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Archive for May 29th, 2010

Pardon the deviation from commentary on political economy, but I have to tell this story – perhaps as a form of catharsis.

As regular readers know, I got back from Europe Thursday afternoon. When I got to my house, I noticed a very unpleasant smell. Given that there was a cat box that hadn’t been changed in 11 days, that wasn’t too much of a surprise, but the smell was beyond that.

Something was rotting. My first instinct was to blame the cats. It is not uncommon for me to smell something terrible and then find a dead mouse or bird that one of the cats dragged into the house. This was a very strong odor, so I was worried that something large – like a rabbit or squirrel, was decomposing under a sofa someplace.

I checked the usual places, but couldn’t find anything. So I shrugged my shoulders and went to sleep.

The next day, Friday, I went to work and stayed late catching up on things that built up during my absence. I came home, noticed the smell again, but couldn’t find anything and went to bed.

I woke up today, greeted by the same foul smell and was beginning to think I would have to take the house apart. But my first order of business was to mow the lawn and handle some other yard work. So I mowed and then decided to open the garage to get some weed killer.

Big mistake.

The odor hit me like a freight train, followed by an awareness of hundreds of flies buzzing around, and then followed by the horrifying realization that the freezer door was open.

Nothing I write can capture the scene that greeted me, but let your imagination contemplate the combination of a full freezer and nearly two weeks of warm weather. I won’t provide too many gross details, but I will say that if maggots were worth anything, I’d be a rich man today.

So I spent over one hour pulling various disgusting and putrid things out of the freezer, breathing only with my mouth, and trying not to recycle my lunch. Tomorrow, I’ll have to sop up a disgusting brown liquid that has accumulated in the bottom of the freezer. Oh, and to add insult to injury, garbage pickup isn’t until Tuesday, so the smell won’t go away anytime soon (and it will probably linger even after then).

I’ve had some unpleasant experiences in my life, including the discovery of no toilet paper (or paper towels, or anything) after making an emergency bathroom visit in Romania. Nothing, though, comes remotely close to the nightmare I endured today.

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David Ignatius continues his odd habit of drawing wrong conclusions from Europe’s fiscal crisis. In a previous post, we made fun of one of his columns because he said America needed a value-added tax to avoid a Greek-style crisis. Yet since Greece has a VAT, he was, for all intents and purposes, arguing that we should copy Greece’s policies to avoid Greece’s problems. Now he has a column saying that Europe needs fiscal centralization to make the euro work. This is a rather interesting assertion since Ignatius comes from a nation that shows that it is possible to have a common currency with 50 different states with 50 different fiscal policies. Perhaps this is why he wrote an entire column on the topic without ever offering any analysis or evidence for his position. Here’s an excerpt:

…there’s a radical mismatch between the ideal of economic integration and the reality that the eurozone has 16 different fiscal regimes — a disconnect that helped produce this crisis. …With this crisis, [Italian President Giorgio Napolitano] argued, Europeans must finally accept that union “implies a partial transfer of national sovereignty.” The current halfway integration simply isn’t strong enough to support a common currency, he suggested. …Investors keep pounding Europe in part because they don’t yet see the mechanisms that will enforce discipline. The European Union just established a trillion-dollar bailout fund, but what happens when it runs out? There’s a pledge to impose strict conditions on Greece, Portugal and the rest in exchange for loans, but it still isn’t clear how Brussels will make this austerity regime work. …What worries me is that the dictates of economics and politics are now in conflict in Europe. To sustain its common currency, Europe needs integrated fiscal policies that are enforceable on all members.

Given his reliance on empty assertions, let’s step into the vacuum and make two observations. First, letting Greece officially default would have been the best way to enforce fiscal discipline. A default would have radically curtailed Greece’s ability (and the ability of other European nations) to overspend by borrowing cheap money and leaving the bill for future generations. The bailout, by contrast, rewarded profligacy and sent a signal to other European nations that it is possible to over-tax and over-spend and send the bill to taxpayers in other nations.

Second, a centralized fiscal policy would exacerbate Europe’s fiscal problems by creating a tragedy of the commons. The existence of a pot of money in Brussels would encourage every nation to maximize its share of the loot, in the same way that a bloated federal government in Washington subsidizes bad fiscal behavior by state politicians. It wouldn’t matter whether the centralized fiscal policy replaced a portion of national budgets or (more likely) represented an additional source of government largesse. Europe’s problems exist because too many people have learned to try to live off the labor of too few people. Another layer of government makes that problem worse, not better – especially since it would open up the possibility of having people from other nations bear the burden.

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Apologies to Star Wars fans for the title, but it seemed very fitting considering the profound amoral mentality of the lobbyists who have launched a public relations campaign to defend earmarks. The key part of the story is excerpted below for your reading pleasure, but let’s focus on the “best” defense of earmarking. I’ve talked to some Republican politicians who argue the practice is legitimate because it means that elected officials rather than faceless bureaucrats are deciding how money is being allocated. That sounds semi-legitimate, but it overlooks three key problems.

1. Earmarking facilitates higher spending. The politicians on the Appropriations Committees allow other members to insert special requests (earmarks) – but only if they agree to vote for the underlying bill. This “log-rolling” practice makes it much more difficult for fiscally responsible members to convince their colleagues to support smaller budgets.

2. Earmarking is naked corruption. In the majority of cases, earmarks are inserted at the request of campaign contributors. In some cases, the contributors are lobbyists representing clients. In other cases, the contributors are the actual earmark beneficiaries. In either case, the process accurately could be described as bribery.

3. Earmarking supports programs and activities that should not exist. The “bridge to nowhere” became a symbol of the earmarking process, but the underlying problem is that members of the Alaska delegation focused on steering as many transportation dollars to their state as possible when they should have been fighting to get rid of the Department of Transportation.

Almost everybody in Washington loves earmarks. Politicians get to raise campaign cash. Lobbyists get rich charging clients. Special interests get money they haven’t earned. Congressional staff facilitate the process so they eventually can become rich lobbyists. The only losers are taxpayers and the Constitution. Anyhow, here’s the nauseating excerpt:

Lobbyists who pursue congressional earmarks are planning a public-relations campaign to defend the practice, as voters signal they no longer want lawmakers to direct millions of federal dollars to pet projects back home. The Ferguson Group, one of the largest earmark lobbying shops in Washington, is seeking donations from other appropriations lobbyists to establish a group that would promote the benefits of earmarks through a media campaign, according to documents obtained by The Hill. …“We have decided to form an informal coalition, tentatively called the Earmark Reform and Education Coalition, with the overall goal being to foster a rational conversation about earmarking among all interested parties, so that we can preserve what works and reform what does not.” …A third option is to partner with the American League of Lobbyists (ALL), according to Ferguson’s memo. Dave Wenhold, ALL’s president and a partner at Miller/Wenhold Capitol Strategies, said the organization has not decided on whether to join the campaign, but he defended earmarks as “the most transparent and accountable form of funding.”

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