My intrepid Mercatus Center colleague Veronique de Rugy – writing at National Review – is rightly appalled by the lousy ‘reporting’ done by the New York Times‘s David Leonhardt about the stance toward Ukraine taken by AIER’s Will Ruger and the Koch organization Stand Together. Here’s Vero’s conclusion:
Here’s the bottom line: David Leonhardt seems to have done no actual investigating whatsoever before accusing Charles Koch and Will Ruger of being pro-Putin. This is particularly sad in a piece that actually quotes some people praising Putin. It’s obvious that he has delegated to others (in this case a Democrat political operative writing for a subscription-based newsletter — funny for a guy who throws Koch-funded accusations around) whatever “investigation” is done for this section of the report. That alone is disappointing enough. But what is more disappointing is to equate disagreement over just what the U.S. should do regarding the Ukrainian invasion or disagreement about why we shouldn’t put boots on the ground in Ukraine (no national-security stakes, vs. Putin has the nuclear bomb) with support for Putin himself. These types of attacks, especially in the pages of the NYT, hinder debates and make us all stupider at a time when we need more debates and more ideas.
P.S. Also sloppy and laughable is calling AIER a Koch-funded organization. Can we please stop assuming that scholars on the right or on the left hold their policy positions because of who funds them? AIER received a small grant from the Koch Foundation in 2018 and 2019. If that makes them a Koch-funded organization, then the NYT should start referring to the ACLU as a Koch-funded organization, too.
Stand Together is a charitable organization founded by Charles Koch that gives money to libertarian groups and causes. It works to advance classically liberal ideas on a variety of issues: school choice, criminal justice reform, regulation, and foreign policy, to name just a few. Stand Together works with right-leaning organizations on some of these issues, left-leaning organizations on other issues, and also with organizations that don’t neatly fit the left-right paradigm. (Disclosure: Reason Foundation, the nonprofit that publishes Reason, receives support from Stand Together.)
Unfortunately, many progressive journalists—and even some populist conservatives—view everything connected to Charles Koch and his late brother David as nefarious by default. In their zeal to denounce the Koch brothers’ influence on American politics, they end up attacking policies that they should otherwise support.
Case in point is this bizarre and misleading “exclusive” report on Stand Together from Judd Legum, a progressive journalist who writes the newsletter Popular Information. Legum accuses Stand Together of supporting a “partial victory” for Russia in Ukraine, and wanting the U.S. to drop “virtually all” Russian sanctions.
Most irresponsibly, Legum highlights the following line: “An outright victory by either Russia or Ukraine is increasingly unlikely and a diplomatic resolution is the path that best limits the bloodshed.” He describes this as Stand Together advocating for the U.S. to “seek to deliver Russia a partial ‘victory’.”
But [Dan] Caldwell clearly does not wish for Russia to achieve “victory,” partial or otherwise; he is merely acknowledging that any peace will likely involve both Russia and Ukraine getting some things that they want. It’s perfectly reasonable to concede that in order to end all the death and destruction, Putin will have to emerge from the conflict as something short of a complete and total loser.
Legum quotes two foreign policy experts—Brian Katulis and Daniel Fried—who think the current sanctions should remain in place and believe they are working to “reduce Putin’s resources for further aggression.” They are certainly entitled to that opinion; there is little reason to doubt that the sanctions are making things harder in Russia, including for ordinary Russians. But it is not crazy to wonder whether the sanctions will meaningfully prevent Putin from continuing the war in Ukraine, or whether the amount of suffering we are dispensing to the Russian people is ultimately counterproductive or even immoral.
Efforts to punish Russia for invading Ukraine rely not just on funneling weapons to the beleaguered defenders but also on economic sanctions to deny Vladimir Putin’s regime resources and to inflict pain until the aggression stops. Among the targets are “Russian elites and their families,” in President Joe Biden’s words, whose assets are being seized to pressure the regime. But calling somebody an “oligarch” is no substitute for legal proceedings, and the U.S. government is stretching already sketchy asset forfeiture powers in ways that will, no doubt, create precedents for the future.
Russian billionaires will probably survive economic sanctions in relative comfort. But the precedent set by labeling people as untouchables and then imposing penalties without proof of a crime will set the tone for future abuses. Powers used against wealthy Russians now will be deployed in the years to come against people who cross the authorities and have fewer resources for defending themselves.
The consumer-welfare standard, defended eloquently by Phil Gramm and Christine Wilson in “The New Progressives Fight Against Consumer Welfare” (op-ed, April 4), is fundamental to advancing the rule of law in antitrust. It provides a clear benchmark for understanding when business conduct is economically beneficial to consumers, while also benefiting workers and producers.
When producers obtain raw materials more cheaply, savings can be passed on to consumers. When workers are more productive, they tend to earn more and can buy more goods or save money. Worker efficiency helps companies produce more and better goods, reducing prices further. Consumers are emphasized because, in the end, everyone is a consumer.
The consumer-welfare standard isn’t concerned with a business’s size or industry. Maintaining the rule of law necessitates that antitrust enforcers not discriminate. This creates an equal playing field, again to the benefit of consumers.
Abandoning the consumer-welfare standard and considering a broader range of conduct to be antitrust violations would undermine years of progress. By assigning weights and making judgments based on ill-defined criteria like “fairness,” enforcers would be picking winners and losers, arbitrarily and inconsistently applying antitrust in defiance of the rule of law.
For most of the 132 years that antitrust laws have been on the books, enforcement has been inconsistent and unpredictable. In the late 1970’s, acceptance of consumer welfare as the guiding principle allowed for unprecedented growth and innovation. The last thing we should do is quickly throw out the consumer-welfare standard, disrupt the rule of law, and introduce a new and arbitrary standard that threatens this success story.
Mercatus Center at George Mason
Mr. Abbott was the Federal Trade Commission’s general counsel (2018-21).
I wouldn’t dream of telling Elon Musk, who recently became Twitter’s top shareholder, how to turn a profit. But I do know something about free speech. If Mr. Musk is serious about making the social-media behemoth a force for free speech, here are 10 things he can do:
1. Leave more content up. Twitter has rules about posts, and the bulk of enforcement is done through artificial intelligence. The algorithms err on the side of taking down material that might violate Twitter rules. Instead, they should err on the side of leaving questionable material up until there has been human review.
2. More aggressively screen complaints. Currently, there is too much bad-faith reporting done for the purpose of getting controversial, but legitimate, content taken down. For every 10 content moderators tasked with taking down content, hire a content defender, whose job is to advocate for keeping or putting content back up. Err on the side of speech, not censorship.
10. Stop supporting congressional legislation that would reduce speech, such as the misnamed “Honest Ads Act.” Make the company an advocate for free speech, not censorship.
On the matter of foreign investment, Cass misrepresents Smith in two ways. First, he seems to suggest that Smith’s theorizing assumes that there is little to no foreign investment. Cass writes, “Smith and Ricardo…assumed that capital would remain in the domestic market. And as a corollary, both conceived of trade as occurring only on the basis of goods for goods.” In a reply to [Dominic] Pino, Cass writes: “Smith and Ricardo wrote about one very specific kind of trade — the direct exchange of goods for goods — and assumed this would occur in a world where capital remained within national boundaries.”
Second, Cass suggests that Smith’s favor for liberal policy depended on this same assumption of little to no foreign investment. Cass writes: “Smith and Ricardo never suggest that this pursuit of profit abroad will align with the public interest at home, no other theory gives a reason that it should, and empirically it has not.”
On both points, Cass is wrong about Smith. I do not mean to imply that Smith would not under any circumstances favor a restriction on foreign trade or investment. Smith considered arguments for making an exception to the principle of free trade, but, as Boudreaux explains, Smith himself tended to diminish those arguments. We cannot rule out that Smith might favor certain restrictions under certain circumstances, for polity reasons, perhaps because they would support political stability or national security, or simply because they would play a part in the crafty art of liberal politics. Smith strove to make governments less dishonest and illiberal, but knew that foreign countries had governments too. Smith’s friend Edmund Burke exemplified the virtuous pursuit of circumstantial liberal politics.
Does Smith ever frown on foreign investment? Smith does say that British capital invested in Britain more surely augments employment in Britain than British capital invested abroad. But universal benevolence does not stop at the border: “The capitals of the British manufacturers who work up the flax and hemp annually imported from the coasts of the Baltic, are surely very useful to the countries which produce them.” Smith hardly seems opposed to British investment in the Baltic countries. Elsewhere Smith writes: “Though the same capital never will maintain the same quantity of productive labour in a distant as in a near employment, yet a distant employment may be as necessary for the welfare of the society as a near one; the goods which the distant employment deals in being necessary, perhaps, for carrying on many of the nearer employments.”
Cass suggests that Smith wishes to confine the invisible-hand point to circumstances in which the individual invests domestically, writing: “If a capitalist wishes to deploy his capital domestically, and if the domestic investment that will generate the most profit for him is also the one that will create the most value and employ the most people in his country, then we will have a well-functioning capitalist system.” I take it that Cass means only then.
But it is daft to think that Smith thusly confined the invisible-hand idea. As Peter Minowitz has shown when criticizing a similar misreading, the invisible-hand idea is all over Wealth of Nations. Minowitz’s textual analysis refutes Cass’s attempt to confine the point.