Quotulatiousness

September 17, 2014

Creating jobs, good. Creating subsidized jobs, not so good.

Filed under: Economics, Government — Tags: , , , , — Nicholas Russon @ 09:33

Gregg Easterbrook on the difference between ordinary jobs and government subsidized job creation:

Elon Musk Recharges His Bank Account: Tesla’s agreement with Nevada to build a battery factory is expected to create about 6,000 jobs in exchange for $1.25 billion in tax favors. That’s about $208,000 per job. More jobs are always good. But typical Nevada residents with a median household income of $54,000 per year will be taxed to create very expensive jobs for others. Volkswagen is expanding its manufacturing in Tennessee, which is good. But the state has agreed to about $300 million in subsidies for the expansion, which will create about 2,000 jobs — that’s $150,000 per new job, much of the money coming from Tennessee residents who can only dream of autoworkers’ wages. The median household income in Tennessee is $44,140, about a third of the tax subsidies per new Volkswagen job. The Tesla handout was approved by the Democratic state legislature of Nevada; Tennessee’s Republican-controlled state government approved the Volkswagen corporate welfare deal.

At least it’s a bargain compared to federally subsidized solar jobs. A Nevada solar project — state that is home to Senate Majority Leader Harry Reid, President Barack Obama’s closest ally on Capitol Hill — cost $10.8 million in subsidies per job created. Local public interest groups noticed the extreme subsidy while the national media did not.

This cheeky website monitors giveaways state by state.

August 27, 2014

Disappointingly, SpaceX plays the crony capitalist game with Texas politicians

Filed under: Business, Government, Space — Tags: , , — Nicholas Russon @ 10:28

If you’ve been reading the blog for a while, you’ll have picked up that I’m a fan of SpaceX and other non-governmental organizations in the space race. I wouldn’t go so far as to say Elon Musk is a hero, but I’ve generally been happy about his company’s successes in bringing more private enterprise into the launch business. However, as Lachlan Markay explains in some detail, Elon Musk is not above taking government funds to do things he’d be doing anyway, just like crony capitalists in the rest of the government-industrial complex:

Shortly before a private spaceflight company’s test rocket exploded over southern Texas last weekend, state lawmakers announced millions in subsidies to get the company to continue launching rockets in the Lone Star State.

Space Exploration Technologies, commonly known as SpaceX, will receive more than $15 million in public financing to build a launch pad in Cameron County, near the Mexican border.

The subsidies came after SpaceX’s founder, billionaire tech mogul and pop technologist Elon Musk, made campaign contributions to key state lawmakers and hired lobbyists with ties to Austin.

SpaceX is one of a number of innovative and disruptive startups that, though lauded by some free marketeers for making government-run markets more competitive, are finding themselves drawn to political advocacy, whether out of shrewdness or necessity.

Of the more than $15 million in incentives for a SpaceX launch facility in Brownsville, Texas, announced this month, $13 million will come from the state’s Spaceport Trust Fund.

Initially created in 2002, the fund began to wind down together with the idea of commercial spaceflight. But with the ascendancy of SpaceX and similar companies, Texas looked to secure its place as a destination for commercial spaceflight operations.

Musk took notice. A prolific political donor, he began pouring money into the campaigns of key state lawmakers. On November 7, 2012, he donated $1,000 to state representative Rene Oliveira (D). Two weeks later, he gave state senator Eddie Lucio Jr. (D) $2,000.

The next month, the Associated Press reported that Lucio and Oliveira were working to secure state backing for a potential SpaceX launch pad in Brownsville.

As Drew M. says at Ace of Spades H.Q., it’s not like this is a new thing for businesses or for politicians, it’s just disappointing:

I’m not naive to think this sort of stuff hasn’t gone on forever and will go on forever, it’s simply human nature. That’s why making government at levels as small as possible is so important.

What does continue to surprise me when it shouldn’t is how cheap it is to buy politicians. Remember Team GOP’s hero, Mississippi Senator Thad Cochran’s longtime aide who accepted $20-30K in gifts from Jack Abrahmof in return to ensuring the felon’s clients received millions in government money?

When you think about it it’s really no surprise that politicians sell themselves so cheaply. Unlike honorable whores who sell their own bodies, politicians sell other people’s money. Plus, they make it up in volume.

This bi-partisan rush to hand out everyone’s money for their own gain is part of why I’m drifting away from conservatism and towards libertarianism. Screw them all.

July 26, 2014

QotD: French “ultra-liberalism”

Filed under: Bureaucracy, Europe, Government, Quotations — Tags: , , , , — Nicholas Russon @ 00:01

The French press, media and intellectuals castigate ad nauseam what they call the ‘ultra-liberalism’ of the present-day western world: and their characterization, as intellectually lazy as it is inaccurate, now goes virtually by default. Very few are the commentators who see through its inaccuracy. That a country whose public sector accounts for more than half of economic activity, and which is as highly-administered as France (and, it must be said, often well-administered, for who would not rather go on the Paris Metro than the New York Subway?), cannot plausibly be described as ‘ultra-liberal,’ ought to be perfectly obvious even on the most casual reflection, but alas it is not. If France is ultra-anything it is ultra-corporatist, but even that would be an exaggeration. And so present discontents are laid at the door of ultra-liberalism, though in fact a considerable proportion of the resentments and discontents of the young who approve of M’Bala M’Bala are attributable to the rigidity of the French labor market, which is caused precisely by an illiberal nexus of protections and restrictions.

The problem, then, is not ultra-liberalism but insufficient liberalism. The difference between France and other western countries, incidentally, is one of degree and not of type, though even degree can be important: illiberalism in the French labor market has in a matter of a few years turned London into one of the largest French-speaking cities in the world.

Theodore Dalrymple, “Illusions of Control in the Omnicompetent French State”, Library of Law and Liberty, 2014-01-07

July 23, 2014

The partisan reasons for institutionalized crony capitalism

Filed under: Business, Government, USA — Tags: , , , , — Nicholas Russon @ 07:38

There’s capitalism and there’s crony capitalism: they share a name, but they’re very different creatures. Crony capitalism thrives when government controls a large share of the economy, because then the politicians and bureaucrats have more goodies to share with their “capitalist” cronies. The bigger the slice of the pie controlled by political leaders and unelected regulators, the better the situation for the favoured companies — and that usually means the biggest of the big corporations. In the US government, one of the best examples of institutionalized crony capitalism is the Export-Import Bank (Ex-Im): it exists to allow big corporations like Boeing to sell their products to foreign buyers at highly favourable interest rates, with the taxpayer picking up the risks and the American corporation creaming off the excess profits.

This system works so well — for the businesses being subsidized and the politicians who control the process — that it’s difficult to see it being stopped any time soon. Ex-Im’s enabling legislation is due to be re-authorized later this summer, so this is one of those brief chances to stop it. The problem is that it isn’t just Republicans who support it (because “what’s good for General Motors Boeing is good for America”), but also Democrats … sometimes the very same Democrats who make a lot of speeches about the evils of Wall Street. Jonah Goldberg explains why:

The Left’s anti-big-business populism is very different. It doesn’t want to cut the government’s incestuous relationship with big business; it simply wants to bring business to heel. Big business should do what Washington tells it to do, and when it does, it will get treats. When it doesn’t, it will get the newspaper to the nose. But big business will never be let off its leash, if the Left has its way.

“[Senator Elizabeth] Warren doesn’t have a problem with big banks or corporations,” the Federalist’s David Harsanyi writes. “She has a problem with banks and corporations that make profits in ways that she finds morally intolerable. She is an opponent of dynamism, not cronyism.”

This has always been the central idea behind progressive economics. Bureaucrats and other planners need — or at least want — ever more power to decide how economic resources are arranged and allocated. That doesn’t mean they’re socialists, it just means that corporations need to follow their lead. Indeed, good “corporate citizenship” means acquiescing to the priorities of progressive state planners and whatever their latest idea of “public–private partnerships” might be. The one constant in such partnerships is that business is always the junior partner.

This was the vision behind Woodrow Wilson’s “war socialism,” FDR’s New Deal, LBJ’s Great Society, Bill Clinton’s “Third Way,” and virtually all of Barack Obama’s economic policies. What is Obamacare but an attempt to turn the entire health-care industry into Washington’s well-fed lapdog?

What’s amazing is that people are still capable of shock when it turns out that a policy of treating businesses like dependent lapdogs yields businesses that try to have the government’s lap all to themselves.

July 17, 2014

Mussolini would recognize (and approve of) “economic patriotism”

Filed under: Economics, Government, History, USA — Tags: , , , , — Nicholas Russon @ 07:58

Kevin Williamson isn’t a fan of the recent upsurge in usage of the term “economic patriotism”, both for practical and historical reasons:

“Economic patriotism” and its kissing cousin, economic nationalism, are ideas with a fairly stinky history, having been a mainstay of fascist rhetoric during the heyday of Franklin D. Roosevelt’s favorite “admirable Italian gentleman.” My colleague Jonah Goldberg has labored mightily in the task of illustrating the similarities between old-school fascist thinking and modern progressive thinking on matters political and social, but it is on economic questions that contemporary Democrats and vintage fascists are remarkably alike. In fact, their approaches are for all intents and purposes identical: As most economic historians agree, neither the Italian fascists nor the German national-socialists nor any similar movement of great significance had anything that could be described as a coherent economic philosophy. The Italian fascists put forward a number of different and incompatible economic theories during their reign, and the Third Reich, under the influence of Adolf Hitler’s heroic conception of history, mostly subordinated economic questions as such to purportedly grander concerns involving destiny and other abstractions.

Which is to say, what the economic nationalism of Benito Mussolini most has in common with the prattling and blockheaded talk of “economic patriotism” coming out of the mealy mouths of 21st-century Democrats is the habit of subordinating everything to immediate political concerns. In this context, “patriotism” doesn’t mean doing what’s best for your country — it means doing what is best for the Obama administration and its congressional allies. This is where my fellow conservatives who write off Barack Obama as a Marxist really get it wrong: He has no meaningful economic philosophy whatsoever. Marxism might be a moral step backward for Barack Obama, but it would be an intellectual step up in the sense that it at least represents a coherent worldview. (“At least it’s an ethos.”) In years of listening to Barack Obama’s speeches, I’ve never detected any evidence that he understands, or even has any interest in, economic questions as such. He is simply a keen political calculator. The conflation of the national interest — “patriotism” — with the interest of the party or the supreme leader is too familiar a demagogic technique to require much explication.

That’s the Washington way: Create stupid financial incentives, complain when people respond to them — and then declare that conformity with your political agenda is identical to patriotism. The production values may be Hollywood slick, but this is just another third-rate sequel: Banana Republic: The Tax Code Strikes Back.

Except the tax code is not striking back. Democrats complain about it, but they rarely if ever try to do anything about the industry handouts and sweetheart deals enshrined therein — given that they wrote so many of them, why would they?

June 30, 2014

QotD: The new American ruling class

Filed under: Bureaucracy, Government, Quotations, USA — Tags: , , — Nicholas Russon @ 00:02

Our political bureaucracies are grasping and vicious, and some of the larger of them are dominated by people who are, if we’re being frank, not especially bright. No society can long thrive by making its creators and innovators subservient to its pimps and thieves. But agencies with the power to tax or the power to pay themselves out of taxes have the power to command, and, human nature being what it is, it is not surprising that their executives use that power to extort for themselves extraordinary levels of compensation (occasionally through criminal means, as in the Bell case), even as they bore us all to death talking about the sacrifices they have endured on behalf of their careers in “public service.” [...]

It is baffling that my progressive friends lament the influence of so-called big money on government while at the same time proposing to expand the very scope and scale of that government that makes influencing it such a good investment. Where government means constables, soldiers, judges, and precious little else, it is not much worth capturing. Where government means somebody whose permission must be sought before you can even begin to earn a living, when it determines the prices of products, the terms of competition, and the interest rates on your competitors’ financing, then it is worth capturing. That much is obvious. Progressives refuse to see the inherent corruption in the new ruling class — and, make no mistake, we now have a ruling class — because it is largely made up of them, their colleagues, and people who are socially and culturally like them and their colleagues. Getting a couple hundred grand a year to teach one class doesn’t look so crazy if you think you might be the guy who gets the check next time around. You can be an anti-elite crusader on behalf of the poor and disenfranchised from your million-dollar mansion, even if you never find yourself so much as downwind from a poor person, without fearing charges of hypocrisy: Ask Senator Warren. Of course Chelsea Clinton does not have the sense or the good taste to be embarrassed when talking about her blasé attitude toward money: Money is invisible to her for the same reason that water is invisible to a fish — she’d notice it if it weren’t there, and flap like a desperate landed mackerel until she’d secured her next big payday.

Kevin D. Williamson, “Politics Pays”, National Review, 2014-06-29.

June 28, 2014

31% of Americans believe the US is a crony capitalist state

Filed under: Economics, Government, USA — Tags: , — Nicholas Russon @ 10:55

Thirty-one percent of Americans are probably right:

Many Americans remain unconvinced that the United States has a system of free market capitalism and continue to be wary of government involvement in the economy.

A new Rasmussen Reports national telephone survey finds that 32% of American Adults believe the United States has a system of free market capitalism, while just as many (31%) say it is a system of crony capitalism. Slightly more (37%) are not sure what kind of capitalist system America has.

That’s from a survey conducted at the beginning of April. I suspect the same survey done now would produce a plurality for the crony capitalist side.

H/T to Jesse Walker for the link.

June 25, 2014

Mexico’s champion crony capitalist

Filed under: Americas, Economics, Government — Tags: , , , — Nicholas Russon @ 08:31

I don’t read the various financial magazines’ regular fanboi coverage of multi-billionaires, so I wasn’t all that aware of the fabulous wealth of Mexico’s Carlos Slim. Slim is one of the richest men in the world, but he doesn’t owe his success to technical innovation or outstanding business skills … he owns the Mexican telephone market thanks to a sweetheart “privatization” deal he got from his good friend in the Presidential palace back in 1990. In other words, his fortune largely derives from his ability to skim off vast profits from a captive customer base. Steve Sailer rounds up some interesting snippets about Slim, including a bit from French economist and current media darling Thomas Piketty:

Andres Oppenheimer wrote for PBS:

    Mexico in the early nineties was similar to American capitalism in the late 1870s. Azcarraga, Slim, and Hernandez were not much different from railroad and steel magnate Andrew Carnegie or oil trader John D. Rockefeller. Like the American “Robber Barons” of their time, the Mexico Twelve were making a fortune from their close partnership with the government. And to their immense relief, Mexico was not contemplating anything like the 1890 Sherman Anti-Trust Act, which had broken up U.S. monopolies through forced sell-offs.

In return, Salinas demanded at a private dinner party on February 23, 1993 that Slim and Mexico’s other 29 oligarchs donate $25 million each to the ruling party’s campaign war chest, a total of $750 million. Oppenheimer notes:

    Telecommunications magnate Slim … supported the motion, adding only that he wished the funds had been collected privately, rather than at a dinner, because publicity over the banquet could “turn into a political scandal.”

Now, you might think that there is something unseemly about a regular contender for the title of World’s Richest Man making his fortune off the relatively small Mexican economy. We’re constantly told that Mexicans have to be allowed to flock to America to escape starvation in their own land. Yet one well-connected monopolist is permitted to pile up an enormous trove by charging exorbitant fees for the lifeblood of any economy, communications.

A 2006 article in the New York Times pointed out:

    The Organization for Economic Cooperation and Development, an association of wealthy countries based in Paris, reports that Mexicans pay some of the highest phone rates in the world, with calls costing 50 percent more than the group’s average. Forbes reported that the average monthly phone bill for a small business in Mexico is $132, compared with $60 in the United States.

Slim epitomizes the toll taken on the Mexican economy by monopolists:

    As a result, said Mr. Ortiz of the Bank of Mexico, economic growth is one percentage point less than it could be with real competition. There are not enough jobs to keep workers from migrating to the United States …

Piketty, however, is offended by how Slim

    … is often described in the Western press as one who owes his great wealth to monopoly rents obtained through (implicitly corrupt) government favors…

(Slim, himself, has been proactive about improving his press coverage: in 2008 he financially bailed out the New York Times and is now the newspaper of record’s second-biggest owner. Not surprisingly, Slim, who profits lavishly off long distance calls between illegal immigrants in America and their loved ones in Mexico, doesn’t get mentioned much in the Times’ vociferous denunciations of immigration skeptics.)

Piketty, in his inimitable prose style, explains that criticizing Slim is a mistake, if not downright racist:

    Rather than indulge in constructing a moral hierarchy of wealth, which in practice often amounts to an exercise in Western ethnocentrism, I think it is more useful to try to understand the general laws that govern the dynamics of wealth—leaving individuals aside and thinking instead about modes of regulation, and in particular taxation, that apply equally to everyone, regardless of nationality.

In other words, rather than the citizens of Mexico using the rule of law to break up Slim’s monopoly, as Americans did with Rockefeller’s, the important thing is for readers of Capital to take global control.

What could possibly go wrong in Piketty’s planetary empire?

June 24, 2014

“How should we do x?”

Filed under: Government, USA — Tags: , , , — Nicholas Russon @ 09:11

The urge to provide a national (or even a global) solution to a given problem is almost always mistaken. Kevin Williamson explains why:

“How should we do x?” The main problem is not the answer, but the question itself, and the assumptions behind that question, the belief that an answer exists.

Some policies must, by their nature, be implemented at the national level. If you’re going to have a sovereign nation-state, you need a national defense apparatus (which is not to say you need our national-defense apparatus; there are alternatives), and you probably need a national immigration policy, etc. The basic architecture of the current American constitutional order, which is a remarkably wise and intelligent piece of work, contemplates national policies in those areas in which the several states interact with foreign powers and in those cases in which the states cannot coordinate efforts or resolve disputes among themselves on their own. That, along with some 18th-century anachronisms (post roads, etc.) and some awful economic superstitions (political management of trade, a political monopoly on the issuance of currency), constitutes most of what the federal government is in theory there to do. That and fighting pirates and others committing “felonies on the high seas,” of course, which is awesome, and we can all feel patriotic about fighting pirates.

But … if we look at federal programs by budget share, almost nothing that Washington does requires a national policy. There’s national defense, of course, at around 20 percent of spending; you may believe, as I do, that that number is probably too high, but national defense is a legitimate national endeavor. But most federal spending is on various entitlement programs — Social Security, Medicare, Medicaid, and various other welfare benefits. There is not much reason for any of these programs to exist at all — government is a criminally inept pension planner and a thoroughly incompetent insurance company — and there is very little reason for any of them to exist as uniform, one-size-fits-all national programs. Start digging into that non-defense discretionary spending and you end up with very little more than a catalog of crony payoffs and political favoritism.

There is no more reason to believe that a single government-run pension scheme is in each individual’s best interest than to believe that a single city or single model of car is right for everybody. And the people who design and plan these programs know that. The point of Social Security — like the point of insisting that health insurance is “a right” rather than a consumer good — is to redefine the relationship between citizen and state. That is the real rationale for a national pension scheme or a national insurance policy. For several generations now, we’ve been changing the very idea of what it means to be an American citizen. It used to mean being entitled to enjoy liberty and republican self-governance under the Constitution. Eventually, it came to mean being eligible for Social Security, functionally if not formally. Now it means being eligible for Obamacare. The name of the project may change every generation, and its totems may evolve from Bismarck to Marx to “the experts” — that legion of pointy-headed Caesars who are to be the final authority in all matters in dispute — but the dream remains the same: society as one big factory under the management of enlightened men with extraordinary powers of compulsion.

June 16, 2014

The Kronies: Laughing All The Way to the Export-Import Bank

Filed under: Humour, Politics, USA — Tags: , — Nicholas Russon @ 12:26

Published on 16 Jun 2014

Get Konnected at http://thekronies.com/

In this very special episode of “The Less You Know”, Johnny and Bobby learn a valuable lesson about campaign finance.

With a crucial re-authorization vote looming, the Representatives must decide whether or not to support the U.S. Export-Import Bank. Johnny and Bobby nearly make a terrible mistake, one that could endanger their political careers!

Luckily, Bankor and Ariel Stryker appear just in time to set the Reps straight…straight on the path to re-election. Including a special appearance by “the Big man” himself, this episode is sure to capture hearts, minds, and votes.

June 1, 2014

In the Progressive Era, “big business led the struggle for the federal regulation of the economy”

Filed under: Business, Government, History, USA — Tags: , , , , — Nicholas Russon @ 11:00

Timothy Carney says we should know much more about socialist historian Gabriel Kolko and his careful debunking of the “Teddy Roosevelt as trust-buster” myth:

Every American knows the fable of the Progressive Era and that “trust buster” Teddy Roosevelt wielding the big stick of federal power to battle the greedy corporations. We would be better off if more people knew the work of the man who dismantled this myth: historian Gabriel Kolko, who died this month at age 81.

Kolko was a self-described socialist and a Harvard-educated historian, but he had little use for the liberal political establishment’s pious regard for the Progressive Era of 1900 to 1916. And he was never credulous enough to believe that government intervention in the economy was generally in the public interest.

For today’s politics, Kolko’s most important book was The Triumph of Conservatism, published in 1967. His thesis: “The dominant fact of American political life” in the Progressive Period “was that big business led the struggle for the federal regulation of the economy.”

The standard history of the Progressive Period — which painted Teddy and the Feds as the scourge of Big Business — relied too much on the public rhetoric of TR and his cohorts. Kolko dug deeper to show how Big Business truly felt about Big Government, and how the Progressives truly felt about Big Business.

Many corporate titans in the early 20th Century, buying into the pervasive hubris of the day, believed that a state-managed economy was the inevitable end of a rational society — the conclusion of what Standard Oil’s top lobbyist Samuel Dodd called the “march of civilization.” Competition, in their eyes, was destructive redundancy.

[...]

Liberal scholar William Galston at the Brookings Institution explains the economics at play. “Corporations have sizeable cash flows and access to credit markets, which gives them a cushion against adversity and added costs,” he wrote in 2013, explaining why the big guys often welcome regulation. “[S]mall businesses often operate much closer to the margin and are acutely sensitive to policies that threaten to drive up costs.” Also, “CEOs can hire experts to help them cope with added regulatory burdens and can spread the costs over a large workforce.”

Kolko’s research smashed the favorite tales of the Progressive myth. When Upton Sinclair wrote The Jungle, which included descriptions of rancid meat-packing plants, Roosevelt saw Sinclair as personally despicable, but a useful asset in his quest to impose federal meat inspection. Sinclair opposed Roosevelt’s regulation, and Kolko relates that “the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors.”

By “conservatism,” Kolko meant “stability,” and preservation of the status quo. This is often the aim of corporate giants. It is consistently the consequence of federal action. And it is reliably the enemy of entrepreneurship, economic growth and free choice.

May 27, 2014

WSJ – “…the Canadian government is paying almost 80% of his developers’ salaries”

Filed under: Business, Cancon, Economics, Government, Technology — Tags: , , — Nicholas Russon @ 07:32

Stephen Gordon linked to this rather boggling Wall Street Journal article that outlines how the Canadian and provincial governments are attempting to lure start-up technology businesses to locate in Canada with vast bribes of taxpayer money:

Imagine you are launching or running a startup and there’s a place where all of your developers — the biggest expense for most tech companies — cost one quarter what they do in Silicon Valley. Sure, it’s cold there, but talent is plentiful and the locals are friendly. Would you trade your hash browns for poutine?

Adam Adelman, co-founder of Mighty Cast, a startup working on a new kind of wearable technology, recently told me the Canadian government is paying almost 80% of his developers’ salaries. And that’s not a tax credit. It’s a rebate, a check he gets from the government whether or not his startup makes money.

Even at Mighty Cast, a two-year-old hardware startup, salaries have been 80% of expenses. Combine that with the lower salaries demanded by engineers in Montreal, where Mighty Cast moved its headquarters after its genesis in Silicon Valley, and Mr. Adelman says he’s able to stretch his angel round of investment four times as far.

So the federal government is literally giving away money to start-up tech companies to compete at a huge advantage against actual Canadian companies? Nearly 80% of the payroll is funded from taxes, partly collected from the domestic competition? Does this seem like a good idea to anyone who isn’t already drawing 100% of their income from Ottawa?

The government is particularly badly suited to picking technology winners, and this program sounds like a vast give-away for the well-connected few, literally at the expense of everyone else. Maple-flavoured crony capitalism, with the official stamp of approval of Stephen Harper’s “conservative” government.

QotD: What capitalism should do now

Filed under: Business, Economics, Quotations — Tags: , , , , — Nicholas Russon @ 07:13

Just as democracy can be corrupted by repressive populism, so can capitalism be perverted by “rent-seeking” — when people seek to gain more than the goods and services they produce are worth to others.

Sometimes they use political influence to sustain monopolies or to prevent new entrants and innovators from competing for custom. Sometimes they use governments to provide subsidies from taxpayers, or to prohibit cheaper imports.

Sometimes they do deals with governments that provide taxpayer funds to cushion losses derived from incompetence or recklessness. These forms of crony capitalism detract from capitalism’s real benefits and achievements.

What capitalism should now do is to free itself from these rent-seeking perversions and spread its benefits as widely as possible.

It should act against anti-competitive practices to give people instead the power of free choices between competing goods and services. It should spread ownership of capital and investment as widely as possible through such things as personal pensions and individual savings accounts.

It should lower the barriers to entry so that everyone can aspire to start up a business to bring goods and services to others. It should seek a tax system that rewards success rather than punishing it.

Capitalism should become inclusive, making it as easy and as attractive as possible for as many as possible to set aside some part of present consumption in order to invest some of their resources and their time in providing goods and services that others will want. It should become true capitalism.

Dr. Madsen Pirie, contributing to “Viewpoints: What should capitalism do?”, BBC News, 2014-05-26.

April 22, 2014

Obama’s afterthought appointment as US ambassador to Canada

Filed under: Cancon, USA — Tags: , , — Nicholas Russon @ 09:13

Ezra Levant isn’t impressed with President Obama’s choice for ambassador:

Barack Obama waited nine months before replacing the last U.S. ambassador to Canada. The post was empty, and Obama just didn’t care.

He doesn’t much like Stephen Harper – compare Obama’s icy body language towards Harper, to Obama’s deep bow when he met the Saudi king, or his high fives with the Hugo Chavez, the late ruler of Venezuela.

Don’t feel singled out. That’s how Obama treats many of America’s traditional allies. He spied on German Chancellor Angela Merkel’s cellphone. The White House’s bust of Winston Churchill was returned to the United Kingdom when Obama became president.

Get used to it. Obama treats his friends worse than his enemies.

You’d think a $600-billion-a-year trade relationship between Canada and the U.S. would warrant sending a new ambassador quickly. Apparently not.

When Ottawa was finally blessed with Obama’s choice this month, it was yet another Chicago crony capitalist – Bruce Heyman, a former Goldman Sachs banker who, together with his socialite wife, bundled $1.7 million for Obama’s election campaign.

That’s what Obama thinks of the diplomatic corps: a reward for personal service, and an incentive to future donors.

April 9, 2014

Being “pro-business” does not mean the same as being “pro-market”

Filed under: Business, Economics, Politics, USA — Tags: , , , , — Nicholas Russon @ 07:32

It’s a common misunderstanding (especially with people who don’t know what laissez faire actually means):

For years, Republicans benefited from economic growth. So did pretty much everyone else, of course. But I have something specific in mind. Politically, when the economy is booming — or merely improving at a satisfactory clip — the distinction between being pro-business and pro-market is blurry. The distinction is also fuzzy when the economy is shrinking or imploding.

But when the economy is simply limping along — not good, not disastrous — like it is now, the line is easier to see. And GOP politicians typically don’t want to admit they see it.

Just to clarify, the difference between being pro-business and pro-market is categorical. A politician who is a “friend of business” is exactly that, a guy who does favors for his friends. A politician who is pro-market is a referee who will refuse to help protect his friends (or anyone else) from competition unless the competitors have broken the rules. The friend of business supports industry-specific or even business-specific loans, grants, tariffs, or tax breaks. The pro-market referee opposes special treatment for anyone.

[...]

GOP politicians can’t have it both ways anymore. An economic system that simply doles out favors to established stakeholders becomes less dynamic and makes job growth less likely. (Most jobs are created by new businesses.) Politically, the longer we’re in a “new normal” of lousy growth, the more the focus of politics turns to wealth redistribution. That’s bad for the country and just awful politics for Republicans. In that environment, being the party of less — less entitlement spending, less redistribution — is a losing proposition.

Also, for the first time in years, there’s an organized — or mostly organized — grassroots constituency for the market. Historically, the advantage of the pro-business crowd is that its members pick up the phone and call when politicians shaft them. The market, meanwhile, was like a bad Jewish son; it never called and never wrote. Now, there’s an infrastructure of tea-party-affiliated and other free-market groups forcing Republicans to stop fudging.

A big test will be on the Export-Import Bank, which is up for reauthorization this year. A bank in name only, the taxpayer-backed agency rewards big businesses in the name of maximizing exports that often don’t need the help (hence its nickname, “Boeing’s Bank”). In 2008, even then-senator Barack Obama said it was “little more than a fund for corporate welfare.” The bank, however, has thrived on Obama’s watch. It’s even subsidizing the sale of private jets. Remember when Obama hated tax breaks for corporate jets?

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