Wednesday, April 28, 2010

Meddlers at the Gate

Meddlers at the Gate
David Harsanyi
Wednesday, April 28, 2010

No. Legislators never would employ crude and simplistic sloganeering like those rowdy anti-gummint protesters.

Just ask Senate Majority Leader Harry Reid, who this week offered up this eloquent gem: "A party that stands with Wall Street is a party that stands against families and against fairness."

You know Wall Street; it lives to destabilize the family unit. Just scratch the surface and you'll find 8,500 companies trading on the New York Stock Exchange and another 3,200 companies listed on Nasdaq. Nearly 50 percent of households own some form of equities, and 21 million households own individual stocks outside any employer-sponsored plan.

All working together against kids and fairness.

Actually, what Reid's words reveal is an ideological disposition that is wholly unconcerned with creating a healthier Wall Street or a Wall Street scrubbed of crony capitalism and government-produced moral hazard.

Using stale populist rhetoric, Democrats dishonestly pit families against "banks" to generate enough support to pass a fiscal reform bill. But how many voters manipulated by the fear-mongering of Chris Dodd, Reid or Barack Obama fully understand reform? I sure don't. It's complex stuff, no doubt.

How many of us are aware that these derivatives that politicians rail against are financial tools that often allow people to hedge bets and take insurance on risk? As The New York Times recently reported, entities like Mars, the maker of M&M's, like to dip into the derivative market to insulate themselves from fluctuating prices of sugar and chocolate.

How many voters are aware that the pending Senate reform bill includes a payback to unions in the form of a "proxy access" that would allow labor to manipulate company boards? How many are aware that the bill may give the Treasury Department the right to seize private property and businesses without any significant judicial review?

How many Americans are aware that the reform bill might create a so-called "consumer protection board" that would slather another needless layer of federal red tape on a wide range of businesses -- businesses, incidentally, with far less culpability in creating the housing bubble than members of the Senate Banking Committee.

At the same time, the board also may ban private, voluntary arbitration agreements between consumers and financial firms. Why?

How many voters are aware that the Senate reform bill would clamp down on "angel investors" -- wealthy individuals who invest in startups with few regulatory guidelines. From Google to Facebook, it was angel investors who undertook the initial risk.

What is appropriate risk? Well, who else but politicians and bureaucrats, both genetically disposed to avoid risk, could be better judges? That is the kind of micromanaging Washington is proposing. Would it not make more sense for government to disentangle itself from the market (and the bailouts), enhance transparency and simply enforce the rules already in place?

Instead, Democrats have boiled down this intricate and wide-ranging legislation into a false choice that pits Wall Street against families. Our attention is to be diverted by a show trial of Goldman Sachs -- which, as far as I can tell, is accused of betting against the housing market just as Fannie and Freddie were incentivizing failure -- to gin up anger.

No crisis ever is wasted. And for those reflexively averse to risk, profit and markets, this is an opportunity like no other.

We need financial reform. What we're being offered, it seems, is another piece of command-and-control legislation fast-tracked to avoid the midterm elections -- and honest discussion.

Everyone Prospers With Free Trade
John Stossel
Wednesday, April 28, 2010

Trade is win-win. Two people trade only because each values what he gets more than what he gives up. That's why in a store both customer and clerk say, "Thank you."

At the international level, trade is also win-win because it allows countries to specialize in what they do well and trade the extra for things they don't make as well. When free trade is unmolested, the world is richer and has more choices.

But I keep hearing about unfair trade. I'm told that trade allows American companies to exploit people in poor countries and makes Americans jobless.

Tom Palmer of the Atlas Economic Research Institute, one of my guests on my Fox Business News show tomorrow night, says those are myths.

Do we exploit people in Third World countries?

"The evidence does not show that," Palmer said. "Multinational companies pay a wage premium. They pay more than local companies pay ... because they want to attract good workers. Look at the Shanghai factory of General Motors. They pay three times what Chinese-owned factories (pay)."

Yet House Speaker Nancy Pelosi says that liberalizing trade with Central America would exploit workers.

"People want to work at those factories. They line up. They compete. Are they competing to get exploited? They're competing for higher-wage jobs. I think that those people know their interests better than Nancy Pelosi does."

Sen. Byron Dorgan called free trade "a race to the bottom. This says to American workers if you can't compete against 30-cents-an-hour labor in some other country, you lose your job."

"Again, evidence doesn't support that," said Palmer. "Look at the iPod. It says, 'Manufactured in China.' But if you look in the back, it says, 'Designed in California.' Most of the value is added by American workers." My colleague at Fox, former Gov. Mike Huckabee, said, "In a country we can only be free if we can feed ourselves, fuel ourselves and fight for ourselves. When we start outsourcing everything, that's a road to being enslaved."

"I hope that Gov. Huckabee thought about that when he was governor of Arkansas, and made sure there was no jobs outsourced to Virginia or Texas," Palmer replied. "He should have protected the people of Arkansas, right?"

But that's different. We can count on Pennsylvania in a time of war. I don't know that I can count on China.

"If you're trading with them, it makes war much less likely," Palmer said. "We're not going to go to war with Canada. It's our biggest trading partner -- $600 billion a year going across the U.S.-Canada border in trade along the longest non-militarized border in the world. Five thousand miles, counting Alaska. That is trade creating peace."

As the French economist Frederic Bastiat put it, "When goods don't cross borders, soldiers will."

Palmer offered another way to think about trade: as a machine -- "a machine that allows Florida farmers to turn oranges into (phones). They can't grow cell phones on their trees in Florida. They grow oranges really well. What they can do is take those oranges and trade them for cell phones."

And when people do this worldwide, they get richer. "Just like the case of you buying some coffee at the Starbucks. You could have made your own coffee. But your time might have been better spent doing something else. So you outsourced your coffee production. You made yourself better off. And that young lady who sold you the coffee made herself better off."

Palmer points out that China was once the most advanced society in the world. It had developed the clock, printing, the compass and more. Not coincidentally, while it was advancing technology and science, it was a major world trader.

"And it crumbled because they destroyed their trade. They made it illegal to trade with foreigners. And they turned inward. That set in process a stagnation that only now is being undone. We shouldn't do that to our country."

We're different, aren't we? We know how to make everything we need. "There's always opportunities for new progress. ... Remember watching 'Star Trek' as a kid and they had that weird communicator? Everybody has one now. ... (T)rade made that possible."

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