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Free Markets Archive

Tuesday

9

June 2009

1

COMMENTS

Why I Boycott GM

Written by , Posted in Free Markets

Chris Moody discusses a GM boycott:

Limbaugh called for it recently, and only 42 percent of Americans who own an automobile made by General Motors say they are going to buy one again. All of this, of course, makes the left so gosh darn mad.

As an urbanite, I own a Chinese-made scooter and a bus pass. But if I were to buy a car, GM would be the last place I look, on principle. For anyone who is not keeping score at home, that includes Chevy, Buick, Cadillac, Daewoo, Holden, Saab, Pontiac and Saturn.

Before we know it, we will hear calls that it is our patriotic duty to buy GM cars, just as it’s “patriotic” to pay taxes. Baloney. It’s my “duty” to find the best product at the best price, and reward the company who makes that product with my patronage. That is how I’ve always done it, and that is how I will continue, whether I’m buying a car or a box of tissues to wipe away my non-existent tears for General Motors.

Buying GM at this point is an implicit endorsement of government intervention. I am not boycotting for political gain or to spite Obama, but to show that I do not accept dangerous interventions into the economy and the destruction of private contracts and the rule of law.

I will never in my life purchase a GM product, regardless of quality. It’s not whether or not their product is right for me anymore; it’s about the means taken to produce it. They are not acceptable in a free society.

Sunday

7

June 2009

0

COMMENTS

School Choice Under Assault In Milwaukee

Written by , Posted in Education, Free Markets, Health Care, Welfare & Entitlements

From National Review:

Milwaukee is home to America’s most vibrant school-choice program: More than 20,000 students participate, almost all of them minorities. They have made academic gains and boast higher graduation rates than their peers in public schools. They even save money for taxpayers. Inevitably, Democrats in the state capital are trying to eviscerate the Milwaukee Parental Choice Program.

They’ve wanted to gut school choice for years, at the behest of teacher-union patrons who believe education should be a government monopoly. Until recently, Republicans have stood in the way. That changed following last year’s elections. Now, for the first time since the advent of school choice in Milwaukee two decades ago, Madison is a one-party capital. The governor, Jim Doyle, is a Democrat. Members of his party control both the state assembly and the state senate. School choice is in their crosshairs.

Last week, the legislature’s Joint Finance Committee approved a series of auditing, accrediting, and instructional requirements that will force successful voucher schools to shift resources away from classrooms and into administration. Several schools will have to comply with new bilingual-education mandates, even though many immigrant parents choose those schools precisely because they emphasize the rapid acquisition of English instead of native-language maintenance.

…Sometimes onerous regulations are at least well-intentioned blunders. Not these. The enemies of school choice in Madison know exactly what they’re doing. In the name of “accountability,” they attack the quality of voucher schools with deadly precision. The goal is to make them as mediocre as the public schools they routinely outperform — and to leave parents, once again, without a choice.

Government has many tools in its choice destroying arsenal.  It doesn’t have to simply prohibit something to make it stop.  Government has similarly paved the way for its takeover of health care by devastating the private health insurance industry with mandates that force coverage for all sorts of things people don’t want.  After reducing the primary advantage of the market (flexibility and choice), government will swoop in for the kill.


Monday

1

June 2009

0

COMMENTS

General Motors Bankruptcy Is A Triumph Of Capitalism

Written by , Posted in Free Markets

The primary benefit of a free market system is that it rewards companies that are capable of meeting our needs and demands, while punishing those that do not.  Economist Joseph Schumpeter famously referred to this process as “creative destruction.”

The collapse of General Motors and Chrysler is evidence of the process in action.   As Greg Mankiw recently noted on his blog, the 2009 Consumer Report ranked Chrysler dead last, recommending zero percent of tested cars for purchase.  General Motors came in next to last, with 17% recommended.  At the top was Honda with a score of 95%.

Standing in the way of this capitalist process was the administration’s of both George W. Bush and Barack Obama. Obama in particular has gone above and beyond in his counterproductive effort to prevent GM and Chrysler from facing the consequences of producing shoddy products. He opened the corporate welfare spigot in a flawed effort to save the floundering companies, but to no avail. Like the grim reaper, bankruptcy knows when the time has come for a business to be put to rest, either to be reborn again as a new company (even if it’s under the same name), or for good.

Democrats who pushed for passage of corporate welfare bills to prop up the automakers portrayed bankruptcy as an unacceptable course.  Gov. Rendell flat out called it “a disaster to put them in Chapter 11.” Obama seemed to share this aversion to bankruptcy when he asserted a need to “figure out ways to put the pressure on the automakers the way a bankruptcy court would.  Demand accountability, demand serious change, but do so in a way allows them to keep the factory doors open.” Yet despite the efforts of Obama, the GM and Chrysler of yesterday that ranked at the bottom of the 2009 Consumer Report will finally be laid to rest. Having eventually realized that the best way to “put pressure on the automakers the way a bankruptcy court would” is to let an actual bankruptcy court do it, Obama should now get out of the way and let the free market make the ultimate decision on the survival of their new incarnations as well.

Tuesday

19

May 2009

0

COMMENTS

Uncreative Destruction

Written by , Posted in Economics & the Economy, Free Markets

Scott Sperling, co-president of private equity firm THL partners, writes in todays Wall Street Journal that “Obama’s Auto Plan Is Capitalism at Work.”

Mr. Sperling is ignorant of the ideology of which he speaks.  Capitalism’s creative destruction, which he cites to support his argument, is a process of spontaneous order, not central planning.  Letting Chrysler and GM go bankrupt without government meddling would have been an example of this process, not what Barack Obama is doing.  For while the President’s policies are destructive, they are anything but creative.

Friday

15

May 2009

0

COMMENTS

Obama Doesn't Understand A Free Society

Written by , Posted in Free Markets

President Obama recently addressed the graduating class at Arizona State University’s commencement ceremony.  In the speech, Obama displayed a shocking level of  ignorance regarding the most fundamental aspects of a free market economy.

In the face of these challenges, it may be tempting to fall back on the formulas for success that have dominated these recent years. Many of you have been taught to chase after the usual brass rings: being on this “who’s who” list or that top 100 list; how much money you make and how big your corner office is; whether you have a fancy enough title or a nice enough car.

You can take that road – and it may work for some of you. But at this difficult time, let me suggest that such an approach won’t get you where you want to go; that in fact, the elevation of appearance over substance, celebrity over character, short-term gain over lasting achievement is precisely what your generation needs to help end.

This is rich coming from a man who has, perhaps forever, cemented the American presidency as an office of appearance over substance.  His every action to date has involved public spectacles to hide contradictory actions, as exemplified by his denunciation of our unsustainable debt from Mexico after he spent 100 days piling it on in Washington.

With that said, there are tiny grains of truth in the President’s speech.  Short term gain should not overwhelm lasting achievement, and one’s life ambitions should certainly be more substantive than authoritative titles and flashy cars.  But Obama utterly dismisses the single best, albeit far from perfect, way we have to measure public usefulness: our pay.

The leaders we revere, the businesses that last – they are not the result of narrow pursuit of popularity or personal advancement, but of devotion to some bigger purpose – the preservation of the Union or the determination to lift a country out of depression; the creation of a quality product or a commitment to your customers, your workers, your shareholders and your community.

The trappings of success may be a by-product of this larger mission, but they can’t be the central thing. Just ask Bernie Madoff.

This is the common call of the collectivist, but it is completely false.  The greatest contributions to our collective good rarely, if ever, come from an actual desire to serve, or even an awareness of, “some bigger purpose.”  It is the beauty of a dynamic, free market economy that one need not try to serve “some bigger purpose” to provide real benefits for others.  When we earn a dollar, it means we have delivered a dollars worth of products or service to others. That which serves ourselves, serves us all. This is even truer in the modern welfare state, where merely providing for oneself means preventing the need for additional burdens on others.

America’s greatest inventions have not come from government bureaucrats serving some nebulous common good, but from entrepreneurs willing to take great risk for fame or fortune. It is those who demand that we all serve the collective good who condemn us all to poverty and servitude.  Just ask anyone who has lived under collectivist rule.

Tuesday

5

May 2009

0

COMMENTS

Son Of FDR

Written by , Posted in Economics & the Economy, Free Markets

With a deep ignorance of economic and political history, many have praised Obama by comparing him to FDR.  I see the similarities between Obama and FDR as deeply troubling.  It turns out the two presidents have quite a lot in common, though this hardly speaks well of either Obama nor the prospects for our nation’s future.

While President, FDR created a political environment hostile to free enterprise and growth.  The result was a needlessly prolonged period of economic misery.  Arbitrary rule, the natural consequence of making economic decisions through political means, is the enemy of economic growth.  Barack Obama is today creating a similarly hostile environment for free enterprise.

The most recent example is the President’s unlawful attack on Chrysler’s investors.  As payback for the millions of dollars in campaign funds they provided, Obama has seized the company from private investors and handed a majority over to the UAW, despite the fact that they held far fewer bonds than private investors.  For more on this atrocious abuse of governmental power, see here, here and here.

For refusing to go along with the President’s unfair raid on their investments, private investors were singled out for a public thrashing by the President, who took to the bully pulpit to once again bully the private economy into submission.  Obama is creating an environment in which contracts are meaningless and investment is always at risk of being wiped out by politicians advancing special interests.  This is crony capitalism.  It is the kind of disgraceful action taken every day in Latin America, and it will wreak havoc on our economy the same as it does theirs.

Monday

27

April 2009

2

COMMENTS

Barney Frank’s Confused Philosophy

Written by , Posted in Free Markets, Liberty & Limited Government

Barney Frank has recently been pushing for legalizing online gambling and expanded freedom in a few other areas.  On this issue I support him.  But in making the case for this he revealed a sadly confused, and quite dangerous, philosophy.

“I would let people gamble on the Internet,” Frank said. “I would let adults smoke marijuana; I would let adults do a lot of things, if they choose.

“But allowing them total freedom to take on economic obligations that spill over into the broader society? The individual is not the only one impacted here, when bad decisions get made in the economic sphere, it causes problems.”

So the basis for government intervention, according to Barney Frank, is whether or not a decision has any impact on other people.  That’s not an unreasonable criteria, but it’s entirely too simplistic by itself.

What government should be concerned with is rights.  The question is not just whether someone else has been negatively impacted by a decision, but whether or not their rights have been violated.  That is the criteria necessary for government action.

But there’s perhaps an even more glaring problem with Barney Frank’s assertion.  He implies that bad economic decisions are less likely to be made with government involvement than when the people are “allowed” their freedom.  This is entirely baseless.

Bad decisions will be made regardless of whether private individuals or governments are making them.  As they cannot be eliminated, and usually not even reduced, through government involvement, the fact that bad decisions impact other people is irrelevant.  The question we should be asking is: what is better at correcting those mistakes that inevitably do arise, a government bureaucracy or a dynamic economy based on freedom and choice?  The evidence overwhelming points to the latter as better able to self-correct and adapt to changing circumstances.

Tuesday

21

April 2009

0

COMMENTS

Obama Appointee: Bailout Liberal Media

Written by , Posted in Free Markets, Media Bias

Former member of the liberal media and new Obama appointee Rosa Brooks wants the government to bailout the dying print media industry.

Brooks, who has taken up a post as an adviser at the Pentagon, advocated upping “direct government support for public media” and creating licenses to govern news operations.

“Years of foolish policies have left us with a choice: We can bail out journalism, using tax dollars and granting licenses in ways that encourage robust and independent reporting and commentary, or we can watch, wringing our hands, as more and more top journalists are laid off,” she wrote in her parting column on April 9.

Brooks said this would help rescue the industry from a “death spiral” and left the government unaccountable to the journalists who must keep it honest. “[I] can’t imagine anything more dangerous than a society in which the news industry has more or less collapsed,” she wrote.

I can’t imagine anything more dangerous than a society in which the media is controlled by the government.  Of course, her entire premise is false.  Media is not collapsing; old media is collapsing.  This is what happens in a dynamic economy, the old dies and the new takes its place.

The old model of heavily filtered news delivered by liberal journalists is a loser.  It’s going the way of the dodo, and for good reason.  The government should not step in to protect this old format anymore than it should have to protect horse and carriages with the arrival of the automobile.  Trying to codify old business models into law will only prevent the new business models that otherwise would have developed from doing so, losing us the primary advantage of a dynamic economy: innovation.

Tuesday

14

April 2009

0

COMMENTS

Obama Eases Restrictions On Cuba

Written by , Posted in Foreign Affairs & Policy, Free Markets

President Obama announced, as inconspicuous as possible, that his administration is reversing several restrictive policies on Cuba, including restrictions on travel to visist family, limits on money and goods that can be sent to family, and prohibitions on high tech investment. I support these moves. Unfortunately, however, the move does not indicate a broad commitment to freedom by the Obama administration, which seeks to limit trade in most other ways.

Monday

30

March 2009

0

COMMENTS

Government Motors

Written by , Posted in Economics & the Economy, Free Markets

President Barack Obama announced today that he had effectively fired the CEO of General Motors.  His announcement was nothing short of extraordinary:

GM has made a good faith effort to restructure over the past several months — but the plan that they’ve put forward is, in its current form, not strong enough.  However, after broad consultation with a range of industry experts and financial advisors, I’m absolutely confident that GM can rise again, providing that it undergoes a fundamental restructuring.  As an initial step, GM is announcing today that Rick Wagoner is stepping aside as Chairman and CEO.  This is not meant as a condemnation of Mr. Wagoner, who’s devoted his life to this company and has had a distinguished career; rather, it’s a recognition that will take new vision and new direction to create the GM of the future.

Translation: “I just fired the CEO of a U.S. corporation.  No one is beyond my reach.”

Who are these “industry experts?”  What makes them more qualified to evaluate GM than investors who are willing to put their own money on the line? To put it another way, who do you think has more incentive to get it right: investors betting their own money, or “industry experts” betting yours?

In this context, my administration will offer General Motors adequate working capital over the next 60 days.  And during this time, my team will be working closely with GM to produce a better business plan.  They must ask themselves:  Have they consolidated enough unprofitable brands?  Have they cleaned up their balance sheets, or are they still saddled with so much debt that they can’t make future investments?  Above all, have they created a credible model for how not only to survive, but to succeed in this competitive global market?

Despite this announcement describing all the ways in which government is now dictating the direction of GM, Obama made sure to assure us plebes that, in fact, he really has no desire or intention to run GM from Washington D.C.

But that’s not all.  The government is now going to guarantee the warranty’s of GM and Chrysler.  This, The One proclaimed, will make your warranty “safer than it’s ever been.”  Well, isn’t that reassuring?  No.  To any person who has observed even a fraction of the history of government run anything, it’s not in the slightest bit credible.

What we’ve witnessed in the first few months of this Presidency is the opening stage of a war on capitalism, a blitzkrieg on free enterprise.  GM is just one battle in this war.  There will be more casualties and further government transgressions into the territory of freedom.  And make no mistake, freedom itself it what’s ultimately under assault.  Economic freedom is a necessary, though not sufficient, condition for political freedom.  Or to put it another way, no people have ever had political freedom without economic freedom.  By doing his best to take away the latter, Barack Obama is undermining the foundations of the former.

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About Me

profileI serve as Vice President of the Center for Freedom and Prosperity, a non-profit think tank dedicated to preserving tax competition and free markets. This site features my personal views, which are not reflective of CF&P.

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