, House leadership) short-sightedly fear that repealing Jackson-Vanik will make them look soft on Russia, but as long as Jackson-Vanik is on the books, Russia’s WTO obligations do not apply to trade with the United States.

As many people have explained many times (including myself), there is no downside to repealing Jackson-Vanik, and not doing so will prevent U.S. businesses from taking advantage of Russia’s newly opened economy.  Even if Congress eventually acts, the fact that they haven’t done it yet (and we don’t really know when or if they will) creates enough uncertainty to keep U.S. companies from engaging the Russian market.  The most troubling part of all this is that literally billions of people are more free than they were Tuesday, but I am not.

The GOP’s Big Government Baggage

Brian Myrick / AP file

The Republican National Convention is just days away, so it’s relevant to point out that the longer big-government interventionists are associated with the GOP, the more terms like “limited government” and “free markets” will lose all meaning. One Republican who epitomizes the damage of this guilt by association is former Vice President Dick Cheney. He won’t be at the convention, but his message surely will be.Below are two arguments put forward by Cheney, the first about Iraq in 2002, the second about Iran in 2007:

Armed with an arsenal of these weapons of terror, and seated atop ten percent of the world’s oil reserves, Saddam Hussein could then be expected to seek domination of the entire Middle East, take control of a great portion of the world’s energy supplies, directly threaten America’s friends throughout the region, and subject the United States or any other nation to nuclear blackmail.

And on Iran:

There is no reason in the world why Iran needs to continue to pursue nuclear weapons. But if you look down the road a few years and speculate about the possibility of a nuclear armed Iran, astride the world’s supply of oil, able to affect adversely the global economy, prepared to use terrorist organizations and/or their nuclear weapons to threaten their neighbors and others around the world, that’s a very serious prospect. And it’s important that not happen.

What is so remarkable about this vision proffered by Cheney is how it fails to elucidate precisely how either country threatens America’s interests or economic well-being. If one were to challenge the validity of Cheney’s claims, questions would include:

  • What is the likelihood of such a hypothetical disruption?
  • What is the harm if America’s access to markets is closed, and for how long?
  • How would the perpetrators of the closure be affected?
  • How has America dealt with such disruptions in the past?
  • Would there be available alternatives?
  • And, most importantly, would the risks to America’s interests and economic well-being be worse if it took preventive action?

Cheney evokes the imagery of America spreading stability and peace, while his world view relies on aggressive militarism that destroys both. What is particularly appalling is his implication that the United States must protect “the world’s energy supplies” and “the world’s supply of oil.” Chris Preble has drawn on a rich body of literature that shows why such claims do not withstand scrutiny.

Remarkably, Cheney represents a Republican constituency supportive of free markets, and yet his world view contradicts basic free trade and free market principles. He believes that free markets thrive only when peace and stability are provided by the U.S. government—and there’s the rub.

Rather than a world of economic exchange free of the state and its interventions, government must enforce global order for free trade to occur. Cheney’s vision of free markets impels American expansion.

At its heart—and far from free market—the former vice president’s world view fulfills a radical interpretation of U.S. foreign policy. Cheney gives new life to the works of revisionist historians like William Appleman Williams, by propagating the pernicious notion that U.S. intervention abroad is required to control the flow of raw materials and protect America’s wealth and power.

It’s Simple to Balance the Budget with Modest Spending Restraint

Now that new numbers have been released by the Congressional Budget Office, it’s time once again for me to show how easy it is to balance the budget with modest spending restraint (though please remember our goal should be smaller government, not fiscal balance).

  • I first did this back in September 2010, and showed that we could balance the budget in 10 years if federal spending was limited so it grew by 2 percent annually.
  • Most recently, back in January after CBO produced the new Economic and Budget Outlook, I crunched the numbers again and showed how a spending cap of 2 percent would balance the budget.

I’m happy to say that the new numbers finally give me some different results. We can now balance the budget if spending grows 2.5 percent annually.

In other words, spending can grow faster than inflation and the budget can be balanced with no tax hikes.

And here’s the video I narrated almost two years ago on this topic. The numbers have changed a bit, but the analysis is exactly the same.

In other words, ignore the politicians, bureaucrats, lobbyists, and special interests when they say we have to raises taxes because otherwise the budget would have to be cut by trillions of dollars. They’re either stupid or lying (mostly the latter, deliberately using the dishonest version of Washington budget math).

Modest fiscal restraint is all that we need, though it would be preferable to make genuine cuts in the burden of government spending.

Court: Telecommuting May Be Reasonable Accommodation Under ADA

Not that long ago, reflecting the views of labor unions, the federal government regarded telecommuting as something deeply suspect, even when (or especially when) both an employer and an employee were enthusiastic about it. As late as the Reagan era, as I recounted in this Reason piece a way back, the AFL-CIO had called for a moratorium on the practice, while the president of the Communications Workers of America warned in 1992 that allowing at-home employment was dangerous “particularly if that worker wants to work at home.” (A dispersed workforce, of course, can make it harder to organize unions.)

How times change. Now the ever-expanding scope of the Americans with Disabilities Act (ADA) is opening up the possibility that employers may be legally obliged to accept at-home work arrangements even when they see them as a bad idea. As Jon Hyman explains at Lexis/Nexis Employment Law and Mike Underwood at Employer Law Report, the federal court for the Southern District of Ohio has ruled that it is a question for a jury whether an employer improperly failed to accommodate a worker when it denied her request to work from home, based on asthma and chemical sensitivity to the perfumes of co-workers. Previous Sixth Circuit precedent had rejected any employer obligation to accept telecommuting other than in “very extraordinary” circumstances, but the court said that precedent needed to be revisited in light of the advance of time and technology, which has rendered telecommuting less “burdensome or untenable” to employers. The case is Core v. Champaign County Board of County Commissioners (PDF).

Notice the pattern? Views of telecommuting change, but what remains constant is the idea that the government should impose the result, rather than defer to the results of actual free contract between the two parties.

Broadcasting the Parties’ Infomercials

Looks like Roger Pilon and I have different perspectives on whether the television networks should broadcast hours and hours of packaged convention coverage rather than broadcasting what viewers want to watch. Here’s how I responded to  Politico’s question,

Are convention TV cuts a bad idea?

Are you kidding? Why should the networks provide hours of coverage for lavishly produced infomercials for the two government-supported parties?

Conventions used to be news events. I’d love to see the television coverage of the 103-ballot 1924 Democratic convention. Or of Everett Dirksen pointing his finger in 1952 at Eisenhower’s floor lieutenant, Thomas Dewey and shouting, ”We followed you before and you took us down the road to defeat.” But the last time there was any news or suspense at a convention was probably 1976, when Ronald Reagan’s supporters thought - probably wrongly - that the nomination was still barely within their grasp, and there was a real floor fight over a motion designed to flush out hidden Reagan supporters in Ford delegations.  Let Ron Paul be nominated, and let his supporters do a traditional floor demonstration. The networks would cover that, because it would be news. But if there’s no news, then the networks are just providing the two old parties with free publicity.

And speaking of “government-supported parties” - this year the taxpayers will give each party $18 million to produce these infomercials. That should stop. The parties both have plenty of money. And in a year when 57 percent of Americans tell Pew that there should be a third major party, why are those people being taxed to shore up the existing parties with which people are dissatisfied?

You’ll See What We Want You to See

Today POLITICO Arena asks:

Are Convention TV cuts a bad idea?

My response:

What a surprise! The three major television networks are devoting only an hour of coverage to the three final nights of the political party conventions, even though the Republican convention runs for four nights. And doubtless those three hours will be filled as much by commentary as by the speeches themselves.

As any sentient being can see, the mainstream media has been in the tank for Obama from the time he stepped onto the national stage, as even ABC’s Jake Tapper is now saying. With the economy stagnating, unemployment growing, and the national debt exploding, the mainstream media is focused, day in and day out, on every Republican gaffe it can find – or manufacture – while treating Obama like a rock star.

You’d think some of these “media stars” would be embarrassed by their transparently unprofessional behavior. But apparently the “camp-following” instinct – as with a bunch of middle-schoolers – is strong enough to overcome any critical judgment they might have learned in journalism school. And they wonder why they’re held in such low regard by the public – which they blame, of course, on conservative-extremist attacks. Thank God there’s at least some “fair and balanced” reporting out there.