The White Peril 白禍

If the predictable awfulness of the stimulus bill is so predictably awful that you're so incapable of getting worked up over it and kind of fear you're dead inside, Reason.com asked a group of libertarian-leaning economists to descant on the many specific ways it promises to suck. Even Deirdre McCloskey, who's usually good for at least one wicked laugh, doesn't find much funny. She does note one of the ways we got here and will probably get here again:

At less than full employment the Keynesian stuff works. So the minority of the quickie expenditures will "put people back to work"--until we return to almost-full employment, which will happen pretty quickly in the recovery. At that point the stimulus will merely crowd out private investment. In the short run people might get more cheerful, too, always a good thing. But in two years the recession will be over. And the myth will grow up--rather similar to the ones about FDR and war expenditure--that Obama did it. Essentially, Obama will get credit for the self-adjusting character of the economy. I reckon we should start preparing that other face of Mount Rushmore.

The lead editorial in the Nikkei today opposes protectionism, both in general and in specific (that is, U.S. and Japan) cases:

If a certain country sets policies that benefit only its domestic enterprises, there is the possibility that its trading partners will incline toward similar protectionist measures as a countermove. If this vicious cycle is left uncontrolled, it is possible that the WTO's non-discrimination principle, which places importance on equal competition between domestic and foreign entities, will exist in name only.

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The United States is not the only country suffering. Global demand has contracted, and both developed and developing countries both are contending with the same sorts of under-performing organizations and manufacturers domestically. It will be no strange thing if other countries are hesitating over criticizing America because they think tomorrow it could be their hide.

Latent in all this is the danger that protectionist barriers will go up. If we shut our eyes tight against one another's actions, cases that are essentially outside the applicability of the WTO conventions will keep piling up as faits accomplis. Even [staying carefully] outside the line demarcating governmental provisions that could conflict with the WTO conventions, there's plenty of room to exercise grey-area judgments related to subsidies, technology barriers, quarantining, and import procedures.

Japan, of course, has its own not-so-nice history with protectionism, so the Nikkei could have warned more against economic drag rather than just focusing on retaliatory measures by trading partners.

Are we still on this topic (via Instapundit)? Of course, we are. It comes up every contentious election. Don Surber's reaction to the latest BBC poll is this:

What? The sky did not open? The light did not come down? Celestial choirs did not sing? The world is not now perfect?

Reality is hitting liberals.

Envy, honey, envy.

We're the bestest nation and they are soooooooooo jealous of us.

Well, yes, it often really is envy, especially on the part of Europeans whose grandparents needed rescuing during the war.

Never underestimate the power of good, old-fashioned ignorance, though. A lot of supposedly educated people abroad seriously think they can learn all they need to about the United States by watching CSI: Miami and listening to, well, the BBC/CNN International version of world news. I can't count the number of discussions I had about the Iraq invasion, during my twelve years in Asia, in which my interlocutor clearly just was not processing the idea that finding weapons of mass destruction had not been the only (or even the primary) rationale offered by the Bush administration. My point is not that foreigners couldn't build a case that America is prosecuting the WOT in a way that does harm, if they really believe so, based on an accurate understanding of how things work. My point is that they don't. I think most news-junkie Americans would be pretty shocked at how few alternatives to pacifist social-democratic happy talk there are in many other places.

At Hit and Run, Matt Welch is on fire. First on the anti-bourgeois crack high of a salary cap on upper management at banks:

I'll stack up my class resentment against anyone's, particularly when it comes to billionaire hosebags scarfing at the public trough. However, the only "outrageous" thing going on here is that the government forced itself upon a comparatively successful private company, bitched about the host's ingratitude, and is now doing what the federal government does best: Setting compensation rates at commercial banks. What's that you say? Bank stocks tumbling on "nationalization" fears? Why I never!

To sum up: In a fit of righteous anti-greed, people who make several hundred thousand dollars a year as federal employees (then millions more out of office doing whatever it is Tom Daschle was doing) are consciously driving the best talent out of endangered firms that are sitting on scores of billions of taxpayer dollars that they were made to accept by force. Shoot, what could go wrong with that?

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It will likely never be that time [when President Obama deems it acceptable for banks to make profits and pay out bonuses], as long as the government is in the business of running private commerce. Banks will be forced to write 4 percent mortgages. Automakers will be forced to build magical green cars that spew out 3 million jobs from their exhaust pipes. Airlines will be forced to Buy American, governors will be forced to spend their budget-filling bounty on unionized teachers, and newspapers will be forced to run Rahm Emanuel columns. Local commercial decisions will be made in Washington, based on politics, instead of by business-owners, based on consumers.

And, again, no one who supports this kind of interventionist malarkey is in any moral or ethical position to be working up to high dudgeon about the omnipresence of lobbyists in D.C.

Welch is even better on Obama's column in the WaPo today. The president's introduction reads in part:

What Americans expect from Washington is action that matches the urgency they feel in their daily lives — action that's swift, bold and wise enough for us to climb out of this crisis.

Well, then, Americans are screwed. Federal officials may have the best of intentions, but many of them have clearly never run so much as a lemonade stand successfully, and there is much on-the-ground information about actually operating a business in a way that's good for shareholders, employees, and customers that they just have no way of knowing.

So the wisdom part's kind of suspect. Welch has issues with the boldness part, too, especially when it's characterized as a departure from all those free-market, capitalist policies that have been blighting our lives lately.

There is one charge here that I for one am happy to embrace: We can indeed "ignore...energy independence"...because there's no such as thing as energy independence. Really. It's b******t.

Why do people oppose the stimulus? Here are a few actual reasons: There is no strong evidence that stimuli work, and plenty of evidence that they don't (a relevant consideration, no?). Like the deeply flawed PATRIOT Act, the deeply flawed Iraq War resolution, and the deeply flawed bank bailout, it is being rushed through the legislature in an atmosphere of pants-wetting crisis and presidential warnings of impending doom. It is filled with special interest giveaways, big-government featherbedding, and "Buy American" considerations that have about as much to do with stimulating an economy as playing violin has with putting out fires. By taking from fiscally responsible states (like South Carolina) and giving to fiscally irresponsible states (like California), it violates basic notions of fairness and creates still more moral hazard in an already hazardtastic universe.

And remember–aside from misportraying his opponents' concerns, Obama is also blaming their "theories" for the whole crisis in the first place. Neat! But who had the theory that the federal government should be the elephant in the room of the mortgage business, pressure commercial banks to write mortgages for risky borrowers, even while applying less oversight to Fannie Mae and Freddie Mac than on actors in private sector? It certainly wasn't the free marketeers. Who thought credit default swaps and mortgage-backed securities should be left to expand like crazy without providing for a clearinghouse to at least measure their number and worth? It wasn't the house libertarian on the SEC. Who thought elevating Alan Greenspan to deity status while he maestroed the long era of loose credit was the capital thing to do? I know this will come as a surprise for those who think an Ayn Rand habit gets people a lifetime get-out-of-jail-free card on Planet Libertarian, but Greenspan's bubble-blowing policies were plenty controversial in these quarters before the dukey hit the fan.

Who knew Barney Frank was a libertarian?

It's a few days old, but Cato's David Boaz posted at Real Clear Politics with clarity and point about the latest attempt by special-interest politicians to interfere with honest profit-seeking:

Every company and industry wanted to be sure that it would be eligible for some of the money, and members of Congress worked to slip their constituents and campaign donors into the bill's 451 pages. By the time it passed, it included special provisions for Puerto Rican rum producers, auto race tracks, and corporations operating in American Samoa (such as Starkist, which is headquartered in House Speaker Nancy Pelosi's district). It required that insurance companies pay for mental health benefits and granted tax benefits for victims of the 1989 Exxon Valdez oil spill and makers of children's wooden arrows.

Once the bill passed, the lobbying frenzy only accelerated. Banks and other companies focused their attention on the Treasury Department regulators. A Treasury spokesman told the Wall Street Journal that political influence played no role in the department's decisions: "The decisions are made by a committee of officials at Treasury based on recommendations and data provided by the regulators through the application process."

That's always the official answer. Put the government in charge of handing out money, and the decisions will be made by highly trained, public-spirited economists or lawyers, irrespective of political considerations.

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Even if regulators are as smart as Leonardo da Vinci and as incorruptible as Mother Teresa, they can never have as much knowledge as the decentralized, competitive market process, so planned economies and planned industries fall further and further behind free-market systems. But in reality, even if they're smart, they're not incorruptible. Political influence always comes into play. What we're seeing with the bailout funds will also happen with the stimulus money.

I get why people don't like lobbyists, but it's not hard to understand why they exist. When Congress wields power over Americans on all sorts of little local issues, it's irrational for affected individuals and organizations not to try to leverage it in their favor. And then there's the problem that no congresscritter can be an expert on everything from sheep farming to municipal opera outreach programs to traffic engineering, so decisions are inevitably made on the fly based on what sounds good (yet another opening for clever lobbyists). And we citizens who have better things to do must waste all sorts of time keeping an eye on Washington in order to stay even marginally informed about the shenanigans going on there.