Topic: Government and Politics

Anti-Socialism = Racism ??

At Salon.com, Michael Lind asks and answers, “Is Barack Obama a socialist?  If he is, then so is John McCain.“ I have to agree.  McCain so often plays the class warrior that his “desperate use of the socialist smear is particularly shameless.” I might add that McCain is giving anti-socialism a bad name by associating it with hypocrisy, anger, piety, trigger-happiness, etc.

But I can’t go as far as Lind, who doesn’t really seem interested in the answer to his own question. Indeed, it appears Lind’s purpose is to teach McCain the true meaning of shameless. Lind writes:

McCain and Palin claim that Obama’s proposed healthcare system is socialist. It is nothing of the sort. It is a variant of the employer-friendly, insurance-friendly “play-or-pay” scheme discussed in the 1990s. Employers will be given the choice of providing tax-favored health insurance to their employees or being taxed to support a public insurance system. Over time the latter might expand, but for the foreseeable future our dysfunctional private insurance system will survive.

I’m sorry, but the fact that Obama would preserve private health insurance says absolutely nothing about whether his health-care plan is socialist. (If your jaw just hit the space bar, you probably need to read my paper, “Does Barack Obama Support Socialized Medicine?”) The Church of Universal Coverage loves pointing to the presence of “private” health care because it distracts attention from what they’re really doing.

Lind further attempts to innoculate Obama from the charge of socialism by associating the candidate with that great anti-socialist Friedrich Hayek. Lind describes Hayek’s Road to Serfdom as “the bible of free-market libertarians,” and refers to the part where Hayek writes:

Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness…neither the desire to avoid such calamities nor the efforts to overcome their consequences are, as a rule, weakened by the provision of assistance — where, in short, we deal with genuinely insurable risks — the case for the state’s helping to organize a comprehensive system of social insurance is very strong. There are many points of detail where those wishing to preserve the competitive system and those wishing to supercede [sic] it by something different will disagree on the details of such schemes; and it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective. But there is no incompatibility in principle between the state’s providing greater security in this way and the preservation of individual freedom.

When Hayek wrote that in 1943, the world had little experience with health insurance at all, much less with market provision of health insurance. Today, we have lots of experience with the former and enough experience with the latter to know that markets “can make adequate provision” of health insurance for more than just a “few individuals.” In 1943, Hayek and his contemporaries also knew little about how health insurance affects the incidence of health “losses.” Today, we have lots of evidence to show that moral hazard is real and — as Hayek would predict — governments have only the bluntest of tools for dealing with it. Finally, universal-coverage schemes have come to consume such considerable shares of workers’ earnings, as well as other aspects of individual self-determination, that it is implausible to suggest that socialized medicine is compatible with individual freedom.

In short, Hayek was wrong here. (So much for the whole “bible” thing.) Even if Hayek were right, that wouldn’t make Obama’s health plan any less reliant on centralized planning — i.e., any less socialist.

“Another champion of healthcare socialism,” writes Lind, ”was the late Milton Friedman, [who] proposed that major costs be paid for by mandatory catastrophic healthcare coverage run by the federal government.” Lind cites Friedman’s support of a Negative Income Tax as further evidence of Friedman’s socialist tendencies. 

Unlike Lind’s claims about Hayek, this is just silly. Friedman offered those ideas as second-best alternatives to prominent proposals that were far more socialist — some of which had already been enacted (socialized medicine for the elderly, the expanding welfare state) and some of which merely seemed inevitable (socialized medicine for all). Anyone looking for Friedman’s true preferences need only consult Free To Choose (which he coauthored with his wife Rose):

In our opinion, there is no case whatsoever for socialized medicine. On the contrary, government already plays too large a role in medical care. Any further expansion of its role would be very much against the interests of patients, physicians, and health care personnel.

Since Obama would vastly expand the federal government’s role in health care, I think we can guess where the Friedmans stand.

Lastly, Lind gets nasty:

McCain’s last-minute clarion call is really a racial “dog whistle.” The McCain campaign may appear to be debating public philosophy, when in fact it is making a disguised appeal to white racism. If that is the case, then “redistributionist” and “socialist” may be intended to be understood by white swing voters as code words that function the way that “welfare queen” did for the Reagan campaign. A “socialist” or “redistributionist” is a politician who taxes white people like Joe the Plumber and gives money to … you know who.

Does Lind mean to suggest that voicing opposition to “socialist” policies, “redistribution,” and “spreading the wealth around” is necessarily racist? If not, then is there any way an anti-socialist could say such things without Lind suspecting him of racism? Or of race-baiting?

And what’s with this eagerness to impute evil motives to those who disagree with you? That’s so … McCain-esque.

Bush’s Midnight Regulations?

The lead story in today’s Washington Post — above the economy, above the election — is a warning that the Bush administration may deregulate something before it leaves office. Here’s the online headline and subhead:

White House Makes a Last Push to Deregulate

New regulations, which would weaken rules aimed at protecting consumers and environment, could be difficult for next president to undo.

The story begins:

The White House is working to enact a wide array of federal regulations, many of which would weaken government rules aimed at protecting consumers and the environment, before President Bush leaves office in January.

The new rules would be among the most controversial deregulatory steps of the Bush era and could be difficult for his successor to undo. Some would ease or lift constraints on private industry….

Once such rules take effect, they typically can be undone only through a laborious new regulatory proceeding, including lengthy periods of public comment, drafting and mandated reanalysis.

OK, that’s news. A fair story. Although of course the reporter quotes no economist critical of regulation — just a couple of White House flacks and a business lobbyist — though he does quote at least three pro-regulation “public interest” activists issuing dire warnings of impending doom.

But I was curious: Did the Post run a prominent story a few days before the 2000 election about the Clinton administration’s push to impose sweeping regulations before they left office? You know the answer: of course they didn’t. Before election day, according to a Nexis search, there was one reference at the tail end of the jump of a Post story in the Business section to the Mercatus Center’s Midnight Regulations website. So they knew about the problem — Mercatus was publicizing it, and the Houston Chronicle ran a front-page story — but the Post didn’t think voters needed to know.

Even though, as today’s story mentions after the jump,

[T]he last-minute rush appears to involve fewer regulations than Bush’s predecessor, Bill Clinton, approved at the end of his tenure. …

“Through the end of the Clinton administration, we were working like crazy to get as many regulations out as possible,” said Donald R. Arbuckle, who retired in 2006 after 25 years as an OMB official.

Maybe they didn’t quite grasp the problem back in 2000. We’ll see whether there are such stories toward the end of the Obama administration in the Post — and on Diane Rehm, and on ABC News, and in the New York Daily News, and all the other places that are very concerned about “midnight deregulation.”

Does Harper Support Regulation of Gambling and Financial Services?

My post yesterday regarding Members of Congress who voted to exempt financial derivatives from state gambling laws created a firestorm of controversy. Well, two people asked me about it, anyway …

(A new WashingtonWatch.com post on the presidential candidates who didn’t help create our economic problems is available for your perusal, by the way.)

“Why would a libertarian think it’s bad to exempt anyone from regulation? Do you support gambling laws? Do you support financial services regulation?”

These are all fair questions, given my objection to preempting state gambling laws in this case. So let me expand on this observation from my earlier post:

Many gambling laws are nanny-statism, of course, but if they’re going to go away, they should be repealed by the legislatures that wrote them. This federal preemption gave special permission to certain parts of the financial services industry to run a huge gambling operation masquerading as a market in real assets.

I’m quite a bit less a fan of preemption than many of my colleagues. There are fair-minded people who believe that national markets call for national regulatory regimes to replace the states’. As commerce has become national, the Commerce Clause has become a grant of authority to regulate national markets, they appear to believe.

I’m not convinced. Given the nation’s experience under the Articles of Confederation, the Commerce Clause was included in the Constitution to prevent states from regulating parochially - that is, for the benefit of local interests over out-of-staters. The Constitution gave Congress authority to regulate commerce “among the states” - which, if words have meaning, is something narrower than just regulating all commerce.

So when state gambling laws interfere with an interest capturing the sympathy of a majority in Washington, D.C., that doesn’t necessarily empower Congress to withdraw state authority. Congress is supposed to prevent only state parochialism, not every bad idea coming out of a state legislature.

If we are to have a healthy political economy, debates about state gambling regulations should be taken to each state that enacted them. The merits of freedom and personal responsibility should be made clear there so they win majorities once again.

The alternative preferred by many is a shortcut: trumping states by moving power to the federal level. This is not a felicitous trend, and its end-point - a remote national government with plenary power - is not good for liberty.

Gambling regulation is nanny-statism, but I wouldn’t go and kick the legs out from under state anti-gambling regulation through federal preemption - especially not for one narrow part of the financial services industry. This is not a game, where any loss for regulation is a gain for liberty.

If responsibility for self-protection against gambling is going to be restored to people in a given state, the legislature of that state should repeal the anti-gambling laws, signaling people that they are once again responsible for themselves. What happened here was that Congress trumped state power and withdrew the protection of state anti-gambling regulation without signaling to anyone that there were risks to be encountered. What looked like asset-based financial services to all but a few was in fact gambling.

The Congress helped perpetrate a deception about what was going on with financial derivatives - and just because some regulation went under the tires, that isn’t a victory for liberty.

No Socialists Here

Is Barack Obama a socialist? That’s the question Cato adjunct scholar Don Boudreaux asks in one of the last paper editions of the Christian Science Monitor. Not really, he concludes. But

Anyone who speaks glibly of “spreading the wealth around” sees wealth not as resulting chiefly from individual effort, initiative, and risk-taking, but from great social forces beyond any private producer’s control….This “socialism-lite,” however, is as specious as is classic socialism. And its insidious nature makes it even more dangerous. Across Europe, this “mild” form of socialism acts as a parasitic ideology that has slowly drained entrepreneurial energy – and freedoms – from its free-market host.

So why does he say that Obama is not a socialist? Well, after all,

“Socialism” originally meant government ownership of the major means of production and finance, such as land, coal mines, steel mills, automobile factories, and banks.

And no American politician would favor that, right? Oh, right.

For a Good Time Call the U.S. Fish & Wildlife Service

Back in September, the U.S. Fish & Wildlife Service became a punchline after issuing 3.5 million duck stamps with the wrong phone number. But it wasn’t just any ordinary wrong number.  Unassuming callers who were “lucky” enough to dial it were invited to “talk only to the girls that turn you on” for $1.99 a minute.

It’s a safe bet that were this to have happened in the private sector, someone would have been reprimanded or fired.  Not so in the public sector.  In fact, the Washington Post’s Al Kamen tells us this morning that an upcoming U.S. Fish and Wildlife Service trip “will send 28, that’s twenty-eight, senior officials to Mexico for a week of post-election R and R.  It includes a tour of the fabulous Mayan ruins in Palenque in the Lacandon rain forest.”

Kamen says, “It’s unclear what benefit will be derived by the wildlife agency’s director, Dale Hall, who’s retiring Jan. 3, and Assistant Interior Secretary Lyle Laverty, who should be moving on after Jan. 20. The group includes most of the agency’s regional directors and various assistant directors.”

The folks out there working hard today, whose taxes pay for incompetent, joy-riding career bureaucrats like Dale Hall, should bear stories like this in mind the next time some DC politician speaks of the federal budget being “tight.”

Bailouts: Where Will They End?

“There’s no logical end to it,” Cato Senior Fellow Gerald P. O’Driscoll Jr. said to Neil Cavuto on Fox Business. He’s talking about the incredible expanding bailouts. It started with Bear Stearns in March and then homebuilders in April. Then Fannie Mae and Freddie Mac in September, and after that the deluge. AIG, announced at $85 billion but quietly increased to $123 billion so far, and the $700 billion centerpiece and then money market funds and then bank nationalizations and an increase in the federal guarantee to bank depositors. Where will it stop?

Friday’s papers noted that the head of the FDIC said that the federal government might start guaranteeing home mortgages. On Saturday we learned that insurance companies want to get a piece of the money. Yesterday the Treasury said that automobile companies–which already got their own $25 billion program–might also be eligible for the general “financial rescue plan,” and their success might encourage other industries to try to get in on it.

As I noted before, Congress is talking about “a second economic stimulus package, totaling $50 billion in the form of money for infrastructure projects, relief for state governments struggling with rising Medicaid costs, home heating assistance for the Northeast and upper Midwest, and disaster relief for the Gulf Coast and the Midwestern flood zone.” And Transportation Secretary Mary Peters wants “an $8 billion infusion” for the federal highway trust fund.

Where does all this money come from? The total cost is hard to estimate, because we don’t know how many of these guarantees will actually result in payments. But some analysts are talking about a total bill of $2-3 trillion. Given the underestimate on the cost of the Iraq war, we shouldn’t have confidence in any claims that it will be less. So where does the money come from? Even Obama doesn’t want to raise taxes that much. And if you tax Americans to bail out as many Americans as we’re now talking about helping, eventually you’re going to be taxing people to bail themselves out. In fact, the government is likely to borrow some of the money and have the Federal Reserve create more of it. That process seems to be under way, as Greg Mankiw and Jeff Hummel have discussed. How can that astounding and unprecedented increase in the monetary base not lead to inflation, even hyperinflation? We’ve already decided to tax the prudent and thrifty to bail out the imprudent and irresponsible. Now the prudent may face a danger even worse than taxes: inflation that erodes their hard-earned savings.

Howard Baker famously called Ronald Reagan’s tax cuts a “riverboat gamble.” This is more like a “Celebrity Solstice gamble.”

Members of Congress Who Voted for the Financial Crisis

In late 2000, with the budgeting and spending process in collapse, Congress hurriedly passed a mammoth spending bill called the Consolidated Appropriations Act, 2001. It contained a provision preempting state regulation of financial derivatives under gambling or “bucket shop” laws. The result less than a decade later was the out-of-control market for credit default swaps that has caused so much financial, and perhaps economic, chaos.

One hundred fifty-five members of Congress who voted for the Consolidated Appropriations Act and the preemption of state law are still serving and are up for election next week. Twenty-two senators who stood by as the bill passed by unanimous consent are also up for election Tuesday.

Details are in a WashingtonWatch.com blog post entitled “Did Your Representative Cause the Financial Crisis?

Many gambling laws are nanny-statism, of course, but if they’re going to go away, they should be repealed by the legislatures that wrote them. This federal preemption gave special permission to certain parts of the financial services industry to run a huge gambling operation masquerading as a market in real assets.

All this is a good illustration of why it’s harmful for Congress to let the annual budgeting and spending process go off the rails. Maybe voters will hold some of their representatives accountable.