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October 29, 2004
GDP and the Election, Part II
Here is the headline: "GDP growth weaker than expected"
3.7% is a very strong number. But the forecasts were so high that, like I said yesterday, this isn't going to give Bush or Kerry a boost one way or another.
Posted by Peter Mork at 6:53 AM | Comments | TrackBack
October 28, 2004
Are Liberty and Democracy Equivalent?
Earlier this week Cox & Forkum published this cartoon:
The cartoon was a reaction to Bush's response to a question on what would happen if Iraqi elections produced a fundamentalist Islamic government. As Bush was quoted:
"I will be disappointed. But democracy is democracy," Bush said. "If that's what the people choose, that's what the people choose."
What's disturbing about this quote is that it leaves the impression that Bush is unaware of what makes this country great. It's not simply that we practice democracy, it lies in the fact that we are republic based on a constitution that enshrines individual rights. This is a point that is lost in much of today's political debate, but is captured in the editorial cartoon superbly. Democracy is not an end and of itself, it must be limited by laws that protect the individual from the majority vote. Friedrich Hayek highlighted this issue in his classic The Constitution of Liberty:
"The dogmatic democrat feels, in particular, that any current majority ought to have the right to decide what powers it has and how to exercise them, while the liberal regards it as important that the powers of any temporary majority be limited by long-term principles."
Bush has stated that he views the job of the U.S. should be to "spread freedom". If he envisions leaving Iraq in the hands of a simple majority rule he is not even living up to his own debatable standard. Without a proper constitution, whose to say that Iraq won't vote in a regime that is even more hostile to the U.S. than that of Saddam and his Bathist party? I agree with the President that people across this globe want to be free, but there is a serious debate in how to best accomplish this noble goal. If his version of freedom is democracies that are not limited by a respect for the individual's right to his or her own life, it won't make this world a safer place.
Update: After writing this I found Bush's full quote and to his credit he does mention the word "constitution". Still though, the post above remains valid.
BUSH: I will be disappointed, but democracy is democracy. They have now got a - the beginnings of a constitution, the TAL, which sends a different message, that there will be tolerance and an open society. But people - if that's what the people choose, that's what the people choose.
Posted by Peter Mork at 11:47 PM | Comments | TrackBack
Economics and Morality
I read Steve Landsburg's reasons for voting for Bush a few nights ago. He is one of only five Slate staff members surveyed that is casting his ballot for the incumbent this coming Tuesday. In his statement he certainly didn't mince his words:
If George Bush had chosen the racist David Duke as a running mate, I'd have voted against him, almost without regard to any other issue. Instead, John Kerry chose the xenophobe John Edwards as a running mate. I will therefore vote against John Kerry.
Duke thinks it's imperative to protect white jobs from black competition. Edwards thinks it's imperative to protect American jobs from foreign competition. There's not a dime's worth of moral difference there. While Duke would discriminate on the arbitrary basis of skin color, Edwards would discriminate on the arbitrary basis of birthplace. Either way, bigotry is bigotry, and appeals to base instincts should always be repudiated.
Bush's reckless spending and disregard for the truth had me almost ready to vote for Kerry-until Kerry picked his running mate. When the real David Duke ran against a corrupt felon for governor of Lousiana, the bumper stickers read, "Vote for the crook. It's important." Well, I'm voting for the reckless spendthrift. It's important again.
The Agitator picked it up the following day and Landsburg himself posted on the subject at Marginal Revolution. As I'm coming in late on this one I thought I would just point out the similarities to my thought process on trade, which helped spur the idea for my book. As I recount in the "About" section of this webpage, an article in The Wall Street Journal started me along the same train of thought:
An article entitled "Bitter Fruit: Spat Persist Despite Nafta" discussed how in San Diego avocados cost about $4.00 a pound, while in Tijuana, just miles away, the price was less than 30 cents a pound. This despite the free trade agreement Nafta. This quote specifically stuck out:
" 'The California growers want to control all of the supply -- that way they get the best prices,' complains Ricardo Salgado, who raises avocados on 25 acres outside Uruapan, Michoacan, which has some of the world's lushest groves. 'We'd love to have a bigger selling season, but right now we have to wait for the U.S. Congress to give us permission.' "
Any Ph.D. Economist could draw out supply and demand charts, explaining step by step the benefits of free trade and the theory of competitive advantage in relation to the world avocado market. The only problem is that two minutes into the conversation it is quite possible you would be bored to tears. Even if you made it through the entire dialogue, it's unlikely you would be able to explain the idea yourself, let alone replicate the graphs the economist had produced.
But then here is Ricardo Salgado, and without any graphs or definitions it's possible for anyone to ask: "Why am I allowed to buy avocados from an American whose orchard is in Fallbrook, California but it's illegal for me to buy from Ricardo whose orchard is in Uruapan?" Moreover, while surely American avocado growers would face hardships if Ricardo were allowed to sell his avocados in the U.S., are they born with some rights that Ricardo is not?
On a closing point a lot of debate seems to have been generated over what defines right and wrong when it comes to discrimination. As Vice Squad puts it:
Would one be a bigot to discriminate in favor of one's own children versus strangers? One's neighbors? When is discrimination arbitrary, and when is it not arbitrary?
Let's say a mother decides to hire her child instead of a more qualified applicant who is of no relation to her. Is this wrong? Well the mother has a personal relationship with her son or daughter which she presumably values and gains from... so it's not strictly a business decision.
But this is taking the subject out of the context in which it was originally discussed. Let's say this same mother decides to hire the more qualified applicant instead her child. What if a politician came along and said, by law, she has no choice in the matter. She must hire her child to help strengthen the family unit. In addition, she would be threatened by fines and eventual imprisonment if she failed to comply. This is clearly wrong by my standard of values, but whoever's elected as the next President and Vice-President, to a degree, they will have this power.
To be clear, Bush has been far from perfect in this area as he imposed steel tariffs that President Clinton twice refused to put in place. Unfortunately the Kerry/Edwards ticket has ignored this flaw in the President's record, instead taking an even more protectionist stance during the campaign. It was a lost opportunity in my book, especially with Kerry's strong free-trade record.
Posted by Peter Mork at 5:37 PM | Comments | TrackBack
GDP and the Election
Tomorrow morning the first reading of GDP growth for the 3rd quarter will hit the wires. A consensus of economists are forecasting a 4.3% annualized growth rate while Briefing is forecasting a scorching 5.0% rate. These are high estimates. Since the release is the Friday before the election, the number could definitely have some political implications.
Truthfully though it might be a wash. I think the likely scenario is growth coming in at a strong 3-4% range, followed by headlines in the press such as: "Economy Grows in 3Q... Yet Slower than Economists Expected". Both sides could use this as ammunition and it won't swing voters one way or the other. Tune in tomorrow morning to see how this plays out.
Posted by Peter Mork at 11:15 AM | Comments | TrackBack
October 26, 2004
Libertarians Of All Varieties
Last week when I calculated the percent going to each candidate from a Reason poll of prominent libertarians, I was surprised by Nader's relatively strong showing in 2000. While he is a great spokesman against corporate welfare, he is also the biggest proponent of regulating those same corporations. Not a quality I associate with a party of limited government.
In the same vein, when Lawrence N. Allen described his politics on the front page of the WSJ this morning as "to the left of the standard Democratic candidate", thoughts of nationalized health care, higher taxes and protectionism start flying through my head. For this reason his vote in 2000 was an initial surprise:
To prepare for next week's election, Lawrence N. Allen taught himself the Matlab statistical programming language and built a database of 1,700 state polls pulled off the Internet. His program runs a "likelihood analysis" on 15 closely contested battleground states. It takes 50 minutes to run on an old computer he got in return for a bunch of parts from a broken laptop.
The unemployed computer programmer in Oakland, Calif., identifies his politics as "to the left of standard Democratic candidates" and says he flirted with voting for Ralph Nader in 2000 before opting for libertarian Harry Browne. His calculations, made on Oct. 20, give Mr. Bush a 78.1% chance of victory.
Posted by Peter Mork at 8:06 AM | Comments | TrackBack
October 25, 2004
Protecting Bubba Gump
Last Thursday, the WSJ ran a front-page article on Vietnam and it's thriving shrimp industry. The article is yet another example of how trade not only makes us all better off financially, but it also brings cultures closer together. In the case the U.S. and Vietnam this is happening despite the fact our two countries were at war just a few decades ago. Unfortunately, the U.S. may begin to reverse this trend by placing tariffs on Vietnamese shrimp in order to protect domestic producers.
NAM CAN, Vietnam -- As a Viet Cong guerrilla, Chung Thanh Tam once dodged American bullets here in the Mekong delta. More than a decade later, he began raising shrimp in ponds dug beside these same waterways, and came to appreciate Americans for their hearty appetites.
Now, the 54-year-old Mr. Tam again feels under attack. In July, the U.S. Commerce Department proposed socking Vietnamese shrimp exports to the U.S. with tariffs ranging from 12% to 93%. The U.S. also imposed tariffs on five other nations, agreeing with the allegation of U.S. shrimpers that foreign competitors were unfairly selling shrimp at below-market prices, a practice known as dumping.
"Thanks to shrimp, I could afford decent marriages for my children," says the father of seven, donning aviator sunglasses against a fierce midday sun. "Now the U.S. is trying to make our life hard again."
As mentioned above, the tariffs will be justified on the grounds that the Commerce Department says the Vientamese are selling shrimp below costs. But here is a question to ponder: if Mr. Tam losing money by selling his shrimp "below cost", how does this help him to better afford decent marriages for his children?
Further down the article there is a quote that gives some comfort to those who, like me, worry that a Kerry administration will take the U.S. down a protectionist road:
"Vietnam is a country trying to follow our advice and reward entrepreneurship," says Frances Zwenig, a former chief of staff for Sen. John Kerry who has worked for years on building U.S. diplomatic and commercial ties to Vietnam. "Then when they take that advice, we punish them: That is a really harmful lesson."
If Kerry has surrounded himself with people like Zwenig in the past, it could be a sign he that Kerry's recent criticism of free trade is nothing more than pandering to his base during an election. And if in a little over a week we learn that he will be the 44th President of the United States, it is one sign of hope that he will return to his free trade roots.
Posted by Peter Mork at 11:58 AM | Comments | TrackBack
October 21, 2004
The Libertarians Decide, 2004
Dan Drezner links to "Reason’s revealing presidential poll" of prominent libertarians. Reading through it I was surprised by the many of the answers so I threw them into excel to make this table. (NV=Not Voting, NS=Not Saying, Total of 47 Surveyed)
Comparing the 2004 numbers to 2000 the big losers look to be the Libertarian Party and Nader. Big winner is clearly Kerry and the Democrats. There is some room for interpretation here as when people would say they were still deciding between, say, Kerry and Badnarick, I'd give them each a half vote. If anyone is interested in looking at the excel sheet send me an email and I'll zip it over.
As usual P.J. O'Rourke was pretty funny:
P.J. O’RourkeO’Rourke is H.L. Mencken Research Fellow at the Cato Institute and author, most recently, of Peace Kills (Atlantic Monthly Press).
2004 vote: George W. Bush, because I don’t want Johnnie Cochran on the Supreme Court.
2000 vote: George W. Bush. (I always vote Republican because Republicans have fewer ideas. Although, in the case of George W., not fewer enough.)
Most embarrassing vote: A 1968 write-in for "Chairman Meow," my girlfriend’s cat. It seemed very funny at the time. As I mentioned, this was 1968.
Favorite president: Calvin Coolidge -- why say more?
Posted by Peter Mork at 10:42 PM | Comments | TrackBack
Welcome To My World
The Recap
Back in August a debate was raging regarding laws that force landlords to provide today's basic necessities such as heating and hot water. Alex Tabarrok started the fury when he posted:
...I ask my students who is made better off and who is made worse off by a legal doctrine that says tenants must have hot water? Invariably, the students answer that the doctrine makes tenants better off and landlords worse off. But is this so? Think about it and then read the extension for more.
If tenants benefit from a law that says apartments must have hot water then surely a law that says tenants must have hot water and a dishwasher benefits them even more, right? What about a law that says tenants must have hot water, a dishwasher and cable tv? By now the students have cottoned on to the idea that the rent will increase. Once you realize that the law causes the rent to increase it's no longer obvious if tenants benefit or if landlords are harmed.
Not surprisingly Matt Yglesias & Co. blew a fuse. Who on earth could be against a law requiring hot water? Well... libertarians of course. Tabarrok fought back as did some of his colleagues. Brad DeLong (with the help Atrios) chimed in pointing out that that there are benefits to the laws. Landlords have a degree of monopoly power and it also makes the process of looking for an apartment more convenient for tenants:
When I go and look for an apartment, I don't have to spend the time to determine whether every apartment I visit has a working toilet, has hot water, has a working and safe electrical and heating system, and a whole set of charateristics which are roughly what we consider to be the basic necessities for modern life.
Don Boudreaux then entered the fray and pulled out the trump card in my opinion. He brought up the fact that DeLong had not mention a key premise of contract law. He wrote:
Contract law is beautiful in its subtlety. This law typically examines questions from the point of view of the “reasonable person” – that is, when a contract dispute finds its way into court, the law asks about the question before it: “what would the reasonable person have expected (or said, or done) in the circumstances at issue?” In modern America, the reasonable person reasonably expects that the rental unit has running water 24/7, that the ceiling doesn't leak, and that other basic features of the apartment are in order.
Why Do I Care?
Why did I take such an interest in a debate that seems so detached from reality? Well it just so happened that I had returned from my honeymoon with my wife in mid-August to find that, in fact, we ourselves had no hot water.
The landlady had forgotten to pay the electric bill for the room in the complex where the water heater is located. Sadly, this was not a rare occurrence. Multiple times she has also forgotten to pay the water bill that has left us without any water at all for a day or two.
So why do we put up with this? Well, we live about a half block from Mission Bay, in a good size one bedroom apartment that is well below the market price. Putting up with a flaky landlord is the price we pay. Ironically, while the debate over hot water was going on over the internet, the price I was paying was a few days of freezing cold showers.
I hadn't thought much about the discussion above until yesterday when I walked home to this:
It hadn't rained in San Diego in the last half year believe it or not. Sunday night that all changed and through Monday we had a pretty good rainfall. Monday night we noticed that a wet spot was slowly forming on the ceiling of our living room. I called my landlady at her house (no pick-up) and cell phone (left a message). Tuesday I get home to see that there is water dripping from the light fixture in the kitchen and in the hallway. I call again, leave a message on the cell phone and there is no pick-up at her house. I get on the roof and use a broom to clear off some of the huge puddles of water that had formed above our apartment. Yesterday morning it looks clear but during the day it begins to rain again. Getting back from work I open front door to see the nice little surprise above. A half-hour later I finally get a hold of the landlady and she and a few roofers were there within a few hours fixing the problem. They are hopefully finishing up today and this evening we'll be back to normal.
While I'm sure there are various laws on the books she is violating I know that these conditions are not what a "reasonable person" would expect in an apartment. As Don Boudreaux writes above: "In modern America, the reasonable person reasonably expects that the rental unit has running water 24/7, that the ceiling doesn't leak, and that other basic features of the apartment are in order." Yep, I'm pretty sure this would cover us if we had to go to court. To me this is a much clearer standard than endless regulations on the books.
I also know that we're at our apartment by choice, and believe me we are pretty close to choosing to move. But the one thing that holds us back is the fact that a better apartment means a higher price. There is a two bedroom directly next door for rent that is approximately the same square footage as our place. When I called to inquire about it I found out the price is almost double what we pay.
I guess the debate over hot water isn't as detached from reality as one may think.
Posted by Peter Mork at 11:55 AM | Comments | TrackBack
October 20, 2004
The Dirtiest Election of All Time
The election is less than two weeks away, and for many it’s not coming a second too soon. Combining the normal partisan fighting among the two major political parties with a hotly contested election in 2000, many have concluded that this is the dirtiest election in our history.
Not so fast says Paul Johnson on the pages of today’s WSJ. Those who claim that this is the most divided the country has been need to take a look back at our own history, starting in 1824:
John Quincy Adams's election in 1824 was a landmark because it accelerated the move toward choosing electors by popular vote. Out of 356,038 votes cast, Andrew Jackson emerged the clear leader with 153,544, Adams being 40,000 votes behind. Jackson also had the most electoral college votes, 99 to 84, with 78 for other candidates. But under the 12th Amendment, if no candidate got a majority of the college, the election went to the House, which picked the winner from the top three, voting by state. This put the choice effectively into the hands of Henry Clay, the all-powerful Speaker, who gave it to Adams, on the secret condition Adams made him secretary of state. Jackson denounced the election as "a corrupt bargain," and there was a growing feeling that future presidents must be chosen by the voters.