Monday, July 23, 2012

Powell Post

Jim Powell has a very nice article at Forbes,with his trademark combination of thoughtful comment and detailed facts.

I love his litany of ways that the government subsidizes and taxes the same activity. Hmm, I wonder what maximizes the need of all sides to come ask for favors. It's a great list for those of you who think that regulation in practice achieves much of anything coherent:
Government is actually a big bureaucracy run amuck, a vast tangle of contradictions that often have harmful consequences.  For instance:
  • Politicians scold citizens for consuming too much sugar, but the government provides subsidies for producing high fructose corn syrup that’s widely used in sodas, cookies and other sweets.
  • Taxes are higher because government subsidizes some farmers to grow crops and subsidizes other farmers not to grow crops.
  • Government subsidizes home ownership and restricts the number of homes that can be built.
  • Politicians criticize business executives who take on too much debt, but government encourages debt by providing tax deductions for interest (no deductions for equity capital), and of course the government itself is deeper in debt than anybody else.
  • Politicians complain that companies invest so much money overseas, but the government imposes a 35 percent tax on earnings brought back to the United States.
  • Politicians bemoan our dependence on foreign oil, while restricting oil drilling on public lands and offshore.
  • Businesses can be prosecuted for (1) “predatory price cutting” if they charge too little, (2) “price gouging” if they charge too much or (3) “price fixing” if they charge the same as their competitors.
  • By providing billions of dollars of federal aid for attending college, government subsidizes demand, which has had the effect of making college more expensive and more difficult to pay for than it otherwise would be for everybody who doesn’t get federal aid.
  • Politicians promote the virtues of small, high-mileage cars, and they enforce laws that make it hard to produce such cars profitably in the United States.
  • There are laws that make it harder for employers to hire people and laws that provide income for the unemployed.
  • The government shuts off water in California, intensifying a drought and leading to higher unemployment, all to save small fish, while proposing thousands of square miles of windmills that kill birds.
  • Politicians encourage more couples to get married, but there have been higher taxes on married people than on single people, providing incentives not to get married.
  • Politicians say they want more doctors, while enforcing laws that limit the number of students who can enter medical schools.
  • Government promotes health care inflation by channeling hundreds of billions of dollars a year into the health care sector, enabling people to bid up health care prices – and then the government tries to limit health care price increases with health care rationing, such as excluding more treatments from coverage.
  • Government provides subsidies for growing tobacco and enforces prohibitions on smoking
Jim goes on to some great stories of mind-numbing paperwork -- echoed in today's Wall Street Journal article on how the mind-numbing complexity of the tax code affects small businesses, and gives another subsidy to big ones.  And he adds some sobering reminders of how well federal "infrastructure" projects work out. (The Big Dig, Bart, Denver's airport, and so on.)

My only complaint is that Jim tied the article to President Obama's unfortunate "you didn't build it" gaffe. I find that whole business sad, and sad that his opponents can't seem to find a better way to express their serious disagreements with the administration's  policies. We complain about politicians who stick to teleprompters, but when the slightest little misstep will be taken out of context and flung around for weeks, well, you know why the candidates largely stick to a boring script of 5-second soundbites. I also don't find our quadrennial habit of personalizing profound policy disagreements that useful. It's pointless to blame Obama for policies -- like the above -- that three quarters of the Democratic party and at least half the Republicans endorse.


  1. Mr. Cochrane: You should read the entire speech, it is available here:

    It is a remarkable text. The statement "you didn't build that" is not a slip of the tongue, nor was it an isolated gaffe. The entire text was riddled with errors of history and economics too numerous to catalog here. It also can be understood as an articulation of a political philosophy at odds with held by most Americans.

    Gordon Crovitz set the record straight on the internet in Monday's WSJ. Articles have been written about the true history of the Golden Gate Bridge.

    I will give you one small example. The President said:

    ""There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires."

    Only someone who has restricted his view of American Life to the biggest cities could ignore volunteer fire departments. I would venture that the geographically larger part of the US is protected from fire by these private voluntary organizations, which are often at the core of civil society their communities.

    Someone who knows the history of this country would remember Benjamin Franklin, the old white dude on the $100 bill. Ben was what we might call a community organizer, among his other ventures: printer, writer, scientist, and statesman. He organized the first VFD and the first mutual fire insurance company in the US. Note, Ben was at the constitutional convention and never once suggested that fire fighting was a Federal responsibility, or even a governmental responsibility.

    As I said, I could go on, but there too much to cover in a blog comment.

    1. I'm all for thoughtful analysis of an entire speech, in context. I wish we did a lot more of that rather than play gotcha. Thanks for adding that.

    2. If you "would venture that the geographically larger part of the US is protected from fire by these private voluntary organizations," you'd be dead wrong. The entire West is protected by government/state fire fighting crews that are necessary for the summer wildfire seasons. As the vast majority of citizens live the top 300-400 MSAs, I'd also guess you'd be wrong that most people are covered by volunteer organizations.

  2. Looking for the citations on this is such a chore...also, something interesting from his work: it mentioned Amtrak. All well and good, but one of the reasons that he mentioned that it failed is that it has a lot of rural routes that not a lot of people use. Fine, but a lot of people argue that that's the point of a government service; they'd consider it a market failure, the exact type of thing the government is supposed to address, profitably or not.


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