By Stephen Moore
With each passing week that the assault against global capitalism continues in Washington, I become more nostalgic for one missing voice: Milton Friedman's. No one could slice and dice the sophistry of government market interventions better than Milton, who died at the age of 94 in 2006. Imagine what the great economist would have to say about the U.S. Treasury owning and operating several car brands or managing the health-care industry. "Why not?" I can almost hear him ask cheerfully. "After all, they've done such a wonderful job delivering the mail."
I would rank Milton Friedman, next to Ronald Reagan, as the greatest apostle for freedom and free markets in the second half of the 20th century. I used to find great joy in visiting him and his wife and co-author, Rose, at their home in San Francisco. We'd have dinner at their favorite Chinese restaurant and chat about the latest silliness out of Washington.
I've been thinking a lot lately of one of my last conversations with Milton, who warned that "even though socialism is a discredited economic model and capitalism is raising living standards to new heights, the left intellectuals continue to push for bigger government everywhere I look." He predicted that people would be seduced by collectivist ideas again.
He was right. In the midst of this global depression, rotten ideas like trillion-dollar stimulus plans, nationalization of banks and confiscatory taxes on America's wealth producers are all the rage. Meanwhile, it is Milton Friedman and his principles of free trade, low tax rates and deregulation that are standing trial as the murderers of global prosperity.
When the University of Chicago wanted to create a $200 million Milton Friedman Institute last year, Sen. Bernie Sanders of Vermont, an avowed socialist and Chicago alum, fumed that "Friedman's ideology caused enormous damage to the American middle class and to working families here and around the world."
At academic conferences it has been open season on Friedman and his philosophy of limited government. Joseph Stiglitz, a Nobel Prize winner, says that Friedman's "Chicago School bears the blame for providing a seeming intellectual foundation" for the now presumably discredited "idea that markets are self-adjusting and the best role for government is to do nothing." University of Texas economist James Galbraith is even more dismissive: "The inability of Friedman's successors to say anything useful about what's happening in financial markets today means their influence is finished," he says. And pop author Naomi Klein says triumphantly: "What we are seeing with the crash on Wall Street . . . should be for Friedmanism what the fall of the Berlin Wall was for authoritarian communism: an indictment of ideology." One left-wing group is even distributing posters in Washington and other cities that proclaim: "Milton Friedman: Proud Father of Global Misery."
The myth that the stock-market collapse was due to a failure of Friedman's principles could hardly be more easily refuted. No one was more critical of the Bush spending and debt binge than Friedman. The massive run up in money and easy credit that facilitated the housing and credit bubbles was precisely the foolishness that Friedman spent a lifetime warning against.
A few scholars are now properly celebrating the Friedman legacy. Andrei Shleifer, a Harvard economics professor, has just published a tribute to Friedman in the Journal of Economic Literature. He describes the period 1980-2005 as "The Age of Milton Friedman," an era that "witnessed remarkable progress of mankind. As the world embraced free market policies, living standards rose sharply while life expectancy, educational attainment, and democracy improved and absolute poverty declined."
So the Bernie Sanders crowd has things exactly backward: Milton's ideas on capitalism and freedom did more to liberate humankind from poverty than the New Deal, Great Society and Obama economic stimulus plans stacked on top of each other.
At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: "You don't understand. This is a jobs program." To which Milton replied: "Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels."
But in the energy industry today we are trading in shovels for spoons. The Obama administration wants to power our society by spending three or four times more money to generate electricity using solar and wind power than it would cost to use coal or natural gas. The president says that this initiative will create "green jobs."
Milton knew how to create real wealth-producing jobs. Once, when he visited India in the early 1960s, John Kenneth Galbraith, the U.S. ambassador, welcomed him by only half-joking, "I can think of no place where your free-market ideas can do less harm than in India." Talk about irony. India has adopted much of the Friedman free-market model and has moved nearly 200 million people out of destitution and despair.
I recently phoned Rose Friedman and asked her what she thought about the attacks on her husband. She was mostly dismayed at how far off-course our country has veered under President Obama. "Is this the death of Milton's ideas?" I hesitantly asked. "Oh no," she replied, "But it is the death of common sense."
Mr. Moore is senior economics writer for the Wall Street Journal editorial page
Friday, May 29, 2009
Thursday, May 28, 2009
Waxman-Markey
By now, you've probably heard of the Waxman-Markey bill, technically called the "American Clean Energy and Security Act," H. R. 2454. You've heard several sources, including this newsletter, rant on how terrible/hazardous/unnecessary the 946 page piece of prospective legislation is. But I've never seen the disastrous consequences of this legislation outlines so clearly and thoroughly as in this article by Myron Ebell, succinctly titled, "The Biggest Tax Increase in World History."
If enacted, H. R. 2454 would be the biggest government takeover of the economy since the Second World War, which is the last time energy, food, and other basic commodities were rationed. It would also be the biggest tax increase in the history of the world and would cause a colossal transfer of wealth from consumers to big businesses.
The ostensible purpose of Waxman-Markey is to contain global warming by reducing carbon dioxide and other greenhouse gas emissions. The cap-and-trade scheme at the heart of the bill would do this by limiting severely the amount of energy derived from the three carbon-dioxide producing fuels -- coal, oil, and natural gas -- Americans would be allowed to use. Currently, over 80% of U. S. energy comes from these three fuels simply because they are the least expensive fuels available. Waxman-Markey would require cutting emissions by 17 percent below a 2005 baseline by 2020, 42 percent by 2030, and 83 percent by 2050...
How far might energy prices rise under Waxman-Markey? It's hard to tell, but it's clear that committee Democrats think it may require more than doubling electric rates and gasoline above five dollars a gallon. President Obama agrees. When Obama was running for President, he told the San Francisco Chronicle on January 17, 2008, "Under my plan of a cap-and-trade system, electricity prices would necessarily skyrocket."
The same week, former president Bill Clinton was in Spain talking about green jobs. What did he say? Planet Gore translates:
Former US President turned ecologist Bill Clinton is aware of the impact on employment by the development on renewable energy. Even though he is, as a former dweller of the White House, one of the most visible supporters in that industry, the US Democrat recognized yesterday that clean energies "have cost many jobs" in Spain.
Though without citing it directly, Clinton was acknowledging yesterday during his conference in Madrid that the study about the impact of public support on renewable energies, released by Universidad Rey Juan Carlos, has very valid conclusions. That report, which has received enormous coverage in US media and been used against Barack Obama's energy policy, argues that every job in renewable energies created in Spain in the year 2000 has cost 571138 Euros and has been the cause of the loss of 2.2 jobs elsewhere in the economy.
Bill Clinton recognized yesterday that "this commitment to clean energy has cost many jobs" while at the same time calling for Spain to intensify investment in this industry to be able to turn high costs into new jobs.
So, the Green Agenda consists of a dramatic rise in unemployment, coupled with the biggest tax increase in world history.
Good to know.
If enacted, H. R. 2454 would be the biggest government takeover of the economy since the Second World War, which is the last time energy, food, and other basic commodities were rationed. It would also be the biggest tax increase in the history of the world and would cause a colossal transfer of wealth from consumers to big businesses.
The ostensible purpose of Waxman-Markey is to contain global warming by reducing carbon dioxide and other greenhouse gas emissions. The cap-and-trade scheme at the heart of the bill would do this by limiting severely the amount of energy derived from the three carbon-dioxide producing fuels -- coal, oil, and natural gas -- Americans would be allowed to use. Currently, over 80% of U. S. energy comes from these three fuels simply because they are the least expensive fuels available. Waxman-Markey would require cutting emissions by 17 percent below a 2005 baseline by 2020, 42 percent by 2030, and 83 percent by 2050...
How far might energy prices rise under Waxman-Markey? It's hard to tell, but it's clear that committee Democrats think it may require more than doubling electric rates and gasoline above five dollars a gallon. President Obama agrees. When Obama was running for President, he told the San Francisco Chronicle on January 17, 2008, "Under my plan of a cap-and-trade system, electricity prices would necessarily skyrocket."
The same week, former president Bill Clinton was in Spain talking about green jobs. What did he say? Planet Gore translates:
Former US President turned ecologist Bill Clinton is aware of the impact on employment by the development on renewable energy. Even though he is, as a former dweller of the White House, one of the most visible supporters in that industry, the US Democrat recognized yesterday that clean energies "have cost many jobs" in Spain.
Though without citing it directly, Clinton was acknowledging yesterday during his conference in Madrid that the study about the impact of public support on renewable energies, released by Universidad Rey Juan Carlos, has very valid conclusions. That report, which has received enormous coverage in US media and been used against Barack Obama's energy policy, argues that every job in renewable energies created in Spain in the year 2000 has cost 571138 Euros and has been the cause of the loss of 2.2 jobs elsewhere in the economy.
Bill Clinton recognized yesterday that "this commitment to clean energy has cost many jobs" while at the same time calling for Spain to intensify investment in this industry to be able to turn high costs into new jobs.
So, the Green Agenda consists of a dramatic rise in unemployment, coupled with the biggest tax increase in world history.
Good to know.
Sunday, May 24, 2009
Henry Waxman
Here is Henry Waxman. He is the supposed co-author of a bill that will create such an over-reaching of the government into the liberties of it citizens but he has no idea what's in his own bill. This is the epitome of where of government is today. Puppets with their strings being pulled by others.
Thursday, May 14, 2009
Tincture of Lawlessness
By George F. Will (link)
Thursday, May 14, 2009
Anyone, said T.S. Eliot, could carve a goose, were it not for the bones. And anyone could govern as boldly as his whims decreed, were it not for the skeletal structure that keeps civil society civil -- the rule of law. The Obama administration is bold. It also is careless regarding constitutional values and is acquiring a tincture of lawlessness.
In February, California's Democratic-controlled Legislature, faced with a $42 billion budget deficit, trimmed $74 million (1.4 percent) from one of the state's fastest-growing programs, which provides care for low-income and incapacitated elderly people and which cost the state $5.42 billion last year. The Los Angeles Times reports that "loose oversight and bureaucratic inertia have allowed fraud to fester."
But the Service Employees International Union collects nearly $5 million a month from 223,000 caregivers who are members. And the Obama administration has told California that unless the $74 million in cuts are rescinded, it will deny the state $6.8 billion in stimulus money.
Such a federal ukase (the word derives from czarist Russia; how appropriate) to a state legislature is a sign of the administration's dependency agenda -- maximizing the number of people and institutions dependent on the federal government. For the first time, neither sales nor property nor income taxes are the largest source of money for state and local governments. The federal government is.
The SEIU says the cuts violate contracts negotiated with counties. California officials say the state required the contracts to contain clauses allowing pay to be reduced if state funding is.
Anyway, the Obama administration, judging by its cavalier disregard of contracts between Chrysler and some of the lenders it sought money from, thinks contracts are written on water. The administration proposes that Chrysler's secured creditors get 28 cents per dollar on the $7 billion owed to them but that the United Auto Workers union get 43 cents per dollar on its $11 billion in claims -- and 55 percent of the company. This, even though the secured creditors' contracts supposedly guaranteed them better standing than the union.
Among Chrysler's lenders, some servile banks that are now dependent on the administration for capital infusions tugged their forelocks and agreed. Some hedge funds among Chrysler's lenders that are not dependent were vilified by the president because they dared to resist his demand that they violate their fiduciary duties to their investors, who include individuals and institutional pension funds.
The Economist says the administration has "ridden roughshod over [creditors'] legitimate claims over the [automobile companies'] assets. . . . Bankruptcies involve dividing a shrunken pie. But not all claims are equal: some lenders provide cheaper funds to firms in return for a more secure claim over the assets should things go wrong. They rank above other stakeholders, including shareholders and employees. This principle is now being trashed." Tom Lauria, a lawyer representing hedge fund people trashed by the president as the cause of Chrysler's bankruptcy, asked that his clients' names not be published for fear of violence threatened in e-mails to them.
The Troubled Assets Relief Program, which has not yet been used for its supposed purpose (to purchase such assets from banks), has been the instrument of the administration's adventure in the automobile industry. TARP's $700 billion, like much of the supposed "stimulus" money, is a slush fund the executive branch can use as it pleases. This is as lawless as it would be for Congress to say to the IRS: We need $3.5 trillion to run the government next year, so raise it however you wish -- from whomever, at whatever rates you think suitable. Don't bother us with details.
This is not gross, unambiguous lawlessness of the Nixonian sort -- burglaries, abuse of the IRS and FBI, etc. -- but it is uncomfortably close to an abuse of power that perhaps gave Nixon ideas: When in 1962 the steel industry raised prices, President John F. Kennedy had a tantrum and his administration leaked rumors that the IRS would conduct audits of steel executives, and sent FBI agents on predawn visits to the homes of journalists who covered the steel industry, ostensibly to further a legitimate investigation.
The Obama administration's agenda of maximizing dependency involves political favoritism cloaked in the raiment of "economic planning" and "social justice" that somehow produce results superior to what markets produce when freedom allows merit to manifest itself, and incompetence to fail. The administration's central activity -- the political allocation of wealth and opportunity -- is not merely susceptible to corruption, it is corruption.
Thursday, May 14, 2009
Anyone, said T.S. Eliot, could carve a goose, were it not for the bones. And anyone could govern as boldly as his whims decreed, were it not for the skeletal structure that keeps civil society civil -- the rule of law. The Obama administration is bold. It also is careless regarding constitutional values and is acquiring a tincture of lawlessness.
In February, California's Democratic-controlled Legislature, faced with a $42 billion budget deficit, trimmed $74 million (1.4 percent) from one of the state's fastest-growing programs, which provides care for low-income and incapacitated elderly people and which cost the state $5.42 billion last year. The Los Angeles Times reports that "loose oversight and bureaucratic inertia have allowed fraud to fester."
But the Service Employees International Union collects nearly $5 million a month from 223,000 caregivers who are members. And the Obama administration has told California that unless the $74 million in cuts are rescinded, it will deny the state $6.8 billion in stimulus money.
Such a federal ukase (the word derives from czarist Russia; how appropriate) to a state legislature is a sign of the administration's dependency agenda -- maximizing the number of people and institutions dependent on the federal government. For the first time, neither sales nor property nor income taxes are the largest source of money for state and local governments. The federal government is.
The SEIU says the cuts violate contracts negotiated with counties. California officials say the state required the contracts to contain clauses allowing pay to be reduced if state funding is.
Anyway, the Obama administration, judging by its cavalier disregard of contracts between Chrysler and some of the lenders it sought money from, thinks contracts are written on water. The administration proposes that Chrysler's secured creditors get 28 cents per dollar on the $7 billion owed to them but that the United Auto Workers union get 43 cents per dollar on its $11 billion in claims -- and 55 percent of the company. This, even though the secured creditors' contracts supposedly guaranteed them better standing than the union.
Among Chrysler's lenders, some servile banks that are now dependent on the administration for capital infusions tugged their forelocks and agreed. Some hedge funds among Chrysler's lenders that are not dependent were vilified by the president because they dared to resist his demand that they violate their fiduciary duties to their investors, who include individuals and institutional pension funds.
The Economist says the administration has "ridden roughshod over [creditors'] legitimate claims over the [automobile companies'] assets. . . . Bankruptcies involve dividing a shrunken pie. But not all claims are equal: some lenders provide cheaper funds to firms in return for a more secure claim over the assets should things go wrong. They rank above other stakeholders, including shareholders and employees. This principle is now being trashed." Tom Lauria, a lawyer representing hedge fund people trashed by the president as the cause of Chrysler's bankruptcy, asked that his clients' names not be published for fear of violence threatened in e-mails to them.
The Troubled Assets Relief Program, which has not yet been used for its supposed purpose (to purchase such assets from banks), has been the instrument of the administration's adventure in the automobile industry. TARP's $700 billion, like much of the supposed "stimulus" money, is a slush fund the executive branch can use as it pleases. This is as lawless as it would be for Congress to say to the IRS: We need $3.5 trillion to run the government next year, so raise it however you wish -- from whomever, at whatever rates you think suitable. Don't bother us with details.
This is not gross, unambiguous lawlessness of the Nixonian sort -- burglaries, abuse of the IRS and FBI, etc. -- but it is uncomfortably close to an abuse of power that perhaps gave Nixon ideas: When in 1962 the steel industry raised prices, President John F. Kennedy had a tantrum and his administration leaked rumors that the IRS would conduct audits of steel executives, and sent FBI agents on predawn visits to the homes of journalists who covered the steel industry, ostensibly to further a legitimate investigation.
The Obama administration's agenda of maximizing dependency involves political favoritism cloaked in the raiment of "economic planning" and "social justice" that somehow produce results superior to what markets produce when freedom allows merit to manifest itself, and incompetence to fail. The administration's central activity -- the political allocation of wealth and opportunity -- is not merely susceptible to corruption, it is corruption.
Tuesday, May 5, 2009
Sun Oddly Quiet -- Hints at Next "Little Ice Age"?
Here is a very interesting article on the sun spot activity. Towards the end there is a very important quote.
"In general, recent research has been building a case that the sun has a slightly bigger influence on Earth's climate than most theories have predicted."
Anne Minard(link)
for National Geographic News
May 4, 2009
A prolonged lull in solar activity has astrophysicists glued to their telescopes waiting to see what the sun will do next—and how Earth's climate might respond.
The sun is the least active it's been in decades and the dimmest in a hundred years. The lull is causing some scientists to recall the Little Ice Age, an unusual cold spell in Europe and North America, which lasted from about 1300 to 1850.
The coldest period of the Little Ice Age, between 1645 and 1715, has been linked to a deep dip in solar storms known as the Maunder Minimum.
During that time, access to Greenland was largely cut off by ice, and canals in Holland routinely froze solid. Glaciers in the Alps engulfed whole villages, and sea ice increased so much that no open water flowed around Iceland in the year 1695.
But researchers are on guard against their concerns about a new cold snap being misinterpreted.
"[Global warming] skeptics tend to leap forward," said Mike Lockwood, a solar terrestrial physicist at the University of Southampton in the U.K.
He and other researchers are therefore engaged in what they call "preemptive denial" of a solar minimum leading to global cooling.
Even if the current solar lull is the beginning of a prolonged quiet, the scientists say, the star's effects on climate will pale in contrast with the influence of human-made greenhouse gases such as carbon dioxide (CO2).
"I think you have to bear in mind that the CO2 is a good 50 to 60 percent higher than normal, whereas the decline in solar output is a few hundredths of one percent down," Lockwood said. "I think that helps keep it in perspective."
Local Cooling
For hundreds of years scientists have used the number of observable sunspots to trace the sun's roughly 11-year cycles of activity.
Sunspots, which can be visible without a telescope, are dark regions that indicate intense magnetic activity on the sun's surface. Such solar storms send bursts of charged particles hurtling toward Earth that can spark auroras, disrupt satellites, and even knock out electrical grids.
In the current cycle, 2008 was supposed to have been the low point, and this year the sunspot numbers should have begun to climb.
But of the first 90 days of 2009, 78 have been sunspot free. Researchers also say the sun is the dimmest it's been in a hundred years.
The Maunder Minimum corresponded to a profound lull in sunspots—astronomers at the time recorded just 50 in a 30-year period.
If the sun again sinks into a similar depression, at least one preliminary model has suggested that cool spots could crop up in regions of Europe, the United States, and Siberia.
During the previous event, though, many parts of the world were not affected at all, said Jeffrey Hall, an astronomer and associate director at Lowell Observatory in Flagstaff, Arizona.
"Even a grand minimum like that was not having a global effect," he said.
Wild Cards and Uncertainties
Changes in the sun's activity can affect Earth in other ways, too.
For example, ultraviolet (UV) light from the sun is not bottoming out the same way it did during the past few visual minima.
"The visible light doesn't vary that much, but UV varies 20 percent, [and] x-rays can vary by a factor of ten," Hall said. "What we don't understand so well is the impact of that differing spectral irradiance."
Solar UV light, for example, affects mostly the upper layers of Earth's atmosphere, where the effects are not as noticeable to humans. But some researchers suspect those effects could trickle down into the lower layers, where weather happens.
In general, recent research has been building a case that the sun has a slightly bigger influence on Earth's climate than most theories have predicted.
Atmospheric wild cards, such as UV radiation, could be part of the explanation, said the University of Southampton's Lockwood.
In the meantime, he and other experts caution against relying on future solar lulls to help mitigate global warming.
"There are many uncertainties," said Jose Abreu, a doctoral candidate at the Swiss government's research institute Eawag.
"We don't know the sensitivity of the climate to changes in solar intensity. In my opinion, I wouldn't play with things I don't know."
"In general, recent research has been building a case that the sun has a slightly bigger influence on Earth's climate than most theories have predicted."
Anne Minard(link)
for National Geographic News
May 4, 2009
A prolonged lull in solar activity has astrophysicists glued to their telescopes waiting to see what the sun will do next—and how Earth's climate might respond.
The sun is the least active it's been in decades and the dimmest in a hundred years. The lull is causing some scientists to recall the Little Ice Age, an unusual cold spell in Europe and North America, which lasted from about 1300 to 1850.
The coldest period of the Little Ice Age, between 1645 and 1715, has been linked to a deep dip in solar storms known as the Maunder Minimum.
During that time, access to Greenland was largely cut off by ice, and canals in Holland routinely froze solid. Glaciers in the Alps engulfed whole villages, and sea ice increased so much that no open water flowed around Iceland in the year 1695.
But researchers are on guard against their concerns about a new cold snap being misinterpreted.
"[Global warming] skeptics tend to leap forward," said Mike Lockwood, a solar terrestrial physicist at the University of Southampton in the U.K.
He and other researchers are therefore engaged in what they call "preemptive denial" of a solar minimum leading to global cooling.
Even if the current solar lull is the beginning of a prolonged quiet, the scientists say, the star's effects on climate will pale in contrast with the influence of human-made greenhouse gases such as carbon dioxide (CO2).
"I think you have to bear in mind that the CO2 is a good 50 to 60 percent higher than normal, whereas the decline in solar output is a few hundredths of one percent down," Lockwood said. "I think that helps keep it in perspective."
Local Cooling
For hundreds of years scientists have used the number of observable sunspots to trace the sun's roughly 11-year cycles of activity.
Sunspots, which can be visible without a telescope, are dark regions that indicate intense magnetic activity on the sun's surface. Such solar storms send bursts of charged particles hurtling toward Earth that can spark auroras, disrupt satellites, and even knock out electrical grids.
In the current cycle, 2008 was supposed to have been the low point, and this year the sunspot numbers should have begun to climb.
But of the first 90 days of 2009, 78 have been sunspot free. Researchers also say the sun is the dimmest it's been in a hundred years.
The Maunder Minimum corresponded to a profound lull in sunspots—astronomers at the time recorded just 50 in a 30-year period.
If the sun again sinks into a similar depression, at least one preliminary model has suggested that cool spots could crop up in regions of Europe, the United States, and Siberia.
During the previous event, though, many parts of the world were not affected at all, said Jeffrey Hall, an astronomer and associate director at Lowell Observatory in Flagstaff, Arizona.
"Even a grand minimum like that was not having a global effect," he said.
Wild Cards and Uncertainties
Changes in the sun's activity can affect Earth in other ways, too.
For example, ultraviolet (UV) light from the sun is not bottoming out the same way it did during the past few visual minima.
"The visible light doesn't vary that much, but UV varies 20 percent, [and] x-rays can vary by a factor of ten," Hall said. "What we don't understand so well is the impact of that differing spectral irradiance."
Solar UV light, for example, affects mostly the upper layers of Earth's atmosphere, where the effects are not as noticeable to humans. But some researchers suspect those effects could trickle down into the lower layers, where weather happens.
In general, recent research has been building a case that the sun has a slightly bigger influence on Earth's climate than most theories have predicted.
Atmospheric wild cards, such as UV radiation, could be part of the explanation, said the University of Southampton's Lockwood.
In the meantime, he and other experts caution against relying on future solar lulls to help mitigate global warming.
"There are many uncertainties," said Jose Abreu, a doctoral candidate at the Swiss government's research institute Eawag.
"We don't know the sensitivity of the climate to changes in solar intensity. In my opinion, I wouldn't play with things I don't know."
Saturday, May 2, 2009
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