• “PBS used to ask, ‘If not PBS, then who?’ The answer now is: HBO, Bravo, Discovery, History, History International, Science, Planet Green, Sundance, Military, C‑SPAN 1/2/3 and many more.”
• “The fiscal problem that is destroying U.S. economic confidence is not the fiscal balance, however. It is the level of government expenditures relative to GDP.”
• “The Pentagon’s first cyber security strategy… builds on national hysteria about threats to cybersecurity, the latest bogeyman to justify our bloated national security state.”
• “How ‘secure’ do our homes remain if police, armed with no warrant, can pound on doors at will and, on hearing sounds indicative of things moving, forcibly enter and search for evidence of unlawful activity?”
• National debt is driving the U.S. toward a double-dip recession: 
  
  

With his appearance at a Toledo factory today, President Obama seems to want to make the auto bailout a campaign issue. Let’s welcome that. Americans should understand what transpired.

Fancying himself “Savior of the Auto Industry,” the president deserves credit only for choosing to insulate two companies (and the UAW) from the consequences of their decisions. But with that credit he must accept responsibility for sluggish U.S. business investment, limited job creation, and the anemic economic recovery, which is due in no small measure to the regime uncertainty that descends from his intervention in the auto industry.

The administration suggests that the entire cost of the auto bailout is captured by the outlays that haven’t or won’t be returned. Despite much smaller claims from the administration, that figure will be about $5.5 billion in Chrysler’s case (the administration is overlooking $4 billion written off when New Chrysler emerged from bankruptcy) and somewhere from $7 to $15 billion in GM’s case (depending on average share price for 500 million shares). Should that loss have to be reported to the FEC on a dollar-per-auto-worker-vote basis?

But the costs are much greater than these outlays.

The most compelling objections to the bailout were not rooted in the belief that the government couldn’t use its assumed power to help Chrysler and GM. On the contrary, the most compelling objections were over concerns that the government would do just that. It is the consequences of that intervention — the undermining of the rule of law, the confiscations, the politically driven decisions, and the distortion of market signals — that animated the most serious objections. Ford never publicly objected to the interventions to rescue its rivals. Do you think Ford may feel entitled to a future bailout if needed, having foregone the recent one? Does Ford think it has a pretty good insurance policy if it takes excessive risks that go awry? This is a cost that’s tough to measure, but an important cost nonetheless.

Any verdict on the outcome of the auto industry intervention must take into account, among other things, the billions of dollars in property confiscated from the auto companies’ debt-holders; the higher risk premium built into U.S. corporate debt as a result; the costs of denying the other, more successful auto producers the spoils of competition (including additional market share and access to the resources misallocated at Chrysler and GM); the costs of rewarding irresponsible actors (like the UAW) by insulating them from the outcomes of what should have been an apolitical bankruptcy proceeding; the effects of GM’s nationalization on production, investment, and public policy decisions; the diminution of U.S. moral authority to counsel foreign governments against market interventions that can adversely affect U.S. businesses competing abroad; and the corrosive impact on America’s institutions of the illegal diversion of TARP funds to achieve politically desirable outcomes.

Let’s make the auto bailout a campaign issue and see if we can’t reconcile all of its costs.

Based on this morning’s numbers, I’ve updated my chart showing what the Obama Administration said would happen with the so-called stimulus compared to what actually has happened. As you can see, the unemployment rate is about 2.5 percentage points higher than the White House claimed it would be at this point.

Since I just did an I‑told-you-so post about Greece, I may as well pat myself on the back again (albeit for another completely obvious prediction). Here’s the video I narrated a couple of years ago on the Obama faux stimulus.

Some tidbits from the health care policy world:

• Philip Klein is perhaps too kind to the Obama administration’s latest defense of ObamaCare in “Obama solicitor general: If you don’t like mandate, earn less money.”
• The Obama administration launches a hospital payment reform effort that, rather than promote high-quality, low-cost medical care, will demonstrate once again why Medicare is incapable of such.
• The physicians lobby, having thrown its support behind ObamaCare with the expectation that Congress would jack up Medicare’s physician price controls, is still begging Congress to do so.
• The Obama administration launches a lame effort to reduce medical errors in Medicaid, decades after markets devised far more powerful deterrents.

The Wall Street Journal reports that the Pentagon will soon release a policy document explaining what cyberattacks it will consider acts of war meriting military response. Christoper Preble and I warn against this policy in an op-ed up at Reuters​.com:

The policy threatens to repeat the overreaction and needless conflict that plagued American foreign policy in the past decade. It builds on national hysteria about threats to cybersecurity, the latest bogeyman to justify our bloated national security state. A wiser approach would put the threat in context to calm public fears and avoid threats that diminish future flexibility.

Reuters headlined our piece: “A military response to cyberattacks is preposterous.” Actually, our claim is not that we should never use military means to respond to cyberattacks. Our point instead is that the vast majority of events given that name have nothing to do with national security. Most “cyberattackers” are criminals: thieves looking to steal credit card numbers or corporate data, extortionists threatening denial of service attacks, or vandals altering websites to grind personal or political axes. These acts require police, not aircraft carriers.

Even the cyberattacks that have affected our national security do not justify war, we argue. There is little evidence that online spying has ever done grievous harm to national security, thinly sourced reports to the contrary notwithstanding. In any case, we do not threaten war in response to traditional espionage and should not do so merely because it occurs online.

Moreover, despite panicked reports claiming that hackers are poised to sabotage our “critical infrastructure” — downing planes, flooding dams, crippling Wall Street — hackers have accomplished nothing of the sort. We prevent these nightmares by decoupling the infrastructure management system from the public internet. But even these higher-end cyberattacks are only likely to damage commerce, not kill, so threatening to bomb in response to them seems belligerent.

The Stuxnet worm shows that cyberattacks may indeed do considerable harm, perhaps someday killing on a scale akin to small arms. Attacks like that might indeed merit military response. But they remain hypothetical here.

Vague terms like “cyberattack” and the alarmist rhetoric that surrounds them confuse common nuisance attacks with theoretical tragic ones. The danger is militarized responses to criminal acts, foolish regulation, wasteful spending, or even needless war.

To learn about the exaggeration of cyberthreats, read these two articles from the Mercatus Center. For a good discussion of the policy options for dealing with the various cyberharms, see this 2009 congressional testimony from Jim Harper.

A recently posted article from Reuters contains quotes that are worth sharing, because they perfectly encapsulate what I think is the flawed logic behind trade adjustment assistance, the program that extends enhanced benefits to workers who lose their jobs because of import competition. There are many reasons to oppose this program, as I have outlined before. And the fact the Obama administration is choosing to hold trade agreements hostage unless a stimulus-enhanced version of TAA is renewed is a strong indication that the grand bargain of trade policy — special benefits in exchance for trade liberalization — has broken down.

But one of the most important reasons to oppose TAA is that its very existence implies that “damage” is done when trade is liberalized:

“In large part, workers who lose jobs because of trade do so because of a policy decision by government. The government decided to allow imports, the government decided to allow a liberal investment policy,” [lobbyist Greg] Mastel said.

“I happen to agree with those policies, but you can’t deny they sometimes disadvantage groups of workers,” he said.

Howard Rosen, a visiting fellow at the Peterson Institute for International Economics and executive director of the TAA Coalition, argued the roughly $1 billion annual cost for the program is tiny compared to large benefits the U.S. economy gets each year from trade liberalization.

Workers displaced by foreign competition have a harder time adjusting than other laid-off workers because they tend to be older and less educated and have higher earnings, Rosen said. [emphasis added]

A few things. First, a “policy decision” is made when government decides to respond to special pleading from domestic industry and protect the market by raising taxes on imports. The innocent consumers foot the bill for this, and the fact the tax is hidden and diffuse does not make it morally acceptable. Second, trade liberalization policies may “disadvantage groups of workers” but so do many other policy decisions — the decision to allow the growth of, say, e‑commerce, for example. I happen to agree with those policies, too, but I don’t see Mr. Mastel lobbying for special benefits for bricks-and-mortar retail workers (actually, I shouldn’t give him any ideas). Governments make policy decisions every day about which industries die or survive, sometimes by policy commission, and sometimes by letting certain policies expire. There is nothing special about trade policy in that sense.

Similarly, Mr. Rosen’s objection can be countered by pointing out that perhaps the “higher earnings” trade-displaced workers received were artificially inflated by granting their industry a false, consumer-funded monopoly (in fact, by definition they almost certainly are). Why do we have to compensate them when that monopoly finally expires?

I was speaking to a trade policy wonk friend last week at a lunch about TAA, and he pointed out that “plenty of innocent people are harmed by trade liberalization.” I said to him, and I will repeat here, that plenty of innocent consumers have had their pockets picked for decades so that certain groups can collect rents. So you’ll excuse me if my sympathies are, to say the least, conflicted.

Cornel West feels jilted. In an article on him at Truthdig, Princeton’s Professor of African-American Studies and Religion criticizes President Obama for being ungrateful for West’s service to his campaign.

Much of the article reads like post-breakup grumblings. West describes how Obama never calls him back, “but then a month and half later I would run into other people on the campaign and he’s calling them all the time. I said, wow, this is kind of strange. He doesn’t have time, even two seconds, to say thank you or I’m glad you’re pulling for me and praying for me, but he’s calling these other people.”

Most interesting are West’s criticisms of Obama’s presidency. Like many former supporters, Professor West feels betrayed by Obama’s “same as the old boss” policies. In order to explain this, West engages in the quixotic pursuit of pathologizing President Obama. As Ilya Somin and Jonah Goldberg point out, this is oddly reminiscent of Dinesh D’Souza’s recent book, The Roots of Obama’s Rage, and equally confusing. Run-of-the-mill liberal policies from a liberal president don’t need extensive and convoluted explanations.

Pathologizing political opponents is a difficult and largely self-serving task. Although there are many reasons we believe what we do, it does healthy intellectual discourse a disservice to classify opponents rather than try to refute them. Honest disagreements should not be relegated to the pages of the DSM-IV. Usually, this strategy only helps you feel better about your beliefs. While you have reason and arguments supporting your beliefs, all your opponent has is a long line of racial confusion and societal pressures.

According to West, President Obama (“my brother Barack Obama”) “has a certain fear of free black men” caused by his mixed-race background that has made him always “fear being a white man with black skin.” Obama comes from “Kansas influence, white, loving grandparents, coming out of Hawaii and Indonesia, when he meets these independent black folk who have a history of slavery, Jim Crow, Jane Crow and so on, he is very apprehensive.” Thus, “he has a certain rootlessness, a deracination.”

As Gene Healy has consistently pointed out, President Obama needs no explanation. In the era of the imperial presidency we have presidents who become imperious. Big surprise. What does need an explanation, however, is why Cornel West, an unquestionably intelligent man, still finds this surprising.

Or perhaps he doesn’t. The most striking thing said by West in the article is this: “The tea party folk are right when they say the government is corrupt. It is corrupt. Big business and banks have taken over government and corrupted it in deep ways.” Now, I don’t expect to see Professor West at Glenn Beck rallies, but maybe his disappointment in Obama will lead him to stop believing that the problems with government are personal rather than institutional—that is, that government can be fixed if we just put the right people in office.

Or maybe he’ll just support the next candidate who returns his phone calls.