Rand Paul: Giving Libertarianism a Bad Name

Taranto aptly called it “a rookie mistake” when newly nominated Republican Senate candidate Rand Paul told an interviewer that he was troubled by the fact that the Civil Rights Act of 1964 — which Paul otherwise supported –  crossed the line of regulating behavior by private businesses.  However intellectually coherent Paul’s position might be in a narrow, libertarian-absolutist, freshman-dorm-room kind of way, politically and realistically it’s nuts.

Or as Taranto says:

In this matter, Paul seems to us to be overly ideological and insufficiently mindful of the contingencies of history. Although we are in accord with his general view that government involvement in private business should be kept to a minimum, in our view the Civil Rights Act’s restrictions on private discrimination were necessary in order to break down a culture of inequality that was only partly a matter of oppressive state laws.

If he’s going to play in the big leagues, Paul needs to stop making rookie mistakes. In discussing the horrific oil spill in the Gulf of Mexico, Paul apparently felt a need to stick up for the spiller:

“What I don’t like from the president’s administration is this sort of ‘I’ll put my boot heel on the throat of BP,'” said Paul who overwhelmingly won Tuesday’s GOP Senate primary in Kentucky and is a favorite of Tea Party activists. “I think that sounds really un-American in his criticisms of businesses.”

“I’ve heard nothing from BP about not paying for the spill,” Paul continued. “I think it’s part of this blame game society in the sense that it’s always got to be someone’s fault, instead of the fact that sometimes accidents happen.”

I’m a big fan of capitalism myself, but geez.  There will be other, better opportunities to criticize Obama and the Democrats for excessive corporate-bashing.  For now, Paul would be wise to simply refrain from joining the dogpile on top of the oil industry.

If I were to describe my political philosophy in one word, that word would be “libertarian.” My libertarian slogan of choice is “free people and free markets, under the rule of law.”  The “rule of law” part is a recognition that if you go too far down the spectrum toward small government, you wind up with anarchy.  To become a Senator, Rand Paul needs to stop following his father that far down the libertarian trail.

Loading Up the Corruption Bus in New Jersey

(Welcome, New York Times readers. You might be interested in other posts about New Jersey and Maplewood.)

Corruption BusMy adopted home state of New Jersey has a long sordid history of political corruption.  We’re not yet five years removed from Gov. Jim McGreevey’s resignation after the revelation that he had appointed his unqualified boyfriend to a $110,000 state public safety job. We’ve also had Abscam in the 1980s, indictments of five of the last seven Newark mayors, and the list goes on and on.

So I didn’t pay too much attention to the mass arrests last week, until I stumbled on a long Wall Street Journal article putting it in historical perspective.  Here’s the set-up:

This latest episode featured 44 people, an unprecedented number even for New Jersey, being charged in an investigation into public corruption and international money laundering. The bust included five rabbis, three assemblymen and two mayors, prompting one late-night caller on the state’s talk radio station, New Jersey 101.5, to ask, “Where’s the partridge in the pear tree?”

There’s lots of colorful detail, going back to Colonial days, but what appealed to my libertarian sensibilities was the author’s attempt to explain why there’s so much public corruption in the state.

[T]he state is enormously over-governed. In most states, the local unit of government is the county; in others, it’s the municipality. In Jersey, we have both, and lots of them. There are 566 municipalities—California, with four times the population, has only 480—and each has a mayor and/or councils. The 21 counties have their various freeholder boards and utility commissions and there are also 120 state legislators. When that many people have their hands in the cookie jar —and there are that many cookie jars—is it any wonder that you get people selling Oreos out of their trunk in the parking lot to make a little extra cash on the side?

Most of the corrupt pols in this deep-blue state have been Democrats, and the recent batch is no exception.  It’s annoying to me (yes, I take it personally) that the arrests came just days after I announced my tepid support for the re-election of Gov. Jon Corzine, a Democrat.  A headline on PolitickerNJ.com sums up the situation pretty well: “Corzine is Not Corrupt — But the Corruption Scandal Dooms His Campaign.”

I can’t bring myself to vote for likely future Gov. Chris Christie because of his fervent opposition to marriage equality for same-sex couples — including a veto promise and support for a constitutional amendment.   But he’s already so far ahead that he doesn’t need my vote.  As the Journal article notes, he’s a former U.S. Attorney with a 130-0 record in prosecuting corruption cases.  Sounds like a silver lining to me.

(Photo: Associated Press)

The Perils of Participatory Democracy

Over at change.gov, the President-elect’s transition website, the incoming administration is continuing its efforts to tap the power of social media. Yesterday this took the form of an “Open for Questions” tool that encouraged readers to submit questions and issues they believe the new president should address.

Participation in Open for Questions outpaced our expectations, and we’re looking forward to rolling it out again next week. We’re tremendously excited about the promise of tools like this that offer Americans a level of access that has historically been hard to come by. By voting questions up, users have been able to convey to our team which major issues — like the auto industry, health care, ethical standards, and others — are the most important to this community.

Yes, those are certainly weighty and important issues. I might throw in Iraq, Afghanistan, national security, etc., but that’s just me. So… which of these subjects received the most votes as the most pressing issue facing the nation?

“Will you consider legalizing marijuana so that the government can regulate it, tax it, put age limits on it, and create millions of new jobs and create a billion dollar industry right here in the U.S.?”

Nicely phrased as an economic imperative, and the libertarian in me favors legalization, although my personal interest in this issue has long since passed. But I’m picturing a scene in college dorm rooms across the country, a smoky bong next to the laptop, as America’s newest voters engage in political discourse to shape the nation’s agenda: “Dude! Now you log in and vote!”

Reasons for Republicans to be Thankful

Jennifer Rubin offers some Thanksgiving cheer at Pajamas Media. I don’t agree with every word of her post, but I love these parts:

First, President-elect Barack Obama won by assuring voters he would pursue tax cuts, victory in Afghanistan, prevent Iran from acquiring nuclear weapons, and go “line by line” through the federal budget to eliminate waste and unneeded programs. We can doubt his sincerity or ability to achieve these ends, but he won by recognizing and espousing center-right principles. If he pursues some or all of them, the country will be the better for it. If he doesn’t, he is unlikely to succeed or maintain the broad-based popularity needed to keep Democrats in power.

Second, Hillary Clinton, James L. Jones, and Robert Gates are on tap to fill key national security roles. This is not the crew to bug out of Iraq before the job is done, repeal FISA, rush off to meet with Ahmadinejad, or support a 25% cut in defense spending. On national security, the president-elect in essence has conceded that the Left’s vision is impractical and dangerous. …

Ninth, President George W. Bush and General David Petraeus persevered against tremendous odds and have placed us on the verge of one of the great military turnarounds in our history. We can disagree about the wisdom of the decision to go to war in Iraq, but a victory with a stable Iraq allied with the U.S. and a humiliated al-Qaeda is now within our grasp. By avoiding defeat and empowering an Arab nation to take up arms and defeat Islamic terrorists, Bush and Petraeus furthered the security of the U.S., the region, and our allies around the world.

Rubin’s post is headlined “Ten Reasons for Conservatives to be Thankful.” I substituted “Republicans” in my headline because after describing myself as a liberal for most of my life, I can’t quite get my brain wrapped around the idea that I’m a conservative. I’m certainly right-of-center on economic and national security issues, but I’m pro-choice and I favor marriage equality for same-sex couples. I guess that makes me a libertarian… except hard-core libertarians tend to oppose the Iraq war, which I strongly support.

Also, once you get too far out on the libertarian spectrum you’ve got anarchy. This 64-question libertarian purity test gives you extra purity points for a desire to abolish government, privatize roads, police forces, etc. I’m a big fan of capitalism and market-based incentives, but I think we need some government.

Here’s a much shorter quiz (10 questions) to help locate your political identity. Here’s the result I got:

Bullseye. Happy Thanksgiving.

Wall Street Compensation in the Bailout Era

As bonus time approaches, Wall Street firms are trying to balance the need to retain key executives against concern about the “optics” of giving boatloads of bailout money to the people who arguably created the need for the bailout.

It’s easy to sneer at what passes for frugality on Wall Street when it comes to compensation… so let’s indulge for a moment. From today’s Wall Street Journal (I think it’s a free link, but if not you can get the gist from the excerpt below):

In a sign that Wall Street is waking up to the political tempest over billions of dollars in year-end bonuses likely to be paid out at securities firms lining up for government infusions, top executives are in discussions to possibly cap their own compensation, according to people familiar with the situation….

“There are going to be some people in the financial-services industry who will show real leadership here and recognize the reality of the situation,” one senior Wall Street official said.

At least one major firm has looked at former PepsiCo Inc. Chairman and Chief Executive Roger Enrico’s move in 1998 to give up his $900,000 salary. Instead, Mr. Enrico asked PepsiCo directors to fund scholarships for children of “frontline employees.” Mr. Enrico still got a $1.8 million bonus that year.

Yes indeedy, “real leadership” — give up the high six-figure salary but keep the seven-figure bonus. And of course, the 1998 bonus of a soda-pop CEO is one or even two orders of magnitude lower than what is available on Wall Street in a good year.

I have mixed feelings about this. I’m a fervent capitalist and I lean libertarian, so I believe salaries and other prices should be set primarily by markets, not by government decree. I toiled in the Wall Street vineyards for many years, mostly at Merrill Lynch, and I believe my old firm and its competitors play a crucial role in the economy. I was support staff, not a revenue producer, which meant my annual bonus was a fraction of my salary, not a multiple. But I never complained about executive comp, because when the poobahs got more money, so did the gumbies.

Vermont Senator Bernie Sanders, a self-described democratic socialist, has renewed calls for capping compensation for executives of bailed-out companies at the $400,000 salary of the U.S. President. The idea has a lot of populist appeal — even John McCain expressed support for it during the height of the turmoil last month. (I could probably scrape by on $400K a year. I’d like to give it a shot, anyway.)

But I suspect the best financial minds on Wall Street will continue to find ways to reward themselves handsomely. If such a limit could even be enforced realistically, it would simply drive the top talent into less-regulated pursuits. Do we really want to move the center of gravity of global finance out of the public securities firms and into hedge funds?

So, what should be done about the admittedly scandalous prospect of paying zillions of dollars in bonuses with money ponied up by taxpayers? I dunno… that’s above my pay scale.

Bailout Wisdom from Various Sources

Bill Whittle recently had a very painful medical mishap, which inspired him to refer to “the $700 billion kidney stone the economy is trying to pass.” He prescribes some therapeutic pain:

Every decision we make is based on a risk/reward calculation. If we take away the consequences of risky behavior, we will see more of it. And if there’s a money-back guarantee for greedy and stupid decisions, we’re in real trouble, because there is only so much money in the bank but supplies of greed and stupidity are endless.

So how do we inflict some badly-needed pain on people who need to feel it, without hurting the rest of the good and honest folks who pay their bills [responsibly]? Well, there are three simple rules that we must follow. Unfortunately, no one knows what those three rules are. So here we are. I’m as flummoxed as the rest of you.

At the risk of being a name-dropper, prominent economist Greg Mankiw was a classmate of mine as a Princeton undergraduate. (I didn’t know him at school, but chatted with him at Reunions once. He seemed like a nice man.) On his blog he’s been fairly neutral about the bailout — he doesn’t seem to dispute that something big has to be done, but he does inject a cautionary note:

Nonetheless, one has to be at least a bit skeptical about the idea that government policymakers gambling with other people’s money are better at judging the value of complex financial instruments than are private investors gambling with their own.

Now, Greg Mankiw wrote a best-selling economics text and did a stint as Chairman of the Council of Economic Advisors under President Bush. I took introductory econ courses at Princeton, and also at Rutgers while working toward an MBA I didn’t finish, and to this day I get confused about the effect of currency exchange fluctuations on domestic inflationary pressure.

So I’d like to take this opportunity to point out a flaw in Greg’s reasoning: seems to me that “private investors gambling with their own money” does not describe the process that got us into this mess. The damage seems to have been caused by titans of Wall Street gambling largely with other people’s money.

I’m by no means a Wall Street basher — I worked there for nearly 15 years, and would be willing to do so again. (I called an ex-boss who’s still at Merrill Lynch… it turns out they’re not hiring this month.) But I certainly understand the impulse to bash Wall Street and the financial Establishment — vital institutions led by people who have a lot to answer for.

Count on uber-libertarian Ron Paul to step up to the plate (hat tip: Bill C.). Under the headline “The Creation of the Second Great Depression,” he writes:

The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder.

I’m not sure Congressman Paul’s internally coherent but overstated case actually constitutes “wisdom” as referenced in my headline, but it certainly is a colorful dose of what he believes is moral clarity. Who knows, maybe he’s right. I can see why he has a strong following… and why he’ll never be president.