Friday, June 17, 2016

Election Uncertainty and Economics

speaking at CPAC in Washington D.C. on Februar...
speaking at CPAC in Washington D.C. on February 10, 2011. (Photo credit: Wikipedia)
The economy is already rocky. This election won't bring a stable, growing economy, and it could bring disaster.

In business, I'd rather know what taxes and regulations are ahead of me. If you can plan for something, there's stability. You might not like the programs and proposals of Hillary Clinton (I don't), but you can plan for what she would pursue as president.

Donald Trump? His candidacy embodies the uncertainty businesses fear. It is like waiting for a natural disaster, but you don't know which type of disaster. Do we seek higher ground, to avoid a flood? Do we go into the basement to avoid a tornado? Trump is going to be something, but what will he be?

Don't assume Trump cannot win. He can and he might.

I'm not suggesting support for Hillary Clinton, either, but I am more concerned about Trump.

The world today needs free trade. We need open borders. We need economic flexibility. Trump makes the case that we can magically survive without our partners.

I don't know that Trump will lose. The map favors the Democrats, but Trump could win in the Midwest / Rust Belt. I was in California for the election of Arnold Schwarzenegger. He didn't have any core values, except self-promotion. I've also lived in Minnesota: ditto Jesse Ventura - self-promotion over all. Both men were all about themselves, not about any party or ideology. (I'm still not sure what Jesse Ventura believes, other than some conspiracy theories.)

Trump isn't anything at his core. And that's the problem. He's whatever "wins" for Trump. He isn't an ideologue, which a true fascist must be. Trump isn't even a true nationalist, or he wouldn't outsource in his own businesses. He lacks any depth, at all.

Historically, fascists have been "true believers" like their authoritarian cousins on the left. Trump is frightening because he might do anything, anything at all… if it is good for Donald J. Trump.

Trump would lead the Communist Party tomorrow if he thought he'd get to be the party leader. He'd be a Green, or a Libertarian, or a Democrat (oh, wait, he was). Trump was willing to destroy the GOP as a party to get his way. He would have run (and done well, sadly) as an independent.

He's a cry baby and whiner, who manages to manipulate systems to get what's best for him, no matter who gets crushed in his path.

I can't imagine a worse example of all the dangers mentioned by the classical rhetoricians. Here is a man able to ignore logic and reason, yet win and win again. Isocrates, Aristotle, and Quintilian all warned of such men. Trump is the master of Twitter… today's Agora.

Economically, I'm concerned because Trump lacks coherence. As the election approaches, if it looks close, the uncertainty will start to unnerve investors. Nobody knows what President Trump would really do, or what Congress would permit him to do. At best, we'd have severe gridlock. At worst, we'd have conflicting legislative actions.

What is the "base" of Donald Trump? It's not libertarian-leaning Republicans or independent voters. It's not the religious right (unless they really don't care what Trump has said and done in the past).

Hillary Clinton is predictably loyal to the Democratic majority. She would want to be re-elected by the Democratic base. I disagree with every major policy Clinton has expressed on the campaign trail. She would slow economic growth even more than the current sluggish economy. Yet, she might be better than Trump.

The Republican Party has lost its way. The Libertarian Party never had a clear vision (except to oppose everything).

The United States is experiencing a slow, painful recovery from the Great Recision. The recovery has left many people behind. Uncertainly will cause companies to invest less, setting reserves aside for security. Individuals will curtail spending.

Uncertainty is always there in a market economy, and risk is a given. You at least want government policies to be stable and predictable.

Friday, June 10, 2016

2016: Proof Our System is Broken

Our "choices" for the 2016 presidential election are very bad and extremely bad.

What, you say? There are more than two choices? Right. And I'll soon be running a Hollywood Studio.

The two-party system of the United States is not going to change this election cycle, though the cracks are showing. More likely, if the Republican Party does implode, a new party will rise. It has happened before and will happen again. But, overall, we remain a two-party nation. The parties flip ideologies, the parties change names, individual parties split. And we always end up with a duopoly.

Not that other nations really have multiple parties in the way romantically imagine. There are, generally, two central parties with minor parties trying to pull the major parties to the left or right. Because the parliamentary systems rely on coalitions, those minor parties have more influence than smaller parties can have in the United States.

The upside of the European model is that small parties do have legislative seats. The downside is that the coalitions can be unstable. Just ask most of Southern Europe about stability. The U.S. model isn't exciting, but it is stable. The parties drift towards each other, then apart.

Normally, I can accept that my views seldom win local, state, or federal elections. People want a lot from government for little or no cost and absolutely no inconvenience. If government is going to cost money, take that money from someone else — though there really isn't as much "income" to redistribute as imagined (see "Eat the Rich"). My ideals are electoral losers… and I accept that. Instead, I vote for the "lesser" spender, the "lesser" promiser of public largess.

Not this time.

We have Populist A and Populist B, one of whom will win. Hillary or Trump. They are campaigning on their famous names, not substance. They are campaigning on how well they connect to the "common" person. And they both have populist rhetoric that would take the United States further down the entitlement hole while opposing free trade and economic disruption that is natural to capitalism.

The Libertarian Party's tired re-packaging of Republicans doesn't stand any chance of victory. They might take some votes from the two major parties, but votes are meant to be earned anyway. Whining that some third party helped to elect a major candidate really means that the other major party failed to earn support.

Populist A: Hillary. She wants to expand federal programs. She wants to expand "positive" rights, using government to ensure someone does things for other people. She has lurched to the left during this campaign. I assume much of what Sec. Clinton has promised she knows will not happen. Nobody believes political promises and now we just assume they are blatant lies.

Populist B: Trump. Please, no. Isolationism sounds good, and I generally support it, but Trump doesn't merely promote isolationism: he promotes xenophobia and protectionism. He takes nationalism and cloaks it in fear and dread. He has no clear program for anything, except a wall that isn't about security so much as it is about fear.

Hillary and Trump. Those are our choices. One will win. Any system that leads to these two as the two contenders is broken. Extremely broken.

If anything, these two are a great argument for gridlock and divided government.

The parties can now be caricatured with some accuracy: Democrats are the party of the poor and the elite urban voters. Call it the Urban Party and you'd be reflecting voting patterns. Republicans are the exurban and rural gray-haired voters, the romanticized small towns that are shrinking and dying (sadly).

The parties are more regional and racial than they should be. The Democrats view issues from the perspectives of New York, San Francisco, Los Angeles, and other big cities. Their elite voters are busy gentrifying the cities, while their poor voters are struggling in these urban centers with the greatest inequality in the nation. The ideals of the elites cost the poor, ironically, by raising the costs of living. Rent control, strict zoning, green laws, higher minimum wages, more spending for schools, all cost the poor more as a percentage of income. Ideas that appeal to the educated elites have price tags.

The Republicans are afraid of the urban voters, both the elites trying to dictate values and the poor. The GOP seems to be stuck campaigning on fear of everything. That's not a platform for the future, either. Nothing I'm hearing from Trump or the GOP appeals anymore. They deride regulation, complex taxes, and other problems, but they don't offer realistic solutions that will become law. I'd even accept some "unrealistic" goals accompanied by some incremental plans on how to get to a better place with more effective public spending.

We need new voices, new leadership. Oh, well.

Friday, June 3, 2016

Response: Am I a Libertarian?

Because I've been cautioning that libertarians need to be pragmatic and we should avoid the caricatures of others that we are subjected to online and in the press, a few readers have asked why I consider myself an almost classical liberal and a libertarian.

My core values and my ideal economic and political models remain firmly grounded in the works of Austrian economic theorists and John Stuart Mill's theories on freedom. I value Adam Smith, Ludwig von Mises, Henry Hazlitt, F. A. Hayek (a lot), early Murray Rothbard, Roger Garrison, Eugene Fama, Deidre McCloskey, and Milton Friedman.

I enjoy the views and historical grounding of Meagan McArdle, Robert J. Samuelson, and Amity Shlaes. I argue with other "libertarians" over Ayn Rand, while still respecting The Fountainhead for its emphasis on personal expression over greed.

The federal government of the United States is a tangled mess of departments, agencies, bureaus, and offices.

In order of Constitutional rank, we have cabinet-level departments of State, Treasury, Defense, Justice, Interior, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation, Energy, Education, Veterans Affairs, and Homeland Security.

I do not presume the federal government will be more efficient with fewer cabinet departments, but it might be more responsive. Plus, it has assumed responsibilities it does not need.

I would eliminate, as cabinet agencies: Agriculture (move to Interior), Labor (merge with Commerce), Housing and Urban Development (no replacement at the cabinet level), Energy, Veterans Affairs (move to Defense), and Homeland Security (split between Justice and Defense, once again).

The Department of Homeland Security (DHS) might be the biggest mess we have in the current organization of federal responsibilities. Justice, Treasury, and Defense were more than capable, as long as there was a true central adviser to the White House. A monstrosity was created that is worse than what we had.

I've never liked having a Depart of Agriculture in its current form. Eliminate subsidies, compacts, price controls, and so on. The New Deal programs have done more to hamper the agricultural market than to help it, and keeping prices artificially high benefits large corporations more than small farmers.

Education should be a state issue. Segregation and other issues of civil rights belong under the purview of Justice. I know school districts spend millions of dollars complying with Education regulations. The department is more about perceived "social justice" than education. I dislike using regulatory power to dictate how states and local governments manage education. Fight discrimination, yes, but leave the rest to local control.

As with most libertarians and conservatives, I want to start over with the tax code. No deductions. None. No treating couples and individuals differently. No more than three brackets, starting at an agreed upon level above poverty. No complex forms and calculations: What did you earn? Here are the brackets, do the math. Send a check or get a refund. No caps on "special taxes" (and let's be honest, Social Security is a tax).

Don't whine about the loss of child tax credits, home mortgage deductions, and so on if in return we get corporate taxes with no deductions. That's right: absolutely no deductions even for business. No more using the tax code to encourage or discourage specific behaviors. I would even eliminate deductions to non-profits. No deductions means none, period.

I dislike sales taxes at the local and state levels (very regressive, since the poor spend more as a percentage of income). We need better state tax models.

Transit is a mess. People don't realize most European airports are privatized. Our state-run airports with lots of federal oversight are a mess. Our roads are rotting, the highway fund is broke, and rail transit is in shambles. I'm not sure there are any good solutions, but it is time to consider new funding methods and more private investment.

Obviously, I could go on for pages…

Taking of property for eminent domain, police seizures, and other acts of confiscation (ag co-ops) should be limited to extreme need. Taking land to build a mall or seizing cars without a criminal conviction? Things like that lead to the Tea Party movement.

Dictating what people can or cannot do in private, from drinking large sugary drinks to sleeping with someone of the same sex. Get out of my private life, governments.

Regulatory overload, costing jobs and hindering business. We need a "sunset" provision on all regulations, forcing them to be renewed only after considering how effective each regulation is.

I oppose the minimum wage, but know it isn't going to go away. Therefore, it should be regional, at the state level at most, and indexed to the cost of living.

I oppose criminalizing, as felonies, "victimless" crimes. However, in return I would increase the penalties for choices that result in harm to others. You can drink, smoke, and do whatever you want… but you drive and kill someone? Sorry, there should be a high price for bad choices.

I oppose mandates, on principle, but realize insurance mandates aren't going away. Of course, that means "insurance" is no longer insurance at all. It's something else. But what is it? I don't have a good model for dealing with car insurance, flood insurance, et cetera. Then again, federally subsidized insurance is why people rebuild homes in places that shouldn't have homes.

Government should be small, serving essential needs. We have defined "essential" as anything we want to receive. That's untenable over time.

Overall, I remain a libertarian aware that we've lost in the marketplace of ideas. We don't give away enough goodies and we expect too much of individuals. I'm not sure how to better sell our ideas to the public, when most voters have something the government does for them.

Responsibility only wins voters when you're talking about anyone other than the voter to whom you address such concerns.

I'm increasingly cynical that our system will collapse under its own weight.