ReasonTV
Published on 12 Dec 2018Left-leaning politicians of the 1970s understood that red tape punishes consumers and protects big business. The leading deregulator of that era was none other than Jimmy Carter.
————————
Follow us on Twitter: https://twitter.com/reasonReason is the planet’s leading source of news, politics, and culture from a libertarian perspective. Go to reason.com for a point of view you won’t get from legacy media and old left-right opinion magazines.
————————
When President Donald Trump bragged in his first State of the Union address about cutting red tape, the Democratic response was no surprise. “Deregulation,” warned Center for American Progress Senior Advisor Sam Berger in Fortune, “is simply a code word for letting big businesses cut corners at everyone else’s expense.”But many leading Democrats had the opposite view in the 1970s. Then, at the dawn of the deregulation era, left-leaning politicians and economists understood that excessive government management of industry let the big-business incumbents get away with lousy performance at the expense of competitors, taxpayers, and consumers. The leading figure in that fight to cut red tape and shut down entire federal agencies was none other than Jimmy Carter.
It was Sen. Ted Kennedy who held extensive Senate hearings in the early ’70s, with testimony from the likes of Ralph Nader and liberal economist Alfred Kahn, about the benefits of lifting state controls on the airline industry. The resulting Airline Deregulation Act of 1978, signed by Carter, killed the Civil Aeronautics Board — a federal agency that decided which airlines could fly where, and even what they could charge. The new competition to the old airline cartel reduced fares, expanded destinations, increased safety, and made air travel an option for those of us who aren’t rich.
Carter also lifted stifling government oversight of the rail and trucking industries under a Democrat-controlled House and Senate. The result? Competition intensified, prices dropped, and consumers saved more money on everyday products.
In 1978, President Carter signed a bill that lifted Prohibition-era criminal restrictions on home brewing. The legalization of do-it-yourself beer production unleashed a boom of experimentation, paving the way for the craft beer revolution that is ongoing to this day. The year that Carter loosened the rules, the U.S. was home to a mere 50 breweries. Today there are well over 5,000. In two generations of beermaking, America went from global laughingstock to world leader.
The governor of California during Carter’s presidency was none other than Jerry Brown, then known as “Governor Moonbeam” for his far-out musings, glittery social life, and lefty politics. Yet Brown, too, could be a fiery skeptic of government. In his terrific second inaugural address in 1979, Brown stated that “many regulations primarily protect the past, prop up privilege or prevent sensible economic choices.”
But even while some sectors were unleashed four decades ago by far-seeing Democrats and Republicans alike, too many governments at the local, state, and federal levels have forgotten those lessons, and instead imposed entirely new categories of regulations. Occupational licensing, which applied to about one in 10 jobs 40 years ago, now impacts one in three.
So how did the party of Jimmy Carter and sideburns-era Jerry Brown become the ideological home of Elizabeth Warren and Alexandria Ocasio-Cortez? One explanation may be that Democratic support for deregulation back then was born out of a sense of nearly hopeless desperation in the face of stagflation. Cutting red tape to foster dynamism was about the last move politicians had left.
Our long economic expansion and stock-market boom will soon come to an end, imposing limits on government precisely at the moment when it’s asked to do more. When that day of reckoning comes, the best questions for lawmakers of both parties to ask may just be: What would Jimmy Carter do?
Photo credits: Jimmy Carter Library, Arthur Grace/ZUMA Press/Newscom, Dennis Brack/Newscom, Everett Collection/Newscom, Ron Sachs/CNP/MEGA/Newscom, Brian F. Alpert/ZUMA Press/Newscom, Paul Harris/Pacific Coast Nes/Newscom, Bee Staff Photo/ZUMA Press/Newscom, Dennis Brack/bb51/Newscom, Jonathan Bachman/REUTERS/Newscom, Rick Friedman/Polaris/Newscom
December 13, 2018
When Democrats Loved Deregulation
QotD: The Cabinet
[T]here is a clear similarity between the Prime Minister’s cabinet and the wardrobe/closet from the Narnia Chronicles: neither has any back to it and people who spend an excessive amount of time in either find themselves in a fantasy land.
Eric Kirkland, 2005-03-24.
December 12, 2018
Why Socrates Hated Democracy
The School of Life
Published on 28 Nov 2016We’re used to thinking hugely well of democracy. But interestingly, one of the wisest people who ever lived, Socrates, had deep suspicions of it.
December 8, 2018
Will the West want in again this time?
The last time Albertan sensibilities were being regularly assaulted by federal politicians, the response was the Reform Party with their slogan “The West Wants In”. This time, Lawrence Solomon suggests, the Albertan response might not be so congenial:
Canadians don’t value our fossil fuel economy, which explains why so many are OK to trash pipelines and see Alberta tank. Only 19 per cent think it more important to pursue oil and gas development than to go green and regulate oil, according to EKOS polling. That 19 per cent figure shrinks to eight per cent for Canadians who consider themselves Liberals, six per cent for NDPers and two per cent for those who vote Green, meaning that politicians of most stripes have no interest in alienating their supporters to help Alberta’s energy economy recover.
Those figures also explain why Alberta’s sense of alienation is on the rise. According to Ipsos, fully 62 per cent believe Alberta “does not get its fair share from Confederation” (up from 45 per cent two decades ago), 46 per cent feel more attached to their province than to their country (up from 39 per cent) and 34 per cent “feel less committed to Canada than I did a few years ago” (up from 22 per cent). Just 18 per cent of Albertans believe “the views of western Canadians are adequately represented in Ottawa.”
One-quarter of Albertans now believe Alberta “would be better off if it separated from Canada,” a number that may well rise if the provincial economy founders, and would certainly rise if Albertans realized that they need Canada a lot less than Canada needs them. Without Alberta’s wealth and foreign-exchange earnings, the living standard of Canadians outside Alberta would drop and the Canadian dollar would plummet, likely leading to inflation as the cost of imports rose. Albertans, in contrast, would see their affluence rise and, because oil sales are denominated in U.S. dollars, Alberta would be largely insulated from the inflation to its east and west.
Those pooh-poohing independence claim Alberta, being land-locked, would be held hostage if it were an independent state. Those scoffers have it backwards. Alberta is today held hostage, its pipelines east and west kiboshed by its fellow Canadians. If Alberta were independent, its newfound bargaining power would certainly cause the Rest of Canada to capitulate, and speed to completion any and all pipelines Alberta needed to either ocean.
An independent Alberta would control access to its land mass as well as the skies above it, requiring Canada’s federal government to negotiate rights for, say, Vancouver-to-Toronto flights over Alberta airspace. Canada would also need Alberta’s agreement to have trains and trucks cross its now-international borders. Threats of tolls and tariffs could abound as needed to chasten those perceived to be wronging Alberta, whether Quebec, which exports dairy to B.C., grain interests that now commandeer rail to the detriment of Alberta’s oil shippers, or the B.C. ports that depend on commodities going to and from points east. Anyone thinking that Alberta would be unable to police its borders needs to be reminded that, for the past 70 years, Alberta’s patrols have made it the continent’s only rat-free jurisdiction.
December 7, 2018
December 6, 2018
QotD: The best “industrial policy” is not to have one at all
Which brings us to nub of the matter: how do we increase trade and productivity, given that productivity is the thing they claim the whole schemozzle is about. There is one simple and single policy which will do both. One policy which will increase British productivity simply by allowing more trade.
This policy is so simple that even the Treasury (yes, that’s our Treasury, the one in London) was able to get right, even when being run by George Osborne. As they set out in their analysis of Brexit repercussions:
“The benefits of trade in terms of increasing productivity are well understood… greater openness to trade creates a larger market which the most productive firms expand to serve. Openness also increases competition between firms, enhancing the incentives for domestic firms to innovate or adopt new technology… It increases returns on investment, and encourages UK firms to make greater use of new technologies, either by improving the quality of inputs, or through the more effective adoption of technological innovations. Greater openness to trade also increases consumer choice and reduces prices. Lower trade costs give consumers access to cheaper imported goods and competition reduces the price of domestically-produced goods.”
In plain English, it is the competition from imports which forces British firms to buck up their act and become more productive. So here is how we improve British productivity: we move to unilateral free trade. No barriers to imports, no tariffs, just the same regulation as domestically produced items.
British industry, facing the stiffest competition from the best in the world, would be forced to meet global standards of productivity. So the best industrial policy would be to stop trying to have an industrial policy about what we can and can’t buy from beyond Britain’s borders – and the rest should take care of itself.
Tim Worstall, “The best industrial strategy for Britain is not to have one”, CapX, 2017-01-23.
December 5, 2018
The Alberta government must be getting a heck of a deal on those tank cars and locomotives
Alberta Premier Rachel Notley grabbed headlines recently with her pledge to buy additional railway locomotives and tank cars to help move some of Alberta’s excess crude oil to market. Brian Zinchuk says those numbers don’t make sense, given the amount of money the province is to pay:
On Nov. 28, Alberta Premier Rachel Notley announced her province is going to be acquiring unit trains to get her province’s landlocked oil moving. Not only has she committed money to Trans Mountain Expansion, but now rail, too. This premier is serious.
However, there’s a big problem with her numbers. She spoke of $350 million to purchase up to 7,000 rail cars and 80 locomotives. That $350 million doesn’t come even close. It might be enough to lease those units for a few years. Her stated intention was this was a short-term solution, and the life expectancy of a locomotive and tanker cars is easily into three or four decades.
However, she said, “Alberta will buy rail cars ourselves in our fight to get top dollar for the resources that belong to every Albertan.”
I never saw “lease” mentioned once.
Notley spoke of 120,000 barrels per day (bpd) of capacity. Her initial statements weren’t very clear, as someone with little knowledge of the business might think she just meant two sets of 100 or 120 car trains. That wasn’t at all what she meant.
She meant enough trains to keep 120,000 barrels per day in motion, each and every day. That’s a lot of rail cars, and a lot of locomotives.
[…]
There’s a problem with her numbers, however. The current standard locomotives used by Canadian railways cost US$3 million each as of December 2017, when CN bought 200 locomotives for US$600 million. That’s $3.859 million Canadian, each, at the exchange rate at that time. Notley spoke of 80 locomotives – that’s $308.7 million. That only leaves $41.3 million for 7,000 rail cars, or $5,897 each. That’s obviously way too low. So either there’s some leasing considerations involved here, perhaps on the locomotives, or the $350 million is way too low. Remember they were asking the feds for half? Even if the feds coughed up an additional $350 million, that still leaves only $55,900 per car.
My math shows, on the low end, a price tag of $945 million for new rail cars alone. Coupled with ~$309 million for locomotives, and you come in at $1.254 billion. At the high end, it would be $1.484 billion for cars, totalling $1.793 billion including locomotives. Either way, it’s a heck of a lot more than the $350 million announced. Unless she’s leasing, Notley’s $350 million is only one-third to one-fifth of the money required to buy all these new trains, and no consideration has been given to staffing or operational costs.
H/T to Small Dead Animals for the link.
The true lesson to be learned from GM Canada’s economic plight
Andrew Coyne tries to encapsulate the key economic concept that should be taken away from the GM Canada collapse:
Think of it this way. Governments have proven more than ready in the past to pay whatever the auto companies demanded to hold onto threatened jobs. If there were any chance whatsoever of buying the plant’s reprieve, no matter how foolishly or expensively, can there be any doubt they would have? That they did not — apparently GM waved them off — tells you how hopeless the plant’s prospects really are.
Many have recalled that the closure of the Oshawa plant comes less than a decade after the Canadian operations of GM and Chrysler were bailed out with $14 billion in federal and provincial money, $4 billion of which was never recovered. The lesson some have drawn from this is that GM is a devious ingrate, which may be fair comment but is not especially helpful. The real lesson is this: when you try to buy jobs with public money, the jobs last only as long as the money does. In the end, all you will have done is to lure people into taking or staying in jobs that were long since doomed.
Like most of economics, this is wholly alien to popular wisdom. There is a rich vein of commentary to the effect that the laws of economics are effectively optional, something we can resist by force of will: we can either bend to “market forces,” or we can “stand up” to them in some fashion. But in fact the latter option is entirely imaginary, at least in the long run. You can perhaps lure plants and jobs your way at the outset with subsidies and other goodies. But the only assurance they will stay is if it makes economic sense to the company to keep them there.
If not, then all you have won with your subsidy is the right to go on providing more subsidy, which is a fairly accurate description of Canadian automobile policy in recent decades. The workers whose jobs successive governments boasted of creating or saving were effectively hostages; as in all hostage-takings, the payment of ransom only stimulates further demands for ransom. Until one day when the money runs out, and the workers whose jobs were supposedly saved find themselves abandoned. This may be many things, but one thing it is not is compassionate.
Yes, Minister – The Six Diplomatic Options
HenryvKeiper
Published on 28 May 2009My favorite scene from one of my favorite TV shows of all time.
December 3, 2018
Eric Swalwell’s Kinsley gaffe
If you haven’t encountered it, a “Kinsley gaffe” is where a politician accidentally tells the truth (Wikipedia). Newly elected US member of the House of Representatives Eric Swalwell committed a classic Kinsley gaffe in an online discussion on social media, as Jeff Fullerton explains:
Democratic representative Eric Swalwell made a really provocative statement this week according to an article from Hot Air. Pretty much serving notice that: If we confiscate your guns and you fight back, we will nuke you.
Representative Swalwell sort of gives a disclaimer that he he was not actually advocating nuking Texas or some other disobedient red state or region — but merely trying to make a point in the fashion of the Borg from Star Trek; that resistance is futile and it is the lot of us all to be assimilated — against our will if necessary. The author of the article from Hot Air points out something that my friend and mentor Bruce the Historian pointed out long ago; that there are an awful lot weapons in the hands of private citizens capable of making it hell on earth for any federal troops deployed to disarm the population or engage in the collectivization of property and resources in a martial law scenario. Or forced relocation of people. That’s the real reason they want everyone disarmed. They know from experiences in Vietnam and the “Forever War” in the Middle East; that cracking down with overwhelming force has its limits and once they put off a nuke to burn a town in Texas they might have to burn every square mile of the nation to put an end to the uprising.
Talk about excessive force!
That they’d even talk at all about using a nuclear weapon to put down an internal insurrection proves beyond the shadow of doubt that power hungry politicians are a far deadlier existential threat to us all than any crazed mass shooter or terrorist could ever hope to be!
This congress creature bases his argument on a fallacy which is common assumption among the political class: that because the federal government is capable of mustering overwhelming force — the Second Amendment is obsolete anyway. He already contradicts himself for if we the people are impotent against the overwhelming fire and manpower of the Army and the bombs and missiles of the Air Force — then why are people like him so adamant about disarming the average Joe? I think I already answered that one. […]
There is also the issue of the military itself that the political class ought to take into consideration. It may be less monolithic than assumed. Many of them still believe in the validity of the Constitution and would side with the resistance while others among the loyalist factions would have problems of conscience when it comes to mass slaughter of fellow Americans. Still others might be fearful of the consequences of being held accountable for atrocities or even treason if they end up on the losing side of things. To attack and kill your own people who you swore to serve and protect is a grievous betrayal. It is treason of the highest order and the punishment for that is death. So if you choose such a course of action and loose the fight; you go down in historic infamy to be remembered like the Nazi war criminals who stood before the Nuremberg tribunals. And you will probably [be] shot or hanged in a public execution!
December 2, 2018
QotD: There’s investment and then there’s “public investment”
In 2003, the Organisation for Economic Cooperation and Development published a paper on the ‘sources of economic growth in OECD countries’ between 1971 and 1998 and found, to its surprise, that whereas privately funded research and development stimulated economic growth, publicly funded research had no economic impact whatsoever. None. This earthshaking result has never been challenged or debunked. It is so inconvenient to the argument that science needs public funding that it is ignored.
December 1, 2018
CAFE killed the North American passenger car
The move by GM to close many of its remaining car manufacturing facilities in Canada and the US is a belated rational response — not to the market, but to the ways government action has distorted the market. In the Financial Post, Lawrence Solomon explains how, step-by-step, the CAFE rules have shifted drivers out of sedans and wagons and into minivans, pickup trucks, and SUVs:
Before the U.S. government introduced Corporate Average Fuel Economy (CAFE) standards to increase the distance cars could travel per gallon of gas, sedans and full-size station wagons were popular and SUVs were unknown. CAFE, which effectively governed the entire North American market thanks to the Canada-U.S. Auto Pact, incented manufacturers to artificially raise the cost of large passenger cars in order to favour smaller, more fuel-efficient vehicles. It soon claimed its first victim: the full-size station wagon, whose flexible interior accommodated both passenger and cargo needs, and which, at its peak, came in 62 models to satisfy different tastes.
But, although CAFE priced the station wagon out of the market, the market still demanded a vehicle that offered its flexibility. Enter Lee Iacocca, the chairman of Chrysler, who helped develop the minivan and convinced the U.S. government to deem it a truck rather than a passenger vehicle, thus exempting it from the strict CAFE standards that killed the station wagon. The minivan took off — the first 1984 model, built in Windsor, sold 209,000 its first year — followed by the SUV, which also was deemed a truck rather than a passenger vehicle. By 2000, the passenger car had less than half the market. Today it accounts for only about a third.
CAFE standards didn’t only claim certain car models as victims, they also made the whole industry a victim by making it dependent on government whims and then handouts. CAFE also distorted the market by creating credits for ethanol and electric vehicles and by creating a lobbyist’s dream through ever-changing regulations that led car manufacturers to continually game the system to favour their own vehicles over those of competitors.
Perversely, by improving mileage, CAFE also increased distances travelled and emissions of pollutants such as carbon monoxide and nitrogen oxides. The 2025 CAFE targets (since cancelled by President Trump) ran to almost 2,000 pages and were estimated to add an average of US$1,946 to the cost of a vehicle. Tax loopholes also helped accelerate SUV sales — like all light trucks, they were exempted from the gas-guzzler’s excise tax and also given preferential tax treatment as business vehicles.
November 30, 2018
“Infrastructure” is a Canadian word meaning “jobs for the boys”
H/T to Colby Cosh for the link.
England: South Sea Bubble – Lies – Extra History
Extra Credits
Published on 9 May 2015Support us on Patreon! http://bit.ly/EHPatreon
____________No historian is perfect, so it’s important we acknowledge our mistakes where we find them (with the help of our viewers, no less)! After we clear up some discrepancies that emerged during the South Sea Bubble series, we turn to answering some common questions that came up during this series on economic history. In a period where financial masterminds like John Blunt engaged in trickery meant to confuse other people and hide his real activities, it’s no wonder that many viewers had questions about what insider trading is and how Blunt could endlessly inflate stock prices for his unprofitable company. This is a history show, but we do our best to explain! As a bonus, James also reads Robert Knight’s letter to Parliament on the eve of his illegal flight and tells some cool stories about Robert “It was Me” Walpole.
November 29, 2018
England: South Sea Bubble – It Was Walpole – Extra History – #5
Extra Credits
Published on 25 Apr 2015Support us on Patreon! http://bit.ly/EHPatreon
____________Robert Walpole’s attempts to use the South Sea Company scandal to enhance his own ambitions are threatened by the appearance of Robert Knight, a former South Sea employee whose records of corporate bribery implicate Walpole and his friends in Parliament. But faced with threats of retribution if he ever shares these records, Knight flees the country rather than face a public inquiry. Although he gets caught and sent to prison in Antwerp, Walpole deftly engineers his release and escape. With Knight finally gone, Walpole teams up with John Blunt to pin the blame for the South Sea stock bubble on his political opponents, conveniently clearing the way for himself to become essentially the first Prime Minister of England. He also makes sure that all of his own supporters get off easy (if not scot free) for their involvement, and even Blunt walks away from the South Sea Bubble with more money than he started with.
