Our View - Friday

A smart divestment?

Cutting economic ties won’t end tyranny

Divest from Sudan, Statehouse Democrats say. Divest from Iran, Statehouse Republicans respond. Divest from Burkina Faso, some might say — we don’t like the way Tertius Zongo is running things over there. And what about China? Blocking the state from doing business with companies that operate in China, and halting all Public Employee Retirement Association investment in the country, would really show regimes abroad that Coloradans will put their money where their human rights values are. And what about divesting from Chavez’s Venezuela? Mubage’s Zimbabwe? Putin’s Russia?

Will these regimes care? Will they change their ways as a result? What potential financial hit are we Coloradans willing to take in order to make our point?

Such gestures may garner a few headlines and make divestiture advocates feel good about themselves, but they may not do much to advance the cause of liberty. Investing in companies that do business with unsavory regimes makes Americans complicit in what the regimes do, according to one school of thought. American economic ties with oppressive regimes improves the chances that they’ll become more humane, more just and more democratic, according to another.

It’s a debate that dates back a long way, but in recent times has focused on apartheid-era South Africa, Myanmar (formerly Burma), Cuba and, of course, China.

We libertarians generally believe economic and trade tries with less-than-savory regimes will, in due time, encourage human rights, property rights and democratic reforms in those countries — that economic and political liberties are linked. Severing those ties gives those countries a reason, and an excuse, to thumb their noses at our values. North Korea, Cuba and Iran are examples of this dynamic at work. The average people suffer as a result, not the leaders. That’s why we think divestment is ultimately counterproductive.

There is no iron law guaranteeing that economic liberty precedes political liberty. Fareed Zakaria, in his book “The Future of Freedom,” writes about the evolution of “illiberal democracies,” which manage to adopt market economies while the political elite retain power. China — which is liberalizing economically, and is acknowledging limited property rights for the first time since the communist takeover, but which still counts in our book as a repressive regime — is being closely watched in this regard. But the odds still argue for economic engagement over economic isolation.

Colorado House Speaker Andrew Romanoff has been in the Party’s Republic of China this week, trying to lecture the country’s leaders about their close economic ties with Sudan, which is waging a genocidal campaign in the Darfur region. Romanoff led the way last session when legislators passed a Sudan divestment bill. Republicans are trying to get into the act. We doubt Romanoff’s presence has the Chinese soul searching or shaking in their shoes.

Romanoff is free to engage in foreign-policy freelancing if he likes — a lot of ambitious politicos do this to raise their profile. But the trip strikes us as pompous, naive and somewhat disingenuous. If he and Republicans really want to make statements, why don’t they advocate for the state’s complete divestiture from an economic powerhouse such as China, rather than a relative backwater such as Sudan?

We’ll tell you why. Because the investments and retirement accounts of thousands of active and retired public employees in Colorado stand to benefit from continued economic ties with China, and Romanoff and his colleagues know that they’ll be on the hot seat if divestment from China reduces that return on investment. And neither Republicans nor Democrats are that eager to send signals of disapproval to foreign despots.

It’s not necessarily right. But it’s reality.

For the good of PERA participants — and the good of peoples living in regimes that might change for the better thanks to continued economic ties with the U.S. — we suggest a halt to all the posturing. State legislators should drop all this foreign policy freelancing and focus on matters closer to home.

The wrong prescription

Nearly half of the nation’s children already have government-paid health care. Nevertheless, Congress was pushing hard at press time Thursday to vastly increase governmental health care spending for children who are not officially poor, and add millions more of them to the entitlement roster.

The State Children’s Health Insurance Program was established in 1997 to provide government-paid coverage for children whose parents aren’t poor enough to receive welfare and Medicaid. SCHIP may soon become the largest federal health care expansion since the equally ill-advised 2005 Medicare prescription drug entitlement.

The original intent was to cover families with incomes up to 200 percent of the federal poverty level, or $41,000 a year for a family of four — people twice as well off as those the government considers impoverished. But it didn’t take long for states to gin up the limits. Some states now allow income as high as 250 percent of the poverty level, while others now even provide benefits to adults. Congress is considering raising the income limit to between 300 percent and 400 percent of poverty level. This not-so-creeping socialism would qualify a sizable portion of middle America for government assistance — and add $35 billion to the $25 billion program in the next five years.

When a government program first is advanced, it is couched as a last-resort to help those who cannot help themselves. It doesn’t take long, as SCHIP has shown, for an entitlement mentality to take over. President Bush has threatened to veto any bill that greatly expands SCHIP. If Congress gives him one, he should.