Newsletter 83 - Fall 2016
Scouting report – Big government fans (Side A) have enjoyed considerable success over the years, while those who would like to shrink or at least limit the role of government (Side B) keep losing ground. Perhaps some reflection is in order as to why our intellectual opponents have been so successful.
One possible answer is that Side B is losing because Side A is right, but we really don’t believe this. Despite ample historical evidence that anarchy doesn’t work, relatively free societies under an umbrella of government-provided security have a far better track record of economic and social progress than societies where the government makes all the important decisions.
A limited government model was prescribed by the Constitution, which has served (at least in theory) as the template for the US system of government since 1789. And with the exception of the Civil War, this model worked very well for a long time. Thus, the United States expanded across the continent, enjoyed decades of rapid economic growth, and became a world power. So how did Side A succeed in changing the nation’s path to the one that it’s currently on?
As we see it, there are three basic prongs of the Side A offense: (A) Theories: Intellectuals exaggerate the imperfections of free enterprise and claim that only collective action can fix them; (B) Plans: Politicians incorporate the collective action theories in their political agendas; (C) Execution: Government employees, civic activists with a liberal bent, and special interests work diligently to put the plans into effect.
The foregoing is not a one-time process, but rather a cycle that keeps repeating. No matter how many battles Side A wins, its supporters never seem to see anything other than “more government” as the answer for perceived problems. By way of illustration, this newsletter will present a series of historical and current examples.
Keynesian economics – John Maynard Keynes wrote his magnum opus (The General Theory) in the mid-1930s and died in 1946, but his economic theories remain very influential. The best known of these is that governments should run deficits during economic slumps in order to stimulate the economy and put unemployed people back to work – advice that many politicians have found appealing. (The suggestion that governments should run surpluses during economic booms in order to balance their budgets over the economic cycle has proven less influential.)
Here’s some of the logic: Economic recessions serve no useful purpose and markets don’t self-correct – government should intervene at the first sign of trouble – misdirected investment is better than no investment - government deficits during a slump will have a multiplier effect on overall output of up to “three or four times”– it would be unfair to drive down wage levels to promote full employment – interest rates should be kept very low – inflation will only become a problem if essentially all workers are employed – don’t worry whether these policies are sustainable as “in the long run we are all dead.”
It’s one thing to offer intuitive insights, as Keynes did so well (contemporaries rarely bested him in an argument), and quite another to prove them. In the opinion of scholars who have read Keynes’s writings, they don’t solidly support his theories.
In a nutshell, Keynes described the world in utopian terms (government spending need not be paid for, printing money is OK, economic cycles aren’t inevitable, full employment should be the norm, government planners have better judgment than free markets, etc.) that some found more appealing than the actual facts.
As one critic puts it, Keynes was a bit like Karl Marx except that he blamed economic problems on a different capitalist faction (conservative bankers intent on charging high interest rates versus greedy owners of industrial enterprises). Where Keynes went wrong, Hunter Lewis, Axios Press, 2009.
Bidding war – Let’s say one buys the tenets of Keynesian economics: the government is duty-bound to eliminate unemployment, deficit spending during economic downturns will more than pay for itself, etc. What a great excuse for Side A politicians to keep proposing new spending programs without worrying about pruning existing ones.
One might hope Side B would exert countervailing influence by supporting restrained spending and balanced budgets, but things often don’t work that way. As nominal conservatives (aka “moderate Republicans”) well understand, balanced budgets enjoy less support than popular government programs. Accordingly, Republicans often wind up supporting irresponsible spending – albeit possibly directed at different segments of the electorate than Democrats are seeking to attract – even if they have the votes to stop it.
This may be a poor political strategy for Republicans in the longer run, witness the failure of Bush 41 to win reelection and the second term woes of the Bush 43 administration, but it has often been followed. Leviathan on the right: How big-government conservatism brought down the Republican revolution, Michael Tanner, Cato Institute, 2007.
In this year’s presidential campaign, we can’t credit either side with plans to address the fiscal problem. Clinton proposes to hike taxes on the well to do, but the proceeds would be used to fund new spending programs rather than applied to deficit reduction. Trump has talked in terms of major tax cuts, maintaining entitlement programs, and rebuilding the military, which wouldn’t balance the budget either. Dueling economic plans, 8/15/16.
The Republican nominee recently upped the ante by proposing “childcare reforms” that are obviously intended to compete with Clinton’s plans in this area. The new benefits would be delivered through tax deductions/credits that would increase budget deficits in much the same fashion as direct benefit payments. Positions, donaldjtrump.com, 9/13/16.
Conservatives panned Trump’s plan, and rightly so in our opinion. Trump’s childcare, maternity plan “out-Democrats the Democrats,” Charles Krauthammer, newsmax.com, 9/13/16. But with a Republican plan now on the table, new government subsidies in this area appear inevitable regardless of who wins the election.
Keep your eyes on the stars and your feet on the ground. – Theodore Roosevelt
Precautionary principle – SAFE founder Bill Morris introduced us to the term “hormesis,” which wasn’t (and still isn’t) in common usage. Its meaning: although a great deal of something (usually nuclear radiation) would be lethal, a small dose may be harmless or even beneficial.
If a linear relationship between exposure and damage is assumed, this can result in unrealistically large evacuation zones around nuclear plants and other costly restrictions that drive up operating costs. See, e.g., Nuclear power a safer energy source than most, William Morris, News Journal, 4/26/13.
Hormesis is also germane to the control of pollutants from the combustion of fossil fuels, such as SO2, ozone and microscopic soot particles. If regulators overlook this phenomenon, they are likely to set emission standards that are needlessly stringent and very costly.
The original thinking about radiation exposure was that low levels were harmless; the current linear no-threshold (LNT) model was adopted after a good deal of lobbying by advocates of a “one can’t be too safe” approach. Now some nuclear scientists are pushing the Nuclear Regulatory Commission to get more realistic about low level radiation from nuclear facilities, e.g., by raising the allowable average dose of radiation for members of the general public by a factor of 50 (from 100 millirems per year to 5,000 millirems per year, which is the current and presumably safe standard for nuclear industry workers). Is a little radiation so bad? John Emshwiller & Gary Fields, Wall Street Journal, 8/12/16.
There have been many comments on the foregoing proposals, including a sharp dissent from the Environmental Protection Agency. Radiation’s link to cancer is “particularly strong,” says the agency, and “basing radiation protection on poorly supported and highly speculative proposals” would be a big mistake. Ibid. Hmm, given the EPA’s approach within its own regulatory domain, that’s exactly what we would have expected them to say.
Felon voters – We have often warned that shifting government power to the executive branch tends to promote ever expanding government. Such a shift has been taking place at the federal level, and also in some states as shown by the following example from Virginia.
It’s generally accepted that convicted felons shouldn’t be permitted to vote so long as they remain incarcerated. Less clear is whether their voting rights should be restored after release and completion of the prescribed period of probation, and if so under what conditions.
The law in Virginia has been that ex-felons are banned from voting for life, but can individually apply for reinstatement of their voting rights. That’s more severe than the laws in many states, and arguably the Virginia law should be changed, but the state's legislators apparently weren’t disposed to do so (likely benefitting Democratic candidates) in this election year.
Not inclined to accept continuation of the status quo, Governor Terry McAuliffe purported to restore voting rights for Virginia’s ex-felons (totaling some 206,000) by executive orders. Legal challenges were filed, and the Virginia Supreme Court struck down his orders (4-3 decision) in July; the court also ruled that 13,000 ex-felons who had already applied for reinstatement should be removed from the voting rolls.
The governor reacted by insisting that he did so have the power to restore voting rights for ex-felons. He subsequently issued an order to confirm the reinstatement of the 13,000 ex-felons, and declared that on a going forward basis his office would work to restore the voting rights of all eligible persons on a case-by-case basis.
Next the legislature petitioned the Virginia Supreme Court to initiate contempt proceedings against the governor for flouting a court order. In historic move, Virginia legislators file contempt motion against McAuliffe over felon voting, Hans von Spakovsky, dailysignal.com, 8/31/16.
What would the justices do now, order McAuliffe’s arrest? The Supreme Court blinked, and the governor continued to restore voting rights on an individual basis. As of Sept. 24, about 18,000 ex-felons had been re-enfranchised.
Democracy is two wolves and a lamb voting on what to have for lunch. - Benjamin Franklin (attributed)
Video corner: Milton Friedman debates democratic socialist Michael Harrington re contribution of government, circa 1970s, 4:32.
Coming attractions – The Conservative Caucus of Delaware will hold its 21st annual banquet at Harry Savoy’s Ballroom on Sunday, October 16. This event will feature good food, good company, and a first rate speaker (journalist Timothy Carney). For more information and the rsvp address, please visit the TCC’s website (events page).
Andrew Betley, (302) 239-9679
Edgar Fasig, treasurer, (302) 999-0611
Dan Kerrick, (302) 658-7101
Steve McClain, (302) 998-3910
Jerry Martin, (302) 478-5064
rycK Stout, (302) 478-9495
Bill Whipple, president, (302) 464-2688
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