Can Trump Top Carter's Deregulatory Wins?

At RealClear Markets, economist David Ozgo wonders if Trump can "become the next Jimmy Carter."

I am old enough to shudder from memories of inflation -- and economically literate enough to wonder if a demolition of tariffs anyone can understand is on tap.

Wrong.

Ozgo is writing a positive piece on Carter's underappreciated work as a deregulator, and includes analysis of how deregulation unleashed the potential of several major sectors of the economy:

The Airline Deregulation Act (ADA) was equally revolutionary in its impact. While Federal Express began in 1971, deregulation was deemed so important to founder Fred Smith that he eventually turned over day-to-day operations to subordinates and moved to Washington, D.C. to lobby full time for airline deregulation. Once the ADA was passed it allowed FedEx to purchase larger planes, move into more markets and allowed it to become the company we know today.

Freight is important. But, people are the most important cargo carried by any mode of transportation. The ADA allowed price competition, opened new routes and allowed new entrants into the domestic airline market. Since the ADA's passage the number of domestic passengers has grown more than fourfold from only around 200 million annually in the mid-1970's to over 850 million by 2022. By contrast, since 1975 the U.S. population has only gone up by 55%. We might all complain about getting stuck in the middle seat, but deregulation has made air travel possible for millions of Americans. [bold added]

It is hard not to get excited about what more deregulation might accomplish after Ozgo's whirlwind tour.

That said, my excitement is dampened by my impression that Trump's pledge to deregulate isn't accompanied with a legislative agenda, and that Trump resembles Carter in other unfortunate ways.

Trump did not have much of a legislative agenda in his first term and seems even more addicted to the Executive Order than he was then. So what if he deregulates if it is all easy to undo?

And, don't forget that inflation and weak foreign policy doomed Carter to a single term, and undercut the value of deregulation. Similarly, Trump's foolhardy tariff trade war and destabilizing kowtowing to despots like Putin may cause economic and security problems that dwarf any good he manages to accomplish as a deregulator.

Only time will tell if we have Carter II, and which kind we have if indeed we do. I am not bullish, but I hold out hope to be proven wrong.

-- CAV

What Does the DOGE Folly Accomplish?

"Don't bother to examine a folly, ask yourself only what it accomplishes. -- "Ellsworth Toohey" in The Fountainhead, by Ayn Rand

***

From Question 4 of a recent Q&A at Ask a Manager comes the following revelation about how Trump's DOGE firings are being done:

I was just fired by DOGE. I was not a probationary employee, and there is reason to believe the firing was due to political considerations and therefore illegal. I've been told that I may be a strong lead plaintiff for one of the class-action lawsuits that are being teed up...

In her reply, Alison Green adds:

... Probationary employees in the federal government are being fired and are having it documented as being for "performance reasons" even when they've had glowing performance reviews and even when their managers oppose the firing. A slew of letters doing this to people went out on Saturday night (of all times). This is not only profoundly shitty from a human standpoint -- being told you're being fired for performance when your work has been good -- but it will have practical ramifications too, since if they apply for another federal job in the future, this will come up during the background check.

This comports with Yaron Brook's recent commentary about the DOGE firings:

[T]he goal of DOGE in my view is twofold: one to distract from the fact that the real [reform] is not happening; two and maybe more importantly what DOGE is really doing ... is it is cleansing government from political opposition.

The former is plainly evident to anyone looking at the federal budget, whose largest components are entitlements Trump refuses to even entertain cutting; and the latter is certainly the result, given that any probationary employee will have been hired by the Biden Administration.

(I seem to recall, but haven't time to check that this is a strategy recommended by Project 2025 as a way for the Republicans to begin taking over the federal bureaucracy by speeding up the replacement of career bureaucrats with "our guys." Taking over something that should be phased out and abolished is worse than doing nothing.)

As I have noted already, even if DOGE isn't (or weren't) about taking over the leviathan state (as opposed to ending it), it is gimmicky in the most generous interpretation and will not succeed at all in retrenching government to its proper scope. If anything, it may well cost more than any marginal savings it realizes and will add a nasty cast to the futility it will already impute to the whole enterprise of government reform.

-- CAV

Washington vs. Trump

It is hard to believe that our first and best President, George Washington, was born nearly three centuries ago.

This morning, I chose to commemorate the birth of this great man, to whom so many owe so much, by reading his farewell address, by which he notably -- in contrast to the current holder of his office -- declined a third term as President.

The document lives up to its premise as advice from a parting friend in its warmth and wisdom.

That friend provides us with ample warning against despotism which we would do well to heed today:

However combinations or associations of the above description may now and then answer popular ends, they are likely, in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.

...

The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of public liberty.

Without looking forward to an extremity of this kind (which nevertheless ought not to be entirely out of sight), the common and continual mischiefs of the spirit of party are sufficient to make it the interest and duty of a wise people to discourage and restrain it. [bold added]

We are domestically in exactly the precarious position described above: Both parties are fundamentally anti-liberty and anti-American, and we now have a President clearly eager to fan the flames of tribalism to pit us against each other for his own aggrandizement.

Within the world, things are equally dire:

So likewise, a passionate attachment of one nation for another produces a variety of evils. Sympathy for the favorite nation, facilitating the illusion of an imaginary common interest in cases where no real common interest exists, and infusing into one the enmities of the other, betrays the former into a participation in the quarrels and wars of the latter without adequate inducement or justification. It leads also to concessions to the favorite nation of privileges denied to others which is apt doubly to injure the nation making the concessions; by unnecessarily parting with what ought to have been retained, and by exciting jealousy, ill-will, and a disposition to retaliate, in the parties from whom equal privileges are withheld. And it gives to ambitious, corrupted, or deluded citizens (who devote themselves to the favorite nation), facility to betray or sacrifice the interests of their own country, without odium, sometimes even with popularity; gilding, with the appearances of a virtuous sense of obligation, a commendable deference for public opinion, or a laudable zeal for public good, the base or foolish compliances of ambition, corruption, or infatuation.

Trump's girlish crush on Vladimir Putin -- and the sympathy of many in his own party to Russia's theocratic, anti-liberty bent -- are even now damaging our nation's interests in favor of those of a war-mongering aggressor state we should be allowing (if not helping) to collapse due to its own folly.

As Washington himself would allow -- True leaders are man enough to admit that they are fallible. -- I don't agree with everything he says. But he is fundamentally correct about the need to preserve our nation's carefully crafted form of government so that it remains a powerful guarantor of liberty and at the same time too clumsy for a power-luster to abuse.

-- CAV

Four to File Under ...

A Friday Hodgepodge

I'm in a hurry, so here we go...

1. File under Who (With Any Sense) Needs to Read the Whole Thing? (but everyone will read it anyway): "Do Not Get Your Work Wife (or Husband) a Valentine's Day Card."

I can't believe these actually exist!

2. File under Equally Subtle and Heartwarming: "The Morning Person (a Carpool Story)" (Item 5).

I had to reread this because I correctly thought I was missing something.

3. File under Gross, but Potentially Lifesaving Information for Visitors to Hawaii: "Burning in Woman's Legs Turned Out to Be Slug Parasites Migrating to Her Brain."

Yes, Ars Technica can sometimes be a good source of medical information.

4. File under Why Gives Me an Ulcer Went Away as a Saying Meaning Is Stressful: "The Doctor Who Drank Infectious Broth, Gave Himself an Ulcer, and Solved a Medical Mystery."

I am old enough to remember when we didn't know what caused ulcers, and I am glad to have one less thing to worry about.

-- CAV

Overwhelmed ≠ Powerless

Some time back, Allison Green took a question from a mission-critical employee who lamented that "My Company Is a Great Place to Work ... for Everyone But Me."

The letter reads in part:

Thus far, I've stuck around for the job security, the pay, and the potential for early retirement if our stock options pan out. But I'm being required to bear a much heavier cost than my co-workers for the same upsides, and I'm always teetering on the edge of burnout. Furthermore, the company is so heavily dependent on me for crucial functions, much of that growth potential could evaporate if I quit or even just lowered my productivity. Upper management seems to have convinced themselves (despite what I've said) that I am so emotionally invested in their mission that I will endlessly sacrifice the rest of my life to keep their gears turning. That's the story they tell other people, while telling me that I should take my PTO, but also telling me, "We know you're super busy, but we really need X and Y and Z done ASAP!" [bold added, links omitted]

Regulars here and any Ayn Rand aficionado will know that the situation provides a lead on its own answer, but almost anyone can get into a rut and fail to recognize such an opportunity or how to take advantage of it.

Green cuts through the fog:

[Y]ou don't need your employer's explicit permission to limit your work hours to reasonable ones that match what other people in your company and your field are working; you can simply proceed as if of course we all understand that you're not going to be working yourself to the point of exhaustion, and making decisions accordingly. And you aren't asking for help anymore; you're announcing what you can and can't do and sticking to that.

...

And the thing is, if you're worried about what that would mean for your job security: You have a ton of power here! Your company isn't going to be able to find someone else to handle as much work as you are -- as evidenced by the fact that you're surrounded by people who don't -- and they're highly, highly unlikely to fire the person who has been carrying most of the mission-critical work and has expertise no one possesses just because you decide to set reasonable boundaries on your energy. But you have to actually set those boundaries with both your words and your action ... and you have to mean them. [bold added]

In the words of a very knowledgable civilian contractor I once briefly worked with back in my Navy days, "What are they going to do? Fire me?"

We don't all hear something like that or have it stick the first time. Where this answer shines is that Green weaves every aspect of this situation together in such a way as to make it all but inescapable that part of being a conscientious, productive worker is taking care of oneself.

-- CAV

Hawley-Sanders Rate Caps: Pre-Debunked

At RealClear Markets, Patrick M. Brenner of the Southwest Public Policy Institute considers the Hawley-Sanders proposal to cap credit card rates at 10% and finds it wanting on two levels.

Regulars here and at RealClear Markets will likely already be familiar with the theoretical objections to this proposal, which is simply an attempt to impose price controls on borrowing.

On top of being an improper violation of liberty, price controls lead to shortages:

Image by John Tenniel, via Wikimedia Commons, public domain.

Capping interest rates at 10 percent is not a free-market reform; it is an interventionist policy that will lead to unintended consequences, much like the economic restrictions seen in progressive strongholds.

Some supporters of the proposal argue that credit unions already function under an 18 percent cap and continue to issue credit, so a 10 percent cap should be feasible for traditional banks. This comparison ignores the unique structure of credit unions, which are member-owned cooperatives with different incentives than for-profit banks. Credit unions also have more flexibility to impose fees and limit access to credit in ways that traditional banks cannot. Credit availability under a 10 percent cap would not resemble credit unions, as banks would be forced to reduce credit lines, close accounts, and eliminate many of the benefits consumers currently take for granted. [bold added]

This can not only be seen for all kinds of price control attempts throughout history, there are two recent examples of states attempting exactly this particular type of price control!

The effects of a national rate cap would mirror those seen in states like New Mexico and Illinois, where similar policies have already restricted the availability of small-dollar loans. A 10 percent ceiling would not only make traditional credit cards unprofitable for banks but also eliminate the financial flexibility many consumers rely on. Those who can no longer qualify for credit cards will face limited choices, including expensive alternatives with hidden fees and fewer consumer protections. [bold added, links omitted]

This is a terrible idea, economists know exactly why it doesn't help anyone, and "real-world" data are there for the asking.

Nevertheless, if Trump's rubber stamp Congress passes this monstrosity, I expect Trump to sign it into law. He is, after all, a big fan of tariffs, and those were similarly debunked -- centuries ago -- but also have real-world data showing that they are terrible ideas. Why should things be any different here?

In a free society, some people will inevitably make bad choices. It is ironic that this bill is ostensibly to save such people from themselves, but would instead force Trump's mistakes on all of us.

-- CAV

ESG, RIP?

John Stossel reports that, after enough large companies lost their shirts, many are scaling back on the leftist ESG (Environmental, Social, and Governance) fad. He cites numerous example of businesses losing focus on their purpose -- making money by offering value -- and losing money, oddly enough:

Modified from image by John Thomas, via Unsplash, license.

America needs high-performance computer chips. Intel was once the leading manufacturer of such chips. But now, even as Congress gives Intel billions in taxpayer handouts, the company is cutting thousands of jobs.

Why? While Intel's competitors innovated, Intel obsessed about "sustainability."

Intel's website lists endless ESG goals like "environmental, health, wellness, and safety programs to care for people and the planet." It even brags about "green software," whatever that is.

That's a lot of energy spent not making the best chip...

While many correctly predicted that ESG would lose its momentum once its unprofitability became evident, the above quote contains data that should alarm us: Intel is wrongly being subsidized in the name of "industrial policy," with bipartisan support.

This is bad for two reasons.

First, any company favored in any way by a government is, to the degree of that special treatment, rendered numb to market forces, such as the need to earn money through high quality.

Second, ESG, and past programs like it, were improperly encouraged by the government, such as through the investment strategies of state pension funds and regulatory guidance contrary to the commonsense idea that a fund manager has a fiduciary duty to invest for high returns -- rather than using your money without your consent to finance political schemes you may or may not agree with.

The government has no business dictating (or "encouraging") investment behavior of any kind, and the fact that nobody bats an eye at this (or other ways it meddles with trade) practically guarantees that some other consideration than profit will pollute the investment landscape in a matter of time.

This can be in the form of yet another reincarnation of ESG under a leftist administration or pressure to conform to some sort of right-wing ideological agenda, rather than simply being left alone.

I'm happy to bury ESG, but fully expect it to return like the zombie that it is, until our society's culture changes for the better, to embrace freedom once again.

-- CAV