Ex-Im Bank Reauthorization: Major Victory against Cronyism, Despite Setback

Nobel laureate economist Ronald Coase wrote in his 1975 essay “Economists and Public Policy” that “An economist who, by his efforts, is able to postpone by a week a government program which wastes $100 million a year (which I would call a modest success) has, by his action, earned his salary for the whole of his life.” By Coase’s measure, the Ex-Im fight that began in 2014 was an enormous success, despite the coming reauthorization setback.

Based on data available in Ex-Im’s annual reports, this fight over a relatively small agency was worth $47.9 billion of dollars in reduced Ex-Im activity from 2014-2018. This reduced taxpayer risk exposure by an average of nearly $12 billion per year. Moreover, this figure assumes Ex-Im activity would have remained constant without the shutdown and board quorum fights of the last five years. Agencies tend to grow, so $47.9 billion in savings is likely an underestimate.

By another measure, the size of Ex-Im’s total portfolio went from $112.3 billion in 2014 to $60.5 billion in 2018, reducing taxpayer exposure by a total of nearly $52 billion, or an average of just under $13 billion per year. If this much in savings can come from temporary activity reductions in one agency, savings from successful permanent reforms of larger agencies could be substantial.

The free-market movement deserves a lot of credit for one of its biggest victories in recent years. Veronique de Rugy at the Mercatus Center, Bryan Riley at the National Taxpayers Union, Daniel Ikenson at the Cato Institute, Diane Katz at the Heritage Foundation, and many others have been tireless in their advocacy against cronyism, and pushing for a pro-market, rather than a pro-business, approach to policy.

While this month’s reauthorization is a setback, there is still a chance to enact some helpful reforms. Moreover, the fight is not over. Ex-Im will also require another reauthorization in a few years’ time, which will be another opportunity to finally end an 85-year old monument to cronyism.

The whole paper is here. For a short summary of the main findings, a press release is here.

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Price Controls and Health Insurance

I’m quoted in a Fox News piece about Democratic presidential candidate Pete Buttigieg’s health care plan:

Ryan Young, a senior fellow at the Competitive Enterprise Institute, told Fox News that consumers would continue facing high costs even with reduced premiums. on Thursday. “Their lower premiums would not reduce health care costs, either. They would have to be made up for with some mix of higher taxes, increased debt, lower health care quality, slower innovation, and reduced availability. Price controls are not a free lunch,” he said on Thursday.

The article is here. Similar arguments apply to other candidates’ proposals from both parties, which mostly tinker around the edges of a system already mostly built around third-party payments intended to insulate costs.

Bernard Bailyn – The Ideological Origins of the American Revolution

Bernard Bailyn – The Ideological Origins of the American Revolution

This 1967 book has long been a Cato Institute favorite, and had been on my to-read list for years. It was particularly influential on Gene Healy’s Cult of the Presidency, which makes a compelling case for reining in an executive branch that has grown proportionally too powerful compared to the legislative and judicial branches.

Bailyn is a very detailed writer; his more recent The Peopling of British North America: An Introduction is so filled with minutiae in its chapter-by-chapter crawl of the different regions of North America’s east coast takes almost as long as the actual journey. Ideological Origins of the American Revolution is much livelier in comparison. It opens with a close look at the origins of pamphlets as a medium, in Bailyn’s usual microscopic detail, discussing everything from page size to word counts to stylistic conventions—yet it’s genuinely interesting, and difficult to put down.

Other themes get similar treatment, but Bailyn always keeps in mind the bigger picture; there is method to his madness. Along the way I was surprised to learn of John Adams’ skepticism of Montesquieu, who inspired many revolutionary ideas. Adams, ever practical, thought Montesquieu’s thought too theoretical and idealized. Bailyn also offers insights into the debates over when rebellion was a legitimate course of action (Locke was not the only inspiration); the rejection of rigid European-style social hierarchy and titled nobility; slavery; freedom of religion; and more.

Robert Penn Warren – All the King’s Men

Robert Penn Warren – All the King’s Men

As CEI founder and Louisiana native Fred Smith likes to say, “In Louisiana, we don’t expect our politicians to be corrupt. We insist on it.” Warren’s famous novel is a lightly fictionalized biography of Huey Long, the famous Louisiana politician. While raucous and entertaining as a personality study, this novel also helps to take some of the bloom off the rose of the type of people who run for political office. Huey Long was an exaggerated character, and Warren’s fictional Willie Stark is a an exaggeration of an exaggeration. But the difference between such men and more everyday political types is more a matter of degree than of kind.

Also revealing is the way people enabled, rationalized, and defended Stark’s flaws and the hurtful things he said and did to people throughout the novel. Similar things happen today with famous people from athletes and entertainers all the way up to presidents.

Washington Examiner: Close Ex-Im, Two-Year Reauthorization, Tops

The Washington Examiner has an excellent editorial opposing Export-Import Bank reauthorization, citing my recent paper:

Their bill would reauthorize Ex-Im for an unprecedented 10 years. This is a blatant effort to avoid reform and scrutiny from Congress. As the Competitive Enterprise Institute pointed out in a new paper on the Cramer-Sinema bill, “Ex-Im-related legislation would likely almost never appear on the congressional calendar if occasional reauthorization did not require it to.”

It also argues for a two-year reauthorization cycle, rather than 10 years–while noting that closing the bank altogether would be best. Read the whole editorial here.

Hesiod – Works and Days, Theogony, The Shield of Heracles

Hesiod – Works and Days, Theogony, The Shield of Heracles

Homer and Hesiod are generally ranked Nos. 1 and 2 in the annals of pre-Periclean Greek poetry. The competition is not a close one, and it does not favor Hesiod. His works still had significant historical influence, and have plenty of merit. The Works and Days takes the guise of a letter in verse to Hesiod’s brother Perses. They jointly inherited a farm, and Perses was something of a wastrel. Hesiod tries to convince his brother of the virtues of temperance, hard work, and thrift, while invoking a love of the land, open air, and the agricultural lifestyle. Hesiod’s poem probably felt almost as homiletic and old-fashioned in its own day as it does in ours.

The Theogony is probably as close as Greece ever came to a definitive family tree for its gods. Greek religion was more malleable than most modern religions, and pantheons varied from place to place, integrating with local gods in hodge-podge fashion as Greek colonists moved around the Mediterranean. This process of mixing religions together, called syncretism (think of it as a portmanteau of “synthesizing creeds”) is an early example of spontaneous order in history. I drew on the Theogony in an unpublished working paper I wrote back in grad school that one day, time allowing, I would like to revise and publish somewhere. Revisiting the poem more than a decade later was a genuine treat.

The other important concept in Hesiod’s Theogony is its deterministic view of history. In this case, the trajectory is ever downward, moving from divine to human. A Golden Age degrades to silver, then bronze, all the way down to a Heroic Age (think Perseus, Icarus, et al.) and today’s Age of Iron, where human beings live. Whereas gold shines forever, iron rusts and breaks over time.

This view of history as a series of stages that progress inevitable and in a certain order was the dominant view all over the world before modern times—though it varied in its particulars from civilization to civilization. Such a teleological view—moving inexorably to a certain end—is also familiar to Marxist thought. The common theme of post-Hesiod history was a rejection of progress. There was stability, the rhythm of seasons or dynasties, and often a gradual decline. But there was no sense of progress. This idea would not enter public consciousness in a meaningful way until the Renaissance, and would play a starring role in the modern prosperity we enjoy today. We should be thankful that Hesiod’s historiography is a relic, rather than current thinking.

The Shield of Heracles is Hesiod’s best literary accomplishment. His descriptions of the illustrations etched onto Heracles’ shield are described in beautiful detail, and allow Hesiod to tell the most famous stories of Heracles’ life and labors. Unlike Hesiod’s other works, instruction takes a back seat to beauty.

This Week in Ridiculous Regulations

Congress returned from recess, the Democratic presidential candidates had a debate, and the 2019 federal deficit topped $1 trillion with a month left to go in the federal fiscal year. Meanwhile, rulemaking agencies published new regulations ranging from Kaspersky Lab services to Foskett speckled dace.

On to the data:

  • Last week, 88 new final regulations were published in the Federal Register, after 51 the previous week.
  • That’s the equivalent of a new regulation every one hour and 55 minutes.
  • Federal agencies have issued 2,079 final regulations in 2019. At that pace, there will be 2,920 new final regulations. Last year’s total was 3,367 regulations.
  • Last week, agencies published 413 notices, for a total of 15,205 in 2019. At that pace, there will be 21,356 new notices this year. Last year’s total was 21,656.
  • Last week, 1,431 new pages were added to the Federal Register, after 1,240 pages the previous week.
  • The 2019 Federal Register totals 48,545 pages. It is on pace for 68,125 pages. The 2018 total was 68,082 pages. The all-time record adjusted page count (which subtracts skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Four such rules have been published this year. Six such rules were published in 2018.
  • The running cost tally for 2019’s economically significant regulations currently ranges from savings of $4.30 billion to $4.44 billion, mostly from estimated savings on federal spending. The 2018 total ranges from net costs of $220.1 million to $2.54 billion, depending on discount rates and other assumptions.
  • Agencies have published 47 final rules meeting the broader definition of “significant” so far this year. 2018’s total was 108 significant final rules.
  • So far in 2019, 352 new rules affect small businesses; 15 of them are classified as significant. 2018’s totals were 660 rules affecting small businesses, with 29 of them significant.

Highlights from last week’s new final regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.