Monday, January 31, 2011

The Fate of Mubarak

Stephen J. Hadley, former national security advisor to George W. Bush, writes in today's Wall Street Journal about the possible fate of Egyptian President Hosni Mubarak.  Given the intense political upheaval in Egypt, Hadley sees Mubarak ending up a lame-duck president until presidential elections in September (where it is, in his opinion, unlikely that Mubarak will run again) or alternatively, the army replaces Mubarak to allow for a transition to open democracy.  He provides an interesting argument and it is a worthy read.

Any outcome of the Egyptian protest entails the risk of a seizure of power by the Islamist Muslim Brotherhood - an outcome that would be bad for Egyptian democracy and US and regional interests.  The eternal struggle between stability and transition to democracy is starkly clear, as the US is in an awfully difficult position.  The best course of action is for the US government to announce its support for greater democracy, regardless of what parties bring it about.  This puts the US on the side of the pro-democracy protesters, while limiting the influence of the Muslim Brotherhood, without cutting Mubarak loose, affording him the opportunity to at least attempt to make true reforms from within.  Regardless of the outcome, it ensures a greater likelihood of committed democratic reform, while minimizing the destabilizing costs of an unknown and possibly Islamist "freedom" movement.

Saturday, January 22, 2011

Race, The Welfare State, and Economics

The Wall Street Journal ran a very poignant interview with Walter Williams, a black economist at George Mason University, on the impact of the welfare state, racism, and the growth of government.  Mr. Williams most salient point is best summed up in a quote, "The welfare state has done to black Americans what slavery couldn't do, what Jim Crow couldn't do, what the harshest racism couldn't do... And that is to destroy the black family." 

Williams makes a powerful argument - one that needs to be made more often by the Right.  The so-called nanny state hurts even those it supposedly benefits.  If such an argument is convincingly sold to the voters, it will do much to scale back the expansive growth of government.

Thursday, January 20, 2011

The Power of Lobbies

It is a common political pastime to disparage so-called “special interests.” Their association with the Big “You Fill in the Blanks” [Business, Insurance, Auto, Pharma, etc.] and their alleged corrupting influences on politics has made them an unremitting target of popular umbrage. Following the Citizens United decision, President Obama distinctively claimed that it was “a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.” However, a year after this infamous and contentious Supreme Court ruling, there has yet to be considerable, if any, focus on a key aspect of the special interest world.

The overlooked reality is that no lobby or special interest has any power save what is given to it by the government. Merriam-Webster defines a special interest as “a person or group seeking to influence legislative or government policy to further often narrowly defined interests.” Special interests gain clout not through their own power over a specific industry or market, but by influencing legislators or regulators to grant them undue sway. The real power lays with the government officials, who possess the ultimate command of coercion.

Surprisingly, this fact is frequently disregarded when populists want to attack special interests. However, if one takes a look at the industries where powerful lobbies exist there is an eerie correlation with government involvement. Seemingly, special interests would lose much of their influence if the government ceased arbitrarily meddling in private markets.

To be clear, this is not a claim that the problem of every special interest is rooted in government. For instance, simple vote- or seat-buying [Mr. Blagojevich] is often initiated by special interests and is unquestionably and inarguably wrong. There is little controversy that such behavior is unconscionable and must be eradicated. This is, of course, not a flaw in government as an institution but in government officials as corrupt individuals.

Nor is it a claim that government can have no constructive role in the private sector. Certain regulations and oversight are, at times, necessary. For instance, when non-legislatively caused monopolies exist and they are able, through illegal or unjust means, to deter competition (or in other words, cause severe distortions of the market) the government may have a limited role to play in deconstructing the firm’s market power.

Nevertheless, far too many of the problems (and there are many problems) in the private sector are the result of a conferral of power from the government to an undeserving group or individual. Critics miss the point when attacking lobbies, who like any other group or individual, are solely aiming to maximize their self-interest. Instead, the vitriol should be directed towards the regulators and politicians who continue to write laws and regulations that arbitrarily interfere in a world where the government does not belong. [To parallel, who is at fault when a demanding child is given one-too-many sweets– the relenting parent (who ultimately has the power) or the whining kid?]

Our government and our society need to change their outlook in this regard. If industries know that government will stand at arm’s length from the daily hubbub of a market and instead, solely create guiding rules (I.e. enforcement of contracts, prevent of abuse or fraud, etc.), the power of special interests will be severely limited if not eradicated. However, this is unfortunately not the case. Far too often, a tweak in a law can make or break a company’s bottom line. Right or wrong, this necessitates a strong response from an industry.

Republicans have a grand opportunity (and some say a mandate) to make this cultural shift. While so-far largely symbolic, the “repeal and replace” campaign against Obamacare is a prime testing ground. Regardless of whether the “replace” makes it anywhere in the next two years, it should be fundamentally based on the principle of clear, concise rules, that strengthen market forces and avoid noisome government meddling.  Avoiding unwarranted special interest power is as simple as prohibiting unjustifiable government forays into the private sector.

Saturday, January 15, 2011

Jeb Bush, the Hispanice Vote, and the Economy

Today's Wall Street Journal has a great interview with former Florida Governor, Jeb Bush.  He discusses the need to reach out to the Hispanic voters and provides some great suggestions.  He also discusses the future of the Republican Party and how to approach the next two years; including the GOP's approach to the economy.  His ideas are right on and a must read for anyone who wants to see a successful GOP.  Although it is doubtful that another Bush could successfully win the White House (and he denies any intention), any successful candidate needs to adopt his approach (maybe Chris Christie?)

Bush sums it up nicely: "There is a balance between standing on principle and finding common ground, and we need both. Common ground doesn't have to be compromise of principle."