There Is No Trade Debate

THE PRESIDENT AND CONGRESS ARE HAVING ANOTHER trade debate, but there is less to it than meets the eye. The issue is no longer ""free trade'' versus ""protectionism,'' because history and technology have settled that question. Free trade--actually, open trade--triumphed, and there is no going back. Clinton now wants Congress to renew his broad authority to negotiate trade agreements (an authority confusingly called ""fast track''), but in some ways it doesn't matter whether Congress accepts or rejects his proposal. Either way, trade will expand and the United States will remain highly intertwined with the global economy.The debate isn't meaningless. Clinton's power ought to be renewed; otherwise, the United States will be hard pressed to win new trade concessions. But the stakes are smaller than they seem. The AFL-CIO, opposing the president, insists that new trade agreements contain strong protections for workers and the environment. The aim is to slow imports by raising other...

Abolish The Irs? Dream On.

WE AMERICANS ARE SUCKERS FOR QUICK FIXES. IF the dog barks, kick it; if the team loses, fire the coach. Small wonder, then, that the latest horror stories about the Internal Revenue Service have revived talk of radical tax reform. If the IRS can't be trusted, abolish it. End the income tax. Congressional Republicans scripted the IRS hearings with just this idea in mind. Public outrage, once stirred, will create a climate to replace the income tax with a ""flat'' tax or national sales tax. That would be good policy--and good politics. The advantages of a simpler, fairer system would bolster Republican fortunes for years.Dream on. It almost certainly won't happen. The practical and political problems of jettisoning the income tax are so daunting that, once they become understood, the appeal of alternatives may fade. Radical reform would take a sledgehammer to the tax code's complexity; but its fatal weakness is that much of the complexity flows from popular provisions--the mortgage...

Making Pols Into Crooks

THE PROSPECT THAT AN INDEPENDENT COUNSEL WILL be named to investigate the alleged campaign-law violations of President Bill Clinton and Vice President Al Gore exposes a central contradiction of ""campaign-finance reform.'' The ""reformers'' claim they're trying to lower public cynicism by cleansing politics of the evils of money. Actually, they're doing the opposite: by putting so many unrealistic restrictions on legitimate political activity, the ""reformers'' ensure that more people--politicians, campaign workers, advocacy groups--will run afoul of the prohibitions. Public cynicism rises as politics is criminalized.The distasteful reality is that politics requires money. To compete, candidates must communicate; and to communicate, they need cash. Someone has to pay for all the ads, direct mail and polls. There is no easy way to curb the role of money in politics without curbing free expression. If I favor larger (smaller) government, I should be able to support like-minded...

The Height Of Hypocrisy

YOU SHOULD GRASP THAT WASHINGTON'S LATEST school debate--over whether to have national exams for fourth graders in reading and eighth graders in math-- is a sham. If the exams are approved, they won't much change how students or schools do. If they're rejected (Congress is now considering the issue), they will trigger a false debate over who favors ""tough'' standards. President Clinton supports the exams and condemns ""social promotion'': moving up students who haven't mastered essential skills. But Clinton is a shrewd hypocrite on education. He actually encourages social promotion where it's most rampant: between high school and college. So do most of his opponents on the testing issue. ...

Economic Mythmaking

THE STORIES WE TELL OURSELVES ABOUT ECONOMIC and social change are often simplistic caricatures of what actually happened or what we genuinely know. We spin these fables to make some political point or buttress some seductive intellectual theory. I want to explore two current hot topics to illustrate this habit: the big jump in corporate profits (up almost 80 percent since 1991) and the sharp drop in welfare rolls (down 25 percent since early 1994). Though they seem unrelated, each has inspired twisted tales that overstate what we know and understate society's tendency--a good one--to learn from past experience. ...

A New Start For Europe?

WE AMERICANS ARE SO CONVINCED THAT EUROPE has become an economic basket case that it's worth wondering whether we're wrong. In the American view, Europe suffers from an over- generous welfare state and an obsession with job security. Companies face too many regulations and too many taxes. The unemployed are paid too well for staying idle. Naturally, joblessness is high. It's 10 percent in Germany, 12 percent in France and 21 percent in Spain. But a case can be made that Europe's economy is on the verge of a revival that will shatter the American stereotype. The case, plausible though hardly preordained, deserves examination. ...

Balancing Act

IN HIS NOVEL ""1984,'' GEORGE ORWELL DEFINES ""doublethink'' as the ""power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them.'' There was, in this sense, something deeply Orwellian about last week's orgy of self-congratulation over the balanced-budget agreement. President Bill Clinton hailed it as a ""historic'' moment ""when we have put America's fiscal house in order again.'' Republican Senate leader Trent Lott said the two parties ""rose above partisanship and politics.'' House Speaker Newt Gingrich announced a ""great victory for all Americans.'' All this cheering celebrated an agreement that actually delays a balanced budget. ...

Poisonous Symbolism

OUR POLITICS INCREASINGLY SUBSIST ON SYMBOLISM. We argue furiously over policies that purport to advance ""family values'' or to suppress obscenity or to honor some group, when these policies - whether adopted or not - wouldn't affect most intended beneficiaries. These poisonous debates mainly encourage political breast-beating; each side flaunts its own moral superiority. Nowhere is this truer than in matters of race and ethnicity and, in particular, in affirmative action. Indeed, the debate on affirmative action is now almost completely disconnected from the facts. ...

Don't Hold Your Breath

GLOBAL WARMING MAY OR MAY NOT BE THE GREAT environmental crisis of the next century, but - regardless of whether it is or isn't - we won't do much about it. We will (I am sure) argue ferociously over it and may even, as a nation, make some fairly solemn-sounding commitments to avoid it. But the more dramatic and meaningful these commitments seem, the less likely they are to be observed. Little will be done. I wouldn't stake my life on that, but I don't see how it could turn out otherwise. ...

The Limits Of The Law

ONE OF OUR ENDURING NATIONAL ILLUSIONS IS THAT we can correct every injustice or social imperfection by passing a law. What we don't like we'll just make illegal. The impulse has inspired some disastrous social experiments. Remember Prohibition. But the impulse survives, and it has now brought us employment law: all the laws, regulations and court decisions that tell companies how to hire, fire, promote and supervise their workers. The enterprise exudes good intentions - and absurdities. ...

Please Do Not Disturb

WE ARE NOW WITNESSING-- MOST RECENTLY France but also in the United States and elsewhere--the triumph of conservatism. This is or, of course, what you're hearing. "Europe has turned left,' says The Wall Street Journal, noting that 18 of 15 countries in the European Union now have leftish governments. In France, the socialists and communists have just slaughtered the center-right in parliamentary elections. In Britain, Labour defeated the Conservatives for the first time in a genera] election since 1979. The conventional wisdom has got the facts right; what's wrong is the interpretation. ...

Is Inflation Really Dead?

I have a theory that inflation is not quite as dead as it seems, and now is as good a time as any to explain it. Just last week, the Federal Reserve declined to increase short-term interest rates - the standard weapon against rising inflation - because inflation doesn't, in fact, seem to be rising. For the year ended in April, the consumer price index was up a scant 2.5 percent. That was less than the increase for 1996 (3.3 percent) and identical with the 1995 increase. ...

Telephone Straddle

THE FEDERAL COMMUNICATIONS COMMISSION IS NOT A social-services agency, but you'd never know it from chairman Reed Hundt. He's an evangelist who's turned a drab subject - deregulation - into a religion. So Hundt was predictably bragging last week that the FCC's latest decrees under the Telecommunications Act of 1996 heralded a new era. The FCC has realized, he said, ""the impossible dream of connecting every single American to the Information Highway.'' It has also lowered long-distance rates for grandmothers and hastened the day of complete deregulation. Hallelujah. ...

The Culture Of Poverty

EVERYONE INVOLVED IN "WELFARE REFORM" COULD usefully read "What Money Can't Buy" (Harvard University Press), a study by economist Susan Mayer of the University of Chicago. Its message is somber: as a society, we are fairly helpless to correct the worst problems of child poverty. This is not a new insight, but by confirming it, Mayer discredits much of the welfare debate's overwrought rhetoric. "Welfare reform" may raise or lower poverty a bit (we can't say which), but neither its supposed virtues nor its alleged vices are powerful enough to alter the status quo dramatically. ...

The Trouble With Steak

WE DON'T EAT MUCH STEAK IN OUR HOUSE. IT shows up every couple of months. There's no complaint from our three children. I admit our eating habits aren't especially interesting. But they may be increasingly typical. We're a tiny part of a great national upheaval: the demise of steak. Time was when a thick steak symbolized our affluence and hardiness. Be American, eat steak. Welcome to John Wayne country. No more. ...

Clinton And The Cpi Mess

WE COULD CONCEIVABLY GET PAST THE CONTROVERSY over the consumer price index (CPI) with some presidential leadership, but there's been none. Clinton has been absent, and the whole episode shows him at his worst. The man is a compulsive follower. He's a genius at sniffing the public mood--and then going with it. All politicians do this, but Clinton does little else. He seems incapable of leading public opinion and disguises his timidity with soaring rhetoric and strategic silences. ...

Crackpot Prophet

WE ALL RECALL HOW MICHAEL JORDAN DID IN baseball. He bombed. He couldn't make it into the majors, let alone become a superstar. Even at the AA Birmingham Barons, he batted a miserable .202 (88 for 486, with 114 strikeouts). There's an insight here. Call it the Jordan principle: genius doesn't travel well. Applying the Jordan principle to George Soros--the fabulously successful investor who is among the world's wealthiest men-we find that getting rich doesn't make you an economic philosopher. In Soros's case, just the opposite: as a seer, he's a crackpot. ...

Not A New Cold War

WE CANNOT REPLAY THE COLD WAR WITH CHINA. The cold war pitted two systems against each other. This contest of political ideas and economies suited the American psyche, which prefers to see countries as good or evil. The Soviets accommodated our moralism by barricading themselves from the world economy and democratic societies. The Chinese are not isolating themselves--just the opposite--or promoting an alternate global ""system.'' China may or may not ultimately threaten American interests. But it cannot be treated as a separate force that, somehow, will be ""contained.'' ...

The Joy Of Deregulation

DEREGULATION IS ONE OF THOSE CLUMSY WORDS THAT have crept into our language in the past decade. Before that, only a tiny band of economists and academics used it. But now it's tossed about casually, because we've had so much of it. All sorts of industries have been ""deregulated.'' What are we to make of this? Well, plenty. We've had enough experience with it to draw some conclusions. And the main one is: it works. ...

Justice Among Generations

THE BEST THING WE COULD DO WITH LAST WEEK'S report from the Advisory Council on Social Security is to forget it. The report brims with bad ideas from all along the political spectrum. None of the three proposals to invest vast amounts of Social Security funds (ultimately trillions of dollars) in the stock market is worth adopting. All would "nationalize" the stock market more than "privatizing" Social Security--with unpredictable and, possibly, damaging consequences. And all obscure the central issue posed by an aging America. It's generational justice: how much burden should the old place on the middle-aged and the young, whose taxes mainly pay for government retirement benefits?Sooner or later, cuts in Social Security and Medicare are unavoidable, because the alternatives--huge tax increases or peacetime budget deficits--are worse and probably politically unacceptable. In general, we know what to do: raise retirement ages, tax Social Security benefits fully, shift Medicare toward ...

Europe's New Nutty Money

I HAVE ALWAYS AVOIDED WRITING ABOUT SOME SUBJECTS--despite their importance--because they seem technical and irrelevant to Americans. One of these has been Europe's plans to create a single currency (the Euro) by 1999. It's a lunatic idea but, to be honest, one that I thought would collapse of its own stupidity. Unfortunately, it hasn't, and so here goes. I write about it now not because it's bad for Europe (an old notion) but because it may also be bad for the United States and everyone else. ...

Imperfect Vision

IT'S A MARK OF OUR PROGRESS AGAINST INFLATION THAT the greatest need now is measuring it. Once in double digits, it's so low that we're not sure what it is. The Boskin Commission--named after its chairman, Michael Boskin--brings us closer to a better reading. The commission of five economists says that the consumer price index (CPI) overstates inflation by 1.1 percentage points a year. The precise size of the overstatement is less important than the fact that it is large and persistent. It burdens the federal budget, distorts our economic record and creates uncertainty about the future. ...

Can Clinton Do A Nixon?

IT MAY BE THAT SOCIAL SECURITY AND MEDICARE ARE TO Bill Clinton what China was to Richard Nixon: a chance to make a policy reversal that will be blessed by history. The analogy with Nixon is apt, because the political taboos that once applied to China now apply to Social Security and Medicare. Before Nixon visited Beijing in 1972, no one (least of all Democrats) could suggest talking to the Chinese without being branded a commie stooge. The old taboos vanished when Nixon, a rabid anti-communist, dined with Mao Zedong. People might still disagree on China, but at least there could be open debate. Disputes could be acknowledged and discussed. ...

The Spirit Of Adam Smith

ADAM SMITH (1723-1790) IS A MAN FOR OUR TIME--OR ought to be. This is less because he championed free markets than because he cared about so much more than free markets. What concerned Smith was constructing a decent society. Free markets were only one means to that end. Government was another, and Smith constantly probed the proper roles for government and the market. Smith was long on wisdom, short on self-righteousness. We could use his spirit today, because we seem to have arrived at the opposite mix: surplus self-righteousness and scarce wisdom. ...

Sounds Great, Won't Work

I AM ALL FOR PARENTING. WITH THREE CHILDREN (AGES 6, 9 and 11), homework, soccer games and car pools are the most important parts of my life. But my commitment to parenting stops well short of enthusiasm for the ""parental rights'' amendment now proposed for the Colorado state constitution. The amendment's architects regard it as a trial run. If it's approved in November, parental rights would go national in a big way. A recent poll shows voters favoring the amendment 54 to 26 percent. Too bad. ""Parental rights'' is a swell slogan, but it would make lousy social policy. ...

Roosevelt Romanticized

WHY AREN'T MODERN PRESIDENTS MORE POPULAR? One reason is Franklin Roosevelt. We are now observing Roosevelt History Month, and FDR--the only man elected to the White House three times, let alone four--is being celebrated as the father of contemporary liberalism. This is true, though less so than popular wisdom holds. What Roosevelt actually created was the modern presidency. He set a performance standard that no one since has reached and, ironically, that Roosevelt himself did not attain. But compared with the Roosevelt myth, all his successors have suffered. ...

The Debate We Need ...

THE DEBATE WE NEED ABOUT GOVERNMENT ISN'T happening, and the fault lies largely with Bob Dole. President Clinton is running a campaign of insults and not ideas (ugly commercials mixed with self-congratulation), but who can blame him? He's got the lead. Only Dole could inject intellectual vigor into the campaign, and he hasn't. Everything he says seems stale and disconnected. Last week he bemoaned the economy's sorry state in a speech to the Detroit Economic Club--and two days later the Census Bureau reported that household incomes jumped 2.7 percent in 1995. ...

Confederacy Of Dunces

THE PHILADELPHIA INQUIRER BEGAN A 10-PART SERIES last week entitled ""America: Who Stole the Dream?,'' which will attract attention. The thesis is simple: Big Government and Big Business are relentlessly reducing living standards and job security for most Americans. The series, by Donald Barlett and James Steele, portrays living in America as a constant hell for all but the superwealthy. This seems overdrawn, because it is. It's junk journalism, and the intriguing question is why a reputable newspaper publishes it. ...

A Secret Agenda?

BILL CLINTON'S LATEST SELF-APPOINTED ROLE IS AS America's futurologist. He's been telling us -- at the Democratic convention, in a new book and in interviews -- that he's building ""a bridge'' to the 21st century. To The Washington Post he brags that he's overseeing America's transition into a ""global economy and a global information age.'' He suggests that he deserves to be compared to Theodore Roosevelt, who tempered America's adjustment to industrialization a century ago. Does anyone believe all this presidential blab? ...

The Next Food Crisis?

WE CAN SOMETIMES LEARN A GREAT DEAL FROM things that don't happen. The present farm situation is a case in point. For those who haven't been paying attention, corn and wheat prices are now near record levels and could go higher. Just last week, the Agriculture Department cut its estimate of the 1996 U.S. corn crop by 4.7 percent. We are already hearing warnings about a dangerous new spurt in retail food prices or, worse, the onset of a prolonged era of global food scarcity. I am skeptical that such a ""food crisis'' looms, and if these grim forecasts don't materialize, it will speak volumes about how the farm economy actually operates. ...

Memo To Dole: It's Not 1980

BOB DOLE SEEMS CAUGHT IN A time warp, convinced he can re-create Ronald Reagan's first triumph. But this is not 1980, and Bill Clinton is not Jimmy Carter. In 1980, Americans did not vote for Reagan's promised tax cuts so much as they voted against Carter's double-digit inflation and his handling of the Iranian hostage crisis. People were frightened. In 1979 and 1980, prices routinely rose 1 percent a month. The ABC News election exit polls asked voters which ""one or two'' issues determined their choice. Inflation led at 38 percent (47 percent among Reagan voters); America's ""position in the world'' followed at 33 percent (Reagan voters: 45 percent). Tax cuts lagged badly at 12 percent (Reagan voters: 16 percent). ...

The Message From 1896?

WE TAKE YOU BACK A CENTURY: A HUNDRED years ago, William Jennings Bryan delivered his ""cross of gold'' speech -- denouncing the gold standard -- at the Democratic National Convention and embarked upon what became a fateful political campaign. When it was over, not only had Bryan lost the presidency to William McKinley, but his defeat began nearly four decades of Republican domination. Until 1932 there was only one Democratic president, Woodrow Wilson, and Republicans controlled the Senate in all but six years and the House in all but eight. The election of 1896 triggered one of America's great political ""realignments.'' ...

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