Voice For Liberty

Category: Free markets

  • Economic freedom in America: The decline, and what it means

    “The U.S.’s gains in economic freedom made over 20 years have been completely erased in just nine.” Furthermore, our economic freedom is still dropping, to the point where we now rank below Canada. The result is slow growth in the private sector economy and persistent high unemployment.

    This is perhaps the most important takeaway from a short new video from Economic Freedom Project, which is a project of the Charles Koch Institute.

    What are the components or properties of economic freedom? These are the factors:

    • The size of government based on expenditures and taxes.
    • Whether property rights are protected under an impartial rule of law.
    • Whether there is a sound national currency, so that peoples’ money keeps its value.
    • Whether people are free to trade with others, both within and outside the country.
    • The regulation of credit, labor, and business.

    Economic freedom is associated with longer lifespans and a higher standard of living, says the video. Excessive government spending and unnecessary regulation are two primary causes for the decline in economic freedom.

    A press release accompanying the video explains the harm government is causes when it destroys economic freedom: “The video illustrates how excessive government spending and regulations are eroding economic freedom in the United States, hampering the growth of the economy and leading to record-breaking unemployment. To make this relationship more tangible to viewers, the video translates current statistics into concrete effects that have a direct impact on viewers’ lives. For example, the video notes the fact that it costs U.S. businesses $1.75 trillion to comply with government regulations and that this money would be enough to hire 43 million workers — more than one-quarter of the U.S. work force.”

    The video explains that faster growth in government spending causes slower growth in the private economy. This in turn has lead to the persistent high unemployment that we are experiencing today.

    This is the second video that the Economic Freedom Project has produced. For coverage of the first, see Economic freedom leads to better lives for all, says video.

    To view the video at the Economic Freedom Project site, click on Episode Two: Economic Freedom in America Today. Or, click on the YouTube video below.

  • The politically-motivated attack on Koch Industries

    Investor’s Business Daily and The Atlantic have provided more context to the politically-motivated article in Bloomberg Markets criticizing Wichita-based Koch Industries. We find that the more scrutiny the Bloomberg article receives, the worse it looks.

    The Investor’s op-ed makes the observation that anyone who reads the article must come to: “Indeed, throughout the entire story you find the Kochs taking steps to bring corporate behavior back in line, not only with the law but with their own stringent ethical standards.”

    Later, the authors point out the politics behind the attack on Koch: “The long hit piece, as Daniel Indiviglio writes in the Atlantic, managed to find ‘eight instances of alleged misconduct by a giant multinational over the span of 63 years.’ In nearly every case, Koch itself took steps to correct the problems. Putting it in context, Indiviglio then Google-searched a comparable company, finding eight serious instances of misconduct — we’re talking fines and settlements for fraud and bribery — over 11 years. That company would be GE, whose CEO Jeffrey Immelt heads President Obama’s jobs council and seems to see regulation as opportunities for businesses to profit. We await that Bloomberg investigation.”

    In his piece for The Atlantic, Indiviglio writes: “According to Bloomberg, 14 reporters around the globe worked for six months on the story. What did they turn up? Really, shockingly little. And what’s worse: from the very outset, the reporters’ bias against the Koch brothers is utterly clear.”

    On the bias and lack of context, he writes: “To further attempt to sway the reader before explaining the facts, the reporters reveal the following fact that someone not familiar with politics and lobbying might find shocking: ‘Koch Industries has spent more than $50 million to lobby in Washington since 2006.’ My reaction to reading this was, ‘$50 million? That’s it?’ That might sound like a lot, but let’s compare that to, say, General Electric. Over the same period, GE has spent more than $136 million lobbying, according to the Center for Responsive Politics.”

    After running through the eight issues in the Bloomberg piece, Indiviglio concludes: “Obviously, Koch Industries did make mistakes. It likely regrets those mistakes: the penalties, fines, and lawsuits that resulted cost the firm many millions of dollars. This is more a problem with big multinational corporations than a problem specific to Koch, however. When you’ve got subsidiaries around the world, strong, flawless oversight is difficult and very expensive.”

    Underlying this article (and others like it) and its criticism is the advocacy of Charles Koch and David Koch for free markets and economic freedom — something the political left is opposed to.

    But it’s not only the political left — liberals and progressives — that oppose the positions that Charles and David Koch advocate. Much of the business community, like General Electric, thrive on the crony capitalism the Kochs oppose, and have opposed for many years. As Charles Koch wrote earlier this year in the Wall Street Journal: “Government spending on business only aggravates the problem. Too many businesses have successfully lobbied for special favors and treatment by seeking mandates for their products, subsidies (in the form of cash payments from the government), and regulations or tariffs to keep more efficient competitors at bay. Crony capitalism is much easier than competing in an open market. But it erodes our overall standard of living and stifles entrepreneurs by rewarding the politically favored rather than those who provide what consumers want.”

  • Kansas and its own Solyndra

    At this moment, we can’t say that Kansas has its own version of Solyndra, the subsidized and politically-connected solar energy firm that recently shut down its operations and declared bankruptcy. But as far as absorbing the important lessons from Solyndra, we may have another chance to learn them in Kansas.

    Solyndra is a failure in several ways. Much money was lost. It may be that corrupt or criminal activity was involved; we don’t know that yet. It appears that Solyndra will be a useful political scandal for Republicans to exploit, especially in the upcoming election campaign against the president. We can be sure that Republicans will keep us informed on this.

    But the largest and most important lesson from Solyndra is one that many politicians — Democrats and Republicans both — don’t want to recognize: Government intervention in the economy is wrong for the health of the country.

    The problem is that when government intervenes in the economy, it almost always gets it wrong. It’s not that Obama and other politicians aren’t smart. It’s the problems inherent in government interventionism: There will be both routine and spectacular examples of waste, as people — politicians and bureaucrats, especially — are not spending their own money. Decisions will be made to benefit the well-connected and for political, not market-based reasons. Cronyism and corruption flourish, as many will find it easier to compete in the marketplace for politicians rather than in the free market where fickle consumers rule with their fleeting tastes and preferences.

    But politicians and bureaucrats love to intervene. For bureaucrats, intervention — government programs, that is — provides jobs, and well-paid jobs, too. Since much government intervention in the economy is in the form of subsidies, it allows politicians to dispense other peoples’ money and take credit for having “created” jobs or having built a bridge, probably to be named for them later on.

    Other government intervention is in the form of creating unneeded regulations or tax loopholes that favor politicians’ friends or harm their competition.

    All of this means that economic activity is directed according to political, not economic, considerations. It’s wasteful. It’s harmful. It diminishes market-based investment, that is, investment made according to what people really want and need. It reduces the freedom, liberty, and prosperity of everyone.

    Back to Kansas: Last week the Department of Energy announced the award of a $132.4 million loan guarantee to Abengoa Bioenergy Biomass of Kansas, LLC. This is the same federal agency and the same loan guarantee program involved in the Solyndra matter. The difference is that it’s an even newer so-called green energy technology involved: cellulosic ethanol production.

    The plant in Kansas is to be at Hugoton, in southwest Kansas. The press release from DOE promotes the number of jobs that will be created.

    Cellulosic ethanol is produced from plant material that is usually considered waste, such as corn stalks or wheat straw. That’s different from the usual input to ethanol production in America, which is corn that would otherwise be used as animal or human food. Because of this, cellulosic ethanol is thought of by many as the “silver bullet” that will dramatically improve the path of America’s energy future. That may be the case, or it may not be. Because of the reasons listed above, government is particularly unsuited to make that decision and to participate in the scientific and entrepreneurial experimentation that will produce the answer.

    At one time President George W. Bush praised the potential of this fuel. A Reuters analysis from July opens with: “The great promise of a car fuel made from cheap, clean-burning prairie grass or wood chips — and not from expensive corn that feeds the world — is more mirage than reality. Despite years of research, testing and some hype, the next-generation ethanol industry is far from the commercial success envisioned by President George W. Bush in 2006, when he pledged so-called cellulosic biofuels would be ‘practical and competitive’ by 2012.”

    That hints at the problem: despite much effort, scientists haven’t been able to demonstrate cellulosic ethanol production on a commercially-successful scale. According to the Wall Street Journal, as of this summer, no commercial cellulosic ethanol has been produced.

    The loan guarantee is not the only form of government subsidy and boost ethanol producers received. There is a tax credit for each gallon produced and a tariff that protects producers from cheaper imported ethanol.

    Despite these very large measures of government intervention, cellulosic ethanol backers blame the government for lack of progress in the industry, citing the government’s failure to mandate production levels and provide assurances that the industry would receive subsidies. And the loan guarantees are not made fast enough, they add to the list of complaints. An analysis by ClimateWire that appeared in the New York Times in January had industry boosters blaming the federal Department of Energy for its slow pace in issuing loan guarantees.

    We won’t know the success or failure of the Abengoa plant in Kansas for some time, and now we taxpayers are placed in the position of hoping that it succeeds. But it has the pedigree of a government plan to correct a perceived market failure, and that’s a danger sign.

    Both Kansas Senators Pat Roberts and Jerry Moran have spoken approvingly of this plant despite the government intervention involved; Moran in a statement after the announcement, and Roberts in previous years as plans were being made. U.S. Representative Tim Huelskamp, who represents the district where the plant is located, has not commented on this plant, and offered no comment for this story.

  • NAT GAS Act: Markets are better able to decide

    The real lesson to be learned from Solyndra is that government is not equipped to act as entrepreneur. We need to apply that lesson to natural gas powered vehicles before it is too late.

    This lesson is important to learn at the present, as legislation called the NAT GAS Act, formally known as H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, is working its way through Congress.

    Thomas J. Pyle of the American Energy Alliance does an excellent job tracing through the secondary effects of passing the NAT GAS act. He shows that when considering large legislation like this, we need to really think hard about all the markets and people that will be impacted.

    Furthermore, some of the goals of this legislation, such as decreasing reliance on imported oil from unfriendly sources, could be accomplished with government simply getting out of the way and letting more oil production occur domestically.

    We need to trust people, that is, people and investors trading freely, using their collective wisdom, as to which forms of energy are best for each purpose, Pyle writes: “The market and consumers have proven over and over — “déjà vu all over again,” but in a positive way — to be the best arbiters of what energy technologies succeed or fail. To put it simply, if natural gas vehicles (NGVs) are superior to gas or diesel, and they may be some day, consumers will figure that out on their own.”

    Pyle also offers what he thinks is the real motive of two of the bill’s backers, energy investor T. Boone Pickens and left-wing cause financier George Soros: “Why compete in the free market when it’s more profitable to have Congress do your bidding for you?””

    The full article by Pyle is available on The Hill at NAT GAS Act: Déjà vu all over again. More coverage of this issue is at Pickens criticism illustrates divide between free markets and intervention, Pickens: It’s all about me, and MSNBC doesn’t notice, and Pompeo on energy tax simplification.

    NAT GAS Act: Déjà vu all over again

    By Thomas J. Pyle

    When it comes to unchecked government spending and misguided energy policies, it seems that Congress cannot escape channeling Yogi Berra’s oft-quoted remark, “it’s deja vu all over again.” The latest Congressional boondoggle concerns the NAT GAS Act, which will be addressed at a House Ways and Means Committee hearing on September 22.
    Some background first: the proposed law offers between $5 billion and $9 billion in tax subsidies — although there is no cap on maximum spending in the law — to encourage businesses to convert their vehicles to natural gas, despite the fact that many companies are already doing this doing on their own. Proponents of the law argue that using cleaner burning natural gas will help the environment and that it will improve the nation’s energy security, but a closer look reveals these demand-centric subsidies will lead to expensive consequences for consumers, taxpayers, workers and employers across the board.

    Continue reading at The Hill

  • Free market energy solutions don’t jeopardize national security

    By Mike Pompeo (R-KS) and Jeff Flake (R-AZ), Republican Members of Congress.

    This is not the first time Rep. Pompeo has spoken in favor of free markets for energy. As reported in the Wichita Eagle in May: “Rep. Mike Pompeo, R-Wichita, wants Congress to just say ‘no’ to all energy subsidies.” He has also introduced H. Res. 267, which is subtitled “Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.” Following is an article by Pompeo and Rep. Flake, a version of which appeared in the Washington Examiner.

    Details of the Solyndra scandal continue to unfold, but what we know so far should teach a valuable lesson: The government should not be in the business of picking winners and losers in the energy industry. With half a billion taxpayer dollars now likely gone forever, you would think the Obama Administration would learn. Unfortunately, it has not. The Department of Energy said in a recent blog posting, “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed, but we can’t stop investing in game-changing technologies that are key to America’s leadership in the global economy.” Translation: We’re not that good at manipulating the energy industry, but we’re not going to stop anytime soon.

    By spurring development of the politically-favored alternative fuel of the moment, devotees of federal energy subsidies say that we can stop sending dollars overseas. Interests ranging from wind to solar, from propane to biodiesel, from natural gas to algae purport to provide the key to America’s energy and national security needs. Unfortunately, even some conservatives appear to have fallen for this ruse.

    We can agree that having less oil imported from the Middle East would improve America’s national security interests. However admirable that goal, having Congress and the President pick winners and losers in the energy sector is neither practical nor principled.

    Let’s begin with what we know: national security interests compel us first and foremost to get our financial house in order. We agree with Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, when he said, “Our national debt is our biggest national security threat.” With the federal debt estimated to hit $25 trillion by 2021, the United States cannot continue throwing billions of taxpayer dollars away on federal energy subsidies. In 2009 alone, the government gave over $18 billion in handouts to a wide variety of energy sources, including wind, hydrogen, natural gas, oil, and ethanol. We simply cannot keep wasting money on federal energy subsidies.

    Not only are federal energy subsidies that try to artificially inspire a market for a given product unaffordable, they simply aren’t effective. Subsidy policy toward the renewable and alternative fuels industry has been tried for more than three decades (from President Carter’s Synfuels Corporation in the early 1980s to President Obama’s Solyndra just this year) — and it has failed.

    Alternative energy producers often say that consumers have just not yet caught on to how wonderful the subsidized product is. All we need, they say, are just five years of handouts and everything will be okay. And when those five years are up? These same folks come back for more because customer demand alone will not support the industry as it becomes accustomed to relying on government handouts. It’s precisely this kind of phenomenon that led President Reagan to observe that “nothing is so permanent as a temporary government program.”

    The constant pursuit of federal tax subsidies also keeps some private capital on the sidelines that would otherwise be invested in alternative energy. What private company wants to compete with the federal government? This failed history makes the continued push for energy subsidies by some supposed-conservatives all the more puzzling.

    With gas prices continuing to skyrocket and the federal subsidy policy continuing to fail, how can we make U.S. energy policy reflect our national security interests? First, we must lift the de facto moratorium on domestic energy exploration — off the Gulf Coast, on the Outer Continental Shelf, and elsewhere. Second, we must remove other regulatory burdens, such as the threat that EPA will halt hydraulic fracturing. And finally, we have to stop using taxpayer dollars to pick winners and losers in the energy sector. With these commonsense steps, we can achieve successful energy reform.

    Phasing out market-distorting energy subsidies, preventing the expansion of existing subsidies, and stopping the creation of new ones (for the “latest, greatest” technology) must be part of the overall strategy. Many subsidies, such as fuel tax credits for ethanol, hydrogen, and natural gas, are set to expire soon. There is no reason to pile on our debt while simultaneously distorting the energy market for fuel products that can stand on their own. It is far better for government to keep its thumb off the scale and allow market competition to determine which alternative energy source or sources will succeed.

    Forking over taxpayer handouts in the name of national security does not change that simple truth. Although subsidy seekers argue that OPEC’s dominant position in the world oil market means that government intervention in the energy marketplace is warranted, there is a major flaw in that logic. If collusion by the OPEC cartel really boosts the price of oil artificially high, then alternative fuels should have an easier time competing against it without a subsidy.

    A real conservative solution to energy security requires less government, not more. Looking at our energy policy through a national security lens only strengthens the argument for relying on free-market solutions. When it comes to national security, we cannot afford to abandon free-market principles. As the Solyndra example demonstrates, the stakes are simply too high to cast aside the single best arbiter of capital allocation in human history — the free market — in favor of misguided central planning via government mandate.

  • Walter Williams on doing good

    Thursday’s lecture in Wichita by economist Walter Williams featured a section covering how greed, or what some call enlightened self-interest, is the best way to produce good acts.

    This lecture was presented by the Bill of Rights Institute and underwritten by the Fred and Mary Koch Foundation.

    When government is used in an attempt to do good, it requires either elimination or attenuation of private property and market forces, Williams told the audience. But it is private property and the desire by people for more that motivates people to do the difficult and laborious things that benefit their fellow man. It all happens without government. In fact, government involvement in the market reduces the motivation of people to acquire, protect, and improve private property.

    Here’s a transcript of Williams explaining how this works:

    But do-gooders fail to realize that most good done in the world is not done in the name of good.

    If you were to ask me “Williams, what’s that human motivation that gets wonderful things done? What’s the human motivation that you like?” I tell them greed. I love greed.

    I’m not talking about ripping off people, fraud, and misrepresentation. I’m talking about people trying to get as much as they can for themselves. Now consider the following, because a lot of people don’t understand greed.

    Last winter we had Texas cattle ranchers getting up in the dead of winter, running down stray cattle and trying to feed them, making a huge personal sacrifice to make sure New Yorkers had beef on their shelves.

    This summer we had Idaho potato farmers getting up in the morning, doing back-breaking work, sun beating down on them, bugs biting them, making this personal sacrifice so that New Yorkers would also have potatoes.

    Now, why do you think they’re doing that? Do you think they’re doing that because they love New Yorkers? They may hate New Yorkers — I’m not that wild about New Yorkers myself — but they make sure beef and potatoes get to New York every single day of the week.

    Why? Because they love themselves. They’re trying to get more for themselves. And this is what Adam Smith was talking about in The Wealth of Nations: That the public good is served best by the private interest. That is, by people trying to get more for themselves. And in the free market, in order to get more for yourself, you have to find ways to please your fellow man, to make your fellow man happy.

    How much beef and potatoes do you think New Yorkers would have if it all depended on human love and kindness? I’d be worried about New Yorkers.

    Let me give you another example. Some people tell me “Well Williams, instead of saying greed, you’re trying to win friends and influence people, why don’t you say enlightened self-interest?” Well, that’s okay, but I like greed instead.

    Let me give you another example of the virtue of self interest and private property. I have often said that I don’t care much about future generations. Some people think that’s awful. People have sometimes asked “Williams, why don’t you care about future generations?” And I ask “What have future generations ever done for me?”

    I mean, some kid being born in 2050, what has he done for me? And if he has not done anything for me, how then am I obliged to do anything for him? Where is the quid pro quo?

    But however, if you watch my actual behavior, my behavior would belie that sentiment.

    I have a very nice house and property in Valley Forge, Pennsylvania. Several years ago I took $400 that I could have used to buy two bottles of Chateau d’Yquem Sauterne wine and selfishly enjoyed it all by myself, but instead I planted some trees on my property.

    Now when those trees reach full maturity, I’ll be dead. There will be some 2050 kid swinging in my trees. Mrs. Williams, who is now departed, made extensive improvements to our house — built a big sunroom — with my money of course. That sunroom is going to outlast both of us, and there’s going to be some 2050 kid tracking mud in my sunroom.

    If you ask the question “why did I make those sacrifices of current consumption to produce something that’s going to benefit somebody in 2050,” the answer’s very easy: The nicer my house is, the longer it will provide housing services, and the higher the price I get when I go to sell it.

    That is, by pursing my own narrow selfish interest, I can’t help but make a house available for future generations, whether I mean to or not.

    Now, would I have the same incentives if the government owned my house? Would I have the same incentives if there were a 75 percent transfer tax when I went to sell my house? Whatever weakens my private property rights interest in that house, weakens my incentive to do the socially responsible thing, namely, conserve on the scare resources of our society.

    Let me give you one other example. … I was listening to NPR, a number of years ago, and people were picketing the UN because they were concerned about the extinction of the giraffe, the gorilla, and the lion. So I wrote down a list of animals that people were in a tizzy over the possibility of their becoming extinct.

    Then I wrote down another list of animals, very valuable to us, but people are not worried about them. I said “How come people are not marching for the chicken? Why are people not forming save the pig clubs?”

    What’s the difference between these two lists of animals? The essential difference is that with this list of animals — cows, chickens, and pigs — they belong to somebody. Somebody’s personal private interest is at stake. But this other list of animals — they don’t belong to anybody. Nobody’s personal private wealth is at stake. If you’re concerned about the extinction of various animals, I would recommend trying to privatize them.

  • Contrary to Buffet, government spending is not good

    Recently wealthy investor Warren Buffet has been in the news for his advocacy of higher taxes. But is government — politics, in other words — the best way to allocate resources?

    In a statement on the KochFacts website, Charles Koch disagrees with Buffet:

    As part of the public discourse on government overspending and fiscal irresponsibility, Charles Koch offered the following public response to media queries on the topic: “Much of what the government spends money on does more harm than good; this is particularly true over the past several years with the massive uncontrolled increase in government spending. I believe my business and non-profit investments are much more beneficial to societal well-being than sending more money to Washington.”

    We have to wonder if Buffet is really sincere about the wisdom of sending money to government. As I noted a few years ago, Buffet is giving most of his fortune to charity. In this way, he avoids the estate, or inheritance, tax. If Buffet really thinks inheritance taxes are good, he should keep his wealth and let the government tax it when he dies, like others have to.

    Or, as many have noted, Buffet is free to give as much as he wants — right now — to the federal government.

    But as it turns out, even the super wealthy don’t have much money when compared to the needs of government. Buffet’s fortune, the third largest in the world, would pay for just 12 days of federal government borrowing. Not total spending — just the new debt the U.S. government accumulates in less than two weeks.

  • In Kansas, P.J. O’Rourke promotes free markets

    From May, 2010.

    Last month Americans for Prosperity-Kansas hosted a summit in Topeka where 400 citizens gathered to learn more about free markets and Kansas politics. It wasn’t all instruction, however, as political satirist P.J. O’Rourke was on hand to entertain the audience while also providing insights into politics and economics.

    O’Rourke is the best-selling author of 12 books and contributor to many magazines. He is H.L. Mencken Research Fellow at the Cato Institute.

    An Easterner, he told the audience that people on the east coast are skeptical of the Midwest, saying it’s awful flat out there. “That’s so we can see you coming,” he said.

    The free market, he said, is the greatest repository of our freedoms. He told the audience that “economic freedom is the freedom that we exercise most often and to the greatest extent.” Freedom of speech is important — if you have anything to say.

    The free market is a measurement, he said. It tells us “what people are willing to pay for a given thing at a given moment.” While people may not always like the results the free market produce, it isn’t possible to legislate perfect results.

    He said that while we may not understand the causes of the recent economic crisis, we do understand business investment, “something the Obama Administration seems to be doing everything it can to prevent.” Business investment defines humanity and civilization.

    While O’Rourke heaped criticism on Democrats, he said that Republicans deserve criticism too. “Republicans are the party that says government doesn’t work, and then they get elected and prove it.”

    Bush policies such as No Child Left Behind, immigration reform, and social security reform are examples of failed programs or proposals that didn’t make it into law. “Bush said if illegal immigrants wanted citizenship, they’d have to do three things: pay taxes, learn English, and work at a meaningful job. Bush didn’t meet two out of those three qualifications.”

    While the Bush Administration disappointed, he said the Obama Administration has just began to disappoint.

    Speaking on the role of politics and government in society, O’Rourke said that we keep blaming political problem on politicians. People believe that only if we had better politicians, the world would be better. He countered: “The problem isn’t politicians. The problem is politics.”

    O’Rourke told the audience that all society’s ills can’t be cured through politics. “Politicians lie to us, but it’s not like they’ve got much choice. Think about what the truth would sound like on the campaign stump. Even a little, bitty bit of truth. Imagine the politician who said to the voters ‘No, I can’t fix public education. The problem isn’t funding, or overcrowding, or teachers unions, or lack of computer equipment in the classroom. The problem is your damn kids.‘”

    He said that after 40 years making fun of politicians, he realized he hates politics — all politics. We use the word “politics” in ways that reveal our true attitude, he said: “office politics,” “plays politics,” someone is a “real politician” — all these have negative connotations. True conservatism, he said, is a room deodorizer, trying to get the bad smell of politics out of our lives.

    While partisan political bickering is often viewed as a block to accomplishment, O’Rourke said “We want them to bicker. The two most frightening words in Washington — and right here in Topeka too — are ‘bipartisan consensus.’”

    There is a desire by many to stop worrying about politics, but that’s not possible, as we rely on politics for so much. Politicians of both parties want government to solve all our problems. But O’Rourke mentioned government’s poor record of accomplishment: “Government has trouble figuring out where mail goes, and mail has our address right on the front of it.”

    O’Rourke told the audience that corruption is ingrained in politics. “When buying and selling are controlled by voting, the first things that get bought and sold are votes.” Politicians understand this, he added.

    On the role of lawyers in politics, he quipped “Letting lawyers write laws is like letting pharmaceutical companies invent diseases.”

    On economics, O’Rourke said that “wealth is not a pizza, where if I have too many slices you have to eat the Domino’s box.” Wealth is not a zero-sum gain. In a free market there are no losers when someone gets rich, he added.

    The political quest for equality leads to fear and envy of the rich. The Biblical commandment to not covet your neighbor’s things needs to be applied to the nation: “don’t whine about what others have — go get your own.”

    In an interview after his talk, I was able to ask a few questions. Since much of his talk to the audience was on economic freedom, I asked why isn’t economic freedom more popular?

    He said that psychologically, freedom requires taking responsibility. The zero-sum idea — that when someone makes money, they’re somehow taking it from me — is hard to shake. It’s a relatively new idea in human history, and we have not adjusted, psychologically or politically. Also, he said that children today spend a long time in “socialist dependence” in the family setting. Although children are instinctively in favor of private property, they are brought up in a collectivist settings like families, churches, schools, scout groups, and universities.

    So have we as conservatives or libertarians not done a good job explaining wealth creation through voluntary transactions?

    He said no, this is not taught well at all. The moral aspect of economics is not taught. Economics doesn’t fit into the typical secondary school curriculum, he said, and so students usually don’t received much instruction. There is an element in the education establishment that either doesn’t understand the moral aspects of the free market, or they disagree.

    Responding about a question about the push for tax increases in Kansas, O’Rourke said that government spending advocates assume as a given that the spending needs to be done. He said that an adequate amount is being spent on education, but we’re not getting results.

    Since many of the people in the audience are activists, I asked what advice he had to start reducing the amount of government we have.

    He noted that the paradox is that political involvement is necessary to diminish the role of politics in people’s lives. Moving political power to the local or state level is one way. This requires people to become more politically active. More people need to be more engaged in the decisions that are now being made in Washington. But it’s easy to slough off problems to Washington, O’Rourke said, and this is one of the reasons why government has grown.

    I asked about the state sovereignty and tenth amendment movements: Do we risk replacing a tyrannical federal government with tyrannical state governments? He said the idea of sovereignty may apply to the health care issue, as all states are already involved in this area. But states can be just as oppressive as the federal government, referring to the new Arizona illegal alien law.

    On climate change and global warming alarmism, O’Rourke said this is a tool people use to increase political power. There is a desire to increase the scope of political power, and “any excuse will do,” he said. Using an observation made by Milton Friedman, he added that solving problems through increasing political power relies on the “absurd assumption that we can somehow find honest and unselfish men to put in control of dishonest and selfish men.” There is a qualitative division between the type of people who go into politics and everyone else, he added.

    I asked about those who work for greater government power at the expense of economic freedom: Have they never been exposed to the ideas of free markets, or have they been exposed to these ideas and don’t believe them, or are they simply venal?

    O’Rourke said that — putting the best possible face on it, he said — many politicians regard politics as a “counterweight to what they think of as market failures.”

    He said that the small “l” left believes that man is good, but that the systems of power in the world are inherently bad. And for most of history, the systems of power have been bad. If the power structures of the world can be changed, the “goodness of people will shine through.” O’Rourke said that this idea is wrong: People are not not good, but they’re not evil; they have a capacity for both. The free market is a method to move power away from the political elite and aristocracy and toward ordinary people.

    This represents two different views of the world and human nature. He said that his point of view requires less interference in people’s lives, making it better — or at least less annoying.

    He told of a conversation with Cato Institute’s David Boaz, telling him that he is as over-certain in his libertarianism as anyone on the left is in their beliefs. Boaz replied “Yes, but I’m not prescriptive in my over-certainness.”

  • Pickens: It’s all about me, and MSNBC doesn’t notice

    Appearing on the MSNBC morning program Morning Joe, energy investor T. Boone Pickens let us know that despite his no-nonsense business-like approach to supporting what he believes to be in America’s best interests, it’s really all about him and what profits him. But program hosts Joe Scarborough and Mika Brzezinski didn’t catch that.

    Pickens appeared on the program to gain support for legislation he is seeking to pass through Congress. His bill is H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, commonly referred to as the NAT GAS act. The bill would provide payments in the form of tax credits to encourage the use of natural gas as a transportation fuel.

    Host Scarborough said “It makes so much sense.” At the end of the segment, Brzezinski pleaded “Do us a favor. Please don’t give up.”

    Never once did either host bring up the facts that Daniel Indiviglio cites in his coverage for The Atlantic. Mike Barnicle was on the show but wasn’t helpful in this regard, either.

    The problem is this, according to Indiviglio: “At no point during the nine-minute interview on MSNBC did Pickens mention that he stands to make a significant financial gain if the bill he’s promoting succeeds and natural gas usage expands.”

    Pickens knows how to present his case in the best possible light, picking and choosing which fact to present, and which to stretch or ignore. He criticizes Koch Industries for its opposition to the bill. Koch has explained its opposition to subsidies for natural gas as a transportation fuel, just as it opposes all subsidies. In a statement on its Viewpoint website, Dr. Richard Fink, Executive Vice President of Koch Industries, explained the harm of government intervention, writing “Koch has consistently opposed subsidies that distort markets. We maintain that the marketplace, while not perfect, is the best mechanism for allocating resources to consumers. People deciding what fuels to purchase, instead of the government, is best for consumers and our country. Likewise, if natural gas vehicles are truly advantageous and economically efficient, then consumers will demand that they be developed without political mandates that exhaust more taxpayer dollars.”

    Pickens went on to criticize Koch for accepting subsides for ethanol production. Koch Industries, as a refiner of oil, blends ethanol with gasoline it produces in order to meet federal mandates on ethanol usage. Even though Koch opposes subsidies for ethanol, Koch accepts the subsidies. A company newsletter explains: “Once a law is enacted, we are not going to place our company and our employees at a competitive disadvantage by not participating in programs that are available to our competitors.”

    So the criticism of Koch by Pickens is unfounded. Now I wouldn’t really expect the program hosts to be aware of this, but they must have been aware that Pickens will profit, probably handsomely, if the NAT GAS act passes.

    In his coverage Indiviglio writes: “Essentially, Pickens criticizes Koch for preferring government subsidies to benefit Koch Industries. But is Pickens’ motivation for natural gas subsidies really any different?”

    It is different in an important way. Koch, as explained above, participates in a subsidy program that is available to all similarly situated companies. At the same time the company calls for its end for reasons of principle that the company and its owners have supported for many years. Pickens, on the other hand, wants to create a new program with new subsidies and new expansion of government intervention into free markets.

    Besides this, when you listen to Pickens, you realize it’s all about him and what he wants. “We have 250 million vehicles in America. So I’m going to take eight million heavy duty trucks — that’s it — and that will do it.” And then “I want a billion dollars a year for five years.”

    Large decisions about our country’s energy future shouldn’t be made by one person, or even by Congress and the president. We need to let the dynamic discovery process of markets harness and organize the tremendous diverse power of the human mind and reveal to us the best energy solutions.