Category Archives: Political Animals

Aristotle – The Politics

Aristotle – The Politics

Another fundamental work in its discipline. Despite never having read it until now, it still felt like review. This may be because it has influenced every major work since. Aristotle goes through the positives and negatives of the three major forms of government: monarchy, aristocracy, and democracy.

Drawing from The Nicomachean Ethics and its emphasis on moderation, Aristotle prefers the mean version of each type of government to its extreme versions. Ever the taxonomist, Aristotle spends a good chunk of the book discussing weak, medium, and strong variants of all three forms of government.

Aristotle also takes a stab at constructing his ideal state, though not to the same level of detail as his teacher Plato did in The Republic. In line with the times, Aristotle has only a grudging acceptance of trade and commerce, arguing for ports to be built at a distance from the polis to keep moral degradation away, and to trade only for things the polis cannot produce for itself.

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Aristotle – The Nicomachean Ethics

Aristotle – The Nicomachean Ethics

Aristotle’s major work on ethics. It was named for either Aristotle’s son or father, who were both named Nicomachus. Basically lecture notes from his classes, this later work supersedes the earlier Eudemian Ethics. The major theme here is the golden mean. Courage lies between cowardice and rashness; liberality lies between being a cheapskate and a spendthrift; moderation in all things.

Aristotle’s views on slavery, women, and a few other topics show this work’s age. But the overall impression is one of human decency, if with a somewhat stiff and formal demeanor. Closely connected with The Politics, which was written later, The Nicomachean Ethics focuses mostly on the individual and those close to him. The Politics applies similar thinking outward to larger social and political life. Unlike many modern political combatants, Aristotle thought ethics and politics to be related.

What Do the Midterms Mean for Trade?

Trade was a highly contentious issue during President Trump’s first two years. He has doubled tariffs, other countries have enacted equivalent retaliatory tariffs, and tensions are unlikely to ease anytime soon. This unease will not change under a newly divided Congress. The midterm elections will have significant implications for trade policy in the short, medium, and long runs.

The biggest short-term question will be what happens to the renegotiated NAFTA, called the United States-Mexico-Canada (USMC) Agreement. Congress is currently in the middle of a 90-day window to vote on the revised agreement, but Republicans are lukewarm on it. Many Republicans share economists’ skepticism of President Trump’s trade protectionism. At the same time, they are reluctant to buck a Republican president—some Republicans have even gone one further and reversed their stances on trade and other issues in deference to the president. Lame duck Republicans will likely punt to the next Congress in an attempt to avoid cognitive dissonance.

That’s where the new Democratic House majority comes in. The new NAFTA/USMCA changes very little in terms of actual trade policy. But it has significant symbolic value as a political victory for President Trump. Democrats would love to deny Trump this victory. But they will also be reluctant to cause further tensions with Canada and Mexico’s governments, staunch allies which endured many slights during the negotiating process, both domestically and from President Trump. They would like to have something to show for their indignities, even if it’s just getting President Trump out of their hair for a bit. This could push foreign policy-minded Democrats in favor of passing NAFTA/USMCA. At this point, it is hard to predict which impulse is stronger.

This is also partially because Democrats are just as divided as Republicans on trade issues. Traditional Democrats often favor a more-or-less open approach to trade, not terribly different from the average pre-Trump Republican. The original NAFTA and the creation of the World Trade Organization happened under Bill Clinton, and President Obama signed about half a dozen trade agreements that liberalized trade on net. Going further back, President Kennedy signed a major trade bill in 1962 that led to a successful round of international negotiations bearing his name that sharply reduced tariffs around the world. Franklin D. Roosevelt’s Secretary of State, Cordell Hull, presciently argued that if goods do not cross borders, soldiers will.

Democrats have slowly become more protectionist in recent years, with Sen. Charles Schumer (D-NY) even arguing for a 27.5 blanket tariff against Chinese goods in the mid-2000s. This makes him roughly 2.5 percentage points different from President Trump, which sounds about right. But Trump’s vocal advocacy of government-managed trade has pushed many Democrats somewhat back towards the free trade side.

At the same time, the party’s labor and environmental wings tend to oppose free trade. Labor interests often see protectionism as a rent-seeking opportunity to kneecap competitors. Many environmental activists reflexively oppose policies that create wealth and development. The party’s ideological left flank also tends towards protectionism; Sen. Bernie Sanders (I-VT) is uncomfortably similar to President Trump on trade.

In the medium term, between now and the 2020 election, President Trump hopes to pursue trade agreements with the United Kingdom, European Union, and Japan. As with NAFTA/USMCA, House Democrats will be eager to deny President Trump a political victory. The question is whether Democrats can overcome their own protectionist elements enough to be an effective opposition party.

The biggest long-term policy that could come out of the new congressional alignment is similar to the biggest possible upside to regulatory reform: a renewed separation of powers. Under the Constitution, only Congress has the power to tax. But Congress delegated away much of its tariff-setting authority to the president during the 1960s and 1970s. That is how President Trump was able to enact so many tariffs without congressional input. Democrats should rein in a too-powerful executive branch and reclaim Congress’ intended constitutional taxing authority.

Trade will be a busy issue for at least the next two years. Unlike their Republican colleagues, the new Democratic House majority can be an effective check against President Trump’s government-managed trade policies. But they have to keep their own populist impulses in check in order to do so effectively. Perhaps Iain Murray’s and my “Traders of the Lost Ark” can serve as a guide, as well as excellent primers by Don Boudreaux and Pierre Lemieux.

What Do the Midterms Mean for Regulatory Reform?

A divided Congress probably means the status quo will reign on regulation. This is a mixed bag from a free-market perspective. President Trump made some positive reforms upon taking office, but they were via executive order, and can be easily overturned by a future president—Congress needs to pass legislation to give reforms any staying power. Barring a lame duck miracle, that won’t happen now. Republicans blew a rare opportunity.

President Trump’s executive order reforms include a one-in-two-out rule for new regulations, and a requirement for agencies to add zero net regulatory costs—a de facto regulatory budget, which the Competitive Enterprise Institute has been advocating for more than 20 years. Agencies are not exactly transparent with their data. But based on what we do know, it’s possible that total regulatory burdens have not only stopped growing, but might have even gone down by as much as 1 percent over the last two years.

The main reform priority is the rulemaking process itself. It’s nice to get rid of this or that unfair, obsolete, or burdensome rule, but those are just symptoms. The root problem is the process that allows such regulations through in the first place. Better results require better rules. This cannot be overemphasized.

Congressional Democrats mostly oppose process-level regulatory reforms. Legislation to make recent reforms permanent, or enact further reforms, are unlikely to pass on their watch. But there is one long-running trend that should bring at least some Democrats over to reformers’ side: separation of powers.

Over the last several decades, Congress has slowly but steadily delegated away more and more of its legislative powers to executive branch agencies. Congress will usually pass a little more than 100 bills in a given year; agencies will issue more than 3,000 regulations. Considering who currently runs the executive branch, congressional Democrats are more open than usual to pleas for a more healthy separation of powers, and increased executive branch transparency. This is only a possibility, but well worth pursuing.

At a more concrete level, House Democrats will be unable to legislatively undo President Trump’s executive orders; the GOP Senate won’t allow it. At the same time, if the Senate passed reform legislation, the House wouldn’t let it through. What one hand giveth, the other taketh away.

Even so, it is important to reintroduce reform bills such as the REINS Act, Regulatory Accountability Act, Regulatory Improvement Act, and more. They will almost certainly not pass in the 116th Congress. But keeping the reforms alive in ready legislative form will make them easy to pass if political wins change, and provide opportunities for constructive dialogue about the importance of process reform, transparency, and the separation of powers—concepts which apply to issues far beyond regulatory reform.

In short, when it comes to regulatory reform in the next Congress, not much will happen. But there is much to do.

There’s a Metaphor in There Somewhere

DCist: The National Zoo’s Naked Mole-Rats Still Have Not Chosen Their Queen

Slogans and Nationalism

A passage from p. 562 of Ian Kershaw’s Hitler: 1889-1936 Hubris contains an interesting political slogan:

He was replaced by Wolf Heinrich Graf von Helldorf, up to then police chief in Potsdam, of Saxon aristocratic descent, former head of the Berlin SA, with a reputation deeply sullied by scandal about his financial affairs and private life, but–compensating for everything–a radical antisemite who, the Propaganda Minister reckoned, would help him ‘make Berlin clean again’.

Minimum Wage Proposal Divides D.C. Workers, Voters

Washington, D.C. has a $12.50 per hour minimum wage, increasing to $13.25 on July 1. But for tip-earning workers, such as servers and bartenders, the minimum is $3.33 per hour ($3.89 as of July 1)—tips are supposed to make up the difference. And if they don’t, then employers make up the shortfall. Ballot initiative 77, due for a vote on Tuesday, would raise tipped workers’ minimum wage to match non-tipped workers’ minimum wage in steps through 2026. It would also index D.C.’s minimum wage to the Consumer Price Index so it would automatically annually increase after it reaches $15.00 in 2020. The proposal has divided the restaurant community.

Both sides have good points. Some restaurant owners favor a set wage because it gives them more stability in planning their costs. Some workers prefer that arrangement, too. They know, coming into work, roughly how much they’ll make on a given shift.

But some restaurant owners would rather pay the low wage, even if they sometimes have to randomly supplement it if business is slow or customers are stingy tippers. It lets them print lower prices on their menus, and there can be tax advantages in reporting lower wages. And some servers also prefer lower wages with higher tips because they walk out of work every night with cash in their pocket. They don’t have to wait two weeks for a paycheck. And if they go the extra mile for a good customer, tips can be very lucrative.

So who’s right? They all are. And that’s why ballot initiative 77 is a bad idea. It’s anti-choice.

Restaurateurs and their employees should be allowed to agree on any working arrangement they both see fit. Nothing is stopping restaurants from having a policy of paying its servers a higher wage and discouraging tipping. If that’s what some people prefer, they should be free to choose it, and are. And if some restaurants and workers prefer the low wage/high tip model, they should be free to pursue that, too. The choice should be made by people, not by legislation.

Customers are just as divided. Some prefer walking into a restaurant knowing that what’s printed on the menu is what they’ll pay. Others prefer being able to reward good service with a high tip, or repay bad service with a small tip. Everyone’s different. And they shouldn’t all be shoehorned into one model.

As for the other part of ballot initiative 77, indexing the minimum wage to inflation so it automatically goes up every year—voters should tread carefully. Some workers will benefit, but at a cost to others. Hour cuts, firings, workers never hired at all, non-wage benefit cuts, cuts to on-the-job perks like free parking and meals, and more are all unintended consequences that follow minimum wage hikes. Iain Murray and I have written about those tradeoffs here and here.