Fatal Conceit | Justin Logan and Christopher Preble | Cato Institute: Commentary

Fatal Conceit | Justin Logan and Christopher Preble | Cato Institute: Commentary: "In the nearly 15 years since the Dayton Accord was signed, Bosnia has been the site of the largest state-building project on earth. On a per capita basis, the multinational project there has dwarfed even the post — World War II efforts in Germany and Japan. Tiny Kosovo received higher per capita expenditure. Yet, as political scientists Patrice McMahon and Jon Western warned in Foreign Affairs last year, Bosnia 'now stands on the brink of collapse' — partly as a consequence of persistent ethnic cleavages and the inherent difficulty of state building. McMahon and Western — who support additional efforts in Bosnia to prevent a collapse — warn that Bosnia has gone from being 'the poster child for international reconstruction efforts' to being a cautionary tale about the limits of even very well-funded and focused efforts at state building.

Similarly, in surveying conditions in Bosnia and Kosovo, Gordon Bardos of Columbia University recently concluded that "it is becoming increasingly difficult to argue that we have the intellectual, political, or financial wherewithal to transform the political cultures of other countries" at an acceptable cost. If Bosnia and Kosovo — European countries less rugged than Afghanistan, and with, respectively, one-sixth and one-twelfth of its population — represent the case for optimism in Afghanistan, then the case for gloom is strong."

"Consider the following counterfactual: If everything in Afghanistan were the same today, except the U.S. did not have a large military footprint there, would anyone propose deploying 100,000 servicemen and -women to build the Afghans a government? We should doubt whether the government-building project is likely to succeed. There is little precedent for successful state building on this scale; and there are especially strong centrifugal forces in Afghanistan, including rampant illiteracy, the country's position as a plaything of regional powers (India and Pakistan), powerful identity politics, and a xenophobic culture. Unfortunately, the evidence suggests that Afghanistan simply is not far enough along in the historical processes that produced national states in the past."

"It is incoherent to believe that the same government that can produce neither jobs nor well-educated children at home can build viable states in foreign lands with unfamiliar languages, customs, and cultures. To oppose such projects at home while supporting them abroad defies the laws of economics and basic common sense."

Juveniles in Charge | Richard W. Rahn | Cato Institute: Commentary

Juveniles in Charge | Richard W. Rahn | Cato Institute: Commentary: "Why are sea turtles endangered, while chickens and cows are not? The answer, quite simply, is that chickens and cows are privately owned and turtles are not — thus they suffer from the tragedy of the commons. When things are owned in common — socialism — no person takes responsibility for protecting the property, and thus it most often ends up being neglected or even destroyed — hence the fate of the sea turtle.

Sea turtles like to lay their eggs on nice beaches in tropical areas — the very same places where people like to live and vacation. This is a battle for space that the sea turtle is bound to lose, despite the best efforts of environmentalist do-gooders to keep people from having a good time and enjoying beaches. The better solution is to farm turtles similar to the way we farm chickens and cows, while also requiring the release of some turtles in order to replenish the wild stocks. Virtually every part of the turtle is useful — tasty lean meat for turtle soup, shells for jewelry, etc. If people were allowed to farm them, there would be many millions more turtles."

"Recently, a chairman of a substantial European bank explained to me why he can no longer take American clients or invest in the United States. Under some of the new U.S. laws and regulations that were designed to get a few billion more dollars for the IRS, those who run foreign banks and have U.S. 'tax persons' (citizens and green card holders, etc.) as clients can be held liable both civilly and criminally for not reporting them to the IRS. But, in an age when millions of people have multiple passports and citizenships, there is no way any banker can know with certainty who is and who is not an American 'tax person.' As a result, the United States is in the process of driving away, perhaps, trillions of dollars in needed foreign investment and millions of U.S. jobs because a majority of those in Congress are unable to see the very costly consequences of their juvenile actions."

The Fed Can't Solve Our Economic Woes | Gerald P. O'Driscoll Jr. | Cato Institute: Commentary

The Fed Can't Solve Our Economic Woes | Gerald P. O'Driscoll Jr. | Cato Institute: Commentary: "the collapse of demand is a consequence — not the cause — of the bust. Policies to address crises must get cause and effect right."

"The solution lies in restoring balance sheets. For financial firms, that means raising capital. For consumers and businesses alike, that means saving more of their reduced incomes.

Yet public policy has focused almost exclusively on stimulating spending without much regard to why spending, especially consumption, has flagged. Until balance sheets (corporate and household) are restored, increased spending cannot be sustained."

"Its move toward Japan-style quantitative easing is a misstep. And historically low interest rates — about which the Bank of International Settlements, the bank for central banks, sounded a warning in its 2009/2010 annual report — will inevitably distort economic activity, as they did during the housing boom. Low interest rates slow the process of restoring balance sheets by keeping asset prices artificially inflated. They also penalize saving, thus prolonging the process of rebuilding balance sheets."