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Sheldon Richman at Reason with the lesson the president has never learned – the value of free markets.
… The marketplace, when it’s free of government privilege and regulation, lets us accomplish this to a remarkable degree. In doing so, it raises our living standards and creates an orderly environment, thanks to the price system, which coordinates and facilitates our plans.
Government throws this process out of whack. When politicians forcibly extract resources from us (through taxation) and borrow, they leave us less with which we can improve our lives through entrepreneurship, business formation, and the like. But, you may ask, aren’t the politicians’ projects worthwhile? Actually, many government projects are of zero value or worse. The costly global empire is beyond useless: it endangers us. Other projects might be useful, but — and this is key — we can’t be sure, because they are not subject to the market test.
If a private entrepreneur acquires resources in a quest for profit, she must create value for consumers or she will fail. The market’s profit-and-loss test will see to that. That test is administered by countless millions of consumers who are free to take or leave what the entrepreneur offers. This test is relayed back to the investors who lend money to entrepreneurs for productive ventures. They know that if the entrepreneur fails, they will also suffer losses. So they must scrutinize projects in terms of their potential, ultimately, to please free consumers.
The upshot is that consumers’ uncoerced actions signal (through prices and profit/loss) what pleases them and what does not. Suppliers must pay heed or face bankruptcy. This explains why markets, when not burdened by government privileges and arbitrary rules, work so well to raise living standards.
Note how government projects differ essentially from market projects. Politicians and bureaucrats obtain their money through force, not consensual mutual exchange. (What happens if you tell the IRS you don’t want to purchase its “services”?) Even the money obtained through voluntary loans is expected to be repaid with the taxpayers’ money. It’s taxation all the way down. …
Joel Kotkin points out the problems in the housing “recovery.”
… So while the housing recovery — and the prospect of higher prices — does offer some relief to existing homeowners, it’s having a negative impact further down the economic ladder. For the poorest Americans, nearly eight decades of extensive public subsidies have failed to solve their housing crisis. Given the financial straits of most American cities — particularly those like Detroit that need it the most — it’s unlikely the government can rescue households stressed by the cost of shelter.
As one might suspect, the problem is greatest in New York, New Jersey and California, say the Harvard researchers .In those three states 22% of households are paying more than 50% of pre-tax income for housing, while median home values and rents in these states are among the highest in the country. According to the Center for Housing Policy and National Housing Conference, 39% of working households in the Los Angeles metropolitan area spend more than half their income on housing, 35% in the San Francisco metro area and 31% in the New York area. All of these figures are much higher than the national rate of 24%, which itself is far from tolerable.
Other, poorer cities also suffer high rates of housing poverty not because they are so expensive but because their economies are bad. In the most distressed neighborhoods of Baltimore, Chicago, Cleveland and Detroit, where vacancy rates top 20%, about 60% of vacant units are held off market, indicating they are in poor condition and likely a source of blight.
America’s emerging housing crisis is creating widespread hardship. This can be seen in the rise of families doubling up. Moving to flee high costs has emerged as a major trend, particularly among working-class families. For those who remain behind, it’s also a return to the kind of overcrowding we associate with early 20th century tenement living. …
John Fund says Detroit could raise $2.5 billion selling 38 artworks.
Everyone has an idea about how to handle bankrupt Detroit. Public-employee unions want a state or federal bailout. A liberal state-court judge in Lansing wants to block the bankruptcy because it might reduce government pensions — with no thought as to where the money to pay for them will come from. Supply-siders want to create “innovation zones” that would spur growth by reducing taxes and regulations in the inner city, but it would be years before that measure would have an effect.
What no one wants to do, apparently, is sell the city’s assets. The city has largely unused parks and waterfront property that could be opened to economic development. The DetroitHistoricalMuseum has a collection of 62 vehicles, including an 1870 Phaeton carriage and John Dodge’s 1919 coupe, that is worth millions. But the biggest sacred cow is the Detroit Institute of Art (DIA), one of the nation’s oldest and most valuable art museums. It has pieces by Vincent van Gogh, Henri Matisse, Andy Warhol, and Rembrandt. The Institute also owns William Randolph Hearst’s armor collection and the original puppet from the children’s TV show Howdy Doody.
The Detroit Free Press asked New York and Michigan art dealers to evaluate just a few of the 60,000 items in the Institute’s collection. The experts said the 38 pieces they looked over would fetch a minimum of $2.5 billion on the market, with each of several pieces worth $100 million or more. That would go a long way toward relieving the city’s long-term debt burden of $17 billion. …
The reputation of the IRS will take a long time to recover according to Peggy Noonan.
In all the day-to-day of the IRS scandals I don’t think it’s been fully noticed that the overall reputation of the agency has suffered a collapse, the kind from which it can take a generation to recover fully. In the long term this will prove damaging to the national morale—what happens to a great nation when its people come to lack even rudimentary confidence in the decisions made by the revenue-gathering arm of its federal government?
It will also diminish the hope for faith in government, which whatever your politics is not a good thing. We need government, as we all know. Americans have a right to assume that while theirs may be deeply imperfect, it is not deeply corrupt. What harms trust in governmental institutions now will have reverberations in future administrations.
The scandals that have so damaged the agency took place in just the past few years, since the current administration began. It is not Republicans on the Hill or conservatives in the press who have revealed the agency as badly managed, political in its actions, and really quite crazily run. That information, or at least the early outlines of it, came from the agency’s own inspector general.
But the point is that it was all so recent. It doesn’t take long to crater a reputation. The conferences, seminars and boondoggles in which $49 million was spent, including the famous “Star Trek” parody video—all that happened between 2010 and 2012. The targeting of conservative groups, the IRS leadership’s public lies about it, the leaking of private tax information to liberal groups or journalists, the abuse of donor information—all that took place since the administration began, in 2009. Just this week, an inspector general report revealed excessive travel spending by a handful of IRS executives in 2011 and 2012.
All of it has produced the biggest IRS scandal since Watergate. Which makes it the second of only two truly huge scandals to be visited on the agency in its entire 100-year history. …
WSJ Political Diary with another great presidential appointment.
The Equal Employment Opportunity Commission has run amok under chairwoman Jacqueline Berrien’s guidance, particularly in its extralegal push to expand civil-rights protections for the likes of murderers and rapists. So it’s welcome news to see state attorneys general shedding some light on the situation.
Nine Republican AGs, from states stretching from Montana to South Carolina, penned a letter to Ms. Berrien and the commission last week complaining about the “substantive position” the agency has taken against retailer Dollar General and a U.S. subsidiary of car maker BMW. The EEOC contends the companies broke federal law by using criminal background checks in employment decisions.
The AGs rip apart that legal theory, …
The greatest food in human history? Would you believe a double cheeseburger from McDonald’s? That’s what Kyle Smith says in the NY Post.
What is “the cheapest, most nutritious and bountiful food that has ever existed in human history” Hint: It has 390 calories. It contains 23g, or half a daily serving, of protein, plus 7% of daily fiber, 20% of daily calcium and so on.
Also, you can get it in 14,000 locations in the US and it usually costs $1. Presenting one of the unsung wonders of modern life, the McDonald’s McDouble cheeseburger.
The argument above was made by a commenter on the Freakonomics blog run by economics writer Stephen Dubner and professor Steven Leavitt, who co-wrote the million-selling books on the hidden side of everything.
Dubner mischievously built an episode of his highly amusing weekly podcast around the debate. Many huffy back-to-the-earth types wrote in to suggest the alternative meal of boiled lentils. Great idea. Now go open a restaurant called McBoiled Lentils and see how many customers line up.
But we all know fast food makes us fat, right? Not necessarily. …