Archive for January, 2009

Crying “Wolf!”

Thursday, January 29th, 2009

“None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron and steel used in the project is produced in the US.”

A number of political/economic writers and  interest groups representing those who buy foreign iron and steel oppose this provision in the current stimulus bill.  Of course, opposition is to be expected from the losers in the political process.   However, a few go too far in raising the protectionism bogeyman.

Nothing in the bill seeks to prevent private parties such as public utilities from buying whatever iron and steel suits their needs.  As best I can tell from what is available in the public media, there are no tariffs or quotas on foreign goods.  The legislation simply requires that those feeding at the public trough (it’s not private grant money) buy American iron and steel. The purpose of the legislation is to put Americans back to work.  Yeah, sure it’s loaded with pork barrel spending, earmarks and whatever you want to call spending directed at specific constituents.  Nothing unusual about that. And perhaps it doesn’t go far enough in specifying other American producers that should be used.  But I fail to see how keeping taxpayer dollars in taxpayer hands is protectionism.  After all, the workers can use their earnings from government projects to buy Roquefort cheese.  But wait!… the Bush Administration put a 300% tariff on it in retaliation for the EU throwing up barriers against American hormone laden beef (seems fair enough; you don’t take our hormones, we won’t take your mold).

In the long run, it is most likely inefficient to require contractors to “buy American.”   But in the short run, who will pay to keep our unemployed workers afloat while we pursue a Darwinistic policy for the sake of  trade purity?  The Chinese?  The Europeans?  This is not Smoot-Hawley or I would be grabbing my pitchfork and rushing to the battle myself.

“The Case Against Government Intervention in Energy Markets”

Wednesday, January 7th, 2009

“The Case Against Government Intervention in Energy Markets: Revisited Once Again” by Richard L. Gordon showed up in my mailbox a few weeks ago.  It is No. 628 in a Cato Institute series dubbed Policy Analysis. I’m sure Cato would be glad to send the readers a copy at no charge.

I would recommend getting a copy for the extensive bibliography.  Other than that, the article leaves much to be desired.  It seems as though the author knew the answer he wanted and worked backwards, rather than objectively working forward from questions he had.  There’s nothing wrong with advocacy.  I’ve done it myself.  But I learned the hard way in grad school that if something correlates 100% or there is no correlation whatsoever, you might have a problem or a tautology.  Thus when you set government equal to “bad,” or government = good, and your analysis always produces that result, it’s probably faulty. And boring to read.

But the bibliography is great.