A Good Step In Argentina

We’ve been reading Guide To The Perfect Latin American Idiot. It is instructive about all the socialists, fascists, and others that have come to power in Latin America. The idiots are the folks that tolerate, vote for, or recommend those in power. It is both hard to finish and hard to recommend the book because it is so damn depressing. It is a continent and a half where the voters and sometimes the gunmen put people in power that ruin countries economically. Argentina is an excellent example but there are many others. The Heritage 2023 index of Economic Freedom combines North and South America in one region. Check out this list. Faced with triple digit inflation and a 40 percent poverty rate, Argentina did the unexpected sensible thing: It elected pro-capitalist Javier Milei as president. Dominic Pino at NRO has posts here and here about Javier.

In the former, Dominic discusses why Javier is not The Donald. We think he leaves out two of the superficial connections between Javier and The Donald. As the picture at the start of this post from the Toronto Sun shows, Javier’s hair is not quite as carbon copy of The Donald but we find it strikingly similar to his. And his girlfriend certainly will remind folks of The Donald’s wife, Melania. Javier and The Donald have superficial similarities but are much closer to being political opposites.

Sidebar: It is hard to be sure of what policies The Donald favors. As somebody said, The Donald has moods rather than policies. The two things we can be relatively sure about The Donald is that he is in favor of tariffs and against immigration. Javier is the opposite. In fact, like MWG, he is in favor of unilateral reductions in tariffs. End Sidebar.

Javier faces daunting challenges to change Argentina to a functioning market economy. Peronism has run rampant in Argentina for almost 80 years. Javier has so much to fix and limited authority to do it. He is the president but he doesn’t control the parliament. And, as we remember with Reagan and Thatcher, the benefits of a market economy take time to manifest themselves. The idiots, perfect and imperfect, will ramp up the political pressure soon after Javier takes office. We wish him and the people of Argentina smooth sailing to a market economy but they face enormous headwinds from the idiots.

Sugar Czar Needed

One of our little joys is a cube of sugar with our Darjeeling in the morning. We know, we can get the spoonful of sugar that makes Mary Poppins’ charges so happy or we can get packets, or we can even use other kinds of sweeteners. We prefer sugar cubes. Our problem is that sugar cubes have been missing from the local grocery shelves for several months. We know because we check carefully and find the price label for both brands of sugar cubes on shelves. One store even has a “sorry it is out of stock” sign which winds us up to no end after weeks of checking.

Satire Alert. Obviously there is a sugar cube market failure and we need a governmental solution to this dreadful shortage. There are full shelves of sugar bags of various sizes and various kinds including: granulated sugar (both regular and premium), light brown sugar, dark brown sugar, sugar in the raw, baker’s sugar, and confectioner’s sugar. Why can’t we have a few boxes of sugar cubes? The answer, of course, is that we can. All is we need is a government mandate for sugar cubes. The government mandates all sorts of strange things like solar panels and windmills. Why not mandate something that somebody actually wants: sugar cubes. The Sugar Czar doesn’t need to be a cabinet level post but he will need some suitably vague legislation and minions to make sure every county in America gets enough sugar cubes. And what happens when sugar cubes are fairly distributed to Americans? Well, we will always have the Sugar Czar to make sure that American sugar cube users are never, ever inconvenienced again. End Satire Alert.

If you don’t understand the satire read The Weed Agency by Jim Geraghty. Yes, we know it is fiction. And let us know if you have any sugar cubes.

Economic Policy And The GOP

We refer to ourselves as capitalistic orphans because currently the Democrats are all-out to stop capitalism and the current GOP, at best, doesn’t care about capitalism. Two posts this week emphasize that. At NRO Capital Matters Richard M. Reinsch and David L. Bahnsen beg us, Can We Talk About Economic Growth Again? While at The Dispatch, Jacob Wendler tells us about The Economic Rift On The Right with the scary and easily answered subtitle: Will Conservatives Embrace A Populist Economic Agenda? The answer is No.

Sidebar: Consistent with our previous usage we use the word conservative to identify individuals with conservative beliefs rather than as sloppy synonym for right wing. Conservatives are a small percentage of the right wing that, from time to time, have had substantial influence on US politics. End Sidebar.

We are desperate to talk about what policies will bring the growth fairy to visit. You should read all of Richard and David’s post. We’re not sure there is much juice for economic growth in the tax code but we’d much rather be talking about how to get the growth fairy to visit rather than how to divide up the pie with Jacob and the populists. One sure way to do that would be to lift as many regulations enacted in the name of Climate Change as possible

Reading Jacob might help you understand why the GOP fails in cities. Like the Democrats, the GOP is trying to support various targeted groups rather than appeal to the masses. It seems like a conservative message that includes support for the gig economy, less regulation, and less corruption could resonate in various cities but the GOP leadership reflected in Jacob’s post makes such a message untenable.

Many forget but the Democrats were the tax cutters under JFK and the deregulators under Jimmy Carter. And, of course, the GOP was serious about and effective at getting the growth fairy to visit for decades starting with Reagan. But now both parties are looking for new shiny things to sell the electorate. The politicians seem to think, and they should know, that it always works or it never works doesn’t play well with the voters.

Right now it looks like the best outcome from the 2024 would be a divided federal government. That might limit the bad outcomes. Then in 2026 or 2028 we might get to talk about serious stuff like coxing the growth fairy to visit again.

Regulatory Capture And Voting

Scott Lincicome at The Dispatch is always worth reading but My Treason Charge And The New Right’s Governance Fantasy is astonishingly good. It is worth paying for. Scott starts with the Jones Act and regulatory capture. The Jones Act restricts water transportation within the United States and is causing major energy problems in Puerto Rico and New England. The problems caused by the Jones Act are exacerbated by the capture of the regulators by the industry they are supposed to regulate. Scott quotes Dominic Pino at NRO:

“Regulatory capture” is the term that describes when an administrative agency works for the benefit of the industry it is supposed to regulate. Rarely is there such a clear case of regulatory capture as in U.S. water transportation.

Then Scott moves to generalize and find the problem with what he describes as the new right (we would call them the angry middle). The new right, as Scott sees it and we agree, wants to harness government to “better” goals:

The new right shares and amplifies this elite skepticism but eschews limited government and instead embraces state power to achieve its “anti-elitist” objectives. 

The problem is, as the Jones Act and The Weed Agency (a must read) show, trying to repurpose government is not going to be effective. Here is how Scott puts it:

As mentioned, that’s a big reason why limited government of enumerated powers is so central to the classical liberal thesis: No matter how well-intentioned a policy is, elites are fallible, and the systemic, corrupting influences of a big, unaccountable state all but ensure that policy results won’t match their intentions. 

Even if you win all the elections, and you won’t, it still doesn’t work. As usual, conservatives are right.

Sidebar: New faculty tend to be excited about their ability to make successful change. We would often encourage them to lead but remind them that either “We aren’t going to die on that hill,” or “We’ve already died on that hill.” End Sidebar.

Yet we find Dan Crenshaw’s arguments for unity in the WSJ (another paywall) for 2022 and beyond appealing. For example, the new right or angry middle was a crucial part of the coalition to make corporate taxation more sensible during The Donald’s administration. Dan invokes the sainted Ronald Reagan to attempt to unify the right behind the GOP in 2022:

The choice before Americans next month is simple. Will we sell our votes to politicians promising us prosperity if only we give them more of our money? Will we choose to be free—acknowledging the risks and challenges that inevitably accompany freedom—or will we choose to be dependent? Will we, as Reagan said, “believe in our capacity for self-government, or abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves”?

If the new right is wrong about economics and so many other things that we haven’t covered then why should we Reaganite conservatives support them? The problem is that although there are many conservative leaning folks, conservatives or serious conservatives or classical liberals as Scott calls them are few in number. On economics, we self-identify as a capitalistic orphan indicating that there are few of us. Unfortunately, we are not going to end up with 370 clones of Scott in Congress. One is a big ask. If your minimum qualification for elected office is as conservative as Ronald Reagan then you are unlikely to ever vote again. On the other hand, if you are a classical liberal in Georgia’s 14 district you can be excused for whatever choice you make about your vote for a representative in the House.

The Jones Act has been impoverishing most Americans and enriching a few for over a century yet there is not sign of eliminating it. Despite all the hardship it causes we rarely can even get waivers for it. Being right isn’t enough. You need a majority to elect just one candidate and then need to win a majority of elections to govern. And governing and the related compromises is hard work. Identifying the economics of regulatory capture is easy. Fixing it is really hard. Thus, we need to stay in the political game by electing folks that we have a chance to influence. That’s why we voted (yup, voting is open in WI) GOP this year despite our concerns about some of the nominees.

Name Calling Season

We don’t enjoy the election season because most of the serious discussions go out the window and both parties resort to name calling. It is true that name calling is an international activity and it does go on all year but we think it is still more intense as we close in on election day.

Glenn Reynolds has an interesting post on name calling at the New York Post about the new Italian prime minister, Giorgia Meloni, entitled: Why The Left Keeps Smearing Its Political Rivals As Hitlers Or Mussolinis. You should read Glenn’s post. John Hinderaker at PowerLine adds a specific example of French President Emmanuel Macron’s comments and Giorgia’s video response. Check that out too. Giorgia gets in some serious name calling of her own but we have some support for her since she has specifics while terms like far-left and far-right or Communists or fascists don’t say much of anything.

Sidebar: What is far-right or far-left? Given the enormous portfolio of political position there are to pick from it is really hard to tell. We think that we are far-right: supporting free speech, free domestic markets, and free trade. On the other hand, The Donald, who doesn’t support any of those things is tagged as far right. We think The Donald should be classified as part of the Angry Center. Specifics on positions are needed. End Sidebar.

We are thankful for streaming so we don’t have to sit through many political ads with the hot race in Wisconsin between America’s best senator, Ron Johnson and the challenger, Mandela Barnes. The one we did see was Mandela shopping and engaging in class warfare. The print ad we see is that Ron (not in a suit) will fight for Wisconsin. The former is a real turnoff as the Democrats are the inflation guys (to be fair, the GOP has supported tariffs but otherwise is much more market oriented). We don’t care if Mandela knows the price of milk or is upset that he is not yet a millionaire. The latter does nothing to make us vote for Ron. We strongly support Ron as our prefix reflects but the name calling season doesn’t show him at his best. This season doesn’t do much for us either but not voting won’t stop the name calling.

More Growth Fairy Fantasies

We think economic growth should be Job One for the federal government. Economic growth makes the world better for us and increasing better for each succeeding generation through the miracle of compound interest. As we see it, the folks in charge of the federal government this century have not agreed with us.

Kevin D. Williamson takes a very different view of the current state of affairs. In Fairy Tales Won’t Fix The Economy at NRO he tells us many elements of the economy are beyond political control, we don’t know what causes the growth fairy to visit, and it is in every president’s self-interest to do everything he can to promote strong economic growth. We agree with Kevin on the first, disagree on the second, and completely disagree on the third. A nice example of the president not controlling the economy was in 1976 when Jimmy Carter was challenging Gerry Ford and economic growth and employment were issues. The UAW struck at Ford Motor Company and Gerry at the same time by calling a strike in September. The strike ensured that October numbers on economic growth and employment would be bad (no early voting then) and Jimmy Carter was elected.

Sidebar: The UAW strike didn’t just have an impact on Ford Motor but on its suppliers and distributors. Ford was a really big deal then so it had an impact on the overall US economy. Toyota’s US market share was three percent. End Sidebar.

We know at least some of the causes economic growth including rule of law, light regulation, and light taxation. The problem is that economic growth is a lagging indicator of sensible economic policies. Remember Jimmy Carter? Not many folks remember him kindly but he started the deregulation trend and is remembered very kindly by the president of Fed Ex:

The reform of U.S. transportation is “one of the most unremarked success stories of the 20th century.” And Mr. Smith wants credit to go to the oft-derided Jimmy Carter. “He started it all.” 

Sensible economic policies lead to growth but the lag means the credit and the benefits will probably go to another president. Carter helped Reagan succeed. Another example is The Donald’s administration reduced corporate taxes. The WSJ reports that corporate tax revenue is surging. Of course, The Frontrunner wants to undo the successful economic policy.

Here is Kevin on the incentives for presidents supporting strong economic growth policies:

To believe that it is true would require believing that politicians are too committed to some principle to act in their own self-interest, a claim that brings with it a very heavy burden of proof. In reality, the president and the party in power always want to see strong economic growth, low unemployment, and high wages ….

Well, they do want to see these things but they don’t want to support the policies that lead to them. Presidents don’t support such policies because the benefits of economic growth take too long to accrue and they have other priorities. Just three hours after Kevin D. was writing the above, Dominic Pino, at the same NRO, was writing about how the current president, The Frontrunner, (well, his administration) was fighting railroad productivity (and economic growth):

[The Frontrunner’s] administration is yet again demonstrating its commitment to organized labor above all else on the question of track-safety inspections for freight railroads. At the expense of cost-effectiveness, network efficiency, and track safety itself, the Federal Railroad Administration (FRA) is protecting union jobs and keeping our freight railroads stuck in outdated regulations.

Each of these government actions of throwing sands in the gears of productivity only slightly impairs growth. Here is another from today. But they collectively reduce growth and show that administrations, and not just The Frontrunner’s, don’t prioritize economic growth. The Donald had trade wars on multiple fronts! The last three administrations have emphasized dividing up the pie rather than growing it. We wish Kevin D. was right that policies that lead to strong economic growth were in a president’s self-interest but he is wrong.

Jefferson And Hitler

We recently finished Richard J. Evans three volume history of the Third Reich. We recommend them highly although they are not easy reading because the story is true. Spoiler alert: The Third Reich produced death, death, and more death. Start with this one. We are now reading Derek Baxter’s In Pursuit Of Jefferson. We will give a full review of it later but we are far enough through it to give a thumbs up. Thomas Jefferson and Adolph Hitler are far apart on almost every issue. What we find astonishing are two commonalities between Thomas and Adolph: They were addicted to architecture and the notion of the yeoman farmer.

We will be brief on architecture because we don’t know much about other than Thomas and Adolph were intensely interested in it. Thomas built Monticello as a mountaintop home. Adolph wan’t as intensely involved in Eagle’s Nest, his mountaintop retreat, but he inserted himself in many architectural decisions. It is hard to compare their work for three reasons. First, we are not anywhere near expert at architecture. Second, given Germany’s second place finish in WWII much of Adolph’s work is destroyed or unfinished. Third, Thomas, as Derek notes, got better as he worked more in architecture. We are glad that Adolph’s opportunities, architectural and otherwise, were truncated in 1945.

What we find most interesting to us is the connection between the yeoman farmers for Thomas and Adolph’s lebensraum or living space. The concepts are very similar in that there will be self-sufficient farmers creating an independent life for themselves and their families. Alert: We are not saying they are exactly the same but they are pretty similar given that over a century has passed. What they also share is bad economics.

Adolph wanted autarky for the country as well as the farmers because he correctly recognized that the war he wanted would make trade difficult. Thomas, we think, was just worried about autarky for the farmers. Almost all of us will agree that local produce is really great. Some of us will even start a garden to get it. We also realize that we can only get it for a few weeks a year. We don’t want our yeoman farmer spending days to make the few pencils he needs. There are great economic advantages from specialization. Trade among the wheat farmer, the rancher, and farm vehicle maker enriches them all as does trade among nations. Growing blueberries in Maine makes sense while trying to grow oranges there does not.

Sure, some individuals will want to be closer to self-sufficiency than others. It might be caused by risk aversion approaching paranoia but, to recycle a phrase, folks should be free to choose. Nations have similar choices. As an example, they might not want to be dependent on Russian natural gas delivered via a pipeline even if it is the cheapest alternative. Getting sugar from Brazil does not cause the same security problems because sugar is less critical to our economy and it is easy to switch sources.

Adam Smith published The Wealth Of Nations the same year that the American Revolution started. Thomas, unlike Adolph, was an intellectual. He should have understood economics better. Thomas, like other people and countries, had comparative advantage in certain areas. We are thankful that he didn’t have Adolph’s inclination towards power to implement his faulty economics.

What To Do About Not-For-Profits

We have been over the lack of commitment to free markets and economic growth by governments in general and the USA in particular before but it is a perennial problem. To review, we have had the Great Enrichment as chronicled by Deirdre McCloskey. During the 19th and 20th century humans leaped from a per capita income of $3 dollars a day to $100 a day. Jonah Goldberg has a very readable appendix in Suicide Of The West on this topic. More recently free markets have expanded beyond their traditional bounds and led to an unprecedented reduction in extreme poverty. But governments have been reluctant to embrace free markets. The Heritage Index of Economic Freedom for 2022 ranks 177 countries and only seven with a total population of less than 50 million are classified as free.

What led us to this review is an expose by the WSJ Editors (yes it is behind a paywall)about the problems with philanthropy and particularly the Hewitt Foundation. The Editors quote the Foundation:

“For more than 40 years, neoliberalism has dominated economic and political debates, both in the U.S. and globally, with its free-market fundamentalism and growth-at-all-costs approach to economic and social policy,” the press release says. It “offers no solutions for the biggest challenges of our time, such as the climate crisis, systemic racism, and rampant wealth inequality—and in many ways, it has made those problems even worse.

We are not sure if it is stupidity, dishonesty or both but few paragraphs can match the one above. We usually bold the parts in question or error but in that paragraph everything is wrong except for: the press release says. We will respond to the historical inaccuracies in the first sentence. It marks time from the Reagan administration when the US and many other counties successfully reversed direction to move in the direction of free markets. The US government has, unfortunately, never been in or even near the grips of free-market fundamentalism and, again unfortunately, never ever had a growth-at-all-costs economic or social policy. If you investigate all the 177 countries Heritage ranks you might find one where free-market fundamentalism reigned for a while but you might not. Many governments have nudged towards free markets to be part of the Great Enrichment but few, if any, have embraced it.

We will let the WSJ editors respond to the second sentence about markets and solutions:

Actually, capitalism [we’ve been using free markets] offers solutions to all of those challenges. The largest reductions in carbon emissions have come from natural gas, thanks to the market innovation of shale fracking. Competitive labor markets have helped minorities rise despite residual racism because bigotry is too expensive. The wealth created by free markets and innovation, along with global trade, has lifted billions out of poverty. Extreme global poverty has plunged to less than 10% from 45% in 1980 while world GDP has more than tripled.

Free markets are the best chance countries have to get the growth fairy to visit. JFK was wrong that a rising tide lifts all boats but it does lift almost all of them and it produces a surplus to help the ones that leak. You should read the whole WSJ editorial if you can. Governments have a problem avoiding free markets because they need to enrich their people. Of course, few if any governments back free markets whole heartedly because they prefer the power they get from crony capitalism. Not-for-profits from foundations to universities to the YMCA are a bigger problem because there are fewer incentives for them to behave. We wish we had a solution.

Autarky And The Command Economy

We have been reading a three part history of the Third Reich. As bad as the Nazis were, and they were worse than awful, it could have been even worse if they were better at economics. Two elements of their economic program were autarky and the command economy. The author says a command economy (and Nazi Germany was) isn’t socialism. We think that all command economies are form of socialism but more on that at later date.

When we say that folks in the US and elsewhere support autarky and the command economy we are not saying they are Nazis. What we are saying that they are embracing some of the same foolish economic policies that doomed the Nazis to a second place finish in World War II.

Kevin D. Williamson at NRO takes on autarky. Of course you should read the whole thing and subscribe to the National Review but here is a taste:

A succession of American presidents, including [The Frontrunner]’s immediate predecessor, have felt it necessary to protect American consumers from abundance and low prices, and our government has extended that protection to a great many critical products, among them lumber imported from Canada. Canadian lumber, our politicians insist, is too cheap, because Canada declines to impose cumbrous and unnecessary expenses on its producers, while the United States does.

You will remember that we supported The Frontrunner for lifting some tariffs recently but, as Kevin says, most recent presidents and the Congress has been loathe to support abundance. To be fair to the Nazis, they had a better argument for autarky because when you declare war on folks they are less likely to give you the benefits of trade.

The command economy in Nazi Germany worked badly but better than the ones in the Soviet Union, Venezuela, and Cuba because the Nazis kept an opportunity for profit. The United States wants to do the same thing to deal with climate change. Crony capitalism is another term that could be use to describe this political behavior. As often happens in politics, e.g., social justice, the modifier negates the original concept so crony capitalism is hardly a form of capitalism. The Democrats are world-class at however you choose to describe this behavior but the GOP are not that far behind as the ethanol mandate demonstrates.

Scott Johnson at PowerLine has a link to John Kerry’s attempt to justify the recent climate change confab (it is behind the WSJ paywall) and responses to it. We agree with Scott’s implicit point that John is not worth reading while the responses are. We like this paragraph from Wyoming Senator John Barrasso (GOP):

The administration simply opposes traditional American energy. While in Scotland, Mr. Kerry recklessly declared, “By 2030 in the United States, we won’t have any coal.” At a Senate Energy and Natural Resources Committee hearing last week, however, Mr. Biden’s own Energy Department forecast that coal will continue to be critical part of our electricity mix for decades to come. Abundant U.S. coal, along with natural gas and oil, provide reliable and affordable energy. Mr. Kerry’s goals amount to unilateral American energy disarmament.

Of course, Wyoming John has an economic ax to grind. Wyoming is by far the biggest coal producing state. It is also a major oil producer. Still, we are with Wyoming John. It is not the place of the government to mandate coal or no coal. We are strongly supportive of a modest carbon tax to help get the incentives right but we are strongly against mandates for coal powered cars or a certain amount of energy from a certain source. Back with the Nazis, there were cars that were directly powered by coal.

We are glad that autarky and the command economy didn’t work for the Nazis. We don’t see any reason to think autarky or the command economy will work now. Free trade and markets are the way to prosperity and good decisions. A modest carbon tax wouldn’t hurt.

A Brazen Hussy

Just to be clear, the definition of a hussy is

[A] girl or woman who behaves in a disrespectful or inappropriate way or who has many casual sexual relationships. [Emphasis added]

When we describe Gretchen Whitmer as a brazen hussy we are using the first part of the hussy definition before the second or. She is clearly acting disrespectfully and inappropriately and there is no doubt she is bold and without shame in her dealings with Enbridge Energy’s pipeline, Line 5. We admit the title is attention grabbing rhetoric but it is accurate as well.

Our friends at the WSJ have the story:

Yet Ms. Whitmer is acting like she’s her own sovereign nation. She moved last year to revoke and terminate an easement that allows Line 5 to operate in a 4.5-mile stretch in the Straits of Mackinac and ordered Enbridge to shut down and “permanently decommission” the pipeline within 180 days. Enbridge has defied Ms. Whitmer and continued operations, saying her unilateral actions lack legal authority. The Governor is seeking an injunction to close the pipeline.

The absolutely brazen part is Gretchen’s rationale for trying to abrogate the treaty. The WSJ again:

Ms. Whitmer said in a statement that she is “profoundly disappointed” in Canada’s invocation of the treaty. “Rather than taking steps to diversify energy supply and ensure resilience, Canada has channeled its efforts into defending an oil company with an abysmal environmental track record,” she said.

Eek! Canada is defending its company and oil supply from the inappropriate and probably illegal actions of the Governor of Michigan. You would expect Gretchen to have a fig leaf of rationale related to her duties as Michigan Governor. Instead she is trying to implement Canadian domestic policy and American foreign policy. She wants them to diversify their energy supply and ensure resilience. The last part is especially rich since she is working to make Canadian and US energy supplies less resilient.

Unlike the 44th president or The Donald, Gretchen cannot plead political inexperience as she has been an elected official most of the last twenty years. She should know better based on her experience.

There is also the failure of any Democrat (to our knowledge) or the Democrat Party to disown her. Gretchen is just an elected Democrat but, according to Wikipedia, also one of Vice-Chairs of the Democrat National Committee. And, of course, there is the media failure. Why are there not questions for The Frontrunner or Secretary of State Antony Blinken about Gretchen’s foreign policy? It is easy to see why folks are frustrated with our culture, politics, and media.