Minnesota Free Market Institute
The Minnesota Free Market Institute Weekly Update
Friday, July 3, 2009


An “Exit Strategy” for Big Government?
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If you believe in freedom and free markets like I do, you
will no doubt be appalled, on this 4th of July holiday, to reflect
on how much of our economy is now owned or partially owned and directly
controlled by the Federal government as a result of the Obama administrations’  policies to combat the financial crisis and
the recession.  The government has a
direct ownership stake in failing auto companies, GM, Chrysler, Insurer AIG and
nearly 500 other companies. Two different presidential administrations have
told us that all of the dramatic measures that have been taken are “temporary”
and that they will be reversed as soon as the economic storm is over.  When asked to define what “temporary” means,
there has been an unwillingness on the part of officials and the President
himself to set a deadline or an expiration date for when failing private
companies might return to private ownership.

A new effort by Sen. John Thune, (R-South Dakota) fixes a
end point for government ownership–July, 1, 2010. The bill, recently introduced
in the Senate, mandates that the Federal government must divest itself of private
company ownership.  It also must not
acquire any new private assets. To those concerned that the government may then
be forced to dump assets in a fire sale potentially costing taxpayers millions,
Thune has a out. If Treasury Secretary Geithner can show that the assets are
undervalued and likely to regain their value,
a yearlong extension may be granted.
While it is true that congress could modify the deadline prior to its
expiration, this new initiative by Thune at least sets a clock ticking and puts
the end of federal government ownership on the table, not as some vaguely held
goal in the far off and indistinct future but as a reality at some relatively
near point in time.

Thune’s bill also covers the present “conservatorship” of
Mortgage guarantors, Fannie Mae and Freddie Mac  and demands that Treasury find a way to end
that temporary status to return the entities to a stable and sustainable
course.

Although support for the bill is slow in coming from
Congress, public opinion on it is fairly clear: Rasmussen polling shows 80% of Americans want the Federal Government to divest itself of GM and Chrysler ownership right now.

It would be great to think of celebrating next Independence
day with an end to government ownership in our economy and a return its
rightful role, enforcing laws and contracts.

Pat Anderson is President of the Minnesota Free Market Institute

America’s Shredded Wheat Future
Craig Westover
One of the first things one learns about the art of
salesmanship is conditioning the customer to say “yes.” Small talk isn’t small
talk. That offhand comment about the weather, “Sure is a nice day, isn’t it?”
has a purpose as surely as the less subtle, “So, would you like to save some
money today?”
Given that putting a potential customer in a buying frame of
mind is sound sales technique, one must wonder what a new advertising
campaign for Post Shredded Wheat says about the times in which we live. The
campaign, created by Ogilvy and Mather, promotes the product proposition
that for over 100 years shredded wheat has been made with “one simple, honest
ingredient” – natural whole grain wheat.

“There’s been a marked change in American values,” Kelly
Peters, director of integrated insights and strategy for Post Foods told the
industry publication Marketing Daily,
“with a greater desire for honesty, trustworthiness and security during a time
of economic and social uncertainty.”

It’s that context for the ad that is especially
interesting.

In one
spot, pitchman Frank Druffle plays (tongue in cheek) the fictitious company
CEO. Sitting in warehouse loft-like retro office, Druffle asks, “Has progress
taken us to a better place?”

“I’d say it’s taken us for a ride,” he answers his own
question. “Honestly, what thanks do we owe progress? We’re up to our necks in
landfills, down to the wire in resources, and climate change … (here he goes to
the window; outside the trees are banging against the building, and the wind is
howling) … it’s out to get us (he closes the blinds).”

“That’s why progress plays no role inside Post Shredded
Wheat,” Druffle adds. “Here, we put the ‘no’ in ‘innovation.'” He then goes on
to make a virtue out of shredded wheat’s unchanging nature.

To the degree the lead-in satire of the piece works — the
reason any good satire works — is that it contains an element of truth. The
Post campaign counts on the fact that the audience shares at least some empathy
with the idea that progress isn’t all it’s cracked up to be. The commercial’s
humor requires that people look askew at progress and innovation as worthy
goals. The pitch depends on peoples’ willingness to trade off the potentially
uncertain future for the stability of a perpetual present.

Is it any wonder then that we have a Congress and
administration selling a plethora of policies that put the ‘no’ in ‘innovation’
and promise us the bland security of a shredded wheat future? Is it a surprise
that we so easily accept a Cap & Trade program that effectively caps
innovation and trades away progress? That we accept with nary a nod that
reducing the nation’s wealth and productive capacity can be called ‘progress’?
That it is somehow ‘progressive’ to preserve the status quo?

It is ironic that progressive policy produces the opposite of
its root. Instead of ‘progress’ we are sold the equality of progressive health
care that curtails cost by saying ‘no’ to  unproven innovation. We are pushed to
progressive public education that eschews the innovation spurred by private
competition. And most ironic of all, we are pitched progressive taxation that
reverts to the age-old barbarism of the politically powerful looting the
nation’s wealth, shredding the rule of law in the process.

Have we become a country where GM stands for ‘Government
Motors,’ and the new moniker of our modern economy is ‘What’s good for Post
Shredded Wheat is good for the USA’?

That question is not just small talk.

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute

Culture and the Rise–and Decline–of Free Markets
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Many years ago, Daniel
Bell wrote “The cultural contradictions of capitalism.” It’s been  a long time
since I’ve read anything from it, but ever since the start of the financial
meltdown last year, it’s popped into my head from time to time.

If I
correctly the recall the comic-book version of Bell’s work–and face it, isn’t
that the form that most of our memories of great books take?–Bell argued that
economic prosperity leads to changes in habits and expectations that lead to
economic stagnation. Well, if Bell didn’t say that, I’m going to.

As
Americans, we are filthy rich when compared with the history of human population
and people living across the world today. By some measures, we live much better
than people in western Europe, the people whose political and economic systems
resemble ours the most. Our greatest nutritional problem is not starvation but
obesity. And homeless people have more access to information, thanks to wi-fi
hot spots and public libraries, than the great scholars of centuries
past.

And yet too many citizens are willing to throw this wealth away by
choosing order, predictability, and certainty over chaos, unpredictability, and
the possibility of failure. They don’t do this directly, of course, but that’s
what we all get when government protects us from the unpredictable misfortunes
of life, whether it’s an illness, a down economy, poor personal planning. and
just plain bad luck. So we have product-safety regulations, financial services
regulations, regulations on health insurance, government welfare and health care
programs, and laws and programs meant to eliminate or at least mitigate every
miscalculation, every wrongdoing, every bad bet. The bailout culture is simply
the latest manifestation of this trend.

Increasingly, we are giving up
the risk-acceptance that is necessary for a dynamic, growing economy, preferring
the certainty of laws and programs. But that certainty has costs. Sometimes the
costs are obvious (as on April 15). Other times they are not so obvious, as
when, say, new banking regulations shut down alternatives to the 30-year
mortgage. And sometimes we push the cost far off into the future, as is the case
with the $75 trillion worth of unfunded liabilities that we have shifted onto
our grandchildren through the Medicare program.


More laws won’t guarantee us that certainty. People will continue to break laws, sometimes to an outrageous extent before they are caught and punished, as we have seen with Bernie Madoff’s ponzi scheme.  Madoff broke existing laws but somehow evaded scrutiny due to a combination of lax enforcement and the same skills that every confidence trickster has used from time immemorial.


We’ve become, as a
nation, so wealthy that we’re unaware that prosperity (and its companion,
opportunity) is fragile. Government regulations and taxes take away money that
would be used to invent new goods and services, make it more difficult for new
businesses to start, and squelch the opportunity to fail–or succeed.

In
short, the success of free people and free markets have led to undermining
both.


John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

Must Read

Better Health Care? John Stossel Real Clear Politics

Stossel summarizes the benefits of “free” care vs. the costs of rationing and how they are born by Canadians.  The sickest people pay the highest price.  Also: caught on tape, a “lottery” to see the doctor in one town.
In Case You Missed It from the Minnesota Free Market Institute
King Banaian SCSU Scholars

John LaPlante State House Call

Craig Westover

The Minnesota Free Market Institute Weekly Update is edited by Margaret Martin

The Minnesota Free Market Institute conducts research and advocates for
policy that limits government involvement in individual affairs and
promotes competition and consumer choice. By analyzing the actions of
the past and applying the enduring lessons of the free market, the
Minnesota Free Market Institute creates policy options for the future.
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In This Issue
An “Exit Strategy” for Big Government?
America’s Shredded Wheat Future
Culture and the Rise–and Decline–of Free Markets
Must Read
In Case You Missed it from the Minnesota Free Market Institute
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