State of the Union

The Corporate Myth of Free Trade

It’s a bit amazing in these days of burgeoning state control of the economy, but you still hear politicians–the same ones who foisted corporate-welfare stimulus and bailout plans on us–cursing protectionism and singing odes to free trade.

To be fair, many free-trade defenders these days are real laissez-faire types fighting to prevent yet another assault on economic liberty, but so many who rail against “protectionism rearing its ugly head” seem to believe in an odd distinction: the government can intervene internally in the economy, heightening regulations, mandates, and subsidies; but once we get to the borders, hands off.

But even that gives them too much credit. Many “free traders” support subsidies for our exporters. My column today in the Washington Examiner looks at lobbying records and legislative records, and analyzes this odd dynamic:

For instance, newly confirmed Commerce secretary Gary Locke, during his two terms as Washington State governor, was very close to Boeing and Microsoft. In 2003, he pushed through a $3.2 billion package of special tax breaks for Boeing. More to the point, he heads an agency that spends taxpayer dollars to support American companies. Nevertheless, Locke has long espoused “free trade.”…
Last November, weeks after bailing out Wall Street and while pushing a $34 billion bailout for U.S. automakers, President George W. Bush, signed an agreement with other world leaders proclaiming, “we underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty.”…
But this mindset—protectionism bad, corporate welfare good—is inconsistent only if you look at it from a principled mindset. If you look at it from a practical perspective—that government ought to help our biggest multinational corporations—it’s perfectly consistent.

But the businessmen, I find, are not duplicitous in this way. I called Cal Cohen, CEO of the Emergency Committee on American Trade, whose members include the CEOs of Boeing, GM, and Caterpillar, and asked him if there was an inconsistency between the free-trade talk employed against “protectionism” and the bailouts and subsidies these companies enjoy. His response was frank:

“ ‘Free trade’ is a theoretical construct. What we’re talking about is practical business transactions.”

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BBC Censors Hannan

The video of Dan Hannan verbally assaulting Gordon Brown at the European Parliament is still whistling around the Internet. Indeed, the clip is currently one of YouTube’s most popular posts (more than 700, 000 viewings in just over a day). And Fox News has even described Hannan, a Member of the European Parliament and a conservative journalist, as a possible future prime minister.

Not everyone admires Hannan, though, or agrees with him. Over on Eunomia, Daniel describes him as a “bit of a loon” for his views on Israel. Surely, though, nobody would deny that such a passionate, gloriously eloquent, and delightfully public attack on Brown was newsworthy? It has to be mass-media gold, hasn’t it?

Think again. The BBC completely ignored Hannan’s speech. Instead, Mark Mardell, the corporation’s European Editor, chose to show a clip of a German socialist paying Brown a compliment. Astonishing.

Mardell, after receiving a barrage of complaints, put up this rather testy post to explain his omission. He insists that he did not see Hannan’s speech. Fair enough, though his excuses for not later blogging about the story–and his reasons why the Beeb failed to mention it in other reports–are confusing and feeble to say the least.

Of course he couldn’t just admit that his organization is reflexively pro-EU, left-leaning, and hostile to right-wing views. The good news, however, as Hannan points out today, is that political editors and PR men can’t decide what makes the news anymore:

It’s all a bit unsettling for professional journalists and politicians. But it’s good news for libertarians of every stripe. Lefties have always relied on control, as much of information as of physical resources. Such control is no longer technically feasible.

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Her Country Right or Wrong

A headline in today’s Washington Post appeared to provide confirmation of the suspicion that the economic-political oligarchy that controls the United States might actually regard the country as its personal property.  It reads “On Mexico Trip, Clinton Criticizes US Drug Policy.  She Says Her Country Shares Blame for Violence.”

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Bibi, Barak and Barack

The Likud’s Binyamin (“Bibi”) Netanyahu is expected to form a coalition government in Israel which will include both the ultra-nationalist Israel Beiteinu led by Avigdor Lieberman and — a last minute surprise — the Labor party led by Ehud Barak. You can read about what all this means for U.S. foreign policy in my A Match Made in Tel Aviv: The Last Neocon the new issue of TAC I don’t think that the inclusion of Labor’s Barak will make a big difference as far as the main policy issues of Israel/Palestine and Iran. In fact, the coalition agreement did not contain any mention of the two-state solution as a goal for resolving the Israeli-Palestinian conflict. I also agree with Matthew Yglesias that the decision by Labor to join the coalition marks the beginning of the end of that political party.

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I Am (East Timorese) Woman, Hear Me Roar

Rushing in where even a quarter-century’s worth of genocidal Indonesians feared to tread, comes East Timor’s über-babe Amivi Gama–new President for Life, C-in-C of the Armed Forces, and High Court Chief Justice–whose smack of firm government has been subjected to a misogynistic media embargo, breached only, of course, by the ever-indispensable Onion:

East Timor’s First Female Dictator Hailed As Step Forward For Women

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I’ve resisted until now much of the recent punditry that has centered around whether President Obama has been expressing the necessary passion, outrage and empathy that one had hoped for or even expected from their president throughout such jarring domestic turmoil. Among the magpies perched on the wire of passion patrol is one Michael Wolff, who recently reduced Obama to a B-team Jimmy Carter, and worse, took a scalpel to Obama’s distinguishing if not primary asset — his ability to talk his way, articulately and intelligently, out of anything.

In fact, Wolff proclaims now, “the man can’t talk worth a damn.” Plus:

“He’s cold; he’s prickly; he’s uncomfortable; he’s not funny; and he’s getting awfully tedious.

He thinks it’s all about him. That we want him for himself—that he doesn’t have to seduce, charm, surprise, show some skin.”

I’m still not convinced of this ego-centric caricature, but one thing I could recognize for myself in tonight’s televised press conference: Obama was bland and uninspiring. Bloodless is the word that repeats in my head.  I do think he can still  “talk worth a damn,” though I’m sure many a magpie will say he was wonkish to a fault tonight. Nevertheless, his critics have long attempted to make the “detached” label stick, and I’m afraid it might finally work — if tonight was any forecast.

Obama lacked the guts and fire and energy that is in such ready supply today over the radio waves, on the editorial pages, town council meetings  — in the unemployment lines.  Glenn Beck was crying again all over his show last month and we are still unsure why. If Obama meant to come off soothing, he was nearer to tone-deaf. After a television interview two days ago where he was accused of being “punch drunk” for some seemingly inappropriate giggling, this could spell PR quicksand come tomorrow.

The thing is, he was given a swell chance, more than once, to project himself straight out, over the heads of the equally detached, annoyingly conventional echo chamber that is the Washington press corps and into our living rooms to convince us otherwise. The most opportune was when Chuck Todd of GE-owned NBC/MSNBC asked what the American people could do to sacrifice in these fierce economic times (it was the second such question by Todd in two press conferences in which he seemed to suggest — or wanted the President to suggest – that the onus of failure and recovery was on “the people”).

Obama didn’t fall for the bait, he said something to the effect that people were sacrificing their share already, and with absolutely no change in facial expression, threw out a couple of rather lame references to people working without pay so that co-workers wouldn’t be laid off, and cutting back to send kids to college. But really — three taps on the keyboard will get you much more devastating ammo than that.  Previously hard working people standing in line at unprecedented levels for emergency food assistance, waiting months for unemployment checks because of backlogs (this is happening in more and more states), not to mention forced  “worker furloughs,” being the new craze in cost cutting measures sweeping both the public and private sectors — if he wanted sacrifice, he could have rolled out more weepers than Irene Dunne during the Great Depression.

Acknowledging this, and showing he was at least a little perturbed, if not passionately resolved, would have been a good first step in inspiring the nation’s flagging confidence and staving off the “Wolffes.” Short of calling him a “zombie,” I’d say he was more of an automaton tonight, which is good if you’re a big fan of Data on Star Trek: The Next Generation. I’d say most of us prefer Captain Kirk, and there is a reason for that.

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The Weimar Way

“The best way to destroy the capitalist system is to debauch the currency,” said Lord Keynes.

Ben Bernanke disagrees. A student of the Depression, the Fed chair appears far more fearful of deflation — a vicious cycle of falling prices, debt defaults, home foreclosures and rising unemployment.

Deflation is what America underwent in the 1930s. A Fed-created bubble burst, causing margin calls to go out to stockholders, who ran to their banks that, besieged, collapsed, wiping out a third of our money. As Milton Friedman, who won a Nobel for his thesis that the Federal Reserve caused the Great Depression, told PBS in 2000:

“For every $100 in paper money, in deposits, in cash, in currency, in existence in 1929, by the time you got to 1933 there was only about $65, $66 left. And that extraordinary collapse in the banking system, with about a third of the banks failing … with millions of people having their savings essentially washed out, that decline was utterly unnecessary.

“(T)he Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were … urging them to do that. So it was … clearly a mistake of policy that led to the Great Depression.” Read More…

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Jaw, Jaw for Multi-lateral War, War

Follow this link for a video of John McCain speaking about Afghanistan to the Marshall Fund’s Brussels Forum on Saturday night.

It’s predictable stuff: Afghanistan is the vital battleground for human rights and democracy; we need more NATO/U.S. commitment; terrorists see negotiation as a sign weakness; we can only deal with the Taliban by winning; we mustn’t give in to “minimalist” temptations on foreign-policy.

What is odd is that, although McCain fulminates against the “minimalists,” it is hard to see who exactly these pesky less-war advocates are. You might find some on the blogosphere and elsewhere; but not, it seems, at the Brussels Forum.

Judging from the video clips, it looks as if all the power-shakers at this important conference agreed with a more-not-less strategy, including, emphatically, Richard Holbrooke, the Obama administration’s Special Representative for Afghanistan and Pakistan. McCain’s rousing now-is-not-the-moment-for-doubt rhetoric was merely playing to the gallery. In fact, that’s probably why he was invited as keynote speaker — to provide a little militarist backbone to an internationalist gathering of bureaucrats determined to up the blood stakes in and around the Hindu Kush. (Holbrooke was honest enough, in fact, to say that he didn’t know what “minimalist goals” meant.)

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Docile Oxen & Happy Peasants

Writing in The Weekly Standard, Blake Hurst notes continuing problems with Cuban agriculture and criticizes those he sees as its American proponents:

Yet today people hold up the Cuban food system as a model for the rest of the world.

Sustainable, largely organic, community-based, and healthy food production in post-Soviet Cuba is offered by critics of “industrial agriculture” as an example of the sort of system that we should aspire to in the United States.

I have read two of the books that Hurst mentions: Deep Economy by Bill McKibben and The End of Food by Paul Roberts. While both mention the way that Cuban agriculture changed to be come deindustrialized and somewhat more market oriented, neither fawn over it in the way the Hurst imagines.

Hurst’s mischaracterization of The End of Food is particularly absurd:

Paul Roberts is another writer who finds much to admire in Cuba. His book The End of Food (2008) is a paean to the banishing of the evil tractor and the awful fertilizer, the wonderful diversity, the docile oxen chewing their cud, the peasants happily hoeing as peasants ought to do.

Oddly, for a writer finding “much to admire in Cuba,” he only mentioned it on three pages. I reviewed the book for Chronicles last year and described it as,

a searing indictment not only of the dominant methods of food production, but, implicitly, of the political and media culture, which does a great job of reporting on flag pins and flip-flops but drops the ball when it comes to serious issues.

Roberts makes numerous claims about the American and international food system—none having anything to do with the “evil” of tractors— that Hurst doesn’t mention or dispute. Roberts’ just-the-facts-ma’am style leaves no room for docile oxen or happy peasants. I have no idea what book Hurst had hidden between the covers of The End of Food.

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Good for Congress

Though Michael is correct that the AIG bonuses pale next to the bailout itself, I’m inclined to applaud the House’s proposed 90 percent tax on the bonuses. Crucially, the legislature did not single out AIG: the tax applies to all companies that receive $5 billion or more in rescue money. Those are taxpayer dollars that these executives, many of whom are patently incompetent, are being given. The incentives created by the tax are all in the right direction: 1.) don’t continue to reward the bigwigs at AIG, Fannie, Freddie, etc.; 2.) don’t encourage talented people (if there are any) to stay with these zombie companies that already aren’t “viable” –it’s better that talented people go to companies that actually are viable; 3.) send a signal to other decrepit financial institutions that bailouts come with some personal pain (or at least deprivation of pleasure) for the receiver; and 4.) having already decided to pour billions upon billions of taxpayer dollars (or Chinese loans) down the sinkhole, at least refrain from adding insult to injury.

When news of the tax first broke it sounded like Congress was throwing the rule of law to the wind. But that’s not the case: punitive taxation for the recipients of taxpayer largesse neither amounts to a bill of attainder nor affronts the free market. It simply gives these dubious executives a whiff of what would have happened to them if Uncle Sam had not come riding to their rescue.

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