New School Politics

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Unfortunately, most politicians don’t have much of an economic pedigree, but some at least think more like economists than others. My inclination is that Obama fits the bill among Democrats, although all the talk of “taking on the drug companies,” “predatory lending,” the illusions to protectionism, etc. is enough to conclude that the Democrats are not really to be trusted on big economic issues in general.

Many of the Republicans leave a lot to be desired also, but some do make sense from time to time. The South Carolina debate on Thursday night demonstrates this.

I think among Republicans, Ron Paul and John McCain tend to distinguish themselves. Ron Paul, I believe, has consistently established himself as the most economically-minded of candidates although he is out of the mainstream. Perhaps I am partial to him because he is reads von Mises, Rothbard, and Hayek, however any politician who actually takes the time to read treatises on economics by such thinkers deserves credit.

He also deserves credit for putting the immigration issue into an economic context which none of the other candidates seem think of–ever. Here was his response to an immigration question:

I think this whole thing should be thought of more in economic terms. Maybe I think about economics too much. But there is something said in economics that, if you subsidize something, you get more of it.

And this is what we do. We encourage it by giving free medical care, and free education, and the promise of amnesty. And no wonder more will come.

We have a weakening economy and now immigrants, especially the illegals, are seen as a threat because they come and they undermine our tax system. And some of our hospitals are being closed and some of our people won’t work because of the welfare state.

You can’t solve this problem if you don’t deal with the terms of welfarism. And, besides, you know, some of our border guards are over in Iraq. I think they would be better off on our borders, you know, protecting our borders, not in Iraq.

Immigration is one of the issues on which I disagree to a certain extent with Rep. Paul–I think that immigration laws should be very lax–but he is right with regard to the welfare aspect of it, which must be curtailed. Most of all, he deserves pops for observing that immigration is fundamentally an economic phenomenon, and to analyze any economic phenomenon you must look at incentives.

Zach may be right that Ron Paul sounds about as confusing to the average voter as Sean Paul sounds to–well–me, but at least he speaks in a more rational and candid manner–something which I would rarely accuse the other candidates of doing.

John McCain also made some sense in the debate with regard for the potential recession (especially with regard to the loss of manufacturing jobs in Michigan, which has the next primary):

Well, the first thing we need to do is stop the out-of- control spending. Out-of-control spending is what caused the interest rates to rise. It causes people to be less able to afford to own their own homes.

We need to stop the spending. And that way we can get our budget under control and we can have a — basically a strong, fundamental fiscal underpinnings.

The second thing that we need to do, of course, is stop spending $400 billion a year overseas to oil-producing countries that come right out of our economy immediately. Some of that money goes, unfortunately, to fund terrorist organizations.

We’ve got to — and we can use Detroit for this, where there’s tremendous technology in the state of Michigan, and tremendous abilities to develop technologies to reduce this dependency on foreign oil, and eventually eliminate it, and stop this outflow of some $400 billion a year. Education and training is obviously important, but stop the spending. As president, I know how to do it. I’ll wield that veto pen, and I won’t let another pork-barrel earmark spending bill cross my desk without vetoing it. And I’ll make the authors of it famous.

It was generally a good statement because its theme was that spending more than you have is bad for the economy. Hence, hes giving an economic–not a political (i.e. “deficit” sounds bad, so lets stop it)–reason to tighten fiscal policy, and eliminate the deficit. He also deserves high marks for alluding to the price system and how more spending means less savings and higher interest rates.

His comment on foreign oil was not so good, however. His claim about the $400 billion spent on foreign oil does not compute. Even if we stopped spending that money on foreign oil altogether, we would still have an unfulfilled $400 billion dollar demand for energy. Where would we get it? Its not like “alternative” energies can provide us with nearly the same energy for the same cost.

Additionally, if we stop spending on Middle Eastern oil it wont really hurt those producer–at least, not nearly as much as it will hurt us economically. The oil market is a global market, and if we remove our demand from the marketplace, the price will immediately go down, but that will cause demand from elsewhere to rise and the price to rise, although not quite as high as original levels. The US on the other hand will be spending its energy dollars elsewhere, which will make non-MidEastern energy more expensive and, again, shift spending from the rest of the world back to Middle Eastern oil to off-set the imbalance.

Among the other candidates, there wasn’t much to write home about. Thompson and Giuliani, who have both proposed similar tax cuts, which they insisted would also raise revenue. This is not necessarily true as it is difficult to tell where we are on the Laffer Curve and how much it applies. Additionally, their saying that spending need not be cut reminds me of the Bush deficits.

Mitt Romney kind of surprises me. I see him posturing for public opinion on economic issues more than I hear him making sense–for instance, he was making an obvious appeal to MI voters on the recession question when he talked about how he “created jobs” as Governor. I expect more from such a successful executive and investor.

I have little evidence that Mike Huckabee speaks economics.

Lastly, the Wall Street Journal recently conducted a survey of economists regarding everything from the future of the economy to the presidential race.

when asked their personal preference, the economists favored Republicans. Sen. McCain led the field with 39% of the forecasters’ votes, compared with 11% for Mr. Giuliani and 7% for former Massachusetts Gov. Mitt Romney. Among Democrats, Sen. Obama edged Sen. Clinton, 14% to 11%, while former North Carolina Sen. John Edwards took 4%.

“People are looking for change,” said Susan Sterne of Economic Analysis.

Some 56% of the economists disapproved of President Bush’s stewardship of the economy, while 44% approved. That is especially startling considering 59% of the economists said the stock market performs better under Republican presidents, compared with 28% who said it favored Democrats. Most economists who disapproved of Mr. Bush cited an increase in government spending. Many praised the president’s tax cuts.

The economists polled, as I understand, were generally mainstream ones which is probably one reason why they tended towards mainstream candidates, especially moderate conservatives. McCain led the field by a lot, which suggests that he does sound good on economic issues as I suggested. Ron Paul apparently doesn’t register, which isn’t a surprise because he is so radical, but is disappointing nevertheless.

Popularity: 57% [?]

Congressman Ron Paul was not allowed to participate in last night’s GOP debate along side Giuliani, Thompson, Huckabee, Romney, and McCain.

This decision came from Fox News despite the fact that Paul has been polling at 8-10%, about even with Giuliani and far ahead of Fred Thompson.

I just don’t get it.

Popularity: 17% [?]

Ht: Barry Day for his comment on “Is Ron Paul Worthy?”

Ron Paul took the liberty to defend his earmarking binge thusly:

Because earmarks are funded from spending levels that have been determined before a single earmark is agreed to, with or without earmarks the spending levels remain the same. Eliminating earmarks designated by Members of Congress would simply transfer the funding decision process to federal bureaucrats rather then elected representatives.

…

The real problem, and one that was unfortunately not addressed in last week’s earmark dispute, is the size of the federal government and the amount of money we are spending in these appropriations bills. Even cutting a few thousand or even a million dollars from a multi-hundred billion dollar appropriation bill will not really shrink the size of government.

Dr. Paul is correct on his second point. The bigger problem is the size of the total budget–mainly entitlements–of which earmarks are a relatively small portion.

His first point, however, is wrong. While it is correct that funding is appropriated before they are earmarked, it is incorrect to suppose that more requests for funds does not contribute to the growth of government.

If fewer congressmen (like Dr. Paul) requested earmarks, and less money, on the whole, was spent on earmarks than was appropriated for them, that money would go idle. Consequently, it would go towards financing other parts of the federal budget, over $200 billion of which is unfunded this year. Therefore, by reducing earmarks we could reduce the federal deficit, which reduces the size of government by reducing the amount of money the government needs to borrow from the private sector.

Also, if fewer congressmen requested earmarks, that would lower the demand for discretionary spending. If that happened, the next year’s amount of funds appropriated for earmarks would be reduced because of the fall in demand. When basic supply and demand is applied to the earmarking process it shows that if Congressmen would restrain their corrupt urges to appease special interests through pork barreling, it would reduce the impetus for earmarking in the future.

Popularity: 60% [?]

Two opinion pieces today, one in the Wall Street Journal and one in the Dallas Morning News, shed some negative light on the libertarian Congressman.

First, a revelation from the WSJ editorial entitled “Ron Paul’s Earmarks” (just the title could strike fear into the heart of any Ron Paul admirer):

After reporters started asking questions, the Congressman disclosed his requests this year for about $400 million worth of federal funding for no fewer than 65 earmarks. They include such national wartime priorities as an $8 million request for the marketing of wild American shrimp and $2.3 to fund shrimp-fishing.

When we called Mr. Paul’s office for an explanation, his spokesperson offered up something worthy of pork legends Tom Delay or Senator Robert C. Byrd: “Reducing earmarks does not reduce government spending, and it does not prohibit spending upon those things that are earmarked,” the spokesperson said. “What people who push earmark reform are doing is they are particularly misleading the public–and I have to presume it’s not by accident.”

On the other hand, good libertarians should want to start cutting somewhere. The problem with earmarking is that each year the habit grows by leaps and bounds so that it now represents real money. It is also a gateway to political corruption–a la Duke Cunningham, and other Congressmen currently under investigation for trading favors for earmarks.

Mr. Paul is one of Congress’ better fiscal conservatives. So the fact that even he feel obliged to grab multiple earmarks is all the more reason to keep fighting for transparency in the earmark process, as well as for the line-item veto, which would give Presidents a chance to impose some spending discipline from outside Congress.

Mr. Paul’s defense is in vain. This does not change the fact that Mr. Paul’s request increases the demand for government appropriation of private funds. The $400 million in frivolous projects proposed by the Texas Congressman is money that is taken from private producers and out of the private market and does nothing more than further erode the private citizens’ economic liberty. 

While Congressman Paul still stands as most in favor of individual liberty on the domestic front among presidential candidates, this development is, at least, troubling. Keep in mind that $400 million is a lot of money, and the day that we all start saying that it is not a large sum, we know that the size of our government has gotten out of hand. If all 535 congressmen got $400 in earmarks for their own constituencies–like Dr. Paul desired–that would amount to a total of over $200 billion in earmarks. I wonder if the Congressman would be in favor of that?

The second editorial mention of Ron Paul was by Mark Davis of the Dallas Morning News:  

File all that under disturbing quirkiness. But it is the Ron Paul take on fighting terror that makes him unfit for even the briefest consideration for the presidency.

In the now-famous May 15 GOP debate in South Carolina, he stood out among the crowded field by blaming America for 9/11. “We’ve been over there,” he lectured. “We’ve been bombing Iraq for 10 years. … What would we say here if China was doing this in our country?”

That phony equivalency rises to the level of sheer moral idiocy, and it doesn’t stop there. Dr. Paul’s longstanding unfortunate tendency is to rope Jesus into his war objections. Today, the notion of going to war to actually prevent additional terrorism strikes him as antithetical to the concept of a “Prince of Peace.”

We should expect sixth-graders to recognize that peace is not the mere cessation of hostilities. Peace is what you get when the good guys win.

Joined by a host of Democrats who clearly do not view America as “the good guys,” Ron Paul has shown he is one of many otherwise respectable Americans wholly unworthy of the White House.

As I have said many times, I have plenty of problems with Dr. Paul’s foreign policy and I think that Davis lists some of them here in an entertaining manner. For one, the origin of hatred for America in the Islamic world is ideological and it goes far deeper than something as nominal as American foreign policy in the post-Cold War era. Try the fact that Islamist believe that God–through his prophet Mohammed–wants Muslims to wage a jihad against all cultures and peoples that do not conform all aspects of their lives to Islam.

The second troubling fact is that he uses–as Davis says–Jesus to justify his foreign policy. My question is, what major war in America’s history could General Christ have won?

Popularity: 75% [?]

There’s a great article today on Real Clear Politics illuminating Congressman Paul’s foreign policy both philisophically and in relation to the modern political landscape. Here’s a dosage:

Against such an overwhelming tide of grandiosity and hubris, it sounds farcical to suggest that non-interventionism will some day sway voters and find eventual electoral success. But it will.

First though, it’s important to distinguish non-interventionism from isolationism. The former seeks a more rigorous and delimited definition of America’s interests, while the latter a walled garden that completely cuts America off from the world. Non-interventionists are not pacifists, but they do reserve war fighting for moments of actual national peril. (Paul, for instance, voted to authorize war in Afghanistan in 2001.) They do not view the military as an instrument of social policy. If war is to be fought, non-interventionists demand a Congressional declaration of war to ensure that the conflict is one in which the nation’s resources are fully brought to bear. 

(The italics are mine.) If the standard for foreign policy is what will further America’s self interest–that being what will preserve the freedom and prosperity of the American people–a non-interventionalist foreign policy has a good amount of merit. Here are the basic reasons why:

-It ensures that America won’t entangle itself in costly foreign entanglements.

-It ensures that America won’t sacrifice its health or resources to other nation’s problems or interests, nor engage itself unless American interests are at stake.

-It ensures that America will not engage itself militarily unless the security of its freedom has been attacked or is under imminent threat.

-It ensures that America will not employ military force unless Congress declares war and both the legislative branch and the executive are resolved in doing so.

-It ensures that when America does go to war it does so swiftly and forcefully, for the sake of total destruction of the enemy; it ensures that war will not be fought half heartedly or with mercy, nor that we go to war for reasons relating to occupation or nation building. 

Perhaps I am projecting too positively on Ron Paul’s foreign policy, because it is worth pointing out that I believe that he has applied it poorly in several ways today. He is right to say that Iraq should not have been invaded, he is right to say that Iraq was managed poorly, he was right to say that we should have invaded Afghanistan.

However he is wrong to say that we largely created the threat, he is wrong to say that Iran should not be touched, and he is very wrong to advocate the just war theory. (The fact that he is for the feeble-fighting ways of the just war theory would probably show that Paul would dissent from the first half of my last point, that when we fight we should do “so swiftly and forcefully and for the sake of total destruction of the enemy).

So while Dr. Paul’s domestic policy is unequivocally good, I can find both good and bad in his foreign policy. 

It hurts to be ambiguous.  

Popularity: 51% [?]

Last Thursday, while at Boys Nation, myself and 97 fellow Senators had the privilege of meeting with one, if not both, of  our US Senators. Additionally we were also free to pursue appointments with any other congressman on the hill (whether or not we attained such an appointment was of course, a different issue). I, as well as some other Ron Paul enthusiasts attending Boys Nation with myself, were lucky enough that the great man himself was able to find time in his schedule to meet with us.

I must say that he was a very pleasant man and he asked how we attained interest in his campaign. He also took pictures with us individually and gave us all copies of a speech Davy Crockett made when he was in Congress (“Not Yours to Give”) as well as copies of the constitution, which he was nice enough to sign.

One of the lighter moments came when he was mentioned that if he was president that he’d advocate repealing the 16th amendment (income tax) and someone asked, “Then how would the government pay for things?”

Dr. Paul responded, “Well, there wouldn’t be much to pay for…”

Popularity: 27% [?]