We HPN in shifts now, it seems. Frank has a facebook, and all is lost. Here’s a protest poem for your Friday:
The law locks up the man or woman
Who steals the goose from off the common
But leaves the greater villain loose
Who steals the common from off the goose.
The law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who take things that are yours and mine.
The poor and wretched don’t escape
If they conspire the law to break;
This must be so but they endure
Those who conspire to make the law.
The law locks up the man or woman
Who steals the goose from off the common
And geese will still a common lack
Till they go and steal it back.
– 17th century protest against English enclosure
For multiple perspectives on Geithner’s new plan to bribe investors into buying the banks’ leprous assets, check out this NYT Room for Debate.
I’ve been increasingly impressed with Krugman as of late. He loves the welfare state, hated Bush, and has been harping on Income Disparity for years now. But he’s got his head on his shoulders: he’s down on rent control, down on protectionism (he specializes in foreign trade), and down on this new freakish Public-Private Chimera of a plan.
This plan and it’s supporters have too much faith in the markets, I’m afraid. They hope that we can coax the Invisible Hand back to the County Fair so we can sell it some more Snake Oil. If we can get people to spend money on these assets, Geithner and his proponents say, their prices will go up, our wealth will return, the banks will recover, and we can dive right back up to our eyeballs in buttery debt. » Read the rest of this entry «
Frank threw down a friendly gauntlet earlier which I’m reluctant to pick up for several reasons: 1) protectionism is a label applied by its enemies to a scatter shot group of economic theories; 2) the question on the table requires lots of back-story and a bibliography way too long to appear on such a fey little webzine like HPN; and most importantly, 3) I’m not even a protectionist, by the common definition.
Nevertheless, here are my 8 theses, naked and unsubstantiated as they may be. A real discussion of all this would require picking up volumes of Friedman, Adam Smith, William Cavanaugh, and G.K. Chesterton, among others.
I.
Protectionism can = selfish nationalism. I’m sure there are plenty of economic jingoists who proudly hold to protectionism. But that’s not anything I wish to defend. I much prefer the “localist” label. So…
II.
Localism stands against globalism, which isn’t to say that it is not concerned over the plight of other peoples. Rather, localism makes the case that globalism is actually one of the great oppressive forces in the modern world. Globalism wishes to provide products and services for the cheapest cost that “The Market” can offer. If a Chinese factory can produce G.I. Joes for one-quarter the cost of a domestic toy manufacturuing plant, guess who wins out? In 1965, manufacturing made up 53% of the American economy. As of 2004, that number is just 9%. So first, from the American point of view, globalism has made us utterly dependent on countless foreign industries to continue to exist. We are no longer self-sufficient. If a foreign power felt emboldened enough to completely shut down its exports to the US (e.g. if the UAE enacted an oil embargo), we would be in a desperate condition. Globalism has fueled almost limitless growth in the first-world, but at a tremendous cost to both the first-world and the third-world.
III.
Localism, even in its most “protectionist” forms, is not against trade between nations. It is not against the idea of imports. And it is certainly not mercantilism—not by a long shot.
IV.
Positively defined, localism prioritizes community rather than growth.
V.
Localism manifests itself in a number of different movements, including agrarianism and New Urbanism. It stands against modernity and its ugly bastard children: suburbanism/urban rot, strip malls, industrial agriculture, corporatism, Washington D.C., and iPods. It stands for urban renewal (read: parish life), regional architecture, small businesses, local and seasonal agriculture, city councils, and the local symphony. Localism doesn’t believe that economic hegemony (i.e. having a McDonalds on every street corner from St Louis to Turin to Bangkok) is healthy for a society. Localism disapproves of putting the liveihoods of a third-world village entirely at the disposal of a first-world corporation.
VI.
Localism emphasizes that in a global economy, the winners are the US corporations who can cut costs and the corrupt foreign leaders who offer up their laborers at unimaginably cheap rates. The losers are the third- and second-world poor. Even worse, when third-world villages are conscripted into the global economy, they become dependent on the “mercy” of their foreign employer. If the first-world corporation closes down production in the village, the workers are even worse off than before.
VII.
Localism believes that just rulers should protect the weak against the powerful. Some might argue that tariffs are a good way to do this. Others might advocate an alternative. See Phillip Blond.
“I want to see what kind of language we can … work on this issue,” [Obama] added. “I think it would be a mistake, though, at a time when worldwide trade is declining for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade.”
Do you disagree with your President? If so, why?
I’m actually quite interested to know why you—someone who has taken great pains to convince me that Third World corporate factories are wrong—would be in favor of protectionism.
And calling me “Chicagoan” or “Friedman” isn’t enough. I’m not trying to goad you into an argument; just trying to figure if you’ve written me off just because I sound like Friedman and von Mises. (Because we both know how unfair that would be.)
I have some fairly substantial problems with Austrian economics. But in the spirit of ecumenicity, I want to post this extraordinary clip of Peter Schiff, who took on FoxNews blowhards who tried to pretend back in 2006 and 2007 that our economy was “fundamentally sound,” as a certain presidential candidate so tragically put it. Of special note is Schiff’s tete-a-tete with Arthur Laffer (of the infamous Laffer Curve):
Peter Schiff: I think it’s going to be pretty bad, and whether it starts in 07 or 08 is immaterial and I also think it’s going to last for years rather than quarters. You see the basic problem with the US economy is we have too much consumption and borrowing and not enough production and savings, and what’s going to happen is that the American consumer is basically going to stop consuming and rebuild his savings, especially when he sees his home equity evaporate. And when you have the economy at 70 per cent consumption you can’t address those rebalances without a recession. Rather than the recession being resisted, it should be embraced because the disease is all this debt finance consumption. The cure is that we stop consuming and start saving, and that’s a recession. Sometimes the medicine tastes bad but you’ve got to swallow it.
Cabrera: Do you believe that, Art?
Arthur Laffer: No I don’t believe any of it whatsoever, Michelle. Excuse me, what he’s saying is savings are way down in this country but wealth has risen dramatically, the United States economy has never been in better shape. There is no tax increase coming in the next couple of years, monetary policy is spectacular and we have freer trade than ever before and not only that there’s no income policies here, I think Peter is totally off-base and I just don’t know where he’s getting his stuff.
Schiff: One of us is off-base but it’s definitely not me.
Laffer: I’m going to make a bet with you on this one. I’ll bet you a penny on this one, If you’ll sign a letter saying that you were wrong to me on this. But, you’re way off base, there’s nothing out there that tells us this – we’re going to have a nice slowdown but it’s not going to be a crash.
[...]
Schiff: It’s not wealth that’s increased in the last few years. We haven’t increased our productive capacity. All that’s increased is the paper value of our stocks and real estate. But that’s not real wealth, no more than —
This is an economics post. That’s right! According to BWE, “Doesn’t the Bible say something about ‘It’s easier for a rich man to get into heaven than for a cat to fit through diet beverage packaging’?”
The cat, Maru, has its own website: http://sisinmaru.blog17.fc2.com/
Jesus’s words are full of resentment against the rich, and the Apostles are no meeker in this respect. The Rich Man is condemned because he is rich, the Beggar praised because he is poor…. In God’s Kingdom the poor shall be rich, but the rich shall be made to suffer. Later revisers have tried to soften the words of Christ against the rich … but there is quite enough left to support those who incite the world to hatred of the rich, revenge, murder and arson…. This is a case in which the Redeemer’s words bore evil seed. More harm has been done, and more blood shed, on account of them than by the persecution of heretics and the burning of witches. They have always rendered the Church defenceless against all movements which aim at destroying human society. The church as an organization has certainly always stood on the side of those who tried to ward off communistic attack. But it … was continually disarmed by the words: “Blessed be ye poor; for yours is the Kingdom of God.” — Ludwig von Mises
I’d like to invite you all to participate in a new segment here on the blog. That’s right, it’s…
Correct Austin’s Economic Ignorance!
In this episode, I’ll question laissez-faire and trickle-down economics, and you can tell me what’s wrong with my speculations.
In “trickle-down” economics, what’s good for the rich is good for everyone. If the rich have more money, they’ll invest in the economy, creating jobs, helping the poor, etc.
But it seems like money always flows “uphill”, from the rich to the poor. The rich have more money than they can spend, and the poor have to spend everything that they make. On the lower end of the income spetrum, income matches or exceeds expenses all the time. People live paycheck to paycheck, and when they spend money some of it goes to the other workers living paycheck to paycheck, and some of it goes to the owner of the means of production, who adds it to his money bin.
This system is broken.
The money needs to be forced into circulation, which means higher taxes for the rich. But they shouldn’t care, because the money will come back to them. This isn’t socialism, it’s making capitalism work. Discuss.
For those of you who care to mix economics with Obama, I found this piece to be particularly intriguing.
Quoth!:
Based on this interview, it seems unlikely that Obama opposes constitutionalizing the redistributive agenda because he’s an originalist, or otherwise endorses the Constitution as a “charter of negative liberties,” though he explicitly recognizes that this is how the Constitution has been interpreted since the Founding. Rather, he seems to think that focusing on litigation distracts liberal activists from necessary political organizing, and that any radical victories they might manage to win from the courts would be unstable because those decisions wouldn’t have public backing. The way to change judicial decisions, according to Obama, is to change the underlying political and social dynamics; changes in the law primarily follow changes in society, not vice versa.
Three points of interest:
1. I’ve always been curious about Obama’s specific views concerning The Constitution. There’s some meaty stuff here, especially Obama’s surprisingly not Statist view that social change doesn’t come through the courts.
2. I couldn’t help but draw a corollary between “redistributive change” and our own hope of ending abortion. Especially compelling is his point that the courts generally follow society’s status quo when making potentially revolutionary decisions.
Generally.
3. In the comments, the following socialist gem, from Adam Smith of all people:
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
I just finished reading Economics in One Lesson, which should be subtitled “Why The Kingdom of God is a Free Market, and Marxists Eat Babies.” Adam Smith is quoted extensively throughout.
Frank threw down 
