An African American man lynched from a tree, 1925 (wikimedia)

The Cato Institute’s Ilya Shapiro opines that Sonia Sotomayor’s selection “represents the very worst of racial politics” as “she is not a leading light of the judiciary and would not have been considered had she not been a Hispanic woman.”

I think this is a revealing moment. Sotomayor has the normal qualifications for a Supreme Court justice—she shares the president’s political views, she lacks a record of inflammatory legal writing that would prevent confirmation, the has experience as an appellate judge, she went to fancy schools. Insofar as her background was a consideration in selecting her, which it undoubtedly was, this is also totally normal. Presidents have always sought various kinds of regional, religious, and ethnic balance in the courts. Much was made out of Samuel Alito’s Italian American ancestry, and obviously Thurgood Marshall was initially put on the court in part to make a symbolic statement about civil rights and Clarence Thomas was appointed to replace him in part out of a desire to fill Marshall’s old seat with an African-American. There was a tradition of a “Jewish seat” at various times, etc.

But even more revealing is that even if Sotomayor’s selection were somehow out of the ordinary, the idea that picking one appellate judge rather than another for a promotion could possibly be the very worst of racial politics is ludicrous. At its very worst, racial politics in the United States involved the systematic disenfranchisement of millions of people, their subjection to pervasive social and economic discrimination, and the maintenance of the apartheid system via the threat and reality of state-sponsored terrorist violence. At its very worst, racial politics in the United States involved persistent filibustering to prevent the federal government from doing anything to curb widespread lynching. At its very worst, racial politics in the United States involved a violent rebellion that sought to dismantle the country in the name of chattel slavery and led to the deaths of hundreds of thousands of people.

But despite that long history, broad swathes of the American right remain persistently and willfully blind to the problem of discrimination against non-whites. Their view is, essentially, that racism emerged as a problem sometime in the year 1967 and that the problem consists of white people being unduly burdened by efforts to remediate something or other.

Cairo Traffic Jam (cc photo by tronics)

Cato’s Daniel Mitchell reaches a truly puzzling conclusion about the source of a traffic jam in Washington, DC. In a kind of public choice analysis gone mad, he apparently thinks that the government seeks to maximize profits, whereas private corporations are wholly benevolent in their motives:

But when I made the right turn, I discovered why traffic was so snarled on 15th Street. There was a cop standing in the middle of Constitution Avenue waiting to snare drivers turning right from the center lane. Along with many other drivers that day, I got caught and lost another 10 minutes waiting for a ticket. But the $25 ticket is not what got me so irritated. It was the fact that thousands of commuters had to deal with horrible traffic (not only because people like me suddenly got stopped and traffic behind us also had to stop, but also because people in the right-turn-only lane also could not move with the cop blocking traffic) because some bureaucrat from the National Park Police found an easy way to fill his ticket quota.

If the private sector operated the roads (permit me to engage in some libertarian fantasizing), this would never happen. Because of a desire to please drivers (customers), the folks in charge of the road would have made right turns an option from the center lane. But when government sees a bottleneck, the reaction of politicians and bureaucrats is to figure out how to fleece people for more money — not to make travel safer and quicker.

This is ludicrous. The private sector seeks to maximize profits. If a private sector firm owned the streets of Washington, DC it would exercise its monopoly power “to fleece people for more money.” This is pretty basic. That’s what private firms are there for.

The larger issue is that whether publicly owned or privately owned, the smart thing to do with crowded roads is to charge a fee for the right to drive on them. That would generate revenue, and I wouldn’t call it “fleecing” people since it would result in reduced congestion, a smoother flow of traffic, and a more pleasant experience for the citizens slash paying customers. Of course at the moment we have very little congestion pricing in the United States because of political opposition. And since private road owners would want to engage in congestion pricing, the exact same political impediments stand between sensible public management of roads and their privatization. But if the road was publicly managed, and featured a congestion charge, then the revenue could be used to reduce the overall tax burden or else to increase the quality of the alternative forms of transportation offered.

Whether or not you like the idea of a Canadian-style single-payer health care system, there’s no question that we already have such a system here in the United States. The Canadians call their system “Medicare” and it’s open to all citizens. We call our version of Medicare “Medicare” and it’s open to all citizens over the age of 65. In Medicare, like in Medicare, medical services are provided by the private sector but the costs are substantially born by a government-run insurance program. Medicare in Canada has problems, but it’s very popular and Canadians show little sign of wanting it to change. Medicare in the United States also has problems, but it’s also very popular and senior citizens show little sign of wanting it to change. Older Americans are also generally skeptical of Barack Obama and thus plagued by anxiety that he’s going to somehow curtail their access to generous government-provided health insurance.

Alternatively, you could act like the Cato Institute’s Doug Bandow and treat AARP members’ skepticism as a sign of incipient libertarianism:

In Dallas, at least, the AARP staff found it tough going attempting to explain to the organization’s members why the elderly would be better off with Obama-like “reform.” These people obviously were having trouble with the line, “I’m from the government and I’m here to help you.” And they were quite vocal in stating their concerns. But they were acting well within the American political tradition, which seems to be what has spooked advocates of a government medical takeover speaking breathlessly of “mobs”–presumably like the one in Dallas–opposing “reform.”

I’m sure they did have trouble explaining because there are people like Bandow out there deliberately confusing the situation. But, again, senior citizens are already experiencing government-run health insurance. And they like it. They love it! They’re nervous that it might change. And their fears are being stoked by a right-wing campaign of deception. But they’re certainly not clamoring for a Cato-style agenda in which the government stops giving them health insurance.

One issue I’m interested in with regard to the Supreme Court is civil liberties and executive power. On most issues, I basically assume that anyone who Obama picks is going to have views I’m satisfied with. But Democratic presidents are, you know, presidents and often don’t worry too much about presidential power run amok. So I thought I’d look and see what the libertarian Cato Institute has to say about Sonia Sotomayor’s record, since they follow these issues closely.

Well, Roger Pilon slams her as “the most radical of all the frequently mentioned candidates before him.” In the course of his condemnation he mentions her ruling in just one case, Ricci, and makes no effort to mount an argument on the merits against her position. In a second Cato post on Sotomayor, Ilya Shapiro slams her as an “Identity Politics over Merit” pick. In the course of his condemnation he mentions her ruling in just one case, Ricci, and makes no effort to mount an argument on the merits against her position.

Thank God there’s a think tank looking out for the white men of the world.

Cato’s Doug Bandow starts out with the observation that foreign demand for U.S. Treasuries is down:

So what will become of us all? Well, it’s pretty obvious. At this same time, household savings rates in the United States have gone way up. On one level, that’s pushing us further into recession. On another level, that’s necessary because household savings have been way too low. Still, Bandow is very concerned:

It’s difficult to accurately predict future demand. But U.S. borrowing will be truly staggering in coming years. If international demand is down, the Treasury will have to rely on American investors. Whether the domestic market can easily absorb so much debt — and particularly, to what extent federal debt offerings will crowd out private investment during what we hope will be a recovery — are questions that our spendthrift leaders have not bothered trying to answer.

These aren’t question they’ve “bothered trying to answer” because the future is inherently unpredictable and there’s no need to try to guess the answer. We have no way of knowing whether or not hypothetical future deficits will crowd out hypothetical future private investment at some hypothetical future point. But we do have a good way of telling, at any given time, whether or not this is what’s happening. You can tell because because interest rates go up. It was high interest rates that led the Clinton economic team to conclude in 1993 that it was more important to reduce the deficit, thus decreasing crowding-out, than it was to juice demand through fiscal expansion. These days you have a similar group of personnel in place but a different policy because they’re facing a different situation. Interest rates are incredibly low—nothing is being crowded out.

Meanwhile, the administration has outlined a longer-term plan to bring the deficit to sustainable levels. Those projections might prove wrong. Or that path might prove inadequate. In which case we’ll have to change policies. But there’s no reason to avoid doing what’s necessary for growth now just because in the future we might need to do something different. And it’s worth keeping in mind that a years-long recession would devastate our long-term budgetary picture anyway so it’s not as if there’s a huge short-term tradeoff.

The Cato Institute usually doesn’t mess around with the way-outside-the-mainstream elements of the libertarian worldview (see Chris Hayes for some of this) and certainly not with the elements of hard-core anti-statism that the business community would find very distressing. But with the economy in crisis, a lot of people are feeling somewhat ideologically discombobulated (myself included, at times) so I suppose it’s not shocking to see some loopy ideas moving closer to the mainstream. At the same time, there’s another trend that Brad DeLong’s been calling attention to, namely the fact that the present crisis has reached a level where even Milton Friedman’s ideas suggest that we should be doing stimulus. Brad, with touching naiveté, seems to think that that means that people normally inclined to admire Friedman should start agreeing that stimulus is a good idea. What’s happening, in fact, is that people normally inclined to admire Friedman are embracing fringy “Austrian” ideas (or Ayn Rand books) since the point of admiring Friedman is to reach the conclusion that government intervention is always economically ruinous.

All of which is by way of introducing the fact that Cato Institute Executive Vice President David Boaz apparently thinks we should adopt the gold standard and abandon “fiat money.” Of course, contractionary monetary policy amidst a sharp worldwide recession would doom us to years and years of misery. And during the Great Depression, nations’ ability to recover was strongly linked to their willingness to abandon gold.

Paul Krugman’s old post on “The Goldbug Variations” is always worth re-reading.

Cato Institute senior fellow William Poole offers us the latest version of the new right-wing fad for 1920s-vintage economic thinking:

Federal policy is damaging the economy’s prospects. It fails to provide the needed tax incentives for investment in factories and equipment, incentives that were central to efforts to revive the economy during the Kennedy-Johnson era and under Ronald Reagan. But government spending can’t lead the way to sustained recovery, because its stimulating effect will be offset by anticipated higher taxes and the need to finance the deficit.

One could imagine a world populated by beings who respond to government deficit spending by decreasing their own spending on a one-to-one basis in order to offset anticipated higher future taxes. Even then, it’s not entirely clear that you would get zero stimulative effect, but certainly it would be hard to conduct fiscal expansion in a planet populated by such beings. At the same time, it’s somewhat difficult to understand how these supremely calculating beings with no rate of time preference would ever manage to get involved in speculative bubbles or large debts in the first place. And it’s truly mysterious why this effect would exist during deficits caused by increased spending, but not by deficits caused by decreased revenues. And last of all, I find it baffling that a lot of people on the right persist in talking as if the stimulus plan was 100 percent spending and zero percent taxes when it was, in fact, almost 40 percent tax cuts—one of the biggest tax cuts ever. Perhaps if Obama had contrived to concentrate all the benefits at the very top of the income distribution he could get some credit as a tax cutter.

Paul Krugman offers some of the academic background on how we came to this point.

CNBC had a segment last night in which Cato’s David Boaz and CAP’s Heather Boushey debated whether Ronald Reagan or FDR would make the best model for Barack Obama. It’s striking that the host starts out by saying that “FDR and Reagan both faced similar crises in their presidencies” even though they didn’t, in fact, face similar crises. Reagan faced a situation when the inflation rate was very high. This led the Fed to raise interest rates and strangle the economy in an effort to choke inflation. That worked, but it created a big recession. This is nothing like our current recession, where we’re trying to ward off the possibility of deflation:

Heather makes this point straight out of the gate. At this point, the anchor seems to agree that her intro was totally off-base, but it makes you wonder why she said it in the first place. Boaz, meanwhile, agrees that the situation doesn’t resemble the situation Reagan faced, but then just says we need Reaganite policies anyway! Which I suppose is a pretty good encapsulation of libertarianism’s one-note approach to public policy.

But the fact remains that these are different situations and the differences are important. We shouldn’t just emulate what FDR did. But that’s because some of the things FDR did were bad ideas. What we need is to do something similar to what we would advise FDR to do if we had a time machine. To model our approach on what worked in Depression-era policymaking (not just in the U.S., but abroad) and that avoids what didn’t work or what was counterproductive. The Reagan era is just irrelevant. Reagan did some good things, like remaining relatively steadfast in the face of the short-term pain caused by Volcker’s interest rate policies. And he did a lot of bad things. But you don’t want to emulate either of those things because the situation is different.