Saturday, February 14, 2009

Why I Hate Presidents Day

This coming Monday (February 16, 2009) is Presidents Day. This is the federal holiday that honours George Washington (born February 22) and Abraham Lincoln (born February 12).

Certainly these two men are worthy of remembrance. Washington was instrumental in the founding of this nation. The independence declared by Adams and Jefferson meant little if not defended in the field by Washington. Washington's prowess as a general may be debatable, but he indisputably accompolished an amazing feat. Largely through force of will; he was able to keep a small rag-tag army in the field against what could only be described as the super power of the 18th century; maintain morale; and prevail despite shortages of food, clothing, weapons, and other equipment. Under our current Constitution, Washington was the first President of the United States. But more than being first, Washington set an example for the others to follow. Washington's example is his great gift to our nation. In the history of mankind, generals who lead revolutions usually seize power (Caesar, Napoleon). After victory at Yorktown, Washington resigned his commission, disbanded his army, acknowledged the political supremacy of the Continental Congress and went home to Mount Vernon. For this, King George III called him, "the greatest man in the world." The American Revolution was fought for the principle that no one man should rule with absolute power. Washington could have destroyed that principle and ruled as a popular, perhaps even just, king, but he did not. After the Constitution was ratified, Washington was concerned about the powers invested in the Presidency and therefore limited himself to two terms. Again, he voluntarily relinquished power that no one would have begrudged him. In so doing, he set a precendent that every future President followed until FDR. Regardless of whether or not you believe FDR's legacy is a positive one, certainly a number of his supporters must have taken pause at his virtual lock on the Presidency because after FDR the Constitution was ammended to enshrine Washington's wisdom into law and limit Presidents to two terms.

Lincoln was arguably the most able President in the history of this country. No President has been handled a greater challenge than civil war. Lincoln's courage and fortitude held this nation together. His actions are not without controversy. His means may have been, at times, questionable. But, his legacy is a United States that remained united and whole and cleansed of the stain of slavery. Emancipation set the ground work for people of colour ultimately to share in the Jeffersonian ideal that all are created equal.

Why then do I hate Presidents Day? When I was a child, the holidays were separate: Washington's birthday and Lincoln's birthday. I can understand the desire to consolidate the two rather than have two holidays so close together, but the problem I have with President's Day is that in renaming it, the great legacy bestowed on our country by these two men gets lost. It should be a day for remembering the great gifts of Washington and Lincoln to our nation, not a day for buying cheap mattresses. Invariably, use of the term Presidents Day conjures up images of Mount Rushmore and other Presidents. We as a nation should be grateful for the contributions of Washington and Lincoln, not reminded of the irrelevance of Millard Fillmore, the corruption of Richard Nixon, the lechery of Bill Clinton, or the incompetence of George W. Bush. If it has to be one holiday, why not Washington-Lincoln Day, instead of Presidents Day?

Monday, February 9, 2009

Trade

We are in difficult economic times. The collapse of the housing bubble has had repercussions in other aspects of the economy. Banks, faced with default mortgages, are now unwilling to lend. With capital frozen, business cannot expand or grow. Hiring freezes, and employees are let go to cut costs. In this climate, everyone looks to government to create jobs and protect jobs. Populism and protectionism become popular.

This is evident in the creation of the current economic stimulus package that is being debated on Capitol Hill. The House and the Senate have passed two different bills, which must be resolved in conference committee. The House version contains, “Buy American,” clauses to insure that the government money spent will go to American businesses, buy only American products and, “protect,” American jobs.

It is easy to understand why such measures might be popular in these economic times, but they are extremely short sighted. No one makes an effective argument for truly free trade. Trade proponents argue that it creates jobs, opponents point to the jobs lost. The truth is, in any free and competitive market there will be winners and losers. This gives each side examples to point to, but confuses the public at large that is trying to decide, on balance, whether open trade or protectionism would be better.

However, these, “practical,” arguments about whether free trade costs or creates jobs miss the larger moral issue at stake. What defines a free society is freedom of choice. Our Constitution enshrines some freedom of choice in the First Amendment – our government is not allowed to dictate what you can say (or think), cannot prevent you from assembling peacefully, and cannot tell you what to believe or what god to worship. True liberty, however, requires that this freedom of choice extend to economic activity as well. What empowers consumers is having multiple businesses providing goods and services competing for the consumers' business. The consumer then can choose amongst various options the product he or she judges is of reasonable quality and/or a reasonable price. Monopolies or trusts exploit the consumer by denying choice and either force the consumer to accept inferior quality or charge the consumer exorbitant prices. The competition of a free market prevents this economic exploitation.

Protectionism similarly exploits consumers. Freedom and both political and economic power are maximized when the consumer has more choice. Limiting access to foreign goods, or subsidizing domestic ones, or inflating the prices of imports through tariffs, limits choice and forces the consumer to accept higher prices than the market would otherwise bear. What helps a narrow segment of the population (those that work in the industry being protected) exploits everyone who consumes goods and services and hurts us all. Economic freedom of choice is so crucial to liberty that, in the same sentence of the Declaration of Independence that charges King George III with the tyranny of taxing the colonies without representation, Jefferson also labelled George III a tyrant, “for cutting off our trade with all parts of the world.” It is no less exploitive to restrict consumer’s access to the fullest selection of goods and services today through trade barriers as it was in Mr. Jefferson’s day or when the lord of the manor would insist that all his serfs use the lord's mill exclusively.

Furthermore, economic protectionism is no longer practical in the 21st century. The world and the U.S. economy have changed over the last century. The airplane, the telephone, the cellular phone, the computer, the internet, and broad-band internet access have made the world smaller. The world is now, to borrow Tom Friedman’s phrase, flat. It is now much easier to market goods and services to all parts of the globe, buy from and sell to all parts of the globe, and collaborate with others in every corner of the world. These technological innovations make it impossible to build a wall around fortress America and remain internally self-sufficient. As developing countries can manufacture simpler things less expensively, our economic growth depends on being a center of innovation for the new goods and services of tomorrow. We cannot continue to do that unless we take advantage of the same tools – a worldwide talent pool and the ability to maximize profit by outsourcing tasks that others do better or less expensively – as our competitors will. The truth is, we have no business manufacturing something if we can’t make it better or cheaper and we will need to have open access the world’s resources if we are to continue to innovate. This means our workforce will have to have more flexible skill sets and gone are the days where working on the same assembly line provides a lifetime of job security. This is neither bad nor good, it simply is. Our policies must reflect this reality and trying to protect the industries of the 20th century, burying our heads in the sand, will lead to a long-term lack of competitiveness that stunts our economic growth and allows competitors to pass us by. Buy American provisions will simply encourage others to close their markets to our goods and services and lead to escalating trade wars that will deprive us of the competitive advantages and opportunities of full participation in the global marketplace.

The Buy American provisions in the economic stimulus package are a poison pill that threatens our liberty and long-term economic prosperity. President Obama has voiced his disapproval of these provisions, but if they remain in the final bill, they will prove and interesting test of the new President’s leadership. If such provisions are in the final bill, President Obama should veto it. President Clinton took on elements in his own party when he promoted NAFTA, can President Obama do the same? If these provisions are in the final bill, will President Obama have the political courage to veto a stimulus package that most of the country believes we need in the face of the economic crisis and ask Congress for a new bill without these provisions? I, for one, certainly hope so.