An Economic Issue

In a fascinating London Review of Books essay earlier this Spring, the distinguished historian Peter Clarke engages in a singular attempt to resuscitate the reputation of Enoch Powell, the late British parliamentarian and classicist who became infamous for a xenophobic address in Parliament in 1968 that was later dubbed the “Rivers of Blood” speech.

Acts of political rehabilitation are to me suspect, particularly in the case of a man whose legacy has been hijacked by the lunatic fringe. This one is difficult to dismiss out of hand because it is taken from the perspective of history. Clarke does not attempt to justify or defend Powell’s most odious ideas: if Clarke is an apologist for Powell, he appears motivated not by ideology or ulterior drives, but by a sense that history is ill-served in settling for a one-dimensional caricature of an influential figure.

Let us be clear: Enoch Powell rode into the scrap heap of history at full gallop and of his own free will. But a cursory review of his life reveals at least  two salient truths: first, that artful couching, superb logic, and fine language do not improve a repugnant idea; and second, that the espousal by an individual of one or more bad ideas does not prima facie brand all of the other ideas espoused by that individual as bad.

I will return to that second theme in another post.

One idea that is worth consideration is one that drove Powell through most of his political career: that some government programs, policies, and actions have value that cannot be measured by economic or purely utilitarian means, and indeed that some policies and actions that may appear economically foolhardy are nonetheless good ideas. As Clarke notes:

It wasn’t part of [Powell’s] doctrine to scrimp on the legitimate functions of the state as he saw them; and if a function were deemed legitimate, he made very high claims indeed. Intuition rather than economic logic guided him. For example, he began a speech in 1981 – in favour of public subsidy of the ferry service to Northern Ireland – by stating his premise as the sort of mere common sense everyone would accept: ‘Communication is the essence of all government: it is not for nothing that the mail is the Royal Mail.’ The idea that such conclusions can be reached by treating the royal status of the mail as axiomatic would surprise many latter-day Thatcherites, who argue that the market could sort this problem out more efficiently.

This was a tough one for me to get down initially: it flies in the face of good business sense and an approach to policy-making that has been ascendant for at least 160 years. It implies that the Congressional Budget Office brand of economics-based cost-benefits analysis does not always produce the best policy.

My instinct is to argue the opposite: I do not think we give enough consideration to non-partisan cost-benefits analysis when making policy decisions; that programs are born and outlive their usefulness because of ideology, pork-barrel politics, or bureaucratic self-interest.

But Clarke’s article on Powell compels me to rethink my orthodox adherence to that principle.

Here are the questions I am pondering:

  1. If we cannot measure the return-on-investment of a policy, is it worthwhile?
  2. What makes that policy more or less worthy than a policy whose impact can be measured in a material form?
  3. Have we placed too much reliance on economics as a measure? Or do we place insufficient reliance on economics and cost-benefits analysis?
  4. Is it time we recognize that decisions taken by non-commercial actors (individuals, organizations, governments) may and sometimes should be made for reasons that defy economic logic or even pure utility?
  5. Should we identify and recognize other determinants of policy quality?
  6. On what basis do we decide which means of analysis is best for a given policy?

I have been long away from the study of these matters, so I recognize I may have meandered onto well-trod ground. If so, please tell me.

A government run by roving bands of ideologues, self-interested legislators, and nest-feathering bureaucrats is a recipe for revolution.  At the same time, government by abacus taken to its logical end is a tyranny. On a river of hard questions we must navigate our way back to a passage between those two extremes. The alternative is The End of America As We Know It (TEOAAWKI).

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The Wake-Up

Let’s get something straight: when the Wall fell, it was a triumph of freedom over statist oppression.

The short-sighted attempt to reduce the Cold War to a battle between free markets and breadlines is the work of corporatists who still believe that the primary task of government is to serve the interests of the industrial corporation.

Pork the Navy Doesn’t Want

The $230 billion for operations and maintenance is $2.43 billion above the Pentagon request. The summary boasts of adding $550 million specifically for the services to “improve military readiness, including increased training, depot maintenance, and base operations support.” Whereas Congress added $12.9 billion above the figure requested by the Pentagon to purchase ships and aircraft. That is a 19 percent increase the Pentagon didn’t ask for to buy new equipment, compared to a mere 1 percent increase to solve the supposed “readiness crisis.”

Source: Military Readiness Sidelined For Ships the Navy Doesn’t Want | The American Conservative by Dan Grazier

I give the Pentagon a hard time for its role in procuring gold-plated weapons systems that don’t work and deliver low returns on our investment in national defense. (Cough F-35 cough LCS cough Humvee.) They deserve it: too many careers are built on weapons systems that wind up costing us dearly in American blood and treasure, and in the meantime throttle potential avenues of savings and innovation.

But the Pentagon is not the only culprit here, and Dan Grazier’s article points to the pork-barrel caucus in Congress as a huge part of the problem in the misallocation of our defense funds. In this case, the culprits are ranking Appropriations committee members Senator Richard Shelby from Alabama and Senator Tammy Baldwin of Wisconsin. And lest we feel that these distinguished Solons are simply doing their part to preserve America’s ability to build its own weapons:

Industrial base concerns are important, but when they’re the only remaining justification for a program, they amount to an admission that the product was never worth the investment. They also demonstrate that the keening about a “readiness crisis” is often just a subterfuge for more pork-barrel spending.

Keep in mind that Grazier is not coming at this from the armchair: he is a retired captain in the US Marine Corps and a veteran of both Iraq and Afghanistan.

So as we hold the Pentagon accountable, so must we hold Congress – and specific members of that body – accountable for their excesses. Do not let these people hide their corruption behind the flag or the Capitol Building.

 

 

Move, Delta

If I was a Delta shareholder looking at this map, I would be petitioning the company to begin relocating its headquarters operations out of the State of Georgia and into its hubs at Cincinatti, Detroit, Minneapolis/St. Paul, Salt Lake City, and Seattle.

Atlanta’s strengths notwithstanding, it is hard to make a case for basing a company in a state (or country) where the local government is prepared to punish a corporation for its failure to support a politically powerful special interest.

 

Dances with Soviets

The president was boasting of the “great intel” he receives when he discussed intelligence provided by a U.S. partner.

Source: Trump revealed highly classified information to Russian foreign minister and ambassador – The Washington Post

I cannot help but think about the Gipper at moments like this.

Ronald Reagan is spinning in his grave with such speed that we can almost hear it in Oxnard.

This is No Longer about Trump, or Congress

I believe that many of them are deeply conflicted. That in the leather chairs of Capitol Hill at the end of each of these long Spring days, there is no shortage of Republican legislators sitting alone in their offices or committee rooms, drinking scotch, and cogitating on their futures.

I suspect that there may be a few who have taken campaign coin from Trump or his supporters who are wondering exactly how long they need to “stay bought” before they can begin responding to the popular cry.

And, in the end, I think most will need irrefutable, impeachment-quality evidence to shift their support.

No, Mr. Frum. This is no longer about the President, or even Congress. It is now about the facts.

The future of President Donald Trump, of the Republican Party, and possibly the nation, now lies in the hands of Special Prosecutor Robert Mueller and relies upon the moral fortitude of a small handful of men and women at the Department of Justice, and their ability to ascertain the facts in the face of a President who seems determined to hide them.

WaPo: Sanders’ Trade Policy is Deeply Flawed

“Blaming freer trade for the loss of manufacturing jobs fails to tell the much bigger story of economic transformation that has swept the world over the past several decades. Technological change, automation, productivity improvements and other factors have eliminated old-school manufacturing jobs all over the world. Mr. Sanders cannot bring back the U.S. economy of the 1960s, and it would be harmful to try.”

Source: Mr. Sanders peddles fiction on free trade – The Washington Post

I have in this space been an unsparing critic of the policies that Bernie Sanders is promising to implement if elected President. I have been particularly dismissive, admittedly without citing support, of Mr. Sanders’ efforts to articulate a coherent foreign policy.

In this first of several post that will critique aspects of Mr. Sanders’ foreign policy platform or introduce the criticism of others, I will actually step between Mr. Sanders and his critics.

In the above linked article, the editors of the Washington Post offer their rebuttal to the underlying logic of Senator Sanders’ proposed foreign trade policy. It is an eloquent and poignant critique of the protectionism that oozes from Mr. Sanders’ foreign policy.

And yet I find myself siding against the Post on this item.

The Ebb of Globalism

For most of my life I have been a trade globalist, endorsing the idea that freer trade is broadly beneficial. Yet even as a callow young B-school student I understood that there are limits to the macroeconomic assumptions that support free trade. History has proven that international trade systems are only as good as their most abusive participant. As long as everyone agrees that the system is more important than the needs of any individual nation, the system will thrive. But when enough participants – or one participant of sufficient scale – begin to game the system, the game becomes beggar-thy-neighbor again.

While the Bretton Woods free trade system managed to address a constant patter of abuses, it appears increasingly unable to contain the challenge posed by China – a single, giant global player determined to game the system, and large enough so that in doing so it gives lie to the system itself.

We thus appear on the verge of an era where global free trade is replaced by a resurgence in protectionism and the replacement of the WTO with a series of bilateral accords and multilateral trade arrangements.

Against that background, the Washington Post’s protest that protectionism will not bring back manufacturing jobs is correct. Unfortunately, the Post doesn’t address the larger question: is trade free enough? Or is it too free already?

Regardless of your reaction, the answer is that the time has come for us to have this debate in America. The effects of trade policy are felt by all – it is no longer sufficient to allow the matter to be handled by elites. If the case for trade is compelling for America, let’s make it. Let’s demonstrate that the benefits will redound to the least prosperous among us as well as the affluent.