A few odds and ends on the domestic front:
* The Economist reports that the gap between the Hispanic and African-American out-of-wedlock birth rate in the U. S. is narrowing considerably. In the past 10 years the birth rate among unmarried Latinas has risen from 89 to 100 per 1,000. It is now much higher than the rate among black or white women, and last year for the first time, over half of all Hispanic children in American were born out-of-wedlock, which is counter-intuitive in a society of traditional mores. I am a firm believer in assimilation as a primary solution to the central problems of immigration, but it occurs to me after reading these statistics that, to paraphrase Daniel Patrick Moynihan, assimilation to U. S. family values might in fact be “defining deviancy down”!
* It appears that Bill Gates has discovered the real Adam Smith. In his speech to the recent World Economic Forum in Davos, Switzerland, Gates extolled the virtues of “creative capitalism”, which he defines loosely as using capitalism to benefit the poor and dispossessed of the world. It seems that he is just been awakened to the fact that Smith’s Theory of Moral Sentiments predated his Wealth of Nations and the “invisible hand”, and that he was first and foremost a moral philosopher who believed that free markets were not only the most productive, but also the most moral of economic systems because they have at their core the human “sentiments” of satisfaction of wants and needs, if only they are not unduly obstructed or coerced by government.
* George W. Bush’s legacy is already building in the Supreme Court decisions led by Chief Justice John Roberts. The most recent is the huge decision in Medillin vs. Texas, which ruled that an International Court of Justice ruling ordering states to give convicted murderer Medillin and other foreign nationals new hearings under the Vienna Convention was not binding because the Convention is an understanding between governments, a diplomatic compact, not a source of new rights enforceable domestically. In other words, treaty obligations do not have the force of law in domestic affairs, and this maintains a much needed firewall between international and domestic law, namely our Constitution. A very big case, very capably argued before the U. S. Supreme Court by Texas Solicitor General Ted Cruz.
* “If the government underwrites all the risks, call it socialism. If it underwrites only the failures, call it foolishness.”–Allan H. Meltzer, professor of political science, Carnegie Mellon University. I can’t improve on that quote for pithiness. I can only continue to lament the trail down which we are headed. We are on the brink of destroying over twenty years of credibility in inflation discipline with our weak dollar policy and we are creating a huge reserve of moral hazard that will come back to haunt us. In the meantime, we have spread commodity inflationary pressures around the world and in the process exacted an inflation tax on capital that will damage investment and job growth. And now even John McCain has jumped on the bailout bandwagon.
RE: the last bullet in Potpourri, by executing a govt bailout, we are sending a signal to market actors that we don’t deserve to be in the state that we’re in. In fact, we do deserve this – there are many points of failure and poor risk analysis that got us here. On the consumer side, it makes me sad that people aren’t taking responsibility for their greed (wanting more house than they can reasonably afford). On the supply side, we have the lenders that didn’t properly assess risk. And on up the chain to the big investment houses. I wish there were a more surgical solution to all this that doesn’t punish the more prudent actors (responsible homeowners, traditional lenders, etc.).