Big Government

Should we renew the Foreign Intelligence Surveillance Act?

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There has been quite a bit of concern about an opposition to the Trump presidency set up in Washington by Obama and his allies.

Obama used the US intelligence apparatus to spy on Trump’s presidential campaign.

June 2016: FISA request. The Obama administration files a request with the Foreign Intelligence Surveillance Court (FISA) to monitor communications involving Donald Trump and several advisers. The request, uncharacteristically, is denied.

October 2016: FISA request. The Obama administration submits a new, narrow request to the FISA court, now focused on a computer server in Trump Tower suspected of links to Russian banks. No evidence is found — but the wiretaps continue, ostensibly for national security reasons, Andrew McCarthy at National Review later notes. The Obama administration is now monitoring an opposing presidential campaign using the high-tech surveillance powers of the federal intelligence services.

Why would the FISA court approve such a thing ? Why would the Obama people continue when no evidence was found ?

The controversy has continued and Susan Rice, the Obama NSC head, seems to be at the center of it.

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Our Quasi-Soviet Fiscal Policy

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“It’s like deja vu all over again.”

Do Yogi Berra’s words of wisdom apply to the “new” trillion dollar “public infrastructure” program? The last program, still unpaid, focused on “shovel-ready” projects but somehow missed most potholes. Meanwhile, private companies are prepared to spend $100’s of billions on a new fiber optic internet super highway.

Is the current proposed public spending program more likely to pay off for taxpayers than the last one?

Historical Precedent

When the hammer and sickle flag was lowered for the last time in Moscow on December 25, 1991, the international finance agencies created in Bretton Woods in 1944, led by British economist John Maynard Keynes and the Undersecretary of the U.S. Treasury Harry Dexter White, found a new mission.

The International Monetary Fund (IMF), which is a “bank” according to Keynes, provided the financial infrastructure for international trade. The World Bank (WB), or a “fund” according to Keynes, was promoted by, known communist and accused Russian spy, Undersecretary White to help reconstruct European infrastructure, but primarily Russia’s infrastructure, in the wake of WW II destruction.

The IMF lost its raison d’être in 1971 after President Nixon eliminated dollar convertibility into gold, ending the Bretton Woods function. Russia turned down World Bank membership, so the Bank turned to lending for infrastructure projects in the “underdeveloped” nations, which by 1991 faced overwhelming political obstacles.

Assisting in the conversion of formerly centrally planned economies into capitalist market economies became the finance agencies’ new post-Soviet mission. However, few people had much of an idea of how to accomplish this. It had never been done before, and the IMF and WB were particularly ill-equipped as their charter limited them to lending only to governments. They were essentially statist organizations with little experience with (or sympathy for) competitive private markets (which helps explain why they remain chronically underdeveloped).

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The state of state surveillance technology

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All the discussion of the Trump “wiretapping” seems to assume that there are targets of surveillance. I thought that had passed away years ago and that NSA was simply capturing all transmissions in the ether, converting them from voice to text and storing both in a searchable data base. While additional land lines may be intercepted, the vast majority of signals are now airborne at some point so the NSA has access to virtually all electronic communication, foreign and domestic. Likewise, they do not, except in extraordinary circumstances, have acres of analysts sitting in cubes listening to conversations in real time. Instead, software constantly crawls the text database for terms of interest or manually input searches, such as the names of everyone on the Trump transition team. This is how team 0bama got the dirt that has been leaked to the press.

Politics is now under the influence of those at NSA with search authorization much more than the Kremlin, except to the extent they have comparable capabilities. I suspect the Kremlin has comparable intellectual capabilities but less access to transmissions and even less processing bandwidth. Given the acceptance of the loss of privacy by the facebook generation, this can only expand. And to think that only 80 years ago a Secretary of State could opine that “Gentlemen do not read each others mail.” Things have changed, and once again, not for the better.

Got that off my chest. Now if only the tin foil would stop irritating my scalp.

Free Trade with a Hostile Mercantilist Empire?

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2017 marks the 200 year anniversary of David Ricardo’s publication on the theory of comparative advantage that underlies the economic case for free trade. Several years later Frederic Bastiat wrote the satirical Candle Maker’s Petition debunking the arguments in favor of protectionism. This was an ironic choice, as candle makers were politically protected by the Founding Fathers as necessary for the Revolutionary War. These protections lasted several centuries, and in 2016 Senator Chuck Schumer sought it re-instated on grounds of unfair competition from China.

President Trump’s trade representative economist Peter Navarro is making both the political and economic case against free trade with China, which he considers a mercantilist trader with military ambitions hostile to the U.S.

Navarro’s political case is an update of that faced by the Founders regarding candle making. China is viewed as pursuing a trading strategy to accumulate wealth and technical know-how to challenge the U.S. militarily in the South China Sea and globally. China’s mercantilist trade practices result in huge export surpluses with the U.S. He argues that China uses this advantage to weaken America’s industrial base and future defensive capability.

While economists can’t reject this political concern out of hand, it does seem several decades premature given the relative size of the two countries’ navies. At present the US could quickly secure sources of supply for military purposes, and protectionism tends to linger for decades or even centuries.

The second case against free trade with a mercantilist trader relates mostly to the loss of jobs due to “unfair” competition, i.e., not due to inherent comparative economic advantages as much as political subsidies, in China’s case a purportedly cheapened currency and weak labor and environmental protections. The standard argument is that such trade generally benefits consumers at the expense of high cost producers, resulting in a less political more fair distribution of consumption as well as a higher overall level.

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Dodd-Frank, Obamacare grew out of same faulty reasoning

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The current partisan war over the Dodd-Frank Act is just one dispute in a broader ideological divide about the government’s role in industry. This dispute, which has deep historical roots, includes a similar battle over Obamacare. The common disagreement at issue with both laws — now in the cross hairs of a GOP-controlled Washington — is the extent to which politicians should subsidize their constituents indirectly through regulation of private companies.

The Affordable Care Act governing health insurers was about 1,000 pages, and Dodd-Frank governing most other financial institutions was more than twice that. Both stopped short of nationalizing their respective industry, instead generating more than 10 pages of regulation for every one page of legislation, although many view nationalization as an eventual but inevitable consequence, particularly for health care.

The distinction between public control and public ownership is the primary distinction between the competing mid-20th-century ideologies of fascism and communism. In contemporary terminology, this distinction is between crony capitalism and nationalization, neither of which can be reconciled with competition and freedom of choice.

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