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The Golden Rule of Politics

from Democrats Finally Wake Up to the Dangers of Illiberalism by Charles C.W. Cooke at National Review

Throughout, the Brendan Nyhans of the world will ask, “How could this happen?” And the answer will be elementary: It happened because process was subordinated to partisanship and because ends became mistaken for means. It happened because men are forgetful and myopic and prone to drawing straight lines. It happened because even the best among us are tempted by expedience.

In private we ask, “Do unto others as you would have them do unto you”; in public, “If you would not see your enemies handed untrammeled power, seek it not for your friends.” That so many are skeptical of an incoming president is, by my lights, a good thing. That they are unable to see illiberalism’s continuum and to place his predecessors on it is decidedly less so. This brave new world came into being a long while ago. Only a fool shows up at the changing of the guard and complains about the soldiers’ new uniforms.

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Political Migration

From The Washington Times, The Blue State Depression by Stephen Moore:

Of the 10 blue states that Hillary Clinton won by the largest percentage margins — California, Massachusetts, Vermont, Hawaii, Maryland, New York, Illinois, Rhode Island, New Jersey, and Connecticut — every single one of them lost domestic migration (excluding immigration) over the last 10 years (2004-14). Nearly 2.75 million more Americans left California and New York than entered these states.

They are the loser states. They are all progressive. High taxes rates. High welfare benefits. Heavy regulation. Environmental extremism. Super minimum wages. Most outlaw energy drilling. The whole left-wing playbook is on display in the Hillary states. And people are leaving in droves. Day after day, they are being bled to death. So much for liberalism creating a worker’s paradise.

 Now let’s look at the 10 states that had the largest percentage vote for Donald Trump. Everyone of them — Wyoming, West Virginia, Oklahoma, North Dakota, Kentucky, Tennessee, South Dakota, and Idaho — was a net population gainer.
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Why Government Should Be Irrelevant

by Henry Oliner

Deidre McCloskey in Bourgeois Equality and Joel Mokyr in Culture of Growth examine the incredible growth in human betterment since 1850.

Thomas Malthus predicted a dismal future for human kind from the very logical prediction that food production could not keep up with the exponential growth in human population.  Yet during a period where population has grown seven-fold human wealth has growth tenfold for an increase in wealth of 70x. This is incredible in human history. It is even more stunning that this has happened during a period of two incredibly destructive global conflicts, several smaller scale but still destructive wars and numerous economic collapses.

Looking backwards in Thomas Malthus’s time there was no reason to believe that a history of grinding poverty for the majority of the world’s population would change.

What did change was a cultural shift where dignity and equality were bestowed on the common man. Before these traits had been the domain of the upper class only. The fragmentation of Europe also led to a competition of ideas, what Mokyr called the Republic of Letters, the original social network of intellectuals that knew no national boundary.

This led to innovations from the lower classes and an explosion in ideas esteemed for their practical applications.  These creations were embedded in the university culture so they could be captured and shared, providing the shoulders others stood on. Technology made scarcities obsolete.  Ideas had sex (Matt Ridley) with groundbreaking ideas creating a new platform for future ideas.  Without the internet and cellular communications there would be no Amazon or Uber. Theoretical knowledge often followed rather than led the practical knowledge. Einstein was an incredible exception.

The respect for individual rights rather than credentialed meritocracies expanded the creative space astronomically.  Think of the contributions to our betterment that came from college drop outs, from jazz music (now taught at Julliard)  to iPhones.

Mokyr points that China had well established meritocracies in the 1500’s but they all learned the same base of knowledge; there was no competition of ideas.

As long as this system of individual rights, fragmented systems and the competition of ideas remains intact, the political and media concerns become a side show.  When we see, what has propelled our progress, it is not government institutions.  If anything, they have only served to slow us down by substituting credentialism and authority for competition.  Our universities are letting us down because they lack the one diversity that counts; the diversity of ideas.

The setbacks in financial collapses are blips on the path of growth.  Perhaps the most distinguishing difference between a modern conservative and liberal is the time frame they address.

Capitalism was defined by George Gilder as the competition of ideas.  Our political structures and institutions and our regulations should focus on promoting that objective.

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Radicalism Breeds Radicalism

From Ian Tuttle from National Review, America Needs a Sane Left:

Take all of that (and more) together and there is the distinct sense that the Left’s response to this election is going to be one not of introspection but of finger-pointing. The culprit for its shellacking at every level was not decades of labeling cultural conservatives “racists” and immigration restrictionists “xenophobes” and abortion opponents “misogynists”; it wasn’t the foolish decision to dismiss the white working class not as simply unwinnable but as not worth winning — moral reprobates with backward views; it wasn’t the choice to clear the way for a presidential candidate with longstanding issues of corruption and untrustworthiness; it was “white supremacy” and “sexism” and “fake news.” On Thursday, in a forum at Harvard’s Kennedy School of Government, Clinton campaign manager Robby Mook blamed his candidate’s loss on FBI director James Comey.

The Left has been relentless in giving to every partisan dispute the moral urgency of warfare. It’s the Left that turned Supreme Court nominations into nasty affairs. It’s the Left that co-opted America’s health-care industry on a party-line vote. It’s the Left that scrapped the filibuster. It’s the Left that forced nuns to purchase contraception. If the Right was willing to countenance a great deal of heterodoxy in 2016, it’s in part because they perceive a Left that has become unconscionably radical.

That is not to say the Right does not have serious problems of its own creation. Trump’s success would not have been possible without a real, and alarming, moral and intellectual vacuity. Opportunism in right-wing media trades on the emotivism of talk-radio listeners eager to have their worst fears about the country confirmed, and ideological zealotry has made the necessary task of compromise more difficult.

But radicalism breeds radicalism, and the Left, in the aftermath of a massive defeat, should recognize that. A Left that ensconces itself in a sanctimonious refusal to consider the world from the perspectives of its detractors is a Left destined to become more politically impotent and nastier. That may work to Republicans’ short-term gain. But a nastier Left means a nastier Right.

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The Consequences of Jawboning

Jawboning American industries to comply with political wishes has been with us at least as long as Teddy Roosevelt negotiated an end  to the Pennsylvania coal strikes.  John F Kennedy pressured the steel industry to settle a labor strike. Bailouts and tax payer funded bribes to attract and keep industry is used by every state and most nations.  But just as Trump threatens consequences to those who will leave, there are consequences to his method which are beyond his control.

To be fare to the president elect, there are signs that his policy will rely more on carrots than sticks; that his preferred method is to reduce corporate taxes and friction costs and make the American economic environment more desirable for commercial activity.  The incentives and the jawboning to keep and least a portion of the Carrier employee base in Indiana is a clear victory for the workers and clear political victory for Trump.

But it is also an example of Bastiat’s broken window fallacy that should teach us to examine the entire cost and all the consequences of an economic decision.  The rejection of ideology for immediate pragmatic results is a hall mark of progressivism, as is the use of central government power to drive local decision making. If this is only a short term pragmatic solution with an eye to creating an environment more amenable to bottom up economic growth then the harm will be limited.

The use of threats from a central authority, however, can become  a slippery slope.

Kevin Williamson in National Review writes The Economic Stupidity of the Carrier Bailout:

The ethical question is more complicated than the pop-cons let on, too. Our government runs deficits, which means that a federal tax credit of $1 million given to Smith is $1 million in taxes that eventually will have to be paid — by Jones, and Wilson, and Humperdink — with interest. Carrier is a division of United Technologies (the Otis elevator and Pratt & Whitney engines people), which is first and foremost a government contractor, a firm that derives at least a quarter of its revenue from government contracts, and 10 percent of it from Pentagon contracts alone. It is a company that has competitors — competitors who employ Americans and pay taxes, just as Carrier does. These firms and their employees are put at an economic disadvantage by the subsidies paid to Carrier thanks to Trump and Pence. That means that some of these companies probably will be less profitable, and that they will not hire people they otherwise would have hired. But you’ll see no Trump press conference celebrating that. This is a case of Frédéric Bastiat’s problem of the seen vs. the unseen. The benefits are easy to see, all those sympathetic workers in Indiana. The costs are born by sympathetic workers, too, around the country, and by their families and by their neighbors. But those are widely dispersed, so they are harder to see and do not hit with the same dramatic impact.

From Don Boudreaux at Cafe Hayek, An Open Letter to Generalissimo Trump:

How do you anticipate business executives will respond to your bullying threats?  Are you truly so stupid as not to understand that among the results of your intimidation is that fewer firms will open in America?  That fewer businesses here will expand?  That those that do open or expand will use a higher ratio of capital to labor because they fear that the greater the number of workers they employ the more likely they are to be victimized by your arbitrary diktats?  That no matter how much you cut the monetary taxes they pay, the uncertainty and absurdity of your promised autocratic rule drastically raises firms’ costs of starting and growing on U.S. soil?  And that each of these inevitable responses to your imperious fulminations will be slower job and wage growth for Americans?

From the Wall Street Journal Editors, Trump’s Carrier Shakedown:

The company is also betting that Mr. Trump will fulfill his promise for tax and regulatory reform to make U.S. manufacturing more competitive. United Technologies does about 61% of its sales outside the U.S., and it has some $6 billion in cash overseas that would be taxed at a 35% rate if it brought the money home today. Carrier currently pays a 28% effective tax rate, so a tax reform that cut the corporate rate to 20% and only taxed earnings in the country where they are earned would more than make up for the Indianapolis concession.

From The Editors of National Review, The Winners and Losers of the Carrier Deal

We are not very enthusiastic about government-run economic-development programs that rely on industry-specific — or firm-specific — tax breaks, grants, or other concessions. In the long run (and generally in the short run, too), these programs are almost always corrupt in themselves and a source of corruption in others, with the benefits going mainly to politically influential and well-connected companies, whether that means Solyndra during the Obama administration or Carrier in the Trump administration. Inevitably, what happens is this: The government creates a set of incentives to encourage certain kinds of business activity, from “green” energy to manufacturing, and then, after a few years pass, complains mightily that companies are responding to the incentives that the government created. Consider those periodic journalistic spasms over General Electric’s low corporate-tax bill or the criticism that Starbucks encountered for taking advantage of manufacturing credits in its manufacturing operations: Those deductions and carve-outs didn’t happen by accident — they happened exactly the way the Carrier deal is happening.