Senior Fellow Robert Higgs is interviewed here by Scott Horton on Antiwar.com Radio, warning those who long for total governmental and economic collapse to be careful what they wish for.  Higgs also explains why federal spending cannot continue at the current record levels without a failure of the bond market.  He further compares the military and economic over-extension of the Soviet Union prior to its collapse to the United States as a warning against rampant spending by the government.

[audio:2010_07_01_higgs_antiwar.mp3]
Download mp3 file of interview

Open Letter to The Wall Street Journal

June 23, 2010

Dear Editor:

Paul Rubin argues that President Obama is getting a free pass in the media in light of the environmental disaster caused by the BP oil spill.  The press, on the other hand, harshly chastised President Bush, for what Rubin thinks was a mildly successful government response (“A Tale of Two Disasters”, June 22).  As a former resident of New Orleans, I can attest that Dr. Rubin, however, is incorrect to claim “the federal response [to Katrina] was well coordinated and helpful overall”.

In the immediacy of Hurricane Katrina, approval procedures from Washington prevented or delayed the help of states, non-profits, and the international community.  The national coordinating system stymied the assistance of volunteer medical staff from throughout the country.  The Senate Homeland Security Committee concluded, “The federal department that was supposed to lead, direct and coordinate the federal response to Katrina was time and again late, uncertain and ineffective.”

Michael Brown, director of FEMA, promised buses, trailers and essential commodities for victims barricaded in the convention center, but waited two days before initiating action to deliver on those promises. Brown’s consequent resignation is a testament to his personal failure and that of his bureau, not simply a manner of spin in the press.

Most importantly, 1,800 people lost their lives in the tremendous flooding that occurred because of breeches in the levee system constructed by the federal government’s Army Corps of Engineers and many more suffered because of a federal response system that actively prevented aid from reaching those in need.

Were there failures of state and local government? Yes. Does media bias exist? Yes. Nevertheless, remembering the failures of FEMA allows us to learn from them.  As such, even more of a parallel can be drawn between the failures of the current administration’s disaster management and the federal response to Hurricane Katrina than Dr. Rubin suggests.

***

Emily C. Skarbek, Ph.D.
Director, Center on Entrepreneurial Innovation
The Independent Institute
Oakland, Calif.

Says Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff.  Mullen notes that within two years the annual interest on the debt will be almost as much as the bloated annual Department of Defense Budget of $700 billion.  Well said.  Even better if Mullen would have pointed out that the debt is only a noticeable symptom of the real threat posed by the expanding size and scope of federal government.

Why not appease the far left (ending the war) while simultaneously enacting policy advocated by the far right (cutting federal expenditures and reducing the debt obligation)?  Ah, if only interest group politics operated the same way they do in my constrained day-dreams.

While Americans spend a lot of money on private security, we generally associate police services with a local government monopoly. And indeed, government is where the buck stops. One of the conventional rationales for government provision of police services is that the market will under-provide it. After all, if I subscribe to a protection agency that has to drive by my house, my neighbors presumably get some of the spillover benefits. The market will fail to provide the efficient level of police protection.

Of course, the existence of externalities has to be traded off against the change in incentives that comes with bringing protection services under the auspices of the government. Even if we accept the rationale, I’m not sure it applies anymore. People around our neighborhood have “Protected by [Whoever]” signs in their yards, and presumably properties can be “patrolled” remotely with cameras.

In an ongoing research project about the Memphis Riot of 1866, Christopher Coyne and I are discovering that the case for government provision of police services has never been very strong (here’s a very, very early version of what we’re doing; here’s Fred McChesney on fire services). As technology has changed, though, I’m coming to think more and more that “market failure” arguments for government provision of police services are incorrect.

As election season approaches, we’re starting to see political ads by those running for office, often with vague, meaningless, or misleading slogans.  So, it’s nice to see an honest ad for a change.  Here’s the full text of a billboard I saw on a main thoroughfare:

State Representative
Michelle
Rehwinkel
Vasilinda
Fighting to Protect Public Employees
Political advertisement paid for and approved by Michelle Rehwinkel Vasilinda, Democrat for State Representative District 9

Rather than looking out for the interests of taxpayers, businesses, or even consumers of public services such as children who attend government schools, she’s fighting to protect public employees.

It’s not uncommon for critics of government to argue that government acts to further the interests of the political class, and those who work in the public sector, rather than working to further the general public interest.  It’s less common for elected officials (Michelle Rehwinkel Vasilinda is the incumbent in this election) to campaign on that kind of platform.  I give her high marks for honesty in saying that if re-elected she will work to further the interests of public employees rather than the people who pay the taxes to support those public employees.

Although President Obama’s executive order imposing a six-month moratorium on drilling for crude oil and natural gas in ultra-deep waters within the 200-mile territorial limit recognized by international law has at least temporarily been suspended by a federal district judge, offshore drilling will not come to a screeching halt even if that precipitous action ultimately is determined to be within his constitutional powers.

As reported in the Wall Street Journal on Friday. July 2, Respol YPF SA, a Spanish company, has announced that next year it will begin drilling exploratory wells off the northern coast of Cuba, just 60 miles south of Key West. Industry experts as well as the U.S. Geological Survey seem confident that substantial deposits of crude oil and natural gas are there for the taking.

America’s oil companies cannot participate in exploiting those deposits because of our long-standing and counterproductive trade embargo against Cuba. (Can anyone identify a benefit flowing from that embargo offsetting the heavy costs imposed on me and other smokers of cigars? I doubt it.)

The point is that if the United States commits to bypassing offshore drilling at depths greater than 500 feet, we will be cutting off our collective nose to spite our collective face. Spain, China, Venezuela and other nations will continue to exploit potential reserves of fossil fuels, wherever they may be found. As a result, more of the world’s supply of crude oil and natural gas will fall into the hands of unfriendly nations.

In the event that Respol experiences a blowout of the same magnitude as the disaster that followed the explosion and sinking of the Deepwater Horizon on April 20, Washington will be even more impotent than it apparently now is, owing to the international dimensions of such an accident. Further ecological and economic damage to our homeland is predictable, given the Obama administration’s inept response to the current crisis and its evident diplomatic failures in dealing with Iran, Afghanistan, Pakistan and other flashpoints in the war on terror.

No cost-effective alternatives to fossil fuels loom on the horizon. As such, America either can develop its known domestic resources, both onshore and off, or continue down a path that leads to greater reliance on energy produced by others. That policy choice would be sensible if global trade were free and open, but is dangerous in a hostile world.

The talking heads on both left and right (notably William Kristol) are dumping on Michael Steele for his recent comments on the Afghan War. He may well be forced out as RNC chair or, at the very least, compelled to apologize for his alleged “gaffe.” It would be a shame if Steele lost his job for this. Despite the clumsy nature of his wording, he was essentially right. The Afghan War was indeed of Obama’s "choosing." Obama supported it from the beginning and chose to escalate once in office. More to the point, Steele accurately described the current situation:

Well if he’s such a student of history, has he not understood that, you know, that’s the one thing you don’t do is engage in a land war in Afghanistan. Alright? Because everyone who has tried over a thousand years of history has failed. And there are reasons for that. There are other ways to engage in Afghanistan without committing more troops.