Another Don Boudreaux Karate Kid Crane Kick

Of all the anti-protectionist slapdowns Don Boudreaux has ever issued, this is my favorite:

9 March 2011

Mr. Ian Fletcher

Dear Ian:

In your latest essay at the Huffington Post you state that sensible protectionists, like you, want to use tariffs to protect, not “dying” industries, but, rather, only industries of “the future” (“Protectionism of the Past vs. Protectionism of the Future,” March 9).

Who but a backwoods bumpkin doesn’t cheer for the industries of “the future”? But I’ve some questions.

- How do we identify such industries? Who’ll be charged with determining which industries are of “the future” and which industries are sufficiently passé as to be left unshielded from being slain by foreign competition – slayings that you suppose are the inevitable fate of all U.S. industries not protected by high U.S. tariffs?

- What criteria will be used to distinguished industries of “the future” from what I suppose we ought to call “industries of the past”? Rates of return on capital? Total volume of employment? Productivity per worker? Rates of annual productivity growth? Rates of export growth? Total amount of corporate taxes paid? The technological ‘wow-ness’ of the industries’ outputs – as determined, perhaps, by the amount of positive attention such outputs receive from nightly network news reporters? The age of the industry?
Oh! I know the answer: total dollar amount of contributions to the political campaigns of incumbent members of Congress and the U.S. presidency.

Ok, here comes the Don Boudreaux Karate Kid Crane Kick, the takedown, the crushing blow:

- In those inescapable instances when dispassionate minds, such as yours, discover that protection was mistakenly given to industries of the past that were for a time wrongly thought to be industries of the future, will the shareholders and workers in those industries, whose prosperity has for a long time been made possible only by the tariff protections that their industries received, gracefully accept the revised determination that they have all along been investing in, and working for, industries of the past and, therefore, must now lose their assets and jobs for the greater good? What will you tell these poor workers, shareholders, and bondholders?

- Finally, if an industry really does have such a promising future that even government bureaucrats recognize this promise, why wouldn’t this same promise be recognized by private investors? Seems as though it would. And private investors, then, will pour sufficient amounts of private financing into this industry. Isn’t it one of the central functions of private capital markets to identify – and to shower with liquidity – upstart firms that are likely to be parts of industries of “the future”?

I’m eager to receive your replies.

Sincerely,

Donald J. Boudreaux

Hit the link at the top to read his readers' comments, involving Godzilla, Bambi, priests, and some discussion about failed "Industries Of The Future". 

On Russ Carnahan's wind farm, 10,000 teachers, and everything else

Some people in Missouri are working up some outrage over Rep. Russ Carnahan giving $105 million dollars worth of Porkulus funds to his brother's company, the Wind Capital Group. 

Here's The Wall Street Holy Journal:

A wind farm in Missouri that got a $107 million stimulus grant is generating some turbulence for two prominent Democratic candidates, Robin Carnahan, the state’s Democratic Senate candidate and her brother, Rep. Russ Carnahan.


The wind farm is a project of Wind Capital Group of St. Louis, whose president, CEO and founder is the Carnahans’ brother, Tom Carnahan.

....An Energy Department spokeswoman said the grants in lieu of tax credits had been awarded to all eligible applicants, and that the department had reviewed Wind Capital Group’s application in the same way it had reviewed all the others.

Yeah.  She looked at who was pushing for the grant, and said "yea" or "nay" based on the Congressman's clout.  Carnahan has clout.
 
Look, these things have absolutely nothing to do with usefulness, the public good, the general welfare, or common sense.  They are about recruiting and rewarding donors.  If the Carnahans could loot the public till  by claiming that wind farms prevent alien invasions from the planet Nekthar, that's the justification they would use. 

Please be patient with me.  I'm going somewhere with this.....

This next excerpt is from The Cato Institute, where they are working up some outrage over The Teleprompter Jesus wanting to hire 10,000 more teachers. 

This week, President Obama called for the hiring of 10,000 new teachers to beef up math and science achievement. Meanwhile....public school employment has grown 10 times faster than enrollment for 40 years (see chart), while achievement at the end of high school has stagnated in math and declined in science (hit the link to see the other chart).

Either the president is badly misinformed about our education system or he thinks that promising to hire another 10,000 teachers union members is politically advantageous–in which case he would seem to be badly misinformed about the present political climate. Or he lives in an alternate universe in which Kirk and Spock have facial hair and government monopolies are efficient. It’s hard to say.

So what?  Russ Carnahan gave his brother's Superstition-Based Energy Company a total of  $102 million dollars, despite prayer, wind, and wishful thinking all being less efficient than oil. 

Barack Obama wants to add 10,000 more public school teachers to the public tit, despite the dismal results shown above.

So when are we going to stop believing that their stated goals have anything to do with these wealth transfers?  It is all about rewarding supporters, folks. 

Wake the hell up ! 

On every survey or poll taken, you claim that you don't trust Congress, you don't approve of Congress, and you think Congress does a rotten job.  You would let Ted Bundy babysit before you would allow Congress to trim your hedges.

But when Congress wants to spend a few jillion bucks on an anti-poverty program, or an education program, or a new machine to blow up A-rabs, the same surveys claim that you support these programs (based on party affiliation, of course).    

It's easy to get worked up over the Carnahan family, simply because the quid isn't far enough removed from the  pro quo.   
Very few people can look at that chart above and think we need 10,000 more teachers in our Gladiator Traning Institutes, but when Obama wants to hire more teachers we think it's a good idea.  It would be rude to point out that these 10,000 teachers aren't going to start biting the hand that feeds them. 

But take a look at who gets the rest of your the government's money.  If The Pentagon needs to buy bullets, do they just purchase them from some random-assed bullet manufacturer?  Absolutely not.  They purchase them from a supporter, or someone who is about to be a supporter. 

What about a jail?  Are those built and constructed by generic contractors? 

Absolutely not.  They are built by supporters.  Supporters who lobby for laws that guarantee plenty of occupants for their jails, BTW.     

99 cents of every taxpayer dollar spent goes to the supporters of at least one of our two governing factions.  (I think the other penny is stolen.) 

It's getting harder and harder for entrepreneurs to get loans to start a new business unless they've have a strategy for some sort of rent-seeking partnership with government. 

Yeah, The Carnahans should've covered their tracks better.  But somebody was going to get your money, and unless you were politically connected, it wasn't going to be you. 

Vote Libertarian.  We're know that some government is necessary, but when we're finished, it'll be small enough to drown in the bathtub.