Tag: federal government

The GOP’s Insipid American Exceptionalism

I’ve had it with “American exceptionalism.” Enough already.

The phrase has garnered a considerable amount of attention lately, namely because Republicans are saying it over and over again. The Atlantic points out that the term itself was coined by Joseph Stalin, lamenting America’s inability to go communist (cf. Louis Hartz). Of course, the concept that America was different than Europe goes back at least to Tocqueville, but is it too much to ask that we recall Tocqueville was writing nearly 200 years ago? Might we not pause, at least momentarily, to reconsider the argument from authority and subject it to a bit of scrutiny?

I complained about the pervasive theme at the Republican convention in my podcast yesterday, and Alex Massie holds forth against the exceptionally exceptionalistic speechifying at Foreign Policy today. Republicans—and the rest of us—ought to just shut up about exceptionalism already. As it stands now, a few word substitutions could make Herder or Fichte feel right at home at a GOP convention. We ought not to like this.

Encouraging citizens to reify, then flutter with excitement at the uniqueness of their own “imagined community” lubricates both the administrative capacity of and enthusiasm for the Great American Welfare/Warfare State that is presently bankrupting our unborn children. Those of us who would like a bit more federalism, veering toward sectionalism even, do so realizing that this would create downward pressure on the centralization of our lives in the body of the national government. (“Who is this fellow 2,000 miles away from me and why should I subsidize his career and pay his flood insurance and pension?”) That the disgrace of slavery accompanied the last era of sectionalism in this country is no reason to throw out the concept itself.

Bizarrely, the GOP married this nationalistic theme with an ostensible concern for how America is viewed across the world. Might we not consider that the world finds this constant self-congratulation unseemly and perhaps even dangerous? Imagine your coworker, or neighbor, or spouse, constantly parading about, preening and pronouncing that he is the greatest person ever to have been made and marveling at how lucky are those subject to his ministrations. Any impartial observer would forgive you for nudging him off a pier, and all the more so if he were, in fact, great.

This is perhaps the saddest part of the whole garish spectacle. The United States is a great country. Take a look around you. Saying it over and over again doesn’t make it any more so; in fact it makes it less. All the bleating about our exceptionalism from our leaders is enough to make you think that they don’t really believe it. The party doth protest too much, methinks.

The next time your would-be ruler holds forth about exceptionalism, remind yourself what Mencken said:

Democratic man, as I have remarked, is quite unable to think of himself as a free individual; he must belong to a group, or shake with fear and loneliness—and the group, of course, must have its leaders. It would be hard to find a country in which such brummagem serene highnesses are revered with more passionate devotion than they get in the United States. The distinction that goes with mere office runs far ahead of the distinction that goes with actual achievement.

That’s what this is all about: If we allow the other party or candidate to insert its peculiar and grotesque proboscides into our homes, wallets, and lives—well, we’ll be just that much less exceptional.

Much more in the podcast:

Our Constitution Is Out of Step with the Rest of the World

Is the Constitution out of date? That’s the impression that comes across from an article in yesterday’s New York Times, written by the paper’s crack Supreme Court reporter, Adam Liptak. It comes in turn from an article he points to by two law professors, David S. Law at Washington University in St. Louis and Mila Versteeg at the University of Virginia, scheduled for the June New York University Law Review. In it the authors conclude that the Constitution appears to be losing its appeal as a model for constitution drafters in other countries, despite its having served that role up until as recently as 1987, the year of its bicentennial. So what’s changed over the past quarter century?

Unfortunately, from the Times article we don’t get a clear picture of just how it is that the constitutions other countries have drafted in recent years differ from our own, except for the emphasis throughout the piece on rights. Yet right there is a clue about what’s going on. On that score, in fact, Liptak cites striking comments Justice Ruth Bader Ginsburg made in a television interview during a visit to Egypt last week:

“I would not look to the United States Constitution if I were drafting a constitution in the year 2012,” she said. She recommended, instead, the South African Constitution, the Canadian Charter of Rights and Freedoms or the European Convention on Human Rights.

Liptak then notes, not entirely accurately, that “the rights guaranteed by the American Constitution are parsimonious by international standards, and they are frozen in amber.”

To be sure, the rights enumerated in our Constitution and in the amendments that were added later, including in the Bill of Rights, are few in number. But numbers alone, like rights alone, tell only part of our constitutional story. To tell the story more fully and accurately, we have to step back a bit.

It’s true that our Framers, unlike many others, especially more recently, did not focus their attention on rights. Instead, they focused on powers— and for good reason. Because we have an infinite number of rights, depending on how they’re defined, the Framers knew that they couldn’t possibly enumerate all of them. But they could enumerate the government’s powers, which they did. Thus, given that they wanted to create a limited government, leaving most of life to be lived freely in the private sector rather than through public programs of the kind we have today, the theory of the Constitution was simple and straightforward: where there is no power there is a right, belonging either to the states or to the people. The Tenth Amendment makes that crystal clear. Rights were thus implicit in the very idea of a government of limited powers. That’s the idea that’s altogether absent from the modern approach to constitutionalism—with its push for far reaching “active” government—about which more in a moment.

During the ratification debates in the states, however, opponents of the new Constitution, fearing that it gave the national government too much power, insisted that, as a condition of ratification, a bill of rights be added—for extra caution. But that raised a problem: by ordinary principles of legal reasoning, the failure to enumerate all of our rights, which again was impossible to do, would be construed as meaning that only those that were enumerated were meant to be protected. To address that problem, therefore, the Ninth Amendment was written, which reads: “The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people.” Over the years, unfortunately, that amendment has been misunderstood  and largely ignored; but it was meant to make clear that the people “retained” a vast number of rights beyond those expressly enumerated in the document.

Thus, the rights expressly enumerated in the Constitution may be “parsimonious,” but understood in light of the larger theory of the document, they are not. Neither, moreover, are they “frozen in amber,” because the courts are called on regularly to interpret and apply them in the varying factual contexts that surround the cases or controversies that are brought before them. Thus, the right to freedom of speech has been read to entail the right to desecrate the flag, and the right to liberty has been read to entail the right to engage in sexual practices that others may dislike. Judges may sometimes fail to draw the proper inferences, of course, or draw inferences not entailed. But that says nothing about the Constitution itself.

The idea, then, that our Constitution is terse and old and guarantees relatively few rights—a point Liptak draws from the authors of the article and the people he interviews—does not explain the decline in the document’s heuristic power abroad. Nor does “the commitment of some members of the Supreme Court to interpreting the Constitution according to its original meaning in the 18th century” explain its fall from favor. Rather, it’s the kind of rights our Constitution protects, and its strategy for protecting them, that distinguishes it from the constitutional trends of recent years. First, as Liptak notes, “we are an outlier in prohibiting government establishment of religion,” and we recognize the right to a speedy and public trial and the right to keep and bear arms. But second, and far more fundamentally, our Constitution is out of step in its failure to protect “entitlements” to governmentally “guaranteed” goods and services like education, housing, health care, and “periodic holidays with pay” (Article 24 of the UN Universal Declaration of Human Rights). And right there, of course, is the great divide, and the heart of the matter.

The modern view, which we too have followed, at least statutorily if not constitutionally, is to recognize all manner of “entitlements” of a kind that can be provided only through massive governmental institutions that engage in material and regulatory redistribution. We are constitutionally out of step in that, to be sure. Countries like Greece, Italy, Spain, and Portugal are far ahead of us.

More on the Ex-Im Bank

Last week I blogged about Sen. Dianne Feinstein’s (D-CA) proposal to devote $20 billion of the Export-Import Bank’s funds to promoting manufacturing exports, and why that was a bad idea.

But I realize that my recent call to “X Out the Ex-Im Bank” will be facing some very entrenched interests in Washington, and some well-funded lobby groups. The Bank has historically attracted bipartisan support, and a renewal of its charter sailed through the House Committee on Financial Services earlier this year. The Washington establishment loves this program.

My friend and long-time Ex-Im Bank supporter Gary Hufbauer of the Peterson Institute for International Economics published a critique a few weeks ago of my analysis, and calls for a doubling of Ex-Im’s authorization cap (from $100 billion to $200 billion). His piece is a fair characterization of my arguments, and at least Gary tries to counter them with actual facts and analysis (not always a given in an increasingly poisonous trade policy environment).  But it seems to me that Gary focuses his critique on my assessment of the effectiveness of the Bank. That’s fair enough, of course, but I tried in my paper to make the point that the efficiency or efficacy of the Ex-Im Bank’s activities is kind of irrelevant. The important point, which Gary did not address, is that it is simply not the proper role of the federal government to be in this business at all, even if they can operate “efficiently” (which I do not concede in any case). Where in the Constitution is the federal government authorized to be involved in the export credit business (a business, by the way, that benefits mainly large, profitable companies)?

My opposition to the Bank, in other words, is at a more fundamental level.  On an empirical level—and this is where Gary’s critique is focused—can markets work well enough in trade finance, and if not, can government intervention work better? Gary points to the Bank’s low default rate as evidence that private markets are missing good opportunities:

These figures suggest that the Ex-Im Bank plays a large role in facilitating exports to countries that encounter reluctance from private banks but nonetheless are not ‘bad risks.” Judging by its low default rate, the Ex-Im Bank’s risk assessment seems more correct than the private market.

But I would argue that its low default rate suggests the Ex-Im Bank’s backing is unnecessary. We don’t know that private credit wasn’t available to finance those exports. And even if it wasn’t, private credit not always being available on terms that the trading partners would like does not necessarily signify market failure. So a finance company missed an opportunity that may have paid out. So what? Maybe they had even better opportunities available to them that we (and bureaucratic Washington) don’t know about, or they simply wanted to hold on to their capital for future investment or to meet new reserve standards. The would-be exporter might miss out, but government intervention to direct that private capital (either through mandates, or siphoning it through the Ex-Im Bank) would come at another producer’s or bank shareholders’ expense.

Gary argues that:

Ex-Im’s capability should be strengthened so that the United States can respond when official finance offered by other countries violates the principles of fair competition…Successful multilateral negotiations…are certainly a superior option to tit-for-tat retaliation…[but]…without sufficient leverage…it is difficult to see what will bring China and India to the negotiating table.

But will China and India (and others) see higher Ex-Im funding as “leverage” to bring them to the table, or will it be seen as just the next step in the escalating arms race of subsidized export credit? I suspect, and fear, the latter.

Gary rejects my call to dismantle the Ex-Im Bank, and in fact suggests the government increase the scope of Ex-Im financing to cover 5 percent (rather than the current 2 percent) of total U.S.exports. That seems pretty arbitrary to me. Why stop at 5 percent? Heck, with the Ex-Im Bank being “self-financing” and all, why not go for 100 percent?

Lastly, Gary repudiates my “orthodox free-market reasoning” and the suggestion, attributed to me, that “… the dollar exchange rate alone determines the volume of U.S. exports or the size of the U.S. trade deficit.”  Exchange rates do not equilibrate to keep trade balances at zero, but to keep them in line with the savings and investment balance. The United States has been running persistent deficits because savings has fallen short of investment for many years.

Similarly, Gary takes issue with my analysis on the net effect of Ex-Im financing on jobs:

 …nor do we agree that free markets are sufficiently self- regulating to ensure a constant and low rate of unemployment…If [that proposition] described the American economy, the United States [unemployment would not be stuck at 9 percent-plus.

Here Gary seems to ignore the many interventions in labor markets that can keep unemployment high, no matter what the exchange rate. I’m certainly not under any illusions that the U.S. economy would be totally free market were it not for the existence of the Ex-Im Bank, and I don’t think my paper implied that, either.

Gary and I, not to mention others who study the Ex-Im Bank, will no doubt continue to debate these issues as the Ex-Im Bank’s charter expiry date comes closer.

Your Tax Dollars at Work

President Obama says that we are a  ”generous and compassionate” country and that “through government, we should do together what we cannot do as well for ourselves.” And to fulfill that “progressive vision,” he’s going to work on “making government smarter, and leaner and more effective. “

Today, under the rubric “Breakaway Wealth/Reaping Riches from Federal Spending,” the Washington Post gives us a front-page picture of where a lot of those generous and compassionate federal dollars actually go:

Millions of dollars worth of federal contracts transformed Anita Talwar from a government accounting clerk into a wealthy woman—one who can afford a $2.8 million home in the Washington suburbs with its own elevator, wine cellar and Swarovski crystal chandeliers.

Talwar, a 59-year-old immigrant from India, had no idea that she and her husband would amass a small fortune when she launched a company providing tech support to the federal government in 1987. But she shrewdly took advantage of programs for minority-owned small businesses and rode a boom in federal contracting.

By the time Talwar sold Advanced Management Technology in 2004, it had grown from a one-woman shop to a company with more than 350 employees and $100 million in annual revenue—all of it from government contracts.

Talwar’s success—and that of hundreds of other contractors like her—is a key factor driving the explosion of the region’s wealth over the last two decades. It also has exacerbated the gap between high- and low-wage workers, which is wider in the D.C. area than almost anywhere else in the United States.

Washingtonians now enjoy the highest median household income of any metropolitan area in the country

More than $80 billion in federal contracting dollars will flow to the region this year, up from $4.2 billion in 1980.

That’s my kind of smart, lean, and effective government!

Charity and the Federal Government

David Boaz’s post on bizarre and utterly preposterous claims that the federal government’s “social safety net” has been shrinking brought to my mind James Madison’s position that “Charity is no part of the legislative duty of the government.”

“The Father of the Constitution” wasn’t being cold-hearted when he took this position during a 1794 debate in the House of Representatives over federal aid to refugees. Rather, he was merely recognizing that “the government of the United States is a definite government, confined to specified objects.” Charity just wasn’t one of the specified objects. Of course, future politicians decided otherwise.

Today, most young Americans grow up in federally subsidized schools offering federally subsidized meals. They are inculcated to view the federal government as a benevolent caregiver that exists to provide Americans with housing, food, health care, and even income (to name just a few). Madison’s unfortunately quaint notion that the federal government isn’t supposed to be engaged in “charitable” activities would probably leave them dumbfounded.

I single out children because this week a private charity that I am involved with, the Purple Feet Foundation, is giving select inner-city sixth graders an opportunity to take hold of their futures now. Instead of promoting dependency, these kids will spend the week engaged in educational activities that will hopefully inspire them to utilize their individual talents to succeed in life. The Foundation does not seek, nor will it accept, taxpayer money. I believe this sets a good example for these kids.

Those of us who desire the limited federal government that Madison envisioned are often accused of being uncaring about those who are in need. In fact, the opposite is the truth: we recognize that government programs are wasteful, ineffective, and counterproductive to the aims that they are trying to achieve. As a Cato essay on federal welfare explains, private charity is superior to government programs for several reasons:

Private charities are able to individualize their approaches to the circumstances of poor people. By contrast, government programs are usually designed in a one-size-fits-all manner that treats all recipients alike. Most government programs rely on the simple provision of cash or services without any attempt to differentiate between the needs of recipients.

The eligibility requirements for government welfare programs are arbitrary and cannot be changed to fit individual circumstances. Consequently, some people in genuine need do not receive assistance, while benefits often go to people who do not really need them. Surveys of people with low incomes generally indicate a higher level of satisfaction with private charities than with government welfare agencies.

Private charities also have a better record of actually delivering aid to recipients because they do not have as much administrative overhead, inefficiency, and waste as government programs. A lot of the money spent on federal and state social welfare programs never reaches recipients because it is consumed by fraud and bureaucracy…

Another advantage of private charity is that aid is much more likely to be targeted to short-term emergency assistance, not long-term dependency. Private charity provides a safety net, not a way of life. Moreover, private charities may demand that the poor change their behavior in exchange for assistance, such as stopping drug abuse, looking for a job, or avoiding pregnancy. Private charities are more likely than government programs to offer counseling and one-on-one follow-up, rather than simply providing a check.

‘Education’: The Relentless Political Weapon

On at least six occasions in his address to the nation last night President Obama invoked the words “education,” “student,” or “college” to scare listeners into thinking that the federal government must have increased revenues. Typical was this bit of cheap, class-warfare stoking rhetoric:

How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don’t need and didn’t ask for?

Now, I’m all for eliminating economy-distorting tax loopholes, incentives, etc. But there is simply no way on God’s green Earth that the President—or anyone else—could look at what the federal government has done in the name of education and conclude that it has been anything but a bankrupting, multi-trillion-dollar failure:

  • Spending on Head Start is ultimately just money down a rathole according to the federal government’s own assessment
  • In K-12 education, Washington has dropped ever-bigger loads of cash onto schools out of ever-bigger jumbo jets, but has gotten zero improvement in the end
  • In higher education, all the money that supposedly makes college more affordable is actually a major driver behind students having ”to pay more for college”—just what the President decries—because it enables colleges to raise their prices at rates far outstripping normal inflation

The only people who regularly benefit from federal education profligacy are not students, but school employees and, especially, their lobbyists. They are teachers’ unions, tenure-track college professors, school administrators of all varieties, but not students, and definitely not taxpayers. Oh, and one other group: politicians who, despite the overwhelming evidence that all their spending on education is utterly useless, just keep exploiting students to buy votes and beat down anyone who would return the federal government to a sane—and constitutional— size.

Education, for our politicians, is not a thing to be fostered. If it were, they’d get out of the business. No, it is a political weapon, and it continues to be used to deadly effect.

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