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Archive for June 20th, 2012

For the most part, international summits like the recently concluded G-20 meeting in Mexico are pointless – but expensive – publicity stunts for incumbent politicians.

They pose for photo-ops, have boring meeting, and draft up empty communiques, always at some posh location so that everybody – from bureaucrat flunkies to servile reporters – can have a good time.

But these soirees are more than just money-wasting junkets. They also encourage bad policy. With everything that’s happening around the world, the evidence is stronger than ever about the adverse economic consequences of bloated public sectors and punitive tax regimes.

But when politicians get together at gab-fests like the G-20, they inevitably push for more of the same. Here’s some of what David Malpass wrote today for the Wall Street Journal.

…the two-day G-20 summit this week—the diplomatic equivalent of speed dating—did little but drain more money from deeply indebted nations. …the “Los Cabos Growth and Jobs Action Plan” …mostly commits Europe’s struggling economies to still more government control… The clearest decisions that came out of the summit promoted governments, not private sectors, pointing to even more deficit spending, an IMF expansion led by China and another expensive G-20 meeting next year in Russia. The outcome raises fundamental doubts about the G-20’s value in furthering free markets, strong private economies and global living standards.

David goes on to note that economic problems are rooted in the bad policies of individual governments, so it is illogical to expect that they can be solved by an international summit.

The obstacles to global growth in 2012 are clear and need to be addressed in national capitals, not in summits. Europe’s policy initiatives are probably the most urgent. Europe’s growth focus should be maintaining the euro and setting up decisive mechanisms to reduce borrowing costs while governments sell assets, downsize and remove private-sector obstacles. …the leaders’ time would have been better spent in Europe hammering out the actual mechanisms. …Fast global growth is achievable, but the G-20 summits aren’t helping. Country-specific tasks—not further institutionalization of global financial governance—are the solution.

The final point about “global financial governance” is worth emphasizing. While it is true that nothing good has ever  happened because of a G-20 summit, some bad things have occurred – most notably the big push a couple of years ago to attack low-tax jurisdiction as part of a campaign by high-tax governments to cripple tax competition and facilitate higher tax burdens.

International summits also tend to be the types of gatherings where other bad policies occur, such as agreements to subsidize more bailouts by giving more money to the fiscal pyromaniacs at the International Monetary Fund.

The moral of the story is that the G-20 is a great idea…but only if you think the entire world should become more like France, Italy, Spain, and Greece.

P.S. If you’re following the mess in Europe and like humor that is a bit twisted (and R-rated), then you’ll probably enjoy this bit of “art” posted at zerohedge.

P.P.S. I also dislike international summits since the thugs at the Organization for Economic Cooperation and Development threatened to throw me in a Mexican jail for the “crime” of standing in the public lobby of a public hotel and advising low-tax jurisdictions during one of the OECD’s “global tax forums.”

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I’m not a big fan of the federal government. It does some necessary and important things, such as national defense, but the vast majority of what goes on in Washington is for activities that either belong at the state level or in the private sector.

This is why I want to reform entitlements such as Social Security, Medicare, and Medicaid, and it’s why I want to shut down entire departments of the federal government, including Housing and Urban Development, Transportation, Education, and Agriculture,

Simply stated, I want to go back to the limited central government and constitutional republic envisioned by the Founding Fathers.

With this in mind, you can imagine how agitated I am that the clowns in Washington have decided that it’s their role to investigate possible steroid use in major league baseball. Expressing my scorn, I ranted and raved on Neil Cavuto’s show.

In addition to mocking the absurdity of the Roger Clemens situation, I tried to make an important point about the desirability of shrinking the public sector by about 75 percent, bringing the overall burden of government spending back to about 10 percent of GDP, which is where it was for much of our nation’s history.

Based on Rahn Curve research about the growth-maximizing size of government, this would lead to an economic boom.

But there’s another aspect of the Clemens situation that’s worth exploring.

My former Heritage Foundation colleague Brian McNicoll has some thoughts on the issue, explaining that leftists resent Clemens because of his success.

A related mystery is why the hearing devolved into such a bitter partisan bickering session. …But why? It’s not as if Clemens was known as some big-time conservative. …At least part of it, I think, has to do with how conservatives and liberals view people such as Clemens. Conservatives revere success. They admire self-sacrifice and discipline, and they don’t begrudge the man who parlays these into professional and financial success. They want to be like him and find ways for others to replicate his methods. Liberals believe the Roger Clemenses of the world benefit from a random and thus inherently unfair assignment of talent. They think he’s rich and famous solely because he’s big enough and strong enough to throw a baseball 95 miles per hour. Never mind that not everyone who throws 95 miles per hour has anywhere near the success of Clemens. Never mind lots of people are big enough and strong enough to throw that hard but don’t put in the work to learn the skills it takes to actually do so. Never mind the extraordinary inner strength that even Clemens’ worst detractors admit propelled him throughout his career. This explanation absolves them of all responsibility for the fact they are not Roger Clemens. It’s all luck. He’s just a guy who got wildly rich because of the random assignment of genes. Nobody can have all that ill-gotten gain and any character, so he must have done whatever they say he’s done. And since he did nothing to earn his money, we all deserve a share of it. And wouldn’t it be nice to knock a guy like that down a few pegs?

Brian’s analysis of the left-wing mind makes a lot of sense and certainly is consistent with the mentality that supports class-warfare tax policy.

P.S. Just because national defense is a legitimate function of the federal government, that doesn’t mean the Pentagon should get a blank check. Our Founders would want us to fight against wasteful military spending and needless foreign entanglements.

P.P.S. At the very end of the Cavuto segment, he thanked me for dropping what we originally planned to discuss so we could respond to the breaking news and he kindly said “that’s what makes Dan great.” If I was either braver or more immature (probably the latter), that would have been a perfect moment for me to show that I’m hip to popular culture by blurting out “that’s what she said.” Alas, forever a missed opportunity.

P.P.S. This is the second time Roger Clemens has been featured in this blog. He also made a cameo appearance in this post mocking Obama.

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