Under the guise of protecting the public health

I don't smoke. Restaurants, bars or any other businesses that are privately owned may serve the "public," but I believe they should be able to set their own smoking policies. But I do favor the rights of municipalities to ban smoking in true public areas, i.e. public sidewalks near building entrances, government-owned buildings, etc., because of the health risks that come from breathing second-hand smoke.

Then we have another government blunder when the state tries to regulate the public health, not just safeguard it.

Tobacco Companies Deal With Settlement

Three years ago, Steven Bailey's tobacco company in rural southern Virginia was growing so fast he could have counted on early retirement. Now, he's fighting for every sale. On July 1, a new Virginia law will force S&M Brands Inc. to raise prices on its Bailey's and Tahoe cigarettes. That's on top of a $2-per-carton increase last year, after other states passed similar laws at the urging of large tobacco companies....

Many people would have a tough time shedding tears for a cigarette maker — small or large. But Bailey's reversing fortunes show how the states' $206 billion settlement with major tobacco companies over smoking-related Medicaid costs is dramatically altering the industry. Critics say the 1998 Master Settlement Agreement, or MSA, has steered far from some of its original objectives. Small businesses that weren't sued were forced to pay up, while the big players accused of wrongdoing wound up with market protections....

Under the settlement, the big cigarette companies agreed to restrict their marketing, fund smoking-cessation efforts and make annual payments to the states over 25 years.

But attorneys on both sides knew the large tobacco companies would raise cigarette prices to help make their payments, so they agreed to build in protections to prevent companies outside the MSA from taking too much of their sales. They invited other manufacturers to join the settlement, offering favorable deals. Those who did not join had to pay about $4 per carton into escrow accounts, which would be refunded in 25 years if the states didn't sue them over health care costs....

In the 10 states where S&M does business, profits are stagnating.

But Philip Morris USA is pleased. In the first quarter of 2005, the nation's largest cigarette maker saw operating profit rise and its domestic market share grow to 50 percent, up from 48.3 percent two years earlier.

The new escrow laws provided even more opportunities for companies like Liggett Group Inc. and Commonwealth Brands Inc., which joined the MSA on the favorable terms. On average, this group paid less than $2 per carton in 2003, rather than $4.

Brilliant, wasn't it? The protections hardly worked, and the big tobacco companies probably knew they wouldn't. It was a great way for them to use government to squash their smaller competitors. In fact, it's reminiscent of one way John D. Rockefeller drove competitors out of business, by getting legislation passed that mandated certain levels of fire insurance. It made it too expensive for some startups.

We deserve it

Socialist Leads U.S. Senate Race in Vt.

Bernie Sanders jabs at the air, his flushed face a sharp contrast to his unruly white hair. Yet again, he pummels Washington, the Congress and the president.

"The government that we have today in the White House, the House of Representatives with Tom Delay, the Senate with Bill Frist, is the most right-wing, extremist government, perhaps in the history of the United States," he tells labor activists at a May Day celebration in the century-old Labor Hall.

"Time after time they pass legislation that benefits the rich and the powerful, and they pass legislation that hurts the middle class, working people and low income people." ...

In his eighth term in the U.S. House, the independent socialist has carved out a career in Congress as a Congress-basher. Now he is setting his sights on the Senate, and everyone agrees he is the man to beat for the seat now held by the retiring Jim Jeffords.

The fault, dear voter, lies not in our elected officials, but in ourselves. We elect them; we deserve whatever we get.

If we elect a socialist who spouts rhetoric about "bridge the gap between rich and poor" and how government "ought to do" this and that, we have no right to cry over the requisite tax hikes, and how the attempted redistribution of wealth backfires and hurts the lower income brackets.

Tell me again who rent stabilization is supposed to help?

Though I live in Westchester, I now work in Manhattan and have a keen interest in NYC city policies and developments. Previously I've blogged on the failure of rent stabilization. While it benefits a few people of lower incomes, it drives up the cost of other real estate by more than what the benefiters save. Society is left overall poorer.

Now we see that rent stabilization has failed another way:

Lauper Suing Apartment Owner Over Rent

Cyndi Lauper may be a pop-star who's sold millions of albums, but that doesn't mean she wants to pay much more than $500 for her apartment on Manhattan's Upper West Side.

Lauper, 51, and her husband David Thornton, an actor who's appeared in numerous movies, including "A Civil Action" and 2002's "Swept Away," with Madonna, are suing the owners of their luxury apartment building. Lauper and Thornton claim they were cheated out of thousands of dollars in rent in a scheme to end rent stabilization for their residence....

In 1992, 390 West End Associates entered into a lease with Shlomo Baron for an apartment in its building in Manhattan. While the prior tenant had paid just $508 a month for the rent stabilized apartment, Baron agreed to pay $2,400 a month under an agreement he would not use the dwelling as his primary residence.

Baron then sublet the apartment to Lauper and her husband for $3,250 a month, according to court documents.

Six months later, a state Supreme Court judge ruled the apartment was exempt from the rent stabilization law because Baron wasn't using it as his primary residence.

In 1996, the Thorntons sued Baron, seeking to recover what they paid in excess of the legal stabilized rent plus damages. In 1999, 390 West End moved to vacate the judgment it won in getting the apartment exempted from rent stabilization on the grounds its agreement with Baron was illegal. That motion, which ended the lease with Baron, was granted in 2000.

Subsequently, the Thorntons sued 390 West End, seeking to get their rent reduced to the stabilized price of $508 a month.

Supreme Court ruled in favor of the Thorntons except for the manner of determining rent. The court determined that the four-year limitation period adopted in the Rent Regulation Reform Act of 1997 precluded it from considering the rent history before 1996, four years before the Thorntons' suit against the building owner.

However, the court rejected 390 West End's argument that rent should be set at the $2,400 a month Baron agreed to pay. Instead, the court used a default formula adopted by the Division of Housing and Community Renewal to determine rent should be set at $989 a month.

The Appellate Division of state Supreme Court upheld that ruling.

Perhaps we should establish a minimum wage of sorts for recording artists' royalties, since Cyndi and her husband apparently can't afford the apartment without rent stabilization. Cyndi must be hitting hard times in the nearly two decades since the height of her popularity.

All sarcasm aside, how were the Thorntons "cheated"? Did they not agree to the rent? They're doing no more than using a loophole to get a moderately expensive Manhattan apartment for a song (no pun intended).

So, yet another government policy has gone awry: its attempt to help the "less fortunate" sometimes backfires, benefiting those who don't need it. The Thorntons now pay less for a city apartment than I do for mine in Westchester. Yet if I tried to apply for a rent-stabilized apartment, though I have far less wealth than they do, I'd be laughed out of the boroughs.

Malthus' philosophical descendants

Will they never learn?

Experts: Petroleum May Be Nearing Peak

Could the petroleum joyride — cheap, abundant oil that has sent the global economy whizzing along with the pedal to the metal and the AC blasting for decades — be coming to an end? Some observers of the oil industry think so. They predict that this year, maybe next — almost certainly by the end of the decade — the world's oil production, having grown exuberantly for more than a century, will peak and begin to decline.

And then it really will be all downhill. The price of oil will increase drastically. Major oil-consuming countries will experience crippling inflation, unemployment and economic instability. Princeton University geologist Kenneth S. Deffeyes predicts "a permanent state of oil shortage."

According to these experts, it will take a decade or more before conservation measures and new technologies can bridge the gap between supply and demand, and even then the situation will be touch and go.

Two centures ago, Thomas Malthus began predicting the starvation of the human race. His reasoning was that population grows geometrically, but agricultural production increases only linearly. His mistake was to discount technological innovation that improves output, perhaps not smoothly, but in surges. Part of the neo-classical economics growth model demonstrates this: there's a spike in growth, then a gradual tapering until the next spike.

Others repeat Malthus' blunder today. "But oil use is growing faster than oil production." A Kuwaiti oil minister said that refineries need upgrading if the cost of oil is to fall, but that's not the basic cost of crude. Well, OPEC has recently said that it must charge high prices because it needs to invest in more oil exploration. That's actually valid, considering the dramatic increases in global demand for petroleum.

Some might think OPEC wants oil prices as high as possible, so that they can make as much money as possible. OPEC, though, doesn't want oil prices to get too high. High oil prices mean that people will seek alternatives, especially those that were once too expensive compared to petroleum. And as our technology improves, who knows what entrepreneurs might create in the future?

You just can't win

System Lets Parents Spy on Kids' Lunches

As Garin Hughes picks through his school-lunch burrito and unidentifiable apple-pear dessert, he has a secret. Hidden underneath the eighth-grader's right leg is a chocolate cookie in shrink-wrapped plastic. That's for dessert. In the past, his parents had no clue when he bought a treat at school. Now, thanks to a new school-lunch monitoring system, they can check over the Internet and learn about that secret cookie.

Health officials hope it will increase parents' involvement in what their kids eat at school. It's a concern because federal health data shows that up to 30 percent of U.S. children are either overweight or obese.

I think it's fine that parents are; it's part of their responsibility. But I shake my head how we blame unhealthy school lunches, blame this, blame that, blame everything but the last several decades of medical and social policies' Kerry-esque flip-flopping.

When my dad grew up in the 1920s and 1930s, his mother and aunt wanted him to study instead of playing baseball. So kids over the last several decades started studying more and playing less. Is anyone surprised that their reduced physical exertion, with or without the prevalence of junk foods, led to overweight children? I personally see junk food and fast food as signs of prosperity. Children can afford to buy pretty expensive school lunches, and snacks from vending machines, day in and day out. When the Great Depression hit, my dad was fortunate to have any lunch at all. Literally so, because his mother and aunt sometimes couldn't afford to put food on the table. Children today go to fast food restaurants or 7-11 after school. My father worked whatever after-school jobs he could, so that his family had money.

The article notes a parent who talked her daughter into buying water, not juice. But for years, children were encouraged to drink milk or juice instead of soda pop. I clearly remember those commercials during Saturday morning cartoons. Now juice has been declared bad for kids: too much sugar, too many calories. Milk has already been declared bad because of its fat content -- a couple of decades ago or so?

What I find especially inane is the parent worrying about her daugher's lunchtime supplement of juice, because lunch already comes with a four-ounce bottle. Maybe it's because I'm a big guy and drink three quarts of water per day, but four ounces isn't much more than a swallow. The additional 12-ounce can sounds about right when consuming a meal.

My late father used to sigh about vitamin D. We were told that our bodies must be out in the sun to produce vitamin D, then years later we were told to avoid sunning. Now we're told some exposure to sunlight is necessary, but doctors aren't sure how much. It turns out that vitamin D can help prevent prostate cancer and other forms, with the benefits exceeding the risks of skin cancer.

You just can't win.

When the bottom line isn't everything

My friend Chris Masse sent me the link to an interesting article at Science & Theology News. Professor Malone makes some excellent points, but I disagree with him about his term "noneconomic values." They're non-monetary values, because they still have an economic basis. Remember that economics is not just the science of money and its flows, or the flow of goods and services: most fundamentally, it's the study of human action and the consequences of human decisions. So ultimately Malone's reflections still come down to the economic saying, "People seek to maximize their own happiness for the least cost." Note that it's happiness, not purchasing power or wealth.

One of my friends prefers to patronize local businesses and avoid Wal-Mart (but he does go to Costco). He prefers that his money circulates among people he knows personally, and he doesn't contribute to the coffers of any large corporations whose policies are disagreeable to him. That's still his consumer preference. He most likely will spend more for the same basket of goods, but it maximizes his personal happiness. I factor in quality and service like anyone else, but the cheapest price is my first criterium. Let's say I can purchase something made in Mexico or Asia, and it's cheaper than something produced domestically. All else being equal, I'll buy the foreign-made product, and I'll hope the domestic employees go into jobs where they have a comparative advantage.

Isn't economic freedom wonderful? My friend is free to patronize whom he wishes, and I likewise can do business with whomever I choose. It's why I've come to support free trade -- on any level, especially internationally -- on a moral basis. There's no difference whether I engage in peaceful, voluntary trade with a local grocery store or a large retailer whose goods originated from abroad. Do you have the freedom? Under the same principle, why should I be hindered from trading with a merchant in Beijing, as long as the trade is peaceful and voluntary?

Professor Malone notes an important requisite for advanced consumer preferences: consumers can't really make these types of value judgments until they're relatively wealthy. Until consumers can afford to be more discriminating about the foods they buy and the businesses they patronize, it's a matter of survival.

Today at a barbecue, a few of my host's friends chatted about the (supposed) superiority of organic food, and how additives are giving us cancer (perhaps, perhaps not). But they're forgetting that in preserving our food, additives give us an abundance of it. Remember your Bastiat: abundance leads to lower prices, to an increase in relative wealth. Scarcity is the reverse: it leads to higher prices and a decrease in relative wealth.

They talked about how people "in the old days" died from "old age" and not from cancer. "Old age," however, meant dying from a weak physical condition, usually the direct result of less nutrition than we enjoy today. Diets a century ago incorporated a higher degree of fruit, vegetables and carbohydrates, but they had to. Meat was too expensive to consume like we can today, and the scarcity of protein meant weaker muscles -- particularly cardiac muscle. People just a century ago were generally less robust as they aged. They didn't live long enough to develop cancer, nor did they have the longevity required to worry about heart disease.

Which is worse, to die at an average age of 60-65, living feebly for the last half-dozen years, or to die at an average age of nearly 80, having to take cholesterol medication and other pills for 20 years? The answer depends on the person. I can't let it bother me that American society, in general, eats badly and doesn't exercise enough. All I can do is live my own life as best I can. Frankly, before Americans become a healthier and longer-lived society, I'd rather see the nutrition busybodies stop trying to legislate fitness.

Corporations are hardly "greedy" to add chemicals so they can sell more of their product. It's in their self-interest, of course, otherwise they wouldn't do it, but it's also in ours. Without additives, corporations couldn't sell as much food, and then there would be greater demand for food versus the available supply. Consumers would not be able to afford as much, not without cutting back on other things. And for the poorest people, it could mean starvation. None of us, not even my friend's senior citizen mother, had to live in a day when Americans literally starved to death.

In fact, the next time you purchase USDA Choice steak for $5 per pound (that's the sale price where I live), thank the coal that eventually pollutes our atmosphere -- it fuels the electric power plants that power the grocery stores, as well as your refrigerator. Thank the oil that, though it pollutes our atmosphere, fuels the 18-wheelers that transport goods across the country. Thank our "dirty" hydrocarbon fuels that power our great crop-harvesting machines, which do the work of a thousand hands for a fraction of the cost. It's all a tradeoff, as real economics teaches us. Environmentalists push for harsh regulations that will mandate clean skies, clean rivers and lots of preserved non-urban areas...but they fail to consider how expensive that world would be. Bastiat, in fact, would call them bad economists:

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

On a related note, Don Boudreaux at Cafe Hayek noted that the "natural state" of living is pretty darn uncomfortable. One thing Dr. Boudreaux mentioned was having to use an outhouse, which I consider only marginally better than "going" in the middle of the woods. Our modern sanitation is far better at preventing the spread of disease. One example I like is Edwin Feuler noting that horses were just as unhealthy, if not more so, than exhaust-spewing automobiles. Not only that, but they were expensive too. I can't remember where I read this, but prior to the automobile, cities had severe health problems from dried horse waste. No one would clean it up, so it would stay on the street to dry up -- and then be blown around by the wind. My own little addition is that it would be trodden on, then carried around on the soles of people's shoes. Or their bare feet, which is an awful thought when one remembers how, prior to our modern convenience of running water, people bathed in tubs.

Modern conveniences have allowed us to live healthier, cheaper and better lives. It was sometime in the last year, after receiving my economics B.A., that I realized the Ba'ku homeworld in Star Trek: Insurrection is pure poppycock. As a quick background, the Ba'ku eschew "machines" (presumably electrical technology) in favor of a simpler life, one supposedly more in tune with nature. Such a society, with the leisure time that the movie depicts, simply could not exist. For example:

A few Ba'ku were shown tilling a field, which was far too small to feed a community of six hundred people. Even with the generous assumption of each Ba'Ku eating only one vegetable per day, that's still 600 vegetables to grow per year. Without machinery, with their limited labor force, they'd be hard-pressed to harvest enough wheat and pick enough fruit to feed themselves. The labor force is limited because some Ba'ku spend their time weaving things for artistic purposes; recall the handiwork that Anij proudly presented. Realistically, no Ba'ku would have enough free time to think of anything but hard agrarian work, let alone spend a few decades as artisans' apprentices!

Without machines, how could they not spend a great deal of time weaving clothes? Do they use non-electric looms, like the one Jacquard invented? Even so, are their cloth and thread made of some magical material that never wears out? Prior to the Industrial Revolution, making clothes was extremely slow and laborious. As Isaac Asimov noted in his Book of Facts, making shirts was itself never-ending: women often finished making new shirts by the time the current ones wore out.

The Ba'ku had a dam, whose concrete would have taken 600 strong men years to pour, mold, move over the wooded and hilly terrain, and construct. Who and how many had the unenviable and dangerous task of guiding the stones, and how many died in the inevitable accidents? Now consider that the Ba'ku had a lot of women and children who were physically incapable of helping construct the dam. Also consider that some of the men were needed for other tasks in the village, like farming and blacksmithing. So the manpower was even more limited, and it probably took decades to build the dam. Since they had been there for 300 years when the Enterprise crew arrived, it's no wonder the stone looked so new and not one bit weather-worn. The Ba'ku had likely needed most of the 300 years to complete the dam!

Who had the unenviable and backbreaking task of mining metal ore out of the ground? Who smelted it? Remember, no machines here. This covers everything from the dam's wheel to horseshoes.

Perhaps the women and children did the farmwork and weaving, leaving it to the generally larger men to do the more physical labor, but that doesn't appear to be the case. The Ba'ku children have plenty of time to play "arm hacky sack" and goof off in the hay. Realistically the children would have been put to work from sunrise to sundown, with little time left for education, let alone playing.

"We believe when you build a machine to do the work of a man, you take something away from the man." I completely agree. The machine takes on hard, drudging, repetitive, dangerous work. The man is left with a better standard of living: more abundance of goods, leisure time, greater health, and enough spare resources (both temporal and physical) to pursue artistic endeavors.

What a terrible, pitiable situation when machines do work for men.

What was that about the Force...penetrating?

(I apologize for the atypical PG-13 nature of this post. It's to humor someone.)

My friend Jacqueline Passey and I recently had a deep, sophisticated discussion about her perceptions of Obi-wan Kenobi.

I stand corrected

I said before that "Jar-Jar does appear, but at least he doesn't speak." I was wrong, but in this case I'd rather have been wrong, because being right would have meant hearing that revolting voice.

For more information and much, much more, check out the Star Wars: Episode III Easter Egg Hunt. (Hat tip to my old friend Charlie.)

That was then, this is now

What a difference a couple of years make.

Paul Krugman, 12/27/2002:

Finally, there's the desperate plight of the states. New estimates by the Center on Budget and Policy Priorities show that state governments are facing their worst fiscal crisis since the 1930's. Since Washington shows no interest in helping, states will be forced into desperate expedients. Taxes, mainly taxes that fall most heavily on the poor and the middle class, will go up. Spending on education and, especially, health care will be slashed, with the heaviest toll falling on struggling low-wage workers and their children. (Leave no child behind!)

States take in record $600B, 5/26/2005

Tax collections rose to a record $600 billion in the states last year, up 7.2% over 2003, the biggest increase since 2000. The money is rolling in even faster this year as many states report double-digit revenue increases through April.

The most immediate effects of improving state finances across the USA are college tuition hikes that were smaller than expected, pay raises for government workers and less borrowing. The big decisions - tax cuts vs. major new spending - are starting to brew in most legislatures but won't be decided until late this year or early 2006....

The reversal of fortune ends what the National Governors Association had called the states' worst economic situation in 60 years.

"We've come a long way, baby," says Massachusetts Gov. Mitt Romney, a Republican. He faced a $3 billion budget shortfall during his first year in office in 2003. Now, his state is on track for its second straight year of surpluses. He wants to use about half the surplus to cut the state income tax to 5% from 5.3%.

Instead of government trying to take a bigger piece of the pie, how about it adopt policies so the bakers will have incentive to make a larger pie? That way, everyone -- government included -- gets a bigger share, even those whose percentage actually decreases. That's supply-side economics.

Will Krugman eventually be right? Maybe with an infinite amount of time

Paul Krugman has made plenty of ludicrous statements before, like, "And don't forget that President Clinton's 1993 tax increase ushered in an economic boom." This time, he's really outdone himself. Donald Luskin today quoted the real zinger in Krugman's latest column, asking if it'll be in Krugman's upcoming macroeconomics textbook:

...the Fed's ability to manage the economy mainly comes from its ability to create booms and busts in the housing market.

It boggles my mind how an economics professor, a winner of the "John Clark Bates medal" and perennial Nobel hopeful, can make up economics as he goes along. And the economics isn't even realistic!

So Krugman's new economic catch phrase is "housing bubble." Does anyone still believe his doom-and-gloom wailings? For crying out loud, he perfectly embodies the joke, "Economists have successfully forecasted 10 of the last 3 recessions." It's part of the law of large numbers: if Krugman keeps predicting recessions, "bubbles" or "currency crises" year after year, eventually he'll be right. But he'll be as accurate as the L.A. resident who keeps saying a 7.0+ earthquake will hit the valley "this year," repeating it year after year. Krugman will be as accurate as the Red Sox fans who said from 1919 through 2004 that their team would win the World Series.

In the late 1990s, Krugman wrote about currency crises occurring about every 19 months. (At the end of that paper, he warned about a possible euro crisis! Which, of course, never happened.) Even before Bush was first sworn into the presidency, Krugman warned that Bush's economic policies would bring economic disaster. Krugman warned that the federal deficits will cause a "fiscal train wreck." Krugman even warned back in 2000 of a possible economic crisis like Mexico's if the next president didn't have an air of "legitimacy."

Of course, none of Krugman's economic Armageddons came to pass. He came closest with the first, but he can't take any credit for it. His predictions were only after the Asian Crisis, and even counting Brazil and Argentina, where is this cycle of currency crises every couple of years? And though more than a few liberals today still believe that Bush stole the 2000 election, our only economic crisis was the 2001 recession -- which precipitated from the economic deceleration at the end of Clinton's presidency.

But Krugman always needs some economic spectre to frighten people. After his previous prognostications' miserable failures, he's now chosen the "housing bubble" for his latest harping. Krugman's problem is that he just can't admit that we have economic prosperity without Democrats in charge. We're long past the recovery: how can any real economist not call our current growth a full-blown expansion? It's fast enough to continue adding plenty of jobs, yet moderate enough that it should satisfy Keynesians obsessed with "sustainability."

Except for Keynesians like Krugman.

Walter Williams: the trade deficit is nothing to worry about

Note, March 23, 2006: I've noticed quite a few people coming to this page in search of Walter J. Williams. My reference is to Walter E. Williams, professor of economics at George Mason University and syndicated columnist.

Walter Williams' latest column, "Our Trade Deficit", is brilliant as usual. And I seem to be in good company, because his initial analogy of buying groceries is one that I've used:

I buy more from my grocer than he buys from me, and I bet it's the same with you and your grocer. That means we have a trade deficit with our grocers. Does our perpetual grocer trade deficit portend doom? If we heeded some pundits and politicians who are talking about our national trade deficit, we might think so. But do we have a trade deficit in the first place? Let's look at it.

This is basically what I've said to my oldest friend, who I'm glad to say is starting to view international trade as not a bad thing.

If you spend $100 at the grocery store, do you worry if the employees there buy $100 worth of goods and services from you (or the business where you work)? Of course not. All that matters is that you can afford to buy the goods you want. Everything balances out in the end, because only your overall trade is important: your trade deficits will be balanced by surpluses.

The U.S. has an overall trade deficit, but it's balanced out by a form of foreign lending. Here's how it works. Americans consumers buy more from China, Japan, et al, than we buy from them. The foreigners stuff some of the dollars in their central banks as reserve holdings. Other dollars they use to buy petroleum, and others they invest right back here. The U.S. continues to attract a great deal of foreign investment because of two decades of nearly constant economic growth (especially the 1990s), while most of the other major economies have had stagnant growth since the start of the century. Since foreigners take our dollars and invest them right back into our businesses, we Americans don't have to save as much to invest in our own companies. That means we wind up with extra money for consumption spending, which often involves cheap foreign goods.

Foreigners meanwhile increase their ownership of our stocks, corporate bonds and real estate. Basically we're trading long-term ownership for a higher standard of living today, which isn't bad per se, just not sustainable at this rate of growth. Eventually the trade deficit will correct itself, probably not to a perfect balance, but certainly not through government trade restrictions. The free market will do it just fine. Update: and remember that foreigners will increase their ownership in terms of absolute dollars, but not as a percentage of total assets. As they contribute to our domestic growth, we'll create even more stocks, corporate bonds and real estate for them to buy. There's no danger of foreigners will "crowd out" domestic ownership.

My personal belief is that as long as the U.S. has sustained economic growth, and Japan and Europe remain in trouble, foreigners will have no problem continuing to invest in the U.S. (whether in business, which sustains the trade deficit, or in Treasury bonds, which sustains the budget deficit). I think the limit is not when foreigners lose confidence in the U.S. -- I doubt that will happen anytime soon. The limit is when the U.S. economy could absorb more foreign savings, but foreigners have already invested all they can.

A depreciating dollar can't really fix the trade gap. It would have to weaken massively to bring net U.S. trade to zero, which, even if that were desirable, isn't going to happen. Dr. Williams brought up a point which, if I may say so in all modesty, I myself have stated before:

What about the possibility of foreigners dumping our debt? Foreigners aren't stupid. Dumping large amounts of Treasury bonds would drive down their value. Foreigners as well as we would take a hit.

Such a massive weakening of the dollar isn't in our interest at all. The macroeconomic effects would be surging interest rates (from reduced demand for the dollar) and a spike in the Consumer Price Index. The CPI is, loosely, "inflation." I've explained before what it really is, and what real inflation is. The CPI is a "basket" of goods and services, includes foreign products. A weaker dollar cannot buy as much foreign goods, so if the dollar goes down, our overall buying power goes down.

There's a macroeconomic theory called the J-curve, which says that when a country's currency weakens, its trade gap will suddenly widen before it shrinks; when plotted on a graph, it looks like a J. The idea is that import prices suddenly rise, and consumers continue to pay those prices at first. But I don't think that applies to the U.S., at least not now. I personally think Larry Kudlow is right about the dollar, that it will regain ground by the end of 2005. The trade deficit is on track to grow faster in 2005 than ever before, which will throw the idea that "the J-curve did it" right out the window.

Where does the Constitution give courts the right?

The latest outrage about our out-of-control judiciary is a federal judge's ruling on Wednesday that a private club in NYC is nevertheless still subject to NYC's smoking ban. Read it again: a judge says that a private club, meeting on its own private property, is still subject to a law that bans smoking in public places. Since when is private property a public place?

Even more pernicious to liberty and the Constitution is how Judge Victor Marrero phrased it: the members "have no fundamental constitutional right to smoke tobacco." Really now? Where in the Constitution do we have the right to breathe? Or cross the street? Where does the Constitution give Marrero the enumerated right to go to the bathroom? After all, with his ruling, he s*** on the Constitution and wiped his a** with the Bill of Rights.

I have a clue for you, judge: the Ninth and Tenth Amendments. You should read them sometime.

Amendment IX: The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Amendment X: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

What I don't understand is how the lawsuit reached the federal level at all. How does a federal court have any jurisdiction over a strictly New York City matter?

Do you see the tactics employed by these activist courts? Each one establishes a new, fairly minimal precedent that affects only a very few people. Recently a Michigan court ruled that an encryption on a suspect's computer can imply criminal intent, even though the court didn't say the police had found any encrypted files at all! Most people believe one of two things: such rulings affect only criminals, and even if not, you should have nothing to hide. Both could not be further from the truth. In what way am I being implicitly criminal for wanting to keep my personal, non-public papers in encrypted form?

The Supreme Court says there is a "constitutional right to privacy" for a woman to abort her third-trimester baby, in such a way that the doctor actually induces labor crushes it skull to kill it. But I, who am breaking no law and harming no one, have no "constitutional right to privacy" when it comes to encrypting my personal files? Don't I have the right to safeguard my data in case my computer is stolen? How about protecting it from law enforcement that might try to plant data? The reason itself doesn't even matter one bit.

Aren't we still "innocent until proven guilty," regardless of what our actions supposedly imply? Or are we becoming the police state embodied in Star Trek's Cardassian Empire, which convicts and sentences criminals before the trial? After all, Cardassian jurisprudence says, it's unfair to bring the innocent to trial -- so anyone brought to trial must be guilty.

The problem with our courts started in 1803 with Marbury v. Madison, which established the dangerous precedent of "judicial review," that the courts decide whether a law is or isn't constitutional. From there it degenerated into courts deciding what are "Constitutional rights." The Supreme Court has ruled that people have the right to burn the flag as "freedom of speech"; that women have the right to abort their babies as the "right to privacy"; that strippers can perform as "freedom of expression."

These "activist" courts, driven by a belief in a "living" and "flexible" Constitution, are hailed as being so concerned with rights. Then we have cases like Kelo v. City of New London, which show that courts don't care about real rights. They don't care about your right to private property, at least not when the government wants to force you to sell it to someone else. Courts are rarely anxious to protect your right to keep and bear arms, as secured by the Second Amendment, and criminals meanwhile obtain them any way they can.

Much of the Patriot Act violates the Fourth Amendment, which enumerates -- it does not grant -- the true right to privacy: "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." Today federal agents are empowered to seize your financial, library and medical records, needing only approval from the Foreign Intelligence Surveillance Court (a secret, completely unaccountable-to-the-people court with sealed records). Courts are so determined to protect your right to burn the flag, but not your right from the FBI to secretly wiretap your computer once they claim you're a terrorist. Ah, but the Patriot Act requires them to notify us? Sure, but its architects were smart enough to leave a loophole. Federal agents need only claim that you'll tamper with or destroy evidence, and then they can almost indefinitely postpone notification.

Keep your heads down and your powder dry.

What did we really expect?

Did we really think a government "charity" program would work as designed?

Everybody is, of course, completely outraged at Monday's news that Medicaid has paid for sex offenders' Viagra, including 198 in New York state. This New York Times article has it wrong. Medicaid didn't warn the states that they could be punished for continuing to provide them. The states were still obligated until the federal order came to stop. These federal programs, and worse, "federal mandates," wield tremendous and wholly unconstitutional power over states. Putting aside the issue of redistribution of wealth, there's hardly any accountability (if at all), and states are compelled to obey Washington -- or else.

Conservatives like Michelle Malkin and Power Line made excellent points, pointing to this as the inevitable problem of big government programs. They rightfully blame fellow conservatives who have gone against their claimed principles of limited government, not just sustaining, but expanding the "nanny state" that's facilitated such abuses of "public charity." The problem, however, is more fundamental than they perceive: it's that we the people have allowed government to perform charitable functions at all.

I've written before on how people expect government to "lend a helping hand." Whether they're ignorant or just don't care, the fact still remains that the "helping hand" requires other people to pay for it. By contrast, a remarkable thing happens when people give charitably on their own, instead of paying their taxes "like good citizens" and letting government do it. To paraphrase Milton Friedman, a private individual giving his own money is very discriminating (the true definition, not this tripe that's been perverted into racism) about how much he gives and to whom he gives it. Government doesn't care about either, only that it can "tax and give" to appear successful in "eradicating poverty," "alleviating the plight of the poor," and so on.

Conservatives complained for years about welfare recipients who would keep having children, who would cheat (receiving benefits while working), or who could have worked in the first place. Private charity eliminates all these problems and even goes further: it discourages them, whereas government effectively promotes them by providing an easily accessible safety net. Private benefactors don't long tolerate an unwed mother who persists in child-bearing, an indolent person who can do honest work, or someone who begs and is discovered to be working. Government agencies, though, rarely know an applicant's true circumstances, and why should they bother to discover them? It's not their money they're giving!

Dr. Walter Williams said it best last February in "Not Yours to Give":

I get the feeling that the train of constitutional principles has left the station and the recent tsunami episode is simply another symptom of American obliviousness to constitutional government. Today's politicians can't be held fully responsible for our abandonment of constitutional government. While they can be blamed for not being statesmen, the lion's share of the blame rests with 280 million Americans. Elected officials simply mirror public misunderstanding or contempt for constitutional principles. Tragically, adherence to the constitutional values of men like James Madison and Davy Crockett would spell political suicide in today's America.

The blame lies only with ourselves. We keep sending these Constitutional violators back to Washington, to compete on our behalf in The Great Race -- the race to get other states to pay more for our projects than we do for theirs. Right, Senator Byrd?

The Emperor is less forgiving than I am

And I don't forgive these two Slate nincompoops at all. Again, be cautioned that this contains spoilers.

Now, my blog is not the place to make such blunt insults and attacks, but this is too much. (And if Dr. Cowen relied on them for information, I can understand why, IMO, he got more than a few things wrong about Star Wars.) It wouldn't have been so bad had they not claimed to be Star Wars nerds, not just fans. The choicest of their inane comments:

I'm still not sure why Yoda and the Jedi Fun Club don't realize that the most evil guy in the freakin' galaxy lives and works, like, 20 feet away. And yet, in Episode II, we learn that Yoda can sense the hurt feelings of his fellow Jedi millions of miles away—sorry, Mr. Jedi, I don't get it.

Despite their claim to be fans, and their references to the stories, they apparently didn't watch the movies. In The Empire Strikes Back, Yoda replied, "Difficult to foresee," when Luke asked what would happen to his friends. In both The Phantom Menace and Attack of the Clones, the Jedi Council lamented how the Dark Side was clouding their ability to sense things.

I'm unclear on what happened to "Sifo Diaz" (forgive the phonetic spelling), apparently the first Hispanic Jedi, who started the Clone Wars in Episode II.

This is a curious touch of racism. Why point that out, ignoring all of the non-human Jedi? Furthermore, there's no Sifo Diaz that I ever heard of. Did they mean Sio Bibble? As in Governor Sio Bibble? He was a politician, not a Jedi, and he most certainly didn't start the Clone Wars. No single person "started" them. Do you blame Palpatine for engineering them? Yoda for bringing the army to fight the Separatists' droids?

And, finally, the eternal question, one Kevin Smith raised the other day: Why doesn't Darth Vader recognize C-3PO (the robot he built) and R2D2 (his frequent co-pilot) in episodes IV through VI?

Because C-3PO and R2D2 are not unique droids. In A New Hope, Luke declined a new R2 unit, after a crewman offers because R2D2 is "pretty beat up." In The Empire Strikes Back, C-3PO saw a similar unit, who apparently said something very rude. (Then C-3PO wandered into the room, discovered the Imperial stormtroopers, and was dismantled to prevent him from warning the heroes.) In Episode I, the captain looked at R2D2's designation so that they could properly "commend" it (rather a stupid thing, but the movie was filled with a lot of stupid things). Episode II established that a lot of pilots have R2 or R4 droids. In the Episode III novelization, Obi-Wan's droid is an R4 unit.

Do you think Darth Vader chooses to freeze Han Solo in carbonite in The Empire Strikes Back because he's angry that Solo shot Greedo who, as we learned in The Phantom Menace, is his childhood friend?

Just like with the droids, why must it be the same entity if it looks the same? I don't recall that Anakin ever called him by name, so why must that have been Greedo?

When Leia shows up at the beginning of Star Wars in the ship that Jimmy Smits flies in Revenge of the Sith, do you think it's because she's been handed down the 20-year-old family clunker?

Was there really a purpose to this question, or did they have a minimum words requirement for the article?

And how in the world—as I believe the Weekly Standard's Jonathan Last was the first to point out—does Obi-Wan age from a young, vibrant Ewan MacGregor into a decrepit Sir Alec Guinness over the course of a mere two decades?

I can accept this as a legitimate criticism of the storyline. However, Obi-Wan settled in the Jungland Wastes, and that especially nasty desert could have had a very taxing effect on his physical body.

Chewbacca—since he and Yoda are old pals, why don't they get a chance to reminisce and tell old war stories in episodes IV, V, and VI?

Because never once met they in the original trilogy, hmm?

Yoda never left Dagobah. Chewbacca never made it to Dagobah. Understand do they now, hmm?

And while I'm on the subject, is there anything Obi-Wan Kenobi tells Luke Skywalker at the beginning of Star Wars that turns out to be true? The famous lie, of course, is Kenobi telling Luke that Darth Vader killed his father.

I explained this in my previous blog entry. When Luke asked how his father died, Obi-Wan replied that Darth Vader "betrayed and murdered your father." Later, in Episode VI, Obi-Wan explained that it was all "from a certain point of view": "Your father was seduced by the dark side of the Force. He ceased to be Anakin Skywalker and became Darth Vader. When that happened, the good man who was your father was destroyed. So what I have told you was true...from a certain point of view."

But Obi-Wan appears to have decided to embroider that big lie with a host of little ones. He says Luke's father was a great pilot. These prequels give us no real evidence for that.

Anakin being the only human alive who can pod race, his natural aptitude for learning the controls on Amidala's ship's bridge, the speeder chase in Episode II...none of those count?

He says Luke's father wanted him to have a particular light saber that he pulls out of a box. Guess not.

It's true "from a certain point of view." The remaining good within Anakin would have wanted his son to have his lightsaber.

He says that he fought with Luke's father in the Clone Wars. If that's true, it's sure hard to tell.

Fighting Dooku together at the end of Episode II, and all of Episode III don't count? Just what Star Wars movies are these two watching?

In Star Wars, a member of the Empire tells Darth Vader that Vader is the only remaining believer in that hokey Force religion. Is Palpatine, delightfully campy as his performance may be, still keeping his Sithdom in the closet two decades hence?

Completely wrong. Any neophyte Star Wars fan would certainly know that was Governor Moff Tarkin, not just a nameless "member of the Empire." So again, I question how much these two really know about Star Wars.

Tarkin told Vader, "The Jedi are extinct. Their fire has gone out of the universe. You, my friend, are the last of their religion." He made no reference to others who can use the Force, only to the Jedi.

Even so, is it so unreasonable to think that the Emperor wanted to sustain his image as a regular human? If it were widely known that he were a Dark Lord of the Sith, it "might generate more sympathy for the Rebellion." The entire galaxy would have a reason to fight him, because he was unnatural, not just a tyrant.

I thought Revenge of the Sith was better than OK (it's sad to say that I'll probably see it again), but I used to disagree with people who argued that the prequels would ruin the original movies. (Well, the first two, since Return of the Jedi was already a quietly acknowledged stinker.

As an alleged "stinker," how did Return of the Jedi achieve #130 (at the time of this entry) on IMDB's list of the top 250 movies of all time? Granted these are based on user votes, i.e. strictly popularity, but people certainly enjoyed this "stinker."

I bought three Star Wars video games. I read at least five novels, the final of which was called The Courtship of Princess Leia, about which I shall say no more. I saw the original trilogy countless times on videotape and at least twice in the theater.

Considering all his errors, I ask if he was completely stoned when he saw the movies and read the novels.

"The Jedi are not to be trusted"?

Forewarned you are now: ahead spoilers be, hmm?

Tyler Cowen at Marginal Revolution had an interesting observation about the Star Wars universe:

The core point is that the Jedi are not to be trusted:

But I disagree.

1. The Jedi and Jedi-in-training sell out like crazy. Even the evil Count Dooku was once a Jedi knight.

The desire to become a Jedi Knight is irrelevant. Not just any old youngster has the aptitude to become a Jedi, much like it doesn't matter how much I desire to be an NFL quarterback. One must be strong with the Force, which is a strictly natural ability, to begin training. Count Dooku was an aristocrat, but that had no bearing on his powerful ability to use the Force. One might possibly accuse the Jedi Council of being discriminatory, since if one doesn't have this particular physical trait, one has no hope of becoming a Jedi. (I refuse to use the miti-chlorian explanation for why some are stronger in the Force than others). Well, it's no more discriminatory than an NFL team wanting a quarterback with a powerful throwing arm. Furthermore, while some are stronger in the Force than others, the ability to use the Force to any degree is either there or not there. "Normal" people apparently cannot use the Force even i the slightest. Think of it like a light dimmer switch: there's the "off" position, then "on" with infinite degrees of illumination until maximum brightness.

Then there's how the Jedi Council acts like a top medical school, admitting only so many new pupils. The only payment required is devoting one's life to the Jedi Order, which of course dramatically increases the demand for Jedi training, but there are only so many Jedi Knights. Episode I established that a Jedi Knight may have only one padawan at a time, so since demand exceeds supply, there is a great scarcity of teachers. Therefore, the Council closely scrutinizes even the most highly qualified candidates. In Episode I, Yoda said the entire Jedi Council saw through Anakin and knew of his fear. Mace Windu told Qui-Gon that Anakin is "too old" and wouldn't be trained; presumably at a younger age, he could have been taught better control over his emotions. And this was a boy believed to be the Chosen One, and stronger with the Force than even Yoda!

More importantly, in Episode V, Yoda initially refused to train the impatient and reckless Luke, using the excuse that Luke was too old to begin the training. Supply and demand were at equilibrium: Yoda was the only remaining Jedi Knight, and Luke the only known candidate. Nevertheless, Yoda was still reluctant to provide the resource of Jedi training, though restoring freedom to the galaxy depended on it!

2. What do the Jedi Council want anyway? The Anakin critique of the Jedi Council rings somewhat true (this is from the new movie, alas I cannot say more, but the argument could be strengthened by citing the relevant detail). Aren't they a kind of out-of-control Supreme Court, not even requiring Senate approval (with or without filibuster), and heavily armed at that? As I understand it, they vote each other into the office, have license to kill, and seek to control galactic affairs. Talk about unaccountable power used toward secret and mysterious ends.

The Council is devoted to preserving the Republic, with its strong tradition of personal freedom. The Council is independent but at times is subordinate to the Senate -- remember that Princess Leia's message to Obi-Wan was, "Years ago, you served my father in the Clone Wars." Served. Obi-Wan isn't a neo-con, or a democrat (small d). One of my best friends suggested that Obi-Wan is a "strict constructionist," which isn't a stretch at all. Obi-Wan and the rest of the Council were patriots, devoted to the Republic, its Constitution and the rule of law.

The Jedi have no implicit license to kill, otherwise Anakin wouldn't have felt such reluctance (and guilt later on) about summarily executing Dooku. Ironically it was Anakin who reminded Mace Windu, who at that point had a light saber at Palpatine's throat, that it would be proper to bring Palpatine to trial. Windu replied that he must kill Palpatine right there, since Palpatine controlled the Senate and the courts and is too dangerous to let live. So Windu is a vigilante of sorts? No more a vigilante than the Continental Congress. When government has failed the people, the people must make do.

3. Obi-Wan told Luke scores of lies, including the big whopper that his dad was dead.

Obi-Wan never phrased it that way, only that Darth Vader "betrayed and murdered" Anakin Skywalker. Furthermore, Obi-Wan explained to Luke in Episode VI that it was "from a certain point of view": "Your father was seduced by the dark side of the Force. He ceased to be Anakin Skywalker and became Darth Vader. When that happened, the good man who was your father was destroyed. So what I have told you was true...from a certain point of view."

There's some justification for the "murder" perspective, because Yoda said in Episode III, "consumed by Vader he is." Vader was almost like a separate entity that took over the body. Demonic possession by the Dark Side?

4. The Jedi can't even keep us safe.

In Episode IV, Obi-Wan told Luke, "For over a thousand generations the Jedi Knights were the guardians of peace and justice in the old Republic, before the dark times...before the Empire." They preserved peace with true liberty, not the facade of the Galactic Empire's "peace and justice" via tyranny.

And is there such a thing as perfect safety? Even Superman couldn't prevent every crime. Don Boudreaux once noted in Cafe Hayek that, in the extended version of the 1978 Superman, Jor-El warned his son that "even you cannot serve humanity twenty-four hours a day. Your help would be called for endlessly, even for those tasks which human beings could solve for themselves."

5. The bad guys have sex and do all the procreating. The Jedi are not supposed to marry, or presumably have children. Not ESS, if you ask me. Anakin gets Natalie Portman; Luke spends two episodes with a perverse and distant crush on his sister Leia, leading only to one chaste kiss.

It's true that the Jedi aren't supposed to marry, but some have been known to leave the Order, and presumably afterward they are free to have families. Leaving is not necessarily a stigma. Dooku left because he disagreed with the Council, but not to become evil (at least not openly). In the Episode III novelization, Anakin doesn't care if people realize he and Padme are married, and he doesn't care if it means leaving the Order.

To be fair to Luke, he didn't discover until Episode VI that Leia was his sister. Leia's response, "I know...somehow, I've always known," is a bit odd with its incest implications. What I always liked is when Leia told Han that Luke is her brother. After she kissed Han in his sudden shock, he sported quite a crazy grin, as if he was thinking of when Leia kissed Luke on Hoth. That wasn't a very chaste kiss, either. As I recall, if you look closely she left a slight bit of dribble as their lips parted.

6. The prophecy was that Anakin (Darth) will restore order and balance to the force. How true this turns out to be. But none of the Jedi can begin to understand what this means. Yes, you have to get rid of the bad guys. But you also have to get rid of the Jedi. The Jedi are, after all, the primary supply source and training ground for the bad guys. Anakin/Darth manages to get rid of both, so he really is the hero of the story. (It is also interesting which group of "Jedi" Darth kills first, but that would be telling.)

When Anakin killed the Emperor, it removed the dark cloud over the Force. There had been a yin and yang, but it seems that any existence of the Sith meant that the Dark Side was exceeding the balance.

The Sith were originally expelled Jedi, but they created a following from a relative few. The Jedi in "modern" times produced Dooku and Anakin, but not Palpatine.

Update: let me clarify. Starwars.com gives us additional history not found in the movies. A few Jedi were expelled for being, well, evil. They wandered about and found the Sith people, and over time Sith became the name for the anti-Jedi order. The Sith never needed to recruit from the Jedi, because that initial group and their successors were always able to find Force-strong beings to bring over to the Dark Side. Turning Jedi to the Dark Side was a bonus, but not essential that the Sith have followers.

7. At the happy ending of "Return of the Jedi", the Jedi no longer control the galaxy. The Jedi Council is not reestablished. Luke, the closest thing to a Jedi representative left, never becomes a formal Jedi. He shows no desire to train other Jedi, and probably expects to spend the rest of his life doing voices for children's cartoons.

But the the title is Return of the Jedi, not something like The Last Jedi. Things had only just begun. Luke was the only Jedi; he hadn't yet begun to train his sister. And the Star Wars books dealing with the post-ROTJ Star Wars universe describe the reestablishment of the Jedi Order. The books are not canon, but the presumption since Episode VI is that Luke would bring back the Jedi. He promised Leia, after all, before running off to confront Vader, "In time you'll learn to use it [the Force] too."

8. The core message is that power corrupts, but also that good guys have power too. Our possible safety lies in our humanity, not in our desires to transcend it or wield strange forces to our advantage.

Luke successfully appealed to the "good" -- the humanity -- that he sensed still remained in his "twisted and evil," machine-sustained father. Qui-Gon and Obi-Wan's mistake was to assume, "Well, Anakin is the Chosen One, right? So he can't possibly fall to the Dark Side."

Yoda warned that they'd need to be extremely careful about arresting Palpatine, effectively overthrowing him and requiring that they temporarily take control of the Senate. It isn't the Jedi's place to seize political power, not with the fear and temptation that might lead them to the Dark Side.

What did Padme say?: "So this is how liberty dies, to thunderous applause."

Earth, Germany, 1933. (Mild rephrase of Captain Kirk.) And many other times.

Addendum: By the way, did I mention that the Jedi are genetically superior supermen with "enhanced blood"? That the rebels' victory party in Episode IV borrows liberally from Leni Riefenstahl's "Triumph of the Will"? And that the much-maligned ewoks make perfect sense as an antidote to Jedi fascism?

I prefer the original trilogy's implication that some people are just stronger in the Force than others. Midi-chlorians were too much of an attempt at science fiction, when Lucas should have kept the Force as a fantasy concept.

I'm afraid I'm not familiar with Riefenstahl, so I cannot comment there. However, I'll say that, as an adult, I still like the Ewoks.

(Thanks to Chris Masse for pointing out that I had forgotten to link to Dr. Cowen's post.)

Obi-Wan is a neo-con

Spoilers ahead. Forewarned, you are.

I can imagine John McLaughlin asking his roundtable:

Is Obi-Wan Kenobi,

A: a neo-con
B: an aristocrat
C: an idealistic democrat (small d)
D: a political survivor

The correct answer is...A!

Or not. Palpatine lied to Anakin, accusing the Jedi of wanting to rule the Republic, but of course the Jedi were committed to the Republic and its ideals of freedom. Obi-Wan is no exception and realized the great danger in Palpatine's power-grab, how "democracy" was dying with each successive amendment. I hate the word "democracy" because in its pure form, it's the strict rule of the majority. The Republic's very name shows it isn't a true democracy, but we'll use it loosely.

Semi-major quibble: has the governing body ever been referred to as "Congress"? I always heard it referenced strictly as "the Senate," whether Galactic or Imperial.

I just take the movie as a movie. There's much horse dung about the alleged underlying anti-Bush theme, but Lucas had already developed Palpatine's history by Episode I. Besides, the concept of the absolute ruler gradually acquiring power through subterfuge is as old as our Greeks. One of the Greek models of history was a tyrant (from "turannos") who would forcibly seize control of society to restore order, when society and its government had become so complacent that they degenerated into chaos. After he was overthrown, the people would be free -- and would degenerate all over again.

The Romans had the same concept of an absolute ruler who was needed to keep order. Julius Caesar is their most famous example of a dictator, but not the first. From "Isaac Asimov's Book of Facts":

To provide for quick action in times of emergency, the Roman Republic 500 years before Christ provided for a temporary king, so to speak. The senate could appoint someone to supreme control over Rome for a specified period of time, someone whose word, while he was in office, was law. For that reason, he was called a dictator, from a Latin word meaning "I have spoken." Usually, he was to hold office for six months. In 458 B.C. (according to legend), the Roman general Cincinnatus was appointed "dictator" to meet the threat of an advancing army. He marched off to war, defeated the army, returned, and resigned instantly. Cincinnatus had been dictator for sixteen days.

Liberals (especially French movie-goers at Cannes) are gushing about Lucas' anti-Bush statements. Some conservatives blast Lucas for selling out to Hollywood. Others who are neither liberal nor conservative, but wary of the federal government's growing powers, also point to the supposed similarities between the Emperor/Vader and Bush. One of my best friends has pointed to the exchange between Anakin and Obi-Wan as Bush's "If you're not with us, you're with the terrorists" line:

Anakin: If you're not with me, you're my enemy.

Obi-Wan: Only Sith deal in absolutes!

To repeat, I took Episode III as nothing more than an enjoyable, terrific movie. Not an allegory, not social commentary, but the amazing completion of an amazing saga. Certainly it has moral and political themes, but I doubt that Lucas is commenting on current times.

I decided to wait until today to see it, judging that Sunday at 6 p.m. wouldn't be too busy. The Force had given me much wisdom. I took my mother, who also enjoyed it thoroughly. My uncle was supposed to come but was feeling a bit sick.

Four stars. Letter grade: A. I rank it with A New Hope and Return of the Jedi, just behind The Empire Strikes Back. None of the previous movies affected me quite this way. Perhaps I'm the schmaltzy sort, but I found it just gut-wrenching when Anakin drew his lightsaber against the younglings. I began to tear a little when my mother gasped, "The children too?!" I don't know if anyone else has said this, but I thought the entire slaughter, with valiant Jedi being cut down, was a cross between "The Godfather" (Michael "takes care of all family business") and "Clear and Present Danger" (when the American soldiers were being gunned down).

Warning: Jar-Jar does appear, but at least he doesn't speak. Thankfully. But I was hoping, as someone somewhere envisioned, that Mace Windu would pull out his wallet made out of Gungan skin, the one with "Bad mother******" emblazoned on it. Perhaps a wrapping for his lightsaber handle? "Hey Palpatine, I want you to see my lightsaber's handle... Can you read that?"

Matthew Stover's novelization, which I've previously read, contains much material that isn't in the movie. I wonder how much is what Lucas and Stover added, and how much was filmed but not included. Hopefully Lucas will have an expanded DVD that includes/restores any cut footage.

The novelization has the exchange between Anakin and Obi-Wan as:

Anakin: If you are not with me, you are against me.

Obi-Wan: Only Sith deal in absolutes! The truth is never black and white.

In the movie but not the book, Anakin says that the Sith aren't evil, "from my point of view." Obi-Wan ironically retorts to the effect that Anakin is blinded to their evil. So now who's dealing in absolutes?

Hayden Christensen's makeup was excellent. Anakin's dark countenance from the very start of the movie showed that he was on the verge of the Dark Side. I felt his lines with Palpatine could have been delivered with more emotion. At least at the end, exploding (before he started sizzling, literally) toward Obi-Wan, he spoke with appropriate anger. But as I feared, Hayden was a bit wooden at times. I wrote before that I blame his part in Episode II on bad dialogue, not his bad acting. This time, however, Hayden has to share some of the blame.

Natalie is a good actress but didn't have too much to work with, principally just the latest bad love lines from Lucas. Compare "It's only because I'm so in love / No, it's because I'm in love with you" to Leia and Han's farewell just before he was encased in the carbonite. "I love you!" was met with Han's "I know" smart aleck reply.

The sappy line I always liked is from Episode II, "I've been dying a little bit each day since you came back into my life." Alas, in both movies, it's a shame that the Anakin-Padme romance by itself doesn't elicit anything. While I found it tragic, especially the irony that he helped destroy the Republic to save her, only to kill her, there's no tenderness. Not even a hint of lust: when Anakin and Padme kiss, it's almost as if Natalie said, "Hayden, make it quick, and I'm allowing only one take." Frankly, their acting together is reminiscent of Jennifer from my 3rd grade class. She was so afraid of boy cooties that, when our class skipped around to a song from "Hansel and Gretel", she refused to hold my hand directly. She would pull her sweater's sleeve a few inches past her fingertips, and that she'd permit me to hold.

I'm not suggesting they should have had heavy smooching or simulated intercourse to "prove" their love existed, but when Anakin startled awake from his dream, he was sleeping so far apart (and she was sleeping on her side, her back toward him) that he might as well have been on the far side of the galaxy. Likewise for when she was brushing her hair: he was several feet away, leaning against a wall (which is when they had the "in love" dialogue). So much for a couple in love, forced to spend months apart at a time!

In a way, I'm glad this completes the first (as far as timeframe) trilogy -- how many more of Lucas' sappy love lines can we endure?

Ewan MacGregor and Ian McDiarmid were excellent. With the movie emphasizing lightsaber action, I was pleased to see McDiarmid get his share, not just the Sith lightning -- and he did it well! The special effects were top-notch all-around, particularly with the intense lightsaber battles. And Samuel L. Jackson, one of my favorites, was pure Samuel. Mace Windu was tough, no-nonsense, and kick-ass. The novelization explains Windu's fighting style of vapaad, and his amethyst lightsaber compared to Jedi blue and green, or Sith crimson. He had Palpatine, he had him, until Anakin interfered.

What disappointed me was that Qui-Gon Jinn was reduced to a mere mention. In the book, he actually appears to Yoda, the first Jedi to achieve the mystical spiritual form. Yoda realizes how powerful Qui-Gon really was, and in reversal of their previous relationship, Yoda becomes his apprentice. I'm not sure why Lucas didn't get Liam Neeson to do a cameo. Perhaps like Leonard Nimoy with Star Trek: Generations, Neeson wasn't interested in a small role. Or, will we see it on the DVD?

It almost stunned me when Vader's first words were to ask about Padme. The classic "Noooooooo!" (with lifting up his arms to the skies) was obligatory. Doc Ock did that in Spiderman 2, as have others before. And since Padme's unborn child (which of course turned out to be twins) presumably died with her, Vader had nothing left to live for. At the end of Return of the Jedi, Vader realizing his children were worth saving the galaxy for, so he summoned his remaining good to destroy the Emperor.

The movie seems to cover a fairly short period of time, but one must figure it encompasses at least a few months. Padme wasn't showing when Anakin returned, but she was by movie's end. The movie and novelization explain that Anakin was going away for months at a time, and the novelization directly said he'd been gone for five months.

I'm definitely buying the DVD when it comes out.

Tomorrow I'll do a little commentary on Tyler Cowen's accusations against the Jedi Council, and a couple of Slate writers who don't get it.

Silent Times

Donald Luskin notes that the New York Times has yet to mention Rep. Robert Wexler's plan to save Social Security: a 6% tax on wages above $90,000. Actually Wexler is mentioned on nytimes.com, at least once -- but an AP article and exceptionally brief. A mere 250 words!

Much as the Times would like to champion a plan to raise taxes, it can't champion Wexler's. Not only would it admit the liberals' agenda to raise taxes, but it would go against the Times' own Paul Krugman. Krugman, you may recall, argued in his March 1st column against raising the earnings cap on payroll taxes:

But if the revenue from a rise in the payroll tax maximum was used to subsidize private accounts rather than to bolster the trust fund, it wouldn't address any urgent priorities: it wouldn't help the long-run finances of Social Security, it wouldn't reduce the budget deficit, and it wouldn't support crucial programs like Medicaid

What it would do, instead, would be to get in the way of any return to fiscal sanity. After all, raising the maximum taxable income would be a fairly stiff tax increase for some taxpayers. For example, someone making $140,000 a year might owe an extra $6,000. And the taxpayers who would be hit hardest by this tax increase would, in many cases, be the same people who will face a growing burden from the alternative minimum tax.

What I did not realize until tonight is that Krugman's March 1 column spoke out against one form of taxing income, but he advocated another at the March 15 Social Security debate in Manhattan. Krugman said at the debate, "Basically, if you reverse half the Bush tax cuts you have enough to pay these [Social Security] benefits forever." Either way, it's still raising taxes on income -- and Krugman advocated the one that affects "non-rich" people. Rolling back Bush's tax cuts would affect anyone who makes under $90,000 a year and got tax cuts (there are many who did). However, they wouldn't be affected by removing the earnings cap on payroll taxes.

As for me, I choose neither. As I recently explained to a co-worker who's roughly my age, we'd do so much better with private accounts.

The world's most expensive bus stop

U.S. Gives Anchorage $1.5M for Bus Stop

Tom Wilson is faced with a problem many city administrators would envy: How to spend $1.5 million on a bus stop.

Wilson, Anchorage's director of public transportation, has all that money for a new and improved bus stop outside the Anchorage Museum of History and Art thanks to Republican Sen. Ted Stevens (news, bio, voting record) — fondly referred to by Alaskans as "Uncle Ted" for his prodigious ability to secure federal dollars for his home state.

Wilson is prepared to think big.

The bus stop there now is a simple steel-and-glass, three-sided enclosure. Wilson wants better lighting and seating. He also likes the idea of heated sidewalks that would remain free of snow and ice. And he thinks electronic signs would be nice.

"It is going to be a showpiece stop," Wilson said.

He acknowledges the money has put him in an awkward position.

"We have a senator that gave us that money and I certainly won't want to appear ungrateful," he said. At the same time, he does not want the public to think the city is wasting the money. So "if it only takes us $500,000 to do it, that's what we will spend."

That is still five to 50 times the typical cost of bus stop improvements in Anchorage.

The money was contained in a $388 billion spending bill passed by Congress last November, when Stevens was head of the Senate Appropriations Committee.

Citizens Against Government Waste has ranked Stevens No. 1 every year since it began calculating lawmakers' proficiency at bringing home pork in 2000. In 2005, Stevens brought home more than $645 million, or $984.85 for each Alaskan, the group says.

Un-freaking-believable. Words cannot express my disgust.

Good heavens: CAGW ranks Stevens at the top, beating even Robert Byrd. If only a third of the allocated money is spent, like a good tax-and-spender, he'll probably find other uses for it.

The late Sen. Dirksen said, "A million here, a million there, pretty soon you're talking real money." I bet he never envisioned this travesty of the taxpayer's money.

Said it better than I said it myself

Commuting to my new job takes a very long time, so I didn't notice Jack Kemp's latest article until tonight. He made a just fantastic defense of free trade, specifically CAFTA.

I posted my criticism of protectionist economics a few days ago, and reading it again, it sounds so clumsy compared to Kemp's piece.

Especially good was his flat, true declaration:

Given the political controversy, you might assume that there is an underlying dispute among economists on the issue of free trade. There isn't. The theory has been settled for centuries, since David Ricardo's famous theory of comparative advantage demonstrated that trade allows each country to concentrate on doing what it does well, thus increasing wealth for both countries involved.

No economist worth a damn will argue against free trade. Even Krugman doesn't.

The irresistible force and the immovable object

What happens when both meet?

Well, what happens when laziness meets the socialist welfare state?

France Protests End of National Holiday

PARIS - Teachers, transport workers and much of France ignored the government's call to sacrifice a paid holiday to raise money for the elderly Monday — causing widespread disruption on a day meant to symbolize national unity.

Public transport in up to 90 cities and towns across France was disrupted. Many city halls and classrooms were closed, post offices scaled back services because of striking employees and many private companies gave their staff the day off. Polls showed more than half of the leisure-loving French planned to stay home.

The national "Day of Solidarity" — an extra work day in place of the annual Pentecost holiday — was part of the government's response to a 2003 heat wave that killed 15,000 people, mostly elderly.

Under a new law, workers give up a holiday, while their employers pay into a government fund to improve health care for the aged and handicapped. The extra day of work was expected to reap about $2.5 billion a year in additional revenue for health care.

So there are limits to the French people's love of the welfare state -- when it threatens to limit their indolence.

Don't pop the cork on the Krug yet

Victory for wine drinkers?

US Supreme Court uncorks key 'Wine Wars' ruling

WASHINGTON (AFP) - The US Supreme Court was the toast of wine lovers, after striking down state laws which bar consumers from buying bottles directly from wineries in another state.

Champagne corks popped among leading wine industry figures, and one campaigner said the dismissal of laws in 24 states marked "the best day for wine lovers since the invention of the corkscrew."

The Supreme Court came out with a 5-4 majority in a case, closely watched for its implications for Internet commerce, independent winemakers and the regulation of alcohol sales.

"If a state chooses to allow direct shipment of wine, it must do so on even-handed terms," Justice Anthony Kennedy wrote for the majority.

The court had to sort out two apparently conflicting elements of the US Constitution, one allowing states the authority to regulate alcohol sales, the other prohibiting any state from erecting barriers to interstate commerce.

The justices decided that laws in New York and Michigan were unconstitutional, because they allowed wine to be shipped from locations within those states but not from out-of-state locations.

"We hold that the laws in both states discriminate against interstate commerce in violation of the Commerce Clause," of the US Constitution, Kennedy wrote.

The ruling would still allow states to block any direct shipment of wine to consumers. But it would not permit a state to allow sales from an in-state winery while banning sales from outside the state.

I for one was overjoyed this morning and dropped Professor Bainbridge a line. I hope he won't mind if I excerpt a couple of paragraphs that I wrote:

Supporters of protectionist laws don't realize that they come at the expense of someone else. In this case, the laws "protect" wineries from competition, but at the consumer's expense. And while this may not happen often with wine, it means a consumer will have to go with his second choice, because laws requiring shipping through wholesalers make the consumer's first choice too expensive. The net result is part of the shipping industry built around redundant shipping, making it more expensive for the consumer.

Most respectfully to Justice Thomas (who dissented), I think there are better ways to hinder underage drinking. How can you completely prevent it, anyhow? Even if you require a middleman, nothing prevents a minor from borrowing an older sibling's credit card.

The professor has a more "sober" view on the situation, though. (Forgive the bad pun.) I defer to him on predicting the future of the relevant state laws. I fear he may be right.

Historical revisionism

Update: it was late and I erred. It was Roger Hedgecock, who was filling in for Rush Limbaugh on his radio show, not John Gambling.

Even Republicans can be and are guilty of it. Yes, Republicans. Especially Republicans who call upon the myth of Lincoln, and dishonor Ronald Reagan by becoming the tax-and-spenders that they once accused the Democrats of being.

Before I start, let me give a lot of thanks to Thomas DiLorenzo, whose terrific book The Real Lincoln opened my eyes to what the first Republicans were about. Like their Whig predecessors, they were basically mercantilists: they believed in "protecting" domestic industry with high tariffs, and the shifting of government power to a strong center (i.e. Washington) to facilitate the first two.

While I'm still not convinced about everything Professor DiLorenzo argues, I'll say this: you cannot just dismiss this book. If you want to disregard it as another attention-grabber by a wacko historian, think again. Consider that Walter Williams himself wrote the foreword (not to say Dr. Williams is perfect, but it's darned hard to disagree with the good professor, so what an accolade!). I met Professor DiLorenzo a year ago when he spoke at FEE, and his scholarship on the real Abraham Lincoln is astounding. It shattered my personal mythos about the man even more than when I realized FDR was basically a socialist.

DiLorenzo included a chapter on Lincoln's legacy, particularly Reconstruction. Lincoln was dead, yes, but I think DiLorenzo is right to blame the Republicans' actions on what Lincoln began. At the same time, DiLorenzo destroyed the great myth built around Andrew Johnson.

Now, what provoked me to write this entry was Roger Hedgecock, filling in for Rush Limbaugh on Monday. As a conservative talk show host, he proved that historical revisionism is not confined to liberals or Democrats. Among the various things he claimed was that Booth shot Lincoln in part because Andrew Johnson would succeed him. According to Gambling, Johnson was a Southerner and still sympathetic to the South, and Lincoln needed him on the 1864 ticket to win enough votes. It is true that Johnson was born in North Carolina, but he was not quite a "Southern sympathizer." For one thing, as a Senator he supported the Homestead Bill, which made him more than a few enemies among his Southern colleagues. The only true "sympathy" that Johnson had for the South was to integrate it back into the Union quickly and with the least amount of pain. As we'll see in a few paragraphs, after the Civil War ended, Republicans devastated the South even further.

Gambling also claimed, basically, that Republicans are the ones with a history of protecting individual liberty, and that Democrats since the Civil War have been the ones destroying individual liberty. Nothing could be further from reality. The continued federal usurpation of our individual liberties has never known any limit to any political party. The latest example is the "Real ID Act" that passed last week with ease, 368–58 in the House, and by a unanimous 100–0 in the Senate. If Republicans claim to cherish the rights of the individual, how could they have supported such abhorrent legislation?

But what really caught my attention was when Gambling unfair maligned Andrew Johnson. Schoolchildren today are taught that Johnson was the only president to be impeached (not removed from office, but impeached). Sometimes they're taught that Johnson was an alcoholic, which is possibly true; some thought he was intoxicated when he delivered his vice-presidential inaugural address in 1865. They're taught that he was impeached in 1868 for attempting to fire his Secretary of War, Edward Stanton, in violation of current law. What schoolchildren are rarely taught is that the "Tenure of Office Act" was repealed in 1887 (simply for being a bad law), and that the Supreme Court in 1926 formally declared it unconstitutional.

The law was indeed very unconstitutional. The Constitution says that the President may nominate certain officials with "the advice and consent of the Senate." However, the Constitution does not require the President to seek Senate approval to fire one of his appointees. The TOOA was Congress' way of usurping Presidential authority over his own branch, but it was more sinister than that. Stanton was not only publicly opposing Johnson's administration, he had been conspiring with "Radical Republicans" on Reconstruction, which Johnson opposed. For more information, read this page at the University of Missouri-Kansas City.

Impeaching Johnson over the TOOA was a smokescreen, though. HarpWeek (based on the popular Harper's Weekly newspaper of the time) runs the website http://www.impeach-andrewjohnson.com/, which discusses the reasons. Chief among them was that Johnson opposed Reconstruction. It was unconstitutional, brutal, and no less than martial law. Article IV, Section 4 of the U.S. Constitution says:

The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened), against domestic Violence.

Completely against the Constitution, the North sent massive federal armies to occupy the Southern states. It was nothing less than a coup d'état of the state legislatures that wouldn't bow down to the North. As Professor DiLorenzo wrote in The Real Lincoln:

For the most part, Southern state governments were run by military dictatorships in the form of federally appointed U.S. Army generals. Those sitting governors of the Southern states whom the Federal army was able to capture at the end of the war were imprisoned without trial.

Incredibly, the trampling of the Constitution got even worse. The South, except for Tennessee, had the audacity to oppose the victorious Northern federalists. Nearly all the South's state legislatures refused to ratify the Fourteenth Amendment, which was the first great step in the federal consolidation of governmental power. From The Real Lincoln:

Congress responded to the South's rejection of the Fourteenth Amendment by passing the Reconstruction Act of 1867, which established a comprehensive military dictatorship to run the governments of each of the ten states that were not yet restored to the Union. passed under the false pretense that there was little or no protection of life and property in the South, the law required passage of the Fourteenth Amendment before military rule would end in a state. And it was indeed a false pretense, since the courts had been operating normally in the South since the end of the war.

Great resources were expended on registring the adult male ex-slaved to vote, while a law denying the franchise to anyone involved in the late "rebellion" disenfranchised most Southern white men. So rigorous were the restrictions placed on white Southern males that anyone who even organized contributions of food and clothing for family and friends serving in the Confederate army was disenfranchised, as were all those who purchased bonds from the Confederate government. Even if one did not participate in the war effort, voter registration required one to publicly proclaim that one's sympathies were with the Federal armies during the war, something that very few white Southerners would have dared to do.

I think, also, that their honor prevented them from uttering lies. Perhaps it's because I'm a Yankee through my late father, but I've always had a romanticized view of Southern gentility and honor.

Johnson opposed the violence and corruption of Reconstruction, and his attempt to fire Stanton was just the excuse the Republican Congress needed to get Johnson out of the way. Indeed, Johnson was succeeded by Ulysses S. Grant, whose administration was one of the most corrupt ever known. Grant was no exception, as DiLorenzo notes, using the federal government's expansion to secure jobs for his friends and relatives.

I give full credit and humble thanks to Professor DiLorenzo and others, who helped illuminate the dark, revisionist history that I've suffered all my life. The Real Lincoln and HarpWeek showed me a side of Andrew Johnson that is rarely taught: a man who believed in "Jacksonian democracy," who opposed tariffs and government "internal improvements" money, and who opposed the federal government's rapidly growing powers.

I highly recommend The Real Lincoln as an eye-opener and myth-shatterer. It's among the best $10 you can spend. (The link is to Amazon. I'm not getting any kickbacks.)

The error of protectionist economics

China Opposes New U.S. Textile Quotas

China said Saturday it opposed a U.S. decision to impose new quotas on some Chinese clothing imports, calling the move a violation of international standards of free trade.

The Bush administration announced Friday it would reinstate quotas on three categories of clothing imports from China, responding to pleas from domestic producers that a surge of Chinese imports was threatening thousands of American jobs.

The move "violates the spirit of free trade and the basic principles of the World Trade Organization," Chinese Commerce Ministry spokesman Chong Quan said in a statement on the ministry's Web site.

China is a dominant competitor in the $350 billion-a-year world textile trade, and its shipments into the United States spiked sharply after Jan. 1, when global quotas in effect for three decades were eliminated.

The latest U.S. action will impose limits on the amount of cotton trousers, cotton knit shirts and underwear that China can export to the United States — which American retailers argue will drive up prices for U.S. consumers.

It is unimportant that it violates the "principles" of the WTO or the "the spirit of free trade." What is relevant is that the Bush administration is violating free trade itself. Dr. Russell Roberts recently interviewed Dr. Gregory Mankiw, former Chairman of the Council of Economic Advisers. Dr. Mankiw said, "The President is very much a believer of free trade," which usually appears to be true.

It's ambitious that Bush has proposed eliminating tariffs on manufactured goods (not just the U.S., but across the globe). CAFTA and other Free Trade Agreements are a good thing, including ours with Australia, even if it was allegedly just a political reward. Even so, I don't think they go far enough. They're regulated, liberalized trade, not true free trade. Then I really sigh when Bush and his economic team take a step backward for every step forward. First the steel tariffs, now these quotas.

I agree with the PRC and say that the Bush administration is flatly wrong to place new quotas on Chinese goods. Of course the Chinese are looking out for their own self-interest. So am I. So should all other Americans. Americans benefit by purchasing low-cost cotton goods for less than if we made them ourselves; it increases our purchasing power. Now with the quotas, we'll have to pay more, even at Wal-Mart discount prices. Protectionists argue that we'll gain jobs by having to produce things ourselves, but don't they realize that jobs aren't gained at all? At best, they're only transferred. If a good is no longer imported and is produced domestically for $1 more, that's $1 less for the consumer to spend elsewhere (or save).

But it's worse than that. When we busy ourselves making cotton goods, we aren't making the software, aircraft, high-end machinery and other advanced goods that China, India, et al could produce but not very well. This is comparative advantage, the principle and motive behind all trade, not just at the national level, but the individual level too. What families today make their own clothes and shoes, or grow and raise their own food? Instead, we specialize according to our unique talents, and trading with each other maximizes our total production. The Bush administration is forgetting this. Yes, a few American textiles workers will be better off, but at the expense of everyone else. Society will pay more for the same goods. As Bastiat asked, why do you want to support scarcity? After all, that's what higher prices mean.

Bastiat wrote "The Candlemakers' Petition" to demonstrate the fallacy of protecting domestic industry. In his satire, the French government was asked to pass laws requiring people to close all doors and windows -- in fact, seal off any opening that sunlight might come through. This, the petition declared, will promote the entire economy! More candlemakers will be needed, and since they will require tallow, this will create more jobs involving the raising cows and sheep. Jobs will be created to produce lamp oil. Even Parisians will find jobs creating ornate chandeliers!

Of course the entire proposal is ludicrous, but Bastiat didn't once exaggerate the fallacial principles of protectionist economics. He merely applied them to an industry that nobody thinks to "protect" -- why should one industry be protected, and not another? Over 150 years later, the elegance of Bastiat's clarity still helps us see the simple reason why protectionism appears right but is actually wrong. In "protecting" via tariffs and quotas, government's sole aim is to maintain high prices so that domestic industry can stay in business. But high prices tend to encourage an oversupply of such goods, which normally would cause prices to drop. Then as domestric industry erroneously blames (or even lies) that downward pressure on foreign competition, government must restrict imports even more. Government can even purchase some of the excess supply to prevent falling prices.

If only that last part were fantasy: the U.S. federal government does that with certain types of agricultural subsidies. It pays farmers and ranchers so they won't grow crops or raise certain types of livestock; sometimes it's to pay them to destroy crops and livestock. It's a literal waste of perfectly good food, and a waste of effort because the farmers could have produced something instead. Yet this continues several decades after FDR initiated the subsidies, and even France is doing that for its wine industry. Professor Bainbridge noted the recent violence, "radical" winemakers bombing a government office in southern France, and I explained the bad economics behind the subsidy.

Protectionism simply inhibits progress. Not the absurd vision of "progress" that big government pushes on us, but true progress in the advancement of the human condition. When government supports one industry, it's necessarily at the expense of other industries; it's merely diverting from one to another. Bastiat in "What Is Seen" cautioned us not to mistake transfers for an increase, and even today, it is difficult for people to discern the difference. "But we'll have to produce those things ourselves, which will mean more jobs!" Indeed? If more people are needed to breed more cows and sheep for tallow, fewer people are raising oxen to plow fields. If people are creating cotton goods, they're not making high technology like microchips. Nowadays it's designing microchips, as China, India and Southeast Asia have a huge comparative advantage in semiconductor manufacturing. They have no comparative advantage in design, though. The bulk of R&D lies in developed nations, especially the U.S. and Japan. We also produce software, aircraft and heavy machinery that our poorer trading partners cannot easily make.

Second, protectionism promotes inefficiency. It gives artificial longevity to antiquated industries, or it prevents a society from developing newer industries. Should we have taxed the first automobiles to protect horse breeders and buggy manufacturers? Should we have taxed the first transistors to protect glassblowers and others involved in making vacuum tubes? Of course not, so why should we protect domestic textile industries that cannot compete?

But, protectionists object, the difference is that other countries are "stealing" the jobs. Protectionists insist that we need those jobs. Not so! If we're busy making textiles, cheap plastics or even low-end machine parts, we suffer the greater opportunity cost of not making high-end goods. We wouldn't have new software from Microsoft, Symantec and others, nor the latest Intel and AMD chips, and we're certainly not making Caterpillars and John Deeres. These are all products of greater value, which our trading partners cannot make without suffering greater opportunity costs. The Chinese could certainly produce entire Boeing aircraft, but it's more efficient for them to produce bolts and other basic metal components. It's more efficient for Boeing employees in the U.S. to produce entire aircraft, using low-end parts already made for them. If the Chinese tried to produce John Deeres and ship them to American customers, they'd suffer the greater opportunity cost of not making cotton T-shirts.

Consider that if Indians and Chinese are so competitive, if they're willing to work for a fraction of what an American counterpart would, why is the bulk of Microsoft still at Redmond? This is not to be racist, but by definition it means, for whatever reason, that Microsoft values one American more than several Indians or Chinese.