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Robert Samuelson should scare you with his latest column.
… There’s too much debt. In the spring of 2010, the interest rates demanded by financial markets indicated that about 5 percent of the euro zone’s debt was considered highly risky, says the IMF. That represented only Greece. By late summer 2011, the portion judged risky was 46 percent and included Ireland, Portugal, Spain, Italy and Belgium. If financial markets added France to this group — a possibility — the share of threatened debt would rise to 66 percent.
It’s implausible that the strong half or third of the euro zone (the 17 nations using the euro) could rescue all the weaker members, in part because “strong” countries also have high debts. Everyone knows about the debts of Greece, Italy and Ireland, which are, respectively, 166 percent, 121 percent and 109 percent of their annual output (gross domestic product). It’s less well-known that Germany’s debt is 83 percent of GDP and France’s, 87 percent. (Americans should not smirk. The U.S. debt — using similar assumptions — is 100 percent of GDP.)
Europe is hostage to financial markets because maturing loans and ongoing deficits mean many countries must regularly borrow huge amounts. Already, Greece, Ireland and Portugal have been excluded from private markets; lenders demanded crushing interest rates. That fate could await others. Some countries face staggering 2012 borrowing needs. The IMF estimates that Italy requires new loans equal to one-fourth of its GDP; for Spain and France, the amounts are about one-fifth of GDP.
Europe is caught in an economic pincer: slow-growth assaults from one side; fickle financial markets from the other. One obvious way out — the China option — seems barred by geopolitics. There is precedent. Historians blame the Great Depression’s severity in part on poor international cooperation. Economist Charles Kindleberger found a vacuum of power: Great Britain, the old economic leader, could no longer lead alone; and the United States — a replacement — wasn’t ready to help. Is there a parallel today between the United States and China? Are we repeating the mistakes of the 1930s? Unsettling questions.
Richard Epstein says read the new jobs bill and weep.
The dim news about the current economic situation has prompted the Obama administration to put forward its latest, desperate effort to reverse the tide by urging passage of The American Jobs Act (AJA), a turgid 155-page bill. The AJA’s only certain effect is to make everything worse than it already is by asking Congress to tighten the stranglehold that government regulation has already placed on the economy.
That sad fact would certainly elude anyone who accepted the president’s justification for the AJA when he sent the bill to Congress. This bill, he said, will “put more people back to work and put more money in the pockets of working Americans. And it will do so without adding a dime to the deficit.” How? Why, by closing “corporate tax loopholes” and insisting that the wealthiest American’s pay their “fair share” of taxes.
What is so striking about Obama’s shopworn rhetoric is its juvenile intellectual quality. His explanation for how the AJA will create jobs is a non-starter because he does not explain how we get from here to there. As in so many other cases, the president thinks that waving a wand over a problem will make his most ardent wishes come true, even when similar earlier efforts have proved to be dismal failures. This dreadful hodgepodge of a bill will likely be dead-on-arrival in Congress, but it remains a patriotic duty to explicate some of its worst provisions.
The most evident feature of the AJA is that it is a combination of ill-conceived, disparate measures. The wandering quality of the bill makes it impossible to cover all of its silliness, but it is possible to focus on some of the core job provisions, all of which kill the very jobs that the AJA is supposed to create.
One does not have to dip very far into the bill to find trouble. Section 4 of the AJA imposes “Buy American” restrictions on the use of funds appropriated under this statute for work on public buildings. “[A]ll the iron, steel and manufactured goods” used on such projects are to be fabricated in the United States. There are obvious administrative difficulties in deciding what counts as a “manufactured good” for the purposes of the act. But don’t sweat the small stuff. The fatal problem with this form of jingoism is that, in the name of economic efficiency, it forces American taxpayers to pay more for less. That upside down logic may seem sensible to a die-hard Keynesian, but not to ordinary people who realize that deliberate overpayment for inferior goods makes no more sense in the public sector than in the private one.
The universal statutory command to “Buy American” is not capable of rigorous enforcement, which brings us to another problem with the bill: It allows its legislative mandates to be waived when the head of the relevant federal agency finds that its enforcement is against the “public interest,” including in hard to calculate cases where such deliberations increase project costs by 25 percent. The basic structure of the AJA thus uses large doses of administrative discretion to defang some of its most unrealistic commands. In so doing, it introduces what I have termed elsewhere the vice of government by waiver , where unbridled discretion creates uncertainty and breeds favoritism.
This process only adds to the cost of legislative enforcement. The real jobs created are for government bureaucrats who determine, under rules to be promulgated later, whether the rule or exception applies. The provision has it exactly backwards. The correct piece of legislation should provide that no recipient of funds (assuming there are any) should be allowed to impose “Buy American” preferences—ever.
Section 5 makes the same error as Section 4. One of the lasting shames of American law is the Davis-Bacon Act , passed at the height of the depression in 1931. It guaranteed the payment of “prevailing,” i.e. union, wages to workers on government jobs. For those with short memories, the 1931 statute was introduced to keep “itinerant colored workers” from the South from underbidding union workers in the North. …
Nile Gardiner notes that Americans are not fooled.
This week Gallup is unveiling a series of in-depth analyses of “Americans’ views on the role and performance of government” based on its annual Governance Survey. The first overview, released on Monday, is a real-eye opener. According to Gallup, Americans are expressing historic levels of negativity towards the US government, with “a record high 81 percent of Americans dissatisfied with the way the country is being governed,” including 65 per cent of Democrats, and 92 per cent of Republicans. Gallup concludes by stating that “Americans’ various ratings of political leadership in Washington add up to a profoundly negative review of government,” ratings which are likely to get worse during the lead up to next year’s presidential elections. …
Bart Hinkle has some answers for Liz Warren’s rant.
(5) Plenty of smart, well-meaning people also think even government’s core functions could be delivered better and for less—just as the Obama administration has used the Dartmouth Atlas to argue for greater efficiency in medical care. E.g., since 1970 inflation-adjusted per-pupil spending in public K-12 education has doubled. Class size has been cut in half. Neither change has produced any substantial effect on academic performance. Why don’t we have the equivalent of a Dartmouth Atlas for public education?
(6) Warren’s remarks epitomize the caricature of a progressive as someone who loves jobs but hates employers. She implies the captain of industry is simply sponging off society and hoarding the proceeds. But hiring workers is a huge social good. So is providing a funding basis for pensions, which generally rely on stock returns. So is creating products people want. Five bucks says Warren has a smartphone and a DVR and a bunch of other modern conveniences, and that she didn’t buy any of them with a gun to her head. So why is she so mad at the people who offered to sell them?
(8) Perhaps, like film critic Pauline Kael, who famously didn’t know anyone who had voted for Nixon, Warren doesn’t know anyone who believes government and taxes should be small. And, therefore, perhaps she does not understand their reasoning. She certainly doesn’t give any indication that she does.
So for the record, the reason is that—as Sheldon Richman wrote recently in The Freeman—“government is significantly different from anything else in society. It is the only institution that can legally threaten and initiate violence; that is, under color of law its officers may use physical force, up to and including lethal force—not in defense of innocent life but against individuals who have neither threatened nor aggressed against anyone else.” Many of those who truly love peace prefer to live in a society where the use or threat of violence is minimized. Maybe that idea simply hasn’t crossed Warren’s mind.
Maybe that’s why she looks like she’s ready to haul off and hit someone.
The only downside to an Alaska cruise is pulling into port and seeing the largest building in town is the one occupied by offices of the federal government. A Wall Street Journal story about people who accidentally violate laws explains what the feds are doing.
For centuries, a bedrock principle of criminal law has held that people must know they are doing something wrong before they can be found guilty. The concept is known as mens rea, Latin for a “guilty mind.”
This legal protection is now being eroded as the U.S. federal criminal code dramatically swells. In recent decades, Congress has repeatedly crafted laws that weaken or disregard the notion of criminal intent. Today not only are there thousands more criminal laws than before, but it is easier to fall afoul of them.
As a result, what once might have been considered simply a mistake is now sometimes punishable by jail time. When the police came to Wade Martin’s home in Sitka, Alaska, in 2003, he says he had no idea why. Under an exemption to the Marine Mammal Protection Act, coastal Native Alaskans such as Mr. Martin are allowed to trap and hunt species that others can’t. That included the 10 sea otters he had recently sold for $50 apiece.
Mr. Martin, 50 years old, readily admitted making the sale. “Then, they told me the buyer wasn’t a native,” he recalls.
The law requires that animals sold to non-Native Alaskans be converted into handicrafts. He knew the law, Mr. Martin said, and he had thought the buyer was Native Alaskan.
He pleaded guilty in 2008. The government didn’t have to prove he knew his conduct was illegal, his lawyer told him. They merely had to show he had made the sale.
“I was thinking, damn, my life’s over,” Mr. Martin says.
Federal magistrate Judge John Roberts gave him two years’ probation and a $1,000 fine. He told the trapper: “You’re responsible for the actions that you take.”
Mr. Martin now asks customers to prove their heritage and residency. “You get real smart after they come to your house and arrest you and make you feel like Charles Manson,” he says.
The U.S. Attorney’s office in Alaska didn’t respond to requests for comment. …