July 29, 2003

A federal constitution with the heart of a manifesto

Noel Malcolm on the EU constitution:

The central problem is the sheer fact of its being a constitution. For, in the political realm, only states have constitutions - and the definition of a sovereign state is that its own constitution is not subject to the authority of any higher constitution. In the words of the best academic study of the concept of sovereignty, Alan James's Sovereign Statehood, "the distinguishing characteristic of a sovereign state is that it possesses a set of legal arrangements relating to fundamental matters - its constitution - which exists in its own right".

Endowed with this new constitution, the European Union will match that description. It will also have its own "legal personality", with the ability to sign international treaties in its own right; it will have its own president, foreign minister and foreign policy, as well as its parliament, supreme court, flag, anthem and currency. It will fit the criteria of a sovereign state. The member states, whose constitutions will be subject to the authority of a higher constitution, will not.
The GOP’s New Deal: Big tent, big government, big mistake

Timothy P. Carney analyses the consequences of Bush's "compassionate conservatism" and the GOP's attempt to co-opt the Left's issues:

In the name of "Compassionate Conservatism," the Bush administration is now pressing the Republican-controlled Congress to create the largest new government program in 40 years - a prescription-drug entitlement that will cost an estimated $400 billion over five years. This is only the latest of President George W. Bush’s massive additions to the federal government, and the costs will be political as well as fiscal.

Bush’s advocacy of increased spending on government schools and federal education programs, efforts to ameliorate AIDS in Africa, and the mendacity of tax "rebates" for those who pay no income tax (honest men call this scheme "income redistribution") has some advocates of limited government complaining that the president is sacrificing conservative principles for political expediency. But this understates the hazards of the administration’s profligacy. While Bush’s largesse arguably aids his re-election efforts, the long-term political costs for the Grand Old Party will rival the fiscal and economic costs of our 43rd president’s compassion.


The education bill shows that attempts to appease the Left are futile because its appetite for spending is boundless. It ignores history and common sense to expect the likes of Ted Kennedy and John Edwards to play nice come election time because Bush gave the Left some of what it wanted.

The tax credit "fix" demonstrates that political gain from policy mistakes only goes to those who sell out their principles. Pushing bad bills on the GOP crowds out the conservatives - who support the tax cuts and conservative judges Bush wants.

Increased farm subsidies are a good example of how bad policy can increase the constituency for the welfare state and hence the Democratic Party.

The president’s compassion may help him win a second term, but it will only make the Democrats demand more and more from the GOP. If Bush keeps increasing the size of this big tent, it will soon come crashing down on itself.
1st public gay high school set for NY

MSNBC reports the creation of the firts public "gay high school" in New York:

New York City is creating the nation’s first public high school for gays, bisexuals and transgender students.The Harvey Milk High School will enroll about 100 students and open in a newly renovated building in the fall.


State Conservative Party Chairman Mike Long criticized the creation of the school.
"Is there a different way to teach homosexuals? Is there gay math? This is wrong," Long said. "There’s no reason these children should be treated separately."

July 28, 2003

Conservative backlash against Schwarzenegger

The news that Arnold Schwarzenegger won't run for governor follows a report that California conservatives were not willing to support him:

The California governor's race is up for grabs and a bevy of Republicans are throwing in their hats.
But one thing is sure: If he runs, Arnold Schwarzenegger won’t have the support of the conservative Reaganites who dominate the state's Republican party.

"The conservative wing of the party doesn’t want Schwarzenegger," syndicated talk show host and Fox News commentator Mike Reagan told NewsMax Sunday. Reagan is the son of former president Ronald Reagan and a champion of his father's conservatism.


Michael Reagan told NewsMax.com that Schwarzenegger is not a conservative and he and other California conservatives will not support him if he runs in the recall election.

"The only thing Schwarzenegger has ever done politically is put a ballot measure on the California ballot in the last election to raise my taxes," Reagan said.

"He is not a conservative. All he’s got is a name because he’s an actor. If you want to know the difference between my father and Arnold Schwarzenegger, I’ll give you a couple: Maria Shriver/Nancy Reagan is one. There’s a big difference politically between them.
Schwarzenegger Won't Run?

According to NewsMax.com:

Arnold Schwarzenegger won't run for governor of California, Fox News today quoted "a source close to the actor" as saying.

"Schwarzenegger, 55, is said to have met Sunday with former Los Angeles Mayor Richard Riordan. Riordan and Schwarzenegger are close, and Riordan said last week that he would consider a run if Schwarzenegger decided against a bid," Fox reported.
Stay Out of Liberia!

Ron Paul speaking in the House of Representatives on a possible US intervention in Liberia:

Mr. Speaker, I rise to introduce a resolution expressing the sense of the Congress that while we encourage a regional West African effort to resolve the Liberia crisis, the United States military has no role - either alone or as part of a multinational force - in that country.

We all recognize the tragedy in Liberia. A civil war has raged there for the past 14 years, leaving thousands dead and a million without homes. Horrific stories of atrocities abound. We wish for peace and a resolution to the conflict. But we must recognize that this resolution should come through regional West African efforts. These are the countries involved and affected; these are the countries with the most incentive to resolve the problem. Simply stated, there is no US national security interest at stake in the conflict - no matter how widely "national interest" is defined.

July 27, 2003

Bulgaria and EU integration: What About Freedom?

Ruslan Konstantinov discusses the pros and cons of Bulgaria's possible EU integration:

Believe it or not, the EU actually can bring about something good. Western European legal standards and traditions can only have a positive impact on the situation in Bulgaria. It's too bad for the people of Bulgaria that it appears they need someone else to bring order to their house, but unfortunately the lack of pro-freedom traditions in the country has a strong impact -- and after all it's better to achieve a decent result with aid from the outside than not to achieve such a result at all.

If the story ended here, it would have been more or less a happy one, despite the described problems of the otherwise talented Bulgarians. It would also be far too complimentary to the EU -- something the Union definitely doesn't deserve. So, here comes the second part: what can happen to the horrible Bulgarian bureaucracy under the leadership of Brussels? It will stay. Maybe it will be less corrupt and a bit more polite, but as inefficient as always. This will further tighten the governmental interference in the economy in "the good old" EU way and result in more irrelevant spending of taxpayers' money, which is scarce anyway.

Unfortunately, the Bulgarians as well as the other Eastern Europeans can't accept only the good part of the EU offer; it's a package deal. What they can all hope for is that the EU, pushed by the global competition, will become more adequate in the years to come. If this doesn't happen, there would be more and more people asking themselves: What about freedom?

It is a difficult dilemma. While EU membership would probably improve the institutional framework of Eastern European countries such as Bulgaria, the "package deal" unfortunately includes many undesirable regulations, bureaucratic requirements and interventionist policies that will hamper its development potential in the long run. Making the EU adopt more free-market oriented policies would be the best option for everyone but it is also the hardest one to implement...
The 'state' of education

Edwin J. Feulner on the damaging effects of the "No Child Left Behind" law:

Ronald Reagan said it best: "The most terrifying words in the English language are: 'I’m from the government, and I’m here to help you.'"

Residents in many rural areas are relearning Reagan’s lesson. It’s one of the unintended consequences of the "No Child Left Behind" law.

You see, the federal government now insists that every teacher must have a degree in every subject he teaches, or must pass an exam to prove he’s "highly qualified" in that subject. That may make sense in Chicago or Los Angeles, where a teacher is likely to handle only one subject. For example, he’ll teach chemistry, but not biology.


Washington’s one-size-fits-all education policy is the real problem here. Federal bureaucrats are treating small towns in Montana is if they were New York City and rural villages in Alaska as if they were Dallas.

All this wouldn’t be so bad if the Bush administration was willing to be flexible. But so far, state officials say the White House has been adamant in refusing to grant waivers. That means Jolma, and thousands like him, may be forced to relocate to larger towns or leave teaching altogether. But we won’t improve education by forcing dedicated teachers to quit.

Another troubling aspect of No Child Left Behind is its provision requiring school districts to let students from failing schools transfer to another school, at school district expense. Again, this may be a wonderful idea in large areas with plenty of schools, but it’s a potential disaster in rural states.

July 26, 2003

The Unpatriot Act

The U.S. House of Representatives recently had two votes, praised by Ron Paul, that limit the application of the Patriot Act and protect civil liberties:

One amendment, sponsored by Congressman Butch Otter of Idaho and cosponsored by Paul, denies funding for the Justice department to execute so-called "sneak and peek" warrants authorized by the Patriot Act. "Sneak and peek" warrants enable federal authorities to search a person’s home, office, or personal property without the person’s knowledge! This secrecy upsets decades of legal precedent requiring that an individual be served with a warrant before a search. The House voted overwhelmingly not to fund this overzealous federal police practice.

The House also unanimously passed an amendment prohibiting funds for the Justice department to force libraries and bookstores to turn over records of books read by their patrons. Librarians around the country have led the charge against this provision in the Patriot Act, arguing that Americans have always been free to read whatever they choose without being monitored by government.

The battle against the Patriot Act has only just begun, however, as the Senate could strip the new restrictions passed by the House. Both the administration and congressional leadership continue to support the Act, despite public outcry against it and growing opposition among rank and file members of the House. Paul and hundreds of his House colleagues now hope to capitalize on their momentum by working to repeal all or part of the Patriot Act itself.

July 25, 2003

Bush Must Account for WMD Allegations

Cato's Doug Bandow argues that conservatives should not allow the issue of WMD allegations to fade away:

Which means it is entirely fair to ask the administration, where are the WMD? The answer matters for the simplest practical reasons. Possible intelligence failures need to be corrected. Washington's loss of credibility should be addressed; saying "trust me" will be much harder for this president in the future or a future president.

Stonewalling poses an even greater threat to our principles of government. It matters whether the president lied to the American people. Political fibs are common, not just about with whom presidents have had sex, but also to advance foreign-policy goals. Remember the Tonkin Gulf incident, inaccurate claims of Iraqi troop movements against Saudi Arabia before the first Gulf war, and repetition of false atrocity claims from ethnic Albanian guerrillas during the Kosovo war.

Perhaps the administration manipulated the evidence, choosing information that backed its view, turning assumptions into certainties, and hyping equivocal materials. That, too, would hardly be unusual. But no president should take the US into war under false pretenses. There is no more important decision: The American people deserve to hear official doubts as well as certitudes.

The point is not that the administration is necessarily guilty of misbehavior, but that it should be forced to defend its decision-making process.

Pointing to substitute justifications for the war just won't do. Deputy Defense Secretary Paul Wolfowitz notes that the alleged al-Qaeda connection divided the administration internally, and humanitarian concerns did not warrant risking American lives. Only fear over Iraqi possession of WMD unified the administration, won the support of allies, particularly Britain, and served as the centerpiece of the administration's case. If the WMD didn't exist, or were ineffective, Washington's professed case for war collapses.
A summer of conservative discontent

An interesting article by George Will, particularly on its approach to foreign policy:

The faction that focuses on foreign policy has four core principles: Preserve U.S. sovereignty and freedom of action by marginalizing the United Nations. Reserve military interventions for reasons of U.S. national security, not altruism. Avoid peacekeeping operations that compromise the military's war-fighting proficiencies. Beware of the political hubris inherent in the intensely unconservative project of ``nation-building.''

Today a conservative administration is close to asserting that whatever the facts turn out to be regarding Iraqi weapons of mass destruction, the enforcement of U.N. resolutions was a sufficient reason for war. If so, war was waged to strengthen the United Nations as author and enforcer of international norms of behavior. The administration also intimates that ending a tyranny was a sufficient justification for war. Foreign policy conservatism has become colored by triumphalism and crusading zeal. That may be one reason why consideration is being given to a quite optional intervention -- regime change, actually -- in Liberia.

July 24, 2003

The Biggest Funder of the Left

William Hawkins on how the Ford Foundation finances far left movements:

The Ford supported litigants included the NAACP Legal Defense and Educational Fund, and the Mexican American Legal Defense and Educational Fund in the racial diversity admissions case, and Lambda Legal Defense Fund, the National Gay and Lesbian Task Force and the American Civil Liberties Union's Lesbian and Gay Rights Project in the sodomy case. Though specifics were not given in the press release, a quick look at the Ford Foundation's 2002 Annual Report reveals the extent and purpose of its funding to these groups.

The Ford Foundation in 2002 gave the NAACP-LDEF $500,000 "for litigation and advocacy to combat racial discrimination in employment, education and economic access" and MALDEF $200,000 "for advocacy and litigation to advance the rights of immigrants in the United States." Ford had midwifed the creation of MALDEF with $2.2 million in startup money in 1968, seeking to create a more radical Hispanic movement to displace the more socially conservative and integration-minded groups that then represented the Mexican-American community.

The Lambda Legal Defense Fund was granted $300,000 by Ford in 2002 as "general support for human rights advocacy on behalf of lesbian, gay, bisexual and transgendered people." Another $300,000 went to the National Gay and Lesbian Task Force "for advocacy on behalf of underserved gay, lesbian, bisexual and transgender populations on issues of poverty, aging and racial justice."

July 23, 2003

Nations must vote on EU constitution

Pedro Schwartz says referendums on the proposed "Constitution" in each and every E.U. member state are essential:

No European, however enthusiastic for a united Europe, should overlook the shortcomings of the constitution produced by Valéry Giscard d'Estaing's convention. Under the guise of bringing together the various treaties on which the European Union is based, the draft magnifies some of the defects that have made the EU a byword for bureaucratic intrusiveness. It steers towards the kind of political centralisation and imposed uniformity that has given Brussels a bad name. More importantly, the constitution fails to make the fundamental principles of a market economy one of its central tenets.


Mr Giscard d'Estaing, Gerhard Schröder, the German chancellor, and the Italian government, which holds the EU presidency, have made it clear that they will brook no unpicking of the compromises achieved in the convention. Their aim is to change nothing in this unsatisfactory document. So the only way to force Europe's political and bureaucratic elites to change the proposed constitution is to demand a referendum in each and every state of the Union. Only when ordinary voters are asked to give their consent will Europe have a constitution that entrenches the notion of individual freedom.
The Libertarian Case Against Fractional-Reserve Banking

Gene Callahan is not convinced by any of the traditional libertarian arguments (fraud, creating money out of nothing and de-stabilization of the economy) against fractional-reserve banking:

The question as to whether the marketing or presentation of a product is fraudulent must, as I see it, be based on the expectations of the "typical consumer." Of course, this is a fuzzy concept. That being the case, the old dictum caveat emptor should probably decide the borderline cases. However, there is little question that if a restaurant sells "Irish stew" on its menu, customers expect a stew made with either beef or lamb. If, upon ordering it, a customer discovers the meat in the stew is actually that of a stray dog killed by the restaurant owner, it is clear to me that he has been defrauded, despite the fact that the dish may indeed be a stew prepared in the Irish fashion.

On the other hand, the courts should ignore the beliefs of an especially obtuse consumer. The fact that someone buys birdseed expecting that he will be able to grow birds from it should not open the seller to charges of fraud.

Therefore, the question of whether fractional-reserve banking is fraudulent in any particular case must turn on typical expectations about what such notes imply. There is no a priori answer to such a question. In a society where 100-percent reserve banking was the norm and I opened the very first fractional-reserve bank, the burden on me to explain my product well might be very high. On the other hand, in a society where almost all banking was fractional-reserve and most people were quite familiar with the practice, it might be taken as a matter of course that banknotes were claims on fractional reserves. Legal precedent and an estimate of the beliefs of the typical consumer must be relied upon to resolve each case.

Nevertheless, it seems to me that as a first rough cut as to what would be sufficient to dismiss fraud charges against an fractional-reserve bank, a contract signed with depositors informing them that there deposits are not held in full in the bank and some indication on the notes themselves that they are claims on fractional reserves ought to pass muster. Some fractional-reserve banking critics might contend that under such conditions, no one would patronize fractional-reserve banks. I doubt that is true, but even if it were the case, it would be a purely practical, not a legal, matter.

Personally, I tend to be persuaded by the fraud argument against fractional-reserve banking but Callahan's argumentation is very consistent and well worth reading.

July 22, 2003

Blair 2004!
(via Samizdata)

Blair for U.S. President?

Maybe it would be a good thing for the U.K....
Ron Paul - The Modern Cincinnatus
(via Lew Rockwell Blog)

Good article by Nelson Hultberg on the best (by a large margin) U.S. Congressman:

If such a force is at work in history, I pray that it is exerting some heady pressure upon the one politician in Washington who has never been a politician. That man is Congressman Ron Paul from the 14th District in Texas who has always been a throwback to the original "citizen statesman" that the Founders promoted as the ideal type of leader for the Republic they had formed.

It is said that the Founders modeled their "citizen statesman" after the example of Cincinnatus of Rome. In the early days of the Roman Republic around 450 BC, Lucius Quinctius Cincinnatus was a private farmer who left his plough to lead his countrymen in battle against enemy invaders, then returned to his pastoral life, only to be called again later to lead the Republic as Consul in a time of political crisis. Cincinnatus has, thus, been handed down over the centuries as a prime example of the citizen statesman who does not seek office and political power as a lifetime career, but gives service to his country by his leadership when called.

Well, we have a modern day Cincinnatus right now among us. Off and on over the past three decades, he has been serving the Republic that the Founding Fathers gave us, rather than the unlimited Democracy into which the socialists have transformed us. He bills himself as the "Taxpayers Best Friend," and he backs it up with a myriad of brave cost cutting measures. This Texan has the cattle to go with his hat: He is a physician, a scholar, a statesman, a leader of impeccable integrity and right reason. In a world that no longer values the guiding benevolence of the Constitution, Ron Paul makes it his revered compass as he was commissioned by the Founders to do. In a Washington dominated by unctuous Machiavellians who build their lives upon Faustian bargains and ruthless careerism, Ron Paul stands like a majestic oak of clarity and sanity in defense of the American ideal. His watchword is "steadfast adherence to principle." Compromise if need be on the means of implementation. But never on the principle itself. Never on the Constitution. Never on the rights of man.

July 21, 2003

Taking liberties

Ann Coulter in defense of John Ashcroft:

After Pearl Harbor, President Roosevelt rounded up more than 100,000 Japanese residents and citizens and threw them in internment camps. Indeed, both liberal deities of the 20th century, FDR and Earl Warren, supported the internment of Japanese-Americans. In the '20s, responding to the bombing of eight government officials' homes, a Democrat-appointed attorney general arrested about 6,000 people. The raids were conducted by A. Mitchell Palmer, appointed by still-revered Democrat segregationist Woodrow Wilson, who won the 1916 election based on lies about intelligence and war plans.

In response to the worst terrorist attack in the history of the world right here on U.S. soil, Attorney General John Ashcroft has detained fewer than a thousand Middle Eastern immigrants. Ashcroft faces a far more difficult task than FDR did: Pearl Harbor was launched by the imperial government of Japan, not by Japanese-Americans living in California. The 9-11 Muslim terrorists, by contrast, were not only in the United States but, until the attack, had broken hardly any laws at all (aside from a few immigration laws, which liberals don't care about anyway). And yet, Ashcroft's modest, carefully tailored policies have prevented another attack for almost two years since Sept. 11, 2001. No internment camps, no mass arrests. And no more massive terrorist attacks.

July 20, 2003

U.K. public opinion receptive to free-market reforms

The British public is apparently ready to support more freedom oriented policies in health, education and other areas:

Voters are prepared to pay for health insurance if it guarantees them better and faster care, according to a ground-breaking new poll that suggests the public is far more open to radical ideas than politicians realise.

The survey finds strong support among taxpayers for a range of controversial policy alternatives, including giving parents the right to choose private schools for their children and American-style "zero tolerance" policing.

It remains to be seen, however, if the Conservative Party is willing to follow suit...

July 13, 2003

Limited Liability Corporations in a Free Society

A very interesting article on the legitimacy of limited liability corporations by Bob Murphy, one of the most promising libertarian scholars around:

limited liability corporations are compatible with standard libertarian legal theory, only if the original founders (or subsequent individuals who buy the company and assume full responsibility) maintain full liability for damages caused by agents of the corporation. Individuals cannot evade responsibility for actions by hiding behind the legal fiction of a corporate "person."
We've Been Neo-Conned

Rep. Ron Paul has some strong words for neo-conservatives:

The fact that neo-conservatives ridicule those who firmly believe that U.S. interests and world peace would best be served by a policy of neutrality and avoiding foreign entanglements should not go unchallenged. Not to do so is to condone their grandiose plans for an American world hegemony.

The current attention given neocons usually comes in the context of foreign policy. But there’s more to what’s going on today than just the tremendous influence the neocons have on our new policy of preemptive war with a goal of empire. Our government is now being moved by several ideas that come together in what I call "neoconism". The foreign policy is being openly debated, even if its implications are not fully understood by many who support it. Washington is now driven by old views brought together in a new package.

We know those who lead us - both in the administration and in Congress - show no appetite to challenge the tax or monetary systems that do so much damage to our economy. The IRS and the Federal Reserve are off limits for criticism or reform. There’s no resistance to spending, either domestic or foreign. Debt is not seen as a problem. The supply-siders won on this issue, and now many conservatives readily endorse deficit spending.

There’s no serious opposition to the expanding welfare state, with rapid growth of the education, agriculture and medical-care bureaucracy. Support for labor unions and protectionism are not uncommon. Civil liberties are easily sacrificed in the post 9-11 atmosphere prevailing in Washington. Privacy issues are of little concern, except for a few members of Congress. Foreign aid and internationalism - in spite of some healthy criticism of the UN and growing concerns for our national sovereignty - are championed on both sides of the aisle. Lip service is given to the free market and free trade, yet the entire economy is run by special-interest legislation favoring big business, big labor and, especially, big money.

Instead of the "end of history," we are now experiencing the end of a vocal limited-government movement in our nation’s capital. While most conservatives no longer defend balanced budgets and reduced spending, most liberals have grown lazy in defending civil liberties and now are approving wars that we initiate. The so-called "third way" has arrived and, sadly, it has taken the worst of what the conservatives and liberals have to offer. The people are less well off for it, while liberty languishes as a result.

July 12, 2003

The Medicare Prescription Drug Benefit Is Bad for America's Health

An article from the American Enterprise Institute on how the new prescription drug benefit is fiscally irresponsible and will impose a heavy tax burden on younger Americans:

The new prescription drug subsidy is an unfunded benefit. There has been no mention on either side of the Senate as to how and when this additional federal expenditure will be financed. The politicians are keeping quiet about this detail for a good reason. The cost of the long-term plan is astronomical.

The political debate focuses on the $400 billion cost to taxpayers. But that is only for the next ten years. This is particularly misleading because it does not account for the increased cost associated with the baby-boomers retiring. Using the same long-term spending assumptions applied to Social Security, the present value of all future Medicare expenditures associated with the administration's original proposal for extending prescription drug coverage could generate an unfunded federal obligation of $6 trillion.

That sounds pretty bleak. And it gets worse. The original White House proposal included strong incentives for competition that would have yielded future cost savings. The proposal making its way through the Senate has dropped those incentives. Take the lack of competition into account and the result is striking. Depending on the future growth of demand for prescription drugs under Medicare, the Senate plan would increase the government's unfunded obligation of between $6 trillion and $7 trillion to $12 trillion. Yet Medicare is already in deep trouble. Under conservative assumptions of future healthcare spending growth, its long-term shortfall amounts to more than $30 trillion. And this is without a new prescription drug benefit.
Like father, like son?

Clyde Prestowitz, a former Reagan aide, predicts Bush may risk losing the next election if no WMD are found in Iraq and the situation there remains problematic with American casualties continuing to rise:

The future of the Bush administration could well be at stake. Having criticised President Clinton severely for moral lapses and dishonesty and played the card of born-again Christianity, Bush must be seen to be absolutely honest with the American public. Indeed, much of his political appeal derives from his black-and-white, good-guy, bad-guy Texas rhetoric. If that turns out to be false, he is likely to be hoist with his own petard.

The first signs of Bush’s potential vulnerability are becoming apparent. If the situation in Iraq continues, with a steady stream of US casualties, no apparent end in sight and no good explanation of why we are there, and if the US economy remains sluggish with rising unemployment, Bush could be in deep trouble. Indeed, the parallels with his father’s situation in 1992 are striking. Then the senior Bush appeared unbeatable, so much so that the major Democratic candidates stayed out of the race. But a little known Arkansas governor sensed the feet of clay and went for the gold. This time a little-known Vermont governor, Howard Dean, also sees possible feet of clay and is running for the gold. He has charisma on the stump and a powerful fundraising machine. More importantly, unlike the other Democratic candidates who have supported Bush on the war or kept silent, he has clearly defined himself as the anti-unilateralist and the anti-pre-emptive war candidate. Few give him a chance at the moment. But then, no one thought Bill Clinton could win either.

July 11, 2003

Left Turn: Is the GOP conservative?

In a very significant statement, NR editors say conservatives should consider distancing themselves from the GOP establishment:

We have never been under any illusions about the extent of Bush's conservatism. He did not run in 2000 as a small-government conservative, or as someone who relished ideological combat on such issues as racial preferences and immigration. We supported him nonetheless in the hope that he would strengthen our defense posture, appoint originalist judges, liberalize trade, reduce tax rates, reform entitlements, take modest steps toward school choice. Progress on these fronts would be worth backsliding elsewhere. We have been largely impressed with Bush's record on national security, on judicial appointments (although the big test of a Supreme Court vacancy will apparently not occur during this term), and on taxes. On the other issues he has so far been unable to deliver.


Conservatives, finally, have to find ways to work with the Republicans — their fortunes are linked — while also working on them. The Pennsylvania Senate primary offers a choice between a candidate who is conservative on both economics and social issues, Pat Toomey, and one who is conservative on neither, the incumbent, Arlen Specter. The White House and the party establishment has rallied behind Specter. But President Bush's goals would be better served by a Senator Toomey. And as recent events underscore, this is not a bad time for conservatives to declare their independence from the GOP establishment.

July 10, 2003

Defending The Free Market

Bruce Bartlett comments on Raghuram G. Rajan's study of crony capitalism:

What interests me about Rajan is that he is co-author (with Luigi Zingales) of a very interesting new book, Saving Capitalism from the Capitalists (Crown Business, 2003). It is one of the most powerful defenses of the free market ever written. Not only does he defend the market from anti-globalists and socialists, but against capitalists who manipulate markets and government policies for their own benefit.

In this respect, Rajan writes very much in the tradition of Adam Smith, who was very sophisticated about the ways of businessmen. Smith well understood that businessmen could often be the free market’s worst enemies, because they will sacrifice it in a minute for the sake of profits. Often they enlist government as a co-conspirator, getting it to enact laws that restrain competition and raise prices, which benefits them but hurts everyone else.

(Raghuram G. Rajan is the new IMF chief economist)
When Efficiency Is Bad

Tax "harmonization" in the EU is, as we already know, the Newspeak expression for enforcing higher taxes across Europe in a centralized way:

The EU's draft constitution would keep tax matters a national rather than a European issue. But this won't prevent would-be tax-hikers from finding backdoor ways to do it at the European level. It's already happening.

Besides the tax on foreign savings there are other targets, such as the charging of value-added-tax (VAT) on e-commerce transactions. At the moment VAT is paid on purchases made within the EU, but a new proposal would levy the tax on all transactions made over the Internet whether or not the company is based in the EU.

So far this has met with great resistance from the Department of Commerce and other representatives of the US administration in Washington. It is also, quite understandably, being opposed by internet providers and e-tailers who already have a tough enough time succeeding in Europe. However, their outcry has not stopped Brussels from pursuing the issue and the debate could become as contentious as the one over GMOs.

In most cases, harmonization improves the efficiency with which things are done in Europe. But with taxes it has the opposite effect. Increased tax levels will make it harder for European businesses to operate effectively and they could choose either to move their operations outside of the EU, as German manufacturers are doing already, or find ways to avoid the tax.

July 09, 2003

Giscard's 'federal' ruse to protect Blair

At least, Giscard d'Estaing is honest. The word was removed but the meaning remains the same:

Valery Giscard d'Estaing, the man in charge of drafting Europe's first constitution, admitted yesterday that the much-trumpeted removal of the word "federal" from the text changed nothing and was merely a ruse to shield the British government from criticism.

The former French president said the cosmetic change that did not affect the shape or character of the future EU or lessen the transfer of real power to Brussels.
Independence from England, Dependence on Washington?

Ron Paul on the Constitution and the celebration of the Fourth of July:

Those who dismiss the Constitution ignore the link between the wisdom of our Founders and the freedom and prosperity we still enjoy today. America is not prosperous and relatively free merely by accident. It is prosperous and free because we still retain vestiges of our constitutional system of limited government, with its emphasis on property rights and the rule of law. Other nations are similarly filled with bright, hardworking people, and enjoy abundant natural resources. Yet why have they not prospered like America? The simple reason is they enjoy less liberty. Without liberty and property rights, the human spirit diminishes. More freedom always means more prosperity, which is why American enjoys a much higher level of material well-being than almost any other nation.

As we celebrate the Fourth of July, we might consider what our Founders would think of present-day America. Would they find the ideal of a servant government intact? Would they see a society that abides by the principles established in the Constitution?

Unfortunately, the answer is no. They would discover a society completely dominated by the federal government, totally at odds with the weak central state they envisioned. They would find the people over-taxed, over-regulated, and far too dependent on government in every sphere of human activity. They would find most Americans woefully ignorant about our own history and Constitution, despite the prevalence of college degrees. Worst of all, they would find an attitude of complacency and subservience toward government, a mindset of accepting whatever Washington hands down.
American League of Lobbyists

The Agitator draws our attention to the American League of Lobbyists, a group dedicated to lobbying on behalf of... lobbyists.

July 08, 2003

Leftward W.

Bruce Bartlett convincingly argues that George W. Bush is heading further to the left:

Because the Republican rank-and-file is so happy with Bush over his delivery of tax cuts and their desire to support him in the war or terror, he doesn’t need to move rightward to secure the base. This has allowed him to position himself for the general election - moving leftward toward the center - at an early stage of the campaign.

The prescription-drug subsidy bill is Bush’s signature issue in this triangulation maneuver. By supporting such legislation, he deprives Democrats of the one issue on which they might win next year. Unfortunately, Democrats like Ted Kennedy know how badly Bush wants a prescription-drug bill and are driving a hard bargain. As with the 2001 education bill, Bush is effectively allowing Kennedy to dictate terms.

Conservatives in Congress are appalled by White House demands that they hold their noses and vote for the biggest expansion of government in 30 years. What is the point, they ask, of having control of the White House and Congress if it is just to enact Democrat big-spending programs? Better to be back in the minority, many say.
Liberia Folly

Ted Galen Carpenter explains why a possible U.S. intervention in Liberia does not make any sense:

There is not even a peripheral, much less a vital, U.S. interest at stake in Liberia. It might be possible to find a country that is less relevant than Liberia to America's security and well-being, but it would take a major effort.

Writer Irving Kristol had it right more than a decade ago during a previous civil war in Liberia when he observed that the only issue at stake seemed to be a mundane fight between then-dictator Samuel K. Doe and would-be dictator Charles Taylor. Today, the mundane struggle is between Taylor and rebels who would likely replace his odious regime with an equally odious one. America does not have a dog in that fight.

U.N. Secretary General Kofi Annan and other lobbyists for a U.S.-led peacekeeping mission argue that intervention is justified because considerable suffering is taking place in the Liberian civil war. That is undoubtedly tragic for the people of Liberia. But the existence of suffering in another country is not sufficient reason for the United States to commit its military personnel.

There is suffering taking place in numerous places around the world. Indeed, the scale of human misery is far greater in such places as the Congo, Cuba, Myanmar, North Korea, and Sudan than it is in Liberia. From a moral standpoint, how can the Bush administration justify intervening in Liberia while declining to use force in those other cases? Yet if the United States intends to intervene everywhere bad things happen, our military will be busy in perpetuity. Humanitarian intervention is, therefore, an impractical, bankrupt policy.
Rothbard on Orwell's Nineteen Eight-Four

A 1949 review of George Orwell's Nineteen Eight-Four by Rothbard:

In recent years, many writers have given us their vision of the coming collectivist future. At the turn of the century, neither Edward Bellamy nor H. G. Wells suspected that the collectivist societies of their dreams were so close at hand. As collectivism sprouted following World War I, many keen observers felt that there was a big difference between the idyllic Edens pictured by Bellamy and Wells and the actual conditions of the various "waves of the future."

Notable among these revised forecasts of the world of the future were Aldous Huxley's Brave New World and Ayn Rand's Anthem. Both of their future worlds, evil as they were, had saving graces. Huxley's future was spiritually dead, but at least the masses were happy; Ayn Rand's dictators were timid, stupid men who permitted a renascent individualist to escape from the strangling collectivist world and begin life anew.

George Orwell's collectivist Utopia has plugged all the loopholes. There is no hope at all for the individual or for humanity, and so the effect on the reader is devastating. Orwell's future is run by a Party whose job is the total exercise of Power, and it goes about its job with diabolic efficiency and ingenuity. The Party represents itself as the embodiment of the principles of Ingsoc, or English Socialism. These principles turn out to be: blind, unquestioning obedience to the Party, and equally blind hatred of any person or group the Party proclaims as its enemy. These emotions are the only ones permitted to anybody; all others, such as personal and family love, are systematically stamped out.

July 07, 2003

Signing any health bill

Robert Novak doesn't see much interest from the White House in opposing the march toward a socialist health care system in the United States:

The White House has made clear the president will sign any prescription drug bill arriving from Capitol Hill. Bush thereby has removed himself as a player in an epochal battle over this country's health care, undermining the optimistic scenario. No realistic conservative can devise a way to kill this bill. The question is whether Sen. Edward M. Kennedy's inexorable march toward a government-controlled health care system can be slowed.

The president does not seem at all interested in this effort. Indeed, on no issue has he been so separated from his conservative support base. He did not please supporters when he collaborated with Kennedy on the 2001 school bill or said he would sign any campaign finance reform bill in 2002. But Bush's passivity on prescription drugs, abandoning his own stated intentions, casts a longer shadow on national policy. Republicans do not want to criticize their president as the election campaign nears, but they are heartsick.

Two battles have been lost irrevocably and in fact were lost from the start. First, a massive new entitlement of prescription drugs for seniors will be established, with its real cost around $1 trillion over 10 years. Second, Medicare -- which approximates a national system of socialized medicine -- will not be reformed comprehensively as part of a prescription drug subsidy (as hoped for by nearly all Republicans, George W. Bush included).
Hong Kong Postpones Controversial Subversion Bill

Anti-subversion bill in Hong-Kong postponed in order to give government more time to "explain the legislation to the public":

The Hong Kong government, reeling after a massive show of people power last week, postponed on Monday a controversial anti-subversion bill after losing the support of a key legislative ally.

The climbdown came just days after Chief Executive Tung Chee-hwa said he would water down some of the bill's most contentious provisions but vowed to pass the bill this week.

That changed on Sunday when the Liberal Party's leader quit Tung's Executive Council, leaving the government potentially short of the votes it needed in the legislature to pass the bill.

Liberal Chairman James Tien had called for the final votes on the bill on July 9 to be delayed until December to allow for more public consultation.

July 06, 2003

Take a razor to the deflation debate
(via Institutional Economics)

Samuel Brittan isn't convinced by all the deflation concerns:

It is as well to know just what we are talking about. Just as inflation is a general rise in the price levels, so deflation is a general fall. Apart from Japan, the industrial world has not seen deflation for 70 years. Once there is a single currency and a single monetary authority, inflation and deflation refer to movements of the price level of the whole area. To raise the alarm about possible German deflation, because the rate of inflation in that country has fallen to 0.6 per cent - against a euro area rate of 1.9 per cent - is simply to ignore the advent of the new currency. To talk about German deflation makes as much sense as to talk about deflation in Texas or Cornwall, unless you believe monetary union is premature or still immature.

In any case it seems inherently absurd to believe that a ¼ per cent annual increase in prices is satisfactory, while a ¼ per cent decrease spells catastrophe. Very often the difference between these low rates of inflation and deflation will depend mainly on the price index used. A ½ per cent rate of deflation based on the European Union's Harmonised Consumer Price Index usually translates into a ¼ per cent rate of inflation on the British Retail Prices Index.


Let us suppose that nominal demand - or the national income in nominal terms - is rising by 3 per cent. Would you rather have a 4 per cent increase in output offset by a 1 per cent fall in prices? Or no increase in output but a 3 per cent rise in prices? The deflation-mongers implicitly assume the latter outcome would be better because there is a positive rate of inflation. This is no way to conduct a sensible debate.

July 05, 2003

US-EU: The Constitutional Divide

Another excellent article from Cato:

The American Constitution is a product of the 18th century Enlightenment. Its overriding concern is the relationship between individual freedom and coercive government power. Hence, the government's powers are delegated, enumerated, and thus limited. The authority that government enjoys is derived from the people, who can, in theory, reclaim that authority.

In contrast, the recently drafted EU constitution is a product of 20th century welfare-state socialism. The official goal was to design a simpler, more efficient, more democratic Europe that is "closer to its citizens." However, the goal was never seriously pursued and, consequently, never achieved. As a result, the new constitution will have serious negative implications for liberal parliamentary democracy and the principles of self-government.

The EU constitution makes European government more, not less, remote from the citizenry. The EU's operations are expanded, not streamlined, and its bureaucracy is made more complex, not simpler. There are no cuts to the EU's 97,000 pages of accumulated laws and regulations. The EU's powers are supposedly limited in this document but there is an escape clause in case the Brussels-based bureaucracy ever feels boxed in by popular sentiment. The decisions in Brussels are final and EU laws supersede laws made by national parliaments.

The proposed EU constitution is certainly a product of welfare-state socialism but I fail to understand why does Europe need any kind of constitution...
Berlusconi: I Never Apologized to Germany

Berlusconi asserts that he did not apologize to Germany:

"I have not made any apology as far as the case of the German lawmaker is concerned," Berlusconi told reporters who asked him about the incident. "On the contrary, I have underlined strongly that I felt offended for the grave words that had been directed not only toward me but toward my country."

"I have added that if anybody interpreted what was meant as an ironic joke as damage to a deep feeling of a country, I was very sorry," he continued. "But I have not apologized."

July 04, 2003

Celebrating the Fourth of July

Jacob G. Hornberger reflects on what is celebrated by Americans today:

Today, Americans celebrate the "freedom" to be taken care of and controlled by a powerful paternalistic government ... the "freedom" to subject their lives, economic activities, and fortunes unconditionally to omnipotent government control ... the "freedom" to be made into "good" and "compassionate" people through the coercive welfare apparatus of government.

It is a "freedom" that has created a mindset of socialistic dependency among the people, while destroying the self-reliance and "can-do" spirit that characterized our ancestors. It is a mindset that cannot imagine people actually surviving and prospering without the welfare assistance of government.

It is the "freedom" by which government has once again been placed in the sovereign and supreme position in its relationship to the individual and in which the individual has once again been relegated to a subservient role.

We should also not forget that the “freedom” that Americans today celebrate also includes the federal government’s newly assumed power to seize anyone anywhere in the world, including here at home, and jail or execute him without due process of law.

On July 4, 1776, a small band of radical English colonists expressed an idea of liberty that shook the political foundations of the world. What better way to celebrate the Fourth of July, 2003, than to pledge our lives, fortunes, and sacred honor to its restoration?
Rothbard and Hayek: A Personal Memory

Ronald Hamowy shares his memories of the two men:

Everyone familiar with Rothbard’s writings is aware that he wrote a truly prodigious amount. What is not as well known is that he seems to have totally mastered the literature in those fields in which he had an interest. He had a vast library and unlike the books in my own library, all of Murray’s books had been read, and read with care. All one need do is scan a book out of Murray’s library and he will find marginal comments in Murray’s hands scribbled on each page ("Bull____!," "Ugh!" "Right on!", etc.) and that almost every line on every page was underlined. One of the great mysteries for all who knew him, at least at the outset, was where on earth he found the time to turn out the dozens of books, hundreds of articles, and literally thousands of letters he wrote and on top of it to read so much. In addition to have written a massive amount he seemed to have read everything that came within his grasp, newspapers, magazines, journals, newsletters, even flyers and advertisers.


During the many years I knew Hayek I recall only one occasion when I saw him really angry. In occurred soon after the death of Dag Hammarskjöld, then Secretary-General of the United Nations, who was killed in a plane crash in the Congo in September 1961 while attempting to bring some order to the chaotic situation that obtained there. Hammarskjöld, an economist by training, was, like Hayek, particularly interested in business cycles. Indeed, his doctoral dissertation at the University of Uppsala had been on that topic. Unlike Hayek, however, he was a firm adherent of planned economies and of the need for government intervention in the market. Despite the ideological differences that separated them, however, Hayek and he became and remained quite friendly.

Soon after Hammarskjöld’s death, William Buckley, in some comments attacking Hammarskjöld that appeared, I seem to recall, in the pages of National Review had maintained that Hammarskjöld had been a less than honest man and had suggested that he cheated at cards - the phrase "had an ace up his sleeve" comes to mind. This attack on Hammarskjöld’s personal integrity so infuriated Hayek that he wrote a blistering letter to Buckley denouncing his maliciousness and asking that National Review stop sending him future issues of the magazine. Buckley responded to Hayek’s letter, regretting Hayek’s reaction and pointing out that the characterization was only "un jeu de mot," but it made no difference to Hayek, whom, I believe, remained only on the most formal terms with Buckley for the rest of his life.

July 03, 2003

Socialism's Farewell Note

Marian L. Tupy says the new EU "Constitution" may well be the "last gasp of European socialism":

Drawing on the intellectual legacy of the proponents of the Scottish Enlightenment, the Austrian economist Friedrich Hayek showed that it was not possible to centrally plan complex social systems because the planners in charge did not have sufficient information. Soviet central planning, for instance, was unsustainable because it could not rely on the price system to point out the real needs of the economy. The best social systems develop through a process of trial and error called "evolution."

Such evolution, however, is exactly what the European Constitution undermines. With the exception of direct taxes and foreign policy, virtually all of the social and economic policies of the EU states will be "harmonized" at the pan-European level. Whatever Schumpeterian "creative destruction" of the competitive process remains among the European states, will be eroded through recourse to the concepts of disloyalty and competitive distortion-those Trojan Horses cleverly included in the Constitutional draft.
Economics and Measurement

Gene Callahan has an excellent article on the use (and abuse) of statistics in economics:

Measurement in the physical sciences depends upon the postulate that certain elements in the situation being measured are constant. A meter is always a meter, whether Joe or Mary or Sam is doing the measuring. And that meter should stay constant over time. Even Einstein, in formulating his theory of relativity, which contends that measurements of length are dependent on the observer's frame of reference, still must posit some unchanging elements, such as the speed of light, in order to formulate physical laws based on that idea.

However, once we enter into the realm of human action, there are no quantitative constants. Human action springs from the meaning that humans attach to their situation. Since that is the case, as knowledge is gained, as life is lived - in short, as time passes - the meanings humans attach to the circumstances of their world will alter. Such alterations are inherently unsusceptible to quantitative measurement or prediction. We cannot measure an interpretation, nor can new human meanings be predicted in advance - otherwise, they would not be new!

July 02, 2003

Dissent on Sabine Herold

Andrew Ian Castel-Dodge argues that Sabine is a fraud because she is pro-European Union:

Sabine is pro-European Union, so she is not a classical liberal. That is akin to a libertarian who admired the USSR. It does not work. If you have read any of the treaties or even the history of the founding of the EU, you will realise that the EU was never meant to be anything close to "classical liberal". It is to be an undemocratic, monolithic statist socialist super-state.

Well, I guess nobody is perfect, but possibly having some misconceptions about the EU doesn't automatically turn her into a fraud, especially in such a hostile environment to classical liberal ideas as contemporary France.
The French and taxes

Bruce Bartlett compares Sabine Herold to Pierre Poujade and advises her to develop a consistent political platform:

Exactly 50 years ago, a similar middle-class revolt arose in France led by a small-town bookseller named Pierre Poujade. In the summer of 1953, he organized the shopkeepers in the town of St. Cere to go on strike against the tax collectors. As with Herold, Poujade suddenly found himself the leader of a national crusade. In 1956, his movement elected 52 members to the 544-member National Assembly.

But the Poujadists quickly ran out of steam. Within two years, their movement virtually ceased to exist. The reason seems to be that they had no real vision of reform or a program that went much beyond protest. In the United States, they would be called populists. Once given a bit of power, they didn't know what to do with it and so faded away.


Sabine Herold has her work cut out for her. But unlike Pierre Poujade, she understands the need for a broader political philosophy upon which to base her movement. She is said to be reading the Austrian political philosopher F.A. Hayek and is a great admirer of former British Prime Minister Margaret Thatcher. She will need the wisdom of the former and all the steely determination of the latter if she is to be successful.

July 01, 2003

U.S. online suppliers to levy EU tax

More taxes, courtesy of the European Union:

Companies in the United States and elsewhere selling goods online to customers in the European Union starting today will no longer be able to escape taxes.
Under a new EU directive, a value-added tax will be levied on all online purchases made by a resident of the European Union, regardless of where the supplier is based.
The new rules will plug a loophole in the system that exempted U.S. firms while their European rivals were forced to account for the tax.
The directive was adopted in May last year by EU member states, which rejected U.S. government arguments that e-commerce should be given more time to bed down before it attracts VAT. Online purchases in the United States remain tax-free.
Bust a CAP

Excellent article by Kevin A. Hassett and Robert Shapiro on how the European Union's "Common Agricultural Policy," or CAP, is one of the main factors blocking African economic development:

The average person in sub-Saharan Africa earns less than $1 a day. The average cow in Europe -- thanks to government subsidies -- earns about $2 a day. And therein lies a tale of the power of European farm interests, and the weakness of African economies.

A burgeoning volume of economics literature argues that the largest factors stunting African economic development include not only disease, drought, warfare and mismanagement, but also the European Union's "Common Agricultural Policy," or CAP. Why? Because the EU's policy has spawned subsidies and tariffs that have richly rewarded European farms and swollen European food output, while depressing world food prices and undercutting African exports.
Central bankers eye unusual steps

Central bankers are apparently considering buying up financial assets to "stop deflation":

Designing monetary policy to achieve a targeted inflation rate can be helpful not only to moderate price pressures, but also to boost prices when they fall too low, some said.
"Everybody was very confident about it," Gordon Richardson, former Bank of England Governor, told Reuters after the closed-door session.
"It was a theoretical discussion without any sharp corners," said Matti Louekoski, deputy governor of the Bank of Finland.
According to several central bankers attending the discussion, Federal Reserve Chairman Alan Greenspan said measures once considered unorthodox might become conventional, such as buying financial assets.
"We used to watch only commodity prices, exchange rates and interest rates, but now it seems we also have to examine or monitor asset prices," said one.

Not content with simply pursuing "orthodox" inflationary policies, central bankers are also considering acquiring financial assets with fiat money, thus making an increasing amout of private companies become at least partially state owned. How generous of them...