Interventionists insist that “free market absolutism” is naive, runs counter to reality, puts ideology above empirical facts. Yet I am amazed by how often government policies with a clear historical record of failure are enacted and defended. This is the most baffling and frustrating as it concerns policies that the most elementary of economic understanding will inform us are doomed to create negative effects supposedly unwelcome by those pushing the policies.

There is a shortage of cancer drugs, due to the federal government’s price controls. Being a matter of life and death, this is a tragedy of considerable proportions. At the same time, it is completely predictable. There is no reason an intelligent person who has read even the most basic level of economics should not forever grasp the inevitability of such a result. Yet the Obama administration seeks to extend this destructive program to more drugs via Medicare D.

Surely health care subsidies, the FDA, and other government interventions drive up the price of pharmaceuticals. Instead of favoring a reduction in government intervention to help counteract this tendency—for instance, allowing cheaper drugs to be reimported from Canada, a proposal Obama energetically blocked—the administration favors a coercive solution to this government-caused problem that will predictably make things worse. Ludwig von Mises pointed out that one intervention into the market tends to cause problems that will be presumably addressed by yet another intervention, a horrible cycle of state violence that continues until the economy barely resembles a free market at all. In practice, one step in the interventionist cascade of government destructivism is very frequently that of price controls.

The humor columnist for the New York Times, Paul Krugman, has recently taken to defending his vulgar Keynesianism against its critics by accusing them of making arguments that rely on the existence of a “confidence fairy.” By this mockery, Krugman seeks to dismiss the critics as unscientific blockheads, in contrast to his own supreme status as a Nobel Prize-winning economic scientist.

The irony in this dismissal, as others, including my friend Donald Boudreaux, have already pointed out, is that Krugman’s own vulgar Keynesianism relies on a much more ethereal explanatory force for its own account of macroeconomic fluctuations—namely, the so-called animal spirits. The master himself wrote in The General Theory: “Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die.  . . . [I]ndividual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits. . . .” (p. 162). Because Keynes conceived of his “animal spirits” as “a spontaneous urge to action rather than inaction” (p. 161), he of course had no way to explain their coming and going or to measure or evaluate them in any way. They are as surreal as a ghost—when and why they come and go, no man knows or can know.  Such is the force that drives the ups and downs of private investment in Keynesian economic theory, and such theory unfailingly drives Krugman’s commentaries on the recession and on the possibility and effective means of recovery from it.

Regime uncertainty, however, has a much more grounded basis. In my own research on the topic, I have presented evidence derived from (1) a mass of testimony by investors, businessmen, and other contemporaries, (2) voluminous historical facts on the character of government actions that reasonable people had every reason to interpret as theatening the security of their private property rights, (3) variations in the structure of investment, especially as between short-term and longer-term projects, and (4) specific twists in the term-structure of returns on private corporate bonds, as well as other relevant evidence on the behavior of financial markets.

As against this varied and substantial evidence, what does the proponent of animal sprits have to offer? Well, nothing at all. The idea is purely fanciful, the product of Lord Keynes’s fertile imagination.

A colleague sent me a link to the following collection of Hayek interviews, now available online.

Other useful sites include:

http://miltonfriedman.blogspot.com/

http://www.missliberty.com/ — updates to Miss Liberty’s Guide to Film and Video

http://www.youtube.com/user/independentinstitute

http://www.cato.org/events/archive.html

http://reason.tv/

William F. Buckley, Jr.’s Firing Line show included interviews with people across the political spectrum, now collected at the Hoover Institution:

http://hoohila.stanford.edu/firingline/

Get ready for life in ultra small cars, shorn of spare tires and other unnecessary weight. The Obama administration has set the Corporate Average Fuel Economy (CAFE) standards to 54.5 mpg! There will be fines (read: added costs) if you choose the wrong kind of vehicle or buy from an auto company that fails to meet this standard by 2025.

One thing that most didn’t see coming with Obama: he has defined his jobs agenda as one focused on “green” jobs. He talks about nothing else. Most Americans would prefer any jobs, but green jobs are the “jobs of the future,” so saith the Wizardly Lecturer from Hyde Park, Chicago.

Already car makers are throwing out spare tires and substituting spray cans for when our tires break down. Spare tire = too much weight. What’s next? Head rests? Convenience must give way to reducing carbon footprints. Think of the planet! And all those “future jobs!”

The government reassures us: this is “for our own good” and will save us money. Apparently, we are not able to make the “right” decision on purchases from toilets (“low flush” is for our own good) to light bulbs (no incandescents) to cars. Besides, everyone was expecting 62.5 as the new standard. Do mopeds get that much? FACT CHECK: Yes, they get 80-100 mpg but a family of four would need four mopeds. Perhaps a family-mo-ped of connected motorized bicycles?

Is it better to reduce deficits by cutting spending or by raising taxes?

In his column in Sunday’s New York Times, Paul Krugman complains that President Obama has caved in too much to fiscal conservatives who seek to cut the federal budget deficit more by cutting spending than by raising revenues. The federal debt may not hit the ceiling, but Krugman did.

After he tends to his bruises, Krugman can rest easy.

In a paper published in October 2009 by the National Bureau of Economic Research, “Large Changes in Fiscal Policy: Taxes versus Spending,” Alberto Alesina and Silvia Ardagna addressed the question of whether spending cuts or tax increases are more effective in reducing budget deficits. They examined 107 cases of OECD countries that attempted to cut their deficits by at least 1.5 percent from 1970 to 2007. Their findings?

Alesina and Ardagna wrote that “spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.”

Their paper was relatively well publicized after it came out, but much of that publicity focused on a different aspect of their research—their conclusion that tax cuts tend to be more expansionary than government spending increases.

Undoubtedly Alesina and Ardagna will be getting more phone calls from the news media than usual in the days ahead. It would be nice if among those calls came an open-minded inquiry from a certain New York Times columnist. But alas, judging by the sound of the impact, it may take a while for those bruises to heal.

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure.  It is a sign that the US government cannot pay its own bills.  It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.  Increasing America’s debt limit weakens us domestically and internationally.  Leadership means saying that ‘the buck stops here.’  Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren.  America has a debt problem and a failure of leadership.  America deserves better.”

Barack Obama, excerpts from remarks to the US Senate, March 16, 2006, explaining why he was voting against increasing the debt ceiling.  This quotation has been repeated a lot lately, and deservedly so, because it so fits today’s situation.

If the debt ceiling deal works out, Obama will be able to fly back to Chicago and enjoy a Wednesday evening birthday extravaganza. According to the Chicago Tribune, the event will feature “Jennifer Hudson and Herbie Hancock. There’s also a dinner fundraiser planned for some special donors to go with the show at a cost of $35,800 a person.”

This money-drenched gala might not go through, however, due to the budget deliberations now in the eleventh hour. If things go as planned, the president will have his celebration. If things stall, it might have to be canceled. Who but the president can arrange such a huge event and cancel at the last minute, as though plenty of resources aren’t wasted in such a contingency—as though canceling an event squeezed into one evening of his week actually demonstrates his genuine commitment to anything?

Obama will need his party, because it’s hard to see what else he’s getting for his birthday. In light of the budget deal, it looks like the left is finally considering ending its romance with the president. By caving on the question of increasing taxes on “top 1%,” the chief executive has betrayed his base in a way that the wars and civil liberties violations apparently did not—it is one thing to keep Big Brother fat and strong; it is another to refuse to soak the rich.

We can expect taxes to go up anyway. The Bush tax cuts will expire next year and the president is adamant not to renew them next time. Maybe it’s the symbolism that enrages the progressives. It must be, because left-liberals are spinning this whole spectacle as a triumph for the Tea Party. Conservatives, too, have encouraged this narrative insofar as they have argued that the activism on the ground has given a bit of spine to the Republicans, for once.

But it is all theater. Sure, it’s a good thing that people are at least aware, for the first time, that the debt ceiling is going to be raised. Yet when it almost inevitably comes, this will be the largest debt ceiling increase in U.S. history—by a whole $500 billion. The “cuts,” meanwhile, are illusory. Government is projected to grow every year by an obscene amount, and the Republicans and Democrats are talking about shaving a couple hundred billion off the annual budget.

The workings of Congress are nauseating in the extreme. Senator Harry Reid has reportedly agreed to a deal with Republicans over the debt ceiling controversy that has dominated the political news for weeks.

Although the same news reports indicate there are still some details to be fleshed out. It seems Congressional Republicans are hesitant to approve the small defense spending cuts proposed by Democrats. Anything that reduces funding for the U.S. empire, you see, is bound to make Republicans recoil much like vampires who have caught a glimpse of a crucifix dangling on a prospective victim’s neck. Surely, they would never approve cutting the military back to its funding levels from the end of the Bush administration—that would be most reckless.

Yet when all the smoke clears, what are we looking at here? “There seemed to be broad agreement that any deal reached would include at least $2.5 trillion in spending cuts over the next 10 years, of which $1.2 trillion would be approved now,” reports the New York Times.

All this hubbub over the approval of $120 billion of cuts per year for the next decade. $120 billion is something like 1/13 of the budget deficit. That is to say, the amount the government is now spending above what it is receiving in revenues is something around thirteen times the annual cuts that the two parties are agreeing to. In other words, all this deliberation has amounted to something so closely resembling exactly nothing that we might as well call it exactly nothing.

The debt ceiling will be raised.  The incredible borrowing will continue.

On the bright side, Obama will likely still be able to have his 50th birthday party this week, now that the country’s problems have been addressed. Not that I am complaining. I wish he and all the folks in Congress just spent their time partying every day, even at taxpayers’ expense. It would be unseemly and parasitic, but it would pale in comparison to the immense damage they inflict voting on appropriations for war, welfare, and other socially destructive programs on our behalf.

Are we on the cusp of success for fiscal responsibility? As usual, conservatives describe the battle de jour as the ultimate clash between good and evil. And today, it is the attempt to force Congress to approve a constitutional balanced budget amendment before the debt ceiling is again raised.

This is a bunch of nonsense. The amendment doesn’t even take effect in forcing a balanced budget for —and that’s after the amendment is ratified by the states, which could also take years. Indeed, Congress’s role in voting on a constitutional amendment isn’t the key factor in having one ratified. It’s all up to the states. Meanwhile, we are to see another debt ceiling increase that guarantees yet more unsustainable and destructive borrowing. That means more spending that isn’t paid for. That means more government interference in the economy, bribery, unconstitutional welfare and warfare—all with the promise that some day down the line, revenues and spending will match. But that’s not the big issue. The big issue is government is spending so much to begin with, and the Republicans are a bunch of frauds when the pose as opponents of this trend. They are conspirators. If they accept a debt ceiling raise—if the House of Representatives, which they control, votes for more lavish budgets for the various departments of the federal government—they are at least as responsible as Obama for the maintenance of America’s ridiculously sized government.

We are supposed to cheer that a tax increase might be defeated. But if Republicans take credit for this, again they should be dismissed for their triumphant celebrating, since, again, they could simply refuse to appropriate funds for anything they don’t want to finance. The Republicans are always doing this: pretending they are the victims of an inexorable stampede toward collectivism, even when they are as willing participants in the rampage as the Democrats. Recall the many times the debt ceiling was raised under George W. Bush, or the fact that this party hasn’t actually cut the government in at least three generations, and we can assume right away that their balanced budget baloney is bunch of balderdash. If they want a balanced budget they can refuse to pass any budget that isn’t balanced. Period. But of course they want militarism and welfarism and so they don’t take a principled stand from which they are being pressured to compromise—rather they take a stand about three millimeters to the right of the Democrats and act like they are all preventing America’s descent into socialism. The next year their sickening politicking over these disingenuous gestures toward fiscal responsibility will sure reach new levels of nauseating absurdity.

The Supreme Court is set to decide on the constitutionality of Obama’s health care reform, particularly its individual mandate—the forcing of American to buy health insurance.  Opponents of the law especially worry that the precedent would mean that the federal government could essentially mandate or prohibit any commercial behavior in the guise of interstate commerce.

Ominously, a federal judge with conservative reputation, formerly a clerk to Justice Antonin Scalia, has upheld the law. Is there hope that the Supremes will disagree? All four conventionally defined conservative justices as well as Anthony Kennedy would presumably be the necessary majority to slap down this most controversial and invasive component of Obamacare.

Yet even if the mandate is struck down, it is important to realize that we basically live in a post-Constitutional United States. The problems with the health care reform go beyond the individual mandate, yet no one prominent has questioned these other elements. Most fundamentally, Congress is supposed to only legislate according to its powers outlined in Article I, Section 8, of the U.S. Constitution. Health care is nowhere mentioned. From top to bottom, this law is a constitutional atrocity.

In October 2009, then House Speaker Nancy Pelosi was asked about the constitutionality of the health care reform bill, to which she replied, “Are you serious?” Surely, no serious person would ask such a question.

Yet she is not alone in this automatically dismissive attitude. It is not unique to this party or to this issue. In the fall of 2002, when Congressman Ron Paul suggested that a war with Iraq would require a congressional declaration for it to be Constitutional, a fellow Republican told him declarations were anachronistic and a Democratic Congressman said he was being “frivolous,” Paul reports.