Posts tagged Barack Obama

Column on One Swallow

One Swallow

Tibor R. Machan

Those who have paid a bit of attention to my writings on public policy probably know that I have always been an opponent of preemptive petty tyrannies of government regulations, the sort that force people to follow certain standards of professional conduct, including manufacture, regardless of whether or not they have deserved to be coerced.

In the criminal law such prior restraint is seriously frowned upon but in administrative law it is not, mainly because of two legal notions. These are the police power–a feudal relic if there ever was one–and the arguably distorted provision of the U.S. Constitution, Article 1, Section 8, the interstate commerce clause.

The former made sense only when the monarch had been thought to be in charge of us all, when government ruled the lives of all the subjects as if they were children, invalids or inferiors. The latter appeared at first to mean only that Congress is authorized to regularize commerce among the several states so that these states do not behave as economically warring or protectionist political bodies. No duties may be imposed between New York and Pennsylvania (etc.) was the idea, no tariffs, nada.

OK, now instead of tossing this police power feudal notion and being faithful to the rational meaning of the interstate commerce clause, both developed as weapons in the arsenals of government planners and interventionists despite the classical liberal revolution. This despite the fact that neither legal measure has a leg to stand on in the court of justice.

But perhaps practically they are unexceptionable, no? Why would that be? Because, just as now and then a bit of violence among people can be useful, so can government intervention or regulation bear some valuable fruit.

Consider what Elizabeth Kolbert wrote some time ago for the New Yorker Web site concerning President Obama’s choice for energy secretary, Steven Chu, and his enthusiastic defense of government intervention:

“In the mid-1970s, California–the state Chu lived in–set about establishing the country’s first refrigerator-efficiency standards. Refrigerator manufacturers, of course, fought them. The standards couldn’t be met, they said, at anything like a price consumers could afford. California imposed the standards anyway, and then what happened, as Chu observed, is that ‘the manufacturers had to assign the job to the engineers, instead of to the lobbyists.’ The following decade, standards were imposed for refrigerators nationwide. Since then, the size of the average American refrigerator has increased by more than 10 percent, while the price, in inflation-adjusted dollars, has been cut in half. Meanwhile, energy use has dropped by two-thirds.”

Let’s give Chu credit for at least making the effort to defend government regulation–post bureaucrats treat it as their God given authority. But I am also tempted to mention here how Benito Mussolini was able to make the trains run on time back in the days he ruled Italy as a fascist dictator. Thus it is important here to recall a wise saying by the ancient Greek philosopher Aristotle, namely, that “One swallow does not make a summer, nor does one day; and so too one day, or a short time, does not make a man blessed and happy” (NE I.1098a18). And again, true enough, now and then smacking someone who is acting hysterically could calm him down, yet it would be folly to adopt smacking people around as a general policy by which to help them cope.

Or again, a bit more technically, the imposition of the refrigeration manufacturing standards in California is used by Mr. Chu as an explanation of both the increase in the efficiency of refrigerators nationwide and the cut in half of their price since the imposition was made. But there is a famous fallacy of informal logic that’s in evidence in Mr. Chu’s reasoning, namely, post hoc, ergo propter hoc (after this, therefore on account of this). No one could tell at the time the California government imposed these standards that only by doing so will the desired efficiency and price drop be produced. Indeed, in many cases in which government intrudes by establishing, by law, standards like this the market has already begun to do it, albeit peacefully, without the use of coercive force and the heavy cost of bureaucracy (like ho cigarette smoking began to subside way before government waged its war on smokers).

I am convinced that government regulation is an improper way to run people’s lives, even if now and then it may appear or even prove to be a bit helpful. Would be good thing of Mr Chu & Co. would agree with this.

Column on It wasn’t Capitalism, Stupid

It wasn’t Capitalism, Stupid

Tibor R. Machan

The Sunday, April 25, 2010, issue of The NYT Magazine carried a very clearly written essay by Roger Lowenstein, titled “Cracked Foundation, Fannie and Freddie are Broken. What would fixing them mean?” It further substantiates the point I have been making in numerous columns, essays and scholarly papers over the last several months, namely, that capitalism had nothing to do with the recent financial fiasco. Indeed, it was nearly all due to government meddling, especially with the policy exemplified best by the establishment and operation of Fannie Mae and Freddie Mac, the mortgage giants established by the federal government and recently bailed out by taxpayers at a cost of “upward of $125 billion.”

As Lowenstein put it, “government support of the mortgage twins was among the original sins of the financial crisis. It stemmed from the country’s affection for homeownership–a legacy of a frontier nation that subsidized homesteading for pioneers and encouraged later generations to homestead in the suburbs via the mortgage-interest deduction….”

Now whatever one may think of the sentiments that drove all this, one matter should be crystal clear: laissez-faire capitalism is entirely incompatible with such public policy. Accordingly, all the blather about how market fundamentalism (Paul Krugman’s favorite term) led to the fiasco should by now be admitted to be utterly false.

There is a lot more and anyone who insist that laissez-faire capitalism is the source of our wows would need to come to terms with what the essay makes evident, namely, that government meddling, overt and covert, was the culprit. And it is useful to note that this article is published in The New York Times, a paper that has backed the Krugman explanation all along. Admittedly, the Sunday magazine has, on a few occasions, published essays and notices that put forth a dissenting account, akin to what we get from Lowenstein. The first of those I noticed was published about a year ago, by Professor Niall Ferguson of Harvard University back on May 17, 2009, titled “Diminished Returns,” and made the point up front, namely, “The biggest blunder of all [behind the financial meltdown] had nothing to do with deregulation.”

As I see it, the best objection to government regulations and other type of interference with people’s economic activities rests on the fact that free men and women tend, in the main, to be far more competent at managing their own professional affairs than do government bureaucrats and, even more importantly, have every right to do so without others’ intrusive meddling. Call it interference, call it paternalism, or call it nudging, as I understand human community affairs no one has the proper authority to manage the affairs of other people who haven’t invited them to do so and have done nothing to violate anyone’s rights. That this may now and then result in what some folks consider unwelcome–high risks, high or low prices, lack of full employment or complete financial security–is no excuse for the violation of anyone’s rights. It is, in fact, part and parcel of a regime of individual rights that personal errors, even by large groups, will probably be made now and then. But it is far less damaging than the damage caused by governmental intrusions in the free market place.

Now this line of reasoning is out of fashion in our time because it rests on principles that are defended as true. That’s because in our day pragmatism is very popular. As Rahm Emanuel, Mr. Obama’s Chief of Staff put it in an interview in Bloomberg Businessweek (4/26-5/2, 2010, page 41), “Well, he [Obama] is a pragmatist….He is not wedded to a philosophy or ideology.” (But, quite oddly, Mr. Emenuel adds: “[Obama] sees government mainly for setting rules and then letting the private sector operate within those rules.” Oh yes? Utterly dishonest, this remark.)

Anyway, despite being a principled opponent of government interference in people’s lives, economic or otherwise, I do keep my eyes on the arguments made by more empirical minded thinkers and so I welcome Mr. Lowenstein’s contribution in The Times, indicating that my principled stance has the backing of the more research-minded folks.