Archives: 10/2010

A History Lesson for Trade Bashers

By Daniel Griswold

Candidates from both parties are trying to win votes this fall by criticizing free trade and trade agreements. As John Steele Gordon points out in a wonderful historical essay, “The Great Mistake,” in the latest Barron’s Weekly:

We’ve been down this unfortunate road before. Recall the Smoot-Hawley tariff, named after its chief congressional sponsors, Sen. Reed Smoot of Utah and Rep. Willis Hawley of Oregon, both Republicans and both chairmen of the committees in charge of taxes.

Introduced in 1929 as the country was tipping into recession, their bill did not have a happy ending. It imposed steep tariff increases on agricultural as well as manufactured goods, raising overall U.S. tariffs to their highest levels in decades. When President Hoover reluctantly signed the bill in June 1930:

The stock market, once again a leading indicator, immediately turned south. It wouldn’t stop falling for two years—the Dow Jones Industrial Average gave up all its gains since its inception in 1896.

Other countries made good on their threats of retaliatory tariffs, and world trade collapsed. American exports had been $5.24 billion in 1929. Three years later U.S. exports were worth only $1.16 billion, a 78% decline. The Smoot-Hawley tariff would prove to be one of the major government mistakes that converted an ordinary recession into the calamity of the Great Depression.

The protectionist bill was bad politics as well as bad economics. Hoover, Hawley, and Smoot were all swept out of office in 1932.

Topics:
Trade Policy

This Week in Government Failure

By Tad DeHaven

Over at Downsizing Government, we focused on the following issues this week:

Topics:
Tax and Budget Policy

Bootleggers & Baptists, a Welcome Correction

By Michael F. Cannon

In my recent “Bootleggers & Baptists, Sugary Soda Edition” post, I wrote that environmentalists and agribusiness team up to support ethanol subsidies. An alert Cato@Liberty reader writes to my colleague Jerry Taylor:

[Cannon] is no doubt right that environmentalists and agribusiness worked together to promote government subsidies to ethanol through about 2006. But by 2007 (when the ethanol mandate was doubled) the environmentalists had dropped out of the pro-ethanol coalition, to be replaced by national-security hawks! If you run into him, please tell him to stop blaming environmentalists for current biofuels policies!

If environmentalists have recently dropped their support for ethanol subsidies, they deserve credit for that. Mea culpa.

I would rather have been completely wrong about the environmentalists’ support for ethanol subsidies. But I’ll settle for being partly wrong.

Topics:
Cato Publications, Energy and Environment, Government and Politics, Regulatory Studies

Dusty Bookshelves and Long-Dead Writers

By David Boaz

New York Times reporter Kate Zernike generated a lot of spit-takes in the blogosphere when she wrote on October 2 about how Tea Party activists are reading “once-obscure texts by dead writers”:

The Tea Party is a thoroughly modern movement, organizing on Twitter and Facebook to become the most dynamic force of the midterm elections.

But when it comes to ideology, it has reached back to dusty bookshelves for long-dormant ideas.

It has resurrected once-obscure texts by dead writers — in some cases elevating them to best-seller status — to form a kind of Tea Party canon. Recommended by Tea Party icons like Ron Paul and Glenn Beck, the texts are being quoted everywhere from protest signs to Republican Party platforms.

Pamphlets in the Tea Party bid for a Second American Revolution, the works include Frédéric Bastiat’s “The Law,” published in 1850, which proclaimed that taxing people to pay for schools or roads was government-sanctioned theft, and Friedrich Hayek’s “Road to Serfdom” (1944), which argued that a government that intervened in the economy would inevitably intervene in every aspect of its citizens’ lives.

So that’s, you know, “long-dormant ideas” like those of F. A. Hayek, the winner of the Nobel Prize in Economics, who met with President Reagan at the White House, whose book The Constitution of Liberty was declared by Margaret Thatcher “This is what we believe,” who was described by Milton Friedman as “the most important social thinker of the 20th century” and by White House economic adviser Lawrence H. Summers as the author of “the single most important thing to learn from an economics course today,” who is the hero of The Commanding Heights, the book and PBS series by Daniel Yergin and Joseph Stanislaw, and whose book The Road to Serfdom has never gone out of print and has sold 100,000 copies this year.

So that’s Kate Zernike’s idea of an obscure, long-dormant thinker.

Meanwhile, over the next few weeks after that article ran, the following headlines appeared in the New York Times:

Apparently the Times isn’t always opposed to looking in the dusty books of long-dead writers. By the way, Keynes died in 1946, Hayek in 1992.

Topics:
Political Philosophy

‘What Can We Get Away With?’

By Walter Olson

A New York Times account, based on an open-records request, sheds light on how Mayor Michael Bloomberg’s famously nannyish health department makes up its mind how far to go in food-scare advertising. In particular, a proposed YouTube campaign to scare consumers away from sweetened sodas resulted in

a protracted dispute in the department over the scientific validity of directly linking sugar consumption to weight gain — one in which the city’s health commissioner, Dr. Thomas A. Farley, overruled three subordinates, including his chief nutritionist.

Some highlights:

  • “The scientists, she said [nutritionist Cathy Nonas], ‘will make mincemeat of us.’”
  • “’Basic premise doesn’t work,’ Dr. Michael Rosenbaum, a professor of pediatrics and clinical medicine at Columbia”
  • “’The science [i.e., efforts to be more accurate and precise in conveying the science] absolutely weakens our potential for mass distribution,’ [campaign manager Sabira] Taher wrote.”
  • “’I think this is broad enough to get away with,’ [Nonas] wrote [of the final video].”

Isn’t it comforting to think that the city administration of New York – and its federal counterpart, staffed by very similar sorts of activist officials – are also in charge of regulating private advertising of food and many other products to make sure such ads are fair and not misleading?

Topics:
Health Care & Welfare, Regulatory Studies

Hispanics And Proposition 19

By Juan Carlos Hidalgo

Polls suggest that Hispanics in California are largely opposed to Proposition 19, which would legalize marijuana in that state. This is unfortunate since Hispanics have historically been disproportionate victims of drug prohibition.

Earlier this week, David Kopel wrote a historical analysis in Encyclopedia Britannica of the racist origins of marijuana prohibition, which targeted Mexicans in particular. Back in the 1930’s when the federal government started cracking down on marijuana consumption, officials openly worried about the effect of the drug on “degenerate Spanish-speaking residents … who are low mentally, because of social and racial conditions.”

Some people might claim that even though racial profiling certainly was behind marijuana prohibition, its current enforcement affects all racial groups alike. However, a recent report from the Drug Policy Alliance shows that Hispanics are still overwhelmingly targeted by the police for marijuana offenses. The report states, “From 2006 through 2008, major cities in California arrested and prosecuted Latinos for marijuana possession at double to nearly triple the rate of whites,” even though surveys show that young Hispanics use marijuana at lower rates than young whites. Hispanics are still victims of racial profiling due to marijuana prohibition.

It is not surprising that a socially conservative electorate such as Hispanics would oppose marijuana legalization. Unfortunately, many misconceptions about  drug legalization still abound and are magnified by opponents of the measure. Thus, it is important that Hispanics keep in mind that:

  • Legalization doesn’t mean endorsing or consenting drug consumption.
  • There is an important difference between drug consumption and drug abuse, just as there is a big difference between alcohol consumption and alcoholism.
  • There is also a critical distinction between the negative consequences of drug abuse, such as family disintegration, health problems, loss of workers’ productivity, etc., and the negative consequences of prohibition, like crime, violence, corruption, and high mortality of users due to overdoses, etc. Many people, when arguing against legalization, bring up scenes of violence and crime, when actually these problems would greatly diminish once the illegal black market for drugs is legalized.

Hispanics should also take note of what Colombian president Juan Manuel Santos has said about Proposition 19. The war on drug has been wreaking havoc in Latin America, and it’s increasingly threatening the institutional stability of Mexico and Central America, where many Californian Hispanics come from. Santos has signaled that passing Proposition 19 would force his government to push for a “world-wide discussion” on drug policy. Marijuana legalization in California could thus trigger a global debate on ending the war on drugs, which has cost Latin America dearly for so many years.

Hispanics in California have many reasons to favor the end of marijuana prohibition. They would be doing themselves a big favor if they vote yes next Tuesday.

Topics:
Government and Politics, Law and Civil Liberties

So Long, Wonder Woman

By Neal McCluskey

Today is Michelle Rhee’s last day heading up DC’s public schools, and her departure should serve as a stern reminder: We’ve been forcing children to wait for Superman — or Wonder Woman — for far too long. There are no superheroes, and even when we think we’ve found one, they are almost always defeated by teachers unions, or internecine politics, or just plain burnout.

Rhee is a classic case of the first two, with her bold reforms raising the ire of the local union and eventually bringing the might of the American Federation of Teachers to bear in the mayoral election. But unions aren’t the only powers that ended Rhee’s crusade. Long-simmering divisions over the perceived aloofness of Rhee’s boss, Mayor Adrian Fenty, also landed huge political punches that eventually knocked Rhee out.

Rhee certainly isn’t alone in the Hall of Defeated Heroes. Alan Bersin stormed into San Diego’s superintendency in 1998, but his hard-charging style eventually divided the city and created an intense political backlash. He was gone in 2005.  Carl Cohn, Bersin’s replacement, quit just two years into the job. “I don’t have the energy, heart and passion that I did when I first took the job,” he said. And then there’s Rudy Crew, who was ousted in Miami-Dade after four years. In that time the district was thrice named a finalist for the Broad Prize, which recognizes urban districts for major achievement gains. But Crew became embroiled in racial and ethnic tensions, as well as caught in a budgeting morass, and was booted.  

But if there is no super-being to save the children, who can? Sadly, no one in a government monopoly, which is what public schooling is. In such a system only political power matters — after all, politicians make all the rules — and most of that power resides with teachers, administrators, and other public school employees. Because their very livelihoods come from the government system, they are the most motivated to engage in political combat, and through unions and other associations they are best able to organize. And because they are human, their natural proclivity is to fight for the most generous compensation, and least accountability to others, possible.

Parents and children — the people for whom the public schools are supposed to work — simply can’t counter that politicking force. They can’t constantly run political ads, work for campaigns, lobby, and take to the streets the way unions and other organized interests can. And that means polticians who side with parents against unions and administrators are taking a politically perilous — and often fatal — risk. 

So the problem is not a lack of heroes. It’s that public schooling inherently crushes not just heroes, but the very people our educators are supposed to serve — parents and children. 

Thankfully, knowing that makes the solution clear: We must take education money away from politicians, give it to parents, and in so doing take away the death ray, or robot army, or whatever you want to call the incredible power that government monopolies bestow on special interests. We must give parents school choice not so that they can become superheroes, but so that superpowers are no longer required to get their kids the education they need.

Topics:
Education and Child Policy

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