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Archive for March, 2011

My students and I have lately been reading Rawls, and we have been considering, among other things, the implications of his claim that we do not deserve our “natural assets”  and thus can claim no exclusive title to them on that basis. “The existing distribution of income and wealth,” Rawls writes, “is the cumulative effect of prior distributions of natural assets—that is, natural talents and abilities—as these have been developed or left unrealized, and their use favored or disfavored over time by social circumstances and such chance contingencies as accident and good fortune.” He concludes: “Intuitively, the most obvious injustice of the system of natural liberty [advocated, for example, by Adam Smith] is that it permits distributive shares to be improperly influenced by these factors so arbitrary from a moral point of view” (A Theory of Justice, p. 72).

Given, then, the second of Rawls’s two principles of justice—namely, the “difference principle,” which holds that social and economic inequalities are justified only if they conduce primarily to the benefit of society’s “least advantaged” (TJ, p. 83)—one might conclude that differences in natural assets, as well as the benefits accruing from them, are among the inequalities that are to be so arranged. (Rawls later discusses the necessity and role of a “distribution branch” of government whose “task is to preserve an approximate justice in distributive shares” (TJ, p. 277).)

Across my desk today comes a singular instance that might illustrate the scope of Rawls’s position. Perhaps you have heard of the 12-year-old Indiana boy who is a mathematical genius, so much so that he may be on the verge of discovering some hitherto unknown extensions of Einsteinian General Relativity, possibly even revising it in light of problems he may have discovered. Time magazine has a story about him here.

Apparently people who work on such things think the boy may actually be on to something. So perhaps we might expect some new discoveries and new directions in mathematics and astrophysics from him in time. How exciting.

But reading about his otherwise relatively normal life, which includes things like playing video games and spending time with his “girlfriend” (whatever that means for a 12-year-old), Rawls’s argument beckoned to me. The boy clearly has natural talents, and perhaps even world-changing natural talents. By Rawls’s reasoning, he does not deserve them, and so has no moral claim on them. And it would be unjust to let him alone benefit from what seems like a winning ticket in the “natural lottery” (TJ, p. 75). So, shouldn’t we view them as a natural treasure, a natural precious asset, and, applying Rawls’s “difference principle,” argue that it is to be employed so that it is of principal advantage to the least advantaged in society?

What might this mean? Well, perhaps the boy and his natural assets should be nationalized: they should be viewed as part of the common pool of natural talents from which we are all equally entitled to benefit, subject to the condition that the least advantaged among us must be the primary beneficiaries. That would mean, I should think, that there should be some collective or democratic deliberation about what use(s) of this boy’s natural talents are that satisfy this principle.

Now, by imaginatively putting myself into a Rawlsian “original position” behind a “veil of ignorance,” perhaps I can begin to speculate what those uses might be. Trying to do that now—I’m actually squinting and furrowing my brow quite philosophically at this very moment—it seems easier for me to imagine what kinds of things we would not allow the boy to do than it is to imagine what we would require him to do.

For example, I can tell you that there would be no more video games or spending time with the “girlfriend.” With an intellect like that, every minute not spent working on something important is effectively depriving the rest of us of potential benefits. How could we possibly justify wasting time on things like that? What, then, should we require him to do? I am not so sure, but it may be that working on General Relativity is not one of them. Cancer? Obesity or longevity? Hunger?

His charming mother, who appears, though only behind the camera, in a video associated with the Time story, seems to love her son, even if she does not understand him. A speculation: She would not appreciate our collectively deciding about the best use of her son’s talents, and she would probably try to assert some kind of authority over him. The Rawlsian would presumably hope that she would not press that too hard, lest an unfortunate unpleasantness ensue.

But nationalizing the boy would seem to follow from Rawls’s principles. To what uses do you think we should put his talents?

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Dodd-Frank

Former Fed Chair Alan Greenspan in today’s Financial Times:

The financial system on which Dodd-Frank is being imposed is far more complex than the lawmakers, and even most regulators, apparently contemplate. We will almost certainly end up with a number of regulatory inconsistencies whose consequences cannot be readily anticipated. Early returns on the restructuring do not bode well.

Greenspan goes on to note: “The act may create the largest regulatory-induced market distortion since America’s ill-fated imposition of wage and price controls in 1971.”

For those who have watched the financial reforms, this judgment (and much of the Greenspan’s comments) comes as no surprise.

Far more surprising:

Bill Murray has been cast to play FDR (brilliant choice)

Christine O’Donnell has a book contract (insert punch line here)

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According to Bloomberg:

Premier Wen Jiabao said on March 5 that China will “resolutely” press ahead with controls on the property market to curb speculation, reiterating a promise to keep housing affordable. The government will “severely punish” irregularities in the real-estate market, implement differentiated credit and tax policies, and hold local officials accountable for maintaining stable home prices, he said.

First, given China’s history, I shudder to think what it could mean for the government to “severely punish” someone or something for a market irregularity.

Second, are price controls really the best policy prescription for any market?  Now I understand that politics in China has already heavily distorted the allocation of resources (making housing more attractive in the first place as a store of value), but doesn’t this just continue to distort the market simply in another direction?   And isn’t it possible that the controls will increase evasion and corruption?  Or lead to the opposite of what the government says it wants (how will checking prices actually lead to the higher supply that really works to reduce or check price rises given steady or growing demand?)?  But maybe China’s housing market is so distorted by government policy in the first place that this is necessary (I doubt it).  

I’m guessing that the Chinese government is really more worried about slowly getting a handle on the housing bubble rather than affordable housing.  And the best way to do that isn’t through further government distortion of the market but to open up other realms of safe, legal investment so that housing isn’t seen as a store of wealth (and an inefficient one at that) but a place to live.  

I’m generally skeptical of trying to interfere with prices – especially given how useful they are as an efficient transmitter of local knowledge (HT: Hayek).  So China, increase economic freedom to get out of the problems you’ve created through government action and don’t extend any further the reach of the distortionary tentacles of the state!

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The Real Churchill

I just finished reading Ralph Raico’s total evisceration of Winston Churchill. According to Raico, Churchill was throughout his life dedicated to two ends: his own power and the making of war. Every other principle he “ultimately betrayed.” Among Churchill’s sins are accounted the following: violating the international laws of war in blockading food and medicine from German civilians during World War I, setting merchant shipping policies that led to the sinking of the Lusitania (if not actually arranging for its sinking directly), returning Britain to the gold-exchange standard at prewar parity (thus destroying the British economy and setting the stage for the disastrous series of events that plunged the world into the Great Depression), attempting to crush the Indian independence movement, and more.

Even Churchill’s early opposition to Nazi Germany was tainted, for Churchill also took a hard line against Weimar Germany’s attempts to ease its heavy burden of reparations – policies that ultimately led to the rise of Hitler in the first place. In the end, Churchill’s real value lay in his rhetoric and the way in which he boosted British morale during the dark days of 1940. In the end, one achieves historic greatness more by what one says than by what one does, it seems.

HT: Brian Doherty

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The King’s Speech

The president’s speech last night was interesting. I remain a little uncertain as to what the criteria will be for future interventions. According to the president:

For generations, the United States of America has played a unique role as an anchor of global security and as an advocate for human freedom. Mindful of the risks and costs of military action, we are naturally reluctant to use force to solve the world’s many challenges. But when our interests and values are at stake, we have a responsibility to act.

Apparently, the justification rests on national interests and/or values. The president clearly believes that there are national interests at stake here. When reviewing the potential slaughter in Benghazi, he stated: “It was not in our national interest to let that happen.”

This past weekend, Defense Secretary Gates noted: “No, I don’t think it’s a vital interest for the United States, but we clearly have interests there, and it’s a part of a region which is a vital interest for the United States.” There was no compelling argument last night to contradict this assessment. Ultimately, things seem to hinge on values.

Once again, the president:

To brush aside America’s responsibility as a leader and -– more profoundly -– our responsibilities to our fellow human beings under such circumstances would have been a betrayal of who we are. Some nations may be able to turn a blind eye to atrocities in other countries. The United States of America is different.

And

Born, as we are, out of a revolution by those who longed to be free, we welcome the fact that history is on the move in the Middle East and North Africa, and that young people are leading the way. Because wherever people long to be free, they will find a friend in the United States. Ultimately, it is that faith — those ideals — that are the true measure of American leadership.

Given the number of people who find themselves under dictatorial rule and the threat of annihilation, and thus “long to be free,” it would appear that “our responsibilities to our fellow human beings” is almost boundless.

I am not a foreign policy expert (thankfully), but some of the Pileus readers and contributors (good morning Grover) most certainly are. Quick question: does last night’s speech make you wonder (once again) whether we are in the midst of George W. Bush’s third term? How would one distinguish last night’s comments from what one might encounter in the more refined neocon circles?

Update:
In case you wondered, William Kristol (Weekly Standard) found the speech “reassuring.” In his words:

The president was unapologetic, freedom-agenda-embracing, and didn’t shrink from defending the use of force or from appealing to American values and interests. Furthermore, the president seems to understand we have to win in Libya. I think we will.

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If the answer is no, here’s a link where you can help create an incentive for a local cinema to show the film.  In true Randian (and Smithian) fashion, it is not out of altruism that the typical theatre is going to show Atlas Shrugged but out of the self-interested desire to earn a profit (of course, in doing so, the theatre is also going to satisfy your preferences and everyone involved with the transaction will be better off).  So, please – out of self-interest or even out of altruistic feelings for the rest of us (I think the Objectivists will give you a pass this one time!) – give the theatre owner a reason to show Shrugged on April 15th by clicking on that link and asking for the movie to be shown in your area!*

* No, we haven’t forgotten about the collective action problem.  Nor do I promise the film will be great – I haven’t seen it and hold out hope that it will be wonderful.

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I’m always surprised how often this old post gets viewed by our readers compared to other “age-challenged” posts.  I guess more people are interested in the Department of Agriculture than I thought when I first wrote the post.

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Among the defenders of the Constitution, a great deal was said about the states as a check to the power of the national government that informed the first ideas about interposition. 

Madison’s contention in Federalist 39 is well-known. Our union was to be “partly federal and partly national.” Among the premier federal attributes were such provisions as the equal representation of the states in the Senate by senators appointed through state legislatures, portions of the Electoral College, portions of the amendment process, and the very means of ratification through conventions of the sovereign peoples of the various states.

This last attribute is often not given the attention that is due to it, but James Madison made this point repeatedly in other venues as well. He noted it in various letters and in the state ratification convention in Virginia. It is a major part of the argument against the notion put forward by his critics that the Constitution would establish a consolidating government.

Here is what Madison’s Publius said: “[T]his assent and ratification is to be given by the people, not as individuals composing one entire nation, but as composing the distinct and independent states to which they respectively belong. It is to be the assent and ratification of the several states, derived from the supreme authority in each state…the authority of the people themselves. The act, therefore, establishing the constitution, will not be a national, but a federal act.”

This point was repeated again in Virginia’s ratifying convention. The reason was to assure the Constitution’s critics that the sovereign power of the people of the states was not being usurped. If a simple national majority, he reasoned, were all that was required to form the union, then the majority of all the people of America could bind Virginia or Rhode Island even if they had voted in the negative. This was not the case he assured his opponents.

But beyond ratification, did this conception of sovereign power have any other constitutional implications for the states? What exactly is the relationship between the people of the states and the national government? What if there is a dispute between them? This is where Publius becomes more ambiguous, and it is from here that much of the controversy concerning Madison himself originates.

In the same essay, Madison went on to argue that national supremacy meant that a national tribunal must determine the legitimacy of national laws, at least “so long as they are objects of lawful government.” Setting aside for a moment what is meant by “lawful,” he asserted, “It is true, that in controversies relating to the boundary between the two jurisdictions [state and national], the tribunal which is ultimately to decide is to be established under the general government.” This is necessary, he believed in order “to prevent an appeal to the sword, and a dissolution of the compact.” Really?

Where then resides the hoped for check to centralization? Here it rests on the impartiality of the judges of the court, for whom “all the usual and most effectual precautions are taken to secure this impartiality.” The difficulty is that the very contest presumes an illegality. A state would not contest a national act unless it thought the act to be unlawful; that is to say, not permitted by the Constitution. Is it then reasonable to conclude that they will rely upon the judgment of a national court? (more…)

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A Matt Ridley moment for the evening.

The Great Recession really sucks and everything, but a long term perspective is helpful occasionally.  Real GDP per capita in the U.S. in 2010 (according to the IMF) was 7.1% higher in 2010 that it was in 2000 and almost the same as it was in 2005.

Now by historical standards this is a nasty dip.  But I get tired of all the “it hasn’t been this bad since the depression” rhetoric.  Even in this nasty recession, our national income is about 25% higher now than it was in 1995, the heydey of the supposedly wonderful Clinton years—and the stuff we have to buy with that extra 25% is of much higher quality, even for those whose incomes have stagnated (increases in quality of consumer goods are vastly understated in national income accounts).  Sometimes we all pay way too much attention to the waves and not enough to the current.

The persistently high unemployment is terrible, especially for the unemployed.  But think about it this way:  we can lop off millions of workers from the payrolls and still produce as much as we did 5 years ago.   That is pretty impressive.

I have grave concerns for the future prospects of lesser skilled workers being able to have a decent life in the modern economy.  There is no denying that.  But it isn’t like the mighty engine that is our economy has stalled.  We are just so spoiled by and accustomed to persistent growth that we don’t think clearly about the economy.

The policies we need for continued prosperity remain the same as they have always been: free markets, minimal regulations, low taxes, manageable government debt, and a modest safety net.

So, 2.8 cheers for the American economy!

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Prior to, and immediately after his election as British Prime minister, David Cameron articulated what he saw as a distinctively Conservative foreign policy. A key aspect of this approach was Burkean scepticism about intervening to ‘bring democracy’ to places which have little or no cultural experience of democratic institutions. Recent opinion polls on the Libyan conflict indicate that the British public maintains a healthy scepticism towards overseas adventurism even though its prime-minister appears to have undergone a massive change of heart in this regard. Most polls show a bare majority in favour of British involvement in the ‘no fly zone’ with up to 40% opposing the military action (see, for example: http://ukpollingreport.co.uk/ ). This level of support is remarkably low given the widespread hostility towards Gadaffi’s regime, not least owing to the Lockerbie bombing. So, in light of the disastrous interventions in Iraq and Afghanistan why has David Cameron abandoned Burkean scepticism?

I do not profess to have any expertise on this matter, but for what it is worth I think that the current British position reflects the desire of the prime minister to court support from the ‘twitterati’ element in the media. The latter are epitomised by the various BBC foreign correspondents who have been cheer-leading for the ‘revolutionary movements’ that have rippled across North Africa and the Middle East. The twitterati was, to put it mildly, critical of the interventions in Iraq and Afghanistan, but now appears to relish the prospect of reporting on what it sees as a genuinely ‘just war’ – irrespective of the character of those who may replace the current regime.

Mr Cameron has been courting the twitterati for some time now in the belief (a false belief in my view) that where the twittertati stands today, public opinion will stand tomorrow. On the domestic front his efforts to sell ‘modern conservatism’ appear to have failed, with the BBC running a daily assault on the ‘cuts’ agenda – cuts so ‘deep’ that they will return Britain to levels of public spending last seen in 2006/7. The Libyan conflict, however, provides a supreme opportunity to reconnect with the twitterati by showing that ‘modern conservatism’ can ‘succeed’ in ‘spreading democracy’ where ‘New Labour’ failed. Appeasing the twitterati in this manner is, of course, even more appealing to Mr Cameron when the policies it requires will in large part be paid for by the United States.

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Nice short piece by Yale law professor Bruce Ackerman on why Obama’s war in Libya has moved beyond even Bush II in terms of the imperial presidency. 

A couple of passages:

In taking the country into a war with Libya, Barack Obama’s administration is breaking new ground in its construction of an imperial presidency — an executive who increasingly acts independently of Congress at home and abroad. Obtaining a U.N. Security Council resolution has legitimated U.S. bombing raids under international law. But the U.N. Charter is not a substitute for the U.S. Constitution, which gives Congress, not the president, the power “to declare war.”

and

The War Powers Resolution doesn’t authorize a single day of Libyan bombing. But it does provide an escape hatch, stating that it is not “intended to alter the constitutional authority of the Congress or of the President.” So it’s open for Obama to assert that his power as commander in chief allows him to wage war without Congress, despite the Constitution’s insistence to the contrary.

The WPR is a very dangerous Cold War-era attempt to rein in – slightly given the perceived danger of the period – the presidency.  However, the compromise it embodies are no longer necessary (I actually don’t think they were ever necessary), the resolution is unconstitutional (but not because it limits presidents as conservatives frequently claim), and it should be scrapped (but won’t given how chickenshit Congress is).

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Current Vice President Joe Biden back in 2007:

 “I am not one, who if you’ve observed me for some time, I am not one who’s engaged in excessive populist rhetoric. I’m not one that pits the rich against the poor. I’m not one who’s gone out there and made false threats against presidents about, and god love him he’s a great guy, I’m not Dennis Kucinich saying impeach everybody now. But let me tell you, I have written an extensive legal memorandum with the help of a group of legal scholars who are sort of a stable of people, the best-known constitutional scholars in America, because for 17 years I was chairman of the Judiciary Committee.

“I asked them to put together [for] me a draft, which I’m now literally riding between towns editing, that I want to make clear and submit to the Untied States Senate pointing out the president has no authority to unilaterally attack Iran. And I want to make it clear, I want it on the record, and I want to make it clear, if he does, as chairman of the foreign relations committee and former chair of the judiciary committee, I will move to impeach him.”

HT: Huffington Post

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Seems like many of the headlines about Geraldine Ferraro’s death have noted that she was the first female Vice-Presidential candidate.  See here, and here for examples.  Fortunately, major papers of record like the New York Times and LA Times do not make this claim….since it isn’t true! 

Ferraro was the first female Vice-Presidential candidate for a major party.  Indeed, Ferraro wasn’t even the first female Vice-Presidential candidate to receive an electoral vote.  That is because Tonie Nathan, the Libertarian Party Vice-Presidential candidate in 1972, received one electoral vote when an unfaithful elector cast his electoral votes for the LP ticket instead of Nixon-Agnew in 1972.  

Here is an old note by David Boaz that tells the basic story:

“Nathan was a radio/television producer in Eugene, Oregon, when she attended the first presidential nominating convention of the Libertarian Party in 1972. She was selected to run for vice president with presidential candidate John Hospers, chairman of the philosophy department at the University of Southern California.  Although the ticket received only 3,671 official votes, Virginia elector Roger L. MacBride chose to vote for Hospers and Nathan rather than Nixon and Agnew.”    

Fortunately, the texts of those articles with the mistaken headlines make the correct assertion that Ferraro was the first major party female VP candidate (the NY Daily News does worse, it has the error in the text of a blurb on Ferraro).   This highlights one of the problems with headline writers – they fudge on accuracy for a good sounding phrase.  But accuracy should be privileged and the better MSM pieces I sampled properly avoided the inaccurate headline.  Kudos to them.  And for those of you who don’t know much about the writing business, never blame the author of a piece for the headline.  It is almost always written by a newspaper editor rather than the author of the piece — sometimes much to the chagrin of op-ed writers like me!

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The Times Bob Herbert is finally calling it quits.  Is there any  reasonable person of any political persuasion who is not hugely relieved?

His last column starts “So here we are pouring shiploads of cash into yet another war, this time in Libya, while simultaneously demolishing school budgets….blah, blah,…unrestrained corporate power, blah, blah,…inequality,…blah, blah, blah, blah, blah.”

As Howard Dean would say, “Aaaaarrrrrggggghhh.”

Never mind that one has to look hard to find school budgets that have even declined perceptibly, not to mention being “demolished.”  Or the fact that the main reason school budgets are ailing is that the state governments have been for years pouring money into government employee pension plans, including those of teachers, which they didn’t have.

Herbert never met a government program he didn’t like or a business he didn’t think was evil.  His old-school, knee-jerk statism has always been completely uninfluenced by any notion that expenditures eventually have to be paid or that workers have to produce something of value if their employers are to stay in business or that free exchange actually makes people better off, or that not every Republican is a cold-hearted racist.  It’s like he went to sleep in 1963 and didn’t wake up until 30 years later when some editor offered him the chance to write a column for the NY Times. It is not that he is a leftist.  He is mindless leftist.  Even his ideological allies should be relieved to say good-bye to his drivel.

There are lots of lefty Times columnists I enjoy reading (Dowd, Collins, Blow, even Krugman, on occassion).  But I honestly can’t point to a single Herbert column that hasn’t been complete nonsense.

I think Herbert sees himself as a spokesman for black America.  Both they and the rest of America deserve far better.   Herbert comes to mind when I think of that famous Dan Quayle quote when he was trying to remember the ad slogan of the UNCF: “It is terrible to waste one’s mind, or to never have a mind at all.”

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Today a no-confidence motion toppled Stephen Harper’s Conservative minority government in Canada. Canada has not had a majority government since 2004, when the so-called “sponsorship scandal” rocked the incumbent Liberal government and wrecked their majority in that year’s election. Since 2006 Stephen Harper has been Prime Minister atop Conservative minority governments. Today’s vote means that there will be an election this year, the fourth in the last seven years.

Canada’s political instability is a result of the strength of the “sovereignist” Bloc Québécois, which generally wins roughly half of the seats in Canada’s second-largest province. None of the other parties are willing to enter a coalition with a party they call “separatist,” and the Liberals and NDP, both parties of the left, have been unable to win a majority between them. The Conservatives have thus entered government after the 2006 and 2008 elections by default as the largest party in parliament but have had to compromise with other parties in order to pass legislation. Opinion polls suggest that they will again be the largest party after an election this year, while again failing to reach a majority.

So you see why I always say that Canadian politics are more interesting than American politics. Of course, living under interesting politics may be as undesirable to some as living in interesting times, but I would argue that Canada’s gridlock has actually served the country fairly well. For one thing, Canada came out of the global recession in much better shape than their southern neighbor. Perhaps perpetual political crisis is good for something after all.

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Keith Koffler has written a piece attributing the problematic war kinetic military action time-limited, scope-limited military action intervention to the President’s academic background. A few key lines capture the core of the critique:

President Barack Obama, the former Chicago Law School professor who now commands the U.S. armed forces, has slapped together an operation so inept that it can only have been conceived in a classroom.

The indecisive, dilatory and disorganized manner in which this is being executed has all the hallmarks of academia.

A fast-moving military situation on the ground begs for a man of action, not a professor who gets your exams back to you late. But Obama is stuck thinking things through. And once he comes up with something, he is trapped by a professor’s commitment to theory.

Having served on innumerable faculty committees—including a committee on refurbishing a building that included an extended debate involving 10 PhDs on the comparative merits of different approaches to carpet fiber construction—I am sympathetic to Koffler’s point. He remarks: “If President George W. Bush was ‘The Decider,’ Obama is ‘The Deliberator.’”

Perhaps…

But there is most certainly a role for theory. Deliberation may, in fact, slow things down. But when one is making weighty decisions about the use of deadly force, deliberation—and extended deliberation—seems warranted. One might conclude that one drew on the wrong theories or that deliberation resulted in poor decisions. But this seems to be an altogether different matter.

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In general, libertarians oppose laws requiring a physician’s prescription for purchase or dispensing of controlled drugs, on the grounds that these restrictions are paternalistic infringements on an individual’s right to choose for himself or herself. But under what conditions might libertarians support prescription laws?

Libertarian activist Rachel Mills recently asked on Facebook whether baby formula should be available by prescription and for medical reasons only. Given that there is clear evidence for vast benefits from exclusive breastfeeding up to six months, and no medical evidence for any advantage of infant formula over breast milk at any stage of an infant’s life, it would seem that responsible mothers would do everything they could to breastfeed rather than feed formula. In some cases, of course, breastfeeding might not be an option, due to disease, adoption, etc. What’s important here from a libertarian point of view is that there are third-party effects: a mother’s choice to feed formula can harm her baby.

So it’s not obviously crazy for a libertarian to advocate a drastic increase in government regulation of infant formula. On the other hand, before taking any policy position here, we have to consider relevant “sociological facts,” including the fact that mothers generally want what’s best for their babies. Is government regulation really necessary? Breastfeeding is on the rise, although it’s nowhere near where it ought to be (babies should be breastfed up to a year of age and exclusively so up to six months). Also: do we want to set a precedent for invasive government regulation of family life whenever science shows a possible rationale? On balance, I think there is a strong practical (but not “in principle”) case to be made against regulating baby formula in this way.

One area where I do support retaining prescription laws is for the dispensing of antibiotics. Due to overprescription of antibiotics, drug-resistant strains of bacteria have emerged. It is increasingly important to limit the taking of antibiotics to situations in which they are truly necessary. Misuse of antibiotics can be viewed as a violation of rights – an act that potentially fortifies microorganisms that attack others’ bodies.

Otherwise, however, I think the libertarian case against prescription laws is strong. Let customers decide whether to take painkillers – or chemotherapy for that matter. Sane adults will want to take good medical advice into account when making these decisions, and it ought ultimately to be their choice whether or not to do so.

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From the LA Times:

The rebels of eastern Libya have found much to condemn about the police state tactics of Libyan leader Moammar Kadafi: deep paranoia, mass detentions, secret prisons and tightly scripted media tours.

But some of those same tactics appear to be creeping into the efforts of the opposition here as it seeks to stamp out lingering loyalty to Kadafi. Rebel forces are detaining anyone suspected of serving or assisting the Kadafi regime, locking them up in the same prisons once used to detain and torture Kadafi’s opponents.

For a month, gangs of young gunmen have roamed the city, rousting Libyan blacks and immigrants from sub-Saharan Africa from their homes and holding them for interrogation as suspected mercenaries or government spies.

Now it is admittedly hard to know whether the prisoners in question are actually mercenaries (or agents of Qaddafi) feigning innocence or actual innocent people caught in the jaws of civil war.  However, the story doesn’t give us a lot of confidence that the rebels are abandoning the methods of the old regime.  Is “Operation Hope and Change” going to be a lot less about change than we think?

HT: H&R

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Harry Truman (if I recall correctly), frustrated with the economic advice he was receiving from the Council of Economic Advisors, asked for a one-armed economist who could not say “one the one hand…on the other.”

Ten former CEA heads have issued a joint letter on the long-term budget crisis: Martin N. Baily (Clinton), Martin S. Feldstein (Reagan), R. Glenn Hubbard (Bush I), Edward P. Lazear (Bush II), N. Gregory Mankiw (Bush II), Christina D. Romer (Obama)Harvey S. Rosen (Bush II), Charles L. Schultze (Carter), Laura D. Tyson (Clinton), and Murray L. Weidenbaum (Reagan).

While they disagree on some of the details, “we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention.”

While the actual deficit is likely to shrink over the next few years as the economy continues to recover, the aging of the baby-boom generation and rapidly rising health care costs are likely to create a large and growing gap between spending and revenues. These deficits will take a toll on private investment and economic growth. At some point, bond markets are likely to turn on the United States — leading to a crisis that could dwarf 2008.

Bottom line: they “urge that the Bowles-Simpson report, ‘The Moment of Truth,’ be the starting point of an active legislative process that involves intense negotiations between both parties.” Reducing waste, fraud and abuse and cutting domestic discretionary spending are simply insufficient. Entitlements, defense, and significant tax reform (elimination of expenditures) must be central to any solution.

Of course, the fact that the Bowles-Simpson Commission, former GAO head David Walker, the Congressional Budget Office’s Long Run Budget Projections, and now ten former CEA chairs agree on the fundamental problem may not be sufficient to outweigh the short-term incentives of our elected officials who remain—with a few exceptions–addicted to rent extraction, mud-farming, and kicking the can down the road.

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Over at 538, Nate Silver has an excellent discussion of the perils of “overfitting” statistical forecasting models. It’s good enough that I could see assigning it to my students in methods courses. Incidentally, I would argue that the opposite peril (“underfitting” if you will) is more common in standard, hypothesis-testing political science research. Because the goal is to establish a particular hypothesis, authors face a temptation to exclude relevant control variables and maximize degrees of freedom.

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According to an AP story, President Obama has again stated that the US mission in Libya is limited and that he has ruled out the use of ground forces:

Obama was asked in an interview with the Spanish-language network Univision if a land invasion would be out of the question in the event air strikes fail to dislodge Gadhafi from power. Obama replied that it was “absolutely” out of the question.

Asked what the exit strategy is, he didn’t lay out a vision for ending the international action, but rather said: “The exit strategy will be executed this week in the sense that we will be pulling back from our much more active efforts to shape the environment.”

“We’ll still be in a support role, we’ll still be providing jamming, and intelligence and other assets that are unique to us, but this is an international effort that’s designed to accomplish the goals that were set out in the Security Council resolution,” Obama said.

Is this believable after all of the huffing and puffing about Qaddafi having to go?  Maybe Obama now wants to disown his policy, one that seems to have been so poorly thought through.  But will the same liberal interventionists who brought us the no-fly zone mission stop pushing for more action if (as is likely) Qaddafi stays in power in the west or even starts to make gains again vs. the rebels?  If you need a guide to understanding what the administration is saying, here’s some help.

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Housing Problems Continue

So Marc, are we going to need Recovery Summer II, the sequel?  Or should we call it, “I Still Know What You Didn’t Do Last Summer”?  Housing data looks ugly :

New home sales fell 16.9% in February, to the lowest level since the government began keeping records in 1963, as the reeling housing market failed to generate any momentum.

Sales fell to an annual rate of 250,000 from the revised 301,000 in January, according to the Census Bureau’s monthly report released Wednesday. The rate was down a whopping 28% from the 347,000 of February 2010.

“We’ve been running at a very low level,” said John Canally, an economist with LPL Financial, a Boston-based financial adviser.

The release followed Monday’s downbeat report on existing home sales, which fell 9.6% month-over-month

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In an ongoing attempt to improve the quality of Grover’s lectures, I offer him the following quotes from today’s Maureen Dowd piece in the NY Times:

There is something positively mythological about a group of strong women swooping down to shake the president out of his delicate sensibilities and show him the way to war. And there is something positively predictable about guys in the White House pushing back against that story line for fear it makes the president look henpecked.

It is not yet clear if the Valkyries will get the credit or the blame on Libya. But everyone is fascinated with the gender flip: the reluctant men — the generals, the secretary of defense, top male White House national security advisers — outmuscled by the fierce women around President Obama urging him to man up against the crazy Qaddafi.

The entire piece is entertaining. Enjoy, Grover, enjoy! Meanwhile, let the serious debates on “Operation Hope and Change” continue.

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An update on the price of the Libyan conflict.  From CNN Money:

With the tab already running into the hundreds of millions of dollars, the U.S. military intervention in Libya has sparked a debate over funding.

To date, the United States has spent some $225 million firing Tomahawk missiles, according to CNN estimates based on U.S. Navy figures.

The cost could reach up to $800 million to fully establish the no-fly zone and another $100 million a week to maintain it going forward, said Zack Cooper, a senior analyst for the Center for Strategic and Budgetary Assessments.

In defense of the national interest, fine.  More than fine.  But to satisfy the dubious arguments of the liberal interventionists?! 

Hell no, our dollars shouldn’t go.

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There is an interesting review in the New Republic of one of the new Adam Smith biographies (no, not Jim Otteson’s new one, which I’m looking forward to reading).  I quite appreciated this part of the review:

By turning the logic of mercantilist economics on its head and establishing a market designed for the good of the common citizen, Smith believed governments could both unleash immense productivity and wealth and create economic institutions that encouraged discipline, moderation, and order in an open society. This would mean drawing a clear distinction between “pro-market” economic policy and “pro-business” economic policy, and Smith believed there were few threats to the moral order of a liberal society greater than the entanglement of the government with the nation’s largest producers.

That distinction has been lost in our time. In recent decades, the federal government has too often sought to advance the nation’s economic interests by tying itself to our largest corporations. What the left derides as crony capitalism and the right derides as state capitalism has been the policy of Republican and Democratic administrations alike, particularly since the economic crisis of 2008. The Bush administration’s bailouts of large Wall Street firms and the joint Bush-Obama bailouts of the nation’s largest automakers were the epitome of such entanglement. And the Obama administration’s economic reforms—empowering the largest health insurers over smaller competitors in last year’s health-care reform and the largest financial companies over smaller competitors in last year’s financial regulation reform—have taken this approach to new heights.

It was no surprise that those large insurers and financial firms supported those reforms, even though they increased the government’s power over the companies’ operations. As Smith understood, the wealthy and powerful will always look for exemptions from the rigors of competition. Though he was a champion of free markets, Smith was no fan of big business. Large merchants and principals of “joint stock companies” (or corporations), Smith wrote, are “an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.” And they are more than happy to use the government as their instrument.

However, without having read the book itself (and I’d love to find the time to read two biographies of Smith), I’m not sure how much is new on key questions like “The Adam Smith Problem” given Jim’s excellent treatment of it in Adam Smith’s Marketplace of Life (published by Cambridge University Press).  Unfortunately, Levin shows no sign of familiarity with Jim’s book despite his praise of Phillipson’s argument that The Wealth of Nations and The Theory of Moral Sentiment are connected rather than at odds (something Jim handled skillfully more than a decade before Phillipson’s book [and strangely Jim's well-known work on Smith doesn't merit an inclusion in Phillipson's index, though I can't tell on Amazon if Jim's work is cited in the text]).

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I was figuratively sick about USFP over the weekend but now I’m literally sick with a cold, so light blogging despite all of the interesting things to discuss.  Indeed, I hope to respond to Scott Lemieux’s sensible commentary on Executive-Legistative Relations and War a.s.a.p., but for now will describe a strange twist on the issue brought about by none other than President Grover Cleveland. 

President Cleveland faced a pretty hawkish Congress in 1896 due to the perception of an “intolerable” humanitarian disaster taking place in Cuba where the Spanish were repressing revolutionaries (sound familiar?*)[1].  Indeed, Cleveland was told Congress was going to declare war on Spain.  At that point, things got interesting.  Here is how Louis Fisher describes the episode in his excellent book, Presidential War Power:

Cleveland responded bluntly: “There will be no war with Spain over Cuba while I am President.”  A member of Congress protested that the Constitution gave Congress the right to declare war, but Cleveland countered by saying that the Constitution also made him the Commander in Chief and “I will not mobilize the army.”   Cleveland said that the United States could buy Cuba from Spain for $100 million, whereas a war “will cost vastly more than that and will entail another long list of pensioners.  It would be an outrage to declare war.”  

Fisher goes on to note that:

This standoff raises the intriguing possibility that a President, presented with a declaration of war from Congress, could veto it on the ground that intelligence obtained from diplomatic sources demonstrated that war was unnecessary. 

Or what if the President has a different policy preference and simply ignores Congress’ wishes (say Congress favors war by a slim but vehement supermajority) in his stead as Commander in Chief?  Is there anything Congress could do other than to impeach the President?  Should it?  Would the Court get involved (probably not even if Congress had legal grounds to stand on given that it would likely rely on the wimpy Political Question Doctrine to avoid such a sticky case)?  Would Presidential non-action be like impoundment – a purposeful thwarting of Congressional intent?  Or could we indeed have a declared war that the military is barred by the President from fighting?

1.  The description “intolerable” was used by a Congressional delegation that met with Cleveland as quoted in Louis Fisher.  Presidential War Power.  2nd ed.  Lawrence: University Press of Kansas, 2004.     

* And yes, I understand there were key differences too, especially that this was as much a fight for independence as it was a revolution (not to mention that the Executive branch is driving the Libyan intervention).

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Classical liberals claim that theories of justice must be judged by their practical capacity to facilitate positive sum games in society and to eliminate scope for the exercise of inconsistent and arbitrary political power. Unfortunately, as one of the recent rulings by the European Court of Justice reveals few people in today’s legal and political elites are willing to conceive justice in this regard. Three weeks ago the European Court ruled that it was inadmissible for car insurance providers to take into account sex-specific differences for risk assessment and actuarial purposes on the grounds that this breached the fundamental ‘right to equal treatment’ for men and women. As a consequence, European women will no longer be able to benefit from cheaper driving insurance resulting from their lesser likelihood of involvement in automobile accidents than men of equivalent age and experience. It is difficult to see how this decision is compatible with a positive sum view of society. Men will not be made any better off by the decision as their insurance premiums will at best remain unchanged and women will be made worse off as their previously cheaper premiums will now be equalised upwards in line with those of men.

The nature of this European ruling, however, reveals the wider incompatibility of egalitarian theories of justice with non-arbitrary rule. Egalitarians usually advocate ‘equalising’ policies on the grounds that inequalities are only justified if in some way they operate to raise the position of the ‘worst off’ (Rawlsians) or, if they stem from personal choices rather than from the ‘bad brute luck’ of genetic accident or social circumstance (the ‘luck egalitarian’ followers of Ronald Dworkin). According to these views, any inequalities that do not raise the position of the worst off or do not result from personal choices should be eradicated or compensated for in some way. The European Court’s ruling could certainly be construed in this vein. Charging lower (unequal) car insurance premiums for women might not be justified because this ‘unfair advantage’ does not benefit men in any way. And, differential premiums should be eradicated because the higher risk of accidents for men may not reflect their free choice to engage in riskier driving behaviour. Rather, such ‘choices’ may reflect a genetically determined propensity for men to take more risks than women, or alternatively the fact that many men have been socialised in a ‘macho culture’ which encourages them to take risks which are not genuinely of their ‘choosing’. It is not clear whether such principles directly informed the European Court’s interpretation of ‘equal treatment’ in this particular case, but if they did then all manner of dystopian policy consequences might follow from any non-arbitrary application of the relevant egalitarian doctrine.

Average life expectancy for men is typically 5-7 years less than for women. Irrespective of whether this ‘unfair’ difference reflects a natural/ genetic propensity of men to die younger, or is a reflection of social conditioning which leads men to behave in ways which shorten their lives, a non-arbitrary application of egalitarian principles would favour policies to eliminate such ‘unjustified’ inequality. This might require for example, ensuring that men receive more and better health care than women, or alternatively making sure that during their relatively shorter lives men perform less demanding and less stressful roles than women in order to counteract the ‘bad brute luck’ of having a genetic propensity to earlier death*. Seen in this light, the allocation of resources in most health care systems which tend to spend more on women than on men – is manifestly unjust.

Of course, it might be argued that since men have benefited from patriarchal social values which garner them ‘unfair’ advantages over women in other aspects of life- the gender ‘pay gap’, for example, then ‘compensatory’ policies of the above nature are not in fact justified on egalitarian grounds (but then why stop women from getting cheaper car insurance?). This response, however, only serves to confirm that the pursuit of ‘social justice’ as egalitarians understand it is incompatible with a system of non-arbitrary rule. Quite apart from the difficulty of assessing the extent to which the gender pay gap is attributable to the differential choices of men and women relative to the role played by genetic or social conditioning** , there is no basis to determine an appropriate ‘rate of exchange’ between these different types of ‘disadvantage’ and ‘inequality’. What pay differential is sufficient to compensate men for their loss of an extra seven years of life? And, how much extra life expectancy and benefits such as cheaper driving insurance are sufficient to compensate women for the cultural legacy of patriarchy? Such questions cannot be answered with reference to a clear standard of ‘equal treatment’ because there is no widely acceptable procedure to determine what this might require. In practice, therefore, it will be the arbitrary power of bureaucrats and judges that determines which ‘inequalities’ matter, for whom, and ‘how much’. For classical liberals, there can be no better reason for keeping the remit of justice out of distributive questions and to confine its reach to clear and simple rules that can protect the person and property of men and women alike.

* On this see, Kekes, J. (1997) A Question for Egalitarians, Ethics, 107: 658-669.
** On this see Shackleton, L. (2008) Should we Mind the Gap? London: Institute of Economic Affairs.

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For those of you that lived through the feminist challenge to traditional IR theory in the 1990′s, David Gergen reports on a relevant observation in his CNN piece today:

One irony, as a female friend put it, is that for years many of us believed that if only more women could gain power, the world would surely become more peaceful. Yet, we now see that the three people who talked Obama into using force against Libya’s Moammar Gadhafi were all women — Hillary Clinton, Susan Rice and Samantha Power. Leading male advisers were opposed. Perhaps we should be less surprised than we are. Remember Margaret Thatcher? And Golda Meir? And remember, too, that both were seen as successful leaders for most of their time in office.

Never bought this particular variant (there are different types of feminist IR) in the first place, but this “anecdata” and her response to it are interesting.  I’ll certainly add this story to my next lecture on feminist theory.

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Not Libya

Given the precedents set by Bosnia, Kosovo, and Libya, where is the international community on other places racked by violence perpetrated by bad men like in Ivory Coast?  Here is news out of west Africa:

At least 25 people were killed in what the United Nations called Friday a shocking escalation of violence in Ivory Coast, wracked by an electoral crisis that many fear is sliding toward another civil war.

Doctors Without Borders treated 66 people with gunshot wounds and injuries caused by shell explosions in the wake of the attacks, according to a news release from the medical aid group. Women and children were among those injured, the statement said.

Clinton (Bill in the case of Bosnia and Kosovo), Obama (and his Clinton), and the UN have really opened a can of worms in which there is no principle to distinguish between where outsiders should intervene for the sake of others/values and where they should not.  Frequently we hear that not being able to intervene in all places doesn’t mean we shouldn’t intervene anywhere — but what should we tell the innocents of Ivory Coast?  If there is a responsibility to protect (R2P), shouldn’t we be stepping up in south and west Africa and not just north Africa?  If a moral duty trumps the national interest, how can we ignore the fates of others?  Is there any non-arbitrary limit?

Yes, the UN has a peacekeeping force there in Ivory Coast – but will it be effective?  And if not, what next?

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Current Thoughts On Libya

1.  The Value of Sovereignty? 

Given that the norm of sovereignty has value in constraining (even if ever so slightly) the possibility of interstate aggression (especially that waged ostensibly under the banner of “doing good”) and the potentially devastating consequences that flow from it (see the 30 Years War), I am concerned about its erosion.  On the other hand, sovereignty may allow states to get away with a lot of intrastate aggression against innocent civilians.  Since I don’t think non-democratic states have any moral claim to sovereignty, respecting legal sovereignty is merely a matter of prudence.  But easily rejecting legal sovereignty in hopes of better humanitarian/value-based outcomes is a dangerous game that we should really think hard about engaging in.  There are a number of good reasons that statesmen before us settled on the Westphalian system.    

2.  Silver Lining? 

Now is a great chance to step aside and let our allies do the heavy lifting – especially since this is in their backyard and not ours.  Unless you believe that America must lead everywhere and every time, we must eventually let others lead and bear the costs of their ideals and interests.  If we do so in this case and the European states are successful, then a real silver lining of this whole thing could be that we can finally declare victory in the Cold War and leave Europe militarily!  Of course, given that institutions rarely die and the Washington Consensus is that the US must be involved in pretty much everything, I doubt even that silver lining will occur.  But it certainly would give those of us who think the US is overcommitted abroad another talking point!

3.  Geopolitical Externalities? 

I wonder how the US/UK/French intervention in Libya will impact the Coalition fight in Afghanistan?  If Libya is truly a restricted fight, maybe not.  But if, as I expect, mission creep occurs, will that negatively affect the fight in Afghanistan?  Remember, one of the best critiques of the Iraq War is that it caused us to drop the ball in Afghanistan, especially because key assets were not available in Afghanistan due to preparations for Iraq – especially during Operation Anaconda.  It is worth noting that, according to Foreign Policy, Air Force Chief of Staff Norton Schwartz told the Senate Armed Services Committee last week that it is “clear that while the U.S. military can impose a no-fly zone, that’s not likely to stop Qaddafi all by itself. He also noted that to do so effectively might require diverting some resources from the missions in Iraq and Afghanistan.”  (Sounds like Richard Betts’ “indirect negative” military advice to me). 

And let’s certainly hope that North Korea doesn’t decide to get belligerent.

4.  Germany as Cassandra. 

Nice to see at least one state (Germany) warned others at the UN that this might not go as easily as others think.  German Ambassador Peter Wittig noted that “We should not enter a military confrontation on the optimistic assumption that quick results with few casualties will be achieved.”  Previously, German leader Merkel asked:  “What is our plan if we create a no-fly zone and it doesn’t work? Do we send in ground troops?” she said. “We have to think this through. Why should we intervene in Libya when we don’t intervene elsewhere?”

 5.  Skin in the Game. 

It would be nice if people (in particular, the younger crowd) loudly advocating for the use of force had some skin in the game.  It is a lot easier to send other people into combat than to go yourself. 

6.  What is China up to? 

Maybe I’m not well-plugged into what the Chinese government is thinking, but I’m a little surprised that China is willing to allow intervention for what is essentially an other-regarding/value-based mission against the recognized government of Libya.  Are the Chinese that confident in their ability to deter any future action against itself that it doesn’t mind allowing the international community to essentially declare that repressive regimes like Qaddafi’s cannot fight back against a significant rebellion?  Or are they more than happy to see the US and its allies involved in another potential sticky situation that will bleed us of blood and treasure while it continues to do business as usual? [After writing this, I came across the Armchair Generalist making a similar point, noting  “I guess Russia and China want to watch us fall on our face. Great.”]

For those of you interested in someone else’s commentary on Libya, I recommend keeping in touch with Rob Farley’s thoughts at LGM.

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George Will on This Week as transcribed by Robert Costa:

“It is not worth war,” Will said, arguing that the U.S. should not become entangled in “tribal” conflicts. “We have taken sides in that civil war on behalf of a people we do not know or understand, for the purpose — not a vow, but inexorably our purpose — of creating a political vacuum by decapitating the government. Into that vacuum, what will flow we do not know and cannot know.”

“There is no limiting principle in what we have done,” Will continued, commenting on the global implications of U.S. policy. “If we are to protect people who are under assault, then where people are under assault in Bahrain, we are not only logically committed to help them, but we are inciting them to rise in expectation. The mission creep began, Paul, before the mission began because we had a means not suited to the end. The means is a no-fly zone. That will not affect the end, which is obviously regime change.”

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Marginal Revolution posted a brief piece of this interview with Senator (and Presidential candidate) Obama but his entire response to one of the questions is well worth reading: 

[Interviewer] In what circumstances, if any, would the president have constitutional authority to bomb Iran without seeking a use-of-force authorization from Congress? (Specifically, what about the strategic bombing of suspected nuclear sites — a situation that does not involve stopping an IMMINENT threat?)

[Obama]  The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.

As Commander-in-Chief, the President does have a duty to protect and defend the United States. In instances of self-defense, the President would be within his constitutional authority to act before advising Congress or seeking its consent. History has shown us time and again, however, that military action is most successful when it is authorized and supported by the Legislative branch. It is always preferable to have the informed consent of Congress prior to any military action.

As for the specific question about bombing suspected nuclear sites, I recently introduced S.J. Res. 23, which states in part that “any offensive military action taken by the United States against Iran must be explicitly authorized by Congress.” The recent NIE tells us that Iran in 2003 halted its effort to design a nuclear weapon. While this does not mean that Iran is no longer a threat to the United States or its allies, it does give us time to conduct aggressive and principled personal diplomacy aimed at preventing Iran from developing nuclear weapons.

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An excerpt from John Quincy Adam’s July 4th 1821 speech in Washington – perhaps the finest statement on U.S. foreign policy ever written (and see here where Sven and I fight about it):

Wherever the standard of freedom and independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad, in search of monsters to destroy.  She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own.  She will commend the general cause by the countenance of her voice, and the benignant sympathy of her example.  She well knows that by once enlisting under other banners than her own, were they even the banners of foreign independence, she would involve herself, beyond the power of extrication, in all the wars of interest and intrigue, of individual avarice, envy, and ambition, which assume the colors and usurp the standard of freedom.  The fundamental maxims of her policy would insensibly change from liberty to force.  The frontlet upon her brows would no longer beam with the ineffable splendor of freedom and independence; but in its stead would soon be substituted an imperial diadem, flashing false and tarnished lustre the murky radiance of dominion and power.  She might become the dictatress of the world: she would be no longer the ruler of her own spirit . . .

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Can a state R2P be squared with a libertarian political theory that takes seriously the notion that states have – at the least – a higher duty to their citizens than to others?  The libertarians that most frequently rush to defend humanitarian intervention are utilitarians and thus they assume away a lot of the hard things about living in a world in which separate states exist that by their very purpose (normatively speaking) have special responsibilities (at the least) towards in-group members.

Is there an individual personal R2P?

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CNN is reporting that U.S. Vice Admiral William Gortney told the press at the Pentagon that the U.S. and British have fired “more than 110 Tomahawk missiles” at “20 Libyan air and missile defense targets in western portions of the country.”  So, let’s just assume conservatively that 2/3 of those came from US sources – so 73.  Then let’s multiply that number by the unit cost of a Tomahawk, about $500,000 (current unit production cost, though the unit cost is much higher).    That means the U.S. has spent at least $36.5 million just paying for the missiles alone in its first blows against Libya (and that is a conservative estimate).

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What is worse than either intervening in a foreign land or not intervening in a foreign land?

Answer:  Intervening after its too late to do any good.

 

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Is the economy in a liquidity trap?  Day after day after day Paul Krugman says, “of course we are.”  A liquidity trap occurs when the demand for money becomes perfectly flat, meaning that increasing the money supply has no effect on interest rates and, therefore, no effect on investment or consumption—the drivers of GDP.

To be fair, there are pieces of evidence consistent with a liquidity trap.  Foremost of these is that interest rates have remained very low and unemployment has remained stubbornly high.

The second piece of evidence is this (quoting Krugman): “the failure of interest rates to rise despite very large budget deficits.”  This is also true, as far as it goes.  In a liquidity trap, factors that push up interest rates, such as increased government borrowing, fail to push up interest rates because, well, nothing affects interest rates in a liquidity trap because of the infinite demand for cash.

But here is where Krugman fails to appreciate Logic 101.  Evidence consistent with a hypothesis does not verify the hypothesis unless other theoretically plausible explanations can be ruled out.   In social science, we try to identify causal forces by accounting for all the important things that are happening, not by picking one variable today, one variable the next day, and making no attempt to tell a unified story between the two days.

So, are there other explanations besides the simple Krugmanian liquidity trap (I’m renaming it after him, since he is so obsessed with it, despite his lack of argument)?  For starters, it is more than a little disingenuous to claim that because deficits are not pushing up interest rates means that a liquidity trap exists when, at the same as deficits are increasing, the Fed has been pumping all this liquidity into the economy fora long time with the intent of lowering interest rates.  So, yes, in the short term government deficits won’t drive up interest rates if the government is actively pushing down interest rates through monetary policy.  We have two forces cancelling each other out, but Krugman makes the leap to assume this means that neither force has any effect because he concluded, ex ante, that we are in a liquidity trap.  Analysis is easier if we start with a conclusion, isn’t it?

It is also troubling how often Krugman, an international economist, conveniently uses closed economy arguments when it suits him.  For better or worse, when the world economy is troubled, investors still want US bonds (for now at least, thankfully).  This high international demand will keep bond prices high and interest rates low even if domestic demand is quite responsive to price.

Krugman wants us to believe you will disagree with him only if “you really don’t want to understand,” as he blogged yesterday.  That’s right, everyone who doesn’t believe his resurrected Keynesian dogma, the stuff that you have to blow the dust off your dad’s 1950s textbooks to learn about because everyone stopped teaching it in graduate school decades ago, just doesn’t want to understand.  Dang, I thought it was because macro was tough.  I’m so relieved to learn it is just that I don’t want to understand.

Krugman’s longstanding story is that there is a “global excess of desired savings.”  This “excess of desired savings” language is not really an explanation at all—it is just renaming the problem.  According to Keynes, people desired more or less than they should because of “animal spirits,” which is Keynes speak for “we have no freakin’ idea what is going on here.”  Krugman avoids referring to animal spirits because, well, he wants to sound serious, rather than admit that he has no freakin’ idea what is going on here.   But that won’t stop him from pursuing any argument, no matter how tenuous or unfounded that leads him closer to the great love of his life: bigger, more expensive government.

In a sense, I actually agree with him that psychology is hugely important.  My RBC teachers at Chicago could not account for psychology, so they basically ignored it.  As Krugman rightly points out, the RBC theorists are straining a little to come up with explanations for the last two years in the economy and often rely on unobserved structural changes or shocks (which is probably true to an extent, but never trust people completely whose explanation for everything is an unobserved shock)  But to say that psychology is important is not to say that we understand the psychology.

The thing that Krugman wants everyone to forget is the rational expectations revolution (you know, those models that people have actually studied in PhD programs the past 40 years).   When we start assuming that people have some crude ideas in their heads about how the economy works, then Keynesianism falls apart, since fiscal and monetary policy only really work in Keynesian models if you can trick people into not observing what the government is doing and adjusting their behavior in response.  Right now we have corporations make big profits and turning it into cash that they are sitting on in vast amounts rather than in hiring and investing in new capital.  Why?  We can pull a Krugman and start with the conclusion that there is a liquidity trap.  Or we can wonder what it is about the world that is motivating all these smart, successful people to put money in their mattresses.  Maybe it is something more than messed up animal spirits.  Could it be that they see rapidly rising deficits, a huge, vague, ambiguous restructuring of a giant part of the economy (health care), and few people in either political party that are remotely interested in speaking truth about the fiscal health of the country, people who are afraid of all those voters who think we can balance the budget by cutting humanitarian aid, defunding NPR, and shipping hard-working aliens out of the country?

Nah, it couldn’t be any of that.  Alternative explanations involving rational expectations don’t lead us to the promised land of a massive welfare state where Krugman wants to live.  Thus, they can’t be right.  Let’s just start with the answer we want.  How hard is that?

The really sad thing is that the simple liquidity trap arguments are going to continue to look plausible for some time to come.  Until one day they don’t.  Then we are really in trouble.

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Does the latest UN move and the Responsibility to Protect (R2P) standard it applied embolden other revolutionaries to rise up with the expectation (even if false) that the international community will come to their aid?  And what then?  Might the UN and the US be faced with trying to protect rebels in Libya while standing by and watching while other regimes attack protesters and activists?  Oh yeah, we are already doing that (as Josh Rogin notes, “in Yemen and Bahrain, where the uprisings have turned violent, Obama has not even uttered a word in support of armed intervention – instead pressing those regimes to embrace reform on their own.”).  More here.

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Josh Rogin, on Foreign Policy, has an interesting account of how Obama administration officials lined up on the question of whether to support military intervention in Libya. 

A possible rift between Clinton and Gates is certainly something to watch:

Obama’s Tuesday night decision to push for armed intervention was not only a defining moment in his ever-evolving foreign policy, but also may have marked the end of the alliance between Clinton and Gates — an alliance that has successfully influenced administration foreign policy decisions dating back to the 2009 Afghanistan strategy review.

“Gates is clearly not on board with what’s going on and now the Defense Department may have an entirely another war on its hands that he’s not into,” said Clemons. “Clinton won the bureaucratic battle to use DOD resources to achieve what’s essentially the State Department’s objective… and Obama let it happen.”

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