Power & Market
Listening to the howls from Democrats and the applause from Republicans, one would think President Trump’s proposed fiscal year 2021 budget is a radical assault on the welfare state. The truth is that the budget contains some minor spending cuts, most of which are not even real cuts. Instead they are reductions in the “projected rate of growth.” This is the equivalent of saying you are sticking to your diet because you ate five chocolate chip cookies when you wanted to eat ten.
President Trump’s plan reduces the Department of Education’s budget by nearly 8 percent, leaving the department with “only” $66.6 billion. Cuts to other departments are similarly small, while reductions in entitlement spending consist mostly of reforms that will not affect most of those dependent on these programs.
President Trump deserves credit for proposing an $11.6 billion cut in funding for the Department of State and the US Agency for International Development (USAID). Foreign aid does little to help impoverished people overseas. Instead, it benefits foreign government officials willing to do the US government’s bidding. The State Department and USAID are extensively involved in US intervention abroad, including efforts to overthrow governments.
President Trump’s budget proposes a number of increases in spending. For example, his budget spends around 900 million additional dollars on vocational education. It also includes additional spending on items including infrastructure and childcare.
Few in DC have expressed concern over the fact that President Trump’s $4.8 trillion budget proposal is the largest budget in American history. There is also little outcry from supposedly antiwar progressive Democrats over Trump’s proposal to spend hundreds of billions of dollars on militarism. This is not surprising, as many progressives are happy to support increased warfare spending as long as conservatives go along with increased welfare spending. Similarly, many conservatives are happy to support increased welfare spending as long as it means that progressives will vote for increased warfare spending. So, Congress is unlikely to approve any of President Trump’s spending cuts, but Congress will gleefully agree to all of his spending increases.
Even if Congress agrees to all of President Trump’s cuts, federal deficits will still be over $1 trillion for the next several years. However, President Trump claims that the budget will balance in fifteen years. In order to show a balanced budget by 2035, the administration assumes 3 percent economic growth for most of the next decade. This level of growth is unlikely to come to pass. Instead, the current boom will likely end soon, and the economy will experience another major recession. Signs that we are on the verge of a downturn include rising homelessness and the Federal Reserve’s bailout of the repurchasing market.
The current economic boom is built on debt, and the debt-based economy is facilitated by the Federal Reserve’s easy money policies. The massive amount of debt held by consumers, businesses, and especially government is the main reason the Fed feels compelled to maintain historically low interest rates. If rates were to increase to market levels, government interest payments would be unstable. This would cause the government debt bubble to burst, leading to a major crisis. However, continuing on the current path of low interest rates will inevitably lead to a dollar crisis and the collapse of the welfare-warfare Keynesian system.
Continuing to waste billions on wars abroad and failed programs at home while pretending that we can avoid a crisis via phony cuts and Fed-fueled growth will only make the inevitable collapse more painful. The only way to avoid economic disaster is to cut spending and audit, then end, the Federal Reserve.
Reprinted with permission.
Last night’s State of the Union was particularly noteworthy for its showmanship. Scholarships were given away, medals were awarded, families reunited. At a time when national politics is bad theater, President Trump is clearly its most gifted star.
Trump also knows what sells. As a political figure, he’s motivated not by any consistent ideology, but rather by transactional legislation. Following the performance, an MSNBC pundit noted that the speech was a “microtargeted ad” to various demographics aimed at expanding his base before next year’s election.
Combined with his Super Bowl ads highlighting criminal justice reform, his focus on charter schools and honoring a hundred-year-old Tuskegee airman are aimed at eroding away the Democrats' 90 percent control of black voters. The cameo by Venezuela opposition leader Juan Guaidó was an appeal to Hispanic families who have fled communist regimes—perhaps a poke at Bernie Sanders. Paid family leave, a policy focus of his daughter, is intended to help him with suburban women.
What doesn’t sell? Fiscal responsibility.
The political equivalent of Crystal Pepsi, the Republican Party has given up its long-standing façade of budgetary restraint. As Donald Trump told donors earlier this year, "Who the hell cares about the budget?”
Of course, some people do care, particularly those who understand the real costs of runaway spending. Unfortunately, politics isn’t about the economic literacy of the few, but the prevailing ideology of the masses. As Jeff Deist noted in 2016, the implicit ideology of the American population is much closer to Bernie Sanders than it is to Ludwig von Mises. As such, it should be no surprise that the policies of the country align more closely with the “deficits don’t matter” vision of Modern Monetary Theorists than the sober analysis of Austrians economists.
Of course, the popularity of political positions cannot shield a society from the consequences of their actions.
A recent Congressional Budget Office (CBO) forecast now has America on track for a 98 percent debt-to-GDP ratio by the end of the decade, and that’s with a built-in assumption that spending trends won’t significantly increase—a bet I wouldn’t feel comfortable making.
Left out of this measure, of course, are the true costs of the current American government—including unfunded liabilities built into to America’s entitlement system. For example, social security has a projected long-term deficit of over $13 trillion. Medicare adds another $37 trillion. Factor in federal pensions and veterans' benefits and the number gets to $122 trillion.
Working to DC’s benefit is the fact that American debt is still treated globally as one of the world’s most secure assets. Global demand for US Treasurys remains strong, and directly subsidizes our leviathan state even as we simultaneously weaponize it against the rest of the world. While it’s impossible to predict exactly how long this status will continue, history informs us that it would be foolish to assume it will go on forever.
To his credit, Donald Trump seemed to instinctually understand this as a candidate. While running, he was remarkably honest when he talked about the need for American creditors to eventually take haircuts. The self-dubbed "king of debt," he compared it to his own approach in business:
I've borrowed knowing that you can pay back with discounts. And I've done very well with debt. Now of course I was swashbuckling, and it did well for me, and it was good for me and all of that. And you know debt was always sort of interesting to me. Now we're in a different situation with a country, but I would borrow knowing that if the economy crashed you could make a deal. And if the economy was good it was good so therefore you can't lose. It's like you make a deal before you go into a poker game. And your odds are much better.
While his comments shocked (shocked!) the Very Serious pundits at the time, they were a refreshingly honest look at America’s future. As is often the case with Trump, he was attacked by the press for saying aloud the things you're supposed to keep quiet—like his reportedly saying “Yeah, but I won’t be here,” when given a brief on America’s growing debt crisis in 2017.
Of course, although any sort of default by the American government would be a major chaotic event for the global financial system, it’s something we should embrace and prepare for. Peter Klein has noted, “that the US can never restructure or even repudiate the national debt—that US Treasuries must always be treated as a unique and magical "risk-free" investment—is wildly speculative at best, preposterous at worst.” Murray Rothbard advocated for the repudiation of the national debt, which he viewed as a “part of the American tradition.”
At the end of the day, however, whether one agrees with the idea of debt default is inconsequential. The political system today is inherently unprepared to tackle the issue. The incentive structures of democracy actively work against restraint and responsibility. So long as the economic profession is dominated by bad economists and our education system is dedicated to government indoctrination rather than economic literacy, we will continue to lack the political will to make the difficult choices necessary to get our fiscal house in order.
Luckily, America’s political disorder doesn’t mean that American citizens have to be unprepared. Awareness of the real problems we face doesn’t require taking the black pill, it simply means being aware of practical steps we can take as individuals to best prepare for the future.
Just as we can arm ourselves to protect ourselves against inept law enforcement, we can safeguard our wealth outside of the American financial system to protect ourselves against inept fiscal management. Be it gold, silver, bitcoin, or whatever, the future may very well belong to those who refuse to leave their destiny in the hands of politicians, bureaucrats, and central bankers.
From the time I was an undergraduate, I can remember reading many articles by Leonard Read, founder of the Foundation for Economic Education (FEE). I found his insights valuable enough that I eventually wrote a book, The Apostle of Peace, about what I considered were his best sustained arguments. Many of his shorter arguments were not included. But every so often, I go back and read one or two of his books in search of overlooked inspiration. I did this recently with his 1980 book Seeds of Progress, free online at Mises.org, for its fortieth anniversary.
There, I found a fireman analogy I thought was worth sharing.
- Imagine this fictitious situation—the firemen of a community answering an alarm and rushing to a burning home. Failing to extinguish the fire immediately, they spray the home with kerosene. The fire worsens. The remedy? Spray it with gasoline! Still worse! On and on with “remedies” galore, each more moronic than the former. These imaginary firemen resemble the millions of political bunglers whose actions lead to “the misery and ruin of many thousands and millions of people.”
- How do our political bunglers resemble the fictitious firemen[?]…First and foremost, they have no more understanding of how freedom works its wonders….Thus blinded to reality, they see what to them appears as a societal flaw, and then employ coercion to correct it. Their remedy does not work. They then double their coercions. Worse than ever: more flaws appear! Deeper into the mire of our present mess! Their cure? More and more of their foolish interventions!
- Those who do little if any thinking for themselves are inclined to follow the millions of bunglers who loudly proclaim their know-it-all-ness and promise a heaven on earth.
What Do Bungling Firemen Miss?
- The keynote to the good life is freedom….To pare over-extended government down to its proper role is to maximize liberty…that heavenly power which releases human creativity.
- When the free and unfettered market prevails, there is a race for excellence.
- Each of us should do our little creative things and let everyone else—no exceptions—do theirs. These trillions times trillions of little things are, indeed, the seeds of all human progress and are founded on liberty for one and all.
Living with Bungling Firemen
- We are living under government by unwise men. And the reason is that many of the wise men among us…fail to see what they could and should be doing to limit government to its principled role of keeping the peace with justice to all.
- The most bothersome, frustrating and destructive of all are the millions of dictocrats who…sincerely believe that it is their duty to solve your and my problems.
- Ever so many seekers of political office…actually “think” that we know not how to run our lives; but they never doubt that we are wise enough to select them as our masters!
- Limiting bungling firemen.
- Individual liberty depends on the general observance of the principle of equality before the law.
- Liberty and justice are inseparably associated.
- An ideal government…is where no one “rules” another! Government is an agency of defense…keeping the peace and invoking a common justice. Period!
- What, in all good conscience, should be inhibited? The moral codes give the answer: fraud, violence, misrepresentation—thou shalt not steal or kill or do any evil. And government cannot perform this role when over-stepping its proper bounds.
In millions of words over many decades, Leonard Read spent his life trying to “advance freedom by an improved phrasing of its truths.” Those efforts yield those of us who wish to advance freedom today much wisdom, in small as well as large ways. Seeds of Progress is just one example of how even a small investment can yield us substantial returns to that project.
Joe's excellent critique of "state capacity libertarianism" picks up on something I also noticed when reading Tyler Cowen's piece. As Joe puts it, Cowen's ideal state is "a nonmarginal actor whose task is to achieve certain collective outcomes intuited by Cowen or some other political philosopher." Cowen provides a laundry list of societal challenges he claims only a highly capable state can solve—traffic congestion, secondary education, climate change, etc.—without discussing any in detail. Of course, each issue has been analyzed many times in the libertarian literature, using the standard concepts, theories, and frameworks such as marginal analysis, demonstrated preference, opportunity costs, Austrian price theory, comparative institutional analysis, and so on, and no evidence for "market failure" has surfaced. But Cowen's intuition tells him markets aren't good enough in one area or another.
This is actually Cowen's long-held view. You may remember his 2014 article "The Lack of Major Wars May Be Hurting Economic Growth," which echoed the Mariana Mazzucato position that government spending is the main source of technological progress. I remember a friendly argument with Cowen some twenty years ago about NASA, which he insisted was an example of benevolent government intervention. I brought up the standard counterarguments—theoretical (how do you measure benefits and costs, including opportunity costs?), empirical (lots of case study evidence suggesting widespread waste, fraud, and long-term negative effects on the direction of science and technology), and deontological (is it okay to coerce people to support transfer payments that they see as against their self interest?). He wasn't buying it. Space exploration is just so cool that the usual arguments don't apply.
Many influential writers and thinkers are like this, relying on intuition over analysis and evidence. "I can't explain exactly why this case is different (e.g., immune from public choice considerations), it just is." It's a common problem among academics, elite media, government officials, etc. "People are biased and highly irrational, except for me and my friends." "Inequality is wrong and should be addressed through redistribution, except in the case of academic positions at elite universities or slots in the top journals." "Powerful special interests have too much influence on policy, except for antitrust which is apolitical." Watch for this.
Libby Emmons and David Marcus at the New York Post put a spotlight on the ongoing crusade against the gig economy. They began by citing California Assembly Bill 5, which was designed to put the clamps on the gig economy.
Ostensibly marketed as a bill to reign in rideshare companies like Uber by forcing them to provide independent contractors the same benefits as employees, the law is now poised to harm freelance writers.
This law limits the number of articles a freelancer can sell to a media outlet without occupying a formal employee position to thirty-five. However, a rising number of journalists in the twenty-first century make a living by writing frequently for a few outlets. The damage is already starting to crop up, with news and opinion website Vox cutting two hundred of its California freelancers at one of its outlets.
Such legislation is not just staying in the Golden State. New iterations are being considered in New York and New Jersey. The law might be based in the good intention of protecting gig laborers by providing them with the rights of traditional employees; however, as we’ve repeatedly seen with legislative overreach these days, there are plenty of second- and third-order effects that come about because of these interventions.
Indeed, the gig economy is a transformational advancement in socioeconomic affairs, one that people are still adjusting to as we speak. There will obviously be growing pains as people transition into these work structures. However, politicians who carelessly demagogue these situations make things worse when they scribble legislation that ends up creating unintended consequences.
Ultimately, freelance writing is an enhancement of free speech: dissident voices have the freedom to choose what outlets they write for, often outside of the legacy media’s control. The flexibility that freelance work has given writers could be in jeopardy thanks to such legislation. That extra income that could go to making rent, paying for school, or investing in self-education will now evaporate just because a bunch of politicians supposedly know better and have to save their constituents from the perceived bugaboos of the free market.
New York and New Jersey are now considering their own versions of antigig bills, although the content of such bills remains to be seen. Should these bills target freelance writers like the one in California does, it will only consolidate the legacy media’s power and prevent independent voices from providing a unique perspective in an otherwise stagnant media domain.
Originally published by Advocates for Self-Government.
In a January 14 article for Vox, Ian Millhiser discusses a new proposal in the Harvard Law Review designed to accomplish four things:
(1) a transfer of the Senate’s power to a body that represents citizens equally; (2) an expansion of the House so that all citizens are represented in equal-sized districts; (3) a replacement of the Electoral College with a popular vote; and (4) a modification of the Constitution’s amendment process that would ensure future amendments are ratified by states representing most Americans.
The scheme consists of dividing up the District of Columbia into more than one hundred new tiny states so as to drastically increase the number of leftist-controlled states so as to push through a wide variety of new Constitutional amendments.1
Milhiser is enthusiastic, since he believes the US electoral system is too "undemocractic" and that the system must be overhauled "so that the United States has an election system 'where every vote counts equally.'"
[RELATED: Stop Saying "We're a Republic, Not a Democracy" by Ryan McMaken]
Milhiser's concept of "unequal" is illustrated more clearly when he calls the US Senate "ridiculous" because it is a system "where the nearly 40 million people in California have no more Senate representation than the 578,759 people in Wyoming."
So now we have arrived at the heart of the matter.
Milhiser contends Californians are underrepresented in Washington—or more likely he thinks leftists are underrepresented, given the context of the piece—because Wyoming and California have equal representation in Congress.
This, we are supposed to believe, somehow leaves millions of Californians disenfranchised.
Common sense, however, strongly suggests Californians—or at least the politicians who claim to represent them—are quite well represented in Washington and wield quite a bit of power. Let's look at some numbers:
California has fifty-three votes in the US House of Representatives while Wyoming has one.
As a percentage of the full House, California's delegation makes up 12 percent of all votes while Wyoming's makes up 0.2 percent.
In fact, California's representation in the House is so large that California House members outnumber members from an entire region of the US: namely the Rocky Mountain region. If we add up all eight states of the Mountain West (Nevada, Utah, Arizona, Montana, Idaho, Wyoming, Colorado, and New Mexico) we come up with only thirty-one votes. Moreover, many of these states have split delegations (as with Arizona and Colorado) and rarely vote as a unified group. California, on the other hand, has only seven Republican House members out of fifty-three, meaning that the state's delegation tends to reliably vote together.
California even enjoys a sizable advantage in the electoral college as well. It is true that the electoral college formula evens things up somewhat. California representatives wield more than 10 percent of all electoral college votes, and Wyoming enjoys only 0.6 percent of all votes. Now, if the Rocky Mountain region were to vote together for a certain candidate, it could theoretically, almost equal the power of California. But, the region doesn't vote together, with Colorado, New Mexico, and Nevada often going for one party while the rest of the region goes for another. Thus, California, because its electoral votes are centralized, brings more power to presidential elections than the entire Rocky Mountain region.
So, while it's true that Wyoming's two votes in the US Senate make it easier for a Wyoming-led coalition to veto legislation that favors California, the same can be said of California in the House. While California and Wyoming theoretically have equal power in the Senate, Wyoming has essentially no power in the House, and could not possibly hope to do much to overcome opposition from California House members. The fact that voters in Wyoming have more US senators per person hardly places people with California-type interests at the mercy of people with Wyoming-type interests.
Essentially, the system as it now functions places significantly more veto power in the hands of California in the House. At best, though, Wyoming has only an equal veto to California in the Senate. Veto power, of course, is one of the most important aspects of US legislative institutions, since it is designed to help minority groups protect their own rights even when lacking a majority. This is the philosophy behind the Senate's filibuster, and the philosophy behind the bicameral legislature. The purpose is to provide numerous opportunities for minorities to veto legislation pushed by more powerful groups.
The importance of protecting minority rights, of course, is a mainstay of the ideology we used to call "liberalism"—the idea that people ought to enjoy basic human rights even when the majority doesn't like it.
All that is out the window, however, where progressives and other leftists suspect they are in the majority, in which case the protection of minority groups is null and void. Suddenly, the Democratic majority is the only thing that matters.
Had rank majoritarianism won the day in the past, Indian tribes, Catholics, Quakers, and Japanese Americans would have all been extirpated or run out of the country a century ago. But the sort of prudence that put some limits on the power of the majority in the is now thoroughly unfashionable on the Left. The Left now strains to grasp the opportunity to rid themselves forever of even what small amount of legislative resistance can be offered by the hayseeds in flyover country.
The fact that California gets more than fifty times the votes of North Dakotans isn't enough for progressives. They must also stamp out what limited influence North Dakota has in the Senate as well.
This sort of thinking suggests that in order to make the US more "democratic" large minorities of voters—voters with specific economic and cultural interests that differ from those in other regions—ought to be rendered essentially powerless.
All that said, I endorse the plan from the Harvard Law Review Milhiser is pushing. It undermines the idea that the US's current state boundaries are somehow sacrosanct and that enormous states with millions of people are a perfectly fine thing. The US and its member states are far too large, and could use a thorough dismembering. But Milhiser should be careful what he wishes for.
- 1. I should note there's nothing wrong with dividing up the US into a large number of small states. It's just that the scheme ought to encompass the entire country rather than just a tiny of part of it with the goal of helping a single political party. Indeed, most US states are far too large and ought to be broken up into far smaller pieces: https://mises.org/wire/if-american-federalism-were-swiss-federalism-there-would-be-1300-states
George Mason University economist Tyler Cowen has penned a brief manifesto for what he calls "State Capacity Libertarianism" on the Marginal Revolution blog. In it he makes the case for libertarians to embrace "state capacity" in certain limited cases. You can read his essay here.
My initial responses, in no particular order, are as follows:
1. There is no political will or constituency for skillful technocratic state management of society. This is a pipe dream, once simply referred to as elusive "good government." When do public choicers of all people give this up?
2. There is no third way between state and market, regardless of technology or material development. Futurism is bunk; the question before us today is the same as thirty, fifty, or one hundred years ago: who decides? Decentralization vs. centralization is the most important policy question.
3. Western states won't give up their sclerotic regulatory, tax, central banking, and entitlement systems no matter how many flying cars or hyperloops we want. This reality will be a huge drag on science, infrastructure, medicine/health, and overall well-being.
4. The environmental movement will quash nuclear (especially after Fukushima), and the energy capacity vs. weight/cost issue will continue to plague electric cars/planes.
5. Left socialism, not libertarian futurism, is the rising tide across the West — and its constituency skews young. Adopting its pose, language, or ostensible goals won't produce Singapore.
6. Climate change is not a problem or issue for anyone to solve.
7. The West can't advance until it stops warring. War and peace won't be solved technocratically, and true noninterventionism requires a painful rethinking of the hubris known as universalism. I thought technocrats believed in realpolitik?
8. Human happiness and prosperity depend on elements of civil society which libertarian futurists don't like (faith, family, et al.). Hence the cheap jab at "Ron Paulism."
9. We build "capacity" in society through profit, saving, and capital investment. Government makes this worse, not better, in each and every case.
10. Libertarianism simply means "private." It is a non-state approach to organizing human society. It is not narrow or confining; in fact everything Cowen desires in an improved society can be advanced through private mechanisms.
Buried in the House Judiciary Committee's impeachment report is some insight into how the foreign policy establishment is attempting to re-create a new Cold War with the Russian Federation. Much of the report is devoted to one of the primary charges against the president: that he allegedly obstructed Congress's investigation.
The first claim is largely asserted through legalese about how Trump was insufficiently cooperative with Congressional investigators.
I'll let the lawyers cover that one.
The second charge, however, is more policy-based. The report claims it is possible to commit treason by simply acting to avoid giving money to a foreign government — if that money is being used against the US's adversaries. From there, the report asserts Trump essentially committed treason as part of an "aggravating factor" related to "an impeachable abuse of power." He did this by allegedly withholding foreign aid dollars from the Ukrainian state.
This "abuse of power" consists of the president engaging in bribery by attempting to use taxpayer dollars to extract political favors from the Ukrainian leadership in the form of dirt on former Vice President Biden. I'll leave the bribery and abuse charge to the lawyers, but what is of special interest here is the claim that the withholding of funds destined for the Ukraine government was objectionable largely because the withholding of funds imperiled the US's quasi war against Russia.
Let's follow the report's logic: according to the report, "a person commits treason if he uses armed force in an attempt to overthrow the government, or if he knowingly gives aid and comfort to nations (or organizations) with which the United States is in a state of declared or open war."
The report then asserts "America has a vital national security interest in countering Russian aggression, and our strategic partner Ukraine is quite literally at the front line of resisting that aggression."
The report goes on to claim it is essential that the US president "stand with our ally in resisting the aggression of our adversary." Basically, the logic of the report rests on the old propaganda tactic of claiming "we're fighting them over there so we don't have to fight them here."
Thus, the report strongly suggests that by temporarily and briefly withholding foreign aid dollars from Ukraine, Trump committed treason because he was obstructing Ukraine's military efforts against Russia.
The report's language reminds us that in the minds of DC policymakers, the US is essentially at war with Russia and that any withholding of aid is the equivalent of conspiring with foreign enemies.
There are several problems with this logic, of course.
First, the United States is not "in a state of declared or open war" with Russia. Congress has not declared war on Russia — or anyone else at this time — as the law (i.e., US Constitution) mandates. Nor is the US in a state of "open war" with Russia except in the minds of modern-day McCarthyites and and their supporters.
It is telling that the phrase "open war" was added to the definition of "treason" since it is clear no legal state of war exists between the US and Russia. No doubt, the authors of the report think that the US must obviously be in a state of "open war" with Russia, but this naturally is a matter of opinion. This is why we have a legal process of declaring war on specific groups exists in the US Constitution. The fact Congress has chosen to not declare war would suggest to the reasonable person that the US is, in fact, not at war with Russia. If certain people in the US government want the US to be at war with Russia, they ought to be forced to submit their motion to a majority vote in Congress. Until that happens, the US is not at war with Russia.
Secondly, given that Russia has not even been established as the US's "adversary" in accordance with Article I of the Constitution, it is difficult to see how any US agent commits treason by refusing to hand over taxpayer dollars to the Ukraine regime.
One could reasonably claim that by withholding these dollars, Trump was violating the law. This, however, is a long way from "treason." Moreover, it's entirely possible the president has engaged in bribery, obstruction or justice, or other offenses. The inclusion of the "treason" charge, however, suggests the Judiciary Committee thinks the obstruction and bribery charges were insufficient on their own. Thus, the treason charge had to be created on the back of a neo-Cold War ideology now prevailing in Washington.
This is the natural outcome of a foreign policy in which it is perceived to be the job of the United States to guarantee the safety of any and every foreign regime the US government happens to support.
This should surprise no one since the bread and butter of Washington, DC is perpetual war against countless real and imagined enemies. We're told ever greater resources must be devoted to Washington's continued dreams of global war. For example, the Pentagon is currently funded at levels above those of the Vietnam War, and above the Cold War average , but we relentlessly hear about how the military establishment is at crisis levels of neglect. This is demonstrably false, as is the claim withholding a few bucks from the corrupt Ukraine regime puts the US in danger from a Russian invasion.
There are certainly good reasons to impeach presidents, but not being sufficiently pro-war isn't one of them. If the US Congress were less committed to a maximalist foreign policy, it would be impeaching presidents for war crimes, instead of claiming — rather ridiculously — that the US has a "vital national security interest" in Ukraine. After all, virtually every president since 1945 — including the current one — has started or continued undeclared illegal wars against foreign regimes. Every president since Reagan has bombed foreigners without any legal justification whatsoever. Each one of them was eligible for impeachment on this issue.
But we never hear any call for impeachment from Congressional leaders on those grounds. Instead, what we have now appears to be an impeachment process largely driven by the desire to punish a president for not provoking a war.
Frederic Bastiat made a clear distnction between the good economist and the bad economist. For him, the good economist looks beyond what is immediately apparent and instead looks much further into the future. In this world, however, we have many bad economists, and as Bastiat writes in "That Which Is Seen, and That Which Is Not Seen," "It almost always happens that when the immediate consequence is favorable, the ultimate consequences are fatal, and the converse.” As a result, Bastiat warns, “It follows that the bad economist pursues a small present good, which will be followed by a great evil to come."
A refusal to look beyond the immediate and “seen” to the “unseen” also leads to bad economic theory, which, beyond the mere foibles of individual economists, solidifies the practice of ignoring the hidden future effects of economic policies. These bad theoretical frameworks inevitably lead to bad policies and eventually the destruction of wealth via misallocation of resources within the economy.
This phenomenon is certainly common enough in modern economic policies and their underlying theoretical frameworks. For example, we have a large body of economics built on pseudo-facts and unrealistic assumptions. This has been characterized in part by the over-mathematization of economics. As a result, economic analysis relies only on those phenomena that can be quantified, measured, and fit within certain types of models. Other information is ignored.
In other words, policies built on these theoretical frameworks and mathematical models focus heavily on what is seen, such as prices, wages, volume, GDP, and other such metrics. A decline in these factors, it is believed, must immediately be remedied by other measurable activities, such as injection of money and credit into the economy, regulations, subsidies, and so on.
These have an immediate short term and "seen" effect. But, as they are hard to observe, the long term and "unseen" consequences are often ignored, disregarded, or outright denied.
However, the long term and unseen consequences of these may include changes in and the distortion of the market structure, inflation, stifled trade, destruction of capital and wealth, and misallocation of labor, capital, and production capacity. These factors may be very hard to observe, although they have deeper and lasting effects on the growth and sustainability of the economy.
These unmeasurable distortions of the economy often destroy capital and give rise to zombie companies and sectors that end up suffocating the economy by driving out productive companies and sectors.
Bastiat continues, "The true economist pursues a great good to come, at the risk of a small present evil." Good economics looks to the long term and it confers great importance to what is unseen due to the fact that it almost always has longer lasting, more severe, and deeper consequences. For example, excessive borrowing by government and then the handing out of welfare is seen. But the entrepreneur who is crowded out of the credit market, the potential jobs, and the increase in national wealth that he could have contributed are unseen.
So how to practice good economics?
The good economist takes a very different view, recognizing the importance of uncovering hidden effects and relationships. This can be facilitated with less attention to mere quantitative analysis and more attention to sound theory and qualitative analysis. This, however, requires prudence and restraint on the part of the economist. It requires he or she allow natural market structures and mechanisms to follow their natural trajectories so as to organize the market in the most efficient and productive way. How or when this is done cannot always be directly observed, and thus it becomes difficult to tinker endlessly with the machinery of the economy.
The good economist, however, will not be discouraged by this, and will instead pursue a greater understanding of the economy that includes the unseen and well as the seen.