Devin Nunes Weighs In

Devin Nunes, a Republican, a Trump supporter and Chairman of the House Intelligence Committee previously said (and continues to say) that he doesn’t see any evidence that Trump Tower was wiretapped by the Obama Administration. There appears to be unanimity on that point, taken very literally. But now, according to Nunes, new evidence has surfaced indicating that on numerous occasions, personal communications of U.S. citizens involved in the Trump transition were indeed intercepted by U.S. intelligence. Moreover, the information apparently had little or no foreign policy value, and was unrelated to the Russia investigation. Not only that, according to Nunes it seems that details about the individuals caught up in this net were widely distributed to players in the intelligence “community.”

 

Prior to the delivery of Nunes’s bombshell, James Comey had testified before the House Intelligence Committee the day before. In that testimony, Comey said that the FBI “was investigating the nature of the links between individuals associated with the Trump campaign and the Russian government, and whether there was any coordination between the campaign and Russia’s efforts”. A major focus of the hearing was on whether there was evidence that the prior Administration had “wiretapped” Trump during the campaign, a charge made several weeks ago by His Excellency. On Twitter of course. Under questioning Comey said “I have no information that supports those tweets, and we have looked carefully inside the FBI.”

 

Up until Nunes press conference, with the Comey testimony in hand, the story line peddled by the “Resistance” was (1) that there is no possibility that Trump and Co. were subjected to surveillance by “the intelligence community” and (2) the Trump campaign colluded with Vladimir Putin to swing the election.

 

Let’s unpack all this. It is perfectly obvious that Comey’s statement is about as meaningless as it gets. And that is being charitable. Comey says he has no information that supports Trump’s Tweets after looking carefully inside the FBI. Big Deal. Suppose the information is at the NSA or the CIA? Or suppose a rogue agent somewhere decided to conduct surveillance of Trump and Co. but decided not to write a memo about it and send it to the New York Times? And how did the “intelligence community” get the information that sunk Mike Flynn, anyway?

 

Leave all that aside for now. Comey testified that the FBI was conducting what amounts to a counter-intelligence investigation that included the Trump campaign. How is it even possible for the FBI to run a counter-intelligence investigation of the Trump campaign and not conduct surveillance of said campaign? It is simply beyond belief. And if this is how the FBI manages counter-intelligence activities, we might as well ask the KGB if they’d like to set up an office at the Pentagon.

 

In the meantime Rep. Adam Schiff (D-CA) has effectively charged Trump and his associates with treason in a way that would make Joe McCarthy proud. According to Politicus USA, Schiff “…laid out all of the important “coincidences” involved in the Trump campaign’s relationship with Russia. He asked, “Is it possible that all of these events and reports are completely unrelated and nothing more than an entirely unhappy coincidence? Yes. It is possible, but it is also possible, maybe more than possible, that they are not coincidental, not disconnected, and not unrelated, and the Russians used the same techniques to corrupt US persons that they employed in Europe and elsewhere. We simply don’t know, and we owe it to the country to find out.”

 

Some of Schiff’s performance can be seen below.

There was a time a long ago (pre 1992) when politicians at least pretended to be embarrassed when they got caught telling the inevitable whopper. They also at least hesitated before charging the other side with being a tool of a foreign power, sans evidence. Not anymore. That is exactly what Schiff and Co are doing with lots of innuendo and zero evidence.

When Politics is Everything

We now we have the politicization of just about everything. It is accompanied by a destructive tribalism that leaves no stone unturned. The personal is the political. So political opponents are not merely those with whom you disagree about some issues. They are the enemy and must be crushed at all costs, using any method.

 

So it becomes OK to lie. Because so many have adopted Nietzsche’s nihilism: there are no facts, only interpretations. Norms of decency and civility are taken as signs of weakness. The institutions of civil society are increasingly under attack by radicals and campus book burners who willingly use violence, and who fear no sanction for doing so.What matters is the will to power.

The irony is that Vladimir Putin didn’t need to meddle in our elections to try to weaken freedom and democracy. Our own pusillanimous politicians are doing that all by themselves.

 

JFB

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The Mandibles–A Review

The Mandibles: A Family, 2029 – 2047

By Lionel Shriver

Harper Collins 2016

421 pages

 

In September of 2016, Lionel Shriver, a novelist, gave the keynote address at the Brisbane Writers Conference. She made instant headlines when, donning a sombrero, she denounced the idea of “cultural appropriation”. For those lucky enough to be unfamiliar with the term, cultural appropriation refers to the practice of writing, acting, speaking, dressing in a voice, clothing etc. outside of one’s own ethnic, gender, racial etc. identity. The idea appears to have already gained wide currency on elite campuses among the snowflake brigades.
Lionel Shriver
Shriver argued that fear of cultural appropriation could have a chilling effect on literature; that it could pigeonhole minorities who wish to be seen as individual people rather than members of a group, and that it enforces a narrowing of vision. She is, of course, correct. Not only that, she is refreshingly direct in her approach.

 

When asked by a reporter from Time if she found any validity in the criticism of her speech leveled by a woman who walked out, she replied “No”. When asked if she felt that she had neglected to have empathy for the other side when writing the speech she answered: “I have no empathy with that side”. Needless to say, all this has prompted the neo-Marxist race, class, and gender crowd to reach for the smelling salts.

 

Not bad for a day’s work.

 

Shriver, until that point, was most famous for the novel We Need to Talk about Kevin, which she published in 2003. In June of 2016 she penned a near-future dystopian novel titled The Mandibles—A Family, 2029—2047 in which she excoriates conventional progressivism. It is a wickedly entertaining book. And it is easy to see why progressives are a bit taken aback by it, and by her. The book is unmerciful in its mockery of the pseudo intellectuals who mouth the vacuous pieties of the faith. Worse yet, in the book it is a precoscious 14 year old who is forever pointing out errors in the reasoning of a narcisistic Georgetown economics professor.

 

The book grabs you by the lapels from the first page. It is bitingly ironic, with a keen eye for the inanities of academic fads and pop culture. Stylistically, Shriver combines the irony of Tom Wolfe with George Orwell’s admonitions about the use and abuse of language. She does this in a way that is immensely entertaining and with a clear-headed libertarian bent, but without a hint of Randian hyperbole.

 

The plot centers around “The Renunciation” which refers to the day in 2029 when the U.S. defaulted on its debt in response to foreign powers refusing to accept payment in dollars for U.S. debt service (or eventually anything for that matter). In response to the American government’s reliance on the printing press for money, primarily to finance entitlement spending, foreign powers, including erstwhile allies, form a new currency. The new currency is called “bancorps” and U.S. creditors demand to be paid in it. The U.S. refuses and simply defaults on its debt. Amusingly enough, the U.S. Fed Chairman printing all the U.S. dollars that are quickly becoming worthless is named Krugman.

 

The U.S. government along with the default forbids any of its citizens from holding bancorps. And it isn’t too long before the government begins to confiscate the citizenry’s  gold holdings including jewelry. Needless to say, inflation skyrockets, barter takes over and the U.S. is on the road travelled recently by Venezuela. Anarchy rules as mobs take over the streets.

 

The Mandibles is powerful, well written, funny in a black-comedy sort of way, and immensely entertaining. Most of all, it is not a book about economics as the word is commonly understood. It is about people, incentives, and systems.

 

Economics is commonly thought of as the study of money and business. But that is a narrow understanding of the field. Economics started off as Political Economy. The first economist, Adam Smith, was a Professor of Moral Philosophy at the University of Glasgow where he wrote his Theory of Moral Sentiments.

 

Economics is better understood as the study of the way we make choices. For this, economists have as Schumpeter put it, a set of theories (like the relationships of supply and demand to prices) and a toolbox (statistics). Most importantly, the underlying theory is that man is a rational self-seeking being capable of making his own choices in furtherance of what he subjectively believes to be his own self-interest. That self-interest extends beyond mere monetary gain.

Notably, free choices and free trade tend to maximize social utility. Conversely, systems relying on top down command and control fail to achieve citizen satisfaction, and in the end,  tend to fail disastrously.

Shriver has a good grasp of this and conveys it well in her story telling. As the economy, the culture and civil society break down after “The Renunciation” people still have to make choices, but now their choices face far more difficult constraints than before. So the questions explored are how do they cope, how does it affect their beliefs (if at all), how do they adapt, who is best suited to adapt and why, how do they define moral quandaries in their decision making? Lurking underneath it all, Shriver makes clear that rational self-interest prevails in decision making, no matter changing circumstances.

 

Shriver ties the economic collapse to a fundamental problem of collectivism, which is necessarily dependent on command and control. The Renunciation occurred because the country could not pay its debts. Those unsustainable debts are the inevitable result of the welfare state. Entitlement spending just went on and on until the collapse—and continued on with money from the printing press. The argument for enforced altruism over rational self-interest failed as manifest by the failure of the State, because it is contrary to human nature.

 

The result of an attempt to reconstruct a society contrary to human nature is a collapse of civil society, and a return of man to a Hobbesian state of nature. Sometimes it makes a pit stop with authoritarianism along the way, but inevitably human nature prevails over attempts to recreate a “new man” as various utopians have tried—all with such disastrous results. The Mandibles, in its amusingly smart-alecky way strongly hints at this. And it also suggests, sort of, a way to redemption and rebirth.

 

All in all, The Mandibles is an excellent read. It is highly amusing, witty and provocative, just as the author clearly meant it to be.

 

JFB

 

 

 

 

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Preet Bharara: It’s About Time

Aloha

 

As the salutation suggests, this post is coming from Hawaii, where we have been living these last three weeks. Thanks to the wonders of Airbnb we rented a cottage in Maui near Makawao, a little cowboy town planted in what the locals refer to as the “up country”. The scenery is gorgeous; not only that, we are a short 20-minute drive to some spectacular beaches. For entertainment we take in the local sights, which among other things included going to a Luau, watching hula dancers and downing a Mai Tai or two.

Hula Dancers perfrom at a Luau on Maui

 

Best of all, we don’t have any television in the cottage. Which means that we are not constantly being bombarded by either the latest Trumpism or histrionics of “The Resistance”. Quite a relief since we are smack in the middle of Progressive territory. In a lot of ways, Makawao is like Greenwich Village in the 1970s, but with way more Tattoos. A couple of towns over in LaHaina there is a Tattoo parlor named Spikes that actually broadcasts radio ads with voice-overs by Dustin Hoffman and Gene Simmons (of Kiss). Still not tempting.

 

There are plenty of Village Voice style hand out newspapers that carry stories about the state of “The Resistance”, hushed conversations about the impending fascist state, and guys wearing ponytails that turned gray a long time ago. And if you want to give those old tie-dye jeans one more trip around the block, this is the place to do it.

 

Alas, even from afar, ripples from another clash between HRH Donald Trump and the Resistance managed to wash ashore onto beautiful Maui. This one came compliments of Preet Bharara, U.S. Attorney for the Southern District of New York. It appears that Mr. Bharara is under the impression that Barack Obama appointed him for life to his position as U.S. Attorney.

 

Preet Bahrara Press Conference / NYT

When, on Friday, Bharara’s superior in the DOJ asked for his resignation, he refused, demanding instead that he be fired by Trump. (A new and not entirely clever take on the you can’t fire me, I quit, gambit.) Anyway Trump promptly fired him. The only shame is that it took so long, because by his behavior Bharara conclusively demonstrated that he was, and remains, unfit to hold the office of U.S. Attorney, or any responsible office in law enforcement.

 

Let’s understand what is going on here. Preet Bharara’s refusal to resign was simply another round of the grandstanding that has characterized his tenure as U.S. Attorney. To be fair, grandstanding seems to be an occupational hazard that easily latches on to Attorney’s General and U.S. Attorneys in New York. The list of recent shrinking violets includes Rudy Giuliani, Elliot Spitzer and Eric Schneiderman. (Honorable mention goes to Chris Christie of New Jersey for his dishonorable conduct on this score.)

The Real Problem

There is nothing wrong about a prosecutor launching a political career. That is not the problem with Bharara’s behavior. It is that that Bharara appears to have subordinated the law and the Constitutional order to advance his political goals.

 

It is absolutely clear that the Trump Administration was acting lawfully when it asked for Bharara’s resignation. Article II, Section 2 of the U.S. Constitution gives the President the power to nominate officers of the government who will serve with the advice and consent of the Senate. And those officers serve at the pleasure of the President. The relevant statute 28 U.S. Code § 541 reads as follows:

 

(a) The President shall appoint, by and with the advice and consent of the Senate, a United States attorney for each judicial district.

(b) Each United States attorney shall be appointed for a term of four years. On the expiration of his term, a United States attorney shall continue to perform the duties of his office until his successor is appointed and qualifies.

(c) Each United States attorney is subject to removal by the President.

 

(Added Pub. L. 89–554, § 4(c), Sept. 6, 1966, 80 Stat. 617.)

 

Nothing in the statute says the President has to be polite. So the obvious question is: What doesn’t Preet Bharara, graduate of Harvard Law School, understand about the sentence Each United States attorney is subject to removal by the President?

 

If Bharara doesn’t understand what that sentence means he lacks the competence to preside over the prosecution of a parking citation. But of course, he understands it very well. Which means that while he was U.S. Attorney for the Southern District he deliberately refused a lawful order by the President. So he was insubordinate. And let’s not pretend that “asking” for a resignation is simply a request. When I was 14 my father would ask me if I wanted to mow the lawn and somehow or other I managed to figure out that he wasn’t asking a question.

 

So why would Preet Bharara refuse to obey a Presidential order that was unambiguously lawful, not to mention standard practice with any new Administration? Getting fired, as opposed to handing in a resignation, has zero substantive impact on the ultimate outcome. But stirring up this little drama further damages the administration of justice, which has already suffered some major hits. The wreckers include Hillary Clinton, James Comey, Loretta Lynch, Bill Clinton, Chris Christie and Barack Obama.

 

Well, it seems pretty obvious that Bharara decided to make himself into a (faux) hero by pretending to be a martyr for “The Resistance”. What better way to launch a political career as an elected or appointed official in the future if and when Progressives are once again ascendant.

Prosecutors and Politics

Prosecutors in the United States have tremendous power. Their job is supposed to be to serve justice. It is not to collect convictions. Nor is it to demonize or prosecute unpopular people or advance popular political causes, as did Christie, Giuliani, Spitzer, Schneiderman and Bahrara to name a few. The list is hardly exhausting.

 

The awesome power that prosecutors possess requires that they be held politically accountable. The justice system is not their personal playpen. Which is why U.S. attorneys serve at the pleasure of the President, who is accountable at the ballot box.

 

It is hard to avoid the conclusion that Preet Bharara subordinated the letter and spirit of the law he took an oath to uphold. It is also clear that Bharara’s behavior was a challenge to the Constitutional order. Moreover it has the potential to further damage our already damaged political-legal system. Anyone who doubts this should just ask the following question. If an incumbent lost an election and refused to give up his office in the aftermath, how would his behavior in any way be different than Bharara’s?

Mahalo.

JFB

 

 

 

 

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Where’s that $100 Trillion?

That’s right. Trillion.

 

There is a reason, actually lots of them, why Washington is consumed with the latest Trumpian Tweet to the effect that Team Obama spied on Trump’s Presidential campaign. For one thing, if the charge is true, it would suggest that the Obama White House used the power of the White House to attempt to influence the election outcome in a way that is wholly improper, if not illegal. At the moment Trump & Co have produced exactly zero evidence that any of this is in fact true.

 

On the other hand, Andrew McCarthy, a former federal prosecutor argues there is a plausible case to be made that the Obama White House, and by implication Obama himself, did in fact orchestrate surveillance of the Trump campaign or Trump associates, if not Trump himself. McCarthy’s analyses are worth reading and are available here, here, here and here.

 

Now, back to the $100 trillion.

 

While Washington is busy (1) with its various conspiracy theories and (2) dreaming up new ways to waste your money, the present value of unfunded Social Security, Medicare and Medicaid obligations continues to grow unabated. Entitlements plus debt service now accounts for something in the area of 71% of all federal spending. The present value of unfunded entitlements plus accumulated federal debt amounts to about $100 trillion conservatively speaking, give or take a few trillion, as they say in Washington.

 

And it is slated to get worse as the population ages.

 

President Trump has grandly and repeatedly announced that he does not intend to act to curb the growth of entitlements. Bernie Sanders and Elizabeth Warren have gone him one better. They want to increase entitlement spending. They will of course “pay for” all of this by “taxing the rich.”

 

That will be difficult since U.S. GDP amounts to a mere $20 trillion or so. Clearing the books will require finding an extra $80 trillion, after all earnings have been confiscated. As it turns out the total dollar amount of wealth held by households and non-profit organizations is about $107 trillion, so government could just come along and confiscate all private wealth to balance the books on entitlements. And have a little left over. Probably to start a new entitlement program.

 

By now it should be obvious even to diehard Progressives that the nation’s finances are simply out of control and that there is no conceivable way that government can pay all its bills. Unless there is major reform the government is simply going to default.

 

More likely there will be a series of partial defaults, taken one step at a time. It will begin by pushing back the retirement age, which is the equivalent of rescheduling a loan because the funds are not available to pay off the principal. And where medical services are concerned government will begin by rationing, and will simply deny medical care to those not deemed worthy of it. There is no escaping this outcome without substantial reform.

 

The Administrative State resembles nothing so much as an elaborate Ponzi scheme; its survival depends on a suspension of disbelief. But because the Administrative State is a structural fraud, it is inherently incapable of taking the action needed for reform before the whole thing comes crashing down. Which is why the mandarins in Washington would rather talk about anything but entitlement reform. In this they bear a striking resemblance to Wylie Coyote who is just fine when he runs off a cliff—that is, until he looks down. Which may not be too far from where we are today.

There is a Choice

So that leaves a choice. We can dismantle the fraud that is the Administrative State and replace it with market liberalism and limited government. Or we can continue on and follow the path of Greece and Venezuela.

 

Unless there’s an extra $100 trillion lying around that nobody knows about except Wylie Coyote.

 

JFB

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To Trade or Not to Trade…

Economic Nationalism and the Trump Trade Agenda

According to Steve Bannon, the second prong of the Trump Administration’s policy focus is “Economic Nationalism”. The obvious first question is: what, exactly, does Bannon have in mind when he refers to Economic Nationalism? An important subsidiary question is whether the Trump Administration considers Economic Nationalism to be a distinct area of policy focus, or does the Administration consider it to be an integral part of an integrated policy agenda.
Steve Bannon

The term Economic Nationalism is certain to provoke well-deserved eye rolling among the vast majority of professional economists. The term sounds like one of those focus group inventions that sounds good to the untutored, but is actually bereft of substantive economic meaning. Proof of the pudding is Obama’s use of similar rhetoric, as when he referred to “Economic Patriotism” and attacked what he called corporate “deserters”.

 

Barrack Obama

That said, this type of thing has to be taken seriously for a few reasons. First, terms like Economic Nationalism have a distinctly unpleasant historical odor, one might say stench, about them, as the terms are associated with the likes of Juan Peron and Hugo Chavez, not to mention Adolf Hitler. (Fans of this bunch need to read no further, they are all pretty much beyond saving). Secondly, leaving aside its linguistic associations, Economic Nationalism is often (correctly) seen as a form a mercantilism, which though noxious, doesn’t reach the depravity of fascism or totalitarianism. But mercantilism is no day at the beach either. It (incorrectly) sees trade as a zero-sum game and can easily lead to resource wars and empire building, as it did in the past.

 

Third, to the extent that Economic Nationalism represents some kind of resurgent mercantilism, protectionism or isolationism, it is bad economic policy whose imposition would almost certainly harm economic growth in the United States and abroad leading to economic misery. Ironically enough, the bulk of the economic harms would fall mostly on the people who seem to be most enthusiastic about it.

 

Finally, Trump seems to mean what he says, and he and strategist Bannon seem to be on the same page.
Donald Trump

No matter how you slice it, it is hard to see how Bannon / Trumpian Economic Nationalism is different from old-fashioned protectionism.

 

 

Trade and Protectionism

 

It is important to understand what free trade is and what free trade agreements like NAFTA actually do. In a nutshell, free trade refers to the free exchange of goods and services across national borders. Free trade agreements make this possible by removing trade barriers between people and companies residing in different countries. The trade barriers that are removed or reduced are typically tariffs and regulatory schemes designed to give the importing country’s home producers an advantage over foreign rivals. Consumers pay for all this through higher prices.

 

Discussions about free trade and trade agreements are often phrased in language that obscures more than it reveals. For example, when speaking of trade, it is typical to hear someone say something like this. “The U.S. bought $10 billion worth of goods from Mexico, but only sold Mexico $6 billion worth of goods in return. Therefore the U.S. has a trade deficit of $4 billion with Mexico. Moreover, that’s $4 billion worth of goods that American workers could have made. Therefore trading with Mexico cost Americans to lose jobs.”

 

Let’s take this one piece at a time. It is true but misleading to say that America bought $10 billion worth of Mexican goods, as if America is an undifferentiated whole. It is more accurate to say that millions of individual Americans in the aggregate bought $10 billion worth of stuff that came from Mexico and that millions of Mexicans bought $6 billion worth of stuff made in the U.S. The reason that Americans bought the $10 billion worth of stuff (and vice versa) is that they got a better deal buying the Mexican goods, whether in quality, price or both. In short, American consumers are better off because they can buy better quality and / or lower priced goods made in Mexico and shipped to the U.S.

 

It is not in any meaningful sense true that Mexico “stole” American jobs through trade. The first reason is that apart from a small number of political jobs that require U.S. citizenship, there is no such thing as an American job. There are jobs that Americans do, just as there are jobs that Frenchman do. But there is no particular reason to think of any job as American, or French or Mexican.

 

Second, it is without doubt the case that some jobs that were formerly performed in America are now performed in other countries resulting in the temporary displacement of some American workers. But American consumers are better off because more goods and services are available at lower cost and better quality than were available previously.

 

When it comes to Americans who lose jobs as a result of foreign competition, it really doesn’t matter that the competition comes from abroad or the next town over. It could come from anywhere. Eastman Kodak, for example, did not ultimately fail because of foreign competition. It failed because it resisted innovation and the advent of digital photography and was competed out of business. The lesson here is that to survive and thrive, workers and businesses need to remain dynamic and competitive.

 

By encouraging—or at least not impeding—the free flow of labor and capital across national boundaries, free trade facilitates the spread of knowledge, innovation and economic dynamism. It correctly treats trade as a plus sum game of shared gains. In so doing free trade allows resources to be matched to their highest and best uses, thereby promoting economic efficiency and wealth creation.

 

Opposition to free trade is often rhetorically disguised. One of the more popular dodges is to be for “fair trade” as opposed to free trade. Politicians routinely claim they are in favor of trade, but that it has to be “fair”. But what could be fairer than two counterparties exchanging goods and services for a freely negotiated price? And what could be less unfair than a transaction in which the police power of the State (in the form of tariffs and regulations) is used to tip the scales to favor one side?

 

We often hear that trade is unfair because a foreign producer’s government subsidizes them, or that their currency is being manipulated to lower prices below the market level. And in some cases this is undoubtedly correct.

 

So what?

 

If a government wants to subsidize a domestic producer directly or through currency manipulation, that government is taxing its own citizens to benefit the citizens of the importing country. Let them do it all day long. It is simply self-defeating. To see this, let’s do a thought experiment.

 

Suppose Korea, in an effort to guaranty large exports of Korean cars, decided to subsidize the manufacture of Hyundai and Kia cars such that the companies could sell their cars in the U.S. for a mere $1 dollar apiece. We would soon see lots of Hyundai and Kia cars on the road. And sales of other brands would dive. But American consumers would be richer and Korean taxpayers poorer because Korea would be effectively shipping products over to the U.S. and getting almost nothing in return.

 

Obviously, that wouldn’t last long because it would be so costly to Korean taxpayers that they would revolt. They would revolt because the favoritism (and corruption) of the arrangement is so transparent. But in principle there isn’t any real difference between the example given in this thought experiment and real world subsides and trade barriers. The only difference is that the thought experiment is clear and real world arrangements are opaque.

 

The Trump Trade Agenda

 

The Trump Trade agenda gives every indication of being old-fashioned protectionism implemented through tariffs and regulation, and gussied up as “Economic Nationalism”. The Trump argument is that it will increase employment and wages in America. Except that it won’t.

 

To the extent that people in protected industries keep jobs they do so at the price of higher costs and lower quality for consumers. It necessarily means that inefficiency is being subsidized, which in turn means that the dollars being shoveled into inefficient enterprises are being denied to innovative and efficient businesses that represent the growth of the future.

 

The path to increased economic growth and with it, higher wages, is one that recognizes the importance of achieving productivity gains through innovation and Schumpeterian creative destruction. It does not come through subsidizing failure; nor does it come by taxing consumers to privilege the industries with the best lobbying efforts.

 

Trumpian protectionism does not just fail to make the case in its own right; it is also undermines his stated intention to roll back the Regulatory, or Administrative State. Any serious effort to impose trade protectionism would entail massive increase in the power of the Administrative State. How are we to distinguish what is and is not an “American” product. How far back do we have to follow the supply chain to see whether a car manufactured in South Carolina counts as American or foreign. Are BMWs made in South Carolina foreign or American? How about Volvos? And who makes that determination and how?

 

Should we consider iPhones to be American products? There are about 750 or so parts suppliers, of which 69 are in the U.S. About 85% of the “rare earth” elements in the iPhone come from China. But the intellectual property of the iPhone has its home in Steve Jobs from California. And, by the way, Jobs’s biological father was a Syrian immigrant to the United States.

 

The Politics of Trade

 

Unfortunately, the current political environment does not favor trade. Trump has bought into the illiberal if not bizarre idea that Americans need to be protected from the freedom to trade. Bernie Sanders, Sherrod Brown and Elizabeth Warren have been there all along. Free traders dominate the Republican Congressional leadership, so perhaps they can limit the damage that Trump seems intent on inflicting in concert with Democratic Progressives. Trump has already moderated on some things; perhaps Paul Ryan will talk some sense into him and provide a fig leaf for a decorous retreat.

 

Paul Ryan
One can only hope.

 

JFB

 

 

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Mr. Bannon Goes to CPAC

 

In a fascinating address given at the CPAC annual convention, Trump political strategist Steve Bannon explicitly articulated the framework for the Trump Presidency over the next four years—and possibly beyond. His speech to the convention made it clear that the Trump Administration was not at all interested in tinkering around the edges. They mean to achieve structural reforms that, if enacted, will have profound effects on public administration for generations. (A video of his short speech is below.)

 

 

Bannon laid out what he referred to as three verticals that delineate policy areas that are the focus of the Trump Administration. They are:

 

  • National Security

 

  • Economic Nationalism

 

  • Deconstruction of the Administrative State

 

Bannon may call these policy areas as “verticals” but they are not isolated from one another; in fact they are inextricably intertwined. In some important ways they are at war with each other. It is for instance, flatly impossible to simultaneously deconstruct the Administrative State and implement a program of “Economic Nationalism”. That is because a program of Economic Nationalism is indistinguishable from a national Industrial Policy, which would ultimately be implemented by the bureaucracy. And it would face the usual problems of rent-seeking and regulatory capture.

 

Each of these three prongs will be addressed over time. Today, the focus will be on the idea of deconstructing the Administrative State, which lies at the heart of the agenda.

 

The Rise of the Administrative State

 

Excluding political junkies, public administration scholars, and specialists in administrative law, very few people are aware of how the modern Administrative State actually works in practice. The public thinks that policy is made when Congress passes legislation that becomes law upon being signed by the President. In reality, Congress does not pass “laws” as conventionally understood. Congress passes aspirations, e.g.—The Clean Water Act—and then as part of the law, instructs the relevant Agencies to promulgate rules to effectuate the law’s intent.

 

That’s where the trouble begins.

 

The devil is in the details, as they say, and the details are in the rules the Agency issues. After a comment period, the rules, possibly with adjustments, are then published in the Federal Register, at which point they have the force of law. This is where policy is actually made—in the rule making process. For example, to continue on with the Clean Water example, it makes a great deal of difference whether water is considered legally “clean” when it contains x quantity of pollutants per unit or y quantity of pollutants per unit. That type of decision is usually part of the rule-making process.

 

Unless Congress explicitly sets the standard when it passes a law, the regulatory Agency determines the standard. And according to current legal practice, Courts are supposed to show deference to Agency interpretation of the language of the law, even to the point where Courts are required to overturn their own interpretations of a law when it conflicts with Agency interpretation. This is known as the Chevron Doctrine, named after the Supreme Court’s ruling in Chevron v. Natural Resources Council (1984).

 

The Chevron ruling supercharged the growth of the Administrative State by increasing the power of the Agencies vis-à-vis the Courts and the Congress. Agencies clearly have an incentive to get the first shot at issuing an interpretation of a statute that enhances the Agency’s power, particularly if the Courts are supposed to show it deference. Moreover the Executive branch has an incentive to get an Agency to issue friendly interpretations of a statute before it is contested in a civil Court, because doing so would strengthen its case in the event of a subsequent lawsuit. The Obama Administration was famous for this, although the Courts did slap down the attempt to circumvent the law by obvious and deliberate Agency misinterpretations of it.

 

That said we now live in a society in which every facet of modern life is subject to direct or indirect regulatory review. Not only do the regulatory Agencies have an iron clad grip on the process, they are largely impervious to outside oversight. It is virtually impossible to effectively discipline, must less terminate, an incompetent civil servant. Moreover, some Agencies have investigative powers. Some have enforcement powers. Some have criminal enforcement powers, some civil. Agencies also have their own administrative courts—where the judges are selected by the Agency and the judges are employees of the Agency. In effect, some Agencies have the power to act as judge, jury and prosecutor.

 

The growth of the Administrative State means that policy formation and governance is left largely to an unaccountable bureaucracy with its own agenda. More accurately it represents a set of sometimes competing, sometimes-aligned interests and agendas operating far from pubic view. To the extent that an Agency is captured by an outside interest (often the case) it represents that interest rather than the public interest. The EPA for instance acts like a branch office of the Sierra Club. The Export-Import bank is an important source of subsidies for Boeing. And the weapons procurement bureaucracy at the Pentagon is in a league of its own.

 

It is clear, or ought to be, that the tremendous growth of the bureaucracy and its subsequent rule-making has stunted innovation, raised the cost of doing business, and has acted as a brake on competition by protecting existing businesses at the expense of potential new entrants into the marketplace. But that is not the worst of it. The worst of it is that it has upended the system of checks and balances that fosters healthy debate and forces compromise among competing interests. It has allowed Congress to pass aspirations instead of laws while leaving the heavy lifting for the bureaucracy. If things turn out well, Congress takes credit. If not, it’s obviously the fault of bureaucrats.

 

 

Deconstructing the Administrative State

 

Deconstructing the Administrative State is a project that virtually all libertarians can support. It is a project that will take years, if not decades to complete. Where to begin?

 

Executive Orders that overturn prior Executive Orders on matters that should have been decided by Congress are a good place to start. Not only does this teach the lesson that, in general, policy ought to be made by Congress, it reinforces the notion that truly durable policy ought to be formed in the give and take of democratic politics.

 

There is legislation before Congress right now that would require Congress to approve regulations that impose costs of $100 million or more. The House passed the REINS Act of 2017 on January 5, 2017. It would require a joint resolution of Congress approving all major rules until they can go into effect. That would force Congress to put its fingerprints on regulations that matter, thus forcing democratic accountability on Congress. It would also push the bureaucracy to be more accountable to Congress, thus restoring some of the checks and balances that have been lost over the years.

 

Another step the Congress should take is to pass legislation that overrules Chevron v. Natural Resources Council. There is no good reason why the Courts should show deference to an unaccountable (to the public) bureaucracy. Such deference is not only profoundly undemocratic; it invites abuse, and empowers the bureaucracy at the expense of the people’s elected representatives.

 

These three actions are a good place to start. But it is only a start. There is still a long way to go after that.

 

The Politics of Deconstruction

 

The political challenge of deconstructing the Administrative State is immense. Bureaucracies are quite adept at developing coalitions to protect them and their budgets. As a result, the inevitable failures of the bureaucracy are inevitably followed with perverse cries for more money—and they get it. Failure is rewarded, not punished. Remember the VA scandals of a few years back? Guess whether the VA budget today is larger or smaller. Hint: the correct answer isn’t smaller.

 

But the problem is a lot deeper than mere bureaucratic incompetence and perverse incentives. The problem is that regulatory Agencies are a means to an end desired by Progressives. That end is government by bureaucratic experts. More precisely it is government of, for, and by experts rather than elected representatives. It is profoundly undemocratic, inherently unaccountable and structurally incompatible with the U.S. constitutional order.

 

The U.S. constitution is designed “to secure the blessings of liberty” as the Declaration of Independence puts it. It does so by strictly limiting what government may legally do, leaving the pursuit of happiness to individuals, whose freedom is protected by government. That freedom inheres to the individual; it is a product of natural law, and is therefore pre-political.

 

The Progressive view, that the Constitution is a “living, breathing document” is fundamentally in conflict with the natural law interpretation. Where the natural law interpretation assumes men have rights by birth, the Progressive view is that rights come from the State. The natural law view sees property and contract rights as fundamental to men’s freedom and the pursuit of happiness. The Progressive view sees the pursuit of happiness in terms of entitlements. We are to be free from fear; we have a right to be well clothed, well housed and well fed.

 

While the natural law interpretation seeks to restrain government so as to allow maximum individual freedom, the Progressive view seeks to throw off restraints on government so that it can deliver the good life that men cannot achieve on their own. The mechanism to deliver the Progressive promise is the bureaucracy of the Administrative State. The Madisonian separation of powers in the U.S. constitution, designed to protect freedom, is an anathema to Progressives because it stands in the way of the Wilsonian goal of efficiency in administration.

 

And so when Steve Bannon said that the deconstruction of the Administrative State was a key policy goal of the Trump Administration he threw down the gauntlet. Deconstructing the Administrative State robs the Progressive movement of its prime tool, which is the bureaucracy. Deconstruction of the Administrative State leaves it an empty, powerless shell. Deconstructing the Administrative State and restricting government to its core legitimate functions would re-invigorate individual freedom and effort, leading to an explosion in economic growth and well-being, and a reduction in dependency.

 

The public policy question is, as always: markets or collectivism? The natural law viewpoint embedded in the constitution favors markets and individual freedom. The Progressive movement favors collectivism and central planning. The bureaucracy is its indispensable tool for command and control. Progressives and leftists of all stripes, trapped in the jejune utopianism of the 1960s, will fight with everything they have to squeeze a 21st century economy into a 1930s bureaucratic structure and the stasis that goes with it.

 

Because the stakes are so high, the political battle will be fierce. Winning the battle will be a long and difficult process. But the choice is clear: freedom and dynamism or collectivism and stasis.

 

JFB

 

 

 

 

 

 

 

 

 

 

 

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Chaos

“Can’t anyone here play this game?” – Casey Stengel addressing the Mets.

Well, that was quick. After serving something like 3 weeks in the Trump Administration, General Mike Flynn was Mike Flynnforced out as National Security Advisor. The proximate cause of the ouster was that Flynn misled Vice President Pence about his contacts with the Russian Ambassador in December after the election, but prior to President Trump’s inauguration. According to the New York Times, the Justice Department advised the White House that Flynn had not been “fully forthright” about his conversations with the ambassador.

The FBI had been examining Flynn’s phone calls as more questions were raised about his dealings with Russian officials. The FBI apparently decided that Flynn was subject to blackmail for covering his tracks with respect to what he told the White House. It also turns out that the Army has been investigating whether Flynn took money from the Russian government in a trip to Moscow in 2015. That could be a violation of the Emoluments Clause of the Constitution.

For his part, General Flynn, in his resignation letter, implausibly claimed that he had inadvertently briefed then Vice-President elect Pence with “incomplete information” because of “the fast pace of events”.

Needless to say there are lots of calls for a Congressional Investigation. And predictably enoughSean Spicer Democrats are asking what did the president know and when did he know it? Plenty of Republicans are wondering as well. According to Sean Spicer,
Trump knew for weeks that Flynn was lying and that after evaluating the situation, Trump asked for Flynn’s resignation. If that is true, it leaves open the question of why a replacement was not already waiting in the wings.

Let’s unpack what is going on here.

For starters, General Flynn was incredibly foolish. He had to know that his contacts with Russian officials were being monitored. (Whether they should have been is another matter entirely.) If it is in fact true that he lied to Pence, he had to go. And if the Director of National Security can’t remember the substance of his conversations with Russian officials, that’s a reason for dismissal as well.

Importantly, we do not know whether Flynn’s behavior was sanctioned by Trump, or whether he went off the reservation, and if so, why.

Leaving aside the apparent violation of protocol (imagine that, a Trump official violates protocol) let’s not kid ourselves about what is going on with the Army’s investigation of Flynn’s financial dealings with the Russian Government. It is a potential test case for the Emoluments Clause, which the Democrats intend to use when they get around to impeaching Trump in 2019 if they take control of Congress in the mid-term elections. Trump being Trump, he seems determined to give them plenty of ammunition.

But let’s not get carried away. Sloppy transitions are not all that unusual. George Stephanopoulos didn’t last very long in the White House briefing room before that responsibility was turned over to Dee Dee Myers, Bobby Inmanwho also didn’t last very long. Mike McCurry finally took over. It took the first Clinton Administration 2 failed attempts to get an Attorney General before settling on Janet Reno. Remember Zoe Baird and Kimba Wood? And that was when the same party controlled the White House and Congress.

Clinton’s first chief of staff, Mack McLarty a childhood friend was appointed in January 1993 only to be replaced by Leon Panetta in July 1994. Then there was the nomination of Bobby Inman as Secretary of Defense in January of 1994 to take over from Les Aspin after the fiasco in Mogadishu that was the subject of the book and later the film “Black Hawk Down”. Inman subsequently withdrew a few days later after a rambling speech on national television in which he attacked imagined enemies. William Perry later took the job.

Once again with the Trump Administration it is worth remembering Napoleon’s aphorism never to ascribe to malice that which is easily explainable by incompetence. Now would be a good time to get a few adults in the White House the way Clinton eventually did when he hired people like David Gergen and Leon Panetta. Otherwise, Trump, who is rapidly being schooled in the ways of the Beltway, stands a not-insignificant chance of being impeached down the road.

JFB

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A Win for School Choice

The Teacher’s Unions launched an all-out blitz against Betsy DeVos, Donald Trump’s nominee to be Secretary of Education. In the end she was confirmed, but just barely. After 2 Republicans and all Democratic Senators voted against her, it took the vote of Vice President Mike Pence to break the tie and put her over the top 51 – 50.

The hysteria over the DeVos nomination was evident in the Senate debate in the opening statement made by Senator Patty Murray (Washington, D) Ranking Member of the Senate’s Health, Education, Labor and Pensions Committee. Senator Murray rose as she put it “to strongly oppose Betsy DeVos and her plan to privatize public schools and destroy public education in America.” That gem, Trumpian in its subtlety and nuance, can be seen at about 17 seconds into her opening statement, shown in the video below.

Senator Murray probably didn’t come up with that one all by herself. Her puppet masters, the Teachers Unions did. Listen to Randi Weingarten, President of the American Federation of Teachers. She said that “In nominating DeVos Trump makes it loud and clear that his education policy will focus on privatizing, defunding and destroying public education in America”.
 
What Senator Murray is actually complaining about is the fact that Betsy DeVos is an ardent champion of charter schools and using vouchers to give parents the power of choice in the education marketplace. Not only that, she has actually spent her own money to promote the idea. But Senator Murray, who attended St. Brendan’s Catholic School and who routinely describes herself as “pro-choice” is bound and determined to prevent parents from exercising choice in their children’s education.

 

Let’s understand the politics here. There is a furious battle to define the issue because (leaving aside vested interests) polling data indicate that while the public (and especially minorities) tends to look favorably on school choice, the support is soft, and often dependent on how polling questions are worded. That said, there is a reason why reactionary liberals, of which Murray is one, resist any and all efforts to reform public schools. For them it has nothing to do with students. Public schools are a jobs program for a special interest group that showers them with campaign money and campaign workers.

 

And so at all costs, they resist experimentation and defend failure. Statistics published by the OECD and the National Assessment of Education Progress (NAEP) show the abysmal results coming out of the public school system. Among the 34 countries of the OECD the U.S. is about average in reading. But in mathematics, it ranks 27th while spending more than most. The OECD found that “Students in the United States have a particular weakness in performing mathematics tasks with higher cognitive demands, such as taking real-world situations, translating them into mathematical terms, and interpreting mathematical aspects in real-world problems.” But, “Students in the U.S. are largely satisfied with their school and view teacher-student relations positively”. In other words they are perfectly happy to be mediocre at best.

 

The NAEP statistics, some of which are summarized in the Table below, are in some respects even more appalling. Of 8th graders in America, only 33% are at or above proficiency in mathematics. In reading it is only 35%. The black / white gap in mathematics is stunning. Some 43% of white 8th graders are at or above proficiency, but only 13% of black students are. The only group that scores well is that of Asian and Pacific Islanders. In math and reading, they score at or above proficiency at 59% and 52% respectively.

 

Let’s cut to the chase. Does anybody seriously think that the public schools are serving minority students well when only 13% of black 8th graders are at or above proficiency in mathematics? And without the rigors of competition to replace union rules why would anyone expect this unconscionable state of affairs to change? The answer is, it won’t.

 

Upper class and upper middle class parents regardless of race do not face the same problem getting an education for their kids. They have the wherewithal to send their kids to private schools. As a result, public schools in well-to-do districts actually face real competition, which is one, but only one reason why schools in wealthy areas perform better. In addition, good schools are capitalized into housing prices, putting those schools out of reach for low-income families who can’t afford to buy homes in wealthy neighborhoods. They are effectively trapped in failing schools without a way out.

 

This tendency, and its racial effects, was recently emphasized in a study published by the New School in New York’s Greenwich Village. The study found that more than half of the city’s public schools are more than 90% black and Latino. The study’s authors attribute this level of segregation to the tendency of wealthy parents to “vote with their feet”. Rather than risk sending their kids to a neighborhood school with a history of low test scores, they opt to send their kids to private and charter schools. So conventional public schools are abandoned and wind up being islands of academic failure, largely for poor and minority kids.

 

Educational opportunity ought to be the Civil Rights battle of the early 21st century. But it, like just about everything else, seems to have become a partisan issue, although it remains true that people from across the ideological spectrum have favored different forms of school choice. Milton Friedman the famous libertarian economist was an ardent proponent of school vouchers. Eva Moskowitz, a liberal Democrat, is a strong proponent of Charter Schools. Governor Andrew Cuomo has sided with Moskowitz against Mayor Bill DeBlasio in Charter School political battles.

 

School choice is not a panacea. There are no panaceas. But there is evidence that strongly suggests that well-run charter and private schools produce results that are measurably better than public schools at statistically significant levels in poor areas. What is beyond serious dispute is that public schools, in poor areas without effective competition, have produced failure. And there is no incentive for them to improve. It is unconscionable that is allowed to continue and that politicians go on protect failing schools by resisting experimentation and innovation.

 

On JWallace Schoolhouse Doorune 11, 1963, George Wallace, the Governor of Alabama, stood in the school house door at Foster Auditorium at the University of Alabama to try to block the entry of two black students, Vivian Malone and James Hood. Wallace’s was a forlorn attempt to keep his campaign pledge of “segregation now, segregation tomorrow, segregation forever”.

 

Intentions aside, Patty Murray and her colleagues are slamming the door on minority and disadvantaged students no less forcefully than George Wallace tried to do in 1963. The saddest part of all is that up until this point, Murray and her colleagues have been more effective than Wallace.

Perhaps that is about to end.

JFB

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Neil Gorsuch On Deck

Donald Trump’s nomination of Neil Gorsuch to be the next Associate Justice of the Supreme Court is something that should cheer libertarians during a time when their hasn’t been much to cheer about. Judge Gorsuch has often been described as coming from the same mold as Antonin Scalia. But while both Scalia and Gorsuch have described themselves as originalists, Gorsuch’s sensibilities appear to be be far more libertarian than Scalia’s, whose sympathies tended to have a more of a majoritarian bent. Moreover, Gorsuch appears to part company with Scalia in an important area of Administrative law, namely the Chevron doctrine. More about Chevron later.

 

 

The hysteria generated by the nomination is impressive if for no other reason than the way it exposed left-wing gullibility. For example Salon managed to make Rolling Stone’s reporting look meticulously researched by comparison when they published and then retracted a claim that Gorsuch founded and led an organization named “Fascists Forever” while he attended an elite Jesuit prep school. The fact that the charge was taken with an ounce of seriousness, though obviously preposterous on its face, simply points to the credulousness of reporters who were only writing about fake news a couple of days ago.

 

It is understandable that Progressives are dismayed by the choice of Gorsuch to replace Scalia on the Court, because Gorsuch’s jurisprudence is a dagger pointed at the heart of the 100 year old Progressive Project. The underlying theory of that project is that government, staffed by the best and brightest, knows what’s best. And because government knows best, it will adopt the role of Plato’s Philosopher King and manage the lives of its citizens by controlling and limiting their choices through the regulatory mechanisms of the Administrative State.

 

 

It was then-Professor Woodrow Wilson (at Bryn Mawr 1887) who articulated the rationale for the bureaucracy that would grow into today’s beast. He argued that the complexities of modern life (remember this is in 1887) required a government by experts with large powers and unhampered discretion. The separation of powers that Madison devised to protect freedom by constraining government, was something to be scorned. It was simply an impediment to efficiency.

 

The huge, unaccountable and often coercive bureaucracy of the modern Administrative State is the result. Virtually every aspect of citizens’ lives is regulated various levels of bureaucracy. Obamacare, for instance, requires citizens to buy health insurance. The EPA determines how much water should be used each time a toilet is flushed. It is virtually impossible to build a bridge, road or pipeline anywhere without running into a wall of regulatory resistance. Couples without children are forced to buy health care insurance for the children they don’t have. Entry and exit into virtually every business in the country, from banking to nail salons to flower shops requires some sort of licensing by some government agency. Regulators have even shut down the occasional front-yard lemonade stand for reasons of non-compliance with some regulation.

 

One of the best measures of the growth of Administrative State is the size Federal Register, which contains proposed regulations from agencies, finalized rules, notices, corrections and presidential documents. The Federal Register was 2,620 pages long in 1936. By the end of 2015 it had topped 80,000 pages.

 

Pages in Federal Register

The National Association of Manufacturers estimated that the annual cost of regulations at about $2 trillion. Using a similar methodology, the Competitive Enterprise Institute estimated the annual cost at about $1.88 trillion. The Mercatus Center at George Mason University estimates that regulations that distort investment decisions have reduced average annual growth in the U.S. by 0.8% from 1977 to 2012.

 

These regulations are almost always marketed as regulations on businesses, but the reality is that the costs are almost always borne by consumers. Not only that, the well-connected are also accomplished at extracting economic rents through the strategic use of regulations, including the imposition of regulatory costs on their competitors. For their part, regulators are only too willing to play this game of regulatory capture because they travel back and forth between the bureaucracy and the businesses they oversee, supposedly on behalf of the people.

 

To make sure that the game goes on the Administrative Agencies have their own administrative courts, with the judges appointed by Agency heads. So the Agencies get to play judge, jury and prosecutor. And the (non-agency) courts have traditionally shown deference to Agency interpretations of regulations, thus closing the loop on citizens who naively believe that law-making should be done by the legislature and that the laws should mean what they say, rather than what some bureaucrat wants them to say.

 

That is where Judge Neil Gorsuch comes in. He has challenged the idea that the courts should show deference to government Agencies, a standard known as the Chevron doctrine, named after the Supreme Court’s ruling in Chevron v. Natural Resources Council (1984). In Chevron the Court ruled that courts must defer to an agency’s reasonable interpretation of an ambiguous statute that it administers. By 2005 that ruling had been broadened extended in NCTA v. Brand X Internet Services. In that case the Court held that courts must overrule their own interpretations about the meanings of existing laws in favor of later agency interpretations that satisfy Chevron.

 

Then in Gutierrez-Brizuela v. Lynch (2016) a unanimous panel granted an illegal alien’s petition for a review of a Board of Immigration Appeals order that denied his eligibility to apply for lawful residency. In a concurring opinion Gorsuch wrote that the Chevron standard “[permitted] executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design”. He went on to call for the Supreme Court to reconsider the soundness of the Chevron doctrine. (See Ed Whelan in National Review for more detail on these and other relevant cases).

 

Writing in National Review, Ed Whalen summarizes these cases and goes on to argue that the Chevron rule of judicial deference is ideologically neutral. It depends, he writes, on who is running a given Agency at a given time.

 

I disagree with that part of his analysis.

 

The entire Progressive project requires a massive bureaucracy vested with substantial power and discretion to manage the Administrative State, and through it the lives of the citizens. Moreover, the Administrative State will necessarily struggle for dominance over those institutions of civil society that protect citizens’ individual freedoms. That is because the goal is efficiency in the Public Administration, not the protection of liberty that the Madisonian architecture of government demands. In the Administrative State freedom is neither real nor inherent; it is merely instrumental. Hence the hysteria by the left over Citizen’s United.

 

Free markets provide free choices for consumers, but they are an anathema to the command-and-control mentality of the Administrative State. Freedom of speech and assembly, and the right to the free exercise of religion means that citizens have an inherent right to those activities; those rights pre-exist government. It is the government’s responsibility to secure those rights. Legitimate government authority is limited to its enumerated powers in the Constitution. But religious institutions have a claim to a higher authority, which is why religious freedom is so important for individual freedom. It is why, for instance, government may not legally force a priest to testify about what he heard in the Confessional.

 

This does not sit well with secular progressives. Which is why there is on ongoing campaign to weaken religious institutions and diminish their authority by bending them to the will of the State. It is why, for instance, the Obama administration attempted to force the Little Sisters of the Poor to provide contraceptives and abortafacients against their religious objections. It is why John Podesta, as revealed in his leaked e-mails, was looking for a way to undermine the Catholic Church so as to make it a political instrument of progressives. And let’s not forget that it was Obama who dismissively referred to people who “cling to their guns and religion.”

 

Nor is government a neutral observer in the culture wars. It actively promotes a progressive agenda through the bureaucracy. That is why it forces bakers and photographers to participate in same sex wedding ceremonies rather than to carve out religious exceptions. Anyone who doubts this should ask why it was otherwise OK for pop singers, fashion designers and movie stars to refuse to participate in Trump’s inauguration ceremonies, but a photographer can be forced against his religious beliefs to participate in a wedding ceremony. Or, for that matter, why locker room use has become the current obsession of the left.

 

 

Anyway, back to Neil Gorsuch. In his writings he has challenged the Chevron doctrine. That doctrine has supercharged the growth of the Administrative State and the vast bureaucracy it depends on to rule. Moreover, he has made clear the importance he places on the free exercise of religion as guaranteed by the First amendment. For instance he ruled in favor of the Little Sisters of the Poor and Hobby Lobby. (A brief summary of his record on religious liberty cases is available here.) In a clash between government power and the free exercise clause, it is pretty clear where Gorsuch stands.

 

The modern progressive State needs a vast bureaucracy to rule. And this modern progressive bureaucracy is at war with the Constitution as it was originally written. The progressive dream (more like a nightmare to the community of the sane) of an efficient central bureaucracy to manage the country cannot be squared with the separation of powers embedded in the structure of the U.S. Constitution. The Constitution is the mechanism designed to secure the blessings of liberty promised in the Declaration of Independence. It is designed to constrain, not empower government, so that individuals can have maximum freedom to live their own lives as they see fit.

 

Judge Gorsuch’s defense of religious liberty, freedom of speech, for that matter the entire Bill of Rights, and his challenge to the Chevron doctrine and therefore the primacy of the bureaucracy over liberty make him a deadly threat to the progressive project. Which is why, despite his having graduated from Columbia, Harvard Law, and Oxford (for his D.Phil.), progressives will pretend that he is “out of the mainstream” and therefore not qualified to be an Associate Justice. The irony is that Judge Gorsuch is precisely the type of judge who gives every indication that he will not hesitate to rule against the Trump Administration as it seeks to increase executive power. Liberals ought to think about that; Progressives are probably too far gone.

 

 

Judge Gorsuch will become the next Associate Justice. The only question is whether or not the Democrats try to filibuster. If they do, Mitch McConnell will go for the nuclear option, using Harry Reid’s destructive precedent, and Gorsuch will be confirmed with less than 60 votes. Plenty of Republicans would like to see it happen this way, because it will make the (possible) second nomination that much easier.

 

While Libertarians ought to be pleased about the choice of Gorsuch, they ought to be wary of another procedural blocking point—the filibuster—falling by the wayside. We can add that possibility to the long list of destructive consequences arising from the work of Harry Reid.

 

JFB

 

P.S. The video below, well worth watching, is a discussion of Gorsuch’s nomination by Randy Barnett, the libertarian law professor from Georgetown.

 

 

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Donald J Trump: Unleashed and Unhinged

A lot of conservatives have been scouring Donald Trump’s inaugural address in search of some encouraging signs. They are going to be looking for a long time. Not once did Trump utter the words Freedom or Liberty. Nor did he even intimate that he would attempt to reduce the size and power of an already bloated government. On the contrary, he promised to expand its use of coercion to redirect trade and investment.

Trump Inaugural

“From this day forward” Mr. Trump said, “it’s going to be only America first, America first.” He went on “We must protect our borders from the ravages of other countries making our product (sic), stealing our companies and destroying our jobs. Protection will lead to a great prosperity and strength”. If it does, it will be the first time in history.

 

The nonsense jam-packed into Trump’s remarks is testament to invincible ignorance, even by Trumpian standards. It is simply undeniable that global trade agreements in combination with free capital markets have enabled enormous gains in economic efficiency, making the world far richer today than it has ever been before. Economic illiterates aside, free trade has lifted billions of people out of horrific poverty. And it has greatly benefitted American consumers; particularly lower income consumers, by reducing prices for tradable goods.

 

It is clear that Trump sees the world as a zero-sum game. My gain is your loss. But in the real world, trade is a mutually beneficial and voluntary exchange of value that leaves both sides better off. That’s why the counterparties trade. However, in the zero-sum world of Trump, mutually beneficial trade is not possible. One side has to win and one has to lose. Which of course means that there is no such thing as free trade, or any real freedom at all. There is only power and coercion.

 

This Hobbesian conception of the world is the one subscribed to by Trump. It is is one in which life is nasty, brutish and short. It is a world of self-help where the strong coerce the weak. Behavioral norms do not matter. Peace is merely the interval between wars. This is the worldview that serves as a reference point for Donald Trump, the self-described counter-puncher. It is also how Vladimir Putin sees the world.

 

In International Relations theory this Hobbesian view is the foundation of the school of thought known as political Realism. It is distinct from Smithian Liberalism and Kantian cosmopolitanism. (Note—Realism is a term of art. American politicians who call themselves foreign policy “realists” typically  misuse the term.)

 

The political, economic and security architecture of the post war era is based on Smithian Liberalism. In this world, the nation-state is the primary organizational unit of world politics. Governments of nation-states exist to protect the rights of citizens. But while nation-states are sovereign over their own territory, the global system suffers from structural anarchy.

 

Smithian Liberalism recognizes the structural anarchy of world politics, and so it builds multi-lateral institutions to mitigate its harmful effects. That is why we have NATO, the World Bank, the IMF, the United Nations, free trade agreements and international policy regimes. The Liberal states that created these institutions embrace and protect the rule of law, property rights, individual rights and market economics. Note: these institutions are not supra-national organizations, possessing their own sovereignty. They remain instruments of states, whose behavior is guided by power, self-interest, international norms and policy values.

 

From the end of World War II until the present, this is the world we have lived in, with the framework implicitly guaranteed by the United States. It is without doubt the case that this Pax Americana has led to unprecedented gains in well being in the West and around the world.

 

Donald Trump threw a wrecking ball at all this in his inaugural address.

 

By threatening trade wars through an “America First” policy he threatens to tear apart the Liberal architecture of the post war era that has delivered unprecedented peace and prosperity to so many people around the world. And because of the structural anarchy of world politics, Liberal institutions rely on trust and norms. Trashing those norms is destructive, even if “only” to stake out a negotiating position.

 

The irony is that for all of Trump’s blather about getting rid of regulations, he is threatening to embark on one of the greatest expansions of the regulatory state in history, not to mention the use of the bully pulpit to browbeat citizens whose rights he has sworn to protect. For instance His Majesty announced he was entering the decree issuing business. HRH Trump, (note the use of the royal “We”) said, “We…are issuing a new decree to be heard in every city, in every foreign capital and in every hall of power.” He went on to say, “We will follow two simple rules: Buy American and hire American.”

 

Where does he think he gets the authority to command citizens to “buy American”? Let’s think about that for a moment. Then let’s think about the magnitude and absurdity of the edict and what implementing it would actually entail.

 

U.S. GDP is about $18 trillion, which is about 17% of Gross World Product (GWP). Trade (the sum of exports and imports) accounts for about $5 trillion in the U.S., or 28% of U.S. GDP. How, exactly, does His Royal Highness propose to go about quashing $5 trillion worth of trade, equal to about 28% of GDP without a huge increase in the power of the regulatory state? Does he seriously intend to place large tariffs on imported goods, thereby imposing a new tax on American consumers? Does he intend to give the IRS even more regulatory enforcement powers? Does he not think—to the extent he thinks at all—that foreign governments will respond in kind? How exactly is all this supposed to help?

 

The answer is that it won’t help anybody. The only question is how much damage these policies would do if enacted and implemented.

 

Donald Trump and his supporters have provided an object lesson in the dangers of combining ignorance and enthusiasm. Let us hope that the remaining adults on Capital Hill will recognize the danger and reassert Congress’s powers under the Constitution as a co-equal branch of government. At which point they should begin to dismantle the worst excesses of the regulatory state and block Donald Trump rather than acquiesce as he attempts to expand it.

 

Otherwise it’s going to be a long four years.

 

JFB

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