Big Government

There is no excuse for (purportedly) being surprised by this.

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Progressives laudably seek to oppose injustice by deploying government power as a countervailing force against the imagined oppressive and exploitative tendencies of market institutions. Yet it seems that time and again market institutions find ways to use the government’s regulatory and insurer-of-last-resort functions as countervailing forces against their competitors and, in the end, against the very public these functions were meant to protect.
 
We are constantly exploited by the tools meant to foil our exploitation. For a progressive to acknowledge as much is tantamount to abandoning progressivism.

The Economist, Democracy in America blog Via Mickey Kaus, via Instapundit.

Kaus’s proposed reforms can’t hurt. But the mindset has to change. Conservatives will have to figure out that being “pro business” and being “pro market” and “pro freedom” will often be in opposition. Big Business wants a regulatory state to insulate it from competition. That is rational self-interest. And it is anti-market.

Corporate capture of state power is the inevitable and (should be) well-known consequence of creating state power in the first place. Edmund Burke and Adam Smith and Thomas Jefferson warned about this in the late 1700s, and the liberal thinkers throughout the 19th Century were acutely aware of this problem. (See, e.g., this book) The Founders knew this, and built a central government of limited powers for exactly this reason, with the mercantilist, politically-connected monopolies of Britain very much in mind. In the mid-20th Century, Mancur Olson, James Buchanan and George Stigler, among many others, documented and demonstrated that the regulatory state will be in the hands of the supposedly regulated parties based solely on the incentives and knowledge of all the parties.

Regulatory capture is folk wisdom, not arcane knowledge. It is inevitable.

No one can honestly smack their forehead and say “d’oh!”

There is no excuse for being surprised by this.

UPDATE: Our Nomenklatura, Via Instapundit.

Funding Corruption

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According to this news item, Republicans in the US House of Representatives are vowing to cut payments to the United Nations. Of greater interest to me is the promise of investigations into corruption.

There was a great deal of drama over the UN soon after the 9/11 terrorist attacks. Humanitarian programs were seen as chances for graft and bribes, and resolutions against Iraq certainly did nothing to convince Saddam to abide by the peace agreement that ended Gulf War I. Why does the American taxpayer pony up more than 20% of the United Nation’s budget if the organization is nothing but a toothless waste of time that is run by a collection of criminals?

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Wave Of The Future

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One of the big topics of discussions in the right side of the blogosphere lately has been how the pay and benefits of public employees has contributed to the current fiscal emergency our nation now faces. Of particular interest is how unfunded pensions are causing a budget crises every fiscal year.

The Buckeye Institute, which the local news media dubbed a “conservative think tank” here in Ohio, has a searchable database that lists the salary of every public school teacher in this state. They even go so far as to include the estimated pensions that the educators have coming.

This will probably become something that every state will have, and it has been a long time coming.

Uh Oh

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It may take all hands. While Obama and his team were hardly the only ones to underestimate the depth of the problem they inherited in early 2009, their failure to define it from those early days has undermined a bedrock idea of American liberalism, the faith in the capacity of government to play a constructive role in the markets and make up for the limits of individuals to cope with them. Since unemployment has remained so high for so long while deficits have soared, it must mean the stimulus did not work and the money was wasted. Smaller government, less regulation and lower taxes, therefore, would be the only answer. And so, Obama’s challenge may be more fundamental even than reducing unemployment and winning re-election; he wants to prove that liberal economic theory can be adapted to the 21st century.

“The White House Looks for Work,” NYT

(Emphasis mine.)

Municipal Bond Firm Calls Out Bloggers

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Municipal bonds are going through a rough patch right now. They are being attacked in the media, as featured in a “60 minutes” segment, and their values are falling in mutual funds that hold a portfolio of different issuers. I summed it up in this post but frankly you can just find it everywhere on the internet now.

Municipal Bond Fund Letter

A municipal bond specialist firm called FMS Bonds, Inc. attempted to defend the municipal bond market in the above full-page advertisement that they took out in the Wall Street Journal. This article calls out bloggers (like me) in the first sentence:

A steady drumbeat of opinions is prediction a muni market meltown. Bloggers, columnists and too many people with microphones have weighed in on what they proclaim is imminent danger in the municipal bond market. This fear mongering has spooked investors and disrupted the market.

Well first of all I am a tiny bit flattered; I didn’t think that BLOGGERS had the power to “disrupt” the municipal bond market. The total size of the US municipal bond market is approximately $3 trillion; does it make any sense at all that bloggers or even journalists should be able to impact this market?

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