Painful Lessons in the Executive Office

If history repeats itself, first as tragedy, and then as farce, we are reaping a decades-in-the-making painful lesson in the great risks of creating an executive branch that is far too powerful. I believe we are also witnessing the risks of putting an amoral man into the presidency in a Faustian bargain to attempt to advance our own specific causes. The trouble with Faustian bargains is they are the surest path to hell.
My desire is that in four years the majority of Americans will long for a return to humility and forbearance in the Executive Office. The ideal example should be the manner, style, and substance of a Calvin Coolidge and presidents that preceded him. In short, the President should be a man/woman of virtue who largely leaves us alone who is of limited consequence to our daily lives. Their primary focus should be on removing obstacles to and the promotion of our liberty, peace, prosperity, and freedom of assembly, religion, and speech.

No, pumping up demand through government intervention is not “basic macroeconomics.” In the long run, only great ideas in a free market create economic growth.

In a recent social media debate, I found myself engaged in a discussion about whether government regulation and intervention can create economic growth and jobs. Readers here won’t be surprised at which side I am on generally with this topic . My opposite interlocutor ended his closing argument with something to the effect of, “government can help to increase the velocity of money (and therefore GDP). Just basic macro.”

“Just basic macro” is how progressive economists and those in never-ending faith in big government view the “expert” technocratic interventions in the market. The basic concept is one in which during market downturns, there can be a multiplier effect that ripples throughout the economy when government spends money. Thus, a $1 spend out of government (read taxpayer) coffers can magically create $3 out in the broader economy, and at least in theory results in economic growth and a positive return to the taxpayer for their “investment” which happens to have been forced upon them via the government’s monopoly on violence (if this statement seems dramatic to you, try not paying your taxes one year and see what happens). A true win-win! However, while this concept may be “just basic macro” to John Maynard Keynes, Paul Samuelson, and Paul Krugman, to the Austrian school economists and those of us toiling away on Main Street, we can grasp a sense of what the elitists in Ivory Towers can’t. To put an economic term to it, these “prime the pump to multiply” government interventionists inevitably always fail to account for opportunity costs. In layman’s terms, opportunity costs are defined as the next best alternative that was not pursued because of decisions to use scarce resources to pursue some other objective end. Very often, the opportunity cost can be larger than the objective end that was ultimately pursued. To use a simple analogy, think of an investor with $1,000 in 2006 who chose to invest in Microsoft rather than Apple. While the Microsoft investment may very well have been positive, it paled in comparison to the return on the investment in Apple. In this scenario, the cost of a foregone opportunity exceeded the option that was actually pursued.

On this topic, I am gaining some great insights as I am slowly and deliberately making my way through Deirdre McCloskey’s incredible book Bourgeois Equality, which is the final installment of a trilogy in which McCloskey sets out to prove a remarkable thesis that can be broadly summarized as follows: the global outlook and economic growth changed dramatically for the better when some geographic regions’ ethics changed substantially in the direction of valuing and dignifying the bourgeois class of traders, merchants, bankers, businessmen, etc. The slow and deliberate pace is due to my desire to fully absorb all of the insights and jot down and highlight the key sections to commit to memory, so to the extent that this post is one-part book review, please don’t let my pace suggest lack of interest in the book or that it is  a difficult and laborious read, because I assure you wholeheartedly that this is far from the case. The thesis is essentially that all of the conventional notions of what caused rapid economic development since the 1800s, such as sound government institutions, development of the rule of law, property rights, the Industrial Revolution, and so on, are all sideshows, byproducts, and/or elements that had long existed in a world in which for most of history, life was nasty, brutish, and short, and which most of humanity lived on a mere equivalent of $3 a day. McCloskey powerfully asserts, backed by an unparalleled mountain of facts and her own research, along with quotes from the global history of economics, sociology, philosophy, and literature, that it truly was the ethics and growth of the bourgeois engaging in open competition, resulting in what she calls “trade-tested betterments” that catapulted us to over 1,000% economic growth (from the $3 a day base) in developed parts of the world. Trade-tested betterments is a term coined uniquely by McCloskey, and is just one of many examples of the creative and brilliant mind of the author. One might mistakenly call what McCloskey calls trade-tested betterment “innovation,” but McCloskey stresses the importance of innovators being forced to face competition and global trade to truly push remarkable and rapid innovation to fuel economic growth. In essence, innovation at its best occurs when we don’t allow trade restrictions and competition, both forces that are inevitably rife when a government intervenes in the market.

McCloskey’s Chapter 16 in her book is titled, Most Government Institutions Make Us Poorer. This chapter resonates with the point of my blog post today and ties back to the debate in which it was declared that government intervention grows the economy and creates jobs as “Just Basic Macro.” McCloskey begins the Chapter with a quote from 19th Century French Economist Frédéric Bastiat that is apropos:

“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….Whence it follows that the bad economist pursues a present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.”

Again – the bad economist ignores opportunity costs, moral hazards, and tramples on the rights of citizens with their arbitrary wealth redistribution schemes.

But what if government technocrats could prove themselves truly capable of beating the next best alternatives? Here is what McCloskey has to say about that:

“The fact suggests that the projects of betterment enacted by governments, compared with voluntary deals made among consenting adults free of force or fraud, will fail, as they regularly have, because they are directed not at general betterment but at enriching special interests at the expense of generality, or merely spending mindlessly what money the government can appropriate under the threat of violence. The modern social-democratic habit of regarding the government as a wise and honest distributor of public goods ignores the unseen, the contents of Swiss bank accounts and the misdirected expenditures in aid of the prime minister’s second cousin, which practices govern most of the world. It supposes that every government is like Denmark’s, New Zealand’s, or Finland’s (which together govern 2 percent of the world) when most are instead like Russia’s, China’s, or India’s (39 percent). In James Madison’s words in 1787, ‘If angels were to govern men, neither external not internal controls on government would be necessary.’ Angles are rare, if unseen.”

McCloskey closes the chapter with a sweeping declaration comparing government intervention and regulation with a free market:

“The relevant comparison is not of some unattainable utopia of perfect trade-tested betterment with actual, imperfect government regulation. It is the comparison of the actual record of liberated trade, and the betterment it has brought to the powerless of the world, with the actual record of populism, fascism, socialism, and thick regulation bettering a few favored groups of the poor, every Party official, and most of the owners of the bigger enterprises able to corrupt the government, all at the expense of the rest.”

Once again, the ignored opportunity costs, the actual historical record of how bad governments are at market interventions (either through regulation or prime the pump spending), and the abuse of power and moral hazards it creates, means we as citizens should be extremely skeptical of these interventions.

Taking a quote from one my my favorite blogs, Cafe Hayekfurther illustrates the point of how Keynesians fail to capture the true essence of economics when they reduce everything to their formulas and theories.

Quotation of the day is from page 40 of Arnold Kling’s excellent new book, published this year, Specialization and Trade: A Re-introduction to Economics (link added):

[Paul] Samuelson and his successors taught that the economic machine had a gas pedal that could be used to avoid economic slowdowns.  That device was “aggregate demand,” which could be increased by the government’s printing money, running a budget deficit, or both. In this economic subfield, known as macroeconomics, the concept of specialization is forgotten entirely.  Instead, economists employ an interpretive framework in which every worker performs the same job, toiling in one big factory that produces a homogeneous output.  Macroeconomics replaces specialization with that GDP factory.

Indeed, it’s not too much to say that macroeconomics in the Samuelsonian-Keynesian mode abstracts away from most of what is essential in economics.  Market processes and entrepreneurial searches for profit; specialization; the complementarity of different capital goods with each other and with labor; the role of relative prices; the reality and importance of institutions; the reality and importance of the fact that politicians are relatively uninformed and self-interested agents. These important aspects of economic and social reality are either ignored or treated haphazardly in too much of what is called “macroeconomics.”

In short – “Just Basic Macro” is shorthand for legerdemain to justify government abuse, power, and expropriation of citizen wealth that in aggregate would have created higher economic growth (especially in the long run) than all the government experts in the world pumping out formulas could ever achieve.

In praise of decentralized government

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I have lived everywhere from a tiny Texas Panhandle farm community, a turkey farm in the rural Ozarks of Missouri, a college town (Gig ’em!), the West Texas border town of El Paso, all the way to the great northeastern communities of Hanover, NH and Boston (a slight difference in size between them),  Kansas City after a brief tour in Orlando, and recently back down to the West Texas city of Lubbock. I have witnessed and lived with many different communities that ranged quite starkly in their habits, ethics, socioeconomics, religion, and political compositions.This has given me a tremendous sense of appreciation for the diversity our great land possesses and the different strengths, weaknesses, and decision tradeoffs that each unique community dealt with, and how they responded to their own local needs. As a result of these peregrinations, it is a marvel to me that we don’t force governments to allow more of our substantial decisions on taxation, education, health, and welfare to the lowest possible level that reflects the unique natures of these far-flung communities. This post, then, is an attempt at defending the idea of taking back more control from our central government and in the spirit of federalism that this nation was founded upon, devolving more of it to the communities in which we live and therefore can more directly influence.  Whereas most of my topics on this blog focus on limiting government in the aggregate, this post is directed at the virtues of decentralizing the government and reducing it to the lowest possible polity possible. With this concept of fostering greater use of decentralized tax and spend policies I hope to someday appeal to my progressive friends under the guise of more freely allowing you to build communities on the model that suits you and to craft them in direct competition to your more conservative cousins. If you hate that democracy and the federal government can result in a Donald Trump ruling over the spoils and levers of government, then by all means, join hands to limit the power of central government and remain free to build progressive communities of your own making. Make San Francisco even better than you believe it to be, since you will send less money to the centralized coffers and can retain it in your own backyard. Obviously, for my part, I would like to believe that being unyoked from the decisions that progressives have taken centralized government since the FDR era that in turn limited and decentralized government communities would thrive and grow into my idealistic vision for communities – vibrant, dynamic, innovative, growing, and combining virtue and charity with competent and accountable local government, which is able to bring more decision making into its remit on account of what the central government has given up. Even poorer communities could make decisions that are more efficient and optimized for their needs, lifting them up faster than any central planner could ever do.

The cataclysmic and visceral reactions to last night’s election got me to thinking about why the Presidential and other federal elections matter so much to us as a people. The simplest of ways to reduce the problem logically is that the stakes are extremely high given how much the two dominant parties and their core adherents are fighting over the spoils of big government. The desires and end goals are quite different, but too often the centralizing mechanisms and controls over the levers of government are the same. Recognizing that there is tremendous power and centralized decision making in everything from military base posture, entitlements, health, energy, education, environment, and many more, it is little wonder that the controlling levers are so bitterly contested. If we want to get out of this cycle of high stakes gambles, we will necessarily have to devolve more of these fought over powers to lower levels of government. Tying this back to my list of locations that I have lived in, this devolution has the great benefit of allowing each of these municipalities to focus on the tax and spend and regulation policies that make sense given its populations and all its attendant mixture of demographics, ethics and philosophical beliefs. Lubbock,TX may need greater focus on their water access to aid cotton farmers while Granby, MO may need greater focus on Farm to Market road to support turkey transport trucks. Pulling back money blindly sent to state and federal programs allows them greater flexibility to focus on their unique needs. Getting more specific, the deliberate decentralization of government has many benefits that I find completely intuitive:

  • Local government is more responsive and accountable directly to its constituents.
  • Centralized government is able to obfuscate and hide what they spend money on and its impact – complexity and unaccountability is the enemy of good governance and the friend of easy corruption and pet projects that favor the connected
  • Individual communities making a wide diversity of tax and spend decisions promotes tremendous competition, which is good for us individuals as “consumers” of places to live and work
  • Individual communities making a wide diversity of tax and spend decisions promotes tremendous experimentation, giving us real-world learning labs of what policies actually work versus those that fail. Contrast that with central government decisions in which if the decision is a terrible one, as they often are (see the second bullet point and then connect the logical dots to Obamacare for a great example), then we all go down in a sinking ship due to the central government’s large ability to own the “monopoly of violence” which does not allow us to opt out of their decisions. Furthermore, such sinking ships oddly have very few people with which we can directly point to as accountable for the decisions and the failures
  • Decentralized government is much more consistent with liberty and freedom and mobility. In a world in which power and decisions are increasingly centralized, we are all subjected to the same standards (witness Common Core as an example). In decentralized models and with the competition promoted therein, if we don’t like the tax and spend policies of one community, then we can move on to the next that may have a mixture of these that we personally favor.
  • Greater individual liberties as a result of decentralized government allows us to pursue more meaningful charitable work in which we see the direct and tangible impacts in our own communities, and this is of incalculable personal, spiritual, and community value. One of the most fundamental frameworks of economics is to always keep in mind the opportunity costs. An opportunity cost is the foregone opportunity that could not be pursued due to a decision. In a simple example, the fact that Dr. Jones has to send 20% of her income to the federal government to have it spent by much less accountable bureaucrats means that that same 20% was not able to be taxed by her local community, county, or state – lower levels of government who are in a progression more accountable to her tax dollar. Taking this all the way to its opportunity cost extension, it means Dr. Jones also can’t directly spend that 20% in her local business, church, or community and can’t devote that portion to the charity of her choosing, where she could have uniquely observed a direct impact that connects the community to her and her to the community, all the while boosting her spirits.

I suspect all of this seems quite straightforward but still leaves us needing specific examples to debate the points. I think some natural areas, to name but just a few in my limited time, that are ripe for debate for decentralization are education, criminal justice, health systems, health payment (i.e. Medicaid block grants), commerce, agricultural policy, and determining the role of private charity versus local municipality tax and spend decisions. Each of these topics could use its own further paragraph about the key differences in philosophy, strategies, and expected outcomes when comparing centralized versus decentralized models, but that will be a topic for another day.


What freedom entails: facing the good and the bad consequences of our decisions

For men and women to be free from paternalistic domination from others and free to make our own choices necessarily means that we are in turn subjected to the vicissitudes and the consequences, for better or for worse, of those decisions. It is a fundamental concept that for us to remain free, we must not in turn be “protected” by government from the downside risk of flawed choices or bad luck. It was in fact this form of “protection” that for centuries kept peasants under the feudal domination of their class superiors – the knights, earls, and dukes under which they served and whom they paid exorbitant rents to. Predictably, famine only ever struck the peasants when harvests failed, while nobles and priests always maintained a relatively bountiful diet. Ostensibly, this was the price to be paid for protection by the lords of the castle and his soldiers and mercenaries. The reality was that for most peasants throughout the ages, the only real danger to their lives was in fact the deprivations of the lords supposedly protecting them.

Alas, for centuries and the better part of human history, this system kept a stable class of hereditary beneficiaries in control of a never growing and largely agrarian-based economic pie. People lived consistently on the modern equivalent of $3 a day and under a Malthusian system in which population growth led to a decrease in individual agrarian and artisanal wages, wages which only rose again the next time a plague wiped out swaths of the population and the supply of labor.  On that note, this never growing economic pie also led to no real advancements in science and medicine, and those frequent plagues (thought for centuries to arise out of miasmas in the sky that needed to be avoided by clustering indoors and blood that needed to be let out of the body – an ignorantly fatal combination) killed noble and peasant alike. In the words of Thomas Hobbes, life for the vast majority of our ancestors’ histories was lived in “continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.” Shakespeare poetically wrote of death as, “the arbitrator of despairs, just death, kind umpire of men’s miseries…” Let me pause for a moment and express my extreme gratitude to have been born into the relative bounty and ease of modern-day American life. Whatever our problems, they pale in comparison to the way humanity lived for thousands of years; well into the 1800s most people lived in these Hobbesian conditions. Many millions of people on earth still reside in dark removes of similar medieval conditions in places such as Somalia and Afghanistan.

Deirdre McCloskey, in her remarkable book, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, makes the above points eloquently and with her unique ability to draw upon an impressive panoply of analogies, anecdotes, and historic intellectual luminaries’ thoughts and writings to buttress her points. I highly recommend the book and credit it with much of my facts (i.e. the $3 a day factoid, Malthus’ theories). In direct contrast to the idea that we as individuals need protection and on the topic of the reality and essential connection between freedom and potential loss, she observes:

“The ideas of equality led to other social and political movements not uniformly adorable. Hannah Arendt remarked in 1951 that ‘equality of condition…is among the greatest and most uncertain ventures of modern mankind.’ Alexis de Tocqueville had said much the same a century earlier. And Scottish equality has a harsh, even tragic side. It entails equal reward for equal merit in a marketplace in which others, by freedom of contract, can also compete. As John Stuart Mill put it in On Liberty, ‘Society admits no right, either legal or moral, in the disappointed competitors to immunity from this kind of suffering; and feels called on to interfere only when means of success have been employed which it is contrary to the general interest to permit – namely, fraud or treachery, or force.’ Yet in the real world, unhappily, if the poor are to be raised up, there is no magic alternative to such competition. An ill-advised and undercapitalized pet store, into which the owner pours his soul, goes under. In the same neighborhood a little independent office for immediate health care opens half a block from a branch of the largest hospital chain in Chicago, and seems doomed to fail the test of voluntary trade. Although the testing of business ideas in voluntary trade is obviously necessary for betterment of the economy (as it is too by non-monetary tests for betterment in art and sport and science and scholarship), such failures are deeply sad if you have the slightest sympathy for human projects, or for humans. But at least the pet store, the clinic, the Edsel, Woolworth’s, Polaroid, and Pan American Airlines face the same democratic test by trade: Do customers keep coming forward voluntarily? Does real income rise?
We could all by state compulsion backed by the monopoly of violence remain in the same jobs as our ancestors, perpetually “protected,” though at $3 a day. Or, with taxes taken by additional state compulsion, we could subsidize new activities without regard to a test by voluntary trade, “creating jobs” as the anti-economic rhetoric has it. Aside even from their immediate effect of making national income lower than it could have been, perpetually, such ever-popular plans – never mind the objectionable character of the violent compulsion they require – seldom work in the long run for the welfare of the poor, or the rest of us. In view of the way a government of imperfect people actually behaves in practice, job “protection” and job “creation” often fail to achieve their gentle, generous purposes. The protections and the creations get diverted to favorites. Laws requiring minority or female businesses to be hired, for example, tend to yield phony businesses run in fact by male whites. In a society run by male whites or inherited lords or clan members or Communist Party officials, or even by voters not restricted by inconvenient voting times and picture IDs, the unequal and involuntary rewards generated by sidestepping the test of trade are seized by the privileged. The privileged are good at that.”

 The implicit conclusion is that while there are unfortunate consequences of freedom and a free market, the alternative is worse. The plea, as McCloskey states in her book’s foreword, is this:  “Perhaps you yourself still believe in nationalism or socialism or proliferating regulation. And perhaps you are in the grip of pessimism about growth or consumerism or the environment or inequality. Please, for the good of the wretched of the earth, reconsider.”

Three simple rules to live by

Do not take what does not belong to you.

Keep your promises.

If you fail to abide by the first two, then you must make just compensation for what you took or what you failed to deliver.

Try to do some good in life.

Within two separate Free Thoughts podcasts on the topic of the philosophical underpinnings of the U.S. Constitution, Dr. Roger Pilon does as remarkable and scholarly of a job as anyone I have ever heard on the topic. He discusses in great depth the intellectual traditions embodied in the Constitution as well as how that has evolved from its originalist and natural law construct over time to something much more expansive and interpretative that has moved significantly away from the original guiding principles of a federal government that is a necessary evil that should be deliberately kept small. It was so small in fact, that in the move from Philadelphia to the new White House in Washington D.C. in 1800, all of the federal government files could be transferred in just 12 boxes. Imagine that! The most salient moment for me is when Dr. Pilon distills all of the Constitution and the philosophy behind it into four simple rules for us to live by, which are quoted above.

The first rule is the concept of property rights and rights to be free from physical harm and is embodied most visibly in the opening words to the Declaration of Independence. The second rule is the concept of rights of contract and enforceability of contracts that are freely entered into by citizens. The third rule is based upon the concept of remedies and justice and is essential in upholding the first two as general principles, allowing us to retain trust in the good of fellow man and of just redress if they happen not to be good. The fourth rule is something that Dr. Pilon indicates is entirely optional. If we are to retain our essential freedom and a true good and virtuous nature, we can’t be compelled to do good. However, a preponderance of people doing good seems to be the most secure way in which to uphold a free society and thus ensuring that government does not grow in scope inexorably. As Benjamin Franklin indicated – we have a Republic, if we can keep it. It increasingly seems to be appropriate, given how large and arbitrary our federal government has become, to say that we had a Republic, and we have the blueprint for how to get it back, if we want it bad enough.


“The Silly and Harmful Drug War”

Drug Venn

Economist Dan Mitchell captures my sentiments precisely on the issue of the illegalizatoin and prosecution of drug offenders in a recent blog post. His introduction is a succinct summary that I align with:

I’m not a fan of the War on Drugs, even though I’m personally very socially conservative on the use of drugs. Regardless of my individual preferences, I recognize that prohibition gives government the power to trample our rights, that it is borderline (if not over-the-line) racist, and that it leads to horrible injustices.

I’d much prefer for law enforcement resources be allocated to fighting crimes that actually have victims.

Mitchell then goes on to describe how drug illegalization is not only expensive, it is economically counter-productive. Expanding on this, my own additional thoughts on the matter is focused on the strain of social conservatism that opposes drug legalization strictly on moral grounds, which makes it philosophically impossible for them to support legalization as any sort of priority. My counter argument is that there is moral logic to overturning current illegalization approaches that should allow even social conservatives to not have to look at their shoes when professing support for drug legalization. This does not have to be translated into support for the idea for drug use per se, think of it as more of an endorsement in support of compassion for those who get trapped in a cycle of addiction and further support of policies that are actually more effective at getting them out of that cycle. Additionally, think of it as defense of individual liberty and freedom when individual choices do not cause others harm. True crimes and prosecutions should have a victim. In my opinion, the potential and evident harm of power ceded to the government to prosecute this issue is far more problematic than actions of individual choices made by drug users. It is clear from decades of experience that to criminalize drug users’ behavior through aggressive use of the justice system is not only tremendously expensive, it is inhumane and places people into a spiral of poverty, recidivism, and subjugates people guilty of what ultimately amount to minor offenses against society into a prison system that is a veritable petri dish for spawning more malignant forms of lifelong crime.

To put it bluntly, I would submit that there is an inherent immorality in stances that support locking up people for years over drug use and immorality in policies that ultimately support and enrich murderous drug gangs that benefit from inflated drug prices that criminalization fosters. Would it not be far better to spend our justice system and prison dollars on actual hardened criminals rather than locking up drug offenders, a policy which tends to turn more benign people in need of charity and help into the very hardened criminals we are presumably seeking to numerically reduce?

If we want a role for the state in combating drug use, we should spend it on abstinence, mental health, and drug recovery and rehab programs that are far more compassionate and effective as well as less prone to creating hardened criminals who are much more difficult to redeem later on. An added bonus is that this approach is less costly and less prone to creating government abuses.

“Socialism is for the Uninformed”

Sanders.PNGThomas Sowell makes a compelling case for going beyond surface level platitudes and shibboleths being all that it takes to realize that socialism can’t possibly work and that all evidence of countries that have tried a planned and wealth confiscatory approach have all failed. After making the case through some examples and counterpoints to the Sanders’ socialist agenda, Sowell delivers my favorite quote from the article, “None of this is rocket science. But you do have to stop and think — and that is what too many of our schools and colleges are failing to teach their students to do.”

“Protectionism is Economic Terrorism”

While the analogy may seem a bit sensational, I urge the reader to hear Don Boudreaux from Cafe Hayek out on this thought.

The fundamental concept is confusing wealth and scarcity of select groups (i.e. steelworkers) with wealth at large for society. The same economic fallacy would be similar to assuming that if terrorists struck our water supply, thereby making sellers of bottled water and water engineers that can figure out how to overcome the problem better off and more wealthy, that would somehow make society at large better off. The logic easily fails in both scenarios, it is just more obvious and mentally repugnant in the second scenario.

“The GOP’s Mexico Derangement”


Bret Stephens has a biting critique of the GOP in his recent Wall Street Journal op-ed. Stephens, as ever, is able to criticize the party that he aligns with most often with eloquence and forcefulness that I admire. The GOP’s myopia and fixation, to say nothing of the lack of economic soundness and adherence to liberty, small government, and plain moral decency – was a primary source of frustration of mine with the party long before the rise of Trump. The combination of stances on immigration, free trade, and Trump are the main reasons I will be casting a Presidential Libertarian ballot this election season.

Some of the piquant highlights of the article, in which Stephens addresses common canards leveled against Mexico and Mexican immigration are as follows:

Mexico is a failed state. Mexico’s struggles with drug cartels—whose existence is almost entirely a function of America’s appetite for dope—are serious and well known. So are its deep-seated institutional weaknesses, especially the police forces that collude with the cartels and terrorize rural areas.

Then again, Mexico’s 2014 homicide rate of about 16 murders per 100,000 means that it is about as dangerous as Philadelphia (15.9) and considerably safer than Miami (19.2) or Atlanta (20.5). Are these “failed cities” that you don’t dare visit and that should be walled off from the rest of America?

Mexico steals U.S. jobs. Donald Trump recently resurrected this chestnut by inveighing against Nabisco and Ford for shifting production to Mexico from high-cost Illinois and Michigan. Never mind that one reason Ford made the move was to take advantage of Mexico’s free-trade agreements with the European Union and other countries, meaning that opposition to free trade is the very thing that drives business abroad. Then again, Mexico is the second-largest purchaser of U.S. products; the Wilson Center’s Christopher Wilson has estimated that “six million U.S. jobs depend on trade with Mexico.” That is especially true for border states. ‘Mexico is the top export destination for five states: California, Arizona, New Mexico, Texas and New Hampshire, and is the second most important market for another 17 states across the country.’

Illegal immigrants are a drain on the system. This whopper should be sold at Burger King, since illegal immigrants pay billions in state and local taxes, along with about $15 billion a year to Social Security—the benefits of which they are unlikely ever to get back. Entire U.S. industries, agriculture above all, depend on illegal migrants, without whom fruits and vegetables would simply rot in the field.

If there is a drain, it’s Mexicans going home—roughly one million returnees between 2009 and 2014, according to the Pew Research Center, outpacing the number of Mexicans moving north by about 140,000. That owes something to growth and stability in the Mexican economy, which is largely a function of the North American Free Trade Agreement.

This makes Mr. Trump’s opposition to Nafta all the more misjudged. Without it, Mexico could easily have become Venezuela, run by an Hugo Chávez-like strongman, that would have posed a real threat to U.S. security, as opposed to the one in Mr. Trump’s imagination.


Government dysfunction so blatant even a progressive calls it out

I’m a progressive, but it seems plausible to wonder if  government can build a nation abroad, fight social decay, run schools, mandate the design of cars, run health insurance exchanges, or set proper sexual harassment policies on college campuses, if it can’t even fix a 232-foot bridge competently. Waiting in traffic over the Anderson Bridge, I’ve empathized with the two-thirds of Americans who distrust government. – Larry Summers

In one of my favorite blogs, Grumpy Economist, economist John Cochrane rather gleefully points to a recent frank admission by Larry Summers in his awakening to the validity of points made by conservatives and libertarians of their distrust of big government takeovers of massive swaths of the economy. This soft mea culpa was induced by his front-row seat to the dysfunction and multi-year long ineptitude and inability to repair a dilapidated bridge.

It isn’t that all of us of the limited government bent are reflexively loathing of government involvement in its properly limited spheres, of which infrastructure would presumably be one. I was in the Army after all, and I hardly advocate for privately paid and financed militias ala Hezbollah. It is just that there is rightfully a great amount of skepticism that funds taken and crowded out from the private sphere will be invested wisely or effectively in the public sphere given all that we have witnessed in America in the last few decades.