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Archive for the ‘John Stossel’ Category

Since I’m an out-of-the-closet libertarian, it goes without saying that I’m not favorably disposed to government intervention. As far as I’m concerned, Washington’s an inherently corrupt town filled with people seeking unearned wealth.

But even if I didn’t have any underlying philosophical or moral principles, I think I would still favor small government.

Why? Because just about everything government does turns into a bloody cluster-you-know-what, so there’s also a utilitarian case for libertarianism.

I discuss the reverse Midas touch of government with John Stossel.

The theme of Stossel’s show, by the way, was looking at how good intentions lead to bad results. I actually think that’s too optimistic.

Most government intervention is driven by sordid insider scheming, not good intentions. The politicians merely pretend they have noble-sounding goals when peddling their manure to the public.

But regardless of the goals, the result is still the same.

I point out that if the burden of government spending grows faster than the private economy (sort of Obama’s Golden Rule rather than Mitchell’s Golden Rule), bad things inevitably will happen.

Other points from the interview:

I suppose a more interesting program would be to identify things that the government does intelligently and effectively.

Any suggestions?

P.S. According to Greek mythology, anything Midas touched turned into gold. But since the fable also says that this blessing turned into a curse, perhaps this post should have been titled the “The Midas Touch of Government” rather than “The Reverse Midas Touch of Government.” But since I’m already trying to restore the good name of Robin Hood, I’m going to leave it to others to decide how to characterize Midas.

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What do Mona Charen, Ron Paul, Cory Booker, Pat Robertson, Gov. Gary Johnson, and Sir Richard Branson all have in common?

Almost nothing, I imagine, but they do agree on one thing. It’s time to rethink the War on Drugs.

We can also add John Stossel to the list. Here’s some of what he wrote in his recent Townhall column. Let’s start with his powerful – and pragmatic – argument that the Drug War encourages criminal behavior.

The media (including Fox News) run frightening stories about Mexican cocaine cartels and marijuana gangs. Few of my colleagues stop to think that this is a consequence of the war, that decriminalization would end the violence. There are no wine “cartels” or beer “gangs.” No one “smuggles” liquor. Liquor dealers are called “businesses,” not gangs, and they “ship” products instead of “smuggling” them. They settle disputes with lawyers rather than guns. Everything can be abused, but that doesn’t mean government can stop it. Government runs amok when it tries to protect us from ourselves. Drug-related crime occurs because the drugs are available only through the artificially expensive black market. Drug users steal not because drugs drive them to steal. Our government says heroin and nicotine are similarly addictive, but no one robs convenience stores to get Marlboros.

Citing the work of a scholar at the Manhattan Institute, John also comments on the Drug War’s destructive impact on the black community.

John McWhorter, a senior fellow at the Manhattan Institute, indicts the drug war for “destroying black America.” McWhorter, by the way, is black. McWhorter sees prohibition as the saboteur of black families. “Enduring prison time is seen as a badge of strength. It’s regarded (with some justification) as an unjust punishment for selling people something they want. The ex-con is a hero rather than someone who went the wrong way.” He enumerates the positive results from ending prohibition. “No more gang wars over turf, no more kids shooting each other. … Men get jobs, as they did in the old days, even in the worst ghettos, because they have to.”

I don’t reckon that the Drug War does as much damage to African-Americans as the crummy government-run school system, but it’s probably not too far behind.

Stossel closes by looking at first principles.

“Once the principle is admitted that it is the duty of the government to protect the individual against his own foolishness,” economist Ludwig von Mises wrote, “why not prevent him from reading bad books and bad plays … ? The mischief done by bad ideologies is more pernicious … than that done by narcotic drugs.” If we adults own our own bodies, we ought to get to control what we put in them. It’s legitimate for government to protect me from reckless drivers and drunken airline pilots — but not to protect me from myself.

This is right on the mark. The War on Drugs is misguided because it creates crime. It’s misguided because it hurts the black community. And it’s misguided since government shouldn’t be in charge of micro-managing our lives.

P.S. Also keep in mind that the Drug War is the main excuse politicians given when they impose bad asset forfeiture laws and costly anti-money laundering laws. And it’s the Drug War that is usually the motive when politicians and courts erode our Fourth Amendment liberties and trample our individual rights.

P.P.S. Would you rather agree with John Stossel or Hillary Clinton?

P.P.P.S. And I’m sure you want to side with these Montana patriots, right?

P. P.P.P.S. You don’t need to approve of drugs or use drugs to recognize the Drug War is misguided. You can be uptight and straight-laced like me, but still recognize that the Drug War does far more harm than good.

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Ron Paul has made “End the Fed” a popular slogan, but some people worry that this is a radical untested idea. In part, this is because it is human nature to fear the unknown.

But there are plenty of examples of policy reforms that used to be considered radical but are now commonplace.

This list could go on, but the pattern is always the same. People assume something has to be done by government because “that’s the way it’s always been.” Then reform begins to happen and the myth is busted.

But is money somehow different? Not according to some experts.

Here’s some of what John Stossel wrote in a recent column.

Why must our government make currency competition illegal? …Competition is generally good. Why not competition in currencies? Most people I interviewed scoffed at the idea. They said private currency should be illegal. But impressive thinkers disagree. In 1975, a year after he won the Nobel Prize in economics, F.A. Hayek published “Choice in Currency,”which has inspired a generation of “free banking” economists. Hayek taught us that competition not only respects individual liberty, it produces essential knowledge we cannot obtain any other way. Any central bank is limited in its access to such knowledge, and subject to political pressure, no matter how independent it’s supposed to be. “This monopoly of government, like the postal monopoly, has its origin not in any benefit it secures for the people but solely in the desire to enhance the coercive powers of government,” Hayek wrote. “I doubt whether it has ever done any good except to the rulers and their favorites. All history contradicts the belief that governments have given us a safer money than we would have had without their claiming an exclusive right to issue it.” Former Federal Reserve economist David Barker discussed this idea recently with me. “There are a lot of ways that private money might be better,” Barker said. “It might have embedded chips that would make it easier to count.” The chips would also prevent counterfeiting. There used to be private currencies. A businessman who sold iron and tin made coins that advertised his business. The Georgia Railroad Co. also produced its own currency. This became illegal in 1864 — Abraham Lincoln was a fan of central banking.

Stossel’s historical references are particularly important. As I explain in this video, many nations – including the United States – used to have competing currencies.

And if you want a thorough analysis of the Fed’s performance, I urge you to watch this George Selgin speech. Then ask yourself whether we would have been in better shape with private currencies.

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About this time last year, with the White House about to release a new budget, the press was filled with stories about President Obama being a tough-minded budget cutter.

Once the budget was released, I looked at the real numbers and explained how the burden of government spending would jump by $2 trillion in just 10 years if the President’s plan was enacted.

So why is there such a disconnect? Why does the establishment media report about “cuts” that would “slash” the budget, when actual spending is rising?

I explain this scam to John Stossel.

I made similar points last year in this interview with Judge Napolitano.

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There’s an odd debate in the blogosphere. As happens every Thanksgiving, libertarians and conservatives take joy in pointing out that there was mass starvation and suffering during the early years of the Plymouth Colony because of a socialist economic model. Here’s what John Stossel recently wrote.

Long before the failure of modern socialism, the earliest European settlers gave us a dramatic demonstration of the fatal flaws of collectivism. Unfortunately, few Americans today know it. The Pilgrims at Plymouth Colony organized their farm economy along communal lines. The goal was to share the work and produce equally. That’s why they nearly all starved. When people can get the same return with less effort, most people make less effort. Plymouth settlers faked illness rather than working the common property. Some even stole, despite their Puritan convictions. Total production was too meager to support the population, and famine resulted. This went on for two years. “So as it well appeared that famine must still ensue the next year also, if not some way prevented,” wrote Gov. William Bradford in his diary. The colonists, he said, “began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length after much debate of things, (I) (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. And so assigned to every family a parcel of land.” In other words, the people of Plymouth moved from socialism to private farming. The results were dramatic. “This had very good success,” Bradford wrote, “for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many.”

My colleague Dan Griswold has a blog post making the same point. And here’s a new video from the prolific folks at Reason TV.

This story must bother the statists. For the first time I can remember, they tried to push back this year. A blogger called Liberal Curmudgeon attempted to puncture the supposed myth, blaming the Colony’s woes on lazy Englishmen.

The real problem, though, was that the men recruited for Jamestown and Plymouth were expecting quick and easy riches without having to work at all.

That’s an interesting theory, and Andrew Sullivan swallows it, hook, line, and sinker (apparently any criticism of Rush Limbaugh and Glenn Beck must be true).

But this argument suffers from a couple of flaws. Don Boudreaux deals with one of the problems in his post, but I have a much simpler criticism for Andrew Sullivan, the Liberal Curmudgeon, et al.

If the Plymouth Colony initially was failing because of the wrong type of people, why did those wrong people suddenly succeed once communalism was replaced with private property?

Maybe statists have a good answer to this question, but I won’t be holding my breath.

So the real lesson of Thanksgiving (at least from an economics perspective), is that incentives matter. The Pilgrims figured this out and changed course. Nearly four hundred years later, the question for today is whether Obama is similarly capable of learning from his mistakes.

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One of the main factors determining incumbent election success is economic performance. When disposable income is rising and people feel good about the future, it is difficult for an incumbent to lose. So why, then, is Obama pursuing policies that are undermining growth? Sure, it is in the interests of the left in the long run to create more dependency on government. That’s one of the reasons why there is nothing resembling a free market party in most European nations. But America isn’t at that stage yet (thankfully). And as John Stossel writes, Obama’s bad government policy is causing joblessness and uncertainty. This is going to hurt Democrats this November and may linger until 2012, when Obama would suffer the consequences (in the unlikely event that Republicans put forth a semi-decent candidate).
Why isn’t the economy recovering? After previous recessions, unemployment didn’t get stuck at close to 10 percent. If left alone, the economy can and does heal itself, as the mistakes of the previous inflationary boom are corrected. The problem today is that the economy is not being left alone. Instead, it is haunted by uncertainty on a hundred fronts. When rules are unintelligible and unpredictable, when new workers are potential threats because of Labor Department regulations, businesses have little confidence to hire. President Obama’s vaunted legislative record not only left entrepreneurs with the burden of bigger government, it also makes it impossible for them to accurately estimate the new burden. In at least three big areas — health insurance, financial regulation and taxes — no one can know what will happen. …Nothing more effectively freezes business in place than what economist and historian Robert Higgs calls “regime uncertainty.”

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Using road management as an example, John Stossel explains that government does a worse job than the private sector, even at things that theoretically are a government responsibility. Part of this is because of the profit motive, to be sure, but a big reason is probably because government bureaucracies inevitably are filled with overpaid bureaucrats who understand that job security is best assured by maintaining problems rather than solving them. Stossel makes an excellent point by noting that “contracting out” is not the same thing as genuine free enterprise. But at least it means whatever government is doing (either good things or bad things) will be done for less cost and with more competence.

Free enterprise does everything better. Why? Because if private companies don’t do things efficiently, they lose money and die. Unlike government, they cannot compel payment through the power to tax. Even when a private company operates a public facility under contract to government, it must perform. If it doesn’t, it will be “fired” — its contract won’t be renewed. Government is never fired. Contracting out to private enterprise isn’t the same thing as letting fully competitive free markets operate, but it still works better than government. Roads are one example. Politicians call road management a “public good” that “government must control.” Nonsense. In 1995, a private road company added two lanes in the middle of California Highway 91, right where the median strip used to be. It then used “congestion pricing” to let some drivers pay to speed past rush-hour traffic. Using the principles of supply and demand, road operators charge higher tolls at times of day when demand is high. That encourages those who are most in a hurry to pay for what they need. …for years there was a gap in the ring road surrounding Paris that created huge traffic problems. Then private developers made an unsolicited proposal to build a $2 billion toll tunnel in exchange for a 70-year lease to run it. They built a double-decker tunnel that fits six lanes of traffic in the space usually required for just two. The tunnel’s profit-seeking owners have an incentive to keep traffic moving. They collect tolls based on congestion pricing, and tolls are collected electronically, so cars don’t have to stop. The tunnel operators clear accidents quickly. Most are detected within 10 seconds — thanks to 350 cameras inside the tunnel. The private road has cut a 45-minute trip to 10 minutes.

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John Stossel appropriately scolds the former Federal Reserve Chairman for blaming the financial crisis on the free market. I’ll go one step farther and say that Greenspan’s behavior is a reprehensible example of someone lacking the cojones to take responsibility for his mistakes. Greenspan is surely not responsible for the corrupt system of subsidies from the government-created nightmares known as Fannie Mae and Freddie Mac, but he definitely deserves the lion’s share of the blame for the Fed’s easy-money policy of artificially-low interest rates. Greenspan presumably knows he screwed up, which makes his attack on free markets especially despicable. The icing on the cake is that he’s also sucking up to the political establishment by endorsing higher taxes. Hasn’t he already done enough damage?

I’m getting tired of Alan Greenspan. First, the former Federal Reserve chairman blamed an allegedly unregulated free market for the housing and financial debacle. Now he favors repealing the Bush-era tax cuts. …During a congressional hearing two years ago, Greenspan shocked me by blaming the free market — not Fed and housing policies — for the financial collapse. As The New York Times gleefully reported, “(A) humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets.” He said he favored regulation of big banks, as if the banking industry weren’t already a heavily regulated cartel run for the benefit of bankers. Bush-era deregulation is a myth perpetrated by those who would have government control the economy. We libertarians were distressed by Greenspan’s apparent abandonment of his free-market philosophy and his neglect of the government’s decisive role in the crisis. …now Greenspan, going beyond what even President Obama favors, calls on Congress to let the 2001 and 2003 Bush tax cuts expire — not just for upper-income people but for everyone. …the stupidest thing said about tax cuts is the often-repeated claim that “they ought to be paid for.” How absurd! Tax cuts merely let people keep money they rightfully own. It’s government programs, not tax cuts, that must be paid for. The tax-hungry politicians’ demand that cuts be “paid for” implies the federal budget isn’t $3 trillion, but $15 trillion — the whole GDP — with anything mercifully left in our pockets being some form of government spending. How monstrous!

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It is common to mock paper-pushing bureaucrats and nanny-state politicians for silly laws and mindless regulations, but sometimes absurd policies translate into genuine oppression. John Stossel outlines some of the disturbing ways that the American people are being mistreated.
Something’s happened to America, and it isn’t good. It’s become easier to get into trouble. We’ve become a nation of a million rules…top-down rules formed in the brains of meddling bureaucrats who think they know better than we how to manage our lives. Cross them, and we are in trouble. The National Marine Fishery Service (NMFS) received an anonymous fax that a seafood shipment to Alabama from David McNab contained “undersized lobster tails” and was improperly packed in clear plastic bags, rather than the cardboard boxes allegedly required under Honduran law. When the $4 million shipment arrived, NMFS agents seized it. McNab served eight years in prison, even though the Honduran government informed the court that the regulation requiring cardboard boxes had been repealed. How about this one? Four kindergartners — yes, 5-year-old boys — played cops and robbers at Wilson Elementary in New Jersey. One yelled: “Boom! I have a bazooka, and I want to shoot you.” He did not, of course, have a bazooka. Nevertheless, all four boys were suspended from school for three days for “making threats,” a violation of their school district’s zero-tolerance policy. …Palo Alto, Calif., ordered Kay Leibrand, a grandmother, to lower her carefully trimmed hedges. Leibrand argued that no one’s vision was obstructed and asked the code officer to take a look. He refused. Then the city dispatched two police officers. They arrested her, loaded her into a patrol car in front of her neighbors and hauled her down to the station. In 2001, honor student Lindsay Brown parked her car in the wrong spot at her high school. A county police officer looked inside and saw a kitchen knife — a butter knife with a rounded tip. Because Lindsay was on school property, she had violated the zero-tolerance policy for knives. She was arrested, handcuffed and hauled off to county jail where she spent nine hours on a felony weapons possession charge. School Principal Fred Bode told a local paper, “A weapon is a weapon.”

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In his Townhall column, John Stossel cites my Cato colleague Jerry Taylor as he explains that nuclear energy may not be viable without government subsidies.

President Obama recently announced $8 billion in loan guarantees for nuclear power plants. I smiled when I heard. Finally, even Democrats woke up to the benefits of nuclear power. But Cato Institute energy analyst Jerry Taylor set me straight: “If nuclear power made economic sense, we wouldn’t need to subsidize it.” Affordable nuclear power, says Taylor, is a Republican fantasy. Promoting it makes no more sense than Nancy Pelosi’s promotion of wind and solar power. “Take a Republican speech about nuclear power, cross out the phrase ‘nuclear,’ and put in ‘solar’ — you’ve got a Democratic speech about energy.” …I thought the only reason that nuclear didn’t pay for itself is the burden of excessive regulations and objections from silly environmentalists. Apply for permission to build a plant, and their cumbersome lawsuits impose ruinously expensive delays. Again, Taylor set me straight. He says the nuclear industry itself is comfortable with today’s level of regulation. The big problem today is not environmental rules, but simply the huge cost. The same high costs, he says, are found in countries that have long been friendly to nuclear power. He also notes that when the Department of Energy proposed offering to guarantee 80 percent of the cost of new nuclear plants, the big investment banks told the department that even 80 percent loan guarantees wouldn’t be enough. They needed 100 percent guarantees, or they wouldn’t make the loans. “To me that’s a market verdict that you’re supposed to respect. … We need to leave these (matters) to markets. And in the marketplace, investors will not spend a single red dime on nuclear power because it’s too expensive. … It’s not Jane Fonda or Greenpeace that killed nuclear power. It’s Wall Street investment banks who’ve looked at the bottom line.”

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John Stossel’s show tomorrow on Fox Business News will discuss how modern events are eerily similar to what happened in Ayn Rand’s Atlas Shrugged. Writing about the show in his column, Stossel asks which political figure from today would be akin to the evil Wesley Mouch in the book. That’s a challenging question. During the Clinton years, Ira Magaziner or Robert Reich would have been obvious choices. But who is the statist Rasputin of the modern era? You can vote at this link. Geithner, Frank, and Obama currently lead the voting:

Even though Rand published “Atlas” in 1957, her descriptions of intrusive and bloated government read like today’s news. The “Preservation of Livelihood Law” and “Equalization of Opportunity Law” could be Nancy Pelosi’s or Harry Reid’s work. The novel’s chief villain is Wesley Mouch, a bureaucrat who cripples the economy with endless regulations. This sounds familiar. Reason magazine reports that “as he looks around Washington these days,” Rep. Paul Ryan “can’t help but think he’s seeing a lot of Wesley Mouch”. Me, too. I also saw a lot of him under George W. Bush. So I’m conducting this unscientific poll: Who is our Wesley Mouch? Hank Paulson? Tim Geithner? Barney Frank? You can vote here. Personally, I think Chris Dodd’s ridiculous financial proposals ought to win him the honor. But he isn’t among the choices on Fox’s list. As I write this, Geithner, President Obama and Barney Frank lead the voting. …Rand brings out ferocious hatred in some people. …Had today’s bureaucrats been in charge decades ago, they would have banned things like aspirin, cars and airplanes. Sadly, they are in charge now. That makes the “Atlas” message important today. Although Rand idolizes businessman in the abstract, “Atlas Shrugged” makes clear that she (like Adam Smith) understood that they are not natural friends of free markets. They are often first in line for privileges bestowed by the state. That’s called “crony capitalism,” and that’s what Orren Boyle practices in “Atlas.”

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