the politics of fear

there are countless historical examples wherein the governing regime demands cooperation from the people “for their own good”. alex gourevitch addresses the politics of fear in a recent article in n+1, arguing that compliance in the name of the war on terror has now been replaced with compliance based on the war for the environment. he says, “environmentalism is one of the few movements on the left that presents itself in the same totalizing political terms that the war on terror does on the right, and its influence only seems to grow as the war on terror’s influence declines” (n+1).

furthermore,

The global warming argument can be as morally coercive as the infamous ticking time-bomb torture scenario, even if the clock ticks slower. It’s not just that we should unite; we are, as Gore puts it, “forced by circumstance” to act. In the face of real political opportunities, there is always an element of freedom. One chooses between two alternatives, picks a principle, and commits to it. Imagining ecological collapse as an overweening crisis demanding immediate action and collective sacrifice, with emergency decisions overriding citizens’ normal wants and wishes, is not really a politics at all, but the suspension of politics—there is no political choice, no constituencies to balance, nothing to deliberate. There is no free activity, just do or die. It seems we will have traded one state of emergency for another.

We have already seen that political action based on fear has disastrous consequences, “we have seen that security is an unstable foundation for institutions—the separation of powers, constitutionalism, federalism, civil society—that liberals have recently sought to rehabilitate. It is a principle that can only constrain and limit politics, not renew our political imagination. No social change is possible without a great deal of uncertainty, and even the production of insecurity. No truly democratic choice comes with a guarantee of success, and always produces unintended outcomes. Democracy must embrace an experimental attitude toward society” (n+1).

-a rebuttal by benjamin kunkel
-an anti-growth opinion by chad harbach

five years

On the five year anniversary of the war in Iraq, President Bush continues to defend America’s presence in the Middle East. Below are excerpts from his Wednesday, March 19 speech – flowery rhetoric that ignores the reality of the situation:

Five years into this battle, there is an understandable debate over whether the war was worth fighting … whether the fight is worth winning … and whether we can win it. The answers are clear to me: Removing Saddam Hussein from power was the right decision – and this is a fight America can and must win…

Over the past five years, we have seen moments of triumph and moments of tragedy. We have watched in admiration as 12 million Iraqis defied the terrorists, went to the polls, and chose their leaders in free elections.

And we have watched in horror as al Qaida beheaded innocent captives, and sent suicide bombers to blow up mosques and markets. These actions show the brutal nature of the enemy in Iraq. And they serve as a grim reminder: The terrorists who murder the innocent in the streets of Baghdad want to murder the innocent in the streets of American cities. Defeating this enemy in Iraq will make it less likely we will face this enemy here at home.

A little over a year ago, the fight in Iraq was faltering. Extremist elements were succeeding in their efforts to plunge Iraq into chaos…

My administration understood that America could not retreat in the face of terror. We knew that if we did not act, the violence that had been consuming Iraq would have worsened, spread, and could eventually have reached genocidal levels.

Baghdad could have disintegrated into a contagion of killing, and Iraq could have descended into full-blown sectarian warfare. So we reviewed our strategy – and changed course in Iraq. We sent reinforcements into the country in a dramatic policy shift that has become known as “the surge.”…

The surge has done more than turn the situation in Iraq around – it has opened the door to a major strategic victory in the broader war on terror. For the terrorists, Iraq was supposed to be the place where al-Qaida rallied Arab masses to drive America out. Instead, Iraq has become the place where Arabs joined with Americans to drive al-Qaida out. In Iraq, we are witnessing the first large-scale Arab uprising against Osama bin Laden, his grim ideology, and his terror network. And the significance of this development cannot be overstated…

The challenge in the period ahead is to consolidate the gains we have made and seal the extremists’ defeat. We have learned through hard experience what happens when we pull our forces back too fast – the terrorists and extremists step in … fill the vacuum … establish safe havens … and use them to spread chaos and carnage. …

The successes we are seeing in Iraq are undeniable – yet some in Washington still call for retreat. War critics can no longer credibly argue that we are losing in Iraq – so now they argue the war costs too much. In recent months we have heard exaggerated estimates of the costs of this war.

No one would argue that this war has not come at a high cost in lives and treasure – but those costs are necessary when we consider the cost of a strategic victory for our enemies in Iraq.

If we were to allow our enemies to prevail in Iraq, the violence that is now declining would accelerate – and Iraq could descend into chaos. Al-Qaida would regain its lost sanctuaries and establish new ones – fomenting violence and terror that could spread beyond Iraq’s borders, with serious consequences to the world economy.

Out of such chaos in Iraq, the terrorist movement could emerge emboldened – with new recruits … new resources … and an even greater determination to dominate the region and harm America. An emboldened al-Qaida with access to Iraq’s oil resources could pursue its ambitions to acquire weapons of mass destruction to attack America and other free nations. Iran could be emboldened as well – with a renewed determination to develop nuclear weapons and impose its brand of hegemony across the broader Middle East.

And our enemies would see an American failure in Iraq as evidence of weakness and lack of resolve. …

In the long run, defeating the terrorists requires an alternative to their murderous ideology. So we are helping the people of Iraq establish a democracy in the heart of the Middle East. A free Iraq will fight terrorists rather than harbour them. And a free Iraq will be an example for others of the power of liberty to transform societies and replace despair with hope. By spreading the hope of liberty in the Middle East, we will help free societies take root – and when they do, freedom will yield the peace we all desire.

Ted Carpenter, vice president for defense and foreign policy studies at the Cato Institute, offers the following argument for withdrawing from Iraq.  In the article he states, “Staying in Iraq is a fatally flawed policy that has already cost more than 3,000 American lives and consumed more than $350 billion. The security situation in that country grows increasingly chaotic and bloody as evidence mounts that Iraq has descended into a sectarian civil war between Sunnis and Shiites. Approximately 120 Iraqis per day are perishing in political violence. That bloodshed is occurring in a country of barely 26 million people. A comparable rate of carnage in the United States would produce more than 1,400 fatalities per day”.  Read the rest of his article here.

$2 a share

Regarding JP Morgan Chase’s weekend purchase, Pearce of Samizdata says,

One of the more thoughtful, if sobering, analyses comes from The Times (of London) columnist William Rees-Mogg. He points out that once again, the late Milton Friedman has been proven correct: we have been through a period, since the 1990s, of rapid monetary growth. The inflationary impact of that growth had been temporarily masked in the High Street and the labour market by the deflationary effect of cheap goods from China and elsewhere. But for those who wanted to look hard enough, the warning signals were plenty: asset price bubbles in property, gold, antiques, fine wine, equities, as well as the frenzy of mergers and takeovers, much of which was funded by cheap debt, as well of course as the heavy lending to sub-prime borrowers in the US, Britain and elsewhere.

read the William Reese-Mogg article here.

Ideas 2008, according to Time

Time Magazine features 10 ideas that they claim are changing the way we live.  You can see the complete series here, the list is as follows:

#10 Re-Judaizing Jesus
#9 Mandatory Health
#8 The New Austerity
#7 Synthetic Authenticity
#6 Geoengineering
#5 Kitchen Chemistry
#4 Reverse Radicalism
#3 The Post-Movie-Star Era
#2 The End of Customer Service
#1 Common Wealth

The articles are worth a read, I find the first interesting since it calls for solutions “beyond the market”.  Jeffrey Sachs from Columbia University’s “Earth Institute” says that “the key (is to) make the right choices in our public investments and to find ways to harness, and channel, market forces”.  Sachs claims that “the challenges of sustainable development–protecting the environment, stabilizing the world’s population, narrowing the gaps of rich and poor and ending extreme poverty — will render passé the very idea of competing nation-states that scramble for markets, power and resources”.

While it may be true that the realist view of the world will be shortly obsolete, markets are certainly not passé, and the ideas defining the future should address this distinction.

minimum wage in Germany

Adam Loos

“History, in brief, is an analysis of the past in order that we may understand the present and guide our conduct into the future,” stated former University of Chicago professor Sidney E. Mead. To understand and guide our conduct for the twenty-first century, one must examine the past. The German Union leaders and other prominent German politicians are calling for a minimum wage to be enacted. One labor leader is calling for a price floor of 7.50 euros an hour. Is this policy effective in establishing equality and limiting unemployment? If one wants to understand the future of the German nation, one must look at the history regarding minimum wage.

Australia introduced wage floors in the 19th century to create social equality. Historically, minimum wage is a detriment to the economic and social equality and stability of many countries. As lawmakers seem to fail to understand wealth creation, poor economic conditions result. Minimum wage laws reduce the quantity of hours or workers, increases unemployment and price levels, harm small businesses, constrain freedom, create social unrest, limit the least employable and ineffectively introduces welfare into the private sector.Minimum wage reduces the quantity of hours employed to minimize costs. This produces rising unemployment, due to a pricing out effect on the lowest qualified out of the work-force. General economics suggests this to be so, but when 308 members of American Economics Association were asked to respond to how they viewed “minimum wage increases unemployment among young and unskilled workers”, 73.5% agreed or partially agreed with the statement.

By excluding the lowest economic classes, it manifests itself in institutional racial prejudices in South Africa and the United States. Milton Friedman dubbed the minimum wage law as the “the most anti-Negro law on our statute book.” It is deemed as such because it sets a price floor on how cheap labor can be. It forced the African-American to compete on other levels besides cheap wages, where they were unable to compete (i.e. race, skill level, etc) This finding is supported by National Center for Policy Analysis study stating that “beginning in 1956, when the minimum wage was raised from 75 cents to $1, unemployment rates for the two groups began to diverge. Soon, unemployment rates were significantly higher for both black and white teenage males, but moreso for blacks. By 1960, the unemployment rate for black teen-age males was up to 22.7 percent, while the white rate stood at 14.6 percent.” The study maintains that “the minimum wage was further increased in 1967, 1968, 1974, 1975, 1976 and annually from 1978 through 1981. At each point, the unemployment rate for black teen-agers tended to ratchet higher. By 1981, the unemployment rate for black teen-age males averaged 40.7 percent four times its early 1950s level, when the minimum wage was much lower and its coverage less extensive.”

In 1988, upon hearing about the impending minimum wage laws, the Cato Institute wrote a piece stating that “Contrary to the claims of many members of Congress, government cannot create wealth by simply passing new laws. Otherwise, Congress would long ago have passed laws prohibiting poverty and establishing a minimum wage of $100, or even $1,000, an hour. In such a world, everyone could be a millionaire. But ours is a world of scarcity, and wealth is a product of the market process, not of legislative fiat.” When legislators give raises, who must pay for them? The employed will be paid in three different ways. As aforementioned, employed hours can be cut by minimizing the work force. The employer may take a profit cut, at the expense of research and development, paying off loans or expansion. Lastly, the cost may be passed onto the consumers with price increases.

Many businesses that employ minimum wage workers are restaurants, super-markets and clothing stores. These businesses raise prices quickly in order to restore profit margins. Unfortunately, the government responds far slower in order to meet the inflation created by the minimum wage, leaving the poor with same amount they started with. In a competitive market where prices can’t be raised or businesses is lost, the business will simply cut jobs instead of absorbing the economic loss. Lawmakers often believe that the “wealthiest of the wealthy” will soak the losses minimum wage exerted on large corporations. The problem comes regarding small businesses in highly competitive markets which do not have the profit margins to cover great losses and are not able to raise prices for fear of losing businesses.

Marred by a history of creating inequality, racial prejudice, misplaced welfare, and lack of results, and increasing unemployment; it is difficult to understand Germany’s call to minimum wage. One should hope that the German voters persuade the politicians to vote against a wage floor.

Moderne Frevel

that’s “modern sins or sacrilege”, and achtung: the vatican has now announced new, modern ways we can sin {i don’t know if they’re venial or mortal}. it seems that we are now not only responsible for our individual indiscretions, but for those of “society” as well!

the list includes the following:
1. drugs
2. environmental pollution
3. genetic engineering
4. social inequality
5. economic inequality
6. waste of money on luxury goods
7. the growing gap between the rich and the poor
8. prostitution

wunderbar. societal moral authority comes in the form of pressure to be green, vegan, minimalistic, non-brand buying, organic, and simple. guess we should’ve seen the old bastion of moral authority with its unabashed directives coming long ago.

the missing middle

The New York Times Magazine featured an article on microfinance and celebrity contributions this past Sunday. Natale Portman, advocate for microfinance and poster child for FINCA told the NY Times, “It’s the way it works, I guess. I’m not particularly proud that in our country I can get a meeting with a representative more easily than the head of a nonprofit can.”

Well, who is? But it is the way it works. Stars — movie stars, rock stars, sports stars — exercise a ludicrous influence over the public consciousness. Many are happy to exploit that power; others are wrecked by it. In recent years, stars have learned that their intense presentness in people’s daily lives and their access to the uppermost realms of politics, business and the media offer them

a peculiar kind of moral position, should they care to use it. And many of those with the most leverage — Bono and Angelina Jolie and Brad Pitt and George Clooney and, yes, Natalie Portman — have increasingly chosen to mount that pedestal. Hollywood celebrities have become central players on deeply political issues like development aid, refugees and government-sponsored violence in Darfur (NYTimes).

However, while celebrities are able to broadcast a particular message to the masses, the issues are, not surprisingly, more complex than they seem. The New Yorker points out that while microfinance has won Muhammad Yunus a Nobel Peace Prize and remains to this day a chic economic innovation made popular by Hollywood, it is not the magical solution it is purported to be.

This vogue has translated into a flood of real dollars: institutional and individual investments in microfinance more than doubled between 2004 and 2006, to $4.4 billion, and the total volume of loans made has risen to $25 billion, according to Deutsche Bank. Unfortunately, it has also translated into a flood of hype. There’s no doubt that microfinance does a tremendous amount of good, yet there are also real limits to what it can accomplish. Microloans make poor borrowers better off. But, on their own, they often don’t do much to make poor countries richer.

This isn’t because microloans don’t work; it’s because of how they work. The idealized view of microfinance is that budding entrepreneurs use the loans to start and grow businesses—expanding operations, boosting inventory, and so on. The reality is more complicated. Microloans are often used to “smooth consumption”—tiding a borrower over in times of crisis. They’re also, as Karol Boudreaux and Tyler Cowen point out in a recent paper, often used for non-business expenses, such as a child’s education. It’s less common to find them used to fund major business expansions or to hire new employees.

Not everyone can be, nor should everyone be an entrepreneur. Microfinance is promising for some, but the “micromagic” dream shouldn’t be oversold. To read the rest of the New Yorker article on microfinance, click here.

“trade is evil”. not.

Ohio Voters are Stupid, an article from “Classically Liberal”:

Voters in Ohio are stupid. Of course I’m not sure they are dumber than voters in other states. But I can attest that they are dumb. Exist polls of voters in the Democratic primary showed that 80% of these individuals believe that U.S. trade with other countries destroys jobs in Ohio, while only 10% think trade creates jobs. The rest either have no opinion of think trade has no impact on jobs.

Of course both Clinton and Obama played up the “trade is evil” mantra, even though I suspect neither one of them actually believes it. And Obama’s people have all but told Canada that this is merely political campaigning and not to worry. I still contend that fear is the primary tactic used by politicians to control the voters and that includes real or imagined fears. Obama just outrightly lied when he claimed that “entire cities… have been devastated as a consequence of trade agreements”. Both he and Hillary promise to withdraw from NAFTA unless the treaty puts more restrictions on trade.

The reality is, that before NAFTA passed, the unemployment rate in Ohio was 6.5%. It is now 5.8%. So unemployment in Ohio is lower today than it was before the free trade agreement. On what evidence do these wanna-be presidents declare things are worse? If Hillary and Obama were anymore dishonest they could write scripts for Michael Moore.

Dan Griswold pointed out, in an editorial in the Wall Street Journal, that the Ohio Department of Development says that 283,500 Ohio workers owe their jobs to trade exports. And the two biggest foreign trading partners with Ohio are Canada and Mexico. These are jobs that would be negatively impacted by any anti-NAFTA moves. Griswold also notes that since “Nafta took effect on Jan. 1, 1994, the U.S. economy has added a net 26 million new jobs. The average real hourly compensation (wages and benefits) of workers has climbed 23%. Real median household net worth has increased by a third.” He isn’t say this is all due to NAFTA but he notes this disproves the “getting worse” theory of the candidates.

Griswold points out the blatant hypocrisy of Hillary on this matter. She campaigns as a member of her husband’s “White House”. Hillary says that under the Clinton regime the economy was doing well. But, one of the major pieces of the Clinton economic proposal was NAFTA, which Clinton pushed for rather strongly. So which is it, Hillary? Is NAFTA the wonderful plan Bill said it was, and which helped create an economy, which you now point to with pride? Or was it a disaster leading to unemployment?

I can’t see how Hillary can have it both ways. NAFTA was a key part of her “White House” experience. How can that experience be good for America if she is saying they pushed for a measure which destroyed jobs?

If trade from Ohio with Mexico destroys “jobs” then why isn’t this true about trade between Ohio and Indiana? Why isn’t it true between Columbus and Toledo? Would we create more jobs by preventing companies in Ohio from doing business with people in Kentucky? Would workers be more prosperous if we prevent business in Toledo from buying goods or services from businesses in Cincinnati?

There is no inherent difference between trade with Mexicans and trade with Hoosiers. If cutting down the number of trading opportunities we have is good for us, then the citizenship of the trading partners is of little relevance. Of course the fewer trading opportunities you have the worse off you are. Having one theater in town limits the sort of film you can see. Having one restaurant to pick from limits what you can eat. Every time you cut off trade with one group of people you make them, and yourself, worse off. If there is one utterly stupid opinion that people hold it is the idea that trade destroys jobs.