Category: Public Policy

Blog author: jspalink
Wednesday, October 10, 2007

Society is changing as economic freedom and diversification gradually creep into the Middle East. Dr. Samuel Gregg, director of research at the Acton Institute, explores the effects of free trade on nations including Kuwait, Bahrain, Qatar, and the United Arab Emirates and, in turn, the effect those nations are having on their neighbors.

The diversification of economies, notably the development of new products and services for export, allows nations to grow out of reliance on oil production as the main source of capital. The emerging economies create an entrepreneurial atmosphere open to all and encourages foreign investment. The result is a rise out of poverty and more open foreign relations.

Read the full commentary here.

Normally, I’m not a huge fan of Congressman John Dingell. But on this issue, I have to at least give him points for honesty:

Democrats took over Congress vowing to make global warming a top priority, and House Speaker Nancy Pelosi planned to notch a quick victory with a bill that was long on political symbolism and cost, if short on actual emissions reductions.

Standing in her way has been Mr. Dingell. Much to the speaker’s consternation, the powerful chairman of the Energy and Commerce Committee is insisting that any bill should actually accomplish something, and that its pain be borne by all Americans (rather than just his Detroit auto makers). In recent months he has been circulating his own proposals for hefty new taxes on energy, gasoline and homeowners–ideas that are already giving the rest of his party the willies.

His position arguably makes Mr. Dingell the lone honest broker in the global warming debate. But it also makes him a headache for all his Democratic friends, who’d prefer he just play political nice. For his part, the 81-year-old Dean of the House–as feisty and courtly and colorful a congressman as you’ll ever find–is unrepentant.

“I wasn’t sent down here to destitute [my district]. And I wasn’t sent down here to destitute anyone else. . . . I’ve got a responsibility to legislate, but I’ve got a responsibility to legislate well. I’m going to be honest with the American people about this and say ‘look here, fellas, this is what we’re going to have to do to you to fix global warming. You tell us whether you like it or not.’ “

Read the whole interview, and be sure to savor the ease with which Dingell talks of directly controlling or changing your life from his perch in the government. Honest, and frankly – chilling.

Blog author: eschansberg
Saturday, October 6, 2007

Well…except Goliath is mostly a good guy too– and he’s the one putting rocks in the air– and David got beat in this case by the government.

From yesterday’s (Louisville) Courier-Journal, Charlie White and Sara Cunningham report on the stand-off between homeowner David McCarty and the local Wal-Mart under construction in Lebanon, KY.

Complying with a court order, a Central Kentucky man yesterday ended his sit-down protest a few feet from a blasting site — part of the construction of a Wal-Mart development adjacent to his property. As dusk approached, David McCarty took refuge in his house just outside Lebanon before workers set off the dynamite near his back fence.

On Wednesday, weary from months of the nearby construction work and angry over what he said was damage to his property, McCarty had been determined to keep Wal-Mart from detonating the dynamite to make way for a water line…

The explosions occurred about 5 p.m., ending an exhausting couple of days for the family, whose members say they dealt with daily noise, dust and debris for about four months before deciding to take action…

The police couldn’t intervene in the stand-off because neither side is breaking the law, said Shelton Young, chief of the Lebanon Police Department.

“There was no legal basis for us to make him go in or stop (construction workers) from detonating,” Young said. “The homeowner was just as cordial and courteous as could be to the officers and to the Wal-Mart construction people. The workers weren’t aggressive either. We stayed for a couple hours to make sure everyone was keeping friendly and then we left.”…

The McCartys, who have lived at 2040 Campbellsville Road just outside the Lebanon city limits for 10 years, are now surrounded on all sides by the development.

“They are literally on an island in a sea of construction,” Spainhour said of his clients. “You can’t stand in his yard without getting covered in dust.”…

McCarty said he is eager to sell his property. “I want out of here,” he said in an interview late Wednesday night…he gave a quote for the land to Wal-Mart officials, but would not specify the amount. He acknowledged that the quote was more than the property is worth.

“It may not be worth it right now, but when the new Wal-Mart is up and running, it will be worth every penny,” he said.

Beyond an interesting story, economists would point to the “externalities” involved here. This is a case where one party causes damage– and benefit– to another party. Wal-Mart is damaging McCarty by lowering the value of his property in the short-term (e.g., he can’t sit in his back yard when they set off the dynamite) and helping him by enhancing the value of his property in the long-term (his land is worth much after a Wal-Mart is next door).

But in addition to Wal-Mart’s impact on McCarty, the latter can mess with the former– whether by sitting in his lawn chair or by demanding an artificially high price for his land (or going inside his house while they blow things up). Once Wal-Mart bought the property next to McCarty, he gained tremendous bargaining power over the company and the control of its land!

At least in theory, all of this could have been handled privately. I suspect that WalMart and McCarty could have reached a contractual agreement that was mutually beneficial. When that didn’t/couldn’t happen, the matter must be settled by some aspect of government. The police (as enforcement officers of the State) had no jurisdiction since no laws were being broken. So, it was left to a judge’s interpretation.

How hard did David and Goliath work to avoid the stand-off? It’s not reported. But in this case, a market solution was available before people started throwing stones.

(cross-posted on

The mammoth Congressional expansion of SCHIP is such a bad idea, even the normally big spending President Bush vetoed the bill. I wrote a piece titled, “Abandon SCHIP: Big Government Returns,” which is now available on the Acton Website.

The political posturing concerning the program has reached a troubling level. Supporters are using using kids as props to usher in socialized medicine and government expansion. But one of the main problems with the bill is the regressive characteristic of the expanded version. Money will be transfered from poorer states and citizens to fund a permanent middle to upper-middle class entitlement. While the growing cost of health care is a serious problem, we need to find solutions that provide affordable private coverage outside of the impending bureaucratic and regulatory nightmare.

Another growing frustration is a lack of conservative leadership on explaining the consequences of expanding this program. In general it seems, in the last few years political and moral leadership on government expansion has been largely vacant. Conservatives use to fight the expansion of these programs and point out the unintended consequences of such measures. Do we really want a permanent entitlement for the well to do?

Blog author: jballor
Thursday, October 4, 2007

The Free Exchange blog at (HT) concludes a long and thoughtful post on fair trade, specifically in response to this recent NYT article, “Fair Trade in Bloom,” by wondering:

And how does this affect coffee supply? If a premium is available for fair-trade coffee, shouldn’t other growers enter the market to take advantage of it until the price of coffee is bid down to market levels, leaving total producer take–baseline coffee price plus premium–where it stood before? Such a scenario would also raise distributional questions. If higher coffee prices attract market entrants, then coffee-growing nations will shift resources into that sector, which might be good for grower incomes, but could potentially inhibit the development of other economic activities.

Not to take anything away from the stated goals of the fair-trade movement or the well-meaning consumers who wish to do better by farmers in poor countries. Still, in any economic process, it’s often difficult to foresee the second- and third-order effects of a decision. It will be interesting to observe how growth in fair-trade products changes the structure of markets for targeted commodities.

These sorts of questions and concerns are at the heart of my past criticisms of the fair trade movement.

To the extent that fair trade certifiers are simply acting as agents to inform consumers and guarantee certain practices, to which coffee buyers can freely respond either affirmatively or negatively, there’s no real complaint. Fair trade becomes a boutique item that has to compete in the free marketplace.

But to the extent that the fair trade movement reflects a more thoroughgoing critique of market forces and the “fairness” or justice of market prices, it becomes more problematic. It becomes an entirely different paradigmatic alternative to a system of free trade.

You’ve essentially replaced market prices with arbitrarily determined prices, which are subjectively determined to be “fair.” Compare this with the traditional and classic scholastic understanding of a “just” price as the market value in the absence of any and all fraud and conspiracy.

The Free Exchange blog piece points out all sorts of negative consequences of the change from “just” to “fair” prices, not least of which is the increasing saturation of an already saturated market because of artificial subsidization of a particular commodity. Furthermore, it’s hard to see how it makes good economic and environmental stewardship to subsidize and promote the growth and production of a commodity of which we already have too much.

For more on the disconnect between the intentions and the consequences of the fair trade movement, check out this study, “Does Fair Trade Coffee Help the Poor?”

Blog author: jcouretas
Wednesday, October 3, 2007

The new issue of Philanthropy Magazine features a cover story on Frank Hanna, vice chairman of the Acton Institute board of directors, and winner of the 2007 William E. Simon Prize for Philanthropic Leadership. The story is titled “Call of the Philanthropist,” a play on Acton’s Call of the Entrepreneur documentary, which features Hanna prominently.

The lengthy profile by Christopher Levenick offers insights into Hanna’s philanthropic activities and his philosophy of giving. Rev. Robert Sirico is quoted extensively, as are executives of other nonprofits that Hanna supports. For those who are interested in how philanthropy can be thoughtfully applied — and effective — the article is well worth reading.

Here’s Hanna on “indispensable causes:”

According to Hanna, donors should direct their funds only to causes they deem truly essential. “I believe,” he writes, “that the charities to which we give significant help should themselves be indispensable. In other words, their success should bring to mankind physical, intellectual, moral, or spiritual benefits of the most important kind, benefits without which mankind (or particular individuals) would be fundamentally diminished.”

Once philanthropists have identified the indispensable causes, they should restrict their donations to charities for which their support is truly indispensable. A small contribution to a massive organization will have marginal influence, at best. A series of marginal contributions is hardly better. Funds are always best spent where they will be put to the most effective use. If the organization can succeed without this donation, the money would be better spent on an organization that absolutely needs the funds to attain its objectives.

The Principle of Indispensability is designed to help maximize the leverage of charitable contributions. “Archimedes is credited with discovering how to use a lever to get seemingly disproportionate results,” says Hanna. “But Archimedes didn’t just stick his lever anywhere. He had to find the point of maximal leverage.” So too with philanthropy: Charitable donations achieve seemingly disproportionate results when they are directed to the point of maximal leverage.

A quote from T. H. Green, refuting the view that the law’s “only business is to prevent interference with the liberty of the individual,” construed as doing what you like as long as it does not infringe on others’ rights to do what they want. Green writes:

The true ground of objection to ‘paternal government’ is not that it violates the ‘laissez faire’ principle and conceives that its office is to make people good, to promote morality, but that it rests on a misconception of morality. The real function of government being to maintain conditions of life in which morality shall be possible, and morality consisting in the disinterested performance of self-imposed duties, ‘paternal government’ does its best to make it impossible by narrowing the room for the self-imposition of duties and for the play of disinterested motives.

From Green’s Lectures on the Principles of Political Obligation (PDF) [1883], quoted in Himmelfarb, The De-Moralization of Society, p. 152.

See also, “Moral Duties and Positive Rights.”