LibertyVoter.Org

By Diego Zuluaga

Diego Zuluaga

If China were a Eurozone country, it would likely be regarded as
the next victim of the bond vigilantes.

The People’s Republic has more than doubled its stock of private
credit relative to GDP in the last ten years, even as output grew
at annual rates exceeding 6.5 per cent. Indeed, China accounts for
fully one-third of the global increase in private debt since the
financial crisis.

Only Ireland and Spain, at the height of their ill-fated housing
booms, can rival the Chinese credit explosion in rapidity and
scale.

Investors might be reassured if Chinese credit markets were free
and transparent. But that is manifestly not the case. Lending is
dominated by the “Big Four”
state-owned banks that were spun off from the People’s Bank of
China in the 1980s, as market reforms got under way. They still
account for 60 per cent of bank assets, most of which are loans to
state-owned industrial enterprises, often extended according to
political rather than business criteria.

The retail side doesn’t look much better. Until October of 2015,
bank deposit interest rates were capped. Such financial
repression not only fattened bank profits at the expense of their
depositors, but it also encouraged Chinese savers to reach for yield by buying houses,
speculating in illiquid stocks of largely state-owned companies,
and acquiring investment products in the country’s burgeoning
shadow banking sector. All three markets have of late shown signs
of overheating.

If China were a Eurozone
country, it would likely be regarded as the next victim of the bond
vigilantes.

Not all is bad news. Non-performing loans, which in the wake of
the 1997 Asian financial crisis represented an eye-popping 25 per cent of
total loans, have been brought down to manageable levels through a
mixture of public and private recapitalisation, and the purchase on
favourable terms of toxic assets. But even here, Chinese taxpayers
have had to pick up the tab for the bad decisions of state
cronies.

And it hasn’t been the astute management of Communist Party
chiefs that has helped the country avoid a financial crash so far,
but the breathtaking growth rates that China averaged between the
early 1990s and 2008. When an economy is growing at 10 per cent per
year, the weight of bad loans can halve in ten years, even with the
absolute value of bad loans growing annually at 3 per cent.

But a number of things have changed since 2008. Firstly, Chinese
growth seems to have permanently slowed. Official growth rates have
hovered around 6.5 per cent since 2015, one-third below …read more

Source: OP-EDS

By Doug Bandow

Doug Bandow

Congress created the usual special interest frenzy with its
latest iteration of the Farm Bill. Agricultural subsidies are one
of the most important examples of corporate welfare, money handed
out to businesses based on political connections.

Business plays a vital role in a free market. In real capitalism
there are no guaranteed profits. But corporate welfare eliminates
this handicap for the well-connected.

Business subsidies that allow politicians to channel economic
resources toward their preferred ends distort investment and trade.
Moreover, turning government into an engine of illicit profit
encourages what economists call rent-seeking. Well-organized
special interests usually triumph over the broader public and
national interest.

Aid comes in many forms.

Agriculture has spawned a gaggle of sometimes bizarre subsidies.
Like a dairy program which created milk surpluses, in turn
encouraging state price fixing, generating massive cheese stockpiles, in
turn triggering giveaways to the poor. Payments, loans, crop
insurance, import quotas, and more underwrite farmers.

In real capitalism there
are no guaranteed profits. But corporate welfare eliminates this
handicap for the well-connected.

Money also goes to agricultural enterprises through the Rural
Business-Cooperative Service, which supports “business
development.” The recently defeated Farm Bill even included $65
million in special health care subsidies for agricultural
associations. Ironically, farm households enjoy higher median
income and wealth than non-farm households.

The Market Access Program is one of several initiatives to
subsidize agricultural exports. Other programs support general
trade and investment.

For instance, the Export-Import Bank is known as Boeing’s Bank.
It provides cheap credit for foreign buyers of American products.
Which, ironically, gives foreign firms an advantage over U.S.
producers who must pay full fare. Ex-Im’s biggest beneficiary in
recent years has been China, especially its state-owned firms.

The Overseas Private Investment Corporation underwrites U.S.
investment in potentially unstable nations. If the project pays
off, investors win. If not, the rest of us lose. Why should the
public guarantee investor profits?

At the other end of the commercial spectrum is the Small
Business Administration. Smaller firms are a vital part of the
American economy but they are not an underserved market. There is
no dearth of, say, liquor stores. SBA is a response to a political
opportunity, not an economic need.

Much corporate welfare is disguised in broader terms. The
Commerce Department’s Economic Development Administration
subsidizes “development” in “distressed communities,” meaning the
agency underwrites business, with dubious results. There are some
180 federal pork barrel “economic development” programs.

The Rural Utilities Service (formerly the Rural Electrification
Administration), continues, never mind that rural America got
electricity decades ago. Today RUS has expanded into Broadband
internet and even television service.

The Bureau of Land Management (mis)manages federal lands,
subsidizing use of …read more

Source: OP-EDS

By Trevor Burrus

Trevor Burrus

Brett Kavanaugh is Donald Trump’s nominee to fill Justice
Anthony Kennedy’s “swing” seat on the Supreme Court, known as such
for how often his vote was the deciding one on behalf of either the
liberal or conservative cohorts of the court on issues ranging from
same-sex marriage to the travel ban.

With the Kavanaugh pick, many on the left are now concerned that
a more conservative Supreme Court could result in harm to civil
liberties and the rolling back of federal programs. While those
concerns are not unreasonable, they shouldn’t be apocalyptic. The
reality is that gay marriage isn’t going anywhere, Roe v.
Wade will probably not be overturned, and a court with a
Justice Kavanaugh could help rein in an executive branch that has
become too powerful.

I am a libertarian, and Kennedy’s votes aligned with my
philosophy more often than any other justice’s — albeit often
accompanied by somewhat inscrutable judicial opinions. In addition
to his stalwart defenses of free speech (Texas
v. Johnson) and federalism (NFIB
v. Sebelius) Kennedy was the swing vote in all the major
gay rights cases of the past 25 years. When Kennedy arrived on the
bench in 1987, same-sex intimacy was illegal in many parts of the
country. When he left, gay marriage was legal everywhere. That’s a
legacy for which he will be justly celebrated.

Yet Kennedy did not so much lead that parade rather than join
it. The growing social acceptance of gay rights is one of the great
civil rights stories of all time, and it didn’t happen because the
Supreme Court told us to do it. According to Pew, in 2001, 57% of Americans
opposed gay marriage; in 2017 only 32% did.

Those numbers matter to justices, even ones like Kavanaugh.
Disrupting expectations and going against widespread public opinion
is not something that any justice is likely to do. Overturning gay
marriage would require invalidating hundreds of thousands of
marriages, and it would wreak havoc with tax statuses,
inheritances, property ownership and dozens of other legal
relationships that extend from marriage.

The reality is that gay
marriage isn’t going anywhere, Roe v. Wade will probably
not be overturned, and a court with a Justice Kavanaugh could help
rein in an executive branch that has become too
powerful.

Moreover, overturning gay marriage would cause public opinion to
shift against the Supreme Court, imperiling the legitimacy of an
institution that depends upon the perception of legitimacy to
function effectively. According to Gallup, the court hasn’t had an approval
rating over 50% since 2010. While justices should theoretically do
their jobs without concern …read more

Source: OP-EDS