The Constitution was saved and the people were ruined

Lefty and center-lefty jurists tend to rewrite the Constitution to protect a law. Chief Justice Roberts tried something different: he rewrote a law to protect the Constitution. As such, the Constitution came out of today just fine. The people? Not so much.

Whatever Roberts may have felt towards the document from which our government was built, his respect for the legislative process is dangerously low. His renaming of the health insurance penalty as a tax leaves behind a law that wouldn’t have won 60 votes in the House, let alone the Senate. I prefer the wisdom if the dissenters, who understand that when a law runs afoul of the Constitution – particularly an unseverable law such as Obamacare – it must go down, and it must go down hard.

Moving from the legal to the political, the new dog’s breakfast (henceforth called Robertscare) means far fewer to-be-newly-insured, and a tax-hike label on every Democrat who voted for the 2010 version.

Meaning health care as a policy issue will be revisited again.

If Mitt Romney is smart (and he’s not stupid), he’ll emphasize his post-2008 preference for tax credits over mandate penalties/taxes. It will shift the debate from who gets covered to why can’t Washington stop taking our money, plus the added bonus of showing voters he can learn from his experiences as Governor and correct mistakes (qualities wholly absent from the incumbent).

Meanwhile, if you think this is the biggest story of the day, I have one word for you: Barclay’s.

Cross-posted to Virginia Virtucon

Africa and Ivory: a tragedy of errors

Africa has been blessed with resources for centuries, yet once again, stupidity from outsiders is preventing their use to bring the continent’s people into prosperity.

Today’s example regards elephants, rhinos, and Gabon (Reuters):

The central African nation of Gabon will burn its government stockpiles of ivory on Wednesday against the backdrop of a surge in the killing of elephants and rhinos across the continent to meet surging Asian demand.

No one wants to see elephants and rhinos made extinct, least of all said Asians desiring their ivory – and that’s exactly the point that seems to have been missed here. Basic microeconomics tells us that a resource valued by consumers becomes profits for producers. When the resource is renewable (such as in the case of elephants and rhinos), said producers have every incentive to keep the resource from disappearing – provided that they own the resources in question.

That’s where the story of Africa’s ivory resources takes its first tragic turn. Rather than take the obvious economic steps to ensure ivory sellers and/or native Africans have the incentive to breed and maintain elephants and rhinos via a firm definition of property rights, the “conservation groups” – who repeatedly reveal their complete ignorance of economics – call for complete bans and government “protection” of the animals.

The result is as completely predictable and all the more tragic: no one has an incentive to preserve and grow the elephant population, and the only profit to be gained is by breaking the nonsensical ban – which only encourages criminal elements and short-term thinking . . .

. . . and bizarre situations where the government itself becomes the largest ivory supplier – if only by accident (same link):

. . . the tusks and carvings would be set alight by Gabon’s President Ali Bongo after they had been subjected to an independent audit to ensure none had been pilfered for illegal sale.

. . . wildlife groups reported that Zambia lost 3 tonnes of ivory from government storage last week while Mozambique had 1.1 million tonnes stolen in February.

It would be hilarious if it wasn’t so tragic. The people of Africa lose an avenue to prosperity; criminals have an easier time swiping ivory for sale; and governments trying to stop the ivory trade become its largest de facto enablers.

Are the egos of foreign “conservation groups” really worth that much?

Cross-posted to Bearing Drift

1812: the culmination of a fourteen-year mistake

Two centuries ago this month, the United States of America completed a fourteen-year series of blunders by starting an unnecessary war that led to the destruction of the capital, embarrassing defeats in what is now the Midwest, a peace that solved none of the issues that started the war in the first place, and a battle (two weeks after the peace was signed) that inflicted Andrew Jackson upon the nation. The events from 1798 to 1815 are a clear-as-crystal warning from history of the dangers of geopolitical naivete, “non-intervention,” and general disinterest in foreign affairs that, sadly, still find favor in far too many classical liberals today. That their prominent political progenitors (Thomas Jefferson and James Madison) were forced to jettison nearly every belief they had in limited government to justify Adams’ mistake is an irony so painful it is clearly lost on them.

Normally, when it comes to a major foreign policy decision, it is about an action taken – usually a war. This is one of those rare instances where we can examine the effects of a war not undertaken: in this case, a 1798 war with France. Much of the arguments against war (outside of the ones openly sympathetic to the tyrannical “Republic” in Paris) became “non-intervention” mainstays: the risk of state expansion, the preference for a foreign policy based on commerce only, the value of diplomacy, and the danger of lost blood and treasure. What the events after 1798 reveal is that non-intervention does not take place in a vacuum. In fact, it is quite clear that the decision not to go to war with France made the very fears aforementioned come true – and then gave us a war with France’s enemy to boot.

For example: Government power growing and danger to commerce didn’t need a war with France to rear their ugly heads. Jefferson himself, in a desperate attempt to avoid the merchant marine getting slammed by both France and Great Britain, convinced Congress to pass the hideous Embargo Act of 1807, easily the most intrusive peace-time economic measure this side of Obamacare. Commerce was ground to a halt not due to war, but ostensibly to prevent one. Ditto the expansion of government power. By contrast, Great Britain would have certainly maintained and protected US trade had we been at war with France (lest we forget, Britain herself had been at war with France since 1793).

Meanwhile, diplomacy and concern for loss of men and resources in battle is essentially laid waste by the actual War of 1812, in which we took on a much more formidable enemy (Great Britain as she defeated Napoleon) than we would have faced in 1798 (a weakened French Directorate that had sent Napoleon to Egypt). A War of 1798 would have likely meant the easy seizure of Louisiana (instead of paying $15 million five years later) as well as American possessions in the Caribbean. Meanwhile, most of the reasons for war with Britain in 1812 would have been resolved quickly years before that. London would have hardly considered Royal Navy deserters to American ships as a mortal threat if said deserters were still fighting the French (albeit under different colors). Border issues in re Canada would have been transformed from interesting geopolitics to useless distractions drawing men and arms away from the common enemy. As mentioned before, Great Britain would now consider American commerce abroad as a value to be protected, rather than a problem to be fought.

Would the War of 1798 have been unpopular in some areas? Yes, including most likely Virginia. Would it have been worse than the controversy surrounding the War of 1812? Only those with no knowledge of New England would even ask the question.

In short, the alternative to war is not always “peace.” It can often be twisted policies that surrender the very things peace was supposed to protect and a different war against the wrong adversary. In the case of War of 1798, its avoidance led America to both, the latter being the lamentable War of 1812.

Cross-posted to Virginia Virtucon

Can Silvio save Europe from itself?

My favorite European politician (well, among the living) is on the news again (Guardian, UK):

Italy was abuzz with speculation that Silvio Berlusconi is planning a comeback – and could return to lead the right into an early general election, perhaps as standard-bearer of a party bent on withdrawing Italy from the euro.

I have always had a soft-spot for Silvio, but if he does decide to retake his House of Freedoms Party and lead the charge to get Italy out of the euro, he can save Italy (and maybe all of The eurozone) from the recessionary straight-jacket that is the single currency.

I, for one, sincerely hope he does.

Cross-posted to Virginia Virtucon

Tom Coburn and Jeb Bush . . . don’t get it

I once admired Tom Coburn without stint, and when it comes to wasteful government spending, he is still one of the best in the business. Sadly, however, he has fallen victim to the Beltway mentality when it comes to taxes, as has Jeb Bush recently. Even worse, they think their political illness is actually a cure.

Coburn fell under the spell sometime last year; he came to the conclusion that the massive deficits cannot be reduced or eliminated by cutting spending alone – “you can’t say you want a net decrease and negotiate” (NRO). Bush articulated the same thing earlier this month, and again (more cryptically) in National Review Online: “But to make sure that we do not lose the advantage of that clear difference, we must not layer onto our fundamental beliefs thick black lines of ideology — black lines that we do not allow ourselves to cross.” In other words, they have mistakenly concluded that anti-tax-hikers take the positions they do for ideological, rather than practical reasons.

Nothing could be further from the truth. Contrary to Washington conventional wisdom, tax hikes are not politically problematic; they are economically problematic, and in ways that undermine the very deficit-reduction attempts of which they are a part. The reasons are these.

Tax increases never bring in the revenue they are supposed to bring: One fundamental rule of economics is that when a behavior is taxed, it is also reduced. In microeconomics, this is a feature, not a bug; gas taxes encourage fuel efficient vehicles; cigarette taxes discourage smoking, etc. Yet macroeconomic policymakers manage to forget this and simply assume tax-avoiding behavior will go right on without any change despite the fact that the tax can no longer be avoided. This is why “closing loopholes,” while an excellent policy (so long as rates are reduced overall to match), it is a poor way to raise deficit-reducing revenue. In fact, it ignores the history of the loophole in the first place. Today’s loophole was yesterday’s “targeted tax credit,” designed to encourage a particular behavior. The idea that removing it won’t then discourage said behavior is foolhardy. As a result, tax increases never fulfill the promises of the politicians who enact them, resulting in “unexpectedly large” future deficits – and more pleas for deficit-reduction plans. The very deficit reduction deal Jeb Bush cites (his father’s in 1990) is testament to this: the tax increases generated less than one-fifth of expected revenues, and Bush the Elder left office with deficits at a record level. The five-year plan he signed into law was replaced by his successor in less than three.

This leads to two more problems. First, spending cuts always lag behind tax increases in budget deals. While one could lay this at the feet of devious Democrats or naive Republicans, the fact is, tax increases always affect behavior almost instantly, while spending cuts (even “immediate” ones) need the entire fiscal year to be felt. Moreover, spending cuts promised after the next Congressional election can always be ignored by the next Congress, while tax hikes are permanent.

So, with tax increases creating immediate economic pain and mistaken revenue projections, while spending cuts are still largely backloaded, the deficit-reduction deal is usually cut short and replaced by another one, with more up-front tax increases and spending cuts delayed. I’ve already mentioned the 1993 Clinton tax increase, which was part of his deficit-reduction plan that wiped out the 1990 deal two years early. What is not remembered is that the 1990 deal itself replaced a 1987 budget deal that had failed, but was tried because a 1984 agreement hit the skids, despite being enacted itself to replace the wheezing 1982 deal. All of the 1980s deals involved tax hikes of some kind (the 1982 version was the largest tax increase in history up to that time); all were supposed to make dramatic deficit reductions; all of them failed.

To be fair to Coburn, he didn’t come to Washington until 1995, so he might not be aware of this history (and those who were aware had enough of a hand in it that they’d rather not the word be spread). Bush, meanwhile, has never been in Congress, and began his political career began in 1994 when he first ran for Governor of Florida.

Still, for the rest of us, the 1980s and early 1990s should be instructive. The only balance budget deal that actually balanced the budget came in 1997 – and that one cut taxes rather than raised them.

This isn’t about ideology, “black lines,” or Grover Norquist. It’s about the economic reality of tax increases. That is why they should not be part of any budget deal.

Cross-posted to Virginia Virtucon

Sullivan resignation from UVA: was it due to a would-be Michael Mann appointment?

The resignation of UVA president Teresa Sullivan may soon break free of being a Charlottesville-only story. At present, the Board of Visitors remains tight-lipped about why Sullivan was asked to go.

However, Anthony Watts, over at Watts Up With That, has an explosive theory:

Readers may recall my earlier report on the strange weekend ouster of UVa president Teresa Sullivan last week where I suggested there might be a Michael Mann connection because supposedly he was offered the Kington chair, and the fellow whose name is on it allegedly called the emergency weekend stealth meeting leaving some board members behind. UVa has spent hundreds of thousands of dollars fighting FOIA requests from the American Tradition Institute and Attorney General Ken Cuccinelli for Mann’s emails related to his publication of MBH98 done while at UVa, and from what I hear, this issue has been very unpopular with some alumni and has resulted in some fund raising issues under Sullivan’s tenure.

Now, in the middle of this turmoil, word on the street is that Michael Mann will not get the Kington Chair.

Now, Watts has very good ears when it comes to the dark politics of global warming alarmism, but last I checked, he’s still in California, so the ears (and that street) would have to be pretty long. Climate Depot had the original story about the would-be Mann appointment.

At this point, it should be noted that we just have Watts’ “ear,” so take with an grain (or if you prefer, a lotswife) of salt. It should also be noted that Kington has fallen on his sword (figuratively) and resigned himself. However, if what Watts has heard regarding the Sullivan de facto firing is correct…

1) UVA’s Board had an obligation to send Sullivan packing, and Dragas, Kington, et al deserve high praise for having the guts to do it. The idea that the University would do everything it can to slow down the AG’s investigation into possible fraud by Mann and then offer his the Kington Chair is, at best, ungodly fishy; it may even be a conflict of interest.

2) Perhaps the Board will push harder and have the University reverse course on fighting the investigation.

3) It would certainly explain the Board’s willingness not to go public with the reason (although it doesn’t justify it). According to CD, the department faculty voted to bring Mann back. If anyone thinks they’re upset about Sullivan’s departure now, check out their reaction if it was driven by a Board that had finally had enough of the nonsense behind global warming alarmism.

4) Anyone yelling at Governor McDonnell for his “role” in this should pipe down, pronto. Never mind that Dragas was a Kaine appointee – and the fact that an intervention by the Governor now would mean just the kind of political interference the left usually hates when it’s getting everything it wants at a university – if this was about the would-be Mann hiring, its McDonnell’s critics, not the Governor himself, who should look in the mirror and ask some hard questions.

5) It could play a huge role in Virginia politics for years, if not decades. The Cuccinelli investigation into Mann’s hockey-stick/nature-trick nonsense would claim its first scalp, and given that he is now a candidate for Governor, the Commonwealth could turn into the most dramatic political battle between alarmists and skeptics ever.

… again, this is if Watts is correct.

Cross-posted to Bearing Drift

The euro was saved and the people were ruined

The spasm of “relief” over the victory of the corporatist New Democrats in Sunday’s Greek election lasted less than a day, a sign that investors (a.k.a. “the markets” or “speculators”) are no longer as dumb as they used to be on this.

Nor did it take long for the NDs – supposedly the folks who would hold Greece to it’s bailout terms – to ask for changes in the bailout terms.

Meanwhile, it’s looking like Spain will need a full-blown bailout. The price? About $563B (Telegraph, UK).

All this must be done to save a currency that never should have been created. The elites of Europe have sacrificed (or, in the case if Germany, will sacrifice) their own peoples to a ridiculous post-Christendom fantasy.

The only upside of this is that American taxpayers’ money is still off the table for this. Sadly, several other nations have lined up to set billions of dollars on fire (Telegraph). Even Mexico has agreed to let $10B disappear, a fact that suddenly makes me much more sanguine about the incumbent PAN’s imminent humiliation in our neighbor’s upcoming presidential election.

When historians write of this period, they would be wise to remember and update the words of William Gouge. In this case, the euro was saved and the people were ruined.

At least for now.

Cross-posted to Virginia Virtucon

Organized labor did this to itself

J.R. Hoeft’s post on unions was, if you ask me (and what do you mean you didn’t?), not his best work.

The comments on public sector unionism were nothing short of a repudiation of the efforts of Governor Scott Walker of Wisconsin to bring government spending under control by freeing local budgets from the straight-jacket of union collective bargaining:

For one, in the public sector, most of the unionized labor is police, fire fighters, park employees, janitors, etc. Not people making policy behind desks. How are these workers protected when government is quick to cut spending?

First of all, government – *especially* local government – is hardly *ever* ‘quick to cut spending.’ To imply otherwise is to ignore recent American history.

It gets even worse.

Unions also balance the naturally monopolistic behavior of business – or government. Republicans, in the mold of Teddy Roosevelt, should welcome that balance.

So now the bureaucrats are supposed to protect us from our elected officials? That argument essentially turns democracy on its head. A different Roosevelt (Franklin) understood that; it was why he never approved of public sector unions (TR, in an era where patronage was still the norm, would likely have laughed the idea out of the room).

The comments on private-sector unions aren’t nearly as bad, but when it comes to the businesses that employ their members, things go off the rails again.

Second, in the private sector, the natural trend of business is to increase profits. We have seen in our past that this can have dramatic and negative consequences for the worker.

Excuse me? Workers looking to maximize their income is OK, but business owners doing it is not? How is that anything but a grotesquely offensive double standard against businesses and their stockholders (many of whom are – gulp! – union pension funds)?

I can understand the desire to leave no potential voter unpursued, but organized labor – especially public-sector labor – did this to themselves. Whether it’s clinking classes with the Communist Chinese “union” (as SEIU chiefs did about a decade ago), or threatening to overturn democracy in San Jose and San Diego, 21st Century organized labor is not showing contempt for the Republican Party as much as contempt for the Republic itself.

Cross-posted to Bearing Drift

Europe’s Plan 9 from Outer Space crashes in less than a week

Over the weekend, Spain asked for a $125 billion loan to bailout its banks, including Bankia – which was created by the Spanish government specifically to avoid this sort of thing. Naturally, the EU quickly agreed to this on the hope markets would be calmed by the latest injection of economic heroin.

Well, the high didn’t last long. Spanish 10-year bonds are at over 6.5% – and still rising. Perhaps the markets are finally noticing what Dan Hannan (Telegraph, UK) said yesterday:

It makes no sense to treat a debt crisis with more debt.

So how many billions in euros have to be set on fire before the politicians figure it out?

Cross-posted to Virginia Virtucon

Europe’s Plan 9 from Outer Space hits a snag

The latest attempt to cobble together a plan to save Europe from itself has already been panned by one of the outer colonies (the one previously known as the Republic of Ireland). The grand Rube Goldberg scheme came from Olli Rehn, the EU Economic and Monetary Affairs Commissioner (via thr Telegraph, UK):

We have been considering this as a serious possibility, of breaking the link between the sovereigns and the banks. This is not part of the ESM (bailout fund) treaty for the moment, in its present form, but we see that it is important to consider this alternative of direct bank recapitalisation as we are now moving on in the discussion on the possible ways and means to create a banking union.

The key issue is to be able to break the link between the banks and the sovereigns so that we can go to the roots of this current debt crisis.

In other words, create a Eurozone-wide bank bailout so Spain doesn’t have to beg for IMF money (or actually pay the interest demanded by the market).
Most of the reaction is focused on how Germany will react to essentially being asked to bail out Spain, but even before Rehn’s comments hit the cyberworld, one of the neo-provinces cried foul (same link):

If the eurozone now moves towards banking union – enabling the European Stability Mechanism to be used to recapitalise banks rather than fund governments – Dublin will insist its bank debts get equivalent treatment.

Lest we forget, Ireland is only in it’s current mess because (1) the euro created a massive bubble in the ex-Republic, (2) the government decided to bailout every bank in the 26 counties, and (3) said government (and it’s elected successor) has tried to fix the resulting massive budget hole with wave after wave of tax increases.

Clearly, they’re not happy the Hibernian province could avoid some of that just because it’s bigger.

Yet another day in the Brusselian Empire.

Cross-posted to Virginia Virtucon