Topic: Government and Politics

Will Brexit Promote Free Markets?

For those celebrating Brexit as a way to push for freer markets, be aware that there is going to be a fight over this. This is from a Financial Times piece arguing that the UK must ensure that its agriculture industry continues to receive subsidies:

Some free market thinkers believe Britain’s departure from the CAP [the EU’s Common Agricultural Policy] is a golden opportunity to scale back — and even end — agricultural subsidies altogether. They believe the CAP has been hugely distortive because farmers are granted funds according to how much they produce. British farming businesses have therefore been unwilling to innovate, leaving agricultural productivity in the UK lagging well behind that of the US, for example.

Proponents of deep cuts in subsidy also believe they are a sine qua non if Britain is to forge new trade deals with non-EU states. The EU is so heavily committed to agricultural protectionism — imposing tariff barriers on outsiders while subsidising its own farmers — that its ability to sign trade agreements with developing nations has long been restricted. If the UK adopts a different approach, opening up its markets to food exports from, say, Commonwealth nations, it could gain significant new access for UK companies looking to sell services.

Politicians should tread carefully, however. It is in Britain’s interest to maintain a strong farming industry at home and no government should take risks on food security. Farming is an uncertain profession and one that is increasingly exposed to the challenges posed by climate change. That is why most developed countries, whether inside the EU or not, maintain public funding for farming communities.

The right course for Britain is to replace the CAP with a smarter and more innovative system of public support. Instead of subsiding food production, the UK should look to adopt a system of highly specific direct transfers. Future UK governments should, for example, put far more emphasis on paying farmers to tackle specific environmental problems; or to boost training and skills in the workplace; or to invest in research and development projects that boost productivity.

It’s amazing how much effort goes into finding new and “innovative” ways for governments to take taxpayer money and give it to the agriculture industry. No doubt there are better and worse ways to provide that money, and the EU Common Agricultural Policy could be improved, but Brexit offers an opportunity to go beyond the incremental changes suggested above for farm subsidies. That’s why the next few months and years are such an important time for the future of UK policy: There’s a chance to move strongly in the direction of free markets, in agriculture and other sectors. But this article makes clear that there will be people pushing back, and making questionable arguments about “food security,” so it’s important to engage now, while policies are still being decided.

The Manifest Presence of the President

“The president’s presence is already late to this crisis”: that weird phrase comes from yesterday’s widely shared editorial in the Baton Rouge Advocate“Vacation or not, a hurting Louisiana needs you now, President Obama.” It’s not just the man himself who’s missing: it’s his “presence.” “A disaster this big begs for the personal presence of the president at ground zero,” the editorialist insists.

But why? Well, “it’s what chief executives sign up for when they take the oath of office.” Does it help? The Advocate acknowledges that “sometimes, presidential visits can get in the way of emergency response, doing more harm than good,” but that won’t happen in this case. OK, even if it won’t do more harm than good, what good would it do? “In coming here, the president can decisively demonstrate that Louisiana’s recovery is a priority for his administration–and the United States of America.” Or he could demonstrate that by declaring the affected region a disaster area, freeing federal funds for assistance and recovery under the Stafford Act, like he’s already done. Still, “the optics of Obama golfing while Louisiana residents languished in flood waters was striking.”

Perhaps it’s harsh to point out that there’s not a single line of rational argument in the piece—after all, the editorialist is understandably upset about the suffering friends and neighbors have endured over the last week. But for most of the people sharing it, like Governor Scott Walker (R-WI), it’s content-free partisanship, as complaints about presidents golfing invariably are. Here’s the Washington Times grousing: “Obama puts vacation above American people amid deadly Louisiana flooding,” and Howie Carr snarling that while: “In Eastman, Georgia, a cop, a father of three, is murdered in cold blood by a gunman identified as Royheem Delshawn Deeds, who is later arrested in Florida…. Obama golfs at the Farm Neck Golf Club.” I confess I don’t see the connection.

Remembering Boris Yeltsin’s Finest Moment

Yeltsin on tankTwenty-five years ago today I was driving back to Boston from Cape Cod. Two stories dominated the radio news that morning. Hurricane Bob was headed straight for New England, putting my return to Washington in doubt. And Russian hard-liners had staged a coup against Mikhail Gorbachev, who was being held incommunicado in his dacha in Crimea. Eventually I got back to Washington, by a very slow train rather than by plane. The other story had more lasting consequences.

On that morning of August 19, 1991, as the coup plotters issued a declaration of a new Soviet president and seized control of Russian media, supporters of democracy gathered at the Russian parliament. And Boris Yeltsin, the new president of the Russian Soviet Socialist Federal Republic, decided to go out and speak to the soldiers and people outside the parliament building. He climbed up on a tank and rallied opposition to the coup. Two days later it collapsed, and Yeltsin was a national hero. As I wrote when Yeltsin died in 2007:

More than any other man, Boris Yeltsin moved the Russian people from tyranny to a rough approximation of freedom. For that he is one of the authentic heroes of the 20th century.

In a way he personalizes Mikhail Gorbachev’s accidental liberation of the Russian and Soviet people. Gorbachev intended to reform and reinvigorate communism. He brought Yeltsin from the rural region of Sverdlovsk in 1985 to shake up the stagnant party as the Moscow party boss. But Gorbachev set in motion forces that he couldn’t contain. Once people were allowed to criticize the communist system and glimpse an alternative, things moved rapidly–partly because of Yeltsin’s unexpectedly radical leadership.

Two years later Gorbachev and the party hierarchy pushed him out of the Politburo. But he turned around and ran for the Congress of People’s Deputies, won, and then was elected to the Supreme Soviet. He created Russia’s first parliamentary opposition (in the Supreme Soviet) and then won election to the new Russian parliament. Against the continuing opposition of Gorbachev, he was elected to the chairmanship of that body, thus becoming president of the Russian Soviet Federative Socialist Republic.  He stunned politicos by resigning from the Communist Party.

And then in 1991, less than four years after being pushed out of politics by Gorbachev, Boris Yeltsin became the first elected leader in a thousand years of Russian history, winning a popular election for president. Six weeks later he hit his high point. When hard-line communists tried to stage a coup, Yeltsin courageously raced to parliament to rally opposition.  He jumped on a tank to address the crowd, creating one of the iconic images of the collapse of communism.

He went on to effectively dismantle the Soviet Union and to let 14 of the Soviet republics go their own way. He set about freeing prices and privatizing state property, the largest privatization in the history of the world. It was far from an ideal privatization process. But there weren’t many models for wholesale transformation of a communist economy into a market economy. As I wrote in 2007,

Yeltsin wasn’t perfect. He was often boorish and apparently had an excessive taste for alcohol. Despite letting the other Soviet republics go, he launched the devastating war in Chechnya. He unconstitutionally dissolved parliament in 1993; when communist lawmakers defied him, he sent tanks to shell parliament.  But it should be noted that Yeltsin at that time was seeking to defend liberal democracy against a return to communism. Imagine if Nazi legislators had stayed in the German parliament into 1949, resisting Adenauer’s policies and threatening to bring back National Socialism. Would it be undemocratic to call out the military to counter them? Fareed Zakaria’s worry in 1997 that Yeltsin’s creation of a “Russian super-presidency” might be abused by his successors looks all too prescient now. But a reversion to communism would have been worse.

And finally, after becoming the first elected leader in Russia’s history, he became something even more important–the first Russian leader to voluntarily give up power. True, he turned Russia over to Vladimir Putin, making him more like Ronald Reagan, who delivered the United States to the Bushes, than George Washington, who left us in the capable hands of John Adams and Thomas Jefferson.

Still, the words that President Reagan addressed the American soldiers who invaded Normandy could also be applied to Boris Yeltsin: “These are the champions who helped free a continent. These are the heroes who helped end a war.”

For all his mistakes, Yeltsin helped to free a continent and end the Cold War. And 25 years ago today was his finest hour.

 

A Twitter Conversation with Trump’s Trade Adviser

Recently, Donald Trump announced a team of economic advisers. One of them is Dan DiMicco of Nucor Steel. When DiMicco offered up a tweet about trade, I thought this might be an opportunity to engage him and try to learn more about Trump’s trade views, which are protectionist in tone but lack much detail. Here’s how the exchange went, minus a couple tweets that I left out to keep this post shorter.  (Spoiler: He didn’t seem to know much about the substance of trade law!) 

In response to his initial tweet, I asked for some specifics on how Trump’s trade deals would be different from existing trade deals: 

He referred me to the “7 point plan” Trump had previously announced:

So, I picked one of the points – Trump’s suggestion to renegotiate NAFTA – and followed up with a request for details:

Results from the 2016 Post-Libertarianism v. Conservatism Debate Survey

The Cato Institute and Heritage Foundation recently co-hosted a debate in which interns from both organizations debated whether conservatism or libertarianism is the better philosophy. At the conclusion of the debate, the Cato Institute conducted a post-debate survey of attendees finding important similarities between millennial conservative and libertarian attendees on skepticism toward government economic intervention and business regulation, but also striking differences in attitudes toward immigration, LGBT issues, national security, privacy, foreign policy, and perceptions of bias in the justice system.

Full LvCDebate Attendee Survey results found here.

What Are Their Priority Issues? 

The survey asked conservative and libertarian attendees to rate on a scale of 1 to 5 how concerned they were about nineteen different issues.  

Note: This chart displays the mean level of concern (on a scale of 1-5) across 19 different issues for both conservative and libertarian millennials who attended the Libertarianism v. Conservatism intern debate at the Cato Institute. Moving from the inner to the outer circles indicates an increasing level of concern for each respective issue. Results from statistical tests are shown which indicate if conservatives and libertarians significantly differed in their concern for the issue *** p<.001 ** p < .01 * p < .05.

Note: This chart displays the mean level of concern (on a scale of 1-5) across 19 different issues for both conservative and libertarian millennials who attended the Libertarianism v. Conservatism intern debate at the Cato Institute. Moving from the inner to the outer circles indicates an increasing level of concern for each respective issue. Results from statistical tests are shown which indicate if conservatives and libertarians significantly differed in their concern for the issue *** p<.001 ** p < .01 * p < .05.

Despite a multitude of differences, millennial libertarian and conservative attendees share almost the same top five political priorities: 

  • Size of government
  • Government spending and debt
  • Taxes
  • Economy/jobs  

Japan’s Slow-Motion Fiscal and Monetary Suicide

Remember Bill Murray’s Groundhog Day, the 1993 comedy classic about a weatherman who experiences the same day over and over again?

Well, the same thing is happening in Japan. But instead of a person waking up and reliving the same day, we get politicians pursuing the same failed Keynesian stimulus policies over and over again.

The entire country has become a parody of Keynesian economics. Yet the politicians make Obama seem like a fiscal conservative by comparison. They keep doubling down on the same approach, regardless of all previous failures.

The Wall Street Journal reports on the details of the latest Keynesian binge.

Japan’s cabinet approved a government stimulus package that includes ¥7.5 trillion ($73 billion) in new spending, in the latest effort by Prime Minister Shinzo Abe to jump-start the nation’s sluggish economy. The spending program, which has a total value of ¥28 trillion over several years, represents…an attempt to breathe new life into the Japanese economy… The government will pump money into infrastructure projects… The government will provide cash handouts of ¥15,000, or about $147, each to 22 million low-income people… Other items in the package included interest-free loans for infrastructure projects…and new hotels for foreign tourists.

As already noted, this is just the latest in a long line of failed stimulus schemes.

The WSJ story includes this chart showing what’s happened just since 2008.

Not My Commander in Chief

Hillary Clinton declares on the campaign trail, “Donald Trump simply doesn’t have the temperament to be president and commander in chief of the United States.” Thankfully, he isn’t going to be – not because of his standing in the polls, but because there is no such position as “commander in chief of the United States.”

This is a constitutional republic, and we don’t have a commander in chief. According to Article II of the Constitution, “The President shall be Commander in Chief of the Army and Navy of the United States.”

That’s an important distinction, and it’s disturbing that any candidate for the presidency would miss it. Hillary Clinton may want to be commander in chief of the whole country, of you and me, and to direct us and our economic activities the way the president directs the officers and soldiers of the armed forces. But if so, she needs to propose an amendment to the Constitution – an amendment that would effectively make the rest of the Constitution irrelevant, since it was designed as a Constitution for a limited government of a free people.

Much as they might both wish it, neither Donald Trump nor Hillary Clinton is going to be my commander.