Uh Oh a Trump Administration Might Botch a Middle Eastern Invasion
Tyler Cowen linked to this (unintentionally?) hilarious Politico story:
Top Republican political leaders aren’t the only ones shunning their party’s presidential nominee — a vast number of highly skilled managers and policy experts, veterans of recent GOP administrations who would normally be expected to fill key positions for a new White House, are also vowing to sit out a Donald Trump presidency.
…[T]he absence of policy veterans in a new administration would have a substantive effect on the running of government.
POLITICO interviewed nearly five dozen Republicans over the past two weeks — people with experience working in government and who understand how Congress can enact, or shred, a new president’s agenda — and heard the same sentiment expressed repeatedly….
“I would never serve in a Trump administration,” said James Capretta, a former Office of Management and Budget official under George W. Bush. “The person at the top is unfit for the presidency. He’s made that very clear with his behavior.”
Added Matt McDonald, another Bush OMB veteran: “I wouldn’t vote for Trump, much less work for him. I don’t agree with half his ideas, and the other half I don’t really believe what he said.”
One former Republican official who worked in the Environmental Protection Agency put it this way: “You’d have to worry about your future career and the way you’re perceived in these things. You just kind of think of how he deals with people. Would you really want to work for him?”
Remember, the George W. Bush administration didn’t just involve invading another country on the basis of incompetence and/or lies. It also involved:
==> A doubling of the federal debt held by the public (adding some $3.4 trillion over 8 years),
==> “No Child Left Behind” (big increase in federal involvement in local schools) and Medicare Part D (arguably biggest expansion in welfare state since LBJ), which is estimated to cost some half a trillion dollars over its first ten years,
==> The Energy Independence and Security Act of 2007, which increased auto mileage requirements and jacked up the ridiculous biofuels requirements (which you have probably heard described as the “ethanol mandate”).
==> The creation of the TSA.
==> The Sarbanes-Oxley Act of 2002, which President Bush explained when signing that it was “the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt. The era of low standards and false profits is over; no boardroom in America is above or beyond the law.” (So just to be clear, this is the reason there have been no false reports of profits on Wall Street since 2002.)
==> Oh and let’s not forget, (partially) nationalizing banks.
You can see why “true conservatives” should be alarmed that the experts in implementing the above policies have their principles and won’t play ball with Donald Trump.
STANDARD DISCLAIMER: I don’t like Donald Trump and think he will be an awful president if elected.
It’s Up to Scott Sumner to Save My Reputation
(Before I jump into the blog post, here is the latest Contra Krugman episode.)
On a previous post I pointed out the irony that progressives are flipping out about Trump’s remarks on a Treasury default, when back in 2012 Krugman et al. were scratching their heads trying to even come up with a model in which an attack from the “invisible bond vigilantes” could possibly hurt the U.S. economy (e.g. here).
Now perhaps I should have clarified: Obviously Krugman and Matt Yglesias right now are NOT endorsing Trump’s ideas; they’re saying he’s a nutjob who would wreck the world economy (or at least Yglesias has explicitly said that).
My point is that these claims do not fit with their rosy assessment back in 2012 of an attack from investors who were worried about the huge debt Obama was piling up. Back then, they couldn’t even imagine a scenario in which that would hurt the U.S. economy.
Major Freedom found even better examples of what I’m talking about. Krugman back in 2012 endorsing this analysis from Yglesias (the following words are Yglesias):
Suppose investors do start dumping treasury bonds and interest rates rise. Where does the money go?
Well it could go into private domestic investments, which would boost the economy. Or it go into foreign financial assets, which would reduce the value of the dollar and boost the economy by bolstering exporting and import-competing firms. Higher interest rates have historically caused recessions because the Federal Reserve wasdeliberately using high interest rates as a tool for inducing recessions because they thought higher unemployment would quash worker demands for higher wages and keep inflation under control. An exogenous reduction in the global investment community’s inclination to hold treasury bonds could reduce American doctors’ ability to take that trip to Paris they’ve been dreaming of this spring, but couldn’t induce a recession.
Now in the comments from my recent post, Scott Sumner was incredulous. He said he couldn’t even see why I thought these two trains of thought had anything to do with each other.
Really? Scott, talk me down from the ledge and spare me public humiliation. I’m thinking someone who wrote the above paragraph can’t plausibly now claim that Trump’s careless talk about a Treasury default would wreck the economy, without at least a nod to the above forces that were so benign back in 2012 when the issue was Obama’s trillion-dollar deficits.
Absent a compelling explanation from Scott or someone else, I’m going to town with this.
Hayek Would Be 117 Years Young (Yesterday)
My article in the American Thinker. An excerpt:
This emphasis on dispersed knowledge was one of Hayek’s key contributions to the debate over socialism during the 1930s. Specifically, Hayek argued that one of the key functions of private property and market prices was to allow individuals to communicate information to each other in an economical manner. For example, if a tin mine collapses, then everyone around the world needs to cut back on their usage of tin. Some speculators will hear about the collapse and will push up the price of tin, hoping to profit from their knowledge. It is the rise in price that induces all consumers of tin to consider alternatives; they don’t need to know why tin is scarcer, they just need to know that it is.
Yet without the communication network provided by free market prices, socialist planners could not effectively mobilize the dispersed knowledge held by millions of citizens in their country. There would be no practical way to transmit the localized “knowledge of time and place” from various farmers, factory operators, truck drivers, retail outlet managers, and so on, up through the chain of command, so that the central planners could draw up an efficient use of resources. The socialist economists who thought otherwise were relying on unrealistic mathematical models of the economy which completely ignored the true economic problem, because they assumed all of the relevant information was “given” to the central planner.
Short and Sweet on Salvation
The kind of person who gets to spend eternity with God is one who knows he doesn’t deserve to be there.
Trump on Debt Default
So people are freaking out about Trump’s remarks concerning Treasury debt default. (E.g. Yglesias and Sumner.)
My initial response (on Twitter) was to contrast the freaking out with free-market economists who had favored debt repudiation as a sound (and moral) strategy.
But then I went and dug up Paul Krugman’s posts (one and two) from 2012, when he said that:
(A) The right wingers warning about big deficits leading to fears of default were wrong, but
(B) Even if the “bond vigilantes” did attack, it would be good for countries like Japan and the US, which have independent fiat currencies and not a lot of foreign-denominated debt.
Naturally, Krugman’s fans on Twitter denounced my dishonesty for claiming that was his position.
The whole thing is funny. I am partly guilty here too, to be sure, but I think when person X suggests “a Treasury default might be a good idea,” people’s reactions depend on who person X is.
Now note that this is not completely due to tribalism. I think it’s fair to say that Rothbard is pointing out an aspect of Treasury default that is admirable, whereas Krugman’s argument (namely, that it would depreciate the currency when the central bank is incapable of doing so, because of liquidity trap) relies on Keynesian nonsense.
Discuss.
What Would History Look Like to Prove the Scaremongers Right?
David R. Henderson links to a 2009 Freeman article from Todd Zywicki that has the following:
The headlines are alarming. The New York Times panicked that Americans are “Running in Debt” and just a few years later warned that Americans were “Borrowing Trouble.” Business Week asked, “Is the Country Swamped with Debt?” and U.S. News and World Report worried that “Never Have So Many Owed So Much.” Harper’s even expressed fear that “Debt Threatens Democracy.”
A labor leader bemoaned the improvidence of America’s consumers: “Has not the middle class its poverty? Very few among them are saving money. Many of them are in debt; and all they can earn for years, is, in many cases, mortgaged to pay such debt.”
An academic report concluded that consumers’ promiscuous borrowing has “‘lured thousands to ruin’ encouraging people to buy what they could not pay for and making debt ‘the curse of countless families.'” And not merely the poor and improvident were lured into ruin, but upstanding middle-class families as well, as they engaged in a heated rivalry of conspicuous consumption with their neighbors.
An indictment of our times? Not exactly. The first headline from The New York Times, as well as the labor leader’s concerns, were both from 1873, and the latter Times headline from 1877. The academic report appeared in 1899 and criticized the availability of installment credit, or the practice of buying consumer goods “on time.” Thorstein Veblen voiced his concerns about “conspicuous consumption” and Americans’ willingness to go into hock to fund it in 1899. The Business Week and U.S. News and World Report headlines ran in 1959. And Harper’s fretted that “Debt Threatens Democracy” in 1940.
OK fair enough. We get the point.
Or do we? Consider the NYT article warning that Americans were “Running in Debt.” When Zywicki tells us it was from 1873, rather than last Tuesday, he clearly wants us to go, “Oh! Ha ha, what a relief. People have been wringing their hands over debt for more than a century. We can calm down and tune out today’s Chicken Littles.”
But there’s this historical event called the Panic of 1873. Here’s the Wikipedia article:
The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879, and even longer in some countries. In Britain, for example, it started two decades of stagnation known as the “Long Depression” that weakened the country’s economic leadership.[1] The Panic was known as the “Great Depression” until the events in the early 1930s set a new precedent.
So, what would have had to happen, for the 1873 NYT article to be considered prescient? They experienced what was the worst economic crisis in U.S. history to that point, at least according to some historians. (I think there has been revisionism on this point, but you get the gist of what I’m saying I hope.)
Or what about the Harper’s piece fretting about democracy in 1940? Was the world in general, or the U.S. in particular, swimming in a great civilian economy with all sorts of political liberty, from 1940 onward? Or, on the contrary, was that arguably the worst decline–both in civilian lifestyle and civil liberties–that Americans had experienced since the Civil War?
It would not surprise me in the slightest if people were worried about a housing bubble in the year 2050, and then someone dug up a transcript of Peter Schiff from 2006 in order to convince people in 2050 that they had nothing to worry about. Ha! People have been warning about housing collapses for decades!
NOTE: Don’t misunderstand me; I only skimmed it, but I probably agree with the spirit of Zywicki’s article. And of course, I don’t think it was consumer debt in 1940 that led to the misery that followed.
My simple point is that it’s weird to point to at least two warnings that, on the surface, came true, as proof that today’s warnings are misguided.
You see this in other areas too. For example, Keynesians love to make fun of government officials who said going off gold in the early 1930s was “the end of Western civilization.” Well, wasn’t it? We only have correlation, not causation, to be sure, but Western civilization certainly took a beating in the 1930s and 1940s.
Or what about the people who laugh at the fuddy duddies warning about Elvis shaking his hips on TV and the sexual revolution? Do you think those people would come to our world, and see virtually naked women beamed into our faces in every retail outlet, including the checkout lines at grocery stores, and conclude, “Huh, I guess we overreacted” ?
Alternative Currency Talk
I gave this at the LP Texas state convention about a month ago.
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