Thomas Jefferson argued that the government that governs best is the government that governs least. Though there is some truth to this assertion, it is probably truer that the government that governs best is simply the government that governs best.
Over the last couple of decades, there has been an alliance of sorts between traditional Conservatives and Libertarians opposing “Liberal” big government. Libertarians insist on a minimalist government and oppose, on principle, an ever larger and more intrusive state. To Libertarians economic markets are the preferred regulators of behavior.
Traditional Conservatives, while not necessarily opposed to strong government, were not sympathetic with the uses the Liberals were making of it. Though Liberals attempted out of good intentions to use government to help those in need, their approach has often degenerated into creating, encouraging and subsidizing a dependent class in exchange for political power. It is ironic that the more successful 1960’s Liberalism is in transforming the disadvantaged classes into the middle class, the less need there is for their programs. Their political saliency increases only in proportion to the failure of their policies.
What Libertarians sometimes overlook is that the functional free markets they worship as the regulators of daily transactions do not sprout like weeds from any soil. Conservatives recognize that markets must be planted and nurtured. Libertarians have long accepted the necessity for the rule of law, the regularization of and enforcement of transactions and contracts, and provisions for public order.
Important as such structures are, they are woefully insufficient by themselves. The complex and numerous interactions between individuals require an implicit trust such that in large measure third-party enforcement is not necessary. If every transaction required a regulator, the normal efficiencies of markets would be overwhelmed and destroyed. Markets depend on the character of the people. Markets cannot prosper without an ethos of trust, integrity and honesty. The undermining of this trust by the irresponsible actions of companies like Enron demoralize the markets necessary for prosperity.
One role of government, recognized by traditional Conservatives and not by Libertarians, is to take care to improve the character of individuals, a character necessary for a free people. Such concern might take the form of a tax code that encourages traditional families, private savings for retirement, and contributions to non-profit charities. Such a concern might take the form of anti-discrimination laws that teach tolerance. Such a concern might take the form of strict enforcement of Securities and Exchange Commission laws that reinforce the notion that success is a function of hard work and luck, the not result of fraudulent tactics.
President George W. Bush has proven to be less of Libertarian and more of a traditional Conservative. When he ran for office, he emphasized government-private partnership in providing the community-based services that large government bureaucracies find so difficult to provide effectively. Faith-based solutions have proven particularly effective for problems of drug addiction.
In the recent state of the union address, Bush seems to be concerned about the self-centeredness taught by a society that focuses too much on material acquisition and too little on other values. For too long our culture has said, “`If it feels good, do it.’ Now America is embracing a new ethic and a new creed: `Let’s roll.”’ Bush used the unity in the wake of the September 11 attacks to focus Americans outwards. He asked Americans to personally reach out and help others in their own communities. Bush asked Americans to commit two years somewhere in their lives to volunteering for others, to share of themselves.
Frankly, the expansion of government volunteer programs, like his USA Freedom Corps, may tend to crowd out rather than encourage local efforts. Nonetheless, Bush’s instinct to call upon the better angels of our natures, to ask us to care for those around us, makes Bush a traditional Conservative. Libertarians would deem such considerations outside the legitimate scope of government. For this reason, Libertarians will likely not make good leaders. And in the long run, a government that takes care to help create good citizens, a government concerned about character, is the one that will have to govern least.
When Chapter 11 Does Not Mean Bankruptcy
Sunday, February 10th, 2002Within the United States, free trade works to the benefit of all. Goods and services pass easily between Pennsylvania and Maryland, between California and Nevada, between Georgia and Florida. One reason internal US trade works is that the rule of law exists. If a fraudulent transaction takes place in one state, there is a reasonable chance that someone in another state can achieve effective recourse in the courts. In addition, although states can enact legislation locally, the federal government retains the exclusive right to regulate interstate commerce. Indeed, it was the impediments to free trade between states under the Articles of Confederation that motivated the writers of the Constitution to prohibit the states from regulating interstate commerce.
The presence of barriers to international commerce had been an impediment to prosperity in Europe. The rise of the European Union represents a recognition of this. Europe is on a rapid track to full economic integration, now that these countries largely share a common currency.
The North American Free Trade Agreement (NAFTA) is an attempt to largely achieve the benefits of free trade between the United States, Canada, and Mexico. The increase in trade and prosperity following the enactment of the agreement is a testimony to the benefits of free trade. There was not the great “sucking sound” of jobs being vacuumed out of the United States predicted by some.
Nonetheless, Bill Moyers in the PBS program Now: Trading Democracy focuses on what may turn out to be an important if not fatal flaw in the agreement. Whereas most corporations would like to avoid Chapter 11 when it refers to bankruptcy, some that invest in foreign countries are trying exploit Chapter 11 of NAFTA. The offending section Chapter reads:
Actually, the provision seems to make sense. If one wants to encourage investment, the investors must be confident that their investments will not be arbitrarily seized. The penalty for the expropriation is payment of fair market compensation.
The problem that Moyers focuses on in his special is potential overly broad interpretation of the “tantamount to expropriation” clause. Apparently, California passed an environmental regulation limiting the chemical additive MTBE in gasoline. The chemical had found its way into ground water and there are serious questions about the long-term health consequences of human exposure to MTBE. The Canadian company, Methanex is a major manufacturor of MTBE. It is now suing California under Chapter 11 of NAFTA. Methanex is submitting to an arbitration tribunal set up as part of NAFTA a request for nearly $1 billion in compensation for an act that is “tantamount to nationalization or expropriation.”
Essentially, the thesis of Moyers Special is that the corporations will be able to use the Chapter 11 provision of NAFTA to assert that any government action that might reduce profits is equivalent to expropriation. While such creative interpretations are possible by the tribunal, they are not likely to survive long. Either the tribunal’s rulings will be consistently reasonable or the treaty will be re-negotiated.
The clause cited above specifically gives governments the right to regulate so long as the regulation is directed to a “public purpose” and “nondiscriminator.” Indeed, later in the NAFTA agreement, environmental regulations are specifically allowed.
It is always possible for creative lawyers to conjure up new interpretations of a law inconsistent with the original understanding of those who drafted the legislation. Indeed, that is the goal of much of modern interpretation of Constitutional law. It is the purpose of courts and other tribunals to dismiss interpretations that are too expansive. It was disappointing that Moyers did not discuss in greater details the other provisions of Chapter 11 relating to environmental regulation.
What was amusing was to see in the Now program, the solemn hand wringing of William Greider of the Liberal Nation magazine and Martin Wagner of Earthjustice Legal Defense Fund concerned about national sovereignty. I suspect that neither would shed a tear about national sovereignty if international environment agreements were used to compel compliance to stricter environmental regulations even if they US cost jobs and trumped local or national decisions.
There are very important and legitimate concerns about limitations of sovereignty in any international agreement. It is nice to see the Left learn such a concern. Possible unreasonable interpretations of NAFTA ought to be scrutinized. Nonetheless, it does seem that a dispassionate reading of the entire NAFTA agreement would preclude the problems cited in the Moyers special. If, however, the NAFTA tribunal makes consistently unreasonable or expansive interpretations, NAFTA should be reconsidered. The problem that Moyers focuses on is not a problem with the concept of free trade, but in the details in implementing a free trade protocol in the age of creative interpretation of the law.
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