Sheldon Richman reflects on World War I. A slice:
Could the men responsible for the war have wrought anything like the horrors they inflicted had they not controlled a state apparatus — an army, a navy, a compulsory revenue-collection agency, and a bureaucracy to conscript (enslave) the nation’s young males? (The draft was fittingly called the blood-tax.) It wasn’t just the European state system that is implicated. Three years into the conflict, a purported constitutionally limited republic — the United States — joined the orgy of violence and determined the tragic outcome. That the Great War brought to an end the halting, imperfect journey toward genuine liberalism merely compounded the catastrophe.
The plain reality is that any system of allocating the available water will favor some people and not others. How about a footrace to the local water warehouse? That would favor the swift and the young. How about violence as a rationing mechanism: letting people just fight it out. That would favor the young, the strong, and males rather than females. Suppose we allow beauty to be the criterion. A lot of guys like me would go awfully thirsty. “Fairness” in this context too often is defined as the system under which a given person thinks that he will be able to compete most effectively. Where people stand depends on where they sit.
And so the moral disadvantage of “price gouging” relative to other methods of allocating a good suddenly more valuable remains entirely obscure. The argument that the suppression of “price gouging” will advantage the poor is a fallacy: The net effect on the poor depends on the choice of an alternative rationing scheme, and on whether the poor actually are able to compete more effectively under the latter. Moreover, the nonpoor, prevented from bidding up the price of bottled water, are very likely to shift their spending to other markets, bidding up the prices of those goods instead. Is that better for the poor? And price suppression analytically is a tax borne in part by producers; are not some of them “poor”? More broadly, price controls must have the effect of making the economy smaller. Is that good for the poor? When such politicians as DeWine speak, the answers to those fundamental questions remain shrouded in rhetorical fog.
“Price gouging” — allocation by market price — provides powerful incentives to conserve, and powerful incentives for people to find ways to supply more bottled water. Are those not desirable outcomes? Price rationing may or may not be good for the poor, but, then, any rationing scheme is bad for someone. Unless we want to argue that the poor have a greater moral claim than others — a position that I would criticize sharply — the widely assumed but poorly reasoned premise that “price gouging,” that is, rationing by price, is morally deficient is a popular fallacy.
Paul Krugman broke his uncharacteristic silence on Ex-Im to offer the lukewarm endorsement that Ex-Im is less harmful than usual when interest rates are stuck at zero. He dismisses the usual case for keeping Ex-Im in place, writing that “you can make various strategic trade policy arguments, but the case for a special export lender is weak at best.” Then he reverses position, citing current interest rate conditions as a reason why mercantilism will “work” for the moment.
But if the relevant interest rates really are stuck at zero, it is now the perfect time to eliminate Ex-Im. Since Ex-Im functions as a lender, its removal could cause a small short-term shift in the supply of loanable funds. (In the long run, and possibly very quickly, that supply would be replaced by private banks.) But if the equilibrium full-employment interest rate is currently below zero, the quantity of loans is demand-determined and a leftward shift in supply will have no impact on quantity.
If Krugman is thinking of Ex-Im as a form of fiscal stimulus, his argument collides head-on with the more common defense of Ex-Im, that it does not cost taxpayers money. If Ex-Im runs a surplus, ending it would be a form of stimulus! Alternatively, if Krugman is thinking of Ex-Im’s lending as a form of quantitative easing, it can surely be offset by the Federal Reserve.