Tag: milton friedman

Krugman and Oil Spills, cont’d

Last week Paul Krugman seized on the Gulf oil spill as another occasion to bash libertarians in general and the great Milton Friedman in particular. On Friday David skewered the Times columnist over his odd rhetorical ploy of treating politicians’ failure to follow Friedman’s principles as a refutation of those principles. Now economist Alex Tabarrok at Marginal Revolution reports that Krugman also completely misunderstands the current set of laws governing oil spill liability:

The Oil Pollution Act of 1990 (OPA), which is the law that caps liability for economic damages at $75 million, does not override state law or common law remedies in tort (click on the link and search for common law or see here). Thus, Milton Friedman’s preferred remedy for corporate negligence, tort law, continues to operate and there is no doubt that BP’s potential liability under common law alone would be in the billions of dollars.

…The point of the OPA was not to limit tort law but to supplement it.

Tort law, as traditionally understood, could only be used to recover damages to people and property rather than force firms to pay cleanup costs per se. Thus, in the OPA as I read it – and take the details with a grain of salt since I’m not a lawyer–there is no limit on cleanup costs. Moreover, the OPA makes the offender strictly liable for cleanup costs which means that if these costs are proven the offender must pay them regardless (there are a few defenses, such as an act of war, but they are unlikely to apply). The offender is also strictly liable for up to $75 million in economic damages above and beyond cleanup costs. Thus the $75 million is simply a cap on the strictly liable damages, the damages that if proven BP has to pay regardless. But there is no limit, even under the OPA, on economic damages in the event that BP failed to follow regulations or is otherwise shown to be negligent (same as under common law).

The link Krugman supplies, and perhaps the source of his error, was this Talking Points Memo item baldly describing “the maximum liability for oil companies after a spill” as “a paltry $75 million.” Even the most passing acquaintance with the aftermath of real-world oil spills should have been enough for Krugman and TPM author Zachary Roth to realize that liability for assessments to this one federal rainy-day fund is but one component, perhaps but a minor one, of liability for overall spill damage. And even as regards this one specialized federal fund, Krugman and Roth got it wrong, as a glance at the May 1 edition of Krugman’s own paper would have revealed:

When a rich and well-insured company like BP is responsible for the spill, the government will seek reimbursement of what it spends on cleanup from the company and its insurers.

So Krugman’s post not only strained to take a cheap shot at libertarians, but also thoroughly botched a factual background that it would have been easy enough for him to have looked up. Other that that, it was fine.

Friedman and Moynihan Agree with Sanders and Paul

Reportage in today’s New York Times (“Consensus For Limits to Secrecy At the Fed” by Sewell Chan) indicates that more auditing of the Fed is probably in the cards.

Prof. Milton Friedman and Senator Daniel Patrick Moynihan would have most certainly agreed with the thrust of the Senate (S. 604) and House (H.R. 1207) bills sponsored by Senator Bernard Sanders and Representative Ron Paul, respectively.  These bills would partially lift the shroud of secrecy draped over the Fed.

Prof. Milton Friedman weighed in on central bank independence in a 1962 essay, “Should There Be an Independent Monetary Authority?”  Prof. Friedman’s conclusion: “The case against a fully independent central bank is strong indeed.”  As for letting in some sunshine, Senator Moynihan had this to say: “Secrecy is for losers.”

Exiled Iranian Journalist Awarded $500,000 Milton Friedman Prize for Advancing Liberty

Akbar Ganji, an Iranian writer and journalist who spent six years in a Tehran prison for advocating a secular democracy and exposing government involvement in the assassination of individuals who opposed Iran’s theocratic regime, has been named the 2010 winner of the Cato Institute’s Milton Friedman Prize for Advancing Liberty.

Ganji may be best known for a 1999 series of articles investigating the Chain Murders of Iran, which left five dissident intellectuals dead. Later published in the book, The Dungeon of Ghosts, his articles tied the killings to senior clerics and other officials in the Iran government, including former President Ali Akbar Hashemi Rafsanjani. Ganji was arrested for spreading propaganda against the Islamic system and “damaging national security.” He was eventually sentenced to six years in prison, much of it spent in solitary confinement.

Ganji was released from prison in March of 2006 and left Iran shortly thereafter. Many countries around the world offered him honorary citizenship, and he traveled extensively, giving talks promoting democracy in Iran and exposing major human rights abuses by the Iranian government. Despite his battle with Iran’s theocracy, Ganji remains steadfastly opposed to military action by the United States in both Iran and Iraq, saying “you cannot bring democracy to a country by attacking it.”

Established in 2002 and presented every two years, the Milton Friedman Prize for Advancing Liberty is the leading international award for significant contributions to advancing individual liberty.

The Friedman Prize biennial dinner and award presentation will be held at the Hilton Washington Hotel in Washington, D.C, on May 13, 2010. Reserve your table now to attend.

Arne Duncan Embraces False Friedman

In a shocking development, U.S. Secretary of Arne Duncan embraced the ideas of Milton Friedman today, championing the funding of students instead of schools! Unfortunately, it was in the context of higher education – Duncan and his boss have done all they can to destroy school choice elsewhere – and he completely misrepresented what Friedman said about higher ed, suggesting that the Nobel Laureate somehow endorsed the federal Direct Loan Program:

We will end the loans under the Federal Family Education Program and make them directly to students – just as economist Milton Friedman proposed 50 years ago, and just as the Department of Education has been doing since 1993 through the Direct Loan Program.

Were Milton Friedman still with us, I think he would be pretty miffed with Duncan. For one thing, 50 years ago there was no Federal Family Education Loan Program. Moreover, assuming Duncan is referring to Friedman’s “The Role of Government in Education,” Friedman was clearly stating that if there is going to be any higher education aid it should go to students, not schools. And then there’s this:

The resulting system would follow in its broad outlines the arrangements adopted in the United States after World War II for financing the education of veterans, except that the funds would presumably come from the States rather than the Federal government [italics added].

It’s bad enough that Duncan and his boss reject Friedman’s very wise and proven counsel when it comes to elementary and secondary education. It’s even worse that Duncan then has the gall to blatantly lie about what Friedman wrote in an effort to sell a rotten and costly piece of federal legislation, the laughably titled Student Aid and Fiscal Repsonsibility Act.

Today’s White House ‘Jobs Summit’

Today’s Politico Arena asks:

The WH Jobs Summit: “A little less conversation? A little more action? ( please)”

My response:

Today’s White House “jobs summit” reflects little more, doubtless, than growing administration panic over the political implications of the unemployment picture.  With the 2010 election season looming just ahead, and little prospect that unemployment numbers will soon improve, Democrats feel compelled to “do something” – reflecting their general belief that for nearly every problem there’s a government solution.  Thus, this summit is heavily stacked with proponents of government action.  This morning’s Wall Street Journal tells us, for example, that “AFL-CIO President Richard Trumka is proposing a plan that would extend jobless benefits, send billions in relief to the states, open up credit to small businesses, pour more into infrastructure projects, and bring throngs of new workers onto the federal payroll – at a cost of between $400 billion and $500 billion.”  If Obama falls for that, we’ll be in this recession far beyond the 2010 elections.
 
The main reason we’re in this mess, after all, is because government – from the Fed’s easy money to the Community Reinvestment Act and the policies of Freddy and Fannie – encouraged what amounted to a giant Ponzi scheme.  So what is the administration’s response to this irresponsible behavior?  Why, it’s brainchilds like ”cash for clunkers,” which cost taxpayers $24,000 for each car sold.  Comedians can’t make this stuff up.  It takes big-government thinkers.
 
Americans will start to find jobs not when government pays them to sweep streets or caulk their own homes but when small businesses get back on their feet.  Yet that won’t happen as long as the kinds of taxes and national indebtedness that are inherent in such schemes as ObamaCare hang over our heads.  Milton Friedman put it well:  “No one spends someone else’s money as carefully as he spends his own.”  Yet the very definition of Obamanomics is spending other people’s money.  If he’s truly worried about the looming 2010 elections (and beyond), Mr. Obama should look to the editorial page of this morning’s Wall Street Journal, where he’ll read that in both Westchester and Nassau Counties in New York – New York! – Democratic county executives have just been thrown out of office, and the dominant reason is taxes.  Two more on the unemployment rolls.

Dancing on Cash for Clunkers’ Grave

My colleague Chris Edwards called the government’s “Cash for Clunkers” program the “Dumbest Program Ever.”  Given that Chris is familiar with more than a few dumb government programs, that’s quite a statement.

Today, the Washington Post provides more evidence that he might be right:

After the shopping binge inspired by the government’s “Cash for Clunkers” incentive program ended, U.S. auto sales plunged in September and the industry sunk back to the depths from which it started, figures released Thursday showed… The results raised doubts from some economists about the effectiveness of the $3 billion federal program as a stimulus.

Alan Blinder, a Princeton professor who was among the first to push an auto sales incentive program in the United States, doubted it provided much stimulus, in large part because it was in effect for only a month. “Most of the idea of any stimulus is to pull spending up from the future, but it doesn’t make any sense to design a program that only pulls up spending by one month,” said Blinder, a member of the Council of Economic Advisers during the Clinton administration. “Why in the world would you make it a one-month program? The Germans didn’t do that. The British do that. When I designed a mock version of this I was thinking of it as a one-year or two-year program.

So, Professor Blinder, what happens to auto sales after your one- or two-year program disappears? Regardless of whether the programs lasts one month, three months, one year, or three years, when the “free” money from Uncle Sam goes away, the result is going to be the same.

Milton Friedman said “Nothing is so permanent as a temporary government program.”  Let’s hope he’s wrong in the case of Cash for Clunkers.